Q1 2025 The Southern Co Earnings Call
Good afternoon. My name is Paul and I will be your conference operator today at this time I would like to welcome everyone to the Southern company first quarter 2025 earnings call all lines will be placed on mute to prevent any background noise.
Paul: My name is Paul and I will be your conference operator today.
Paul: At this time, I would like to welcome everyone to the Southern Company first quarter 2025 earnings call. All lines were placed on mute to prevent any background noise.
Paul: After the speaker's remarks, there'll be a question and answer session. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.
After the Speakers' remarks, there'll be a question and answer session.
If anyone should require operator assistance. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
Greg Macleod: I would now like to turn the call over to Mr. Greg MacLeod, Director, Investor Relations. Please go ahead, sir. Thank you, Paul.
Speaker Change: I would now like to turn the call over to Mr. Greg Macleod Director Investor Relations. Please go ahead Sir.
Greg Macleod: Thank you Paul Good afternoon, and welcome to Southern Company's first quarter 2025 earnings call. Joining me today are Chris Womack, Chairman, President and Chief Executive Officer of Southern Company, and Dan Tucker Chief Financial Officer.
Chris Womack: Good afternoon, and welcome to Southern Company's first quarter 2025 earnings call.
Chris Womack: Joining me today are Chris Womack, Chairman, President and Chief Executive Officer of Southern Company, and Dan Tucker, Chief Financial Officer. Let me remind you that we will make 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, Form 10-Q, and subsequent securities filings. In addition, we will present non-GAAP financial information on this call.
Greg Macleod: Let me remind you that we will make forward looking statements today in addition to providing historical information.
Greg Macleod: 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 Form 10-Q, and subsequent securities filings.
Greg Macleod: In addition, we will present non-GAAP financial information on this call.
Chris Womack: Reconciliations to the applicable gap 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 our investor relations website at investor.southerncompany.com.
Chris Womack: Conciliations for 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 our Investor Relations website at Investor <unk> Southern company Dot Com at this time I'll turn the call over to Chris.
Chris Womack: At this time, I'll turn the call over to Chris. Thank you, Greg. Good afternoon, and thank you for joining us today. As you can see from the materials that we released this morning, we reported adjusted earnings results for the first quarter above our estimates. with year-over-year growth reflected across all our major business. The Southeast has a track record of economic resilience, and we continue to be encouraged by a robust economic development activity that includes a sizable large load pipeline. Our state regulated electric utilities continue to experience customer growth and the service territories that we are privileged to serve remain attractive to a wide variety of commercial and industrial customers.
Chris Womack: Thank you Greg.
Chris Womack: Good afternoon, and thank you for joining us today.
Chris Womack: As you can see from the materials that we released this morning, we reported adjusted earnings results for the first quarter above our estimate.
Chris Womack: With year over year growth reflected across all our major businesses.
Chris Womack: The southeast has a track record of economic resilience and we continue to be encouraged by our robust economic development activity.
Chris Womack: That includes a sizable large load pipeline.
Chris Womack: Our state regulated electric utilities continued to experience customer growth and the service territories that we're privileged to serve.
Chris Womack: Remain attractive to a wide variety of commercial and industrial customers.
Chris Womack: Additional. The reliability and resilience of our vertically integrated and well-planned grid are proving hard to beat, and customers, especially data center customers, are increasingly acknowledging that reality with their enthusiasm for our electric service territory.
Chris Womack: Additionally.
Chris Womack: The reliability and the resilience of our vertically integrated and well planned grid are proving hard to beat and customers, especially data center customers are increasingly acknowledging that reality with their enthusiasm for our electric service territories.
Chris Womack: Before I turn the call over to Dan, we know there is a great deal of interest in tariffs and any potential implications to our business. There's clearly policy uncertainty, and in turn, our assessments of tariff implications have varied. For our base capital plan, we currently estimate a range of 1% to 3% of potential cost increases with the top of the range representing the higher end of tariffs that existed for only a few days last month. Among the advantages for a company of our scale is a large portfolio of suppliers and strong vendor relationships to help navigate such challenges collaboratively and proactively.
Speaker Change: Before I turn the call over to Dan. We know there is a great deal of interest in tariffs and any potential implications to our business.
Speaker Change: Theres clearly policy uncertainty and in turn our assessments of tariff implications have varied.
Speaker Change: Our base capital plan, we currently estimate a range of 1% to 3% a potential cost increases with the top of the range representing the higher end of tariffs that existed for only a few days last month.
Speaker Change: Among the advantages for a company of our scale is a large portfolio of suppliers and strong vendor relationships to help navigate such challenges collaboratively and proactively for example, while the majority of materials being sourced from Mexico, and Canada qualify for zero tariffs because.
Chris Womack: For example, while the majority of materials being sourced from Mexico and Canada qualify for zero tariffs because they comply with the United States-Mexico-Canada Agreement or USMCA. The company is working proactively to get any remaining vendors or purchases compliant as well. Our full complement of potential mitigations includes existing project contingencies, contractual provisions, potential regulatory approaches, and options to deploy alternative resources. Our commitment to affordability, balanced with our focus on reliability, could also influence the pace of our capital deployment to mitigate the impact of tariffs on our customers.
Speaker Change: They comply with the United States, Mexico, Canada agreement or U S. MCA.
Speaker Change: Tony is working proactively to get any remaining vendors or purchases compliant as well.
Speaker Change: Our full complement of potential mitigation includes existing project contingencies contractual provisions potential regulatory approaches and options to deploy alternative resources.
Speaker Change: Commitment to affordability balanced with our focus on reliability could also influence the pace of our capital deployment to mitigate the impact of tariffs on our customers.
Chris Womack: Overall. We do not expect a material impact to our forks. Our financial outlook remains strong. and we remain focused on discipline execution. The orderly processes and constructive regulatory frameworks in our service territories, combined with our experienced team and our customer-centric business model, should serve us well as we prioritize reliable and affordable energy for our 9 million-plus customers.
Speaker Change: Overall.
Speaker Change: We do not expect a material impact to our forecast.
Speaker Change: Our financial outlook remained strong.
Speaker Change: And we remain focused on disciplined execution.
Speaker Change: The orderly processes and constructive regulatory frameworks in our service territories combined with our experienced team.
And our customer centric business model should serve us well as we prioritize reliable and affordable energy for our 9 million plus customers Dan I will now turn the call over to you for a financial update thanks, Chris and good afternoon, everyone.
Dan Tucker: Dan, I'll now turn the call over to you for a financial update. Thanks, Chris, and good afternoon, everyone. For the first quarter of 2025, our adjusted EPS was $1.23 per share. Twenty cents higher than the first quarter of 2024 and three cents above our estimate. The primary drivers of our performance for the quarter compared to last year were investments in our state-regulated utilities and weather-related impacts, which added 8 cents year-over-year due to a milder-than-normal first quarter in 2024 and a slightly colder-than-normal first quarter for 2025. This was partially offset by higher operating costs and depreciation and amortization.
Dan Tucker: The first quarter of 2025, our adjusted EPS was $1 23 per share.
Dan Tucker: <unk> <unk> higher than the first quarter of 2024, and <unk> <unk> above our estimate.
The primary drivers of our performance for the quarter compared to last year, where investments in our state regulated utilities and weather related impacts, which added eight cents year over year.
Dan Tucker: Due to a milder than normal first quarter in 2024, and a slightly colder than normal first quarter for 2025.
Dan Tucker: This was partially offset by higher operating costs and depreciation and amortization.
Dan Tucker: The Complete Reconciliation of Year-over-Year Earnings is included in the materials we released this morning. Our adjusted EPS estimate for the second quarter is $0.85 per share. Overall, weather normal retail electricity sales to all classes were 0.3% lower than the first quarter of 2024. The lower sales for the quarter were driven largely by usage impacts on our residential customer class, which was partially offset by customer addition. These use-per-customer trends in the first quarter were consistent with our sales forecast for the year, including the approximately 1% year-over-year negative impact of having an extra day in the first quarter of 2024, which affected all customer segments year-over-year.
Reconciliation of year over year earnings is included in the materials. We released this morning.
Dan Tucker: Our adjusted EPS estimate for the second quarter is 85 per share.
