ATLANTA -- Georgia Power’s monopoly is under attack.
Last session, legislation by Sen. Buddy Carter, R-Pooler, would have ended it in limited situations by allowing companies to lease rooftop space for their solar panels and then sell the electricity to the property owner through so-called power-purchase agreements. Current law only allows power to be sold to utilities, and only utilities can sell to retail customers.
The bill stalled, but not before becoming a cause celeb for environmentalists and the state’s fledgling solar industry. Look for it to be introduced again for next year’s legislative session.
After the General Assembly adjourned, a start-up, solar-electricity company filed its own monopoly-busting proposal with the Public Service Commission that could have a broader, statewide impact. Its aim to compete for retail customers with Georgia Power could have far-ranging repercussions for the state’s economy that go far beyond the solar industry.
Both ideas to clip Georgia Power’s monopoly have won support from all three of the candidates challenging the two commissioners up for re-election this year.
Environmentalists, and folks who see the logic in harnessing free sunshine, support the proposal by Georgia Solar Utilities because they see it as a boon to the solar industry. They have long argued that, on economic terms, increasing sales of solar power and the components that generate it -- specifically photovoltaic panels -- would lead to so-called economies of scale and innovations that would lower the price.
Indeed, the price of solar panels has dropped significantly in recent years, partly due to cheaper production of them in China and demand created by mandates on utilities in other states. Even Georgia Power executives cite the price reduction as a signal that adding solar generation to that company’s fuel mix is now appropriate because it wouldn’t add upward pressure on overall consumer’s electricity rates.
The Libertarian candidates this year also argue that competition would force Georgia Power to become more efficient, despite the fact that observers claim the state has among the lowest electricity rates in the nation. Both incumbents say existing law has mechanisms to keep rates low while also expanding the use of solar.
Indeed, Georgia Power recently sought permission to triple its solar generation to become the largest voluntary, solar-producing utility. It wants to take capacity that had been designated for biomass plants that fell through and buy solar instead from small and medium-sized producers at wholesale prices.
Many observers believe that the giant utility’s latest solar proposal was a defensive move to fend off purchase-power agreements since the Georgia Solar initiative wasn’t public when Georgia Power began its planning. After all, earlier in the month, the Athens Banner-Herald quoted Georgia Power CEO Paul Bowers giving short shrift to all renewable sources.
"Renewable is going to have a sliver (of the company’s fuel mix)," he said. "Is it going to be 2 or 4 percent? That's yet to be determined. Economics will drive that. But you always remember (that renewable energy is) an intermittent resource. It's not one you can depend on 100 percent of the time."
At the very least, his comment added fuel of its own to the debate for advocates who say the company will only accept green energy sources if forced by regulations or competition. Since none of the current commissioners or the candidates running this year favor mandating specific sources, that leaves competition as the most politically viable route.
Breaking the monopoly requires changing the law.
While the utility has traditionally been very adept in dealing with the General Assembly, Georgia Solar has already launched a petition drive, and the Georgia Solar Energy Association already has a lobbying presence at the Capitol.
It would be a huge legislative battle, with the electric-membership cooperatives and four dozen cities that sell electricity joining in, too.
The proposal would be similar to the deregulation of the natural-gas market here, except that Atlanta Gas Light went down that road willingly. The Public Service Commission would regulate the transmission grid, and the retailers would pay to use it.
However, there would no longer be the justification for the commission to regulate Georgia Power and its retail rates if the company is not a monopoly. That could lead to one of two outcomes, high or lower rates.
If the EMCs begin marketing beyond their current territories, they could provide the muscle that the start-up Georgia Solar would not have to push downward pressure on Georgia Power’s rates. After all, a company offering solar power won’t have anything to sell at night or on cloudy days.
But, the loss of monopoly status could also have the opposite effect and send rates higher.
How? It has to do with the reason governments granted monopolies to utilities in the first place, the need for economies of scale and a guaranteed income in order to attract bond investors at affordable interest rates. Without a monopoly, investors will want a higher return in exchange to taking more risk, and Georgia Power could very well have to raise its rates in order to expand or upgrade, including retiring aging coal plants.
The irony is that making the company compete with solar providers could have the opposite effect of what proponents desire. Rates could go up, and the environment could get dirtier.
Georgia was one of the first states to deregulate its natural-gas market, with mixed results. Considering the deregulation of its electricity market will keep economists on both sides of the issue as busy as the lobbyists.
The state of Georgia currently has about 61 MW of solar power. Over the next three years, its solar power capacity could be expanded to 210 MW.
Georgia Power filed with the Public Utilities Commission for approval of what might be the largest solar project in the state. However, it was said to not be enough by the Solar Energy Industries Association (SEIA).
