Georgia energy review

Georgia Energy Review 2005
Prepared by
Division of Energy Resources Georgia Environmental Facilities Authority
Environmental Protection Division Department of Natural Resources
Version 1.0 Updated: March 1, 2006

Georgia Energy Review 2005 This page left intentionally blank.
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Georgia Energy Review 2005
INTRODUCTION The Georgia Energy Review 2005 documents Georgia energy trends from 1984-2004. It explains energy markets and the energy supply system in Georgia, and provides an overview of energy prices in the State. Additionally, it examines the environmental impacts of energy production and consumption and explores the role of energy efficiency and renewable energy sources in meeting the energy needs of Georgians. For the reader, this publication provides the basis for a sound understanding of the energy story in Georgia. Organized in five sections, it addresses energy from the following perspectives:
1. Energy Consumption in Georgia 2. Energy Markets in Georgia: Supply, Marketing and Regulation 3. Energy Prices in Georgia 4. Environmental Impacts of Energy 5. Energy Efficiency and Renewable Energy For readers interested in a basic explanation of how energy sources work, the Appendices include primers on electricity, natural gas and refined petroleum products. The Georgia Environmental Facilities Authority (GEFA) Division of Energy Resources and the Georgia Department of Natural Resources Environmental Protection Division (EPD) are pleased to present this publication. GEFA and EPD owe a debt of gratitude to a number of private sector partners, as well as colleagues at the Georgia Public Service Commission, for their expert advice, guidance and review during the development of this Georgia Energy Review.
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Georgia Energy Review 2005 TABLE OF CONTENTS

Introduction

1

Table of Contents

2

Chapter 1: Energy Consumption in Georgia

4

I. Total State Energy Consumption

4

II. Georgia Energy Consumption by Fuel

5

III. Georgia Energy Consumption by Sector

7

A. Transportation Sector Energy

9

B. Industrial Sector Energy

9

C. Residential Sector Energy

11

D. Commercial Sector Energy

12

IV. Comparative Data, Georgia and the United States

13

V. Electric Power Sector Consumption

16

Chapter 2: Energy Markets in Georgia Overview of Structure and Regulation

19

I. Electricity

19

A.

Electricity Supply in Georgia

19

B.

Electricity Transmission and Dispatch in Georgia

23

C.

Electricity Retail Sales in Georgia

26

D.

Electricity Regulation in Georgia

28

II. Natural Gas

32

A.

Natural Gas Supply in Georgia

32

B.

Natural Gas Marketing in Georgia

34

C.

Natural Gas Regulation in Georgia

35

III. Propane / Liquefied Petroleum Gas

37

A.

Propane / LPG Supply in Georgia

37

B.

Propane / LPG Marketing in Georgia

38

C.

Propane / LPG Regulation in Georgia

38

IV. Refined Petroleum Products

38

A.

Refined Petroleum Products Supply in Georgia

38

B.

Transportation Fuels Marketing in Georgia

39

C.

Heating Oil Marketing in Georgia

40

D.

Refined Petroleum Products Regulation in Georgia

40

V. Other Electricity Fuels

40

A.

Coal in Georgia

40

VI. Non-Electric Biomass and Other Renewables

41

A.

Biofuels in Georgia

41

Chapter 3: Energy Prices in Georgia

42

I. Electricity

42

II. Natural Gas

43

III. Transportation Fuels

43

Chapter 4: Environmental Impacts

44

I. Overview

44

II. Air Quality

45

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Georgia Energy Review 2005

III. Water Quality

46

A.

Mercury Bioaccumulation in Fish Tissues

46

B.

Thermal Pollution

46

C.

Acidification and Eutrophication of Water Bodies

47

D.

Water Consumption

47

IV. Climate Change

47

V. Technology

48

Chapter 5: Energy Efficiency and Renewable Energy in Georgia

49

I. Challenges to the Conventional Energy Supply

49

A.

Price Stability

49

B.

Reliability

50

C.

Health and Environmental Impacts

50

II. Energy Efficiency

51

A.

Technologies and Practices

52

B.

Implementing Energy Efficiency

58

III. Renewable Energy Sources and Conversion Technologies

60

A.

Non-Emitting Technologies

61

B.

Emitting Technologies

62

Appendices

68

I. Appendix I: References

68

II. Appendix II: Glossary of Terms

73

III. Appendix III: Primer Sections

74

A. Electricity 101

74

B. Natural Gas 101

75

D. Refined Petroleum Products 101

77

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Georgia Energy Review 2005 CHAPTER 1: ENERGY CONSUMPTION IN GEORGIA

Energy is defined as the capacity or ability to do work. While natural gas, electricity (and the fuels used to generate it), gasoline, diesel fuel, heating oil and even firewood are all distinct sources of energy, with different roles in our economy, together they make up our total energy industry.

I. TOTAL STATE ENERGY CONSUMPTION

Over the course of the last two decades, Georgia has prospered. From 1984 to 2004, the State's population grew more than 51%, from 5.8 million to 8.8 million people, according to the United States Census Bureau ("Population Estimates," 2004). Georgia now ranks as the ninth most populous state in the United States, with slightly more than 3% of the country's population. During this same 20-year time period, Georgia's economy blossomed, as shown in Figure 1. The State's gross state product (GSP) nearly quadrupled, from $88.6 billion to $343.1 billion (Bureau of Economic Analysis [BEA], "Gross State Product," 2005).

Figure 1
Georgia GSP and Population, 1984-2004

10000000

400

9000000 350
8000000 300
7000000
250 6000000

Population GSP (billion $)

5000000

200

4000000 150
3000000 100
2000000
50 1000000

0 1984

1989

1994 Year

GA Population

GA GSP (million $)

1999

0 2004

Not surprisingly, Georgia's overall energy consumption mirrors its demographic and economic
growth. The State's total energy consumption grew 76% between 1984 and 2004, from 1,731 Trillion
British Thermal Units (TBtu) in 1984 to 3,050 TBtu in 2004. In 2001, the most recent year for which all state-level energy data are available, Georgia ranked 10th in total energy consumption.

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Georgia Energy Review 2005
Authors of this report developed the energy consumption statistics in the previous paragraph and throughout this Chapter by compiling, calculating and combining statistics from eight publications and web sites issued by the Bureau of Economic Analysis ("Current-Dollar and `real' GDP," 2006) and the Energy Information Administration ("Annual Energy Review 2004," 2005; "Prime Supplier Sales Volumes," 2005; "Natural Gas Annual 2004," 2005; "Electric Power Annual 2004," 2005; "Annual Coal Report," 2005; "State Energy Consumption, Price, and Expenditure Estimates: United States," 2005; "State Energy Consumption, Price, and Expenditure Estimates: Georgia," 2005). Per capita statistics in this Chapter also incorporated information from the U.S. Census Bureau ("Population Estimates," 2004), and GSP statistics incorporated information from the Bureau of Economic Analysis (Gross State Product Interactive, 2005).

This broad overview of Georgia's growth makes two important facts stand out: Georgia's energy intensity on a per-capita basis, or the average amount of energy each person in Georgia uses per year, has risen by 16% in the last 20 years. On the other hand, Georgia's economic energy intensity, or the amount of energy consumed to create one dollar of GSP, has fallen dramatically over the same time period, as Figure 2 shows.

Figure 2
Georgia Btu per Dollar GSP and MBtu per Capita, 1984-2004

25,000

400

350
20,000 300

Btu per $ GSP Million Btu

250 15,000
200 10,000
150

100 5,000
50

0 1984

1989

1994 Year

1999

Btu per $ GSP

Million Btu per capita

II. GEORGIA ENERGY CONSUMPTION BY FUEL

0 2004

One useful way to examine energy consumption in Georgia is by the type of fuel from which the energy is produced. Four main fuel types contribute to Georgia's total energy picture: coal, petroleum, natural gas, and other electricity fuels. "Other electricity fuels" refers to energy fuels that are used almost exclusively to generate electricity, including nuclear power, hydropower, and wood and wood

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Georgia Energy Review 2005
waste. This term is different from "electricity," which is generated from a combination of all four main fuel types and then used as a fuel itself in homes, buildings and industries.
Other renewable sources of energy such as ethanol and biodiesel motor fuels, solar and geothermal energy, and various biofuels used in electricity generation play an increasingly important role in Georgia's energy industry, but currently account for less than 5% of total energy consumption in the State. Later chapters of this Review explore these emerging resources and technologies in more detail.
In 2004, Georgia's primary energy use included: 37.9 million short tons of coal, equivalent to 870 trillion British thermal units (Btu) of heat energy; 393 billion cubic feet of natural gas, equivalent to 405 trillion Btu of heat energy; 185.1 million barrels of petroleum products, equivalent to 976 trillion Btu of heat energy; Energy generated from nuclear, hydroelectric, and wood/waste equivalent to 621.8 trillion Btu of heat.
Figure 3 shows that Georgia's consumption of each of the four main fuel types increased significantly from 1984 to 2004, but not at the same rate.
Figure 3
Georgia Energy Consumption by Fuel, 1984-2004

Trillion Btu

1,000 900 800 700 600 500 400 300 200 100 0 1984

1989

Year

1994

1999

Petroleum Coal Electricity Fuels Natural Gas
2004

Consumption of other electricity fuels grew the fastest of the four main fuel types, from 217 TBtu in 1984 to 621 TBtu in 2004, an increase of 186%. Much of this growth occurred from 1989 to 1990, when a new nuclear power plant came on line and generated an additional 10 Billion kilowatt-hours (kWh) of electricity from nuclear energy.

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Georgia Energy Review 2005
Petroleum consumption increased about 67% over the last 20 years, second fastest of the four fuel types. While the growth rate of petroleum consumption does not match that of other electricity fuels, increased petroleum consumption is responsible for almost the same amount of additional energy consumed, roughly 400 TBtu, since 1984.

Coal consumption grew by 28% or 188 TBtu since 1984, but this figure is somewhat misleading. Between 1984 and 1992, the amount of energy consumed from coal actually fell by 10%. From 1992 to 2004, the use of coal energy increased steadily as growth in the consumption of other electricity fuels leveled off. The "Electric Power Sector Consumption" section of this Chapter explores this idea further.

Natural gas consumption has also grown 28% since 1984, but has done so more steadily than coal. However, natural gas is still responsible for the least amount of energy consumed in Georgia among the four main fuel types. Figures 4 and 5 show the percentage of total energy consumption in Georgia by fuel in 1984 and 2004.

Figure 4
Georgia Energy Consumption by Fuel, 1984

Figure 5
Georgia Energy Consumption by Fuel, 2004

Natural Gas 18%
Electricity Fuels 12%

Petroleum 32%

Coal 38%

Natural Gas 14%
Electricity Fuels 22%

Petroleum 34%

Coal 30%

III. GEORGIA ENERGY CONSUMPTION BY SECTOR

Another important way to analyze energy consumption in Georgia is to compare its growth in the main end-use sectors: residential, commercial, industrial and transportation. Figures 6 and 7 show how energy consumption was divided between the four sectors in 1984 and 2004.

Figure 6
Georgia Energy Consumption by Sector (TBtu), 1984

Figure 7
Georgia Energy Consumption by Sector (Tbtu), 2004

Transportation 31%

Residential 22%
Commercial 14%

Industrial 33%

Transportation 29%

Residential 24%

Industrial 29%

Commercial 18%

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Georgia Energy Review 2005
The most notable shift in the total share of energy consumption is away from the industrial and transportation sectors and into the residential and commercial sectors. This shift may reflect an increase in the number and variety of consumer electronic products in Georgia homes and businesses, more energy efficient industrial processes, or, most likely, a shift in Georgia's economy away from heavy industry. Figure 8 suggests that a combination of all three factors may be at work. Per capita energy consumption did increase dramatically in the residential and commercial sectors, and also declined slightly in the industrial sector.

Million Btu

140 120 100
80 60 40 20
0 1984

Figure 8
Georgia per Capita Energy Consumption by Sector, 1984-2004

Residential Commercial Industrial Transportation

1989

1994 Year

1999

2004

It is also important to note that, while the industrial and transportation sectors did consume less energy relative to the other sectors in 2004 compared to 1984, total consumption in each sector has increased steadily over that span, as shown in Figure 9.

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Georgia Energy Review 2005
Figure 9
Georgia Energy Consumption by Sector, 1984-2004

Trillion Btu

1,000 900 800 700 600 500 400 300 200 100 0 1984

1989

Year

1994

1999

Industrial Transportation Residential Commercial
2004

A. Transportation Sector Energy
The transportation sector was the largest energy consuming sector in 2004, barely edging out the industrial sector and accounting for 29% of Georgia's total energy consumption. Total transportation energy consumption rose steadily from 1984 to 2004, starting at 550.5 trillion Btu and reaching 886.5 trillion Btu, an increase of 61%.
Petroleum accounts for 99% of the energy used for transportation in Georgia, and motor gasoline is the single largest petroleum fuel type, accounting for 66% of transportation energy use in Georgia in 2004. Annual consumption of motor gasoline in the State grew by 67% between 1984 and 2004. Another major component of transportation energy consumption is distillate fuel, a general classification of petroleum fuels that includes diesel fuels and other fuel oils. Distillate fuel consumption more than doubled from 1984 to 2004 and accounted for 25% of transportation energy consumption in 2004. These increases in motor gasoline and distillate fuel consumption far outpace the 51% increase in Georgia's population over the same period, indicating more drivers on Georgia's roads, and more vehicle-miles traveled by each driver.
B. Industrial Sector Energy
Georgia's industrial sector consists of agriculture, forestry and fishing, mining, construction and manufacturing industries. With 29% of total statewide energy use in 2004, the industrial sector is the second largest energy using sector in Georgia, just slightly smaller than transportation. While energy
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Georgia Energy Review 2005 consumption by the industrial sector in Georgia increased by 45% from 1984 to 2004, it has declined slightly from a peak of 911 trillion Btu in 1997 to 871 trillion Btu in 2004.
As shown in Figure 10, wood/waste and natural gas lead as the fuels most used by the industrial sector in 2004, each providing about 19% of energy use. Wood is a substantial renewable resource that can be used as a fuel to generate electric power and useful thermal output. Wood waste includes manufacturing and wood processing wastes, as well as construction and demolition debris.1 Electricity (14%), Petroleum (11%), and coal (5%) are the third, fourth and fifth most consumed, respectively.
Figure 10
Georgia Industrial Sector Energy Consumption by Fuel, 1984-2004

Trillion Btu

300 250 200 150 100
50 0 1984

1989

Year

1994

1999

Electrical System Losses Wood and Waste Natural Gas Electricity Petroleum Coal
2004

Electricity consumption has grown the most of the industrial sector fuels; about 61% from 1984 to 2004. Correspondingly, electrical system losses (ESL) have increased as well and accounted for another 32% of industrial sector energy use in 2004. ESLs represent energy lost during generation, transmission and distribution of electricity, and are the difference between the amount of energy input at electric utilities and the amount of electricity that is actually purchased by end-users, as measured by their energy bills.
1 Due to the expanded coverage of renewable energy sources beginning in 1989, a discontinuity exists in the time series between 1988 and 1989, and data on wood and wood waste cannot be tracked accurately before 1989.
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Georgia Energy Review 2005
Natural gas consumption grew the slowest, only 7% from 1984 to 2004, in the Georgia industrial sector. Annual industrial consumption of natural gas has fluctuated over the past 20 years and peaked at 189 trillion Btu in 1995. In recent years it trended upward, and stood at 163.9 trillion Btu in 2004.
C. Residential Sector Energy
Georgia's residential sector consists of all private residences, owned or rented, occupied or vacant, including single-family homes, multifamily housing and mobile homes. Secondary homes, such as summer homes, are also included. Institutional housing, such as school dormitories or military barracks, however, is not part of the residential sector.
Georgia's residential sector, which accounts for 24% of the State's total energy use, ranks third among the end-use sectors in the total amount of energy consumed. Energy consumption in this sector has increased by 79% in the past 20 years, rising from 391 trillion Btu in 1984 to 727.6 trillion Btu in 2004.
In 2004, electricity was the fuel most used in the residential sector, as shown in Figure 11. Residential use of electricity, not including ESL, was 51.1 billion kWh in 2004, more than twice the amount consumed in 1984. Electrical system losses accounted for another 116.3 billion kWh in 2004.
Figure 11
Georgia Residential Energy Consumption by Fuel, 1984-2004

Trillion Btu

400 350 300 250 200 150 100
50 0 1984

1989

Year

1994

1999

Electrical System Losses Electricity Natural Gas Petroleum Wood and Waste
2004

Natural gas was the second most used fuel in Georgia's residential sector in 2004 with 126 billion cubic feet consumed a 33% increase over the amount used in 1984. Since 1984, electricity and
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Georgia Energy Review 2005
natural gas have traded position several times as the largest source of energy for the residential sector in Georgia, although electricity has remained the top source since 1997.
D. Commercial Sector Energy
Georgia's commercial sector consists of service providers such as hotels and restaurants, wholesale and retail trade, religious and nonprofit organizations, health, social, and educational institutions, and federal, state and local governments. This sector does not include businesses engaged in transportation, manufacturing or other industrial activities.
Georgia's commercial activities result in the smallest share of the State's total energy consumption. Only 18% of the total in 2004 was consumed by the commercial sector. However, between 1984 and 2004 energy consumption in the commercial sector more than doubled, from 256 trillion Btu to 542 trillion Btu. This was the fastest growth in energy consumption among the four end-use sectors over the last 20 years.
As shown in Figure 12, electricity, which accounts for 28% of energy consumption, is the most commonly used fuel in the commercial sector. In 2004, 42.5 billion kWh of electricity was used, almost triple the amount used in 1984. In addition, electrical system losses attributable to the commercial sector in 2004 were an additional 61 billion kWh over 1984.
Natural gas consumption, which accounted for about 10% of commercial sector consumption in 2004, has remained relatively flat since 1984, declining by about 1%. Petroleum consumption declined by about 53% since 1984, and only accounted for about 2% of total commercial sector use in 2004.
Figure 12
Georgia Commercial Sector Energy Consumption by Fuel, 1984-2004

Trillion Btu

350 300 250 200 150 100
50 0 1984

1989

Year

1994

1999

Electrical System Losses Electricity Natural Gas Petroleum
2004

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Georgia Energy Review 2005
IV. COMPARATIVE DATA, GEORGIA AND THE UNITED STATES
By comparing historical energy consumption in Georgia to the United States as a whole, similarities become immediately apparent. The first, as shown in Figure 13, is that U.S. energy consumption per capita has increased while U.S. energy consumption per dollar of Gross Domestic Product (GDP) has steadily declined, matching the trend in Georgia seen earlier in Figure 2. Per capita energy consumption in Georgia in 2004 was about 345 million Btu per person, or 5% higher than the national average of 330 million Btu per person. In 2001, the most recent year for which all state-level data is available, Georgia ranked 26th in per capita energy consumption. In the U.S. in 2004, about 8,255 Btu of energy consumed yielded one dollar of GDP, compared to 8,888 Btu per dollar of GSP in Georgia.

Btu per $ GDP Million Btu per capita

25000 20000 15000 10000
5000 0 1984

Figure 13
US Btu per Dollar GDP and MBtu per Capita, 1984-2004

1989

1994 Year

Btu per $ GDP

MBtu per capita

1999

400 350 300 250 200 150 100 50 0 2004

More similarities emerge when comparing energy consumption across the end-use sectors in Georgia to national end-use data. Nationally, industry's share in the consumption of energy has declined somewhat over the past 20 years, and the commercial sector's share has grown, as shown in Figures 14 and 15. This is similar to the trend observed in Georgia earlier in Figures 6 and 7. However, industry nationwide still constitutes a larger portion of the total energy picture (33%) than it does in Georgia (28%), and the residential sector's share of energy consumption is lower nationally (21%) than in Georgia (24%).

