Georgia AFL-CIO President, Charlie Flemming, issued the
following announcement on August 31, 2017:
The Georgia AFL-CIO
fully supports Georgia Power and its decision to complete the Vogtle project.
The completion of this multi-billion-dollar investment means the 4,500
highly skilled craft members of the North America Building Trades will continue
to stay on the job.
“As the President of the Georgia AFL-CIO, representing 210,000 union members
and retirees in the state. I commend Georgia Power and their partners for the
decision to recommend of the Plant Vogtle nuclear project. Not only will it
deliver clean and reliable energy to millions of Georgians, it will provide
thousands of good quality, family-wage jobs. The plant will serve the clean
energy and economic needs of the state for decades to come.” said Charlie
Flemming, President of the Georgia AFL-CIO.
Completing the Vogtle project will allow the Southern Company to continue to
diversify its electricity portfolio, save thousands of family sustaining jobs
and continue to grow the regional economy. We support this decision to continue
the project.
Support for relief
efforts in Texas
In other labor-related news, the AFL-CIO has announced
that the Texas AFL-CIO has activated a link to donate to the Texas Workers
Relief Fund, a 501(c)(3) charitable organization that helps affiliated workers
in the aftermath of disasters. The link is www.texasaflcio.org/donate.
Higher electricity costs due to Plant Vogtle Units 3 & 4 will affect
Georgia’s EMCs as well as Georgia Power customers.
Map of Georgia Electric Membership Corporations
The role of Georgia Electric Membership Corporations
(EMCs) has been overlooked in the discussions on cost overruns and possible
abandonment of Plant Vogtle Units 3 & 4.
EMC customers may be under the mistaken impression that
if the Southern Company decides to go ahead with construction of Units 3 &
4, and the Georgia Public Service Commission approves, that any increases in
electricity costs will be borne only by Georgia Power customers.
This is incorrect. EMC customers will also have to bare
part of the burden of higher electricity costs.
Confusion on this point may help explain why EMC
customers have been less vocal in opposition to the rate increases – they simply
are unaware that their electricity costs will rise along with those of Georgia
Power Customers.
In the case of the EMCs, increased costs to Oglethorpe
Power will be passed along to the EMCs in the form of higher wholesale
electricity prices, which the EMCs will pass along to their customers.
Last week, Oglethorpe Power Co., which owns 30% of the
Vogtle nuclear plant, requested $1.6 billion in additional support from the
Department of Energy, E&E News reports.
Oglethorpe Power Corporation, which supplies wholesale
electric power and is owned by 38 of the state’s 41 EMCs, has kept a low
profile, allowing Southern Company to take the lead.
Nearly half of all Georgia residents receive their
electric service from EMCs, according to Oglethorpe Power.
Georgia Power will file its next report on August 31.
When the decision was made to stop work on the two nuclear
power plants in South Carolina, construction workers didn’t receive much notice
of layoff, according to the following report first published in the Pittsburgh
Post-Gazette. This may be the future for Plant Vogtle workers building Units 3 & 4 if Southern Company decides to end work on the costly and long-delayed project.
A week after efforts to
build two Westinghouse power plants came to a screeching halt in South
Carolina, the Cranberry-based nuclear firm chronicled the shock of the moment and began dealing with the
aftershocks.
About 6,000
people worked at the V.C. Summer site where two utilities, SCG&E and Santee
Cooper, had commissioned Westinghouse Electric Co. to build two AP1000 power
plants nine years ago.
Westinghouse
had hundreds of its own employees at the site last week when the South Carolina
utilities decided to stop the construction project that already was years
behind schedule and billions of dollars over budget. The decision stemmed in
large part from Westinghouse’s March 29 bankruptcy, the utilities said.
But their
move came “without warning,” Westinghouse said in a document filed with the
bankruptcy court Monday.
