Environmental and manufacturing interest groups, concerned customers and staff for the Georgia Public Service Commission (PSC) delivered final arguments Thursday to commissioners ahead of a key vote next week on Georgia Power’s request to raise rates to pay for its fuel expenses.
The company and the PSC’s public interest advocacy staff previously agreed to a deal that would raise customers’ monthly bills by nearly $16 starting June 1 to cover the cost of natural gas, coal and nuclear fuel used at Georgia Power’s power plants. The PSC’s five elected commissioners are set to vote to approve or tweak that plan on May 16.
Georgia Power is heavily dependent on natural gas to meet customers’ power needs, with gas-fired power plants comprising almost half of the company’s total electricity generation capacity. And as a result, its fuel costs — and in turn, its ratepayers — are deeply affected by fluctuations in global natural gas prices.
After supply chain disruptions and Russia’s invasion of Ukraine sent natural gas prices spiking in late 2021 and 2022, the company’s rates did not keep pace. As a result, the company says it has accumulated an unpaid tab for fuel expenses of roughly $2.2 billion. The company is also asking to collect an additional $4.5 billion from customers to pay for projected fuel costs over the next two years. The proposed $16 monthly rate hike would cover both pots of expenses.
As they did in an earlier hearing this month, Georgia Power’s attorneys and the PSC’s staff called Thursday on the commissioners to approve their rate increase agreement — known as a “stipulation” — without modification.
Georgia Power and PSC staff have agreed to spread the collection of the company’s outstanding fuel bill out over three years, instead of the usual two. The company is also planning to increase the Income Qualified Senior Citizen Fuel Discount it offers from $6 to $8 per month, bringing the total amount eligible seniors can access to defray costs to $32 each month.
“The stipulation represents a compromise between the company and public interest advocacy staff that provides significant benefits to customers and is a fair and reasonable resolution of all the issues in this case,” said Steve Hewitson, an attorney at the law firm Troutman Pepper, which represents Georgia Power.
Since Georgia Power is not allowed to earn profits on fuel expenses, the PSC has typically allowed the company to collect those costs with few adjustments.
In a hearing last week, PSC commissioners said they were mostly powerless to tamp down the size of the looming increase because Georgia law requires that they add all reasonable fuel costs into monthly bills. On Thursday, the five commissioners again gave little indication that they are considering making major changes to the company’s rate-increase request. Chairman Tricia Pridemore did hint that she might consider a motion ordering Georgia Power to boost its monthly fuel discount for seniors by $1.50 to $9.50.
Other interested parties in the case continued to argue Thursday that the commission’s hands are not tied and that they can lessen the rate shock facing customers, who already pay some of the highest electricity bills in the country. With natural prices expected to remain volatile, Jennifer Whitfield, a senior attorney at the Southern Environmental Law Center representing Georgia Interfaith Power & Light, said the commission should revisit the company’s future energy plans, which call for adding even more natural gas to its fuel mix.
“Georgia Power is proud to say it doesn’t earn profit on fuel costs but it also doesn’t feel any of the pain,” Whitfield said. “The only people that feel the pain are customers and they are projecting fuel costs to go up.”
This rate bump comes just months after commissioners approved a nearly $4 increase, which took effect in January.
Still more rate hikes are on the horizon.
The PSC earlier approved two additional 4.5% increases in the company’s base rates, which are set to take effect in both 2024 and 2025. More of the costs from building Georgia Power’s two, long-delayed and over-budget nuclear reactors at Plant Vogtle near Augusta could also hit customers’ bills soon.
As soon as Unit 3 enters commercial service — which is expected later this month or in June — another monthly rate increase of roughly $3.78 will roll into customers’ monthly bills. More hikes could follow, with the exact amount to be determined by the PSC in hearings expected to start later this year.
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