Georgia Power wants to tap account to boost sagging profits

Rather than seek a rate increase to boost its sagging profits, Georgia Power wants to take $324 million in customer revenue from a fund set up to mothball old equipment.

The company has asked the Georgia PSC to approve an accounting change that would spread the $324 million over an 18-month period that runs from July 2009 through December 2010.

The electric utility cited the economy in explaining the action, saying due to the recession, its profit in 2009 and 2010 will fall below 10.25 percent. That’s the minimum in the profit range allowed by the PSC.

The utility said it’s taking the action “in lieu of filing to increase base rates,” which it said it can do if its profits don’t hit 10.25 percent. The company said it “believes that this is a bad time to increase rates for customers.”

Consumer advocates say that also would involve greater scrutiny and take more time.

Angela Speir Phelps, a former PSC commissioner, now deputy director for the consumer group Georgia Watch, said, “They want $324 million of ratepayer money … to increase their profit rather than return it to ratepayers.”

Georgia Power said it doesn’t expect to hit the 10.25 percent profit margin even with PSC approval. It said short of “additional extreme economic shocks,” however, it would file its next base rate case on July 1, 2010.

The accounting change stands to benefit the utility’s investors and allow it to borrow at better rates. The utility said it has budgeted $5.4 billion of capital investment in 2009 and 2010 and its “ability to offer investors a stable return is essential for attracting investment in the company.”

The $324 million comes from a reserve account where funds from base rate revenues are accumulated for the disposal of retired equipment such as transformers and poles. The account has gotten so large over the years that its reserves exceed the estimated cost of future equipment disposal.