Savoring air conditioning during the dog days of summer has always come at a price, but Georgians have long had an advantage: electric rates consistently lower than the U.S. average.
But the last three summers, the price edge that Georgia Power and state regulators like to tout has completely or nearly evaporated. That trend could continue as Georgia pushes through this summer’s heat.
National comparison figures are not yet available for the most recent months, but Georgia’s electricity costs continue to climb compared to last year, including the effects of rate increases state regulators approved late last year for Georgia Power.
A typical Georgia Power residential bill this July was about $190 — $37 higher than the price for the same usage five years ago, according to data provided by Georgia Power, the state’s biggest electricity provider.
Georgia’s electricity costs appear to have gone up faster than the nation’s at least during the last five years, said Tyler Hodge, an economist for the U.S. Energy Information Administration. And prices for this year throughout the south Atlantic region are expected to be up 2.4 percent over last year.
Consumers feel the bite.
“We hear from them all the time saying it is getting more and more difficult for them to manage these expenses,” said Janee Briesemeister, a legislative representative with AARP. “Having adequate cooling is essential for health and safety. A lot of folks are struggling.”
“They are complaining about it more and feeling like elected officials are not doing enough to keep rates in check.”
Liz Coyle, acting executive director of consumer advocacy group Georgia Watch, worries about the rising prices.
“Georgia was one of the states worst impacted by the Great Recession, yet at that same time they continue to see the cost of electricity to go up and up,” she said.
Over the course of an entire year, Georgia’s per kilowatt-hour costs are still lower than the national average. That’s the comparison that Georgia Power and elected state utility regulators say people should focus on.
Spokesman Brian Green said Georgia Power’s goal “is to continue to offer rates below the national average, high reliability and superior customer service for years to come – maintaining Georgia’s strength as an economic and business leader.”
But Georgians chug 40 percent of their annual home electricity in just the four warmest months, according to Georgia Power. So prices in that period have an especially big impact. And that’s when Georgia’s per kilowatt-hour costs spiked to hit and, briefly, exceed the national average.
Base rates up
The biggest chunk of Georgia Power’s summer residential bills, and the part that has seen the largest increase from five years ago, is the base rate charged by the utility. That covers everything from operations and some profits to upkeep and improvements to lines and plants. It accounts for nearly half of the $37 increase in a typical July bill this year compared to one in 2009.
The next biggest chunk — about a $10 increase this July compared to five years ago — is what consumers are paying to cover the financing costs for a massive nuclear expansion underway at Plant Vogtle south of Augusta.
State utility regulators — the elected commissioners on the Georgia Public Service Commission — particularly cite the growing cost of environmental compliance with tightening federal pollution limits. That’s up nearly $6 on a recent monthly bill compared to five years ago.
More spending tied to environmental rules may be on the way, PSC commissioners say. Coal-burning plants tend to pump out lots of carbon, which has been blamed for worsening climate change and has prompted new federal proposals for cutbacks.
PSC Chairman Chuck Eaton, a critic of the latest federal action, says Georgia faces extra cost pressures because of its reliance on energy from coal.
“We have been moving away from coal. That costs money,” Eaton said. “It wouldn’t surprise me if we had more upward pressure than other states because we were more coal dependent.”
Regulators also say that over the years they have upped summer rates to better represent increased costs of producing large amounts of power to meet Georgia’s summer demand, which often requires using less efficient plants.
Regulators and Georgia Power spokespeople say they think Georgia may be ahead of some other states on ensuring reliable electric generation in the future.
“Many utilities in unregulated states are not investing in infrastructure to the level we are,” Green said. “So, as other states catch up to the investments we’re making, we expect to see the difference (in electric cost comparisons) fluctuate again.”
Authorized profits among highest
But others criticize state moves, including a decision by the PSC last year on Georgia Power’s authorized profit level. Though the commission slightly reduced the profit level, it turned out to be the highest of more than 80 U.S. utility rate cases in the past two years, according to SNL Energy.
Electric rates that manufacturers pay have also seen spikes above the national average in recent years. Some Georgia manufacturers had complained that neighboring states offer lower rates, but there is some indication that those complaints are waning. Recently Georgia ended its sales tax on energy used by manufacturers.
Mark M. Sweeney, senior principal of McCallum Sweeney Consulting, a Greenville, S.C.-based firm that advises companies on site selection decisions, said some Georgia neighbors “have had upward price pressures. Georgia Power has done a pretty good job of keeping their industrial rates competitive.”
Industry groups have organized to keep energy rates in check.
But homeowners haven’t been as vocal, said Bobby Baker, an attorney and former PSC commissioner who now represents an environmental group fighting rising costs of Georgia’s nuclear expansion.
“Consumers react by trying to save energy,” Baker said, “but few show up to protest.”
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