Feds announce $26.5 billion loan for electric power expansion in Georgia and Alabama

Federal energy officials announced a record $26.5 billion loan to electric utilities in Georgia and Alabama on Wednesday, aimed at helping the companies meet surging power demands from computer data centers while promising cost savings for customers.

The loan, the largest of its kind, allocates $22.4 billion to Georgia Power and $4.1 billion to Alabama Power, both subsidiaries of Atlanta-based Southern Company. The funding will support construction of new natural gas power plants, transmission line development, and upgrades to existing facilities.

Energy Secretary Chris Wright emphasized that the federally subsidized interest rate would generate more than $7 billion in customer savings over the coming decades.

“We’re focused on driving down costs,” Wright said during the announcement. “This loan will help ensure Southern customers have access to affordable, reliable and secure energy for decades to come.”

The loan comes amid the Trump administration’s broader energy strategy that favors fossil fuels as a means to ensure grid reliability. Wright has defended recent orders to extend the operation of coal-fired plants beyond planned retirement dates, claiming these decisions saved customers millions of dollars and helped maintain service during last month’s severe winter weather.

Critics have countered that keeping older plants online unnecessarily increases costs for consumers while delaying the transition to cleaner energy sources.

Southern Company’s CEO Chris Womack welcomed the federal assistance, stating, “These loans will help lower the cost of investments in our grid that will enhance reliability and resilience for the benefit of our customers.”

The announcement arrives at a time of heightened scrutiny over electricity costs, which have outpaced inflation in many states. There is also growing opposition to new data centers that support artificial intelligence technologies due to their enormous power consumption.

President Trump addressed these concerns during his State of the Union address Tuesday, announcing a “ratepayer protection pledge” designed to prevent AI-related utility bill increases. He claimed tech companies would provide their own power for data centers, though specific details remained vague.

When questioned about agreements with technology companies, Wright indicated that major firms like Microsoft, Google, and Meta have been in discussions with the administration, but stopped short of confirming any formal commitments.

Federal utility loans are not unprecedented. Previous administrations, including those of Obama and Trump’s first term, provided $12 billion in loan guarantees for nuclear reactors at Georgia’s Plant Vogtle, which is partially owned by Georgia Power.

The current loan program was reshaped by Trump’s tax and budget legislation last year to emphasize expanding power generation and transmission capacity, representing a shift from the Biden administration’s focus on green energy projects.

Gregory Beard, director of the renamed Office of Energy Dominance Financing, explained that reducing interest rates and changing policy direction “will get us back on the right track in terms of affordability.” He assured that individual projects would undergo financial viability reviews before receiving funds.

However, Jennifer Whitfield, an attorney with the Southern Environmental Law Center who has represented opponents of Georgia Power’s expansion, expressed reservations about the federal support.

“As a taxpayer, it’s hard to avoid the fact that this is a bailout paid for by every taxpaying citizen of the United States,” she said.

Any customer savings must be approved by the Public Service Commissions in both states. The utilities have implemented rate freezes—three years in Georgia and two in Alabama—which company officials highlight as beneficial when other utilities nationwide are seeking increases. Critics counter that these freezes, approved by company-friendly regulators, effectively lock in high rates and profits.

The issue of utility rates has become politically charged, with voters removing two Republican incumbents from Georgia’s commission in November amid growing complaints about rising bills.

Commissioner Peter Hubbard, one of two newly elected Democrats, recently attempted to reverse approval for Georgia Power’s expansion plans. He criticized the federal loan for potentially locking customers into more expensive energy options.

“It’s locking us into a costlier option,” Hubbard said. “And so I think it just is not meeting the moment of affordability.”

As renewable energy costs continue to decline, questions remain about the long-term economics of investing heavily in new natural gas infrastructure, highlighting the ongoing tension between immediate reliability concerns and the trajectory of the energy market.