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Georgia Energy Review 2005

Figure 14 US Energy Consumption by Sector, 1984

Figure 15
US Energy Consumption by Sector, 2004

Transportation 26%

Residential 21%

Commercial 15%

Industrial 38%

Transportation 28%

Residential 21%

Industrial 33%

Commercial 18%

This difference is also evident when comparing per-capita energy consumption in the end-use sectors in Georgia and the U.S. Recall that Figure 8 showed that per capita energy consumption for the residential sector in Georgia was about 82 million Btu in 2004. However, Figure 16 shows that U.S. residential energy consumption per capita is only 72 million Btu, meaning that in 2004 the average Georgia resident used 12% more energy than residents in the rest of the U.S. On the other hand, Georgia industries averaged 99 million Btu per capita in 2004, or 13% less than 113 million Btu per capita in all U.S. industries. In the transportation sector, Georgia's per capita consumption in 2004 was about 100 million Btu, which was about 5% higher than the national average of 95 million Btu. And finally, in the commercial sector in 2004, Georgia's per capita consumption was 61 million Btu, or about 2% higher than the national average of 60 million Btu.
Figure 16
US Per Capita Energy Consumption by Sector, 1984-2004
140

120

100

Million Btu

80

Residential

Commercial

Industrial

60

Transportation

40

20

0 1984

1989

1994 Year
14

1999

2004

Georgia Energy Review 2005
Differences also appear when comparing national and Georgia trends in the four major fuel types. In 2004 the United States consumed approximately:
1.1 billion short tons of coal; 22.4 trillion cubic feet of natural gas; 7 billion barrels of petroleum products; Energy generated from nuclear, hydroelectric, and wood/waste equivalent to 14,023 trillion Btu
of heat
Figure 17
US Energy Consumption by Fuel, 1984-2004

Trillion Btu

40000 35000 30000 25000 20000 15000 10000
5000 0 1984

1989

Year

1994

1999

Petroleum Natural Gas Coal Electricity Fuels
2004

From 1984-2004, petroleum was the largest source of U.S. energy consumption, just as in Georgia, but petroleum consumption nationwide grew more slowly only 26% in the past 20 years, compared to 67% in Georgia. Like Georgia, the additional consumption of petroleum was due largely to rising motor gasoline consumption 32% over 20 years far exceeding the 3% population growth nationally over the same period.
The greatest divergence between U.S. and Georgia consumption trends is in the use of natural gas. While the growth of natural gas consumption has occurred at a similar pace in Georgia (28%) and the U.S. as a whole (25%) over 20 years, in Georgia this fuel was responsible for the smallest proportion of energy consumption since 1989. Nationally, however, natural gas has been the second largest source of energy consumption since that same year. One possible explanation is that Georgia has fewer heating degree days each year than much of the country, requiring the use of less natural gas to heat
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Georgia Energy Review 2005
homes and businesses. Also, natural gas is increasingly used as a fuel to generate electricity, but may not play as large a role in electricity production in Georgia. This idea is explored further in the "Electric Power Sector Consumption" section of this chapter.
Another difference between energy consumption in the U.S. and Georgia is the use of coal. While coal's share in Georgia's energy mix has declined from 38% to 30% of total consumption since 1984, nationally coal has maintained its 23% share of energy consumption (see Figure 18). Between 1984 and 2004, coal was the second largest source of energy among the four main fuels in Georgia, but it also saw a relatively small gain in consumption of 28% over that span. Nationally coal ranks third among the four main energy sources, but coal consumption in the U.S. grew slightly faster (32%) than it did in Georgia over the same time period. It therefore appears that Georgia and the U.S. are converging with regard to the proportion of coal consumed.

Figure 18 US Energy Consumption by Fuel, 1984
Electricity Fuels 13%

Figure 19 US Energy Consumption by Fuel, 2004
Electricity Fuels 14%

Coal 23%

Petroleum 39%

Natural Gas 25%

Coal 23%

Petroleum 39%

Natural Gas 24%

The fastest growth in energy consumption nationwide occurred among other electricity fuels, which saw 2004 consumption levels 39% higher than in 1984. Other electricity fuels were also the fastest growing fuel type in Georgia over the same period, although the increase in Georgia was much more pronounced at 186%.
V. ELECTRIC POWER SECTOR CONSUMPTION
In the preceding sections, electricity has been addressed as a direct-use fuel in homes, buildings and industries, similar to natural gas or petroleum. This section addresses the electric power sector as a fuel consumer, similar to the other end-use sectors of the economy. Additionally, it is important to note that while earlier sections of this chapter identify "other electricity fuels" as hydropower, nuclear power, and wood and wood waste, all of the other major energy sources coal, natural gas and petroleum are used to produce electricity in Georgia and the U.S. This makes electricity a major consumer in fact, the largest consumer of energy fuels. Because electricity is both a major energy consumer and a major source of energy, consumption by the electric power sector must be analyzed separately from the other end-use sectors to avoid double counting data.

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Georgia Energy Review 2005
Figure 20 shows the growth in energy consumed by the electric power sector in Georgia from 19842004.2

1,400

Figure 20
Georgia Electric Power Sector Consumption by Fuel, 1984-2004

1,200

Trillion Btu

1,000 800 600 400

Coal Nuclear Natural Gas Hydro Petroleum

200

0 1984

1989

1994 Year

1999

2004

This image clearly illustrates that coal has consistently been the dominant source of energy for the electric power sector over that span. In fact, 95% of all coal energy used in Georgia is consumed by the electric power sector, and 96% of the growth in total coal consumption statewide since 1984 can be attributed to the electric power sector.
As noted earlier in this chapter, total coal energy consumption in the State of Georgia fell by 10%, or 68 trillion Btu, between 1984 and 1992. During this time, coal energy consumption by the electric power sector in Georgia fell by 12%, or 72 trillion Btu. The industrial sector, which is the only other sector in Georgia that consumes measurable amounts of coal energy, saw a 4 trillion Btu increase in coal energy consumption during the same span. Therefore, the State's diminished use of coal energy between 1984 and 1992 is due entirely to lower levels of coal consumption by the electric power sector. Since reaching this low-point in 1992, coal consumption has rebounded in the electric power sector in Georgia, increasing by 45%. By 2004, energy from coal accounted for 65% of total electric power sector consumption in Georgia.

2 Due to electrical system losses and/or different data collection methods, total consumption by the electric power sector is NOT equal to electricity generated.
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Georgia Energy Review 2005
In 2004, nuclear power was the second largest source of energy for the electric power sector in Georgia, accounting for 28% of consumption. Steadily increasing generation by the Hatch nuclear power plant and the opening of the Vogtle nuclear power plant in 1989 led to a nearly four-fold increase in nuclear energy consumption between 1984 and 1992. Its growth has leveled off somewhat since 1992, increasing by only 20% since then.

While the use of natural gas in the electric power sector has increased nearly eight-fold since 1984, it still accounts for only 4% of consumption. The role of hydroelectricity in Georgia has diminished slightly since 1984, and currently accounts for 3% of electric power sector consumption.

For the entire U.S., fuel consumption by the electric power sector breaks down somewhat differently. Figures 21 and 22 show that while coal and nuclear energy are the main sources of energy for this sector in both Georgia and the U.S., these two fuels make up a much larger proportion of electric power sector consumption in Georgia than in the rest of the country. About 93% of the energy used by the electric power sector in Georgia comes from either coal or nuclear power, compared to only 72% for the U.S.

Figure 21
Georgia Electric Power Sector Consumption by Fuel, 2004 3% 0.2%
4%

Figure 22
US Electric Power Sector Consumption by Fuel, 2004 3%
7%

28% 65%

18% 21%

51%

Coal Nuclear Natural Gas Hydro Petroleum

Coal Nuclear Natural Gas Hydro Petroleum

The share of natural gas accounts for much of this difference, providing 18% of the energy consumed by the national electric power sector, compared to just 4% in Georgia. In fact, the relatively small share that natural gas has in Georgia's total energy consumption mix, shown earlier in Figure 5, can mostly be explained by electric power sector consumption trends. In the U.S. in 2004, roughly 31% of all natural gas energy was consumed by the electric power sector, but in Georgia this figure was about 12%.

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Georgia Energy Review 2005
CHAPTER 2: ENERGY MARKETS IN GEORGIA OVERVIEW OF STRUCTURE AND REGULATION
I. ELECTRICITY
A. Electricity Supply in Georgia
1. Power Plant Owners and Operators
a. Investor-owned utilities Vertically integrated utilities, such as Georgia Power and Savannah Electric (SEPCO), have historically built and operated their own power plants, generating all the electricity they sell. While this picture is more complicated today (with the proliferation of independent power producers), Georgia Power and SEPCO still own and operate most of the power plants that produce the electricity they sell to their customers. They also purchase a portion of their electricity and generating capacity from independent power producers, under what is typically known as "purchase power agreements." The Georgia Public Service Commission has set policy that limits to 30% the amount of capacity the investor-owned utilities procure through purchase power agreements.
Georgia Power Georgia Power is the largest electric utility in Georgia and serves customers throughout the State. Georgia Power is a vertically integrated utility that generates, transmits and sells retail electric power to end-use customers. Georgia Power owns all or part of 28 power plants in Georgia and one in Florida, representing approximately 15,319 MW of generating capacity. Its generation capacity is comprised of approximately 67.1 % coal units,12.5 % nuclear units, 7.0 % hydro units, 7.5 % oil combustion turbines, 5.7 % natural gas units (EIA, "Existing Electric Generating Units" 2005). Georgia Power wholly owns numerous generating facilities and coowns other generating facilities with Oglethorpe Power Corporation, MEAG, the City of Dalton, and Savannah Electric. Georgia Power has wholesale contracts for capacity and energy with independent power producers and co-generators both within and outside the State of Georgia.
As an investor-owned electric utility, Georgia Power follows the regulatory direction of the Georgia Public Service Commission to set its rates, plan for its system requirements and acquire new generation assets. Georgia Power is a fully-owned subsidiary of Southern Company and is the largest of Southern Company's five regulated utility subsidiaries.
Savannah Electric Savannah Electric is an investor-owned utility that serves customers in nearly all of two counties and parts of three other counties surrounding the City of Savannah. Savannah Electric owns three power plants and part of one more, with a total generating capacity of approximately 862 MW. Its generation capacity consists of 44.7 % coal and 55.3 % natural gas combustion turbines (EIA "Existing Electric Generating Units," 2005). They also contract for capacity with the City of Savannah and purchase energy from a number of co-generators. Like Georgia Power, SEPCO follows the regulatory direction of the Georgia Public Service Commission. Savannah Electric Power Company is also a fully-owned subsidiary of the Southern Company.
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Georgia Energy Review 2005
b. Municipal utilities Some of the early municipal utilities generated the electricity they sold. Others purchased bulk power from the existing private utilities, such as Georgia Power. In 1975, the Georgia Legislature created the Municipal Electric Authority of Georgia (MEAG), a public corporation that provides power to most government-owned utilities in the State. Now only the City of Dalton and Crisp County own their own generation assets. Two municipal utilities, not affiliated with MEAG, purchase bulk power from other providers (for example, the City of Chickamauga buys power from the Tennessee Valley Authority).
MEAG MEAG owns a partial stake in four Georgia power plants (Wansley, Scherer, Vogtle, & Hatch) and fully owns a natural gas combined cycle unit at Plant Wansley. MEAG's generating capacity totals approximately 2,233 MW. Its generation mix is comprised of approximately 37.0 % coal units, 37.2 % nuclear units, 0.3 % oil combustion turbines, 25.4 % natural gas units (MEAG Power, 2005; EIA, "Existing Electric Generating Units," 2005).
Dalton Utilities Dalton Utilities is a government-owned utility serving Dalton, Georgia "the Carpet Capital of the World." Dalton Utilities owns a partial stake in four Georgia power plants (Wansley, Scherer, Vogtle, & Hatch). Dalton Utilities' generating capacity totals 127.3 MW (Georgia Power, 2006)
Crisp County Power Commission Crisp County Power Commission (CCPC) is a government-owned, public power system that serves Crisp County, including municipalities of Cordele and Arabi. CCPC owns 32 MW of generating capacity, including a hydroelectric plant with 15 MW of capacity and a 17 MW plant that uses coal and natural gas (EIA, "Existing Electric Generating Units," 2005").
c. Electric Membership Cooperative utilities When electric membership co-operatives (EMCs) started delivering electricity to rural Georgia in the 1930s and 40s, they typically contracted for power with existing utilities and Southeastern Power Administration (SEPA). In 1974, with the United States beset by an energy crisis, 39 EMCs formed Oglethorpe Power Corporation (OPC), a power generation cooperative owned by its EMC members. OPC is now the nation's largest electric power supply cooperative in assets, annual kilowatt-hour sales and ultimate customers served.
When Oglethorpe Power entered the power supply arena in 1975, it did so by purchasing co-ownership in four major generating facilities either under construction or planned by Georgia Power Company, including the Wansley and Scherer coal-fired plants, and the Vogtle and Hatch nuclear plants. Since that time, Oglethorpe has acquired a large pumped-storage hydro facility, assumed operation of assets for member EMCs and built its own generation assets.
From 1974 until 1997, Oglethorpe Power Corporation included power generation, transmission and system operations, giving it a high degree of vertical integration (though never retail sales). In March 1997, Oglethorpe Power divided into three specialized operating companies, each with its own management and Board of Directors. Oglethorpe Power retains power generation and other asset management functions; Georgia Transmission Corporation (GTC) provides transmission services; and Georgia System Operations Corporation (GSOC) provides energy scheduling and other system operations functions.
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Oglethorpe Power has undivided ownership shares in several power plants, including 30 percent each of Wansley, Vogtle and Hatch, 60 percent of Plant Scherer Units 1 and 2, and 74.6 percent of the Rocky Mountain hydroelectric facility. Oglethorpe also owns 100 percent of three natural gas plants and operates two other natural gas plants for Smarr EMC. The generating units owned by Oglethorpe and those it operates on behalf of Smarr EMC represent approximately 5,453 megawatts of generating capacity. That capacity consists of 38.9 percent natural gas units, 27.5 percent coal units, 21.7 percent nuclear units, 11.6 percent hydro units, and 0.3 percent oil combustion turbine units (Oglethorpe Power, personal communication, February 24, 2006).

d. Independent power producers (IPP) With passage of the Public Utilities Regulatory Policy Act (PURPA) in 1978, Congress created a market for power from non-utility power producers, revising the existing national policy that only utilities could own and operate electric generating plants. Congress accelerated this diversification of the industry with passage of the Energy Policy Act of 1992 (EPAct 1992), which encouraged greater competition in the wholesale electric power business. EPAct 1992 allows a broad spectrum of independent energy producers to compete in wholesale electric power markets and requires utilities to provide other power suppliers with access to their transmission facilities.

These policies have changed the power generation landscape in Georgia. Since 1994, independent power producers have built 22 power plants in the State, totaling approximately 10,267 MW of capacity. The IPP generation mix is comprised of approximately 0.05% hydro units, 0.7 % oil combustion turbines, 99.1 % natural gas units (EIA, "Existing Electric Generating Units," 2005). Much of this capacity goes to meet load demand in Georgia and is sold under long-term agreements to Georgia utilities. GEFA does not currently have data on what portion of IPP power generation from units located in Georgia is sold to Georgia utilities to serve territorial load.

Independent power producers generating electricity in Georgia include:

Baconton Power LLC Bio-Energy Partners Cinergy Solutions O&M LLC Doyle I LLC KGen LLC Hartwell Energy Ltd Partners Heard County Power LLC Mid-Georgia Cogen LP

Progress Energy Ventures South Eastern Electric Development
Corporation
Southern Power Company (a subsidiary of Southern Company)
SOWEGA Power LLC Tenaska Georgia Partners LP West Georgia Generating Company LP

e. Federal electricity suppliers Two federal electricity suppliers operate in Georgia: the Southeastern Power Administration (SEPA) and the Tennessee Valley Authority (TVA).
Southeastern Power Administration / Army Corps of Engineers SEPA markets the electric power and energy generated at reservoirs operated by the U.S. Army Corps of Engineers in Georgia, West Virginia, Virginia, North Carolina, Florida, Alabama, South Carolina, Mississippi, Tennessee and Kentucky. SEPA markets this power to customers in all of these states. SEPA markets power from seven Army Corps of Engineer hydroelectric facilities in Georgia, which represent approximately 1,900 MW of generating capacity.
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Georgia Energy Review 2005
The U.S. Secretary of the Interior created SEPA in 1950 to carry out the functions assigned to the Secretary by the Flood Control Act of 1944. In 1977, SEPA was transferred to the newly created Department of Energy, and its headquarters are in Elberton, Georgia (Southeastern Power Administration [SEPA], 2004; EIA, "Existing Electric Generating Units," 2005).

The Tennessee Valley Authority TVA is a federally-owned electric power system that sells wholesale electricity in seven states (including wholesale sales to several municipal and cooperative utilities in Georgia) and operates a large fleet of generating units in six of those seven states. In Georgia, TVA owns and operates two hydroelectric dams with a combined generation capacity of 39 megawatts Blue Ridge in Fannin County and Nottely in Union County (Tennesse Valley Authority, "About TVA," n.d.; EIA, "Existing Electric Generating Units," 2005).

f. Out-of-state utilities A few out-of-state utilities own small electric plants in Georgia or portions of larger units in the State. Gulf Power (a Southern subsidiary) owns a 25% stake in Scherer Unit 3 (equal to 222 MW), and Florida Power and Light and Jacksonville Electric Authority jointly own Scherer Unit 4 (891 MW). South Carolina Electric and Gas Company owns a small hydroelectric plant (18.4 MW).

2. Electricity Production Capacity by Fuel Source

Figure 23

Using 2004 data, adjusted for new plants and plant

retirements, we can estimate that today 71 electric

GA Existing Nameplate Capacity by Fuel Type 2004

power sector plants (comprising 293 generating units)3 operate in Georgia. These plants total
approximately 37,367 MW of generating capacity.
As shown in the top chart of Figure 23 that breaks down the State's nameplate4 electrical generating
capacity by fuel source, we find that Georgia has
14,313 MW of coal-fired capacity (38%), 8,523
MW of natural gas-fired (23%), 5,663 MW of dual-
fired capacity (15%), 4,042 MW of nuclear (11%),

Pumped Storage 4%
Petroleum 3%
Other Renewables 0%
Nuclear 11%

Coal 39%

Natural Gas 23%
Hydroelectric 5%

Dual Fired 15%

Coal Dual Fired Hydroelectric Natural Gas Nuclear Other Renewables Petroleum Pumped Storage

1,923 MW of hydro (5%), 1,635 MW of pumped

storage (4%), 1,266 MW of petroleum-fired (3%),

and a few MW of non-hydro renewable capacity

GA Electric Power Sector Generation by Fuel Type 2004

(EIA, "Existing Electric Generating Units," 2005).

3. Generation Mix by Fuel Source
The statistics above relate to electricity generating capacity, which is the potential output of a power plant when it runs at peak capacity. However, each power plant type operates differently on the system, which explains why production capacity by fuel

Pumped storage 1%
Conventional Hydro 3%

Non-hydro renewables 0%
Other 0%

Nuclear 27%

Other gases 0%
Nat Gas 5%
Petrol 0%

Coal 64%

Coal Petrol Nat Gas Other gases Nuclear Conventional Hydro Pumped storage Non-hydro renewables Other

3 The electric power sector includes only facilities that generate electricity for the purpose of electricity sales across the grid. Consequently, these graphs do not reflect electricity generated by commercial and industrial combined heat and power facilities that primarily generate electricity for on-site consumption. 4 "Nameplate" means the manufacturer's maximum rated output for electric power production equipment.
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Georgia Energy Review 2005

source numbers can differ dramatically from

US Electric Power Sector Generation by Fuel Type 2004

generation by fuel source numbers. Some power plants are considered "base load" plants and run more than 90% of the year. Some are

2%

0%

7%

0%

Coal Petrol

"intermediate" plants, while others only meet peak 21%
demand and operate a handful of hours each year.

Typically, coal, nuclear and hydroelectric plants run

as baseload plants.

0%

Nat Gas
Other gases
Nuclear
51%
Conventional Hydro Pumped storage

Georgia's electric power sector relies on coal-fired units to generate the majority of electricity sold in

16% 3%

Non-hydro renewables Other

the State. Coal-fired units generated approximately

64 % of Georgia's electricity in 2004. Most of the remainder came from nuclear generation, with a

small complement from natural gas and very small shares from hydroelectric facilities and non-hydro

renewable energy facilities. The second and third charts in Figure 23 show the breakdown of net generation5 by fuel source for the electric power sector6 in Georgia and for the electric power sector of

the entire United States (EIA, "Electric Power Annual," 2005).

Comparing Georgia's electric power sector fuel mix to the national fuel mix average, Georgia relies proportionately more on coal and nuclear and less on natural gas.

B. Electricity Transmission and Dispatch in Georgia

1. Integrated Transmission System

Currently, Georgia Power, Georgia Transmission Corporation (previously part of Oglethorpe Power), MEAG and the City of Dalton jointly own the majority of the electrical transmission system in Georgia in an arrangement known as the Integrated Transmission System (ITS). Savannah Electric is connected to the ITS through an interface but does not have any financial investment in the system.

The participating parties came to this arrangement in the 1970s, as part of the agreements that permitted Oglethorpe Power, MEAG and Dalton Utilities to purchase ownership interest in two nuclear and two coal generating plants. The ITS permits the sharing of transmission resources and avoids the duplication of transmission lines for different utilities. The ITS also permits the utilities to compete for new large loads (greater than 900 kW connected load) anywhere in the State, as directed by the Georgia Territorial Electric Service Act.

The ITS is used primarily to serve Georgia load. It is interconnected with neighboring utilities through transmission tie lines. These ties allow utilities to transfer power from one system to another, to purchase power from neighboring utilities when it is less expensive than operating their own units, and to sell and transmit any excess power they may have available.

