8. 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 electric generating plants. Each co-owner is responsible for providing its' own financing. The plant investments disclosed in the table below represent our undivided interest in each plant. A summary of our plant investments and related accumulated depreciation as of December 31, 2015 and 2014 is as follows:


		2015					2014
			(dollars in thousands)
Plant			Investment		Accumulated Depreciation			Investment		Accumulated Depreciation

In-service(1)
Owned property
Vogtle Units No. 1 & No. 2 (Nuclear – 30% ownership)		$	2,869,142	$	(1,674,431	)	$	2,805,310	$	(1,634,062	)
Vogtle Units No. 3 & No. 4 (Nuclear – 30% ownership)			22,557		(891	)		18,267		(637	)
Hatch Units No. 1 & No. 2 (Nuclear – 30% ownership)			767,019		(391,822	)		695,392		(377,902	)
Wansley Units No. 1 & No. 2 (Fossil – 30% ownership)			499,180		(163,266	)		474,740		(157,543	)
Scherer Unit No. 1 (Fossil – 60% ownership)			1,086,435		(332,493	)		1,067,777		(318,990	)
Doyle (Combustion Turbine – 100% leasehold)(2)			124,051		(90,590	)		126,990		(95,644	)
Rocky Mountain Units No. 1, No. 2 & No. 3 (Hydro – 75% ownership)			600,640		(222,888	)		587,762		(211,010	)
Hartwell (Combustion Turbine – 100% ownership)			226,737		(103,111	)		224,512		(98,696	)
Hawk Road (Combustion Turbine – 100% ownership)			243,517		(70,832	)		242,293		(65,931	)
Talbot (Combustion Turbine – 100% ownership)			290,463		(111,617	)		289,020		(102,947	)
Chattahoochee (Combined cycle – 100% ownership)			310,788		(114,914	)		308,943		(106,633	)
Smith (Combined cycle – 100% ownership)			601,903		(166,324	)		579,486		(151,677	)
Wansley (Combustion Turbine – 30% ownership)			3,582		(3,513	)		3,582		(3,377	)
Transmission plant			90,195		(50,786	)		88,031		(49,132	)
Other			116,396		(73,442	)		112,431		(63,427	)
Property under capital lease:
Scherer Unit No. 2 (Fossil – 60% leasehold)			743,543		(354,918	)		720,705		(325,082	)

Total in-service		$	8,596,148	$	(3,925,838	)	$	8,345,241	$	(3,762,690	)

Construction work in progress
Vogtle Units No. 3 & No. 4		$	2,724,543				$	2,268,344
Environmental and other generation improvements			143,723					104,600
Other			403					1,448

Total construction work in progress		$	2,868,669				$	2,374,392


(1)	Amounts include plant acquisition adjustments at December 31, 2015 and 2014 of $196,000,000.
(2)	On August 20, 2015, we acquired Doyle which we previously operated under a capital lease.

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) on the accompanying Statement of Revenues and Expenses.

b. Construction

In 2008, Georgia Power, acting for itself and as agent for us, the Municipal Electric Authority of Georgia, and the City of Dalton, Georgia, acting by and through its Board of Water, Light and Sinking Fund Commissioners, doing business as Dalton Utilities (collectively, the Co-owners) and Westinghouse Electric Company LLC and Stone & Webster, Inc. (collectively, the Contractor) entered into an Engineering, Procurement and Construction Agreement (the EPC Agreement). Pursuant to the EPC Agreement, the Contractor will design, engineer, procure, construct and test two 1,100 megawatt nuclear units using the Westinghouse AP1000 technology and related facilities at Plant Vogtle Units No. 3 and No. 4. Our ownership interest and proportionate share of the cost to construct these units is 30%.

Under the EPC Agreement, the Co-owners will pay a purchase price that is 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. The EPC Agreement also provides for liquidated damages upon the Contractor's failure to fulfill the schedule and performance guarantees, subject to a cap. In addition, the EPC Agreement provides for limited cost sharing by the Co-owners for increases to Contractor costs under certain conditions. The maximum amount of additional capital costs under this provision attributable to us is $75,000,000. Each Co-owner is severally, not jointly, liable to the Contractor for its proportionate share, based on ownership interest, of all amounts owed under the EPC Agreement. As agent for the Co-owners, Georgia Power has designated Southern Nuclear Operating Company as its agent for contract management.

On December 31, 2015, Westinghouse acquired Stone & Webster, Inc. from Chicago Bridge & Iron Co. N.V. (the Acquisition). In connection with the Acquisition, Stone & Webster, Inc. changed its name to WECTEC Global Project Services Inc. (WECTEC). Certain obligations of Westinghouse and Stone & Webster, Inc. have been guaranteed by Toshiba Corporation, Westinghouse's parent company, and The Shaw Group Inc., a subsidiary of Chicago Bridge & Iron, respectively. On March 9, 2016, in connection with the Acquisition and pursuant to the settlement agreement described below, the guarantee of The Shaw Group was terminated. The guarantee of Toshiba remains in place. Additionally, as a result of recent credit rating downgrades of Toshiba, Westinghouse has provided the Co-owners with letters of credit of approximately of $900,000,000 in accordance with, and subject to adjustment under, the terms of the EPC Agreement. In the event of certain credit rating downgrades of any Co-owner, such Co-owner will be required to provide a letter of credit or other credit enhancement.

