Correspondence between the Georgia Public Service Commission and Georgia Power shows that the Vogtle nuclear expansion project may face an abbreviated decision schedule as a side effect to the Senate’s tax bill.
In a letter sent Friday, PSC chairman Stan Wise asked Georgia Power how changes in corporate tax law might impact the Vogtle project, which could end up five years behind schedule and $9 billion over budget if completed. In a Wednesday response, the utility’s CEO Paul Bowers indicated that if the project were to be abandoned, the corporate tax rate change from 35 percent to 20 percent would make it economically advantageous to do so prior to the law taking effect in 2018.
“If the decision were to be made that it is in the best interest of customers to cease the construction of Plant Vogtle Units 3 & 4, making that determination prior to December 31, 2017 would preserve the Company’s ability to utilize the current higher federal tax rate under what is known in simple accounting terms as an abandonment deduction," the letter from Bowers reads.
“Under a scenario where abandonment is declared in 2017, the Company would be able to realize an approximately $150 million larger tax benefit under the current 35 percent tax rate,” the letter states. “These benefits would offset project costs and be passed along to customers through the traditional ratemaking process.”
To see this benefit, the commission would have to make its final recommendation before the new year rather than on February 6, as previously scheduled. Commissioners are expected to take up the question of whether to shorten the timeline at the next set of project hearings beginning Dec. 11, where PSC staff and interveners will testify. After those hearings, the PSC had scheduled a rebuttal phase and submission period for post-hearing briefs.
Fast-forwarding the process, with the potential for customer benefits, throws even more uncertainty at an already tenuous project.
“We’re not convinced the recent correspondence between the commission and Georgia Power means the commission is serious about taking an honest and candid look at the project,” said Kurt Ebersbach, a senior attorney at the Southern Environmental Law Center, an intervener in the proceedings. “Nevertheless, we are hopeful that the commission and Georgia Power are truly considering all options -- including abandonment -- because, as staff testimony shows, the project is no longer economic to complete.”
According to Ebersbach, the back-and-forth between the utility, which owns a 45 percent stake in the Vogtle project, and the PSC could mean the two parties are seriously considering scrapping the project. But it could also be an attempt for the two bodies to push through a decision, and an additional $6 billion in costs for ratepayers, at a busy time of year.
“We’re concerned that a decision of this magnitude is being rushed to be made by the end of the year when many affected members of the public won’t be paying as much attention because of the holidays,” said Ebersbach.
The timeline discussion comes on the heels of an early December PSC staff report that excoriates Georgia Power for scheduling and cost overruns that are being pushed on to customers. According to Ebersbach, because the project is already collecting profit from ratepayers ahead of completion, the delays bring in $5.2 billion in additional profits for Georgia Power. If the project is abandoned, the company has already estimated it would be able to take a deduction of about $2 billion that would go back to customers. In that context, Ebersbach said, the $150 million that Georgia Power said it hopes to save in tax benefits seems like chump change.
“I don’t mean to say it’s insignificant, but the current burn rate at Vogtle is $50 million a month,” said Ebersbach. “It strikes me as a thin reason to truncate the hearing process.”
The timeline debate comes as Congress is in conference over the House and Senate tax bills. While the corporate tax rate declines in both versions, the House bill extends a 1.8 cent per kilowatt-hour tax credit for new nuclear reactors.
Georgia Power continues to assert that finishing the project is “the best economic choice.”
A shortened timeline would put the pressure on both Georgia Power and nuclear skeptics to prove their case before 2018, but it could also mean faster closure on the fate of large-scale U.S. nuclear. The Vogtle project is the country’s only large project still under consideration, after Santee Cooper and Southern Carolina Electric & Gas canceled construction on the V.C. Summer Plant in July.