Energy Overview

Jeff BurlesonDirector, Resource Policy and Planning

Georgia Power CompanyMay 2010

Outline

Demand for More Electricity Historic Energy and Environmental Policy

Impacts of Historic Energy and Environmental Policy

Electricity Supply Fundamentals

Alternative Generation Technologies

Economics of Electricity Alternatives

Observations and Conclusions

US Electricity Generation by RegionHistory and projection, 1990-2030

0%

20%

40%

60%

80%

100%

120%

1990 1995 2000 2005 2010 2015 2020 2025 2030

Chan

ge fr

om 1

990

.

Southeast (SERC, FRCC: AL, AR, FL, GA, LA, W MO, MS, NC, SC, VA)

US

West (WECC: AZ, CA, CO, ID, MT, NV, NM, OR, UT, WA, WY)

Northeast (CT, DE, ME, MD, MA, NH, NJ, NY, PA, RI, VT)

Midwest (ECAR: IN, KY, MI, OH, WV)

Data Source: Energy Information Administration, US Department of Energy

ProjectionHistory

Projected growth

2008-2030

34%

25%34%

22%

11%

ElectricityResourceDecisions

Cost of energy efficiency

EnvironmentalLaws and Regulations(air, water, ash, carbon)

Natural gas and coal(price and availabilityover next 40 years)

Cost to build new generationtechnologies

Natural Gas Policy

• In 1973 U.S. Congress prohibited construction of any new electric generation using oil or natural gas

• Law repealed in 1987

Federal Environmental Laws Affecting Electric Utilities

1862 1872 1882 1892 1902 1912 1922 1932 1942 1952 1962 1972 1982 1992 2001

YOSVA

RTCRHA

LA

NBRAAA

WA

IA FEATH

NPS

MBTA

OPA

MBCA

TAFWCABPA

AEPA

NLR AWPASCS

FAWRA

FIFRA

WPCA

AEA FWA

CAA-55PAA

FWCAA-58

WLDA

FHSANFMUA

NHPAPFWFOIA

WSRAEARCHSA

NEPAEQIACAAEPA

OSHAFAWRAA-70

CAAA-77CWA

SMCRASWRCA

SDWAA-77

ESATAPA

HMTA

ARPA

NWPAESAA-82

RCRAA-84WLDIMPRSAA-82

SDWAA-86SARA-86

NAWCA

AOA

AMFAARPAA-88

AIAASBCAA-88

ESAA-88FIRAA-88

TOSCAA-88NWPAA-88CPDRAA-88

NMSPAA-888FCRPA

MMPAA-88ODBASFA

FWLA-88ICPBD

WRPAAFCA

AQA

FCMHSAESCA

BLBAFWPCAMPRSACZMANCA

FEPCAFWSAMMPA

TOSCAFLPMARCRANFMA

CZMAA-76

APASWDA

CERCLACZMIA

COWLDAFWLCA

MPRSAA-80ANISCA

LLA-81

WQA

EDPOPARECA

CAA-90CCRA

CLFWRAHMTUSA

NEEAPPA

PPVAIEREAANTPAGLCPA

ASACZMAA-90

WRDA

FFCACERFA

CRAA-92

BLRAERDDAAEAWANOPPAPTSA

UMTRCAESAA-78

QCANCPA

0

No.

of

Law

s

150

100

50

Georgia Growth Emissions

Georgia Power Historical Emission Trends

Emission Trends

-120%

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

Year

SO2 down >95%

Fossil Generation up ~ 58%

NOx down > 85%

Ga Population up > 60%

Hg down ~ 70% to 90%

1990 1995 2000 2005 2010 2015

Nuclear Regulation

• 1979 Three Mile Island accident

• Nuclear Regulatory Commission began changing regulations for new nuclear plants under construction

New Capacity Additions – 1970s

Oil14%

Nuclear17%

Coal / Pet Coke37%

Gas20%

Hydro12%

Biomass0%

Green Power0%

Other0%

Green Power2%

Biomass3%

Other0%

Coal / Pet Coke45%

Nuclear31%

Oil2%

Gas11%

Hydro6%

New Capacity Additions – 1980s

Gas63%

Oil5%

Nuclear7%

Coal / Pet Coke14%

Other0%

Biomass4%

Green Power2%Hydro

5%

New Capacity Additions – 1990s

Gas98%

Coal / Pet Coke1%Nuclear

0%Oil0%

Other0%

Biomass0%

Green Power1%Hydro

0%

New Capacity Additions – 2000s

Typical Summer Day Economic Dispatch

System Load

Why do we need a mix?M

W

Peaking(cf < 20%)

Intermediate

(20% < cf < 60%)

Because of the System Load Shape, a combination of resource types is the least cost solution

Base Generation(cf > 60%)

