SANDY SPRINGS — The $27 billion Plant Vogtle, America’s only new nuclear power plant under construction, has survived is latest challenge.
Two of the plant's owners, Municipal Electric Authority of Georgia, or MEAG, and Oglethorpe Power, voted to move forward with the plan Monday.
MEAG provides electricity to its 49-member communities, including Marietta and Acworth. Oglethorpe supplies electricity to 39 of Georgia’s 41 electric membership corporations, including Cobb EMC, although Cobb EMC is not participating in the Plant Vogtle expansion. Oglethorpe did not respond to multiple requests asking where, when and whether a vote would take place.
MEAG passed it unanimously around 3 p.m., and Oglethorpe followed at about 8 p.m. with what it called a “conditional vote in support.” The utility said it will support continuing with the project if certain conditions are met, including an agreement to freeze the budget at its current place.
The vote was required by a clause in the ownership agreement after it was announced another $2.3 billion would be needed to finish the project. Under the clause, 90 percent of the project’s owners need to agree for it to move forward, which means unless Oglethorpe votes yes, the project will die.
Georgia Power, which owns 45.7 percent of the project, had already voted in favor.
Two reactor towers were completed at the Burke County plant in the 1980s, but the new project aims to construct two more. They were originally set to be complete in 2016, but are now projected to finish in 2022.
The MEAG decision was unanimous and came at about 3 p.m. after the group’s nine-member board spent about an hour in executive session.
Speaking after the vote, Marietta Mayor Steve Tumlin, who sits on the MEAG board, said the board members used the time to weigh the consequences of either decision.
“We talked about funding, what happens if we cancel, where does the money come from,” he said. “We’ve got all the facts over a 60-year period, and it was a unanimous vote… We weighed all the things, listened to (the Department of Energy), and yes, there’s still risk. Just like when they made the decision in 1970 to build Vogtle 1 and 2, the estimated price was $800,000, and it ended up costing $8.9 million. I don’t think we’re going to go 100 times. It will be some more money, or hopefully it will go less. There’s still a risk factor. I represent 49 cities, and we listened to the staff and it affects our cities if this doesn’t go. It’s not a desperate situation, it was a good one.”
Tumlin said there was a lot to consider, including pending lawsuits involving the Jacksonville, Florida-based utility company Jacksonville Electric Authority (JEA).
“It affects lending, bond ratings and everything else,” he said.
JEA entered into an agreement with MEAG under which it would get a certain amount of energy for the first 20 years of the plant’s operation in exchange for paying toward construction costs and their share of power.
But as the project has gone over budget and behind schedule, JEA said it wanted out, and launched a suit in a Florida court Sept. 11.
“The project initially was expected to cost $9.5 billion with a guaranteed maximum price that limited JEA’s liability,” JEA wrote in the filing. “Current cost-to-completion estimates exceed $27 billion, and that number is expected to increase. In the interest of the City’s citizens and JEA’s ratepayers, the City and JEA are uncertain as to the validity of the (agreement) and seek a declaration of JEA’s rights, duties and obligations thereunder.”
MEAG immediately countersued.
Also weighing on the board was a Sept. 23 call from the U.S. Energy Department saying if the project did not move forward, the owners, including MEAG, would have to pay back billions of dollars in loans for the project on a quicker timeline than if it continued as planned.
“If it’s a go, they can work with us better is what they said,” Tumlin said. “If it’s not, they want their money. They’re a silent partner, DOE is very important. We had to get input from everyone around, including DOE. As a municipal, we don’t have capital. We’re highly leveraged. So the capital market was very important in this decision, both for go and no-go.”
Tumlin said a cost cap like the one Oglethorpe is asking for would have been a good idea at the start, but now he thinks it would require MEAG to give up a portion of its ownership, which he does not want.
He also said he thinks the project has become more stable, though he acknowledged that without a cost cap, Georgia Power may increase the budget again in a few years' time. Tumlin said, however, that he thinks Votgle has passed its rockiest road.
“I don’t know if fear is the word, but it’s a possibility… We’re at the point where probably the unexpected won’t happen,” he said. “There won’t be another Westinghouse bankruptcy. It’s already in place. There’s less unknowns now.”
Tumlin said the third tower is about 55 percent complete and the fourth, about 40 percent.
During the conference, the board room in MEAG’s Sandy Springs headquarters was mostly empty, but many more listened in over a conference call that anyone could join. While the board was in executive session, several of the conference call participants, most of whom were against the Vogtle expansion, struck up a conversation.
Unbeknownst to them, their voices were being played on the speakerphone in the board room, where a handful of reporters and MEAG employees were waiting for the board to return.
“I got interested in this as an elderly person several years ago when I realized that the way this thing was set up is I was being asked to pay for something that was supposed to give me a power bill into the future that would be lower. At my age, I thought, well wait a minute, I might be dead before I get any of the benefit of this thing,” one man on the conference call said.
Speaking after the meeting Tumlin told the MDJ what he would say to a Marietta ratepayer with that concern.
“We’re actually at a low period, we’re at the lowest production costs we’ve ever been right now,” he said. “Being Marietta, I hate to be selfish, but we’re 20 years out. We’re not there, speaking just for my city.”
Tumlin was referring to the deal with JEA, in which Jacksonville would pay for and receive the energy for the plants first 20 years of operation.
"But also, it would have cost a lot of money if we had voted to stop,” Tumlin added.
As the participants talked, they were constantly interrupted by a female robot voice: “A participant has joined the conference.”
After about an hour of this, the board returned, and Chairman Gregory Thompson addressed the conference call crowd.
“Each member of this board is taking this responsibility very seriously,” he said. “We’ve been asked to make a decision that will impact the lives of people across Georgia, as well as significant portions of Florida and Alabama for many years to come. It was necessary that we undertake a very deliberate process of weighing the impact our decisions will have on MEAG Power and all of our customers.”
Thompson asked the participants to mute their phones and not interrupt the proceedings. They obeyed that rule, but as soon as the vote passed, before Thompson had a chance to adjourn, the robot woman began chanting, “A participant has left the conference. A participant has left the conference. A participant has left the conference,” until someone turned the speakerphone off.
Oglethorpe did not respond to numerous requests asking where and when the vote would take place.
According to a press release, “Oglethorpe’s condition in support of the project includes several cost-control options, such as one scenario in which there is a cap at the current project budget (inclusive of the $2.3 billion budget increase) but allows for an additional $800 million to be added to the contingency, raising it to $1.6 billion”
The utility said the project's overruns have expanded its share of the project’s budget from an initial estimate of $4.2 billion to approximately $7.25 billion, and the conditional approval was an attempt to “protect electric cooperatives, and their rural energy consumers, and hold Southern Company accountable for its newly revised budget and let their owners be responsible for any additional amounts beyond this level.”
“We are hopeful that the Southern Company will agree with a proposal to protect our rural energy consumers in Georgia who should not be responsible for excessive future increases in the costs of this project,” said Mike Smith, president and CEO of Oglethorpe Power in the statement. “The Southern Company directly owns and controls Southern Nuclear Corporation (SNC), which has control of the site and project oversight of Vogtle 3 and 4. As SNC’s owner, Southern Company should be willing to bear further risk of SNC’s missed budgets, not our members.”