管理層發言
Good afternoon. My name is Robert, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Southern Company Fourth Quarter 2024 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. Greg MacLeod, Director, Investor Relations. Please go ahead, sir.
Thanks, Robert. Good afternoon, and welcome to Southern Company's fourth quarter 2024 earnings call. Joining me today are Chris Womack, Chairman, President and Chief Executive Officer of Southern Company, and Dan Tucker, 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 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'll turn the call over to Chris.
Thank you, Greg. Good afternoon, and thank you for joining us today. 2024 was an outstanding year for Southern Company, both operationally and financially. We achieved adjusted earnings at the very top of our EPS guidance range, which represents 11% growth from our 2023 adjusted results. All of our business units executed on their plans and delivered exceptional value to our customers and investors alike. I am incredibly proud of how our team continued to put customers first throughout 2024. While this is our daily mission, our dedication was especially evident as our team came together over the past year in response to several weather events, which adversely impacted many of our customers, including the most destructive storm in Georgia Power's history this past fall. Delivering clean, safe, reliable, and affordable energy to the communities and customers we are privileged to serve will remain our top priority.
Looking forward, we believe our portfolio of companies is incredibly well positioned to capitalize on significant opportunities to serve growth and improve our local economies and sustain success over the long term. The foundation of our business model remains our state-regulated utility franchises. The tremendous value inherent in our three electric utilities and four natural gas distribution utilities is a function of our continuous focus on our 9 million customers, our constructive regulatory environments with orderly processes, and service territories with strong long-term fundamentals. Economic development activities at our utilities are robust and provide a tremendous foundation for regular, predictable, and sustainable long-term earnings growth. Over the past year, more than 150 companies either announced expanded operations or made the decision to locate new facilities in our southeastern footprint.
These projects are expected to support over 20,000 new jobs, further highlighting that the region we proudly serve is thriving. Some of the larger announcements over the past year were in the manufacturing, entertainment, chemical, and metals industries. The economic development pipeline from large electric load customers, including data centers and large manufacturers, represents over 50,000 megawatts of potential incremental load by the mid-2030s. Data centers alone represent roughly 80% of that potential load. While our disciplined approach to forecasting results and a risk-adjusted outlook for sales growth comprise only a fraction of the economic development pipeline, we are encouraged to have commitments for over 10,000 megawatts, with advanced discussions and progress for even more. We remain committed to our approach to sustainably serving this exciting growth opportunity, including pricing and contract terms designed to protect our investments and provide economic benefits back to existing customers.
We are also encouraged to see the data center momentum first observed in Georgia expanding into both Alabama and Mississippi. We recently signed contracts to serve the power needs of data centers in these two states, totaling over 1,000 megawatts. While our state-regulated utilities are expected to represent approximately 95% of our projected capital investments, we have also continued to invest in our other complementary strategically aligned businesses. Many of these businesses add depth to our vertical integration and provide us with unique market insights that help us attract and better serve customers in our regulated footprint. They also represent potential opportunities to add durability to our long-term earnings trajectory. Southern Power, our competitive power business, represents a terrific complement to our state-regulated businesses. Substantially all assets are under long-term contracts with creditworthy counterparties, and we don't take meaningful commodity risk.
In total, Southern Power's portfolio has approximately 13,000 megawatts of capacity across 50-plus generating facilities in 15 states, including approximately 7,000 megawatts of natural gas generation, 3,000 megawatts of solar, and 3,000 megawatts of wind. Southern Power has 500 megawatts of solar currently under construction with projected in-service dates in 2025 and 2026. We will continue to be opportunistic on new renewable energy projects that meet our stringent risk-return criteria. The burgeoning need for reliable, dispatchable natural gas capacity unlocks four significant opportunities for Southern Power. First, as contracts on our existing natural gas fleet come up for renewal beginning in the early 2030s, the low growth in the Southeast is expected to support future renewal pricing that is significantly higher than our existing contracts. Second, meaningful upgrade opportunities are being evaluated on the Southern Power legacy natural gas fleet.
