Georgia Power’s Plant Vogtle nuclear expansion project will take about 19 months longer to complete than originally expected and cost about $740 million more than originally thought, the company said Thursday.
Georgia Power said its share of the estimated $14 billion project will rise to $6.85 billion, up from $6.11 billion, because of increased capital costs and additional financing costs. Customers, who have been paying the financing costs since 2011, now will pay them for a longer period of time.
Customers started paying Vogtle’s financing costs as part of a controversial nuclear fee approved by state lawmakers. The fee started at $3.88 in 2011, then rose to $4.26 the following year. Now, the fee has increased to $5.11 and will continue to climb each year until the reactors start producing electricity, which is now scheduled for the end of 2017 and 2018. At that point, the financing costs will be replaced by operating and capital, or construction, costs.
“It’s clear that some real damage could be done on the pocketbooks of ratepayers,” said Elena Parent, executive director of Georgia Watch, a consumer rights group.
Georgia Power owns 45.7 percent of Vogtle, and a group of municipal and electric utilities owns the rest. Even with the cost increases, Georgia Power executives say the project’s total cost is “still around $14 billion.”
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More increases could be on the way. Delays have triggered lawsuits between the project’s main contractors and the group of utilities building Vogtle. Georgia Power’s liability in those suits totals $425 million, but the utility maintains it is not responsible for the delays or costs associated with them.
Because Georgia Power is a regulated monopoly, the utility can pass its costs onto consumers.
Consumer groups were unable to persuade state regulators to have the utility forgo some of its profits if there are cost increases at Vogtle over a certain amount, so they are pushing a similar measure at the state Legislature.
Georgia Power executives tout long-term savings for customers instead. Low interest rates and production tax credits contribute to the utility’s 2.4 million customers saving a total of $2 billion over the next several decades, the company says. And a new economic analysis done by Georgia Power says if the utility stopped building the reactors and switched to building a coal or natural gas plant, that would cost an additional $4 billion on top of what has already been spent.
Environmental groups disagree and continue to push the utility to add renewable fuels and reduce demand on the power grid.
“Southern Co. (Georgia Power’s parent) is pursuing the most expensive option for new (electrical) generation and ignoring options that would actually lower costs for ratepayers,” said Colleen Kiernan, president of the Sierra Club’s Georgia Chapter.
The reactors are the first in the nation to be permitted and built from scratch in nearly 30 years. Utility and industry officials have said this project would not be a repeat of the past, when the first two reactors at Vogtle, finished in the 1980s, ran over budget by $8 billion and took 16 years to build.
“We’re confident that we have a good, strong project here,” said Buzz Miller, executive vice president of nuclear development for Georgia Power and its sister company, Southern Nuclear.
The Georgia Public Service Commission reviews the project’s schedule and cost every six months. While there have been several warnings that Vogtle’s costs could go up, this is the first time the PSC is actually faced with approving a new schedule and budget.
“Obviously this is something we’re concerned about. We’re going to have to look at it very carefully,” said Chuck Eaton, the PSC’s chairman. “A lot of people are going to have an interest in this.”
The reactors at Vogtle were scheduled to start producing power in the spring of 2016 and 2017. In a report filed with state utility regulators Thursday, Georgia Power said it expects to finish construction on the first reactor during the last three months of 2017. The second reactor should be completed during the same time period in 2018.
The project’s schedule began to slip early, starting with additional site preparation work. Delays in securing key licenses for the reactor design and for major construction were also chief reasons. Increased worker training, additional project oversight and stiffer regulatory requirements have tacked on more labor costs.
Other delays stemmed from Vogtle’s main vendors not meeting stringent documentation rules and other quality assurance requirements. The vendors make critical components for Vogtle elsewhere and then assemble them at Vogtle’s construction site in Waynesboro.
“I think you’re well aware we’ve wrestled with the schedule and have had some commercial issues,” Miller said.
“You have increases in schedule extension, and people think things are being redone and that they were done wrong. That’s not what’s happening here,” he said.