Alabama Power customers to pay $ 740 million after coal plant closed

The William Crawford Gorgas Electric Generating Plant is nearing the end of the day, but it will be worth $ 740 million in costs related to the Walker County coal power plant Securities and Exchange Commission.

Alabama Power's parent group, The Southern Company, disclosed in its latest publication 10-K filing of $ 740 million net investment costs [from Plant Gorgas] will continue to be profitable, and will continue to be profitable. "That will allow Alabama Power to recover the costs of investments in the coal-fired power plant, plus a profit margin set by the Alabama Public Service Commission, from customers through their electric bills.

If divided evenly among Alabama Power's estimated 1.48 million residential, business and industrial customers, that debt works out to about $ 500 for each customer.

Among those costs, Alabama Power spent more than $ 400 million at the plant since 2010 on environmental upgrades, in efforts to keep the plant – which has been in operation since 1917 – in compliance with tightening federal environmental laws, including the US Environmental Protection Agency's MATS (mercury and air toxics standards), which is a combination of coal-fired power plants.

Critics like the Southern Alliance for Clean Energy – an environmental group that pointed out the $ 740 million – said the power company.

"$ 300 million to keep the plant going," said John Wilson, research director for the SACE. "And now Alabama Power customers will be paying for this, for these years of continuing investments in that plant.

"And that really could have been avoided $ 700 million could have been avoided, but certainly somewhere between $ 300 and $ 400 million could have been avoided if they had taken this action earlier. . "

Some of those upgrades included a $ 375 million "baghouse" at the plant, a massive system of air filters meant to be removed from the plant's air emissions, which was scheduled for completion by the end of 2015. According to Alabama Power in 2015, that baghouse contained more than 20,000 filter bags, each 26 feet long, 11 stories tall. That baghouse will have been operational for the last three years.

AL.com presented with a list of questions about environmental upgrades to the plant and the cost and timing of those upgrades, whether the utility has been considered. AL.com also asked for more details about the $ 300 million in additional upgrades the company said would be needed to make Gorgas Plant compliant with the latest federal environmental mandates even after the baghouse was finished.

Alabama Power spokesman Michael Sznajderman issued the following statement in response:

"Utilities have long planning horizons for the assets they invest in. We consider all viable alternatives before making this decision.

"The company regularly examines its generation fleet to determine how to meet the future needs of customers. With the retirement of Gorgas, the remaining net worth is recoverable in this case. "

The company blamed costs associated with environmental mandates when announcing the plant would close. The company does not anticipate any plans to add to the plant, nor does it anticipate any layoffs among the employees at the plant.

Publicly available documents did not specify what costs made up the $ 740 million.

Wilson, who has a masters degree in public policy from Harvard's John F. Kennedy School of Government and leads SACE's work on utility rate issues, said it's not unusual for those costs to be spread over 20 years or more.

SACE executive director Stephen Smith said the Alabama Public Service Commission, should have given more scrutiny to the upgrades were a wise investment.

"This is another wakeup call on the Alabama to provide checks and balances on Alabama Power," Smith said. "If the Alabama PSC and Alabama Power had been more front-end on the market dynamics pulling back from coal we would have discounted these rates and impacts to ratepayers."