SB 31 is Bad Business

I, along with the majority of Peach Pundit contributors, have concluded that S.B. 31, the Georgia Nuclear Energy Financing Act, is bad business and should be killed.

A few years ago, the Senate saved the House from some silly legislation. The House now needs to save the Senate from this bill.

The Public Service Commission’s own staff has analyzed the bill and found that SB 31 not only takes all risk away from investors and shareholders, it “would force current customers to subsidize future customers.” We would pay $740 million more under SB 31.

Peach Pundit is making it really easy for you to contact your state representative to urge him/her to oppose S.B 31.

Please go here. Enter your zip code and you’ll get the phone number of your state representative. Call and tell him to vote no on the Georgia Nuclear Energy Financing Act.

I’ve outlined the reasons why below the fold. You can also go here for more information.

It’s important to point out that we support nuclear energy. We need more of it. But we don’t need legislation that takes away business responsibility to mitigate costs and manage construction overruns, which is exactly what this legislation does.

  1. Passing SB 31 is like consumers paying for a car that has not even been built.
  2. While other states have “cost recovery” laws on the books like SB 31, those states are now having second thoughts because consumers are getting a raw deal.
  3. This legislation will wipe out incentives to minimize cost overruns on the project.
  4. The Public Service Commission’s own staff has analyzed the bill and found that SB 31 not only takes all risk away from investors and shareholders, it “would force current customers to subsidize future customers.”
  5. According to Jeff Pollock’s testimony to the PSC, ratepayers would pay $740 million more under SB 31.
  6. Georgia Power and Sen. Balfour have both stated that early cost-recovery would save rate payers some $300 million in interest, however, this figure can only be found by assuming that there is no cost of money, by ignoring the time value of money and it completely ignores the prepayment of state and federal income tax, which Lane Kollen testified and has quantified as at least $400 million during his testimony to the PSC.
  7. PSC staff notes that it is “unreasonable to ignore” the pre-payment of taxes, adding that Georgia Power is “indifferent to the pre-paid taxes – they are a pass through for them.”
  8. The PSC staff analysis also found that if this bill is passed that it ties the hands of the Public Service Commission “from changing the date that recovery would begin” as well as “[prohibiting] the Commission from changing the period of time over which the costs are recovered.” If things don’t turn out as advertised by Georgia Power, the PSC would be powerless.

23 comments

  1. OMG!

    EE and I agree… Put out the flying pig alert to the FAA.

    Welcome to the cool, freedom, free-market, liberty and personal responsibilty side of politics, Erick. 😉 Keep it up and you’ll have to change redstate.com to redwhiteandbluestate.com.

  2. Icarus says:

    It’s time for the Republican Party to differentiate from being “pro-business” and “pro-big business”. We Republicans had a tailwind when georgia consumers digested natural gas deregulation. We won’t be as fortunate when consumers realize the Republican party leaders shifted cost and risk from GA Power to them.

  3. Now if they’ll just get rid of that “Natural monopoly” nonsense.
    Then we could work on their ability to tolerate how individuals might use their non-infringing freedoms.

  4. Dave Bearse says:

    This legislation adds a whole new dimension to the Georgia GOP being the party in power.

    With 70 Georgia Power lobbyists having worked this, it ought to be the best legislation money can buy. Hope someone bothers to followup up and insure these lobbying costs aren’t passed through to ratepayers.

  5. birdfan says:

    Actually, Georgia Power(who has only 40% of the Nuclear Power Plant project) is asking rate payers pay for the interest in 2 years when they begin production rather than wait 7 years when it comes on line, which they would have to pay interest on interest. This will save the “rate payers” an estimated $300 million. Also, the EMCs (who have 60% of the project) havr the ability to have rate payers pay for both interest and production costs prior to services being on line.

  6. Icarus says:

    “Now if they’ll just get rid of that “Natural monopoly” nonsense.”

