HOUSTON, April 25 Southern Co utilities
will burn 40 percent more natural gas this year than last to
take advantage of the lowest gas prices in a decade, and pare
coal use by 20 percent, executives said on Wednesday.
Southern Co Chief Executive Tom Fanning said the company's
four utilities are projected to burn more than 600 billion cubic
feet of gas this year, up from 430 bcf last year and nearly
three times the amount used in 2007 when Southern's coal use was
at its peak.
"Southern's gas purchases now account for more than 2
percent of all U.S. gas consumption, making us the third-largest
user of natural gas among U.S. utilities," Fanning said on a
call with analysts.
Coal burned this year will fall to about 45 million tons at
Southern utilities, Fanning said, down from 56 million tons last
year and the nearly 80 million tons burned in 2007.
Overall, gas is projected to account for 47 percent of
Southern's fuel mix in 2012, while coal's share will likely slip
to 35 percent and nuclear generation will hold steady at 18
percent, Fanning said.
That compares with a 16 percent share for gas in 2007 and a
70 percent share for coal, he said.
If gas prices remain low, Fanning said, the fuel could grow
to 57 percent of Southern's fuel mix.
Southern has about 43,000 megawatts of generation across the
The first of three new gas-fired units at Plant
McDonough-Atkinson, rated at 840 MW, came online late last year,
and two more units will begin commercial operation in April and
November, Fanning said.
As the utilities reduce coal use, they will remain flexible
should gas prices rise, Fanning said. The companies are working
to match coal purchases to utility need, to maximize onsite and
offsite coal storage, defer purchases and renegotiate coal and
rail contracts when possible.
Fanning said cost and schedule targets "remain achievable"
for the company's two major construction projects -- the $14
billion nuclear units at Plant Vogtle in Georgia and a $2.8
billion advanced-coal plant in Mississippi.
He said the Department of Energy has recently proposed new
conditions for the $8.3 billion loan guarantee granted to the
partners building Vogtle on a conditional basis two years ago.
"We still remain hopeful we'll have loan guarantees, but as
a matter of course since Solyndra the DOE has proposed some new
conditions that really relate to project finance conditions
rather than corporate credit," Fanning said. "We are working
through those issues and hope we will reach a successful
Should the agency "ask us to do something that is not in the
customers' interest, we won't go forward," Fanning added.
Mississippi regulators on Tuesday reissued a certificate to
allow construction to continue at the integrated gasification
combined-cycle power plant in Kemper County.
Southern reported first-quarter earnings of $368 million, or
42 cents per share, down from $422 million, or 50 cents a share,
in the year-earlier quarter, due to a warmer-than-normal winter.
Revenue fell 10 percent to $3.6 billion from $4.01 billion
as power sales fell 5 percent, according to the company.