Alabama Power Co. on Sept. 6 filed a request with the Alabama Public Service Commission for a certificate of convenience and necessity to procure additional generation capacity by acquiring a combined-cycle plant, building a new one and entering into power purchase agreements.
In May, the Southern Co. utility entered into an engineering, procurement and construction agreement with Mitsubishi Hitachi Power Systems Americas Inc. and Black & Veatch Construction Inc. to build an approximately 720-MW combined-cycle facility. The plant is expected to enter commercial operations by the end of 2023.
Additionally, Alabama Power is acquiring an approximately 885-MW combined-cycle generation facility in Autauga County from Tenaska Energy Inc. subsidiary Tenaska Alabama II Partners LP. As part of the transaction, expected to close by September 2020, the utility will assume a power purchase agreement with a third party. Until the expiration of that agreement, the proceeds from the sale of its output will offset the associated costs of operation during the remaining term of the contract.
The capital investment associated with building a new plant and acquiring the Tenaska plant is estimated to total about $1.1 billion, according to a Sept. 6 filing.
Alabama Power also intends to procure through long-term power purchase agreements about 640 MW of additional generating capacity consisting of combined-cycle generation expected to begin in 2020 and solar generation coupled with battery energy storage systems expected to begin in 2022 through 2024.
The utility expects to recover costs associated with the construction through its Rate Certificated New Plant, or Rate CNP, rider, according to the filing.
The costs associated with the power plant acquisition are expected to be recovered through the rate stabilization and equalization rider during the term of the existing power sales agreement and, on the expiration of the agreement, through the Rate CNP rider.
Alabama Power expects to recover the capacity-related costs associated with the power purchase agreements through its Rate CNP power purchase agreement.
The recovery of costs associated with laws, regulations and other mandates are expected to be recovered through Rate CNP Compliance.
Fuel and energy-related costs are expected to be recovered through a rate energy cost-recovery rider. Any remaining costs will be incorporated through the annual filing of Rate RSE.
