SOUTHERN CO(SOMN)Q2 2026 法說會逐字稿

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 measures 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 gigawatts, while Georgia Power signed a 3.2 gigawatt 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 gigawatt of flexible demand response, helping to support reliable energy for all customers when demand is highest. Combined, these four projects representing 6 gigawatts of newly contracted customer load, along with agreements previously signed, brings our total contracted large-load agreements across our electric subsidiaries to over 17 gigawatts by the mid-2030s. These projects are not just bringing in substantial construction work. They are creating thousands of permanent jobs and generating billions of dollars of investment for the local economies and our service territories, and we are proud to responsibly support this growth in a way that benefits the communities we serve. In Alabama, the three new contracts were a clear confirmation of the continued economic development momentum building across all our electric service territories and our differentiated large-load capabilities. Increasingly, our vertically integrated state-regulated model supports our ability to provide reliable power with speed and is an important differentiator for our new and existing customers. Our success attracting significant growth is a testament to the benefits that this model affords all of our customers. As a comprehensive one-stop shop for power solutions and economic development, our electric operating companies utilize long-range integrated system planning processes to coordinate timely development of generation, transmission, and distribution assets through well-structured and transparent regulatory processes that are designed to serve growth reliably. The Southeast, with its robust network of transportation and logistics infrastructure, diverse workforce, and a constructive business climate, continues to be highly attractive for all forms of economic development, including hyperscalers, data center developers, and other large industrial manufacturers. Looking ahead, the opportunities for additional new large-load and data center customer growth remains robust. New projects continue to be added to our prospective pipeline of large industrial and data center projects, which remains well above 75 gigawatts. We are encouraged by the continued progression of potential large-load projects in varying stages of advanced development. Beyond the 17 gigawatts already contracted, there are an additional 8 gigawatts of projects in late stages, including 3 gigawatts 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, 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 toward 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. Systemwide, our data center load now exceeds 1.2 gigawatts, an increase of more than 500 megawatts over the prior year, and we expect this trend to continue accelerating as our 17 gigawatts 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 gigawatts 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 toward 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, the 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 toward the top half of our long-term earnings trajectory. Ultimately, this is a long-term business in which capital is deployed to serve customers for many decades. As we deliver for the communities we serve each and every day as we work towards our goal to provide sustainable long-term growth and outstanding financial integrity year after year, we are well positioned to continue executing with a discipline that is rooted in our long-standing commitment to our customers and investors alike. As we conclude our prepared remarks today, I want to emphasize Southern Company's commitment to making the communities that we have the privilege to serve better off because we are there. As a partner to the communities and cities where we operate, we were proud to help support Atlanta's efforts over the last two months in hosting eight FIFA World Cup matches on the world stage. The success was a culmination of years of hard work by local, regional, and state leadership, and included significant investment in local infrastructure to welcome hundreds of thousands of visitors to Atlanta. This event was an excellent showcase for the Southeastern United States and an opportunity to continue building upon the momentum that defines this region, which will have an impact that will resonate for decades to come. Operator, we are now ready to take questions.

Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press two if you would like to remove your question from the queue. Participants using speaker equipment, it may be necessary to pick up your handset. One moment, please, while we poll for questions. Our first question comes from the line of Nick Campanella with Barclays. Please proceed with your question.

Hey, good morning — or good afternoon, rather. Hope you are hearing me.

Hey, Nick.

We can hear you, Nick.

How's it going? Now that you have higher visibility on on-track megawatts and load ramps, specifically 2028 increased by a few gigawatts here, how does that incremental sales revenue and visibility impact your ability to maybe extend or stay out further and be 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, it creates optionality 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?

Thanks, Christopher, and hey, good afternoon, Nick. Great question. As we work through these processes with the success that we have had in signing these contracts, it does give us a great deal of flexibility in enhancing the benefits for customers. Clearly, we have the ability to look for more generation capacity through the structured processes that we have in Alabama and Georgia. Like we have talked about in the past, we are probably about 1 gigawatt 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 that we have had in signing these contracts really gives us some durability toward the future and additional confidence in being able to deliver on our goals well into the next decade.