These could translate into several hundred additional megawatts available to meet future market demands for capacity. Third, Southern Power has options at its existing plant sites to build new brownfield power plants in the Southeast. And lastly, Southern Power is exploring opportunities outside of the Southeast to serve data centers with new natural gas generation. We are very gratified to have developed and retained this incredibly valuable business as it represents a tremendous opportunity to support sustainable growth well into the next decade. In 2016, when Southern Company acquired what is now Southern Company Gas, we sought to further vertically integrate along the energy value chain. An important additional element of that vertical integration was our 50% investment in the Southern Natural Gas pipeline, which overlays our three electric service territories as well as one of our largest natural gas franchises.
As previously disclosed by our operating partner, Kinder Morgan, this pipeline is poised for growth, largely to support increased natural gas generation throughout the Southeast. Southern Natural Gas, as well as our other smaller FERC-related pipeline investments, provide a terrific complement to our core growth prospects. Even two of our smaller subsidiaries, both of which have seen accelerated growth recently due to expanding computing power demand, have been incredibly valuable for deeper appreciation and understanding of the current market. PowerSecure, which specializes in providing utility and energy solutions to commercial, industrial, and low-serving customers, has seen its business bolstered by the growth in data centers. This has led to a more comprehensive understanding of data center needs and has enhanced our relationships with many national data center owners. Another example of the value in our smaller complementary subsidiaries is Southern Telecom.
On its own and in partnership with our electric utilities, Southern Telecom deploys fiber optic infrastructure that serves as an important and attractive additional product offering, enhancing the appeal to data-intensive customers to locate in our southeastern service territories. Over time, we have exercised exceptional discipline and intentionality in refining our portfolio of businesses. We believe this has uniquely positioned Southern Company to deliver reliable and affordable energy to our customers, as well as to deliver premier risk-adjusted total shareholder returns to our investors. Dan, I'll now turn the call over to you.
Thanks, Chris. I'm going to pause. Robert, can you hear us?
Yes, I can very clearly.
We're being told that none of the audience can hear the audio.
Okay. I just sent a message to our supervisor. Everything looks fine on my end.
Okay. We'll continue. I'm getting mixed reports now. So, we'll continue and what we'll do. I believe this is being recorded. It will be available for webcast. And hopefully, the Q&A goes as far. Thank you, Robert. Well, thanks, Chris. So, look, as you can see from the materials we released this morning, we reported strong adjusted earnings per share of $4.05 for 2024, which, as Chris mentioned earlier, was the very top of our 2024 guidance range and represents 11% growth from adjusted earnings from the prior year. The primary drivers for our performance compared to 2023 were continued investment in our state-regulated utilities and weather-related impacts. A complete reconciliation of our quarterly and annual adjusted earnings is included in the materials we released this morning. Turning now to electricity sales. Excluding the impact of temporary sales losses due to Hurricane Helene, weather-normalized total retail electricity sales for the year were up approximately 1% compared to 2023.
And commercial sales were particularly strong, led by power usage from new and existing data centers, which were up 17% year-over-year. 2024 was our strongest year on record in terms of new residential electric customers. We added 57,000 new residential electric customers, as well as 26,000 new customers in our natural gas distribution businesses. These trends highlight the broad strength we continue to observe across our service territories, particularly in the Southeast. We expect this momentum to continue into 2025, with retail electricity sales on a consolidated basis projected to grow approximately 2% to 3% compared to 2024 weather-normal sales. Longer term, we project average annual sales growth of approximately 8% from 2025 through 2029, an increase of 2% from our prior long-term sales growth expectations. Georgia Power's total retail electric sales growth is projected to be approximately 12% over the same period.
Our commercial segment, which includes data centers and currently represents approximately one-third of total retail electricity sales, is projected to grow an average of 18% from 2025 to 2029. As we have highlighted several times in the past, we take a very measured and disciplined approach to forecasting incremental electric load. As Chris mentioned in his remarks, the extraordinary growth in our forecast represents a fraction of the total economic development pipeline. Informed by our experience and continuous engagement with prospective and existing customers, our forecasts are significantly risk-adjusted as it pertains to both timing and load size. Serving this load reliably requires significant capital investments in the coming years. Our base capital investment forecast over the next five years is $63 billion, 95% of which is at our state-regulated utilities. This represents a $14 billion or an approximately 30% increase from our forecast just one year ago.
