Georgia Power customers should expect another dip in their monthly electricity bills next year thanks to lower natural gas prices and a mild summer.
The utility, which serves 2.4 million customers, notified state regulators on Tuesday that it will apply for a rate reduction to take effect Jan. 1, though it didn’t give an amount. Typically such changes are a few dollars a month on an average residential bill.
It’s the second such move this year by Georgia Power - the first cut average monthly bills $8 - and both were triggered by drops in the cost of natural gas, which is now the utility’s primary fuel. By law Georgia Power cannot profit from dropping fuel costs and must pass them along.
The reductions follow a rise of about $14 a month over a couple of years to help pay for two new nuclear reactors at Georgia Power’s Plant Vogtle and two natural gas units at Plant McDonough.
The downward trend in natural gas prices also affects consumers directly if they use gas to heat their homes. Gas suppliers in Georgia report that typical rates are currently down from a year ago.
However, gas customers could still see higher overall bills this year due to expected colder temperatures compared to last year’s warm winter.
The U.S. Energy Information Administration predicts the average household will pay between 15 and 19 percent more to heat their home this winter due to colder temperatures.
“It’s more likely that we’re going to see a return to more normal temperatures, which means consumers will use more natural gas than last year,” said Kevin Greiner, chief executive officer of Atlanta-based Gas South, one of the companies that sells natural gas to Georgians.
A typical rate for Gas South customers has dropped by 10 cents per therm, the unit used to measure gas, this October, compared with a year ago.
Other gas marketers in Georgia show similar decreases, according to prices posted on the state Public Service Commission’s website. For example, Georgia Natural Gas customers on a standard fixed-rate plan are paying $49.46, compared with $53.36 in October 2011. SCANA customers on the same type of plan are paying $49.84, down from $51.44 this time a year ago.
Because of lower natural gas prices, Georgia Power has collected nearly $200 million more from its customers for fuel than what it needed to pay for it, according to the letter the utility sent to the PSC, which must approve any rate changes up or down.
In June, a typical residential monthly bill dropped by 6 percent, or $8, after the utility said total fuel costs — the amount Georgia Power pays for natural gas, coal, nuclear and renewable fuels to make electricity — would be $567 million less each year over the next two years. The company now says prices have fallen below that, prompting an additional cut to monthly bills.
Georgia Power’s residential customers now pay $116.80 a month for a typical bill of 1,000 kilowatt hours.
Environmental and political pressures have forced Georgia Power to shift away from getting most of its electricity from coal, which used to be among the cheapest and most stable forms of fuel. The utility’s fuel mix, which mirrors that of parent Southern Co., now uses natural gas for about 47 percent of its fuel and coal for about 35 percent.
Evolving technologies such as horizontal drilling and hydraulic fracturing have allowed gas to be extracted from places that it hasn’t before, such as Ohio and Pennsylvania. This has nearly doubled U.S. supply and kept prices stable.
“This shale gas has really transformed the gas supply market,” said Richard McMahon, the vice president of energy supply and finance at the Edison Electric Institute, a group that represents investor-owned utilities such as Georgia Power and Southern Co. “People are locking in lower prices.”
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