Georgia Power gets massive rate hikes to pay for Vogtle 3 & 4 expansion

February 12, 2024

Wondering why your Georgia Power bills are on the rise? The Public Service Commission approved a 12% increase over three years in December 2022 to pay for construction cost overages of Plant Vogtle nuclear power Units 3 and 4. An additional 12% rate hike became immediately effective in June '23 to cover fuel cost increases. The PSC has just approved a third rate hike! The most recent, a 6% increase in December to again cover costs to build Vogtle Unit 3. Another large rate increase is likely to follow when Unit 4 begins operations, now projected to happen by March 2024.


DECEMBER 19, 2023

Georgia Power ratepayers will be responsible for a $7.6 billion bill for the construction of two nuclear reactors built during the long-delayed expansion at Plant Vogtle located southeast of Augusta.

The financial agreement for the nuclear project boondoggle was approved Tuesday by the Georgia Public Service Commission. It calls for the utility company to cover at least $2.6 billion of an expected $10 billion in construction and capital costs spent on the Vogtle project.

Vogtle has remained a major source of contention as costs ballooned to $35 billion, more than double the price initially forecast for a project that’s taken 14 years to complete. The two Vogtle units are the first nuclear reactors to be built in the United States in more than 30 years, and is the latest in a series of rate increases Georgia Power customers will continue to bear in the coming months.

The average Georgia Power homeowner has been paying an extra $5 per month since Unit 3 began operating this summer and will see an estimated extra $9 each month once Unit 4 comes online. Georgia Power officials predict that the final reactor will be fully operational within the first several months of 2024.

https://georgiarecorder.com/2023/12/19/state-regulators-pass-along-7-6b-tab-to-ratepayers-for-georgia-powers-plant-vogtle/#:~:text=The%20average%20Georgia%20Power%20homeowner%20has%20been,within%20the%20first%20several%20months%20of%202024.

Now that Votgle 4 has started commercial operations in April 2024, the PSC has will approve a new rate hike and Georgia Power will send a new bill to the rate payers.

P.S. - Southern Nuclear operates Plant Vogtle and owns 45.7% of the facility through its subsidiary, Georgia Power. Dalton Utilities and MEAG Power own 24.3%. Oglethorpe Power owns 30%. The twin reactors, which are expected to operate for the next 60 to 80 years, will require rate-payers to continue to pay for these reactors for 60 or more years.

If you were to read only certain biased news sources, you might think that Georgia customers now pay some of the highest electric rates in the nation, due to the Vogtle nuclear power project.

The Vogtle Unit 3 plant went into full commercial service last July, and has been generating power since then. Vogtle 4, the second of two new units, was just placed into commercial service this week. Various rate increases have occurred during construction to pay for the projects. Also, since the Vogtle plants are partially owned by several different utilities, from the link here, “In Georgia, almost every electric customer will pay for Vogtle.”

So, how high are the electricity rates now in Georgia? Perhaps lower than you might think.

As of February of this year, Georgia residential customers pay 12.60 cents per kilowatt-hour on average for electricity. The entire US average is 15.74 cents/kwh, so the electric power rates in Georgia are actually below what most US ratepayers are charged.

If we look back to previous years, we see Georgia has been consistently below the US average throughout the Vogtle construction period. In the link here, look at Table 5.6.B, if you are interested. This is for 2021 as one example.

Now that Unit 4 is in commercial service, the full cost of construction can now be put into the rate base. We will see the effect on prices later this year and into next. But right now, based on the previous rate adjustments, the Vogtle projects do not yet seem to have a big effect on the price of electricity. Based on the EIA data, the average price of electricity in Georgia has actually declined a little since Unit 3 went into service last year.

  • Pete
6 Likes

That is totally bogus response. There are many reliable stories on the internet which corroborate my initial post. Here are some of them:

Article 1

The Georgia Public Service Commission on Tuesday unanimously approved a final agreement pertaining to billions of dollars that Georgia Power will pass on to its customers for costs related to building two new nuclear reactors at Plant Vogtle.

“The parties agreed that $7.562 billion is a reasonable and prudent total construction and capital costs for the project to be included in the rate base,” said George Brown, utilities analyst at the PSC. “Any additional project construction capital cost above that amount will be the responsibility of the company and not the ratepayers.”
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Article 2

State regulators voted Tuesday to pass most of the tab for Plant Vogtle’s two new nuclear reactors on to Georgia Power customers, providing a final answer to the question of who would pay for the project’s budget overruns and triggering another major rate increase early next year.

