Final October, Georgia Energy approached regulators with what it stated was a disaster. Except they did one thing quickly, they found, the rising demand for electrical energy would outpace manufacturing someday within the winter of 2025. Georgia’s Governor Brian Kemp and different state leaders had been courting knowledge facilities and new manufacturing crops for a while, and it was all catching as much as the ageing energy grid.
The Georgia Public Service Fee, the elected physique tasked with regulating the utility firm, had authorised Georgia Energy’s long-term grid plan, which the corporate makes each three years, in 2022. Since then, the corporate stated, its projections for the expansion of electrical energy demand by means of 2030 had elevated by an element of 17.
Georgia Energy proposed a mixture of assets to satisfy this rising demand, together with shopping for energy from neighboring utilities, including photo voltaic and battery storage, and constructing three new pure fuel generators that would generate 1,400 megawatts of electrical energy, sufficient to energy greater than half one million houses, per 12 months. Consultants, together with some on the service fee’s personal employees, have questioned these projections and the ability firm’s technique of creating its forecast. They testified that the expansion in power demand would take longer to materialize than the corporate projected, giving the utility extra time to deal with the issue. The plan for gas-powered generators additionally drew sharp criticism from specialists and members of the general public alike, who stated the utility ought to depend on carbon-free options.
The proposals to purchase electrical energy, in the meantime, drew much less consideration and criticism, however they raised suspicions from ratepayer advocates and environmentalists as a result of they bypassed regular process. When Georgia Energy wants to purchase extra power from one other energy firm, it’s required by statute to challenge a request for proposals, or RFP, and select the most effective bid. However confronted with the information center-driven spike in demand, the utility didn’t solicit aggressive bids. As an alternative, it used a provision of Georgia regulation that permits for exceptions for “assets of extraordinary benefit that require fast motion” so long as the PSC approves, which the fee could do retroactively.
And so, in October, earlier than any public hearings over Georgia Energy’s request for extra power passed off, the ability firm orchestrated two offers, often called energy buy agreements, or PPAs, with Santa Rosa Power, in Florida, and with Mississippi Energy — the latter of which is owned by the identical company that owns Georgia Energy, the Southern Firm. The precise pricing of the deal was filed as commerce secret, which means the service fee, its employees, and intervening events like environmental and enterprise teams may see how a lot Georgia Energy is paying Mississippi Energy however members of the general public can not; that is widespread observe for data that might be of financial worth.
It wasn’t till April 2024 that Georgia’s Public Service Fee authorised the utility firm’s new plan, together with each buy agreements. Underneath the deal, the Georgia utility will purchase 750 megawatts of electrical energy by means of 2028 from its Mississippi sibling firm and as much as 230 MW from the Florida plant. In line with the ultimate settlement authorised by the PSC, Georgia Energy will accumulate an extra $3 per kilowatt 12 months on the ability transferred from Mississippi starting in 2026.
Energy buy agreements like those Georgia Energy has entered into are usually not unusual, particularly for the Southern Firm and its associates, Ari Peskoe, director of Harvard College’s Electrical energy Regulation Initiative, informed Grist. The corporate usually chooses, as a enterprise technique, “to construct and rely by itself assets to satisfy demand in its territories,” he stated. “That’s the usual utility enterprise mannequin, however the Southern Firm pursues that mannequin in a extra aggressive manner than some other utility firm in America,” Peskoe added.
However some critics are skeptical of the utility’s argument that this urgency precluded aggressive bidding. “There’s nonetheless time to do RFP processes; the enterprise world can reply on an expedited foundation,” stated Daniel Tait, an Alabama-based researcher on the Power and Coverage Institute, a utility watchdog nonprofit. The settlement between two Southern Firm associates, performed in haste and shrouded from public scrutiny, smacked of self-dealing. And since the costs have been redacted from the general public, “we don’t know whether or not or not that was an excellent deal,” Tait stated.
The deal got here with an added concern: To be able to present electrical energy to Georgia, a Mississippi Energy coal plant that had been slated for closure might want to maintain operating, reversing plans authorised by Mississippi regulators and saddling residents of that state with the associated fee dangers and air pollution of coal to satisfy power wants in Georgia. Georgia Energy officers even cited that impending closure as a motive they entered into the deal final 12 months. Requested by Georgia Energy’s personal attorneys why it was essential to signal an settlement with a sister firm, the utility’s director of useful resource planning Jeffrey Grubb replied, “As a result of these items would have been both retired or offered off-system and we wanted certainty that they’d be there to serve our clients.”
