|March 16, 2021|
Maggie Shober, Southern Alliance for Clean Energy, firstname.lastname@example.org, 865-235-1448
Daniel Tait, Energy Alabama, email@example.com, 256-812-1431
Jonathan Levenshus, Sierra Club, jonathan.levenshus@sierraclub.
Knoxville, Tenn. — Clean energy groups, in public comments submitted on March 13, are calling on the Tennessee Valley Authority (TVA) to halt its plans for a massive build-out of gas-fired power plants that are inconsistent with President Biden’s call for net zero emissions in the power sector by 2035. The Southern Environmental Law Center on behalf of Sierra Club, Southern Alliance for Clean Energy, and Energy Alabama argue that new gas is costly, adds significant risk to customers and that TVA failed to analyze any alternatives such as energy efficiency or renewable energy should it need new capacity.
In February, TVA released an Environmental Assessment containing plans to build 1.5 gigawatts of new peaking gas-fired power plants, three new combustion turbines in Alabama totaling 750 megawatts, and three in Kentucky totaling 750 megawatts. President Biden signed a series of executive orders in late January, days before TVA announced its gas additions, to help achieve a “carbon pollution-free power sector by 2035” and the President called on the federal government to leverage its footprint and buying power to “lead by example.”
“The environmental, public health and economic impacts of gas aren’t going away, and there’s little chance of our nation affordably meeting President Biden’s achievable carbon reduction goals if we increase our reliance on fossil fuels,” said Jonathan Levenshus from the Sierra Club’s Beyond Coal Campaign. “TVA should be winding down its use of gas to power our homes and businesses, not ramping it up.”
“The decision by TVA to replace one fossil fuel with another locks the utility into gas for decades,” said Keith Johnston, Director of the Southern Environmental Law Center’s Birmingham office. “TVA did not properly consider other energy resources, such as energy efficiency, renewables and demand response programs, that could alleviate this need for more fossil fuels.”
TVA’s high wholesale power cost, driven largely by expensive coal plants, debt, and historic underinvestment in energy efficiency, has some local utilities considering a departure from TVA and potentially procuring power elsewhere. TVA’s lack of energy efficiency drives bills up for all customers.
“The TVA territory is home to some of the highest energy burdens – measured by the proportion of income spent on energy – in the country,” said Daniel Tait, Chief Operating Officer of Energy Alabama. “TVA’s failure to even consider energy efficiency, renewable resources, or demand response will exacerbate the problem rather than solve it.”
“At a time when TVA’s future customer base and business model are in question, we cannot afford to increase the risk for even more stranded assets,” said Maggie Shober, Director of Utility Reform for the Southern Alliance for Clean Energy. “TVA must get serious about modernizing its infrastructure rather than doubling down on the infrastructure of the last century.”
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This article by our Chief Operating Officer, Daniel Tait, was originally published in Business Alabama.
What happened in Texas in February was a tragedy, with millions left without power amid freezing temperatures for days. A recent opinion piece by Mr. George Clark of Manufacture Alabama discussed what a similar situation could mean for Alabama. While it’s true that better energy planning is needed, Mr. Clark missed the mark on the right solution for Alabama and left out key tools (cleaner and cheaper tools) to address Alabama’s energy needs.
As Mr. Clark noted, almost all energy sources had troubles in Texas, although not all suffered equally. Some government officials and other vested interests (mainly fossil fuel advocates) immediately jumped to conclusions, blaming the power outages on renewable energy sources, namely frozen wind turbines. It has since come to light that the main cause was actually frozen gas pipelines and instruments. Gas and other fossil fuels like coal were especially hit hard with supply issues. Upwards of 40% of the Texas’s gas, coal, and nuclear fleet went offline at times. At its peak, about 30 gigawatts of mostly gas generation in Texas failed because of the cold temperatures. Wind power also had some outages, but not nearly on the same scale. In fact, ERCOT, Texas’ grid operator, reported that wind power was “the least significant factor” in the blackout. Furthermore, wind turbines can and do operate reliably in sub-zero temperatures if they are properly winterized, and wind turbines operate fine in much colder places, such as the northern Plains.
