The Southern Company Q2 2026 Earnings Call

Afternoon. My name is Christine and I'll be your conference operator today. At this time. I would like to welcome everyone to the Southern Company's second quarter 2020 earnings call. All. Lines have been placed on mute to prevent any background noise. After. The speakers remarks, there will be a question and answer session. If. Anyone should require. Operator assistance during today's conference, please press star zero on your telephone keypad. As a. Reminder, this conference is being recorded. I would now like to turn the call over to Mr. Greg MacLeod, Director of Investor Relations. Please go ahead, sir.

Thank you. Christine. Good afternoon, and welcome to Southern Company's second quarter 2020 earnings call. Joining me today are Chris Womack, chairman, president and Chief Executive officer of Southern Company. And David Poroch, Chief Financial Officer. Let me remind you that we will make forward looking statements today in addition to providing historical information. Various important factors could cause actual results to differ materially from those indicated in the forward looking statements, including those discussed in our form 10-K form 10-q and subsequent securities filings. In addition, we will present non-GAAP financial information on this call. Reconciliations to the applicable GAAP measure are included in the Financial information we released this morning, as well as the slides for this conference call, which are both available on our Investor Relations website at investor dot Southern Company dot com. At this time, I'll turn the call over to Chris.

Thank you Greg. Good afternoon, everyone, and thank you for joining us for today's update. As you can see from the materials that were released this morning. Southern Company continues to perform exceptionally well, which supports a very bright future. We reported strong adjusted earnings results for the second quarter with each of our businesses contributing to performance meaningfully above the estimate we provided last quarter. The. Extraordinary economic development momentum and demand for power across our southeast region that we've seen for the past several years continues, particularly from data centers and other large low customers in our utilities are capturing. This growth in a way that meaningfully benefits the customers and communities. We are privileged to serve. And support our long term outlook. And just. In the last quarter, we were three. Across the state. Alabama Power added approximately three gigawatts, while Georgia Power signed a 3.2GW 25 year contract for electric service with OpenAI for its recently announced site near Savannah, Georgia. This site, which is expected to take electric service in phases beginning in 2028, features. One gigawatt of flexible demand response, helping to support reliable, reliable energy for all customers. When demand is highest Combined, these four projects representing six gigawatts of newly contracted customer load, along with agreements previously signed, brings our total contracted large load agreements across our electric subsidiaries to over 17GW by the mid 2030s.

These projects are not just bringing in substantial construction work, they are creating thousands of permanent jobs and generating billions of dollars of investment for the local economies and our service territories. And we are proud to responsibly support this growth in a way that benefits the communities we serve. In. The three. New contracts were a clear confirmation of the continued economic development. Momentum building across all our electric service territories and our differentiated large load capabilities. Increasingly, our vertically integrated, state regulated model supports our ability to provide reliable power with speed and is an important differentiator for our new and existing customers. Our success attracting significant growth is a testament to the benefits that this model affords all our customers. As a comprehensive, one stop shop for power solutions and economic development, our electric operating companies utilize long range integrated system planning processes to coordinate timely development of generation, transmission and distribution assets through well structured and transparent regulatory processes that are designed to serve growth reliably. The southeast. With this robust network of transportation and logistics infrastructure, diverse workforce and a constructive business climate continues to be highly attractive for all forms of economic development, including hyperscalers, data centers, developers, and large industrial manufacturers.

Looking ahead, the opportunities for additional new large loads and data center customer growth remains robust. New projects continue to be added to our prospective pipeline. Of large industrial and data center projects, which remains well above 75GW. We are encouraged by the continued progression of potential large load projects in varying stages of advanced development. Beyond the 17GW already contracted. There are an additional eight gigawatts of projects in late stages, including three gigawatts projected to be violent, finalized in the near term. Clearly, the benefits of our approach are resonating with both new customers and several repeat large customers during a time of increasing power demand. We are privileged to support this transformative growth. David. I'll now turn the call over to you for an update on our financial performance.

Thanks, Chris. And good afternoon, everyone. For the second quarter of 2026, our adjusted EPS was $1.13 per share. $0.21 higher than the second quarter of 2025 and $0.13 above our estimate. The primary drivers of our performance for the current quarter compared to last year, included increased usage and customer growth, along with higher afudc from ongoing construction projects, higher earnings from equity method investments and tax related impacts at our state regulated electric utilities. The improved results in the second quarter compared to the second quarter of 2025, were also supported by contributions from Southern Company Gas and some of our smaller, complementary businesses, including Power Secure, where the distributed generation backup generation and bridge Power Solutions markets continue to expand This was partially offset by interest expense from higher debt balances and dilution from additional shares outstanding. A complete reconciliation of year over year earnings is included in the materials we released this morning. And with our first quarter results, our adjusted EPS for the first half of the year is $2.46, well above our year to date expectations. With. Rates held stable at our two largest subsidiaries. This strong performance continues to be driven by increased sales and customer growth and strong execution across each of our regulated businesses and Southern power.

