Southern Q2 2025 Earnings Report

Southern EPS Results

• Actual EPS: $0.91
• Consensus EPS: $0.99
• Beat/Miss: Missed by -$0.08
• One Year Ago EPS: $1.10

Southern Revenue Results

• Actual Revenue: $6.97 billion
• Expected Revenue: $6.70 billion
• Beat/Miss: Beat by +$273.48 million
• YoY Revenue Growth: +7.90%

Southern Announcement Details

• Quarter: Q2 2025
• Date: 7/31/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, July 31, 2025
• Conference Call Time: 1:00PM ET

The Southern (NYSE:SO) Company, through its subsidiaries, engages in the generation, transmission, and distribution of electricity. The company also develops, constructs, acquires, owns, and manages power generation assets, including renewable energy projects and sells electricity in the wholesale market; and distributes natural gas in Illinois, Georgia, Virginia, and Tennessee, as well as provides gas marketing services, gas distribution operations, and gas pipeline investments operations. In addition, it owns and operates nuclear, coal, hydro, cogeneration, solar, wind, battery storage, and fuel cell facilities. Further, the constructs, operates, and maintains approximately 77,900 miles of natural gas pipelines and 14 storage facilities with total capacity of 157 Bcf to provide natural gas to residential, commercial, and industrial customers. The company serves approximately 8.9 million electric and gas utility customers. Further, it develops distributed energy and resilience solutions; deploys microgrids for commercial, industrial, governmental, and utility customers; and offers digital wireless communications and fiber optics services. The Southern Company was incorporated in 1945 and is headquartered in Atlanta, Georgia.

Southern Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Southern Company reported Q2 adjusted EPS of $0.92, beating the prior estimate by $0.07 and reinforcing confidence in achieving full-year targets.
• Positive Sentiment: Weather-normalized retail electricity sales were up 1.3% year-to-date, with Q2 growth across all customer classes—residential +2.8%, commercial +3.5%, industrial +2.8%—and data center usage up 13%.
• Positive Sentiment: Georgia Power and PSC stakeholders unanimously approved extending the 2022 alternate rate plan through 2028, avoiding a 2025 base rate case and preserving stable, predictable base rates.
• Positive Sentiment: The Georgia PSC approved the 2025 IRP, authorizing certification filings for up to 10 GW of new generation—split between PPAs and Georgia Power-owned resources—to meet projected system demand.
• Neutral Sentiment: Southern Company raised its five-year base capital plan to $76 billion from $63 billion, with incremental equity needs of about $5 billion through 2029 to support approved generation and modernization projects.

Presentation

[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 Second Quarter twenty twenty five Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

[Operator]

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

[Gregory MacLeod, Director - IR at The Southern Company]

Good afternoon, and welcome to Southern Company's second quarter twenty twenty five earnings call. Joining me today are Chris Womack, Chairman, President and Chief Executive Officer of Southern Company and David Parokh, 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 ks, Form 10 Q and subsequent securities filings.

[Gregory MacLeod, Director - IR at The Southern Company]

In addition, we will present non GAAP financial information on this call. Reconciliations to the applicable GAAP measure are included in the financial information we released this morning as well as the slides for this conference call, which both are available on our Investor Relations website at investor.southerncompany.com. At this time, I'll turn the call over to Chris.

[Christopher Womack, CEO, President & Chairman at The Southern Company]

Thank you, Greg. 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 02/2025. 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.

[Christopher Womack, CEO, President & Chairman at The Southern Company]

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 is an estimate 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.

[Daniel Tucker, Executive VP & CFO at The Southern Company]

Thanks, Chris, and good afternoon, everyone. For the 2025, our adjusted earnings per share was $0.92 per share, 0.7 above our estimate and $0.18 lower than the 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 $06 year over year compared to the 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 over year earnings is included in the materials we released this morning.

