Energy Department offers extra $3.7 billion loan backing for Vogtle

The Department of Energy has given initial approval for $3.7 billion in additional loan guarantees to help cover more cost overruns at the troubled Plant Vogtle project.

The U.S. agency said Friday it gave conditional approval of loan guarantees for the project to add two new nuclear reactors at the plant near Augusta.

The commitments include $1.67 billion to Georgia Power, which owns almost half of the plant; $1.6 billion to Oglethorpe Power and $415 million to subsidiaries of the Municipal Electric Authority of Georgia, the project’s other two large partners. A sliver is also owned by the city of Dalton.

“Advanced nuclear energy projects like Vogtle are the kind of important energy infrastructure projects that support a reliable and resilient grid, promote economic growth, and strengthen our energy and national security,” said U.S. Secretary of Energy Rick Perry.

The guarantees are in addition to $8.3 billion in earlier Energy Department loan guarantees for Plant Vogtle. The project was billions over budget and years behind schedule when the bankruptcy earlier this year of its key contractor, Westinghouse Electric, threw it into turmoil and caused costs to balloon even more.

Atlanta-based Georgia Power, the main Vogtle partner, told state utility regulators last month that its construction costs to finish the plant will rise by about $4.5 billion, boosting its total to $8.8 billion.

The ultimate price, including spending by all project partners and financing costs, could go above $26 billion, based on Georgia Power’s estimates for its share. That’s about double the original projected cost when the project was started in 2009.

The Georgia Public Service Commission is expected to make a decision in February on whether to continue construction, but most commissioners have already signalled they don’t want to abandon it.

After the Westinghouse bankruptcy, partners in a similar unfinished project in South Carolina decided to shut it down because of rising costs and risks due to the bankruptcy, and slowing demand for electricity.