An analysis of the Southern Company.

• Author: Kimbro, Brad
• Position: Company Profile

THE SOUTHERN COMPANY - A RURAL ELECTRIC COOPERATIVE THREAT?

In the uncertain world of deregulation of the electric industry, competition to the not-for-profit rural electric cooperatives of America will certainly come from many different companies. One such company that will surely pose a competitive threat to the rural electric cooperatives (REC's) of America is the Southern Company.

The Southern Company is a for-profit, investor owned electric utility company and the largest producer of electricity in the United States. In 1995 the Southern Company had 234,927 stockholders owning the company's preferred stock. The Southern Company is based out of Atlanta, Georgia and supplies electricity to more than 11 million people in a four-state area, a region including 120,000 square miles of the southeastern United States. The company also operates facilities that provide electricity to customers in England, Argentina, Chile, Trinidad and Tobago, and the Bahamas.

The Southern Company (NYSE: SO) is the parent company of five electric utilities: Alabama Power, Georgia Power, Gulf Power, Mississippi Power, and Savannah Electric. These five utilities serve a territory that includes 71 rural electric not-for-profit cooperative organizations and 65 municipally-owned electric distribution systems providing electricity to consumers.

Alabama Power Facts:

* Serves 1.2 million customers over some 68,787 miles of electric lines throughout 44,500 square miles. The company directly serves 1,018 communities and indirectly serves 260 other communities.

* Assets of $8.7 billion.

* Paid $58 million in state and local property taxes in 1995.

* Provided electricity to their customers an average of 99.61% of the time in 1995.

* Owns 76 electric generating units with total nameplate capacity of 10.9 million kilowatts, located at 22 power plants.

* Generated 74% of its electricity at its six coal-fueled power plants in 1995. Its one nuclear power plant generated 18% of its electricity, and 14 hydroelectric plants generated 7% of its electricity in 1995.

* Employs 7,261 people with a total payroll in 1995 of over $373 million.

* Directly supplies wholesale power to two rural electric cooperatives in Alabama.

Gulf Power Facts:

* Serves 334,832 residential, commercial and industrial customers. Some 8,511 miles of electric lines deliver power to 71 towns and communities in northwest Florida throughout 1,064 square miles.

* Has a generating capacity of 2174 megawatts using 100% coal mix.

* Had a net income of $57.8 million in 1995.

* Employed 1,501 people in 1995.

* There are no rural electric cooperatives that purchase wholesale power from Gulf Power.

Georgia Power Facts:

* Serves 1.7 million residential, commercial and industrial customers. Some 75,000 miles of electric lines deliver power to 57,000 of Georgia's 59,000 square miles. Georgia Power provides service in all but six of the state's 159 counties.

* Had a net plant investment of $10.75 billion in 1995, and is the largest of the Southern Company's five operating companies.

* Employed 11,061 people in 1995.

* Until 1991 supplied wholesale power to Oglethorpe Power Corporation, supplier of wholesale power to 39 rural electric cooperatives in Georgia.

Mississippi Power Facts:

* Serves 183,000 residential, commercial and industrial customers. Some 6,600 miles of electric lines deliver power to 11,500 square miles from Meridian Mississippi to the Gulf of Mexico.

* Had more than $1 billion investment in plant in 1995.

* Supplies wholesale power to six rural electric cooperatives in Mississippi.

* Generating facilities total more than 2,000 megawatts capacity in 21 generating units fueled by coal and natural gas.

* Employed 1,421 people in 1995.

Savannah Electric:

* Serves more than 250,000 residential, commercial and industrial customers. Some 3,000 miles of electric lines deliver power to a 2,000 square-mile area in southeast Georgia.

* In 1995 Savannah Electric employed more than 600 people.

* Merged with the Southern Company in 1988.

* Employed 584 people in 1995.

The Southern Company also markets energy-related services and mobile radio services under the Southern name. Their Southern Energy Inc. subsidiary develops, builds, owns, and operates power production and delivery facilities and provides a broad range of services to utilities and industrial companies in the U.S. and international markets. The Southern Company's stock is one of the 20 most widely held corporate stocks in America.

In October 1995, they made their first entry into the European marketplace. The Southern Company acquired South Western Electricity (SWEB). At that time, the electric distribution utility served 1.3 million customers in southwestern England. Bill Dahlberg, Chairman, President, and Chief Executive Officer of the Southern Company stated, "We bought SWEB because it was a successful company and will provide growth to our bottom line more rapidly than some of our other investments."

In 1997, Southern Company acquired Consolidated Electric Power Asia (CEPA) for $2.1 billion. CEPA has two generating plants in China, three in the Philippines, and two more under development.

With these and other acquisitions in Europe, South America, and the Caribbean, the Southern Company significantly increased the size of their company in international business. "Privatization of utilities remains an ongoing trend in many countries, and the Pacific Rim countries need significant new generation. The Southern Company will continue to seek attractive projects with the potential for superior financial returns", according to Dahlberg.

In 1995, the Southern Company had an outstanding year with a record net income of $1.1 billion, an increase of 5.4% over 1994. Earnings per share were $1.66 and return on common equity was 13.01 percent. With these record results, the board of the Southern Company increased their dividend in January 1996 for the fifth time in as many years. Earnings for 1996 were a record $1.13 billion...