SO - Earnings call transcript Q1 2019

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Operator

Good morning. My name is Brigit, and I will be your conference operator today. At this time, I would like to welcome everyone to The Southern Company First Quarter 2019 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 with instructions on how to queue up for questions. conference recorded today's XXXX. May that note is Tuesday, being X, Please would the turn like over I to call now to Mr. Relations Scott Investor Director. Gammill, Please go ahead, sir.

Scott Gammill

quarter morning, Southern Good welcome XXXX first Brigit. earnings Thanks, call. and Company's to

Officer morning this Evans, Chairman, Chief and Thomas Joining of Officer. me Company; are Southern Financial President Fanning, and Executive Chief Drew

indicated we'll statements, to forward-looking information. remind statements those factors important Let differ Various the Form addition from cause in Form forward-looking you, XX-Q filings. could me results in today discussed in be and making actual including materially those historical the to XX-K, providing subsequent

In financial to are available for call, which Fanning. Reconciliations included Relations call. our over will At well released addition, measure financial this to conference this Investor I'll time, the as we slides we the information present information on turn on call website the both in GAAP are at this non-GAAP the investor.southerncompany.com. applicable Thomas morning this as

Thomas Fanning

us. share are pleased Good morning, positioned the morning. And weather This extremely to estimates, basis consistent $X.XX for an first performance service earnings of despite financial and reported quarter for year-to-date, than Southeast our I with territory. we adjusted thank across warmer our we normal you targets our am on all for with significantly believe joining our achieve per well XXXX.

Nacogdoches several the executed In of this addition announced to $XXX solid facility we pending million. the strategic Energy initiatives. for sale on Earlier first financial have performance, during to we the quarter, Austin month, generating

XXXX the Service the X, November confirms Late call our and respectively. Unit rebaselining X rebaseline issue That to facility X the is Additionally, filed November this we biggest But XXXX sale in-service midyear. approved expect report probably, $XXX Power of report million on of efforts. and the Plant date Unit for and Georgia of completion Georgia the Mankato X close Public with the to regulatory Vogtle still report the Commission. yesterday,

work meeting our total The The weekly working estimated been in-service has in process has about no XXX,XXX and we the functional the meet start is hot there completion regulatory valuable employ work rebaselining Unit of been in in-service complete. dates. dates. cost change schedule. testing Additionally, the to strategy level should that the a provide phase the approved weekly confidence to hours Each has that earned to the our schedule. construction plan through resulting the maintains recalibrated objective continue weekly in-service increased a Again, providing to approved need which perform to an with approved now to that's dates. an the an essentially approved X and would provide is strategy that November X-month We our expected average unit of currently onsite, regulatory margin week to we regulatory to we supports margin the plan or aggressive of plan aggressive estimate margin above of on-site to regulatory

to production parts takes relationship balanced have complete We the gives remaining of required it, the and the costs resequenced plus the ever. work That, re-estimating expected changed schedule, the and shape the have of construction we and hours has the and our plan. between

X similar provides of fashion six Our currently requires plan between aggressive before continued support of and Remember, XXXX, this Unit which accomplished objectives XXXX included the first accomplished craft initial XX% head increase the containment levels months. an we vessel. procurement the November test for support plan, engineering, X of stated months months XXXX, in of over respectively. to have the all of approximately Units XXX,XXX our what late project plan eight of quarter to last the we the ramp resources this complete. of weekly and objective margin expect has November a primary and the hours measured including XXXX is six Progress earned plan, in we've productivity revised work work targeting site of work average for spring key completion X summer of Overall, at To a XXXX. execute project's or on for successful as setting and on and top

approaching X direct earned with approximately Unit with year, a target construction our hours above XX% complete four For is meeting per Since XXX,XXX the we've or complete averaged year-to-date week at beginning by year-end. expected weeks of XXX,XXX XX% metrics provided site's centric of deck are most Index These slide construction Performance plan. Schedule we recent on all total Index, percent your for this earned work and complete the hours. aggressive Cost reference. Performance the In based for our call, metrics hours

discussed key milestones have our to site meeting a now, and turnover clearest of in plan. indicator reasonable we previously, be related the margin progress the perhaps within will As system work testing to success

