Southern Company (SO) Vogtle Project Wins Georgia PSC Nod

Southern Company (SO) Vogtle Project Wins Georgia PSC Nod

December 26, 2017

Georgia Public Service Commission (PSC) recently approved the construction of The Southern Company 's SO controversial Vogtle project. The news came as a respite for the company's project which has been receiving much censure owing to its ballooning costs. 

Work continues on a new reactor at Plant Vogtle Nuclear Power Plant in Waynesboro in this photo from 2014. Three years later, the project remains unfinished and in limbo. - photo by John Bazemore | Associated Press source gainesvilletimes.com

edited by kcontents

The Vogtle nuclear reactors have been grappling with cost overruns and scheduling delays since the commencement of the construction. Bankruptcy of Westinghouse - the major construction contractor of the two nuclear reactors of the plant - aggravated the costs further and led to more delays. Since then a cloud of uncertainty has been hovering over the beleaguered plant.

A couple of weeks ago, Georgia's regulatory staff were of the opinion that the overtly expensive project should be called off unless Southern company and its subsidiary Georgia Power - which is the chief owner of the project with 45.7% stake - bear the costs. While Georgia Power wanted the customers to bear the additional costs of the project, the regulatory staff believed that such inflated cost would be a burden on customers. However, the latest verdict has allowed the company to pass on the additional cost of the project to the ratepayers.

The Vogtle expansion will result in the construction of a third and fourth reactor along with the two existing reactors. The nuclear reactors are now expected to come online in 2021 and 2022.  The construction of the two new Vogtle reactors is expected to cost more than $25 billion. On a positive note, Toshiba recently paid the entire guaranteed amount of $3.68 billion which it had promised for the expansion of the project. Southern Company also received around $10-billion federal loan guarantee for Vogtle Project, emphasizing the government's faith in the future of nuclear energy in the nation.

The verdict underscores the fact that such nuclear energy projects are important in promoting economic growth and strengthening the energy and national security of The United States.With the decision to continue with the project, Vogtle plant in Georgia remains the only nuclear project which is under construction in the United States. In August, South Carolina Electric & Gas - subsidiary of SCANA Corporation SCG - terminated the construction of $18-billion VC Summer nuclear project in South Carolina. Duke Energy Corporation DUK also announced the abandonment of Lee III Nuclear Generating Station in South Carolina.

However, the decision to continue with the project may increase the credit risk of the company. The project which has been missing milestone dates and suffering from poor productivity rates is likely to suffer from the ballooning costs, which may hurt the already weak financials of the company.

Headquartered in Georgia, Southern Company is one of the largest generators of electricity in the United States.The buyout of energy services holding company AGL Resources, Inc. has helped Southern Company to significantly increase the customer base, while diversifying its business by adding gas distribution assets.

Southern Company (The) Price

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Southern Company currently carries a Zacks Rank #2 (Buy).

Another top-ranked player in the energy space is Northern Oil and Gas, Inc. NOG which sports a Zacks Rank #1(Strong Buy). You can see  the complete list of today's Zacks #1 Rank stocks here.

Northern Oil and Gas delivered an average beat of 175% in the last four quarters.

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http://www.nasdaq.com/article/southern-company-so-vogtle-project-wins-georgia-psc-nod-cm896470

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