Moody’s slams Ga. Power decision to move ahead with Vogtle nukes

[private]Georgia Power’s decision to continue construction of two nuclear reactors at Plant Vogtle drew stern cricitism from one of Wall Street’s major credit rating agencies, Moody’s.

“If approved by state regulators, continuation of the project will increase the utility’s business and operating risk profile because total costs are open ended and because Georgia Power’s parent company will be assuming construction risk on its balance sheet,” Moody’s said in an advisory.

Georgia Power filed a recommendation with the Public Service Commission on Thursday that it move ahead with the Vogtle project, despite the bankruptcy filing of the primary contractor, long schedule delays, and cost overruns that exceed $3 billion and are expected to increase.

“The two new units at Plant Vogtle will be in service for 60 to 80 years and will add another low-cost, carbon-free energy source to our already diverse fuel mix,” said Georgia Power President Paul Bowers.

Moody’s was more pessimistic in its analysis of the project.

“We incorporate a view that the Vogtle project is likely to exceed the roughly $19 billion cost estimate (plus financing costs), and that additional delays beyond the November 2021/2022 target operational dates are still a possibility,” Moody’s said.

“We note that Georgia Power will no longer have the benefit of the experience and shared knowledge from two nearly identical nuclear units being built by neighboring South Carolina Electric & Gas Company (Baa2 negative), which made the credit positive decision to abandon its construction project after similarly higher costs and delays were incurred,” Moody’s said.

“Finally, we note that the Vogtle co-owners, Oglethorpe Power Corporation, Municipal Electric Authority of Georgia (MEAG Power) and the City of Dalton are also feeling the financial and consumer pressures of pursuing a new generating project that will cost in excess of $12,000 per kw-capacity (offset by the funds received under the Toshiba guarantee), which is materially higher than alternative sources of generation,” Moody’s said.

The PSC is expected to make a decision by late February on whether it will go along with Georgia Power’s recommendation. To date, the commissioners have tended to grant Georgia Power whatever it requests and has allowed the utility to offload all of the business risk on its ratepayers rather than its shareholders.

“Georgia Power and Southern Company have convinced the Georgia Public Service Commission — an elected body that should be answering to you — that the best course of action is the single most expensive one,” said John Noel, a former legislator who is running against Commissioner Chuck Eaton in 2018.

“Their job is to protect Georgia families and small businesses and help keep our utility rates low – not do exactly opposite,” Noel said. “It’s a complete failure of oversight on the part of the PSC.”

© 2017 by The Georgia Report

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Tags: Georgia Power , Moody's , Plant Vogtle