Advocates, Ratepayers Oppose Paying for Vogtle’s Cost Overruns (UPDATE 1)
(APN) ATLANTA — On July 18, 2013 the Georgia Public Service Commission (PSC) held the first of two scheduled hearings on Georgia Power’s request to pass 381 million dollars in cost overruns, in connection with the construction of two new nuclear reactors at Plant Vogtle, onto ratepayers, in the form of higher electricity bills.
Georgia Power had also asked the PSC to change the certified cost, or budget, to complete the project from 6.11 billion dollars to 6.85 billion dollars, adding another 737 million to the current, or first amended, budget for the new reactors.
The PSC has a second scheduled hearing on August 13 and 14, 2013. The subject of the hearings is who will eventually pay the hundreds of millions in cost overruns: the public; or the company and its shareholders.
However, following the first hearing, Georgia Power and the PSC staff entered into a stipulation agreement, in which the company agreed to withdraw its request.
“The PIA [Public Interest Advocacy] Staff and the Company further recognize that many of the issues presented by the Company’s proposed amendment are also subject to, or may be subject to, claims by the Contractors and the pending litigation between the Owners and the Contractors,” the Stipulation states.
“The PIA Staff and the Company acknowledge that the cost and schedule impacts of several identified Company decisions and actions may not be fully ascertainable until subsequent events unfold. Moreover, some decisions and actions are ongoing in nature and can span multiple reporting periods. Also, the budgeted costs to be reviewed in considering whether to amend to [sic] certificate are forecasted costs, which can be viewed during subsequent VCM [Vogtle Construction Monitoring] proceedings when and if they become expenditures. For these reasons, PIA Staff and the Company agree that the request to amend the Certificate is not ripe for consideration,” the Stipulation states.
“The PIA Staff and the Company jointly agree that consideration of the request to amend the certificate, and any further requests to increase the certified cost, should be held in abeyance until the completion of Vogtle 3,” the Stipulation states.
The PSC will have to vote to agree to allow the company to withdraw its request.
Construction of Plant Vogtle units 3 and 4 is fourteen months behind schedule. The 2017 or 2018 competition date may be moved even further into the future; thus, ratepayers will continue to pay the Nuclear Construction Cost Recovery [also known as the nuclear tax] on their electric bills.
The AP 1000 reactors are supposed to cost 14 billion dollars, but with continuing billion dollar cost overruns, will probably cost much, much more.
Georgia Power’s Plant Vogtle is the poster child for the so-called new nuclear renaissance, which began a few years ago and which has mostly fizzled out with the exception of two heavily subsidized projects in Georgia and South Carolina. They may be the first new nuclear reactor projects in the United States in over thirty years, but will likely be the last.
Since the Fukushima disaster in Japan, which is now known to be causing a leak of radioactive pollution into the Pacific Ocean, the nuclear renaissance has started to fizzle. This year it was announced that four reactors are being shut down. They are Kewaunee in Wisconsin, Crystal River in Florida, and two reactors at San Onofre in California. The Nuclear Regulator Commission found steam generator tube degradation at San Onofre due to vibrations.
Individual ratepayers, as well as groups in favor of safe and clean energy, testified that the cost overruns are not prudent and asked the PSC to not pass them on to Georgia Power customers.
“Many of the cost overruns are the result of mismanagement. The company has said less than one percent of the increases in costs are from engineering procurement and construction. These costs are results from mismanagement in paperwork and scheduling delays,” Courtney Hanson, Director of Public Outreach at Georgia Women’s Action for New Directions (Georgia WAND), testified.
“Southern Company jumped the gun in seeking license for the whole project and the cost accrued because of design changes and license amendment requests. They were not prepared when the process started and the cost reflects that. This is a problem that happens over and over,” John Michael, a ratepayer, testified.
“The cost overrun is not a new story and it is unfair for these cost overruns to be continually passed on to the ratepayers. Last time [with Vogtle units one and two] we were promised four reactors for six hundred million dollars and we got two for over eight billion. A company will never reduce costs if they continually have a blank check written to them,” Amanda Hill-Attkisson, Managing Director of Georgia WAND, testified.
As previously reported by Atlanta Progressive News, the cost of Vogtle 1 and 2 escalated from 660 million dollars, to 8.9 billion, a 1,200 percent cost overrun. Many fear the same epic cost overruns and delays with Vogtle 3 and 4.
Chicago Bridge and Iron (CB&I), formerly known as Shaw Modular Solutions, makes modules being used to assemble four Westinghouse AP1000 reactors being built at Plant Vogtle in Georgia and V.C. Summer in South Carolina.
“CB&I is unable to provide properly constructed modules… and [have demonstrated a] continued inability to reliably meet the quality and schedule requirements of the project,” Barbara Antonoplos, a ratepayer, testified, citing a report from the utility’s regulatory staff in South Carolina.
“These problems have existed from the beginning and been raised in every other VCM hearing and still there is no fix… they [Georgia Power] still do not have a competent outfit making parts and once the new parts get delivered to Vogtle, they are repairing them to make them acceptable. This alarms me because incompetence of this magnitude breeds disaster especially when it comes to construction of a nuclear device. There is no way these reactors can be considered safe… when ‘patch it together’ is the best construction model they are able to come up with,” Antonoplos said.
“Ongoing failures of this sort result in escalating cost and I don’t believe you should force ratepayers to foot the bill for such gross incompetence,” Antonoplos said.
Southern Company’s projections do not include the cost of the lawsuit they’re engaged in with their contractor, The Shaw Group/Chicago Bridge and Iron, nor the full cost of not getting Federal Loan Guarantees, for which the negotiation deadline has been extended three times according to Georgia WAND’s website.
During the cross-examination component, Liz Coyle, Consumer Energy Program Director at Georgia Watch, and a former candidate in 2009 for Atlanta City Council District 6, asked Georgia Power representatives, “Why is it appropriate at this point in the process–when you acknowledge that the budget is overbudget–to say, well then, let’s just change what the budget is, so that we are no longer in this position of overruns?”
The Georgia Power attorney asked the witness to not answer the question because it calls for a legal conclusion.
During the hearings, Commissioner Tim Echols (District 2) suggested that cost overruns at Plant Vogtle should be capped and Georgia Power may have to absorb some of the cost overruns related to expanding Plant Vogtle.
Steve Prenovitz’s cross-examination of Georgia Power was like a wild bird entering the room for four long, agonizing hours of a mix of cross examination, testimony, and unrelated ramblings.
Prenovitz, an expert in economics with Nuclear Watch South, challenged continuing the Vogtle project. He raised the question over whether the public would be better served by cutting their losses on Vogtle before massive cost overruns in the future reach stratospheric numbers.
Georgia Power has said the company has an excess capacity of energy, raising the question of why Georgia ratepayers should make big bets on nuclear that they do not need and is too expensive and dangerous.
David McKinney, a Georgia Power witness, testified that Georgia Power can “absolutely control costs on Vogtle.”
However, given the company’s history of cost overruns and the fact that they are already 1.7 billion dollars overbudget on this project, McKinney’s statement sounds ridiculous.
Georgia regulators said they are studying an approach being taken in Mississippi that involves sharing the extra costs between utility customers and shareholders, as reported in the Wall Street Journal newspaper.
CORRECTION: A previous version of this article states that Barbara Antonoplos testified to the PSC that certain issues had already been brought up at every other CB&I hearing; however, the article has been corrected to reflect that she testified that the issues had been brought up at every other VCM [Vogtle Construction Monitoring] hearing.