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Highlights

Reactors may be online a few months early

Company focused on starting testing

Houston — Southern Company management said the Alvin W. Vogtle nuclear plant expansion in Georgia is about 74% complete and remains on track to meet, if not beat, the regulatory approved in-service dates for new units 3 and 4.

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The new reactors are scheduled to come online November 2021 and November 2022, respectively, but Georgia Power -- a Southern Company utility subsidiary and majority owner of Vogtle -- has been focused on ramping up productivity at the site to bring the units online as early as April 2021 and April 2022.

Georgia Power manages the project alongside corporate affiliate Southern Nuclear Operating.

"We currently estimate that we need to sustain approximately 110,000 weekly earned hours ... to meet the November 2021 and November 2022 regulatory-approved schedule," Southern Company Chairman, President and CEO Thomas Fanning said Wednesday on the company's fourth-quarter 2018 earnings call. Fanning added that the company has been exceeding the productivity target with an average of 141,000 weekly earned hours to date in February.

"We think if we average 110,000 hours per week, we can hit the November schedule. Hitting anything better than that improves our likelihood of gaining margin to November," Fanning said. "That's why we are targeting [140,000 hours per week] or even above for the remainder of the period of [February 2019 to February 2020]. These numbers, we believe, are consistent with the April schedule that we have in place."

'RE-BASELINING CONSTRUCTION'

Georgia Power also is in the midst of "re-baselining" its construction plan for Vogtle units 3 and 4 with a report filed with the Georgia Public Service Commission no later than May 15, management said.

"This re-baselining effort will refine the weekly work plan for the remainder of the project," Fanning said.

"Everything we see right now, as of today, says cost and schedule are preserved and we expect to have to spend less hours to complete the project than what is currently in our budget," Fanning said.

Management noted that the re-baselining effort is a measure for understanding "the number of hours that it takes to complete each of the tasks that are required for completion of the facility."

"All other things being equal, if you have less hours, you have less cost, you have less schedule," Fanning added in response to an analyst's question about the process. "But we can't say that with certainty until re-baselining is complete."

The CEO noted that there is "still a long way to go" before cementing more aggressive in-service dates or modifying the productivity schedule.

"It's important for us to continue to build the margin," Fanning said. "That just insulates us against risk in the future."

The company hopes to start hot functional testing of the units soon after it begins to ramp down construction in early 2020.

"We are now laser-focused on what it's going to take ... to move out of the construction phase into start-up phase," Fanning said.

CAPITAL EXPENDITURE ESTIMATES

As far as capital costs, Southern Company Executive Vice President and CFO Andrew Evans said it expects to spend about $4 billion on the new Vogtle reactors as part of its $38 billion capital investment plan for 2019 through 2023.

Outside of Vogtle, the company has earmarked $25 billion for its state-regulated electric utilities and $7 billion for its regulated gas utilities over the five-year plan. About $2 billion is set aside for energy infrastructure under long-term contracts, including interstate natural gas pipelines and Southern Power renewable energy investments.

"We expect to remain opportunistic with regard to growth at Southern Power seeking to deploy new capital for projects that meet our stringent risk and hurdle rate objectives, but any incremental growth opportunities at Southern Power are expected to enhance the long-term financial plan and be largely self-funded," Evans said.

In addition, Southern Company management said the company forecasts an equity need of $2.5 billion to $3 billion over the five-year period.

"We have the capacity to fulfill most or all of our projected equity needs through our robust internal equity plans," Evans added. "However, we will continue to preserve all options and evaluate other potential equity alternatives."

-- Darren Sweeney, newsdesk@spglobal.com

-- Edited by Valarie Jackson, newsdesk@spglobal.com