A 'War On Coal'? Or Is It Common Sense Reform?

According to its CEO, Southern Company – the parent corporation of Alabama Power – will be increasing its use of natural gas and decreasing use of coal, not because of recent EPA regulations, but simply because it's cheaper.

In a recent conference call, CEO Tom Fanning told shareholders that while in the first half of this year coal provided 43% of the company's needs and gas 36%, those numbers are likely to even out to about 40% each by the end of 2014.

Fanning explained, though, that the 3% decrease in coal-produced power and 4% increase in gas-fired power was not due to regulations by the EPA, but by lowering natural gas prices.

“We're slightly ahead in 2014 on coal related to gas, but I would argue that with gas prices falling recntly into the $4 [perMMBtu] range, we will see gas pick up a little bit,” Fanning said.

Additionally, despite Alabama Power's recent announcement that it is closing coal plants, CFO Art Beattie said that with Southern Company's 330 industrial projects currently underway, 37,000 new jobs are set to be created in the four states it serves.

The Environmental Protection Agency under President Obama has been the subject of intense criticism by the right in Alabama, with Public Service Commission President Twinkle Cavanaugh at the helm. Cavanaugh gained regional attention when at a press conference held by the Alabama Coal Association she insisted she would pray for the overreaching regulators in Washington, as all Alabamians should.

And though it appears that high coal prices relative to that of natural gas are causing a shift in the fuels used by power companies, politicians like Cavanaugh tell a somewhat different story:

“After traveling all around Alabama it is clear that what mamas and daddies want is the least expensive option to power their homes. And you know small businesses and industry share that same concern. They depend on affordable and reliable power to stay in business and grow jobs.”

Despite Cavanaugh's understanding, Southern Company's top leadership seems to believe natural gas is “the least expensive option to power... homes” – or that it is at least tied with coal 40% to 40%. Nuclear units provide another 16% of Southern's supply, and hydro and other units the remaining 5%.

Commissioner Cavanaugh doubled down on her view in a statement released after Alabama Power's revelation of a shift away from coal:

“It's a sad day when Barack Obama and the federal government get to tell the people of Alabama how to handle our own energy production... These plants help keep our utility bills low when electricity demand is high... Now, Obama and his liberal EPA are bringing uncertainty to the jobs and utility bills of our citizens.”

President Obama, however, did not shift the ratio of coal and natural gas Southern Company uses away from the former and toward the latter in order to “keep our utility rates low” – the power company itself did. 

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