On August 8, 2018, Georgia Power announced a $2.3 billion increase to the estimated cost to finish the new nuclear units at Plant Vogtle, of which its share of the cost overrun is $1.1 billion. Georgia Power claimed that it would absorb $700 million of the $1.1 billion in its press release, leaving questions about the remaining $400 million in costs and if those costs would ultimately be paid by unsuspecting Georgia Power customers.
Georgia Power customers, however, are not getting the full story.
When asked for comment by the Energy and Policy Institute, Commissioner Echols responded, “The certified cost of the plant that ratepayers are responsible for did not change at result of Georgia Power eating $1.1 billion last week. However, many forget that the 1991 integrated resource plan legislation passed by the Georgia legislature allows utilities to recover all prudently incurred expenses after the project is completed.”
Impact on Co-Owners
|% Ownership of Project
|Resulting Share of $1.2 Billion Vogtle
Overage Owed by Customers
|Municipal Electric Authority of Georgia
Source: Georgia Power
Trouble in Paradise?
Jacksonville Electric Authority (JEA), who owns a portion of the project through MEAG, recently signaled its desire to leave its contract, citing the project’s poor economic performance.
In a bombshell letter, first reported by Nate Monroe at the Florida Times-Union, JEA interim CEO Aaron Zahn states, “a decision to continue [Vogtle] cannot be justified on any rational basis.”
In an analysis sent to MEAG, JEA claimed it could save hundreds of millions of dollars by canceling the project, in direct contradiction to Georgia Power’s claim before the Georgia Public Service Commission that the project is economical and should continue.
The total cost of the Vogtle expansion project is now at $27.3 billion.
Georgia Power’s full statement to the Energy and Policy Institute:
Georgia Power is only allowed to collect financing costs above $4.4 billion in base capital costs once the new Vogtle units come online – financing costs above $4.4 billion are deferred and treated as AFUDC, expected to be collected from customers over the life of plant. The $350 million (a roughly $100 million increase) in AFUDC financing costs referenced in the earnings materials is NOT related to the $1.1 billion increase in the total capital cost forecast for the project announced last week. Instead, it is due to the spending curve for the project and that we expect that we will reach the $7.3 billion previously forecasted capital and construction cost amount sooner. The financing costs that are expected to be capitalized through AFUDC have been previously anticipated and reported and will only be collected once the new units come online, and will be distributed over 60 years of operation.