Dan Tucker: Overall weather normal retail electricity sales to all classes or 3% lower than the first quarter of 2024.
Dan Tucker: The lower sales for the quarter were driven largely by usage impacts our residential customer class, which was partially offset by customer additions.
Dan Tucker: Use per customer trends in the first quarter were consistent with our sales forecast for the year, including the approximately 1% year over year negative impact of having an extra day in the first quarter of 2024, which affected all customer segments year over year.
Dan Tucker: We also believe return to office trends and customers proactive management of their energy consumption in response to inflation and economic uncertainty continue to be factors as well. Commercial and industrial sales were higher compared to the first quarter of 2024, as we saw continued strength in data center sales, which were up 11% year-over-year, office buildings, which were up 4%, and the transportation sector, which increased 4% year-over-year, primarily driven by the Hyundai Metaplant in southeast Georgia beginning production activities several months ago. More broadly, the economy in the Southeast remains well positioned. with unemployment rates and recent population growth in our service territories better than the national average.
Dan Tucker: We also believe returned to office trends and customers' proactive management of their energy consumption in response to inflation and economic uncertainty continue to be factors as well.
Dan Tucker: Commercial and industrial sales were higher compared to the first quarter of 2024 as we saw continued strength in data center sales, which were up 11% year over year office buildings, which were up 4% in the transportation sector.
Which increased 4% year over year, primarily driven by the Hyundai meta plant in southeast, Georgia, beginning production activities several months ago.
Dan Tucker: More broadly the economy in the southeast remains well positioned with unemployment rates and recent population growth in our service territories better than the national averages.
Dan Tucker: Additionally, economic development activity in the first quarter was robust. with announcements totaling over $11 billion of capital investment and more than 4,000 new jobs announced in our electric service territory. As we look ahead, our large load pipeline across our electric subsidiaries, which includes data centers and large manufacturers, continues to grow, totaling more than 50 gigawatts of potential incremental load by the mid 2030s. Project Commitments totaling 10 gigawatts and ongoing advanced discussions for even more, interest from large load customers and our service territories continues to be robust. As we've consistently communicated, our disciplined approach to forecasting means that our sales forecast only assumes a fraction of this pipeline materialized.
Dan Tucker: Additionally, economic development activity in the first quarter was robust with announcements totaling over $11 billion of capital investment and more than 4000, new jobs announced in our electric service territories.
Dan Tucker: As we look ahead, our large loan pipeline across our electric subsidiaries, which includes data centers and large manufacturers continues to grow totaling more than 50 gigawatts of potential incremental load by the mid 2000 <unk>.
Dan Tucker: With project commitments totaling 10, Gigawatts and ongoing advance discussions for even more.
Dan Tucker: Interest from large load customers in our service territories continues to be robust.
As we've consistently communicated our disciplined approach to forecasting it means that our sales forecast only assumes a fraction of this pipeline materializes.
Dan Tucker: Georgia Power's ongoing 2025 Integrated Resource Plan, or IRP, filed earlier this year, includes continued investment in the existing fleet with proposed plant life extensions, up rates for more capacity at existing nuclear and natural gas facilities, and the modernization of hydro facilities as we continue to plan our resources to economically and reliably serve our customers for the long term. Resolution of the 2025 IRP is expected in mid-July. Also in Georgia, the regulatory process continues for 13 gigawatts of new energy resources. via Competitive Requests for Proposals or RFPs. Various company-owned resources were submitted into these valuations. Successful bidders are expected to be notified in the coming months for a substantial portion of these RFPs, including 8.5 gigawatts of all-source, or technology-agnostic, energy resources.
Dan Tucker: Georgia Power's ongoing 2025 integrated resource plan or ERP filed earlier. This year includes continued investment in the existing fleet with proposed plant life extensions up rates for more capacity at existing nuclear and natural gas facilities and the modernization of hydro facilities.
Dan Tucker: <unk> as we continue to plan, our resources to economically and reliably serve our customers for the long term.
Dan Tucker: Resolution of the 2025 ERP is expected in mid July.
Dan Tucker: Also in Georgia, the regulatory process continues for 13 Gigawatts of new energy resources via competitive request for proposals or Rfps.
Dan Tucker: Various company owned resources were submitted into these valuations.
Dan Tucker: Successful bidders are expected to be notified in the coming months for a substantial portion of these rfps, including eight five gigawatts of all source or technology agnostic energy resources.
Dan Tucker: Georgia Power expects to file for certification of all projects awarded under these RFPs with the Georgia Public Service Commission in July. Considering the timeline of these ongoing Georgia regulatory processes, we expect to be positioned to provide additional color on potential updates to our capital expenditure outlook and associated financing plan on our second quarter earnings call. All else being equal, this potential incremental capital and continued economic development momentum are key to supporting our potential re-evaluation of the base for our long-term EPS growth as early as 2027.
Dan Tucker: Georgia power expects to file for certification of all projects awarded under these Rfps with the Georgia Public Service Commission in July.
Dan Tucker: Considering the timeline of these ongoing Georgia regulatory processes.
Dan Tucker: We expect to be positioned to provide additional color on potential updates to our capital expenditure outlook and associated financing plan on our second quarter earnings call.
Dan Tucker: All else being equal this potential incremental capital.
Dan Tucker: And continued economic development momentum are key to supporting our potential reevaluation of the base for our long term EPS growth as early as 2027.
Dan Tucker: Before I turn the call back over to Chris. I'd like to provide an update on our financing activities through the first quarter. Our state-regulated electric subsidiaries have issued $2.2 billion of long-term debt year-to-date, which is nearly half of 2025's projected financing needs for those entities in our base plant. Quality and credit strength of our subsidiaries continue to draw robust investor interest, providing strong access to capital and supporting lower interest costs for the benefit of customers. At the parent company, we have issued approximately $2.4 billion of Junior Subordinated Notes, or JSNs, year-to-date, which receive 50% equity treatment from the rating agency.
Chris Womack: Before I turn the call back over to Chris.
Dan Tucker: I'd like to provide an update on our financing activities through the first quarter.
Dan Tucker: Our state regulated electric subsidiaries have issued $2 $2 billion of long term debt year to date, which is nearly half of 2025 projected financing needs for those entities and our base plan.
Dan Tucker: Quality and credit strength of our subsidiaries continue to draw robust investor interest, providing strong access to capital and supporting lower interest cost for the benefit of customers.
At the parent company, we have issued approximately $2 $4 billion of junior subordinated notes or <unk> year to date, which receive 50% equity treatment from the rating agencies. We have also entered into forward contracts through our at the market program or ATM.
Dan Tucker: We've also entered into forward contracts through our At-The-Market Program, or ATM, for the sale of an additional $1 billion of common stock, with settlements extending as late as the second half of 2026. Collectively, the ATM and the JSNs equate to $2.2 billion of equity and equity equivalent. Combined with approximately $350 million of annual equity issuances we forecast through our internal plan. We have a clear path in place to fully address Four billion dollar, five-year equity needs in our base plant. Our disciplined approach in sourcing equity reinforces our commitment to maintaining strong investment credit ratings and our journey to 17% FFO to debt, while also focused on delivering value to shareholders.
Dan Tucker: For the sale of an additional $1 billion of common stock with settlements extending as late as the second half of 2026.
Dan Tucker: Collectively the ATM and the <unk> equate to $2 $2 billion of equity and equity equivalents.
Dan Tucker: Combined with approximately $350 million of annual equity issuances, we forecast through our internal plans.
Dan Tucker: We have a clear path in place to fully address the $4 billion five year equity needs in our base plan.
Dan Tucker: Our disciplined approach and sourcing equity reinforces our commitment to maintaining strong investment grade credit ratings, and our journey to 17% <unk> to debt, while also focus on delivering value to shareholders.
Dan Tucker: and we are well positioned to continue to finance any incremental growth opportunities above our base plan in a credit supportive and shareholder focused fashion.
Dan Tucker: And we are well positioned to continue to finance any incremental growth opportunities above our base plan and a credit supportive and shareholder focused fashion.
