Q2 2025 The Southern Co Earnings Call

Kevin (Conference Operator): Good afternoon. My name is Kevin, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the SOUTHERN Company's second quarter 2025 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there'll be a question and answer session. You may be placed into question queue at any time by pressing star one on your telephone keypad. I will now turn the call over to Mr. Greg MacLeod, Director of Investor Relations. Please go ahead and answer.

Good afternoon. My name is Kevin, and I'll be your conference operator. Today, at this time, I'd like to welcome everyone to The Southern Company's Q2 2025 earnings call.

All mine's been placed on mute to prevent any background noise. After the speaker's remarks, there'll be a question and answer session. You may be placed into question Queue at any time by pressing star 1 on your telephone keypad,

Greg Macleod: Good afternoon and welcome to SOUTHERN Company's second quarter 2025 earnings call. Joining me today are Chris Womack, Chairman, President, and Chief Executive Officer of SOUTHERN Company, and David Paroch, Chief Financial Officer. In addition, Dan Tucker, who recently announced his retirement as CFO of SOUTHERN Company after nearly three decades with the company, is also joining us for the call today. 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 the Form 10-K, Form 10-Q, and subsequent securities filings. In addition, we will present non-GAAP financial information on this call.

I would now like to turn the call over to Mr. Greg MacLeod, Director of Investor Relations. Please go ahead, sir.

Good afternoon and welcome to Southern Company's second quarter 2025 earnings call. Joining me today are Christopher Womack, Chairman, President, and Chief Executive Officer of Southern Company, and David Perrow, Chief Financial Officer.

In addition, Dan Tucker, who recently announced his retirement as CFO of Southern Company, after nearly three decades with the company, is also joining us for the call today.

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 the form. 10K form, 10 q and subsequent Securities filings.

Greg Macleod: 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 our investor relations website at investor.southercompany.com. At this time, I'll turn the call over to Chris.

In addition, we will present non-gaap financial information on this call.

Chris Womack: Thank you, Greg, and good afternoon, and thank you for joining us on today's call. As you can see from the materials that we released this morning, we reported strong adjusted earnings results for the second quarter, meaningfully above the estimate provided last quarter, and we remain on track to meet our financial objectives for 2025. These results reflect the combined efforts of many employees across the SOUTHERN Company system who consistently work to deliver clean, safe, reliable, and affordable energy to our customers. Our operations team, generation fleet, and power delivery system have demonstrated exceptional performance throughout the first half of the year. Just this week, during an extreme heat wave, our system, with the support of our dedicated team, met the year-to-date peak load of nearly 39 gigawatts with no major issues. Our success.

Reconciliations to the applicable Gap measure are included in the financial information. We release this morning as well as the slides for this conference call which are both are available on our investor relations website at investor company.com at this time. I'll turn the call over to Chris.

Thank you, Greg, and good afternoon. Thank you for joining us on today's call.

As you can see from the materials that were released this morning,

We reported strong adjusted earnings results for the second quarter, meaningfully above the estimate provided last quarter. We remain on track to meet our financial objectives for 2025.

These results. Reflect the combined efforts of many employees across the Southern Company's system, who consistently work to deliver Clean, safe, reliable, and affordable energy to our customers.

Our operations team generation Fleet and power delivery system have demonstrated exceptional performance throughout the first half of the year.

Recording/Announcement Voice: This call is now being recorded.

Chris Womack: Is a testament to our vertically integrated, state-regulated business model with long-range integrated resource planning processes, which continue to deliver substantial value to our customers and the communities we are privileged to serve. Providing outstanding reliability and affordable service to our customers is fundamental and just one example of why SOUTHERN Company truly is a great company and continues to find ways to improve and get better. Dan, I'll now turn the call over to you for an update on our financial performance.

Just this week, during an extreme heat wave, our system, with the support of our dedicated team, met the year-to-date peak load of nearly 39 gigawatts with no major issues.

To deliver substantial value to our customers. And the communities. We are privileged to serve

Providing outstanding reliability and affordable service to our customers is fundamental and just 1, example of why Southern Company, truly is a great company and continues to find ways to improve and get better.

Dan Tucker: Thanks, Chris, and good afternoon, everyone. For the second quarter of 2025, our adjusted earnings per share was 92 cents per share, 7 cents above our estimate, and 18 cents lower than the second quarter of 2024. Our performance for the current quarter included increased earnings from investments in our state-regulated utilities, along with higher usage and customer growth, which added 6 cents year-by-year compared to the second quarter of 2024. These positive drivers were offset by milder weather, prior year gains on transmission asset sales, and current year state tax credit adjustments, along with higher operating costs, interest expense, and depreciation and amortization. A complete reconciliation of year-by-year earnings is included in the materials we released this morning. Our adjusted EPS estimate for the third quarter is $1.50 per share.

Dan, I'll now turn the call over to you for an update on our financial performance.

Thanks, Chris and good afternoon everyone. For the second quarter of 2025, our adjusted earnings per share was 92 cents per share, 7 cents above our estimate and 18 cents lower than the second quarter of 2024.

Our performance for the current quarter included increased earnings from investments in our state-regulated utilities, along with higher usage and customer growth, which added $0.06 year-over-year compared to the second quarter of 2024.

These positive drivers were offset by milder weather.

Prior to your gains on transmission asset sales and current year state tax credit adjustments, along with higher operating costs.

Interest expense and depreciation in.

A complete reconciliation of year-over-year earnings is included in the materials. We released this morning.

Dan Tucker: Turning now to our retail electricity sales, year-to-date weather normal retail electricity sales were 1.3% higher than the first half of 2024. Year-by-year retail electricity sales growth increased modestly across all customer classes in the second quarter, growing 3% from the second quarter of 2024. Weather normal residential sales were up 2.8%, higher than in the second quarter of 2024, bolstered by the addition of over 15,000 new electric customers in the quarter and higher overall use per customer. Weather-adjusted commercial sales and industrial sales, which were 3.5% and 2.8% higher, respectively, in the quarter compared to the prior year, were driven by the combination of increased existing customer usage and new large load customers coming online. Notably, data center usage was 13% higher compared to the second quarter of 2024.

Our adjusted EPS estimate for the third quarter is $1.50 per share.

Turning now to our retail electricity sales.

Year to date, normal retail electricity sales were 1.3% higher than in the first half of 2024.

Year-over-year retail electricity sales growth increased modestly across all customer classes in the second quarter, growing 3% from the second quarter of 2024.

Whether normal residential sales were up 2.8% higher than in the second quarter of 2024 bolstered by the addition of over 15,000 new electric customers in the quarter and higher overall use per customer.

Weather-adjusted commercial sales and industrial sales, which were 3.5% and 2.8% higher, respectively, in the quarter compared to the prior year, were driven by a combination of increased existing customer usage and new large load customers coming online.

Dan Tucker: Industrial sales to our largest customer segments also saw robust growth in the quarter, including transportation and primary metals, which were both up 6% year-by-year, and paper, which was up 16%. I now turn the call back over to Chris for further insights into our economic activity and to highlight recent constructive outcomes for some of our regulatory processes.

Notably, data center usage was 13% higher compared to the second quarter of 2024.

Industrial Sales to our largest customer. Segments also saw robust growth in the quarter including transportation and primary Metals, which were both up 6% year-over-year and paper, which was up 16%

Chris Womack: Thank you, Dan. While we can continue to monitor macroeconomic trends, the economy in the Southeast remains well-positioned, with unemployment rates and recent population growth in our service territories better than national averages. Economic development activities in the second quarter continued, with announcements totaling nearly $2 billion of capital investment and more than 6,000 new jobs announced in our electric service territories. Of note, in Alabama, there were several economic development announcements led by continued expansion in the aerospace and automotive sectors. Industrial manufacturing developments in Mississippi included the announcement of an expansion by a domestic manufacturer specializing in electric transformers, which is expected to create 400 local jobs. The large load pipeline across Alabama, Georgia, and Mississippi, which includes data centers and large manufacturers, remains well above 50 gigawatts of potential incremental load by the mid-2030s.

I now turn the call back over to Chris for further insights into our economic activity and to highlight recent constructive outcomes, for some of our regulatory processes

Thank you, Dan.

While we can continue to monitor macroeconomic trends.

The economy in the Southeast remains well positioned, with unemployment rates and recent population growth in our service territories better than national averages.

Economic Development activities in the second quarter continued with announcements totaling nearly $2 billion in capital investment and more than 6,000 new jobs announced in our electric service territories. Of note in Alabama, there were several Economic Development announcements led by a continued expansion in the aerospace and automotive sectors.

Industrial manufacturing developments in Mississippi included. The announcement of an expansion by domestic. Manufacturers specializing in electric Transformers, which is expected to create 400, local jobs,

The large load pipeline across Alabama, Georgia, and Mississippi.

