If you read today's print column, you know that a federal rescue has now become part of the discussion about how – or whether – to salvage those two new nuclear reactors being built at Plant Vogtle. This was the lede:
Tim Echols, a member of the state Public Service Commission, knew that last Friday, newly installed Energy Secretary Rick Perry would be the featured speaker at an Earth Day luncheon in Dallas.
Echols quickly booked a flight from Atlanta, wangled a seat at the table next to the former Texas governor, and crossed his fingers for an opportunity to get a brief word with the man. But even that required a Plan B.
"He came in late. I was sitting at the table next to him. I shook his hand, and handed him the letter," Echols said. In that letter, the PSC member from Georgia — acting on his own — suggested that federal assistance might be required to complete two new nuclear reactors at Georgia Power's Plant Vogtle.
But Tom Bond, the PSC’s director of utilities, focused on these two paragraphs:
If their answer is "fish," then the PSC will have to determine how much of the additional cost should be paid by ratepayers. It will be a contentious debate that's likely to linger through next year's campaigning.
In a note forwarded to us this morning, Bond writes that, regardless of the Westinghouse bankruptcy, the PSC isn’t obliged to renegotiate the deal it has already cut with Georgia Power. It can if it chooses -- but it doesn't have to.
The commission could stand pat, and let Georgia Power and its other utility partners absorb the added costs. His note:
The Company is required to keep the Commission informed as to the forecasted schedule and cost to complete. But, the Company has no right to demand that the Commission pre-approve costs or increase the certified amount. They gave up that right in the VCM 8 Stipulation in exchange for Staff not pursuing $100s of millions in disallowances at that time. The Prudency Review Stipulation cemented this framework. The entire stipulation is premised upon the fact that Staff did not believe the Company's cost and schedule forecasts.
Under the Prudency Review Framework, there are two types of ratepayer protections. First, there are automatic provisions that kick in if the costs and schedules that the Company promised this fall are not met. These provisions, while not enough by themselves to keep the project economic on a cost to complete basis, will still prove critical in the event of a large increase in cost and schedule. For example, if capital costs were to increase $2b and the schedule were delayed 36 months, ratepayers would pay almost $800 million less with these provisions than without them.
Second, there are provisions that authorize additional pro-active disallowances by the Commission. Significantly, the Prudency Review Stipulation already has decided that the Company will retain the burden of proof on reasonableness and prudency on all capital costs over $5.6b. This is a huge ratepayer benefit that should not be tossed away simply because Staff was right and the Company was wrong about the cost and schedule. And the Company does not get to cancel the project and make ratepayers reimburse it for the costs simply because it is now concerned that it will not be able to meet its agreed upon burden of proof.
About the Author
