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Southern Company earns DOE support for first nuclear units in 30 years
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President Obama announced that the U.S. Department of Energy has offered Southern Company and Georgia Power a conditional commitment for loan guarantees for the construction of the nation’s first nuclear power units in more than 30 years, a move designed to help spur a renaissance in America’s nuclear industry.
The announcement came in a morning news conference with the president, Secretary of Energy Steven Chu and CEO David Ratcliffe held at the International Brotherhood of Electrical Workers Local 26 in Lanham, Md. Ratcliffe was joined at the event by Georgia Power CEO Mike Garrett, chief operating officer Tom Fanning, Southern Nuclear CEO Jim Miller and Chris Womack, executive vice president of external affairs.
“We are honored by the administration’s confidence in our ability to build the nation’s first new nuclear power plant in more than three decades,” Ratcliffe said. “It’s an important endorsement in the role nuclear power must play in diversifying our nation’s energy mix and helping to curb greenhouse gas emissions.”
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.
With DOE loan guarantees, Georgia Power and its customers are expected to save approximately $15 million to $20 million 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.
“The administration’s decision is great news for our customers, our company, our industry and our nation’s energy future,” Garrett said. “It will enable us to continue to meet our customers' energy needs with safe, reliable and economical electricity.”
Ratcliffe added that loan guarantees would serve as a catalyst to accelerate the construction of new nuclear plants and other clean energy sources while adding jobs and aiding the economy. The additions of units 3 and 4 are expected to produce approximately 3,500 jobs during construction and an additional 800 permanent jobs once the units begin operation.
Georgia Power has 90 days to accept the conditional commitment, including any necessary regulatory approvals. The company will work with the DOE to finalize the loan guarantees.
Final approval and issuance of the loan guarantees are subject to receipt of the combined operating license from the U.S. Nuclear Regulatory Commission, completion of final agreements, the receipt of any other required regulatory approvals and satisfaction of other conditions. The company received an early site permit from the NRC for the two additional units in 2009, and preliminary site work has begun.
Along with Georgia Power’s portion of the two 1,100-megawatt reactors, the remaining ownership is split among Oglethorpe Power Corporation, the Municipal Electric Authority of Georgia and Dalton Utilities. Total cost of the new units is currently projected to be approximately $14 billion. Georgia Power’s share is currently projected at approximately $6.1 billion, which includes approximately $1.7 billion of financing costs to be collected during construction.
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.
The Shaw Group is the general contractor for the new Vogtle units, which will use Westinghouse Electric Co.’s AP1000 reactor technology.
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