Squawk of the Day - August 10, 2012

ATLANTA (MCT) -- Georgia Power plans to start buying wind power and distributing it to customers in 2016, the latest step by the utility to boost its limited use of renewables.

The Atlanta-based utility, which has never used wind power and gets a small fraction of its power from solar or other alternative sources, said Monday it will buy power from a company that operates wind turbines in Oklahoma.

The initial purchase will be enough to power 50,000 homes, Georgia Power said.

Georgia Power said economics drove the decision. It has also been pressured by alternative energy advocates to add more renewables.

The large majority of Georgia Power's electricity comes from natural gas, coal and nuclear plants -- and will for the foreseeable future, the top executive of parent Southern Co. said.

"I am very bullish on renewables, but I believe for the Southeast that they will be a niche," said Tom Fanning, president and CEO of Southern, which owns utilities in four southeast states.

The decision to buy wind power follows a similar announcement last year regarding solar power. In September the company said that by 2017 it will buy more than 10 times the amount of solar electricity it now gets from solar farms and rooftop arrays.

Even with the new purchases, wind and solar will account for about 2 or 3 percent each of the power the utility distributes.

Georgia Power said the deal with EDP Renewables North America "is expected to deliver cost savings to Georgia Power customers over the life of the contract," but did not put a number on any expected impact on bills or rates.

Power bills for Georgia Power customers have risen in the past three years amid a general rate increase and a special assessment for financing costs related to construction of two new nuclear reactors at Plant Vogtle.

There are no commercial wind power operations in Georgia, and the southeast generally is not considered to have conditions as favorable as other regions to wind and solar generation.

Georgia Power will pay Houston-based EDP Renewables, which has operations in Oklahoma and other states, to put a certain amount into a regional transmission grid. Under the contract Georgia Power can then draw a certain amount.

"While there is always room for improvement, it is important to acknowledge Georgia Power's smart decision," said Colleen Kiernan, director of the Sierra Club's Georgia chapter. "Importing wind power is affordable and promotes clean air for Georgians."

Wind is emerging as an answer for some utilities that want a fuel cleaner than coal, less expensive than nuclear and more stable cost-wise over the long term than natural gas. The U.S. could get as much as 20 percent of its electricity from wind power by 2030, according to a U.S. Department of Energy study.

States with the most wind development are Texas, California, Iowa, Illinois and Oregon.

Wind developers are starting to target the Southeast for more opportunities, said Geoff Coventry, the chief operating officer of Kansas-based TradeWind Energy, a major wind developer in the midwest.

"More transmission lines are being built so you can get it onto the grid and get it out there somewhere,"Coventry said.

Critics of windpower say the industry is too heavily subsidized and argue the fuel is not as cheap as proponents say. Transmission costs, among other things, erode any cost advantage, they argue.

Southeast states have lower use of renewables than the rest of the nation. Unlike some states in other regions, they do not require a certain level of renewable use from utilities.

"The reluctance to embrace mandates for renewables in the Southeast probably extends from what is good news for consumers: they already have some of the lowest electricity bills in the country," said Scott Segal, coordinator of the Electric Reliability Coordinating Council, a group of power companies that includes Southern.

Environmental groups take a different view.

"We're not where we should be as a region in the Southeast," said Jill Tauber, a senior attorney at the Southern Environmental Law Center, who doesn't buy the argument that the region's low energy prices should prevent a larger use of renweable fuels.

Another Southern Co.-owned utility, Alabama Power, last year agreed to buy windpower from wind farms in Oklahoma and Kansas. Wind power will represent about 3 percent of the electricity its customers will use. It's too early to tell the effect on bills.

Elsewhere in the Southeast, the Tennessee Valley Authority has signed 10 long-term deals since 2010 to buy wind mostly from Midwestern states where the resource is plentiful. Southwestern Electric Power Co. also has agreed to buy wind power for its customers in Arkansas, Louisiana and Texas.

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