ATLANTA, Nov. 6, 2017 /PRNewswire/ -- Georgia Power
and the other Owners of the Vogtle 3 & 4 project (Oglethorpe
Power, MEAG Power and Dalton Utilities) today presented their
unified recommendation to continue construction of the project to
the Georgia Public Service Commission (PSC). Georgia Power filed
the recommendation to move forward with the Georgia PSC on
August 31 as part of the 17th Vogtle
Construction Monitoring (VCM) Report. The recommendation was
supported by all of the Owners and based on the results of a
comprehensive schedule, cost-to-complete and cancellation
assessment which was launched following the bankruptcy of
Westinghouse in March.
Chairman, President and CEO of Georgia Power Paul Bowers
delivered the following remarks prior to the start of scheduled
public hearings at the Georgia PSC.
"Good morning. On behalf of the Vogtle 3 & 4 Owners –
Georgia Power, Oglethorpe Power, MEAG Power and Dalton Utilities –
we appreciate the opportunity to appear before this Commission to
provide an overview of the recommendation to continue the Vogtle 3
& 4 expansion and answer any questions you may have about the
project. As you know, project experts will take the stand
throughout this week to discuss the 17th Vogtle Construction
Monitoring (VCM) Report filed on August
31 in more detail.
The 17th VCM Report included a recommendation, supported by
all the Owners and their respective boards, to go forward with the
project. This recommendation was based on the results of a
comprehensive schedule, cost-to-complete and cancellation
assessment that was prompted by the bankruptcy of Westinghouse and
the subsequent rejection of the fixed-price contract. That is
why we are here – to consider the impact of the Westinghouse
bankruptcy.
The Owners are unified in our recommendation to move forward
with construction and believe we have identified the risks upfront
and provided the information necessary to support the
recommendation. We also understand that this is a complex and
difficult decision and it is ultimately the Commission's decision
on whether or not we will move forward with this project.
Based on all factors considered, completing both units
represents the best economic choice for customers and preserves the
benefits of carbon-free, baseload generation for our state.
Assessments of the project included a robust economic analysis;
evaluation of various alternatives including abandoning one or both
units or converting the units to gas-fired generation; and
assumptions related to potential risks including future payments
from Toshiba, availability of production tax credits and the
extension of loan guarantees from the Department of Energy (DOE)
that reflect the new cost projections.
Since the filing, we have mitigated some of the risks that
further strengthen the recommendation:
- On September 29, we announced
an agreement with the DOE for a conditional commitment of
approximately $3.6 billion in
additional loan guarantees – this illustrates continued federal
support of new nuclear. Understand this is a loan through the
Federal Financing Bank, it is not a grant. The federal government
is allowing us to access a cheaper source of funding versus a
commercial financing option.
- On October 2, we announced the
first payment of $300 million
($137 million for Georgia Power) from
Toshiba and, on November 1, another
$77.5 million was paid pursuant to
the payment schedule. 100 percent of these funds will be used to
benefit customers. This is a positive indication that Toshiba
intends to fulfill its commitments to our customers by paying the
$3.686 billion parent
guarantee.
Construction has continued uninterrupted at the Vogtle site
over the past six months with all the Owners working together to
maintain the project's momentum following Westinghouse's
bankruptcy. Southern Nuclear, the nuclear operating subsidiary
which operates the existing units in Georgia, is now the project manager at the
site. Global construction firm Bechtel is managing daily
construction efforts. Progress is steady and evident, illustrated
by multiple recent achievements such as the placement of the final
steam generator for Unit 3 on October
10 and, at the end of September, more than 1,800 cubic yards
of concrete was placed in the Unit 3 containment vessel – a 71-hour
pour which illustrates significant efficiency improvements.
Let me close with specific Georgia Power comments:
As Chairman, President and CEO of Georgia Power, it is my
responsibility every day to make sure that everything we do is in
the best interests of the 2.5 million customers we serve. In
addition to the Vogtle expansion, we're focused on making the
investments necessary – including further diversifying our energy
mix as well as investing billions of dollars in grid enhancements
in order to provide clean, safe, reliable and affordable energy for
our customers, today and in the future. The value of these
investments was proven following the impact of Hurricane Irma when
we restored power to nearly one million customers across the state
in just four and a half days.
Based on the new expected operation dates of November 2021 and November
2022, the projected peak rate impact to Georgia Power retail
customers is approximately 10 percent, with 5 percent already
related to the project in rates – well below our original
projections of approximately 12 percent.
Georgia Power will continue to fulfill our commitment to our
customers and share in the financial risk of the project.
Under the prudence agreement approved by this Commission, Georgia
Power and our shareholders bear significant penalties as a result
of the updated forecast, which will equate to almost half a billion
dollars. Based on current projections, this agreement will also
reduce the amount paid by customers for the project by
approximately $750 million. As the
commission envisioned in approving this agreement, the consequences
are severe.
Finally, Georgia's
constructive regulatory environment and forward-looking energy
policy has enabled Georgia Power to maintain a diverse energy mix
that allows us to deliver clean, safe, reliable electricity at
rates 14 percent below the national average today – which includes
5 percent for the Vogtle project that is already in rates. We
believe nuclear is a dominant solution in our long-term energy
picture.
In conclusion, I want to thank the members of this Commission
for your continued thorough and thoughtful oversight of the Vogtle
3 & 4 project. As you carefully consider the best path
forward for the Vogtle project, we are confident you will make the
right, long-term decision for the citizens of Georgia.
Before we answer any questions you may have, I would also
like to make you aware of a letter that was sent to all of the
Owner CEOs last week from former U.S. Senator Sam Nunn expressing his support for our
recommendation to finish this project. I have a copy of that
letter if you would like."
The Georgia PSC is expected to review the recommendation and
make a decision regarding the future of the Vogtle 3 & 4
project as part of the 17th VCM proceeding. Read more here.
Final approval and issuance of additional loan guarantees by the
DOE cannot be assured and are subject to the negotiation of
definitive agreements, completion of due diligence by the DOE,
receipt of any necessary regulatory approvals, and satisfaction of
other conditions.
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 expected rate
impacts and other future actions related to 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,
2016, 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
inability or other failure of Toshiba to perform its obligations
under its guarantee; the impact of any failure to extend the
in-service deadline for federal production tax credits; 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;
current and future litigation, regulatory investigations,
proceedings, or inquiries; available sources and costs of fuels;
effects of inflation; the ability to control costs and avoid cost
overruns during the development construction and operation of
facilities, which include the development and construction of
generating facilities with designs that have not been finalized or
previously constructed; the ability to construct facilities in
accordance with the requirements of permits and licenses, 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
Nuclear Regulatory Commission actions; 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 DOE 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.
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SOURCE Georgia Power