Today the Senate took great strides in saving taxpayers and Georgia Power customers significant money by passing the Georgia Nuclear Energy Financing Act, Senate Bill 31. The bill allows recovering of financing costs during the construction of two nuclear power generators rather than have the financing costs compounded at the end of the project. Sen. Don Balfour, chairman of the Rules Committee, sponsored the bill.
“The beauty of the bill is that it prevents the capitalization of financing costs at the end of the project, lowering the cost by $300 million,” said Balfour. “The reality is that these generators will be built with or without this legislation. So why not save customers and taxpayers as much money up front as we can? This is purely good business practice.”
Traditionally, utilities are allowed to recover the costs of investments, such as power generators, after the generators begin to operate and serve customers. Construction, utility and many other costs are incurred during this time as well as compounding interest.
As an alternative, Balfour’s legislation allows for recovery of financing costs during construction period- and therefore avoids the “interest on interest” expenses. The Public Service Commission (PSC) can allow recovery of financing costs during the construction period by including the on-going construction costs related to the new units in the rate base of customer power bills. Customers will see a raise in their power bills of approximately $1.30 per month starting in 2011. Construction on the projects begins in 2010.
Balfour has also noted that by passing this legislation, funding for the projects will accelerate the development of the generators and bring significant economic growth to the local areas. Building the nuclear generators will create over 3,500 jobs over the next eight years. The generators also produce tremendous energy savings for companies, which will make Georgia more competitive with neighboring states in attracting new businesses.
The Energy Independence and Security Act of 2007 provides approximately $80 billion in Federally backed monies for the creation of nuclear power generators across the U.S. The creation of the two new facilities by Georgia Power will be the first in 30 years. Nuclear energy accounts for about 20 percent of U.S. electricity supply. Georgia is already harnessing the benefits of nuclear energy. As of 2006, one-fifth of Georgia’s electricity was powered by nuclear energy. Georgia is home to two nuclear generators – Plant Vogtle near Waynesboro, and Plant Hatch near Baxley in southeastern Georgia. In an effort to increase the state’s nuclear output, Georgia Power is seeking federal funding to build two new 1,100 megawatt nuclear reactors at Plant Vogtle along with two partners, Georgia EMC’s and the Municipal Electric Authority of Georgia.
The nation’s nuclear generators are among the safest and most secure industrial facilities. Every nuclear plant has a detailed plan for responding in the event of an emergency. Nuclear energy will add needed diversity to Georgia’s fuel mix at a time when fuel prices are increasingly significantly and represents the only technology that does not produce greenhouse gas emissions.