What is the primary purpose of the Alternate Rate Plan (ARP) approved for Georgia Power?

The primary purpose of the 2013 ARP is to establish a framework for Georgia Power's retail rates and revenue recovery from January 1, 2014, through December 31, 2016. It aims to provide predictable revenue streams for the company while recovering costs associated with generation capacity, environmental compliance, and other operational expenses, and it sets specific parameters for the company's return on equity.

How will the 2013 ARP affect customer bills?

The 2013 ARP will result in increased charges for Georgia Power customers. In 2014, base revenues are expected to increase by approximately $110.0 million through adjustments to traditional rates and specific tariffs like the ECCR and DSM. Further estimated revenue increases are projected for 2015 ($186.8 million) and 2016 ($169.8 million) to cover additional capacity and environmental compliance costs.

What are the implications of the 10.95% ROE and the 10.00%-12.00% ROE range for investors and customers?

For investors, the 10.95% ROE provides a target return, and the 10.00%-12.00% range offers some stability. If Georgia Power earns above 12.00% ROE, two-thirds of the excess earnings will be refunded to customers, meaning investors will only retain one-third. Conversely, there's no automatic recovery for earnings below 10.00% ROE; however, the company can petition for an Interim Cost Recovery (ICR) tariff to potentially bring earnings back to 10.00%.

Will Georgia Power be able to file for general rate increases outside of this ARP?

Generally, no. Georgia Power is prohibited from filing for a general base rate increase while the 2013 ARP is in effect, except as provided within the plan itself (e.g., petitioning for the ICR tariff). The company is required to file a general rate case by July 1, 2016, at which point the PSC will determine the future of the rate plan.

SOUTHERN CO 8-K SEC Disclosure

Summary

This 8-K filing from Southern Company (SO) announces a significant development for its subsidiary, Georgia Power. On December 17, 2013, the Georgia Public Service Commission (PSC) approved an Alternate Rate Plan (ARP) for Georgia Power, effective from January 1, 2014, through December 31, 2016. This plan was developed through a settlement agreement with various stakeholders, including the PSC's Public Interest Advocacy Staff and several industrial and consumer groups. The 2013 ARP outlines a series of revenue increases for Georgia Power through adjustments to its base tariff rates and various recovery mechanisms like the Environmental Compliance Cost Recovery (ECCR) and Demand-Side Management (DSM) tariffs. These adjustments are designed to recover additional costs related to generation capacity and environmental compliance over the next three years, impacting customer bills. Importantly, the plan also establishes a specific framework for Georgia Power's return on equity (ROE), setting a target of 10.95% and a range of 10.00% to 12.00%, with provisions for customer refunds or potential cost recovery mechanisms if earnings fall outside this range.

Key Highlights

1Georgia PSC approves Alternate Rate Plan (ARP) for Georgia Power, effective Jan 1, 2014 - Dec 31, 2016.
2The 2013 ARP is based on a settlement agreement with the Georgia PSC's Public Interest Advocacy Staff and a broad coalition of stakeholders.
3Georgia Power will implement a total base revenue increase of approximately $110.0 million in 2014, with further estimated increases of $186.8 million in 2015 and $169.8 million in 2016.
4Revenue increases will be applied through traditional base tariff rates and specific recovery tariffs, including Environmental Compliance Cost Recovery (ECCR), Demand-Side Management (DSM), and Municipal Franchise Fee (MFF).
5Georgia Power's retail return on equity (ROE) is set at 10.95%, with earnings evaluated against a range of 10.00% to 12.00%.
6Earnings above 12.00% ROE will be shared (two-thirds to customers, one-third to Georgia Power), with no automatic recovery of shortfalls below 10.00% but an option to petition for an Interim Cost Recovery (ICR) tariff.
7Georgia Power is generally prohibited from filing for a general base rate increase during the 2013 ARP period, with a required rate case filing by July 1, 2016.

SOUTHERN CO 8-K Report, Corporate Update (Dec 17, 2013)

Summary

Key Highlights

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