SOUTHERN CO (SO) Q2 2026 Earnings Call Transcript

Good afternoon. My name is Christine, and I will be your conference operator today. At this time, I would like to welcome everyone to The Southern Company's Second Quarter 2026 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. As a reminder, this conference is being recorded. I would now like to turn the call over to Mr. Gregg MacLeod, Director of Investor Relations. Please go ahead, sir.

Thank you, Christine. Good afternoon, and welcome to Southern Company's second quarter 2026 Earnings Call. Joining me today are Christopher C. Womack, Chairman, President and Chief Executive Officer of Southern Company and David P. 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.southerncompany.com. At this time, I will turn the call over to Christopher C. Womack.

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 we have seen for the past several years continues particularly from data centers and other large load customers and our utilities are capturing this growth in a way that meaningfully benefits the customers and communities we are privileged to serve and supports our long-term outlook. In just the last quarter, there were three projects across the state of Alabama; Alabama Power added approximately 3 GW, while Georgia Power signed a 3.2 GW, 25-year contract for electric service with OpenAI at its recently announced site near Savannah, Georgia. This site, which is expected to take electric service in phases beginning in 2028, features 1 GW of flexible demand response helping to support reliable energy for all customers when demand is highest. Combined, these four projects representing 6 GW of newly contracted customer load, along with agreements previously signed, brings our total contracted large load agreements across our electric subsidiaries to over 17 GW 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 Alabama, 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 of 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 its 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 center developers, and other large industrial manufacturers. Looking ahead, the opportunities for additional new large load and data center customer growth remain robust. New projects continue to be added to our prospective pipeline of large industrial and data center projects, which remains well above 75 GW. We are encouraged by the continued progression of potential large load projects in varying stages of advanced development. Beyond the 17 GW already contracted there are an additional 8 GW of projects in late stages including 3 GW projected to be finalized in the near-term. Clearly, the benefits of our approach are resonating with both new customers and several repeat large load customers during a time of increasing power demand. We are privileged to support this transformative growth. David, I will now turn the call over to you for an update on our financial performance.

Thanks, Christopher C. Womack, 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 PowerSecure, 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. Combined 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 customer 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 $1.50 per share. Turning now to retail electricity sales. Year to date, weather-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 have seen in nearly two decades. Year to date, weather-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. Weather-normal commercial sales grew 7.4% in the second quarter, bringing year-to-date weather-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 1.2 GW, an increase of more than 500 megawatts over the prior year and we expect this trend to continue accelerating as our 17 GW 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 3,000 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, helping shape future growth opportunities. Turning to our infrastructure buildout. The continued success of our operating territories in 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 have worked constructively with regulators to meet the demand for a growing system, securing approvals for 10 GW 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 Yates 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 reliable and affordable service to all customers. These transparent and orderly processes are designed to facilitate a 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 Public Service Commissions, 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 to 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 will now turn the call back over to Christopher C. Womack.

Thank you, David. We are truly in transformative times for the energy industry and our nation. 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, 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 are taking will deliver lasting benefits as we deliver rate stability for our customers. Recall, the framework under which we approach contracting with large load customers includes pricing with minimum bills to cover at least 100% of the incremental cost to serve. Large load 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 for existing customers. With retail base rates held stable in both Georgia and Alabama until 2029, and significant customer benefits identified and committed to based on previously signed large load 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 PowerSecure. 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 in support of an 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 we have the privilege to serve better off because we are there. As a partner to the communities and cities where we operate, we were 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 a question-and-answer session. If you would like to ask a question, please press one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 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. One moment, please, while we poll for questions. 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 are hearing me. Hey. How's it going? Alright. Just now that you have higher visibility on contracted megawatts and megawatts of load ramps, specifically, 2028 increased. 30 increased by a few gigawatts here. So how does that incremental sales revenue and visibility impact your ability to maybe extend or stay out further and kind of commit on the regulatory front? And just, maybe you can kind of talk to that a little bit. Thanks.

Thanks. Let me start, then I will turn it to David. But as we said in our prepared remarks, we do expect to be at the top half 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 the rate proceedings or regulatory proceedings, those are conversations we will have with regulatory bodies. As we have extended our rate stability focus in both Georgia and Alabama, we think it creates optionality for us to continue to provide rate stability for our customers.

