House bill would end Ga. Power’s surcharges on Vogtle nukes

[private]Legislation introduced in the Georgia House (HB 931) would terminate the “Construction Work in Progress” surcharge (CWIP) on the Plant Vogtle nuclear project that Georgia Power has been collecting from customers for more than five years.

The bill by Rep. Karla Drenner (D-Avondale Estates), if enacted, would cut off a guaranteed revenue stream that has brought nearly $1.7 billion into Georgia Power’s corporate coffers.

“Today’s Georgia Power customers stand to pay $1.4 billion more to finance Vogtle construction over the next few years due to major construction delays,” Drenner said. “Because half of the tariff collected is the company’s return on equity, Georgia Power actually stands to profit off the delays. This legislation rights that wrong.”

HB 931 would not allow Georgia Power to collect the tariff after it should have ended in March 2017.

“House Bill 931 would protect current Georgia Power customers from bearing most of the burden of Vogtle cost overruns,” said Liz Coyle, executive director of the consumer advocacy group Georgia Watch.

“The recovery of financing costs during construction is saving our customers money by preserving the company’s credit ratings and lowering borrowing costs, and helps us avoid ‘rate shock’ at the end of the project.” Georgia Power spokesman Jacob Hawkins said.

“We do not support a change in law, or any proposal or effort, which will unnecessarily raise rates for our customers,” Hawkins said. “House Bill 931 recognizes the capital investment we are making in the Vogtle expansion and that customers today are benefitting from past investments, just as future customers will benefit from the investments we make today.”

Drenner’s proposal has also been under consideration at the Public Service Commission (PSC), which oversees the money Georgia Power spends on the Vogtle project.

Commissioner Lauren “Bubba” McDonald said last week he will bring up the topic of a CWIP termination at the commission’s next energy committee meeting.

The PSC originally authorized Georgia Power to collect the CWIP charges in 2009, when the commission gave the go-ahead for Vogtle. Commissioners certified then that Georgia Power’s share of the Vogtle project would be about $6.1 billion — $4.4 billion for construction and $1.7 billion in financing costs.

The utility was allowed to start collecting those financing costs in advance of the completion dates through the monthly fee on customers bills, which first showed up in January 2011.

McDonald noted that when the PSC initially authorized the CWIP fee, the projected start date for the reactors was 2016 for Unit 3 and 2017 for Unit 4. Since then, construction delays have thrown the Vogtle project at least 39 months behind schedule, with the start dates now pushed out to June 2019 and June 2020.

Because Georgia Power has now collected the amount of CWIP revenues originally authorized by the PSC in 2009, McDonald suggested it was time to consider ending the fee.

Connected with the CWIP issue is a move by the PSC to start reviewing all of Georgia Power’s cost overruns on Vogtle – currently estimated at about $1.7 billion – and determined how much can be charged off to customers and how much should be paid off by Georgia Power’s shareholders.

“Nothing is gained by deferring action to a future comission, however, the industry does have something to lose if we do not act,” Commissioner Stan Wise said.

One of Georgia Power’s sister companies, Mississippi Power, is facing similar cost overrun issues with the construction of a “clean coal” power plant in Mississippi’s Kemper Country.

The Kemper plant was originally estimated to cost $2.9 billion, but the cost has now grown to $6.5 billion and the parent company, Southern Co., has absorbed about $2.3 billion of those cost overruns.

© 2016 by The Georgia Report

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Tags: Bubba McDonald , customer surcharges , Georgia Power , Karla Drenner , Plant Vogtle , Stan Wise