[Daniel Tucker, Executive VP & CFO at The Southern Company]

Our adjusted EPS estimate for the third quarter is 1.5 per share. Turning now to our retail electricity sales. Year to date, weather normal retail electricity sales were 1.3 higher than the 2024. Year over year retail electricity sales growth increased modestly across all customer classes in the second quarter, growing 3% from the 2024. Weather normal residential sales were up 2.8%, higher than in the 2024, bolstered by the addition of over 15,000 new electric customers in the quarter and higher overall use per customer.

[Daniel Tucker, Executive VP & CFO at The Southern Company]

Weather adjusted commercial sales and industrial sales, which were 3.52.8% 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 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%. I'll 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.

[Christopher Womack, CEO, President & Chairman at The Southern Company]

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 2,000,000,000 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.

[Christopher Womack, CEO, President & Chairman at The Southern Company]

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. 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 continue 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. The stipulated agreement, which was unanimously approved by the Georgia Public Service Commission, extend 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.

[Christopher Womack, CEO, President & Chairman at The Southern Company]

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. 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, 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.

[Christopher Womack, CEO, President & Chairman at The Southern Company]

The 2025 RRP outcome also further highlighted and confirmed the need for new generation resources previously approved in our prior RRPs as we build to serve projected growth. Under the approved IRP, Georgia Power received authorization to provide generation procurement options for at least six gigawatts to meet increasing Georgia Power system demand. In accordance with the IRP process, yesterday, Georgia Power filed to certify eight gigawatts of new generation resources resulting from the all source request 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 02/1931. Of these, approximately 1.2 gigawatts of the awards were for third party PPAs, including 732 megawatts from existing Southern Power capacity.

[Christopher Womack, CEO, President & Chairman at The Southern Company]

The remaining 6.8 gigawatts is a mix of Georgia Power on resources from a variety of technology types, including new combined cycle natural gas facilities, stand alone battery energy storage systems are best and solar power 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 two 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 request to certify approximately 10 gigawatts of new generation, which includes seven 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.

[Christopher Womack, CEO, President & Chairman at The Southern Company]

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.

[David Poroch, SVP, Chief Accounting Officer & Comptroller at The Southern Company]

Thanks, Chris. Good afternoon, everyone. Earlier this year, in addition to our $63,000,000,000 five year base capital plan, we highlighted $10,000,000,000 to $15,000,000,000 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 improved line of sight on our expected capital opportunities and are adding $12,000,000,000 of state regulated capital into our five year base capital plan. This represents the capital investment associated with the low end of the six 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.

[David Poroch, SVP, Chief Accounting Officer & Comptroller at The Southern Company]

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 $4,000,000,000 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 2027. These projects represent approximately $800,000,000 of additional investment, which is now included in our base capital plan. In total, our five year base capital plan has increased $13,000,000,000 from $63,000,000,000 to $76,000,000,000 with potential upside of approximately $5,000,000,000 still pending 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 in a credit supportive banner that supports our strong investment grade credit ratings.

[David Poroch, SVP, Chief Accounting Officer & Comptroller at The Southern Company]

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 $4,000,000,000 equity needs in our original $63,000,000,000 base capital plan. The increase in our base capital plan of $13,000,000,000 is projected to be funded with approximately 40% of additional equity or equity equivalents, which represents an incremental $5,000,000,000 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. In fact, we've continued to be proactive in addressing our equity needs, pricing an additional $1,200,000,000 of equity through forward sales under our at the market or ATM program since our last earnings call, leaving less than $4,000,000,000 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 $3,000,000,000 of equity and equity equivalents through our ATM program, internal equity plans and issuances of junior subordinated notes.

[David Poroch, SVP, Chief Accounting Officer & Comptroller at The Southern Company]

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.

[Christopher Womack, CEO, President & Chairman at The Southern Company]

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 predicted 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 02/2025, 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.

[Christopher Womack, CEO, President & Chairman at The Southern Company]

We are where we are 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. 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'm 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.

[Christopher Womack, CEO, President & Chairman at The Southern Company]

I do wanna 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 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.

[Operator]

Certainly. We'll now be conducting a question and answer session. Our first question is coming from Carlyle Davenport from Goldman Sachs. Your line is now live.

