Steam rises from cooling towers at Georgia Power’s nuclear Plant Vogtle, in Waynesboro, Ga. The company is leading a massive plant expansion, which has gone billions of dollars over budget and is years delayed. Now the U.S. government is warning about the ramifications of a Florida utility’s attempts to drop out of the project. (AP Photo/Mary Ann Chastain, File)

Feds warn: Georgia nuclear project threatened by Florida company’s case

The federal government is warning that the nuclear expansion underway at Georgia’s Plant Vogtle is threatened by a lawsuit filed by a utility hoping to extricate itself from the project.

JEA, a Jacksonville, Fla.-based utility, no longer wants to be on the hook for paying some of the expansion’s costs and buying some of the energy it generates when completed. The Plant Vogtle expansion is years behind schedule and billions of dollars over budget.

But a recent court filing by federal attorneys cautions that the moves by JEA could put at risk hundreds of millions and potentially billions of dollars in federal loan guarantees blanketing the Georgia project.

It also reiterated what others have warned for months: The efforts by JEA could imperil the entire unfinished project. Virtually anyone who buys electricity in Georgia has a financial connection to the project and its costs.

The Vogtle expansion is led by Georgia Power, which owns just under 50 percent of the project. Its ownership partners include Oglethorpe Power, which represents Georgia electric membership corporations, as well as Dalton Utilities and the Municipal Electric Authority of Georgia, which represents dozens of city utilities.

MEAG, in turn, sold some of its rights to Vogtle’s power – as well as much of its responsibilities for construction costs – to JEA, formerly known as formerly Jacksonville Electric Authority.

Last year, JEA began a push to drop out of the agreement with MEAG as the project’s costs continued to soar without a cap on how much higher it might go.

JEA said Vogtle energy will be far more expensive than what it could by from other sources. And the utility’s new leaders contend past JEA executives did not have legal authority to strike the original deal.

MEAG and JEA are suing each other, with MEAG arguing that JEA knew the deal it was getting into and must abide by it.

The legal battle raised questions last year about whether the Vogtle expansion could be halted if JEA won its case. That could threaten the resolve of the co-owners to continue the project if they had to take on JEA’s share of the risks and costs or find another utility willing to do so.

Now, the federal government is raising that same issue.

Recently, Justice Department attorneys representing the U.S. Department of Energy filed a “statement of interest” in the case. JEA wants its lawsuit moved from federal court to a state court, saying the issues involve only Florida and local laws and state policy. The U.S. government wants it kept in federal court, citing “significant federal interests” involved.

Federal attorneys argue that if JEA succeeds in its lawsuit, the DOE likely would have to make payment on its guarantee of a $578 million loan tied to Vogtle because MEAG wouldn’t have enough funds to cover the obligation.

“And given the potential domino effect,” that could lead to unwillingness or inability of Vogtle’s other owners to cover costs, which could jeopardize completion of the project, according to the federal filing. That “could result in demands that DOE honor its guarantees as to the broader $8.3 billion in loans.”

Vogtle is the only big commercial nuclear power construction project underway in the U.S., the government wrote. Its completion is “important to preserving the United States’ leadership in civilian nuclear power generation” and “will demonstrate the domestic civilian nuclear industry’s ability” to tackle new nuclear projects under current conditions.

In previous years, a number of U.S. utilities had proposed building nuclear reactors after a 30-year drought on such construction. But that interest faded amid declining prices for competing natural gas, slowed growth in electric use and mushrooming problems on the Vogtle project and another in South Carolina. The construction project in South Carolina was later canceled in midstream.

Meanwhile, on Thursday, the Federal Energy Regulatory Commission refused to weigh in on the fight between JEA and MEAG. Both JEA and MEAG are traditionally exempt from FERC oversight.

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