State regulators have heard final pleas urging them to reject Georgia Power’s request to have ratepayers pay expensive fuel costs, which would lead to higher electric bills starting in June.
Georgia Power and the state’s Public Service Commission’s public interest advocacy staff are urging the five-member panel to approve an agreement that would reimburse ratepayers for $2.1 billion in under-budgeted fuel costs, driven in part by a sharp increase in fuel costs inflation were caused.
In addition to the excess fuel costs, the proposed rate increase includes an additional estimated $4.4 billion in fuel costs over the next three years.
On Tuesday, commissioners will vote on the utility’s request for a fuel adjustment, which would increase average monthly residential electric bills by $16 over three years. In response, opponents are calling on regulators to extend the proposed deadline for customers to pay unfunded fuel costs and for the PSC to create a new system that would require Georgia Power to cover a portion of its excess fuel costs.
The PSC heard arguments Thursday from attorneys representing environmental groups, the Georgia Association of Manufacturers, Georgia Power and PSC staff.
The Sierra Club of Georgia and the Southern Alliance for Clean Energy are among the organizations calling for fuel costs to be spread over 60 months instead of the 36 months now proposed.
Many Georgia Power customers have expressed concerns According to the PSC, rising fuel costs will make things even more difficult for cash-strapped customers who already cannot afford their electricity bills.
Jennifer Whitfield, an attorney representing Georgia Interfaith Power and Light, said these additional costs came after Georgia Power disconnected about 10% of residential customers last year for nonpayment.
Whitfiled said Georgia law gives state regulators greater control over fuel cases than just approving a utility’s application.
Under Georgia law, utilities have a legal right to reimbursement of fuel costs unless they have charged unlawful or unreasonable fees.
“One of the things the General Assembly says about ‘fair’ and ‘reasonable’ is that the commission is directed to consider the quality of service provided by the utility when determining what rates are fair and reasonable,” said Whitfield. “As one public commenter said eloquently at last week’s hearing, there is nothing fair or reasonable about a service that people cannot afford.”
Preston Thomas, the commission’s attorney who engages in public interest advocacy, said some opponents of the terms of the pending agreement are unfairly criticizing its analysis without providing evidence as to why Georgia Power is shouldering a larger share of the burden of these latest costs should wear.
The only costs that cannot be recognized in this case are those costs resulting from unlawful or manifestly careless behavior on the part of the energy supplier,” he said.
“Instead of talking about ineligibility based on the provisions of the law, (opponents) are talking about a (cost) sharing mechanism,” Thomas said. “I also think there is some confusion about what fair and reasonable means. As the Commission knows, it is fair and reasonable to balance the interests of customers and utilities, not just the lowest possible tariffs.”
According to Bryan Jacob of the Southern Alliance for Clean Energy, Georgia Power should be responsible for up to 5% of inflated fuel costs so that company leaders don’t shirk their responsibility for grossly understated fuel prices. By spreading fuel costs, utilities are also more likely to rely on different energy sources, reducing reliance on unpredictable global energy markets, Jacob said last week.
The Southern Environmental Law Center estimates that typical residential electricity bills will be about $45 higher on average in 2025, according to Georgia Power customers six interest rate increases for fuel costs, annual increases in electricity tariffs and the bill that will be due upon completion of the nuclear expansion of the Vogtle power plant.
The three-year repayment period strikes the right balance between Georgia Power and its consumers, said Tom Newsome, director of utility finance at the PSC.
Newsome said it would have cost Georgia Power customers tens of millions of dollars more to extend the payment period beyond 36 months.
“Extending the payback period is not a gift,” Newsome said.
In contrast, the PSC advisor recommends that ratepayers pay off the fuel account within 48 months.
Critics have also ridiculed proposed terms that would allow Georgia Power to recoup more than 39% of under-budgeted fuel costs without requiring a full case review involving state regulators and experts. The current fuel setting limit is 15%.
Commission Chairwoman Tricia Pridemore said Thursday she supports a motion to increase the senior citizen discount from the $2 increase proposed in the proposed agreement. The larger monthly rebate would result in low-income customers aged 65 and older paying the same 12% higher utility costs as other residential customers would pay under the higher fuel tariffs.