Tim Echols, Public Service Commissioner announced on January 26 in a radio interview the approval of the operating license that authorizes the construction of two more nuclear power reactors at Plant Vogtle. The official notification came on February 8, 2012. While many in Georgia condemned SB 31 and the building of both reactors, such as the AARP, representative Paul Broun, R-10th District, applauded the decision of the Obama administration.
The Nuclear Regulatory Commission approved in December 2011 the design certification for the Westinghouse AP1000 reactors, clearing the final hurdle in the process to license and build two new units at Plant Vogtle.
The $14.8 billion Vogtle project involves adding two AP1000 units to the existing ones at the power generating plant in Burke County.
Although preliminary site work has been under way for several years, the receipt of the operating license will set in motion a nuclear construction program that would bring the Unit 3 online in 2016 and Unit 4 online in 2017.
March 2009 Press Conference on the steps of the Georgia State Capitol.
SB 31 is the law that allows, since 2010, Georgia Power Company to begin raising electric rates to pay for the financing costs of a multi-billion dollar expansion of the Plant Vogtle nuclear power facility well before it is finished or ever produces electricity. This type of financing is known as "construction work in progress" or "CWIP".
SB 31 is a bad idea in a bad economy. As Georgians face lay-offs, wage cuts and high cost mortgages, SB 31 asks them to pay higher electric bills. Suggestions that SB 31 may allow customers to pay less over the 60 year life of a nuclear plant are cold comfort to the family struggling to make ends meet today.
The Georgia Public Service Commission (PSC), with an expert staff and mission to balance the interests of regulated utilities and utility ratepayers, is best-equipped to handle this issue and is currently doing so. The PSC is able to assess the entire fiscal position of Georgia Power to determine the most appropriate way to finance the expansion of Plant Vogtle. Pre-payment of financing for Plant Vogtle does not have to be an all or nothing proposition, but SB 31 makes it just that - taking away the PSC's ability to arrive at a balanced outcome for all interests.
SB 31 will raise rates by more than $2 billion during the construction period. The PSC estimates that SB 31 will require consumers to pay $1.6 billion in financing, $400 million in prepaid taxes, plus sales taxes, before receiving any power from the plant.
The little guys take the hit while the biggest electric users take a walk. Although they will benefit from the new Vogtle plant, SB 31 largely exempts many of the state's biggest industrial customers from paying the new surcharges. That means more costs are shifted to residential and small business customers.
SB 31 shifts more risk to consumers, but lets Georgia Power continue to earn high returns on investment. That pre-payment schemes such as this shift risk to customers is not an opinion; it is an established utility ratemaking principle. A recent report by the National Regulatory Research Institute (NRRI) states that CWIP and similar advanced payments, "involves some upfront shifting, from regulated utilities to ratepayers, of the economic and timing risks associated with implementing a major capital project." Meanwhile, Georgia Power would continue to earn returns that assumed its shareholders, not its customers, are financing the plant.
SB 31 ties the hands of the PSC, reducing accountability and oversight. 20-20 hindsight tells us that much of the blame for the financial market meltdown falls on regulators who did not have the authority or the tools to address problems as they arose last year. Yet SB 31 follows the same failed approach by tying the hands of the PSC, regardless of what the future holds.
According to the PSC, Georgia Power is not in danger of having its bond rating downgraded. The threat of a downgrade is not real, and therefore not a basis for passing SB 31. Moreover, the PSC has sufficient authority under current law to make adjustments to address such a situation should it arise.
The estimated savings through CWIP are overstated. Georgia Power's estimated savings to ratepayers through CWIP of $300 million over 60 years fails to take into account that consumers are also impacted by the cost of money. If ratepayers are forced to finance this expansion, they will incur financing costs also through lost investment opportunities and debt. Many small business and residential customers will pay higher rates, but never receive any benefit for the expanded Plant Vogtle.
SB 31 removes GPC's incentive to finish the plant on time. Because the utility will receive financing payments upfront, it reduces the pressure to put the plant in service on schedule. The longer the delay, the higher the costs of construction that are borne by ratepayers.
Florida already regrets passing similar legislation. Bills for customers of Progress Energy in Florida will increase 11% due to upfront payments for two proposed nuclear power plants. Several lawmakers are asking for suspension of these customer surcharges because they would further burden financially strapped customers in the middle of a deep recession.
