Southern (SO) Q1 2026 Earnings Call Transcript

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DATE

Thursday, April 30, 2026 at 1 p.m. ET

CALL PARTICIPANTS

• Chairman, President, and Chief Executive Officer — Christopher C. Womack
• Executive Vice President and Chief Financial Officer — David P. Poroch

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TAKEAWAYS

• Adjusted EPS -- $1.32 per share, up $0.09 year over year, and $0.12 above management’s estimate.
• Retail Electricity Sales Growth -- Weather-normalized retail electricity sales rose 2.3%, the highest first-quarter growth in recent history.
• Customer Additions -- Residential base expanded by 46,000 new customers, reflecting sustained positive net migration trends.
• Commercial Class Electricity Sales -- Weather-normalized commercial sales increased 4.5% due to ongoing data center growth.
• Data Center Electricity Usage -- Data center consumption surged 42% year over year from accelerating large load ramps.
• Industrial Sales Growth -- Industrial segment increased 1.5%, led by demand from multiple steel manufacturers in Alabama.
• Large Load Contracting -- Fully contracted large load agreements now exceed 11 gigawatts after adding 1.9 gigawatts with hyperscalers recently.
• Late-Stage Large Load Pipeline -- Late-stage contracted load discussions increased to 12 gigawatts, up 2 gigawatts from last quarter, with half expected to close in the near term.
• Upcoming Generation Investments -- Georgia Power achieved commercial operation of two battery energy storage systems providing nearly 200 megawatts capacity; multiple natural gas combustion turbines and more storage slated for 2026-2027.
• DOE Loan Agreements -- Secured $26.5 billion in Department of Energy loans for Alabama and Georgia, projected to yield $7 billion in customer savings over 30 years.
• Dividend Increase -- Annual dividend raised by $0.08 per share to $3.04, marking the 25th consecutive annual increase and 79th year of dividend stability.
• Equity Financing Actions -- Raised $500 million in equity via at-the-market forward contracts, resulting in a remaining equity need of $1.8 billion through 2030 for the capital plan and credit goals.
• Southern Power Expansion -- Announced 400 megawatts of natural gas turbine upgrades, with $700 million incremental capital projected and additional 300 megawatts under consideration.
• Next Generation RFP -- Georgia Power begins regulatory process for an all-source Request for Proposal (RFP) targeting 2–6 gigawatts of new dispatchable generation for service in 2032–2033.
• Rate Stability -- Base rates in Alabama and Georgia frozen through 2029 and 2028, with regulatory filings underway in Georgia to further lower bills via fuel and storm cost recovery.
• Job Creation and Economic Announcements -- Over $7 billion in capital investment and nearly 4,000 permanent jobs announced in the Southeast during the quarter, including a $2 billion biopharmaceutical project north of Atlanta.
• Equity Proportion for Capital Spend -- Ongoing capital expansion to continue with an approximate 40% equity funding ratio.
• Southern Power Contracted Position -- “We have set numbers up in the mid-90s in terms of what is contracted. Many of those contracts go through the mid-2030s, but we have signaled there may be some early review of some of those contracts and early negotiations in terms of potential recontracting.

SUMMARY

The Southern Company (NYSE:SO) delivered substantial earnings growth, driven by sharply higher load and customer additions across regulated electric and gas segments. Contracting with hyperscale and large load customers accelerated, markedly expanding both the contracted pipeline and the scope of future capital needs tied to new generation. Management secured long-term, low-cost Department of Energy financing that is expected to reduce capital market reliance and deliver measurable customer savings. Georgia Power commenced major battery storage operations, and upcoming generation and storage projects aim to address sustained demand growth. The board authorized its 25th consecutive annual dividend increase, underscoring management's commitment to shareholder returns and financial predictability.

• Management stated, “The demand for power across our electric service territories has culminated in 23 gigawatts of contracted or late-stage load,” signaling a transformative step change in projected load and infrastructure requirements.
• Credit-supportive actions included $500 million raised through at-the-market equity, with remaining equity needs clearly quantified and tied to specific projects and growth trajectories.
• Active regulatory engagement advanced an all-source RFP in Georgia for 2–6 gigawatts of new dispatchable assets for the next decade, highlighting proactive planning to match new load growth with capital investment.
• Management characterized their large-load contract strategy as mitigating existing customer rate risk by requiring “minimum bills” and collateral from new load, supporting rate stability and financial strength.
• Board approval of a $0.08 annual dividend increase extends a historic streak of annual increases, reinforcing a disciplined, shareholder-oriented capital allocation approach.

