Waves of price increases are expected to douse many Georgians who pay electricity and natural gas bills in the coming months.
One crucial reason: surging prices for natural gas that heat homes, water, stoves and ovens. Utilities also rely heavily on burning natural gas to generate electricity.
Adding to the consumer burden, state regulators already have approved an electricity rate increase for Georgia Power and are considering beginning to allow some charges for construction costs at the long-troubled nuclear expansion of Plant Vogtle.
Georgia Power’s moves alone could hit its 2.6 million customers with more than $600 million in extra costs over the next nine months or so, with more to come later. Typical residential electric bills could rise $10.46 a month, or $125.52 over a full year. More than a fourth of the increase is already locked in to start in January.
Business customers, who typically pay lower rates, also would see bills rise.
“Rate increases are never welcome,” Jeffry Pollock, a witness for the Georgia Association of Manufacturers, told the Georgia Public Service Commission in a hearing last week. But the timing of the nuclear charges “could not be worse.”
The prospect of higher utility bills comes as many Georgians already are paying more for everything from groceries to used cars. The U.S. consumer-price index rose by 5.4% in September from a year earlier after the pandemic triggered shortages in workers and goods.
Natural gas could drive U.S. winter heating costs up 30%
The U.S. Energy Administration released its winter fuels outlook last week, and it wasn’t pretty.
It predicts that people in almost half the nation’s homes that rely on natural gas for heating will spend an average of 30% more than they did a winter ago. And most of the increase is because of rising natural gas prices, rather than some expectations of a somewhat colder winter.
One telling set of natural gas spot prices was up 84% on Oct. 1 compared with last winter’s average. According to the EIA, once-lagging demand for fuel has risen faster than supply and production.
In Georgia, rates charged to residential customers by natural gas marketers are already up about 20% compared with this time last year, according to an Atlanta Journal-Constitution analysis of rates published by the PSC, the state regulator. The marketers are served by Atlanta Gas Light’s distribution system and provide natural gas to customers around the state.
Georgians already were paying the fourth-highest residential natural gas rates in the nation last year, or 43% more than the U.S. average, according to the EIA. About two in five Georgia households rely on natural gas to heat their homes.
They aren’t the only ones paying more for natural gas. Electric utilities are the state’s biggest users of the fuel after they shifted away from more expensive and dirtier coal. As of last year, natural gas was the fuel for just over half of Georgia Power’s power generation.
A spokesman for Georgia Power, the state’s largest electric utility, said natural gas prices it pays have risen 220% since lows in June 2020. He blamed “a combination of supply and demand factors including constrained production recovering from the COVID-19 pandemic, and high prices overseas causing continued strong export demand.”
So, last week, Georgia Power asked the PSC for permission to increase its “fuel cost rider,” a line item included in customers’ monthly bills to cover the cost of natural gas, coal and nuclear fuel to generate power. The increase would raise customer rates by $252 million annually, or $3.81 per month for a typical residential customer, beginning Jan. 1. The PSC is expected to make a decision later this year.
After a string of cuts in the fuel cost rider, including one last year, it is Georgia Power’s first request to increase that specific rate in more than a decade.
As of last year, Georgia Power’s residential rates for electricity were higher than average for the state, but about 6% below the national average, according to data from the federal government.
Vogtle nuclear bills also loom
Meanwhile, Georgia Power is already set to increase overall electricity rates in January by $157 million, or about $2.87 a month for an average household. It’s the final piece of a three-year ramping up of rates approved earlier by a majority of the elected members of the PSC, which regulates the utility, a for-profit territorial monopoly.
Other potential price increases are coming down the pipeline.
The PSC is contemplating Georgia Power’s request to start charging customers for the first wave of construction costs on its nuclear expansion of Plant Vogtle, which is already years behind schedule and billions of dollars over budget.
Customers have for years been paying Vogtle financing costs and a portion of Georgia Power’s profits on the massive project near Augusta. Cumulatively, those payments alone will have topped $850 for the typical residential customer by the time the first of two new reactors is slated to begin producing electricity.
The utility struck a proposed agreement earlier this month with the PSC’s public interest advocacy staff to add $2.1 billion of Vogtle construction expenses into the company’s rate base, potentially as early as next summer, assuming the first of two new reactors goes into full operation by then.
Under that tentative deal, the near-term, first round of nuclear construction charges could add up to around $3.78 a month in typical residential bills, according to Georgia Power. The PSC is expected to decide the matter in November.
One more way consumers could end up paying more for electricity: In July, Georgia Power is expected to file a request for the next three years of rates. Some PSC watchers assume the utility will again seek to increase charges on its customers.
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