Q2 2021 Southern Co Earnings Call

Tom.

[music].

Tom.

[music].

Good afternoon. My name is read out and I will be your conference operator today.

At this time I would like to welcome everyone to the Southern company second.

<unk> second quarter 2021 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 1 followed by the for on your telephone.

As a reminder, this conference.

Is being recorded Thursday July 29th 2021.

I would now like to turn the call over to Mr. Scott Gammill Investor Relations Director. Please go ahead Sir.

Thank you Peter Good afternoon, and welcome to Southern company's second quarter 2021 earnings call joining me.

Tom Fanning, Chairman, President and Chief Executive Officer of Southern Company, and drew Evans, Chief Financial Officer Glen.

Let me remind you that we will 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 on the forward looking statements.

Including those discussed in our form 10-K form 10, Qs and subsequent filings.

In addition, we will present non-GAAP financial information on this call reconciliations to the applicable GAAP measure are included in the financial information. We released this morning as well as the slides for this conference call, which are both available on.

On our Investor Relations website at Investor that Southern company Dot Com at this time I'll turn the call over to Tom Fanning.

Thank you Scott good afternoon, and thank you all for joining us today drew and I will cover our usual business updates in a few moments, but first let me provide an update on bogo units 3 and.

For.

Unit 3 hot functional testing is complete.

Through testing, we have validated the operation of critical primary and secondary systems at full temperature and.

Pressure and demonstrated that the.

The design basis is sound.

The completion of hot functional testing Mark the last.

Major milestone before fuel load and represents a significant step towards placing unit 3 in service.

For the duration of hot functional testing.

Longer than we originally anticipated we remain committed to getting it right.

For all aspects of the project taking into account the length of hot functional testing for unit 3 the remaining activities for both units and recent productivity trends, we now per.

Project, placing unit 3 in service during the second quarter of 2022 and unit for in service during the first quarter of 2023.

From a cost perspective, Georgia Power's share of the total project capital cost forecast to fund.

Fund expected future risks.

As a result, Georgia power recorded an after tax charge of $343 million during the second quarter.

With unit 3 hot functional testing complete our next and final major milestone for unit 3 is.

Claude.

We project fuel load to occur sometime near year year end 2021 or early in 2022.

As we approach fuel load our commitment to get it right remains our top priority.

As the operator of these units safety as our.

Our Paramount objective and we strive to meet first time quality standards prior to significant testing and operations activity, we will not sacrifice those commitments to meet schedule for milestone dates.

The scope and time required for the work remaining to prior to fuel.

Load includes 1 completion of the nuclear fuel systems, and the associated documentation or paper as I referred to it in the past.

2.

Completion of remediation work and additional work identified during hot functional testing.

We can implement our.

Plant support systems.

And for a reduction in productivity levels consistent with recent site performance.

The unit III tax on Middle and review process follow our construction and testing.

Activities on site.

Okay.

Our per day 8 eyetech have been submitted to the NRC, we will submit the remaining 100 day.

And 91, as we approach fuel load.

Recently, the nuclear regulatory Commission conducted a special inspection of electrical quality issues that we had identified earlier.

For this year and the remediation efforts that are underway.

The onsite inspection is complete and we expect the Nrc's report to be published within a couple of months, though that exact timing, we will of course be determined by the NRC.

Turning to unit for.

For direct construction is now approximately 84% complete and we achieved initial energized nation in may.

Our revised construction productivity assumptions are consistent with recent trends.

And as I mentioned, we now projected in service day during the first quarter of 2023 per unit for.

Earlier, our updated timeline for unit 4 is reflective of several factors.

First <unk>.

<unk> has experienced a slower than expected recovery from our COVID-19 related staffing reduction and in early 2020.

Recall at the time.

For staffing reduction disproportionately impacted unit for as we shifted our focus to unit 3 critical path work fronts.

Recall, we reduced the density of personnel on the site and effectively moved people from unit for units.

Up to endure.

And during hot functional testing delayed our plans to transition resources to unit for.

Alright.

More recently, we have staffed unit for independently as.

As work on unit 3 continues SaaS 3 months for growing.

This demand demand for skilled labor is impacted our ability to attract and retain electricians and as a result, we experienced higher than expected attrition.

