Southern Company’s second quarter earnings news yesterday about Plant Vogtle’s nuclear expansion having yet another multi-billion dollar cost increase is not surprising given the continued problems occurring at the nuclear construction site that is just approaching halfway completion despite being more than nine years into construction. But it is infuriating.
There was no wiggle room left as the project was deemed uneconomic to continue last year by the Georgia Public Service Commission’s (PSC) own Staff. The project is well over five years delayed and has more than doubled from original cost estimates, and yet the Georgia PSC approved nearly everything that Georgia Power wanted. These new numbers show it is only getting worse.
Plant Vogtle’s completion schedule and ultimate cost is off the rails yet again. When does Georgia Power lose credibility given their statements time and time again about being able to bring this project in on time and on budget? If that were the case, the two reactors would have been operational in 2017 at half the cost of what is now projected.
The Georgia PSC cannot continue to turn a blind eye to the situation – utility customers deserve openness and transparency along with actual protections from this out-of-control project in which at least Southern Company appears to be pushing ahead despite the continued and worsening warning signs. (And please don’t bring up the $75 so-called “rebate” for Georgia Power customers the Commission approved last year which will actually cost customers a whole lot more in the long run as determined by Georgia Conservation Voters.) It is not sustainable or fair for the Vogtle Owners – Georgia Power, Oglethorpe Power, the Municipal Electric Authority of Georgia (MEAG), and Dalton Utilities – to continue hemorrhaging money when there is no end in sight and no assurance that their customers will be protected.
The Southern Alliance for Clean Energy filed our final brief in the 18th semi-annual Vogtle Construction Monitoring (VCM) docket before the Georgia PSC last week, which included a recommendation not to approve the $448 million in expenditures, portions of which are still being audited. In the 18th VCM, PSC Staff testimony showed that the project was barely economic, with only a $100 million “benefit” to customers, and that if delays of 2 months or more occurred, the project would once again be uneconomic to continue. With the newly announced $1.1 billion cost increase just for Georgia Power’s share of the Vogtle project (at 45.7% ownership), it is clearly uneconomic to continue. It is notable that Georgia Power’s brief, filed just days before Southern Company’s earning call, did not mention or allude to any of the new Vogtle cost increases.
Despite a coordinated statement from Governor Deal and recent news headlines that make it appear that Georgia Power will “absorb” some of the cost increases, we see through the spin and have been down this road before. It is clear to us given the utility’s statements yesterday that the only question is “when” they will request at least $400 million (if not more) in cost recovery from Georgia Power customers, not “if.” For instance, from Georgia Power’s own press release (emphasis added): “While it is believed the increased projected costs are reasonable, necessary and prudent, the company has decided not to ask the Georgia Public Service Commission (PSC) to approve those costs so soon after receiving the Georgia PSC’s approval of the capital forecast last year. Additionally, based on the latest estimate, the previous contingency for the project has been determined to be insufficient to fully offset forecasted cost increases resulting in an increased contingency of approximately $400 million, which may be presented to the Georgia PSC for evaluation as and when appropriate in the future.”
With this new information, it is even more important for the Commission to stop approving everything that Georgia Power asks for and demand an immediate, open and transparent process that the public can easily participate in. The Commission’s decision on the 18VCM is scheduled for the Administrative Session on August 21, 2018 even though a decision by all of the Co-owners is not anticipated until September, at outlined in SEC filings, to determine whether to go forward with the project.
Additionally, the Department of Energy must not finalize the additional $3.7 billion in taxpayer-backed federal nuclear loan guarantees. Clearly the Vogtle nuclear project is in trouble and U.S. taxpayers should not be forced to take on even more risk given $8.3 billion in loan guarantees has already been secured by three of the Vogtle co-owners: Georgia Power, Oglethorpe Power, and MEAG.