Update: on the morning of July 15, the Georgia PSC voted unanimously to approve the stipulation without any amendments. SACE and co-intervenors Sierra Club and the NRDC also issued a press release regarding the approval of the IRP.
Last week, Georgia Power Company and the Staff of the Public Service Commission reached a settlement agreement (called a “stipulation” or “stip”) regarding the Company’s Integrated Resource Plan (IRP). The IRP is a roadmap to meet the future energy needs of Georgia Power’s customers. The decisions outlined in the IRP will strongly influence electric system reliability, electricity rates paid by consumers, and the amount of harmful air pollution that power plants will emit for decades to come. The IRP also contains programs to help customers reduce energy needs so that the overall energy system will cost less.
In this case, the Commission’s Staff is recommending that the Commission approve a stip settling these numerous issues. A hearing is scheduled for Tuesday, July 15, where commissioners will have the opportunity to amend the stipulation before a final vote. They could also reject the stipulation, although this is very rare.
SACE has not signed onto this agreement, though several other intervening organizations have. While we tend to agree with many items in the stipulation agreement, there are key pieces that we think need improvement, and one key piece that we simply cannot support. Therefore, we’re breaking down key pieces of the agreement that are good, some that are bad, and several that introduce a high level of uncertainty in the plan.
The Good
Some of the transmission-related items in the agreement represent positive steps forward, such as greater consideration of grid-enhancing technologies (or GETs) that help us get more out of our current grid. Additionally, as SACE requested, the stip requires that Georgia Power continue to file reports on the addition of large new electric customers such as massive computer data centers that are expected to drive expansion of the electric system over the next decade. The public has a strong interest in understanding whether and to what degree these large customers are adding new costs and challenges and bringing new revenue to the electric system.
The stip also would grant large customers, such as data centers, more freedom in meeting their own needs through new clean energy resources. Georgia Power, for instance, has agreed that these large energy users, who are represented in this case by the Clean Energy Buyers Association (CEBA), can pay extra to increase the amount of solar energy developed through its competitive procurement process. As of the weekend before the decision, however, Georgia Power had not agreed to fully credit the generating capacity of large-scale batteries that CEBA members want to develop. Given the urgency of adding non-polluting generating capacity to the grid and the willingness of large customers to pay for it, SACE strongly favors amending the stip to fully credit these customer-financed batteries.
Several customer pilot programs proposed in the IRP were also included in the agreement. These programs are another step in the right direction since they create new pathways for customers to add to grid stability through customer-sited solar plus storage, or through vehicles to grid for electric school buses. However, as is the case with all customer programs, implementation will be key for ensuring that both the customer and the utility system benefit from the program. For example, one program is aimed at bringing solar and battery storage online for smaller customers, such as homes and small businesses. But the current proposal limits customer energy systems to a size that may be insufficient to drive heating and air conditioning. This provision should be modified to ensure that customers can have enough solar and battery capacity to fully power a home during a power outage.
Another positive provision is the “vehicle-to-everything” pilot program. This pilot program will test the ability of electric school buses to put power on the grid during high-load events. SACE has previously written about how medium and heavy-duty vehicles, such as electric school buses, can act as a grid resource through managed charging and vehicle-to-grid. The success of this pilot will be influenced by decisions like the selection of software and hardware vendors or the level of ongoing support provided to school districts during implementation. Since this type of program generally allows the utility to take direct control of the charging of the vehicle, it will be important for Georgia Power to provide ongoing support during implementation in order to build confidence with school bus operators that participation in the program will not conflict with providing transportation.
The stipulation also continues Georgia Power’s steady buildout of utility-scale solar. More solar is always good news. However, given the huge expected energy needs, analysis by our independent expert showed that building even more solar would reduce system costs and would help reduce the impact of unpredictable fossil fuel price spikes.
The Bad
This stip delays the previously expected retirement of a coal plant (Scherer Unit 3) that will soon be 40 years old. It also fails to set retirement dates for other units at Scherer or the units at the Bowen coal plant. Our expert analysis clearly showed, as has previous Georgia Power analysis, that these coal plants are uneconomical, and it is better for ratepayers if they are retired earlier. SACE believes that the Commission should keep the Scherer Unit 3 retirement date and set deadlines that will speed the retirement of the other coal units.
