Georgia Power works with contractor on Vogtle schedule, cost issues

Construction on new nuclear capacity at the Vogtle power plant is proceeding well, with some developments lately in terms of higher projected costs, according to June 28 testimony filed by Georgia Power at the Georgia Public Service Commission.

Writing this update on the Vogtle project were: Kyle Leach, Director of Resource Policy and Planning for Georgia Power; and David McKinney, Vice President of Nuclear Construction Support, Vogtle Units 3 & 4, at Southern Nuclear Operating Co.

The Georgia PSC’s procedural and scheduling order issued for the company’s February 2013 Eighth Semi-Annual Vogtle Construction Monitoring Report identifies three issues to be decided in this case. First, whether the commission should verify and approve or disapprove the expenditures as made pursuant to the certificate of public convenience and necessity issued by the commission. Second, whether the PSC should exclude certain construction cost amounts from the company’s rate base on the basis of fraud, concealment, failure to disclose a material fact, imprudence or criminal misconduct. And, third, whether the commission should amend the existing certificate to reflect a revised construction schedule and associated extension costs, and a revised total project cost. 

The project continues to be well managed, and, with engineering, procurement and construction of the facility approximately 50% complete based on contractual milestones, is progressing toward a utility goal of providing a safe, reliable, clean and cost-effective source of electricity.  The cumulative capital costs for the facility through this reporting period total $2.21bn. These investments were prudently incurred in compliance with the original and previously amended certificate, the company witnesses wrote. These costs reflect significant progress in the nearly four year period since the facility’s original certification.

The company’s revised capital forecast, at $4.8bn, is $381m more than the forecast in the current certificate. Costs for actual engineering, procurement, and construction of the main power block and support structures (i.e. bricks and mortar) remain stable and represent a less than 1% increase in the certified capital costs, the witnesses pointed out.

Changes in the capital cost forecast also include known and expected costs to implement Nuclear Regulatory Commission (NRC) regulatory changes, increased taxes, costs necessary for operational readiness, quality and compliance during construction, transmission costs, and legal and environmental permitting costs. Many of these costs are driven by a construction schedule extension to fourth quarter 2017 and fourth quarter 2018 for Units 3 and 4, respectively.

The benefits to customers of completing the facility remain positive, the witnesses wrote. Under current schedule assumptions, the facility will bring about $4bn more value to customers when it is completed as compared to alternative generation available today.

When the new Vogtle units were originally certified as the most cost-effective resource for customers, the facility’s capital cost was expected to raise customers’ bills by around 12% without construction work in progress (CWIP) in rate base, and 9-10% with CWIP in rate base. The current projection is that the total customer rate impact of the facility in the first several years of its operations will be approximately 6-8%.

Commercial responsibility for the extended schedule remains in dispute, and the Engineering, Procurement and Construction (EPC) Agreement contemplates a construction duration that is shorter than that reflected in the extension to fourth quarter 2017 and 2018, the company witnesses said. “The Company continues to engage with Westinghouse Electric Company and Chicago Bridge & Iron (collectively, the ‘Contractor’) to determine whether a shorter construction duration is possible while continuing to allow for the time required to satisfy the rigorous nuclear safety standards applicable to this ‘first of a kind’ endeavor,” the witnesses said. “If a shorter construction schedule is implemented, it will be accomplished in a manner that will ensure our commitment to safety, quality and compliance.”

The Vogtle nucleat plant, which has existing units 1 and 2, is located near Waynesboro, Ga. Two Westinghouse AP1000 advanced pressurized nuclear facilities are being built with Unit 3 and 4. Generating capacity will be approximately 1,117 MW per unit.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.