POWER August 2016 - 43

GENERATION TRANSITIONS
2. Nuclear redux. When Southern Co.'s two-unit expansion at Plant Vogtle in Georgia began
construction in 2012, it was the first new nuclear reactor project to break ground in the U.S.
in decades. But the project has seen repeated delays that have pushed its in-service date back
to at least 2020. Courtesy: Southern Co.
related facilities in Tennessee.
A dynamic 41-year-old New York attorney
named Wendell Willkie became C&S chief in
1933 (he would later become the Republican
nominee to challenge President Franklin
D. Roosevelt in the 1940 presidential election-losing,
and dying, in 1944). In 1935,
Congress passed the Public Utility Holding
Company Act, resulting in the breakup of
many large electric utilities, including C&S.
The company's southern utilities were reorganized
under a holding company, and the
modern Southern Co. was born.
Following the 1980s trend toward nonutility
generating companies in the wake of
the 1978 Public Utility Regulatory Policies
Act, Southern in 1981 formed an unregulated
subsidiary and, a year later, spun it off as Mirant
Corp. Mirant eventually went bankrupt
and was acquired by NRG.
Perusing Georgia Power's prudence filing
with the PSC, Wamsted noted " red flags
aplenty when someone, anyone in the decision
making process would have been justified
in standing up and saying, 'Hey, wait a
minute, what are we thinking?' " The company
had basically the same experience with
the first two Vogtle units in the mid-1980s, as
the cost escalated to $9 billion and the construction
schedule consistently slipped.
But Georgia Power CEO Paul Bowers insisted,
according to press accounts, " Every
dollar, and every day, that has been invested
has been necessary to complete these new
units safely and correctly. Our reports will
establish that the new units could not have
been built for less money or in less time than
it has taken. "
So far, the problems at Vogtle have not
cost Georgia Power shareholders money.
State law provides for " construction work in
progress " financing, which means that customers
pay the costs of the ongoing project
while it is being built, presumably yielding
lower rates once the project comes online.
But that all depends on the PSC concluding
that the utility's spending has been prudent.
If not, the company eats the costs.
A Long History
Southern Co.'s roots reach back into the late
19th century. Thomas Edison's Pearl Street
station in Manhattan, the nation's first central
station generation unit, started in 1882
(the same year that POWER was launched).
In 1883 in Atlanta, the Georgia Electric
Light Co. organized and began building its
first generating station. At the same time,
Savannah, Ga., and Montgomery, Ala., inAugust
2016 | POWER
stalled street lights.
Four years later, Pensacola Electric Co.
in Florida, predecessor to Gulf Power, was
born and began building its first generating
station. 1894 marked the incorporation
of Biloxi Electric Light Co., the first in a
series of business events that would form
Mississippi Power. 1902 saw the formation
of Savannah Electric Co., as a decade-anda-half
of consolidations of small electric
companies began.
The U.S. entered World War I in 1917,
and the War Department selected Muscle
Shoals in Alabama-with its plentiful
hydro capacity-as the site for factories
making nitrates used in explosives. Muscle
Shoals would become a legendary legal
and legislative battle over the coming three
decades, waged between Southern Co. and
the federal government's Tennessee Valley
Authority (TVA).
The modern Southern Co. began to come
together in 1924, with Alabama Power, Mississippi
Power, and Gulf Electric becoming
subsidiaries of Southeastern Power & Light
(SP&L). Two years later, SP&L would buy
Georgia Power. In 1929, Georgia Power spun
off Atlanta Gas Light, which 76 years later it
would reacquire as AGL Resources.
1930 saw the creation of giant utility
conglomerate Commonwealth & Southern
(C&S), including six southern electric utilities
and five northern companies. In 1932,
Eugene Yates became head of the southern
utility group, and later would be a major figure
in the politically explosive Dixon-Yates
territorial dispute with TVA in the 1950s over
who would build new capacity to serve the
Atomic Energy Commission's atomic bombwww.powermag.
Challenges
and Transitions
In addition to dealing with its challenges at
the Kemper County project and the Vogtle
expansion, Southern faces a serious transition
if the Obama administration's Clean
Power Plan passes federal court review. Given
its position as one of the nation's largest
users of coal, Southern already faces competition
from low-priced natural gas. The company
views the Obama regulatory plan using
the Clean Air Act to reduce CO2
emissions
as draconian.
A Brookings Institution analysis of 2014
utility comments on the Obama plan said
Southern Co.'s " strongly worded condemnation
of the Clean Power Plan is striking and
unusual even compared to other critical voices.
Southern asserts that the Plan 'extends
beyond EPA's authority under the Clean Air
Act, is unworkable and would increase electricity
prices to customers while jeopardizing
reliability.' This will result, Southern says,
in a 'complete deconstruction of the nation's
electric sector and negatively impact America's
energy security.' Implementing the Plan,
according to Southern, could cost $1 trillion. "
As it contemplates the possibility of a new
regulatory regime to control CO2
emissions,
the company is moving toward ways to reduce
the regulatory impact. One of those is to
get deeper into natural gas, although Southern
has already moved considerable generation
into gas. A year ago, Southern made a
successful bid for AGL Resources, its nextdoor
neighbor in Atlanta and a major gas distribution
company. Southern paid $12 billion
for AGL, including assumption of $4 billion
in debt.
The New York Times commented that the
AGL deal " represents an important step for
Southern as it moved from coal to natural
gas. Once combined, the company will be
43

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POWER August 2016

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