These results exemplify Southern Company's commitment to delivering for customers and investors. Looking towards the second half of the year, we anticipate this momentum continuing and now project our full year 2026 adjusted earnings to be near or at the top of our 2026 adjusted EPS guidance range of $4.50 to $4.60. Our adjusted. EPS estimate for the third quarter is $1.65 per share. Turning now to to retail electricity sales year to date. Whether normal. Retail. Electricity sales were 2.3% higher than the first half of 2025. Consistent with the trends observed earlier this year. This represents the highest retail sales growth through June we've seen in nearly two decades. Year to date, whether normal retail electricity sales are higher across all customer classes, bolstered by continued residential customer additions, diverse industrial and manufacturing expansions, and significantly increasing usage from data centers Approximately 11,000 new electric residential customers were added in the quarter, bringing our net electric customer adds to over 40,000 in the last year. Manufacturing and reshoring trends, particularly in Alabama in the primary metals, stone, clay, glass and pipeline segments supported continued industrial strength, whether normal commercial sales grew 7.4% in the second quarter, bringing year to date whether normal commercial sales to 6% higher than the first half of 2025.

Notably, data center usage was 55% higher compared to the second quarter of 2025 and is now up 49% year to date. Primarily due to accelerating load ramps from our large load customers system wide. Our data center load now exceeds 1.2GW, an increase of more than 500MW over the prior year. And we expect this trend to continue accelerating as our 17GW of contracted demand comes online. As Chris mentioned earlier, economic development activity in the southeast continues to be strong. In the last quarter alone, announcements were made for nearly $14 billion of investment and more than 3000 new jobs, led by several new data center facilities in Alabama and a new Amazon warehouse in Georgia. The projects announced in the second quarter, marked the second highest investment level ever recorded in our electric territories, underscoring the strength of regional trends in economic development and ultimately help shape future growth opportunities. Turning to our infrastructure, build out the continued success of our operating territories and attracting significant new load is driving the need for additional new power generation and infrastructure across our southeast region. Over the past several years, we work constructively with regulators to meet the demand of our growing system, securing approvals for ten gigawatts of new company owned generation resources, including thermal battery and solar resources, as well as hundreds of miles of new transmission lines.

With the first two of several battery sites in service and benefiting customers and work on the three combustion turbines and plant gates advancing towards completion in the coming quarters. We continue to execute on the construction of our portfolio of new build generation projects. As our projected incremental load needs grow beyond our system's current and expected supply of generation capacity into the next decade, we remain well positioned to respond. Ongoing requests for proposals or RFPs at both Alabama Power and Georgia Power are underway for potential additional generation resources to help ensure that we can continue to provide a reliable and affordable service to all customers. These transparent and orderly processes are designed to facilitate the timely and cost effective procurement of new generation needs. In the early 2030s, to the extent that company owned resources are selected through these active RFP processes and ultimately authorized by the respective Pcis, these new generation investments would represent substantial incremental investment upon our current base capital plan. As future capital investment opportunities materialize, we remain committed to funding incremental capital investments in a credit supportive manner. We continue to proactively address our identified equity needs to support our path towards 17% FFO to debt by 2029.

In the second quarter, we sourced an additional $700 million of equity through our at the market or ATM program with forward contracts that settle at our discretion through 2028, together with the significant amount of equity previously sourced, we have reduced our projected remaining equity need by 2030 to $1.1 billion. Our. Proactive, shareholder friendly equity strategy, combined with our disciplined approach in the debt capital markets and access to low cost Doe loans, continues to position us well towards our goal of efficiently meeting our future financing needs and achieving our long term credit objectives. I'll now turn the call back over to Chris.

Thank you, David We are truly in transformative times for the energy industry and our nation. And Southern Company has continually demonstrated that we are executing on this extraordinary growth in a way that protects and benefits. Customers and communities Last week, the Southern Company Electric System was proud to formally reinforce this commitment by joining the National Ratepayer Protection Pledge alongside several other utilities. This pledge aligns with the Southern Company system's well established approach to serving growth. In a responsible manner, while maintaining rate, stability and reliability. For millions of households and small businesses across the southeast. We are confident the approach we're taking will deliver lasting benefits as we deliver rate stability for our customers. Recall, the framework work under which we approach contracting with large, low customers. Includes pricing with minimum bills to cover at least 100% of the incremental cost to serve large, customers are paying their full share. We also include provisions with strong protections in the form of termination payments backed by significant high credit quality collateral requirements that provide an additional layer of security This large load contracting structure helps ensure investors and customers are protected while providing meaningful savings, savings for existing customers with retail based rates held stable in both Georgia and Alabama until 2029.

