Southern Co. Q3 2025 Earnings Call Transcript

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Date

Thursday, October 30, 2025 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

The Southern Company (NYSE:SO) reported the following key results and developments for the quarter:

Adjusted EPS -- $1.60 per share for 2025, which is $0.01 above estimate and $0.17 higher than in 2024.

Year-to-date adjusted EPS -- Adjusted EPS was $3.76, up from $3.56 in the first nine months of 2024.

Full-year guidance -- Management projects full-year adjusted EPS at the top end of the 2025 guidance range of $4.30 per share, based on year-to-date performance and a fourth quarter adjusted EPS estimate of $0.54 per share.

Weather-normal retail electricity sales growth -- Year-to-date weather-normal retail electricity sales were 1.8% higher year-over-year in the first nine months of 2025. In the third quarter, the commercial sector grew 3.5% on a weather-normal basis compared to the prior year. Data center sales rose 17% in the third quarter. Residential sales increased 2.7%, bolstered by the addition of approximately twelve thousand new electric customers during the quarter.

Industrial segment growth -- All major industrial customer segments, including primary metals, paper, and transportation, increased at least four percent year-over-year in the first three quarters of 2025.

Large load contracts -- Four new contracts representing over two gigawatts of demand were signed in the past two months across Georgia and Alabama.

Forward load growth pipeline -- Over fifty gigawatts of potential incremental load across electric subsidiaries projected by the mid-2030s. Contracts and commitments total seven gigawatts through 2029, ramping to eight gigawatts in the 2030s.

Capital investment plan -- $76 billion planned through 2029. Cumulative equity need of $9 billion through 2029, with over $7 billion already secured or committed, including $1.8 billion of equity priced via ATM forward sales agreements since the last earnings call.

Long-term credit quality objective -- Targeting 17% FFO to debt within the planning horizon to maintain or improve investment-grade ratings. David P. Poroch stated, "our path is getting closer to 17% And we see these qualitative factors and quantitative factors improving."

Debt issuance -- $4 billion of long-term debt was issued in the third quarter across multiple subsidiaries. All 2025 long-term debt financing needs are now satisfied.

Georgia Power base rate plan -- The rate freeze on base rates at Georgia Power has been extended through at least 2029, excluding storm-related costs.

Generation expansion -- Georgia Power filed to secure ten gigawatts of new resources (five natural gas combined cycle units, eleven battery storage facilities), with a final regulatory decision expected by year-end.

Asset acquisition and construction -- Alabama Power completed acquisition of the 900-megawatt Lindsay Hill facility. Construction continues on approximately two and a half gigawatts of generation assets in Georgia and Alabama, including three gas turbines and seven battery storage sites, all projected to go online over the next two years.

Southern Natural Gas expansion -- South System 4 project moving forward, totaling a $3 billion investment with Southern Company Gas holding a 50% interest.

Tolling agreement renewals -- Southern Power has 95% of assets contracted through 2029. Two new PPAs secured at "almost three times" current pricing, effective early 2030s, according to David P. Poroch.

Economic development -- Twenty-two companies announced projects in the quarter, generating nearly five thousand potential jobs in the third quarter and approximately $2.8 billion in expected capital investment.

Large load pipeline maturity -- Management indicates advanced negotiations for approximately twelve gigawatts of additional large load commitments beyond current contracts.

Upcoming guidance update -- Christopher C. Womack stated, "Consistent with our past practice, and representative of our continued discipline, we expect to provide a complete update to our long-term plan during our fourth quarter 2025 earnings call this coming February. As always, this update will include refreshes to our five-year capital investment outlook, sales forecast, and financing plans, as well as our 2026 and long-term EPS guidance."

Summary

Executed large-load contracts now underpin a significant portion of forecasted electric sales growth through 2029, with Georgia Power projected to average twelve percent annual electric sales growth through 2029. The company clarified that 95% of Southern Power’s portfolio is under long-term contracts through 2029, and new agreements reflect a notably higher pricing environment. Regulatory proceedings in Georgia seek approval for ten gigawatts of new generation, supporting capacity needs aligned with the growing data center and industrial pipeline, with a final determination by the commission scheduled by the end of 2025. Alabama and Georgia are seeing both newbuild and expansion projects in gas and battery storage, matched to the established ramp-up schedule. The utility stated it has met all debt financing needs for 2025 and described ongoing progress toward addressing its $9 billion equity requirement through 2029, primarily through forward equity instruments and hybrid securities. Management affirmed credit quality remains a strategic priority and linked continued proactive capital planning to its commitment to maintaining investment-grade ratings.

Christopher C. Womack emphasized contract structures that ensure "Minimum bills cover all of our costs, whether or not the meter spins."

David P. Poroch explained that incremental capital needs from regulatory approval in Georgia could add about $4 billion, financed at approximately 40% equity.

