Blogs from April, 2023

Solar Power as the Solution to Georgia Power's High Electricity Rates

By: Adam Hoyt, AES Solar Consultant

If you are a Georgia Power customer, you’re probably wondering “Why am I paying so much for my electricity?” Even if you are a customer of one of Georgia’s 93 other electric power utilities, you may be asking the same question.

And it’s a fair question.

In this age of rapid technological advancement, shouldn’t our energy costs be going DOWN? While electricity rates might appear mind-numbingly confusing (because they are), here are a few reasons why rates are so high, and a few things you can do about it.

Georgia Power is a monopoly

Every electric utility in Georgia is a regulated monopoly, meaning residential and small business rate-payers (this is the actual term utilities use to refer to their customers) don’t have a choice in which electric company provides them with power. It’s solely based on the customer’s address. Georgia Power is the largest of these monopolies and is governed by the Georgia Public Service Commission. As such, they are entitled to fixed-yet-continuous profits of around 11% per year. If their cost of doing business increases, so does your electricity pricing. Utilities are not immune from inflation and a weakening dollar, as it takes tremendous capital to keep them operating. Labor pricing is on the rise, our infrastructure is aging (and increasingly vulnerable to attacks, as North Carolina learned the hard way this winter). All these inflationary pressures play into the rates utilities request from the regulators.

And their latest request was granted with no opposition: In January 2023, Georgia Power received permission to raise their rates a whopping 11.8%. Over the next 3 years, they will roll this out by turning up the thermostat on your electricity rate: +2.8% this past January, +4.5% in January 2024, and another +4.5% in January 2025.

You might think this is historic, and it certainly feels like it. But it’s not as bad as the Great Rate Increase of 2011. That was when Georgia Power raised the base rate by 6% in a single year, ostensibly to help with the cost of the planned new reactors at its Vogtle Nuclear plant. But that didn’t go so well. Keep reading.

In contrast, customer-owned generators, such as solar panels, serve as a “hedge” against utility inflation. When utilities raise their rates, solar customers are insulated from those effects, as they can produce a significant portion of their own electricity.

Fossil fuel costs are volatile

Unless your power is coming to you directly from renewable sources like hydropower, sun, or wind, there is a cost for the fuel that goes into the power plant. Here’s what Georgia Power’s fuel costs consist of:

Source: Georgia Power

See that hefty reliance on Gas? That’s a large part of the fuel cost increase. Even prior to the invasion of Ukraine by Russia, natural gas prices displayed great volatility. The war has extended far beyond some pundits’ (and Putin’s) original timeline, causing a protracted shortage of natural gas around the world.

In their arrangement with the Public Service Commission, Georgia Power is allowed to pass along the full cost of fuel volatility to their rate-payers (i.e. you). So when natural gas prices go up, your electricity rates go up. The current fuel cost recovery tariff is already nearly $0.03/kilowatt-hour or a nearly 20 percent increase over the base rate.

And Georgia Power is seeking yet another fuel cost recovery increase this summer. This latest change, if approved, would bring an additional 17% increase to power bills. For the average residential bill of $130/mo, that’s another $23. Combined with the aforementioned base rate increases, the increases could be a whopping 45% or $60/mo for the average homeowner!

In contrast, solar power’s fuel cost is zero. Solar panels are fueled by sunlight. So when fossil fuel prices increase, solar becomes an even better investment.

Plant Vogtle Nuclear Boondoggle

The only nuclear reactor construction in the United States at the current time, Plant Vogtle has caused the bleeding of many a journalist’s pen. Suffice it to say that the project is several years behind schedule and the price tag (which rate-payers are liable for) is over double the original budget.

The rate case of 2011 was supposed to help pay for the expansion of the plant. But then, cost overruns caused the nuclear developer Westinghouse to declare bankruptcy in 2017. So while Plant Vogtle finally started producing power from one of the two new reactors some weeks ago, Georgia rate-payers will bear the brunt of this financial boondoggle for decades, to the tune of $35 billion dollars.

Some have made the case that Georgia Power could have invested half as much money into batteries and grid-scale solar, and still provided the equivalent power and base load of the two reactors. Nuclear always appears to be the cheapest power, until projects are actually in motion.

Solar offers a way out

Instead of being limited by 150-yr old steam turbine technology, the interest of corporate shareholders, and the frailties of aging infrastructure, solar owners enjoy a level of freedom that is high-tech, forward-thinking, and predictably stable. Solar has firmly established itself as the most economical way to produce power. And for homeowners and business owners, the long-term financial benefits of solar will always make it a great investment, as sure as the sun shines.