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CyberB0B39 writes: "The Department of Energy is set to approve $6.5B for a Georgia nuclear power plant, the first such plant in more than 3 decades. While other nuclear plants are shutting down due to competition from natural gas, Atlanta-based Southern Company is forging ahead with its planned construction of the plant."
[ED Note: "For those that are wondering, the new nuclear plant will be based on the AP1000 design by Westinghouse Electric Company LLC, a company based in Pittsburgh, PA and a subsidiary of Toshiba."]
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DOE to OK $6.5B for Georgia Nuclear Plant
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(Score: 5, Informative) by wjwlsn on Sunday February 23 2014, @02:50AM
Loan guarantees are not loans, but are mind of like insurance; they only pay out if the recipient defaults. Georgia Power will still have to borrow that money elsewhere and pay it back themselves. The point of the loan guarantee is to help the borrower obtain the loans it needs by soaking up some of the credit risk. In addition, the nuclear loan guarantees from DOE are structured such that the utility actually pays the credit subsidy costs. The loan guarantee does not pay out unless GP defaults.
The issuance of this loan guarantee does not mean that $6.5B going out the door, so you can't really say that the money could be used elsewhere. It's not really money yet, just the promise of money if something unexpected happens in the future.
I am a traveler of both time and space. Duh.
(Score: 4, Interesting) by Appalbarry on Sunday February 23 2014, @02:57AM
I'll bite: if there's solid business case for GP building this project, why do they need government guarantees to get the money to do it?
If the Market won't lend them money based just on the business's likelihood of profit, then I have to assume there's some kind of significant risk that we're not being told about.
(Score: 5, Informative) by wjwlsn on Sunday February 23 2014, @03:15AM
Moody's had this to say about it last year, before the loan guarantees were approved:
"In the event the two parties cannot come to agreement on the final terms and conditions of a guarantee, Georgia Power would continue to finance the plant as it has done thus far with its own capital market financings. We would view this situation as only a slight credit negative as interest costs would be marginally higher than DOE guaranteed debt, although this is mitigated over the near term by the low aggregate level of interest rates, as well as by Georgia Power’s strong credit quality and capital markets access. We note that the South Carolina Electric & Gas has proceeded with a nearly identical nuclear construction project without a DOE loan guarantee."
I'm no finance guy, but to me, this says that GP not getting the loan guarantees wouldn't be a show-stopper. With the loan guarantees, they'll get marginally better interest rates.
PDF linky - http://matchbin-assets.s3.amazonaws.com/public/sit es/274/assets/9O21_Moodys_report_on_Vogtle_July_11 _2013.pdf [amazonaws.com]
I am a traveler of both time and space. Duh.
(Score: 0) by Anonymous Coward on Sunday February 23 2014, @05:48PM
Awesome; thanks for the info.
(Score: 0) by Anonymous Coward on Sunday February 23 2014, @03:42AM
I would assume the biggest risk for anything nuclear would be political.