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Southern Company and former DOE counsel defend loan guarantees as critical to building Vogtle and grid projects
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Summary
Southern Company’s treasury chief told a House Science Subcommittee that DOE loan guarantees helped reduce financing costs for Plant Vogtle and that similar assistance can accelerate transmission and other grid investments needed for rising electricity demand.
John Haygood, head of treasury at Southern Company, told the House Science Subcommittee that the Department of Energy’s loan programs were instrumental in financing Plant Vogtle Units 3 and 4 and in supporting transmission and other grid projects that Southern Company is pursuing.
Haygood said the loans “helped mitigate capital markets risk, saved our customers over half a billion dollars, and contributed to America’s energy security.” He told the subcommittee Southern Company first sought LPO assistance during the Bush administration and continued work through subsequent administrations, citing Plant Vogtle as an example in which LPO financing and low-cost capital reduced overall financing expenses amid contractor bankruptcy and COVID-19 delays.
Haygood and other witnesses described additional ways LPO financing can affect customers and projects. He said LPO-backed financing can lower the cost of capital for long-lead infrastructure, reduce pressure on rates when utilities use construction work in progress (CWIP) recovery, and accelerate transmission upgrades that move renewable energy from generation areas to load centers. Representative Nancy Mace (questioning member) and others asked how LPO conditional commitments and final loan guarantees affect projects that are dependent on that financing.
Sam Walsh said LPO has access to DOE technical experts and national laboratories to assess technology risk on advanced projects — a resource commercial banks typically do not have — and that this capability is valuable for first-of-a-kind projects such as advanced nuclear. Members and witnesses discussed how LPO’s financing can derisk a technology class, making it easier for private finance to follow, and how that can expand domestic supply chains and workforce development.
Ending: Industry witnesses urged continued use of LPO tools for capital-intensive projects such as nuclear units, transmission and storage. Committee members pressed for oversight and clarified that conditional commitments do not guarantee a loan will close absent the project meeting technical and financial milestones.
