Oglethorpe Agrees to Continue Vogtle Nuclear Project with Conditions; Final Vote Still to Come
Owners of the beleaguered Plant Vogtle nuclear expansion project have voted—at least for now—to continue construction of two new AP1000 reactors at the site near Waynesboro, Georgia. Directors of the Municipal Electric Authority of Georgia (MEAG Power) and Oglethorpe Power on September 24 each agreed the oft-delayed and increasingly over-budget project should move forward, although Oglethorpe’s board said its vote was conditioned on the project’s owners agreeing to cap costs.
The other co-owners, Georgia Power and Dalton Utilities, already had agreed to support continuing the project, which adds two reactors to the two that have operated at Plant Vogtle since the 1980s. However, the co-owners late Monday also apparently agreed to continue discussions about the plant’s future, saying they have set a 5 p.m. Eastern deadline September 25 to make a final decision on the plant’s future.
The expansion project, which is about half finished with the two new reactors now expected to come online in 2021 and 2022, respectively, is about five years behind schedule and more than $13 billion above budget, according to cost estimates from the parties involved outlined in filings with government regulators. (For more on costs, see “Vogtle’s Soaring Costs” and “How the Vogtle Nuclear Expansion’s Costs Escalated.”)
The latest cost increase, with Georgia Power announcing in August its share of the project cost had increased another $1.1 billion, prompted today’s vote by co-owners Oglethorpe Power (30% ownership stake) and MEAG Power (22.7%). Both Oglethorpe and MEAG needed to agree with Georgia Power (45.7%) and Dalton Utilities (1.6%) for construction to continue. The project’s ownership agreement requires holders of at least 90% of ownership interests to agree to move forward in order for the project to continue, meaning a “no” vote from either or both of MEAG and Oglethorpe could have scuttled the project.
MEAG Power’s board voted unanimously Monday afternoon to continue construction. Oglethorpe announced its vote late Monday evening. Michael Smith, Oglethorpe’s president and CEO, said, “Capping our costs … is a reasonable request and a prudent business decision that would allow the project to move forward.”
Sara Barczak, regional advocacy director with the Southern Alliance for Clean Energy—a group that has been vocal in its opposition to continuing the Vogtle project—in a statement after Monday’s vote said: “(The authority’s) decision to go forward with the Vogtle nuclear units despite serious objections by a key utility partner of theirs, (JEA), and additional massive cost overruns and continued mismanagement represents yet another broken promise for electric power customers in Georgia, who will suffer because of the inability for the owners and their regulators to make hard decisions.”
The Plant Vogtle expansion is the only U.S. nuclear power plant project currently under construction. A similar project to add two AP1000 reactors to the V.C. Summer Nuclear Station in South Carolina was abandoned last year. Only one new nuclear unit, Unit 2 at the Watts Bar Nuclear Plant in Tennessee—POWER’s Top Plant for 2018—has come online in the U.S. since Watts Bar Unit 1 entered service in 1996.
Georgia Power in August said its shareholders would partly cover the utility’s portion of the most-recent cost overrun at Vogtle. The project’s other owners are co-operatives, meaning ratepayers would have the burden of paying for increased costs.
The U.S. Department of Energy (DOE) already has paid the project’s owners $5.6 billion of an $8.3 billion loan guarantee for the project. The Trump administration has promised the project an additional $3.7 billion if construction continues.
John Sneed, executive director of the DOE Loan Programs Office, in a letter to the project co-owners on September 21 said his agency acknowledges continuing construction is a “commercial decision” but said the owners must realize Vogtle’s “profound impact on the U.S. nuclear industry.” Sneed in his letter wrote: “The decision each owner makes should be made with an understanding of the ripple effect this project is already having, including job creation and the positive signal of the continued value of commercial nuclear power in our country.” Sneed’s letter said if the project were canceled the DOE “will move to fully enforce its rights under the terms of the Loan Guarantee Agreements to ensure the true guarantors of those funds … are made whole.”
Georgia Gov. Nathan Deal last week in a letter to the co-owners said: “Given the project’s critical economic impact to the State of Georgia, I strongly encourage [the] co-owners to continue work and complete the construction. I am counting on the project co-owners to follow through on the commitments you made to the citizens of Georgia, ratepayers and [to] myself.”