Chris Womack: I'll now turn the call back over to Chris. Thank you, Dan. Last week, the Southern Company Board of Directors approved an eight-cent-per-share increase in our annual common dividend. Raising the annualized rate to $2.96 per share. This action marks our 24th consecutive annual increase, and this will now be 78 consecutive years, dating back to 1948. Company has paid a dividend that is equal to or greater than the previous year. We are incredibly proud of our dividend track record, which continues to be an integral part of Southern Company's long-term value proposition. Southern Company has consistently delivered regular, predictable, and sustainable adjusted results.
Chris Womack: I'll now turn the call back over to Chris.
Chris Womack: Thank you Dan.
Speaker Change: Last week, the Southern company Board of Directors approved an <unk> <unk> per share increase in our annual common dividend.
Chris Womack: Raising the annualized rate to $2 96 per share.
Chris Womack: This action marks our 24th consecutive annual increase and this will now be 78 consecutive years dating back to $19 48.
Chris Womack: Southern company has paid a dividend that is equal to or greater than the previous year.
Chris Womack: We are incredibly proud of our dividend track record, which continues to be an integral part of southern company's long term value proposition.
Chris Womack: Southern company has consistently delivered regular predictable and sustainable adjusted results and I'll start to this year provides a solid foundation to continue executing on our goals for 2025 and beyond.
Chris Womack: and our start to this year provides a solid foundation to continue executing on our goals for 2025 and beyond. We remain very excited about the future of this company.
Chris Womack: We remain very excited about the future of this company.
Chris Womack: Thank you, as always, for your interest in Southern Company.
Thank you as always for your interest in Southern company. Operator, we are now ready to take questions.
Paul: Operator, we are now ready to take questions. Thank you. We'll now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for questions.
Speaker Change: Thank you we will now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
Speaker Change: I am pleased to while we pull for questions.
Carly Davenport: Our first question is from Carly Davenport with Goldman Sachs. Hey, good afternoon. Thanks for doing well. Thanks. Thanks for taking the time.
Our first question is from Carly Davenport with Goldman Sachs.
Carly Davenport: Hey, good afternoon. Thanks.
Speaker Change: How are you.
Dan Tucker: Maybe just to start on the 2Q EPS guide, the 85 cents represents fairly sizable downside relative to what you guys did last 2Q and 24.
Carly Davenport: Doing well thanks, thanks for taking the time.
Speaker Change: Maybe just to start on the <unk> EPS guide the 85 represents fairly sizeable downside relative to what you guys had last to Q and 24 could you just talk a little bit about the puts and takes there that drive that estimate, particularly relative to the stronger <unk> print.
Dan Tucker: Could you just talk a little bit about the puts and takes there that drive that estimate, particularly relative to the stronger 1Q Yeah, absolutely, Carly. This is Dan. Thanks for the question. So, there's two big factors in there, really. One is weather. Year over year, there's a pretty substantial weather differential. You know, if you're thinking about what normal weather in our forecast relative to a really strong, kind of warmer than normal quarter a year ago. And then, the other one is really just what I'd characterize as timing. There are recurring normal course transactions that happen within the Georgia transmission system that is mutually owned amongst all the parties in the state.
Dan Tucker: Yes, absolutely Collin this is Dan thanks for the question.
Dan Tucker: So there's two big factors and Theyre really one is weather year over year, there is a pretty substantial.
Dan Tucker: Weather differential.
Dan Tucker: If you're thinking about what normal weather in our forecasts relative to a really strong kind of warmer than normal quarter, a year ago and then the other one is really just what I'd characterize as timing there are kind of recurring normal course transactions that happen within the Jordan.
Speaker Change: The transmission system that is mutually owned amongst all the parties in the state not so Georgia power municipals.
Carly Davenport: So, Georgia Power, the municipals, entity that represents the co-ops, and there are ongoing transactions to transfer ownerships of assets, kind of commensurate with their load. So, we had a sizable transaction that occurred in the second quarter of last year, and there's none anticipated similarly in the second quarter of this year. So, those are the two big drivers. Got it. Great. That's helpful. Thanks for the clarity on that piece.
Speaker Change: It represents the co ops and there are ongoing transactions to transfer ownership of assets kind of commensurate with their loads. So we had a sizable transaction that occurred in the second quarter of last year and there is none anticipated. Similarly in the second quarter of this year. So those are the two big.
Speaker Change: Drivers.
Speaker Change: Got it great Thats helpful. Thanks for the clarity on that piece and then maybe just on the Georgia power load pipeline just any update you can provide in terms of size of the pipeline what's contracted what's broken ground similar to the disclosures that you guys have provided in prior quarters and then just more broadly anything you could share on.
Chris Womack: And then maybe just on the Georgia Power Load Pipeline, just any update you can provide in terms of size of the pipeline, what's contracted, what's broken ground, similar to the disclosures that you guys have provided in prior quarters. And then just more broadly, anything you could share on conversations you're having with your data center customers in Georgia, and if there's been any change in tone, just given the macro environment relative to last quarter.
Speaker Change: Conversations Youre, having with your data center customers in Georgia, and if theres been any change in tone, just given the macro environment relative to last quarter.
Chris Womack: Douglas, why don't you start with any change in tone, and I'll hit the numbers. Yeah, Carly, I mean, I think what we've seen is that we've not seen a shift in tone. I mean, I think as you've seen a few hyperscalers make some announcements the past couple of days about capital budgets, I think that's what we have seen in terms of our conversations all across our service territory with these data center hyperscaler customers in terms of looking to continue to make those investments to support their business strategies now and into the future. So we still see a robust degree of high economic activity in our service territory.
Chris Once you start with any change in tone in I'll call. It.
Speaker Change: What we've seen is that we've not seen a shift in tone.
Speaker Change: I think as you've seen a few hyperscale is make some announcements past couple of days about capital budgets I think thats, what we have seen in terms of our conversations Ali.
Speaker Change: All across our service territory with these data center Hyperscale customers.
Speaker Change: In terms of looking to continue to make those investments to support their business strategies now and into the future. So we still see a robust degree of high economic activity in our service territory.
Dan Tucker: Yeah, and then when it comes to the pipeline itself, Carly, you asked about the Georgia pipeline. I mean, in total, again, going out to the mid 2030s, it's about 52 gigawatts in Georgia alone. The, you know, contracted piece is I think the more interesting thing that you'll see when Georgia Power makes its filing here in the coming weeks is actually a shift forward in interest. So the more near-term pipeline, the 2028-2029 kind of number is actually moving up, which is actually an interesting and also exciting thing to see happening in the pipeline.
Speaker Change: Okay and then when it comes to the pipeline itself. Currently you asked about the Georgia pipeline I mean in total again going out to the mid 2000 <unk> that's about 52 gigawatts.
Speaker Change: In Georgia alone.
Speaker Change: The contracted piece is.
Speaker Change: Four gigawatts for that same number the committed as eight Gigawatts I think the more interesting thing that youll see when Georgia power makes its filing here in the coming weeks is actually a shift forward.
Speaker Change: And interests so the the more near term pipeline in the 2028 2029.
Speaker Change: Number is actually moving up which is actually an interesting and also exciting thing to see happening in the pipeline.
Carly Davenport: Awesome. Thanks so much for that. Appreciate it. You bet.
Speaker Change: Awesome. Thanks, so much for that I appreciate it you bet.
Speaker Change: Sure.
Julien Dumoulin Smith: Our next question is from Julien Dumoulin Smith with Jeffrey's LLC.
Speaker Change: Our next question is from Julien Dumoulin Smith with Jefferies LLC.
Julien Dumoulin Smith: Hey, Julien, how you doing, man? Hey, hey, good afternoon, guys. Thanks so much for the time. I appreciate it. Nicely done again. Got to hand it to you.
Speaker Change: Hey, Julien.
Speaker Change: Hey, good afternoon, guys. Thanks, so much for the time I appreciate it nicely done again and I'll hand, it to you.
