Q4 2020 Southern Co Earnings Call
Please continue to stand by your conference call will begin momentarily. We think you will see a patience and ask that you. Please continue to standby.
Thank you.
[music].
Okay.
Uh huh.
Good afternoon, My name is Panama, and I will be your conference operator today.
At this time I would like to welcome everyone to the Southern company fourth quarter 2000, and 'twenty earnings call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.
At that time, if you have a question. Please press the one followed by the four and your telephone.
As a reminder, today's conference is being recorded Thursday February 18th 2021.
I'd now like to turn the call over to Mr. Scott Gammill Investor Relations Director. Please go ahead Sir.
Thank you Paolo good afternoon, and welcome to Southern company's year end 2020 earnings call. Joining me today are Tom Fanning, Chairman, President and Chief Executive Officer of Southern Company, and drew Evans Chief Financial Officer.
Let me remind you we'll be making forward looking statements. Today. In addition to providing historical information various important factors could cause actual results to differ materially from those indicated in the forward looking statements, including those discussed in our form 10-K and subsequent filings.
In addition, we will present non-GAAP financial information on this call reconciliations to the applicable GAAP measures are included in the financial information. We released this morning as well as the slides for this conference call, which are both available on our Investor Relations website at Investor that Southern company Dot Com.
At this time I'll turn the call over to Tom Fanning.
Good afternoon, and thank you all for joining us.
As you can see from the materials. We released this morning, we reported strong adjusted earnings per share for 2020 that exceeded our guidance range.
In addition, we have a solid outlook for 2021 and importantly, we are raising our projected long term earnings per share growth rate.
But before we turn to more on our year end business update I'd like to share some thoughts on 2020.
In 2020, we essentially saw for Pandemics health economic social and political Southern company demonstrated axon from resilience on every front, including prioritizing the health and safety of our work force and communities overcoming decreased electric demand while delivering both.
Strong financial and superior operating results and continuing to address racial injustice and working with policymakers to advance a cleaner energy future.
First the health pandemic. The COVID-19 pandemic was of course, the first and primary challenge that we faced last year and one that continues to impact our communities today from developing a pandemic response re entry playbook that was ultimately leverage by many peer companies to standing up a <unk>.
Medical village at the Vogtle construction site and making heroic progress towards completion of those units, we placed the health and safety of our employees as a top priority. So by taking care of our work force we were able to continue taking care of our customers.
The economic pandemic.
Beginning in March and April of last year. The World has experienced significant economic duress Southern company originally projected a $250 million to 400 million dollar loss in revenue as a result of the COVID-19 pandemic through thoughtful disciplined O&M reductions, we were able to mitigate the.
Estimated now 300 million dollar revenue loss that we have experienced while still providing reliability and industry, leading customer satisfaction to our customers.
As well our long term efforts with the states that we serve on economic development efforts continue helping capital investment and job growth in the communities we are privileged to serve.
The social pandemic.
I am also proud of our ongoing commitment to foster racial justice for years. This has been an effort of southern to focus on building a healthy culture, even before the unrest last summer we initiated an effort to donate $50 million to historically black colleges and.
Please.
Last summer I told you that meaningful discussions were underway across our company related to our actions and response.
And while these conversations will continue and initial outcome is that we have refocused our efforts towards a more holistic goal of diversity equity and inclusion ensuring that all groups are welcomed well represented engaged and fairly treated throughout the organization.
As an example of this commitment the Southern Company Foundation recently announced a partnership with Apple where each are investing $25 million to launch the propel center, a new digital learning hub business incubator and global innovation headquarters.
Located in Atlanta for students throughout the nation of historically black colleges and universities.
And finally.
The political pandemic.
I also wanted to address the political discord that our nation has experienced over the past several months at southern we have consistently prioritize working with policymakers, regardless of political party and we have been working constructively with the Biden administration for months in fact, we have already.
Engaged in matters related to energy policy.
Especially the transition to a net zero carbon future as well as on matters related to national security you'll.
You'll see in the appendix a letter I sent to president elect Biden pledging our support.
As we continue to engage with the new administration as well as legislators and regulators at both federal and state levels. Our positions will continue to focus on energy policies that can enable a smart transition and be informed by our key objectives of providing clean safe reliable and affordable energy to our.
<unk>.
So, let's now turn to an update on plant Vogtle units three and four we.
We remain focused on meeting the November 2021 in November 2022 regulatory approved in service dates for units three and four respectively with the start of hot functional testing expected in only a few weeks. We now expect in November completion for unit three.
For unit four we continue to utilize an aggressive site work plan as a tool to provide margin to the regulatory approved November 2022 in service date.
Unit Force current site work plan targets, a third quarter 2022 in service date from.
From a cost perspective, Georgia Power's share of the total project capital cost forecast increased by $176 million, largely reflecting estimated COVID-19 impact and other costs, along with a replenishment of contingency to fund future.
At risk that will include lower productivity rates and increased support costs.
As a result, Georgia power recorded an after tax charge of $131 million during the fourth quarter.
2020 marked another year of significant progress at the site throughout the year as some other major projects around the country, we're shutting down or delayed due to COVID-19.
Georgia power and the Vogel site team worked tirelessly to implement measures to keep the project progressing while prioritizing the safety of our work force and the surrounding community.
Similar to what was experienced across much of the United States. During the last two months of the year and earlier. This year, we saw a surge in COVID-19 cases at the Vogel site, which as you can see on slide six peaked around the beginning of January.
Excuse me.
Since the onset of the pandemic and most acutely during the fourth quarter of 2020, the impacts from COVID-19 have included high absenteeism and disruptions to planned or ongoing work as we isolated personnel.
We estimate the pandemic has extended the schedule for both units by approximately three to four months consuming much of the remaining margin to the November 2021 in service day for unit three and several months of margin for unit four.
Unit three direct construction is now approximately 98% complete and hot functional testing is expected to start in the coming weeks on our last call. We identified three key risk factors to our time line electrical productivity.
Subcontractor performance.
And what we call paper closure Ricky.
Recall paper closure relates to the turnover of systems to the testing group to help ensure that the as built condition of the plant meets design specifications over.
Over the past few months COVID-19 has hurt site productivity negatively impacted electrical production and impaired our ability to close paper issues that facilitate timely system turnovers and ultimately I tax of metals. The combination of these factors has delayed system turnovers and <unk>.
Packed at our timeline for the start of hot functional testing.
Based on our recent production trends, we now expect to start hot functional testing during the second half of March and start loading fuel during July.
Starting hot functional testing and fuel load on this time line would support a November 2021 in service date with up to one month of flexibility remaining in the schedule now.
