“It is the profit on overruns provision that concerns me the most,” said Chapman. “A good deal is when both parties are treated fairly, and being able to bill ratepayers for cost overruns that are your own fault hardly seems fair to me. HB 267 is simply a precautionary measure that would only come into play if additional cost overruns materialize, which Georgia Power has suggested won’t be the case.”
Under a current law passed in 2009 under Senate Bill 31, Georgia Power is allowed to bill captive ratepayers in advance for the construction, financing and profit of two new nuclear reactors before the reactors deliver power to those ratepayers. The reactors, initially scheduled for completion in 2016 and 2017, are already running at least a year behind schedule and at tens of millions of dollars above cost, according to most estimates and recent testimony.
There was no provision in the 2009 legislation that protected ratepayers in the event that costs to build the reactors exceeded the $6.1 billion dollars the Public Service Commission certified as the construction amount. Further, Georgia Power is eligible to receive a “return on equity” of more than 11 percent on all capital outlays or spending for the $6.1 billion reactors, including cost overruns.
Cost overruns, as defined by HB 267, would be any costs that exceed the $6.1 billion that was certified by the commission after the passage of SB 31.
“Simply put, this allows Georgia Power to build a safe plant, but prevents them from socializing their cost overruns in order to subsidize their profits at the expense of the hard-working people of Georgia,” said Chapman.
Though Chapman voted against SB 31 as a state Senator in 2009, his co-sponsor Drenner voted for it. She believed that recovering interest early would save the ratepayers about $300 million, as Georgia Power claimed at the time.
“I would never have voted for this financing plan had I known that the responsibility for cost overruns and other extraneous costs would be passed on to ratepayers.” said Drenner, a longtime advocate for nuclear power. “Though our intentions were good, the legislature helped to create this mess, so it is our responsibility to take steps to clean it up.”
Drenner, the ranking Democrat on energy issues, echoed Chapman’s concerns on cost overrun profits by saying, “I know of no other business that not only makes money by spending money, but also profits from being late and over budget.”
HB 267 was scheduled for its first subcommittee hearing Tuesday.