Regulators approve deal to pay for Georgia Power's new nuclear reactors
Almost 15 years of wrangling over who should pay for two new nuclear reactors in Georgia and who should be accountable for cost overruns came down to one vote Tuesday, with the Georgia Public Service Commission unanimously approving an additional 6% rate increase to pay for $7.56 billion in remaining costs at Georgia Power Co.'s Plant Vogtle.
The rate increase is projected to add $8.95 a month to a typical residential customer’s current monthly bill of $157. It would take effect in the first month after Vogtle’s Unit 4 begins commercial operation, projected to be sometime in March. A $5.42 rate increase already took effect when Unit 3 began operating over the summer.
Tuesday's vote was the final accounting for Georgia Power's portion of the project to build a third and fourth reactor at the site southeast of Augusta. They're currently projected to cost Georgia Power and three other owners $31 billion, according to Associated Press calculations. Add in $3.7 billion that original contractor Westinghouse paid the Vogtle owners to walk away from construction, and the total nears $35 billion.
The reactors were originally projected to cost $14 billion and be complete by 2017.
Vogtle’s Unit 3 and Unit 4 are the first new American reactors built from scratch in decades. Each can power 500,000 homes and businesses without releasing any carbon. But even as government officials and some utilities are again looking to nuclear power to alleviate climate change, the cost of Vogtle could discourage utilities from pursuing nuclear power.
Southern Co., the Atlanta-based parent of Georgia Power, said in a stock market filing Friday that it would record a $228 million gain on the deal, saying it will now be able to recover from ratepayers certain construction costs that it had been subtracting from income. That means the total loss to shareholders on the project will be about $3 billion, which the company has written off since 2018.
Overall, the company said Georgia Power would collect an additional $729 million a year from its 2.7 million customers.
“We believe this decision by the Georgia PSC acknowledges the perspectives of all parties involved and takes a balanced approach that recognizes the value of this long-term energy asset for the state of Georgia and affordability needs for customers,” Georgia Power spokesperson John Kraft said in a statement.
The five Republican commissioners, all elected statewide, voted on an agreement that Georgia Power reached with commission staff and some consumer groups. Called a stipulation, it averted what could have been lengthy and contentious hearings over how much blame the company should bear for overruns.
“This is very reasonable outcome to a very complicated process," Commission Chairman Jason Shaw said in an interview after the vote.
Calculations show Vogtle’s electricity will never be cheaper than other sources Georgia Power could have chosen, even after the federal government reduced borrowing costs by guaranteeing repayment of $12 billion in loans. Yet the company and regulators say Vogtle was the right choice.
“You can’t go back to 2009 and make a decision based on everything that happened," Shaw said.
But Bryan Jacob of the Southern Alliance for Clean Energy called the vote “disappointing.” He said residential and small business customers paid a disproportionate share of a financing charge that Georgia Power collected during construction, but Tuesday's vote parceled out additional costs without giving customers credit for heavier shares of earlier contributions.
Other opponents held up crime scene tape after the vote to show their displeasure.
“The Georgia Public Service Commission just approved the largest rate increase in state history,” said Patty Durand, a Democrat and possible candidate for the commission. “The people of Georgia deserve a state agency that protects them from monopoly overreach, but that's not what we have.”
Georgia Power owns 45.7% of the reactors. Smaller shares are owned by Oglethorpe Power Corp., which provides electricity to member-owned cooperatives, the Municipal Electric Authority of Georgia and the city of Dalton. Some Florida and Alabama utilities have also contracted to buy Vogtle’s power.