Strategy and Planning

Strategy and Planning

Southern Company’s strategy towards meeting customers’ future energy needs is straightforward. Our planning process consistently addresses changes in our business and accounts for external factors.

Planning provides us with the options and flexibility to meet the future needs of existing customers, expand the customer base and geographic scope of our subsidiaries and take advantage of emerging opportunities that will provide financial growth to our stockholders.

Fleet

Customer impacts must be at the heart of generation resource planning and the resulting resource strategy must consider a range of potential outcomes, including greenhouse gas (GHG) - constrained futures. Impacts include the direct cost effectiveness of the resource strategy as compared to alternative resource strategies, as well as local community impacts such as jobs and taxes.

 

Resource planning

The Southern Company system is at the forefront of the production, delivery and end-use of electricity and we leverage a portfolio of new technology options that seek to balance reducing environmental impact, increasing customer value, improving reliability, increasing efficiency and minimizing cost.

Long-term strategy

Southern Company’s long-term strategy is based on taking advantage of the competitiveness of existing technologies, while still focusing on affordability, reliability, safety and the need for clean energy.

Flexibility

Maintaining flexibility by including as much information as possible before making final decisions is a key advantage of our process that allows decision-making on an incremental basis. For example, while the environmental strategy includes environmental control plans for the next 10 years, final decisions on specific pollution control projects are not made until commitments are required for construction to commence early enough to meet any required compliance date. This flexibility enables each operating company to adapt to changing requirements and keep costs as low as possible for customers.

As renewable generation is added to the system it changes the generation mix and is incorporated in future planning scenarios. This generation enhances the company’s ability to meet any future greenhouse gas constraints and other environmental requirements.

GHG Considerations

To appropriately consider risk and uncertainty related to future of GHG regulation, a scenario process is employed by the Southern Company system for long-term resource planning. A range of planning scenarios are established, developed and modeled to identify important drivers in the ongoing evolution of the energy industry. Scenarios consider multiple views of GHG policies and other environmental issues, fuel markets, economic growth and technology development. 

Renewable strategy

Southern Company is highly focused on strategically increasing the role of renewables. Our retail electric subsidiaries continue to expand their utilization of renewable energy generation, including solar, wind, biomass and other sources.

Georgia Power is developing the nation’s largest voluntary solar portfolio and the Southern Company system is the only utility partnering with all four branches of the armed forces to develop solar installations at U.S. military bases.

In addition Southern Power continues acquisition of renewable energy projects across America.

Fuel diversity and reliability

Fuel diversity, including high capacity factor electric generation sources (i.e., generation available 24 hours a day, 365 days a year), is a key ingredient to the United States being able to meet its long-term energy and environmental objectives.

Since most renewable sources are variable in output according to the weather and time of day, there must be sufficient generation sources to avoid reliability consequences. Public policy must be formulated to ensure all energy resources including nuclear, natural gas and 21st century coal remain viable options for future development.

Retirements

Southern Company considers retirement options for generating units as a part of the overall resource strategy. For example:

  • If an electric generating unit is not able to achieve required emission reductions in a cost-effective manner, the company evaluates other options, such as switching fuels, finding alternate methods to comply or retiring the unit. If environmental controls are mandated for a unit, then the economic value of the unit, including future operating costs, must be considered to determine whether it is in the best interest of customers to install the required control technology or to retire the unit and replace it with another resource. After the process is completed and analyzed across various planning scenarios, an environmental strategy is also compiled on a unit level and reviewed annually based on the most current information.
  • Along with a quantitative economic review, the Company also considers other qualitative factors such as fuel diversity, tax base and jobs for local communities, and operational flexibility and value.

Southern Company’s Environmental Compliance Strategy involves the continuous monitoring of regulatory developments, compliance options and other factors which may impact long term viability of additional units in the futureSouthern Company’s resource planning process and environmental compliance strategy led to 4,226 megawatts of coal- and oil-related retirements since 2010. The below table details these retirements.

 

Unit Retirements

Unit

Nameplate Capacity (MW)

Retirement Date

Barry 3

225

Retired Aug-15

Branch 1

250

Retired Apr-15

Branch 2

320

Retired Sept-13

Branch 3

490

Retired Apr-15

Branch 4

490

Retired Apr-15

Gorgas 6

100

Retired Aug-15

Gorgas 7

100

Retired Aug-15

Kraft 1

50

Retired Oct-15

Kraft 2

50

Retired Oct-15

Kraft 3

100

Retired Oct-15

Kraft 4

116

Retired Oct-15

McDonough 1

250

Retired Feb-12

McDonough 2

250

Retired Sept-11

McManus 1

40

Retired April-15

McManus 2

75

Retired April-15

Mitchell 3

155

Retired Aug-16

Scholz 1

40

Retired Apr-15

Scholz 2

40

Retired Apr-15

Smith 1

125

Retired Apr-16

Smith 2

180

Retired Apr-16

Sweatt 1

40

Retired Jul-16

Sweatt 2

40

Retired Jul-16

Watson 1

75

Retired Jul-15

Watson 2

75

Retired Jul-15

Yates 1

100

Retired Apr-15

Yates 2

100

Retired Apr-15

Yates 3

100

Retired Apr-15

Yates 4

125

Retired Apr-15

Yates 5

125

Retired Apr-15

 

Transmission and distribution

Since 2000, we have invested approximately $16.9 billion to upgrade and expand our transmission and distribution infrastructure. Over the next three years, we plan to invest more than $4.3 billion to help ensure that we maintain our high level of reliability and keep electricity flowing to the increasing number of customers in our region.

Engagement

We engage in the public policy debate as well as work with legislators and regulators to support an energy policy that promotes innovation and restores America’s financial integrity. We do this to advocate for future energy policies that reflect our evolving business structure and improve the lives of customers. 

Legislative and regulatory participation

Forecasting and planning go hand in hand with participation in the legislative and regulatory process, especially related to proposed laws or rules that impact our customers and shareholders. In addition to working with state and local legislators and policy-makers, we maintain an office and staff in Washington, D.C., to interact with Congress and agencies including:

Trade associations and research organizations

We use outside firms to assist our efforts and support coalitions and trade organizations that engage in lobbying activities. Expenses associated with operating our Washington office in 2015 were about $12.86 million. We also participate in the regulatory process through industry groups and committees to communicate our positions. These groups and committees include the Electric Power Research Institute, American Gas Association, Utility Air Regulatory Group, the Utility Water Act Group, the Utility Solid Waste Activities Group, Edison Electric Institute and the Nuclear Energy Institute. Political contributions to organizations can be found in the political contribution report.