Despite headlines about cost overruns and delays at its Georgia nuclear project and a new Mississippi plant, Southern Company “continues to perform beautifully” overall, CEO Tom Fanning told shareholders Wednesday.
But Fanning also said it will take more time than expected for the Atlanta-based parent of Georgia Power and other utilities to decide whether to continue the nuclear expansion at Plant Vogtle near Augusta.
A bankruptcy filing by Westinghouse, the chief contractor on the project, has thrown into question the future of one of the first new-from-scratch nuclear power plants to be built in the U.S. in three decades. The project is already years behind schedule, with Georgia Power customers at risk of ultimately paying billions of dollars more than they would have if the project had been completed on time, according to a state consultant.
Power company officials had said they hoped to have a decision by the shareholder meeting, or at least in June, about whether to ask Georgia regulators to stick with the project, complete only part of it for now or drop the new nuclear endeavor.
Fanning said Wednesday he now hopes to have that evaluation completed in August or “late summer.”
It is taking longer than expected to get assessments from subcontractors about how much it will cost to complete the project, Fanning told The Atlanta Journal-Constitution following the shareholder meeting at Callaway Gardens in Pine Mountain, Ga.
Southern also would need to get buy-in from the elected Georgia Public Service Commission if Georgia Power wants to collect on further cost increases at the project. The company also would seek agreement from project co-owners, which include Oglethorpe Power (which supports many electric membership corporations in the state), the Municipal Electric Authority of Georgia (which supports many city utilities) and Dalton Utilities.
“For now, we’ve kept together,” Fanning said. But he pointed out, “They’ve got their own interests.”
Asked who he thinks should take on additional risks or responsibility for future cost overruns if the project goes forward, Fanning said, “That’s a matter of deliberation” at the end of the evaluation.
The possibilities include ratepayers, the federal government and company shareholders, he said.
During the annual meeting, Fanning touted Southern Company strengths including a long history of consistent or growing dividends, a low risk profile compared to many other publicly traded companies, a sharp expansion into natural gas pipelines as well as solar and wind power, and numerous business accolades and awards.
“The fundamentals of the business are tremendous,” he said.
Before, during and after the meeting, though, shareholders raised the issue of Vogtle’s expansion and questioned how it might affect the company. Some voiced hope the effect impact on their investments will be limited. Others had concerns.
“Sounds like we are chasing a dead horse, and that’s not good,” said Charles Waites, a shareholder from Newnan.
A group of public pension funds and a foundation that hold Southern stock had issued an open letter last month urging shareholder votes against approval of 2016 executive compensation, and against re-election of two directors. They cited moves to protect bonuses despite “poorly executed key projects” including Vogtle.
The executive compensation plan — which included a $2.7 million bonus for Fanning — was approved in the non-binding “say on pay” vote, though it generated opposition of nearly 40 percent. The two directors were re-elected with more than 90 percent approval.
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