Chris Womack: With project commitments totaling 10 gigawatts and ongoing advanced discussions for even more, interest from large load customers in all of our electric service territories continues to be strong and growing, and we're increasingly well-positioned to serve this robust projected growth in a sustainable fashion. As we have consistently communicated, our disciplined approach includes pricing and contract terms designed to protect existing customers and our investments, while also generating economic benefits for all customers. In May, Georgia Power and the Georgia Public Service Commission Public Interest Advocacy staff, along with several other interveners, reached a settlement that demonstrated the reality of these economic benefits for customers.

Which includes data centers and large manufacturers, remains well above 50 gigawatts of potential incremental load by the mid-2030s.

With project, commitments told in 10 gigawatts and ongoing Advanced discussions for even more.

Interest from large load customers in all of our electric service territories continues to be strong and growing, and we're increasingly well positioned to serve this robust projected growth in a sustainable fashion.

As we have consistently communicated.

Our discipline approach includes pricing and contract terms designed to protect existing customers and our investments while also generating economic benefits for all customers.

Chris Womack: The stipulated agreement, which was unanimously approved by the Georgia Public Service Commission, extends Georgia Power's 2022 alternate rate plan, ultimately precluding the need for a 2025 base rate case filing and keeping base rates stable and predictable over the next three years through 2028, with the exception of any future recovery of storm-related costs, including those related to Hurricane Helene. Overall, this outcome demonstrates our commitment to capturing the benefits of this robust projected economic growth and prioritizing customer affordability. We believe this outcome, which preserves the existing regulatory framework in Georgia, benefits all stakeholders. Our vertically integrated market and constructive orderly regulatory processes continue to help ensure we have the critical resources necessary to reliably and affordably serve our growing states.

In May Georgia power and the Georgia Public Service Commission, public, interest advocacy staff along with several other interveners reached a settlement that demonstrated the reality of these economic benefits for customers.

Unanimously approved by the Georgia Public Service Commission, extend Georgia, Powers 2022, alternate rate plan ultimately precluding the need for a 2025 base rate, case filing, and keeping base rate, stable and predictable over the next 3 years, through 2028 with the exception of any future, recovery of storm related cost, including those related to Hurricane Helen.

Overall, this outcome demonstrates our commitment to capturing the benefits of this robust projected economic growth and prioritizing customer affordability. We believe this outcome, which preserves the existing regulatory framework in Georgia, benefits all stakeholders.

Our vertically integrated market and constructive, orderly regulatory processes continue to help ensure we have the critical resources necessary.

Chris Womack: Earlier this month, the Georgia Public Service Commission unanimously approved a stipulated agreement between Georgia Power and the Georgia PSC Public Interest Advocacy staff regarding Georgia Power's 2025 Integrated Resource Plan, or IRP. This approval provided for continued investment in existing fleet, with plant life extensions at multiple steam units, upgrades for more capacity at existing nuclear and natural gas facilities, and the modernization of hydro facilities to increase output and extend life. The 2025 IRP outcome also further highlighted and confirmed the need for new generation resources previously approved in our prior IRPs as we build to serve projected growth. Under the approved IRP, Georgia Power received authorization to provide generation procurement options for at least 6 gigawatts to meet increasing Georgia Power system demand.

To reliably and affordably serve our growing States.

Earlier this month, the Georgia Public Service Commission unanimously approved a stipulated agreement between Georgia Power and the Georgia PSC, public interest advocacy staff regarding Georgia Power's 2025 Integrated Resource Plan (IRP).

This approval provided for continued investment in existing Fleet.

With plant life extensions. At multiple steam units up rates for more capacity at existing nuclear and natural gas facility.

And the modernization of hydro facilities to increase out to increase output and extend life.

The 2025 RFP outcome also further highlighted and confirmed the need for new generation resources, which were previously approved in our prior RFPs, as we build to serve projected growth.

Under the approved, RP.

Chris Womack: In accordance with the IRP process, yesterday, Georgia Power filed to certify 8 gigawatts of new generation resources resulting from the all-source requests for proposals or RFPs. This competitive process, which was overseen by an independent evaluator, resulted in a mix of purchase power agreements, or PPAs, and multiple Georgia Power-owned resources being selected as the best choice for customers to meet the projected incremental capacity need by 2031. Of these, approximately 1.2 gigawatts of the awards were for third-party PPAs, including 732 megawatts from existing Southern Power capacity. The remaining 6.8 gigawatts is a mix of Georgia Power-owned resources from a variety of technology types, including new combined cycle natural gas facilities, standalone battery energy storage systems, or BESS, and solar-powered BESS options.

Georgia Power received authorization to provide generation and procurement options for at least 6 gigawatts to meet the increasing demand of the Georgia power system.

In accordance with our RFP process yesterday.

Georgia Power filed a certified 8 gigawatts of new generation resources, resulting from the All Source Requests for Proposals, or RFPs.

This competitive process which was overseen by an independent evaluator, resulted in a mix of purchase power agreements, or ppas and multiple Georgia Power on resources, being selected as the best choice for customers to meet the projected incremental capacity needs by 2031.

Of these approximately 1.2 gigawatts of the awards were for third-party ppas, including 732 megawatts from existing Southern power capacity.

The remaining 6.8 gigawatts is a mix of Georgia Power resources, derived from a variety of technology types, including new combined cycle natural gas facilities.

Standalone battery energy storage systems are the best.

Chris Womack: Further, to meet the total capacity need identified as a part of Georgia Power's 2025 RIP load forecast, Georgia Power also requested certification for approximately 2 gigawatts of additional generation capacity through a supplemental filing. This includes 1.6 gigawatts from third-party PPAs, with the remainder consisting of Georgia Power-owned resources to address near-term projected generation needs. In summary, Georgia Power has filed requests to certify approximately 10 gigawatts of new generation, which includes 7 gigawatts of Georgia Power-owned resources. These requests will be reviewed by the Georgia PSC, with the final determination by the commission expected later this year. I'll now turn the call over to David to share more about the capital investment and financing implications associated with these orderly regulatory processes.

And solar powered best options.

Further.

To meet the total capacity need identified as a part of Georgia power's 2025, rip load forecast, Georgia Power also requested certification for approximately 2, gigawatts of additional generation capacity, through a supplemental filing.

This includes 1.6 gigawatts from third-party PPAs, with the remainder consisting of Georgia Power resources to address near-term, projected generation needs.

In summary.

Georgia Power has filed requests to certify approximately 10 gigawatts of new generation, which includes 7 gigawatts of Georgia Power-owned resources. These requests will be reviewed by the Georgia PSC, with the final determination by the commission expected later this year.

Dan Tucker: Thanks, Chris. Good afternoon, everyone. Earlier this year, in addition to our $63 billion five-year base capital plan, we highlighted $10 to $15 billion of projected potential incremental regulated capital investment through 2029. With the approval of Georgia Power's 2025 IRP, along with the certification filings for new resources, we now have an improved line of sight on our expected capital opportunities and are adding $12 billion of state-regulated capital into our five-year base capital plan. This represents the capital investment associated with the low end of the 6 to 10 gigawatt range for new resources from the certification processes Chris mentioned earlier, along with investments associated with upgrades and modernization of existing resources approved in the 2025 IRP.

I'll now turn the call over to David to share more about the capital investment and financing implications associated with these orderly regulatory processes.

Thanks, Chris. Good afternoon, everyone. Earlier this year, in addition to our $63 billion 5-year base capital plan, we highlighted $10 to $15 billion of projected potential incremental regulated capital investment through 2029.

Into our $5 billion base capital plan.

Dan Tucker: Should the Georgia PSC confirm the need for and ultimately certify the entire 10 gigawatts of new generation, there could be up to an additional $4 billion of new state-regulated generation capital through 2029. Separately, Southern Power, our competitive power business, has commenced repowering at three additional wind facilities in our existing portfolio, all of which have begun construction and are projected to be in service by the first half of 2027. These projects represent approximately $800 million of additional investment, which is now included in our base capital plan. In total, our five-year base capital plan has increased $13 billion from $63 billion to $76 billion, with potential upside of approximately $5 billion still pending, tied to the generation procurement certifications in Georgia and potential FERC-regulated gas pipeline expansions at Southern Company Gas.

This represents the capital investment associated with the low end of the 6 to 10 gigawatt range for new resources from the certification processes. Chris mentioned earlier, along with investments associated with uprights and modernization of existing resources. Approved in the 2025 IRP, should the Georgia PSC confirm the need for, and ultimately certify, the entire 10 gigawatts of new generation, there could be up to an additional $4 billion of new state-regulated generation capital through 2029.

Separately, Southern Power's competitive power business has commenced repowering at three additional wind facilities in our existing portfolio, all of which have begun construction and are projected to be in service by the first half of 2027.

These projects represent approximately 800 million dollars of additional investment, which is now included in our base Capital plan.

In total, our 5-year base capital plan has increased $13 billion, from $63 billion to $76 billion, with potential upside of approximately $5 billion still pending.

