The Southern and AGL merger and the questions it raises

Construction on Georgia Power's expansion.

Construction on Georgia Power’s expansion of Plant Vogtle in east Georgia.

Southern Company, the electric utility giant, announced Monday it will acquire the massive natural gas company AGL Resources in a blockbuster merger of Atlanta-based Fortune 500 companies.

The deal – valued with debt at about $12 billion – will bring together a dominant Southeastern power company with one of the nation’s biggest gas sellers and pipeline companies to create the nation’s second-largest utility, the companies said.

As The Atlanta Journal-Constitution reported this morning, the combined business will include 11 regulated electric and natural gas distribution companies, serving approximately 9 million customers in nine states.

The companies will hold a joint press conference at noon about the future of the combined enterprise. And there will be many questions to answer.

Stay with the AJC for complete coverage of the merger at ajc.com, myAJC.com and in print.

Here are some of the questions that we hope to answer for readers in the days ahead:

  • How will the merger affect consumers? Will the combining of these two Atlanta companies result in more expensive or cheaper energy sources for consumers? Will it provide new services or choices for customers, or fewer?
  • How will the merger affect employees of the two companies? AGL, which will maintain its headquarters in Atlanta, will become a subsidiary of Southern. Though both energy companies serve similar geographic regions, they are in two different businesses. But the headquarters of both companies are in Atlanta, and might some of the financial appeal of the merger have to do employee overlap that could lead to downsizing? We’ll try to find out.
  • The deal will require approval from various regulatory agencies. Might those agencies require some divestitures of assets as part of the approval process?
  • The merger brings together two of Atlanta’s biggest corporate citizens: Will that have an effect on the corporate giving and other philanthropic support that Atlanta has grown accustomed to from these two companies?
  • By buying a natural gas company, what does the move mean for the future of Southern Company’s energy mix? Southern has been trending away from coal and toward natural gas as well as nuclear in recent years given pending federal environmental standards. What will this mean going forward?

Reader Comments 0

6 comments
Good Times
Good Times

The Nuclear Plant near Baxley, Ga. (Plant Hatch) delivers to the "grid", however, it is being mostly purchased by Florida.The other Nuclear Plant is currently expanding (near Waynesboro, Ga.-Plant Vogtle).The PSC has stated that Georgia rate payers will be required to pay for that up front instead of as-you-go.


The original Plant Hatch was budgeted at $100 million but exceeded well over $1 billion by time it went into production in 1978.


AGL was deregulated due to one of the largest suppliers, Columbia Nitrogen, did not want to pay AGL for the gas when they could purchase it elsewhere cheaper.Once FERC decided it could do so, deregulation was the result.Now the regulated side is the "pipes" company the money make is the deregulated side.


AGL Resources (AGLR) became the holding company and Atlanta Gas Light (AGL) "pipes company" became a regulated portion


Prior to deregulation, AGL could purchase gas in years ahead of projected usage. Now it is bought at "spot" pricing by the different companies you are allowed to get your service through costing many more dollars.


The Lignified Natural Gas (LNG) that AGL produces for peak demand is now has a higher BTU than the regular natural gas.Your PSC has allowed that in any month the LNG is used, ALL of your gas is charged at this larger BTU rate than normal: Costing you even more money.


The service you are connecting, no matter which company you choose, is connected/disconnected via AGL, which have charges separately from the "marketing" companies.


Natural gas is not like telephone service.Natural gas actually have molecules of material moving to and from destinations, unlike telephone lines that once in place, are virtually there forever.


Obama has declared an end to coal and the EPA is right in line with this policy.

Ga. Power has petitioned the PSC to tax solar panels to prevent the power monopoly from being threatened.

Liquid Propane is non-existent as an alternate solution to AGL's natural gas in anything but a rural setting.

The PSC has stuck it to you so good luck with this merger.


GaBlue
GaBlue

My question:


Why are Georgia Public Service Commission members drawing taxpayer-funded salaries when they actually work for the Southern Company? Everybody knows the GPSC is a wholly-owned subsidiary thereof. These jokers don't work for us. Never have.

BurroughstonBroch
BurroughstonBroch

This is the second time these two have been jointly owned. From the New Georgia Encyclopedia, "In 1903 United Gas sold Atlanta Gas Light to Georgia Railway and Electric (GR & E), the predecessor of Georgia Power. Georgia Power owned the company until 1929."

PJ25
PJ25

There's one thing you can always bet on with SoCo/Ga Power, you're rates will continue to go up.  Period.  This acquisition wasn't so they could lower rates.


Thank god for Blue Ridge Mountain EMC.