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Southern (SO) Subsidiary Resolves $413 Million Dispute
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Southern Co. (SO - Free Report) subsidiary, Georgia Power, announced a $413-million resolution with Oglethorpe Power Corporation, a wholesale electricity provider. The resolution is set to settle a dispute over the Vogtle nuclear power plant project, which is currently under construction in Georgia.
Let’s delve into the details of the dispute, shedding light on the financial aspects and implications for both parties involved.
The Genesis of Plant Vogtle Units 3 and 4
First, it's important to understand the background of Plant Vogtle and the expansion project. Plant Vogtle, located in Burke County, GA, is home to two operational nuclear power units, Vogtle 1 and 2. These units have been serving as reliable sources of electricity for decades.
The expansion project, known as Vogtle Units 3 and 4, aims to add two more nuclear reactors to the existing facility. The expansion was initiated to meet the growing energy demands of Georgia and contribute to clean energy production. Southern subsidiary, Georgia Power, one of the primary stakeholders in this venture, embarked on this ambitious project in partnership with Oglethorpe Power.
The Legal Dispute
The Monetary Settlement: The crux of the legal dispute revolves around a cost-sharing agreement between Georgia Power and Oglethorpe Power regarding the construction of Vogtle Units 3 and 4. According to a disclosed 8-K filing, Georgia Power has agreed to pay at least $413 million to resolve this contentious issue.
Of this amount, $308 million will be disbursed by Georgia Power to cover a portion of the construction costs for the two Vogtle units. Additionally, Georgia Power has committed to covering part of the future construction costs, estimated at approximately $105 million based on the current project’s capital cost estimation. Notably, the utility company has agreed to bear two-thirds of any cost incurred above the current forecast.
Financial Implications: The financial ramifications of this settlement are substantial. Georgia Power anticipates recording a $114-million after-tax charge for third-quarter 2023 in connection with the settlement and the current project’s capital cost estimation. This charge reflects the company's commitment to resolve the dispute and move forward with the construction of Vogtle Units 3 and 4.
Technical Hurdles: In addition to the financial aspects, SO also reported a technical challenge at Plant Vogtle. Specifically, Georgia Power identified a motor fault in one of the four reactor coolant pumps at Plant Vogtle Unit 4. In response, the utility company initiated the process of replacing the faulty pump with an on-site spare.
This technical setback is expected to impact the timeline for the unit's in-service date, pushing it into the first quarter of 2024.
The Road Ahead
As Georgia Power and Oglethorpe Power work to resolve their legal dispute, the focus remains on completing the construction of Vogtle Units 3 and 4. These additional nuclear reactors are vital for meeting the energy needs of Georgia and advancing the state's commitment to clean energy production.
In conclusion, the legal dispute between Georgia Power and Oglethorpe Power regarding the cost-sharing agreement for Plant Vogtle Units 3 and 4 has been resolved with a significant financial commitment from the former. This resolution allows the project to move forward, albeit with a technical hurdle that may delay the in-service date of Unit 4.
The future of Plant Vogtle represents not only a substantial investment in clean energy but also a testament to the complexities and challenges faced in the construction of nuclear power facilities.
Zacks Rank and Other Key Picks
SO is an American utility firm that provides electricity to customers across Southern United States. It is one of the country's largest energy companies, focusing on clean energy and sustainability. Currently, SO carries a Zacks Rank #2 (Buy).
E.ON is valued at around $30.24 billion. In the past year, its shares have risen 51.4%.
E.ON is the world's largest investor-owned energy service provider with operations in energy, chemicals, real estate, oil, telecommunications, distribution/logistics, aluminum and silicon wafers.
Consolidated Water is worth approximately $489.92 million. It currently pays dividends of 38 cents per share or 1.22% on an annual basis.
It develops and operates seawater desalination plants and water distribution systems in scarce or nonexistent water sources, targeting tourist properties. The company operates in Retail, Bulk, Services and Manufacturing segments.
Artesian Resources is worth approximately $435.25 million. It currently pays dividends of $1.14 per share, or 2.68% on an annual basis.
ARTNA is a regulated water utility company that provides water and wastewater services to customers in Delaware, Maryland and Pennsylvania. It is a well-established company with a long track record of dividend payments and earnings growth.
