Renewables rise in Georgia Power plan

In coming months, state regulators will pore over the 2016 Integrated Resources Plan, whose 1,500 pages cover the next 20 years. Whatever the PSC approves in the plan, which must be updated every three years, could eventually affect electric bills.

“This is where the decisions get made,” said Colleen Kiernan, of the Sierra Club’s Georgia chapter.

In the short run, the company proposes adding 525 megawatts of new capacity by 2020, mostly from long-term contracts with solar power installations, wind farms or other renewable energy suppliers.

That comes on top of more than 1,000 megawatts of power expected to come online by 2020 from the expansion of nuclear Plant Vogtle near Augusta. No other new plants or expansions are mentioned in the report, although company officials have said they may consider adding more nuclear capacity after the Vogtle project is done.

Meanwhile, the utility also wants permission to look into whether wind power towers up to 450 feet tall might someday enable Georgia to compete with the windy Great Plains states, where wind turbines now generate a significant share of that region’s electricity.

“This potential resource would utilize taller wind turbines with larger rotors than ever deployed in the United States,” Georgia Power said.

Georgia Power’s latest plan arrives at a time of more-than-usual uncertainty.

The PSC decided this month to speed up its cost review of the Vogtle nuclear expansion years ahead of schedule. The project, approved as part of Georgia Power's long-term plan years ago, is over three years behind schedule and $3 billion over budget.

The plan has always been to add part of the construction costs to customer bills — replacing a current charge for financing — as the two new reactors go into operation. But the amounts haven’t been set, and it is yet to be decided if customers will pay for overruns.

Many pages of the new long-term plan are partly blank in the public version. Georgia Power, a state-regulated monopoly, says those parts contain trade secrets.

Here’s a look at what the utility has disclosed:

Rates: up or down?

Georgia Power isn’t saying whether rates would eventually go up if its plans are approved. The PSC sets rates in a separate process, but many parts of whatever long-term plan is approved will affect customers’ future power bills.

“Our goal with every (long-term plan) is to ensure reliable power,” Georgia Power spokesman Jacob Hawkins said. After the last plan update, in 2013, Georgia Power closed several coal-fired plants and boosted its use of natural gas, resulting in lower costs that were passed on to customers, he said.

So far, outside experts say they don’t have a clear picture of how Georgia Power’s proposals would affect rates.

Slack demand

Georgia Power’s latest plan arrives at a time when demand for electricity is flat or falling. Last year, Georgia Power sold 1.6 percent less power than 2007, its peak year, and 1.2 percent less than in 2014. Likewise, the peak demand last year on Georgia Power’s system was 10 percent lower than its highest point — almost 18,000 megawatts — set in the summer of 2007. Those peaks help determine how much extra capacity the utility needs to keep in reserve.

Electricity usage dropped, the utility said, due to the recession and customers’ adoption of more efficient light bulbs, appliances, heating and air conditioning systems and other equipment.

With the Vogtle expansion’s two new nuclear units expected to come online in 2019 and 2020, the company doesn’t expect to need any additional capacity until 2024.

Still, Georgia Power’s long-term plan forecasts a revival in demand, partly because it expects Georgia to add a million new residents by 2021. The company expects electricity demand to grow 1.2 percent annually over the next 20 years.

“We’re building for growth,” said Hawkins, with Georgia Power.

Bigger reserves

Citing expected population growth and other factors, Georgia Power has asked the PSC to approve bigger power reserves — from 15 percent extra capacity now to 17 percent — to buffer against power outages or unusually high demand. That 2 percent increase is roughly equal to a good-sized power plant.

But critics say Georgia Power already has more reserve capacity than most utility companies, which typically have reserves of about 10 to 12 percent. That extra capacity means the company will keep some plants open that might otherwise be retired, said Bobby Baker, a former PSC commissioner and lawyer who recently represented the Southern Alliance for Clean Energy.

During the winter, when demand is typically low, Georgia Power has sometimes used only half of its power plants’ capacity, Baker said.

“There is a direct cost. That is not free,” said Baker.

Hawkins said Georgia Power takes “great care” to maintain its reserves to ensure that it can provide reliable power. He said the utility’s reserve levels are “in line” with the industry.

“Our number one priority is to ensure that our customers have power when they need it – it’s easy to Monday morning quarterback on past statistics, but we’re focused on meeting the future needs of our customers every day using the best information we have today,” he said.

Adding power

Even though Georgia Power said it doesn’t need to add any new capacity before 2024, its 20-year-plan includes proposals to add 525 megawatts by 2020 through long-term contracts with renewable power suppliers.

One megawatt is roughly the amount of power needed to supply 1,000 homes. Solar and wind power units usually operate below their maximum capacity, depending on the weather and time of day. Conventional power plants operate much closer to their full capacity.

The projects would range in size from utility-scale installations to homeowners’ roof-top solar panels. Most projects would be in Georgia.

That comes on top of about 1,500 megawatts of solar, wind, and biomass energy projects and power contracts the utility has added since 2011. The latest, which started Jan. 1, was a contract for 250 megawatts from the Blue Canyon wind farm in southwest Oklahoma.

One reason for turning to renewables: The cost of solar and wind energy has been falling dramatically in recent years. Hawkins said those low costs convinced the utility to add more renewable power, even though it’s not yet needed.

But the Sierra Club and Southern Alliance for Clean Energy say growth is actually slower in the new plan, even as it boosts the total. They say the planned projects add about 1.5 percent annually to Georgia Power’s renewable power capacity in 2018 and 2019, below this year’s planned 3.9 percent increase.

Hawkins disputed that, saying the new plan adds the same amount of renewable capacity as the previous plan.

“We are proposing to continue that momentum,” he said.

Closing plants

Georgia Power plans to close one coal unit and two oil-fired units at Plant Mitchell near Albany, and an oil-fired unit at Plant Kraft near Savannah. Combined they account for 375 megawatts.

Utility companies in recent years have closed numerous coal-fired plants, the nation’s biggest sources of carbon dioxide and other greenhouse gases. A steep decline in natural gas prices has hastened the transition to that cleaner-burning fuel.

Federal rules issued last year would force utilities to close more coal-fired power plants, but last week the U.S. Supreme Court put them on hold, at least temporarily.

The planned closures are “nothing of consequence,” said Baker. “They’re waiting to see if they will have to shut down some more coal plants.”

Kiernan, of the Sierra Club, said she’d hoped Georgia Power would close Plant Hammond near Rome, an old coal-fired plant that only runs a few months a year, during peak demand times.

Hawkins said, “We want our assets to deliver power as long as they can.”

Conservation plans

Georgia Power has proposed changes to several conservation plans, saying lower fuel costs make the old plans less valuable. Customers’ bills include a surcharge related to these programs, which encourage businesses and residential customers to switch to more efficient light bulbs, appliances and other equipment.

The plans could add costs in the short run but save money over the long run by allowing the company to avoid building new power plants.

Georgia Power projects that by 2019, these conservation programs will reduce peak demand by about 1,900 megawatts — nearly twice the Vogtle expansion’s capacity.

Georgia Power estimated the programs will cost about $187 million annually for a few years, but save $149 million annually over the long run.

“We’d like to see more” conservation programs, said Liz Coyle, executive director of the consumer advocacy group Georgia Watch. “The cheapest form of electricity is electricity that is not produced.”