Electric plant, construction and related agreements:

12 Months Ended

Dec. 31, 2011

Electric plant, construction and related agreements:

Electric plant, construction and related agreements:

6. Electric plant, construction and related agreements:

a. Electric plant

    We, along with Georgia Power, have entered into agreements providing for the purchase and subsequent joint operation of certain of Georgia Power's and our electric generating plants. The plant investments disclosed in the table below represent our undivided interest in each co-owned plant, and each co-owner is responsible for providing its own financing. A summary of our plant investments and related accumulated depreciation as of December 31, 2011 is as follows:

	2011					2010
		(dollars in thousands)
Plant		Investment		Accumulated Depreciation			Investment		Accumulated Depreciation
In-service
Owned property
Vogtle Units No. 1 & No. 2 (Nuclear – 30% ownership)	$	2,726,129	$	(1,528,841	)	$	2,722,168	$	(1,497,484	)
Hatch Units No. 1 & No. 2 (Nuclear – 30% ownership)		603,865		(369,189	)		594,712		(356,088	)
Wansley Units No. 1 & No. 2 (Fossil – 30% ownership)		394,596		(129,994	)		392,217		(122,452	)
Scherer Unit No. 1 (Fossil – 60% ownership)		663,583		(269,525	)		598,674		(264,375	)
Rocky Mountain Units No. 1, No. 2 & No. 3 (Hydro – 75% ownership)		584,569		(176,356	)		575,266		(167,711	)
Hartwell (Combustion Turbine – 100% ownership)		223,936		(85,337	)		223,766		(80,865	)
Hawk Road (Combustion Turbine – 100% ownership)		241,587		(51,253	)		238,719		(45,991	)
Talbot (Combustion Turbine – 100% ownership)		280,413		(77,616	)		279,928		(69,244	)
Chattahoochee (Combined cycle – 100% ownership)		299,117		(79,285	)		299,117		(70,314	)
Murray (Combined cycle – 100% ownership)		554,158		(109,741	)		–		–
Wansley (Combustion Turbine – 30% ownership)		3,684		(3,084	)		3,676		(2,946	)
Transmission plant		78,470		(41,539	)		71,919		(40,213	)
Other		106,083		(64,433	)		101,569		(61,388	)
Property under capital lease:
Doyle (Combustion Turbine – 100% leasehold)		126,990		(80,030	)		126,990		(77,514	)
Scherer Unit No. 2 (Fossil – 60% leasehold)		448,686		(262,362	)		443,532		(245,146	)
Total in-service	$	7,335,866	$	(3,328,585	)	$	6,672,253	$	(3,101,731	)
Construction work in progress
Generation improvements	$	1,783,246				$	1,180,347
Other		1,018					15,128
Total construction work in progress	$	1,784,264				$	1,195,475

    Our proportionate share of direct expenses of joint operation of the above plants is included in the corresponding operating expense captions (e.g., fuel, production or depreciation) on the accompanying statements of revenues and expenses.

b. Construction

    In April 2008, Georgia Power, acting for itself and as agent for Oglethorpe, the Municipal Electric Authority of Georgia, and the City of Dalton, Georgia (collectively, Owners), and a consortium consisting of Westinghouse Electric Company LLC (Westinghouse) and Stone & Webster, Inc. (collectively, Consortium) entered into an engineering, procurement, and construction agreement (Vogtle No. 3 and No. 4 Agreement) to design, engineer, procure, construct, and test two AP1000 nuclear units with electric generating capacity of approximately 1,100 megawatts each and related facilities, structures, and improvements at Plant Vogtle (Vogtle Units No. 3 and No. 4).

    The Vogtle No. 3 and No. 4 Agreement is an arrangement whereby the Consortium supplies and constructs the entire facility with the exception of certain items provided by the Owners. Under the terms of the Vogtle No. 3 and No. 4 Agreement, the Owners will pay a purchase price that will be subject to certain price escalations and adjustments, including fixed escalation amounts and certain index-based adjustments, as well as adjustments for change orders, and performance bonuses for early completion and unit performance. Each Owner is severally (and not jointly) liable for its proportionate share, based on its ownership interest, of all amounts owed to the Consortium under the Vogtle No. 3 and No. 4 Agreement. Our proportionate share is 30.0%.

    The Owners and the Consortium have agreed to certain liquidated damages upon the Consortium's failure to comply with the schedule and performance guarantees. The Consortium's liability to the Owners for schedule and performance liquidated damages and warranty claims is subject to a cap.

    The NRC certified Westinghouse's Design Certification Document (DCD) as amended for the AP1000 reactor design, effective December 30, 2011. On February 9, 2012, the NRC affirmed a decision directing the NRC staff to proceed with the issuance of combined operating permits and construction licenses (COLs). The COLs were received on February 10, 2012. Receipt of the COLs allows full construction to begin on Vogtle Units No. 3 and No. 4, which are scheduled to be placed in service in 2016 and 2017, respectively.

    There are pending technical and procedural challenges to the construction and licensing of Vogtle Units No. 3 and No. 4, including legal challenges to the NRC's issuance of the COLs and certification of the DCD. Similar additional challenges at the state and federal level are expected as construction proceeds.

    The ultimate outcome of these matters cannot be determined at this time.

    We estimate our proportionate share of the costs to construct Plant Vogtle Units No. 3 and No. 4 will be $4,200,000,000. At December 31, 2011, our total capitalized costs to date were approximately $1,287,649,000.