Latest round of monitoring construction of nuclear units at Plant Vogtle spotlights a decade of inaccuracies in Commission filings.

Bryan Jacob | December 23, 2020 | Georgia, Nuclear, Utilities

“The Company grossly under-estimated the cost of Vogtle 3&4 in its filings and testimony to the Commission during the first ten years of the Project.”

This critical indictment comes from testimony filed on behalf of the Georgia Public Service Commission (PSC) Public Interest Advocacy (PIA) Staff in VCM 23, the 23rd semi-annual Vogtle Construction Monitoring (VCM) process.

The Background

In 2009, the Georgia PSC approved Georgia Power’s proposal to build two new nuclear units at Plant Vogtle. Now, more than a decade later, the project originally projected to cost $14 billion and be complete by 2017, has seen costs nearly double and schedules delayed by more than 5 years.

 

Perpetual Schedule Changes

Just in the second half of this year alone, Southern Nuclear has revised their Integrated Project Schedule (IPS) twice – once in July (“2020 July Refinement”) and then again in October (“2020 October Site Working Schedule”).

SACE has previously expressed concerns that the perpetual “rebaselining,” “schedule refinement” efforts, etc., mask the full, realistic Project delays and resulting Project cost increases. The “dynamic” nature of this approach may give the artificial impression that delays are on the order of weeks or months when in actuality, the delays could be more substantial – of a year or more, which would prompt another “go/no-go” vote among the Project partners.

The current “regulatory-approved in-service dates” are November 2021 for Unit 3 and November 2022 for Unit 4. So we are now within one year of Unit 3 being online. Or are we?

Staff testimony expressed that “all IPS iterations have been overly aggressive and unachievable” [emphasis added] “since inception of the Project in 2009.” It wasn’t just the costs estimates that were grossly underestimated, the schedules have been unrealistic from the start, too. It’s no wonder the Project is more than 68 months behind schedule.

According to testimony from Donald Grace of Vogtle Monitoring Group (VMG), “it is highly unlikely that U-3 will meet a November 2021 COD [commercial operation date].” Mr. Grace also opines that the total project cost will be exceeded by an additional $1.8 billion to $2.2. billion.

Base Rate Increase

Georgia Power has reported that “Vogtle Units 3 and 4 peak rate impact for customers is expected to be approximately ten Percent…with approximately 4.7% already in rates.”

SACE reiterated a prior recommendation that the Company should be required to report Peak Rate Impacts on each Customer Class. Not all classes of ratepayers will be impacted the same. The Company asserts that it does not track rate impacts by customer class. SACE finds this response to be wholly unacceptable. The Commission should be entitled to full and transparent information as to how each class will be affected.

The Commission’s own Advisory Staff incorporated that provision into their VCM22 recommendation:

“Advisory Staff recommends that a provision be added to the next PSO [Procedural and Scheduling Order] to address customer class Peak Rate Impacts from the Project.”

Unfortunately, at the August 18, 2020, Administrative Session, the Commission voted to strike this provision with only one Commissioner supporting it. The prevailing view was that “It’s just too early; it’s just not the right time, yet.”

There was also a point expressed that “there’s no reason to change the rules of the game at this point.”  Which brings me to my next point…

Cost To Complete

Another routine part of each VCM report is the “cost to complete” analysis. This compares the incremental cost of completing the Plant Vogtle expansion with a hypothetical alternative of a fossil gas-fired combined cycle alternative under a set of high, medium and low gas prices and several potential carbon prices.

This has been a part of VCM reporting since the inception of the project. And yet, “the Company no longer believes it is necessary to continue performing this analysis.”

The Commission’s PIA Staff “maintains that the Company should continue to provide the cost-to-complete analysis information.” And their witnesses express a variety of reasons why this information provides more than just “marginal value to the Commission” as the Company had asserted.

SACE agrees with PIA Staff that the Company should be required to keep including the cost-to-complete analysis in its semi-annual VCM reporting. But it will be interesting to see what the Commission decides since the Company is now the party suggesting to change the rules of the game.

Detail Forthcoming?

PIA Staff testimony included an approximation of the cost impact on residential customers (an additional $5.50 per month during the first five years of operation). And the witnesses made a compelling case that we can’t wait any longer to start examining the specific rate impacts. “Staff recommends that the Commission direct the Company to file an Application to adjust base rates, NCCR [Nuclear Construction Cost Recovery] rates, and fuel rates…at least six months prior to the regulatory COD.”

By my math, that should be May 2021 at the latest. So before we complete the next round of these semi-annual progress updates (VCM 24), there should be much greater visibility into how the Company’s big bet will impact customer rates.