A new staff analysis by Georgia's Public Service Commission suggests construction of America's first totally new nuclear power reactor of the 21st century should be scrapped unless Georgia Power agrees to absorb a bigger share of the project's cost overruns.
The state regulatory staff said in a report last week that finishing the two new reactors being built at the Plant Vogtle Nuclear Power Plant near Waynesboro, Ga., will cost customers $1.6 billion more than other energy sources, "meaning that the project is uneconomic" and should be halted.
"Staff concludes that completion of the project is no longer economic on a to-go (forward looking) basis given the additional costs and schedule delays, even without considering the conditions requested by the company," the PSC's Public Interest Advocacy staff said in a report given to the PSC last Friday. "Staff opposes several of the conditions requested by the company, which would effectively shift most of the financial risk of the project to customers."
The two new Westinghouse AP1000 reactors being built at Plant Vogtle have been plagued by construction delays and cost overruns. Similar problems led to the abandonment of similar reactors at the V.C. Summer plant in South Carolina earlier this year.
But Georgia Power and its partners, including Dalton Utilities, say the new reactors at Plant Vogtle are now 64 percent complete and should be finished.
"It is in the best long-term interest of all Georgians to complete the plant because our experience over the last two decades with the existing Vogtle units has shown them to be the most reliable and lowest cost source of energy to customers," said Tom Bundros, a former Southern Co. finance manager who is now CEO of Dalton Utilities, which owns 1.6 percent of Plant Vogtle. "There are costs with either option [of completing or scrapping the new reactors]. However, completing the plant will provide Dalton Utilities customers with a competitive and reliable base load resource into the future."
The five-member Georgia PSC will begin hearings on Vogtle's future Monday in Atlanta.
The project owners replaced lead contractor Fluor Corp. with global engineering company Bechtel this summer and Georgia Power announced this week it has reached a new agreement with Toshiba, the parent company of former primary Vogtle contractor Westinghouse, to receive all remaining scheduled payments from Toshiba in the amount of $3.2 billion by Dec. 15.
To date, the Vogtle co-owners — Georgia Power, Oglethorpe Power, MEAG Power and Dalton Utilities — have received $455 million in payments from Toshiba for the Vogtle project after the bankruptcy of Westinghouse in March.
"We are pleased to have reached this constructive agreement with Toshiba regarding the parent guarantees for the Vogtle project and every dollar will be used to benefit our customers," said Paul Bowers, CEO of Georgia Power. "We remain committed to making the right decisions for our state's energy future and continue to believe that completing both Vogtle units represents the best economic choice for customers and preserves the benefits of carbon-free, baseload generation for Georgia electric customers."
Cost estimates for the Vogtle expansion have reached nearly $20 billion, or 30 percent more than the original $14 billion estimate for Units 3 and 4 at the plant. The new units at Vogtle were originally scheduled to come online in 2016. But the new reactors are now not expected to be completed until 2022.
In a 41-page assessment of the Plant Vogtle project in advance of next week's hearings, the Public Interest Adovcacy staff of the Georgia Public Service Commission said ratepayers for Georgia Power, which owns 45.7 percent of Plant Vogtle, should not pay any more than $8.3 billion for Plant Vogtle. Georgia Power says the cost to complete is almost $4 billion more, however.
In August, PSC Commissioner Tim Echols urged that the new reactors at Plant Vogtle be completed as the first completely new nuclear power units to be added to America's grid in the 21st century.
Echols noted that the original two reactors at Plant Vogtle were supposed to cost $1 billion but ended up costing $8 billion to finish.
"Still, it was a great deal for the ratepayers in the end, delivering low-cost power for decades," Echols said. "Today, finishing the Vogtle plant's two new Westinghouse AP1000 rectors is the right call. Diversifying the energy supply makes sense because no one knows what the future holds."
Echols said ratepayers have already begun to pay for the new Plant Vogtle and it makes little sense to strand $5 billion of investment in a plant official estimate is now about 64 percent complete.
Echols and four other PSC commissioners will ultimately decide how much Georgia Power is allowed to recover from its Plant Vogtle investment, which could determine whether or not the units are finished.
Echols said if the units are scrapped, Georgia Power rates will still climb 6 percent to recover the stranded investment in the plant.
Contact Dave Flessner at email@example.com or at 423-757-6340.