Management expects "to provide additional clarity on our long-term earnings trajectory," with the possibility of rebasing EPS growth as early as 2027.

The company achieved recognition as Newsweek’s highest-ranked U.S. energy company on the World’s Most Trustworthy Companies 2025 list.

In response to investor questions, management stated it is "not in a position to make that decision at this point until we find ways to make sure all risks are mitigated."

The company described both greenfield and expansion projects across the customer portfolio, indicating diversity in load growth sources and ramp-up profiles.

Industry glossary

ATM (At-The-Market) program: A mechanism allowing a company to sell equity incrementally into the market, frequently using forward sales agreements, to raise capital efficiently as market conditions permit.

FFO to debt: A credit metric representing Funds From Operations as a percentage of total debt, used by rating agencies to assess leverage and credit quality.

PPA (Power Purchase Agreement): A long-term supply contract where the buyer agrees to purchase electricity at pre-negotiated terms and pricing, often supporting project financing.

Load ramp: The scheduled increase in electricity demand associated with a new large customer contract as their facility becomes operational over time.

RFP (Request For Proposal): A formal solicitation issued by a utility for competitive bids to provide new energy generation or capacity resources.

Large load customer: An industrial, manufacturing, or data center client with significantly above-average power demand, often representing hundreds of megawatts to gigawatts of incremental load.

Full Conference Call Transcript

Christopher C. Womack: Thank you, Greg. And good afternoon to everyone. We thank you for joining us for today's update. The Southern Company continues to perform exceptionally well. As you can see from the materials that we released this morning, we reported strong adjusted earnings results for the third quarter, meaningfully above the estimate provided last quarter. And we expect to deliver on our financial objectives for 2025, and I have to say The Southern Company has an incredibly bright future ahead. Our state-regulated electric and gas utilities continue to provide long-term value to the more than 9 million customers across the Southeast and beyond with reliable and affordable energy.

Vertically integrated markets in which our electric utilities operate continue to provide transparent and orderly processes and have consistently supported our ability to meet the needs of our growing economies' electric demand while providing premier reliability and resilient service day in and day out. We've done all of this while keeping customers' rates more than 10% below the national average. Further, the rate plan extension at Georgia Power, which freezes base rates until at least 2029, excluding the recovery of storm-related costs, is a testament to the benefits of a constructive regulatory framework and our focus on balancing growth and affordability. Customers continue to be at the center of everything we do.

Our focus on the customer underpins our disciplined approach to forecasting, pricing, contracting, and deploying resources to serve this once-in-a-generation growth opportunity. We continue to execute on those plans for the benefits of all of our customers. Over the last two months, we have four contracts with large low customers across Georgia and Alabama representing over two gigawatts of demand. Consistent with our approach across The Southern Company, these contracts include pricing and terms that are designed to pay for the incremental cost to serve new customer demand while also benefiting and protecting existing customers, helping to ensure growth does not come at the expense of affordability.

I will now turn the call over to David to give an update on our financial performance.

David P. Poroch: Thanks, Chris. And good afternoon, everyone. For 2025, our adjusted EPS was $1.60 per share, $0.01 above our estimate and $0.17 higher than 2024. The primary drivers for our performance for the quarter compared to last year were continued investment in our state-regulated utilities along with strong customer growth and increased customer usage. These positive drivers were partially offset by milder than normal year-over-year weather, higher depreciation and amortization, and higher interest costs. For the nine months ended September 30, 2025, our adjusted EPS was $3.76 compared to adjusted earnings of $3.56 for the same period in 2024. Year-to-date, revenue grew at our state-regulated electrics, partially influenced by customer growth and higher usage, which has added $0.12 year-over-year.

A complete reconciliation of year-over-year earnings is included in the materials we released this morning. Our adjusted EPS estimate for the fourth quarter is $0.54 per share, which combined with our year-to-date performance would represent full-year adjusted earnings at the top of our 2025 annual guidance range of $4.30 per share. Turning now to retail electricity sales, year-to-date weather-normal retail electricity sales were 1.8% higher compared to 2024. Year-over-year weather-normal retail electricity sales, which are on pace for the highest annual increase since 2010, excluding the pandemic, demonstrate growth across all three customer classes. In the third quarter alone, the commercial sector grew 3.5% on a weather-normal basis compared to 2024.

This growth was driven partially by increased sales to existing and new customers and new data centers, which were up 17%. Weather-normal residential sales also showed strong growth and were 2.7% higher than in 2024, bolstered by the addition of roughly 12,000 new electric customers in the quarter, substantially higher than historical trends. Electricity sales to individual customers also demonstrated continued strength, growing 1.5% in the quarter compared to the prior year. Year-to-date, all of our largest industrial customer segments are up year-over-year, including primary metals, paper, and transportation segments, which were each up 4% or higher through the first three quarters.

