Significant progress made on Vogtle 3 & 4 construction

Company to absorb $700 million additional projected costs; No impact on customer bills from these future costs

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Aug 08, 2018, 16:25 ET

ATLANTA, Aug. 8, 2018 /PRNewswire/ -- Georgia Power announced today that Southern Nuclear has made significant progress on construction of Vogtle 3 & 4 since assuming project management on behalf of the project co-owners (Georgia Power, Oglethorpe Power, MEAG Power and Dalton Utilities) from Westinghouse following its bankruptcy in 2017. The company also announced that its revised capital and construction cost forecast for its share of the project has increased from $7.3 billion to $8.4 billion, based on a revised cost-to-complete estimate from Southern Nuclear. The new nuclear units are the first to be built in the United States in a generation and the only new units currently under construction in this country. With projected in-service dates still expected in November 2021 (Unit 3) and November 2022 (Unit 4), the new units will generate enough emission-free electricity to power approximately 500,000 homes and businesses.

More than 7,000 workers from across the country are onsite working to complete the new units and focused on safety, quality construction and productivity. Milestones over the past 60 days alone have included a major concrete placement lasting more than eight continuous hours inside the Unit 3 shield building and the placement of a 52,000-pound Q233 piping module for Unit 4, a critical piece of the overall passive core cooling system, inside the containment vessel allowing large quantities of specialized piping to now be installed. Click here to view photos of these milestones and other recent construction progress.

"Significant progress has been made on the construction of Vogtle 3 & 4 since the transition to Southern Nuclear following the Westinghouse bankruptcy," said Paul Bowers, chairman, president and CEO of Georgia Power. "While there will always be challenges in building the first new nuclear units in this country in more than 30 years, we remain focused on reducing project risk and maintaining the current project momentum in order to provide our customers with a new carbon-free energy source that will put downward pressure on rates for 60 to 80 years."

As work continued at the site uninterrupted during the transition from Westinghouse to Southern Nuclear, project leadership made a series of decisions, such as providing craft labor incentives to both attract and retain adequate staffing levels and increased field supervision and engineering oversight, in an effort to lower project risk and maintain project momentum. As a result, and based on a year's worth of experience managing the project, Southern Nuclear has revised its estimate of the cost to complete the project. This revised forecast includes approximately $700 million in additional projected costs which will be absorbed by the company and have no impact on customer bills. While it is believed the increased projected costs are reasonable, necessary and prudent, the company has decided not to ask the Georgia Public Service Commission (PSC) to approve those costs so soon after receiving the Georgia PSC's approval of the capital forecast last year.

Additionally, based on the latest estimate, the previous contingency for the project has been determined to be insufficient to fully offset forecasted cost increases resulting in an increased contingency of approximately $400 million, which may be presented to the Georgia PSC for evaluation as and when appropriate in the future.

"Our responsibility is to our customers first and we are accountable to them for this project and committed to ensuring that our state has affordable and reliable energy today and for generations to come," added Bowers.

From the beginning of the Vogtle expansion, Georgia Power has worked with the Georgia PSC to pursue all available benefits for customers and minimize the impact of the new units on electric bills. A total of $75 in 2018 bill credits, or $188 million overall, was approved by the Georgia PSC as part of its order to continue construction of Vogtle 3 & 4 in December 2017. Georgia Power customers are receiving three separate $25 credits in 2018 with the third and final $25 credit expected to be issued in September. The credits are a direct result of parent guarantee payments for the Vogtle project from Toshiba available due to the strength of the original contract for the project and protections in place for Georgia electric customers.

Customers also continue to save money throughout 2018 under the company's updated 2018 Nuclear Construction Cost Recovery (NCCR) tariff. The tariff allows the company to collect financing costs for the Vogtle expansion every month, a structure which saves customers hundreds of millions of dollars by reducing financing and borrowing costs, while also phasing the new units into rates over time helping to avoid "rate shock" once the new units come online. As a result of the Toshiba parent guarantee payments and changes in federal tax law this year, customers will pay $139 million less than expected in 2018 for the Vogtle project with the typical residential customer using 1,000 kilowatt-hours per month paying $1 less each month than they did in 2017.

Nuclear energy is an essential piece of Georgia Power's commitment to deliver safe, clean, reliable and affordable energy for customers. Emission-free nuclear energy generated by the existing units at Plants Vogtle and Hatch currently accounts for more than 20 percent of Georgia's overall electricity production every year. Once the new units come online, Plant Vogtle will be the first four-unit nuclear facility in the United States. To learn more, visit www.georgiapower.com/nuclear.

