Legal & Regulatory

Georgia PSC Backs Additional Costs for Vogtle Nuclear Project

Georgia regulators on February 19 approved another $526.4 million in expenditures by Georgia Power related to the long-delayed Vogtle nuclear power plant expansion near Waynesboro, Georgia. Georgia Public Service Commission (PSC) members voted 4-1 to approve a settlement agreement for the 19th Vogtle Construction Monitoring (VCM) Report, which covers the first six months of 2018.

The PSC also said the next two VCM reports could be combined. Atlanta-based Georgia Power originally was scheduled to file the 20th VCM at the end of February, but the company said it is currently re-baselining the cost and schedule of the nuclear project, a task that will not be completed until April. The next report, combining the 20thand 21st VCMs, is scheduled to be filed on August 31.

The Vogtle project involves construction of two, 1,100-MW AP1000 reactors known as Units 3 and 4 at the site. Units 1 and 2 at Plant Vogtle have operated since 1987 and 1989, respectively. Georgia Power owns 45.7% of Plant Vogtle. Three other project partners—Oglethorpe Power Corporation, the Municipal Electric Authority of Georgia, and the City of Dalton Utilities own the remaining 54.3%.

Ballooning Costs

The two new reactors were expected to cost a total of about $14 billion when the expansion was approved by the PSC in 2009, but the latest estimates from analysts put the current cost at $27.5 billion. Units 3 and 4 originally were expected to come online in 2016. The current timetable calls for one reactor to enter commercial operation in November 2021, with the other following in November 2022.

The project has faced headwinds for years, but the PSC and the project’s owners have continued to press forward, with the four co-owners voting as recently as September 2018 to continue construction.

A consulting firm tasked with overseeing the ongoing construction told the PSC late last year that several challenges remain to meet that timetable, including many that not only could further delay the project but also add additional costs.

The PSC said its decision to support the $526.4 million in Georgia Power’s costs was not a ruling on whether those costs were prudent, but rather an acknowledgement the money already has been spent. The commission did not approve an additional $51.6 million in costs requested by Georgia Power, money related to its role in the bankruptcy filing by former Vogtle project leader Westinghouse.

The PSC also approved a modification of Georgia Power’s allowance for the commission’s monitoring costs, up to $3.8 million. The PSC said the additional money—an increase of $2.6 million over the prior monitoring cost allowance—would allow it more resources to monitor Vogtle’s progress. The commission in a news release said the increase was needed due to the “termination of the fixed price contract with Westinghouse and the resulting shift of more cost risk to ratepayers. This additional funding will allow the Commission to better protect ratepayers by hiring additional consultants to independently monitor the Vogtle Construction Project and to more thoroughly analyze the Company’s cost and schedule for the project.”

“These additional consultants, who have extensive experience in estimating, construction, and management of large-scale construction projects including nuclear power plants, will work for the Commission only, not for Georgia Power,” said PSC Chairman Lauren “Bubba” McDonald. “They will provide the Commission with an independent assessment of the construction of the project.  Electric customers throughout Georgia, whether served by Georgia Power or by its partners in the Vogtle project, will benefit from this robust and independent review of the cost and schedule.”

Commissioner Chuck Eaton said: “The $2.6 million for additional consultants on the now $16 billion total project capital cost for all the partners is appropriate and needed. This will help ensure that the project receives a high level of oversight so that ratepayers are not burdened with unnecessary expenses.”

“With this decision we are a step closer to finishing this monumental clean energy project,” said Commission Vice-chair Tim Echols. “As our country inches towards putting a price on CO2 emissions, the Vogtle units are positioned to deliver billions in savings.”

McDonald, Eaton, Echols, and Jason Shaw were the four commissioners voting to approve Georgia Power’s additional costs. Commissioner Tricia Pridemore was the lone dissenter.

Pridemore in a statement on Tuesday said she voted “no” because she does not agree with the $2.6 million for more project consultants, although she reiterated her support for nuclear power and the Vogtle project. Said Pridemore: “These additional costs are not in the best interests of ratepayers at this time. With less than three years until [the Vogtle project plans] to move at least one of the units into rate base and go live, more transparency is needed—not less. More cost savings is needed—not more spending. Re-baselining this project this year is likely to come with increased costs— the staff seeking additional consultants testified of this very likelihood.

“While costs of construction average more than $100 million per month, I want—as I believe all of my colleagues want—Vogtle units 3 and 4 to move quickly and safely into rate base as soon as possible. Any increase in spending should be assigned to getting more hands on deck to build. Any lapse in reporting should only come after several VCMs mark increased productivity, balanced budgets and a project significantly over schedule.”

Lawsuit Moving Forward

Tuesday’s vote on Vogtle’s latest progress report comes after a Fulton County Superior Court judge last week granted class-action status to a lawsuit challenging fees that Georgia Power is collecting from customers each month related to its costs for the nuclear expansion. The case goes back to 2011, when it was filed on behalf of Georgia Power customers represented by former Georgia Gov. Roy Barnes and Glenn Richardson, the state’s former House Speaker.

The suit accuses Georgia Power of overcharging customers millions of dollars in “cost recoveries” associated with the nuclear expansion project. The lawsuit charges Georgia Power has artificially raised municipal franchisee fees that appear on customers’ monthly bills based on the costs of the nuclear expansion.

The Georgia Supreme Court last summer ordered that the PSC must weigh in on the merits of the lawsuit before the case can move forward. Georgia Power has argued the suit is without merit.

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

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