Georgia Power settles for half a loaf on residential rates

ATLANTA – Georgia energy regulators approved a rate increase for Georgia Power Co. Tuesday that will raise its basic service fee for residential customers during the next three years from $10 a month to $14, or $168 a year.
Ruling on the Atlanta-based utility’s first rate case in six years, the state Public Commission voted 4-1 for a compromise the company offered last week in an agreement approved by the city of Atlanta, MARTA, The Kroger Co. and three organizations that represent Georgia manufacturers and other large commercial customers.
Georgia Power originally had proposed increasing the fixed fee to $17.95 a month.
In approving Georgia Power’s offer, the commission rejected alternatives advocated both by the agency’s staff and commission Chairman Lauren “Bubba” McDonald, the lone commissioner to vote against the rate hike.
The staff and McDonald pushed for a lower profit margin for Georgia Power. On Tuesday, McDonald proposed setting that “return on equity” at 10.25%, well below the 10.9% ROE the utility originally requested and 10.5%, the final number the commission approved.
Commissioner Tim Echols, who suggested the final number, said a 10.5% profit margin would protect Georgia Power’s financial integrity, including its credit with bond-rating agencies.
“Maintaining Georgia Power’s financial integrity is important to me and the economy of this state,” he said. “This keeps the company on the low side of Moody’s and S&P’s metrics.”
Environmental and consumer advocacy groups opposed to the increase in the basic monthly fee Georgia Power originally proposed remained dissatisfied with the compromise offer the commission approved.
“Customers who earn a fixed or lower income suffer the most from high electric bills,” said Codi Norred, program director for Georgia Interfaith Power & Light. “Allowing Georgia Power to increase mandatory fees only makes that burden even greater.”
Kurt Ebersbach, senior attorney for the Southern Environmental Law Center, noted that none of the industrial intervenors that signed onto the agreement with Georgia Power represent any of its 2.2 million residential customers.
“While Georgia Power did not get everything it wanted, it’s disappointing that residential customers will now suffer additional financial burden and less control over their electric bills,” he said.
Commissioner Tricia Pridemore described Tuesday’s vote as a pro-business move by the PSC against burdensome government regulation.
“Nationally, we see utilities filing bankruptcy due to overregulation,” she said. “Georgia is different.”
As part of its agreement offer, Georgia Power will not increase rates next year. Instead, the monthly fee will go from $10 to $12 in 2021 and to $14 the following year. 

Georgia PSC set to vote on Georgia Power rate hike

ATLANTA – Georgia Power Co. has cut the 7% rate increase it requested from state energy regulators last summer in half.

But in an unusual development in Georgia rate cases, the proposal the state Public Service Commission (PSC) will take up on Tuesday is missing a key element. Commissioners will have to decide on the fly how much return on equity (ROE) to award the Atlanta-based utility because negotiators for Georgia Power and the PSC staff were too far apart to reach an agreement.

As a result, the commission will have three alternatives to consider rather than the typical single proposal: a settlement agreement submitted by Georgia Power, a second plan from the agency’s staff and a third in the form of a motion by commission Chairman Lauren “Bubba” McDonald.

 “It’s definitely unusual,” said Kurt Ebersbach, senior attorney for the Southern Environmental Law Center, one of more than a dozen parties intervening in the rate case. “There’s almost always a stipulation agreement between the staff and company. … I’m not used to seeing it come down to the wire like this.”

The rate hike Georgia Power submitted last June 30 would cover a three-year period starting Jan. 1.

The utility’s original request of a 7% increase, a big jump by previous standards, was driven in part by a six-year lag since it received its last adjustment. Georgia Power agreed not to pursue a rate case in 2016 while the PSC was busy considering and subsequently approving its proposed merger with natural-gas giant AGL Resources.

This year, company executives argued the utility needed the money to recover the costs of major investments since 2013 in infrastructure improvements aimed at better serving customers and environmental compliance expenses, including closing all of its coal-ash ponds adjacent to power plants. Georgia Power also was hit with a clean-up bill of more than $450 million following several major storms, including Hurricane Michael in October of last year.