The plan, approved unanimously by the five elected members of the Georgia Public Service Commission (PSC), allows Georgia Power to charge ratepayers for $7.56 billion of the $10.2 billion the company ultimately expects to spend completing the nuclear plant near Augusta. The company and shareholders of its parent, Southern Company, will absorb the remaining $2.63 billion of the project’s construction costs.

The costs approved Tuesday come on top of a monthly surcharge Georgia Power customers have shouldered for years to pre-pay for Vogtle’s expansion and on top of recent hikes approved by the PSC.

The PSC’s vote means residential customers will face another increase of about 6% in their monthly bills after Vogtle’s second new reactor, Unit 4, comes online. Georgia Power has said Unit 4 will be complete by the end of the first quarter next year.

The average Georgia Power residential customer’s monthly bill already jumped about 3.2% this summer, when Vogtle’s first new reactor — Unit 3 — entered operation and $2.1 billion in construction costs were placed into rates.

Tuesday’s vote means ratepayers on Georgia Power’s standard residential plan, the company’s largest group of customers, will feel a cumulative 10% increase in their monthly bills as a result of Vogtle’s capital and construction costs. For the average residential customer using 1,000 kilowatt-hours of electricity a month, that means an increase of roughly $14.38 to their monthly bills, according to calculations by The Atlanta Journal-Constitution based on Georgia Power rate tables.

Adding in those financing costs, taxes and the cost of replacement fuel, the bill Georgia Power customers will ultimately cover for Plant Vogtle’s expansion is now $12.43 billion, according to calculations by the PSC’s staff.
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Article 3

ATLANTA - Georgia Power customers’ energy bills are about to go up again. The utility company is bringing two new nuclear reactors online. State regulators on Tuesday approved a plan to let Georgia Power pass the cost onto consumers. This is on top of rate hikes the company pushed through earlier in the year.

The public service commission approved the $10.2-billion plan to cover cost overruns for the new reactors at the Vogtle plant near Augusta. The company will pay $2.63 billion. Customers will shoulder $7.56 billion.
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Article 4
https://www.fitchratings.com/research/corporate-finance/fitch-rates-georgia-power-company-senior-notes-a-22-02-2024

Fitch Ratings - New York - 22 Feb 2024: Fitch Ratings has assigned an ‘A-’ rating to Georgia Power Company’s $500 million series 2024A 5.004% senior notes due Feb. 23, 2027 and $900 million series 2024B 5.250% senior notes due March 15, 2034. Georgia Power intends to use the net proceeds from these issuances to repay all or a portion of its CP borrowings and for general corporate purposes.

Georgia Power’s Issuer Default Rating (IDR) is ‘BBB+’/Outlook Positive. The ratings reflect stable and predictable cash flow generation of Georgia Power’s regulated electric utility operations, constructive regulation and robust growth across its service territory. The ratings also capture the diminished execution risks regarding Georgia Power’s new nuclear units given the successful commissioning and operations till date of Vogtle Unit 3 and expected commissioning of Unit 4 in the second quarter of 2024 (2Q24).

Vogtle Risks Abating: With the commercial operation of Vogtle Unit 3 and as expected performance of the unit thus far, the execution risk associated with the construction of two new nuclear units is materially reduced for Georgia Power. The construction of Unit 4 continues to benefit from lessons learned on Unit 3. Based on the most recent forecasts, Georgia Power’s share of the capital costs for the two units currently stands at $10.7 billion. Unit 4 is on track to reach commercial operation in 2Q24 per latest management estimates.

Positive Resolution of Prudence Review: Consistent with the 2017 Georgia Public Service Commission (PSC) order and Unit 4 completing fuel load, Georgia Power filed an application on Aug. 30, 2023 to seek recovery of all prudently incurred capex for Vogtle Units 3 and 4. Georgia Power reached a stipulated agreement with Georgia PSC staff and key intervenors that provides for recovery of $7.562 billion of capital costs. This is lower than the company’s ask of $8.826 billion but modestly higher than $7.3 billion, which was deemed reasonable by the PSC in its 2017 order. Georgia Power will also be allowed to recover $1.02 billion of additional costs, which include capitalized financing costs. New rates will be effective the month following commercial operations of Unit 4. The Georgia PSC approved the stipulation in December 2023.strong text
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Article 5
New Vogtle nuclear reactor now online in Georgia, completing expansion.

April 29, 2024
The second new nuclear unit at Plant Vogtle has entered commercial service, Georgia Power announced Monday, marking the end of the expansion of the nuclear power plant near Augusta, beset by years of delays and cost overruns.

