The daylong testimony was the first in an ongoing hearing before the Public Service Commission to certify the $389 million the company spent on construction during 2013. The commission normally reviews six months’ worth of costs at a time but agreed to lump all of last year’s review together because it had been busy at the time with other hearings.
The reviews are an effort to prevent Georgia Power’s share of the $14 billion expansion, one of the largest construction projects in the country, from exceeding projections as wildly as had happened during construction of the plant’s original two reactors in the 1980s.
This time, costs have already soared more than $700 million over budget, but the company agreed during a review of the 2012 expenses to wait about asking commission permission to charge electricity customers for the overage until the whole project is complete.
Tuesday, David McKinney, vice president for nuclear construction at Georgia Power’s sister Southern Nuclear, told the commission that quality-control issues that had slowed construction were being resolved. At one point last year, Georgia Power ordered a halt to deliveries from any vendor until quality improved. The Nuclear Regulatory Commission issued its own stop-work order in March 2013.
In the meantime, Chicago Bridge & Iron merged with the original contractor and instituted greater quality-control measures, McKinney said. When its internal review showed quality had slipped, Chicago Bridge halted work itself in February of this year, a step McKinney said demonstrated the contractor’s commitment to quality.
It has also stepped up its planning, giving Georgia Power last month a point-by-point schedule for completing construction by mid-2017.
“We have a much bigger confidence in what we are seeing from this executive team...,” he said. “We believe they can deliver on their commitments to us.”
Construction is 56 percent complete.
Lawyers for the commission and a pair of environmental groups quizzed McKinney and Georgia Power planning and policy director Kyle Leach on the witness stand for hours about details of the construction costs under review, learning no specifics, such as how much of the company’s legal fees were included for its ongoing suit against the contractor over some disputed costs. The commissioners themselves didn’t seem very interested.
“The main thing I look at in this is that we are on track for the projected cost,” said Commissioner Lauren “Bubba” McDonald.
Leach testified that the company’s analysis shows expanding Vogtle is still a good idea even as natural gas prices have declined in recent years as has demand for electricity. He said gas prices aren’t likely to remain low throughout the 60-year life of the new reactors, and that tougher environmental rules on carbon emissions released by the U.S. Environmental Protection Agency on Monday make low-emitting nuclear fuel preferable to coal.
“We have contemplated carbon in our analysis,” he said. “... We anticipated that at some time we would be in a carbon-constrained world.”
With the completion of Vogtle’s addition, the company will have 30 percent more generating capacity than it needs on the hottest summer day when air-conditioning units are blowing full force across the state. That’s even after the company closes 15 coal-burning generating units.
Leach said last winter’s coldest days created nearly as much demand for electricity as the company’s summer peak.
He also said that overall demand is beginning to increase as the economy improves and that by the end of the decade all of the excess capacity will be absorbed and the company will need to get more generation capacity.