If there ever was a king of coal-fired electricity, it was Southern Co.
The Atlanta-based utility, the owner of Georgia Power and three other Southeast utilities, got 70 percent of its electricity from coal-fired power plants as recently as five years ago. Only 16 percent of Southern’s power came from natural gas then.
Now, environmental mandates and cheap natural gas prices have led to a dramatic shift in Southern’s energy mix: This year the utility will get 47 percent of its fuel from natural gas and 35 percent from coal, Chief Executive Tom Fanning said.
“We’ve cut coal in half,” Fanning told The Atlanta Journal-Constitution.
The amount of natural gas that Southern buys now accounts for more than 2 percent of U.S. natural gas consumption, making the company the third-largest user of natural gas in the utility industry behind South Florida’s NextEra Energy and Calpine, based in Houston. Southern serves a territory that is slightly smaller than the entire country of Australia.
“That’s a big transition in five years for somebody like us,” Fanning said.
For Georgia Power customers, Southern’s increased reliance on natural gas means an average drop of $8 in their monthly bills starting in July. The reduction in fuel rates is the first major one in more than a decade.
There are costs as well. Georgia Power and other utilities are considering closing several coal-fired units to comply with federal environmental rules. The utility also may retrofit some coal units with pricey pollution controls or convert them to run on natural gas.
The cost of doing any of these options can be passed on to consumers.
Southern reported a 13 percent drop in first-quarter profits Wednesday because a warmer-then-normal winter meant its customers didn’t run the heat as much.
Southern’s profits were $368 million, or 42 cents a share, compared with $422 million, or 50 cents a share, during the first quarter a year ago.
Revenue for the quarter ending March 31 was $3.6 billion, down 10 percent from $4.01 billion over the same period a year ago.
Fanning remained optimistic in a statement released early Wednesday.
"Despite the effects of an unusually warm winter, we continue to see positive indications of economic growth in our service territory," Fanning said.
Southern's utilities in Georgia, Alabama, Florida and Mississippi added 15,000 residential customers during the first three months of the year. At that time last year, the utilities signed up only 2,000 new customers. The unexpected increase in customers is a sign of economic recovery throughout the Southeast, Fanning said.
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