Southern Company (The)

Good afternoon. My name is Sherry and I will be your conference operator today. At this time, I would like to welcome everybody to the Southern Company's second quarter 2024 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. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. I would now like to turn the call over to Mr. Scott Gamow, Vice President, Investor Relations, and Treasurer. Please go ahead, sir.

Thank you, Sherry. Good afternoon and welcome to Southern Company's second quarter 2024 earnings call. Joining me today are Chris Womack, Chairman, President, and Chief Executive Officer of Southern Company, and Dan Tucker, Chief Financial Officer. Let me remind you 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 our forward-looking statements, including those discussed in our Form 10-K, Form 10-Q, and subsequent filings. In addition, we'll 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. Now I'll turn the call over to Chris.

Thank you, Scott, and good afternoon, and thank you for joining us today. As you can see from the materials we released this morning, we reported strong adjusted earnings results for the second quarter, meaningfully ahead of the estimate provided last quarter. We believe we are well positioned to achieve our financial objectives for 2024. All our businesses, electric and gas, are performing well, and we continue to see both economic resilience and economic growth, especially within our Southeast service territories. During the most recent heat wave across the Southeast, our dedicated employees, supported by our coordinated planning, ensured our electric system delivered outstanding reliability and resiliency for the customers and communities that we are privileged to serve. Last quarter represented the warmest second quarter in the last 38 years with a peak electric load of over 38,000 megawatts, the third highest June peak electric load on record for the Southern Company system. We take tremendous pride in our ability to reliably serve our customers through all operating conditions. Our performance continues to highlight the value of the integrated regulated framework in which we operate. Coordinating planning for generation and transmission as well as our robust portfolio of natural gas transportation capacity and storage have positioned us to effectively manage peak demand needs. This same framework including our orderly internal and external regulatory processes for long-term demand planning and resource decisions is what also positions us so well to reliably serve the significant electric load growth projected over the next decade, an opportunity we're excited about. Dan, I'll now turn the call over to you for a financial update.

Thanks, Chris, and good afternoon, everyone. For the second quarter of 2024, our adjusted earnings per share was $1.10 per share, 31 cents higher than the second quarter of 2023, and 20 cents above our estimate. The primary drivers of our performance for the quarter compared to last year were continued investment in our state regulated utilities and warmer than normal weather for our electric subsidiaries. This was somewhat offset by higher interest and depreciation expenses. A complete reconciliation of year-over-year earnings is included in the materials we released this morning. Our adjusted EPS estimate for the third quarter is $1.30 per share. As Chris noted, all of our businesses experienced a strong second quarter, leading to adjusted financial results meaningfully higher than our estimate of $0.90 per share. The warmer than normal weather in the second quarter contributed to these results, as well as our continued focus on managing operating costs. Additionally, during the second quarter, we experienced higher than expected weather-adjusted electricity sales in our commercial customer class. These higher sales were driven by a combination of continued strength in our local economies, as well as increased usage by many of our existing data center customers. In fact, sales to existing data centers for the quarter were up approximately 17% year-over-year. The strong Southeast economy, including favorable business climates and expansions in manufacturing, continues to drive net in-migration and customer growth. For the second quarter, we saw residential customer additions of 14,000 in our electric businesses and 6,000 in our natural gas distribution businesses. We also continue to see strong economic development activity across our electric service territories. The aggregate pipeline for potential new industrial and commercial customers across our three-state electric utility footprint includes nearly 200 projects and over 30 gigawatts of potential load over the next decade or so. While it's likely these numbers include some degree of duplication in potential projects, as some prospective customers are evaluating multiple states that we serve for their facilities, these numbers are significantly higher than what we've seen historically. About 40% of the projects in the pipeline and 80% of the potential electric load are data centers. In addition to data centers, clean energy and transportation manufacturing, port-related businesses, and other heavy industries continue to be attracted to our states due to reliable energy, a diverse workforce, robust transportation networks, and a low cost of living, all compelling reasons to locate or expand in our southeastern states. The potential load growth in this pipeline that is reflected in our forecast is currently only a fraction of this full potential. As a reminder, during our year-end earnings call in February, we updated our forecast to reflect projected retail electric sales growth that is expected to accelerate in the latter part of this decade with a projected growth rate of approximately 6% from 2025 to 2028. The underlying Georgia Power projected sales growth is approximately 9% over this same period. In response to this growth, Georgia Power filed and the Georgia Public Service Commission subsequently approved earlier this year its 2023 integrated resource plan update. Since the time of the original filing last year, Georgia Power's pipeline of potential large load additions by the mid-2030s has grown approximately 40%, and the amount of committed peak demand over the same timeframe has more than doubled, now totaling over 7 gigawatts. As we described in detail on our last earnings call, we continue to execute on our disciplined approach to attracting, serving, pricing, and forecasting this potential incremental electric load. We continue to expect that our disciplined approach to pricing this new load should result in revenues that not only cover the incremental cost to serve these new customers, it also provides economic benefits to existing customers. Chris, I'll now turn the call back over to you.

