By Maria Saporta
Friday, December 10, 2010
That’s the way environmentalist Ted Turner greeted David Ratcliffe, the recently retired CEO of Southern Co., at a meeting in Turner’s Atlanta office building on Dec. 6.
The two men — legends in their respective fields — had agreed to sit down for an interview to discuss how their relationship has evolved from being adversaries to being business partners in a groundbreaking solar joint venture in New Mexico.
Turner, who made his fortune creating CNN, had become one of the world’s leading environmentalists and philanthropists.
Ratcliffe was a top leader in the energy industry and running a utility that environmentalists considered to be one of the greatest contributors of air pollution. Southern Co. (NYSE: SO) has relied heavily on coal, considered one of the dirtiest fuels for generating energy.
To say that the two men came from opposite ends of the spectrum would be an understatement.
Ratcliffe remembered running into Turner at a global climate change conference in Washington, D.C., in the mid-1990s when both were staking out their positions.
Ratcliffe introduced himself to Turner by saying: “We ought to talk sometime so you can understand my viewpoint on this and I can understand yours.”
About 10 years later, the two finally began meeting privately to discuss the future of energy policy in the United States — sometimes debating with each other and other times agreeing.
Those meetings initially were brokered by Taylor Glover, CEO of Turner Enterprises, which includes all of Turner’s business interests.
“What I remember is David and I were together and he said something about Ted’s penchant for the environment and Ted’s interest in energy,” Glover said. “David wanted to make sure Ted was fully informed, and he offered to meet with Ted.”
So Ratcliffe and Turner had their first face-to-face visit about three years ago.
“We sat down in this room,” Ratcliffe said while sitting in Turner’s Atlanta office. “I brought some slides. I wanted to show you what we had done. We had a good conversation about coal and gas.”
Amazingly, Turner said that over time they realized that “we really weren’t that far apart.”
“There are a couple of common threads that Ted and I share,” Ratcliffe said. “We are both environmentalists. We understand that the key to success for civilized society is in providing reliable sources of electricity. The issue was how do we do both of these, provide reliable energy with a cleaner footprint.”
Ratcliffe needed to make sure he was serving Southern’s 4.5 million customers with reliable energy, and Turner wanted Southern do it with renewable energy, such as wind and solar.
“I know we had some disagreements about how fast Southern Co. was switching to renewables,” Turner said. “We had a ways to go to bridge the gap, but we did it. We are pals now, partners and pals.”
Both had to overcome ingrained perceptions of each other. Ratcliffe said environmentalists viewed Southern as the “just say no” crowd. And utility industry leaders thought Turner was “off the wall” in his views on energy and climate change.
But those perceptions began to change as the two began meeting.
“When you talk to Ted, you realize he is one of the smartest guys around,” Ratcliffe said. “He couldn’t have had the business success he’s had without being smart. He’s a smart guy.”
“David is, too,” Turner chimed in. “You don’t rise to the top of Southern Co. without being smart.”
Turner also has been a big believer in bridging global differences. That’s one reason he started CNN. And it’s why he started the Goodwill Games during the Cold War. “You get more with cooperation than you do with confrontation,” Turner said. “I was going to try my best to see if we could work out a deal with Southern Co., and we have done it.”
Nearly a year ago, Turner and Ratcliffe announced that they were entering into a joint venture to acquire and develop one of the nation’s largest solar photovoltaic power plants.
The Southern Turner Cimarron I Solar Project bought the plant from Tempe-based First Solar Inc., which just brought the plant online at the beginning of this month. The 30 megawatt project involved building a solar array on 250 acres of Turner-owned land adjacent to his Vermejo Park Ranch in northern New Mexico.
The deal came with a customer in hand. The Tri-State Generation and Transmission Association nonprofit wholesale power supplier, which serves 1.4 million customers, agreed to a 25-year contract to purchase the electricity generated by the plant.
“We are both business people at heart,” Ratcliffe said. “He likes a good business deal, and so do I.” As the two got to know each other, they were able to find more and more areas of consensus.
“They were very civil and respectful of each other’s position, and each tried to convince the other he was right, while at the same time learning the other’s position,” Glover said. “That discussion proved they had some common ground, which led to further discussions that ultimately resulted in our partnership.”
Ratcliffe became more open to investing in the development of solar energy. And Turner became more accepting of nuclear power. “I would much rather have a nuclear power plant than a coal plant,” Turner said. “One we know might kill you. But the other one will for sure.”
Ratcliffe did bristle a bit when Turner made that comment, and then he began talking about Southern’s investment in coal gasification plants, which he said have a carbon footprint of natural gas.”
Turner acknowledged that the energy debate is complicated and that he is still learning.
“I certainly trust David and whatever he says about it,” said Turner after Ratcliffe’s comment Southern’s clean coal technology with a natural gas carbon footprint. “If you do that, I have got to shut up. I have no problem saying I’m wrong.”
Then the two put on their businessmen hats and talked about the financial and market challenges over the pricing of renewables, natural gas, ethanol plants, nuclear energy and coal.
“I really think today we would be better off with some sort of system that guarantees reasonable price increases for the producers and buyers of electricity for the long term,” Turner said.
As for their $100 million solar joint venture operating, Turner said it is projected to have a decent return. “But we are taking a risk,” Turner said. Because it is a 25-year fixed-price contract, runaway inflation would make it a less profitable business deal.
The joint venture was helped along with a requirement that the Tri-State nonprofit have a certain percentage of its energy portfolio in renewables, a policy that Southern has opposed in Georgia and the other states where it operates.
“When I put my environmental hat on, I like them and he doesn’t,” Turner said looking toward Ratcliffe. “We don’t agree about everything. But if I were in his position, I would be against them, too.”
But both agreed that if technology can be found to store renewable energy, it’s a “game changer.”
As the interview came to a close, Turner and Ratcliffe began comparing calendars about a hunting or fishing trip at one of Turner’s many properties. Turner proposed going to New Mexico where they could visit their solar joint venture.
Ratcliffe reflected on their relationship. “It’s all about understanding,” he said. “The more we talk, the more we agree.”