Summary
Southern Company (SO) reported on October 20, 2016, that its subsidiary, Georgia Power, reached a settlement agreement with the Georgia Public Service Commission (PSC) Staff regarding the costs associated with the Plant Vogtle Units 3 and 4 nuclear construction project. This settlement addresses prudence matters for costs incurred up to December 31, 2015, and for costs associated with the Westinghouse settlement. It also establishes a revised forecast for in-service capital costs at $5.680 billion, including a contingency, and outlines the burden of proof for costs exceeding this revised forecast.
Key Highlights
- 1Georgia Power and Georgia PSC Staff reached a settlement agreement on the costs of Plant Vogtle Units 3 and 4 as of October 20, 2016.
- 2The settlement resolves prudence matters for approximately $3.3 billion in costs incurred through December 31, 2015, meaning these costs will not be disallowed from rate base on the basis of imprudence.
- 3The settlement deems the Contractor Settlement Agreement with Westinghouse reasonable and prudent.
- 4Financing costs for approved capital costs will be considered prudent if incurred before December 31, 2019 (Unit 3) and December 31, 2020 (Unit 4).
- 5A Revised Forecast for in-service capital costs is set at $5.680 billion, including a $240 million contingency.
- 6Costs up to the Revised Forecast are presumed prudent, with the burden of proof on challenges; costs above the Revised Forecast require Georgia Power to demonstrate prudence.
- 7The certified in-service capital cost for the Nuclear Construction Cost Recovery (NCCR) tariff remains at $4.418 billion, with construction costs above this level accruing AFUDC.
Frequently Asked Questions
The main outcome is that approximately $3.3 billion of costs incurred through December 31, 2015, and costs associated with the Westinghouse settlement are deemed prudent and will not be disallowed from rate base. A revised forecast for in-service capital costs is established at $5.680 billion, with the burden of proof for costs exceeding this amount placed on Georgia Power.
The settlement establishes a Revised Forecast of $5.680 billion for in-service capital costs, which includes a $240 million contingency. Costs incurred up to this Revised Forecast are presumed prudent, while any costs exceeding it will require Georgia Power to demonstrate their reasonableness and prudence.
Financing costs on verified and approved capital costs will be deemed prudent if incurred before December 31, 2019, for Unit 3 and December 31, 2020, for Unit 4. The certified in-service capital cost for the NCCR tariff remains at $4.418 billion. Construction capital costs above $4.418 billion will accrue AFUDC through commercial operation. The ROE used for NCCR and AFUDC calculations will be reduced.
No, the Vogtle Cost Settlement Agreement is subject to approval by the Georgia Public Service Commission (PSC). The terms are subject to change, and the final agreement approved by the PSC may differ materially from the current settlement agreement.