August 1, 2008
Georgia Power Files Diverse Energy Plan
ATLANTA, Aug. 1 /PRNewswire/ -- Georgia Power today asked the Georgia Public Service Commission (PSC) for approval of its updated integrated resource plan, including its proposal to build two additional nuclear generating units at the Vogtle Electric Generating Plant.
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In an application filed with the PSC, the company said the nuclear units are expected to save customers between $2 billion and $6.5 billion over their operational life, when compared with similarly sized coal-fueled units over the same period, and $1 billion to $6.5 billion when compared with similarly sized natural gas fueled generators. The PSC is expected to rule on the proposal in March 2009.
Georgia Power also informed the PSC that it is in the final stages of evaluating the conversion of an older coal-fueled power plant, located near Albany, to burn renewable biomass wood. If approved, this plant would be one of the largest wood biomass plants in the U.S. Georgia Power expects to complete this analysis in late August.
"While we will continue to increase our emphasis on energy efficiency and renewable energy sources, we must also add large-scale base load generation to meet Georgia's growing energy needs," said Mike Garrett, Georgia Power president and CEO. "Since 2002, the price of natural gas has increased more than 400 percent. And the cost of coal has more than doubled in the past year. Additional nuclear energy capacity will help reduce our dependence on fossil fuels, at a time when fossil fuel prices are increasing significantly."
The company's filing requests: -- The PSC's approval of an update to the company's "Integrated Resource Plan," an energy plan which outlines how the company will meet customers' demand and energy requirements in an economic and reliable manner. The plan includes: -- The addition of Plant Vogtle units 3 and 4, which would provide 1,102 megawatts each. -- Consideration to convert Plant Mitchell to burn renewable biomass, with details of the potential conversion to follow in a possible filing later this month. -- A solar research project, which could be expanded by 2011. -- Renewable energy, energy efficiency and demand response programs that could meet between 11 to 18 percent of future resource needs over the next 10 years. -- Expansion of the company's Green Energy program through a large volume renewable option and the addition of renewable energy credits. -- The PSC to allow inclusion of Construction Work in Progress (CWIP) for the two new Vogtle units in rate base, a regulatory treatment that would lower capital cost of the nuclear units by approximately 30 percent. -- Georgia Power's portion of the cost of Vogtle units 3 and 4 is expected to be $6.4 billion without CWIP in rate base; however, with CWIP in rate base, Georgia Power's cost of the plant after it goes into service is estimated to be almost $2 billion - or about 30 percent - lower. -- Approval of the company's recommendation to install environmental controls at Plants Branch and Yates. -- Approval of costs to assess new coal generation as an alternative to nuclear. -- Approval of a method to address cost adjustments associated with changes in commodity costs during construction.
Earlier this year, Georgia Power, acting for itself and for Plant Vogtle's co-owners (Oglethorpe Power, Municipal Electric Authority of Georgia [MEAG Power] and Dalton Utilities), entered into an Engineering, Procurement and Construction contract (EPC) with Westinghouse Electric Company LLC and The Shaw Group Inc.'s Power Group, for the development and construction of two AP1000 nuclear units.
Oglethorpe Power, MEAG Power, and Dalton Utilities informed Georgia Power July 2nd that they will maintain their maximum ownership shares in the new units: Oglethorpe Power, 30 percent; MEAG Power, 22.7 percent; and Dalton Utilities, 1.6 percent. Georgia Power's proportionate share is 45.7 percent.
While the final rate impacts of the proposed nuclear units will be determined by the PSC, the company estimates the typical Georgia Power customer, using 1,000 kilowatt-hours a month, would see a base rate increase of approximately $12 per month in 2018, when both units are fully operational. The rate impact is expected to decline over time.
However, if the PSC approves including CWIP for the new units in rate base, total rate increases required to cover the cost of the plant when it goes into service will be nearly 3 percent lower, and the cost of the plant when it goes into service will be approximately $2 billion - or 30 percent - lower. Because including CWIP in rate base would allow for small rate increases over a period of years leading to commercial operation, customers would also avoid large rate increases when the plant goes into service.
Georgia Power submitted its proposal to the Georgia Public Service Commission May 1, 2008 as a self-build option in connection with the company's plan to meet increased electric demand in 2016-2017. The company has worked with the Georgia PSC's Independent Evaluator and the Georgia PSC staff over the past few months to review the proposal. The review by the Georgia PSC staff will continue until a final certification decision is reached in March 2009.
If certified by the Georgia PSC and licensed by the Nuclear Regulatory Commission (NRC), the two Westinghouse AP1000 units, with a capacity of approximately 1,102 megawatts each, would be constructed at the Vogtle Electric Generating Plant site near Waynesboro, Georgia, and would be placed in service in 2016 and 2017, respectively.