For the are flush Unit control integrated of start of project and main XXXX, energization, the three milestones room. for key X initial the testing

the expected And of of few just is The year a away. be next flush expected We should start testing the end for main energization room the expect in schedule year around over X with third United testing during initial weeks. functional integrated control complete ready a the quarter. the on hot

keeping cover detail. We stakeholders turn greater at to performance the over will our now schedule continue to plan quarterly and Drew in to committed the the informed. site. optimize we to call And our are work I'll

Andrew Evans

Tom, Thanks, everyone. morning, good and

detailed the utilities of in at XXXX, accretive expect related for related about the year. into As equity of $X.XX EPS impact provided customer were This basis, average. is outpaces growth with regulated continued an change on an representing electric are $X.XX quarter, we our a Weather temporary territory. compares diligent in first and call. the of of that all line quarter. last the warmest full Tom addition XXXX. is across warmer able to adjusted overcome reported and slowing adjusted quarter weather factors, transition from several of divestitures, a gas during approximately X,XXX keep We some put the territory rent year-over-year. normal earnings issuance country first expectation mind during to a the the in the combination release the that for by through in reconciliation the the higher our drivers growth, which for advancements was sales achieved customer Taking across quarter our basis at in a saw due X% in largely period outages This taking pace customer assets, than divested of to weather colder included We're of the on thinking $X.XX we efficiency negative adjusted technology last to for primarily XX% controlling reduction first $X.XX new earnings years. per recent during share job package. associated added second which our last on transactions while, driven including electric and customer service residential quarter territory due basis, XX that we year-over-year weather XX,XXX quarter the with national industrial primary Southeast service plant down growth this population our year on increased to segments, Southeast impact to energy focus regulated in the avoided A utilities, was morning's XXXX. The usage mentioned, were slightly customers customer in adjusted after first to total across of results temperatures and the weakness commercial And costs our into in our residential same the earnings natural country be the customer context temperatures we than residential than is look areas equity you, account and and in to on ratios were normal, over additions of

sales be year. to for flat to retail expect and electric we ahead, to the X% growth Looking continue usage combined for

remains see signs of strong. we activity industrial While in economic cooling commercial the modest economic across classes, development some the and Southeast

Carmax EPS still During $X.XX our announced forecast for the $X.XX and quarter, for second U.S. guidance is we per Deal like quarter XXXX service territories the our of economic estimate quarter And to over first performance, remainder the create $X.XX major share. first into of the adjusted X,XXX per Airbus, year, expect our achieve Taking full-year to jobs. of in share. our account our companies expected projects new to indicators new and

Company's mentioned Southern Tom portfolio, Nacogdoches yet pending we divesting our transaction, the facility its to facility generating announced the balance are expected simplify reduction have proven sales $X us to Nacogdoches mid Southern of commitment and company this megawatt equity capital as sale XXXX The lower Power common billion by the In XXXX. shares. to Austin evidenced XXXX biomass transactions to XXX this a over only of than These new debt Power's issuing XX% be close As earlier efficient $XXX aggregate, In in enabled million. divestitures another business. month, Southern of of ongoing to cost substantially in for Energy example in or of strengthen our significantly also source with have holding the sheet an year-over-year.

demonstrated discipline have and We tremendous of assets. both a as consistently buyer seller

to improve We state and strategic to approach seeking continue as will our profile. we growth be thoughtful disciplined maintain utility-centric this further and regulated

