Georgia Power Co. filed a notice July 20 with the Georgia Public Service Commission that an automatic recovery mechanism will temporarily increase its fuel cost recovery rate to recover $98.8 million in under-recovered fuel costs.

The change in the fuel rate, which will temporarily increase the average residential bill by about $2.70 per month, will begin in August but will end in January 2001, when the $98.8 million should be recovered.

The Public Service Commission does not allow Georgia Power to earn a return, or profit, on fuel costs, and requires that the company simply “pass through” the company’s actual costs for fuel directly to customers through a fuel cost recovery charge on bills.

The automatic recovery mechanism is triggered on a six month basis when the company is $30 million over-, or under-recovered, in its fuel costs. This review occurs at the end of June and December.

The company is under-recovered in its fuel costs due primarily to:

 The drought, which has resulted in a reduction in the amount of electricity produced from hydro electric plants, because the company has been conserving water. This hydro electric generating capacity has been replaced by other sources, including natural gas-fueled generation.

 Increased natural gas prices. Natural gas prices have risen significantly since the beginning of 2000.

 Increased overall use of electricity because of hot, dry weather. This increased use has resulted in a greater reliance on higher cost plants and plants that use natural gas.

In 1998, the Georgia Public Service Commission lowered Georgia Power’s rates by a total of $262 million for 1999. Even further reductions – including a $24 million rate reduction for small businesses and a one-time, $78 million refund – took place in 2000.

Based on 1999 surveys – the latest available – Georgia Power’s rates are at least 15 percent below the national average.