{"id":6566,"date":"2013-11-07T03:42:13","date_gmt":"2013-11-07T08:42:13","guid":{"rendered":"http:\/\/www.l-a-k-e.org\/blog\/?p=6566"},"modified":"2013-11-07T03:59:21","modified_gmt":"2013-11-07T08:59:21","slug":"southern-company-missed-earnings-weather-and-kemper-coal-and-nuclear-plant-vogtle","status":"publish","type":"post","link":"http:\/\/www.l-a-k-e.org\/blog\/2013\/11\/southern-company-missed-earnings-weather-and-kemper-coal-and-nuclear-plant-vogtle.html","title":{"rendered":"Southern Company missed earnings: weather and Kemper Coal and nuclear Plant Vogtle"},"content":{"rendered":"

\r\n\r\n<\/a>\r\nSO CEO Tom Fanning continued to blame slow sales and earnings on mild\r\nweather (air conditioners running less), but the big boondoggle\r\ngoing bad is Kemper Coal, which has slipped six months from May 2014 to Q4 2014,\r\nand even the Wall Street Journal calls it “possibly the most expensive fossil-fuel power plant ever built in the U.S”.\r\nHow bad will SO’s stock tank when SO’s even more expensive\r\nnuclear Plant Vogtle slips even more?\r\n\r\nDividends can’t prop up SO’s share price forever, not when PSCs are revolting against the rate hikes\r\nand guaranteed profit hikes that prop up those dividends.\r\nWhen will Southern Company and Georgia Power get out front and lead in solar and wind power?\r\nBefore or after the public, state public service commissions, and investors make them do it?\r\n

\r\nJustin Loiseau wrote for DailyFinance 4 November 2013,\r\n\r\nSouthern Company Earnings: A $5 Billion Blunder?<\/a>\r\n

\r\n\r\n

\r\nSouthern Company’s sales clocked in at $5.0 billion\r\nfor Q3, 0.6% below last year’s Q3 and a full 6.8% below analyst\r\nestimates. On the bottom line, Southern’s earnings also tapered off.\r\nIts $1.08-adjusted EPS clocked in $0.03 below analyst expectations,\r\nas well as Q3 2012’s profit.\r\n<\/p>\r\n<\/blockquote>\r\n

\r\nAnd that is not good for SO’s stock price, because\r\nEPS is\r\n\r\nearnings per share<\/a>,\r\nas in (net income minus dividends on preferred stock) divided by average\r\noutstanding shares of stock.\r\n\r\nInvestopedia says<\/a>:\r\n

\r\n

\r\nEarnings per share is generally considered to be the single most\r\nimportant variable in determining a share’s price.\r\n<\/p>\r\n<\/blockquote>\r\n

\r\nThe article quotes Fanning and SO CFO Art Beattie with their\r\nstandard weather excuses, then gets to the point:\r\n

\r\n

\r\nUnfortunately for the utility, weather isn’t the only worry in\r\nKemper County.\r\n<\/p>\r\n

\r\nSouthern announced earlier this month that it no longer expects to\r\nfire up its new 582 MW “clean coal” gasification plant by May 2014.\r\nIt now anticipates powering Kemper up some time in Q4 2014, and a\r\nnew $243 million in costs puts the plant’s total price tag at $5.24\r\nbillion. The Wall Street Journal calls it “possibly the most\r\nexpensive fossil-fuel power plant ever built in the U.S.”\r\n<\/p>\r\n

\r\n\r\n<\/a>\r\nAnd unfortunately for Southern, recently resigned Mississippi Public\r\nService Commissioner Phil Bryant is no longer the decision-maker for\r\nany additional cost recovery requests. Long-time Chevron Executive\r\nStephen Renfroe came out of retirement (and off a sailboat) in\r\nSeptember to take the reins, and it’s unclear whether Renfroe will\r\nbe as amicable an ally.\r\n<\/p>\r\n<\/blockquote>\r\n

