Nuclear Fuel Disposal Cost Litigation

9 Months Ended

Sep. 30, 2012

Nuclear Fuel Disposal Cost Litigation

Nuclear Fuel Disposal Cost Litigation

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Nuclear Fuel Disposal Cost Litigation.    Contracts with the U.S. Department of Energy have been executed to provide for the permanent disposal of spent nuclear fuel produced at Plants Hatch and Vogtle. The Department of Energy failed to begin disposing of spent fuel in January 1998 as required by the contracts, and Georgia Power, as agent for the co-owners of the plants, is pursuing legal remedies against the Department of Energy for breach of contract.

In 2007, the U.S. Court of Federal Claims found in favor of Southern Company and awarded damages in the amount of $59,900,000 representing substantially all of the Southern Company system's direct costs of the expansion of spent nuclear fuel storage facilities at Plants Hatch and Plant Vogtle. Our share of the award was $17,980,000. In 2008, the government filed an appeal and, on March 11, 2011, the U.S. Court of Appeals for the Federal Circuit remanded the Georgia Power portion of the proceeding back to the U.S. Court of Federal Claims for reconsideration of the damages amount in light of the spent nuclear fuel acceptance rates adopted in a separate proceeding by the U.S. Court of Appeals for the Federal Circuit.

On April 5, 2012, the U.S. Court of Federal Claims issued a final order for judgment in favor of Georgia Power and awarded $54,017,000 in damages, of which our ownership share was approximately $16,205,000. The effects of the judgment were recorded at June 30, 2012 and resulted in a $9,679,000 reduction in total operating expenses, which included reductions to fuel expense, production costs and depreciation and amortization, as well as a $6,526,000 reduction to plant in service.

In 2008, a second claim against the government was filed for damages incurred after December 31, 2004 (the court-mandated cut-off in the original claim). The complaint does not contain any specific dollar amounts for recovery of damages. Damages will continue to accumulate until the issue is resolved or storage is provided. No amounts related to this claim have been recognized in the financial statements as of September 30, 2012.

For a more information regarding the nuclear fuel costs and litigation, see Note 1 of "Item 8—FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA—Notes to Consolidated Financial Statements" in our 2011 Form 10-K.