I write in response to the opinion piece of July 23 by Joan King which attempted (and failed, I think) to tie the enabling of addictive behavior to the Georgia power nuclear power initiative underway with expansion of Plant Vogtle. Talk about obtuse thinking! If there is addictive behavior here, it is Ms. King’s Quixotic joist with the nuclear issue she has pursued for years.
I don’t doubt her sincerity and I admire her tenacity. I just find her filled with misinformation and lacking in understanding of the admittedly arcane details of electric rate justification and power plant construction financing, to say nothing of insight into how electrons flow to our homes and businesses in the reliable and affordable fashion we have come to take for granted.
When an electric utility builds a new generation facility, it generally borrows the money required to pay for the equipment and the labor to install it. Depending on the financial stability, managerial credibility and earnings of the utility company, the lender sets an interest rate for the use of these borrowed monies. It’s not unlike how our home mortgages work. These borrowed funds used during construction cost a great deal of money during the time the plant is being built.
By increasing our electric rates now, before the plant is in operation, Georgia Power is avoiding the borrowing of about 5 percent of the cost of the plants. In the case of Plant Vogtle, this saves customers about $300 million in interest costs. This lowers the amount of money it must borrow, thereby lowering the amount it must recover from all of us ratepayers when the plants come on line.
By paying a little more now, the company is reducing our rates in the future by an amount greater than the rate increase we are currently paying to support construction. So, in the long run, it’s win-win. The utility reduces its construction costs and our rates increase less and more gradually.
The construction of central station power plants that are essential to the supply of reliable electricity is complex; in essence, it is rocket science. It is perfectly natural in the course of these complex undertakings for there to arise disagreements about cost and responsibility between the owner and the builder. Anyone who has ever built a home knows this — think home construction on steroids.
Georgia is fortunate that we have a utility company sophisticated enough and well managed enough to successfully undertake this type of project. Our electric rates are some of the most competitive in the country. They wouldn’t be if Georgia Power was behaving irresponsibly or if we ratepayers were being gouged.
When we base analysis of these complex projects on facts rather than emotion, we can easily understand that Georgia Power, the Public Service Commission and the state legislature are taking good care of us. I’m glad that we’re enabling them to do so.
William D. Rezak