5 Net generation is the amount of gross generation less the electrical energy consumed at the generating station(s) for station service or auxiliaries. 6 The electric power sector includes only the generation of electricity for the purpose of electricity sales across the grid. Consequently, Figure 23 does not reflect electricity generated by combined heat and power facilities, which are typically industrial or commercial units that generate electricity for on-site consumption.
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Georgia Energy Review 2005
At the local level, Georgia Power Company operates the ITS through two Transmission Control Centers (TCC). The TCCs are the system operations agents for all of the ITS owners. One TCC is located in the northern region of the State, and the other in the southern region. The TCCs monitor transmission line loading and network status throughout the ITS. The TCCs also review maintenance outage requests from the ITS owners to see if the transmission system can withstand any single contingency during scheduled maintenance activities. The ITS is located within the Southern Company Control Area and Southern Company Services is responsible for operating the control area in compliance with the North American and Southern Electric Reliability Councils.
A Joint Committee comprised of two members from each of the ITS owners was established in August 1976. The Joint Committee, along with three subcommittees, make up the decision-making body for the ITS and are responsible for changes, additions and improvements to the transmission facilities. This body ensures that the system can handle current and future loads of the co-owners and that the tie lines with neighboring utilities are adequate. The Joint Committee also ensures adherence by all parties to the ITS Agreements.
Although the transmission system is defined as jointly-owned, each transmission facility has a single owner. Each utility is responsible for maintaining its own facilities and developing separate maintenance standards for its respective facilities. These standards make no distinction between the facilities that serve the owner and those that serve other ITS participants. Maintenance costs are the responsibility of the facility owner.
Georgia Power, Georgia Transmission Corporation, MEAG and the City of Dalton have invested in ownership of the ITS according to each utility's percentage of the collective system's peak load. If changed circumstance cause a utility's share of investment in the ITS to differ from its load ratio, it can consider the purchase or sale of transmission facilities from or to another co-owner.
The ITS arrangement, which has existed for more than 20 years, is unique to Georgia. The ITS allows Georgia utilities access to power delivery systems for buying and selling available wholesale electric energy both within and outside of Georgia. The ITS enabled joint transmission services to be offered in Georgia years ahead of the recent federal initiative, creating limited transmission open access at the wholesale utility business level on a regional and national basis (Georgia Public Service Commission [GPSC], "Staff Report," 1998).
2. Southern Electric System
Southern Company is a utility holding company with five electric utility operating subsidiaries that provide electric service in four southeastern states: Georgia Power Company and Savannah Electric and Power Company in Georgia; Alabama Power Company; Gulf Power Company (in Florida); and, Mississippi Power Company. The geographic area served by these utilities constitutes the Southern Control Area. Southern Company Services, Inc., an affiliated company, operates the Southern electric system from Southern Company's William R. Brownlee Power Control Center (PCC) in Birmingham, Alabama.
The PCC was established to provide integrated and coordinated operation of the generation and transmission systems of Southern's operating companies. Using the guidelines established by the Operating Committee in the Intercompany Interchange Contract (IIC), the PCC is responsible for coordinating the operation of the bulk power supply resources. Its objectives are to supply the territorial power requirements of the operating companies' respective service areas at the lowest
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practical cost consistent with a high degree of reliability of the bulk power supply, and to fulfill the interconnected contractual agreements with non-associated utilities.
The Power Coordination Center's responsibilities include: Unit Commitment Determine the appropriate set of generating units and other power supply resources required to economically meet projected integrated system demand on a daily basis; Economic Dispatch Determine the desired loading of the generating units and power supply sources connected to the integrated system; Common Interchange Implement the interchange of power with the non-associated companies that are interconnected with the Southern electric system; Bulk Power Transmission Security Evaluate the reliability of the bulk power transmission system (500 kV, 230 kV and all interconnections) and concur on actions required to ensure its integrity under first contingency conditions; Maintenance Outage Coordination Coordinate the unit maintenance outage requirements of the operating companies, including any auxiliary equipment which could curtail unit capacity, in such a way as to minimize cost to the system; Record Keeping Maintain specified operating data and records.
All major utility systems in the eastern half of the United States and Canada (except in Texas) are interconnected and operated synchronously as part of the Eastern Interconnection-- an interconnected grid of roughly 580,000 MW capacity. Within the Southern electric system, generation is economically dispatched to meet resources without regard for operating company boundaries. Power flows are scheduled and controlled between the Southern electric system and non-associated companies. The Southern Company complies with Federal Energy Regulatory Commission (FERC) requirements and with operational guidelines established by the North American Electric Reliability Council (NERC).
The Southern electric system acts as a tight pool with the PCC at Southern Company Services, Inc. acting to provide integrated and coordinated operation of the system. A power pool is a group of interconnected utilities that act together in a closely coordinated manner to enhance reliability and economics. Loose pools may coordinate only a few operational functions-- typically interchange, spinning reserves and system security-- among independent utilities. Tight pools, such as the Southern electric system, share common unit commitment, economic dispatch and interchange functions to maximize reliability while minimizing production costs.
By operating as a pool, the Southern electric system derives significant economic and operational efficiencies:
Reserve sharing: An independent utility would have to carry reserves equal to its largest unit. A pool also carries reserves equal to its largest single unit, but each pool member carries only a portion of such reserves;
Construction staging: Individual utilities must add generation in increments too small to take advantage of the economies of scale. A pool may add generation in larger increments to be shared among several utilities and take advantage of the economies offered by size;
Buying power: A pool generally has more clout in purchasing off-system capacity and energy than individual companies;
Reliability: Pool operations generally enhance reliability (GPSC, "Staff Report," 1998).
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C. Electricity Retail Sales in Georgia
Three types of utilities provide retail electric service in Georgia: investor-owned utilities (IOUs), government-owned utilities (mostly municipalities or "munis") and electric membership cooperatives (co-ops or EMCs).
1. Investor-Owned Utilities
Investor-owned utilities in Georgia have historically comprised two companies: the Georgia Power Company and Savannah Electric Power Company, both operating subsidiaries of Southern Company7. Georgia Power and Savannah Electric Power Companies trace their corporate lineages back, through previous incarnations, to the dawn of electric power service in Georgia in the 1880s. The Georgia Electric Light Company, a forerunner of the Georgia Power Company, started operating a network of electric street lights in downtown Atlanta in 1884. Likewise, a group of Savannah business people financed development of the Brush Electric Company, the forerunner of Savannah Electric Power Company, in 1882 to illuminate the streets of Savannah.
a. Georgia Power Company Georgia Power Company is the largest electric utility in the State. While the bulk of Georgia Power's service territory is in and around Georgia's largest cities (Atlanta, Macon & Augusta), the Company serves customers in most of the 159 counties in the State. The Company's 2004 4th quarter FERC Form 1 filing shows that the overall average price paid to the Company for electricity by all customer classes in 2004 was 6.13 cents per kilowatt-hour ("Form 1: Sales of Electricity by Rate Schedule") and the Company had operating revenues of $5.38 billion in 2004 ("Form 1: Statement of Income"). The Company's 2005 Facts and Figures pamphlet indicates the company had total gross investment in facilities of $19.7 billion at the end of 2004 (Federal Energy Regulatory Commission [FERC], "Georgia Power," 2005).
b. Savannah Electric and Power Company Savannah Electric and Power Company is also a subsidiary of the Southern Company and serves customers in five counties located in Southeast Georgia, including Chatham, Effingham, Bryan, Bulloch, and Screven. The Company's 2004 4th quarter FERC Form 1 filing shows that the overall average price paid to the Company for electricity by all customer classes in 2004 was 7.73 cents per kilowatt-hour ("Form 1: Sales of Electricity by Rate Schedule"). The same filing indicates the Company had operating revenues of $358 million in 2004 ("Form 1: Statement of Income") and total facility investment of approximately $2 billion in 2004. 2004 ("Form 1: Comparative Balance Sheet") (FERC, "Savannah Electric and Power Company, 2005).
2. Municipal Utilities
At the close of the 19th century and during the 20th, smaller cities across the State founded their own government-operated municipal electric utilities. For example, Newnan initiated electric service in 1891, Dalton in 1898, Acworth in 1906 and Jackson in 1907. Today, 52 cities and one county (Crisp County) in Georgia operate government-owned utilities. Forty-nine of these government utilities purchase their power from the Municipal Electric Authority of Georgia (MEAG), a state-chartered
7 At the close of 2005, Georgia Power and Savannah Electric announced that Georgia Power would acquire Savannah Electric and serve customers in Savannah Electric's territory. The companies expect to complete the merger by July 2006.
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Georgia Energy Review 2005
generation and transmission corporation serving government-owned utilities. The government-owned utilities of Dalton, Chickamauga and Hampton remain unaffiliated with MEAG.
3. Cooperative Utilities
Georgia's early utilities served the more densely settled, urban areas, leaving rural Georgians largely without access to electricity. Georgia was not unique in this regard; this pattern could be found all across the country. President Franklin Roosevelt addressed this national urban/rural disparity with the creation of the Rural Electric Administration in 1935 and, more importantly, the passage of the Rural Electrification Act (REA) in 1936. Electric membership cooperatives sprang up around Georgia in the wake of the REA's passage. Today, Georgia supports 42 electric membership co-ops (EMC)8, 38 of which distribute power generated by Oglethorpe Power Corporation and other suppliers, three that distribute power from the Tennessee Valley Authority, and one that distributes power from Southern Power Company. Each EMC is owned by its customers and is self-regulating, with their rates set by the EMC's Board of Directors.
4. Retail Sales Breakdown
Figure 24

Customers per Utility Type by Sector

1,909,640

Number of Customers

2,000,000 1,750,000 1,500,000

1,565,06 4

1,250,000

1,000,000
750,000
500,00 0 250,000
0

284,019

277,09 1
Residential

55,71 0
Commercial

160,235
559 Industrial Sector

7,881

Investor-Owned

4,332

Cooperative

Type of Utility

Publicly Owned

As shown in Figure 24, the two investor-owned utilities in the State in 2004 served approximately 1.9 million residential customers (51% of all residential customers in State), 284,000 commercial customers (57% of all commercial customers in the State), 7,880 industrial customers (62% of all industrial customers in the State) and the single transportation customer in the State (Metropolitan Atlanta Rapid Transit Authority). In that same year, all the utilities in Georgia sold 129,466,000 megawatt-hours of electricity. Sales of the two investor-owned utilities accounted for 64% of the

8 A 43rd EMC (Haywood EMC) also serves Georgia customers in a small portion of Rabun County, but it is located in North Carolina and primarily serves North Carolina customers.
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Georgia Energy Review 2005
megawatt-hour sales in the State, according to EIA's "Electric Sales, Revenue, and Average Price," (2004), source of all sales data in this section.
In the same year, the 53 government-owned utilities in the State served approximately 277,000 residential customers (7.4% of all residential customers in State), 55,700 commercial customers (11% of all commercial customers in the State) and 559 industrial customers (4.4% of all industrial customers in the State). The collective electricity sales of the 53 government-owned utilities accounted for 9.1% of the total megawatt-hour sales in the State in 2004.
Figure 25
The 43 electric membership co-ops served approximately 1,565,000 residential customers (41.7% of all residential customers in State), 160,235 commercial customers (32% of all commercial customers in the State) and 4,332 industrial customers (34% of all industrial customers in the State). The sales of the 43 electric membership co-ops accounted for 27.3% of the total megawatt-hour sales in the State that year.
5. How the Pie Is Divided - The Georgia Territorial Electric Service Act
In 1973, the Georgia General Assembly adopted the Georgia Territorial Electric Service Act, establishing assigned territories for Georgia utilities, in which they have the responsibility / privilege to serve all residential, small business and existing large commercial and industrial customer (Official Code of Georgia [O.C.G.A.] 46-3-1). Figure 25 maps the power service territories in Georgia, as defined by the Territorial Act. For most new large commercial and industrial customers (over 900 kW of connected load a load comparable to a large supermarket), the Act allows for competition among all the utilities in the State to serve these loads. As a result, Georgia integrated an element of competition into its electricity marketplace decades before electrical competition (deregulation) swept the United States.
D. Electricity Regulation in Georgia
1. State Electricity Regulation: Georgia Public Service Commission
The Georgia Public Service Commission (GPSC) is Georgia's energy regulatory body. The GPSC retains exclusive power to determine just and reasonable rates for investor-owned electric utility companies (Georgia Power and Savannah Electric) to charge for electricity and natural gas service. The GPSC also reviews the utilities' long-range plans to meet energy demand in their service areas. Finally, the GPSC oversees the process by which these companies acquire new assets (generation capacity or pipeline capacity).
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Georgia Energy Review 2005
The Commission has more limited authority with respect to municipal-owned (munis) and electric membership cooperative (co-ops) utilities. The Commission's limited regulatory jurisdiction over the munis and co-ops entails resolution of territorial disputes and approval authority over co-op financing applications. Although the Commission does not approve rates for the munis and co-ops, it does require those utilities to file their rates with the Commission, enabling the GPSC to publish a quarterly comparative analysis of electric rates across the State.
2. State Statutes Affecting the Electric Power Sector
a. Integrated Resource Planning Act In 1991, the Georgia General Assembly adopted the Integrated Resource Planning Act (O.C.G.A. 463A-1). The Act requires the two investor-owned electric utilities regulated by the GPSC to submit Integrated Resource Plans every three years for review by the Commission. Developing an IRP requires that a utility forecast how much demand for electricity there will be within its service territory each year for the next 20 years. Once it has established the load forecast, the utility must describe how it will satisfy that demand and do so at the lowest possible cost. To fulfill this requirement, the utility projects what plants it will decommission and when, the size and type of plants it will build and when (or what agreements it needs to execute to purchase the requisite power from someone else and when it will enter into those contracts), and how the implementation of demand-side management (energy efficiency) programs could help lessen the forecasted load. The purpose of this certification process is to ensure that energy requirements are met and customers receive safe and reliable electric service.
The IRP Act grew from the difficulties inherent in the Commission's ex post facto reviews of generating plants, such as the Commission's review of Georgia Power Company's construction of Plant Vogtle. Prior to enactment of the IRP Act, the Commission did not review a utility's management decisions pertaining to the need, planning and construction of expensive electric generating facilities until the company applied for financing approval or filed for recovery of these costs in rate case proceedings after the plants were partially or fully built. If planning or construction management decisions were found to be imprudent or if the facility was deemed unnecessary in the rate proceedings, the Commission could disallow recovery of certain costs.
The IRP Act gave the Commission the authority to review, modify, reject or approve a plan for meeting future energy demands prior to any commitment regarding construction of the facility, contracting for purchase power or the implementation of a demand-side resource. This certification process helps to ensure the energy is needed, gives the utility more certainty in recovery of expenditures, and ensures that the source of power with the best value is selected after considering both cost and reliability.
In requiring utilities to evaluate demand side management programs (DSM) as a resource for meeting their forecasted load, the Integrated Resource Planning Act permits energy efficiency to compete with building new power plants as a cost-effective way to meet future demand. The IRP process dictates that the utilities develop the resources that prove the most cost-effective in helping Georgia meet its energy needs. Additionally, the Integrated Resource Planning Act requires that the GPSC determine whether a given IRP "...adequately demonstrates the economic, environmental, and other benefits to the state and to customers of the utility..." (O.C.G.A. 46-3A-2) associated with improvements in energy efficiency and alternative energy and co-generation facilities. The Public Service Commission's rules acknowledge these "external" benefits of demand side management by authorizing the Commission to offer monetary incentives to utilities that engage in DSM (State of Georgia Secretary
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of State, 2006). Utilities in Georgia currently offer demand response tariffs (real-time pricing, time-ofuse, and interruptible tariffs), weatherization assistance for low-income customers, direct load control programs, energy efficiency consumer awareness programs, ENERGY STAR awareness programs, energy audits, renewable energy programs and other energy efficiency or demand-side programs.
b. Georgia Territorial Electric Service Act As described earlier, the Georgia Territorial Electric Service Act was enacted in 1973 to assure the most efficient, economical and orderly rendering of retail electric service within the State and to avoid the duplication of electric lines by different utilities. Electric suppliers under the jurisdiction of the Territorial Act are Georgia Power Company, Georgia's Electric Membership Cooperatives (42 EMCs), Municipal Electric Authority of Georgia (MEAG), Savannah Electric and Power Company, North Carolina's Haywood EMC and Tennessee's Electric Power Board of Chattanooga.
As a result of the Act, customer choice for most new large commercial and industrial customers with a connected load of 900kW or more has been in place in Georgia for more than 20 years, long before the national debate on electric industry restructuring began. The Territorial Act assigned nearly all of the geographic areas within the State to an electric supplier, leaving some small areas as "unassigned" territories that can be served by any electric supplier. With certain exceptions, customers with connected loads of less than 900kW (about the demand level from a modern grocery store) must take electricity from the franchised supplier in that geographic area. However, if any customer with a load of 900kW or more locates outside the 1973 city limits of a Georgia city, that customer may have a choice of suppliers. Within the 1973 city limits of Georgia towns, such customers may have a more limited opportunity to choose suppliers. Once a customer chooses a supplier, the Territorial Act allows that supplier the exclusive right to serve that customer for the life of the premises. Georgia electric suppliers (Munis, EMCs and IOUs) compete for about 100 MW of load each year.
c. Georgia Distributed and Cogeneration Act of 2001 In 2001, the Georgia General Assembly and the Governor affirmed the value of stimulating the deployment of renewable energy resources in Georgia with the passage of the Georgia Distributed and Cogeneration Act. Specifically, the Legislature concluded that "it is the public interest to: (1) Encourage private investment in renewable energy resources; (2) Stimulate the economic growth of Georgia; and (3) Enhance the continued diversification of the energy resources used in Georgia" (O.C.G.A 46-3-51). The GPSC referenced this legislation in describing its pursuit of a green pricing program9 for Georgia Power and Savannah Electric Power (GPSC, "Green Power Pricing," n.d.).
3. Environmental Regulation (EPD & EPA)
a. Georgia Environmental Protection Division The Environmental Protection Division (EPD) of the Georgia Department of Natural Resources regulates the air emissions, water withdrawals and water discharges of all large electric generating units in Georgia. This authority derives from State law and the authority for enforcing major pieces of federal environmental law (such as the Clean Air Act and the Clean Water Act) that has been "delegated" to EPD by the U.S. Environmental Protection Agency. For example, EPD issues Title V air permits for all large electric generating units in the State. These permits derive their name from Title V of the Clean Air Act, which outlines the specific air emissions and monitoring requirements that apply to such facilities.
9 In green pricing programs, regulated utility providers offer their customers the option to buy green energy for a premium price.
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A large coal-fired electric plant in Georgia would require a number of permits from EPD, including an air emissions permit (in accordance with the federal Clean Air Act and Georgia Air Quality Control Act), a solid waste handling permit to ensure proper handling and disposal of ash and other generated wastes, surface water withdrawal permit for the withdrawal of cooling water and a National Pollutant Discharge and Elimination System permit for planned discharge of wastewater from the power generating process.
b. U.S. Environmental Protection Agency In response to growing concern about environmental pollution, Congress created the U.S. Environmental Protection Agency in 1970. With the formation of EPA, Congress consolidated in one agency a variety of federal research, monitoring, standard-setting and enforcement activities to ensure environmental protection. EPA's mission is to protect human health and to safeguard the natural environment--air, water, and land--upon which life depends.
EPA exercises regulatory authority over energy projects in Georgia in a number of ways. First, permits that the Georgia EPD issues are predicated on regulatory guidance and requirements set forth by EPA. Additionally, Georgia's air and water quality must meet national EPA standards.
4. Federal Electricity Regulation (FERC, NRC & RUS)
a. Federal Energy Regulatory Commission The Federal Energy Regulatory Commission (FERC) has broad authority over the electric utility industry. FERC's responsibilities include:
regulating the transmission and wholesale sale of electricity in interstate commerce, ensuring that wholesale and transmission rates charged by utilities are just and reasonable and not unduly discriminatory or preferential;
licensing and inspecting private, municipal, and state hydroelectric projects; reviewing utility pooling and coordination agreements; overseeing the issuance of certain stock and debt securities, assumption of obligations and
liabilities, and mergers; reviewing the holding of officer and director positions between top officials in utilities and
major firms supplying electrical equipment to the power companies and underwriting securities; and reviewing rates set by the federal power marketing administrations, such as the Tennessee Valley Authority.
FERC was created by the Department of Energy Organization Act on October 1, 1977 to replace the Federal Power Commission. The FERC's legal authority comes from the Federal Power Act of 1935, the Natural Gas Act of 1938, the Natural Gas Policy Act of 1978, the Public Utility Regulatory Policies Act of 1978, the Energy Policy Act of 1992 and the Energy Policy Act of 2005.
b. Nuclear Regulatory Commission The U.S. Nuclear Regulatory Commission (NRC) is an independent agency established by the Energy Reorganization Act of 1974 to regulate civilian use of nuclear materials. NRC is headed by a fivemember Commission. The NRC's regulatory activities focus on reactor safety oversight and reactor license renewal of existing plants, materials safety oversight and materials licensing for a variety of purposes, and waste management of both high-level and low-level waste.
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Georgia Energy Review 2005
c. Rural Utilities Service (RUS) The Rural Electrification Act of 1936 established the Rural Electrification Administration (REA) in the U.S. Department of Agriculture to provide affordable electric service to rural communities. REA offered low cost loans to encourage groups in rural areas to start customer-owned utilities to provide electric service for their members.
The Rural Electrification Loan Restructuring Act of 1993 amended the 1936 Act. The Rural Utilities Service (RUS) replaced the REA and makes loans and loan guarantees to not-for-profit rural electric cooperatives. These loans finance the construction, operation and improvement of electric facilities. The loan program offers the incentive of low cost financing to ensure continued reliable service to rural areas in Georgia and throughout the country.
II. NATURAL GAS
A. Natural Gas Supply in Georgia
1. Imports / Natural Gas Transport
Georgia produces no natural gas and has no proven reserves of natural gas. Therefore, the State must rely on imports to meet all of its demand. Natural gas imports into Georgia arrive via three interstate pipelines and a liquefied natural gas import terminal at Elba Island, near Savannah (Elba Island Terminal). Three companies operate the interstate pipelines that deliver natural gas to Georgia Transcontinental Gas Pipeline Corporation (Transco), East Tennessee Natural Gas Company (ETNG) and Southern Natural Gas Company (SNG).
a. Transcontinental Gas Pipeline Company The Transco system consists of 10,500 miles of pipeline extending from South Texas to New York City. The Transco pipeline system is a major provider of natural gas to 12 southeastern and Atlantic Seaboard states. The system capacity totals 8.1 billion cubic feet (Bcf) per day. Transco is a whollyowned subsidiary of Williams, headquartered in Tulsa, Oklahoma. Transco's pipeline staff is headquartered in Houston, Texas (Williams, 2006).
b. East Tennessee Natural Gas The ETNG pipeline system begins in Tennessee and extends to an area just south of Roanoke, Virginia and serves the southeastern states of Georgia, Tennessee, North Carolina and Virginia. The pipe is 1,353 miles long and has a total capacity of 1.3 billion cubic feet per day. Duke Energy Gas Transmission owns this pipeline, which is a subsidiary of Duke Energy (Duke Energy, 2006).
c. Southern Natural Gas The SNG pipeline system consists of 8,000 miles of pipeline extending from Gulf Coast points in Texas and Louisiana to seven southeastern states, including major metropolitan areas such as Atlanta and Birmingham. The SNG pipeline system capacity totals 3.4 Bcf per day. SNG's pipeline delivers gas at 165 delivery points in Georgia, including 131 local distribution company or municipal gas utility delivery points, 22 direct industrial customers and 12 power generation facilities. SNG, with headquarters in Birmingham, Alabama, is a wholly-owned subsidiary of El Paso Corporation, which is headquartered in Houston, Texas (El Paso Corporation, 2006).
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Georgia Energy Review 2005
The Elba Island Terminal is one of four operational liquefied natural gas (LNG) terminals in the United States. Southern LNG Inc. (SLNG), a wholly owned subsidiary of SNG, owns the Elba Island Terminal and operates the facility from its main office in Savannah, Georgia.The Elba Island Terminal receives and stores shipments of liquefied natural gas, which originate primarily in Trinidad. SLNG stores the LNG in large tanks on-site. Before moving the gas, SLNG re-gasifies the LNG, pressurizes it and then delivers it off the island into the pipeline grid. Prior to February 2006, the Elba Island Terminal was capable of delivering 446 million cubic feet (MMcf) per day on a firm basis to the interstate pipeline grid. In 2005, monthly purchases of gas from the Elba Island Terminal that were made to serve Georgia markets ranged from 60-80% of the actual send-out of the Terminal. The remainder of the gas was purchased for consumers in other states in the Southeast. In February 2006, SLNG completed a project that expanded the Elba Island Terminal's send out capacity to 806 MMcf per day. Another expansion of the Elba Island Terminal is planned for a 2010 completion that will more than double the terminal send-out capacity again to over 2,000 MMcf per day.
Southern Natural Gas is also building two new pipelines from the Elba Island Terminal, which when combined with the existing pipeline infrastructure will accommodate the 2,000 MMcf per day of expanded terminal send-out. First, the Cypress pipeline project will have 500 MMcf per day of capacity and deliver gas to Brunswick and several counties in south Georgia and northern Florida. SNG expects to complete the first phase of the Cypress pipeline in 2007. A second pipeline expansion will be built by a SNG subsidiary, Elba Express Company LLC. The new Elba Express Pipeline will have the capability to transport over 1,000 MMcf per day and will travel northwest from Elba Island to connect with SNG's existing pipeline near Wrens, Georgia, as well as Transco's pipeline near the borders of Georgia and South Carolina. SNG expects to complete the Elba Express Pipeline in 2010.
Figure 26 Natural Gas Pipeline System in Georgia