Relative Costs

Fixed Variable

Low High

Medium

LowHigh

Medium

time of day

Potential technologies to fill electricity generation needs

• Natural Gas• Pulverized Coal• Coal Gasification• Nuclear• Renewable

– Solar, wind, biomass, geothermal, etc• Energy Efficiency Programs

Comparison of Coal, Gas & Oil Ending March 2007

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

$16.00Ja

n-9

0

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

Jan

-05

Jan

-06

Jan

-07

Fu

el P

ric

e (

$/m

mB

tu)

Historical Bituminous Coal*Historical Henry Hub Gas

PRB (8,800 Btu/lb; 0.8 #SO2; FOB-Mine)

Colombian (11,300 Btu/lb; <1% SO2; FOB-Port Bolivar: $/MT)

West Texas Intermediate Crude Oil (WTI)

Coal Generation – Summary

Pros

• 250 years of known/reliable domestic reserves

Cons

• Possible climate legislation

• Ever increasing environmental regulation

Nuclear Generation – Summary

Pros• No air emissions, including CO2

• Generic design pre-approval • Federal government support• Low operating cost• Greater cost certainty than in

past

Cons• Long development periods

– Site permitting license process takes about four years

• Used fuel storage issues• High capital costs

Renewable Generation

SolarSolar

WindWind

GeothermalGeothermal

BiomassBiomass

Landfill Landfill gasgas

Small, low-Small, low-impact impact hydrohydro

US Solar Energy Resources

US Wind Energy Resources

Researching wind potential off the Georgia coast

Photo-Simulation, Northern Wind Farm Location, 6.8 miles Southeast of Tybee Island

US Geothermal Energy Resources

Source: US Department Of Energy

Potential Renewable Projects in GeorgiaPotential Renewable Projects in Georgia

Around 80% of potential comes from Biomass

24

Poultry Litter Landfill Methane

Municipal Solid Waste Biomass

Georgia Is Rich in Biomass

US Biomass Energy Resources

Attorney Client Communication

Plant Mitchell

155 MW Coal Unit

1964 Vintage

Opportunity

High operating costs

High Environmental Costs

Low Capacity Factor

Excellent Location

Near abundant wood supply

Good transportation logistics

Economic Impact

Tens of millions of dollars annually in local wood purchases vs. out-of- state coal purchases

Increased tax base

Jobs

50-75 permanent to supply wood

80-100 temporary construction jobs over a two-year period

Energy Efficiency• Programs offered include:

– Energy Star Houses– Energy Star Appliances– Etc

• 8 new programs since 2007

• Spend $500 million over next 10 years

• Limited economic potential– Additional energy efficiency programs would increase price of

electricity

Renewables With Energy EfficiencyRenewables With Energy Efficiency((Indicative Model Assuming Waxman Markey)Indicative Model Assuming Waxman Markey)

0%

5%

10%

15%

20%

25%

2012 2013 2014 2015 2016 2017 2018 2019 2020

En

erg

y (%

)

29

Renewables 5%Renewables 5%

Energy Efficiency 2.5%Energy Efficiency 2.5%

ACPACP

7.5%

Approx.ACP = $350M/yr

Note: ACP is based on estimates and not actual kWh

Illustrative Cost Comparison of Generation Technologies

0

5

10

15

20

25

30

35

40

Combined Cycle "G"(natural gas)

Nuclear "AP1000"(uranium)

Pulverized Coal "withCCS"

Solar PV * Wind Turbines Greenfield Biomass(wood)

Ap

pro

xim

ate

le

ve

lize

d c

en

ts p

er

kW

h

Low Range High Range

* High Range for Solar Photovoltaics is 65 cents/kWh

- - - - - - - - - - -- - - - - - - - - - - - - Generation Technologies - - - - - - - - - -- - - - - - - - - - - - - These cost estimates are illustrative of utility ownership for future generation technologies including capital costs, O&M, and fuel. Costs are projected over the useful life of each generation technology and levelized for comparison purposes. Low and high ranges reflect various assumptions on the uncertain costs of capital, equipment, fuel prices, and the potential costs of carbon legislation.

December 1, 2009

Customer Interest in Green EnergyBlocks Sold* # of Customers

Premium Standard Total Premium Standard Total

Jan-2010 2,350 7,236 9,586 770 3,360 4,130

Feb-2010 2,371 7,226 9,597 781 3,339 4,120

Mar-2010 2,372 7,154 9,526 790 3,316 4,106

Observations & Conclusions• Need a Combination of Best New Generation Options

– Natural Gas Generation

– Biomass Generation• Limited amount of cost effective resource• Lack of reliable supply in Georgia

– Energy Efficiency Programs• Limited amount of cost effective resource• Demand is small

– Nuclear Generation