Judge rules JEA is still bound to Georgia nuclear power deal

The utility's financial obligation has risen to nearly $3 billion

File photo of construction at Plant Vogtle (Provided by Southern Company)

JACKSONVILLE, Fla. – JEA’s efforts to back out of a deal to buy power from a Georgia nuclear plant reached a dead end Wednesday when a federal judge upheld the contract.

In a 53-page order, U.S. District Judge Mark Cohen ruled that JEA’s power purchase agreement (PPA) with the Municipal Electric Authority of Georgia (MEAG) is valid and enforceable, despite the utility’s legal arguments to the contrary.

As a result, JEA remains on the hook for nearly $3 billion as part of the Plant Vogtle project, which has seen its costs balloon as construction has fallen way behind schedule.

[DOCUMENTS: Read the 53-page ruling]

“From the beginning, we have simply argued that the PPA is valid and fully enforceable, and that the suit brought by JEA and the City of Jacksonville was meritless,” MEAG Power CEO James Fuller said. “Judge Cohen’s ruling was very thorough and perfectly clear – JEA and the City of Jacksonville knew what they were doing when they entered into this agreement, and they have to honor their commitment.”

A little background: JEA originally signed the PPA agreement with MEAG in 2008, promising to pay 41 percent of the cost of building two new units at the power plant located in Waynesboro, Georgia, in exchange for affordable electricity rates for 20 years. JEA would have been required to pay $1.4 billion of the anticipated $9.5 billion price tag under the fixed-cost agreement.

Since then, the project has faced construction delays and spiraling costs.

RELATED: Feds reject JEA plan to ditch nuclear power plant

A new agreement was created in 2017 without JEA’s approval after the project’s first general contractor, Westinghouse, filed for bankruptcy. Under the new deal, JEA’s obligation climbed to $2.9 billion and the completion date was delayed from April 2016 to November 2021.

JEA and the city sued MEAG in Florida in 2018, saying the contract was no longer valid. MEAG in turn sued for breach of contract, and the case was transferred to federal court.

In response to Cohen’s order, a JEA spokeswoman said the utility’s leadership will review the ruling and consider its options. It also noted that the judge lifted a stay on discovery for JEA’s claims that MEAG was negligent when it entered the new agreement without JEA’s approval.

RELATED: JEA working to get out of nuclear power deal

“These claims seek to recuperate damages resulting from MEAG’s failure to exercise reasonable care when it voted to continue construction of the project. JEA will pursue these claims going forward,” the statement said in part.

Similarly, discovery can continue for MEAG’s claims that JEA and the city breached their contract. That process can resume in July.

“We will continue to honor all of our commitments, as we always have, and are hopeful that this ruling puts this matter behind us,” Fuller said.

Reporting by Steve Patrick contributed to this report.

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