Under Senate Bill 421, a new Chapter 3B-to be called the Georgia Utility Rate Reduction Act (GURRA)-would be added to Title 46 of the Georgia Official Code.
Under GURRA, a utility could apply for, and may obtain, a financing order from the Georgia Public Service Commission (GA PSC) to authorize such utility to charge its customers for GURRA-eligible projects that include:
- A new nuclear unit;
- A retired electrical generating unit with remaining book value necessitating the continued collection of revenue from customers; or
- Capital construction associated with cleanup or remediation of any coal combustion residuals (CCRs).
While other states1 have laws that permit a utility to recover the undepreciated value of retired fossil-fired generation, none have permitted new nuclear construction2 or CCR remediation to be funded by utility tariff bonds.3
While using utility tariff bonds to fund nuclear construction delays and cost overruns would mean that the utility applicant would have to forgo equity return on the related investment, at least recovery would be assured and related customer "rate shock" impact mitigated.
Recent cost estimates for utility coal ash remediation are substantial. For example, in Alabama, Alabama Power's estimate for coal ash cleanup is around $3.3 billion; in Georgia, Georgia Power's estimate is $9 billion; and in North Carolina, Duke Energy's estimate ranges between $8 and $9.5 billion. Given the magnitude of these related costs, it is likely that other states with coal-fired generation and related coal ash ponds will follow and enact similar legislation.
Footnoes
1 These include Colorado, Montana and New Mexico, and other states have considered similar legislation.
2 Florida had a law that permitted utility tariff bonds to recover nuclear abandonment costs. This law was used for the proposed Crystal River 3 nuclear unit. A similar law was proposed in South Carolina for the VC Summer plant but was not passed.
3 See our previous Legal Updates regarding utility tariff bonds: "California's AB913 Permits Securitization for Recovery of COVID-19 Electric Utility Undercollections," "Utility Tariff Bonds for Storm Recovery in North Carolina-Coming to Your State Soon?," "Utility Tariff Bonds for Coal and Other Electrical Generating Plant Retirements in Montana?," "Utility Tariff Bonds for Coal Plant Retirements in New Mexico and Possibly Colorado. Coming to Your State Soon?" and "Catastrophic Wildfire Recovery-Newest Type of Utility Tariff Bond."
Visit us at mayerbrown.com
Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe - Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.
© Copyright 2020. The Mayer Brown Practices. All rights reserved.
This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.
