The Georgia Public Service Commission unanimously approved a settlement Tuesday that will increase Georgia Power’s rates by about a $100 a year for the average residential customer by 2016.
An initial rate increase of about $2 a month goes into effect Jan. 1. New Year’s Day in 2015 and 2016 will bring further increases. The company, which has 2.3 million customers in Georgia, requested a rate hike $573 million larger than what was eventually agreed to. Instead of an 11.5 percent return on equity, that mark was knocked back to 10.95 percent.
“The company’s retail return on common equity (ROE) will be set at 10.95 percent with a retail ROE range of 10 to 12 percent, so the agreement reached as part of this rate case provides us with the financial flexibility needed to continue to invest in Georgia’s energy future, better serve our customers and meet shareholder expectations,” said Georgia Power spokesman John Kraft.
Commissioner Tim Echols noted the agreement provides Georgia Power with “some additional revenue for operations and required pollution controls while lowering their return on equity.”
“No one wants rates to go up, and we did our best to keep it to a minimum,” Echols said.
Georgia Power proposed its new customer rate plan in its June 28 filing, originally including a fee on property owners who install solar panels on their homes or businesses starting in 2014. The commission conducted three rounds of hearings in October and November at which ratepayers and solar advocates roundly criticized the so-called “solar tariff,” and the company backed off the idea. This decision is “a good example of the compromise brought about by the settlement process,” Kraft said.
The Sierra Club argued against the solar tariff and against pre-charging customers for federally mandated upgrades to coal plants the environmental organization would prefer to see replaced by cleaner renewable energy sources, such as wind. Among the facilities targeted for upgrades is Plant McIntosh in Effingham County.
“We are thankful that the PSC recognized that Georgia Power’s solar analysis was flawed and would hurt Georgia families,” said Ashten Bailey an attorney for GreenLaw, a nonprofit law firm that is representing the Sierra Club. “However, it’s unfortunate that the commission voted to approve this rate hike to keep aging and dirty coal plants running past their expiration date, especially when there are opportunities for cheap and clean wind energy pending before them.”
Noting that nearly half the rate increase is the result of environmental regulations, Georgia Power spokesman Kraft refuted the Sierra Club’s position, saying there’s no “arbitrary ‘expiration date’ on the company’s fleet of power plants.” The company plans to phase in the charges to recover the costs as the equipment is added, he said, “consistent with Georgia law and PSC rules that have been in place for decades.”
“Through proper maintenance and operation, as well as the latest environmental controls required by strict government regulations, we expect our plants to continue providing customers with reliable, affordable, energy around-the-clock for many years to come,” Kraft said. “We owe it to our customers to meet their energy needs through an all-of-the-above approach including nuclear, coal, natural gas, renewables (like solar, hydro, biomass and wind), and energy efficiency.”
Among the provisions contained in the settlement:
• Provides for a three-year rate plan with new rates effective Jan. 1, 2014. Increases the average residential rate by $2.19 a month effective Jan. 1, 2014. There will be an additional rate increase of $3.61 per month on Jan. 1, 2015, and of $2.96 per month beginning on Jan. 1, 2016.
• Increases the monthly Senior Citizen Discount from a maximum of $14 to $18 a month for qualifying low-income customers 65 years and older.
• Sets an “Earnings Band” of 10 percent to 12 percent. Any earnings above 12 percent will be shared two-thirds with customers with the remaining one-third retained by the company. Georgia Power will not file a general rate case unless its earnings drop below 10 percent.
• Allows the company to implement an electric service pre-pay program for eligible customers in the second quarter of 2014.