$$ Problems Mount at Georgia Nuclear Construction
Who gets soaked? Taxpayer loan guarantees pending as contractors begin feeding frenzy on cost overruns due to long-standing and new design problems
Statement by NC WARN Director Jim Warren:
Durham, NC – Just weeks after receiving a federal construction license and now being challenged in federal court – by a lawsuit boosted by this week’s revelations about the Fukushima disaster – the first US nuclear power project in decades is suffering persistent problems that have already caused eight months of delays and are driving up costs. Meanwhile, contractors are arguing between each other and the plant’s owner about who should absorb millions in cost overruns – giant corporations or taxpayers and electricity customers.
The project is already in such trouble that a task force is being formed to collate the “corrective action programs” of the lead contractors and many others.
A state report filed yesterday by Georgia Power, part of the Southern Company, shows that new construction at Plant Vogtle is being hampered by design flaws, contractor disputes and extensive manufacturing facility problems that have persisted for over two years despite intensive remedial efforts (see excerpts from the report below).
Despite being heavily censored and couched in legalistic wording, the document reflects the depth and persistence of problems in two key areas:
1) Contractor Shaw’s inability to correct major problems at its facility that fabricates modules for the Westinghouse AP1000 reactor – two years after problems were first identified – even as new facility problems emerge.
2) Overall construction problems have led to an upcoming cost request for creation of a “development and implementation” plan to resolve problems with multiple contractors, and “to integrate the corrective action programs” of Southern Company, and lead contractors Westinghouse and the Shaw Group.
The report adds to problems cited in December by an independent construction monitor, Dr. William Jacobs, who is a veteran nuclear industry engineer. He warned that the problems have persisted despite repeated attempts at resolution, and that efforts to recoup lost time could compound existing cost and schedule problems.
As reported today by the Augusta Chronicle, “Although the project is $28 million under budget [which the independent construction monitor says is due to scheduling delays], the report noted cost increases will become more likely in the future due to further delays, unforeseen modifications that might be needed and change orders that have already begun to emerge from contractors Westinghouse and Stone & Webster.”
Last week, South Carolina Electric & Gas reported $380 million in changes that likely coincide with many of those at Vogtle, since each utility is trying to build two Westinghouse AP1000 reactors. (Georgia Power is claiming trade secret on virtually all cost information except the years-old total estimate of $14 billion for the 2 units).
Today’s news adds fuel to a lawsuit by public interest groups challenging the U.S. Nuclear Regulatory Commission’s approval of the AP1000 plant design. The groups say the agency has not required owners to incorporate widely-expected changes, based on last year’s crippling disaster in Japan, as required by federal law prior to licensing.
Such design changes will boost the prices of AP1000 projects, which could include major alterations such as upgraded protections against earthquakes and consideration of accidents on sites with multiple reactors. Those concerns were fueled this week by a new report on Fukushima revealing that the Japanese government was afraid the triple-meltdown of nuclear reactors would lead to a cascading failure of nearby nuclear plants, thus requiring evacuation of Tokyo.
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VERBATIM EXCERPTS FROM GEORGIA POWER’S REPORT
Note: the excerpts exclude a number of problems that arose but which GP says were resolved. I invite you to review these excerpts within the context of the full report:
http://www.psc.state.ga.us/factsv2/Document.aspx?documentNumber=140695
(Page 2) There will be increased costs to complete the Project … The amount of those costs and the question of which party to the EPC Agreement bears what portion of those costs have not yet been settled between and among the parties to the EPC Agreement.
… There are three broad categories of possible cost increases resulting from submitted and potential change orders.
(Page 3) The Company is currently engaged in discussions with the Consortium to seek agreement on which party bears responsibility … As of the date of this filing, the Company has not agreed that it has any responsibility to the Consortium for any of these unapproved costs and with regard to most, denies any liability at all. With regard to the cost impact on the Owners of potential schedule delay, the Company plans to seek liquidated damages from the Consortium to mitigate any such potential costs.
It is unique for a project of this magnitude not to have a contingency [to cover unbudgeted costs], but the Company supported the Commission determination that it was appropriate in this regulatory setting. Any additional costs, including change orders, over the Revised Certified Amount must be shown to be prudent and approved, rather than simply drawn down from a contingency fund as they would be in a more typical project.
