This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.

Southern Company (The)
5/1/2025
As a reminder, this conference is being recorded. I would now like to turn the call over to Mr. Greg McLeod, Director, Investor Relations. Please go ahead, sir.
Thank you, Paul. Good afternoon, and welcome to Southern Company's first quarter 2025 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 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 our Form 10-K, Form 10-Q, and subsequent securities 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 Chris. Thank you, Greg.
Good afternoon, and thank you for joining us today. As you can see from the materials that we released this morning, we reported adjusted earnings results for the first quarter above our estimate, with year-over-year growth reflected across all our major businesses. The Southeast has a track record of economic resilience and we continue to be encouraged by robust economic development activity that includes a sizable large load pipeline. Our state regulated electric utilities continue to experience customer growth and the service territories that we're privileged to serve remain attractive to a wide variety of commercial and industrial customers. Additionally, The reliability and the resilience of our vertically integrated and well-planned grid are proving hard to beat, and customers, especially data center customers, are increasingly acknowledging that reality with their enthusiasm for our electric service territories. Before I turn the call over to Dan, we know there is a great deal of interest in tariffs and any potential implications to our business. There's clearly policy uncertainty and in turn, our assessments of tariff implications have varied. For our base capital plan, we currently estimate a range of 1% to 3% of potential cost increases with the top of the range representing the higher end of tariffs that existed for only a few days last month. Among the advantages for a company of our scale is a large portfolio of suppliers and strong vendor relationships to help navigate such challenges collaboratively and proactively. For example, while the majority of materials being sourced from Mexico and Canada qualify for zero tariffs because they comply with the United States-Mexico-Canada Agreement or USMCA, the company is working proactively to get any remaining vendors or purchases compliant as well. Our full complement of potential mitigations includes existing project contingencies, contractual provisions, potential regulatory approaches, and options to deploy alternative resources. Our commitment to affordability balanced with our focus on reliability could also influence the pace of our capital deployment to mitigate the impact of tariffs on our customers. Overall, we do not expect a material impact to our forecast. Our financial outlook remains strong, and we remain focused on disciplined execution. The orderly processes and constructive regulatory frameworks in our service territories, combined with our experienced team and our customer-centric business model, should serve us well as we prioritize reliable and affordable energy for our 9 million-plus customers. Dan, I'll now turn the call over to you for a financial update.
Thanks, Chris, and good afternoon, everyone. For the first quarter of 2025, our adjusted EPS was $1.23 per share, 20 cents higher than the first quarter of 2024 and 3 cents above our estimate. The primary drivers of our performance for the quarter compared to last year were investments in our state regulated utilities and weather-related impacts, which added 8 cents year-over-year due to a milder-than-normal first quarter in 2024 and a slightly colder-than-normal first quarter for 2025. This was partially offset by higher operating costs and depreciation and amortization. A complete reconciliation of year-over-year earnings is included in the materials we released this morning. Our adjusted EPS estimate for the second quarter is 85 cents per share. Overall, weather normal retail electricity sales to all classes were 0.3% lower than the first quarter of 2024. The lower sales for the quarter were driven largely by usage impacts in our residential customer class, which was partially offset by customer additions. These use per customer trends in the first quarter were consistent with our sales forecast for the year, including the approximately one percent year-over-year negative impact of having an extra day in the first quarter of 2024 which affected all customer segments year-over-year we also believe return to office trends and customers proactive management of their energy consumption in response to inflation and economic uncertainty continue to be factors as well commercial and industrial sales were higher compared to the first quarter of 2024 as we saw continued strength in data center sales, which were up 11% year-over-year, office buildings, which were up 4%, and the transportation sector, which increased 4% year-over-year, primarily driven by the Hyundai Meta plant in southeast Georgia beginning production activities several months ago. More broadly, the economy in the southeast remains well-positioned with unemployment rates and recent population growth in our service territories