The cost of expanding Plant Vogtle has swelled to more than $25 billion and work has slipped further behind schedule in the wake of a key contractor’s bankruptcy, according to estimates disclosed Wednesday by Southern Company.
The new cost estimate is close to double the original projection when state regulators in 2009 approved plans for two new nuclear reactors at the plant near Augusta, and roughly $3 billion higher than the most recent figure.
Construction was originally supposed to be finished by now. But Atlanta-based Southern also said Wednesday the new reactors won’t be finished until March 2023 — two and a half years later than its most recent target of late 2020.
Southern’s revised estimates came only days after news that the owner of a similar nuclear expansion in South Carolina is canceling the project because of soaring costs, delays and other challenges.
Kempner: Georgia’s nuclear crisis of confidence Regulators: Georgia’s Vogtle project not like shuttered S.C. nuke plant
Both projects were disrupted by a late March bankruptcy filing by Westinghouse Electric, which supplied the reactor designs and oversaw construction at Vogtle as well as the South Carolina site.
Work continues at Vogtle, and Southern is expected to finish an analysis this month of whether to complete the expansion. The Georgia Public Service Commission, the state’s utility regulator, has the final say.
In comments Wednesday during a conference call with investors, Southern CEO Tom Fanning indicated he leans toward recommending that construction keep going.
“From a lot of scenarios, going forward with nuclear may make sense,” Fanning said during the call to discuss Southern’s quarterly earnings. He said the expanded nuclear plant would provide carbon-free power, maintain fuel diversity and play better politically with state regulators and lawmakers.
“When you abandon, you have nothing to show for the money you spent. If you go forward, you have a nuclear plant that serves you for decades,” he said. “But there has been no decision made.”
Scuttling the project wouldn’t be cost-free. Southern estimates it would incur shutdown costs of $400 million on top of the nearly $6 billion that its subsidiary Georgia Power has invested so far.
Customers of Georgia Power, which operates Vogtle and is the main partner in its expansion, already are being assessed for financing costs on the Vogtle project, with the levy adding $100 a year to a typical residential bill. The PSC will eventually decide how much they pay toward construction.
Fanning said Southern has “looked at the waterfront” of options, including building natural gas plants instead, probably at another site.
He said the company will recommend “a single idea” to the PSC by the end of the month. PSC Chairman Stan Wise has said he wants the commission to issue a go/no-go decision by December.
Georgia Power owns 45.7 percent of the project, while Oglethorpe Power and MEAG Power also own significant chunks and the city of Dalton has a small stake.
Southern is counting on almost $3.7 billion in guarantees to be paid to all the partners by Westinghouse’s parent, Toshiba Corp., starting with a $300 million payment in October. That commitment stems from settlement of previous contractor disputes on the project.
In South Carolina, utilities SCANA Corp. and Santee Cooper faced a similar $25 billion cost figure — and decided to pull the plug on building two new reactors at the V.C. Summer plant north of Columbia.
In addition to costs and delays they cited falling demand for electricity and the uncertainty around Westinghouse’s bankruptcy.
Vogtle project critics also have said slowing demand for electricity has made the bigger nuclear plant unnecessary and overly expensive compared to alternatives.
But Fanning and at least two of the PSC’s five commissioners said this week that the South Carolina project’s abandonment doesn’t point to a similar decision for Vogtle.
“There are a host of differences between our project and the Summer project,” Fanning said, even though the projects share the same reactors, suppliers, and challenges.
Wise and fellow PSC commissioner Doug Everett made similar comments earlier in the week. They also expressed confidence that Southern Nuclear, a unit of Southern, can take over management of the project from Westinghouse, even though it hasn’t built any nuclear plants.
Southern’s new Vogtle estimates were disclosed during the company’s second-quarter financial report. Southern lost $1.4 billion during the quarter, largely due to writing off more than $3 billion on another troubled project — a “clean coal” plant in Mississippi.
Mississippi’s utility regulator recently told Southern’s Mississippi subsidiary to keep burning natural gas at the plant and give up the coal project, following years of rising costs and complications.
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