ATLANTA – Profits suffered at the parent company of Georgia Power because of cost overruns incurred in the construction of a novel power plant, the Southern Co. reported Wednesday.
The utility’s holding company is constructing two large, first-of-their-kind power plants, and both are behind schedule and over budget. The only one affecting earnings at this point, according to the company, is an experimental, low-emission coal-fired plant in Kemper County, Miss.
Regulators there have ruled that company shareholders must absorb most of the overage rather than passing it along to electricity customers.
The other large plant with construction overruns, Plant Vogtle in Waynesboro, Ga., is awaiting a decision from the Georgia Public Service Commission on how much of the overage, if any, will be passed along to electricity customers and how much to shareholders. That decision will be the subject of hearings that have yet to be scheduled and may not come until sometime next year, PSC spokesman Bill Edge said Wednesday.
The company reported first-quarter earnings of $485 million or 53 cents per share, a drop from $508 million or 56 cents per share for the same quarter of 2015.
The charges for the Kemper plant were $33 million or 4 cents per share.
The earnings were also reduced by $14 million or 1 cent per share related to the acquisition of AGL Resources, the parent of Atlanta Gas Light Co. Without Kemper and the gas merger, Southern Co. could report rising earnings of $532 million or 58 cents per share for the first three months of the year.
“Southern Company performed superbly in executing its business plan in the first quarter of 2016. We saw positive customer growth, along with strong residential and commercial sales and a robust economic-development pipeline,” said Southern Co. Chairman Thomas A. Fanning. “Our franchise operations and our competitive generation subsidiary, Southern Power, continue to perform at a high level and deliver on our core strategy of providing clean, safe, reliable and affordable energy to customers.”
Even though money from sales of electricity grew, the company also reported that electricity consumption decreased 3 percent in its four-state operating area during the quarter, led by a 7.2 drop off in residential usage.
Critics argue the usage declines are a reason to halt construction on Plant Vogtle’s two new reactors, the first built in the United States in 30 years.
“These data show undeniably that Georgia Power doesn’t need the measly 6 percent increase in capacity that Vogtle 3 and 4 would provide if Georgia Power can even build the reactors at all,” said Glenn Carroll, the coordinator for the activist group Nuclear Watch South. “Yet, despite its notoriously poor performance at Vogtle 3 and 4, Georgia Power ‘earned’ a net profit margin of 15.3 percent ($1.26 billion) in 2015.”
Company officials that say the biggest problems at Plant Vogtle were related to startup and that the expansion is needed to prepare for Georgia’s population growing by a million in the next 15 years. Southern added 14,000 residential customers during the January-March period.