better than the national averages. Additionally, economic development activity in the first quarter was robust, with announcements totaling over $11 billion of capital investment and more than 4,000 new jobs announced in our electric service territories. As we look ahead, our large load pipeline across our electric subsidiaries, which includes data centers and large manufacturers, continues to grow, totaling more than 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 our service territories continues to be robust. As we've consistently communicated, our disciplined approach to forecasting means that our sales forecasts only assumes a fraction of this pipeline materializes georgia powers ongoing 2025 integrated resource plan or irp filed earlier this year includes continued investment in the existing fleet with proposed plant life extensions up rates for more capacity at existing nuclear and natural gas facilities and the modernization of hydro facilities as we continue to plan our resources to economically and reliably serve our customers for the long term. Resolution of the 2025 IRP is expected in mid-July. Also in Georgia, the regulatory process continues for 13 gigawatts of new energy resources via competitive requests for proposals, or RFPs. Various company-owned resources were submitted into these valuations. Successful bidders are expected to be notified in the coming months for a substantial portion of these RFPs, including 8.5 gigawatts of all source or technology agnostic energy resources. Georgia Power expects to file for certification of all projects awarded under these RFPs with the Georgia Public Service Commission in July. Considering the timeline of these ongoing Georgia regulatory processes, we expect to be positioned to provide additional color on potential updates to our capital expenditure outlook and associated financing plan on our second quarter earnings call. All else being equal, this potential incremental capital and continued economic development momentum are key to supporting our potential re-evaluation of the base for our long-term EPS growth as early as 2027. Before I turn the call back over to Chris, I'd like to provide an update on our financing activities through the first quarter. Our state regulated electric subsidiaries have issued $2.2 billion of long-term debt year to date, which is nearly half of 2025's projected financing needs for those entities in our base plan. Quality and credit strength of our subsidiaries continue to draw robust investor interest, providing strong access to capital and supporting lower interest costs for the benefit of customers. At the parent company, we have issued approximately $2.4 billion of junior subordinated notes, or JSNs, year-to-date, which receive 50% equity treatment from the rating agencies. We've also entered into forward contracts through our at-the-market program, or ATM, for the sale of an additional $1 billion of common stock, with settlements extending as late as the second half of 2026. Collectively, the ATM and the JSNs equate to $2.2 billion of equity and equity equivalents. Combined with approximately $350 million of annual equity issuances we forecast through our internal plans, we have a clear path in place to fully address the $4 billion five-year equity needs in our base plan. Our disciplined approach in sourcing equity reinforces our commitment to maintaining strong investment-created credit ratings and our journey to 17% FFO to debt. while also focused on delivering value to shareholders. And we are well positioned to continue to finance any incremental growth opportunities above our base plan in a credit supportive and shareholder focused fashion. I'll now turn the call back over to Chris.
Thank you, Dan. Last week, the Southern Company Board of Directors approved an eight cent per share increase in our annual common dividends. raising the annualized rate to $2.96 per share. This action marks our 24th consecutive annual increase, and this will now be 78 consecutive years, dating back to 1948. Southern Company has paid a dividend that is equal to or greater than the previous year. We are incredibly proud of our dividend track record, which continues to be an integral part of Southern Company's long-term value proposition. Southern Company has consistently delivered regular, predictable, and sustainable adjusted results. And our start to this year provides a solid foundation to continue executing on our goals for 2025 and beyond. We remain very excited about the future of this company. Thank you as always for your interest in Southern Company. Operator, we are now ready to take questions.
Thank you. We'll now be conducting a question and answer session. 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 to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions.
Our first question is from Carly Davenport with Goldman Sachs.
Hey, good afternoon. Thanks for, hey, doing well. Thanks. Thanks for taking the time. Maybe just to start on the 2Q EPS guide, the 85 cents represents fairly sizable downside relative to what you guys did last 2Q and 24. Could you just talk a little bit about the puts and takes there that drive that estimate, particularly relative to the stronger 1Q print?