The Company continues to conduct surveillance and closely monitor the Consortium’s improvement efforts for the quality and production issues with Shaw Modular Solutions (“SMS”). SMS has demonstrated progress in implementing an improvement plan following a deferred NRC inspection from January 2011.
… (Page 10) The original certified budget included a forecast for REDACTED based on REDACTED annual escalation. To date, REDACTED rates have experienced a REDACTED annual escalation rate. Combining the REDACTED to date with a forecast for future REDACTED rates based on July 2010 actual values escalated at REDACTED, the Project forecasts REDACTED REDACTED.
… (Page 14) Table 1.1 reflects all significant sources of changes in the in-service cost since Certification. The major source of projected cost decreases results from the Commission’s adoption of Amendment No. 3 to the EPC Agreement. While these savings have been offset by potential new and emerging issues as described in previous VCM reports, Table 9.1 below reflects additional projected costs identified during this Reporting Period. [CONTENT of TABLE 1 ENTIRELY REDACTED]
… (Page 15) EPC Scope Change – Integrated Corrective Action Program (“ICAP”): An estimated cost increase is reflected for additional costs incurred by the Consortium for the development and implementation of an ICAP. In order to meet NRC and industry expectations for problem identification and resolution, the ICAP has been developed to integrate the corrective action programs of SNC, Shaw and Westinghouse.
(Page 25) REDACTED REDACTED continue to pose a risk for impact to the operator training schedule. The Company completed an assessment of the processes for I&C hardware and software design development and has recommended changes for those processes related to forecasts of total work scope and incorporation of design changes.
… [S]tatus of major component fabrication. …The Company continues to conduct surveillance and closely monitor the Consortium’s improvement efforts for the quality and production issues with SMS. During the Reporting Period, startup production issues arose during sub-module fabrication and production, REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED. These production issues have delayed sub-module delivery to the Vogtle Project site. As of December 31, 2011, REDACTED REDACTED REDACTED that were scheduled had been delivered.
The Company is monitoring SMS’s improvement as fabrication recovery plans for each delayed sub-module are developed and implemented. Increased management oversight at the SMS facility was established through a regular presence of the SNC Vendor Oversight and Performance Improvement Manager starting on October 17, 2011 through the end of the Reporting Period. SMS has added resources for oversight and preparation of module document packages, improved pre-job brief planning, utilized the use of mini-mockups, worked down the backlog of nonconformance reports, and improved cycle time of resolution of nonconformance reports and corrective actions. Development of an electronic tracking system for the SMS corrective action program is also underway and expected to be completed in the next reporting period. The Company will continue to place appropriate levels of oversight at the SMS facility to monitor execution of SMS corrective actions until acceptable work practices are fully demonstrated and fabrication meets expectations.
In July 2011, the Consortium conducted a mock NRC inspection to prepare for the NRC unannounced re-inspection that subsequently occurred November 14-18, 2011. … SMS is expected to provide to the NRC its action plans to resolve the issues noted in the [January 6, 2012] NRC report. The Company will be given the opportunity to provide input to plans prior to SMS’s submittal to the NRC.
Production of Containment Vessel Bottom Head (“CVBH”) assembly has been steady but slow due to start-up issues that are typical for new activities … CB&I has added a night shift, developed more efficient welding techniques, and reallocated resources to improve and recover production.
Also during the Reporting Period, issues with other subcontractors were identified and are being monitored. Specifically, an adverse trend in quality during fabrication activities by Mangiarotti and its sub-suppliers has slowed fabrication of REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED.
In December 2011, issues with alignment of the first tube support plate with the tubesheet caused a delay on the Unit 3B Steam Generator work and rework of at least 10 tube support plate holes will be required. Steam Generator delivery is expected to slip two to three months but no impact is expected to the construction schedule since adequate margin remains between the delivery date and the construction site need date for this component.
Finally, the delivery schedules for the Unit 3 Containment Vessel Rings 2, 3 and Upper Head as well as the Unit 4 Containment Vessel Rings 1, 2, 3 and Upper Head have slipped and deliveries are approaching the construction schedule critical path.
