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Monitor sees Vogtle nuke missing in-service dates, exceeding cost projections


Cites poor construction productivity and schedule delays

Southern expects to remain on schedule, on budget

  • Author
  • Zack Hale    S&P Global Market Intelligence
  • Editor
  • Jason Lindquist
  • Commodity
  • Electric Power

New York — A monitor tasked with independently evaluating Southern Co.'s already delayed Alvin W. Vogtle Nuclear Plant nuclear expansion project has found that the utility is "highly unlikely" to meet the most recent November 2021 and November 2022 in-service dates for the two new reactors.

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Poor construction productivity and schedule delays will also cause Southern to exceed the projected $17.1 billion cost of the project, according to Donald Grace, vice president of engineering for the Vogtle Monitoring Group. The group has been conducting independent reviews of the Vogtle project since April 2018.

Approved by regulators in 2009, units 3 and 4 at the Burke County, Ga., facility — majority-owned by Southern subsidiary Georgia Power Co. — were originally expected to enter service in 2016 and 2017 at a combined cost of $14 billion. After multiple setbacks and delays, the Georgia Public Service Commission approved the continued construction of units 3 and 4 in December 2017 after Georgia Power said it would have the units online in November 2021 and November 2022, respectively.

In a June 5 filing with Georgia utility regulators, Grace said Southern's decision to accelerate required testing activities has actually caused additional delays.

Vogtle Monitoring Group "is of the opinion that a primary root cause of poor productivity and production is due to [Southern's] strategy of accelerating testing prior to completion of a greater degree of the bulk construction commodities, which then leads to inefficient and costly execution of construction," Grace said.

Grace noted that the group's analysis did not attempt to assess the impact COVID-19 is having on the project. In April, George Power cut its workforce at the site by 20% to mitigate the spread of the virus and estimated the pandemic may add between $15 million and $30 million in related costs.

In a separate June 5 filing, staff on the Georgia Public Service Commission noted that their analysis of a projected increase in base rates following the completion of unit 3 differed from Southern's analysis by more than $1.2 billion. Under their own regulatory interpretation, staff estimated $1.13 billion in prudently incurred costs could be added in base rates following the start of operation of unit 3, while Southern's interpretation would allow the company to start recovering $2.34 billion at that time.

Southern spokesperson Jeff Wilson said in a June 8 email that the company continues to expect to achieve the in-service dates of November 2021 and November 2022 for units 3 and 4, respectively.

"The project is continuing its strategy of utilizing an aggressive site work plan as a tool to help us achieve the November regulatory-approved dates," Wilson said. "The total project capital cost forecast remains unchanged."

Webber Research & Advisory noted in a June 1 quarterly report that Georgia Power has the burden of proving that project decisions and costs exceeding $5.86 billion were prudent in order for those costs to be passed through to ratepayers. Georgia Power can file prudency cost requests with the Georgia Public Service Commission after the fuel load for unit 4 is complete, "a process we'll be watching closely," the investment research firm said.