INDUSTRY GLOSSARY

• Large Load: Customers, often data centers or manufacturing plants, whose power requirements are multiple orders of magnitude greater than typical retail clients—and require dedicated agreements and infrastructure planning.
• All-Source RFP: A regulatory procurement process soliciting bids for generation resources of any type, including renewables, storage, and firm thermal capacity, to meet projected load growth.
• Minimum Bill: A contract feature requiring customers to pay a base level of charges that ensures recovery of all incremental costs associated with serving new high-demand load, irrespective of actual realized load ramp.
• ATM (At-the-Market) Program: An equity issuance facility enabling shares to be sold at prevailing market prices via forward contracts, providing flexible capital sourcing aligned with funding needs.

Full Conference Call Transcript

Christopher C. Womack: 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. That performance reflects premium execution and the strength of our strategy to serve the phenomenal growth we are seeing across the Southeast with reliable and affordable energy while delivering durable long-term value for shareholders. We continue to see extraordinary growth and economic development opportunities as our service territories attract investment, people, and jobs at a pace few regions can match.

As we previously highlighted, a substantial portion of this growth is driven by projected demand from large load customers. The demand for power across our electric service territories has culminated in 23 gigawatts of contracted or late-stage load. In just the last two months, we have signed contracts for another 1.9 gigawatts of customer load with high credit quality hyperscalers, bringing our fully contracted large load agreements to more than 11 gigawatts across our electric subsidiaries. These bilaterally negotiated agreements are structured so that customers driving incremental demand cover the full share of the cost to serve them, helping to assure this growth benefits all customers.

We continue to execute on our plans to serve growth, and our straightforward approach protects existing customers. We invest in line with demand to serve growth that enables us to deliver regular, predictable, sustainable results while providing meaningful benefits to the customers and communities we are privileged to serve. The Southern Company continues to be uniquely positioned to do this because of our scale, our experience, and our expertise, all supported by a constructive, long-standing regulatory framework. At The Southern Company, we are capitalizing on transformative growth opportunities while delivering energy reliability and rate stability as energy demands grow.

With base rates held stable in Alabama and Georgia until at least 2010 and 2029, along with the recent filing to lower rates in Georgia associated with the recovery of fuel and storm cost, we are demonstrating the value of this approach. Rate stability for our customers is a purposeful objective supported by our constructive, orderly planning and procurement processes, cost management, and thoughtful finance. This same built-for-purpose approach also creates the potential for additional capital investment to serve incremental growth opportunities under established regulatory processes.

We have routinely demonstrated, as growth opportunities present themselves, that The Southern Company has the ability to convert these opportunities into value through enhanced operations and grid-improving infrastructure investments for the benefit of customers and investors alike. The construction of many of these investments is well underway. In the last two months, Georgia Power achieved commercial operations for two battery energy storage systems providing nearly 200 megawatts of capacity, representing an important step forward in advancing reliable, sustainable energy solutions across the state.

These projects are the first of several resources included within our 10 gigawatt portfolio of approved new generation resources that are in development to power the extraordinary productive growth in our region, including multiple battery systems and natural gas combustion turbines that are projected to be online later in 2026 and 2027. Before I turn the call over to David for our financial update, I would like to highlight the recently announced historic $26.5 billion in loan agreements with the Department of Energy that will benefit customers across Alabama and Georgia for decades. We expect these loans to translate into meaningful long-term customer savings while reducing pressure on our capital market needs.

Over the approximately 30-year term of the DOE loans, this lower-cost financing is projected to generate cumulative savings of $7 billion for customers. David, I will now turn the call over to you for a financial update.

David P. Poroch: Thanks, Chris, and good afternoon, everyone. For the first quarter of 2026, our adjusted EPS was $1.32 per share, 9¢ higher than 2025 and 12¢ above our estimate. The primary drivers of our performance for the quarter compared to last year were meaningful customer growth and increased usage, including from data centers, at our state-regulated electric utilities. Additionally, increased revenues in our gas utilities and higher energy-related revenues at our unregulated businesses, including Southern Power, were positive drivers in the first quarter. This was partially offset by higher financing costs and milder weather year over year compared to 2025. 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 $1 per share. Turning now to retail electricity sales. First quarter weather-normal retail electricity sales to all classes were 2.3% higher than 2025. This represents the highest total retail sales growth that we have seen in the first quarter in recent history. In fact, sales to all three customer classes were up year over year, including residential, where we saw 46,000 new customers added to our system as positive trends in net migration continue. The commercial class grew 4.5% in the first quarter when adjusted for weather, bolstered by ongoing growth in data centers.

