Earlier this year, utility regulators approved Georgia Power’s plan to beef up its system with more fossil-fueled power assets and battery storage, mostly to serve an onslaught of energy-intensive data centers the company says are driving up electricity demand.
On Wednesday, a key part of that plan — the construction of three new oil and gas-burning units at Plant Yates in Coweta County — came under the microscope during hearings at the Georgia Public Service Commission (PSC).
The hearings come as other electricity providers in Georgia and beyond also double down on greenhouse gas-releasing fossil fuels, despite record global temperatures and other growing climate concerns.
Here’s what you need to know about the Yates expansion and what comes next.
Cost questions
The three new combustion turbines Georgia Power plans to build at Plant Yates will be able to generate electricity by burning either natural gas or low-sulphur diesel.
They will join two existing units at the site, which were converted to natural gas after decades of burning coal. All of Plant Yates other coal-burning units were shuttered back in 2015.
Running on natural gas, the three units combined will have a maximum output of about 1,300 megawatts. Powered by diesel, their capacity drops to 1,070 megawatts, which is comparable to one of the recently completed nuclear units at Plant Vogtle.
Units like the new Yates combustion turbines are known as “peaker plants” and are generally only fired up at times of peak demand.
Credit: HYOSUB SHIN / AJC
Credit: HYOSUB SHIN / AJC
The PSC already gave the company a green light to skip the normal competitive bidding process to build the new units. But the costs Georgia Power will be able to charge customers for, plus the procedures for monitoring construction progress, have not been sorted out and were the focus of Wednesday’s hearing.
In pre-filed and in-person testimony, Georgia Power kept the Yates price tag under wraps, claiming the cost is “trade secret” information. Jeffrey Grubb, Georgia Power’s director of resource and policy planning, argued divulging cost projections could harm customers because the company is currently accepting bids for other power supply additions.
Asked by a PSC staff attorney when the company would consider pulling back the curtain on costs, Grubb did not commit to providing the information.
“I don’t want to say never ... it’s just going to depend on how things move,” he said.
An analyst for the PSC’s public interest staff said recent projects in other states that are less than half the size of the Yates expansion cost between $573 million and $735 million. A third, 800-megawatt gas-powered system in Missouri cost $800 million.
How much rates will go up to pay for the project is yet to be determined and will be up to the five members of the PSC to decide.
The deal approved by the PSC this spring allowing Georgia Power to add the Yates units includes some limited cost protections for customers.
Georgia Power agreed not to try to collect costs above the approved amount without showing that any overruns are the result of “circumstances beyond the company’s reasonable control,” like hurricanes, pandemics, labor strikes, “acts of God” and more. For those costs, if they are incurred, the company is required to prove to the commission that they were “reasonable and prudent.”
Like it did for years with the recently completed Plant Vogtle expansion, Georgia Power will also have to file semiannual reports with the PSC on its construction progress. But even with the oversight, the Vogtle project was plagued by years of delays and more than $20 billion in cost overruns, which have led to skyrocketing rates for customers.
On Wednesday, Georgia Power tried to reassure the PSC that Yates would not resemble Vogtle.
“We are absolutely expecting to bring this in on time, on budget and bring it into service for our customers,’ Grubb testified.
A gas bonanza
Georgia Power is not alone in adding huge amounts of new fossil fuels to its system.
Oglethorpe Power, which is co-owned by 38 cooperatives in Georgia serving mostly rural areas, recently announced plans to add nearly 2,000 megawatts of natural gas-powered generation over the next six years. The gas-powered capacity is enough to provide electricity to roughly 700,000 homes.
Other utilities around the Southeast are also doubling down on gas. Much of that expansion has been attributed to serving the needs of data centers, which form the backbone of artificial intelligence systems and our digital economy, but require huge amounts of 24/7 electricity.
Critics say natural gas is a risky investment. As the planet sweats through more record temperatures — scientists reported this week the planet endured its hottest day in recorded history on Sunday — extracting and burning more gas will add huge amounts of greenhouse gas emissions to the atmosphere.
But opponents of gas say it is also bad for customers because it exposes them to the volatility of fuel prices.
Since Georgia Power is not allowed to earn profits on fuel expenses, utility regulators have typically allowed those costs to be passed on to customers with little adjustment.
Albert Lin, an independent consultant who testified on behalf of the Sierra Club and the Southern Alliance for Clean Energy, argued Wednesday that the commission should require Georgia Power to absorb some of its fuel costs.
“I recommend this commission investigate updating the policies on whether or not ratepayers should bear all the risks of fuel costs, or whether the company could bear some of that risk and thereby lower this moral hazard,” Lin said.
Similar proposals have been floated to the PSC in other cases, but the idea seemed to gain little traction with commissioners Wednesday. In past hearings, PSC commissioners have said their hands are tied when it comes to fuel costs, claiming Georgia law requires they pass on the utility’s fuel expenses into customers monthly bills.
The PSC is set to make a final decision on whether to allow Yates costs to be folded into rates once the project is complete on Aug. 20.
Editor’s note: This story has been updated to clarify costs of recent out of state power plant expansions.
This coverage is supported by a partnership with Green South Foundation and Journalism Funding Partners. You can learn more and support our climate reporting by donating at ajc.com/donate/climate/
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