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Southern Company, DOE agree to conditional nuclear loan guarantee terms
Southern Company and Georgia Power have reached an agreement with the U.S. Department of Energy (DOE) to accept terms for a conditional commitment for loan guarantees to build two new nuclear units at Plant Vogtle.
"This will provide Georgia Power customers significant savings,” said Georgia Power President and CEO Mike Garrett.
President Obama and DOE Secretary Steven Chu announced the award of the conditional loan guarantees to Georgia Power on Feb. 16.
"This is another step forward on the road to nuclear power playing a prominent role in America's energy future,” said Southern Company President and CEO David Ratcliffe. "Nuclear energy is vital in any effort to make meaningful reductions in greenhouse gas emissions and meet this nation's rising demand for electricity. This conditional commitment is an endorsement of the company's performance as a safe, efficient nuclear operator with strong financial integrity.”
The conditional commitment is for loan guarantees that would apply to future borrowings related to the construction of units 3 and 4 at Plant Vogtle near Waynesboro, Ga.
Total guaranteed borrowings would not exceed 70 percent of the company's eligible projected costs, or approximately $3.4 billion, and are expected to be funded by the Federal Financing Bank. Any guaranteed borrowings would be full recourse to Georgia Power and secured by a first priority lien on the company's 45.7 percent ownership interest in the two new units.
Final approval and issuance of the loan guarantees are subject to receipt of the Combined Operating License from the U.S. Nuclear Regulatory Commission (NRC), completion of final agreements, the receipt of any other required regulatory approvals and satisfaction of other conditions. The company received an early site permit and limited work authorization from the NRC for the two additional units in 2009, and site work has begun.
The additions of units 3 and 4 are expected to produce approximately 3,500 jobs during construction and 800 permanent jobs once the units begin operation.
Along with Georgia Power's existing portion of the two 1,100-megawatt reactors, the remaining ownership is split among Oglethorpe Power Corp., the Municipal Electric Authority of Georgia and Dalton Utilities. Georgia Power's share of the project cost is currently projected at approximately $6.1 billion, which includes approximately $1.7 billion of financing costs to be collected during construction.
The DOE loan guarantees are expected to save Georgia Power's customers millions in interest costs annually over the expected life of any guaranteed borrowings, based on preliminary estimates. The actual amount of the interest savings will depend upon the final terms and the timing of the specific borrowings and cannot be determined at this time.
Units 3 and 4 are expected to begin commercial operation in 2016 and 2017, respectively. Southern Nuclear will oversee the construction as well as operate the two new units for Georgia Power and the other owners.
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