Dan Tucker: We remain committed to funding our capital plan in a credit-supportive manner that supports our strong investment-grade credit ratings. As we highlighted in our May earnings call, our financing activity through the first quarter, along with our internal equity plans projected through 2029, resulted in a clear path to fully address the $4 billion equity needs in our original $63 billion base capital plan. The increase in our base capital plan of $13 billion is projected to be funded with approximately 40% of additional equity or equity equivalents, which represents an incremental $5 billion through 2029. This level of equity content supports our credit quality and our progress toward our credit metric target of approximately 17% FFO to debt in the latter part of our forecast horizon.

Tied to the generation, procurement certifications in Georgia, and potential FERC-regulated gas pipeline expansions at Southern Company Gas.

We remain committed to funding our Capital plan and a credit supportive Banner that supports our strong investment grade credit ratings. As we highlighted in our May earnings, call our financing activity through the first quarter along with our internal Equity plans projected through 2029 resulted in a clear path to fully address. The 4 billion Equity needs in our original 63 billion base, Capital plan,

The increase in our base capital plan of $13 billion is projected to be funded with approximately 40% of additional equity or equity equivalents, which represents an incremental $5 billion through 2029.

Dan Tucker: In fact, we've continued to be proactive in addressing our equity needs, pricing an additional $1.2 billion of equity through forward sales under our at the market or ATM program since our last earnings call, leaving less than $4 billion of the incremental need remaining to be addressed through 2029. These remaining equity needs are easily manageable for a company our size. Considering just in the last six months, we've addressed well over $3 billion of equity and equity equivalents through our ATM program, internal equity plans, and issuances of junior subordinated notes. As we've highlighted today, we continue to make great progress in solidifying our plan and remain increasingly encouraged about the strength of our long-term outlook and ultimately the potential to reassess the base for our 5 to 7% long-term EPS growth rate as early as 2027. And I'll turn the call back over to you, Chris.

This level of equity content supports our credit quality and our progress toward our credit metric. Target of approximately 17% ffo to debt in the latter, part of our forecast Horizon,

In fact, we've continued to be proactive in addressing our equity needs, pricing an additional $1.2 billion of equity through forward sales under our at-the-market (ATM) program. Since our last earnings call, this leaves less than $4 billion of the incremental need remaining to be addressed through 2029.

These remaining equity needs are easily manageable for a company our size, considering that just in the last 6 months, we've addressed well over $3 billion of equity and equity equivalence through our ATM program, internal equity plans, and issuances of junior subordinated notes.

as we've highlighted today, we continue to make great progress and solidifying, our plan and remain increasingly encouraged about the strength of our long-term Outlook, and ultimately the potential to reassess the base for our 5 to 7% long-term EPS growth rate, as early as 2027,

Chris Womack: Thank you, David. As you can see, we are building for growth in the Southeast and our vertically integrated markets with constructive regulation and transparent orderly regulatory processes, proving foundational to meet this projected growth in a disciplined fashion that benefits the states in which we operate and the customers we are privileged to serve. This is an exciting time at SOUTHERN Company. We have accomplished a lot so far in 2025, and our future has never looked brighter. Before we turn to questions, I'd like to highlight our commitment to investing in and developing our people at SOUTHERN Company. We are where we are thanks to our dedicated leadership team and our thousands of customer-focused, committed teammates across the enterprise.

And I'll turn the call back over to you, Chris. Thank you, David.

As you can see.

We are building for growth in the Southeast.

And our vertically integrated markets, with constructive regulation and transparent, orderly regulatory processes.

Approving foundational measures to meet this predicted growth in a disciplined fashion benefits the states in which we operate and the customers we are privileged to serve.

This is an exciting time at Southern Company.

We have had a lot of success so far in 2025, and our future has never looked brighter.

Before we turn to questions, I would like to highlight our commitment to investing.

In and developing our people at Southern Company.

We are where we are.

Chris Womack: Collectively, they help each and every day to ensure we're making the right investments, running our business efficiently and effectively, and keeping customers at the center of everything we do. Sustained long-term success is a function of investing in our people and building a deeply talented bench. Our recently announced CFO transition, along with the other leadership announcements we've made in recent weeks, is a great example. While we have Dan around for a period of time advising and helping with the smooth transition, I am very pleased to have someone as experienced and talented as David stepping into the CFO role to continue with our mission to deliver regular, predictable, and sustainable results. I do want to congratulate Dan on an incredible career with SOUTHERN Company, and I want to thank him for everything he has done to support our company's success.

Thanks to our dedicated leadership team and our thousands of customer focused committed teammates across the Enterprise.

Collectively, they help each and every day to ensure. We're making the right Investments, running our business efficient, our business efficiently and effectively,

And keeping customers at the center of everything we do.

People and building a deeply talented bench.

Our recently announced CFO transition.

Along with the other leadership announcements we've made in recent weeks, this is a great example.

While we have Dan around for a period of time advising and helping with the smooth transition.

I am very pleased to have someone as experienced and talented as David stepping into the CFO role to continue with our mission to deliver regular, predictable, and sustainable results.

Chris Womack: For three decades, his counsel, his strategic advice, his leadership, and his friendship have been foundational in helping our team seize the bright future ahead of us. One of the things I've always admired about Dan is his passion for developing our future leaders, and that's a legacy he'll certainly leave behind. I'm honored to call Dan my respected friend. And while his presence will be greatly missed, we wish he and Chelsea the very best as he embarks on a well-deserved retirement. Operator, we're now ready to take questions.

I do want to congratulate Dan on an incredible career with Southern Company, and I want to thank him for everything he has done to support our company's success.

for 3 decades, his Council

His strategic advice, his leadership, and his friendship have been foundational in helping our team seize the bright future ahead of us.

One of the things I've always admired about Dan is his passion for developing our future leaders, and that's a legacy he will certainly leave behind.

I'm honored to call Dan my respected friend.

And while his presence will be greatly missed.

We wish he and Chelsea.

The very best as he embarks on a well-deserved retirement.

Kevin (Conference Operator): Certainly. We're now conducting a question and answer session. If you'd like to be placed into question queue, 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 if you'd like to remove your question from the queue. One moment, please, while we pull for questions. Our first question is coming from Carly Davenport from Goldman Sachs. Her line is now live.

Operator, we're now ready to take questions.

Certainly, we're not the conducting a question and answer session. If you'd like, to be placed into the question queue. Please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2. If you'd like to remove your question from the queue 1 moment, please while we pull for questions.

Chris Womack: Hey, Carly.

Carly Davenport: Hey, Chris. Thanks so much for taking the time. just maybe to start on the capital plan update and the shift in the rate-based growth to 8% from 7 through 29, just any shift potentially in the timeline as we think about the rebasing, in '27 or the views on the long-term growth rate there. And then just tactically, would you expect to give another full financial plan update on the four-Q call as well?

Our first question is coming from Carly Davenport from Goldman Sachs. Providers now live.

Hey, Carly.

David Arcaro: Sure. Hey, good afternoon. thanks for your question. Let me take the second question first. And yes, we will expect to continue with our normal cadence of doing annual updates. So we'll address all that in the fourth quarter. as it relates to the rate-based growth and the timing, you know, we continue to be increasingly encouraged about what we're seeing in the marketplace. The momentum that we've seen with, with these large load customers is growing, and we're attracting many of them and having very good conversations about those. I think that we're going to stick to the plan of sustainability over the long term. We need to see how this plays out. We need to see it be in a sustainable pattern over the long term. And then we're going to be revisiting, that set point within the 5 to 7%.

Hey Chris, thanks so much for taking the time. Um, just maybe to start on the capital plan update in the shift in the rate-based growth to 8% from 7% through 2029. Just any shifts potentially in the timeline as we think about the rebasing in 2027 or the views on the long-term growth rate there. And then just tactically, would you expect to give another full financial plan update on the Q4 call as well?

Sure. Hey, good afternoon. Uh, thanks for your question. Let me take the second question first. Yes, we will expect to continue with our normal cadence of doing annual updates. So we'll address...

Carly Davenport: Great. thank you for that. And then just on the RFP update, you know, some combined cycle capacity filed for certification there as part of the plan. can you just refresh us on your procurement status in terms of turbines and also gas supply for those units, to come into service in the '29-'30 timeframe?

All that in the in the fourth quarter, um, as it relates to the rate-based growth and and the timing, you know, we continued being increasingly encouraged about what we're seeing in the marketplace. The momentum that we've seen with, uh, with these large load, customers is growing. And we're attracting many of them and having some very good conversations about those. Um, I think that we're going to stick to the plan of sustainability over the long term. We need to see how this plays out. We need to see it be in in a sustainable pattern over the long term. And then we're going to be revisiting um, that set point within the 5 to 7%.

Chris Womack: Yeah, Carly, we have reservations. we've, made payments for the we've paid the fees. And because of our size and activity that we've had for the past number of years, we have good relationships with with the OEMs, also the EPCs in terms of how this work will be carried out. So we feel real good about where we are and making sure that we're positioning ourselves to be very efficient, but also making sure we have the ability to execute.

