Georgia Power says more gas use helping to cut fuel costs

Georgia Power said Nov. 1 that it has filed a request with the Georgia Public Service Commission to reduce fuel rates by approximately 7% and total annual billings by about $122m.

The new, lower rates would begin Jan. 1, 2013. In October, the company announced it would voluntarily trigger the Interim Fuel Rider (IFR) early. The IFR requires the company to adjust rates if the balance of its fuel accounts is significantly over- or under-recovered and was approved by the commission in June.

The proposed decrease would offset most of three previously-scheduled increases that will take effect at the same time, the Southern Co. (NYSE: SO) subsidiary noted. Of the increases:

  • one is due to new, clean-burning, natural gas combined-cycle facilities at Plant McDonough-Atkinson in Atlanta;
  • another is related to the company’s demand-side management (DSM) programs; and
  • the third is due to a Nuclear Construction Cost Recovery (NCCR) tariff increase.

The three increases contribute to long-term rate stability and cost savings. The McDonough-Atkinson and DSM tariff changes will raise the typical residential customer bill by about $1.05 and $0.36, respectively, per month, while the increase to the NCCR will add about $0.85 per month. If the fuel reduction is applied against these increases, a typical residential customer should see a net increase of just 44 cents per month, Georgia Power noted.

Fuel rates were reduced 19% on June 1 of this year. The continued drop in fuel costs was partially driven by lower natural gas prices as a result of increased natural gas supplies. The company said it has been able to expand its use of low-cost gas with the addition of its new gas units at Plant McDonough-Atkinson. Lower demand for electricity resulting from the milder-than-normal summer weather was also a contributing factor.

“Our state-of-the-art natural gas facility at Plant McDonough-Atkinson is already bringing tremendous value to all customers through lower fuel costs,” said Georgia Power President and CEO Paul Bowers. “Investments like this, plus new nuclear, 21st century coal, renewables and energy efficiency, are further examples of how the Georgia Public Service Commission’s long-term planning process benefits all Georgians by ensuring clean, safe, reliable energy at costs below the national average.”

Fuel rates are set separately from base rates. Georgia law prohibits the company from earning a profit on fuel, while allowing recovery of all prudently incurred fuel costs. Under the terms of the IFR adjustment mechanism, the PSC has 30 days to review the company’s filing.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.