Representative Broun Both Ways on State Mandate
1 (Washington, D.C.) 2-8-2012 - Congressman Paul Broun, M.D. (GA-10) released the following statement after the Nuclear Regulatory Commission approved construction of the nation’s first two new nuclear units in 30 years at Georgia Power’s Plant Vogtle, near Waynesboro, Georgia:
“This is a historic day for the state of Georgia, Southern Company, its partners, and the nation in the revival of nuclear power in this country,” said Congressman Broun. “I commend the Nuclear Regulatory Commission for swiftly approving the operating licenses needed to move forward with these important projects. It is crucial that we continue to develop all sources of clean, safe, and affordable energy – and nuclear must play a key role. I am pleased to say that between these two new units at Plant Vogtle, more than half of a million Georgians will be provided with electricity.
“I congratulate Southern Company on this significant achievement, and thank them for all they continue to do on behalf of our state. The economic impact of these two new units will be immeasurable for the state of Georgia, representing a $14 billion investment that will create approximately 5,000 on-site jobs and 800 permanent jobs. This is exactly the type of development that our state and our country needs to resurrect a booming, prosperous, and cutting edge American economy.”
Dr. Broun OK With SB 31 Not Health Insurance for All His Constituents
2 (Washington, D.C.) 2-8-2012 - Congressman Paul Broun, M.D. (GA-10) partnered with the American Center for Law & Justice (ACLJ) in filing an amicus brief with the United States Supreme Court urging the high court to rule that the individual mandate violates the Commerce Clause of the Constitution and must be rejected.
Congressman Broun said, “The individual mandate portion of Obamacare is one of the biggest assaults on our freedom to date, and one of the worst perversions of the Commerce Clause that I have ever seen. Requiring all Americans to purchase health insurance under the penalty of law is not only fundamentally wrong, but it is also contradictory to the basis of the free market system that our Founding Fathers envisioned when they wrote the Constitution. I urge the Supreme Court to strike down first the individual mandate, and then Obamacare in its entirety, because it is both unconstitutional and the wrong remedy for healthcare reform.”
"I want to express my gratitude to Dr. Broun for his leadership and for assisting us in representing 119 members of the House in this critically important challenge,” said Jay Sekulow, Chief Counsel of the ACLJ. “As a physician, Dr. Broun knows firsthand the dangers of ObamaCare. And he understands that this individual mandate is not only wrong, but represents an unconstitutional overreach by Congress. I appreciate the leadership Dr. Broun has shown on this vital issue."
Representative Broun Both Ways on State Mandate
1 (Washington, D.C.) 2-8-2012 - Congressman Paul Broun, M.D. (GA-10) released the following statement after the Nuclear Regulatory Commission approved construction of the nation’s first two new nuclear units in 30 years at Georgia Power’s Plant Vogtle, near Waynesboro, Georgia:
“This is a historic day for the state of Georgia, Southern Company, its partners, and the nation in the revival of nuclear power in this country,” said Congressman Broun. “I commend the Nuclear Regulatory Commission for swiftly approving the operating licenses needed to move forward with these important projects. It is crucial that we continue to develop all sources of clean, safe, and affordable energy – and nuclear must play a key role. I am pleased to say that between these two new units at Plant Vogtle, more than half of a million Georgians will be provided with electricity.
“I congratulate Southern Company on this significant achievement, and thank them for all they continue to do on behalf of our state. The economic impact of these two new units will be immeasurable for the state of Georgia, representing a $14 billion investment that will create approximately 5,000 on-site jobs and 800 permanent jobs. This is exactly the type of development that our state and our country needs to resurrect a booming, prosperous, and cutting edge American economy.”
Dr. Broun OK With SB 31 Not Health Insurance for All His Constituents
2 (Washington, D.C.) 2-8-2012 - Congressman Paul Broun, M.D. (GA-10) partnered with the American Center for Law & Justice (ACLJ) in filing an amicus brief with the United States Supreme Court urging the high court to rule that the individual mandate violates the Commerce Clause of the Constitution and must be rejected.
Congressman Broun said, “The individual mandate portion of Obamacare is one of the biggest assaults on our freedom to date, and one of the worst perversions of the Commerce Clause that I have ever seen. Requiring all Americans to purchase health insurance under the penalty of law is not only fundamentally wrong, but it is also contradictory to the basis of the free market system that our Founding Fathers envisioned when they wrote the Constitution. I urge the Supreme Court to strike down first the individual mandate, and then Obamacare in its entirety, because it is both unconstitutional and the wrong remedy for healthcare reform.”
"I want to express my gratitude to Dr. Broun for his leadership and for assisting us in representing 119 members of the House in this critically important challenge,” said Jay Sekulow, Chief Counsel of the ACLJ. “As a physician, Dr. Broun knows firsthand the dangers of ObamaCare. And he understands that this individual mandate is not only wrong, but represents an unconstitutional overreach by Congress. I appreciate the leadership Dr. Broun has shown on this vital issue."
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