Great. Um, thank you for that. And then just on the RFP update, um, you know, some combined cycle capacity filed for certification there as part of the plan, um, can you just refresh us on your procurement status in terms of turbines and also gas supply for those units? Um to come into service in the 29th. 2030 time frame? Yeah, Carly. We have, we have reservations. Uh, We've made made payments for the. We paid the fees.

And because of our size and activity that we've

had for the past number of years, we have good relationships with

Carly Davenport: Great. I appreciate that. And Dan, congratulations on your retirement, and thanks so much for all the insights over the last couple of years.

With OEMs, uh, also the EPCs in terms of how this work will be carried out. So we feel real good about where we are and making sure that we're positioning ourselves to be very efficient, but also making sure we have the ability to execute.

Dan Tucker: Yeah. Thank you, Carly.

Kevin (Conference Operator): Thank you. Next question is coming from Steve Fleischman from Work Research. Your line is now live.

Great, appreciate that. And Dan, congratulations on your retirement. Thanks so much for all the insights over the last couple of years. Yeah, thank you, Carly.

Chris Womack: Hey, Steve.

Dan Tucker: Hey, Chris. Dan, man, you're leaving me one of the old ones here. But, congrats, and David, congrats, to you as well. So.

Thank you. Next question, is coming from Steve fleshman from Wolf researcher Line is now live.

Hey, Steve.

Chris Womack: Thanks, Steve.

Dan Tucker: A couple of questions. First, just maybe, I think on a couple of the prior Q&A calls, you've talked about the kind of rebase in '27, maybe toward the top end of the seven, 5 to 7, going back to, I don't know, 25, and then kind of high end of 5 to 7 from there. Is that still what you're thinking, or has that shifted a little bit?

Hey Chris, uh, Dan, man, you're leaving me, leaving me 1 of the old ones here but uh, congrats and David, uh, congrats, uh, to you as well. So, um,

uh, a couple questions first just

maybe, uh, I think on a couple of the prior Q&A calls, you've talked about,

The kind of rebates in 27, maybe towards the top end of the 7 to 7 going back to, I don't know, 25.

and then kind of high-end to 5 to 7 from there, is that

David Arcaro: Yeah, I think where we've come out on that, and I think we've been pretty consistent, Dan's been pretty consistent with that in the last several calls about rethinking that base, upon which we set the 5 to 7% growth. And, you know, as I mentioned earlier, as we see that momentum growing and we get a better line of sight in a sustainable fashion, we'll recalibrate that and and be within the 5 to 7% and, and and work toward that. You know, it could happen as early as 2027, but there's a lot of variables at play. And, and, we like what we're seeing at the moment, but, we really don't see that happening before 2027.

Still what you're thinking or has that shifted a little bit?

Yeah, I think where we've come out on that, and I think we've been pretty consistent. Dan's been pretty consistent with that in the last several calls about...

Rethinking That Bass.

Dan Tucker: Yeah. Steve, we are where we were. And I think, as David described earlier, we're we're gaining a better line of sight on the things that we were looking for. Yeah, but we are where we were.

David Arcaro: Okay. and then on the FFO to debt improvement, could you maybe give us a sense of how, you know, kind of the year-by-year rough pace of getting to the 17%? Like, where where do you expect to be in 2025, '26, and then when do you get to the 17?

Um, upon which we set the 5 to 7% growth. And you know, as I mentioned earlier, as we see that momentum growing and we get a better line of sight in a sustainable fashion, we'll recalibrate that and and be within the 5 to 7% and um and and work toward that, you know, it could happen as early as 2027. But there's a lot of variables at play and, and, um, we like what we're seeing at the moment. But, uh, we really don't see that happening before 2027. Yeah. Steve, it, we are where we were and I think as David described earlier, we're we're gaining better line of sight on the things that we were looking for. Yep. But we are where we are.

Okay, uh, and then on the FFO to debt improvement, could you maybe give us a sense of how, you know, kind of the year-by-year rough pace of getting to the 17%? Like, where do you expect to be in?

Dan Tucker: Well, we expect to get to the approximately the 17 near the back end of their planning horizon. And with the capital that we've, we see coming down the line, you know, that that path is going to be up and down a little bit. And the pace and the shape of that may change over time, but we're going to continue to be very proactive and take advantage of opportunities as we see them as we grow into, that 17% FFO to debt.

2025, 26. And then when do you get to the 17?

Well.

We expect to get to approximately the 17 near the back end of the planning horizon.

and with the capital that we've, uh, we see coming down the line, you know, that that path is going to be up and down a little bit and and the the pace and the and the shape of that

May change over time.

David Arcaro: Do you have a rough number where you are, like, right now at the end of the quarter, or?

But we're going to continue to be very proactive and take advantage of opportunities as we see them. As we grow into that 17% FFO to debt.

Dan Tucker: Yeah. Yeah. For the 12 months ended, Steve, and I remember when we were talking about this before, we kind of gave a, "Here's the unadjusted number. Here's the number adjusted for Helene." Right now, we're in the kind of 14.3, 14.4 unadjusted, more like 15.3 adjusted for the Helene. And I think what's important, and David hit this, is how proactive we're being with this equity plan. You know, we we hinted, as we talked about this before, that increased capital could kind of change the shape of the trajectory for this path to 17%. And I think that's what you'll see play out. But having the equity issued now, kind of if you adjusted for the equity we've committed to, that's another 70 basis points or so on today's numbers. So we feel good about the progress and the commitment and how we're executing against that.

Do you have a rough number where you are like right now?

at the end of the quarter, or do you?

Yeah, for the 12th, I did Stephen. I remember when we were talking about this before, we kind of gave a, here’s the unadjusted number. Here’s the number adjusted for Helen. Right now, we’re in the kind of 143, 144 unadjusted, more like 153 adjusted for the Helen. And, but I think what’s important, and David hit this, is how proactive we’re being with this equity plan. You know, we hinted as we talked about this before that increased capital could kind of change the shape of the trajectory for this path to 17%, and I think that’s what you’ll see play out.

but having the equity issued,

Now.

David Arcaro: Okay. Great. One last question. Just how much are you maybe looking also at asset sales? And I think there have been some stories out about PowerSecure on that regard. Could you just talk to asset sales?

Kind of if you adjusted for the equity we've committed to. That's another 70 basis points or so on today's number. So we feel good about the progress and the commitment and how we're executing against that.

Okay, great. What’s one last question? Just.

Chris Womack: Steve, I know you wouldn't be disappointed if I said we're not going to comment on any rumors or anything specific. You know, but as you know, we're always evaluating. I mean, if there's a better owner and they're willing to pay, we'll be a great seller in those circumstances. But I think it'd be very premature for us to comment and speculate on anything that you may have heard or maybe considered talked about in the marketplace today.

How much are you? Maybe looking also at asset sales, and I think there have been some stories out about PowerSecure on that regard. Could you just talk to asset sales?

David Arcaro: Okay. Understood. Thank you. Congrats again.

Steve, I know you. You wouldn't be disappointed if I said, we're not going to comment on any rumors or anything specific uh you know. But as you know, we're always evaluating. I mean if there's a better owner and they're willing to pay, we'll be a great seller and those circumstances. But I think it'd be very premature for us to to comment and speculate uh on anything that you've ever heard or maybe consider talked about in the marketplace today.

Chris Womack: Thanks, Steve.

David Arcaro: Thank you, Chris.

Chris Womack: Always good to hear from you.

Okay, understood that. Thank you. Congrats again.

David Arcaro: Thank you. Next question is coming from Julian Dumoulin Smith from Jefferies. Your line is now live.

Thanks, Steve. Thank you. It's always good to hear from you.

Chris Womack: Hey, Julian.

Julien Dumoulin-Smith: Hey, Chris. Thank you very much. Appreciate it. Dan, David, truly congratulations to both of you. Wish you the best of luck there, Dan.

Thank you. Next question is coming from Julian Demo and Smith from Jefferies. Your line is now live.

David Arcaro: Thank you. Thanks for inviting your retirement. Absolutely. Guys, nicely done today, I got to say. Just a couple of details here. Can we talk firstly about load and the load update? I think you guys are going to refine that here later this year. Can we talk about what you're seeing? You guys have been very diligent in providing commentary about the pipeline. We certainly heard that from peers thus far with the earnings. How are you guys thinking, at least as it stands today, with respect to what you would anticipate, I think, in October? And then related, I suppose you've got this further affirmation from the PSC on a couple more gigawatts, or I think that was the $4 billion number you guys threw out there as further potential in the commentary.

Hey Julian. Hey Chris, thank you very much. I appreciate it. Dan David, truly, congratulations to both of you. I wish you the best of luck there. D, thanks very much in retirement.

Chris Womack: Yeah. And on that number, I think we'll expect to hear from the commission later this year, I think before the end of the year on that filing. As we've said, I mean, we still see that 50 gigawatt pipeline continuing to grow, and we continue to see just incredible amounts of activity. And as you see hyperscaler capital budgets continuing to grow, I mean, we just keep seeing these huge numbers; we see corresponding activity. And so we're in conversations with all of the majors, all the hyperscalers, and having what I would call very advanced discussions. And so, you know, we still got work to do. I mean, our focus is making sure we price them right, that there are benefits to existing customers.

