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Only three power reactors have been connected to the grid in the US in the past 25 years, and no power reactor in the US has both begun construction and been completed since the Three Mile Island accident in 1979.1 With the cancellation of the V.C. Summer project in South Carolina, only two reactors are under construction in the US: the AP1000 reactors at the Vogtle plant in Georgia. Will the Vogtle project break the streak of no reactors being ordered, built and completed since Three Mile Island? Or will the project be cancelled ‒ in which case there will be a grand total of zero reactors under construction in the US?
A decision will probably be announced by the end of the month by the project owners, then the Georgia Public Service Commission will have to decide whether or not to accept their proposal ‒ a process that could take several months.2
Comments by Southern CEO Tom Fanning on August 2 suggested that he is leaning towards recommending that construction keep going.3 Fanning said the company had costed the option of building one of the Vogtle reactors and a gas-fired plant at the same site, but preferred to either keep or abandon the nuclear project as a whole.4 "We would need to build a rather lengthy [gas] pipeline, and maybe other sites around Georgia are maybe more suitable for that," Fanning said.4
In some respects, the Vogtle project in Georgia has better prospects than the abandoned V.C. Summer project in South Carolina:
- Energy demand is growing more rapidly in Georgia.5
- The Vogtle project is closer to completion than V.C. Summer. According to the Augusta Chronicle, the Vogtle project is 66% complete overall, with almost all of the engineering and most of the procurement done, and construction 44% complete.6 The current timeline for completion of the reactors is between Feb. 2021 and March 2022 for Vogtle #3 and between Feb. 2022 and March 2023 for Vogtle #4.7
- Toshiba's settlement payment for the Georgia AP1000 project is US3.68 billion, well above the US$2.2 billion to be paid to the South Carolina utilities.
- The rate impact is spread across a bigger customer base ‒ Georgia Power has about three times more customers than SCE&G.7
But there are important similarities between the South Carolina and Georgia projects. Westinghouse is exiting from both projects. Both projects are long-delayed and billions over-budget. Ratepayers in both states are sick of paying in advance for the AP1000 reactors that may never be completed ‒ Georgia Power had collected almost US$1.2 billion from ratepayers by the end of 2016 to pay for Vogtle.8
Another vulnerability for the Vogtle project is that it has more owners ‒ Georgia Power (45.7%), Oglethorpe Power Corp. (30%), the Municipal Electric Authority of Georgia (22.7%) and Dalton Utilities (1.6%) ‒ and the project might collapse if just one of the owners calls for its termination.9 Georgia Public Service Commissioner Stan Wise said: "I would question whether the commission would have the appetite to go forward without a unanimous decision from the owners."9
In 2008, the cost estimate for the two Vogtle reactors was US$14 billion. Southern Co. said on August 2 that its current estimate is a total cost of at least US$25 billion.3,10
Georgia Power estimates net additional capital costs of US$1.0-1.7 billion to complete the two AP1000s under construction at Vogtle.7 Costs for other owners ‒ who own slightly over 50% of the project ‒ would presumably be slightly larger.
Of course, that US$25 billion figure could prove to be an underestimate, as with all previous estimates. The Southern Alliance for Clean Energy (SACE) estimates that the cost could reach US$29 billion.11 SACE based its estimate on a June 2017 report by two utility consultants to the Georgia Public Service Commission. The consultants' report is based on a scenario in which the project comes online in 2022, and Westinghouse's bankruptcy adds further costs.
Will Vogtle go ahead? "It might be a close call," said Kit Konolige, a New York-based utility analyst for Bloomberg Intelligence. "The biggest issue is, what's your level of confidence that if you do go ahead, it's going to be done on time and on budget."10
Few people on the outside looking in have much confidence that Vogtle could be completed without significant additional cost overruns and delays. But there is more confidence among the Vogtle project partners and state 'regulators' that the project can be completed.
Southern Co. recently noted that the project has fallen further behind schedule since Westinghouse filed for bankruptcy protection in March 2017.3
Matt Kempner commented in the Atlanta Journal-Constitution:12
"Continuing to fund the only remaining nuclear power plant under construction in the U.S. relies largely on decision-makers convincing themselves that the companies can accurately revise cost and schedule estimates for Plant Vogtle's expansion. It's a dicey proposition. Accuracy hasn't been a strong suit of the power giants in recent years.
"Southern is one of the biggest power companies in the country and the parent of Georgia Power. It has embarked on exactly two mega construction projects in the last decade or so. Both ‒ the expansion of Plant Vogtle and the Kemper clean coal/gas plant in Mississippi ‒ have gone billions of dollars over budget and faced years of delays. As each project struggled, Southern and its subsidiaries continued to underestimate the magnitude of the overruns. Independent monitors for the Georgia Public Service Commission regularly warned about rising Vogtle costs that were more accurate than Georgia Power's reassurances about stability."
Georgia Power estimates it would cost it a total of US$6.3 billion to cancel the project, comprising its share of expenditure on the project to date; financing costs; and other costs connected with cancellation, including terminating contracts for construction and other services, and securing the construction site.7
References:
1. www.iaea.org/PRIS/CountryStatistics/CountryDetails.aspx?current=US
2. Russell Gold, 2 Aug 2017, 'US nuclear revival hopes dim as utilities ditch reactors', www.theaustralian.com.au/business/wall-street-journal/us-nuclear-revival...
3. Russell Grantham, 2 Aug 2017, 'Southern Co. says Vogtle costs to exceed $25B', www.myajc.com/business/southern-says-vogtle-costs-exceed-25b/mvP3M8H3Db3...
4. Megan Geuss, 4 Aug 2017, 'Vogtle, Summer nuclear plants face bleak outlook after Westinghouse bankruptcy', https://arstechnica.com/information-technology/2017/08/vogtle-summer-nuc...
5. Tom Buerkle, 31 July 2017, 'Power down', www.breakingviews.com/considered-view/scana-move-signals-lights-out-for-...
6. Tom Corwin, 2 Aug 2017, 'Company update predicts longer start date for Vogtle reactors', Augusta Chronicle, http://businessinsavannah.com/bis/2017-08-02/company-update-predicts-lon...
7. World Nuclear News, 3 Aug 2017, 'Georgia Power expects late August decision on Vogtle', www.world-nuclear-news.org/NN-Georgia-Power-expects-late-August-decision...
8. Russell Grantham and Johnny Edwards, 19 May 2017, 'Plant Vogtle: Georgia's nuclear ‘renaissance' now a financial quagmire', www.myajc.com/business/plant-vogtle-georgia-nuclear-renaissance-now-fina...
9. Kristi E. Swartz, 1 Aug 2017, 'Death of Scana's V.C. Summer project puts industry on notice', www.eenews.net/stories/1060058199
10. Mark Chediak and Jim Polson, 2 Aug 2017, 'Even at $25 Billion, Southern Sees Value in Finishing Nukes', www.bloomberg.com/news/articles/2017-08-02/southern-sees-benefit-to-fini...
11. Tom Hals, 15 June 2017, 'Group says Georgia nuclear plant costs rise to $29 billion', www.reuters.com/article/us-toshiba-accounting-westinghouse-bankr-idUSKBN...
12. Matt Kempner, 3 Aug 2017, 'Kempner: Georgia's nuclear crisis of confidence', www.myajc.com/business/kempner-georgia-nuclear-crisis-confidence/Zm7o79f...