[Christopher Womack, CEO, President & Chairman at The Southern Company]

Hey, Carly.

[Carly Davenport, VP - Equity Research at Goldman Sachs]

Hey, Chris. Thanks so much for taking the time. Just maybe to start on the capital plan update and the shift in the rate base growth to 8% from 7% through 29%. Just any shifts 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 4Q call as well?

[David Poroch, SVP, Chief Accounting Officer & Comptroller at The Southern Company]

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.

[David Poroch, SVP, Chief Accounting Officer & Comptroller at The Southern Company]

As it relates to the rate base growth and the timing, we continue to be increasingly encouraged about what we're seeing in the marketplace. The momentum that we've seen 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 gonna 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%.

[Carly Davenport, VP - Equity Research at Goldman Sachs]

Great. Thank you for that. And then just on the RFP update, you know, some combined cycle capacity filed 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 twenty nine, twenty thirty time frame?

[Christopher Womack, CEO, President & Chairman at The Southern Company]

Yeah. Carly, we have we have reservations. 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 with 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.

[Carly Davenport, VP - Equity Research at Goldman Sachs]

Great. Appreciate that. And and, Dan, congratulations on on your retirement, and thanks so much for all the insights over the last couple of years.

[Daniel Tucker, Executive VP & CFO at The Southern Company]

Yes. Thank you, Carly.

[Operator]

Thank you. Next question is coming from Steve Fleishman from Wolfe Research. Your line is now live.

[Christopher Womack, CEO, President & Chairman at The Southern Company]

Hey, Steve.

[Steve Fleishman, MD & Senior Analyst at Wolfe Research LLC]

Hey, Chris. Dan, man, you're leaving me one of the old ones here. But congrats, and David, congrats to you as well. So a couple of questions. First, just maybe I think on a couple of the prior Q and A calls, you've talked about the kind of rebase in twenty seven million maybe toward the top end of the 7,000,005 to 7,000,000 going back to, I don't know, '25 and then kinda high end of five to seven from there. Is that still what you're thinking, or is that shifted a little bit?

[David Poroch, SVP, Chief Accounting Officer & Comptroller at The Southern Company]

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 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 five 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.

[David Poroch, SVP, Chief Accounting Officer & Comptroller at The Southern Company]

And and we like what we're seeing at the moment, but we really don't see that happening before 2027.

[Daniel Tucker, Executive VP & CFO at The Southern Company]

Yeah. Steve, 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, but we are where we are.

[Steve Fleishman, MD & Senior Analyst at Wolfe Research LLC]

Okay. And then on the FFO to debt improvement, could you maybe give us a sense of how kind of the year by year rough pace of getting to the 17%? Like where do you expect to be in 2025, 2026? And then when do you get to the 17%?

[David Poroch, SVP, Chief Accounting Officer & Comptroller at The Southern Company]

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

[Steve Fleishman, MD & Senior Analyst at Wolfe Research LLC]

Do you have a rough number where you are, like, right now at the end of the quarter? Or yeah.

[Daniel Tucker, Executive VP & CFO at The Southern Company]

Yeah. For the twelve months ended, Steven, remember when we were talking about this before, we kinda gave a here here's the unadjusted number. Here's the number adjusted for Helene. Right now, we're in the kind of fourteen three, fourteen four unadjusted, more like fifteen three adjusted for the Helene. And but I think what's important, and and David hit this, is how proactive we're being with this equity plan.

[Daniel Tucker, Executive VP & CFO at The Southern Company]

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 that's another 70 basis points or so on on today's number. So we we feel good about the progress and the commitment and how we're executing against that.

[Steve Fleishman, MD & Senior Analyst at Wolfe Research LLC]

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?

[Christopher Womack, CEO, President & Chairman at The Southern Company]

Steve, I know you you wouldn't be disappointed if I said we're gonna 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 to comment and speculate on anything that you may heard or maybe consider talked about in the marketplace today.

