Covington residents can expect to pay around 7 percent more for electricity, because the City of Covington will have to pay its provider, the Municipal Electric Authority of Georgia, a similar increase. The cost for customers will not come in the form of a rate increase, but will instead be passed on through the power cost adjustment, or PCA, which is designed to pass increased market costs on to customers.
The increase is being caused because six power plant units will be shut down for extended periods of time in 2011. This will increase costs for all MEAG customers, namely cities, and Georgia Power, because those companies will have to continue to pay for their investment in the plant, will have to pay for the maintenance and will have to buy additional power from the market, said Scott Jones, vice president of corporate affairs for MEAG.
Jones called the situation a perfect storm, because in addition to regularly scheduled nuclear plant shutdowns for maintenance and to replace fuel supplies, two major coal plants will have extended shutdowns to add pollution-controlling enhancements required by new regulations.
The full impact of the unit shutdowns won't be known until electricity providers see how the weather affects demand and what market prices are, Jones said. However, if current low electricity prices remain, the outages may not be as problematic.
While coal power remains the dominant source of energy, Jones said the regulatory industry is continuing to require lower pollution standards, which will continue to make coal plants more expensive to operate.
If particularly restrictive regulations are enacted in the future, coal could become uncompetitive, but Jones said regulation is difficult to predict. While MEAG gets about 50 percent of its power from coal, Georgia Power gets around 70 percent of its power from coal. Natural gas production would likely increase to cover any decline in coal production.
While power costs are expected to continue to increase past 2011, Jones said MEAG will also be paying off a good amount of debt service it accrued while investing in baseload power plants.
Prices won't go down, but MEAG will remain competitive, Jones said, helped by the fact the entity is a non-profit group that already operates lean.
The shutdowns will occur at the coal-fired plants Scherer, two units, and Wansley, one, and at the nuclear plants Hatch, one unit, and Vogtle, two units.