Southern Company's Kemper Facility Starts Power Generation

Electric utility holding firm Southern Company’s (NYSE:SO) subsidiary, Mississippi Power, recently reported that its Kemper County energy facility has started generating electricity using syngas.

Southern Company’s subsidiary built this $6.9 billion Kemper County facility to use coal for electricity generation. The plant creates syngas by turning lignite coal mined from that region into gas. The syngas, which is used in the same way as natural gas, produces electricity through a series of combustion turbines.

The lignite plant is expected to be placed in service by Nov 30, 2016, when the project’s second gasifier starts producing electricity. This, in turn, will lead to a complete integration of the project's systems. Thereafter, the facility will begin full commercial operations. Once fully functional, the plant is expected to not only help in generating electricity, but also capture marketable products from syngas like carbon dioxide, which in turn, will help in enhanced oil recovery.

Originally supposed to cost about $2.9 billion and expected to come online in 2014, once in service, the Kemper facility will be the first large-scale power plant in the U.S. to turn coal into gas and capture carbon ahead of its release into the atmosphere.

Southern Company is one of the largest and best managed electric utility holding companies in the U.S. The firm dominates the power business across the southeastern region. With good rate base growth and constructive regulation, we expect the firm to generate steady earnings and dividend growth in the coming years through its long-term power contracts.

SOUTHERN CO Price

Currently, the utility holds a Zacks Rank #2 (Buy), which implies that the stock will outperform the broader U.S. equity market over the next one to three months.

Some better-ranked players in the broader utility sector include TalkTalk Telecom Group PLC TKTCY, Nippon Telegraph and Telephone Corporation (NYSE:NTT) and Companhia de Saneamento Basico do Estado de Sao Paulo (NYSE:SBS) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The year over year sales growth estimate for TalkTalk Telecom for the current year is 13.97%.

Nippon Telegraph and Telephone, on the other hand, has a year over year earnings growth estimate for the current year at 30.48%.

In the current quarter, Companhia de Saneamento posted a positive earnings surprise of 175%.

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