Resequencing of Vogtle nuclear plant expansion activities is credit negative: Moody's

Washington — Georgia Power's resequencing of construction activities for the Vogtle nuclear plant expansion project is credit negative, Moody's said June 24.

"The unexpected, late-stage changes to these planned activities is credit negative for Georgia Power because it signals that challenges with the project continue, increasing the likelihood of additional cost overruns and further schedule delays," Moody's said in a statement.

The utility's long-term rating remains unchanged at Baa1, a lower-medium investment-grade rating, and its outlook is stable, according to Moody's. Moody's long-term rating range from Aaa, or prime investment-grade rating, to C, or non-investment grade.

Georgia Power said in a June 23 statement it has rescheduled certain project construction activities, primarily due to "continued challenges in electrical construction productivity," a previously implemented workforce reduction and adjustments to work practices at the project site amid the coronavirus pandemic.

This "resequencing of certain planned activities" will not change the in-service dates approved by the Georgia Public Service Commission of November 2021 for Unit 3 and November 2022 for Unit 4, Georgia Power said. The utility notified the US Nuclear Regulatory Commission earlier this year that fuel loading would take place around Nov. 23.

However, Georgia Power and Southern Nuclear Co., a subsidiary that manages Vogtle project construction, are "employing an aggressive site work plan" that targets a May 2021 in-service date for Unit 3 and May 2022 for Unit 4, Georgia Power said.

The project's structural integrity test and integrated leak rate testing will now occur before cold hydro testing, and the start of cold hydro testing has moved to this fall from July. Cold hydro testing, one of the main milestones in pre-operational testing of a nuclear unit, is followed by hot functional testing and then fuel loading.

Georgia Power said in a statement April 15 that it would reduce its workforce at the construction site by about 20% to mitigate the effects of the coronavirus pandemic, including on labor productivity. The utility estimated the pandemic could add $15 million-$30 million in costs, though the utility left the $17.1 billion capital forecast intact.

In June, Vogtle Monitoring Group, an independent monitor, assessed the nuclear project as "highly unlikely" to meet the November 2021 and November 2022 in-service dates. The group has been conducting independent reviews of the Vogtle project since April 2018.

Thus far in 2020, the project has achieved the placement of the final module and integrated head package atop the reactor vessel, as well as completion of open vessel testing for Unit 3. The company has also placed the polar crane and containment vessel top for Unit 4.

Georgia Power is the majority owner of the Vogtle expansion project at 45.7%. Other owners are Oglethorpe Power Corporation with a Baa2 stable Moody's rating owning 30%, Municipal Electric Authority of Georgia 22.7% and City of Dalton, Georgia 1.6%.

Approved by regulators in 2009, Units 3 and 4 were originally expected to enter service in 2016 and 2017, respectively, at a combined cost of $14 billion. After multiple setbacks and delays, the Georgia Public Service Commission approved the continued construction of both units in December 2017 after Georgia Power said it would have the units online in November 2021 and November 2022, respectively.