Obtaining the necessary levels of craft labor to meet construction milestones for unit for has been more challenging than expected.

In recent weeks, we have seen positive staffing trends driven in part by offering enhanced electrician compensation, which has helped to mitigate further schedule impact.

Construction completion for unit for has averaged 1.4% per month since the start of this year.

To achieve in November 2022 in service, we estimate unit for would need to average 1.9% construction completion per month.

And to support our first quarter 2023 in service unit for would need to average construction completion of approximately.

<unk>, 1.3% per month for the rest of this year.

Looking now at cost of $460 million pre tax charge recorded during the second quarter reflects the schedule update for both units, including updated assumptions for construction activity in support.

As well as replenishing the contingency for potential cost risk associated with completing both units.

In conclusion.

While the timing of unit 3 hot functional testing took longer than originally expected.

I am encouraged by the success.

Resort test.

Even so with completion of this enormous milestone we still have a lot of important work ahead of us to get to fuel load.

Per unit for we are focused on progressing through the next several milestones while continuing to navigate through the COVID-19 pandemic.

The broader economic recovery efforts that have impacted productivity at both sites.

As a company and a management team, we remain focused on bringing bogo units 3 and for safely on line to provide Georgia with a reliable carbon free energy resource for the next.

And B to 80 years.

And as always I want to thank our employees contractors co owners and community partners for their unwavering dedication to this important statewide project.

Drew I'll turn it over to you now for an update on the financials.

Thanks.

Thanks, Stephen and good afternoon, everyone. I Hope you all are well first I want to touch on the financial impacts of todays Bogle update we continue to be very committed to credit quality for both Georgia power and Southern company. Therefore, southern company will contribute capital down to Georgia power to maintain its.

Target capital structure and credit profile.

We expect to fund the cash needs at the parent company as it is incurred by reinstating new issuances under our internal equity plans, primarily the dividend reinvestment plan, which is expected to produce approximately $400 million over the next year.

Tom This financing strategy, we expect to maintain southern company's credit profile with consolidated credit metrics above current downgrade thresholds.

This has a de minimus impact on earnings given our size and we continue to see our long term EPS growth rate in the 5% to 7% range and we are also.

Ali we're hitting our 2020 for projected EPS range of $4 for $4.30.

Turning now to earnings we had strong performance in the second quarter of 2021 with adjusted earnings per share of <unk> 84.

6 higher than both last year's second quarter and our estimate.

Recall on the second quarter of last year, we were experiencing the peak impacts of the COVID-19 pandemic on our kilowatt hour sales. This peak was primarily related to shelter in place mandates and working remote and in response, we implemented significant cost savings initiatives. Therefore, it is no surprise.

The primary drivers of our quarterly earnings this year as compared to last year were increased customer usage at our state regulated utilities, coupled with strong customer growth from the southeast as well as constructive state regulatory actions.

As you would expect with ryzen kilowatt hour sales versus last year or.

The non fuel O&M was higher due to increased maintenance and planned outages that are generating units weather impacts for the quarter were negligible year over year.

When looking at adjusted EPS as compared to our estimates for the quarter. The main drivers of the increased earnings for customer growth that remains.

Our non than our expectation new connects are exceeding forecast by 25% and continued expense discipline.

Year to date through June 2021, adjusted EPS was higher by 26.

Compared to the first 6 months of last year.

Drivers are similar to those for the second quarter.

Higher increased usage stronger customer growth constructive state regulatory actions and are partially offset by higher non fuel O&M.

Year to date weather impacts for <unk> favorable compared to the prior year and <unk> <unk> unfavorable as compared to normal.

Detailed reconciliations of these reported and adjusted.

<unk> quarterly and year to date results as compared to 2020 are included in today's release on the earnings package.

Turning to the economies in our service territory, we continue to see significant improvement from the lows. We are experiencing at this time last year related to the pandemic in the second quarter weather normal retail.

<unk> sales in aggregate were up by 6% compared to last year with commercial and industrial segments on the short sharply and modest declines in residential sales.

We have been analyzing retail sales compared to pre COVID-19 levels to assess recovery relative to historical norms and early data indicate that in aggregate.

Adjusted our retail sales have recovered to between 97%, 98% of 2019 pre pandemic levels.

