PSC vote to reduce Georgia Power’s fuel allowance too little to make a dent in customer bills

May 24,2011

Due largely to lower natural gas prices than expected, the Georgia Public Service Commission (PSC) voted 4-1 today to decrease Georgia Power’s Fuel Cost Recovery (FCR) rate by $0.64 per month for the typical 1000 kWh residential customer.

Georgia Watch formally intervened in the case on behalf of residential and small business customers and supported the decrease.

“While we applaud any decrease in electric bills, this is unfortunately nowhere near enough to offset the skyrocketing increases that took effect in January of this year,” said Georgia Watch Consumer Energy Director and former PSC attorney Clare McGuire. “It’s simply not enough relief to make a real difference in the lives of ratepayers.”

At the start of 2011, the typical residential ratepayer was hit with a base rate increase of about 10%, or $10.88 per month. That amount will ratchet up to almost $18 per month by 2013. In addition to the base rate increase, residential ratepayers this year also began paying the Nuclear Construction Cost Recovery Rider (“NCCR”) charge, which prepays Georgia Power $1.6 billion in financing costs for the construction of two new reactors at Plant Vogtle near Augusta. The charge added $3.73 to the typical monthly bill and will increase to almost $9.00 per month by January 2015.

“In a time of deep recession and high unemployment, Georgia Power customers have seen their bills increase by almost $15 dollars a month, or about $175 per year,” said McGuire. “Commissioners should be taking all necessary actions on behalf of ratepayers to make utility bills more affordable for the average Georgian.”

In addition to this year’s fuel charge, Georgia Power customers are currently in the process of paying down more than $300 million in fuel costs from previous years.

In Georgia, utilities are not allowed to earn profits on their fuel costs, but state law permits electric utilities to recover prudently incurred fuel costs on a dollar-for-dollar basis.

At recent hearings, PSC Staff testified that part of the uncollected $300 million sum is due to overcharges and argued that Georgia Power was directly responsible for a number of plant outages that caused the Company to purchase additional fuel and pass the charges onto customers.

In a letter filed at the PSC on May 17th, Georgia Watch urged the Commission to adjust the uncollected sum so that ratepayers are not saddled with costs caused by Georgia Power’s imprudence.

In today’s vote, commissioners agreed to throw out $5.2 million for replacement fuel costs for an outage at Pant Branch. As for the other plant outages in question, commissioners decided that Georgia Power’s conduct did not rise to the legal standard of imprudence that would have justified a decision against the Company.

“We appreciate the Plant Branch ruling but we’re disappointed that Commissioners didn’t listen to their own advisors and allow customers relief on a number of other imprudent outages,” said McGuire.

According to Georgia Power officials, customers will have paid down the uncollected sum of $313 million by February 2013.