Southern Company CEO: Vogtle Ahead of Schedule

Southern Company CEO Thomas Fanning on February 20 said construction of two new nuclear reactors at Plant Vogtle is on track and could possibly beat the current regulatory approved startup dates for the AP1000 units.

Fanning spoke Wednesday on the company's fourth-quarter 2018 earnings call. He said Georgia Power, a Southern Company subsidiary and the majority owner of Vogtle, has ramped up the work schedule at the site near Waynesboro, Georgia, and said if that productivity continues the first of the two new reactors could come online as early as April 2021, seven months ahead of the current schedule, with the second coming online in April 2022.

He said the company hopes to start hot functional testing of the units soon after it begins to ramp down construction early next year. "We are now laser-focused on what it's going to take " to move out of the construction phase into start-up phase," Fanning said.

Construction Delays, Cost Overruns

The Vogtle project has sustained a series of construction delays since it was first approved by state regulators in 2009. At that time the cost for the two new reactors was pegged at about $14 billion, with an original startup date of 2016. The most recent estimates of the project's cost now stand at $27.5 billion.

Georgia Power owns 45.7% of Plant Vogtle. Three other project partners-Oglethorpe Power Corporation, the Municipal Electric Authority of Georgia, and the City of Dalton Utilities, own the remaining 54.3%.

The original project leader, Westinghouse, filed for bankruptcy in 2017 due to financial problems associated with the Vogtle construction.

"We currently estimate that we need to sustain approximately 110,000 weekly earned hours " to meet the November 2021 and November 2022 regulatory-approved schedule," Fanning said, adding that workers have been exceeding the productivity target with an average of 141,000 weekly earned hours to date this month. "We think if we average 110,000 hours per week, we can hit the November schedule. Hitting anything better than that improves our likelihood of gaining margin to November. That's why we are targeting [140,000 hours per week] or even above for the remainder of the period of [February 2019 to February 2020]. These numbers, we believe, are consistent with the April schedule that we have in place."

Construction About 74% Complete

Southern Company said construction of Units 3 and 4 at Vogtle, where two existing reactors have operated since 1987 and 1989, respectively, is about 74% complete. Georgia Power is managing the expansion project along with Southern Company affiliate Southern Nuclear.

Georgia Power has said it is "re-baselining" its construction plan for the nuclear expansion and will file a report with the Georgia Public Service Commission no later than May 15. Said Fanning: "This re-baselining effort will refine the weekly work plan for the remainder of the project. Everything we see right now, as of today, says cost and schedule are preserved and we expect to have to spend less hours to complete the project than what is currently in our budget."

The re-baselining is a way to measure "the number of hours that it takes to complete each of the tasks that are required for completion of the facility. All other things being equal, if you have less hours, you have less cost, you have less schedule," Fanning said. "But we can't say that with certainty until re-baselining is complete."

Fanning cautioned that there is "still a long way to go" before project managers would solidify earlier in-service dates, or modify the construction schedule. "It's important for us to continue to build the margin. That just insulates us against risk in the future," he said.

$38 Billion Capital Investment Plan

Andrew Evans, Southern Company executive vice president and CFO, said on Wednesday's call that the company expects to spend about $4 billion on the new Vogtle reactors as part of its $38 billion capital investment plan for 2019 through 2023.

Evans also said Southern Company has budgeted $25 billion for its state-regulated electric utilities and $7 billion for its regulated gas utilities in the 2019-2023 plan. He said about $2 billion has been set aside for energy infrastructure under long-term contracts, including interstate natural gas pipelines and Southern Power renewable energy investments.

Said Evans: "We expect to remain opportunistic with regard to growth at Southern Power seeking to deploy new capital for projects that meet our stringent risk and hurdle rate objectives, but any incremental growth opportunities at Southern Power are expected to enhance the long-term financial plan and be largely self-funded."

-Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine).

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