Economic development activity across our electric service territories remains robust, with 22 companies making announcements to either establish or expand operations in our service territories during the third quarter, generating nearly 5,000 potential new jobs and representing expected capital investments totaling approximately $2.8 billion. Clearly, between robust customer growth, increasing customer usage in the commercial and industrial segments, and the flourishing economic development activity in our service territories, the economy in the Southeast remains strong and extremely well-positioned. Transitioning to our financing, I'd like to take an update on our activities for the quarter, including the progress made addressing our future equity needs.

During the third quarter, we issued $4 billion of long-term debt across Alabama Power, Georgia Power, Southern Company Gas, and Southern Power. The quality and credit strength of our subsidiaries continue to draw robust investor interest. Strong demand for our subsidiary securities ultimately translates into lower interest costs, which will provide benefits to customers and our regulated subsidiaries over the long term. With these issuances, combined with what we issued in the first half of the year, we have fully satisfied our long-term debt financing needs for 2025 at each of our subsidiaries.

On the equity financing front, we continue to be opportunistic in our proactive approach and have made significant progress on our plans to source equity in a disciplined, credit-supportive manner. This approach reflects our steadfast commitment to credit quality, including our strong investment-grade credit ratings across all three major rating agencies. We plan to continue utilizing equity or equity equivalents in support of our path towards 17% FFO to debt within our planning horizon. Recall this long-term credit quality objective is intended to provide cushion to the quantitative credit metric targets provided by the rating agencies.

As a reminder, on our July earnings call, we highlighted a cumulative equity need of $9 billion through 2029 to fund our $76 billion capital investment plan in a credit-supportive manner. Since our last earnings call, we priced an additional $1.8 billion of equity through forward sales agreements under our at-the-market or ATM program. These forward equity contracts contain final settlement dates that extend through mid-2027, with the ability to call sooner if we choose. This progress and the flexibility it provides significantly reduce risk in financing plans.

Considering these ATM forward sales, other hybrid security issuances, and past and projected issuances under our internal equity plans, we have solidified over $7 billion of our $9 billion equity need through 2029. We are extremely well-positioned to address the remaining amounts in a shareholder-friendly manner. Looking ahead, and as we continue to take steps to require strong customer protections and credit provisions, our pipeline of large load data centers and manufacturers continues to be robust. Across our electric subsidiaries, the total pipeline remains more than 50 gigawatts of potential incremental load by the mid-2030s. Recall that our disciplined approach to forecasting assumes that only a fraction of this load pipeline materializes.

As Chris mentioned earlier, in just the last two months, we have four contracts across The Southern Company system that represent over two gigawatts of load. As you can see, projects within our pipeline are maturing into executed contracts, which, along with their associated load ramps over the next several years, solidifies a substantial portion of our total forecasted electric sales growth of 8% annually through 2029, including average annual growth at Georgia Power of 12% through the same period.

Across Alabama, Georgia, and Mississippi, we now have contracts in place with large load customers representing seven gigawatts through 2029, which ultimately ramp to eight gigawatts in the 2030s, and we are in advanced discussions for several more gigawatts of load. I'll now turn the call back over to Chris for further insights into the progress we are making on our plans.

Christopher C. Womack: Thank you, David. As David noted, we have made great progress with signing new large load contracts. Just last month, as a part of Georgia Power's ongoing RFP certification proceedings, Georgia Power filed an update to its load forecast. This updated forecast continues to project the capacity need consistent with the 10 gigawatts of capacity resources being requested, which include five natural gas combined cycle units and 11 battery energy storage facilities. These proceedings are scheduled to have a final determination by the commission by the end of this year.

Separately, Alabama Power, with approvals from the Alabama Public Service Commission and the Federal Energy Regulatory Commission, has completed the acquisition of the 900-megawatt Lindsay Hill natural gas generating facility to serve projected long-term capacity needs in the state. In addition, construction continues on approximately two and a half gigawatts of new generation in both Georgia and Alabama, which includes three natural gas combustion turbines and seven battery storage facilities, all of which are projected to go online over the next two years. Further, the South System 4 expansion at Southern Natural Gas within our Southern Company Gas subsidiary continues to move forward and will provide a valuable resource in serving the projected growth in our service territories.

It is clear that we continue to make great progress executing on our plan as we deliver exceptional value to customers and investors. Consistent with our past practice, and representative of our continued discipline, we expect to provide a complete update to our long-term plan during our fourth quarter 2025 earnings call this coming February. As always, this update will include refreshes to our five-year capital investment outlook, sales forecast, and financing plans, as well as our 2026 and long-term EPS guidance.