Yeah, absolutely, Carly. This is Dan. Thanks for the question. So there's two big factors in there, really. One is weather. Year over year, there's a pretty substantial weather differential. You know, if you're thinking about what normal weather in our forecast relative to a really strong, kind of warmer than normal quarter a year ago. And then the other one is really just what I'd characterize as timing. There are of recurring normal course transactions that happen within the georgia transmission system that is mutually owned amongst all the parties in the state not so georgia power the municipals uh an entity that represents the co-ops and there are ongoing transactions to transfer ownerships of assets kind of commensurate with their load so we had a sizable transaction that occurred in the second quarter of last year, and there's none anticipated similarly in the second quarter of this year. So those are the two big drivers.
Got it. Great. That's helpful. Thanks for the clarity on that piece. And then maybe just on the Georgia power load pipeline, just any update you can provide in terms of, you know, size of the pipeline, what's contracted, what's broken ground, similar to the disclosures that you guys have provided in prior quarters? And then just more broadly, anything you could share on conversations you're having with your data center customers in Georgia and if there's been any change in tone just given the macro environment relative to last quarter?
Chris, why don't you start with any change in tone and I'll hit the numbers.
Yeah, Carly, I mean, I think what we've seen is that we've not seen a shift in tone. I mean, I think as you've seen a few hyperscalers make some announcements the past couple of days about capital budgets. I think that's what we have seen in terms of our conversations all across our service territory with these data center hyperscale customers in terms of looking to continue to make those investments to support their business strategies now and into the future. So we still see a robust degree of high economic activity in our service territory.
Yeah, and then when it comes to the pipeline itself, Carly, you asked about the Georgia pipeline. I mean, in total, again, going out to the mid-2030s, it's about 52 gigawatts in Georgia alone. The contracted piece is 4 gigawatts for that same number. The committed is 8 gigawatts. I think the more interesting thing that you'll see when Georgia Power makes its filing here in the coming weeks is actually a shift forward. in interest. So the more near-term pipeline, the 2028, 2029 kind of number is actually moving up, which is actually an interesting and also exciting thing to see happening in the pipeline.
Awesome. Thanks so much for that.
Appreciate it. You bet. Our next question is from Julian DeMoulin-Smith with Jefferies, LLC.
Hey, Julian, how you doing, man?
Hey, hey. Good afternoon, guys. Thanks so much for the time. I appreciate it. Nicely done again. Got to hand it to you. Hey, so let me just follow up a little bit where Carly just left it off there, because I know in the quarter there's been a lot of talk about Microsoft and others that you're dealing with directly in your service territory, and there's a perception, and you just hit it, But are you seeing any churn in the underlying composition of who and the kind of data centers and the geography that you're seeing? Again, I know folks at times are super fixated on one or two out there, but listening to your comments here, I mean, even if you got fixated on one specific site, it seems like you're still seeing an aggregate acceleration in the opportunity. But I'd love to hear you reconciling your comments against some of the concerns about one or two discrete data points here.
And June, I think you said it very well. I mean, there's an, I guess, aggregate, I use the word diversity of customers. I mean, from the one or two or three or four hyperscalers to developers as well. I mean, so I think we see kind of a wide, diverse nature of interest that is showing up in our territory. And that momentum continues to exist. I mean, so it's not just one or two. It's a I think it's what we see is across the board in terms of the conversation and the interest that we are seeing.
Awesome. Yeah, I appreciate the commentary as possible here. And, you know, you guys provided some nice details on equity and overall financing plan here. Can you elaborate a little bit as you think about marrying up an improving balance sheet with your comments about the rebase potentially in 27? Yeah. When and how do you think about getting to that 17% and reconciling that against the potential rebates? Do you think you'll be at that 17% by the time you kind of reevaluate, shall we say, your EPS commitments here?
John, I think of it more as having line of sight on it, and I think we've said this before. everything in kind of a measured way and financing all of our capital with the right mix to kind of get there. The biggest, as we've highlighted before, the biggest driver of improvement in the short term is really debt associated with certain regulatory assets rolling off. Right now on the books, there's about $2 billion really just at Georgia Power alone between remaining under-recovered fuel from a few years ago, there's about a billion dollars of that, and then a little over $800 million of storm costs from Hurricane Helene. As those costs get recovered over the next few years, that naturally on its own kind of brings the number up. The other offsetting factor will be, and I think this was a bit implicit in your question, is the capital plan. And particularly if we have incremental opportunities to deploy capital, that could adjust the shape of our journey to 17% a little bit and perhaps push it out a year or two. But I think getting to the heart of your question, by the time we get to 2027 or whenever that time comes, will we be there? No. But will we need to have confidence that we can see it in the foreseeable future? Absolutely. And I think that's how we'll be positioned.
