A dispute over who must pay for more than $950 million in cost overruns at the site of Plant Vogtle’s new reactors has advanced to formal dispute resolution and could affect the project’s completion schedule, according to Georgia Power.
In a quarterly financial report filed last week with the Securities and Exchange Commission, Southern Co. – whose subsidiary Georgia Power owns 45.7 percent of the nuclear project – said it has not agreed to adjustments proposed by the contractor consortium that includes Westinghouse and Stone & Webster Inc.
“While the formal dispute resolution process has been initiated, Georgia Power expects negotiations with the contractor to continue over the next several months with respect to cost and schedule,” the statement said.
In late April, the contractor group estimated that Georgia Power’s share of added costs would be $400 million, “in 2008 dollars,” with proportionate costs paid by Vogtle co-owners.
Oglethorpe Power owns 30 percent, while the Municipal Electric Authority of Georgia owns 22.7 percent. The remaining 1.6 percent is owned by Dalton Utilities.
The newest filing shows that Georgia Power’s proposed assessment has increased to $425 million, which would push the project’s total estimated cost increase to more than $950 million.
The expansion, originally estimated to cost $14 billion, includes adding two reactors whose completion dates could now be in question.
“In connection with these negotiations, the owners are evaluating whether maintaining the currently scheduled commercial operation dates of 2016 and 2017 remains in the best interest of their customers,” the statement said.
Southern Co. also disclosed that a plan by Vogtle’s owners to use an $8.3 billion U.S. Department of Energy loan guarantee to help finance the project is now uncertain.
“There can be no assurance that the DOE will issue loan guarantees for Georgia Power,” the statement said, adding that the financing remains subject to “definitive agreements” that remain under negotiation.
“In the event that the DOE does not issue a loan guarantee or Georgia Power determines that the fi-
nal terms and conditions
of the loan guarantee by
the DOE are not in the best interest of its customers, Georgia Power expects to finance
the construction of Plant Vogtle Units 3 and 4 through traditional capital markets financings,” the report stated.
The government’s offer was set to expire about 90 days after the Vogtle expansion received its operating license in February, and company officials had said an agreement would be reached during the second quarter of 2012.
That target date was later changed to the third quarter, after the government extended the conditional commitment to the end of the year.