Federal Government Backs 6.5 Billion Dollars in Loans for Plant Vogtle
By Glenn Carroll, Special to The Atlanta Progressive News
(APN) ATLANTA — On February 20, 2014, U.S. Secretary of Energy Ernest Moniz came down to Georgia to sign off on giving 6.5 billion in taxpayer dollars to Southern Company, its subsidiary
Georgia Power, and Oglethorpe Power to build two nuclear reactors at Plant Vogtle near Augusta.
MEAG (Municipal Electric Association of Georgia), 22.7% owner of Vogtle is seeking 1.8 billion dollars in a separate loan guarantee and has a July closure deadline.
The terms of the loan are secret, but Southern Company has divulged to the media that it has put up collateral for the massive loan — namely, the unfinished Vogtle 3 and 4 reactors.
The relatively obscure loan guarantee program goes like this: Wall Street wouldn’t underwrite risky nuclear energy development, so erstwhile President George W. Bush persuaded U.S. Congress to pass a bill allowing the U.S. Department of Energy (DOE) to give “loan guarantees” to jump start construction of a new generation of nuclear reactors. These loan guarantees are direct payouts from the U.S. Treasury.
Troublingly, there is an historic 50 percent default rate in the loan guarantee program.
As the so-called “Nuclear Renaissance,” which was touted in the late Bush years, shriveled, Southern Company has become one of only two utilities in the country even attempting new reactors, and Southern Company became the sole candidate requesting loan guarantees.
Southern Company’s loan was first announced by President Barack Obama in 2010. Four years passed, in which Vogtle, less than half-finished, has gone 1.6 billion dollars over budget and 21
months behind schedule.
U.S. citizens have sent literally tens of thousands of letters and petitions to Obama and DOE demanding that the loan guarantees be withdrawn.
Southern Company has said repeatedly that it does not even need the loan guarantees.
The loan had been hung up for so long, reportedly, because Southern Company balked at the terms which amounted to an unbelievably low interest rate, an upfront “credit subsidy fee” of only 0.5-1.5 percent.
However, because the loan guarantee terms are secret, it is not known if Southern Company actually ended up paying anything at all to use taxpayer money.
We do know that DOE gave weight to Southern Company’s “captive ratepayers” and the Georgia Public Service Commission’s generously allowing electric customers to be taxed up front for Vogtle construction costs in a financing mechanism called Construction Work in Progress (CWIP).
Sara Barczak, high-risk energy choices program director for Southern Alliance for Clean Energy, calls it “corporate welfare for one of the largest power companies in the country.”
Recent analysis of Georgia Power annual report data shows that Georgia Power is not even using 46 percent of its electrical production capacity, has suffered flat sales for ten years years, and has posted declining sales the past three years.
This gives rise to real concern whether Southern Company, Georgia Power, Oglethorpe Power and MEAG can sell enough electricity to pay back their hefty loan from U.S. taxpayers.
“This loan guarantee is a sweetheart deal for the utilities building Plant Vogtle. Essentially, they’re gambling with every U.S. taxpayer’s dollars to unnecessarily expand one plant here in Georgia.”
Becky Rafter, executive director of Georgia Women’s Action for New Directions, said.
Glenn Carroll is coordinator of Nuclear Watch South based in Atlanta. http://www.nuclearwatchsouth.org