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Energy Update – May 2024

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Plant Vogtle Unit 4 comes online; Georgia PSC approves IRP Update settlement

GAM remains a consistent advocate on behalf of manufacturers in energy matters before the Georgia Public Service Commission. Two recent developments demonstrate the value of GAM’s representation of industry in this critical area.

On April 29, Georgia Power announced that Vogtle Nuclear Unit 4 was operational and online, bringing to a close the long pathway towards construction and operation of the first new nuclear units in the United States in 30 years.  These units will bring reliable, round-the-clock, carbon-free energy to Georgia citizens for the next 60-80 years.  GAM’s advocacy supported Vogtle but we helped negotiate a settlement, since approved by the Commission, to ensure that the associated capital costs to be recovered from ratepayers would not exceed a specified amount and that Real Time Pricing rates would be appropriately treated.

Earlier in April, the Commission approved another settlement agreement negotiated by GAM, Georgia Power, Commission Staff and others to resolve issues in the Georgia Power’s Integrated Resource Plan (“IRP”) Update case.  Georgia Power’s forecast for future capacity needs has dramatically increased in the last couple of years, due in large part to Georgia’s continued economic growth and an influx of large data centers and manufacturers coming to our state.  The approved settlement ensures that Georgia Power will be able to meet these needs while simultaneously protecting customers from excessive costs and, indeed, hopefully putting downward pressure on customer rates.

For more details on these two cases and GAM’s involvement on your behalf, please see below.

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Plant Vogtle Nuclear Unit 4 Now Operational

Completing a long construction saga, Georgia Power Company announced on Monday, April 29, that Plant Vogtle Nuclear Unit 4 is now operational, meaning that the Vogtle 3/4 Project is completed and there are four fully functioning nuclear units online at Plant Vogtle.  Vogtle Unit 3 began commercial operation on July 31, 2023.  Units 3 and 4 are the first new nuclear units in the United States in 30 years and are expected to be operational for the next 60-80 years. 

Plant Vogtle is now the largest clean energy generator in the country and expected to produce 30 million megawatts (MW) of energy annually.  As a reminder, Georgia Power co-owns the Vogtle facility (45.7%) with Oglethorpe Power (30%), MEAG Power (for municipal providers) (22.7%) and Dalton Utilities (1.6%). 

As expected, customers will see an increase in their base rates related to Vogtle Unit 4, starting with bills received in May.  However, it is important to remember that more online nuclear power will tend to drive down fuel costs and benefit customers, helping to keep the Fuel Cost Recovery (FCR) rate in check, pay down the current FCR under-collection and provide downward pressure on Real Time Pricing (RTP) rates.  

In addition, as we previously reported to you in our December 19, 2023 edition of Transformer, late last year the Georgia Public Service Commission approved a “Stipulation” negotiated by GAM, Georgia Power, the Commission Staff and other parties, resolving all remaining issues related to the capital costs associated with the construction of Plant Vogtle nuclear Units 3 and 4.  The Stipulation provided for a hard cap on the total approved recovery of capital costs at $7.562 billion ($2.1 billion of which is already incorporated into the rate base). This would mean – assuming Georgia Power’s current projection for the final project cost is accurate – Southern Company shareholders will be responsible for $2.625 billion ($10.187B minus $7.562B) of project costs that will not be charged to ratepayers.   The Stipulation also ensured appropriate rate treatment of these costs, specifically that the Vogtle 3 and 4 increase to standard base rates would not be applied to marginal usage on Real Time Pricing (“RTP”) tariffs.   

Now that the start date for Unit 4 has been achieved, GAM will be working to provide individual impact letters to GAM members served by Georgia Power, quantifying the impact of this development and demonstrating the value provided by the Association’s engagement. 


Commission Approves Favorable IRP Update Settlement 

On April 16, the Georgia Public Service Commission approved on 4-0 vote (with Commissioner McDonald abstaining), without modification, the proposed settlement agreement reached by GAM, Georgia Power and the Commission Staff to resolve all issues in the Update to Georgia Power’s Integrated Resource Plan (IRP).  Prior to the Commission approval, a wide variety of additional parties signed onto the settlement, including the Advanced Power Alliance, Clean Energy Buyers Association, Georgia Watch (representing residential customers), MARTA, Southern Renewable Energy Association, and Walmart.  This settlement agreement, or Stipulation, satisfactorily addressed all of the issues GAM raised in the case.   