And significant customer benefits identified and committed to. Based on previously signed large contracts. We are demonstrating that when growth is done right. Everyone benefits. Across our businesses, we continue to demonstrate exceptional execution and meaningful progress, delivering on this growth. Southern Company has a bright future, especially when considering the strength of the southeast economy. The likelihood of additional large load contracts, incremental capital investment opportunities across our state, regulated utilities, and our ability to capture value across the energy value chain through southern power investments in southeastern natural gas infrastructure and distributed and bridge power opportunities through complementary businesses like Power Secure. This. Extraordinary growth continues to strengthen our business fundamentals and expand capital investment opportunities. Well into the next decade. And we continue to see momentum building and support of the improving growth outlook into the future. The. Success we have had in the first half of the year positions us exceptionally well to deliver on our near-term objectives. While reinforcing and strengthening our confidence in our long term outlook and our goal to be towards the top half of our long term earnings trajectory. Ultimately, this is a long term business in which capital is deployed to serve customers for many decades.

As we deliver for the communities we serve, each and every day as we work towards our goal to provide sustainable, long term growth and outstanding financial integrity. Year after year, we are well positioned to continue executing with a discipline that is rooted in our long standing commitment to our customers and investors alike. As we conclude our prepared remarks today, I want to emphasize Southern Company's commitment to making the communities that that we have the privilege to serve better off because we are there as a partner to the communities and cities where we operate. We proud to help support Atlanta's efforts over the last two months in hosting eight FIFA World Cup matches on the world stage, the success was a culmination of years of hard work by local, regional and state leadership and included significant investment in local infrastructure to welcome hundreds of thousands of visitors to Atlanta. This event was an excellent showcase for the southeastern United States and an opportunity to continue building upon the momentum that defines this region, which will have an impact that will resonate for decades to come. Operator. We are now ready to take questions.

Thank you We will now be conducting our questioning. If you would like to ask a question, please press Star one on your telephone keypad. Q you may press star two if you would like to remove your question from the queue. Participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys. One moment please, while we poll for questions. Thank you. Our first question comes from the line of Nick Campanella with Barclays. Please proceed with your question.

Hey, good morning or good afternoon? Rather hope you're hearing me.

Hey, Nick, we can hear you, man.

Hey, how's it going? All right, all right. Just now that you have higher visibility on,, attracted megawatts and load ramps, you know, specifically 28 increase and 2030 increase by a few gigawatts here. So how does that incremental sales revenue and visibility?, how does that impact your ability to maybe extend or stay out further in the, you've kind of committed to on the regulatory front and just maybe you can kind of talk to that a little bit. Thanks. Thanks.

Let me start there. Now, then I'll turn it to David. But as we said in our prepared remarks, we do expect to be at the top half of our of our long term earnings trajectory. And so as we think about that, we think about the opportunity that provides for us in terms of meeting our long term outlook. But clearly, as we think about rate proceedings and regulatory proceedings, those are things that conversations will have with regulatory bodies., but as we have extended our rate stability focuses in both Georgia and Alabama,, we think it creates, creates optionality for us to continue to continue to provide rate stability ,, for our customers. Anything you want to add?

Yeah. Thanks, Chris. And hey, good afternoon Nick., great question. You know, as we work through these processes with the success that we've had in signing these contracts, you know, it does give us a great deal of flexibility and enhancing the benefits for customers., clearly we've got,, the. Ability to, look for more generation capacity through the structure processes that we have in Alabama and Georgia. And,, you know, like we've talked about in the past, we are probably about a gig or two away from, if you will, selling out the capacity., that we had approved in Georgia last year. So now we're going to work through that process. And, you know, the success that we've had in signing these contracts really gives us some durability toward the future. And additional confidence in being able to deliver on our goals well into the into the next decade.

Thanks for those thoughts. And then maybe on the,, the three gigawatts that you're finalizing and finalizing stages for, is that within the 2030 window, or is it after it? And what are kind of the key milestones you still need to get through?, on those three gigs of finalizing? Thank you.

Sure. No. For sure., working through those contracts, those are, are likely to go into 2028 and beyond. So, you know, they'll like every other, big data center project., large load customer have a ramp up period., a couple of them that we're working on would initiate that ramp up in 2028 and bring us into the next decade.

Thank you.

Thank you Nick.

Thanks, Nick.

Our next question comes from the line of Shar Pourreza with Wells Fargo. Please proceed with your question.

What's up Shar. How you doing, man?

Oh, good. How you doing? How you doing?

Doing great.

Wonderful.

Excellent.. So just Chris on Southern Power. The existing tolling agreements are going to start to roll off. I know there's obviously an opportunity to repurpose the capacity towards serving the hyperscalers. Can you maybe discuss how you're thinking about that opportunity set? Have conversations with the hyperscalers begun with these assets and would any opportunities be captured within your existing 75 gigawatt pipeline? I guess what does this mean to the plan, I guess? Yeah.

