Troubled $25 billion nuclear project gets OK to continue
ATLANTA (AP) — Georgia’s utility regulators are allowing construction to continue on two new nuclear reactors, despite massive cost overruns for the multi-billion-dollar project.
Thursday’s decision by the state’s Public Service Commission will shape the future of the nation’s nuclear industry, partly because the reactors at Plant Vogtle were the first new ones to be licensed and to begin construction in the U.S. since 1978.
The project has been plagued by delays and spiraling costs, compounded when the main contractor filed for bankruptcy. Westinghouse Electric Co., the U.S. nuclear unit of Japan’s Toshiba Corp., filed for bankruptcy in March.
The reactors, approved in 2012, were initially estimated to cost $14 billion. Regulators tried to make nuclear reactors easier to build, encouraging the use of off-the-shelf designs that could get approval in advance. New construction techniques were supposed to require less in-the-field assembly, making building quicker and reducing human error.
But by July 2012, the reactors, initially estimated to cost $14 billion, had run into over $800 million in extra charges related to licensing delays. Later that year, officials said construction of the reactors was expected to be delayed seven months.
In February 2013 Georgia Power asked to raise its Vogtle construction budget by $737 million to $6.85 billion. The request raised expectations that PSC staffers would seek to block the utility from passing along some of its costs to customers, but that didn’t happen.
By May 2015, regulators said there was a “high probability” the reactor construction would be delayed even longer than the three years already announced by its owners, according to an analysis obtained by The Associated Press. The latest estimates from regulators put the utility company’s costs at $8.2 billion.
The rising construction costs hit an industry already under financial pressure, after 2011 a tsunami in Japan triggered meltdowns at the Fukushima Dai-ichi nuclear plant. Meanwhile, the price of natural gas dropped, lessening the incentive to build new nuclear power.
Under state law, Georgia Power’s 2.4 million customers will ultimately reimburse the state-regulated monopoly for the flagship plant as they pay their monthly electricity bills. That law allows Georgia Power to charge its customers now for the interest it pays on the borrowed money needed for the project. Under an older law, the utility had to wait until the plant was operating to collect those interest charges from its customers, a practice that meant the interest owed grew during the construction period.
Cost overruns were also an issue with the original reactors at Vogtle. The cost of building the existing reactors at the site jumped from $660 million to nearly $9 billion by the time they started producing power in the late 1980s.