When it comes to the two nuclear reactors Georgia Power has been trying to build at Plant Vogtle, there never seems to be any good news.
The latest wave of negative news hit last week in the form of disclosures by the top executives of Southern Co., the Atlanta-based holding company that owns Georgia Power and several other utilities. They confirmed that the total cost of the Vogtle project is now going to be somewhere between $25 billion and $27 billion. That is nearly double the original cost of $14 billion that was estimated when the project was first approved by the Public Service Commission eight years ago.
Georgia Power is responsible for 45.7 percent of that cost, with the remainder divided up among the other project partners: Oglethorpe Power (30 percent), MEAG Power, (22.7 percent) and Dalton Utilities (1.6 percent).
These cost overruns, as we have noted before, will inevitably be passed along to the customers of these utilities in the form of higher monthly power bills—much higher monthly bills.
But wait, there’s more: It was disclosed that the service date for the Unit 3 reactor has been pushed back to the period between February 2021 and March 2022, while the Unit 4 reactor won’t start operating until sometime between February 2022 and March 2023. When the project was initially authorized by the PSC, Georgia Power said Unit 3 would be operating by 2016 and Unit 4 by 2017. That means the project is now at least five to six years behind schedule.
There is one faint bit of optimism for the Vogtle partners. Westinghouse, the primary contractor on the project, was forced into bankruptcy in March because of the cost overruns. Southern Co. has now assumed management responsibility for completing the reactors. Toshiba, the parent company of Westinghouse, has said it will pay the Vogtle partners $3.68 billion because of the bankruptcy, an amount that would be deducted from the current cost estimate of $25 billion. That would seem to be some good news among all the bad.
However, Toshiba is on increasingly shaky financial ground itself and could eventually end up filing for bankruptcy as well, which puts the future of that $3.68 billion payment very much in doubt. The PSC’s public interest advocacy staff has already suggested that Georgia Power’s shareholders should have to eat the cost if Toshiba skips out on that $3.68 billion payment. That recommendation set off a nuclear reaction from Georgia Power’s chief attorney, Kevin Greene. He fired off a letter to the PSC demanding that the commissioners reject the recommendation—which would, of course, enable the utility to pass off that possible loss of funds to the ratepayers.
While all of this bad news came crashing down in Georgia, two South Carolina utilities made the decision to kill a nuclear project that was similar to Vogtle in some significant ways. The South Carolina venture involved the construction by Westinghouse of two reactors that are identical to the reactors at Vogtle. Like Vogtle, the project had nearly doubled its original construction budget.
Southern Co. will soon be faced with the same decision. Company officials say they will tell the PSC by the end of August whether they are going to cancel the Vogtle project or continue with construction.
But even pulling the plug on Vogtle would not be cheap. “If a decision is made to cancel the project, we have estimated Georgia Power's cancellation cost at approximately $400 million,” Southern Co. CEO Tom Fanning said.
That cost would also be passed along to ratepayers, just in case you were wondering.