US utilities NextEra Energy and Dominion Energy have confirmed that they will combine, forming the largest regulated power utility company in the world.
The companies announced a share combining agreement yesterday, which will create what they called the “world’s largest regulated utility business”, focusing on the US states of Florida, Virginia, North Carolina and South Carolina. The combined company—which will operate under the NextEra Energy name—will operate a portfolio of around 110GW of energy capacity and have almost 130GW of “large-load opportunities” in its pipeline.
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The deal closed for around US$67 billion. Dominion Energy shareholders will receive a fixed exchange ratio of 0.8138 shares of NextEra Energy shares for every Dominion share, with the ultimate split between shareholder ownership weighted at around 75% to NextEra Energy shareholders. Dominion Energy will retain its local utility trading names in Virginia and the Carolinas.
The new company will be almost 80% focused on regulated markets, where utilities have a natural monopoly and have influence over transmission and power networks as well as energy generation. US utilities have been turning towards regulated operations for a while now, as they can offer more consistent returns than competitive markets.
NextEra and Dominion said they expect an 11% annual growth in regulated capital deployment and at least 9% growth in adjusted earnings per share through 2032.
“This is a historic moment for our two companies and for the states we are privileged to serve. Electricity demand is rising faster than it has in decades. Projects are getting larger and more complex. Customers need affordable and reliable power now, not years from now,” said John Ketchum, CEO, president and chairman of NextEra Energy.
Robert Blue, chair, CEO and president of Dominion Energy, said: “This combination brings together two strong operating platforms and creates an even stronger energy partner for Virginia, North Carolina, South Carolina and Florida, with the scale and balance sheet to deliver the generation, transmission and grid investments our customers and economies need.”
The new company is undeniably significant. NextEra Energy is the world’s largest publicly traded renewable energy developer, and the combined companies would be one of, if not the largest US gas and nuclear generation firm and the largest by market capitalisation.
The projected growth of AI and data centres, as well as US manufacturing projects and growing electrification across the economy, is set to increase energy and electricity demand significantly in the coming years. In establishing itself as the biggest player in the US energy sector, the new NextEra Energy will be well-poised to profit from this growth and increasing demand for renewables, in particular.
The transaction is expected to close within 12-18 months. After closing the deal, the company said it will offer US$2.25 billion in bill credits to Dominion Energy customers in Virginia, North Carolina and South Carolina for two years.
