Southern Company Could Delay Plant Vogtle Decision Until Late Summer

CEO Tom Fanning told Southern Co.'s shareholders attending the company's annual meeting on May 24 that a decision on how to proceed with the Plant Vogtle nuclear expansion could take several more months.

The Vogtle expansion-one of two new nuclear construction projects underway in the U.S. utilizing Westinghouse's AP1000 technology-has been in limbo, albeit still in progress, since Westinghouse filed for bankruptcy in late March. Yesterday, Reuters reported that Westinghouse had "reached a deal to borrow $800 million after allaying creditors' concerns that the money would be flowing to non-bankrupt affiliates overseas."

But that news doesn't seem to have made Southern Co.'s decision to proceed with Plant Vogtle Units 3 and 4 any easier. Following the annual meeting, The Atlanta Journal-Constitution reported that despite company officials previously stating that they had hoped to have a decision by today, or at least in June, Fanning is now aiming for August or "late summer."

Less than two weeks ago, Southern Co. subsidiary Georgia Power announced that it had reached a new service agreement, which would allow for the transition of project management from Westinghouse to Southern Nuclear and Georgia Power "once the current engineering, procurement and construction contract is rejected in Westinghouse's bankruptcy proceedings."

However, in its press release, the company offered little information about the long-term future of the project. It said, "Georgia Power will continue work to complete its full-scale schedule and cost-to-complete analysis and work with the project Co-owners (Oglethorpe Power, MEAG Power and Dalton Utilities) and the Georgia Public Service Commission to determine the best path forward for customers."

There are a few different directions the company could go. It could continue to develop the project as originally planned. That option could be risky though, because cost overruns and schedule delays are what led to Westinghouse's bankruptcy. Whether Southern Co. could manage the project more efficiently or not is uncertain. Vogtle is not the only Southern Co. project to experience problems. Its Kemper County Energy Facility has also been a fiasco. That integrated gasification combined cycle project is 3 years behind schedule and some $4.7 billion over budget.

Other options for the Vogtle project include proceeding with one unit while delaying completion of the other, or abandoning the project altogether.

One expert, Peter Bradford-former commissioner with the U.S. Nuclear Regulatory Commission, and former chair of the Maine and New York Public Utility Commissions-has suggested that other power options could be more cost effective than the AP1000 nuclear reactors.

"Incredibly enough, it's at least possible that those alternatives may still be cheaper than these plants despite the amount of money already spent on them," Bradford said during a conference call shortly after the Westinghouse bankruptcy announcement. "Customers have lost billions of dollars on these plants, but they shouldn't be tossing good money after bad."

Southern Co. doesn't hold all of the cards either; co-owners will have some say in the decision. "For now, we've kept together," The Atlanta Journal-Constitution quoted Fanning as saying. He reportedly added, "They've got their own interests."

But the Georgia Public Service Commission holds the wild card. If Southern Co. intends to bill ratepayers for any potential cost increases for the project, it will need the commission's approval. That may not be easy to obtain. The project is under the microscope now, and elected officials may not be willing to make customers foot the bill when things don't go as planned.

-Aaron Larson, executive editor (@AaronL_Power, @POWERmagazine)

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