Vogtle loan guarantee extension sought

The owners of Plant Vogtle are negotiating with the U.S. Energy Department to extend — for a second time — the government’s 2010 offer of up to $8.3bn in federal loan guarantees to help finance two new nuclear reactors.

Southern Co. (NYSE: SO) — whose subsidiary Georgia Power owns a 45.7% stake in the $14bn project — made the disclosure during recent testimony before the Georgia Public Service Commission.

“We are now currently in discussions with the Department of Energy about extending that further,” said David McKinney, Southern Nuclear‘s vice president of construction support. “It has taken longer than we expected.”

Georgia Power and co-owners Oglethorpe Power and Municipal Electric Authority of Georgia (MEAG) were conditionally approved in February 2010 for loan-guarantee financing, in which the government promises to assume a company’s debt if the company defaults.

The $8.3bn offer included up to $3.46 billion for Georgia Power; up to $3.05bn for Oglethorpe, which owns 30 %; and up to $1.80bn for MEAG, which owns 22.7 %.

The project’s remaining 1.6 % is owned by Dalton Utilities.

Oglethorpe Power also cast a positive light on the loan guarantee discussions, saying — in a Nov. 26 earnings conference call with investors — that the deal could still be consummated, despite more conditions placed on such programs by the government.

Betsy Higgins, Oglethorpe’s chief financial officer and executive vice president, told investors the negotiations have moved slowly but progress is likely.

“We still believe that we can get the loan guarantee,” she said, adding that it could be completed in the first half of 2013.

“We can’t be assured we will get it then, but if we don’t, we have a good backup plan.”

Although the loan guarantees could help reduce borrowing costs, the owners have said the project could still be completed without them.

The new Westinghouse AP-1000 reactors under construction at the Burke County site are scheduled to go online in 2016 and 2017, although contractors have said the projected startup dates could be delayed as much as a year.