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Plant Vogtle (Georgia Power): What Now?

By Jim Clarkson -- August 16, 2023

Ed. Note: The following filing with the Georgia Public Service Commission by Jim Clarkson and Resource Supply Management is reprinted below. In the Matter of: Docket No. 29849 Georgia Power Company’s Twenty Fourth Construction Monitoring Report for Plant Vogtle Units 3 & 4)

 It has been clear for some time this Commission will support substantial rate increases for Georgia Power. Over the next two years it is estimated that the Company will seek about a $1 billion in new revenue with even more to follow as the Vogtle unit 4 comes online.
            Now that the first case of Vogtle recovery of capital and associated costs has begun, we offer our advice which has been ignored during the construction cases. There are ways to provide to least some relief to ratepayers.

Section 1

  • End the cross-class subsidy from small businesses to residential customers. Right now, small business customer rates provide the Company with rates of return much higher than the Company’s authorized average return. The extra overcharge on small businesses is necessary so the Company can undercharge on residential rates.

Moving all rates closer to the Company’s average rate of return will enhance rational customer behavior and provide better feedback to the Company for planning capacity needs. In the current state of the economy small businesses are taking a beating and can use relief to stay in business.
Stop the favoritism of renewable generation and electric vehicles. Customer choice, not bureaucratic edicts, should determine what technologies are employed. Renewable sources of generation should be on an equal footing as traditional generation with no dictates from the Commission about how much the Company should utilize. Georgia Power should not put in EV charging stations with ratepayer money thereby stifling private investment. Let Georgia Power use stockholder money when competing in the marketplace for EV charging.

  • Eliminate phantom taxes. Georgia Power collects the full income tax rate on profits yet pays the actual taxes over long periods. This excess money, the Company claims, gives them operating capital that otherwise would be raised by selling bonds or stock. But why should ratepayers, about half of whom have charge card balances, provide Georgia Power with an interest free loan when the Company can borrow money for about 4% or even less? This Commission should examine flow-through accounting for utility income tax collection.
  • Stop natural gas hedging with ratepayer money. Georgia Power’s natural gas hedging program has needlessly sent well over $700 million to their buddies on Wall Street – all of it collected from customers in the Company’s fuel cost recovery rate. This huge hit to the state economy did not cost Georgia Power any of their own money. The Commission should forbid the Company from gas hedging until the fuel recovery rate is eliminated and the Company uses their own money to play roulette.
  • The Company’s and the Commission’s Demand Side Measures programs should cease. Here the Company collects a DSM surcharge which includes far more profit and overhead than the rebates for customer efficiency improvements. Less than 10% of residential and commercial customers receive rebates while 100% of them pay the surcharge. The large industrial customers have enough political clout to avoid this needless expense.
  • Enhance customer demand response. Georgia Power’s current rates and policies discourage customers from reducing their electricity use during periods of high demand or generation shortages. With a growing portion of the utility’s generation being supplied by intermittent renewable sources the Company needs to fully develop customer response to offset the need for building additional peaking generation. Because the unneeded and expensive nuclear Vogtle plant requires additional revenue, the Company is reluctant to use additional hourly pricing to engage customer help in avoiding even further investment.

Section 2

Of course, the root cause of Georgia Power’s problems is the flawed strategies of parent company, Southern Company. Southern’s grand strategy was to build excess generating capacity to sell into the wholesale market. Southern’s unregulated subsidiary, Southern Power, is already a big player in wholesale market with a large fleet of low-risk combined-cycle generators. A second part of the strategy is to place high-risk nuclear plants in its regulated subsidiaries where they have sufficient political influence to obtain approval for uneconomic, foolish investments.

With low-to-no growth in retail power sales, Georgia Power must shut-down still useful generating plants to make room for the Vogtle capacity. These shut down plants are zombie plants. They are dead as far as generating power but live on in Georgia Power’s books for capital recovery and profits on investment. All profits generate collectable income taxes as well.

Section 3

 Further, the Commission should follow staff’s original proposal to defer much of the cost recovery to the next planned rate case when a cost-of-service study can show any overearning to offset the current revenues needs.

            THERFORE, the Commission should follow the wise advice presented in this brief.

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