Georgia Power deal sets $1.8B rate increase over 3 years

Georgia Power Co. and regulatory staff reached an agreement Wednesday that would give the company a nearly $1.8 billion rate increase over three years — if Georgia's five elected public service commissioners approve.

That's a little above the midpoint between the $2.9 billion that the electric utility proposed and the $529 million that staff said was justified. It's about the same as the $1.77 billion Georgia Power got in 2019, when it and staff members never reached a bargain.

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 $3.60 a month in January, an increase of 2.5%. Increases of 4.5% would follow in 2024 and 2025, staff lawyer Preston Thomas wrote in a letter to commissioners.

Commissioners are likely to first consider the deal at a committee hearing Thursday before a final vote scheduled Tuesday. The proposal punts two key decisions to commissioners — how much Georgia Power should pay for electricity generated by customers with solar panels and what the profit band should be for the largest subsidiary of Atlanta-based Southern Co.

Georgia Power's proposal had been frontloaded to get almost all of the rate increase in 2023 from its 2.7 million customers. Instead, it will raise rates in the traditional yearly steps.

The lower amount in the first year could ease customer pain as other bills come due. Georgia Power is likely to ask the commission early next year to let it charge more to cover higher natural gas costs. The commission has already approved an increase when the third nuclear reactor at Plant Vogtle begins generating electricity, also likely early next year. And a larger Vogtle-related increase would come when the fourth reactor is finished, possibly in 2024.

Public Service Commission staff had warned that all the changes could increase bills $55 to $60 month, or 45%.

Staff and Georgia Power agreed to keep its return on capital targeted at 10.5%, a level critics say is too high. Staff had wanted to lower that return on equity to 9.45% while the company sought to increase it to 11%. Avoiding the increase saves customers $300 million over three years. But commissioners must decide where to set the return-on-equity band, which now runs from 9.5% to 12%. Below that, the company could ask for a mid-cycle rate increase. Above that, most money would go to pay down the value of coal and other power plants the company is retiring.

Commissioners must also settle how much Georgia Power will pay for electricity generated by owners of rooftop solar panels. A more lucrative 5,000-unit pilot will remain frozen and grandfathered for 15 years. Commissioners must set a rate for other solar households. Georgia Power says rooftop solar unfairly shifts costs to other customers who don't have panels, an analysis pro-solar forces dispute.

The deal kills a "smart usage" rate plan that includes a fixed monthly fee based on a customer's peak usage. The plan is the default for customers in newly built houses since 2021 and opponents say it unfairly drives up bills. Georgia Power wanted to force all new customers onto the plan. Instead, all residential customers will go back to the traditional rate plan.

Georgia Power would get most of the money it wants to improve the grid, retire old coal plants and acquire electricity from new sources. But the deal would trim nearly $200 million from grid improvement and other operations and maintenance, while spiking most spending on a distributed energy management system. The company will also cut stock-based pay to employees.

Spending on equipment and wiring to charge electric vehicles would be cut by 75%. Georgia Power agreed to prioritize public chargers or public infrastructure like charging for transit and school buses after staff found the utility was spending on private property the public can't use.

Company spending on public vehicle chargers would be targeted at low-income and rural areas. Other private charging companies would get a right of first refusal on locations Georgia Power proposes, to keep the company from dominating the market. Georgia Power would also propose a new rate plan for charging competitors.