What do you call overruns on a project that’s more than three years delayed and at least $1.7 billion over budget?
Reasonable and prudent. At least if you are Georgia Power and you want customers to swallow every penny of the mistakes that would otherwise be the utility monopoly’s responsibility for its adventures in nuclear expansion.
“Every dollar, and every day, that has been invested has been necessary to complete these new units safely and correctly,” Georgia Power CEO Paul Bowers asserted in a recent filing to state regulators.
The company uses the words “prudent” and “reasonable” a lot in the filing because that’s the legal measure of whether the extra costs can be pushed onto customers’ monthly power bills for the company’s troubled Plant Vogtle expansion.
The average residential customer is already paying roughly $100 a year just for financing costs on the project (and Georgia Power profits on the financing), but the project isn’t even close to producing electricity. Those charges are expected to eventually be replaced by actual construction costs.
The state Public Service Commission will decide who also gets stuck with overruns — customers or Georgia Power and parent Southern Co.
Bowers wrote that, “We anticipated challenges in building the first new U.S. nuclear units in more than 30 years and the cost and schedule adjustments over the past several years have been part of the assessed, known risks.”
Essentially, the company is shrugging off cost overruns with a sort of what-did-you-expect? attitude.
That’s annoying. Especially, if you compare what Georgia Power says now with the assurances it gave when it first urged the state to let it undertake the massive expansion at Plant Vogtle.
Georgia Power now: Everyone knew there were risks.
“They are trying to rewrite history,” said Liz Coyle, who is executive director of consumer advocacy group Georgia Watch, a frequent critic of the project.
Not a regular business
Let’s be clear, Georgia Power is not a regular business that has to weather the twists of a free market. It is a government-regulated monopoly with virtually guaranteed profits.
Its screw-ups are often not just costly for customers, but profitable for itself.
Because of the way its rates and profits are set, Georgia Power can make more if it blows its construction budget. How crazy is that?
Now, Georgia Power is using every muscle it has to avoid eating any of the financial blame for Vogtle, which has been the scene of a nuclear load of missteps, virtually every one of which the company had assured the state wouldn’t become a problem.
The company has even recruited Gov. Nathan Deal to shove his political weight into the fray. Deal recently extolled the virtues of the Vogtle project in signed a letter to the elected PSC members.
(See all the project’s pretty construction jobs? Pretty jobs! Pretty jobs! Don’t worry about whether our power bills are about to get shafted.)
Don’t be fooled into thinking this is a jobs debate. Or a nukes/no-nukes debate.
The issue of the moment is dollars and cents: Who should pay for the fact that Georgia Power blew its own budget?
Georgia Power came up with the Vogtle expansion plan. The company came up with the cost estimates. It set the time schedule, picked the contractors (which it said were up for the job) and chose to use pre-fabricated building parts that it said should keep costs down and make the project go faster. It choose to use a new kind of nuclear reactor, which it said wasn’t really all that new, so no need to worry about it.
Most of the Georgia PSC’s elected officials, a traditionally compliant bunch, nodded OK.
The first new reactor was supposed to be online by now, but the current target date is June 2019, and even that appears to be wishful thinking.
Nuclear power plants are efficient and inexpensive to operate. They last a long time. And they avoid producing carbon emissions tied to climate change. They also have issues: toxic nuclear leftovers, risks of catastrophic meltdowns, steep construction costs and a history of blown budgets.
Georgia Power, the lead Vogtle owner among several utilities, said it had come up with a number of ways to keep the high costs in check.
‘Squib valve’ tests
But detailed design work on the nuclear reactors was delayed. Everyone, according to one Georgia Power consultant, underestimated the complexity of the designs required. Contractors struggled to get the skilled workers and managers they needed. Work didn’t match quality standards. Pre-fabricated building parts slowed the project, instead of speeding it up.
The problems were numerous, according to the company’s filing. Crucial reactor coolant pumps were essentially 28 months behind schedule. Testing failed on “squib valves.”
Georgia Power kept assuring state officials it was working to fix the issues. But delays grew.
The company put much of the blame on its contractors. Yet earlier this year it settled lawsuits with the contractors and agreed to pay hundreds of millions of dollars, all of which it wants to pass along to customers.
If this is prudency, what would a mess up look like? What would it take for Georgia Power to take some – any – financial responsibility?
Jacob Hawkins, a company spokesman, emailed me that “This project is the best, most economic choice to meet Georgia’s future energy needs.” But a PSC consultant concluded years ago that given Vogtle’s rising costs and the lowered price of natural gas, a new nuclear project would not be justified.
Now, Georgia Power is contemplating building another nuclear plant in Stewart County, south of Columbus. I’m sure, when the time comes, company officials will tell us what a great project it will be.
Would it be reasonable and prudent to believe them?
Find Matt on Facebook (facebook.com/mattkempnercolumnist) and Twitter (@MattKempner) or email him at email@example.com.
Related stories and columns:
Related stories and columns: