A warmer-than-normal winter colored Southern Company’s 1Q2012 financial results, but natural gas issues, and particularly coal-to-gas trends, dominate the current landscape for the Atlanta-based operator, which recently received the first construction/operating licenses for two nuclear units in more than 30 years.

Operating in the traditionally coal-fired generation region of the Southeast, Southern reported earlier this year that its fourth-quarter generation mix was about 40% natural gas and 40% coal. Given continued low gas prices and environmental pressures on coal, CEO Tom Fanning said Wednesday the company’s latest fuel mix estimates are 47% gas and 35% coal, with the remaining from nuclear and hydroelectric sources, its lowest-cost resources for power. By comparison, the Southern portfolio just five years ago was 16% gas and 70% coal-fired generation.

The Southern CEO said three new combined-cycle gas-fired units are being built by Georgia Power: one 840 MW unit that started operations last fall, a second to begin operations soon and a final unit that is to start up in November. In the first three months of this year Southern’s natural gas-fired generation fleet achieved a capacity factor of more than 70%, said Fanning.

The company has projected that it could burn up to 600 Bcf of gas for the full year, about 1.7 Bcf/d or three times more than it burned in 2007. Southern is now the third largest user of natural gas among U.S. utilities, he said. Southern also estimates that it will burn about 45 million tons of coal this year for power generation, compared to 80 million tons in 2007, the year it set a peak record for coal consumption.

Another indicator of the shift to greater gas-fired generation reliance away from coal is the rising quarterly capacity factors in Southern’s generation fleet. “We saw signs of them beginning to creep up last year,” said Fanning, who noted that traditionally they were in the 30% area and last year they moved into the 40-50% range.

Fanning also reported on the company’s historic landing of Nuclear Regulatory Commission approval for a combined construction and operating license (COL) for Plant Vogtle Units 3 and 4, the first such license ever approved for a U.S. nuclear plant. “Receipt of the COL signifies that full construction can begin,” said Fanning.

The company reported quarterly profits of $368 million (42 cents/share), on revenues of $3.6 billion, compared with $422 million (50 cents), on revenues of $4.01 billion in 1Q2011.

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