Georgia Power CEO provides overview of recommendation to move forward with Vogtle 3 & 4 project to the Georgia PSC
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:
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.
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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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