SOUTHERN CO Q1 FY2024 earnings call

• Plant Vogtle Unit 4 successfully achieved commercial operation, making Vogtle the largest clean energy generator in the country. - Southern Company Board of Directors approved an $0.08 per share increase in annual common dividend, marking 23rd consecutive increase. - Strong economic development activity in Southeast, with first quarter investment announcements second highest on record. - Georgia Public Service Commission approved stipulations in 2023 IRP update, including new storage resources. - Key requirements for navigating growth: supportive states and constructive regulation, institutional wherewithal, flexible pricing framework, and experience/discipline.

For the first quarter of 2024, adjusted EPS was $1.03 per share, $0.24 higher than Q1 2023. Weather-normal retail electric sales to all classes were 1.7% higher than Q1 2023. Commercial customer class had higher than expected weather-adjusted electricity sales, with data center sales up over 12% for the quarter. Industrial sales showing signs of recovery. Southeast regional labor supply above pre-pandemic levels, low unemployment, and net in-migration driving customer growth.

• Adjusted EPS estimate for Q2 is $0.90 per share. - Incremental capital from commission approvals and solar project expansion adds an upward bias to earnings, though exact impact is yet to be fully determined.

• Potential for forecasted load not materializing, with risk adjustments already incorporated. - Legislative changes affecting data centers in Georgia, such as House Bill 1192. - EPA rules impacting coal plant retirements and carbon capture technology feasibility. - Uncertainty around regulatory processes and their impact on capital allocation.

Q: Good to see the strong sales growth coming in during the quarter. Are there any sensitivities around the commercial load or data center load specifically?

A: Yes, roughly $20 million to $40 million for 1% change in sales.

Q: As you think about the recent commission approvals on the 23 Georgia IRP filing, do you see any incremental capital needed relative to what you previously laid out?

A: There will be some additions, largely pertaining to additional storage resources, with total dollars above $500 million and south of $1 billion.

Q: Congrats on Vogtle up and running. Just is it fair to say that adding this capital has an upward bias to earnings?

A: Yes, incremental investments should have an accretive effect, adding an upward bias particularly if momentum continues.

Q: Just on the legislative front, any update on election court cases and consumer council bill?

A: The consumer advocacy group bill was not passed, but legislature passed bill providing certainty on election cycle for commissioners.

Q: Can you elaborate on the timing of guidance update around the 'upside bias'?

A: Updates will likely be in fourth quarter call with significant needle-moving event.

Q: What conversations are you having around hyperscalers and self-generation?

A: Having conversations across continuum of options, understanding their needs and providing service and support through complementary subsidiaries.

Q: On sales growth in other jurisdictions, what's embedded in the plan versus upside?

A: Activity in other jurisdictions not assumed in current forecast, but projects like Meta's 200-megawatt facility in Alabama are seen.

Q: How does the $500 million to $1 billion CapEx impact credit implications?

A: Will issue equity and restore metrics, with incremental CapEx having accretive effect.

Q: Can you break down data center sales growth?

A: About 3/4 from existing data centers and 1/4 from new ones.

Q: On House Bill 1192, any commentary on impact on data centers in Georgia?

A: Hard to say, but competitive nature of economic development means need to evaluate closely.

Q: If EPA rules adopted, does it accelerate coal plant retirements?

A: Evaluating rules, but they may make running coal units more difficult.

Q: Updated thoughts on nuclear technology viability?

A: Country will need more nuclear, federal leadership needed, and Vogtle success is a basis for future consideration.

Q: On HP1192, would it slow data center addition in Georgia?

A: Hard to answer, but competitive economic development nature means need to evaluate.

Q: On T&D investment with load forecast, any upside?

A: Yes, transmission considerations part of long-term planning as new resources are added.

Q: Alabama and Mississippi IRP schedules and similar issues?

A: Mississippi launched process in April, Alabama to have one next spring 2025, with quarterly updates to keep commission informed.

Q: Customer preference for carbon resources in data centers?

A: Early requests for 24/7 carbon-free, and Southern is transparent about transition plans.