Georgia Power is trying to build new nuclear units at its Plant Vogtle outside of Augusta, and it hasn’t been going well. What does this have to do with your monthly power bill? A lot, as it turns out.
You’re forgiven if you haven’t been following every twist and turn in this decade-old saga. Here’s what you need to know: Vogtle is a joint project of Georgia Power and most of Georgia’s municipal utilities and electric cooperatives. So, if you’re an electricity customer in Georgia, this project likely affects you. The project is years behind schedule and over-budget by a whopping $13 billion. Recently, the owners voted to continue despite billions in recent overruns, a likelihood of similar increases ahead and no overall cap on costs.
Georgia Power is profiting tremendously from this sad state of affairs and you, the customer, are paying those profits. If you’re a Georgia Power customer, you began seeing a surcharge on your power bill in 2011 to build these nuclear units, even though you were not getting electric service from them. Georgia Power customers have already paid more than $2.3 billion for the units even though they won’t produce electricity until 2022, if even then. Half of that – more than a billion dollars – has been straight profit to Georgia Power.
VOGTLE NUCLEAR POWER STATION ANOTHER SOLYNDRA – By Katie Tubbs The Heritage Foundation
It is by the forced goodwill of electricity customers in Georgia that federal taxpayers aren’t yet paying for another Solyndra — of nuclear proportions.
For those who’ve forgotten the Solyndra fiasco, let me refresh your memories. Solyndra was a solar-panel maker in California. The U.S. Department of Energy gave the company $535 million in loan guarantees as part of the Obama administration’s stimulus package.
It was a gamble that didn’t pay off. Solyndra went belly up in 2011, and taxpayers were out the $535 million.
But that’s chicken feed compared with the wager Washington is placing on the Vogtle nuclear power station in Georgia. Under the same loan guarantee program that brought us Solyndra, the Energy Department has committed $8.3 billion for the construction of the only two nuclear reactors being built in the U.S. today.
Originally estimated to cost $14.3 billion, the 2,200-megawatt project was supposed to come online this year. Now it’s expected to cost over $28 billion, and construction delays have pushed back the estimated completion date to 2022.
But late last month, Vogtle’s co-owners fell out over yet another multibillion-dollar cost overrun. Oglethorp Power Corp. argued that it could no longer pass costs on to its customers who, under Georgia’s regulated monopoly electricity sector, cannot switch providers. Several tense days later, the co-owners agreed to continue construction, further committing their customers to picking up the overrun.
Plant Vogtle a utility boondoggle – By Marc Hyden of R-Street
The construction of Plant Vogtle’s nuclear reactor units 3 and 4 has been a slow-motion disaster. Cost-overruns and repeated delays have marred the project. Developers are already five years behind schedule and $13 billion over budget.
The truth is that many of the issues plaguing Vogtle’s construction were easily foreseeable and, in a free market, an undertaking such as Plant Vogtle would likely never have transpired. That should tell you a lot about the project’s viability.
The power companies’ decision to proceed with the foolhardy construction is a symptom of Georgia’s problematic electricity market. Georgia permits electricity providers to maintain monopolies and shields them from competition. What this means for electricity consumers is that if they don’t like their provider or its prices, they are out of luck.
In such a setting, consumers are captive to local electricity monopolies. Thus, these companies have no incentive to provide top-notch customer service or competitive pricing to retain their customers. By comparison, in a competitive electricity market, businesses are forced to vie for consumers’ loyalties to remain profitable.
It seems unfathomable that in a free market, a company would embrace a massive and risky investment like Vogtle. Developers have abandoned over 20 nuclear sites in the South alone for various reasons, which should have been the first red flag. The plan also requires charging current ratepayers for the yet-to-be-finished reactors. In a competitive market, this would drive customers away as they flee to companies that offer lower prices.
Most importantly, given the construction and regulatory complexities, cost-overruns and delays were inevitable from the start. No company operating outside of a subsidized monopoly would undertake a venture like Vogtle. Doing so would lead to rate increases that hurt customers and, in turn, shareholders.
In contrast, free markets discourage poor business decisions by allowing consumers to freely patronize companies that are run more efficiently and offer more competitive pricing. Pursuing a project like Vogtle is just the type of imprudent endeavor that a healthy free-market would deter.
So long as Georgia has an electricity market system that requires little accountability and prohibits competition, we can expect more of the same — and consumers will pay the price.