Georgia Power: Plant Vogtle price tag $1.5 billion lower than expected

After all the hullabaloo (some examples here, here, here and here) during the last session of the General Assembly concerning Georgia Power “pre-billing” customers for new power facilities, they are now claiming that passage of SB 31 has allowed them to save 1.5 billion dollars in the construction of two new reactors at Plant Vogtle. This information was relayed to the Georgia Public Service Commission during testimony earlier today from Georgia Power executive Jeffrey Burleson. Except it appears that, beyond such a generalized pronouncement, little more will be provided to the public concerning such statements.

The commissioners reviewed copies of the secret data during the two-hour hearing, and no details were revealed during the questions crafted to avoid disclosure. Lawyers for consumer and business groups who signed confidentiality agreements also have access to the secrets, but none questioned Burleson when given the chance to cross examine him.

Projected construction costs dropped, Burleson said, because the company is avoiding some interest by charging its customers for the reactors before they begin operation. A law and a commission decision, both enacted earlier this year, allow the company to break from normal practice and pass along expenses to ratepayers while construction is in progress.

More details from The Augusta Chronicle.

37 comments

  1. DonnieChaffin says:

    We do not believe this. The financial geniuses said this could not happen, so it has to be a lie. This is nothing more than propaganda from a company known to make its shareholders filthy rich off the ratepayers.

    • Jason Pye says:

      No, because it flies in the face of the past when it comes to constructing a nuclear reactor. Costs are always much higher than projected.

      It’s far too early to run around saying that costs will be lower.

    • DonnieChaffin says:

      AD, I’m suprised nobody’s mentioned it yet, but you’re not considering that the average Georgian is now carrying a higher credit card debt because they’ve had to pay so much more to Georgia Power.

      P.S. All of my comments thus far have been sarcastic. I agree with you, but you’re not going to get anywhere here. Once people get entrenched in a conspiracy theory, no amount of data will turn them around.

    • Sleepy Tom says:

      “Documents in secret” do not prove one darn thing.

      You folks who believe this tripe must be connected to Ga Power and Southern Company. Company Shills.

      • DonnieChaffin says:

        Is a “company shill” a step up from “lobbyist”? I’m trying to determine if I’ve been promoted or not.

    • B Balz says:

      Now is a great time to build any durn thing. Construction costs, steel and concrete are down, labor is plentiful.

      I am waiting for the Fat Lady, as well.

  2. Wow, Pete. I’m not generally a fan, but it took some admirable balls to post this here. Why not go ahead and say something nice about Oxendine, while you still have front-page privileges? 🙂

  3. Technocrat says:

    Now that these 2 minisule plants are confirmed when will they build the other dozen so that Georgia can actually export power to other states.
    To make up for our lack of oil, gas, and coal – maginal sunshine and wind.

    A real world would require each STATE to supply their own energy [including gasoline] not suck and beg off the others.

    Since we cannot do that we need a gross Significant surplus of electricity to fuel transport in the future

  4. Scottf says:

    I hate to burst anyone’s bubble, but I think Georgia Power only reduced the 2017 ‘in service’ cost, not the actual construction cost. The $1.5 billion did not disappear and it is not savings. Customers will simply pay the $1.5 billion before the plant goes in service instead of paying it (with an additional $300 million in interest) afterward. So, if there is a savings, it would be the $300 million in avoided interest. Whether avoided interest is a savings for you depends on how your cost of money compares to the interest rate you avoided.

  5. Ramblinwreck says:

    This appears to be an attempt to pvovide some political cover before an upcoming election to those who voted for SB31 last year. I don’t think it will work. As Jason points out these things always take longer and cost more than projected. It’s way too early to come out with this kind of statement for any reason except to excuse this vote for the people who suppored the bill.

    • ByteMe says:

      But it made for a good headline in the paper… and anyone want to wager that the headline will get used in an ad down the road?

      The ultimate astroturfing.

  6. Icarus says:

    …For the love of God…

    “ATLANTA — The official price tag for Georgia Power’s share of two new reactors at Plant Vogtle is now $1.5 billion lower than when the company originally requested permission to build them, according to testimony Tuesday before the Georgia Public Service Commission. ”

    Key Words: lower than when originally requested.

    There is no real “cost savings”. They shifted the costs from Georgia Power to small rate payers via the largest lobbying effort since the Yazoo Land Scandal.

    And let’s not forget, almost a Billion of those “costs” are advanced profits off the plant that GA Power shareholders will be allowed to receive off the backs of its small rate payers who unfortuntately, only have Reps and Senators to represent their interestes, and not over 70 lobbyists.

    Nothing new to see here. Move along.

    • Icarus says:

      That’s the nature of the law in how new plants work. Wouldn’t matter if it were Nuclear, Coal, Hydro, or Magic Beanstalk green technology. The law allows for the plant construction costs to be recouped with a return on investment.

      One thing during our orginal coverage that I did not understand at the time but will correct now. SB 31 did not put the ratepayers at additional risk. If the plant never comes on line, but was approved by the PSC, the GA Power still has the right to recoup costs under the same law.

      This would be the same if they approved a new coal plant, but because of a new Cap/Trade law (or judges ruling) the plant was not allowed to operate, then the rate payers would still pay for the plant.

      The problem with SB 31 is simple, and still remains:

      1) GA Power is able to take profit, in advance, from rate payers, who have a higher cost of funds than GA Power.

      2) Only small customers are paying for this. Large commercial customers were exempt from the rate hike.

      I’m for nuclear, and hope we build not just these but even more plants. I’m not for small businesses and retail customers subsidizing large users and, more importantly, giving GA Power $1 Billion of advanced, unearned profit.

      • Sleepy Tom says:

        I’m for nuclear too. I’m also in favor of a used uranium rod being shoved up the rear end of a certain Rules Chairman in the state senate.

    • Icarus says:

      I’m not sure I understand your question, but I’ll take a stab.

      We’re paying for “financing costs” in advance, not the “hard” construction costs. Included in the financing costs is not just the interest on construction, but a provision to allow “return on investment” as part of financing costs. ROI is known in layman’s terms as “profit”, and we, the little guys, will be responsibile for paying Georgia Power’s profit, in advance, on this plant.

      GA Power is entitled to charge rate payers for the hard costs over the life of the plant. Should the plant never come on line, they will still be entitled to do so under state law.

    • Mad Dog says:

      Ic and Ben,

      Not sure I’m following this good thread very well. My biggest question would be defining the ‘life’ of the plant.

      5 years? 10 years? 20 years? Forever?

      Then, I think Ic has it right on what costs can be transferred to consumers before the plant goes online, if it ever does.

      Can I look at the books to make sure only the legally allowed costs are on my bill? Hmmmmmm, NO.

      Can I be sure that the $1.5 billion cost savings (?) isn’t being moved to another expense to be passed along NOW instead of later?

      Just say Enron … the best power company in the world … until … it got busted.

      • Icarus says:

        MD,

        Can’t tell you the number of years off hand, but I believe it is greater than 20. These are long term assets, and the costs are generally recovered over a very long time horizon.

        As for looking at the books for only the legally allowed costs, that is the responsibility of the Public Service Commission. I know that they have to approve costs that they deem proper. I have no idea which, if any, of these records are open for public inspection.

        But if you read above, the $1.5 Billion has done exactly what you said. It wasn’t cut, it was just removed from capitalized interest expense on the balance sheet (that would then be amortized over that long period) to a direct expense on the income statement, with rate payers making up for the expense on the revenue side.

        Accounting gimmick does not equal “cost savings”.

Comments are closed.