Southern Co. faces additional $400 million bill for new reactors

The consortium building two new nuclear power units in Georgia has told Southern Co. that it will have to pay an additional $400 million to finish the units on time, according to Southern Co. filings with the Securities and Exchange Commission.

Southern’s Georgia Power unit owns 45 percent of the reactors, which just three months ago received the first new construction and operating license for a new nuclear power plant since 1978 and which also received $8.3 billion in federal loan guarantees.

The cost overruns would mean that a total of $900 million would be added to the $14 billion cost of the new reactors at the Vogtle site. But in its quarterly SEC filing, Southern said its Georgia Power unit “has not agreed with the amount of these proposed adjustments” and would seek dispute resolution or sue its partners in court if they cannot reach a compromise on the cost overruns.

The Energy Department in February 2010 approved $8.3 billion in loan guarantees for the new reactors, saving Southern and its partners hundreds of millions of dollars in financing costs, one of the biggest expenses of building nuclear power plants. Critics said then that the Obama administration underestimated the risk of default, cost overruns and delays.

Georgia Power has received permission from the state public service commission to charge its customers $1.7 billion of the company’s $6.1 billion in costs before the plants come online.

Steven Mufson covers energy and other financial news.
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