Consistent with our comments throughout 2025, as a part of that communication, we expect to provide additional clarity on our long-term earnings trajectory, which, as we've highlighted before, could translate into an increase in the base from where our long-term EPS growth starts, which could be potentially as early as 2027. We have delivered exceptional operational and solid financial results in the first three quarters of the year. Just this week, The Southern Company was named to Newsweek's World's Most Trustworthy Companies for 2025 list and was the highest-ranked energy company in The United States on that list.

Recognized companies were identified in an independent survey, and our inclusion at the top of this list is a testament to the hard work and unwavering commitment of our employees to uphold our values and operate each day at the highest standards of integrity, transparency, and accountability. We are honored by this recognition, and I'm incredibly proud of our team and the execution across all of our businesses. In conclusion, we're extraordinarily well-positioned to finish the year strong. We have the team, we have the experience, and the scale to capture and execute on the exciting opportunities in front of us. We really have a bright, exciting future ahead. Operator? We're now ready to take questions.

Diego: Thank you. And at this time, we will conduct our question and answer session. Please lift your handset before pressing the star. And our first question comes from Steven Isaac Fleishman with Wolfe Research. Please state your question.

Steven Isaac Fleishman: Hey, Steve. Hey, Steve.

Diego: Hi. I have no idea how I got on the list for questions because I didn't ask one, but I appreciate that. You want So I will say hello and all good.

David P. Poroch: Didn't have any questions.

Steven Isaac Fleishman: Thanks, Dave. Thank you.

Diego: Thank you. And your next question comes from Carly S. Davenport with Goldman Sachs. Please state your question.

Carly S. Davenport: Good afternoon. Thanks for taking hey, thanks so much for taking my question. Maybe to start just on the kind of load growth outlook in Georgia. I guess as you continue to lock in contracts under the new tariff structure there, can you talk a little bit about the reception from customers to the new structure and also how you approach the minimum bill and ensure cost recovery from investments to support that load?

Christopher C. Womack: Yes, sure. Hey, Carly. Thanks. Great question. Like we talked about, we've moved into a mode working underneath the, at least at Georgia, working underneath the Georgia Public Service Commission new rules that came into place in the spring. And you know, what we're finding is customers totally get it. They understand that these are long-term commitments that we are making to deploy resources to serve their needs and think these rules have really helped bring the more credit quality, more serious counterparties up to the front of the line and we've just made great strides in structuring these contracts.

And, you know, what these contracts, the ones that we've signed now have brought to the table are great protections for customers and our investors. Minimum bills cover all of our costs, whether or not the meter spins. And once they hit their ramps and they start moving up, it's just very beneficial for the company and for our customers. So we're really happy with the education effort that we've been able to accomplish over the past year. And that's kind of the indicator as to why to some extent, these contracts have taken a minute to get resolved.

Just because we're taking them along the journey of the structure and the need to be able to protect customers going forward through these contracts.

Carly S. Davenport: Great. Really helpful. Thank you. And then maybe the follow-up just on the Georgia regulatory environment just with the upcoming certifications and potential for incremental needs on the generation side. For approval. How are you thinking about potential impacts from the PSC elect and those processes as you think about the longer-term plan?

Christopher C. Womack: Yeah. Carly, let's start with the election question first. Elections in Georgia for the two commission seats, they will be held next Tuesday. We've had a couple weeks of early voting. I mean, one of the things we talk a lot about in all of our states is that we have an incredibly long history of working constructively with whomever is in those seats. And the five seats that are occupied in Georgia, they all they've always brought different views and perspectives. And so we expect that to will in fact be the same. And so we'll work with whomever is there.

And as those positions are filled, I mean, they keep the citizens in mind as well as we keep our customers in mind. So we have a lot of alignment there. So we've always constructed the work with whomever has been elected in those seats. You wanna take that for

David P. Poroch: And, Carly, you asked about status and kinda where we are. Recall that in September, Georgia Power filed an updated load forecast and testimony and that load forecast, you know, using the same methodologies as several months ago, discounting forecasted load and risk adjusting that. Supported the need for the whole 10 gigawatts that we're requesting. And that process is ongoing. So we're gonna have staff and other interveners file their testimony in the next couple of weeks, I think. And we're scheduled to get a ruling from the commission. I think it's December 19, latter part of December. But all that should be wrapped up and we'll see the results before year-end.

Carly S. Davenport: Great. Appreciate all the color. Thank you.

Christopher C. Womack: Thank you.

Diego: Your next question comes from Julien Patrick Dumoulin-Smith with Jefferies. Please state your question.

Julien Patrick Dumoulin-Smith: Hi, Julien. Hi, good morning. Good afternoon, team. Thank you guys very much for the time. I appreciate it.

Christopher C. Womack: Hey. Thank you, man. If it's still hey.