For example, Georgia Solar Utilities proposed to generate 2,000 MW. It was noted that even with weaker sunshine, Germany has expanded its solar capacity very much. Sunlight in Georgia is stronger, so it should have greater energy potential on that score. Critics of the energy industry in Georgia have said Georgia Power wields too much influence in the state legislation and has worked to block the flowering of renewable energy. (Georgia apparently is one of the states without a state requirement for developing clean energy.) If Germany’s huge solar expansion with relatively low levels of solar irradiation is unconvincing, consider that New Jersey is a solar leader in the United States (#2 for installed solar power capacity) but is far north of Georgia. Add Ohio, New York, and Massachusetts to the list of northern states that are working to expand their solar capacities.
Georgia’s solar potential has been rated as one of the top ten best states, but its current capacity is nowhere near that. (Florida is in a similar situation, with an abundance of sunshine, and apparently without much political will to take advantage of it.) In addition to the public health benefits associated with using less coal, constructing renewable energy results in new jobs and training opportunities. Regardless of some of these fundamental aspects of the situation, an insider has predicted that Georgia Power’s 210 MW solar proposal would be approved.
Southern startup Georgia Solar Utilities (GaSU) is hoping it can lower electricity rates for area residents by rebating profits to customers—in fact, it promises to do so if given a chance to compete with Georgia Power Company as a new Georgia utility. The only problem? It won’t be easy.
“There are obstacles. There’s no question there are obstacles, but you have to look at the rewards,” GaSU President Robert E. Green said at a Capitol news conference. “We don’t know what it’s going to take, but we are prepared to go through legislative action if necessary.”
Indeed, obstacles are to be expected with this proposal, which is seen as fairly radical. To begin, GaSU needs approval from the Georgia Public Service Commission to build an 80-megawatt solar farm near Milledgeville, which it wants to use to start developing two gigawatts of solar power. And getting that approval involves getting past current legislation like a 40-year-law that divides the state up into sections and gives regional monopolies. The proposal is so unique, in fact, that both Georgia Power and Georgia Solar Energy Association representatives are staying silent on the subject and have declined to comment.
On the plus side for solar energy, however, all five members of the Public Service Commission want more renewable energy—a good sign for what’s ahead. But whether or not that will mean approval for GaSU is yet to be determined. Public Service Commissioner Bubba MacDonald did say that he felt the plan warrants a serious review.
Without approval, the startup could still build its solar farm, and Georgia Power would buy its electricity—but the company would only have to pay GaSUI the cheapest wholesale rate.
By Vince Font
In a state that has been teeming with solar resources since the beginning of time, it's ironic that a fight to seize upon that great, untapped resource is only now taking place. In a recent study performed by the University of Arizona, Georgia ranked in the top three U.S. states most capable of harnessing that abundance of solar to not only create clean energy, but to also create new jobs and dramatically increase state and local revenue. Yet to date, that potential remains far from full realization. But if a certain Atlanta-based startup gets its way, it may only be a matter of time before the first giant leap is taken.
Georgia Solar Utilities Inc (GaSU), aims to become another utility in the state and sell power to customers through Georgia Power. GaSU recently put a proposal before the Georgia Public Service Commission to take advantage of the Peach State’s massive solar potential, bringing the possibility of new jobs and a richly desired diversification of the state’s energy portfolio. The proposal, which was submitted on September 20, lays out GaSU’s plans to develop an 80-MW solar PV farm and sell power directly to consumers. If approved, the project may eventually expand to 2 GW of solar PV capacity by the year 2016.
Standing in the way of GaSU’s efforts is a 30-year-old law that essentially gives Georgia Power a fully legal monopoly on providing utility services throughout the state. In order for GaSU’s bid to be successful, an amendment to the Georgia Territorial Service Act of 1973 would be required.
According to experts, GaSU could go forward and build the 80-MW farm without intervention of the public service commission and existing law would even compel Georgia Power to purchase the resulting energy but only at the cost of its lowest wholesale electricity rate. Instead, the start-up would like to sell power directly to customers who would be billed by Georgia Power, very similar to the way natural gas is sold in Georgia. GaSU would pay Georgia Power for the use of its transmission infrastructure and then share profits with its customers in the form of rebates, resulting in lower utility rates over time.
Meanwhile, in a move that might be construed as an attempt to secure its position as the state’s premier supplier of solar energy, Georgia Power has proposed the creation of the Georgia Power Advanced Solar Initiative (GPASI). Under the initiative, which was proposed to the Public Service Commission on September 26, Georgia Power will pledge to acquire 210 MW of solar power capacity between now and 2015. Currently, Georgia Power has a modest solar portfolio totaling 61.5 MW. The plan would have the newly-formed GPASI adding 60 MW per year through large-scale competitive bids, with the remaining 10 MW being added through distributed solar programs available on the residential and small business level.
