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Public meetings, other rising costs make a new rate hike a tough sell for Georgia Power

Posted: November 6, 2013 - 1:03am

ATLANTA — This week, the Public Service Commission resumes testimony in Georgia Power’s rate case in which the giant utility is requesting a $482 million increase.

In the month since testimony in this case paused, the five commissioners have sensed the public distaste in a way uncommon for past rate-hike requests. Of course, the only people favoring any price increase are those on the receiving end, and commissioners expect a certain amount of grumbling as they balance the need to have a financially viable energy producer against the need to keep rates affordable.

What’s different this time is a series of forums that were hosted by The Sierra Club conservation group and the Georgia Watch consumer advocacy. Commissioners who attended any of the hearings in Augusta, Savannah, Gainesville and other places -- and those who only read the headlines or saw the news videos about them --appreciated the level of displeasure.

The company obviously recognized early on that this would be a hard case to make because it invited a platoon of supporters to the first hearing to praise its corporate citizenship, a public-relations display it hasn’t seen the need for in past hearings over the last 15 years.

Georgia Power executives argue the rate increase is needed to cover pollution controls, transmission equipment and smart-grid technology.

This 6.1 percent hike request comes on the heels of the company’s last rate case in 2011 when the commission approved a 10 percent increase that year followed by a 2.6 percent in 2012 and 1.2 percent this year. That doesn’t include the $8.74 added to monthly residential bills since 2011 for the financing costs of the expansion of Plant Vogtle.

The full construction cost of adding two nuclear reactors to Vogtle won’t appear on customer bills until completion, but delays and cost overruns are likely to boost that add-on above initial projections. Since everyone knows those costs are eventually coming, too, a rate hike is especially unwelcome.

On the other hand, the company did notify the commission last November that its costs for fuel had dropped, warranting a 7 percent reduction in monthly bills.

The company is also seeking an $8 monthly increase on the base charge from customers who have their own solar panels for generating electricity, an issue that has been particularly objectionable for environmentalists. After all, opponents argue, the owners of solar panels not only require Georgia Power to generate less electricity to supply them on sunny days, but they also produce excess energy that the utility can use.

The company’s vice president for prices and planning, Greg Roberts, testified in the first round of hearings a month ago that the revised charge was to cover the infrastructure needed to generate and distribute electricity to those solar-panel owners at night and cloudy days. Customers will never pay off their share of those costs, even after 20 years he said, because the company is constantly making improvements.

Commissioner Tim Echols asked Roberts how much the company is paying the owners of solar panels for their infrastructure investments, which could total $30,000 for a single property owner.

“How much of that investment are you all paying for?” asked Echols, who had himself made a similar investment installing panels on his previous home.

“None,” Roberts answered.

Echols next brought up a point environmentalists frequently argue, that solar generation peaks at the moment demand does, offsetting the most expensive electricity.

Here, Roberts punctured that notion. The company’s experience has shown that solar power output is the greatest from noon to 2 p.m. and then drops off quickly, he said. However, demand for electricity peaks around 6-7 p.m.

“It does make some contribution, and we recognize that in the generation capacity that we’re crediting (panel owners for) that generation,” he said. “But it doesn’t coincide with our system peak.”

Since there’s no practical way to store large-scale energy from the solar peak until the demand peak, utilities still must generate power.

The current price structure gives panel owners too much credit, he said, for the generation costs they help the company avoid. As a result, other customers are overpaying for the solar power of these panel owners, according to company calculations.

When solar was a novelty and few property owners could afford to install it, back-of-the-envelope calculations were precise enough. Now that the panels have dropped significantly and pending legislation could make it more financially doable, Georgia Power has reason to hone the figures in preparation for a wave of installations.

The base rate increase and the solar component will make for several complicated days of testimony in this second part of the hearings. The really tough part for commissioners comes when they vote next month.

(Walter Jones is the Atlanta bureau chief for Morris News Service. Follow him on Twitter @MorrisNews and Facebook or contact him at walter.jones@morris.com and (404) 589-8424.)

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