Oglethorpe Power will use a one-time contractual option to freeze its capital costs for the construction of Plant Vogtle Units 3 and 4 in Waynesboro, Georgia.
By exercising this option, Oglethorpe will tender a portion of its ownership in the nuclear project to Georgia Power in exchange for the latter paying Oglethorpe’s remaining share of construction costs.
Cost overruns and construction problems have delayed the project, the first nuclear units to come online in the United States since 2016. Vogtle Unit 3 is currently expected to come online by the end of 2023 Q1, and Unit 4 is expected at the end of 2023. Each unit is rated at 1,114 MW.
Vogtle is jointly owned by Georgia Power, Oglethorpe Power, Municipal Electric Authority of Georgia and Dalton Utilities (1.6%).
In 2018, coinciding with a vote to proceed with construction of the project, the four co-owners jointly agreed to a cost-sharing agreement designed to mitigate financial risk from future potential cost increases.
Under that agreement, if total sharable project costs increase by $2.1 billion from the time the agreement was executed, each co-owner, other than Georgia Power, has a one-time option to freeze their capital investment in the project.
Since September 2018, the project budget has increased five times, and is now expected to total more than $30 billion.
Oglethorpe Power’s decision to exercise its freeze option means its share of the project would be estimated at $8.1 billion. If the total project budget remains the same, Oglethorpe estimates its new ownership will be approximately 28 percent, instead of 30 percent as expected at the start of the project.
The company said while it remains deeply invested in the success of Vogtle, it felt the need to protect its member cooperatives and their customers from more potential cost increases.
“By exercising the freeze option, we are ensuring that the 4.4 million Georgians served by our member cooperatives will not absorb future capital cost increases, if they occur,” said Oglethorpe Power President and Chief Executive Officer Michael L. Smith.
According to Oglethorpe Power’s latest quarterly SEC filings, the company said if it didn’t exercise the freeze option, any schedule extension for Units 3 and 4 could increase Oglethorpe’s cost by approximately $75 million per month for both units and approximately $30 million per month for Unit 4 only, including financing costs.
Since Oglethorpe Power plans to exercise the option, the company expects each additional month of delay to increase financing costs by approximately $30 million per month for both units and approximately $12 million per month for Unit 4.
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