Kempner: Georgia’s nuclear crisis of confidence

This time, Southern Co. and Georgia Power will get their numbers right.

Or so officials would like to believe.

Continuing to fund the only remaining nuclear power plant under construction in the U.S. relies largely on decision-makers convincing themselves that the companies can accurately revise cost and schedule estimates for Plant Vogtle’s expansion.

It’s a dicey proposition.

Accuracy hasn’t been a strong suit of the power giants in recent years.

Southern is one of the biggest power companies in the country and the parent of Georgia Power. It has embarked on exactly two mega construction projects in the last decade or so.

Both — the expansion of Plant Vogtle and the Kemper clean coal/gas plant in Mississippi — have gone billions of dollars over budget and faced years of delays.

As each project struggled, Southern and its subsidiaries continued to underestimate the magnitude of the overruns.

Independent monitors for the Georgia Public Service Commission regularly warned about rising Vogtle costs that were more accurate than Georgia Power’s reassurances about stability.

On Wednesday, Southern offered new preliminary estimates of possible costs to complete Vogtle. Apparently the latest price tag is now nearly double the original estimate of roughly $14 billion.

So I guess now we really know what the project will cost. Right?

Umm. Well…

Would you make any expensive decision based on the company’s projections?

Southern CEO Tom Fanning, would you bet me a dinner at Waffle House (drinks and tip included) that Southern’s latest estimate falls within $200 million of the actual final total cost? OK, how about $400 million?

It’s like I can already taste those cheese-drenched grits.

Crisis of confidence

If Georgia doesn’t have a crisis in confidence over nuclear cost estimates, it should. (By the way, an average Georgia Power residential customer pays $100 a year toward Vogtle, and they don’t really have a choice because the company has a state-enforced territorial monopoly.)

Georgia Power, I think, already knows it has a credibility issue. It brought in outside consultants to offer up cost projections, too. The supporting cast, I imagine, is supposed to help the power company get its numbers right and convince others they can be trusted. Southern said that later this month it expects to report updated estimates to the PSC and a recommendation on whether to continue the project it, shelve part of it or park the whole thing.

The project’s future was further clouded earlier this year when Westinghouse, Vogtle’s main contractor, filed for bankruptcy protection. That pushed Vogtle costs and uncertainty back on Georgia Power and the project’s smaller co-owners, including Oglethorpe Power (which includes dozens of community electric membership corporations in the state), the Municipal Electric Authority of Georgia (which is owned by city utilities) and the city of Dalton.

Nuclear is an important and prudent part of the energy mix, Oglethorpe CEO Mike Smith wrote. But “a decision to go forward would require our having high-confidence in the estimate to complete – both dollars and time.”

High confidence. Is that possible?

That’s not really a knock on Georgia Power. It’s more curiosity about whether anyone would have great confidence when it comes to projecting the costs of new nuclear construction in the U.S. In recent days, two South Carolina utilities announced plans to halt a nuclear project that was essentially the twin of Georgia’s Vogtle.

In Georgia, the PSC gets say on whether Vogtle’s project can be abandoned or if Georgia Power can charge customers still more for the growing costs.

‘Not interested’

Tim Echols, who sits on the PSC, emailed that he is “not interested in raising the certified cost or changing the existing stipulation in any way.”

The project can be completed with billions of dollars in promised payouts from Westinghouse’s parent, Toshiba Corp., he wrote. But Toshiba is financially shaky, and if it files for bankruptcy “the math doesn’t work and the Vogtle project probably terminates or gets converted to natural gas.”

Lauren “Bubba” McDonald, who sits on the regulatory Georgia PSC, told me any decision to continue Vogtle should include some kind of “guarantees” from Georgia Power that it can meet the goals.

“They need to have some skin in the game,” McDonald said, adding later, “You can’t run from the responsibility of ownership.”

Will Georgia Power go for that?

Maybe it won’t have much choice. “They are not in a very driving position right now,” McDonald said.

Still chapped

By the way, he sounded chapped about a move by Georgia Power – OK’d by his colleagues last year – to force the company’s customers to pay for work on whether to build yet another nuclear plant. The work was eventually suspended.

“Wasted $50 million,” McDonald said.

Marietta mayor Steve “Thunder” Tumlin, who sits on the board of Vogtle co-owner MEAG, told me Georgia Power has to provide “compelling” evidence for continuing the project. If it did, he said, he expects to back them.

I asked him why he would put his faith in Georgia Power, given the company’s track record on projections.

“They are the best thing we got,” he told me.

“You could look back and see some bad facts,” he said, but “but nobody else besides them had the wherewithal to get us this far along.”

I agree with at least that last point if I can tweak the intent: Georgia Power certainly got us to where we are today.

AJC Unofficial Business columnist Matt Kempner offers you a unique look at the business scene in metro Atlanta and beyond. You'll find more on, including these columns:

Never miss a minute of what's happening in local business news. Subscribe to

In other Business news:

Reader Comments ...

Next Up in Business

Is active or passive investing best? You may be surprised
Is active or passive investing best? You may be surprised

It’s hard to believe, but we’re more than halfway through 2018. So far, it’s been a year of market ups and downs. We’ve endured a correction, experienced a rebound, and are now back closer to flat. The recent choppiness makes this a good time to revisit the great debate between active and passive investing. Last year, an email...
Atlanta company eyeing sports betting industry outside Georgia
Atlanta company eyeing sports betting industry outside Georgia

When Inside Injuries launched in 2016, the company was intended to supply fantasy sports players and companies with injury analysis on top players across sports, CEO Tracy Hankin said. Sports betting wasn’t in the company’s sights. A Supreme Court ruling in May, which struck down a federal law outlawing sports betting outside of Nevada...
No, you don’t need a perfect score to be an exceptional borrower

WASHINGTON — I have been told many times that I’m a perfectionist, but I feel that I’m not perfect enough for such a label. Yet it’s true that my life is driven by a relentless report-card-like quest for excellence. This is why I understand people with super-high FICO credit scores who seethe that they have yet to get a perfect...
Man fired after encounter with 'racist' customer. After sharing story, Home Depot offers job back.
Man fired after encounter with 'racist' customer. After sharing story, Home Depot offers job back.

After a man last Thursday approached the checkout at a Home Depot in Albany, New York, staff member Maurice Rucker asked him to leash his dog. That's when the man exploded. » RELATED: Atlanta's Home Depot growing in various ways, but not new stores Rucker, a 60-year-old black man, claimed he was fired Tuesday after defending himself from...
Peach problem: Georgia fruits clobbered again
Peach problem: Georgia fruits clobbered again

Uncooperative weather has taken a jumbo bite out of the Peach State’s peach crop , a second year of pain for growers of the iconic fruit. And similar hardship appears to have eliminated half Georgia’s more lucrative blueberry yield. The difficult years have left Atlanta shoppers in the produce aisle facing the prospect of paying...
More Stories