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US: Georgia Power increases risks for ratepayers

Nuclear Monitor Issue: 

In 2009, U.S. utility Georgia Power convinced the State legislature to pass Senate Bill 31, which approves the utility to let power customers pay for new generation facilities before the plants produce power. SB 31 was one of the most intensely lobbied measures in years. Opponents say SB 31 shifted risk to ratepayers and forced some consumers to pay for plants they will never use. Company lobbyists and the bill's sponsors all used the US$1.30 per month initial increase figure to sell the fee. But now that figure has changed and opponents said the public was tricked.

The nuclear power expansion fee that will show up on Georgia Power bills in January will be bigger than the utility indicated when lobbying for the levy, according to plans filed on September 3.

Georgia Power said the initial fee will add US$3.73 to the typical monthly residential bill in 2011 - more than double the US$1.30 figure the company and its supporters used when it convinced the state legislature to allow the fee. In the Public Service Commission (PSC) filing, Georgia Power also said the fee will ratchet up to US$9 over the following four years, rather than six as it had suggested last year.

However, the total amount collected through the fee to help pay for two new reactors will remain unchanged, Georgia Power said. It's the initial amount and pace of the increases that differs from the company's previous indications according to the utility.

But opponents said the public was tricked. "It's the old bait and switch," said Angela Speir, executive director of Georgia Watch and a former PSC member. "Georgia Power told  legislators it would be one thing, but when ratepayers get their bill, it's something else."

Under state law and utility regulatory policy, power customers don't typically pay for new generation facilities until the plants produce power. But in 2009, Georgia Power convinced the legislature to pass Senate Bill 31, which changed that for nuclear reactors. SB 31 was one of the most intensely lobbied measures in years. Company lobbyists and the bill's sponsors all used the US$1.30 per month initial increase figure to sell it.

Opponents say SB 31 shifted risk to ratepayers and forced some consumers to pay for plants they will never use.

Georgia Power's nuclear fee is intended to pay about US$1.6 billion in financing costs for constructing two Westinghouse Advanced Passive 1000 (AP1000) pressurized-water reactors (PWRs) designated as Vogtle, Units 3 and 4, near Augusta. They are scheduled to be complete in 2016 and 2017. The reactors will cost an estimated US$14 billion total.

Preliminary site work has already started for the two units. The NRC granted an Early Site Permit (ESP) as well as permission for limited safety-related construction in August 2009. However, actual construction of the new plant cannot begin until Southern receives a

combined construction and operating licence (COL) from the NRC not expected before mid 2011.

The Vogtle 3 and 4 reactors could become the first licensed nuclear reactors in the US since the 1970's. But that doesn't come cheap. Besides the fee for the construction costs (and putting th risk with the customers, Georgia Power was the recipient of the US$8.3 billion in federal loan guarantee from the Department of Energy announced by President Obama on February 16, 2010.

The new fees will come on top of whatever basic rate increase Georgia Power wins from state utility regulators later this year. Because, amid the worst recession since the Great Depression and state unemployment still topping 10 percent, Georgia Power filed a rate increase request before the Public Service Commission (PSC) of more than US$1 billion. The new billion-dollar proposal would be phased in over the next three years. By February 2013, typical household bill would shoot up US$18 per month.

In August this year, PSC approved an amendment to the construction contract between Georgia Power and Westinghouse–Shaw, the group building the two new units. Though many details of the contract dispute are still unknown, the PSC decision allows Georgia Power to shift the cost of the dispute – estimated at US$108 million – directly to customers. It comes without the slightest effort by Georgia Power to explain why its shareholders shouldn't be the ones to shoulder those costs.

On 7 September, Florida's Public Service Commission voted 3-2  to increase Florida Power & Light customers' bills by US$31 million starting in January to pay for development of the company's nuclear projects. The decision came after nearly three weeks of wrangling between the company and the commission over whether to conduct a full hearing on the issue after testimony revealed that FPL supplied the commission with inaccurate data last year regarding its nuclear projects.

By law, the commission must determine if what FPL is allowed to charge customers for planning and development of its nuclear projects is reasonable and prudent. The increase will mean that customer bills will increase 33 cents per 1,000-kilowatt hour to pay for nuclear projects, and the commission will decide sometime next year whether those costs are reasonable.

FPL is moving ahead with its plans to build two new nuclear power plants at Turkey Point.
The examiner, 10 September 2010

Sources: /  World Nuclear News, 8 September 2010 /, 23 march 2010 / The Atlanta Journal-Constitution, 3 September 2010 / website of consumers advocacy organization
Contact: NIRS