The project
owners did not give Westinghouse any notice before dismissing its
subcontractors and vendors on the job, telling them to “halt all shipments and
suspend or demobilize all work in progress,” the nuclear company said.
The utilities
also restricted Westinghouse’s access to the project, the company said,
“escorting its employees off the site using armed personnel, and subsequently
only allowing entry to a handful of Westinghouse’s representatives and
subcontractors, preventing Westinghouse from generally accessing the site” and
carrying out its responsibilities.
The same was
true for other workers like Kenneth Blind, a nuclear construction technician
with Fluor Corp., the Texas-based firm that Westinghouse brought in in late
2015 to get the troubled construction work back on track.
Mr. Blind
echoed Westinghouse’s account of what it was like on the day the project was
canceled.
He found it
strange that the Friday before the dismissals craft workers suddenly were told
to hand in their work packages — binders with work instructions necessary
to do their jobs, he said.
But the day
before, Scana Corp., which owns part of the VC Summer project, had announced
that Westinghouse’s parent company Toshiba Corp. had agreed to a $2.2 billion
guarantee for the power plants. Mr. Blind took that as a good sign.
So did
Westinghouse, which wrote in its bankruptcy filing on Monday that negotiating
Toshiba’s commitment sent the message of wanting the projects to continue.
On the morning
of July 31, things at V.C. Summer continued as usual. Mr. Blind’s team was
starting to pour concrete for one of the buildings near the reactor. Around 11
a.m., a security guard approached him and asked if he would be sent home, too.
Too? Mr.
Blind asked. He went to
find his boss, who then called his boss — a scene that was playing out across
the huge site where thousands of workers were grasping at rumors. Word of armed
guards had started to spread.
At an
“all-hands meeting” at 2 p.m., they were told it was their last day on the job
and thanked for their contribution to the project, Mr. Blind said.
People were
angry, he recalled, and some were crying.
They began
hustling to collect their stuff. “If you couldn't fit it through the
turnstiles, you just had to leave it,” he said.
Now begins
the work of “demobilizing” and “stabilizing” the site, Westinghouse said,
vowing in a court document to seek payment from the South Carolina utilities
for its part of the winding down process.
On Monday,
Westinghouse also asked the court to allow it to break thousands of contracts
associated with the V.C. Summer project. The contracts cover everything from
engineering services and security protection to scaffolding and urine testing.
Had the project
owners negotiated with Westinghouse to take over control of the power plant
construction, as Southern Co. did with the Vogtle project in Georgia, these
contracts would have likely changed hands from Westinghouse to the South
Carolina utilities.
Now, they
will join the long march of unsecured creditors in Westinghouse’s mammoth
bankruptcy.
Late on Friday, May 12, 2017, the Southern Company agreed
to take over construction of the nuclear construction site at Plant Vogtle.
This means that the 6,000 workers on site in eastern Georgia
will be able to continue building the reactors at least until June 3.
Southern Nuclear (a subsidiary of the Southern Company) and Georgia Power will become the main
contractor for the Plant Vogtle expansion whose ownership is shared between
Georgia Power, Oglethorpe Power, the Municipal Electric Authority of Georgia,
and Dalton Utilities.
Westinghouse, which had filed for bankruptcy in March, appears
ready to walk away from the project if it can receive approval from the
bankruptcy court, leaving the future of the two reactors in the hands of the
utilities and the Georgia Public Service Commission.
Georgia Power still has not committed to completing both
reactors.
Options include completing one or both reactors,
converting one or both reactors to natural gas, or giving up on the project
entirely.
The role of the Georgia Public Service Commission is becoming extremely important as discussions continue on how to pay for the two new reactors, which are billions of dollars over budget.
E&E News reports that "Georgia Power has a
settlement with the Public Service Commission on how to handle Vogtle's costs
going forward. The utility and the PSC staff negotiated the agreement, in part,
after the project's costs rose 30 percent from when it started.
