Profits on Vogtle construction exceed $1 billion

Plant Vogtle reactors three and four are more than three years behind schedule and $3 billion over budget, but you wouldn't know it from how well the project's largest stakeholder, Georgia Power is doing.
Plant Vogtle reactors three and four are more than three years behind schedule and $3 billion over budget, but you wouldn't know it from how well the project's largest stakeholder, Georgia Power is doing.

WAYNESBORO, Ga. (WJBF)- Plant Vogtle reactors three and four are more than three years behind schedule and $3 billion over budget, but you wouldn’t know it from how well the project’s largest stakeholder, Georgia Power, is doing.

Georgia Power’s parent company, Southern Company, has seen its shareholder dividends steadily rising. CEO Tom Fanning, received a nearly 34 percent pay raise last year to $15.8 million.

How is the company coming out on top despite an upside down project?

It turns out the costs are being passed on Georgia Power customers each month in their power bills. The Nuclear Construction Cost Recovery tariff is about $10 per month on the average residential Georgia Power bill. The money goes toward the financing costs of constructing the nuclear reactors.

Through Dec. 2016, the Nuclear Construction Cost Recovery charges collected have added up to nearly $2 billion dollars.

Some of that money collected goes toward Georgia Power’s profit, even though the project’s cost keeps rising and its completion date drags on. Reactors 3 and 4 have not produced enough electricity to light a single light bulb, but the company has made a hefty profit off the project.

In a public report, Georgia Power discloses that its shareholders and lenders have made $1.151 billion dollars from that fee. That’s money customers are paying now for power they’re expected to receive over the next 60 years if the reactors are completed.

“It would be like saying, you go to the grocery store, you pay for groceries….this is an essential service, so it is very much like going to the grocery store, and say, ‘well, we’re going to charge you $100 for the groceries you got today. We’re going to charge you another $10 for groceries that you might get 10 or 20 years from now if you still live here and if we ever finally deliver those groceries,'” said Craig Severance, who is a Colorado-based CPA and utility commission staffer.

Ratepayers have also paid $637 million dollars in income taxes on those profits.

“I didn’t realize this thing is going back as a profit…which I don’t know…is it legal?” said Georgia Power customer Nandi Shetty.

It is legal because of the Georgia Nuclear Energy Financing Act, which passed in 2009. It allows utilities to collect the financing costs of nuclear power plants before the plant is complete.

“The shareholders and Georgia Power itself have gotten a law written where the ratepayers are put on the hook,” said Tom Clements, who is a senior adviser to environmental organization Friends of the Earth. “So every time the cost increases, the company is going to recoup all those cost increases, plus a profit on top of it.”

Now, five years into construction of Plant Vogtle reactors 3 and 4, its main contractor, Westinghouse, has filed for bankruptcy, and Georgia Power and the project’s other owners are reassessing whether construction should continue.

“Everything is on the table at this point, but again we can’t speculate on what we will do at this point,” said Georgia Power spokesperson Jacob Hawkins.

Hawkins says collecting financing costs during construction actually saves customers money by reducing financing costs overall.

NewsChannel 6 also asked whether customers would get their money back if construction ends. Hawkins says that’s something the company would have to work out with the Public Service Commission.

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