Two Plant Vogtle partners to settle cost dispute as new issue arises

A cooling pump problem will also slow the completion of Vogtle’s second new nuclear reactor
(L-R) Views of units and cooling towers 1-4 at Plant Vogtle, in Burke County near Waynesboro, on Monday, July 31, 2023. Unit 3 officially entered commercial service Monday. It makes history as the first nuclear reactor built from scratch in the U.S. in more than three decades.(Arvin Temkar / arvin.temkar@ajc.com)

Credit: arvin.temkar@ajc.com

Credit: arvin.temkar@ajc.com

(L-R) Views of units and cooling towers 1-4 at Plant Vogtle, in Burke County near Waynesboro, on Monday, July 31, 2023. Unit 3 officially entered commercial service Monday. It makes history as the first nuclear reactor built from scratch in the U.S. in more than three decades.(Arvin Temkar / arvin.temkar@ajc.com)

Georgia Power and one of the other co-owners of the new nuclear reactors at Plant Vogtle have agreed to settle a legal dispute over responsibility for the still rising costs of the project, the companies announced Friday.

At the same time, Georgia Power said it has to replace a critical cooling component in the site’s yet-to-be-finished second new reactor, a process that will take the prospect of completing the unit this year off the table.

The settlement between Georgia Power and partner Oglethorpe Power is a significant step in resolving a web of lawsuits that have arisen over the Plant Vogtle expansion. Vogtle Units 3 and 4 are the first two commercial nuclear reactors built from scratch in the U.S. in more than three decades, but the project has been marred by years of delays and billions in cost overruns. Unit 3 recently entered service, about seven years late, and Unit 4 is now expected to begin operation early next year, at least six years behind schedule.

Oglethorpe Power, a cooperative that produces electricity for more than three dozen electric membership corporations in Georgia, sued Georgia Power last year for breach of contract and other claims. Their complaint centered around a 2018 agreement inked when the parties were at odds over who would pay for the rising costs from building the new units.

That agreement gave Oglethorpe Power and the new units’ other co-owners — MEAG Power and Dalton Utilities — a one-time chance to cap their liability for construction costs.

Oglethorpe Power claimed that costs had moved past the trigger point of $19.2 billion, affording the co-op the opportunity to limit its exposure to the rising costs, in exchange for forfeiting a share of its ownership in the new units. Georgia Power argued costs hadn’t yet reached that level.

Left to right, are units 3 and 4 at Plant Vogtle, in Burke County near Waynesboro, Georgia, on Monday, July 31, 2023. Unit 3 officially entered commercial service Monday. It makes history as the first nuclear reactor built from scratch in the U.S. in more than three decades. (Arvin Temkar/The Atlanta Journal-Constitution/TNS)

Credit: TNS

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Credit: TNS

To settle the lawsuit, Georgia Power said it will pay Oglethorpe $308 million to cover its share of construction costs that were already incurred. Georgia Power will also pay an estimated $105 million for Oglethorpe’s portion of the costs needed to complete Vogtle’s expansion, and will cover 66% of any additional cost overruns.

In exchange, Oglethorpe will maintain its 30% ownership in the new Vogtle units and has agreed to dismiss its lawsuit. Georgia Power said it will record a charge of approximately $152 million in the third quarter as a result of the settlement.

The deal will likely help insulate millions of Georgia households that get power from electricity membership cooperatives supplied by Oglethorpe from Vogtle’s mounting costs. Georgia Power spokesman Jacob Hawkins said the company’s customers also will not face any added charges from the settlement.

Hawkins added that Georgia Power is “pleased to have reached a settlement with Oglethorpe Power in this matter, and that Oglethorpe Power will retain its full ownership interest in these new units.”

Georgia Power has faced other legal squabbles with co-owners during the final stages of Vogtle’s expansion.

Last year, Georgia Power settled a similar cost spat with MEAG Power, which owns a 22.7% share in the new Vogtle reactors. A lawsuit filed by Dalton Utilities, which holds a 1.6% stake in the units, is still pending. Georgia Power said Friday that it could have to pay another $17 million to resolve that dispute.

Cooling pump problem

While resolving the Oglethorpe Power lawsuit fixes a major issue in the courtroom, Georgia Power disclosed Friday that it is facing another technical setback with Vogtle’s second new reactor.

The problem at Vogtle Unit 4 involves a faulty motor inside one of the reactor’s four coolant pumps, which keep temperatures at safe levels inside the reactor core. Georgia Power said the issue was discovered during start-up testing and that the entire pump will have to be replaced.

Georgia Power said work has already begun to swap out the pump with a replacement that was already on site, but did not provide an estimate for when the fix would be complete. In a filing with the federal Securities and Exchange Commission, the company said it believes the pump defect is an isolated issue, but cautioned that more problems could be uncovered when start-up testing resumes.

Georgia Power’s residential ratepayers have already faced monthly charges for the Vogtle expansion for years. The average customer will have paid an estimated $1,000 for the two new units by the time they’re both complete. That’s on top of other recent significant rate increases customers have seen to pay for fuel and other costs.

This new problem comes weeks after Georgia Power reached a separate deal with staff for the Georgia Public Service Commission (PSC) and other interested groups that could determine how much of its remaining Vogtle costs are borne by ratepayers.

According to the agreement — which has not been approved yet by regulators at the PSC — Georgia Power’s customers would pay for $7.6 billion of the company’s outstanding construction costs. Its shareholders will pick up the rest of the tab.

The amount the company is seeking to collect is less than the $10.2 billion the company expects to ultimately spend on building the two new reactors. But it is far more than the $4.4 billion in construction costs forecast when the project began more than a decade ago.

If the plan is approved by the commission, Georgia Power says the average residential customer will see their bills go up by almost $9 per month. That rate hike would take effect the month after the second new nuclear reactor on the site, Unit 4, begins providing electricity to Georgians. The company said Friday the unit is expected to enter operation in the first quarter next year.

Those rate hikes would remain in place until at least 2025, when they could be adjusted by the PSC. But Georgia Power customers are likely to continue paying at least some amount for Vogtle’s expansion in their monthly bills for the entire life of the reactors, which the company estimates will be 60 to 80 years.


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