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Released December 14, 2023 | SUGAR LAND
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December 14, 2023--Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Georgia utility regulators on December 19 will vote on a proposed settlement of Georgia Power's share of the costs to construct and finance two units at the Alvin W. Vogtle Nuclear Power Station. The unit additions are co-owned by four electricity companies, but only Georgia Power (Atlanta, Georgia), a unit of the Southern Company (NYSE:SO) (Atlanta, Georgia), is regulated by the Georgia Public Service Commission (GPSC) (Atlanta, Georgia).
In August, Georgia Power reached a settlement with several intervenors in the rate case. In that settlement, which must be approved by the GPSC, Southern Company agreed to absorb about 25% of its proportional share of the costs to construct and finance the two new 1,117-megawatt units. Georgia Power had invested about $10.2 billion to build the two new units, but in the settlement, it agreed to absorb about $2.6 billion of those costs and not charge customers for them. The overall costs to construct and finance the two new nuclear units has been estimated at about $35 billion. For more on the August settlement, see September 11. 2023, article - Georgia Power Reaches Settlement for Its Share of Vogtle Costs. Last week, the GPSC held several days of hearings on the settlement.
For the most part, parties at the early-December hearings rehearsed familiar arguments, with Georgia Power and its settlement partners stressing the carbon-free electrical output of the units, the new units' 60-80-year projected lifespan and the fact that Vogtle Units 3 and 4 were the first grassroot nuclear power project built in the U.S. in more than 30 years.
"While project delays and overruns do mean Georgians will be paying for this project for decades, Georgia Power agreed to significantly lower the construction costs they were expected to pass on to customers," said Bob Sherrier, a staff attorney with the Southern Environmental Law Center (Charlottesville, Virginia). His organization was part of the settlement.
Aaron Abramovitz, Georgia Power's chief financial officer and treasurer, said some of the delays and cost overruns were to be expected considering the Plant Vogtle expansion is the first new nuclear project built in the United States in more than 30 years.
According to a report from the Capitol Beat News Service, Mark Gentry, a Minneapolis-based energy consultant, testified December 4 that other unforeseen issues also contributed to the delays. He said those factors included the COVID-19 pandemic, which forced the construction team to reduce its workforce by 20% as a safety precaution; the identification of additional scope needed to complete the work; and greater-than-anticipated complications during testing and startup of Unit 3, the first of the new reactors.
"Despite these challenges ... the project team addressed each of these issues it encountered and successfully reached commercial operation of Unit 3 in July 2023," Gentry said.
Joseph Miller, another outside energy expert, cited the 2017 Chapter 11 bankruptcy of Westinghouse Electric Company (Cranberry Township, Pennsylvania), as another factor in the delays. Westinghouse had been providing engineering, procurement and construction (EPC) services to the project until it declared bankruptcy.
"The decisions made and actions taken by Georgia Power related to controlling costs were reasonable and prudent," Miller said. "Southern Nuclear and Georgia Power exercised appropriate oversight and monitoring of the project."
But opponents decried the high cost of the project and fretted over the impact on retail customers, who have been paying for these two units for years under various regulatory agreements. Prior to the early December hearings, opponents took out a full-page ad in the Atlanta Journal Constitution urging commissioners not to vote on the settlement until new commissioners were seated. Two of the GPSC commissioners were slated to stand for re-election in 2022, but legal wranglings over the process by which commissioners were elected have prevented those elections from taking place.
Building two new nuclear units has been a long and fraught process for the co-owners, who are: Georgia Power, which owns 45.7% of two new nuclear units; Oglethorpe Power Corporation (Tucker, Georgia) (30% ownership), the Municipal Electric Authority of Georgia (MEAG Power) (Atlanta) (22.7% ownership); and Dalton Utilities (Dalton, Georgia) (1.6% ownership). Initially budgeted at about $12 billion in 2008, the project is more than $20 billion over budget and years late in coming online. Unit 3 came online this past July, years behind schedule, and Unit 4 is scheduled to begin operating in early 2024. For more on Unit 3's start of commercial operations, see August 2, 2023, article - Years Late and Over Budget, Vogtle Unit 3 Begins Commercial Operations.
The estimated $35 billion price tag includes a $3.7 billion payment the co-owners received from Westinghouse Electric.
