Georgia Power said Monday it will shut down 15 coal and oil-fired units, cutting nearly one-sixth of its power grid capacity to comply with federal rules aimed at reducing air pollution.
The move, which comes after the utility and parent Southern Co. spent years unsuccessfully fighting the regulations, further cuts coal out of the electricity mix of a company once known as the dominant provider of coal-fired electricity.
Currently, the amount of coal that Georgia Power uses to produce electricity stands at 47 percent, down from 70 percent five years ago.
Georgia Power will replace much of the lost capacity by the expansion of nuclear Plant Vogtle, which is already underway, and buying natural gas from a sister company, Southern Power. Customer bills will not be immediately affected, but Georgia Power could seek to recoup shutdown costs from ratepayers.
“Georgia Power’s announcement today shows utilities’ continued move away from coal, which we support as beneficial for both our health and Georgia’s economy,” said Stephanie Stuckey Benfield, executive director of GreenLaw, an Atlanta-based environmental law firm. However, she noted that several coal units will continue to operate.
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Some of Southern Co.’s power plants routinely rank at or near the top of the heaviest emitters of greenhouse gases or other pollutants, largely because they are among the nation’s biggest coal plants.
Georgia Power announced the planned closures three weeks before releasing a highly anticipated long-term energy plan the company must file every three years with the Georgia Public Service Commission. The closures must be approved by the PSC.
“These decisions were made after extensive analysis and are necessary in order for us to maintain our commitment to provide the most reliable and affordable electricity to our customers,” said Paul Bowers, Georgia Power’s President and Chief Executive Officer.
The utility wants to close coal or oil units at the following plants: Branch, in central Georgia; Yates, in Coweta County; and McManus and Kraft, near the state’s coast. The company also wants to convert two coal-fired units at Plant Yates so they run on natural gas. Power plants typically have two or more units that produce electricity.
“It is in the best interest of Georgia consumers to close these coal units and the oil units. How they then make up that capacity is the detail that we’d be worried about,” said Liz Coyle, deputy director of Georgia Watch, a consumer group.
Georgia Power has plans to replace the electricity over time. The bulk of the new power will come from twin reactors at Plant Vogtle, the first of which may be delayed a year past its 2016 start date.
The utility has also agreed to buy a small amount of solar from independent producers, along with natural gas from Southern Power, Southern’s wholesale electricity division. This means customers would be paying Georgia Power to buy that fuel, and money eventually goes to another Southern-owned company.
Utilities and elected officials often tout the Southeast as having a reliable power grid and affordable utility bills compared with other areas of the country. Some consumer advocates question whether that will be true with that many electrical units being closed by 2015 and 2016.
Customer bills already have risen because of a three-tiered rate increase approved in 2010. At the same time, bills dropped 6 percent last year because of a sharp decline in natural gas prices.
The rate hikes included paying shutdown-related costs from a previously announced closure of two coal units at Plant Branch.
By law, the company is allowed to recoup money for materials and supplies that cannot be used once power units are shut down, which means the utility eventually could profit from closing additional coal and oil units.
“Essentially it’s going to be treating the plants as if they are still operational … if it were any other business, it would be ‘no, you write that off,’” said Bobby Baker, a former PSC commissioner who now represents Resource Supply Management, an energy consultant that works with large commercial, institutional and industrial electric customers.
The regulations prompting Georgia Power’s move require utilities to cut harmful mercury emissions. Power plants emit about half the nation’s mercury toxins, which contaminate water and fish. The government says the new rules may help prevent thousands of premature deaths as well as asthma attacks and other health problems.
Industry officials have criticized the rules for being too strict, saying jobs will be lost and the cost of electricity will go up. Southern has spent millions lobbying against the rules and succeeded in some areas but not on mercury emissions.
Scott Segal, director of the Electric Reliability Coordinating Council, a group of power companies that includes Southern, said the mercury rule “is extraordinarily expensive and has been widely criticized for producing few, if any, benefits.”