EDITOR'S NOTE: An article in Thursday’s edition should have stated federal tax credits for Plant Vogtle’s two new nuclear reactors will end Dec. 31, 2021.
Executives of the parent company financing Plant Vogtle’s two new reactors continue to be awarded millions in incentives despite it being behind schedule and billions over budget, and many shareholders are not happy about it.
Southern Company held its annual shareholders meeting Wednesday to give investing companies and others the chance to discuss issues with executives. One of those matters this week concerned the board of directors decision to award incentives to executives while ignoring losses at two of the company’s major projects; Kemper Plant in Mississippi and the Vogtle expansion in Burke County.
The contract company Westinghouse, responsible for the Vogtle expansion, filed for bankruptcy March 29, prompting fears of potential project abandonment.
At the meeting, about 40 percent of the shareholders voted to give themselves a more influential role in handing out incentives, which are approved and controlled by the board. Such a high percentage means there are a lot of shareholders with complaints about the executive pay structure, according to 50/50 Climate Project. The project has been monitoring Southern Company because of its Kemper Plant and its clean coal intentions. The project continued watchdog work on the utility company as the Westinghouse situation unfolded.
“The shareholder opposition to the executive compensation plan is a vote of no confidence in the board’s failure to hold executives accountable for the Kemper and Vogtle project failures in 2015 and 2016,” said Edward Kamonjoh, Executive Director of 50/50 Climate Project.
According to a 2017 proxy statement filed with the Securities and Exchange Commision, Southern Company CEO Tom Fanning earned approximately $1.3 million in 2016, a $50,000 raise from his 2015 salary. His performance pay incentive for 2016, as approved by the board of directors prior to Wednesday’s shareholder meeting, was more than $2.7 million.
Paul Bowers, CEO of Southern Company’s largest subsidiary Georgia Power, which is footing the bill for construction in the wake of Westinghouse’s bankruptcy, earned a $721,000 base salary in 2016, a $21,000 raise from 2015. Bowers’ incentive pay was more than $1.1 million.
The proxy statement said the executives earned their pay for being “above target” and for “making significant progress” at Vogtle, as well as the troubled Kemper Clean Coal Plant in Mississippi.
According to government documentation, Southern Co. at the Kemper Plant is under investigation by the SEC.
Allegations levied against the company from whistleblowers allege it intentionally understated costs and covered up issues as they emerged.
The plant is years behind deadline and has overrun its budget by billions, just like Vogtle.
At the Georgia Public Service Commission hearing this month, executives told the commission that construction had fallen four months behind schedule. Earlier this year, Georgia Power also announced it was moving operational deadlines for units 3 and 4 back six and three months, respectively.
During the hearing, Georgia Power executives told the commission that reaching operational deadlines would be even more unlikely post-bankruptcy filing. Executives also questioned whether or not the plants new units would be ready by 2021, when tax credits from the federal government expire.
Tim Echols, vice chairman of the PSC, took advantage of an event with Energy Secretary Rick Perry last month to ask him for federal help.
Federal help could include extending tax credits to help the floundering project reach the finish line.
The Southern Co. proxy statement said Southern paid over $2.1 billion to shareholders in 2016. In the case of plants Kemper and Vogtle, ratepayers have invested up front and haven’t seen any returns. Without electricity production on hold at both facilities for at least several more years, any returns on consumer investment will have to wait.
Before construction began at Vogtle, Georgia lawmakers approved Construction Work in Progress, allowing the regulated utility to collect money from ratepayers for the Vogtle expansion upfront before construction was complete. Georgia Power customers have paid as much as $500 individually for the project, which won’t provide a single kilowatt of electricity for years to come.
A Georgia Power spokesman said the company is committed to the Vogtle project.
“As we have discussed, all options are being considered for the expansion at Plant Vogtle,” said Jacob Hawkins. “We continue to conduct a full-scale schedule and cost-to-complete assessment for the project and will work with the Georgia PSC and the project’s other co-owners to determine the best path forward. We expect to have this analysis completed this summer.
“For our customers and neighbors in Burke and Richmond Counties, we want them to know that we remain committed to them and the communities we serve, regardless of the outcome of our assessment and how the Vogtle expansion project moves forward.”
Reach Thomas Gardiner
at (706) 823-3339