Julien Dumoulin Smith: Hey, so let me let me just follow up a little bit where Carly just left it off there, because I know in the quarter, there's been a lot of talk about Microsoft and others that you're dealing with directly in your service territory. And there's a perception, you just hit it. But are you seeing any churn in the underlying composition of, of who, and the kind of data centers and the geography that you're seeing? Again, I know folks are at times are super fixated on one or two out there. But listening to your comments here, I mean, even if you got fixated on one specific site, seems like you're still seeing an aggregate acceleration and the opportunity, but I'd love to hear you reconciling your comments again, some of the again, some of the concerns about, you know, one or two discrete data points here.
Yeah.
Speaker Change: Okay. So let me let me just follow up a little bit. We're currently just left it out there because I know in the quarter Theres been a lot of talk about Microsoft and others that youre dealing with directly in your service territory and there is a perception you just hit it but are you seeing any churn in the underlying composition of who and the kind of data centers and the geography that youre seeing again.
Speaker Change: I know folks are at times are super fixated on one or two out there but.
Speaker Change: Listening to your comments here I mean, even if you got fixated on one specific site. It seems like Youre still seeing an aggregate acceleration and the opportunity, but I'd love to hear you reconciling your comments again some against some of the concerns about one or two discrete data points here.
Chris Womack: And Julien, I think you said it very well. I mean, there's an, I guess, aggregate, I use the word diversity of customers. I mean, from the one or two or three or four hyperscalers to developers as well. I mean, so I think we see kind of a wide, diverse nature of interest that is showing up in our territory. And that momentum continues to exist. I mean, so it's not just one or two. It's a, I think it's what we see is across the board in terms of the conversation and the interest that we are seeing.
Speaker Change: And I think you said it very well I mean, there isn't I guess aggregate.
Speaker Change: I used the word diversity of customers I mean from the one or two or three or four a hyperscale as to developers as well I mean, so I think we see kind of a wide diverse nature of interest that is showing up in our territory and that momentum continues to exist I mean so.
Speaker Change: It's not just one or two it's a I think it's what we see is across the board in terms of the conversation and the interest that we're seeing.
Julien Dumoulin Smith: Awesome. Yeah, I appreciate the commentary as possible here.
Speaker Change: Awesome.
Dan Tucker: And, you know, you guys provided some nice details on equity and overall financing plan here. Can you elaborate a little bit as you think about marrying up an improving balance sheet with your comments about the rebates potentially in 27? When and how do you think about getting to that 17% and reconciling against the potential rebates? Do you think you'd be at 17% by the time you kind of... You know, re-evaluate, shall we say, your EPS commitments here? Julian, I think of it more as having line of sight on it. And I think we've said this before.
Speaker Change: I appreciate the commentary as possible here.
Speaker Change: You guys provided some nice details on equity and overall financing plan here can you elaborate a little bit as you think about.
Speaker Change: Marrying up and improving balance sheet with your comments about the rebase potentially in 2007.
Speaker Change: And how do you think about getting to that 17% and reconcile that against the pleasure Marine base.
Speaker Change: We added 17% by the time, you kind of you.
Speaker Change: Reevaluate shall we say your EPS commitments here.
Speaker Change: John I think of it more as having line of sight on it and I think we've said this before so.
Dan Tucker: So it. Everything in kind of a measured way and financing all of our capital with the right mix to kind of get there. The biggest, as we've highlighted before, the biggest driver of improvement in the short term is really debt associated with certain regulatory assets rolling off. Right now on the books, there's about $2 billion really just at Georgia Power alone between remaining under-recovered fuel from a few years ago, there's about a billion dollars of that, and then a little over $800 million of storm costs from Hurricane Helene. As those costs get recovered over the next few years, that naturally on its own kind of brings the number up.
Speaker Change: Yeah.
Speaker Change: Everything and kind of a measured way and financing all of our capital with the.
Speaker Change: The right mix to kind of get there the biggest as we've highlighted before the biggest driver of improvement in the short term.
Speaker Change: Really that associated with certain regulatory assets rolling off right now on the books. There is about $2 billion really adjusted Georgia power alone between the remaining under recovered fuel from a few years ago. There was about $1 billion of that and then a little over $800 million of storm.
Speaker Change: Costs from Hurricane Helene as those costs get recovered over the next few years that naturally on its own.
Dan Tucker: The other offsetting factor will be, and I think this was a bit implicit in your question, is the capital plan, and particularly if we have incremental opportunities to deploy capital, that could adjust the shape of our journey to 17 percent a little bit and perhaps push it out a year or two. But I think getting to the heart of your question, by the time we get to 2027 or whenever that time comes, Will we be there? No. But will we need to have confidence that we can see it in the foreseeable future? Absolutely. And I think that's how we'll do it.
Speaker Change: Brings the number up.
Speaker Change: Other offsetting factor will be and I think this was a bit implicit in your question is the capital plan, particularly if we have incremental opportunities to deploy capital that could adjust the shape of our journey to 17% a little bit and perhaps push it out a year or two but I think getting to the heart of your question.
Speaker Change: And by the time, we get to 2027 or whenever that time comes.
Speaker Change: Will we be there no, but we'll we need to have confidence that we can see it in the foreseeable future absolutely and I think that's how we'll be positioning.
Julien Dumoulin Smith: Yeah, thank you for understanding the gist of it. Appreciate it, Dan. Best of luck, Chris. Nicely done. Thanks, Julien. Always.
Speaker Change: Yes. Thank you for understanding the gist of it I appreciate it Dan best of luck, Chris nicely done.
Speaker Change: Thanks, Julien always ma'am.
Nick Campanella: Our next question is from Nick Campanella with Barclays. Hey, guys, good afternoon. Nick.
Speaker Change: Our next question is from Nick Campanella with Barclays.
Nick Campanella: Hey, so, um, you know, question on the rebase, just trying to kind of understand a little bit more what that would look like. And I guess the question is, do you anticipate kind of being at the higher end of your five to seven through 27? And that would kind of equate to like a new higher base for 27 to grow off of? It's just going to be based off of actuals and where you get to just, I guess I'll leave it there. But it's just looking for more color on the interim.
Nick Campanella: Hey, guys good afternoon.
Speaker Change: Nick Hey, so.
Speaker Change: A question on the rebates, just trying to kind of understand a little bit more what that would look like.
Speaker Change: I guess the question is do you anticipate kind of being at the higher end of your 5% to 7% through 2007 and that would kind of equate to like a new higher base from 2007 to grow off of is it just going to be based off of actuals in where you get to just I guess I'll leave it there, but just looking for more color on the interim.
Dan Tucker: Sure, Nick. And yeah, and what I'll do is I'll just I'll just kind of restate the way we said it on our last call, because, again, you know, nothing has changed in the 10 weeks since then in terms of how we think about this. It's To the extent that this incremental capital opportunity that we pointed to emerges, and to the extent that this data center in particular momentum continues. All else being equal, yes, we believe that in the back half of our plan, We could be positioned at or near the top of our existing range.
Speaker Change: Sure, Nick and Yeah, and what I'll do is I'll, just I'll just kind of restate the way we said it on our last call because again nothing has changed in the 10 weeks. Since then in terms of how we think about this it's due.
Speaker Change: To the extent that this incremental capital opportunity that we pointed to emerges and to the extent that this data center in particular momentum continues.
Speaker Change: And all else being equal.
Speaker Change: Yes, we believe that in the back half of our plan.
Speaker Change: We could be positioned at or near the top of our existing range.
Dan Tucker: Now, we also pointed to headwinds in the near term, like parent company interest refinancing, and that's why the immediate near term is not up there. This is really about the back half. If that is what we see and where we are, and if kind of like going back to Julien's question about having line of sight, if that appears to be a sustainable trajectory. then that provides us the opportunity to potentially Rebase the starting point for 5 to 7. Okay. No, that's helpful.
Speaker Change: We also appointed the headwinds in the near term like parent company interest refinancings and Thats why the immediate near term is not up there. This is really about the back half.
Speaker Change: If that is what we see and where we are and if kind of like going back to Julians question about having line of sight, if that appears to be a sustainable trajectory.
Speaker Change: Then that provides us the opportunity to potentially.
Re base, the starting point for 5% to 7% growth.
Nick Campanella: And then just Georgia Power rate case, just.
Speaker Change: Okay No that's helpful.
Speaker Change: And then just.
Speaker Change: Georgia power rate case.
