Georgia Power rate hike plan gets days in the sun as utility plans to hand customers the tab

Georgia Power’s proposal for a $200 increase to the average household’s yearly electricity costs is set to kick into high gear with a series of public airings before state regulators beginning on Tuesday.

Over the next few months, corporate lawyers, consumer watchdogs and government officials will get their say in a rate case that will determine how much the state’s largest utility provider charges its 2.7 million consumers over the next three years.

The state Public Service Commission has scheduled rate hearings from Tuesday to Thursday. The next round of hearings are set for a few days in November, with utility regulators scheduled to render a final decision on the plan Dec. 20.

Georgia Power executives, managers and analysts will attempt to show during the hearings that a 12% hike in the base rates for homes and small businesses is necessary as the company transitions to cleaner forms of energy and invests billions of dollars into an aging electrical grid and other infrastructure and technology.

The Southern Environmental Law Center is warning the five PSC commissioners the power company’s customers will struggle with such a steep increase tacked onto household electric bills that now average about $150 a month.

Under Georgia Power’s proposal, the largest increase on average residential customers would occur in 2023, with $14.32 added to monthly bills, and topping out at $16.29 in 2025. Large businesses would incur a 6% spike in rates.

In its petition, the nonprofit center urges the PSC to cut Georgia Power’s rate request and lift the state-approved cap limiting rooftop solar installations offered through the utility’s popular sustainable energy program.

“Right now, Georgia Power is asking its regulators — the Public Service Commission — to let it impose rates and enact programs that give you less freedom to reduce your bills when you invest in clean energy or simply reduce your electric usage,” SELC attorney Jill Kysor said in an email. 

Georgia Power’s CEO and president Chris Womack said that the company’s plan will allow it to provide reliable and efficient energy investing over the long haul, at a time when volatile markets are driving up the cost of running large public utility companies. 

The company’s customers are also paying a separate tab for expenses related to the closure of its coal-fired power plants and related cleanup of its 29 coal ash ponds. Environmentalists have long criticized Georgia Power for charging its customers hundreds of millions of dollars for coal ash disposal when the company ignored their repeated warnings an expensive day of reckoning would come. Money aside, environmental groups complain the company is also using a process for storing the toxic ash in unlined pits that will contaminate groundwater and pose other threats to people near some Georgia plants.

The cost to generate electricity by burning coal no longer makes economic sense, with Georgia Power planning to shutter the last coal-fired units in 2028 at Plant Bowen, the last remaining units in operation. The company is determined to replace dirtier, higher polluting fossil fuels with nuclear power and renewable energy, Womack said.

“Ten to 12 years ago, if you would’ve asked me how do we keep the lights on,  I would tell you that more than 70% of the power we make is coming from coal, ” Womack said at a Sept. 13 event hosted by the Atlanta Press Club. “Today, that’s less than 20%.”

“There’s a lot of resources that are being made available for the development of clean technologies,” he added. “I think that is something that we’ll dig into and figure out how we take advantage of those opportunities into our business as we go forward.”

State utility regulators will likely tinker with the rate plan in the coming weeks. At the end of the months-long 2019 rate case, state regulators passed a $1.8 billion three-year plan after shaving off about $400 million from Georgia Power’s initial pitch. 

The rate hearings can devolve into mundane technicalities, but at other times testimony becomes more lively as witnesses are cross-examined by advocates and Georgia Power attorneys question experts provided by the other side. 

Critics have made the case in courtrooms and at commission meetings the five-member Republican board too often bends to the wishes of the state’s largest supplier of electricity over the needs of typical Georgians, many of whom are Black and struggle to stay afloat.

At a committee hearing earlier this month, Lauren “Bubba” McDonald defended his colleagues against those attacks, noting that he voted against Georgia Power’s 2019 rate plan, and that federal environmental and economic policies have complicated utilities’ situations, just like many Georgians are dealing with.

As a result of inflation and other plans impacting the energy market, utilities companies that depend on natural gas for electricity generation are stressed as the energy’s price has tripled this year, McDonald said. 

There is one elephant in the room that won’t be settled in the rate case – Georgia Power’s big bet on the future demand for electricity, the nuclear expansion at Plant Vogtle. 

In 2012, the project was initially forecast to cost $14.3 billion but has now ballooned to $30 billion after repeated setbacks.

Georgia Power and its parent company, Southern Co., are engaged in a legal battle with Vogtle’s co-owners, Oglethorpe Power and its electric membership cooperatives, which represent 4.4 million customers in Georgia’s rural and suburban communities. According to Oglethorpe, it is no longer legally responsible for capital expenses that far exceed the share that the company and EMC’s agreed to in 2018.  

Georgia Power officials are on record that they’re unlikely to ask regulators to pass along expenses above a threshold of $7.3 billion in capital costs after it exceeded those last year under a PSC agreement. But the approved costs will continue to be absorbed on consumer’s bills and some consumer advocates worry that customers could end up being saddled with other expenses that could offset some of Vogtle’s construction.

Womack said that with decades of power coming from Vogtle, it’ll be worth the investment the moment the first kilowatt is produced by a generator that the company insists is now on track to be up and running in early 2023.

“Because of the volatility that’s happening all across Europe, we’ve seen in the U.K., we’ve seen Poland, other countries are looking to make investments similar to what we’re doing (with Plant Vogtle) because there is nothing better than a reliable, nuclear power plant that’s producing clean energy,” Womack said.

The rate case will likely pit the profits of Georgia Power’s investors against the financial pain felt by its customers. According to the Southern Alliance for Clean Energy, Georgia Power’s proposal would shift $80 million annually from ratepayers to the shareholders of Southern Co.

Leaders at Georgia Power say a healthy return on equity is a good sign to the credit rating agencies that set interest rates for borrowing that pays for projects that will benefit its customers.