Absolutely. Um, guys, nicely done today. I gotta say, um, just a couple details here. Can we talk firstly about load and the load update? I think you guys are going to refine that here later this year. Can we talk about what you're seeing? You guys have been very diligent in providing commentary about the pipeline. We certainly heard that from peers as far with the earnings. How are you guys thinking, at least as it stands today, with respect to what you would anticipate, I think in October? And then related, I suppose, um, you've got this further affirmation from the PSC on a couple more gigabytes, or I think that was the $4 billion number you guys threw out there as further potential in the commentary.

Yeah. And on the, on that number, I think we'll expect to hear from the commission later this year. I think by before end of the year on on that filing.

Chris Womack: And so, but we are, I would say, very optimistic about what the future holds in these conversations and the opportunities that we see available all across our electrics.

Of activity. And as you see, hyperscaler Capital budgets continue to grow. I mean, we just keep seeing these huge numbers. We see, corresponding activity. And so we're in conversations with all of the majors, all the hyperscalers and having what I would call very Advanced discussions. Uh, and so, you know, we still got work to do. I mean, our focus is making sure we price them, right? That there are benefits to, to existing customers. Uh, and so, but we, I would say very optimistic about what the future holds in these conversations and the opportunities that we see available all across our Electrics,

David Arcaro: Got it. Okay. Fair enough. We shall see what happens in the fall. And then maybe related here, as you think about that rate-based versus earnings translation here, any other factors that you could point to here, especially as you think about it? I heard your comments about repowering at Southern Power, but especially as you roll forward the plan here, any updated thoughts about where those contracts could land and/or maybe on the pipeline side, any updates there as to opportunities in terms of size and scale? Again, I'm just thinking through the rate-based commentary here and subsequent implications to earnings, right? What are the other factors on the non-regulated stuff?

Dan Tucker: Sure. So, you know, the conversations that we're having with the large load customers are going well, very interested in all of our service territories, a lot of attraction. Obviously, we talked a lot about Georgia, but Alabama and Mississippi having great conversations there as well. So as we get more clarity to that, you know, like I mentioned earlier, we're going to get to a place where we feel comfortable over the long term that that momentum is sustainable, and that's going to bring us to a place where we see the possibility of being able to reset that anchor point, if you will, within the 5 to 7%. Now, Julian, you also asked about Southern Power and some of those repowering projects that we've got going on there.

Got it. Okay, fair enough. All right we we shall see what happens this fall and then maybe related here. As as you think about that rate, based versus earnings translation here. Um any other factors that you you could point to here, especially as you think about it. And I heard your comments about repowering at at Southern power but especially as you roll forward, the plan here. Any updated thoughts about where those contracts could land Andor? Maybe on the, um, on the pipeline side, any updates there as to opportunities, in terms of size and scale. Again, I'm just thinking through the rate based commentary here and, um, subsequent implications to, um, earnings, right? If what are the other factors,

Dan Tucker: You know, that is, that's a great company, and we've got a lot of opportunities that we're thinking about in the marketplace with all that's going on with the large load customers. But, you know, as we see them, we evaluate them. You know, keep in mind, as we've talked about probably for years, that we do not get a hold of or get in front of ourselves. We don't put placeholders in our capital plan. Whatever projects that we find that we want to go explore, they're going to have to meet some pretty strict, stringent risk return parameters that we follow and have historically followed. But one interesting thing to think about is you look into the next decade, as we get into the early 2030s, there's several contracts that will come up for renewal at Southern Power.

On the non-regulation stuff. So, you know, the, the, the conversations that we're having with, uh, the large load customers are, are going well, very interested in all of our service territories. A lot of Attraction. Obviously, we talked a lot about Georgia, but Alabama and Mississippi having great conversations there as well. Um, so as we get more clearity to that, you know, like I mentioned earlier, we're going to get to a place where we feel comfortable over the long term, that that momentum is, is sustainable. And that's going to bring us to a place where we see the possibility of being able to reset that Anchor Point. If you will, within the 5 to 7% now Julian, you also asked about southern power and and some of those repowering, uh, projects that we've got going on there. You know, that is just, that's a a great company. And we've got a lot of opportunities that we're thinking about um, in the marketplace, with all that's going on with the large load customers.

Dan Tucker: And what we see in the marketplace, there should be, we expect the possibility of some really good opportunities to reprice a lot of that capacity in the early part of the next decade.

Um but you know, as we see them, we evaluate them, you know, keep in mind as we've talked about probably for years that we do not get a, get a hold of or get in front of ourselves. We don't put placeholders in our Capital plan, whatever projects that we find that we we want to go explore. They're going to have to meet some pretty strict stringent risk, return parameters, that that we follow and have historically followed, but 1, interesting thing to think about, is you look into the next decade, as we get into the early 2030s, um, there's several contracts that

David Arcaro: Right. So maybe more ripe by the time you get to '27 with that longer-term roll forward in the rebase.

Come up for renewal at Southern power and what we see in the marketplace, there should be, we expect the possibility of some really good opportunities to reprice a lot of that capacity in the early part of the next decade.

Dan Tucker: That's right. That's kind of the plan that we've been set on for a while.

Right? So, maybe more ripe by the time you get to 27 with that, that longer term rule for it in the rebase.

David Arcaro: Yeah, absolutely. I'll leave it there, guys. All the best. Speak soon.

That's right. That that's kind of the plan that we we've been set on for a while.

Dan Tucker: Awesome. Thank you.

David Arcaro: Thank you. Next question today is coming from Nick Campanella from Barclays. Your line is now live.

Yeah, absolutely. I'll leave it there, guys. All the best speak to you. Awesome. Thank you.

Chris Womack: Hey, Nick.

David Arcaro: Hey, Mike.

Chris Womack: Hey, good afternoon. Thanks for all the updates. Congrats again on your retirement and congrats to David. Looking forward to working with you. So, hey, I just had a follow-up, actually, on on Southern Power. You know, I was just wondering, you know, now that you're kind of committing more capital there, just how would you frame the returns compared to your core regulated, business? And then, you know, I know it's just a much, you know, smaller part of the business, but just in like a post-OBB world, how are you kind of framing the returns for, you know, contracted renewables? Thank you.

Thank you. Next question. Today is coming from Nick campanelle from barklay. Your line is now live.

Dan Tucker: Sure. Yeah, great to hear from you. you know, we talked about, we have a pretty stringent risk return parameter. we try to set these things up with long-term, credit-worthy counterparties, try not to take fuel risk. And that usually plays out for us to be a little bit higher than our state-regulated returns historically. And we see these opportunities giving rise to perhaps expanding that in the future. But like I said, there's a thin needle to get through when we work through these things. The risk reward has to be right, and the credit metrics have to be right for the counterparty. But we do explore opportunities all the time there.

Hey, Nick, you know, hey, good afternoon, thanks for all the updates. Uh, congrats again on your retirement and congrats to David. Um, looking forward to work with you. So, um, hey, I just had a follow-up actually on, on Southern power. You know, I was just wondering, you know, now that you're kind of committing more Capital there just, how would you frame the returns compared to your core regulated, uh, business? And then, you know, I know it's just a much more you know, smaller part of the business but just in like a post, obb world, how are you kind of framing the returns for, um,

You know, contracted Renewables. Thank you.

Sure yeah, great to hear from you. Um, you know, we talked about um, we

Have a pretty stringent risk, return parameter. Um, we try to set these things up with long-term. Um, creditworthy counterparties, try not to take fuel risk and and that usually plays out for us to be a little bit higher than our state regulated uh returns historically. And we see these opportunities giving rise to perhaps expanding that in the future. But like I said, we there's a, there's a thin need, uh, a needle to get through when we work through these things. Uh, the risk reward has to be right, and the credit metrics have to be right for the counterparty. Um, but we do explore opportunities all the time there.

David Arcaro: Okay. No, thank you. And I guess in the IRP, you know, there were nuclear upgrades contemplated here. Just wondering where the conversation now kind of stands on new nuclear overall. Have those discussions picked up with the recent momentum we've seen in the industry and the executive orders? Just, I guess, you know, we talked about this before, but where do you guys kind of stand now in your position on that? Thanks.

Chris Womack: Yeah, Nick. Yeah, Nick, we've been very clear about the need for new nuclear in this country. And so talked with the administration, talked with hyperscalers all across this country. We speak the virtues of the importance of new nuclear as we the success that we had with Bogle 3 and 4 in terms of bringing those two units online. I mean, I still think we've got to we've got to complete the risk mitigation, the financial concerns that are there on the back end. We've got to make sure there's there's financial certainty as those projects are pursued. And so we continue to have those kind of conversations amongst ourselves, but throughout the industry. But we continue to believe that for this country to respond to the incredible demand we see, new nuclear has got to be a part of the part of the solution set going forward.

