Georgia Power filed an innovative 5-year rate plan today with the Georgia Public Service Commission. The plan reflects the rising costs of the electric utility industry and calls for a minor increase in rates.
Georgia Power has not had a base rate increase since 1991. In fact, customers received a $262 million rate reduction in 1998 and another $24 million in 1999. However, the company is now entering a construction phase for 5,500 megawatts of new generation over the next five years, 300 miles of new transmission with a price tag of $1.4 billion in that same timeframe and is spending approximately $875 million on environmental controls. Those costs have resulted in a capital spending budget of $1.6 billion in 2001. Those costs need to be added to the rate base.
The company was required by the 1998 PSC accounting order, which expires on Dec. 31, 2001, to file a rate case by July 1, 2001. The company filed that case based on its costs over a one-year test period. That case calls for an increase of $103 million or about 2.3 percent.
Georgia Power also filed an alternative proposal, which waives the increase in favor of several innovative measures in the five-year plan. The company is asking to continue operating with an earnings band, as it has for the last six years, but is requesting to earn between 11 and 13.5 percent return on equity.
The company also wants to continue with the sharing mechanism that was approved in 1998 that has resulted in customer refunds because of hotter-than-expected weather. Under the new proposal, customers would keep two-thirds of any earnings above the earnings range that can be attributed to weather, while the company would keep one third. If there are any other earnings above the range, including those attributable to the companys cost management program, the company would receive half and the customers half.
Georgia Power is also proposing a Certified Capacity Cost Recovery tariff that would become effective June 1, 2002. This tariff would provide for recovery of costs of purchased power agreements that provide electricity or for the costs of building new plants to provide that electricity. The new tariff will result in average annual rate increases of 1.2 percent. The first year increase will be about $30 million or .7 percent, which is less than the increase required by a test-year case.
This five-year plan will benefit customers by providing predictable rate increases of about 1.2 percent annually instead of potentially volatile price spikes. The plan also helps the company to maintain financial stability.
This plan provides low, predictable rates to ensure that Georgians will continue to pay among the lowest prices for electricity in the nation, said David Ratcliffe, Georgia Power President and CEO. The plan assures customers will have the power they need, when they need it and will help to continue the economic expansion and growth of our already robust region.
Georgia Power is the largest subsidiary of Southern Company, one of the nations largest generators of electricity. The company is an investor-owned, tax-paying utility, serving customers in 57,000 of the states 59,000 square miles. Georgia Powers rates are more than 15 percent below the national average and its 1.8 million customers are in all but six of Georgias 159 counties.