The Atlanta Journal-Constitution
The state Public Service Commission approved the Georgia Power price hikes by a 4 to 1 vote, with departing commissioner Bobby Baker the lone dissenter.
The company sought part of the increase to pay for spending on electric infrastructure and mandated environmental controls, while the rest will pre-fund work on a nuclear plant expansion. Georgia Power contends that Georgia’s rates remain comparatively low nationally.
Consumer groups blasted Tuesday’s decisions, which will boost the typical household bill by $168 a year starting in 2011, and $216 a year by 2013. They said the commission is shoring up Georgia Power’s profits in a recession.
“This deal was crafted by Georgia Power for Georgia Power,” said Will Phillips, associate state director of AARP Georgia. “It raises customer rates by hundreds of millions of dollars more than is necessary in one of the worst economies in a generation.”
The hikes include a three-year rate increase deal between the company, PSC staff, industry, big retailers and big government power users. It adds $10.76 to a typical household bill next month.
The second immediate increase is the new nuclear construction fee, mandated by the legislature in 2009 and approved by the PSC Tuesday. That adds another $3.73 to the typical bill in January.
Bills will then rise again in 2012 and 2013, adding another $4 to the typical households monthly costs.
The typical bill is calculated at 1,000 kilowatt hours of power use in a month. For customers who use only 1,000 kilowatts of power in the summer — a conservative amount — a monthly bill will rise from $115.64 this past summer to $130 in 2011.
Commissioners who voted for the hike blamed it squarely on mandated environmental spending by Georgia Power, which has had to install equipment to control pollution from burning coal.
“This is one of the most difficult votes I’ve ever had to take,” said Commissioner Chuck Eaton. “I think there’s a big disconnect between environmental concerns and the impact on rates.”
Eaton and commissioners Lauren McDonald and Doug Everett said environmental mandates were responsible for nearly half of the rate hike.
But Baker said half of costs they cited were going to a new gas-fired power plant the company is building in Vinings. The plant will burn more cleanly than a much smaller coal-fired power it replaces. It also will make Georgia Power money, unlike environmental control equipment.
Opponents called the commission’s emphasis on environmental costs a red herring, and said the real issue in the rate case was the size of the company’s allowed rate of return.
In approving the deal, the PSC gave Georgia Power an allowed return on its investments of 11.15 percent, slightly lower than it had been. The commission also allowed the company to keep all profits in excess of that up to 12.25 percent, the same deal the company has had for the past three years.
Casting his final vote as a PSC member, Baker aid he couldn’t support the allowed profit: “Everybody in this room has been impacted by the recession. We’ve had record foreclosures. Business bankruptcies are the highest in Georgia history.”
The deal also changed the rules under which Georgia Power and its regulators have reached three year deals in the past. Previous deals gave the utility a higher rate of return in exchange for taking the risk of a three-year rate freeze.
Tuesday’s deal eliminates the freeze, letting the utility come back for more money if its profits fall too low.
In October, the PSC approved a separate rate hike for Atlanta Gas Light, which supplies natural gas retailers in Georgia. That hike is about $1 on a typical bill.