Vogtle completion 'no longer economic,' Georgia PSC staff says

Dive Brief:

Construction of the Vogtle nuclear plant is "no longer economic" and should be cancelled unless the finances of the project change, regulatory staff in Georgia said last week.
In a Dec. 1 report, the staff of the Georgia Public Service Commission wrote that construction of the long-delayed nuclear plant would be too expensive for customers under current cost estimates. Staff recommended regulators reject the project's completion unless plant owner Georgia Power can cut the cost to ratepayers.
The Vogtle plant is the only nuclear generator under construction in the U.S. today after the cancellation of the V.C. Summer nuclear expansion in South Carolina this autumn. Both projects were beset by delays and cost overruns due largely to issues with reactors supplied by now-bankrupt Westinghouse Electric.

Dive Insight:

The staff report from the Georgia PSC does not represent a final decision on the Vogtle project, but its findings could spell trouble for the two-reactor expansion planned by Georgia Power.

The staff report argues that completion of the Vogtle plant would only be economic under scenarios with both high gas prices and a high price on carbon — situations most analysts say are unlikely to materialize in the next few years.

Averaging assessed scenarios, regulatory staff said they expect the project to be uneconomic by about $1.6 billion when compared to other generation sources. If Georgia Power and its parent, Southern Co., cannot make the project economic, staff argues regulators should cancel it.

Georgia Power, which owns about 45% of the plant, estimates total costs to finish the two reactors will be about $12.2 billion. Regulatory staff says a "reasonable" total project cost would be about $8.3 billion for the utility's share.

Southern has blamed most delays and cost overruns on the performance of reactor-maker Westinghouse, which filed for bankruptcy in March. But the staff report also includes some harsh criticisms of the utility's role in the plant expansion.

"The company's failure to manage the project in a reasonable manner resulted in repeated schedule delays and increases in actual and projected costs," staff wrote.

If the project is completed under current cost estimates, "ratepayers would incur significantly higher revenue requirements and a reduced economic benefit while the company's profits would increase," staff concluded.

Bringing the plant's cost estimates down to the levels that staff envisions will be a challenge for Southern, which only assumed control of construction in May. But the company said in a statement it is still confident Georgia regulators will approve completion of the project.

"We remain confident that the unified recommendation to move forward with construction represents the best choice for customers while preserving the benefits of a new carbon-free energy source for our state," a utility spokesperson said. "We also understand that this is a complex and difficult decision and it is ultimately the decision of the Georgia PSC on whether or not we will move forward with the Vogtle project."

If the Vogtle plant is cancelled, it would join the V.C. Summer nuclear expansion, which was abandoned by its two utility owners earlier this year. Since then, the CEO of one utility has stepped down, the government is looking to privatize the other, and a series of lawsuits are attempting to ascertain whether utility leaders misled the public and shareholders about the project's progress.