CONSOLIDATED UTILITIES (ConU) COMPANY ANNUAL REPORT
Management’s Letter to Stockholders
Dear Fellow Shareholders:
By now you have heard news reports of ConU’s $1 billion cost overrun on the construction of our nuclear plant. However, that’s just part of the good news we have to report. If all goes according to plan, we will be able to overrun another $1 billion before the project is complete. You are, of course, aware this extra $2 billion in our capital base will mean higher earnings for decades to come with increased dividends for us all.
This achievement brings with it challenges that your management team is well equipped to handle. While these wonderful cost overruns and the profits associated with them are something we can all be proud of, they come with increased public criticism, an enormous expenditure of political capital and problems for our regulatory allies.…
“Tell me, JJ, what’s this capital request all about?”
“Boss, this is for a heat exchanger that will use our cooling-tower water for meeting our air conditioning needs when it’s cold outside. I figure it will save 5% of the power we now use for operating our chiller. The project should come in at around $10,000 and have a payback of less than a year.”
“Saves energy, does it? We can use this project to get greenie points towards obtaining Polar Bear level on our Politically Correct Building certification.”
“Maybe, but getting that certification takes a lot of paperwork and costs about $50,000.”
“Include a bicycle rack in this project, which gets points also. And does this thing use electricity?”
“A little bit, for controls and automatic valves.”
“Good. Include a solar panel to power it and put it over the entrance to the building so it can be seen. …
“[The Georgia] situation is part of a trend where regulators are becoming the senior partners in the monopoly-regulatory cartel.”
Georgia Power is getting a lot of press these days about its commitment to using solar and wind generation. The problem is the age-old triumph of political power over consumer-driven power. The Company does not need this marginal supply, and what is being committed to is more expensive and less reliable than what they already have or could otherwise purchase.
Background
Back in 2007 Georgia Power had its peak year in sales; today’s average is down about 15%. However, the Company continued to increase capacity, and its capacity factor (average utilization) has fallen to 55% from 73% in 2007. With a big nuclear plant coming on, why in the world is Georgia Power out buying more power capacity from other sources?…