Georgia Power said Tuesday that it had reached an agreement with Toshiba to speed up a $3.2 billion payment to help salvage two nuclear reactors under construction in Georgia.
Under the agreement, Toshiba will make the payments by Dec. 15 on behalf of its nuclear construction subsidiary Westinghouse, which is in bankruptcy.
The agreement was disclosed four days after three staff members of the Georgia Public Service Commission said the project at the Vogtle power station "is no longer economic" given huge cost overruns, construction delays and the burden that would be placed on ratepayers while the company profits. The PSC commissioners will decide in February whether to let the project go forward.
The Trump administration has pledged $3.7 billion in new loan guarantees for the pair of reactors — even though the administration is urging Congress to eliminate the Energy Department's loan guarantee programs. The administration and Congress are working on ways to grandfather in the new loan guarantees for the nuclear reactors as well as for a large chemical plant in Lake Charles, La.
The Vogtle project, whose cost estimates have ballooned from $14 billion in 2008 to approximately $23 billion, was once seen as part of a wave of new nuclear power stations. Today the two reactors are the only ones under construction in the United States, and their completion date has been pushed back to 2021.
Construction was halted on two reactors in South Carolina earlier this year.
The cost overruns overwhelmed Westinghouse, a storied name in the nuclear power business that had touted its AP1000 plant design as a step forward in cost and safety.
Georgia Power, a subsidiary of Southern Company that owns 46 percent of the Vogtle reactor project, said Tuesday that its agreement with Toshiba is subject to the Japanese electronics giant's board, but Toshiba recently raised $5.4 billion in a sale of new shares for its U.S. nuclear unit.
However, the Georgia PSC's public-interest advocacy staff wrote that the economic costs of the nuclear reactors would outweigh the benefits by $1.6 billion.
The staff advised the commission to block rate increases for costs due to mismanagement, the Westinghouse bankruptcy and construction delays. "It is unreasonable for ratepayers to have to bear increased costs as a result of the Units not being constructed efficiently," the staff report said.
Georgia, Mississippi and South Carolina are among the few states where utilities are allowed to ask ratepayers to pay for a power plant before the plant is online and producing power, but the utilities must get approval from the states' public service commissions.
Georgia Power's share of the costs has roughly doubled to $12.2 billion, with $8.8 billion for construction and $3.4 billion for financing. The commission staff estimated that ratepayers would end up paying $4.5 billion of that.
Originally the company planned on receiving production tax credits from the federal government, but now the 68-month delay in the schedule means it won't finish in time to qualify for the credits. The project partners could also lose bonus depreciation benefits. Georgia Power said in a statement Tuesday that it was still planning on the credits, whose implementation date can be altered by Congress.
Even if the company qualifies for the credits, however, the public service commission staff noted that the cut in the corporate tax rate that Congress is weighing would reduce the value of those tax credits from $1.1 billion to $900 million.