For more on those issues, see September 11, 2023, article - Georgia Power Reaches Settlement for Its Share of Vogtle Costs; and August 21, 2023, article - Vogtle Nuclear Power Unit 4 Reaches Latest Milestone with Fuel Loading. Unit 4 is scheduled to begin commercial operations either in the fourth quarter of 2023 or the first quarter of 2024.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 Trillion (USD).
In August, Georgia Power reached a settlement with several intervenors in the rate case. In that settlement, which must be approved by the GPSC, Southern Company agreed to absorb about 25% of its proportional share of the costs to construct and finance the two new 1,117-megawatt units. Georgia Power had invested about $10.2 billion to build the two new units, but in the settlement, it agreed to absorb about $2.6 billion of those costs and not charge customers for them. The overall costs to construct and finance the two new nuclear units has been estimated at about $35 billion. For more on the August settlement, see September 11. 2023, article - Georgia Power Reaches Settlement for Its Share of Vogtle Costs. Last week, the GPSC held several days of hearings on the settlement.
For the most part, parties at the early-December hearings rehearsed familiar arguments, with Georgia Power and its settlement partners stressing the carbon-free electrical output of the units, the new units' 60-80-year projected lifespan and the fact that Vogtle Units 3 and 4 were the first grassroot nuclear power project built in the U.S. in more than 30 years.
"While project delays and overruns do mean Georgians will be paying for this project for decades, Georgia Power agreed to significantly lower the construction costs they were expected to pass on to customers," said Bob Sherrier, a staff attorney with the Southern Environmental Law Center (Charlottesville, Virginia). His organization was part of the settlement.
Aaron Abramovitz, Georgia Power's chief financial officer and treasurer, said some of the delays and cost overruns were to be expected considering the Plant Vogtle expansion is the first new nuclear project built in the United States in more than 30 years.
According to a report from the Capitol Beat News Service, Mark Gentry, a Minneapolis-based energy consultant, testified December 4 that other unforeseen issues also contributed to the delays. He said those factors included the COVID-19 pandemic, which forced the construction team to reduce its workforce by 20% as a safety precaution; the identification of additional scope needed to complete the work; and greater-than-anticipated complications during testing and startup of Unit 3, the first of the new reactors.
"Despite these challenges ... the project team addressed each of these issues it encountered and successfully reached commercial operation of Unit 3 in July 2023," Gentry said.
Joseph Miller, another outside energy expert, cited the 2017 Chapter 11 bankruptcy of Westinghouse Electric Company (Cranberry Township, Pennsylvania), as another factor in the delays. Westinghouse had been providing engineering, procurement and construction (EPC) services to the project until it declared bankruptcy.
"The decisions made and actions taken by Georgia Power related to controlling costs were reasonable and prudent," Miller said. "Southern Nuclear and Georgia Power exercised appropriate oversight and monitoring of the project."
But opponents decried the high cost of the project and fretted over the impact on retail customers, who have been paying for these two units for years under various regulatory agreements. Prior to the early December hearings, opponents took out a full-page ad in the Atlanta Journal Constitution urging commissioners not to vote on the settlement until new commissioners were seated. Two of the GPSC commissioners were slated to stand for re-election in 2022, but legal wranglings over the process by which commissioners were elected have prevented those elections from taking place.
Building two new nuclear units has been a long and fraught process for the co-owners, who are: Georgia Power, which owns 45.7% of two new nuclear units; Oglethorpe Power Corporation (Tucker, Georgia) (30% ownership), the Municipal Electric Authority of Georgia (MEAG Power) (Atlanta) (22.7% ownership); and Dalton Utilities (Dalton, Georgia) (1.6% ownership). Initially budgeted at about $12 billion in 2008, the project is more than $20 billion over budget and years late in coming online. Unit 3 came online this past July, years behind schedule, and Unit 4 is scheduled to begin operating in early 2024. For more on Unit 3's start of commercial operations, see August 2, 2023, article - Years Late and Over Budget, Vogtle Unit 3 Begins Commercial Operations.
The estimated $35 billion price tag includes a $3.7 billion payment the co-owners received from Westinghouse Electric.
For more on those issues, see September 11, 2023, article - Georgia Power Reaches Settlement for Its Share of Vogtle Costs; and August 21, 2023, article - Vogtle Nuclear Power Unit 4 Reaches Latest Milestone with Fuel Loading. Unit 4 is scheduled to begin commercial operations either in the fourth quarter of 2023 or the first quarter of 2024.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 Trillion (USD).
