Huge electric rate hike request on horizon

By Margaret Newkirk

The Atlanta Journal-Constitution

Georgia Power will be asking for a “significant” rate increase this summer, possibly topping $800 million per year, utility regulators said on Thursday.

The figure dwarfs the company’s past two rate increase requests.

Georgia Power received $515 million per year total in new revenues from the rate cases decided in 2004 and 2007. Those combined hikes raised the typical residential customer's bill by about $9 per month.

It's not yet clear how much the upcoming increase request would raise customers' bills, how much of it regulators would actually approve, or how much of it will be borne by businesses as opposed to residential customers.

The company won't file its rate increase request until July, and typically keeps details under wraps until the filing.

In a conference with Wall Street analysts on Wednesday, Southern Co. CEO David Ratcliffe repeatedly refused the discuss details of the looming rate request.

But the $800 million figure slipped out during a Thursday Public Service Commission meeting on a related issue. The number comes from a PSC staff memo to commissioners drafted that morning.

The company neither confirmed nor disputed the figure, but did confirm that its rate increase request was going to be large.

Both the staff memo and Thursday’s meeting focused on a highly unusual request from Georgia Power. In an effort to whittle the rate increase, the company is asking for permission to delay using -- and getting paid for -- three new power generators near Vinings.

Otherwise, said Troutman Sanders attorney Kevin Greene, representing Georgia Power, the rate increase could threaten the state's fragile economic recovery.

The delay in collecting money for the new gas plants could reduce the company's revenue needs by $75 million in 2011 and $29 million in 2012, the staff memo said.

“Usually, we are not big fans of deferred cost recovery,” Greene said, but  “these are unique times, extremely unique times.”

He said the company never got the benefit from its last rate increase, because the economy tanked and "energy sales have fallen off the cliff."

"As the economy slowed down and manufacturing plants were closed and stores were shuttered and citizens did not move here, the sales did not materialize,” he said.

Georgia Power has also been building new infrastructure, including environmental controls on older plants and transmission lines.

“It is an inescapable fact that there will a significant rate increase as we go into next year, regardless of how we massage things,” Greene said.

PSC staff and the consumer group Georgia Watch both raised objections to Georgia Power's proposal to delay charging for the new plants, saying the delay would raise the plants' costs to customers over time while having little effect on the upcoming rate request.

The PSC will vote on that proposal at a special meeting on Thursday.

Georgia Power is expected to file its rate increase request on July 1, kicking off a six-month review.

Any increase would go into effect in January, 2011.