Thanks, Dan. Southern Company remains focused on execution, and we're excited about the future. We believe we are well positioned to capture the value of this significant electricity demand for the benefits of all stakeholders. Our orderly and proven processes for engaging with prospective customers and for addressing resource needs with our regulators differentiate Southern Company from our peers and helps mitigate risk for our customers and our investors. Additionally, prospective electric customers are increasingly recognizing the value of our institutional experience and wherewithal, the value of the great states we operate in, and the value of the vertically integrated regulated utility model. Before taking your questions this afternoon, I'd like to take a moment to recognize the hundreds of team members from Alabama Power, Georgia Power, and Mississippi Power who recently returned home after aiding in power restorations in Texas following the devastation caused by Hurricane Beryl. These teams and others from across our industry work tirelessly to bring relief to affected communities, and their performance throughout the successful restoration effort stands as a testament that our employees are at their very best when conditions are at their worst. Let me conclude by saying we have delivered very strong operational and financial results for the first half of this year. We will remain focused on continuing to execute on our plan, and we believe that we are extraordinarily well positioned to deliver the superior performance that you expect from us for the remainder of the year. Operator, we're now ready to take your questions.

Thank you. If you would like to ask a question, 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 would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment while we poll for questions. Our first question is from Carly Davenport with Goldman Sachs. Please proceed.

Hey, good afternoon, Carly. How are you? Thanks so much for taking the questions. Maybe just to start on the quarter itself, I guess just with the significant beat relative to your initial 90 cents guidance, sort of how are you thinking about the puts and takes around the full year guidance and your execution there at this point?

Look, we're always very cautious. While we're halfway through the year, there's a lot of year left to go. And in particular, with our electric utilities being in the southeast, the summer is a pretty big period from a revenue perspective. So we typically kind of hone in on a more specific expectation after our third quarter call. That said, to your point, we are incredibly well positioned. We're off to a great start. And what we also have a history of doing is really taking that kind of opportunity and doing anything and everything that we can to not only deliver on the current year, but use that as an opportunity to improve our positioning for future years. So that might look like advancing maintenance work out of future years into 2024 or getting ahead on other programs. There are reliability reserves. We have the opportunity to kind of optimize in some of our states. And so with how we're positioned, we're working hard to do all those things, focus on this year, but focus on the long term. But, you know, all that to say, given how we started, if we you know, don't end up in the top half of our range, I think Chris and I would be disappointed.

But I think, Dan, I think as we say internally a lot, when we have the opportunity to fix the roof while the sun is shining, and so thinking about 24 and 25 and 26, those are some things we'll consider as we continue to move forward through this year.

Great. Appreciate that, caller. And then the follow-up, just would love to get your perspectives on nuclear as it continues to gain focus here. I guess, what do you think the industry needs to do to support the buildout of new large-scale nuclear? And as you think about the 2025 Georgia IRP filing, is there any potential to see nuclear play a role there?