Now certainly risks remain to this schedule. These.
These risks may be thought of in four segments.
First the completion of system turnovers, leading up to hot functional testing.
The successful completion of hot functional testing third the completion of system turnovers, leading to fuel load and for an orderly transition from fuel load to an efficient startup of the unit.
Successful completion of hot functional testing this spring would significantly decrease the remaining operational risk to unit three completion, although certainly challenges and risks will remain in focus as you as we focus to fuel load.
I tax of Midland review is expected to continue to accelerate and will remain an area of focus to date 180, eyetech have been submitted to the NRC. We expect approximately 20 additional I tag to be submitted by the start of hot functional test I think and the remaining.
200 to be submitted during hot functional testing and as we approach fuel load.
Direct construction for unit four is now over 75% complete.
Last month, we started integrated flush and we expect initial energy station to occur during March to support the November benchmark, we will need to average construction completion of approximately 1.5% per month.
Which is in line with the average rate achieved during the period from last November through January.
As we progress in 2021 construction production is expected to increase in support of our upcoming testing milestones and importantly, as unit three nears hot functional testing, we expect to shift additional resources to unit four to increase our current.
Pace of construction completion.
Now turning to cost.
During the fourth quarter, Georgia power allocated its remaining contingency plus an additional $5 million and subsequently added new contingency of approximately $171 million to support completion of the project.
We estimate the pandemic has extended the schedule for both units by approximately three to four months at an estimated cost to Georgia power of between $150 million and $190 million.
This cost is embedded in our updated total project cost estimate.
While COVID-19 related impacts were significant drivers of the change of our capital cost forecast future risks, including project construction productivity were contributing factors.
Earlier this week, the Georgia Public Service Commission unanimously approved the C. M twenty-three, which included project capital costs through June 32020.
As a part of the order, Georgia power was directed to work with the PSE staff to develop a mutually agreeable recommendation to the commission by the end of March regarding the process timing and substance of filings related to the transition of unit three costs into base rates. Additionally.
Georgia Power files V C M 24 today.
The months ahead represent a critical and exciting time for Vogel.
The project team has worked tirelessly amid conditions, none of us could have imagined just a year ago, our employees contractors co owners and community partners should be commended for their perseverance and dedication to the completion of this important project.
Drew I'll turn it over to you now for an update of the financials and our outlook.
Tom and good afternoon, everyone. I Hope you are all safe and healthy.
As Tom mentioned, we had a very strong year in 2020, despite the many challenges we face.
For the full year, our adjusted earnings per share was $3.25 14 cents higher than last year and three cents above the top of our guidance range Twenty-twenty was certainly defined by milder weather and sales impacts due to COVID-19, and we were able to substantially overcome both as evidenced in our salt.
Results.
Looking at the details retail electric sales on a weather normalized basis were down by 14 cents year over year, including impacts related to COVID-19, offset by customer for growth.
<unk> temperatures throughout 'twenty 'twenty resulted in an additional 21 cents negative earnings per share variance as compared to the prior year.
We substantially mitigated both weather and COVID-19 impacts through thoughtful disciplined O&M reductions as well as continued investment at our state regulated utilities on a combined basis. These factors allowed us to exceed our adjusted EPS guidance for the year.
A detailed reconciliation of our reported and adjusted results as compared to 2019 is included in today's release and earnings package.
COVID-19 impacts reduced our projected weather normal kilowatt hour sales held.
Sales by 3% for the year.
The slight uplift from the residential sector persisted throughout 2020 with more people working from home in.
In the fourth quarter, we continued to see improvement in kilowatt hour sales for both the commercial and industrial customer classes. However, we do not believe we have seen a full recovery in these sectors yet.
Factoring in impacts across all customer classes, our non fuel revenues declined by approximately $300 million, which was at the lower end of our <unk> are our original estimates at the as the pandemic began.
As Tom mentioned, an important part of our COVID-19 response was and continues to be supporting our customers. We have worked closely with customers across our regulated utilities offering special payment plans for those with past due account balances and have delayed disconnects.
You can see the impact of our COVID-19 related protocols for disconnects in our customer accounts for the year.
Last year, our state regulated utilities added just over 53000, new residential electric customers and nearly 30000 residential natural gas customers.
Our electric customer growth was approximately 30% higher than our expectations.
Overall, we estimate that about 80% of the residential electric customer growth in 'twenty 'twenty was due to continued and accelerating in migration to the region, particularly in Georgia.
The remainder is likely related to the steps we have taken to keep customers connected during the pandemic, particularly through the use of extended payment plans.
During this time customer arrears have tended better than we anticipated across our operating companies. We also have constructive mechanisms approved by the commissions in many of our states, allowing us to address incremental COVID-19 related costs, including bad debt expense those will be considered in future regulatory proceedings.
In a trend that differentiates our service territory. The pandemic has strength in population and job growth in the southeast.
Particularly in Georgia, which is one of the fastest growing states in the United States.
Robust economic development in the South East region is also a positive indicator that our key states are weathering the pandemic relatively well in 2020, we saw new investment of nearly $6 billion and nearly 25000 jobs created across Georgia, and Alabama. In fact, Georgia was the number two state in the country for job creation in December.
And just last week, Microsoft confirmed Atlanta is a major east coast hub, which is expected to bring significant job growth and investment.
Our state regulated operating companies play an integral role in leading economic development efforts in each of their states.
Turning now to our expectation for 'twenty 'twenty, one our guidance range for the year is $3.25 to $3.35 per share.
In the first quarter of 'twenty 'twenty, one we expect we estimate that we will earn 84 cents per share.
Included in our full year guidance is an assumption that we will see modest impacts continue to see modest impacts on retail sales from COVID-19, which we expect to continue to mitigate through thoughtful cost control.
Additionally, we expect total retail sales growth normalized for any short term COVID-19 impacts to be flat to 1%.
For the foreseeable future. This expected growth rate is driven by a combination of customer growth and ongoing improvements in energy efficiency.
Moving now to our outlook for long term growth, we see our long term EPS growth rate in the 5% to 7% range consistent with adjusted earnings in the range of $4 to $4 30 per share by 2024.
With 90% of total projected earnings over the five year plan horizon coming from our state regulated utilities are expected EPS trajectory has a solid foundation.
Likewise, our history of constructive regulation stable credit metrics and ongoing focus on cost control serve to underscore the achieve a bill pulte of our plan.
Looking more closely at our long term capital investment plan, we continue to allocate 95% of our capital investment to our state regulated utilities.
