Lawmaker: bar Ga. Power from profit on overruns

The question of whether Georgia Power should be allowed to profit from cost increases at its $6.1 billion Plant Vogtle expansion could wind up in the hands of the Legislature.

Rep. Jeff Chapman (R - Brunsiwick) plans to file a bill Thursday that would prohibit the utility from collecting its set profit margin on any overrun charges passed along to ratepayers.

Chapman already wrote a letter to Georgia Power President and Chief Executive Officer Paul Bowers, asking that the company voluntarily forgo or reduce the allotted 11.15 percent return the company would get on top of any additional Vogtle costs.

“I think it is in the best interests of your company and the ratepayers to resolve this problem quickly and fairly,” Chapman wrote. Georgia Power said company officials plan to meet with Chapman.

A Georgia Power spokesman said the state Public Service Commission “has complete oversight of the project and has verified and approved every dollar spent to date.” An independent project monitor also has testified that “Georgia Power is managing the project well and that the dollars invested to date are prudently invested,” spokesman Mark Williams said.

Georgia Power is building two nuclear reactors at Plant Vogtle, in east Georgia, and rates already have risen to help pay financing costs. Because Georgia Power is a regulated monopoly, it gets a set profit in exchange for providing electricity to all customers in its statewide territory. That means if the costs for the Vogtle project rise, consumers may wind up paying that amount plus enough to give Georgia Power the 11.15 percent profit.

The utility is in a legal battle with two major contractors over delays in site preparation and initial construction work. Georgia Power said it is not responsible for those delays or costs, which total $425 million for the utility.

If the utility loses the lawsuit or settles, however, it could seek PSC approval to recoup the added costs from ratepayers.

A built-in profit gives the utility no incentive to keep Vogtle’s costs under control, Chapman said.

“We obviously want to see the plant built in a professional, safe manner, and that’s not negotiable,” Chapman said. “The cost overruns, the way it’s set up now, (Georgia Power) would literally profit from them, and that just harms consumers. That’s just unfair.”

The outlook for Chapman’s bill is unclear, but consumer advocates back the idea of Georgia Power bearing more of the financial risk for the project, which involves the first reactors built in nearly 30 years.

In addition to being able to ask the PSC to approve rate increases to cover cost hikes, Georgia Power has $3.4 billion in federal loan guarantees for the work.

“All of the risk, all of the responsibility for paying for the overruns and the profit on that falls to the average residential ratepayer,” said Liz Coyle, deputy director for Georgia Watch, a consumer rights group.

Chapman’s bill would amend the 2009 law that paved the way for customers to start paying the project’s financing costs.

The reactors are scheduled to start producing power in 2016 and 2017.