Vogtle Nuclear Project Facing $900 Million in Cost Overruns

May 11th, 2012

Georgia Power is currently disputing $400 million dollars in cost overruns with its contractors over construction issues for the new twin reactors at Plant Vogtle near Augusta.

Georgia Power’s partners, collectively, could be on the hook for an additional half a billion. The total cost of the overruns are projected at about $900 million.

The exact amount that could be passed down to ratepayers isn’t known at this point – negotiations are still ongoing. But recent filings by Southern Company, Georgia Power’s parent company, have Jim Warren of the environmental watchdog NC WARN concerned.

“You are going to expect some changes to occur, but the enormity of these problems so early on, I mean they were barely three months from receiving a license for construction and they are already suffering major cost overruns,” says Warren.

The original projected cost of the two new reactors is about $14 billion. Cost overruns threaten to raise the price tag nearly a billion dollars.

Southern officials say the overruns stem from a delayed federal licensing process. According to recent SEC filings, Southern believes its primary manufacturer, Westinghouse, should absorb the costs of the delay.

“The company has not agreed with the amount of these proposed adjustments or that the owners have responsibility for any cost related to these issues,” says Southern spokesman Steve Higginbottom.

Georgia Power has a 45 percent stake in the project. Oglethorpe Power, the Municipal Electric Authority of Georgia, and Dalton Utilities are the project’s other major partners.

According to Higginbottom, Georgia Power is negotiating on their behalf.

“If a compromise cannot be reached, formal dispute resolution which includes litigation could follow and the company intends to vigorously defend its position.”

Higginbottom says that in the event that Georgia Power is deemed responsible, the company would have the authority to go to the Public Service Commission and seek approval to recover those costs from ratepayers.

The two new nuclear reactors would be the first built in the U.S. in a generation. Earlier this week, Georgia Power officials reported to state regulators that the original completion date for the first unit would be delayed by seven months, from April to November of 2016.