By Dave Williams and Maria Saporta
Atlanta-based Southern Co. has decided to push forward with completion of an over-budget, behind-schedule nuclear expansion at Plant Vogtle rather than give up on what has ballooned into a $25.2 billion project.
Southern affiliate Georgia Power Co. filed a recommendation Thursday with the state Public Service Commission (PSC) to continue construction at the nuclear plant south of Augusta, Ga. The project’s co-owners, Oglethorpe Power, MEAG Power and Dalton Utilities all supported the recommendation, Paul Bowers, chairman, president and CEO of Georgia Power told Atlanta Business Chronicle in an exclusive interview minutes after the announcement.
“We had to have unanimous agreement with all of our co-owners,” Bowers said. “All of us worked through this together.”
The commission approved a resolution two weeks ago essentially endorsing completion of the project despite the huge price tag, nearly twice the originate estimate when the construction of two additional nuclear reactors at Plant Vogtle was approved in 2009. The work also has fallen six years behind schedule.
The PSC acted shortly after two South Carolina utilities pulled the plug on a similar nuclear expansion in the Palmetto State, citing cost overruns and scheduling delays.
However, Bowers said an extensive analysis Georgia Power and its partners conducted at Vogtle showed the Georgia project still could be completed with a rate impact on customers of around 10 percent, less than the originally anticipated impact of 12 percent on customer bills.
“A lower interest rate, loan guarantees, tax credits and the parent guarantee from Toshiba brought the costs down,” he said.
According to numbers released by Georgia Power Thursday, the Atlanta-based utility’s share of the construction costs for completing the two nuclear reactors at Plant Vogtle will be $8.8 billion out of a total capital price tag of $19 billion. Georgia Power owns a 45.7 percent share of the project.
The PSC already has signed off on $5.68 billion in capital costs for Georgia Power. With $1.7 billion expected to come the utility’s way in the form of a guarantee from Toshiba Corp., the Japan-based parent of original prime contractor Westinghouse Inc., Georgia Power’s potential additional construction costs come to about $1.4 billion.
While both the South Carolina and Georgia nuclear expansions were planned using similar next-generation nuclear technology, Bowers said other factors differentiating the two projects led to Georgia Power’s decision to keep moving forward at Plant Vogtle.
“We have a larger customer base and the ability to manage the site ourselves,” Bowers said.
“We now have full control of the project,” added Steve Kuczynski, chairman, president and CEO of Southern Nuclear, the Southern Co. affiliate that took over construction management at Vogtle after Westinghouse filed for bankruptcy last March. The South Carolina utilities that abandoned the nuclear expansion there had no such inside expertise to assume control from Westinghouse.
“We feel very excited about the opportunity to guide [Vogtle] to completion,” Kuczynski said.
With Thursday’s decision to keep going with the Vogtle expansion, Georgia Power becomes the only U.S. utility pursuing nuclear expansion using the new AP1000 reactors designed by Westinghouse.
Kuczynski said that’s not a concern because the technology has been tested overseas.
“Plants have been built in China and completed,” he said. “The technology leverages 40 to 50 years of technology that has been proven quite reliable. It’s next-generation, but the core functions remain the same.”
Far from being concerned about going it alone, Bowers said Georgia Power feels a sense of responsibility to make new nuclear power generation work in the U.S.
“For America to have a nuclear platform that’s still viable is something to think about,” he said.
At the same time, Bowers said Georgia Power wouldn’t go forward with the Vogtle project if the utility didn’t believe it was in customers’ best interests.
“This is an emissions-free asset that’s going to be around for 80 years,” he said. “You still have to have a diverse fuel mix. We have coal. We have natural gas, and we’re expanding the nuclear portion.”
The PSC will review Georgia Power’s recommendation during the next six months, a process that will include hearing from the utility, the agency’s staff and environmental advocates who have consistently opposed the project. A final vote by the commission on whether to let the project go forward is expected in late February.
If the PSC approves continuing the work, the first of the two new reactors would go into commercial operation in November 2021, followed a year later by the second reactor unit.
Dave Williams covers government for the Atlanta Business Chronicle