Georgia regulators OK deal on nuke plant costs overruns

Dalton Utilities CEO calls Vogtle 'terrific'

Despite initial cost overruns and delays at Plant Vogtle, Dalton Utilities President Tom Bundros said Tuesday the addition of two more reactors at the nuclear plant should pay off for the city-owned utility, which owns 1.6 percent of the plant and has already invested more than $135 million into the unfinished reactors. "Long term, the investment in Plant Vogtle will be terrific," said Bundros, who worked in finance at Southern Co., when the first two reactors were built at Vogtle. "There were also a lot of concerns when the first units were built, but they have consistently been one of the lowest cost provider of reliable electricity in the state of Georgia. Given the regulatory issues with coal, the nuclear option at this point looks brilliant and is really the safe bet option." Unlike Georgia Power which is borrowing to pay for the future generation, Bundros said Dalton Utilities has paid for most of its share of the capital investment in Vogtle with current funds and hasn't issued debt for the plant and therefore won't have as much of a rate impact once the new reactors start generation.

Plant Vogtle at a glance

Location: Waynesboro, Ga. Existing units: Two Westinghouse pressurized water reactors were built finished in 1987 and 1989 New units: Two Westinghouse AP1000 reactors are being built for completion by 2020. When TVA gave up the design for the AP1000 at its Bellefonte plant in Alabama, Plant Vogtle became the first new plant to use the next-generation design. Owners: Georgia Power (45.7 percent), Oglethorpe Power Corp. (30 percent), Municipal Electric Authority of Georgia (22.7 percent) and city of Dalton (1.6 percent) Operator: Southern Nuclear Source: Southern Co.

ATLANTA - An agreement addressing cost overruns at an expanding nuclear power plant will mean millions in short-term savings for consumers, but billions in longer-term costs.

The pact was approved unanimously Tuesday by the five-member Public Service Commission. The commission's staff negotiated the deal with Georgia Power, the lead partner in the project to build two new reactors at the Vogtle nuclear plant near Augusta.

The commission said the agreement benefits customers because it avoids potential litigation with Georgia Power over who will cover cost overruns. It also sets stiff penalties if the Atlanta utility doesn't complete the project by the end of 2020.

The project is more than three years behind schedule and more than $3 billion over its original budget.

The PSC staff and Georgia Power say the Oct. 20 pact will save ratepayers about $185 million over the next four years.

"I think what we've done is remove the threat of litigation and front-load a lot of savings," said Chuck Eaton, PSC chairman.

Critics of the deal include the Southern Alliance for Clean Energy. The advocacy group, said the deal short-circuits the agency's chances to disallow almost $1.6 billion for Georgia Power's share of the cost overruns under a previously planned "prudency hearing" once the project is finished.

The settlement gives Georgia Power an additional 18 months to complete the first new unit and six months to complete the second one.

The deal also delays Georgia Power's collection of another $139 million until the project is completed, over the expected 60-year life of the reactors.

Customers' rates won't go down as a result of the deal. They just won't go up next year, because a surcharge on customers' bills that finances the Vogtle project is expected to stay at this year's level. As part of the settlement, Georgia Power withdrew a request to increase the surcharge next year.

Georgia Power's customers can't be billed for costs that the PSC decides are "imprudent."

Georgia Power customers' future rates are still expected to go up once the Vogtle expansion is completed. They just won't go up as as much.

In the hearing on the settlement earlier this month, Commissioner Stan Wise said the Vogtle project is now expected to result in a 6-8 percent increase in customers' rates once the project is done, well below the 12 percent increase that was originally projected.

The agreement doesn't give "either party everything it wanted (but) is in the public interest and provides (Georgia Power) a clear way forward to complete construction," the company and PSC said in a joint filing.

But in its filing, the Southern Alliance for Clean Energy said the deal is a rush job with little public oversight compared to how the PSC scrutinized the original Vogtle power plant's costs after it was completed almost 30 years ago.

The group said the "de facto" prudency hearing effectively gives its blessing for customers to eventually be billed $8 billion for Georgia Power's share of the project, rather than the currently certified $6.1 billion.