Our capital investment plan of $40 billion for 'twenty 'twenty, one through 'twenty 'twenty five includes annual projected rate base growth at our state regulated utilities of greater than 5% with a continued emphasis on transmission transportation and distribution modernization and resilience.
For southern power the cumulative five year investment plan is comprised entirely of previously approved renewables projects and maintenance capital for the existing generation fleet, which is over 90% contracted for the next 10 years.
Any incremental growth opportunities at southern power are expected to enhance the long term financial plan and be largely self funded and credit neutral.
Importantly, this cap ex projection for the whole company does not include amounts for accelerated fleet transition and any associated transmission growth nor does it account for new generation projects at southern power.
We will be evaluating a number of paths over the next few years as it relates to fleet transition, but we do not establish placeholders in our plan.
With virtually all projects being known in the process of or having already been engineered or have already begun.
Taking a look at the balance sheet, we currently forecast no equity needs over our five year plan horizon, even when considering the potential increase in capital investment I just described.
We believe we are well positioned to further strengthen our balance sheet and to improve our credit metrics materially during this time.
I'll highlight that in January we became the first large cap utility in the U S to publish a sustainable financing framework and the days that followed southern power issued a five year green bond under that framework that resulted in a record low coupon rate.
This framework highlight southern is ongoing commitment to a wide range of sustainability and social issues and should allow us to leverage our work in these areas to help optimize our balance sheet and benefit our customers. We will also continue our focus on societal priorities in the upcoming years.
Before I turn it back Tom I'd like to Echo his opening remarks the result.
The resilience of our business has demonstrated amid the pandemic.
This is a testament to the hard work our employees put forth every each and every day.
The ability of our employees to continually provide outstanding service to our customers combined with the support of our communities in the constructive relationships, we maintain with regulators and public ficials underpin our ability to also deliver such solid performance I.
I would like to particularly thank the people who work for and on behalf of the customer our customers to meet our priorities even in light of a global pandemic. We are all grateful. Thank you.
Tom I'll turn it back over to you. Thanks drew.
I'd like to circle back to your comments on fleet transition.
Southern has two primary goals related to our greenhouse gas emissions. The first is to achieve zero net zero emissions by 2050, we will work constructively with the by the administration to accelerate this timeframe as national policy evolves. The second one is to put in place an interim milestone to achieve a fifth.
50% reduction in greenhouse gases by 2030.
Regarding the intermediate goal, we achieved our 2030 goal in 'twenty 'twenty.
With preliminary greenhouse gas emissions now down 52% now certainly 2020 was an unusual year and we may see emissions reductions move around 50% for the next two years, but we believe will be sustainably above a 50% reduction level by 2023.
While ESG issues have received increasing attention by investors over the past few years at Southern company. These issues have consistently received the heightened attention they deserve.
And it's being recognized we were once again ranked as one of the world's most admired companies by Fortune magazine Diversity, Inc. Rated us as a top company for E. S. G and for the fifth consecutive year, we've received a perfect corporate equality index score by the human rights campaign.
In addition, we're very proud of the a minus rating. We recently received from the carbon disclosure project.
For our environmental transparency and leadership, we recognize the value our investors and stakeholders place on transparency and we are committed to continued enhancements.
Now before closing I want to just take a moment to recognize our leadership transition announcement that we made at the end of last year My trusted friend and one of my closest confidence Mark Lantrip plans to retire in April after dedicating 40 years to Southern company Mark yourself positioned Southern company is a.
Leader that is building in shaping the future of energy we are grateful for the many contributions Mark has made to our business and we'll miss him dearly and wish him all the best.
Mark is passing the baton to Chris Kaminski, who has been a valued member of the Southern company leadership team for many years holding key positions at both Georgia power and southern power.
In closing.
Over the past decade that I have been privileged to serve as CEO of Southern company I can think of no other year that I've been prouder of the way, we've conducted ourselves and managed our business our engagement with and empathy for our employees customers and communities in 'twenty 'twenty demonstrates our enduring commitment to.
B a citizen wherever we serve.
Thank you for joining us. This afternoon, operator, we are now ready to take questions.
Thank you Sir.
Well now begin the question and answer session. If you would like to register a question. Please press. The one followed by the following your telephone you'll hear at three town Tom So it knows your requests.
If your question has been answered and you would like to withdraw your legislation passed the one followed by day three.
Once again, please press the one followed by the four.
Wow.
One name in place for the first question.
Our first question comes from the line of Julien Dumoulin Smith with Bank of America. Please proceed.
Julian how are you hey, good morning too.
Hey, Thanks for the time congrats guys.
Maybe just to kick things off on a light basis.
The five to seven.
Are you thinking about the base here you guys gave the four to 430 in number but can you talk about what's what's the baseline year for that and then if I can throw it in there at the same time.
Net five to seven how are you thinking about upside capex, perhaps some of the spending opportunities that exist in a shall we say posts mobile world and do you think about the transition how does that fit against the numbers you guys gave today.
Yeah Man you bet.
Hey.
We did it a little bit differently. This year. The way you should think about the base year is kind of a 2024 number that is a $4 or $4.30 and then kind of reverse engineer back from that at the kind of top end of that range at a you know.
With a growth rate of 7% in the bottom end of that range. It kind of 5%. That's how we come up with a five to seven certainly as we move from 2021 to 2022. There is a step change, but I think you can see the math from there.
With respect to that range. It's it's fascinating as drew pointed out and I've said this before on other calls the way we do capex forecasting in my opinion.
Is really conservative.
We put out there I know some companies I shouldn't say this but perhaps some companies use capex forecast to plug to a growth rate, we do almost the opposite we only put in our capex forecast, what we know or what we firmly expect.
And we do not put in place holders. So what is absent in that Capex forecast.
Capital allocated to future projects at Southern power, you know that we allocate on current practice about half a billion a year to that business unit, but none of that is showing up in the capex forecast certainly as you look at fleet transitions that I think from a policy.
The endpoint or being pushed in Washington, you will see growth in renewables and it wouldn't surprise me that there will be plenty of opportunities to do more solar and wind in the future.
Right now we think those markets are very tough.
So we elect not to put anything in the forecast.
Secondly.
We don't include any fleet transition I think it's been very clear and I've been in the press here recently talking about the transition of the fleet.
And working with the Biogen team to think about how to move net zero 2050 to something sooner.
So president Biden now would like to put out a marker of net zero by 2035 for this industry. We certainly I think we can certainly achieve that there are certain policy choices will have to be made along the way but.
We are engage constructively in that conversation.
If you go to something like that I think you will accelerate fleet transition again.
Nothing in this capex forecast is reflected associated with any of retiring coal plants sooner and building more renewables or more gas assets as assets in this timeframe.
