The Southern Company (SO) Q2 2025 Earnings Call Transcript

The Southern Company (NYSE: SO) Q2 2025 Earnings Call dated Jul. 31, 2025

Corporate Participants:

Greg MacLeod — Director, Investor Relations

Christopher C. Womack — Ch, President and Chief Executive Officer

Dan Tucker — Chief Financial Officer

David P. Poroch — Executive Vice President and Chief Financial Officer

Analysts:

Carly Davenport — Analyst

Steve Fleishman — Analyst

Julien Dumoulin-Smith — Analyst

Nick Campanella — Analyst

Andrew Weisel — Analyst

Jeremy Tonet — Analyst

Bill Appicelli — Analyst

Anthony Crowdell — Analyst

Angie Storozynski — Analyst

Presentation:

Operator

Good afternoon. My name is Kevin, and I’ll be your conference operator today. At this time, I’d like to welcome everyone to the Southern Company’s Second Quarter 2025 Earnings Call. All lines have been placed on-mute to prevent any background noise. After the speakers remarks, there’ll be a question-and-answer session [Operator Instructions]

I would now like to turn the call over to Mr.Greg MacLeod, Director of Investor Relations. Please go ahead, sir.

Greg MacLeod — Director, Investor Relations

Good afternoon, and welcome to Southern Company’s second quarter 2025 earnings call. Joining me today are Chris Womack, Chairman, President and Chief Executive Officer of Southern Company; and David Poroch, Chief Financial Officer.In addition, Dan Tucker, who recently announced his retirement as CFO of Southern Company after nearly three decades with the Company is also joining us for the call today.

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 the 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 are available on our Investor Relations website at investor.southerncompany.com.

At this time, I’ll turn the call over to Chris.

Christopher C. Womack — Ch, President and Chief Executive Officer

Thank you, Greg, and good afternoon, and thank you for joining us on today’s call. As you can see from the materials that we released this morning, we reported strong adjusted earnings results for the second quarter, meaningfully above the estimate provided last quarter, and we remain on-track to meet our financial objectives for 2025.

These results reflect the combined efforts of many employees across the Southern Company system, who consistently work to deliver clean, safe, reliable and affordable energy to our customers. Our operations team, generation fleet and power delivery system have demonstrated exceptional performance throughout the first half of the year.

Just this week, during an extreme heat wave, our system with the support of our dedicated team met the year-to-date peak load of nearly 39 gigawatts with no major issues. Our success call is testament to our vertically integrated state-regulated business model with long range integrated resource planning processes, which continue to deliver substantial value to our customers and the communities we are privileged to serve.

Providing outstanding reliability and affordable service to our customers is fundamental and just one example of why Southern Company truly is a great company and continues to find ways to improve and get better.

Dan, I’ll now turn the call over to you for an update on our financial performance.

Dan Tucker — Chief Financial Officer

Thanks, Chris, and good afternoon, everyone. For the second quarter of 2025, our adjusted earnings per share was $0.92 per share, $0.07 above our estimate and $0.18 lower than the second quarter of 2024. Our performance for the current quarter included increased earnings from investments in our state-regulated utilities, along with higher usage and customer growth, which added $0.06 year-over-year compared to the second quarter of 2024.

These positive drivers were offset by milder weather, prior year gains on transmission asset sales and current year state tax credit adjustments, along with higher operating costs, interest expense and, depreciation and amortization. A complete reconciliation of year-over-year earnings is included in the materials we released this morning. Our adjusted EPS estimate for the third quarter is $1.50 per share.

Turning now to our retail electricity sales. Year-to-date weather-normal retail electricity sales were 1.3% higher than the first half of 2024. Year-over-year retail electricity sales growth increased modestly across all customer classes in the second quarter, growing 3% from the second quarter of 2024.

Weather-normal residential sales were up 2.8%, higher than in the second quarter of 2024, bolstered by the addition of over 15,000 new electric customers in the quarter and higher overall use per customer. Weather-adjusted commercial sales and industrial sales, which were 3.5% and 2.8% higher respectively in the quarter compared to the prior year, were driven by the combination of increased existing customer usage and new large load customers coming online. Notably, data center usage was 13% higher compared to the second quarter of 2024. Industrial sales to our largest customer segments also saw robust growth in the quarter, including transportation and primary metals, which were both up 6% year-over-year and paper, which was up 16%.

I’ll now turn the call back over to Chris for further insights into our economic activity and to highlight recent constructive outcomes for some of our regulatory processes.

Christopher C. Womack — Ch, President and Chief Executive Officer

Thank you, Dan. While we continue to monitor macroeconomic trends, the economy in the Southeast remains well positioned with unemployment rates and recent population growth in our service territories better than national averages. Economic development activities in the second quarter continued with announcements totaling nearly $2 billion of capital investment and more than 6,000 new jobs announced in our electric service territories.

