Vogtle saga puts Georgia Power’s clout in spotlight

3:30 p.m Friday, Dec. 15, 2017 Homepage
The cooling towers for two new nuclear reactors at Plant Vogtle outside Augusta rise above the construction sites. GEORGIA POWER PHOTO

What Georgia Power sold to state legislators wasn’t just a deal. It was the future.

Clean, renewable nuclear energy. No climate-changing hydrocarbon emissions. No worries about volatility in the global supply of natural gas.

All lawmakers had to do, according to the state’s largest and most influential utility, was approve a new way to finance construction of two new nuclear reactors at Plant Vogtle outside Augusta. Georgia Power would assess its customers as the project was being built, rather than after it was completed and generating electricity. Pay now, the company’s lobbyists argued, not later. In short order, the General Assembly agreed.

Eight years and billions of dollars later, however, the future still has not arrived.

The Atlanta Journal-Constitution
Stan Wise, chairman of the state Public Service Commission, plans to step down after a vote on whether to continue the nuclear expansion at Plant Vogtle. Wise is a strong supporter of the Vogtle project. AJC FILE PHOTO

In fact, the Vogtle expansion is in jeopardy. It faces a pivotal moment Thursday, when the state Public Service Commission will vote on whether to allow the project to proceed. The PSC might impose conditions that would cause Georgia Power and its partners to abandon the expansion. Or it could simply let construction continue with no new restrictions, billions of dollars over budget and years past schedule. And consumers would continue paying, on top of the nearly $2.4 billion they’ve already sunk into the project.

How the Vogtle expansion got to this point underscores the influence Georgia Power has held over governors, lawmakers and regulators, year after year, decade after decade, well into the company’s second century.

The legislators who supported forcing consumers to pay for the expansion in advance still say it was a good idea. Leaders such as Gov. Nathan Deal and U.S. Sen. Johnny Isakson still favor the project’s continuation. Even some officials who once opposed the project’s novel financing plan now say the expansion has become too big to fail.

“We’ve gotten a long way down the road,” House Speaker David Ralston, R-Blue Ridge, who voted against the financing plan in 2009, said last week on Georgia Public Broadcasting. “I’m not inclined to turn out back on the project until we’ve exhausted every conceivable way to salvage it.”

Persistent influence

Seventy years ago, two Emory University graduates set out across the state asking a simple yet profound question: Who runs Georgia?

The answer, as Calvin Kytle and James A. Mackay later wrote: the railroads and Georgia Power.

The utility, in particular, held such sway over legislators that an Atlanta Journal editorial once described the company’s chief lobbyist as “the most persistent influence for corrupt government in Georgia.”

Lobbying has become more refined, more sophisticated over the years. Decades ago, lobbyists routinely plied legislators with liquor and women, practices now frowned upon. But Georgia Power remains a strong — perhaps the strongest — force in the state Capitol.

The company donates to political campaigns and entertains lawmakers with meals and drinks, concert tickets and seats at sporting events. Since 2011, Georgia Power lobbyists have spent more than $200,000 on entertaining legislators. The lobbyists also regularly pick up breakfast, lunch, dinner and bar tabs for PSC staff members. Last December, they even treated five PSC secretaries to lunch, at a cost of $65 each. Perhaps even more significant, some executives have moved seamlessly between Georgia Power and state government. The former head of the utility’s lobbying corps spent four years as Gov. Sonny Perdue’s chief of staff. Deal’s former economic development commissioner is now Georgia Power’s executive vice president for external affairs.

Paul Bowers, chief executive of Georgia Power, spoke recently with reporters and editors at The Atlanta Journal-Constitution. WILLIAM THWEATT/william.thweatt@coxinc.com

In 2009, to ensure passage of Senate Bill 31, Georgia Power flooded the zone with lobbyists seeking legislative approval for a proposal to authorize partners in the Vogtle expansion to assess a “nuclear construction cost recovery” fee during construction. Even Georgia Power’s chief executive at the time registered as a lobbyist to press the company’s case.

“They hired just about every lobbyist in the Capitol,” said Bobby Baker, a former member of the PSC. “It was rammed through there.”

At the time, Vogtle’s expansion coincided with new interest in nuclear energy, which had fallen out of favor in the United States after the partial meltdown of a reactor at the Three Mile Island plant in Pennsylvania in 1979. Georgia Power and its partners in Vogtle – Oglethorpe Power, which comprises most of the state’s electric membership corporations; the Municipal Electric Authority of Georgia, made up of 49 city-owned utilities; and Dalton Utilities – said construction would get under way in 2011 and be finished by April 2017. The estimated cost was $14 billion; Georgia Power’s portion was to be $6.4 billion.

