Georgia’s energy demands are growing, and the expansion through Vogtle units 3 and 4 will provide our state reliable, low cost, emissions-free energy.
Previously, nuclear plant projects encountered unexpected budget increases due to licensing delay charges. These days, new licensing practices help curb unanticipated budget increases:
- Plants now secure advance Nuclear Regulatory Commission (NRC) certification approval of standardized plant designs.
- Early site permit process enables utility companies to obtain NRC approval prior to deciding to build or expand a plant.
- Provides issuance of combined construction permit and operating license (COL) before construction begins.
- Nuclear plant design technologies are now pre-approved by the NRC.
The Vogtle 3 and 4 project is a $5 billion capital investment by Georgia Power. The Vogtle nuclear plant is jointly owned by Georgia Power (45.7%), Oglethorpe Power Corporation (30%), Municipal Electric Authority of Georgia (22.7%) and Dalton Utilities (1.6%). All customers served by these utilities companies will help pay for the project.
Though the cost of the project is spread out among many, we understand this is still a lot of money. To ensure the project is as cost effective as possible, Georgia Power is paying for the interest on its construction loans now through Construction Work in Progress (CWIP).
Construction Work in Progress Benefits Customers:
Construction Work in Progress (CWIP) is an accounting term utility companies have borrowed and added as a line item on a project’s balance sheet. The CWIP line item allows utility companies to collect from customers, prior to the completion of a project, to offset construction costs. The collected funds compensate for the cost of materials and labor accrued during a project. Recovering financing costs during construction lowers the customer rate base once the facility in finished and goes into operation.
Specific CWIP Advantages for Plant Vogtle 3 & 4:
- Reduce total projected rate increases for the plant from approximately 12% to approximately 9%.
- Cut financing costs $300 million during the construction period, directly benefiting customers.
- Help preserve the company’s credit ratings, which will reduce borrowing costs, saving customers as much as $100 million annually for all company projects (not just nuclear).
- Ease the plant into rates in a way that does not cause “rate shock,” by phasing in the cost over seven years (starting in 2011) versus applying the full cost increase in just two years.
- Reduce the in-service cost of the plant by $2 billion, saving customers additional financing costs over the life of the plant.
Traditional Cost Recovery vs. CWIP:
In years past, utility companies began recovering costs for construction projects after the project’s completion. Utility companies would either finance or absorb cost of materials and labor. During the construction period this required a tremendous amount of investment and financing costs associated with interest expenses (“interest on interest”). The postponed construction costs were then added to customer rates over the life-cycle of the plant (40-60 years in the case of a nuclear energy plant).
Under Georgia Power’s plan with CWIP, customers avoid “interest on interest” expenses. Recovery of financing costs during construction reduces the total return required over the life of the plant. CWIP also improves the credit ratings of utility companies, which often results in lower financing costs for the project. Better credit ratings equal lower interest costs to the company, directly benefiting a customer’s rate.
Nuclear Loan Guarantees:
In February 2014, Georgia Power completed the closing process for $3.46 billion in loan guarantees from the U.S. Department of Energy (DOE) toward the construction of Plant Vogtle units 3 and 4. By securing the federal loan guarantees, Georgia Power expects to be able to provide $225 million to $250 million in present-value benefits to its customers.
Safety Is Our Top Priority
Plant Vogtle Job Opportunities
Plant Vogtle is the largest job-producing project in Georgia. At the height of construction, it will employ approximately 5,000 people and, once operational, will offer 800 permanent jobs for Georgians. See Plant Vogtle See Plant Vogtle job opportunities.
What is 'New' Nuclear?
Project Vogtle units 3 & 4 are the first new nuclear units in the industry to use advanced pressurized water reactor technology. This technology is safe, more efficient and simpler than current models. Learn how nuclear works.
Back to Top ↑