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MEAG creating three subsidiaries for Vogtle nuclear funding

The arguments in the complaint, along with general opposition to nuclear plants, include claims that Georgia Power does not really need the federal funding or the project, as well as that the project is not needed since some of the electricity would be sold outside the state as part of the MEAG proposals.

Ray Lightner 

http://www.griffindailynews.com/news/article_d639dc1e-910b-11e3-bcdd-001a4bcf6878.html

The Municipal Electric Authority of Georgia (MEAG) is asking the Nuclear Regulatory Commission to allow it to create up to three wholly owned subsidiaries to help MEAG fund the expansion of the Vogtle nuclear power plant.

The expansion, adding reactors 3 and 4, has already been approved, with MEAG as one of the licensed co-owners, along with Southern Nuclear Operating Company, Georgia Power Company, Oglethorpe Power Corporation and the City of Dalton. MEAG owns 22.7 percent, Oglethorp Power owns 30 percent, City of Dalton owns 1.6 percent and Georgia Power owns the rest.

Southern Nuclear Operating Company operates Vogtle and is making the request, which would allow MEAG to create the three subsidiaries, dividing up MEAG’s 22.7 percent share of the electricity generated by the two new reactors.

The cities of Griffin, Barnesville, Thomaston and Jackson are among the 48 cities and one county across the state that make up MEAG. The request is being made “To facilitate proposed additional, independent financing for one or more of these projects, some or all of MEAG Power’s 22.7 percent undivided ownership interest in VEGP (Vogtle Electric Generating Plant) Units 3 and 4 must be transferred to one or more wholly-owned special purpose entities,” each to still be owned by MEAG, and each named after the already approved projects, M, J and P.

According MEAG Senior Project Manager Paul Warfel, Griffin, Barnesville and Thomaston are part of Projects M, J and P and Jackson is a part of Projects J and P only. Warfel said the request “makes a technical change in the ownership structure for MEAG, but functionally, does not change the agreement that was previously in place with our participants.”

For each of the three projects, MEAG Power has entered into long term “cost passthrough” contracts with the counterparties or offtakers, who are entitled to their proportionate share of any electricity produced by Vogtle Units 3 and 4 and are obligated to pay for their proportionate share of the costs of constructing and operating those units, including funding for decommissioning.

According to a complaint last week by Nuclear Watch South along with a dozen other anti-nuclear organizations, Georgia Power has raised almost $1.5 billion through a Construction Work In Progress (CWIP) fee. The complaint asks the federal government to not approve the request and not approve the $8.3 billion in federal loan guarantees for the project.

Georgia Power customers have been paying for the project up front with the CWIP fee added to their monthly bills. MEAG has not done that and leaves it up their participants to set their own rates, Warfel said.

The arguments in the complaint, along with general opposition to nuclear plants, include claims that Georgia Power does not really need the federal funding or the project, as well as that the project is not needed since some of the electricity would be sold outside the state as part of the MEAG proposals.

Two of the three projects each include an out of state electric producer with the output and services of Project J and Project P to be surplus initially to the requirements of MEAG participants for the first 20 years. Project M comprises 33.870736 percent of MEAG Power’s 22.7 percent ownership interest in Vogtle 3 and 4 (or 7.6886571 percent of the undivided interest) with 29 MEAG offtakers/partners including Griffin, Barnesville and Thomaston.

Project J comprises 41.174636 percent of MEAG Power’s ownership interest in Vogtle 3 and 4 (or 9.3466423 percent of the undivided interest). For the first 20 years, the offtaker will be JEA, a publicly owned electric, water and wastewater (sewer) utility located in Jacksonville, Fla.

Project P comprises 24.954628 percent of MEAG Power’s ownership interest in Vogtle 3 and 4 (or 5.6647006 percent of the undivided interest). As with Project J, the output and services of Project P will be surplus initially, so for the first 20 years of commercial operation of Unit 3 and 4, the offtaker will be PowerSouth Energy Cooperative, a rural electric generation and transmission cooperative located in Andalusia, Alabama.

After the first 20 years of operation for both Projects J and P, the offtakers are 39 MEAG participants, including Griffin, Barnesville, Jackson and Thomaston.

MEAG Power already may purchase from, sell to or exchange with other bulk electric suppliers additional capacity and energy in order to enhance the MEAG Participants’ bulk power supply. From time to time, Griffin Power has purchased or sold off bulk electricity in one-time agreements with other providers, both in and out of the state and in and out of MEAG.

The three project companies, and the projects also will be funded by bonds already issued under MEAG’s statutory authority to issue revenue bonds to pay for the costs associated with each of its VEGP Units 3 and 4 projects, including costs incurred by the project companies. To date, MEAG Power has already issued bonds for each of the three projects that accounts for 70 percent of the three projects’ originally anticipated costs for Vogtle 3 and 4, according to the request.

Proceeds from these loans, MEAG explained in the request for the change in ownership structure, will augment the funding already obtained by MEAG Power, enhancing the funding available for construction of Vogtle 3 and 4. However, unlike the bond resolutions, the loans require a lien on the assets of each project that is financed with a Department of Energy-guaranteed loan.

To provide that lien “in a way that both is consistent with the existing project structure and provides clarity with respect to the available remedies in the event of any potential default,” MEAG Power explained, it created the three project companies, would transfer interest in the respective projects to the companies and execute the liens.

If one or more of these proposed transfers is not completed, according to the request, the associated ownership interest(s) would remain owned by MEAG Power and that existing MEAG Power project, along with the arrangements for funding the construction of that project, would remain unchanged.

The change in ownership structure, according to the request, “will have no effect on MEAG Power’s commitments to provide funding for the construction” from the proceeds of bonds that have already been issued, and have no effect on MEAG Power’s statutory authority to issue additional revenue bonds as needed to pay for the costs associated with each of the three projects.

And upon final payoff of any DOE-guaranteed loan, MEAG Power has agreed with the other Vogtle 3 and 4 owner participants that it will seek the Nuclear Regulatory Commission’s consent to transfer the license(s) back to MEAG Power. Accordingly, because the applicants expect MEAG Power to be the licensee at the time of eventual decommissioning, the application contemplates that MEAG retain responsibility for the nuclear decommissioning trust funds.

February 8, 2014 - Posted by | Uncategorized

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