Politics

State Regulators Allow Retirement of Two Coal Units

March 20th, 2012

State regulators Tuesday signed off on the retirement of two coal-fired units and an offline oil-fired unit.

They also approved three natural gas contracts to make up for the lost power – contracts that shed light on the future costs of transitioning from coal to cleaner energy sources.

In a 4-1 vote, the Public Service Commission approved Georgia Power’s request to retire three of its older units – two in central Georgia and the other in south Georgia.

To offset the power lost by the retirements, Georgia Power will be allowed to enter into contracts with three natural gas companies, one less than the company originally requested.

At the meeting, Commissioner Stan Wise said despite new federal clean air regulations, and the resulting uncertainty within the energy market, he felt the megawattage provided by three contracts, not four, was sufficient to ensure reliability for ratepayers.

“I’d love to have all the extra capacity that four [contracts] bring, but every time you add another one it’s additional cost,” said Wise.

Ratepayer advocates had been lobbying for only two contracts, but Josh Galperin of the Southern Alliance for Clean Energy said he was satisfied with the compromise.

“If there’s an excessive reserve margin, it means that ratepayers are paying for all this extra capacity so the commission made a small step in the right direction here by reducing the number of outside contracts,” said Galperin.

During the meeting, Commissioner Wise also introduced a motion, later approved by the Commission, to delay the payment of a state incentive meant to encourage Georgia Power to enter into outside contracts rather than build expensive new power plants of its own.

The incentive payment – in the tens of millions over the lifespan of the contracts – will now be delayed until 2019, presumably, Wise says, after Georgians weather the first stage of market volatility in the wake of the new emissions regulations.

“The Commission has the opportunity to mitigate the impact of the cost to customers during the period when there’s great uncertainty regarding the capacity need for the citizens of the state,” said Wise.

Ratepayer advocates had lobbied hard to reduce or eliminate the incentive in light of the sluggish economy.

In the 4-1 vote, the lone dissenting opinion came from Chairman Tim Echols.

He said Georgia Power would continue expecting the incentive as it considers future coal plant retirements.

“As they come to us to replace coal units – which I imagine will happen a lot over the next 10 years – they’re going to look back on this day,” said Echols.

At the meeting, Echols’ attempts to reduce other ratepayer costs, such as paying for leftover equipment at the retired units, failed to attract support from the rest of the Commission.

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