PSC to Resume Hearings on Georgia Power Request for More Generating Capacity

Staff Report From Georgia CEO

Tuesday, February 27th, 2024

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Georgia Power executives gave state energy regulators chapter and verse last month on why the company needs a huge increase in electrical generating capacity to serve its 2.7 million customers.

Soon, environmental and consumer advocates will get their turn.

The Georgia Public Service Commission (PSC) will hold a second round of hearings Feb. 29 and March 1 on Georgia Power’s request for 6,600 megawatts of additional capacity, up from just 400 megawatts the company forecast it needed two years ago.

Georgia Power executives attribute the anticipated huge increase in demand for electricity to unprecedented economic growth in the Peach State. That growth has generated more than 38,000 jobs and $24 billion in capital investment since the PSC approved the utility’s most recent Integrated Resource Plan (IRP) in 2022, Jeff Grubb, the company’s director of resource policy and planning, wrote in testimony filed with the PSC ahead of last month’s first round of hearings.

IRPs, normally submitted to the commission every three years, lay out the mix of energy sources Georgia Power intends to rely on for power generation during the next two decades.

“Nothing in the company or state’s history could have anticipated growth of this magnitude,” Grubb wrote. “Importantly, similar growth is also being experienced by other utilities nationally as they face similar trends in increased electricity demand.”

Francisco Valle, Georgia Power’s director of forecasting analytics, said the explosion of electric vehicle manufacturing, EV battery production and emerging clean-energy technologies in Georgia are driving much of the demand for power. But the biggest factor – accounting for about 80% of the demand – is the growing number of energy-intensive data centers popping up across the state.

“You can’t just locate a data center anywhere in the country,” Valle said. “You have to have the infrastructure to be able to provide the service for them. Georgia checks the boxes in many levels for these customers.”

Some of the additional electricity Georgia Power is seeking permission to generate would come from stepping up investment in renewable energy projects, including battery storage and distributed generation such as rooftop solar.

But much of the new power would be generated by natural gas, including the construction of three new gas combustion turbines at Plant Yates near Newnan, a power purchasing agreement (PPA) with Mississippi Power – a sister company of Georgia Power – and a second PPA with Florida-based Santa Rosa Energy Center LLC. Such “dispatchable” sources of power can be turned on and off by the utility depending on real-time need.

“Until there’s new technologies that we aren’t aware of yet, you’re going to need dispatchable resources for cold winter mornings,” Grubb testified last month. “There’s always going to need to be some resources that can hit those really peak times.”

Representatives of environmental groups that have filed as intervenors in the case are questioning whether Georgia Power needs such a huge increase in generating capacity.

Kim Scott of Georgia WAND said earlier forecasts of the company’s capacity needs have failed to materialize.

“Georgia’s grid is vastly overbuilt with reserves of 40%, or nearly three times the annual amount recommended by the National Electric Reliability Corp. for the Southeast, which is 15%,” she said. “Does it make sense to add more capacity … when the grid was already overbuilt?”

Valle disagreed with Scott’s characterization of Georgia Power’s forecasting prowess.

“Our forecast is very accurate,” he said. “When you compare the performance of the forecast year after year … the average deviation that we have had for the last 10 years is less than 1%. … So, it’s very much on target.”

Tim Echols, the commission’s vice chairman, expressed similar skepticism as Scott about the company’s forecast, noting that Georgia Power already has raised customer rates several times in the last couple of years.

“My greatest concern is that your estimates are wrong,” Echols told the Georgia Power executives who testified at last month’s hearing. “We secure all this power and your revenue falls short and we have to go to ratepayers and claim that. … We just can’t do that.”

“What if you’re wrong, and you put upward pressure on rates by building for demand that doesn’t come?” Commissioner Tricia Pridemore added.

But Grubb in his pre-filed testimony wrote that Georgia Power likely won’t have to raise rates because the increased electrical generating capacity will produce enough revenue to offset the cost of the additional resources.

The PSC is scheduled vote on the proposal April 16.