JEA Demand: Protect Customers, Stop Gambling on Vogtle Nuclear Reactors

George Cavros | August 21, 2018 | Energy Policy, Nuclear
In Kenny Rogers’ song, The Gambler, the secret to success is knowing when to hold your cards and knowing when to fold ‘em. JEA has concluded that the Vogtle reactors are a bad hand for its customers stating that “a decision to continue the project cannot be justified on any rational basis.” It’s demanding that one of the partners, in the tortured project, the Municipal Electric Authority of Georgia (MEAG), walk away from the table before it’s too late to avoid the worst economic impacts for JEA customers, and the partner utilities’ customers.

JEA has a vested interest in the project because it has a 20-year Power Purchase Agreement (PPA) with MEAG that requires it to shoulder some capital and operating costs during the Vogtle construction. The PPA was signed long ago and market conditions have significantly changed since then – for the worse. The projected cost of the Vogtle AP-1000 nuclear reactors have more than doubled to over $27 billion, and are well over 5 years delayed.

We’ve seen this hand before

In July of last year, you may recall, that construction of the proposed VC Summer AP-1000 nuclear reactors in South Carolina was abandoned after the bankruptcy of Westinghouse – the designer and builder of the reactors. Santee Cooper, a utility partner in the project, balked at a revised cost estimate that put the cost to complete the reactors at over $25 billion. With Santee Cooper out, SCG&E, the other utility partner, abandoned the project as well.

That left the proposed Vogtle 3 & 4 reactors in Georgia as the last game in town on nuclear construction. Without a lead contractor, Southern Company, Georgia Power’s parent company, has taken over the role of building the reactors. Yet, history has a tendency to repeat itself, and the Vogtle reactors are also way over budget and behind schedule. Southern Company just announced another round of cost overruns of over $2 billion dollars – bringing the current projected cost to over $27 billion. That projection is even more costly than the VC Summer reactors – which caused those utilities to fold their hands.

The owners of the Vogtle project include Georgia Power (45.7%), Oglethorpe Power (30%), MEAG (22.7%) and Dalton City (1.6%). There is a vote expected by the partners in late September on whether to continue with the Vogtle project. JEA is demanding that MEAG vote NOT to continue the project. JEA is clearly ready to litigate should MEAG vote to move forward with the project.

You got to know when to walk away, know when to run 

On August 17, 2018, JEA sent a letter to MEAG with an independent economic analysis, that stated, in part, the following:   

  • The announced 2021 in-service date is “questionable” and the units are “economically obsolete.”
  • The latest cost overruns add another $10 million to the PPA costs for JEA customers.
  • If the project were to be canceled, the savings to JEA customers could be as much as $727 million (present value) according to JEA’s consultants – even after purchasing replacement power.

To its credit, JEA has done its homework on the project. The Vogtle partners would be well advised to do a similar analysis on the impact to their customers. After all, Vogtle’s utility partners shouldn’t be gambling their customers’ hard-earned dollars on a project that has already been deemed economically obsolete.

It’s OK to conclude that you’re holding a bad hand. The smart move is to fold ‘em, and walk away.

George Cavros
This blog was written by a former staff member of the Southern Alliance for Clean Energy.
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