Carly, I mean, I think the industry has got to continue to do all the planning, all the reviews, working with industries to look at what all the possibilities may be. I think to ultimately get that build out and get the momentum, we've got to have incredible leadership from the government to make this a reality. We know there are risks, and I think we all must find ways, and I think support from the government can help mitigate some of that risk. So I think that is the critical element in terms of really gaining the momentum to build on what we got done by completing voter units three and four. I think it's got to be a part of the future. It's got to be a part of the mix. We've got to have diverse resources to meet this demand we see going forward. And NUCLA's got to play a very prominent part in that role. But I think there's got to be and needs to be great leadership from the government to really kind of help build the momentum that we need to see. I mean, I'll leave it at that.

Thanks so much for the comments.

Our next question is from Char Perez with Guggenheim Partners. Please proceed.

What's up, Char? How are you doing, man? Hey, guys. Good. How are you doing, Chris?

Doing great, man.

Excellent. So, Dan, I can maybe a quick one for Dan. Dan, I can totally appreciate the conservativeness and sort of how you're messaging around this year. But, like, obviously, like, we are seeing, you know, much stronger – the reality of your sort of your footprint is much stronger than kind of your planning assumptions, right? And I know you've talked about in the past that maybe you can provide an update in the fourth quarter or potentially EI timeframe of what all this kind of means to your longer range guidance. I guess, what other trigger points are you looking for outside of sustainability around this load backdrop to really revisit how you guys think about a longer range plan?

Sir, I think it does, you know, and I know you said besides sustainability, but it really is rooted in that notion of continued momentum. Look, I think we feel good about what we know and see right in front of us, and that's a large part of what we addressed in this recent Georgia proceeding. We've got the 2025 IRP ahead of us that will provide an opportunity to kind of further button up the latter part of the decade and into the next decade for, again, what we kind of know sitting here today, the opportunity and it certainly feels like there is continued increased momentum. The opportunity is that assuming that continues, there will inevitably be more capital investment needed to serve continued load growth, whether that's in the form of new generation resources, certainly transmission improvements around the system. But the thing I want to balance all of that with, and I think we've continued to say this, this is really a later in the decade phenomenon. This is not a 25 thing. This is starting to bleed into 26. But because of the long-term nature of these capital investments, because of the long-term nature of building out these data centers, this is an opportunity that sustains beyond the current forecast period.

kind of financial profile and strength that we see okay um got it that's helpful and maybe just chris uh on your end i know obviously we've we've got a georgia grc coming it's going to come sooner than we think there's been some noise around sort of roes and equity ratios maybe being overly adequate now that vogel is online from just some of the commissioners Can you maybe just talk this through a bit? Is this going to be an issue as you prep for the case? Have you begun discussions kind of with stakeholders ahead of this filing? Thanks.

Sure. You know, I mean, there's always conversations about those matters as we go through those proceedings. And so I would not, you know, I would not, you know, be surprised. I mean, we always have good deliberations about those, issues in terms of where we are and recognizing the level of service that we provide and the premium nature of how we run this business. I mean, equity ratio also came from a tax reform issue, not just from Vogel. I mean, so there are a lot of implications. And so, as usual, as we go through 25, all of these issues, I think, will be thoroughly vetted and thoroughly debated, recognized, and also, once again, as I said, recognizing how we perform as a company.

Got it. The equity ratio kind of changes were broad-based, right? This is not just a Georgia conversation. It was in all of our states, and Chris made the point that was for tax reform. It was coincidentally during the construction of Vogel, but had nothing to do with Vogel construction itself. So unless there's some major change to the tax policy that has implications, I think defending that is is where we'll start from.

Okay. That's helpful. Thank you so much, Dan, Chris. We'll see you soon.

Thanks, Char. I hope to.

Our next question is from Julian DeMolin-Smith with Jefferies. Please proceed.

Julian.

Are you there, Julian?

Yeah, oh, hey, how you guys doing? Sorry, I was on mute there. Hey, Julian, how are you, man? How are you? Good, good, good. Pleasure, guys. Absolutely doing well. Thank you.

