Georgia sticks with nuke project
Work OK’d to continue on 2 new reactors despite setbacks
ATLANTA — Georgia’s utility regulators are allowing construction to continue on two new nuclear reactors, despite huge cost overruns for the multibillion-dollar project.
Thursday’s unanimous decision by the state’s Public Service Commission will shape the future of the nation’s nuclear industry, partly because the reactors at Plant Vogtle were the first new ones to be licensed and to begin construction in the U.S. since 1978.
The project, co-owned by Georgia Power, Oglethorpe Power, MEAG Power and Dalton Utilities, has been plagued by delays and spiraling costs, compounded when the main contractor filed for bankruptcy. Westinghouse Electric Co., the U.S. nuclear unit of Japan’s Toshiba Corp., filed for bankruptcy in March.
Georgia Gov. Nathan Deal praised the commission’s decision.
“Investing in clean, sustainable energy infrastructure is a worthwhile endeavor that will have a positive economic impact as well,” Deal said in a statement shortly after Thursday’s vote.
“It is important that we stay the course,” he added.
The Sierra Club, meanwhile, slammed the vote, calling the project a disaster. Ted Terry, director of the group’s Georgia chapter, said the project should have been halted.
But Georgia Power said the
commission decision was important to the energy future of Georgia and the United States.
In a statement, Georgia Power chairman, president and chief executive officer Paul Bowers said the commission “recognized that the Vogtle expansion is key to ensuring that our state has affordable and reliable energy today that will support economic growth now and for generations to come.”
Officials say the Public Service Commission vote means Georgia consumers will pay more for power, starting in 2021.
Commission spokesman Bill Edge said Thursday that he’s still ascertaining how much that will be. After the commission’s meeting Thursday, commission member Tim Echols estimated rates would rise by 10 percent after the plant is completed. However, Edge said commission chairman Stan Wise predicted it will be more like 8 percent.
Georgia Power spokesman Craig Bell said that the projected peak rate effect for the utility’s retail customers is approximately 10 percent, but 5 percent related to the project is already factored into customers’ bills.
David Schlissel, a utility consultant and analyst who has previously testified against the Vogtle plant, criticized Thursday’s vote, saying regulators were letting Georgia Power and its parent, the Southern Co., off the hook.
“The commission’s own monitors have identified that Southern mismanaged the project,” he said. “Now the commission is giving them unanimous approval to spend even more money.”
He added, “In Georgia, you apparently have commissioners who are fine having ratepayers shovel money into a bottomless pit.”
The reactors, approved in 2012, were initially estimated to cost $14 billion in total. Regulators tried to make nuclear reactors easier to build, encouraging the use of off-the-shelf designs that could get approval in advance. New construction techniques were supposed to require less in-the-field assembly, making building quicker and reducing human error.
But by July 2012, the reactors had run up more than $800 million in extra charges related to licensing delays. Later that year, officials said construction was expected to be delayed seven months.
In February 2013, Georgia Power asked to raise its share of the Vogtle plant construction budget by $737 million to $6.85 billion.
By May 2015, regulators said there was a “high probability” that construction would be delayed even longer than the three years already announced by the owners, according to an analysis obtained by The Associated
Press. Estimates from regulators at that time put the utility company’s costs at $8.2 billion.
The rising construction costs hit an industry already under financial pressure, after 2011 a tsunami in Japan triggered meltdowns at the nuclear plant. Meanwhile, the price of natural gas dropped, lessening the incentive to build new nuclear power.
In South Carolina, Santee Cooper and South Carolina Electric & Gas Co. abandoned the construction of a similar nuclear project in July, blaming the decision primarily on the bankruptcy of lead contractor Westinghouse.
Under state law, Georgia Power’s customers will ultimately reimburse the state-regulated monopoly for the plant as they pay their monthly electricity bills. That law allows Georgia Power to charge its customers now for the interest it pays on the money borrowed for the project. Under an older law, the utility had to wait until the plant was operating to collect those interest charges from its customers, a practice that meant the interest owed grew during the construction period.
Cost overruns were also a problem with the original reactors at the Vogtle plant. The cost of building the existing reactors at the site jumped from $660 million to nearly $9 billion by the time they started producing power in the late 1980s.