About Georgia Power
Georgia Power is the largest electric subsidiary of Southern Company (NYSE: SO), America's premier energy company. Value, Reliability, Customer Service and Stewardship are the cornerstones of the company's promise to 2.5 million customers in all but four of Georgia's 159 counties. Committed to delivering clean, safe, reliable and affordable energy at rates below the national average, Georgia Power maintains a diverse, innovative generation mix that includes nuclear, coal and natural gas, as well as renewables such as solar, hydroelectric and wind. Georgia Power focuses on delivering world-class service to its customers every day and the company is consistently recognized by J.D. Power and Associates as an industry leader in customer satisfaction. For more information, visit www.GeorgiaPower.com and connect with the company on Facebook (Facebook.com/GeorgiaPower), Twitter (Twitter.com/GeorgiaPower) and Instagram (Instagram.com/ga_power).

Cautionary Note Regarding Forward-Looking Statements
Certain information contained in this communication is forward-looking information based on current expectations and plans that involve risks and uncertainties. Forward-looking information includes, among other things, statements concerning the expected cost and schedule for completion of construction of Plant Vogtle Units 3 and 4. Georgia Power cautions that there are certain factors that could cause actual results to differ materially from the forward-looking information that has been provided. The reader is cautioned not to put undue reliance on this forward-looking information, which is not a guarantee of future performance and is subject to a number of uncertainties and other factors, many of which are outside the control of Georgia Power; accordingly, there can be no assurance that such suggested results will be realized. The following factors, in addition to those discussed in Georgia Power's Annual Report on Form 10-K for the year ended December 31, 2017, and subsequent securities filings, could cause actual results to differ materially from management expectations as suggested by such forward-looking information: the impact of any failure to amend the DOE loan guarantee to allow for additional borrowings; state and federal rate regulations and the impact of pending and future rate cases and negotiations; the impact of recent and future federal and state regulatory changes, as well as changes in application of existing laws and regulations; the uncertainty surrounding the recently enacted federal tax reform legislation, including implementing regulations and Internal Revenue Service interpretations, actions that may be taken in response by regulatory authorities, and its impact, if any, on the credit ratings of Georgia Power; current and future litigation or regulatory investigations, proceedings, or inquiries; available sources and costs of fuels; effects of inflation; the ability to control costs and avoid cost and schedule overruns during the development construction and operation of facilities, including Plant Vogtle Units 3 and 4 which include components based on new technology that is just beginning initial operation in the global nuclear industry at scale, including changes in labor costs, availability and productivity, challenges with management of contractors, subcontractors or vendors, adverse weather conditions, shortages, increased costs or inconsistent quality of equipment, materials, and labor, including any changes related to imposition of import tariffs, contractor or supplier delay, non-performance under construction, operating, or other agreements, operational readiness, including specialized operator training and required site safety programs, unforeseen engineering or design problems, start-up activities (including major equipment failure and system integration), and/or operational performance; the ability to construct facilities in accordance with the requirements of permits and licenses (including satisfaction of U.S. Nuclear Regulatory Commission (NRC) requirements, to satisfy any environmental performance standards and the requirements of tax credits and other incentives, and to integrate facilities into the Southern Company system upon completion of construction; advances in technology; legal proceedings and regulatory approvals and actions related to Plant Vogtle Units 3 and 4, including Georgia Public Service Commission approvals and NRC actions; a decision by more than 10% of the owners of Plant Vogtle Units 3 and 4 not to proceed with construction; the inherent risks involved in operating and constructing nuclear generating facilities, including environmental, health, regulatory, natural disaster, terrorism, and financial risks; interest rate fluctuations and financial market conditions and the results of financing efforts; changes in The Southern Company's or Georgia Power's credit ratings, including impacts on interest rates, access to capital markets, and collateral requirements; the impacts of any sovereign financial issues, including impacts on interest rates, access to capital markets, impacts on foreign currency exchange rates, counterparty performance, and the economy in general, as well as potential impacts on the benefits of U.S. Department of Energy loan guarantees; and the effect of accounting pronouncements issued periodically by standard setting bodies. Georgia Power expressly disclaims any obligation to update any forward-looking information.

SOURCE Georgia Power