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Why Georgia Power wants to raise rates 12%
0927 2022 Rates
Georgia Power Co. Chairman and CEO Chris Womack answers a question before the Georgia Public Service Commission on Tuesday, Sept. 27, 2022 in Atlanta. The company is seeking a 12% rate increase over three years, which could cost a residential customer nearly $200 a year. - photo by Associated Press

State regulators begin hearings Tuesday on Georgia Power Co.'s request to raise rates by 12% over the next three years, setting up clashes over how much profit the utility should earn, how much solar panel owners should be paid and how rates should be structured.

The five elected members of the Public Service Commission are scheduled to decide in December on the company's request to collect a cumulative $2.8 billion more from its 2.3 million customers beginning in January. Changes are likely before any vote.

The company says it needs more money to improve the grid, retire old coal plants, acquire electricity from new sources and upgrade customer-facing computer systems.

A residential customer who uses 1,000 kilowatt hours of electricity per month pays Georgia Power an average of $128 a month now, the company has said. Under the plan, that would rise by $14.32 a month in 2023, reaching a total of $16.29 more over the three-year period. That's nearly $200 a year more by 2025.

However, electricity bills are likely to go up even more. Commissioners have already approved plans for the company to increase rates by $3.78 a month when the first of two new nuclear units being built at Plant Vogtle starts generating electricity, likely early next year. A bigger increase could follow the second new reactor coming online, possibly in 2024.

The unit of Atlanta-based Southern Co. is also likely in February to seek approve for the increased cost of coal and natural gas that fuels power plants. All that could push bills upward more than 15% for customers in 2023 alone.

The commission granted a $1.77 billion cumulative increase in the current three-year rate plan, which began in 2020.

Tuesday is likely to see the contrast of everyday customers testifying about the harm they believe the rate increases would do, followed by Georgia Power CEO Chris Womack taking the stand to justify the request for more money.

One key fight will be over how much Georgia Power must pay for electricity generated by owners of rooftop solar panels. A 5,000-unit pilot program has filled, and some commissioners and others have pushed to expand the cap. But Georgia Power says rooftop solar unfairly shifts costs to other customers who don't have panels.

Georgia Power wants to boost its return on equity, the amount Southern Co. shareholders earn on invested capital, from 10.5% to 11%. Opponents argue Georgia Power's return is already artificially high, but the company says financial strength lets it borrow money more cheaply. The boost would cost customers another $94 million a year.

Some consumer groups want commissioners to curtail a Georgia Power rate plan that includes a fixed monthly fee based on a customer's peak usage. Opponents say the demand charge rate plan, the default plan for customers in newly built houses since 2021, unfairly drives up bills.

There will be other fights. The Sierra Club, for example, continues to oppose Georgia Power being allowed to charge ratepayers to excavate or cap coal ash, even though a court ruling says the utility may do so. The company would collect $400 million over three years to cap or excavate ash ponds at coal-fueled power plants. Environmentalists want all the ash excavated and reburied in lined landfills, which could cost even more.

A group of convenience store owners want rates for electricity sold for vehicle charging to be equal to what Georgia Power pays for its own chargers, saying otherwise Georgia Power may dominate the charging market.