Texas relies heavily on gas for its energy supply, just like Alabama. Unfortunately, the recent disaster highlights the inherent risks associated with gas plants, gas supply, and an overreliance on gas. Many of the gas plants that went offline in Texas could not receive the gas they were promised, even if they had firm delivery gas contracts. And, as this goes to press, Alabama Power is currently proposing a massive expansion of their electric generation capacity with mostly gas. But gas, as we are seeing in Texas, is not the panacea many utilities claim it to be.
So, what can Alabama do to help protect us from a similar catastrophe? While we won’t know the full story until Texas authorities investigate further, Alabama can and should take immediate steps to prepare. While electricity outages are always a possibility, we can reduce the likelihood of occurrences and impacts by investing in more energy efficiency, having more robust demand response programs and reducing barriers to renewable energy in our state. Alabama is woefully behind in deploying these lower cost resources that do not require the massive expenditures (and accompanying rate hikes) that a new gas plant requires.
As the least cost energy resource for customers, ramping up energy efficiency would lower bills for customers across the board. Energy efficiency is especially important to reduce peak stress on the grid in Southern states where much of our home heating comes from electricity–more efficient homes and businesses hold on to heating and cooling for longer periods and save energy and money year-round. But energy efficiency is also a public safety issue. If power goes out for a prolonged amount of time as it did in Texas, Alabama needs buildings that can keep people warm and safe. Unfortunately, Alabama Power ranks last in the nation in energy efficiency offerings among utilities. Utilities often oppose stringent energy efficiency standards and building codes in an attempt to sell more electricity and build more centralized power plants. While that may be good for utility profits, it’s not good for Alabamians or our businesses.
Furthermore, stronger and more robust demand response programs – which reduce or shift your energy usage – can help utilities manage load to keep the grid running when power plants go down and demand for electricity is still rising. Demand response programs can compensate residents for things like dialing back the temperature on their thermostat or shutting down a water heater during an emergency.
Finally, Alabama utilities and regulators have gone out of their way to block renewable energy sources in this state. Look no further than the Alabama PSC’s recent decision, and Alabama Power’s increase in a “standby charge”, to keep taxing the sun for small scale solar producers in the state. Or the Alabama PSC’s recent decision to not allow 400 MW of solar plus battery storage. Smaller scale solar and energy storage projects can help us mitigate energy usage in record-breaking storms. These local sources of reliable and cost-effective energy are almost nowhere to be found in Alabama, even when compared to our Southeastern neighbors, and it’s critical to bring these sources online and scale them as quickly as possible. Neighboring states like Georgia are doing it, and they are creating jobs and stimulating the economy in the meantime. Utilities often oppose renewable energy resources, despite the myriad benefits for customers, because of the threat to their business model.
Preventing a disaster like Texas from happening in Alabama will require better planning and investing in lower cost resources such as energy efficiency, demand response, and renewable energy resources. Alabama should take heed of the tough lessons Texas learned: more gas plants are not a failsafe solution and banking on last century’s technology for a historic weather event can result in unprecedented failure.
Today, Energy Alabama sent a letter to the Alabama Public Service Commission (PSC) asking it to commit fully to transparency and fairness by allowing regular Alabamians to review and submit questions about an overdue report examining Alabama Power’s Rate Stabilization and Equalization (RSE), a key factor in how the utility’s excessive profits are determined.
Alabama Power’s RSE utilizes a formula that over-rewards the company at the expense of its customers. Hard-working Alabama Power customers deserve to know why they pay some of the highest electric bills in the country. The Alabama PSC owes an explanation to the people of Alabama and should find a way to virtually open this meeting to the general public.
There are major questions about the workings and results of the RSE formula which should be answered by a report required by a 2013 PSC order authorizing the rate. Publicly available data shows that Alabama customers are overburdened by the PSC’s formula, which hides the usual measure of return on equity (ROE) used by other utility regulators.