The company’s plan to raise its basic service fee on residential customers from $10 a month to $17.95 drew a public outcry as the PSC opened hearings on the case, including sign-carrying demonstrators marching outside the commission’s headquarters in downtown Atlanta.

In negotiations with the PSC staff, the utility backed away significantly from its original stance. The new settlement agreement would reduce the proposed fee hike to $14.

In another major concession, Georgia Power pledged not to seek any increase next year. Instead, the monthly fee would go up to $12 in 2021 and not reach $14 until 2022.

Liz Coyle, executive director of the Atlanta-based consumer advocacy group Georgia Watch, said she’s encouraged by the company’s willingness to compromise on the fees.

“I believe we’re getting close to a resolution that will be to the benefit of Georgia Power customers,” she said.

But Georgia Power isn’t budging on the return-on-equity issue, which the utility sees as vital to its credit worthiness and overall financial integrity.

“Maintaining the company’s credit rating is critical, especially as the company goes to the financial markets to build out the … infrastructure, comply with federal and state [environmental compliance] obligations, all the investments [the PSC] staff has admitted, accepted and agreed we need to make,” Kevin Greene, a lawyer representing Georgia Power, told the commission’s Energy Committee Thursday.

The ROE question is the main reason the company and PSC staff have failed to reach agreement. Georgia Power originally proposed a ROE of 10.9%, while the PSC staff countered with 9.2%.

“That’s worth $390 million, $290 million of which would be profit for the company,” Ebersbach said.

The commission’s staff upped its offer last week to 10.25% – with McDonald concurring in the motion he filed last week.

But Greene said reducing the ROE essentially would punish Georgia Power despite a record of stellar customer service.

“Georgia Power is a superior performing utility,” he said. “It deserves to be treated as such.”

But McDonald brought up the massive cost overruns and scheduling delays Georgia Power has encountered at its Plant Vogtle nuclear expansion project as an example of “poor decisions” by the utility that are costing ratepayers.

He said he took Plant Vogtle’s woes into account in crafting his motion for a lower ROE for Georgia Power, even though costs associated with the nuclear construction are not part of the rate case.

“You failed to recognize the leadership decisions made over the years that didn’t work, that could be negative to consumers,” McDonald told Greene. “You have to take responsibility.”

Greene said Georgia Power shareholders already have absorbed $720 million in costs associated with Plant Vogtle. To reduce the utility’s ROE in a rate case essentially would be to “double penalize” the company, he said.

Despite Georgia Power’s willingness to pare back the increase in its basic service fee, environmental and consumer advocacy groups remain opposed to the proposed settlement agreement and are calling on the PSC to approve its staff’s recommendations.

Notably, none of the six intervenors in the case that signed off on the Georgia Power agreement last week were environmental or consumer groups. Intervenors siding with the utility include the city of Atlanta, MARTA, The Kroger Co. and three organizations representing Georgia manufacturers and other large commercial customers.