[Steve Fleishman, MD & Senior Analyst at Wolfe Research LLC]

Understood. Thank you. Congrats again.

[David Poroch, SVP, Chief Accounting Officer & Comptroller at The Southern Company]

Thanks, Steve.

[Christopher Womack, CEO, President & Chairman at The Southern Company]

Thank you.

[David Poroch, SVP, Chief Accounting Officer & Comptroller at The Southern Company]

Always good to hear from you.

[Operator]

Thank you. Next question is coming from Julien Dumoulin Smith from Jefferies. Your line is now live.

[Julien Dumoulin-Smith, II-Ranked & 'Hall of Fame' Research Analyst covering Power, Utilities & Clean Energy at Jefferies]

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. Thanks very in 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?

[Julien Dumoulin-Smith, II-Ranked & 'Hall of Fame' Research Analyst covering Power, Utilities & Clean Energy at Jefferies]

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 so 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 gig bots. So I think that was the $4,000,000,000 number you guys threw out there as as further potential in the commentary.

[Christopher Womack, CEO, President & Chairman at The Southern Company]

Yeah. And on the on that number, I think we'll expect to hear from the commission later this year, I think, by the before end of the year on on that filing. As we've, you know, as we've said, I mean, we still see that fifty fifty 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.

[Christopher Womack, CEO, President & Chairman at The Southern Company]

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 to existing customers. And so but we I I would say very optimistic about what the future holds in these conversations and opportunities that we see available all across our electrics.

[Julien Dumoulin-Smith, II-Ranked & 'Hall of Fame' Research Analyst covering Power, Utilities & Clean Energy at Jefferies]

Got it.

[Julien Dumoulin-Smith, II-Ranked & 'Hall of Fame' Research Analyst covering Power, Utilities & Clean Energy at Jefferies]

Okay. Fair enough. We shall see what happens in fall. And then maybe related here as you think about that rate base versus earnings translation here. Any other factors that you could point to here, especially as you think about it?

[Julien Dumoulin-Smith, II-Ranked & 'Hall of Fame' Research Analyst covering Power, Utilities & Clean Energy at Jefferies]

And 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 base commentary here and subsequent implications to earnings, right? What are the other factors?

[David Poroch, SVP, Chief Accounting Officer & Comptroller at The Southern Company]

Sure. So 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 gonna get to a place where we feel comfortable over the long term that that momentum is sustainable, and that's gonna 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.

[David Poroch, SVP, Chief Accounting Officer & Comptroller at The Southern Company]

You know, that is just 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.

[David Poroch, SVP, Chief Accounting Officer & Comptroller at The Southern Company]

Whatever projects that we find that we wanna go explore, they're gonna 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. 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.

[Julien Dumoulin-Smith, II-Ranked & 'Hall of Fame' Research Analyst covering Power, Utilities & Clean Energy at Jefferies]

Right. So maybe more right by the time you get to '27 with that that longer term roll forward in the rebase.

[David Poroch, SVP, Chief Accounting Officer & Comptroller at The Southern Company]

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

[Julien Dumoulin-Smith, II-Ranked & 'Hall of Fame' Research Analyst covering Power, Utilities & Clean Energy at Jefferies]

Absolutely. I'll leave it there guys. All the best. Speak soon.

[Daniel Tucker, Executive VP & CFO at The Southern Company]

Awesome.

[Julien Dumoulin-Smith, II-Ranked & 'Hall of Fame' Research Analyst covering Power, Utilities & Clean Energy at Jefferies]

Thank you.

[Operator]

You. Next question today is coming from Nick Campanella from Barclays. Your line is now live.

[Christopher Womack, CEO, President & Chairman at The Southern Company]

Hey, Nick.

[Nicholas Campanella, Director at Barclays]

Hey, Nick. Hey, afternoon. Thanks for all the updates. Congrats again on your retirement and congrats to David. Looking forward to work with you.

[Nicholas Campanella, Director at Barclays]

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 kinda committing more capital there, just how would you frame the returns compared to your core regulated, business? And you know, I know it's just a much, you know, smaller part of the business, but just in, a post OBB world, how are you kind of framing the returns for, you know, contracted renewables? Thank you.