Sales from the residential segment remained elevated due to continued hybrid working while industrial and commercial sales remained slightly below the 2019 comparable something like 97.

7% of the 2019 level.

In the industrial segment, we're seeing strong momentum across nearly all sub segments. Commercial sales are also improving those sales may be may take longer to reach historical norms.

As the COVID-19 Delta variant becomes more widespread in our service territories, we will closely.

We monitor for any signs of change, but have yet to see any material impacts.

Underpinning these positive sales trends as a strong labor market evidenced by shrinking unemployment rates that are below below 4% in both Georgia and Alabama. In addition customer growth remains robust with new connects significantly outpacing.

Pacing, our expectations across the electric utilities, reflecting reflecting construction of new homes as well as new commercial businesses and continued in net migration.

Economic development continues to be very active in the southeast in Georgia alone. There are over 200 active projects with the potential to bring over 30000.

Jobs in the coming years.

Capital investment and job announcements are far outpacing what we experienced even before the pandemic.

These are positive signals for continued improvement of both customer growth and sales.

With our solid adjusted results through the first half of the year, we are well positioned as we head into the peak electric load season.

Our estimate for the third quarter of 2021 is $1.22 per share on an adjusted basis and consistent with historical practice, we will address earnings for the year relative to this EPS guidance after the third quarter.

With that Tom I'll turn it back to you.

Thanks drew we understand that Vogel news often.

Dominates our earnings calls, but I think it's important that.

We also focus on the terrific performance, we see across our businesses as drew highlighted our adjusted financial results for the first half are outstanding and operationally, we're performing well we are already endured a tropical storm in Georgia earlier this summer.

And our system has demonstrated resilience during the extreme Tampa for <unk> experienced throughout this week in the southeast.

I would like to mention 1 more topic before we take your question.

5 years ago. This month, we closed on our acquisition of AGL resources now known as Southern company.

And again, our objective with the transaction was to deliver even greater customer.

Shareholder value by continuing to invest in high quality predominantly state regulated utility assets and we have done just that we bolstered investment at the regulated gas utility.

<unk> continued to strengthen the position of our retail natural gas franchise in Georgia, and divested nonregulated assets.

Over the past 5 years Southern company gas has.

<unk> increased its J D power customer satisfaction scores.

<unk>.

Increased its regulated business mix to 90% 3 increased its authorized equity ratio to 55% for increased our annual growth in rate base by 14% by an average of 14% annually.

Fifth rate.

$3 billion from the sale of non strategic assets.

Tom at all time high P/e multiples and reduce risk by selling assets like the Atlantic Coast pipeline and the sequent asset management business.

And then.

7 all while increasing opportunities for.

For talented leaders to take on new and important roles across the Southern company Enterprise a great example of that is sitting right next to me drew Evans, our Chief Financial Officer is doing a terrific job and his breadth of experience.

And.

Engaging thought process has helped us all.

In summary.

The acquisition has far exceeded our own expectations. The positive results at our gas business are indicative of the approach we take across all of our businesses and to the 9 million customers and communities. We are privileged to serve.

This approach best positions, our state regulated utility centric.

<unk> business model for the future as we seek to maximize our return to shareholders on a risk adjusted basis.

Once again I want to thank everyone for being with US This afternoon on.

Operator, we'll go ahead and open the floor for questions.

Thank you if you would like to register your question.

Please press the 1 followed by the for on your telephone.

Here are 3 Tom Tom to acknowledge a request.

For your question has been answered and you would like to withdraw your registration.

Please press the 1 followed by the 3.

1 moment please for the first question.

Yes.

Our first question comes from the line of Julien Dumoulin Smith from Bank of America. Please proceed with your question.

Hey, Julien how are you everyone.

Hey, this is actually credit Clark on for Julien.

Okay.

Great Fantastic.

So maybe first if we can talk about hot functional testing on.

Im wondering how youre thinking about the post test analysis that youre kind of working through right now.

You took temperature back down to <unk> I'm wondering if you're on.

Assuming that you have all the data now that you can kind of procedure.

Or is there is there still other potential risk for additional remediation work there.

So.

Let me call it a couple of things out.

Interesting I think.

Number 1 is everything is progressing right now as we said it would in other words.

Now that we have.

Today, Jeffrey effectively we take the car and lift the Hood and look at the engine and see what happened.

