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Federal energy officials on Wednesday announced a record $26.5 billion loan for electric power expansion in Georgia and Alabama, positioning the financing as a way to cut long-term costs while utilities upgrade the grid for rising electricity demand tied to computer data centers.
The U.S. Energy Department said the money will be split between the state’s two investor-owned utilities under Southern Company. Officials said $22.4 billion would go to Georgia Power and $4.1 billion would go to Alabama Power.
The utilities plan to use the loan funds for multiple parts of a larger build-out. Georgia Power and Alabama Power said the cash will go toward new natural-gas fueled power plants, new transmission lines, and upgrades to existing power plants, according to Wednesday’s announcement described in the report.
Energy Secretary Chris Wright said the federal loan would lower borrowing costs through a subsidized interest rate. He said the deal would lead to more than $7 billion in savings over decades and that the administration is “focused on driving down costs,” adding that it would help ensure Southern customers “have access to affordable, reliable and secure energy for decades to come.”
Wednesday’s announcement landed amid intensifying scrutiny of rising utility bills and broader opposition to new data centers for artificial intelligence. The report said President Donald Trump, in his State of the Union address Tuesday, announced a “ratepayer protection pledge” aimed at preventing higher utility bills tied to AI, saying tech companies would provide their own power as they build data centers. The report said Trump did not provide details and that it was unclear whether tech companies have signed pledges for their own power plants.
During a Wednesday call with reporters, Wright said “every name you know that’s developing a data center has been in dialogue with us,” and he cited cooperation from companies including Microsoft, Google and Meta without specifying written agreements, according to the report.
Southern’s leadership argued the federal financing would reduce costs while improving reliability. Chris Womack, the utility parent’s chairman, president and CEO, said in a statement that the loans would help lower the cost of investments in the grid that would enhance reliability and resilience for customers, according to the report.
In interviews and statements cited by the report, critics challenged whether the loan terms and the planned build-out would ultimately make electricity cheaper for residents. Gregory Beard, who directs the newly renamed Office of Energy Dominance Financing, said the loan program would review projects for affordability and financial viability. In an interview, Beard said the administration’s approach—cutting interest rates and discarding Biden’s policy—“will get us back on the right track in terms of affordability,” and he said, “We’re not going to build this plant or deploy this capital until we are sure that it’s the right thing to do for the local community, for the local ratepayer.”
Opponents questioned whether the loan structure sets out those affordability safeguards clearly. Jennifer Whitfield, an attorney for the Southern Environmental Law Center who represented Georgia Power expansion opponents, said the loans will save money for Georgians but argued that the arrangement amounts to a bailout funded through the public. She said, “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,” according to the report.
The report also said that any customer savings would depend on decisions by Georgia and Alabama Public Service Commissions. Commissioners in Georgia approved a three-year rate freeze requested by Georgia Power last July, while Alabama regulators approved a two-year rate freeze in December, according to the report. The report said opponents argue that regulators aligned with utilities have locked in high prices and high profits.
In recent political shifts, voters removed two Republican incumbents from the Georgia commission in November amid complaints about rising bills, according to the report. Commissioner Peter Hubbard, one of two new Democrats, unsuccessfully tried to roll back approval for Georgia Power’s expansion in recent weeks. Hubbard said Wednesday that the federal loan is “locking us into a costlier option,” adding, “And so I think it just is not meeting the moment of affordability,” according to the report.