Southern Company's Vogtle Plant Gets $3.8B Aid from Toshiba

Electric utility firm The Southern Company SO recently entered into an agreement with Japan's Toshiba Corp. Per the deal, Toshiba will provide a financial assistance of $3.68 billion for the development of two nuclear reactors at its $20 billion Vogtle plant in Georgia. The news came as a respite for the company's Vogtle Power Project.

The company will make the payments in installments between Oct 2017 and Jan 2021. The deal will also provide access to Toshiba's subsidiary Westinghouse's intellectual property needed for the project.

The agreement has been approved by the Department of Energy and is awaiting approval from the bankruptcy court. The interim deal has been extended until June 22 to allow the new agreement to be incorporated.

With the deal, Southern Company will take over the project management of the nuclear power plant from Westinghouse. Southern Company's largest subsidiary, Georgia Power, as well its other unit, Southern Nuclear, will continue with the construction work of two nuclear reactors at its Vogtle power plant.

The Vogtle nuclear reactors have been grappling with cost overruns and scheduling delays since the commencement of construction. Westinghouse was the major construction contractor and designer of the two nuclear reactors at Vogtle power plant. However, Westinghouse had filed for bankruptcy in late March, casting a shadow over the nuclear industry. This was because the company's corporate parent, Toshiba suffered huge losses owing to Westinghouse's projects in Georgia and South California. Therefore, Westinghouse exited the Vogtle project as part of the bankruptcy proceedings. Since then, a cloud of uncertainty has hovered over the beleaguered plant.

However, the latest positive development will help the project gain momentum, with Southern Company proceeding with the project and completing  its full-scale schedule and cost-to-complete analysis with the other co-owners namely, Oglethorpe Power, MEAG Power and Dalton Utilities.

Zacks Rank & Key Picks

Southern Company is one of the largest and best-managed electric utility holding companies in the U.S. The firm dominates the power business across the southeastern region. The utility under Zacks categorized Utility- Electric Power industry currently carries a Zacks Rank #3 (Hold).

Southern Company (The) Price

Southern Company (The) Price | Southern Company (The) Quote

Some better-ranked players from the same industry include  RWE Aktiengesellschaft RWEOY, Atlantic Power Corporation AT and CenterPoint Energy, Inc. CNP. While RWE sports a Zacks Rank #1 (Strong Buy), Atlantic Power and CenterPoint carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

RWE is expected to report year-over-year growth of 42.45% in its earnings in 2017.

Atlantic Power is expected to report year-over-year growth of 19.54% and 183.33% in its sales and earnings respectively in 2017.

CenterPoint is expected to report year-over-year growth of 8.58% and 11.38% in its sales and earnings respectively in 2017.

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