This has great bearing for Duke Energy and NC’s future. There remains a strong chance that neither the Georgia nor SC AP1000 projects will be completed. — NC WARN Executive Director Jim Warren
Five years into construction, serious challenges remain as detriments have fully eliminated the project’s benefits
Atlanta, Ga. — During yesterday’s day-long hearing before the Georgia Public Service Commission (PSC) on the 13thsemi-annual Vogtle Construction Monitoring report, expert witnesses on behalf of the PSC predicted that additional delays beyond the current 39-month delay are likely for the two nuclear reactors under construction at Plant Vogtle near Waynesboro, Georgia along the Savannah River. Though five years into the project, only 26 percent of construction is complete. With more delays come more cost increases, in excess of $2 million per day for Georgia Power’s share of the project, negatively impacting utility customers as all project benefits have been eliminated. During the hearing, a possible figure of approximately $21 billion was mentioned as the current total revenue requirement for the entire Vogtle project, a staggering increase since the $14.1 billion estimate in 2009, which did not include further delays.
“The testimony during the hearing made it abundantly clear that the new Vogtle reactors are not going to deliver anything close to what Georgia Power told this Commission and their customers who were forced by state policy into paying in advance for the ever-increasing financing costs,” said Sara Barczak, high risk energy choices program director with the Southern Alliance for Clean Energy. “What was once a $14 billion price tag is now $21 billion and the situation is actually worsening. How much worse does it have to get before regulators and lawmakers start paying attention?”
Customers are already paying more than 9.4 percent on their monthly bills in Nuclear Construction Cost Recovery (NCCR) costs due to anti-consumer state legislation passed in 2009 to incentivize building new reactors. Over $1.4 billion in pre-collected financing costs have been charged to ratepayers and the financing costs represent the largest share of the project’s cost overruns. This rate will increase to over 9.7 percent starting in January 2016.
PSC witness Hayet testified to a current project estimate of $8.409 billion, a 38 percent increase since certification, for the 39-month delay, which includes the lost fuel savings and the $350 million cost increase for Georgia Power’s share of the project given the settlement between the utility owners and lead contractor Westinghouse that was announced in late October, but did not include the 46 percent tax true up rate on the approximately $2.4 billion in financing costs associated with the 39-month delay nor any additional delays. He agreed that taxes should be added, bringing Georgia Power’s estimated cost to over $9.5 billion, more than $3 billion more than the certified cost.
PSC witnesses Jacobs and Roetger testified to several variances to critical path activities from January to June 2015 ranging from 82 to 379 days. One of the variances is the installation of the CA03 module, part of Unit 3’s long-plagued Shield Building, with a forecasted delay of 379 days. When questioned, they stated that making-up the significant delay would be very difficult. Supposed integration of “lessons learned” from Unit 3 apparently was also not resulting in reducing schedule delays for Unit 4.
Further complicating the project is Westinghouse’s announcement in October about acquiring subcontractor CB&I (Chicago Bridge & Iron), the lead subcontractor that has experienced major problems with module construction since the beginning of the project, even after taking over for Shaw. Westinghouse is bringing in Fluor Corporation to manage the four Toshiba-Westinghouse AP1000 reactor projects currently under construction – two at Plant Vogtle and two at SCANA’s V.C. Summer in South Carolina.
“The long promised contractor mitigation strategy still isn’t in place and construction delays keep mounting for critical path and near-critical path activities,” said SACE attorney, Bobby Baker. “The current commercial operation dates will be pushed back further until a viable construction mitigation strategy is implemented by the new Project contractor.”
Find the audio recording of yesterday’s hearing in three parts here. The PSC will vote on approving the $148 million in expenditures on February 18, 2016. A rebuttal hearing is currently scheduled for January 19. Public comments may be submitted online via http://www.psc.state.ga.us/content.aspx?c=/commissioners/, by regular mail to the PSC or by phone at (800) 282-5813 and should reference “Docket 29849.”
Originally Vogtle reactor Unit 3 was scheduled to come online April 1, 2016 and Unit 4 one year later but estimates from Georgia Power are currently June 2019 and June 2020 respectively, representing a 39-month delay. But expert witnesses for the PSC have identified additional delays as serious construction challenges remain. The current certified cost for Georgia Power’s share of the project is approximately $6.113 billion. In the 13th VCM report the Company’s cost estimate is approximately $7.453 billion, not including the $350 million increase due to the settlement reached among the Vogtle utility owners and lead contractor, Westinghouse, who have been in litigation for several years over approximately $1.2 billion in disputed cost increases to the project. Georgia Power is 45.7 percent owner in the project (remaining utility partners are Oglethorpe Power (30 percent), MEAG (22.7 percent) and the City of Dalton (1.6 percent)). Oglethorpe announced a $230 million increase due to the litigation settlement; collectively the settlement with Westinghouse cost the utility owners an estimated $760 million.
About Southern Alliance for Clean Energy
Founded in 1985, the Southern Alliance for Clean Energy is a nonprofit organization that promotes responsible energy choices that work to address the impacts of global climate change and ensure clean, safe, and healthy communities throughout the Southeast. Learn more at www.cleanenergy.org.