During hearings before state regulators, Georgia Power Co. executives defended its request to recover $937 million in additional revenues, resulting in a $2.2 billion revenue requirement, with several environmental groups questioning the utility's intent to use rates to cover costs from coal ash cleanup.
Within the rate case filed with the Georgia Public Service Commission, the Southern Co. subsidiary wants to recover $524 million to comply with federal and state regulations for coal combustion residuals asset retirement obligations, including closing 29 coal ash ponds at power plants across the state.
Georgia Power proposes to levelize most of the requested rate case over the period from 2020 to 2022, with rates adjusting annually for the increasing cost of its coal ash cleanup, demand-side management programs and municipal franchise fees. Georgia Power Executive Vice President and CFO David Poroch said during an Oct. 1 Georgia PSC hearing that the annual increases would be fair toward the impact on customers rates, as well as the utility's timely cost recovery and maintain its credit quality.
"We thought it was a reasonable compromise of balancing important factors," Poroch said. If Georgia Power had pursued a "traditional recovery" where it tied each ash pond to its respective power plant, "it would require a recovery that's two to three times more than what we're asking for today."
While interveners in the proceeding objected to the utility ultimately charging customers for environmental compliance costs, Georgia Power Chairman, President and CEO Paul Bowers said the request was necessary for the business.
"We're very capital intensive," Bowers said in Sept. 30 testimony, adding that the company has spent $2 billion on environmental compliance costs since 2013.
Georgia Power plans to remove ash from 20 of its ponds near bodies of water, while the utility will cap in place ash at the remaining nine ponds. Several environmental and advocacy organizations oppose the plan.
The Georgia PSC approved Georgia Power's integrated resource plan in July 2019, which included the utility's planned coal retirements for the 142.5-MW McIntosh plant and all four units at the 840-MW Hammond plant. The utility has so far declined to retire additional coal units, such as Bowen units 1 and 2 despite pressure from stakeholders.
"We operate our fossil fuel plants better than anyone else in this industry," Bowers added.
The Vogtle question
Stakeholders and utility commissioners also brought up the Vogtle nuclear plant, of which Georgia Power is the majority project partner with a 45.7% stake. Vogtle's units 3 and 4, two under-construction reactors that have faced costs overruns and project delays, are not included in Georgia Power's rate case, but rates would change once the reactors are completed and in-service.
"According to regulatory schedule, the carrying cost to amount deemed prudent will be incorporated into rate bases," when units 3 and 4 come online in November 2021 and November 2022, respectively, Poroch said.
In a July 30 report, the Georgia PSC staff expressed skepticism that Georgia Power and its project partners will be able to meet the latest regulatory-approved in-service target dates for the two Vogtle reactors. Southern CEO Tom Fanning assured analysts on its July 31 earnings call of its construction timeline and in-service dates. "We think everything we are doing is sound," he said.
Bowers echoed Fanning's optimism during his testimony, saying that "nuclear has a significant role to play in the future of America," most likely through small modular reactors close to load source.
"If you believe we're going to be a carbon-constrained economy going forward, nuclear has to play a role," Bowers said.
The hearings, which began Sept. 30, are scheduled to continue through Oct. 2. (Georgia PSC Docket No. 42516)
