Central Florida state Sen. Debbie Mayfield has asked the Legislature’s auditing and accountability office to study JEA’s involvement in a faltering and increasingly expensive nuclear power project, citing it as an “alarming example” of “potential mismanagement” at the city-owned electric, water and sewer utility.
JEA’s involvement in the Plant Vogtle nuclear expansion project has largely simmered in the background this year as City Hall was embroiled in a contentious debate over whether it should sell the utility to a private operator. But the costs associated with JEA’s share of Vogtle — which could total $4 billion over 20 years — have concerned city and utility officials and credit-rating analysts.
JEA has told the Plant Vogtle co-owners it wants the project canceled, and utility officials are actively searching for ways to get out of the contract it has with the Municipal Electric Authority of Georgia, one of the co-owners.
Mayfield, who represents a state Senate district that includes Brevard and Indian River counties about 150 miles south of Jacksonville, wants the Office of Program Policy Analysis and Government Accountability Office to complete an in-depth study of JEA’s contract with MEAG, and to submit a report to the House and Senate leadership by Feb. 1.
“Citizens from the community have expressed concern over recent events and published reports that suggest serious issues surrounding the spending and operation decisions of the JEA,” Mayfield wrote in a Wednesday letter to the legislative auditors.
Aaron Zahn, JEA’s interim CEO, said Thursday he welcomed the review but disputed the characterization that the decision to invest in Vogtle was evidence of mismanagement.
“JEA has just been taken for a ride,” he said.
Zahn said he believed Mayfield — who is vice chair of the Senate’s committee on government oversight and accountability — was alerted to the Vogtle issue by a letter from a constituent. Mayfield’s office line went to voicemail.
Mayor Lenny Curry may have also played a role in getting Mayfield’s attention.
“Mayor Curry has shared a concern that the Plant Vogtle agreements put risk on the backs of JEA customers and Jacksonville taxpayers,” said Brian Hughes, Curry’s chief of staff, in a statement.
“We received Senator Mayfield’s letter, forwarded it to JEA leaders, and will be replying that the city encourages JEA to fully cooperate with her inquiry. Senator Mayfield is a respected leader in the legislature so we welcome her oversight on behalf of taxpayers and the people of northeast Florida.”
JEA signed the Plant Vogtle nuclear power agreement in 2008, when industry analysts considered nuclear power to be on the upswing. In theory, JEA’s partnership would have allowed it to diversify its fuel mix — at the time, it was still heavily reliant on carbon-intensive coal power — for a fraction of the cost of building a nuclear facility on its own. Although JEA is the eighth largest public electric utility in the nation, it’s a small fish next to its private counterparts, which typically are better positioned to carry the enormous costs and risks associated with building nuclear power plants.
In recent years, however, the fortunes of nuclear power have nose dived, stemming in large part from the availability and low cost of natural gas.
The Plant Vogtle expansion is the only remaining active project of its kind in the nation and has experienced explosive cost overruns and delays in the completion dates. Zahn said JEA’s decision to invest made sense in 2008 but that the structure of the contract has left JEA in a bad spot, especially as the cost of Vogtle has skyrocketed. JEA’s share of nuclear power if or when the reactors come online — the latest estimate is 2021 and 2022 for each — is 206 megawatts, which is about 10 percent of JEA’s total power generation capacity.
Last week, the plant’s co-owners said the cost of Vogtle had increased by $2.3 billion, prompting another round of concerns by credit-rating analysts and pushed the total cost up to about $27 billion. Original estimates pegged the maximum cost of the project at around $14 billion. The cost overruns and construction delays have dinged the credit ratings of the Vogtle co-owners.
JEA’s credit rating hasn’t suffered because of Vogtle, but the agencies say they’re concerned about the impact the costs could have down the road.
JEA’s agreement with MEAG obligates it to share in the construction cost and to eventually buy power from the facility for 20 years. Even if the project is never completed, JEA will still have to help pay for already-existing construction costs. JEA prefers cancellation.
? ... JEA faces cost uncertainties under both scenarios,” credit-rating agency Standard & Poor’s said in a report issued Tuesday, after the latest Vogtle cost increase was announced. “However, we believe that the utility’s financial strength and flexibility positions it to absorb their impact without a deterioration in credit quality.”
Estimates over what exactly JEA’s share of the cost will be has varied.
Mayfield said in her letter that JEA initially projected a $140 million burden that over time has grown to $2.5 billion. Zahn pegged the overall cost — both JEA’s share of debt for the construction of the reactors and the cost of buying power for 20 years — at about $4 billion.
This story was originally published by our partner the Florida Times-Union.
