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Legislative panel kills Plant Vogtle profit curbs bill

State Rep. Jeff Chapman speaks before a House subcommittee on Tuesday.
Tuesday, March 5, 2013 3:04 PM
Last updated Wednesday, March 6, 2013 1:29 AM
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ATLANTA — A House subcommittee voted overwhelmingly Tuesday to kill a bill designed to reduce the profits Georgia Power Co. could earn on Plant Vogtle construction expenses that exceed the original budget.

Plant Vogtle Unit 3's containment vessel is assembled in stages and placed into the nuclear island using the heavy lift derrick.  SPECIAL/GEORGIA POWER
Plant Vogtle Unit 3's containment vessel is assembled in stages and placed into the nuclear island using the heavy lift derrick.

The company announced last week that the project to add two nuclear reactors to the plant near Waynesboro, Ga., was $737 million over the $6.11 billion budget. That news came after the initial hearing on House Bill 267 in the Utilities Subcommittee.

The bill’s sponsor, Rep. Jeff Chapman, R-Brunswick, said he thought his bill was ahead of the issue because he didn’t expect the company to disclose it was over budget until next year.

Chapman said allowing the company to make its usual 11 percent rate of return on the overrunss gives it reason to be wasteful.

“Georgia Power has a serious incentive to pull as many dollars out of ratepayers’ pockets as possible because they have shareholders,” he said.

Company officials countered that passage of the bill would trigger higher electricity prices because investors would find Georgia Power unattractive if Plant Vogtle is too risky. The Public Service Commission can rule the company can’t charge its customers for any expenses it considers “clearly imprudent,” but investors have accepted that much risk as a way to protect the public, according to Georgia Power attorney Kevin Greene.

He said investors still expect to get an 11 percent return on any expenses added to the budget for safety reasons, such as increased training demands and heightened cyber-security requirements, and that changing the expected profit now would spook them.

“If you tell investors they can’t get that, it will send shockwaves throughout Wall Street,” he said.

“We’re going to have to raise our prices somewhere else to be able to interest these investors.”

The bill had the support of a diverse group that included liberal-leaning consumer-advocacy group Georgia Watch and the conservatives Tea Party Patriots.

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Little Lamb
Little Lamb 03/05/13 - 04:17 pm

So the extreme left wing and the extreme right wing joined forces on this bill, only to watch it go down in flames at the hands of moderate independents. Maybe Washington ought to work that way.

resident 03/05/13 - 05:34 pm
Well Here We Go Again!!!!!

Monopoly gets their way and basically can once again overcharge to please greed!!!!! Wall street is a risk people get over it. This does not mean well no risk to me just charge someone else more money!!!! I am tired of lame excuses for overbudget projects. The Government is notorious for this stuff becaus eof their kickbacks in one form or another. TSPLOST money which I did not vote for will be another example of this. Make a bunch of millionaires for land grabbing...Building roads to nowhere....3 lanes plus to a bridge that does not even support it....Great idea lets waste more money...Lets have a bunch of cost overuns or delay as much as possible and find excuses to charge more money. The cost overun should come out of the contractors pocket...Take their profits not taxpayer money or Utility company customers!!!

Warnin 03/05/13 - 08:17 pm
Exactly WHO did this

I don't see the name of the panel or committee, I don't see the name of the members who killed this bill. I don't see the vote???????? Let's have a little SUNSHINE HERE! If these miscreants voted to kill the bill then let's name them - WHO ARE THEY!

rebellious 03/06/13 - 01:14 am

OMG am I living in an alternate universe. 11% ROI, are they serious? And didn't we get a rate increase to finance this effort upfront?

What are banks giving right now? 2% is considered a great rate. 11% is Venture Capital rates, on a successful venture.

Excuse me while I rifle through your pockets for the remaining change. And, by the way, don't you be late on a monthly bill, we'll have to cut you off.

Dixieman 03/06/13 - 07:37 am

Um, Rate of Return is NOT ROI and 11% is modest and reasonable. Utility accounting and profits are regulated and profits are modest.

rebellious 03/06/13 - 08:17 am
You are so right

IRR and ROI are different. Modest and Reasonable? I don't know. To be turning record profit on the backs of consumers in the midst of an economic recession, regulatory approved or not, is neither modest nor reasonable IMO.

From the AJC:
Customers paying down the financing costs for Georgia Power's planned nuclear expansion project, as well the utility's rate hike, were a key part of parent Southern Co.'s robust fourth-quarter profit, the company said early Wednesday.

Atlanta-based Southern reported a net income of $261 million, or 30 cents a share, a 70 percent increase from $153 million, or 18 cents a share during the same period a year ago.

Earnings for the company for 2011 were $2.20 billion, or $2.57 a share, up from $1.98 billion, or $2.37 cents a share in 2010.

Southern's profits were "positively influenced by regulatory actions -- primarily at the subsidiary Georgia Power -- that became effective in 2011," the company said in a news release. Georgia Power customers began paying a monthly fee for the financing costs of two planned nuclear units at Plant Vogtle in January.

That fee is on top of three-year rate increased approved by the Georgia Public Service Commission a year ago, adding an average $10.76 to bills each month.

Southern Chief Executive Officer Tom Fanning said the company spends between $5.5 billion and $6 billion a year on capital projects, the bulk of which are related to the planned expansion at Plant Vogtle as well as converting Plant McDonough from coal to natural gas. Those projects require regulatory approvals that affect rates and eventually the company's profits.

Georgia Power also is the only one of the utilities in Southern's four-state territory that reported an increase in fourth quarter revenue: $1.8 billion, a 1.2 percent increase from the fourth quarter of 2010.

Bantana 03/06/13 - 08:39 pm
You do know who buys the booze for our elected officials...

In a former life I was responsible for planning "events" for state government economic development efforts and I could always count on regulated utilities to contribute to the food and liquor costs. Sadly the truth is that our politicians can be bought so cheaply. A couple of mixed drinks with some catered BBQ and Bob's your uncle.

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