What is the main purpose of this 8-K filing?

This filing announces a settlement agreement reached by Georgia Power Company (a subsidiary of Southern Co.) and other parties regarding its 2019 base rate case. It outlines the proposed terms for rate adjustments and earnings sharing for the years 2020-2022, pending approval by the Georgia Public Service Commission (PSC).

What are the key financial implications of the settlement for Georgia Power and its customers?

For customers, the settlement means expected annual rate increases through 2022 and potential refunds if earnings exceed 12.00% ROE. For Georgia Power, it establishes a framework for earnings with a defined ROE range and a sharing mechanism for excess profits. The recovery of specific costs, like coal combustion residuals, is also addressed.

What aspects of the rate case are still undecided?

The settlement does not cover Georgia Power's requested equity level in its capital structure and the specific allowed retail return on equity (ROE). These critical items remain under consideration and will be decided by the Georgia Public Service Commission.

When will the final decision on the rate case be made and what is the potential impact?

The Georgia PSC is scheduled to vote on the settlement on December 17, 2019. If approved, the new rate plan would take effect January 1, 2020, and continue through December 31, 2022. However, the PSC's final decision could differ from the settlement terms, leading to potentially different outcomes for rates and earnings.

SOUTHERN CO 8-K SEC Disclosure

Summary

This 8-K filing from Southern Co. (SO) reports on a significant settlement agreement reached by its subsidiary, Georgia Power Company, regarding its 2019 base rate case. The settlement, achieved with several key industrial and commercial stakeholders, outlines a framework for rate adjustments and earnings sharing for the period of 2020 through 2022. While a broad agreement has been reached on key features like annual rate increases and how certain environmental costs will be recovered, critical elements such as Georgia Power's capital structure equity and the allowed retail return on equity (ROE) remain subject to the Georgia Public Service Commission's (PSC) final decision. The settlement introduces a defined ROE range of 9.50% to 12.00%, with a specific customer-sharing mechanism for earnings above this band. Earnings exceeding 12.00% will be split, with 40% reducing regulatory assets, 40% refunded to customers, and 20% retained by Georgia Power. The agreement also addresses how past earnings will be utilized, with a portion of 2018 excess earnings being refunded to customers and used to reduce regulatory assets, and Georgia Power forgoing its share of 2019 excess earnings for similar purposes. The Georgia PSC is expected to vote on the full adoption of these terms on December 17, 2019.

Key Highlights

1Georgia Power reached a settlement agreement on key aspects of its 2019 base rate case with industrial and commercial parties.
2The settlement outlines an Alternate Rate Plan (2019 ARP) expected to be effective from January 1, 2020, through December 31, 2022.
3The agreement covers annual rate increases through 2022 and establishes a retail ROE range of 9.50% to 12.00% for rate-setting purposes.
4A customer-sharing mechanism is defined for earnings above 12.00% ROE, involving refunds to customers and reduction of regulatory assets.
5Coal combustion residual asset retirement obligations will be recovered through an Environmental Compliance Cost Recovery tariff.
6The Georgia PSC will make the final decision on contested items, including equity levels in capital structure and the allowed retail ROE.
7The terms are subject to Georgia PSC approval on December 17, 2019, and final terms may differ materially from the settlement.

SOUTHERN CO 8-K Report, Corporate Update (Dec 11, 2019)

Summary

Key Highlights

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