As one of five statewide elected officials who regulate Georgia Power, I am compelled to respond to an Aug. 2 AJC article regarding Georgia Power profits and consumers’ concerns about their power bills.
The members of the Georgia Public Service Commission have several duties tied to our elected positions. We have the duty to follow Georgia law. We have a fiduciary duty to Georgia Power, to ensure the company remains financially viable and able to responsibly produce electricity. And we have a duty to Georgians, to keep rates as reasonable as possible. All come into play when discussing power rates.
Credit: Handout
Credit: Handout
Several factors contributed to Georgia Power’s recent price increases, not the least of which was simple economics. Prices are naturally higher in the summer months. Electricity usage is at peak demand when residences, businesses and churches keep air conditioners running more hours of the day.
Georgia Power also has the right to ask the PSC to increase rates. Georgia Power requested a rate increase in 2022, the results of which are now adding to consumers’ bills.
The electric utility requested an increase of $2.9 billion over three years. After a full audit and analysis, and after many public hearings, the PSC approved a $1.9 billion increase — 40 percent lower than what Georgia Power requested.
A recent article in The Atlanta Journal-Constitution mentioned that Georgia Power’s profits for the second quarter of 2024 were significantly higher than last year. But the article did not mention that the company’s profits are capped.
The PSC has set a profit “band” of 9.5 percent to 11.9 percent for Georgia Power. The profit “band” is set above and below the return on equity (ROE). At the end of 2024, Georgia Power’s profit is guaranteed to be at least 9.5 percent, but it cannot exceed 11.9 percent. Profits are peaking now, but they must come in line by December. Profits for the second quarter are higher than last year, but per the PSC’s rate case order, Georgia Power’s annual profits can’t exceed 11.9 percent.
When finalizing the rate case, I submitted a motion to lower the profit cap to 11.5 percent. When my motion did not pass, I voted against the rate increase request.
Two additional factors for increased bills are fuel costs and the new nuclear units at Plant Vogtle.
Per state law, Georgia Power cannot profit on fuel costs, but it can — and does — pass those costs to ratepayers. The PSC does not control state law. The PSC merely enforces the laws passed by the legislature and signed by the governor.
Nationally, the cost of fuel has risen significantly. When looking for reasons behind high fuel costs, I suggest looking to the White House. Energy costs reflect the volatility in the market thanks to the push for “the Green New Deal.”
State law also allows Georgia Power to recover the costs of infrastructure improvement, including Plant Vogtle construction. The PSC used Vogtle’s many construction delays to negotiate an agreement with Georgia Power that saved ratepayers more than $3 billion in capital costs. That amounts to ratepayers saving nearly 30 percent off Vogtle’s construction costs.
The new units at Plant Vogtle are currently providing carbon-free energy for up to a million homes and businesses. This will continue for the next 60 to 80 years. The reliability afforded to Georgia’s electric grid by Plant Vogtle cannot be understated.
Though no one like rate increases, they are sometimes necessary for Georgians to have continuous, reliable energy. Georgians don’t want to suffer brownouts or blackouts as happen in other states. The PSC is working to protect ratepayers by ensuring they can access reliable energy without overpaying.
Lauren “Bubba” McDonald served as a state representative for 20 years before he was appointed to the Public Service Commission in 1998 and won a special election to serve the remainder of the term. He was subsequently elected to the position in 2008, 2014 and 2020.
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