Senate Bill 31 allowed the utilities to charge financing costs, return on equity — profit, essentially — and certain taxes to customers during construction. Previously, utilities could not recover such costs until projects were finished and generating electricity.

The bill sailed through both the Senate and the House, becoming one of the first measures passed during the 2009 legislative session. On Feb. 11, just a month into the session, the Senate approved the bill on a 38-16 vote. Two weeks later, the House bumped the Senate measure ahead of hundreds of its own bills and voted 107-66 for final passage. Then Perdue signed it into law on April 21, and it became effective the same day.

To this day, Georgia Power downplays its role in the bill’s provenance.

“That was a legislative initiative,” Jacob Hawkins, a company spokesman, said last week. “We supported it.”

But Don Balfour, a former state senator who sponsored Senate Bill 31, has a different recollection.

“I’ll be honest,” he said in an interview. “Georgia Power sat down with me. I understood it. So I carried the bill.”

Balfour, a Republican from Snellville, is a proponent of nuclear energy (“always have been, always will be”). He still thinks the bill was a good idea.

“The ratepayer is going to pay for it one way or another,” he said. “The only question is: Do you pay it now, or do you pay it later?”

‘Plant Cronyism’

Georgia Power and its partners began assessing the construction charge in 2011. It now adds about $9 a month, or about $100 a year, to the average residential customer’s bill. Georgia Power recently requested PSC approval for an increase that, beginning in January, would raise the average customer’s fee to about $12 a month, or $144 a year.

The fee will continue until the project is finished – no sooner than November 2022, Georgia Power says.

As the construction has fallen behind schedule, estimated costs have steadily increased – from $14 billion to as much as $25 billion. Some of the overruns are being offset by a $3.68 billion refund from Toshiba, the parent company of one of the project’s original contractors, Westinghouse, which filed for bankruptcy last spring. The rest will ultimately fall to consumers.

Some opponents to Senate Bill 31 predicted in 2009 that cost overruns and construction delays would plague the Vogtle expansion.

“We can’t say we’re at all surprised at how this has turned out,” said Liz Coyle, executive director the consumer group Georgia Watch.

Baker, the former PSC commissioner, said letting a utility collect financing costs ahead of finishing a project and allowing it make more profit by increasing costs created “a counter-incentive.”

“It took away any incentive for the company to come in on time and on budget,” Baker said. “No company would ever be able to do this unless they were regulated and you had very compliant regulators.”

Inevitably, Vogtle has become a political issue. One Republican candidate for governor next year, Lt. Gov. Casey Cagle, strongly supported the legislation in 2009. In a statement Friday, Cagle said the project should continue because “ratepayers deserve a return on the money we’ve invested already.”

Cagle added: “The project can’t be an open checkbook and our patience is not endless, though. We need to insist on real accountability and progress now.”

Two other Republican candidates last week issued statements denouncing the project – and the ties between Georgia Power and the state’s political establishment.

“Georgia Power has a cozy relationship with everyone under the Gold Dome,” candidate Clay Tippins said. “As a result, my opponents have a long record to defend on this issue.”

Another candidate, state Sen. Michael Williams, R-Cumming, took the critique further: “Plant Cronyism has been mismanaged and filled with crony capitalism from the start.”

Consumer advocates say the uncertainty over Vogtle’s future is a natural consequence of officials’ submitting to Georgia Power’s influence.

“They have so much clout,” said Debbie Dooley, a Tea Party activist who is president of Conservatives for Energy Freedom. “They just assume, ‘So what, it won’t cost us. Our ratepayers will pay for it.’ It’s like they’re playing with Monopoly money.”

But with the project’s fate uncertain, Georgia Power still contends the way it has financed the Vogtle project benefits its customers, saving them money over the life span of the reactors — even if they pay more now than they would have otherwise.

“From the beginning of the Vogtle expansion,” said Hawkins, the Georgia Power spokesman, “we have worked to pursue all available benefits for customers and minimize the impact of the new units on electric bills.”

Georgia Power currently spends $50 million per month on the project. In March 2017, Vogtle’s lead contractor, Westinghouse Electric, filed for bankruptcy. The project was already three years behind schedule and more than $3 billion over budget. Georgia Power’s Paul Bowers argues the project presents “long-term benefits to customers.” Critics have fought against Vogtle's expansion for years, citing cost and safety concerns. Cost and schedule estimates presented by Georgia Power may determine the p