Few utility companies are more convinced of the power of shale gas than Southern Co. But when the polar vortex hit last winter, the Atlanta-based utility, its 4 million customers in a four-state territory, along with utility investors got an object lesson in the limitations of the shale revolution.
As temperatures in Atlanta plunged as low as 6 degrees (F), the spot price of natural gas in various parts of the country climbed well above its recent price range. Prices spiked 40 percent on futures markets to as high as $8 per million British thermal units of energy (BTU)—up from a $4 to $5 range last fall. As the nation shivered (frozen gas pipelines were part of the problem), executives in Southern's Atlanta dispatch center fired up more coal plants.
"On those days, you run the plants you have available, from the cheapest to the most expensive, said John Trawick, Southern's senior vice president for commercial operations. "We were able to save customers $100 million because we were able to ramp the percentage of gas production down.''