Atlanta Progressive News

(APN) ATLANTA — The Public Service Commission (PSC) is currently considering Georgia Power’s purposed 844 million dollar rate increase, despite the fact that the country is in the middle of a recession with historically high unemployment and foreclosure rates.

Georgia Power initially requested a 1.1 billion dollar rate increase, but after consumers expressed outrage at a November meeting of the PSC, the request was lowered to 844 million.

This rate increase will be phased in through 2013.  A typical residential customer’s bill will go up approximately 11 dollars per month in January 2011 and 18 dollars per month by 2013; this is just from the currently proposed rate increase.

In addition to the rate increase, Georgia Power wants an additional 11.15 percent profit margin guarantee, which ratepayers will also be expected to dig even deeper into their pockets to pay. 

This is on top of two other rate increases for Georgia Power, approved by PSC, within the last two years.

APN previously reported in early 2009 that Georgia Power had sought a rate increase to cover their up-front costs for design of two new nuclear reactors at Plant Vogtle in Georgia; this increase was later approved by the PSC.

The Georgia legislature passed SB 31 to allow Georgia Power to bill customers for Construction Work In Progress (CWIP) for the nuclear power reactors. 

The CWIP/Plant Vogtle increase, which was approved last summer, will go into effect this January 2011 and will add an additional 10 dollars per month to the average bill.  

In addition, Jonathan Shapiro, spokesman Georgia Watch, told APN that the PSC also approved a March 2010 fuel cost increase, which added 5 dollars and 60 cents per month to the average residential bill.

The grand total for the two increases already approved, and the one which the PSC will vote on December 21, 2010, will be approximately 33 dollars in increases approved in fewer than two years.  If approved, the latest increase will be phased in over the next two years and will take full effect in 2013.

The intended purpose of the PSC is to protect consumers from price gouging by utility companies and from secret back room deals which benefit energy corporations while harming the consumers.

APN previously reported in 2006 that only two states, Georgia and Louisiana, allowed regulators to hold secret behind-closed-doors meetings with the companies they oversee.  However, APN learned that since that time, in 2007, the PSC banned ex parte communications between individual PSC Members and representatives of interests with matters pending before the PSC.  This ban was sought by then-PSC Member Angela Speir Phelps, who is now Executive Director of Georgia Watch.

“We don’t see why Georgia Power should be entitled to earn a profit margin in excess of 11 percent – a margin far greater than most businesses are currently earning,” Clare McGuire, Director of the Georgia Watch Consumer Energy Program, said in a press release.

It gets worse: Georgia Power wants two-thirds of its annual losses offset by imposing higher rates on customers without having to file a formal rate case.  

Georgia Power’s request for high profit is to fund all of their expansion projects.  However, the new nuclear construction at Vogtle is the expansion project most critically related to the need for exceptionally high profits because it’s the most expensive to build, the most difficult to fund, and is linked to the “conditional” taxpayer-guaranteed loans from the federal government.

Georgia Power’s decision to build two new nuclear reactors is causing them a credit rating downgrade because the credit rating agencies consider nuclear construction a risky endeavor.  

Georgia Power wants the PSC to grant them a higher return on equity because they are willing to take on this high risk.  

Georgia Power wants to “build their new reactors and have their credit rating top-notch.  The only way they can do this is to get ratepayers to put enough money into Georgia Power’s coffers to increase their profits enough to better balance their debt to equity ratio,” Barbara Antonoplos, an activist with Georgia Women’s Action for New Directions (WAND), told APN.

This will allow Georgia to regain their top-notch credit rating and to meet the conditions to borrow money at more favorable interest rates from the federal government and elsewhere for their ‘high risk’ nuclear construction project, Antonoplos said.

“Ratepayers and taxpayers bear the costs [and…] bear the risk.  Georgia Power gets a lot of money,” she said. 

With the help of the PSC, the financial burden is shifting from Georgia Power and their shareholders to the ratepayers.  This is the hallmark of modern-day capitalism in the US: the risks are socialized while the profits are privatized. 

“We’re in one of our state’s worst recessions and Georgia Power is filing one of the biggest rate increases requests in history and asking for more profit,” Angela Speir Phelps, Georgia Watch Executive Director, said in a press release.  

