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NextEra Energy To Acquire Natural Gas Utility With Choice Program
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NextEra Energy, Inc. today announced it has entered into definitive agreements with Southern Company to acquire Florida City Gas, a natural gas utility that offers a choice program for business customers, as well as Gulf Power and Southern's ownership interests in the Oleander and Stanton natural-gas generating plants located in Florida, in transactions valued at approximately $6.475 billion, including the assumption of approximately $1.4 billion of Gulf Power debt.
Florida City Gas serves approximately 110,000 residential and commercial natural-gas customers in Florida's Miami-Dade, Brevard, St. Lucie and Indian River counties with 3,700 miles of natural gas pipelines
While there is no minimum size threshold for business customers to be eligible for choice at Florida City Gas, Florida City Gas on its website includes the following as an FAQ:
"Q: As a small user of natural gas, why am I having difficulty getting a marketer to provide a proposal?"
"A: Actually, this is a result of competition in energy markets. In order to compete, many marketers have reduced their profit margins to a level that makes it impossible for them to make a profit offering to small volume customers at a competitive price. For most low-volume customers, Florida City Gas may offer the best price for their gas supply."
Southern said that the Florida City Gas sale will generate $530 million in pre-tax proceeds
The Florida City Gas acquisition is subject to the expiration or termination of the waiting period under the Hart-Scott-Rodino Act and is conditioned on the consummation of Southern Company's previously reported dispositions of the Elizabethtown Gas and Elkton Gas divisions of Southern Company Gas. Pending receipt of required approvals and other customary conditions and approvals, NextEra Energy expects to complete the acquisition of Florida City Gas in the third quarter of this year
NextEra Energy expects the transactions to be immediately accretive to earnings upon closing and $0.15 and $0.20 accretive to its 2020 and 2021 adjusted earnings per share (EPS) expectations, respectively.
NextEra Energy intends to finance the approximately $5.1 billion purchase price through the issuance of new debt. NextEra Energy said that it has reviewed the transactions with the credit rating agencies and, based upon these discussions, following the financing of the transactions and as a result of the expansion of the company's regulated operations, NextEra Energy is expected to continue to maintain $5 billion to $7 billion of excess balance sheet capacity, while maintaining its current strong credit ratings.
NextEra touted that the transactions expand NextEra Energy's regulated business operations
Southern said that proceeds from the transactions are intended to be used to reduce debt and improve Southern Company's balance sheet.
Gulf Power serves approximately 450,000 customers in eight counties throughout northwest Florida and has roughly 9,500 miles of power lines and 2,300 megawatts (MW) of electric generating capacity
NextEra Energy will also acquire:
• 100 percent ownership interest in Plant Oleander, a natural-gas fueled, simple-cycle combustion turbine electric generation plant located near Cocoa, Florida, with a generating capacity of 791 MW and power purchase agreements with the Florida Municipal Power Agency and Seminole Electric Cooperative; and
• 65 percent ownership interest in Stanton Energy Center, a combined-cycle electric generating unit, with a generating capacity of approximately 660 MW, located near Orlando, Florida. The 65 percent interest is contracted with the Orlando Utilities Commission and Florida Municipal Power Agency.
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May 21, 2018
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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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