Data center usage saw material expansion in the quarter, up 42% year over year, primarily due to accelerating usage ramps at large load facilities. Our industrial sales grew 1.5%, with particular strength in several segments, including robust activity at multiple steel manufacturers in Alabama. More broadly, the Southeast continues to stand out as one of the most attractive economic regions in the country, driven by a diverse mix of advanced manufacturing, technology, and other energy-intensive industries.

In the first quarter alone, there were economic development announcements for over $7 billion of capital investment and the creation of nearly 4,000 permanent jobs in our region, including a global biopharmaceutical manufacturing project north of Atlanta bringing $2 billion of investment and over 300 jobs to Georgia. The sustained higher-quality growth reinforces why demand in this region of the country remains strong and visible, underscoring the region’s tremendous opportunity for future growth. Outside the Southeast, we continue to see momentum in our gas utilities, including a recently announced Hyundai investment in Illinois that is expected to bring 2,500 jobs and $500 million of investment to the Nicor Gas service territory.

Looking ahead, the interest from large load customers in our electric service territories, which includes data centers and large manufacturers, remains strong, with a prospective pipeline of well over 75 gigawatts. We continue to make incredible progress advancing projects through stages in our large load process to finality with executed contracts. As Chris mentioned, over the past two months Georgia Power signed two projects representing 1.9 gigawatts, pushing the cumulative amount of contracted large loads to over 11 gigawatts across Alabama, Georgia, and Mississippi. These bilaterally negotiated contracts, with pricing and terms designed to both protect and benefit existing customers, also support our long-term financial outlook.

We continue to see incredible momentum and tangible interest for power from large load customers and are in active late-stage discussions for another 12 gigawatts of contracted load through the mid-2030s, an increase of 2 gigawatts from what we shared last quarter. Importantly, roughly 6 gigawatts, or half of these late-stage gigawatts, are expected to be finalized with executed contracts in the near term. In a little over two months, we have seen projects representing 12 gigawatts advance into the next stage in our large load process.

The demonstrated progress we are making in attracting and signing new agreements with large load customers is exciting and continues to drive projected growth in our risk-adjusted load forecast, which ultimately helps inform future generation needs and generation request for proposals, or RFPs, across our service territory. For example, Georgia Power recently initiated the regulatory process for an all-source RFP to procure 2 to 6 gigawatts of new dispatchable generation resources, including from thermal generation, battery energy storage, and renewables, that are projected to be in service in 2032 to 2033.

Generation procurement through RFPs delivers substantial value to customers and is a testament to the transparent and orderly processes in our vertically integrated state-regulated markets with long-range integrated resource planning. To the extent that company-owned resources are selected through Alabama Power’s and Georgia Power’s active RFP processes and ultimately authorized by their respective PSC, these generation investments would represent incremental investment above our current base capital plan. Turning to Southern Power, we are moving forward to add 400 megawatts of additional capacity through natural gas turbine upgrades in multiple existing facilities in Alabama and Georgia, with commercial operation projected between 2029 and 2031.

This incremental investment is projected to add approximately $700 million to our capital plan over the next several years. We continue to evaluate other growth investment opportunities at Southern Power, including an additional 300 megawatts of natural gas uprates, as well as other new generation opportunities in both the Southeast and other markets to meet future demand. Before I turn the call back over to Chris, I would like to provide an update on our financing activities through the first quarter. We continue to proactively address equity needs that support our strong credit quality and path towards 17% FFO to debt by 2029.

Over the last quarter, we sourced an incremental $500 million of equity through our at-the-market, or ATM, program with forward contracts that settle at our discretion by 2028. Combined with the significant amount of equity previously sourced, and including the incremental $700 million of Southern Power projected capital expenditures I mentioned earlier, we project a remaining need for equity or equity equivalents of $1.8 billion through 2030 in support of our capital plan and long-term credit objectives. We are well positioned to continue financing our remaining equity needs in a credit-supportive and shareholder-focused fashion. I will now turn the call back over to Chris.

Christopher C. Womack: Thank you, David. Last week, The Southern Company Board of Directors approved an increase of 8¢ per share in our annual common dividend, raising the annualized rate to $3.04 per share. This action marks our 25th consecutive annual increase, and this will now be 79 consecutive years dating back to 1948 that The Southern Company has paid a dividend that is equal to or greater than the previous year. Increasing the dividend 25 years in a row represents a historic milestone for the company and underscores our focus on premium risk-adjusted total shareholder return and our goal of delivering regular, predictable, and sustainable value for our shareholders.