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Southern (SO) Subsidiary Resolves $413 Million Dispute
Southern Co. (SO - Free Report) subsidiary, Georgia Power, announced a $413-million resolution with Oglethorpe Power Corporation, a wholesale electricity provider. The resolution is set to settle a dispute over the Vogtle nuclear power plant project, which is currently under construction in Georgia.
Let’s delve into the details of the dispute, shedding light on the financial aspects and implications for both parties involved.
The Genesis of Plant Vogtle Units 3 and 4
First, it's important to understand the background of Plant Vogtle and the expansion project. Plant Vogtle, located in Burke County, GA, is home to two operational nuclear power units, Vogtle 1 and 2. These units have been serving as reliable sources of electricity for decades.
The expansion project, known as Vogtle Units 3 and 4, aims to add two more nuclear reactors to the existing facility. The expansion was initiated to meet the growing energy demands of Georgia and contribute to clean energy production. Southern subsidiary, Georgia Power, one of the primary stakeholders in this venture, embarked on this ambitious project in partnership with Oglethorpe Power.
The Legal Dispute
The Monetary Settlement: The crux of the legal dispute revolves around a cost-sharing agreement between Georgia Power and Oglethorpe Power regarding the construction of Vogtle Units 3 and 4. According to a disclosed 8-K filing, Georgia Power has agreed to pay at least $413 million to resolve this contentious issue.
Of this amount, $308 million will be disbursed by Georgia Power to cover a portion of the construction costs for the two Vogtle units. Additionally, Georgia Power has committed to covering part of the future construction costs, estimated at approximately $105 million based on the current project’s capital cost estimation. Notably, the utility company has agreed to bear two-thirds of any cost incurred above the current forecast.
Financial Implications: The financial ramifications of this settlement are substantial. Georgia Power anticipates recording a $114-million after-tax charge for third-quarter 2023 in connection with the settlement and the current project’s capital cost estimation. This charge reflects the company's commitment to resolve the dispute and move forward with the construction of Vogtle Units 3 and 4.
Technical Hurdles: In addition to the financial aspects, SO also reported a technical challenge at Plant Vogtle. Specifically, Georgia Power identified a motor fault in one of the four reactor coolant pumps at Plant Vogtle Unit 4. In response, the utility company initiated the process of replacing the faulty pump with an on-site spare.
This technical setback is expected to impact the timeline for the unit's in-service date, pushing it into the first quarter of 2024.
The Road Ahead
As Georgia Power and Oglethorpe Power work to resolve their legal dispute, the focus remains on completing the construction of Vogtle Units 3 and 4. These additional nuclear reactors are vital for meeting the energy needs of Georgia and advancing the state's commitment to clean energy production.
In conclusion, the legal dispute between Georgia Power and Oglethorpe Power regarding the cost-sharing agreement for Plant Vogtle Units 3 and 4 has been resolved with a significant financial commitment from the former. This resolution allows the project to move forward, albeit with a technical hurdle that may delay the in-service date of Unit 4.
The future of Plant Vogtle represents not only a substantial investment in clean energy but also a testament to the complexities and challenges faced in the construction of nuclear power facilities.
Zacks Rank and Other Key Picks
SO is an American utility firm that provides electricity to customers across Southern United States. It is one of the country's largest energy companies, focusing on clean energy and sustainability. Currently, SO carries a Zacks Rank #2 (Buy).
Investors interested in the utility sector might look at some other top-ranked stocks like E.ON (EONGY - Free Report) and Consolidated Water (CWCO - Free Report) , each sporting a Zacks Rank #1 (Strong Buy), and Artesian Resources (ARTNA - Free Report) , carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
E.ON is valued at around $30.24 billion. In the past year, its shares have risen 51.4%.
E.ON is the world's largest investor-owned energy service provider with operations in energy, chemicals, real estate, oil, telecommunications, distribution/logistics, aluminum and silicon wafers.
Consolidated Water is worth approximately $489.92 million. It currently pays dividends of 38 cents per share or 1.22% on an annual basis.
It develops and operates seawater desalination plants and water distribution systems in scarce or nonexistent water sources, targeting tourist properties. The company operates in Retail, Bulk, Services and Manufacturing segments.
Artesian Resources is worth approximately $435.25 million. It currently pays dividends of $1.14 per share, or 2.68% on an annual basis.
ARTNA is a regulated water utility company that provides water and wastewater services to customers in Delaware, Maryland and Pennsylvania. It is a well-established company with a long track record of dividend payments and earnings growth.