Environmental Challenges in Electric Supply Planning May 4, 2006 Overview Mike Wilder Energy Supply FundamentalsJeff Burleson Environmental Challenges Steve Ewald Planning for the Future

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Environmental Challenges in Electric
Supply Planning May 4, 2006
Overview Mike Wilder
Energy Supply Fundamentals Jeff Burleson
Environmental Challenges Steve Ewald
Planning for the Future Jeff Burleson

2
Georgia Power8,800 Employees Across
Georgia 2 Million Customers in 153 of Georgia's
159 Counties 13,000 Miles of Transmission Lines
61,000 Miles of Distribution Lines 14,000 MW
of Generating Capacitys of Plants 19
Hydro 10 Oil/Gas 7 Coal 2 Nuclear
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Power Generation
Capacity - 2006
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What are the potential technologies to fill
Southern Companys needs?

• Gas-Fired
• Pulverized Coal
• Coal Gasification
• Nuclear
• Renewables / Other Alternatives

5
Comparison of Coal, Oil and Gas PricingUpdated
as of January 1, 2006
6
Current Long Range Gas Forecasts
Henry Hub, /MMBtu
Consultant 3 October 05
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Gas-Fired Generation Summary

• Cons
• Uncertainty of gas supply
• Concerns about gas price volatility
• Long-term performance is unproven

• Pros
• Multiple configurations allow flexible sizing
• Low SO2, NOx, and CO2 emissions no mercury
  emissions
• Less capital intensive
• Lower base rate impact
• Short construction period
• Easier to site
• Low water usage
• Needs smaller footprint
• Recent operational experience
• Ability to add coal gasification technology

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US Coal Recoverable Reserves

• US Appalachian Basin
• 55 billion tons

Georgia Power purchased 34.6million tons in 2004
for itself and other plant co-owners
Interior US/ Illinois Basin 68 billion
tons
Rocky Mtns and PRB Basins 150
billion

• Southern Appalachian (Ala.Basin)
• .3 billion tons

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Coal Generation Summary

• Cons
• High capital costs
• Large rate base impacts
• Environmental concerns
• Siting
• Proximity to rail, barge, or mine
• Larger footprint
• Water
• Longer development period
• 5-6 years versus 3 for a CC
• More risk from decision to in-service
• Coal and ash storage issues
• Permitting

• Pros
• 250 years of known/reliable domestic reserves
• Experience in operating coal plants
• Low variable costs
• Less fuel price volatility than gas
• Aftermarket ash sales

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Coal Gasification Generation Summary

• Pros
• Low variable costs
• Less fuel price volatility than gas
• Southerns prior involvement
• Potential for synfuel tax credits
• DOE support
• 250 years of known/reliable domestic reserves
• Can be added to existing combined cycles
• Can burn gas as a secondary fuel

• Cons
• Technology risk
• Must be located in close proximity to rail or
  barge
• Coal and ash storage issues
• High capital costs
• Large rate base impacts
• Unknown environmental classification

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Nuclear Generation Summary

• Pros
• No emissions
• Low fuel price volatility
• Expected generic design pre-approval
  (Westinghouse/GE)
• Federal government support

• Cons
• Long development periods
• Site permitting license process takes about four
  years
• Public opinion / politics
• Unresolved spent fuel storage issues
• Yucca Mountain
• Maturity of cost and schedule estimate
• Spent fuel transportation
• High capital costs
• Large rate base impacts
• Design is subject to regulatory
  revisions/mandates after commercial operation

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Renewable Generation

• Wind
• Solar
• Hydro
• Biomass

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A Matter of Scale
Georgia Power Peak Demand 16,177 MW (7/26/05)

Solar
Wind
Coal
1 Turbine 3 MW
1 Installation 45 kW
VS.
Hydro
Biomass
1 Plant 1800 MW
1 Dam 45 MW
1 Unit 125 MW
1 MW Energy Needed To Power 250 Homes
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Energy Efficiency and Demand Side Management

• Programs offered include
• Energy Audits
• Energy Star New Home Program
• Energy Star Appliances
• Low Income Weatherization
• Powercredit
• Approximately 1,000 MWs of demand reduction
  through Pricing programs
• Distribution Efficiency Program
• Additional programs will be proposed next year

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Renewables Summary
Wind Lack of sustained velocity Solar Lack of
sufficient intensity Hydro Most Commercial sites
developed Biomass Combustion Process Landfill
Gas Combustion Process
Green Energy Program awaiting completion of Green
Energy Generator construction
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Environmental Challenges in Electric
Supply Planning May 4, 2006
Overview Mike Wilder
Energy Supply Fundamentals Jeff Burleson
Environmental Challenges Steve Ewald
Planning for the Future Jeff Burleson