Lawsuits Cloud Project’s Future
JEA, formerly known as Jacksonville (Florida) Electric Authority, which has a power purchase agreement with MEAG Power to buy electricity from Vogtle, earlier this month sued MEAG Power and filed a petition with federal regulators that outlined how abandoning the project would save JEA’s customers money. JEA has put up billboards in Georgia calling Vogtle a “$30 billion mistake.” It also took out full-page newspaper ads in the region headlined “Plant Vogtle Will Cost You.”
MEAG in turn sued JEA for breach of contract regarding the PPA.
JEA, in a statement issued after the MEAG board Monday unanimously voted in favor of continuing the Vogtle project, said: “JEA is disappointed with the decision made by the MEAG Power board of directors to proceed with the Plant Vogtle expansion project. This action effectively ignores an alternative arrangement that JEA presented, which would have provided total savings of $2.5 billion to MEAG Power, Power South and JEA customers.”
The statement continued: “Ratepayers across Georgia, Alabama and northeast Florida are shouldering this project’s exorbitant and ever-ballooning costs with no guarantee they will receive the power promised by the new units. All of the project owners are responsible for the interests of our collective ratepayers, and JEA will continue working to find a course of action that relieves them of this unfair burden.”
Alan Howard, chairman of the board for JEA, last week told the MEAG board, “I urge you to vote no on continued construction of Vogtle 3 and 4. The amount of cost overruns at Vogtle 3 and 4 boggles the mind.”
Howard in a letter last week to MEAG Power Chairman Gregory Thompson outlined the cost savings for JEA’s customers if the Vogtle project is abandoned.
Georgia Power spokesman John Kraft in an email statement prior to Monday’s vote said, “A year ago, Georgia Power and all of the Vogtle co-owners entered a new contract to move forward with the project and everyone acknowledged and accepted all possible risks. Georgia Power has voted to move forward, and we hope the co-owners will also vote in favor to fulfill their obligation.”
Tim Echols, vice-chair of the Georgia Public Service Commission (PSC) who has written commentary about Vogtle in POWER, in an email statement said, “Gov. Deal is right in saying that Vogtle’s biggest benefit right now is the massive economic development impact in the region providing almost 7,000 jobs. Even with the continued support our commission has shown for the project, the plant’s destiny is now in the hands of the co-owners.”
Georgia lawmakers last week sent a letter to the Vogtle co-owners asking for a limit on the Vogtle project’s ballooning costs. Twenty members of the state General Assembly, representing districts within MEAG Power’s service territory, said a move by Southern Company—parent of Georgia Power—to pass along additional costs to the company’s shareholders puts a “disproportionate cost burden on EMC [Georgia Electric Membership Corp.] and city utility customers.” The Georgia EMC represents the state’s electric membership cooperatives.
Vogtle Major Issue in PSC Races
The PSC, which regulates the rates Georgia Power charges, has been in the middle of the debate about Vogtle’s future. The agency’s own analysts in December 2017 said the project was “no longer economic,” but the five PSC commissioners later that month voted to move forward with the project, based on Georgia Power’s agreement to a set of conditions to continue construction.
Two PSC seats are up for election in November. The five-member panel is elected statewide for six-year terms on a rotating basis. Commissioner Chuck Eaton, a Republican representing District 3, has been a proponent of nuclear power and regularly touts the jobs the Vogtle project has created. He has not addressed a cap on the project’s costs.
Eaton’s opponent, Democrat Lindy Miller, has focused her campaign on ensuring the project’s costs are capped. In an email to media she wrote: “Since Westinghouse went bankrupt in 2017, our Public Service Commissioners have repeatedly voted to let this project continue with no cap on costs or protections for Georgians. With Vogtle now billions of dollars over budget and years behind schedule, Georgia’s working families and small businesses are paying for corporate mistakes and a lack of substantive regulatory oversight. This is another story of Wall Street versus Main Street. We need commissioners who will fight for the public interest and protect consumers, instead of writing blank checks to special interests with our money. I applaud the members of the legislature who are joining our push for greater accountability in this project.”
Dawn Randolph, the Democratic candidate for the District 5 PSC seat, in a statement said, “Relying on Georgia Power to place a cap on the project is ludicrous—it’s like taking Cookie Monster to the Keebler Elves Factory and telling him not to eat anything.” Randolph said the current PSC has been “negligent” in its duties and said she would work with state lawmakers on legislation to enforce a cap on the project’s costs.
