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Georgia Power, Regulators Find Common Ground on EV Charging

Georgia Power and the state’s Public Service Commission were not in agreement about a proposed rate hike to fund infrastructure upgrades, including renewable energy sources, but agreed on the need for EV charging subsidies.

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(TNS) — Georgia Power and Public Service Commission (PSC) members and staff clashed over how much profit the state’s largest utility will be able to make in the years ahead as state regulators resumed hearings Tuesday on proposed rate hikes that could affect 2.7 million Georgia Power customers.

The Atlanta-based utility is seeking to raise rates nearly 12% over the next three years, which would lead to a nearly $200 annual increase in the typical household’s electric bill.

The company has said the hikes, which would allow the company to collect $2.9 billion more from its customers, are needed to cover the cost of upgrading electricity transmission infrastructure, complying with environmental regulations and transition toward renewable energy sources as it attempts to reduce greenhouse gas emissions.

The PSC’s Public Interest Advocacy staff has countered with a more modest proposal that would allow Georgia Power to collect $520 million to $664 million more from customers through 2025. The biggest gap between the two proposals involves the company’s proposed “return on equity and capital structure” — largely profits, in other words.

The decision to approve or amend the company’s proposal will ultimately be up to the five elected members of the PSC.

“Our ratepayers are about to be blasted with an enormous increase and we need to figure out a way to curtail some of it,” said Commissioner Tim Echols.

Georgia Power argued Tuesday that lowering shareholder returns could threaten the financial health and stability of the company.

But the most recent quarterly filing of Georgia Power’s corporate parent, Southern Company, shows profits are up compared to last year. Southern reported third quarter profits of about $1.5 billion, up nearly $400 million from the same period last year. Georgia Power, by far Southern’s most profitable subsidiary, reported $858 million in third quarter profit, up 60% from a year ago.

The public interest staff recommended lowering the ceiling on Georgia Power’s investor returns from 12% to 10.5% and requiring all profits above that limit go back to ratepayers. Georgia Power wants to keep the ceiling at 12% and share profits that exceed it, while increasing the target return on equity from 10.5% to 11%. The U.S. median return on equity for similar utilities is 9.5%, according to Fitch Ratings.

“It’s been stuck at a pretty high level,” said Robert Trokey, director of the electric section at the PSC, referring to return on equity rates. He called it “unfair to ratepayers.”

Testimony submitted by PSC staff show that Georgia Power has consistently earned above the target return rate and some years exceeded the ceiling.

Brandon Marzo, an attorney for Georgia Power, objected to the proposed changes, which he described as “radical.”

“Isn’t it important to understand what those radical changes might do to the way the company is able to do business in this state?” he asked.

Georgia Power argues that increasing shareholder returns is necessary to maintain good credit ratings, which affects borrowing costs.

Commissioner Lauren “Bubba” McDonald pushed back on Georgia Power’s argument.

“This commission sets the rate and then it’s a requirement for the company to operate within the framework,” McDonald said.

EV CHARGING STATIONS


There was one area where Georgia Power, environmental advocates, local governments and others appeared to agree: keeping subsidies for building electric vehicle charging stations.

The company wants to expand its “Make Ready” EV program from $6 million to $27 million a year to offset costs of installing charging stations at public and commercial properties.

Compared to traditional fossil fuel-powered vehicles, EVs produce no carbon emissions on the road and are considered a key tool in the fight to limit climate change.

PSC staff recommended cutting the program entirely, arguing that captive ratepayers should not have to pay to build charging stations they may not use. To date, EVs make up a fraction of vehicles in Georgia, but sales are expected to boom amid broader electrification of the auto industry.

“Staff is not opposed to the electric vehicle market or electric vehicles themselves,” said Ralph Smith, a regulatory utility consultant with Larkin & Associates who helped present PSC staff’s case. “We’re saying it should not be the responsibility of electric utility customers to meet that need.”

Alicia Brown from the Georgia Coalition of Local Governments questioned Smith’s argument, asking about the potential benefits of widespread electrification to ratepayers and the economy.

The city of Savannah and DeKalb County have already received Make Ready funding, she wrote in a follow-up email to the AJC, and Atlanta and Decatur have applied.

“[W]e are also interested in the continuation and expansion of Make Ready as a support for businesses, public transit, apartment owners, and others who have an interest in fleet transition, because these investments will support our respective community-wide energy goals,” she said.

PUBLIC COMMENT


About half-a-dozen people weighed-in during public comment prior to expert testimony.

This summer, the PSC enacted a rule that says public commenters will be asked to leave the chambers after speaking.

The rule has raised eyebrows among transparency advocates, who say it violated the state’s Open Meetings Act. Commissioners say the rule would only be enforced if space became a concern in the PSC’s longtime hearing room in downtown Atlanta.

No speakers were asked to leave during Tuesday’s hearings.

Hearings are set to resume Wednesday at 9:30 a.m. and Thursday at 7:30 a.m.

Staff writer Drew Kann contributed to this report.

A NOTE OF DISCLOSURE: This coverage is supported by a partnership with 1Earth Fund, the Kendeda Fund and Journalism Funding Partners. You can learn more and support our climate reporting by donating at ajc.com/donate/climate/

©2022 The Atlanta Journal-Constitution, Distributed by Tribune Content Agency, LLC.


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