Friday, August 3, 2012

Cheaper & Cleaner: Natural Gas Saves Southern Company's Ratepayers At Least $567 Million

For the first time in its history, Southern Company--one of America's five biggest electric utilities--will generate most of its electricity from fuels other than coal. And the result will be lower bills and emissions.

Southern Company has switched substantially and quickly to natural gas, increasing its gas generation from 29% to 45% and reducing its coal generation from 70% to 38% during April to June 2012.  Nuclear plants continue to provide about 15% of Southern's total power.

Proving cleaner can be cheaper, for Georgia Power, just one of Southern Company's major subsidiaries, the switch to gas cut by $567 million or 19% fuel costs collected from its monopoly electricity ratepayers.

Unlike in competitive markets, where the market clearing price typically reflects the production or operating costs of the last generator dispatched to meet demand, Southern's monopoly customers pay both a base rate to recover capital and fixed costs and a separate charge for all fuel costs. The fuel charge is adjusted up or down periodically.  Southern's switch substantially to gas has meant its fuel cost charge has declined substantially.

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