Georgia and the state’s electric utilities are laying down a big bet on the completion of the two-unit, 2,000-MW Vogtle nuclear plant.
What’s going on in Georgia is similar to what’s going on in South Carolina, but with significant differences. Whether the Georgia approach to the same problems that have faced South Carolina will yield a different result is still far up in the air.
The Peach State is playing a very risky game, as the collapse of the mirror-image product in neighboring South Carolina demonstrates. But the key difference is that the Georgians are playing with house money –that is, federal taxpayer cash — reducing their fear of the consequences of a crash. But if they fail, the consequences are enormous.
The Vogtle project is billions of dollars over budget and years behind schedule. That’s exactly what South Carolina regulators faced when they euthanized the V.C. Summer project last year and are now reaping the unpredictable consequences of that action.
Nevertheless, the Georgia Public Service Commission is plowing ahead with Vogtle, despite the bankruptcy of its reactor vendor and plant builder Westinghouse, and skyrocketing costs and unmet schedules. Unlike in South Carolina, where the Public Service Commission pulled the plug on Summer, the five-member, elected Georgia Public Service Commission, against the advice of its staff, agreed 5-0 late last year to move ahead. Tim Echols, vice chairman of the Geogia commission, said in POWER magazine this month, “This ‘experiment’ here in Georgia is all that is left of the nuclear renaissance bludgeoned by cheap natural gas prices and a Japanese tsunami.”
Environmental and anti-nuclear groups last week filed a suit in state court to overturn the PSC decision. Kurt Ebersbach, a senior attorney with the Southern Environmental Law Center said, “The commissioners rushed a decision concerning the single most expensive capital project in state history, giving George Power everything it asked for and sticking customers with all the risk.”
Southern Co. subsidiary Georgia Power owns 45.7 percent of the two Vogtle units under construction, while Oglethorpe Power holds 30 percent, MEAG Power (Municipal Energy Agency of Georgia) has 22.7 percent and the city of Dalton’s municipal utility owns 1.6 percent. Oglethorpe, MEAG, and Dalton are public power systems not subject to PSC regulations.
Last week, a Republican state senator who has been critical of the project introduced a bill that would repeal the 2009 state law that allows Georgia Power to recover its costs and earn a return during the construction, similar to a South Carolina law that is under attack in the Palmetto State. But Sen. Chuck Hufstetler had to agree to an amendment that would exclude Vogtle from the repealer
What distinguishes Vogtle from Summer that keeps the Georgia program going? Uncle Sam. The project has had the consistent support of the federal government, from the Obama administration and into the Trump regime. In February of 2010, the U.S. Department of Energy awarded the Vogtle project $8.3 billion in a loan guarantee. It was the only DOE nuclear loan resulting from a 2005 law that was designed to kick off a new round of nuclear plant construction, revitalizing the moribund industry. But the law kicked in just as fracking revolutionized the U.S. electricity industry. The nuclear renaissance was stillborn.
The South Carolina utilities that were building Summer ultimately declined DOE loan guarantees.
The two Vogtle units were expected to cost around $12 billion total and be in operation in 2016 and 2017. Today, the cost estimate is around $25 billion, with commercial service beginning no sooner than 2021.
With Vogtle’s cost and schedule seemingly out of control and the project facing failure, the Trump DOE in September 2017 upped the loan guarantee ante by another $3.7 billion. And this month, when Congress passed a two-year bi-partisan spending agreement, the legislation included an extension of advanced nuclear production tax credits of 1.8 cents per kW/h. The Georgia congressional delegation was behind the extension. As World Nuclear News noted, the original tax credits in the 2005 law required new plants to be in operation by the end of 2020 to be eligible for the tax breaks. The new law “allows reactors entering service after 31 December 2020 to qualify for the tax credits” and gives public power systems, which are tax free, the ability to sell their credits to other partners that are subject to federal taxes.
— Kennedy Maize
Kennedy:
I’m surprised that you let the statement from the Southern Environmental Law Center stand without either a contrasting statement or checking to see if the SELC’s statement is factually correct.
I’ve read the Echols motion that the GA PUC passed unanimously. It does not give Georgia Power a blank check. It puts tight limits on the liability that is being accepted by GA ratepayers and puts the majority of the remaining cost and schedule risk onto Georgia Power, its partners and its parent company.
There is no doubt that the project has not gone well so far, but the most costly thing that the players could do at this point is to quit. It is analogous to an inadequately prepared, but intellectually capable, student deciding to quit college the semester after having finally learned how to study and obtaining satisfactory grades that might even be approaching a solid B average.
Quitting doesn’t eliminate the previously accumulated debt obligations. Continuing may not guarantee success on schedule and on budget, but quitting comes close to guaranteeing that all of the previously completed hard work, expended money, and learning turns into complete waste with a crushing burden that doesn’t get any lighter for a long time.