Alabama Power Co.. customers will pay $740 million from the closure of the 1,063-MW Gorgas coal-fired power plant, according to a recent federal filing by parent company Southern Co.
According to Southern's recent annual filing, "approximately $740 million of net investment costs will be transferred to a regulatory asset at the retirement date and recovered over the affected units' remaining useful lives," allowing Alabama Power to recover the Gorgas plant's costs through customers' electric bills, plus a profit margin set by the Alabama Public Service Commission. Alabama Power is able recover a power plant's investment costs, including the costs associated with unit retirements caused by environmental regulations, through the commission's Environmental Accounting Order.
In February, the company said it would shut down the three remaining units at the Gorgas plant on April 15 due to the costs of complying with federal environmental requirements for handling coal ash and wastewater. Alabama Power has said it would cost about $300 million to bring the power plant into compliance and keep in operation.
"A number of people, including us, wanted Plant Gorgas to be retired back in 2015 rather than investing $300 million to keep the plant going," John Wilson, research director at the Southern Alliance for Clean Energy, told AL.com. "And now Alabama Power customers will be paying for this, for these past years of continued investments in that plant."
Once the Gorgas plant has been shut down, Alabama Power will have seven operational coal-fired generators at three power plants, down from 23 generating units in 2015. For the remaining units, the company has said it may either retire them or convert them to natural gas.
"Utilities have long planning horizons for the assets they invest in," Alabama Power spokesman Michael Sznajderman was quoted as saying. "We considered all viable alternatives before making this decision."