The rate increase Georgia Power is asking for now dwarfs the $1.8 billion plan the PSC approved back in 2019.
Changes to the plan are likely before the five members of the PSC vote on the proposal on Dec. 20, and several issues remain unresolved.
In the meantime, these are the key takeaways after the first round of hearings.
Big increases in ‘23, with more likely on the horizon
In his testimony, Georgia Power CEO and chairman Chris Womack said the company recognizes the financial impact the rate increase would have on customers, but claimed they were necessary to fund grid improvements, plus continue the company’s gradual shift toward renewable energy sources.
“We’re always sensitive to the price of electric service and how it impacts our customers,” he said. “At the same time, we must make the necessary investments to ensure we can continue to meet the needs of our customers as Georgia continues to grow.”
Preston Thomas, an attorney for the PSC’s public interest advocacy staff, pushed Womack to justify the increases and pried for information about other rate requests likely to come from the company in the near future.
Georgia Power customers are already paying for two long-delayed and over-budget nuclear units at Plant Vogtle near Augusta. If Vogtle Unit 3 begins generating electricity in 2023, as expected, and Unit 4 follows in 2024, more rate increases to cover the units’ costs are likely to kick in, Thomas said.
Womack also acknowledged that in February, the company will ask the commission to approve recovery of costs it has paid for the coal and gas it burns at power plants.
All told, Thomas said PSC staff estimate those requests could add another $55 to $60 to the average monthly bill.
Thomas asked Womack if he had concerns about how several increases in quick succession would impact customers’ finances.
“Yes, we take that into consideration,” Womack said.
Increased investment returns
Not only is Georgia Power asking the commission to allow it to raise rates. The company also wants a bump in its return on equity, or the amount that shareholders of its parent, Southern Company, earn on their investments.
The company has proposed raising the return on equity investments it receives from 10.5% to 11%.
Georgia Power’s chief financial officer Aaron Abramovitz said the increased returns are needed to help the company raise capital at more favorable rates. Critics have claimed the company’s return is already excessive.
Commissioner Lauren “Bubba” McDonald also seemed to view the request with some skepticism. McDonald acknowledged the challenges that the COVID-19 pandemic has caused for Georgia Power, but added that small businesses and households have also struggled.
“The company has also got to take a bit of that in consideration too, as it looks at its earnings, and its potential earnings as we go through this rate case.”
Little movement on rooftop solar
One of the most hotly anticipated issues the PSC is expected to decide in this rate case is what to do about rooftop solar.
A popular program created in 2019 that allowed customers with rooftop panels to dramatically lower their energy bills by selling excess energy back to the grid hit its 5,000 participant cap way back in July 2021.
Solar advocates have pushed hard for the commission to expand the pilot program, but a proposal from Commissioner Tim Echols to allow another 75,000 participants to enroll failed to pass this summer.
Georgia Power has been consistently opposed to expansion, claiming the program’s participants save on their power bills at the expense of other customers without solar. In filed testimony, Larry Legg, the company’s director of pricing and rates, said company revenue has fallen by $1.4 million as a result of the program.
The commission did not make any decisions on whether to expand the program or not this week, but the issue is expected to figure prominently in the next set of hearings scheduled for November.