(This is a breaking news story. This post will be updated as information is available; scroll down for the latest updates and additions.)
by Will Davis
Today, Georgia Power announced that it will file with the Georgia Public Service Commission its recommendation to complete construction of the two AP1000 units that constitute the Plant Vogtle expansion. Today was the filing deadline for the utility to present a schedule and cost-to-complete for the units, and a go / no-go decision was expected today.
Georgia Power Announces Ahead of PSC Meeting
In an early morning press release, Georgia Power announced its decision to continue the project (which will now be subject to a six month review by the Georgia PSC) and added that the project’s co-owners (Oglethorpe Power, MEAG Power and Dalton Utilities) are in agreement with the decision.
In the same release it was announced that construction management for the project will be taken over by Bechtel Corporation, who will work for Southern Nuclear, a subsidiary of Southern Company; Southern Company is Georgia Power’s parent company. Southern Nuclear has effectively taken over as prime or lead contractor for the project. Westinghouse, formerly the prime contractor, has long been expected to step back (under bankruptcy) to being a technology/equipment provider.
Update (10:10 AM Eastern Time) – No further information emerged during the Georgia PSC’s brief Energy Committee meeting this morning, which briefly handled about five other, unrelated docket items.
Westinghouse Applauds Georgia Power’s Decision
Westinghouse President and CEO Jose Gutierrez was quoted in an official release as saying “We are very pleased with Georgia Power’s decision to recommend the continued construction of Vogtle 3 and 4, and are honored to have the opportunity to move forward with our customers.” He also said “Georgia Power’s continued confidence in the AP1000 plant technology strengthens their energy offerings and nuclear energy’s role in America’s infrastructure.”
At the time ANS Nuclear Cafe went to press, further press releases from Bechtel and other Vogtle co-owners were not yet available. This post will be updated with further details as they emerge.
Georgia Public Service Commission Receives Revised Cost and Schedule Figures on Vogtle (10:12 AM Eastern)
The Georgia PSC announced this morning that it had received the revised cost-to-complete and construction schedule from Georgia Power. According to the Georgia PSC press release, Georgia Power / Southern Nuclear will act as overall project manager on behalf of all participating utilities. The expected completion dates are now November 2021 for Vogtle Unit 3, and one year later for Unit 4.
In terms of ratepayer impact, the projected increase overall on Georgia Power’s ratepayers is expected to be approximately $1.41 billion more than what has already been approved by the PSC, according to the release.
Significantly, the release notes that “updated project economics are based on assumptions related to the Parental Guarantee, the extension of the Production Tax Credits and United States Department of Energy Federal Loan Guarantees.” Clearly, then, these revised figures will require more legislative work as well as the ability of Toshiba, Westinghouse’s parent, to make full and timely payments on its previously-agreed Parental Guarantee.
Georgia Governor Praises Decision to Continue Vogtle (10:40 AM Eastern)
Georgia Governor Nathan Deal issued a press release this morning, reproduced below:
Gov. Nathan Deal today praised the recommendation of Plant Vogtle Units 3 and 4 co-owners to complete construction of a new clean energy source for Georgians. This recommendation was made today in a filing to the Georgia Public Service Commission.
“I’m extremely pleased to learn the co-owners of Plant Vogtle Units 3 and 4 have recommended completion of construction,” said Deal. “Georgia Power, Oglethorpe Power, MEAG Power and Dalton Utilities have made the right decision for our state. These new units will provide clean and affordable energy to Georgians for more than 60 years while creating 6,000 jobs during project construction and 800 well-paying, permanent ones after.”
Bechtel Selected to Complete Construction of U.S. Nuclear Plant Expansion (11:00 AM Eastern)
Bechtel Corporation made a press release this morning (8/31) which in part stated the following:
Bechtel, a global leader in engineering, procurement, construction, and project management, today announced the company has been selected by Georgia Power to complete construction of the two-reactor expansion of a nuclear power plant near Augusta, Georgia. Plant Vogtle Units 3 & 4 will be the first new units built in the U.S. in the last three decades and are currently the only new units being constructed in the country.
“This is a critically important project for the nation and we’re honored to be chosen,” said Barbara Rusinko, president of Bechtel’s government services and commercial nuclear power business. “We are committed to the long-term future of nuclear power as a safe and reliable, 24/7 provider of carbon-free electricity.”