Dalton Rome

Athens

Atlanta

Augusta

Macon Columbus
Albany

Savannah Brunswick

Valdosta

Legend
SNG Elba Express SNG Cypress Transco East Tennessee
Elba Island

1
2. Sources of Supply 33

Georgia Energy Review 2005
In 2004, natural gas reached Georgia either through three interstate pipelines or via direct international imports that arrived at Elba Island. The net receipt of gas in Georgia from interstate pipeline totaled 289,530 million cubic feet in 2004. While Georgia receives natural gas (has "interstate receipts" of gas) from Alabama and Tennessee, it only has positive net receipts with Alabama. In other words, while natural gas does move from Tennessee to Georgia, considerably more gas moves across the state line in the opposite direction. The net receipts from Alabama represent all the gas that moves into Georgia via the Southern Natural and Transcontinental pipelines minus the gas that continues through those pipelines to other states (e.g. Tennessee, South Carolina, North Carolina and Florida).
With regard to international receipts, Georgia imported 105,203 million cubic feet of natural gas through Elba Island. All of this gas originated in Trinidad. (EIA, "Natural Gas Navigator: International & Interstate Movements of Natural Gas by State," 2006.)
B. Natural Gas Marketing in Georgia
Understanding the current natural gas market in Georgia requires understanding the fundamental market change that occurred in 1998. Prior to 1998, all retail and commercial natural gas consumers in Georgia purchased their gas either from one of the two investor-owned natural gas distribution companies in the State (Atlanta Gas Light Company and United Cities Gas now Atmos Energy), or from their local municipal gas company. The Georgia Public Service Commission (GPSC) regulated and set rates for the two investor-owned utilities, while the local municipal governments set rates for their municipal gas systems.
In 1997, the Georgia General Assembly passed The Natural Gas Competition and Deregulation Act (SB 215) (O.C.G.A. 46-4-150 through 166). The act was signed in April of that year, and Georgia's transition to a partially deregulated natural gas market commenced the following summer. The GPSC oversaw the deregulation process.
Specifically, the Act permitted the existing investor-owned natural gas distribution companies in the State to "elect" to relinquish their gas merchant functions and operate as a "pipes only" utility (Electing Distribution Company). The municipal utilities were exempted from the legislation. Competitive natural gas marketers would enter the market and take over the retail function of selling natural gas to end-use customers. Atlanta Gas Light Company (AGLC) began the transition to become a pipes-only gas company in 1998, when it elected to open its territory to competition. In October 1999, AGLC completed the conversion process and relinquished all merchant functions. However, AGLC is still responsible for ensuring gas delivery for the State by contracting for firm transmission and storage capacity with interstate pipelines. The rights to use these contracts are "released" to marketing companies, which then use them to ship gas to their customers in Georgia. AGLC also directly manages storage and transportation services needed to meet the shifts in customer loads associated with weather forecast variances. United Cities Gas did not "elect" to open its territory and continues to operate as an investor-owned local distribution company, fully regulated by the GPSC.
Today, 11 natural gas marketers are certified, and 10 of those currently serve customers on AGLC's system10. Marketers charge market-based prices, but rates for AGLC's distribution service are still
10 Catalyst Energy, Commerce Energy, Coweta-Fayette EMC Natural Gas, Gas South, GasKey, Georgia Natural Gas, Infinite Energy Inc., SCANA Energy, Shell Energy Services Co., Vectren Source and Walton EMC Natural Gas.
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Georgia Energy Review 2005
regulated by the GPSC (and make up a percentage of each customer bill issued by the natural gas marketers).
In the wake of Georgia's natural gas deregulation, three types of natural gas companies serve retail customers in Georgia. Customers living within the AGLC service territory (the deregulated area of the State) can choose their marketer from the list of natural gas marketers certified by the GPSC. Customers living within the service territory of Atmos Energy must take their natural gas service from Atmos. Likewise, those natural gas customers living within the service territory of one of the 84 municipal natural gas utilities must take their natural gas service from that municipal utility.
C. Natural Gas Regulation in Georgia
1. State Natural Gas Regulation (Georgia Public Service Commission)
The Georgia Public Service Commission (GPSC) has regulatory responsibility for natural gas in Georgia that varies with each type of entity: the 11 natural gas marketers, the investor-owned utility (Atmos Energy) and the "pipes-only" electing distribution company, AGLC. The 84 municipal utilities are primarily self-regulating entities. These utilities are accountable to City Government - their primary link of customer accountability is the same one that links elected officials to their constituents. However, Georgia law does provide for the GPSC to regulate municipal gas systems in some instances, and they are subject to GPSC's Pipeline Safety jurisdiction.
a. Regulation of natural gas marketers The GPSC does not regulate most components of the rate natural gas marketers charge for natural gas service, but does retain certain regulatory responsibilities, including:
Certification: To serve customers in Georgia, natural gas marketers must receive certification from the GPSC. The process ensures that the proposed marketer possesses adequate financial and technical capability to sell or offer to sell natural gas within the State.
Designation of a regulated provider: In 2002, the Georgia Legislature passed the Natural Gas Consumers' Relief Act (O.C.G.A. 46-4-158.1 through 158.5). One provision required the GPSC to establish a Regulated Provider Program to provide natural gas service to low-income residential consumers and consumers who are unable to obtain or maintain service from a gas marketer. The GPSC has authority over the rates the Regulated Provider may charge for natural gas.
Protection of basic consumer rights: The Natural Gas Consumers Relief Act also required the GPSC to develop and enforce consumer protections, such as expanded notice of disconnection requirements, expanded disconnection exceptions, billing standards and minimum standards for terms of service.
Designation of an interim pooler: Deregulation of the natural gas market requires the designation of an "interim pooler," an entity that will provide customers in the deregulated territory with service in the event a marketer files bankruptcy or otherwise leaves the natural gas market. The Commission oversees the competitive bid process to choose an interim pooler.
b. Regulation of Atmos Energy The GPSC regulates Atmos Energy, including the rates Atmos may charge for natural gas service, Atmos' capacity supply planning process and the Company's terms of service that are covered in the Company's Tariff.
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Georgia Energy Review 2005
c. Regulation of Atlanta Gas Light Company The GPSC regulates the rates that AGLC may charge to the marketers for gas distribution and metering. These appear as AGLC "base charges" on bills customers receive from marketers. Additionally, the GPSC oversees AGLC's capacity supply planning process.
2. State Statutes Affecting the Natural Gas Sector
Natural Gas Competition and Deregulation Act (O.C. G.A. 46-4-151-46-4-166). This Act, passed by the General Assembly in 1997, established a new regulatory model to allow for competition in the natural gas industry. The Act's stated intent includes the following: to "(1) Promote competition in the natural gas industry; (2) Protect the consumer during and after the transition to a competitive natural gas market; (3) Maintain and encourage safe and reliable natural gas service; (4) Deregulate those components of the natural gas industry subject to actual competition; (5) Continue to regulate those natural gas services subject to monopoly power; (6) Promote an orderly and expeditious transition of the natural gas industry toward fully developed competition. . ." (O.C.G.A. 46-4-151). The Act allows an existing local distribution natural gas company to elect to provide distribution service only instead of proving both distribution service and commodity sales to the end use customer. Under the Act, any such electing distribution company's (EDC) rates remain regulated by the Commission and it provides distribution service to the marketers, who actually sell the commodity to the end use customer. The price the marketer may charge for the actual commodity is not regulated and is subject to competition.
Universal Service Fund (O.C.G.A 46-4-166) - The Act also created a Universal Service Fund (USF) for each EDC, which is used for (1) ensuring that gas is available for marketers to sell to firm retail customers, (2) allowing the EDC to expand its facilities in the public interest, and (3) assisting low income customers in times of emergency.
Standards of Conduct (O.C.G.A. 46-4-159) - In addition, the Act created Standards of Conduct for an EDC, which require an EDC to conduct its business to conform to standards that are intended to prevent any advantage or disadvantage accruing to a marketer, including a marketer that is an affiliate of the EDC, in relation to other marketers and their customers.
Capacity Supply Plans (O.C.G.A 46-4-155) The Act requires an EDC to file a capacity supply plan every three years that (a) specifies the range of the requirements to be supplied by interstate capacity assets, (b) describes the array of interstate capacity assets selected by the EDC to meet such requirements, (c) describes the criteria of the EDC for entering into contracts under such array of interstate capacity assets from time to time to meet such requirements; provided, however, that a capacity supply plan approved or adopted by the GPSC shall not prescribe the individual contracts to be executed by the EDC in order to implement such plan, and (d) specifies the portion of interstate capacity assets that must be retained and utilized by the EDC to manage and operate its system.
Commission Regulation of Utility Rates (O.C.G.A. 46-2-25) This section requires any regulated natural gas utility to seek approval of any rate change from the Commission.
Alternative Form of Regulation (O.C.G.A 46-2-23.1) Section 46-2-23.1 provides a gas company the opportunity to file to have its rates regulated under an "alternative form of regulation," which means that rates are established without regard to the traditional methods which are based strictly upon cost service, rate base and rate of return. The
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Georgia Energy Review 2005
Commission may approve the application, if among other things, it provides incentives for reduced costs and improved efficiencies.
Intrastate Pipelines and Distribution Systems (O.C.G.A 46-4-20 46-4-35) This chapter establishes the process for Commission oversight over extension of natural gas facilities. Section 46-4-21 states that no person shall construct or operate in intrastate commerce a pipeline or distribution system without obtaining a certificate from the Commission. The chapter further describes the procedure for obtaining a certificate, including criteria the Commission will consider.
Safety Jurisdiction (O.C.G.A 46-2-20) The Commission has the authority to draft rules and regulations for the safe installation and operation of natural gas facilities, including facilities owned and operated by municipalities.
Gas Supply Plans (O.C.G.A 46-2-26.5) Pursuant to this section, any natural gas utility that has not unbundled the sale of commodity must file a gas supply plan annually, including the factors the utility intends to use to recover its gas costs from its customers the following year. After public hearing, the Commission shall approve the plan as filed, or as modified by the Commission.
Municipal Gas Authority of Georgia (O.C.G.A. 46-4-80 46-4-125) The General Assembly created the Municipal Gas Authority of Georgia ("MGAG") for the purpose of assisting political subdivisions that own and operate gas distribution systems with securing adequate, dependable and economic gas supply sources, and to assist in financing and other expenditures of the municipal gas systems.
3. Federal Natural Gas Regulation (FERC)
The Federal Energy Regulatory Commission (FERC) has regulatory responsibilities for interstate commerce and transportation of natural gas, including:
Regulation of pipeline, storage and liquefied natural gas facility construction; Regulation of natural gas transportation in interstate commerce; Issuance of certificates of public convenience and necessity to prospective companies
providing energy services, or constructing and operating interstate pipelines and storage facilities; Regulation of facility abandonment; Establishment of rates for services; Regulation of transportation of natural gas as authorized by the NGPA (Natural Gas Policy Act) and the OCSLA (Outer Continental Shelf Lands Act); and Oversight of the construction and operation of pipeline facilities at U.S. points of entry for the import or export of natural gas.
III. PROPANE/LIQUEFIED PETROLEUM GAS (LPG)
A. Propane / LPG supply in Georgia
1. Imports / Propane Transport
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Georgia Energy Review 2005
Georgia supports no petroleum or natural gas refining operations, and therefore produces no propane or liquefied petroleum gas. The State must rely on imports to meet all of its needs. All propane / liquefied petroleum gas imports are carried through the 1,300-mile Dixie Pipeline, which transports 100,000 barrels of propane per day from Mont Belvieu, Texas and nine other fractionators and refineries in Texas, Louisiana and Mississippi to customers throughout the Southeast. Delivery points include termination points in North Carolina and Georgia, as well as seven intermediate delivery terminals. Enterprise Products Partners, a large, diversified energy partnership headquartered in Houston, Texas, owns 66% of the Dixie Pipeline system.

2. Sources of Supply

This section is currently under development.

B. Propane / LPG Marketing in Georgia

This section is currently under development.

C. Propane / LPG Regulation in Georgia

This section is currently under development.

IV. REFINED PETROLEUM PRODUCTS

A. Refined Petroleum Products Supply in Georgia

1. Imports / Transport

Georgia produces no crude oil, has no oil wells in operation and has no proven reserves of crude oil.

Additionally, Georgia has no petroleum

refining capability. Therefore, the State must rely on

Figure 27

imports of refined petroleum products to meet its

demand. Most refined petroleum product imports

come into the State via two interstate pipelines:

a. Colonial pipeline The Colonial Pipeline system spans from Texas to Delaware, providing refined petroleum products to Louisiana, Mississippi, Alabama, Georgia, Tennessee, South Carolina, North Carolina, Virginia, Maryland and Delaware. Colonial ships a wide array of refined petroleum products, including 38 different grades of gasoline, seven grades of kerosene (including two for military use), and 16 grades of home heating oil and diesel fuel (Colonial Pipeline, 2006).

b. Plantation pipeline The Plantation pipeline system receives distillate products from nine refineries in Mississippi and Louisiana and delivers those products to 130 shipper terminals in eight states through a network of
38

