Plant Vogtle: End Of An Era (or is that an “error”?)

After 25 rounds of semi-annual Vogtle Construction Monitoring (VCM), that VCM process is now changing.

Bryan Jacob | March 3, 2022 | Georgia, Nuclear, Utilities

No, the nuclear program at Plant Vogtle isn’t over. Units 1 and 2 (built in the late 1980s) remain operational. And Units 3 and 4 (which were due in 2016 and 2017) remain under construction.

What I mean by the “end of an era” title is that, after 25 rounds of semi-annual Vogtle Construction Monitoring (VCM), the VCM process is now changing.

New Rules

Up until now, Georgia Power has been coming before the Georgia Public Service Commission (PSC) seeking “verification and approval” (or disapproval) of costs incurred by the project during each six-month Reporting Period. The 25th and most recent semi-annual reporting round, VCM25, covered the period from January through June 2021. Georgia Power reported incurring $608 million of capital expenditures during the Reporting Period.

However, during that Reporting Period, Georgia Power’s share of the project cost exceeded $7.3 billion – a figure that had previously been “deemed reasonable” by the PSC. Consequently, as a result of the Commission’s order in VCM24 (and a Stipulation reached between Georgia Power and PSC Staff), Georgia Power will not seek “verification and approval” for any costs over $7.3 billion until a full “prudence review,” which can only start once they begin fuel load for Unit 4. The latest “risk adjusted” schedule theorizes that could be between April 2023 and July 2023.

So in VCM25, Georgia Power wasn’t seeking verification and approval of that full $608 million. Instead, they could only seek verification and approval of $67 million which got them up to the $7.3 billion figure. That left “the remaining $541 million being presented for Commission review only.” And with the VCM25 order issued by the Georgia Public Service Commission (PSC) on February 17, the PSC verified and approved that $67 million. But from now on, the semi-annual VCMs will only be to “review” the costs – not “verify and approve” (or disapprove).

Not Off the Hook Yet

Let’s be clear. The project is still racking up expenditures at a pace of around $100 million per month. And Georgia Power is likely to seek recovery on some or perhaps all of the cost overruns. In fact, during the Energy Committee meeting on February 10, there was a potentially impactful discussion over the semantics that Georgia Power is not seeking verification and approval of those costs “at this time.” That phrase is reflected in the final order.

Georgia Power just filed its VCM26 Report on February 17 and claims it “incurred $584 million of capital expenditures during the Reporting Period.” [July through December 2021]. Georgia Power’s portion of the capital cost had reached $8.4 billion by the end of last year. And the total cost of the project (all owners combined) is now projected to be $30 billion.

Co-Owners Vote by March 8 Could Also Change the Rules

Because the forecast total project cost at completion has risen by more than $2.1 billion over the corresponding figure from VCM19, which was $17.1 billion, the project has triggered another vote by the co-owners. Georgia Power currently owns less than 46% of Units 3 and 4 – with Oglethorpe Power, MEAG (the Municipal Electric Authority of Georgia), and Dalton Utilities owning the rest.

But the revised co-owners agreement empowers the other owners with a one-time option “to tender a portion of its Ownership Interest” and force Georgia Power to absorb 100% of the remaining cost overruns. Southern Company Chairman and CEO Tom Fanning discussed this scenario during the Southern Company earnings call on February 17. (Yes, that was a rather fateful day for Plant Vogtle.) These co-owner votes must take place by March 8.

If Georgia Power were to seek PSC permission to increase its ownership stake (even if just slightly), I feel rather certain the PSC would reject that. But these cost overruns offer a back-door for Georgia Power to increase its ownership with the PSC having no obvious authority to stop it.

SACE attempted to address this situation with one of our recommendations. That recommendation was:

“The Commission should proactively order that Georgia Power not bring forward any of the incremental costs that would have otherwise gone to other co-owners.”

From its final Order on February 17, “The Commission finds and concludes that SACE’s request is outside the scope of this proceeding and is therefore denied.”

A Football Analogy

The PSC’s rejection of the SACE recommendations was not surprising. This item was on the Energy Committee agenda on February 10 – just days before the Super Bowl. I used a football analogy to illustrate how illogical it is to keep punting these important decisions.

You can watch the recorded video here. My bit starts at around 13:15.

Essentially, I suggested that the referees need to rule on certain matters during the game rather than waiting until it’s over and reviewing the controversial calls then. Getting those calls right in real-time can impact the dynamic of the game itself.

The other SACE recommendation in VCM25 was, The Commission should disapprove costs for the electrical rework and the Spent Fuel Pool repairs that may be present in the $67 million request.

These were just two examples of where Georgia Power fumbled. And I needed to throw the proverbial challenge flag because VCM25 is the last time the commission has the opportunity to disapprove of expenditures until we get to the prudence process.

Nevertheless, the Commission denied that request as well. And from VCM26 onward the rules of the game only involve a review of the project expenditures – with no semi-annual opportunity to “verify and approve or disapprove” of those costs.

SACE will continue to Monitor the Monitoring

SACE will remain active in the Vogtle Construction Monitoring docket and seek to minimize the impact its cost overruns will have on Georgia ratepayers who already experience some of the highest energy burdens in the country. Georgia Power has already collected approximately $4 billion from customers through a Nuclear Construction Cost Recovery (NCCR) fee – predominantly from residential and small business customers.

Plant Vogtle featured photo courtesy of High Flyer 2019.

Bryan Jacob
Bryan joined the Southern Alliance for Clean Energy in June 2017. As Solar Program Consultant, Bryan helps to lead activities to promote solar power across the Southeast. These activities range…
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