The economic benefits of prebilling are substantial and long-lasting
– By April Murelio –
Don Beaver, chief operating officer of the Cobb Chamber of Commerce in Georgia, says allowing utilities to prebill nuclear plant construction costs protects credit ratings and ultimately lowers costs to their ratepayers. A bill pending in the state Senate would let Georgia Power bill customers in advance for construction of two proposed nuclear reactors at Plant Vogtle near Augusta and generate many needed jobs. Other Georgia utilities have been able to prebill their construction costs, Beaver says.
Other utilities in Georgia can recover financing costs during construction —- and have done so previously. Additionally, states around Georgia have passed legislation that allows recovery of financing costs during construction, particularly utilities that are considering new nuclear power plant projects. The Cobb Chamber, along with the chambers of Douglas, Clayton, Gwinnett, North Fulton, Rome-Floyd and others support SB 31 and believe it is good for consumers and the state.
SB 31 does not affect the Georgia PSC's authority to approve the construction of the nuclear units and certify the cost that Georgia Power is allowed to recover. The PSC will monitor the construction of the nuclear units to determine whether expenses are prudently incurred.
Georgia Power’s other alternatives are coal and natural gas. Coal and natural gas prices are highly volatile. Both fuels also face the probability of a federal carbon tax, which will make fossil fuels even more expensive in the United States.
Contrary to opponents’ assertions, the PSC does not allow Georgia Power to sell power from power plants paid for by customers in Georgia —- unless the proceeds from those sales directly benefit the company’s customers. Georgia Power also imports power from other states, when doing so will save money for customers or maintain reliability for customers.
To retain the nuclear energy option for Georgia’s future, and help keep the state competitive with other states, lawmakers believe they must provide Georgia Power the same financing options available to other utilities in Georgia and the Southeast.
Like our other utilities in Marietta and Cobb, Georgia Power has invested millions of dollars in infrastructure improvements as the region has grown. These massive investments are straining these utilities’ ability to raise money at the lowest possible interest rates.
For large capital projects like nuclear power plants, this problem is multiplied because utilities must borrow billions of dollars for plants that take years to build. If utilities are allowed to financing costs as these projects are under way, they avoid “interest on interest” costs —- saving customers money. And when utilities are allowed to recover financing costs during construction, they protect their credit rating, thus lowering their costs to consumers.
Cobb County has one of the best bond ratings of any county in the U.S., and this saves taxpayers millions in interest expenses when the county borrows funds for roads, schools and parks.Likewise, Georgia Power has one of the best bond ratings among utilities in the U.S. For Georgia Power customers, damaging the company’s bond rating by putting further strain on its capital budget could cost customers millions a year more in financing costs.
By opposing SB 31, opponents are effectively opposing further nuclear power plant development in Georgia, thus encouraging further reliance on fossil fuels and their volatile prices —- and even greater exposure to expensive carbon taxes. By opposing SB 31, opponents are not only opposing a recovery method that will save customers hundreds of millions of dollars, they are opposing the only phase-in approach that is allowed.