Of note, in Alabama, there were several economic development announcements led by continued expansion in the aerospace and automotive sectors. Industrial manufacturing developments in Mississippi included the announcement of an expansion by domestic manufacturers specializing in electric transformers, which is expected to create 400 local jobs.

The large load pipeline across Alabama, Georgia and Mississippi, which includes data centers and large manufacturers remains well above 50 gigawatts of potential incremental load by the mid-2030s. With project commitments totaling 10 gigawatts and ongoing advanced discussions for even more, interest from large low customers in all of our electric service territories continue to be strong and growing, and we’re increasingly well-positioned to serve this robust projected growth in a sustainable fashion.

As we have consistently communicated, our disciplined approach includes pricing and contract terms designed to protect existing customers and our investments, while also generating economic benefits for all customers. In May, Georgia Power and the Georgia Public Service Commission, Public Interest Advocacy Staff along with several other interveners reached a settlement, that demonstrated the reality of these economic benefits for customers.

The stipulated agreement, which was unanimously approved by the Georgia Public Service Commission, extend Georgia Power’s 2022 Alternate Rate Plan, ultimately precluding the need for a 2025 base rate case filing and keeping base rates stable and predictable over the next three years through 2028, with the exception of any future recovery of storm-related costs, including those related to Hurricane Helene.

Overall, this outcome demonstrates our commitment to capturing the benefits of this robust projected economic growth and prioritizing customer affordability. We believe this outcome, which preserves the existing regulatory framework in Georgia benefits all stakeholders.

Our vertically integrated market and constructive — constructive orderly regulatory processes continue to help ensure we have the critical resources necessary to reliably and affordably serve our growing states. Earlier this month, the Georgia Public Service Commission unanimously approved a stipulated agreement between Georgia Power and the Georgia PSC Public Interest Advocacy Staff regarding Georgia Power’s 2025 Integrated Resource Plan or IRP. This approval provide it for continued investment in existing fleet with plant life extensions at multiple steam units, upgrades for more capacity at existing nuclear and natural gas facility and the modernization of hydro facilities to increase out — to increase output and extend life.

The 2025 RFP outcome also further highlighted and confirmed the need for new generation resources previously approved in our prior RFPs as we build to serve projected growth. Under the approved IRP, Georgia Power received authorization to provide generation procurement options for at least 6 gigawatts to meet increasing Georgia Power system demand. In accordance with the IRP process, yesterday, Georgia Power filed a certified 8 gigawatts of new generation resources resulting from the All-source request for proposals or RFPs. This competitive process, which was overseen by an independent evaluator resulted in a mix of purchase power agreements or PPAs and multiple Georgia Power-owned resources being selected as the best choice for customers to meet the projected incremental capacity need by 2031.

Of these, approximately 1.2 gigawatts of the awards were for third-party PPAs, including 732 megawatts from existing Southern Power capacity. The remaining 6.8 gigawatts is a mix of Georgia Power-owned resources from a variety of technology types, including new combined cycle natural gas facilities, standalone battery energy storage systems or BESS and solar power best options.

Further, to meet the total capacity need identified as a part of Georgia Power’s 2025 RIP load forecast, Georgia Power also requested certification for approximately 2 gigawatts of additional generation capacity through a supplemental filing. This includes 1.6 gigawatts from third-party PPAs with the remainder consisting of Georgia Power-owned resources to address near-term projected generation needs.

In summary, Georgia Power has filed requests to certify approximately 10 gigawatts of New generation, which includes 7 gigawatts of Georgia Power-owned resources. These requests will be reviewed by the Georgia PSC with the final determination by the Commission expected later this year. I’ll now turn the call over to David to share more about the capital investment and financing implications associated with these orderly regulatory processes.

David P. Poroch — Executive Vice President and Chief Financial Officer

Thanks, Chris. Good afternoon, everyone. Earlier this year, in addition to our $63 billion five year base capital plan, we highlighted $10 billion to $15 billion of projected potential incremental regulated capital investment through 2029. With the approval of Georgia Power’s 2025 IRP, along with the certification filings for new resources, we now have improved line of sight on our expected capital opportunities and are adding $12 billion of state-regulated capital into our five year base capital plan. This represents the capital investment associated with the low end of the 6 gigawatt to 10 gigawatt range for new resources from the certification processes Chris mentioned earlier, along with investments associated with upgrades and modernization of existing resources approved in the 2025 IRP.

Should the Georgia PSC confirm the need for and ultimately certify the entire 10 gigawatts of new generation, there could be up to an additional $4 billion of new state-regulated generation capital through 2029. Separately, Southern Power, our competitive power business, has commenced repowering at three additional wind facilities in our existing portfolio, all of which have begun construction and are projected to be in-service by the first half of 2027. These projects represent approximately $800 million of additional investment, which is now included in our base capital plan.