Overall uh, have those discussions picked up with the recent momentum, we've seen in the industry and the executive order is just I guess, you know, we've talked about this before but where, where do you guys kind of stand now? And your your position on that? Thanks. Yeah. Nick. We've been very clear about the need for new nuclear in this country.

and so talked with the administration, talked with hyperscalers, all across this country, we speak the virtues of the importance of new nuclear as we

The success that we have with Bobo 3 and 4, in terms of bringing those 2 units online. I mean, I still think we've got to, we've got to complete, uh, the risk mitigation, the financial concerns on that. Are there on the back end? Uh, we've got to make sure that there's there's Financial certainty uh as those projects are pursued.

Chris Womack: And we'll continue to talk about it and continue to to advance ideas to to to try to make it happen and to get it done.

David Arcaro: Okay. Great. And just one last one, if I could follow up on Julian's question, but you still expect a large load update filing in August, and and would that would that would be higher than kind of the 52 that we talked about in the past?

And so we continue to have those kind of conversations amongst ourselves but throughout the industry. Uh, but we continue to believe that for this country to respond, to the incredible demand, we see, uh, new nuclear has got to be a part of the part of the solution set going forward and we'll continue to talk about it and continue to, to Advanced ideas to to, uh, to try to make it happen and to get it done.

Okay, great and and just 1 last 1. If I could follow up on Julian's question, but you still expect a large load uh update filing in August and and that would that would be higher than kind of the 52 that we talked about in the past.

Chris Womack: Yes. Yeah. Yeah. Yeah. I mean, we will give updates, and as we see success and as we see these projects advance, we'll make sure that we that we have updates. We'll continue to keep keep keep you abreast of where we are and what's occurring and also letting you know what we see in the marketplace. We think the intelligence and market analysis about what's occurring as this as this market continues to advance, we'll continue to share.

Dan Tucker: Yeah. Growing in the pipeline, Nick, but just remember, our disciplined approach is going to risk adjust that, and that's what you'll see us planning for and working with the commission on.

Yes, yeah, yeah, yeah. I mean the we will give updates and, and as we seek success and as we see these projects Advanced, uh, we'll make sure uh, that we that we have updates. Uh, we'll continue to keep keep keep you a breast of where we are, and what our current and also, letting you know what? We see in the marketplace, uh, we think the intelligence and market analysis about what's occurring. Uh, as this as this Market continues to advance, uh, we'll continue to share. Yeah.

David Arcaro: Yeah. And just to clarify, we'll make that filing in the mid-August timeframe with the Georgia Public Service Commission, and then we'll follow on in September through the RFP and the certification process that will provide an updated load forecast that will reflect what we see in the marketplace as well.

Growing in the pipeline Nick, but just remember our discipline approach is going to risk, adjust that. And that's what you'll see us planning for and working with the commissioner of. Yeah. And just to just to clarify, we'll make that filing in the mid August time frame with the Georgia Public Service Commission. And then we'll follow on in September through the um, RFP in the secret.

Chris Womack: All right. That's great. Always interesting to see those filings. So thank you. Appreciate it.

Certification process that will provide an updated load forecast that will reflect what we see in the marketplace as well.

Kevin (Conference Operator): Thank you. Next question today is coming from Andrew Weisel from Scotia Bank. Your line is now live.

All right, that's great. Always interesting to see those filings. So, thank you. Appreciate it.

Chris Womack: Hey, Andrew.

Andrew Weisel: Hi, everybody. Congrats to everyone echoing that sentiment. First question is on the gas plants. I see you're planning to build some new units by 2029 or 2030, but you're also planning to add combined cycle plants under PPA as early as 2028. How confident are you in those counterparties' ability to execute on timing? It seems a little aggressive from an EPC and turbine delivery perspective. What assurances or protections do you have in place?

Thank you. Next question, says, coming from Andrew, wisel from Scotia Bank. Your line is now live

Hey, Andrew.

Hi everybody. Uh, congrats to everyone echoing that sentiment.

Dan Tucker: Yeah, that's existing capacity, Andrew. So those are just that's available capacity in the marketplace that's rolling off of a PPA that's serving some either already serving Georgia Power and expiring or serving someone else.

Andrew Weisel: Perfect. Okay. Great. And then the other question is, obviously, three years ago, you had an IRP, and then demand was so robust, you needed to do the 2023 update. Now that the 2025 process is complete, how are you feeling about the outlook for demand and its sticking for at least the next three years? Obviously, that's a moving target. I think you said you'll share a refreshed load growth target with us in six months. Maybe just high-level thoughts on how much buffer or excess reserve margin or just how are you thinking about it now that this year's process was settled?

First question is on the gas plants. I see your planting to build some new units by 2029 or 2030 but you're also planning to add uh combined cycle plants under PPA as early as 2020 2028. How confident are you in those counterparties ability to execute on timing? It seems a little aggressive from an EPC and turbine delivery perspective. What assurances? Or protections do you have in place? Yeah, that's existing capacity. Andrew. So those are just that that's available capacity in the marketplace that's rolling off of a PPA that's serving some either already serving, Georgia power and expiring or serving someone else.

Perfect. Okay. Great.

And then the other question is, obviously 3 years ago, you had an IRP and then demand was so robust. You needed to do the 2023 update. Now that the 2025 process is complete, how are you feeling about the outlook for demand? And it's sticking for, at least the next 3 years. Obviously, it's a moving Target. I think you said you'll share a refresh load growth Target with us in 6.

David Arcaro: Sure. Yeah, great question. I mean, if you look at the result of the 2025 IRP approval, we've got an incremental generation need that was acknowledged and agreed to in the stipulation and approved by the Public Service Commission. And then we're going to be in this pattern of repeatedly updating what our large load pipeline looks like. That will, at least in September, but perhaps more often, come with updates of our load forecast. And you know, we've got this structure that is going to exist at the Georgia Public Service Commission that is orderly, is thoughtful. There's good deliberation of what is submitted, but it also has a degree of flexibility to it as well. So, you know, we filed the 2025 IRP, but we are not at all precluded, if circumstances warrant, from doing an update to that as well.

Months. Maybe just high-level thoughts on how much buffer or excess Reserve margin or just how are you thinking about it now that this year's process was settled?

To it as well. So you know, we we filed the 2025 IRP. Um but we are not at all precluded if circumstances warrant from doing an update to that as well.

Andrew Weisel: Okay. Sounds good. Nicely done, turning what was supposed to be a very noisy year into a pretty smooth one so far. Thank you very much.

David Arcaro: Thank you.

Dan Tucker: Thanks, Andrew.

Kevin (Conference Operator): Thank you. Next question today is coming from Jeremy Tunnett from JP Morgan. Your line is now live.

Okay, sounds good nicely done. Uh, turning, what was supposed to be a very noisy year into a pretty smooth 1 so far. Thank you very much.

Thank you. Thanks Andrew.

Julien Dumoulin-Smith: Hi. Good afternoon.

Chris Womack: How are you doing?

Thank you. Next question. Today is coming from Jeremy tet from JP Morgan. Your line is now live.

Julien Dumoulin-Smith: Good, thanks. Congrats, Dan, David, as well. Dan, we will miss you. First, I want to start with Alabama, Mississippi a little bit here. You touched on the economic momentum there. And I was just wondering if you could speak to when these tailwinds could possibly translate into incremental investment opportunities there.

Hi, good afternoon.

How are you doing?

Good, thanks. Congrats. Uh, Dan David as well, and we will miss you.

First, I want to start with, um, Alabama and Mississippi a little bit here. You touched on the economic momentum there, and I was just wondering,

Chris Womack: I think it's going to be very difficult to speak exactly when all of that exactly shows up. I can just say to you that we're in the midst of advanced discussions on a number of projects. And so, I mean, there's work being done there. And so as it advances, we'll advise you and let you know. But good conversations, good activity, good strong pipeline. I mean, we've talked about some of the economic projects, the Airbuses, and some others that have announced economic development expansions. I think we've spoken to some of those, but there's just a good, strong, solid pipeline of activity that's occurring there that I think is moving to some advanced discussions.

If you could speak to when these tailwinds could possibly translate into incremental investment opportunities there.

It's, I think.

Be very difficult to speak. Exactly when.

all that.

Exactly shows up.

I can just say to you that we're in the midst of advanced discussions on a number of projects. Uh, and so, I mean, there's work being done there. As it advances, we'll...

I will advise you and let you know. But, uh, good conversations, good activity, good, strong pipeline. I mean, we've talked about some of the economic projects, uh, the air buses and some others that have announced their development expansions. I think we've spoken to some of those, uh, but there's just a.

Dan Tucker: Yeah. And some of that investment that you're asking about is already occurring. Certainly, you know, I think we spoke in a prior quarter about over 1,000 megawatts of data center projects across those two states. There's the transmission and distribution investments that are already happening there. You've seen Alabama Power acquire and have other pending acquisitions on generation resources to serve their growing load. So it's happening. It's just, it's a little, it's been a little less front and center than all this stuff happening in Georgia lately.

