Georgia Power Co. – the largest subsidiary of electric utility firm Southern Company (SO - Free Report) – has filed a 20-year resource plan with the Georgia Public Service Commission (PSC), asking for a planned reduction in its power generating capacity by 1,000 megawatts (MW).
According to management, the declining need for power by the consumers and the purchase of power from some other utilities are the main reasons behind the plan.
As per the filing, Georgia Power seeks to shut down 15 coal and oil-fired power plants, and also to sell and decertify one plant of 32 MW capacity, thereby reducing the company’s power generating capacity by 2,093 MW.
However, the utility’s power purchasing agreements for natural gas, which are already in place now, will be able to offset some of the lost generating capacity, resulting in an eventual decrease of roughly 1,000 MW.
Georgia Power is the largest of four electric utilities that make up Southern Company. It is an investor-owned, tax-paying utility that serves 2.3 million customers in all but four of Georgia's 159 counties. It has been providing electricity to Georgia for more than a century at rates well below the national average.
Headquartered in Atlanta, Georgia, Southern Company is one of the largest generators of electricity in the nation, along with the likes of Exelon Corporation (EXC - Free Report) and Duke Energy Corporation (DUK - Free Report) – which serve both regulated and competitive markets across the Southeastern U.S.
The operating results of Southern Company are affected by weather conditions and may vary on a seasonal and quarterly basis. Electric power supply is usually a seasonal business. In several regions of the country, demand for power peaks during the summer months, along with market prices. In other areas, power demand reaches its maximum in winter. Consequently, the future operating results of the company may fluctuate substantially on a seasonal basis.
Southern Company currently carries a Zacks Rank #4 (Sell), implying that it is expected to underperform the broader U.S. equity market over the next one to three months.
In the electric utility space Ameren Corporation (AEE - Free Report) displays better fundamentals and currently holds a Zacks Rank #1 (Strong buy).