Southern Company Cuts Its Cost Forecast for Vogtle Expansion, Provides Update on Project

In its third quarter 2022 earnings call presentation, Southern Company reduced its “Total project capital cost forecast” for Vogtle Units 3 and 4 to $10.383 billion from $10.453 billion, which is what it had reported in the company’s second quarter 2022 earnings call presentation.

The company’s cost estimate reduction doesn’t mean that total project costs have decreased, however, just that the amount Southern Company is expecting to pay has gone down. The Vogtle Electric Generating Plant is jointly owned by Southern Company subsidiary Georgia Power (45.7%), Oglethorpe Power Corp. (OPC, 30%), Municipal Electric Authority of Georgia (MEAG, 22.7%), and Dalton Utilities (1.6%). The forecast released on Thursday only reflects Southern Company’s capital costs and does not include that of other owners.

During an earnings conference call, Tom Fanning, CEO of Southern Company, said his team had reached an agreement to settle a dispute with MEAG. Dan Tucker, Southern Company’s CFO, said, “You might see in the materials a slight cost revision for Georgia Power’s ownership and that’s really reflective of that settlement. Our assumptions previously assumed, as many of you know, this notion of a tender or a put of ownership from any of the co-owners, and since that was not part of the resolution we reached, our estimate of the impact of the settlement is less than our previous estimate.”

The Southern Company forecast includes approximately $590 million of costs that are not shared with other Vogtle owners. It also includes approximately $353 million of incremental costs under relevant cost-sharing and tender provisions. In the second quarter estimate, the incremental costs under relevant cost-sharing and tender provisions was approximately $456 million. Another footnote in the latest release says Georgia Power may be required to record further costs of up to $300 million associated with cost-sharing and tender provisions for OPC and Dalton.

Southern Company’s estimate excludes financing costs of approximately $385 million expected to be capitalized through AFUDC (Allowance for Funds Used During Construction), of which $275 million has been accrued through Sept. 30, 2022. The forecast also factors in $1.7 billion received from Toshiba under a Guarantee Settlement Agreement, and approximately $188 million in related customer refunds.

Unit 3 Fuel Load Complete

Among recent milestones reported during the conference call was completion of Unit 3 fuel loading. Georgia Power announced on Oct. 14 that fuel loading had begun. Fanning said the work was completed “early last week.” The process involved nuclear technicians and operators from Westinghouse and Southern Nuclear transferring 157 fuel assemblies one-by-one from the Unit 3 spent fuel pool to the Unit 3 reactor core. Completion of that milestone means startup testing is the next major step on the path toward commercial operation.

Fanning said Southern Nuclear submitted its “all-ITAAC-complete” letter for Unit 3 during the third quarter. ITAAC stands for “Inspections, Tests, Analyses, and Acceptance Criteria,” and all of the requirements must be completed before the Nuclear Regulatory Commission (NRC) will allow a plant to operate.

Southern Company also received a letter from the NRC during the third quarter confirming receipt of the 103(g) finding. This signifies that the new unit has been constructed and will be operated in conformance with the Combined License and NRC regulations. No further NRC findings are necessary in order for Southern Nuclear to begin the startup sequence for the new unit.

“The focus over the next couple of months turns to final preparations and testing of systems primarily associated with the electric power production side of the plant and achieving the pristine conditions in the nuclear island necessary for startup activities,” Fanning said.

“The next major milestone for Unit 3 is initial criticality, or the first self-sustaining nuclear reaction, which is projected in January,” said Fanning. “Once this important milestone is achieved, plant operators can begin the prescribed testing sequence, which includes a series of power ascensions and reductions, various sustained power output plateaus, and multiple forced trips to test the unit’s safety systems. This rigorous process is intended to demonstrate the performance of the unit under a variety of conditions and its readiness to be included in reliable dispatch and to be placed in service to the benefit of customers. We continue to project Unit 3 will be placed in service by the end of the first quarter 2023.”

Unit 4 Makes Slow but Steady Progress

Fanning said Unit 4 completed open vessel testing in August. Open vessel testing verifies that water flows between the primary systems and the reactor vessel, and that the pumps, motors, valves, pipes, and other system components function as designed. “Direct construction is now approximately 97% complete,” he said.

“Electrical production, in particular electrical terminations, remains a key area of focus to support are projected December 2023 in-service date,” said Fanning. “Testing is expected to become the critical path as the project team progresses towards future milestones of cold hydro testing and the start of hot functional testing, which is projected by the end of the first quarter 2023.”

Cold hydro testing involves several separate tests in different areas of the plant to verify that welds, joints, pipes, and other components of the reactor coolant system, steam-supply system, and associated high-pressure systems do not leak and will hold pressure. To accomplish these tests, internals will be installed in the reactor vessel and the integrated head package will be installed with all head bolts tensioned. The reactor coolant system will be filled and pressurized above normal operating conditions, backed down to normal design pressure, and held there while the comprehensive inspection is conducted. Hot functional testing will follow the cold hydro testing, after which, fuel loading can begin.

—Aaron Larson is POWER’s executive editor (@AaronL_Power, @POWERmagazine).