Tuesday, February 3, 2009

Georgia Power's Nuke-Sized Nightmare
by Lyle Harris
Georgia Online News Service

Every so often our lawmakers need to be reminded that what's good for the Georgia Power Co. isn't always best for Georgians. Now is one of those times.

With a platoon of lobbyists at its disposal, the state's largest utility is in the process of bulldogging Senate Bill 31 through the Legislature on the broad hips of Sen. Don Balfour (R-Snellville), who also chairs the Senate Rules Committee.

To be blunt, this bill is bad news that could result in costly, nuke-sized nightmare. Just ask state officials in Florida.

SB 31 would allow Georgia Power to pre-collect $1.6 billion in financing costs from customers prior to the construction and operation of a pair of nuclear reactors it plans to build at Plant Vogtle near Augusta. The total cost of the new units is an estimated $14.4 billion, with a heavy emphasis on "estimated."

The twist here is that Georgia Power could start getting that money from consumers by 2011 and then continue doing so for years before the reactors are expected to be up and running. Typically, ratepayers begin paying those costs after large-scale utility projects have been completed and are providing their energy needs, not before.

So why the change?

Utility officials claim this somewhat creative arrangement makes sense because it would shave $300 million in financing costs the company could use to retire construction loans on the project sooner rather than later. Those savings will accrue many times over to those of us who've paid for the plant and stand to benefit from the power it produces, Georgia Power officials promise.

Unfortunately for the customers in Florida, their state lawmakers have already been suckered into believing a similar promise by Progress Energy which, like Georgia Power, is also in the process of building a nuclear power plant. Several years ago, lawmakers there approved an "advance recovery fee" for a proposed nuke plant which was expected to raise electricity bills by about 11 percent. But when the advance nuke fees were added to separate fuel recovery charges Progress Energy's subsequently charged for the operation of its existing plants, customers saw their monthly electricity bills jump by a whopping 25 percent.

Florida lawmakers are now scrambling to suspend or eliminate the advance fees that Progress Energy is charging customers for its nuke plant, which probably won't be completed for a decade. But if SB 31 is approved, Georgians may not be so lucky; the bill's language expressly prohibits the state's Public Service Commission from even considering the impact of the proposed nuke surcharges when Georgia Power seeks to raise its rates on customers in the future, as it inevitably will.

But Balfour, who introduced the bill, has been chatting up SB 31 with simple-minded talking points Joe the Plumber could have written.

"If you buy a car and put it on your credit card, you're going to pay a lot of money," Balfour tells anyone willing to listen. "If you save a little money and pay some of the cost up front, you pay a lot less."

Say what?

The hole in Balfour's logic is obvious: Anyone stupid enough to buy a car with a credit card at least gets to drive their shiny new debt-mobile off the parking lot and go wherever they please.

Conservative blogger Peach Pundit gently chided Balfour's misshapen metaphor by asking: "Would you send a check to a car manufacturer when they start building a car, essentially paying for it before you ever have the benefit of driving it?"

Of course not.

Balfour's backward analogy doesn't compute for several other compelling reasons:

-- The General Assembly is out-of-bounds for even considering this proposal. The state Constitution empowers Georgia's elected Public Service Commission to decide, among other things, whether this financing arrangement makes sense for Georgia Power and its customers. The five-member PSC was already reviewing the proposal before the Balfour bill was introduced. The Legislature, which already has its hands full trying to close a $2 billion budget gap, is setting a dangerous and unnecessary precedent by attempting to usurp the PSC's authority over such matters.

-- There's a good chance Georgia Power's math is all wrong. The nuclear reactors the utility wants to construct at Plant Vogtle have never been built before. Anywhere. Nuclear power plants are historically subject to huge cost overruns that are often more than double the original estimates. Yet there are no incentives in the current legislation for Georgia Power to control their costs or ensure that the reactors are completed on time and on budget. And why should there be if utility customers wind up paying the difference anyway?

-- Consumers will likely save much more money by paying for the plants on the back end rather than the front end. Lane Kollen, an expert witness, testified before the PSC that Georgia Power's numbers are way off and the utility miscalculated the true cost to ratepayers. Paying for the plants the old fashioned way - after they're built rather than before - will actually save consumers about $576 million, according to Kollen.

