Tag Archives: CWIP

Nuclear’s “bet-the-farm” risk —Moody’s

Wonder why Southern Company couldn’t get private financing for its new nukes at Plant Vogtle? Because back in June 2009 bond-rater Moody’s said this:

But from a credit perspective, the risks of building new nuclear generation are hard to ignore, entailing significantly higher business and operating risk profiles, with construction risk, huge capital costs, and continual shifts in national energy policy.

In case that wasn’t clear enough, they spelled it out further.

Nuclear’s “bet-the-farm” risk

The NRC says about 14 companies to date have submitted COL applications, proposing numerous new nuclear reactors for power generation. The first of these COL’s is expected to be approved beginning in mid-2011. Many of the COL license applications include partners, but the next table lists the primary holding company entity behind each project, and our view of the activity level associated with the endeavor.

From a credit perspective, companies that pursue new nuclear generation will take on a higher business and operating risk profile, pressuring credit ratings over the intermediate- to long-term.

Moody’s wraps up with some reassuring words for financiers, but maybe not so reassuring to we the taxpayers:

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New nukes increasingly bad business bet for Southern Company and Georgia Power

Harvey Wasserman wrote for HuffPost 9 April 2012, America’s 2 New Nukes Are on the Brink of Death,

The only two U.S. reactor projects now technically under construction are on the brink of death for financial reasons.

If they go under, there will almost certainly be no new reactors built here.

The much mythologized “nuclear renaissance” will be officially buried, and the U.S. can take a definitive leap toward a green-powered future that will actually work and that won’t threaten the continent with radioactive contamination.

Those are the stakes. And in that high-stakes poker game, it seems Southern Company is doing a little bluffing.

In Southern Company’s (SO) Q1 2012 Earnings Call 25 April 2012, its CEO Thomas Fanning revealed another little flaw in the project:

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Southern Company wants even more special nuke loan terms

Southern Company wants even more special loan guarantee terms for its new Plant Vogtle nukes. When that or CWIP gets revoked, maybe Southern Company will see that solar is a lot less trouble, and more profitable.

The license authorized by the NRC 9 February 2012 for the new Plant Vogtle nukes is the first one in thirty years. Harvey Wasserman wrote for CounterPunch 18 April 2012, The Big Liability,

It’s about a proposed $8.33 billion nuke power loan guarantee package for two reactors being built at Georgia’s Vogtle. Obama anointed it last year for the Southern Company, parent to Georgia Power. Two other reactors sporadically operate there. Southern just ravaged the new construction side of the site, stripping virtually all vegetation.

It’s also stripped Georgia ratepayers of ever-more millions of dollars, soon to become billions. This project is in the Peach State for its law forcing the public to pay for reactor construction in advance.

Look on your Georgia Power bill for Nuclear Construction Cost Recovery Rider, aka Construction Work in Progress (CWIP). It’s probably about 3% of your bill, for power you may never receive.

If you get your electricity from an EMC instead, remember Georgia’s Electric Member Corporations already participate in the existing Plant Vogtle nukes, so you’ll be on the hook one way or another for the new nukes.

When the project fails, or the reactors melt, the public still must pay.

And even before then, Georgia Power customers get to pay for cost overruns. Not to worry; last time nukes were built at Plant Vogtle, they only ran over budget by a factor of seven.

Southern Company’s existing Plant Vogtle reactors had an unexpected shutdown last year days after NRC said they were fine. And Southern Company says Continue reading →

Austin Energy changed from anti-solar to pro-solar in one year

At the end of 2003, Austin Energy (AE) suddenly went from very anti-solar to very pro-solar. Formerly coal-smoking Cobb EMC is doing it right now. If AE and Cobb EMC can do it, so can Georgia Power: change in one year from opposed to aggressively promoting solar power.

Mike Clark-Madison wrote for the Austin Chronicle 5 December 2003, AE drops a solar bomb,

In a near-complete turnaround from its public position just a week ago, Austin Energy has announced plans to adopt specific, highly ambitious, and undeniably expensive goals for adding solar energy to the Austin electric and economic mix. At a town hall meeting held Tuesday night to discuss the AE plan — also the subject of a public hearing at City Council today (Thursday) — AE’s Roger Duncan announced the utility’s commitment to develop 15 megawatts of solar generating capacity by 2007, escalating to 100 megawatts by 2020. The AE plan also calls for a study of the “comprehensive value” of solar power — putting a dollar amount on the economic and environmental benefits to Austin, in addition to the cost of solar-generated electricity itself. This would determine the price Austin Energy would pay for electricity generated by privately owned solar installations, just as AE now buys wind power from third parties.