Georgia hospitals get new transparency rules

ATLANTA – Nonprofit hospitals in Georgia will have to make a wide range of financial data readily available to the public under rules the state Board of Community Health adopted Thursday.
Board members voted unanimously to impose new reporting requirements mandated by the General Assembly last March. Republican legislative leaders proposed the bill in an effort to give consumers the ability make a more informed choice when selecting a hospital for care or treatment.
Under the legislation, hospitals must list on their websites the properties they own, their debts, their policies for providing charity care to the indigent and the salaries of their 10 highest paid employees.
As the legislation moved through the General Assembly, hospital lobbyists argued that gathering the additional data would put a huge financial burden on hospitals, particularly small facilities in rural communities operating with small staffs.
“It takes manpower to pull together the type of reports they expect,” said Monty Veazey, president and CEO of the Tifton-based Georgia Alliance of Community Hospitals. “Many of our rural hospitals estimate it costs $30,000 to $40,000 to comply.”
Ethan James, executive vice president for external affairs for the Georgia Hospital Association, said many nonprofit hospitals already make public much of the information required in the new rules.
“It’s not condensed in one spot, but it’s publicly available,” he said.
However, James acknowledged that compiling financial data on hospital websites where it’s easy to find is in the “public good.”
He said an issue hospital administrators have been more concerned about is vague wording that leaves many of the proposed rules subject to interpretation.
“We don’t want to do it wrong,” he said. “And not only do we want to do it right, but everybody needs to be doing it the same.”
As an example, James cited the provision in the rules governing disclosure of top executive salaries that could have been interpreted as extending the requirement to hospital contractors.
But after a presentation to the board Thursday by Rachel King, general counsel for the Georgia Department of Community Health, James said he felt comfortable the salary disclosure rule will be applied only to hospital employees.
Veazey said he, too, was satisfied with clarifications of the rules King offered.
“I feel pretty good about what the department did today,” he said.
In other business, the board took no action on a proposed waiver the state plans to seek from the federal government to go its own way with Georgia’s Medicaid program. The General Assembly authorized Gov. Brian Kemp this year to apply for the waiver, which would take a more conservative approach to Medicaid expansion than the Affordable Care Act.
Board members agreed to wait until a special called next meeting before acting on the waiver application in order to give the department more time to consider late-arriving public comment on the plan.

Legal recommendation favors Georgia over Florida in water case

ATLANTA — A special master appointed by the U.S. Supreme Court to hear arguments in a long-running dispute between Florida and Georgia over water allocation sided with the Peach State Thursday.

Paul Kelly recommended the justices dismiss Florida’s 2013 lawsuit asking the federal courts to order Georgia to withdraw less water from the Chattahoochee River basin, a system that includes the lower Flint River.

Florida’s lawyers argued Georgia’s withdrawals to supply water customers in rapidly growing metro Atlanta and irrigate crops in the South Georgia Farm Belt aren’t leaving enough water at the state line to support the environmentally fragile oyster industry in Apalachicola Bay.

But after hearing from both sides last month in a New Mexico courtroom, Kelly disagreed with Florida’s contentions.

“The evidence has not shown harm to Florida caused by Georgia,” Kelly concluded in his report. “The evidence has shown that Georgia’s water use is reasonable, and the evidence has not shown that the benefits of apportionment would substantially outweigh the potential harm.”

“We greatly appreciate Special Master Kelly’s recognition of Georgia’s strong, evidence-based litigation,” Gov. Brian Kemp said in a statement shortly after the report was released. “We will continue to be good stewards of water resources in every corner of our state, and we hope that this issue will reach a final conclusion soon.”

Kelly’s recommendation was the second handed down in the case that was favorable to Georgia. In 2016, the first special master assigned the case, the late Ralph Lancaster, also recommended the Supreme Court deny Florida’s water allocation demands.

However, Lancaster’s ruling did not address the merits of Florida’s case. Instead, he reasoned that since the U.S. Army Corps of Engineers – which controls the flow of water down the Chattahoochee River through a series of reservoirs – is not a party to the lawsuit, Florida could not be guaranteed the relief it was seeking.

As a result, the Supreme Court ordered the case sent to a second special master for a hearing on the merits.

With a second opportunity to argue the case, Florida’s lawyers primarily targeted farmers in the lower Flint as water wasters, essentially acknowledging the Atlanta region’s successful efforts in recent years to curb wasteful water use habits.

While metro Atlanta’s population has grown by 1.3 million since 2000, water withdrawals have declined by more than 10%, thanks to conservation efforts undertaken by the region’s water utilities.

“The fact that [Florida] is focusing on the Flint says to me they’ve recognized they don’t have much of a case regarding the Chattahoochee,” said Brad Currey, retired CEO of Rock-Tenn Inc. and a board member of ACF Stakeholders, a decade-old nonprofit that includes farmers, seafood harvesters, utility executives, manufacturers and environmental advocates.

