Kempner: A $5.2 billion reason Georgia politicians should listen now

Power company executives spoke during a recent Georgia Public Service Commission hearing, urging continuation of Georgia Power’s nuclear expansion at Plant Vogtle. Photo courtesy of Bill Edge at PSC.

Power company executives spoke during a recent Georgia Public Service Commission hearing, urging continuation of Georgia Power’s nuclear expansion at Plant Vogtle. Photo courtesy of Bill Edge at PSC.

This one should be hard for Georgia Power to squirm out of. Unless elected state leaders willfully close their ears, as they’ve done in the past.

Experts for the state just filed written testimony that amounts to 140 pages of incriminations against Georgia Power and its contractor over the nuclear expansion of Plant Vogtle. The experts' conclusion: massive costs on Vogtle are unreasonable and shouldn't be dumped into your power bills.

My translation: the emperor of electricity has no clothes.

Extra profit for mistakes

Eight years ago, some of the same experts recommended risk-sharing steps that could have protected Georgia consumers.

At the time, they warned that without the mechanism, Georgia Power would have no incentive to properly estimate and control costs. “In fact, the company would have disincentive to do so,” one state attorney said.

Instead, elected members of the Georgia Public Service Commission covered their ears, and Vogtle turned into a financial debacle with huge cost overruns and years of delays on a project that is still far from complete.

This time, will PSC members listen to their own experts?

You should encourage them. (See the bottom of this column for how you can do that.)

Otherwise, you and other Georgians will pay out at least $14 billion more than expected in Georgia Power bills in coming years.

And Georgia Power? It will devour an extra $5.2 billion in profit over time, specifically because of the overruns, according to new testimony from the state’s own experts. That’s on top of $7.4 billion in profits Georgia Power (and its parent Southern Company) were already set to make on the project if they had finished it on time and on budget.

Failure = More profits?

Bizarro World

That could only happen in the Bizarro World that Georgia Power is pushing for. It’s a government-protected monopoly, and most people who buy electricity in its territory are allowed to purchase only from the company.

Where is our state’s financially conservative leadership?

Why are you — Gov. Nathan Deal and some state legislators — saying pretty things about the project and apparently not a word publicly about how troubling it is that a for-profit business is using the government to force regular Georgians, business owners, schools and others to shell out more for Georgia Power profits because the company screwed up?

The governor instead highlights jobs tied to the project (including construction work that was supposed to last no more than eight years but now is likely to go at least five-and-a-half years longer, if you believe Georgia Power's latest estimate). Deal also has cited the expansion's potential to provide additional electricity to support Georgia's growth.

I like growth, too, but not at unlimited cost. The state’s own experts have concluded there are less expensive ways to generate power.

A material omission?

The testimony of six state-assigned independent experts concluded that the company is attempting to dump billions of dollars in unreasonable costs on its customers.

These aren’t anti-nuke knee jerkers. Several have been involved in or around the energy industry for most of their careers. They include PSC staffers, an independent construction monitor and financial analysts.

They rattled off three main causes for Vogtle’s costly delays: it never had a realistic, sufficiently detailed project schedule; the parties from the very beginning were not prepared to adhere to strict federal nuclear quality assurance standards; and Westinghouse (Georgia Power’s chosen contractor) didn’t have sufficient designs completed even as much of the plant was being built.

The result? Lots of notices of violations from federal regulators, poor quality workmanship and inadequate documentation on some of the construction, and “many thousands” of design changes including many for original designs that were “not constructible or otherwise deficient.”

The company testified before the project began that it would be an “active manager” of the Vogtle expansion. But the state’s experts now say that testimony “may constitute a material omission of fact or a misrepresentation.”

Commonsense advice

The state’s witnesses are recommending — nearly pleading — with Georgia PSC members not to agree with most of Georgia Power’s proposed conditions for continuing the project.

Instead the staffers and analysts called for protections for people who pay electric bills in Georgia. Their suggestions seem like commonsense:

  • Don't pay more for the project than it would cost to halt it and build something else instead.
  • Allocate an appropriate level of risk between the company and its customers.
  • Don't approve unreasonable costs, which the staff pegged at $3.9 billion.

In the next few days, Georgia PSC commissioners will hold a hearing where Georgia Power and others will be able to cross examine the state’s experts and look for holes in their conclusions.

The PSC could decide whether to kill the Vogtle expansion or continue with it, possibly with new mandates about who will bear most of the risks and costs. That decision could come in early February or, maybe, later this month — if the PSC suddenly rushes the decision, as its chairman is pushing for.

Let’s hope the PSC’s five commissioners — Stan Wise (the chairman), Chuck Eaton, Doug Everett, Lauren “Bubba” McDonald and Tim Echols — have their listening ears on.

What you can do

Respectfully share your thoughts with the people you are paying to serve in office. Here are contacts for elected Georgia Public Service Commissioners:

PSC main phone number: 404-656-4501 (Or toll-free when calling from Georgia but outside of metro Atlanta: (800) 282-5813

Commissioner’s government email addresses:

Tim Echols:

Chuck Eaton:

Doug Everett:

Lauren “Bubba” McDonald:

Stan Wise:

Related coverage:

PSC staff says cancle Vogtle if project remains "uneconomic"

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