Georgia Power president defends rate hike

ATLANTA, GEORGIA - Georgia PowerÂ’s new president said that the electric utility had to raise prices to meet stricter emissions rules and maintain its system, but heÂ’s considering new ways to help customers cut costs.

W. Paul Bowers, 54, became president and CEO of the largest subsidiary in the Atlanta-based Southern Co.Â’s network on December 31, just as its customers were hit with a rate increase that will add more than $14 to the monthly power bill for an average home.

Raising prices was necessary to comply with stricter environmental rules on coal-fired power plants, build a new gas-fired plant and maintain the companyÂ’s transmission network, Bowers told The Associated Press in an interview. Critics assailed BowersÂ’ company for raising rates during an economic downturn that pushed unemployment to 10.1 percent, although Bowers said his firm invested billions of dollars in its business even in a sour economy.

“We didn’t stop it because our customers expect the lights to stay on, they expect us to be compliant with environmental law and they want us to have power for the growth of the future,” Bowers said.

Last month, GeorgiaÂ’s utility regulators at the Public Service Commission approved a settlement that not only hiked bills, but also gave BowersÂ’ company the ability to more quickly raise prices should its earnings fall below set targets. Normally, Georgia Power must file a new case with the commission to raise rates, a process that takes months, involves testimony, analysts and a greater say for critics.

Outgoing PSC commissioner Robert Baker voted against the settlement, saying it gave the utility too much. The Georgia chapter of the AARP wanted it rejected for raising customer costs by hundreds of millions of dollars more than necessary during one of the worst economies in a generation.

When asked, Bowers said he could not rule out another price increase before the current settlement expires at the start of 2014, particularly if Georgia suffers another deep recession.

“I hope not,” Bowers said. “You know, you never know.”

Georgia Power sought permission in July to more rapidly change its prices after weathering a drop in electricity usage and revenue during the Great Recession. Bowers said he watched as the Southern Co.Â’s power system went from adding up to 70,000 new customers annually to a net growth of less than 100 new customers in 2009.

“That made us step back and say, ’Is the three-year rate plan process the right process, and is there a way that we can adjust during these ups and downs in the economy?”’ said Bowers, formerly Southern Co.’s chief financial officer.

Bowers said his goals include giving customers more control over their electricity bills. For example, Bowers said Georgia Power is researching whether customers are willing to install systems that automatically turn off major appliances such as air conditioners when electricity costs peak, typically in the early evening.

Sensors installed on the compressor of an air conditioner can detect signals from the power grid and shut down the cooling system. Georgia Power experimented with a similar plan in the 1990s, although Bowers said customers never embraced it. If thereÂ’s enough demand, a new pricing plan could be created in six months to two years, Bowers said.

Industry executives are still debating how much money residents must save before they will voluntarily change their electricity usage. Bowers estimated that a system capable of shutting off air conditioners during peak times might shave a few dollars off a monthly household bill. ThatÂ’s not much compared to the $22 monthly increases that average Georgia Power households will see by 2013.

“Is that going to be of value to the customer?” he said. “When they walk in and it’s a little warmer in their home, are they willing to accept that?”

Bowers said his biggest long-term challenges include overseeing the construction of two nuclear reactors at Plant Vogtle near Waynesboro. ItÂ’s a project with big stakes for the entire nuclear industry. Georgia Power and its partners could be among the first in a generation to win permission to build a new reactor.

The federal government last gave permission to build a nuclear plant in 1978, just as shrinking electricity demand and a poor economy brought the industry to a near standstill. An accident the following year at the Three Mile Island nuclear plant in Pennsylvania added to the woes. Cost overruns and delays were endemic.

In a departure from the past, Georgia Power has picked an off-the-shelf reactor for the Vogtle expansion rather than a custom model, Bowers said. He also expects the utility will benefit from a streamlined review process from the Nuclear Regulatory Commission.

He argued that the Southern Co. subsidiary was uniquely positioned to build the capital-intensive project, since the firm is large, has access to cash and had experience with big construction projects. He said going forward now, rather than waiting, gave the utility more bargaining leverage.

“There is a benefit of being first associated with the first mover,” Bowers said, adding that Westinghouse Electric Co., the reactor supplier, and The Shaw Group, the construction contractor, are using Plant Vogtle as a demonstration project.

“This will be the first one in the United States,” he said. “They want it to be successful.”