Moody’s Investors Service said Monday that adverse developments at Georgia Power’s new Plant Vogtle nuclear construction project that have increased costs and delayed the construction schedule are a credit negative.
However, the costs and delays are manageable at the utility’s A3 senior unsecured rating level. The outlook is stable.
On Feb. 28, in a semiannual Vogtle construction monitoring report filed with the Georgia Public Service Commission, Georgia Power requested a $381 million increase in the certified capital cost of its share of the project to approximately $4.8 billion from $4.4 billion, according to Moody’s.
The power company also indicated that there would be an increase in financing costs to about $2.1 billion from $1.7 billion because of a delay in the scheduled completion date.
The cost increases and construction schedule delay follow several other negative project developments, including ongoing litigation with the construction consortium over $425 million of additional costs, more than 20 Nuclear Regulatory Commission license amendment requests as a result of deviations to the approved project design, and other concerns, according to Moody’s analysts.
The commercial operation date for nuclear Unit 3 has been moved to the fourth quarter of 2017 from April 2016, and to the fourth quarter of 2018 from April 2017 for Unit 4.
Georgia Power, whose parent company is investor-owned Southern Co., owns 45.7% of the project while Oglethorpe Power Corp. owns 30%, Municipal Electric Authority of Georgia owns 22.7%, and Dalton Utilities 1.6%.
MEAG, a public generation and transmission organization, secured most of its financing in March 2010 through the sale of $2.62 billion of bonds.
The authority also has a $1.8 billion loan guarantee from the Department of Energy.
Officials at MEAG could not immediately be reached to find out if its costs will increase or it will require additional financing.
In October, Moody’s affirmed its A2 rating on MEAG’s $2.27 billion of project M and J bonds, and the Baa2 rating on $390.5 million of project P bonds financing the authority’s ownership interest in the new Vogtle units.
Moody’s said it was maintaining a negative outlook on MEAG’s bonds “to reflect the uncertainty” over the cost dispute with contractors and potential pressure related to cost increases and delays.