Georgia Energy Review 2005
3,100 miles of pipeline. The states served by the Plantation pipeline include Louisiana, Mississippi, Alabama, Georgia, Tennessee, South Carolina, North Carolina and Virginia. Plantation's deliveries of motor gasoline, diesel and home heating fuels, aviation gasolines, kerosenes, and commercial and military jet fuels total more than 20 million gallons each day (Plantation Pipeline Company, "Pipelines Information, n.d.).
2. Sources of Supply
The supply of transportation fuels and other refined petroleum products involves not only the supply of crude oil though the global oil market, but also the capacity to refine crude oil into fuels. While refineries are spread throughout the United States, the greatest concentration of refining capacity is located in Texas, Louisiana and Mississippi along the Gulf Coast. Georgia relies almost entirely on the refining capacity in the Gulf Coast region.
a. Global oil markets / oil supply
This section is currently under development.
b. Refining At the close of 2005, U.S. refining capacity stood at approximately 15.4 million barrels per day of finished petroleum products. The majority of this refining capacity resides along the coast of the Gulf of Mexico, particularly in Texas and Louisiana. In December of 2005, the coastal and inland refining capacity in Louisiana and Texas exceeded 7.7 million barrels per day. This capacity exceeds the7.6 million barrels per day of total refining capacity for the rest of the United States (EIA, "Petroleum Navigator," 2006).
B. Transportation Fuels Marketing in Georgia Currently there are approximately 7,995 retail gasoline outlets in Georgia, or about 4.7 percent of the U.S. total (EIA, "Petroleum Profile: Georgia," 2006). While service stations remain the predominant retail establishments for marketing gasoline, the variety of service station formats and ownership is increasing. The most predominant formats of gasoline outlets include:
A company-owned, company-operated station is owned by a refining company and operated by salaried or commissioned personnel of the refining company. Due to consistently rising operating costs and shrinking margins over the last decade, nearly all refiners have ceased this direct type of station operation with company employees in Georgia.
A lessee-dealer is a person who leases the station and land, including tanks, pumps, signs, and other equipment, from a refiner and is supplied directly by the refiner or an affiliate or subsidiary company of the refiner. The lessee-dealer is required by contract to buy gasoline from the refiner at the price set by the refiner, the "dealer tank wagon" (DTW) price. This price will generally be higher than the rack price charged to jobbers (see below), as it will include a charge for promotional support provided by the refiner. The refiner also sets the lease rate and other operating standards and may also offer certain discounts, all of which affect operating costs and ultimately the retail price charged by the lessee-dealer. Because of high costs, refiners have divested themselves of nearly all of their retail real estate in Georgia. Refiners have determined a much greater return exists in refining and crude production for the capital deployed.
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Georgia Energy Review 2005
A jobber purchases branded or unbranded gasoline at a terminal owned or supplied by a refinery, commonly called the "rack," and distributes it either to his or her own service stations or to service stations owned by others (jobber-dealers) or both. Many jobbers have term contracts with refiners to purchase specific amounts of branded gasoline. Some jobbers operate chains of convenience stores that may or may not be branded. Many jobbers also make bulk deliveries in quantities ranging from 250 to 9,000 gallons to wholesale customers (farmers, trucking fleets, commercial and industrial accounts, government agencies, etc.).
A jobber-dealer is an individual or entity that owns (or leases from a third party) the station or land of a retail outlet and has use of tanks, pumps, signs and other equipment. A jobber-dealer sells a major brand of gasoline or may sell unbranded product. A jobber-dealer has a supply agreement with a jobber. If the jobber-dealer is retailing a major brand, the jobber-dealer must abide by the image and marketing programs of that brand. It is the jobber's responsibility to enforce the requirements of the major brand. The jobber-dealer may, upon expiration of a contract, switch to another source of supply, including a different brand.
An independent dealer generally does not have a long-term contract with any particular jobber or refiner; they shop around for the lowest unbranded rack price. They use either a jobber or common carrier to execute delivery of the gasoline purchased at the rack. Unbranded gasoline may be sold under a local, regional or national retail chain name such as Racetrac, Quik Trip or Country Cupboard, or a local individual owner, such as "Joe's Gas."
In recent years, the retail marketing of gasoline has become increasingly linked with convenience shopping. For many years, the most common service station format consisted of several islands of gasoline pumps and two or three service bays. Today, gasoline is predominantly being offered at convenience outlets such as Quik Trip and Seven-Eleven, supermarkets such as Safeway and Kroger, and hypermarkets such as Wal-Mart and Costco (Majority Staff, Senate Committee, 2002).
C. Heating Oil Marketing in Georgia
Except for industrial facilities requiring heating fuel when cut off by natural gas suppliers during extreme winter conditions, heating oil is not a product in significant use in Georgia. The availability and economy of natural gas has all but eliminated the use of home heating oil. When heating fuel is needed for industrial or home heating applications, jobbers make the sale and delivery.
D. Refined Petroleum Products Regulation in Georgia
This section is currently under development.
V. OTHER ELECTRICITY FUELS
A. Coal in Georgia
1. Imports / Transport
Georgia produces no coal and therefore must import all of the coal it uses. In 2004, electric generation plants and industry in Georgia consumed 37,863,000 short tons of coal, imported to Georgia from around the United States and abroad (EIA, "Annual Coal Report," 2005).
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Georgia Energy Review 2005 2. Sources of Supply
This section is currently under development. VI. NON-ELECTRIC BIOMASS AND RENEWABLES A. Biofuels in Georgia
This section is currently under development.
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Georgia Energy Review 2005

CHAPTER 3: ENERGY PRICES IN GEORGIA

I. ELECTRICITY

Describing average electricity rates in Georgia, even

for a single class of customers like residential

Table 1

customers, is not as simple as looking up all the electric providers' rates and averaging them together. How much an electricity customer pays for electricity depends on how each customer uses electricity. For instance, Georgia Power's standard residential rate includes an inclining block rate in the summer11 and a declining block rate in the winter. Consequently, two residential users on the same rate may pay a different amount per kWh for electricity. The rates structures for commercial and industrial customers are considerably more complicated.

2004 Average Per-Kilowatt Hour

Electric Rates

Customer class

GA US

Average revenue per kilowatthour Residential ( per kWh)

7.86

8.97

Average revenue per kilowatthour Commercial ( per kWh)

6.88

8.16

Average revenue per kilowatthour Industrial ( per kWh)

4.43

5.27

Average revenue per kilowatthour All sectors ( per kWh)

6.58

7.62

The U.S. Energy Information Administration provides data on average electric rates by state by calculating the revenue all electricity providers take in by customer class divided by the number of kilowatt-hours sold by class. Georgia's 2004 average per kilowatt-hour electric rates can be seen in Table 1. Figure 28 shows the trend in these rates over the last 15 years (EIA, "Current and Historical Monthly Retail Sales," 2005).

Figure 28

Average Revenue Per Kilowatt-hour by End Use Sector in Georgia 1990 - 2005 (cents per kWh)

10.00

9.00

8.00

7.00

6.00

5.00

4.00

3.00

2.00

1.00

0.00

1990

1992

1994

1996

1998

2000 2002 R 2004 R

Avg Revenue Per KWH Residential (/KwH)
Avg Revenue Per KWH Commercial (/KwH)
Avg Revenue Per KWH Industrial (/KwH)
Avg Revenue Per KWH -All Sectors (/KwH)

The recent increase in Georgia's electricity prices, evident in Figure 28, reflects an increase in the underlying costs of electricity fuels, especially the price of coal and natural gas.

11 Georgia Power's residential inclining block rate in the summer means that a customer will pay one rate for electricity for the first 650 kWh he or she uses, a higher rate for the next 350 kWh and more after that. A declining block rate reverses those rates. For more information, visit Georgia Power's website at www.southernco.com/gapower.
42

Figure 29

Georgia Energy Review 2005 II. NATURAL GAS

Table 2

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Average natural gas price by end use sector in Georgia 1990 2005 ($ per thousand cubic feet)

16

14

12 Residential Consumer Price

10

($ per Thousand Cubic Feet)

8

Commercial Consumer Price ($ per Thousand Cubic Feet)

6

Industrial Consumer Price ($

per Thousand Cubic Feet)

4

2

0

2004 Average Natural Gas Prices

Customer class
Average Residential natural gas price ($ per 1,000 cubic feet)

GA US 13.87 10.75

Average Commercial natural gas price ($ per 1,000 cubic 11.45 9.41
feet)

Average Industrial natural gas price ($ per 1,000 cubic feet)

7.56

6.56

Georgia's residential, commercial and industrial natural gas prices remained stable for years, but dropped in 1999, only to climb dramatically over the next six years, as shown in Figure 29. This trend is not unique to Georgia, but reflects the pricing trend all over the United States. Most experts attribute the increase in U.S. natural gas prices over the last few years to the tightening between demand and available supply. The destructive hurricanes of 2004 and 2005 exacerbated this underlying trend, pushing recent natural gas prices to record highs. Table 2 shows Georgia's 2004 average natural gas prices by end use sector stacked against the average prices for those sectors across the United States (EIA, "Natural Gas Navigator," 2006).
III. TRANSPORTATION FUELS
This section is currently under development.

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Georgia Energy Review 2005
CHAPTER 4: ENVIRONMENTAL IMPACTS OF ENERGY
I. OVERVIEW
Energy production and consumption comprise a multi-billion dollar industry in Georgia, but energy use is so pervasive and routine that it is taken for granted. Fossil fuels and renewable energy resources are part of everything, from heating and cooling homes to fueling cars and tractors to manufacturing textiles and powering electronics and appliances.
As the ninth most populous state, Georgia uses large quantities of energy. In 2002, Georgia consumed well over 100 million barrels of gasoline and diesel fuel to meet transportation needs, and burned approximately 760 trillion British thermal units (Btus) of coal, natural gas and petroleum to produce electricity for Georgians and consumers in other states.
Unfortunately, energy is rarely used as efficiently as technology permits, and its use often has adverse environmental impacts on air, water, and land. Energy consumption for power generation and transportation has direct impact on Georgia's air quality. Fuel combustion for transportation, heat and electricity results in emissions of fine particulate matter, oxides of nitrogen (NOx), volatile organic compounds (VOCs), sulfur dioxide (SO2), carbon monoxide (CO), carbon dioxide (CO2), mercury (Hg) and other metals, as well as benzene, formaldehyde and other toxic compounds. Emissions of NOx and VOCs lead to the formation of ozone (smog). Emissions of SO2 and NOx create additional fine particulate matter. Emissions of Hg can move from the air into rivers and streams when it rains, and ultimately to fish living there. These air pollutants have important human and environmental health implications for Georgia and its citizens.
Energy use also contributes significantly to water supply challenges in Georgia, where population and economic growth are stressing a finite fresh water supply. Steam generation and cooling processes in power plants take billions of gallons of water each year from Georgia's surface waters and groundwater. While most of this water is returned, a significant portion is lost to evaporation.
Land availability is becoming a greater challenge as the growing demand for power requires new heat and power generation facilities. These operations require large land blocks as well as access to rail, barge or pipeline for fuel delivery. Power generation facilities also need access to transmission lines, and these facilities in turn require significant amounts of land.
Finally, Georgia imports almost all of its fossil fuels: coal from Kentucky, natural gas from Oklahoma and petroleum from South America and the Middle East. The raw resources, purchased to produce energy in Georgia, represent a trade deficit that affects the economy of the state.
The state has many options in addressing these energy and environmental issues, but each choice has trade-offs. Supporting and investing in a particular energy strategy is a policy decision with both costs and benefits. For example, heavy reliance on coal to generate energy will have significant impact on air quality, while natural gas-fired generation will increase infrastructure pressures. Finite water supplies will set limits on the future siting of these facilities.
Economic development, reliable and affordable energy, and a healthy environment have all been an essential part of Georgia's tremendous growth and prosperity. Georgia's demand for transportation of people and freight as well as electrical energy consumption and peak demand are projected to grow at a brisk pace for the next decade at least. This increased demand will require construction of new power
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Georgia Energy Review 2005 plants and the delivery and use of more motor vehicle fuels. Yet growth and prosperity have already brought the State significant air quality and water supply challenges. The State's ability to chart a positive environmental future is intricately linked with the development of a comprehensive energy strategy that not only meets current and future energy demand, but also improves energy efficiency, diversifies the State' s fuel sources and minimizes environmental effects.
II. AIR QUALITY Energy use, whether for electricity or for transportation, is a principal factor in Georgia's air quality challenges. Energy consumption in 2002, the most recent year for which data are available, produced statewide emissions of more than 510,000 tons of SO2, nearly 475,000 tons of NOx (69% of the state total) and 1.4 tons of air-borne Hg (75% of stack emissions statewide). Each year these emissions form ground-level ozone, fine particulate matter and haze across the State, and add Hg to rivers, lakes and streams. As a result, 24 full or partial counties are now designated as non-attainment for the eight-hour ozone air quality standard and 27 full or partial counties are designated as non-attainment for the fine particulate matter standard. The Environmental Protection Division has issued Hg-based fish consumption advisories for all 14 of Georgia's river basins, and two Class I natural areas the Cohutta Wilderness and the Okefenokee Swamp suffer from reduced visibility because of regional haze.
Figure 30
Heat and power generating facilities also have a significant impact on air quality. Coal-fired facilities emit primarily SO2 (a primary contributor to fine particulate matter formation), NOx (which contributes to both fine particulate and ozone formation), CO, particulate matter and hazardous air pollutants.
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Georgia Energy Review 2005
Emissions from natural gas facilities consist mainly of NOx. Both types of facilities also emit greenhouse gases, primarily CO2.
Petroleum consumption for transportation affects air quality statewide. Vehicles produce significant amounts of NOx and VOC emissions that contribute to ozone formation (smog), as well as other pollutants such as hazardous air pollutants, CO, CO2 and particulate matter. Violations of the national ambient air quality standards for ozone and fine particulate matter will continue to drive strategies to reduce emissions from motor vehicles.
To help states address emissions transported across state lines, the Environmental Protection Agency (EPA) issued National and Regional rules designed to address NOx and SO2 from diesel emissions and power plants. The Clean Air Interstate Rule (CAIR) is designed to reduce emissions of NOx and SO2 from coal-fired utilities. The state must submit a rule to implement these federal reductions by the fall of 2006. Other EPA rules are continuing to reduce emissions such as NOx and particulate matter from gasoline- and diesel-powered engines, and should have a dramatic effect as new compliant engines join the on-highway and non-road fleets over the next 15 to 20 years.
Stricter federal clean air standards have forced states and utilities to examine their dependence on fossil fuels. Current and projected population growth and industry expansion in Georgia suggest that the State may face future environmental challenges in providing the required energy. Alternative approaches like energy efficiency and conservation could play a role in balancing energy and environmental concerns for air quality.
III. WATER QUALITY
A. Mercury (Hg) Bioaccumulation in Fish Tissues
Fish can supply important information about water quality because their tissue accumulates higher concentrations of contaminants than found in water. The Georgia Department of Natural Resources (DNR) can study fish tissue and determine whether those from a specific body of water are safe to eat, and how much of that fish, based on size and species, can be safely consumed during a given period of time. This information enables people to make informed decisions, while continuing to benefit from an important natural resource.
Of the current recommendations for reduced consumption, mercury (Hg) accounts for approximately 80 percent of all advisories, and most of the Hg originates from power plants. All of the officially listed impaired waters for Hg have undergone an analysis that determined a federally required Total Maximum Daily Load (TMDL), which is the amount of loading that must be reduced to achieve water quality standards. The TMDLs for Hg indicate that substantial reductions from coal fired electric generating facilities are necessary. EPA has also recognized that Hg emissions are transported long distances, and has issued the Clean Air Mercury Rule to help states meet their water quality goals and reduce emissions from coal fired utilities. States must submit a rule to implement the federal reductions by fall 2006.
B. Thermal Pollution
Conventional power plants have the potential of creating significant thermal pollution when discharging excess waste heat. Georgia's Rules and Regulations for Water Quality Control (Georgia Department of Natural Resources, 2004) provides use classifications and quality standards for all
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Georgia Energy Review 2005
surface waters of the State. Specific standards for water temperature limit the absolute temperature of a water body and the amount that the receiving water temperature is allowed to be increased above intake temperature. `Intake temperature' is defined as the natural or background temperature unaffected by any man-made discharge or thermal input.
Currently, only one area of the state a nine-mile section of the Chattahoochee is in violation of the temperature standard. The main cause is waste heat from two power plants. EPD has established a TMDL for this water body and is working with the plants to remove their heat loads from the river.
C. Acidification and Eutrophication of Water Bodies
The energy sector may also have an impact on the potential acidification and eutrophication of the State's waters. In the preamble to the Clean Air Interstate Rule in the Federal Register, EPA stated that activities to reduce emissions from coal-fired utilities will result in ecological and welfare benefits, including reduced eutrophication in water bodies and reductions in lake, stream, and forest acidification (Rule to Reduce Interstate Transport of Fine Particulate Matter and Ozone, 2005)
D. Water Consumption
Energy use also contributes to water supply challenges in Georgia. In 2002, fossil fuel-powered electric power plants withdrew about 3.1 billion gallons of water per day for the production of steam, of which more than 5% was lost through cooling tower evaporation.
In addition, the production of hydroelectricity requires significant water volume to meet seasonal and peak demands of late spring, summer and early fall. Most of this water is released from large federal reservoirs, and once released is not available for other uses. As the population and the demand for other uses grow, competition among these uses will create challenges to hydropower generation.
Water is undisputedly a current and future constraint in Georgia for new power plants. In fact, water is already a constraint for economic and population growth in some parts of Georgia. Water resources are very limited in most of the State for any type of intensive water-consuming enterprise. The pressures on water supply from a growing population and growing industries will create a lack of unallocated water in more parts of Georgia and thereby even less water available for energy production.
In 2004, Georgia HB 237 was signed into law, providing EPD with a mandate to develop a statewide water management plan. This plan will be written under the following policy: "Georgia manages water resources in a sustainable manner to support the state's economy, to protect public health and natural systems, and to enhance the quality of life for all citizens" (O.C.G.A. 12-5-522). Among other things, this plan will address water use permitting decisions in the context of river basin and aquifer management. Hydropower and electricity generation are uses that will need to be taken into consideration in this planning effort.
IV. CLIMATE CHANGE
There is strong evidence and a growing scientific consensus that increasing emissions of CO2 and other greenhouse gases are affecting Earth's climate. The impact of climate change on the economy could include rising shoreline levels, disruption of growing seasons, reduction in tourist trade, and species shifts in forests. Energy generation is the most significant source of CO2 emissions, followed by transportation sources. The options currently viable to reduce CO2 emissions are increasing energy
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Georgia Energy Review 2005 efficiency and switching to energy sources that generate considerably less CO2, such as nuclear energy, hydropower, natural gas, biomass, solar and wind energy.
V. TECHNOLOGY Technology has played an important role in improving and protecting natural resources in recent years, and new technology will contribute significantly in the coming decades. Some of these improvements include:
Emission control technologies, such as scrubbers, traps and catalysts that remove additional pollutants from smokestacks and tailpipes;
Wastewater treatment technologies that remove pollutants at much higher levels; Water reuse and recycling initiatives that decrease waste and prevent pollution; and Energy efficiency technologies that reduce the energy needed per unit of activity. Businesses, industries and local governments in Georgia have spent billions of dollars implementing new technology, which has contributed to the protection of the state's environment. The development of additional technology and industries will be an important strategy in addressing Georgia's environmental challenges in the coming years.
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CHAPTER 5: ENERGY EFFICIENCY AND RENEWABLE ENERGY IN GEORGIA
I. CHALLENGES TO THE CONVENTIONAL ENERGY SUPPLY
Previous chapters of Georgia Energy Review 2005 have discussed conventional forms of energy supply in Georgia as well as their environmental impact. This chapter focuses on energy efficiency and renewable energy, two non-conventional forms of energy supply.
Energy use creates many opportunities for Georgians including jobs, mobility, convenience and everrising prosperity. However, energy use also creates certain pressures that affect how Georgians maintain and improve their quality of life. Evidence suggests that conventional energy supplies face challenges in three key areas: price stability, reliability, and health and environmental impacts.
A. Price Stability
The United States participates in a global energy market for various sources of energy, most importantly petroleum and natural gas. As demand for these fuels grows in response to rapidly developing economies, and as current supplies approach or pass peak production, the price of these fuels can increase quickly and dramatically. As the world comes to rely increasingly on areas with the largest proven reserves of petroleum and natural gas, political instability and disruptions in some of these countries can also affect global energy prices and availability. Figure 31 shows how average gasoline prices from 1984 to 2004 have changed over time. Figure 32 shows natural gas prices for the same period (EIA, "Natural Gas Navigator: Natural Gas Prices," 2006).
Figure 31

250.0

Nominal Gasoline Price (cents per gallon)

200.0

Nominal Price (Cents)

150.0

100.0

50.0

Jan-84 Jan-85 Jan-86 Jan-87 Jan-88 Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04

0.0 Month

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Dollars per Thousand Cubic Feet

Georgia Energy Review 2005
Figure 32
Natural Gas Wellhead Prices 1984-2004
8
7
6
5
4
3
2
1
0 Jan-84 Jan-85 Jan-86 Jan-87 Jan-88 Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04
Month
B. Reliability
Reliability is related to price stability, and supply disruptions are often the cause of price instability. Consumers throughout the United States have witnessed or experienced disruptions in conventional energy sources due a variety of causes. In 2003 the Northeast experienced an electrical system blackout of unprecedented proportions; in 2005 most of the United States experienced shortages in petroleum supply due to damage from Hurricane Katrina to Gulf Coast supply and production facilities; and two million people in Los Angeles experienced a blackout in 2005 caused by human error. These reliability challenges emerge from the centralized and interconnected nature of our energy supply infrastructure. Additionally, many businesses require higher quality power supplies than some parts of our aging energy infrastructure were designed to provide.
C. Health and Environmental Impacts
Some conventional energy sources, such as coal-fired electricity generation, are significantly less sensitive to price instability or reliability concerns. With ample domestic coal supplies and a generally robust electricity system, coal is relatively inexpensive and available. However, coal-fired electricity generation carries with it potential hazards to human and environmental health, including SO2, NOx and Hg emissions, all of which are regulated by the Environmental Protection Agency. Combustion of coal for electricity production also creates significant amounts of CO2, a greenhouse gas that has no direct impact on human health, but contributes to the potential for global climate change.
The deployment of alternative sources of energy that can reduce or minimize health and environmental risks serves the public interest in Georgia. Two classes of alternative energy are described in this chapter: energy efficiency and renewable energy. While numerous alternative technologies, practices and strategies exist that can reduce reliance on conventional energy sources, those discussed in this chapter are commercially available and proven technologies. Together, energy efficiency and renewable energy have the potential to address challenges created by conventional energy sources and to provide Georgians with a more diverse, robust and environmentally sound energy sector.
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II. ENERGY EFFICIENCY
Strictly speaking, energy efficiency is the ratio of energy used to work performed or service delivered. Using less energy to provide the same services or providing more service without increasing energy consumption are both forms of energy efficiency.
In everyday life, energy efficiency can be achieved by using improved technologies. Items from household appliances and office equipment to passenger vehicles and buildings are available with a range of energy efficiencies. In most cases, the federal government has established minimum energy efficiency standards for major types of energy using products. Items that significantly exceed these standards are usually considered energy efficient. There are a number of energy efficiency standards that identify these class-leading products, including the well-known ENERGY STAR label administered by the Department of Energy and Environmental Protection Agency.
Energy efficiency is different than energy conservation. Conservation is the practice of using less energy by reducing the amount of work performed or service delivered, such as lowering the thermostat during winter to use less heat. In some cases, such as when supply is disrupted, conserving energy is necessary. Georgians can rely on energy efficiency to provide the benefits of alternative energy described previously, including price stability, reliability and reduced environmental impacts.
Energy efficiency can be considered an alternative form of energy supply because it can serve the same purpose as a new power plant or a greater supply of gasoline. If passenger vehicles were 10% more efficient, it would either allow Georgians to drive ten percent further using the same amount of fuel or allow them to drive the same distance using 10 percent less fuel. Therefore Georgians can use more efficient technology, rather than more fuel, to travel further (or spend less money).
There are technical and other limits to the amount of energy that can be "supplied" with energy efficiency, but Georgia has great potential to utilize this resource in the near future. In 2005 the Georgia Environmental Facilities Authority released the results of the Energy Efficiency Potential Study. This report (available at www.gefa.org/pub.html) used a variety of data and computer models to determine how much energy Georgians could save while saving money, as illustrated in Table 3 (Jensen & Lounsbury, 2005).
Table 3
Achievable Energy Efficiency: Total Potential and Percentage of 2010 Electricity Demand

Load Type
Reduction in Electricity Sales (MWh) Reduction in Peak Demand (MW) Reduction in Gas Sales (MMcf)

Minimally Aggressive Moderately Aggressive

Very Aggressive

3,338,924

2.3% 8,704,577

6.0% 12,546,554

8.7%

447

1.7%

1,149

4.4%

1,608

6.1%

7,041

1.8%

16,972

4.4%

21,343

5.5%

The study determined that with a moderate amount of education and financial incentive, Georgians could save about six percent of the energy they use through investments in technologies and practices that actually save money. When examined over the 10-year period from 2005-2015, this investment would save Georgians a total of $1.6 billion dollars. The report was produced shortly before electricity costs for about 2.3 million customers in Georgia increased by about eight percent. This cost increase

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makes additional energy efficiency options cost effective, enabling Georgians to save even more through energy efficiency.

