UCS Report: Wind Cheaper than Keeping Alabama Coal Plants Alive

Guest Blog | January 13, 2014 | Coal, Energy Policy, Wind
Newly updated research shows that Alabama is still high on the list of states with coal plants that may be more expensive to maintain than to replace with cleaner sources, as we noted in an earlier blog. The report, an update of the Union of Concerned Scientists’ Ripe for Retirement using 2012 numbers (the most recent available), indicates that 22 coal-fired generators at 7 Alabama plants  — most owned by Alabama Power — are more expensive than new wind generated in the Southeast. While the report acknowledges that plant-specific details affect individual retirement decisions, it’s clear that the economics of Alabama Power’s plants deserve closer scrutiny.

Five of those “ripe for retirement” generators belong to the Tennessee Valley Authority (TVA) at its Colbert plant, and TVA recently announced plans to retire them. One is at the Charles R. Lowman plant, which services Alabama’s rural electric co-ops. The rest belong to Alabama Power: all of the units at Alabama Power’s Gorgas, Barry, Greene County and Gadsden plants (14 units total) are more expensive to operate that an existing natural gas plant or a new wind generation facility that takes advantage of the wind energy Production Tax Credit, according to the findings.

Atlanta resident Bobby Green weighs in at the Georgia IRP hearing.

Alabama Power is the only electric utility overseen by the Alabama Public Service Commission, which hurts consumers by failing to require a side-by-side, long-term comparison of electric generating sources that could expose and rectify any resource decisions that are no longer economical. Usually referred to as an Integrated Resource Plan, or IRP, most states require it to be submitted for review by officials, their staff, and the public every few years. TVA already began its 2015 IRP in the fall of 2013. Georgia Power conducted one earlier in 2013, and it exposed that generators at three of the company’s oldest plants were not economical. They are now being phased out, while Georgia Power increases its investment in cost-effective solar.

Instead of an IRP, Alabama uses an arcane “Rate CNP” formula, and only exhibits the end results of its calculations after the fact, with no opportunity for public critique or input. This exhibition occurs at an annual informal hearing. Click here for a re-cap of December 2013’s event and explanation of the backwards logic of letting Alabama Power determine compliance costs while making a guaranteed profit on its expenditures. This system is perpetuated by a PSC president, Twinkle Cavanaugh, who received about $89,000 from coal interests during her campaign.

Meanwhile, wind companies are increasingly interested in building wind farms in the Southeast as the Midwest transmission system becomes saturated — so that regionally produced wind resources, like those the report uses for comparison with the cost of coal, may soon be available. In fact, two farms are under active development in Alabama. Alabama Power is also importing 404 MW of wind energy from Oklahoma and Kansas, and even at that distance it’s still economical. John Kelley, director of forecasting and resource planning at Alabama Power, told AL.com that “The purchase was made because it is expected to displace more expensive energy for other sources that we have.”

We’re glad Alabama Power is taking some steps in the right direction without outside involvement, but Alabamians can’t afford to let the fox guard the henhouse — we deserve a PSC that proves to us that the most economical decision is being made. As we pointed out when the original research was published, the Union of Concerned Scientists’ Ripe for Retirement update underscores once more that to best serve Alabamian bill payers, Alabama needs a transparent, accountable integrated resource planning system.

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