Meridian Star

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December 29, 2012

Southern Co. faces risks on Miss. power plant

(Continued)

DEKALB — In the 1970s, a giant construction program brought Southern to the edge of insolvency. High inflation and interest rates made it almost impossible to borrow money to complete plants in its four-state territory. The subsidiaries struggled to win rate increases from hostile state regulators, and nuclear plant overruns ballooned under new safety demands after 1979's Three Mile Island incident.

The company history says that at one point in 1979, Mississippi Power was down to less than six months of operating cash.

The company eventually patched things up with regulators and finished its construction marathon, but not before shareholders ate $1 billion in overruns at Vogtle.

"It was like you had your hands on something big that you couldn't control," Ed Addison, Southern CEO from 1983 to 1995, said in the company history. "You couldn't stop because ... too much was already invested in it."

Fanning argues this time is different because inflation and interest rates are low and Southern has gotten better at big construction projects.

"Everything that I know, this plant was exceedingly well-built and well organized during the construction period," Fanning said. "I suppose there is a theoretical risk of prudency. But in my view, this company is executing like no company in the United States."

He is comfortable with the chips he has on the table.

"Now look, I am not a skeptic of natural gas more than any other fuel. But you cannot plan to put all your eggs in that basket. That is imprudent," he said. "What Mississippi is doing here is a big bet. But ultimately, long-term, it will serve well the interests of the families we serve here in Mississippi."

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