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Energy Department offers extra $3.7 billion loan backing for Plant Vogtle

The Department of Energy has given initial approval for $3.7 billion in additional loan guarantees to help cover more cost overruns at the troubled Plant Vogtle project.

The U.S. agency said Friday it gave conditional approval of loan guarantees for the project to add two new nuclear reactors at the plant near Augusta, drawing praise from Georgia Power and other supporters, and anger from long-time critics who say the costly project should be shut down.

The commitments include $1.67 billion to Atlanta-based Georgia Power, which owns almost half of the plant; $1.6 billion to Oglethorpe Power and $415 million to subsidiaries of the Municipal Electric Authority of Georgia, the project’s other two large partners. A sliver is also owned by the city of Dalton.

“Advanced nuclear energy projects like Vogtle are the kind of important energy infrastructure projects that support a reliable and resilient grid, promote economic growth, and strengthen our energy and national security,” said U.S. Secretary of Energy Rick Perry.

In a statement, Georgia Power hailed the move as welcome support for the Vogtle expansion that will provide $500 million in “present-value benefits to its customers” through savings on debt costs for the project.

“The (Trump) administration, Secretary Rick Perry, the entire cabinet and members of Congress from both sides of the aisle have been exceedingly helpful with the construction of the Vogtle 3 and 4 project,” said Georgia Power CEO Paul Bowers.

Senator Johnny Isakson, R-Ga., said he is “doing whatever I can to ensure that the Plant Vogtle project stays on track for completion.” That includes pushing for an extension of a separate tax credit for the project, he said, that is expected to otherwise expire before the plant in completed, because of new project delays.

The new guarantees are in addition to $8.3 billion in earlier Energy Department loan guarantees for Plant Vogtle, including $3.46 billion for Georgia Power.

The project was billions over budget and years behind schedule when its key contractor, Westinghouse Electric, filed bankruptcy in March, throwing it into turmoil and causing costs to balloon even more.

Critics said the new loan guarantees are propping up a struggling project that will cost taxpayers if it fails, as a similar one did earlier this year in South Carolina.

“We are astonished that utility giant Southern Company and its partners are getting yet another amazing sweetheart deal while taxpayers bear all the risk,” said Stephen A. Smith, executive director of the Southern Alliance for Clean Energy.

The decision “continues the disturbing trend of regulators transferring enormous risk from utilities to ratepayers and taxpayers,” said Ted Terry, director of the Sierra Club’s Georgia chapter. “It’s time the (Georgia) Public Service Commission stop this runaway nuclear train before customers pay an even higher price for more inevitable mismanagement and cost overruns.”

Debbie Dooley, president of Conservatives for Energy Freedom, said the loan guarantees amount to the government picking winners and losers. “Plant Vogtle is a loser if it had to compete in the marketplace like any other business. We should not bail out irresponsibility.” she said

Final approval of the loan guarantees will depend on meeting conditions such as the Energy Department’s final review and regulatory approvals, Georgia Power said.

Georgia Power, the main Vogtle partner, told state utility regulators last month that its construction costs to finish the plant will rise by about $4.5 billion, boosting its total to $8.8 billion.

The ultimate price, including spending by all project partners and financing costs, could go above $26 billion, based on Georgia Power’s estimates for its share. That’s about double the original projected cost when the project was started in 2009.

Georgia Power’s customers finnace the project through surcharges on their power bills that add about $100 a year for the typical residential customer.

The Georgia Public Service Commission is expected to make a decision in February on whether to continue construction, but most commissioners have already signalled they don’t want to abandon it.

After the Westinghouse bankruptcy, partners in the unfinished South Carolina expansion project decided to shut it down because of rising costs and risks due to the bankruptcy, and slowing demand for electricity.


AJC Business reporter Russell Grantham keeps you updated on the latest news about major companies, CEOs and public utilities in metro Atlanta and beyond. You'll find more on, including these stories:

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