PSC stalls key money decision on Ga. nuclear plant

By RAY HENRY

ATLANTA

The state's top utility regulators indefinitely postponed a big financial decision Tuesday that could have trimmed Georgia Power's earnings if costs escalate on what may become the country's first brand-new nuclear plant in a generation.

Instead of deciding the long-delayed issue, the elected members of the Public Service Commission voted unanimously to allow another delay so the Atlanta-based Southern Co. can file its own risk-sharing plan and offer more testimony on accounting rules. The issue has dragged on for more than two years without resolution.

PSC Chairman Stan Wise, who introduced the motion to take more testimony, said there is no rush.

"We're on time, we're on budget," Wise said, referencing the latest reports from the construction site. "There's absolutely no reason we can't put this off for another month or so."

Wise said he wants to make a final decision in a matter of months, but he conceded the process may take longer. A lengthy delay could push the commission's decision closer to the start of major construction at Plant Vogtle, which could begin after the U.S. Nuclear Regulatory Commission decides whether to license the plant, possibly later this year.

It remains unclear whether an ongoing crisis at the Fukushima Dai-ichi nuclear plant in Japan could affect the project's schedule. A March 11 earthquake and tsunami apparently disabled the plant's cooling systems, leading to radioactive releases. Federal safety regulators are reviewing whether U.S. nuclear plants need changes in the aftermath of the disaster in Japan.

The first two reactors at Plant Vogtle demonstrate how costs can skyrocket while building nuclear power plants. Georgia Power originally estimated the project would cost $660 million. But the final bill reached nearly $9 billion by the time the reactors started producing commercial power in 1987 and 1989. Utility customers paid for the bulk of those costs.

Citing that experience, PSC staff members have proposed a carrot-and-stick plan giving Georgia Power a financial incentive to keep costs under control. Under the plan, if construction bills on the new reactors exceed $6.4 billion, then regulators would trim the money Georgia Power can make off the new reactors. If the project costs less than $5.8 billion, the company could earn more money off its new reactors.

The utility would not be held responsible if NRC safety regulators change the rules for building nuclear plants, resulting in higher costs. Safety changes required after the 1979 accident at the Three Mile Island nuclear plant in Pennsylvania raised the cost of construction throughout the industry.

This debate has simmered for more than two years without a decision.

PSC staffers proposed a similar concept before the elected commissioners allowed Georgia Power to pursue the Plant Vogtle expansion on March 17, 2009. In its order, the commissioners directed their staff and the utility to draft a risk-sharing plan and report back within 180 days. An agreement was never struck.

Last year, the Southern Alliance For Clean Energy, a project critic, accused Georgia Power of negotiating in bad faith and urged the commission to impose a risk-sharing deal to protect customers. In response, the commission told Georgia Power to keep negotiating. It instructed its staff and the company to file separate plans by December if they could not reach a deal.

Once again, neither side could agree.

Georgia Power did not file its own risk-sharing proposal in December. Since then, the company said it's been unable to negotiate a compromise. It calls the current plan illegal and said it would unfairly penalize the utility for construction problems that are beyond its control. The firm also raised last-minute objections, saying that accounting rules would force the company to take a write-off if the proposal passed.

Although the company had not raised that argument in previous testimony, the commissioners decided to explore it.

"We're comfortable with the commission's decision," Georgia Power spokesman Jeff Wilson said. "Their decision to make sure they understand all the implications of this proposal is certainly prudent."

The commission's vote to reexamine the case may not bode well for consumers, said Clare McGuire, director of the consumer energy program at Georgia Watch, which supported the risk-sharing proposal.

"It seems to be sort of a do-over for Georgia Power," she said.