\r\nActually, \r\nPhil Bryant is the governor of Mississippi<\/a>\r\nwho \r\nappointed Renfroe<\/a>\r\nto replace\r\n“Leonard Bentz, who stepped down to become the executive director of the Southern Mississippi Planning and Development District.”<\/a>\r\nOn with the story:\r\n

\r\n

\r\nThe world of utilities has changed rapidly over the last few years,\r\nand Southern’s attacked its reliance on dirty coal with a vengeance.\r\nCapex as a percentage of invested capital base has averaged a\r\nsubstantial 8% as the company plowed ahead with new natural gas\r\nplants, nuclear plants, clean coal plants, and environmental\r\ncompliance spending.\r\n<\/p>\r\n

\r\nBut while Fanning expects expenditures to ease up in the next few\r\nyears, overextended projects like Kemper have already caused the\r\ncompany considerable trouble. While Exelon has chosen to invest\r\nheavily in hedges to keep low power prices and cheap natural gas\r\nfrom killing its nuclear-centric portfolio, Southern is physically\r\nreshaping its fleet. Exelon’s latest earnings report blew away\r\nexpectations, and Exelon stock’s 20% drop this year may finally be\r\nready for a turnaround.\r\n<\/p>\r\n

\r\nSouthern talked a big talk for the next decade, but 2013 will simply\r\nnot be its best year. Q4 estimates are set at $0.44 EPS, and the\r\ncompany expects its annual results to clock in at the bottom end of\r\nits guidance range.\r\n<\/p>\r\n<\/blockquote>\r\n

\r\nFanning talked a big talk back in May at SO’s shareholder meeting, too,\r\nabout that tiger team<\/a> that was supposed\r\n“to develop a business model where Southern Company can now promote, play offense, on distributed generation.”\r\nWhere’s the report that tiger team was supopsed to make “sometime later this summer”?\r\n\r\n<\/a>\r\nWhat happened to Fanning’s idea of:\r\n

\r\n

\r\nto think about a rooftop not as a customer-owned or “we\r\nown” kind of resource, but as a potential site. And what we’ll\r\npay the home is a site lease.\r\n<\/p>\r\n<\/blockquote>\r\n

\r\n\r\n<\/a>\r\nAustin Energy\r\n\r\ndemonstrated back in 2003<\/a> that for the same amount\r\nof money as a coal plant, a utility can subsidize rooftop solar\r\nand get just as much energy, installed faster, generating\r\nwhen it is needed the most, and distributed so it doesn’t all fail at once.\r\nSolar PV prices are much lower now than then (and keep falling),\r\nand that was compared to a traditional coal plant, not that over-expensive\r\nboondoggle in Kemper County, Mississippi.\r\n

\r\n\r\n<\/a>\r\nPlus since then there have been studies that show how to\r\n\r\npower entire states with sun, wind, water<\/a>, and less natural gas than\r\nis already in use.\r\nAnd since then electric utility think tank\r\nEdison Electric Institute\r\n\r\nhas reported that rooftop solar is a massively disruptive development<\/a>.\r\nThat report alone should have dispelled\r\n\r\nthe illusion of certainty<\/a> in SO and Georgia Power’s decision making,\r\nbut apparently it hasn’t yet.\r\n

\r\nWhen will Southern Company do what Austin Energy did in 2003 and\r\n\r\nCobb EMC did last year<\/a>:\r\nkick the coal habit entirely and get on with solar power?\r\nWhen will Georgia Power stop reactionary defensive measures like\r\n\r\ntrying to charge a tax for connecting solar generation<\/a>?\r\n

\r\n\r\n<\/a>\r\n

\r\nWhen will SO realize that\r\n\r\nits relatively high dividend<\/a> (4.86% yield) can only keep\r\n\r\nincreasing that dividend every year<\/a>\r\nas long as Georgia Power (and\r\n\r\nAlabama Power<\/a> and \r\nMississippi Power<\/a>)\r\ncan keep hiking its rates and guaranteed profit,\r\nand \r\nGeorgia citizens across the state are opposing those hikes<\/a>?\r\nPeople and even PSCs are getting tired of\r\n\r\nas Adam Smith put it two centuries ago<\/a>,\r\n