A good, strong, solid pipeline of activity that's occurring there, and I think is moving to some advanced discussions. Yeah. And some of that investment that you're asking about is already occurring. Certainly, you know, we, I think we spoke in a prior quarter about over 1,000 megawatts of...

Data center projects are ongoing across those two states. There are transmission and distribution investments already happening there. You've seen Alabama Power acquire and have other pending acquisitions on generation resources to serve their growing load. So, it's happening; it's just, it's a little...

Julien Dumoulin-Smith: Got it. Thank you for that. And then just wanted to pivot to the FERC gas pipeline expansion potential there. Just wondering what visibility you have there or what are the gating items left?

It's been a little less front and center than all this stuff happening in Georgia lately.

Got it. Thank you for that. And then just wanted to pivot to the first gas pipeline expansion potential. I was just wondering what visibility you have there or what are the gating items left?

Dan Tucker: So as a reminder, so this is largely our investments with Kinder Morgan. We have another investment that we co-own in North Georgia. And as you can imagine, they are tied to a lot of the same things driving our utility investment. So it's around new combined cycle construction. It's around large load growth and just load growth overall in the area. It's not just our utilities. It's the co-ops. It's the munis being served as well. And so the the upside potential is really a function of what will be built where ultimately to serve this large load?

So as a reminder, so this is largely our

Investments with Kinder Morgan. We have another investment that we co-own in North Georgia and.

As you can imagine, they are tied to a lot of the same things driving our utility investment. So, it's around new combined cycle construction. It's around large load growth and just load growth overall in the area. It's not just our utilities; it's the co-ops and the munis being served as well.

Julien Dumoulin-Smith: Got it. Understood. Thank you for that. And then just the last one, if I could, as it relates to the equity needs there, just wondering, you know, thoughts on using forwards to kind of de-risk the outlook there.

And so the upside potential is really a function of what will be built where ultimately to serve this large load.

Dan Tucker: Well, you know, it's really not appropriate to talk about specific structures or timing. But you know, we've got a lot of flexibility. We've demonstrated that there's multiple tools, if you will, in the toolbox that we can implement. And I think we're going to continue on that path and be proactive and take advantage of opportunities whenever they present themselves to achieve the equity needs that we have over the horizon. And you know, to your point, I think technically it may be worth pointing out that our ATM program, it really is a forward. I mean, we're locking in a price, if you will, today for securities that we're transacting that will be delivered in the future. So to your point, I think we are utilizing that flexibility.

Got it, understood. Thank you for that. And then, just the last one, if I could, as it relates to the equity needs there, just wondering, you know, thoughts on using forwards to kind of de-risk the outlook there.

Well, you know, it's really not appropriate to talk about specific structures or timing, but, you know, we've got a lot of flexibility. We've demonstrated that there's multiple tools. If you will in the tool box that that we can Implement. And I think we're going to continue on that path and, and be proactive and and take advantage of opportunities whenever they present themselves to achieve the, uh, the equity needs that we have Over the Horizon and, and, and, you know, to your point. I, I think technically, it may be worth pointing out that the, our ATM program, it really is a forward. I mean, we're we're locking in a price. If you will today.

Julien Dumoulin-Smith: Got it. Makes sense. Thank you. I'll leave it there.

For securities that we're transacting, that will be delivered in the future. Um, so to your point, I think we are utilizing that flexibility.

Kevin (Conference Operator): Thank you. Our next question today is coming from Bill Apatceli from UBS. Your line is now live.

Got it; makes sense. Thank you. I'll leave it there.

David Arcaro: Hey, good afternoon. Thanks, Dan, for all the great work over the years. You'll be missed. Just to clarify on a question that Steve asked earlier around the financial guidance. So the outlook is to see where you shake out in the current 5 to 7 through '27, right? And then rebase, you know, the 5 to 7 off of that number. That's the intention?

Thank you. Our next question is coming from Bill AER from UBS. The row is now live.

Hey, good afternoon. Uh, thanks, Dan, for all the great work over the years. You'll be missed.

um,

Dan Tucker: Yeah, I wouldn't necessarily put a specific date on the calendar for that. I mean, it could be as early as 2027, but like I said, there's a long list of things that need to come to fruition. We need to see the continuing momentum solidify and be sustainable over the long period. So, you know, that could be 2027 when we rebase the set point within the 5 to 7% targets. But you know, we're not going to get ahead of ourselves there. We've got to wait to see how these things that we see on the horizon come to fruition.

the just to clarify on a question that Steve asked earlier around the financial guidance. So, so the Outlook is to see where you shake out in the current 5 to 7 through 27, right? And then um, rebase you know, the the 5 to 7 off of that number, that's the intention.

I mean, it could be as early as 2027, but like I said, there's there's a long list of things that need to come to fruition. We need to see a continuing momentum solidify and be sustainable over the long period. So, you know, that that could be 2027. Um when we rebase the set point with uh, within the 5 to 7%, uh targets, but you know, we're we're not going to get ahead of ourselves there. We've got to wait to see how

David Arcaro: Okay. Understood. And then just a question, you know, higher level around the trends on generation costs, right? So we've seen the cost of combined cycles and peakers, obviously, you know, materially escalate over the last couple of years. I mean, in the conversations and in your own financial planning for some of this generation, you know, future needs, I mean, what are you baking in? Is the expectation that these costs are going to continue to increase materially, or do we, is there some, you know, as capacity comes on from some of the developers, manufacturers, is it going to stabilize? I mean, what is your view in terms of how you plan for that?

These things that we see on the horizon come to fruition.

Okay, understood. And then, just the question, you know, higher level around the trends on generation costs, right? So we've seen the cost of combined cycles and peers, obviously, you know, materially escalate over the last couple of years. I mean, in the conversations and in your own financial planning for some of this generation, uh, you know, uh,

Future needs. I mean, what are you baking in? Is the expectation that these costs are going to continue to, uh, increase materially, or do we, is there some, you know, as capacity comes on from some of the different?

Dan Tucker: Yeah, I mean, you're kind of seeing the same things that we're seeing out there in the marketplace. You're absolutely right that prices are going up, but we've got, you know, placeholders and reservation fees in there, and we're going to react accordingly and be prepared to be able to deliver the capacity that we need in the timelines that we've committed.

Developers and manufacturers, is it going to stabilize? I mean, what is your view in terms of how you plan for that?

Yeah, I mean, you're kind of seeing the same things that we're seeing out there in the marketplace. You're absolutely right that prices are going up.

Chris Womack: But as you know, man, there's a lot of demand out there. And so there's a lot of upward pressure that we see in the marketplace.

Um, but we've got, you know, placeholders and reservation fees in there. Um, and we're going to react accordingly and, um, be prepared to be able to deliver the capacity that we need in the timelines that we've committed.

David Arcaro: Okay. All right. Great. That's it for me. Thank you.

But as you know, I mean, there's a lot of demand out there. And so there's a lot of, there's a lot of upward pressure uh that we see in in in the marketplace.

Chris Womack: Thank you.

Kevin (Conference Operator): Thank you. Next question is coming from Anthony Crottle from Zero Securities. Your line is now live.

Okay. All right, great. That's it for me. Thank you.

Thank you.

Chris Womack: Hi, Anthony.

Julien Dumoulin-Smith: Hey, good afternoon, everyone. Congrats, Dave. Dan, congrats. Really appreciate all the time you gave us over the years. I just have like one follow-up. I think it's been a thematic for the whole call, the questions. I'm just trying to balance out the conservative approach of management versus maybe the uncertainty that you guys maybe think about achieving a higher growth rate. Like, you know, you have such firepower and CapEx and a big raise today, but like, you know, hey, maybe not until 2027 at the earliest, and still not looking to like anchor that in. I'm just curious if you could help us balance that out when we clearly understand you guys have always approached it conservative.

Thank you. Next question is coming from Anthony Crowell from Zero Security. Your line is now live.

May I have any? Hey, good afternoon everyone. Congrats. Dave, Dan congrats, really appreciate all the time. Uh, you gave us over the years. I I just have like 1 follow up. I think it's been the Thematic for the whole call the questions. I'm just trying to balance out the conservative approach of management versus maybe the uncertainty that you guys may be thinking about achieving a higher growth rate, like, you know, you have such Firepower and cat-backs in a big race today but like, you know, hey, maybe not until 2027 at the earliest and still not looking to like,

Dan Tucker: Well, I think you hit it right there. You obviously do know us, and I appreciate that. You're absolutely right. We're going to take this in a conservative manner. We're seeing the growth accelerating, having great conversations with a lot of potential large load customers. And we see a lot of this coming to fruition in the back half of the decade. So, you know, we've got to see how this plays out. Also, keep in mind, we are a fairly big company, and it takes a lot to move us. And so we need to see that momentum get to a place where it can carry us in a sustained way where it makes sense for us to change that long-term outlook.

Anchor that in, and just curious if you could help us balance that out. We clearly understand you guys have always approached your conservative.

Well I think you hit it right there. You you obviously do know us and I appreciate that. Um you're you're absolutely right. We're going to take this in in a conservative manner. We're seeing the the growth accelerating um having great.