The experience in China.

So that there shouldn't be any big things happen, that's our experience in China, but certainly that's an important part of work.

The other.

I just want to point out because I know there has been a topic on prior calls just want to raise this.

If you recall I want to say it was the first unit that went through HSA on China actually had to re perform their HFC co pay.

They had significant operational issues concerning vibrations in a variety of other things.

And that.

Completed we're 6 months.

We have pass through those issues, we learned from them and for the issue they experienced our plant worked great.

So we are as we thought we would be and of course between now and fuel load as we called out in the script there certainly.

For big areas, we do have to work on.

No.

Page 5 I think slide 5 on the information we've given you guys. This morning, you see.

Vogtle unit 3 cooling tower actually have.

Water vapour coming out of it that was such a wonderful site to see I was on site.

Frankly on that what's going on.

But look we got it was heated with affluent heat from the reactor coolant pumps, who performed beautifully during the test.

Now, we're going to hit it with nuclear fuel. So we got to put all of the systems necessary to get nuclear fuel in there and use that as the heat source secondly, as.

We.

Went through the process of starting HFC and then through HFC. We found some things we can do better to improve the long term operation of the plant we will do those things.

And then I called this out on the last call we call on plant support systems, but this is essentially balance of plant.

Activities Hvac's potable water some signage things like that that are necessary to support and operating work for us as the plant goes live.

And then finally, we made an adjustment we reduced actually our estimate of productivity.

<unk> of the workforce on site to more closely match, our recent experience, but thats whats left to get to fuel load.

All of these things represent a significant effort, but I will say that the biggest risk with getting day, JFK and completing exit in an excellent manner.

We did that.

Got it understood. Thank you Scott.

And so and then to be specific 1 more thing.

We have seen no data so far that gives us any concern if that was part of your question.

Got it no that's helpful. That's helpful.

So can you give us a little bit more.

And we are on attrition at the site I know that was brought up in some of the staff PCM testing on it what are you assuming in the new schedule and especially considering the enhanced pay that you mentioned.

Yes, so we.

We went through a period there. So we were really focused on on getting.

<unk> getting into it and going through it and all of that and so we werent planning on doing a lot for.

Further.

The quality issues, we recognize we wanted to make sure that we fully understood. The scope of everything that we were finding so that we didn't repeat those mistakes on unit for which I think we've done at 1 point.

<unk>.

During our meetings with co owners and the NRC and the PSC staff and Dr. Jacobs and everybody that we deal with.

We were seeing greater than expected attrition.

And we really lay that out to I think the.

Proving economy.

<unk> in the southeast, particularly big data centers that were attracting electricians. So we exited 2 stages.

Compensation increases that really arrested that so I want to say 1 week, we hired 25 electricians and we lost like 72.

And when we saw that we work on Oh man and we got to fix that and I think now we have.

On a recent experience would say that since the adjustment in June. So this would be maybe 4 weeks of activity.

Net added now so these are net adds 3.

150 people. So we have about a thousand now and we'd like to get to 1200, So theres still some hiring activity going forward for unit 4.

But we feel good about our ability to do that.

And the other important point here is.

Unit for now.

Tac from unit 3 okay.

And we used to and in fact in prior earnings.

Patient ship at 9 months in 12 months on.

We have.

Stop the idea it no.

Think about the track for unit 3 unit for it now.

It is.

From unit 3.

Got it and then just 1 more if I can.

Just wondering.

<unk> of the.

The Delta is on staff impacts from this and the current schedule.

Yeah, absolutely. So what we have been we went through a period, where there was just a handful of positive test and they are up a little bit.

Sure.

Let's see I guess are we.

We've had something like since the start of the pandemic something like 2600 people impacted.

<unk>.

Right now we have somewhere around 65, okay that would be our latest data and thats, an increase probably a week or 2 ago. It was 25 in about a week before that it might've been can so yes. It is picking up.

Other thing we're seeing.

Net for those that are impacted.

The.

Severity of the.

Of the illness associated with the virus has been less significant okay.

The other thing I do want to say I don't think we have a slide here that shows the progression.

<unk> is <unk> it took us a while to get to.

Full temperature flow pressure, but once we got there the plant is running like a champion. It really has been stable so lots of little things along the way, we fixed them and once we got there it's been very stable.

