As the cost of building a new nuclear plant in Georgia rises, credit rating agencies are taking critical notice.
Four power utilities — Georgia Power, the Municipal Electric Authority of Georgia, Oglethorpe Power Corp. and the city of Dalton — are building a first-of-its-kind nuclear plant about 30 miles southeast of Augusta. That project was originally expected to cost roughly $14 billion, but it has fallen behind schedule by more than a year and is expected to exceed its budget.
The effort is managed by Southern Co. subsidiary Georgia Power, a large utility with a 46 percent stake in the new plant. In late February, Georgia Power told state regulators that its costs were expected to grow by roughly $737 million to about $6.85 billion. Other utilities have reported similar increases in spending roughly equivalent to their share in the project.
Few analysts are worried about the financial implications for Georgia Power, which has a big balance sheet. So far, elected utility regulators have allowed it to pass along its costs to nearly 2.4 million customers.
Other partners are facing more scrutiny. Last week, Fitch Ratings gave a negative outlook to bonds issued by Oglethorpe Power Corp., which supplies electricity to 1.8 million customers, and owns a 30 percent stake in the two new reactors being built at Plant Vogtle. The company’s share of project costs has risen by $300 million to $4.5 billion, according to financial filings.
Fitch did not change the company’s midlevel credit rating, a ranking that shows analysts think there is low risk that Oglethorpe will fail to repay its lenders. But the negative outlook “reflects Fitch’s concern that further delays and higher costs related to the Vogtle nuclear expansion project could weaken the cooperative’s operating and financial profile beyond original expectations,” the Fitch report said.
Oglethorpe said it believes the nuclear plant will prove cost-effective in the long run.
Separately, Moody’s Investors Service has not changed its scoring for the power companies building the new reactors at Plant Vogtle. But it released a report in March noting that negative financial pressures were increasing for three bonds issued by the Municipal Electric Authority of Georgia, which owns a 23 percent stake in the new plant.
Jim Fuller, MEAG’s chief financial officer, said the company has enough financing to fund its share of construction costs and still allow for contingencies.
