Georgia Power Co. now says the first of two nuclear reactors it’s building at Plant Vogtle near Augusta might not begin generating electricity until as late as March 2023 and the reactors will cost their owners nearly $30 billion.
Southern Co., the Atlanta-based parent of the Georgia utility, made the announcements February 17 as it released its annual earnings. The parent company took a further $920 million loss on the reactors and warned it could have to write off another $460 million depending on how a dispute with Vogtle co-owners turns out.
With the charge-offs, Southern Co. said it lost $215 million in the fourth quarter, or 20 cents per share, while earning a profit of $2.39 billion, or $2.26 per share, for the year.
Vogtle is the only nuclear plant under construction in the United States, and its costs could deter other utilities from building such plants, even though they generate electricity without releasing climate changing carbon emissions.
Georgia Power’s 2.6 million customers are already paying the financing cost of the third and fourth reactors at Vogtle on monthly bills, a total of $3.5 billion through December 2020. Customers could be asked to pay $680 million of the additional construction and financing costs recorded Thursday, although ultimately that will be up to regulators at the Georgia Public Service Commission.
Southern Chief Financial Officer Dan Tucker told The Associated Press in a telephone interview Thursday that the company recognizes it’s committed more than $10 billion to building the plant but may never recover more than the $7.2 billion limit in construction costs set by commissioners.
“We understand that there is a low likelihood of that ever being reflected on customers bills,” Tucker said.
When approved in 2012, the third and fourth reactors were estimated to cost $14 billion, with the first electricity being generated in 2016. Thursday’s report pushed back the start date for the third reactor by as much as six months to March 2023, from the previous deadline of Sept. 30. Southern says the fourth reactor at Vogtle will reach commercial operation in late 2023, also delayed up to six months.
Vogtle is now projected to cost at least $29.8 billion, with Georgia Power projected to pay $13.8 billion for the 45.7% it owns. Oglethorpe Power Corp., which serves most Georgia electric cooperatives, is projected to pay at least $8.25 billion. The Municipal Electric Authority of Georgia, which serves municipal utilities, is projected to pay at least $7.5 billion. The city of Dalton’s utility owes at least $240 million.
The municipal utility in Jacksonville, Florida, as well as some other municipal utilities and cooperatives in Florida and Alabama are obligated to buy power from the plant.
The totals don’t count $3.68 billion that original contractor Westinghouse paid to owners after going bankrupt, which would bring total spending to more than $33 billion.
Tucker said that while work to fix previous problems at the third reactor continues, the new delay is driven by problems in documentation the company must submit to the Nuclear Regulatory Commission before it’s allowed to load nuclear fuel.
“We’ve identified that that paperwork was not adequately done along the way with construction on Unit 3, and now we’re having to go back and kind of remediate that,” Tucker said. He said the company hopes to load fuel between August and October.
Tucker said the company hopes to complete Unit 4 nine months after Unit 3 by building on its experience so far.
“We are seeing tangible evidence that those lessons learned are paying off,” Tucker said.
Tucker said Oglethorpe and MEAG have activated their right to require Georgia Power to pay all remaining overruns past a certain point, with the others selling shares of their ownership to Georgia Power equal to the additional costs. Of the $920 million that Southern wrote off, $440 million was to cover the other owners’ share of additional costs.
Southern said owners could shift another $460 million to Georgia Power but that the utility won’t seek to bill its own customers for any of the costs it assumes from other owners. Georgia Power disputes that it owes the $460 million.
The company also warned that further delays will cost $60 million per month for the third reactor and $40 million per month for the fourth reactor.
Georgia Power’s cost update came on the same day that the five-member Public Service Commission voted unanimously to accept a twice-yearly progress report on Vogtle. An expert witnesses who testified about the report in December said he believed Georgia Power might be intentionally low-balling the costs and completion dates for Vogtle. Tucker “adamantly” denied any subterfuge.
“Every time that we provide an estimate of cost and schedule, it is our very best estimate that we have in hand at the time,” he said. “And the notion that we are holding back in any way is just not true.”