Yeah. Thanks, Christopher C. Womack and hey. Good afternoon, Nick. Great question. As we work through these processes with the success that we have had in signing these contracts, it gives us a great deal of flexibility in enhancing the benefits for customers. Clearly, we have the ability to look for more generation capacity through the structured processes that we have in Alabama and Georgia. And, like we have talked about in the past, we are probably about one GW or two away from, if you will, selling out the capacity that we had approved in Georgia last year. So now we are going to work through that process. The success that we have 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 next decade.

Thanks for those thoughts. And then maybe on the 3 GW you are finalizing stages for, is that within the 2030 window, or is it after? And what are kind of the key milestones you still need to get through on those 3 GW of finalizing? Thank you.

Sure. Working through those contracts, those are likely to go into 2028 and beyond. So, they will, like every other big data center project or large load customer, have a ramp-up period. A couple of them that we are working on would initiate that ramp-up in 2028 and bring us into the next decade.

Thank you. Thanks, Nick. Thanks, Nick.

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

What is up, Shahriar? How are you doing?

Yeah. Good. How are you doing? Doing great. Wonderful. Excellent. So, just on Southern Power: the existing tolling agreements are going to start to roll off. I know there is obviously an opportunity to repurpose the capacity towards serving the hyperscalers. Can you discuss how you are 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? What does this mean to the plan?

Yeah. Shahriar, we have talked about this on a number of calls in terms of the opportunity as these contracts begin to roll off and expire — the opportunity for recontracting. The team is now in the midst of having those conversations with a host of different counterparties. You understand our risk profile there in terms of making sure that they are creditworthy counterparties. But in terms of where they were contracted from a pricing standpoint and where the market is today, we do see upside opportunities. That will contribute to the durability and the length of our long-term plan. We are going to continue to pursue this opportunity as we move down that path and as these contracts expire and the opportunities for recontracting present themselves.

Got it. And these would not just be typical tolling agreements. They would be energy and capacity side, I am assuming under a long-term PPA. Correct? Perfect. Okay. And then I know your favorite topic is new nuclear. With lessons learned between unit 3 and 4 and the big attention now to large-scale reactors, should there be any financial backing from the government in helping take on some of the cost overrun risk? Is that something Southern would be interested in participating in, i.e., through the back end? Any color on potentially participating in this consortium or are you just looking to license the blueprints?

Shahriar, thank you. You have heard me talk a lot about the importance of new nuclear helping this country meet this incredible moment that is in front of us. I do think as we look into the 2030s this country needs to have, particularly in the mid-2030s, some more nuclear units in operation. I have to give a great big shout out and compliment to the administration; there are a number of actions they have taken on the regulatory front with bringing groups together around long-lead-time items and a lot of other things they are doing. We are having many conversations with them about how to make this a reality. Let me be clear: Southern Company is not going to be next immediately, but we are going to continue to work constructively and pretty aggressively with this administration and with a lot of other parties to see how we can get this done. I do think it is important from an energy policy standpoint and for the economy to meet this moment and meet this demand that we see in the marketplace today.

Just a follow-up: are you finding traction with the hyperscalers taking on cost overrun risk above budgeted amounts for these AP1000s?

I do not want to get ahead of a firm conclusion, but yes, we are having conversations with them in terms of what role they can play in this equation.

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

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

Hey, Carly.

Hey, good afternoon. Thanks for taking the questions. Maybe to start, you have talked in the past about the potential for upside on the capital plan related to FERC-regulated 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. Great question. As we have talked about with the contracts that we are signing, the growth in the Southeast region and the strong economy, we definitely see opportunities in our FERC-related pipeline investments. We have talked about some of those before, and as the opportunities continue to grow, we do see the possibility of expanded investments in those areas. The RFP processes that we have in our regulated jurisdictions will help inform that. We see great potential in the Southeast to continue to grow those investments.

Carly, the only thing I would add is that infrastructure across the Southeast 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 is real opportunity in terms of pipeline expansion opportunities to align with the needs portrayed in our RFPs.

Got it. That is really helpful. And then just to 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 load pipeline that you have seen over the last quarter or so? And is there potential room for upside even incremental to the incremental RFPs if you think about the conversion of the pipeline?