Yeah. Thank you for understanding the gist of it. Appreciate it, Dan. Best of luck, Chris. Nicely done.
Thanks, Julian. Always, man.
Our next question is from Nick Campanella with Barclays.
Hey, guys. Good afternoon.
Hey, Nick.
Hey. So, you know, question on the rebase, just trying to kind of understand a little bit more what that would look like. And I guess the question is, do you anticipate kind of being at the higher end of your 5-7 through 27, and that would kind of equate to like a new higher base for 27 to grow off of? Is it just going to be based off of actuals and where you get to? I guess I'll leave it there, but just looking for more color on the interim.
Sure, Nick. And what I'll do is I'll just kind of restate the way we said it on our last call because, again, nothing has changed in the 10 weeks since then in terms of how we think about this. It's to the extent that this incremental capital opportunity that we pointed to emerges and to the extent that this data center in particular, momentum continues, all else being equal, yes, we believe that in the back half of our plan, we could be positioned at or near the top of our existing range. Now, we also pointed to headwinds in the near term, like parent company interest refinancings, and that's why the immediate near term is not up there. This is really about the back half. if that is what we see and where we are, and if kind of like going back to Julian's question about having line of sight, if that appears to be a sustainable trajectory, then that provides us the opportunity to potentially rebase the starting point for five to 7% growth.
Okay. No, that's helpful. Um, and then just, uh, Georgia power rate case just, um, Just wanted to make sure, are you guys still on track to kind of file that at the end of June or by July 1st? And has anything kind of changed there in your rate case strategy? Thanks.
Nick, I think you said it very well. As required by the 22 rate case order, we're working towards a filing this summer. So it would be that early July timeframe. So everything is on track to do that and to make sure we comply with that order. But you said it very well.
Thank you. Thank you. Thank you. Our next question is from Jeremy Toney with J.P.
Morgan.
Hey, Jeremy. Hi, good afternoon. How are you doing? Good, good, thanks. Maybe just kind of picking up on the last point there with regards to the Georgia Power Rate case. Maybe, you know, bill pressure is in focus, I guess, nationwide. And just wondering any thoughts you could share with levers that you could potentially pull to manage costs from bills there. Is the potential to kind of, you know, move timing around or rate changes to coincide with fuel cost recovery rolling off or just any other thoughts there?
And once again, I mean, I think you're acknowledging all the factors and the variables and the puts and takes that will be under consideration as we look at the filing process. I mean, it's a little bit too early to say what the exact filing will look like. But yeah, I mean, one of the things we think about is the pricing of these large load growth, how that can impact and help us with our focus on affordability. Yes, I mean, we do have the fuel case, fuel adjustment occurring that we'll recognize next year, in June of next year. So that's a factor to also be considered. We also have storm recovery related to Hurricane Alim. that has to be dealt with. So, I mean, I think you've acknowledged a lot of the factors that will go into what this filing could look like, but it's just way too early to kind of speak to exactly what the nature of the filing, how it will come together.
Got it. No, that's helpful. Thank you. And then just curious, I'll look for the IRA and any potential changes there, how that could impact Southern California. particularly as it relates to transferability, I guess, is in focus for the market. Just any thoughts in general from what you see or what you guys are thinking at this point?
Yeah, Jeremy, I'll hit transferability first and let Chris weigh on any kind of broader policy commentary. But on transferability, we just aren't that reliant on it. We certainly take advantage of it where we can, and we've got a great program in place to monetize tax credits as efficiently and quickly as possible. But if For some reason, that was not available to us based on our current base plan. I mean, the impact FFO to debt, let's say, is a basis point or two, or I'm sorry, 10 to 20 basis points or so. And so it's just not that meaningful, but it's important. And when it comes to projects that we're doing in the regulated space, it's good for customers to have that in place. It helps obviously monetize things and keep the balance sheet efficient. and that's good for everybody. So we're certainly doing what we can to be a part of that conversation and to express the importance.
