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This excerpt taken from the SO 10-K filed Feb 27, 2007. Rate
Plans
In December 2004, the Georgia PSC approved the 2004 Retail Rate
Plan for the Company. Under the terms of the 2004 Retail Rate
Plan, the Company’s earnings are evaluated against a retail
return on equity (ROE) range of 10.25 percent to
12.25 percent. Two-thirds of any earnings above
12.25 percent will be applied to rate refunds, with the
remaining one-third retained by the Company. Retail rates and
customer fees increased by approximately $203 million
effective January 1, 2005 to cover the higher costs of
purchased power, operating and maintenance expenses,
environmental compliance, and continued investment in new
generation, transmission, and distribution facilities to support
growth and ensure reliability. In 2007, the Company will refund
2005 earnings above 12.25 percent retail ROE. No refunds
are anticipated for 2006.
In connection with the 2004 Retail Rate Plan, the Georgia PSC
approved the transfer of the Plant McIntosh construction project
from Southern Power at a total fair market value of
approximately $385 million. This value reflected an
approximate $16 million disallowance and reduced the
Company’s net income by approximately $9.5 million.
The Georgia PSC also certified a total completion cost not to
exceed $547 million for the project. In June 2005, Plant
McIntosh units 10 and 11 were placed into service at a total
cost that did not exceed the certified amount. Under the 2004
Retail Rate Plan, the Plant McIntosh revenue requirements impact
is being reflected in the Company’s rates evenly over the
three years ending December 31, 2007.
In May 2005, the Georgia PSC approved a new three-year rate plan
for the former Savannah Electric ending May 31, 2008. Under
the terms of the plan, earnings were evaluated against a retail
ROE range of 9.75 percent to 11.75 percent. Retail
base revenues increased in June 2005 by approximately
$9.6 million.
The Company is required to file a general rate case by
July 1, 2007, in response to which the Georgia PSC would be
expected to determine whether the 2004 Retail Rate Plan should
be continued, modified, or discontinued. In connection with this
case, the former Savannah Electric’s base rate tariffs will
be combined with the Company’s.
Under the terms of the 2001 Retail Rate Plan, earnings were
evaluated against a retail return on common equity range of
10 percent to 12.95 percent. The Company’s
earnings in all three years were within the common equity range.
Under the 2001 Retail Rate Plan, the Company amortized a
regulatory liability of $333 million, related to previously
recorded accelerated amortization expenses, equally over three
years beginning in 2002. Also, the 2001 Retail Rate Plan
required the Company to recognize capacity and operating and
maintenance costs related to certified purchase power
Table of Contents
NOTES
(continued)
Georgia Power Company 2006
Annual Report
contracts evenly into rates over a three-year period ended
December 31, 2004.
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