Incremental to the incremental — I love that term. The opportunities we see there are well baked into the RFPs. We talked about our load forecast and the processes we use to, in a rather conservative way, project need. As we continue to sign these contracts, that will be the foundation for the RFPs we have in Alabama and Georgia. There is certainly potential to procure more generation than we have identified right now, but we cannot get ahead of the process. There is a thorough screening, structured vetting, and everybody will have an opportunity to participate in those processes. Also, it is worth reminding that there are no placeholders in our capital plan. We do not get ahead of our regulators. The upside we have talked about is not in our capital plan right now. The RFPs that are open in Alabama and Georgia are not contemplated in our capital forecast at the moment.

One thing I would add: the OpenAI contract in Georgia pushes us beyond our recently approved capacity by right around 1 GW. So just making sure that is clear in terms of where we are and what the upside opportunities are.

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

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

Hi, Stephen.

Hey, good afternoon. Thanks very much for taking my question. Just had a quick one, kind of a follow-up on Carly's question. It is my understanding that any new incremental load, especially large load in Alabama, would drive incremental generation requirements. We have the RFP outstanding, but if the load forecast is up 3 GW in the quarter and then you are talking about OpenAI, at least 1 GW, can you frame whether this is 4 to 5 plus gigawatts of generation that we could put some type of capacity multiple on to estimate the size? I do not want to put the cart in front of the horse, but want to make sure we are level setting on what is in the plan and what the opportunity is.

Great question. A decent rule of thumb to think about capital opportunities going forward is about $2 billion or so related to one GW of new generating capacity. That covers a broad range of different generating sources for us. The newly signed contracts in Alabama are about 3 GW right there, and we are about 1 GW or so oversubscribed in Georgia based on what we have signed. So your way of thinking about it is directionally correct.

That is very helpful. And then in terms of the finalizing, late-stage pipeline that you continue to fill up, how do those finalizing gigawatts filter into the RFP, and what is the timeline for when those loads would energize and when resources have to be in place to serve those? Trying to sequence it out here.

Those projects will vary project by project. As we finalize agreements and they are certified and blessed by the commissions, they will factor into the RFP process to match up with the year in which those resources are needed. As we finalize contracts and projects are approved, that information will be forthcoming and will be reflected in updated load forecasts. A couple of proceedings will unveil how it all lines up with needs and new opportunities going forward.

To add, as we work through those processes, if the company is selected to provide generation resources, we will start feathering in some spend. It is also not currently contemplated in our projections in the 2028 time frame. That will start to feather in as we build out generation to come online in the 2030–2031 timeline.

That is very helpful. Thanks, Christopher C. Womack and David P. Poroch. Appreciate the time.

Very good. Thanks. Have a good day.

Our next question comes from the line of Jeremy Tonet with JPMorgan. Please proceed with your question.

Hey, Jeremy.

Hi. Good afternoon. I wanted to pivot to Mississippi for a minute. We have had recent stakeholder conversations in the state where it seems like the state is particularly receptive to incremental data center activity. I was curious about your outlook there, and if you could talk a little more on the opportunity set and what you see down the pipeline.

As we have said before, we have talked for a number of quarters about seeing this momentum migrate west and you are clearly seeing that now in Alabama. You have seen success with 100 MW projects in Mississippi. Our pipeline reflects that ongoing and increasing activity in the Mississippi territory.

Got it. Thank you. Then on OpenAI again, with demand response there: how is demand response fitting into your conversations about projects overall in the pipeline? Do you factor that into your assumptions going forward?

Great question. It does enter into all those conversations and we would like to see that continue and stay flexible. It is one of the great aspects that our three electric jurisdictions have where we are 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. This is a great trend and it is part of every conversation that we have.

Very early on in our conversations with hyperscalers, we begin to raise matters like technical requirements and how their operations would impact the system and the grid — not just being a taker but creating flexibility to provide benefits to the entire grid. As we look at data centers, these things need to be communicated more broadly in terms of value, benefits, flexibility, and how they support the grid and communities. There is an incredibly positive narrative to be told here and we all need to be a bit louder in communicating those benefits amid the noise on social media.

Got it. Makes sense. That is a story to be told more. Thank you.

Thank you very much.