Chris? No, I mean, as Dan talked to me, as a part of that conversation that Dan referred to me, we continue to engage with policymakers in the administration, but also as well as on Capitol Hill, expressing and explaining the value and the benefits of these credits and tax policy in terms of value goes directly to customers. And as we talk about affordability and our strategy there, uh, making sure there's full recognition or understanding that the benefits of these credits go directly to our customers. And so we are, I mean, we have no idea politically how this is going to play out with all the issues that are going on in Washington, but we continue to spend a lot of time making sure we're telling the story and helping people understand the value and benefits of these tax provisions.
Got it. That's helpful. I'll leave it there. Thanks.
Thank you.
Our next question is from Andrew Weisel with Scotiabank.
Hey, Andrew.
Hey, good afternoon, everybody.
I'm hoping to elaborate a little bit on the commentary on demand trends. Even after adjusting for the leap day, each customer class saw a sequential slowdown. Data centers in particular still grew at a double-digit pace, but down from 17% last quarter to 11%. Can you talk about that a little bit? I realize the year ago weather was atypical, certainly skewed the residential comps, but that shouldn't matter as much for CNI. Can you elaborate a little bit?
Yeah, I don't think there's anything to read into it, Jeremy. Again, if you adjust commercial and industrial in particular for that leap day effect just for the first quarter, again, these are just quarter numbers, not kind of 12 months ended numbers. It's a almost a full 1%, so up a percent and a half or so. The underlying stuff, like you mentioned data centers, look, you're doing growth year over year on an increasing ramp, right? And so you're not comparing to the same numbers you were a quarter ago, you're comparing off a higher base a year ago. And so the numbers aren't going to necessarily align or continue to escalate in that fashion. In total volume, they continue to go up. You know, other things relative to our Our forecast, look, there's things that are just, again, timing related. There are some large industrial outages, not economy related, just kind of operational related. There was a delay in a steel manufacturer that was expected to come on the first quarter that is baked into our numbers for the full year that's expected now in the next several months. And so from our seat, nothing in the first quarter results gives us any pause about any kind of systemic trends we're seeing in the economy or underlying customer base.
Okay. That's good to hear. And then similarly, the large load pipeline, the slides say well over 50. Dan, did I hear you right? Did you say 52 gigawatts now? I'm not sure if I maybe misheard you, but maybe if you could just get a little more detail there. How are you? You're being very clear in the tone that activity remains robust. Maybe you could get a little more detail in the numbers.
Yeah, and I think the tone, Andrew, is what's more important than numbers. I answered a question earlier specific to the Georgia pipeline that we make filings on. So that's 52 gigawatts on its own. The characterization we made in the prepared remarks is for the total consolidated pipeline across all three electric service territories. And we said over 50. And it grew quarter over quarter. In fact, it was over 50 last quarter. It's over 50 this quarter. But it's a bigger over 50. We're trying to be a little less precise about the total because look, everyone has acknowledged that these pipelines include some degree of double counting. They include some degree of speculative projects, and that's where it's really important to really focus on the way in a very measured way that we are only including and counting on and planning for a small fraction of these numbers. So we're trying not to get hung up too much on the big headline number. and focus more on kind of the underlying tangible trends that we're seeing within that pipeline.
Okay. As long as you're clarifying that they are, in fact, rising, that's reassuring. Thank you very much. Appreciate it.
You bet, Andrew.
Our next question is from David Arcaro with Morgan Stanley.
Hey, David. Hey, thanks so much. I guess maybe... On data center activity, I was just wondering if there had been any changes following the modifications of the rate structure that you've now implemented in Georgia. Any feedback on that? You know, is that manageable for the industry to work with now in that state?
