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Will Southern's (SO) Vogtle Project Face Another Delay?

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Southern Company (SO - Free Report) subsidiary Georgia Power’s Vogtle nuclear expansion project in the same US state seems implausible right now because it may fail to meet its deadline and is also likely to encounter further cost overruns per the Vogtle Monitoring Group. The independent evaluator believes that the electric utility player is running behind schedule to complete the work on its two nuclear reactors, which were supposed to be ready by November 2021 and November 2022, respectively, a time line set by the Georgia Public Service Commission. Expenses for the undertakings may cross the present $17.1-billion estimate.

However, last month, Georgia Power placed the final module on Plant Vogtle Unit 3, marking a progress in the completion of the project. Per the company, a massive water tank worth 720K-lb capacity has been placed atop the containment vessel and shield building roof at the Vogtle 3 and 4 nuclear expansion project close to Waynesboro, GA.

The Vogtle nuclear reactors have been grappling with cost overruns and scheduling delays since the commencement of construction activity. Further, the bankruptcy of Westinghouse, the major construction contractor of the two nuclear reactors of the plant, escalated costs to cause more delays. Ever since, a cloud of uncertainty is hovering over the plant.

Approved in 2009 by the Georgia Public Service Commission, units 3 and 4 were originally supposed to come online in 2016 and 2017 at a collective cost worth $14 billion. Therefore, the project is already slowed down by more than five years and even exceeded its earlier-stipulated budget by more than $10 billion with the current total expenditure (including financing costs) having scaled to above $25 billion. And even if Georgia Power does finish on its latest timeline, the nuclear project will be $1 billion over its current budget, which was already billions of dollars higher than when the project commenced.

Management believes that the plant will boost the competitive edge of US nuclear energy, helping the nation to catch up with the likes of nuclear-powered Russia and China. Many proponents also supported the company’s commitment to strengthen nuclear power with zero emissions, finding it more reliable than solar and wind energy. With the decision to advance the project, Vogtle plant in Georgia will be the only under-construction venture in the United States.

Southern Company is one of the largest and the best-managed electric utility holding companies in the United States. The firm dominates the power business across the Southeastern region. The stock has lost 6.8% year to date compared with its industry’s 5% decline.

Zacks Rank and Key Picks

Southern Company currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the utility space are Atlantic Power Corporation , China Resources Power Holdings Co (CRPJY - Free Report) and RWE AG (RWEOY - Free Report) , each presently carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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