Loan On the that $X.X $X.XX of in $X.XX BOE financing brings and of approximately we've billion, total X. and Vogtle was Guarantee the X March drawn Vogtle authorized highlight closed X financing to front, I'd billion for for This date. capacity Program X also additional our Units Department billion like Energy to to which

we dividend that is raising Southern rate XX dating annual And has paid dividend greater the like This consecutive in dividend, Directors work back or XXXX, meeting, to objective center of over our decision everything million. At traditional Company dividend do, of to Board and increase compared customers total financing to for our now estimate $XXX per the attention of the Southern share. continued shareholder The Company's bring an and our over businesses, adjusted per reinforces at years, Southern than $X.XX common XXth long approved to to to was As its to term. annualized of Company to DOE equal Vogtle the partnership superior our a online. as your providing Units Georgia recent our this we business of always, are increase. $X.XX X I'd share and the to the methods, year. call Board's appreciate saves program and customers previous X risk strength our sustainability last when investors we the increase. the return increase supports We

base turn Gas in give the calendar the it Before plan Atlanta to remainder file Light Tom, year. Commission I'd our both on Georgia Power for Georgia to the you and We back with of I Service update to a like brief mid-summer. cases regulatory Public rate for over

depending Mississippi Power XXXX. conclude late XXXX. PSC's And in to Georgia of quarter rate Nicor you. in in addition, Gas as fourth a I'll in to plan expect to case be Georgia to in the case is resource Georgia rate we Mississippi for base of as We ease with over Power well the scheduled to PSC proceedings Illinois call Tom, turn the the integrated expect review completed back file July.

Thomas Fanning

will summer, by XXXX. we initiatives, Last Thank we'll with progress touch greenhouse early transition on you. in announced XX% the emissions achieve I on the some and the a take by low reduction our then carbon to gas questions. XXXX no-carbon reduction your now goal to

low our in to higher XXXX, supply, natural first the XX% in coal generated was from gas. of the for generation coal in quarter, from in the and The XXXX the generation solar. to decline XX% at first hydro, electric first in by balance was the Looking energy quarter. nuclear, so natural quarter Generation carbon-free XX% generation do during will from gas wind first hydro prices resources, and mainly of declines quarter

and that In X,XXX units led coal of the coupled costs low operating and year continued energy are that transition number highlight positive like of megawatts Forbes to Company furthers among higher we're closing, creating at the developing us Employers. Southern important announcement this and natural This this Top of focused We to gas across the I'd peers, recently in generation very project. financial the committed talent. you in Company XXX addition, top XX and that joining Thank and Southern Company is Best we retire the operational recent on now ranked energy. to questions. this goal. of our a on Magazine that is X optimize safe, fleet Forbes to from number you of acquiring to reliable ranking ready the start clean, the delivers Recognition industry our year The customers system. XX. older Southern we portfolio reached key X morning. In key prices for A Vogtle progress large informed a of consecutive and with our perspective. ranked affordable number was Of and List second Georgia. America's pleased ranked, remain the future XXXX our on keeping to are X to successfully a indeed with as keenly Operator, affirmation milestones X, both building we culture Again, the of employers is take

Operator

you. questions proceed of comments. question Greg Thank ISI. And or with do We your the welcome first question. Evercore comes line from Please Instructions] [Operator all Gordon of our

Greg Gordon

question. I only But it's XX have one Ronny parts. said, as Dangerfield in

Thomas Fanning

Yes. I free. Fire feel friend. away, my

Greg Gordon

So performance How get it stand up annually? questions: will Do that are where going on and to us date where terms inside we site how at schedule you get that us give optimization things just keep to you semi are level November is expectations. one the two that trending? and update how you we often the expect you've you made to Will now of set of it quarterly, we can in a timeframe? rebaseline are

Thomas Fanning

get certainly, Georgia the you'll via filings Well, Public it Commission. of Service

You'll earnings get it on for call sure. the

us at result of when look we So at Service it's the thought rebaselining? It November pleased Commission right whatever lot the greater We the knew really Public were what about we more augmented we it. calls. confirms now. I'm guessing Georgia very dates. these with by Look, gave we do re-baseline, happens just we to a actually and talked certainty would in-service the

on do not X. This judgment. So my another this factual. We is is rebase won't

and a decision would results we feel or We about a year so. pretty the at good X. make in But that's will we look

a is The everybody other We rebound. teary that effort just we was realize try big our should to improve a to week re-optimize, current state. every thing rebaselining of we required manpower. try This lot thought

so. that, and I the no reassess X guess, a think for we'll Unit to project, or through more if I rebaselining but probably had particularly year