Nick Campanella: I just wanted to make sure, are you guys still on track to kind of file that at the end of June or by July 1st, and has anything kind of changed there in your rate case strategy? Thanks. Nick, I think you said it very well, as required by the 22 rate case order. We're working towards the filing this summer, so it would be that early July timeframe, so everything is on track to do that and to make sure we comply with that order, but you said it very well. Thank you.
Speaker Change:
Speaker Change: Just wanted to make sure you guys still on track to kind of fight that.
Speaker Change: End of June or by July one and has anything kind of changed there in your rate case strategy.
Speaker Change: Nicky I think you said it very well as required by the 'twenty two rate case order, we are working towards a filing this summer. So it would be that early July timeframe. So everything is on track to do.
Speaker Change: Do that and to make sure we comply with that order, but you said it very well.
Speaker Change: Thank you.
Speaker Change: Thank you. Thank you.
Jeremy Tonet: Our next question is from Jeremy Tonet with J.P. Morgan. Jeremy Jeremy. Hi, good afternoon. Are you doing? Good.
Speaker Change: Our next question is from Jeremy Tonet with Jpmorgan.
Speaker Change: Hey, Jeremy.
Jeremy Tonet: Hi, good afternoon.
Dan Tucker: Maybe just kind of picking up on the last point there with regards to the Georgia Power Rate case. Maybe, you know, build pressures and focus, I guess, nationwide, and just wondering any thoughts you could share with levers that you could potentially pull to manage cost from bills there. Is the potential to kind of, you know, move timing around or rate changes to coincide with fuel cost recovery rolling off, or just any other thoughts there? And once again, I mean, I think you're acknowledging all the factors and the variables and the puts and takes that will be under consideration as we look at the filing.
Speaker Change: Are you doing.
Speaker Change: Good good thanks, maybe just kind of picking up on the last point there with regards to the Georgia.
Speaker Change: Georgia power rate case.
Speaker Change: Maybe.
Speaker Change: Bill pressures and focus I guess nationwide and just wondering any thoughts you could share with leverage that you could potentially pull to manage customer bills. There is the potential to kind of move timing around a rate crease rate changes to coincide with fuel cost recovery rolling off or just any other thoughts there.
Speaker Change: And once again I think you acknowledging all the factors and variables and the puts and takes that will be under consideration as we look at the filing I mean is it.
Dan Tucker: I mean, it's a little bit too early to say what the exact filing will look like. But yeah, I mean, one of the things we think about is the pricing of these large load growth, how that can impact and help us with our focus on affordability. Yes, I mean, we do have the fuel case, fuel adjustment occurring that we'll recognize next year, in June of next year. So that's a factor to also be considered. We also have storm recovery related to Hurricane Eileen that has to be dealt with. So, I mean, I think you've acknowledged a lot of the factors that will go into what this filing could look like, but it's just way too early to kind of speak to exactly what the nature of the filing, how it will come together.
Speaker Change: A little bit too early to say, what the exact filing will look like.
Speaker Change: But yes, I mean, one of the things we think about is the pricing of these large load growth how that can impact and help us with our focus on affordability, yes, I mean, we do have the field case fuel adjustment.
Speaker Change: Occurring that will recognize next year and June of next year. So thats a factor to also be considered it. We also have storm recovery related to hurricane of lean that has to be dealt with so I mean, I think you've acknowledged a lot of the factors that will go into with this filing could look like but it's just way too early.
Speaker Change: To kind of speak to exactly what the nature of the filing how it will come together.
Dan Tucker: Got it. No, that's helpful. Thank you.
Dan Tucker: And then, just curious on your outlook for the IRA and any potential changes there, how that could impact Southern, you know, particularly as it relates to transferability, I guess, is in focus for the market. Just any thoughts in general from what you see or what you guys are thinking of? Yeah, Jeremy, I'll hit transferability first and let Chris weigh on any kind of broader policy commentary. But on transferability, we just aren't that reliant on it. We certainly take advantage of it where we can. And we've got a great program in place to monetize tax credits as efficiently and quickly as possible.
Speaker Change: Got it no. That's helpful. Thank you and then.
Speaker Change: Just curious on your outlook for the IAA.
And any potential changes there how that could impact southern.
Speaker Change: Particularly as it relates to transferability I guess is in focus for the market just any thoughts in general from what you see or what you guys are thinking at this point.
Jeremy Tonet: Yes, Jeremy I'll hit Transferability first.
Jeremy Tonet: Chris weigh on any kind of broader policy commentary on transferability, we just arent that rely on it we certainly take advantage of it where we can and we've got a great program in place.
Chris Womack: But if, for some reason, that was not available to us, based on our current base plan, I mean, the impact, FFO to debt, let's say, is a basis point or two. Or I'm sorry, 10 to 20 basis points or so. And so it's just not that meaningful. But it's important. And it's when it comes to projects that we're doing in the regulated space, it's good for customers to have that in place. It helps, obviously, monetize things and keep the balance sheet efficient. And that's good for everybody. So we're certainly doing what we can to be a part of that conversation and express the importance.
Jeremy Tonet: Monetize tax credits as efficiently and quickly as possible, but if for some reason that was not available to us based on our current base plan I mean the impact.
Jeremy Tonet: <unk> to debt, let's say as a basis point or two.
Jeremy Tonet: I'm, sorry, 10 to 20 basis points or so and so it's just not that meaningful.
Speaker Change: But it's important and it's when it comes to the projects that we're doing in the regulated space. It's good for customers to have that in place. It helps obviously monetize things and keep the balance sheet efficient and thats. Good for everybody. So we're certainly doing what we can be a part of that conversation and to express the importance Chris No I mean as Dan talked me is.
Chris Womack: Chris? No, I mean, as Dan talked to me, as a part of that conversation that Dan referred to me, we continue to engage with policymakers in the administration, but also as well as on Capitol Hill. Expressing and explaining the value and the benefits of these credits and tax policy in terms of value goes directly to customers. And as we talk about affordability and our strategy there, making sure there's full recognition or understanding that the benefits of these credits go directly to our customers. And so we are, I mean, we have no idea politically how this is going to play out with all the issues that are going on in Washington, but we continue to spend a lot of time making sure we're telling the story and helping people understand the value and benefits of these tax provisions.
Speaker Change: As part of the conversation that Dan referred to I mean, we continue to engage with policymakers and administration, but also as well as on Capitol Hill.
Speaker Change: Expressing and explaining the value and the benefits of these credits and tax policy in terms of value goes directly to customers and as we talk about affordability and our strategy there.
Speaker Change: Making sure Theres full recognition of understanding that the benefits of these credits go directly to our customers and so we are I mean, we have no idea politically how this is going to play out with all of the issues that are going on in Washington, but we continue to spend a lot of time, making sure we're telling the story and helping people understand the value and benefits.
Speaker Change: Of these tax provisions.
Jeremy Tonet: Got it. That's helpful. I'll leave it there. Thanks. Steve, thank you.
Speaker Change: Got it that's helpful I'll leave it there thanks.
Thank you.
Andrew Wiesel: Our next question is from Andrew Wiesel with Scotiabank. Hey, Andrew. Hey, good afternoon, everybody.
Speaker Change: Our next question is from Andrew Weisel with Scotiabank.
Dan Tucker: I'm hoping to elaborate a little bit on the commentary on demand trends. Even after adjusting for the leap day, each customer class saw a sequential slowdown. Data centers in particular still grew at a double digit pace, but down from 17% that last quarter to 11. Can you talk about that a little bit? I realized a year ago, weather was atypical, certainly skewed the residential comps, but that shouldn't matter as much for CNI. Can you elaborate a little bit? Yeah, I don't think there's anything to read into it, Jeremy. Again, if you adjust, you know, commercial and industrial in particular for that leap day effect, just for the first quarter, again, these are just quarter numbers, not kind of 12 months ended numbers.
Speaker Change: Hey, Andrew.
Andrew Weisel: Hey, good afternoon, everybody I'm, hoping to elaborate a little bit on the commentary on demand trends, even after adjusting for the leap day, each customer class a sequential slowdown datacenters in particular still grew at a double digit pace, but down from 17% last quarter to 11 can you talk about that a little bit I realized the year.
