管理層發言
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. 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 large industrial and data center pipeline, 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, and Southern Company has continually demonstrated that we are executing on this extraordinary growth in a way that protects and benefits customers and communities. Last week, 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, and 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.
分析師問答
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 may need 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 afternoon. Hope you can hear me. Now that you have higher visibility on contracted megawatts and load ramps, specifically the 2028 increase and how 2030 increased by a few gigawatts here, how does that incremental sales revenue and visibility impact your ability to extend or stay out further and remain committed on the regulatory front? Maybe you can talk to that a little bit. Thanks.
Thanks. Let me start, then I will turn it to David. As we said in our prepared remarks, we do expect to be at the top half of our long-term earnings trajectory. As we think about that, we think about the opportunity that provides for us in terms of meeting our long-term outlook. Clearly, as we think about rate proceedings or regulatory proceedings, those are conversations we will have with regulatory bodies. But 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. David, anything you want to add?
Yeah. Thanks, Christopher C. Womack, and hey, good afternoon, Nick. Great question. As we work through these processes with the success we have had in signing these contracts, it gives us a great deal of flexibility in enhancing benefits for customers. We clearly have the ability to look for more generation capacity through the structured processes that we have in Alabama and Georgia. As we have talked about in the past, we are probably about 1 GW or 2 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 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. On the 3 GW you are finalizing that are in late stages, is that within the 2030 window or is it after? What are the key milestones you still need to get through on those 3 GW that are finalizing? Thank you.
Sure. Working through those contracts, those are likely to go into 2028 and beyond. Like every other big data center project or large load customer, they have a ramp-up period. A couple of the projects we are working on would initiate that ramp-up in 2028 and bring us into the next decade.
Thank you, 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? Christopher, on Southern Power, the existing tolling agreements are going to start to roll off. I know there is an opportunity to repurpose the capacity toward serving the hyperscalers. Can you discuss how you are thinking about that opportunity set? Have conversations with the hyperscalers begun with these assets? Would any opportunities be captured within your existing 75 GW pipeline? What does this mean to the plan?
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 and the opportunity for recontracting. The team is in the midst of having those conversations with a host of different counterparties. You understand our risk profile in terms of making sure that they are creditworthy counterparties. When you look at where they were contracted from a pricing standpoint and where the market is today, we do see upside opportunities in pricing 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 opportunity for recontracting presents itself.
Got it. These would not just be typical tolling agreements; they would include both energy and capacity under a long-term PPA, correct? Perfect. And I know, Christopher, your favorite topic is new nuclear. With lessons learned between units 3 and 4 and increased attention to large-scale reactors, should there be any financial backing from the government to help take on some of the cost overrun risk? Is that something Southern would be interested in participating in—through the back end or participating in a consortium—or are you looking to license the blueprints? Any color on potentially participating would be helpful.
Shahriar, thank you. You have heard me talk a lot about the importance of new nuclear helping this country meet an incredible moment. As we look into the 2030s, the country needs to have more nuclear units in operation, particularly in the mid-2030s. I will give a big compliment to the administration for actions they have taken on the regulatory front and for bringing groups together around long-lead-time items. We are having many conversations with them about how to make this a reality. Southern Company is not going to be next immediately, to be clear, but we will continue to work constructively and aggressively with the administration and other parties to see how we can get this done because it is important from an energy policy standpoint and for the economy.
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 about what role they can play in this equation.
Fantastic. Thank you guys so much. Appreciate it.
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 could point to some incremental gas plant builds?
Sure, Carly. Great question. Like we have talked about with the contracts we are signing and the growth in the Southeast region and the strong economy, we definitely see opportunities in our FERC-regulated pipeline investments. We have discussed some of those previously, and as the opportunities continue to grow, we see the possibility of expanded investments in those projects. The RFPs that we have in place and the processes in our regulated jurisdictions will help inform that, but 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 coming. There is more to be done and real opportunity for us in terms of pipeline expansion opportunities to align with the needs portrayed in our RFPs.
Got it. That is really helpful. Then just to follow up on the RFPs you have ongoing for generation needs through 2032: did those filings already contemplate some of the progression in the load pipeline you have seen over the last quarter or so? Is there potential room for upside beyond the incremental RFPs if you think about the conversion of the pipeline?
Incremental to the incremental—love that term by the way. The opportunities we see are well baked into the RFPs. We talk about our load forecast and the processes we use to project need in a conservative way. As we continue to sign these contracts, they become the foundation for the RFPs in both 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 everyone will have an opportunity to participate. Also, it is worth reminding that we do not use 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 open RFPs in Alabama and Georgia are not contemplated in our capital forecast at the moment.
