Friday, February 6, 2009
News Georgia Power nuke bill is a gamble — with ratepayers' money
Posted by Scott Henry @ScottTheHenry on Fri, Feb 6, 2009 at 8:24 PM
Georgia voters have never gotten terribly excited over our Public Service Commission elections, partly because the issues involved — franchise agreements, amortization schedules, telecommunication service areas — are often so complex that few people understand them. But that's why we elect these folks, to six-year terms, no less: to make difficult decisions about very complicated matters involving huge utilities.
That's why no one I've talked to can figure out why the Senate is handling legislation to enact a fundamental change in the way Georgia Power bills its customers — meaning all of us. Sponsored by Rules Committee chairman Don Balfour, R-Duluth, SB 31 motored through committee Wednesday, even though some of his fellow Republicans indicated they didn't completely grasp what it would do.
So, what would it do? Put simply, it would require Georgia Power customers — again, you and me — to begin paying for two new nuclear reactors at Plant Vogtle as they're being built. This is a huge departure from how the billing process has worked in past decades. For all previous projects:
- The utility gets approval for a capitol project from the PSC
- The utility builds the capitol project on its own dime
- The utility raises our rates to recoup its investment
This process has worked fairly well so far. Now, however, Georgia Power is pushing to get its money up front. I suppose you can't blame 'em; Vogtle's two original reactors nearly bankrupted the company. Construction began in 1974, but endless delays caused by numerous redesigns and shifting federal regulations meant the plant didn't go into operation until 1989. Costs ballooned from a projected $680 million to a staggering $8.4 billion — money the company couldn't begin to recoup for a solid 15 years until the project was completed.
If that bit of history sounds worrisome to you as a ratepayer, it should. It's been more than 30 years since a new nuclear reactor has been built in the U.S., so nobody really knows what the final cost will be. Even Georgia Power hasn't but a price tag on the project. If we, as ratepayers, get billed upfront, that effectively makes us investors in what could be a bottomless money pit.
But let's say the optimists are right and construction costs don't get out of control; utility lobbyists claim that ratepayers could end up saving money with the pay-as-you-go approach. Critics, however, argue that any dollar savings would be offset by inflation and the loss of interest income — that's why "12 months same as cash" usually makes more financial sense than paying upfront.
As a consumer lobbyist put it: "No businessman would take this deal."
In fact, even the usually cheerful consumer watchdog Clark Howard has attacked SB 31 like a pit bull, accusing Georgia Power of "trying to pick your and my pocket in a way that's absolutely disgusting."
On top of all of the above, there's a fairness issue. Balfour's legislation exempts big industrial and commercial users — shopping malls, Kia factories, etc. — from having to pay up front. Why? Because those folks are powerful enough to get the bill killed. But Georgia Power seems to assume that Mr. & Mrs. Ratepayer don't have the clout to protect themselves from this raw-deal legislation.
The question is, is the company right?
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