ATLANTA (AP) — Two major utility companies building a nuclear power plant in Georgia will not pay a fee to secure billions of dollars in government-subsidized loans, records show.
The U.S. Department of Energy in February approved $6.5 billion in lending for Southern Co. subsidiary Georgia Power and Oglethorpe Power Corp without requiring them to pay a credit subsidy fee, which is supposed to compensate the government for the financial risk involved in making the loan. Together, those companies own a three-quarters stake in the two new reactors under construction at Plant Vogtle (VOH'-gohl) in eastern Georgia.
Greenwire first obtained the documents using the federal open records law.
Spokesmen for Southern Co. and Oglethorpe Power declined to comment on the fee structure. Officials at the Department of Energy say they used a standardized system to calculate the charges and did not give either company special treatment.
"These calculations are made using a standard methodology, consistent with guidelines followed across the federal government," DOE spokeswoman Dawn Selak said in a statement. "In this case, it should be noted that the Vogtle project sponsors are well-established, sizable companies that are already heavily invested and wholly committed to the project."
Initially, industry analysts and insiders viewed the loan guarantees as more critical to building efforts. Decades ago, utility companies were pushed to the brink of collapse when they built an earlier generation of nuclear plants. Building costs skyrocketed while the demand for electricity dropped. Some utility companies simply quit building, figuring it was cheaper to walk away than finish.
Given that history, it was unclear whether major lenders would fund a new generation of reactors given the historical odds that a project could go bust and loans would not be repaid. To ease such worries, Congress in 2005 authorized federal funding to help finance the projects, which shifted more of the risk from financiers to taxpayers.
Critics of the program have long argued it shifts risk from private investors onto taxpayers, since the government would have to absorb the cost of a loan default. Not charging a loan subsidy fee suggests that the government believes the projects are sure financial bets.
"If that's the case, then they don't need a loan guarantee because the loan guarantee is for projects that are deemed risky by traditional Wall Street investors," said Sara Barczak of the Southern Alliance for Clean Energy, which has been critical of the loan guarantee program.