Southern Co (SO.N) Chairman Tom Fanning said on Wednesday that the company is working with the U.S. Energy Department to finalize an $8.3 billion loan guarantee for its two-reactor expansion at the Vogtle nuclear plant in Georgia, the first new reactors to be built in three decades.
Southern's Georgia Power unit is leading a utility consortium that is building two 1,100-megawatt Westinghouse AP1000 reactors at a projected cost exceeding $14 billion.
"After extensive negotiations on loan guarantees, Georgia power has delivered its documents to DOE," Fanning said on a call with analysts.
While a series of steps remain to close the federal loan, Fanning said the guarantee represents about $200 million in value to Georgia Power customers who are already paying early costs for the Vogtle units. The new reactors won't begin producing power until late 2017 and late 2018, a year later than initially planned.
Federal loan guarantees had been viewed as critical to the once-predicted revival of U.S. nuclear construction due to the regulatory risk and high cost of nuclear construction.
Now, only a few new reactors are expected to be built due to lower natural gas prices, anemic growth in electricity demand and the lack of restrictions on emissions of carbon dioxide.
The only new U.S. reactors under construction are being built by the Georgia Power consortium and SCANA Corp (SCG.N), which is building two reactors in South Carolina.
The Vogtle loan guarantee, announced in 2010, was expected to be finalized in 2012, but negotiations bogged down over terms and costs and were complicated by DOE requirements added after the much-publicized bankruptcy in 2011 of solar panel maker Solyndra which had received loan guarantees.
Fanning said progress on Vogtle "is terrific."
He said construction is also going well at Mississippi Power's coal-gasification power plant in Kemper County, Mississippi.
Southern added $40 million to bolster its contingency funds for the Kemper plant as its total price tag is now above $5.2 billion, according to a filing with regulators made Tuesday.
Fanning said Kemper's gas turbines produced electricity in January using natural gas from its new pipeline as workers continue to install gasifier equipment which will eventually convert coal into synthesis gas to fuel the plant.
"We will move towards testing of the gasifier in the second quarter," Fanning said.
Source: Reuters
