Dive Brief:
- Rising costs for the development of two new nuclear units at the Vogtle plant in Georgia have spawned dueling lawsuits between an owner of the project and a municipal utility that claims it never signed up for the perpetual cost increases — and if it did, it shouldn't have been allowed to.
- Jacksonville Electric Authority (JEA) has asked a Duval County, Fla., circuit court to find a 2008 power purchase agreement (PPA) to be unenforceable, claiming it violates the state's constitution, laws and public policy, and the city's elected leadership had not given its blessing to the deal.
- Development of Units 3 and 4 was initially expected to cost $7.3 billion but over the years that price tag has ballooned to more than $27 billion. According to the Augusta Chronicle, JEA's obligations over the 20-year life of its agreement could be more than $2 billion.
Dive Insight:
JEA is showing signs of buyer's remorse, but given the nearly 400% cost increase it's hard to blame the municipal utility.
JEA is suing one of Vogtle's owners, the Municipal Electric Authority of Georgia (MEAG), requesting a declaratory judgment that the PPA they agreed to cannot be enforced. The utility argues the Jacksonville City Council did not approve the deal; JEA's board overstepped its authority in making the arrangement; and Florida law prohibits the contract.
Despite the fact that JEA's board of directors signed off on the deal, the utility says it should not have.
"The citizens and ratepayers in northeast Florida rely on JEA to manage the electric utility system in a prudent manner and to protect them from unjust, ill-considered, or extortionate contracts," the utility said in its filing with the court.
The utility goes on to highlight what it claims to be a very bad deal.
"Under the PPA, JEA’s electric utility ratepayers are burdened for 20 years by the obligation to fund a project in which JEA retains no ownership interest, over which JEA has no management or budgetary control, and from which ratepayers may never receive any electricity or capacity notwithstanding the massive unconditional financial obligations incurred," the authority told the court.
JEA's interest in voiding the contract has spurred its own lawsuit in a Georgia district court.
MEAG has sued JEA, asking the court to weigh in on the contract and the parties' responsibilities, and for "injunctive relief" to stop future breaches of contract.
Rising costs have triggered a vote by the owners on whether to continue construction on Vogtle, scheduled for Sept. 24. According to MEAG, JEA has "demanded" that it vote against continuing the project.
"JEA has indicated a clear intent to breach its contract, abandon its obligations, undermine MEAG Power’s ability to perform, and attempt to force MEAG Power’s hand in the vote," the Georgia authority told the court.
The Vogtle expansion is primarily owned by Southern Co. and its utility subsidiary Georgia Power. Oglethorpe Power and Dalton Utilities also own shares.
