Workers at the Alvin W. Vogtle Nuclear Plant expansion in November.
Source: Georgia Power Co.
Georgia Power Co.'s CEO said Dec. 6 that if passed, federal tax reform would result in the utility collecting less money from ratepayers to fund its expansion of the Alvin W. Vogtle Nuclear Plant.
In response, Georgia's top utility regulator expressed a desire for him and his colleagues to make a decision by year's end on whether the Southern Co. subsidiary can continue construction at the project, which is behind schedule and over budget, or else customers may not see a possible $150 million in savings.
Georgia Power Chairman, President and CEO Paul Bowers wrote in a Dec. 6 letter to Georgia Public Service Commission Chairman Stan Wise that according to the utility's preliminary analysis, a lower federal tax rate would result in lower revenue requirements for its nuclear cost recovery tariff, which Bowers described as a situation favorable to ratepayers.
A lower federal tax rate of at least 20% "will positively impact customers," Bowers wrote, but there is one benefit to the utility of the current 35% rate that would be forgone if reform takes effect in 2018 and if the PSC keeps its current schedule for reviewing Vogtle's future.
If commissioners end up deciding the expansion should be abandoned, Bowers said determination should preferably be made before the end of 2017 so Georgia Power could utilize the current 35% rate for a more favorable abandonment deduction.
"Under a scenario where an abandonment is declared in 2017, the company would be able to realize an approximately $150 million larger tax benefit under the current 35% tax rate," Bowers wrote. "This benefit takes into account the company's anticipated taxable income and related limitations on deductions the company may take in a given year. These benefits would offset project costs and be passed along to customers through the traditional ratemaking process."
Wise responded to Bowers on Dec. 6, writing in a reply letter that he and his fellow commissioners would want to make the "go" or "no-go" decision before the end of 2017 or else Georgia Power ratepayers would lose out on $150 million in savings.
The chairman requested that both the utility and PSC staff consider revising the Vogtle hearing schedule "in order that we may have a decision by the end of the year. This might include the possibility of the company limiting or waiving its opportunity to file rebuttal if this Commission were to rule on this matter before that rebuttal is filed."
"Obviously scheduling allowances would still be necessary for post-hearing briefs and proposed orders," Wise continued. "These changes would allow the company to make any necessary abandonment declarations this year if the decision warrants or otherwise know the conditions for proceeding with construction."
Wise said he wants to act on an updated schedule when the PSC meets Dec. 11 to hear staff and intervenor testimony on Vogtle.
Energy trade groups expect President Donald Trump to sign tax reform into law by year's end. Earlier this month, PSC staff recommended that Georgia Power shoulder more Vogtle risk and proposed slashing the utility's cost recovery for the project.