David Ratcliffe addresses energy policy issues

ATLANTA – In his first major speech addressing energy policy issues, Southern Company Chairman, President and CEO David Ratcliffe said that the company is working hard to achieve a “delicate balance” of providing more, affordable electricity to a growing region while continuing to lower emissions from its power plants.

“Our nation not only wants electricity when they need it, we want it at a cost we can afford and we also want it cleaner,” Ratcliffe said today in his speech to the Rotary Club of Atlanta. “At Southern Company, we’ve already invested nearly $2 billion to lower our emissions. We are about to embark on the largest and most expensive pollution control program ever undertaken by a U.S. utility – we’ll spend $6 billion over the next 10 years to drive our emissions down even further. We’re working hard to help America implement practical, common-sense solutions to the challenge of providing more electricity while reducing our environmental impact.”

Ratcliffe noted that electricity demand is expected to rise more than 30 percent during the next 15 years in the Southeast, one of the fastest-growing regions in the United States. The U.S. Census Bureau reports that nearly 40 percent of the nation’s population will live in the South by the year 2030.

“All of these people will want – and expect – reliable, affordable electricity,” Ratcliffe said. “We face a long-term energy crisis in America, and we can no longer hope that short-term fixes will make the problem go away.” He went on to say that demand for energy is on the rise, pointing out that the nation is “much too dependent on foreign oil” and that the potential impact of climate change is a concern.

“And as our 21st Century high-tech economy expands, and our population grows, the demand for energy will be even greater,” he said.

In the United States today, Ratcliffe noted, coal produces about 54 percent of the nation’s electricity; 65 percent in the Southeast. Nuclear power, nationally, accounts for about 22 percent, and natural gas about 12 percent. The rest comes from hydroelectric, oil and some renewable sources.

“As we look to the future, here’s what we know: There is a 250-year supply of coal in the United States, compared with about 50 years of a known supply of natural gas,” Ratcliffe explained. “Coal is here. It is not in a foreign land, as compared to the fact that more than 95% of the world’s known natural gas reserves lay outside the United States. We must continue to use coal, although we must use it more efficiently and cleanly.”

Ratcliffe also noted that renewable sources make up about 9 percent of the nation’s electricity generation, which includes hydro. “If you take out hydro, renewable sources like wind and solar only provide about 2 percent of our nation’s energy needs,” he said. “Future expansion is currently limited by supply, reliability and the much higher cost of renewable options. Still, renewables must and will be a part of the mix. And we are working in that area, too.”

Southern Company believes technology is the answer to address energy policy and energy demand, said Ratcliffe. “We must develop a smart, sensible energy policy, driven by technology that assures electricity is affordable and reliable for everyone. We are investing in people and in technology.”

Ratcliffe gave specific examples of the company’s investments in new technologies. He noted that Southern company is:

• Developing technologies that turn coal into electricity both cleanly and safely. The U.S. Department of Energy has awarded Southern Company a $200 million grant to build a unique power plant that will be among the cleanest and most efficient in the world, while producing 20-25 percent less carbon dioxide than conventional coal-based plants. “I want to emphasize that we’re building the plant now – not just thinking about it,” Ratcliffe said. “It should be operational by 2011.”

• Actively involved as a founding member of the NuStart Consortium, a partnership of nuclear utilities seeking to make sure the next generation of nuclear power is an option in meeting growing U.S. energy demand. “Nuclear power emits no greenhouse gases,” noted Ratcliffe, who also said the company has sent to the Nuclear Regulatory Commission its intent to file an early site permit in order to move the process along should it decide to build a new nuclear unit.

• Expanding research into biomass for power generation by testing a process to gasify biomass, such as switchgrass that can be grown in Southern Company’s territory. This has the potential to be cost-competitive when compared with other forms of renewable energy.

• Investing more than half a million dollars in a joint partnership with Georgia Tech to study the feasibility of installing wind turbines off the coast of Georgia.

Ratcliffe said that the company’s $2 billion investment in environmental controls has lowered emissions of two major pollutants – sulfur dioxide and nitrogen oxides – nearly 40 percent since 1990. During that same 15-year period, the company has increased its generation 30 percent to meet demand.

Southern Company’s projected investment of more than $6 billion over the next decade will further lower those emissions and mercury emissions by 70 percent from today’s levels.

“We’ve taken the initiative over the years to develop new technologies to provide reliable and economical power while reducing our emissions substantially,” said Ratcliffe. “For example, we’ve managed more than $400 million in environmental research and development over the past decade, including our work at the Power Systems Development Facility in Alabama, the nation’s only advanced coal research center.”

Ratcliffe outlined other environmental initiatives, noting that Southern Company is:

• Investing $5 million in developing the nation’s first mercury research test center, which will evaluate the latest technologies for reducing mercury emissions from power plants.

• Actively involved in a $1 billion, 10-year DOE project known as FutureGen to develop an advanced coal plant with carbon capture and sequestration – basically, a plant with no emissions.

• Playing a leadership role in addressing the complex and controversial issue of climate change. “We have been participating in the scientific, technical and policy parts of the issue for more than a decade,” Ratcliffe said.

• Actively involved as a founding member of the Department of Energy’s Climate Challenge Program, participating in a diverse portfolio of voluntary actions to address carbon dioxide and other greenhouse gas emissions.

• Participating in Climate VISION with a pledge to work toward a goal of reducing the industry’s greenhouse gas emissions rate 3-5 percent over the next decade.

• Funding a project to perform site selection and process identification for CO2 capture and storage test centers at four company facilities.

“We are finding ways to burn coal more cleanly, to advance the next generation of nuclear plants and to invest in the potential of renewable energy sources, like wind and biomass,” Ratcliffe concluded. “In the end, we have the responsibility to keep the lights on, and we take it seriously. The choices we are making today will ensure future generations can enjoy the extraordinary standard of living we have in the South.”

With more than 4 million customers and nearly 39,000 megawatts of generating capacity, Atlanta-based Southern Company (NYSE: SO) is the premier super-regional energy company in the Southeast and a leading U.S. producer of electricity. Southern Company owns electric utilities in four states, a growing competitive generation company and a competitive retail natural gas business, as well as fiber optics and wireless communications. Southern Company brands are known for excellent customer service, high reliability and retail electric prices that are 15 percent below the national average. Southern Company has been ranked the nation’s top energy utility in the American Customer Satisfaction Index five years in a row. Southern Company has more than 500,000 shareholders, making its common stock one of the most widely held in the United States. Visit the Southern Company Web site at www.southerncompany.com.