Okay. That's great. Thank you for taking my questions ill jump back in the queue.

Thank you for joining I appreciate it.

Thank you. Our next question comes from the line of Jeremy Tonet from Jpmorgan. Please proceed with your question.

Hey, Jeremy how are you.

Hi, good.

Thank you Ryan on for Jeremy.

[laughter] with your debt.

I guess just wanted to ask 1 on any expectations that you.

You kind of have heading into this kind of an RFP kind of report and then they are very explicit about the.

Great.

Afternoon for timeline, but if theres any kind of.

Anything kind of baked in there for unit 4 regarding what might come out of that report any kind of additional remediation R. J.

That might be required.

Yes.

Doesn't necessarily to the NRC report, but rather it goes too.

It is really was involved.

Net for time, it took to get to <unk> and the remediation plans we put in place.

To satisfy that.

Kind of quality issues, we saw in the paper and remember paper.

Is shorthand for turning over from construction.

System testing.

2.

<unk>.

Documentation necessary on the nuclear quality necessary to submit on time.

Okay. So when I say pay for it actually a big deal and I've said that in the past 3 or 4 call what a big deal at work and it has been a big deal. So we put in.

Processes in.

To improve that.

Effort.

And our new schedule does include.

The effect of those processes okay.

On the other thing I want to say about the NRC is.

This is their report and it's in their hands so I serve.

Play as I wouldn't speak for a state regulator in any of our jurisdictions I'm not going to speak to the NRC I will say.

As we have been completely transparent in all of our site meetings with all the co owners all everybody there.

The NRC is fully aware of what we found and they are fully aware.

Certainly.

On a remediation practices.

That's about all I want to say about that let the NRC speak for themselves beyond that.

Understood Doug.

I understand.

And then I guess, just when you guys had mentioned the kind of the day.

Your internal equity programs on a combination kind of want to.

<unk> got a sense.

Where does it sound like just just over the next year for the $400 million in trip or kind of maybe take longer.

Plant potentially come online just calling on.

Make sure I understood the message there.

Yes, maybe I can give you a couple of sort of boundaries on this understand that what we'll experience from what we just reported in terms.

Increased costs, we won't actually experiencing until we start to move later into construction. So these are incremental to budgets that really begin sometime next April.

The sum total of those things led to the write down that we reported today of $343 million.

We are incredibly focused.

Focus on credit and felt like there was a necessity.

<unk> that we've made to the rating agencies related to our coverage ratios in particular and so the simplest thing for us to do is to turn on the drip plan, whether thats temporary or permanent.

Just sort of monitors we continue to monitor construction the intent.

This is for it to be quite temporary for a single year of that program generates about $400 million, which.

I think what we've just described.

On a divot created by this expectation that's only 3 quarters of what we could issue under those plans in a particular year, but I would say the single biggest.

<unk> purpose for this is that we have made commitments.

Commitments to rating agencies and to bondholders to maintain credit through construction and that is our singular on tenant and I think you said it in a skirt to true, but with respect to the plan for financial plans are put in place the guidance that we did forward for 5 years to 7% at around a 4% to $4.30.

The impact of.

Turning on for some time, the drip is de Minimis.

Understood appreciate the color I'll leave it there.

Thank you.

Thank you. Our next question comes from the line of Michael Lapides with Goldman Sachs. Please.

Proceed with your question.

Hey, Michael how are you.

Well, Tom Thank you Tom Andrew for taking my questions as always.

1 on vocal in really 1 on Georgia in specifically in Georgia, How do you envision to regulatory processes, playing from here first of all the.

On a timeline for.

Kind of how you think about getting Vogel 3 in our rates and kind of really the proceeding for that are the docket for that and then the second question is with Vogel moving around and schedule a little bit how you think about the rate case that you are supposed to file next year on whether youll, just kind of pushed that off and try and do all.

That's 1 big docket.

Yes so.

No.

For my Admonition before we certainly will not front run anything with the regulators or really kind of the plans that we have you know I mean, Michael you know you've been around forever and you follow us and do a great job with that we've already laid out.

For the same work to address cost recovery improvements and in fact.

The unit 3 rate proceeding right before the commission is currently 1 of those early steps.

Sure.

