Hacker News Reader

Comment by Mountain_Skies | Hacker News Reader

Georgia Power customers have been paying extra for this plant for something like a decade. Rate payers absorbed much of the risk instead of investors in the company. This was pushed as a way to save on financing costs by getting the money from customers upfront but saving them more long term with lower rates. But it appears the customers, despite prepaying for the plant, aren't going to see those savings. The investors however were insulated from much of the cost overruns.

View on HN

Utilities are generally paid for by the users regardless of their cost. Investors are typically insulated in so far as the project completes, which is completely normal. It’s not like there’s some sort of call provision on a bond that asks for more money from the bond holder if the project costs more. Typically you would simply issue more bonds. Instead of issuing bonds and paying interest on those out of utility bills, they decided to just pay up front (which was likely a bad deal given how low interest rates have been). But in the end the utility users pay everything in every situation. Where else would the money come from? The charity investors who give money to mega projects out of benevolence? There aren’t many of those. It generally comes out of a mixture of taxes and utility users. Even investors are just loaning capital and their primary risk is the project outright fails.

I feel like in reading these comments people feel like there’s some other third party that foots the bill

Depends on if you have a regulated or open electricity market. You describe a regulated market.

On the other hand, Europe by and large operates on a marginal pricing open market with utilities providing the transmission grid and stabilization services.

In that market the investors take the losses. Unless huge state subsidies are brought out like Hinkley Point C leading to the government guaranteeing a strike price of $150/MWh over 35 years.

Realistically consumer still pay for the utility as the marginal pricing must provide revenues sufficient and in excess of capital and operating costs, and a sufficient risk premium to investors. If consumers don’t like it, they won’t get the services. There’s an argument that a market model is more efficient, but there’s an equally plausible argument that utility models provide more stable pricing - and that end users of utility services prefer stability over efficiency. Thanks for the info though I wasn’t aware Europe was structured this way, but it does explain why costs have been so volatile.

> Depends on if you have a regulated or open electricity market. You describe a regulated market.

what's being described is a regulated natural monopoly, standard economics. No economist would recommend unregulated natural monopolies.

marginal pricing would not pay for a transmission grid, and utility investors would not agree to build or maintain a grid without it being paid for. Marginal pricing refers to the cost of electricity given the grid, where there is no extra amount covering the cost of extra grid capacity.

> The investors however were insulated from much of the cost overruns.

The American way.

Capitalizing rewards, socializing the risks. But socialism is bad folks, m'kay.

Worse things have happened than a $4 rate increase. https://en.wikipedia.org/wiki/Great_Chinese_Famine

Hmmmmm I don't see what famine has to do with nuclear power.

The famine killed more people than nuclear power ever did, yet green activists are all for killing off nuclear power and not socialism.

I still don't see anyone else talking about "green activists" or famines. Your comment reads like a non sequitur.

Did you check what you are saying?

I did that for you: [1] has the average electricity prices in different regions of the US as published by the EIA. As of December 22 (latest data available), the average price for residential use in the whole of the US was 14.96 cents/kWh. In Georgia it was 11.96 cents/kWh. The report also has December 21, and also other sectors (commercial, industrial, transportation, overall). As far as I can see the price in Georgia was systematically below the nationwide average.

[1] https://www.eia.gov/electricity/monthly/epm_table_grapher.ph...

I’m only paying $0.08 cents in Georgia but I’m with another energy provider that has the lowest rates in the state (if their marketing material is correct).

Sawnee EMC charges 7.67 cents per kWh ($0.0767) [0].

Georgia Power (most of metro Atlanta) charges 5.8-10.6 cents per kWh depending on season and amount consumes [1].

Georgia is very lucky to have cheap electricity. I think it’s in part to having nuclear power plants.

[0] https://file.sawnee.com/web-docs/rates/Residential-Service-R... [1] https://www.georgiapower.com/residential/billing-and-rate-pl...

Thanks. I am going to email Cobb EMC and ask why Sawnee has lower rates yet they claim they have the lowest.

Actually Sawnee is tiered so you would only get that rate below 100 kWh and the warm weather rates go up during specifics months. Cobb EMC rates don’t change unless you do the Niteflex program.

Socialize the risks, privatize the profits. Who would have guessed?

Setting aside the relative investment risk issues, perhaps customers are happy that they are getting a reliable source of power that is carbon free? Is zero cost the right threshold when looking at the larger benefits, nuclear or solar? That being said, I personally think we are headed to a combination of some always on nuclear combined with a lot of solar. Look to Texas for recent lessons on lack of robustness in power generation capability.

> Look to Texas for recent lessons on lack of robustness in power generation capability.

When they had not winterized the grid and an abnormal amount of gas, coal and nuclear power went offline.

Reply on news.ycombinator.com