Southern Company could put Mississippi Power on the block if selloff continues
The Southern Company is selling off assets after expensive failures with clean coal and a Georgia nuclear plant and it's not beyond the realm of possibility that its Magnolia State subsidiary, Mississippi Power, could be next.
Southern Company CEO Thomas Fanning wouldn't rule out further transactions in a conference call Monday about the sale of its northwest Florida subsidiary Gulf Power.
Fanning said that the Florida transaction was done irrespective of any need for equity or tax law change.
"We did a spend a lot of time thinking about the sale of Gulf Power. It's a wonderful company," Fanning said during the call related to the Florida transaction. "We'll continue to look at opportunities and we'll look at some tax-driven things, like the sale of roughly a third in our solar portfolio.
"If there's anything else that makes sense, we'll evaluate it on the buy or on the sale side. If we can improve shareholder prospects by value-enhancing sales, we'll certainly consider it."
Mississippi Power could be an attractive asset for sale considering that it has the least amount of long-term debt, $600 million, among Southern's three remaining electric generating companies.
Southern Company has been in a sale mode since its 2015 acquisition of AGL Resources.
The company announced Monday that it'd sell Gulf Power, Florida City Gas and its share of two Florida generating plants to Florida-based NextEra Energy for $6.475 billion. The sale price includes $1.4 billion in debt for Gulf Power, which serves 450,000 customers in all or parts of eight Florida counties. These customers represented less than 5 percent of the company's total rate base.
The Southern Company also announced today that it will sell a 33 percent stake in its solar portfolio — which amounts to $1.175 billion — to Global Atlantic Financial Group Limited.
In October, the company sold two components of its 2015 AGL purchase — Elizabethtown Gas and Elkton Gas — to South Jersey Industries for $1.7 billion. After the finalization of its Florida transaction, Southern will retain only four of the seven gas distribution companies it acquired in the $12 billion AGL purchase
NextEra owns Florida Power and Light, which serves 10 million customers in Florida.
Florida City Gas serves approximately 108,000 residential and commercial customers in Miami-Dade, Brevard, St. Lucie and Indian River counties in south Florida. Florida City Gas became a subsidiary of AGL Resources starting in 2004 before becoming part of the Southern Company in 2016.
The sale is subject to the approval of the Federal Energy Regulatory Commission and the company hopes to finalize the transaction for Florida City Gas in the third quarter of this year and for Gulf Power and the power plants in the first quarter of 2019.
The reason for the transactions is the bleeding on Southern Company's balance sheet. Two new reactors for Plant Vogtle in Georgia could end up costing the company $25.2 billion.
The company also wrote off $6.2 billion in losses on the Kemper Project clean coal power plant in Mississippi, which will amount to $4.1 billion after taxes.
Kemper was basically an experimental power plant that would gasify lignite coal mined on site, remove pollutants such as anhydrous ammonia, sulfuric acid and carbon dioxide for off-site sale and use the now-clean synthesis gas to fuel a pair of electricity-generating turbines.
It was supposed to cost only $2.4 billion and be operational by May 2014, but the company was unable to get it running consistently and will now operate it solely as a natural gas plant.