Future Energy Overview 2009 GCAA Management Workshop February 17, 2009 Jeff Burleson Director, Resource Policy and Planning Georgia Power Company.

Future Energy Overview

2009 GCAA Management Workshop

February 17, 2009

Jeff BurlesonDirector, Resource Policy and Planning

Georgia Power Company

Current Situation• Fuel prices have declined

– Retail gasoline $4.00 vs 1.50 per gallon– Wholesale natural gas $13 vs 6 per million btu– Central Appalachian coal $120 vs 60 per ton

• But for the wrong reason– Economic downturn lowering current and near term outlook for demand

• Fuel prices will climb again in the future– Only a matter of time– Over half of U.S. oil consumption is from imports– Natural gas imports projected to rise significantly over long term– No single fix, nor quick fix

• Requires holistic, sustained efforts

• Environmental requirements will increase

US Electricity Generation by RegionHistory and projection, 1990-2030

0%

20%

40%

60%

80%

100%

120%

1990 1995 2000 2005 2010 2015 2020 2025 2030

Chan

ge fr

om 1

990

.

Southeast (SERC, FRCC: AL, AR, FL, GA, LA, W MO, MS, NC, SC, VA)

US

West (WECC: AZ, CA, CO, ID, MT, NV, NM, OR, UT, WA, WY)

Northeast (CT, DE, ME, MD, MA, NH, NJ, NY, PA, RI, VT)

Midwest (ECAR: IN, KY, MI, OH, WV)

Data Source: Energy Information Administration, US Department of Energy

ProjectionHistory

Projected growth

2008-2030

34%

25%34%

22%

11%

Coal vs. Gas Prices

Fuel Price Risk

Environmental Uncertainty

1862 1872 1882 1892 1902 1912 1922 1932 1942 1952 1962 1972 1982 1992 2001

YOSVA

RTCRHA

LA

NBRAAA

WA

IA FEATH

NPS

MBTA

OPA

MBCA

TAFWCABPA

AEPA

NLR AWPASCS

FAWRA

FIFRA

WPCA

AEA FWA

CAA-55PAA

FWCAA-58

WLDA

FHSANFMUA

NHPAPFWFOIA

WSRAEARCHSA

NEPAEQIACAAEPA

OSHAFAWRAA-70

CAAA-77CWA

SMCRASWRCA

SDWAA-77

ESATAPA

HMTA

ARPA

NWPAESAA-82

RCRAA-84WLDIMPRSAA-82

SDWAA-86SARA-86

NAWCA

AOA

AMFAARPAA-88

AIAASBCAA-88

ESAA-88FIRAA-88

TOSCAA-88NWPAA-88CPDRAA-88

NMSPAA-888FCRPA

MMPAA-88ODBASFA

FWLA-88ICPBD

WRPAAFCA

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FCMHSAESCA

BLBAFWPCAMPRSACZMANCA

FEPCAFWSAMMPA

TOSCAFLPMARCRANFMA

CZMAA-76

APASWDA

CERCLACZMIA

COWLDAFWLCA

MPRSAA-80ANISCA

LLA-81

WQA

EDPOPARECA

CAA-90CCRA

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NEEAPPA

PPVAIEREAANTPAGLCPA

ASACZMAA-90

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CRAA-92

BLRAERDDAAEAWANOPPAPTSA

UMTRCAESAA-78

QCANCPA

0

No.