In total, our five year base capital plan has increased $13 billion from $63 billion to $76 billion with potential upside of approximately $5 billion still pending tied to the generation procurement certifications in Georgia and potential FERC-regulated gas pipeline expansions at Southern Company Gas.

We remain committed to funding our capital plan in a credit supportive banner that supports our strong investment-grade credit ratings. As we highlighted in our May earnings call, our financing activity through the first quarter along with our internal equity plans projected through 2029, resulted in a clear path to fully address the $4 billion equity needs in our original $63 billion base capital plan. The increase in our base capital plan of $13 billion is projected to be funded with approximately 40% of additional equity or equity equivalents, which represents an incremental $5 billion through 2029. This level of equity content supports our credit quality and our progress toward our credit metric target of approximately 17% FFO to debt in the latter part of our forecast horizon.

In fact, we’ve continued to be proactive in addressing our equity needs, pricing an additional $1.2 billion of equity through forward sales under our at-the-market or ATM program since our last earnings call, leaving less than $4 billion of the incremental need remaining to be addressed through 2029. These remaining equity needs are easily manageable for a company our size. Considering just in the last six months, we’ve addressed well over $3 billion of equity and equity equivalents through our ATM program, internal equity plans and issuances of junior subordinated — subordinated notes.

As we’ve highlighted today, we continue to make great progress in solidifying our plan and remain increasingly encouraged about the strength of our long-term outlook. And ultimately, the potential to reassess the base for our 5% to 7% long-term EPS growth rate as early as 2027.

I’ll now turn the call back over to you, Chris.

Christopher C. Womack — Ch, President and Chief Executive Officer

Thank you, David. As you can see, we are building for growth in the Southeast and our vertically integrated markets with constructive regulation and transparent orderly regulatory processes are proving foundational to meet this predicted growth in a disciplined fashion that benefits the states in which we operate and the customers we are privileged to serve. This is an exciting time at Southern Company. We have accomplished a lot so far in 2025 and our future has never looked brighter.

Before we turn to questions, I’d like to highlight our commitment to investing in and developing our people at Southern Company. We are where we are. Thanks to our dedicated leadership team and our thousands of customer focused committed teammates across the enterprise. Collectively, they help each and every day to ensure, we’re making the right investments, running our business efficient — our business efficiently and effectively, and keeping customers at the center of everything we do. Sustained long-term success is a function of investing in our people and building a deeply talented bench.

Our recently announced CFO transition, along with the other leadership announcements we’ve made in recent weeks is a great example. While we have Dan around for a period of time advising and helping with the smooth transition, I’m very pleased to have someone as experienced and talented as David stepping into the CFO role to continue with our mission to deliver regular, predictable and sustainable results.

I do want to congratulate Dan on an incredible career with Southern Company, and I want to thank him for everything he has done to support our Company’s success. For three decades, his counsel, his strategic advice, his leadership and his friendship have been foundational in helping our team seize the bright future ahead of us. One of the things I’ve always admired about Dan is his passion for developing our future leaders and that’s a legacy he’ll certainly leave behind. I’m honored to call Dan my respected friend. And while this presence will be greatly missed, we wish he and Chelsea, the very best as he embarks on a well deserved retirement.

Operator, we’re now ready to take questions.

Questions and Answers:

Operator

Certainly, we will now be conducting a question-and-answer session [Operator Instructions] Our first question is coming from Carly Davenport from Goldman Sachs. Your line is now live.

Christopher C. Womack

Hey, Carly.

Carly Davenport

Hey, Chris. Thanks so much for taking the time. Just maybe to start on the capital plan update and the shift in the rate base growth to 8% from 7% through ’29. Just any shifts potentially in the timeline as we think about the rebasing in ’27 or the views on the long-term growth rate there? And then just tactically, would you expect to give another full financial plan update on the 4Q call as well?

David P. Poroch

Sure. Sure. Hey, good afternoon. Thanks for your question. Let me take the second question first. And yes, we will expect to continue with our normal cadence of doing annual updates. So we’ll address all that in the fourth quarter. As it relates to the rate base growth and the timing, we continue to be increasingly encouraged about, what we’re seeing in the marketplace, the momentum that we’ve seen with these large load customers is growing and we’re attracting many of them and having some very good conversations about those.

I think that we’re going to stick to the plan of sustainability over the long-term. We need to see how this plays out. We need to see it be in a sustainable pattern over the long-term and then we’re going to be revisiting that set point within the 5% to 7%.

Carly Davenport

Great. Thank you for that. And then just on the RFP update, some combined cycle capacity filed for certification there as part of the plan. Can you just refresh us on your procurement status in terms of turbines and also gas supply for those units to come into service in the ’29, 2030 timeframe?

