(Those of us in most of St. Johns County are stuck with another nuclear utility, Florida Power & Light. This is because city managers in St. Augustine and St. Augustine Beach and City Commissioners voted unanimously to renew 30 year FPL franchise agreements, never researching and never exploring a municipal electric distribution system. Sad.)
JEA's lawsuit over its wanting out of the Vogtle nuclear powerplant contact was filed in state court, and may be removed to federal court.
From The Times-Union:
From Power Magazine:
Contract dispute threatens $27bn Vogtle nuclear project
Battle over Jacksonville electricity deal jeopardises construction of new plant
Ed Crooks in New York September 13, 2018
(c) 2018 Financial Times
A legal battle has flared up over the only new nuclear power plant under construction in the US, raising questions about the $27bn project’s future.
Companies involved in the plan to build two reactors in Georgia have sued each other over a contract to buy electricity from the plant, as communities argue over who should bear the rising cost of the project. The outcome of the dispute will have implications for the nuclear industry in the US and internationally.
The two Westinghouse AP1000 reactors being built at the Vogtle power plant in Georgia have been hit by delays and cost overruns, but the companies leading the project are still pressing ahead with construction.
However, the city of Jacksonville in Florida and its electric utility JEA, which had agreed to buy power from the plant for 20 years, are attempting to escape from that contract. In a filing at a Florida court on Wednesday, the city argued that the 2008 agreement to buy power from the plant was in breach of state law and therefore unenforceable.
In their filing, Jacksonville and JEA said the contract “purports to saddle JEA and its ratepayers with an unlimited obligation to fund the exorbitant and ever-ballooning cost of constructing units of a nuclear power plant that JEA does not own”.
There appears to be no end in sight to the ever-increasing cost and delays plaguing the construction of the additional units
Jacksonville utility JEA
The power purchase agreement was signed with the Municipal Electric Authority of Georgia, a state not-for-profit corporation that owns 22.7 per cent of the Vogtle plant. On Tuesday MEAG sued Jacksonville in a federal-district court in Georgia, arguing that “JEA has indicated a clear intent to breach its contract, [and] abandon its obligations”.
MEAG warned that if JEA were allowed to escape from its power purchase agreement, Georgia communities would “face serious and irreparable injury, including, potentially the inability to finance and complete construction” of the new reactors.
It added that letting JEA out of its contract could also force payment default on loans backed by the US Department of Energy. In 2014-15 the department extended government loan guarantees to back $8.3bn of financing for the new reactors.
A vote of the shareholders in Vogtle is scheduled for September 24, to decide whether the new reactors should go ahead in the light of “recent disclosures of unanticipated costs”. MEAG said it was “currently evaluating its decision” in that vote, and accused JEA of trying to force its hand. JEA has called on MEAG to vote to stop construction on the project.
The other shareholders in Vogtle are led by Georgia Power, a subsidiary of Southern Company, one of the largest listed utility groups in the US, which has a 45.7 per cent stake in the project.
Georgia Power said in a statement that it was “very supportive of MEAG Power’s efforts to protect its rights under its agreements with JEA and comply with its obligations to the co-owners and to the Department of Energy”.
The new reactors at Vogtle have faced a succession of difficulties since the project was launched in 2005. The two reactors were originally expected to cost $9.5bn, with a guaranteed maximum price. The estimated cost to complete them has nearly trebled to $27bn, and JEA argues that “that number is expected to increase”.
Westinghouse, the engineering group that is providing the reactor technology and had been lead contractor on the project, put its US operations into Chapter 11 bankruptcy protection last year.
Meanwhile the low cost of natural gas and increasing competition from renewable energy has undermined the economics of nuclear power.
The challenge for nuclear is to recover its competitive edge
The other large new nuclear project in the US, to build two AP1000 reactors at the VC Summer plant in South Carolina, was abandoned last year. Scana, the company that led the development, proposed to build a new gas-fired plant and add solar capacity to replace the generation from the abandoned reactors. It subsequently accepted a takeover offer from Dominion Energy, and the two companies are working to secure the regulatory approvals needed to complete the deal.
JEA said in its filing that the estimated cost for its involvement in the Vogtle reactors had already doubled from $1.4bn to $2.9bn, and “there appears to be no end in sight to the ever-increasing cost and delays plaguing the construction of the additional units”.
It added that because it had no ownership stake in Vogtle, it was not allowed to be involved in negotiating the terms of the construction agreement for the reactors, or “the ill-advised decision of the co-owners to continue with the Vogtle project”, which had no economic justification.
MEAG said in its filing that the agreement with JEA was a “hell or high water” deal that gave “no right under any circumstances to abandon the contract”.