[David Poroch, SVP, Chief Accounting Officer & Comptroller at The Southern Company]

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 creditworthy counterparties, try not to take fuel risk.

[David Poroch, SVP, Chief Accounting Officer & Comptroller at The Southern Company]

And 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, we there's a there's a thin knee a 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.

[Nicholas Campanella, Director at Barclays]

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.

[Nicholas Campanella, Director at Barclays]

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 where do you guys kinda stand now and your your position on that? Thanks.

[Christopher Womack, CEO, President & Chairman at The Southern Company]

Yeah, Nick. Yeah, Nick. We've been very clear about the need for new nuclear in this country. And so talks with the administration, talk with hyperscalers. All across this country, we speak the virtues of the importance of new nuclear as we the success that we had with Bogota three and four in terms of bringing those two units online.

[Christopher Womack, CEO, President & Chairman at The Southern Company]

I mean, I still think we've gotta we've gotta complete the risk mitigation, the financial concerns that are there on the back end. We've gotta 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 gotta be a part of the part of the solution set going forward. 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.

[Nicholas Campanella, Director at Barclays]

Okay. Great. And 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?

[Christopher Womack, CEO, President & Chairman at The Southern Company]

Yes. Yeah. Yeah. Yeah. I mean, we will give updates.

[Christopher Womack, CEO, President & Chairman at The Southern Company]

And as we seek success and as we see these projects advance, we'll make sure that we have updates. We'll continue to 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.

[Daniel Tucker, Executive VP & CFO at The Southern Company]

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 commissioner.

[David Poroch, SVP, Chief Accounting Officer & Comptroller at The Southern Company]

Yeah. And just to just to clarify, we'll 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 RFP and the certification process that will provide an updated load forecast that will reflect what we see in the marketplace as well.

[Nicholas Campanella, Director at Barclays]

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

[Operator]

Thank you. Next question today is coming from Andrew Weisel from Scotiabank. Your line is now live.

[Christopher Womack, CEO, President & Chairman at The Southern Company]

Hey, Andrew.

[Andrew Weisel, Director at Scotia Howard Weil]

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 02/1930, 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?

[Andrew Weisel, Director at Scotia Howard Weil]

It seems a little aggressive from an EPC and turbine delivery perspective. What assurances or protections do you have in place?

[Daniel Tucker, Executive VP & CFO at The Southern Company]

Yeah. That's existing capacity, Andrew. So that 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, Director at Scotia Howard Weil]

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 it's sticking for at least the next three years?

[Andrew Weisel, Director at Scotia Howard Weil]

Obviously, it'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?

[David Poroch, SVP, Chief Accounting Officer & Comptroller at The Southern Company]

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 that was acknowledged and agreed to in the in the stipulation and approved by the Public Service Commission. And then we're gonna be in this pattern of repeatedly updating what our large load pipeline looks like.

[David Poroch, SVP, Chief Accounting Officer & Comptroller at The Southern Company]

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 gonna exist at the Georgia Public Service Commission that is orderly, is thoughtful. There's good deliberation of of what what is submitted, and it but it also has a degree of flexibility to it as well. So, you know, we we filed the 2025 IRP, but we are not at all precluded if circumstances warrant from doing an update to that as well.

[Andrew Weisel, Director at Scotia Howard Weil]

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.

[Christopher Womack, CEO, President & Chairman at The Southern Company]

Thank you.

[Daniel Tucker, Executive VP & CFO at The Southern Company]

Thanks, Andrew.

[Operator]

Thank you. Next question today is coming from Jeremy Tonet from JPMorgan. Your line is now live.

[Jeremy Tonet, MD & Research Analyst at J.P. Morgan]

Hi, good afternoon.

[Christopher Womack, CEO, President & Chairman at The Southern Company]

How are you doing?