Christopher C. Womack

Yeah, Carly, we have — we have reservations. We’ve made — made payments for the — we paid the fees and because of our size and activity that we’ve had for the past number of years, we have good relationships with — with OEMs of also the EPCs in terms of how this work will be carried out.

So we feel real good about where we are and making sure that, we’re positioning ourselves to be very efficient, but also making sure we have the ability to execute.

Carly Davenport

Great. I appreciate that. And Dan, congratulations on your retirement and thanks so much for all the insights over the last couple of years.

Dan Tucker

Yeah. Thank you, Carly.

Operator

Thank you. Next question is coming from Steve Fleishman from Wolfe Research. Your line is now live.

Christopher C. Womack

Hey, Steve.

Steve Fleishman

Hey, Chris. Dan, man you’re leaving me leaving me one of the old ones here, but congrats and David, congrats to you as well. So.

David P. Poroch

Thanks, Steve.

Steve Fleishman

A couple questions. First, just maybe I think on a couple of the prior Q&A calls, you’ve talked about the kind of rebase in ’27, maybe towards the top end of the 7% — 5% to 7% going back to, I don’t know, 25% and then kind of high end of 5% to 7% from there. Is that still what you’re thinking or has that shifted a little bit?

David P. Poroch

Yeah. Yeah. I think where we’ve come out on that, and I think we’ve been pretty consistent. Dan has been pretty consistent with that in the last several calls about rethinking that base upon which we set the 5% to 7% growth. And as I mentioned earlier, as we see that momentum growing and we get a better line of sight in a sustainable fashion, we’ll recalibrate that and be within the 5% to 7% and work toward that. It could happen as early as 2027, but there’s a lot of variables at play and we like what we’re seeing at the moment, but we really don’t see that happening before 2027.

Dan Tucker

Yeah. Steve, we are where we were. And I think as David described earlier, we’re gaining better line of sight on the things that we were looking for, but we are where we are.

Steve Fleishman

Okay. And then on the FFO to debt improvement, could you maybe give us a sense of how kind of the year-by-year rough pace of getting to the 17%? Like where do you expect to be in 2025, ’26 and then when do you get to the 17%?

David P. Poroch

Well, we expect to get to the approximately the 17% near the back end of the planning horizon. And with the capital that we’ve — we see coming down the line, that path is going to be up and down a little bit and the pace and the shape of that may change over time, but we’re going to continue to be very proactive and take advantage of opportunities as we see them as we grow into that 17% FFO to debt.

Steve Fleishman

Do you have a rough number where you are like right now, at the end of the quarter?

Dan Tucker

Yeah. For the 12 months ended, Steve, I remember when we were talking about this before, we kind of gave a — here’s the unadjusted number, here’s a number adjusted for Helene. Right now, we’re in the kind of 14.3%, 14.4% unadjusted, more like 15.3% adjusted for the Helene. And I think what’s important and David hit this is, how proactive we’re being with this equity plan.

We hinted as we talked about this before that, increased capital could kind of change the shape of the trajectory for this path to 17% and I think that’s what you’ll see play out. But having the equity issued now kind of, if you adjusted for the equity we’ve committed to, that’s another 70 basis points or so on today’s number.So we feel good about the progress and the commitment and how we’re executing against that.

Steve Fleishman

Okay, great. One last question. Just, how much are you maybe looking also at asset sales? And I think there have been some stories out about Power Secure on that regard. Could you just talk to asset sales?

Christopher C. Womack

Steve, I know you wouldn’t be disappointed if I say, we’re not going to comment on any rumors or anything specific. But as you know, we’re always evaluating. I mean, if there’s a better owner and they’re willing to pay, we’ll be a great seller in those circumstances, but I think it’d be very premature for us to comment and speculate on anything that you may heard or maybe consider talked about in the marketplace today.

Steve Fleishman

Okay. Understood. Thank you. Congrats again.

Christopher C. Womack

Thanks, Steve.

David P. Poroch

Thank you.

Christopher C. Womack

Always good to hear from you.

Operator

Thank you. Next question is coming from Julien Dumoulin-Smith from Jefferies. Your line is now live.

Christopher C. Womack

Hey, Julien.

Julien Dumoulin-Smith

Hey, Chris. Thank you very much. Appreciate it. Dan, David, truly, congratulations to both of you. Wish you the best of luck there.

Dan Tucker

Thank you. Thanks for having you on retirement.

