Dive Brief:

Regulators have approved an agreement related to the long-delayed construction of two new units at the Vogtle nuclear plant, ensuring Georgia Power customers will see savings of $325 million and that the units will be online in 2020.

The Georgia Public Service Commission unanimously approved the deal, which includes a lower return on equity for the utility and further possible reductions if deadlines are missed.

Vogtle units 3 and 4 are years behind schedule, leading to the agreement. Regulators have also approved a $0 increase in the utility's Nuclear Construction Cost Recovery (NCCR) tariff for 2017.

Dive Insight:

Following years of delay, Georgia regulators in February ordered a review of costs incurred through the end of last year, with an eye towards whether the capital cost forecast should be adjusted. The final agreement will save customers hundreds of millions, and could wind up reducing bills even further if the utility misses deadlines.

Commissioner Stan Wise called the agreement an "extraordinary balance of interests among all the parties."

Wise, who will become chairman of the PSC next year, also said the agreement provides "significant back end reductions" to costs by lowering the utility's ROE if construction costs exceed the new limit or if the project fails to startup in 2020.

Current Georgia Power customers will see costs related to development of the nuclear generation decline over the next four years as a result of the utility's lower ROE on the NCCR tariff, as well as project financing costs. The PSC said reducing the allowed return on project financing costs reduces shareholder earnings by approximately $115 million.

In June, Georgia Power officials said construction of the new reactors was on track for 2019 and 2020, but added the schedule is "a great challenge." Once completed, Units 3 and 4 will generate 2,200 MW of power. The plant's initial pair of units were brought online in the late 1980s. Last year, the utility selected Westinghouse to take over as lead contractor, finalizing the new inservice dates.