BRADENTON, Fla. – The Municipal Electric Authority of Georgia will need $1.4 billion in additional financing to complete its share of two nuclear reactors under construction at Plant Vogtle.
MEAG Power expects about $985.3 million will be financed in the public capital markets, the agency said in a notice posted on the Municipal Securities Rulemaking Board's EMMA website.
The remaining cost is expected to come from Federal Financing Bank lending through a 100% loan guarantee backed by the U.S. Department of Energy, though that is still subject to approval.
The new estimated cost of MEAG’s share of building reactors 3 and 4 at Vogtle results in total financing needs of approximately $6.1 billion, according to the agency’s notice, posted Friday.
“Taking into account MEAG Power’s updated estimate of its financing needs for Vogtle Units 3&4, including reserve funds and other required fund deposits, approximately $1.4 billion of additional financing will be required,” the notice said.
MEAG announced Wednesday that its board voted to complete the reactors, but it did not disclose details about costs at the time.
On Thursday, Georgia Power Co., the majority owner of the new Vogtle units with a 45.7% share, also reported to the Georgia Public Service Commission that it planned to complete the project along with the public partners.
GPC said the total estimated cost to complete the reactors is $9.45 billion, of which is $4.5 billion is its share.
The cost to complete the reactors is based on evaluations by consultants and information provided by Westinghouse Electric Co.
Westinghouse filed for bankruptcy March 29 to shed billions of debt related to its contract as the prime contractor at Vogtle, and a two-reactor project in South Carolina. The South Carolina project's owners, including the South Carolina Public Service Authority, have chosen not to continue with construction.
MEAG owns 22.7% of the Vogtle project, and has already issued $2.85 billion of taxable and tax exempt M, J, and P nuclear project bonds for its share of the work.
The agency previously obtained Federal Financing Bank lending commitments of $1.81 billion, of which $614.9 million remains to be advanced. An application for $414.7 million in additional FFB lending has been filed based on the new completion cost estimate, according to Friday’s EMMA notice.
The agency said the forms of capital market financing will include bonds and other kinds of debt that may provide cost-effective options.
In its EMMA notice, MEAG said its cost to complete the Vogtle project is based on several assumptions, including that the financially struggling Toshiba Corp., Westinghouse's parent, fulfills the terms of a guarantee settlement on behalf of Westinghouse.
For MEAG, that guarantee totals $835.36 million to be paid out over several years.
In addition to MEAG, the other public owners of the project also voted to complete the new reactors.
The other owners are Oglethorpe Power Corp., which has issued $1.5 billion of first mortgage bonds for its 30% share and the city of Dalton, Ga.’s utility, which is funding a 1.6% share of the project on its own.
MEAG’s decision to complete the project is viewed as a credit negative because of the increased cost and delayed in-service timetable for the new units, Moody's Investors Service said Thursday.
“Based on an extensive assessment by the co-owners and outside consultants of the impact of the Westinghouse bankruptcy on the project and the uncertainty around cost and timetable, the project is now expected by the co-owners to have a total cost of roughly $25 billion, which is much higher than the previous estimate,” said Moody’s analyst Dan Aschenbach.
Aschenbach said a mitigating factor for continuing the project is that Bechtel Corp. has taken over as the main construction contractor, which he said could improve project management.
MEAG’s outstanding Project J and M bonds are rated A2 by Moody's and A-plus by Fitch Ratings and S&P Global Ratings. The Project P bonds are rated Baa2 by Moody’s and A-minus by Fitch and S&P.