The Blog

Plant Voglte: Worth It To The Ratepayer?

Posted on October 10, 2018

By: Caroline Gustavson

The construction process for the nuclear power reactor, Plant Vogtle, has been anything but simple. One of the utility partners of the project, Oglethorpe Power, had until September 26that 5:00pm to decide whether or not they would continue to support the plant’s construction.[i]The building of Plant Vogtle has become controversial between the businesses involved and the Georgia ratepayers as both the cost and time of the project have been extended on multiple occasions. However, the utilities involved have officially decided to continue the construction of Plant Vogtle upon the agreement of a cost cap, saying that the benefits of nuclear power will one day outweigh the costs of its construction.[ii]

In 2013, Georgia Power, Oglethorpe Power, Municipal Electric Authority of Georgia (MEGA), and Dalton Utilities agreed to the construction of power reactor units three and four.[iii]The construction of unit three began on March 12, 2013 and unit four began on November 19, 2013.[iv]The reactor units were utilizing Westinghouse’s AP 1000 reactors, which is a U.S. based nuclear power company offering construction, products, and other services to utilities around the world.[v]Initially, units three and four were estimated to have a cost of 4.418 billion and were to be completed in 2016 and 2018.[vi]Within the first three months of unit three being built, however, the project was already delayed by 14 months. In the 17thSemi-Annual Vogtle Construction Monitoring Report released in 2017, the new price estimate of the project had escalated to $8.77 billion dollars.[vii]

Along with the rising costs and extended time table for the project, Westinghouse was forced to file bankruptcy in 2017 for their net loss of nine billion dollars from construction projects including the failed nuclear reactor V.C. Summer in South Carolina as well as Vogtle itself.[viii]This caused Georgia Power and the other utilities to hire a different construction company, once again decreasing the time efficiency of the project. At this point, the utilities began to grow weary of the plant’s success, particularly Oglethorpe Power and MEGA.  MEGA was the first company reluctant to continue with Plant Vogtle as they were being discouraged by Jacksonville Energy Authority’s (JEA) interim CEO, Aaron Zahn.[ix]In the initial phases of units three and four, JEA agreed with MEGA to buy power from the not yet constructed reactor. However, with the increasing costs, Zahn claimed the Plant Voglte project was now “economically obsolete” as JEA would now be obligated to pay four billion over the next two decades.[x]Eventually, JEA decided to go ahead with the project in order to avoid any losses associated with previous investments.

Oglethorpe Power was also hesitant to continue with Plant Voglte upon the $2.3 billion dollar increase in August 2018.[xi]Oglethorpe voiced their concerns to Georgia Power and stated that they would only continue to support the project if a price cap was established. If Oglethorpe failed to support the project, the company would still have to pay their already borrowed federal loans, but would now only have five years to pay them off instead of twenty years. Due to facts such as this and other reasons, all four utilities were able to agree on a price cap, allowing Plant Vogtle to move forward with the construction process.

So far Plant Voglte has had many implications for the utilities companies involved, but what does the plant’s project mean for Georgians?Plant Vogtle has been a complex task, as its construction has provided benefits as well as drawbacks. First, it is important to note why Georgia Power was so fervent about the construction of units three and four in the first place. Nuclear energy represents the future of energy production, as it is much more environmentally feasible than traditional coal-burning plants. Also, when nuclear reactors are well-kept, they are estimated to produce energy for eighty years, which is an enormously beneficial payoff when compared to other forms of energy. Nuclear energy is also the most powerful form of energy as Plant Vogtle itself would bring hundreds of homes and companies power throughout Georgia.

Along with the benefits of nuclear power, there are three key incentives as to why Plant Vogtle should continue to be built. First, the construction of the plant has brought about 5,000 jobs to the areas in and around Waynesboro.[xii]Not only has this increased the employment rate, but it also attracts investment to the more rural areas of Georgia. Second, Georgia will become particularly desirable for businesses surrounding the state and even outside the U.S. Plant Vogtle is the only power plant under construction in the U.S. and will soon offer advantages for companies looking to capitalize. Finally, it is likely that administration within the next few years will place carbon taxes on energy companies.[xiii]By taking the initiative to ‘go nuclear’, Georgia subsidiary companies and thus ratepayers will no longer be threatened by this tax.

The time and money to build Plant Vogtle has translated to costs for Georgia ratepayers. Many people in Georgia are understandably concerned about what this will mean for their power bill. The effects from the project will not be represented on power bills until 2023 and will only increase by a rate of eleven percent from all overrun charges.[xiv]Currently, the Georgia consumer already pays a Vogtle surcharge at about eight percent.

While Plant Vogtle has increased rates among Georgia payers, it has also brought job growth and outside interest to rural Georgia. There is no denying that the project has been off to a rough start, but the supporting companies have shown that they all agree it would be worse to walk away after coming so far. There are conflicting arguments as to whether or not Plant Vogtle will prove beneficial for Georgia, but only time will truly tell and for now, it is the people of Georgia to decide.

[i]Nadler, Ben. (September 26, 2018).Georgia Nuclear Plant Gets Go-Ahead Despite Budget Overages. Retrieved September 27, 2018. https://www.google.com/amp/www.onlineathens.com/nationworld/20180926/georgia-nuclear-plant-gets-go-ahead-despite-budget-overages%3ftemplate=ampart

[ii]Ibid.

[iii]King, Michael. (December 11, 2017). A Concise History of GA Power’s Plant Vogtle Project. Retrieved September 27, 2018.  https://www.google.com/amp/s/www.11alive.com/amp/article%3fsection=money&headline=a-concise-history-of-ga-powers-plant-vogtle-project&contentld=85-498580565

[iv]Ibid.

[v]Westinghouse. (December 21, 2017).Westinghouse Applauds Decision To Continue Voglte Construction. Retrieved September 27, 2018. http://www.westinghousenuclear.com/About/News/View/WESTINGHOUSE-APPLAUDS-DECISION-TO-CONTINUE-VOGTLE-CONSTRUCTION

[vi]King, Michael. (December 11, 2017). A Concise History of GA Power’s Plant Vogtle Project. Retrieved September 27, 2018.  https://www.google.com/amp/s/www.11alive.com/amp/article%3fsection=money&headline=a-concise-history-of-ga-powers-plant-vogtle-project&contentld=85-498580565

[vii]Ibid.

[viii]Ibid.

[ix]Monroe, Nate. (August 25, 2018). JAE issues ultimatum to Plant Vogtle co-owner:Walk away from nuclear project. Retrieved September 27, 2019. https://www.google.com/amp/www.jacksonville.com/news/20180817/jea-issues-ultimatum-to-plant-vogtle-co-owner-walk-away-from-nuclear-project%3ftemplate=ampart

[x]Ibid.

[xi]Nadler, Ben. (September 26, 2018).Georgia Nuclear Plant Gets Go-Ahead Despite Budget Overages. Retrieved September 27, 2018. https://www.google.com/amp/www.onlineathens.com/nationworld/20180926/georgia-nuclear-plant-gets-go-ahead-despite-budget-overages%3ftemplate=ampart

[xii]Political Rewind Podcast. (September 24, 2018). Political Rewind: Is Plant Vogtle Worth The Cost To Consumers. Retrieved September 27, 2018.

[xiii]Ibid.