The long-troubled Vogtle nuclear construction project in Georgia is again in peril, caused by a continuing, uncontrolled increase in costs. While Southern Co., the lead utility in the project, says it is ready to absorb the latest increase in the cost estimate, two major public power systems may pull out.
The latest cost increase, $2.3 billion announced just eight months after another round of cost hikes, brings the total cost estimate for the plant to $27 billion, or double the original cost estimate. Southern Co. subsidiary Georgia Power owns 46% of the two-unit, 2,000 MW project. Oglethorp Power Corp., a generation and transmission cooperative (30%), Municipal Electric Authority of Georgia, a municipal joint action agency (22.7%), and the city of Dalton (1.6%) own the majority of the project. The project is five years behind schedule.
The latest cost increase triggered a requirement that the plant owners take a vote to continue the project, which likely will take place in September. Jim Galloway of the Atlanta Journal Constitution commented, “For Georgia Power customers, the good news is that stockholders are covering the added cost. The picture may be different for those served by smaller utility operations in Georgia that are also stakeholders in the project.”
Oglethorp has commented that it can absorb its share of the cost increase. S&P Global reported, “Electricity cooperative Oglethorpe Power is reviewing whether it will support going forward with the Vogtle nuclear plant expansion in Georgia following an increase in costs, CEO Mike Smith said Thursday [Aug 16.] He said the company thinks costs may climb further.” The report added that while Oglethorpe’s budget has a contingency fund that will cover the cost increase, “it will leave the company with little room to account for other costs and future increases, he said.”
MEAG has not commented, but is coming under severe pressure from the Jacksonville, Fla., municipal utility, which has a contract to buy 200 MW of power from Vogtle, through MEAG, for 20 years. Jacksonville in April, before the latest cost increases came to light, was pushing MEAG to alter the contract, which could lead to the demise of the municipal utility. A November ballot initiative could lead to sale of the city utility to an investor-owned utility.
Soon after the latest Vogtle cost announcement, Jacksonville Energy Authority demanded that MEAG walk away from the project. JEA interim CEO Aaron Zahn called the Vogtle project “economically obsolete” and said the two public power agencies have a “starkly different understanding of our joint business and legal relationship was well as the fundamental viabillity” of Vogtle.
The Florida Times-Union said, “the demand letter represents a significant escalation in JEA’s determination to kill the Plant Vogtle project. It has previously told financial analysts it wanted the project to get canceled but has stayed on the sidelines as Georgia power regulators debated its future.”
The JEA letter to MEAG came a day after a state senator asked legislative auditors to look at the MEAG contract, saying it appears to be an “alarming example” of “potential mismanagement.”
–Kennedy Maize