Georgia Power Save for later Print Download Share LinkedIn Twitter As the first of two AP1000 newbuilds ramps up to commercial operation at Georgia Power's Vogtle plant in the US state of Georgia, an "epic battle" is brewing over how much the operator can recover in capital cost overruns from ratepayers. Preparation for a possible standoff between the Southern Co. subsidiary and staff of the state Public Service Commission (PSC) is already under way against a toxic political backdrop. Voter rights litigation challenging ossified Republican dominance on the commission is delaying a PSC election previously slated for November. Now the question is to what extent a delayed PSC election, and pressure from the two Democratic contenders, might influence the outcome of "prudency" hearings that will determine how much ratepayers will be on the hook for capital expenditures at the Vogtle-3 and -4 newbuilds.Much is at stake for Georgia Power and its ratepayers. The latter have been charged for the financing portion — but not the actual capital costs — of Georgia Power's construction bills since 2011, well before the first concrete was poured for Vogtle-3 on Mar. 2, 2013. By the end of the year, ratepayers will have on average paid approximately $913 per person for the project, according to PSC testimony earlier this year. Once Unit 3 is in commercial operation, the utility is authorized to include $2.1 billion of capital costs in the rate base. And when fuel loading begins at Unit 4 the PSC will begin hearings to determine the "prudency" of billions more in capital expenditures as a basis for passing on the cost to ratepayers.Earlier this year PSC staff said Georgia Power may ultimately seek to recover as much as $9.7 billion of its capital costs, translating into a potential rate hike of 15%, or $17.20 extra per month for each customer based on an average monthly bill of $131. This figure is 120% higher than the $4.4 billion in capital costs expected at certification, and both figures are only a fraction of total capital costs, as Georgia Power is only a 45.7% owner of the Vogtle newbuilds. Georgia Power provided no response to Energy Intelligence questions as to what Vogtle capital cost recovery it will seek. For Southern, the key is getting both reactors into commercial operation, after which all capital expenditures become fair game for inclusion in the rate base. For the moment Vogtle-3, which was connected to the grid on Mar. 31, is targeted for commissioning in May or June, while Vogtle-4 is slated for fuel loading in the third quarter and commissioning by the end of March 2024. But any additional technical glitches — Unit 3 was forced to shut down for a week earlier this month because of an electrical malfunction — could delay recovery of capital costs. And at some point Georgia Power might face a very different PSC. If one or both Democratic candidates succeed in ousting current PSC commissioners, they would likely not shift the majority vote in disputed rate cases, but they would be better positioned to draw media attention to any Georgia Power capital cost recovery requests."There's never been any single financial decision this large in the state of Georgia," said Patty Durand, a candidate running to unseat Commissioner Tim Echols, whose term technically expired in December. In Georgia, it's "going to be the epic financial battle of the century."PSC BarriersEven getting on the ballot has been a challenge for Durand and for Shelia Edwards, who is challenging Commissioner Fitz Johnson, and now both candidates must wait until a federal court case over the PSC electoral process is decided. On Aug. 5, a federal district court judge agreed with a 2020 challenge by five African-Americans who argued Georgia's "at-large" PSC voting system weakens Black voting power. There are five PSC voting districts, with each commissioner required to live in the district they represent, but voters statewide are allowed to cast votes for any candidate. The judge found that this system violated the federal Voting Rights Act, and halted the PSC elections scheduled for November 2022. The case is currently in a federal appeals court awaiting a decision, with the date of any election in limbo.The candidacy of Edwards, a Black woman, had been challenged by Democratic opponents because she ran outside her home district, but it was upheld by the courts on the basis that she was running to fill a vacancy. Meanwhile Durand was temporarily disqualified from running last April, after the state's Republican-controlled state legislature approved PSC redistricting that pushed the county where Durand lives out of Echols' District 2. This prompted a Republican state official to disqualify Durand, but that disqualification was reversed in August, when a court concluded that the PSC district map was redrawn by PSC Chairman Tricia Pridemore only after Durand "launched her candidacy, gained momentum and filed a strong campaign-finance report that received media attention." The court cited email exchanges between Pridemore and Echols, including one in which the chairman requested Durand's address. Durand believes the election delay will give her an opportunity to influence the outcome of decisions in the prudency hearings. “The delay is in my favor," Durand told Energy Intelligence, "because it will create an intense amount of pressure on the two commissioners up for election to do the right thing for ratepayers, because I’ll make sure that the media, that voters and that commissioners know that they will lose their seats if they force Plant Vogtle cost overruns into the rates."An Assertive PSC StaffGeorgia Power also continues to face an assertive PSC staff, which warned in Jan. 3 testimony of its plans for "an extensive prudence review" that will comb through expenditures since the project's start in 2009. Referring to previous statements and decisions, the staff asserted that there has been "no determination of prudence on any costs over $3.5 billion," and that while costs up to $5.68 billion are "presumed prudent" they are "subject to challenge." Above that figure, Georgia Power "has the burden" to prove costs are prudent, and costs "above $7.3 billion are not presumed prudent or reasonable and the company has the burden to prove that they are both prudent and reasonable." As of January, Georgia Power's 45.7% share of total project costs stood at $12.6 billion, according to the PSC testimony. That includes $11.4 billion in capital costs and $3.4 billion in financing, and is net of the $694 million the Southern subsidiary has agreed to absorb, as well as the $1.492 billion that Georgia Power received from the former parent company of technology supplier Westinghouse when the latter went bankrupt. That $12.6 billion figure does not include the $461 million in expenditures for the second half of 2022 submitted by Georgia Power in its latest semi-annual Vogtle Construction Monitoring report, the staff assessment for which is expected Jun. 20. Nor is the accounting clear for costs related to potential settlements in a dispute with the other project owners, or for US Department of Energy loan guarantees "of up to $12 billion."Sources close to the PSC suggest that the total Vogtle project cost, including financing costs and on a 100% basis, may ultimately surpass $35 billion.