State regulators approve $1.8B Georgia Power rate increase
The Georgia Public Service Commission approved a $1.8 billion Georgia Power Co. rate increase Tuesday, raising rates by 12% over three years after tweaking an agreement between the company and commission staff to give the company more of what it wanted.
The all-Republican regulatory commission voted 4-1 for the plan, after agreeing to give the company more money to build charging infrastructure for electric vehicles, adopting a lower payment rate for electricity generated by rooftop solar panels than staff had recommended, and letting the company earn more on its capital than staff had recommended.
The company had originally proposed a $2.9 billion rate increase, compared to $529 million that staff said was justified. The unit of Atlanta-based Southern Co. will get about as much as the $1.77 billion commissioners voted for in 2019.
Georgia Power says residential customers who use 1,000 kilowatt hours of electricity will see their bills go up by $3.60 a month in January. That's an increase of 2.8% over the $128 such customers now pay. Increases of roughly 4.5% would follow in both 2024 and 2025, pushing bills to around $144 a month.
Those won't be the only increases for customers. Georgia Power is likely to ask the commission early next year to let it charge its 2.7 million customers more to cover higher natural gas costs. The commission has already approved an increase when the third nuclear reactor at Plant Vogtle begins generating electricity, also likely early next year. And a larger Vogtle-related increase would come when the fourth reactor is finished, possibly in 2024.
Commissioner Lauren "Bubba" McDonald was the lone dissenter. He attempted multiple times to lower the company's return on equity, which drives company profits. The staff-company settlement set rates to generate a return of 10.5%, which critics say is already too high. But Georgia allows the company to reap a higher return if it can do so without raising rates.
The company wanted to keep everything up to 12%, while the staff recommended 11.5%. A motion by Commissioner Tricia Pridemore, the body's chair, set the level at 11.9%. That means Georgia Power could earn an extra $200 million above what staff had proposed over three years.
Pridemore said a high return is needed to offset inflation and rising interest rates, saying a high return would "maintain the company's financial integrity and efficiency incentives to ultimately benefit customers."
McDonald, though, said Georgia Power should not need to be bribed with extra profits to run an efficient business.
"The earnings the company makes to supposedly incentivize them to run a good business, that doesn't sit particularly well with me," McDonald said in an interview after the vote. "They do run a good business and they should run it without being incentivized."
Pridemore's motion also changed how profits above the 12% level would be handled. Instead of using 70% of the money to pay for costs like decommissioned coal plants, the commission kept the current split of 40% for customer refunds, 40% for stranded assets and 20% for additional company profit. That might generate $40 million in customer refunds over three years.
Commissioners agreed that Georgia Power will pay 6.68 cents per kilowatt hour for electricity generated by owners of rooftop solar panels. But panel owners will only get a credit after paying retail rates for electricity taken from the grid.
That's different than a 5,000-unit net metering program that allows self-generated power to be subtracted from total usage, better financially for customers. Georgia Power says that plan, which will be grandfathered but not let in new customers, unfairly shifts costs to customers who don't have panels. Pro-solar forces disagree. They say the payment could make solar panels uneconomic for Georgia Power customers.
"It's too rich for Georgia Power and misses major opportunities to give customers more control over rising bills," said Jill Kysor, lawyer for a group that wants net metering expanded.
The deal makes optional a "smart usage" rate plan that includes a fixed monthly fee based on a customer's peak usage. The plan had become the default for customers in newly built houses and opponents say it unfairly drives up bills. All residential customers will go back to the traditional rate plan.
Commissioners raised spending on equipment and wiring to charge electric vehicles to 60% of the company's original proposal, compared to the 25% proposed in the staff-company deal. Commissioners also decided that spending to install chargers at auto dealers would get the same high priority as charging for transit and school buses.