Randolph’s Republican opponent, Tricia Pridemore, was appointed by Gov. Deal to the seat vacated by former PSC Chairman Stan Wise in early 2018. She has not responded to requests for comment on the Vogtle project.
The Odyssey of Plant Vogtle
1970 —The board of directors of Georgia Power, a subsidiary of Southern Company, vote to build a nuclear power plant, designed to include four reactors.
1976 —Construction of the first two reactors begins near Waynesboro, in a rural area of eastern Georgia near the border with South Carolina. The plant is dubbed the Alvin W. Vogtle Electric Generating Plant, or Plant Vogtle. It is named after former Southern Company board chairman Alvin Vogtle.
1987 —The 1,215-MW Unit 1 enters commercial operation.
1989 —Unit 2, also with 1,215 MW of generation capacity, comes online. Cost of the first two reactors, each a Westinghouse pressurized water reactor with a General Electric steam turbine and electric generator, is estimated at $9.2 billion.
2006 —Southern Nuclear, the nuclear power subsidiary of Southern Company, applies for a permit to build two additional reactors at Vogtle. Georgia Power asks the state Public Service Commission (PSC) for permission to bill the utility’s customers for the planning and licensing costs for the two additional reactors.
2009 —The PSC tells Georgia Power it can begin construction on Units 3 and 4 at Vogtle. State lawmakers vote to allow the utility to pass on costs to customers as the project moves along, with the units expected to be completed in 2017. The operating license for the existing Units 1 and 2 at Vogtle is extended another 20 years.
2013 —Construction begins on Units 3 and 4, which would add 2,300 MW of generation capacity at Plant Vogtle.
2015 —Construction contractors sue Georgia Power over continued construction delays that have added an estimated $3 billion to the cost of the project. The completion date is now 2020.
December 2016 —Georgia Power reaches a settlement with state regulators. The utility agrees to controls on the cost of the two new reactors, and agrees to pay penalties if the two units are not completed by year-end 2020.
February 2017 —Toshiba, parent company of Westinghouse—which designed the two AP1000 reactors at Vogtle and served as the project manager at the time—says it has lost $6 billion on its two ongoing U.S. nuclear plant projects: Vogtle in Georgia, and the similar V.C. Summer twin-reactor project in South Carolina.
March 2017 —Westinghouse files for Chapter 11 bankruptcy protection, saying it has lost $9 billion on its two U.S. projects.
May 2017 —Georgia Power reaches a deal to take over the project from Westinghouse. Southern Nuclear, a subsidiary of Southern Company (the parent of Georgia Power), takes over as the project manager.
July 2017 —SCANA Corp. and Santee Cooper say they are ending construction on Units 2 and 3 at the V.C. Summer project. The project is estimated to be 64% complete. The decision comes two days after Toshiba agrees to pay SCANA and Santee Cooper $2.2 billion to exit the project.
August 2017 —Southern Company says there have been more delays in the Vogtle project. It says the cost to build the two new reactors has ballooned to more than $25 billion. Bechtel takes over as lead contractor on the project.
September 2017 —The DOE announces another $3.7 billion in loan guarantees for the Vogtle project. The money is in addition to $8.3 billion already guaranteed by the DOE to support construction.
December 21, 2017 —The PSC supports Georgia Power’s request to continue construction at Vogtle, despite PSC analysts earlier in the month saying the project is “no longer economic.”
August 2018 —Georgia Power announces another $2 billion-plus in cost overruns at Vogtle.
September 2018 —The city of Jacksonville, Florida, and JEA—that city’s municipal utility—ask a Florida court to rule whether a power purchase agreement with Vogtle is valid. JEA says it filed the lawsuit to protect its ratepayers. MEAG Power files a lawsuit against JEA in a Georgia court, accusing JEA of breach of contract.
September 24, 2018 — The project’s co-owners vote on whether to continue construction. Georgia Power and Dalton Utilities earlier had voted to move forward; MEAG Power’s board unanimously votes to continue construction. Oglethorpe Power’s board gives conditional approval, asking for a cap on the project’s costs.
—Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine).
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