Vogtle, Units No. 3 and No. 4. The Co-owners appointed Georgia Power to act as agent under this agreement. Our ownership interest and proportionate share of the cost to construct these units is 30%. Pursuant to this agreement, Georgia Power has designated Southern Nuclear Operating Company, Inc. as its agent for licensing, engineering, procurement, contract management, construction and pre-operation services.

In 2008, Georgia Power, acting for itself and as agent for the Co-owners, entered into an Engineering, Procurement and Construction Agreement (the EPC Agreement) with Westinghouse Electric Company LLC and Stone & Webster, Inc., which was subsequently acquired by Westinghouse and changed its name to WECTEC Global Project Services Inc. (collectively, Westinghouse). Pursuant to the EPC Agreement, Westinghouse agreed to design, engineer, procure, construct and test two 1,100 megawatt nuclear units using the Westinghouse AP1000 technology and related facilities at Plant Vogtle.

Until March 2017, construction on Units No. 3 and No. 4 continued under the substantially fixed price EPC Agreement. In March 2017, Westinghouse filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code. Effective in July 2017, Georgia Power, acting for itself and as agent for the other Co-owners, and Westinghouse entered into a services agreement (the Services Agreement), pursuant to which Westinghouse is providing facility design and engineering services, procurement and technical support and staff augmentation on a time and materials cost basis. The Services Agreement provides that it will continue until the start-up and testing of Vogtle Units No. 3 and No. 4 is complete and electricity is generated and sold from both units. The Services Agreement is terminable by the Co-owners upon 30 days' written notice.

In October 2017, Georgia Power, acting for itself and as agent for the other Co-owners, entered into a construction completion agreement with Bechtel Power Corporation, pursuant to which Bechtel serves as the primary contractor for the remaining construction activities for Vogtle Units No. 3 and No. 4 (the Bechtel Agreement). The Bechtel Agreement is a cost reimbursable plus fee arrangement, whereby Bechtel is reimbursed for actual costs plus a base fee and an at-risk fee, which is subject to adjustment based on Bechtel's performance against cost and schedule targets. Each Co-owner is severally, and not jointly, liable for its proportionate share, based on its ownership interest, of all amounts owed to Bechtel under the Bechtel Agreement. The Co-owners may terminate the Bechtel Agreement at any time for their convenience, provided that the Co-owners will be required to pay amounts related to work performed prior to the termination (including the applicable portion of the base fee), certain termination-related costs and, at certain stages of the work, the applicable portion of the at-risk fee. Bechtel may terminate the Bechtel Agreement under certain circumstances, including certain Co-owner suspensions of work, certain breaches of the Bechtel Agreement by the Co-owners, Co-owner insolvency and certain other events.

As part of its ongoing processes, Southern Nuclear continues to evaluate cost and schedule forecasts on a regular basis to incorporate current information available, particularly in the areas of engineering support, commodity installation, system turnovers and related test results, and workforce statistics.

In mid-March 2020, Southern Nuclear began implementing policies and procedures designed to mitigate the risk of transmission of COVID-19 at the construction site, including worker distancing measures, isolating individuals who tested positive for COVID-19, showed symptoms consistent with COVID-19, were being tested for COVID-19, or were in close contact with such persons, requiring self-quarantine, and adopting additional precautionary measures. Since March 2020, the number of active cases of COVID-19 at the site has fluctuated and impacted productivity levels and pace of activity completion. The project faced challenges, including, but not limited to, higher than expected absenteeism; overall construction and subcontractor labor productivity; system turnover and testing activities; and electrical equipment and commodity installation.