Drew what else would you I think the only thing I'd supplement with maybe Julien is that if you kind of look at our historical performance go back as far as 2018, we've been clearly growing.
Rate base and growing earnings in sort of afforded.
5% to 7% range historically, we've had some changes in that pathway a little bit because we've taken.
Penalty for Vogel construction, we'll see a little bit of that.
Change as we move Vogel into service and so you get a bit of a wagon the way our growth rate might be delineated on a linear basis, but what we're really trying to express is a longer term potential for the business as we invest capital into it and.
And then I think the other important point that Tom made is that we have quite a bit of.
Generation modernization to do that we have not yet quantified.
Because I think there are a number of ways that could play out if you think about broadly what the what that looks like we've got about 10 gigawatts of coal fired facilities in aggregate will have to find some method of meeting the reliability requirements of our customer base.
Without relying on coal is a primary source of megawatt hour.
Production and so I think we will over the next couple of years, we'll take stock of emerging technology.
Different things.
Things that work within our system to meet the goals that we have and what kind of lay those out for you is as they reveal themselves to us Hey, one of their point you know drew is and I did mention this one I'll bet you. There's at least another $1 billion of transmission. So when we talk about transitioning the fleet it isn't just choices generate.
<unk>, which we think will as well.
We do believe that there will be additional transmission associated with this transition that will occur.
I see that easy to achieve over this five year period.
One last thing and I, you know I'm not often doing this but complementing the analyst community you guys have done the math if you back out this penalty period, we had been earning about 6% EPS growth.
Once you exit that period, and so that actually creates a nice line going into the future.
Julian anything I didn't cover you want it.
Well, Hey, listen so let me, let me clarify that if I can read when does some of this capex started hitting right whether it's the transmission to generation. When you guys had this 4% rate base trajectory through 'twenty five.
Well I mean, it seems like that already translates from the five to seven when do you actually get this capex uplift it sounds like that drives you hire within that five to seven range as I'm hearing you right.
And if you get some each day.
Yeah, Yeah. So you know and you all know that we never tried to get ahead of our regulatory processes in each of our states followed their own version of an integrated.
Our resource plan and so as we file those plans and file whether it's our S E in Alabama, Emma or the three year rate case at Georgia or tap in Mississippi.
That that we'll make those plans known and approved by the commission as appropriate. The other thing you should know that the you know heading into this call I guess, we show 4% for electric it was 5% probably a week ago. It's rounding. Okay. So it's you know it's in the middle of four to five per se.
The gas business is growing at like 10%. So the overall kind of support the growth trajectory that is supportive of five to seven and Youre right. You know when you think about starting with four bucks to 430.
There is upside to our mid range forecast there based on how we deploy capital over time, but I think even with the base forecast that we're showing you today.
We're within that range and we're comfortable at five to seven within that range in 'twenty four.
Yep absolutely great. Thank you for clarifying that al first of luck guys talk soon thank.
So much appreciate you calling in.
Thank you.
Up next we have a question from the line of Steve Fleishman with Wolfe Research. Please go ahead Sir.
Hey, Steve how are you.
Tom Good afternoon.
So just a question if you end up determining that.
You you cannot meet the November 3rd line.
For Volvo for some reason could you remind us like do you have to what do you have to do with anything then do you have to make a filing.
Or.
Or is it just you just from a just update the schedule.
That's right well just update the schedule and certainly.
You know I think we're pretty good about letting people know when things change we did the press release with the express intention of moving off of what we had thought I guess back in.
In October May have been a July H F. T. As this third wave of Covid hit it really did just knock us for a loop in terms of productivity and pushed us now.
And actually the numbers continue to move just a wee bit but it puts us from February now into March.
Tom.
No. It really just has a function of cost day, then and it really depends on when you incur the costs. Okay. So.
If it is a delay that causes us to get into hot functional test.
The amount of both units in Georgia power dollars is about 40 million Bucks.
If it's.
Item <unk> unit three only it's about 25 million Bucks.
If however, we shift and it is a delay kind of from fuel load to in service in other words, it's some punch list that causes us to have a delay in the in service declaration of a unit. It goes way down for both units its 25 million a month for unit three its only 10 million.
In a month so depending on when the delay occurs there would just be an additional cost that we're factoring in and I will say that with this now new estimate on estimated cost to complete this 176 million. We've added this this time.
It includes a November in service for both units. It includes a C. P I number.
Is like 1.8. It includes a construction per month that is consistent for unit four with our experience from November to January now My hope is that we can improve on those numbers, but we wanted to put out what we thought was a thoughtful and kind of reasonably conservative.
Estimate so we wouldn't have to come back to this number again, no assurances that won't happen, but that's where we are.
Okay.
I know this November.
I think the only thing mechanically that occurs is that we continue to function under a penalty Roy until we bring the unit into service and so that would be the.
Material thing to model, that's right you start losing that penalty rate once you declare in service.
Okay.
So because I know for a long time, we've had November is a psych regulatory approved deadline.
If there's a new deadline or whatever you don't need to kind of go back and seek a new deadline or anything like that you just printed.
And it goes through CMS as is.
Yes, Sara Theres nothing special the V. C. M process, we've been filing has been really effective at kind of handling those issues and as you guys know you've followed those DCM filings very clearly.
That's kind of the the way we would handle it.
Okay and then one other just quick Vogel question that I think Theres, a new Arthur is gonna be a new chair of the NRC.
Does that matter at all for you in terms of your timing process I doubt that they are too much in the weeds.
Everything but.
Oh no.
Would argue hey look a steep kaczynski and I visit with each of the NRC commissioners regularly.
And we're very happy with Chris Hansen, we were very happy with Christine's of Anarchy.
My sense is Chris Hansen will I think run an NRC consistent with the principles of a severe nicky.
Hansen has experience in a variety of fronts in Congress with Doctor Ernie Moniz Who's on our board, we know him well and we think he will be terrific.
The NRC.
Right, Yeah, the inner cities of very tough regulator.
We think theyre very fair and they've been very constructive in their treatment of vogtle three and four.
Great. Thanks, so much.
Thanks, Dave.
Thank you and our next question comes from Michael Weinstein with Credit Suisse. Please go. Please go ahead Sir.
Hey, Michael glad to have you with us.
Glad to be here.
So the just to follow up on Julians question, So the 4% rate base growth profile for electric and.
If I look at that overall I'm just thinking.
That once you get to the 2024 range and the penalties are out.
Moving to the penalties is the main driver of five to seven and I'm guessing you know that.
Well from that.
