Critics pan Georgia Power fossil fuel plans ahead of state PSC hearing

Caption

Every time Georgia Power builds a new gas plant, it gets to fully recover the cost of that construction from customers, and then some.

Credit: John McCosh / Georgia Recorder

The state’s utility regulators are set to vote Tuesday on Georgia Power’s proposal to increase its reliance on fossil fuels and renewable energy sources to meet skyrocketing demand.

During a hearing held Thursday, a Georgia Power representative urged the five-member Public Service Commission to support a stipulated agreement that the company says provides some financial protection to ratepayers. Nonetheless, critics of the plan complain that the company’s plans are unrealistic and that a greater use of renewable energy could prevent the company from significantly expanding its carbon footprint.

The utility intends to rapidly add several thousand megawatts of electricity to its 2023 resource plan in order to supply power to a growing number of large data centers and industrial facilities.

Georgia Power’s revised 2022 resource plan calls for an accelerated timeline for the company to build several natural gas or oil-fired units, extend agreements to purchase power from utility companies in other states, and construct new solar facilities.

A stipulated agreement reached between Georgia Power and PSC staff has been signed by seven intervening parties since the proposed settlement was announced on March 27.

Consumer watchdog Georgia Watch, MARTA, the Clean Energy Buyers Association, the Georgia Association of Manufacturers and the Southern Renewable Energy Association are among the groups endorsing Georgia Power’s updated 2022 resource plan.

Georgia Power’s attorney Steven Hewitson said the company is willing to make concessions to mitigate customer risks while completing the projects.

“Approval of this agreement will preserve and protect the reliability and the quality of electric service Georgia Power’s customers expect and deserve,” he said. “It will also support our state’s continued economic development while placing downward pressure on rates for all customers.”

The debate over Georgia Power’s utility rates has intensified over the last several years as customers faced hikes in electric base rates and paid for overrun fuel costs, coal ash cleanup and construction overages at Plant Vogtle. Georgia Power customers will soon pay more on their bills after Vogtle’s fourth and final unit started producing electricity last week.

Several clean energy advocates also made the case at the hearing on Thursday that state regulators amend the agreement by replacing the expanded use of fossil fuels with more renewable energy and requiring companies to increase their capacity to cover these costs in future rate cases.

Preston Thomas, an attorney representing the commission’s Public Interest Advocacy staff, said that the stipulated agreement requires the utility company to make conservative revenue projections that would benefit average customers. This means that in Georgia Power’s 2025 rate case, if the large load customers fail to generate enough revenue to cover the expanded capacity, then the utility company will make up the difference, he said.

“The company guarantees that its 2025 rate case filing will reflect downward pressure of at least $2.89 per month to the typical residential customer,” Thomas said.

Commissioner Lauren “Bubba” McDonald said Thursday that he would ask other board members ahead of Tuesday’s vote to hold off on adopting the plans until after the November election, when the direction of federal energy policies will be clearer for the next few years. 

“I am not going to be comfortable supporting a couple of billion plus dollars that might have a rate impact on the residential and small commercial ratepayers in Georgia,” McDonald said. “I want to know what the future is going to be beyond October and beyond the early part of November before I can comfortably move on to expand energy capacity for the state.” 

Jennifer Whitfield, an attorney who appeared on behalf of Georgia Interfaith Power and Light at Thursday’s meeting, said the settlement includes several positive plans, such as expanded solar and battery storage. She also expressed concerns that by 2028, Georgia Power’s residential and small business customers could subsidize a large share of costs related to the increased energy capacity.

“We know the big costs are coming after (2027),” Whitfield said. “This rate case has some protections built in. But after that, we’re still going to be paying bills and will still need more protections.”

Hewitson warned that if the PSC grants any of the recent motions filed by intervenors, more parties may refuse to compromise in future utility cases if they believe they can make significant changes at the last minute.

Georgia Power has also agreed not to collect any additional fees from ratepayers until 2026 on excess electricity it purchases from natural gas-fired units operated by its sister company Mississippi Power and at a power plant in Florida.

The utility company also reached a compromise with PSC staff that allowed it to avoid the typical bidding process in order to construct a 500 megawatt solar facility with battery storage by the end of 2026. In addition, the company will expedite the competitive bidding process for another 500 megawatts of solar battery storage that will open by early 2027.

In addition, Georgia Power pledges not to recoup any construction cost overruns incurred at Plant Yates, located in Coweta County, where three natural gas or oil fired units would be built.

Georgia Power could file a request with the PSC for reimbursement of expenses resulting from circumstances beyond the company’s reasonable control, such as natural disasters.

Bryan Jacobs, director of the solar energy program for the Southern Alliance for Clean Energy, said that Georgia Power and regulators should follow the advice of experts who called on them to delay the Yates project until they can study if it’s the most effective way to bring new energy sources onto the grid.

Commissioner Tim Echols said that including a cap on construction costs for Yates provides a great level of consumer protection.

“All of the anxiety that I had is really relieved by this,” he said.

The utility company contends that the proposed agreement will benefit residential and small business customers, as well as support the state’s future economic development needs.

Under the agreement, Georgia Power is projecting that the average residential household will save around $2.89 per month on their utility bills over the next couple of years.

The next base electric rate adjustment will be made when the PSC considers the 2025 rate case.

 The debate over Georgia Power’s utility rates has intensified the last few years as customers cover rising fuel prices, coal ash cleanup costs, and construction overages at Plant Vogtle. Georgia Power customers will soon pay more on their bills after Vogtle’s fourth and final unit started producing electricity last week.

Several clean energy advocates also made the case at the hearing on Thursday that state regulators amend the agreement by replacing the expanded use of fossil fuels with renewable energy and making large industrial and manufacturing facilities pay for their expanded electric footprint in future rate cases.

“If the PSC approves the stipulated agreement as it stands, it will extend the lifeline of other fossil fuel-burning plants, which will continue to pose an environmental risk to Georgians,” said attorney Jennifer Whitfield, who argued on behalf of the nonprofit Georgia Interfaith Power and Light.

According to Hewitson, granting the motions discussed during Thursday’s hearing could result in more parties refusing to compromise if they believe they can get changes made at the last minute.

According to Georgia Power, it is appropriate to decide how electric rate costs are split between both residential and industrial customer bases when the PSC considers the next rate case.

“They want all the costs to be put on large load customers but they want the benefits of increased revenue to be shared with all customers,” Hewitson said.

“If a party can get what it wants by refusing to compromise on issues and then simply submit a motion seeking to amend that stipulation, then they’re not going to participate in good faith and future negotiations,” Hewitson said.

Georgia Power has also agreed not to collect any additional fees from ratepayers until 2026 on excess electricity it purchases from natural gas-fired units operated by its sister company Mississippi Power and at a power plant in Florida.

In addition, Georgia Power pledges not to recoup any construction cost overruns incurred at Plant Yates, located in Coweta County, where three natural gas or oil fired units would be built.

The company could file a request with the PSC for reimbursement of additional expenses resulting from circumstances beyond the company’s reasonable control, such as natural disasters.

A compromise was also reached with PSC staff that allowed the utility company to speed up building a 500 megawatt solar facility with battery storage by the end of 2026 and to expedite the competitive bidding process for another 500 megawatt solar facility projected to open by early 2027.

Hewitson said that Georgia Power is simply asking the PSC to exercise its discretion and waive the normal bidding process in order to expedite the installation of new power sources.

This story comes to GPB through a reporting partnership with Georgia Recorder.