GEORGIA, USA
Nuclear plant price doubles to $28.5B as other owners balk
By JEFF AMY Associated Press
ATLANTA (AP) — The cost of two nuclear reactors being built in Georgia is now $28.5 billion, more than twice the original price tag, and the other owners of Plant Vogtle argue Georgia Power Co. has triggered an agreement requiring Georgia Power to shoulder a larger share of the financial burden.
Atlanta-based Southern Co. announced in its quarterly earnings statement Thursday that Georgia Power’s share of the third and fourth nuclear reactors at Plant Vogtle has risen to a total of $12.7 billion, an increase of $264 million. Along with what cooperatives and municipal utilities project, the total cost of Vogtle has now more than doubled the original projection of $14 billion.
Opponents have long warned that overruns would be sky-high. Liz Coyle, executive director of consumer advocacy group Georgia Watch, said the price tag is “outrageous” but predictable.
“We said you can’t build it for what you’re saying you can,” she said of Georgia Watch’s opposition to the project when the Georgia Public Service Commission originally authorized the new reactors.
Total costs are actually higher than $28.5 billion, because that doesn’t count the $3.68 billion that contractor Westinghouse paid back to owners after going bankrupt. When approved in 2012, the first electricity was supposed to be generated in 2016.
The company and regulators insist the first new U.S. reactors in decades are the best source of clean and reliable energy for Georgia. Opponents say other options would be cheaper and better, including natural gas or solar generation.
Southern Co. also disclosed Thursday that the other owners of Vogtle are saying Georgia Power has tripped an agreement to pay a larger share of the ongoing overruns, a cost the company estimates at up to $350 million. Southern Co. said it disagrees that Georgia Power has crossed the cost threshold but has signed an agreement to extend talks with the other owners on the issue.
Georgia Power owns 45.7% of the new reactors, while cooperative-owned Oglethorpe Power Corp. owns 30%. The Municipal Electric Authority of Georgia owns 22.7% and the city of Dalton’s municipal utility owns 1.6%. Florida’s Jacksonville Electric Authority is obligated to cover some of MEAG’s costs. Some cooperatives and municipal utilities in Alabama and northwest Florida have agreed to buy power as well.
The higher costs stem from more construction delays. Georgia Power announced last month that it doesn’t expect Unit 3 to start generating electricity until the third quarter of 2022. It was the third delay announced since May. Unit 4 is now projected to enter service sometime between April and June of 2023.
The company says it is redoing substandard construction work and contractors aren’t meeting deadlines. Experts hired by the Georgia Public Service Commission to monitor construction have long said Southern Co. has set an unrealistic schedule. In August, the U.S. Nuclear Regulatory Commission found two sets of electrical cables meant to provide redundancy in Unit 3 weren’t properly separated. Earlier, Georgia Power had to repair a leak in Unit 3′s spent fuel pool.
Georgia Power shareholders have been paying the cost of recent overruns, but the company could ask regulators to require customers to pay some or all of those bills.
Other owners almost walked away in 2018, only agreeing to keep going after Georgia Power agreed to protect them from some additional overruns.
The Thursday stock filing indicates the other owners now believe the cost threshold has been reached requiring Georgia Power to pay a larger share of the project.
Southern Co. told investors that Georgia Power disagrees that it has reached the threshold, but said the owners had signed an agreement Oct. 29 to “clarify” how the 2018 deal will work.
Beyond a certain point, Georgia Power is required to pay an additional $80 million of the next $800 million. After that tier, Georgia Power is required to pay an additional $100 million of the next $500 million. Above that price, other owners can sell parts of their ownership shares back to Georgia Power.
The $350 million price tag suggests the other owners argue overruns have reached the third tier.
It wasn’t immediately clear Thursday exactly what is being negotiated or when an agreement might be reached. Georgia Power spokesperson Jeffrey Wilson acknowledged the disagreement, saying “all parties are working constructively” to resolve differences. He answered no questions. Oglethorpe spokesperson Terri Statham declined comment, saying Oglethorpe would provide an update in a Nov. 12 investor filing. MEAG didn’t respond to emails and calls seeking comment.
The Georgia Public Service Commission on Tuesday approved a $224 million rate increase to pay for $2.1 billion in construction costs on Unit 3. That’s a 3% rate increase for residential customers, or $3.78 a month on a bill of $122.73. It will take effect after Unit 3 enters commercial operation.
Georgia Power’s 2.6 million customers have already paid more than $3.5 billion in Vogtle borrowing costs. Customers of Oglethorpe-served cooperatives have already paid almost $400 million, according to financial statements.
Vogtle nuclear expansion facing yet another delay, Georgia Power reports
Georgia Power has pushed back the in-service dates for its troubled Vogtle Units 3 and 4 expansion project—the first new nuclear power plant construction to be completed in years—by maybe another quarter or more.
The utility originally had hoped to make Unit 3 commercial operational by this year, but numerous cost overruns and construction problems have caused more delays. Now, Southern Co.-owned Georgia Power says Unit 3 may not start operations until July and maybe as late as September 2022, while Unit 4 will not come online until the second quarter of 2023.
“The primary drivers of the change in schedule for Unit 3 include continued identification of additional remediation work, construction productivity related to completion of remaining electrical installations and remediation work, and the subsequent resulting pace of system turnovers,” reads the company press release. “The primary drivers of the change in schedule for Unit 4 include productivity challenges and some craft and support resources being diverted temporarily to support construction efforts on Unit 3.
“The achievability of these projected in-service dates is subject to current and future challenges, including construction productivity, the volume of construction remediation work, the pace of system and area turnovers, and the progression of startup and other testing. Any further delays could result in later in-service dates.”
This summer, Georgia Power reported that both the projected starting dates would be pushed back and costs would rise by billions. Recent estimates put the overall tab of the project at close to $28 billion.
Work on Vogtle units 3 and 4 began in 2015. Two years later, the original contractor Westinghouse filed for Chapter 11 bankruptcy reorganization, so Bechtel was brought in to lead construction efforts to the finish line. Southern Nuclear took oversight duties from Westinghouse.
Both Vogtle units will have Westinghouse AP1000 reactors at the center. Each of the units are designed to generate about 1,000 MW at capacity and together will power close to 500,000 customers.
Unit 3 direct construction is now 99 percent complete, with the entire project at about 93 percent complete. The construction site now has close to 7,000 workers, with about 800 permanent jobs planned once the units begin operating.
Earlier this year, the U.S. Nuclear Regulatory Commission revealed it was launching a special inspection into remediation work on Unit 3 related to the electrical cable raceway system.
If and when they go into service, Vogtle units 3 and 4 would be the first new U.S. nuclear generation reactors since Watts Bar 2 entered operation six years ago.
Georgia Power’s lead partners on the project include the Municipal Electric Authority of Georgia (MEAG), Dalton Power and Oglethorpe Power. Southern Co. is the parent of Georgia Power.
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