管理層發言
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 Second Quarter 2025 Earnings Call. I would now like to turn the call over to Mr. Greg MacLeod, Director of Investor Relations. Please go ahead, sir.
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 3 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 both are available on our Investor Relations website at investor.southerncompany.com. At this time, I'll turn the call over to Chris.
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 is being recorded as a 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.
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.
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 a domestic manufacturer 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 load 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 intervenors 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, extends 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 3 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 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 provided for continued investment in the existing fleet with plant life extensions at multiple steam units operating for more capacity and existing nuclear and natural gas facilities and the modernization of hydro facilities to increase output and extend life. The 2025 IRP 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 to certify 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 to use for customers to meet the projected incremental capacity need by 2031. Of these, approximately 1.2 gigawatts of the awards are 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, stand-alone battery energy storage systems, and solar power best options.
Further, to meet the total capacity need identified as a part of Georgia Power's 2025 IRP 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 a request 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 a final determination from 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.
Thanks, Chris. Good afternoon, everyone. Earlier this year, in addition to our $63 billion 5-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 5-year base capital plan. This represents the capital investment associated with the low end of the 6 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 3 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 5-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 manner 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 6 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 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.
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 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 encompassed 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 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 3 decades, his counsel, his strategic advice, his leadership, and his friendship have been foundational in helping our teams see 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 his presence will be greatly missed, we wish him and Chelsea the very best as he embarks on a well-deserved retirement. Operator, we're now ready to take questions.
分析師問答
Our first question is from Carly Davenport from Goldman Sachs.
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 shift 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?
Sure. Thanks for your question. Let me take the second question first. 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 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%.
Great. 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?
Yes, Carly, we have reservations. We've made payments for the fees. And because of our size and activity that we've had for the past number of years, we have good relationships with OEMs, 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.
Great. I appreciate that. And Dan, congratulations on your retirement, and thanks so much for all the insights over the last couple of years.
Next question is coming from Steve Fleishman from Wolfe Research.
Chris, Dan, man you're leaving me one of the old ones here. But congrats, and David, congrats to you as well. So a couple of questions. First, just maybe I think on a couple of the prior Q&A calls, you've talked about the kind of rebates in '27 maybe towards the top end of 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?
Yes. 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.
Yes. 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 were.
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 '25, '26? And then when do you get to the 17%?
Well, we expect to get to the approximately 17% near the back end of the planning horizon. And with the capital that 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.
Do you have a rough number where you are like right now at the end of the quarter or yes?
Yes. For the twelve months ended, we provided both unadjusted and adjusted figures previously. Currently, we are around 14.3% to 14.4% unadjusted, and approximately 15.3% when adjusted. It’s important to note how proactive we're being with this equity plan. We mentioned earlier that increased capital could significantly impact our path toward reaching 17%. You should see that develop. Additionally, considering the equity issued now, adjusting for our committed equity adds another 70 basis points to today’s numbers. Overall, we are pleased with our progress, commitment, and execution in this area.
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 PowerSecure on that regard. Could you just talk to asset sales?
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 is a better owner and they're willing to pay, we'll be a great seller in those circumstances. But I think it would be very premature for us to comment and speculate on anything that you may have heard or may be considering, talked about in the marketplace today.
Next question is coming from Julien Dumoulin-Smith from Jefferies.
Dan, David, truly, congratulations to both of you. I wish you the best of luck in your retirement. 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 we talk about what you're seeing? You guys have been very diligent in providing commentary about the pipeline. We certainly heard that from peers so 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.
Yes. Regarding that number, we expect to receive feedback from the commission later this year, likely before year-end about that filing. As we've mentioned, we continue to see the 50 gigawatt pipeline grow, and there's a significant amount of activity. With hyperscaler capital budgets on the rise, we are witnessing substantial numbers and corresponding actions. We are engaged in conversations with all the major hyperscalers and are having what I would describe as very advanced discussions. There is still work to be done, and our focus remains on ensuring we price our offerings appropriately to benefit existing customers. However, I am very optimistic about the future prospects in these discussions and the opportunities available across our electrics.
Got it. Okay. Fair enough. We shall see what happens in the 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, and 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 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 on the nonregulated.
The discussions we're having with large load customers are progressing positively, and there is significant interest across all our service territories. While we've focused a lot on Georgia, we're also having strong conversations in Alabama and Mississippi. As we gain more clarity, we aim to establish a sustainable momentum that could allow us to adjust our expectations within the 5% to 7% range. You also inquired about Southern Power and its repowering projects. Southern Power is an excellent company with many potential opportunities, especially given the current dynamic with large load customers. However, we are careful not to rush into decisions. We don’t include placeholders in our capital plans, and any projects we consider must meet our strict risk-return criteria, which we have adhered to historically. Looking ahead to the next decade, particularly in the early 2030s, several contracts at Southern Power will be up for renewal. Based on current market trends, we anticipate some advantageous opportunities for repricing much of that capacity as we enter the next decade.
Right. So maybe more ripe by the time you get to '27 with that longer-term roll forward than the rebate?
Next question today is coming from Nick Campanella from Barclays.
Congrats again on your retirement, and congrats to David. Looking forward to work with you. So 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-OBB world, how are you kind of framing the returns for contracted renewables?
Yes, it's great to hear from you. We have a stringent risk-return framework. We aim to partner with long-term creditworthy counterparties to avoid fuel risk. This generally leads to returns slightly higher than our historically state-regulated returns, and we see potential for expanding that in the future. However, there are challenges we need to navigate. The risk-reward equation must be favorable, and we need to ensure the credit metrics align with the counterparties, but we constantly look for opportunities in this area.
