Moody’s downgrades Georgia Power’s credit rating over new Plant Vogtle costs

Moody's has downgraded Georgia Power's credit rating, following the company's announcement of increased construction costs at Plant Vogtle.

The credit rating agency lowered the utility’s credit rating from A3 to Baa1, which according to the agency’s rating definitions signifies the company’s shift from low credit risk to moderate credit risk.

VIDEO: More on Plant Vogtle

Early Wednesday, Georgia Power announced a $1.1 billion increase in the cost to complete construction at the twin nuclear units being built in Burke county. The company said the increase, announced eight months after the Georgia Public Service Commission certified $7.3 billion as the cost to complete construction, would be self-financed.

“Although the additional costs will be covered through new equity issuances at the Southern parent, the latest revised cost estimate risks damaging the ongoing support from regulators, given it occurred so soon after they vetted and approved an earlier estimate,” said Jeff Cassella, senior credit officer at Moody’s Investor Service.

Georgia Power is expected to file the “developments with the Commission for review,” said state Public Service Commission spokesperson Bill Edge.

The credit rating company also placed the company’s ratings on review for further downgraded due to “the utility’s weaker financial metrics, which have steadily declined as the Vogtle project has proceeded and are not expected to improve over the near term.” Also, Moody’s said, Vogtle co-owners, Oglethorpe Power and the Municipal Electric Authority of Georgia, could decide to pull out of the project.

In a statement, Oglethorpe Power which owns 30 percent of Vogtle’s share, said its existing budget was “adequate to cover the bulk of its share of the recently announced increases in the base capital forecast for the project.”

Oglethorpe "is performing its due diligence under the Project Adverse Events (PAEs) within the co-owner agreement resulting from the new budget forecast and Georgia Power's decision not to seek rate recovery for these amounts. A vote on these items is anticipated late in the 3rd Quarter of 2018," the company said in a statement.

Meanwhile, public interest groups are appealing to the Public Service Commission not to approve a portion of $448 million in expenditures related to ongoing construction at Vogtle that Georgia Power submitted.

The Southern Alliance for Clean Energy, Georgia Interfaith Power and Light and the Partnership for Southern Equity asked commissioners to delay the approval of Westinghouse Electric Company’s portion of the amount, due to invoicing weaknesses identified by an audit firm.

The utility company updates state regulators every six months about progress on the nuclear units. The groups are asking for confirmation that the expenditures accrued between March to December 2017 by Westinghouse were directly related to the project.

“Here, the evidence is undisputed that a not-insignificant portion of the expenditures in question are potentially in dispute,” wrote the Georgia Interfaith Power and Light and the Partnership for Southern Equity to the commission.

Consumer interest groups in the state have been protesting the delays and cost overruns associated with the project, arguing that consumers should not shoulder the financial burden of the project.

“Any failure of the Commissioners to stay vigilant over this project and to maintain their duty to protect the ratepayers at the forefront could quickly result in further extended timelines and increased cost overruns that cannot be overcome by any amount of non-economic benefits,” wrote the Southern Alliance on Clean Energy.