In 2021, Southern Nuclear has been performing additional construction remediation work necessary to ensure quality and design standards are met as system turnovers are completed to support hot functional testing and fuel load for Unit No. 3. Hot functional testing for Unit No. 3 was completed in July 2021. As a result of challenges including, but not limited to, construction productivity, construction remediation work, the pace of system turnovers, spent fuel pool repairs, and the timeframe and duration for hot functional testing and other testing, at the end of the second quarter 2021, Southern Nuclear further extended certain milestone dates and Georgia Power has disclosed that it projects an in-service date for Unit No. 3 in the second quarter of 2022. Our current budget reflects our expectation of an in-service date for Unit No. 3 in June 2022.

2023. The in-service date for Unit No. 4 primarily depends on overall construction productivity as well as appropriate levels of craft laborers, particularly electrical and pipefitter craft labor, being added and maintained. While Georgia Power has disclosed that it projects an in-service date in the first quarter of 2023, we believe that a delay into the second quarter of 2023 is more likely and our current budget anticipates an in-service date for Unit No. 4 in June 2023.

During the fourth quarter of 2020, Georgia Power established $375 million of additional contingency (of which our 30% share was $112.5 million). As of March 31, 2021, Georgia Power assigned approximately $183 million (of which our 30% interest was $55 million) of that construction contingency to the base capital cost forecast for costs primarily associated with the schedule extension for Unit No. 3 to December 2021, construction productivity, support resources and construction remediation work. During the first quarter of 2021, Georgia Power also established an additional $106 million of construction contingency (of which our 30% share was $32 million). Considering the factors above, during the second quarter of 2021, the remaining previously established project-level contingency of approximately $300 million (of which our 30% interest was $90 million) and an additional $746 million (of which our 30% interest is $224 million) was assigned to the base capital cost forecast for costs primarily associated with the schedule extensions for Units No. 3 and No. 4 described above, construction remediation work for Unit No. 3, and construction productivity and support resources for Units No. 3 and No. 4. Georgia Power also established an additional $260 million of construction contingency (of which our 30% interest is $78 million) to replenish the project-level construction contingency. Georgia Power has stated its expectation to allocate the remainder of this project-level contingency by completion of the project.

In addition, the continuing effects of the COVID-19 pandemic could further disrupt or delay construction, testing, supervisory, and support activities at Vogtle Units No. 3 and No. 4. The incremental cost associated with COVID-19 mitigation actions and impacts on construction productivity is currently estimated by Georgia Power to be between $352 million and $442 million (of which our 30% interest is $106 million to $133 million) and is included in the project budget.

As a result of the above mentioned challenges, we have increased our budget for our 30% ownership interest in Vogtle Units No. 3 and No. 4, which includes capital costs, allowance for funds used during construction, our allocation of the project-level contingency and a separate Oglethorpe-level contingency, from $7.5 billion to $8.25 billion. Our revised budget is based on commercial operation dates of June 2022 and June 2023 for Units No. 3 and No. 4, respectively. Separate from the contingency amounts, our revised budget includes approximately $80 million of construction, financing and owner's costs to cover three additional months of construction for Unit No. 4 compared to the assumptions reflected in Georgia Power’s project budget.

The project-level contingency is separate and in addition to our Oglethorpe-level contingency. The Oglethorpe-level contingency, which we have carried at various levels since the beginning of the project, provides additional margin to cover potential cost, schedule, and financing risks associated with our share of the project which may not be covered by project-level contingencies. As construction progresses, the Oglethorpe-level contingency may continue to fluctuate as it represents the difference between known project-level costs and contingencies and our total budget of $8.25 billion. At the end of the project, if there is remaining Oglethorpe-level contingency, we will adjust our project budget to remove this contingency and bill our members based on the actual project costs. The table below shows our project budget and actual costs through June 30, 2021 for our 30% interest in the project.


	(in millions)
	Project Budget		Actual Costs at June 30, 2021		Remaining Project Budget
Construction Costs (1)	$	6,013	$	5,145	$	868
Financing Costs	1,735		1,385		350
Total Costs	$	7,748	$	6,530	$	1,218

Project-Level Contingency	$	78	$	—	$	78
Oglethorpe-Level Contingency	424		—		424

Total Contingency	$	502	$	—	$	502
Totals	$	8,250	$	6,530	$	1,720

(1) Construction costs are net of $1.1 billion received from Toshiba Corporation under a Guarantee Settlement Agreement.