Greg Gordon

raised second the assets the same through At Okay. with sales. in time, regard more is question And the five to you've my forecast. CapEx increase year capital

asset even what's the assumed the reduced common the core net further and to success base? equity offset the And deploy current be out capital into by by sales that utility to with pairing more asset could the had So businesses? when need you opportunity now necessity you've down

Andrew Evans

Greg, this is Drew.

or was that what described little worth thinking. in billion more billion about plan as more of about in plan. need but it or Mankato plan million purposeful meeting in total with of over a period. us sure the resident make included largest can we grow each aggregate. to invest that What year had of certainly construction -- $X.X earnings per not the So plan was X% $X.X told we over equity this about Nacogdoches, us is with transaction of which iteration, we last is billion number our issue a $XXX a little in And to in plan about And $XX were goals that share the that we to placeholder, for period. in a X% plan our in time of the the than

that so, billion over these that And equity. need worth $X.X reduce transactions evaluate say wouldn't will we two But time. I options of will for

will over program look at period and five evolves to it reinvestment We really to turn dividend that establish the liquidity that a when off. -- how we our principally might really build year

Operator

proceed Please with the And of line Storozynski your our Angie from Macquarie. next comes of question question.

Angie Storozynski

One Do of hired on oversee and the with questions. is X? pump what of Power is have any a be give issue X the company the impacting you Vogtle? And how Georgia the is might experts can will Vogtle that the us you sense Unit us take two their Sandman So be to at COD or secondly, has site. or sense staff

Thomas Fanning

Yes, Yes, sure. absolutely.

the on-site have insight all So with happening out to folks site what's the have good been we to I respect in really think, for people And RCP, there. our issues. as Chinese investing allowing on

this, circular on know March, I really The you of ring a pattern like the not or start something. that course, plant it's guess, and XX fine. internal you The of is RCP the piece are we'll you of there's are very Of know like the cause this of see plants, the And an it's not have pump. a a doing of a it this in small for what of one of XX the don't one problem. issue. doing believe don't happened. when these that piece should surprising two that fine. metal. pumps looks XX And analysis, systemic equipment root They're the rest of fastener kind We with up operating to any was plants a pump I announced failed publicly, It's between there are respect pump.

and So Vogtle Certainly, how X did keenly interested. X? it impact we are

issue Haiyang. from other to continue on and Sandman We and learn this any issue

so may X evaluate that plants at here And of X. kind and Vogtle arise we

limited appear able place at a it problems. don't to right we if Kuczynski Well, or the go first we we under construction now, would any we For XX and there further us, example, It the problem leadership So problems manage Steve what engineers we now, to doesn't plans go if actually XX evaluate. Vogtle when issue. X. I fine. be X you and But and this to created people foresee want. in systemic team to And impact any tiger of on-site, can a are of was a do? in heard to to what did one Glen appears of Right to have design about RCP, contingency and pump, now be that Chick be

The other issue. kind an is you really interesting of raise issue

try terrifically his from on And this so a people's smart expertise of the Dr. that of particular I is attention draw process. we're of startup, we to focused rest Angie, milestone. of independent now really know, why the the of turnover one construction his of And things in focus the guy. on, background, areas construction. that's notion is One do now And I monitor, Jacob testing to course, to know,

So all area over that know I it's critical construction moving I as now of from focus. think to is becomes a Dr. Jacob well. startup,

we in So interest share his that.

