Georgia Power nuclear plan called ‘lousy’
February 18, 2009 at 1:25 pm by Thomas Wheatley in News
WHITE ELEPHANTS Senate Bill 31 would provide safety net for Georgia Power
In 1974, Georgia Power broke ground on nuclear reactors at Plant Vogtle near Augusta, embarking on a nuclear odyssey that would nearly bankrupt the company.
Almost 15 years later — and after several delays and environmental hurdles— the project’s construction costs ballooned from $680 million to a staggering $8.4 billion. And it wasn’t until then that Georgia Power could begin to recoup the cost from ratepayers.
Now, as the state’s largest utility moves forward on two new reactors at Plant Vogtle estimated at $6.4 billion, the first in nearly 30 years, the company wants to cover its assets — and it’s enlisted the assistance of a phalanx of lobbyists and a controversial legislative plan of attack.
Introduced by state Sen. Don Balfour, R-Snellville, Senate Bill 31 would allow Georgia Power to begin charging customers — you and me — in advance for two new proposed nuclear reactors at Plant Vogtle. The bill passed the state Senate last week and now moves to the House.
That’s a huge diversion from the typical process. In past decades, Georgia Power sought state approval before building a plant, built it on its own dime, and then recouped the cost by raising customers’ rates.
According to Georgia Power, residential energy bills would rise $1.30 per month beginning in 2011. The following year, the average customer would see bills increase by $2.60 a month. By 2017, the average customer would pay an additional $9 a month — nearly $108 a year.
The bill has consumer advocates, Democrats — and even some Republicans — crying foul. Georgia Power, a private company that operates as a regulated monopoly in the state, is asking customers, not shareholders, to shoulder the risk of a what’s basically a business investment that has the potential to once again balloon in cost.
Balfour, who says he was presented the concept last fall by utility executives, claims it would save ratepayers $300 million in the long run by allowing Georgia Power to avoid interest payments — and would prevent a “rate shock” to customers when the reactors start producing energy.
“I think it’s a win-win-win,” Balfour says. “I think it’s great for Georgia. I don’t see any losers in it.”
But consumer advocates and some Democrats call the bill misleading, unfair, and the wrong solution at the wrong time.
Consummate consumer-advocate guru Clark Howard blasted the bill, saying the utility was “trying to pick your and my pocket.” Libertarian blogger Jason Pye branded Balfour’s legislation as “Georgia Power’s poison bill.”
“It’s a bad, big-government bill that’s forcing consumers to prioritize Georgia Power’s debt and financial obligations over our own,” says Beth Malone, a spokesperson for consumer advocacy group Georgia Watch.
Another part of the bill that might piss off consumers: Big business is exempt from the rate hike — a group that, unlike you, me and small-business owners, enjoys the service of lobbyists. After language was written into the bill that exempted big business from the rate hike, the group’s lobbyists have been noticeably absent from the debate.
But perhaps the most serious problem with the bill is that the Georgia Public Service Commission — a body better prepared to handle such issues — is already considering the exact same fix.
The commission, the state agency that decides how much you pay to heat your home or turn on your lights, is staffed by a team of experts in energy issues and financing. Those experts have raised questions over whether future consumers of Plant Vogtle’s newly generated energy would be spared the expense incurred by current ratepayers.
Or, as Sen. David Adelman, D-Decatur warned his colleagues: “It is a bad idea to inject yourself into this system, substitute your judgment for that of five statewide elected officials, force them to engage in piecemeal ratemaking, and to do so without the background, without the special knowledge, and without hearing any debate.”
The Public Service Commission is supposed to rule on the issue in 30 days.
“It doesn’t really belong in the General Assembly,” says Malone of Georgia Watch.
Balfour’s response to that argument speaks to the power-grabbing move of his legislation: The commission, he says, was created by the General Assembly, and lawmakers have the authority to issue it directives.
But eleventh-hour changes to the bill allow the commission to retain a measure of control, Balfour points out.
“The PSC still decides what rate of return Georgia Power gets on a rate of return,” he says. “The PSC still decides whether they build this plant. And they can disallow any expense they think is not prudent.”
