8-KOther Events

SOUTHERN CO 8-K Report, Corporate Update (Aug 30, 2023)

Filed August 30, 2023For Securities:SOSOJESOJFSOJCSOJDSOMN

Summary

Southern Co (SO) filed an 8-K on August 30, 2023, detailing Georgia Power's Application to the Georgia Public Service Commission (PSC) to adjust rates for the full costs of Plant Vogtle Units 3 and 4. Georgia Power seeks to recover $8.826 billion in total construction and capital costs, plus associated retail rate base items and operating costs. Crucially, a stipulated agreement has been filed by Georgia Power and several intervenors, proposing a recovery of $7.562 billion in construction and capital costs and $1.02 billion in retail rate base items, contingent upon Georgia PSC approval. This stipulation represents a significant development, as it aims to resolve outstanding issues regarding cost recovery, including extended construction times and rework. If approved, the stipulation would lead to an approximate 5% increase in annual retail base revenues and a similar adjustment in average retail base rates upon Unit 4 achieving commercial operation. However, the filing also highlights potential penalties, including a zero return on equity for the Nuclear Construction Cost Recovery (NCCR) tariff if Unit 4 commercial operation is delayed past March 31, 2024. Additionally, Georgia Power faces a potential pre-tax charge of up to $345 million related to cost-sharing disputes with co-owners of the project.

Key Highlights

  • 1Georgia Power filed an application with the Georgia PSC to recover $8.826 billion in total construction and capital costs for Plant Vogtle Units 3 & 4.
  • 2A stipulated agreement has been filed with the Georgia PSC by Georgia Power and intervenors, proposing a recovery of $7.562 billion in construction/capital costs and $1.02 billion in retail rate base items.
  • 3If the stipulation is approved, Georgia Power expects an approximate 5% increase in annual retail base revenues and average retail base rates upon Unit 4 achieving commercial operation.
  • 4A condition in the stipulation mandates a zero return on equity for the NCCR tariff if Unit 4 commercial operation is not achieved by March 31, 2024.
  • 5Georgia Power may incur pre-tax charges of up to approximately $345 million due to a dispute with co-owners over cost-sharing and tender provisions.
  • 6The Georgia PSC has approved expenditures up to a revised $7.3 billion through the Vogtle Construction Monitoring (VCM) process, with expenditures above this amount through December 31, 2022, having been reviewed but not yet verified or approved.
  • 7The filing triggered a required vote by joint owners on continuing construction, which Georgia Power has supported.

Frequently Asked Questions

The primary purpose is to inform investors that Georgia Power, a subsidiary of Southern Co, has filed an application with the Georgia Public Service Commission (PSC) to adjust customer rates to recover the costs associated with the full operation of Plant Vogtle Units 3 and 4. It also details a significant stipulated agreement that proposes a resolution for these cost recovery issues.

Georgia Power is seeking to recover $8.826 billion in total construction and capital costs, plus associated retail rate base items and operating costs. However, a stipulated agreement filed with the PSC proposes a recovery of $7.562 billion in construction and capital costs and $1.02 billion in associated retail rate base items. The final approved amount will be determined by the Georgia PSC.

If the stipulated agreement is approved by the Georgia PSC, and upon Unit 4 achieving commercial operation, Georgia Power anticipates an approximate 5% increase in annual retail base revenues and a corresponding adjustment to average retail base rates.

Yes, the stipulated agreement includes a penalty: if Unit 4 does not achieve commercial operation by March 31, 2024, Georgia Power's return on equity for the NCCR tariff will be reduced to zero until commercial operation is achieved. Additionally, Georgia Power faces a potential pre-tax charge of up to $345 million related to ongoing disputes with co-owners over cost-sharing and tender provisions.