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

I am doing well, thanks. So could you remind us in Georgia, for OpenAI and other customers who may not be investment-grade credits or strong investment-grade, how do the tariffs work from a credit standpoint? Both the large load tariffs?

Remember the four pillars under which we are negotiating and structuring these contracts. You have long-term contracts — the OpenAI contract is 25 years — and our minimum bills cover 100% of the incremental cost to serve. There are default provisions tied to collateral. We have flexibility in the forms of collateral we can take from counterparties. Depending on credit quality, a parent guarantee might work, but in other instances we will look to lines of credit, surety bonds, and other combinations. The collateral portfolio we take to back up these contracts is going to put us at about an A- or better position. Keep in mind, you asked about OpenAI and that is about $20.8 billion of collateral that will be in the aggregate on full ramp. We have flexibility to determine acceptable collateral that puts us in a position around A- or better — a combination of lines of credit and surety bonds in this particular case.

Okay. That is clear. The RFPs — can you remind us the timelines for finalizing answers and approvals?

The process is going to play out through most of the rest of the summer into the fall. By year-end we should have a good idea of what projects were selected in the RFP process. Once projects are selected, that will move into a certification process through much of 2027, and by the latter part of 2027 we should have good clarity as to what actually gets certified. Alabama's timeline is fairly similar, so you can expect the proceedings in Georgia and Alabama to run roughly in parallel.

Then last question on Georgia: you have highlighted benefits, both economic and for customer rates of the data centers, but there has been political noise, particularly from Democrats, on data centers. Can you give us a lay of the land and whether there is appreciation growing for benefits that offset pushback?

I would suggest you look at the OpenAI announcement and how that played out with the community. They highlighted the project along with us and communicated rate stability and economic community benefits. There is noise across the country about data centers, but there are no statewide moratoriums in our territory. You may see local restrictions in some counties, but you continue to see progress, projects moving forward, and approvals in our territory. Hyperscalers and utilities both need to do a better job explaining benefits and dispelling misinformation. The pipeline remains full and continues to grow.

Let me clarify one thing: earlier I referenced the portfolio in aggregate. The entire portfolio of the 17 GW has about $21 billion of collateral. I recognize you were speaking specifically to the OpenAI contract, and I wanted to make that clarification.

That is very helpful. Thanks so much.

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

Hi, Andrew.

Hey, everyone. Good afternoon. Congrats on the OpenAI deal. Certainly a massive project. I want to follow-up on the gigawatt of demand response. I agree that is a great resource. Am I right that this is the first time you are doing something like that? The press release talks about long-term savings for customers — have you quantified that? Is it about accelerating speed to market for the center, or does the rest of the customer base see benefits?

The rest of the customer base will see benefits across the entire project. During peak load periods, being able to shave the peak provides tremendous value to the entire system. We operate the system on a minute-by-minute, second-by-second basis, and being able to put online the most economical resource to meet that load is of great value. Having that resource be flexible is an incredible benefit to the entire grid as we operate our system.

Okay. Was this the first time you have done that for a data center?

Yes, it is the first time.

Hope to see more of it. Secondly on equity: you settled $2 billion of the ATM priced in 2025, and you have $700 million that will settle through 2028. Any guidance on how to think about the pace of equity and when it will hit over the next few years? How should we think about year-by-year dilution and whether it will be ratable or accelerated?

There are a lot of moving parts affecting decisions on drawing equity commitments. They are available to us with a few days' notice, so we have flexibility to manage liquidity. Generally, we want to shape drawdowns to mirror our capital outlays for construction, and it dovetails with our plan to get near 17% FFO to debt by 2029. We have settled about $2 billion recently, which helps on that path. We will continue to do this in the most shareholder-friendly manner we can, protect credit quality, and draw on the program as needs and opportunities become available.

Fair enough. We will model it out best we can. Thank you.

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

Julien Dumoulin-Smith, hey there, sir.

Hey. What is going on, guys? Thanks for the time. I wanted to take this in the direction of rates and rate cases. Obviously transposing this ongoing success, how do you think about the opportunity here in Georgia and Alabama, especially Georgia? There is a regular cadence to these cases and sometimes a desire to update tariffs and rate structure. Is there an opportunity to come back with bigger rate credit here? From last year the number was north of half a billion. Is there a way to effectively sidestep the revenue process here?

