Cost rises on nuclear power project in Georgia

In its quarterly report to the U.S. Securities and Exchange Commission (SEC), Southern Co. (NYSE: SO) said the consortium in charge of building two new Westinghouse AP1000 nuclear power reactors at Plant Vogtle in Georgia has informed the company it will cost an additional $400 million to complete the reactors by the scheduled completion date.

Southern Co. said in the filing that during the course of construction activities, issues have arisen that may impact the project budget and schedule.

“The Owners and the Consortium have begun negotiations regarding these issues, including the assertion by the Consortium that the Owners are responsible for these costs under the terms of the Vogtle 3 and 4 Agreement,” the statement read.

Vogtle Unit 3 is expected to enter service in 2016, with Unit 4 expected to connect to the grid in 2017.
Georgia Power, which received permission from the Georgia Public Service Commission to charge its customers $1.7 billion of the company’s $6.1 billion in costs before the plants enter service, said it “has not agreed with the amount of these proposed adjustments or that the owners have responsibility for any costs related to these issues.”

“Georgia Power expects negotiations with the Consortium to continue over the next several months during which time the parties will attempt to reach a mutually acceptable compromise of their positions,” the filing said.

Georgia Power, which has a 45 percent stake in the project, said if a compromise cannot be reached, formal dispute resolution, including litigation, may follow.

“If these costs are imposed upon the Owners, Georgia Power would seek an amendment to the certified cost of Plant Vogtle Units 3 and 4, if necessary,” the filing said. “Additional claims by the Consortium or Georgia Power (on behalf of the Owners) are expected to arise throughout the construction of Plant Vogtle Units 3 and 4.”

The Department of Energy in February 2010 awarded Soutern Co. an $8.3 billion loan guarantee for the project.

Including the $400 million listed in the May 7 SEC filing, The Washington Post reported that cost overruns for the Vogtle project have now reached $900 million.

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