ATLANTA — A plan by Georgia Power to change the way it pays for solar electricity from small- and medium-sized projects is worrying developers just a year after they pushed the monopoly into using more renewable energy.
This price dispute illustrates the tension between traditional utility companies and a growing solar industry. For years, the Southern Co. subsidiary has operated on a straightforward monopoly model: Use a small number of big, expensive plants to produce huge amounts of electricity relatively cheaply. In the long run, distributed solar panels could make those big plants less important and weaken the financial clout of traditional utilities.
The latest conflict focuses on how much Georgia Power should pay developers who build small- and medium-sized solar projects. Right now, those projects compete in a lottery to sell their energy to Georgia Power at a fixed cost of 13 cents per kilowatt hour. That price is supposed to reflect how much it would cost the utility to produce an equivalent amount of power using its own equipment.
Now Georgia Power wants to abandon the lottery and buy energy from solar developers who offer the cheapest prices.
"It is time to let the market deliver the best value to our customers," the company said in a legal filing.
In theory, cheap solar energy should benefit Georgia Power customers. However, some developers worry that small customers and investors will hesitate to build solar panels if uncertain or fluctuating prices make it difficult to predict a project's financial payoff. The industry also says the price Georgia Power pays fails to reflect other benefits for society, for example, less pollution from burning fossil fuels.
"It's very destructive to companies that in the past have based their business decisions knowing they have a certain rate to rely on," said Brion Fitzpatrick, chairman of the Georgia Solar Energy Association.
Georgia Power officials agreed to delay its plan until the issue can be discussed further. A meeting has been set for Tuesday.
"We're going to move cautiously and slow and in the interest of the consumer," said PSC Commissioner Lauren "Bubba" McDonald, who pushed the utility to expand its solar power usage.
A year ago, a coalition of solar companies, trade groups and anti-monopoly tea party activists successfully lobbied regulators to force Georgia Power to add another 525 megawatts of solar electricity to its system. Initially, the utility did not propose adding new solar projects in its plans for meeting the state's energy needs for the next 20 years. When it became clear that solar proponents had the votes, Georgia Power opted not to resist.
In July, the Georgia Solar Energy Industries Association asked regulators to consider raising the price Georgia Power pays for solar electricity. The trade group said the price should reflect additional factors since solar panels do not need cooling water, increase grid security and help mute price shocks caused by the fluctuating prices of fossil fuels.
The following month, Georgia Power unveiled its latest pricing proposal.
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