Andrew Weisel: Year ago weather was a typical certainly skewed the residential comps, but that shouldn't matter as much for C&I can you elaborate a little bit.
Andrew Weisel: Yes, I don't think theres anything to read into it Jeremy again, if you adjust commercial and industrial in particular for <unk> just for the first quarter again. These are just quarter numbers not kind of 12 months ended numbers.
Dan Tucker: It's a almost a full 1%, so up a percent and a half or so. The underlying stuff, like you mentioned, data centers, look, you're doing growth year over year on an increasing ramp, right? And so you're not comparing to the same numbers you were a quarter ago, you're comparing off a higher base a year ago, and so the numbers aren't going to necessarily align or continue to escalate in that fashion. In total volume, they continue to go up. You know, other things relative to our forecast, look, there's things that are just, again, timing related. There are some large industrial outages, not economy related, just kind of operational related.
Andrew Weisel: A full 1% so up a percent and a half or so the underlying stuff like you mentioned data centers look.
Youre doing growth year over year on an increasing ramp right and so you're not comparing to the same numbers you were a quarter ago, you are comparing off a higher base a year ago, and so the numbers aren't going to necessarily align or continuing to escalate in that fashion and total volume. They continue to go up.
Andrew Weisel: Other things relative to our our forecast look there are things that are just again timing related there are some large industrial outages not economy related just kind of operational related there was a delay in our <unk>.
Dan Tucker: There was a delay in a steel manufacturer that was expected to come on the first quarter that is baked into our numbers for the full year that's expected now in the next several months.
Andrew Weisel: Steel manufacturer that was expected to come on in the first quarter that is baked into our numbers for the full year. That's expected now in the next several months and so from our seat nothing in the first quarter results gives us any pause about any kind of systemic trends, we're seeing in the economy or underlying customer base.
Dan Tucker: And so from our seat, nothing in the first quarter results gives us any pause about any kind of systemic trends we're seeing in the economy or underlying customers. Okay, that's good to hear. And then similarly, the large load pipeline, the slides say well over 50. Dan, did I hear you right? Did you say 52 gigawatts now? I'm not sure if I maybe misheard you. But maybe if you could just get a little more detail there. How are you? You're being very clear in the tone that activity remains robust. Maybe you can get a little more detail in the numbers.
Speaker Change: Okay. That's good to hear and then similarly, the large loan pipeline.
Speaker Change: <unk> say well over 50, then because I hear you right did you say 52, Gigawatts now I'm not sure if I, maybe misheard you, but maybe if you could just give a little more detail there how are you.
Speaker Change: You you've been very clear in the tone that activity remains robust maybe.
Dan Tucker: Yeah, I think the tone, Andrew, is what's more important than numbers. I answered a question earlier specific to the Georgia pipeline that we make filings on. So that's 52 gigawatts on its own. The characterization we made in the prepared remarks is for the total consolidated pipeline across all three electric service territories. And we said over 50. And it grew quarter over quarter. In fact, it was over 50 last quarter, it's over 50 this quarter, but the bigger, bigger over 50. We're trying to be a little less precise about the total. Because look, everyone has acknowledged that these pipelines include some degree of double counting, they include some degree of Speculative Projects, and that's where it's really important to really focus on the way in a very measured way that we are only including and counting on and planning for a small fraction of these numbers.
Speaker Change: Maybe you could get a little more detailed in the numbers.
Speaker Change: Yes, I think the tone Andrew's, what's more important the numbers I answered the question earlier specific to the Georgia pipeline that we make filings on so thats 52, gigawatts on its own the the characterization. We made in the prepared remarks is for the total consolidated pipeline across all three electric service territories, and we said over <unk>.
50.
Speaker Change: It's and it grew quarter over quarter in fact, it was over 50 last quarter's over 50 this quarter, but it's a big bigger over 50, we're trying to be a little less precise about the total because look everyone has acknowledged that these pipelines includes some degree of double counting that includes some degree of specs.
Speaker Change: Speculative projects and that's where it's really important to really focus on the way.
Speaker Change: Measured way that we are only including in counting on and planning for a small fraction of these numbers. So we're trying not to get hung up too much on the big headline number and focus more on kind of the underlying tangible trends that we're seeing within that pipeline.
Andrew Wiesel: So we're trying not to get hung up too much on the big headline number and focus more on kind of the underlying tangible trends that we're seeing within that pipeline. Okay, as long as you're clarifying that they are in fact rising, that's reassuring. Thank you very much. Appreciate it. You bet, Andrew.
Speaker Change: Okay as long as Youre clarifying that they are in fact rising that's reassuring. Thank you very much I appreciate it.
Speaker Change: Andrew.
David Arcaro: Our next question is from David Arcaro with Morgan Stanley. Hey, David. Hey, thanks so much. I guess maybe, on data center activity, I was just wondering if there had been any... Change is following the modifications of the rate structure that you've now implemented in Georgia. Any feedback on that, you know, is that manageable? to work with now.
Speaker Change: Our next question is from David Arcaro with Morgan Stanley.
Speaker Change: Hey, David.
David Arcaro: Hey, thanks, so much.
Speaker Change: I guess maybe.
Speaker Change: On data center activity I was just wondering if there had been any.
Any changes following the modifications if the rate structure that you've now implemented in Georgia any feedback on that.
Speaker Change: Is that manageable for the industry.
Speaker Change: To work to work with now in that state.
Dan Tucker: Yeah, Dave, it's Dan. It's just it's early days still. And so it's important to understand kind of the journey we've been on there. So very much earlier this year, we highlighted the rules, which the commission approved, which were very kind of high level rules to be the basis of a framework. What has happened since then is there's been an actual more detailed framework that's been developed by the public utility staff working with the company to kind of Great, what was essentially a tariff framework doesn't have specific pricing in there, but it is a framework for doing this that just got finalized a couple of weeks ago.
Speaker Change: Yes, David It's Dan It's just it's early days still and so it's important to understand kind of the the.
Speaker Change: The journey, we've been on there so very much earlier this year, we highlighted the rules, which the commission approved which we're very kind of high level rules too.
Speaker Change: Be the basis of a framework what has happened since then.
Is there has been an actual more detailed framework that's been developed by the public utility staff working with the company to kind of.
Speaker Change: Great.
Speaker Change: Essentially a tariff framework does have specific pricing in there, but it is a.
Speaker Change: Framework for doing this that just got finalized a couple of weeks ago.
Chris Womack: April 15, I think is what was the date that it happened. So in terms of The details kind of being Absorbed by and understood well by potential customers, that process is underway now, so it's a little early for reaction. but I do think some of the reaction. Feedback We've Gotten. You know, we talk a lot about orderly processes. This framework does provide another degree of order and certainty as we engage with these customers. And I think you've seen Another state and others consider looking at deploying, approving very similar rules and regulations. So we think today to somewhat of a market that's evolving to bring this kind of certainty really brings some discipline and puts us in a position, as we always say, to make sure as we engage with these customers, we're going to we want to provide benefits to all of our customers.
Speaker Change: April 15th I think is what was the date that it happened so in terms of.
Speaker Change: The details kind of being.
Speaker Change: Absorbed by and understood well by potential customers that process is underway now so it's a little early for reaction.
Speaker Change: But I do think some of the reaction.
Speaker Change: Some feedback we've gotten we've talked a lot about orderly processes.
Speaker Change: This does this framework does provide.
Speaker Change: Another degree of order and certainty as we engage with these customers and I think you've seen.
Speaker Change: Another state and others consider looking at deploying.
Speaker Change: Proving very similar rules and regulations, so we think to take.
Speaker Change: Somewhat of a.
Speaker Change: In a market that is evolving to bring this kind of certainty really brings some discipline and puts us in a position as we always say to make sure as we engage with these customers we're going to we want to provide benefits to all of our customers. So we think theres great value.
David Arcaro: So we think there's great value in these rules and regulations and this framework that's been approved by the commission. Yeah. And David, as you heard me answer Andrew's question, I mean, over the last three months, the pipeline has grown and the nature of these rules, while not the details have not been out there, the nature of them has been for three months and that growth has continued to occur. Yep, got it. Okay, great. That makes sense.
