One-year construction delay at Vogtle 3 & 4 means $730 million in cost overruns for GA ratepayers!

The Vogtle 3 & 4 construction site (aka money pit) as it appeared in July 2013.As reported by the Augusta Chronicle, construction schedule delays at the Vogtle 3 and 4 new reactor project in Georgia will add to the price tag at a whopping rate of $2 million per day! State ratepayer advocates now estimate a one-year delay in reactor start up, which amounts to a $730 million add-on to the already multi-billion dollar cost.

Under Georgia's Construction Work in Progress (CWIP) law, ratepayers are forced to pay for the constructions costs with a surcharge on their electricity bills. This practice is illegal in most other states.

In addition to gouging ratepayers, Vogtle 3 & 4 is also gouging federal taxpayers. The Obama administration awarded an $8.3 billion loan, and loan guarantee, to the project -- Southern Co. and its partners have not one cent of skin in the game. Talk about a financial "moral hazard," with a radiological twist! Let's hope the scheme doesn't "meltdown," and the investment turn "radioactive"!

In fact, the Vogtle 3 & 4 federal loan guarantee amounts to 15 times more federal taxpayer money than was lost in the Solyndra solar scandal. And, Vogtle 3 & 4 are actually more at risk of defaulting on their loan repayment than was Solyndra!

Cost overruns and schedule delays at proposed new reactors in GA, SC, and TN

Aerial image of Vogtle nuclear power plant in GA, showing the operational Units 1 and 2, as well as the construction site for the proposed Units 3 and 4. Photo credit: High Flyer.We told them so. As the environmental movement warned 14 years ago, when the nuclear relapse was hatched by the Bush/Cheney administration, proposed new reactors at Vogtle 3 & 4 in Georgia, Summer 2 & 3 in South Carolina, and Watts Bar 2 in Tennessee are suffering major cost overruns and construction schedule delays.

Southern Alliance for Clean Energy (SACE) has published an update on Vogtle 3 & 4, which currently are suffering a 21-month schedule delay, and $1.4 billion cost overrun. The delays could well get worse, at a staggering cost increase of $2 million per day of delay!

Similarly, as reported by SRS Watch, delays of up to three years, and cost overruns topping $500 million, are afflicting the Summer 2 & 3 proposed new reactors in SC.

Note that those April 1st projected opening dates for the new reactors at Voglte and Summer, listed in the updates above, are no April Fool's joke. GA and SC ratepayers are already being gouged for the new reactors' troubled contstruction, on their electricity bills.

Vogtle 3 & 4's financial risks also now implicate federal taxpayers, in the form of a $6.5 billion loan guarantee, likely to soon grow to an $8.3 billion loan guarantee. This is compliments of the Obama administration. So, if Vogtle 3 & 4 default on their loan repayment, federal taxpayers will be left holding the bag. This is 15 times more taxpayer money at risk than was lost in the Solyndra solar loan guarantee scandal. And that risk, of Vogtle 3 & 4 defaulting on its loan repayment, was judged, years ago, by the likes of the Congressional Budget Office and Government Accountability Office, as a much greater risk than Solyndra defaulting on its loan repayment.

Vogtle 3 & 4, as well as Summer 2 & 3, are Toshiba-Westinghouse AP-1000 reactors. They are experimental, never having been built before anywhere in the world, although AP-1000s are also under construction in China.

The proposed new reactor in Tennessee, that is also suffering cost overruns and schedule delays, is the Tennessee Valley Authority's long-mothballed Watts Bar Unit 2.

To add to the irony, the existing reactors at Vogtle, Units 1 & 2, were the poster child for cost overruns in the last generation of reactor construction, coming in at 1,300% their originally estimated cost!

And the operational Watts Bar Unit 1 took 23 years to build, from 1973 to 1996!

Update on August 14, 2014 by admin

PowerMag has reported on the construction schedule delays at V.C. Summer 2 & 3 in South Carolina. Included is a link, reporting on the now-delayed construction schedule for the project.

