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Plant Vogtle – Lawmakers debate penalizing utility over nuclear expenses

Martin said Chapman needed to better define what qualifies as a cost overrun. But time is getting short. The bill would have to be adopted by a committee and be approved by the entire House in six legislative days or else it fails for the year.

 

Part of the containment vessel for a new nuclear reactor at the Plant Vogtle nuclear power plant is under construction in Augusta in 2012. Rep. Jeff Chapman (R-Brunswick) asked a House subcommittee Tuesday to support his proposal to cut into the profits of Georgia Power if the company’s cost of building Plant Vogtle exceeds a state-approved budget of roughly $6.1 billion.
The Associated Press

Rep. Jeff Chapman (R-Brunswick) asked a House subcommittee Tuesday to support his proposal to cut into the profits of Georgia Power if the company’s cost of building Plant Vogtle near Augusta exceeds a state-approved budget of roughly $6.1 billion. Georgia Power is a subsidiary of the Atlanta-based Southern Co.

As a regulated monopoly, the utility earns a profit of roughly 11 percent on every dollar it invests in the capital project. Chapman’s plan would force the utility to earn a much lower profit on any spending in excess of its budget.

“The way it’s set up today, it actually incentivizes cost overruns,” Chapman said. “Now I don’t believe Georgia Power would intend to do that. But they can legally now charge and profit from cost overruns.”

Georgia Power officials say the project is already monitored by the state’s Public Service Commission, which can prevent the utility from passing along costs to customers if it decides any project spending is egregious.

“This provides a very real incentive to make sure we’re managing costs effectively,” John D’Andrea, the utility’s legislative affairs manager, told lawmakers.

Last year, federal regulators gave Southern Co. permission to build two Westinghouse Electric Co. AP1000 reactors at the site of an existing power plant in eastern Georgia. It was the first time since 1978 that a utility won permission to break ground on a nuclear plant.

State regulators have authorized Georgia Power to spend about $6.1 billion as its share of the estimated $14 billion project cost. The other owners include Oglethorpe Power Corp., the Municipal Electric Authority of Georgia and the city of Dalton.

In recent filings, Southern Co. has projected its share will cost roughly $6.2 billion if the first reactor comes online in November 2016. But a monitor hired by Georgia’s government has warned there could be additional delays and extra costs in the range of hundreds of millions of dollars. The company is scheduled to file an updated construction report Thursday.

Chapman’s plan faces political obstacles.

Georgia Power enjoys considerable influence in the General Assembly, and Republicans have historically given the utility wide latitude. For example, elected GOP utility regulators have rejected administrative proposals similar to Chapman’s plan.

And in an overwhelmingly Republican Legislature, Chapman has a single bill co-sponsor, Democratic Rep. Karla Drenner.

Time constraints are another factor.

Rep. Chuck Martin (R-Alpharetta) who chairs the subcommittee reviewing the plan, signaled Tuesday that he did not believe the bill was ready for a committee vote. Martin said Chapman needed to better define what qualifies as a cost overrun. But time is getting short. The bill would have to be adopted by a committee and be approved by the entire House in six legislative days or else it fails for the year.

February 27, 2013 - Posted by arclight2011 | Uncategorized