What’s at the Center of the Georgia Power 2022 Rate Case?

We're still a few weeks away from final PSC decisions on the Georgia Power IRP (Integrated Resource Plan) and yet we've already begun the companion Rate Case process. The Company made its filing along with pre-filed testimony last week. Here's what's in it.

Bryan Jacob and Heather Pohnan | July 1, 2022 | Energy Efficiency, Energy Policy, Georgia, Solar, Utilities

Georgians have long struggled to afford high energy bills, and consumers are now beginning to see how fossil fuel dependence impacts their wallets. Considering this backdrop, we at the Southern Alliance for Clean Energy are disappointed to see that the latest Georgia Power rate case filing doesn’t create more opportunities for customers to reduce their energy burden through energy efficiency programs,  and additionally takes steps to block solar growth in the state – all while lining shareholders pockets.

Energy Efficiency Measures that would Lower Customer Bills Ignored, Despite Company “Commitment” to Customers

In pre-filed testimony, CEO Chris Womack states, “At Georgia Power, our customers are, and will always be, at the center of all we do.” This echoes similar statements made by Southern Company CEO, Tom Fanning, in a 2021 report that outlines the company’s views on energy justice: “We believe the communities we serve should be better off because we are there – a goal that’s bigger than the bottom line.”

All evidence to the contrary. If customers were at the center, and if there were anything bigger than the bottom line, Georgia Power would be embracing more energy efficiency programs. In the latest IRP, Georgia Power proposed to freeze energy efficiency savings levels at the same levels ordered by the Commission in 2019. And the rate case looks to be no different: Mr. Womack’s testimony doesn’t mention energy efficiency, at all.

Georgia Power’s own analysis reveals that more energy efficiency would result in lower total cost for customers. The utility’s objection to expanding the energy efficiency (Demand Side Management, DSM) program targets is that the Company perceives it as a “cost shift” – some customers who choose not to take advantage of the programs would still have to pay for those that do. And if that’s truly a concern, the Company should actually increase its energy efficiency offerings. Many low-income customers have been paying into energy efficiency for years or even decades with every monthly bill, even before income-qualified energy efficiency programs were available to them.

Georgia Power’s energy savings fell considerably further in 2020 compared to both peer utilities and the national average. The Company’s dismissal of energy efficiency will reduce these savings even further in years to come. Source: SACE’s “Energy Efficiency in the Southeast” fourth annual report, February 2022, page 10

Further, it’s disingenuous for Georgia Power to oppose programs that would enable customers to reduce their consumption and bills because it would potentially increase ratepayer costs when they are proposing to increase the Return on Equity (ROE) from 10.5% to 11.0% which will cause a direct cost-shift of $80 million per year from Georgia Power ratepayers to Southern Company shareowners.

The True Bottom Line: Rates and Bills are Going Up

  • For residential customers, Georgia Power’s proposal would increase a typical household annual bill by over $195 or $16.29 per month.
  • The biggest jump is just around the corner in 2023, 11.4%, followed by smaller increases in 2024 and 2025. [$14.32 + $1.35 + $0.62 = $16.29 per month]
  • Other customer segments will experience similar levels of increase as well. Small businesses, for example, will increase 12%.
  • Large industrial businesses on the marginal price rate will only increase 6.3%.
  • In total, over the three-year period, the proposed rates and fees will increase by more than $1 billion or 11.9%.

But Shareowners Will Still Be Compensated 

  • Part of that increase is because Georgia Power has proposed to increase the Return on Equity (ROE) by an additional 0.5%. (ROE is the portion of the revenue requirement that a utility ultimately keeps as profit. See How do Electric Utilities Make Money? for more information.)
  • If the Public Service Commission – Georgia’s elected energy regulators – approves that increase, Georgia Power will collect approximately $80 million additional each year for shareowners of Southern Company.
  • The 11% ROE Georgia Power has requested is well above the U.S. average. For reference, “The combined median 9.50% ROE in 2021 was slightly higher than 9.45% in 2020, which dropped from 9.70% in 2019.
  • In addition, there’s an earnings band around that target ROE, from 9.5% to 12% — which Georgia Power has proposed to keep the same. In each of the last 10 years, Georgia Power has earned above their target and in four of the last ten, they’ve earned above the top end of the band.

Options to Take Advantage of Bill Lowering Renewable Energy Programs Will Be Limited

  • Georgia Power continues to oppose monthly net metering that would properly credit solar customers for the energy they produce, despite the fact that a pilot test ordered in the 2019 Rate Case was very popular.
  • The traditional Residential (“R”) tariff will be discontinued. After the end of this year, it will not be available for newly constructed residential premises. Since the 2019 Rate Case, the new Time-of-Use Residential Demand (TOU-RD) “Smart Usage” tariff has been the default for new construction, though customers continue to have the ability to opt for a different rate upon request. Apparently, the ordinary R tariff will only be available for existing premises, so new construction won’t be able to opt for that.
  • Georgia Power is proposing to raise the fee for participating in the Community Solar program. At $24.99 per month for each subscription block, many felt the program was already overpriced. Now Georgia Power has proposed to increase that monthly fee to $27.99 per month. That seems likely to hinder, rather than help, enrollment.

Next Steps + Take Action

The rate case process is just getting started. We’re presently working with the first filing made on June 24. The first round of hearings will begin on September 19, followed by another on November 8. A decision is scheduled for December 20.

Additionally, we’re still a few weeks away from final PSC decisions on the Georgia Power IRP (Integrated Resource Plan).

We’re bringing Georgians together to be the generation that achieves clean, safe, and healthy communities because all of us deserve to benefit from an equitable clean energy transformation. Join us to learn how you can stay involved in the rate case and more to Renew Georgia.

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Bryan Jacob
Bryan joined the Southern Alliance for Clean Energy in June 2017. As Solar Program Director, Bryan leads activities to promote solar power across the Southeast. These activities range from conducting…
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