By Alicia Mundy and Rebecca Smith
Federal officials have finalized a long-awaited loan guarantee
for $6.5 billion, which will help a utility in Georgia bring the
first new nuclear reactor in the U.S. on line in decades.
The deal announced Wednesday by Secretary of Energy Ernest
Moniz, signals White House support for nuclear power, though the
loan guarantee has been under review since 2010. "The president
wants to make clear that he sees nuclear energy as a part of his
carbon-free portfolio," said Mr. Moniz.
The nuclear reactors at the Vogtle plant site in Waynseboro,
located in eastern Georgia near Augusta, represent the "next
generation of reactors with passive safety features" that require
less operator intervention to keep them safe, Mr. Moniz said.
Some of Mr. Obama's allies in the environmental lobby, many of
whom support and contributed to his re-election in 2012, oppose the
use of nuclear energy because of safety concerns. Mr. Obama,
though, has included nuclear power as part of his "all of the
above" strategy that includes a wide mix of fuels.
The Union of Concerned Scientists and other groups such as
Friends of the Earth have expressed opposition to the loan
guarantees, concluding they subsidize the wrong kind of
electricity. They have become even more concerned since the March
2011 accident at the Fukushima Daiichi reactors in Japan.
The two new Vogtle reactors being built by Southern Co.'s
Georgia Power Co. unit will receive up to $8.3 billion in loans to
be furnished by the Federal Financing Bank. That includes $6.5
billion in federal loans and loan guarantees to two of the
companies that will own the plant, Georgia Power and Oglethorpe
Power Corp. A third partner, the Municipal Electric Authority of
Georgia, has won conditional approval to receive up to $1.8 billion
in federal assistance.
Southern spokesman Tim Leljedal said the company's borrowings
will be secured by the reactors.
Federal guarantees are new to the U.S. nuclear power industry.
In the last construction cycle, which hit the skids following the
nuclear accident at the Three Mile Island plant in Pennsylvania in
1979, utilities and their customers were exposed to cost overruns
and losses. This time around, the power industry lobbied for
guarantees so utilities could protect their customers and
shareholders from potential losses.
Few nuclear plants are under construction in the U.S. because
the economics have moved against the costly, lengthy projects.
Nuclear plants look expensive compared with gas-fired plants that
can burn inexpensive natural gas from the nation's many shale
plays.
In an earnings call last month, Southern Co. Chief Executive Tom
Fanning said the guarantees will save Georgia Power customers
approximately $200 million, by reducing the financing cost of the
twin reactors, in the works since 2006.
Georgia Power, in a report filed with Georgia utility regulators
in January, said its majority share of the project will cost $4.8
billion or $381 million more than the amount approved by state
regulators. State officials don't have to approve the sums spent by
the other utilities.
The two reactors are the first of a new generation of reactor
designs approved by the U.S. Nuclear Regulatory Commission.
Southern expects its first unit to be in service in early 2018 and
the second unit a year later. One other utility, Scana, is building
reactors of the same design type--called the Westinghouse AP
1000--in South Carolina.
Write to Alicia Mundy at alicia.mundy@wsj.com and Rebecca Smith
at rebecca.smith@wsj.com
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