So, let's let's leave it there that there is a whole lot of moving pieces and then in a constructive way.

Out of for really since I was involved in putting in place.

Accounting order methodology back at $19.95.

<unk> been able to manage really a complex situations in a constructive way.

And my sense is with all the moving pieces here.

<unk> real tough regular later, but I think they'll do a fair constructive job with it as we move forward.

Got it and then a question about the jurisdiction no 1 ever talks about no 1 ever asked but obviously 1 of the better places to be a utility.

Are you thinking about Alabama in terms of how continued change in net generation fleet.

May play out as.

As well as kind of how the pace of grid investment may change over the next 3 to 5 years.

So grid investments and interesting question on that that's a much bigger than Alabama question right. When we look at California, and we look at Europe, and we look at the dysfunction in the so.

We are operating.

The so called organized markets.

It is very clear that all of our jurisdictions, Mississippi, Alabama, Georgia have a very.

Well founded and orderly way of evaluating a transition to a generating fleet.

And the integration importantly of transmission into the overall integrated resource plant. So we have processes in place all of our companies have embraced to some degree the idea of renewables recall on the past, Georgia power was sided.

The.

Calls on our owned utility of the year by the solar industry.

Recently, Alabama power and.

Embraced the idea of solar being part of their mix everybody has a different way to approach the problem, but I would say all of our utilities have a very constructive effective way of addressing the problem.

Invest way, where we're accountable whether it's fuel procurement generation transmission distribution sales.

We are accountable and we work with the commission to develop optimal answers for our customers that is the best market structure and we've been able to do it for years My sense will continue.

Got it thank you Tom.

And then I appreciate it guys.

Thank you.

Thank you. Our next question comes from the line of Paul Patterson with Glen <unk> Associates. Please proceed with your question.

Hello, Paul how are you.

All right How're you doing.

Fantastic, Thanks for being with us.

Absolutely so.

Just.

Just a question just came up I think.

I heard somebody else asked about Covid.

I'm just curious how many people what percentage of your Workforces vaccinated, Kevin do you have a number on that.

So we don't know.

But I would argue it's somewhere between 30.

Low forty's.

Probably not materially different from what we see in the general population in the southeast would be that we're not requiring people to disclose that for example, we are required on certain behaviors.

Workforce.

And if youre not.

Vaccinate are you aware of math youll socially distant.

5 et cetera et cetera.

Okay, Great and then.

We took the sales growth.

And Covid just I'm just wondering as we've gotten further along just sort of if theres any change what's your outlook is post pandemic post pandemic effects.

When we're back to normal.

So is there a new normal in terms of what's your expectations for total retail sales might be or or.

How is that what's your thought I guess, obviously, we've had a rebound on what have you. So.

Kind of noisy here, but just going forward, assuming let's say in 2021 excuse me at the end of 2021 we're back to normal let's say.

How would you think the sales growth is there any change I guess on what's your sales growth expectations are for retail sales growth.

Now.

Given the pandemic.

So, let's I'll, let drew and I double team. This because I think he brings a different perspective than David.

Giving you a part of the chart package I guess Pedro.

Normal 11, it shows that the pre pandemic residential is still up so here is 1 of the interesting things to consider.

When we evaluate our work force.

Pre pandemic roughly 80%, we're kind of permanently in.

Page 11, with about 20%, maybe 25%, mostly virtual thank call centers and things like that.

When we've tried to analyze what the new normal will be the numbers are changing pretty significantly and it varies by local location. It varies by work function.

<unk>.

But kind of wrap your head around this.

I think we're going to be between 20, and 25% kind of permanently in the office with about round numbers, 50% being a hybrid.

Sometimes they are in the office, sometimes they are working virtually and then we'll have that 2025%.

<unk> completely virtually.

If the rest of the world starts to follow this idea of a new normal then I would expect residential sales to be up prior to 2019 levels. Okay.

Industrial appears to me to be racing back too.

<unk>.

Pre COVID-19, so we're kind of at 98% there.

And the economic development activity that we see.

Especially I mean, I'll give you 1 Amazon I think it's Amazon is bringing a thousand jobs and investment of $250 million. That's 1 I said.

If you guys want to Squawk box this morning.

I told them net and the economic development data.

Forward looking investment now for this hasn't happened, but these are announced projects.