Yeah, Yeah, Michael excuse me that those penalties will expire as we moved to in service for each of the units. They expire by degree so if in effect once we declare unit three.
In service and then unit four in service, we actually have a step change in growth that we're really not saying a whole lot about the 5% to 7% is what we think we can sustain and have sustained over recent history without the step change in the vocal uplift moving into.
In into rate base.
Okay, I mean, because I was thinking a that's a five to seven is simply sustained.
By increasing the capex profile and increasing the rate base growth profile. Once it is it is a sustainable growth rate beyond the uplift from Vogel.
It sounds like it actually any any yeah, I'm thinking any increase in AR.
Renewable capex or de carbonization, capex actually improves on that five to seven.
Yes, it would.
Yeah.
Absolutely.
Mike and Andy focus the durability of spend I think is the way, we think about it and so trying to extend the 5% to 7% range as long as we as we can the.
If you sort of draw the line between what we've laid out today is our earnings expectation for 'twenty 'twenty, one and then take a look at our projection for 2024, you can see that sort of falls without outside of the range that we've intimated at five to seven we think of that really as being more of a longer term sustainable growth rate in absence of single.
Art project risk, Yeah, and then the way you should think about it as almost a reverse engineer start with what we're thinking about it as a reasonable range with this capex.
Cash for 'twenty 'twenty, four and then reverse engineer backwards using 5% to 7% growth rate. We think that's the right way to think about this.
And it looks like most of the increase from almost a third of the increase in Capex.
And this new plan is at southern power.
This year.
And is that just a function of you just not wanted to put placeholders in there so each year, you'll simply have a major increase.
No in fact, I would say in particular to southern power. It was more that we had earmarked capital in.
'twenty 'twenty that was committed but not yet.
In place will actually deploy that capital in 'twenty, 'twenty, one which increases the.
The expenditure, but if you look at it over a longer period of time, a three or a five year average very close to the $500 million that your mark in that yeah. So I mean, let me just say it enough.
Were we to spend the dollars that we allocate in our minds to southern power. That's an additional $2 5 billion to the Capex forecast that doesn't show up in that forecast.
Yeah, that's right.
Adding.
Yep.
And like I said before there's probably an additional billion I mean, who knows entre transmission and then whatever happens on fleet transition Theres something else. There yeah, I think what we've given you with kind of a bare bones approach, which we think is appropriate and that supports the five to seven and what we've represented for southern power in particular.
At 1.3 billion are committed projects that we will execute on within this calendar year or represents maintenance of those facilities over time.
Now I mean, you mentioned that the increased or the extension of tax credits.
The promotion of renewable power by the by the administration.
Going forward it could present more opportunities for southern power in the past you've been a little more.
It's more cautious on it you know, saying that returns are in tight you've been pulling back on spending at southern power.
Ah you're reversing that stance now or are you thinking of it it might be more opportunity not less going forward.
No in fact, I hope I put those words I thought I thought I'd put those works fit in there.
The returns have been in the terms and conditions have been tougher the duration of the contracts has been shorter and so all I'm, saying is and that's really the reason why we don't include capital commitments to southern power and our forecast we think it's a very tough market now I was only postulating.
That.
With a and administration is really bullish on pushing more renewables that the markets may get a little looser, but theyre certainly not now.
Gotcha, Okay. Thank you.
Yes, Sir thank you.
Thank you and our next question comes from the line of Angie Dzherzinsky with Seaport Global. Please go ahead.
Hello, Angie how are you.
Great. How are you guys. So fantastic two questions one obviously.
About Volvo.
So we're all waiting for hot functional testing to start.
Concerns if its going to uncover any sort of catastrophic flaw.
The App project I mean is there anything.
You guys have learned about.
Unit three that would make you feel more comfortable with how hot functional testing has been in Galle.
Yeah Angie.
Knock on wood.
Don't show overconfidence or what have you the Chinese plants that went through hot functional test went through it pretty well without any incident.
We have every reason to believe that will be our experience as well I just can't predict the future that's all.
There's nothing there.
Cause me concern right now.
And he and Andrew the other thing is that you know we've done all these partial system tests along the way.
And I think we've even surprised ourselves how well those have gone.
Okay, and then something completely unrelated given what's been happening in Texas and I understand it's a completely different design of a hard market but.
We're about to have this debate about.
What types of plans I need them the system in order to maintain a reliable electric service and again lots of differences between your service territory and Arcot Butt in.
In light of what has happened is it changing your perspective of what types of power plants utilities should have you know.
You talked about some generation replacement how does.
In the last week play into this planning.
Yeah, Let me offer a few comments I was on CNBC. This morning, and it was a great topic of interest and discussion about what about Texas and in it and it really gets into this idea of organized markets versus integrated regulated.
Markets, you know I've been a fan of integrated regulated markets through our integrated resource plans, we can effectively.
Begin with optimal capacity portfolios and iterate around transmission that supports those optimal portfolios.
We can also build in resilience requirements and socialize those costs over a large customer base and we've been able to do that for decades and it has worked exceedingly well.
A a real criticism of the so called organized markets is that they are set up and I think the people inside those markets operate quite rationally, but they they either operate within <unk>.
Punitive constraints or.
Profit incentives are that.
That are.
Our broadly in every market is different as you know, but they're broadly designed around maximizing short run marginal.
Property, so minimizing short run marginal cost that's no way to build a portfolio and I would argue that the outcome of those designs.
Is as you start to include other value attribute like transmission.
Like I'm, sorry, not transmission like a backup generation like resiliency like other thing you get a really complex kind of approaches in a market I think P. J M has been wrestling with how to value all those things.
I guess you know the second thing is that.
You really don't get a sense of valuing.
Our long term baseload capacity as it should be.
And I think we've seen that in the markets where.
For Heaven's Sakes very valuable nuclear generation is getting priced out of the market and those valuable assets, especially as we consider our carbon reduced future are getting priced out of the market and getting turned down.
I think theres better approaches here.
And so.
You know it was interesting not only did I had this conversation on CNBC. This morning, and I guess I'll just be a little abstruse about this but I was called by the by the administration.
From a national security standpoint, what can we do as an industry to avoid these thing.
Unfortunately, given the market structure of ERCOT theres, probably not a lot. We can do in the near term, but I think long term this notion of resilience.
First is reliability reliability is how we handle the vagaries of weather and economic load and machine reliability under kind of known conditions resilience is the idea of keeping your system up under unknown and unexpected condition, whether they be operational weather driven.
Or cyber related these are things, we must do as an industry and I think southern is in a good position to help lead that dialogue.
Oh, thank you.
You bet.