The stip approves a significantly increased budget for programs that help customers save energy, which is a good thing, but it does not require an equivalent increase in energy savings. This issue is important not only because customer efficiency is the cheapest and cleanest way to meet energy demand, but also because Georgia Power is backtracking on a commitment from three years ago.
In the 2022 IRP, Georgia Power committed to proposing and supporting energy efficiency programs that would produce energy savings equal to 0.75% of its annual retail sales. This amount of energy savings would be about 50% more than what Georgia Power has produced recently, but is still significantly below what other utility companies have achieved for years. As the time approached to deliver on the promise, Georgia Power met repeatedly with stakeholders to help develop the 0.75% energy savings plan. Numerous organizations, including SACE, attended, gave suggestions, and analyzed data and ideas provided by Georgia Power. Then, Georgia Power submitted the 0.75% energy savings plan with a massive, unrealistic price tag (including six times the customer rebates to achieve only 50% more energy savings). In parallel, it also submitted a cheaper alternative plan that had never been shown to stakeholders and that largely maintained the status quo for energy savings. This tricky course of action was clearly intended to steer the Commission away from the 0.75% savings plan that Georgia Power had agreed to support.
Georgians deserve progress on energy efficiency without games or overblown costs. Hopefully, on Tuesday, the Commission will amend the stip to require Georgia Power to meet its promised 0.75% energy savings target.
The Unknown
Perhaps the most fundamental issue in the case is the size of Georgia Power’s projected load growth: several intervenor experts, plus the Commission’s own staff, have warned that Georgia Power is over-estimating load growth, which could result in overbuilding billions of dollars in power plants. The stip requires the Company to collaborate with staff in the coming months to update the load forecast that will be used to determine how much power to procure in a future RFP, including potentially the method of creating the load forecast. While this could lead to a load forecast that is based on better information, at the end of a litigated utility planning case, this fundamental determinant of the amount of power that will be procured has been left largely to non-public negotiation between the Company and the Commission’s staff.
This brings us to the procurement process: under the regulatory system in Georgia, the biggest decisions affecting the implementation of Georgia Power’s IRP will actually be made outside the IRP process. Georgia Power issues periodic RFPs for new power projects under an “All-Source Procurement” process, which determines what types of resources actually get developed. In this case, the agreement would allow Georgia Power to procure up to 8,500 MW of energy projects from RFP bids that have already been made, but for which the costs have remained secret throughout the IRP process. That is a huge amount of power, exceeding, for instance, the whole size of nearby utility companies such as Dominion Energy South Carolina and Santee Cooper.
All-Source Procurement – a concept SACE supports – is intended to ensure that all types of generation resources compete on an even playing field to drive down the cost of meeting future energy needs. Like any bidding process, a great deal of care must be taken to avoid gaming by bidders or having the terms of the RFP itself steer the outcome. Historically, in Georgia, “All Source” has mostly meant new natural gas power plants. In fact, Georgia Power’s own affiliate has indicated that it is currently analyzing electric transmission projects to interconnect a large amount of new gas plant capacity that presumably will fulfill the RFP.
A Challenging Moment
SACE recognizes that projected massive electricity demand growth creates a historic challenge for Georgia Power, its state regulators, and eventually its customers. Serving increased needs while retiring the most polluting power plants on the system would require decisive action in the face of great uncertainty, among elected commissioners who, themselves, do not always agree.
We believe that the actions that are most certain and least likely to lead to uncontrolled cost outcomes are (1) helping customers save energy and (2) rapidly expanding renewable energy and battery storage. We are concerned that, when secrecy is lifted on up to 8,500 MW of power projects, it will reflect a massive fossil gas power buildout that will tie much of the state’s economy to a volatile, polluting energy source for decades to come. We urge the Commission to take large tech companies up on their offer to do more to help foot the bill for renewable energy and storage, to maximize additions of renewable energy, and to hold Georgia Power to its word regarding a modest, 0.75% annual energy savings target. Those actions, plus careful oversight of upcoming procurement dockets, should curb some of the risks associated with a historic expansion of energy systems in Georgia.