Julien Dumoulin-Smith

Absolutely. Guys, nicely done today, I got to say. Just a couple of details here. Can we talk firstly about load and the load update? I think you guys are going to refine that here later this year. Can you talk about what you’re seeing? You guys have been very diligent in providing commentary about the pipeline. We certainly heard that from peers thus far with the earnings. How are you guys thinking at least as it stands today with respect to what you would anticipate, I think in October? And then related, I suppose you’ve got this further affirmation from the PSC on a couple more gigawatts or I think that was the $4 billion number you guys threw out there as further potential in the commentary.

Christopher C. Womack

Yeah. And on that number, I think we’ll expect to hear from the Commission later this year, I think by before end of the year on that filing. As we — as we’ve said, I mean, we still see that 50 gigawatt pipeline continuing to grow. And we continue to see just incredible amounts of activity. And as you see hyperscaler capital budgets continuing to grow, I mean, we just keep seeing these huge numbers, we see corresponding activity.

And so, we’re in conversations with all of the majors, all the hyperscalers and having, what I would call very advanced discussions. And so we still got work to do. I mean, our focus is making sure we price them right that there are benefits to existing customers. And so — but we I would say, very optimistic about what the future holds in these conversations and opportunities that we see available all across our electrics.

Julien Dumoulin-Smith

Got it. Okay. Fair enough. We shall see what happens in fall. And then maybe related here, as you think about that rate base versus earnings translation here, any other factors that you could point to here, especially as you think about it? I heard your comments about repowering at Southern Power, but especially as you roll forward the plan here, any updated thoughts about where those contracts could land and/or maybe on the on the pipeline side, any updates there as to opportunities in terms of size and scale? Again, I’m just thinking through the rate base commentary here and subsequent implications to earnings, right? What are the other factors?

David P. Poroch

Sure. So the conversations that we’re having with the large load customers are going well, very interested in all of our service territories, lot of attraction. Obviously, we’ve talked a lot about Georgia, but Alabama and Mississippi having great conversations there as well. So as we get more clarity to that, like I mentioned earlier, we’re going to get to a place where we feel comfortable over the long-term that momentum is sustainable and that’s going to bring us to a place where we see the possibility of being able to reset that anchor point, if you will, within the 5% to 7%.

Now Julien, you also asked about Southern Power and some of those repowering projects that we’ve got going on there. That is just — that’s a great company and we’ve got a lot of opportunities that we’re thinking about in the marketplace with all that’s going on with the large load customers. But as we see them, we evaluate them. Keep in mind, as we’ve talked about probably for years that we do not get a hold of or get in front of ourselves. We don’t put placeholders in our capital plan. Whatever projects that we find that we want to go explore, they’re going to have to meet some pretty strict stringent risk return parameters that we follow and have historically followed.

But one interesting thing to think about is, you look into the next decade, as we get into the early 2030s, there’s several contracts that will come up for renewal at Southern Power and what we see in the marketplace, there should be — we expect the possibility of some really good opportunities to reprice a lot of that capacity in the early part of the next decade.

Julien Dumoulin-Smith

Right. So maybe more ripe by the time you get to ’27 with that longer term roll forward to the rebase?

David P. Poroch

That’s right. That’s kind of the plan that we’ve been set on for a while.

Julien Dumoulin-Smith

Yeah, absolutely. I’ll leave it there, guys. All the best. Speak to you.

David P. Poroch

Awesome.

Julien Dumoulin-Smith

Thank you.

Christopher C. Womack

Thank you.

Operator

Thank you. Next question today is coming from Nick Campanella from Barclays. Your line is now live.

Christopher C. Womack

Hi, Nick.

Nick Campanella

Hey, good afternoon. Thanks for all the updates. Congrats again on your retirement and congrats to David. Looking forward to work with you. So, hey, I just had a follow-up actually on Southern Power. I was just wondering, now that you’re kind of committing more capital there, just how would you frame the returns compared to your core regulated business? And then, I know it’s just a much smaller part of the business, but just in like a post-OBD world, how are you kind of framing the returns for, contracted renewables? Thank you.

David P. Poroch

Sure. Yeah, great to hear from you. As we talked about, we have a pretty stringent risk return parameter. We try To set these things up with long-term creditworthy counterparties, try not to take fuel risk and that usually plays out for us to be a little bit higher than our state-regulated returns historically and we see these opportunities giving rise to perhaps expanding that in the future. But like I said, we — there’s a needle to get through when we work through these things. The risk reward has to be right and the credit metrics have to be right for the counterparty, but we do explore opportunities all the time there.

Nick Campanella

Okay. No, thank you. And I guess in the IRP, there were nuclear upgrades contemplated here. Just wondering, where the conversation now kind of stands on new nuclear overall. Have those discussions picked-up with the recent momentum we’ve seen in the industry and the executive orders. Just I guess, we’ve talked about this before, but where do you guys kind of stand now and your position on that? Thanks.