Julien Dumoulin-Smith: Great. Thanks so much, Chris. I always thought of you as the Paul Simon and Dan as the Art Garfunkel. So no worries going forward.

Conversations with a lot of potential large load customers are ongoing, and we see a lot of this coming to fruition in the back half of the decade. So, you know, we've got to see how this plays out. Also, keep in mind, we are a fairly big company, and it takes a lot to move us. Therefore, we need to see that momentum get to a place where it can carry us in a sustained way, where it makes sense for us to change that long-term outlook.

Chris Womack: Hey, Anthony, but we're still singing. We're still performing.

Julien Dumoulin-Smith: Absolutely. Absolutely.

Chris Womack: The band is still together.

Great. Thanks so much, Chris. I always thought of you as the Paul Simon and Dan as the Art Garfunkel. So no worries going forward. Hey, Anthony. But we're still singing; we're still performing.

Kevin (Conference Operator): Thank you. The next question is coming from Angie Strozinski from Seaport Global. Angie, please go ahead.

Absolutely. Absolutely. The fan is still together.

Chris Womack: Hey, Andy.

Angie Storozynski: Thank you. How are you? So I'm just wondering, I mean, you clearly have this unique cost of capital advantage in the entire industry that usually comes with, well, with more pressure, but also premium growth prospects. You are sticking with your current range, again, for the time being, but there are other ways to create upside to earnings, you know, asset acquisition, corporate acquisitions. I mean, you know, there's, you clearly have experience in developing generation assets. You know, some of your peers are starting to do what basically Southern Power has done in the past. So either expanding existing assets or building greenfield gas plants, again, using, you know, your skills. So you're not going into any of this. Is it just because you are not planning to do it, or is it just because you don't want to sort of project the options that lie ahead?

Thank you. The next question is coming from Angie Stoinski from Cport Global. Angie, please go ahead.

Hey, Andy. Thank you. How are you? So, I'm just wondering, I mean, you clearly have this unique cost of capital advantage in the entire industry that usually comes with, well, more pressure but also premium growth prospects. You are sticking with your current range, um, again for the time being. But the other way is to create the website to earnings, um, you know, asset acquisition, corporate acquisitions.

I mean, um, you know, there's clearly experience in developing generation assets. You know, some of your peers are starting to do.

What basically Selling Power has done in the past, so either expanding existing assets or building, uh, Greenfield gas plants, again using, um, you know, your skills.

So you're not going into any of this, are you? Just because you're not planning to do it, or is it just because you don't want to? Um,

Dan Tucker: Well, first, Angie, I think we should get you to come tell our story for us sometime.

Um, sort of, uh, project the options that are that lie ahead.

David Arcaro: That's terrific.

Dan Tucker: But look, it's just our nature, and it kind of goes back to what Anthony said. We're not going to get ahead of ourselves. We do have tremendous opportunities here.Yes,

First, Angie, I think we should get you to come. Tell our story for us sometime soon, but that, uh,

Kevin (Conference Operator): Southern Power remains an opportunity not only to recontract the existing fleet, but to potentially build new green or brownfield sites as all this growth is happening. But as part of our discipline and our outlook, because we are a regulated utility holding company, we don't put placeholders in there for Southern Power. We're not a development company, even though we are incredibly skilled at it. It's just how we have approached this historically. It's how we're trying to approach this going forward. And I think David described it incredibly well. This is about us having the discipline to assess whether or not what we see is sustainable for the truly long term and not temporary in nature, which we don't believe it is, but we want to be sure. And as we are, you'll see us kind of acknowledge the incredible upside that we think exists in our outlook.

Going to get ahead of ourselves. We do have tremendous opportunities here. Yes, Southern Power remains an opportunity, not only to recontract the existing fleet but also to potentially build new green or brownfield sites as all this growth is happening.

But as part of our discipline in our Outlook, because we are a regular utility holding company, we don't put placeholders in there for Southern Power. We're not a development company, even though we are incredibly skilled at it. It's just how we have approached this historically, and it's how we're trying to approach this going forward. I think David described it incredibly well; this is about us.

Having the discipline to assess whether or not what we see is sustainable for the truly long term, and not temporary in nature, which we don't believe it is, but we want to be sure. And as we are, you'll see us kind of acknowledge the.

Conference Center Specialist: Okay. And then, you know, just the other thing is, but we heard from some other, you know, vertically integrated electric utilities, right? They can name specific projects that are coming to their service territory. And those announcements are being made along with those utilities. In your case, I'm not complaining that there hasn't been enough activity on the data center side in Georgia or Mississippi, but fewer of those are sort of done along with your state utilities. Is it just a different business model? Or is it just a different pitch? Again, you know, it almost feels like it's, you know, it almost seems like those other utilities are getting more traction because they are being more, they're linking some of the generation assets to those projects directly while you are just, you know, I guess, increasing the load for the entire system.

Incredible upside that we think exists in our outlook.

Okay. And then you know, just just the other thing is so we we we heard from some other, you know, vertically integrated, Electric utilities right there, they can name specific projects that are coming to their service territory, uh, and and those announcements are being made along with those utilities the New York case. Uh, I'm I'm not complaining that there hasn't been enough activity on the uh, data center side and and Georgia.

Conference Center Specialist: I don't know if I'm expressing myself correctly. It's just that it seems like your announcements are less glitzy than those from others.

Chris Womack: No, you're not being, I mean, we get exactly what you're saying. And I think we're not promotional. And I think we're not getting ahead of ourselves until the deals are done. And we're not talking about any non-binding conversation, not any non-binding agreements. I mean, we're working diligently through the processes and at the right time, we will make the appropriate announcements.

Oh, I'm Mississippi. But fewer of those are, um, sort of done along with your state, utilities, is it just a different business model? Um, so, so, or is it just a different pitch again? I'm, uh, you know, it almost feels like it's, um, you know, it's, it almost seems like those other utilities are getting more traction because they are being more, um, they're linking some of the generation assets to those projects that directly while you're just, uh, you know, I guess increasing the load for the entire system. I, I don't know if I'm expressing myself correctly, just that it seems like. You're, you're announcements are less glitchy than those from others.

No, you're not being. I mean, we get exactly what you're saying, you know, I think,

We are, we're not promotional.

And I think, uh, we're not getting ahead of ourselves until.

Uh, deals are done.

And we're not talking about any non-binding conversation or any non-binding agreements. I mean, we are working diligently through the processes, and at the right time,

Kevin (Conference Operator): Yeah, I think the biggest affirmation for us, Angie, is these processes we're going through with our regulators. They see what we see, and they are agreeing with the needs that we see to serve this growing dynamic. Whether there's promotional announcements around individual customers or not, we're getting independent affirmation that this stuff is there and that there are benefits for existing customers, and it will support the kind of investment that you're seeing us make.

Uh, we will make the appropriate announcements.

Yeah, I think the biggest affirmation for us, Angie, is...

These processes were going through with our regulators. They see what we see.

And they are agreeing with the needs that we see to serve this growing dynamic. Whether

There's promotional announcements around individual customers or not.

Greg Macleod: Yeah, and just to add on to that, that last point about the benefits to customers, you got to keep in mind these are incredibly complex contracts, very large volumes that we're working through. And the paradigm that we've tried to establish in our service territories is entering into these contracts that will also provide benefits for all of our existing customers and protect those same customers. And so that takes a minute to get through those conversations and get to a good answer for everybody.

We're getting independent affirmation that this stuff is there and that there are benefits for existing customers. It will support the kind of investment that you're seeing us make.

Yeah, and just to add on to that, that last point about the benefits to customers. You’ve got to keep in mind, these are incredibly complex contracts.

Conference Center Specialist: Very good. Congrats, everybody. Thank you.

Um, very large volumes that we're working through, and the paradigm that we've tried to establish in our service territories is entering into these contracts that will also provide benefits for all of our existing customers and protect those same customers. And so that takes a minute to get through those conversations and get to a good answer for everybody.

Chris Womack: Thank you.

Kevin (Conference Operator): Thanks, Angie.

Recording/Announcement Voice: Thanks, Angie.

Dan Tucker: Thank you. We have reached the end of our question and answer session. I'd like to turn the floor back over for any further closing comments.

There you go. Congrats, everybody. Thank you. Thank you. Thanks, Andy.

Chris Womack: Again, let me thank everyone for being a part of our call today. Thank you for your questions. And we value and appreciate your interest in Southern Company. Thank you very much, and have a good rest of the day.

Thank you. We have reached the end of our question and answer session. I'd like to turn the floor back over for any further closing comments.

Dan Tucker: Thank you, sir. Ladies and gentlemen, this concludes the Southern Company second quarter 2025 earnings call. You may now disconnect.

Again, let me thank everyone for being a part of our call today. Thank you for your questions; we value and appreciate your interest in Southern Company. Thank you very much, and have a good rest of the day.

Thank you, sir. Ladies and gentlemen, this concludes the Southern Company's second quarter 2025 earnings call. You may now disconnect.