Southern's Division Signs Landmark UESC With U.S. Army

Southern Company's SO largest electric subsidiary, Georgia Power, is collaborating on energy efficiency through a $72 million utility energy service contract (UESC) with the U.S. Army Garrison Fort Eisenhower. This initiative aims to enhance the energy efficiency, resiliency and greenhouse gas reduction at the 55,000-acre military installation near Augusta, GA.

What is a Utility Energy Service Contract?

The UESC is a limited-source acquisition between a federal agency and a serving utility for energy management services. This contract focuses on improving the overall efficiency of buildings and mechanical equipment at a given location. In this case, SO's subsidiary, Georgia Power, alongside PowerSecure (another SO's subsidiary), will lead the improvements at Fort Eisenhower to reduce energy costs by $6 million annually.

Key Improvements Under the UESC

Replacement of Diesel Generation Infrastructure: One of the most critical upgrades in this project is replacing the aging diesel generation infrastructure with new natural gas generation systems. This transition is expected to provide more reliable and sustainable power to Fort Eisenhower while significantly reducing its carbon footprint.

Energy Savings From Lighting Retrofits: The project will involve comprehensive lighting retrofits across the installation. By upgrading to modern, energy-efficient lighting systems, Fort Eisenhower will not only save on energy costs but also improve the overall lighting quality in various facilities.

Heating and Air Conditioning Replacement: Another major component of the UESC is the replacement of outdated heating and air conditioning systems. New, energy-efficient heating, ventilation, and air conditioning (HVAC) systems will be installed to ensure better climate control and reduce energy consumption.

Water Conservation Measures: Water conservation is another key focus of this project. Various measures will be implemented to reduce water usage, further contributing to the overall energy savings and sustainability goals of Fort Eisenhower.

Expected Outcomes and Benefits

Significant Cost Savings: The energy improvements coordinated by Georgia Power and PowerSecure are anticipated to save $6 million energy costs yearly. These savings should help to fund the initial investment and ensure the long-term sustainability of the project.

Enhanced Energy Resiliency: By upgrading the energy infrastructure, Fort Eisenhower will benefit from increased energy resiliency. The new natural gas generation systems and other improvements will provide more reliable power, ensuring that the military installation can continue its operations without disruptions.

Reduction in Greenhouse Gas Emissions: The shift from diesel to natural gas generation, along with other energy efficiency measures, will significantly reduce greenhouse gas emissions. This reduction aligns with broader environmental goals and supports Fort Eisenhower's commitment to sustainability.

Broader Implications for Georgia Power and Southern Company

Strengthening Energy Infrastructure: This project is the largest UESC in Georgia Power's history and highlights the company's commitment to enhancing energy infrastructure. By investing in advanced technologies and sustainable practices, Georgia Power is setting a benchmark for future projects.

Supporting Military and Community Goals: Georgia Power's collaboration with the U.S. Army Garrison Fort Eisenhower highlights the company's dedication to supporting military and community goals. By improving energy efficiency and sustainability at the military installation, it is contributing to the broader mission of the U.S. Army and the well-being of the local community.

Long-term Environmental Impact: The successful implementation of this UESC will have long-term environmental benefits. By reducing energy consumption and greenhouse gas emissions, Georgia Power is helping to create a more sustainable future for Fort Eisenhower and the surrounding areas.

Conclusion

The $72 million utility energy service contract between SO's major electric subsidiary and the U.S. Army Garrison Fort Eisenhower represents a significant step forward in energy efficiency and sustainability. Through comprehensive upgrades to lighting, HVAC systems, water conservation measures and the replacement of diesel generation infrastructure, this project will provide substantial cost savings, enhance energy resiliency and reduce greenhouse gas emissions. This collaboration not only benefits Fort Eisenhower but also sets a precedent for future energy projects by Georgia Power and Southern Company.

Zacks Rank and Key Picks

Currently, SO carries a Zacks Rank #3 (Hold).

Investors interested in the utility sector might look at some better-ranked stocks like California Water Service Group CWT, sporting a Zacks Rank #1 (Strong Buy) and Primo Water Corporation PRMW and Atmos Energy Corporation ATO, eachholding a Zacks Rank #2 (Buy), at present.

California Water Service Group: CWT is worth approximately $2.8 billion. It currently pays a dividend of $1.12 per share, or 2.31%, on an annual basis.

CWT offers water utility and other related services in California, Washington, New Mexico, Hawaii and Texas. The company is involved in the production, purchase, storage, treatment, testing, distribution and sale of water for domestic, industrial, public and irrigation uses, as well as for fire protection services.

Primo Water Corporation: Primo is a leading pure-play water solutions provider in North America and Europe. The company operates largely under a recurring razor/razorblade revenue model.

PRMW currently pays a dividend of 36 cents per share, or 1.65%, on an annual basis. In the past year, its shares have risen 75.1%.

Atmos Energy Corporation: ATO, together with its subsidiaries, engages in the regulated natural gas distribution and pipeline and storage businesses in the United States.

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