Georgia Power is the largest subsidiary of The Southern Company , one of the nation's largest generators of electricity. The company is an investor-owned, tax-paying utility with rates well below the national average. Georgia Power serves 2.3 million customers in all but four of Georgia's 159 counties.
Oglethorpe Power Corporation is a $4.9 billion power supply cooperative serving 38 consumer-owned EMCs in Georgia. These EMCs provide retail electric service to approximately 4.1 million Georgians. Oglethorpe Power is the nation's largest electric cooperative in assets, annual kilowatt-hour sales, and ultimate consumers served.
The Municipal Electric Authority of Georgia (MEAG Power) is a public generation and transmission organization providing power to 49 Georgia communities with annual electric sales of $736 million and 10.8 million megawatt-hours of delivered energy in 2007.
Dalton Utilities has operated as a public utility since 1889 and provides potable water, electrical, natural gas and wastewater treatment services to approximately 65,000 customers in the City of Dalton and portions of Whitfield, Murray, Gordon, Catoosa and Floyd counties. In 2003, Dalton Utilities launched OptiLink and now provides broadband, cable TV, telephone and internet services to residential and business customers.
Southern Nuclear, a subsidiary of Southern Company, operates Plant Vogtle's two existing nuclear power units for the plant owners. Southern Nuclear also operates the Edwin I. Hatch Nuclear Plant near Baxley, Ga. and the Joseph M. Farley Nuclear Plant near Dothan, Ala.
Cautionary Note Regarding Forward-Looking Statements:
Certain information contained in this release is forward-looking information based on current expectations and plans that involve risks and uncertainties. Forward-looking information includes, among other things, statements concerning the timing of various regulatory and other actions and plans for and estimated costs of new generation resources for Georgia Power. Southern Company and Georgia Power caution that there are certain factors that can cause actual results to differ materially from the forward-looking information that has been provided. The reader is cautioned not to put undue reliance on this forward-looking information, which is not a guarantee of future performance and is subject to a number of uncertainties and other factors, many of which are outside the control of Southern Company and Georgia Power; accordingly, there can be no assurance that such suggested results will be realized. The following factors, in addition to those discussed in the Annual Report on Form 10-K for the year ended Dec. 31, 2007 of Southern Company and Georgia Power, and subsequent securities filings, could cause results to differ materially from management expectations as suggested by such forward-looking information: regulatory approvals related to the potential Plant Vogtle expansion, including Georgia Public Service Commission and Nuclear Regulatory Commission approvals; effects of inflation; ability to control costs, including the cost and efficiency of construction labor, equipment and materials; interest rate fluctuations and financial market conditions and the results of financing efforts, including Southern Company's, Georgia Power's, and any of their subsidiaries' credit ratings and their impact on the cost of capital; the impact of recent and future federal and state regulatory change, including legislative and regulatory initiatives regarding deregulation and restructuring of the electric utility industry, implementation of the Energy Policy Act of 2005, environmental laws including regulation of water quality and emissions of sulfur, nitrogen, mercury, carbon, soot or particulate matter and other substances, and also changes in tax and other laws and regulations to which Southern Company, Georgia Power and any of their subsidiaries are subject, as well as changes in application of existing laws and regulations; current and future litigation, regulatory investigations, proceedings or inquiries, including the pending EPA civil actions against certain Southern Company subsidiaries, FERC matters, IRS audits and Mirant-related matters; the effects, extent and timing of the entry of additional competition in the markets in which Southern Company's or Georgia Power's subsidiaries operate; variations in demand for electricity, including those relating to weather, the general economy, population and business growth (and declines), and the effects of energy conservation measures; available sources and costs of fuel; advances in technology; state and federal rate regulations and the impact of pending and future rate cases and negotiations, including rate actions relating to fuel and storm restoration cost recovery; potential business strategies, including acquisitions or dispositions of assets or businesses, which cannot be assured to be completed or beneficial to Southern Company, Georgia Power, or any of their subsidiaries; the ability of counterparties of Southern Company or Georgia Power to make payments as and when due; the ability to obtain new short- and long-term contracts with neighboring utilities; the direct or indirect effect on Southern Company's or Georgia Power's business resulting from terrorist incidents and the threat of terrorist incidents; the ability of Southern Company, Georgia Power, and any of their subsidiaries to obtain additional generating capacity at competitive prices; catastrophic events such as fires, earthquakes, floods, hurricanes, droughts, pandemic health events such as an avian influenza or other similar occurrences; the direct or indirect effects on Southern Company's or Georgia Power's business resulting from incidents similar to the August 2003 power outage in the Northeast; and the effect of accounting pronouncements issued periodically by standard- setting bodies. Southern Company and Georgia Power expressly disclaim any obligation to update any forward-looking information.
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