JEA leaders want a financial buffer should delays continue in bringing the nuclear Plant Vogtle Units 3 and 4 online.
At the Jan. 11 JEA board meeting, Managing Director and CEO Jay Stowe said the utility needs to be ready with replacement electricity if plant owners Georgia Power and Municipal Electric Authority of Georgia are unable to hit their latest targets to make the units operational.
MEAG and Georgia Power told JEA, and put in an official disclosure statement, that Unit 3 will come online in September 2022 and Unit 4 in October 2023, according to Stowe.
To hedge fuel purchases and control costs, Stowe said JEA will plan internally for Unit 3 to start generating power between December 2022 and March 2023 and Unit 4 between December 2023 and June 2024.
“We’re basing this on the idea that the progress the co-owners are showing us doesn’t seem to be on track toward successful completion of the dates that they suggest,” Stowe said.
“And it’s our job to be sure that we appropriately plan for that replacement fuel in the meantime.”
JEA signed the agreement with MEAG in 2008 to use nuclear energy from the power plant near Augusta, Georgia, after its estimated $20 billion expansion
Vogtle is owned jointly by Georgia Power, which owns a majority 45.7% stake; Oglethorpe Power Corp. at 30%; MEAG at 22.7%; and Dalton Utilities at 1.6%, according to Georgia Power parent Southern Company’s website.
JEA is not an owner, but MEAG told JEA its portion of the Unit 3 and 4 project will be approximately $3.2 billion.
According to a JEA spokesperson, a significant portion of the payments the utility will make to MEAG under a power purchase agreement will go to debt service.
The spokesperson said in a Jan. 25 email that JEA's payments on the roughly $2.8 billion of debt issued by MEAG to date totals $2.6 billion for fiscal years 2022 through 2043.
Stowe told the board that more delays mean increased construction costs and a need for JEA to find replacement electricity that would have come from the power purchase agreement with MEAG and Georgia Power.
For every month of delay, JEA officials say the construction expense increase adds $8 million in costs for its ratepayers.
Stowe said JEA borrows to spread those costs over 20 years, adding about $40,000 to $50,000 to the municipal utility’s monthly expenses.
The cost of replacement fuel increases costs to JEA by “a couple of million dollars per month,” Stowe said.
After the meeting, Stowe said if there are further delays, the power JEA expected from Vogtle would have to come from its existing power plants or by new or expanded power purchase agreements with other utilities.
MEAG and Georgia Power have pushed back expected operation dates for Units 3 and 4 multiple times in recent years.
In July 2020, the companies projected the expansion would be ready in late 2021 and 2022.
Stowe said that since JEA officials made a site visit in late 2021, there has been “little to no progress” on work needed to prepare the facility to load nuclear fuel.
“And with that concern, it means that we need to be planning appropriately for our future,” Stowe said.
Because of COVID concerns, JEA leadership met virtually with MEAG and Georgia Power this month instead of making another planned site visit, according to Stowe.
A required letter from the federal Nuclear Regulatory Commission was set back by 17 days because of the delays. Stowe said the letter gives Vogtle owners guidance to start loading fuel and moving toward completion.
“They (MEAG and Georgia Power) are suggesting the delay of 17 days is still within their risk margin of having Unit 3 online by September of this year and Unit 4 by October of next year,” Stowe said.
In an email Jan. 21, a JEA spokesperson said the utility is not aware of the ownership group receiving the letter.
On its website, Southern said Unit 3 construction is about 98% complete as of July 2021 with the total Vogtle Units 3 and 4 expansion project about 92% complete.
Stowe said pushing back JEA’s expectations on Vogtle’s timeline is for internal planning. He said its public messaging and formal disclosure statements will follow MEAG’s lead.
“We’re not suggesting that the commercial operation date is moving,” Stowe said.
“All of our official statements will still match up with what MEAG and Georgia Power/Southern are saying.”
Finding federal money
JEA board member Joe DiSalvo attended the Vogtle site visit in late 2021. He is asking utility executives to approach the U.S. Department of Energy about available financial assistance to mitigate the plant’s cost increase.
DiSalvo said the recently enacted federal infrastructure law could have money for energy projects.
According to Stowe, JEA has a grant-writing team as well as lobbyists in Washington, D.C., that are starting to search for the money.
He added that he and JEA staff also are monitoring the progress of President Joe Biden’s “Build Back Better Act” that also could have money available for Plant Vogtle.
According to a Jan. 21 report by The New York Times, with that legislation stalled in the U.S. Senate, Biden hopes to break up the bill and pass portions of it, including climate change provisions.
The $555 billion over 10 years for climate initiatives includes subsidies for nuclear power as well as wind and solar, according to the Times.
Vogtle’s rate impact
Stowe was clear that Vogtle’s continued delays have short-term and long-term impacts on JEA’s bottom line. What that will mean for residential and commercial ratepayers is not clear.
JEA officials plan to complete a cost-of-service study by August that Stowe says will provide a better picture of what rates will need to be.
Stowe said the report also will determine the impact of Vogtle expenses on utility bills in JEA’s service area.
“I don’t have an indication that Plant Vogtle individually will cause a rate increase or a rate change,” Stowe said.
“The cost of service (study) will help define that.”
