Georgia Power and state regulatory staff announced a tentative deal Wednesday that would allow the company to expand reliance on fossil fuels and add more battery storage to meet a sharp rise in electricity demand, mostly to serve energy-hungry data centers.
The company says the plan would apply “downward pressure” on rates for other customers, but consumer advocates say there’s no guarantee bills will drop — and they worry about the climate impacts of adding more oil, gas and coal to the Georgia Power system.
Aaron Abramovitz, Georgia Power’s chief financial officer, testified Wednesday before the Public Service Commission (PSC) that the plan would allow the company to maintain reliability during a period of “extraordinary economic development.”
“The capacity resources we are requesting… will ensure that we can continue to serve our existing and growing customer base with the reliability our customers value and expect,” Abramovitz said.
Bryan Jacob of the Southern Alliance for Clean Energy said he was surprised that the proposal appeared to give the utility almost everything it asked for in exchange for very few concessions.
“The stipulation takes the overall proposal from bad, which it already was, to worse,” said Jacob. “It’s a win for dirty energy.”
Georgia Power is the state’s largest energy utility and a regulated monopoly. That means it is guaranteed a profit by law, but its rates and resource planning must be regularly approved by elected representatives on the Public Service Commission.
The company issued a surprise off-year request to amend those plans in October, warning that it could face an electricity shortfall as soon as 2025. Some of the new load Georgia Power expects is from electric vehicle factories and other industrial customers heading to Georgia. Company executives, however, have testified that more than 80% of its forecast demand growth comes from data centers, which have also flocked to the state.
The company had asked the PSC for permission to add almost 3,400 megawatts (MW) of electricity assets to its system. That would include building three oil-and-gas-fired units at Plant Yates in Coweta County, developing 1,000 MW of battery storage and continuing to buy electricity from a gas plant in Florida and its corporate cousin, Mississippi Power. The Mississippi Power agreement will keep a coal-fired power plant open that had been slated to close.
Georgia Power said the need is so urgent it wanted to sidestep the competitive bidding process normally required to determine the most cost-effective solution for customers. In earlier hearings, PSC staff had pushed back on that part of the company’s ask, arguing that demand was growing, but not as fast as Georgia Power claimed.
Clean energy advocates were caught off-guard by the proposed deal, which was released Wednesday morning, minutes before intervenors were allowed to cross-examine Georgia Power executives in the hearing. Commission Chairman Jason Shaw called a half-hour recess to allow interveners to read the document before questioning began.
The deal still needs to be approved by the PSC commissioners in a vote scheduled for April 16, but the framework provides a preview of what the final plan is likely to resemble. If approved, it would give the company most of what it requested.
Georgia Power would be allowed to build the new oil- and gas-burning units at Plant Yates, without evaluating other options to secure the 1,400 MW they’ll provide. Even before receiving the commission’s sign-off, the company had begun developing the Yates units. Earlier testimony revealed cancelling the project would have cost $250 million.
In an email, a Georgia Power spokesman said the company had begun work on the combustion units before the approval vote because it “had to include actionable resources in the portfolio of proposed solutions.”
“To that end, the company needed to begin procurement and development of the proposed [combustion turbines], including contracting with vendors for construction, to meet the accelerated commercial operations dates needed to serve loads,” he said.
The agreement would give the greenlight to the company to keep buying electricity from Mississippi and Florida, and to build and own 500 of the 1,000 MW of battery storage it was seeking. For the other 500 MW, the utility would need to solicit bids, and the commission could decide later how much to approve.
In return, the company says it will use the increased revenue from serving data centers and industrial customers to shave off $2.89 from the monthly bills paid by the average residential customer. In 2022, the average residential customer in Georgia paid roughly $151 a month for electricity. That includes customers of all electric utilities in Georgia, not just Georgia Power.
But the agreement says those reductions would only last three years, starting in 2026. And it does not include similar protections for other groups, like small businesses and agricultural customers. In testimony Wednesday, company executives said they could not predict other factors that could affect rates. In response to questions from intervenors and commissioners seeking a firmer guarantee or commitment from Georgia Power to lower customer bills, executives repeated the phrase “downward pressure.”
Jennifer Whitfield, a senior attorney at the Southern Environmental Law Center, representing Georgia Interfaith Power and Light, said terms of the agreement do not mean that rates will go down. And she said provisions allowing the utility to avoid the normal competitive bidding process were an erosion of consumer protections.
“That unprecedented growth isn’t coming as fast and as furious as they’re predicting, nor does it require us to strip away the customer protections that are in our regulations,” Whitfield said. “We’re very concerned about the bill impact on residential customers and everybody else.”
Georgia Power’s residential customers — the company’s largest group — have already faced a series of commission-approved rate hikes that will ultimately increase the typical residential customer’s bill by about $38 per month. That doesn’t include another rate increase that will kick in to start in 2025, the exact amount of which is still to be determined.
Environmental interests also have big-picture concerns about how the company’s plan would affect the climate.
The planet just endured its hottest year on record in 2023, and scientists say the burning of fossil fuels is to blame for most of the ongoing rise in temperatures.
The majority of the power assets the company is set to add rely on oil, natural gas and coal. Gas-fired units, like those under construction at Plant Yates, are especially troubling to climate advocates, because natural gas infrastructure releases methane, a hyper-potent, heat-trapping gas.
Critics say adding the Yates units, which could be in service for more than 45 years, would lock in even more global warming.
“It reeks of methane,” Jacob said of the deal.
A note of disclosure
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