UPDATE:Southern CEO Sees 1Q Preliminary Nuclear Loan Guarantee
January 27 2010 - 9:57AM
Dow Jones News
Southern Co. (SO) expects to receive a conditional loan
guarantee from the Department of Energy within the first quarter to
build two new reactors at the Vogtle nuclear power plant in
Georgia, the company's chief executive said Wednesday.
A preliminary loan guarantee for the project is likely to be
finalized "within the next couple of months," said David Ratcliffe,
Southern's chairman, president and chief executive, in an
interview.
Ratcliffe declined to disclose the amount of the conditional
guarantee but said the company has made "significant progress" in
negotiating the terms of the guarantee with the Department of
Energy. The U.S. government hasn't yet issued any preliminary loan
guarantees for new nuclear power plants.
The government aims to foster a buildout of new nuclear power
plants with its loan guarantee program. Under the program, the
government promises to assume the companies' debt obligations if
they default on loans for the projects. Because new nuclear
reactors are so costly, the loan guarantees are often a key step
for energy companies that plan to undertake such projects.
The Vogtle project, estimated to cost $14.5 billion, received an
early site permit from the U.S. Nuclear Regulatory Commission last
year. The permit has allowed the company to begin construction at
the Vogtle site.
Southern also filed for a combined operating license to build
and operate the 1,100-megawatt reactors, which the company has said
could enter service in 2016 and 2017. The government won't award
final loan guarantees for new nuclear power plants until the
projects have received combined operating licenses, which aren't
likely to be granted before 2011.
Congress has so far appropriated $18.5 billion for the nuclear
loan guarantee program, enough funding for only a handful of
projects. As of May, Southern, Scana Corp. (SCG), Constellation
Energy Group (CEG) and NRG Energy Inc. (NRG) were the four
companies with projects still in the running for federal loan
backing.
Southern shares were down 0.5% to $32.81 in recent premarket
action.
-By Christine Buurma, Dow Jones Newswires; 212-416-2143;
christine.buurma@dowjones.com
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