ATLANTA — Construction work at Plant Vogtle is coming under the microscope to see who pays for going over budget: electricity customers or utility investors.
The project to add two nuclear reactors, estimated to cost $9 billion, is employing 5,500 construction workers and an additional 800 permanent technicians once operations begin. It is three years behind schedule and more than 56 percent over budget.
Executives with Georgia Power, the largest owner, say the delays were related to startup of precision manufacturing lines that have been idle for 30 years. The company argues that the delays and resulting budget overruns are reasonable because of the need to ensure safety, and therefore its decisions were prudent.
“Every dollar, and every day, that has been invested has been necessary to complete these new units safely and correctly,” company Chairman Paul Bowers wrote in the introduction to an 885-page filing. “Our reports will establish that the new units could not have been built for less money or in less time than it has taken.”
Whether Georgia’s Public Service Commission agrees determines who pays. State law says that reasonable expenses, prudently incurred, must be borne by electricity users.
Many consumer advocates, lawyers for major customers and anti-nuclear activists argue there was nothing prudent about how the overages have mounted.
Georgia Power is building its case. Last month, it submitted reams of documents and affidavits in support of its decisions. Included are statements from a host of experts, politicians including Gov. Nathan Deal, and former state Supreme Court Chief Justice Norman Fletcher.
Critics say there is ample evidence for questioning the company’s judgment.
“For starters,” Dennis Wamsted wrote on the Energy Collective website, “what were Georgia Power and Westinghouse executives thinking in April 2008 when they signed an engineering procurement and construction contract for the two new nuclear units that was essentially a fixed-price affair – even though detailed design drawings for the reactor’s construction were still years from completion, meaning, for the clear-eyed, that the contract price was little more than an estimate scribbled on the back of a cocktail napkin?”
Since no one in the U.S. had built a reactor of this design, engineering changes and delays were almost inevitable, he said.
The formal hearings on the costs should have been starting about now, since the first of the new reactors was to have been operating April 1. The company made an agreement with the commission to wait until operations began to seek a determination on the “prudency” of the initial overruns.
The reason for the delay was because the company was suing the building contractor. A court victory could have reduced or eliminated the overage by sticking it to the builder. When the suit ended in a settlement, with Georgia Power agreeing to pay $350 million to the builder, the utility announced there was no longer a reason to delay a prudency decision.
The commission agreed, but Commissioner Lauren “Bubba” McDonald passed a motion to consider whether the company is still entitled to add a nearly 10 percent charge on customers’ monthly bills for the two reactors.
The Legislature approved the charge for the planned construction period to lessen financing expenses that would have mounted, but now three-fourths of the money collected goes to taxes and Georgia Power profits, according to former Commissioner Bobby Baker, now a lawyer for the Southern Alliance for Clean Energy.
“Georgia Power claims that the Vogtle Units 3 and 4 will theoretically operate for 60 years,” Baker wrote to the commission. “Accelerating payment of the financing costs period to the units going into service imposes an immense intergenerational subsidy on today’s ratepayers who may not receive any benefit from Units 3 and 4.”
An expert witness told the panel that the prepayment charges amount to more than $3 billion and are the biggest cost to customers so far.
The hearings, expected late this year, will decide whether customers will pay more. In the meantime, the company is churning out hundreds more pages of data to address specific questions. That data-collection phase will last months and accelerates this week when Vogtle’s co-owners – the Municipal Electric Authority of Georgia, Oglethorpe Power and Dalton Utilities – begin making their own filings.
Georgia Power estimates the total impact on customer bills will be 6 to 7 percent, roughly half of the original projection because interest rates and the price of nuclear fuel dropped. Customers are already paying 4.5 percent.
“We are committed to managing this important project well, and every dollar we have invested has been necessary to complete the new units safely and correctly to best serve our customers,” Bowers said.