OREANDA-NEWS. The Georgia Public Service Commission's (PSC) postponement of a request by the Georgia Power Company to amend the certified costs and in-service dates for its Vogtle 3 and 4 nuclear units has not resulted in changes to Georgia Power's ratings, according to Fitch Ratings. However, Fitch does view the deferral as a negative development.

Georgia Power, in its twelfth Vogtle Construction Monitoring (VCM) report, had requested the PSC to amend the certificate to reflect total construction and capital costs of \$5.045 billion (compared to certified costs of \$4.418 billion) and new in-service dates of June 2019 and June 2020 for units 3 and 4, respectively. However, in a Procedural and Scheduling Order issued yesterday, the PSC decided to stick with the VCM 8 stipulation that requires that any requests for revision to the costs or the schedule of the Vogtle units be postponed until the completion of Vogtle 3 unit.

Fitch's 'A' Issuer Default Rating and Stable Rating Outlook for Georgia Power is not affected by the PSC order, but Fitch views the order negatively and believes regulatory uncertainty could become elevated as the construction expenditures approach the original certified amount. In addition, while Georgia Power will collect the financing costs on the originally certified amount of \$4.418 billion through the Nuclear Construction Cost Recovery Tariff, the financing costs above the \$4.418 billion will be recorded as AFUDC and could pressure credit metrics if costs continue to escalate.

On a positive note, the PSC order did clarify that the currently approved certified costs for the Vogtle units should not be construed as a cost cap and Georgia Power will be allowed to recover prudently incurred costs both up to and above the certified cost. This is a key assumption that underpins Georgia Power's ratings as Fitch expects that any adjustments to the overall project costs will be deemed prudent and recoverable by the PSC. Significant project cost overruns that cannot be recovered in rates or unexpected long deferral periods for project cost recovery would be adverse credit factors.

The twelfth VCM proceedings will be key to gauge the staff's reaction to the extended schedule and economic viability of the Vogtle units after the latest increase in the owners and financing costs. In the prior VCM proceedings, the staff has concurred with Georgia Power's assessment that the nuclear units remain economic in each of the 12-, 24-, 48- and 60-month delay scenarios. Georgia Power sees no change to its assessment of a 6%-8% impact on customer rates as a result of the latest construction delay and this should minimize the regulatory risk, in Fitch's opinion.