PSC rubberstamps Vogtle costs; next day Fitch affirms Southern Company ratings

Need any more proof that Southern Company’s nuclear boondoggle only works with Georgia Power customer and taxpayer subsidy? PSC rubberstamps one day and Fitch affirms ratings the next day. Maybe we should elect Public Service Commissioners who will serve the public.

Georgia Power PR 21 August 2012, Georgia PSC approves Vogtle construction costs

The Georgia Public Service Commission (PSC) today in a 5-0 vote approved Georgia Power’s spending on Plant Vogtle units 3 and 4 for the period including July 1, 2011 through Dec. 31, 2011.

The next day, Fitch PR 23 August 2012, Fitch Affirms Ratings for Southern Company and Subsidiaries,

Fitch Ratings has affirmed the Issuer Default Rating (IDR) and security ratings for Southern Company. In addition, Fitch has affirmed the IDRs and debt ratings of Southern Company’s subsidiaries, Alabama Power Company (Alabama Power), Georgia Power Company (Georgia Power), Gulf Power Company (Gulf Power), Mississippi Power Company (Mississippi Power) and Southern Power Company (Southern Power). The Rating Outlook for all of the subsidiaries is Stable except for Mississippi Power, which remains Negative. Approximately $22 billion of long-term debt is affected by these rating actions. A complete list of rating actions is provided at the end of this release.

Southern Company

Southern Company’s ratings recognize the financial support that the company gets from its operating subsidiaries in the form of dividends for the payment of corporate expenses, debt-service, dividends to common stockholders, and for other business matters. Southern Company provides equity funding to its subsidiaries for their long-term growth while optimizing their capital mix. Southern Company’s regulated utility subsidiaries derive predictable cash flows from low-risk utility businesses, enjoy relatively favorable regulatory framework in their service territories, and exhibit limited commodity price risks due to the ability to recover fuel and purchased power through separate cost trackers.

Southern Company’s subsidiaries, including its biggest one, Georgia Power, “derive predictable cash flows from low-risk utility businesses, enjoy relatively favorable regulatory framework in their service territories….” Yep, the Georgia PSC is a favorable regulatory framework all right. Such regulatory capture is why Georgia Power enjoys a “low-risk utlity business”. Wouldn’t you like to have all your risks underwritten by GA PSC (and the Georgia legislature, and federal loan guarantees)? Oh, sorry: you’re not a state-sponsored monopoly, and Georgia Power is.

Georgia Power’s PR doesn’t mention cost overruns; for them, see GA PSC’s PR of the same day,

“For this reporting period, Georgia Power is not seeking any changes to the schedule or certified budget amount of $6.113 billion,”said Commissioner Tim Echols.”If and when they do bring changes in future periods, I’ll scrutinize it closely.”

In this Report, the Company acknowledges potential cost increases associated with certain design changes made by the Consortium during the Design Control Document review process. However, the Company continues to state that the project is more favorable for customers than originally anticipated at the time of the Certification given the impact of cost savings from the Department of Energy’s Loan Guarantee, Production Tax Credits and the Construction Work in Progress in rate base. The Company will file its Seventh Semi-annual Vogtle Construction Monitoring Report on August 31, 2012 for the period ending June 30, 2012.

So Georgia Power hasn’t yet asked the PSC to approve its $425 million (and climbing) cost overruns. I wonder what Fitch’s plan is for when that happens 6-12 months from now?

Echols is the best of the utility-sponsored Public Service Commissioners, in that while the rest apparently took 70+% of their campaign contributions from people or companies potentially affected by PSC decisions,

nearly one in five dollars in Echols’ contributions came from people or companies whose business is affected by PSC decisions, the review found.

Hey, what if we elect some commissioners not beholden to the power utilities?