GAM Reaches Proposed Settlement of IRP Update with Georgia Power and Commission Staff

GAM Counsel Clay Jones gives us an update on this important case.

GAM Reaches Proposed Settlement of IRP Update with Georgia Power and Commission Staff

On Wednesday, March 27, GAM reached a proposed settlement agreement with Georgia Power Company (“Georgia Power” or “Company”) and the Georgia Public Service Commission (“Commission”) Staff (“Staff”) to resolve all issues in the ongoing Update case to Georgia Power’s Integrated Resource Plan (“IRP”). This settlement agreement, called a Stipulation and reached on the eve of the last round of hearings in the case, would satisfactorily address the issues GAM raised in the case, address the unprecedented growing demand for electricity fueled by Georgia’s economic growth, and provide significant protections for ratepayers.

The Commission will decide whether to approve the Stipulation at its April 16 Administrative Session.

Brief Summary of Issues Raised by GAM

While supporting Georgia Power’s forecast of increased load and generally favoring the Company’s approach to address that load, GAM nonetheless raised four main issues in response to the IRP Update filing. The Stipulation would address all four issues:

• GAM opposed any regulatory deferrals for costs related to purchased power agreements (“PPAs”) and other costs. These deferrals would have allowed 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 provides that no deferrals will be allowed, 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.

• GAM supported most of the range of proposed measures by Georgia Power to address the interim need for more capacity, including 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. 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 of assets proposed by Georgia Power. The Stipulation removes this high-cost resource from the proposed set of resources to be approved by the Commission.

• GAM opposed the “additional sum” associated with the two new PPAs on a variety of grounds. An additional sum is sometimes provided with new PPAs to incentive the Company to pursue the most economical resources instead of resorting only to self-built generation. Georgia Power proposed an “additional sum” recovery of $3 per kilowatt-year (“kW-year”) for the five-year terms of the PPAs. The Stipulation provides that no additional sum will be allowed for 2024 and 2025. Georgia Power would be allowed to receive the $3 / kW-year additional sum for 2026-2028, the years in which the PPAs are providing service to Georgia Power customers.

• Georgia Power proposed a series of tariffs to promote distributed energy resource (“DER”) and demand response (“DR”) customer solutions. Georgia Power, GAM and the Staff are in agreement in principle on these tariffs and continue to work to finalize language for the Commission’s consideration.

The Remainder of the Stipulation

Some additional highlights of interest included in the Stipulation:

• 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. If less than expected economic growth materializes and the downward pressure on rates is less, Georgia Power will be responsible for any amount less than the $2.89 per month projection and any shortfall will not be recoverable from other customer classes. This will be reflected in the 2025 Rate Case filing.

• 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.

• The other parts of Georgia Power’s proposed array of assets to address the increased capacity need, including BESS projects proposed to be co-located at Robins and Moody Air Force Bases and three new CT units at Plant Yates, would be approved under the Stipulation. The Stipulation 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 for the three units as those were stated in the IRP Update filing.

GAM firmly supports the Stipulation as a reasonable resolution of the issues raised in the case and will urge the Commission to adopt it at the April 16 Administrative Session.