Consumer protection legislation powers electric debate

If you want to see battle lines drawn in the Georgia General Assembly, watch any piece of legislation that is perceived to curtail the power of a government agency or a business monopoly. Every so often you will find a bill that does both. In those cases, you’re encouraged to take cover because it will be a combative debate.

That’s what happened at a recent Senate Regulated Industries hearing when committee members considered Senate Bill 34, a bill sponsored by Sen. Chuck Hufstetler, R-Rome. The proposal seems innocuous enough. It simply aims to address cost allocation of electricity, which is a critically important issue that may not grab headlines.

The overarching concern has to do with data centers. They are proliferating and require massive amounts of electricity—some equal to the needs of a small city. As data centers flood Georgia, the increased demand might spur utilities to build more power plants, which consumers ultimately fund, leading to higher electricity bills. Hufstetler’s bill simply states the increased costs driven by data centers must be paid by them and not spread out among other users.

The Public Service Commission (PSC) recently adopted a similar rule, but there is concern about its durability and effectiveness. Hufstetlers’ proposal, on the other hand, sounded so straightforward that not a single person disagreed with the bill’s underlying concept in the hearing. Nevertheless, it was highly contentious thanks, in large part, to Georgia’s outdated method of regulating electricity markets, which doesn’t serve consumers particularly well.

For all the bluster about Georgians believing in market competition, there is little competition in our electricity markets because the state gives electric utilities monopolies in exchange for being regulated. So, geographic regions were carved up and awarded to utilities like spoils of war, and the General Assembly ceded regulation of those electric monopolies to the PSC, which is composed of elected officials.

Because of this system, residential electric customers have zero choice over what provider they use, and the arrangement seems to favor large industrial users. During the hearing, former Public Service Commissioner, Robert Baker said, “If you are a new large-load customer […] you can look for the best deal. It’s a one-time option.” Residential customers don’t enjoy this benefit.

Moreover, large-load customers tend to benefit from sweetheart deals. “The rate system is set up so that you and I are on base rates as residential customers,” explained Baker. “Our average rate right now is about 21 cents a kilowatt. If you are a large industrial customer, you can get what is called a marginal rate.” That marginal rate, according to Baker, is 5 cents.

The U.S. Energy Information Administration has different numbers, but it shows a similar disparity. Including all electric providers, the average residential rate in Georgia is 13.49 cents per kilowatt hour as of December 2024. Industrial customers pay only 6.92 cents.

During the debate, it became clear that some lawmakers, monopoly electric provider Georgia Power and the PSC were opposed to the measure. A representative of the PSC even testified that they believed that this would heedlessly tie their hands, but that’s unsurprising. Government entities tend to loath surrendering power.

An opponent of the bill, Sen. Frank Ginn, R-Danielsville, believes that elected public service commissioners are best positioned to make cost allocation decisions. “Do you think those Georgia voters are going to keep people on the PSC that aren’t protecting their utility rates?” Ginn asked Baker. He responded,  “I would love to have an opportunity to vote for a public service commissioner, but I haven’t had that right to vote for a public service commissioner since [2020].” Legal disputes have prevented PSC elections for years, although it appears that Georgians will be able to vote in two PSC elections this June.

A spokesman from Georgia Power also testified in opposition to the bill—essentially saying this measure is unnecessary. To that, Sen. Greg Dolezal, R-Cumming, had some quick responses. “You guys have a lot of lobbyists working for you, and I have had more of them reaching out to me […] saying ‘please don’t pass this,’” he said. Georgia Power’s representative replied that his company really only takes issue with two lines in the bill where he would prefer to see some wording related to pro-rata pricing. As such, Dolezal asked, “So why aren’t you lobbying for pro-rata language to be included in this bill?”

Hufstetler’s legislation passed out of committee with some notable opposition and awaits further action. While the best remedy to the electricity debacle is to permit competition and consumer choice, passing SB 34 would represent a big win for residential electric consumers—ensuring that they won’t be burdened with data centers’ costs. Considering the intensity of the debate, expect a dog-fight if this proceeds.