New construction delays at V.C. Summer in South Carolina, shown here, and at Georgia's Plant Vogtle are prompting analysts to review the credit impact on public utilities involved in the nuclear projects.

BRADENTON, Fla. — New construction delays on nuclear units in South Carolina and Georgia are prompting rating analysts to evaluate potential credit impacts on public power and cooperative utilities involved in the projects.

The second round of delays were announced recently for the two units that South Carolina Electric & Gas Co. is developing at the V.C. Summer Nuclear Station, and two units that Georgia Power Co. (GPC) is developing at Plant Vogtle.

The South Carolina Public Service Authority has a 45% ownership interest in the Summer project. For Vogtle, a 30% stake is owned by Oglethorpe Power Corp., which has 38 member cooperatives, and a 22.7% interest is owned by the Municipal Electric Authority of Georgia. MEAG has 20-year power purchase agreements with JEA in Jacksonville, Fla., and Alabama's PowerSouth Energy Cooperative.

Both projects have the same construction consortium led by Westinghouse Electric Co. The developers now expect the units are three years behind the original schedules, adding to costs for owners and power purchasers as they secure replacement power, Standard & Poor's said Thursday.

The delays could also require additional financing.

"We are increasing our focus on the participating public power and cooperative utilities after multiple announcements of project delays at both sites," said S&P analyst David Bodek.

Bodek said there likely will be negative rating implications if the delays erode the participating utilities' credit metrics or if there are further delays and higher costs.

The plants in both states are the U.S.'s first nuclear units in decades, and both are using Westinghouse's new AP1000 reactors and modular construction that was expected to improve quality and avoid major cost overruns, according to Moody's Investors Service.

The projects involve first-in-kind engineering that has never been done at the scale of a nuclear project, and the initial cost estimates and schedules have not been met due to problems with the fabrication of some modules, said Moody's analyst Dan Aschenbach.

While the delay is a negative impact for MEAG, Moody's said the impact appears to be significantly mitigated by the authority's risk diversification strategy, including the potential for lower interest costs for completion financing later this year.

MEAG has financed a portion of its $3.7 billion cost with about $2.7 billion in bonds, and has been approved for up to $1.8 billion in guaranteed federal loans. In a Jan. 29 notice to bondholders, MEAG said that Georgia Power has not yet agreed to adjust the completion schedule for the new reactors and there may be litigation.

The South Carolina Public Service Authority's cost of the Summer project is $5.1 billion. Revenue bonds have been issued for most of the project, though about $1.5 billion of capital needs remain to be financed. Some funding will come a $1 billion offering pricing later this month, though most of it is a refunding.

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