State regulators Monday said Georgia Power’s request that ratepayers pay $525 million to clean up coal ash ponds and landfills over three years should be phased in more slowly.
The state Public Service Commission staff says commissioners should review the proposed toxic ash cleanup and related reimbursements on an annual basis over the next few years. That should provide a more accurate projection of the yearly costs as regulations change, before customers are charged for Georgia Power’s cleanups at its coal-fired plants in 2021 and 2022.
In the near term, the PSC staff recommends allowing Georgia Power to charge ratepayers $104 million for coal ash cleanup costs next year, or roughly $53 million less than the company’s request. If Georgia Power is required to return to the PSC the following two years, the commission can make a more informed decision about how to distribute the burden of remediating coal ash at power plants across the state.
“We’re facing new regulations that will require new treatment and different methodology,” said PSC utilities analyst Robert Trokey. “The question is whether or not the costs should have been handled in a different way over (the decades) so that current ratepayers don’t carry the burden of the costs.”
This week’s hearings allow Georgia Power to challenge the PSC’s staff recommendations that commissioners only approve half of the $2.2 billion rate hike the utility is asking for over the next three years.
Georgia Power is also asking the PSC to approve an increase in the residential base rate to $17.95 from $10 by 2022. The staff is instead recommending a $2 base rate increase in 2021.
The staff also calls for cutting the state’s largest electricity provider’s profit rate from as much as 12% to as low as 9% percent. Any money above that threshold could go toward coal ash recovery costs.
Two-thirds of that excess revenue now is returned to customers with Georgia Power keeping the rest.
“We agree (Georgia Power) should recover the costs of complying with (coal ash remediation) but I think the area of disagreement is if the company should earn a return on equity profit on the cost recovery,” testified Ralph Smith, a CPA and a senior regulatory utility consultant with the firm Larkin & Associates.
Georgia Power created an environmental mess across Georgia while it produced power at at coal-fired plants and created toxic ash ponds when it stored the residue on site.
Public Service Commission Chairman Lauren “Bubba” McDonald said that Georgia Power continues to search for new technology that would help lower coal ash costs down the road.
Consumer and environmental watchdog advocacy groups have spoken out against a sharp base rate increase because of the impact it could have on people living on fixed incomes.
However, Georgia Power’s rate request is meant to ensure the company has the financial health needed to meet customers’ future needs, Georgia Power Attorney Brandon Marzo said at the hearing.
“The commission should consider whether the current model has worked well over the last 25 years,” Marzo said.
The company wants the rate hike to also pay for $450 million in natural disaster recovery and a planned $1.3 billion investment in the electrical grid and for other infrastructure work.