SO's Georgia Power Approves Power Expansion to Serve Data Centers

Core Insights - Georgia Power, a subsidiary of Southern Company, is set to expand its electric generation capacity by nearly 50% to meet increasing electricity demand, particularly from data centers linked to artificial intelligence development [1][10] - The construction cost is estimated at $16.3 billion, with total costs to customers potentially reaching $50 billion to $60 billion over several decades when including interest and guaranteed utility profits [2][10] Cost Structure and Customer Impact - Georgia Power argues that large users, especially data centers, will bear a significant portion of the costs, which could lead to reduced residential bills after the current rate freeze ends in 2028 [3] - New customer revenues are expected to exert downward pressure on rates through 2031, potentially saving the average household about $102 annually [4] Demand Forecast Concerns - Critics express skepticism regarding the demand forecasts, suggesting that reliance on speculative data center construction may leave existing customers responsible for costs associated with unused infrastructure if growth does not materialize [5][10] - Consumer advocates caution that while rates may be pressured downward, this does not guarantee lower bills, and may only slow the pace of future increases [6] Political and Environmental Reactions - The expansion decision has faced political scrutiny, with recent elections resulting in the ousting of two Republican commissioners due to concerns over electricity rate hikes [7] - Environmental groups have criticized the plan for its reliance on new natural gas plants, raising concerns about increased carbon emissions and the long-term implications of tying energy policy to the uncertain future of AI-driven data centers [8] Company Overview - Southern Company operates in the generation, transmission, and distribution of electricity, serving approximately 9 million customers through its various electric and natural gas distribution units [9] - Currently, Southern Company holds a Zacks Rank of 3 (Hold), with potential investment opportunities in better-ranked utility stocks such as Ballard Power Systems Inc., Ameren Corporation, and Dominion Energy, each carrying a Zacks Rank of 2 [9]