Southern Company President and CEO David Ratcliffe announced today that the boards of directors of Southern Company, Savannah Electric and Georgia Power have approved a plan to merge Savannah Electric into Georgia Power. The companies expect to complete the merger, pending required approvals, by July of 2006.
Ratcliffe said the merger is expected to reduce the impact of future rate increases for Savannah Electric customers, result in future operational efficiencies for the combined company and enhance the future economic well-being of Savannah Electric's service area, the strongest economy of any metro area in Georgia.
Savannah Electric customers are expected to benefit from Georgia Power's more diverse and cost-efficient generating fleet, which includes coal-fueled, nuclear and hydro electric generating units, in addition to natural gas-fueled units.
Ratcliffe pledged Georgia Power's continued involvement in, and support of, civic efforts in the Savannah community, and said Savannah Electric employees would fill most of the positions in a new Georgia Power region organization headquartered in Savannah. While the new region organization is expected to require fewer positions, the companies plan to offer voluntary severance to affected non-union Savannah Electric employees and try to find positions elsewhere within Southern Company for those who are not offered positions in the new organization.
Savannah Electric management plans to meet soon with union leadership to discuss issues around job opportunities, transition and severance benefits for employees covered by bargaining agreements.
The Savannah Electric board of directors also today elected Anthony James chairman of the board and Craig Barrs president and CEO of Savannah Electric. James will remain chairman until Feb. 1, at which time he will become executive vice president of Southern Company Services and president of the shared services group, which includes those centralized corporate functions that are providing services to Southern Company's operating companies and other businesses. James will be based in Atlanta and report to Ratcliffe. Barrs, who most recently served as vice president of community and economic development for Georgia Power, will be named vice president of Georgia Power's new coastal region when the merger of Georgia Power and Savannah Electric is completed.
Under the merger agreement, Southern Company will continue to own all of the outstanding common stock of Georgia Power, which will be the surviving corporation in the merger. Preferred shareholders of Savannah Electric will receive shares of Georgia Power preferred stock in exchange for their Savannah Electric preferred stock, and Georgia Power will assume Savannah Electric's obligations under its outstanding debt securities.
The merger will require the approval of Savannah Electric's common and preferred shareholders, as well as various regulatory approvals, including the approval of the Federal Energy Regulatory Commission. In addition, Georgia Power also will ask the Georgia Public Service Commission to approve asset, service territory, Integrated Resource Plan (IRP) and service rule transfers. Georgia Power plans to seek approval of new fuel cost recovery rates from the Georgia Public Service Commission, including a fuel recovery rate expected to be significantly lower for former Savannah Electric customers and a merger transition charge to better align Savannah Electric's base rates with Georgia Power's base rates.