Southern gets third DOE extension on nuclear loan talks

The U.S. Department of Energy (DOE) has again extended its deadline for DOE and a Southern (NYSE:SO) subsidiary to reach agreement on a federal loan guarantee for two new nuclear reactors currently under construction in Georgia.

A Southern spokesperson confirmed July 8 that DOE has extended the loan guarantee negotiation deadline for Vogtle 3 and 4 until Sept. 30. This is the third such extension, the spokesperson noted in an email to GeneraitonHub.

Southern CEO Tom Fanning said during a June appearance in Washington, D.C., that he was disappointed that DOE has changed the “terms and conditions” for final approval of the federal loan guarantee following the Solyndra solar bankruptcy.

“This is a corporate financed project” that DOE is trying to treat as a “project financing” venture, Fanning said following his speech June 17. Subsidiary Georgia Power owns almost 46% of the $14bn nuclear plant construction project and is about halfway through the 10-year project.

A tentative agreement was reached between the company and DOE during the first term of the Obama administration. Southern continues to hope that a final agreement will be reached with DOE – although it says the U.S. loan guarantee is not critical.

Loan guarantees were developed to provide an incentive for new nuclear development in the U.S. “We are committed to financing options that will serve the best interests of our customers, and – as long as the terms and conditions of DOE loan guarantees serve those interests – we will continue to pursue that option,” the Southern spokesperson said.

It’s important to note that, in 2012, Southern financed $4.3bn at an average rate of approximately 2.8% with an average life of 18 years. “Securing a loan guarantee is not a requirement to complete the construction of Vogtle 3 and 4,” the Southern spokesperson said.

Georgia Power and the other owners continue to wrestle with some contract cost and schedule issues at the Vogtle project.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.