The Georgia Public Service Commission will decide the fate of billions of dollars and thousands of jobs when it votes Thursday on whether Georgia Power Co. and its partners can continue a long-delayed project to build two new nuclear reactors at Plant Vogtle.
The commission will rule on Georgia Power’s request to declare “reasonable” its plan to continue those reactors but now at a cost of $12.2 billion and with the reactors coming online in 2021 and 2022. The company, which owns 45.7 percent of the project, says its capital cost would be $8.8 billion and the total capital cost would $19 billion.
Georgia Power’s financing cost would be $3.4 billion but that of the other owners – Oglethorpe Power, MEAG Power and Dalton Utilities – is unknown because they do not publicly report it to the commission.
Georgia Power’s cost request is double the $6.1 billion when the project was certified in 2009, with the reactors to be completed in 2016 and 2017. According to commission staff reports, about $4.33 billion has already been spent on the project in capital and construction costs and about $2 billion on financing and it is around 40 percent complete.
The company projected the cost to cancel the project would be between $730 million and $760 million, with its share at $330 to $350 million. Because of the change in corporate tax rates next year, Georgia Power requested the commission move up its decision from February to take advantage of $150 million more in tax benefits from abandoning the project. One commission consultant estimated that Georgia Power would actually gain $1.8 billion in tax advantages in canceling the project now than depreciating its cost over time after completion.
The project’s original main contractor, Westinghouse, declared bankruptcy in March after its parent company, Toshiba, wrote off more than $6 billion in losses from its nuclear business. In addition to Vogtle, Westinghouse had a similar project in South Carolina at the V.C. Summer site that was abandoned in July due to the high cost of completing that project. Westinghouse, which is also designing the new generation AP1000 reactors that would be installed in Vogtle Units 3 and 4, is still on site to complete the design and Southern Nuclear Operating Company, which already operates Vogtle Units 1 and 2, has taken over the project.
Georgia Power is also asking the commission to approve $542 million in costs spent on the project this year up to June 30. But commission staff is recommending that it be able to recover only $44 million of that cost and object to paying more than $400 million in liens and payments to vendors after the Westinghouse bankruptcy while also acknowledging that Westinghouse might have shut the project down while it went through bankruptcy. Georgia Power contends that not only was it necessary to keep the project going but important work was completed in the interim.
The company and the commission staff also have very different forecasts about the economics of the project going forward.
The staff say the “break even” cost on the project is $9 billion and ratepayers should not be on the hook for more than that. Because Georgia Power got a $1.7 billion payment from Toshiba as part of a settlement, the difference between the staff estimate and company request is really about $1.5 billion.
Compared to canceling the project and getting the same electricity from a natural gas plant, going forward would be “uneconomic” by $1.6 billion, according to staff testimony. Georgia Power asserts that under the schedule it put forth for completion and various cost forecasts, average savings of completing the plant would be $585 million. Commission staff acknowledged a $1 billion difference between its forecast of future natural gas prices and that of the company.
In a brief filed Tuesday, the company acknowledged that circumstances have changed since the project began, particularly a drop in natural gas prices, but noted that “the economics still favor completion of both units and preserves the benefits of carbon-free fuel diverse base load generation for 60 to 80 years.”
Delays in the project actually have worked in Georgia Power’s favor, commission staff contended. Over the 72-year expected life of the project – 12 years of construction and 60 years of operation – Georgia Power’s profit would increase by $5.2 billion, from $7.4 billion to $12.6 billion, while the cost to ratepayers would increase by $14 billion, from $23 billion to $37 billion. The project already accounts for about 5 percent of customers bills and that would rise to 10.3 percent by the project’s completion, according to Georgia Power estimates.
Although both projects were using Westinghouse as the main contractor and were set to use the new AP1000 reactors, Georgia Power said in its request that the Vogtle project and the V.C. Summer were very different. South Carolina Electric and Gas customers are paying 18 percent of their bills toward that project compared to 5 percent in Georgia and there are three times as many Georgia Power customers to shoulder future costs. Georgia Power and its partners also got much more from the Toshiba settlement, $3.68 billion, compared to $2.2 billion for SCE&G and its partner.
Vogtle is the only current project adding new reactors in the U.S. and they would be the first added in more than 30 years, which some have argued as a reason for contnuing the project .
“(T)he magnitude of this decision counsels that this Commission also contemplate the far-reaching state and national impacts resulting from completion or cancellation of the Project,” Georgia Power argued in its brief.
There were 6,400 workers on the site around the time Westinghouse declared bankruptcy in March, according to the Georgia Power request, and completing the project would create 800 permanent jobs. The construction payroll was estimated at $115 million a year and the 800 permanent jobs would generate an additional 528 jobs in the community and $33 million in annual income, according to one analysis.
Staff Writer Damon Cline contributed to this article.
Reach Tom Corwin at (706) 823-3213 or email@example.com