June.22.2020
A cross-practice Orrick team secured a significant federal court ruling for long-time client the Municipal Electric Authority of Georgia (“MEAG”) that removes a challenge to financing the multi-billion-dollar expansion of the Plant Vogtle nuclear power plant. The effort involved a team of litigators, appellate lawyers, public finance and E&I lawyers from multiple Orrick offices.
MEAG is a co-owner of the Plant Vogtle nuclear power plant near the Georgia/South Carolina border, where an expansion project began in 2005 to build two new nuclear units, the first such nuclear project in the U.S. in decades. Orrick served as bond counsel for MEAG in helping it negotiate and secure the billions of dollars necessary to fund its share of the nuclear power plant expansion, a cutting-edge public/private project financing.
The Jacksonville Electric Authority (JEA) challenged the centerpiece of MEAG’s financing of its share of the Plant Vogtle expansion, approximately $6.8 billion in revenue bonds, loans and Department of Energy guaranteed debt for MEAG’s share. About 40% of that amount is secured by, among other things, a power purchase agreement (“PPA”) between MEAG and the JEA. Beginning in 2017, JEA began to advocate for the cancellation of the Vogtle project and/or its obligations under the PPA, prompting litigation in federal court in the Northern District of Georgia where JEA sought to invalidate the PPA.
In a 53-page opinion on June 17, U.S. District Judge Mark Cohen upheld the validity of the PPA, siding with our arguments against those made by JEA and the City of Jacksonville. While the case remains ongoing, the decision resolves the most important issue in the litigation and removes the biggest risk factor that had been hanging over MEAG and its members. The outcome also set important precedent for public power institutions such as MEAG as they seek to protect take or pay contracts which are much used in the public power arena.
“From the beginning, we have simply argued that the PPA is valid and fully enforceable, and that the suit brought by JEA and the City of Jacksonville was meritless,” MEAG Power President and Chief Executive Officer James E. Fuller said in a statement. “We look forward to Vogtle units 3 and 4 coming into service as planned in 2021 and 2022, respectively. We will continue to honor all of our commitments, as we always have, and are hopeful that this ruling puts this matter behind us.”
Our litigation team includes partners Peter Coll, Andrew Silverman and Jon Direnfeld, as well as associates Ben Aiken, Monica Svetoslavov, Jose Valdes and Lauren Schnepper, with litigation and paralegal support from Tami Grosko, Amy Gerrish and Michael Satoshi Abrams. Partners Carl Lyon, Neil Wolk and Kyle Drefke have advised MEAG in designing and developing the financing structure with, among others, the U.S. Department of Energy.