The Victor J. Daniel Electrical Producing Plant, or Plant Daniel for brief, sits in a rural space of Jackson County within the southeastern nook of Mississippi. It has operated two coal items for the reason that Seventies; in 2001, two new fuel mixed cycle generators have been constructed on the identical web site. Collectively, the 4 items comprise the state’s largest single energy station.
Coal is a notoriously polluting type of electrical energy technology, and Plant Daniel is not any exception. In 2022, the ability plant reported greater than six million metric tons of greenhouse fuel emissions to the EPA, greater than some other facility in Mississippi. And a 2019 report discovered that the groundwater close to Plant Daniel contained 5 occasions the secure quantity of lithium, probably on account of contamination from coal ash, a poisonous byproduct of the coal-fired energy course of.
In 2018, the Mississippi Public Service Fee commissioned a evaluate of its energy reserves. Its consultants discovered that Mississippi Energy had extra energy crops than its clients wanted — a “substantial and chronic capability overhang that imposes extra prices on ratepayers.” To deal with this, they instructed retiring the 2 coal items at Plant Daniel. Nothing modified till 2020, when the fee ordered Mississippi Energy to provide you with a plan to take care of its 950 megawatts of extra capability; the next 12 months, the utility introduced it could retire the coal items by 2027.
On the time, environmentalists celebrated the choice. “Retiring Plant Daniel means people dwelling within the space can breathe simpler figuring out that there’s an finish date to burning coal,” David Rogers, deputy director of the Sierra Membership’s Past Coal Marketing campaign stated in a assertion. “However that is additionally a win for all of Mississippi Energy’s clients, who received’t need to pay for the costly electrical energy the coal plant produces.” The deal between Georgia and Mississippi modified that. Whereas Mississippi clients received’t be paying for the plant anymore, they’ll nonetheless need to take care of its continued air and coal ash air pollution — and pay for any additional cleanup that’s required.
In line with a petition that Mississippi’s Sierra Membership chapter filed in June with the Mississippi PSC, the regulatory physique was not formally consulted on the take care of Georgia Energy. In impact, critics of the deal cost, the association permits Georgia Energy to pay for the electrons however successfully offshore the externalities that make coal energy unfeasibly costly to Mississippi.
In January 2024, when Georgia Energy lastly confronted public questioning in regards to the deal, Tim Echols, one in every of Georgia’s public service commissioners, explicitly acknowledged this facet of the deal: “I assume the profit to it being outdoors is the air pollution’s not in Georgia, proper?” he stated. “It’s in Mississippi. It’s elsewhere.”
To Mississippians, that remark was telling. It was cited within the Sierra Membership petition, which requested the fee to weigh in on the buying settlement and require Mississippi Energy to indicate how its plans to “proceed working a number of of its ageing fossil crops and promote the ability to Georgia Energy” would impression Mississippi ratepayers.
“Persevering with to function these items previous the beforehand established retirement dates poses potential financial dangers to the [Mississippi Power] ratepayer, together with probably vital capital investments to adjust to impending environmental laws, upkeep prices, and dangers related to the storage of coal ash residuals at Plant Daniel,” Robert Wiygul, an legal professional for the Sierra Membership, wrote.
Every of Southern’s associates in Georgia, Alabama, and Mississippi has been granted a regional monopoly by statute in a big swath of its respective state. In lieu of the pressures to conduct enterprise pretty and maintain prices low for shoppers that will in different areas come from market competitors, the Southeast’s public service commissions theoretically function the forces to maintain these firms in verify.
In on a regular basis phrases, which means residents can’t select what energy firm to pay their payments to, and electrical energy charges are set by the state’s service fee primarily based on a method by which the ability firm’s shareholders obtain a hard and fast return on their funding within the firm and ratepayers fund the utility’s capital investments, reminiscent of the development of latest energy crops or different infrastructure, so long as it may possibly justify the expenditure to the regulators. In greater phrases, the power of their monopolies, the Southern Firm’s overarching management, and the relative obscurity during which the commissions function all quantity to a scenario during which personal offers which have huge, and typically adverse, public implications are simply made.
Critics contend the area’s commissions must be extra intently scrutinizing utilities’ choices. “The Public Service Commissions and Public Utilities Commissions are supposed to manipulate the monopoly utilities to be sure that they’re making the choices which are in the most effective curiosity of the ratepayers and never essentially in the most effective curiosity of shareholders,” stated Bryan Jacob, the photo voltaic program director for the nonprofit Southern Alliance for Clear Power.