The Co-owners may terminate the EPC Agreement at any time for their convenience, provided that the Co-owners will be required to pay certain termination costs. The Contractor may also terminate the EPC Agreement under certain circumstances, including certain suspension or delays of work by the Co-owners, action by a governmental authority to stop work permanently, certain breaches of the EPC Agreement by the Co-owners, Co-owner insolvency, and certain other events.

The Nuclear Regulatory Commission certified the Westinghouse AP1000 Design Control Document (DCD) in late 2011. In early 2012, the Nuclear Regulatory Commission issued combined construction and operating licenses for Vogtle Units No. 3 and No. 4 which allowed full construction to begin. There have been technical and procedural challenges to the construction and licensing of Vogtle Units No. 3 and No. 4 at the federal and state levels, and additional challenges may arise as construction proceeds.

In 2012, the Co-owners and the Contractor commenced litigation regarding the costs associated with design changes to the DCD and the delays in the timing of approval of the DCD and issuance of the combined construction and operating licenses, including the assertion by the Contractor that the Co-owners are responsible for these costs under the terms of the EPC Agreement. The Contractor also asserted that it was entitled to extensions of the guaranteed substantial completion dates of April 2016 and April 2017 for Vogtle Units No. 3 and No. 4, respectively. In May 2014, the Contractor filed an amended claim alleging that (i) the design changes to the DCD imposed by the Nuclear Regulatory Commission delayed module production and the impacts to the Contractor are recoverable by the Contractor under the EPC Agreement and (ii) the changes to the basemat rebar design required by the Nuclear Regulatory Commission caused additional costs and delays recoverable by the Contractor under the EPC Agreement. In June 2015, the Contractor updated its estimated damages, based on our ownership interest, to an aggregate of approximately $470,000,000 (in 2015 dollars). The case was pending in the U.S. District Court for the Southern District of Georgia (the Vogtle Construction Litigation).

On December 31, 2015, Westinghouse and the Co-owners entered into a definitive settlement agreement (the Settlement Agreement) to resolve disputes between the Co-owners and the Contractor under the EPC Agreement, including the Vogtle Construction Litigation. Effective December 31, 2015, Georgia Power, acting for itself and as agent for the other Co-owners, and the Contractor entered into an amendment to the EPC Agreement to implement the Settlement Agreement. The Settlement Agreement and the related amendment to the EPC Agreement (i) restrict the Contractor's ability to seek further increases in the contract price by clarifying and limiting the circumstances that constitute nuclear regulatory changes in law; (ii) provide for enhanced dispute resolution procedures; (iii) revise the guaranteed substantial completion dates to match the currently estimated in-service dates of June 30, 2019 for Unit No. 3 and June 30, 2020 for Unit No. 4; (iv) provide that delay liquidated damages will now commence from the currently estimated nuclear fuel loading date for each unit, which is December 31, 2018 for Unit No. 3 and December 31, 2019 for Unit No. 4, rather than the original guaranteed substantial completion dates under the EPC Agreement; and (v) provide that we, based on our ownership interest, will pay to the Contractor and capitalize to the project cost approximately $230,000,000, of which we have paid (a) approximately $80,000,000 prior to the Settlement Agreement under the dispute resolution procedures of the EPC Agreement and (b) approximately $80,000,000 subsequent to December 31, 2015 under the terms of the Settlement Agreement. In addition, the Settlement Agreement provides for the resolution of other open existing items relating to the scope of the project under the EPC Agreement, including cyber security. Further, as part of the settlement and in connection with the Acquisition: (i) Westinghouse has engaged Fluor Enterprises, Inc., a subsidiary of Fluor Corporation, as a new construction subcontractor; and (ii) the Co-owners, Chicago Bridge & Iron, and The Shaw Group have entered into mutual releases of any and all claims arising out of events or circumstances in connection with the construction of Vogtle Units No. 3 and No. 4 that occurred on or before December 31, 2015. On January 5, 2016, the Vogtle Construction Litigation was dismissed with prejudice.

Our previously disclosed project budget, which includes capital costs, allowance for funds used during construction and a contingency amount, is $5,000,000,000, even after payments contemplated by the Settlement Agreement. As of December 31, 2015, our total investment in the additional Vogtle units was $2,888,000,000.

Processes are in place that are designed to assure compliance with the requirements specified in the DCD and the combined construction and operating licenses, including inspections by Southern Nuclear and the Nuclear Regulatory Commission that occur throughout construction. As a result of such compliance processes, certain license amendment requests have been filed and approved or are pending before the Nuclear Regulatory Commission. Various design and other licensing-based compliance issues may arise as construction proceeds, which may result in additional license amendments or require other resolution. If any license amendment requests or other licensing-based compliance issues are not resolved in a timely manner, there may be further delays in the project schedule that could result in increased costs to the Co-owners, the Contractor, or both.

In addition, as construction continues, the risk remains that challenges with the Contractor's performance including additional challenges in its fabrication, assembly, delivery, and installation of the shield building and structural modules could further impact the revised forecasted completion dates and cost and the Contractor must improve its schedule performance in order to mitigate this risk. Also, delays in the receipt of the remaining permits necessary for the operation of Vogtle Units No. 3 and No. 4 or other issues could arise and may further impact the project schedule and cost.

Future claims by the Contractor or Georgia Power, on behalf of the Co-owners, could arise throughout construction. These claims may be resolved through formal and informal dispute resolution procedures under the EPC Agreement and, under the enhanced dispute resolution procedures, may be resolved through litigation after the completion of nuclear fuel load for both units.

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