Thank you continuing on our next question comes from the line of Andrew Weisel with Scotiabank. Please go ahead.
Hello, Andrew Thanks for joining us.
Hey, good afternoon.
Question, you talked quite a bit about the update in the car. The decarbonization strategy I guess my question more specifically to Georgia is given the political changes. It's now a pretty solid blue state is Saturday I've made a funny sketch about does that change your thinking at all about.
The pace and the message that which you plan to reduce your carbon footprint in Georgia coming into the ERP.
You know, we don't try to evaluate long term strategies based on the current politics of any state or elected official or what have you. We have I think a very solid long term plan now.
I think the broader kind of issue that we'll be dealing with is how fast do we want to get to net zero and how will we do that how will we.
Evaluate the relative merits of just trading out one form of generation for another how will we help fund and pushed along.
Research and development energy innovation as solution that will make this transition hopefully easier and more efficient in the years ahead.
C N B C. Also did a segment just before mine with Bill gates, He and I are on the American Energy Innovation Council and we're working on several ideas whether they are storage based hydrogen based.
The fourth generation nuclear based or even energy efficiency based.
We're letting energy innovation work for us and may be joining into a re imagined partnership with government to make that happen.
He is I think a very wise energy policy to follow and like I say, we're already engaged with a bite administration on some of those concepts and I look forward to their ideas as they advance.
Okay, I guess, maybe a different way to ask a similar question as you're very well.
Ahead of schedule as far as your interim carbon emission reduction goal for 'twenty 30, do you see opportunity to accelerate the net zero target from 2050 currently.
Sure.
I think it really is a matter, though of working with our local jurisdictions in each of the states to do that in a wise manner. So we'll be doing that.
Okay, Great and one unrelated question.
On dividends the growth has obviously been fairly modest at eight cents or about 3% per year I recognize the high current payout ratio, but you talked about the vocal penalty is going away in 12, and 24 months and then the 5% to 7% earnings growth thereafter, what's your current thinking on the outlook for dividend growth once we're past the vogel construction.
So of course, that's a decision of the board and will make obviously recommendation from the board.
But you guys can do the math as well as we do and I'm looking at my friend Drew Evans right now and kind of laughing you know I have a certain half life with my career here certainly as we grow into this long term earnings guidance that we've put before you one of the choices that I think the people that follow me will be a.
To make very easily.
The weather to take the dividend payout ratio down, perhaps below 70% or whether to increase the rate of growth of dividends per share that is certainly a strategic option on the table, but will carry that with the board at the right time.
No I'd, just say, Andrew we've been incredibly protective of our creditworthiness.
Credit worthiness, we're very focused on ratings.
And conversations with the rating agencies related to vogtle construction in particular.
And we think it's most prudent to hold dividend growth at a modest level until we come out from under the large scale construction net were performing.
Down in Augusta.
Once we get through Vogel and headline risk is behind us and our credit metrics start to strengthen into categories. We think are more.
Or at home with how we've operated in the past we will start to take a look at what dividend policy would be and we'll also really start to hone in on what our target credit rating might be southern has operated at a as a premium to its peer group relatively in P. E in periods, where we didn't post headline risk and in periods where.
Our credit was a little bit stronger than where we stand today and so all of these things are gonna be considerations as we go forward and consistent with what drew just said, we typically say it on every call we didn't say it yet.
One of the other outcomes.
Kind of this reset in moving to these higher rate not just earnings per share growth improvement.
Cash flow improvements pretty significant over 800 million and increase cash flow per year, that's right.
Terrific. Thank you very much.
Thank you.
Thank you.
Next question comes from the line of Jeremy Tonet with J P. Morgan. Please go ahead Sir.
Hey, Jeremy how are you.
Hey, good thanks for having me good afternoon.
Good afternoon.
I just want to reach out to the 2024 guidance as you laid out there and thinking about Georgia, Georgia power row, and recovery of Bogo Overspend, if you could paint any kind of broad strokes on what assumptions might be baked in on those two items into your guidance there.
You know, we're always I think reasonably cautious and relatively conservative on our guidance now the only thing I would just say is that for the system.
It is a reasonable estimate of what we expect to earn across the system.
We're not pushing numbers in order to hit those ranges.
Yeah.
Got it that's helpful. And then maybe just one on 'twenty and 'twenty one itself.
Theyre implies kind of a smaller step up year over year and are there any meaningful drivers to this outside of Vogel Roe penalty.
No I would say that the Vogel ROE penalty is the single largest driver of that.
Depresses earnings in 2021, almost 24 cents a share related to our constructions, they're very consistent with the agreement that was reached.
<unk> reached with the commission a couple of years ago.
Very helpful. That's it from me thanks.
You bet. Thank you.
Thank you.
And we now have a question from the line of Michael Lapidus with Goldman Sachs. Please go ahead.
Hey, Michael how are you.
Uh huh.
Thank you for taking my question.
Ben from interesting dynamics at the FERC.
With some of the utilities, having made filings regarding having the FERC review potentially a M.
Grid, operator like structure in the southeast can you just give your views on where you think that's going what do you think the point is what do you think the consensus is at you know you talked a little bit about the difference between regulated markets and kind of the the merchant power market.
And it just made me think of having seen a little bit of those filings and trying to understand kind of where the where the long term goal is.
The long term goal is for us to not break what's working.
When you look at these markets down here, we've been able to provide for clean safe reliable power for decades for our customers' benefit and the data just overwhelmingly supports that.
Now when you look at the so called organized markets I think there is a certain amount of chaos in those markets, where you know I think originally people with great goodwill thought they would.
Reap great benefits I don't think the risk return that we see in those markets benefits customers at all you know recently, we've submitted we think even an improvement to our own wholesale markets that is the same effort, which frankly is a.
Is a model that allows us to benefit renewables, particularly solar.
In a more efficient way and it broadens the market to bring in people like Duke and T V, a and others and so we brought in the market.
I think we've made it more attractive to renewables because we believe that renewables are going to be really important as we transition. The fleet will continue to seek ways to improve our markets over time.
But they're working well I can't believe anybody would find the wisdom to throw that out right now.
Got it thank you Tom much appreciate it.
Yes, Sir thank you.
Thank you.
We now have a question from the line of Paul Fremont with Mizuho Securities. Please go ahead.
Hello, Paul Great to hear from you.
Oh, great talking with you My first question a pretty technical question for southern power.
Are the targeted investment.
Uh huh.
Inclusive of <unk>.
Tax equity or art or does that represent.
Our share of.
What you.
Our planning on spending.
I would say that today this represents our share but as we evaluate all of these projects and as they go into commercial operation. We've looked at a number of alternatives for ways to optimize the returns that we received there.