Hey, congratulations on your child.

All right, thank you so much. I appreciate it. It's been a busy month, all right. I got to tell you.

Hope you're getting some sleep.

One of these days, seriously, getting this lunch done. Look, speaking of having the sun shining, you guys are starting the year off pretty well. It's nice to see. Maybe turning that into a specific question, you know, you've got this $1.30 out there. Just to kick it off, you've probably seen some continuation of that good weather from 2Q into 3Q. Is that already reflected in that $1.30, or is there some more upside there? Because you already had $0.10 versus normal in the second quarter.

So what we would typically do, Jillian, and what we've certainly done in this case is put out a quarterly estimate that is weather normal. You know, there's always still at least two months left in the quarter when we put these out. And just anecdotally, I would say I think this is the first day in about three weeks that it hasn't rained here in Atlanta. So I'm not so sure that July has looked like June did.

Sounds like Texas as far as rain goes. Anyway, just to keep going on that, in terms of the backdrop with the low growth, I just want to make sure I'm hearing you clearly on this, right? The 17% is phenomenal on the data center low growth. How do you think about that number in terms of the medium and longer term, right? You've obviously provided some very healthy longer-term low growth numbers. Should we expect that to continue to compound kind of consistently through the period here? To what extent actually could we see an acceleration of that number here? I mean, you know, there's a lot of talk about building infrastructure, but you guys are realizing it in a much more tangible way than perhaps some of your peers.

Great question. So let me just kind of clarify the dynamics that are happening. That 17% that we referred to is existing data centers that are on the ground, have been on the ground, and they're either in the process of ramping to their full load Or in some cases, what we believe is also happening is some of these are actually improving the technology in the data centers with not only increasing processing capabilities, but that's also utilizing a little bit more electricity in the process. What will happen going forward while this dynamic will be there, this is a small component of our overall commercial sales today. everything we've been talking about in terms of what drives that 6% sales growth from 25 to 28, 9% at Georgia Power, those are new data centers. And so it will be a significant acceleration that begins to happen in the 26, 27, 28 timeframe and beyond as these data centers are completed. And they too will have their own ramp ups to the point where overall commercial sales growth implicit in that 6% will be in the double digits.

Right. But the point is, you know, while 17% looks phenomenal off the existing base, that acceleration is obviously accentuated in 26 hours. And we can see continued ramping of the existing base in 25.

It will become a big... Excellent. All right, guys, I'll leave it there. Thank you.

Thank you, Julian.

Our next question is from David Arcaro with Morgan Stanley. Please proceed.

Hey, thanks so much for taking my question.

Good afternoon, David.

You know, a great commentary here just on the load growth that you're seeing in data center commentary. Are you tracking ahead of that 6% assumption? I feel like things are pretty fluid and moving quickly. Are there indications that it could be stronger from here?

I think given how the pipeline is evolving, there are indications the long term could certainly be stronger. So again, we're talking into the decade, into the 2030s. The way that is building in the momentum is very promising in terms of the very near term, David, You know, like this 17% we were just talking about, even if that swung a little bit, it's such a small piece today, it's not going to have a meaningful impact on kind of current results. It really is about the capital being deployed in the big hyperscale data centers that are due to be online a little bit here in a few years.

Yep, got it. That makes sense. And I was thinking about the load growth. overall. And let's see, the other item I just wanted to check on, there was a valve issue at Vogel 3 recently. Just wondering if you had any feedback on that, kind of the extent of that issue and anything else to watch for there.

Yeah, no, they worked through that issue and the unit is now back online and Vogel 3 has operated more than 98% is capacity factor over the period. So those things will happen with new units, but we're very pleased with the performance of VOGA-3 and VOGA-4.

Yeah. Okay, great.

Thanks so much. I'll leave it there.

Our next question is from Steve Fleshman with Wolf Research. Please proceed.

