The future is again in question for a multi-billion expansion of Plant Vogtle in Georgia. But consumers are likely to pay for the nuclear power project even if it’s never completed.
By the end of day Monday, energy organizations from around the state are supposed to vote on whether the expansion should be kept alive despite repeated delays and steep cost overruns. The vote was triggered by Georgia Power’s conclusion that more than $2 billion in new cost overruns are ahead.
Nearly every Georgian who pays an electric bill – as well as people who live or do business in some parts of Florida and Alabama — have a stake in the outcome.
Because many electric utilities are liable for Vogtle’s costs, their customers would likely end up having to pay for the work already done if the expansion is halted.
But “if they continue the project without a cap on how much the utilities can collect from their customers, it is a staggeringly bad outcome for anyone in the state paying a power bill,” said Liz Coyle, who leads consumer advocate Georgia Watch. “It would be 60 years at least that Georgians are being forced to pay for a project that is unnecessary and risky.”
“If you are in a hole and you want to get out of the hole, don’t keep digging the hole,” she said.
Backers say Vogtle’s benefits are too great to turn away from — having a diversified energy mix and a decades-long source of power that would help meet carbon limits that might be enacted in the future.
“Yes, we have had our struggles with Vogtle,” said Chuck Eaton, an elected member of the Georgia Public Service Commission that approved the project and eventually signed off on cost increases. Still, he said, “we’ve come a long way.”
If Vogtle is not completed, utilities “will still be on the hook for what has been spent and you won’t have a single volt of electricity for it,” he said.
Meanwhile, some of Georgia’s top legislators recently wrote Vogtle’s main owners — Georgia Power, Oglethorpe Power and the Municipal Electric Authority of Georgia — urging them to cap the amount that can be passed on to customers if the project continues.
Just last month, Tom Fanning, the chief executive of Georgia Power parent Southern Company, told analysts that, while “we are hopeful” no more increases occur, “we recognize that a nuclear construction project can continue to experience challenges and that unanticipated events may require further revision …”
Georgia Power did not directly address questions from The Atlanta Journal-Constitution about whether it would agree to cost caps for all customers of Vogtle’s owners. But a company spokesman emailed that, “A year ago, Georgia Power and all of the Vogtle co-owners entered a new contract to move forward with the project and everyone acknowledged and accepted all possible risks. Georgia Power has voted to move forward, and we hope the co-owners will also vote in favor to fulfill their obligation.”
Because of the latest cost increase, continuing construction requires approval from project owners. That means sign-offs from Georgia Power, as well as Oglethorpe Power, which serves electric membership corporations in Georgia, and the Municipal Electric Authority of Georgia, which is made up of city utilities. (A fourth owner in the project, Dalton Utilities, doesn’t have a large enough stake in Vogtle to affect the decision.)
As of Friday, neither Oglethorpe nor MEAG have publicly announced their plans as they awaited decisions by their boards.
Georgia Gov. Nathan Deal has urged that the project continue. In the past, he has cited the thousands of workers employed at the construction site and hundreds of long-term jobs once two new nuclear reactors are in operation at the plant south of Augusta.
If the project is canceled, Georgia Power is expected to seek PSC approval to get its customers to pay for its share of costs and profits tied to the work already done.
PSC Chairman Lauren “Bubba” McDonald said the commission would decide whether all, some or none of the costs could be passed on to Georgia Power customers’ electric bills. (Georgia Power customers’ bills already include charges for Vogtle financing costs.)
Without the Vogtle expansion, Georgia Power would need to secure another source for additional power in 2024, according to PSC staff. The company could buy power from other providers or build a new energy source.
Power demand in Georgia hasn’t grown nearly as fast as expected over the last decade, in part because of increased energy efficiency moves by businesses and consumers.
The plant’s two new nuclear reactors originally were supposed to be in operation by 2017. Now, the plant isn’t slated for completion until 2022.
But the costs haven’t slowed.
“You have almost spent what the original cost was, and you are only halfway there,” said Sara Barczak of the Southern Alliance for Clean Energy.
What happens to Vogtle could have other political repercussions. Lindy Miller, who is running for a seat on the PSC against Eaton, has been critical of state regulators’ role in the project.
“If our Public Service Commissioners had been doing their jobs all along, we wouldn’t be watching this play out how it is,” she said. “We are all on the hook for their mistakes.”
Meanwhile, electric authority JEA in Florida urged Vogtle’s co-owners to drop the project, given the soaring prices and cheaper energy alternatives that it said are available. JEA also is suing MEAG to get out of a contract that requires the Florida utility to pay the construction costs in return for power from the project.
The Vogtle expansion had a lot going for it early on. It got hefty support from federal and state political leaders, a streamlined regulatory approval process and big federal tax breaks and loans.
But Georgia PSC staff and an independent monitor for the state repeatedly warned that designs and deeply detailed schedules were incomplete even as construction progressed. There were frequent quality problems with work. And construction tactics that were supposed to speed the project instead caused more delays.
Georgia Power’s cost estimates were consistently shown to be wrong. Then the project’s main contractor, Westinghouse Electric, filed for bankruptcy protection, putting more of the responsibility for cost overruns on the project’s owners and, ultimately, consumers.
1970: Georgia Power’s Board of Directors votes to build a four-unit nuclear power facility.
1989: Vogtle units 1 and 2 are online at a cost of $9.2 billion, far more than originally projected.
2006: Georgia Power seeks permission from the PSC to bill customers for planning and licensing costs for Vogtle 3 and 4.
2009: PSC approves Georgia Power’s request to begin construction on reactors 3 and 4. Lawmakers allow Georgia Power to pass on financing costs to customers before the project is completed. The project is to be finished in 2017.
2015: Georgia Power and plant construction contractors sue each other over delays that add more than $3 billion to project and three years to the completion date.
December 2016: In a settlement with regulators, Georgia Power agrees to controls on the project’s costs and to penalties if the project isn’t completed by the end of 2020.
February 2017: Toshiba — the parent company for Westinghouse, which is the project manager for Vogtle — reveals a $6 billion loss on its U.S. nuclear projects, including Vogtle.
March 2017: Westinghouse files for Chapter 11 bankruptcy protection.
June 2017: Following Westinghouse’s exit, Southern Nuclear takes over as lead project manager.
July 2017: Plug is pulled on a South Carolina nuclear project that is Vogtle’s near twin.
August 2017: Southern Company discloses project delays and costs up to more than $25 billion.
December 2017: Analysts appointed by the Georgia Public Service Commission conclude Georgia Power failed to manage the project in a “reasonable manner.”
December 2017: PSC approves Georgia Power request to keep Vogtle nuclear construction going. Approves highers costs.
August 2018: Georgia Power announces Vogtle’s cost to complete project had increased by more than $2 billion. Southern Company to cover at least $700 million of Georgia Power’s portion of $1.1 billion.
September 2018: Vogtle co-owners to vote on whether to stay in the ownership partnership.
What’s next for Vogtle?
Plant co-owners are expected to vote by end of day Monday on whether to stay in the partnership. If one of the major partners opts out, the project would likely be cancelled. The Georgia Public Service Commission would then decide how much of the project’s costs could be passed on to Georgia Power customers. The PSC may also decide that Georgia Power shareholders should bear some of the costs alongside customers.