Georgia Power's pay-in-advance funding tops consumer issues at Legislature|
Georgia Online News Service
First of two articles
The threat of bigger power bills during a recession is shocking Georgia's most prominent consumer watchdog, yet the plan to finance new nuclear power plants is just the first consumer item on a legislative agenda that may put sub-prime mortgage brokers in the dog house and muzzle some tax preparers.
"The consumers are going to be footing the bill for prepaying the financing costs plus getting the kick in the gut of paying the construction costs after the thing comes online," according to Allison Wall, executive director of consumer advocacy group Georgia Watch, one of the main opponents of the Georgia Nuclear Energy Financing Act.
Senate Bill 31 would allow Georgia Power to start tacking a surcharge on its customers' bills as early as 2009 to finance building of two nuclear plants near Augusta which will only come online in 2017. That means people who leave Georgia in the meantime, or die, will pay for something they won't get the chance to use.
The fee would start at about $1.30 a month for homeowners, growing to $9.10 per month by 2017, according to the calculations of the bill's sponsor, Sen. Don Balfour (R-Snellville).
Wall believes that the Georgia Power's $6.4 billion share of the $14 billion project will go over budget like a similar project in Alabama. "I sort of think we should go ahead and triple those amounts," she estimates.
She also expects time overruns, arguing that if Georgia Power is already getting the money for plants that aren't in operation, it has no incentive to finish on time.
Besides that, in bad economic times, consumers can make better use of their own money than Georgia Power can, argue both Georgia Watch and the Georgia Public Service Commission – the elected body that sets electricity rates. Both say the utility should take the cheap loans that it can get at about 7.35 percent, leaving consumers to apply their capital to their more expensive loans like credit cards.
Under SB 31, consumers would also take an untimely hit from income taxes that Georgia Power must pay earlier under the new method of financing than under the regular method, according to testimony from a utilities consultant on behalf of the state PSC.
Georgia Watch calls SB 31 an attempted "end run" around the PSC, straight to the legislature. Usually the PSC decides when and why Georgia Power can raise rates, and generally only lets the utility recoup construction and construction finance costs after a new facility starts running – to make sure only actual users pay for a utility. In fact, Georgia Power has presented its case for early rate hikes to the PSC – which is still deliberating on the proposal at the same time as the legislature.
The PSC is the appropriate venue for rate-setting, says Wall, because that's where the experts are.
"[We're] not really sure why we're taking up legislators' time and taxpayer money duplicating these efforts in the General Assembly," she adds.
But the rate hikes won't hit everyone the same – major industrial and commercial customers are exempt, according to the PSC analysis of the bill's language.
Sen. Balfour has said the language doesn't constitute an exemption.
Georgia Power believes the new financing plan will save money in the long run. It will reduce the amount of money the company must borrow from other lenders to pay for its first new facilities in many years. And besides, the longer lead time will introduce rate hikes slowly, not in a major jump, says company spokeswoman Carol Boatright. The utility also claims the bill will protect its credit rating, though the PSC opines that Georgia Power's rating is in no danger.
But if the bill doesn't pass, the company has not yet offered a Plan B for funding, Boatright says.
Wall thinks the bill's chances are "totally up in the air," though she's hopeful some early supporters may be backing down. A committee hearing on the bill last week attracted an audience that spilled into the hall. Another hearing is scheduled this week.
For Thursday: Cleaning up the mortgage broker industry
Maggie Lee specializes in quality of life topics, Atlanta's international communities and general reporting. She covers Georgia economic development and the Chinese community as a stringer for China Daily and chronicles life in Georgia's most diverse county for the DeKalb Champion. [full bio]