The study also showed that energy efficiency had benefits beyond saving energy and money. For example, energy efficiency saves water used by energy efficient appliances, such as clothes washers, and water used by power plants during the production of electricity. According to the Metropolitan North Georgia Water Planning District, "the region would face a water deficit of 284 million gallons a day by 2030 without aggressive conservation measures and new lakes to store water... The option is to spend more than $60 billion over the next 30 years to pay for water and sewer improvements and ongoing maintenance, according to the district."

The energy efficiency measures described in the moderate scenario of the Energy Efficiency Potential Study can save about 159 million gallons per day by 2015. Since these savings are achieved through cost effective energy efficiency measures, consumers will actually save money and can avoid spending the $60 billion dollars projected by the Metropolitan North Georgia Water Planning District that would otherwise be required to supply water.

A. Technologies and Practices

Georgians can invest in cost-effective energy efficiency in many ways. This section describes energy efficiency technologies and practices commonly available in each of the following energy consuming sectors: residential, commercial, industrial and transportation.

1. Residential

The residential sector in Georgia used 727.6 trillion Btu in 2004 to heat and cool homes, as well as to power appliances, electronics and everything else found in the home. This amounts to 24% of the total energy, 39.4% of the electricity and 32% of the natural gas consumed in Georgia.

a. Home building industry Single and multifamily homes up to four stories high in Georgia must, at minimum, adhere to the Georgia Energy Code (in addition to other construction, health and safety codes). The most recent version of the code adopted by Georgia is the 2000 International Energy Conservation Code with Georgia Amendments (2003, 2005 and 2006), available at http://www.dca.state.ga.us.

Energy efficient homes exceed the minimum energy code by some degree. Energy efficiency in homes can be achieved most effectively by utilizing a whole-building or integrated design strategy, ideally when the home is built. This often requires the skills of a trained and certified homebuilder who is knowledgeable in energy efficient building practices. In Georgia, homebuilders are increasingly adopting energy efficiency practices because of several programs, listed in Table 4, that effectively educate homebuilders on the integrated design approach.

Table 4
Program ENERGY STAR New Homes EarthCraft House EarthCraft House Multi-family Builder's Guide to Energy Efficient Homes in Georgia

Resource www.energystar.gov www.earthcrafthouse.com www.earthcrafthouse.com www.gefa.org/pub.html

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These programs often train builders in a variety of techniques, that when used together can save 1540% of the energy used by a conventional home of the same size. Builders apply these techniques and receive credits for each measure they incorporate in a new home in order to achieve certification by the program. Some programs, such as EarthCraft House, conduct performance tests of each home to ensure the measures were installed correctly.

There are many benefits to incorporating energy efficiency in a home. In addition to minimizing utility bills, energy efficient homes often provide healthier and more comfortable environments. For example, a well-sealed and properly ventilated home reduces the level of pollutants and irritants that can aggravate respiratory conditions such as asthma.

b. Existing homes Energy efficiency is also possible in existing homes that were not originally built according to efficiency standards. Homeowners can undertake energy efficient upgrades to homes regardless of their condition through their own purchases and home improvements, such as air sealing, installing insulation, heating and cooling adjustments or lighting improvements. Web sites like www.gefa.org provide detailed suggestions. Electric and natural gas utilities throughout Georgia also help consumers improve energy efficiency through programs such as home audits, heat pump rebates and conservation education.

Homeowners who make larger investments by contracting for renovations, additions or significant heating and cooling upgrades can look for contractors and building professionals trained in applying integrated design through one of several programs listed in Table 5. This training helps ensure that homeowners achieve the most savings and best performance from the investment.

Table 5

Program Home Performance with ENERGY STAR (for existing homes) EarthCraft House Renovations Home Energy Projects

Resource www.energystar.gov
www.earthcrafthouse.com www.gefa.org/pub.html

c. Appliances Like buildings, appliances are subject to minimum federal energy standards. They can also earn the ENERGY STAR label for meeting energy efficient standards established by the U.S. Department of Energy. ENERGY STAR appliances are more energy efficient than about 75% of the appliances in their class, and the Department of Energy continually updates these standards to ensure that ENERGY STAR appliances are always best in their class.

The ENERGY STAR website, www.energystar.gov identifies the products qualified by ENERGY STAR, the retailers that carry these appliances, and special offers by manufacturers, retailers or utilities. The Consortium for Energy Efficiency (CEE), a Boston, MA non-profit organization that promotes energy efficiency, identifies additional products, including some that significantly exceed even ENERGY STAR criteria, which enables consumers to identify the most efficient products on the market.

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Georgia Energy Review 2005 2. Commercial

The commercial sector consumes approximately 541.8 trillion Btu, 18% of Georgia's energy and 32.8% of the electricity.

a. Buildings Commercial buildings must, at minimum, comply with the Georgia commercial energy code (as well as other health, safety and construction codes). In 2006, Georgia utilizes the 2000 International Conservation Code with Georgia amendments 2003, 2005 and 2006.

Energy efficiency rating systems identify high-performance buildings, both new and existing. As of 2005, 41 buildings in Georgia have earned the ENERGY STAR label by demonstrating that the building is efficient compared with other buildings of similar size and purpose based on one year of utility bills. Existing buildings are rated with the ENERGY STAR Portfolio Manager, while new buildings earn the `Designed to Earn ENERGY STAR' label by establishing energy efficiency performance goals.

Buildings can also pursue energy efficiency as part of a broader nationally available "green building" program called Leadership in Energy and Environmental Design (LEED), administered by the U.S. Green Building Council (USGBC). This system allows design teams to achieve points in six categories: sustainable sites, water efficiency, energy and atmosphere, materials and resources, indoor environmental quality, and design and innovation. If a building achieves the required credits, it is designated on the LEED scale as shown in Table 6.

Table 6

LEED Rating Certified Silver Gold Platinum

Number of Credits 26-32 33-38 39-51 52-69

As of January 2006, USGBC had certified 19 buildings in Georgia, and most were rated more energy efficient than the minimum level, as shown in Table 7 (U.S. Green Building Council, 2006).

Table 7

LEED Rating Certified Silver Gold Platinum Total

Number of Buildings 4 10 4 1 19

Commercial buildings vary widely in size, purpose and layout, but they can adhere to principles of building science to achieve energy efficiency levels greater than code. Certain building practices can substantially improve a building's energy performance, including energy modeling and building performance commissioning.

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Energy modeling is the process of estimating the impacts of different design strategies on the energy performance of a building before design is finalized. That feedback is used to optimize the building's energy performance. Energy modeling uses specialized software, some of which is available through the Department of Energy. While energy modeling does not provide the design team or owner with final energy consumption or costs for the building, it provides relative energy performance levels that can help determine the value of strategies such as daylighting or alternative heating and cooling scenarios.

Building commissioning also helps optimize energy performance. It ensures that the design will meet the owner's stated objectives and will be realistic and achievable, that the building and its systems are installed correctly, and that the owner/operator is fully educated on operating the building properly.

b. Office equipment The commercial sector relies on the use of a great deal of office and other commercial equipment.
Many of these products are eligible for the ENERGY STAR label.

c. Combined Heat and Power Combined Heat and Power (CHP) is a technology that integrates energy generation and heat recovery in a single system to overcome the inefficiency of generating electricity and heat separately. CHP is designed to recycle waste heat during the conversion of fuel to electricity. In conventional conversion, more than two-thirds of the energy is lost as waste heat and the plant achieves only a 33% efficiency. In CHP systems, efficiency rises to 60%-80%, and air emissions of NOx, SO2, Hg, particulate matter, and CO2 are reduced (Energy Efficiency and Renewable Energy [EERE], "Distributed Energy," 2005).

CHP can be an useful for businesses that require reliable energy inputs and have significant heating or cooling loads such as hospitals, hotels, office buildings and data centers. The Southeast CHP Application Center co-located at Mississippi State and North Carolina State Universities works to increase the use of CHP units (www.chpcenterse.org).

3. Industrial

Manufacturing is an energy-intensive activity, and the industrial sector accounts for approximately one
third of the overall energy consumption in Georgia, consuming approximately 871.2 trillion Btu or
28.7 % of all energy in Georgia including 27.6 % of electricity and 40.4 % of natural gas (for energy purposes)12. According to the Georgia Department of Labor (Georgia Employment and Wages," 2004 Averages, n.d.), major Georgia industries include:

Aerospace Agriculture and Forestry Automotive & Transportation Chemical Manufacturing

Construction Food Processing Metal and Material Production Textiles

Approximately 85% of industrial energy use is focused in 6 of the 21 major industries within the United States: wood, primary metals, nonmetallic minerals, paper, chemicals and petroleum (EERE, "Industrial Technologies Program Strategic Plan," 2003). Georgia is the home of significant operations in both the paper and wood industries. These Georgia industries can incorporate energy efficient

12 The industrial sector utilizes natural gas for two primary purposes as energy and as a feedstock for certain products such as fertilizer, chemicals, etc. These figures include only the energy uses of natural gas.
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Georgia Energy Review 2005
technologies and practices in both the facilities where they manufacture products and in the processes they use.
Because industrial facilities use energy to light and to heat or cool buildings, many of the same practices and technologies that apply to commercial buildings can be used in industrial facilities, such as ENERGY STAR, LEED and CHP.
The processes that industries use can also achieve energy efficiency. Manufacturing processes in Georgia vary widely depending on the industry, yet many share basic energy consuming technologies such as motors, pumps, steam production and process heating. Ensuring that these processes utilize the most efficient technologies and are optimized to minimize waste can save energy while improving a company's profitability and competitiveness.
Advanced technologies such as materials and sensors are used increasingly to improve efficiency, but they require adequate investment in the research, development and demonstration of these technologies.
The U.S. Department of Energy hosts many comprehensive programs that help energy intensive industries, like paper and wood products found in Georgia, increase their efficiency. The Department also supports 26 Industrial Assessment Centers throughout the United States, including one in Atlanta at the Georgia Institute of Technology, which provide energy assistance to companies in Georgia for little or no cost. Georgia's Industrial Assessment Center is housed at Georgia Tech's Economic Development and Technology Ventures (www.edtv.gatech.edu/), another resource for energy efficiency technical assistance and information for a variety of industries. The University of Georgia Engineering Outreach Service in Athens (www.engr.uga.edu/service/outreach/index.html) also provides energy assistance to industry, particularly those in the agricultural arena.
4. Transportation
Transportation accounts for approximately 886.5 trillion Btu, 29.2 % of the total energy used in Georgia, but unlike the electricity sector, transportation is highly dependent on one fuel source petroleum that constitutes 99% of all transportation energy use.
Reducing dependence on petroleum for transportation can be accomplished by improving the efficiency of conventional transportation modes such as passenger vehicles, utilizing technologies such as mass transit that are more efficient per person carried, and reducing dependence on conventional transportation modes through alternatives, such as biking, walking, tele-working and other transportation demand management (TDM) measures.
a. Vehicle efficiency The federal government has sole jurisdiction over the fuel efficiency of passenger vehicles. The average fuel economy of all vehicles sold by a manufacturer each year must meet or exceed the federal government's Corporate Average Fuel Economy (CAF) fuel efficiency standard, currently set at 27.5 miles per gallon (MPG) for passenger vehicles and 21.5 MPG for light-duty trucks (up to 8,500 pounds gross vehicle weight). In recent years, light-duty trucks, including pick-ups and sport utility vehicles, have comprised a larger proportion (currently 41.8%) of new vehicle sales, causing the average fuel economy of all vehicles currently operating in the United States to drop, as shown in Figure 33 (Heavenrich, "Executive Summary," 2005). Sales of pick-up trucks have remained relatively constant
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Georgia Energy Review 2005 from 1984 to 2004 while sales of sport-utility vehicles have grown from 4.5% to 29.2% during the same period (Heavenrich, "Appendix E," 2005).
Figure 33
In recent years, some vehicle manufacturers have introduced hybrid gasoline-electric vehicles to increase fuel efficiency. These vehicles use smaller engines coupled with battery packs and electric motors to improve the efficiency of gasoline engines while overcoming the limited power and range of electric vehicles. Unlike all-electric cars that preceded them, hybrids do not need to be plugged in to recharge their batteries. Nine hybrid gasoline-electric vehicles are currently available to consumers: four compacts/sedans; four sport utility vehicles; and one light (pick-up) truck (Berman, n.d.). Several manufacturers are developing additional gasoline-electric models. These vehicles have improved fuel efficiency of 10-200% over their conventional counterparts (United States Department of Energy [DOE] & United States Environmental Protection Agency [EPA], "Compare Hybrids," n.d.; U.S. DOE & U.S. EPA, "Find a Car," n.d.) and cost between $2,500 and $3,000 more (Mello, 2004). b. Alternative transport modes State and local government can significantly reduce the energy consumption of transportation directly and indirectly by influencing land use and development, improving access to mass transit, encouraging transportation demand management and leading by example with appropriate procurement strategies. The layout of cities and towns has a significant impact on how much fuel is used for transportation. Mixed-use, compact or quality development strategies use land, rather than technology, more efficiently to reduce transportation energy use. Living near work, shop and play requires less fuel, time and money to move around among destinations. State and local government have a variety of tools to guide land development to achieve these goals. In a more specific sense, governments can also
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Georgia Energy Review 2005
provide amenities such as high-occupancy vehicle lanes, bicycle lanes and walking paths to enable residents to choose from a variety of transportation modes.
State and local governments also determine the scope and variety of mass transit options available to residents of their jurisdictions. Mass transit often improves the efficiency of the transportation system by reducing reliance on single occupancy vehicles in favor of bus and rail alternatives.
State and local governments can participate programs to promote energy efficiency and energy conservation to commuters. Local and regional transportation management associations (TMA) offer a variety of programs and information to encourage employers and commuters to team together to reduce the number of vehicles on the road. These strategies, collectively known as transportation demand management help to improve employee recruitment, productivity and retention, reduce air pollution, save money and save gasoline. In metropolitan Atlanta, the Clean Air Campaign serves to coordinate and promote transportation demand management among residents, employers, government agencies and other interested organizations.
State and local government can also adopt preferences for energy efficient vehicles in their procurement practices. The state of Georgia owns more than 19,000 vehicles, and almost 80% are conventional gasoline powered vehicles. With the average state-owned vehicle traveling more than 12,000 miles per year (Georgia Department of Administrative Services, e-mail communication, November 21, 2005) and average fleet fuel economy at approximately 21.4 MPG, the state could save approximately 400,000 gallons of gasoline per year for every 10% of the fleet replaced with hybrid vehicles achieving at least 35 MPG.
B. Implementing Energy Efficiency
Consumers and producers of energy do not always make choices that incorporate energy efficiency and renewable energy, often due to lack of awareness or the high cost of adopting these technologies. Policies, programs and resources at both the federal and state levels from mandatory energy consumption standards and informational programs to government purchasing requirements and economic incentives are addressing these barriers and facilitating energy efficiency and renewable energy.
The Environmental Facilities Authority, Division of Energy Resources serves as Georgia's energy office. The Division promotes energy efficiency, renewable energy and energy assistance programs that improve environmental quality, strengthen quality of life and stimulate sustainable economic development in Georgia. The Division achieves these goals by administering proven programs, providing critical energy information resources and promoting cost effective energy solutions for public and private entities.
1. Federal
a. Energy Policy Act of 2005 In August 2005, President Bush signed the Energy Policy Act of 2005 (EPAct 2005), the first comprehensive national energy policy legislation since the Energy Policy Act of 1992. This bill addressed many aspects of energy production, generation and consumption. Most notably for consumers, EPAct 2005 provided federal tax incentives for various types of energy efficiency and renewable energy measures. Most of these incentives are available between January 1, 2006, and December 31, 2007 unless Congress acts to extend them.
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Georgia Energy Review 2005
b. Appliance standards Most energy consuming appliances must meet energy standards established by the federal government. Typically, the Department of Energy establishes these standards and renews them periodically to account for advancing technology. In several cases, states have acted to impose standards on appliances not governed by federal standards13. The Energy Policy Act of 2005 requires the Department of Energy to update minimum efficiency standards for several appliances over the next few years.
c. Corporate Average Fuel Economy Perhaps most well known among federal energy standards are the Corporate Average Fuel Economy (CAF) standards that apply to all vehicles sold in the United States. Only the federal government, specifically the National Highway Traffic Safety Administration of the Department of Transportation, currently has the authority to regulate vehicle fuel economy directly. CAF standards apply to all vehicles under 8,500 pounds (gross vehicle weight), but are established separately for passenger cars and light trucks. The standards for model year 2006 are 27.5 miles per gallon for passenger cars and 21.6 MPG for light trucks.
The Environmental Protection Agency is responsible for calculating the actual average fleet-wide fuel economy for each manufacturer. Figure 33 shows the trend in the average fuel economy of all sold in each year from 1984 to 2004 (Heavenrich, "Executive Summary," 2005).
d. Voluntary programs A variety of federal voluntary programs are designed to encourage energy efficiency or related efforts, such as pollution prevention or greenhouse gas reduction. The Department of Energy provides funding and technical assistance, often through the state energy office to promote energy efficiency in buildings, utilities, industry and transportation through such initiatives as Rebuild America, Industries of the Future, and FreedomCAR. The U.S. Environmental Protection Agency lists twenty-five programs addressing energy efficiency in sectors ranging from agriculture to waste management and recognizing the importance of energy efficiency in reducing pollution, improving health and minimizing climate change risk.
2. State
a. Building energy codes States are required to establish minimum energy codes for all buildings that use energy for heating and cooling, and in Georgia, the Department of Community Affairs has this jurisdiction. Georgia mandates use of the 2000 International Energy Conservation Code with Georgia amendments 2003, 2005 and 2006. While this building energy code ranks among the strictest in the Southeast, local jurisdictions may not always have the resources to consistently enforce it.
b. Utilities and demand side management Georgia's electricity sector remains a regulated environment. The Georgia Public Service Commission (GPSC) retains exclusive power to determine just and reasonable rates for companies to charge for
13 States wishing to establish stricter standards for which federal minimum energy efficiency standards already exist must apply for a waiver from the Department of Energy. As of February 2006, California is the only state to have submitted such an application, however it has not yet been acted upon (conversation, Appliance Standards Awareness Project, 2/27/06).
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Georgia Energy Review 2005
electricity and natural gas service. The GPSC also reviews the investor-owned utilities' long-range plans to meet energy demand in their service areas, and oversees the process for companies to acquire new assets (generation capacity or pipeline capacity).
In accordance with the Integrated Resource Planning Act of 1991, the investor owned utilities, Georgia Power and Savannah Electric, must forecast the demand for electricity within their service territories each year for the next 20 years, then describe how they will satisfy that demand in a cost-effective manner.
Historically, these integrated resource plans (IRP) have focused on supply side options building new generating or transmission capacity. However, as part of the 2004 IRP hearings, the GPSC approved four pilot demand side management programs that are designed to reduce demand as a means to satisfy future electric loads. The programs include:
The proposed statewide "fuel neutral" Energy Star Home Program is directed at growth areas as it applies to new construction;
The Energy Star Appliance Program uses market forces and market techniques to encourage the purchase of more energy efficient appliances while establishing partnerships across the manufacturing and retail sectors;
The Duct Sealing and Infiltration Control Program uses an innovative marketing strategy designed to minimize cost while maximizing effectiveness;
The Home Inspector Program educates home inspectors on the benefits of demand side management so that they can convey additional recommendations to potential homebuyers at the time of home purchase.
The GPSC also required Georgia Power and Savannah Electric to participate in a demand side management measure screening process with interested stakeholders in advance of the 2007 IRP hearings14. This process will focus on new demand side management measures that balance least cost planning, the financial health of the utility and consumer benefits.
III. RENEWABLE ENERGY SOURCES AND CONVERSION TECHNIQUES
Definitions of renewable energy vary, but most adhere to the following principles: The energy "source" is (practically speaking) inexhaustible or is able to be renewed at rates that exceed rates of consumption; Most forms of renewable energy produce a significantly smaller environmental impact than conventional (non-renewable) forms of energy because they emit fewer pollutants that contribute to acid rain, smog, climate change and health concerns.
Four sources of renewable energy are available in Georgia solar, wind, biomass and hydropower.15 In addition to their environmental benefits, these sources have stable prices, are readily available, reduce dependence on foreign energy sources and promote local economic development. Solar and wind energy sources are "free." Their primary costs are the capital, construction and maintenance activities
14 See Demand Side Management Working Group Final Report, Georgia Public Service Commission, Docket 17687, Document 80236, available at http://www.psc.state.ga.us/ for more information. 15 Geothermal electric, tidal and wave energy are also renewable energy sources, but they are available only on a very limited basis is Georgia. Hydrogen may also play an important role in the future energy system due to its clean burning characteristics, but is not a renewable energy source because it is produced using another form of energy.
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required to convert the source to usable energy. Once fixed costs are incurred, the facility can produce energy on a relatively stable basis. The price stability of these sources is in contrast to the prices of other energy resources such as petroleum and natural gas, which have experienced increased volatility in recent years.
Despite their benefits, renewable energy sources face challenges to their widespread use and development. Resources such as wind and biomass are often located far from major population centers. To connect certain resources to load centers, an expansion of the existing transmission infrastructure would be required. The intermittent nature of resources such as sun and wind mean they cannot provide energy around the clock, making the timing and amount of energy production difficult to control and therefore less reliable than conventional sources like coal and natural gas. Cost is also a challenge because the conversion technologies, such as photovoltaic panels, are very expensive. Even with a free supply of sun, electricity produced by photovoltaic panels costs three to ten times the electricity produced from coal or nuclear power plants.
While all renewable energy production has some environmental impact most often in the manufacture or operation of conversion technologies some renewable sources produce emissions and others do not. Table 8 and the following sections of the narrative text provide detailed information on the seven major renewable sources in Georgia and their emissions, applications, cost and availability.
A. Non-Emitting Technologies
1. Solar Energy
a. Solar electric: photovoltaics Photovoltaic ("solar") cells produce electricity directly from sunlight. They are made of semiconducting materials similar to those used in computer chips. When these materials absorb sunlight, the solar energy knocks electrons loose from their atoms, allowing the electrons to flow through the material and produce electricity (National Renewable Energy Laboratory [NREL], "Photovoltaics," 2006).
Photovoltaic semi-conductors typically include silicon, Cadmium Telluride, Copper Indium Diselenide (CIS) and Gallium Arsenide (EERE, "Solar Cell Materials," 2005). Each material has different characteristics, efficiencies and applications. Crystalline silicon solar cells are the most mature type of solar cell, relying on materials and processing techniques that are well-understood. Newer materials and manufacturing practices offer a wider range applications and lower production costs. For instance current development efforts utilizing CIS and CdTe include developing photovoltaics that can be applied to thin, flexible plastics for a wide variety of applications.
Photovoltaics provide electricity when it is most needed, on hot sunny afternoons. They reduce peak demand and the need for utilities to generate expensive peak power. Photovoltaics can be incorporated into the design of a new building to generate electricity, and can be incorporated into building envelope materials such as roofing, curtain wall and window components.
Photovoltaic systems consist of modules that feed directly into an end-use (such as a building, remote communications and water pumping) or to the electricity grid. Systems can also include storage components that provide electricity when the sun is not shining.
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Table 8

