Southern Co.’s Tom Fanning supports new nuclear, 21st Century coal, renewables and a national energy policy
By Maria Saporta
Since Tom Fanning became CEO of the Southern Co. last December, it has been one challenge after another — the January snowstorm, the nuclear plant meltdown in Japan as a result of an earthquake and tsunami, an earthquake and Hurricane Irene along the East Coast.
“What’s next? Famine and pestilence?” joked Fanning, who gave the luncheon address Monday at the Rotary Club of Atlanta.
But in all seriousness, Fanning made a case for a national energy policy and provided a well-rehearsed talk about Southern Co.’s perspective on the need to have a diversified energy portfolio.
“It’s really a common sense approach on how we need to take this nation on a national energy policy,” Fanning said. “We need less foreign oil.”
Fanning said the United States “is blessed with a variety of energy resources,” and the nation needs to take advantage of all of them.
For Southern Co., there a five-prong strategy.
First, there’s “new nuclear.” Southern Co. is building the first new nuclear power plant in this country in more than a generation. Plant Vogtle 3 and 4 are in the preliminary phase of development, and Southern hopes to get the license approved by the end of the year.
Fanning said the new plants will cost $14 billion over 10 years, and it has already spent $3.5 billion on the project.
Next is “21st Century coal,” a description Fanning prefers over “clean coal,” as it has been called in the past.
“The United States is the Saudi Arabia of coal. Fifty percent of all electricity production in the United States is derived from coal,” Fanning said. “A future without coal is no future at all.”
And then Fanning started to rail against “over-reaching regulations,” which would “have the effect of eliminating new coal in the future.”
But Fanning said Southern already is becoming less reliant on coal. Not so long ago, 70 percent of Southern’s energy production came from coal. Today it is 51 percent. And by 2020, Fanning said that percentage should be down to the low 40s.
“We have got to figure out a way to make coal as clean as natural gas,” Fanning said. And Southern already has been working on reaching that benchmark.
Natural gas also is growing in importance as utilities have found new ways to extract the gas. But Fanning was quick to say that natural gas is not a panacea, partly because of the volatility in its price.
Next, Fanning spoke about renewable energy sources, such as solar, wind and biomass. The company, which has been conservative in adopting alternative fuels, is softening its stance ever so slightly.
“I’m excited about renewables,” Fanning said. “We think that’s an important source of energy going forward.”
And he talked about Southern’s biomass plant in Texas and its solar joint venture with Ted Turner in New Mexico.
‘I think it has great promise down the road,” Fanning said, but then he went into Southern’s standard storyline about how solar and wind are not fiscally competitive in the Southeast unless they are heavily subsidized.
“Let’s make sure we understand their limitations,” Fanning said about renewables.
Lastly, Fanning said energy efficiency is another important tool for Southern. “I want you to use my product more efficiently,” he said.
Interestingly enough, after the Rotary lunch, Fanning met privately with Michael Finley, president of the Turner Foundation, an environmentally-oriented philanthropy that was founded by Ted Turner. Turner has developed a solar farm on the parking lot next to his Atlanta office building, and it is working through some issues with Southern Co.’s subsidiary — Georgia Power — on how it put any excess power that it generates on the grid.
Because Turner is not having to buy as much power from Georgia Power because it invested in solar, its utility rates per kilowatt have gone up. The more energy one buys, the less Georgia Power charges.
Environmentalists, however, believe it should be the other way around — rewarding customers who use less energy with lower rates instead of more expensive rates.
Laura Turner Seydel, who sits on the board of the Turner Foundation, said other utilities have changed their rate structure to encourage greater energy efficiency among customers while also promoting the use of renewables.
Meanwhile, attending his first meeting as a member of the Atlanta Rotary was Paul Bowers, president and CEO of Georgia Power.