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Southern Co Earnings - Analysis & Highlights for Q4 2024
Overview
PositivesNegativesOutlook
- Southern Company has paid a dividend that is equal to or greater than the previous year for 77 consecutive years, with consecutive increases over each of the last 23 years.
- Southern Company is poised for a bright future.
- Southern Company has a terrific outlook, 5% to 7% long term, and is seeing some incremental fundamental things being additive to the overall profile.
- Southern Company is excited about the future and sees significant capacity opportunities.
- Southern Company is well-positioned to capitalize on significant opportunities to serve growth and improve local economies and to sustain success over the long term.
- The size of the pipeline is expected to shrink over the next three to six months.
- The company is encouraged about the strength of its long-term earnings outlook.
- The company expects to have commitments for over 10,000 megawatts, with advanced discussions in progress for even more.
- The company projects continued modest increases in the dividend over its forecast horizon.
- The company is increasingly encouraged about the strength of its long-term earnings outlook.
- The company expects to have better line of sight on a substantial portion of these potential incremental investments later this year.
Q&A Highlights from Southern Co Earnings Call Q4 2024
- Analyst asked about the split between Georgia Power and natural gas pipeline investment opportunities above the plan.
- Daniel S. Tucker explained that the majority of the investment opportunities are with Georgia Power, and there is some degree of natural gas pipeline investment opportunities. He also mentioned that the regulatory processes are ongoing and the company will maintain the same discipline it has in the past.
- Daniel S. Tucker explained that the majority of the investment opportunities are with Georgia Power, and there is some degree of natural gas pipeline investment opportunities. He also mentioned that the regulatory processes are ongoing and the company will maintain the same discipline it has in the past.
- Analyst asked about the cumulative earnings trajectory and potential of repowering on a cumulative basis through the early part of the decade for Southern Power.
- Daniel S. Tucker responded that Southern Power's current assets are under long-term contracts, and that opportunities to recontract all lend themselves to benefits into the next decade. He also mentioned that options to build new brownfield gas plants or to build new generation outside of the Southeast are also end of the plan, into the next decade opportunities. The company is actively repowering its first repowering project at one of its wind facilities and has new solar facilities under construction. They will continue to be opportunistic where opportunities make sense, but the company expects Southern Power to remain a steady contributor to the status quo.
- Daniel S. Tucker responded that Southern Power's current assets are under long-term contracts, and that opportunities to recontract all lend themselves to benefits into the next decade. He also mentioned that options to build new brownfield gas plants or to build new generation outside of the Southeast are also end of the plan, into the next decade opportunities. The company is actively repowering its first repowering project at one of its wind facilities and has new solar facilities under construction. They will continue to be opportunistic where opportunities make sense, but the company expects Southern Power to remain a steady contributor to the status quo.
- Analyst asked about Southern Power's plan to leverage its sites for colocation opportunities and supplementing not just with repowering but additional outright potential gas turbines to serve data center opportunities.
- Daniel S. Tucker, CEO of Southern Power, explained that the company has a pipeline of 50 gigawatts to the mid-2030s, and Southern Power has the opportunity to play into that. He mentioned that the company is not interested in colocation, but there is a great opportunity for Southern Power to serve load-serving entities that are then, in turn, serving data centers.
- Daniel S. Tucker, CEO of Southern Power, explained that the company has a pipeline of 50 gigawatts to the mid-2030s, and Southern Power has the opportunity to play into that. He mentioned that the company is not interested in colocation, but there is a great opportunity for Southern Power to serve load-serving entities that are then, in turn, serving data centers.
- Analyst asked about the ability to reach the high end and mentioned the possibility of rebasing, and why 2027 is a key year for that.
- Daniel S. Tucker explained that the company is not going to get ahead of itself and will wait until they rebase to measure the size of any rebasing. He mentioned that the ramp-up in capital spending and revenues from large load customers are more backend-loaded in the plan, and that it is also a function of what's happening right in front of them with interest cost. He said that the company feels good about the opportunities once they become more tangible and that's really what's behind the 2027.
- Daniel S. Tucker explained that the company is not going to get ahead of itself and will wait until they rebase to measure the size of any rebasing. He mentioned that the ramp-up in capital spending and revenues from large load customers are more backend-loaded in the plan, and that it is also a function of what's happening right in front of them with interest cost. He said that the company feels good about the opportunities once they become more tangible and that's really what's behind the 2027.
- Analyst asked about the company's approach to providing updates on their progress in chipping away at the wood.
- The company typically provides updates on their progress during their quarterly calls, but they may provide an update earlier in the year if they feel there has been significant progress. They plan to provide a more comprehensive update during their fourth quarter call.
- The company typically provides updates on their progress during their quarterly calls, but they may provide an update earlier in the year if they feel there has been significant progress. They plan to provide a more comprehensive update during their fourth quarter call.
- Analyst asked about the availability of gas turbines and the pricing backdrop.
- The company has diversified their suppliers and are engaged with a number of different suppliers, but they are having to pay reservation fees to get in line. They feel good about their position due to their history with OEMs and their diverse supplier experience. However, there is a heavy demand on the supplier part, and they are having ongoing conversations with them to let them know their needs and make reservations to ensure they are in line to respond to their needs.
- The company has diversified their suppliers and are engaged with a number of different suppliers, but they are having to pay reservation fees to get in line. They feel good about their position due to their history with OEMs and their diverse supplier experience. However, there is a heavy demand on the supplier part, and they are having ongoing conversations with them to let them know their needs and make reservations to ensure they are in line to respond to their needs.
- Analyst asked about the company's updated thoughts on the possibility of federal backstop for EPC in case of catastrophic insurance or hyperscaler participation.
- The company believes that there is strong stakeholder momentum building for more nuclear energy in the country, and that the risks associated with EPC need to be mitigated through federal activity or private concerns willing to participate. The company will continue to make the case for new nuclear units and highlight the benefits and value of nuclear energy, including efficiency gains and improved supply chains.
- The company believes that there is strong stakeholder momentum building for more nuclear energy in the country, and that the risks associated with EPC need to be mitigated through federal activity or private concerns willing to participate. The company will continue to make the case for new nuclear units and highlight the benefits and value of nuclear energy, including efficiency gains and improved supply chains.
- Analyst asked about the need for transmission infrastructure to serve the large load growth, and if more generation capacity would be needed.
- The company has a better line of sight on transmission projects, as they are vertically integrated and cannot be purchased from third parties. Generation resources, on the other hand, have optionality and can be purchased from other providers. The company has 13 gigawatts of outstanding RFPs in Georgia alone, and once these resources firm up, they will be included in the potential capital of $10 billion to $15 billion.
- The company has a better line of sight on transmission projects, as they are vertically integrated and cannot be purchased from third parties. Generation resources, on the other hand, have optionality and can be purchased from other providers. The company has 13 gigawatts of outstanding RFPs in Georgia alone, and once these resources firm up, they will be included in the potential capital of $10 billion to $15 billion.
- Analyst asked about policy support to help attract data center growth in Alabama specifically, and if there are any changes to tariff design for hyperscaler customers like the ones made in Georgia.
- The company is not aware of any tariff legislation or incentives in Alabama at this time. However, they do have flexibility in contracting with large-load customers, and there is no need for changes to attract and serve these customers.
- The company is not aware of any tariff legislation or incentives in Alabama at this time. However, they do have flexibility in contracting with large-load customers, and there is no need for changes to attract and serve these customers.
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