Progress at Vogtle, but cost forecast rises

09 August 2018

Georgia Power announced yesterday that Southern Nuclear has made "significant progress" on construction of units 3 and 4 of the Vogtle nuclear power plant since assuming project management on behalf of the project co-owners. The forecast for its share of the project has increased however from USD7.3 billion to USD8.4 billion, based on a revised cost-to-complete estimate from Southern Nuclear.

Construction work at Vogtle 3, pictured last month (Image: Georgia Power)

The USD1.1 billion cost increase covers Georgia Power's share of the project; the co-owners face a USD1.2 billion cost increase. Georgia Power said it will "absorb" USD700 million of its additional cost and not seek recovery from ratepayers when it files its 19th Vogtle Construction Monitoring Report with the Georgia Public Service Commission (PSC) at the end of this month.

Southern Nuclear and Georgia Power, both subsidiaries of Southern Company, took over project management for the Vogtle AP1000 nuclear power plant construction project last year under a new service agreement. The project is majority owned by Georgia Power (45.7%), with co-owners Oglethorpe Power (30%), MEAG Power (22.7%) and Dalton city (1.6%).

The new nuclear units are the first to be built in the USA "in a generation", Georgia Power noted, and the only new units currently under construction in that country. They are still expected to start operations in November 2021 (unit 3) and November 2022 (unit 4), it added.

Milestones over the past 60 days alone, it said, have included a major concrete placement lasting more than eight continuous hours inside the unit 3 shield building and the placement of a 52,000-pound Q233 piping module for unit 4, a critical piece of the overall passive core cooling system, inside the containment vessel allowing large quantities of specialised piping to now be installed.

"While there will always be challenges in building the first new nuclear units in this country in more than 30 years, we remain focused on reducing project risk and maintaining the current project momentum in order to provide our customers with a new carbon-free energy source that will put downward pressure on rates for 60 to 80 years," Paul Bowers, chairman, president and CEO of Georgia Power, said.

The increase in costs will have no impact on customer bills, Georgia Power said, adding it has decided not to ask the Georgia PSC to approve them so soon after receiving its approval of the capital forecast last year.

Additionally, based on the latest estimate, the previous contingency for the project has been determined to be insufficient to fully offset forecasted cost increases resulting in an increased contingency of about USD400 million, which may be presented to the Georgia PSC for evaluation "as and when appropriate", it added.

A total of USD75 in 2018 bill credits, or USD188 million overall, was approved by the Georgia PSC as part of its order to continue construction of the Vogtle units in December last year. Georgia Power customers are receiving three separate USD25 credits this year, with the third and final USD25 credit expected to be issued next month. The credits are a direct result of parent guarantee payments for the Vogtle project from Toshiba, the former owner of Westinghouse.

Customers also continue to save money throughout this year under Georgia Power's updated 2018 Nuclear Construction Cost Recovery tariff. This allows the company to collect financing costs for the Vogtle expansion every month, a structure which it says saves customers hundreds of millions of dollars by reducing financing and borrowing costs, while also phasing the new units into rates over time helping to avoid 'rate shock' once they come online.

Bowers said during a conference call with analysts yesterday that there is a shortage of qualified labour at the site, while Southern Company CEO Tom Fanning added that the company is looking to recruit workers from Canada and possibly from Puerto Rico.

Construction of Vogtle unit 3 began in March 2013 and unit 4 in November the same year, with commercial operation scheduled for December 2019 and September 2020, respectively.

Nuclear energy generated by the existing units at Vogtle and Hatch accounts for more than 20% of Georgia's overall electricity production every year.

Researched and written by World Nuclear News