Largest loan in DOE history goes to Southern Co. Will $26.5B lower electric bills?
The U.S. Department of Energy finalized a $26.5 billion loan to Southern Company, the parent company of Georgia Power and Alabama Power, making history as the largest loan package ever distributed by the DOE.
This comes two months after the largest power request in U.S. history was granted by the Georgia Public Service Commission, permitting 10 gigawatts of power to supply energy needs through 2031 for Georgia Power.
The controversial approval in December included 6 GW new battery storage plants and 4 GW of gas plant upgrades that was agreed to be paid off through 2045.
Wednesday’s announced, 30-year-term loan is expected to cover over 16 GW of electric grid power, the DOE news release says, with $20 billion going toward 200 projects in Alabama and Georgia, and the other $7 billion going to help save customers money between now and 2033, according to Southern Co.
Lawyer and Public Service Commission expert Jennifer Whitfield of the Southern Environmental Law Center said the customer savings aren’t set in stone and needs PSC involvement through a rate case or rate proceeding, ordering Georgia Power to pass savings to customers.
“The savings (the DOE) are referring to are related to Georgia Power and Alabama Power accessing cheaper debt,” she said. “That doesn’t mean that Alabama Power and Georgia Power are required to pass those savings to customers. It just means that they’re getting cheaper financing for their massive investments. But it doesn’t mean that customers will see the benefit of that, nor does it mean that it makes these massive investments in any way affordable. That’s an entirely separate question.”
Will the $7 billion lower customer bills?
The way Georgia Power’s debt is paid for is complicated.
When Georgia Power spends money on capital expenditures, about 40% is paid for with debt, and about 60% is paid for with equity, according to Whitfield.
“This agreement only deals with the debt side, and it makes the debt side of the ledger a little bit less expensive,” she said. “In order for the loan to have any meaningful impact on the affordability of this massive expansion, the commission would also have to deal with the fact that (customers) are paying astronomical amounts of profit and income taxes on about 56% of the financing, and this loan does nothing to resolve that. ”
How much does Southern Company need for power?
Wednesday, the Southern Company filed an 8K form as part of the DOE loan announcement. In it, the company projects about $50 billion in capital expenditures between now and 2030.
The form also details that, out of the $26.5 billion DOE loan, Georgia Power will receive $22.41 billion and Alabama Power will receive $4.08 billion.
“DOE is putting a lot of skin in the game to help finance these projects,” Whitfield said.
Two other DOE loans have been distributed to Georgia in the past seven years for nuclear power and an EV car manufacturing plant.
In 2024, a $6 billion DOE loan granted a lifeline for Rivian in Social Circle, Georgia, during the Biden administration. And in 2019 a $12 billion loan was granted for the clean energy, nuclear Plant Vogtle unit 3 and 4 project.
Data centers and climate consequences
Thursday, the Sierra Club released a statement saying the gas portion of Georgia Power’s 2030 build-out is to serve data centers. The club called the DOE’s loan to the Southern Company a “terrible investment” and a “corporate welfare handout to Big Tech.”
“Georgia Power is building the most expensive gas fleet in the nation in order to serve data centers, not for everyday Georgians,” Michael Hawthorne, campaign organizing strategist for the Sierra Club, said in the news release. “Spending our tax dollars to prop up a fading industry is a terrible investment. … These projects will damage our communities and our health. Instead of this corporate welfare handout to Big Tech companies, the Trump Administration should invest in lower-cost, lower-risk clean energy projects that serve the entire state.”
In September testimony, Georgia Power said they expect 90% of the 10GW power requests to go toward data centers. At the time, the power company sited $20 billion needed to cover expenditure costs
“The way that they are planning to power those data centers is a step back for customers’ bills and a step back for our climate,” Whitfield said. “The way that Georgia and Alabama have decided to lay the red carpet for data centers seems to remain incredibly problematic, not only because of environmental reasons, but the cost for this expansion are astronomical, and lowering the cost of debt doesn’t make this once-in-a-generation investment in fossil fuels affordable — it just changes the ledger a little bit on Southern Companies’ accounting side.”
Climate Power, a nonprofit organization for climate progress and accountability in politics, took the climate damage a step further by calling the loan from Secretary of Energy Chris Wright a gift to himself.
“Energy Secretary Wright is a crooked natural gas executive who has abused his position to kill off all the cleaner, cheaper competition to his own industry,” Climate Power senior adviser Jesse Lee said in a news release. “The result has been thousands of lost Georgia jobs and skyrocketing utility prices. Now suddenly he’s found billions of dollars to funnel to his own industry. Merry Christmas to Secretary Wright from Secretary Wright, and literally coal for everybody else.”
Where did the priority and DOE funding originate?
The DOE said in its announcement Wednesday that the loan was made possible by President Donald Trump’s Working Families’ Tax Cuts.
Wright thanked Trump for his executive order, Unleashing American Energy, that made the loan possible.
“The President has been clear: America must reverse the energy subtraction agenda of past administrations and add more reliable power generation to our electrical grid,” Wright said. “These loans will not only lower energy costs but also create thousands of jobs and increase grid reliability for the people of Georgia and Alabama.”
He said Southern Company is the first utility to work with the DOE and Trump administration this term.
%20Southern%20Chairman,%20President%20%26%20CEO%20Chris%20Womack,%20Department%20of%20Energy%20Secretary%20Chris%20Wright%20.jpg "(L-R) Southern Chairman, President & CEO Chris Womack, Department of Energy Secretary Chris Wright .jpg")
Southern Company president and CEO Chris Womack said this is an extraordinary investment that will support the transformative growth in the company.
“These loans will help lower the cost of investments in our grid that will enhance reliability and resilience for the benefit of our customers,” Womack said.
