Georgia Power says complying with new regulations to cut toxic emissions will cost from $741 million to nearly $3 billion and lead it to close or refit six additional coal or oil-fired plants by 2015.
That could mean cleaner air, but also higher bills for customers when the utility seeks approval to raise rates in 2013.
The list of plants to be refitted was included in the utility’s 20-year plan update, issued Thursday. The plan also includes buying electricity from independent power producers to ensure that the grid remains reliable when plants are closed or retrofitted. The utility is required to have a 15 percent margin of reserve power to prevent blackouts during peak days.
The plan does not disclose how much money customers would pay to upgrade plants, buy additional energy and cover other costs.
The Georgia Public Service Commission has six months to review the 1,000 page document. Georgia Power files a long-term plan with the PSC every three years unless a major update is needed.
Thursday’s document, updated from 2010, reflects significant changes stemming from new or pending rules from the U.S. Environmental Protection Agency. The utility said compliance costs could be between $74 million and $289 million in 2011; $191 million to $670 million in 2012; and $476 million to $1.9 billion in 2013.
Tom Fanning, CEO of Southern Co., Georgia Power’s parent, told The Atlanta Journal-Constitution last week that the rules mean the utility will have to reduce its dependency on traditional coal and switch to natural gas, the price of which is volatile.
“It’s going to reduce reliability and increase costs,” he said.
The utility said it is awaiting EPA rules to regulate mercury, coal combustion byproducts and other toxins before it decides what changes to make at the six plants: Branch, Yates, Mitchell, Kraft, McIntosh and McManus. The plants produce a total of 2,592 megawatts of power.
Georgia Power said to expect 2,000 of those megawatts to be “unavailable” by 2015, meaning the plants will be closed or refitted in some way, a spokeswoman said. Coal-fired units at plants Kraft and McIntosh are the most likely to be converted to natural gas, according to documents. Plant McManus, an oil-fired plant, likely could use a cleaner form of oil, the documents said.
The documents did not address what could happen with the targeted units at plants Branch, Yates and Mitchell. The plants are not in metro Atlanta.
“Because these units are old, they haven’t been modernized with pollution controls. This will make way for cleaner sources of power and efficiency,” said Colleen Kiernan, director of the Sierra Club’s Georgia chapter.
The EPA is expected to issue mercury regulations in November. The rules come four months after the agency began requiring certain states, including Georgia, to reduce sulfur dioxides and nitrogen oxides by 2012 and 2015.
Georgia Power already said it will have to buy emission allowances, or credits, to comply with regulations for sulfur and nitrogen. The utility has added equipment to remove sulfur dioxides and nitrogen oxides at some coal plants, with more planned. It takes four to five years to install the equipment, which can cost from $300 million to more than $1 billion for each unit.
The utility said it will add additional equipment, called baghouses, to remove dust and particles from these plants by 2017. The company said it would ask the PSC to approve the cost to install the baghouses this year. The amount, which Georgia Power did not disclose, would be included in customer bills after its 2013 rate case.
Georgia Power announced earlier this year it would close two coal-fired units at Plant McDonough in 2011 and 2012 as well as two units at Plant Branch by the end of 2013.
The utility said Thursday it will close one of the oil-generating units at Plant Mitchell.
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