Georgia Power decides to complete Vogtle

5 September 2017

US Georgia Power on 31 August filed a recommendation with the Georgia Public Service Commission (PSC) to complete construction of units 3&4 at the Vogtle NPP near Augusta, Georgia, arguing that it was the most economical choice for customers. Construction of unit 3 began in March 2013 and unit 4 in the following November. The units will be the first in the USA to use Westinghouse Electric AP1000 technology following Scana Corporation subsidiary South Carolina Electric & Gas’s decision to cancel construction of two AP1000 reactors at the VC Summer NPP in the wake of Westinghouse’s decision in March to file for bankruptcy. 

The Vogtle project is majority owned by Southern Company subsidiary Georgia Power (45.7%), with co-owners Oglethorpe Power (30%), MEAG Power (22.7%) and Dalton city (1.6%), all of which supported the recommendation. Southern Nuclear Operating Company will operate the units. Georgia Power expects Vogtle 3 to begin commercial operation in November 2021 and Vogtle 4 in November 2022. 

The recommendation was based on economic analyses evaluating various options, including abandoning one or both units or converting them to gas-fired generation, and potential risks such as future payments from Westinghouse parent company, Toshiba, as well as the availability of production tax credits and the extension of federal loan guarantees. 
"Based on all factors considered, completing both units represents the most economic choice for customers and preserves the benefits of carbon-free, baseload generation," the company said. The recommendation will be reviewed by the PSC, which expects to give its decision by late-February 2018.

The total rate impact of the project remains less than initially estimated, Georgia Power said, noting that it had invested about $4.3bn in capital costs in the project to June 2017. The estimated cost to complete units is put at $4.5bn, bringing the total capital cost forecast to $8.8bn. The PSC has already approved $5.68bn in capital costs for Georgia Power's share of the project, with payments of $1.7bn under parental guarantees anticipated from Toshiba. Georgia Power's potential additional capital costs are estimated at around $1.4bn, putting the total estimated capital cost for the entire project at $19bn.

New role for Bechtel


The new plan includes changes among the contractors, with Bechtel taking over from Fluor Corporation, which had previously served as a subcontractor. Georgia Power announced that it has now contracted with Bechtel to manage daily construction efforts under the direction of Southern Nuclear. Both companies bid to take over development after Westinghouse filed for bankruptcy. Fluor said it was “disappointed” at the decision, but would work with Southern Company to support an orderly project transition. Fluor became construction contractor at Vogtle in early 2016 after Westinghouse Electric purchased CB&I's nuclear construction business in late 2015. Westinghouse had put Fluor in charge of managing construction work at both Vogtle and VC Summer.

Southern Nuclear assumed management and control at the Vogtle site after a services agreement between Westinghouse and Vogtle's co-owners came into effect on 27 July. "Since Southern Nuclear assumed control of the site from Westinghouse at the end of July, momentum has accelerated with a consistent focus on safe, high-quality construction. We expect this trend to continue with Bechtel," said Georgia Power President and CEO Paul Bowers. He noted that, despite the cost increases, the Vogtle reactors would be competitive with other energy sources over their 60 to 80-year lifespans.

Several construction milestones were recently reached at Vogtle. The steam generator was installed at Vogtle 3 on 15 August. Each unit will have two steam generators, and all four are now on-site. On 18 August, the 120-tonne pressuriser compartment for Vogtle 4, which was assembled on-site, was installed. The second of four accumulator tanks, which hold borated water inside the containment vessel to provide emergency coolant, was put in place on 19 August. 

However, on 31 August Moody's issued a warning that the decision to continue construction at Vogtle may lead to a credit downgrade. Moody’s questioned whether Georgia Power could recover its costs. Moody's Investors Service published an Issuer Comment stating that it regarded the decision as a credit negative. Moody's expressed concerns about the management of the project. While it sees the hiring of Bechtel as a positive development, it writes: “We view nuclear plant construction as an activity well outside of Southern's core competency of operating regulated electric and natural gas utility businesses.”

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