This has been a good summer for Georgia Power, the company that provides electricity to millions of customers around the state.
Thanks to the high temperatures caused by the heat dome overlying Georgia and much of the country, homeowners and businesses are running their air conditioners constantly, which enables Georgia Power to generate electricity at peak summer rates.
Life got better for the utility giant last week as the staff of the Public Service Commission, which theoretically regulates the company, surrendered in its efforts to control the costs of two nuclear reactors.
Georgia Power is building these reactors at Plant Vogtle near Waynesboro. The current cost of the nuclear plants is estimated at more than $14 billion, with Georgia Power owning 45 percent of the project and significant chunks held by the state's EMCs and the Municipal Electric Authority of Georgia. Even if you don't get your electricity directly from Georgia Power, you are likely to be affected by the Vogtle reactors.
In a project that expensive, cost overruns become a crucial issue. When Georgia Power built the first two nuclear units at Vogtle, the initial estimated cost was $660 million. That total ballooned to nearly $9 billion by the time the reactors were completed because of cost overruns.
To prevent a repeat of that unfortunate episode, the PSC staff devised a plan that would have divided the financial risks between the utility's shareholders and its customers.
The staff's risk-sharing plan would have slightly reduced profits if Georgia Power went more than $300 million over the approved budget. That would provide some motivation for Georgia Power to manage the project prudently and try to hold down cost overruns.
This is how the free market works, at least in theory. When you invest in something, you run the risk that you may not earn back your investment if the business is poorly managed.
Georgia Power has basically eliminated the risks of the free market. Without a risk-sharing mechanism, the company could benefit financially by running up the price of the Vogtle project and charging it off to customers in the form of higher rates.
"Georgia Power has little or no incentive to minimize the cost of the Vogtle plants without a risk-sharing plan in effect," said Richard D'Arizzo, an attorney for AARP who urged the PSC to adopt the plan. "The company would earn money from cost overruns."
Georgia Power's response to the risk-sharing proposal has been simple. The company said "no" to the original plan and kept saying "no" at every opportunity.
"We're getting wrapped around the axle here trying to figure out how to put in place an incentive mechanism to incent the company to do the right things when, so far, to date I think everything indicates it's doing the right things," Georgia Power attorney Kevin Greene contended.
Georgia Power executives knew that no matter how tough a risk-sharing plan the PSC staff proposed, all they had to do was refuse to go along with it. The elected members of the PSC would eventually side with Georgia Power, as they typically vote to give the utility whatever it requests.
Last week, the PSC staff finally gave up on attempts to finalize a risk-sharing plan. The PSC announced that it had reached a "settlement" with Georgia Power where it would continue to monitor the Vogtle project, but without any danger that the utility's investors will see profits reduced if there are cost overruns.
"This proposed settlement protects Georgia Power shareholders but it does not offer any protection whatsoever for Georgia Power customers who are already getting socked with back-to-back increases, including the construction financing cost for Vogtle," said Angela Speir Phelps, a former PSC member who now heads the consumer organization Georgia Watch.
What this means is that your electricity bills will keep getting higher, no matter how poorly Georgia Power may handle the Vogtle project.
My latest bill from Georgia Power was $66 higher than it was for the same month last year. When I get the bill for the same period next year, it won't surprise me if it's gone up by another $66 - or by $666, for that matter.
It's bad news for customers - which means great news for Georgia Power and its investors.
Tom Crawford is the editor of The Georgia Report, an Internet news service that covers government and politics in Georgia. His column appears Wednesdays and on gainesvilletimes.com.