US to approve $6.5 billion in federal loan guarantees for Georgia nuclear plant

The energy department is set to approve $6.5 billion in federal loan guarantees for the first US nuclear power plant to be built from scratch in over three decades, Associated Press reports.

The final approval of the deal from energy secretary Earnest Moniz is expected in a speech today, a day ahead of his scheduled visit date to the $14 billion Vogtle nuclear plant now under construction in eastern Georgia.

Three government officials familiar with the deal confirmed its details yesterday, but asked not to be identified as the deal had not been made public, AP said.

The plant is being built by Atlanta-based Southern Co, in association with a number of partners, about 30 miles southeast of Augusta, Georgia. The project has acquired a test case status as regards the industry's capability to set up nuclear plants without the endemic delays and cost overruns that bedevilled earlier rounds of building in the 1970s. The original cost outlay was projected at around $14 billion, but government monitors had warned the final cost was likely to be higher.

In 2010, the energy department tentatively approved an $8.3 billion loan guarantee for the project, as part of president Barack Obama's commitment towards the expansion of nuclear power and other energy sources.

The guarantees would go to Georgia Power, a subsidiary of the Southern Company, 45.7 per cent owner of the Vogtle nuclear project, and the Oglethorpe Power Corporation, a non-profit consortium of smaller companies, which owns 30 per cent, The New York Times reports. A third company, MEAG, a consortium of municipalities, which owns 22.7 per cent, would get a guarantee of $1.8 billion soon, the report quoted government officials as saying.

Nuclear loan guarantees have, however, not quite been able to live up to plans. Congress authorised $17.5 billion in lending authority in 2005, on expectations a nuclear renaissance was in the offing, and that it would require credit help from Washington. In 2011, the guarantees were hiked by $36 billion on bipartisan support.

But the construction boom never materialised. The energy department offered a $2 billion guarantee to Areva, a European nuclear company, for building an enrichment plant in Eagle Rock, Idaho, but the company later dropped the construction plans. Another company, USEC, is seeking a $2 billion loan guarantee for the commercialisation of a new enrichment technology it is demonstrating in Piketon, Ohio, but has not yet been able to convince the department that it was a good investment.