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

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 project, they will 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. Thanks, Nick.

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

What is up, Shahriar? How are you doing?

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 gigawatt pipeline? What does this mean for the plan?

Shahriar, we have talked about this on a number of calls. As these contracts begin to roll off and expire, there is an opportunity for recontracting. The team is now in the midst of conversations with a host of different counterparties. You understand our risk profile in terms of making sure they are creditworthy counterparties. In terms of 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 have talked about this a good bit, and that is where we are — we are going to continue to pursue this opportunity as these contracts expire and recontracting opportunities present themselves.

Got it. These would not just be typical tolling agreements; they would be energy and capacity under a long-term PPA, correct? Perfect. Okay. And then I know, Christopher, your favorite topic is new nuclear. With lessons learned between unit 3 and 4 and the big attention now to large-scale reactors, would any financial backing from the government to help take on some cost overrun risk be something Southern would be interested in? Participating in a consortium or licensing blueprints — any color on potentially participating?

Shahriar, thank you. You have heard me talk a lot about the importance of new nuclear helping this country meet this incredible moment. I do think as we look into the 2030s, particularly in the mid-2030s, this country needs additional nuclear units in operation. I have to give a big compliment to the administration for actions taken on the regulatory front, bringing groups together around long-lead-time items and other actions. We are having many conversations with them about how to make this a reality. Southern Company is not going to be next, let me 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. It is important from an energy policy standpoint and for the economy to meet this demand.

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 hyperscalers about what role they can play in this equation.

Fantastic. Thank you very much. I 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've talked in the past about the potential for upside on the capital plan related to FERC pipeline investments. Anything new on that front in terms of timing, especially as you think about the incremental RFPs that maybe could point to some incremental gas plant builds?

Sure, Carly. Great question. With the contracts we are signing and the growth in the Southeast region, we definitely see opportunities in our FERC-regulated pipeline investments. As opportunities continue to grow, we see the possibility of expanded investment in those pipelines. The RFP processes in our regulated jurisdictions will help inform that. We see great potential in the Southeast to continue to grow those investments.

Carly, I would add that infrastructure across the Southeast is needed to support this growth that is here and for the growth to come. There is more to be done and real opportunity for us in pipeline expansion to align with the needs portrayed in our RFPs.

Got it. That is really helpful. And then 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've seen over the last quarter or so? Is there potential room for upside beyond the incremental RFPs if you think about conversion of the pipeline?

I love the phrase 'incremental to the incremental.' The opportunities we see are well baked into the RFPs. We talk about our load forecast and use conservative processes to project need. As we continue to sign contracts, that will be the foundation for the RFPs in Alabama and Georgia. There is certainly potential to procure more generation than identified right now, but we cannot get ahead of the process. There's thorough screening, good vetting, and everyone will have an opportunity to participate. Also, it's worth reminding that there are no placeholders in our capital plan. We do not get ahead of our regulators. The upside we've talked about is not in our capital plan at the moment. RFPs that are open 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 about 1 gigawatt, so that illustrates where we are and what the upside opportunities are.

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

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

Hi, Stephen.

Hey, good afternoon. Thanks for taking my question. Just a quick follow-up on Carly's question. My understanding is any new incremental large load, especially in Alabama, would drive incremental generation requirements. We have the RFP outstanding, but if the load forecast is up about 3 gigawatts in the quarter and then you are talking about OpenAI at least 1 gigawatt, and the RFP is 2 to 6, can you frame whether this is perhaps 4 to 5+ gigawatts of generation needed? How should we think about the size?

Great question. You're thinking about it directionally correct, and appreciate the thought about not getting ahead of the process. We have the newly signed contracts in Alabama about 3 gigawatts, and we're about 1 gigawatt or so oversubscribed in Georgia based on what we've signed. A decent rule of thumb to think about capital opportunities is about $2 billion or so related to roughly 1 gigawatt of new generating capacity, which covers a broad range of different generating sources for us.

That is very helpful. In terms of the finalizing late-stage pipeline, how do those finalizing gigawatts filter into the RFP and what's the timeline for when those loads would energize and when resources are needed?

