Summary
This 8-K filing from Southern Company and its subsidiary Georgia Power addresses a critical regulatory matter impacting Georgia Power's financial performance. Due to the economic recession significantly reducing revenues, Georgia Power's projected retail return on equity (ROE) is expected to fall below the 10.25% minimum threshold set by the Georgia Public Service Commission (PSC) for 2009 and 2010. Instead of seeking a rate increase, Georgia Power has filed a request with the PSC for an accounting order to amortize approximately $324 million of a regulatory liability related to other cost of removal obligations over an 18-month period. This action is intended to reduce operating expenses and help the company stay on track to file its next general base rate case by July 1, 2010, even though its ROE may remain below the allowed range.
Key Highlights
- 1Georgia Power projects its retail ROE to fall below the allowed 10.25% minimum in 2009 and 2010 due to the economic recession.
- 2Instead of requesting a customer rate increase, Georgia Power filed a request for an accounting order with the Georgia PSC.
- 3The accounting order request seeks to amortize a $324 million regulatory liability related to 'other cost of removal obligations'.
- 4This amortization would be spread over 18 months (July 1, 2009, to December 31, 2010) as a reduction to operating expenses.
- 5The company aims to use this accounting adjustment to remain on schedule for its next general base rate case filing by July 1, 2010.
- 6The accounting order is subject to review and approval by the Georgia PSC, and the outcome is uncertain.
- 7The filing includes a cautionary notice highlighting numerous factors that could affect future results, including regulatory changes, economic conditions, and operational risks.