ATLANTA — One of the nation’s largest firms to rate investments, Moody’s Investors Service, says Georgia Power Co. is adequately dealing with setbacks in Plant Vogtle construction but additional glitches could make the company’s bonds a riskier investment.
Moody’s issued a 13-page report Thursday aimed at answering questions investors have raised since the rating agency announced in March that cost increases and delays at the nuclear plant’s expansion created added investment risk. The firm slightly downgraded the utility’s bonds from A2 to A3 when Vogtle construction began while keeping it there in March and continuing to label the bonds as “stable.”
“Recently, adverse developments that have led to higher costs and schedule delays are credit negative but thus far manageable at the utility’s current rating level,” wrote Moody’s analyst Michael G. Haggarty. “Although issues associated with the project have increased Georgia Power’s overall business — and operating-risk profile, the company continues to have the strong support of the (Georgia Public Service Commission) for completing the project and recovering the project’s construction and financing costs.”
Just hours after Moody’s released the report, the commission approved Georgia Power’s 20-year plan, which includes completing Vogtle’s addition of two reactors, as well as closing 15 coal-fired plants and the conversion of others from coal to natural gas. Commissioners also ordered the utility to double the amount of solar generation it will have access to, bringing it to about 1.5 percent of total generating capability.
When the Vogtle expansion is completed, nuclear power will amount to about 20 percent of the company’s capacity. Georgia Power’s share of the $14 billion expansion is a major undertaking, even for a company with annual sales of around $8 billion.
Haggarty notes that part of the delays stem from extra time the U.S. Nuclear Regulatory Commission took to issue Vogtle’s expansion license, and part from late quality-control paperwork for components fabricated by a Louisiana vendor. Nearly identical projects in South Carolina and a pair in China have also suffered construction delays, he reported.
Georgia Power and the other Vogtle owners have gone to court to settle a $425 million dispute with the construction company, but Haggarty says that amount is relatively too small to matter to the investment rating.
So far, the company is managing, he said, as long as things don’t go worse and regulators don’t decide to shut down the project before completion or change financial arrangements.
Georgia Power spokesman Mark Williams didn’t quibble with Haggarty’s report.
“The report is accurate and reasonably fair, although it does include opinions of Moody’s, which are not necessarily the same as the company’s in all cases,” Williams said.
He noted that the utility’s latest estimate projects that the Vogtle expansion will provide $4 billion more in economic value than adding natural-gas generation, which would be the next best option.