of

Law

s

150

100

50

US Utility Industry Capacity Additions – 1970s

Oil14%

Nuclear17%

Coal / Pet Coke37%

Gas20%

Hydro12%

Biomass0%

Green Power0%

Other0%

Green Power2%

Biomass3%

Other0%

Coal / Pet Coke45%

Nuclear31%

Oil2%

Gas11%

Hydro6%

US Utility Industry Capacity Additions – 1980s

Gas63%

Oil5%

Nuclear7%

Coal / Pet Coke14%

Other0%

Biomass4%

Green Power2%Hydro

5%

US Utility Industry Capacity Additions – 1990s

Gas98%

Coal / Pet Coke1%Nuclear

0%Oil0%

Other0%

Biomass0%

Green Power1%Hydro

0%

US Utility Industry Capacity Additions – 2000s

Some Elements of a Sound Energy Strategy

• More fuel efficient automobiles to reduce oil imports

– Plug-in hybrid electric vehicles

• Energy efficiency and demand reduction

• Increase fuel diversity of electric generation

– Fully develop all cost effective applications of renewable generation

– Nuclear

Planning to Ensure a Reliable and Economic Electric Supply

• Uncertainties include– Long term fuel costs and availability– Long term environmental requirements– Customer response to Demand Side Management (DSM)

programs

• Long lead times for new resources– Typically 3 to 10 years– Resources typically last 30 to 60 years

• Robust, comprehensive planning process– Integrated Resource Planning (IRP) – Frequent validation and updates, as needed

Strategic Options for Meeting Generation Needs

• Supply Decisions– Pulverized coal – Natural gas combined cycle – Integrated gasification combined cycle– Nuclear – Renewable energy

• Demand Side Management

Georgia Power Anticipated Plan for the Next Decade

• 12-20% renewable and DSM– Plant Mitchell conversion to

biomass • One of largest wood

biomass plants in US– Solar research project

• 2011 possible expansion– Limited potential

• 69-76% natural gas capacity (50% add’l gas energy generation)– Price and volatility

• 12% nuclear– First U.S. nuclear planned

in 30 years

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20Year of Plan

Cap

acity

(MW

s)

Demand Side Management & Renewables New Generation Existing Resources

Georgia Power Supply Capability by Fuel Type

2008 Net Capacity by Fuel Type

Nuclear10.2%

Hydro5.3%

Coal44.5%

Gas & Oil36.6%

Active DSO3.4%

2018 Net Capacity by Fuel Type

Nuclear12.6%

Hydro4.3%

Coal33.4%

Gas & Oil46.3%

Active DSO3.5%

† Includes generics & PPAs

Contracts with Renewable Generators

0

100

200

300

400

500

600

700

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Year

MW

s o

f C

apac

ity Notice of Intent

Capacity Additions UnderContract

Operational Capacity

May invest more than $1 billion on capacity and energy from renewable generation developers over next 10 years if all projects proceed

Nuclear Power Cost-Effective when Compared to Alternatives:

• Significant lifetime savings– $2 - $6.5 billion when compared to pulverized coal– $1 - $6.5 billion when compared to natural gas combined cycle

• Reduces exposure to high natural gas prices and future costs of potential carbon legislation– Natural gas prices rose 400 percent between Jan 31, 2002 and Jun

30, 2008– Future costs of potential carbon legislation could be significant for coal

• Natural gas generation more sensitive to fuel price fluctuations– 60 to 80 percent of cost per kWh from natural gas plant is fuel– About 10 percent of nuclear generation cost is fuel

Base Load Generating Capacity Needed:

• Georgia Power’s last base load plant was added in 1989

• Natural gas capacity increased from 7 percent to 37 percent since 1989

• New coal power plants less attractive– Increased environmental requirements– Coal fuel has more than doubled in a year– Cost of potential carbon legislation could be significant.

Demand Side Management (DSM) will Play a Key Role but Cannot Displace all

Generation Need• Within 10 years, Georgia Power will have 1,900–2,200 MWs DSM

• DSM will play a key role, but not cost effective to achieve DSM maximum potential of 3,000 megawatts

• DSM is less reliable

– Energy efficiency programs do not provide constant load reductions in all hours of year

– Base load generation typically operates 24 hours per day, 7 days per week, throughout entire year

Summary

• Planning to ensure an economic and reliable supply of electricity

• Georgia Power pursuing diverse and economic portfolio of new generation resources

– nuclear

– renewables and usage reduction

– natural gas