How will these requested rate increases impact customers?

Georgia Power is requesting phased-in rate increases totaling approximately $852 million in 2023, $107 million in 2024, and $45 million in 2025. These increases are designed to cover specific cost recovery needs as outlined in the filing. The exact impact on individual customer bills will depend on the Georgia PSC's final decision and the specific tariff structures approved.

What is the significance of the proposed ROE range and earnings sharing mechanism?

The continuation of the allowed retail ROE range of 9.50% to 12.00% provides a framework for Georgia Power's profitability. The proposed 80/20 earnings sharing mechanism means that if Georgia Power earns more than the allowed ROE, a majority of those excess earnings would be returned to customers, while the company would retain a portion. This aims to balance shareholder returns with customer interests.

What are the potential risks for investors related to this filing?

The main risk for investors is that the Georgia PSC may not approve the full amount of the requested rate increases or may impose conditions that are less favorable than proposed. The ultimate outcome is uncertain and depends on the regulatory review process, which could impact Georgia Power's future earnings and dividend capacity, and by extension, Southern Company's financial performance.

SOUTHERN CO 8-K SEC Disclosure

Q: What is the primary purpose of Georgia Power's base rate case filing?

The primary purpose is to seek approval from the Georgia Public Service Commission (Georgia PSC) for a three-year Alternate Rate Plan. This plan would allow Georgia Power to recover costs associated with significant capital investments in grid modernization, the transition to cleaner energy generation, and environmental compliance, while also addressing operational cost pressures.

Summary

Southern Company's subsidiary, Georgia Power, has filed a base rate case with the Georgia Public Service Commission (Georgia PSC) requesting a three-year Alternate Rate Plan. The plan proposes incremental rate increases totaling approximately $852 million in 2023, $107 million in 2024, and $45 million in 2025. These increases are primarily intended to recover costs associated with significant capital investments in grid modernization, the transition to cleaner energy resources including the retirement of coal-fired generation units, and compliance with environmental regulations, particularly for coal combustion residuals (CCR) asset retirement obligations. The filing also proposes to maintain an allowed retail Return on Equity (ROE) range of 9.50% to 12.00%, with a customer-sharing mechanism for earnings above the top of the range. Additionally, Georgia Power has requested the option to file an Interim Cost Recovery tariff if earnings fall below the ROE range. The Georgia PSC is expected to issue a decision by December 20, 2022. Investors should monitor the outcome of this rate case, as it will directly impact Georgia Power's revenue and profitability, and consequently, Southern Company's financial performance.

Key Highlights

1Georgia Power filed a 2022 Base Rate Case seeking a three-year Alternate Rate Plan with cumulative requested rate increases of $1.004 billion over three years ($852M in 2023, $107M in 2024, $45M in 2025).
2The requested rate increases are driven by investments in grid modernization, transition to cleaner energy resources (including coal unit retirements), and environmental compliance costs (CCR AROs).
3The filing proposes to maintain the existing allowed retail ROE range of 9.50% to 12.00%.
4A customer-sharing mechanism is proposed where 80% of earnings above the ROE range would be shared with customers, and 20% retained by Georgia Power.
5Georgia Power seeks the option to file an Interim Cost Recovery tariff if projected earnings fall below the ROE range.
6The Georgia PSC is expected to make a final decision on the rate case by December 20, 2022.
7The outcome of the rate case is subject to regulatory approval and cannot be determined at this time, posing a potential risk and opportunity for investors.

SOUTHERN CO 8-K Report, Corporate Update (Jun 24, 2022)

Summary

Key Highlights

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