GA PSC OKs Discount Contract

Fortnightly Magazine - December 1996
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The Georgia Public Service Commission (PSC) has approved its first negotiated contract for discounted electric rates under an economic development incentive plan adopted in 1994.

Georgia Power Co. filed the contract in May after Olin Corp. announced it would relocate 100 manufacturing jobs to Tennessee unless the company could negotiate power rates. (The Tennessee Valley Authority rate structure for large industrial loads is more competitive than that of Georgia Power, primarily because of hydropower and federal subsidies.)

Olin, one of the state's largest electric consumers, relies on firm service to make chlorine-based products. Power makes up half the company's operating expenses.

The PSC's Economic Development Incentive Plan (EDIP) encourages business growth and expansion through special utility services and rates for companies that qualify by meeting specific criteria.

Olin said it couldn't expand its Augusta, GA, operations without lower rates and would have to downsize or leave the state. Georgia Power said the price it negotiated (em considered a trade secret (em will cover the fixed and incremental costs of supplying power as well as provide a return on its investment.

The contract's risks fall to Georgia Power's shareholders, since the EDIP includes no mechanism to recover lost revenue. However, the PSC could factor in any revenue impacts during the company's next rate case in 1998, dividing loss or gain between ratepayers and shareholders. If a customer like Olin were to leave the system, the PSC pointed out, much of the invested costs would be reallocated to other customers. (em JFS

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