Last week representatives from Georgia Power met with members of the Georgia Public Service Commission (PSC) in a hearing to decide whether the utility company’s customers would pay almost seven dollars per month extra to help offset rising fuel costs.
This past December’s unusually cold weather cost the company an additional $22 million beyond their fuel budget, according to testimony during the hearing, and the company currently has more than $650 million in what are known as “under–recovered fuel costs.”
Gregory Roberts, Director of Pricing and Rates for Georgia Power testified during the hearing that the recovery of the funds is necessary because the outstanding sum is damaging the company’s credit rating with two of the three main credit rating agencies.
Through this hearing with the PSC, the company is trying to recover $470 million of those under–recovered funds, which resulted from a $900 million increase in the company’s coal costs. About $430 million of that was offset by decreasing cost of gas generated electricity and decreased demand for kilowatt hours by consumers, according to Georgia Power spokesperson Jeff Wilson.
Members of the PSC staff have suggested an investigation into the company’s coal procurement practices, something Georgia Power opposes, because it has already been investigated several times in the past few years.
“It would be a redundant waste of both Commission and company resources since over 60 percent of the last seven years has already been spent on fuel cases and investigating,” Roberts testified.
Despite the unrecovered fuel costs, Georgia Power still counts its annual profits in the hundreds of millions, and its parent company, the Southern Company, has cleared $1.7 billion in profits, earning it the 149th spot on the Fortune 500 list.
The PSC will make a final decision on the rate hike at a hearing to be held on March 11. However, if Georgia Power agrees to several stipulations put forth by the commission in a document following the hearings, including the length of time for collecting the funds, the rate increase will almost certainly be approved.
The increase in cost is unrelated to another monthly surcharge that was approved by state legislators last year, which allows the company to charge consumers in advance to help finance the expansion of Plant Vogtle, its nuclear facility near Waynesboro, Ga. That will cost consumers an extra $1.30 per month.
According to their website, the PSC “must balance Georgia citizens’ need for reliable services and reasonable rates with the need for utilities to earn a reasonable return on investment.”
Over the last several years, the balance seems to have leaned favorably toward the utility company.
In late 2007, the PSC approved a measure guaranteeing the Georgia Power retail returns between 10.25 and 12.25 percent every year. If the utility makes more than 12.25 percent returns than it must reduce its rate, and if it makes below 10.25, it is able to raise its rate.
That decision, which was passed in December of 2007, was also accompanied by a base rate increase for customers.
Following the approval, then–commissioner Angela Speir, who voted against the measures, said in a media release, “the biggest single factor in this unnecessary rate increase is excess profit.”
In 2008, the PSC approved an additional charge of three dollars per month to Georgia Power customers for fuel recovery costs, as the company tried to re–coup $221 million. The company also enacted an Environmental Cost Compliance Recovery Tariff (ECCR), which sought to off–set $222 million in costs associated with state and federal environmental regulation.
The accumulation of various rate increases, along with the economic downturn, has taken a distinct toll on consumers.
According to data Georgia Power provided to the PSC during the hearing process, the annual number of service disconnections for non–payment has increased from 226,000 in 2006 to 260,000 in 2009.
Even without the slew of new charges, Georgia Power customers already pay slightly higher than average prices, particularly depending on usage. For customers using 1000 kilowatt hours (kwH), the company is only slightly above average pricewise, ranking 52 out of 88 providers, at 10.75 cents per kwH. For customers using more than 1500 kwH, the pricing becomes even less competitive (75th out of 95 providers) at 11.28 cents per kwH.
Meanwhile, the company’s average fuel cost, including coal, nuclear, oil and gas, is only 3.11 cents per kwH.