Yeah. And so we've talked about this, I think on a number of calls in terms of the opportunity, as these contracts begin to roll off and expire. The opportunity for for recontracting. And so the team is now in the midst of having those conversations., with a host of different counterparties that you understand our risk profile there in terms of making sure that they're creditworthy counterparties. But we look at in terms of where they were contracted from a pricing standpoint, in terms of where the market is today. We do see upside opportunities in those pricing opportunities that will contribute to the durability and the length of our long term plan. So we talked about this a good bit with you guys. And so that's where we are. And we're going to continue to pursue this opportunity as we as we move down that path. And as these contracts expire and the opportunities for recontracting positions itself.

Got it. And these wouldn't just be typical tolling agreements. They would be the energy and capacity side. I'm assuming, under a long. Correct. Got it. Yes that's correct. Okay. You got it. Got it. And then I know Chris, your favorite topic is,, new nuclear, right? So I guess with sort of lessons learned between unit three and four and sort of this big attention now to large scale reactors Should, should there be like any financial backing from the government and hyperscalers taking on some of the cost overrun risk? Is that something southern would be interested in building? I.E. through the Pac ten? Just any color on potentially participating in this consortium, or are you just looking to license the blueprints? Thanks.

Sure. Thank you. Very much. And you've you've heard me talk a lot about the importance of new nuclear helping. This country meet this incredible moment. That's in front of us. I mean, I, I do think as we look into the 2030s, this country needs to have,, particularly in the mid 30s, need to have some more nuclear units., in operation. I have to give a great big shout out and compliment to,, the Trump administration. I mean, there are a number of actions they have taken on the regulatory front,, with bringing groups together around law, long lead time., items, just a lot of things that they're doing. And we're having a lot of conversations with them about how to make this a reality., I mean, Southern's not going to be next. Let me be clear about that., but we're going to continue to work constructively and very, I would say, pretty aggressive with this administration and with a lot of other parties to see how we can get this done, because I do think it's important for, for from an energy policy standpoint, from the economy,, to meet this moment and meet this demand that we see in the marketplace today.

I just, I guess to follow up is, are you finding traction with the hyperscalers taking on cost overrun risk above budgeted amounts for these AP 1000 S?

I don't want to get ahead of kind of that that that firm conclusion. But yes, we are we're having conversations with them in terms of what role they can they can play in this conversation, in this equation.

Fantastic. Thank you guys so much, I appreciate it. See you soon.

Thank you. We appreciate you, man.

Our next question comes from the line of Carly Davenport with. Please proceed with your question.

Hey.

Carly. Hey. Good afternoon. Thanks for taking the questions., maybe to start, you've talked in the past about the potential for upside on the capital plan related to Ferc pipeline investments. Anything new on that front in terms of timing, especially as you think about the incremental RFPs that maybe could point to some incremental gas plant builds.

Sure. Carly. Thanks. Great question., you know, like we've talked about with the, the contracts that we're signing, the growth in the southeast region, the strong economy,, we definitely see opportunities in our Ferc related pipeline, Ferc regulated, I pipeline investments., we've talked about some of those, but you know, as the opportunities continue to grow ,, we do see the possibility of expanded opportunities in, in those, investments that we currently hold. So really excited about those, those prospects., you know, the RFPs that we've got in place and the processes that we have in our regulated jurisdictions will help inform that, but we see great potential in the southeast to continue to grow those investments.

I don't think I would add is that infrastructure, you know, across the South. Southeast. And we've you've heard us say it before, is needed to support this growth that is here. And for the growth that is to come ., so there is more to be done here. We think there's real opportunity for us in terms of ,, all the pipeline expansion opportunities to, to, to align with the needs that we have that are, that are, that are portrayed in our RFPs.

Got it. Okay. That's really helpful. And then just a follow up on the RFPs that you have, ongoing for the generation needs through 2032. Did those filings already contemplate some of the progression in the pipeline that you've seen over the last quarter or so? And is there potential room for upside on even incremental to the incremental RFPs? If you think about the conversion of the pipeline?

To the incremental, I love that term. I'll have to think about how to how to use that. Appreciate that. But yeah, the, the opportunities that, that we see there., are well baked into the RFPs. You know, we've talked about our load forecast and the processes that we use., to, you know, in a, in a rather conservative way project, what that need could be. And as we continue to sign these contracts, that's really going to be the foundation for the RFPs that we have both in Alabama and Georgia. And so there is certainly potential out there., to go and procure more generation than, than we have identified right now., we just can't get ahead of the process. There's a, you know, a thorough screening structure., good vetting and,, everybody's going to have an opportunity to, to,, participate in those processes. And so, and also, I think it's, it's worth reminding that as we've regularly say, you know, there's not placeholders in our capital plan, we don't get ahead of our regulators. And so obviously, you can see how the, the upside that we've talked about is not in our capital plan right now. So the RFP that are open in Alabama, the RFPs that are open in Georgia.

None of that is contemplated in our capital forecast at the moment.

I would add. The open our contract in Georgia pushes us beyond our recently approved capacity by a by right around one gigawatt. So just making sure that was real clear in terms of where we are and what the upside opportunities are.

