Georgia Power customers would receive little protection or relief
Contact: Jennifer Rennicks, SACE, 865.235.1448
Atlanta, Ga. (October 21, 2016) ///PRESS RELEASE/// Late Thursday the Georgia Public Service Commission (PSC) Staff issued a proposed Stipulation Agreement that fails to protect Georgia Power customers for increased costs associated with the now 45-month delayed, over budget nuclear reactors under construction at Plant Vogtle near Waynesboro along the Savannah River. The estimated capital cost forecast has increased $1.262 billion for Georgia Power’s share of the project to $5.680 billion from the original $4.418 billion. The PSC press statement identified what appear to be only phantom savings to utility ratepayers while granting the Company guarantee of collection of billions of dollars in increased project costs.
Key items in the proposed Stipulation include:
- A defacto extension of the construction schedule from the current 39-month delay to 45 months with acknowledgement that it could be even further delayed, with nominal penalty for the Company.
- Capital costs up to $5.680 billion are considered reasonable and prudent thus no review in the future; despite the fact that $3.68 billion has been spent in capital costs as of the 15th Vogtle Construction Monitoring (VCM) report. This appears to represent approval of $2 billion in advance of those capital costs even being spent.
- The phantom cost savings to customers over the next four years appears to be due to merely slowing down the collection of financing costs versus actually denying the Company collection of these costs.
Below is a statement from Southern Alliance for Clean Energy’s High Risk Energy Choices Program Director Sara Barczak, an intervening party in the Vogtle Supplemental Information Review process, which the clean energy organization has criticized as an expedited, quasi-prudency review:
Halloween came early in Georgia given the clear treats offered to Southern Company (parent Company of Georgia Power) and the tricks doled out to utility customers. The proposed Stipulation is a major disappointment to consumers for many reasons.
Not one penny of construction costs associated with the construction delay was disallowed, including the $700 million in additional financing costs caused by the delay. Georgia Power will collect 100% of its financing costs. Most of the $325 million in phantom cost reduction to customers is only a delay in collecting financing charges. Georgia Power shareholders may see a tiny drop in their earnings but remain largely protected.
While Georgia Power has spent $3.68 billion on the Project to date, the Stipulation certifies $5.680 billion in construction costs as “prudent” and “reasonable” – essentially an advance approval of $2 billion dollars.
Finally, there is no public record to evaluate whether the PSC Staff negotiated a fair deal or rolled over to the utility company demands.
The proposed Stipulation clearly rewards Southern Company for their and their Contractors’ bungling of the troubled Vogtle nuclear construction project, which has been plagued with a plethora of serious design, engineering and construction problems from Day One that were identified by PSC Staff over years of testimony.
Georgia Power customers will realize little benefit should the Georgia Public Service Commissioners approve this proposal. It’s really sad to see yet another big power company receiving essentially a free pass for their mistakes that will cost families and businesses money.
Originally Vogtle reactor Unit 3 was scheduled to come online April 1, 2016 and Unit 4 one year later. As of the 15th VCM report, schedule estimates were June 2019 and June 2020 respectively, a 39-month delay, with a cost estimate of $7.862 billion. The current certified cost for Georgia Power’s share of the project is approximately $6.113 billion. Customers are already paying an additional 9.4% on their monthly bills for the Nuclear Construction Cost Recovery (NCCR) costs due to anti-consumer state legislation passed in 2009 to incentivize building new reactors. Over $1.8 billion in pre-collected financing costs have been charged to ratepayers and the financing costs represent the largest share of the project’s cost overruns. The original approximately $14.1 billion Vogtle project is now estimated to cost well over $20 billion. Georgia Power is 45.7% owner in the project (remaining utility partners are Oglethorpe Power (30%), MEAG (22.7%) and the City of Dalton (1.6%)).
Find more information about Plant Vogtle’s expansion here.
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.