PSC, Ga. Power will proceed with Vogtle, decide later on who pays for overruns

[private]The Public Service Commission voted unanimously Thursday to proceed with construction of two additional nuclear reactors at Plant Vogtle, brushing aside recommendations from their own staff that the project no longer makes economic sense.

“We are in a difficult dilemma now, no doubt about it,” Commissioner Chuck Eaton said. “I still believe nuclear needs to be part of a diversified mix.”

The PSC staff recommended that the project be scuttled unless the commission limited the costs that can be passed along to ratepayers to $9 billion. Any amount above that would make the project too expensive, the staff said.

Georgia Power, on the other hand, wanted the commission to authorize it to spend $12.2 billion to finish the project and charge off the whole amount to ratepayers.

The commissioners put off a decision on whether to charge the cost overruns completely to ratepayears or partly to shareholders until both units are operational, which won’t be until 2022 or later.

The commission also said it would impose financial penalties on Georgia Power in the form of reduced return on equity (ROE) if the project is hit with further delays.

“We will accept the decision of this commission and the conditions it has imposed upon us,” said Kevin Greene, an attorney for the utility giant.

“Most people have to pay for their mistakes, but Georgia Power is still profiting from theirs,” said Kurt Ebersbach, an attorney for the Southern Environmental Law Center (SELC). “There’s something wrong with a system that rewards this kind of failure.”

“The commission has failed Georgia’s hard-working families and businesses today by choosing to be lapdogs for Georgia Power instead of watchdogs for the people of Georgia,” said Ted Terry, director of the Sierra Club’s Georgia chapter.

“The PSC played Santa Claus for Georgia Power and Scrooge for ratepayers,” said state Sen. Michael Williams (R-Cumming), a candidate for governor. “They ignored the recommendations from their own analysts, handed Georgia Power a blank check, and incentivized failure. Georgia Power should be responsible for their own cost overruns.”

The PSC decision affects Georgia Power and its partners on the nuclear project: Oglethorpe Power, MEAG Power, and the City of Dalton.

The Vogtle project was originally projected to cost $14 billion and be complete by 2017, but total cost has ballooned to more than $25 billion and the reactors won’t be operational until 2021 or 2022.

The PSC staff argued that if Georgia Power’s share of the costs exceeded $9 billion, it would be more economical for ratepayers to stop the nuclear project and build a gas-fired plant instead.

“I am not willing to trust anyone’s snapshot forecast today of future gas prices as a basis for abandoning the nearly $5 billion we have already invested in this asset,” Commissioner Tim Echols said.

The commission will reduce Georgia Power’s ROE from 10 percent to 8.3 percent starting in 2020 and will reduce it again to 5.3 percent in 2021 as an inducement to get the project finished.

Georgia Power will take part of the $1.7 billion settlement it recently received from Toshiba Corp. and credit each customer with three $25 monthly credits that will be received no later than the 3rd quarter of 2018.

© 2017 by The Georgia Report

[/private]

Tags: Georgia Power , Plant Vogtle , PSC