After years of delays and gigantic cost overruns, two co-owners voted Monday afternoon to keep building two half-completed Georgia reactors that were once touted as the leading edge of a torrent of new nuclear power plants in the United States. The current builder—Southern Company’s subsidiary Southern Nuclear—has vowed there will be no more overruns. But officials there made the same vow nine months ago when they took over the troubled project, and there is absolutely no reason to believe the current estimate of $27.5 billion will come in at that cost.
Together, the two co-owners—the Municipal Electric Authority of Georgia (MEAG) and the Oglethorpe Power Corp.—own 52.7 percent of the project. Another owner, Georgia Power, a subsidiary of Southern Company, which initiated the project and owns 45.7 percent of it, had decided in August to continue building the two reactors after the latest announcement of cost overruns. That triggered a requirement that the other co-owners vote on whether to continue. If either of them had said no, the project would have been shut down. Oglethorpe says its vote to keep going is contingent on a cap on costs being imposed.
Republican Gov. Nathan Deal has repeatedly supported keeping construction going, noting that the project provides thousands of construction jobs and other economic benefits. Advocates say the new nukes are needed to continue providing the state power from diverse sources. Currently, natural gas generates most electricity in Georgia, with nuclear at 26 percent and coal at 25 percent. Since the state consumes more electricity than it produces, it also imports electricity from other states.
The yes vote stands in contrast to last year’s decision by the South Carolina Electric and Gas Co. to end construction of two nearly identical nuclear reactors that had also been plagued by long delays and cost overruns in the billions. The vote also means that some residential utility customers in Georgia may be on the hook for a piece of the $2.3 billion in cost overruns announced in August.
That’s in addition to the annual average of $83 in higher electricity costs imposed after lawmakers passed legislation in 2009 to allow a surcharge to be added to electricity rates to generate $2 billion to get reactor construction underway. Georgia Power has generated ample profits over the past seven years from the construction-work-in-progress surcharge. It has ample resources to avoid charging customers more, but that’s not the case for MEAG.
However, for now at least, the vote means U.S. taxpayers won’t have to cough up some or all of the $8.3 billion to cover repayment of federal loan guarantees provided by the Obama administration to the co-owners. U.S. Department of Energy officials said Sunday they might require Georgia Power and Oglethorpe to pay back $5.6 billion of the loans within five years under an accelerated timeline if the project were shut down. Currently, they have 25 years to do so. If they decide they can’t pay, you know who gets the bill.
When the Georgia project was first publicly discussed in 2006, critics argued it was a boondoggle and have been proved right ever since. They point out that the loan guarantees are 15 times the guarantee to Solyndra, the failed solar power company that right-wingers love to point to when attacking advocates of renewable power.
Meanwhile, the fight continues over who pays for the $3.7 billion borrowed by South Carolina Public Service Authority for its share of the two shuttered nukes in that state, which obviously will generate neither power for customers nor revenue to cover the bonds SCPSA issued to raise those billions.
The unfinished reactors at the Alvin W. Vogtle Electric Generating Plant, near Waynesboro, Georgia—where two other reactors have been operating since 1987 and 1989—were supposed to have come on line in 2016 and 2017, three years after ground was broken. But construction mistakes, production problems with prefabricated modules, contractor departures, deficits in staffing and experience, legal fights, and the bankruptcy of reactor-manufacturer Westinghouse have extended the switch-on date for generating juice from reactors #3 and #4 to 2021 and 2022, respectively. And nobody who has followed the saga is likely to wager their rent money on that timeline being met.
In addition to the long delays, the total costs of the pair of 1,117-megawatt reactors have nearly doubled from an original estimate in 2009 of $14.3 billion to about $27.5 billion. Here’s a timeline on how those costs soared.
Pressure to end construction was added last month by the Jacksonville Electric Authority of Florida, the eighth largest community-owned electric utility in the United States. It seeks to extricate itself from a deal it signed nearly a decade ago to buy Vogtle power from MEAG. They say that contract is going to cost them far more than they signed on to pay and they’ve asked the Federal Energy Regulatory Commission to step in even though municipal utilities such as MEAG are exempt from FERC rules.
Last Wednesday, 20 Georgia state legislators sent a letter to the three largest owners of the nukes, complaining that after Westinghouse went bankrupt, Southern Nuclear took over construction with a vow that there would be no more cost overruns. In August, however, Southern announced the latest billions of additional costs. Georgia Power has said it will absorb some of those costs. But, as it stands, MEAG’s and the non-profit cooperative Oglethorpe’s ratepayers will have to cover a portion of those costs, something the lawmakers called an “unfair impact.” They wrote:
Please ensure prior to voting in support of moving forward, as required by the amended Co-Owners Agreement, that a cost cap is established that protects all Georgia electric ratepayers from this and future overruns.
Legislators aren’t the only ones twitchy over paying for the overruns. For years, consumer advocates have been weighing in, too. In November 2017, for instance, when the previous cost overruns were announced:
… “if they continue the project without a cap on how much the utilities can collect from their customers, it is a staggeringly bad outcome for anyone in the state paying a power bill,” said Liz Coyle, who leads consumer advocate Georgia Watch. “It would be 60 years at least that Georgians are being forced to pay for a project that is unnecessary and risky.”
“If you are in a hole and you want to get out of the hole, don’t keep digging the hole,” she said.
It was that month that Georgia Power sought another $6 billion for construction of the Vogtle reactors because of the overruns, and arguments for continuing construction were met with considerable skepticism:
“I see this as the last dinosaur in what’s really a broken utility model,” said Katie Ottenweller, an Atlanta-based senior attorney at the Southern Environmental Law Center (SELC), which is intervening in the hearings. “It’s gotten to the point where this project is so over-budget and so delayed that, for all intents and purposes, it’s really a utility entitlement program.”
SELC would like to see Georgia Power put more emphasis on renewable sources and distributed generation, especially solar, which is growing at a rapid pace in the Peach State. In May, Southern Company sold off a third of its stake in 26 solar projects in Georgia, California, Georgia, Nevada, New Mexico, North Carolina, and Texas.