The settlement includes
the utility absorbing an amount through a lower rate of return on equity if the
reactors are not online by 2020. Consumers would shoulder the rest.
Southern stated in filings
earlier this month that the project is not likely to meet that deadline.
Georgia Power executives confirmed the same in a routine hearing about the
project's cost and schedule last Thursday.
Georgia Power has already
hinted that it will want to revisit that settlement, which was put in place
months before Westinghouse filed for bankruptcy protection. The PSC staff has
held firm that the agreement remains in place, according to emailed statements
obtained by E&E News (Energywire,
May 5)."
The PSC took comments from the public at last Thursday’s
meeting, and many were not pleased that Georgia utility ratepayers have been
paying for the plants since 2009 when Georgia Power began charging customers
for the project’s costs years before the plants would come actually generate
electricity.
WSAV-TV (Savannah, Ga.) has nicely captured the current situation and you can watch their report here.
Atlanta Progressive News reports that the next public
hearing on Vogtle will be June 29, 2017, when the construction monitors on PSC
staff will testify.
Westinghouse's bankruptcy will be very costly to the owners of Plant Vogtle -- Southern Company (through its subsidiary Georgia Power), Oglethorpe Power Corp., the Municipal Electric
Authority of Georgia (MEAG Power), and Dalton Utilities -- but Georgia electricity users and workers will ultimately foot the bill.
The contractor, which is a subsidiary of Toshiba Corp.,
continues to deal with large cost overruns in its building of two nuclear
reactors in Georgia, and it is unclear whether Westinghouse will be able to proceed
with the project.
Now Westinghouse is in the hands of a Federal bankruptcy
judge who may void previous agreements with the utilities, allow contractors to renegotiate contracts for higher payments, and may allow
Westinghouse to abandon the project altogether.
The judge has tentatively approved Westinghouse’s access
to $800 million in debtor-possession financing so it can continue some work
during the bankruptcy proceedings but raised questions during the hearing about whether some of
those funds would go to support the company’s foreign operations that are not
involved in the bankruptcy proceedings instead of only financing Westinghouse's U.S. operations.
The implication is that Westinghouse may use some of that $800 million to prop up their non-American projects and leave the Georgia and South Carolina projects starved for cash.
If Westinghouse is preparing to abandon Plant Vogtle,
which may be the case, the utility owners have only a limited number of options, each of which involve large unexpected costs.
The utilities can attempt to bring in another
contractor to take over construction of the two nuclear reactors, choose to turn
the nuclear reactors into gas-fired plants, or close down construction and
leave the site unfinished.
Southern Company's CEO Tom Fanning has asked Toshiba to continue work on Plant Vogtle, but Toshiba is under pressure from its stockholders to pull out of Georgia and South Carolina.
What’s at Stake
The Plant Vogtle project employs more than 5,000
well-paid construction workers at the site, most of whom are working under union contracts.
If the site is abandoned, it will be a blow to those
workers as well as all of Eastern Georgia. Plant Vogtle is located in Burke
County near Waynesboro,
Ga., and the Augusta, Ga. metro area, both of which have benefited from the influx of workers and money, as has nearby Aiken, S.C.
Even a temporary halt to construction will cause large layoffs and loss of a skilled workforce who will scatter to find comparable paying jobs.
Higher Electricity Bills are a Real Possibility
For customers of Georgia Power, Oglethorpe Power Corp., the Municipal Electric Authority of Georgia (MEAG Power), and Dalton Utilities; the threat is even higher electricity rates to cover the increased costs.
Any delays, including if a new contractor must be brought
on site, will only increase costs in the project that is already more than $3
billion over budget.
In addition, Bloomberg
reports that “U.S. taxpayers have already financed $6.5 billion in loan
guarantees for Southern and its partners that were awarded in 2014 to build the
Vogtle plant. The Energy Department followed up in June 2015 with an $1.8
billion loan guarantee for the project.”
