ATLANTA — A federal judge ruled against JEA's attempt to back out of a costly deal to purchase nuclear power, and it could mean a higher electric bill for JEA customers in the future.
It's the latest development in JEA's legal battle over a 20-year agreement to purchase energy from a Georgia nuclear plant that is currently billions of dollars over budget and years behind schedule on its construction of two new nuclear reactors.
U.S. District Judge Mark Cohen sided with the Municipal Electrical Authority of Georgia, a nonprofit, statewide generation and transmission organization, finding that the purchase power agreement between the two utilities is "valid and enforceable" and that the "PPA unconditionally requires JEA to pay MEAG for capacity and energy at the full cost of production."
“Once again, the gift that keeps on giving,” City Council member LeAnna Cumber tweeted Wednesday. “It highlights yet another reason for more stringent oversight over JEA. How this contract was ever entered into boggles the mind.”
In 2014, JEA renewed a 2008 agreement to purchase energy generated by the new units 3 and 4 at Plant Vogtle during their first 20 years of operation, as well as paying approximately 41% of the construction costs of MEAG, part-owner of the plant. But in 2018, JEA and the City of Jacksonville filed a lawsuit in Florida seeking the Federal Energy Regulatory Commission to intervene and have the PPA invalidated.
The lawsuit followed the Vogtle expansion project being years behind schedule and billions of dollars over budget, with the primary contractor in charge of construction, Westinghouse, filing for bankruptcy in 2017.
The Georgia Public Service Commission voted to approve the project's continued construction later that year, with conditions that would reduce Georgia Power Company's revenue requirement by $1.7 billion over the construction and operation of the plant. JEA said it was blocked from the negotiations leading to that vote in its lawsuit.
JEA also claimed its original agreement had safeguards in place that went away when Westinghouse declared bankruptcy, since the company originally pledged to absorb most of the cost overruns incurred during construction.
MEAG filed counterclaims, including a request to change jurisdiction to the U.S. District Court for the Northern District of Georgia, where the dispute was decided in MEAG's favor.
The ruling could mean an increase in electric rates for JEA customers, as the company has said its cost for the project could amount to $4 billion over 20 years. The utility's administrators have not many any presentations to the utility board for a rate increase, however.
JEA issued the following statement Wednesday after the ruling came down:
"This afternoon, JEA received the court’s order granting MEAG’s motion for judgment on the pleadings and finding the Plant Vogtle PPA to be a valid contract. Importantly, however, the court instructed the commencement of discovery on JEA’s counter claims. These claims seek to recuperate damages resulting from MEAG’s failure to exercise reasonable care when it voted to continue construction of the project. JEA will pursue these claims going forward. As to the ruling on the contract’s validity, the City and JEA will review the ruling and evaluate its options."
Unit 3, the first of the new reactors scheduled to be complete at Plant Vogtle, is slated for completion in 2021, and Unit 4 is scheduled for 2022.