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A ‘nuclear renaissance’ turns into a financial quagmire: Plant Vogtle

Plant Vogtle: Georgia’s nuclear ‘renaissance’ now a financial quagmire By Russell Grantham and Johnny Edwards – The Atlanta Journal-Constitution  May 19, 2017


Southern Company’s chief executive has said more than once that the giant utility’s project to build two more nuclear reactors at Plant Vogtle would be history-making.

He may be right, but not in the way he meant.

Years behind schedule, billions over budget, and with a key contractor’s bankruptcy clouding its future, the troubled Vogtle project near Augusta is fast becoming Exhibit A for why no U.S. utility before Atlanta-based Southern had tried building a new reactor in 30-plus years.

Most Georgians who get electric bills could eventually pay for overruns on the project that are likely to grow. Customers of Southern subsidiary Georgia Power already pay a Vogtle-related surcharge that adds about $100 a year to the average residential bill, with the ultimate effect on ratepayers yet to be determined.

Also uncertain is how the project will get done.

On March 29, Westinghouse Electric, the company that designed the new Vogtle reactors and eventually became the primary contractor on the project, filed for bankruptcy. As part of its Chapter 11 restructuring, the company is expected to ditch the fixed-cost contracts that led to billions in losses on its work at Plant Vogtle and a similar nuclear project in South Carolina.

Under an interim deal announced a week ago, Southern and Georgia Power plan to take over running the Vogtle expansion, which is not quite half-done. Westinghouse will still help, but in a smaller role.

Beyond that they face a more elemental decision: spend billions more finishing the reactors, convert the project to another type of power plant such as natural gas, or just abandon it — leaving two dormant cooling towers and skeletal buildings.

A Georgia Power spokesman said the company is doing a “full-scale” study to “determine the best path forward.”

The utility has acknowledged that Westinghouse’s bankruptcy will mean more delays and costs. The elected members of the Georgia Public Service Commission eventually will determine the actual construction costs to be borne by ratepayers.

Meanwhile, Southern CEO Thomas Fanning, who as recently as last year said the project was going “beautifully,” got a 2016 compensation package worth $15.8 million, including a $2.7 million bonus………

Richard Nephew, a senior research scholar at the Center on Global Energy Policy at Columbia University, said the utility underestimated the costs of replacing a vanished industry of nuclear construction workers and suppliers.

……….Westinghouse’s financial meltdown has rattled even the most loyal Plant Vogtle supporters – those living in the shadows of the towers in rural Burke County, population 23,000, who rely on the plant for a stable economy and a flush tax digest……..

History repeats itself

Delays, cost overruns and contractor snarls were not part of the picture government and industry officials painted in 2009 when state regulators approved the project to add the new reactors.

In addition to arguing it was needed to help power Georgia’s growth, Fanning called the Vogtle expansion a “national priority” to help revive the U.S. nuclear power industry. It would be a “renaissance,” he said.

But construction of Plant Vogtle’s first two reactors had provided a vivid example of the potential complications.

Plant Vogtle was conceived around 1970, with an original cost estimate of about $660 million. Construction was expected to take about eight years. Then, Three Mile Island happened. Regulations tightened. Demand for materials and interest rates shot up in the 1980s.

Construction took 13 years. The final price tag: around $9 billion…….

However the Vogtle expansion plays out from here, it won’t likely be held up as the model it was intended to provide.

Of the dozens of new reactor projects once being considered for licensing by the Nuclear Regulatory Commission, all have been shelved except the Vogtle and South Carolina projects. Georgia Power has tabled plans to study a new nuclear plant south of Columbus, citing slowing demand growth……. http://www.myajc.com/business/plant-vogtle-georgia-nuclear-renaissance-now-financial-quagmire/5l16IFMFICknSCeI7RXG6J/

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May 20, 2017 - Posted by | business and costs, USA

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