By allowing ads to appear on this site, you support the local businesses who, in turn, support great journalism.
Monopoly money
The intersection of solar energy and GA Power’s rate increase

Guess what Georgia utility asked the Public Service Commission for a base increase rate of $482 million? (Hint: “What”, not “which” — guessing options are slim right now.)

That’s right, Georgia Power sought the millions — a 6.1 percent base rate increase — as cost recovery for infrastructure investments. With the PSC vote on Georgia Power’s 2013 20-year Integrated Resource Plan requiring the company to expand solar energy in their portfolio, it can be understood that rates may change for alternative resource development. (Here comes the sun… 525 more megawatts of it!)

But, Georgia Power proposed the increase in base rates on June 28, before the IRP vote on July 11—meaning that this money has little to do with the inevitable increase of solar energy.

The base rate increase is something that happens every year to keep up with costs and inflation. But Georgia Power is doing it a little differently this year: they are actually giving options. The $482 million is part of a three-year Alternative Rate Plan in substitution of their traditional annual rate case — which would ask for $280 million.

So it’s either A) $280 million means about a $4.55 monthly increase for the average residential customer using 1,000 kilowatt-hours per month, but Georgia Power can file for another rate increase anytime in the future; or B) $480 million, meaning approximately a $7.84 monthly increase per customer, and Georgia Power has to stick with the same rates for the next three years, for better or worse.

Because the rate increase was proposed nearly two weeks before the PSC’s vote on the Integrated Resource Plan, was it able to take into precise account the new long-term adjustments? Georgia Power was required to submit their rate increase request a minimum of five months prior to the effective rate increase date: Jan. 1, 2014. Timing may not have worked out so smoothly for the overlapping plans, but there are still months for commissioners and consumers to mull over the options. The Commission will hold the first round of public hearings on October 1 for Georgia Power’s direct testimony.

Georgia Power is asking for this increase to “recover the costs of recent and future investments in infrastructure — including environmental controls, transmission and distribution, generation, and smart grid technologies — required in order to maintain high levels of reliability and superior customer service.”

They need the money to keep up with costs, technology, and the Joneses. But are consumers covering necessary expenses or giving money to grow Georgia Power’s profit margin?

While this year’s request isn’t as transparent in their efforts to grow profit margins in 2011 (when the initial rate increase request would have raised profits an additional $84 million annually), both of this year’s rate options are still higher than the years since then. Consumers are facing either a $4.55 monthly increase that may rise in the near future or a $7.84 raise that will be fixed for three years, but neither of those options are kept as low as the past two years — $1.48 in 2013, and $3.09 in 2012.

But keep in mind that the proposals aren’t as high as the $10.76 monthly increase in 2011, even if Georgia Power tries to keep that year out of the books.

In Georgia Power’s “Load and Energy Forecast Summary”, the company’s document for this year’s proposal, it states that “Real Gross State Product (RGSP) has increased at an average rate of 2.1 percent per year over the past two years,” excluding 2011, “and is expected to grow at a 3.2 percent average annual growth rate through 2016.”

This means, according to Georgia Power’s projections, that the fixed higher rate increase option may be the cheaper choice for consumers in the long run.

But, once again, Georgia Power can’t ignore the rise of solar power. Now that the Commission voted to require more solar in Georgia Power’s long-term plan, how does that affect rate increases? And was it factored into the upcoming rates?

Georgia Solar Utilities Inc. said in a recent statement that with the Commission’s recent decision, “the solar industry will have an opportunity to go head-to-head with other energy sources in an open and fair bid process. The Commission also showed the people of our state that they believe Georgia businesses can get the job done when it comes to home-grown electricity. We agree with Georgia Power’s attorneys when they said that this new solar plan is not a mandate or RPS (Renewables Portfolio Standard).”

Georgia Solar Utilities addressed the issue, stating they “found ratepayers are bound into a monopoly which claims it is unable to take advantage of solar energy as an optimal part of our energy generation portfolio. Hence the ratepayers are locked into long term fuel contracts for finite supplies of coal, natural gas and uranium along with the fuels’ inherent volatility... ratepayers need the advantage of a proven technology as a part of our energy generation that has no fuel costs or volatility.”

In the near enough future, consumers may see options that aren’t limited to only one company. What will happen to the current projected rate increases for Georgia Power when competitors are finally factored in?

After all, even Monopoly can be played with up to 8 people at once.