The federal government agreed Tuesday to stand behind loans that will help build two new nuclear reactors at Plant Vogtle.
President Obama announced the $8.33 billion in loan guarantees for Southern Nuclear's plan to add two new reactors to the plant in Burke County.
"This will be the first new nuclear power plant to break ground in America in decades," U.S. Energy Secretary Steven Chu said later during a White House conference call with reporters.
The conditional commitment is for loans that would apply to Vogtle Units 3 and 4, which would go online in 2016 and 2017. The project cost has been estimated at $14.5 billion.
Under the loan-guarantee program, the government promises to assume a company's debt if the company defaults. Because of the huge -- and potentially varying -- costs of new nuclear reactors, the loan guarantees make it easier for energy companies to undertake such projects.
"The project we're announcing today will create up to 3,500 construction jobs and, once the reactors become operational, will sustain about 800 permanent jobs," Chu said, adding his hopes that Tuesday's announcement will be the first of many such awards.
In all, the Energy Department received 19 applications seeking more than $120 billion in financing under the federal Energy Policy Act of 2005, which is designed to accelerate development of energy programs.
The program -- with only $18.5 billion appropriated by Congress for nuclear projects -- has enough current funding to assist two or three applicants, with an additional $36 billion being proposed by the Obama administration for loan guarantees.
The Vogtle project, which includes two new 1,100-megawatt reactors, stood out as the most likely recipient for the nation's first award, Chu said.
"I think they were further along in the process; they had already begun some site preparation; and their partners are companies in good standing," he said. "We felt simply that this was a project that had a low probability of default."
Southern Nuclear, owned by Southern Co., operates the plant for its co-owners, including Georgia Power Co., which owns 45.7 percent of Vogtle. The remaining ownership is split among Oglethorpe Power Corp., the Municipal Electric Authority of Georgia and Dalton Utilities.
Southern Co. CEO David Ratcliffe said in a news release that Georgia Power has 90 days to accept the conditional commitment. The company's borrowings would not exceed $3.4 billion, with the remainder of the loan guarantees available to the other owners of the plant.
Environmental groups expressed concerns over the loan guarantee program and the risks it could pose to taxpayers.
"The only thing today's announcement does is shift risk from the company and financial institutions to the back of the taxpayer," said Tom Clements, the Southeast nuclear campaign coordinator for Friends of the Earth. "The risk of spiraling costs, failure to secure licenses or project abandonment stays the same, and the bet on new reactors at the Vogtle site still remains uncertain."
Sara Barczak of the Southern Alliance for Clean Energy echoed similar concerns.
"We are very disappointed with the administration putting the U.S. taxpayer on the hook for the risky, costly proposed new Vogtle reactors when cleaner, safer more affordable choices exist, including efficiency and bio-power, wind and solar that create good jobs that keep dollars here in Georgia's communities," Barczak said.
Despite criticisms that past generations of nuclear projects have faced delays and cost overruns, Chu expressed confidence in new regulatory programs -- and new technology -- that will help keep new projects such as Vogtle on time and within budget.
"We are doing a lot to help streamline many things regarding construction of these power plants," he said. "The NRC is also working to speed the regulatory process and approval."
The Nuclear Regulatory Commission's new "combined operating license" program -- which Plant Vogtle will be among the first to navigate -- includes safeguards that could avoid some of the costly delays that plagued reactors in the 1970s and 1980s.
The program simultaneously authorizes construction and operation of the reactors, and replaces a system in which utility companies worked for years to obtain a license, then would become mired in changing regulations in their quest for a second license to operate a plant.
"Across the board we are looking at ways we can build these things on time and on budget," Chu said.
He also expressed confidence in new technology -- and specifically in the AP1000 reactors designed by Westinghouse that will be used at Vogtle and other new projects.
A unique feature of the reactors is a passive safety system that uses natural forces such as gravity and convection. In an accident, the plant is designed to shut down without operator action and without power or pumps. Emergency cooling water tanks 100 feet above the ground will hold more than 6 million pounds of water.
The new reactors also will have fewer pumps and tanks, miles less electrical cable and barely half the valves of their predecessors. They are designed to be easier to assemble and operate, partly because of a modular design that incorporates components from many locations.
Other finalists in contention for existing loan guarantee program allocations are South Carolina Electric & Gas Co.'s V.C. Summer project in South Carolina and two others in Texas and Maryland.
Chu said Tuesday that other announcements of loan guarantees could be made soon.
"We're working with the applicants to get through them as fast as we can," he said. "One can't say, with the complexity of these agreements, exactly when the next announcement will be. But we're working very hard."