Public utility JEA is on the hook for hundreds of millions more than originally planned under a nuclear power contract, according to an annual financial disclosure CEO Paul McElroy presented to City Council on Thursday.
The municipal utility agreed in 2008 to purchase power from a planned dual reactor power plant in Waynesboro, Georgia. McElroy was the company’s chief financial officer at the time.
At the time, nuclear power seemed a safe bet economically — its use was still expanding, and costs to produce it were relatively low — but with the advent of natural gas, the market changed, leaving the Waynesboro nuclear plant the last project of its kind under construction across the country, as our partner the Florida Times-Union reported.
Under its agreement with a Georgia utility, JEA is responsible for paying for a portion of construction costs and is obligated to buy power from Plant Vogtle for 20 years after its completion, which, after delays, is scheduled for four years from now. One of its two reactors could be finished a year early, but JEA will continue paying a portion no matter how far over budget and behind schedule the project becomes.
At a special Council committee investigating the potential sale of JEA on Thursday, CEO Paul McElroy said Vogtle nuclear power is projected to eventually make up 13 percent of JEA’s overall generation, but it won't net the utility a profit.
“At this time because of the cost overruns, if we were to get that power today — I can't project four years in the future — if we were to get that power today, it would be above market,” he said.
A financial evaluation commissioned by JEA in February estimated that the Vogtle liability was around $1.2 billion, lower than a 2017 Wall Street analysis that projected the obligation would top $1.7 billion. However, at Thursday’s meeting, McElroy presented a 2017 JEA financial disclosure showing that estimate is much higher — at least roughly $2.5 billion.
As privatization talks continue, the Plant Vogtle deal is casting a shadow on the possibility of finding a buyer. McElroy says it’s possible JEA could sell the power-purchase obligation to another utility down the road, though.
Ryan Benk can be reached at rbenk@wjct.org, 904-358-6319 or on Twitter at @RyanMichaelBenk.