Versus 2020 are up 85% and versus 2019 are up 65%.

So there's this burst of activity from investment.

Jobs created is somewhere in the mid 20.

So what's happening.

Residential may remain elevated industrial is gonna catch up commercial is still a little bit of a question.

We'll see.

Through what would you state on I think you did a nice job on that.

Only thing I might add would be around customer count itself and so we normally add something like 40000 customers in a given year.

Largely residential and we've probably added 3 quarters of that in just the first half of this year. So net.

Net in migration is a little bit difficult to separate from sort of use per customer, which is kind of what we represented here, but residential is that 3% higher than what we would've expected.

Pre pandemic and I think as you described that's probably here to stay is industrial segments. We've had a couple of large industrial customers.

<unk> moved in and out of more global product.

Productivity or.

Based on global economics, not a lot based on the region not being a good employer and there are a couple of really strong sectors.

Like automotive, where there could be huge transitions that really benefit the southeast and some as.

As with you I'm very bullish on <unk>.

Residential and industrial in particular commercial is going to take a little bit longer to normal on yes, raw data year over year.

On manufacturing industrial was up 11, 7% the only ones down there with chemicals. It was really on OLED plant that produced.

Sure.

Chlorine and caustic soda and stuff like that.

And that's really they've just taken down their production.

Everybody else is up we had 3 segments up over 30% year over year.

Primary metals transportation.

Pipeline, So I think Scott 1 last data point, we're just.

Total of that Scott.

Georgia, It looks like it's going to be 1 of the first states to hit at pre Covid levels by the end of this year.

In Alabama, and Mississippi are expected to hit in 'twenty..2 those are some of the fastest recovering states in the United States.

Okay, Great and then just turning to Volvo.

<unk>.

The testimony by staff I don't think you guys filed in rebuttal testimony.

Which is I think.

Normal course here, but they're not getting done asking to do battle here or anything but.

But in terms of this sort of attention that they brought up about BD milestones on the quality of work.

So have you would you say with this hot functional testing.

That.

If they were to look at the situation now after that given what you guys have found.

You know what how the plant performed with hot functional testing that debt, perhaps those issues have.

We'd probably be diminished.

On it.

People on my question on other words, you mentioned that it performed very well.

And I was just wondering whether or not that's sort of may indicate that the.

This quality of work issue that they were bringing up would be.

Would it be used as a significant issue maybe as we as we move forward.

So here's kind of my view on that.

I think.

There've been a number of interesting arguments.

On that follow your question Mark.

On that has been a consistent difference we have had with the staff for.

For example.

It has been our dogma and doing this project to fail quickly.

So it was I think a big risk mitigate or from our standpoint to test early find problems and fix them before they became a bigger profitable them later.

He also.

Yeah.

You know the alternative to that would have been.

Coop completely constructive system and only test it kind of when everything is done I think that would have exacerbated the bow wave of work the criticism well the way youre doing it costs more money, yes, we.

Would agree but I would also say values a function of risk and return for the additional cost we have followed and testing early in failing early.

The risk mitigation characteristic overwhelm the value range.

Remember it is our posture to get it right okay.

We found a lot of issues going in and not deal killer not huge issues, but the issues, we had to deal with going into H F. T. We found more during <unk>. We finished H F. T. We don't think we will repeat zone.

And unit for and so we'll deal with.

We did go through a very rigorous argument on unit for about.

Whether we should estimate it being complete in the first quarter or the second quarter and I remember, we came back and add another argument about it.

And this was like in 2 hours 3 hours long.

That argument with people on the site everybody that is involved with the project and we landed on the first quarter now, let's just go through the math on.

Ultimately from where we are to.

<unk> service, we're kind of projecting.

I guess the fuel we're projecting no in service, we're projecting 16.

Long on.

Okay.

<unk> added 4 months, so adding for months on top of 16 is in round numbers, something like 17, 25% or more.

So my sense is that's a good place to be.

If you were to add.

<unk> another corridor Holy Smokes now you are in the.

You are getting near 50% contingency income need and the people on site.

That felt like too much.

So listen we had good rigorous arguments I think we've landed in a good spot.

1 other.

But we're particularly watching.

So if you say what is the riskiest thing Youre thinking about right now.

So the work ahead of us the big work is getting the nuclear fuel.