Georgians tend to think Georgia Power’s foot-dragging and disinformation campaign about solar is so entrenched it will never change. But I’ve seen it happen, and it happened despite people’s expectations set by the power utility, and it happened very quickly and very big:

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Judge OKs Barnes and Richardson CWIP suit against Georgia Power

Historic Davids get approval for slingshot against power company Goliath.

Judge allows lawsuit over Georgia Power surcharge to go forward,

Fulton Superior Court Judge Ural Glanville’s ruling Thursday allows the lawsuit filed by former Gov. Roy Barnes and ex-Republican House Speaker Glenn Richardson to go forward.

The complaint said Georgia Power has improperly collected sales tax and fees on a surcharge created by a 2009 law. They say it has added up to as much as $100 million in costs to ratepayers.

This lawsuit opposes Georgia Power’s Construction Work in Progress (CWIP) that is already charging gapower customers for the Plant Vogtle nukes that won’t produce any power for years yet. If this lawsuit wins, they may not ever be built.

But you don’t have to wait for this lawsuit, or for the legislature to ban CWIP. You can oppose CWIP by paying for it in a separate check.

Maybe soon we can get rid of Georgia Power’s territoriality law so we can, like we could in 46 other states, generate our own solar or wind power and sell it to whomever we choose.

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Barnes and Richardson against Georgia Power’s CWIP

Two former big-time politicos join the fight against CWIP.

Melissa Roberts wrote for CBS Atlanta yesterday, Unlikely duo challenges Ga. utility over rates,

The unlikely duo of ex-Democratic Gov. Roy Barnes and former Republican House Speaker Glenn Richardson are heading to court to challenge Georgia Power over a surcharge they say has cost ratepayers as much as $100 million.

They're going after Construction Work in Progress (CWIP)!

Jim Galloway in the AJC yesterday noted the irony,

The gentleman knows of what he speaks, and that is only one of the ironies here. The legislation that has allowed Georgia Power, for the last 15 months, to charge ratepayers for financial costs associated with the construction of two new nuclear power plants, was passed in 2009 during Richardson’s final session as the second- most powerful man in the Capitol.

Maybe he can help undo the harm he helped do. Ditto Roy Barnes, who got coal-plant-building Cobb EMC former head Dwight Brown off on a technicality.

Melissa Roberts wrote:

The lawsuit contends the utility is charging sales tax on the finance surcharge and the franchise tax paid to cities. Richardson said in a phone interview he and Barnes are two "Davids against the Goliath."

Add those two Davids to the two Davids of Savannah, Drs. Sidney Smith and Pat Godbey and their Lower Rates for Customers LLC. Add a few more thousand Davids around the state paying their CWIP in separate checks with objections.

New Hampshire banned CWIP and their nuke-building utility went bankrupt. Missouri banned CWIP. Iowa is working on banning CWIP. Georgia can ban CWIP, too. Watch out Goliath!

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Missouri has defeated CWIP: so can Georgia

A veteran of the original No Nukes movement calls Plant Vogtle and CWIP like he sees it.

Harvey Wasserman wrote Friday for EcoWatch, Nuclear Power’s Green Mountain Grassroots Demise,

The accelerating revolution in renewables has allowed solar, wind and other green sources to outstrip atomic reactors in cost, time to build, ecological impact and safety. As billions pour into Solartopian sources, private investment in atomic energy has all but disappeared—except where there are massive taxpayer subsidies.

Even that’s not enough. In 2011, President Obama handed $8.33 billion in federal loan guarantees to the builders of two reactors at Georgia’s Vogtle. But Peach State ratepayers are already being soaked for billions more in pre-payments, and the cost of the project is soaring. A parallel financial disaster looms at the Robinson site in neighboring South Carolina. Though the industry assumes these four reactors will eventually be finished, economic realities may say otherwise.

Cost estimates for new nukes have been soaring even before construction begins. Even with federal money, the builders still demand that state ratepayers foot the bill as the process proceeds, meaning consumers are on the hook for multiple billions even if the reactors never open. Pitched battles over this Construction Work in Progress scam have already been won by consumers in Missouri and are being fought in Iowa and elsewhere. As the years of building drag on, costs will escalate while renewables continue to become cheaper. Sooner or later, construction is likely to stop, as it did at numerous projects in the 1970s and 1980s which were never finished.

We can end CWIP in Georgia. It will benefit Georgia Power and the EMCs as well as all the rest of us when we stop wasting tax and customer dollars on boondoggles like Plant Vogtle or biomass or private prisons and get on with clean, profitable, job-creating renewable energy in Georgia: wind off the coast and sun inland.

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Separate CWIP payments to Georgia Power —WACE call for action

We don’t have to wait for the Georgia legislature to ban Construction Work in Progress (CWIP) for Georgia Power’s new nukes at Plant Vogtle. WACE has put out a clever call for action about CWIP, Go Solar, Not Nuclear!