Got it. Very clear. Thank you guys for the time. Okay.

Our next question comes from line of Steve D'Ambrisi with RBC Capital Markets. Please proceed with your question.

Hey, Steve Hey. Good morning. Thanks very much for for taking my question. Just just had a quick one, kind of a follow up on Charlie's question, actually. Just to put a little bit of a finer point on it. You know, it's my understanding that,, any, basically any new incremental load, especially large load in Alabama would drive,, basically incremental generation requirements. So obviously we have the RFP outstanding, but if the load forecast is up three gigawatts in the quarter, and then you're talking about open, AI, at least one gigawatt. But I think the RFP is 2 to 6. But is a is a range beyond that as well. Like, can you just frame is this 4 to 5GW of gen that, you know, we could put some type of, of, you know, capacity multiple on and try and, you know, estimate what the size is or I don't want to put the car in front of this, but I want to make sure we're level setting on what's in the plan and what the opportunity is.

Yeah. Great. Great question. And, and really a good way to think about it and appreciate your your thought on not getting in front of the process. You know, we're definitely focused on that. But I think the way you're thinking about it is directionally correct., you know, we've got the,, the newly signed contracts in Alabama that's going to inform that that's about three gigs right there. Contract signed., we're about an, about a gig or so., oversubscribed if you will, in Georgia based on what we've,, what we've signed and keep in mind, I think we've shared this in the past, maybe a decent rule of thumb., to think about capital opportunities going forward is about $2 billion or so, a little bit above maybe related to a gig of new generating capacity, you know, that kind of covers a broad range of,, of different generating sources for us.

Okay. That's very helpful. And then just in terms of like the finalizing and late stage ,, pipelines that you continue to, to fill up, you know, obviously you've seen great momentum and progression in kind of converting this, but again, like, how does how do these finalizing gigawatts kind of filter into this RFP and just like, what's the timeline for like when those loads would energize and when we'd have to think about resources to serve those just trying to like sequence it out here.

Sure.

No, I mean, those, those projects will vary project by project. And so as we finalize, those agreements and they are certified and blessed by the commissions, then we'll factor those into the RFP, RFP process going forward to to match up with the year in which those resources are, in fact, needed. So as you as we kind of in a position to inform as we finalize those contracts, that is information, then that will be forthcoming., once those contracts are finalized and the projects are approved. And as also then as we provide you with an upload updated load forecast. So there are a couple of proceedings that will that will unveil how that how that all lines up and matches up with the needs and what the new opportunities are going forward.

And I might add, you know, as we work through those processes,, you know, to the extent that the company is selected to provide that generation resource, you know, we're going to probably start feathering in some spend. That's also not currently contemplated in, in our, in our projections in the sort of the 28 time frame. And that'll start to feather in as we build out that generation to come online. And the. 3132 timeline.

Okay. That's very helpful. Thanks, Chris. Thanks, David. Appreciate the time.

Very good. Thanks, man. Have a good day.

Question comes from the line of Jeremy with JP Morgan. Please proceed with your question.

Hey, Jeremy.

Hey. Good afternoon., just wanted to pivot to Mississippi, if I could, for a minute. Here. And,, we've had recent, you know, stakeholder conversations in the state where it seems like the state is particularly receptive to incremental data center activity., you know, more than what we usually hear. And so I was just curious, I guess your outlook there, if you could maybe talk a little bit more on, on the, you know, the opportunity set and what you see maybe down the pipeline there.

As we have said before, we have we've talked, I guess, a number of quarters now about seeing this momentum migrate to the West. And you're clearly seeing that now in Alabama., have you seen success?, with 500MW projects in Mississippi. And as we as we talk about our, our pipeline, that also reflects that ongoing activity, increasing activity that we also see ,, in the Mississippi Territory.

Got it. Thank you. For that., and then just want to go to open. Or open AI again., with demand response there, just wondering how is demand response fitting into your conversations with projects overall in the pipeline? How do you factor that into, you know, kind of a, your assumptions going forward?

Yeah. So great question. And it does enter into all those conversations., and we'd like to see that continue along and stay flexible. You know, it's one of the actually, one of the great aspects,, that our three electric jurisdictions have where we're not limited to just a tariff, we can negotiate bilateral contracts that leverage the flexibility and the demands that these hyperscalers want and be able to price that. Right. So,, I think this is a great trend and I'd like to see it continue., and it is a part of every conversation that we have.

You know, one of the things I'd, I'd add there is that,, very early on in our conversations with hyperscalers, we began to raise matters like technical requirements in terms of how they're operations would impact the system, how it would impact the grid, and not just being a taker, but, but having creating flexibility to provide benefits to, to the entire grid. And so I think as we look at this broader conversation about data centers, and I think these things have got to be communicated more broadly in terms of value and benefits. And flexibility and how they're being supportive of the grid. This is how they're being supportive of communities. I mean, there's an incredibly positive narrative and story to be told here., we all have got to be, I think, a little more voice. These, these benefits. A little more stronger in terms of making sure that gets into the conversations about data centers, you know, as we, as we hear all the, all the conversations and noise right now about what's going on. So just a great win win. I think for us as well as the customer.

