W|EPC: Dominion Energy (D) – Offshore Wind Project Monitor Q320

W|EPC: Dominion Energy (D) – Q320 Offshore Wind Project Monitor

• Dominion Energy (D) Q320 Capital Project Monitor: Key Takeaways (slide 2)
• Virginia Clean Energy Act – Why Should You Care? (slide 3)
• Energy Costs vs. Benefits (slide 4)
• Coastal Virginia Offshore Wind (CVOW) Project Overview (slide 5)
• Phase #1: A Closer Look At The Pilot Project (slide 7)
  • Regulatory Approval Timeline
  • EPC Contractor – Ørsted
  • Cost & Schedule Analysis
• Phase #2: The $8B Main Course (slide 13)
  • Overview & Status
  • How big Are 12MW Offshore Turbines?
  • Offshore Wind: Construction, Risk, & Insurances Overview (slide 16)
  • Conclusions: Thank A Rate Payer (slide 20)

Key Highlights:
• Offshore Wind… An Awesome Opportunity for Dominion, Right?
• Phase #1 Demonstrator Costs Ballooned By ~73%…
• Phase #2 (2.6GW) Is The Real Prize – But Definitely Worth Keeping An Eye On Costs…

For access information please email us at [email protected]

Southern Company (SO): Vogtle Nuclear Project Q220 Quarterly Monitor

Southern Company (SO) Q2 Vogtle Nuclear Project Monitor – Key Highlights:

• Vogtle Expansion: 6-Years Late…And ~$13-$16 Billion Over Budget? (Slides 2-5)
• How Much Will SO Be On The Hook For? (Slides 3-6)
• Something’s Gotta Give: Key Commissioning Milestones Appear Crammed Together To Avoid ROE Reductions (Slides 6-8)
• Cost Projections Were Already Ramping…Before COVID-19 (Slides 9-12)
• Cost Prudency Reviews – A Make Or Break For Stakeholders?…. (Slides 13-19)

For access information, please email us at [email protected]

• Quarterly Deep Dive Into Southern Company’s (SO) $27B Vogtle Nuclear Expansion. Southern Company (SO), is the largest owner of the Vogtle Nuclear Facility, via the 46% held by its wholly-owned subsidiary Georgia Power.
  • Vogtle has two active units (Units 1-2), which have been in-service since 1987-89. A two unit expansion (Units 3-4) was approved in 2009
  • Units 3 & 4 were originally expected to be in-service in 2016-17 and cost a combined ~$14B, the expansion project is now 6-7 years behind schedule, with costs rising to ~$27B….and potentially higher (slides 3-6).
  • Hence, the premise of adding a W|EPC Quarterly Vogtle Project Monitor to our Utility & Energy research platform: Digging into those cost overruns – particularly the bulging EPC costs, to get a more accurate and detailed view of the potential headwind for project stakeholders and SO shareholders.

Regulatory Background: Vogtle is regulated by the Georgia Public Service Commission (GPSC). GPSC’s primary role is to protect rate payers & determine if project costs can be justifiably passed-through via utility rates. In the quarters that follow we’ll venture to aggregate, analyze, and interpret cost overruns through the lens of GPSC, to put together a thoughtful estimate of what cost overruns will eventually land with SO shareholders.

For access information, please email us at [email protected]

W|EPC: AEP Capital Project Analysis – Q220

Digging Into AEP’s Capital Project Backlog

• AEP Company Overview                                                       Page 2
• Key Takeaways                                                                         Page 3
• ERCOT Overview                                                                     Page 4
• AEP’s Activity Level vs Guided Capex                                 Pages 5-8
• Cost Overrun Analysis: Who Stays On Budget?
  • AEPT                                                                                    Page 9
  • SWEPCO                                                                            Page 10
  • ETT                                                                                       Page 11
• Ongoing Capital Projects – Current Status                          Pages 12 -15
• ETT’s CREZ Project Problem – Warranty Status?                Pages 16-17
• Project Profile: Solstice To Bakersfield, 345-kV T-Line      Pages 18-20
• Additional Management Questions                                     Page 21

American Electric Power (AEP, Market Cap ~$42B) has been in business for 114 years, with 5.5 MM customers across 11 states, including Texas. General Project EPC Background (AEP Subsidiaries):
American Electric Power Texas (AEPT) is a subsidiary of AEP, and provides transmission and distribution of electric power to ~1MM customers through Retail Electric Provider’s (REPs) in west, central, and south Texas, with an ROE sitting at at ~9.4%.

