Are industrial power customers favored too much?

The mandatory charge on customers for financing the construction of Plant Vogtle has risen from an average of 0.25 cents per kilowatt-hours sold to 0.48 cents per kilowatt-hours sold. The actual rate is heavily weighted towards residential customer use.

Across the Southeast, industrial power customers get special perks. One reason is that they can afford to hire lawyers and experts to persist in asking for the most favorable treatment they can get. One example of this is the advance payment for Georgia Power Company’s Plant Vogtle nuclear expansion project.

Georgia Power customers have already paid over $2.2 billion for financing costs associated with the expansion of Plant Vogtle, without receiving a single kilowatt-hour of electricity from the incomplete nuclear power plant. Under Georgia’s 2009 Nuclear Energy Financing Act (SB31), this pay-in-advance payment is allocated to customers in a very specific way – which heavily favors industrial power customers.

SACE obtained the total payments by customer class through the ongoing Plant Vogtle proceedings before the Georgia Public Service Commission (PSC) (see below). Using data supplied to the Energy Information Administration by Georgia Power, we have calculated the average cost per kilowatt-hour (kWh) electricity sold and per customer.

Residential customers are currently paying over 0.7 cents/kWh, while industrial customers pay less than 0.2 cents/kWh. Over the first six years of these mandatory nuclear plant construction financing fees, residential customers have paid 45% more than average (on a per kWh basis), while industrial customers have enjoyed a 58% below average rate.

The average residential customer, using 1,081 kWh per month, has paid $484 towards the cost of Plant Vogtle through September 2017. Of that total, residential customers have paid about $153 per household to provide industrial customers with $319 million in rate savings. (Georgians are also paying for this advance fee in other ways, such as for schools and municipalities that also pay electric bills and are subject to this charge.)

If industrial customers had paid at the average rate, they would have paid over $615 million to finance the construction of Plant Vogtle, rather than the $257 million they have paid through September 2017.  However, the Georgia General Assembly set a standard that resulted in the Plant Vogtle advance payment representing less than 3% of industrial customer bills. If they were paying for Plant Vogtle at the same rate as residential customers, industrial users might have been much more concerned about whether Plant Vogtle was in customer interests. The severely delayed and over budget reactors have essentially doubled in cost and are more than 5 years delayed.

Georgia Power Company has collected $2.2 billion from 2011 through September 2017 to finance the construction of Plant Vogtle. See HR-1-6 at http://www.psc.state.ga.us/factsv2/Document.aspx?documentNumber=170337

The next Georgia Public Service Commission hearing for Plant Vogtle begins on December 11, 2017 @ 10 am Eastern. The Commission will hear testimony from its own expert witnesses that found that it is uneconomic to continue the troubled project, as well as testimony from intervening parties including SACE.

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