Cobb EMC backing new coal plant

Georgia Power isn’t building new coal power plants, considering them too risky given the uncertainty about carbon emission limits.

One of the nation’s biggest electric cooperatives, Jackson EMC in Atlanta’s far northeast suburbs, backed out of building new coal plants last year for similar reasons -- and has no intention of going back.

So why are two other suburban Atlanta co-ops investing in two coal plants that could cost about $4.2 billion, effectively zigging while others zag?

Some customers of Marietta-based Cobb EMC and Snapping Shoals EMC, based in Covington, would like to know.

They are part of a five-member group of non-profit electric co-ops called Power4Georgians, which plans a $2.1 billion coal plant in Sandersville, about two hours southeast of Atlanta, and a second in Ben Hill County, another two hours south of that. The second plant is in early stages but would likely cost at least the same.

It’s an unprecedented expansion into the generation business for Georgia co-ops. Most have invested in Georgia Power’s nuclear expansion near Augusta instead of launching construction projects of their own.

The two Atlanta-area co-ops, which serve about 300,000 customers, have shouldered most of Power4Georgian’s costs to date. A 2009 contract obtained by the Atlanta Journal-Constitution says Cobb EMC was responsible for $11.4 million and Snapping Shoals another $8 million of the estimated $27 million in initial development costs.

Power4Georgians spokesman Dean Alford said those costs amount to “just tens of cents” on monthly bills and haven’t pushed up rates. He also said the coalition “has chosen a reliable and cost effective energy source for the future.”

Alford is president of Allied Energy, one of several Cobb EMC for-profit affiliates that a court ordered liquidated last year, under a settlement with customers over unrelated issues.

Power4Georgians will own the new plants and contract out their operation. The five co-ops will buy the output, just as they buy power from other suppliers now.

Alford said the co-ops don’t know yet whether they will use debt or ratepayer cash to build the plants, adding “they will do the one that ensures the least impact on rates.”

The two Atlanta area co-ops paying the most in development costs aren’t bound to pay for the entire project in the same proportion, Alford said. Other customers, including other co-ops, will likely contract for power, he said, reducing the burden on Cobb and Snapping Shoals.

One Cobb EMC customer skeptical about the plan formed a group called Cobb Alliance for Smart Energy to fight it.

“What do (other utilities) know that Cobb EMC doesn’t know?” asked Tom Barksdale of Woodstock. “Or what does Cobb EMC know that they don’t? Are Georgia Power and Jackson EMC led by dumb people who don’t understand economics?”

Alford said Power4Georgians began considering building coal plants in 2007, as a number of power contracts were poised to expire and other plans for new coal plants fizzled.

Led by Cobb EMC, the five co-ops decided to build plants themselves. Alford said the group calculated it could build the first plant for less than than other options then available, such as investing in Georgia Power’s nuclear plant or buying power from other suppliers.

To be sure, Power4Georgians isn’t the only organization trying to build new coal plants. Dozens are in development across the country, although many -- unlike the Power4Georgians project -- would include technology to pull carbon out of their stack gases, making them less vulnerable to carbon limits.

Still, “there’s no question that there’s some real apprehension about new coal out there,” said Paul Patterson, an analyst with Glenrock Associates in New York. “There are new coal plants. But they are fewer and farther between.”

Most municipal power companies and 34 of the 38 co-ops that are part of Oglethorpe Power are involved in Georgia Power’s nuclear expansion. Cobb EMC and two other Power4Georgians members are holdouts, while Snapping Shoals is one of two co-ops involved with both the coal and nuclear projects.

Jackson EMC and GreyStone EMC, the latter based in Douglasville, both pulled out of Power4Georgians in 2009, saying the coal projects were too risky because of the unsettled carbon issues and the tight credit market.

New supplies and falling prices of natural gas also made gas plants more attractive than they were in 2007. Gas plants are relatively cheap to build and create less pollution -- including carbon -- than coal. Many utilities are looking at building gas plants next.

Power4Georgians’ Alford said the energy picture is so muddy now that any decision could prove to be brilliant -- or dumb -- over time.

“A year ago, we thought biomass was going to come roaring out of the ground,” he said, referring to the use of wood products to make energy. New environmental rules stopped that, and those who invested “are sucking wind now.”

As for the new cheap natural gas, “There’s a huge history of that market being volatile,” he said. “It looks like the scream machine at Six Flags.”

He said the state’s co-ops are going to need more power from many sources, including coal: “It’s not coal versus not-coal. We’re going to need everything. Nuclear, gas, biomass, everything.”

This week, the federal Environmental Protection Agency released new guidance for carbon permits for new power plants. It could raise costs for the Ben Hill plant, which doesn’t yet have its air permit.

Industry experts said the guidance doesn’t change the uncertainty about carbon, because it includes too many options. And Congress, although not likely to limit carbon anytime soon, could easily do something over the 40 to 50 years a new coal plant will last.