Georgia Public Service Commissioners Fail to Protect Consumers

Guest Blog | August 19, 2014 | Press Releases

Regulators approve spending on over budget, delayed Vogtle nuclear reactors

Contact: Jennifer Rennicks, SACE, 865.235.1448, [email protected]


Atlanta, Ga. (August 19, 2014) ///PRESS RELEASE/// Today the Georgia Public Service Commission (PSC) unanimously approved an additional $389 million in expenditures for Georgia Power’s two reactors under construction at Plant Vogtle despite continued delays, cost overruns and learning that the Consortium hired three new subcontractors to complete the nuclear module construction, which has plagued the project since the start. The Commissioners rejected a request from the Southern Alliance for Clean Energy (SACE), a clean energy advocacy organization that intervened in the construction monitoring docket, to bar the Company from collecting any return on equity on the pre-collected portion of the financing costs. Georgia Power, subsidiary of the Southern Company, is the majority owner in the project and is regulated by the PSC.


All the Toshiba-Westinghouse AP1000 reactors under construction in the U.S. are delayed and face cost overruns. Vogtle’s expansion is at least 21 months behind schedule, well over $1 billion over budget and has a large outstanding lawsuit of nearly another billion dollars between Southern Company and Westinghouse. Just last week, SCANA announced additional significant delays of 2.5 to 3 years in the construction of new reactors at their V.C. Summer nuclear plant in South Carolina. Both projects had been on parallel tracks, prompting concern that Vogtle will likely face additional schedule delays that have yet to be announced.


As highlighted in SACE’s final brief in this docket, testimony from an expert witness on behalf of the PSC stated, “…the average Total Project and Production Cost impact caused by a delay increases to approximately $2.0 million per day.” Testimony also revealed that there is a 317-day delay in the construction of Unit 3’s long-plagued Shield Building. SACE argued that this could amount to a $634 million increase in the cost of the Vogtle expansion with additional delays possible, further compounding the cost overrun problem. The Commission also rejected the organization’s request that more water efficient cooling technologies be implemented in order to protect the imperiled Savannah River and increase reliability.


“Nuclear reactor construction projects are high risk propositions as we are now clearly seeing in Georgia, South Carolina and Tennessee. They are all significantly behind schedule and over budget,” said Dr. Stephen A. Smith, DVM, executive director of the Southern Alliance for Clean Energy. “Despite today’s decision, it is critical for the Georgia Public Service Commission to keep in mind that these cost overruns should not and do not have to only be borne by Georgia Power ratepayers. Georgia Power shareholders who stand to profit significantly from the long-term rate of return guaranteed on this multibillion-dollar investment should pick up much of these cost overruns. Georgia ratepayers have been paying early and often for this inflated project and they are carrying all the risk, while Georgia Power shareholders are getting all the profit. It’s well past time for the Commission to start to look out for Georgia Power consumers and not just Georgia Power shareholders.”


SACE’s brief noted that ratepayers are currently paying an additional 9.3% on their bills for the Nuclear Construction Cost Recovery (“NCCR”) Rider and that based on the Company’s estimates, the cost to ratepayers will increase an additional 50% to 100%:


“Georgia Power Company’s current construction monitoring report states that, ‘…the Facility’s total rate impact is projected to be about 6 to 8 percent,’ and 4% are already in rates. Georgia Power ratepayers pay an additional 9.3141% on their gross monthly bill for the Nuclear Construction Cost Recovery rider. For an average residential ratepayer who uses 1,100 kilowatts per month this is a cost of $7.98. If the Company projects that the rate impact of Vogtle Units 3 and 4 will increase by an additional 2% to 4% beyond the current 4% level already in rates, this means rates could increase an additional 50% to 100%. That would mean residential and commercial ratepayers would see further rate increases between 4.7% to 9.3% above the current 9.3% NCCR-4 rider amount. Based on current rates this would mean the average residential ratepayer who uses 1,100 kilowatts a month would pay an additional $4.00 to $8.00 on their monthly bills or a cumulative increase between $12.00 and $16.00. These amounts would increase proportionately based on a consumer’s electric demand.”


SACE highlighted that the PSC currently allows Georgia Power to collect its return on equity (“ROE”) of 10.95% on prepaid financing costs ratepayers are paying in advance, due to anti-consumer state legislation passed in 2009 to incentivize building new reactors. But typically a regulated utility’s ROE is provided to cover the cost of financing and to provide investors with an adequate incentive to offset the risk of investment.


“Georgia Power pre-collects its financing costs before Plant Vogtle is operational and thus there is no risk to the Company, so it would have been reasonable for the Commission to decide that no return on equity should be paid,” said attorney Robert Baker, representing SACE. “Unfortunately, the Commission didn’t agree. Georgia Power’s ability to recover a return on equity is excessive and represents nothing but a huge financial windfall at the expense of ratepayersthat is unjustified, unnecessary and unearned.”


Additional information:

Originally Vogtle reactor Unit 3 was scheduled to come online April 1, 2016 and Unit 4 one year later, on April 1, 2017 and updated estimates, as stated in expert testimony in the combined 9th/10th VCM docket, are now December 31, 2017 and December 31, 2018 respectively, representing a 21-month delay. The current certified cost for Georgia Power’s share of the project is approximately $6.1 billion. With a 21-month delay, the Company’s cost estimate has increased to approximately $6.8 billion (Georgia Power’s 9th/10th VCM Report, Table 1.1, p. 31). Georgia Power is 45.7% owner in the project (remaining utility partners are Oglethorpe Power (30%), MEAG (22.7%), which is still trying to finalize a $1.8 billion taxpayer-backed nuclear loan guarantee, and City of Dalton (1.6%). This means the original approximately $14.1 billion Vogtle project is now estimated to cost approximately $15.5 billion.



Founded in 1985, the Southern Alliance for Clean Energy is a nonprofit organization that promotes responsible energy choices that create global warming solutions and ensure clean, safe, and healthy communities throughout the Southeast. Learn more at