Tuesday, February 21, 2017

Vogtle Cost Overruns

(APN) ATLANTA — On Tuesday, December 20, 2016, the Georgia Public Service Commission (PSC) rubber-stamped a controversial stipulation agreement that fails to protect Georgia utility customers and rewards Georgia Power’s bad management.

The Commissioners’ unanimous vote, although disappointing, was not surprising, because the current five Republican Commissioners so often serve the wishes of Georgia Power.  Some ratepayers advocates have suggested they be called “The Georgia Power Service Commission.”

Georgia Power customers are now stuck with paying billions more than the company originally estimated for the ever-increasing construction costs for two new nuclear reactors at Plant Vogtle.

The settlement certifies as “prudent” capital costs up to 5.68 billion dollars, on top of 3.68 billion dollars already spent.

That’s an advance approval of approximately two billion more dollars for ratepayers to suck up on this bottomless money pit, while Georgia Power shareholder profits will only be reduced by 115 million dollars in this stipulation deal, which also has been criticized for an extraordinary lack of transparency, even by Georgia standards.

“The Commission’s decision to approve the Vogtle settlement with limited Staff review and a single hearing sets a dangerous precedent that drastically undermines the chances that a full prudence review for both units will ever be done,” Robert Baker, an attorney for Southern Alliance for Clean Energy, said in a press release.

“The Vogtle settlement review process… was unorthodox and not transparent because no reports or audits were produced by the Commission Staff, and the witness panel had a limited understanding of the reports produced by Georgia Power,” Baker said.

“Approval of the Vogtle settlement creates the largest rate impact for Georgia Power customs based on the least public review in PSC history,” Sara Barczak, High Risk Energy Choices Program Director for SACE, added in the release.

“With today’s decision, the Georgia Public Service Commissioners have wrongly rewarded Georgia Power, its partners and shareholders and lead Contractor Westinghouse for years of mistakes that will cost utility customers billions of additional dollars,” Barczak said.

The Stipulation also gives Georgia Power an extension of 18 months to finish Vogtle Unit 3 and six extra months to complete Vogtle Unit 4.

If Georgia Power completes the project by the newest deadline of December 31, 2020, they will not receive any penalties in terms of making a profit for their shareholders.

Dr. William Jacobs, a PSC staff member, does not believe Georgia Power will make the latest deadline, especially unit 3.

If the deadline is missed, the Stipulation would reduce Georgia Power’s profits from ten percent to between four to seven percent.

But never fear, the Stipulation could be amended in the future; it is not embedded in law.

There is still a lot the public still does not know about this deal, but we do know that Georgia Power continues to make money on their bad management, cost overruns, delays, design flaws, and problems with contractors; and they can thank the PSC for their ability to make money on bad judgement.

The original 14.1 billion dollars for the project has mushroomed to over 20 billion.

But, if one includes the construction, financing, operation, and maintenance costs over the life of the project, the actual cost is closer to 65 billion, as earlier reported by APN.

That 65 billion number doesn’t include decommissioning, radioactive waste disposal costs, health and environmental-related costs from radioactive pollution, or God forbid an accident that could contaminate most of South Georgia for hundreds of thousands of years.

There is nothing prudent about this deal: in fact, the whole Vogtle project has been imprudent from the start.

Georgia Power and the PSC should have known from their experience with Vogtle 1 and 2 that it would run over, take longer, and cost more.

The only thing they chose to learn from Vogtle 1 and 2 was to lobby the Georgia General Assembly to pass an anti-consumer bill (Senate Bill 31) to force utility customers to pay up front for the mess.

Construction Work in Progress (CWIP)–an unusual practice when looking at other U.S. states–has allowed Georgia ratepayers to pay up front for Georgia Power’s capital costs.

And pay we have – to the tune of two billion dollars and counting through the Nuclear Construction Cost Recovery tax (CWIP) on our utility bills.


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