Kempner’s Unofficial Business
I’ve been a reporter or editor since gas was about a dollar a gallon and “Hands Across America” was a thing. I’ve spent lots of time covering government, the environment and, for most of my career, business. But I don’t daydream about fiscal policy and corporate earnings. What I love about business is the strategy and the people and the journeys that those people take. I like irony and surprise and nuance. I’ve interviewed soldiers, oystermen, football stars, chicken plant workers, Fortune 500 CEOs, suburban activists and entrepreneurs dreaming big dreams. How cool is that? I’ve teared up in interviews, laughed inappropriately, been yelled at and snookered. I do like an adventure. Let’s see where this one goes.
Georgia Power officials want you big time. They want you to keep consuming power – yes, more efficiently – but, please, keep consuming.
And the energy giant is increasingly open to giving you power any way that works, as long as it can make money in the process.
Which brings us to the mega deal just announced by Georgia Power’s parent, Southern Company, to buy AGL Resources, whose pipelines carry natural gas to homes and businesses.
Yes, the proposed $12 billion purchase would give the state’s dominant power company a bigger stack of your monthly energy dollars.
Georgia Power collects its biggest electric bills in the summer. Now, it also will have a stake in lots of natural gas bills, which tend to peak in the winter. That’s a sweet balance for a business.
The deal should help Southern boost profits, which energy analyst Andy Pusateri of Edward Jones emailed me to say were expected to be weak even by utility industry standards.
But here’s something bigger Southern gets: a fresh pipeline into your home that might help it continue to make money in the increasingly uncertain energy industry. And it will do it through two regulated monopolies enforced by the state, which is sure to make some people worry they’ll get squeezed in the process.
For Southern, the deal is a bridge to keep you connected to its system, no matter what kind of energy you use, even natural gas that it used to see as a competitor. Even rooftop solar energy systems, which it also once battled, but now is offering to help finance.
Earlier this summer I got a chance to sit down with Southern Company chairman and chief executive Tom Fanning.
“If the world is changing around us and we don’t keep pace, we could be doomed to failure,” he told me. He sounded chipper, though, convinced Southern won’t let that happen.
He talked about putting the company through an “innovation intervention,” to thrive with whatever changes come, such as lots of Georgians eventually generating their own power, maybe with solar.
At one point, Fanning mentioned an advantage natural gas pipelines might eventually exploit over electric companies. He said they could pipe in natural gas or hydrogen to run fuel cells in homes and businesses.
I guess that’s one issue Southern won’t have to worry about if the AGL deal goes through.
If the deal passes regulatory scrutiny, Southern employees will not only be the ones stringing up your electric lines. They also will be the ones visiting to light the pilot on your gas furnace or turn your gas service on or off.
Kevin Greiner, the chief executive of Gas South, which markets gas to residents and businesses in Georgia and Florida, told me the Southern/AGL pairing is likely to be a good thing for his company and customers, perhaps improving what he already considers good service by AGL.
It also means Southern would get dibs on AGL fees that amount to an average of about a third of what customers pay in monthly gas bills, he said.
RIVALS MARRY
Not so long ago, natural gas companies in this state were just rivals to electric companies like Georgia Power. (Remember how the electricity guys were always pushing you to switch to a heat pump?) Now, they are kissing cousins.
Money has a way of making companies see each other in a new light.
Natural gas got cheap. Cheaper, even, then coal. That, and government pressure to clean up dirty emissions, has pushed Southern to switch much of its reliance on coal-burning generating plants to gas-burning ones.
Now, Southern is one of the nation’s biggest consumers of natural gas, according to the company.
Fanning is making a long-term bet that natural gas via AGL will become increasingly crucial in Georgia and the nation as regulators push to curb climate change.
We’ll see. In the meantime, it’s good to keep in mind that this isn’t the first time the two companies have given it a go.
An affiliate of Georgia Power bought what was then known as the Atlanta Gas Light Company.
That was in 1903.
Georgia Power sold it 26 years later, according to a company history I read online. We’ll see how long the marriage lasts this time around.
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