The Oglethorpe-level contingency in our current budget is expected to be sufficient to cover delays up to three months on each unit beyond our assumed in-service dates of June 2022 and June 2023 for Unit No. 3 and Unit No. 4, respectively. Any further delays beyond these extended dates are expected to impact our cost by approximately $55 million per month for both units and approximately $25 million per month for Unit No. 4 only, including financing costs.

As construction, including subcontract work, continues and testing and system turnover activities increase, risks remain that ongoing or future challenges with management of contractors and vendors; subcontractor performance; supervision of craft labor and related productivity, particularly in the installation of electrical, mechanical, and instrumentation and controls commodities, ability to attract and retain craft labor, and/or related cost escalation; procurement, fabrication, delivery, assembly, installation, system turnover, and the initial testing and start-up, including any required engineering changes or any remediation related thereto, of plant systems, structures or components (some of which are based on new technology that only within the last few years began initial operation in the global nuclear industry at this scale), including the spent fuel pools, any of which may require additional labor and/or materials; or other issues could arise and further impact the projected schedule and estimated cost.

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 level and additional challenges may arise. Processes are in place that are designed to ensure compliance with the requirements specified in the Westinghouse Design Control Document and the combined construction and operating licenses, including inspections by Southern Nuclear and the Nuclear Regulatory Commission that occur throughout construction. In connection with the additional construction remediation work described above, Southern Nuclear reviewed the project’s construction quality programs and, where needed, is implementing improvement plans consistent with these processes. In June 2021, the Nuclear Regulatory Commission began a special inspection to review the root cause of this additional construction remediation work and the corresponding corrective action plans. Findings from this or other inspections could require additional remediation and/or further Nuclear Regulatory Commission oversight and may impact the projected in-service dates. In addition, certain license amendment requests have been filed and approved or are pending before the Nuclear Regulatory Commission. On March 15, 2021, the Nuclear Regulatory Commission denied the Blue Ridge Environmental Defense League's December 2020 motion to reopen proceedings on its petition challenging a requested license amendment which had been issued by the Nuclear Regulatory Commission staff.

Various design and other licensing-based compliance matters, including the timely submittal by Southern Nuclear of the inspections, tests, analyses, and acceptance criteria documentation for each unit and the related reviews and approvals by the Nuclear Regulatory Commission necessary to support authorization to load fuel, have arisen or may arise, which may result in additional license amendments or require other resolution. If any license amendment requests or other licensing-based compliance issues, including inspections, tests, analyses, and acceptance criteria, 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 Co-owners' joint ownership agreements, as amended, provide that the holders of at least 90% of the ownership interests in Vogtle Units No. 3 and No. 4 must vote to continue construction, or can vote to suspend construction, if certain adverse events occur, including: (i) the bankruptcy of Toshiba Corporation; (ii) termination or rejection in bankruptcy of certain agreements, including the Services Agreement, the Bechtel Agreement or the agency agreement with Southern Nuclear; (iii) Georgia Power publicly announces its intention not to submit for rate recovery any portion of its investment in Vogtle Units No. 3 and No. 4 (or associated financing costs) or the Georgia Public Service Commission determines that any of Georgia Power's costs relating to the construction of Vogtle Units No. 3 and No. 4 will not be recovered in retail rates, excluding any additional amounts paid by Georgia Power on behalf of the other Co-owners pursuant to the Joint Ownership Agreement and the first 6% of costs during any six-month VCM reporting period that are disallowed by the Public Service Commission for recovery, or for which Georgia Power elects not to seek cost recovery, through retail rates or (iv) an incremental extension of one year or more over the most recently approved schedule (each, a Project Adverse Event).