The OpenAI contract in Georgia pushes us beyond our recently approved capacity by right around 1 GW, just to be clear about where we are and what the upside opportunities are.
Got it. Very clear. Thank you.
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 for taking my question. Just a follow-up on Carly's question. My understanding is that any new incremental large load in Alabama would drive incremental generation requirements. We have an RFP outstanding, but if the load forecast is up 3 GW in the quarter and you have OpenAI at least 1 GW, and I think the RFP is 2 to 6 GW, can you frame whether this could be 4 to 5-plus gigawatts of generation that might be needed? How should we think about the size?
Great question, Stephen. I think the way you are thinking about it is directionally correct. We have the newly signed contracts in Alabama that are about 3 GW of contracts signed. We are about 1 GW oversubscribed in Georgia based on what we have signed. A decent rule of thumb to think about capital opportunities going forward is about $2 billion or so related to 1 GW of new generating capacity. That covers a broad range of different generating sources for us.
That is very helpful. In terms of the finalizing late-stage pipeline projects that you continue to fill up, how do those filter into the RFP? What is the timeline for when those loads would energize and when we should think about resources to serve those? Trying to sequence this.
Those projects will vary project by project. As we finalize agreements and they are certified and approved by the commissions, they will factor into the RFP processes to match the year in which those resources are needed. Once we finalize contracts, that information will be forthcoming. Several proceedings will unveil how that lines up with needs and what the new opportunities will be going forward.
I might add, as we work through those processes, to the extent the company is selected to provide generation resources, we will probably start feathering in some spend. It is also not currently contemplated in our projections for the 2028 time frame. Spend will start to feather in as we build out generation to come online in the 2030–2031 timeline.
That is very helpful. Thanks, Christopher and David. 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. Recent stakeholder conversations in the state indicate receptiveness to incremental data center activity. What is your outlook there and what do you see down the pipeline in Mississippi?
We have talked over a number of quarters about momentum migrating west, and you are clearly seeing that now in Alabama. You have seen success with 100 MW projects in Mississippi, and our pipeline reflects ongoing and increasing activity in the Mississippi territory.
Got it. Thank you. On OpenAI again, with demand response there, how is demand response fitting into your conversations and the projects overall in the pipeline? Do you factor that into your assumptions going forward?
Great question. Demand response enters 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: we are not limited to just a tariff. We can negotiate bilateral contracts that leverage the flexibility the hyperscalers want and price that appropriately. This is a great trend, part of every conversation we have.
One of the things we do very early in conversations with hyperscalers is raise technical requirements about how their operations would impact the system and how they could create flexibility to provide benefits to the entire grid. There is value to be communicated about how data centers provide flexibility and support to the grid and communities. We should all be more vocal about these benefits and dispel misinformation in public forums. The pipeline remains full, and projects continue to advance in our territory.
Got it. That makes sense. 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'm doing well, thanks. In Georgia, for OpenAI and other customers who may not be strong investment-grade credits, how do the tariffs work from a credit standpoint for the large load contracts?
Remember the four pillars under which we negotiate and structure these contracts: long-term contracts, minimum bills that cover 100% of the incremental cost to serve, default provisions, and collateral. We have flexibility in the forms of collateral we can accept from counterparties depending on credit quality, including parent guarantees, lines of credit, surety bonds, and other combinations. The collateral portfolio we take to back up these contracts is intended to put us at about an A- position or better. For the entire portfolio, on full ramp, we have about $20.8 billion of collateral, and we have the flexibility to determine acceptable forms of collateral that put us in a strong credit position.
That is clear. For the RFPs, can you remind us of the timelines for finalizing answers and approvals?
The process will play out through most of the rest of the summer into the fall. By year end, we should have a good idea of which projects were selected through the RFP process. Once projects are selected, they will move into a certification process that will take place through much of 2027. So by the latter part of 2027, we will have good clarity on what actually gets certified. Alabama is on a fairly similar timeline, so you can expect the proceedings in Georgia and Alabama to run in similar windows.
Then last question on Georgia: you've highlighted benefits, economic and rate benefits, of the data centers, but there has been political noise, particularly among some Democrats, about data centers. Can you give a lay of the land and whether appreciation is growing for the benefits to offset some of the pushback?
I would point to the OpenAI announcement in terms of how it played out with the community and how they communicated rate stability and economic community benefits. There is noise across the country about data centers, and there may be moratoriums at some county levels, but projects continue to move forward in our territory. Hyperscalers and utilities need to do a better job explaining the benefits and value, and dispelling misinformation. The pipeline remains full and projects continue to be approved across our territory.
Steven, let me clarify one thing: when I referenced collateral earlier, I was speaking about the entire portfolio of the 17 GW. We have about $21 billion of collateral in the aggregate for that portfolio, and I wanted to make sure that was clear.
