Vogtle economics foggy, but fight over who pays is certain

Kristi E. Swartz – E&E News

ATLANTA — The cost to finish Georgia Power’s nuclear expansion project remains unclear, but the battle over who will pay is all but certain.

The question became all the more dire at a Georgia Public Service Commission hearing Thursday because of the number of unknown factors that remain in Plant Vogtle’s final price tag.

“Ultimately, the determination whether the project will be economic will depend on the additional cost, the length of the delays and whether customers are expected to bear all of the additional costs associated with the project,” PSC staff consultant Phil Hayet said at the hearing about Plant Vogtle’s cost and schedule.

Plant Vogtle and V.C. Summer in South Carolina are restarting the nation’s nuclear industry after 30 years. But the projects are examples of why it’s so difficult to build nuclear reactors — a number of regulatory delays and vendor problems have already put them years behind schedule and billions of dollars over their forecast budget.

The economics of completing Vogtle’s twin reactors were called into question again at the hearing, which was a look at the project during the last half of 2016. Delays and cost increases have chipped away at the project’s benefits, but two pivotal events this year have shifted its economics significantly.

The first is Vogtle’s main contractor, Westinghouse Electric Co. LLC, filing for Chapter 11 bankruptcy protection in March because of major cost increases in Georgia and at a similar project in South Carolina. The second is Georgia Power’s decision to take over the project along with its Southern Nuclear sister company.

Georgia Power and Southern Nuclear are units of Atlanta-based Southern Co., which recently secured $3.7 billion in guarantees from Westinghouse’s parent, Toshiba Corp. Southern is also among those pushing for Congress to extend nuclear tax credits past the end of 2020 so Vogtle can benefit from them.

Both will help offset Vogtle’s additional costs. That is key because the Georgia PSC has an agreement in place on how to handle Vogtle’s rising price tag. Georgia Power has to justify its customers paying for additional costs once the project’s capital costs reach a certain amount.

But even with that clear agreement in place, consumer advocates pressed PSC consultants on how it would work, exactly, because of so many factors at play now. This is in part because the PSC consultants said even though Toshiba has a written agreement and payment schedule, there’s no certainty the financially troubled company will be able to live up to that.

Georgia Watch Executive Director Liz Coyle asked the consultants whether Georgia Power would bear the risk if Toshiba didn’t make those payments.

“If … Toshiba does not live up to the guarantee, staff believes the risk of performance is retained by the company and does not shift to ratepayers,” Coyle asked.

Consultant Lane Kollen confirmed that but said such a decision may be left up to the PSC.

“The company is going to have a position on this as well, and so the commission arbitrates disagreements,” he said.

Coyle pressed for clarity.

“The company might believe the risk should shift to the ratepayers? And the commission will decide?” she asked.

“That’s correct,” Kollen replied.

Georgia Power will take until at least August to release its new cost and schedule estimates for Vogtle, Southern’s CEO, Tom Fanning, has said. The project’s lead analysts have seen a draft of the estimated cost to complete but have not reviewed its details (Energywire, June 30).

Hayet said staff hasn’t been involved with the company’s assessment.

Copyright © 2017 Energywire

2 comments on “Vogtle economics foggy, but fight over who pays is certain

  1. The term “finished” should be defined. Even though the Commercial Operating Date could be reached, much work and expense would remain before potentially achieving reliabile operation. Assumed capacity factor for initial years of operation should be reviewed with scrutiny in any cost effectiveness project analysis. Historical capacity factor data is available for the startup of Vogtle Units 1 & 2. This, of course, is for a proven and well yetted design. Not so for the Vogtle expansion project. The assumptions for the AP1000 initial capacity factor should be a reasonable percentage of historical data and not the existing fleet average value. Be careful not to let analysis compare apples to oranges.

  2. I read an article from an Augusta, Georgia television station WRDW today that illustrates how statements can mislead the public. The article ended with “This year there was no increase for what customers are paying for the Vogtle project”. “No increase” means Georgia Power and Southern Company continue to profit from the ratepayers at the current non-ethical rate. Even though the ending statement was chosen wisely to seem positive for the public, it indicates nothing has changed.

Leave a Reply

Your email address will not be published. Required fields are marked *