Julien Patrick Dumoulin-Smith: Absolutely. Chris, can we talk about the rebasing? You use the same language again about as early as 2027. that you're looking at whether it's operational or regulatory or just frankly incremental you know, signed dataset deals. To get you comfortable to make it more of a firmer timeline for that rebasing. Any thoughts that you'd observe here on how you're thinking about that timeline?

Christopher C. Womack: Julien, I mean, I think we said I mean, there's not kind of an exact list. I mean, there are a lot of things that we're gonna look at to make that decision. I mean, how's the economy performing? What's happening with interest rates? I mean, where are we with large load contracts? I mean, just a number of factors, I think, that has to go into that consideration to give us the confidence and certainty to make that kind of decision. And so, I mean, as we said before, I mean, clearly, a lot more meat on the bone in terms of where we are and how that decision needs to be made.

But, yeah, I mean, that's something we'll work through and we'll give you more clarity on that in our February call. Next year.

Julien Patrick Dumoulin-Smith: Awesome. Excellent. And a little bit more of a nitpicky question. The $9 billion equity you guys talked about here a second ago. In theory, if you were to get this, incremental $5 billion, how do you think about that being reflected in that 9?

David P. Poroch: The upside that we've discussed in the second quarter call, Julien, you mean?

Julien Patrick Dumoulin-Smith: Yeah. Is that's all in there. Right?

David P. Poroch: Yeah. So in the 9 No. Actually, the upside to the extent that the Georgia Public Service Commission approves all of our requests, had talked about that being about another $4 billion of incremental capital. And that's likely to be financed kind of in that neighborhood of about 40% equity going forward. So once we get clarity on that, we'll be able to execute on that plan.

Julien Patrick Dumoulin-Smith: And there's a little rounding error there, right, between the four and the five with gas, I think it is?

David P. Poroch: I understand? Yeah. That's right. The numbers. You're exactly right, Julian. The four relates specifically to the remainder request at the Georgia Public Service Commission. And we've talked about opportunities within our FERC regulated jurisdictions in the gas infrastructure business, and that's about $1 billion. So you're exactly on point.

Julien Patrick Dumoulin-Smith: Alright. Awesome, guys. Thank you very much. I'll turn it over there.

David P. Poroch: Thank you. Okay, man.

Diego: Next question comes from Shar Pourreza with Wells Fargo. Please state your question.

Shar Pourreza: Hey, Shar. Hey, guys. Hey, Shar. Guys. How you doing, man?

Christopher C. Womack: Oh, not too bad. Not too bad. Thanks, Chris. So just real quick on the magician shift gears to Southern Power. Mean, there is a lot of opportunities there and you've got existing tolling agreements. That start to expire. I guess what I guess is there how do we think about just the assets, the value of the assets the pricing environment, have conversations started? And is there opportunities to renegotiate these tolls ahead of the expirations just given the value of the assets?

David P. Poroch: Yes. So like we've talked about, we've got a very large portion of these contracts under long-term of these assets under long-term contracts, about 95% or so through 2029. And you're absolutely right. There's where those opportunities exist, we're toward the end of those contracts, we'll start having some conversations to renegotiate those and renew those where appropriate. And when we're looking at a couple of live data points, right, in our in the RFP that was recently approved at in Georgia, Southern Power on a competitive bid basis won two PPAs that go into effect in the early 2030s. And those are repriced about two almost three times kind of where they sit today.

So assuming that market holds, we see great opportunity out in the future as those contracts lay off then we can renegotiate those and recommit those assets in the future.

Shar Pourreza: Got it. Okay. Perfect. And then just lastly, just obviously you guys talk about the amount of gas that's needed in the Southeast Just around the S and G pipeline expansion, any thoughts on timing there or how are the conversations going with the counterparties? Thanks.

David P. Poroch: The SNG expansion is going well on track. I think we've talked about that being about a $3 billion investment, 100%. We're a 50% owner of that. And so that project is going as scheduled and we expect great interest in contracting that capacity. Pipe runs kind of, if you will, through our backyard, and we see that pipe being able to serve our needs as well as a number of other needs through the around the adjoining state. So looking forward to getting that project taken care of.

Shar Pourreza: Okay. Perfect. And then just last, if I could just slip one quick one on the equity question. Chris, it's been obviously some pretty healthy transactions that have been done around partial asset sales. Some of your peers have done it. They have been successful. It's been accretive. But just want to get a sense on have you considered sort of other avenues versus these equity or equity-like instruments And even can subparts of Southern Power be opportunities there?

Christopher C. Womack: We're just focusing on equity and equity-like. You know, Shar, you know, we don't comment on kind of speculative transactions or rumors or kind of these broad questions. You know, we're always looking to see who's the best owner of a given asset. And that's something that we'll always look around corners and make those kinds of decisions. And I think it's a little bit premature, But, yeah, I mean, that's something that, you know, we'll always give deep considerations to. And we like our cards. We like the portfolio that we have. But, I mean, there's something some things we'll always take a look at.

