Georgia Power customers will be paying nearly $9 a month in financing charges for the company’s planned nuclear expansion at Plant Vogtle by the time the two reactors start producing electricity.
Additional costs are looming: the actual price of construction and what it will take to keep the plant running.
Georgia Power is responsible for $6.1 billion of the estimated $14 billion nuclear expansion project. Of its part, $1.7 billion is financing costs. The $4.4 billion balance is operating and capital costs.
In 2016-2017, when the reactors start producing power and the operating and capital costs kick in, the company doesn’t expect a “significant change” to what customers will be paying each month, Georgia Power Comptroller Ann Daiss said. The reason: the financing costs they’re already paying — which started in January at $3.88 a month for a typical bill and will increase to $8.71 a month by 2015 — will be removed from bills when the reactors start operating.
The company would not estimate how the $4.4 billion in operating and capital costs would impact the monthly bills of Georgia Power’s 2.36 million residential and business customers.
Georgia Power will include the costs of the first reactor when it seeks a rate hike in 2013. It plans to ask to recover the costs of the second reactor later, Daiss said.
Pending Georgia Public Service Commission approval, the charges will show up on customer bills in 2016 and 2017.
The costs will be spread out over the term of the license that Georgia Power will have to operate the reactors. Daiss said that period is typically between 40 and 60 years.
Currently 104 nuclear reactors operate in the United States, but significant cost overruns have been a key reason none has been built in 30 years. The first two reactors at Plant Vogtle were estimated to take seven years and $660 million to build. The project took nine additional years and cost more than $8 billion.
Utility regulators are keeping a closer watch this time. Using Georgia Power’s money, the state PSC hired an independent construction monitor who files monthly progress reports. The PSC also reviews and signs off on project costs every six months.
“It’s always tough when you look at a big project because there’s a lot of risk for everybody in them,” said David Parker, an analyst with Robert W. Baird. “The days are gone where regulators just go, ‘OK, go ahead and come back 10 years later’ [with an amount]. Nobody is going to do that anymore.”
Georgia Power recently avoided a measure that would have required the utility to eat some of the costs if its portion of the project runs over budget by $300 million. But in exchange the PSC will be allowed to re-examine previously approved parts of the project if there is a budget increase. If regulators determine that Georgia Power’s mistake led to the cost overruns, consumers would not have to pay the additional costs.
“A lot of the problem with cost-control systems is they are looking backward and not forward. What you want to know is are there any problems looming on the horizon,” said Brian Bowen, a professor at Georgia Tech’s College of Architecture.
One way to control costs is through graphic modeling and design software used by the project’s structural engineers. The software, which is the de facto standard for civil engineers, helps have more cost-effective designs, said Leroy Emkin, co-founder of Georgia Tech’s Computer Aided Structural Engineering Center, where the software was developed.
Emkin said the software can help save money on material costs but warned that those are a small part of overall construction costs.
Increases in monthly bills
Customers pay a monthly fee for Vogtle’s financing costs. The additions are cumulative:
$3.88 in 2011
$1.45 in 2012
$1.50 in 2013
$1.22 in 2014
81 cents in 2015