However, the “hidden” ROE can still be calculated from other sources. Such a comparison from 2014 through 2018 shows that Alabama Power customers paid more than $1 billion in excess profits than they would have if the PSC had instead awarded Alabama Power the national average ROE.
COVID-19, and the economic hardships it created, have further exacerbated the excess profit Alabama Power has pocketed. Instead, the PSC continues to over-reward Alabama Power at the expense of its customers.
Allowing a monopoly utility to retain profits that are far above those necessary to provide mandated services is not equitable nor economical for customers. The long overdue RSE report should provide the important information necessary for all stakeholders to discuss the unique formula and the profits it supports.
“If this Commission cares about creating jobs, it should put Alabama Power’s excessive profits back into the hands of regular folks and small businesses,” said Daniel Tait, Energy Alabama’s Chief Operating Officer. “The time for monopoly handouts is over.”
By any objective standard, the case is clear. The Alabama PSC must support transparency and #ReleaseTheRSE.
Gasp and Energy Alabama have formally asked the Alabama Public Service Commission to reconsider its June decision to approve the single largest capacity increase ever proposed by Alabama Power, including including almost 1,900 MW of gas generation. We requested a rehearing to consider updated testimony in light of economic forecasts showing lessened electric demand due to the coronavirus pandemic (COVID-19).
Last year, Alabama Power filed a “Petition for a Certificate of Convenience and Necessity” with the Alabama Public Service Commission. That proposal initially sought to add nearly 2.4 gigawatts of new generating capacity — which would cost customers over $1.1 billion. Energy Alabama and Gasp, represented by the Southern Environmental Law Center, intervened in the docket to question Alabama Power’s lack of evidentiary support to build and buy such a significant amount of new gas resources.
In March, just before COVID-19 brought the world as we know it to a halt, the Alabama Public Service Commission held a series of hearings on the petition. Witnesses for Gasp and Energy Alabama exposed exposed significant flaws in Alabama Power’s planning and justification processes. After those hearings concluded, we made several key points in our proposed order filed with the Commission:
- Alabama Power failed to produce the evidence necessary to support its request to increase electric generation capacity by almost 20%. The utility had previously asserted it wouldn’t need new generation sources until 2035.
- Without a showing of need, Alabama Power’s request amounts to an effort to build rate base and enrich shareholders at the expense of its customers, who will pay for expensive, unnecessary generation for decades.
- Alabama Power’s own analysis showed that the proposed solar plus battery storage projects were the cheapest options for customers.
The pandemic and subsequent economic downtown have cast even more doubt on Alabama Power’s supposed need for new capacity. In early June, we filed additional information regarding anticipated economic effects of COVID-19, arguing that the economic downturn precipitated by the pandemic called into question the magnitude and timing of Alabama Power’s claims about needing additional power sources. Alabama Power relied on outdated projections from more than two years ago, well before the economic devastation wrought by COVID-19. We argue those projections can no longer serve as the basis for a making a $1.1+ billion investment with customer dollars.
Despite all of that, the PSC in June unanimously voted to approve everything in Alabama Power’s proposal, including almost 1,900 MW of gas generation, except Alabama Power’s proposed solar plus battery storage projects. The PSC said they were not well-suited to meet Alabama Power’s reliability needs, despite the overwhelming evidence that supported their approval. However, the Commission refused to ask for supplemental information from Alabama Power as to whether its petition was still warranted.
Alabama customers already pay some of the highest electric bills nationwide. (A recent report found that people in Birmingham have the highest energy burden in the nation.) COVID-19 has only worsened the plight of customers struggling to pay monthly bills. If they want to move forward with these monumental investments, Alabama Power should not be allowed to put the entire financial burden on customers. Utility shareholders should bear the risk that the projects may become stranded assets before the end of their useful lives.
We also hope the Commission will reconsider its denial of the solar-plus-storage projects, which were the most economic options according to Alabama Power’s own analysis. That was just the latest in a long line of anti-solar decisions from the Commission. In September, the Alabama Public Service Commission dismissed our challenge against Alabama Power’s discriminatory solar charge, instead approving an increase in the charge.