In addition to increases for previously announced new projects at Southern Power and the expansion plans for our largest interstate natural gas pipeline, incremental investment in our transmission system is the largest driver of increased capital expenditures in our forecast. Our capital investment plan supports projected long-term state-regulated average annual rate base growth of approximately 7%, a 1% increase from our forecast one year ago. Our forecast reflects an approach to capital forecasting consistent with that which we have used in the past and that we have not included potential capital investments primarily new or expanded generation resources, which remains subject to regulatory processes. For example, there are outstanding requests for proposals, or RFPs, for new resources from the previously approved Georgia Power Integrated Resource Plan, or IRP, that represent approximately 13,000 megawatts.
There are also potential incremental FERC-regulated natural gas pipeline investments to meet the increasing energy needs of customers in the Southeast. Combined, we estimate that reasonable outcomes for these opportunities represent a potential range of incremental regulated capital investments totaling $10 billion to $15 billion for 2025 to 2029. As a reminder, we are currently in active regulatory processes for the vast majority of these opportunities, and given the timing of these ongoing regulatory processes, it's likely that we could have better line of sight on a substantial portion of these potential incremental investments later this year, at which time we could update our base capital investment plan. The financing plan we have provided supports our base capital plan and continues to fund the business in a credit-supportive manner. Preserving our investment-grade credit ratings continues to be a priority.
As we believe that to be a high-quality equity investment, a company must also be a high-quality credit. Our base plan projects average annual equity needs of approximately $800 million a year to support our credit quality and our progress toward our credit metric target of approximately 17% FFO to debt by the latter part of our forecast horizon. These equity needs should be easily manageable within our internal plans, which provide approximately $350 million to $400 million annually, plus our at-the-market or ATM program. To the extent incremental capital opportunities become part of our base capital investment plan, our credit quality objectives would remain the same. Accordingly, we would expect to fund incremental capital investments above our current plan with approximately 30% to 40% equity or equity equivalents. We expect to continue to be flexible and to use the same shareholder-focused discipline we have demonstrated historically when it comes to sourcing incremental equity or equity equivalents.
Since our last earnings call, we've already addressed roughly $500 million of equity needs for 2025 by pricing ATM sales under forward contracts and through the issuance of junior subordinated notes or JSNs, which received 50% equity treatment by the credit rating agencies. For decades, our dividend has been an integral part of our value proposition for shareholders. Southern Company has paid a dividend that is equal to or greater than the previous year for 77 consecutive years, with consecutive increases over each of the last 23 years. While future dividend increases are subject to approval by our Board of Directors, we project continued modest increases in the dividend over our forecast horizon. This should serve to lower our dividend payout ratio into the low to mid-60% range as we balance our equity needs with this very important component of our value proposition. Turning now to our earnings guidance for 2025 and beyond.
Our adjusted earnings per share guidance range for 2025 is $4.20 to $4.30 per share. Our adjusted guidance midpoint of $4.25 represents 6% growth from our 2024 adjusted EPS guidance midpoint. Our projected long-term adjusted EPS growth rate guidance is unchanged at 5% to 7% from our 2024 guidance. Clearly, we are seeing strong fundamentals that we expect to support our long-term growth. These growth drivers become increasingly significant in the latter years of our forecast horizon. At the same time, interest rates, which are now expected to be higher for even longer, continue to be a partially offsetting factor as our parent company debt gets refinanced at meaningfully higher rates than the securities outstanding today. That said, we are increasingly encouraged about the strength of our long-term earnings outlook. All else being equal, and assuming the current positive momentum continues, including the potential for a significant portion of the incremental capital opportunities we've highlighted materializing, we believe our long-term adjusted EPS should be near the top of our projected long-term range.
Assuming this potentially improved trajectory appears sustainable, we also could be positioned to rebase our 5% to 7% projected growth trajectory at a higher starting point as early as 2027. Chris, I'll now turn the call back over to you.