This 1.3 actually represents all capital being deployed at southern power.
The big chunk of that is a wind deal there is a little bit of a storage deal. The wind deal we kind of like its got the 10 year profile.
You know, where we did a lot of the tax equity I guess was on the solar where you had the big pop in one year, and we didn't particularly like the impact of all of that in our financials.
Yeah.
Okay, that's an interesting and animal I would say that that rather than us trying to define an amount of capital that we're interested in deploying their projects tend to draw capital from the parent when they can meet certain criteria. Many of the things that we found over the last couple of years have been largely in the solar or I'm sorry in the.
Wind arena, because we're able to find better contract terms better contract Counterparties and construction risk is generally handled by others and we've been pretty fortunate I think the last couple of years. This particular plan includes a couple of identified wind transactions and as Tom said.
Two battery transactions in the California marketplace, where we're building attendant to our own solar and that'll give us a tremendous amount of experience in attaching storage to solar that will look at deploying across the balance of fleet in another location.
Great and then my second question if I go back to the staff testimony I think what what anywhere suggesting back in the fall was that you guys were hoping.
To get all of your Eyetech remaining approvals done by March which would have been like over 240.
But now when we get to March which is the.
Start day, one of your hot functional testing they will still be about too.
200 that you need to get in hand based on the number that you provided today.
That's right.
But what gets you.
To sort of accelerate.
The level of Eyetech approvals to.
Hi extend to allow you to load fuel in July.
You bet and thank you for.
For Paul for a shining light on that important issue.
We believe that the ultimate filing of iron tax we've accomplished a lot with the NRC frankly over the life of this project and we've shrunk down what was it about 875 or something down to about four in a quarter or somewhere.
And and we've adopted the practice of the UI and that is we filed the form and substance of an Italian had that approved so really all we have to do now is essentially fill in the blanks as to the result of a test as a result by working with the NRC and this constructive way I think once we.
Get the systems in place to submit the results in the eye intact I think the itek process, that's going to go really well.
Like I say the NRC has been great in this regard and recall, we got NRC personnel all over the plant working with us to make sure all this happened.
Paul the issue was not a high tax the issue is getting the system done getting the turnover appropriate with the testing appropriate and the paper as we pointed out before appropriate so that we can file and put in the values in these I tax and submit them.
I said this I think on the last call and I made a big deal about it when I say paper that that almost feels too glib. This idea of having engineers present.
This would be backed off our own the NRC that will evaluate the as built condition of the plant and harmonizing that to the design basis at the plant and making sure. It exactly meets our standards is really taking a lot of time and it is a complex exercise.
The most important thing we can do is assure that we have quality.
That will permit the itek process to go well frankly, it will permit the testing processes that we will do now H F T to go well.
So the filing of high taxes simply associated with system turnover of these important processes within the plant.
Mr Free Mark do you have any further questions.
No. Thank you.
Thanks.
Joining us.
Thank you Sir and now we have a question from the line of Andrew Levi with Hite hedge. Please go ahead Sir.
Andrew how are you doing.
Alright, I think I think most of my.
My questions were answered when thinking is listening this call, you'll probably get more work done before.
New England.
Offshore wind gets done what do you think.
Okay.
Net income.
That's funny, how things play out things happen.
So seriously.
I think I understand everything that you're saying as far as.
The potential renewable Stan.
The transmission and distribution around that.
Just far as the time line. So I guess now at some point this year.
Hopefully sooner rather than later, we hear from the body and administration.
Kind of what their plan is as far as their energy plan and then probably I guess November.
Hopefully knock on wood.
<unk> III.
Turning to <unk>.
Operation.
At that point I guess is that when.
Youll kind of have a better idea of how much incremental capex is going to be and I guess kind of just kind of doing back of the envelope.
Well from conversations I had with you guys.
I'm thinking you probably could add too.
200 basis points to the electric utility rate base growth longer term from the 4% to 6% get I don't want to put numbers out there that you're not comfortable talking about that.
Like a timeline in that.
Thinking that all that happens.
Finding out and where we made.
Co and volatile.
Well I'll tell you my friend here as well.
Let me give you a couple of ways to think about it number one the key is going to be these I rfps that where we do this integrated resource planning no kidding and so as we submit those and have those approved ultimately with each of our state of a very good idea as to how the Capex forecast will change whether fleet transition occurs to what degree.
Sorry, what about transmission the whole bit that'd be very illuminating in advance of those important regulatory processes. We already have an E. L G kind of.
Requirement put out.
For our coal unit and so.
Some of those units are already on the thin economic margin as you add new requirements to them.
I think that may cause us to accelerate that conversation with our commission, but rest assured you guys. You know its exceedingly well I think you and I were laughing with each other not long ago, I think you and I go back maybe 30 years.
And talking about art dogma, and dealing with state regulation, we will not get in front of the regulators and the regulatory processes with you or anyone else, we're going to let those things play out and then we'll reflect that in our plan as it shows up yeah, Andy I would just add that.
This is a complex topic and I'll just start by saying El Che effluent limitation guidelines unlikely to use an acronym.
Yeah.
Which will regulate served mercury and selling them in a couple of other things that come out of our facilities and we'll have to make some choices about how we whether or not we control those facilities put them into limited use or ultimately retire those facilities. The one thing that is certain is that if you look at the technology that's available to us today, it's not a <unk>.
Substitution of what we currently generate with what.
What the future might look like there are certain changes in materials science that need to occur there are certain complexities related to clean safe and reliable power that have to be met through our transmission considerations that have to be taken into account and but if you wanted to put a big broad bower of wrap around it if we have to do 10 gig.
What's in let's say the seven of that is replacement or that three needs to be held in reserve for some period of time, you could think about numerically what the replacement or something like that amount of generation would require and make the assumption that we probably have to do 15 or 20% of that total Capex. In addition in transmission distribution.
So there are ways to kind of come around come to what's the size of this ultimately I think for the company and so let me give you a head start.
So what are you going to say I would argue you have kind of this I'm, giving you a caveman math now.
So looking at that forecast I'll bet, you I kind of gave a few numbers already if you were to fill out our half a billion per year, there's two 5 billion.
I had another 1 billion for transmission and then on top of that put in some estimate probably back end loaded.
On generation replacement and it's easy to see that I think you could get two don't hold me to this and we're not forecasting this way, but added to the Capex forecast $5 billion to $8 billion over this timeframe I don't think that's unreasonable and you can do the math on what that does to your growth rates.
That's easy stuff okay.
Okay, Yeah, I can add subtract multiply and divide.