Radioactive "Moral Hazard": DOE loans, and guarantees, $6.5 billion for two new reactors for a 0%, $0.00 credit subsidy fee!

Aerial image of Plant Vogtle Nuclear Generating Station - photo credit to High Flyer. The photo shows the operating Units 1 and 2, as well as the construction site for proposed new Units 3 and 4.Southern Alliance for Clean Energy reports in a press release entitled "New Documents Confirm Utility Giant Southern Company Gets Sweetheart Deal from Energy Department for Multi-Billion Nuclear Loan Guarantees for Vogtle Reactors":

"As revealed today in an Energy & Environment News story by Hannah Northey, the credit subsidy fee for utility giant Southern Company and its utility partner, Oglethorpe Power, for billions of dollars in taxpayer-backed federal loan guarantees, is nothing, $0. This shocking information was disclosed two months after the Department of Energy (DOE) finalized terms of $6.5 billion worth of loan guarantees that were offered as part of an $8.3 billion package to build two new nuclear reactors at Plant Vogtle in Georgia. A third partner in the project, MEAG, has yet to have their $1.8 billion loan guarantee finalized."

Please register your disapproval of this nuclear sweetheart deal, at taxpayer expense and risk, to President Obama, your two U.S. Senators, and your U.S. Representative! You can be patched through to your Members of Congress via the Capitol Switchboard at (202) 224-3121.

Despite construction cost overruns, as well as schedule delays, that further risk a default on Vogtle 3 & 4 loan repayments, the credit subsidy fee that was supposed to be around $300 million, to provide some meager protection to federal taxpayers for a loan guarantee of many billions of dollars, was haggled down by nuclear lobbyists to a big fat ZERO. More.

DOE signs $6.5 billion federal nuclear loan guarantee for Vogtle 3 & 4

Aerial image of Plant Vogtle Nuclear Generating Station - photo credit to High Flyer. The photo shows the operating Units 1 and 2, as well as the construction site for proposed new Units 3 and 4.U.S. Secretary of Energy Ernest Moniz has announced that the Department of Energy (DOE) will sign an agreement with Southern Co. and Oglethorpe Power for a $6.5 billion loan guarantee that puts federal taxpayers on the hook if the Vogtle 3 & 4 new reactor project defaults on its loan repayments. This, despite the fact that the project is seriously over budget and behind schedule, as has been so common in the history of nuclear power. Energy Secretary Ernest Moniz will speak at the proposed new reactor construction site at 2 PM Eastern today, Thursday, Feb. 20th (you can listen to his address by calling 1-800-282-1696).

President Obama gave the Vogtle 3 & 4 federal loan guarantee offer (for a total of $8.3 billion) the highest profile possible, by announcing it himself at a press event in Feb. 2010. Despite this, it has taken over four years for the project proponents to sign on the dotted line, given their reluctance to put any of their own "skin in the game," in the form of credit subsidy fees. The nuclear loan guarantee program was authorized in the 2005 Energy Policy Act, and $22.5 billion was approved by Congress and George W. Bush for new nuclear facilities on Dec. 23, 2007 ($18.5 billion for new reactors, $4 billion for new uranium enrichment).

The $8.3 billion Vogtle 3 & 4 federal loan guarantee is 15 times bigger than the infamous Solyndra solar loan guarantee, which defaulted on its loan repayment, a $585 million loss to the U.S. Treasury. But the Vogtle 3 & 4 loan guarantee is at much higher financial risk of default than was the Solyndra solar project!

Beyond Nuclear's Paul Gunter blasted the deal in a Common Dreams interview. Southern Alliance for Clean Energy (SACE) also blasted the deal in a press release. Harvey Wasserman has penned an essay entitled "Obama's Nuke-Powered Drone Strike on America's Energy Future."

