The federal government has approved a massive $27 billion loan to electric companies in Georgia and Alabama to expand power infrastructure driven by data center demand. Energy Secretary Chris Wright says the federally subsidized loan will save customers over $7 billion in the long term, though critics call it a taxpayer-funded bailout.
Federal energy officials announced Wednesday they have approved a historic $27 billion loan package for electric utility companies in Georgia and Alabama, with officials claiming the massive funding will help reduce customer costs while companies expand their power infrastructure to meet growing demand from computer data centers.
Georgia Power will receive $22.4 billion while Alabama Power gets $4.1 billion from the loan package. Both companies operate under Southern Company, an Atlanta-based utility giant that ranks among the country’s largest power providers. The utilities plan to spend the money constructing new natural gas power facilities, building additional transmission infrastructure, and modernizing current power plants.
According to Energy Secretary Chris Wright, the loan arrangement will generate more than $7 billion in customer savings over multiple decades through reduced, government-subsidized interest rates.
“We’re focused on driving down costs,” Wright stated. He emphasized that the loan would guarantee Southern Company customers “have access to affordable, reliable and secure energy for decades to come.”
Both Wright and President Donald Trump have consistently promoted their fossil fuel-supporting policies as essential for maintaining electric grid reliability nationwide. This includes recent directives over nine months to prevent coal plant closures beyond their scheduled shutdown dates.
Wright claims these directives have protected utility customers from millions in costs and maintained power during January’s winter storm. However, opponents argue the orders are unwarranted and have increased electric bills by forcing utilities to operate older, costlier facilities.
“These loans will help lower the cost of investments in our grid that will enhance reliability and resilience for the benefit of our customers,” stated Chris Womack, Southern Company’s chairman, president and CEO.
The loan announcement comes during increased examination of rising utility costs, as electricity rates have climbed faster than inflation across numerous states. Additionally, widespread resistance has emerged against new artificial intelligence data centers.
During Tuesday’s State of the Union address, Trump unveiled a “ratepayer protection pledge” targeting higher utility costs linked to AI development. He indicated technology companies would supply their own electricity when constructing data centers, though Trump offered no specifics while promising price reductions.
While no confirmation exists regarding tech company commitments to construct independent power facilities, Wright told reporters Wednesday that “every name you know that’s developing a data center has been in dialogue with us.”
He mentioned “cooperation” from major corporations including Microsoft, Google and Meta, though he provided no details about formal written commitments.
Government utility loans have a long history, including $12 billion in loan guarantees from both the initial Trump administration and President Barack Obama’s administration for two expensive nuclear reactors at Georgia’s Plant Vogtle, which Georgia Power partially owns.
Trump’s recent tax and budget legislation modified the loan program to emphasize expanding electricity generation and transmission capacity. Under President Joe Biden, loan guarantees prioritized environmental energy objectives.
Gregory Beard, who leads the recently renamed Office of Energy Dominance Financing, said Wednesday that reducing interest rates while abandoning Biden’s approach “will get us back on the right track in terms of affordability.”
The loan office will examine individual projects for financial viability, he explained. “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,” Beard said during an interview.
However, these requirements appear absent from loan documents Southern Company released Wednesday. Jennifer Whitfield, a Southern Environmental Law Center attorney who represented opponents of Georgia Power’s expansion, acknowledged the loans would benefit Georgians financially but questioned their prudence.
“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 commented.
Customer savings require approval from elected Public Service Commissions in both Alabama and Georgia. Commissioners approved a three-year rate freeze for Georgia Power last July, while Alabama commissioners authorized a two-year freeze in December. Company representatives highlight these freezes amid record rate increase requests by utilities nationwide. Critics argue company-supportive regulators have maintained elevated prices and utility profits.
Georgia voters removed two Republican commission incumbents in November over concerns about increasing bills.
Commissioner Peter Hubbard, among two newly elected Democrats, recently attempted unsuccessfully to reverse approval for Georgia Power’s expansion plans. He argued Wednesday that decreasing costs for solar, wind and battery technologies could render new natural gas facilities economically unfeasible over time.
“It’s locking us into a costlier option,” he said regarding the federal loan. “And so I think it just is not meeting the moment of affordability.”