Marking the end of a more than year-long transition from becoming a coal-fired power plant to one fueled by natural gas, Georgia Power reported Monday that the third and final of the company's 840 MW natural gas combined-cycle units at Plant McDonough-Atkinson in Smyrna, GA, became operational Oct. 28.

The three units represent one of the largest generation sources on Georgia Power's system, capable of producing more than five times the electricity of the two coal units that were retired on Sept. 30, 2011 and Feb. 29, 2012, respectively. Removal of the coal stack at the plant has begun and will be complete by June 2013, the company said.

Georgia Power placed the first gas-fired unit online at the plant in December 2011, and the second on April 26 of this year. The move is one in the continuing trend across the country of replacing older coal-fired generation with cleaner burning, low cost natural gas-fired power.

While still easier on the environment than coal-fired generation, natural gas could be losing it's cost advantage, according to Credit Suisse equity research analysts, led by Arun Jayaram (see Daily GPI, Oct. 25). Coal-to-gas switching is no longer favoring gas, Jayaram said in the report. Electric utility demand this year "has been off the charts, averaging 5.8 Bcf/d, or 29% above 2011 levels." Gas demand "could lose 2.4-5.1 Bcf/d of market share to coal at gas prices between $3.50 and $4.50/Mcf." At the current futures strip of $3.95/Mcf, "we estimate gas could lose 3.75 Bcf/d of market share to coal."

The new Smyrna units are expected to meet growth in customer electricity needs and ensure reliability in Metro Atlanta and North Georgia. Georgia Power added that the units will also reduce emissions and help improve air quality in Metro Atlanta.

With the addition of the third unit, Plant McDonough-Atkinson is now capable of producing more than 2,500 MW, enough energy to power 625,000 homes.

Georgia Power a subsidiary of Southern Co, serves 2.4 million customers in all but four of Georgia's 159 counties. Operating in the traditionally coal-fired generation region of the Southeast, Southern's 4Q2011 generation mix was about 40% natural gas, 40% coal and 20% other. CEO Tom Fanning said in April the company's latest fuel mix estimates are 47% gas and 35% coal, with the remaining coming from nuclear and hydroelectric sources, its lowest-cost resources for power (see Daily GPI, April 27). By comparison, Southern's portfolio just five years ago was 16% gas, 70% coal-fired generation and 14% other.

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