Some really great deals are only great if someone else pays for them.
The state’s largest power company has just such a deal for us.
Georgia Power insists it’s really important and prudent to spend nearly $175 million so the company can investigate building a nuclear plant on land it owns south of Columbus in Stewart County. Executives testified that the investment is “in the best interest of its customers.”
But that certainty magically evaporates if Georgia Power has to pay for the exploration itself.
The company – a government-regulated monopoly — said last week that it would pull the plug on its review if state regulators don’t allow it to charge Georgia Power customers for the entire cost of the exploration. Customers should pay even if a plant is never built on the site, according to the company. Those costs would be incorporated in monthly power bills eventually.
Rule number 1 of investing: If someone tries to get you to invest in something they are unwilling to help pay for themselves, run.
Rule number 2: Run even faster if that someone insists that you pony up before you know the full cost of the last investment they got you into.
We still don’t have a tally of how much customers will pay for Georgia Power’s nuclear expansion at Plant Vogtle south of Augusta. The company’s piece of the project is already at least $1.7 billion over budget – all of which customers should pay for, according to Georgia Power. Experts for the state worry the costs will keeping rising.
Georgia Power representatives testified that they don’t think its appropriate to consider Vogtle’s cost challenges when considering whether to pay for the Stewart County review.
There’s a clear theme when it comes to Georgia Power’s dealings. Customers should take on all the risk. Georgia Power and parent Southern Co., and its shareholders, should reap the profits, which unlike for most companies are virtually guaranteed by regulators.
Southern logged a profit last year of $2.4 billion. (That’s a “b,” each one of which equals $1 million, a thousand times.)
Yet, the company resists doing what most small and large businesses do every day: Take financial responsibility for their own growth plans.
The company is obligated to evaluate all options for power generation to meet customer demands at the lowest possible rates, spokesman Jacob Hawkins wrote me in an email. It’s also allowed to recover its investments that benefit customers, he wrote.
(By Georgia Power’s estimates, major new options for power generation aren’t needed for many years, but nuclear reactors take a long time to get in place.)
Georgia Public Service Commissioner Lauren “Bubba” McDonald is a fan of nuclear energy.
But he said Georgia Power, which the PSC regulates, should fund its own analysis of the Stewart County site if it thinks it’s such a good idea.
“I’m not willing to put ratepayer money up for them (Georgia Power executives) to speculate,” McDonald told me.
“There are not many businesses in the real world that their due diligence is going to be paid by somebody else.”
McDonald told the PSC’s four other elected members that he wants them to hold off on the request to have customers cover the Stewart County review. First, he said, there should be more clarity on the cost of the nuclear expansion already underway at Vogtle.
Georgia Power, he said, already has a profit rate that’s one of the highest set for a U.S. power utility. That profit typically depends on big construction projects. Like maybe a new nuclear plant in Stewart County.
So if further evaluating nuclear in Stewart County is such a good deal, maybe it’s time for Georgia Power to play the odds, this time using its own money and not the house’s.
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