Shar Pourreza: Perfect. I appreciate it, guys. Thanks so much.

Diego: Okay. Your next question comes from Anthony Christopher Crowdell with Mizuho Securities. Please state your question.

Anthony Christopher Crowdell: Hey. Good afternoon, team. What's going on? Hey. I'm beautiful. As good as you. Hey. Two easy ones. Two softballs. You talk about on the fourth quarter call, you're going give us a capital refresh. And I guess potentially an update on the EPS CAGR. And I think you mentioned that I don't want to put words your mouth about maybe talking about a base starting in 2027. My question is do we get 2020 will we also get 2027 guidance on the fourth quarter call.

David P. Poroch: Anthony, we've been talking about this opportunity for a good little while. And as we've seen this kind of momentum around developing these contracts come to fruition, It is pretty unique and those contracts that we've talked about are kind of coming into play in the latter part of our planning horizon. So we do expect to be able share some clarity on that. Like Chris talked about, a lot of things are in the mix. And as we move forward in getting these contracts taken care of, we be able to share what that clarity looks like in February.

Anthony Christopher Crowdell: Great. And then just last, question. I and I apologize if had the timing wrong. I believe from your from your last call to this call, I believe Moody's put, the holding company on a negative outlook. Your equity needs you had already announced before. Does that negative outlook or maybe changed if you have maybe pulling forward or the timing of that remainder $2 billion of equity?

David P. Poroch: Yes. No. We've got We've got what we believe is a really good path to get towards 17% FFO to debt. And let's remember, fundamental belief at Southern that a premium equity starts with being a high-quality credit. And so it's important that we're going to retain these ratings that we have and we looked at be able to build cushion toward that 16% threshold. That's our downgrade threshold. So our path is getting closer to 17% And we see these qualitative factors and quantitative factors improving. The executing on the equity issuances is really encouraging bringing these contracts to fruition is encouraging. And we're just going to continue to be proactive and disciplined in this approach.

And we're going to continue to share our progress with the rating agencies to make sure that they're aware of where we're getting or where we're going towards 17% over the planning horizon.

Anthony Christopher Crowdell: Great. See you guys down at EEI. Awesome. Look forward to it. Thanks.

Diego: Your next question comes from Jeremy Bryan Tonet with JPMorgan. Please state your question.

Jeremy Bryan Tonet: Hey, Jeremy. Hi. Hey, Jeremy. Hi. Good morning. Good afternoon. Just one quick question here with regards to Neutrol. I think Southern has talked in the past of the importance of Neutrol development. For the future of the country. And we've seen support from the federal government start to move things forward in different parts of the country. Just wondering if there's any specific actions out there support from the federal government or other entities that would make expanding Vogtle or pursuing SMR, more attractive to Southern?

Christopher C. Womack: First of let me say I was in incredibly excited about the actions that the administration took with Westinghouse and Kameko and Brookfield. In terms of that collaboration. I mean, I think all of those things are very important to bring forth new nuclear in this country. And with this incredibly growing demand, I think it's so important that we take the steps necessary to build new units in this country. And so between the action taken announced yesterday, a couple days ago, as well as the president's executive orders on the regulatory side All those things, I think, are very important and very instrumental in helping support the development of new nuclear in this country.

Because as you look at bringing these new units on, these units could have sixty to eighty year lives. And so that would take us in meet the current future demand, but also demand into the next century. So this is incredibly important to recognize the steps in the leadership role that the government must take to address risk and find ways to help mitigate that risk. So I think it's incredibly important and real excited about the steps that are being taken by this administration.

Jeremy Bryan Tonet: Got it. That's helpful. I'll leave it there. Thanks.

Christopher C. Womack: Thank you very much.

Diego: Your next question comes from Andrew Marc Weisel with Scotiabank. Please state your question.

Andrew Marc Weisel: Hey, Andrew. Hey, Andrew. Hey, everybody. Forgive me, I'm not sure if I heard an answer to that last question. Does all of that federal government activity change your appetite? I appreciate the industry commentary, but what about your appetite?

Christopher C. Womack: No. Not at this time.

Andrew Marc Weisel: Okay. Thank you for clarifying. But that wasn't my original question. My original question was on Slide nine, I'm interested so you showed the demand from large load customers for 2029. And then the mid-30s. What strikes me is it's a fairly small change. Only one incremental gigawatt is contracted and one additional gigawatt of committed. How much of that would you say is the same project ramping up their demand versus an incremental project or projects coming online between those years? But then to what degree would you say the small increases conservatism or risk adjusting or however you wanna call it? It just seems like a fairly small delta relative to the trends in commentary.

