The Southern Company’s SO wholly-owned subsidiary, Georgia Power, is building two nuclear units at the Vogtle Electric Generating Plant in the United States. Notably, the Vogtle nuclear expansion project suffered continued timing and cost overrun issues over the years.
Already running behind schedule, Georgia Power is again facing challenges, which might affect the overall project delivery time and costs. Per a Georgia Public Service Commission (“PSC”) expert, the commissioning of Vogtle Unit 3 is likely to be delayed beyond the in-service date and could cost an additional $2 billion.
In May 2021, the Vogtle nuclear expansion project underwent a crucial series of testing at Plant Vogtle Unit 3 and revealed complications. As a result of this, Georgia Power postponed the in-service date for Vogtle Unit 3 from November 2021 to January 2022. While the nuclear reactor is 98% complete, it is still exposed to risks of delays.
Georgia Power’s nuclear expansion of Vogtle Unit 3 is even further behind the utility’s recently-announced start-up date as it faced an unexpected array of quality issues. Then again, Vogtle Unit 4, the second nuclear reactor is expected to start operating no later than November 2022. However, per the recent testimony, Vogtle Unit 4 could not be expected to start operating until at least June 2023.
In the recent testimony, independent monitors and PSC staffs cited several project issues and claimed that most of the issues incurred should have been resolved before the current testing. PSC alleged that the utility is ultimately responsible for the unfortunate condition. Moreover, they added that the reactor is in a worse condition than the past U.S. new construction nuclear plants were at the same stage of construction.
In 2020, Plant Vogtle achieved several milestones in the construction of Unit 3, including the recently executed hot functional test for the Vogtle Unit 3 turbine system. Notably, the nuclear expansion project is regarded as the largest employment-generating construction project in Georgia, which will create more than 800 permanent jobs once online and power more than 500,000 homes and businesses.
Above all, Georgia Power aims to offer customers a clean and non-carbon source of energy for the next 60-80 years. Notably, the two new units are crucial for the utility's aim to deliver clean and reliable energy for customers. However, project delays and cost overruns could make it difficult for the new nuclear units to power homes and businesses from non-carbon-emitting sources like nuclear and renewables by 2035.
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 7% compared with the industry’s 5.6% growth.
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Zacks Rank & Stocks to Consider
Southern Company currently carries a Zack Rank #3 (Hold).
Some better-ranked players in the utility space are MGE Energy Inc. MGEE, NewJersey Resources Corporation NJR and ENN Energy Holdings Ltd. XNGSY, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
MGE Energy’s earnings for 2021 are expected to rise 11% year over year.
NewJersey Resources’ earnings for 2021 are expected to grow 8.7% year over year.
ENN Energy’s earnings for 2021 are expected to rise 13.2% year over year.
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