Thank you, Dan. We are very excited about the future here at Southern Company. When it comes to the incredible growth we see, our objective is to serve as much of this growing electric load as we can sustainably serve. The vertically integrated state-regulated service territories that we are privileged to serve are proving well-suited to attracting these large-load customers. And thanks to integrated resource plans and the other orderly processes inherent in our regulated frameworks, our market is also perhaps proven to be better suited than the unregulated markets at effectively deploying new resources to serve them. Our disciplined approach to forecasting these needs will continue to include a measured, risk-adjusted methodology, as well as pricing and contract terms for new large local customers that continue to benefit and protect our existing customers and investors. As we continue to grow, strong credit quality remains paramount.
This important buffer against adversity distinguishes Southern Company from much of the industry and serves to insulate investors from sudden market impacts as the world around us changes. Additionally, one of my top priorities is our team here at Southern Company. We believe we have one of the most talented and deepest benches in the industry; continuing to prioritize and invest in the development of our future leaders is crucial to maintain our competitive edge and ensuring our continued long-term success. And finally, we aspire to deliver premier risk-adjusted total returns to investors. Our aim is to be a high-quality, must-own stock and a company built to endure, and we believe delivering exceptional value to our shareholders is best achieved by putting our customers first, including providing reliable and affordable energy. We had a phenomenal year in 2024, and I'm extremely proud of all we have accomplished as one team across our company.
Southern Company is poised for a bright future, and I cannot be more excited for the opportunities ahead of us. Thank you for joining us this afternoon, and thank you for your continued interest in Southern Company. Operator, we are now ready to take questions.
And before we do, let me just say thanks for everyone's patience as the webcast apparently was only not working temporarily; the dial-in is working fine. We will have the entirety of the recording posted for replay after the call.
分析師問答
The first question comes from Carly Davenport with Goldman Sachs. Please proceed with your question.
Maybe just to start on the earnings growth cadence. Could you just flesh out your comments a bit more there just in terms of where you could trend in that 5% to 7% range as we move through the 5 years of the current plan, just as you think about the increased rate base growth and the upside capital investment opportunities? And maybe just anything that you see at this point that could potentially derail that trend?
Thank you for the question and for joining us. The key point to emphasize is that our outlook remains steady. We maintain a strong long-term forecast of 5% to 7%. We are now seeing some additional fundamental factors that are enhancing our overall profile. When we mention increased durability, we mean that we are not simply striving each year to reach our targets. There are enough positive fundamentals at play that give us greater confidence in sustaining this long-term outlook. With the recent updates and the potential for more capital clarity in the near future, we are solidly within our range and possibly trending toward the upper end. Looking ahead to 2027, we might maintain the 5% to 7% growth rate or even start that growth from a higher baseline. For now, we remain in the same position we were in.
Great. That's super helpful. I appreciate that. And then maybe just on that $10 billion to $15 billion of investment opportunities above the plan. Could you talk a little bit about how we should think about the split between sort of what's at Georgia Power versus you referenced that natural gas pipeline opportunity? And any color in terms of sort of the outcomes that underpin that estimated CapEx?
Yes, it mainly involves Georgia Power, with some involvement from natural gas pipelines. In our 10-K, we mentioned an amount of up to $14 billion related to the Georgia Power aspect. As I indicated earlier, the regulatory processes for these are ongoing, and we will adhere to the same level of discipline we’ve had in the past. We won’t delve into the specifics just yet. We expect to have more clarity around July. The financial figures are significant, especially considering the RFPs indicated on Slide 16. Historically, all-source RFPs represent large dispatchable resources, which traditionally lead to purchase power agreements. Given the current market conditions, a considerable amount of the previously available excess capacity has been absorbed by the load-serving entities in the region, resulting in a tighter supply and a higher likelihood of needing to build new capacity. I'll pause there and see if this answers your question, Carly.
That does. Thank you so much for the color.
Our next question comes from Julian Dumoulin-Smith with Jefferies. Please proceed with your question.
Team, very nicely done. I feel the confidence exceeding from you guys. With that said, just maybe to add to the commentary on the regulated side of the business. You provided a number of comments about Southern Power. Is there any kind of metric you can disclose around the cumulative earnings trajectory that you guys are seeing there today or the potential of repowering on a cumulative basis through the early part of the decade? Obviously, you have a number of different assets at which prices are not disclosed that come up. So, clearly, there's an opportunity. It's just difficult to discern externally and how does that add incrementally ultimately to that commentary on 5% to 7%, if you can elaborate, if you don’t mind.