-- For reasons Georgia Power hasn't explained, some of the state's big, industrial companies would be exempt from the pre-payment plan. That means a majority of the upfront costs would be borne by residential and commercial customers already struggling to stay afloat in the midst of a seemingly-bottomless recession.

This bill reads like a blueprint for a costly debacle lawmakers would be smart to avoid. Georgia Power has made it known that it might forgo building the new reactors unless their pre-payment plan gets approved, an implied threat that's apparently intended to scare us stupid. Instead, our elected officials should take heed of what's happening in Florida and resist the impulse to cave-in to Georgia Power's unreasonable request.

Lyle Harris is a former member of the Atlanta Journal-Constitution editorial board.   [full bio]

Editor's note: Hello, Georgia! Lyle Harris, one of the most savvy journalists in the state, has a question for Georgians: Would they be willing to buy a car unseen and as-yet not even built – and pay for it in advance? Probably not. But that's exactly how Georgia Power plans to finance its expensive new plans for nuclear plants. Harris' story leads off today's articles from the Georgia Online News Service – and it's a message vital to the pocketbooks of every citizen in this state.

Also, Paul Kaplan takes a look at the awful state of Major League Baseball – awful for everyone but the grossly overpaid players and the team owners. They demand massive subsidies for their stadiums – or they threaten to leave town. Kaplan says the best thing that could happen for fans would be for the Yankees to dominate the season with all of their high-priced talent – and for owner George Steinbrenner to go bust because all of the corporations that typically buy luxury suites and seats have become victims of the economic downturn.

Our "Soapbox" today is occupied by Sam Olens, who takes a shot at Gov. Sonny Perdue for wanting to drive up the prices of housing and health care.

And, if you're not mad as hell at that, I'll heat things up with my column on the foibles of "bipartisanship" and how some folks hate "socialism" when it's for you – but not when it's for them.

As always, send your comments and suggestions to john.sugg@georgiaonlinenews.org or call 800-891-3459.

John F. Sugg, Executive Editor

Today's GONSO

When business has failed so utterly, it isn't "socialism" for government to set things right

by John Sugg
It's easy to make jokes about government. For example, there's a popular fable that when the federales in the 1990s took over a famed Nevada brothel called the Mustang Ranch, the bureaucrats so, um, screwed up the business that not even Viagra could save it from dysfunction. The only part that's true is that the government did end up owning the assets of the Mustang Ranch, some of which were auctioned on eBay. What's not true is that the government is so lousy at running things in a businesslike way, it couldn't even make a success of selling sex and booze.
Full Story

Economic downturn could produce a level playing field for baseball

by Paul Kaplan
The economic crisis is crippling the nation's most important financial institutions, but it may actually save one of the most frivolous ones.


The grand sport has been losing its relevance ever since George Steinbrenner figured out that baseball in New York defies the laws of economics.

Full Story

Perdue should not hike the cost of home ownership or medical care

by Sam Olens
Raising taxes during a recession is almost never a good idea.

But that is exactly what Gov. Sonny Perdue is proposing in two crucial state budget areas: housing and health care.

The governor wants to eliminate state grants that save many homeowners $200 to $300 per year on their annual property taxes. At a time when Georgia is leading the nation in home foreclosures, this is clearly not the time to make housing more expensive.

Full Story

Georgia Power's Nuke-Sized Nightmare

by Lyle Harris
Every so often our lawmakers need to be reminded that what's good for the Georgia Power Co. isn't always best for Georgians. Now is one of those times.

With a platoon of lobbyists at its disposal, the state's largest utility is in the process of bulldogging Senate Bill 31 through the Legislature on the broad hips of Sen. Don Balfour (R-Snellville), who also chairs the Senate Rules Committee.

To be blunt, this bill is bad news that could result in costly, nuke-sized nightmare. Just ask state officials in Florida.

Full Story

Tomorrow's Budget
New book chronicles Civil War from viewpoint of ordinary soldiers
by Bill Hendrick
Only those who hate schools would vouch for vouchers
by John Sugg
Georgia Power's pay-in-advance funding tops consumer issues at Legislature
by Maggie Lee
Georgia's chief justice: Because of bad economy, 'people will need access to justice now more than ever'

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