SO CEO Tom Fanning continued to blame slow sales and earnings on mild weather (air conditioners running less), but the big boondoggle going bad is Kemper Coal, which has slipped six months from May 2014 to Q4 2014, and even the Wall Street Journal calls it “possibly the most expensive fossil-fuel power plant ever built in the U.S”. How bad will SO’s stock tank when SO’s even more expensive nuclear Plant Vogtle slips even more? Dividends can’t prop up SO’s share price forever, not when PSCs are revolting against the rate hikes and guaranteed profit hikes that prop up those dividends. When will Southern Company and Georgia Power get out front and lead in solar and wind power? Before or after the public, state public service commissions, and investors make them do it?
If business is so good, why did CCA lose two contracts for new prisons in Georgia last year when neither the state nor the feds had enough prisoners to fill them? And why was the private prison in Ocilla nearly sold at auction? Why this year was Gladiator School closed and two other CCA prisons cancelled? And all that was before U.S. DoJ announced today it will “avoid charging certain low-level and nonviolent drug offenders with crimes that carry mandatory minimums”.
Ed Arnold wrote for Memphis Business Journal 23 July 2013, Corrections Corp. of America debunks Anonymous report,
As reported on Monday, the computer hacking collective known as Anonymous Analytics published a blog warning investors that a declining prison population and reforms designed to reduce incarceration rates in the U.S. point to shrinking revenue for Corrections Corporation of America (NYSE: CXW) going forward.
CCA flatly denied the Anonymous Analytics conclusions in a statement.
CCA apparently didn’t dare link to the actual report. Anonymous Analytics wrote 9 July 2013, Corrections Corporation of America: The Dismantling of a National Disgrace, Continue reading
It’s not like they weren’t warned, about coal and about nukes. It’s not Standard & Poor’s this time, but that could happen soon, too. SO’s biggest part, Georgia Power, is neck-deep in nukes, as Edison Electric Institute’s warning about the disruptive challenge of distributed solar starts to affect its parent’s stock price.
Zacks.com wrote 21 June 2013, Southern Company Slips to Sell – Analyst Blog
On Jun 20, Zacks Investment Research downgraded electric utility firm, Southern Company ( SO ), to a Zacks Rank #4 (Sell).
Why the Downgrade?Continue reading
The hydropower assets of the Tennessee Valley Authority would give Southern Company a way to avoid doing distributed solar for a while. Will SO CEO Tom Fanning and Georgia Power CEO Paul Bowers bit the bullet and go straight for distributed solar instead of helping Duke privatize TVA for a short-term stopgap that would set both of them farther behind the disruptive solar curve?
Wes Patoka wrote for Motley Fool 24 May 2013, Who Benefits the Most if the TVA Is Privatized,Continue reading
Standard & Poor’s lowered Southern Company’s rating from stable to negative because of the risks of Kemper Coal in Mississippi, and SO’s stock price plummetted. This was immediately after activists grilled SO on that and other topics at the SO stockholder meeting. Wait ’till S&P catches on to the risks of SO’s 19-months-late and $1 billion-over-budget nukes at Plant Vogtle in Georgia! Or SO’s non-action so far on the challenge of distributed solar.
Kristin Jones wrote for WSJ 24 May 2013, S&P Lowers Outlook on Southern Co., Noting Project Risks,Continue reading
What’s next door to Georgia Power, also a Southern Company, and raising rates on customers who are using less electricity? Alabama Power.
Rebecca Smith wrote for WSJ 21 March 2013, Return Rates for Utilities Get Harder Look
Households getting electricity from Alabama Power Co. are using 6% less than five years ago. But their monthly power bills still have increased by an average of 8%, partly because of a lucrative rate agreement that the utility brokered with state regulators 30 years ago.“an absurd tax upon the rest of their fellow-citizens”
The deal allows Alabama Power, the state’s largest electric utility, to adjust its rates annually to maintain a return on equity, a measure of profit, of 13% to 14.5%. Now it is coming under fire from consumer advocates and one state utility commissioner, who argue that the utility’s profit levels are too high.Continue reading
If the Southern Company’s slick nuclear financing deal and its ongoing operation of three of the country’s dirtiest coal plants (two of them in Georgia) is such a good deal, why are so many insiders selling so much stock?
Maybe SO CEO Thomas A. Fanning needed that $12.4 million he got back in January by selling 275,617 shares at $45.0693 per share for a new yacht, or a new wing on his house, or something. A brief scan of nearby energy companies (Duke and Progress) indicates it’s not unusual for an energy company CEO to sell shares, although mostly not for this much dollar amount. $12.4 million is more than twice Fanning’s 2010 salary of $6.02 million, and well more than his 62% raised 2011 salary of $9.75 million that Georgia Power customers get to help pay for through Construction Work in Progress (CWIP) charges for the new nukes at Plant Vogtle that won’t be built for years, if ever.
But what’s with two SO subsidiary company CEOs, Mark A. Crosswhite, President and CEO of Gulf Power ( #206 on the Forbes Global 2000 in 2010) and Edward Day VI, President and CEO of Mississippi Power Company ( former engineering group supervisor at the Hatch Nuclear Project) selling a bunch of stock in April? Also there have been only a couple of puny little purchases, each of less than $30,000, in the past year. Why so much selling and so little buying by insiders?
Maybe new nukes are an increasingly bad business risk for Southern Company and Georgia Power. Perhaps some economic expert can help with this question; how about Moody’s? Maybe Georgia Power customers and Georgia and U.S. taxpayers and voters have an opinion?
I wonder what will happen to SO’s insider trading patterns when SO’s illusion of certainty of profit from nuclear and coal eventually becomes obvious even to their board and shareholders as actually a big risk, and when SO realizes Cobb EMC made the right choice for profit by ditching coal plant plans and building solar plants instead; when SO finally suddenly switches to solar like Cobb EMC and Austin Energy already did. Will insiders decide SO’s stock has become a good buy when SO builds solar and wind plants?