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Southern Company (SO) Faces Delay in Vogtle Testing Activities

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The Southern Company’s SO wholly-owned subsidiary Georgia Power yet again announced a delay in execution of the hot functional test for the nearly completed Vogtle Unit 3 turbine system.

Vogtle Unit 3 is one of Georgia Power’s new units at the Vogtle Electric Generating Plant, currently underway in the United States. Notably, the hot functional testing is considered the last crucial step before fuel load and the new reactor is placed in service.

Earlier, the decision to delay the hot functional test was made due to the rising number of coronavirus cases at the construction site since October. As a result,Georgia Power implemented major changes to the project’s workflow as the outbreak of the disease affected a significant portion of its workforce and testing activities.

Due to a recent finding from additional construction remediation work, Southern Company is re-examining the project’s construction quality management programs and executing development plans as deemed necessary. Findings from the reviews and inspections could require additional remediation that will be effective in addressing the project-related issues. Notably, this is likely to postpone the in-service date of Unit 3, resulting in millions of dollars as penalties.

The Vogtle expansion project, the nation's only nuclear power plant under construction suffered continued timing and cost-overrun issues over the years. However, during the course of 2020, plant Vogtle achieved several milestones in the construction of Unit 3 including the completion of cold hydro testing, closed vessel testing and open vessel testing, the structural integrity test and the integrated leak rate test besides obtaining the unit’s first nuclear fuel shipment.

The nuclear expansion project is regarded as the largest employment-generating construction project in Georgia, which once online, is expected to create more than 800 permanent jobs and power more than 500,000 homes and businesses.

Georgia Power hopes to maintain the in-service dates for Units 3 and 4 in November 2021 and 2022, respectively, and aims to deliver clean and reliable energy for customers. However, the schedule is challenged and a probable delay could add several months to the date placed in service. Notably, for Unit 3, any extension beyond November is expected to generate additional base capital costs of nearly $25 million per month.

Company Profile & Price Performance

Headquartered in Atlanta, GA, Southern Company is one of the largest utility companies in the United States.

Shares of this utility have outperformed the industry in the past six months. Its stock has gained 13.6% compared with the industry’s 9.1% growth.

Zacks Rank & Stocks to Consider

Southern Company currently carries a Zack Rank #3 (Hold). Some better-ranked players in the utility space are Portland General Electric Company POR, NewJersey Resources Corporation NJR and California Water Service Group CWT, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Portland General’s earnings for 2021 are expected to rise 4.7% year over year.

NewJersey Resources’ earnings for 2021 are expected to grow 30.1% year over year.

California Water Service’s earnings for 2021 are expected to rise 6.8% year over year.

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Southern Company The (SO) : Free Stock Analysis Report

Portland General Electric Company (POR) : Free Stock Analysis Report

California Water Service Group (CWT) : Free Stock Analysis Report

NewJersey Resources Corporation (NJR) : Free Stock Analysis Report

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