Vogtle progress rests on Oglethorpe vote

Vogtle units 3 and 4, AP1000 units scheduled to enter service in November 2021 and November 2022 respectively, are co-owned by Georgia Power (45.7%), Oglethorpe Power (30%), MEAG Power (22.7%) and Dalton city (1.6%). Following reactor vendor Westinghouse's March 2017 bankruptcy filing, the owners decided to continue with the project, and work has gone ahead under the project management of Southern Nuclear. However, increases in estimates for the total project budget of over USD1 billion earlier this year passed the threshold for a Project Adverse Event (PAE) under the terms of Vogtle's Joint Ownership Agreement, as did a decision by Georgia Power not to seek recovery of its share of the latest cost increase via the Georgia Public Service Commission (PSC).

Crossing a PAE threshold meant that under the terms of the ownership agreement, all of the project's co-owners were required to vote on the continuation of the project, with owners of at least 90% of the interest required to be in favour if construction is to continue.

MEAG yesterday joined Georgia Power and Dalton Utilities in voting to continue with the project. Oglethorpe Power requested an extension to the 24 September deadline, which the co-owners agreed to, and is due to vote later today (25 September). Georgia Power yesterday said the project would be cancelled if Oglethorpe Power does not vote to move forward under the current ownership structure.

"We hope Oglethorpe Power joins us in doing what is best for Georgia's citizens and votes tomorrow to fulfil its obligation to complete this project which is critical to Georgia's energy future," said Georgia Power Chairman, President and CEO Paul Bowers said.

MEAG Power President and CEO Jim Fuller said his Board had voted unanimously to support completion of the project, taking into account its environmental and economic benefits to the state. "We are disappointed that Oglethorpe Power has not yet joined us in agreeing to complete the units for the future of Georgia," he said.

Dalton Utilities CEO Tom Bundros said his company "believes that continuation of the Vogtle Project is in the best interests of its customers. We hope that [Oglethorpe Power] will realise the benefit of the Vogtle Project to its customers and join us as we move forward."

All of Vogtle's co-owners had considered their own costs and "fully acknowledged and accepted possible risks associated with continuing construction" ahead of their 2017 recommendation to continue construction of Vogtle 3 and 4 following Westinghouse's bankruptcy, Georgia Power said. This understanding was reaffirmed last year when all four co-owners voted to continue construction.

The company said it has responded to recent "demands" from Oglethorpe that its parent company Southern Company accept Oglethorpe's risk in the project by providing "several proposals" to help give Oglethorpe additional financial support and certainty "[e]ven though Georgia Power is under no obligation to do so."

Governor of Georgia Nathan Deal yesterday commended Georgia Power, MEAG and Dalton Utilities for voting to move forward on Vogtle 3 and 4, which he described as a "critical infrastructure and economic development project" and called on Oglethorpe Power to "reconsider" its decision. He said the state's "low carbon-free electric rates" allowed it to remain competitive in economic development. "The co-owners should honour their commitments and complete this project," he said.

Ahead of its vote, the US Department of Energy said Oglethorpe's decision would have a "profound impact" on the US nuclear industry and a "reputational mark on the ability" of the nation to complete "important and complex" infrastructure projects.

Oglethorpe has a USD3 billion loan guarantee for the Vogtle project from the DOE, and August 2017 said it would seek further loan guarantees for the project. In a letter to Oglethorpe Power dated 21 September, John Sneed, executive director of the DOE's Loan Programs Office, said the DOE would be prepared to "move swiftly" to fully enforce its rights under the terms of loan guarantee arrangements, including repayment provisions, if the owners decide to cancel the project.

"When Vogtle 3 and 4 comes online, it will be the first large scale nuclear utility project in America completed in more than 30 years and a linchpin in the all-of-the-above energy strategy required to sustain our nation's economic strength and energy independence," the letter noted. The significant policy implications of the project, stretching beyond the state of Georgia, had been a factor in the DOE's "continued willingness" to guarantee loans representing a major part of the project's cost.

To date, the DOE has disbursed about USD5.6 billion of a loan guarantee totalling USD8.3 billion, but disbursements are currently suspended. "We fully support the project, but … will not move forward on the pending USD3.7 billion conditional commitment, until there are firm assurances that all necessary components are in place to complete Vogtle, as stipulated in the Loan Guarantee Arrangements," the letter says.

"In the end, we are hopeful that construction on Vogtle 3 and 4 will continue," the letter concludes.