Inside Southern Company’s ROE and Earnings by Segment
Southern Company’s ROE
Southern Company’s (SO) adjusted ROE (return on equity) was near 13% in 1Q16. By comparison, PPL Corporation (PPL) fetches ROE close to 12%, which is higher than US peer utilities, given to its large UK presence. WEC Energy Group (WEC) fetched a ~12% ROE—one of the highest among US regulated utility peers.
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Remember, ROE is the only part of the revenue requirements that utilities keep for themselves as profit.
We should also note that Southern Company is one of the beneficiaries of the healthy regulatory environments in Georgia and Alabama. Mississippi has a comparatively tough regulatory environment, which has resulted in limited rate recovery in Kemper County plant overruns.
In the next part, we’ll discuss debt.