Those projects will vary project by project. As we finalize agreements and they are certified by the commissions, they will factor into the RFP process to match up with the year in which those resources are needed. As we finalize contracts, that information will be forthcoming. There are proceedings that will show how that aligns with needs and what the new opportunities are going forward.

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

That is very helpful. Thanks, Christopher and David. Appreciate the time.

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

Hey, Jeremy.

Hi, good afternoon. Just wanted to pivot to Mississippi for a minute. We've had recent stakeholder conversations in the state where it seems the state is receptive to incremental data center activity. Could you talk a little about the opportunity set and what you see down the pipeline there?

We've talked for a number of quarters about seeing momentum migrate west. You are clearly seeing that now in Alabama. We have seen success with 100 megawatt projects in Mississippi, and our pipeline reflects increasing activity in the Mississippi territory.

Got it. Thank you. On OpenAI with demand response, how is demand response fitting into your conversations for 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 like to see it continue. It is one of the great aspects our three electric jurisdictions have: we are not limited to just a tariff. We can negotiate bilateral contracts leveraging flexibility and the demands these hyperscalers want and price that appropriately. This is a great trend, it is part of every conversation we have.

Early in our conversations with hyperscalers, we begin to raise technical requirements in terms of how their operations would impact the system and the grid — not just being a taker but creating flexibility to provide benefits to the entire grid. This broader conversation about data centers, value, benefits, and flexibility needs to be communicated more broadly. There is a very positive narrative about how they can support the grid and communities, and we and hyperscalers need to do a better job explaining these benefits and dispelling misinformation.

Makes sense — a story to be told more. Thank you.

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

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

Remember the four pillars under which we negotiate and structure these contracts in our territories. You have long-term contracts — OpenAI is 25 years. Our minimum bills cover 100% of the incremental cost to serve. There are default provisions tied to collateral. We have flexibility in the forms of collateral we can accept from counterparties. If a parent guarantee works depending on the counterparty's credit quality, we will work with that, but in some instances where they are not at the investment-grade level we want, we will look to lines of credit, surety bonds, and other combinations. The collateral portfolio we will take to back these contracts is intended to put us at about an A- position or better. Regarding OpenAI specifically, on full ramp there is about $20.8 billion of collateral in the aggregate.

That is clear. The RFPs — can you remind us the timelines for finalizing answers and then 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 selected, those move into a certification process that will take place throughout much of 2027, so by the latter part of 2027 we'll have good clarity as to what actually gets certified. Alabama follows a fairly similar timeline, so you can expect the proceedings in Georgia and Alabama to be close, though not exactly parallel.

Lastly, on Georgia, you've highlighted benefits both economic and for customer rates from data centers, but there's political noise, particularly from some Democrats. Can you give a lay of the land — is there growing appreciation for benefits to offset some pushback?

I would suggest looking at the OpenAI announcement and how it played out with the community. The announcement highlighted the rate stability and economic community benefits that align with the project. There is noise nationally about data centers, and you may see moratoria in various counties, but projects continue to advance and get approved in our territory. Hyperscalers need to do a better job explaining benefits and value and dispelling misinformation on social media, but the pipeline remains full and projects continue to move forward.

Steven, let me clarify: earlier when I referenced collateral I was speaking about the entire portfolio of 17 gigawatts, which aggregates to about $21 billion of collateral. I apologize for any confusion about the earlier comment specific to OpenAI.

That's very helpful. Thanks a lot.

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. I want to follow up on the gigawatt of demand response. Is this the first time you've done something like that? Have you quantified the long-term savings for customers? 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 sees benefits across the entire project. During peak load periods, flexible demand response can reduce peak, and as we operate the economic system on a minute-by-minute basis, putting online the most economical resource to meet load provides tremendous value and benefits to the entire grid. Having that resource be flexible is an incredible value to the system.

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

Yes, it is the first time we've done something like this at that scale with a data center.

