For Plant Vogtle, the magic number is 9 billion

[private]The Public Service Commission is one week away from a decision that could have an impact of billions of dollars on consumers: should Georgia Power move ahead with the construction of two additional nuclear reactors at Plant Vogtle?

If the decision is made to continue, then the PSC will have to make another momentous decision: how much of the cost overruns will have to be eaten by Georgia Power shareholders, and how much can the utility giant pass along to its ratepayers in the form of higher bills.

In testimony this week from PSC staffers and outside experts, the commissioners have been told that the magic number on Plant Vogtle is $9 billion.

As long as ratepayers are not required to pay more than $9 billion for the completion of the reactors, then it is still a project that makes economic sense, they contended.

“If it is any amount above $9 billion, then it ceases being economic and cancellation [of the reactors] is the better option,” said Philip Hayet, one of the consultants who has tracked the economic impact of the project for the PSC.

“It doesn’t make sense, economically, to go forward if the amount exceeds $9 billion,” said Lane Kollen, another economic consultant.

“We’re not proposing a cap,” said PSC staffer Tom Newsome. “We’re saying $9 billion [to complete the project] is reasonable.”

Georgia Power, however, says it will have to spend at least $12.2 billion as its share of finishing the project, and the utility is demanding that the PSC allow it to pass along those costs to ratepayers.

If the PSC requires Georgia Power to eat even one penny of the cost overruns, then the utility says it would cancel the project. At least one commissioner disputed whether Georgia Power had the authority to kill the project on its own.

“The commission does have the power — not that I’m saying we will — to compel them to finish the project,” said Commissioner Tim Echols.

Does the commission listen to its own experts and hold Georgia Power accountable for some of the massive cost overruns? Or will the commission lay off the whole mess on Georgia Power’s customers?

The original cost of the two reactors back in 2010 was projected at around $14 billion, with Georgia Power’s certified share of that set at $6.1 billion (the utility owns 45.7 percent of the project with the rest allocated to Oglethorpe Power, MEAG Power, and Dalton Utilities). The two units were scheduled to begin generating electricity in 2016 and 2017.

The total estimated cost has now ballooned to more than $25 billion and the two units won’t be operational until at least 2021 and 2022, or possibly later.

Testimony from the PSC’s experts showed that the schedule delays in completing the reactors would actually benefit Georgia Power’s bottom line.

If the project is not completed until 2021 or 2022, which is still not a certainty, then Georgia Power’s profits over the lifespan of the reactors would increase by $5.2 billion, they estimated.

Over the lifetime of the reactors – 12 years of construction and 60 years of operation — ratepayers would pay $14 billion more than if project had been completed on time.

“The longer they are out there, the more profit, the more capital investment,” Newsome said.

The Vogtle project has now become an issue in the governor’s race.

State Sen. Michael Williams (R-Cumming), who’s running in the Republican primary, said the commissioners have been “rewarding failure” in the Plant Vogtle case.

“Plant cronyism has been mismanaged and filled with crony capitalism from the start,” Williams said in a statement released Wednesday. “Georgia Power was allowed to pre-bill customers for its construction and now they are again passing on cost ‘overruns’ to its customers.”

“The mismanagement and cost overruns should come from Georgia Power’s massive $5.2 billion profit, not the people of Georgia,” Williams said.

© 2017 by The Georgia Report


Tags: Georgia Power , Plant Vogtle , Public Service Commission