David P. Poroch: Yes. No, I get where you're coming from. What we wanted to try to display in this in this chart, so I appreciate your question. Is that the entire seven gigs on the 2029 column is included in the 2030 column. And so what we're trying to reflect there is ramp-up timing, and our expectations and projections based on the contracts that we have as well as in the committed section that's reflective of the conversations that we've been having the modeling that we've been doing through the negotiations. And so those ramp-ups do take a minute. And those are projected to kind of be over about a five-year period.

It's a little different from contract to contract because obviously these are tailor-made contracts bilateral negotiations not necessarily at all a unique large load tariff. And so these are tailor-made and reflect our expectations around the ramp-up.

Andrew Marc Weisel: Okay, great. Thank you very much.

Diego: Thank you. And your next question comes from David Arcaro with Morgan Stanley. Please state your question.

David Arcaro: David? Hey, thanks so much. Hey. Good afternoon. I was so looking at the 10 gigawatt large load contracted or committed numbers, by 2029. I guess I was just wondering if there's still a further opportunity to add on more gigawatts there to bring on more large load by the 2029 timeframe? Or are you seeing system constraints or limits in terms of absorbing additional data centers in the near term?

Christopher C. Womack: I think the ability to bring on more is out there. I mean, so the answer to your question is yes. There's more capacity, more opportunity. And yes, we are in advanced discussions and advanced considerations with other large load companies in terms of looking at more possibilities. So, yeah, there are more upside opportunities for the latter part of this decade.

David Arcaro: Yeah. Okay. Got it. Got it. And then I was just wondering if you could you characterize just maybe the plan for the for the next set of RFPs, just looking forward for future generation needs? What years would those be represented? In terms of when they come into service? And then when would you be potentially considering bringing forth those RFPs to take in the bids?

David P. Poroch: Sure. So remember that 25 step stipulation allowed for another all-source RFP to begin as early as 2026. And at the moment, we don't really have any size or parameters. We're just working through that and assessing our needs. Now we need to get through the processes in place at the moment, and then we'll look to the future. And that could be in the early 2030s, maybe 2030s, But, you know, we'll have to wait and see how that plays out, and we'll have more clarity next year. But we're really encouraged by the by the conversations that we've been having and the momentum continues to build, not just in Georgia, but around the service territories.

David Arcaro: Okay. Perfect. That's helpful. Thanks so much.

David P. Poroch: Sure, David. Thank you.

Diego: Your next question comes from Agnieszka Anna Storozynski with Seaport. Please state your question.

Agnieszka Anna Storozynski: Hey, Angie. Thank you. Are you guys? Okay. So my first question about contract-based gas-fired newbuild. So in the past, you guys were saying that you're still waiting to see you know, demand or interest in, like fully loaded economics for, gas-fired new build for Southern Power. And I'm wondering if we've already achieved it at that point? Or is it still a waiting period?

David P. Poroch: For recontracting at Southern Power? I just wanna make sure I don't get

Agnieszka Anna Storozynski: building a brand new combined cycles for a hyperscaler or whoever under a long-term contract by Southern Power, you know, meeting your return expectations. If you've already seen offers at levels that you would consider interesting.

David P. Poroch: You know, we continue to evaluate and recall, I think we talked about it probably several times in the past that Southern Power, we run with a pretty high filter. We have high credit quality, counterparties long-term in nature locking up the capacity no fuel risk. So as we find those opportunities that fit into that box, we'll definitely pursue them. And at the moment, we're just still evaluating.

Agnieszka Anna Storozynski: So the answer is no. You haven't seen them or you're still sort of debating if the if the if the terms are attractive?

David P. Poroch: Yeah. We're evaluating and having some conversations around that.

Agnieszka Anna Storozynski: Okay. And then second thing, and I know you have answered this question a couple of times already on this call about nuclear new build, but it's and we keep hearing, especially from Westinghouse, right, that they are seeing interest in nuclear new build from large regulated utility operators. In The US. And I know that it could be just preliminary discussions. But I mean, the Southeast seems to come up quite a bit. I mean, I'm looking at the map. There few options here.

So I'm just wondering, is it just as I said, preliminary discussions, or is it know, you wouldn't be the first one seemingly given what's happening in South Carolina But how should we, you know, brace for any potential announcements from you?

Christopher C. Womack: Yeah. I mean, I can't speak for others, but I will speak for The Southern Company. We are not there yet to make an announcement about a new nuclear plant. As we said many times in the past, we want to make sure that all risks are mitigated before we make that kind of decision. I'm excited about all the activity that's occurring around the country with considerations about new nuclear. But until we find a way to get all the risk mitigated, I mean, that's not a decision that we're gonna make.

But we're going to continue to work with the administration, work with other government agencies to talk about the importance and the role that new nuclear can play in leading this growing demand. But being perfectly clear, no, we're not in a position to make to make that decision at this point until we find ways to make sure all risks are mitigated.