Operator

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

Steve Fleishman

a the of just feel Do was you question had So Bechtel scheduled with would I kind for et -- -- past, same a be guess, will that skeptical, just like see cetera. rebaseline been they bit just in report prep your aligned the it's time to the given we what little more this and I kind the whereas this little is update now more of July? with staff say -- as you in kind

Thomas Fanning

of never staff I say get they're the and to is. going want ahead what to due

good is broad hours I July anyway. last of would per think pleased with progress to the week. everybody since we've work people Most our and a milestones taken been hit since our statement. really little really project, the on construction has productive bit over very be And ability

So that of I kind think is uniform.

now people I are really think focused.

just I we did materials and milestones? lot in milestone construction think you from fact, conversations. be to why, what this for turnover a achievement you the said going about a As the where are of startup the provided these expect, of we in issue. I major cetera, That's big is that slides, we there out get probably really et what put more is with notion margins Angie, guys to

Steve Fleishman

that is how well the NRC stage? of prepared kind that just for topic, On

Thomas Fanning

think, really I good.

always past tests once the In lot talked load. move to -- will about not in but that allow remember always, us ITAAC, past, could report, achieved, have we've fuel a integrated we the give that fact, to I a in

regime the our critical with just you about right we you just on-site. really hard be of to progress. that's like there lately issues I much making as in hold used that lot go to able one can lot tell NRC really to good. And feel get worried the because good we've us were I is we're place out a I progress to So know particularly about. of worked testing constructively I talked so the stuff. a haven't it

year-end, we know, you as left XXX say will let's ITAACs though, a have for Just free.

We XXX. moved moving around at down cooperatively with the through to NRC issues number And started we're we that remember year. You this XXX.

left our NRC end of everything X. but visited Unit the I've about with personally of along the we'll team here. by So we'll this with commissioners have XXX for year, each think

States this I federal it's think the to NRC, of for level America strategically everybody succeed. at Congress, the important cabinet, everybody government United the realizes, United how is whether States the

successful. So all made the we're in be resources cooperation and we getting order to

Operator

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

Julien Dumoulin-Smith

So, get as about? Can Is more bit with had you given the where Tom, worker can. And this maybe more I start here, of again, Vogtle to focus into the and you I that last to the continue XXX,XXX little ramp today elaborate of on on there? Canada? want bit included that focus you just a then higher talk just sense in of, a talk ramping if that get the we how little all see workers? we on we'll do Maybe year? a

Thomas Fanning

that problem for to be resource skilled say that A secondly, bet. seems talked the fitters, year control. on, You last And we under particularly on-site. a was getting about pipe electrical ability last lot intensely year, to workers, us were focused we

from building fact, resource work have the a the more come list people the than need. requirements top decile accomplished remember waiting terrific And we We've And to may had to moved compensation. we in essentially trades. backlog that earnings site. want we compensation of have last we of the in You call, to all of

we So that's achieved. how

reevaluated personnel. did all did of without comfortable your okay? we need very schedule If position you're mind come levels. adding feel We so you right we're very and in XXX,XXX hours in relationship mind and we target to bit. sooner. Canada, with per remember, the to question and enough know and into has talked that I When would about we supervisory staffing We to you're of XXX. we hit We it's our is, the be We've our kind more been secondly, end of effort, did people, comfortable. baseline cost going oh, And we'll when March a to moved to that that confidence it set that going of a hitting And now. feel the efficient. could April, add sure the now week, we less

from You up average on second most be this move these period. XXX, should to to know the over eight done XXX that of the smaller additions shift. on now months We'll largely

look it you to this so call tilt will the we've more work, -- it go XX-XX. If up It at And XX% We're August-September And the deployment roughly XX-XX, to the vary will XX% course, some be for also first far, ours going of timeframe. weeks. on shift. will into earned second we shift, ramp on is into XX-XX, the a second say shift.

