A key hearing took place last week as part of a planning process to determine what types of energy will power Georgia for the coming decades. Georgians have the opportunity to advocate for a plan that centers residents’ needs and prioritizes our continued transition to a clean energy future.Chris Carnevale and Cary Ritzler | April 11, 2022
Every three years, Georgia Power proposes its Integrated Resource Plan (IRP), the guiding document that serves as a roadmap for which types of energy generation and efficiency program offerings will be used to meet Georgia’s energy needs over the following decades.
Before the IRP goes into effect, however, it must be ruled on by the state’s primary utility regulator, the Georgia Public Service Commission (PSC). In coming to its ruling, the PSC invites and considers testimony from a range of parties to help ensure that the plan balances achieving Georgia Power’s goals with the public interest.
The first hearing with such testimony happened early last week, when Georgia Power representatives testified to defend the IRP proposal the utility filed in January.
The IRP details how much electricity will be needed over the next 20 years and what resources it plans to pursue to meet those needs. Georgia Power is predicting sustained growth, as future economic development is anticipated to drive more electricity sales and increase peak demand in both the summer and winter months. This will occur, however, as Georgia Power retires the remainder of its coal generation fleet in response to increasing costs to control pollution, and in the context of climate change and the urgent need to limit emissions that damage the climate. These factors together make this perhaps the most important Georgia Power IRP to date.
From now until July, the Commission will review and then determine whether it should accept Georgia Power’s IRP as proposed, or require modifications to the plan – which has been common in past IRP proceedings. Decisions made in the IRP will have far reaching implications for both the environment and financial costs to customers.
In this blog, we highlight four critical issues that should be of the highest priority for residents, members of the press, Georgia Power, the Georgia Public Service Commission, and the State of Georgia.
Reliability and Resilience
The ability to reliably provide power when it is needed – even in response to challenging and unexpected events – is a key consideration in the IRP. Weather extremes and aging infrastructure present unique challenges that will be exacerbated by climate change – requiring a more adaptable and resilient energy system. These pressures, however, provide unique opportunities for both local and regional innovation and more effective system planning.
Various planning and energy alternatives should be considered to increase resilience and reliability, including:
- greater and more effective reserve sharing between utility systems to put unused capacity to better use,
- distributed energy resources like solar and batteries,
- cost-effective investments in energy storage technologies,
- deployment of non-wires & transmission alternatives, and
- development of regional transmission projects.
The timing of coal retirements is constrained by transmission in some areas, particularly in North Georgia, and the alternatives above should be critical components of this ongoing energy transition that may allow coal retirements to proceed more quickly and to the benefit of Georgians. To date, Georgia Power has failed to effectively plan for the transition away from coal by considering essential alternatives. The question is, what is the cost of this failure to ratepayers and residents of Georgia?
Energy Efficiency is a Low-Cost Solution to Many Problems
Energy efficiency is a least cost resource that reduces energy demand and increases resiliency by helping people need less energy through measures like better insulation and efficient appliances. Yet Georgia Power failed to propose energy saving at levels that would bring the greatest value to customers. As a point of comparison, annual efficiency savings among national and regional peer utilities are 2-3 times higher, on average, than those delivered by Georgia Power.
Instead of pursuing higher levels of energy efficiency in this IRP, Georgia Power is proposing to freeze efficiency savings at the same levels ordered by the Commission in its last IRP, back in 2019. The fact is, Georgia Power failed to meet those savings targets over the past two years – again underperforming compared to peer utilities, all of whom were confronted by the same challenges brought on by the pandemic. And the utility has argued against making up for lost savings in future years.
In response to cross examination before the Commission last week, Georgia Power admitted it did not consider higher levels of energy efficiency in response to any of the major drivers for future energy needs identified in its IRP. As noted above, Georgia Power is projecting annual load growth and proposing retirement of its entire fleet of coal power plants, which 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 – but the utility chose not to consider it.
Two sets of analysis conducted by Georgia Power itself show that it is more cost effective to divert investments away from expensive fossil fuel generation in favor of more low-cost energy efficiency. As an alternative to Georgia Power’s proposed efficiency savings levels, the company’s IRP also includes analysis results for higher efficiency savings levels that were proposed by SACE and other public interest advocates. The Company’s own IRP filing shows that customers could save over $180 million over the next three years if it went with the higher efficiency levels that we proposed, and more than $1 billion of additional savings across the full IRP planning period. Doing so would put Georgia Power near the national average among peer utilities. But during cross examination last week, Georgia Power made clear that it limited energy efficiency investment to reduce short term impacts on rates, rather than optimize for over $1 billion in lower costs to customers overall.
