- Buyer's Guide
Southern Company on February 16 announced that the U.S. Department of Energy (DOE) has offered its subsidiary 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.
"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," said Southern Company chief executive officer David Ratcliffe, following an event at which President Obama and Secretary of Energy Steven Chu announced the award. "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."
President Obama and Secretary Chu announced the commitment for the loan guarantees at a news conference 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, Southern Company chief operating officer Tom Fanning, Southern Nuclear CEO Jim Miller and Southern Company executive vice president Chris Womack.
The new units will be located at Plant Vogtle near Waynesboro, Ga., where the company already owns and operates two nuclear units. The conditional commitment is for loan guarantees that would apply to future borrowings related to the construction of Vogtle units 3 and 4.
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.
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 obtaining 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 (COL) 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 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 (MEAG Power) 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, a subsidiary of Southern Company, will oversee the construction as well as operate the two new units for Georgia Power and the other owners. Southern Nuclear currently operates Plant Vogtle's two existing nuclear power units as well as Georgia Power's Plant Hatch nuclear facility near Baxley, Ga., and Alabama Power's Plant Farley nuclear facility near Dothan, Ala.
Georgia Power is the largest subsidiary of Southern Company, one of the nation's largest generators of electricity. The company is an investor-owned, tax-paying utility with rates well below the national average. Georgia Power serves 2.3 million customers in all but four of Georgia's 159 counties.
With 4.4 million customers and more than 42,000 megawatts of generating capacity, Atlanta-based Southern Company is the premier energy company serving the Southeast. A leading U.S. producer of electricity, Southern Company owns electric utilities in four states and a growing competitive generation company, as well as fiber optics and wireless communications.