Bechtel will assume responsibility for a broad range of activities including day-to-day construction through completion of the project under the management of Southern Nuclear, the Southern Company subsidiary which operates the existing two units at Plant Vogtle.
“We look forward to moving ahead with the great relationships we’ve built with plant leadership and the skilled tradespeople at the site,” said Ty Troutman, Bechtel’s project manager and a 30-plus year nuclear industry veteran. “We’ve accomplished a lot already and we have a plan in place to deliver.”
Bechtel Corporation has been involved in nuclear plant design and construction since the very beginning of the nuclear energy era in the United States.
•ANS Nuclear Cafe is in receipt of the detailed documents filed today with the Georgia PSC by Georgia Power, and analysis of these will follow later today.
Southern Company Subsidiary Georgia Power files recommendation to complete construction of Vogtle Nuclear Expansion (12:00 PM Eastern)
A portion of Southern’s press release follows, related to today’s news and a look ahead:
Southern Company subsidiary Georgia Power filed a recommendation with the Georgia Public Service Commission (PSC) to continue construction of the Vogtle nuclear expansion near Augusta, Georgia. The project’s co-owners, Oglethorpe Power, MEAG Power and Dalton Utilities, all support the recommendation. The recommendation is based on the results of a comprehensive schedule, cost-to-complete and cancellation assessment. The Georgia PSC is expected to review the recommendation and make a decision regarding the future of the Vogtle 3 & 4 project as part of the 17th Vogtle Construction Monitoring (VCM) proceeding.
“Completing the Vogtle 3 & 4 expansion will enable us to continue delivering clean, safe, affordable and reliable energy to millions of Georgians, both today and in the future,” said Paul Bowers, chairman, president and CEO of Georgia Power. “The two new units at Plant Vogtle will be in service for 60 to 80 years and will add another lowcost, carbon-free energy source to our already diverse fuel mix.”
Based on all factors considered, completing both units represents the most economic choice for customers and preserves the benefits of carbon-free, baseload generation. Assessments of the project included robust economic analyses; evaluation of various alternatives including abandoning one or both units or converting the units to gasfired generation; and assumptions related to potential risks including future payments from Toshiba, availability of production tax credits and extension of loan guarantees from the Department of Energy (DOE). The latter two benefits were prescribed in the Energy Policy Act of 2005.
Georgia Power expects Vogtle Unit 3 will reach commercial operation in November 2021 and Unit 4 in November 2022. The total rate impact of the project remains less than the original estimate, 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. Once the project is on line, the company should still be able to offer retail rates below the national average with the additional long-term benefits from this new source of clean and reliable energy.
“Since the beginning of the Vogtle expansion, we have worked to minimize the impact of this critical project on customers’ monthly bills and, even as we assessed our options of whether or not to continue the project, our focus has been to ensure long-term value,” added Bowers. “Today, the total cost of electricity from Georgia Power is significantly below the national average, and when the project is completed, we expect that the new units will help keep energy bills competitive.”
Georgia Power, which owns 45.7 percent of the new units, has invested approximately $4.3 billion in capital costs in the project through June 2017 and estimates that its cost to complete the project is approximately $4.5 billion, for a total Georgia Power capital cost forecast of approximately $8.8 billion. The Georgia PSC has already approved $5.68 billion in capital costs for Georgia Power’s share of the project. With $1.7 billion in anticipated payments from Toshiba, the company’s potential additional capital costs are approximately $1.4 billion. Based on the new assessments, the total estimated capital cost forecast for 100 percent of the project is approximately $19 billion.
Nuclear Energy Institute’s Maria Korsnick on Vogtle Continuation (1 PM Eastern)
WASHINGTON, D.C. — Earlier today, the boards of Georgia Power and Southern Company announced their intention to continue construction of Plant Vogtle Units 3 and 4. The following statement is from Maria Korsnick, president and chief executive officer of the Nuclear Energy Institute.
“Georgia Power’s decision to continue construction of Vogtle Units 3 and 4 is welcome news and signals a new era for nuclear energy in this country. Today’s announcement is also a shot in the arm for the employees and contractors on site and America’s nuclear supply chain, sustaining a ripple effect that will generate jobs and economic activity across Georgia and the nation for the entire 60-year life of the reactors.