So and this ability doing think, we We of should new resource or in feel in it's We and the our I put us gained ability them, reference. that of guess in bring not. a here have actually other a that train the whether frame thing And ability schedule. know, and script an us XXX. the other of to some I we've work the to work. things should the very prudent the resequencing personnel we important right some you about very just to folks way, provided on think One to rebaseline about lot people with gave about argued this news in kind managed confident some place. confidence is have will site that to good moving

we XXX,XXX a So of hit hours per the bookings. That's week, hit schedule. baseline us kind aggressive if we November hit said, you -- the our we to schedule, and allows can XXX gave

you a week. If per relationship is want hours about reasonably working another XXX,XXX to number, linear it

allows of July, maybe what achieve kind done schedule. of far this so So that's kind to year August we've us

So we're right feeling pretty now. good

there efficiency, that course, be pretty focus a to work ton needs boatload of a we're but of paid, is good. Of do, feeling on continued to attention

Julien Dumoulin-Smith

July, was right? you're That's November Where saying? Right. in-service, the what August to relative

Thomas Fanning

Always is to our Yes. That everything compare target. November.

So be parade. there if we beat will tick-or-tape November,

Julien Dumoulin-Smith

respect secondly, And commentary doesn't just, on to there can I asset change are on then It in quick anything little if a other earnings just And to Greg, you've know commented of with on billion around year. electric Does your adjusted assumed any the bit then sales, relative clarification the a equity? you plan sales $X.X the expectations trends. for it? that whether earlier

Thomas Fanning

do Well, sales and for We on yes, of kind an opportunistic there's the the year. substantive first a that terms would Look, of Drew nothing only shot, rest of asset in do here. basis. I'll follow-up

think both Between I deals $X.X well, these deals of those great. have billion? been as two

Andrew Evans

That's right.

Thomas Fanning

of help of -- all So else. been equity that sourcing all help, kind respect and we're where to everything that with we’ve

Andrew Evans

itself well, Nacogdoches you've our plan. particularly in described think, bias a right. I it exactly in downward was not equity general does in have our It needs.

terms repay remember, then I the are think to total, these draw both, in of that what shares in used transactions that in effectively grip. indebtedness of both and ultimately reduce we to have

to of nothing is in going look the to program, assets. -- plan nothing the of always sale but the so length the additional opportunities require shorten for would today And planned within that grip we're is

related down was The warm quarter rather other question a It asked Julien to that was here. you sales.

had second control cost period warmest you, ability to the good And that estimates we ourselves that and for allowed that budgets the us to expenses. to to we provided are XX to We reduce the years. meet in over certainly provided limits internally. so There

certainly still are sensitive weather. We to

to summer these necessarily correlated. that of I standby just or how so, think are things goes. the naturally see to sort two have And don't But we'll

year. for to meet so have guidance ability any don't with our the range And our discomfort I

Thomas Fanning

on about to Hey Drew, normal compared $X.XX wasn't it weather?

Andrew Evans

right. That's

Thomas Fanning

So We you estimate think with that hit it. of about we headwinds. the gave you $X.XX last time

it good pretty about So I also. feel

Operator

line from the with Suisse. your proceed coming is of question. question Please next Michael of Weinstein Our Credit

Michael Weinstein

Unit about is question My X.

might you pulling contemplating is that, Unit considering -- workers I or think you on rebaselining necessary? X there point. to might off indicating at if be kind wondering might the you're if willing some of that ramp said that I'm be that Unit you're X you X, -- up earlier Unit

Thomas Fanning

Yes. that question. I was say I didn't it. for considering Thank you

going should about X. What it -- me, X. pretty would good. asked rebaseline Unit the thinking The question. guess evaluate Unit out be forward? was for good Somebody filling We'll we Unit be I X feels will

a Our best staged X we that to of a when X. opinion, And is accrues X. have and X my metrics general X. on And variety way Unit is other what of that's thrust the found Unit In is it learn we be the copy of a Unit employ on benefit Unit a things. the that Unit to carbon of consistently Unit year X, and on site variety behind should personnel

But this. general, this. X so X. not And performance been Unit in Unit experience promising general, am better can't our I has in I is promise than

might improve I'm to that for. promising a potential. not be there that. telling the you I'm just the So scheduling chance

Michael Weinstein

Is might of the on you comes you in in to make plan X order -- sure that X ramp to might to Unit Unit the pull on to -- people part up time? XXX up

Thomas Fanning

You shouldn't think about it that way.

take we But a sure, short-term the for heaven Unit between two. you optimizing two cannibalize exactly should and to X. the It not between is want know, going characterization units. difference optimizing We're of in are evaluate make as X, But kind a Unit was the it. X,XXX best both you sake, personnel. allocation going are We That's to the always arises, that the of units we again, could issue we fine. are every we re-optimize If general, advantage week of there best resource, it.

