On Jan 10, 2014, Georgia Power – the largest affiliate of electric utility firm Southern Company (SO) – has reported that it has witnessed a record demand for electricity on Tuesday last week, owing to an extreme drop in temperature in Georgia.
On the said Tuesday, the estimated peak electricity demand reached 16,859 megawatts (MW) between 7 to 8 am. This broke the previous record of the company which stood at 15,806 MW on Dec 14, 2010. Consequently, Georgia Power has adopted several measures to meet the increased demand.
Georgia Power is an investor-owned, tax-paying utility that serves 2.4 million customers in Georgia. It has been providing electricity to Georgia for more than a century at rates well below the national average.
Southern Company is based in Atlanta, Georgia. Southern Company is one of the largest generators of electricity in the nation, serving both regulated and competitive markets across southeastern U.S. It is a holding company for four regulated Southern electric utilities that serve about 4.4 million customers – Georgia Power, Alabama Power, Gulf Power and Mississippi Power.
Southern Company’s heavy reliance on coal-generated energy supply and a lack of meaningful contribution from renewable energy is a matter of concern. In the current age of growing emphasis on ‘environment friendly or green’ energy, the company may be forced to divert cash flows to ensure regulatory compliance, which can adversely impact profitability.
Currently, Southern Company holds 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.
Meanwhile, one can look at better-ranked players in the electric utility sector like Korea Electric Power Corp. (KEP), Wisconsin Energy Corp. (WEC) and National Grid plc (NGG). All the stocks sport a Zacks Rank #1 (Strong Buy).
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