Renewable Energy Sources in Georgia

Renewable Energy Applications/

Cost

Source

Capacity

NOx

Solar Electric Photovoltaics

Stand-alone and building-integrated applications; residential to utility scale

$5-6/ Watt- 0 peak (module), 40-60% of total system

Solar Thermal Water Heating

Stand-alone and building-integrated applications; residential to industrial scale

$2,000 -

0

$5,000 system

(residence

scale)

Solar Thermal

Stand-alone and

Not available 0

Space and Process building-integrated

Heat

applications;

residential to

industrial scale

Wind

Stand-alone

$790/kW of 0

applications; utility installed

to residential scale capacity (est.)

Hydroelectric

Utility to residential Not available 0 scale; stand-alone applications

Emissions

SO2 PM

CO2

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

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Other Environmental Impact No significant impact
No significant impact
No significant impact
Concern over avian and bat collisions, esp. in migratory pathways; concern over rotor noise and visual impact Reduction of natural water flow that can affect water quality, wildlife, fish passage

Current Market Status 330 solar installations (panels, hot water and pool heating units) 330 solar installations (panels, hot water and pool heating units) No known solar process or solar space heat installations in Georgia No known wind projects in Georgia
1 hydroelectri c project Tallassee Shoals Project (certified by Low-Impact Hydro Institute);

Source
(Southface, 2005)
(Southface, 2005)
(American Wind Energy Association, 2005) (LowImpact Hydropower Institute, 2005)

Biomass Energy Generation
Landfill Gas to Energy

Commercial, industrial and utility scale applications (electricity); production scale facilities (liquid fuels and bio-based materials) Operating and closed landfills; 0.515 MW

Not available
$0.8 - $1.2 million/MW (est.)

Georgia Energy Review 2005

5.4 lbs/ MWh

0.8 lbs/ N/A MWh

2988 lbs/ MWh

MSW reduces solid waste volume 75-90%; uses and discharges water like conventional power plant; produces potentially hazardous ash

installed capacity 2.3 MW; annual projected output 6.5 GWh Not known how many biomass-toenergy projects are operating in Georgia

(GPSC, 2004; EPA, "Basic Facts: MSW," 2006)

NOx
2.05 lbs/ MWh

SO2
0.17 lbs/ MWh

Hg
3.4 X 10(6) g/MWh

CH4
6090% lower emissions

Reduces odors, reduces danger of methane explosion, offsets use of non-renewable resources

7 operating landfill gasto-energy projects in Georgia 4 use methane for direct heating, 3 convert methane to electricity with reciprocatin g engines (1-4 MW). Actual emissions unknown.

(EPA, "LMOP," 2006; EPA, "LMOP: Energy Projects and Candidate Landfills," 2006)

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Georgia Energy Review 2005
b. Solar thermal: water heating Most solar water heating systems for buildings have two main parts: a solar collector and a storage tank. The typical collector is a flat-plate collector that is mounted on the roof and consists of a thin, flat, rectangular box with a transparent cover that faces the sun. Small tubes run through the box and carry the fluid, such as water or antifreeze solution, to be heated. The tubes are attached to an absorber plate, which is painted black to absorb heat. As heat builds up in the collector, it heats the fluid passing through the tubes. The storage tank, which is large and very well-insulated, holds the hot liquid. Systems that use fluids other than water pass it through a coil of tubing in the tank. Active systems use pumps to move fluids through the system; passive systems rely on convection driven by the temperature differences in the system. Conventional gas or electric water heating systems often supplement the solar systems to ensure hot water on demand, but less energy is required because of the solar design (NREL, "Solar Hot Water," 2006).
c. Solar thermal: space and process heat Solar space process heating uses a solar ventilation system that preheats the air. A thin, black metal panel mounted on a south-facing wall, called a transpired collector, absorbs the sun's heat. Air passes through the many small holes in the panel. A space behind the perforated wall allows air streams from the holes to mix together. The heated air is then sucked out from the top of the space into the ventilation system (NREL, "Solar Process Heat," 2006).
This type of system is designed to provide large quantities of hot water or space heating for nonresidential buildings, and are increasingly being used in disaster recovery situations. A typical system includes solar collectors that work along with a pump, a heat exchanger, and/or one or more large storage tanks. Solar collectors can operate at high temperatures with high efficiency. An evacuated-tube collector is a shallow box full of many glass, double-walled tubes and reflectors to heat the fluid inside the tubes. A vacuum between the two walls insulates the inner tube, holding in the heat. Parabolic troughs are long, rectangular, U-shaped mirrors tilted to focus sunlight on a tube, which runs down the center of the trough, heating the fluid in the tube (NREL, "Solar Process Heat," 2006).
2. Wind Energy
Wind turbines, like windmills, are mounted on a tower to capture the most energy. At 100 feet (30 meters) or more above ground, they can take advantage of faster and less turbulent wind. Turbines catch the wind's energy with their propeller-like blades. Usually, two or three blades are mounted on a shaft to form a rotor (NREL, "Wind Energy Basics," 2006).
Wind energy is used increasingly at the utility scale, with several turbines sited in one location to create a wind farm ranging in size from a few megawatts (<10 turbines) to hundreds of megawatts. Wind power has a capacity factor between 30-35%, with an average annual energy output of one third of its capacity (in kW) multiplied by one year (8,760 hours) (American Wind Energy Association, n.d.).
With support from the Department of Energy and Georgia Environmental Facilities Authority, the Georgia Wind Working Group is partnering with the National Renewable Energy Laboratory to map Georgia's wind resources and identify areas with the greatest potential for cost-effective on-shore and off-shore wind energy.
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Georgia Energy Review 2005
3. Hydroelectric
The most common type of hydroelectric power plant uses a dam on a river to store water in a reservoir. Water released from the reservoir flows through and spins a turbine, which in turn activates a generator to produce electricity. However, hydroelectric power does not necessarily require a large dam. Some hydroelectric power plants use a small canal to channel the river water through a turbine (NREL, "Hydropower Basics," 2006).
A pumped storage hydroelectric power plant can also store power. The power is sent from a power grid into the electric generators, which pump water from a river or lower reservoir to an upper reservoir, where the water is stored. To generate electric power, water is released from the upper reservoir and flows through a turbine back down into the river or lower reservoir (NREL, "Hydropower Basics," 2006).
A small or micro-hydroelectric power system can produce enough electricity for a home, farm, or ranch. Most new hydroelectric capacity is being installed in smaller installations, often at existing dams. The U.S. Hydropower Assessment (Idaho National Laboratory, 2005) determined that nationwide, new hydroelectric generation reflecting current environmental standards could add about 4.3 GW of new generation overall, not a significant source of new renewable capacity.
The Low Impact Hydropower Institute administers a certification process that ensures minimal disruptions of water and wildlife resources resulting from hydropower projects (Low Impact Hydropower Institute, n.d.). Generally, only hydropower resources meeting this certification are considered environmentally sound energy resources by state agencies, including Georgia's Public Service Commission (GPSC, "Georgia Power," 2004).
B. Emitting Technologies
1. Biomass Energy Generation
Within the context of energy generation, biomass is generally defined as plant-based or plant derived material that can be converted to a useful energy form such as a liquid fuel such as biodiesel or a gas fuel for electricity generation or direct heating. Most of these feedstocks are found in the agricultural sector (such as corn and corn residues) and the forestry sector (logging residues and fire prevention residues).Currently, ongoing research and new technologies are expanding the types of biomass feedstocks that can be efficiently converted to useful fuels (EERE, "Biomass Basics," 2006). The following sections describe different technologies and processes for obtaining useful energy from these biomass feedstocks.
a. Direct-fired biomass Direct-fired systems burn bioenergy feedstocks directly to produce steam. This steam is usually captured by a turbine, and a generator then converts it into electricity. Some industries use combined heat and power facilities, where steam from the power plant is also used for manufacturing processes or to heat buildings. For instance, wood waste is often used to produce both electricity and steam at paper mills (NREL, "Biopower," 2006)
b. Co-firing biomass
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Co-firing systems are used in fossil fuel power plants to significantly reduce emissions, especially SO2 emissions. Co-firing uses bioenergy feedstocks as a supplementary energy source in high efficiency boilers (NREL, "Biopower," 2006).
c. Gasification Gasification systems use high temperatures and an oxygen-starved environment to convert biomass into a gas (a mixture of hydrogen, CO and methane), which then fuels a combustion turbine. In some instances, a facility may extract more energy from the gas using a combined cycle technology (combustion turbine and a steam turbine) (NREL, "Biopower," 2006).
Methane can be produced from biomass through a process called anaerobic digestion, which uses bacteria to decompose organic matter in the absence of oxygen. Anaerobic digestion occurs naturally in landfills, but progress has been made in developing methane through anaerobic digestion of manure, mainly cattle and pig waste. Applications are similar to landfill gas-to-energy (below).
d. Pyrolysis In addition to gas, liquid fuels can be produced from biomass through a process called pyrolysis. Biomass is heated in the absence of oxygen, then turned into a liquid called pyrolysis oil, which can be burned like petroleum to generate electricity. A biopower system using pyrolysis oil is being commercialized (NREL, "Biopower," 2006).
e. Chemical Processing Currently, fuels such as ethanol and biodiesel are made by chemical processing certain biomass feedstocks such as corn or animal fats. These, and more advanced processes currently in development, will help to make liquid fuels that can displace petroleum fuels in the transportation sector.
f. Biorefinery A promising application of biomass energy involves a biorefinery that generates electricity through the gasification of biomass feedstock as well as bio-based materials for use in product manufacture and liquid fuels for transportation use. A biorefinery pilot project is underway at the University of Georgia (University of Georgia, n.d.).
g. Municipal Solid Waste Municipal solid waste (MSW) may be considered a renewable energy source, as it contains a considerable amount of organic waste that may be treated like other biomass and is unlikely to be exhausted in the foreseeable future. It does pose the problem of containing plastics and heavy metals (thermometers, batteries), which are combustible and may cause the emission of hazardous air pollutants (Environmental Protection Agency [EPA], "Electricity," 2006).
MSW can be incinerated to fire a boiler and drive a steam turbine. Residues produced include bottom ash (which falls to the bottom of the combustion chamber), fly ash (which exits the combustion chamber with the hot flue gas combustion products), and residue (including fly ash) from the flue gas cleaning system (EPA, "Electricity," 2006).
The combined ash and air pollution control residue typically ranges from 20 percent to 25 percent by weight of the incoming refuse processed. This ash residue may or may not be considered a hazardous material, depending on the makeup of the municipal waste (EPA, "Basic Facts," 2006).
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Georgia Energy Review 2005 2. Landfill Gas-to-Energy Large landfills are required to capture and flare the methane gas produced by the breakdown of refuse previously deposited in the landfill. Landfill gas-to-energy projects divert this methane either to an industrial enterprise for a direct end-use (displacing natural gas consumption) or into an internal combustion engine or turbine to produce electricity (EPA, "LMOP: Basic Information," 2006). Landfill gas-to-energy systems consist of a series of wells in the landfill that collect the methane, which is then sent to a processing unit (depending on the end use) and to a combustion system. The fuel can be used to produce electricity, in a boiler to produce hot water, for direct thermal use, cogeneration or a variety of other applications. LFG can utilize a variety of technologies including reciprocating engines or turbines. Several other technologies are currently under development including the Stirling and Organic Rankine Cycle engines and fuels cells. LFG has also been successfully converted to a vehicle fuel (compressed natural gas), and liquefied natural gas and methanol projects in development (EPA, "LMOP: Basic Information," 2006).
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Georgia Energy Review 2005
APPENDICES
APPENDIX I: REFERENCES
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American Wind Energy Association. (n.d.) How Does A Wind Turbine's Energy Production Differ from Its Power Production? Retrieved February 2006 from http://www.awea.org/faq/basicen.html
Berman, Bradley. (n.d.). Cars. Retrieved February 10, 2006 from http://www.hybridcars.com/cars.html
Bureau of Economic Analysis, United States Department of Commerce. (2005). Gross State Product Interactive Tables. Retrieved February 2006 from http://www.bea.gov/bea/regional/gsp
Bureau of Economic Analysis, United States Department of Commerce. (2006). Current Dollar and "real" GDP. Retrieved February 2006 from http://www.bea.gov/bea/dn/gdplev.xls
Colonial Pipeline Company. (2006). Retrieved February 2006 from http://www.colpipe.com/home/asp
Comprehensive State-wide Water Management Planning Act. 2004 Official Code of Georgia 12-5-522.
Duke Energy. (2006). DETG Pipeline Facilities. Retrieved February 2006 from http://www.dukeenergy.com/businesses/trans/pipelines/us/facilities
El Paso Corporation. (2006). Retrieved February 2006 from http://elpaso.com
Energy Efficiency and Renewable Energy, United States Department of Energy. (2003). Industrial Technologies Program Strategic Plan, August 2003. Retrieved February 2006 from http://www.eere.energy.gov/industry/about/pdfs/strategic_plan.pdf
Energy Efficiency and Renewable Energy, United States Department of Energy. (2005). Distributed Energy Program. Retrieved February 2006 from http://www.eere.energy.gov/de/chp/chp_technologies/tech_basics.html
Energy Efficiency and Renewable Energy, United States Department of Energy. (2005). Solar Cell Materials. Retrieved February 2006 from http://www1.eere.energy.gov/solar/solar_cell_materials.html
Energy Efficiency and Renewable Energy, United States Department of Energy. (2006). Biomass Basics. Retrieved February 2006 from http://www1.eere.energy.gov/biomass/biomass_basics.html
Energy Information Administration, United States Department of Energy. (2005). Annual Coal Report 2004. Retrieved February 2006 from http://www.eia.doe.gov/cneaf/coal/page/acr/acr_sum.html
Energy Information Administration, United States Department of Energy. (2005). Annual Energy Review 2004. Retrieved February 2006 from http://www.eia.doe.gov/emeu/aer
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Energy Information Administration, United States Department of Energy. (2005). Current and Historical Monthly Retail Sales, Revenues, and Average Retail Price. Retrieved February 2006 from http://www.eia.doe.gov/cneaf/electricity/page/sales_revenue.xls
Energy Information Administration, United States Department of Energy. (2005). Electric Power Annual 2004. Retrieved February 2006 from http://www.eia.doe.gov/cneaf/electricity/epa/epa_sum.html
Energy Information Administration, United States Department of Energy. (2005). Electric Sales, Revenue, and Price. Retrieved February 2006 from http://www.eia.doe.gov/cneaf/electricity/esr/esr_sum.html
Energy Information Administration, United States Department of Energy. (2005). Existing Electric Generating Units in the United States, 2004. Retrieved February 2006 from http://www.eia.doe.gov/cneaf/electricity/epa/epat2p2.html
Energy Information Administration, United States Department of Energy. (2005). Natural Gas Annual 2004. Retrieved February 2006 from http://www.eia.doe.gov/oil_gas/natural_gas/data_publications/natural_gas_annual/nga.html
Energy Information Administration, United States Department of Energy. (2005). State Energy Consumption, Price, and Expenditure Estimates (SEDS): Georgia. Retrieved February 2006 from http://www.eia.doe.gov/emeu/states/state.html?q_state_a=ga&q_state=GEORGIA
Energy Information Administration, United States Department of Energy. (2005). State Energy Consumption, Price, and Expenditure Estimates (SEDS): United States of America. Retrieved February 2006 from http://www.eia.doe.gov/emeu/states/main_us.html
Energy Information Administration, United States Department of Energy. (2006). Natural Gas Navigator. Retrieved February 2006 from http://tonto.eia.doe.gov/dnav/ng/ng_prod_top.asp
Energy Information Administration, United States Department of Energy. (2006). Natural Gas Navigator: International & Interstate Movements of Natural Gas by State. Retrieved February 28, 2006 from http://tonto.eia.doe.gov/dnav/ng/ng_move_poe1_a_EPG0_IML_Mmcf_a.htm
Energy Information Administration, United States Department of Energy. (2006). Natural Gas Navigator: Natural Gas Prices. Retrieved February 27, 2006 from http://tonto.eia.doe.gov/dnav/ng/ng_pri_sum_dcu_nus_m.htm
Energy Information Administration, United States Department of Energy. (2006). Petroleum Navigator. Retrieved from http://tonto.eia.doe.gov/dnav/pet/pet_sum_top.asp
Energy Information Administration, United States Department of Energy. (2006). Petroleum Profile: Georgia. Retrieved February 2006 from http://tonto.eia.doe.gov/oog/info/state/ga.html
Energy Information Administration, United States Department of Energy. (2006). Prime Supplier Sales Volumes. Retrieved February 2006 from http://tonto.eia.doe.gov/dnav/pet/pet_cons_prim_dcu_nus_m.htm
Environmental Protection Agency. (2006). Basic Facts: Municipal Solid Waste. Retrieved February 2006 from http://www.epa.gov/msw/facts.htm
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Environmental Protection Agency. (2006). Electricity from Municipal Solid Waste. Retrieved January 2006 from http://www.epa.gov/cleanrgy/muni.htm
Environmental Protection Agency. (2006). Landfill Methane Outreach Program (LMOP). Retrieved January 2006 from http://www.epa.gov/landfill/index.htm
Environmental Protection Agency. (2006). Landfill Methane Outreach Program (LMOP): Basic Information. Retrieved February 2006 from http://www.epa.gov/lmop/overview.htm
Environmental Protection Agency. (2006). Landfill Methane Outreach Program (LMOP): Energy Projects and Candidate Landfills. Retrieved January 2006 from http://www.epa.gov/landfill/proj/index.htm
Fanning, Julia L. (2003). U.S. Geological Survey. Water Use in Georgia by County for 2000 and Water-Use Trends for 1980-2000. Retrieved February 2006 from http://ga.water.usgs.gov/pubs/other/ggs-ic106/
Federal Energy Regulatory Commission. (2005). FERC Form No. 1, Georgia Power Company, December 31, 2005. Retrieved from http://www.ferc.gov
Georgia Department of Labor. (n.d.) Georgia Employment & Wages, 2004 Averages. Retrieved February 2006 from http://explorer.dol.state.ga.us/mis/current/ewcurrent.pdf
Georgia Department of Natural Resources. (2004). Rules and Regulations for Water Quality Control. Chapter 391-3-6. Retrieved February 2006 from http://www.state.ga.us/dnr/environ//rules_files/exist_files/3913-6.pdf
Georgia Power. (2006). About Us. Retrieved February 2006 from http://www.southernco.com/gapower/About
Georgia Public Service Commission. (1998). Staff Report on Electric Industry Restructuring. Docket 7313-U. Retrieved February 2006 from www.psc.state.ga.us/electricindust/Final%20Draft%2012398.pdf
Georgia Public Service Commission. (2004). Georgia Power Company: Green Energy Resources. Docket 16573, Document 69938. Retrieved February 2006 from ftp://www.psc.state.ga.us/16573/69938.doc
Georgia Public Service Commission. (n.d.) Green Power Pricing. Retrieved February 21, 2006 from http://www.psc.state.ga.us/electric/grpricing.htm
Heavenrich, R. (2005). Light-Duty Automotive Technology and Fuel Economy Trends: 1975 Through 2005 Appendix E. Retrieved February 2006 from http://www.epa.gov/otaq/cert/mpg/fetrends/420r05001e.pdf
Heavenrich, R. (2005). Light-Duty Automotive Technology and Fuel Economy Trends: 1975 Through 2005 Executive Summary. Retrieved February 2006 from http://www.epa.gov/otaq/cert/mpg/fetrends/420s05001.htm#highlight2
Idaho National Laboratory. (2005). State Resource Assessment Reports. Retrieved February 2006 from http://hydropower.id.doe.gov/resourceassessment/states.shtml
Integrated Resource Planning Act. 1991 Official Code of Georgia 46-3A-2. 70

