By Mark Jaffe, EUCI energy writer
The U.S. Department of Energy (DOE) on Feb. 25 issued its largest loan package ever – $26.5 billion – to help finance 16 gigawatts (GW) of generation and 1,300 miles of new transmission in Georgia and Alabama.
Georgia Power, a subsidiary of Southern Company, received $22.4 billion, and Alabama Power was awarded about $4.1 billion to fund more than 200 individual energy projects.
The financing will support roughly 5 GW of new natural gas generation and about 6 GW of upgrades at nuclear plants to increase generating capacity, as well as license renewals, hydropower modernization, battery energy storage systems, and grid enhancement projects.
“These loans will help lower the cost of investments in our grid that will enhance reliability and resilience for the benefit of our customers,” Chris Womack, Southern’s chairman, said in a statement.
The DOE will provide a federal loan guarantee, backing the loans with the U.S. government’s credit for a portion of a borrower’s debt, enabling the utilities to obtain lower interest rates.
This will reduce borrowing costs and lower the amount the utilities will have to recover through electricity rates.
“These loans represent the largest government investment aimed at directly lowering consumer energy costs and increasing grid reliability,” the DOE said in a statement. “Once all funds are received through the program, the loans are estimated to reduce Southern Company’s interest expenses by over $300 million per year.”
The rising cost of electricity has become an issue for consumers in many states as the average electricity bill last year rose 6.6%. In 2025, utilities across the county sought $71.8 billion in rate increases through 2028.
Electric prices have been outpacing inflation since 2022, according to the U.S. Energy Information Administration. Among the factors spurring the increase were higher natural gas prices, growing data center demand, overhauling aging grids and extreme weather.
Consumers and public officials have begun to push back against the rising rates, with at least 14 states moving to address the issue.
On her first day in office, New Jersey Gov. Mikie Sherrill issued an executive order directing the state’s utility regulators to consider pausing or modifying any moves by utilities that could raise bills and to use existing funds to help offset bill increases coming in June.
In 2025, energy regulators in Alabama issued a rate freeze through 2027, while Georgia regulators approved a rate freeze through 2028, out of concern that ratepayers would be on the hook for grid investments to serve data centers.
The DOE couched the large loan guarantees as a way of addressing the issue, estimating that the reduced borrowing costs will lead to $7.1 billion in savings. “Real and immediate electricity savings will be provided to Georgia and Alabama ratepayers,” the department said.
The loan guarantees will help cushion a big boost in spending by Southern.
In its fourth-quarter earnings call, Southern said it plans to spend $81 billion for capital investment between 2026 and 2030 – a nearly 30% increase from its previous forecast.
“These investments will support the extraordinary and transformative projected growth we’re seeing across our company,” Womack said.
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