Hey, Steve. Hi. Good afternoon. Hi, Chris. First, just wanted to clarify on the data center. So I think on the Q1 call, you gave a number of pipeline of 21 gigawatts, firm commitment of 6.2 gigawatts by the mid-2030s. Does that sound right?

Yeah.

What are those numbers now?

Sure. And so I'm going to even take it a little bit further back, Steve, because I think the progression here is important. So you mentioned the 21 gigawatts. That was where we were as of our last call, and that's compared to 17 gigawatts back when we originally filed the 2023 IRP update at Georgia Power. So it had grown 4,000 gigawatts. As we sit here today, that 21 gigawatts is 24.3 gigawatts. in terms of the total pipeline. You mentioned the commitments. The commitments were a significant change from the original filing last quarter. So it went from 3.6 gigawatts to 6.2 gigawatts. And then from the last earnings call to today, that 6.2 is now 7.3. Got it.

OK. That's helpful. And then, totally separate question. The, you know, on Kinder Morgan's call, they mentioned expanding the SONET system with $3 billion, I think, growth investment and kind of, I think, implied that you would represent half of it. And could you just talk to your thoughts on that and likelihood you'll do that?

Yeah, look, it's really early for that. So, yes, we're a 50% partner on Southern Natural. There is a project that is proposed that total capital is $3 billion. Our share would be $1.5 billion. It's just really early days. You know how these projects evolve. Look, we're very encouraged by it. It's 90-plus percent, I believe, brownfield, existing rights away, a tremendous opportunity there. We will kind of you know, at the right time down the road, once this thing has solidified a little bit more, there's some traction from a FERC perspective in terms of approval, kind of reflect that more in our outlook, but that's still, all that said, it's an encouraging opportunity.

Steve, the only thing I would add, I think Dan said it, but it's just very early on in that process. I think there's a, a great deal of diligence to be done, but I think at this point in time, I think the thing to note is that it's just very early on in that consideration.

Okay.

Last question.

I was going to say just policy-wise, I mean, we're excited about it. To the extent that we can get this done, it's important for everything else that's happening, right? To the extent that all this large load is down the road that has the opportunity to be served with more gas, capacity like this is really important. And so we're super supportive of them.

Yeah, Steve, let me add one more thing on that. And we talk a lot about the importance of this country building infrastructure. So these kind of things need to happen to support this economy going forward. But for us, it's just very early on. But it's some things that this country must embrace and must move forward on.

Okay. One last question, just going back to my first topic on data centers. Can you just remind me how you define firm commitments relative to pipeline or data centers.

Yeah, so the commitment we're characterizing is essentially a signed request for service within our service territory. It's a commitment by the customer to be at a particular level. It's a commitment by us to provide the service. And then A lot of these commitments have kind of further papering, if you will, that goes beyond those kind of key elements where it's commitments for local infrastructure, commitments around pricing, commitments around the ramp. So there's clearly different stages here. I think, importantly, because we argue with ourselves, what is the right nomenclature for this? What's the right word to really characterize this? Commitment sounds like something that's completely fixed and unreversible. The reality is we have these commitments, these requests for services, and over time there's puts and takes. In fact, in the numbers I shared with you a few minutes ago, Steve, there were puts and takes in there. But net-net, the megawatts are still going up.

And, Steve, last earnings call, we went through this, I guess, process, this orderly process that we go through internally. in terms of confirming that this load is in fact real. And so if you look, remember some of that, I mean, that's kind of the discipline in which we, you know, look at these projects to make sure they are real, that they've demonstrated a commitment to the state, that they've selected our utility companies. I mean, so it's a very orderly and disciplined process that we go through because, like I said, we've been in this economic development business for a very, very long time. I mean, we're in the market each and every day. engaging with customers. But we know how this plays out. We know how it works. And so for us, as well as for them, it's important to understand what's real and what it means to have a commitment. So we spend a lot of time working on this.

