Sunday, August 14, 2011

PSC rejects financial risk plan for Ga. nuke plant
Utility regulators unanimously rejected a plan ... that would have trimmed the profits of the Southern Co. if it breaks its budget while building what may become the first brand-new nuclear plant in a generation.

The elected members of the state Public Service Commission voted 5-0 to approve a compromise negotiated between its staff and Southern Co. subsidiary Georgia Power that shelved a proposal meant to pressure the utility into controlling construction costs while building two Westinghouse Electric Co. AP1000 reactors at Plant Vogtle near Augusta. The cost of building the existing reactors at the site jumped from $660 million to nearly $9 billion by the time they started producing power in the late 1980s.

Under state law, Georgia Power's 2.4 million customers will ultimately reimburse the state-regulated monopoly for the flagship plant as they pay their monthly electricity bills. President Barack Obama's administration had awarded the project $8 billion in federal loan guarantees as it seeks to increase the country's use of nuclear power. Georgia Power, which has a 46 percent stake in the new reactors, has been authorized to spend $6.1 billion on its share of construction costs.

As part of the agreement, Georgia Power says it will not legally challenge the power of utility regulators to ban the company from passing along "imprudent" construction costs even after those expenses are disclosed as part of semi-annual reviews. Company officials had earlier argued that regulators could not revisit construction spending after a review was complete.
The debate over how to split financial risk between Georgia Power and its customers — an issue potentially worth hundreds of millions of dollars — has simmered for years.
PSC staffers who represent customers presented a plan in December that took a carrot-and-stick approach.

If Georgia Power went $300 million over its approved construction budget, the PSC would trim the utility's profit from the new plant. If the power company built the project for $300 million under its target, it could receive a boost in earnings. Staffers later watered down that proposal during negotiations.

Georgia Power had argued that a risk-sharing plan was illegal and unnecessary. The company also said trimming its profits would make it more difficult to get investors to buy its stock, making it more expensive to raise money for big projects.
U.S. Nuclear Regulatory Commission officials are still considering whether to approve the design of the AP1000 reactor that would run the expanded nuclear plant. Until that reactor design is approved, federal safety regulators cannot issue a license to start plant construction....

While Southern Co. officials say the project remains on budget, a nuclear engineer hired by the state to monitor construction costs has warned that change orders and delays in getting key approvals from the NRC could drive up costs.

by Ray Henry
R&D Magazine
August 2, 2011

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