The Trump administration on Wednesday closed a $26.5 billion loan package for Southern Co. power projects in Georgia and Alabama amid rising concern about electricity price affordability and electricity-thirsty data centers.
The Energy Department said the financing — $22.4 billion to Georgia Power and about $4.1 billion to Alabama Power — represents the largest largest loan in the agency’s history, and is aimed at directly lowering consumer electricity costs and increasing grid reliability.
The financing, to be used for projects including new gas and hydropower, is expected to reduce the utility’s interest expenses by over $300 million per year, helping lower electricity costs for customers. The funding would also save customers $7 billion over the 30-year term of the loans, according to a statement from Southern.
The funding will also help build or upgrade more than 16 gigawatts of power, including 5 gigawatts of new gas generation, 6 gigawatts of additional nuclear capacity through upgrades, license renewals, hydropower modernization, battery energy storage systems and more than 1,300 miles (about 2,100 kilometers) of transmission and grid enhancement projects, the Energy Department said in a statement.
Surging electric bills have placed a mounting political focus on affordability for homes and businesses. The issue factored into November elections in Georgia, Virginia and New Jersey.
Energy Secretary Chris Wright said the financing would help lower electricity prices while supporting power-hungry data centers.
“We’re going to massively expand the capacity of the US electric grid, allowing us to lead in AI, allowing us to reshore manufacturing and next generation jobs for American workers across the country,” Wright told reporters Wednesday. “And at the same time as these new job opportunities are created, we’re going to freeze or put downward pressure on electricity prices.”
While the Trump administration is taking steps to try to add electric capacity, it’s facing several challenges in this push. There’s uncertainty over who will cover the costs for the new power and related infrastructure. And historically, there’s been local pushback to the transmission lines needed to connect those facilities.
Southern’s package is aimed at addressing affordabililty concerns that have become a political flashpoint. Surging regional power demand has prompted Southern to build new plants and upgrade existing ones, raising concerns the projects could increase customers’ bills. Offering preferred financing rates should help reduce project costs and ultimately benefit ratepayers, according to Gabriela Privetera, a Bloomberg Intelligence analyst.
“This definitely will help with financing costs,” she said. “It does benefit the customers.”
Southern’s shares slipped as much as 1.8%, while the broader S&P 500 Utilities Index declined as much as 1.2% Wednesday in New York.
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