Southern Co. Accepts DOE’s Loan Guarantees for Vogtle Reactors

Southern Co. on Friday said it had agreed to terms with the U.S. Department of Energy (DOE) for $8.3 billion in loan guarantees to build two AP1000 nuclear reactors at the Alvin W. Vogtle Electric Generating Plant in Burke, Ga. The conditional commitment could accelerate the start of construction for the first U.S. nuclear plant in more than 30 years.

Total guaranteed borrowings would not exceed 70% of the company’s eligible projected costs—or approximately $3.4 billion—and are expected to be funded by the Federal Financing Bank, the Georgia Power subsidiary said. Any guaranteed borrowings would be full recourse to Georgia Power and secured by a first priority lien on the company’s 45.7% 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.

Southern Co. already received an early site permit and limited work authorization from the NRC for Plant Vogtle’s planned Units 3 and 4 in 2009, and site work has begun. The units are expected to begin commercial operation in 2016 and 2017, respectively.

Southern Nuclear, a subsidiary of Southern Co., 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.

Along with Georgia Power’s existing portion of the two new 1,100-MW 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.

“This is another step forward on the road to nuclear power playing a prominent role in America’s energy future," said Southern Co. President and CEO David M. 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."

For more information on the new builds, see “Plant Vogtle Leads the Next Nuclear Generation,” in POWER’s November 2009 issue.

Sources: POWERnews, POWER, Southern Co.

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