First piece of Vogtle financing

01 March 2010

A Georgia state firm with a significant stake in two new US reactors has announced plans to finance its investment.


Vogtle - new reactors
Two new reactors would add 2204 MWe
in capacity to the power plant

With a 22.7% stake in the existing two nuclear power reactors at Vogtle, the Municipal Electricity Authority of Georgia (MEAG) needs to raise significant sums to take the same portion ownership in two new units at the site.


Preliminary site work has already started for the two Westinghouse AP1000 units, slated to begin operation in 2016 and 2017 subject to regulatory processes already underway.


MEAG has announced that $2.48 billion of its commitment will come from the issuance of Build America Bonds with the remaining $54 million coming from tax exempt bonds, both of which are only available to publicly owned companies.


MEAG said these sums would "fund a significant portion" of the capital expenditure for Vogtle 3 and 4. An estimated cost for the new units of $14 billion would put MEAG's total investment at around $3.18 billion, but the company did not reveal how it would fund the remaining $700 million.


The firm's announcement comes two weeks after the US Department of Energy (DoE) said it would support the Vogtle project through some $8.3 billion in loan guarantees. That figure was split between all Vogtle's investors, and MEAG was granted $1.8 billion of guarantees.


Announcements are expected soon from the other major partners: Georgia Power with 45.7% is to receive $3.07 billion in guarantees to help it finance $6.4 billion in expenditure. Oglethorpe Power with 30.0% should receive $3.07 billion in guarantees to help it raise $4.2 billion. The remaining 1.6% share is held by the City of Dalton, which has no DoE support for its stake of about $360 million.


The loan guarantees offered by the DoE mean that the federal government will cover certain additional capital costs if project execution is delayed by factors outside the usual commercial realm. With the DoE as guarantor for large sums, investors in new reactors should find it easier to raise private capital for the sometimes prohibitive up-front costs associated with nuclear power.


As a state-owned company in a regulated state, MEAG is well positioned. The Georgia Public Service Commission has agreed electricity rate increases to provide additional cash flow to cover construction costs. And MEAG is also eligible to issue Build America Bonds, which are a part of the US stimulus program meant to speed up public sector projects.
Researched and written
by World Nuclear News