Southwestern Electric Power Company’s (SWEPCO), also an AEP sub, has 4K miles of transmission lines and 5K MW’s of generation capacity, supporting 536K customers primarily in Western Louisiana, North East Texas, the Panhandle of Texas, and Western Arkansas. SWEPCO’s ROE sit at ~9.6%.

Electric Transmission Texas, LLC, (ETT) is 50/50 JV between AEP and Berkshire Hathaway Energy Company, and owns/operates transmission facilities within Electric Reliability Council of Texas (ERCOT), primarily around the AEPT service territory.  ETT’s ROE sits at ~9.6%, and it’s capital budget is not broken out within AEP’s forecasted numbers. AEPT and SEPC 2020-2024 capital forecast (~$8.4B) comprises ~25% of AEP’s total expected spend (~$33B) over that period.

Key Takeaways:
• Why Utility Project Tracking Is Increasingly Important In This Environment…
• Estimated vs. Actual Project Costs – Who comes in well under budget…and who doesn’t? (Pages 9-11)
• AEPT & SWEPCO Capex Trending Materially Below Forecast (Pages 5-8)
• The Jury Is Still Out On $1.6B Of Project Costs (Pages 12-15)
• ETT – Ongoing Problems With CREZ Projects, But No Warranty Cost Recovery Claims? (Pages 16-17)
Click here to buy this report

W|EPC Utilities & Energy – Sempra Deep Dive – Oncor, March 2020

 Sempra (SRE) Capital Project Analysis – Oncor March 2020.

As part of our W|EPC Utility & Energy Project coverage, we’ve put together a deep dive into a number of large public utilities, including SRE, SO, D, AEP, CNP, ENB, EPD, ET, KMI, XOM, TOT, RDS:A, and others. We’ve included more information about our W|EPC Utility & Energy project coverage in the back of this presentation.

Given its size, and the sheer volume of projects and jurisdictions, we’re breaking our Sempra (SRE) coverage down into underlying components, with our Oncor deep dive below. Oncor Electric Delivery Company, LLC, is headquartered in Dallas, TX and is a regulated electrical distribution and transmission business. It is owned by two investors, SRE (80.25%) and Texas Transmission Investment LLC (19.75%).

Our Key Takeaways On Oncor:

• Out-sized Role In Critical TX Projects
  • Oncor is involved with 5 out of the 10 most important projects to provide more efficient electricity dispatch, while supporting the increasing electrical demand in Texas. (Page 5)
• Oncor vs. Other Investor Owned Utilities
  • Oncor has 156 more projects scheduled to be completed in 2020 than AEP, ET (50% AEP/50% Berkshire Hathaway) and CNP combined. (Page 8)
• Final Estimates vs. Final Actual Costs
  • Over the last 15 months, Oncor’s reported final construction costs for 190 projects were 12% higher than their final estimated costs. (Pages 9-10)
• Lubbock Power and Light
  • Oncor’s May 2019 acquisition of InfraREIT included a variety of electricity transmission and distribution projects & assets, which included ~$3600MM joint project with Lubbock Power and Light (LP&L). (Pages 13, 17-20)
• Future Project Opportunities
  • The integration of LP&L to ERCOT should reduce congestion costs in the Panhandle of Texas and increase demand for new transmission projects in/and around Oncor’s coverage area. (Page 4)

Click here to buy this report