On Monday, the U.S. Energy Association hosted Peter Davidson, Executive Director of the DOE Loan Program Office (LPO) at an event called, simply: “USDOE Loan Programs Update.” TCS staff was on hand to grill Mr. Davidson about the decision to continue with the ongoing negotiations with Southern Company for an $8.33 billion loan guarantee for the troubled Vogtle Project, especially when the company has claimed it could get private financing. His response included this statement: “…the companies are very eager to continue to receive the government loan.” 

It’s not news that companies are eager to get government-backed financing. It’s like getting your parents to co-sign your mortgage – because the bank doesn’t trust you because your credit rating stinks. This is a good analogy for Southern Company. On Thursday, Southern Company stock hit a 52-week low of $40.03, the fifth time in the last three months the stock has hit a new 52-week low, pointing to a downtrend, continuing the 6-month slide for the company.

The construction of Vogtle reactors 3&4 continues to experience cost overruns and schedule delays. Each of the project owners’ credit ratings has been downgraded or their credit outlook changed to ‘Negative’ by one of the top financial ratings agencies. Even though investors have been turned off from Southern Company in the last six months, DOE has extended their offer for the loan guarantees twice during this time.

In 2008, Plant Vogtle reactors 3&4 cost was $14.3 billion and commercial operations would begin in 2016 and 2017, respectively. Today, the estimate of the project’s cost has reached $15.5 billion and the reactors are projected to come online in 2018 and 2019, respectively. Pending lawsuits between project partners and the construction contractors could push the project’s final costs even higher to $16.5 billion.

“Stay tuned” said Davidson at this week’s event. Why are they even still talking about this?