Vogtle utility customer wants project canceled as regulators near decision

Dive Brief:

The Georgia Public Service Commission will make a decision by Dec. 21 on the fate of the Plant Vogtle nuclear expansion, which is long-delayed and billions over construction cost estimates.
However, project owner Georgia Power painted a rosy picture in a project update it released yesterday. The utility said 2017 was "a year of construction progress for the Vogtle expansion." Despite setbacks, the Southern Co. utility wants to complete the project.
Its partners may not feel the same way. Moody's has lowered the ratings outlook of Jacksonville Electric Authority, a Florida utility with a 20-year contract for Vogtle power. And analysts say the utility is hoping Georgia regulators cancel the project, as it no longer wants the power it has promised to buy.

Dive Insight:

Georgia regulators are poised to make a decision on the Vogtle project in the next week, and the stakes riding on their decision are high for customers, Georgia Power and its partners.

Moody's Investor Services last week cited JEA's involvement with Vogtle as one reason it lowered the municipal utility's ratings outlook to negative from stable.

The credit ratings agency said the downgrade "reflects the increasingly pressing credit challenges facing JEA owing to the exposure to new nuclear construction." JEA has a 20-year power purchase agreement with the Municipal Electric Authority of Georgia (MEAG) for 206 MW of Vogtle's output.

But JEA reportedly wants the project canceled. And JEA Chairman Alan Howard disagreed with Moody's decision, telling Jacksonville.com, “I don’t believe it is justified.”

Georgia Power owns most of the project but three municipal utilities — Oglethorpe Power (30%), MEAG (22.7%) and Dalton Utilities (1.6%) — own the remaining shares.

In September, Georgia Power got a boost from the U.S. Department of Energy, which announced conditional commitments for up to $3.715 billion in loan guarantees for Vogtle. DOE granted $1.67 billion to Georgia Power to move forward with its 46% of the project. The company is also slated to receive $1.47 billion from Toshiba, parent company of former primary Vogtle contractor Westinghouse. It's part of a $3.2 billion settlement Westinghouse is paying to project owners.

In Georgia Power project update, it said that after including anticipated customer benefits from federal production tax credits and interest savings from loan guarantees, "the projected peak rate impact to Georgia Power retail customers is approximately 10 percent, with 5 percent related to the project already in rates – well below original projections of approximately 12 percent."

In addition, much of the rate impact is already baked in to customer bills, it noted.

If the PSC decides to scrap the Vogtle project, Platts reports making that decision before the end of this year could save customers some $150 million due to anticipated changes to the tax code.