Decision day for Georgia Power’s $2.2 billion rate hike request

Georgia Power attorney Kevin Greene last week told state regulators a reduced hike offer is contingent on a profit margin the company deems to be fair. Stanley Dunlap/Georgia Recorder

State regulators are set to vote Tuesday on Georgia Power’s $2.2 billion rate hike request, setting up a final round of haggling several months after the company proposed to charge residential customers $200 more per year for electricity.

Georgia Power appears poised to settle for something less than its initial proposal after the Public Service Commission staff recommended a much smaller increase. Consumer watchdogs, social justice groups and environmentalists that watched the slow-moving rate case unfold for months are sure to be on hand as the five elected commissioners are expected to decide today at the downtown Atlanta hearing.

The company’s initial three-year plan called for incrementally raising the monthly basic service charge from $10 to $17.95 starting next year. The company is offering to keep the current mandatory monthly fee in 2020 and raise it $2 in 2021 and another $2 in 2022.

However, Georgia Power’s offer of a $4 monthly basic service rate increase by 2022 is contingent on state regulators establishing a profit margin the company deems to be fair, the utility’s attorney Kevin Greene said at a PSC committee meeting last week.

The rate case began in June with Georgia Power requesting a $2.2 billion rate hike over the next several years to cover storm damage costs, environmental cleanup and updating the electrical grid.

While significant differences between PSC and Georgia Power remain, a recent settlement among large electricity users and the utility points to a potential for compromise. The Georgia Industrial Group, Georgia Association of Manufacturers, Kroger,  MARTA and the City of Atlanta signed onto an agreement with Georgia Power in a filing last week that endorses the phased-in $4 monthly rate increase.

“Not every party got what they wanted in that stipulation, and not every party was completely disappointed, but all the signatories believe it represents a fair balance when taken as a whole,” Greene said at the commission’s energy committee meeting last week.

The Southern Alliance for Clean Energy points out that Georgia Power’s settlement process is playing out different than a normal rate case. Typically, a utility company reaches an agreement with state regulators staff first and then gets other parties to sign off, said Chris Carnevale, the alliance’s coastal climate and energy manager.

A consumer watchdog among the groups that objected to the original hike is now encouraged by some of the emerging compromises. Georgia Power now also proposes to better accommodate low-income customers and levy a lower service charge than at first, said Liz Coyle, executive director of Georgia Watch.

Meanwhile, Commission Chairman Lauren “Bubba” McDonald recommends a $3 fixed fee increase in 2022, according to a motion last week, with no increase for the next two years.

McDonald said at a recent committee meeting that it’s the responsibility of Georgia Power’s leaders and other investors to be held accountable for problems and not saddle the ratepayers with the whole tab.

He noted that the ongoing rate case does not include the likely $800 million to $1 billion customers may pay for the looming tab for Plant Vogtle’s two newest nuclear reactors. Those discussions will come later.

“It’s one of the best run utilities in the nation, yet still when you have significant responsibilities and you make decisions, you can’t just throw those decisions to someone else all the time,” McDonald said. “You have to eat a little bit yourself.”

Coal ash tab a sticking point

Georgia Power maintains it needs the additional revenue to pay for $450 million in damages from Hurricane Michael and other storms, help cover $1.3 billion in infrastructure investment, and recoup $525 million in projected coal ash cleanup costs.

Environmentalists and consumer advocates continue to object to sticking ratepayers with the tab for the proposed cleanup of the toxic ash residue created by Georgia Power’s coal-fired power plants over several decades.

The commission’s staffers say the company’s coal ash cleanup cost estimates are too high and the utility should charge for next year now and create more accurate projections for the subsequent years to justify later requests.

Environmental organizations including the Sierra Club say customers shouldn’t have to pay any of those coal ash cleanup costs. If the commissioners do decide ratepayers will shoulder cleanup costs, the nonprofit sides with the commission staff that recommends Georgia Power get more accurate cost projections, attorney Robert Jackson said.

The Partnership for Southern Equity is asking commissioners to reject any increase in the basic service charge and to support offering a tiered-discount option for low-income customers. It also opposes customers paying for coal ash environmental compliance.

“Georgia Power’s proposal is unjustified, inequitable, and bad for customers,” the Atlanta-based nonprofit said in a letter sent to the PSC on Friday.

Greene, the utility’s attorney, said it’s important that the commission’s ruling doesn’t harm the company’s financial integrity. One of the commissioners sounded sympathetic to that point of view recently.

Tim Echols, who is the commission’s vice chair, says that higher rates will allow Georgia Power to cover what it costs to operate. The rate case comes after Georgia Power’s bills have remained relatively flat for the last eight years, he wrote in an op-ed ahead of the vote.

“This is primarily due to low fuel prices, the corporate tax reduction, and several credits and refunds approved by our Public Service Commission,” Echols said. “Many of the groups that are protesting against any increase were radio silent on the refunds — but take a look at your bills over the past 8 years.”

Stanley Dunlap
Stanley Dunlap has covered government and politics for news outlets in Georgia and Tennessee for the past decade. At The (Macon) Telegraph he told readers about Macon-Bibb County’s challenges implementing its recent consolidation, with a focus on ways the state Legislature determines the fate of local communities. He used open records requests to break a story of a $400 million pension sweetheart deal a county manager steered to a friendly consultant. The Georgia Associated Press Managing Editors named Stanley a finalist for best deadline reporting for his story on the death of Gregg Allman and best beat reporting for explanatory articles on the 2018 Macon-Bibb County budget deliberations. The Tennessee Press Association honored him for his reporting on the disappearance of Holly Bobo, which became a sensational murder case that generated national headlines.