The decision by the Georgia Public Service Commission to allow construction to continue on two new reactors at Plant Vogtle will permit Georgia Power and its partners to spend billions more that could be charged to ratepayers. And while those costs will still be reviewed every six months and ultimately must be shown to be “prudent,” one critic concedes that will be more difficult in the future.
The commission voted unanimously to let construction continue with a “reasonable” capital budget of $7.3 billion, the amount the company requested minus $1.7 billion from a settlement with the parent company of its former main contractor, Westinghouse. Georgia Power, which owns 45.7 percent of the project, and its partners split a $3.66 billion payment from Toshiba, the parent company, so the total capital cost of the project of $19 billion would presumably be reduced by that total amount, making it just under $15.4 billion. Commission staff said $4.33 billion in capital and $2 billion in financing had already been spent on the project prior to the commission approving $542 million spent this year up to June 30.
Georgia Power requested and the commission apparently approved as reasonable spending $3.4 billion on financing. The financing cost from the partners, Oglethorpe Power, MEAG Power and Dalton Utilities, is not publicly reported.
Commission Chairman Stan Wise and Vice Chairman Tim Echols said the new reactors is a “20-plus billion” dollar project. Georgia Power and its partners will still file Vogtle Cost Monitoring reports every six months that will need to be reviewed and approved by the commission, and critics and advocates will get a chance to weigh in during those proceedings on what costs should be approved.
Wise also noted that Georgia Power and commission staff agreed to a stipulation earlier this year that the company would have the burden of proving that any capital costs above $5.68 billion were “prudent,” a determination that would have been made after the new reactors, Units 3 and 4, are brought online. Anything “over and above that is clearly what the company is at risk” of not being able to pass onto ratepayers, Wise said.
In his lengthy motion that allowed the project to continue, Echols proposed that the company be allowed to add the cost of Unit 3 to what ratepayers are footing for the project, which is currently around 5 percent of bills. The company has said in its proposal that the new added cost would likely push that to a little over 10 percent of bills in the future. Allowing the company to raise rates potentially at least a year earlier than after the full completion date in 2022 was an incentive for it to finish earlier.
“This provision works as a carrot instead of a stick,” Echols said, after also proposing a cut beginning in 2021 that will cost the company around $1.7 billion in what it can charge customers. Echols said that while the company has proposed taking an extra 29 months to finish the project, the work is currently on schedule for completion in 23 months and “I want them to try and make that,” he said. Getting Unit 3 running would be a “milestone” and Echols said he hoped the president of the United States would fly into Augusta for the ceremony.
But it is after Unit 4 is operational, which would likely be sometime after 2022, when the commission will decide during what is known as a prudency hearing how much of the rest of Georgia Power’s additional cost will be added to ratepayer bills. That hearing “will be probably every bit as big of a vote as this was,” Wise said.
At least one critic of continuing the project, Kurt Ebersbach of the Southern Environmental Law Center, conceded that Thursday’s approval makes it all that much more likely that Georgia Power will get its way then, too, a sentiment also expressed by some of the commission staff who worried the ruling would preclude further review.
“There still will be a chance but I think the meaningful ability to change anything is going to be much more difficult as a result of (this) decision,” Ebersbach said. “Our concern is that today’s decision shifts the burden to ratepayers when it should lie on the company and does so five years ahead of the units being complete. So the prudency hearing five years from now could very well be a sham proceeding.”
Reach Tom Corwin at (706) 823-3213 or firstname.lastname@example.org