Profits for Atlanta-based utility Southern Company, the parent of Georgia Power, rose for the second straight quarter, driven mainly by increases in usage and customers’ electric rates, plus progress on the two new nuclear reactors at Plant Vogtle, the company said.
Southern reported third quarter profits of $1.5 billion on Thursday, up $400 million from the same period last year. Through the end of September, the company’s earnings are also up by nearly $1 billion compared to the first nine months of 2021.
Company revenues also climbed to $8.4 billion in the third quarter, compared to $6.2 billion in the third quarter of 2021, an increase of more than 34%. The company attributed the jump mainly to higher fuel costs, which customers will likely pay for in the future.
Despite fears of an impending recession, Southern executives said the economy in Georgia and across the Southeast continues to defy gravity and is a big reason why company profits have soared. Metro Atlanta added 6,600 jobs last month and hit a new record low for unemployment. Meanwhile, huge new economic development projects, like the planned Hyundai and Rivian EV factories, are expected to bring more than 15,000 new jobs to the state.
“We continue to see better than expected growth in our sales and it’s reflective of all the great growth going on in our state,” said Dan Tucker, Southern’s chief financial officer.
Southern’s Chairman and CEO Tom Fanning also attributed earnings growth to recent progress on Plant Vogtle’s two new nuclear reactors.
Earlier this month, Georgia Power loaded fuel into Unit 3, a significant step toward generating electricity from the first commercial nuclear units built in the U.S. in three decades. Fanning said the next major milestone is to achieve what’s known as criticality inside Unit 3, which means creating a sustained nuclear chain reaction. If current testing proceeds as planned, that could occur as soon as January, Fanning said.
Vogtle Unit 3 is expected to begin generating electricity in the first quarter of 2023, with Unit 4 joining it by the end of 2024.
Still, the project is more than five years behind schedule and has cost an estimated $30 billion to build, more than double initial projections.
Despite the sunny earnings report, Georgia Power — Southern’s largest subsidiary — is pushing state regulators to approve another major rate increase that would hit its 2.7 million customers’ bills starting next year.
Beginning in January, the average Georgia Power residential customer’s bills could climb by $14.32 each month. That would be followed by smaller increases of $1.35 per month in 2024 and $0.62 per month in 2025. All told, households could see their annual bill go up by almost $200 over the next three years.
Georgia Power has also asked regulators to bump up its return on equity, or the amount that Southern Company shareholders earn on their investments. Critics have claimed the company’s return is already excessive.
On Thursday, Fanning and Georgia Power’s chairman and CEO, Chris Womack, defended the requested higher rates as necessary to maintain the reliable service he said customers expect.
“I think everything that Georgia Power is doing is absolutely consistent with the balancing act we must follow of providing clean, safe, reliable and affordable energy over time,” Fanning said.
Those aren’t the only hikes likely to hit Georgia Power’s electricity customers in coming months and years.
Once Plant Vogtle’s two long-delayed and over-budget nuclear reactors come online, Georgia Power is expected to ask the five members of the Georgia Public Service Commission (PSC) to allow the company to recover certain cost overruns of building the units from its customers.
Then, next February, the company will make its case at the PSC to recover costs it has paid for the coal and gas burned at other power plants.
PSC staff estimate those combined requests could add another $55 to $60 to the average monthly bill.
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