Dive Brief:
- Southern Company subsidiary Georgia Power announced further delays for the Vogtle nuclear facility in Georgia, with delays of three to four months for the plant's two new units.
- Vogtle Unit 3 is now expected to start service in the second quarter of 2022 rather than the first quarter, with Unit 4 expected to become operational in the first quarter of 2023, the company said. Southern Company also raised its estimated total capital costs for the project by $460 million for a total of $9.2 billion.
- Despite the delays, Southern Company CEO Tom Fanning said on the company's second quarter earnings call that testing has shown "no data so far that gives us any concern." Unit 3 has completed hot functional testing and Fanning said the plant is "running like a champion."
Dive Insight:
Vogtle, the only nuclear plant under construction in the U.S., has been dogged by a series of technology and operational problems. The first unit was originally scheduled to be operational in 2016 with the second online the following year, but Southern Company has steadily pushed back that timeline.
Most recently, the Nuclear Regulatory Commission announced a special investigation in late June into electrical cable raceway issues at the facility, preventing operators from progressing on construction or fuel loading. Southern Company announced Thursday that the investigation was complete, but gave no indication of what the investigation could show or how it might impact future construction.
"We have been completely transparent … and NRC is fully aware of what we found and our remediation practices," Fanning said on the earnings call. The completion of hot functional testing, a crucial step simulating thermal working conditions on a new reactor, represents "the last major milestone" before fuel can be loaded, Fanning added.
"As a company and a management team, we remain focused on bringing Vogtle Units 3 and 4 safely online to provide Georgia with a reliable, carbon-free energy resource for the next 60-80 years," he said.
The latest delay is in line with projections from the Georgia Public Service Commission's independent monitors overseeing the project, who said last month that Vogtle Unit 3 likely wouldn't be operational until at least the summer of 2022. According to Southern Company's latest update, construction on Unit 4 is roughly 84% complete, but was delayed because of COVID-19-related staffing reductions and managers shifting their focus to Unit 3.
Southern Company reported second quarter earnings of $372 million, compared to $612 million in the same period last year. The earnings were impacted by a $343 million after-tax charge for Vogtle construction as well as higher non-fuel operations and maintenance costs related to the economic recovery from the COVID-19 pandemic.
However, a large increase in potential customers could help raise the company's prospects. Chief Financial Officer Drew Evans said on the earnings call that the utility typically adds 45,000 customers in a year, but had already reached about three-quarters of that amount in the first half of 2021, making him "bullish" on the prospects of more residential and industrial power use. Retail electric sales have recovered to more than 97% of pre-pandemic levels, the company said, with stronger than expected residential sales. The company also touted its grid resilience and reliability, reporting no service issues amid rising temperatures or the impact of Tropical Storm Elsa.
The utility, which serves more than 4.2 million electric customers across six southern states, reported a slight increase in the share of energy produced from coal, from 17% in 2020 to 21% so far in 2021. The share of renewables was up from 15% to 16% and the use of natural gas dropped from 51% to 47%.