We have previously reported to you on this IRP Update case, an interim filing between the 2022 and 2025 IRPs that was prompted by significant increases in Georgia Power’s projections for future capacity needs.  These increases are being driven largely by the influx of new large data centers in Georgia, as well as increasing large manufacturing investment.  The Commission’s decision helps address this unprecedented growing demand for electricity fueled by Georgia’s economic growth while simultaneously providing significant protections for ratepayers and, we believe, putting downward pressure on customer rates.  

The Stipulation includes numerous provisions that provide protection and value to ratepayers.  Several of the highlights include: 

  • No regulatory deferrals for costs related to purchased power agreements (“PPAs”) and other costs will be allowed, consistent with GAM’s position in the case.  These deferrals would have permitted Georgia Power to segregate such costs and put them in an account for later recovery after Georgia Power’s 2025 Base Rate Case.  The Stipulation expressly prohibits such deferrals, meaning any such costs must be expensed and borne by the Company in the context of its currently approved Accounting Order and earnings band.  This avoids the possibility of ratepayers being responsible for increased costs including carrying costs associated with regulatory deferrals.
  • No “additional sum” will be allowed for the two new PPAs for the years they will not be in service (2024-2025), in response to GAM’s position in the case.  GAM opposed Georgia Power’s proposed additional sum associated with the two new PPAs on a variety of grounds.  An additional sum is sometimes provided with new PPAs to incentivize the Company to pursue the most economical resources instead of resorting only to self-built generation.  Georgia Power proposed additional sum was $3 per kilowatt-year (“kW-year”) for the five-year terms of the PPAs.  Based on opposition from GAM and from the Commission Staff, Georgia Power agreed to withdraw its additional sum requests for 2024 and 2025, years in which the PPA resources will not be in service.  Under the Stipulation, Georgia Power will receive the $3 / kW-year additional sum for 2026-2028.  
  • The most expensive asset proposed by Georgia Power, a self-build solar facility, will not move forward, consistent with GAM’s position in the case.  GAM supported most of the range of proposed measures by Georgia Power to address the interim need for more capacity, including the two new PPAs, new combustion turbine (“CT”) units at Plant Yates, expanded battery energy storage systems (“BESS”), and customer-centered tariffs to help address the capacity need (more on this below).  GAM did oppose a new BESS co-located with a new solar facility because the cost analysis showed that while the BESS was economical, this particular new solar facility was much more expensive than the rest of the array proposed by Georgia Power.  The Stipulation removes this high-cost resource from the proposed set of resources to be approved by the Commission.
  • A series of tariffs to promote distributed energy resource (“DER”) and demand response (“DR”) customer solutions to increasing capacity needs are approved.  GAM worked with the Company and Staff to make improvements to these tariffs.  We expect the Company to offer these options to large customers and will be working with Georgia Power to ensure our members are aware of them and understand the potential benefits. 
  • Georgia Power will guarantee a minimum amount of downward pressure on rates.  In response to concerns about whether the incremental revenue from new large load customers will place downward pressure on customer rates, Georgia Power guarantees in the Stipulation that such downward pressure will materialize for all customers and that it will equal at least $2.89 per month for the average residential customer (this is the impact on residential customers; the impact on business-class customers will vary significantly).  If less than expected economic growth materializes, Georgia Power will be responsible for any downward pressure less than the $2.89 per month projection and any such shortfall will not be recoverable from other customer classes.  This will be reflected in the 2025 Rate Case filing that will be made on or about July 1, 2025. 
  • Georgia Power will conduct an expedited RFP for 500 MW of BESS.  In response to the concerns of Staff and other interveners that the resources proposed by Georgia Power were not selected through a competitive solicitation process, Georgia Power agrees in the Stipulation to own and operate 500 MW of BESS (as opposed to the original proposed 1,000 MW) and conduct an expedited RFP process for the remaining 500 MW.  Obtaining these resources through a competitive process should produce benefits for customers. 
  • Economical BESS Projects at Air Force bases will be approved.  The Stipulation approves low-cost BESS projects that will be co-located with existing solar facilities at Robins and Moody Air Force Bases.  
  • Three new combustion turbine (CT) units will be approved at Plant Yates and ratepayer responsibility will be capped.   The Stipulation approves Georgia Power’s proposal to construct three new CT units at Plant Yates.  It also provides for a cap on the costs of the CT units at Yates – with certain force majeure or “Act of God” exceptions, Georgia Power agrees not to seek any costs that exceed its proposed construction costs as stated in its IRP Update filing.

GAM firmly believes this Stipulation is a resounding success for our members and an example of the positive value of GAM’s involvement in cases before the Commission.  Georgia Power will file a full IRP in early 2025 that will be even more thorough and complex and GAM will be prepared to intervene and advocate on your behalf.    

Thank you to our members for your support that made this result possible. 

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