ATLANTA (AP) -- A decision to absorb losses on an over-budget power plant in Mississippi may haunt Southern Co. now that it wants regulators to raise its construction budget for a nuclear power plant in Georgia.
Southern Co. executives fielded critical questions Thursday during their first testimony since announcing the firm could not meet its state-approved budget to build two more nuclear reactors at Plant Vogtle (VOH'-gohl), southeast of Augusta. Southern Co. subsidiary Georgia Power has asked to raise the budget for its share of the massive project by $737 million to roughly $6.85 billion.
While costs have increased, Southern Co. officials said finishing the plant remains cheaper than the next alternative, building gas-fired power plants.
Public Service Commissioner Tim Echols asked whether Southern Co. executives had considered an agreement like one reached in Mississippi. Faced with cost overruns while building Plant Ratcliffe in Mississippi's Kemper County, a showcase facility designed to capture much of the carbon dioxide produced while burning local coal to make electricity. Southern Co. agreed to take a $540 million loss on unexpected project costs rather than passing along those expenses to its customers. The utility recently announced it may face another $160 million in additional losses on the same plant.
"Is that something that you all are open to or talked about?" Echols asked two company executives.
Kyle Leach, director of resource policy and planning for Georgia Power, said he could not testify about the Mississippi agreement. Southern Co. has said that Georgia's utility regulators have the power to reject any project spending they deems imprudent. The utility has consistently opposed legislation and proposed rules that would have trimmed its profits if the project broke its budget.
Echols asked how the company did not consider as imprudent a problem in the installation of metal bars at the plant, an issue that delayed construction. The bars were installed in ways that differed from an approved design. The discrepancy forced Southern Co. to seek federal permission to change its designs. While the NRC approved the changes, the process slowed down construction.
"How is your failure to catch the flaw not imprudent?" Echols said.
"I believe all the actions taken to resolve these issues and work through these issues were appropriate and reasonable," said David McKinney, a vice president of nuclear construction support. "And I'll tell you this project represents a lot of people working on it, and there's the human factor."
Commissioner Stan Wise, a reliable defender of the company, expressed frustration that delays have driven back the finish dates from April 2016 and April 2017 to late 2017 and 2018.
"The trend is delay and overruns," Wise said. "Is there any reason to believe the trend is not going to continue through the construction phase?"
An independent monitor hired by Georgia officials previously warned that Southern Co. and its partners were missing key construction deadlines. The monitor warned that a manufacturing facility run by The Shaw Group Inc. in Lake Charles, La., was failing to produce key parts on schedule while meeting industry rules. Southern Co. officials said the plant's performance has improved since it was acquired by CB&I.
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