So despite the financially competitive advantages of energy efficiency and the myriad problems it could help solve, Georgia Power’s proposed IRP merely maintains the status quo, which if approved would mean more fossil fuels and higher utility system costs passed on to its customers.
Renewables vs. Fossil Gas
In the 2022 IRP, Georgia Power has proposed as much capacity from fossil gas resources as renewables. Six fossil gas power purchase agreements (PPAs) proposed were selected from a Capacity Request for Proposals (RFP) the Company previously issued. The Capacity RFP, however, contained an “eligibility gap” which rendered most utility-scale solar plus storage projects ineligible to bid.
Similarly, on small, distributed solar, “the Company does not support any expansion of the RNR [Renewable, Non-Renewable] monthly netting program,” as they say in their IRP proposal. This is despite the fact that witnesses testified last week that the Company has not performed a study to quantify the cost to serve customers with on-site solar – and they were not aware of a study by Duke Energy revealing that it costs less to serve solar customers elsewhere in the Southeast. Georgia Power continues to follow the typical utility playbook as it remains opposed to fair compensation for smaller-scale, self-generation of solar and portrays solar energy production as an “either-or” proposition between utility-scale solar or rooftop solar.
The vast majority of solar in the proposed IRP (2,100 MW out of 2,300 MW total) will be used for the Company’s Clean And Renewable Energy Subscription (CARES) program, which is dedicated exclusively to commercial and industrial customers, with only unsubscribed excess serving the general body of ratepayers. Ring-fencing the lowest cost, cleanest energy and offering it only to commercial and industrial subscribers in effect will leave the remaining ratepayers to shoulder the burden for the higher-cost, dirtier energy on Georgia’s Power’s system. Witness responses to cross-examination questions during the hearing seemed to represent a fundamental misunderstanding of accounting principles for renewable energy. In fact, the witnesses testified that they were not familiar with the emissions accounting rules of the Greenhouse Gas Protocol.
Georgia Power’s parent, Southern Company, is a founding member of the newly formed Southeast Energy Exchange Market (SEEM), which is described to the public as a ‘market’ and “21st century solution” that will bring substantial cost and environmental benefits to customers. If that description were true, however, why does Georgia Power’s IRP include no more than one half-page description of SEEM in the hundreds of documents provided for the GPSC’s review? Clearly, the Company does not believe SEEM is going to drive new renewable energy development.
In functional renewables markets outside the Southeast – where power projects can compete directly on price and locational pricing is fully transparent – new renewable industries are booming. As an example, Oklahoma, Kansas, Nebraska, and the Dakotas, which are all in the Southwest Power Pool (SPP) market, are experiencing economic booms through wind development. Georgia could do the same with solar energy if independent projects were allowed to compete in an open and transparent market, which drives down costs to consumers and creates new jobs, however as Georgia Power’s filed IRP demonstrates, SEEM is not expected to provide this opportunity.
As discussed above, Georgia Power’s previously conducted Capacity RFP, which Georgia Power claims was open to all energy technologies, was designed quite narrowly. It remains unclear whether these strict eligibility requirements benefited Georgia Power’s parent, Southern Company, at the expense of customers. The currently proposed IRP does not provide enough evidence that approving the Capacity RFP fossil gas PPAs now – some of which won’t begin until the late 2020s, and after subsequent IRP cycles – is the best deal for Georgia Power’s ratepayers.
The Company is far from forthcoming in its proposed IRP filing, so it is imperative that public advocates, representing a diversity of stakeholders, take this incredible opportunity to demand transparency in market organization and development, pricing, competition, and the inclusion of technologies that will ultimately define Georgia’s energy future.
Georgians Can Get Involved
Today, we ask that you join SACE, Southface, and the many other dedicated advocates and organizations engaging the PSC during review of the 2022 IRP.INTERESTED IN GETTING INVOLVED WITH CLEAN ENERGY IN GEORGIA? LET US KNOW HERE.
Georgia residents who are interested in getting involved in clean energy and climate action, please let us know with the form here. If you would like to provide public comment for the PSC’s consideration you can do so at this link, with the docket numbers 44160 and 44161.
Stay tuned for more blogs on the Georgia IRP, including further examination of energy efficiency issues in the utility’s proposed IRP.
Also, thanks to our colleagues at Southface, who helped contribute content for this blog post.