Caps

Yesterday I was touring the Plant Vogtle facility with Ryan Graham and Dawn Randolph. We had Michael McCraken, a representative of Southern Nuclear, showing us the area and answering questions. Suzanne Sharkey of Georgia Power joined us for the first part of the tour.

I never understood why many people are enamored of ostentatious projects. The principle of the seen and the unseen always seemed so intuitive to me. To me those large castles of Europe, for example, represented food, housing, and infrastructure the peasants never got access to. People’s lives were worse off so that some jerk could inflate his ego.

Maybe it’s because a power plant actually does do something useful that softened my view a bit, but I began to see it. It really is quite an achievement that’s hard to appreciate from a distance, and there are a very large number of people who provide for their families working there. You could almost convince yourself that the few extra dollars here and there isn’t SO bad, right? Most people might not even notice, right? Right?

It’s true that humans can achieve great things when we cooperate and come together for a common cause. But it’s only a beautiful, great thing when people choose to do so. And we do. People can believe in a grand vision and chip in. Oftentimes people simply tolerate an organization’s expansion while doing business with them for some other reason. Either way, it’s our choice to make.

I have to keep coming back to this, but so long as a monopoly is being enforced by the state and we don’t have the choice to opt in or out, we must be sensitive to the interests of consumers not able to stick up for themselves. We cannot allow ourselves to be swayed by concentrated benefits while ignoring diffuse costs.

And what exactly will that cost end up being?

How much can you be expected to pay for something you may not even want? That issue was taken up at testimony before the PSC, where capping the cost or timeline was laughed off. When the PSC approved the most recent cost overrun, there would be no more overruns. That was supposed to be achieved by the owners absorbing any additional costs, according to Georgia Power.

Now, a group of a couple dozen legislators have expressed concern that owners absorbing costs would be “unfair and anti-competitive” because EMCs and municipal utilities don’t have “shareholders to absorb these additional costs”.

Now, no one really expects the burdens to be “absorbed” by the shareholders in the long run. You’ve added a major asset to a company while also “…insisting that the commission assure Georgia Power… pass its entire investment and financing costs to customers in retail rates.” But in the short run they have somewhat of a point in how it will disparately impact the different regions. Another complication that comes from this bizarre corporate-regulator ‘market’. If consumers had choices, of course, the rate in your local area would be limited by what the competition was going to charge.

What fix are these legislators looking for? They are asking the Vogtle owners to agree on a cap on the price of the project.

What a concept! The idea that a project might have a budget it would have to fit in? There’s no way a private business would ever consider following such a stringent rule. How do they come up with these things?

In all seriousness, they’re right on target with this point. Yes of course the project needs a cap on the final price. And a deadline. It seems almost everyone involved has fallen into the sunk cost fallacy. Perhaps most egregiously when Echols said it was too big to fail. No, it isn’t. At some point you have to stop throwing good money after bad, cut your losses and live to fight another day. We may disagree on what that point is, but obviously there must be a point.

So yes, we do need a cap. And not one of these that everyone expects to be waived once reached. It should be specified in writing, and consequences of hitting it called out. But, you know, I wouldn’t worry so much about it if it was some private investors. I’m very willing to trust people not to throw their own money away without oversight. What I’m concerned with is utilities, with the blessing of the PSC, throwing your money away. And so of course we need to keep pushing for an end to the Nuclear Construction Cost Recovery Fee. The three incumbents who will still be seated in 2019 no matter what will still have a majority on the 5-member commission, and they won’t let it happen. But let’s make it abundantly clear those who support this sort of thing are wearing out their welcome.

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