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I had just gotten used to writing 2024 on my checks, and now I have to double check and make sure I write 2025. Things change quickly. As we get older, time passes quicker.

Last year passed very quickly, and many things changed. In 2023, we completed the Lowman Energy Center (LEC), a natural gas combined cycle generation plant, at the site of our retired coal-fired Lowman Plant in Leroy, Alabama. The LEC provides just under 700 megawatts of extremely efficient generation at very competitive pricing.

When planning the LEC, we looked at recent growth on our members’ systems and across the geographic area. We thought the generation provided by the LEC would be sufficient to handle our members’ increased electric growth for a few years. Our next generation plant wasn’t planned until the end of the decade. Other utilities’ planning models were similar, expecting generation capacity surpluses in the southeast region to continue for a few more years.

In 2024, coal-fired plant retirements due to environmental regulations continued, which reduced available generation in the region despite the construction of some natural gas generation. With the changes, surplus generation capacity in the southeast has declined much faster than anticipated.

If asked – and they rarely are – when is the peak usage of electric power, most people say it is on a hot July or August afternoon. That makes sense to most, because it is really hot in Alabama on summer afternoons, and we can all relate to air conditioners running wide open to keep houses and buildings cool. But, the answers of July and August peaks are just dead wrong and, by the way, not even close. Our members’ systems’ peak, or annual highest usage, occurs during the 6:00 a.m.AM hour on a cold winter day, usually in January. Sometimes, it happens in December or February. The winter peak is about 25 percent higher than in summer.

Utilities are required to maintain (either own or control) generation resources to make electricity available to meet system demand over peak periods. Over the past few years, you will recall that obligation has not been met in certain regions, with blackouts in Texas and the TVA area. None of us want that to happen again, especially not here.

As we enter 2025, things have changed quickly. The economy busted out of the conservative strategies based on fears around the Covid pandemic and organic growth has increased strongly. The Biden’s Administration’s efforts to electrify everything, including transportation, has increased electric demand. The 2024 presidential race has rejuvenated expectations of an expanding and growing economy, and businesses are looking at expanding to meet the growing demand for products. Increasing numbers of people are moving into our members’ service areas from other states. Finally, and most impactful, the electric demand necessary to drive the tremendous growth in artificial intelligence (AI) and the cloud-based data centers supporting the emerging AI industry is raising expectations of the need for additional reliable and dispatchable electric generation.

This week, Microsoft announced plans to invest $80 billion of capital in AI data centers, at least half of which is planned for the U.S. The other large data users, Apple, Meta (Facebook), Google and Amazon have similar expansion plans yet to be announced. Most of the investment will be in data centers located around the country to handle increased data usage and AI’s expansion. The Department of Energy (DOE) predicts the electric appetites of the data industry will triple over the next three years, at which time they will use 12 percent of all electric power consumed in the U.S.

Those projections, combined with the retirement of reliable coal-fired generation and the lack of new generation assets, are very troubling.  Based upon our past experience, as well as the production queues for new natural gas turbines from the three equipment suppliers and the projections of construction companies, it will take at least five years to complete a new natural gas plant.  Already on the bleeding edge of sufficient capacity, 4 percent annual growth of the country’s electric usage solely for data centers – plus the other electric growth for the next three years – is a daunting challenge.

To ensure we have sufficient capacity to serve our members’ growth, we are moving quickly to secure a slot for a new natural gas turbine and start the design stage for an additional generation plant. In the past, we have relied on purchases from other utilities in the region to meet our short-term needs, but we now have doubts that strategy will provide the stability and reliability we need.

Things change quickly, and plans have to be adjusted. We are building new generation earlier than we had planned. Our goal is to be able to provide reliable power to our members whenever they need it. Just like I have to get used to changing the years on my checks, we have to change our plans as things change around us.

 I hope you have a good month.