State Senate Approves Nuclear Power Layaway for Consumers


(APN) ATLANTA — The Republican-dominated State Senate today, February 11, 2009, approved a payment method for Georgia consumers comparable to layaway, for the building of nuclear power plants in Georgia, despite opposition by the all-Republican Public Service Commission.

The vote on SB 31, the Georgia Nuclear Energy Financing Act, was 38-16.

State Senators spent nearly an hour and half today debating SB 31, sponsored by State Sen. Don Balfour (R-Snellville). The bill would give Georgia Power the green light to recover funds from ratepayers for two proposed new nuclear power plants while the plants are still being constructed.

State Sen. David Adelman (D-Decatur) called it “a lousy bill” that is essentially an end-run around the PSC.

“It is a bad idea for you to inject your judgment into the system in place of five elected officials [the PSC], to do so without the background, without the special knowledge, without hearing the testimony,” he said.

Balfour argued the bill would help Georgia Power save money on construction costs and interest payments and ultimately save money for consumers in the long run.

Because of the large cost, utilities typically have to borrow money to pay for nuclear power plants’ construction, thus incurring interest expenses. Georgia Power argues implementing the CWIP model would save customers $300 million in interest.

Additionally, they say utility credit rating agencies view upfront recovery positively, which Georgia Power believes could result in lower financing costs for all utility projects, thereby keeping rates lower for consumers.

“If we can help reduce [Georgia Power’s] costs and reduce our costs…and that brings down the interest rates, that entire savings goes down to the consumers,” Balfour said.

SB 31 now heads to the House for consideration.

Meanwhile, the Georgia Public Service Commission (PSC) convened a final round of hearings Monday, February 09, 2009, to allow Georgia Power to make its case for building two new nuclear power generators at Plant Vogtle in southwest Georgia.

Georgia Power presented experts and outside consultants who delivered summaries of pre-filed testimony and faced cross-examination from attorneys from the PSC’s Public Interest Advocacy (PIA) Staff and other interested parties.

Testimony focused on the cost of the project and the pros and cons of raising rates on residential consumers in order to pay for the project while construction is ongoing.

The price tag for the proposed Vogtle 3 and 4 is approximately $14 billion, with Georgia Power set to pay $6.4 billion of the total. Oglethorpe Power, MEAG Power, and Dalton Utilities will share the remaining cost.

If the PSC decides to grant Georgia Power certification—and if the US Nuclear Regulatory Commission also provides approval–Vogtle 3 and 4 would go online in 2016 and 2017, the company estimates.

Witnesses expressed confidence the project will come in on time and on budget.

“Based on what we know — that $6.4 billion recommendation is a very reasonable assumption,” Jeffrey A. Burleson, Director of Resource and Policy Planning for Georgia Power, said.

During previous PSC hearings in January, critics of the expansion noted any price tag on a project of such size is never reliable.

They pointed to the cost of Vogtle 1 and 2, which carried an initial $330 million price tag but which ballooned to $9 billion.

To combat overruns, the PIA Staff recommended in December punishing Georgia Power for going over budget and rewarding them for staying under budget.

But witnesses Monday called such an idea “unacceptable.”

“It’s not appropriate for customers for the company to receive a windfall if the project [is] under budget,” Burleson said. “We don’t think we ought to be penalized for things that are out of [the company’s] control either.”

Witnesses noted that variables such as the cost of labor and materials could alter the cost of the project.

Georgia Power also made its case Monday for why it should be able to increase rates on consumers to pay for the project while it is under construction.

Under current rules, Georgia Power would only be able to recover the costs of the project after the new units are operational. The company says if forced to do this, rates for consumers will jump 12 percent between 2016 and 2017.

In order to avoid this “rate shock,” the company proposes recovering financing costs during construction, increasing rates 1.3 percent every year for a total increase of 9 percent from 2011 through 2017. This model is known as a Construction Work in Progress (CWIP).

The company estimates consumers would see an annual increase of about $1.30 on the typical residential monthly bill of 1,000 kilowatt-hours.

But the PIA Staff said in December the CWIP model would be “harmful to ratepayers.”

“It cost them more, it requires prepayment of taxes, it requires current customers to subsidize future customers, and it reduces the company’s incentive to get the plant in service on time,” the staff said in its recommendations.

The PSC is set to meet again on March 17 to vote whether or not to grant certification to Georgia Power.

About the author:

Jonathan Springston is a Senior Staff Writer for The Atlanta Progressive News, and is reachable is

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One comment

  • Safety issues aside, if construction of these new nuclear power plants was a reliable investment, Georgia Power would accept the risk of that investment. High monetary risk motivates Georgia Power to transfer that risk to the taxpayer. Bearing the monetary risk in mind while recalling the safety risk, for Georgia citizens this deal is a lose-lose situation.

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