Southern Company (NYSE: SO) has signed a letter of intent to acquire the Georgia customers currently being served by The New Power Company. Southern Company would pay approximately $28 million, or $131.00 per flowing customer, for the customer contract and its customer care and billing systems. Southern Company would also pay an additional amount for the rights to use New Power’s risk management system. In addition, Southern Company would pay approximately $32 million for New Power’s Georgia natural gas inventory and accounts receivable.
Southern Company has formed a new entity, Southern Company Gas LLC, from which the Georgia gas operations will be run. The new entity will seek certification from the Georgia Public Service Commission to become a natural gas marketer in Georgia. Terms of the New Power deal are subject to bankruptcy court and regulatory approvals.
New Power provides natural gas in Georgia to approximately 210,000 residential and small commercial customers, which is a 15 percent share of the market. On Tuesday, June 11, New Power filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U. S. Bankruptcy Court for the Northern District of Georgia.
“The acquisition of New Power’s Georgia customers would fit our strategic plan to offer energy-related new products and services, apart from our traditional sales of electricity,” said Allen Franklin, chairman, president and CEO of Southern Company. “Our emphasis will always be on the customer. Our goal would be to provide retail natural gas customers with the same high level of customer service and competitive prices that they have come to expect from all of our companies.”
“We would expect that the New Power acquisition would enhance Southern Company earnings in the first few months after the acquisition closes,” said Gale Klappa, Southern Company’s chief financial officer.
With 4 million customers and nearly 35,000 megawatts of generating capacity, Atlanta-based Southern Company (NYSE: SO) is the premier super-regional energy company in the Southeast and a leading U.S. producer of electricity. Southern Company owns five electric utilities, a fast-growing competitive generation company and an energy services business, as well as fiber optics and wireless communications. Southern Company brands are known for excellent customer service, high reliability and retail electric prices that are 15 percent below the national average. Southern Company has been named No. 1 on Fortune magazine’s 2002 “America’s Most Admired Companies” list in the Electric and Gas Utility industry. Southern Company has more than 500,000 shareholders, making its common stock one of the most widely held in the United States.
Forward Looking Statements Note: Certain information contained in this release is forward-looking information based on current expectations and plans that involve risks and uncertainties. Forward-looking information includes, among other things, statements concerning Southern Company`s goal of providing retail natural gas customers with the same level of customer service and competitive prices that customers expect from all Southern Company subsidiaries and of enhancing earnings for Southern Company shareholders in the first few months. Southern Company cautions that there are certain factors that can cause actual results to differ materially from the forward-looking information that has been provided. The reader is cautioned not to put undue reliance on this forward-looking information, which is not a guarantee of future performance and is subject to a number of uncertainties and other factors, many of which are outside the control of Southern Company; accordingly, there can be no assurance that such indicated results will be realized.
The following factors, in addition to those discussed in Southern Company`s Annual Report on Form 10-K for the year ended December 31, 2001, and subsequent securities filings, could cause results to differ materially from management expectations as suggested by such forward-looking information: the impact of recent and future federal and state regulatory change, including legislative and regulatory initiatives regarding deregulation and restructuring of the electric utility industry and also changes in environmental and other laws and regulations to which Southern Company and its subsidiaries are subject, as well as changes in application of existing laws and regulations; current and future litigation, including the EPA civil action against certain subsidiaries of Southern Company and the diversity litigation against certain subsidiaries of Southern Company; the effects, extent and timing of additional competition in the markets in which Southern Company`s subsidiaries operate; the impact of fluctuations in commodity prices, interest rates and customer demand; state and federal rate regulation in the United States; political and legal conditions and developments in the United States; the performance of projects undertaken by the non-traditional business and the success of efforts to invest in and develop new opportunities; internal restructuring or other restructuring options that may be pursued; potential business strategies, including acquisitions or dispositions of assets or businesses, which cannot be assured to be completed or beneficial to Southern Company or its subsidiaries; the effects of, and changes in, economic conditions in the areas in which Southern Company`s subsidiaries operate; the direct or indirect effects on Southern Company’s business resulting from the terrorist incidents on Sept. 11, 2001, or any similar such incidents or responses to such incidents; financial market conditions and the results of financing efforts; the timing and acceptance of Southern Company`s new product and service offerings; the ability of Southern Company to obtain additional generating capacity at competitive prices; and weather and other natural phenomena.