WASHINGTON (Reuters) - The Obama administration will announce that it has finalized $6.5 billion in loan aid to build the country’s first new nuclear reactors in more than 30 years, sources said on Tuesday.
The announcement, expected on Wednesday, follows four years of wrangling between the government and energy company Southern Co over the terms of the loan agreement, which was initially offered in February 2010 to support the construction of two new reactors at the Vogtle nuclear plant in Georgia.
The conditional agreement totaling $8.3 billion provided loan aid to Southern’s Georgia Power unit as well as project co-owners Oglethorpe Power and Municipal Electric Authority of Georgia (MEAG).
While loan assistance to Georgia Power and Oglethorpe will be finalized Wednesday, the $1.8 billion loan guarantee to MEAG remains outstanding.
The Department of Energy said on Tuesday that U.S. Energy Secretary Ernest Moniz would make a major announcement about the administration’s “all of the above” energy strategy and a “path toward a low carbon energy future” at the National Press Club on Wednesday at 12:30 p.m. EST.
The department declined to comment about the specifics of the announcement.
In 2010, the loan deal for Southern was expected to be the opening salvo in an emerging U.S. nuclear power renaissance. But record low natural gas prices, tepid growth in electricity demand and the lack of a federal cap on carbon emissions have kept any such revival at bay.
Now only a few new reactors are projected to be built and Vogtle is the only nuclear power plant to receive a federal loan guarantee so far.
Southern’s drive for a loan guarantee also got caught up in the political fallout from the high profile 2011 bankruptcy of solar panel maker Solyndra, which had received a federal loan guarantee.
The Obama administration added requirements after Solyndra’s collapse that complicated negotiations over Southern’s loan deal, which was initially expected to be finalized in 2012.
Southern owns 45.7 percent of the Vogtle expansion project, making it the project’s largest stakeholder.
When contacted regarding the announcement on the loan guarantee, Southern reiterated comments made in January by its CEO Tom Fanning during a call with analysts after its quarterly earnings that the company had delivered its documents to the department.
“Since that time, the company has been working through a series of steps that must be taken prior to closing,” a Southern spokesman said.
Southern’s Georgia Power unit is leading a utility consortium that is building two 1,100-megawatt Westinghouse AP1000 reactors at a projected cost of more than $14 billion.
Southern Co shares closed up 2 cents at $42.54 in Tuesday trading on the New York Stock Exchange.
Additional reporting by Valerie Volcovici in Washington and Eileen O'Grady in Houston; editing by Andre Grenon, Ros Krasny and G Crosse