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Jensen, V. & Lounsbury, E. (2005). Assessment of Energy Efficiency Potential in Georgia. Atlanta, GA: Georgia Environmental Facilities Authority.
Low Impact Hydropower Institute. (2005). Certified Facilities. Retrieved January 2006 from http://www.lowimpacthydro.org/cf.asp
Low Impact Hydropower Institute. (n.d.). LIHI Certification Program. Retrieved February 2006 from http://www.lowimpacthydro.org/cert_program.asp
Majority Staff, Permanent Subcommittee on Investigations, U.S. Senate Committee on Homeland Security and Governmental Affairs. (2002). Gas Prices: How Are They Really Set? April 29, 2002. Retrieved February 2006 from http://www.senate.gov/~gov_affairs/042902gasreport/sectioni.pdf)
MEAG Power. (2005). Overview of MEAG Power. Retrieved February 2006 from http://www.meagpower.org/About/Overview/tabid/56/Default.aspx
Mello, T.B. (2004). The Real Costs of Owning a Hybrid. Retrieved February 27, 2006 from http://www.edmunds.com/advice/specialreports/articles/103708/article.html
National Renewable Energy Laboratory. (2006). Biopower. Retrieved February 2006 from http://www.nrel.gov/learning/re_biopower.html
National Renewable Energy Laboratory. (2006). Hydropower Basics. Retrieved February 2006 from http://www.nrel.gov/learning/re_hydropower.html
National Renewable Energy Laboratory. (2006). Photovoltaics. Retrieved February 2006 from http://www.nrel.gov/learning/re_photovoltaics.html
National Renewable Energy Laboratory. (2006). Solar Hot Water. Retrieved February 2006 from http://www.nrel.gov/learning/re_solar_hot_water.html
National Renewable Energy Laboratory. (2006). Solar Process Heat. Retrieved February 2006 from http://www.nrel.gov/learning/re_solar_process.html
National Renewable Energy Laboratory. (2006). Wind Energy Basics. Retrieved February 2006 from http://www.nrel.gov/learning/re_wind.html
Natural Gas Competition and Deregulation Act. 1997 Official Code of Georgia 46-4-151.
Office of Electricity Delivery and Energy Reliability, U.S. Department of Energy. (n.d.). GridWorks. Retrieved February 2006 from http://www.energetics.com/gridworks/grid.html
Plantation Pipe Line Company. (n.d.). Pipelines Information. Retrieved February 2006 from http://www.plantation-ppl.com
Rule to Reduce Interstate Transport of Fine Particulate Matter and Ozone, 70 Fed. Reg. 25405 (2005).
Shelton, Stacy. (2005, June 27). Atlanta Water Supply Precarious. Atlanta Journal-Constitution, p. E1. 71

Georgia Energy Review 2005 Southface Energy Institute. (2005). Million Solar Roofs Initiative: Final Report. Atlanta, GA. State of Georgia Secretary of State. (2006). Rules and Regulations of the State of Georgia 515-3-4-.11. (2006).
Retrieved February 2006 from http://rules.sos.state.ga.us/docs/515/3/4/11.pdf Southeastern Power Administration. (2004). About Us. Retrieved February 2006 from
http://www.sepa.doe.gov/overview/?c=2 Tennessee Valley Authority. (n.d.). About TVA. Retrieved February 2006 from
http://www.tva.gov/abouttva/index.htm United States Census Bureau. (2004). Population Estimates, Archives, 1980s and 2000s. Retrieved February
2006 from http://www.census.gov/popest/archives United States Department of Energy and United States Environmental Protection Agency. (n.d.). Retrieved
February 10, 2006 from http://www.fueleconomy.gov United States Department of Energy & United States Environmental Protection Agency. (n.d.). Compare
Hybrids Side-by-Side. Retrieved February 2006 from http://www.fueleconomy.gov/feg/hybrid_sbs.shtml United States Department of Energy & United States Environmental Protection Agency. (n.d.). Find a Car. Retrieved February 2006 from http://www.fueleconomy.gov/feg/findacar.htm University of Georgia. (n.d.). UGA Site Georgia's First Biorefinery. Retrieved February 2006 from http://www.engineering.uga.edu/engr/Biorefinery.php United States Green Building Council. (2006). Certified Project List. Retrieved February 2006 from http://www.usgbc.org/LEED/Project/project_list.asp Williams. (2006). Natural Gas Pipeline Transportation and Storage. Retrieved February 2006 from http://www.williams.com/productservices.com/gaspipelines
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Georgia Energy Review 2005 APPENDIX II: GLOSSARY OF TERMS This section is currently under development.
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Georgia Energy Review 2005
APPENDIX III: PRIMER SECTIONS
A. Electricity 101
1. How is Electricity Produced?
Most of the electricity produced and consumed in Georgia is generated by thermo- and hydroelectric power plants. A power plant contains one or more generating units that convert primary energy, such as fossil fuels, uranium, or moving water, into electric energy. In Georgia, 71 power plants comprise a total of 293 generating units.
The two principal parts of a generating unit are the prime mover and the generator. The prime mover is the turbine, engine, water wheel, or similar machine that drives the electric generator. The generator creates the electric current. A shaft connects the prime mover to the generator.
a. Steam turbines Most electricity generated in Georgia is produced by steam turbine generating units that rely on either coal combustion or nuclear fission for heat. At a steam turbine generating unit, the heat generated from combustion or fission boils water or other fluid in a boiler to create high pressure steam. The expanding steam pushes against the turbine blades, causing the turbine to spin. The spinning turbine turns the shaft of the generator.
b. Gas turbines Gas turbine generating units employ a turbine prime mover as well, but in a different configuration. In a gas unit, the combustion of natural gas and distillate oil produces expansive hot gasses, which pass directly through the turbine to spin the generator shaft, much like a jet engine.
c. Combined cycle units Georgia's electricity generating units also include a number of combined cycle units that use both of these generating technologies in tandem. First, hot gas produced from the combustion of natural gas spins a turbine. Combined cycle units then "recover" the heat from the gas, after it has passed through the turbine, to boil water. The steam produced from the boiling water spins a steam turbine. In this way, combined cycle units use the heat twice from a single instance of combustion to produce energy, increasing the thermal efficiency of the units compared to a single-cycle gas turbine or a steam turbine alone.
d. Water turbines Water turbine prime movers are called hydroelectric generating units. In hydroelectric power generation, flowing water applies pressure to the blades of the turbine, thus spinning the turbine and the generator shaft. Although 116 of the 293 (40%) generating units in GA are hydroelectric, they account for only 4% of the electricity generated in the State. This is true for several reasons. Hydroelectric generating units are typically small, generally less than 50 MW each (many much smaller with a few larger ones). Additionally, water availability may vary during the year, impacting the output of hydroelectric units. However, hydroelectric units require no fuel, making them inexpensive to run and emissions free.
e. Electric system losses All energy conversion processes entail some loss of energy. This is certainly true for traditional electrical production, which is fairly thermally inefficient. Typical power plants convert about 33% of
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the energy input into electrical energy. The "central power plant" structure of the US grid compounds this problem, because the transmission of electricity over long distances results in further system losses. The level of transmission and distribution loss depends on the loading of the grid, but US DOE estimated that in 2001, average losses transmission and distribution losses reached 9.5%. These two factors result in an overall loss of energy of approximately 79% from Btu's of fuel consumed at the power plant to Btu's of electrical energy delivered to homes, offices or manufacturers (Office of Electricity Delivery and Energy Reliability, "GridWorks," n.d.).
In addition to traditional methods of electricity production that rely on fossil fuels or water as energy sources, there are other forms of electricity production that use non-hydro renewable energy resources, such as wind, solar and biomass. Although these other methods currently contribute only a small amount to total power production in the United States, they are one of the fastest growing segments of the electricity production sector.
Solar power is derived from the light and heat of the sun. Two types of solar energy can be used to generate electricity. The process known as photovoltaic conversion generates electricity directly from sunlight through photochemical processes. No turbine or generator is needed. In the solar thermal energy process, generators concentrate the heat from the sun to heat water in boilers. Just like fossil fuel boilers, the heated water forms steam that turns the turbines in a power plant. Photovoltaic technology is commonplace, powering everything from pocket calculators, to road-side emergency phones to homes and office buildings. Solar thermal technology, on the other hand, is only suitable to very sunny locations. Only a few large-scale solar thermal units exist in the United States.
Wind power units typically employ a rotor to capture the energy of the wind. The spinning rotor turns the generator.
Geothermal power comes from heat energy located deep within the earth. A geothermal power plant captures the steam that is created where magma flows close to the earth's surface. The steam is then used in a conventional steam turbine plant. Potential for geothermal electricity production in Georgia is very low.
2. How Is Electricity Delivered To The Consumer?
When electricity leaves the generator, it flows to a transformer, which increases the electric pressure, or voltage, to between 115,000 and 500,000 volts so it can be transmitted over long distances. This high-voltage electricity travels along large wires called transmission lines until it reaches one or more substations near where the electricity will be used. At the substation, another transformer decreases the voltage to distribution voltage levels of 4,000 to 30,000 volts. Electricity typically flows over the distribution lines until the point where a home or business receives its electric service. A distribution transformer would typically decrease the voltage to between 120 and 480 volts so it can be supplied to homes and businesses along distribution lines.
B. Natural Gas 101
1. What Is Natural Gas and How Is It Produced?
Natural gas is a combustible, gaseous mixture of simple hydrocarbon compounds, composed primarily of methane (CH4) but including small amounts of other gases including ethane, propane, butane and pentane.
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2. Where Does Natural Gas Come From?
Energy production companies extract natural gas from underground deposits in much the same way they extract oil. In fact, energy production companies often find natural gas deposits while searching for oil and remove the natural gas using wells that are drilled to access petroleum deposits. After they extract natural gas to the earth's surface, energy production companies compress it into "gathering pipelines" that concentrate the gas from different wells for treatment (removal of some non-methane hydrocarbons, particulate impurities and moisture) and transmission to the interstate pipeline system.
3. How Is Natural Gas Measured?
Natural gas is typically measured by volume and heat content. The volume of natural gas is measured in cubic feet and the heat content is expressed in British Thermal Units (Btu)16. A cubic foot of natural gas may contain varying levels of heat content, depending on the level of non-methane hydrocarbon content. The natural gas in the pipelines serving Georgia average about 1,027 Btu of heating value per cubic foot. Natural gas is typically sold to end users on a heat content basis, but consumer use is measured and billed in therms of gas rather than Btus. A therm is 100,000 Btu of heating value.
4. How Does Natural Gas Get to my Home or Business?
Three segments of the natural gas industry are involved in delivering natural gas from the wellhead to the consumer.
a. Energy production companies Energy production companies locate, drill and extract natural gas, then compress the unprocessed gas into low-pressure "gathering" pipelines, which then carry the gas to processing plants that remove nonmethane hydrocarbons, moisture and impurities from the gas stream. The gathering lines can be owned by the producers or a separate gathering company. Once the gas has been cleaned to pipeline quality, the gas is delivered into the high-pressure, large diameter transmission pipeline network.
b. Natural gas transmission (or pipeline) companies Natural gas transmission companies transport natural gas across the nation in an underground system of large-diameter pipes. In order to move large volumes of gas from the areas of production to the areas of consumption, natural gas transmission companies compress the gas before putting it into the pipeline. The pressure gradually declines as the gas travels. To maintain pressure, a series of compressor stations are positioned along the path, where large compressors re-pressurize the gas to push it to the next station.
Natural gas transmission companies operate like railroads and trucking companies. They do not own the commodity they carry in their pipelines or store in their underground facilities. They move natural gas from producing areas to market areas under contract to gas buyers. These contracts typically require transmission companies to deliver the gas (i) to the "city gate," where the gas changes hands
16 One Btu is equivalent to the heat needed to raise the temperature of one pound of water by one degree Fahrenheit at sea level. The energy industry uses Btus to measure the heat content of different fuels, providing a common denominator to compare the heating value of gasoline (124,000 Btu per gallon), coal (10,377 Btu per pound), electricity (3,412 Btu per kilowatt-hour) and natural gas (1,027 Btu per cubic foot).
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and becomes the responsibility of the local distribution companies, or (ii) to industrial plants or electric power plants for use in producing a product or generating electricity. The Federal Energy Regulatory Commission (FERC) sets transportation and storage rates charged by interstate pipeline companies. FERC requires pipelines to operate "open access" systems that allow any shipper to request gas transportation on any pipeline.
c. Local distribution companies Local distribution companies (LDC) take control of gas at the city gate and oversee the final leg of natural gas's journey to the end-user. LDCs construct and operate the pipeline network that delivers gas to individual homes and businesses (including the measurement equipment at the city gate and, in some cases, liquefied natural gas and propane peaking plants connected to their system). LDCs are also required to forecast the adequate amount of natural gas that customers will use so they can contract for adequate firm transportation and storage services with transmission companies. To determine the optimal supply mix, LDCs analyze customer usage patterns under various weather scenarios and apply these behavior patterns to actual weather experience. The source of gas into the available transmission pipeline is also an important factor. Because most of the gas delivered to Georgia through interstate pipelines is supplied by production in the Gulf of Mexico, alternative supply sources in cases of weather disruptions must be considered.
State public service authorities regulate the publicly-held distribution companies, while other distribution systems are owned by municipalities.
In some areas of the Georgia, the Local Distribution Company distributes, sells, bills and collects for the gas consumed by end use customers. In other areas of the state (where gas sales have been "deregulated"), the LDC elected to become an Electing Distribution Company ("EDC"). In this case, natural gas marketing companies handle all gas marketing functions. These marketing companies rely on the EDC to do provide many of the services described above, including forecasting customer demand, managing the use of storage and transportation contracts, operating peaking facilities to meet customers' extreme weather needs, and distributing gas to homes and businesses (including turning meters on and off and reading them for consumption data). The marketing companies act independently from the EDC in purchasing gas supply from producers and directing the use of gas transportation and storage provided by the EDC for their customers. Marketers bill and collect for gas sales and other appropriate charges to end use customers.
5. Who Uses Natural Gas?
Residential and commercial consumers use natural gas extensively for space and water heating, cooking and clothes drying. Industrial consumers use natural gas for heating processes, the generation of steam and as a feedstock for the production of fertilizers and other manufactured products. Electric utilities use an increasingly large amount of gas to generate electricity. Public transit providers and large fleet operators also use natural gas as a transportation fuel. Finally, natural gas transmission companies use natural gas as the fuel to run compressor stations along their interstate pipeline routes.
C. Refined Petroleum Products 101
1. Why Petroleum?
Crude oil or petroleum is a liquid mix of hydrocarbons (an organic chemical compound of hydrogen and carbon) that contains a considerable amount of easily usable energy. Through the application of
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heat energy and a variety of chemical processes, crude oil refineries transform petroleum into a broad range of products, including gasoline, diesel fuel, heating oil, jet fuel, liquefied petroleum gases, residual fuel oil, asphalt, lubricating oils, solvents, paraffin, petroleum jelly, petroleum coke, and feedstocks for the manufacture of chemicals, synthetic rubber, fibers, plastics, drugs and detergents. Fuel products, which include motor gasoline, jet fuel, diesel fuel, kerosene and liquefied petroleum gases, account for nearly 90 percent of the petroleum used in the United States.
2. From Below the Earth's Surface to Your Gas Tank
Locating crude oil, extracting it from the earth or seabed, transporting it to refineries, transforming it into useful products, and transporting the refined products to end-users is a complex, technologically sophisticated industrial operation that spans nearly the entire globe. The basic components of this complex industrial operation include:
a. Exploration and production The exploration and production of oil is a technologically sophisticated and capital intensive operation. The process contains many steps, including identifying prospective oil sites (core sampling, seismic testing), testing the rock, drilling a well, determining whether the find is commercially viable and estimating the dimensions of the reservoir with further drilling. If warranted, production or "development" wells are put in place, along with tanks, pipelines and gas processing plants, so the oil can be produced, moved to markets and sold.
b. Global transport / shipping Oil tankers transport crude oil to the United States from Europe, Asia, the Middle East and Alaska. Crude oil from Mexico and Canada travels both by barge and pipeline. The major ports with capability to receive shipments of crude oil are located in New York Harbor, along the Gulf Coast and on the West Coast.
Once in the U.S., barges and 114,000 miles of pipelines transport the crude oil to refineries. A network of pipelines carries crude oil delivered to the Gulf Coast into the Midwest, and a lesser network carries crude oil produced in the continental United States across the various regions.
c. Refining The first step in the refining process is atmospheric distillation, which consists of heating the crude oil to separate the hydrocarbon components with differing boiling points. Lighter products, such as gasoline, are recovered at the lowest temperatures; middle distillates, such as home heating oil and diesel fuel, come next; the heaviest products, such as residual fuel oil, are only recovered at the highest temperatures, sometimes over 1000 degrees Fahrenheit. Most refineries in the United States use additional refining technologies, such as vacuum distillation, coking, catalytic cracking, and hydrocracking, to improve efficiency, recover additional components and improve product quality.
The United States has the largest refining capacity of any nation in the world approximately 20 percent of the total global capacity. Almost all of the gasoline consumed in the United States approximately 96 percent is produced in domestic refineries; the remainder is imported from locations such as the Caribbean and Europe.
d. Interstate pipeline transport and bulk terminal storage Once crude oil is refined, the products are stored in tanks at the refinery or shipped to other distribution facilities, called wholesale terminals. A terminal may have as much as 2 million gallons of storage
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