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Cost Pressures, Delay Worries Sour Two Southern Co. Projects

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Meanwhile, representatives of Georgia Power and Southern Nuclear, the Southern unit overseeing that Vogtle expansion, told the Georgia Public Service Commission last week the $14-billion nuclear project is facing cost and scheduling challenges, but that the project remains on track.

David McKinney, vice president of nuclear support at Southern Nuclear, told the PSC the commercial-operation dates for the two planned units—originally scheduled for April 2016 and April 2017 but pushed back to November 2016 and November 2017, respectively—may be pushed back by an additional few months.

Georgia Power holds a 45.7% ownership interest in the 2,200-MW expansion project and has PSC's approval to spend up to $6.4 billion on its share of the project's overall costs. Oglethorpe Power holds a 30% stake, Municipal Electric Authority of Georgia holds a 22.7% stake, and the municipal utility in Dalton, Georgia, holds a 1.6% stake.

Georgia Power spokesman Mark Williams explained that the project's engineering-procurement-construction contractor, Westinghouse/Stone & Webster, has been working under a somewhat stretched-out schedule that the co-owners have "not agreed to." He added, Georgia Power is "in discussions with [the EPC contractor] on coming up with a final schedule" acceptable to all parties.

Williams said he "can't get into the details on why there are different schedules" for the project's co-owners and Westinghouse/Stone & Webster but said the differences relate in part to a legal dispute between the parties on which is responsible for costs associated with delays in securing Nuclear Regulatory Commission design certification and combined construction and operating licenses (COL) for the planned units.

Westinghouse/Stone & Webster on Nov. 1 filed a lawsuit in the U.S. District Court for the District of Columbia seeking an additional $918 million from the co-owners of the expansion project to cover costs tied to the design-certification and COL delays. The same day, the co-owners filed suit against the EPC contractor at the U.S. District Court for the Southern District of Georgia, asking for a declaratory judgment that the extra costs are not their responsibility.

Asked for comment, Gentry Brann, vice president at The Shaw Group, corporate parent of Stone & Webster and 20% owner of Westinghouse, said, "The consortium has not given any updates on the schedule" for completing the Vogtle units. She did not elaborate.

Georgia Power has not yet asked the PSC to increase the current $6.4-billion cap on the Vogtle costs recoverable from ratepayers, but it may need to, depending on the outcome of the design-certification and COL-delay dispute with Westinghouse/Stone & Webster.

As Southern Nuclear's McKinney put it in his testimony to the PSC, "Once those disputes [with the EPC contractor] are resolved, the owners may conclude that the projected cost should be revised to reflect additional costs."

Paul Patterson, a utility analyst at Glenrock Associates, New York City, said that while the prospects of higher costs and schedule delays at the Kemper and Vogtle projects raise concern, Mississippi Power and Georgia Power each operate under what, until now, has been a "favorable regulatory environment." He added, "The only risk to them would be if regulators said they could not recover any added costs" from ratepayers.

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