By Kristi E. Swartzv – E&E News
Even so, the two new reactors under construction at the plant in Georgia stand alone now as the only U.S. nuclear project still holding on despite rising costs and big risks.
Utility owners of the nation’s only other major nuclear expansion project, at the V.C. Summer power plant in South Carolina, decided Monday to stop building. The costs to those electric companies and their customers were too great despite some financial relief from elsewhere and attempts to get other sources to ease the monetary pain.
Reaction from South Carolina regulators, consumer advocates and, for a while, Wall Street, showed that Scana Corp.’s South Carolina Electric & Gas Co. and Santee Cooper were in a “no-win” situation regardless of what they decided to do.
This is because in tightly regulated utility markets, customers likely are on the hook for huge capital investments even if projects aren’t finished. And for large, highly complicated construction projects like nuclear, utilities can reap big profits for making major investments, and thousands of construction jobs are on the line.
Georgia Power and some state utility regulators tried yesterday and Monday to distance themselves from the South Carolina electric companies’ decisions so they could stave off any additional pressure to cancel Vogtle.
This is because South Carolina has already shown that even in an economic-based decision, politics, public pressure and egos are at play. Those stakes could be even higher in Georgia where Georgia Power needs buy-in from board members, Vogtle’s co-owners, regulators, Wall Street and the public.
“There’s a lot of places I’d rather be than in the hot seat with Vogtle,” said Georgia Public Service Commission Chairman Stan Wise. “I didn’t sign up for this a year ago, but we are where we are.”
Wise doesn’t question the commission’s decision years ago, based upon all of the information it had at the time and a scenario that predicted rising natural gas prices and pending carbon legislation.
“Knowing what we know today, probably not,” he said.
Shifting the risk
Vogtle and V.C. Summer were being built almost in tandem with Westinghouse’s AP1000 next-generation technology. The utilities in both states had to navigate through regulatory delays and vendor problems that eventually led to their projects being years behind schedule and billions of dollars above their forecasted budgets.
When Westinghouse filed for Chapter 11 bankruptcy protection in March because of rising costs at each project, the utilities found themselves stepping up to keep the reactors going forward. Then they started digging through data to figure out how long it would take to finish the reactors and how much that would cost.
Vogtle and V.C. Summer are financed differently and have a different number of utilities that are involved. Scana’s market capitalization is also significantly smaller than Southern’s, which means the risk for the South Carolina utility is greater.
For V.C. Summer, the utilities’ analysis showed that both reactors wouldn’t be finished until 2024, four years after their currently scheduled date. The price tag was above $20 billion, more than twice the original amount.
At Vogtle, Southern’s nuclear unit and Georgia Power have taken on the task of finishing the project. The working arrangement keeps construction going at Vogtle but transfers much of the risk away from Westinghouse and onto the companies, which worries consumer advocates and some regulators.
“Now that Westinghouse has gone bankrupt, and the fixed price contract has gone down with it, everybody has anxiety about where to shift the risk,” Georgia Public Service Commissioner Chuck Eaton said.
The PSC staff’s hypothetical analysis pushes out Vogtle’s new operation dates to 2022 and 2023 and adds more than $3 billion in capital costs to the project. Staff has also said Vogtle could become uneconomical to finish under certain circumstances.
Georgia Power said it is still working with Vogtle’s co-owners — Oglethorpe Power Corp., Municipal Electric Authority of Georgia and Dalton Utilities — to figure out how long it will take to finish the two reactors. After that it will work with the PSC on a final decision.
Georgia Power said it will publicly release its findings, likely in a routine cost-and-schedule report for Vogtle, later this month. Meanwhile some preliminary scenarios and figures are circulating, but it’s unclear who’s seen what.
The staff has asked Georgia Power for a wide range of data, models, analyses and other information for the utility’s preferred option in what’s known as “data requests.” The company’s recently filed response has been consistent: The analysis is ongoing, and the results aren’t ready for presentation at this time.
‘Too much uncertainty’
Even after Georgia Power issues its final analysis, it’s unclear to many what happens next. The PSC approved a settlement on Vogtle’s rising costs that is supposed to be the guideline, but some consumer advocates are skeptical that the document will hold now.
Even with that agreement in place, consumer advocates are worried that customers will wind up shouldering the burden of Vogtle’s price tag. Westinghouse’s parent, Toshiba Corp., has promised to underwrite $3.7 billion of the project, but it, too, is on shaky financial ground.
Congress could extend production tax credits, but the Senate has failed to act on a measure so far.
“There’s just too much uncertainty, and I find that absolutely unacceptable,” said Liz Coyle, executive director for Georgia Watch, a consumer group.
Wise said Monday he will ask that staff and Georgia Power develop a schedule to ensure that they vote by the end of the year whether to continue with Vogtle or scrap the project. If they decide to go ahead, then they also must approve a new cost and schedule along with it.
Wise told E&E News that Georgia Power’s figures must be accurate. The utility has nothing more to lean on, especially now that they cannot blame Westinghouse for the problems.
“It has to be really no room for any variance. For all the schedule delays and the cost overruns and mistakes that have been made in the last decade, that has to come to an end,” Wise said. “There will be a different level of review from this point on because there is no ‘Westinghouse buffer.'”
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