On August eight, Georgia Power introduced that its revised capital and development price forecast for its share of the Plant Vogtle enlargement undertaking had elevated from $7.three billion to $eight.four billion, primarily based on a revised cost-to-complete estimate from Southern Nuclear. The information was softened considerably by Georgia Power’s declaration that important development progress had been made on Units three and four since Southern Nuclear assumed the duty for undertaking administration following Westinghouse’s chapter in 2017.
Nonetheless, Georgia Power isn’t the one firm on the hook for price will increase; there are three different co-owners of the undertaking. Georgia Power holds a 45.7% stake within the Plant Vogtle enlargement, whereas Oglethorpe Power Corp. (OPC, 30%), MEAG Power (22.7%), and Dalton Utilities (1.6%) maintain the remaining shares.
According to The Bond Buyer web site, each OPC and MEAG may face bond ranking downgrades as a result of elevated price estimate for Vogtle. In an August 13 publish, Bond Buyer reported, “Fitch Ratings positioned its A and A-minus scores on MEAG’s bonds on Rating Watch Negative Friday, affecting $5.17 billion of excellent debt. Oglethorpe’s A-minus ranking on $three.9 billion of excellent obligations was additionally positioned on Rating Watch Negative.”
The Vogtle price improve has not been form to Georgia Power’s scores both. According to The Florida Times-Union, a Jacksonville-based newspaper, “Moody’s Investors Services issued a downgrade to Georgia Power’s ranking, saying the rise comes simply eight months after utility regulators signed off on the earlier spherical of elevated price estimates.”
In August 2017, OPC’s Board of Directors permitted a $7.zero billion finances that included a contingency most-recently valued at about $490 million. After Georgia Power introduced the brand new finances forecast, OPC issued a press launch wherein Mike Smith, the corporate’s president and CEO, mentioned, “The want to regulate OPC’s finances to finish Plant Vogtle three and four to account for the just lately introduced will increase will likely be muted for OPC and its member [electric membership corporations], because of a conservative contingency that we imbedded in our present finances of $7.zero billion.”
However, the OPC assertion additionally mentioned the corporate was “nonetheless analyzing the necessity to rebuild its contingency.” It prompt the finances may improve by 5% to six%, assuming a contingency just like the quantity introduced publicly by Georgia Power.
Additionally, OPC mentioned it was “performing its due diligence below the Project Adverse Events (PAEs) inside the co-owner settlement ensuing from the brand new finances forecast and Georgia Power’s determination to not search charge restoration for these quantities. A vote on these things is anticipated late within the third Quarter of 2018.”
A publish on the Seeking Alpha web site written by Michael Wald, a self-employed analysis analyst primarily based in Georgia, prompt MEAG was “dealing with a insurrection” from JEA, a Florida utility contracted to buy energy from the Vogtle enlargement. The Times-Union reported that JEA’s 20-year purchase-power settlement with MEAG stipulates that JEA pays even when the Vogtle reactors by no means produce energy. It mentioned no cap exists on how excessive JEA’s obligations may go primarily based on the continued will increase in the price of developing the reactors. Wald wrote, “JEA is demanding that both the development undertaking be deserted or that the contract between the utility and MEAG be canceled.” Furthermore, Wald surmised that if MEAG canceled the contract with JEA, it might have a tough time protecting its prices for the Vogtle undertaking.
Southern Co. CEO Tom Fanning was basically requested through the firm’s second quarter earnings name what would occur if a member of the joint possession group selected to not proceed the undertaking. Fanning responded, “Yeah, so, the technical reply there’s that the undertaking can be deemed…