We are incredibly proud of our strong dividend track record, which continues to be an integral part of The Southern Company’s long-term value proposition. As we conclude our discussion today, our first quarter results reinforce a simple point: Our company is delivering. We are off to a strong start in 2026, and that momentum gives us confidence as we continue executing on our long-term goals. We are capturing growth, protecting customers, and creating long-term value, and we are doing it in a disciplined, predictable way. With that foundation, we have a bright future ahead. Thank you for joining us this afternoon and for your continued interest in The Southern Company. Operator, we are now ready to take questions.

Operator: Thank you. We will now open the call for questions. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like 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 key. One moment while we poll for questions. Thank you. Our first question comes from the line of Shahriar Pourreza with Wells Fargo.

Shahriar Pourreza: Hey, guys. Hey, Chris. How are you doing?

Christopher C. Womack: Alright. Not too bad. I hope you are doing well.

Shahriar Pourreza: Good. Doing well. Good. On new nuclear, there seems to be a consortium that has formed with utilities and hyperscalers, maybe with some backstop by the U.S. government around new AP1000s. It seems like there could be some views that hyperscalers would be willing to take on some of the cost inflation risk above budgeted amounts. One of your peers highlighted that they would not be surprised if the first deal was announced this year. Can you comment on your view? Is The Southern Company interested? Are you in the consortium? Just some thoughts on new nuclear in light of the learning curves of Unit 3 versus Unit 4. Thanks.

Christopher C. Womack: Yes, sure. A very good question. At the outset, I am very excited to see all the actions that the administration has taken to support the build and construction of new nuclear. I have said it many times: With the growth that we see in this country, it is going to be important that we make available new nuclear in this country to help support and meet this demand. The administration, I think, has taken some wonderful steps on the regulatory front. All the conversations that DOE is leading and having today about long lead times for supply chains—these issues are matters that we clearly have to address and get our arms around.

All of these things can help mitigate risk associated with new construction. As you know, I have said before, The Southern Company is not at a place to make a commitment about building a new unit. We are going to continue to share the experiences that we gained from Vogtle Units 3 and 4 here in this country and other places with other companies that are interested in moving forward. But I am very thrilled and excited about the conversations and the commitments and the actions that are being taken, particularly around doing more around AP1000s with a group of companies. I am glad to see this action and work being taken.

Once again, to be clear, we are not at a place for The Southern Company, in terms of making that kind of decision, but it is really exciting and very positive to see the work that is being led to support the development of new nuclear construction.

Shahriar Pourreza: Got it. Perfect. Thank you for that. And then on Southern Power, there are a lot of opportunities there with existing tolling agreements that are going to start to roll off. Have those renegotiation conversations started? And are there any conversations being had with potential hyperscalers with those assets? There seems to be more and more interest on the gas side. How are you thinking about that process?

Christopher C. Womack: Sure. I would say the answer is yes and yes. We are in the midst of some recontracting opportunities, and we have talked about where we are and what we see into the 2030s, so that work is underway. At the same time, with all the activity in the marketplace across the country, we see there could be opportunities for Southern Power. They are having those conversations to see what is possible and what is doable. They bring good construction support and good work that they have experienced across this company with creditworthy counterparties. To your question, the answers are yes and yes. We are doing both.

Shahriar Pourreza: Perfect. And I would assume this is all upside to your 7% to 8%—you are not embedding any assumption around this.

Christopher C. Womack: As we think about upside, we think about strength and durability—how do we add length to our growth trajectory that we have laid out—and things like Southern Power and additional large load projects that we are working on could support some additional capital investments, but they also bring greater durability to our plan. That is how we see these upside opportunities.

Operator: Our next question comes from the line of Nicholas Joseph Campanella with Barclays. Please proceed with your question.

Christopher C. Womack: Nick, how are you doing?

Nicholas Joseph Campanella: Hey. Good afternoon. Good to hear from you. Thank you. You kind of answered it—what you have announced here, the incremental progress you see strengthens and lengthens the durability of the 7% to 8% CAGR. My question is more on the load side and how you think that is affecting the regulatory strategy. When I take a step back, you committed to these stay-outs late last year, and since then you have been making notable progress both on load visibility and usage ramps. How is that creating or changing your philosophy around regulatory strategy—when you would actually go in and file again after these next stay-outs?

Are you ahead of plan on the load, and can that crystallize a further stay-out for customers?

