Tentative deal to cut Georgia Power’s rate hike

Georgia Power consumers might be see a rate increase in 2014. But it won’t be as much as it could have been.

The utility has tentatively agreed to cut its proposed rate hike by roughly 40 percent, from $1.46 billion to $873 million, for its 2.4 million residential and business customers, according to a deal reached Monday between the Atlanta-based utility and staff members of the Georgia Public Service Commission.

Instead of paying $7.84 more a month for three years starting in 2014, residential consumers would pay an estimated $2.19 more in 2014.

That amount would increase another $3.61 in 2015 and another $2.96 in 2016.

The deal must be approved by the PSC.

Georgia Power said in July it needed to boost bills to pay for pollution equipment on its coal-burning power plants, as well as to add transmission lines and install smart grid technologies.

As a regulated monopoly, Georgia Power is allowed to recoup its capital costs from consumers plus earn a set profit.

“The terms reached under the settlement agreement give us the flexibility to manage our business by taking care of our customers and meeting shareholder expectations,” said Georgia Power spokesman Brian Green.

That request included two contentious issues. One was to have a set rate of return of 11.5 percent with an allowed profit margin of 10.25 percent to 12.25 percent. The other was a tariff that would have required residential consumers who use solar panels to help reduce their own energy costs to pay additional fees.

As part of Monday’s deal, the utility agreed to a reduced rate of return of 10.95 percent, documents say. Georgia Power also agreed to withdraw the tariff.

“We’re still analyzing and looking to see what this means for the actual monthly increase, but at first read there are many things in this agreement that look to be good for consumers,” said Liz Coyle, deputy director for Georgia Watch, a consumer rights group. “The public service staff, I think, made a very strong case for a reduced revenue requirement.”

Georgia Power said it needed the tariff to cover the cost of supplying back-up electricity when the solar panels aren’t in use, such as during rainy days or if they require maintenance, as all power units do. Renewable energy advocates argued that paying the tariff offsets any savings consumers get from using solar and perpetuates Georgia Power’s grip on solar growth.

“This is a real victory for individuals and businesses that want to use technology to regain some control over their energy bills,” said Jason Rooks, director of government affairs for the Georgia chapter of the Solar Energy Industries Association.

The proposed increase was the latest in a series of rate hikes or construction-related fees since 2011, though falling fuel costs have partly offset those increases. Georgia Power says its customers pay about 10 percent to 15 percent less on their utility bills than the national average.

Regulators typically approve the utility’s requests, but settlements also are a routine part of the process.

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