Rhone Resch, president and CEO of the Solar Energy Industries Association (SEIA), said Georgia Power’s idea is a good start, but also indicated that it is not enough to truly take advantage of Georgia’s vast solar resources. “Georgia Power’s initiative demonstrates that solar is a trusted and reliable energy source and has an important role in achieving fuel source diversity,” Resch said in a statement. “However, more needs to be done for Georgia to become a true leader in solar and to build a sustainable solar market in the state.”
Resch may be referencing the fact that solar leasing companies are also currently unable to operate in the state of Georgia under the same Georgia Territorial Service Act of 1973. Last February state Senator Buddy Carter proposed and then withdrew an amendment (SB 401) that would allow small businesses and homeowners to lease solar systems from third parties under PPAs. Experts say that he withdrew the bill after learning that Georgia Power had influenced some of his “yes” and “maybe” votes to "no."
The prevailing opinion that’s led some to conclude that Georgia Power may not be interested in statewide efforts to expand the use of solar energy is bolstered by a report released byGreen America in 2011 titled “Leadership We Can Live Without: The Real Corporate Social Responsibility Report for Southern Company.” The report gave Georgia Power’s parent,Southern Company, an “F” for its heavy reliance on coal and nuclear power, as well as for the company’s overall output of air and water pollution.
Speaking to the two initiatives now before the Georgia Public Service Commission, Resch added, “Important policy decisions lie ahead. It’s vital that the Georgia Public Service Commission allow both centralized and distributed solar generation to fulfill a larger role in the state’s energy mix.” Resch called the Georgia Power proposal “limited” and said “distributed solar must be allowed to grow at a rate higher than 10 MW per year in order to create a truly sustainable market and jobs across the state.”
“In addition, the state needs competitive rules and standards for connecting to the grid as well as policies to allow for other solar providers to participate in the market,” he said.
According to GaSU, the Georgia Public Service Commission is evaluating the GaSU plan and the Georgia Power plan right now and an answer from staffers is expected within the next two weeks. While Georgia Power has so far been able to block proposed changes to legislation, it’s not inconceivable that concessions may be made in an effort to boost Georgia’s sagging jobs market. Recent estimates by the Georgia Department of Labor place the state’s unemployment rate at 9.2 percent, more than a full percentage point ahead of the national jobless average of 8.1 percent.
By Walter C. Jones
ATLANTA -- In a matter of days, political candidates and private companies have started jockeying to see which is the most supportive of solar energy.
Thursday, Democratic challenger Steve Oppenheimer attacked Republican Public Service Commissioner Chuck Eaton, his opponent, for being a Johnny-come-lately because Eaton is backing a proposal Georgia Power Co. filed the day before. The giant utility is seeking commission approval to issue limited-size contracts for solar power instead of the biomass it was already authorized to use because the biomass producer backed out.
Eaton trumpeted Georgia Power’s plan, saying he had helped shape it so that customer rates would not increase.
“The Georgia Public Service Commission has been unduly criticized by special interests and others with radical ‘solar first’ political agendas for not developing solar capacity on a timeline that satisfies their liberal ideological desires,” he said. “Until now, the cost of solar power was not competitive without taxpayer or ratepayer subsidies to politically connected solar firms like Solyndra.”
Solyndra was a company that made solar panels and came under national attention when it went bankrupt after getting large loans from the Obama administration.
The challenger accused Eaton of a “battlefield conversion” to solar six weeks before their election when it had become economically viable long before, according to Oppenheimer. Where was the commissioner’s concern for customers when he voted 10 times to raise their utility rates, he asked.
“What is best for Georgia, a politician who only supports something when the polls say he should, or a representative who works for Georgia families full time?” Oppenheimer asked.
At the same time, a start-up corporation that wants to compete with Georgia Power Co. issued its own criticisms Thursday.
Shane Owl-Greason, co-founder of Georgia Solar Utilities Inc., said his company’s approach is better for customers.
“GaSU’s plan puts ratepayers first, builds a solid path for rate reductions and does not compromise the profits of the incumbent utilities,” he said.
GaSU plans to share its profits with customers after paying Georgia Power to use its wires.
Meanwhile, Georgia Power executives said GaSU should shrink its sights to one-tenth of what the start-up plans and instead of competing, it should simply supply the existing utility which would remain a monopoly. After all, said Georgia Power’s Greg Roberts, vice president of pricing and planning, a bigger solar installation like GaSU plans won’t operate any cheaper than a small one.
“There’s not much more economies of scale to it above 20 megawatts,” Roberts said.