The co-owners of the two-reactor Plant Vogtle expansion project in Waynesboro, Georgia, have arrived at a joint agreement meant to put the brakes on cost increases or shift more of the burden onto principal owner Georgia Power if costs continue to soar.
The four project owners, Georgia Power, Oglethorpe Power,. The Municipal Electric Authority of Georgia and Dalton Utilities currently own 45.7 percent, 30 percent, 22.7 percent and 1.6 percent, respectively.
After a recently announced $2.3 billion escalation in costs, Ogltethorpe Power’s directors announced a plan to cap future cost escalations. That plant was met with quick disapproval by Southern Company subsidiary Georgia Power. Prior to Wednesday’s announcement, the Atlanta Journal-Constitution described the co-owners of the project as “warring co-owners.”
The new arrangement sets new cost burdens for the co-owners with more of the costs shifting to Georgia Power depending on how expensive the escalations get. If the price of the project grows from $800 million to $1.6 billion, Georgia Power will be obligated to pay 55.7 percent of the increase, the other co-owners obligated to pay 44.3 percent. If costs rise by $1.6 billion to $2.1 billion, the percentages shift with Georgia Power responsible for 65.7 percent of the increase, the others 34.3 percent.
Further, if costs rise above $2.1 billion, then the co-owners have permission to sell part or all of their shares to Georgia Power. Georgia Power, in turn, has the right to cancel the project at its own discretion, a contingency that is moot given a Georgia Power pull out would kill the project, anyway. Further, there is no longer a requirement for the co-owners to vote on each cost increase when presented to the Georgia Public Services Commission.
On the flip side, there are contingencies built into the new deal that would have Georgia Power benefit more than its standard share if costs are contained or if the reactors are completed ahead the current schedule.
In addition, safeguards have been put in place to eliminate the threat of The Municipal Electric Authority of Georgia’s ability to pull out if it losses a lawsuit from one of its customers, Jacksonville, Florida, utility JEA, which is suing to avoid cost increases, saying that its customers could now do better purchasing electricity from other sources, given the cost overruns at Vogtle.
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