Monday, October 23, 2017

Tropical storm Irma had minimal effect on Georgia’s employment and that is worrying


Georgia nonfarm employment, Jan-Sep 2017, in thousands, seasonally adjusted


Nobody was surprised when Georgia’s employment numbers for September showed a 500-job loss, after seasonal adjustment. Most blamed it on Irma, which hit Florida as a hurricane and was downgraded to a tropical storm by the time it came through Georgia.

State Labor Commissioner Mark Butler told WUGA that the storm caused Georgia’s job numbers to fall and unemployment claims to rise in September. Butler said a 240 percent jump for the month in the coastal region drove the state’s numbers to some degree.

“It wasn’t because of some kind of economic issue that happened where there was some problem with the economy,” according to Butler. “Most of what we saw with the jobs and initial claims has to do with the storm.”

It is true that the largest disruptions occurred in the Savannah area, which experienced a mandatory evacuation although the storm itself failed to seriously impact the coastal area.

If the job losses were storm-related, then temporary and contract employment should have shown the greatest losses. These jobs lack the security of regular employment and so are the most likely to be impacted when businesses suddenly stop operations even for a few days.

Unfortunately, in September, employment services in the state actually gained 5,300 jobs in September, before seasonal adjustment. That is above the 4,600 jobs gained in September 2016 when there was no storm.

Job losses concentrated in three industries partially offset by gains in two others

Georgia’s job losses in September were concentrated in three key industries: construction, manufacturing, and retail trade.

Construction jobs fell by 3,600 over the month, followed by a 2,900 job decline in retail trade and a 2,800 job drop in manufacturing.

The reason overall losses were not larger can be attributed to gains in education and health services (+4,200) and leisure and hospitality (+2,800).

Again, if the tropical storm had caused significant job losses, leisure and hospitality would have been one of the key industries to suffer.

It is possible some construction jobs were lost due to the inclement weather, but even if they were, that would not explain the loss of manufacturing or retail jobs in September.

On the other hand, manufacturing might represent not a loss of manufacturing activity, but a decreased need to hire more people as automation takes on a larger role in the manufacturing process.

For retail, job losses might reflect the increasing effect of the internet and online purchasing. Retailers are being cautious as they see online sales rise.

Looking ahead to Christmas, there is sure to be seasonal hiring in the months of October and November, but it is possible to see a continued decline in retail jobs after the first of the year.

One month does not make a trend

Monthly numbers are subject to wide variations month-to-month, despite the Bureau of Labor Statistics’s attempts smooth out the changes using seasonal adjustment factors.

It is too soon to say whether the losses in September represent something significant, but it is worth watching future months.

Expect to see some job pick-up in construction from storm-related repairs, and a boost in October before settling down to more usual numbers in November. 

Then we will be able to see if September was a fluke or the beginning of a trend.

Thursday, October 5, 2017

Georgia’s energy future becomes less clear after 2018


Georgia Power has had a rough couple of months dealing with the aftermath of Tropical Storm Irma and the Westinghouse bankruptcy, which placed the construction of the nuclear project at Plant Vogtle in jeopardy.

One source of support they could count on was the Georgia Public Service Commission that has consistently approved Georgia Power’s plans to continue construction of the Plant Vogtle Units 3 & 4.

This support has remained steadfast even as a similar nuclear project in South Carolina was abandoned, and neighboring utilities Duke Energy and NextEra Energy (Florida Power & Light) stepped back from plans to build future nuclear reactors.

With the upcoming election of two Georgia Public Service commissioners in 2018, that level of support is less clear.

Changes to the Georgia Public Service Commission

Stan Wise, District 5 Commissioner and Chairman of the Georgia Public Service Commission, has announced that he does not intend to seek re-election in 2018, putting that open seat up for grabs in November 2018.

Georgia’s five Public Service Commissioners serve six-year staggered terms.

In 2018, commissioner seats in Districts 3 & 5 will be up for election, and voters in those two districts will have the opportunity to express their views on Georgia Power and how Georgia’s energy future shall proceed.

District 3 includes core Atlanta urban counties including Fulton, DeKalb, Clayton, and Rockdale. Currently, District 3 is represented by Chuck Eaton, a Republican who first won election in 2006.

District 5 includes counties to the west and south of Atlanta including Cobb, Coweta, Fayette, Henry, and 16 other counties.

District 5 Commissioner Stan Wise has been a consistent advocate for Plant Vogtle and for Georgia Power.  By not standing for re-election, Mr. Wise will be able to vote on issues between now and the end of 2018 without considering how his votes will affect his standing with the voters.

It gives him tremendous freedom over the next 15 months but it also removes him from crucial decisions that the PSC will be taking in 2019 and beyond.

In addition, District 4 Commissioner, Lauren “Bubba” McDonald, while consistently voting with the other commissioners, has called for an ending to Georgia Power collecting surcharges that are part of ratepayers bills for two nuclear plant units that have not yet begun operation.

If there are significant changes in the incumbents of Districts 3 & 5 come 2019, there might be new majorities formed on a number of issues, only one of which is Plant Vogtle.

Looking to 2019 and beyond

In 2016, Georgia Power and the Georgia PSC agreed that the company's next base electric rate case should be postponed until July 2019.

According to Georgia, Power, the company's last base electric rate case in 2013 incorporated the costs of investments in infrastructure required in order to maintain high levels of reliability and superior customer service.

In 2016, the extent of cost overruns and delays in the construction of Plant Vogtle Units 3 & 4 were less known to the public.

Georgia Power was reporting continued progress in the construction of the two units and gave no hint of the problems coming in 2017.

Since then, Georgia Power’s problems have become more apparent and more public.

Rating agencies are considering lowering their rates for the company’s bonds, and investors are taking note of Georgia Power’s decision to move forward with a technology that is becoming less cost effective as natural gas prices drop and alternative energy sources become more viable.

As a result, the base electric rate case in 2019 may be more contentious than in the past.


For Georgia Power, which has always had excellent relations with the political powers in the state, the next two years will be a test of its political skill.