PSC is advised it can’t change Ga. Power’s cost recovery on nukes

[private]The Public Service Commission’s legal counsel has told the commissioners they don’t have the statutory authority to stop Georgia Power from charging customers for the financing costs of a nuclear construction project before the work is completed.

Commissioner Lauren “Bubba” McDonald prompted the legal opinion last month when he tried to stop Georgia Power’s collection of a monthly nuclear construction fee from its customers.

The PSC voted 4-1 to “hold” McDonald’s motion to kill the fee until they could get a ruling on its legality from the attorney general’s office.

Senior Assistant Attorney General Daniel Walsh, who advises the commission on legal matters, wrote an informal advisory opinion that said state law prevented them from terminating the monthly fee.

“It is my conclusion that the Commission is not authorized to approve the recovery of financing costs associated with the construction of Plant Vogtle Units 3 and 4 using AFUCD accounting treatment,” Walsh said in a July 5 letter to PSC Chairman Stan Wise.

The issue of when Georgia Power’s customers will have to pay for the construction of the Vogtle nukes involves complex questions of accounting and regulatory law.

In former times, Georgia Power could only start charging its ratepayers for the financing and construction costs of building a new power plant after the facility had been completed and was in operation.

That method of cost recovery is known as AFUDC, or “Allowance for Funds Used During Construction.”

That changed in 2009 when the PSC authorized the construction of Units 3 and 4 at Plant Vogtle.

The General Assembly passed a bill that year allowing Georgia Power to collect the financing charges from its customers before construction was complete. This method of cost recovery is called CWIP, for “Construction Work in Progress,” and the utility has collected about $2 billion so far from this.

Citing the huge cost overruns and schedule delays associated with the Vogtle nukes, McDonald has proposed that the commission shift from CWIP back to the more traditional AFUDC, which would require Georgia Power to stop collecting its monthly nuclear construction fee that it has added to customer bills since 2011.

Walsh said the state law enacted in 2009 effectively prohibits the PSC from doing that, because it says the utility “shall begin recovering” the financing costs in 2011.

The PSC only has the powers that are granted to it by the legislature, so “unless the Commission is granted the authority by statute to approve the recovery of these financing costs through AFUDC, then no such authority exists,” Walsh wrote.

Georgia Power also “cannot voluntarily agree to recover such financing costs using AFUDC accounting treatment,” Walsh added.

© 2017 by The Georgia Report

[/private]

Tags: Georgia Power , nuclear cost recovery , Plant Vogtle , PSC