That it makes sense. Yeah, that story needs to be kind of told a bit more. Makes a lot of sense to us. Thank you.

Thank you very much.

Our next question comes from the line of Steve Fleishman with Wolfe Research. Please proceed with your question.

Hey, Steve. Hi.

Hi. Good afternoon. I'm doing well, thanks.. So just could you just remind,, in Georgia., for open AI and other., customers who maybe aren't,, investment grade credits or strong investment grade. How do the tariffs work for from a credit standpoint? The large low tariffs.

Yeah. So. Remember, the, if you will, the kind of for pillars. Under which we're negotiating structure. These contracts in our territories. You got long term contracts., and you hit it exactly the open AI contract is 25 years. our minimum bills cover 100% of the incremental cost to serve ., there's default provisions in there. And those,, default payments are, are tied to, to, collateral. And so, you know, we've got a lot of flexibility in terms of the forms of collateral that,, that we can take from these counterparties and,, you know, if a parent guarantee works., for us, depending on the credit quality of the counterparty,, we'll work with that. But in some, some instances that,, they're not quite at the investment grade that we want to see. We'll look to,, lines of credit, we'll look to surety bonds, we'll look to other combinations. But at the end of the day, the collateral portfolio that we're going to take to back up these contracts is going to be put us at about an A minus or better position ., and, you know, keep in mind you asked specifically about open AI and that's about 20, $28 billion of collateral., that will be in the aggregate,, upon full ramp.

So I think we're in a really good spot for that., and keep in mind that's, we have the flexibility to, to, determine what collateral is accepted to us. Acceptable to us., and puts us in a position of about a minus or better. So combination of,, lines of credit, surety bonds in this particular case.

Okay. That that's very clear. Thank you., the, the RFP. Could you and apologize if I missed this earlier, but just can you remind us just the timelines for ,. You know, finalizing answers and then approvals.

Sure. So,, the, the process is going to play out through most of the rest of the summer into the fall. I think by year end, we should have a good idea of what projects were selected in through the RFP process. And then once those projects are selected, that will move into a certification process that will take place. Much of 20 throughout much of 2027. So the latter part of 2027,, will have good clarity as to what actually gets certified. And Alabama is in a fairly similar timeline., so you can kind of count on, on both the proceedings in Georgia and Alabama. Not exactly to run in parallel, but pretty close.

Okay. And then last question just on Georgia, maybe, you know, you guys have clearly highlighted some of the benefits, both economic and and customer rate benefits of the data centers. But, but then I think there's still been political noise. There., particularly, maybe more from the Democrats., mixed on data centers. Can you just give us maybe a little lay of the land there? And is there any kind of appreciation? Growing for, for some of the benefits to kind of offset some of this kind of pushback,, or reported alleged pushback?

Steve. I would, I would say, I would suggest you look at the open AI announcement. In terms of how that played out with that community as a highlighted the project, but they also highlighted along with us in terms of the rate stability that comes along and benefits that come along with the project. But also how they communicate kind of the, the. Economic community benefits that that align with that project. Yeah. I mean, there's noise. All across the country about, about, about data centers. But I think,, there's no moratorium across the state., and. Yeah, there may be some moratoriums in various counties, but, but I think you can continue to see progress activities,, projects move forward., in our territory., once again, I'll say we've got to do a better job. Hyperscalers need to do a better job of explaining., the benefits and value and,, dispelling,, some of the, the misinformation that's out there on social media., but say you continue to see the pipeline., continue to remain very full and continue to grow. And you continue to see projects advance and projects get approved., across our territory.

Hey, Steve. Great. Let me..

Oh, yeah. Please.

I'm sorry. Let me clarify one thing. I said. You you were asking specifically about open AI and collateral. And and I was talking about the entire portfolio. So I apologize for that., you know, the whole portfolio of, of 17 gigs, we got about $21 billion of collateral. So,, and I recognize you were speaking specifically to the open AI contract. So I just want to clarify that for you.

Yeah, no, that's very helpful. Thank thanks so much.

Anything else Steve?

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

Hey, Andrew.

Hey, everyone. Good afternoon., congrats on the. Open AI deal. Certainly a massive project. I want to follow up on the gigawatts of demand response. I agree that that's a great resource. And there was something we seen something similar in Michigan. But am I right that this is the first time you're doing something like that? And I know that the press release talks about long term savings for customers. Have you quantified that? And is it more about accelerating speed to market for the data center, or does the rest of the customer base see any benefits?

