The first suggestion of a federal rescue for Plant Vogtle

To call it a spur-of-the-moment act would be wrong. “Impromptu” might be the better word.

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.

“My goal was to let him know that, just because the utility wants to finish the reactors, it doesn’t mean that they will. Because the public service commission has the final say on how much of the cost is passed onto the ratepayers,” Echols, a conservative Republican, said on Monday.

So we’re talking federal bailout? “I know that Rick Perry and Donald Trump have significant authority, particularly over how the federal loan guarantee is structured,” Echols said carefully. ”At this point, I’m open to seeing them do whatever they have to do in order to move the project forward and protect Georgia ratepayers.”

A federal solution, of course, would protect Georgia ratepayers, and utility stockholders. But not taxpayers.

Welcome to what may become the most volatile issue of the 2018 campaign for governor, lieutenant governor, Congress, the state Legislature, and perhaps dogcatcher. Two of five members of the state PSC are up for election, too. Curiously, Echols is not one of them.

The size of the debacle has yet to be determined. Westinghouse Electric Co., the mega-contractor that had been building the reactors for a utility consortium led by Georgia Power, declared bankruptcy in March. Georgia Power has taken control of the project, but a 30-day interim agreement twixt the utility and Westinghouse, keeping the project alive and thousands of workers on the site in paychecks, is set to expire Friday.

We’re told that the agreement is likely to be extended for a few more weeks. Ultimately, Westinghouse could abandon the project, or sharply curtail its role.

Yes, certain financial guarantees were agreed to last year by Toshiba, Westinghouse’s Japan-based parent company. But there is some doubt that Toshiba itself will be able to survive Westinghouse’s collapse.

Regardless, the overwhelming odds are that Georgia Power will soon go before the five members of the PSC with a “cost to complete” report, with itself as the new chief contractor. And the utility commission will have to determine whether to fish or cut bait on those two nuclear reactors.

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.

That’s because, back in 2009, the Legislature passed a bill to allow Georgia Power to pass financing costs for the two new nuclear units on to ratepayers starting in 2011 – with the promise that the reactors would be generating electricity in 2017. Think about that: You’re a homeowner who, upon the say-so of a Legislature and governor (Sonny Perdue), has had to pay extra for the last six years for a service you now may never see.

This is why God made political TV ads.

One of the biggest backers of Senate Bill 31 was Lt. Gov. Casey Cagle, who has already filed his paperwork for a 2018 run for governor. But others will have music to face, too.

“It will be the most difficult issue I’ve ever dealt with on the Public Service Commission,” said Chuck Eaton, one of two commissioners up for re-election next year. The low cost of natural gas has driven out coal as a fuel source, and now threatens nuclear power, he said.

“Solar and wind have gained efficiency, but I don’t think there’s anybody who thinks that our entire grid can be placed on the backs of those two sources,” Eaton said.

Stan Wise, chairman of the PSC, will also be running for re-election next year. He, too, favors completion of the nuclear reactor – but not at any price. He referred to Echol’s missive to Perry – which he didn’t know about and still hasn’t seen – as “premature.”

But Wise also said this: “We didn’t think we’d be the test case for the next generation of nuclear reactors.”

That’s an observation that could fit within an argument for federal assistance. What many thought could be a nuclear renaissance is winking out in the United States. If Westinghouse projects at Plant Vogtle and in South Carolina are shut down, no more new U.S. ventures stand waiting. The movement that some pitched as an alternative to coal will be over.

Trump’s emphasis on reinvigorating the coal industry hasn’t done nuclear power any favors. If global warming isn’t a thing, then renewed and heavy investment in nuclear technology makes no sense.

But if Plant Vogtle becomes a vehicle for the preservation of nuclear technology in the United States, that could also become a national security argument for federal assistance.

The Plant Vogtle project was backed by $8.3 billion in loan guarantees from the U.S. Department of Energy – during the Obama administration. Two days before Echols left for Dallas to track down Perry, the Congressional Research Service noted that those loan guarantees came with this price: “If the Vogtle project is terminated, the borrowers must repay the entire outstanding loan amount in five years.”

But the CRS also said that the secretary of energy has the power “to modify the loan agreement terms and take other steps upon a default.” Which is an excellent reason for going to Dallas.

“As the Trump administration evaluates its America First policy, and if Toshiba fails, and we’re looking at some massive amount of money to complete the project,” Echols said, “I could see the president stepping in to ensure that the project is finished. But not at our ratepayers’ expense.”

But at somebody’s expense.

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About the Author

Jim Galloway
Jim Galloway
Jim Galloway is a three-decade veteran of The Atlanta Journal-Constitution who writes the Political Insider blog and column.