The parent company of Florida utility giant Florida Power & Light announced Monday that it will buy the largest electricity producer in Northwest Florida, Gulf Power, in a $6.4 billion deal.
Juno Beach-based NextEra Energy Inc. said in a news release that it plans to buy Gulf Power from Atlanta-based Southern Company, along with the Florida City Gas natural-gas company and ownership interests in two power plants in Central Florida, if regulators approve.
If approved, the deals would expand NextEra Energy's already dominant footprint in Florida, where FPL is one of the state's largest contributors to political campaigns. Adding Gulf Power would put the combined residential customer base at about 51 percent, according to a 2016 report by the U.S. Energy Information Administration.
The acquisition achieves a goal NextEra has been seeking for several years, as it has attempted to purchase a regulated utility but has been stymied in other states.
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Regulated utilities provide a guaranteed return for shareholders that investors consider more predictable than non-utility assets the company has purchased to compete in the changing energy marketplace.
In 2015, regulators rejected its bid to acquire Hawaii's major utility, saying they were not confident that NextEra would be able to meet the goal of achieving 100 percent renewable energy by 2040. In 2017, regulators in Texas rejected the company's $18.7 billion bid to acquire Oncor Electric.
And in February of this year, the company expressed interest in buying the Santee Cooper power company in South Carolina for $15.9 billion and reached a deal to sell its Canadian portfolio of renewable generation as part of a push to move capital back to the U.S. The potential domestic purchases allow NextEra to take advantage of the lower corporate tax rate, which dropped from 35 percent to 21 percent for the industry.
"These transactions will provide meaningful benefits for the state of Florida, and Gulf Power and Florida City Gas customers, as well as NextEra Energy shareholders,” Jim Robo, chairman and chief executive officer of NextEra Energy, said in the statement.
Thomas A. Fanning, chairman, president and CEO of Southern Company, said the Florida businesses "are being sold at a price that provides substantial value to our stockholders, while entrusting the customers of these exceptional franchises to a high-quality utility company that has a well-established presence in the state."
Florida City Gas has about 110,000 residential and commercial natural-gas customers in Miami-Dade, Brevard, St. Lucie and Indian River counties.
NextEra said it will buy a 100 percent ownership interest in Plant Oleander, near Cocoa, which has contracts to sell electricity to the Florida Municipal Power Agency and Seminole Electric Cooperative. It also will buy a 65 percent stake in one generating unit at the Stanton Energy Center, near Orlando, which has contracts with the Orlando Utilities Commission and the Florida Municipal Power Agency.
FPL is the largest electric utility in Florida with nearly 5 million customers. Gulf Power has about 450,000 customers in eight counties and is the largest utility in the Panhandle.
NextEra Energy plans to finance the deal through the issuance of new debt and will assume $1.4 billion of Gulf Power debt, the company said.
Completion of each of the transactions is conditional upon several factors, including the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the Southern Company said in a statement.
The purchase of Gulf Power and the stakes in the power plants are subject to approval by the Federal Energy Regulatory Commission and the Federal Communications Commission. Unlike other states, Florida law does not require that mergers between electric utilities receive approval from the Florida Public Service Commission, the utility regulatory board.
"The PSC staff will be briefed and have an opportunity to question Florida Power & Light Company, Gulf Power Company, and Florida City Gas on the details in the coming days," said Bev DeMello, PSC spokesperson. "The PSC will continue to ensure the customers of Florida’s investor-owned utilities receive reliable, safe service at a reasonable cost."
The target completion for the sales of Gulf Power and Southern Power's interests in the power plants is the first half of 2019. The Florida City Gas transaction's target completion is third quarter 2018.
Environmental and solar energy advocates expressed concern that the merger of two of Florida's largest utility players could have a negative impact on Florida consumers.
"While Southern Alliance for Clean Energy is still reviewing this deal, it raises concerns that any one monopoly utility would control such a significant percentage of Florida’s energy market. Such consolidation of control may limit competition at a time when we need more and not less,'' said the Southern Alliance for Clean Energy, which has been a frequent adversary of FPL's efforts to expand its fossil fuel-related energy footprint in Florida.
The group said that because the Florida Legislature has not authorized the Florida Public Service Commission to determine whether the sale of a utility is in the best interest of consumers, "there is no protection of the public's interests."
A recent report by Integrity Florida commissioned by SACE found that Florida’s four largest energy companies gave more than $43 million during the 2014 and 2016 election cycles to state-level candidates, political parties and political committees.
Susannah Randolph, senior representative for the Sierra Club's Beyond Coal campaign in Florida, also said they are awaiting more details about the deal.
"We’re always concerned about environmental and rate impacts when utility giants merge, and we’re wary of efforts to increase NextEra and FPL’s dominance of the Florida energy sector to become an even stronger monopoly," she said.
Rob Gould, chief communications officer for NextEra Energy and FPL, said in an email statement Tuesday, "Once again, SACE and Sierra Club are demonstrating their anti-utility bias, and in the case of SACE, because it's paid by secretive groups to do so.
"We intend to employ our long-term strategy of advancing affordable, reliable and clean energy and making smart infrastructure investments at Gulf Power. By deploying our industry-leading skills, knowledge and capabilities, we expect to extend over time to Gulf Power customers our best-in-class value proposition of low bills, clean energy, high reliability and outstanding customer service."
NextEra has consolidated revenues of approximately $17.2 billion, operates approximately 46,790 megawatts of net generating capacity and employs approximately 14,000 people in 33 states and Canada as of year-end 2017.
Southern Company operates about 46,000 megawatts of generating capacity and 1,500 billion cubic feet of combined natural gas consumption and serves 9 million customers through its subsidiaries.
This story was updated to include comments from the Florida Public Service Commission, the Sierra Club, the Southern Alliance for Clean Energy, and NextEra/FPL and to clarify that NextEra Energy has only expressed interest in the Santee Cooper power company in South Carolina.