Christopher C. Womack: Nick, let me start, and then see what David wants to add. The focus for us is more about rate stability. As we have structured these contracts with large loads—to make sure they pay their full share, with collateral, cancellation fees, minimum bills, and all the terms we are contracting—that gives us protection and supports our ability to make sure we are protecting existing customers. That gives us the opportunity for rate stability and freezes in Georgia through 2028 and in Alabama through 2029. All of that supports the regulatory strategy, but more importantly, it supports our commitment to rate stability and making sure that all of our customers benefit from this growth. David, anything you want to add?

David P. Poroch: Yes, Chris. Nick, thanks. Great question. When we took this opportunity, we saw the road shaping up. These contracts were coming to fruition. The conversations we were having with these large load opportunities—momentum was building. We saw the opportunity to provide long-term stability for our customers, and it has paid off quite well. These ramps are going exactly as we had thought. The opportunities with the DOE are further enhancing affordability and stability. Everything is working out very well with this opportunity and enhancing the benefits for customers.

Christopher C. Womack: Nick, did I get your question?

Nicholas Joseph Campanella: Yes, I appreciate it. When you made that commitment, are you in line with the plan on your load visibility or ahead of the plan? How would you characterize that?

Christopher C. Womack: We are in line, and we are focused on getting to the top of the range and delivering what we say we are going to deliver. That is one thing you can count on us to do. We are delivering on what we said we were going to do. As we look at this great start to the year, we are excited about where we are here in 2026, and as we look long term, we feel very confident about the plan we have laid out.

Nicholas Joseph Campanella: My only follow-up: As we think about wrapping in additional capital, you have given that sensitivity for incremental equity, but what are your thoughts on portfolio rotation at this time?

David P. Poroch: It is something we talk about regularly. We are always looking around. We are blessed to have the cards we have been dealt and we love the portfolio. But if there is an opportunity where there is a better owner of something, we are open to that. If there is an opportunity for us to buy something, we are open to that as well. It has to be under the right circumstances, and we are always looking.

Operator: Our next question comes from the line of Julien Patrick Dumoulin-Smith with Jefferies. Please proceed with your question.

Julien Patrick Dumoulin-Smith: Thank you very much. You have $8.85 billion of cumulative bill credits you have been talking about. Is there a chance that number gets revised higher as you see this contracted large load number head higher? That was a snapshot at a point in time. I imagine you could eventually be in a better position there. I think that is partially what Nick was getting after.

Christopher C. Womack: Julian, we do not get ahead of our regulators, first of all. But clearly, as we continue to deliver these contracts in terms of how they are structured, and as we have signaled—Georgia Power is in the middle of storm recovery proceedings along with fuel recovery processes—those proceedings can provide benefits and lower bills for customers. That is a major focus of ours. As we think about rate stability, signing these large load contracts, focusing on growth, and managing this company, we are doing all we can to maintain rate stability and find opportunities to put downward pressure on rates for our customers. That is a key focus of ours.

Julien Patrick Dumoulin-Smith: Quickly here, because you are showing continued quarter-over-quarter success at the corporate level on finalizing contracts, as you show in the funnel chart in your slide deck. But if I look at the 4Q 2025 Georgia Power large load economic development report, it shows some degree of softening in contracted commitments. Is there something about Georgia versus your other states, like Alabama, where other states are accelerating to offset Georgia? There is a timing element here. I want to make sure I am understanding the core message.

Christopher C. Womack: I think it is more about timing, but we are also seeing this activity migrate to the west, with increasing activity in Alabama. Yes, there is some churn in Georgia, but the fire is still very hot in Georgia. We are also witnessing greater activity in Alabama and Mississippi as well. You can also look at the pipeline number—still 75 gigawatts—that reflects all the activity we see. The churn is more speculative, but you will continue to see more hyperscale activity across the territory.

David P. Poroch: Julian, one thing to think about as well are the rules under which we are negotiating these contracts in Georgia and the need for these potential customers to demonstrate their commitment by posting collateral. That is really shaking a lot of the potentials out that are more speculative in nature and leaving Georgia Power to work with a high-quality portfolio of potential customers with which we are choosing to contract. What you are seeing is a refinement of that, not a degradation. I would characterize it as a strengthening of that portfolio, if anything.

Christopher C. Womack: Very strong in Georgia.

Julien Patrick Dumoulin-Smith: A 100%. Got it. Thank you very much.

Operator: Our next question comes from the line of Carly S. Davenport with Goldman Sachs. Please proceed with your question.

