Nuclear construction overruns won't hit Southern Co. profits

Georgia utility regulators rejected a plan that would have affected Southern Co. profits if it exceeds its budget while building two new Westinghouse AP1000 nuclear reactors at its Vogtle station.

The commission voted 5-0 to approve a compromise negotiated between its staff and Southern Co. business unit Georgia Power. As part of the agreement, Georgia Power said it will not legally challenge the power of utility regulators to ban the company from passing along "imprudent" construction costs even after those expenses are disclosed as part of semi-annual reviews. Company officials had earlier argued that regulators could not revisit construction spending after a review was complete.

PSC Chairman Stan Wise described the authority to disallow construction costs as "the hammer that we still have in our tool belt."

"Four years from now, if there is a failure in some way that is determined not to be reasonable, not to be prudent, this commission has the opportunity to go ahead and disallow those costs," PSC Chair Stan Wise told the Associated Press in an interview.

PSC staffers presented a plan in December 2010 that would have cut the utility's profit from the new plant if construction costs went $300 million over budget. If the power company built the project for $300 million under its target, it could receive a boost in earnings.

Georgia Power argued that a risk-sharing plan was illegal and unnecessary. The company also said trimming its profits would make it more difficult to get investors to buy its stock, making it more expensive to raise money for capital projects.

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