VOGTLE BIG BET$ LOTTO

Big-Bets

Where has all the public’s money gone?

by Glenn Carroll, illustrated by Tom Ferguson

ATLANTA 5/17/17: IT MAY BE EASIER TO UNDERSTAND the fast-moving drama of the slow-moving construction of Vogtle 3 & 4 if you look at the whole affair as a high-stakes betting game rather than the high-risk nuclear power project it appears to be.

If you haven’t already, tune into the frequent financial headlines about the $10 billion debt ruining Georgia Power’s multi-national corporate partners building AP1000 reactors in Burke County, Georgia. Tom Ferguson, famous artist and Nuclear Watch South board president, has created the above infographic to help you understand the action-packed poker game: VOGTLE BIG BET$ LOTTO!

(We join the game already in progress)

In December, Georgia Power secured a commitment from the Georgia Public Service Commission (PSC) to be reimbursed for its portion of billions of dollars in cost overruns that had been tied up in litigation with reactor designer Westinghouse for two years.

Four days later, the Japanese firm Toshiba, parent company of U.S.-based Westinghouse, announced substantial losses from its U.S. nuclear reactor projects. Toshiba had taken on all future cost overruns at Vogtle as part of its settlement with Georgia Power, and Toshiba’s stock went into freefall as it was revealed that the nuclear losses amounted to $10 billion.

Westinghouse declared bankruptcy in March while suing the construction company it had acquired as part of the settlement, Stone & Webster/Shaw/CB&I, for concealing several billion in debt which CB&I was carrying from Vogtle 3 & 4 (and Summer 2 & 3 in SC) in the deal.

All the companies involved have been honing their profit-making skills for a century and have rich, litigious histories. In the case of Westinghouse, bankruptcy appears to be a business strategy — it was bailed out by Toshiba after bankrupting British Nuclear Fuels Ltd. in a Japanese MOX fuel scandal. Toshiba made a risky bet on Westinghouse, paying three times the asking price because of giddy expectations of a “Nuclear Renaissance” back in 2006.

A most important detail of the game is that Georgia Power’s bets have been placed with public money: $2 billion collected from Georgia customers in an up-front nuclear construction tax on electricity bills (CWIP) PLUS $8 billion in taxpayer dollars loaned by the U.S. Department of Energy (DOE).

Georgia Power emerges as the Big Winner posting startling annual profits more than 20% higher than before Vogtle construction! In light of the bankruptcies, Georgia Power says it is reviewing its options, including to stop construction of Vogtle.

Nuclear Watch South has filed a formal request for an emergency public hearing with the PSC and for a deadline to be set for Georgia Power to submit its plan forward. Georgia Power customers continue to pay $23 million per month to keep building an unneeded power project with an uncertain future. Today, we are still waiting for the PSC to exercise its authority and take hold of the situation.

Last week, the public came out strong to say “NOT ONE MORE CENT FOR VOGTLE” at the PSC’s 16th Semi-Annual Vogtle Construction Monitoring Review public hearing. Media coverage was strong and our message is beginning to show up in the narrative. The next public hearing will be on June 29 at 10AM at the PSC.

Follow the action at nonukesyall.org.

Federal Government Backs 6.5 Billion Dollars in Loans for Plant Vogtle

Vogtle-Dec-13-2013-IMG_9872-smGlenn Carroll

(APN) ATLANTA — On February 20, 2014, U.S. Secretary of Energy Ernest Moniz came down to Georgia to sign off on giving 6.5 billion in taxpayer dollars to Southern Company, its subsidiary

Georgia Power, and Oglethorpe Power to build two nuclear reactors at Plant Vogtle near Augusta.

MEAG (Municipal Electric Association of Georgia), 22.7% owner of Vogtle is seeking 1.8 billion dollars in a separate loan guarantee and has a July closure deadline.

The terms of the loan are secret, but Southern Company has divulged to the media that it has put up collateral for the massive loan — namely, the unfinished Vogtle 3 and 4 reactors.

The relatively obscure loan guarantee program goes like this: Wall Street wouldn’t underwrite risky nuclear energy development, so erstwhile President George W. Bush persuaded U.S. Congress to pass a bill allowing the U.S. Department of Energy (DOE) to give “loan guarantees” to jump start construction of a new generation of nuclear reactors.  These loan guarantees are direct payouts from the U.S. Treasury.

Troublingly, there is an historic 50 percent default rate in the loan guarantee program.

As the so-called “Nuclear Renaissance,” which was touted in the late Bush years, shriveled, Southern Company has become one of only two utilities in the country even attempting new reactors, and Southern Company became the sole candidate requesting loan guarantees.

Southern Company’s loan was first announced by President Barack Obama in 2010.  Four years passed, in which Vogtle, less than half-finished, has gone 1.6 billion dollars over budget and 21 months behind schedule.

U.S. citizens have sent literally tens of thousands of letters and petitions to Obama and DOE demanding that the loan guarantees be withdrawn.

Southern Company has said repeatedly that it does not even need the loan guarantees.

The loan had been hung up for so long, reportedly, because Southern Company balked at the terms which amounted to an unbelievably low interest rate, an upfront “credit subsidy fee” of only 0.5-1.5 percent.

However, because the loan guarantee terms are secret, it is not known if Southern Company actually ended up paying anything at all to use taxpayer money.

We do know that DOE gave weight to Southern Company’s “captive ratepayers” and the Georgia Public Service Commission’s generously allowing electric customers to be taxed up front for Vogtle construction costs in a financing mechanism called Construction Work in Progress (CWIP).

Sara Barczak, high-risk energy choices program director for Southern Alliance for Clean Energy, calls it “corporate welfare for one of the largest power companies in the country.”

Recent analysis of Georgia Power annual report data shows that Georgia Power is not even using 46 percent of its electrical production capacity, has suffered flat sales for ten years years, and has posted declining sales the past three years.

This gives rise to real concern whether Southern Company, Georgia Power, Oglethorpe Power and MEAG can sell enough electricity to pay back their hefty loan from U.S. taxpayers.

“This loan guarantee is a sweetheart deal for the utilities building Plant Vogtle. Essentially, they’re gambling with every U.S. taxpayer’s dollars to unnecessarily expand one plant here in Georgia,” Becky Rafter, executive director of Georgia Women’s Action for New Directions, said.

Glenn Carroll is coordinator of Nuclear Watch South based in Atlanta. http://www.nuclearwatchsouth.org. This article originally appeared in Atlanta Progressive News February 26, 2014