Critics hope Balfour’s bill will face additional scrutiny in the House. Two House committees were scheduled to discuss the legislation on Wednesday and Friday.
If passed, the bill would need Gov. Sonny Perdue’s signature. Last week, the governor released an update about the state’s energy plan that emphasizes the expansion of Plant Vogtle. Add to the equation that Perdue’s chief of staff is a former Georgia Power executive, and you can rest assured he’s keeping tabs on the bill’s progress.
Additional reporting by Scott Henry.
(Photo by Christina Wedge)
February 18th, 2009 at 3:44 pm
I am a big supporter or nuclear power. It’s cheap, reliable, abundent, and produces no greenhouse gasses. Nuclear waste can be recycled/reprocessed.
That said, Southern Company has a history of raping Georgia rate payers. They have historically built new plants in South Georgia, on the rate payers’ dime, with transmission lines straight into Florida. Why? So the can sell the power to Florida utilities for profit while having Georgia rate payers cover the capital costs.
Georgia has plenty of electric generating capacity–if we kept it in the state.
February 18th, 2009 at 8:13 pm
Great article and information. Consumers should not be required to pay for something that will not happen for many years, if ever. That type of risk and cost should be borne by Georgia Power shareholders. If Georgia Power is not adequately comfortable that it will be able to recoup its investment in a nuclear plant, then they should not proceed. But Georgia Power should not ask consumers for a safety net (or a bailout).
By the way, Georgia Power needs to let the PSC do its work. Doing an end-run around the PSC through at the Georgia Legislature is ridiculous. It certainly will be a stinky mess if legislators who have been wined and dined by Georgia Power all of a sudden grant incredibly favorable treatment to Georgia Power. But then again, this is the State of Georgia….
February 19th, 2009 at 8:28 pm
jason, i too am a big supporter of nuclear power. i would like to see a large increase in nuclear power production in this country.
problem is, nuclear power is far from cheap, especially when considering the mammoth start-up costs. this is why georgia power nearly went bankrupt and why there has not been a new nuclear reactor built in the US in decades.
if we want to increase nuclear power (a great idea if we are serious about reducing greenhouse emissions), it will require gigantic amounts of money. the financial demands are probably too large for a private firm to take on alone, and they will seek help from the government or directly from citizens.
dont expect more nuclear power until that happens.
February 23rd, 2009 at 3:20 pm
Being a victim of Three Mile Island I could tell you a lot. What I do want to tell you that you that it is not what they say, and that even if it were, NOTHING is worth it. Please ask yourself, since there still isn’t any place for the waste, WHY is it still being considered. And, if you can only deal with cost, then please ask yourself, if it isprofitable, then why, in order for it to be built does the public need to pay for it BEFORE it’s built.
February 27th, 2009 at 7:20 am
The state should give Ga Power loans that can only be paid out directly to the builder, not let them charge us for something they can then get out of building by declaring bankruptcy like everyone else is lately.
July 3rd, 2009 at 11:11 pm
I also support nuclear power; particularly the new generation of plants. They will be easier (and less costly) to operate and the construction costs should be fairly predictable. One factor in Vogtle’s cost was all the new requirements the NRC issued after TMI. Not to mention the constant legal actions by interveners. Yes, nuclear power (actually it is atomic power as it involves fission vs fusion) was supposed to be too cheap to meter. That was in the 50’s when they didn’t understand the complexities involved. They are better understood after over 40 years of experience.
That said, GP/SoCo should be getting shareholders to pay for this plant; not rate payers. I’m sure if this law was legally challenged it would be overturned. So why hasn’t anyone filed a legal challenge? Another question is what happens to all that money if GP/SoCo pulls the plug half way through if the economics don’t work out. FL is looking at building four new nukes so it’s demand for outside power will go down making the need for more generating capacity here questionable. Even if power demands grow by 4%/yr as projected, there are much easier and less costly ways to meet that growth. Offer new more efficient appliances for free or at huge discounts. People should to replace their refrigerators every five years (insulation breakdown and compressor aging) but hang on to them forever. Home solar panels are another possibility to make more capacity for business use.