ATLANTA - Dec 24 - Augusta Chronicle, The

Georgia Power Co.'s customers shouldn't pay $1.6 billion for two power plants before they're built on the site of Plant Vogtle near Waynesboro, say the public-advocacy staff of the Georgia Public Service Commission.

The staff filed its conclusions late Friday in documents with the commission. A spokeswoman for the company said its executives would have no comment until they have had more of a chance to review those documents.

The company is seeking permission to include one-third of the construction costs in the base rates it charges its customers. Its experts argue in documents and testimony before the commission that customers would save much of the financing costs by paying up front.

The five-man commission must decide in March. In the meantime, it asked its public-advocacy staff for a recommendation.

The staff said the company's idea is a bad one.

"Revenues should only be collected from those ratepayers who are receiving service, otherwise current ratepayers are forced to subsidize future ratepayers, and they are forced to pay for assets that are not benefiting them," writes Tom J. Newsome, the director of utility finance with the commission.

Mr. Newsome said that the staff assumed many customers would move out of Georgia Power's service area before the plants begin operation. In that case, 75-80 percent would lose money or save only an average of 35-40 cents for every dollar of prepayment.

Georgia Power has argued in documents it filed over the fall that the financial risks of constructing two power plants next to two existing plants are reasons for the up-front payment plan. Rating agencies, such as Moody's and Standard & Poor's, will downgrade company bonds from "A" to BBB because of the added risk to bond investors during construction, company experts said.

But commission staffers counter that most electric utilities' bonds have a BBB rating and that the slight difference in the interest rates for the lower rating would only amount to a fraction of the total plant cost, now estimated to be as high as $6.4 billion.

Plus, according to the staffers, if customers could keep the money in their own pockets instead of paying ahead for the plant, it would make them $570 million richer.

Monday, the former president of Oglethorpe Power Co., Forrest F. Stacy, filed testimony on behalf of a group of major retailers who are fighting Georgia Power's prepayment plan proposal.

Oglethorpe, which generates power for electric-membership cooperatives, is one of the co-owners of Plant Vogtle along with 50 cities. Mr. Stacy said Georgia Power's customers would face many financial risks if the plants are not completed as budgeted.

"This is significant because cost overruns were a great problem with Vogtle units 1 and 2," he said. "Further, delays in the completion of the units would likely increase the risk of an increase of labor, commodity and component cost increases."\

THE BACK STORY NUCLEAR REACTORS

BACKGROUND: Georgia Power sought approval from the Public Service Commission to build two nuclear reactors to augment the two already in operation near Waynesboro.

PAYING FOR THE PROJECT: Georgia Power would expect to pay as high as $6.4 billion for its share in the plant. The project would double the plant's generation capacity and add about $12 to customers' monthly power bills. The company sought permission to include one- third of the construction costs in the base rates it charges customers.

DEVELOPMENTS: - Late Friday, the PSC public advocacy staff filed an opinion with the commission that customers should be charged only if they are receiving service, not "subsidize future ratepayers."

- On Monday, former Oglethorpe Power Co. president Forrest F. Stacy filed testimony on behalf of a group of retailers who are fighting the pre-payment proposal.

WHAT'S NEXT: The PSC won't make a final decision until March about the payment plan.

Originally published by Walter C. Jones Morris News Service.

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