DOE again extends loan guarantee offer deadline for Vogtle nuclear project

DOE again extends loan guarantee offer deadline for Vogtle nuclear project

By Matthew Bandyk

The U.S. Department of Energy has extended through the end of the year the deadline for its offer of an $8.3 billion loan guarantee for the two new reactors under construction at the Vogtle plant in Georgia. The DOE and Southern Co. have still not reached an agreement on the final terms of the loan guarantee, a company spokesman said Sept. 30.

While the offer was set to expire Sept. 30, the new deadline is Dec. 31. The DOE already has extended the deadline several times after having initially announced the loan guarantee in 2010. The program provides financing support for Vogtle units 3 and 4, the first new nuclear reactors to be built in the country in decades. They are being built by Southern subsidiary Georgia Power Co.

"There continues to be constructive dialogue in the loan guarantee negotiations between the company and the Department of Energy, and we are cautiously optimistic as we work toward the December deadline," Southern spokesman Tim Leljedal wrote in an email.

But Southern has been optimistic in the past, such as earlier this year when it was negotiating with the DOE around a June 30 deadline that was later extended.

The company has provided some hints as to what is delaying a final agreement. The DOE, in the wake of the controversy over loan guarantees for Solyndra, the solar cell manufacturer that later went bankrupt, tightened up its terms and conditions for the guarantee in a way that Southern felt was inappropriate for a company of its size and credit rating, according to Southern Chairman, President and CEO Thomas Fanning.

While he hoped the negotiations could settle this issue, Fanning said Southern would finish the project without the loan guarantee if the costs outweighed the benefits. "Of course the loan guarantee would benefit our customers, but we have to evaluate the marginal benefit to customers against the marginal cost if there are unreasonable terms and conditions," he said in an interview earlier this year.

The company has testified to state regulators that when combined with other factors such as interest rate savings, the loan guarantee could reduce the amount customers will have to pay for the plant's power after it is finished by about $2 billion.

The DOE public affairs office did not immediately respond to a request for comment.

Opponents of the new Vogtle reactors have criticized the loan guarantee offer as corporate welfare. One environmental group, the Southern Alliance for Clean Energy, has used Freedom of Information Act requests to reveal details of the loan guarantee. One finding revealed by the documents obtained by the group is that the credit subsidy fee — the amount of money the recipient of the guarantee must pay — was much lower for Georgia Power than for the other Vogtle partners participating in the loan guarantee, Oglethorpe Power Corp. and the Municipal Electric Authority of Georgia.

The Southern Alliance said the difference in the fees amounted to "favoritism" from the DOE toward Southern. Earlier this year, the group sued the agency in an attempt to force them to release more documents. That case was dismissed by the U.S. District Court for the District of Columbia in June.

But the group is still trying to uncover more information about the fee that the DOE is asking the utility to pay for the loan guarantee. The Southern Alliance recently filed two more Freedom of Information Act requests — one with the DOE, another with the White House Office of Management and Budget — to find out whether the agency plans to increase the credit subsidy fee, according to Turner Environmental Law Clinic Director Mindy Goldstein, an attorney representing the group.

In light of the Fukushima Dai-ichi nuclear disaster in Japan and the delays in the expected completion dates for Vogtle, "you would think the risk assessment would change," Goldstein said. Southern expects the new reactors to begin commercial operations in the fourth quarters of 2017 and 2018, a one-year delay from an earlier estimate.

The city of Dalton, Ga., also is an owner of the Vogtle project.