Georgia cooperatives move to freeze nuclear costs at $8.1B
One of the owners of a nuclear power plant being expanded in Georgia says it’s shifting overruns to Georgia Power Co. in exchange for giving up a sliver of its ownership.
Oglethorpe Power Corp. which provides power to 38 electric cooperatives, said Saturday that it has exercised a contractual option to freeze its costs for Plant Vogtle at $8.1 billion.
Oglethorpe Power said it would save members at least $400 million. In exchange, Oglethorpe’s ownership share of the two new reactors being built at the plant east of Augusta would fall from 30% to 28%. That would bump Georgia Power’s share of ownership from 45.7% to 47.7%.
Associated Press calculations show the plant will cost at least $30.34 billion.
If costs rise further, Oglethorpe would save more, but give up a larger share of its ownership.
Georgia Power officials have said they don’t expect regulators with the Georgia Public Service Commission to approve customers paying further costs. That means shareholders of Georgia Power’s parent — Atlanta-based Southern Co. — would pay.
Oglethorpe, Georgia Power and Vogtle’s two other owners — the Municipal Electrical Authority of Georgia and the city of Dalton — have been arguing over Georgia Power’s obligations to start absorbing more costs.
It was supposed to begin after more than $2.1 billion in overruns had occurred following a 2018 agreement. Oglethorpe says costs have risen by $3.4 billion since then. But Georgia Power has said COVID-19 was an act of God that drove up costs and delayed work, and it shouldn’t have to pay for that slowdown.
Southern Co. has acknowledged it will have to pay at least $440 million more to cover what would have been other owners’ costs, and has said another $460 million is in dispute.
Georgia Power spokesperson Jacob Hawkins said the company still has a “difference of opinion regarding whether the conditions for the tender have been satisfied.” He said Georgia Power would respond to Oglethorpe.
Oglethorpe said Saturday that the dispute remained unsettled. “However, we expect our partner to honor their commitment and stand by the contract all co-owners signed in 2018,” spokesperson Blair Romero said.
The 2018 escape hatch was written when Oglethorpe threatened to withdraw from the project, which could have led to its cancellation. Georgia Power first agreed to pay increasing shares of Vogtle’s cost beyond a certain point, costing Georgia Power $180 million without affecting others’ ownership shares. Then the co-owners can freeze costs in exchange for owning less of the generating capacity.
Oglethorpe said Saturday that it expects to own 618 megawatts of capacity, down from 660 megawatts. The two new units at Vogtle are supposed to generate 2,234 megawatts.
Some of Oglethorpe Power’s cooperatives have already been charging their members for Vogtle’s construction costs. Oglethorpe President and CEO Michael Smith said the cooperatives remain “deeply invested in the success of these nuclear units” but said 4.4 million member owners had to be protected. Unlike Georgia Power, cooperatives don’t have shareholders to fall back on.
Smith said the decision to freeze protects “consumers who can least afford increases in their electricity rates, especially in today’s economy.”
Vogtle’s $30.34 billion cost doesn’t include $3.68 billion that original contractor Westinghouse paid to the owners after going bankrupt, which brings total spending to more than $34 billion.
Vogtle is the only nuclear plant under construction in the United States, and its costs could deter other utilities from building such plants, even though they generate electricity without releasing climate-changing carbon emissions.
The Municipal Electrical Authority of Georgia, which owns owns 22.7% of Vogtle and provides power to city-owned utilities, hasn’t said yet whether it will hand over part of its ownership to save costs. MEAG projects it will pay $7.8 billion.
The city of Dalton, which owns 1.6%, estimated its cost at $240 million in 2021.
The municipal utility in Jacksonville, Florida, as well as some other municipal utilities and cooperatives in Florida and Alabama are obligated to buy power from the plant.
When the project was approved in 2012, the reactors were estimated to cost $14 billion, with the first electricity being generated in 2016. Now the third reactor is set to begin operation in March 2023, and the fourth reactor in December 2023.