Southern Co.’s Tom Fanning: Decision on Vogtle expansion likely to be made in AugustSouthern Co. CEO Tom Fanning stands next to Georgia Power CEO Paul Bowers after the company's 2017 annual meeting Wednesday in Callaway Gardens (Photo by Maria Saporta)
By Maria Saporta
CALLAWAY GARDENS – More than a dozen shareholders participated in a question-and-answer session with Southern Co. CEO Tom Fanning during the annual meeting that lasted two hours.
And most of the questions centered around the company’s efforts to adopt more renewable energy, vocally support the Paris Climate Accord and to become a more vocal industry leader addressing global warming and climate change.
Surprisingly few shareholders questioned the company’s investment in the troubled expansion of the Vogtle nuclear power plant. But that didn’t stop Fanning from addressing the two big challenges the company is facing with Vogtle and the clean coal Kemper plant in Mississippi.
“We have these big issues in front of us,” Fanning said when talking about the expansion of Plant Vogtle.
When they struck the deal with Westinghouse to build the two new nuclear power plants nearly 10 years ago, Fanning said Southern made sure that Westinghouse’s parent company Toshiba was “on the hook” for the project with a $3.7 billion guarantee.
“This spring Westinghouse…declared bankruptcy,” Fanning told shareholders. “We were well-prepared when that unfortunate event happened. We have been working on an agreement with Toshiba for the $3.7 billion.”
Fanning expects the project development to transition to Southern and a couple of partner contractors.
“We are 65 percent complete on site,” Fanning said, adding that the company is studying the efficiency, the schedule and the costs. “We believe we will make that evaluation probably in August. We’ll know the cost to complete somewhere in that time frame. The board will make a conclusion (about whether to continue or stop the work on Plant Vogtle).”
Fanning explained the other partners also will need to weigh in so they can have a consistent decision on how to proceed.
As for Kemper, Fanning expressed disappointment on issues related to Kemper – a “clean coal” plant. “It’s a technology developed in house that uses coal in a responsible way,” said Fanning, who said the whole experience had been frustrating because of the difficulty in getting the complicated technology to work. “We are committed to making this work.”
One of the more dramatic moments during the meeting was when Fanning announced the preliminary results of a shareholder proposal asking the company to issue a report on Southern Co.’s strategy for aligning business operations with the International Energy Agency 2 degree celsius Scenario.
Fanning announced the proposal did not pass, but 46 percent of shareholders voted in support of it, which the backers pointed to as a victory rather than a defeat.
“Last year, we got 34 percent, and this year it was 46 percent,” said Sister Pat Daly, who spoke on behalf of the shareholder proposal. “That’s extraordinary.”
Marinangeles Gutierrez, an executive committee member of the Sierra Club’s Georgia Chapter, also spoke in favor of the shareholder proposal, and she was delighted by the strong showing.
Fanning did not downplay the vote in an interview after the meeting, but he said he was not surprised because such proposals have been getting nearly 50 percent at annual meetings of other companies.
But Fanning also acknowledged that several shareholders would like Southern to be more active in fighting climate change.
“I know they always want more,” Fanning said. “I think actions speak louder than words.”
During the annual meeting, Fanning outlined what the company has done to move away from coal, increase its renewable energy offerings and invest in natural gas.
“Before I got here, 70 percent of our energy came from coal,” Fanning said. “Now it is below 30 percent.”
At the time, Southern was “zero on renewables,” Fanning added, “and now it’s just less than 10 percent of renewables. Renewables are growing.”
But the problem remains with “what do you do when the wind doesn’t blow and the sun doesn’t shine?” Fanning asked. The company is trying to bridge the intermittency of renewables with natural gas, fuel cells and ways to store renewable energy.
Despite the company’s problems with its nuclear power plant, Fanning told shareholders that the company’s financial foundation was secure in terms of growth and reliability.
When asked about the company’s venture with the Warner Robins military base where Southern is developing solar panels, Fanning said it was important for the U.S. government to have a back-up if there happened to be an electric grid catastrophe.
“We have a dual mandate,” Fanning said. “We want to have a renewable standard, and we want to have a sustainable power supply.”
Sam Booher, a shareholder, asked the company to support the existing Paris Agreement to fight climate change.
“We are engaged in real solutions,” Fanning responded. “We have chosen over the years to stay away from the rhetoric.” And then he went on to defend the company’s investment in new nuclear, 20th Century coal, natural gas and renewables. He also said the company is researching the capture of carbon emissions. “I appreciate your question,” Fanning said. “We choose to focus on the solutions and not engage in the arguments.”
Fanning deftly handled questions related to a carbon tax, coal ash, storage of nuclear wastes, cybersecurity and a variety of other topics. He fulfilled his promise to keep the meeting going until all shareholders had had an opportunity to ask their questions. He called it his favorite part of the meeting.
“Everybody’s opinion matters,” he told shareholders. “All is grist for the mill. We try to be careful listeners.” And then he said the company’s responsibility is to provide clean, safe, reliable and affordable energy to its customers.
In the interview, Fanning elaborated on those thoughts. “One of the most respectful things a human can do is to listen,” he said. “I think the environmental community has been effective in moving the discourse in America.”