Southern Company Generation
– Fuel Overview –
Fueling the World's Best energy company ─
reliably and economically
Scott D. Clouse
March 5, 2009
Presentation Overview
 Southern Company at a glance
 Strategy and Coal Procurement Process
 2009 Southern Company Outlook
 Future Generation Growth
Southern Company at a glance
 Four Electric Utilities
– Georgia Power
– Alabama Power
– Mississippi Power
– Gulf Power
 Southern Nuclear
 42,000 MW’s of generating capacity
 4.3M customers
Southern Company Capacity Mix
Hydro
7%
Gas
25%
Nuclear
11%
Oil
3%
Coal
54%
Southern Company Generation Mix
Gas
16%
Hydro
1%
Nuclear
15%
Coal
68%
2008 Coal Metrics:
 Total Coal Cost: $5.1 B
–
–
–
–





Coal Commodity
Transportation
Taxes
Lease & Maint.
$3.3
$1.6
$0.1
$0.1
Coal Tons: 75.2 M
Coal MWs: 21,282
Coal Plants: 21
Coal Units: 65
Largest coal rail fleet in U.S. – excluding the railroads
(either owned or leased): ~18,000 rail cars
Diversity of Coal Purchases 2008
Tons and % by Region – 100% Ownership
PRB
37.8%
28.4 M Tons
Western
2.6%
2.0 M Tons
Illinois Basin
1.3%
1.0 M Tons
CAPP
31.3%
23.6 M Tons
Alabama
11.2%
8.4 M Tons
Southern Company
Coal Generation:
21 Coal Plants (65 units)
75.2 million tons 2008
* Data reported January – December 2008 Actual Receipts
from FAACS
Import – 15.7%
11.8 M tons
(Colombian & Venezuelan via Ports at
Mobile, Charleston and Port Kraft)
NORTH CAROLINA
TENNESSEE
Southern Company- Transportation Diversity
Hammond
Bowen
ARKANSAS
Gadsden
Gorgas Miller
SOUTH CAROLINA
McDonough
Wansley
Yates
Branch
Gaston
Scherer
GEORGIA
Greene Cty.
McIntosh
Kraft
ALABAMA
MISSISSIPPI
Mitchell
Barry
Crist
LOUISIANA
Watson
Daniel
Barge Transportation
Scholz
Smith
Rail Transportation
(Kraft is Ocean Vessel)
FLORIDA
Diversity of Coal Transportation Modes2008 Purchases
Truck
2.4%
Ocean Vessel
8.0%
Barge
10.4%
BN
37.8%
Rail
79.1%
CSX
20.8%
NS
15.7%
UP
2.2%
Other
2.6%
Actions taken to improve
Southern’s Coal Supply Position
 Increased diversification of supply sources as more Colorado, Utah,
and Illinois Basin coals have been purchased for various plants
 Test burns of Illinois Basin coals at some of the system’s nonscrubbed plants
 Feasibility study of PRB conversions
 Reviewing opportunities to blend PRB or Illinois Basin coal at various
plants
 Developing 3 million annual ton rail to barge loading capacity at
Alabama State Docks (ASD) in Mobile, AL
 Maintaining increased railcar fleet reserves to allow some nontraditional supply moves as constraints emerge
 Constructed Gorgas transloader to support truck coal sourcing
Strategy and Coal
Procurement Process
Provide a reliable, low cost, environmentally acceptable fuel supply
Coal Procurement Strategy

Evaluate the entire value chain of fuel, transportation, operations and allowances to
achieve the lowest reasonable total cost while meeting reliability and environmental
requirements.

Five key risks identified and strategies to mitigate:
Volume:
 Flexibility needed to adjust to burn fluctuations
 Procure to guideline percentages based on the generation nature of the unit
Price:
 Goal to be at market while mitigating significant swings
 Typically 3 to 5 year contracts
Supply:
 Seek diversity of supply regions and transportation modes
 Blending coal opportunities
Reliability:
 Creditworthiness
 Replacement cost language
Environmental:
 Incorporate non-negotiable Environmental Force Majeure language in ALL
contracts
Coal Procurement Process
Interaction/Feedback/Inputs
Long Term
(Mail)
NPV
Analysis
OPCOs/
Plants
Railcar
Team
Field Reps
Treasury
Admin
Logistics
Strategic
Plan
Internet
RFP Posting
Initial
Screening
Short List
Projected
Need
Spot
(CIBS)
Negotiate
Terms and
Conditions
Delivered cost
evaluation
Execute
Contract(s)
Paperwork
(FAACS, Comtrac,
P.O.’ s, etc.)
Execute
Confirmation
(LOI)
Total Cost Equation
Freight Cost
Coal Cost
EC
GX
Railcar Cost
L&M
Environmental Costs
(So2, NOx, etc)
DE
GX
Coal Pile Inventory
Carrying Cost
Plant Fuel
Handling
EC GX
= Total Cost of Process (Burn)
Total Cost Example by Component
Total with Sulfur= $106.65/ton or $4.44 per MMBtu
Sulfur
Subtotal before Sulfur= $100.65/ton
or $4.19 per MMBtu
Taxes
$6.00
$4.55
$1.10
L&M
$0.00
TLF
$30.00
Rail
$65.00
Cen App coal
$0
$20
$40
$60
$80
$100
$ per ton
Note: Assumes 12,000 btu/lb coal; 1% sulfur at $300/ton of SO2 for Plant X
$120
Evaluation of NOx



