In a move expected to cap the biggest part of Georgia Power electric bills for three years, state utility regulators on Thursday unanimously approved parent Southern Co.’s $8 billion plan to buy natural gas provider AGL Resources.
The freeze on future increases in base rates through July 2019 was part of a merger-related settlement between the utility companies and the Georgia Public Services Commission.
The commission approved the settlement in a 5-0 vote Thursday.
The settlement does not block Georgia Power from seeking increases in charges tacked onto customers’ monthly bills for specific purposes, such as a current assessment to bankroll finance costs for the Plant Vogtle nuclear expansion.
This year, however, Georgia Power said most residential customers’ monthly bills are expected to go down by about $2.50, mostly due to lower fuel costs.
Meanwhile, PSC approval of the merger allows Southern Co.’s acquisition plan to clear a key hurdle.
The deal still needs approval from regulators in several other states where AGL and other Southern-owned utilities operate. The merger would create one of the nation's largest utilities, with 9 million customers in nine states.
Southern Co.’s settlement with the PSC requires the company to shoulder all merger costs, rather than attempting to pass along costs to Georgia Power customers. The agreement also allows the utility to keep any cost savings that result from combining the companies for the first three years.
After that, the utility must pass on 60 percent of the cost savings to customers for the next three years, and all savings to customers after that, according to the PSC.
“This is real money,” said Bobby Baker, a utilities lawyer and former Georgia PSC commissioner. As the result of a similar settlement after AGL bought a large natural gas utility in Illinois several years ago, customers saw a collective savings of about $10 million a year from their share of AGL’s post-merger cost cuts, he said.