Florida had more leeway to attack Georgia’s irrigation practices. As recently as the turn of this century, farmers in the region did not measure their water consumption with meters, so they had no idea how much they were using.

Since then, however, the vast majority have installed meters. Also, technological advances have allowed farmers to install low-pressure drip nozzles located close to the ground instead of spraying large volumes of water onto farm fields, most of which is lost to evaporation.

“The next iteration of that … is to have soil-moisture sensors in the field feeding back into the hardware so it’s applying exactly what’s needed,” said Gordon Rogers, executive director of Albany-based Flint Riverkeeper.

Florida wants the Supreme Court to place a cap on Georgia’s water usage, a request Georgia’s lawyers have called draconian. Such a limit, they have argued, would bring growth in metro Atlanta grinding to a halt, wreaking severe damage to the state economy.

Kelly’s recommendation lands the case back with the Supreme Court. The justices can decide whether to accept or reject the special master’s recommendation.

Analysis: Loeffler pick carries more upside than downside for Kemp

ATLANTA – U.S. Rep. Doug Collins, R-Gainesville, would have been the safe choice in Gov. Brian Kemp’s search to replace retiring U.S. Sen. Johnny Isakson, R-Ga.
A leading voice against impeaching President Donald Trump on the House Judiciary Committee, Collins was the president’s favorite to move to the other side of the Capitol as Isakson’s interim successor. The conservative lawyer who served in the General Assembly and did a tour of duty in Iraq with the U.S. Air Force is popular with the Republican base that elected Kemp last year.
But it wasn’t lost on the GOP governor that his margin of victory over Democrat Stacey Abrams was a lot smaller than wins scored by Nathan Deal and Sonny Perdue, Kemp’s two Republican predecessors.
Bolstered by votes from suburban white women, a group the GOP had dominated in Georgia since the turn of the century, Abrams came within fewer than two points of becoming the Peach State’s first Democratic governor since Perdue derailed Roy Barnes’ bid for a second term in 2002.
So, Kemp tapped Atlanta businesswoman Kelly Loeffler last Wednesday to step into Isakson’s shoes come January, a political newcomer who has scored her previous successes as CEO of a Bitcoin-focused affiliate off Intercontinental Exchange Inc., headed by husband Jeff Sprecher, and as co-owner of the Atlanta Dream of women’s pro basketball.
Even if word of Loeffler’s appointment hadn’t been widely leaked in the news media in the days leading up to the announcement, the governor’s selection of a woman for the Senate post shouldn’t have come as a surprise, said Kerwin Swint, a political science professor at Kennesaw State University.
It fits a pattern of encouraging diversity Kemp began setting last February during his first six weeks in office when he named Allen Poole, an African-American, director of the Georgia Office of Highway Safety. The governor followed that up in June by appointing Doraville Police Chief John King state insurance commissioner following the indictment of Jim Beck, making King Georgia’s first Latino statewide constitutional officer.
“He has said he was open to unconventional candidates and growing the party,” Swint said.
Charles Bullock, a political science professor at the University of Georgia, said there’s a political upside to Kemp appointing a woman to the Senate. Bullock noted that last fall, for the first time, the percentage of votes in Georgia cast by whites dipped below 60%.
“With the electorate becoming increasingly diverse and the increasing role suburban white women are playing, making an appointment that may bring new Republican voters to the table may be rewarding for him,” Bullock said.
Bullock said another advantage to the pick is any pushback Kemp might get from the right wing of the state Republican Party over not choosing Collins likely will have dissipated by the time the governor is up for re-election in 2022.
“This may be old news by then,” he said.
In fact, Kemp can turn the selection of Loeffler to his advantage in 2022, depending on the job she does in the Senate. If she wins election next November to complete Isakson’s unexpired term, she would be on the ballot in 2022, sharing the top of the ticket with the governor to deliver a potentially potent one-two punch.