That is very helpful. Thank you.
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. Is this the first time you are doing something like that? The press release mentions long-term savings for customers. Have you quantified that, and is it more 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, flexible demand response helps shave peak demand. As we operate the system on a minute-by-minute basis, having that flexible resource allows us to put online the most economical resources to meet load, providing tremendous value to the entire system. It is an incredible benefit to the grid.
Okay. Was this the first time you have done that for a data center?
Yes, this is the first time we have implemented demand response at this scale for a data center.
Thanks. Then on equity, you've been active. You settled $2 billion of the ATM that was priced in 2025, and you have priced $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 in decisions about drawing equity commitments, and they are available to us on short notice, so we have flexibility to manage our liquidity. We generally want to shape equity issuance to mirror our capital outlays for construction, and it dovetails into the plan to reach near 17% FFO to debt by 2029. We have settled about $2 billion recently, which helps us toward that goal. We will continue to access equity in the most shareholder-friendly manner that protects credit quality and draw on it as needs and opportunities become available.
Fair enough. We'll model it out. Thank you.
Our next question comes from the line of Julien Patrick Dumoulin-Smith with Jefferies. Please proceed with your question.
Hello, Julien.
Hey. Thanks for the time. I wanted to talk about rates and rate cases. With ongoing success, how do you think about opportunities in Georgia and Alabama to come back with bigger rate credits? Last year the number was north of half a billion. Is there a way to replicate what you did before and effectively offset the revenue process?
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 our customers. We are pleased with how we are delivering rate stability to our customers through 2028. As we continue to sign contracts, there will be conversations about what is possible, but I will not get ahead of any process with the commissions. Growth provides opportunities to benefit customers and deliver rate stability. I would also note that while many discuss inflation and rising rates elsewhere, electric rates in our territory are not going up; we are delivering rate stability. Holding rates flat provides real nominal savings to customers.
Understood. On Alabama, how do you think about taking this load growth and incorporating it into rates? The CMP is how you bring on some new capacity for the incremental 3 GW. Is there an equivalent thought process there?
Those projects will go through traditional proceedings to get projects certified and approved by the commission and included in rates as part of the RFP process. Alabama has an orderly process for approving contracts and projects and getting them into rates. With the recent changes in commission structure and procedures, there is a clear process for certifying projects and incorporating them into rates. There are great opportunities in Alabama, and long-term benefits for customers.
Thank you very much.
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. Circling back to Southern Power, I know you had some updates last quarter. Curious about the tone and interest on the remaining upgrades and the brownfield efforts. Given the load trends, how is that trending? Are you still thinking about having a Southern Power update later this year?
Great question. We continue to evaluate those opportunities. Conversations with current counterparties and exploring new counterparties for Southern Power are proving fruitful. Remember, Southern Power operates under a disciplined business model; we do not build and then see who shows up. It is a structured process. There is great potential to reprice contracts that will roll off into the next decade and to take advantage of 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. There are real opportunities there.
Turning back to the sales growth and data center load added recently, any learnings from those ramp-ups and sales trends, and how that might apply to your outlook for load growth and EPS guidance?
One thing we see is the need to work closely with projects on their ramp rates because they may not be what was predicted when projects were initially approved. We work closely with customers to understand ramp rates and system implications. But the load is real; it may not be there initially but we know it is coming. Our minimum bills give us a degree of revenue protection as customers ramp.
I would add that the experience with customers we have served for years has taught us a lot and helped inform new contracts. Protections like minimum bills are a distinct advantage going forward to protect customers and the company in terms of stability. We crossed over the 1,000 MW line this quarter and growth has been fantastic in the data center and large load portfolio. It is exciting.
Appreciate the time. 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, can you talk about what made that location unique and why both you and OpenAI decided that location could handle a project of this size? Also, where else in your service territory could a project of that size be constructed and operational in a short time?
Economic development is a lot of courting and evaluating sites—geography, topography, proximity to electric infrastructure, and availability of other energy resources. There is not a single set of criteria, but many investigations of sites to see what works for each project. We are glad when they work out and we have a number of meaningful sites available for consideration across our territory, though specific site details are proprietary. The Savannah area, including Effingham County, benefits from the strong local economy, the Hyundai plant and Port of Savannah, which continue to lead the country in activity. Those areas have proven to be excellent sites for economic activity.
Understood. One quick follow-up: in terms of meeting future equity needs as you add to CapEx, is there 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 a need for minority investments. We like the options we have and the receptiveness in the market for issuing securities, so I do not see that as necessary in 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. It has been an incredibly exciting first half of the year for Southern Company and it sets us up for the rest of the year. It also speaks to what a bright future we have. Thank you for joining us and 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.