The Southern Company — 2024 Q1

Yes. Look, I think it's fair to characterize that everything that is occurring and particularly if the momentum continues and what we're seeing, I would characterize that as adding an upward bias to where we are from an earnings perspective. And you kind of said it, Steve, and we certainly saw your commentary and your note yesterday. We are a big company. We are issuing equity. But even with all of that, these incremental investments should have an accretive effect. But I think it's just too soon to say exactly what that means, but an upward bias, absolutely exists, particularly if this momentum continues.

And Steve, the only thing I'd add is we talked to you before about not just about raising growth rates, but it's about the durability and the length, how we extend the runway is something that we are keenly focused on as we've talked to you many times about. And I think that's clearly an opportunity that we are afforded by this added growth.

And then the only thing I'd add is also the thing that we are really gratified to see as part of this whole dynamic is a derisking of our outlook. Because of these customer benefits the affordability equation is greatly improved, and that's a good thing for the long-term sustainability of our business.

Steve, the only thing I'd add, I mean, one of the things that we talked about in our prepared remarks, we've talked to you more about how do we use this opportunity to make sure we put downward pressure on rates across our customer classes and making sure that we price this new load in the right way. And I think we've demonstrated our ability to do that and having the resources and tools to do that going forward. So it provides us additional excitement for us as we go forward.

Yes, the consumer advocacy group inside the commission, that bill was not passed by the legislature. The legislature did pass a bill that provided what I think is some certainty around the election cycle going forward for the commissioners. There was some confusion chaos and time and schedule got a little short because of the court cases.

Yes, Steve. I think that's what we tried to capture a little bit in what we laid out in the Slide 11 in our deck. It's we're not counting on those that could potentially still be trying to put multiple states or utilities on the hook, really until we have pretty firm line of sight and that bilateral conversation and commitment between them and our utilities, it's really not solidly in there. There may be some degree of risk adjusted or kind of a probability-weighted aspect just because there's so much activity out there. But we feel pretty good about -- I got I hate to use the word, but it's -- I think our forecast is fairly conservative in that regard.

Yes. So importantly, Shahr, the way I characterize that is that if we continue to see this momentum, right? So it's certainly not the cards we have today. The cards we have today have greatly improved our overall profile. It's added that durability. It's massively derisked kind of the outlook. But it's going to take continued momentum on this front more investment, more sales growth over the long term.

So I'd say we're having a lot of conversations that covering all of those options and all those considerations. I mean, I think as you talk to these hyperscalers data centers, one, they want the power. They want resilience. They want the reliability. Some of them want clean, and they recognize the demand that they're putting on load in certain locations. And so their considerations do they self generate, do they want support from behind the meter.

I don't think there's anything embedded in the plan. I think we -- it's about announcements and that we see forthcoming. We know I think there was an announcement today in Alabama of a 200-megawatt facility that Meta just announced. And then you saw also some legislation in Mississippi that was providing incentives for data centers and other hyperscalers to come into Mississippi. So we see it coming, but that activity -- those projects have not assumed are not included in the forecast as we talk about it today.

Yes, absolutely, Nick. That profile we described in the fourth quarter that kind of ramps from that 14% last year up to 17% in the back half of the plan, it's absolutely still the profile to watch as this incremental capital opportunity emerges. What we'll do is issue sufficient equity probably through something like an ATM and through our plans to kind of restore the metrics to where they would have otherwise been without that incremental CapEx.

So it's about 3/4 existing data centers and then a little bit the other quarter kind of coming from new data centers year-over-year. So we're seeing both. We're seeing a continued ramp-up of new facilities, existing facilities ramping up their usage.

Yes. I mean I think that I mean, it passed and now sitting on the governor's desk and so waiting to see what happens there. I think one of the things the government wants to do is let economic development activities know that Georgia is still open for business. And so I think that's one of the key factors in consideration that he will pay attention to as he makes a decision on that bill. But right now, I don't know what will happen, but it's there for him to take action on. And so we're waiting just like everybody else to see what happens.

I think that's a lot to come. And I'd add one more factor there. It's the new EPA rules, and we saw the suite of announcements that came out of EPA last week, which we are reviewing. And many of the rules we think are in practical in terms of aligning with the kind of demand that we see forthcoming, and also from a technology standpoint, some expectations that they are advocating and putting forward don't align necessarily with the reality.

