March 4, 2019 Read More →

Alabama utility to bill customers $740 million for environmental upgrades at closing coal plant

AL.com:

The William Crawford Gorgas Electric Generating Plant near Parrish is set to be retired in April, but Alabama Power customers will be repaying about $740 million in costs related to the Walker County coal power plant long after it closes, according to documents the company filed with the Securities and Exchange Commission.

Alabama Power’s parent group, Southern Company, disclosed in its latest public 10-K filing that “approximately $740 million of net investment costs [from Plant Gorgas] will be transferred to a regulatory asset at the retirement date and recovered over the affected units’ remaining useful lives.” That will allow Alabama Power to recover the costs of investments it made in the coal-fired power plant, plus a profit margin set by the Alabama Public Service Commission, from customers through their electric bills.

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 U.S. Environmental Protection Agency’s MATS (mercury and air toxics standards) rule, meant to limit the amount of mercury emitted to the air at 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 was spending too much money on keeping old coal plants in operation rather than exploring other options, such as converting to natural gas. “A number of people, including us, wanted Plant Gorgas to be retired back in 2015 rather than investing $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 past years of continued investments in that plant.

“And that really could have been avoided. Maybe not the whole $700 million could have been avoided, but certainly somewhere between $300 and $400 million could have been avoided if they had taken earlier action to recognize that this plant was not economical in the long run.”

The company blamed costs associated with environmental mandates when announcing the plant would close. The company has not announced plans to add any new plants or facilities due to the closing and has said that it does not anticipate any layoffs among the employees at the plant.

More: Alabama Power customers to pay $740 million after coal plant closes

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