Southern Delays New Reactors 18 Months on License Issues

Southern Co. (SO), the company building the first new U.S. nuclear power reactors since the 1970s, is postponing the commercial start by 18 months and increasing cost estimates because of regulatory delays and contractor issues.

The reactors are now scheduled to begin operating by the end of 2017 and 2018 and cost the company $6.85 billion, Atlanta-based Southern said in a filing with the Georgia Public Service Commission today. That’s 12 percent more than the $6.11 billion cost approved by state regulators in 2010. Southern’s Georgia Power subsidiary is the largest owner of the project, with a 45 percent stake.

The $14 billion project being built at an existing nuclear power plant site near Augusta, Georgia, includes the first reactors to be licensed in the U.S. since the Three Mile Island accident in 1979. They were originally slated to begin commercial service in April 2016 and 2017.

“The design and construction of the facility is a massive undertaking by any measure,” Southern said in the filing. “It is one of the largest and most capital-intensive infrastructure projects currently underway in the United States.”

The company is asking regulators to increase its certified construction costs by 8.6 percent to $4.8 billion. The delayed start won’t “meaningfully change” the effect on customer rates, which are expected to rise by 6 percent to 8 percent because of the new reactors, the company said.

Contractor Litigation

Southern is involved in litigation about some of the work done by contractors and its costs may increase depending on the outcome of the lawsuits against Westinghouse Electric Co. and Stone & Webster Inc., Joseph Miller, the president of nuclear development, said in a phone interview today.

Total project costs are expected to remain at about $14 billion, including lower interest expenses and other savings, Georgia Power Comptroller Ann Daiss said in the interview.

An initial six-month delay, when federal regulators took longer than expected to approve the reactors’ design, was compounded when Westinghouse and Stone & Webster didn’t exactly follow license specifications for installing steel to reinforce concrete at the site, Miller said.

Georgia Power and the two project managers sued each other in November over at least $900 million in added costs.

The company has spent $2.21 billion on the project so far and said in the filing today that it is still the “best cost option” for customers compared with alternative power supplies.

To contact the reporter on this story: Julie Johnsson in Chicago at jjohnsson@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net

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