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Letter to Senator Shafer Regarding Power-Purchase Agreements in Georgia

In Open Letter on February 27, 2012 at 4:37 AM

February 27, 2012

Senator David Shafer
Georgia Senate Committee on Regulated Industries and Utilities
421-F State Capitol
Atlanta, GA 30334

Re: Power-Purchase Agreements in Georgia

Dear Senator Shafer:

As a voter in Georgia Senate District 39 and Georgia House District 55, please be advised of my support and others support for SB 459 as proposed by Senator Buddy Carter as of February 27, 2012, which aims to legalize power-purchase agreements (PPAs) in Georgia.

Please consider the groundswell of collective support from reputable proponents of the bill including the Georgia Solar Energy Association (GSEA), Steve O’Day of Smith, Gambrell & Russell, and consumer advocate Clark Howard.

Additionally, take into account several observations outlined below as cited and made available in various press reports and underlying statistical records:

From the Atlanta Business Chronicle, February 23, 2012,

“Georgia businesses and homeowners already have the right under existing law to put solar panels on their properties if they pay for them in cash, with a loan or through a lease with their utility.”

“What Carter’s bill would do is allow a form of third-party financing known as a power-purchase agreement (PPA).”

“As practiced in 45 other states, solar companies finance and install the equipment while retaining ownership of the system. The customer then makes monthly payments to the company based on the amount of electricity that will be generated.”

“PPAs have become the most common method of financing solar panels, lawyer Stephen O’Day, partner and head of the environmental and sustainability practices at Atlanta-based Smith, Gambrell & Russell LLP, told the committee.”

“The ease of financing through PPAs has helped create 27,000 solar jobs in Texas and 23,000 in Florida, O’Day said. Georgia only has 5,000 solar jobs, he said.”

From the U.S. Department of Energy, July 2011,

“Power purchase agreements allow Federal agencies to implement on-site renewable energy projects with no upfront capital costs. A developer installs a renewable energy system on Federal land or buildings. In exchange, the agency agrees to purchase the power generated by the system. These power purchase payments repay the developer over the contract term. The developer owns, operates, and maintains the system for the life of the contract.”

From the Savannah Morning News, February 24, 2012,

“[Senator] Carter’s interest in third party power purchase agreements came from constituent Dr. Sidney Smith. The Savannah dermatologist is a long-time proponent of solar who in January hooked up a pole-mounted solar array at Savannah’s Driftaway Cafe. The company Smith started with Brunswick pathologist Pat Godbey, Lower Rates for Customers LLC, has agreed to sell the power produced there directly to the cafe at a rate 1 percent below that of Georgia Power.”

“Yet in only four states — Georgia, Florida, North Carolina and Kentucky — are third party power purchase agreements disallowed,” says the paper.

As for opposing views, Georgia Power Company is insisting that PPAs will lead to higher electricity rates, raising the burden of overall costs to end-users. However, that claim is largely unsupported by facts.

For instance, Georgia, Florida, Kentucky and North Carolina charged an average of 8.71 cents per kilowatt hour in 2010, according to the U.S. Energy Information Administration. However, geographically comparable states with PPA business – Alabama, Tennessee, South Carolina and Virginia, for example — charged an average lower rate of 8.67 in 2010. Over the longer term, in every year on record judging from 1990 onward, these 4 states have consistently produced lower electricity rates.

Therefore, from a property rights perspective, a jobs perspective and an environmental perspective, your motion to support SB 459 as worded is the right decision.

Sincerely,

James Breedlove

CC:

Georgia Senator Renee Unterman;
Georgia Senator Vincent Fort;
Georgia Representative Rashad Taylor; and
U.S. Congressman Jack Kingston

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