Credit: Georgia Power Co.
State senator pitches lower-cost financing for Plant Vogtle expansion
Allowing Georgia Power to finance the Plant Vogtle nuclear expansion and other large projects through ratepayer-backed bonds could save customers hundreds of millions of dollars, supporters told a state Senate committee Tuesday.
But an executive with the Atlanta-based utility said such securitized bonds are risky and are typically reserved only for unexpected costs.
Senate Bill 421 would authorize Georgia Power to pursue securitized bond financing to recover some of the costs of the Vogtle project as well as what Georgia Power is spending to retire its fleet of coal-burning power plants and clean up the ash ponds surrounding those plants.
Going with securitized bonds would be voluntary on Georgia Power’s part and would be subject to a vote of the state Public Service Commission (PSC).
Securitized bonds would reduce interest rates compared to traditional bond financing, yielding utility customers huge savings, Senate Finance Committee Chairman Chuck Hufstetler, R-Rome, told members of the Senate Committee on Regulated Industries and Utilities. Twenty-two states have adopted laws allowing securitized bonds, Hufstetler said.
“Moody’s [Investors Service] says securitization is credit-positive,” he said. “This seems to work in other states.”
Representatives of both the state’s largest power customers – the Georgia Association of Manufacturers – and residential ratepayers testified in favor of Hufstetler’s bill.
Liz Coyle, executive director of the consumer advocacy group Georgia Watch, said Georgia Power’s customers have been paying for the construction of two additional nuclear reactors at Plant Vogtle since 2011, even though the project still isn’t finished.
The utility has been earning a profit on the project during that time, despite extreme delays and cost overruns, Coyle said.
By the time the reactors go into service late this year and next year, the average customer will have paid $900 toward the project, she said.
“This bill is an opportunity for the power company and the commission to relieve some of the higher costs coming onto customers’ bills,” she said.
But Aaron Abramovitz, Georgia Power’s chief financial officer, said securitized bonds have been used in other states only for “unexpected, unusual, extraordinary expenses.” As examples, he cited Hurricane Katrina in 2005 and the failure of the power grid in Texas during severe weather last winter.
Once the utility decided to use securitized bond financing, it would be irreversible, Abramovitz said.
“It could limit future financial flexibility not only for Georgia Power but for its customers,” he said.
Abramovitz said Georgia Power already has secured $5 billion in “inexpensive debt” in the form of federal loan guarantees for the Plant Vogtle expansion from the Department of Energy.
Also, the PSC has yet to determine whether to authorize recovery from Georgia Power ratepayers of any of the Vogtle project’s capital costs beyond an original commitment of $7.3 billion, he said.
Committee Chairman Bill Cowsert, R-Athens, said he wants to hear from members of the PSC on Hufstetler’s bill before voting on it.
This story comes to GPB through a reporting partnership with Capitol Beat News Service, a project of the Georgia Press Educational Foundation.