Speir Phelps formerly served on the PSC as an advocate for transparency and consumer interests.  Interestingly, Phelps is a Republican who unseated McDonald in 2002, who then served on the PSC as a Democrat.  McDonald later took the seat back in 2008 after switching to the Republican Party.

Today, the PSC consists of five Republicans and no members of any other party.  David Burgess, who had been the last remaining Democrat, was unseated by Chuck Eaton, a Republican, in 2006.

“It’s essential for ratepayers to get involved so they can protect their pocketbooks.  In this economy people cannot afford to pay inflated profit margins for necessities like electricity,” Speir Phelps said. 

APN reviewed campaign contributions from May and June 2008 for PSC Chairman Lauren “Bubba” McDonald, and found extensive donations from energy related companies.  

Attorneys at Troutman Sanders, which represents Georgia Power, contributed 7,600 dollars during those 2 months, while representatives of SCANA, a gas company, contributed 6,500 dollars.  Other contributors included individuals from Atlanta Gas Light, AT&T, Southstar Energy, and Verizon Wireless.

Kevin Greene and Brandon Marzo of Troutman Sanders law firm are the two primary lawyers for Georgia Power who put forth their cases to the PSC.  

Greene and Marzo each contributed 500 dollars to Bubba’s 2008 re-election. 

In April this year, the PSC allowed Georgia Power to shift the cost of a construction contract dispute, regarding the Vogtle nuclear reactors project, directly to customers to the tune of 108 million dollars.  Specifics of the dispute between Georgia Power and Westinghouse-Shaw were never provided. 

This is just the beginning of massive delays, cost overruns, disputes, and unforeseen problems that are so common on nuclear reactor projects.  

This is why the private sector rarely invests in nuclear power technology.  The final cost to Georgia taxpayers will be astronomical.   

“They have already now established a pattern of coming to ratepayers and taxpayers for more and more and more money to fund their ill-advised financially unsound nuclear construction project,” Antonoplos said.

The Wall Street Journal newspaper and other sources have made it clear the proposed new reactor projects can’t financially compete with gas and renewables.  

“The potential of wind offshore represents one of the greatest available renewable energy resources Georgia is going to be looking at in the future,” Brandon Blevins, wind program coordinator for the Southern Alliance for Clean Energy, told the Atlanta Business Chronicle newspaper. 

“Georgia lags behind other states in solar production, but it’s not for lack of sunshine.  Georgia is in the top 10 [states] in solar energy potential but 38th when it comes to solar energy projects connected to the grid,” Michelle Conlon of the Georgia Solar Energy Association, told the Savannah Morning News newspaper. 

Georgia Power plans to lead Georgians, with the blessing of the PSC, into the dark past of expensive, dangerous nuclear energy, instead of into the future with clean, renewable energy. 

The PSC “has held hearings around the state, and the verdict is unanimous,” Barry Reid, a member of American Association of Retired Persons, Georgia’s executive council, said in a statement on Georgia Watch’s website.  “It’s the wrong time for a billion rate increase and it’s the wrong time to give Georgia Power the ability to raise rates with less scrutiny from the PSC.” 

At the November 08, 2010, PSC meeting, at least 19 citizens spoke out against the Return on Equity (ROE), 11.95 percent, that Georgia Power wanted.  Georgia Power has since lowered the equity to 11.15 percent, which is still considered high. 

Some of the critics of Georgia Power’s rate request include Georgia Watch, AARP, Georgia Retail Association (GRA), Georgia Retired Educators Association (GREA), Georgia WAND, and others. 

The five PSC members are expected to vote on the final settlement at a 9am Tuesday, December 21 meeting which is a few days before Christmas.  Public participation may be low because of the holiday.

(END / 2010)

CORRECTION: A previous version of this article reported that Speir Phelps was a Democrat.  That is not so; she is a Republican.  The article has been updated to reflect this, to note that McDonald switched parties, and to note that the last remaining Democrat on the PSC, David Burgess, was unseated in 2006 by Chuck Eaton.

CORRECTION: A previous version of this article noted that APN reported in 2006 that Georgia was one of the only states which allowed private communications between PSC Members and industry representatives.  While that was true in 2006, as now noted above, the rule changed in 2007 after then-Commissioner Speir Phelps pushed for the change.