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Kempner: How Georgia officials pantsed you over the holidays


Now that you’ve dug out of the long holiday/shopping season, here’s a quick summary of what elected state officials did while you were distracted: They pantsed you.

The Georgia Public Service Commission — a body of five officials that most voters don’t even realize exists — yanked Georgia consumers’ pants down to their ankles. One thing they exposed in the process: a big gap in the state’s system for regulating a powerful business monopoly.

It took PSC commissioners less than six minutes, without debate, to unanimously slap customers of Georgia Power with responsibility to pay for billions of dollars in cost overruns tied to the for-profit company’s expansion of nuclear Plant Vogtle. The PSC allowed only the barest of reductions in Georgia Power’s profit margins. Even that is a temporary measure compared to decades the company is likely to be pulling in fully caffeinated profits in this arrangement.

But ignore that, because the PSC also ordered that a note be inserted in Georgia Power bills to declare, essentially, what a deal you’re getting.

They decided to include this message because, well, if you just look at your Georgia Power bill you won’t actually notice anything that looks like savings.

In reality, the PSC’s Dec. 20 vote didn’t give Georgia Power and its parent the Southern Company the entire moon, just most of it.

That’s not the way PSC commissioner Stan Wise saw it.

“It’s an extraordinary balance of interests of all the parties,” Wise said during the hearing.

Some others, like consumer advocacy and environmental group leaders, disagreed. But the most troubling issue is how weak of an effort the state put forth to actually do its job.

Careful limits, but…

We should carefully limit how much government regulates business.

But the picture changes when our government grants a monopoly to a for-profit business, distorting any pretense of a free market. Georgia forces residential consumers who buy electricity to get it from utilities guaranteed geographic territories.

It’s up to the PSC to aggressively regulate Georgia Power and protect captive customers that have been wrapped up like presents and given to the electric giant.

Unfortunately, aggressive is not a word usually attached to the Georgia PSC.

The expansion of nuclear power at Plant Vogtle is the biggest, most expensive construction project the PSC has ever dealt with. Independent monitors for the commission — who one commissioner described as “our eyes and ears on this project” — have warned for years about deep and widespread troubles, from quality issues to weaknesses in Georgia Power’s oversight. The expansion is already more than three years behind schedule.

By law, no imprudent costs should be passed on to Georgia Power customers. The PSC is supposed to be the watchdog on that.

Georgia Power earlier said that every penny of costs was prudent. (I asked Georgia Power to comment for this column, but two spokespeople did not respond.)

In a hearing, the PSC’s staff and independent monitor insisted some costs were imprudent and that they had been in the process of identifying those that were.

Staff’s initial run suggested that $800 million to $1 billion of the excess should be disallowed, according to an email the staff’s chief negotiator sent to Georgia Power’s attorney as they began PSC-ordered settlement negotiations last fall.

Instead, it looks like what public service commissioners really wanted was a settlement, which is exactly what they got.

Accounting sidestepped

The settlement sidestepped any full accounting from staff about how much of the soaring costs for the massive expansion of Plant Vogtle should be questioned. The deal stated that no costs incurred prior to 2016 or so would be disallowed for imprudence.

The elected commissioners — Wise, Doug Everett, Chuck Eaton, Tim Echols and Lauren “Bubba” McDonald —  decided that Georgia Power won’t have to pay any of its nuclear construction overrun expenses so far. It won’t have to put its CEO on the stand to explain massive delays and overruns.

The company will still collect from customers a handsome (and essentially tax free) profit on the project (including extra profit for the overruns), though at a profit rate that has been gently and only temporarily trimmed (from 10.95 percent to 10 percent).

PSC commissioners say current customers will “save” $325 million. That includes money that all parties agreed long ago should be deferred for customers to pay later.

Here are the real figures: the company will collect about $115 million less in profits than if it had gotten all of the moon. Because customers pay to cover Georgia Power’s taxes on its profit (don’t get me started), consumers will pay $185 million less than they might have otherwise.

So to recap, customers will eat more than $2 billion in extra charges and the company will skip about $115 million in profits. Quite an “extraordinary balance,” right?

If the delays get way worse — even beyond a buffer given on top of the delays Georgia Power has acknowledged — the company could be forced to skip another $72 million in profit per year of additional delay.

Back in the day

Nearly 30 years ago, under a Georgia PSC with completely different members, the commission ruled that Georgia Power should pick up some of the tab for massive overruns on the original construction of Plant Vogtle.

Even then, some PSC commissioners were accused of being too cozy with Georgia Power and too willing to cut a deal on complex cases.

I tracked down Dep Kirkland, who in the 1980s served as the state consumer utility counsel, assigned to argue for customers. (Such a position no longer exists).

Back in the day, Kirkland had written that public service commissioners “would rather facilitate than adjudicate” and that they applied “political methods to non-political issues.” He had urged the state to shift the PSC from being elected positions to appointed ones. Appointees could be selected from a pool of people first vetted and chosen by a judicial nominating commission or the Georgia Supreme Court, he said.

I told Kirkland about the current PSC’s actions on the Vogtle expansion. (He’s long been out of the utility world and now is an actor in L.A.)

“It sounds like nothing has changed,” he said. “The process has the same odor that it always did.”

“The truth,” he told me, “should always win.”

Wouldn’t that be nice.



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