Of the customers say customer base will see benefits across the entire project? I mean, what we're doing is doing peak load periods, during high demand periods. We're able to shave the peak. And so as we operate this economic system on a minute by minute, second by second basis, we're always looking to put online the most economical resource to meet and serve that load. And so that is tremendous value and benefits to, to the entire system. Having that resource be flexible. So it's an incredible value, incredible benefit to the entire grid., as we operate our system.

Okay. Great. And was this the first time you've done that for a data center?

Yes.

Yes, yes it is. Yep.

Okay. Great. Hope to see more of it. And secondly, on equity, I know you've been pretty active. You settled 2 billion of the ATM that was priced in 2025. And your price you've priced 700 million. That will settle through 28. Are you able to give any guidance on how to think about the pace of equity, and when it'll actually hit over the next few years? I know there's a lot of moving parts there, and I don't expect you to get too specific, but how should we think about the year by year? Dilution and whether it'll be readable, or maybe accelerated any, any Color there would be very helpful.

I think you said it really well. There's a lot of moving parts in terms of making the decisions on how to draw those equity commitments. And keep in mind there available to us really at a few days notice., and so we have a great deal of flexibility to manage our liquidity,, over that period. But, you know, we generally want to shape that in terms of kind of mirroring, if you will, our capital outlays for the construction effort that we're going to have. But it also, dovetails into the to the plan to get near 17% FFO to debt by 2029., and I think we've settled about 2 billion,, in a, in, in recently. And that again, like I said, kind of,, helps us down the path of 17% FFO to debt. And. Bottom line, we just, we're going to continue to do this in the most shareholder friendly manner that we can protect the credit quality and,, and continue to, to draw on this as needs, needs and opportunities become available.

Okay. Fair enough. We'll model it out as we can. Thank you.

Thank you.

Thank you.

Our next question comes from the line of Julian Dumoulin-Smith with Jefferies. Please proceed with your question.

Julian.

Julian. Hey there sir.

Hey, what's going on, guys? Thanks for the time. I appreciate it very much.

Thank you very much Nice. Of course. Nicely done here., look, I wanted to take this in direction of of rates rate. Cases, etc.. I mean, obviously transposing this real ongoing success. How do you think about the opportunity here?. Georgia and Alabama, but especially in Georgia. Right. You know, obviously there's a regular cadence to these cases. And obviously there's a desire to maybe at times to, to update tariffs and rate structure, but is there an opportunity to come back with a, with a bigger rate credit here? I mean, obviously the number, I think from last year at this point was, was north of a half a billion. I mean, is there a way to again, do what you did before and effectively sidestep the revenue process here?

Julian let me say, as you know, we we don't get ahead of our regulators. We work very constructively with them kind of hand in hand. I mean, our goal at all times is to keep rates as low as possible for our customers. And so we are thrilled with how we're delivering rates, stability to our customers through 28., and so, I mean, as we, as we continue to sign these contracts, there are conversations that we'll have and have other considerations about what's possible. But I'm not going to get ahead of any process or any conversation with the Commission at this point in time. But yeah, growth provides us incredible opportunities to benefit customers. But also to continue to deliver rates to ability that I was listening to a lot of commentary yesterday after the fed decision, a lot of commentary about inflation and electric rates going up across the country. Electric rates are not going up in our in our territory. We're delivering rate stability to our customers. And that's something that we are thrilled and privileged to, to make available and provide to our customers that benefit the. Ability is savings. One of the things I try to remind ourselves is that being flat or being frozen there.

Was real kind of nominal benefits in terms of savings for customers. As we hold rates flat going forward.

Yeah. No, I mean, I clearly,, clearly have a demonstrated track record on that front., and then Alabama, how do you think about this, this growth transposing itself a, in terms of the process, like, how do you take this load growth and put it into rates? Again, I know you've got this rate cap. I mean, in theory, that's how you bring on some of the new capacity. I take it for the for the incremental three gigs. And then separately, is there some sort of equivalent thought process on that state in particular? I get that your comments earlier were a little generic to.

Yeah, you got it. I mean, they'll, they'll go through those traditional proceedings in terms of getting, getting, getting these projects and getting the load needed to be certified., through, through. The CMP process., and so as you know, they've made some changes in, the structure and size of the commission., they're going to have a new, secretary of energy in Alabama., they just gone through,, processes of kind of, I would say. Defying,, the procedures of how we are serving. Signing up these contracts. So Alabama, I think is, has a very orderly process about how to ,, approve. These contracts, but also then,, get these projects approved by the commission and get them in the rates as well as through the RFP process. So what do we say with three gigawatts?, as to long term about. The long term benefits for customers. So great opportunities in Alabama.

Awesome. Thank you guys. Really appreciate it.

Thanks. Julian.

Thanks, Julian.

Our next question comes from the line of Richard Sunderland with Truist Securities. Please proceed with your question.

Hey, Richard.

