Moody's upgrades MEAG Project J bonds to A2

Moody's Ratings upgraded the Municipal Electric Authority of Georgia's (MEAG) Vogtle Project J revenue bonds' rating to A2 from A3. The outlook is stable on the approximately $2.47 billion of outstanding bonds.

The rating results from Jacksonville Electric Authority's (JEA) improved credit quality, according to the rating agency. The authority is the "sole offtaker pursuant to a take or pay (TOP) wholesale power purchase agreement (PPA) with MEAG Power that supports the payment obligations of the Project J revenue bonds," according to the report.
Per the TOP, JEA is responsible for all of Project J's operating costs that come from Vogtle Units 3 and 4, Moody's said. It will pay these costs for the first 20 years after the commercial operation of each unit plus the first 20 years of debt service for both units. Vogtle Units 3 and 4 began operations July 31, 2023, and April 29, 2024, respectively.

The rating also takes into account that in 2044 when the initial TOP contract with JEA expires, the contractual agreements will transfer from JEA to "a diverse group of 39 MEAG Power municipal electric participants until 2064," the report said.

"Moody's specifically highlighted the take-or-pay power purchase agreement with JEA, which provides a highly secure revenue stream for bondholders, as well as the fact that the contractual arrangements have been validated by Georgia courts," Ernest Libershteyn, MEAG director of finance and treasury at MEAG Power wrote in an email. "These features, combined with the successful completion and operation of the first new nuclear units built in the United States in more than 30 years, have significantly strengthened the credit profile of the project."

Libershteyn said the boosted rating "reflects the reliability and value Vogtle Units 3 and 4 are delivering to customers, as well as the long-term strength of the contractual structure supporting the project."