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Southern CEO: $1.5 Trillion Needed for Power Plants

Wednesday, 13 Aug 2008 | 12:19 PM ET

Southern Company Chairman and Chief Executive David Ratcliffe said Wednesday he expects as much as $1.5 trillion will need to be invested in new power plants, construction and other infrastructure over the next 20 years to meet the growing demand for energy.

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“We’ve got to invest in major capital and new infrastructure by some estimates over the next 20 years -- as much as a $1.5 trillion in new power plant, transmission and infrastructure,” he said, in an interview on CNBC. “It will be a challenging time to meet the growth of this economy.”(To listen to this part of the interview with David Ratcliffe, click here.)

The rising cost of fuel and commodities has been affecting companies such as Southern . And in response to the significant price pressure, businesses have no alternative but to raises prices to meet the demands of its customers.

“Our fuel prices for natural gas and coal have gone up significantly in the last couple of years as have commodity costs associated with all the raw materials we use, such as steel, copper and aluminum -- these things are essential to our business.”

Ratcliffe, however, does not expect prices to decline anytime in the near future.

“I think things are going to be more expensive than they have been, but I don’t think it will stay on this continuing escalation curve,” he said. “I think there will be some moderation.”

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Despite dealing with rising prices, Southern, the parent of Georgia Power, has been trying to put its efforts on becoming a “greener” company by restructuring some of its power plants to reduce carbon emission. (Watch the video to the left for more on actions Southern and other corporations are taking to become environmentally friendly companies.)

“We are converting one of our coal-powered power plants in South Georgia from coal to wood products so that we’d be burning biomass and a cleaner product,” explained Ratcliffe.

“It does not take that long when you convert an existing facility," he said. "A lot of the infrastructure is already there. We’ve asked the regulators in Georgia to approve the project as a part of an ongoing transition to cleaner fuel in the state of Georgia. Hopefully they’ll do that in the next six months and we can put it in operation in the next couple of years.”

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