Meeting power needs with less coal in Georgia

Image: Patrick Hruby, New York Times http://www.nytimes.com/2011/06/05/opinion/lweb05gas.html?pagewanted=all&_r=0

Image: Patrick Hruby, New York Times

Ulla Reeves, SACE’s Regional Program Director, contributed to and edited this blog.

On January 7, Georgia Power Co. announced that it would shutter 15 generating units – about 2,000 megawatts (MW) or 2 gigawatts (GW) of coal and oil  capacity – as part of the three-year “Integrated Resource Plan” it will file with the Public Service Commission on January 31. The plan, also known as the IRP, allows ratepayers and regulators to see how Georgia Power will meet energy demand with a variety of resources, including energy efficiency programs, while maintaining a reliable supply of power to serve customers.

While we’re still looking forward to the details of the IRP, we thought now was a good time to review how we understand Georgia Power plans to meet energy needs for the state as they move forward with retirement of numerous coal units. Despite rhetorical worries from the Washington Examiner editorial board that “It is unclear how Georgia’s energy sector will make up the 2 gigawatts of capacity it is losing,” Georgia Power already made very public plans to replace retiring coal plants with natural gas power. We also expect the IRP to address alternative directions for Georgia Power as it transitions its fleet away from coal, including solar and energy efficiency.

Georgia Power’s first, smaller plan to retire coal units was approved in March, 2012. It covered two out of the four generators at Plant Harllee Branch, representing about 600 MW of capacity, which should be closed by the end of 2013. Upon approval, Georgia Power also forecasted in their application that additional generating units on its system would be “unavailable” by 2015, creating a gap the company calculated at about 1,200 MW of electric capacity. To make up the difference, it proposed to the Public Service Commission that it be allowed to enter long-term contracts (called power purchase agreements) for 1,562 MW of capacity from natural-gas-fired plants.

The Public Service Commission (PSC) staff argued at the time that 1,562 MW of gas power was too much – the purchasing plan gave Georgia Power extra electric capacity beyond what it needed, at ratepayer expense (download the final order summarizing these arguments here in .zip file). The Commissioners agreed, and approved only three of the four proposed gas contracts, saying in the order that “The three proposed PPAs … are for a total of 998 MW, which with the additional capacity resources already planned and included by Georgia Power Company in their generation mix will adequately maintain the target reserve margins without the burden of additional costs.” (p.10)

It’s possible that these additional capacity resources could include the 2,200 MW expansion of nuclear Plant Vogtle, but that project is not without concern and controversy. SACE has opposed the Vogtle expansion from its inception due to safety and environmental concerns, high water usage, problems with project transparency, massively expensive $8 billion federal subsidies and a “construction work in progress” statute that allows Georgia Power to pile construction costs on ratepayers. Not surprisingly, construction is over budget and behind schedule, and companies developing the plant are now suing each other.

Energy efficiency programs are a big part of how Georgia Power will thrive without the retiring coal generators. The programs hold promise of cutting demand by a tangible percentage each year – currently less than .25%, but with potential to grow up to 1% if the company proposes strong programs in the IRP. There is tremendous opportunity for Georgia Power to save more energy. As the chart below shows, the company lags behind its southeastern peers – and even farther behind national leaders – in helping customers reduce their usage and lower their bills. SACE has been a leading member of Georgia Power’s stakeholder process for guiding its “demand side management” (DSM) plan, which we expect it to file alongside the IRP.

Solar energy is also an incredibly important long-term investment and we hope to see Georgia Power continue to expand its program as it moves away from coal. In a recent blog we analyzed the company’s plans to purchase 200 MW of capacity from solar panels through its new Advanced Solar Initiative, which we hope represents just the beginning of solar expansion in Georgia. Solar energy is ideal for helping to meet peak electric loads – key in Georgia, where our maximum electricity demand tends to happen on hot summer afternoons when air conditioners are working hard. Solar energy can put that summer sun to good use, and it’s getting less and less expensive to do so.

In short, Georgia Power is fully capable of keeping the lights on as it retires 2,600 MW of coal in the next three years. Between about 1,000 MW of natural gas power that’s ready to go, 200 MW of solar by 2015, and a generation plan already approved by the Public Service Commission, the company has plenty of replacement power in order to begin their transition away from coal. Nuclear could be a part of that mix too, but one we are not as eager to see given the significant cost overruns for which customers will pay the lion’s share. Contrary to critics’ claims, with shifts toward natural gas, solar, and energy efficiency, Georgia Power has plenty of options to provide reliable power to customers across the state.

The Integrated Resource Plan and Demand Side Management program certification, where all of the above issues will be addressed in the coming months, is subject to public review and comment. We’ll keep you updated with our analysis of the company’s energy efficiency plans, alongside its plans to retire coal units and grow renewable energy investments, in the coming months. Please stay tuned for opportunities to weigh in in support of more clean energy and energy efficiency programs to help Georgia Power confidently move away from coal and less risky energy choices in the coming months!

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