ATLANTA - Southern Co. said Thursday it will exceed its original budget to build a first-of-its-kind nuclear plant, a troubling development for an industry long plagued by cost overruns.
The Atlanta-based utility formally asked regulators to raise its budget to build two more nuclear reactors at Plant Vogtle by about $737 million to roughly $6.85 billion. Additional costs are possible. Companies designing and building the plant have sued the utility seeking $425 million for unexpected project costs, though the utility has filed its own suit and denies responsibility for those expenses.
The plant features a reactor design never before built in the United States.
Delays have pushed back the timeline for completing the two reactors from April 2016 and April 2017 to late 2017 and 2018. Southern Co. said it was trying to determine whether the pace can be quickened.
Industry leaders have hoped that Plant Vogtle and an identical plant in South Carolina would prove new nuclear plants can be built without the excess spending that hampered the last round of construction decades ago. Despite the cost increases, Southern Co. said finishing the plant remains about $4 billion cheaper than stopping and building natural gas plants. That analysis ignores money already spent on the nuclear plant.
"If people are debating billions in value for customers, that's a good thing," said Buzz Miller, executive vice president of nuclear development at Southern Co. In the past, financial analysts for utility regulators have found the value for customers could be less than company estimates, though regulators have not yet analyzed the latest company report.
The 2.4 million customers of Southern Co. subsidiary Georgia Power will reimburse the utility for its costs. Georgia Watch, a consumer advocacy group, said it was not surprised by the request. It wants state lawmakers to adopt legislation financially penalizing Southern Co. for cost overruns.
"This for us is further evidence that ratepayers need further protection than they already have," said Liz Coyle, deputy director of Georgia Watch.
Georgia Power owns about 46 percent of the two new reactors, which are estimated to cost $14 billion. The other owners include Oglethorpe Power Corp., the Municipal Electric Authority of Georgia and the city of Dalton. Georgia's elected utility regulators previously authorized Georgia Power to spend $6.1 billion. That commission must now decide whether to approve the latest budget proposal.
Utility commissioners, all Republicans, can bar the utility from passing along to its customers any spending deemed "imprudent."
Years ago, state utility regulators blocked Georgia Power from charging customers $951 million incurred while building the first two reactors at Plant Vogtle. That project was originally budgeted at $660 million. By the time the reactors were finished, the price tag approached $8.9 billion.
The budget may still change. While Southern Co. said it is not responsible for the extra costs now part of the lawsuits, Miller acknowledged the utility may seek a settlement. Utilities in South Carolina reached a deal to end a similar dispute there.
"If we get a settlement and it's good for our customers, we'd take it to the commission at that time," Miller said.
Utility officials said many of the new building costs were for extra oversight. For example, Southern Co. and plant designer Westinghouse Electric Co. have sent workers to a factory run by CB&I, which produces large parts for the plant. Utility officials previously said they needed to increase their oversight after the factory had difficulty meeting federal rules and sticking to its schedule.