Yeah, Dave, it's Dan. It's early days still, and so it's important to understand kind of the the journey we've been on there so very much earlier this year we highlighted the the rules which the commission approved which were very kind of high level rules to be the basis of a framework what has happened since then is there's been an actual more detailed framework that's been developed by the the public utility staff working with the company to kind of create what was essentially a tariff framework. It doesn't have specific pricing in there, but it is a framework for doing this. That just got finalized a couple of weeks ago. April 15th, I think, was the date that it happened. So in terms of the details kind of being absorbed by and understood well by potential customers, that process is underway now. So it's a little early for reactions.
But I do think some of the reaction we've, some feedback we've gotten, you know, we talk a lot about orderly processes. This framework does provide another degree of order and certainty as we engage with these customers. And I think you've seen another state and others consider looking at deploying, approving very similar rules and regulations. So we think to somewhat of a a market that's evolving to bring this kind of certainty really brings some discipline and puts us in a position, as we always say, to make sure as we engage with these customers, we want to provide benefits to all of our customers. So we think there's great value in these rules and regulations and this framework that's been approved by the commission.
Yeah. And David, as you heard me answer Andrew's question, I mean, Over the last three months, the pipeline has grown, and the nature of these rules, while the details have not been out there, the nature of them has been for three months, and that growth has continued to occur.
Yep, yep, got it. Okay, great. That makes sense. You know, separately, I was curious, you know, is there any feedback that you'd offer on what you're seeing in the RFPs that are underway today? there have just been so many moving pieces around like tariffs, inflation, price increases for equipment. So I'm just wondering, are there any changes in the preference, like technology preference or strategy or the split among solar, storage, natural gas as you're kind of executing against these RFPs?
Yeah, and David, unfortunately, we can't speak to the RFP process. It's very intentionally done kind of by an independent evaluator, very confidentially, a lot of trade secret information. So disclosing or answering any of the questions you just ask, I think would be stepping outside the bounds of what we were allowed to do.
Okay, got it. We'll revisit as you get toward the end there, but I appreciate it.
Yeah, and I will just say, David, what's important about the RFP itself being the nature, it's all source, right? And so it does inherently have in it a multitude of technologies and options. So at the end of the day, given all the factors you've listed, that independent evaluator and the commission will have options to kind of address. Yeah, understood.
Okay, thank you.
You bet. Thank you.
Our next question is from Durgash Chopra with Evercore ISI.
Durgash, how you doing, man? Hey, good afternoon. You actually... answered all my questions but can i just ask a quick clarification question on the rfp so um i think there's some language in the slides on clarity by july this is the georgia rfp but then there's some also i think language in the release that you get more incremental data points throughout 2025 and then dan i think you said q2 call which is presumably you know um sometime in July, we'll be able to get some more capex details. So are we going to get concrete data points from the RFP in July itself?
So definitely, Durgesh, by the time of our Q2 call, we will be able to speak to, we believe, incremental capital opportunities at least associated with that largest all source rfp and maybe some degree of the other rfps and so that will kind of address most i think of the up the potential upside capital that we've pointed to okay got it okay perfect that that's all that's all i had um i'll give the time to somebody else really appreciate you taking time dr gush
Our next question is from Char Perez with Guggenheim Securities.
Char. Hey, good afternoon, everyone. It's actually Alex here on for Char. Hey, Alex. Just on the impacts from tariffs as we think about the growth opportunities at Southern Power, sort of what's the exposure there? You could be looking at building contracted gas, and conversely, does the tariff and supply chain environment further conversations for contract renewals for the expiring tolling agreements? Thanks.
Yeah, look, Alex, I think the way to think about Southern Power is twofold. One, it's projects they already have underway. And when it comes to that, I think they're incredibly well positioned when it comes to this. The solar facility they have under construction is in great shape from that perspective. It's far enough along and materials on the ground enough that there's very little exposure there. There's a wind repowering project underway. I also feel pretty good about how we're protected there. Your question really spoke to new contracted gas in the future, and that's a little bit the beauty of our business model at Southern Power. We don't go out and do speculative projects where we build something and then go get a contract. It's get a contract, make sure the risk mitigations are in place for that contract, understand the environment we're in from a cost perspective. and then go execute. And so I feel confident that we'll have the ability to price in whatever the future holds in terms of cost to build new natural gas. There's always some degree of risk, but that's where we're also incredibly measured from a contingency and contractual provision perspective.
