The troubled Vogtle nuclear power construction project in Georgia, facing massive cost overruns and years behind schedule, may have survived another existential threat. But it may not. The outcome is still in doubt.
Today, one major public power partner unanimously agreed to continue with the staggering nuclear project, but another major public power player offered only conditional support for the project, calling for a hard cap on future costs.
Under the terms of the most recent agreement among the Vogtle partners, 90% of the controlling interests must agree to keep the work going, now perhaps 50% complete.
Southern Co. subsidiary Georgia Power, the lead on the two-unit, 2,200-MW reactor project and the licensee for two existing units at the site, has pledged to continue the project, with the support of the state Public Service Commission. The investor-owned utility said its shareholders will eat a major portion of the latest over $3 billion in cost overruns at the job. But Southern only owns 47.5% of the project. Three public power systems own the rest: Oglethorpe 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%).
MEAG in the early afternoon said its board had voted unanimously to continue the project. But late in the day, around 7:30 PM Eastern time, Oglethorpe laid down conditions for continued support. In a press release, Mike Smith, Oglethorpe CEO, said, “We are hopeful that the Southern Company will agree with a proposal to protect our rural energy consumers in Georgia who should not be responsible for excessive future increases in the costs of this project.”
Smith said that “capping our costs, and by extension the costs borne by our [electric membership cooperative] members, is a reasonable request and a prudent business decision that would allow the project to move forward.”
Oglethorpe’s action came after 20 Georgia state legislators, Republicans all, last Wednesday sent a letter to the Vogtle partners, expressing concern about the impact of the Vogtle costs on the captive customers of the rural electric cooperatives and municipal systems.
The letter expressed concern about the impact of the Southern Co.’s decision to load cost overruns onto its shareholders. “This puts a disproportionate cost burden on [electric membership cooperative members] and city utility customers – our local utilities don’t have the luxury of shareholders to absorb these additional costs and will have to increase rates even higher. This approach is unfair and anti-competitive.” They called for a cost cap on Vogtle.
The public power customers are on the hook for their systems’ full share of the cost of the project, now north of $27 billion, or nearly twice the original estimates for the plant. One of MEAG’s major customers is Jacksonville, Fla., where its JEA municipal utility has a 20-year power purchase agreement to buy Vogtle power. JEA says the cost of that power is about $2.5 billion above what it would have to pay on the open market if it didn’t have to buy the nuclear energy.
JEA has sued in Florida state court to try to get the power purchase agreement voided. MEAG has sued in federal court to counter JEA’s litigation. Last Friday, the U.S. Department of Energy weighed in on the tag-team match. The project has an $8 billion loan from DOE, over $5 billion of which has been drawn down. The loan is euphemistically billed as a “loan guarantee,” but that’s political fiction. It is a direct loan from the Treasury and taxpayer money is entirely at risk.
DOE’s loan office informed the Vogtle consortium that, should the vote go against the project, the feds would call in the loan, seeking rapid repayment. DOE said the government is “prepared to move swiftly to fully enforce its rights under terms of the loan guarantee agreements, including the repayment provisions.” So much for that “guarantee.”
A “senior DOE official” told Politico, “We were concerned with the lawsuits. We were concerned with Jacksonville’s efforts to get out of its PPA agreement.”
DOE said that Vogtle represents “a linchpin in the all-of-the-above energy strategy required to sustain our nation’s economic strength and energy independence.” The threat from Washington no doubt sent chills down the respective spines of the project partners. It could threaten the existence of the three public power systems and possibly put Georgia Power in bankruptcy reorganization.
Among the signers of the letter from the General Assembly members were House Speaker Pro Tem Jan Jones and Senate President Pro Tem Butch Miller. Republican Gov. Nathan Deal has been strongly behind the project, as has the elected Georgia Public Service Commission.
— Kennedy Maize