Georgia Power

Cost overruns embolden Vogtle foes

by Walter C. Jones, Morris News Service

ATLANTA – Without saying “I told you so” in so many words, groups opposed to the construction of two additional nuclear reactors at Georgia Power’s Plant Vogtle are pointing out that their predictions have come true. 

“Unfortunately, this is what we had been hearing and expecting. It is absolutely a significant change,” said Elena Parent, executive director of the advocacy group Georgia Watch.

Meanwhile, the company, which is only one of the plant’s owners, says despite construction delays and inflated costs that the doubling of electricity generation at the plant will still benefit its customers.

“Vogtle 3 and 4 represents the best economic value -- up to $4 billion more -- over available alternatives for providing safe, reliable, clean, affordable electricity to Georgians for a 60-year period,” said company officials.

Since the project was announced, the first commercial reactors to be built in the United States in 30 years, critics have warned that it would be prohibitively expensive and that costs were likely to soar beyond the $14 billion budget, $6.1 billion which would be Georgia Power’s share. And twice a year as the company submitted its expenses from the previous six months for state Public Service Commission approval, company executives kept saying it was on budget.

It all changed Feb. 28 of this year when Kevin Queen, Georgia Power’s manager of regulatory affairs, sent the eighth, semi-annual report on construction. The report with the pretty, color photo and positive projections of customer impact waited until page 4 to note that it would be $381 million more than originally forecast.

“I would say things have changed,” said Sara Barczak, a policy analyst with the Southern Alliance for Clean Energy. “This will be their first test of how the PSC will react to a request for more funds. From a process standpoint, that hasn’t happened yet.”

The commission has approved each of the first seven expense reports the company has submitted. Thursday, it will set dates for hearing testimony on the latest report from company executives and an independent observer the commission hired.

In addition to approving the latest expenses, the company wants the five-man commission to certify a higher budget for the project.

Georgia Watch and the Southern Alliance say they haven’t discovered any expenses that are “clearly imprudent,” the standard by which the commission can disallow expenses, forcing the company’s shareholders to bear the cost. But both organizations want the commission to set a policy that Georgia Power not be allowed to earn its standard profit for exceeding the budget, a policy they say would give the company incentive to hold the line on costs.

The commission already rejected such a risk-sharing mechanism when its staff proposed it before the budget overruns became a reality. And since the February overrun announcement, a House of Representatives committee also killed legislation that would have put it into place.

Two anti-nuclear groups have a bigger goal than Georgia Watch and Southern Alliance. They want the commission to halt Vogtle’s expansion outright despite the fact that construction is one-third complete. The Georgia Women’s Action for New Directions and the Nuclear Watch South say no more money should go into the project.

“I hope that this is kind of a wakeup call and that the project will be canceled all together. Georgia WAND does not think that it is too late to turn back,” said WAND spokeswoman Courtney Hanson.

She argues the commission does have reason to at least reject the current expenses.

“There is a huge lack of oversight, and the project is managed very poorly,” she said.

Canceling the project could impact more than Georgia Power, the company warns.

“The construction of Vogtle 3 and 4 is the largest job-producing project in Georgia, employing approximately 5,000 people during peak construction and creating 800 full-time, highly skilled and highly paid careers when the plant begins operating,” according to company officials’ statements in prepared documents.

That’s significant in the Central Savannah River Area where the unemployment rate is already 9.2 percent.

Besides, much of the remaining costs are locked in and can’t go up beyond a certain point. All but 4 percent of the engineering work is complete. The prices of equipment, labor and materials are fixed by a contract.

What has increased is the cost of quality control and added safety measures.

During the last round of expense-approval hearings, PSC Commissioner Tim Echols was flabbergasted to learn that paperwork was the reason for part of the delay and expense. Key components couldn’t be shipped from Louisiana to Georgia for months because quality documentation couldn’t be found.

All of the critics say there are cheaper ways to make electricity, especially since the wellhead price of natural gas has dropped from a high of $10.79 per thousand cubic feet in 2008 when Vogtle’s expansion was planned to as low as $1.89 last year.

And then there’s the safety issue.

Opponents had used the earthquake in Japan that triggered a nuclear-plant explosion as reason to stop Vogtle before it got a federal license to proceed. Of course, earthquakes and tsunamis are unlikely in Waynesboro where the plant is located.

But even last week’s explosion of a generator in an off-line, coal-fired unit at Georgia Power’s Plant Bowen provides new fodder.

“I think every time there is an event like that, it heightens everyone’s concerns about what could happen at a nuclear plant,” Parent said.

Georgia Power spokesman Mark Williams said Friday the company is still investigating the cause of the accident while adding that a comparable situation at Vogtle would not have involved any of the nuclear processes.

“And it’s important to note that the situation at Bowen is not comparable to Vogtle,” he said.

The commission’s work is suddenly much harder now that cost overruns can no longer be brushed off as the exaggerations of critics.

“It is not rocket science to predict that we would be in exactly this position, behind schedule and over budget, with the Vogtle nuclear project. Every nuclear reactor on the whole planet has charted a similar course,” said Glenn Carroll, coordinator for Nuclear Watch South.

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