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Ga. regulators approve nuclear project's continued construction


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Ga. regulators approve nuclear project's continued construction

SNL Image

The Alvin W. Vogtle Nuclear Plant in Waynesboro, Ga.

Source: Georgia Power Co.

Georgia regulators on Dec. 21 gave the green light for construction to continue at the troubled Vogtle nuclear plant expansion, in a win for Georgia Power Co. and the nuclear industry.

Members of the Georgia Public Service Commission voted to approve the utility's revised cost and schedule estimates for completing two new reactors at the Waynesboro, Ga., facility, which are years behind schedule and billions of dollars over budget.

Commissioners ultimately chose to side with the Southern Co. subsidiary, which argued Vogtle units 3 and 4 to be in the best interest of Georgia Power customers. Regulatory staffers said earlier this month that the expansion's economic benefit would be negative $1.6 billion.

"The decision to complete Vogtle 3 & 4 is important for Georgia's energy future and the United States," Paul Bowers, Georgia Power's chairman, president and CEO, said in a statement. "The Georgia Public Service Commission has shown leadership in making this complex and difficult decision and 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."

"Our responsibility is to our customers first and we remain focused on fulfilling our commitment to them to deliver a new energy source that will put downward pressure on rates for 60 to 80 years once the new units are on line," he added.

The PSC's decision is also a spark of hope for the struggling nuclear industry. Numerous reactors around the country are slated for retirement. And Vogtle's sister project in South Carolina was scrapped after it was revealed the Summer expansion would cost more than double its original price tag of $11.4 billion.

U.S. Nuclear Regulatory Commission staffers recently favored Florida Power & Light Co. receiving a license for its Turkey Point expansion, but construction has yet to begin there. Florida regulators have criticized the NextEra Energy Inc. subsidiary for not filing a recent feasibility analysis.

A similar situation played out during a contentious Vogtle hearing earlier this month, when a Georgia PSC staffer lamented the then-lack of an integrated project schedule by the plant's owners. That document was only released to regulators just one day before they voted to allow continued construction.

"We're damned if we do and damned if we don't," that staffer, Steven Roetger, said at the time.

Recent boosts to Vogtle

In a series of recent all-day hearings, PSC staffers defended their view that Vogtle 3 and 4 are uneconomic, and recommended that Georgia Power shoulder more risk and slash its cost recovery. But the company's attorneys were able to extract key concessions to support their position, which likely had an impact on the commissioners' decision to vote in favor of continuing construction.

Staffer William Jacobs said Georgia Power's most recent Vogtle costs represent a reasonable basis going forward, assuming the utility can straighten out nearly $500 million in fees to former project manager Westinghouse Electric Co. LLC. And Roetger confirmed no prudent costs would have been disallowed, and that a cost cap was not being recommended.

Further shoring up Vogtle's financial strength was the recent announcement that Westinghouse parent Toshiba Corp. completed $3.68 billion in payments to the plant's owners, one of the "critical assumptions" upon which their August recommendation to continue construction was based.

And while an extension of nuclear production tax credits, or PTCs, was not included in federal tax reform, Georgia's senior senator, Johnny Isakson, authored a provision in a new bill released Dec. 20 that would indeed continue nuclear PTCs.

"I encourage my Senate colleagues to act quickly to prevent tax increases that could hamper America's energy security," Isakson said in a statement. "In Georgia, keeping the Plant Vogtle nuclear energy project on track will not only strengthen America's energy security and national security, but it will preserve the more than 6,000 Georgia jobs created by this project. I remain committed to doing whatever I can to ensure that the Plant Vogtle project stays on track for completion."

Vogtle is owned by Georgia Power, Oglethorpe Power Corp., the Municipal Electric Authority of Georgia and Dalton Utilities.

Georgia Power, the only owner required to submit its expenses for PSC review, spent $542 million on Vogtle in the first half of 2017, with over 90% of that amount allocated to liens and prepositions owed to Westinghouse. Regulatory staff wanted to disallow $498 million from cost recovery, but the full $542 million ended up being certified by commissioners at their Dec. 21 meeting.

The utility says Vogtle units 3 and 4 will go online in November 2021 and November 2022, respectively, over five years after the original commercial operation dates. Halfway through 2017, the owners' capital estimate to complete the project was $9.45 billion, which was more than double the initial PSC-certified capital cost.