[Jeremy Tonet, MD & Research Analyst at J.P. Morgan]

Good, thanks. Congrats, Dan and David as well. And we will miss you. First, I want to start with, Alabama, Mississippi a little bit here. You touched on the economic momentum there.

[Jeremy Tonet, MD & Research Analyst at J.P. Morgan]

And I was just wondering if you could speak to when these tailwinds could possibly translate into incremental investment opportunities there.

[Christopher Womack, CEO, President & Chairman at The Southern Company]

I I think it's gonna 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. And so, I mean, there's work being done there. And so as as it advances, we'll 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 that have announced economic development expansions.

[Christopher Womack, CEO, President & Chairman at The Southern Company]

I think we've spoken to some of those, but there's just a a good strong solid pipeline of activity that's occurring there that I think is moving to some advanced discussions.

[Daniel Tucker, Executive VP & CFO at The Southern Company]

Yeah. And some of that investment that you're asking about is already occurring. Certainly, 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.

[Daniel Tucker, Executive VP & CFO at The Southern Company]

So it's 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.

[Jeremy Tonet, MD & Research Analyst at J.P. Morgan]

Got it. Thank you for that. And then just want to pivot to the FERC gas pipeline expansion potential there. Just wondering what visibility you have there? What are the gating items left?

[Daniel Tucker, Executive VP & CFO at The Southern Company]

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.

[Daniel Tucker, Executive VP & CFO at The Southern Company]

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.

[Jeremy Tonet, MD & Research Analyst at J.P. Morgan]

Got it. Understood. Thank you for that. And then just the last one, if I could. It relates to the equity needs here, just wondering thoughts on using forwards to kinda derisk the outlook there.

[David Poroch, SVP, Chief Accounting Officer & Comptroller at The Southern Company]

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 that we can implement. And I think we're gonna continue on that path and and be proactive and and take advantage of opportunities whenever they present themselves to achieve the the equity needs that we have over the horizon. Yeah. 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 for securities that we're transacting that will be delivered in the future. So to your point, I think we are utilizing that flexibility.

[Jeremy Tonet, MD & Research Analyst at J.P. Morgan]

It. Makes sense. Thank you. I'll leave it there.

[Operator]

Thank you. Our next question today is coming from Bill Apicelli from UBS. Your line is now live.

[Bill Appicelli, Executive Director & Head - North America Power & Utilities Research at UBS Group]

Hey. Good afternoon. Thanks, Dan, for all the great work over the years. You'll be missed. The just to to clarify on the question that Steve asked earlier around the financial guidance.

[Bill Appicelli, Executive Director & Head - North America Power & Utilities Research at UBS Group]

So so the the outlook is to see where you shake out in the current '5 to '7 through '27. Right? And then rebase, you know, the the '5 to '7 off of that number. That's the intention?

[David Poroch, SVP, Chief Accounting Officer & Comptroller at The Southern Company]

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.

[David Poroch, SVP, Chief Accounting Officer & Comptroller at The Southern Company]

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.

[Bill Appicelli, Executive Director & Head - North America Power & Utilities Research at UBS Group]

Okay. Understood. And then just a question, higher level, around the trends on generation costs. Right? So we've seen the cost of combined cycles and peakers, obviously, materially escalate over the last couple of years.

[Bill Appicelli, Executive Director & Head - North America Power & Utilities Research at UBS Group]

I mean, in the conversations and in your own financial planning for some of this generation 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 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?

[David Poroch, SVP, Chief Accounting Officer & Comptroller at The Southern Company]

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

[Christopher Womack, CEO, President & Chairman at The Southern Company]

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

[Bill Appicelli, Executive Director & Head - North America Power & Utilities Research at UBS Group]

Okay. Alright. Great. That's it for me. Thank you.

[Christopher Womack, CEO, President & Chairman at The Southern Company]

Thank you.

[Operator]

Thank you. Next question is coming from Anthony Cradle from Mizuho Securities. Your line is now live.

[Anthony Crowdell, Managing Director at Mizuho Financial Group]

Hi, Anthony. Hey, good afternoon, everyone. Congrats, Dave, Dan. Congrats. Really appreciate all the time you gave us over the years.

