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Vogtle is 'damned if we do and damned if we don't,' regulatory staffer says

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Vogtle is 'damned if we do and damned if we don't,' regulatory staffer says

SNL Image

The Alvin W. Vogtle Nuclear Plant in Burke County, Ga.

Source: Georgia Power Co.

Georgia Power Co. attorneys and regulatory staffers clashed Dec. 11 at a contentious seven-hour hearing on the future of the Vogtle nuclear plant expansion, a decision on which could now come before Christmas.

Stan Wise, chairman of the Georgia Public Service Commission, said the Southern Co. subsidiary has waived its right to file rebuttal testimony as long as a "substantive" ruling is made by Dec. 21. If that does not occur, he added, Georgia Power would present its closing argument next month, followed by a PSC verdict in February 2018.

That schedule is in flux, though, as both Wise and the utility want the PSC to act on Vogtle before federal tax reform is likely enacted this month. If regulators decide the expansion should be scrapped, doing so by the end of the year could allow Georgia Power to utilize the current 35% rate for a more favorable abandonment deduction, and pass those benefits onto customers.

Georgia Power also wants regulators to certify $542 million in Vogtle costs from the first half of 2017, but PSC staff argues that because $498 million of that was spent in fees to Westinghouse Electric Co. LLC, the former project manager, the utility should only be entitled to recover $44 million — less than a 10th of what was requested.

When asked if a recent positive development for Vogtle's owners — that they are slated to receive all remaining project payments upfront from Westinghouse parent Toshiba Corp. — changes staff's recovery-slashing recommendation, the PSC's lead Vogtle analyst, Steven Roetger, was unswayed.

"It does not," Roetger said, citing another staff report finding that the expansion continues to be uneconomic. The document recommended certain project costs be borne by Georgia Power and its shareholders, not ratepayers.

Reinforcing his written testimony, Roetger continued to criticize the utility for not completing an integrated project schedule, or IPS. Another analyst, William Jacobs, said he believes the IPS is still being reviewed by Georgia Power management, and that it could be released to PSC staff on Dec. 20 — just one day before regulators could decide whether Vogtle's owners can continue construction on reactors already years behind schedule and billions of dollars over budget.

"We've gone along since 2008 without an integrated project schedule that fits any type of industry norm," Roetger said. "How do you take billions of dollars from your customers through [cost recovery] year after year and expect to have all of these costs found reasonable when one of the most fundamental tools — I mean, you could ask a first-year student at Georgia Tech [for an IPS]."

If an IPS was in place, he added, "I think the economics would've shown maybe you don't go forward. But by waiting so long, we're kind of at a point where we're damned if we do and damned if we don't."

Staff concessions

But a Georgia Power attorney, Kevin Greene, was able to extract several key concessions from Roetger and Jacobs.

Jacobs responded in the affirmative when Greene asked if the utility's most recent cost recovery application represents a reasonable basis going forward, assuming Georgia Power can straighten out the $498 million in Westinghouse fees.

Roetger told Greene that PSC staff was not recommending any prudent costs be disallowed at this point in time. The analyst also confirmed they are not recommending a cost cap, expenses over which would be disallowed from recovery.

Jacobs said Vogtle's problems could be attributed both to overly optimistic expectations by Westinghouse and to lower productivity by craft workers. But once Southern affiliate Southern Nuclear Operating Co. assumed project management, laborers are "much more productive and much more engaged in the work than they were."

A number of public commenters touted the emission-free and national security benefits of nuclear power, but others were opposed.

"I'm wearing these Mardi Gras beads ... to symbolize the fact that Georgia Power gets everything they want," said Conservatives for Energy Freedom founder Debbie Dooley. "They will be having a real Mardi Gras celebration off the backs of ratepayers. Their shareholders and their members will be getting the gold mine, and their utility customers will be getting the shaft."

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