Speaker Change: And these rules and regulations and this framework that's been approved by the Commission and David as you heard me answer Andrews question I mean over the last three months the pipeline has grown and the nature of these rules while not the details have not been out there. The nature of them has been for three months and that growth has continued to occur.
Speaker Change: Yes, yes got it okay, great that makes sense.
David Arcaro: You know, separately, I was curious, you know, is there any feedback that you'd offer on what you're seeing in the RFPs that are underway? There's just been so many moving pieces around, like tariffs, you know, inflation, pricing. Equipment. So I'm just wondering, you know, are there any changes in the preference, like technology preference or strategy or the, you know, the split among solar, storage, natural gas, as you're kind of exploring?
Speaker Change: Separately I was curious is there any feedback that you would offer on what youre seeing in the Rfps that are underway that have just been so many moving pieces around tariffs inflation price increases for equipment. So I'm just wondering.
Speaker Change: Are there any changes in the in the preference like technology preference or strategy or the split amongst solar storage natural gas.
Speaker Change: As you are kind of executing against these rfps.
Dan Tucker: Yeah, and David, unfortunately, we can't speak to the RFP process. It's very intentionally done kind of by an independent evaluator, very confidentially, a lot of trade secret information. So disclosing or answering any of the questions you just asked, I think, would be stepping outside the bounds of what we were allowed to do. Okay, got it. We'll revisit as you get toward the end there, but appreciate it. Yeah. And I will just say, David, look, what's important about the RFP itself being the nature is it's all source, right? And so it does inherently have in it a multitude of technologies and options.
Speaker Change: Yeah, and David Unfortunately, we can't speak to the RFP process, it's very intentionally done.
Speaker Change: By an independent evaluate are very confidentially lot of trade secret information so disclosing.
Speaker Change: Our answering any of your questions USAA ask I think would be stepping outside the bounds of what we were allowed to do.
Speaker Change: Okay got it.
Speaker Change: Revisit as you get towards the end there, but I appreciate yes and no.
I will just say, David what's important about the RFP itself being the nature, It's all source right and so that it does inherently have in it a multitude of technologies and option. So at the end of the day given all the factors you've listed that independent evaluate are and the commission will have options to kind of address.
Dan Tucker: So at the end of the day, given all the factors you've listed, that independent evaluator and the commission will have options to kind of... Understood. Okay. Thank you.
Durgesh Chopra: You bet. Thank you.
Speaker Change: Yeah understood. Okay. Thank you.
Speaker Change: You bet. Thank you.
Durgesh Chopra: Our next question is from Durgesh Chopra with Evercore ISO. Gas, how you doing, man? Hey, good afternoon. You actually answered all my questions. But can I just ask a quick clarification question on the RFP? So I think there's some language in the slides on clarity by July, this is the Georgia RFP. But then there's some also, I think language in the release that you get more incremental data points throughout 2025. And then Dan, I think you said, Q2 call, which is presumably, you know, sometime in July, we'll be able to get some more capacity. So are we going to get concrete data points from the RFP in July itself?
Our next question is from Doug guests Cobra with Evercore ISI.
Speaker Change: Hey, guys how are you doing man.
Speaker Change: Hey, good afternoon.
Speaker Change: Answered all my questions, but can I just ask a quick clarification question on the RFP.
Speaker Change: No.
Speaker Change: I think there is some language in the slides on clarity by July the Georgia RFP, but then there is some ultra I think language in the release that you will get more incremental data point throughout 2025, and then Dan I think you said Q2 call, which is presumably and.
Speaker Change: No.
Speaker Change: Sometime in July.
Speaker Change: We'll be able to.
Speaker Change: Get you some more capex.
Speaker Change: So.
Speaker Change: Are we going to get concrete data points from the RFP in July itself.
Durgesh Chopra: So definitely Durgesh, by the time of our Q2 call, we will be able to speak to we believe incremental capital opportunities, at least associated with that largest all source RFP, and maybe some degree of the other RFP. And so that will kind of address most, I think, of the up the potential upside capital that we've Okay, got it. Okay, perfect. That's all. That's all I had. I'll give the time to somebody else. Really appreciate you taking the time.
Speaker Change: So definitely digested by the time of our Q2 call, we will be able to speak to we believe incremental capital opportunities at lease associated with that largest all source RFP and may be some degree of the other rfps.
Speaker Change: And so that will kind of address most I think of the up the potential upside capital.
Speaker Change: We wanted to.
Speaker Change: Okay got it okay perfect. That's all that's all I had.
Speaker Change: Ill give the 10 to somebody else and we appreciate you taking the time.
Shahriar Pourreza: Durgesh. Our next question is from Shahriar Pourreza with Guggenheim Security. Shah. Hey, good afternoon, everyone. It's actually Alex here on for Shahriar.
Speaker Change: Better yes.
Speaker Change: Our next question is from Shar <unk> with Guggenheim Securities.
Speaker Change: Hey, good afternoon, everyone, it's actually Alex on for sure.
Alex: Just on the impact from tariffs as we think about the growth opportunities at Southern Power, sort of what's the exposure there? You could be looking at building contracted gas. And conversely, does the tariff and supply chain environment further conversations for contract renewals for the expiring tolling agreements? Thanks. Yeah, look, Alex, I think the way to think about Southern Power is twofold. One, it's projects they already have underway. And when it comes to that, I think they're incredibly well positioned when it comes to this. The solar facility they have under construction is in great shape from that perspective.
Speaker Change: Hey, Alex.
Speaker Change: Just on the impacts from tariffs is when you think about the growth opportunities at southern power sort of what's the exposure there.
Speaker Change: Are you looking at building contracted gas and Conversely, does the tariff and supply chain environment further conversations for contract renewals for the expiring tolling agreements.
Speaker Change: Yes look Alex I think the way to think about southern power is twofold. One it's projects they already have underway and when it comes to that I think they are incredibly well positioned when it comes to this.
Speaker Change: The solar facility they have under construction is in great shape from that perspective.
Dan Tucker: It's far enough along and materials on the ground enough that there's very little exposure there. There's a wind repowering project underway. I also feel pretty good about how we're protected there. Your question really spoke to new contracted gas in the future. And that's a little bit the beauty of our business model at Southern Power. We don't go out and do speculative projects where we build something and then go get a contract. Get a contract, make sure the risk mitigations are in place for that contract, understand the environment we're in from a cost perspective. Dingo execute.
Speaker Change: Far enough along in materials on the ground enough.
Speaker Change: There's very little exposure there.
Speaker Change: There is a wind repowering projects underway also feel pretty good about how we're protected there.
Speaker Change: Your question really spoke to.
Speaker Change: New contracted gas in the future and Thats, a little bit the beauty of our business model at Southern power, We don't go out and do speculative.
Speaker Change: Projects where are we.
Speaker Change: Build something and then go get a contract it's.
Speaker Change: Get a contract to make sure the risk mitigation are in place for that contract understand the environment. We're in from a cost perspective.
Dan Tucker: And so I feel confident that we'll have the ability to price in. Whatever. Future holds in terms of cost to build new natural gas, there's always some degree of risk, but that's where we're also incredibly measured from a contingency and contractual provision.
Speaker Change: And then go execute and so I feel confident that.
Speaker Change: We will have the ability to price in.
Speaker Change: Whatever.
The future holds in terms of cost to build new natural gas. There's always some degree of risk with us where we're also incredibly measured from a contingency and contractual provision perspective.
Dan Tucker: Great, thanks. And just a quick one, just a quick one on the upcoming GRC, just sort of how you're thinking about it. It's an election year, the PSC has been more vocal, just any sense how we should be thinking about the ask or the rate impact. You haven't filed yet. So our conversations happening ahead of filings. Thanks. Yeah, in responding to an earlier question, I think it's too early to really say what the filing will look like. I mean, there are a number of variables and puts and takes and issues that have to be dealt with.
Speaker Change: Alright. Thanks.
Speaker Change: And just a quick one just a quick one on the upcoming <unk>, just sort of how youre thinking about it it's an election year. The PSC has been more vocal just any sense, how we should be thinking about the ask of the rate impact you haven't filed yet our conversations happening ahead of silence.
