February 2016 Powerlines

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Powerlines February 2016 | Volume 29 • Number 2 | www.powersouth.com/powerlines | info@powersouth.com PowerSouth's 2016 outlook is a bright one, according to Chief Operating Officer Damon Morgan's presentation on the future power generation portfolio at the annual Trustee Update Jan. 27–29. "As we think about where we are in our generation future, the message I want to send is that we should be 'Happy,'" Morgan said. "I'm often reminded we've been through low and hard times, so we need to enjoy the present as things are going really well." Morgan provided the following highlights of PowerSouth's generation outlook over the next decade: • Slow but steady load growth is forecast • Capacity needed to meet load growth has been secured for the next 10 years • Ample ability to take advantage of low natural gas prices • Continue resource diversity Fuel and purchased power costs continue to be the biggest cost driver (50 percent of 2016 budget) for the cooperative. Taking advantage of dynamic fuel markets and burning the most economical fuels remain a key part of our strategic plan. As a result, Morgan reported a 29 percent annual growth in natural gas burn since 2006 because coal prices have stayed relatively flat and natural gas prices have fallen. "However, even though things are 'Happy' for now, there are always threats and obstacles to consider for the future," Morgan said. Among the issues PowerSouth will be focusing on are regulatory compliance, renewable power questions, protection from cyber attacks and preparing for production from the Vogtle nuclear plant. Southern Company's Mark Rauckhorst spoke to trustees at the 2016 update about the progress of Vogtle nuclear units 3 and 4. The 125 megawatts of power we will receive beginning in 2019-20 will provide additional diversity of resources, as well as a non-carbon emitting resource. Morgan said that compliance with environmental regulations and reliability standards impact how we generate and deliver energy. Current federal policies favor the use of natural gas and renewables for power generation, making it increasingly difficult to maintain coal as an option and frustrating our strategic goal of maintaining fuel diversity. "Many people think renewable power can solve all the world's energy problems," Morgan said. "Yet, renewable power generates on its own schedule, not based on consumer demand. So, reliability — a PowerSouth core value — is at risk when depending on renewable power, and that's a risk we can't take." As we look ahead at the next decade, a steady but slow load growth is forecast. Morgan said capacity needed to meet that growth is secured, and we anticipate taking full advantage of low-cost fuels while maintaining resource diversity. "We have many blessings here at PowerSouth," Morgan said. "We have a lot to be thankful for. We really do." g Prefer to read an electronic version of Powerlines? Visit www.powersouth.com/powerlines to access our e-newsletter. COO Damon Morgan: PowerSouth's generation future looks bright

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