The Southern Company

Good afternoon. My name is Myra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Southern Company's third quarter 2021 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. At that time, if you have a question, please press the 1 followed by the 4 on your telephone. If at any time during the conference you need to reach an operator, please press star 0. I would now like to turn the call over to Mr. Scott Gannell, Investor Relations Director. Please go ahead, sir.

Thank you, Myra. Good afternoon and welcome to Southern Company's third quarter 2021 earnings call. Joining me today are Tom Fanning, Chairman, President, and Chief Executive Officer of Southern Company, and Dan Tucker, Chief Financial Officer. Let me remind you that we'll be making forward-looking statements today in addition to providing historical information. Various important factors could cause actual results to differ materially from those indicated in the forward-looking statements, including those discussed in our Form 10-K, Form 10-Qs, and subsequent filings. 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 are both available on our investor relations website at investor.southerncompany.com. At this time, I'll turn the call over to Tom Feeney.

Thank you, Scott. Good afternoon, and thank you for joining us today. As you can see from the materials released this morning, we reported strong adjusted results for the third quarter. The economies in our service territories continue to recover from the COVID-19 pandemic, And, in particular, customer growth continues to exceed our expectations. Given results through September, we expect full-year adjusted earnings per share to be above the top end of our guidance range. Dan will share more on this in a moment. So let's begin with an update on Vogel Units 3 and 4. Two weeks ago, we updated our expected completion timeline for both units extending the in-service dates by three months. For Unit 3, following the completion of hot functional testing, we completed walk-downs of the 158 safety-related rooms within the nuclear island to assess the extent of remediation work required, consistent with the electrical installation quality issues we highlighted earlier this year. The number of instances of items needing remediation found during our full assessment process, however, exceeded our estimate from July. The change in the Unit 3 schedule into the third quarter of 2022 is primarily a function of the time needed to address the full scope of the remaining remediation work and to account for the impact on productivity resulting from higher than expected attrition and slower than expected onboarding of new electricians, field engineers, and supervisors. For Unit 4, recent progress has slowed as craft labor and support resources have been temporarily shifted to support Unit 3's completion effort. Considering this decrease in available resources over the next several months, plus recent productivity trends, we now expect Unit 4 in service during the second quarter of 2023. Importantly, with the corrective actions the site has implemented after discovery of the Unit 3 quality issues, including reinforcement of the importance of first-time quality with craft personnel, and improvements to the application of Bechtel's quality program, we believe that as we turn systems over on Unit 4, the amount of remediation work required will be less than what we experienced on Unit 3. During the third quarter, consistent with the surrounding areas, the site experienced a spike in COVID-19 cases that approached the peak of cases we experienced early in 2021. While the availability of vaccines and well-established protocols helped preclude the same degree of disruption experienced during the first waves of COVID-19, the pandemic was certainly a contributing factor to overall productivity and resource availability. For Unit 3, repairs to the spent fuel pool, system turnovers, and ITAC submittals continued throughout the third quarter. Repairs to the spent fuel pool are now complete, and the next major milestone for Unit 3 will be the receipt of the 103G letter from the NRC. To date, 242 ITAC have been submitted to the NRC, with 156 remaining. On slide seven of today's earnings call deck, we have included a forecast of the remaining ITAC submittals required to support a projected May 2022 fuel load and third quarter 2022 projected in service date. Now, considering our recent volume of ITAC submittals in October, and the expected completion and turnover of significant systems in the months ahead, the site is targeting ITAC completion earlier than what is indicated in this forecast, which would provide margin to Unit 3's remaining schedule. We expect to use the time between ITAC completion and fuel load to finalize the non-safety-related elements of the plant and to complete any remaining pre-fuel load testing. Turning now to Unit 4, direct construction is now approximately 89% complete. A revised projected in-service date of the second quarter 2023 reflects the temporary shift of services to Unit 3, recent productivity trends on bulk electrical work, an ongoing effort to add craft labor and non-manual field support resources in support of first-time quality and productivity. Construction completion for Unit 4 has averaged 1.4% per month since the start of the year. To achieve a second quarter 2023 in-service date, we estimate that Unit 4 would need to average approximately 1% construction completion per month through the end of 2022. From a cost perspective, Georgia Power's share of the total project capital cost forecast increased by $264 million, largely driven by our updated schedule, productivity consistent with recent trends, the cost of additional resources to complete the full score for remaining work with necessary focus on quality, and the replenishment As a result, Georgia Power recorded an after-tax charge of $197 million during the third quarter. We remain committed to the credit quality of Georgia Power and Southern Company, and we will continue to seek to maintain strong credit metrics for both entities. Our priority is bringing Vogel Units 3 and 4 safely online to provide Georgia with a reliable, carbon-free energy resource for the next 60 to 80 years. We are committed to taking the time to get it right and will not sacrifice safety or quality to meet schedules. At Unit 3, we are working to submit remaining ITACs to support receipt of the 103 letter prior to fuel load and commercial operations in 2022. For Unit 4, we remain focused on attracting and retaining necessary craft labor and support resources, as well as first-time quality as we work to increase productivity and progress toward the start of open vessel testing, which is now projected by the second quarter of 2022. Dan, I'll turn the call over now to you for an update on the financials.