And so importantly, just last thing, Steve, just to clarify, commitment for us does not mean it's in our forecast. There's further risk adjustment from there. We know that things will get delayed. We know that the actual peak load alluded to may not show up to that extent, but there'll be load, but not that much. So we're risk adjusting beyond this commitment level to be as conservative, but also as pragmatic as we can with the forecast.

And then lastly, the 9% Georgia Power growth rate, that was based off of the initial numbers that you gave at the end of 23. for when you get the filing.

Okay, so these updates. Yes, there is potential for those to evolve, and I think that's what we will see where we are at the time of the 2025 IRP filing.

Thank you.

Yeah, thank you, Steve. Thank you.

Our next question is from Nick Campanella with Barclays. Please proceed.

Hey, thanks. Hope everyone's doing well. I am. I am. It's hot. Hey, a lot of questions have been answered, but I guess just, you know, I know that there's been potential for DOE loans to enter the portfolio, and hopefully that's coming up soon, but just can you just remind us, you know, how that could affect your overall financing plans and what could maybe be on the table, if anything?

Sure, Nick. Happy to. So, look, there's, we believe, and the devil be in the details as we work through this process with the DOE loan office, there could be big round numbers, eligible capital in the range of $15 billion to $20 billion over the next, I don't know, seven to eight years or so that could qualify for this. And the program allows that qualified capital to be financed up to 80%. the qualifying amount so that's a significant amount of debt financing that could be done through a very low cost source relative to the capital markets implication of that is a potential tremendous benefit to customers over time not unlike what we had with boba three and four In terms of the loan program there, again, this program could potentially be three to four times the size of the BOGO 3 and 4 program, which created tremendous savings for customers.

Hey, I appreciate that. And maybe just one conceptual question here. We've heard about economic development on your call, on all of your peers' calls this earnings season. The tailwinds continue to be very strong I can't help but notice that some economic and industrial indicators are now starting to roll. You know, ISM indicators this morning were at their lowest since the pandemic. And I guess my question is just what's differentiating your service territory, you think, on the economic development side? And then, you know, is this just all kind of chalking up to maybe you guys being conservative in this five to seven outlook and waiting for it to come? Thanks.

No, and we talked about it earlier on this call about the reliability and the performance of our company, the cost of living in the territory, the transportation hubs and access and resources that we have here, the kind of business climate. Alabama was recently recognized by CNBC as a top state to do business in, and so the great advancements there. So I think a collection of things that are occurring across this southeastern territory has really been attractive for a long period of time and continues to make this part of the country very attractive. And so I think we have a lot of good things going for us. And so we're kind of excited about where we are. And it shows up in the pipeline of business and the projects that are currently in the queue in all of our states, all of our southeastern states. So I think it speaks well for the characteristics of our states and where we are. And also I think our vertically integrated model also supports kind of this is a good place to come and do business.

Thanks for those thoughts. Thank you, Nick.

Our next question is from Gesh Chopra with Evercore ASI. Please proceed.

Andrew Gesh.

Hey, Dan. Good afternoon. Thanks for taking my questions. Hey, Dan, as we think about your forward-looking guidance and your 2024 base, you've obviously started the year phenomenally, year-to-date materially above the plan, but there's some one-timers in there like weather. So as we think about our models and 26, 27 EPS estimates and beyond, whenever you provide this guidance at Q4, Are you going to exclude these one-time benefits in 2024? I'm just trying to think of what should be the base of the new five to seven, if you will.

Yeah, the base for the five to seven is the current guidance in 2024, 395 to 405. The way to think about, so you mentioned weather as an example, Durgesh. You heard us describe kind of the notion of fixing the roof while the sun is shining, advancing maintenance out of future years and this year. If you looked back over the course of time at our O&M spend, while on average it's probably flattished down over time, year to year it's more of a sine wave. Because, again, what we're doing is managing the short term, taking advantage of opportunities like warmer than normal summers, colder than normal winters, such that in other years, where we have milder weather, 2023 being a great example, we have the flexibility to spend less. And so we're managing to a regular, predictable, kind of sustainable result year in and year out, despite what might be characterized as one-time things.

