Southern Company’s CEO said the company has “seen positive movement lately” on an $8.3 billion taxpayer-funded safety net for nuclear plant construction at Plant Vogtle near Augusta, in the form of federal loan guarantees.
“We don’t need them to complete the plant,” Tom Fanning said of the loan guarantees at the National Press Club on Monday. “But they will help to serve our customers and help reduce long-term energy costs. So that would be helpful.”
Southern and the Department of Energy have been negotiating terms of the loan guarantees since they were awarded in 2010 as an incentive to start construction on the $14 billion project, nearly half of which is owned by the Atlanta-based utility.
Fanning dismissed the notion that movement in negotiations has to do with its $100,000 gift to President Barack Obama’s second inaugural committee, which raised hackles from the good-government advocacy group Public Citizen as a possible quid pro quo. During the campaign, Southern gave $50,000 to Obama’s Republican opponent, Mitt Romney.
Fanning said Southern participates in the political process but “we do that as our obligation. There is no connection — zero — between any of that activity and loan guarantees.”
Fanning also played down the $737 million increase in the estimated cost of Plant Vogtle, revealed by the company last month, saying the construction cost estimates were “dead on” but a 19-month project delay – due in part to wrangling over regulations and site licenses – was to blame.
“Any increase in cost we’ve seen so far has been as a result of the schedule, and as a result of the regulatory regime in Georgia, customers will see no increases in rates,” Fanning said.
But customers will pay higher rates for longer. State lawmakers approved a controversial “nuclear fee” in 2011 that now stands at $5.11 per month and will exist until the two reactors start producing electricity, now scheduled for 2017 and 2018.
Fanning said the Vogtle project, a $6.85 billion bet on the future of nuclear energy, is part of the company’s commitment to a diverse energy portfolio.
But Fanning nonetheless said he had long-term concerns about the reliability of natural gas and renewable energy such as solar and wind. That is why Southern continues to rely heavily on coal-fired plants, bringing it into conflict with the Environmental Protection Agency, which under Obama has more forcefully regulated coal emissions.
Fanning said the company has a “constructive” relationship with EPA and praised Obama’s pick for the agency’s next administrator, current deputy Gina McCarthy.
“I think she’s a great pick,” Fanning said. “I’ve already chatted with her, and I look forward to the years ahead with her.”
But Fanning warned against energy policy coming from “regulators who are accountable to no electorate,” instead of Congress. Obama has been unable to get a cap-and-trade law meant to bring down carbon emissions through Congress, but EPA regulations under the Clean Air Act provide another avenue for the administration’s greenhouse gas-reducing goals.
For now EPA is still considering final greenhouse gas regulations on new power plants.
“The conversation continues,” Fanning said. “I think we’ll reach a successful conclusion as we have with virtually every regulation put out by EPA and other policymakers.”
Georgia Power said earlier this year it will ask state regulators for permission to close 15 coal and oil-fired units to comply with federal EPA rules to limit mercury emissions and other air toxins.
If the EPA tackles greenhouse gas emissions at existing power plants next, that shouldn’t lead to additional coal-unit closures, said Georgia Power President and Chief Executive Officer Paul Bowers.
“The whole debate on greenhouse gases is more of a question of it being a revenue source,” as in whether the EPA will place a tax on carbon emissions, said Bowers, who spoke at the Rotary Club of Atlanta on Monday.
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