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Southern Co. keeps on rolling the dice
Jones on Georgia

ATLANTA — A company doesn't become the country's largest privately held utility by being timid, and Southern Co. CEO Tom Fanning is in no danger of becoming a wallflower.

That's because he learned bold business tactics in the management suite from his predecessor, Allen Franklin.

"Southern Co. is really proud of our culture," Fanning said during a recent speech to the Atlanta Press Club. "We really try to focus on that sustaining legacy."

So, the company hired a pair of writers to produce a corporate history, titled Big Bets, that would double as a management primer. Released last month, the book tells of the executives who drew on London investors to build dams and buy up competitors while assembling the conglomerate in a part of the country with little manufacturing to use all that electricity.

From hydro-generating plants, street cars and even ownership of Atlanta Gas Light Co. for a time to operating the nation's largest fleet of coal-fired power plants, the company grew through a series of winning gambles.

Under Fanning's watch, the bets are bigger and more numerous.

The largest wager is on the construction of two nuclear reactors at Plant Vogtle, the first to be built by any private company in America in three decades. Considering the eightfold budget overruns Southern Co. rang up building the first two reactors at Vogtle, it would be gutsy to propose even one new reactor there, much less two.

"It took a lot of courage to take that first step," Fanning said.

Southern's shareholders had to eat a whopping helping of those overruns, and the company's financial base shuddered at the time.

This go round, the bet is being hedged by federal loan guarantees and a law allowing Southern subsidiary Georgia Power to charge its customers for financing before the first electricity is generated from the new units.

Other utilities are eagerly watching Vogtle's progress before they ante up. Some experts say they're wise to wait because falling electricity demand, the discovery of huge sources of natural gas and the fact that the proposed carbon tax never passed have all fundamentally changed the economics of nuclear plants in recent years. But Southern executives filed testimony Friday with the Public Service Commission swearing the economics still favor Vogtle's expansion.

In addition to the nuclear wager, Southern is betting that coal continues to have a future, another move opposite of its peer companies. Southern is committed to pouring $2.5 billion into clean-coal research at a time when most utilities are switching to natural gas as quickly as possible.

Other rolls of the dice include figuring out how to integrate into the "smart grid" and the evolution of distributed generation that creates electricity closer to where it's consumed. Plus, the company is also putting money into experimental solar generation and planning to erect offshore wind mills near Tybee Island.

A reporter asked Fanning how he justifies the risks of expanding Vogtle, and his answer explained why the company keeps placing big bets in any area. A safe bet would have been to build another natural-gas plant to supply the same demand, but that would not have left the company poised to excel in the future, he said.

Walter Jones is the Atlanta bureau chief for Morris News Service and has been covering state politics since 1998. He can be reached at (404) 589-8424 or on Twitter @MorrisNews.

Web posted on Thursday, November 03, 2011

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