SO's Georgia Power Approves Power Expansion to Serve Data Centers

The Southern Company’s SO subsidiary,Georgia Power, has planned one of the largest electric generation expansions in the country, backed by the state regulator’s approval to boost capacity by nearly 50%. The build-out is aimed largely at meeting soaring electricity demand from data centers, many tied to artificial intelligence development. The Public Service Commission voted unanimously to greenlight the plan, calling it necessary to keep up with projected growth.

It would rank among the largest power expansions in the country, driven by surging electricity demand from AI developers. While construction is estimated at $16.3 billion, customers could ultimately pay $50 billion to $60 billion over decades, factoring in interest and guaranteed utility profits.

The Cost-Sharing Argument Behind the Rate Proposal

Georgia Power and commission staff contend that large users — especially data centers — will bear a disproportionate share of the costs. They argue that spreading fixed costs across a broader customer base could eventually reduce residential bills once the current rate freeze ends in 2028.

Under the agreement, new customer revenues would put downward pressure on rates through 2031, potentially saving the average household about $102 annually. Supporters say this structure places much of the financial risk on the utility rather than on everyday customers.

Skepticism Over Demand Forecasts & Long-Term Risk

Opponents remain unconvinced that the projected demand will materialize. Critics argue that Georgia Power’s forecast relies too heavily on speculative data center construction. If that growth slows or reverses, they warn, existing customers could be left paying for decades of infrastructure that no longer serves its intended purpose.

Consumer advocates also note that downward pressure on rates does not guarantee lower bills. At best, they say, it may simply slow the pace of future increases rather than reverse them.

Political Backlash & Climate Concerns

The decision comes amid rising political scrutiny of electricity rates in Georgia. Recent elections unseated two Republican commissioners after campaigns focused heavily on repeated rate hikes. Incoming Democratic commissioners opposed the expansion but were outvoted.

Environmental groups have also pushed back, criticizing the reliance on new natural gas plants and warning of increased carbon emissions. Protests at the commission meeting underscored broader public unease about tying long-term energy policy to the uncertain future of AI-driven data centers.

SO’s Zacks Rank & Key Picks

Southern Company deals with the generation, transmission and distribution of electricity and serves approximately 9 million customers through its seven electric and natural gas distribution units. Currently, SO has a Zacks Rank #3 (Hold).

Investors interested in the utility sector might look at some better-ranked stocks like Ballard Power Systems Inc. BLDP, Ameren Corporation AEE and Dominion Energy, Inc. D, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ballard Power Systems focuses on developing and bringing to market PEM fuel cell systems for transportation, stationary and portable applications. The Zacks Consensus Estimate for BLDP's 2025 earnings indicates 43.9% year-over-year growth.

St. Louis, MO-based Ameren Corporation is a utility company that generates and distributes electricity and natural gas to residential, commercial, industrial and wholesale end markets in Missouri and Illinois. The Zacks Consensus Estimate for AEE's 2025 earnings indicates 8.2% year-over-year growth.

Richmond, VA-based Dominion Energy is a major energy company engaged in regulated and non-regulated electricity distribution, generation and transmission businesses. The Zacks Consensus Estimate for D's 2025 earnings indicates 22.7% year-over-year growth.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research