Legal & Regulatory

Cost Overruns at Vogtle Expected to Soar

Georgia Power officials say the utility continues to work with its partners in the troubled Vogtle nuclear plant to firm up construction timelines and determine the costs to complete two new units at the facility. At the same time, a group opposed to the project and two long-time project consultants say ballooning costs should put an end to the plan.

A recent report from the consultants—William Jacobs, Jr., the project’s independent construction monitor since 2009, and Steven Roetger, the GPSC’s lead analyst for the project—to the Georgia Public Service Commission (GPSC) said the Vogtle project, already billions of dollars over budget and years behind schedule, is not economically viable, with a recommendation it should be abandoned.

The news comes just days after Southern Co., parent of Georgia Power, and Westinghouse reached a deal in which Westinghouse parent Toshiba agreed to pay Southern $3.68 billion to keep the project moving forward and continue the process of moving project management at Vogtle Units 3 and 4 from Westinghouse to Georgia Power. The U.S. Department of Energy (DOE) has provided more than $8 billion in loans to the project.

Construction of Units 3 and 4 at the Vogtle nuclear plant near Waynesboro, Georgia, has been plagued by problems and cost overruns. Georgia Power/Handout via REUTERS
Construction of Units 3 and 4 at the Vogtle nuclear plant near Waynesboro, Georgia, has been plagued by problems and cost overruns. Georgia Power/Handout via REUTERS

Westinghouse filed for bankruptcy in March, citing financial losses from its AP1000 reactor projects in Georgia (Plant Vogtle) and South Carolina (V.C. Summer Nuclear Station). Toshiba in February said it would write off more than $6 billion and no longer participate in building new nuclear plants in the U.S. due to the delays and cost overruns of the Vogtle and Summer facilities.

The Southern Alliance for Clean Energy (SACE), a group opposed to the Vogtle project, said it estimates the construction costs of the two new units at the plant will increase another $9 billion, to a total $29 billion, by the time it is complete. SACE said its estimate is based on the report from the consultants to the GPSC, and incorporates a scenario in which the plant is further delayed by the Westinghouse bankruptcy and does not begin operations until 2022, three years behind its current schedule. The plant was originally supposed to begin operating in 2016, and initial construction estimates were pegged at $14 billion.

A Reuters analysis of the Vogtle and Summer projects says problems with construction at the two facilities have contributed to an estimated $13 billion in cost overruns to date.

A report from the GPSC in April of this year estimated cost overruns at Vogtle at nearly $4 billion. An estimate from Morgan Stanley in March came in at nearly $6 billion in overruns for Vogtle and nearly $12 billion for Summer.

The report from Jacobs and Roetger continued their insistence that construction timelines for the project have been unrealistic since the start. The report estimated the additional cost to Georgia Power to complete Vogtle construction at $3 billion. SACE took that number and said additional costs for taxes and more financing would add a total of $9 billion to the project.

Sara Barczak, director of the High Risk Energy Choices Program at SACE, said she does not expect Vogtle to be finished. In an interview with Reuters, she said “But the unknown question is, ‘How long is it going to take for Southern Co. to pull the plug?’”

Georgia Power CEO and President Paul Boyers in a statement last week said the utility “will work with the Georgia Public Service Commission to determine the best path forward for our customers.” Jacob Hawkins, a spokesman for Georgia Power, told reporters last week that the utility continues to review the construction schedule, and said any additional delays and costs were based on hypothetical scenarios. Westinghouse officials have not commented on the report to the GPSC, although they have continued to say that costs for the company’s U.S. nuclear projects have been “far surpassing estimates.”

Jacobs and Roetger in their report said Westinghouse has not improved productivity in Vogtle construction even as delays persist. The report said that four core activities fell an average of 325 days further behind schedule in the past year. The latest completion deadlines for the two new units—December 2019 and September 2020—already put the project more than three years behind schedule.

Construction at Vogtle has been dogged by delays since its start. In 2009, 3.6 million cubic yards of dirt were removed at the site in preparation for construction. However, about half the backfill, used to fill the excavated area, did not receive regulatory approval, reportedly delaying construction by at least six months.

In 2012, construction was delayed about eight months due to problems with the paperwork needed to move a prefabricated section of the plant from a factory in Lake Charles, La. Prefabrication was part of Westinghouse’s approach to its AP1000 reactors that the company said would make construction not only less expensive but also safer.

Sarah Cassella, a spokeswoman for Westinghouse, in a statement to reporters in May said the company is “committed to the AP1000 power plant technology” and is moving forward with plant construction in China, with an expectation of bidding for projects elsewhere outside of the U.S.

Unit 1 at Plant Vogtle, in eastern Georgia near the border with South Carolina, began commercial operation in May 1987. Unit 2 at the facility began operating in 1989.

—Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine)

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