In July, the Public Service Commission requested that Georgia Power, the largest provider of electrical power in the state, add 525 megawatts of solar to its long-range generation portfolio. This decision became the subject of one of the most contentious debates the commission has seen since I’ve served on it.
Before making my vote, I laid three criteria that had to be satisfied, before I voted for more additional solar power. First, that no new monopoly service provider is created; second, that no upward pressure on rates is exerted; and third, that nothing violates the Territorial Services Act, which divides geographic responsibility for serving electric customers in Georgia by providers, including Georgia Power and the electric membership cooperatives and municipal electric authorities.
This criteria is why I joined my colleagues Chuck Eaton and Stan Wise in supporting two important amendments to ensure that Georgia’s consumers and businesses are protected from upward pressure on electric rates and continue to enjoy reliable service. The first amendment requires that an independent monitor oversee procurement of solar power under the program to ensure that ratepayers are protected and that the guidelines we set in place are followed. The second amendment requires that any additional solar, under the new program, be approved by the Public Service Commission only after we determine that there will be no upward pressure on electric rates. These two amendments require that no extra costs will be passed on to Georgia’s families as a result of this program.
Upward pressure is a term used in utility regulation to recognize that many factors ultimately affect rates, and it is often inaccurate to say that any single factor causes rates to go up or to decline.
To identify the greatest cause of upward pressure on electric rates in Georgia and elsewhere, we need only look to Washington, D.C., where the Obama administration’s Environmental Protection Agency, with its war on coal and unpredictable environmental standards, exerts an unprecedented upward pressure on energy costs.
States across the country are being forced to contend with federal policies that cause rising energy costs and unreliable service. Solar power, deployed conservatively, and with procedures in place to contain costs, can act as a hedge against the environmental risk caused by the Obama administration’s green agenda.
With so much public interest focused on PSC decision-making, I’d like to discuss the next major decision we will make: Georgia Power’s rate case in which the company seeks to recover additional costs from the construction of two new nuclear reactors at Plant Vogtle.
At the Public Service Commission, we are accustomed to our votes being characterized as either pro-utility or pro-consumer, but a regulatory decision very seldom sides purely with the utility or with the consumer. It’s expected that PSC election challengers will try to characterize a commissioner as siding with the utility a majority of the time. The irony is, most of the time, the policies these challengers propose, will actually put upward pressure on rates and increase the chances of blackouts or brownouts. Increased environmental controls and premium sources of energy don’t come cheaply.
In many of our decisions, state law limits the latitude of the Public Service Commission. In fuel cases, which are a large number of the votes we cast, our review is limited to whether the utility actually paid for the fuel they consumed, and whether there’s any reason to believe that the decision-making was so poor as to have been "imprudent."
Simply put, when a utility buys fuel to produce power, unless it spends money foolishly, it is entitled by law to reimbursement and the Public Service Commission is required to approve the expenses. Fortunately, during my tenure at the Commission, I have supported more natural gas electric generation. My votes to expand our natural gas capacity have allowed Georgia to take advantage of the historically low natural gas prices, which has caused your electric bill to be reduced during the last fuel case.
Similarly, many of the factors in whether we ultimately allow Georgia Power to recover more expenses for the construction of Plant Vogtle must be decided through a quasi-judicial process in which the standard of review was whether an expense was incurred prudently. As a matter of law, we cannot substitute our own decisions made with the benefit of hindsight for those made by the company. Nor are we allowed to decide on the basis of whether we like or dislike the parties before us, or whether we approve or disapprove of nuclear power in general. Our decisions must be based on facts and evidence presented during the hearing.
Without financially-healthy private sector utility providers, we could not have the inexpensive, reliable services we have come to expect. Without a healthy balance sheet and acceptable profit margin, a private-sector company will end up paying far more in financing costs; those costs are ultimately borne by the consumer and business ratepayers of Georgia.
Short-sighted decisions to temporarily and artificially lower rates have the potential to become even higher costs down the road as borrowing costs increase and are in turn passed on the ratepayer. Many of the states currently experiencing electric blackouts and brownouts have haphazard electric policies without any consideration for long-term ramifications. These states have lacked the political fortitude to invest in future capital projects.
The challenge on the Public Service Commission is to provide oversight that allows the best balance between keeping rates low today and for the future. A recent Politifact article finding that Georgia ratepayers have paid electric rates 10 to 15 percent lower than the national average in eight of the last nine years indicates that the partnership between the Georgia Public Service Commission and the private sector providers we regulate benefits Georgia families and businesses.
Doug Everett is a commissioner on the Georgia Public Service Commission.