PSC completes first week of Ga. Power rate hearings

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The Public Service Commission wrapped up its first week of hearings Thursday on Georgia Power’s request for a $482 million rate increase for the three-year period starting Jan. 1.

The three days of testimony from Georgia Power executives and advocacy groups challenged some popular assumptions about the business operations of the utility giant.

One of those assumptions, which is most strongly voiced by Commissioner Stan Wise, is that Georgia Power is being forced to raise its rates because of environmental regulations imposed by the EPA on the emissions of coal-fired generation plants.

The Obama administration, Wise contended “has forced the company to put these (environmental) controls on.”

Wise, one of the most conservative PSC members, accused environmental groups of supporting the federal restrictions on generation plants at the same time that they are opposing Georgia Power’s rate increase to pay for these environmental upgrades.

Wise’s contention about the financial impact of environmental controls was refuted by no less an authority than the chief financial officer of Georgia Power, W. Ron Hinson.

Under questioning from a former PSC member, Bobby Baker, Hinson acknowledged that the utility plans to spend about $6.8 billion on capital outlays over the three-year period covered by the proposed rate increase

Hinson said $865 million of those capital expenditures would pay for installing such environmental controls as baghouses and scrubbers on coal-fired power plants. That’s a large amount of money, but it accounts for less than one-seventh of the total capital outlays the company anticipates.

Georgia Power will spend more than three times that amount — $2.7 billion – on the construction of two nuclear reactors at Plant Vogtle and the production of nuclear fuel for those reactors, according to Hinson’s testimony.

Georgia Power also plans to spend about $2.3 billion on capital outlays associated with its distribution system and customer service, Hinson said, an amount that far outstrips the $865 million allocated for environmental controls.

Commissioner Doug Everett briefly attempted to make the point that implementation of the Affordable Care Act would be another factor driving up Georgia Power’s rates.

“What’s going to be the impact of Obamacare?” Everett asked Laura Patterson, the company’s assistant comptroller.

“About $1 million a year,” Patterson replied.

Georgia Power’s operating expenses in 2012 were almost $5.8 billion, so $1 million wouldn’t even be a rounding error on the company’s balance sheet. Everett asked no further questions about Obamacare.

While the PSC was delving into Georgia Power’s rate request this week, another Southern Co. affiliate was dealing with financial problems in Mississippi.

It was disclosed Wednesday that Mississippi Power, which is building a coal-fired plant in Kemper County, won’t complete the facility by the original May 2014 deadline. Southern Co. will have to repay $133 million in federal tax credits it received under the condition that it meet the May deadline.

Mississippi Power also disclosed there could be further cost overruns at the $4.75 billion Kemper plant, a project on which Southern Co. has already written off some $990 million in costs.

Company spokesman John Kraft said the financial issues involving Mississippi Power will have no impact on the Georgia Power rate case.

© 2013 by The Georgia Report

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Tags: Bobby Baker , Doug Everett , environmental controls , Georgia Power , Mississippi Power , Obamacare , rate increase , Ron Hinson , Southern Co. , Stan Wise