Southern Company's Complete Commitment To Completing Plant Vogtle

Feb. 28, 2018 5:16 AM ETThe Southern Company (SO)75 Comments
Michael Wald profile picture
Michael Wald


  • Despite losses incurred on its gasification project, Southern Company is fully committed to completing its nuclear construction project as demonstrated in their Fourth Quarter 2017 Earnings Report.
  • The financial impact of the company's past and future big bets will drive the company’s direction for the next 5 years.
  • Investors who do not share the company's faith in nuclear power should consider the costs and invest in utilities that are more aggressively pursuing renewable energy and grid modernization.

Southern Company’s (NYSE:SO) 2017 earnings results may not have surprised investors, but they did reinforce how deeply the company has had to pay for past failures and how committed they are to completing Plant Vogtle Units 3 & 4.

For the full year, the company’s 2017 earnings came in at $0.84 per share compared to $2.57 for 2016. Much of that drop reflects a $3.366 billion (-$2.33 per share) loss caused by the failure of the company’s Kemper gasification project in Mississippi. That represents just over half of the $6.4 billion that is the responsibility of shareholders according to an agreement between the Southern Company's Mississippi Power subsidiary and the Mississippi Public Service Commission.

Nevertheless, Kemper is in the past, and Southern Company’s latest financial report sends a very clear message to investors: just as the company once believed that the energy future was in gasification, it now believes that nuclear power is the future and the company is fully committed to completing its nuclear construction project at any cost.

Update on Plant Vogtle

After winning unanimous approval in December by the Georgia Public Service Commission to continue construction of Plant Vogtle Units 3 & 4, the company reports that it remains on track to complete Unit 3 in November 2021 and Unit 4 in November 2022.

SO 4th Quarter 2017 Slide 20Source: Southern Company, 4Q17 Earnings Presentation

The company believes that once Units 3 & 4 are in service, their costs will be deemed prudent and added to Georgia Power’s base rate ROE (currently 10.95%).

Considering the full impact of Plant Vogtle during construction

For investors, Southern Company’s $3.9 billion estimated cost-to-complete is only part of the price they will be paying for Plant Vogtle until the new units are in service. Meanwhile, the combination costs for Vogtle Units 3 & 4 along with the cost of the failure of

This article was written by

Michael Wald profile picture
I am retired from the U.S. Department of Labor after a career that included 10 years as the U.S. Bureau of Labor Statistics's Southeast Regional Economist where I focused on U.S. labor markets. My main interest is in bonds, utility stocks, and REITS. Individual stocks and bonds are as much affected by the overall direction of the economy as the activities of individual firms, so when I focus on stocks, I include consideration of the political environment in which a company operates as much as on the company's financial situation. It is important to get underneath the top line data, as reported in the media, to really understand the direction of the economy. My goal is to provide knowledge and understanding of macro trends and add depth to the national statistics reported elsewhere.

Disclosure: I am/we are long DUK. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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