Ready to go to be inserted into the reactor vessel.

When we look.

Things at the testing of our spent fuel pool.

We found greater than acceptable leaks in the pool.

We tested unit for and while that testing is still ongoing we believe a uniform is looking good. So this is not a design problem.

Look it is on welding problem on frankly on unit 3 and so we are undertaking.

<unk> remake.

Of the day.

The bed of the spent fuel pool in order to assure the floor of the pool to assure that it will work with its called upon that.

We think the biggest thing in my mind right now that I know about okay.

I feel very confident that what we've learned on 3 through the end of HFC and now it works.

We'll apply that on for in a good way.

And I will say this.

I am sorry for go on here, but let me just finish with that.

Kind of as we completely respect the SaaS opinion and.

And we completely respect.

Dr. Jacobs, we respect our co owners anybody that has an opinion on this.

They all have a point of view that is valid I'm, giving you. What we think is the best answer and the best outcome.

And the thing that is so beautiful without this process and anybody that we'll talk about everybody sees everything.

There are no secrets, there's no smoking gun everybody knows everything as we build this plant I think that transparency has worked so much to our advantage.

Awesome.

Thanks, so much.

You bet. Thank you.

Yes.

Thank you.

Our next question comes from the line of Stephen Kaczynski with Southern Company. Please proceed with your question.

He worked for us I don't think.

Yeah, that's a.

A mistake go to your next question sorry about that everybody.

Not a problem and that will conclude today's question and answer session. Sir are there any closing remarks.

Yes. My question is what was Steve do it on the phone.

For those of you done a speed is the Heath terrific. He is the CEO.

<unk> of our of our nuclear business and he has direct management counsel oversight for the construction of Vogtle, 3 and for and of course, there is a staff of people that are Guyana, and Glen Chick has been a hero.

Southern working so hard to make this thing on success Here's the thing I would leave you with and I think the feedback we're getting from the analyst community.

Entity is right on point, so I think I'm, telling you what you already know.

But.

Listen.

Be personally we are sometimes we get frustrated with the tactics of hitting a milestone in our schedule.

On the integration of the entire client assets and making.

At work with a heat source that is not nuclear but still making it work as it did.

It was prolonged and frustrating at times, but you know what once we got it saw.

And once we got the plant at pressure at temperature it worked great and it was very stable.

So.

We fixed those things and we continue to work hard to make sure we don't repeat them on for.

Still a good bit of work ahead between now and fuel load and I think we've outlined that carefully for Ya.

And so we look forward to getting to fuel load per unit 3 unit for.

For the kind of productivity.

<unk> that we have suggested to you lets just deal with the percent complete per month. So the 1.9 to $1.3 right 1.9 to $1.3 we have done.

Already at unit for 1.4 and we have done kind of the 1.9 level on unit 3 for.

7 to 9 months at that time.

These are levels, we have done in the past in the estimate we have given you we have estimated however, lower productivity.

That's to give ourselves a little more margin on cost and schedule. So we're trying to be sensitive to to really hit these numbers.

Outside of Vogel, we're very excited about the progress but outside of Vogel This franchise.

Whether we're transitioning the fleet for a low carbon future, whether we're running the business to make it more resilient to extreme weather.

Or attacks in the cyber and physical realm to preserve.

Serve our national Security, we are doing great and we will continue to do great.

And so we're making progress on all of those functional from last thing I'll just mention.

When I think about our D. Eni efforts when I think about diversity and when I think about the improvements.

It's a culture.

We mentioned 2.

Bringing southern company gas into the fold I guess, bringing AGL on the sales now becoming southern company gas we have cross populated.

Southern company gas now run by Kim Greene.

Drew Evans is over here being CFO at southern the cross population.

<unk> learning has strengthened our culture and increased if you will our cultural bandwidth. This company is better off in the long run for all of these efforts and I think now and we have renewed our efforts on diversity and inclusion will be even better.

So thank you.

Exciting day to day and look.

Look forward to talking with you on the future. Thanks.

Thanks, everyone for listening.

Thank you, Sir ladies and gentlemen, this concludes the southern company second quarter 2021 earnings call you may now disconnect.

Okay.

Sorry.

Tom.

Okay.

Tom.

Mark.

Yes.

Okay.

Yes.