On St. Patrick’s Day in 2009, the Public Service Commission decided one of its most important cases ever.
The commissioners had before them a proposal from Georgia Power to build two more nuclear reactors at Plant Vogtle. Georgia Power also asked for authorization to start charging small customers for the project’s financing costs at least six years before any electricity would actually be generated.
The General Assembly had already passed a bill allowing these early customer charges — after Georgia Power hired more than 70 lobbyists to get the bill through — but the PSC was more than willing to do the company’s bidding.
The only PSC member who spoke against the proposal was Bobby Baker. He noted the economic uncertainty and said the commission should take time to get more information before making a decision that would have such an impact on consumers.
“We don’t need to make this decision today,” Baker said. “You’re taking a big gamble with Georgia Power’’s money, the rate payers’ money. If you want to roll the dice, roll it with your own money. We’re talking about billions of dollars here.”
Commissioner Stan Wise, who’s long been one of Georgia Power’s most faithful supporters, was in no mood to hear such talk.
“Who are you telling that to?” Wise sneered. “We know.”
The PSC voted 4-1 to approve the Vogtle project and authorize Georgia Power to start charging its customers in advance. Baker cast the lone dissenting vote.
With the advantage of eight years’ hindsight, we know a couple of things for sure: Baker was right. Wise, along with Commissioners Chuck Eaton, Bubba McDonald and Doug Everett, was wrong.
Nuclear projects are complicated and costly, as the PSC would have known if it had taken the time to study its own history. Georgia Power had massive cost overruns on the first two reactors it built at Plant Vogtle. It soon started running into similar problems on units 3 and 4.
That’s why we now have a nuclear project that is $3 billion over budget, 39 months behind schedule and unable to generate a single watt of electricity.
This is a major problem not just for Georgia Power but also for its partners in the Vogtle project: Oglethorpe Power, the Municipal Electric Authority of Georgia and Dalton Utilities.
Baker is no longer a PSC member, his seat now held by Tim Echols. Echols and the four commissioners who originally voted for this boondoggle will soon have to face the consequences of that decision.
That’s because the cost overruns on Vogtle and a similar project in South Carolina have driven the primary contractor, Westinghouse Electric Co., into bankruptcy.
Georgia Power has signed an interim agreement with Westinghouse for the company to continue as the primary contractor until April 28. After that, the choices aren’t good.
If the contract with Westinghouse is terminated during the bankruptcy proceedings, Georgia Power will have to find another contractor. There aren’t many companies that have the expertise and resources to take on such a huge project.
Georgia Power is also suggesting that it just might take over the project itself if Westinghouse can’t do it.
Whatever happens, you can be sure Georgia Power will come back to the PSC and tell them the project has become more expensive to complete. It will then demand the commissioners allow them to charge off the new expenses to the utility’s customers in the form of higher rates.
Up to now, the PSC has been happy to grant Georgia Power nearly all of these write-offs. It doesn’t really care if homeowners and small businesses get stuck with higher bills.
We are nearing a point, however, where the higher costs of electricity will start being felt by large businesses and industries. Companies that might think of relocating here will take a look at the skyrocketing rates and decide to go somewhere else. That will bring immense pressure on the PSC.
The commission now has to deal with a monster it unleashed with that vote back in 2009. Will it have the backbone to tell Georgia Power that its shareholders will have to eat some of those cost overruns?
If history is any guide, that answer will be no.
Tom Crawford is editor of The Georgia Report.