Yes, I'm happy to answer that, Julien. I want to emphasize the work because it aligns with the opportunities at Southern Power, highlighting the durability and sustainability of our long-term trajectory. Most of Southern Power's current assets are secured under long-term contracts, lasting through the end of this decade. The chances for recontracting will likely provide benefits into the next decade, reinforcing that durability idea. Regarding options to construct new brownfield gas plants or generate new energy outside of the Southeast, these will also follow a similar timeline, not due to a lack of opportunities, but because of the general industry timelines for deploying such resources, including getting new equipment and the construction process. This too points to opportunities towards the end of the decade. In the meantime, we are actively working on repowering our first project at one of our wind facilities while new solar facilities are under construction. We'll continue to be opportunistic where it makes sense, even if those opportunities are limited. Overall, Julien, I see Southern Power as a steady contributor to the current landscape, with opportunities emerging toward the end of this period and into the next decade.
Julien, I want to emphasize that our conversation highlights how these complementary businesses provide us with greater resilience amid the current market opportunities, which we are excited about. We haven't discussed them much in the past, but seeing the changes in the marketplace and the potential in front of us with these complementary businesses, we felt it was important to share our insights. This not only supports our growth trajectory but also enhances our resilience moving forward.
Yes. And if I can complement that question further, I mean you talk about retail sales accelerating, obviously, within your regulated confines. How do you think about leveraging the sites themselves for co-location opportunities or supplementing not just with repowering, but additional outright potential gas turbines here to serve these data center opportunities? I mean, again, if you think about Southern Power recontracting, but truly additional within or in adjacent service territories, how does that fit into the plan as well, just to be clear.
Yes, Julian, if you're looking at Slide 8 in our presentation for Southern Power, it directly addresses your inquiry about maximizing the opportunities in the Southeast. Key factors to consider include the rates related to the current natural gas fleet and the brownfield gas plants in the region. We have a pipeline of 50 gigawatts extending to the mid-2030s, indicating a long-term prospect for Southern Power in this area. While co-location isn't part of our market strategy, we are very comfortable with our vertically integrated market. Southern Power has significant potential to serve load-serving entities that, in turn, cater to data centers, creating a remarkable opportunity.
Our next question comes from Steve Fleishman with Wolfe Research. Please proceed with your question.
So, I appreciate the additional color on the capital plan and potential kind of growth opportunity. Just wanted clarity on one piece of that. So, Dan, you mentioned the ability to reach the high end and also mentioned this possibility of rebasing. And I guess, first of all, why is 2027 kind of a key year for that that might drive it? And is there any way to give any sense of the size of rebasing that might be there?
Thank you for the question, Steve. We're not going to jump ahead of ourselves. Let's wait until we actually rebase to measure the magnitude of any potential changes. Regarding why 2027 is significant, there are many factors at play. A lot of the immense growth we are experiencing is long-term, with the capital spending and revenue from our large load customers being more weighted towards the latter part of the plan. Additionally, as I briefly mentioned earlier, the current interest costs are a major consideration. This is likely the biggest factor affecting the early years. As we refinance our existing securities, which are currently at very low rates, this impacts our current situation. Once we move past this and these opportunities become more concrete rather than just forecasts, we’ll have a clearer outlook. That’s essentially what supports the importance of the year 2027.
Got it. Okay. So basically, some of the headwind maybe moderates then that's been there in the earlier years.
There's only so much debt needs to be refinanced.
Yes, that's good. Okay. I would like to know what you have been doing prior to receiving approval for a change in how you can contract with data centers in Georgia. What new strategies are you able to implement going forward?
Steve, we've already been implementing quite a bit of that. The codification and communication to data center customers has been well received by them and the market. As you know, the Georgia Public Service Commission approved these rules and regulations in January to ensure that all risks and costs are transparent for large load customers of over 100 megawatts. This is meant to promote balance and fairness among all customers by providing tools such as credit requirements, extending contract terms from five to 15 years, and setting minimum billing alongside specific costs that customers are already paying. These practices are already in place. I believe that this certainty and formalization of these processes enhance clarity in the marketplace. While some aspects are new, many of them have been practiced by us for some time.
