PSC may stop early payments on Vogtle reactors

[private]The Public Service Commission may consider whether to terminate a monthly surcharge that has provided customer revenues of nearly $1.7 billion to Georgia Power since 2011.

Commissioner Lauren “Bubba” McDonald said Tuesday it could be time to end the “construction work in progress” (CWIP) fee that Georgia Power has added to monthly electricity bills to cover the financing costs of building two additional nuclear reactors at Plant Vogtle.

“Those of us in old age that participated in paying these amounts over these last few years, we need a break,” he said. “Let younger folks who are going to enjoy them over 80 years pay the bill.”

McDonald said he will bring up the CWIP proposal at the PSC’s next committee meetings to start a discussion among the commissioners.

Consumer advocates and nuclear power critics have complained for years about the CWIP surcharge that Georgia Power customers are required to pay for construction of the reactors, well in advance of when the reactors become operational.

The PSC originally authorized Georgia Power to collect the CWIP charges in 2009, when the commission gave the go-ahead for the Vogtle reactors. Commissioners at that time certified that Georgia Power’s share of the Vogtle project would be about $6.1 billion — $4.4 billion for construction and $1.7 billion in financing costs.

The utility was allowed to start collecting those financing costs in advance of the completion dates through the monthly fee on customers’ bills, which first showed up in January 2011.

McDonald noted that when the PSC initially authorized the CWIP fee, the projected start dates for the reactors were 2016 for Unit 3 and 2017 for Unit 4. Since then, construction delays have thrown the Vogtle project at least 39 months behind schedule, with the start dates now pushed out to June 2019 and June 2020.

Since Georgia Power has now collected the amount of CWIP revenues that was originally authorized by the PSC, McDonald suggested it was time to end the fee.

Liz Coyle, director of the consumer advocacy group Georgia Watch, called McDonald’s proposal “a nice surprise, protecting today’s ratepayers from the financing costs caused by all these delays.”

McDonald raised the subject of the CWIP fees at the same meeting where commissioners voted to start a review of the settlement between Georgia Power and its contractors related to cost increases incurred on the Vogtle project. That could result in prudency hearings to determine who should have to pay for those increases: ratepayers or Georgia Power shareholders.

Georgia Power and the PSC agreed nearly three years ago that prudency hearings on the cost overruns would not be held until after Unit 3 began operations, which is now estimated to be in 2019.

Now that the utility and its contractors have settled a lawsuit over construction cost increases, Commissioner Stan Wise said the PSC should set aside that agreement and start reviewing the project costs.

“The issues will not get any easier by waiting until Unit 3 is complete,” Wise said.

“The litigation is no longer hanging over us,” PSC Chairman Chuck Eaton agreed. “We’re better off addressing the issue sooner rather than later.”

The commission voted 4-1 to proceed with the cost review, with only Commissioner Tim Echols opposed. Echols is running for reelection this year.

With the PSC staff already committed to reviewing Georgia Power’s latest Integrated Resource Plan (IRP) and a new rate case in the summer, “this is not the year to ask our staff for such a monumental task,” Echols said. “It puts them at a disadvantage in negotiations.”

“We welcome the review,” Georgia Power spokesman John O’Brien said. “It’s the commission’s purview to review prudency of this project. We have shown that that all of the investments made to date have been reviewed and deemed prudently incurred through the rigorous and transparent VCM [Vogtle cost monitoring] process.

Georgia Power’s estimated costs for Vogtle have increased from the original authorized level of $6.1 billion to about $7.5 billion.

© 2016 by The Georgia Report

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Tags: Bubba McDonald , Chuck Eaton , cost increases , CWIP surcharge , Georgia Power , Plant Vogtle , PSC , Stan Wise , Tim Echols