Electricity Markets

NextEra Energy to buy Gulf Power, other assets for $5.1 bil purchase price

Florida-based NextEra Energy on May 21 said that it has entered into definitive agreements with Southern Company to acquire Gulf Power, Florida City Gas and ownership interests in generating assets in Florida in transactions valued at approximately $6.475 billion, including the assumption of approximately $1.4 billion of Gulf Power debt.

Florida Power & Light Company, a NextEra Energy subsidiary, serves nearly five million customer accounts or an estimated 10 million people across nearly half of the state of Florida. 

NextEra Energy intends to finance the approximately $5.1 billion purchase price through the issuance of new debt. “NextEra Energy 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,” the utility said in a news release.

Through the transactions, NextEra Energy will acquire:

  • Gulf Power, which 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;
  • Florida City Gas, which 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;
  • 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 interest in Stanton Energy Center’s Unit A, a combined-cycle natural gas unit. The 658-megwatt plant, which went into operation in 2003, is jointly owned by Southern Company (65 percent), Orlando Utilities Commission (28 percent) and the Florida Municipal Power Agency and Kissimmee Utility Authority (3.5 percent each).

“Southern Company has always retained a right to sell its ownership portion at any time,” said Jan Aspuru, OUC’s Chief Operating Officer.

“In addition to its ownership share of the actual power plant, OUC has a power purchase agreement with Southern Company to buy additional generation, in which those terms transfer with the sale,” Aspuru said. “We do not anticipate any impact on OUC’s operations to our customers or employees at the Stanton Energy Center.”

Dominion, SCANA unveiled merger deal in early 2018

Earlier this year, Virginia-based investor-owned utility Dominion Energy and SCANA Corporation, also an IOU, unveiled a plan for the two companies to combine in a stock-for-stock merger. Including the assumption of debt, the value of the transaction is approximately $14.6 billion.

Meanwhile, in the summer of 2017, California-based Sempra Energy unveiled an agreement to acquire Energy Future Holdings Corp., the indirect owner of 80 percent of Oncor Electric Delivery Company LLC. Oncor is the operator of the largest electric transmission and distribution system in Texas.

Also last summer Canada's Hydro One Limited and Avista Corporation, which is based in Washington state, jointly announced a definitive merger agreement under which Hydro One will acquire Avista for $5.3 billion in an all-cash transaction.

NextEra Energy previously fell short in other attempted mergers. Utility regulators in Texas in 2017 rejected NextEra Energy's proposed acquisition of Dallas-based Oncor Electric Delivery Company, saying the merger was not in the public interest.

In July 2016, the Hawaii Public Utilities Commission turned aside NextEra's proposed deal with the Hawaiian Electric Companies. That merger was proposed in 2014 and was valued at $4 billion.