Vogtle, the Law of Holes, and Two Modest Proposals

Ever hear of the law of holes? If you’re in one, stop digging. This blog was originally posted here by Steve Huntoon at RTO Insider on September 11, 2017. An excerpt is below, published with permission. Steve Huntoon is a former president of the Energy Bar Association, with 30 years of experience advising and representing energy companies and institutions. He received a B.A. in economics and a J.D. from the University of Virginia. He is the principal in Energy Counsel, LLP.

Vogtle, the Law of Holes, and Two Modest Proposals

The Vogtle nuclear project in Georgia is looking like an object lesson in the failure of regulation (and a vindication of competition).

What went wrong? Traditional regulatory policy is that new utility investment didn’t get billed to utility customers unless and until it’s actually in service and thus “used and useful” to utility customers.

But nuclear advocates argued that the lead time and risk of nuclear plants were so great that construction costs ought to be guaranteed, and in some cases charged to utility customers, long before the plants are completed.

This fundamentally and completely changed the investment calculus for utilities interested in nuclear plants, with the potential for enormous returns on billions of dollars. The key was to get legislators and/or regulators to go along.

Once they did, nuclear plant development became a no-lose proposition for the utility.

To read Mr. Huntoon’s full column, please click here. (Please note, RTO Insider allows you to view two free articles per month.)

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