8-KEarnings & ResultsOther Events

SOUTHERN CO 8-K Report, Financial Results (Oct 6, 2023)

Filed October 6, 2023For Securities:SOSOJESOJFSOJCSOJDSOMN

Summary

Southern Co. (SO) filed an 8-K report detailing two significant events. Firstly, its subsidiary, Georgia Power, has reached a settlement with Oglethorpe Power Corporation (OPC) regarding the Plant Vogtle Units 3 and 4 joint ownership agreements. This settlement involves Georgia Power making a payment of $308 million to OPC and agreeing to cover a portion of future construction costs, resulting in an estimated $152 million pre-tax charge to income for the third quarter of 2023. While this resolves the dispute with OPC, a similar dispute with the City of Dalton remains unresolved, carrying a potential exposure of up to $17 million. Secondly, Georgia Power announced a projected delay in the in-service date for Plant Vogtle Unit 4. Following the identification of a motor fault in a reactor coolant pump during start-up testing, Georgia Power now anticipates Unit 4 will become operational during the first quarter of 2024, rather than the previously expected timeline. This delay is attributed to the necessary remediation and ongoing pre-operational testing. The company emphasized that the motor fault appears to be an isolated incident and that further updates will be provided in the November 2023 earnings call.

Key Highlights

  • 1Georgia Power settled a dispute with Oglethorpe Power Corporation (OPC) concerning Plant Vogtle Units 3 & 4 joint ownership agreements.
  • 2The OPC settlement will result in an estimated $152 million pre-tax charge to income for Southern Co. in Q3 2023.
  • 3The settlement includes a $308 million payment to OPC and Georgia Power covering a portion of OPC's future construction costs.
  • 4A dispute with the City of Dalton regarding Plant Vogtle remains unresolved, with potential exposure up to $17 million.
  • 5Plant Vogtle Unit 4's in-service date is now projected for the first quarter of 2024 due to a motor fault requiring replacement and ongoing testing.
  • 6The motor fault in Unit 4's reactor coolant pump is considered an isolated event, as Unit 3's pumps have operated as designed.
  • 7Further project delays and cost increases for Unit 4 remain a possibility due to potential operational challenges, contractor management, and evolving technologies.

Frequently Asked Questions

The OPC settlement is expected to result in a charge to income of approximately $152 million (or $114 million after tax) for Southern Co. in the third quarter of 2023. This includes a $308 million payment to OPC and a portion of OPC's future construction costs.

No, the OPC settlement does not resolve the related pending litigation with the City of Dalton. Georgia Power has remaining potential exposure of up to approximately $17 million in pre-tax charges related to this dispute.

The in-service date for Plant Vogtle Unit 4 has been delayed due to a motor fault identified in one of its reactor coolant pumps during start-up testing. This requires the replacement of the pump and completion of further pre-operational testing.

Georgia Power now projects that Plant Vogtle Unit 4 will become operational during the first quarter of 2024.

Yes, the company acknowledges that further schedule delays and cost increases for Unit 4 are possible. This is due to the potential for additional operational challenges, management of contractors and vendors, ongoing testing, and the inherent complexities of new technology in nuclear power generation.