Carly S. Davenport: Hey, thanks so much for taking my questions. One follow-up on the upgrade opportunities at Southern Power on the gas fleet. You announced some of those today, and it seems like there is another 300 megawatts on the table. Any sense you could give us on timing in evaluating that opportunity? Is that the extent of the upgrade opportunity you see on the gas fleet at Southern Power?

David P. Poroch: From an upgrade perspective, that really covers the whole fleet if we work through the rest of those opportunities. In terms of timing, we are working through that—it could be over the course of the next year or so. We set out a plan to explore opportunities to uprate each one of the existing generation facilities within Southern Power.

Christopher C. Womack: And, Carly, that construction is scheduled to begin this year in 2026, so this is very immediate work that will be done.

Carly S. Davenport: Got it. Thank you. Then on Georgia, there are two seats up on the PSC for election this year. Could you provide your latest thoughts on the setup in terms of the focus areas of the candidates you have heard thus far, and any views on the latest temperature in Georgia around affordability and development?

Christopher C. Womack: As you know, the primary election is in May. If there are runoffs, they will be June 16. There is a lot of conversation—everyone is on the campaign trail—about data centers, large load customers, and things like rate stability. All those issues are being debated on the campaign trail, and we will see how that plays out in terms of results. The Southern Company has been around for over 100 years, and we have seen a lot of twists and turns politically. With the experience we have had and the ability to navigate whichever way the politics go, we have a tremendous history of being able to work with both parties or whoever is in office.

We feel comfortable and confident that because of the work we do across our communities, and our employees live and work there, and the commitments we have to the state, we will continue to have a constructive regulatory environment no matter how these elections turn out.

Carly S. Davenport: Very clear. Thank you so much.

Operator: Our next question comes from the line of Stephen D’Ambrisi with RBC. Please proceed with your question.

Stephen D’Ambrisi: Thanks very much for taking my question. There seems to be a significant acceleration in the pace of how you are moving these large loads into late stage and finalizing. You added 2 gigawatts and expanded finalizing and late stage to 12. How does that interplay with the 2 to 6 gigawatts, or the sizing of the RFP that you are currently working on? I want to level set to understand what adding 2 gigawatts to the contracted pipeline means, how much of the new RFP that uses, and what any incremental signings mean for subsequent RFPs.

Christopher C. Womack: It speaks to updates in the load forecast as a result of the demands we are seeing from large loads, and we should not take for granted the other large manufacturing opportunities we see across the state. There is a lot of investment, people, jobs, capital, and interest in our states, and what you see in that RFP is a reflection of that increase in the load forecast. I would also highlight our vertically integrated structure, with orderly processes and certainty with these bilateral negotiations—understanding what these customers need and our ability to respond and align with their needs is really paying off and delivering.

That is what you see through this RFP and in the pipeline funnel we speak to. We are also seeing “repeat buyers”—they find success and say, “You can deliver. Let us come back and get a little bit more.” It gives us reason to be bullish about the robust activity and demand we see in our territory.

Stephen D’Ambrisi: A couple of your other questions were about accelerating the loads and what it means for affordability. Can you talk about the fact that you are pricing these so minimum bills cover the incremental cost to serve? To the extent the ramps exceed minimum bills and come close to what is projected by hyperscalers, what does that mean for customer rates, and what is the timeline to discuss that with regulators?

Christopher C. Womack: Let me start, and then David can add. There has been language about “incremental,” but for us you should think more about “full”—making sure they cover their full share. As a result, that provides benefits to existing customers and allows us to consider maintaining rate stability and freezes and putting downward pressure on existing customers’ rates. By negotiating with these customers to make sure they are covering their full cost, growth provides an opportunity to provide benefits to existing customers. Growth is a wonderful value and contributor to what we are delivering to all of our customers, particularly existing customers.

David P. Poroch: A differentiating factor in our contracts is the minimum bill established within the contract, designed to recover all of the costs introduced into the system, like Chris said. We are not held captive to a variable pricing methodology to recover those costs. It is embedded within the minimum bill—think of it as basically writing a call option to the network. We recover our costs through that minimum bill, not through variable pricing and making sure the customer achieves their ramp rates. It is a very thoughtful design, a differentiating factor around the country, and it is helping protect our customers and provide stability and downward pressure on rates going forward.

Operator: Our next question comes from the line of Nicholas Amicucci with ISI. Please proceed with your question.

Nicholas Amicucci: Thanks, everybody. David, I wanted to hone in on the attractiveness and ability for you to leverage the notion of virtual power plants and your fully integrated asset base, and the attractiveness of that to expedite the time-to-power mechanism.

Christopher C. Womack: What is your question?

