Georgia’s troubled expansion of Plant Vogtle got a last-minute extension Wednesday, with the project’s warring co-owners striking a deal to keep alive the nation’s only commercial nuclear plant still under construction.
All four owners voted to continue the multi-billion-dollar effort, but without a proposed cap on further cost overruns or clear limits on how much of new expenses might appear in customers’ monthly electric bills.
According to a joint press release, though, new agreements will help “mitigate financial exposure for each” of the owners: Georgia Power, Oglethorpe Power, the Municipal Electric Authority of Georgia and Dalton Utilities.
If future overruns become big enough, the deal would require lead owner Georgia Power to cover a larger portion of those costs than it otherwise would have. For example, it appears that if there are $1.6 billion in new expenses, Georgia Power would shoulder an additional $80 million above its normal share of the costs.
The agreement also reduces some of the ability of Georgia Power’s partners to pull out of the project. But it creates options in certain circumstances for them to sell portions of their project rights to Georgia Power. And it states Georgia Power has the right to “cancel the project at any time in its sole discretion.”
“We are all pleased to have reached an agreement and to move forward with the construction of Vogtle Units 3 & 4 which is critical to Georgia’s energy future,” the co-owners stated in a press release. “While there have been and will be challenges throughout this process, we remain committed to a constructive relationship with each other and are focused on reducing project risk and fulfilling our commitment to our member-consumers.”
After nine years of construction, the project south of Augusta is billions of dollars over budget and years behind schedule. It is now slated to go online in late 2022. Overruns can affect customers of nearly every utility in Georgia, most of which are slated to get energy from the project.
Georgia Power recently had announced $2.3 billion in new cost overruns, just eight months after its last announcement of increased costs. The increase automatically triggered a requirement that co-owners on the Vogtle project again vote on whether to continue the work. That requirement no longer exists under Wednesday’s agreement.
The board of Oglethorpe Power — the project's second biggest owner — had earlier demanded that a cost cap be placed on the project to mitigate its soaring costs. Oglethorpe also had insisted that Georgia Power's parent company, Southern Company, eventually take on the additional financial risk if it continues to be wrong about cost projections on the work it manages.
It was the first public call by a Vogtle owner to enact limits on project costs.
That was followed by two days of negotiations before Wednesday’s announcement of a deal.
The agreement sparked additional worries from some.
“We’re very concerned about today’s announcement because it’s clear the Plant Vogtle nuclear project is in serious trouble if this much arm twisting is necessary to keep all four partners at the table,” Stephen Smith, executive director of Southern Alliance for Clean Energy said in an emailed statement.
Liz Coyle, the executive director of consumer advocate Georgia Watch, said that after a quick view of the agreement it “appears the owners have decided to plow ahead with a project that holds continued uncertainty and certainly clear risk of major cost increases and very little, if any true protections for Georgia’s electric customers.”
But Gov. Nathan Deal commended efforts to continue a project that “will ensure that Georgia citizens have a long-term, affordable and sustainable energy source,” according to an emailed statement from his office.
Jim Fuller, the chief executive of the Municipal Electric Authority of Georgia, issued a statement that the new agreement “includes significant additional safeguards” that validate an earlier decision by the Vogtle co-owner to continue with the project.
The deal includes financial safeguards if MEAG’s ability to continue the project is stymied by a fight with JEA, a Jacksonville, Fla.-based utility that is suing to extricate itself from a deal to buy some of the project’s power and cover some of its construction costs. JEA, like a number of other Vogtle critics, says the project’s power will be more expensive than that from other sources.
Under a new agreement
If the Plant Vogtle project costs exceed the latest estimate cost of completion by:
between $800 million to $1.6 billion, Georgia Power would be responsible for 55.7% of the costs. Co-owners would share the remaining 44.3%;
between $1.6 billion to $2.1 billion, Georgia Power would be responsible for 65.7% of the costs. Co-owners would pay the remaining 34.3%;
$2.1 billion, each of the co-owners would have a one time chance to sell a portion of their share to Georgia Power. Georgia Power will then cover their portion of the costs.
If the project is completed under the estimated budget and before the November 2021 and November 2022 target dates, Georgia Power would be entitled to 60.7 % of the cost savings. The co-owners will split the the rest of the savings based on their share of the project.
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