“Georgia Power to testify about construction costs at nuclear plant expansion”

By Walter Jones, Morris News Service

ATLANTA | For the third time since construction began in 2009, a new contractor is overseeing expansion at Plant Vogtle, and the change could have wide implications.

Some may become clear Tuesday when Georgia Power officials testify in front of the Georgia Public Service Commission about construction costs at the nuclear facility.

One implication is the 8,000 workers of Stone & Webster will have a new parent company.

Stone & Webster seemed a logical choice as the contractor when Georgia Power and the other utilities that own the Waynesboro nuclear facility won permission to add two reactors, the first built in the United States in more than 30 years. The Massachusetts-based engineering company had produced some of the components for the Manhattan Project, the Oak Ridge Laboratories and various projects at Plant Vogtle over the years.

As delays, cost overruns and persistent quality issues mounted, the utilities and the contractor blamed each other, taking their dispute to mediation. When that failed to resolve the issues, they sued each other in federal court. By then, Chicago Bridge & Iron had purchased Stone & Webster, and the 2013 deal came with assurances that the problems would disappear.

Late Tuesday, a flurry of press releases announced that Westinghouse Electric was buying Stone & Webster and its contracts at Vogtle and Plant V.C. Summer in South Carolina for $229 million. The announcement also reported the lawsuits had been settled.

“This settlement is extremely positive for the Vogtle project, and now the contractors can focus 100 percent on project execution,” said Buzz Miller, executive vice president of nuclear development for Georgia Power.

One skeptic is Liz Coyle, executive director with the consumer advocacy group Georgia Watch. “So, we’ve seen these changes in contractors and leadership before, when promised improvements haven’t materialized,” she said. “Why should we expect significant improvement this time around?”

The recent settlement included Georgia Power paying $350 million to Chicago Bridge & Iron (CB&I), about $100 million less than was initially in contention. The other owners will also write checks, bringing the total to around $900 million. Still, CB&I announced that it will lose as much as $1 billion on the transaction, even though it will still supply some components for the new reactors.

CB&I’s loss may be a gain for Georgia Power customers because it is money they will not have to pay. However, Georgia Power plans to ask the Public Service Commission to allow it to collect the $350 million from customers.

As the prime contractor now, Westinghouse adds to its already big role at Vogtle. It supplies the fuel pellets the two existing reactors burn to make electricity. The company also designed the AP1000 reactors that are being built, which is why it already has personnel on site. Having Westinghouse in complete charge — though it is hiring Fluor Corporation to manage construction — also removes debates about whether problems are the fault of the design or the company building it.

“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,” Georgia Power’s Miller said.

Moody’s Investors Service, a bond-rating agency, predicts that with the lawsuit out of the way, the Public Service Commission will adjust upward the approved price and timeline for the project.

But Georgia Watch’s Coyle has a different perspective. “Given that the subject of the litigation was finding fault in those costly delays, I would be very surprised if commissioners allowed those costs to be passed off on customers,” she said.

Commissioners have said they aren’t eager to hold the lengthy hearings to revise the price because the possibility of continued overruns could require another revision, and they only want to deal with it once.

To get Westinghouse to become the prime contractor, the utilities agreed to revise the due dates in the contract. The first new reactor was supposed to begin producing power next April, but the latest realistic estimate is in 2019. The contract schedule change means that Westinghouse won’t face the penalties for being late that CB&I had hanging over it. That also means that Georgia Power will ask the Public Service Commission to make electricity customers pay that cost.

Still, utility officials said this week that the estimated increase in customer bills would be the 6 percent to 8 percent originally projected. And bills already include 4.5 percent of that projected increase.

Opponents of nuclear power see the contractor switch and the lawsuit settlement as new reasons to halt construction. Sara Barczak with the Southern Alliance for Clean Energy figures customers are already paying 9.4 percent for Vogtle’s construction financing, totaling $1.2 billion so far.

“These announcements are shocking, and customers once again are going to suffer with higher bills for this troubled project unless the commission starts paying attention to the red flags that have been waving in front of them for years now and does something to protect consumers instead of Georgia Power and their shareholders,” she said.

SOURCE: OnlineAthens.com