By Kristi E. Swartz – E&E News
Georgia utility regulators are weighing the future of Georgia Power’s nuclear reactor project in a way that some argue ensures that customers will eventually be stuck with the tab.
At issue: The Georgia Public Service Commission won’t decide until next February whether Georgia Power should finish the half-built reactors. This would essentially allow the utility to spend millions on the reactors at Plant Vogtle, money that the company will ask to recoup from customers.
The bigger issue is who carries the risk that comes with completing the multibillion-dollar reactors. Carefully worded documents from Georgia Power coupled with two recent PSC decisions, including one yesterday, point to the customers.
“It’s how badly do the commissioners want to see this project completed, and are they willing to do it at any price?” Liz Coyle, executive director of Georgia Watch, said in an interview with E&E News.
Vogtle stands as the lone nuclear project under construction in the United States. The project’s future has been in flux since its main contractor, Westinghouse Electric Co. LLC, filed for Chapter 11 bankruptcy protection in March.
Westinghouse’s bankruptcy stemmed from significant cost increases at Vogtle and a nuclear project in South Carolina. There, Scana Corp.’s South Carolina Electric & Gas Co. and state-owned Santee Cooper decided in July that the cost to finish their reactors at the V.C. Summer nuclear generating station would be too much for customers to bear.
Georgia Power is a unit of Southern Co. It and Southern’s nuclear unit have agreed to take over as Vogtle’s main contractor. Georgia Power’s board has agreed that the utility should finish the project with a number of conditions that essentially ensure it is free from significant financial risk.
The public power companies involved have done the same, plus, through Georgia Power, placed a condition on the PSC on how it should treat the project’s new costs.
Any benefits from Vogtle have been shrouded in the nuclear industry’s main challenge: Nuclear reactors are expensive to build and have stringent safety regulations. This means none has been finished within its original budget and schedule.
Indeed, Vogtle’s original price tag was $14 billion, and the reactors were supposed to have been producing electricity by now. Georgia Power’s 45.7 percent share of that amount was $6.1 billion in capital and financing costs, but now the utility’s capital costs alone have doubled to $8.8 billion, according to company filings.
This brings Vogtle’s total capital costs to $19.3 billion. Financing costs will drive that total amount higher.
The PSC is now set to weigh Vogtle’s future through six months of documents and lengthy hearings usually reserved for reviewing already-spent costs. Efforts to set up a different process failed.
Georgia Power said it was following the law by including Vogtle’s new cost and schedule information in a routine filing. It’s up to the commission to make changes to how that information should be vetted.
“It is ultimately up to the Georgia PSC to determine the structure of each [construction monitoring] proceeding — we will continue to work with the Georgia PSC and all parties through the [monitoring] process,” Georgia Power spokesman Jacob Hawkins said.
However, Georgia Power has already told the PSC in a heavy-handed filing that the entire project will fall apart if regulators don’t agree to let the company recoup all of Vogtle’s increased costs — including financing costs — from customers.
Yesterday’s decision takes that one step further. The commission also agreed that in February it would decide whether Vogtle’s proposed costs were “reasonable.” The common word has legal significance. The commission is not supposed to take up whether the costs are reasonable — and prudent — until Unit 3 starts producing electricity.
Practically speaking, consumer advocates argue signing off on “reasonableness” now gives Georgia Power an OK to spend billions in customer money.
“They’re saying, ‘Give us a credit card with a $3 billion limit and the OK to spend up to that limit,'” said Kurt Ebersbach, an attorney with the Southern Environmental Law Center.
A number of factors remain in play that keep Vogtle’s costs and future in flux. This includes whether the project will receive additional loan guarantees from the Department of Energy; whether Congress will extend federal production tax credits; and whether Westinghouse’s parent, Toshiba Corp., will start making money payments to underwrite a portion of the project.
These financial benefits will help offset Vogtle’s rising price tag. If they don’t come through, the project could be canceled.
A PSC decision in February will come roughly one year after Westinghouse’s bankruptcy filing.
“Now they say, ‘We can drag that on until next February and spend a half a billion dollars in the meantime’? That is not acceptable,” Coyle said.
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