“The Vogtle reactors are a national asset that we can ill afford to lose, and the Senate must act quickly to preserve a critical piece of our strategic infrastructure. We need the Senate to follow the example of the House and vote to lift the deadline for the nuclear production tax credit.”
Details Become Available in Georgia Power Filing to PSC (2:55 PM Eastern)
Today’s filing of the 17th Semi-Annual Construction Monitoring Report on Plant Vogtle’s expansion by Georgia Power contains a number of interesting and important details that may affect the project in the weeks, months and even years to come.
The bankruptcy of Westinghouse, occasioned because that firm accepted overrun responsibility beyond the fixed price guaranteed to the plant owners, has led to the effective uncapping of total project cost and thus risk to the company’s ratepayers and/or shareholders. From the filing:
The Company recognizes that the conditions under which the Project was first certified
have changed. Namely, WEC has filed bankruptcy and rejected the fixed and firm protections of
the EPC Agreement. The risks that WEC bore have been shifted to Georgians. Nevertheless,
continuing the Project is the better course and in the best interests of Georgia and its
citizens. There is no easy choice here; this is an important policy decision that will affect all
Georgians for the next 60 to 80 years. If this Commission decides in this proceeding that it is
best to stop and abandon this Project, it will be for all practical purposes stopped because the
non-Georgia Power Owners will not proceed without Georgia Power.
Continuation of the project through to completion is dependent upon a number of other factors as well, any of which could threaten the project’s viability. These include but are not limited to the following: Extension of the Production Tax Credit provisions so that the plants will receive these credits, even though the new estimated dates of completion are after the now-scheduled breakout date beyond which the credits aren’t available; the provision of new loan guarantees from the Department of Energy, in order to allow access to further funds at acceptable interest rates in line with the presently perceived increase in capital costs; that the Georgia PSC agrees that the presently authorized capital cost is not a cap, and that further costs above that amount could be shown prudent in the same way present costs have been considered, even if they are above the authorized amount.
Georgia Power also makes it clear that the project’s future is also contingent upon Toshiba making full and timely payments under its parental guarantee, as has been agreed to previously.
The company is asking that the Georgia PSC approve its newly submitted completion schedule and cost estimate; according to the filing if the PSC disapproves some or all of the new proposed cost and schedule, the company “may cancel units 3 and 4 and recover its actual investment in the partially completed facility…” under presently set agreements.
A definite acknowledgement of the project’s potential wider importance was also made as a part of the company’s filing, as reproduced below:
In addition to considering the results of the economic analyses, the Commission
should consider other factors in deciding whether the project should continue,
such as fuel diversity benefits, the zero emissions produced by nuclear generation,
the importance nuclear generation has in our country, and the economic impact on
the state and local citizens if the Project were to be abandoned.
According to the recently completed new estimates, the owners’ capital cost to complete the project is now $9.45 billion. The planned operational dates for the two units are 29 months later than the date presently approved schedule’s date; these will now miss the cutoff date for receipt of the PTC or Production Tax Credit, since the dates of completion for Units 3 and 4 are now November 2021 and November 2022 respectively. Georgia Power also stated that while the total cost has increased more, the amount ratepayers will be exposed to is limited to about $1.41 billion (minus financing), reduced by the Toshiba payments, the amounts no longer to be paid to WEC for its now-vacated EPC contract, and the approved contingency amount. According to the filing if the Toshiba payments are not made, the owners other than Georgia Power would not continue as they would be forced to pass the overage on to their ratepayers. Indeed, the report says that “none of the owners can go forward without the others.”
Although much of the actual specific information as to costs and schedule, as well as Georgia Power’s system load forecasts has been heavily redacted, the documents made public today still have enough detail to make it clear that economically, so long as a number of provisos are met, the project is still economical and in the best interests of all parties to continue.
Will Davis is a member of the Board of Directors for the N/S Savannah Association, Inc. He is a consultant to the Global America Business Institute, a contributing author for Fuel Cycle Week, and he writes his own popular blog Atomic Power Review. Davis is also a consultant and writer for the American Nuclear Society, and serves on the ANS Communications Committee and the Book Publishing Committee. He is a former U.S. Navy reactor operator and served on SSBN-641, USS Simon Bolivar.