Georgia Power’s ‘Smart Usage’ rate plan draws scrutiny

Credit: Natrice Miller / Natrice.Miller@ajc.com

Credit: Natrice Miller / Natrice.Miller@ajc.com

Witnesses say company’s default rate plan for new customers is opaque and increases monthly bills

Consumer advocates and staff for state regulators this week raised alarms about a Georgia Power practice that automatically places new customers into a complicated rate plan they say is confusing and often drives up bills, even for households that use less energy.

Georgia Power says its “Smart Usage” rate plan is designed to offer consumers an incentive, charging higher energy rates at peak periods and much lower than usual rates at off-peak times. By nudging consumers to use energy at times of lower demand, the idea is customers can save money.

But that’s not the way it’s working out, Georgia Public Service Commission public interest staffers and other experts testified this week during hearings on the company’s proposal to raise its electricity rates.

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The plan charges higher rates during peak times for electricity demand — 2 p.m.-7 p.m., Monday through Friday, in the months of June through September — but much lower-than-normal rates for all other periods. However, Smart Usage customers also see an additional “demand charge” fee tacked onto their bills, calculated based on the 60-minute period each month when a customer used the most electricity.

Several witnesses said customers often don’t understand how the complicated plan works.

“They’ve got children to feed, they’ve got children to bathe, they’ve got dinner to cook,” said Glenn Watkins, a rate economist enlisted to testify in the proceedings by the PSC’s Public Interest Advocacy staff. “It just doesn’t work very well for residential customers, plain and simple.”

Complaints over Smart Usage come as Georgia Power wants to expand the program to more customers, including some that install rooftop solar.

Smart Usage has been available since 2014 as one of several new customer rate plans. The PSC, however, allowed Georgia Power to make Smart Usage the default rate plan for any new homes, condos or apartments built after January 1, 2021.

Customers can opt out and choose a standard residential rate or another plan the company offers — but some don’t know that, experts say.

Credit: arvin.temkar@ajc.com

Credit: arvin.temkar@ajc.com

Georgia Power’s online literature frames “Smart Usage” as a way to encourage customers not to run energy-hogging appliances at peak times and to reduce overall electricity use.

“By making small changes to how and when you use energy, you could save on your annual energy bill,” it says.

Witnesses for the PSC’s Public Interest Advocacy staff say their analysis shows that the average Smart Usage customer pays approximately $200 more per year than they would on a traditional rate plan.

An analysis of 11,000 Georgia Power bills by the Solar Energy Industries Association also found customers that use less electricity were even more likely to pay more on the Smart Usage rate than they would on one of the company’s other plans.

Other utilities offer “demand charge” rates, but Georgia Power might be unique in using it as the default for new residences.

“There is not a single IOU (investor owned utility) in the country regulated by a state regulatory commission that has mandatory residential demand charges,” the PSC’s Public Interest Advocacy staff said in filed testimony.

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Georgia Power spokesman Jacob Hawkins said the company proactively communicates with customers to help them understand the Smart Usage plan and its other rates.

“Many customers who have been on the Smart Usage rate option for a number of years have reported high levels of satisfaction with this rate plan,” Hawkins said in a statement. “We are always happy to work with any customer to evaluate and determine the best rate for them.”

PSC staff want Georgia Power to stop using Smart Usage as the default plan for newly built homes and instead place new customers on the standard residential rate.

Georgia Power, meanwhile, is requesting the PSC’s approval to stop offering the standard rate entirely to new hookups at the end of this year. Existing customers on the standard plan who established service before January 2023 would be allowed to stay on it, according to the company’s proposal.

The request is part of Georgia Power’s plan to raise rates nearly 12% over the next three years, which would increase the typical household’s electric bill nearly $200 annually.

Georgia Power has said the hikes are needed to cover the cost of upgrading transmission infrastructure, complying with environmental regulations and shifting away from fossil-fueled power generation toward renewables.

The company’s new rates and the percentage of its profits it can share with investors are ultimately up to the five elected members of the PSC to decide. The commission is expected to make a decision on whether to approve or adjust the company’s proposed plan just before the New Year.