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UPDATE 1-U.S. to finalize loan guarantee for Southern Co nuclear plant

WASHINGTON, Feb 19 (Reuters) - The Obama administration will finalize about $6.5 billion in loan guarantees this week for the nation's first two new nuclear reactors in three decades, ending years of delay.

U.S. Energy Secretary Ernest Moniz will travel to Waynesboro, Georgia, on Thursday to mark the completion of an agreement backing the construction of two new reactors at Southern Co's Vogtle nuclear power plant, the Department of Energy announced on Wednesday.

The department issued a conditional agreement for the Vogtle plant totaling $8.3 billion in 2010, offering loan aid to Southern's Georgia Power unit as well as project co-owners Oglethorpe Power and Municipal Electric Authority of Georgia (MEAG).

While loan assistance to Georgia Power and Oglethorpe will be finalized, the planned $1.8 billion loan guarantee to MEAG remains outstanding.

In a wide ranging speech at the National Press Club in Washington on Wednesday, Moniz said the Obama administration was committed to promoting innovations in energy technology that would help lower U.S. carbon dioxide emissions - but dodged questions on the Keystone XL pipeline and other contentious issues.

Despite criticism of Energy Department's loan program after the bankruptcy in 2011 of solar panel maker Solyndra, Moniz said the federal government must not be limited to strictly funding research and development.

"The need to accelerate the pace of change in response to climate change makes it essential that we continue investments ... that get the first movers out there in commercial market pushing the technology envelope," Moniz said.

Originally expected to be finalized in 2012, the loan aid for the Vogtle expansion was held up by haggling over new conditions requested by the Obama administration in the wake of Solyndra's failure.

Solar panel maker Solyndra folded after receiving a $535 million federal loan guarantee, leading to accusations that the Energy Department had mismanaged taxpayer dollars and favored political allies in doling out funds.

REVIVAL ON HOLD

When it was offered four years ago, the loan deal for Vogtle was supposed to herald a new era for the U.S. nuclear power sector, which had stalled after the Three Mile Island nuclear accident in Pennsylvania in 1979.

Since then, surging U.S. natural gas production, weak growth in electricity demand and the lack of a cap on carbon emissions have dampened expectations for a nuclear renaissance.

Only a few nuclear plants are expected to be built and Vogtle is the only nuclear power plant to be offered a federal loan guarantee so far.

With "substantial" funding authority still available, Moniz did not rule out additional loan guarantees. He said the department plans to move ahead with the loan program to back deserving low-carbon projects across the energy spectrum.

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