Georgia’s official project monitor warns of 4-year delay and persistent incompetence as corps sue and counter-sue over $930 million in first-year cost overruns
Durham, NC – The first US nuclear plant being built in a generation tumbles further into a perfect storm of cost overruns, delays, corporate bungling and an uncertain future, as documented last week by a career nuclear engineer monitoring the project for Georgia regulators.
Georgia Power received a construction license in January to build two AP1000 plants at its Vogtle facility, but the project is already “far behind schedule” and nearly a billion dollars over budget – even as “numerous” design changes loom, a construction schedule is non-existent and the key supplier struggles with manufacturing problems that have persisted for three years.
Additional cost overruns will come atop $930 million in overages that are the topic of several ongoing lawsuits between Georgia Power and lead contractors Westinghouse and The Shaw Group. If not for ratepayers being stuck with “pay in advance” state legislation called Construction Work in Progress, the project probably would have been cancelled already.
Below are highlights of testimony before Georgia regulators last week by Dr. William Jacobs, the project monitor hired by utilities regulators. Most of the passages are verbatim:
“I have found the performance of the Consortium [utility and major contractors Westinghouse and Shaw] in the critical safety related areas to be unsatisfactory.”
“Key critical path activities including [pouring of the reactor foundation, which has been delayed ‘many times’] are far behind schedule.”
“Issuance of critical design information is also far behind schedule and in many cases has not been in conformance with the licensing basis defined in the [approved engineering plans].”
“Fabrication, delivery and assembly of key structural modules are far behind schedule and the Consortium has not provided a schedule or plan going forward. Assembly of the Auxiliary Building CA20 structural module was halted in August 2012 after only 5 of 72 sub-modules had been assembled. … schedule impact of these delays is unknown at this time but could be significant.”
“The Project is at least 14 months late … Delay in the fabrication and assembly of structural modules could result in additional schedule delay.”
“It is not prudent to manage a project of the size and complexity of the Vogtle 3 and 4 Project without a fully Integrated Project Schedule … The need for an IPS is so important to the Project that I will repeat the rationale here …”
“The cost drivers that I have identified including schedule delay and Consortium [design] change notices will result in substantial cost pressure on the Project.”
“I recommend that the [Georgia] Commission order the Staff and Company to work jointly in development of additional delay scenarios of 24, 36 and 48 months.”
“[Georgia Power] could also be faced with future litigation if the Consortium and Company cannot resolve the disputes that may arise as this complex Project continues.”
Despite deceptive claims to the news media by Georgia Power and allies, “the Project is under budget because the Consortium has not completed the milestones necessary to receive milestone payments as anticipated in the [contract].”
“Additional cost drivers that could impact Project costs include
- additional capital costs due to schedule delay,
- additional financing costs due to schedule delay,
- costs resulting from a settlement of the current litigation with the Consortium and
- costs resulting from current, and future change notices received from the Consortium.”
“The cost of schedule delays is potentially one of the largest cost drivers that could increase Project costs as it leads not only to increased direct construction costs but also to additional financing costs.”
“The cost of a one year delay in the Project is in the range of hundreds of millions of dollars.”
That final point is exactly why utilities demand the CWIP scheme, so customers absorb the risks of cost overruns and, if the project collapses, get no refund of billions of dollars paid in advance through electric rate increases.
Another lawsuit by watchdog groups including NC WARN is making its way through a federal appeals court, and is intended to stop Vogtle and other AP1000s until utilities incorporate lessons from the 2011 Fukushima disaster.