Valdosta Daily Times

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October 3, 2013

Regulators debate Georgia Power rate hike

ATLANTA — Georgia Power executives asked Wednesday to raise prices by nearly $8 a month for typical residential customers because the electric company said its costs are rising while sales remain slumped following a deep recession and tepid recovery.

The regulatory hearing went forward after Public Service Commissioner Lauren “Bubba” McDonald Jr. made an unexpected move Tuesday. He requested a one-day delay in testimony so the Southern Co. subsidiary and the PSC staff could try negotiating an alternative to the proposed rate hike. No deal was struck.

Georgia Power wants to collect an additional $482 million from its customers next year, then hold rates flat for the following two years. That translates into a monthly price increase of nearly $8 for a typical residential customer, according to company filings.

Under the plan, the electric monopoly would earn a profit of 10.25 percent to 12.25 percent for every dollar it invests in its electricity system. If profits exceeded the top range, customers would get back two-thirds of the excess collections. Georgia Power CFO Ron Hinson said those profit levels are necessary to attract shareholders whose cash is used to build and maintain an electric system serving nearly 2.4 million customers.

“We need to establish rates that allow us to continue our financial position in meeting shareholder expectations,” Hinson said during testimony.

Consumer advocacy groups including Georgia Watch and the state branch of the AARP are certain to object to those profit margins. While Georgia Power says its costs are rising, Southern Co. still reported $297 million in net income during the three-month period ending in June. Those earnings were down 52 percent compared to last year, mostly due to losses on building a coal gasification plant in Mississippi.

The local solar industry objects to charges proposed by Georgia Power. Starting next year, the utility wants customers who install new solar systems to pay additional charges for using the electric grid. As solar panels spread, utilities sell less electricity and make less money to support their infrastructure. While solar customers buy less electricity from Georgia Power, they rely on the utility to power their homes and businesses when solar panels do not work.

Solar installers say their customers already pay a fair share of costs. Industry groups accuse the utility of trying to cling to customers and price solar technology out of the market.

Over the next three years, the electric utility said it plans to invest nearly $7 billion in its system. That includes the construction of two more nuclear reactors at Plant Vogtle (VOH’-gohl) in eastern Georgia and upgrading its fossil fuel plants to meet stricter anti-pollution rules.

Like other utilities nationally, Georgia Power is facing flat or even dropping demand. From 2010 to 2012, the number of customers it serves increased less than 1 percent while retail sales fell, according to company filings.

Since Georgia Power is a monopoly, its prices are approved by the PSC commissioners. A vote is expected in mid-December.

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Follow Ray Henry on Twitter: http://twitter.com/rhenryAP.

 

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