Experts Agree It Is Uneconomic for Georgia Power Customers to Shoulder Costs if Bungled Plant Vogtle Nuclear Expansion Project Continues
Hearing next week will discuss dire financial impacts to customers
Contact: Jennifer Rennicks, SACE, 865.235.1448
Atlanta, Ga. (December 6, 2017) ///PRESS RELEASE/// Despite Georgia Power’s announcement yesterday of securing the remaining Toshiba Parent Guarantee, extensive expert testimony filed at the Georgia Public Service Commission (PSC) deems the Plant Vogtle nuclear expansion project no longer economic for customers to pay for, should it continue. Though SCE&G and Santee Cooper cancelled the only other nuclear reactor construction project in the country at the V.C. Summer plant in neighboring South Carolina, Georgia Power and its utility partners hope to move forward with Plant Vogtle. A multi-day hearing for the 17th semi-annual Vogtle Construction Monitoring (VCM) review will begin next Monday at the PSC to discuss the project’s fate, which has doubled in costs and is at least five years delayed. Mr. Peter Bradford, a former Commissioner with the U.S. Nuclear Regulatory Commission (NRC) and former Chairman of the Maine and New York utility commissions, will testify on behalf of the Southern Alliance for Clean Energy (SACE), a clean energy organization long involved in the project.
For the first time in a VCM review, the PSC Staff is recommending that not all expenditures incurred by Georgia Power during the reporting period were reasonable. The Staff is recommending only a small portion, or $44 million, of a Company requested $542 million, be verified and approved. Liens and other pre-paid petition amounts owed to Westinghouse contractors, totaling $498 million, should not be verified per the Staff recommendation.
SACE highlighted some portions of PSC Staff testimony (available here and here):
- “Staff concludes that completion of the Project is no longer economic on a to-go (forward looking) basis given the additional costs and schedule delays, even without considering the conditions requested by the Company.”
- “Staff also assumed that the Company will receive the Toshiba Guarantee payments in its economic analyses.”
- “Staff opposes several of the conditions requested by the Company, which would effectively shift most of the financial risk of the Project to customers.”
- “Staff’s analysis indicates the Project’s economic benefit is a negative $1.6 billion, meaning that the Project is uneconomic.”
- “The rejection of the EPC [Engineering, Procurement and Construction] Agreement eliminated a protection that Toshiba or Westinghouse bore some financial responsibility if the Units did not function as required under the EPC Agreement. If the Units require modifications or do not operate as intended or not as efficiently as expected, any cost to address such problems is entirely the responsibility of the Company, and potentially the ratepayers.”
- “The Toshiba Guarantee payments eliminate effectively all liability for Toshiba and Westinghouse regarding performance of the Units. The Commission should take into consideration the unusual nature and potential magnitude of the Project’s technology risk.”
The Vogtle project’s uncertainty looms in the wake of the Westinghouse bankruptcy, the designer and builder of the AP1000 reactor design that has never operated anywhere in the world, given the multi-billion dollar losses it and parent company Toshiba suffered because of the Vogtle and V.C. Summer reactor projects. Georgia Power’s 17th semi-annual Vogtle Construction Monitoring report mentioned an additional $4.5 billion capital cost estimate to complete Georgia Power’s portion of the project as 45.7% owner and a total capital cost estimate of $9.45 billion to complete the project, which represents more than a doubling of the original capital cost estimate. Georgia Power’s estimated financing costs are $3.4 billion, up significantly from the original $1.695 billion estimate. The completion schedule is also significantly delayed, again. Originally the two reactor units should have both been online in April 2016 and April 2017 and new Company estimates are November 2021 for unit 3 and November 2022 for unit 4.
In a recent blog post, SACE determined the disproportionate burden due to pay-in-advance payments the Vogtle project has had on residential customers in comparison to large industrial users. Residential customers are currently paying over 0.7 cents/kWh, while industrial customers pay less than 0.2 cents/kWh. Over the first six years of these mandatory nuclear plant construction financing fees, residential customers have paid 45% more than average (on a per kWh basis), while industrial customers have enjoyed a 58% below average rate.
“The PSC Staff and majority of intervenor testimony clearly demonstrates that Georgia Power customers cannot and should not bear the additional costs and risks associated with continuing this off-track project,” said Sara Barczak, high risk energy choices program director with SACE. “We hope that the Commissioners will closely consider the evidence and recommendations and keep the interests of customers in the forefront of their minds during next week’s hearing and leading up to their decision. Customers have already shouldered considerable risk and if the Company chooses to go forward, the Commission must ensure that the Company and its shareholders are held accountable and take responsibility for the increased costs and remaining risks.”
The Company’s 17th VCM report requests that the Georgia PSC approve the new estimated schedule and cost to complete the Vogtle reactors and a number of conditions that must occur in order for the project to continue moving forward. The Georgia PSC is expected to make a decision on these matters by February 2018.
Additional Information:
The 17th VCM hearing will begin at 10 am ET at the Georgia PSC on Monday, December 11, 2017 and continue for several days. Audio streaming is available and SACE will offer Facebook livestreaming here when possiblethroughout the hearing. Public comments can be given at the start of each day or by contacting the Commissioners directly.
The current certified cost for Georgia Power’s share of the project is approximately $6.113 billion, which represented an original $4.418 billion for capital costs and $1.695 billion in financing costs. Over $2.2 billion in pre-collected financing costs have been charged to ratepayers due to anti-consumer state legislation passed in 2009 to incentivize building new reactors. Georgia Power is 45.7% owner in the project and remaining utility partners are Oglethorpe Power (30%), MEAG (22.7%) and the City of Dalton (1.6%).
Plant Vogtle is located on the Savannah River near Waynesboro in Burke County Georgia. The Georgia Water Coalition selected the costly, water-guzzling nuclear expansion for their annual “Dirty Dozen” report, issued last month, calling upon the PSC to cancel the project and pursue less water-intensive, affordable energy choices such as solar, wind and energy efficiency and conservation.
Find filings with the Georgia PSC in the semi-annual Vogtle Construction Monitoring review docket here. Find more information about Plant Vogtle 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.