ATLANTA — Southern Co. showed signs Friday of better controlling its spending while building a first-of-its-kind nuclear plant, an important development for a project that was supposed to prove the nuclear power industry is financially viable.
Projections released by the Atlanta-based utility show it expects to spend roughly $6.76 billion as its share of the cost to build two more nuclear reactors at Plant Vogtle in eastern Georgia, an effort that is trending $646 million above a government-approved budget. The financial situation has improved compared with last year's estimates that showed the project was trending $737 million over budget, for a total of $6.85 billion.
Controlling spending is critical for the nuclear industry if it wants to prove it can build new plants without the soaring costs that crippled the sector decades ago and pushed utilities to the brink of financial ruin. The latest financial projections suggest that Southern Co. and its partners have slowed the rate of spending growth and are resolving at least some of the problems with its suppliers, contractors and project oversight.
Southern Co. subsidiary Georgia Power owns a 46 percent stake in the reactors, which are expected to cost more than $14 billion when complete, including the investments of all the owners.
"This is a first-mover plant here," said Joseph "Buzz" Miller, the president of nuclear development for Southern Co.'s nuclear subsidiary. "Our level of knowledge and our people and what we're looking at, we've got way more certainty of where we are (compared with) a year ago."
Not everyone watching the project is convinced that costs are being contained. Spending could still increase. The plant's designer, Westinghouse Electric Co., and the building contractor, CB&I, say that Georgia Power and other owners are responsible for an extra $930 million in charges mostly incurred when a federal licensing process ran late. The utility companies deny they are responsible for those costs. The issue remains unresolved.
Under a deal with regulators, Georgia Power has agreed not to officially seek to raise its budget until the first reactor comes online, likely in late 2017 or very early in 2018.
"This report is written in such a way it's meant to put the company's best foot forward," said Liz Coyle, acting executive director of the consumer advocacy group Georgia Watch. She wants to see an upcoming report on the project due from an independent engineer who works for the state's utility regulators. "That's when the independent monitors can peel off the positive language and really tell us what's happening."
Southern Co. said Friday that it has increased oversight on the project and is working through problems with suppliers that led to delays. Still, there are issues. In one example, the utility said Friday that some engineering work was lagging behind schedule.
Utility companies nationally had plans to build dozens of new nuclear plants until the price of natural gas plunged and the United States entered a deep recession that crimped the demand for electricity. Now experts expect only a handful of plants to be constructed in the coming years, including the plant in Georgia and an identical facility under construction at the V.C. Summer nuclear plant in South Carolina. Many of the issues that affected the Georgia facility also slowed construction progress in South Carolina.
The Tennessee Valley Authority is separately working to complete a long-mothballed reactor at its Watt Bar plant. Initially budgeted at $2.5 billion, the utility has said finishing the project could cost up to $2 billion more.
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