Co-owners of the plant voted Wednesday to continue its expansion, but did little to address the fundamentals of the Vogtle’s troubles.
The owners ditched a proposal for a firm cost cap on the now $27-billion-plus project and avoided addressing calls by state lawmakers to refrain from passing new cost increases along to customers. Meanwhile, electric membership cooperatives and city utilities around the state lost some of their say over whether the project continues in the future.
Georgia Power blasted the idea of a firm cost cap, but agreed to take on a greater share of costs in the event of certain big overruns. The size of the risk shift was limited — if there are $2.1 billion in cost increases, the company would face an extra $180 million penalty, “peanuts in this context,” said one critic.
Georgia Power, the state’s largest utility, was given carte blanche to drop out of the project at its sole discretion.
Morgan Stanley analysts predict a “very good chance” that Vogtle costs could jump more than another $2.1 billion.
“We think there is a significant level of uncertainty around the budget and see a very high likelihood of continued cost overruns,” the analysts wrote.
Add that to the existing pile. Nine years into construction, the Vogtle expansion is billions of dollars over budget, years behind schedule and at least four years away from completion.
Cost projections and assurances from Georgia Power have been consistently wrong.
Then a bankruptcy filing last year by the project's main contractor, Westinghouse Electric, eliminated a contract that had buffered Vogtle owners from many extra costs. But the costs still continue to rise.
When Georgia Power recently announced $2.3 billion in new increases, it automatically triggered a vote by the co-owners on whether to stick with the project.
Georgia Power, the Municipal Electric Authority of Georgia and Dalton Utilities all gave approval. But Oglethorpe Power, which represents electric membership corporations throughout the state, insisted on a cost cap. It also asked that shareholders of Georgia Power’s parent, Southern Company, eventually cover additional cost increases. (Another Southern subsidiary is overseeing the construction.)
Bitter disagreements among the project's co-owners bubbled out into the public. It kicked off brinkmanship negotiations over whether and how the project would continue.
The core issue is one that has haunted Vogtle for years: Who should shoulder its ever-ballooning costs?
“We never signed up for a project where we would just be a blank checkbook for Southern Company or anybody else in this project,” said Gary Miller, the chief executive of GreyStone Power Corporation, which serves portions of Fulton, Cobb, Douglas and other counties. “We never said, ‘Build it no matter what the cost.’ ”
Miller said a new agreement worked out by owners is positive. Among the benefits: a condition that consulting and auditing firm KPMG watchdog the project and regularly report to all the owners.
“Our ratepayers today are better off today than they were before this deal,” Miller said.
Chip Jakins, the chief executive of Jackson EMC, came to the same conclusion for his customers northeast of Atlanta. He cited an option for co-owners to eventually freeze their risk in the project if they give up some ownership, which he contends is a cost cap. Either way, he’s hoping Georgia Power won’t let costs go higher.
“I like to believe no more cost increases are in our future,” he said.
Georgia Power said its chief executive Paul Bowers would not be available for an interview.
There’s been intense political pressure to continue the work. If the project were to be canceled, its costs likely would end up in customer bills without any energy generation to show for it. Some Jackson EMC members consider that wasteful; others want to stop the bleed.
Proponents laud Vogtle as a way to diversify Georgia’s energy mix for decades to come, provide balance against natural gas expenses eventually rising and lock in more power that doesn’t emit carbon blamed for climate change.
Critics point out the repeated cost increases. They say the power isn’t needed and that there are far less expensive and better options for filling Georgia’s energy needs.
“Georgia Power’s refusal to accept any cap — even a generous one — on Plant Vogtle should alarm nearly every Georgian who pays an electric bill,” wrote attorney Kurt Ebersbach of the Southern Environmental Law Center. “Georgia Power clearly has no faith in its ability to finish this plant without more billion-dollar surprises.”
Vogtle is sure to be an issue in November's election to fill two seats on the Georgia Public Service Commission, which has supported the project and will decide how much of Georgia Power's costs can be passed on to the company's customers.
Gregory Carswell is a pastor and mayor of Waynesboro, Ga., a town of about 6,000 people on the edge of the Vogtle project south of Augusta.
He supports the work and believes it will be worth the pain. He said he’s already seen its economic benefits to locals. But Carswell also said he understands frustrations with the project’s continuing troubles.
“It seems like every time you get going, something else comes up,” he said.
“Will there be anything else? I couldn’t say. We can only just keep going and follow the road.”
WHAT IT MEANS FOR YOU
Nearly every Georgian who pays an electric bill has a stake in this week’s decision.
There is likely to be pressure to pass along to customers the growing construction costs for the nuclear expansion underway at Plant Vogtle.
In 2009, Vogtle was expected to cost $14 billion and be finished in 2017. Now, the project isn’t expected to be completed until late 2022 — at a cost of more than $27 billion.
Vogtle 3 and 4 Timeline
2006: Georgia Power seeks permission from the Public Service Commission to bill customers for planning and licensing costs for Vogtle 3 and 4.
2009: PSC approves Georgia Power's request to begin construction on the reactors. Lawmakers allow Georgia Power to pass on financing costs to customers before the project is completed. The project is to be finished in 2017.
2015: Georgia Power and plant construction contractors sue each other over delays that add more than $3 billion to project and three years to the completion date.
December 2016: In a settlement with regulators, Georgia Power agrees to controls on the project's costs and to penalties if the project isn't completed by the end of 2020.
February 2017: Toshiba — the parent company for Westinghouse, which is the project manager for Vogtle — reveals a $6 billion loss on its U.S. nuclear projects, including Vogtle.
March 2017: Westinghouse files for Chapter 11 bankruptcy protection.
June 2017: Following Westinghouse's exit, Southern Nuclear takes over as lead project manager.
July 2017: Plug is pulled on a South Carolina nuclear project that is Vogtle's near twin.
August 2017: Southern Company, Georgia Power's parent, discloses project delays and costs estimated to be more than $25 billion.
December 2017: Analysts appointed by the Georgia Public Service Commission conclude Georgia Power failed to manage the project in a "reasonable manner."
December 2017: PSC approves Georgia Power request to keep Vogtle nuclear construction going. Approves new $7.3 billion in Georgia Power's portion of capital costs.
August 2018: Georgia Power announces another $2.3 billion increase in Vogtle's costs. Southern Company to cover at least $700 million of Georgia Power's portion of $1.1 billion.
September 2018: All Vogtle co-owners vote to continue construction but with new conditions.