Energy Independence Impossible, Southern Co. CEO Says

November 17, 2008

Global demand, competition too great, he says; alternate energy advocates disagree
By MARGARET NEWKIRK
The Atlanta Journal-Constitution

Remember that "energy independence" everybody talked about so much during the presidential race?  It isn't possible, according to the chairman and CEO of Atlanta utility giant Southern Co.
Speaking to a gathering of electric energy engineers in downtown Atlanta on Monday, Southern's David Ratcliffe said growing electricity demand and global competition for the means to meet it make energy independence an illusion for most countries, including the United States.
"We've seen it with coal," he said, speaking of the worldwide competition that has driven up U.S. coal prices.
"We've seen it with natural gas and, I would submit, we'll see it with renewable (energy) technology."
Global competition is also obvious to "those of us who are involved in the nuclear renaissance," he said. Demand for equipment and parts needed for new reactors is fierce.
"Would I like for the U.S. to be energy independent?" asked Ratcliffe. "Absolutely." But "energy independence is not a viable option," he said.
"We need to abandon this notion."
It's not something alternative energy advocates either want to hear or agree with, after green energy gained momentum as a path to independence during the presidential campaign.
Told of Ratcliffe's remarks, Steve Smith, head of the Southern Alliance for Clean Energy, said the company was clinging to old ways and only dabbling in new ones. With the incoming administration, "My sense is that they'll lose."
Ratcliffe was one of three keynote speakers at the sustainable energy infrastructure meeting of the Institute of Electrical and Electronic Engineers.
He characterized his remarks as a dose of reality for the energy debate.
Southern's chief executive warned of daunting challenges for the electric industry at home and globally. Electric demand is estimated to grow 40 percent by 2030, and will slow only temporarily because of the current economic crisis, Ratcliffe said.
Power companies will need to spend up to $1.5 trillion to build adequate generation and infrastructure, he said. They need to "much more aggressively diversify the technology available to us" and to cooperate globally to get that technology.
Alternative energy sources and energy efficiency, often cited as the path toward independence, should be part of that, Ratcliffe said.
But, "We have to be realistic about what can be done in that regard."
"We can do more. But we're simply going to have to build more of something" else, he said.
New nuclear reactors - like those Southern plans in Georgia - and new low-emission coal plants - like the one Southern plans in Mississippi - are key, Ratcliffe said.
Ratcliffe took on T. Boone Pickens, who is pushing wind power expansion in the Southwest and Midwest and transmission upgrades to move that power nationally. Pickens recently called the nation's power infrastructure "pathetic."
"I told him we (Southern) do not operate a pathetic infrastructure," Ratcliffe told the crowd. He said he'd like Pickens' plan to work but that, "He would be better served if he saw us not as the enemy but as a partner."
Whether the industry invests in wind or reactors, it is looking at huge capital outlays: "It will cost a great deal of money at a time when we're facing grave uncertainty in the capital markets."
"We are the most capital-intensive industry in the country, second to railroads," Ratcliffe said.
Most utilities - not Southern - have less favorable credit ratings than they did 30 years ago. "It will be difficult for some to access capital markets. For all of us, no matter what our rating, capital will cost more."
Clean energy advocates like SACE's Smith see the financial crisis in a different light.
Interest in conservation, he said, will grow.