Old Coal on the Brink in Georgia

Guest Blog | December 6, 2011 | Coal, Energy Policy

Georgia Power Company (GPC) operates a fleet of old coal plants. Their oldest coal units, Yates units 1 and 2, are 61 years old. Unlike wine, cheese or a savings account, coal plants do not get better with age. They become more expensive to maintain, less efficient and more damaging to human health and the environment.

GPC is only considering retirement at its oldest units.
GPC is considering retirement at its oldest units.

Aging coal fleets are part of the reason that the Tennessee Valley Authority, Duke Energy Carolinas and Progress Energy Carolinas have announced and begun to plan for a first wave of coal plant retirements at their oldest and least efficient coal plants. Georgia Power, on the other hand, is just now beginning to wade into the retirement waters. It is doing so very timidly and with great protestations.

Georgia Power’s recent small step toward retiring its old coal plants is a proposal to retire 658 MW, Units 1 and 2 at its Harllee Branch plant. In the retirement  application GPC told the Georgia Public Service Commission that they aren’t ready to make a retirement decision regarding another approximately 15 units, representing over 2,000 MW.* GPC claims that it is awaiting final rules from the Environmental Protection Agency before it can make any decisions. GPC has relied primarily on coal for generations, so their reluctance to accept the changing market is understandable, but it is time to recognize that EPA is not the keystone here, age and market forces are. Sooner or later GPC will have to retire additional coal units as well.

GPC’s current plan to decertify Branch Units 1 and 2, plus an earlier decertification of McDonough Units 1 and 2 totals to 1,256 MW. As a percentage of total coal capacity, GPC’s plans fall short of the retirement projections at other regional utilities. Duke anticipates retiring approximately 1,700 MW, Progress 1,400 MW and TVA has already announced over 2,700 MW but may go over 4,000 MW according to its integrated resource plan.

GPC's retirement proposal is the smallest in the region, but if GPC retires all of its old and economically vulnerable coal units it will be a leader in the region.
GPC's retirement proposal (represented in red, far left) is the smallest in the region, but if GPC retires all of its old and economically vulnerable coal units (represented in blue, far left) it will be a leader in the region.

GPC has complained so much about EPA initiatives, insisted that EPA is destroying coal-power as we know it and even pleaded with EPA to allow more leniency in compliance with the Clean Air Act and yet, under the present application, the magnitude of GPC’s retirement request does not match its rhetoric. What GPC is doing—instead of proactively planning for the future, as other utilities have—is railing against EPA (See what CEO Tom Fanning had to say here, and see what Sr. Environmental Officer Chris Hobson had to say here). If EPA were really forcing electric utilities out of the business of coal, then GPC would be getting out of the business of coal, rather than offering only a modest retirement application.

We believe that the economics and human health impacts of coal power, regardless of EPA policy, should lead to more retirement. From mountaintop removal to choking air pollution and toxic coal ash, coal ravages the environment and human health, raises health care costs and reduces productivity all while playing a predominant role in climate change. Beyond health and environmental impacts the cost of coal is increasing, aging plants present growing expenses for utilities and the dominance of coal power leads to under-utilization of energy efficiency while imposing hurdles to alternative energy options.  For all these reasons the Southern Alliance for Clean Energy, represented by the Southern Environmental Law Center, has intervened in the GPC retirement proceeding, where we argue that GPC should consider more retirements.

We have carefully reviewed GPC’s filings and have noted issues that we brought to the Commission’s attention yesterday when we presented our testimony regarding GPC’s retirement application. Among the issues we discussed is the fact that GPC has not considered the uncertainty of increasing coal prices or the very low price of natural gas. Another issue of particular interest is GPC’s assumptions that the cost of maintaining a coal plant will not increase as the plant ages. This ignores the fact that machinery will require more frequent maintenance and operate less efficiently as years go by. All of these issues bias GPC’s decisions in favor of maintaining the coal status-quo.

Utilities are slow to adapt. Their reluctance to embrace innovation explains why our region still relies on coal plants over 60 years old. However, the effects of aging and market forces alone should help persuade the Public Service Commission and GPC that customers and stockholders would benefit from a more accurate retirement analysis.

Although Georgia Power’s application in this proceeding offers more excuses than new retirements, it is not too late to think big. GPC can help its customers save money and, more importantly, to save lives, by retiring expensive, polluting, inefficient coal plants.

* The MW numbers in this post represent nameplate capacity, but note that in other cases these numbers are reported as summer dependable generation, typically a slightly lower number.

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