Committee backs MEAG contract changes allowing 20-year deals with large-load users, requires customers to cover generation-build costs

A Georgia Senate committee approved a committee substitute to House Bill 1027 that would allow MEAG Power and MEAG-member municipalities to enter contracts of up to 20 years with large-load customers, such as data centers, while requiring any additional generation capacity needed to serve those customers to be paid for by the large-load customer during the initial contract term.

Representative Anderson (speaker 9), who presented the committee substitute, said the new text removes references to retail-customer rates and instead preserves protections by requiring that large-load customers pay 100% of their pro rata portion of new-generation construction costs during the initial contract term. “...we retain the ability to enter in up to 20 year contracts, [and] require that the large load customer pay 100% of their portion of the cost of that generation during the term of that initial contract,” Representative Anderson said. (Representative Anderson, speaker 9)

Pete Degnan (speaker 6), general counsel for MEAG Power, described the Fulton County Superior Court validation process for MEAG bond issuances and contracts: once a contract is validated by the superior court it is generally not subject to later challenge, which MEAG and bond markets consider important for credit ratings and lowering borrowing costs. Degnan told the committee: “Once that decision is made by the superior court, those contracts can never be challenged on any grounds, at any point, even constitutional grounds.” (Pete Degnan, MEAG general counsel, speaker 6)

Committee members probed whether shifting construction costs to large-load customers and conducting negotiations at the MEAG level would protect smaller retail customers from cross-subsidization and whether city-level rate-making authority would be preserved. Degnan said MEAG intends to run an RFP process and negotiate terms at the MEAG level so that offerings apply to all member cities and allow smaller cities to participate. He said retail-rate setting by cities remains a separate authority but that objective, nondiscriminatory parameters must guide rates at the city level.

Senator Ginn (speaker 7) moved to pass the committee substitute and referenced the LC number; Senator Albers (speaker 2) seconded. The chair called the voice vote and the committee announced a recorded count of nine in favor and one opposed; the chair said the substitute passes and will be sent to the Rules Committee.

Legislative council and committee staff were asked to correct typographical issues in the draft before transmittal; no further amendments were recorded in the transcript. The committee adjourned after completing the business on the agenda.