On Thursday, the state Public Service Commission will make what could be its most important decision in a generation on how energy is generated in Georgia, with implications for consumers, businesses and the field of nuclear power technology in this country.
The PSC will be asked to ratify Georgia Power’s decision to continue construction of two new nuclear reactors at Plant Vogtle in east Georgia. The project has been brought to near-collapse by the bankruptcy of Westinghouse Electric, which had been in charge of construction.
The original schedule has become a work of high fiction. The project is years behind schedule and billions over budget. Ratepayers have already paid billions of dollars in advance for what is now the only remaining new nuclear power project in the U.S.
Consumers could be asked to pay billions more. Again, in advance, before the first kilowatt is generated.
All five members of the PSC are Republican. Politically, the vote is a hazardous one. Two members are up for re-election in 2018. Chairman Stan Wise has announced he’ll resign after the Plant Vogtle vote, allowing Gov. Nathan Deal to name someone to fill out the remaining months of his term — someone unsullied by the current debate.
Chuck Eaton, the other PSC member up for re-election, has already drawn two Democratic opponents.
And so it has fallen to Tim Echols of Athens, a third member of the PSC safely re-elected in 2016, to search for the path forward. Officially, Echols has not decided which way he’ll vote. But read between the many lines he has uttered over the past several days and it becomes clear that Echols will be the fulcrum in any balancing act that plays out in the next 24 hours.
On Monday morning, Echols was on WGAU (1340AM) in Athens describing the horns of the dilemma. "The amount of money that we're being asked to give them in the new schedule is — for Georgia Power's piece — is going to be about $10.5 billion. And our staff says the break-even point on the plant is $9 billion," Echols said.
The bottom line: “This is the first decision we have to make, on whether we knowingly push the plant into uneconomic territory,” he said.
Echols will be on GPB's "Political Rewind" (88.5 FM in Atlanta) at 2 p.m. today. In between he has fielded calls from homeowners and businesses. He's received about 400 emails in the past two weeks on the topic. Sixty percent want the over-budget nuclear project shut down.
I had 10 minutes of Echols’ time on Tuesday morning. Politicians love win-win scenarios. This isn’t one of them. In fact, Echols said, this is lose-lose. The choice is about what would hurt the least.
“Either way, ratepayers are going to be on the hook for an increase in rates. If we cancel the units, then we’re going to have about a 6 percent rate increase,” Echols said. That would be for Georgia Power’s lost investment if the PSC judges that expenditure to be “prudent.”
“And if we move forward, we’re going to have about a 10 percent rate increase — assuming we can keep it on track from this point forward,” he said. That’s a 5 percent rate increase ratepayers are already picking up to help with financing the project, plus another 5 percent that would represent the increased cost of the project, about $10.5 billion.
I was puzzled because I had long considered a 6 percent increase in my power bill preferable to a 10 percent increase.
Echols explained that the lower figure buys abandonment.
“With the 6 percent, you’re going to get nothing. You’re going to have rebar rusting until Jesus comes,” he said. “With the 10 percent, you’ll have the premier nuclear plant in the United States, with the president of the United States probably flying down to Augusta on Air Force One cutting the ribbon.”
Given that Georgia is a red state, a ribbon-cutting that featured Donald Trump would represent no political hazard. But it’s also not a reason to make an energy decision that carries a risk higher than many find comfortable.
Two factors appear to be pushing Echols toward continued construction at Plant Vogtle. First, there are the 6,000 employees currently on site.
“If you cancel those 6,000 jobs, it’s like pulling $150 million in annual payroll from that regional economy,” Echols told WGAU radio host Tim Bryant on Monday. “When we canceled the coal plant just down the road from here on (U.S.) 441 at Lake Sinclair, we saw the impact that it had on the Putnam County Board of Education in Eatonton, Ga. It wiped out a third of their tax base.”
And then there’s the example of what happened when South Carolina pulled the plug on the V.C. Summer Nuclear Station, a twin to the new construction at Plant Vogtle — down to the Westinghouse contractor. Never mind the state and federal criminal investigations. Which, one hopes, wouldn’t be replicated here. The political recriminations over a lost $9 billion bet have been brutal.
“The governor’s chopping heads off over there,” Echols said over the radio.
“It is frightening to think about the political ramifications of canceling this plan,” Echols said to me over the phone.
“Sunk costs” in the Plant Vogtle project aren’t just financial. In 2018, not a few statewide candidates — and many running for re-election in the Legislature — would be required to explain a 2009 vote that allowed Georgia Power to ding ratepayers in advance to offset the financing costs for the reactors.
(Echols, by the way, was first elected to the PSC in 2010. He says he opposed the advance payments by ratepayers.)
So how is this likely to end on Thursday? Echols has a number in mind: $1.7 billion.
That's the "haircut" he would like to see Georgia Power accept on its revenue requirements — earnings that it would like to pass on to shareholders.
In other words, everyone at tomorrow’s PSC hearing should be limping when they leave. Everyone. Otherwise, it might be worth investing in a salvage company.
“At the site, they would salvage any metal they could get out and sell it to the scrap man,” Echols had said Monday. “And maybe some of the parts that have been put on could be pulled off and sold to other countries like China and Russia. Maybe we sell them for 10 cents on the dollar — a nickel on the dollar.”
Unless Jesus arrives earlier than expected.
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