The fate of the oft-delayed and budget-spiking Vogtle nuclear reactor construction project in Georgia may be even more uncertain as utility owners consider whether to continue work later this week.
Work on Vogtle Units 3 and 4—now expected to cost at least $25 billion with the ever expanding cost shared among several utilities and their customers—has even made legal enemies of business partners. Municipal Electric Authority of Georgia (MEAG) has sued the Jacksonville Electric Authority (JEA) of Florida for allegedly reneging on a deal to buy power from the Georgia co-owner in the Vogtle plant.
JEA wants MEAG to abandon work on Vogtle which, if ever completed, would be the first new nuclear reactor completed in three decades. A letter from JEA Chairman of the Board G. Alan Howard said that abandonment would save JEA customers up to $2.5 billion in favor of other power purchase alternatives including solar.
Howard said he appreciates that MEAG’s board has a tough decision later this week, but that the right path is clear for JEA customers. Abandoning work at Vogtle Units 3 and 4 would be tremendous blow for the already reeling U.S. nuclear energy sector, and yet the project has racked up billions of dollars in cost overruns with more potential debt on the horizon.
“We in Jacksonville have 50,000 families that live at or below the poverty line to project, making affordability an essential priority for us and our community,” Howard wrote in this letter to MEAG.
“And this decision is crystal clear: if MEAG Power’s Board votes not to proceed with this Project, communities across Georgia, Alabama, and Florida could save at least $2.5 billion when compared to at least one alternative power option we have identified: money that makes a meaningful difference in the lives of the people we serve,” the letter continues. “The choices made this week will endure long past our own lifetimes. These are choices with which our children and our grandchildren will have to live. Choose affordability; vote no.”
Co-owners such as MEGA, Oglethrope Power and Georgia Power have soldiered on to try and eventually complete Vogtle 3 and 4, despite accelerating costs and the bankruptcy of project contractor Westinghouse last year.
Georgia Power revised its own cost estimates for its share of Vogtle construction by an additional $1 billion earlier this summer. The revision caused financial ratings firm Morningstar to down the utility from A3 to Baa1, thus impacting its ability to borrow.
Georgia Power revised cost estimates for its share of Vogtle construction from $7.3 billion to $8.4 billion. The increase led financial ratings firm Morningstar to downgrade the utility from A3 to Baa1 status.
The latest cost revision comes only eight months after a previous tabulation was reviewed and approved by Georgia state utility regulators, Morningstar’s release reads.
“The review for further downgrade reflects the near-term risk that one or both of the key co-owners (Oglethorpe Power Corp. and MEAG Power) will decide to opt out of the project as allowed under the amended ownership agreement,” the ratings firm noted.
When it comes to JEA buying power from MEAG, replacement offers including solar and storage are financially better per MWh acquired, according to the JEA letter. Vogtle, meanwhile, includes higher costs and a greater risk of not even being completed.
“A decision to continue with the project is a decision to impose at least $2.5 billion of unnecessary costs on MEAG’s participants and their customers, PowerSouth and JEA, and is contrary to prudent utility practice,” Howard wrote. “Moreover, JEA believes a decision to proceed in the face of this MEAG Replacement Offer would be a breach of the MEAG Board’s duties to its Participants and their customers and a breach of MEAG’s duties to JEA under the PPA.”
Voting to end work at Vogtle would be a devastating blow to the nuclear industry, resulting in no current new construction for the U.S. sector. South Carolina utilities last year abandoned their efforts to build new reactors at the V.C. Summer generating plant, leaving customers holding the bag for billions of costs in an unfinished facility.