Both new Vogtle units were dogged by construction quality issues and other problems, and ultimately reached completion roughly seven years later than initially forecast. Their total price tag also blew past the original cost estimate of $14 billion to around $35 billion. Most of Georgia Power’s portion of those costs have — and will continue to — come out of the pockets of Georgia Power customers.

In a statement, Georgia Power president and CEO Kim Greene praised the unit’s co-owners and regulators at the Georgia Public Service Commission, who greenlit the project and repeatedly voted to continue construction, despite skyrocketing costs. Georgia Power owns the largest share in the Vogtle expansion with 45.7%, followed by Oglethorpe Power (30%), the Municipal Electric Authority of Georgia (22.7%) and Dalton Utilities (1.6%).

Late last year, state regulators voted to approve a deal to pass $7.56 billion of Vogtle’s construction costs on to the company’s ratepayers. Georgia Power and shareholders of its parent, Southern Company, will absorb the remaining $2.63 billion of the project’s construction costs.

As a result, the average residential customer using 1,000 kilowatt-hours of electricity a month will see a cumulative increase of $14.38 in their monthly bills. Part of that increase — about $5.42 — kicked in last year after Unit 3 entered service.

Now that Unit 4 is online, the rest — about $9 — will show up on customer bills starting in May.

The construction cost of Vogle 3 was never added to the rate case until Unit 3 started commercial operation in 2023. The construction cost of Vogtle 4 was never added to the rate case until Unit 4 started comercial operation this week.

Thus your statement that “Georgia has been consistently below the US average throughout the Vogtle construction period” is totally irrelevant and meaningless.

The construction costs for Vogtle were added to customers’ bills going back several years. Here are a couple of links…

The article is about Unit 3 entering service, but there is also this paragraph…

Georgia Power customers have already been paying a monthly charge for the cost of financing the Plant Vogtle construction, amounting to nearly $100 per customer per year for more than a decade, according to recent testimony before the Public Service Commission.

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The monthly fee is known as the Nuclear Construction Cost Recovery charge. Below is a link from Georgia Power, describing the tariff…

Note the effective date is January 1, 2021. It also says…

The Nuclear Construction Cost Recovery Schedule (NCCR) will recover the cost of financing associated with the construction of a nuclear generating plant which has been certified by the Commission in accordance with O.C.G.A. § 46-2-25(c.1) and the Commission’s Certification Order in Docket No. 27800. This schedule is applicable to and becomes a part of each retail rate schedule in which reference is made to the NCCR.

All bills rendered subject to the NCCR Schedule shall be respectively increased in an amount equal to 5.8456% of their base bill calculations which exclude Real Time Pricing (RTP) incremental usage revenue.
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As this example is NCCR-10, there were several other versions going back previous years, each version looks to be applicable for one year.

Georgia electricity customers pay less than the national average rate, even with these NCCRs and after Unit 3 went into commercial service. We shall see what the rates are later when Unit 4 is completely added to the rate base.

  • Pete
1 Like

These were not construction costs that the customers paid over the years. These were financing cost that the customers paid.

Approximately $3.5 billion in financing costs that customers have already paid. On average, customers have paid about $100 per year for Vogtle Units 3 and 4 over the past decade, which is double what they would have paid if the reactors had been completed on time.

As of December 2023, Georgia Power customers are expected to pay $7.56 billion for the construction of two nuclear reactors at Plant Vogtle.

Therefore, customers will end up having paid $3.5 billion financing + $7.56 billion construction for a total of over $11.0 billion for Vogtle 3&4.

The customer’s grandchildren will still be paying for this boondogle 40 to 60 years from now to keep the rates under control.

The financing paid for the construction, did it not?

  • Pete

The finacing paid for loans that were taken to pay for engineering, licensing, procurement, fabrication, construction and management. They were never tied to just construction. That is why they have been designated differently in the accounting and PSC commitments.

Those news sources were not biased and your saying they were biased has been shown to be wrong. Looking at the past Georgia customer rates does not reflect the recent PSC decisisons and rate increases. Also the cost of Vogtle 3&4 is buried in with the costs of all other electrical generation and operation for Georgia.

In 2022, Georgia’s electricity generation was 47% natural gas, 27% nuclear power, 13% coal, and 13% renewable energy. Georgia’s power plants had a total summer capacity of 36,198 megawatts and a net generation of 126,484 gigawatt-hours in 2022.

Vogtle 3&4 have a total capacity of about 2300 megawatts. That is an increase of about 6% for Georgia. It will be hard to see the cost impact of Vogtle 3&4 in the statwide average cost of electricity for all residents.