Yes. One of the incremental changes we believe will greatly benefit us in managing this growth is the introduction of credit or collateral requirements for customers in our pipeline. These provisions will help us eliminate more speculative projects. As a result, those observing may notice a slight reduction in the size of the pipeline over the next three to six months. This shift is not due to the disappearance of customers who will eventually locate in our state, but rather because the more speculative projects are unable to provide the necessary collateral to remain in the queue. Feedback from many large customers, including those you may recognize who are interested in building infrastructure, indicates they are enthusiastic about these changes. This ensures that our focus is on serving the needs of more viable projects.
Our next question comes from Anthony Crowdell with Mizuho. Please proceed with your question.
Just quick, I guess, housekeeping. The 5% to 7% growth rate from '24, is that off of '24 actual or off the midpoint of the '24 range?
It's off of our 2024 guidance. So yes, not a fact we're just trying to reflect the kind of normal course of business, not any kind of one-time things that might be in the number.
Great. Perfect. Referring to Slide 17 and building on Carly's earlier question about the $10 billion to $15 billion in capital investments, could you clarify how the announcements will be communicated? Should we expect quarterly updates, or will we need to wait for the fourth quarter to see progress?
I believe that with the clarity we will have, it is certainly possible that by the time of our second quarter call, we could provide a bit more visibility on this. The fourth quarter will still be our official time to update everything, but given the scale and speed of this situation, there may be an update in July.
Great. And just one last question regarding Steve's inquiry. You mentioned the parent and some of the financing on Slide 26. Thanks for clarifying that. Regarding the $9 billion of parent debt maturing over the next three years, do you have an average coupon? If not, I can follow up later. I didn't mean to put you on the spot.
Yes, follow up with IR to kind of get something a little more specific. I'm sure that's all available in the public domain. But the just in terms of magnitude, it's largely, these are having to be refinanced at rates that are, in some cases, 150 basis points to 200 basis points higher.
Our next question comes from David Arcaro with Morgan Stanley. Please proceed with your question.
Thanks so much. I was wondering if you could touch on what you're seeing in terms of the availability of gas turbines and what the pricing backdrop is looking like? I'm thinking with the you've got all source RFPs coming up that may lean toward dispatchable gas generation over time? It seems like there could be more coming in your plans in the future and then also thinking about Southern Power. So, I guess, what's your access to turbine these days?
We feel pretty good. I mean, we have diversified our suppliers, and we are engaged with a number of different suppliers. Clearly, we're having to pay reservation fees to get in line. But I mean, I'll tell you right now, we feel pretty good about where we are because of our history with these OEMs and having this diverse supplier experience that we've been engaged with over a number of years. So yes, it's challenging. I mean, there's a heavy demand on the supplier part. But right now, we're having ongoing conversations with them, letting them know what our needs are. And like I said, we're making the reservations to make sure we're in line to respond to the needs that we have.
And we're doing the exact same thing, Dave, with EPC providers.
Okay. Excellent. And let me see, Dan, I was curious, just looking at FFO to debt in the path here, 15.5% when you exclude the storm impact, could you talk about the trajectory when you'd be aiming for that 17% FFO to debt level and kind of describe the path to get there from here?
Yes, I would say that especially for our base forecast, the middle to late part of our five-year plan seems reasonable and achievable. If we experience increased capital needs, our goal remains unchanged, but we will adopt a careful approach to reach it. The latter part of the plan still appears reasonable. In 2025, you might notice a somewhat stable trend in the FFO to debt ratio, starting from the adjusted figure you mentioned. This is largely due to delays in addressing storm-related costs, which we likely won't begin to recover until after 2025.
Our next question comes from Jeremy Tonet with JPMorgan Chase. Please proceed with your question.
A lot of growth coming through there. And maybe just want to peel back a little bit more on Alabama and Mississippi there. I think you talked about data centers, a bit of growth there. But just wondering I guess, if you could provide a bit more color on what you're seeing there, what could the upside be there over time? It seems like these states are, Mississippi in particular, is really kind of pursuing some of growth more aggressively than others? And just any other thoughts would be helpful.