Here’s an excerpt:

  • Use two checks each time you pay your bill. One check covers the amount you are forced to pay for “Nuclear Construction Cost Recovery” (write “for solar construction” in the memo line). The other check covers the remaining amount of your actual electricity costs.
  • Include a note in the letter with your checks voicing your opposition to nuclear power and ask Georgia Power to invest your funds in solar energy instead. This note could read:
    • I oppose nuclear power because of its dangers to our health and our environment. (See the nuclear accidents at Fukushima, Chernobyl, and Three Mile Island)
    • I oppose the construction surcharge for nuclear power plants because they are too expensive and waste billions of our tax dollars. (Plant Vogtle was originally estimated to cost $660 million. Eventually, only 2 of its proposed 4 reactors were built, costing more than $8 billion, and resulting in huge rate hikes for Georgia residents.)
    • I ask that GA Power invest my money and any collected surcharges in solar instead.
The PDF of the call includes these addresses:
Tim Echols, Chairman
Georgia Public Service Commission
244 Washington Street SW
Atlanta, GA 30334
1-800-282-5813 		W. Paul Bowers, CEO
Georgia Power Company
241 Ralph McGill Boulevard NE
Atlanta, GA 30308
1-888-660-5890
And don’t forget Georgia Power’s parent company The Southern Company’s CEO, Thomas Fanning, said a year ago he’s “bullish” on solar. Let’s see some solar action from The Southern Company and Georgia Power!

Here are some more contacts.

You don’t even have to be a Georgia Power customer to write to these people. Most of them are elected or appointed officials who are supposed to represent you, the taxpayers.

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Why CWIP is a bad idea

Iowa is rejecting CWIP, and Georgia can, too. Here’s why.

Herman K. Trabish wrote for Green Tech Media 22 February 2012, The Nuclear Industry’s Answer to Its Marketplace Woes: Construction Work in Progress (CWIP) financing shifts the risks of nuclear energy to utility ratepayers,

A sign of the nuclear industry’s difficult situation in the aftermath of Fukushima is a proposal before the Iowa legislature
“Construction Work in Progress was intended to circumvent the core consumer protection of the regulatory decision-making process,”
that would allow utility MidAmerican Energy Holdings, a subsidiary of Warren Buffett’s Berkshire Hathaway, to build a new nuclear facility in the state using Construction Work in Progress (CWIP) financing (also called advanced cost recovery).

“Investment in nuclear power is the antithesis of the kind of investments you would want to make under the current uncertain conditions,” explained nuclear industry authority Mark Cooper, a senior fellow for economic analysis at Vermont Law School’s Institute for Energy and the Environment. “They cannot raise the capital to build these plants in normal markets under the normal regulatory structures.”

CWIP would allow the utility to raise the money necessary to build a nuclear power plant by billing ratepayers in advance of and during construction.

“Construction Work in Progress was intended to circumvent the core consumer protection of the regulatory decision-making process,” Cooper explained. “It exposes ratepayers to all the risk.” The nuclear industry’s answer to its post-Fukushima challenges, he said, “is to simply rip out the heart of consumer protection and turn the logic of capital markets on their head.”

And the Iowa Utilities Board staff agreed with Cooper and recommended against CWIP.
His message to policymakers is simple, Cooper said. “This is an investment you would not make with your own money. Therefore, you should not make it with the ratepayers’ money.”
Meanwhile, in Georgia: Continue reading →

How to ban CWIP in Georgia

A one-paragraph law can do it; that’s all it took in New Hampshire to ban Construction Work in Progress (CWIP) after Three Mile Island. OK, plus a state Supreme Court ruling, but that would be easier in Georgia since the New Hampshire Supreme Court already set a precedent of upholding the NH law. After Fukushima, Georgia could ban CWIP and end the new Plant Vogtle construction. The we could get on with building solar.

Here’s the text of the NH law, taken from the NH Supreme Court ruling:

“378:30-a Public Utility Rate Base; Exclusions. Public utility rates or charges shall not in any manner be based on the cost of construction work in progress. At no time shall any rates or charges be based upon any costs associated with construction work if said construction work is not completed. All costs of construction work in progress, including, but not limited to, any costs associated with constructing, owning, maintaining or financing construction work in progress, shall not be included in a utility’s rate base nor be allowed as an expense for rate making purposes until, and not before, said construction project is actually providing service to consumers.”
Simple enough. The Georgia legislature could do it. Knowing the NH CWIP ban caused PSNH to go bankrupt on costs for the Seabrook nuclear plant, Georgia Power might back off on Plant Vogtle rather than have such a law passed.

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