GPSC adopts proposal on fuel allowance increase

The Georgia Public Service Commission (GPSC) today adopted the GPSC Staff recommendation allowing Savannah Electric to raise its fuel allowance by slightly over one-third of a cent per kilowatt-hour ($0.00354/kwh). The measure was requested in February and becomes effective with the first billing cycle in April 2000.

Under Georgia law, electric utilities are permitted to recover what has actually been spent for fuel or purchased power -- with no profit or mark-up -- through a Fuel Cost Recovery Allowance.

Savannah Electric supplies customers by generating its own electricity and purchasing power from other utilities. The proposed increase is necessary because of higher than expected purchased power costs during the summer of 1999. Rising demand for electricity across much of the nation resulted in the full utilization of lower fuel-cost generating sources and led to the operation of generating units with higher fuel costs more frequently.

Under the measure, a typical residential customer paying $84 per month will experience a 5 percent increase of approximately $4.20 on their monthly bills beginning in April. The increase applies to commercial and industrial customers as well.

Even after this fuel allowance increase, Savannah Electric’s prices will remain well below the national average and below what many pay in the Southeast.

Prior to an adjustment in 1999, the fuel cost recovery allowance had not risen since 1992 and was actually reduced in 1996. Savannah Electric last raised its base rates -- that portion of its prices covering investment in power plants, substations, wires, poles, equipment, and daily operating costs -- 15 years ago in 1985. The company implemented base rate reductions to all customer classes in 1988, 1990, 1991, and 1992 and further cuts to small business customers in 1998, 1999 and 2000.

Savannah Electric serves over 128,000 customers in a five-county area of Southeast Georgia. Savannah Electric is a subsidiary of Southern Company. Southern Company (NYSE: SO), the parent firm of Alabama Power, Georgia Power, Gulf Power, Mississippi Power and Savannah Electric, is an international energy company with electric generating capacity worldwide. It is the largest producer of electricity in the United States and one of the world’s largest independent power producers.