Mississippi Will Have Regrets for Bottomless Bankroll

Georgia Power trashes regulatory staff’s financial proposal for Vogtle cost overruns

By Kristi E. Swartz

The Atlanta Journal-Constitution

4:36 p.m. Wednesday, July 6, 2011

 

Georgia Power officials told state regulators they never would have started to build a new multi-billion-dollar nuclear power plant if they knew the company might be on the hook for certain potential cost overruns.

The company, they said, would be building a natural gas plant instead.

Georgia Power, which is the largest stakeholder in a partnership building two new reactors at Plant Vogtle, is responsible for $6.1 billion of the $14 billion project. The Georgia Public Service Commission’s staff wants to cut into the utility’s allowed profit margin if the project runs more than $300 million over budget. Profits would similarly get a boost if the reactors come in under budget by the same amount.

At a PSC hearing Wednesday, company executives said the proposal could drive up financing costs of the project, potentially damage the ability to raise capital and eventually increase customer bills.

“As a member of the management team of the company, if this mechanism had been part of the original certification, we very likely would have not proceeded [with the project],” said Ann Daiss, Georgia Power’s comptroller.

Tom Newsome, a member of PSC’s staff, said Georgia Power earns a high profit if the cost of the project increases. The PSC proposal would continue to allow for that but would shield the company’s customers from having to pay for those cost overruns.

Should the costs grow to $7 billion, Georgia Power wouldn’t earn below a 10.25 percent return on its investment from this project. The current rate of return on investment is set at 11.15 percent.

“Even under the most adverse outcomes, the units remain highly profitable with very limited risk for investors,” Newsome said. “We’ve been talking a lot about investors in this hearing and I think we need to be talking about [customers].”

There are exceptions. Georgia Power would not be responsible for paying for overruns stemming from safety, efficiency or regulatory changes.

Newsome, who sparred with a Georgia Power attorney for most of the afternoon, said he thinks the company’s construction costs could come in under the “deadband” or threshold set in the proposal.

Still, company executives say that had the PSC staff’s risk-sharing mechanism been part of the plan years ago, Georgia Power would be building a natural gas plant instead.

Pete Ivey, an executive with the nuclear unit of Georgia Power’s parent company, Southern Co., told state regulators that a natural gas plant would have been most cost effective.

Ivey said the PSC’s plans would force the company to look at short-term financial decisions instead of long ones. It could impact maintenance decisions, for example, he said.

The PSC will vote on this issue in August.

 

Georgia Power trashes regulatory staff’s financial proposal for Vogtle cost overruns  | ajc.com.

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Welcome! It is an honor to have a moment of your day. We are in favor of all forms of energy. We care about the future of this great Nation and seek to expose the corruption behind the Kemper County CO2 capturing experimental Lignite coal Demonstration unit. Our Chief complaint is that the rate payers pay for it in their electric bills. The CO2 capturing does not produce electricity so therefore serves no purpose for the ratepayers. It is a money scam for Mississippi power and Southern Company. Mississippi is first in following the (United Nation's Agenda 21) Kyoto Protocols for the regulation of carbon dioxide, a gas we breathe out of our lungs, by forcing the people to pay for it through energy bills and taxes. Through the process of investigating the Kemper County Coal Plant issue, we feel criminal acts have been committed and that soon FCC violations will be added to the offenses. People are being lied to, deceived, or misled and therefore are fully cooperating with this Lignite experiment. "This blog or any content may contain copyrighted material. Such material is made available for educational purposes, to advance understanding of political pathways, Constitutional infringements, democracy, science, and other issues. This constitutes a 'fair use' of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright Law. This material is compiled and distributed without profit. This blog does not always agree with certain personal views or agendas of the published authors, but we will overlook such views many times in order to present facts, conclusions, and connections for knowledge or clarification. We hope you gain from this critical subject matter of the article/op-ed."

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