Georgia PSC approves Georgia Power’s recommendation to move forward with Vogtle nuclear expansion
The Georgia Public Service Commission (PSC) on Thursday granted Georgia Power approval to complete the construction of two new reactors at its Vogtle nuclear plant near Waynesboro, Georgia, the only new nuclear reactors under construction in the United States.
The decision follows months of review of a recommendation to continue the project presented to the Georgia PSC on August 31 by Vogtle co-owners Georgia Power, Oglethorpe Power, MEAG Power and Dalton Utilities.
The commission approved the construction project that has been plagued by billions of dollars in cost overruns and is years behind schedule, but with conditions. Specifically, Georgia Power’s revenue requirement will be reduced by $1.7 billion over the construction and operation of the plant. The commission also previously ordered Georgia Power to give ratepayers $75 in bill credits by the end of the third quarter in 2018.
“No matter what one’s opinion is of the economics of finishing Vogtle versus other generation sources, or the accuracy of certain natural gas forecasts, we cannot ignore the value of fuel diversity and all other non-economic benefits that have been mentioned in this case in the last few months,” Stan Wise, chairman of the Georgia Public Service Commission, said during the commission’s special administrative session on Thursday.
“We can not forget that this commission is statutorily charged with balancing the interests of both customers, constituents and utilities shareholders …,” Wise added.
The decision to cut Georgia Power’s revenue requirement by $1.7 billion “is real savings for ratepayers,” said Commission Vice Chairman Tim Echols, whose motion to impose the conditions received unanimous approval.
“The revenue requirement is the amount due to the company from customers over a period of time and includes return on equity (profit), return of equity (depreciation), taxes, debt, expenses, and all costs that the company needs to collect from ratepayers,” Echols said. “It is an ‘all in’ price and a reduction of revenue requirement of Vogtle over the construction and operation of the plant.”
Vogtle Unit 3 is expected to come online in November 2021, and Unit 4 is expected in November 2022. Vogtle 3 and 4 would be the country’s first new nuclear units in 30 years.
“The decision to complete Vogtle 3 & 4 is important for Georgia’s energy future and the United States,” Paul Bowers, chairman, president and CEO of Georgia Power, said. “The Georgia Public Service Commission has shown leadership in making this complex and difficult decision and recognized that the Vogtle expansion is key to ensuring that our state has affordable and reliable energy today that will support economic growth now and for generations to come.”
The commission approved the company’s revised schedule and cost forecast request, explaining the approved cost forecast will be reduced by the amount Toshiba Parent Guaranty recently paid Georgia Power for the project’s ongoing construction. As a result, the revised capital forecast totals $7.3 billion.
The agreement also includes further decreases if the expansion does not meet the revised in-service dates and does not guarantee that the company will collect its full cost request until it completes construction.
The commission’s decision assumes Congress will approve approximately $800 million in nuclear production tax credits, but if Congress does not, the commission may reconsider its decision.
Georgia Power said the company continues to support legislation that would allow the Vogtle project to continue to qualify for advanced nuclear production tax credits if the units are placed in service after Jan. 1, 2021.
“Today, after including anticipated customer benefits from federal production tax credits, interest savings from loan guarantees from the DOE and the fuel savings of nuclear energy, 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,” Georgia Power said.
Following the bankruptcy of the former primary Vogtle contractor Westinghouse in March and the rejection of the fixed-price contract, Georgia Power conducted a schedule, cost-to-complete and cancellation assessment that informed its recommendation to continue the project.
In September, the company received a conditional commitment of approximately $1.67 billion in additional loan guarantees from the U.S. Department of Energy (DOE). Recently Toshiba, the parent company of Westinghouse, paid the remaining $3.2 billion of its $3.68 billion parent guarantee.
“I commend the Public Service Commission for its vision and foresight in approving continuation of the Plant Vogtle expansion while holding the owners accountable to ratepayers,” Georgia Gov. Nathan Deal said. “Investing in clean, sustainable energy infrastructure is a worthwhile endeavor that will have a positive economic impact as well.”
The construction of the Vogtle nuclear units involves more than 6,000 workers and once operational, the plant is expected to create nearly 800 new jobs, according to Georgia Power. The units will generate enough electricity to power approximately 500,000 homes and businesses.
Plant Vogtle Units One and Two have been in commercial operation since 1987 and 1989 respectively.