Christopher C. Womack

Yeah, Nick. Yeah, Nick, we’ve been very clear about the need for new nuclear in this country. And so talks with the administration, talk with hyperscalers all across this country, we speak the virtues of the importance of new nuclear as we — the success that we had with 3 and 4 in terms of bringing those two units online. I mean, I still think we’ve got a — we’ve got to complete the risk mitigation, the financial concerns of that are there on the back end. We’ve got to make sure, there’s financial certainty as those projects are pursued. And so we continue to have those kind of conversations amongst ourselves, but throughout the industry.

But we continue to believe that, for this country to respond to the incredible demand we see, new nuclear has got to be a part of the — a part of the solution set going forward. And we’ll continue to talk about it and continue to advance ideas to try to make it happen and to get it done.

Nick Campanella

Okay, great. And just one last one if I could follow-up on Julien’s question, but you still expect a large load update filing in August and would that would be higher than kind of the 52, that we talked about in the past?

Christopher C. Womack

Yeah. Yeah. I mean, we will give updates and as we see success, and as we see these projects advance, we’ll make sure that we — that we have updates. We’ll continue to keep — keep you abreast of where we are and what’s occurring and also let you know what we see in the marketplace. We think the intelligence and market analysis about what’s occurring as this — as this market continues to advance, we’ll continue to share.

Dan Tucker

Yeah. Drove in the pipeline, Nick, but just remember, our disciplined approach is going to risk adjust that and that’s what you’ll see us planning for and working with the Commission.

David P. Poroch

Yeah. And just to clarify, we’ll make that filing in the mid-August timeframe with the Georgia Public Service Commission and then we’ll follow-on in September, through the RFP and the certification process that will provide an updated load forecast that will reflect what we see in the marketplace as well.

Nick Campanella

All right. That’s great. Always interesting to see those filings. So, thank you. Appreciate it.

Operator

Thank you. Next question today is coming from Andrew Weisel from Scotiabank. Your line is now live.

Christopher C. Womack

Hey, Andrew.

Andrew Weisel

Hi, everybody. Congrats to everyone going that sentiment. First question is on the gas plants. I see you’re planning to build some new units by 2029 or 2030, but you’re also planning to add combined cycle plants under PPA as early as 2028, how confident are you in those counterparties ability to execute on timing? It seems a little aggressive from an EPC and turbine delivery perspective. What assurances or protections do you have in place?

Dan Tucker

Yeah, that’s existing capacity, Andrew. So those are just — that’s available capacity in the marketplace, that’s rolling off of a PPA that’s serving some — either already serving Georgia Power and expiring or serving someone else.

Andrew Weisel

Perfect. Okay, great. And then the other question is, obviously, three years ago, you had an IRP and then demand was still robust, you needed to do the 2023 update. Now, that the 2025 process is complete, how are you feeling about the outlook for demand and it’s sticking for at least the next three years. Obviously, it’s a moving target. I think you said, you’ll share a refreshed load growth target with us in six months. Maybe just high level thoughts on, how much buffer or excess reserve margin or just how are you thinking about it now that this year’s process was settled?

David P. Poroch

Sure. Yeah, great question. I mean, if you look at the result of the 2025 IRP approval, we’ve got an incremental generation need that was acknowledged and agreed to in the stipulation and approved by the Public Service Commission. And then we’re going to be in this pattern of repeatedly updating, what our large load pipeline looks like that will at least in September, but perhaps more often come with updates of our load forecast. And we’ve got this structure that is going to exist at the Georgia Public Service Commission that is orderly, it’s thoughtful, there’s good deliberation of what is submitted and but it also has a degree of flexibility to it as well. So we filed the 2025 IRP, but we are not at all precluded if circumstances warrant from doing an update to that as well.

Andrew Weisel

Okay. Sounds good. Nicely done, turning what was supposed to be a very noisy year into a pretty smooth one so far. Thank you very much.

David P. Poroch

Thank you.

Dan Tucker

Thanks, Andrew.

Operator

Thank you. Next question today is coming from Jeremy Tonet from JPMorgan. Your line is now live.

Jeremy Tonet

Hi, good afternoon.

Christopher C. Womack

How are you doing?

Jeremy Tonet

Good, thanks. Congrats, Dan, David as well. Dan, we will miss you. First want to start with Alabama, Mississippi a little bit here. You touched on the economic momentum there. I was just wondering, if you could speak to when these tailwinds could possibly translate into incremental investment opportunities there.

Christopher C. Womack

I think it’s going to be very difficult to speak exactly when all that exactly shows up. I can just say to you that, we’re in the midst of advanced discussions on a number of projects. And so I mean, there’s work being done there. And so as it advances, we’ll advise you and let you know, but good conversations, good activity, good strong pipeline. I mean, we’ve talked about some of the economic projects, the Airbus and some others that have announced development expansions. I think we’ve spoken to some of those, but there’s just a good strong solid pipeline of activity, that’s occurring there that I think is moving to some advanced discussions.