Please contact President Obama and Energy Secretary Moniz, registering your disapproval of this $6.5 billion nuclear loan guarantee, and urging them not to grant the remaining $1.8 billion nuclear loan guarantee to project partner MEAG for Vogtle 3 & 4. Also urge them to withdraw any further nuclear loan guarantee offers, with the remaining $10.2 billion authorized for new reactors, and $4 billion authorized for new uranium enrichment.

But the federal nuclear loan guarantees, and even the CWIP charges which are gouging Georgia ratepayers, are not the only subsidies benefitting this proposed new reactor project. If Vogtle 3 & 4 do get built and operated, the George W. Bush DOE also obligated U.S. taxpayers to ultimate liability for the risks and costs of the high-level radioactive waste they would generate. DOE hastily signed the contract in the last days of the Bush administration, despite the fact that federal courts are awarding $500 million per year in damages to nuclear utilities for DOE's breach of contract for failing to begin taking title to irradiated nuclear fuel in 1998 under the contractual agreements signed in the mid-1980s. The hastily signed contacts were exposed by D.C. attorney Diane Curran, IEER President Arjun Makhijani, and Beyond Nuclear's Kevin Kamps in a March 24, 2010 press conference based on a FOIA Request.

Update on February 20, 2014 by admin

Since when did Georgia Power/Southern Company take over communications for DOE?! When Beyond Nuclear's Kevin Kamps phoned into the teleconference call audio broadcast of the DOE-Southern Co. "loan guarantee signing ceremony," at the toll-free number listed above, a Georgia Power (not a DOE) public relations official answered the call and patched him through!

Vogtle nuclear loan guarantees drag into fifth round of delays

Aerial image of Plant Vogtle Nuclear Generating Station - photo credit to High Flyer. The photo shows the operating Units 1 and 2, as well as the construction site for proposed new Units 3 and 4.As reported by Platts, and conveyed in a Friends of the Earth press release, the December 31, 2013 U.S. Department of Energy deadline for finalization of the $8.3 billion federal taxpayer backed nuclear loan guarantee for Vogtle 3 & 4 has been extended yet again, for a fifth time, until the end of January, 2014.

As reported by FOE: "Freedom of Information Act requests and litigation revealed that the credit subsidy fee offered to Southern Company ranged from 0.8 to 1.5 percent. The credit subsidy fee is supposed to insulate against default, but the fee offered to Southern Company is woefully inadequate to cover the risks involved in major nuclear construction. According to the Nuclear Regulatory Commission, 32 percent of reactor construction is cancelled before any electricity is produced."

Watchdog groups have long called for a credit subsidy fee commensurate with the risk of the nuclear new build proposals. Congressional auditors reported several years ago that new reactors, historically, have had a 50% risk of cancellation and potential default. The Vogtle 3 & 4 nuclear loan guarantee puts 15 times more taxpayer money at risk than did the Solyndra loan guarantee scandal, which had a significantly lower risk of default than does Vogtle 3 & 4.

Vogtle 1 & 2 were the poster children for cost overruns in decades past, coming in with a price tag 1,300 percent higher than originally estimated! Vogtle 3 & 4's price tag has also skyrocketed over the past several years.

The only way that Vogtle 3 & 4 have proceeded this far is that Georgia lawmakers made legal what is illegal in most states: the gouging of ratepayers on their electricity bills with "Construction Work in Progress" (CWIP) surcharges for the building of the new reactors. This makes ratepayers unwilling investors, who receive no share of the profits that are made -- at who are put at risk of losing every penny invested, if the project ever goes belly up. Ratepayers in Florida just experienced this at the Levy new build site -- $1.5 billion lost, and nothing to show for it.

Given the Obama administration offered the $8.3 billion nuclear loan guarantee nearly four years ago, and now this latest delay, concerns continue to mount that the project is a financial house of cards, and will ultimately leave taxpayers holding the bag. Nuclear Watch South has called for taxpayers to express their concerns to decision makers, as has Beyond Nuclear.