ANS 2015 Plenary Talks – Part 3 Tom Fanning, President, Chairman and CEO of Southern Company
Tom Fanning is always a good choice to speak to a gathering of nuclear professionals who might need a little bit of confidence building.
Here is a quote from the start of his talk during the ANS 2015 opening plenary session.
I’m going to give you the punchline and that is that nuclear must be a dominant solution in this nation’s energy future. And I think there are really super good reasons why that is. I’m kind of an evangelist about this nation’s energy future.
For all the challenges facing the world today, and I’m kind of speaking from my vantage point of the Fed, when you look at unacceptably high unemployment still, a lack of wealth creation in our households today, when I think about risk and uncertainty in Russia and the Middle East, the lack of transparency in China and for our own problems at home, I am so proud to say that what you do, what we do in terms of providing this nation with clean, safe, reliable, affordable energy is a way for Americans to play offense in what is otherwise a challenging environment.
There are often people who dismiss that kind of talk to a crowd of nuclear professionals as “speaking to the choir,” but Fanning comes from an area where successful evangelists attract huge crowds and make enormous political impact. Like those professional evangelists, Fanning understands that a good evangelist has to excite the converted and create energetic disciples from the dedicated members of the choir who may sometimes feel like they are taken for granted.
Fanning shares some other thoughts that should be highlighted.
We heard about cost increases, cost overruns that are associated with Plant Vogtle.
Yeah, there’s been a schedule change and there’s been a cost associated with that, but I want you to also know that the benefits that we have developed along the way have far overwhelmed any cost increases. And I want you to know that when that project was approved, we thought we would have a 12% price increase in Georgia.
Because the benefits have overwhelmed the cost increases – and that is never reported in the press and I say it all the time – benefits have exceeded cost increases, that 12% is now going to be somewhere between 6 and 8 percent.
And yeah, we’ve had some schedule changes, but our commitment to quality and building this important technology the right way is foremost in our minds as we undertake that important challenge.
He is concerned about the way that so many people accept the conventional wisdom — which is so often promoted by people who are interested in selling more natural gas — that all we need for our future energy needs are various forms of renewable energy firmed up with “clean, cheap natural gas.”
Natural gas. We can talk about that. Yeah, a lot of people believe it is going to be cheap forever. Go try and get long term supplies cheap; you can’t get ‘em. Because it’s volatile, and because the United States is moving to more and more reliance on natural gas, it is a risky proposition.
One of the biggest challenges environmentalists are posing to the gas industry right now is building out gas infrastructure. We need more pipes. We need more storage.
We need to understand what’s going to happen with this enormous demand curve shift from companies like Southern Company, the broader electric utility industry, manufacturing enterprises, and others. Exporting, Southern Company is for, 100%, exporting of natural gas — if the markets will bear it.
We’ve got to understand what’s going to happen to price and volatility. It’s not a free lunch. We need all the arrows in the quiver in the nation’s energy portfolio.
I hope you take the time to listen to this talk. Share it with your colleagues. Talk about it over lunch. Bring it up at the dinner table. Begin a movement to recruit Fanning to run for office. We need more leaders like him to make the sacrifice to put our politics back on track.
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Re: “He is concerned about the way that so many people accept the conventional wisdom — which is so often promoted by people who are interested in selling more natural gas — that all we need for our future energy needs are various forms of renewable energy firmed up with “clean, cheap natural gas.”
Why SHOULDN’T people feel that way when you hide nuclear’s virtues and advantages in a PR closet? Why must a NYC resident like me see more Puppy Rescue ads than _any_ extolling the benefits of Indian Point whom our esteemed governor can’t wait to take apart? I grit my teeth at the Gas Lady commercials but hey — they’re only doing the logical thing to get their word and product out — just like how now sterling BP Gulf did to get their impossibly soiled bacon out of the fire. No, I can’t blame the oil and gas companies a wilt for making themselves known to the world. It’s the nuclear “industry”/community/collective that hasn’t a clue about stroking and educating the public. Preach on more to the choir, folks! Or call Puppy Rescue to learn how it’s done — and funded!
“the benefits that we have developed along the way have far overwhelmed any cost increases.”
What are these benefits? Do these benefits allow Southern Company to increase their profits from Vogtle 3-4? If the benefits directly impact the revenues that Southern can reap from the units they’re currently building, that’s wonderful. If these benefits are something else, like rebuilding an American supply chain that will benefit the next builder, the argument that Southern will reap great benefit from that makes far less sense.
As explained in the quote, the benefits will allow Southern to charge customers less than expected over a long predicted operating period. As a rate-regulated, integrated electric utility, Southern’s chief benefit will come from keeping rates low and attracting new customers to its service territory over time.
As Fanning mentioned in passing during his talk, Southern is negotiating for additional plants to take advantage of its investment in learning. He said they have to resolve “some vendor issues.”
Well, since Georgia Power is suing Westinghouse and Stone & Webster for over $900M, those issues may take some time being resolved. I want the US nuclear sector to expand as much as anyone, but the performance of the Vogtle and Summer projects isn’t helping make that a reality.
Perhaps the resolution of “vendor issues” will be to choose a different vendor.
Changing vendors would eliminate all of the learning from the FOAK project. Better to learn to work together and to recognize that NRC has some responsibility for things that Southern has called “vendor issues.” Like many licensees, Southern mistakenly believes “you can’t fight city hall.”
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