Southern Co. CEO committed to nuclear despite Japan disaster

By Maria Saporta
Friday, April 8, 2011

The leading flag bearer for “new nuclear” in the United States — Atlanta-based Southern Co. — is as committed as ever to a nuclear renaissance.

That is despite the devastating earthquake and tsunami that hit Japan on March 10 — an event that is leading many utility companies and foreign governments to put their nuclear plans on hold.

But not Southern Co., which is moving forward with its plans to build two new nuclear units (Units 3 and 4) at Plant Vogtle near Augusta — the first new nuclear projects in the United States in three decades.

In an exclusive conversation with Atlanta Business Chronicle on April 1, Southern Co. Chairman and CEO Thomas Fanning recounted his reaction to the Fukushima situation and reaffirmed the company’s dedication to nuclear as a leading source of energy in the future.

Within hours of hearing the news about the Japanese earthquake, Fanning held a special conference call with his board on Friday, March 11.

“I wanted to let them know what had happened and that we were on top of the issue,” Fanning said.

Confident that the situation was under control, Fanning that same day boarded a plane for London to attend the international conference of the Edison Electric Institute. When he arrived Saturday morning, he was greeted by industry analysts and friends.

“The initial reaction of people was ‘Oh my goodness. What does this mean?’ ” Fanning said. “Once people understood the facts of the situation and how Southern was positioned relative to others, Congress, the administration, regulators have behaved beautifully. I think Wall Street has a great deal of faith in us.”

But once in London, Fanning realized the situation in Japan was getting exceedingly worse so he returned to Atlanta that Tuesday, March 15.

“We were in contact with a variety of people in Washington, just to inform them about the facts of the situation,” Fanning said. “I did come home early on Tuesday. I was going to be there all week. But I didn’t want to be an absentee CEO.”

Once back in his office, Fanning called Norio Sasaki, president and CEO of Toshiba Corp., Japan’s largest maker of nuclear reactors.

“We have a relationship with Toshiba. I spoke to the CEO of Toshiba on Tuesday after the event. It was 11:30 [p.m.] their time, and he was still at work,” Fanning said. “The people in Japan have been working exceedingly hard. And we have mustered all of the support we can.”

But, once again, as bad as the situation is in Japan, it has not led to any doubts or second-guessing in Fanning’s mind about Southern’s nuclear plans.
“What’s happening in Japan proves to me that we need Plant Vogtle 3 and 4 to go forward as the standard-bearer for new nuclear in America,” Fanning said. “Japan just reinforces my belief that the AP1000 design is superior.”

The AP1000 design from Westinghouse Electric Co., with pressurized water reactors, will be used at Vogtle Plants 3 and 4. It is quite different from the design of the Fukushima plants in Japan, which relies on a boiling water reactor.

Actually Southern Co.’s Plant Hatch used a similar design as the Fukushima plant.
Fanning said that the AP1000’s technical design is one of its most attractive features.

“It’s a passive, gravity-driven design. It’s elegant and simple. You don’t need an external power source to drive it in the event of an emergency,” Fanning said. “If the valves blow, the water just drops straight down.”

Fanning also doesn’t have great concern that the Fukushima disaster could be replicated at Plant Hatch, near the city of Baxley in southeast Georgia. It is not located in a seismically sensitive area so earthquakes should not be an issue; and it is not located near the coast so it would not be hit by an ocean surge (which caused the most damage at Fukushima).

The one area that Southern and the nation’s nuclear power experts will closely examine as a result of Japan’s experience will be the containment vessels where spent fuel rods are stored in pools of water.

Fanning said that “generally speaking,” the containment vessels for the Plant Hatch design is lighter than the AP1000 design being built at Vogtle 3 and 4, which “has enough safety features to withstand a direct plane crash.”

But he quickly added that Plant Hatch has “been completely safe” and it has “operated without any problems” since the units were built in 1975 and 1979. “It may be that we will want to add more containment as something we’ve learned from Japan,” he said.

Looking forward, Fanning said the United States needs new nuclear power to help meet the nation’s growing demand for energy. He repeated Southern’s belief that all modes of energy will be needed — coal, natural gas, renewables and nuclear.

Although the recent recession has slowed down the growth projections that Southern used in making the case for Vogtle 3 and 4, Fanning said he believes that slowdown is temporary and that the South will continue to have significant growth.

Also Fanning said that more stringent clean air rules could lead to Southern having to retire several of its smaller coal plants, and then that energy production could be replaced with new nuclear. Plant Vogtle’s Unit 3 is supposed to open in 2016 and Unit 4 in 2017.

Financially, Southern and its partners — Oglethorpe Power Corp., the Municipal Electric Authority of Georgia and Dalton Utilities — already have invested $2.4 billion in preparing the site for construction. Final approvals to begin building the actual plants are expected later this year. Also, the U.S. Department of Energy has provided a loan guarantee of $8.3 billion to build Units 3 and 4 (of which $3.4 billion is Southern’s share).

For Fanning, who became Southern’s CEO on Dec. 1, the Fukushima disaster has been his first major challenge as the utility’s top executive. Asked how this ordeal has impacted him personally, Fanning remained guarded.

“Certainly the days are full, but I have been very gratified by the reaction since what happened in Japan. We have been very conscientious in thinking about how to tell our story in proceeding without delay on Vogtle 3 and 4,” Fanning said.

“One of the things that we always recognize in business, there will always be challenges,” he continued. “The test of a person or a company or an industry is not how you handle yourself when things are going just fine. It’s how you meet the challenges of the future. If you look at the data, we are weathering this storm really well.”

He then added: “We don’t have hubris in this industry. We regularly question ourselves.”

Pressed again about whether he had a personal “Oh my goodness” moment following the Fukushima disaster, Fanning quickly answered, “Absolutely not.”

Maria Saporta, Editor, is a longtime Atlanta business, civic and urban affairs journalist with a deep knowledge of our city, our region and state.  Since 2008, she has written a weekly column and news stories for the Atlanta Business Chronicle. Prior to that, she spent 27 years with The Atlanta Journal-Constitution, becoming its business columnist in 1991. Maria received her Master’s degree in urban studies from Georgia State and her Bachelor’s degree in journalism from Boston University. Maria was born in Atlanta to European parents and has two young adult children.

2 replies
  1. Burroughston Broch says:

    Maria, I think that you need to sit down, sip a cool drink and take deep breaths.
    A few comments, please:
    1. There are 23 present license applications for new nuclear plants, with Southern Company, Unistar, Entergy, Exelon and Progress Energy having two apiece. Would you term all of them “leading flag bearers”? What about the US Government (Tennessee Valley Authority)?
    2. There is no tsunami risk where Southern Company proposes to build its nuclear plants.
    3. The seismic risk at Southern Company’s nuclear plant sites is certainly manageable, as any skilled structural engineer can tell you. The Charleston SC earthquake much mentioned in the press occurred in 1886 and you can check the recent history here http://earthquake.usgs.gov/earthquakes/states/south_carolina/history.php.
    4. Statistically, nuclear plants are safer than fossil-fired and wind turbine plants.Report

    Reply

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