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• 2003 Status Report Shows U.S. Air Cleanest Ever
  Since 1970EPA Press Release - Washington, D.C.-
  September 22, 2004
• America's air is the cleanest ever in three
  decades
• Emissions have decrease even as our economy has
  increased nearly 200
• Since 1970, the aggregate emissions for the six
  major pollutants have been cut 53

CO - 55 NOx - 30 SO2 -
52 VOC - 53 Pb - 99
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Press Release lt Back
Press Release Governor Sonny Perdue
Thursday, June 16, 2005
Metro Atlanta Air Quality Shows Dramatic
Improvement Area in Attainment with the 1-Hour
Ozone Standard for the First Time Since 1978
Metro Atlanta has made significant progress in
improving its air quality said Governor Sonny
Perdue.  Increased partnership with industry,
including significant investment from Georgia
Power to lower the emissions on their coal-fired
power plants.  


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Georgia Power Historical Emission Trends
Retail Sales Up 40
Population Up 28
SO2 tons Down 39
NOx tons Down 56
1990
1995
2000 2003
Georgia Growth Emissions
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Plant Bowen
Controls installed to address 1-Hour Ozone
Standard Selective Catalytic Reduction (SCR) at
Plants Bowen Units 1-4, Wansley Units 1-2, and
Hammond Unit 4 combustion controls at Plants
Hammond, McDonough, Yates, Branch, and Scherer.
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Cooling Tower Retrofits
Plant Branch
Plant Yates
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Environmental Issues Timeline
2000 2001 2002 2003 2004 2005 2006
2007 2008 2009 2010 2011 2012 2013
2014 2015
NOx 1-hour Ozone ?
NOx 8-hour Ozone Nonattainment
PM2.5 Nonattainment
Clean Air Interstate Rule
Clean Air Mercury Rule
Regional Haze
New Source Review
SO2
NOx
Hg
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8-hour Ozone Nonattainment Designations
TOWNS
F
ANNIN
CATOOSA
DADE
RABUN
MURRA
Y
UNION
WHITFIELD
W
ALKER
WHITE
GILMER
LUMPKIN
HABERSHAM
STEPHENS
CHA
TTOOGA
GORDON
PICKENS
BANKS
FRANKLIN
DAWSON
HART
BARTOW
HALL
FLOYD
CHEROKEE

• Atlanta
• Attain by 2007 or
• Bump-up SIP due 2007
• Attain by 2010
• Macon
• SIP due 2007
• Attain by 2009

FORSYTH
ELBERT
MADISON
JACKSON
POLK
BARROW
BARROW
CLARKE
COBB
GWINNETT
P
AULDING
OGLETHORPE
OCONEE
WILKES
WALTON
HARALSON
DEKALB
LINCOLN
DOUGLAS
ROCK-
DALE
GREENE
FULTON
MORGAN
T
ALIAFERRO
McDU
CLAYTON
CARROLL
COLUMBIA
NEWTON
HENR
Y
FAYETTE
W
ARREN
PUTNAM
RICHMOND
RICHMOND
JASPER
COWETA
BUTTS
SPALDING
HEARD
GLASCOCK
HANCOCK
PIKE
BURKE
LAMAR
JEFFERSON
MONROE
MERIWETHER
BALDWIN
JONES
TROUP
W
ASHINGTON
UPSON
BIBB
SCREVEN
HARRIS
BIBB
JOHNSON
JENKINS
CRA
WFORD
WILKINSON
TWIGGS
T
ALBOT
EMANUEL
PEACH
MUSCOGEE
T
A
YLOR
HOUSTON
BLECKLEY
MARION
BULLOCH
LAURENS
TREUTLEN
MACON
CANDLER
CHA
TT
A-
EFFINGHAM
HOOCHEE
MONT
-
SCHLEY
GOMER
Y
PULASKI
DOOL
Y
WHEELER
EV
ANS
TOOMBS
STEW
ART
BR
Y
AN
CHA
THAM
SUMTER
WEBSTER
DODGE
WILCOX
T
A
TTNAL
CRISP
TELF
AIR
LIBERTY
QUITMAN
TERRELL
LEE
LONG
JEFF
BEN HILL
RANDOLPH
DA
VIS
APPLING
TURNER
IRWIN
McINTOSH
COFFEE
CLA
Y
WORTH
CALHOUN
BACON
DOUGHERTY
W
A
YNE
TIFT
PIERCE
BAKER
BERRIEN
EARL
Y
A
TKINSON
GL
YNN
BRANTLEY
COLQUITT
MITCHELL
MILLER
W
ARE
COOK
LANIER
SEMINOLE
CAMDEN
THOMAS
LOWNDES
CLINCH
CHARL
TON
BROOKS
DECA
TUR
GRADY
ECHOLS
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• Designations Dec 17, 2004
• SIPs due 2007
• Attain 2010 to 2012

