Southern Company's new sub gets green light from SEC

Southern Company has received final approval from the Securities and Exchange Commission to form a new subsidiary that will own, manage and finance wholesale generating assets in the Southeast. The new subsidiary will market to wholesale customers in the fastest-growing wholesale electricity market in the nation.

"We expect that this will allow us to move faster and more aggressively in seizing wholesale opportunities throughout the South," said Charles McCrary, Southern Company chief production officer and president of Southern Company Generation. "We also believe this innovative approach to providing market- based wholesale generating assets continues to move our region toward competitive energy markets in a staged, orderly fashion. Our goal is to play a major role in serving the region's growth and to continue to expand our presence outside of our traditional core service territory."

The new subsidiary, which will carry the legal name of Southern Power Company, will be the primary growth engine for Southern Company's market-based energy business. Energy from its assets will be marketed to wholesale customers under the Southern Company name. The current goal is to grow income from the new subsidiary by 15 percent annually so that in five years Southern Company earnings from wholesale market sales will more than double.

By 2005, plans call for the new subsidiary to have developed or acquired more than 7,500 megawatts dedicated to the competitive wholesale business. Within 10 years, the new wholesale generating company is expected to own more than 15,000 megawatts.

"But this is about more than growing our business," said McCrary. "It's also about doing it in a manner where we can minimize the environmental impact of our operations by using the most environmentally advanced generation technology available as we build and add new facilities. It's also about maintaining our reputation of high customer satisfaction."

McCrary will be the president of the new wholesale generation subsidiary with senior officers across the Southern Company system named to serve on the company's board of directors.

Late last year, as part of Southern Company's wholesale strategy in the region, the company announced plans to construct, operate and maintain a 632-megawatt combined cycle unit near Orlando as part of a joint venture among Southern Company, Orlando Utilities Commission, Kissimmee Utility Authority, and Florida Municipal Power Agency. Southern Company will own 65 percent of the unit.

Edited by Stephen Heiser