Integrated Resource Planning is meant to find the least cost, most reliable, and least risky resources to meet customers' future energy needs. Unfortunately, Georgia Power sidelined energy efficiency in its most recent IRP filings, and fell far short of reaching the savings levels required by the Commission in its previous IRP.Forest Bradley-Wright | April 18, 2022
Each year SACE compiles efficiency performance data from nearly 500 electric utilities in the Southeast. This year we published our fourth annual “Energy Efficiency in the Southeast” report.
Our latest report centers on utility efficiency savings from 2020 (the most recent year with complete data) taken as a percent of annual electric retail sales – which creates a standard metric to compare performance between utilities and states of different sizes. Our data-driven findings are presented with historical context and policy trends to give a sense of where efficiency savings performance will likely go in the coming years. Our first blog in this series coincided with the release of the fourth annual “Energy Efficiency in the Southeast” report. Our second blog focused on efficiency and decarbonization and our third blog examined shifts in efficiency requirements for Dominion Energy South Carolina.
Georgia Power’s Efficiency Savings Fell Far Short of Commission Requirements in the 2019 IRP
Every three years, Georgia Power proposes its Integrated Resource Plan (IRP), the guiding document that serves as a roadmap for the types of energy generation and efficiency programs the company will use to meet Georgia’s energy needs over the following two decades. Before the IRP goes into effect, however, it must be ruled upon by the state’s primary utility regulator, the Georgia Public Service Commission (PSC).
Georgia’s IRP rules are fairly robust, requiring Georgia Power to engage in an energy efficiency stakeholder process, complete a technically rigorous efficiency savings potential analysis, and project efficiency savings impacts a dozen years into the future.
In the 2019 IRP, the PSC ordered Georgia Power to increase annual efficiency savings 15% above the level proposed by the company. Despite this new requirement, Georgia Power’s efficiency savings actually fell 35% the next year, meeting only 56% of the Commission ordered savings levels in 2020 and 70% of its target in 2021.
While utilities across the country all experienced disruptions to efficiency programs due to the pandemic, Georgia Power’s savings fell considerably further compared to both peer utilities and the national average. Unfortunately, Georgia Power won’t make up for lost efficiency savings from 2020 and 2021 in future years, citing regulatory provisions it says would impair its ability to recover its costs for increased efficiency spending.
Georgia Power’s 2022 IRP Didn’t Analyze Higher Efficiency Levels, Despite Projected Resource Needs
In its 2022 IRP, Georgia Power projects annual load growth and is proposing to retire its entire fleet of coal power plants, which in turn leaves a significant resource gap that the company must fill. The utility has also identified reliability issues in North Georgia; higher peaks in energy demand during winter months; and potential challenges associated with integrating more renewable energy onto the grid. Energy efficiency can help solve every one of these issues – while reducing costs to residents.
Instead of pursuing higher levels of energy efficiency in its 2022 IRP, Georgia Power is proposing to freeze savings at the same levels ordered by the Commission in 2019. In response to cross examination before the Commission earlier this month, Georgia Power admitted it didn’t even consider higher levels of energy efficiency to address any of the factors driving future energy needs in its IRP.
Georgia Power’s Own Analysis: More Efficiency = Lower Total Costs for Customers
The level of efficiency savings Georgia Power proposed in its Base Case not only fails to address future resource needs, it would also increase the total utility system costs the company will pass on to customers. At the same time, the utility’s own analyses show that far higher levels of efficiency savings are both achievable and cost effective.
Following a two-year stakeholder process, a large group of public interest organizations (including SACE) proposed higher levels of efficiency savings, known as the Advocates Case, which the utility analyzed and included in its 2022 IRP filing. Factoring in all utility costs and benefits, Georgia Power’s analysis shows that the Advocates Case produces $180 million more net benefits in just the first three years compared to the company’s Base Case. Those savings increase to more than $1 billion across the full planning period. Ultimately, lower utility system costs mean lower total costs for utility customers overall. But during recent cross examination, Georgia Power representatives made it clear that the company limited energy efficiency investment to reduce short-term impacts on rates, rather than optimizing for this more than $1 billion of additional savings over the longer term.
The purpose of integrated resource planning is to find the least cost, most reliable, and least risky combination of energy resources to meet future energy needs. But the unfortunate fact is, when it comes to these three critical objectives, Georgia Power didn’t integrate energy efficiency in its IRP at all.
Georgia Power’s 2022 IRP Can Still be Improved
The PSC’s final decision will be informed by the vision and priorities of individual Commissioners and the facts in the case. So far, Georgia Power is the only party in the 2022 IRP proceeding to present its arguments before the Commission. On May 6th, SACE and its co-intervenor Southface – along with other public interest organizations and the Commission staff – will file their respective testimony in the Georgia Power IRP docket. Some of the key energy efficiency and demand side management recommendations SACE and Southface intend to address include the following:
- Adopting the higher efficiency savings levels outlined in the Advocates Case, to reduce total utility system costs and bring Georgia Power more in line with higher performing peer utilities.
- Implementing a Manufactured Home Retrofit and Replacement program, which will address a critical gap in Georgia Power’s existing residential efficiency offerings.
- Adding a requirement that Georgia Power include competitive analysis of efficiency and other demand side resources in future IRP filings as alternatives to adding more power supply.
- Incorporating robust demand response programs to increase grid reliability and reduce the need for fossil fuel peaking capacity.
- Ensuring that utility performance incentives (Georgia Power’s Additional Sum) are properly aligned to count new savings that actually result from Georgia Power’s efficiency programs, while incentivizing pursuit of deep and long-term efficiency program offerings over shallow short-term savings.
- Requiring Georgia Power to deliver the full amount of Commission required efficiency savings, while allowing some flexibility on spending between individual years.
Every three years, the Georgia Power IRP process provides an opportunity for the utility, Commission staff, and public interest stakeholders to make their case for the best strategy to meet our future energy needs. In addition to energy efficiency and demand side management issues, other important matters in the 2022 IRP include retirement of outdated, expensive, and polluting power plants (including all of Georgia Power’s remaining coal plants), deployment of new renewable energy and battery storage technology, and grid reliability issues.
Fortunately, the PSC can still order Georgia Power to do better in its IRP – as it did in 2019. As we continue to transition towards a clean energy future, there is a lot riding on this IRP.