The warning from nuclear engineer William Jacobs. Jr. was his bluntest assessment yet on the possibility that Southern Co. subsidiary Georgia Power will need more money to construct two more nuclear reactors at Plant Vogtle near Augusta. Cost overruns plagued the industry during the last round of nuclear construction years ago. The 2.4 million customers of Georgia Power ultimately pay for the building costs.
“In my opinion, the Company will need to request an increase in the certified cost and a change in the certified schedule to a later completion date,” said Jacobs, who was hired by the state’s Public Service Commission to monitor construction progress.
Jacobs said the amount of the increase will depend on progress made at the construction site and the outcome of negotiations between Southern Co. and other firms over costs related to design changes and licensing delays. The latest timeline would have the first reactor online by November 2016, or roughly seven months behind schedule. The second reactor would follow a year later. Still, Jacobs said even that timeline was uncertain.
Southern Co. owns a 45.7 percent stake in the new plant, which is expected to cost roughly $14 billion. The other owners are Oglethorpe Power Corp, the Municipal Electric Authority of Georgia and Dalton Utilities.
The report marked a change in tone for Jacobs. When asked in written testimony whether the plant could be built on budget and schedule, he simply answered, “No.” In previous reports, Jacobs had said Southern Co. faced “significant challenges” sticking to its budget.
Southern Co. spokesman Mark Williams said the company has not formally requested a budget increase. During a recent hearing, a Southern Co. executive suggested that may happen unless current conditions change.
“I can’t say that it’s highly likely that the cost would be able to maintain, you know, the current projections without some kind of potential adjustment if those cost pressures continue to mount,” said David McKinney, a vice president for nuclear construction.
Utility officials say any cost overruns would be balanced against $2 billion that the company estimates it will save over the plant’s lifetime, for example, benefiting from lower-than-expected interest rates.
Southern Co. faces cost pressures on several fronts, Jacobs said. The companies building the plant — Westinghouse Electric Co. and The Shaw Group Inc. — want Georgia Power to pay $400 million as its share of charges related to delays in getting federal approval for the reactor and plant. Southern Co. has not accepted any responsibility for those charges. The utility is also negotiating over change orders.