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PSC priority is managing Vogtle costs

2014 to be a year of implementation for utilities, regulators

Sunday, Jan. 26, 2014 4:21 PM
Last updated 7:42 PM
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ATLANTA -- After what seemed like non-stop planning, evaluation and rate setting, the panel that regulates Georgia's utilities is set for an unusually quiet year of what insiders call "implementation."

In the last three years, the five-man Public Service Commission has been busy. It has:

- approved and oversaw the start of construction of the nation's first commercial nuclear reactors in three decades,

-considered rate-change requests by the state's largest gas and electric utilities,

- approved the shuttering of 15 coal-fired power-generating units

- oversaw the introduction of an historic level of solar-power generation

- launched a statewide network of compressed-natural-gas vehicle fueling stations

- and authorized major expansion and upgrades of Georgia's network of natural-gas pipelines

"This year is really just about implementation," said Kristie Benson, spokeswoman for Atlanta Natural Gas.

It's an assessment repeated by consumer advocates, commissioners and observers.

It is the commission's job to oversee that implementation. For Atlanta Gas, that means the addition of four compressed-natural-gas fueling stations, including one in Savannah. That's along with continued extension of the company's network, with a pipeline to serve the Liberty County industrial park, and a $5.5 million rate decrease because of savings resulting from a merger with Midwestern-based Nicor Inc.

Benson credits the network upgrade already implemented with maintaining adequate pressure to serve all customers during the current cold snap. On the other hand, electricity customers of the Tennessee Valley Authority are being instructed to turn back their thermostats to conserve because that system can't keep up with demand.

Maintaining reliability and low prices are the twin goals of Georgia regulators.

"In the end, the economics have to rule the day because that drives manufacturing; that drives jobs," said Commission Chairman Chuck Eaton in an interview with Morris News. "These competitive electric rates are important to fixed-income senior citizens."

He notes that the commission was criticized by environmentalists for not being among the first states to order greater use of solar-powered generation. But in the meantime, prices for solar technology declined significantly, and now Georgia electricity rates are based on the reduced costs instead of being locked in at the higher, older ones.

"Because the Public Service Commission was cautious up to this point without acting very boldly, it has saved the Georgia Power ratepayers a lot of money," he said.

That caution will continue to moderate the commission's actions in the year ahead, no doubt. That includes keeping on top of the expenses for Plant Vogtle where two reactors are under construction.

"The No. 1 priority is to continue to review Vogtle, keep a watchful eye on it," Eaton said. "That takes a lot of manpower and a lot of our time."

The commission gets semiannual reports on what Georgia Power spends on construction. But the next report, due in February, will cover a 12-month period instead of six because last year's consideration of a rate-hike request and an update to the company's long-term plans simply ate up all of the time.

The commission is asking legislators to appropriate funds for two more staffers. Currently, just one member of the staff and one consultant work full-time monitoring the $14 billion project, which is four times the cost of widening the Panama Canal and one of the largest construction undertakings in the country.

By comparison, after Vogtle's first two reactors were built in the 1908s, the commission employed a dozen auditors to pour over the books for five years.

"The fear is that we won't be able to analyze everything," Eaton said. "Not only is this important to Georgia, but the eyes of the country are on us. We want this to be successful."

Other implementation responsibilities include overseeing the actual contracts Georgia Power signs for 210 megawatts in new solar generation, the decertification of the first of the coal-fired plants being shuttered, and the company's first-ever contract to purchase wind power.

When Georgia Power takes bids for solar generation, it can compete for the contracts against the private contractors. Former Commissioner Bobby Baker, now a lawyer representing large utility customers, is hopeful his former colleagues won't be suckered.

" Georgia Power and Southern Company have a really bad habit of low-balling initial bids to win contracts (Vogtle) and then coming back to increase the cost of the bid amount because of unexpected cost increases or delays," he said. "This doesn’t happen in the real world."

Activists like Seth Gunning of the environmental group The Sierra Club will be watching the commissioner and looking for opportunities to nudge them to do more.

"Georgia Power has more than double the amount of necessary backup power it needs to reliably meet electricity demand," Gunning said. "Instead of raising electricity prices on customers to update aging coal plants that sit idle for many months of the year (like Plant McIntosh in Savannah), the company should put these plants on a path to retirement and invest in cheaper, cleaner, energy options like wind and solar."

The commission will also act on a request by the company to pull the plug on its attempt to generate power from pine trees. Company executives say federal environmental regulations make it unprofitable, even though the purpose was to find a renewable source to replace fossil fuels.

And Atlanta Gas isn't escaping scrutiny. Thursday, a commission analyst announced in a letter that the utility is charging customers roughly $1 each per month for a 24-mile pipeline extension in metro Atlanta that is "unused and unusable." An 8,000-foot section that was recently installed was found to be corroded and needs replacement while another 1,700-foot section has never been installed at all, according to the letter.

It may be an implementation year for the commission, but it won't be an inactive one.


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