Southern Co. has filed for federal regulatory approval of its $6.48 billion deal to sell electric utility subsidiary Gulf Power Co., a gas utility and two power plants in Florida to NextEra Energy Inc.
Under the transaction, Southern will sell Gulf Power and its natural gas local distribution company, Florida City Gas, through a separate transaction, both of which operate in Florida. However, under the Natural Gas Act, the Florida City Gas transaction does not need the Federal Energy Regulatory Commission's approval as it does not serve any gas-fired power generation facilities, according to a July 3 filing.
NextEra said in May the acquisition of Gulf Power and Florida City Gas will boost its regulated contribution to 70% of the overall business mix.
Gulf Power owns or operates approximately 2,277 MW of generating capacity, owns a 2,700-mile transmission system and 7,700-mile distribution system, according to a separate filing.
Southern and NextEra are establishing a 5-year "Transition Period" to ensure Gulf Power has sufficient time to move to standalone operations, during which the utility will remain within the Southern Company balancing authority areas. The transition period could be terminated early if Gulf Power is ready, or extended by up to two years, according to the filing.
Concurrently, Southern competitive generation subsidiary Southern Power Co. is selling 100% ownership in Southern Power – Florida, LLC, which owns a 65% managing stake in unit A of the combined-cycle Stanton energy center, located in Orange County, Fla. Stanton CC operates in the Florida Municipal Power Pool BAA.
Southern Power is also selling complete ownership in the simple-cycle combustion turbine Oleander power plant to NextEra. Pursuant to the transaction, NextEra will enter into a long-term lease with GE Power Holdings, LLC for the output of Oleander's unit 1, extending to Dec. 31, 2029. Under the lease agreement, GE Power will eventually purchase output from the other four Oleander units as existing power purchase agreements on those units expire.
Southern said in May that it will use deal proceeds to address a $7 billion equity need over the next five years as it works to mitigate the effects of federal tax reform. The deal terms include a $5.1 billion cash purchase price, which NextEra expects to finance through the issuance of new debt, and the assumption of $1.4 billion of Gulf Power debt. (FERC dockets EC18-117 and EC18-119)