Great, thanks. And just a quick one on the upcoming GRC, just sort of how you're thinking about it. It's an election year, the PSC has been more vocal. Just any sense how we should be thinking about the ask or the rate impact? You haven't filed yet, so our conversation is happening ahead of filing. Thanks.
Yeah, in responding to an earlier question, I think it's too early to really say what the filing will look like. I mean, there are a number of variables and puts and takes and issues that have to be dealt with. And yeah, clearly affordability. is an issue that will be primary and at the forefront of our thinkings, but it's just, I think, simply too early to kind of say what all of that will look like. I mean, we're ordered to file, and we'll do that in early July, but I think it'd be a little bit premature to speak to kind of what the actual and what some of the exact provisions and considerations will look like at this time.
Got it, thanks. I'll leave it there. Thanks for taking my questions. Thank you.
Our next question is from Travis Miller with Morningstar.
Hey, Travis. Thank you. Hello, everyone. Two-part question here. As you're going through the RFPs and any other generation contracting and look for it, how much is midstream becoming a constraint here? And then you've also identified that to an extent as part of the upside CapEx opportunities. Is that something, a midstream gas investment or a midstream gas joint venture, something like that, a potential that we might see midyear as you update it?
Yeah, Travis, this is Dan. I'll take that. Is gas supply a focus for us as we look at these generation expansion plans? Absolutely not. But I think we're incredibly well positioned there. We're participating in a multitude of expansion projects in the Southeast as a procurer of natural gas. So locking up, if you would, firm transportation of natural gas to serve our needs well into the future. So it's, I think there is one, a sufficient starting point for supply and great line of sight for incremental supply. When it comes to our own investments, None of that is, you know, greenfield, brand new pipeline opportunities. We already have 50% interest in the Southern Natural Pipeline that kind of overlays our Southeast Service Territory. That's our largest midstream investment. Kinder Morgan operates that on behalf of our partnership. And then we've got a couple of other much smaller Ventures where we are not the operator and are a passive owner of those facilities. And so these upside opportunities are largely associated with potential expansion projects of those pipelines, primarily brownfield, looping, very, very little greenfield exposure, and all in service territories that we know well.
And Dan, one thing I would add, and from a broader policy perspective, when I was at a meeting conference last week with Secretary of Energy, Secretary of Interior, Secretary of Agriculture and EPA Administrator, as well as some other industry and data center hyperscalers. And I mean, there's just broad consensus that to meet this growing demand, there's going to have to be more pipes being built, as well as more transmission being built to make sure we have the capacity and the resources to meet those growing needs. So, yeah, I mean, that's part of our narrative and part of our conversation, expressing support for additional permitting reform to make sure that we can, in a timely manner, meet this growing demand by building out the infrastructure in this country.
Perfect. No, that's great. I appreciate all those details. Now that I know you were in the room with a lot of important people, I've got a lot of other questions, but we'll do that later. One other quick one. On the dividend policy, anything that the board is looking at? I know you've been on that $0.08 and even $0.07 for a long time increase. Anything in particular metric-wise that the board would look to to get off of that 7% or 8% increase?
I think from where we are today, it's a recognition that we've got a lot of financing to do and a big capital plan. And a great source of equity is keeping the growth in a dividend more modest than not. And doing so should help us drive our payout ratio a little further south. I think once we are kind of in the low 60% range somewhere, which would kind of be the back end of our plan if we stay at this pace, that's the time to step back and reevaluate. Do those capital opportunities and equity needs persist out into the future. If so, we might remain modest. If not, the board might have an opportunity to do something different.
Perfect. Okay.
Thanks so much. Appreciate it. Thank you. You bet, Travis. And that will conclude today's question and answer session.
Sir, are there any closing remarks?
Again, we thank you for your interest in Southern Company, and we look forward to speaking with you on our next call. Thank you very much. Have a great day.
Thank you, sir. Ladies and gentlemen, this concludes Southern Company's first quarter 2025 earnings call. You may now disconnect.