On Friday, Georgia Power announced that a new nuclear reactor at Plant Vogtle is on its way to becoming fully operational in the coming months, news that comes several days before the utility faces another showdown over the project’s ballooning costs brought on by years of delays.
Georgia Power announced on Friday that the Waynesboro’s nuclear energy facility operators, Southern Nuclear, has turned over to the Nuclear Regulatory Commission the 364 inspections, tests and analyses required for regulatory approval to assure that Vogtle’s final reactor meets strict nuclear safety and quality standards prior to completion. The development comes just weeks after Georgia Power revealed that Vogtle’s third reactor unit was delayed for another month before becoming the first new reactor to produce electricity in the country in 40 years when it came online in July.
Georgia Power is awaiting the nuclear commission’s formal approval to start loading fuel into Unit 4, which is expected to be completed by this fall or early 2024. It is the last planned expansion of the nuclear plant started in the late 1980s with the completion of two reactors.
“The new Vogtle units are an essential part of Georgia Power’s commitment to delivering clean, safe, reliable and affordable energy to its 2.7 million customers,” the utility company said in a press release. “Once operating, each of the new units can produce enough electricity to power an estimated 500,000 homes and businesses.”
The latest setback to Vogtle’s Unit 3 was caused by a malfunction of the hydrogen system that supports the generator that converts the turbine’s mechanical power into electricity. It was just another of many delays stemming from the early project’s stages when its contractor Westinghouse Electric declared bankruptcy, to technical and regulatory problems throughout construction as well as periodic worker shortages during the pandemic.
On Thursday, Georgia’s Public Service Commission is scheduled to hold another hearing to review the progress of a project with costs that have more than doubled to north of $31 billion after taking seven years longer to complete than projected. A number of utilities analysts and consumer and clean energy groups have expressed concern about how much more ratepayers will have to pay for a project that its supporters argue will provide a reliable, cleaner source of energy for decades to come.
The state regulatory agency’s Director of Utility Finance Tom Newsome and utility analysts predict that the power plants’ skyrocketing expenses will cancel out the cost-savings of the nuclear expansion over its expected life cycle.
Steven Prenovitz, a consultant working with consumer advocate Concerned Ratepayers of Georgia, argues that Georgia Power does not have enough incentives to control construction costs. Favorable state laws allow utilities to collect costs while construction is underway, as well as recover environmental and fuel costs, he said in testimony filed ahead of Thursday’s hearing.
“Nuclear construction costs were not, and are not, controllable which is why there had not been any new construction projects for 20 years,” Prenovitz said. “This lesson was slowly learned by the industry, with one exception– Georgia Power and their regulators.”
In Georgia Power’s latest Vogtle filings, the state’s largest electricity generator cites total construction and capital costs of $11.6 billion and another $3.5 billion in financing costs as part of its 46% ownership share of the project. The other co-owners are Oglethorpe Power Corp. with 30% and the Municipal Electric Authority of Georgia with about 20%. Dalton Electric will own less than 2% of the nuclear expansion.
Newsome and utility analysts are estimating that a typical residential customer will have paid $926 for Vogtle by the time the expansion is completed.
During the fall, state regulators are expected to hold hearings to determine how Vogtle’s cost overruns will be split between ratepayers and shareholders. Georgia Power officials have recently expressed uncertainty about how much the company expects to recover above the $7.3 billion threshold approved in a 2017 settlement agreement with state regulators.
“The company is not requesting commission approval of the $2 billion of contingency allocated to construction cost categories in this filing but may request that the commission evaluate expenditures allocated to contingency for rate recovery as and when appropriate,” Georgia Power states in its 28th Vogtle monitoring report.
The PSC utility finance director and Roswell consultants Philip Hayet and Lane Kollen also accused the company of grossly underestimating the costs of the two reactors over a period of 13 years. Newsome recommends that state regulators consider whether the company has fully demonstrated reasonable capital costs for the power plant located southeast of Augusta.
“The company has consistently reserved the right to seek recovery of the entirety of costs incurred, beyond a $0.6 billion that it has agreed to pass on to shareholders,” the PSC utility analysts say in written testimony.
