Last Thursday, Moody’s Investor Service released a new credit report finding that Georgia Power Company’s (subsidiary of The Southern Company) credit rating could drop further if construction of nuclear reactors 3&4 at Southern Company’s Plant Vogtle is further delayed or costs continue to rise. In February 2010, the Department of Energy (DOE) conditionally offered an $8.33 billion loan guarantee to Georgia Power Company and its utility partners for the construction of Plant Vogtle’s reactors 3&4. Since then, DOE has extended the offer multiple times as the financial outlook for each of the project owners has become increasingly questionable. The most recent extension expires September 30.

The Moody’s report shows the risky $8.33 billion deal between taxpayers and the owners of Plant Vogtle reactors 3&4 has a high potential of becoming even riskier. Given the history of the project, a downgrade to Georgia Power’s credit seems imminent. The last time Moody’s downgraded Georgia Power and The Southern Company in August 2010, the agency cited poor financial metrics such as weak cash flow coverage while briefly acknowledging Plant Vogtle’s construction.  Since then, the project has been beset by lawsuits, delays, and cost increases. Each of the project owners have now had their respective credit rating outlooks changed to ‘Negative’ as a result.

An independent monitor hired by the Georgia Public Service Commission (GPSC) has suggested[1] that the Vogtle partners should plan for construction to be delayed as much as 48 months from the original completion date, compared to the 18-21 month delay Georgia Power and other project owners have already acknowledged. GPSC is scheduled to hold hearings, starting this week, on the semi-annual Vogtle construction report. If the independent monitor testifies that costs are likely to increase or certifies the schedule delays, Georgia Power’s credit rating could tumble further.

A new credit downgrade would provide further evidence that extending billions in loan guarantees to Georgia Power and its utility partners is a bad bet for American taxpayers. Instead of bailing out the beleaguered Plant Vogtle project, DOE should take note of what ratings agencies and investment firms have been saying and rescind its offer, saving taxpayers from this massive, unnecessary financial liability.