By Kristi E. Swartz – E&E News
Consumer watchdog group Georgia Watch has asked state utility regulators to reconsider their December decision to let Georgia Power Co. finish two half-built nuclear reactors that are behind schedule and billions of dollars over budget.
The five-member Georgia Public Service Commission signed off on new conditions that, among other things, chisel away at the amount that Georgia Power can earn from the reactors at Plant Vogtle. A number of those changes had not been vetted in hearings held just months before.
Georgia Power and a group of public power companies are building two reactors at Vogtle in southeastern Georgia. Vogtle and a similar project in South Carolina were using Westinghouse Electric Co. LLC as their main contractor, but skyrocketing costs caused the company to go bankrupt last March.
The electric companies in South Carolina decided their reactors at V.C. Summer were too much for customers to pay for. Georgia Power and Vogtle’s co-owners told the PSC last year they wanted to finish their reactors, arguing that they would provide emissions-free baseload generation on the power grid for several decades.
Vogtle’s new costs highlight the main challenge with nuclear. The reactors are expensive and hard to contain within their budget. Indeed, Vogtle’s price tag had been around $14 billion but has ballooned to $27 billion.
Outside incentives have lowered that figure. Chiefly, Westinghouse’s parent, Toshiba Corp., has paid $3.7 billion to underwrite part of the project. Georgia Power’s 45.7 percent share, with Toshiba’s payment, is at $10.5 billion.
Consumer advocates have voiced concerns about the project’s risks and profits the utility could book because of the delayed completion date. The PSC’s staff said that Vogtle is too costly to finish unless Georgia Power and parent Southern Co. absorbed several billion dollars in cost increases instead of passing it on to consumers.
For its part, Georgia Power defended the PSC’s decision as well as the company’s to finish the reactors.
“The commission’s 5-0 decision to finish Vogtle 3 and 4 followed months of review and evaluation of a unified recommendation presented to the Georgia PSC by the Vogtle co-owners,” Georgia Power spokesman Jeff Wilson said. “Our responsibility is to our customers first, and we remain focused on fulfilling our commitment to them to deliver a new energy source that will put downward pressure on rates for 60 to 80 years once the new units are on line.”
Ratepayers on the hook
But when regulators approved new conditions for Vogtle in December, that included additional changes to the project’s economics. They did so without a complete analysis, which Georgia Watch now wants.
This includes the cost of adding a 5-megawatt solar project at Vogtle, how the new corporate tax savings should be applied to any cancellation costs and the impact of using Toshiba’s payments to credit customer bills instead of lowering project costs overall.
What’s more, the commission approved allowing Georgia Power to ask to recoup costs for Vogtle’s Unit 3 reactor once it starts producing electricity. A previous settlement said the utility needed to wait until Unit 4 started working as well.
While it is typical practice for utilities to ask to collect money for one unit at a major power plant once it starts producing electricity, the commission’s changes could be significant here.
Georgia Watch argued in its motion filed with the PSC late yesterday that the commission erred in putting Unit 3 into the rate base early, “without prior notice to the parties and without any evidence of the potential economic effect on ratepayers of such a change.”
In emails obtained earlier by E&E News, comments from PSC Utilities Director Tom Bond said that “decoupling” the reactors and allowing the company to collect that money after each one starts producing electricity “would have the effect of ratepayers paying more, not less.”
E&E News has asked Georgia Power to comment on Bond’s statements.
PSC Chairman Stan Wise said he’s not surprised that one of the stakeholders in the Vogtle hearings asked for regulators to rehear and reconsider their decision.
“Some of these intervenors have spent a great deal of time, energy and resources to raise these issues and want another bite of the apple, and holy cow, I don’t blame them,” he said in an interview.
Wise, who is stepping down on Feb. 20 after several terms as a regulator, said he thinks the commission took a leadership position with their decision.
“We’re not out of the woods,” he said. “I can’t tell you how pleased I was with my colleagues to show the level of detail and interest.”
The South Carolina utilities’ decision to walk away from their project sparked widespread political backlash that is playing out in a number of ways. Wise said he’s happy that is not happening in Georgia.
“You only have to look across the river and see the political and financial disaster that’s in South Carolina,” he said. “We’re not going to have that for a variety of reasons.”
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Source: E&E News