Geologically, yes. I mean there are places down on the coast. The mobile area, some parts of Mississippi, where we have the geology for sequestration. But once again, I think as you look at what is somewhat predicated in some of these roles and the expectations and what the desires are -- is the technology available at a commercial scale to do what they're asking us to do. I think there are a lot of questions there.

I mean I can give you my speech if you'd like to hear it. I mean the country is going to need more nuclear. I mean there's clearly no technology better suited to support demands of this increasingly digital economy and society.

Yes, Anthony, this is Dan. Look, I think largely, any commentary you heard was simply focused on affordability and ensuring that the benefits that Georgia Power said we're there, end up reflected in customer rates. And that's exactly what the stipulation does is provide that commitment so that when we file the 2025 rate case, one of those moving parts is going to include incorporating those economic benefits for all customers into that calculation.

Angie, I think it is what it is. I mean it was intended to move around the partners and participants of excess capacity. And so that's what it has been doing, I think, has been very successful, but I don't think it signals anything more than that. I mean that simply is it's doing what we intended to do with all the participants. And so we'll continue to utilize that. Now how does it factor into the additional growth? I mean we'll step back and look at it. But it doesn't signal anything more than what we intended to be when we made all the filings and got all the approval.

Yes. And really just to create a more nimble market for those intermittent resources to make sure that customers, wherever it's needed benefit from that very, very low-cost energy.

Yes. Look, so I'll start with the second question first. Look, Southern Power is always going to evaluate opportunities to serve load-serving entities, right? And so to the extent those opportunities present themselves in any of our jurisdictions where it makes sense, we'll evaluate that. And you've seen that happen in the past, particularly in Georgia.

And Paul, I think it's hard to answer that question, but I would think not, but also I think you have to look at the competitive nature of economic development across states. And where does it put Georgia and then what signal does it send. But also, I think it's about -- it's a big question about resilience and the ability to meet the demands of these customers and not just reliably, but providing them the resilience they expect and the demand.

And Paul, that's like we're evaluating those rules as we speak today. And I mean I think there's a lot we've kind of gotten to very quickly on the gas side in terms of capacity factors and the expectations for carbon capture. I mean I think there's more work for us to do in terms of the coal implications. But at first blush, like I said, I think they're in practical and probably yet would make it more difficult to run coal units as well any longer.

I don't know that we have the specific construction updates, Ryan, but I will tell you just in general, this is -- I mean, think of it as a continuous kind of waterfall, right? I mean there are always data centers coming in and exploring and then committing. And so it's just -- it's an ongoing thing. So we've got -- right now, there's 12 under construction that totaled about 2,400 megawatts.

I think we said before, Georgia has an RFP in 2025. And so they'll factor in new requests, new demands, new load doing that proceeding. Alabama and Mississippi will do make similar decisions in their processes based on the demands and requests that they receive as well.

And coming out of this last process, Ryan, there was a part of the stipulation is that Georgia will kind of keep the staff and commission updated a little more -- it's not real time, but on a quarterly basis, kind of leading up to the next formal process that way everyone kind of has line of sight as to what is emerging.

Because it goes back to some of the points we laid out in the prepared remarks. Is this load real? And so I think that quarterly update helps give the commission and the staff the information they need to give confirmation of the reality of this load.

And that next regular filing is scheduled for next January '25.

I mean early on, we saw a lot of requests for 24/7 carbon-free of late. We see the request for do you have power. And like I said, we continue to build additional carbon-free resources. And so we'll continue to work with them. But right now, I think there is just a simple desire and request for resources for energy.

And we're very transparent about our own transition plans. And I think that is an opportunity for them to kind of latch on to transitioning along with us.

We chose that word very carefully.

Yes. And so if you remember, Travis, part of our year-end update on the capital plan, I mean, it totaled $5 billion of increased capital. There was a big piece of that, that was also transmission, and that will continue to be part of the long-term planning discussions we have with our states.

And I'll also add, there's got to be some additional build-out of gas infrastructure as well. I mean, so there's a lot more infrastructure that's got to be built to support the generation resources to meet this demand.

We don't want to get too far ahead of exactly what it will look like in terms of if there's suddenly this accelerated load. But so the next scheduled processes. We got Mississippi, we'll launch a process and -- or they launched the process in April rather they're going through that now and Alabama will have one next spring 2025.

I think it's -- let me call by saying this. Understandably, I mean, Vogtle 3 and 4, the journey that we've been through, took a lot of attention from our stakeholders and have met fewer conversations focused on our underlying business and the success of our underlying business.