Georgia Power reached a tentative pact with state utility regulators that would eventually pass on to customers roughly 80 percent of $1.7 billion in cost overruns at the Plant Vogtle nuclear expansion project.
However, in the short run the deal would lead to a $325 million reduction for ratepayers over the next four years if it is approved by the Georgia Public Service Commission.
That’s because the deal also reduces a current surcharge that Georgia Power is collecting on bills to finance the project at the plant near Augusta. The surcharge is now about $100 a year on a typical residential bill.
The PSC announced the tentative deal Thursday. It did not offer any specifics about the effect on customer bills.
PSC spokesman Bill Edge said public hearings on the deal will likely be held in December or January, followed by a vote of the five-member commission. Any rate changes would take effect in January.
Edge said Georgia Power agreed to a lower profit margin on the massive project under the deal.
Some observers said that while the proposed deal would give ratepayers a break over the next few years, it also appears to accept most of the cost overruns that have occurred so far as “prudent,” a crucial distinction because under law the utility can recover all costs deemed “prudent.”
Several months ago, the PSC asked Georgia Power and the agency’s staff to negotiate an agreement on how Georgia Power and customers would split up the cost overruns at the nuclear expansion near Augusta, which is more than three years behind schedule.
The deadline for an agreement was Wednesday but the PSC earlier this week granted an extension.
Consumer advocate Liz Coyle said she’s pleased to see the agreement cuts customers some slack and that the PSC committed to public hearings before voting.
“It’s a step in the right direction because customers are overwhelmingly bearing the burden of cost overruns,” said Coyle, executive director of consumer advocacy group Georgia Watch.
But she said the finance charges have already been boosted by the overruns, so the deal only reduces that amount for the next four years. She called the deal “complex,” adding that all the effects weren’t immediately clear.
The deal judges all costs on the project through last year as “prudent,” including Georgia Power’s portion of a $760 million settlement of a lawsuit with former project contractors.
That means all costs up to that date — almost the total amount so far — will almost certainly be rolled into customers’ bills for decades to come if the PSC approves the deal.
The deal also adds a $240 million “contingency” amount to the project’s total projected cost to Georgia Power. That could be a sign of further expected cost overruns, according to critics of the project.
Georgia Power’s total share of the project was $6.11 billion when the project was approved in 2009, the PSC said. Other partners’ share of the project was $7.26 billion at that time. The project is now more than $3 billion over budget for all parties. The other partners are Oglethorpe Power Corp., city of Dalton utilities and the Municipal Electric Authority of Georgia.
The project will add two new reactors at Plant Vogtle, which already has two in operation.
One reactor is currently slated to be completed by the end of 2019 and the other by the end of 2020.