Now you're a genius I loved this proven.
Okay. Thank you. Thank you very much Scott.
You are the best thank you.
Thank you.
We have a question from the line of Paul Patterson with Glen Rock assess yet. Please proceed sir.
Hey, Paul Thanks for being with Us.
Good to be here.
So.
Just on the Covid.
Impact on Google It looks like you guys have taken into account.
Not just our current experience, but what do you expect in the future and I see what you guys give us good data on how the infection rates have been trending I'm. Just wondering what is your expectation going forward about.
The impact of Covid on construction.
Construction of Google.
And I apologize if I missed this but are your people getting vaccinated Arthur essential workers.
Varies from state to state. It seems so I was just wondering.
I was just wondering so yeah, that's elaborate yes.
Sure, but so you know I help lead the S. D C electricity sub sector coordinating council for this industry.
You know it started with cyber and went to a physical national security matters. It has grown into a storm response and now COVID-19.
We have had lots of good dialogue with H H S. In a variety of other people about the right classification for utility workers.
And you got to be proud of this industry through this crazy Hurricane season, we had last year, we were able to adopt kind of cutting edge COVID-19 protocols and get the lights back on the wires up and the plants running again.
So we've done a good job I would argue that these guys, particularly the people that work hard to keep the lights on.
And our Hearts go out to them and thank them for their hard work this year.
They should be treated as critical resources for this nation, and therefore get a very high priority.
To receive vaccinations.
It is Joe at the end of the day, despite what the C. D. C will recommend it is the option of each state to deploy those vaccines now we've got great relations in each state, particularly in Georgia, where Vogel is theres been a lot of discussion.
Is that how to make sure that the folks that can get the.
The vaccines are our it's available to the folks at the site I'm going to guess that they may be able to get vaccines, maybe within a month or so, but that's highly uncertain and depends upon the ultimate deployment within the state.
Okay.
Okay, and then just sort of on COVID-19.
As you know there've been some papers and stuff out there, indicating that perhaps the long term economic impact.
It could be pretty substantial.
When you're talking about your plans and just plug that utilities in general one doesn't really tend to think that that.
Your growth or whatever would be impacted by that or whether there has to be some big deviation.
If in fact, the economy does change as a result of COVID-19, or what have you is that pretty much.
Is that just roughly speaking sort of a way to sort of think about this.
Hey, Paul let drew and I tag team. This one I mean, let me go first then I'll shut up and let you go but.
Here's what I see.
From my past work at the Fed I love to break the industrial segment, particularly as.
As a great leading indicator into 10 big segments for southern.
And then not only do I look at period versus period results virtually all of it is still negative compared to a year ago, obviously pre COVID-19.
But the momentum statistics are really illuminating now and they have turned positive so of the 10 segments that make up something like 80% of our industrial sales eight of them from a momentum standpoint are turning positive.
So.
That tells me and with a quote that has been you know.
Put out there by me.
In the past America is learning to live with Covid, a I think COVID-19.
<unk> incidences are starting to decline maybe that's the normal sine wave, we see from any surge, which we just went through and maybe its a longer term effect of getting more people vaccinated didn't abandon administration say recently, they want everybody vaccinated by July or sometime this summer.
So surely that'll have an impact, but the economic data I see would show a recovery.
Down 3% last year, maybe up 2% to 3% this year with industrial is starting to respond in a favorable manner.
I always worry about the long term implications of something like this because the.
The pressure that we've put on folks on the margin where the COVID-19 puts on folks on the margin.
Will reveal itself. We've been served 60 days away from Covid ending for now 10 months and so it'll be interesting to see where we come out our expectation around how it would impact our particular customers actually was quite different than what we expected on the onset. So we expected that retail customer usage would incur.
Kris as people stayed home, we actually expected industrial production would maintain itself.
Would decline a little bit, but not quite as drastically as it has in that commercial.
Customers would be impacted most acutely and it was very it was a very different outcome commercial customers found a way to do business in a different way.
Not all but most and industrial went through a period, where there was sort of a reduction in output as because inventories were at a reasonable level and they can sort of pare down that inventory as they saw the economy progress. We've now seen sort of a tightening in supply in a number of the industrial segments and production is.
<unk> to pick up and there have always been two or three standout weak segments in any particular, two or three month period, but as Tom said today. The momentum is generally positive and we're encouraged by the fact that people have adapted their businesses to earn profits in a way that they may be hadn't anticipated two years ago, but.
Yeah, I always or a year ago, I always worried that the longer anything goes to more pressure youre going to put on on somebody on the margin for sure and Quint quick punchy stats nonfarm employment fell nationally six 2% in the southeast it was only one 7%.
Last year in.
Our territory, we had record job creation best we've ever done.
We're seeing an increase I want to say the increase in jobs projected in our economic development group that we're showing that's kind of our headlights up 17% and then you see events like Microsoft.
Coming in developing Atlanta as their third hub, there other hubs being a core Seattle and San Francisco, where Silicon Valley line.
Look I.
I'm not going to paint a super rosy picture, but I will say the southeast is really resilient, what's down right now chemicals are down mostly we see that is driven by a large outage and particularly one plant in Alabama, and some global demand for chemical which might change the marginal economics of a single facility for sure and what kind of looks bright.
It looks like pipelines.
Especially.
As we start seeing gas continues to displace coal the pipes are doing pretty well.
Okay, Great I really appreciate it thank you.
Thank you.
Thank you.
And that will conclude today's question and answer session. Sir are there any closing remarks.
Well thank you.
These are exciting times Tonight I know.
The folks around our system that made the system perform as well as it did in 'twenty 'twenty just.
Great.
Debt of gratitude and I don't Wanna card, specifically are covered workers, particularly IBEW and the folks.
From the broad building trades.
All around the system, particularly at plant Vogtle, three and four the leadership of the IBEW.
The leadership of the building trades.
They are terrific business partners for us and we could not have achieved this level of success without their great leadership and the and the great work of the folks that are members there.
I really like the cards, we have I'd like the fact that we have a lot of Optionality no matter what the future holds and I think we've run this business over the past decade to leave it.
Stronger than ever we will get through Vogel III and look forward to the progress there we'll get through Vogel for next year and we're often running.
Thanks, everybody for your attention today, and we'll talk to you soon.
That's all thank you.
Thank you, Sir ladies and gentlemen, this concludes the southern company fourth quarter 2020 earnings call. You May now disconnect. Thank you all once again.
Day.
Yeah.
Okay.
[music].
Okay.
Uh huh.
Oh.
Sure.
[music].
Uh huh.
Yes.
Uh huh.
[music].