In the IRP, new nuclear uprates were being considered. I'm curious about the current state of discussions around new nuclear energy. Have conversations increased recently due to the industry's momentum and the executive orders? We've touched on this topic before, but where does your organization currently stand on it?
Yes, Nick, we have clearly stated the necessity for new nuclear energy in this country. In discussions with the administration and hyperscalers nationwide, we emphasize the significance of new nuclear power, especially reflecting on our success with Vogtle 3 and 4 in bringing those two units online. However, we still need to address risk mitigation and the financial concerns that arise later in the process. It is essential to ensure financial certainty as these projects advance. We are actively engaging in conversations both internally and across the industry. We firmly believe that addressing the substantial demand requires incorporating new nuclear into the solution set moving forward, and we will keep discussing and promoting ideas to facilitate its implementation.
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 that would be higher than kind of the 52 that we talked about in the past.
Yes. Yes. I mean, we will give updates. And as we seek success then as we see these projects advance, we'll make sure that we have updates. We'll continue to 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 market continues to advance, we'll continue to share.
Growing 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.
Yes. 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.
Next question today is coming from Andrew Weisel from Scotia Bank.
Congrats to everyone going that sentiment. First question is on the gas plant. I see you're planning to build some new units by 2029 or 2030, but you're also planning to add combined cycle plant 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?
That's existing capacity, Andrew? So that's available capacity in the marketplace that is coming off of a PPA that is either already serving Georgia Power and is expiring or serving someone else.
And then the other question is, obviously, 3 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 its sticking for at least the next 3 years? Obviously, it's a moving target. I think you said you'll share a refreshed load growth target with us in 6 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?
Dave?
Sure. Yes, 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. 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.
Okay. Sounds good. Nicely done. Turning what was supposed to be a very noisy year into a pretty smooth one so far.
Next question today is coming from Jeremy Tonet from JPMorgan.
Congrats, Dan, David as well. Dan we will miss you. First, I 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.
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 Airbuses 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.
Yes, some of that investment you mentioned is already taking place. We discussed in a previous quarter the over 1,000 megawatts of data center projects in those two states. There are transmission and distribution investments already underway. You may have noticed that Alabama Power has made acquisitions and has more pending for generation resources to meet their increasing demand. This is happening, although it hasn't been as prominent as the developments in Georgia recently.
Got it. And then I just wanted to pivot to the FERC gas pipeline expansion potential there. Just wondering what visibility you have there? Or what are the gating items left?
As a reminder, our investments with Kinder Morgan are significant, and we also have a co-owned investment in North Georgia that is closely related to our utility investments. This involves new combined cycle construction, large load growth, and overall load growth in the area. It's not only about our utilities but also includes the co-op system and municipalities being serviced. Therefore, the potential for upside is largely dependent on what infrastructure will be developed to accommodate this increasing load.
Got it. Understood. And then just the 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.
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're 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.
Our next question today is coming from Bill Appicelli from UBS.
Thanks, Dan, for all the great work over the years. You'll be missed. 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.
Yes. 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 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.
Okay. Understood. I have a higher-level question about the trends in generation costs. We've noticed that the costs for combined cycles and peakers have significantly increased over the past couple of years. In your discussions and financial planning for future generation needs, what are you anticipating? Do you expect these costs to keep rising sharply, or might they stabilize as new capacity comes online from developers and manufacturers? What is your perspective on how you will plan for this?
Yes. 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 deliver the capacity that we need and the timelines that we've committed.
But as you know, there's a lot of demand out there. And so there's a lot of upward pressure that we see in the marketplace.
Next question is coming from Anthony Crowdell from Mizuho Securities.
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 of 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 and a big raise today. But like, hey, maybe not until 2027 at the earliest and still not looking to anchor that in. I'm just curious if you could help us balance that out and we clearly understand you guys have always approached it conservatively.
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.
Your next question is coming from Angie Storozynski from Seaport Global.
I'm curious about your unique cost of capital advantage in the industry. This typically brings both pressure and promising growth opportunities, yet you are maintaining your current range for now. There are other ways to enhance earnings, like asset acquisitions and corporate acquisitions. You've demonstrated expertise in developing generation assets, and some of your competitors are following the path that Southern Power has taken by either expanding existing assets or constructing new gas plants using similar skills. Are you not pursuing any of these options because you’re not planning to, or is it that you don’t want to reveal the possibilities that are ahead?
First, Angie. I think we should get you to come tell our story for us sometimes, that was terrific. But look, 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 happening. But as part of our discipline and our outlook because we are a regulated 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.
Okay. We’ve noticed that other vertically integrated electric utilities are announcing specific projects within their service areas, often in collaboration with those utilities. While I’m not suggesting there hasn't been enough activity regarding the data center sites in Georgia or Mississippi, it seems fewer projects are announced together with your state utilities. Is this due to a different business model or perhaps a different strategy? It seems that those other utilities are gaining more traction because they are directly linking some of their generation assets to those projects, while we appear to be focusing on increasing the load for the entire system. I’m not sure if I’m articulating this well, but it feels like your announcements are less impressive compared to those from other companies.
No, we completely understand your perspective. I want to emphasize that we're not being promotional at this stage. We're simply focusing on our processes and aren't jumping ahead until the deals are finalized. We are not discussing any informal conversations or agreements at this moment. We're diligently working through everything, and when the time is right, we will make the necessary announcements.
Yes. I think 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 today.
Yes. And just to add on to that, that 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.
We have reached the end of our question-and-answer session. I'd like to turn the floor back over for you further or closing comments.
in Southern Company. Thank you very much, and have a good rest of the day.
Thank you, sir. Ladies and gentlemen, this concludes the Southern Company's Second Quarter 2025 Earnings Call. You may now disconnect.