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Newbuild: How Much of Vogtle Nuclear Plant’s Capital Costs Can Southern Recover?

 Energy Intelligence Group , Apr 28, 2023, Stephanie Cooke, Washington

As the first of two AP1000 newbuilds ramps up to commercial operation at Georgia Power’s Vogtle plant in the US state of Georgia, an “epic battle” is brewing over how much the operator can recover in capital cost overruns from ratepayers. Preparation for a possible standoff between the Southern Co. subsidiary and staff of the state Public Service Commission (PSC) is already under way against a toxic political backdrop. 

 Voter rights litigation challenging ossified Republican dominance on the commission is delaying a PSC election previously slated for November. Now the question is to what extent a delayed PSC election, and pressure from the two Democratic contenders, might influence the outcome of “prudency” hearings that will determine how much ratepayers will be on the hook for capital expenditures at the Vogtle-3 and -4 newbuilds.

Much is at stake for Georgia Power and its ratepayers. The latter have been charged for the financing portion — but not the actual capital costs — of Georgia Power’s construction bills since 2011, well before the first concrete was poured for Vogtle-3 on Mar. 2, 2013. By the end of the year, ratepayers will have on average paid approximately $913 per person for the project, according to PSC testimony earlier this year. 

Once Unit 3 is in commercial operation, the utility is authorized to include $2.1 billion of capital costs in the rate base. And when fuel loading begins at Unit 4 the PSC will begin hearings to determine the “prudency” of billions more in capital expenditures as a basis for passing on the cost to ratepayers.

Earlier this year PSC staff said Georgia Power may ultimately seek to recover as much as $9.7 billion of its capital costs, translating into a potential rate hike of 15%, or $17.20 extra per month for each customer based on an average monthly bill of $131. This figure is 120% higher than the $4.4 billion in capital costs expected at certification, and both figures are only a fraction of total capital costs, as Georgia Power is only a 45.7% owner of the Vogtle newbuilds. Georgia Power provided no response to Energy Intelligence questions as to what Vogtle capital cost recovery it will seek.

For Southern, the key is getting both reactors into commercial operation, after which all capital expenditures become fair game for inclusion in the rate base…………………

…………. any additional technical glitches — Unit 3 was forced to shut down for a week earlier this month because of an electrical malfunction — could delay recovery of capital costs. And at some point Georgia Power might face a very different PSC. If one or both Democratic candidates succeed in ousting current PSC commissioners, they would likely not shift the majority vote in disputed rate cases, but they would be better positioned to draw media attention to any Georgia Power capital cost recovery requests.

“There’s never been any single financial decision this large in the state of Georgia,” said Patty Durand, a candidate running to unseat Commissioner Tim Echols, whose term technically expired in December. In Georgia, it’s “going to be the epic financial battle of the century.”

Even getting on the ballot has been a challenge for Durand and for Shelia Edwards, who is challenging Commissioner Fitz Johnson, and now both candidates must wait until a federal court case over the PSC electoral process is decided……………………………………………….

…………………………………… Sources close to the PSC suggest that the total Vogtle project cost, including financing costs and on a 100% basis, may ultimately surpass $35 billion.


May 4, 2023 - Posted by | business and costs, USA

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