Southern Company subsidiary, DOE finalize Vogtle nuclear project loan guarantees
U.S. Secretary of Energy Dr. Ernest Moniz joined Southern Company leaders in a ceremony at the site of the Plant Vogtle units 3 and 4 nuclear expansion project in Georgia to announce that subsidiary Georgia Power has secured approximately $3.46 billion in loan guarantees from the U.S. Department of Energy (DOE) toward the construction of the project. The nuclear loan guarantees are expected to provide Georgia Power customers approximately $225 million to $250 million of present-value benefits.
"Southern Company supports a national energy policy based on a full portfolio of energy resources," said Southern Company Chairman, President and CEO Thomas A. Fanning. "Our partnership with the Department of Energy is an important step in moving the U.S. nuclear industry forward."
The Vogtle 3 and 4 project is the first U.S. nuclear project to receive funding through the DOE program designed to encourage the development of new nuclear in the U.S.
"We see ourselves as one part of a team of multiple parts of the private sector and governments needed to see major projects succeed," said Sec. Moniz during the ceremony. "This energy infrastructure buildout is not only for Georgia, not only for the United States, but for the world."
The two new nuclear units are under construction at Plant Vogtle near Waynesboro, Ga., where two existing nuclear units have been in operation since the late 1980s. The new units, using state-of-the-art AP1000 technology, are among the first new nuclear units being built in the U.S. in 30 years. The addition of the new units will make Plant Vogtle the only four-unit nuclear facility in the country.
"The Vogtle project is one of the first new nuclear power plants in a generation of Americans," Fanning added. "It is a carbon-free source of baseload generation necessary to create American energy security. Loan guarantees are enhancing the benefits to customers by lowering financing costs."
Under the terms of the agreement, total guaranteed borrowings will be the lesser of 70 percent of the company's eligible projected costs or approximately $3.46 billion and will be funded by the Federal Financing Bank. Georgia Power received an initial draw of $1 billion and future draws may occur as often as quarterly. The loan guarantees apply to borrowings related to the construction of Vogtle units 3 and 4, and any guaranteed borrowings will be full recourse to Georgia Power and secured by a first priority lien on the company's 45.7 percent ownership interest in the two new units.
Along with Georgia Power's portion of the two 1,100-megawatt reactors, the remaining ownership is split among Oglethorpe Power Corporation, the Municipal Electric Authority of Georgia (MEAG Power) and Dalton Utilities. Georgia Power's share of costs is currently projected at approximately $6.8 billion, which includes approximately $2 billion of financing costs to be collected during construction.
The construction of Vogtle units 3 and 4 represents a multi-billion dollar capital investment in Georgia. It is the largest job-producing project in the state, employing approximately 5,000 people during peak construction and creating 800 permanent jobs when the plant begins operating. Georgia Power is in a position to provide customers approximately $2 billion in potential benefits in the form of savings related to recovery of financing costs during construction, DOE loan guarantees, production tax credits, lower-than-forecast interest rates and lower-than-forecast commodity costs. Once complete, the new facility will produce enough clean, safe, reliable and affordable electricity to power 500,000 Georgia homes and businesses.
Vogtle units 3 and 4 are expected to begin commercial operation in 2017 and 2018, respectively. Positive progress continues on the facility and major milestones are being met. Procurement of all major components is complete and fabrication and delivery of these components are on track to meet project needs.
Southern Nuclear, a subsidiary of Southern Company, is overseeing the construction and will operate the two new units for Georgia Power and the other co-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.
Georgia Power is the largest subsidiary of Southern Company, one of the nation's largest generators of electricity. The company is an investor-owned, tax-paying utility with rates below the national average. Georgia Power serves 2.4 million customers in all but four of Georgia's 159 counties.
With 4.4 million customers and nearly 46,000 megawatts of generating capacity, Atlanta-based Southern Company (NYSE: SO) is the premier energy company serving the Southeast through its subsidiaries. A leading U.S. producer of clean, safe, reliable and affordable electricity, Southern Company owns electric utilities in four states and a growing competitive generation company, as well as fiber optics and wireless communications. Southern Company brands are known for energy innovation, excellent customer service, high reliability and retail electric prices that are below the national average. Southern Company and its subsidiaries are leading the nation's nuclear renaissance through the construction of the first new nuclear units to be built in a generation of Americans and are demonstrating their commitment to energy innovation through the development of a state-of-the-art coal gasification plant. Southern Company has been recognized by the U.S. Department of Defense and G.I. Jobs magazine as a top military employer and listed by DiversityInc as a top company for Blacks. The company received the 2012 Edison Award from the Edison Electric Institute for its leadership in new nuclear development, was named Electric Light & Power magazine's Utility of the Year for 2012 and is continually ranked among the top utilities in Fortune's annual World's Most Admired Electric and Gas Utility rankings. Visit our website at www.southerncompany.com.
Cautionary note regarding forward-looking statements
Certain information contained in this release is forward-looking information based on current expectations and plans that involve risks and uncertainties. Forward-looking information includes, among other things, statements concerning customer savings, projected cost and schedule for the completion of construction projects, benefits of ongoing construction projects and job creation. Southern Company cautions that there are certain factors that can cause actual results to differ materially from the forward-looking information that has been provided. The reader is cautioned not to put undue reliance on this forward-looking information, which is not a guarantee of future performance and is subject to a number of uncertainties and other factors, many of which are outside the control of Southern Company; accordingly, there can be no assurance that such suggested results will be realized. The following factors, in addition to those discussed in Southern Company's Annual Report on Form 10-K for the year ended December 31, 2012, and subsequent securities filings, could cause actual results to differ materially from management expectations as suggested by such forward-looking information: the impact of recent and future federal and state regulatory changes, as well as changes in application of existing laws and regulations; current and future litigation, regulatory investigations, proceedings, or inquiries; ability to control costs and avoid cost overruns during the development and construction of facilities, which include the development and construction of facilities with designs that have not been finalized or previously constructed, including the impact of factors such as labor costs and productivity, adverse weather conditions, shortages and inconsistent quality of equipment, materials, and labor, or contractor or supplier delay or non-performance under construction or other agreements, delays associated with start-up activities, including major equipment failure, system integration, and operations, and/or unforeseen engineering problems; ability to construct facilities in accordance with the requirements of permits and licenses and to satisfy any operational and environmental performance standards; state and federal rate regulations and the impact of future rate cases and negotiations, including rate actions relating to fuel and other cost recovery mechanisms; regulatory approvals and actions related to the Plant Vogtle expansion, including Georgia Public Service Commission approvals and Nuclear Regulatory Commission actions; the inherent risks involved in operating and constructing nuclear generating facilities, including environmental, health, regulatory, natural disaster, terrorism, and financial risks; the ability of counterparties of Georgia Power Company to make payments as and when due and to perform as required; interest rate fluctuations and financial market conditions and the results of financing efforts, including Southern Company's and Georgia Power Company's credit ratings; and the impacts of any potential U.S. credit rating downgrade or other sovereign financial issues, including impacts on interest rates, access to capital markets, impacts on currency exchange rates, counterparty performance, and the economy in general, as well as potential impacts on the benefits of U.S. Department of Energy loan guarantees. Southern Company expressly disclaims any obligation to update any forward-looking information.
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