Attorney General: Customers must pay Plant Vogtle charges up front

One of the Plant Vogtle reactors under construction. Photo: Georgia Power

One of the Plant Vogtle reactors under construction. Photo: Georgia Power

Customers must keep paying a financing surcharge for the troubled Plant Vogtle nuclear project, according to the Georgia Attorney General’s office.

Georgia Power has collected more than $2 billion in such finance charges from customers since 2011, according to Bobby Baker, a former state utility regulator and Atlanta attorney.

Because of a 2009 state law enacted just after the Vogtle project was authorized, “Georgia Power cannot voluntarily agree” to suspend the surcharges, Senior Assistant Attorney General Daniel Walsh said Wednesday in a letter to state utility regulators.

Atlanta-based Georgia Power, the largest partner in the project, previously said it has no intention to agree to stop collecting the surcharge, which adds roughly $100 a year to the typical residential customer’s bill.

However, the surcharge can apparently be adjusted or frozen at a reduced level.

Georgia Power agreed to cap the surcharge last year in a settlement with the Georgia Public Service Commission.

Under that Oct. 20 settlement, the amount of Vogtle construction costs the finance charge is based upon was capped at $4.4 billion until the project is completed, in effect freezing the amount Georgia Power can collect each year in finance charges.

Georgia Power spokesman Jacob Hawkins said state law requires the company to collect the surcharge, but he declined to answer a question about whether the law allows it to reduce the surcharge. Hawkins said the surcharge "saves customers hundreds of millions of dollars by reducing financing and borrowing costs."

The opinion from the Attorney General’s office does not appear to address whether the surcharge can be reduced.

Lauren "Bubba" McDonald, on the Georgia Public Service Commission's five-member board, raised the surcharge issue last month when he proposed that the PSC ask the Atlanta utility to quit collecting the financing charge.

The late-March bankruptcy of Westinghouse Electric, a key contractor on the Plant Vogtle expansion, has raised questions about the viability of the project to build two new reactors at the nuclear plant near Augusta. The project, about a third built, is more than three years behind schedule and over $3 billion over budget.

Given the uncertainty, McDonald said Georgia Power should be asked to suspend collection of the surcharge. The other PSC commissioners instead decided to ask the Attorney General's office if such a move was legally possible.

In his letter to the PSC, Walsh said the 2009 state law unambiguously stated that the surcharge “shall” be collected — meaning it is mandatory — based on the project’s ongoing construction costs, starting in 2011.

Under heavy lobbying from Georgia Power, state lawmakers passed the Nuclear Energy Financing Act in 2009, shortly after the Vogtle project was approved from the PSC.

Typically, utilities begin recovering the costs of big power plant projects from utility customers after the projects are completed and state regulators have determined which project costs are “prudent.”

This traditional approach “avoids having current ratepayers subsidize future ratepayers” who actually benefit from the long-lived nuclear plant, said Walsh in his opinion. But paying finance charges up-front “may assist in preventing any rate shock” after the project is completed, he added.

Under the 2009 law, customers are paying about $414 million this year in financing charges for the Vogtle expansion, according to Baker, the former PSC commissioner.

Through the end of 2016, customers had paid just under $2 billion in such charges, he said. The cumulative total will reach almost $2.38 billion this year, he said.