"We think there is a lot of risk," said Autumn
Hanna, a senior program director for the Washington-based watchdog group
Taxpayers for Common Sense, a group that has been critical of the loan
guarantees. "We are really afraid this puts the $8 billion on line even
more for taxpayers."
“If Southern’s contract with Westinghouse is terminated
and the project is abandoned, the Energy Department could require repayment of
its investment over five years, according to Moody’s Investors Service analyst
Michael Haggarty.”
Georgia is a "Utility-friendly" State
No doubt if the utilities must pick up extra costs
stemming from Westinghouse’s inability to meet its obligations, they will be
asking the Georgia Public Service
Commission to pass along those costs by raising electricity rates.
Traditionally, the Georgia PSC is seen as very "utility-friendly" in allowing utilities to pass along higher costs to ratepayers, even for plants not yet producing electricity.
Ratepayers in Georgia have already contributed about $3,9 billion for the reactors, while the utilities are guaranteed a 10% return in profits, even in the case of cost overruns, according to Facing South.
Reuters quoted one advocacy group as stating that “electric bills in Georgia and
South Carolina could rise more than customers expect if state utilities are
left stranded by a Westinghouse Electric Co. bankruptcy filing.”
“People will either be forced to pay for something they
never got or pay more to complete something that does not make economic sense,”
said Liz Coyle, executive director of consumer advocacy group Georgia Watch.
Of course higher electricity rates will impact businesses in both states and discourage companies from moving or expanding in both Georgia and South Carolina, thus damaging economic development efforts.
South Carolina faces a similar problem because
Westinghouse is the lead contractor for the V.C. Summer nuclear facility
presently under construction in Jenkinsville, S.C.
The
Aiken Standard recently editorialized that in their opinion the
Westinghouse bankruptcy should not become a burden on ratepayers: “Ratepayers
[in South Carolina] may wind up paying more in the long run should SCE&G
raise rates. It's wrong to force power customers to pay higher rates for a
facility that's years behind schedule and billions of dollars over budget.”
The Westinghouse-Plant Vogtle bankruptcy is getting relatively little local news coverage in the Atlanta media.
Bond Rating
Services Are Negative
The
Street.com says that “Fitch Ratings put the majority stakeholders of
Westinghouse's Georgia and South Carolina projects on "negative
watch." Those stakeholders are Municipal Electric Authority of Georgia,
Oglethorpe Power Corp. (Ga.) and South Carolina Public Service Authority."
Moody’s Investor Service has issued a statement saying:
“Westinghouse’s Chapter 11 bankruptcy filing and Toshiba’s ongoing financial
weakness have raised new questions over their ability and willingness to
complete the Summer and Vogtle nuclear projects under the terms of the fixed
price contracts, placing additional financial pressure on the project owners.
“Our negative outlooks for these entities incorporated
our expectation that a Westinghouse bankruptcy filing could occur, and reflect
the likelihood that the projects won’t be completed under the current time and
cost arrangements. We anticipate the project owners will evaluate alternatives
for finishing construction, which in all likelihood would result in higher risk
and additional costs.”
Oglethorpe Power, one of the partners in the project, has
said that "the revised in-service dates of December 2019 and September
2020" for the two reactors "do not appear to be achievable."
Utility Owners of
Plant Vogtle
Ownership in the two nuclear reactors under construction
at Plant Vogtle is shared among several utilities in Georgia:
Georgia Power, a for-profit subsidiary of The Southern
Company, serves 2.4 million customers in all but four of Georgia's 159
counties.
Oglethorpe Power Corporation is a nonprofit
cooperative owned by 38 electric membership corporations.
The Municipal Electric Authority of Georgia (MEAG
Power) is a nonprofit, statewide generation and transmission organization
providing wholesale electricity to its 49 member communities, who own their
local distribution systems.
Dalton Utilities provides electricity to the City of
Dalton since 1898.
