ALBANY -- A White House initiative to put $8 billion in federal loan guarantees toward building the nation's first nuclear power plant in years may have implications for the Albany Water, Gas & Light Commission, which currently has a $150 million obligation for power from that same nuclear power plant.
President Obama announced an initiative to offer the loan guarantees for a pair of reactors currently set to be built by Southern Co., the parent organization of Georgia Power Co., at Plant Vogtle in Burke County, located in northeast Georgia.
Calling for comprehensive energy legislation that assigns a cost to carbon pollution of fossil fuels, Obama's announcement Tuesday may signal a shift away from traditional coal-burning plants.
That shift could dramatically affect the way local utilities -- like WG&L -- which currently purchase much of their electricity from coal-burning plants provide power to customers.
WG&L General Manager Lemuel Edwards told a joint committee of WG&L board members and city commissioners that the utility predicted coal would begin to either fade away or to rise in price given current environmental discussions going on around the country, which prompted a $150 million investment in power from Plant Vogtle -- a nuclear facility -- over the next 40 years.
Currently, WG&L doesn't have an immediate need for the power it obligated itself to, and has brokered a deal to sell the surplus energy to two of the largest utilities in the Southeast for the next 20 years. But when that contract expires in 2038, WG&L rate payers could find themselves on the hook for the remaining 20 years' worth of power consumption.
It's a simple concept.
Since much of local electricity consumption comes from coal use, if coal plants go away, nuclear power may be the only alternative to provide energy on a cost scale that is feasible. That would prompt WG&L to consume the remainder of its 40-year contract. If that happens, WG&L would be obligated to pay the remaining sum of its obligation -- likely to be around $70 million -- in six-figure-per-month payments.
Some alternatives to the 2038 payout that were offered up during discussion at the committee meeting included renewing the agreements for the remaining 20 years with the Florida and Alabama utilities or keeping the power and selling the excess on the open market for a profit. Either way, it looks like WG&L has the nuclear option.
"We just can't see meeting our power needs in the future from coal," Edwards said. "As more and more emphasis is put on clean energy, coal will either get too expensive to use or plants will fade away. So we opted for the nuclear option."
That's why, when the Municipal Electric Authority of Georgia announced two years ago that it would be repaying nearly $90 million in credits that were collected to stave off deregulation of the utility industry back to the city, some at the table wanted to tuck a portion of that money away to pay for the future energy consumption by WG&L customers.
On Feb. 15, both the city of Albany and WG&L officials made their first official requests to use that $30 million set-aside money from the Longterm Financial Planning fund, not much more than a year after it was created.