Georgia’s nuclear mess is about to get way messier now that the chief contractor on the Plant Vogtle expansion has fled to bankruptcy court.
So a new race is underway to see who can nab enough bubble wrap to insulate themselves from a fresh round of costly shocks.
So far, Georgia Power has sidestepped virtually all of the financial reckoning on its own project. Billions of dollars in past Vogtle overruns and delays will be borne by Georgia consumers or already have been by the contractor, Westinghouse Electric Company.
I suspect leaders of Georgia Power and parent Southern Company would like to keep dodging on this one.
A partial federal bailout from taxpayers perhaps? Southern CEO Tom Fanning has been spending a lot of time in Washington D.C. talking about continuation of nuclear energy development being in "our national security interest."
And what about convincing the elected Georgia Public Service Commission that if work on Vogtle continues, mom and pop customers and not the big utility will be the ones most on the hook?
No such action has been taken or even officially proposed. Yet.
But don’t be surprised to see pressure in that direction later this year if the Vogtle expansion survives.
I asked Fanning about who might shoulder the risk going forward. He talked maybe an “amendment to the current regulatory regime.” My translation: get the PSC to put more on ratepayers. He mentioned potential additional help from the feds, who already committed billions for loan guarantees and tax credits on the project.
And, drumroll, Fanning brought up the option of his own shareholders ultimately bearing some risk.
“I just don’t know,” he said. “It’s hard to speculate on anything like that until we see the data” from an evaluation of what it might take to complete the expansion.
Low-profile risk
Shareholder risk is an especially unhappy phrase at a company like Southern, where Fanning loves to chat about the corporation’s low-risk profile. Southern, like many big utilities, has been the kind of place you could stash your cash and watch the dividends roll off the conveyor belt.
At the company's annual meeting Wednesday, I met shareholders who also pay Georgia electric bills.
That leads to conflicting allegiances.
Richard Dent, an Atlanta retiree, likes his Southern dividends, but he told me he’s worried about power bills continuing to grow. (A typical Georgia Power residential customer already pays about $100 a year in fees for financing and profits on the Vogtle project.)
"It concerns me that the PSC continues to cave in to Georgia Power," Dent said. "I'd like to see the PSC have more backbone."
Jerry Stober of Carroll County is a big supporter of nuclear power. His wife, Angie, bought Southern stock for its predictability, but she told me the company shouldn’t try to transfer all additional overruns onto others.
“If they put it all on ratepayers, that’s not right,” she said.
Had things gone better with Vogtle over the years, Southern’s leaders would have looked pretty sharp.
By pushing for contracts that put much of the financial risk on contractors, they buffered the company — and Georgia Power customers — from lots of costs of adding two new reactors.
But Vogtle’s problems were so numerous and monumental that those efforts weren’t enough.
An extra $5.8B
Even before costs crushed Westinghouse, the delays and other spillover were expected to pile an extra $5.8 billion onto Georgia Power customers over the expected life of the project, according to a state consultant’s estimates last year
How much higher will that number go? And how much worse might things get if Georgia Power’s co-owners on the project bail out?
Neither Georgia Power nor Southern have a good batting average on assurances about Vogtle or a deeply delayed, budget-busting Mississippi project called Kemper (no relationship to me).
During a 2013 hearing, a friendly commissioner on the Georgia PSC asked a senior company executive, “So you don’t think the trend of delay and overruns will continue?”
“No, sir, I don’t expect that,” the exec said.
The delays grew. Third-party monitors and PSC staff have accurately predicted delays long before the company did.
Four years ago, a PSC commissioner asked about the potential ramifications if a Vogtle contractor ever filed for bankruptcy protection. A Southern executive expressed confidence that a contract ensured they were “well protected.”
Seeing no issues
And last year, a utility executive assured the PSC that despite a credit downgrade of Westinghouse’s parent Toshiba and billions in losses, Toshiba remained financially stable. “… so today we don’t see any issue on the Vogtle 3 & 4 project that is related to any of Toshiba’s issues,” he said.
Now, Southern is scrambling to make sure Toshiba’s $3.7 billion in guarantees on Vogtle don’t evaporate as the Japanese company teeters on potential collapse.
Even that money may not be enough to cover the potential for growing costs, Fanning has said.
Of course, lots of big companies try to limit damage to their bottom lines and put the risk on others. But Georgia Power, as a government-regulated monopoly, has broader responsibilities and expectations to meet.
Southern, Fanning said, puts customers “at the front of everything we do.”
“We are in fact bigger than our bottom line,” he said. “We make communities better because we are there.”
Is that an assurance we can trust or will Southern again hoard most of the bubble wrap for the rough ride ahead?
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