In an extraordinary hearing in Georgia last week, public utility regulators were considering whether or not to protect the captured, monopoly electricity consumers of Southern Company from possible, even probable large cost overruns to build two nuclear reactors.
Of course in the competitive electricity generation markets of Pennsylvania or any other competitive market for goods and services, generally if an owner of a plant has a cost overrun, the owner pays for it. There are no captured, monopoly food or clothes customers for example to make pay.
But that is not the rule in fully regulated electric generation service territories such as those in Georgia. There the mistakes of power plant owners become the higher bills of consumers, unless regulators say "NO."
The two reactors at the Vogtle plant site are projected to cost about $12 billion so a 10% overrun amounts to a cool $1.2 billion.
A representative of Georgia Power, the utility subsidiary of Southern, was quoted in the Wall Street Journal as saying the company "very likely would not have proceeded" with the nuclear plant if it had been told it could be held financially responsible for cost overruns in part or in whole.
Meanwhile Georgia Power residential customers are already paying $3.73 per month for the nuclear plants, even though they won't be finished for about 5 years or perhaps ever. The federal government has also extended substantial loan guarantees to this nuclear construction program.
New nuclear plants will not be built in the USA, unless federal and state government remove all risk from the owners of new plants, as the Vogtle plant is proving yet again.
Despite massive government and compulsory consumer support, the costs of new nuclear power plants are now haunting both utility managers and consumers once more. History may be repeating in Georgia.
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