By denying Alabama Power’s proposed solar-plus-battery storage projects in this docket and then approving an increase to Alabama Power’s unjust solar fee on rooftop solar customers in another, the PSC continues to deny Alabamians the benefits of clean, renewable energy like solar. Alabama has less solar capacity than other states in the sunny South, and far fewer jobs as a result of the PSC’s decisions.
2020 has been a bad year, especially if you’re an Alabama Power customer.
The Alabama Public Service Commission (PSC), never content with how many favors it can give Alabama Power, added insult to injury today when it upheld Alabama Power’s sun tax. As many of you know, Alabama Power taxes small scale solar at one of the highest rates in the country; $5/kilowatt/month, or about 50% of the money you could expect to earn from your system. It is currently unclear if the Commission’s vote today actually INCREASED the sun tax.
In other words, the supposed supporters of small government at the PSC chose to institute an approximate 50% tax on solar for homes and small businesses in order to protect the monopoly of one the largest and most profitable companies in the state.
How the PSC Fails Alabamians
This is not the first questionable decision the PSC has made this year. Here are a few lowlights:
- The Commission failed to take any action to protect customers from disconnections or late fees amid COVID-19. Advocates like Energy Alabama had to force Alabama Power to protect consumers, but the PSC claimed its closed doors talks with utility executives were good enough and no action was needed.
- By the way, Alabama Power is restarting disconnections soon, despite its parent company earning almost $5 billion in net income last year alone.
- The Commission ruled in favor of Alabama Power, allowing it build expensive and unneeded gas, and punted on solar and energy storage projects despite them being the most cost effective.
- The Commission allowed Alabama Power to overcharge customers for fuel by more than $100 million until a group of advocates, including Energy Alabama, called them out on it. Under fire, the Commission finally did the right thing and refunded customers most of the money.
- The Commission, in an attempt to legislate from the bench, is actively blocking the recording of hearings and the use of electronic devices.
- And then today, the Commission backed Alabama Power’s tax on the sun. Alabamians of all political stripes want more low-cost renewable energy but the PSC has decided it knows better than the people.
Again, this is just 2020.
The Cost of Being a Puppet
The Alabama PSC has proven itself to be not much more than a puppet for Alabama Power. For instance, the solar tax complaint was first filed back in April 2018, yet it took the PSC more than two years to decide the case. However, Alabama Power was able to file for one of its largest expansions in history and get it approved, all before the solar tax case was decided. If Alabama Power wants it done, it gets done. If the people want it done, nothing happens.
There are real world consequences to all of this deference to Alabama Power. First off, real economic harm is being done to the people of Alabama and many of our small businesses. Our utility bills are some of the highest in the nation, the proportion of income Alabamians spend on electricity is one of the highest in the nation, and we have the worst energy efficiency in the country. But rather than make any of these problems better, the Commission continues to green light expensive and unneeded construction, allow high taxes on alternatives, and ignore any efficiency. Alabama Power does not want any of these things because it would rather you remain forcibly and 100% dependent on them.
Bluntly, the decisions of the PSC are contributing to poverty in Alabama, rather than alleviating it. Alabama has a history mired in poverty and we need our energy policy to help us break that cycle. Favoring monopolies and Wall St. over low-cost distributed energy perpetuates the struggle of hundreds of thousands of hard-working Alabamians.
And secondly, Alabama is losing out on tens of thousands of good paying jobs in advanced energy stemming directly from PSC decisions. There are tons of folks who could be employed in the energy efficiency sector, making much needed upgrades to our built environment and infrastructure. Renewable energy, such as solar and wind, are some of the fastest growing sectors of the economy in most states, but not Alabama.
Twinkle Cavanaugh, the PSC President, has often touted jobs in statements to Alabama Power-supported outlets like Yellowhammer News, in campaign materials, and even from the dias during PSC meetings. We’d encourage her to actually take her own words seriously and put Alabamians to work.