With the Georgia-Mississippi deal, the Southern Firm achieved not solely forestalling the closure of a coal plant by promoting the power to itself, but in addition squeezing just a few extra {dollars} out of Plant Daniel’s last years with the extra income Georgia’s public service fee allowed it to gather.
When affiliate firms like Georgia Energy and Mississippi Energy enter into buying agreements, these offers are topic to an added layer of scrutiny from the Federal Power Regulatory Fee, or FERC.
“The Firm follows FERC protocols associated to affiliate transactions and conducts common worker coaching to make sure workers stay acquainted with these protocols,” stated Georgia Energy spokesman John Kraft in an announcement, including that the Mississippi PPA complied with these protocols and was authorised by the Georgia PSC. “Extra broadly, Georgia Energy routinely selects assets by means of an RFP course of that additionally assures acceptable relationships between associates.”
However this isn’t the primary time Georgia Energy’s offers with its fellow Southern Firm associates have come below hearth: In 2022, Jacob’s group and one other Georgia sustainability nonprofit challenged 5 such agreements, arguing that the utility tailor-made its RFP to favor its sister firms. FERC finally disagreed and allowed the transactions, although one commissioner dissented.
Barring elevated state PSC scrutiny or intervention from FERC, advocates contend there’s one other method to forestall back-room offers that danger favoring associates to the detriment of consumers: opening up the ability market. Utilities in different areas take part in regional transmission organizations and arranged wholesale markets that see utilities and different house owners of large-scale energy technology shopping for and promoting power extra publicly.
“Becoming a member of a regional wholesale market completely supplies a transparency, governance, and platform to mitigate the dangers of affiliate abuse in transactions throughout utilities,” stated Katie Southworth, who leads coverage efforts within the southeast for the Clear Power Patrons Affiliation, a bunch representing firms and governments seeking to purchase carbon-free power to satisfy their very own emissions objectives.
The Southern Firm, in the meantime, has lobbied arduous in opposition to federal transmission reforms that might encourage better interconnection between the nation’s fragmented electrical energy grids — and thereby probably lower into its earnings if cheaper power from one other producer is offered within the area.
The corporate additionally opposes organized wholesale markets. In an announcement to Grist, Southern Firm listed what it considers the advantages of the vertically-integrated, regulated monopolies it operates within the southeast, arguing that they’re extra reasonably priced and dependable for patrons and deal with electrical energy as a necessity slightly than a commodity.
“The very nature of those [deregulated and regional transmission organization] markets — that are targeted on short-term earnings — encourages conduct that focuses on assembly short-term demand, slightly than long-term planning,” the corporate’s assertion learn. “These firms are coordinated by unaccountable bureaucracies that place earnings over individuals and infrequently prioritize sure traits as an alternative of working to attain an optimum steadiness for all clients below any situation.”
The Southeast’s mannequin of electrical energy regulation does have its defenders amongst some local weather advocates who word that, merely put, a monopoly is extra virtually able to financing a capital-intensive clear power buildout than the remainder of the nation’s liberalized power markets. Current scholarship has highlighted financing as one of many principal hurdles to an power transition away from fossil fuels worldwide: whilst subsidies and innovation have made renewable power more and more low-cost, markets haven’t sufficiently rewarded precise investments in constructing it.
Proponents of deregulation and wholesale markets level to Texas, the place a deregulated power market has responded to rising demand and widespread grid failure throughout a winter storm with a solar-and-storage constructing bonanza. And so they disagree with the notion that regulated-monopoly utilities present extra dependable power. One good thing about regional transmission and gross sales, they contend, is that if a storm knocks out the ability grid in a single place, energy might be introduced in from an unaffected space.
“The climate is greater than the grid,” stated Southworth, “When you take a look at the remainder of the nation, [you’ll see] these vast swaths the place areas are sharing reserves and dealing collectively to make sure dependable service.”
What’s even greater than the climate, although, are the adjustments taking place to the worldwide local weather and the burden on the earth that people have created by burning fossil fuels. The Southern Firm has an official goal of reaching net-zero emissions by 2050 — however its regional associates disclaim any duty towards reaching that purpose, leaving open the query of how the corporate as a complete can decarbonize whereas its subsidiaries are constructing new fossil infrastructure and delaying the retirement of present coal crops.