Julien, we do not get ahead of our regulators. We work constructively with them. Our goal is always to keep rates as low as possible for customers. We are thrilled with how we are delivering rate stability to our customers through 2028. As we continue to sign these contracts, there will be conversations with regulators about what is possible, but I am not going to get ahead of any process or conversation with the commissions. Growth provides incredible opportunities to benefit customers and to continue to deliver rate stability. There has been commentary about inflation and electric rates going up across the country — electric rates are not going up in our territory. We are delivering rate stability to our customers and that is something we are privileged to provide. Holding rates flat provides real nominal savings for customers going forward.

Clearly you have a track record on that front. On Alabama specifically, how do you take this load growth and put it into rates? I know you have the CMP process. In theory that is how you bring on some of the new capacity for the incremental 3 GW. Separately, is there some equivalent thought process in that state in particular?

They will go through traditional proceedings for certification and rate approval, including the CMP and RFP processes. Alabama has a very orderly process for approving these contracts and getting projects approved by the commission and into rates. There are great opportunities in Alabama and long-term benefits for customers.

Thank you, guys. Really appreciate it.

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 the time today. Just circling back to Southern Power: curious about the tone and interest on the remaining upgrades and the brownfield efforts. I know you targeted an update later this year as well. Given the load trends, how is all of that trending? Are you still thinking about having some sort of Southern Power update this year?

Great question. We continue to evaluate those opportunities. Conversations with current counterparties and new counterparties have been fruitful. Remember Southern Power's disciplined business model: we do not build something and then see who shows up. We engage in structured processes and continue conversations. There is a lot of potential not just to reprice contracts that will roll off into the next decade, but also to take advantage of the upgrades we announced last quarter. As we continue these conversations, we will have better clarity on timing and execution of additional upgrades.

We look forward to giving updates on activities under consideration at Southern Power. I think there are real opportunities there.

Sure. Circling back to the sales growth and data center load added recently, any learnings you would highlight from the ramp-up and sales trends? In particular, how that might apply to your outlook for load growth and running that through to EPS growth guidance?

One thing we see is the need to work very closely with these projects on their ramp rates — they may not always be what was predicted when projects were initially approved. We work closely with them to understand their ramp profiles. But our minimum bills provide a degree of revenue protection; we have somewhat decoupled revenue because of those minimum bills. Operationally, we have to work closely with customers on ramp rates and system implications. The bottom line is the load is real and we know it is coming, even if not immediately.

I would add that customers we have served for years have taught us a lot and helped inform the new contracts we are signing. The protections we put in place, like minimum bills, will be a distinct advantage and protect customers and the company, delivering the stability we aim for. We crossed the 1,000 MW line this quarter; growth has been fantastic in data centers and large load customers we currently serve. It is really exciting.

Appreciate the time today. Thank you.

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

Hey, Travis.

Thanks for the time. Going back to the OpenAI project: could you talk about what made that location unique and why both you and OpenAI decided the location could handle a project of this size? Secondly, are there other areas in your service territory where a project of that size can be constructed and operational in such a short time?

These projects involve a lot of courting, site evaluations, geography, topography, proximity to electric infrastructure, and availability of energy resources. It is not a single set of criteria; it requires investigation of sites to see what works for the companies. We are glad when they work out and are thrilled that we have a number of meaningful sites available across our service territory. I will not disclose proprietary site locations, but we have additional opportunities for similar projects. The Savannah area and Effingham County have proven to be wonderful sites for economic activity given the strong local economy, the Hyundai plant, and the Port of Savannah's leadership in shipping activity.

Understood. One quick one: in terms of meeting future equity needs as you add to CapEx, any interest in taking minority interest investment from another partner to meet some of those needs?

We look at many different structures, but at the moment we do not see that as a need. We like the funding options we have, including issuance receptiveness in the marketplace, and we do not see the need for minority investment for the foreseeable future.

Got it. Thanks a lot.

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

Just let me thank everybody for joining us today. Let me conclude by saying it is an incredibly exciting first half of the year for Southern Company and it sets us up for the rest of the year. It speaks to the bright future we have. Thank you for joining us today. Have a good rest of the day.

Thank you, sir. Ladies and gentlemen, this concludes The Southern Company's second quarter 2026 earnings call. You may now disconnect.