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Clean Air Interstate Rule (CAIR)

• Rule Finalized in March 2005
• SO2 Emissions Reductions
• 45 reductions from 2003 levels by 2010
• 57 reductions from 2003 levels by 2015
• Anticipated 73 reduction at full implementation
• NOx Emissions Reductions
• 53 reductions from 2003 levels by 2009
• 61 reduction for 2003 levels by 2017

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Clean Air Mercury Rule

• Rule finalized March 2005
• 38 ton national cap on coal-fired power plants in
  2010
• 15 ton national cap on coal-fired power plants in
  2018
• Equivalent to a 70 reduction when fully
  implemented

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Man-Made Mercury Sources Worldwide
North America-balance 64.4
Oceania 48.3
United States 140.6
South Central America 176.2
Africa 246.1
Europe 508.3
Asia 1,117.2
U.S. electric utilities emit one percent of
total global mercury emissions
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Georgia Powers Environmental Commitment
Past Projected
SO2
Bowen 34 Scrubbers
Wansley 1 2 Scrubbers
Clean Air Interstate Rule Clean Air Mercury Rule
PM2.5 8-Hr. Ozone Nonattainment
Bowen 1 2 Scrubbers
TBD
NOx
TBD
TBD
Low Sulfur Coal
TBD
Low NOx Burners on Larger Boilers
TBD
SCRs _at_ Bowen, Wansley Hammond 4
TBD
Fuel Switching _at_ Scherer
TBD
Low NOx Burners _at_ Branch
TBD
TBD
TBD
TBD
'90 '95
'00 '03
1 Billion Spent
3 Billion Potentially
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Emission Control Equipment for Coal-Fired Boilers
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Scrubber Concept
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675 Feet
60 Feet
Scrubber Concept
120 Feet
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2005 2006 2007
2008 2009 2010


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Flue Gas Outlet
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Potential GPC Controls through 2012
PRELIMINARY

• 10 Scrubbers under construction
• Additional SCRs
• Baghouses w/ Sorbent Injection

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Unknowns in Planning for the Futurethe Carbon
Dioxide (CO2) Challenge
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What options are available?

• Shift to Gas (lower CO2 emissions)
• Sequester CO2
• - Forestry / Agriculture
• Capture and Store
• Purchase Credits/Allowances
• Install Non-emitting Generation (nuclear, wind,
  solar, biomass)
• Coal Gasification

-- Long Term, Global Solutions --
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A Matter of Scale
Georgia Power Peak Demand 16,177 MW (7/26/05)
Solar
Wind
Coal
1 Turbine 3 MW
1 Installation 45 kW
VS.
Hydro
Biomass
1 Plant 1800 MW
1 Dam 45 MW
1 Unit 125 MW
1 MW Energy Needed To Power 250 Homes
41
Environmental Challenges in Electric
Supply Planning May 4, 2006
Overview Mike Wilder
Energy Supply Fundamentals Jeff Burleson
Environmental Challenges Steve Ewald
Planning for the Future Jeff Burleson

42
Integrated Resource Plan Overview
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Why do we need a mix?
Because of the System Load Shape, a combination
of resource types is the least cost solution
Relative Costs
System Load
Fixed
Variable
Peaking (cf lt 20)
Low
High
MW
Intermediate (20 lt cf lt 60)
Medium
Medium
Base Generation (cf gt 60)
Low
High
time of day
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New Capacity Additions 1970s
45
New Capacity Additions 1980s
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New Capacity Additions 1990s
47
New Capacity Additions 2000s
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Analysis of AlternativesCoalNatural GasNuclear
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Nuclear Summary

• New designs appear economic in 2015
• Gas and to some extent coal continued volatility,
  nuclear offers stable fuel source
• Zero air emissions, including CO2

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Observations Conclusions

• Gas Price Volatility
• Renewables Green
• Very Expensive
• Lack of reliable supply in Georgia
• Demand Side Programs
• Programs yielding rate indifference are currently
  offered
• Demand is small
• Nuclear
• With current assumptions, nuclear is the least
  cost base load option
• Nuclear technology still carries many
  political/regulatory and cost risks