Got it. Okay. So basically, go ahead.

I'm sorry, there was some background noise there. I get it. Thank you very much. And then just one quick follow-up on credit metrics and FF photo debt. I think this year, this is from the Q1 call, I believe, but you were kind of trending towards 14% by the end of this year, and then 16% to 17% by the end of the planning period in 2028. You know, does that outlook change? get strengthened here given the year-to-date outperformance as we think about the end of 2024?

I think we are where we were. You heard Chris and I allude to maybe being disappointed if we're not in the top half of the range, so maybe there's some incremental benefit for 2024, but I think in terms of the trajectory we're on, we are exactly where we were and how you described it.

Okay, perfect. Thanks again for giving me time.

Yeah, you bet.

Our next question is from Jeremy Tonnet with JP Morgan. Please proceed.

Hi, good afternoon.

Good afternoon, Jeremy.

Just wanted to come back to the Sonat expansion, if I could, in the open season. I was just wondering if you were able to share any color on shipper interest there and whether that was that was largely for Southern or there was others that came in with good demand there?

Jeremy, I think it's very premature. I mean, we have no insider perspective on that at this time. It's just very early in the process.

Got it. Fair enough. And then just wondering, you know, as you sit back today, how you think about the current business mix in jurisdictional exposure as the electric backdrop is changing for load growth? Is there any rotation of assets that you might be interested in here?

I don't think we're there. We love the portfolio we have. We've done a lot of work over the years to hone it to the portfolio it is today. We've got great electric and gas jurisdictions at large. We've got great complements with Southern Power. There's certainly no designs on anything like that as we stay here today.

Got it. Fair enough. Thank you very much.

Thank you. Thank you.

And our next question is from Travis Miller with Morningstar Incorporated. Please proceed.

Good afternoon. Thank you. Hi there. Back to the data center conversation. As you go through those numbers and you talked about risk adjusting and all of that, what are the regulatory requirements the state regulatory hurdles that you face in terms of thinking about that risk adjustment and some of those numbers actually coming to fruition.

Once again, Travis, as we go back to a pretty detailed conversation we had on our last call, it's also going to the commissions to confirm the reality of the projects, understanding what the risks are, understanding the pricing that needs to take place that make sure that we are working with these customers to really fully load, understand what their incremental costs are and their marginal costs are and how we price that so that we also, when we do this, we're providing benefits to the rest of the customers in terms of what sometimes we refer to as downward pressure. So just as we work to confirm reality and commitments but also then do risk adjusting having that same kind of process and conversation with the regulatory jurisdictions in terms of understanding the reality and then understanding the financial and pricing implications. And so one of the things I feel real good about is this kind of orderly process that we have to work through this with the commissions, but also the ability to work through this with the respective customers. I just feel real good about kind of our process to give order to sometimes what looks like a lot of chaos in this marketplace. I think we have the experience, we have the wherewithal, we have these constructive regulatory environments, and we have the framework to do this, I think, in a way that makes sure that it's orderly and disciplined and provides benefits to all stakeholders.

Sure, sure. And do each of those contracts... need official regulatory sign-off, or can you negotiate those without regulatory sign-off, state regulatory sign-off?

Yeah, we can negotiate that without regulatory approval.

Okay, very good. And then real quick, what's the long-term planning process timing in Alabama and Mississippi in terms of when we might get more information on data center load or total CNI load growth there?

You'll see those conversations, I think, on a regular basis annually. I mean, it's a little different than what happens in Georgia, but as they look at their plans and look at the issues and needs that show up, I mean, they'll take that to the commissions for certification.

Okay, great. I appreciate it. Thanks.

And that will conclude today's question and answer session. Sir, are there any closing remarks?

Again, thanks, everybody, for taking time to be with us. We feel good about where we are as a company and how we're performing and executing, and we're incredibly excited about the future. Thanks for being with us today, and be safe.

Thank you. Ladies and gentlemen, this concludes the Southern Company's second quarter 2024 earnings call. You may now disconnect.