[Anthony Crowdell, Managing Director at Mizuho Financial Group]

I just have like one follow-up. I think it's been 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 have such firepower and CapEx and a big raise today, but like, 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.

[David Poroch, SVP, Chief Accounting Officer & Comptroller at The Southern Company]

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.

[David Poroch, SVP, Chief Accounting Officer & Comptroller at The Southern Company]

And we see a lot of this come 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.

[Anthony Crowdell, Managing Director at Mizuho Financial Group]

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

[Christopher Womack, CEO, President & Chairman at The Southern Company]

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

[Anthony Crowdell, Managing Director at Mizuho Financial Group]

Absolutely. Absolutely.

[Christopher Womack, CEO, President & Chairman at The Southern Company]

The band is still together.

[Operator]

Thank you. Next question is coming from Andy Sterzewski from Seaport Global. Andy, please go ahead.

[Christopher Womack, CEO, President & Chairman at The Southern Company]

Hey, Andy.

[Angie Storozynski, Senior Equity Research Analyst at Seaport Research Partners]

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, asset acquisition, corporate acquisitions.

[Angie Storozynski, Senior Equity Research Analyst at Seaport Research Partners]

I mean, 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 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 are that lie ahead?

[Daniel Tucker, Executive VP & CFO at The Southern Company]

Well, first, Angie, think we should get you to come tell our story for us sometime too. Sounds terrific. But that look. It's it's just our nature, and it kinda goes back to what Anthony said. We're we're not gonna get ahead of ourselves.

[Daniel Tucker, Executive VP & CFO at The Southern Company]

We do have tremendous opportunities here. Yes. 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 is happening. But as part of our discipline in in 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.

[Daniel Tucker, Executive VP & CFO at The Southern Company]

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.

[Angie Storozynski, Senior Equity Research Analyst at Seaport Research Partners]

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, 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?

[Angie Storozynski, Senior Equity Research Analyst at Seaport Research Partners]

Again, you know, it almost feels like it's, you know, it's 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. I don't know if I'm expressing myself correctly. Just that it seems like your your announcements are less glitzy than those from others.

[Christopher Womack, CEO, President & Chairman at The Southern Company]

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

[Daniel Tucker, Executive VP & CFO at The Southern Company]

Yeah. I I think the biggest the 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.

[David Poroch, SVP, Chief Accounting Officer & Comptroller at The Southern Company]

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 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.

[Angie Storozynski, Senior Equity Research Analyst at Seaport Research Partners]

There we go. Congrats, everybody. Thank you.

[Christopher Womack, CEO, President & Chairman at The Southern Company]

Thank you.

[Daniel Tucker, Executive VP & CFO at The Southern Company]

Thanks, Angie.

[David Poroch, SVP, Chief Accounting Officer & Comptroller at The Southern Company]

Thanks, Angie.

[Operator]

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

[Christopher Womack, CEO, President & Chairman at The Southern Company]

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.

[Operator]

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

Participants

Executives

• Gregory MacLeod, Director - IR
• Christopher Womack, CEO, President & Chairman
• Daniel Tucker, Executive VP & CFO
• David Poroch, SVP, Chief Accounting Officer & Comptroller

Analysts

• Carly Davenport, VP - Equity Research at Goldman Sachs
• Steve Fleishman, MD & Senior Analyst at Wolfe Research LLC
• Julien Dumoulin-Smith, II-Ranked & 'Hall of Fame' Research Analyst covering Power, Utilities & Clean Energy at Jefferies
• Nicholas Campanella, Director at Barclays
• Andrew Weisel, Director at Scotia Howard Weil
• Jeremy Tonet, MD & Research Analyst at J.P. Morgan
• Bill Appicelli, Executive Director & Head - North America Power & Utilities Research at UBS Group
• Anthony Crowdell, Managing Director at Mizuho Financial Group
• Angie Storozynski, Senior Equity Research Analyst at Seaport Research Partners