Dan Tucker

And some of that investment that you’re asking about is already occurring. Certainly, I think we spoke in a prior quarter about over 1,000 megawatts of data center projects across those two states. There’s the transmission and distribution investments that are already happening there. You’ve seen Alabama Power acquire and have other pending acquisitions on generation resources to serve their growing load. So it’s happening. It’s just — it’s a little — it’s been a little less front and center than all this stuff happening in Georgia lately.

Jeremy Tonet

Got it. Thank you for that. And then just wanted to pivot to the FERC gas pipeline expansion potential there. Just wondering, what visibility you have there? What are the gating items left.

Dan Tucker

So as a reminder, so this is largely our investments with Kinder Morgan. We have another investment that we co-own in North Georgia. And as you can imagine, they are tied to a lot of the same things driving our utility investment. So it’s around new combined cycle construction. It’s around large load growth and just load growth overall in the area, it’s not just our utilities, it’s the co-ops, it’s the munis being served as well. And so, the upside potential is really a function of what will be built where ultimately to serve this large load?

Jeremy Tonet

Got it, understood. Thank you for that. And then just a last one, if I could, as it relates to the equity needs there. Just wondering, thoughts on using forwards to kind of derisk the outlook there?

David P. Poroch

Well, it’s really not appropriate to talk about specific structures or timing. But we’ve got a lot of flexibility. We’ve demonstrated that there’s multiple tools, if you will, in the toolbox that we can implement. And I think we’re going to continue on that path and be proactive and take advantage of opportunities whenever they present themselves to achieve the equity needs that we have over the horizon.

And to your point, I think technically, it may be worth pointing out that our ATM program, it really is a forward. I mean we are locking in a price, if you will, today for securities that we’re transacting that will be delivered in the future. So to your point, I think we are utilizing that flexibility.

Jeremy Tonet

Got it. Makes sense. Thank you. I’ll leave it there.

Operator

Thank you. Our next question today is coming from Bill Appicelli from UBS. Your line is now live.

Bill Appicelli

Hey, good afternoon. Thanks, Dan, for all the great work over the years. You’ll be missed. The — just to clarify on a question that Steve asked earlier around the financial guidance. So the outlook is to see where you shake out in the current 5% to 7% through ’27, right, and then rebates the 5% to 7% off of that number. That’s the intention?

David P. Poroch

Yeah. Yeah. I wouldn’t necessarily put a specific date on the calendar for that. I mean, it could be as early as 2027. But like I said, there’s a long list of things that need to come to fruition. We need to see the continuing momentum solidify and be sustainable over the long period. So that could be 2027, when we rebase the set point with within the 5% to 7% targets. But we’re not going to get ahead of ourselves there. We’ve got to wait to see how these things that we see on the horizon come to fruition.

Bill Appicelli

Okay, understood. And then just a question higher level around the trends on generation costs, right? So we’ve seen the cost of combined cycles and peakers obviously, materially escalate over the last couple of years. I mean in the conversations and in your own financial planning for some of this generation, future needs. I mean, what are you baking in? Is the expectation these costs are going to continue to increase materially or do we — is there some — as capacity comes on from some of the developers, manufacturers, is it going to stabilize? I mean, what is your view in terms of how you plan for that?

David P. Poroch

Yeah. I mean, you’re kind of seeing the same things that we’re seeing out there in the marketplace. You’re absolutely right that, prices are going up, but we’ve got placeholders and reservation fees in there and we’re going to react accordingly and be prepared to be able to deliver the capacity that we need in the timelines that we’ve committed.

Christopher C. Womack

But as you know, there’s a lot of demand out there. And so there’s a lot — there’s a lot of upward pressure that we see in the marketplace.

Bill Appicelli

Okay. All right, great. That’s it from me. Thank you.

Christopher C. Womack

Thank you.

Operator

Thank you. Next question is coming from Anthony Crowdell from Mizuho Securities. Your line is now live.

Christopher C. Womack

Hey, Anthony.

Anthony Crowdell

Hey, good afternoon, everyone. Congrats, Dave, Dan. Congrats. Really appreciate all the time you gave us over the years. I just have like one follow-up. I think it’s been thematic for the whole call, the questions. I’m just trying to balance out the conservative approach of management versus maybe the uncertainty that you guys maybe think about achieving a higher growth rate. Like you have such firepower and capex in a big raise today, but like, hey, maybe not until 2027 at the earliest and still not looking to like anchor that in. I’m just curious, if you could help us balance that out and we clearly understand, you guys have always approached a conservative.

