ATLANTA – Shareholders of Georgia Power Co. may be at more risk of shouldering the utility’s share of cost overruns for the two new nuclear reactors being built at Plant Vogtle.
The Georgia Public Service Commission on Tuesday approved an agreement between the unit of Atlanta-based Southern Co. and commission staff that says the commission won’t agree that any expenses above a $7.3 billion cap imposed in 2017 are “reasonable” until the end of the project.
“Since the company has exceeded the approved revised capital cost of $7.3 billion, it is no longer appropriate for the commission to verify and approve the dollars invested in the project,” states the agreement approved by all five commissioners.
That’s a change from previously, when commissioners were reviewing and approving expenses every six months, giving Georgia Power some legal assurance that it could get charge ratepayers for the costs after the reactors went into service. Most of the approved spending is still subject to later review as to whether it was prudent.
The last set of expenses to be verified was the $670 million that the company spent from July 1 through Dec. 30 of last year, which commissioners approved Tuesday. From now on, Georgia Power will continue to present expenses every six months for commission review, without the commission verifying them.
John Kraft, a spokesperson for Georgia Power, said the change “preserves the transparency and accountability of the semi-annual construction monitoring process, while appropriately deferring certain decisions until closer to the project’s conclusion.”
The move reduces Georgia Power’s legal protections when its share of construction costs is already projected to be $9.2 billion, with another $3.2 billion in financing costs. Southern Environmental Law Center attorney Kurt Ebersbach, a critic of the Vogtle project, said the agreement does “the right thing.”
“The usual practice has been for Georgia Power to get advance assurances of cost recovery basically whenever they ask for it,” Ebersbach wrote in an email. “It’s good that more of that apparently is not going to happen.”
Georgia Power is a minority owner of the project, where costs are projected to surpass $27.8 billion overall, not counting $3.68 billion that original contractor Westinghouse paid back to the owners after going bankrupt.
Other owners include most Georgia electric cooperatives and municipal utilities. Florida’s Jacksonville Electric Authority and some other municipal utilities and cooperatives in Florida and Alabama are also obligated to buy power.
Southern says Vogtle’s Unit 3 is now projected to start operation in spring 2022, while Unit 4 is supposed to be finished in 2023. Independent monitors dispute that schedule, saying June 2022 is the earliest possible start date for Unit 3 and that the project will cost up to $1 billion more than what Southern had acknowledged so far.
Georgia Power has agreed to absorb at least $700 million in overruns, but could still ask ratepayers to cover all the other costs.
Commissioners have already agreed that $3.5 billion in spending earlier in the project was prudent, and the company is asking to start recovering some of that cost as soon as Unit 3 goes into service. Commissioners are scheduled to vote on that request in November.
Georgia Power’s 2.6 million customers have already paid more than $3.5 billion toward the cost of Vogtle under an arrangement that’s supposed to hold down borrowing costs. Customers of cooperatives served by Oglethorpe Power Corp. have already paid about $400 million, according to Oglethorpe financial statements.
The reactors, approved in 2012, were initially estimated to cost $14 billion, with the first new reactor originally planned to start generation in 2016. Delays and costs spiraled, especially after Westinghouse filed for bankruptcy in 2017.
The company says the third reactor is 99% complete, while the overall project is 93% complete.
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