Speaker Change: Yes.
Speaker Change: In response to an earlier question I think it's too early to really say what the filing will look like I mean, there are number of variables and puts and takes.
Dan Tucker: And, yeah, clearly affordability is an issue that will be primary and at the forefront of our thinking, but it's just, I think, simply too early to kind of say what all of that will look like. I mean, we're ordered to file and we'll do that in early July, but I think it'd be a little bit premature to speak to kind of what the actual and what some of the exact provisions and considerations will look like at this time. Got it. Thanks. I'll leave it there. Thanks for taking my questions. Thank you.
Speaker Change: And issues that have to be dealt with.
Speaker Change: Yes, clearly affordability is an issue that will be primary and at the forefront of this.
Speaker Change: Our thinking but as Jess I think simply too early to kind of say what all of that will look like I mean, we were ordered to file.
Speaker Change: And we will do that on early July, but I think it would be.
Speaker Change: So it would be premature to speak to kind of what's the actual and what some of them.
Speaker Change: Zach.
Speaker Change: Provisions in considerations will look like at this time.
Got it thanks I'll leave it there thanks for taking my questions.
Travis Miller: Our next question is from Travis Miller with Morningstar. Travis. Thank you. Hello, everyone.
Speaker Change: Thank you.
Speaker Change: Our next question is from Travis Miller with Morningstar.
Travis Miller: Hey, Travis Thank you Hello, everyone.
Dan Tucker: Two part question here, as you're going through the RFPs and any other generation contracting and look for it, how much is midstream becoming a constraint? And then you've also identified that to an extent as part of the upside CapEx opportunities. Is that something a midstream gas investment or a midstream gas joint venture, something like that, a potential that we might see midyear as you update it? Yeah, Travis is Dan, I'll, I'll take that is Gas Supply, a focus for us as we look at these generation expansion plans, absolutely. But I think we're incredibly well positioned there.
Travis Miller: Two part question here as you go into the Rfps than any other generation contracting and look forward how much is midstream, becoming a constraint and then you've also identified that to an extent as part of the upside capex opportunities.
Travis Miller: Is that something in midstream gas investment, our midstream gas joint venture or something like that.
Travis Miller: Potential that we might see midyear as you update it.
Dan Tucker: Yes. This is Dan I'll take that is.
Dan Tucker: Gas supply a focus for us as we look at these generation expansion plans absolutely.
Dan Tucker: We're participating in a multitude of expansion projects in the Southeast as a procurer of natural gas, so locking up, if you would, firm transportation of natural gas to serve our needs well into the future. So it's, I think there is One, a sufficient starting point for supply and great line of sight for incremental supply. When it comes to our own investment, None of that is Greenfield brand new pipeline opportunities. We already have 50% interest in the Southern Natural Pipeline that kind of overlays our Southeast Service Territory. That's our largest midstream investment. Kinder Morgan operates that on behalf of our partnership.
Dan Tucker: But I think we're incredibly well positioned there were participating in a multitude of expansion projects in the southeast as a procure of natural gas. So locking up if you would firm transportation of natural gas to serve our needs well into the future. So it's I think there is.
Dan Tucker: One a sufficient starting point for supply and great line of sight for incremental supply when it comes through our own investments.
Dan Tucker: None of that is.
Dan Tucker: Greenfield brand new pipeline opportunities, we already have.
Dan Tucker: 50% interest in the southern natural pipeline that kind of overlays our southeast service territory, that's our largest midstream investment Kinder Morgan operates that on behalf of our partnership and then we've got a couple of other much smaller.
Chris Womack: And then we've got a couple of other much smaller ventures where we are not the operator and are a passive owner of those facilities. And so these upside opportunities are largely associated with Potential expansion projects of those pipelines, primarily brownfield, looping, very, very little greenfield exposure, and all in service territories that we know of.
Dan Tucker: Ventures, where we are not the operator NRA passive owner of those facilities and so these upside opportunities are largely associated with potential.
Dan Tucker: Expansion projects of those pipelines, primarily brownfield looping.
Dan Tucker: Very very little Greenfield exposure.
Chris Womack: Dan, one thing I would add, and from a broader policy perspective, when I was at a meeting conference last week with Secretary of Energy, Secretary of Interior, Secretary of Agriculture and EPA Administrator, as well as some other industry and data center hyperscalers, and I mean, there's just broad consensus that to meet this growing demand, there's going to have to be more pipes being built, as well as more transmission being built to make sure we have the capacity and the resources to meet this growing need. So, yeah, I mean, that's part of our narrative and part of our conversation.
Dan Tucker: All in service territories that we know well.
Dan Tucker: Dan One thing I would add from a broader policy perspective.
Dan Tucker: I mean, how is that a meeting conference last week with the Secretary of Energy Secretary of Interior Secretary of Agriculture, and EPA administrator as well as some other industry.
Dan Tucker: Data center, Hyperscale or I mean, theres, just broad consensus that to meet this growing demand is going to have to be more pipes being built as well as more transmission being built to make sure.
Dan Tucker: We have the capacity and the resources to meet this growing need so yes, I mean, that's part of our narrative and part of our conversation.
Travis Miller: Express in support for additional permitting reform to make sure that we can in a timely manner meet this growing demand by building out the infrastructure in this country. Perfect. That's great. I appreciate all those details.
Dan Tucker: Expressed support for additional permitting reform to make sure that we can.
Dan Tucker: Family matter meet this growing demand.
Dan Tucker: By building out the infrastructure in this country.
Dan Tucker: Now that I know you were in the room with a lot of important people, I got a lot of other questions, but we'll do that later. One other quick one. On the dividend policy, anything that the board is looking at? I know you've been on that $0.08 and even $0.07 for a long time. Increase anything? In particular metric wise that the board would look to to get off of that seven or eight percent increase. Yeah, look, I think from where we are today, it's a recognition that we've got a lot of financing to do in a big capital plan.
Dan Tucker: Perfect. That's great I appreciate all those details now that I know you were in the room with a lot of important people got a lot of other questions later.
Dan Tucker: The later.
Dan Tucker: One other quick one.
Dan Tucker: On the dividend policy anything that the board is looking at I know you've been on that <unk> and even <unk> for a long time increase anything.
Dan Tucker: In particular metric wise.
We would look to to get off of that 7%, 8% increase.
Yes.
Dan Tucker: I think from where we are today, it's a recognition that we've got a lot of financing to do and a big capital plan.
Travis Miller: And, you know, a great source of equity is keeping the growth in a dividend more modest than not. And doing so should help us drive our payout ratio a little further south. I think once we are kind of in the low 60% range somewhere, which would kind of be the back end of our plan if we stay at this pace. That's the time to step back and reevaluate. Do those capital opportunities and equity needs persist out into the future? If so, we might remain modest. If not, the board might have an opportunity to do some Perfect.
Dan Tucker: And a great source of equity is keeping the growth on dividend more modest than that.
Dan Tucker: Doing so should help us draw.
Dan Tucker: Our payout ratio a little further Sal I think once we are kind of in the low 60% range somewhere which would kind of be the back end of our plan. If we stay at this pace.
Dan Tucker: That's the time to step back and reevaluate do those capital opportunities and equity needs persist out into the future. If so when might remain modest if not the board might have an opportunity to do something different.
Travis Miller: Okay. Thanks so much. Appreciate it. Thank you, Matt Travis.
Speaker Change: Perfect. Okay. Thanks, so much I appreciate it.
Travis Miller: Thank you you bet Travis.
Paul: And that will conclude today's question-and-answer session. Sir, are there any closing remarks? Again, we thank you for your interest in Southern Company and we look forward to speaking with you on our next call. Thank you very much. Have a great day. Thank you, sir.
Speaker Change: And that will conclude today's question and answer session. Sir are there any closing remarks.
Speaker Change: Again, we thank you for your interest in Southern company and we look forward to speaking with you on our next call. Thank you very much have a great day.
Paul: Ladies and gentlemen, this concludes Southern Company's first quarter 2025 earnings call. You may now disconnect.
Speaker Change: Thank you, Sir ladies and gentlemen, this concludes southern company's first quarter 2025 earnings call.
Speaker Change: Now disconnect.