Southern Co. says NO to new coal but Dean Alford plows ahead with bad business deal

Guest Blog | May 6, 2011 | Coal, Energy Policy
Dean Alford with Power4Georgians plans to build new coal plants in GA despite opposite trends across the industry

Southern Company, the dinosaur of the utility world, has now declared new coal plants a dead end due to competitive prices of natural gas. The April 18, 2011 Energy & Coal Price Report reports that Southern Company (parent company of Georgia Power) told the North Carolina Coal Institute spring meeting it has no plans to build any new coal plants.

Southern Co. has often lagged behind its peers (such as TVA) in moving toward clean energy, but luckily for them there’s still one guy making them look good – Mr. Dean Alford. If the market isn’t there for the experienced utility, Southern Company to build new coal plants, why do Dean Alford, his friends at Cobb EMC, and the boards of four other Georgia EMCs (collectively referred to as Power4Georgians) who have no experience building coal facilities, think it makes sense to build two new coal plants?

Alford is the leader and spokesman for Plant Washington and Plant Ben Hill, two coal-fired power plants slated to cost ratepayers upwards of $4.4 billion. A consortium of electric co-ops, led by embattled Cobb EMC, are paying his company, Allied Energy Services, to develop the plants despite inadequate assessments of the actual demand needs for 2 giant new coal plants.

Detailed, sound business plans are also missing from public scrutiny, further raising skepticism that these coal plants are good for Mr. Alford and his cohorts, but probably not such a good deal for the members of the EMCs who will likely foot the bills. In previous blogs we have also highlighted the outdated price tag (cost projections are well over 2 years old) publicly associated with the coal plants as well as the lack of any analysis proving that coal is the least expensive means of meeting the EMCs energy needs.

Adding to concerns that these coal plants are a shady deal, Allied was a subsidiary of Cobb Energy, a Cobb EMC affiliate that earned Cobb EMC’s leadership an ongoing, 35-month-old civil suit, and a criminal indictment against Dwight Brown, ex-CEO of both Cobb EMC and Cobb Energy. Allied got a no-bid contract despite the fact that there’s no evidence it has ever built a coal plant before.

According to the April 18, 2011 issue of Coal & Energy, Southern Company’s director of coal services, Rob Hardman,

“pointed out that a 2,500 megawatt gas-fired plant in Atlanta replaced an aging 500-megawatt coal facility. He said there’s little or no chance that Southern Company will build any new coal-fired plants in the foreseeable future (he used a tombstone graphic to make the point) and said that readily available shale gas is the game changer. Asked if going just about all-in on gas could be shortsighted since prices have been historically low of late he said they likely aren’t going that far up anytime soon. In fact, he said the Southern Company can hedge against a rise in gas prices and can be more certain about its costs further out than ‘coal producers will give a fixed price for coal.'”

Southern Company’s “end of new coal” proclamation is just another nail in the coffin for coal in Georgia. The news follows its realitycheck1March 2011 announcement of plans to retire coal-fired boilers at its Harllee Branch plant and replace coal-fired Plant McDonough with natural gas. Additionally, the company that generates the electricity for most of the electric co-ops in Georgia, Oglethorpe Power Company, bought a gas-fired plant in January for approximately one-sixth of the per-energy-unit price of the proposed Plant Washington.

The EMCs following Cobb EMC’s lead to build Plants Washington and Ben Hill need to dramatically increase their scrutiny of these proposed projects. There are too many missing links and public information lacking to prove that these coal plants are the best deal for the EMC members. Across the industry experienced utilities are turning away from coal but Power4Georgians hasn’t gotten the message – if you want to make a smart investment, coal isn’t it.

Ulla Reeves edited and contributed to this blog post.

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