Georgia Regulators Approve Some Protections for Utility Customers from Southern Company’s Delayed, Over Budget Nuclear Reactors at Plant Vogtle
More than five years into construction, serious challenges remain
Contact: Jennifer Rennicks, SACE, 865.235.1448
Atlanta, Ga. (February 18, 2016) – Today the Georgia Public Service Commission (PSC) unanimously approved an additional $148 million in expenditures for the 39-month delayed nuclear expansion of Plant Vogtle near Waynesboro, Georgia along the Savannah River. The Commission has approved all of the Company’s previous applications for expenditures, which has now amounted to over $3.1 billion. The Commissioners did accept several of Southern Alliance for Clean Energy’s (common-sense recommendations in the 13th semi-annual Vogtle construction monitoring docket (VCM), which could provide partial protections to utility customers.
In addition to confirming that the $6.113 billion certified cost for Georgia Power Company’s share of the Project costs was not an estimate, the Commission included the following recommendations SACE offered in their final brief: 1) Georgia Power must provide a viable mitigation strategy to meet the current commercial operation dates of June 2019 for Unit 3 and June 2020 for Unit 4 in the 14th VCM; and 2) costs should be properly allocated where expenditures for Units 3 and 4 provide benefits to the existing, operational Units 1 and 2.
“We appreciate the Commission’s adoption of some of our recommendations,” said Sara Barczak, high risk energy choices director for the Southern Alliance for Clean Energy (SACE). “But there still much to be done to ensure that consumers have the protections they deserve given Vogtle’s total estimated project costs have already ballooned from $14 billion to nearly $22 billion and further delays and cost increases are likely.”
Financing costs now represent the largest share of the project’s cost overruns. Georgia Power customers are already paying more than 9.7 percent on their monthly bills in Nuclear Construction Cost Recovery (NCCR) costs due to anti-consumer state legislation passed in 2009 to incentivize building new reactors. Over $1.4 billion in pre-collected financing costs have been charged to ratepayers. House Bill 931 is currently before the Georgia State Legislature; it would not allow Georgia Power to collect the financing cost surcharge after it should have ended in March 2017. An estimated $2.4 billion in financing costs is associated with the current 39-month delay. During the 13th VCM hearing in December, SACE was able to confirm that the approximately 46 percent tax gross up rate should be included, which amounts to an additional $1.264 billion in financing costs.
Recently the PSC voted 4-1 to approve what could be described potentially as an expedited prudency review of all project costs to-date including the litigation settlement costs. Commissioner Wise’s amended motion was submitted in response to Georgia Power’s request for the Commission to approve the recent settlement agreement between the utility owners and lead contractor Westinghouse that was first announced last October and finalized in January. The settlement amounts to over $916 million in cost increases to the utility owners, with Georgia Power’s share at $419 million, which includes $69 million for “change orders relating to cyber security and site security integration issues which were not part of the Major Claims litigation.”
In the Order for this new proceeding, Georgia Power is required to file a report by April 5, primarily documenting that “its justification for approval of the Consortium Settlement and the Company’s position that all costs incurred to date have been prudently spent and that the new cost and schedule is a reasonable re-forecast.” Comments on that report would then be due just a month later, May 5. The PSC Staff would then have approximately six months for review and to reach a potential settlement agreement and must report back to the Commission on the status by October 5. It appears that there would be no hearings or expert witness testimony during that time. Separately, Georgia Power is required to file the 14th VCM by the end of this month, which triggers the start of a 6-month long review process of the expenditures the Company incurred during the last reporting period of July 1 through December 31, 2015.
“It appears that the troubled Vogtle project is going to receive some additional scrutiny this year that will be conducted in proceedings separate from the semi-annual VCM docket,” said SACE attorney, Bobby Baker. “It remains to be seen exactly how this process will be able to provide a thorough and professional review of all the Vogtle costs to date.”
Additional information:
Originally Vogtle reactor Unit 3 was scheduled to come online April 1, 2016 and Unit 4 one year later but estimates from Georgia Power are currently June 2019 and June 2020 respectively, representing a 39-month delay. But expert witnesses for the PSC have identified additional delays as serious construction challenges remain. The current certified cost for Georgia Power’s share of the project is approximately $6.113 billion. In the 13th VCM report the Company’s cost estimate is approximately $7.453 billion, not including the $419 million increase due to the settlement reached among the Vogtle utility owners and lead contractor, Westinghouse, including costs associated with cybersecurity and site security. Georgia Power is 45.7 percent owner in the project (remaining utility partners are Oglethorpe Power (30 percent), MEAG (22.7 percent) and the City of Dalton (1.6 percent)). Find more information about Plant Vogtle’s expansion here.
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Founded in 1985, the Southern Alliance for Clean Energy promotes responsible energy choices that work to address the impacts of Global Climate Change and ensure clean, safe, and healthy communities throughout the Southeast. Learn more at www.cleanenergy.org.