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High wrangling over Georgia’s Vogtle nuclear plant: costs likely to fly even higher

After wrangling over Georgia nuclear plant, cost concerns remain, By Matt Kempner and Anastaciah Ondieki – The Atlanta Journal-Constitution , September 28, 2018


Not many people can name the plant that their electricity comes from. But in Jefferson, at a gathering sponsored by Jackson EMC, plenty of customers were familiar with the trials and tribulations of expanding Plant Vogtle.

Among the people who gather annually for chicken dinners, gospel music and raffle drawings put on by the electric cooperative, there are worries about the mounting headaches 130 miles away.

Plant Vogtle — the only nuclear power plant under construction in the United States — keeps ending up in the news because of its ever escalating pricetag. And those soaring costs are likely to end up in the monthly bills of customers of Jackson EMC and most other Georgia utilities, which are on the hook to pay for the project.

“I don’t understand why they can’t figure out what it’s going to cost,” said Mike Mize, a retired phone company worker who lives in Commerce and gets power from Jackson EMC. “I want them to hurry up and finish the thing and quit spending money on it.”

But high-stakes events this week suggest that costs will only go higher.

Co-owners of the plant voted Wednesday to continue its expansion, but did little to address the fundamentals of the Vogtle’s troubles.

The owners ditched a proposal for a firm cost cap on the now $27-billion-plus project and avoided addressing calls by state lawmakers to refrain from passing new cost increases along to customers. Meanwhile, electric membership cooperatives and city utilities around the state lost some of their say over whether the project continues in the future.

Georgia Power blasted the idea of a firm cost cap, but agreed to take on a greater share of costs in the event of certain big overruns. The size of the risk shift was limited — if there are $2.1 billion in cost increases, the company would face an extra $180 million penalty, “peanuts in this context,” said one critic.

Georgia Power, the state’s largest utility, was given carte blanche to drop out of the project at its sole discretion.

Morgan Stanley analysts predict a “very good chance” that Vogtle costs could jump more than another $2.1 billion.

“We think there is a significant level of uncertainty around the budget and see a very high likelihood of continued cost overruns,” the analysts wrote.

Add that to the existing pile. Nine years into construction, the Vogtle expansion is billions of dollars over budget, years behind schedule and at least four years away from completion.

Cost projections and assurances from Georgia Power have been consistently wrong.

Then a bankruptcy filing last year by the project’s main contractor, Westinghouse Electric, eliminated a contract that had buffered Vogtle owners from many extra costs. But the costs still continue to rise.

When Georgia Power recently announced $2.3 billion in new increases, it automatically triggered a vote by the co-owners on whether to stick with the project.

Georgia Power, the Municipal Electric Authority of Georgia and Dalton Utilities all gave approval. But Oglethorpe Power, which represents electric membership corporations throughout the state, insisted on a cost cap. It also asked that shareholders of Georgia Power’s parent, Southern Company, eventually cover additional cost increases. (Another Southern subsidiary is overseeing the construction.)

Bitter disagreements among the project’s co-owners bubbled out into the public. It kicked off brinkmanship negotiations over whether and how the project would continue.

The core issue is one that has haunted Vogtle for years: Who should shoulder its ever-ballooning costs?

“We never signed up for a project where we would just be a blank checkbook for Southern Company or anybody else in this project,” said Gary Miller, the chief executive of GreyStone Power Corporation, which serves portions of Fulton, Cobb, Douglas and other counties. “We never said, ‘Build it no matter what the cost.’ ”………

There’s been intense political pressure to continue the work. If the project were to be canceled, its costs likely would end up in customer bills without any energy generation to show for it. Some Jackson EMC members consider that wasteful; others want to stop the bleed. …….https://www.myajc.com/business/after-wrangling-over-georgia-nuclear-plant-cost-concerns-remain/9iGHX9Ugo7QPkli9LoqGbM/

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September 29, 2018 - Posted by | business and costs, UK

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