PSC staff says Vogtle project no longer makes economic sense

[private]Public Service Commission staffers and analysts have concluded that it no longer makes economic sense for Georgia Power to continue building two additional nuclear reactors at Plant Vogtle.

In comments filed Friday with the PSC, Tom Newsome, Philip Hayet, and Lane Kollen wrote that “the completion of the project is no longer economic on a to-go (forward looking) basis given the additional costs and schedule delays.”

“Staff’s analysis indicates that the project’s economic benefit is a negative $1.6 billion, meaning that the project is uneconomic,” the staffers wrote.

The cost of the Vogtle reactors, originally projected to be $14 billion, is now more than $25 billion and growing. The first of the reactors was expected to start generating electricity by 2016, but the nuclear project is now more than four years behind schedule.

The PSC is currently considering whether to approve letting the project continue and, if it does, how much of the cost overruns will have to be eaten by Georgia Power’s shareholders.

Georgia Power wants to complete the nuclear reactors and has demanded that the PSC authorize it to pass along all of the costs to ratepayers.

“We conclude that certain costs already incurred by the company are not reasonable to allocate to customers,” the staffers wrote. “Furthermore, we conclude that certain costs in the company’s estimate of future costs are also unreasonable to allocate to customers and instead should be allocated to the company and its shareholders.”

The staffers noted that two of the biggest economic justifications cited by Georgia Power for building the nuclear reactors have now been knocked down by real-world events of the past nine years.

“The threats of high natural gas prices and carbon dioxide emission cost (CO2 legislation) have diminished,” they wrote. “Without these economic cornerstones, the economic rationale for the units is diminished.”

The increases in construction costs and the schedule delays have actually benefited Georgia Power, the staffers contended.

“Due to the delays in the project, the company will collect considerably more in profit over the entire lifecycle of the units (construction period and operating period) from ratepayers than it would have had the project been completed under the original schedule,” they wrote.

“The profit the company will collect will increase from approximately $7.4 billion to approximately $12.6 billion over the unit’s entire lifecycle,” they wrote.

The PSC is expected to vote in February on Plant Vogtle’s future.

© 2017 by The Georgia Report

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Tags: Georgia Power , Plant Vogtle , PSC