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Southern Company to Buy Solar Power from Mississippi Plant

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Mississippi Power, a subsidiary of electric utility firm, The Southern Company (SO - Free Report) recently received approval to buy electricity from a $100 million solar facility to be built in eastern Mississippi.

Construction of the Plant

The solar facility received the green signal after The Mississippi Public Service Commission unanimously voted for it to be built in Lauderdale County. It will be operated by Nashville-based Silicon Ranch's wholly owned subsidiary – SR Meridian, III – and will cost $100 million. Silicon Ranch is a large independent solar power producer and has already invested in more than a dozen facilities in Mississippi. Southern Company expects the generating facility to start production by December 2019. 

Mississippi Power’s Interest

Mississippi Power plans to purchase all the affordable wholesale energy from SR Meridian, III, for 25 years through a Power Purchase Agreement. The subsidiary expects the plant to supply around 53 megawatts of electricity at maximum with the help of 570,000 photovoltaic solar panels. The generated electricity will be able to provide power to around 8,000 households. The deal is expected to boost solar capacity of the Southern Company unit to 160 megawatts.

Mississippi Power also has facilities in Hattiesburg, Sumrall, Naval Air Station Meridian and Naval Construction Battalion Center in Gulfport. The deal will help Mississippi Power to support the U.S. Navy's renewable energy initiatives and strengthen its grid resiliency and reliability. It produces environmentally responsible energy for approximately 187,000 customers in 23 southeast Mississippi counties.

What’s in Store for Southern Company?

The initiative is expected to help the Southern Company maintain its position as a low-cost provider of electricity with superior customer satisfaction levels. It will also enable it to remain a leader in power plant productivity and new technology research.

About the Company

Atlanta, GA-based Southern Company is one of the largest utilities in the United States. Its operations include wholesale electricity generation and natural gas services, retail energy services and natural gas storage operations throughout the country.

The buyout of energy services holding company AGL Resources Inc. has helped Southern Company to significantly increase its customer base while diversifying its business by adding gas distribution assets. Focusing on natural gas might also help the utility to reduce its operating cost to a large extent.

However, the continued timing and cost overrun issues over two large construction projects – Vogtle and Kemper – may hamper Southern Company's results in the next few quarters.

Price Performance

Southern Company has lost 2.5% of its value year to date against 9.3% growth of its industry.

Zacks Rank and Stocks to Consider

Southern Company has a Zacks Rank #3 (Hold).

Some better-ranked stocks from the oil and energy sector include Range Resources Corporation (RRC - Free Report) , Canadian Solar Inc. (CSIQ - Free Report) and Subsea 7 SA (SUBCY - Free Report) . It sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Range Resources’ sales for 2017 are expected to increase 124.2% year over year. The company delivered a four-quarter average positive earnings surprise of 51.8%.

Canadian Solar’s sales for the third quarter of 2017 are expected to increase 24.7% year over year. The partnership delivered a positive earnings surprise of 6.25% in the second quarter of 2017.

Subsea’s sales for 2017 are expected to increase 11.6% year over year. The company delivered a positive average earnings surprise of 83.8% in the last four quarters.

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