Item 8.01 Other Events.
On June 24, 2022, Georgia Power Company ("Georgia Power") filed a base rate case
(the "2022 Base Rate Case") with the Georgia Public Service Commission (the
"Georgia PSC"). The filing includes a three-year Alternate Rate Plan with
requested rate increases totaling $852 million, $107 million, and $45 million
effective January 1, 2023, January 1, 2024, and January 1, 2025, respectively.
The request is based on a proposed retail return on equity ("ROE") of 11.0%
using the currently approved equity ratio of 56% and reflects levelized revenue
requirements during the three-year period, with the exception of incremental
compliance costs related to coal combustion residuals asset retirement
obligations ("CCR ARO"), Demand Side Management programs, and adjustments to the
Municipal Franchise Fee Tariff.
Georgia Power has requested recovery of the proposed increases through its
existing base rate tariffs as follows:
Tariff 2023 2024 2025
(in millions)
Traditional Base $739 $0 $0
Environmental Compliance Cost Recovery
("ECCR") -
ECCR Traditional (1) 0 0
ECCR CCR ARO* 64 78 47
Demand Side Management* 30 27 (2)
Municipal Franchise Fee 20 2 1
Total** $852 $107 $45
*As determined by the Georgia PSC through annual compliance filings.
**Totals may not add due to rounding.
Georgia Power's filing primarily reflects requests to (i) recover the costs of
recent and future capital investments in the electric grid including the
transmission and distribution systems and the continuation of the Grid
Investment Plan, all designed to support customer long-term reliability and
resiliency needs, (ii) recover the cost of coal-fired generation units proposed
for retirement, or made unavailable, as requested in the 2022 Integrated
Resource Plan, as Georgia Power continues the transition of the generation fleet
to more economical and cleaner resources, (iii) make the necessary investments
and recover costs to comply with federal and state environmental regulations,
including costs associated with the CCR AROs related to ash pond and landfill
closures and post-closure care, and (iv) reduce operating costs despite
significant inflationary pressures. In addition, the filing includes the
following provisions:
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•Continuation of an allowed retail ROE range of 9.50% to 12.00%.
•Continuation of the process whereby 80% of any earnings above the top of the
allowed ROE range are shared with Georgia Power's customers and the remaining
20% are retained by Georgia Power.
•Continuation of the option to file an Interim Cost Recovery tariff in the event
earnings are projected to fall below the bottom of the ROE range during the
three-year term of the plan.
Georgia Power expects the Georgia PSC to render a final decision in this matter
on December 20, 2022. The ultimate outcome of this matter cannot be determined
at this time.
Cautionary Note Regarding Forward-Looking Statements
Certain information contained in this Current Report on Form 8-K is
forward-looking information based on current expectations and plans that involve
risks and uncertainties. Forward-looking information includes, among other
things, statements concerning the 2022 Base Rate Case and CCR ARO compliance
costs. The Southern Company and Georgia Power caution that there are certain
factors that could cause actual results to differ materially from the
forward-looking information that has been provided. The reader is cautioned not
to put undue reliance on this forward-looking information, which is not a
guarantee of future performance and is subject to a number of uncertainties and
other factors, many of which are outside the control of The Southern Company and
Georgia Power; accordingly, there can be no assurance that such suggested
results will be realized. The following factors, in addition to those discussed
in each company's Annual Report on Form 10-K for the year ended December 31,
2021 and subsequent securities filings, could cause actual results to differ
materially from management expectations as suggested by such forward-looking
information: state and federal rate regulations and the impact of pending and
future rate cases and negotiations, including rate actions relating to fuel and
other cost recovery mechanisms and the 2022 Base Rate Case; the impact of recent
and future federal and state regulatory changes, including tax, environmental,
and other laws and regulations to which Georgia Power is subject, as well as
changes in application of existing laws and regulations; the extent and timing
of costs and legal requirements related to coal combustion residuals; current
and future litigation or regulatory investigations, proceedings or inquiries;
the effects, extent and timing of the entry of additional competition in the
markets in which Georgia Power operates, including from the development and
deployment of alternative energy sources; variations in demand for electricity;
available sources and costs of fuels; effects of inflation; the ability to
control costs and avoid cost and schedule overruns during the development,
construction and operation of facilities, to construct facilities in accordance
with the requirements of permits and licenses (including satisfaction of Nuclear
Regulatory Commission requirements), to satisfy any environmental performance
standards and the requirements of tax credits and other incentives, and to
integrate facilities into the Southern Company system upon completion of
construction; investment performance of the employee and retiree benefit plans
and the nuclear decommissioning trust funds; advances in technology, including
the pace and extent of development of low- to no-carbon energy technologies and
negative carbon concepts; the ability to successfully operate Georgia Power's
generating, transmission and distribution facilities and the successful
performance of necessary corporate functions; the inherent risks involved in
operating and constructing nuclear generating facilities; the ability of
counterparties of Georgia Power to make payments as and when due and to perform
as required; the direct or indirect effect on Georgia Power's business resulting
from cyber intrusion or physical attacks and the threat of physical attacks;
interest
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rate fluctuations and financial market conditions and the results of financing
efforts; access to capital markets and other financing sources; changes in
Georgia Power's credit ratings; the ability of Georgia Power to obtain
additional generating capacity (or sell excess generating capacity) at
competitive prices; catastrophic events such as fires, earthquakes, explosions,
floods, tornadoes, hurricanes and other storms, droughts, pandemic health
events, political unrest, wars, or other similar occurrences; the direct or
indirect effects on Georgia Power's business resulting from incidents affecting
the U.S. electric grid or operation of generating resources; and the effect of
accounting pronouncements issued periodically by standard setting bodies. The
Southern Company and Georgia Power expressly disclaim any obligation to update
any forward-looking information.
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