    I agree. Let’s have 3 to 5 companies stringing wire down every street. I’d much rather pay 10 times what I pay now for electricity so I could enjoy a greater delusion of liberty.

  7. Ic… that’s that little central planner in you that you need to learn to quit listening to (just keep him drunk and blathering to himself). You actually have no idea what the outcome of allowing true competition would be. Maybe another outcome might be that a company bids for maintaining different portions of the infrastructure then providers could pay for attaching to it. Or the plublic could own it (like the roads) and constantly put out bids for upkeep for portions of it. Or some other outcome that you or I are unable to conceive. And just because you’re willing to pay 10x,… you could probably get your own minnie power plant for that.

  8. Sorry… Misread the 10x part, that was suppose to be me. I don’t believe that would be the result. Show me where, an actually example, where truly unregulated competition lead to higher price for less service.

  9. Technocrat says:

    “have 3 to 5 companies stringing wire down every street” .
    Unlike Cable or Telephone which have only a 2-3 foot working space and must be 12″ apart on poles.
    Power companies must follow The National Electric Safety Code which limits the closeness to communications space to 4 feet minimum. In short there is no room on existing poles for another company. Now we could go back to ENRON and have different Power Suppliers and Marketeers use the same Ga Power lines just as Natural Gas companies use the common pipes today.

    It is much less expensive to maintain a Gigawatt of Nuclear than 2000* – 5MW wind powered turbines.
    *you need 10x the peak capacity of wind for cold weather and low wind conditions.

  10. Icarus says:

    Technocrat,

    Please don’t bog down a discussion of Libertarian utopia with details from the real world. Don’t you know the free market would solve the problem of making room for the extra poles if the market demands it? And that this would also somehow result in the lowest cost?

  11. Enron and natural gas deregulation are bad analogies. It only opened the market to “marketeers” or middlemen where none were needed. As if someone was having trouble finding Atlanta Gas/Light. It only introduced another layer or groups buying from the same monopoly producers. Libertarian economist (Cato) stated that partial deregulation like this would not work and cause prices to go up for consumers. And as usual, they were proven correct. And now these examples are held up as “see, deregulation doesn’t work.” When in fact, it wasn’t deregulation at all. It was a scheme set for failure from the start.

    Anytime you only partially deregulate between production to final delivery, you will set up a bottleneck that causes a false supply and demand issue within the stream that causes prices to increase. In the above examples, the middlemen were competing for the same supply with no increase in production or new producers entering the market, creating a market within a market where one wasn’t needed. Not what I’m advocating.

  12. gawatch says:

    EMC ratepayers are also shareholders, birdfan. Not so for Georgia Power. This bill forces Georgia Power ratepayers to act like shareholders, but we get none of the shareholder spoils. And we won’t see a net benefit until 2027 at the earliest, ignoring opportunity cost.

    Your $300 million “savings” exists in a world of nominal dollars and unicorns – not reality. That “savings” doesn’t take into account consumers’ cost of money, the forced prepayment of income taxes, SB 31’s partial exemption for RTP customers, nor the sales tax impact.

  13. Progressive Dem says:

    In case anyone forgot, a certain Senator from Bonaire, named Sonny carried the water for natural gas deregulation.

  14. jenny says:

    Lookee, lookee–freedom is popular with everyone. Even on PeachPundit. Down with Corporate Tyranny. Let’s go picket Georgia Power! We can invite all their dirty lobbyists to a luncheon laced with GMO’s and rBGH. 🙂 LOL.

  15. Jon Hodges says:

    “It’s time for the Republican Party to differentiate from being “pro-business” and “pro-big business”” – Icarus

    Good Grief, I agree with Icarus.

    A common enemy makes for strange bedfellows.

  16. Bill Simon says:

    In case anyone forgot, a certain Senator from Bonaire, named Sonny carried the water for natural gas deregulation.

    Yes, ProgD…a certain DEMOCRAT SENATOR AT THE TIME carried that legislation. Nice try.

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