In a filing with the Securities and Exchange Commission Wednesday, Southern Co. said that it would cost an additional $1 billion to $1.7 billion to complete construction of two new AP1000 Westinghouse-designed reactors at the Vogtle expansion project in Waynesboro, Ga.
On the heels of the decision by South Carolina Electric and Gas and Santee Cooper to abandon the two-unit project relying on AP1000 designs in Jenkinsville, S.C., after $9 billion spent, Southern Co. said it would make a final decision on the Vogtle project by the end of the month. The Vogtle expansion, as of May of 2017, was said to be 66 percent complete.
Southern Co. Chief Executive Officer Tom Fanning and Georgia Public Service Commission Chairman Stan Wise have been widely quoted in the media as noting (separately, but similarly) that there are several critical differences between the V.C. Summer expansion in South Carolina and the project in Georgia.
While both projects involved construction of two AP1000 units, SCE&G had only one partner in its project, Santee Cooper. In contrast, Georgia Power, the Southern Co. subsidiary that owns 45.7 percent of the Plant Vogtle expansion project, has several partners, including Oglethorpe Power, in for 30 percent, MEAG Power, which owns 22.7 percent, and Dalton City, which holds 1.6 percent.
The other critical financing difference is the impact that the projects have so far had among consumers. Ratepayers in South Carolina have experienced an 18 percent jump in their utility bills due to a 2007 state law that allowed SCE&G to pre-charge for construction and to make those charges stick even if the project – as seems the case now – did not make it to fruition. In Georgia, where the primary owner has three times as many ratepayers to lean on, the impact on the average tax bill has been about a third of that. Georgia Power ratepayers have thus far seen a rate hike of less than 5 percent based on the Plant Vogtle expansion.
The last significant difference: Southern Co. Chief Executive Officer Tom Fanning was able to secure $3.7 billion in guaranteed financing from Toshiba, the financially struggling owner of Westinghouse, which had been the lead contractor in both projects until Westinghouse declared bankruptcy in March. SCE&G had only secured $2.2 billion from Toshiba – a figure that may be hypothetical, as it depends on Toshiba making good on the pledge, despite financial problems of its own.
But both projects have experienced significant delays and escalating costs. The original price tag for Plant Vogtle's expansion was estimated by Southern Co. in 2008 to reach $14 billion. That price tag, assuming other partners have similar financing costs, now looks to be $25 billion and could reach $27 billion, based on Southern Co.'s filing.Georgia Power, to date, has spent $4.5 billion of its own on the project. Southern Co., meanwhile, says it would cost $6.3 billion just to stop work on the Vogtle project. Those costs include financing obligations, contract obligations and securing the site should the project be halted.
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An increase in costs was expected
Costs have increased in all projects under construction