Nicholas Amicucci: If you could comment on that and frame it. Is that part of the appetite and attraction for you to be able to expedite the process to time to power through those mechanisms?

David P. Poroch: Great observation. You used the term “vertically integrated,” and that really does help us in marketing these contracts and conversations. The counterparty knows exactly where their generation will come from, where transmission infrastructure will come from, and where distribution infrastructure will come from. We have been very transparent to make sure customers understand the cost makeup, how it will happen, and when it will happen, and we have been able to deliver on that. I point you back to the vertically integrated model and the transparent, structured regulatory processes we go through to establish approval for the capital we deploy and the resources we bring to serve these contracts.

Nicholas Amicucci: That is helpful. Given the incremental growth going forward and supply chain availability and turbine availability, you have somewhat front-run higher prices. As we think about it, it seems like you can ring-fence a lot of the costs, but contemplating the generation source and assets going forward—how are you thinking about cost, mitigating pricing increases on natural gas or something else, and getting that into rate base?

Christopher C. Womack: Size and scale are benefits we bring to this period of time—having relationships and having worked with OEMs and turbine suppliers for years. We are in line; we have our positions. We are having ongoing conversations with suppliers to make sure they understand what our needs are and we understand where they are, ensuring the partnership is valuable for both parties in terms of delivery and pricing. In this marketplace, scale matters. Relationships matter. Having history and experience brings value, and we are bringing all of those characteristics to bear as we operate in this transformative period.

Operator: Our next question comes from the line of Andrew Marc Weisel with Scotiabank. Please proceed with your question.

Andrew Marc Weisel: Good afternoon. My first question is about the Georgia RFP. What would be the timing of when the process is completed and when you would have visibility into the company-owned resources, and therefore when we might see the CapEx update? You said it could be substantial incremental investment. Related, you said the in-service dates would be 2032 to 2033. Could there be appetite for something sooner if demand materializes earlier, or is the process specific to that timing?

Christopher C. Womack: You are going to have to hold your breath until the end of the year before we get through that process. It is kind of a year-long process, and we are not going to get ahead of our regulators and the overall process.

David P. Poroch: We will go through the selection process through the rest of this year, and that will lead to a certification process that will take us pretty much through 2027. To the extent that we work through that process and any of our proposals are selected, that would lead toward initiating spend probably in 2028, with deliveries in 2032–2033. We have talked about this in the past—it is probably a decent rule of thumb that maybe a gigawatt of company-owned resources might be $2-plus billion of incremental CapEx in the latter part of the planning horizon and into the next decade.

Christopher C. Womack: And as you know, we are building some 10 gigawatts now that gets us through the end of this decade, and then the RFP that was certified at the end of last year gets us into the early 2030s. Once again, I point to our very orderly planning processes across our company.

Andrew Marc Weisel: To clarify on the equity outlook: First, the $26.5 billion of DOE loan guarantees—am I right that would reduce traditional debt dollar for dollar without impacting the equity? And then it looks like an incremental $300 million of equity relates to the $700 million from the Southern Power gas upgrade. What would be the timing of that? I think the upgrades are for 2029 to 2031—should I think of the equity being in the later years of the plan? And if you move forward with the additional 300 megawatts, would that require additional equity, or is that included?

David P. Poroch: The DOE loans definitely help our capital markets needs—pretty much takes care of us for at least the foreseeable future. Great pricing, helps with liquidity, and it is for Georgia and Alabama, recall. On the Southern Power upgrades, yes, we are continuing along with that sort of 40% equity proportion as we grow those capital opportunities. That $700 million is incremental—that is what we talked about now. Keeping us in line with that 17% FFO to debt, as we explore other opportunities beyond the $700 million we talked about today, would likely carry about a 40% ongoing equity proportion. We will explore whatever opportunities are available at the time and take advantage of market circumstances.

It is a good rule of thumb to continue to expect about 40% of incremental capital to be funded through equity.

Operator: Our next question comes from the line of Analyst with Truist. Please proceed with your question.

Analyst: Thanks for the time. Recognizing the progress on the Southern Power upgrades and the 300 megawatts to go, I am curious about the overall development arc given that progress. Is it tracking the expectations you laid out on the 4Q update, and how do you think about the timing for more visibility into brownfield and greenfield development there?

Christopher C. Womack: It is tracking as we expected. The interest is very strong on both the opportunities we have in negotiation with existing customers and, clearly, from a brownfield standpoint we are in early-stage considerations. Later in the year, we will be in a better position to give you more of an update on where that stands. As we said earlier, we are executing on what we have highlighted and moving through the plan in an orderly way. We will keep you posted as results come and as projects bear fruition.

