Southern Co. taps inside vet for CEO spot
By Maria Saporta
Friday, July 30, 2010
In picking its next CEO, Southern Co. stayed within its tried-and-true formula — select someone who has grown within the Southern family and will continue the company’s traditions of providing reliable and affordable energy.
That describes Thomas A. Fanning, who has been Southern’s chief operating officer for the last two years and will become its president Aug. 1. Fanning will then succeed David Ratcliffe as chairman and CEO on Dec. 1. That’s the day Ratcliffe will be retiring after 39 years with the company.
In a wide-ranging interview shortly after the news was announced July 27, Ratcliffe and Fanning spoke about Southern’s leadership and economic conditions as well as some of it challenges and opportunities.
“What I’m really happy about is that there’s not a crisis,” Ratcliffe said. “This thing is not broken. I’m proud of the team of people we have in place.”
On his part, Fanning said he would not depart from Ratcliffe’s leadership style when he is running the company.
“It would be a high compliment to say I would be the same as David,” Fanning said. “David has left this company in such good shape, having the best reliability in the United States, having the lowest prices and best customer service experience that we possibly can.”
In fact, Fanning repeated many of the same themes that Ratcliffe and Southern have been saying over the last several years as there has been more scrutiny on the company’s carbon emissions and policies toward alternative energy sources.
Fanning said Southern’s reputation of being the biggest polluter among utilities is “simply because we are the biggest.” By market capitalization, Fanning said, Southern is the largest utility in the United States. Southern also has had a strong reliance on coal, which is a leading generator of carbon emissions.
“The real challenge in America is, how do you transition to this new energy future? We are going to need all the different generating resources brought to bear to provide reliable, economical and reasonable sources of electricity in the future,” Fanning said. “We need all the arrows in the quiver — nuclear, 21st-century coal, natural gas and renewables.”
Fanning also defended the company’s use of coal.
“Coal has served us very well. We have been able to generate electricity to serve the economic interests of our region,” Fanning said, adding that the company is building a new coal plant in Mississippi that will have a carbon footprint equivalent to a natural gas-powered plant.
It also was clear that Fanning endorsed the company’s pioneering effort in nuclear power. It is the first utility in the United States to get a green light to move forward on nuclear reactors (at its Plant Vogtle).
“That is a mission important to America,” Fanning said. “We are leading the renaissance of a new nuclear industry.”
Still Fanning, 53, represents a new generation of leadership at Southern. W. Paul Bowers, Southern’s chief financial officer, who is also 53, was named to be the new chief operating officer of Southern subsidiary Georgia Power Co. He is in line to become CEO of Georgia Power when Michael Garrett, 60, decides to retire.
This is the first time in decades that Southern’s CEO had not first served as president of Georgia Power, the largest subsidiary in the system.
“I’m in my 14th job in 29 years with eight different companies or business units of Southern,” Fanning said. “I really feel like that wealth of experience will serve me well. And there are plenty of other hard-working, qualified people in this company.”
Ratcliffe said he first got to know Fanning in 1992. At the time, Ratcliffe was CEO of Mississippi Power, and he needed a chief financial officer.
Fanning, who earned his bachelor’s and master’s degrees in industrial management from Georgia Tech, already had been part of the Southern family since 1980 when he joined as a financial analyst.
After about three years working with Fanning, Ratcliffe told his then-boss, Allen Franklin, that “we should throw him into the deep side of the pool and put him in IT.”
In was in the role of chief information officer that Ratcliffe said he first recognized Fanning’s leadership potential. “That’s such a different part of the business to throw a guy, a financial guy, in the CIO role” where Fanning had to reorganize the operation, downsize it and cut costs, Ratcliffe said.
“He’s smarter than most people, and he has an excellent financial background,” Ratcliffe said. “He’s always been one of those guys we’ve looked at for leadership development.”
Fanning, who was born in the Northeast, moved down to Sandy Springs when he was in elementary school. He attended Sandy Springs High School, and he continues to live in that community with his wife of 23 years, Beverly. They have two sons.
The family celebrated the announcement July 27 by having friends over for a lasagna dinner that night.
The timing of the announcement also suited Ratcliffe. He said he decided to fully retire in December rather than at the company’s annual meeting in May because he is looking forward to spending time with his family, playing golf and enjoying life.
“There was no reason to stay other than to do one more annual meeting, and I’ve done enough of those,” said Ratcliffe, who plans to spend most of time in Atlanta and remain involved in the community. “There’s a lot of pressure in a job like this.”