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PSC Request for Georgia Power to add Megawatts

By   /   August 5, 2013  /   Comments

by Public Service Commissioner Doug Everett

In July, the Public Service Commission requested that Georgia Power, the
largest provider of electrical power in the state, add 525 megawatts of
solar to its long-range generation portfolio. This decision became the
subject of one of the most contentious debates the Commission has seen
since I’ve served on it.

Before making my vote, I laid three criteria that had to be satisfied,
before I voted for more additional solar power. First, that no new
monopoly service provider is created; second, that no upward pressure on
rates is exerted; and third, that nothing violates the Territorial
Services Act, which divides geographic responsibility for serving
electric customers in Georgia by providers, including Georgia Power and
the electric membership cooperatives and municipal electric authorities.

This criteria is why I joined my colleagues Chuck Eaton and Stan Wise in
supporting two important amendments to ensure that Georgia’s consumers
and businesses are protected from upward pressure on electric rates and
continue to enjoy reliable service. The first amendment requires that an
independent monitor oversee procurement of solar power under the program
to ensure that ratepayers are protected and that the guidelines we set
in place are followed. The second amendment requires that any additional
solar, under the new program, be approved by the Public Service
Commission only after we determine that there will be no upward pressure
on electric rates. These two amendments require that no extra costs will
be passed on to Georgia’s families as a result of this program.

Upward pressure is a term used in utility regulation to recognize that
many factors ultimately affect rates, and it is often inaccurate to say
that any single factor causes rates to go up or to decline.

To identify the greatest cause of upward pressure on electric rates in
Georgia and elsewhere, we need only look to Washington, D.C., where the
Obama Administration’s Environmental Protection Agency, with its war on
coal and unpredictable environmental standards, exerts an unprecedented
upward pressure on energy costs. States across the country are being
forced to contend with Federal policies that cause rising energy costs
and unreliable service. Solar power, deployed conservatively, and with
procedures in place to contain costs, can act as a hedge against the
environmental risk caused by the Obama administration’s green agenda.

With so much public interest focused on PSC decision-making, I’d like to
discuss the next major decision we will make; Georgia Power’s rate case
in which the company seeks to recover additional costs from the
construction of two new nuclear reactors at Plant Vogtle.

At the Public Service Commission, we are accustomed to our votes being
characterized as either pro-utility or pro-consumer, but a regulatory
decision very seldom sides purely with the utility or with the consumer.
It’s expected that PSC election challengers will try to characterize a
Commissioner as siding with the utility a majority of the time. The
irony is, most of the time, the policies these challengers propose, will
actually put upward pressure on rates and increase the chances of
blackouts or brownouts. Increased environmental controls and premium
sources of energy don’t come cheaply.

In many of our decisions, state law limits the latitude of the Public
Service Commission. In fuel cases, which are a large number of the votes
we cast, our review is limited to whether the utility actually paid for
the fuel they consumed, and whether there’s any reason to believe that
the decision-making was so poor as to have been “imprudent.”

Simply put, when a utility buys fuel to produce power, unless it spends
money foolishly, it is entitled by law to reimbursement and the Public
Service Commission is required to approve the expenses. Fortunately,
during my tenure at the Commission, I have supported more natural gas
electric generation. My votes to expand our natural gas capacity has
allowed Georgia to take advantage of the historically low natural gas
prices, which has caused your electric bill to be reduced during the
last fuel case.

Similarly, many of the factors in whether we ultimately allow Georgia
Power to recover more expenses for the construction of Plant Vogtle must
be decided through a quasi-judicial process in which the standard of
review was whether an expense was incurred prudently. As a matter of
law, we cannot substitute our own decisions made with the benefit of
hindsight for those made by the company. Nor are we allowed to decide on
the basis of whether we like or dislike the parties before us, or
whether we approve or disapprove of nuclear power in general. Our
decisions must be based on facts and evidence presented during the
hearing.

Without financially-healthy private sector utility providers, we could
not have the inexpensive, reliable services we have come to expect.
Without a healthy balance sheet and acceptable profit margin, a private
sector company will end up paying far more in financing costs; those
costs are ultimately borne by the consumer and business ratepayers of
Georgia.

Short-sighted decisions to temporarily and artificially lower rates have
the potential to become even higher costs down the road as borrowing
costs increase and are in turn passed on the ratepayer.
Many of the states currently experience electric blackouts and brownouts
have haphazard electric policies without any consideration for long-term
ramifications. These states have lacked the political fortitude to
invest in future capital projects.

The challenge on the Public Service Commission is to provide oversight
that allows the best balance between keeping rates low today and for the
future. A recent Politifact article finding that Georgia ratepayers have
paid electric rates 10 to 15 percent lower than the national average in
eight of the last nine years indicates that the partnership between the
Georgia Public Service Commission and the private sector providers we
regulate benefits Georgia families and businesses.

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