{"id":5028,"date":"2013-08-06T17:09:10","date_gmt":"2013-08-06T21:09:10","guid":{"rendered":"http:\/\/www.l-a-k-e.org\/blog\/?p=5028"},"modified":"2013-08-06T19:13:44","modified_gmt":"2013-08-06T23:13:44","slug":"southern-company-backed-off-on-cost-overrun-request","status":"publish","type":"post","link":"http:\/\/www.l-a-k-e.org\/blog\/2013\/08\/southern-company-backed-off-on-cost-overrun-request.html","title":{"rendered":"Southern Company backed off on cost overrun request"},"content":{"rendered":"

\r\n\r\nFitch reaffirmed SO’s and Georgia Power’s (and Mississippi Power’s) ratings today<\/a>\r\nafter Southern Company backed off a week ago from \r\n\r\nrisking losing the larger cost overrun request to GA PSC<\/a>.\r\nBeware: SO will be back, when maybe fewer people are looking.\r\nOr maybe\r\n\r\nthat tiger team<\/a>\r\nwill issue its summer report and the titanic Southern Company ship\r\nwill finally change course towards distributed solar and wind power.\r\n

\r\nJonathan Shapiro wrote for AP 31 July 2013,\r\n\r\nAP: Georgia Power To Waive Request for Extra Vogtle Costs<\/a>\r\n

\r\n

\r\n\r\n<\/a>\r\n[Southern Company]\r\nCEO Thomas Fanning told analysts Wednesday that the Atlanta-based\r\ncompany reached a preliminary deal with Georgia officials.\r\n<\/p>\r\n

\r\nUnder the plan, the company would only seek right now to collect the\r\n$209 million that it spent building the two new reactors at Plant\r\nVogtle from July to December.\r\n<\/p>\r\n

\r\nThe company would waive a separate request it made to regulators to\r\nraise its construction budget by $737 million to cover\r\nhigher-than-expected costs.\r\n<\/p>\r\n<\/blockquote>\r\n

\r\nWABE posted \r\na copy of the preliminary agreement<\/a>,\r\nwhich the Georgia Public Service Commission hasn’t yet approved.\r\nGA PSC could decide not to pass any cost overruns on to Georgia Power customers.\r\nOr it could even cancel Plant Vogtle 3 and 4 as a bad economic bet.\r\n<\/p>\r\n

\r\nFitch PR today\r\n\r\nFitch Affirms Ratings for Southern Company and Subsidiaries<\/a>,\r\n

\r\n

\r\nFitch Ratings has affirmed the Issuer Default Rating (IDR) and\r\nsecurity ratings for Southern Company. In addition, Fitch has\r\naffirmed the IDRs and debt ratings of Southern Company’s\r\nsubsidiaries: Alabama Power Company (Alabama Power), Georgia Power\r\nCompany (Georgia Power), Gulf Power Company (Gulf Power),\r\nMississippi Power Company (Mississippi Power) and Southern Power\r\nCompany (Southern Power). The Rating Outlook for all of the\r\nsubsidiaries is Stable except for Mississippi Power, which remains\r\nNegative. A complete list of rating actions is provided at the end\r\nof this release.\r\n<\/p>\r\n<\/blockquote>\r\n

\r\nFitch warned SO, however:\r\n

\r\n

\r\nRegulatory risk has increased for Southern Company’s utility\r\nsubsidiaries given the ongoing rate proceedings at Georgia Power and\r\nGulf Power, return on equity (ROE) review proceedings at Alabama\r\nPower and higher regulatory scrutiny of Mississippi Power’s cost\r\noverruns associated with the 580 MW Integrated Gasification and\r\nCombined Cycle (IGCC) plant at Kemper. Favorable outcomes for\r\nGeorgia Power and Alabama Power’s regulatory proceedings will be key\r\nto sustaining Southern Company’s current ratings given that the two\r\nsubsidiaries account for approximately 84% of consolidated operating\r\nincome.\r\n<\/p>\r\n

\r\nFitch acknowledges that the downside risk to ROEs is higher for both\r\nGeorgia Power and Alabama Power given the national trend of\r\ndeclining ROEs. At the same time, Fitch recognizes the constructive\r\nregulatory regime in both Georgia and Alabama and low commodity\r\nprices that provide a favorable backdrop for rate negotiation. The\r\nlast rate case outcome for Georgia Power in 2010 was quite\r\nconstructive, which enabled the utility to embark on a heavy capex\r\nspend with strong credit metrics. Fitch believes Georgia Public\r\nService Commission (PSC) will continue to be supportive of the\r\nfinancial health of the utility. Furthermore, the expected increase\r\nunder the Nuclear Construction Cost Recovery (NCCR) tariff of\r\napproximately 1% per year through 2017 lowers the overall rate\r\npressure on Georgia Power’s customers.\r\n<\/p>\r\n<\/blockquote>\r\n

\r\nDid you catch that?\r\nCWIP for Plant Vogtle is what’s propping up Southern Company’s\r\nprofit margin and stockholder dividends.\r\nAnd Fitch gave a much sharper warning about that than\r\nlast year<\/a>.\r\n<\/p>\r\n

\r\nGeorgia Power ratepayers and Georgia taxpayers: is the purpose\r\nof the Georgia Public Service Commission to prop up Southern Company’s\r\nmonopoly profits, or to provide clean affordable power to Georgians?\r\nIf the latter, maybe GA PSC should reject any more cost overruns\r\nfor Plant Vogtle and ask to see that\r\n\r\ntiger team report<\/a>\r\non how SO is going to make a profit on offshore wind and distributed\r\nrooftop solar power.\r\n

\r\n-jsq","protected":false},"excerpt":{"rendered":"Fitch reaffirmed SO’s and Georgia Power’s (and Mississippi Power’s) ratings today after Southern Company backed off a week ago from risking losing the larger cost overrun request to GA PSC. Beware: SO will be back, when maybe fewer people are looking. Or maybe that tiger team will issue its summer report and the titanic Southern […]","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"_links_to":"","_links_to_target":""},"categories":[142,14,17,18,2,104],"tags":[437,8746,8704,8707,8701,8708,8699,6433,8702,6432,8737,107,108,6339],"class_list":["post-5028","post","type-post","status-publish","format-standard","hentry","category-cwip","category-economy","category-ga-psc","category-georgia-power","category-government","category-nuclear","tag-cost-overrun","tag-cwip","tag-economy","tag-ga-psc","tag-georgia","tag-georgia-power","tag-government","tag-knowledge-exchange","tag-lake","tag-lowndes-area","tag-nuclear","tag-plant-vogtle","tag-southern-company","tag-tom-fanning"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p585fK-1j6","jetpack_sharing_enabled":true,"jetpack-related-posts":[],"_links":{"self":[{"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/posts\/5028","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/comments?post=5028"}],"version-history":[{"count":5,"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/posts\/5028\/revisions"}],"predecessor-version":[{"id":5032,"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/posts\/5028\/revisions\/5032"}],"wp:attachment":[{"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/media?parent=5028"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/categories?post=5028"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/tags?post=5028"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}