David P. Poroch

Well, I think you hit it right there. You obviously do know us, and I appreciate that. You’re absolutely right. We’re going to take this in a conservative manner. We’re seeing the growth accelerating, having great conversations with a lot of potential large load customers and we see a lot of this come to fruition in the back half of the decade. So, we’ve got to see how this plays out.

Also keep in mind, we are a fairly big company and it takes a lot to move us. And so we need to see that momentum get to a place where it can carry us in a sustained way where it makes sense for us to change that long-term outlook.

Anthony Crowdell

Great. Thanks so much. Chris, I always sort of view it to Paul Simon and Dan as the Art Garfunkel. So no worries going forward.

Christopher C. Womack

Hey, Anthony, but we’re still slinging, we’re still performing.

Anthony Crowdell

Absolutely, absolutely.

Christopher C. Womack

Dan is still together.

Operator

Thank you. Next question is coming from Angie Storozynski from Seaport Global. Angie, please go ahead.

Christopher C. Womack

Hey, Andy.

Angie Storozynski

Thank you. How are you? So I’m just wondering, I mean, you clearly have this unique cost of capital advantage in the entire industry that usually comes with a — well, with more pressure, but also premium growth prospects. You are sticking with your current range again for the time being, but there are other ways to create upside to earnings, asset acquisition, corporate acquisitions. I mean, there’s — you clearly have experience in developing generation assets. Some of your peers are starting to do what basically Southern Power has done in the past. So either expanding existing assets or building greenfield gas plants, again, again using your skills. So you’re not going into any of this, is it just because you’re not planning to do it or is it just because you don’t want to sort of project the options that are that lie ahead.

Dan Tucker

So, first Angie, I think we should get you to come tell our story for us sometime soon. Look, it’s — it’s just our nature and it kind of goes back to what Anthony said. We’re not going to get ahead of ourselves. We do have tremendous opportunities here. Yes, Southern Power remains an opportunity not only to recontract the existing fleet, but to potentially build new green or brownfield sites as all this growth is — is happening. But as part of our discipline in our outlook, because we are a regular utility holding company, we don’t put placeholders in there for Southern Power. We’re not a development company even though we are incredibly skilled at it. It’s just how we have approached this historically. It’s how we’re trying to approach this going forward.

And I think David described it incredibly well. This is about us having the discipline to assess whether or not, what we see is sustainable for the truly long-term and not temporary in nature, which we don’t believe it is, but we want to be sure. And as we are, you’ll see us kind of acknowledge the incredible upside that we think exists in our outlook.

Angie Storozynski

Okay. And then, just the other thing is, so we heard from some other vertically integrated electric utilities, right there? They can name specific projects that are coming to their service territory and those announcements are being made along with those utilities. In your case, I’m not complaining that there hasn’t been enough activity on the data center side in Georgia or Mississippi, but fewer of those are sort of done along with your state utilities. Is it just a different business model? So or is it just a different pitch? Again, I’m — it almost feels like it’s — you know it almost seems like those other utilities are getting more traction because they are being more — they’re linking some of the generation assets to those projects directly while you’re just, I guess increasing the load for the entire system. I don’t know, if I’m expressing myself correctly. Just, it seems like your announcements are less glitzy than those from others.

Christopher C. Womack

No, you’re not being — I mean, we get exactly what you’re saying. And I think, we are not promotional and I think we’re not getting ahead of ourselves until the deals are done. And we’re not talking about any non-binding conversation, not any non-binding agreements. I mean, we are working diligently through the processes and at the right time, we will make the appropriate announcements.

Dan Tucker

Yeah. Yeah. I think the biggest — the biggest affirmation for us, Angie, is these processes we’re going through with our regulators. They see what we see and they are agreeing with the needs that we see to serve this growing dynamic, whether there’s promotional announcements around individual customers or not, we’re getting independent affirmation that this stuff is there and that there are benefits for existing customers and it will support the kind of investment that you’re seeing us make.

David P. Poroch

Yeah. And just to add on to that, that’s a last point about the benefits to customers. You got to keep in mind, these are incredibly complex contracts. Very large volumes that we’re working through. And the paradigm that we’ve tried to establish in our service territories is entering into these contracts that will also provide benefits for all of our existing customers and protect those same customers. And so that takes a minute to get through those conversations and get to a good answer for everybody.

Angie Storozynski

Very good. Congrats everybody. Thank you.

Christopher C. Womack

Thank you.

Dan Tucker

Thanks, Angie.

Christopher C. Womack

Thanks, Angie.

Operator

Thank you. We have reached end of our question-and-answer session. I’d like to turn the floor back over for any further or closing comments.

Christopher C. Womack

Again, let me thank everyone for being a part of our call today. Thank you for your questions. And we value and appreciate your interest in Southern Company. Thank you very much and have a good rest of the day.

Operator

Thank you, sir [Operator Closing Remarks]