First New US Nuclear Reactor Faces Financial Challenges
ATLANTA — The completion of the first new U.S. nuclear reactor in decades should be cause for celebration, but the soaring costs of the Georgia power plant have raised concerns about its viability as a path to a carbon-free future.
Georgia Power Co. announced on Monday that Unit 3 at Plant Vogtle, southeast of Augusta, has passed testing and is now in commercial operation. However, the project was completed seven years behind schedule and a staggering $17 billion over budget.
At its full capacity of 1,100 megawatts, Unit 3 can power up to 500,000 homes and businesses. The electricity generated from the plant is distributed to several utilities in Georgia, Florida, and Alabama, as well as Southern Co. subsidiary Georgia Power’s 2.7 million customers.
“This hadn’t been done in this country from start to finish in some 30-plus years,” said Chris Womack, CEO of Atlanta-based Southern Co. “So to do this, to get this done, to get this done right, is a wonderful accomplishment for our company, for the state, and for the customers here in Georgia.”
A fourth reactor is also reaching completion at the Plant Vogtle site. The Nuclear Regulatory Commission expects radioactive fuel to be loaded into Unit 4 before September’s end, with commercial operation beginning by March.
Initially projected to cost $14 billion, the third and fourth reactors are now estimated to cost owners approximately $31 billion. This figure does not include the $3.7 billion paid by Westinghouse, the original contractor, as compensation for walking away from the project. Consequently, the total expenditure on the reactors is nearly $35 billion.
The project’s delays and cost overruns have significantly impacted the benefits of low nuclear fuel costs. Experts have argued that the high construction costs undermine any future financial advantages.
Tom Newsome, director of utility finance for the Georgia Public Service Commission, testified in a hearing that, “The cost increases and schedule delays have completely eliminated any benefit on a life-cycle cost basis.”
The Georgia Power project has also faced opposition from critics who argue that solar and wind energy would be cheaper alternatives. They view the obligation placed on ratepayers to cover the mistakes as unfairly benefiting Georgia Power’s profits.
Bob Sherrier, a staff attorney at the Southern Environmental Law Center, said, “While capital-intensive and expensive projects may benefit Georgia Power’s shareholders who have enjoyed record profits throughout Vogtle’s beleaguered construction, they are not the least-cost option for Georgians who are feeling the sting of repeated bill increases.”
The Georgia Public Service Commission will ultimately determine who bears the remaining costs of the project, including the fourth reactor. Ratepayers will be responsible for the portion of spending deemed prudent by the commissioners, while the company and its shareholders will cover wasteful spending.
Georgia Power CEO Kim Greene stated that the company has not yet decided how much it will ask customers to pay.
“That will be determined as we move closer and closer to our prudence filing, but we have not made a final determination,” Greene said.
As government officials and utilities turn to nuclear power to combat climate change, the struggles faced by the Vogtle project have made many stakeholders cautious about similar endeavors. While smaller nuclear reactors are being explored as a potential solution, Southern Co. has expressed no plans to invest in additional reactors.
“In terms of us making additional investments, at this time, that is not something that we’re going to do, but I do think others in this country should move in that direction,” Womack concluded.