Hey. Good afternoon. Thanks for your time today. Just circling back to Southern Power. You know, I know you had some updates last quarter on this front. Curious about kind of the tone and interest on the remaining updates. And then the, the brownfield efforts. I think you tapped for an update later this year as well., you know, given the low trends, how's all that trending? And are you still thinking about having some sort of a Southern Power update this year?

Yeah., great question., we continue to evaluate those opportunities. I mean, the conversations that we're having with,, our. Counterparties as well as exploring opportunities with new counterparties at Southern Power,, are proving to be very fruitful. I'm looking forward to working through those, but, you know, keep in mind the, the business model under which we operate, southern Power, right? We don't go and build something and see who shows up. So it's a very disciplined and structured process. That we continue to engage in these conversations. So there's a lot of great potential out there to not just reprice the contracts that will come rolling off,, into the next decade, but also take advantage of the announcements that we made last quarter in terms of those updates. And as we continue to have those conversations and explore those opportunities with the current,. At Southern Power and potential new customers, then we'll, we'll have better clarity as to when and, and how we can execute on the additional updates that we alluded to.

But we look forward to giving you updates on activities., that's that that's occurring, that's under consideration at Southern Power. I think there's some real opportunities there.

For sure.

That's great to hear. And then I guess turning back to the script, you recognize you called out the sales growth on the quarter and thinking about some of the data center load added to the system recently. Any learnings you'd highlight from some of that ramp and the sales trends? And I guess in particular, how that might apply to your outlook for all this load growth. And, you know, running that through to the EPS growth guidance as well. Thank you.

I'll start by saying, I mean, one of the things we see is that, you know, we have to work very closely with these projects in terms of what their ramp rates are. They may not be what was projected when, when the when the projects were initially approved., but we work very closely with them in terms of kind of what those ramps will be. But once again, remember, remember, remember the minimum bills that we have. I mean, we kind of somewhat what we call decouple the revenue because we do have those minimum bills where from an operational standpoint, we have to work very closely with them in terms of understanding what their ramp rates are in terms of what the system implications are. But the bottom line is the load is very real. And so we know it's may not be there initially, but we know that it's coming.

And I might add that the the customers that we've been serving for a number of years, we're we have learned so much from their experience that has helped us inform these new contracts that we're signing. And so, you know, like Chris mentioned, the protections that we've put in place for customers and the company in terms of the minimum bills, that is really, we think, going to be a distinct advantage going forward that will protect our customers and the company in terms of ,, that, that type of stability that we're trying to deliver. And the, you know, we've crossed over the 1000 megawatt line, this particular quarter, and the growth has just been fantastic in that portfolio of data centers and large customers that we're currently serving. Really exciting.

It's great. I appreciate the time today. Thank you.

Thank you.

Our next question comes from the line of Travis Miller with Morningstar. Please proceed with. Your question.

Hey Travis.

Hey. Thanks for the time. You're welcome back to going back to the open AI project. I wonder if you could talk a little more about what made that location unique and why both you and open AI decided that that location could handle a project of this size, and then secondly, build on that. Are there other areas in your service territory or what are the other areas where a project of that size can be constructed and, and operational in such a short time?

Yeah. I mean, I it's these projects and the processes of economic development, it's a lot of, it's a lot of courting, a lot of evaluations of sites and locations and geography, topography. Location to infrastructure, electric infrastructure, facilities and other energy resources being available. I mean, so it's not a set criteria, but there's a lot of kind of investigation of sites to see what works for the projects that that these companies want to want to construct. And so, and we're glad when they work out. We're also thrilled that we have a number of meaningful sites that are available for additional consideration. Across our entire service territory., not. Not going to give you kind of exactly where those sites are. I mean, that's a lot of that's kind of protected., but know that we have additional opportunities ,, for, for similar projects. I mean, the Savannah area. The economy there is very strong with,, the Hyundai plant., that is, that is there and continues to, to grow and expand., the port of Savannah., that continues to kind of lead this country and, and, and activity,, from a shipping standpoint. So, Savannah, Effingham County,. Those areas,, have, have proven to be just a wonderful sites for economic activity..

Understood. Yes. Thank you. And then one real quick one. In terms of meeting any future equity needs as you add to the CapEx, any interest in taking minority interest investment or another partner to meet some of those.

You know, we look at a lot of different structures, but at the moment, we just don't see that as a need., love the cards that we have., love the opportunities that, that we've had in terms of,, issuing the securities and the receptiveness in the marketplace. I just don't see that as a need for us, at least for the foreseeable future.

Got it. Okay. Thanks a lot.

Thank you.

Thank you.

And that will conclude today's question and answer session. Sir, are there any closing remarks?, just let me thank everybody for for joining us today., let me conclude by saying this is an incredibly exciting first half of the year for Southern Company. And it sets us up for the rest of the year. But I also think it speaks to what a bright future we have. And so thank you for joining us today. Have a good rest of the day.

Thank you sir. Ladies and gentlemen, this concludes the Southern Company second quarter 2026 Earnings call. You may now disconnect.