By TOM CRAWFORD
Georgia Power has settled its long-running legal dispute with CB&I (Chicago Bridge & Iron), one of the contractors building the Plant Vogtle nuclear reactors, and will no longer use CBI on the $16 billion project.
The company announced Tuesday night it will pay CB&I $350 million to settle the lawsuit that involved about $1.2 billion in disputed construction costs and has bounced between federal courts in Augusta and Washington, D.C. since 2012.
Going forward, Westinghouse Electric Co. will be the sole contractor on the nuclear project that has been hit by cost increases and is more than three years behind schedule.
“The agreement resolves current and pending disputes, reaffirms the current schedule, and increases efficiencies by streamlining resource deployment with Westinghouse and its affiliates as the prime contractor over the Vogtle expansion,” said Buzz Miller, Georgia Power’s executive vice president of nuclear development.
Miller called the settlement “extremely positive” and said the contractors “can focus 100 percent on project execution.” He added that the settlement “reaffirms” the current dates of 2019 for the Unit 3 reactor and 2020 for the Unit 4 reactor to be in service.
Bobby Baker, an attorney who served for 18 years on the Georgia Public Service Commission, estimated that the settlement “will raise the total cost of the project to a little more than $17 billion.”
“You’re going to be looking at a total rate impact of somewhere between 13 and 14 percent for the average Georgia Power customer,” Baker said.
“The Vogtle project is a continuing train wreck that will cost Georgia electricity customers for decades to come,” said energy consultant Jim Clarkson. “However, these new costs add to the company’s future profits. Regulated utilities make money on invested capital, foolish or not.”
“Given that the litigation was about mistakes made early in construction, I would expect Georgia Power to be accepting the blame for those mistakes,” said Liz Coyle of Georgia Watch. “Therefore, ratepayers should not be expected to foot the bill for imprudently incurred cost overruns.”
“I don’t know that making Westinghouse the sole contractor will make any difference in terms of completion,” Coyle added. “I’ve yet to see any evidence the contractor is making up any of the schedule slippage so far.”
CB&I said it has entered into a definitive agreement for Westinghouse to acquire all of the outstanding equity interests in CB&I’s nuclear construction business. The transaction is expected to close in the fourth quarter 2015.
© 2015 by The Georgia Report
Source: Tom Crawford’s Georgia Report