Background:
– Due to requirements of the Clean Air Amendments of 1990, all OPCo’s
now include NOx in the delivered cost equation
– NOx predictor model (EPRI/SoCo) includes all Southern Company coal
units
Process:
– Enter mine specific ultimate analysis into NOx predictor model
– Evaluate to applicable unit(s)
Result:
– The unit specific result is reported in lbs/mmbtu
– This result is converted to a $/mmbtu result by multiplying by $/ton NOx
cost
Example: Model result for Mine A to Plant X= 0.400 lbs/mmbtu
NOx allowance cost = $2,880/ton
0.400 lbs/mmbtu x $2,880/ton
2,000 lbs/ton
= $0.576/mmbtu
Total Cost Example by Component (w/ NOx)
$13.82
Nox
Total with Sulfur and NOx=
$120.44/ton or $5.02 per MMBtu
Sulfur
$6.00
$4.55
Taxes
Subtotal with Sulfur= $106.65/ton
or $4.44 per MMBtu
L&M
$1.10
$0.00
TLF
$30.00
Rail
$65.00
Cen App coal
$0
$20
$40
$60
$80
$100
$120
$140
$ per ton
Notes:
Assumes 12,000 btu/lb coal; 1% sulfur at $300/ton of SO2 and $2,880/ton for NOx for
Plant X and assumes Plant X has no NOx controls.
2009 Southern Company Outlook
 Decrease in coal burn
– Natural gas
– Economy
– Environmental costs
 Increase in Inventory
– Strategically optimize system inventories to account
for any overage
– Carrying cost vs. avoided cost
 Projected Purchases
– 2009
– 2010 - forward
Southern Company Generation
Coal Program Status as of January 9,2009
80,000
70,000
Tons X 1,000
60,000
50,000
40,000
30,000
20,000
10,000
0
2009
2010
2011
2012
2013
2014
2015
Additional Uncommitted
0
9,210
28,782
51,255
63,145
74,057
75,091
Pending "Out in the Market"
0
0
0
0
0
0
0
75,877
66,136
45,888
24,410
13,160
3,400
2,400
Committed
100.0%
88.0%
61.5%
32.3%
17.2%
4.4%
3.1%
% Pending "Out in the Market"
0%
0%
0%
0%
0%
0%
0%
% Additional Uncommitted
0%
12.0%
38.5%
67.7%
82.8%
95.6%
96.9%
% Committed*
Includes Co-Owners ; January 2009 DEPS Update
* Committed tons include options –this analysis includes projected burns and
commitments that are in place.
Future Generation Supply

Nuclear – Vogtle 3 & 4 – Georgia Power Company
– 2,200 MW - ownership share is 45.7%
– Certification ruling in March/April 2009, on-line in 2016 and 2017

Gas CC – Plant McDonough conversion – Georgia Power Company
– 500MW coal to 3 gas/oil CC units at 840MW each
– Completed in 2012

IGCC – Kemper County – Mississippi Power Company
– 582 MW lignite mine mouth coal gasification plant
– Carbon capture and sequestration capabilities
– Certification ruling in late 2009, on-line in November 2013

Biomass – Plant Mitchell conversion – Georgia Power Company
– 96 MW – one of largest biomass plants in the country
– Certification ruling in March/April 2009, on-line in June 2012
– Lower fuel and operating costs when compared to continued operation using
coal
 Plentiful supply all within 100 miles, low transportation costs

Biomass – 5% co-firing being studied at many other system plants
Conclusion
 2009 will continue to present challenges
 Environmental costs will continue to have a negative impact
on coal burn
 No projected additional coal purchases this year
 2010 and beyond there are projected needs
 Southern Company is continuing to investigate new
generation sources
Fuel Services Vision:
Fueling the World's Best energy
company ─
reliably and economically
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Overview of Southern Company