Vogtle Nuclear Expansion Price Tag Tops $30 Billion
Credit to Author: Darrell Proctor| Date: Mon, 09 May 2022 16:53:56 +0000
An updated financial report from one of the owners of the Plant Vogtle nuclear expansion in Georgia shows the cost to build two new reactors has now topped $30 billion, more than double the original price tag expected for the project.
The Municipal Electric Authority of Georgia (MEAG), one of four groups with an ownership stake in the Vogtle expansion, on May 6 raised its total cost forecast for the project to $7.8 billion, up from $7.5 billion. The group’s updated figures, when combined with cost estimates from the other owners, push the cost to build two new 1,100-MW reactors at the site in Waynesboro, Georgia, to at least $30.3 billion.
The owners’ updated cost estimate does not include the $3.68 billion that original contractor Westinghouse paid to the project’s owners after Westinghouse declared bankruptcy, putting total spending for the expansion in the range of $34 billion.
More Cost Overruns
MEAG, which provides power to city-owned utilities, owns 22.7% of Vogtle. The group in the report released Friday said its cost forecast includes capital spending and borrowing costs. MEAG’s new cost figure comes after Georgia Power, the lead owner of the project, in March announced another $920 million in cost overruns, putting its outlay for the project at an estimated $13.8 billion. Georgia Power, part of Southern Co., owns 45.7% of the project.
Oglethorpe Power Corp., which owns a 30% stake in the expansion, in March said its costs for the project had increased by $250 million, to $8.5 billion. The city of Dalton, Georgia, has a 1.6% ownership stake in Vogtle. Officials last year estimated Dalton’s costs at $240 million.
The addition of two new AP1000 reactors at Vogtle is the only utility-scale nuclear power construction project underway in the U.S., and when complete would represent the first U.S. major new nuclear power plant project finished in more than 30 years. The cost of the expansion has ballooned due to construction delays and other problems, including workforce reductions caused by the coronavirus pandemic.
Years Behind Schedule
The project is years behind its original schedule and billions of dollars above its original budget. The two Westinghouse AP1000 reactors were expected to enter service as early as 2016, at a cost of about $14 billion, after construction was approved in 2012.
Southern Co. CEO Tom Fanning in the company’s first-quarter earnings call in late April said both new reactors should be online by the end of 2023, with fuel loading for Unit 3 expected later this year.
Plant Vogtle has two existing reactors, with combined generation capacity of 2,450 MW. Unit 1 began operation in 1987, with Unit 2 coming online in 1989.
Chuck Goodnight, who leads the U.S. Nuclear Energy team at Arthur D. Little as part of the firm’s global Energy & Utilities Practice, recently told POWER the Vogtle expansion remains important to the nation’s nuclear power sector. He acknowledged the project’s cost overruns, and continued delays, but said, “The reason I think it should continue is a sunk cost issue. If we look back five years from now and say we didn’t finish this project, and we were so close … it would be a tremendous waste of money.”
Goodnight added: “For Vogtle, I’m exactly excited to see those plants completed and come online. Southern [Co.] has a historic reputation, well-earned, they run the plants well. They’ve been good at this. I would be confident that when they get these across the finish line, we’re looking at 80 years of 2,400 MW of generation. That’s exciting.”
‘Cost Sharing is Imminent’
Each ownership group, in a procedural move, voted in late February to continue construction. The three minority ownership groups in 2018 signed an agreement with Georgia Power that said if costs reach a certain level, the other owners can choose to freeze their costs at that figure. Georgia Power would take a larger ownership share of the projects if the utility pays more of the costs of the expansion.
MEAG on Friday said it wants to freeze its costs, though the group did not specify what amount it would want to shift to Georgia Power. Oglethorpe earlier said it wants to freeze its costs at $8.1 billion, with the group selling a 2% stake to Georgia Power in exchange for Georgia Power paying an additional $400 million toward construction.
Southern Co. earlier said it will pay at least $440 million more to cover other owner’s costs; another $460 million in costs is being disputed. Georgia Power has questioned the cost threshold of its liability, and has said it should not have to pay other owners’ share of costs related to issues with the pandemic.
Talks are continuing among the parties regarding those costs. Oglethorpe CEO Mike Smith in March said, “Cost sharing is imminent, however, until the parties reach agreement, Oglethorpe will continue to pay its full share of the construction costs as billed by Georgia Power, but will do so under contractual protest.”
—Darrell Proctor is a senior associate editor for POWER (@POWERmagazine).
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