\r\nby raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens.\r\n<\/blockquote>\r\n

\r\n\r\n<\/a>\r\nSouthern Company can still do what Google cannot, and what SolarCity cannot:\r\nuse\r\n\r\nSO’s vaunted biggest private R&D operation<\/a> to tie rooftop solar\r\nand offshore wind into profitable energy generation that can retire\r\nmore coal plants, with no need for new nuclear or natural gas generation.\r\nSO could use existing transmission lines and rights of way, too,\r\nwith no need for\r\n\r\na 100 foot natural gas gash through south Georgia<\/a>\r\n(or \r\nthrough north Georgia<\/a>).\r\nAdd \r\nefficiency and conservation<\/a> to sun, wind, and water\r\nand we’ll have a clean, safe, reliable, Georgia and southeast\r\nexporting excess power at a profit to states to the north,\r\nall\r\n\r\nwithout sucking up massive amounts of water for coal, gas, and nuclear plants<\/a>.\r\n

\r\nAs Equity Watch on Utilities put it on Seeking Alpha yesterday,\r\n\r\nSouthern Company Fails To Provide Clearer Picture Of Future<\/a>.\r\n\r\n<\/a>\r\nWe’re already seeing\r\n\r\nSO’s Plant Vogtle nuclear boondoggle cost overruns driving a boom\r\nin solar power in Georgia<\/a>.\r\nIt’s time to get in the lead or get left behind.\r\nCome on, SO CEO Tom Fanning and Georgia Power CEO Paul Bowers:\r\nthe southeast and investors are depending on you to turn that\r\nmighty utility ship in a more sunny direction,\r\nwith the offshore wind in your sails.\r\n

\r\n -jsq\r\n<\/p>","protected":false},"excerpt":{"rendered":"SO CEO Tom Fanning continued to blame slow sales and earnings on mild weather (air conditioners running less), but the big boondoggle going bad is Kemper Coal, which has slipped six months from May 2014 to Q4 2014, and even the Wall Street Journal calls it “possibly the most expensive fossil-fuel power plant ever built […]","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"_links_to":"","_links_to_target":""},"categories":[216,14,264,265,16,17,8,18,19,6124,104,32,23,24,89,36],"tags":[712,8753,6129,7215,7217,8704,8754,8755,8706,7216,8707,8701,8708,8709,171,8702,12,7,562,8737,6327,107,8715,8713,1605,8714,108,2532,6,8735,8716],"class_list":["post-6566","post","type-post","status-publish","format-standard","hentry","category-coal","category-economy","category-energy-conservation","category-energy-efficiency","category-environment","category-ga-psc","category-georgia","category-georgia-power","category-history","category-natural-gas-2","category-nuclear","category-pollution","category-renewable-energy","category-solar","category-weather","category-wind","tag-boondoggle","tag-coal","tag-disruptive","tag-dividend","tag-earnings-per-share","tag-economy","tag-energy-conservation","tag-energy-efficiency","tag-environment","tag-eps","tag-ga-psc","tag-georgia","tag-georgia-power","tag-history","tag-kemper-coal","tag-lake","tag-lowndes-area-knowledge-exchange","tag-lowndes-county","tag-natural-gas","tag-nuclear","tag-plant-ratcliffe","tag-plant-vogtle","tag-pollution","tag-renewable-energy","tag-rooftop-solar","tag-solar","tag-southern-company","tag-stock","tag-valdosta","tag-weather","tag-wind"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p585fK-1HU","jetpack_sharing_enabled":true,"jetpack-related-posts":[],"_links":{"self":[{"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/posts\/6566","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/comments?post=6566"}],"version-history":[{"count":12,"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/posts\/6566\/revisions"}],"predecessor-version":[{"id":6579,"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/posts\/6566\/revisions\/6579"}],"wp:attachment":[{"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/media?parent=6566"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/categories?post=6566"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/tags?post=6566"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}