On equity: you settled $2 billion of the ATM priced in 2025, and you've priced $700 million that will settle through 2028. Any guidance on the pace of equity and when it will actually 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 deciding how to draw equity commitments. The forward contracts are available to us on short notice, so we have flexibility to manage liquidity over that period. Generally, we want to shape draws to mirror capital outlays for construction, and it dovetails into our plan to get near 17% FFO to debt by 2029. We have settled about $2 billion recently, which helps toward the 17% goal. We will continue to do this in the most shareholder-friendly manner possible, protect credit quality, and draw as needs and opportunities become available.

Fair enough. Thanks.

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

Julien, hey there.

Hey, thanks for the time. I wanted to take this in the direction of rates and rate cases. With the ongoing success, how do you think about the opportunity in Georgia and Alabama — especially Georgia — to come back with larger rate credits or to effectively sidestep the revenue process, similar to prior outcomes? Is there an opportunity here?

Julien, as you know, we do not get ahead of our regulators. We work very constructively with them. Our goal is always to keep rates as low as possible for our customers, and we are pleased with how we are delivering rate stability to our customers through 2028. As we continue to sign these contracts, there will be conversations with regulators about what's possible, but I'm not going to get ahead of any proceeding or commission conversation at this time. Growth provides incredible opportunities to benefit customers and continue to deliver rate stability. Notably, while there's commentary about inflation and rates rising broadly, electric rates are not going up in our territory — we are delivering rate stability, and that delivers real nominal savings for customers when rates are flat.

On Alabama, how do you think about translating this growth into rates? Do you use the CMP process to bring on some of the new capacity for the incremental 3 gigawatts, and is there an equivalent thought process there?

They will go through traditional proceedings for certification and approval. Alabama has made changes in the structure and size of the commission and will have a new secretary of energy. They have been codifying procedures for signing contracts and approving projects. Alabama has an orderly process to approve contracts, get projects approved by the commission, and get them into rates as well as through the RFP process. There are great opportunities in Alabama and long-term benefits for customers.

Thank you, guys. I appreciate it.

Our next question comes from the line of Richard Sunderland with Truist Securities. Please proceed with your question.

Hey, Richard.

Hey, good afternoon. Just circling back to Southern Power. Curious about the tone and interest on remaining upgrades and brownfield efforts. I think you targeted an update later this year. Given the load trends, how is all of that trending, and are you still thinking about a Southern Power update this year?

Great question. We continue to evaluate those opportunities. Conversations with current counterparties and exploring opportunities with new counterparties are proving to be fruitful. Southern Power's business model is disciplined: we do not build and then see who shows up. We engage in structured processes and continue to have productive conversations. There is potential to reprice contracts that will come off and to take advantage of the upgrades we announced last quarter. As we have clarity, we will provide updates on the activities under consideration at Southern Power.

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

Turning back to sales growth and the data center load added recently: any learnings from that ramp-up and sales trends, and how might that apply to your outlook for load growth and the EPS guidance?

One of the things we see is the need to work very closely with projects on ramp rates — they may not be what was predicted when initially approved. We work closely with customers to understand ramp rates and system implications. But the minimum bills we include provide a level of decoupling so we can manage revenue expectations. The load is real and we know it is coming even if not immediately present.

To add, the customers we've been serving for years have taught us a lot and helped inform these new contracts. Protections we put in place — minimum bills and collateral — are distinct advantages that will protect customers and the company. We crossed over 1,000 megawatts this quarter in the data center portfolio and the growth has been fantastic. It's very 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: what made that location unique and why did both you and OpenAI decide that location could handle a project of this size? Also, are there other areas in your service territory where a project of that size can be constructed and operational in a similar timeframe?

These projects involve a lot of courting and evaluation of sites and geography, topography, proximity to electric infrastructure, and availability of other resources. There isn't a single set of criteria; it's a lot of investigation to see what works for the projects. We are glad when they work out and we have a number of meaningful sites available across our service territory for additional consideration. Savannah and Effingham County have proven to be excellent sites for economic activity given the strong local economy, proximity to Hyundai, and the Port of Savannah's national leadership in shipping activity.

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

We look at many structures, but at the moment we don't see a need for minority investments. We like the options we've had in the market, the reception to our securities issuance, and we don't see that as a need in the foreseeable future.

Got it. Thanks a lot.

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 is 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 today. Have a good rest of the day.

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