“As usual the Georgia Power Company and the Georgia Public Service Commission staff quibble over the cost-to-complete analysis of Plant Vogtle (Units 3 & 4). The company inflates the cost of the combined-cycle alternative and leaves out costs of completing the project.”
“After water-boarding the numbers, the Company says completing the project is in the best interest of ratepayers. Staff again catches phony numbers and says an eight-month delay will make the project uneconomic. The full Commission again ignores the staff criticisms and approves whatever Georgia Power tells them. … Yawn.”
“Georgia Power’s obvious strategy is to delay the bad news until they get more sunk cost behind them. The actual construction is about 60% complete; and Georgia Power, as always, says the schedule and budget projections are ‘challenging’.”
In his recent treatise on the contra-capitalist corporation, Enron Ascending: The Forgotten Years, Robert Bradley Jr.…
“We are accustomed to seeing news coverage of tearful hurricane victims praising the heroic utility workers who restore their electrical service. Not so heroic is the way the utility accountants are booking that expense in a way that gives huge future streams of profits to the poor storm-victim utility.”
Over the years, the procedures for state-level utility rate cases have evolved into a pretty standard set of formulas and estimating methods.
Most states use a future “test year” where the utility estimates its revenue and costs for an upcoming period. Naturally, the utility will low-ball the projected revenue to justify asking for a higher level of revenue through rates approved by the regulators. Costs in the model year will be overstated as much as the utility thinks they can get away with.…
“Government-orchestrated retail competition in electricity largely failed. With that failure came the return of regulatory-mandated, utility-administered wasteful energy efficiency programs. This time the programs carried the added justification of countering global warming.”
Prior to the oil shocks of the 1970s, energy was just another input in the management of capital, labor and other operating costs. Tradeoffs were made between energy costs and capital spent to increase efficiency. During the natural turnover of capital equipment, energy efficiency improved along with productivity, quality and waste reduction. Effective energy use was a technical matter where efficiency had to make economic sense.
Oil and gas shortages in the 1970s were caused by government price controls, but the news media hyped the concept of “running out” of resources. This brought politics into the use of energy, an example of how the problems from government intervention can breed more intervention.…