Operator: Our next question comes from the line of David Arcaro with Morgan Stanley. Please proceed with your question.

David Arcaro: Thank you so much. Wondering if you could speak to the supply chain and where you stand currently in terms of access to some of the tight areas like turbines and labor—what you are seeing there?

Christopher C. Womack: In this current market, it is not anything you can take for granted. The headline would be we are very well positioned, but we cannot sleep on it. Whether it is turbines, transformers, wire, cable—you name it—our supply chain organization continues to be very aggressive and focused. As we look at RFPs, we do have the turbines identified to support those RFPs. You mentioned labor—we have had a long history of working with labor. We have an incredible relationship with the building trades and other labor organizations. We continue to update them on our construction schedules and the skills that will be needed, and those relationships will bear fruit for us. You should expect tightness in the labor market.

During Vogtle construction, at peak we had about 10,000 laborers on site, and all we went through further enhanced our relationship with labor. Those relationships will pay off for us in a constrained environment. It is about coordination and our experience. I feel good about where we are, but we have to keep working it.

David Arcaro: Appreciate that. When would new generation be needed as you sign more large load contracts? How do we think about the next round of an all-source RFP? Is there a certain level of gigawatts that would trigger another round, or is it more a matter of time?

Christopher C. Womack: We are in the midst now of building 10 gigawatts that will support activities and demands through the end of the decade. The RFP that was certified in Georgia at the end of last year would take us through the early stages of the 2030s. This new RFP looks more at the 2032–2033 time frame—somewhere between another 2 to 6 gigawatts. We are lining up well in terms of matching up with the needs we are seeing across the economy and market. Alabama is also active from an RFP standpoint. We feel good about how we are matching demand and the load forecast between now and the mid-2030s.

Operator: Our next question comes from the line of Paul Fremont with Ladenburg Thalmann. Please proceed with your question.

Paul Fremont: Thank you very much, and a really strong result for the quarter. I wanted to pursue Southern Power. Can you give us a sense of how much of that capacity is currently contracted today?

Christopher C. Womack: We have set numbers up in the mid-90s in terms of what is contracted. Many of those contracts go through the mid-2030s, but we have signaled there may be some early review of some of those contracts and early negotiations in terms of potential recontracting. Then there will be the opportunity to have new conversations about some of that capacity being made available. That puts us in a strong position as we see pricing opportunities. Southern Power is in a strong position, recognizing the demand in the marketplace and what they are seeing around pricing.

Paul Fremont: On the 400 megawatts, should I assume that you have already contracted for that capacity, or is it likely that when it is built, you will contract for it?

David P. Poroch: The 400 megawatts of uprates we announced are in ongoing conversations—fairly late stage. We will be wrapping those up in the relatively near future, but those conversations are well in hand.

Paul Fremont: So likely, by the time it is built, it will be contracted?

David P. Poroch: That is clearly our expectation.

Paul Fremont: I would assume then that part of the decision on the additional 300 megawatts would be assessed based on your ability to potentially contract that additional amount as well.

Christopher C. Womack: Yes, and think about it consistent with the way we have run Southern Power over the years. We are always looking at high credit quality counterparties—typically load-serving entities, other investor-owned utilities, EMCs, munis. We definitely do not “build it and see who shows up.”

Paul Fremont: The price per kW seems pretty close to what it would cost to build at least a new CT, if not all that far off from a new CCGT. In terms of your consideration of new build, would that also likely revolve around your ability to contract the plant before completion?

David P. Poroch: For sure. New build or upgrades—same operating philosophy. Long-term strategy, creditworthy counterparties. It fits the business model we have held to for years and will continue to execute.

Christopher C. Womack: And we have said before, we do not take merchant risk. We are not in the merchant business.

Paul Fremont: And most likely in your service territory the party you are contracting with is another utility, like a co-op or something like that.

David P. Poroch: That is typically the case.

Paul Fremont: Great. Thank you very much.

Operator: That will conclude today’s question-and-answer session. Are there any closing remarks?

Christopher C. Womack: No. Again, let me thank you for joining us. We are excited about the growth we are experiencing and the operations of our company. I will end where I started: We believe we have a bright future ahead. Thank you for joining us today on this first quarter earnings call. Everybody, stay safe. Have a good day.

Operator: Thank you, sir. Ladies and gentlemen, this concludes The Southern Company First Quarter 2026 Earnings Call. You may now disconnect.

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