Investor-owned Georgia Power will recover capital costs associated with the over-budgeted construction of two new nuclear reactors from ratepayers, according to a preliminary agreement announced Thursday.
Georgia Power and the Georgia Public Services Commission’s public interest advocacy staff agreed to a $7.56 billion cap on the amount of capital construction costs placed in the rate base to fund completion of a pair of nuclear reactors at Plant Vogtle in Waynesboro, Georgia.
The PSC said it was “a significant reduction” from the $10.19 billion the utility said it needs to finish the units.
Public Services Commission Chairman Jason Shaw said the “culmination of construction on this historic project” marked “the expansion of clean energy production for another 60 to 80 years here in Georgia.”
The final agreement must be approved by the PSC’s elected commissioners.
The Unit 3 and 4 nuclear reactors at Plant Vogtle are being developed with a partnership that includes Georgia-based MEAG Power, Oglethorpe Power and Dalton Utilities, Jacksonville, Florida’s city-owned JEA utility, and Alabama-based PowerSouth Energy Cooperative, with a total project cost of around $30 billion.
The PSC does not have jurisdiction over municipal utilities Dalton and MEAG or cooperative Oglethorpe.
The nuclear units will replace coal-fired plants.
Georgia Power owns the largest 45% stake while MEAG Power owns a 22.7% stake.
MEAG’s bonds carry S&P ratings between BBB-plus and A, depending on the revenues pledged to back them.
The reactors were originally set for completion in 2016 and 2017 but encountered numerous delays and cost overruns during construction that ballooned the price tag and nearly fractured part of the partnership in 2018 when JEA took to the courts to seek contractual changes.
In August, Unit 3 began the start of commercial operations, seven years late and billions over budget, leading to an outlook boost for three of the project partners, to stabilize from negative, from S&P Global Ratings.
S&P said the start of commercial operations was a major milestone, despite overruns and delays that weighed on the project’s bottom line.
“The outlook revisions reflect the commencement of commercial operations at Vogtle nuclear unit 3, albeit seven years behind schedule and at a cost that is almost double initial projections,” S&P said, adding they “believe that unit 3 entering commercial service reduces but does not eliminate the financial uncertainties surrounding the Vogtle projects.”
Georgia Power expects Unit 4 to enter commercial operations on March 31. Any additional capital costs accrued after that will fall on Georgia Power, not the ratepayers, under the arrangement announced this week.