The reduced energy costs, anticipated to be in effect for a two-year period based on current fuel price projections, are mainly the result of conservative fiscal planning by the commission and lower natural gas prices.
Under Georgia law, Georgia Power is entitled to recover fuel costs associated with generating electricity and such costs are passed-through to ratepayers without a profit. Beginning over a decade ago, fuel prices for coal, natural gas, fuel oil and other sources increased sharply due to limited energy supplies in the U.S. and increased demand worldwide, primarily from the growing economies of China and India.
To reduce the impact on customers that an immediate dollar-for-dollar pass-through would have had on monthly bills, the Commission required the utility to carry a fuel cost balance. Although it has fluctuated, the under-recovered balance at one time reached close to $1 billion. According to the March 30 filing by Georgia Power, the current balance will be completely paid off tomorrow, March 31.
“Since my service began in 2007, my priority has been to pay down this balance,” said Public Service commissioner Chuck Eaton. “I am proud to say we didn’t kick the can down the road and push our burdens onto future generations.”
Commissioner Eaton credits the Commission's conservative fiscal policies for paying down the balance. The Commission not only established amortization schedules for collecting the under-recovered fuel balance over a reasonable time frame, but in March 2010, when the markets were highly volatile, the Commission created an interim fuel recovery rider to ensure the balance did not grow larger between fuel cost cases.
“Paying down the fuel balance not only saves interest costs for consumers, it also helps maintain the utility's credit rating, which avoids higher borrowing costs for consumers in the future,” said Public Service commissioner Stan Wise.
The Commission will conduct a hearing in early June, and any new reductions will begin July 1.
For more information, use the Docket Search function on the Commission website at www.psc.state.ga.us.