State regulatory staff and Georgia Power Co. have agreed on a plan that will boost power bills by 12% in June to cover the higher costs of natural gas and coal that the utility burns to generate electricity for its 2.7 million customers.
The unit of Atlanta-based Southern Co. filed new figures Monday saying it needs to collect an additional $6.6 billion from customers over the next three years, under an agreement it reached with Georgia Public Service Commission staff earlier this month.
Because of declining natural gas price forecasts, that’s actually $1.1 billion less than Georgia Power had earlier projected. But it will boost a typical residential bill to $147.50 a month, up $15.90 from the current $131.60. The increase had originally been predicted to be as high as $23.
The five-member elected commission is scheduled to vote on fuel charges on May 16. Any final plan is likely to closely track the agreement between the company and the staff.
Bill increases are stacking up for Georgia Power customers. Rates went up 2.5% last month in January after commissioners approved a three-year rate plan in December. Increases of 4.5% will follow in 2024 and 2025. Customers will also have to pay the costs of the third and fourth nuclear units at Plant Vogtle near Augusta. Unit 3 is projected to begin operation in May or June, leading to a roughly $4 a month increase for residential customers. A larger rate increase is likely to follow when Unit 4 begins operations, now projected before March 2024.
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Typically, a utility is allowed to charge customers for the cost of fuel, but isn’t allowed to make a profit on those charges, unlike the profits Georgia Power is guaranteed for investing in power plants and transmission lines. The all-Republican commission typically decides how much Georgia Power can collect for fuel once every two years. In the meantime, if prices change, the company may collect too much or too little.
During this two-year period, even though commissioners approved a 15% boost in fuel costs that began in January 2022, the company collected far too little money. Natural gas prices skyrocketed because of an improving economy and the Ukraine war, and coal prices rose even more steeply in part because of supply and labor shortages.
Georgia Power says it will end the period roughly $4.5 billion in the hole for fuel already burned. Most of the proposed rate increase will make up for that deficit, repaying the company over three years instead of the normal two because the debt is so large.
The utility says it forecasts it also needs another $2.2 billion to make up for higher fuel prices going forward.
Georgia Power and commission staff have agreed to let the company make larger changes to cover cost swings between fuel-cost rate cases. The agreement would let Georgia Power raise or lower fuel charges by as much as 40% in the interim, instead of the current 15%. Because of unrecovered debt, that ability would likely only be used to further raise customer bills in the next two years.
The company and staff also agreed to raise a fuel cost discount for low-income senior citizens from $6 a month now to $8 a month.
The Georgia Association of Manufacturers argues commissioners should stretch repayment of the deficit out over five years to reduce rate increases. Georgia Power said Monday it opposes a longer payback period.
Environmentalists argue that commissioners should force Georgia Power to bear some rising fuel costs because it has shifted its generation portfolio to depend on natural gas, whose price is volatile. The company argues the commission has already approved the current generation mix as the most economical and reliable option.
