PSC begins review of Vogtle overage

ATLANTA – Georgia Power executives repeated assurances that the utility would be better at managing costs Thursday in the first day of hearings on raising the construction budget for its work at Plant Vogtle.

 

The executives fielded critical questions Thursday during their first testimony since announcing the firm could not meet its state-approved budget to build two more nuclear reactors at Plant Vogtle. Southern Co. subsidiary Georgia Power has asked to raise the budget for its share of the massive project by $737 million to roughly $6.85 billion.

“The trend is delay and overruns,” Public Service Commissioner Stan Wise said. “Is there any reason to believe the trend is not going to continue through the construction phase?”

David McKinney, a vice president of nuclear construction, offered the first of multiple assurances that things would go more smoothly in the future. By the end of the day, he had it down to a dozen words.

“I will tell you absolutely we can control the costs going forward,” he said.

Kyle Leach, Georgia Power’s director of resource planning, said lower-than-predicted interest rates would offset the impact of the overage on customers, who can expect to see their bills rise 6 percent to 8 percent.

The company cannot pass along costs to its customers without commission authorization.

Public Service Commissioner Tim Echols asked whether Southern Co. executives had considered an agreement like one reached in Mississippi. Faced with cost overruns while building a plant there, Southern Co. agreed to take a $540 million loss on unexpected project costs rather than passing along those expenses to its customers. The utility recently announced it might face another $160 million in additional losses on the same plant.

Leach said he could not testify about the Mississippi agreement.

Echols asked about a problem in the installation of metal bars at Vogtle that delayed construction. The bars were installed in ways that differed from an approved design, which forced Southern Co. to seek federal permission to change its designs.

“How is your failure to catch the flaw not imprudent?” Echols said.

“I believe all the actions taken to resolve these issues and work through these issues were appropriate and reasonable,” McKinney said. “And I’ll tell you this project represents a lot of people working on it, and there’s the human factor.”

While costs have increased, Southern Co. officials said finishing the plant remains cheaper than the next alternative, building gas-fired power plants.

An independent monitor hired by Georgia officials previously warned that Southern Co. and its partners were missing key construction deadlines. The monitor warned that a manufacturing facility run by The Shaw Group Inc. in Lake Charles, La., was failing to produce key parts on schedule while meeting industry rules. Southern Co. officials said the plant’s performance has improved since it was acquired by CB&I.

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