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COVID-19 impact on Vogtle nuclear expansion likely not known until late July

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Essential Energy Insights - January 2021


COVID-19 impact on Vogtle nuclear expansion likely not known until late July

With doubts mounting as to whether Southern Nuclear Operating Co. Inc. can bring the new Alvin W. Vogtle Nuclear Plant expansion online as planned, it will likely be several more weeks before the impact on the project from the coronavirus pandemic is known.

"We don't know what this will bring to the project," Steven Roetger, the lead Vogtle analyst for the Georgia Public Service Commission, said during a June 25 hearing on the 22nd semiannual Vogtle Construction Monitoring, or VCM, report. "There's still a lot of uncertainty."

The latest refinement schedule for the project is expected to be filed by the end of July.

"That will incorporate the realities of COVID," Roetger said.

The independent Vogtle Monitoring Group said in a June 5 filing with state regulators that Southern Nuclear is "highly unlikely" to meet the regulatory approved November 2021 and November 2022 in-service dates for Vogtle units 3 and 4.

Poor construction productivity and schedule delays will also cause Southern to exceed the projected $17.1 billion cost of the project, Donald Grace, vice president of engineering for the Vogtle Monitoring Group, wrote in the report. Grace believes the total project costs will jump by at least $1 billion even if it meets the planned in-service dates, excluding financing costs.

Fellow Southern Co. subsidiary Georgia Power Co., the majority owner of the Vogtle project, announced June 23 that it has rescheduled planned activities at the site. Moody's said the "unexpected, late-stage changes" are credit negative for Georgia Power because they increase the odds of additional cost overruns and further delays.

"Their whole approach to planning to me is unrealistic," Grace testified at the hearing.

The independent monitor and PSC staff agree Southern Nuclear will likely not meet its aggressive target of May 2021 and May 2022 for the new reactors, casting doubt on the company's ability to begin fuel load for Unit 3 by the end of the year.

"There is simply too much work to be done," Roetger said.

"We'll know in a very short period of time if the May dates are going to be pushed and reflected in their new refinement that they are working on right now," the PSC analyst added.

Roetger said there is "some stress" on the November benchmarks but it is too early to tell if they will be met.

Georgia Power in April revealed it cut its workforce at the site by about 20% to mitigate COVID-19 impacts.

Still, Southern executives told investors the company is keeping its aggressive site work schedule for unit 3, in which the company could have the reactor online by May 2021 if monthly construction completion stays above 2%.

"The next few months will be pivotal as we adjust to a smaller, more streamlined workforce and seek the safety of our workforce and the surrounding community remains paramount," Southern Chairman, President and CEO Tom Fanning said on the company's first-quarter earnings call.

"November is what matters. We've got to beat November, and our eyes are on that," Fanning added. "The site continues to believe they can hit a May schedule."

Georgia Power filed its 22nd semiannual VCM report with the Georgia PSC on Feb. 19, requesting approval of $674 million in construction costs incurred at Vogtle units 3 and 4 in the second half of 2019. The staff recommends the commission approve these costs.

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