Agnieszka Anna Storozynski: Understood. Thank you.

Diego: Your next question comes from Paul Fremont with Ladenburg Thalmann. Please state your question.

Paul Fremont: Hey, Paul. Hey, Paul. Hey, thanks for taking my question. First question is, I just wanna understand the difference between contracted and committed. Is that just an ESA versus an LOA? Or what's the distinction there?

David P. Poroch: Sure. So let's maybe start with the contract. I mean, that's a signed agreement hopefully pretty relatively self-explanatory. We've got a commitment to deliver based on the terms and conditions negotiated and parties have signed off and we're moving forward. The RFS request for service, you know, that's going through the process that we've described in the past where you kinda start with an entity looking across the states. Maybe they've selected Georgia. We start having conversations with them.

We start getting through they're gonna within the state of Georgia, as an example, they're gonna pick Georgia Power versus other providers that takes us to a new level of conversation more collateral is posted, the process gets more involved, engineering studies are happening. And so the commitment then is as we're negotiating terms and conditions, pricing, ramp-ups and other needs, that's kind of like your last phase before you're getting into actually signing a contract. So committed is very far down the road, and we're working through Ts and Cs. Finalizing engineering studies. And on the verge of signing contracts.

Paul Fremont: So that's sort of like fine that's sort of like finalizing agreements. Can you be able to characterize then how many gigawatts would be in advanced stage negotiations? I think some of your peers provide, you know, that third layer of breakout.

David P. Poroch: Yeah. So, you know, in that bucket, we're probably in the neighborhood 12 ish gigs. I mean, it's fairly dynamic and it's across the system.

Paul Fremont: Right. And then sort of last question for me. You are targeting, or you're you're guiding to 8% sales growth, What year would you expect to sort of achieve that level of sales growth?

David P. Poroch: That's in the latter part of the horizon. I think we talked about 2029 is the is the target for that. We grow into that over time.

Paul Fremont: Great. That's it. That's it for me. Thank you very much.

David P. Poroch: Awesome. Thank you.

Diego: Your next question comes from Travis Miller with Morningstar. Please state your question.

Travis Miller: Hi, guys. Thank you. Hey, Travis. Hey, Travis. Back still keeping with the large load topic here. If I run through those numbers that you broke out in terms of projects and gigawatts, it looks like average project somewhere less than 0.5 gigawatt, maybe 300 to 500 megawatts. One, I was wondering if that's a fair assessment of what you're seeing out there. And then two, what is the what is the extra 50 gigawatts of the next stage look like? And we've heard some utilities talking about gigawatt projects tech companies talking about multiple gigawatt projects. So wonder if you could characterize the current customers and then the next step.

David P. Poroch: Okay. Yeah. Thank you. So, yeah, it I wouldn't do just the straight math. I mean, these are wide-ranging. You know, we've got some on the one hundred megawatts of the scale, and then we've got a couple at the north of one. One gigawatt. And so they are really all over the place. And like we've talked about, I mean, each one of these are tailor-made contracts for their own specific needs. So I'd suggest resisting the simple math.

Travis Miller: Okay. That's helpful there. And then the 50 gigawatts or the next stage 40 or so gigawatts? Incremental? Would it are you seeing from those coming into the system requesting? Yeah. Like, the whole the whole pipeline. Yeah. We as we as we've talked about, those are in various stages And as we build our forecast, we heavily discount all of that through the various layers, if you will, of the of the contracting process. So, yes, 50 gigawatts north of 50 gigawatts is the universe in which we're evaluating right now. And know, we have talked about a small portion of that coming to fruition as a contract.

Travis Miller: Okay. But still the same kind of range in terms of actual project 100 megawatts to north of a gigawatt? Okay. Yes. Okay. Yeah. Exactly. Okay. And then do these tend to be greenfield or brownfield? Are they expansions, whether it's manufacturing or data center, are they expansion projects or greenfield projects? Typically?

David P. Poroch: Both. Yeah. It's it's it's really all over the place. I mean, we've got industrial customers, making announcements that they're expanding their capacity here in our service territories. We've got new businesses relocating or starting up. And then the data centers, some are expanding. I think we mentioned, I think, our prepared comments that the portfolio of data centers that we're serving today have grown at 17% year over year in the quarter. So really excited about what we're seeing in both the portfolio that we're serving today and the process of contracting. And the diversity that those customers are bringing to the system.

Travis Miller: Okay. Great. Appreciate it.

David P. Poroch: Sure thing. Thank you.

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

Christopher C. Womack: Again, let me thank everybody for joining us today on our call. And as we said before, we have a bright future, and we're looking forward to what's ahead. So you very much, and have a great day.

Diego: Thank you, sir. Ladies and gentlemen, this concludes The Southern Company Third Quarter 2025 Earnings Call. You may now disconnect.

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