Yes, in Alabama, a project was announced mid-last year involving a couple of hundred megawatts. There is now increased activity in that region, and their broader economic development pipeline is very busy with various projects, similar to Mississippi. Mississippi has publicly announced the Compass project and has also had a chemical manufacturer that expanded its operations. This presents significant capacity opportunities for them. As we mentioned earlier, we are observing a migration and increased activity moving westward across our territory, which enhances the excitement and potential opportunities we see for our company and in the future. Yes. In Alabama, there was a meta project that was announced around the middle of last year, which involved a couple of hundred megawatts. There is currently more activity taking place there. Their broader economic development pipeline is very full of activities and projects, and the same can be said for Mississippi.
Mississippi publicly announced the Compass project, and they also had a chemical manufacturer that expanded its line. Thus, there were significant capacity opportunities for them. As we mentioned earlier, we are seeing this migration and activity moving westward across our territory. Once again, it adds to the excitement and opportunities we anticipate for our company and the future. Let me be clear. This country needs more nuclear power. New nuclear energy is the best long-term solution for the low growth currently facing the industry. You've pointed out the risks, and it's crucial to address these risks whether through federal involvement or private companies willing to engage. We plan to continue advocating for the advantages we're seeing with Bob and I, highlighting how well these units are operating and their value amid our growth. We witnessed significant efficiency gains transitioning from Unit 3 to Unit 4, creating a compelling narrative for investing in more nuclear units.
The more we build, the better we become at all facets of this process, including supply chain and workforce, which will enhance each project as we progress. Therefore, we will keep collaborating with our partners and utility companies to emphasize the benefits and value of new nuclear energy going forward.
Our next question is from Durgesh Chopra with Evercore. Please proceed with your question.
I have just one quick question. We've covered a lot already, and all my other questions have been addressed. I'm trying to understand the increase in capital expenditures related to equity. Capital expenditures rose by $13 billion, and last time you provided partial equity. This time, you've allocated equity toward the five-year plan, which I appreciate. However, according to my calculations, that suggests roughly 20% of the capital increase, while you indicated it could be 30% to 40%. Could you clarify the factors at play? Is it related to a slowdown in dividend growth or more opportunities for tax transferability monetization? What are the key elements involved?
Yes, Durgesh, I want to say it's all of the above. You really did highlight some key points. It is the other cash flow improvements. The transferability certainly supports our overall five-year plan with the tax credits we have. Everything we've done has helped reduce our equity needs prior to this, not just the $500 million we took off the table for 2025, but our approach to our financing plan last year with equity content. We are also focusing on taking a pragmatic long-term view on our objectives. I believe we are incredibly well positioned. We prioritize having a buffer against adversity, but there is no need to make impulsive decisions to meet specific numbers in any given year as long as we maintain our long-term objectives and discipline. Yes, that won't surprise you. We're not going to get ahead of ourselves. In terms of assessing the magnitude of any rebasing, let's just wait until we rebase if that happens to measure it.
As for why 2027, there are many factors at play. It largely reflects the significant long-term growth we keep describing. The increase in capital spending and revenues from these large load customers are primarily back-end loaded in the plan. Additionally, as I mentioned briefly in the prepared remarks, it's influenced by the current interest costs. This is likely the biggest factor holding us back in the early years, especially since we need to refinance some of our existing securities that are currently at ultra-low rates in the current market. However, once we move past that and these opportunities become more concrete rather than just projections, we feel very optimistic about them. In other words, that’s the reasoning behind targeting 2027.
And that will conclude today's question-and-answer session. Sir, there are any closing remarks.
Again, let me thank each of you for taking time to spend time with us today, and thank you for your interest in Southern Company. We are incredibly excited about our future and we look forward to talking to you again in the future. Thank you very much, and have a good day.
And before we do, let me just say thanks for everyone's patience is the webcast apparently was only not working temporarily; the dial-in is working fine. We will have the entirety of the recording posted for replay after the call.
Thank you, sir. Ladies and gentlemen, this concludes the Southern Company Fourth Quarter 2024 Earnings Call. You may now disconnect, and we thank you for your participation.