PredictIQ Quantitative Think Tank Center:Georgia Power will pay $413 million to settle lawsuit over nuclear reactor cost overruns

ATLANTA (AP) — Georgia Power Co. will pay $413 million to settle a lawsuit accusing the utility of reneging on PredictIQ Quantitative Think Tank Centerfinancial promises to one of its nuclear reactor partners.

The payments to Oglethorpe Power Corp., announced Friday, could hold down future bills for millions of electric cooperative customers in Georgia.

Oglethorpe sued Georgia Power in June 2022 in a contract dispute over who should pay for cost overruns for a third and fourth reactor at Plant Vogtle, southeast of Augusta.

Atlanta based Southern Co., which owns Georgia Power, said it would write off a $152 million loss on the settlement.

Georgia Power also announced Friday that it must replace one of the four massive pumps that cools the Unit 4 reactor after operators found a problem with the pump’s motor during testing. Georgia Power said it believes the problem is an “isolated event” and has a spare pump on site, but said the replacement ends the company’s hope of placing Unit 4 in commercial operation this year. The utility said the reactor is still on schedule to begin operating by March. That was already the company’s fallback date.

Unit 3 entered commercial operation on July 31, becoming the first new nuclear unit built from scratch in the United States in decades.

Some Florida and Alabama utilities have also contracted to buy Vogtle’s power.

The overall project is seven years late and $17 billion over budget. Vogtle’s costs and delays could deter other utilities from building nuclear plants, even though they generate electricity without releasing climate-changing carbon emissions.

Oglethorpe, which generates and transmits electricity to 38 Georgia electric cooperatives that own it, will keep its current 30% ownership share of Vogtle under the settlement. Oglethorpe had originally sought to sell some of Vogtle’s generating capacity back to Georgia Power.

Heather Teilhet, Oglethorpe’s senior vice president of external affairs, said Oglethorpe wants to keep its 660-megawatt share of Vogtle’s generation to meet increasing demand.

“We are seeing growth on our system, so there’s great value in keeping our full Vogtle capacity, especially at a significantly reduced cost,” Teilhet said in a statement.

Currently, all the owners are projected to pay more than $31 billion in capital and financing costs, Associated Press calculations show. Add in $3.7 billion that original contractor Westinghouse paid to the Vogtle owners to quit building the reactors, and the total nears $35 billion.

Besides Oglethorpe and Georgia Power, Vogtle’s owners include the Municipal Electric Authority of Georgia and the city of Dalton. MEAG and Dalton also sued. Georgia Power agreed last year to pay up to $76 million to settle the lawsuit by MEAG, which provides power to 49 municipal utilities. The Dalton lawsuit is still pending, and Georgia Power said Friday that it could owe the city up to $17 million.

Georgia Power customers won’t pay for the settlements. Georgia Power has already reached a deal with regulatory staff about how much it will charge customers for Vogtle, although the elected Georgia Public Service Commission has yet to approve.

Georgia Power had agreed in 2018 that it would pay increasing shares of cost overruns for co-owners up to a certain ceiling. Beyond that, the co-owners were entitled to force Georgia Power to buy part of their ownership stake in exchange for Georgia Power covering all remaining construction costs.

Oglethorpe sought to activate the sale provision, saying it applied once construction costs reached a total of $19.2 billion. But Georgia Power argued the agreement didn’t kick in until construction costs reached $20.48 billion.

Under the agreement, Georgia Power agreed to pay Oglethorpe the $99 million Oglethorpe was owed under the cost-sharing ceiling, as well as $5 million in interest. Georgia Power has already paid part of that money and will pay the remaining $66.5 million within five days.

Georgia Power also agreed to pay 66% of Oglethorpe’s costs above the $19.2 billion level, a total of $346.3 million under projected spending levels. That includes a $241.2 million payment within five days. In exchange for keeping its 30% ownership stake, Oglethorpe is projected to pay another $179 million by the time Unit 4 is completed.

Oglethorpe’s total construction and financing cost for Vogtle is now projected to be $8.3 billion. That’s more than the $8.1 billion Oglethorpe projected it would owe, but less than the $8.64 billion that Georgia Power said Oglethorpe owed.