Robin Hood in Reverse: |
Consumers Bailing Out Georgia Power Stockholders
David Kyler, Executive Director
Center for a Sustainable Coast
St. Simons Island, GA
February 14, 2012
AJC Guest Column Published April 3, 2012
As outrageous as it is, most Georgians evidently don't understand that residential power customers, in lieu of stockholders, are paying the exorbitant costs and absorbing unfair impacts of adding two new nuclear reactors at Georgia Power's Plant Vogtle. The General Assembly made that part of the utility-rate structure in state law adopted several years ago.
Assuming the reactors are ever put into use, customers footing this bill will be rewarded with electric service made available by costly new generators that may not even be needed, enabling excess power produced by Georgia Power to be sold to customers in other states at a handsome profit.
Although there are provisions preventing power produced by the new reactors from being sold outside Georgia, the company can still sell power generated at their other plants to customers where power plants are better regulated, like Florida.
Putting the nukes online will free up electricity generated at other Georgia Power facilities in Georgia. Consequently, the PSC prohibition is little more than a cover-up, implicitly condoning profiteering tactics used on unwitting customers, while stockholders reel in the benefits.
By requiring Georgia Power customers to pay in advance, the General Assembly has created a socialized utility which these same politicians would quickly condemn as a violation of free markets if done by anyone else.
This reverse Robin Hood arrangement ensures that the well-heeled stockholders incur virtually no risk from the nuke venture, while reducing their costs by enabling Georgia Power to pay for the multi-billion dollar project with the aid of financial safeguards carried on the backs of the public.
The General Assembly has demanded that residential power customers begin paying off Georgia Power's loans in advance, years before power is produced. Meanwhile the company also benefits from billions in federally guaranteed loans. In combination, these provisions mean stockholders are exposed to no risk, no matter what the project's final cost.
Moreover, Georgia Power will profit whether the venture succeeds or not, being subsidized by federal downside limits, an accommodating rate structure, and billions of dollars in federal liability protection provided to builders of nuclear plants.
Such a transfer of wealth from the typical residential power customer and taxpayer, whose income is modest, to stockholders and Georgia Power executives having far greater "net worth" is the worst form of corporate welfare. In light of this blatant exploitation, it is noteworthy that the Corporation for Enterprise Development reports that Georgia's citizens have the lowest level of financial security in the nation.
How can it be that politicians who are so strident in their defense of capitalism can be so accommodating to a corporation that wants all the rewards and none of the risks linked to private enterprise?
There are at least two answers to that question, each equally objectionable to any fair-minded person. When both answers apply, as they do here, shameful exploitation of the public is greatly multiplied by abusing taxpayers and power customers alike.
First, nuclear power is chronically expensive and - despite deceptive claims of rampant propaganda - would not exist in any "free market." Since its inception, the nuclear power industry has received, and continues to receive, lavish federal subsidies - as previously referenced.
Without such subsidies there would be no nuclear power industry because the costs and risks are simply too great to attract private investors. Every time a nuclear plant is built, final costs are billions more than originally estimated, imposing long-term economic burdens on energy customers and taxpayers.
That's why the only U.S nuke plants being built today are in states having "regulated" markets where political influence can be used to divert other funds towards nuclear projects, thereby favoring select private investors having substantial control over state politicians.
Secondly, Georgia Power has become so entrenched in the politics of Georgia for so long that it's virtually impossible for elected officials to protect customers against unfair practices that unduly benefit corporate profit-makers pedaling power.
While producing electricity is an essential service when truly needed, it should not be "regulated" in a way that imposes enormous private costs onto the unwary public - thereby covertly transferring considerable wealth to stockholders who are at no risk.
Another hidden cost is the diversion of funds toward nuclear facilities and away from renewable sources of power that ultimately cost much less.
If corporations are people, as determined by the U.S. Supreme Court in its Citizens United decision, Georgia Power is surely among the business world's most colorful characters - reminiscent of a certain forest dweller sheathed in green. But, unlike his legendary predecessor, Georgia Power's Robin Hood is clad in a costume made of cash and his merry men in the legislature are redirecting treasure from the commoners to the landed gentry.