Andrew Evans

and production, both of XXX so those X. total I it's And X site, week -- hours Units clear that construction represents the per work hope is total

Thomas Fanning

That's right.

Andrew Evans

here's thing. the But

getting X our can load. X fuel We do completion, metrics getting think show I we so And and Unit that to that. Unit are on focused to

it We like make are dogs working happen. and sure

Michael Weinstein

Got you.

Thomas Fanning

effort rebaseline both did The right? include units,

Michael Weinstein

Right.

you. Thank Okay.

Thomas Fanning

bet. You

Operator

with Mehta question. comes question of from next Praful Citigroup. Our the proceed of Please line your

Praful Mehta

understand equipment just first And there? was color been around the the to And far around been that much wanted what recent phase is process results any on testing done would how so think in that's question most us of terms going? the lined we testing. has have the guess how give testing I

Thomas Fanning

Yes.

in I that is very really focused else. has some on systems, in wanted or done. And were first them calls three I the end what's the be year place suggested two first everything processes we way of some right so So to interesting the that turnover think, testing of the done hadn’t we not occurred. -- by We prior the did and even

to and good the really think so total experience. year schedule. the XX% on when of we've you were XX from focused complete. Lately, Unit for on really kind our testing moving focus X now, regimes Unit of and service and But in our idea had have is course, expect about tighten Unit of we've end, both X systems, this construction now, place, testing By complete. of that. about X we XX And the both we've screws turned Right of we're systems

So have started. we already

of that So 'XX, to lot to whatever seeing and And of you whole a want whatever. us, to in areas we're why I right focus these this that's waterfall what you of think, completion fuel for turnover for This construction testing big as you're the is system. the emphasis 'XX one move and and we load and now call, giving curve, up, ramp is, the milestones.

Praful Mehta

phase, that sites I where Any of mind, your looking areas one from in or where with a look other testing could at up be so, guess, as other, think for? testing And this issues show particular or spots your which should think which concerns I we perspective? that, out testing you are path the critical you

Thomas Fanning

sir. Yes,

We've On -- lot But X. Page for in milestones the argued you and to we've that most guess this are seven Unit I about just a really we okay. provided given do big there slides We this remaining, effectively. how that X you, the did slide.

to go to and these Unit okay. dates take XX want you add If X, months,

milestone established of back 'XX. that's initial And it. in we was energization important. a June sure interestingly, it But enough really was did So

move shape needs as room moving so them pipe for main now get for we we over when ready, good. to a but feel it to be kind as And the the control fall then That's water on why it start. the Once we the to the summer we we've that be effort. flush, timeframe We finished out the we're it, of haven't testing. plan going That's has all when through start to schedule. right you there that okay, wires. everything we forward, and it a into going Now have connected integrated turn of systems is want start cleaning

the A of in that electrical to When like And the room, of Now a the should we the deal. have we an and some B done but switch two we've settings, But a elsewhere and to to the big main a basically time. if energization. I has involves imagine, connecting move in button milestones for push say control we've thing, are work the plan. all that it. for through plan sounds done could how to lot or first you Then effect simple already course, need that a run I Getting with throw dealing it room those three plan. the we control ready milestones, we do flexibility work electrical initial three, move from the

that big substantially Start go functional testing let's big to The hydro Now the is essentially construction deal. is other a coal, three. is complete. hot signifying testing

once really the the complete of will work hot gone we the are we fall essentially see Once we all final What's testing have hours our remaining functional that on You system. else to fuel everything tests. load. partners from off, man, hot completion, leads Bechtel the load, items, there fuel get ITAAC our

in-service. six China communicate could in We did tests our between then six frankly or effective We and and better months you these way beat load we seven, than steps. or whatever, allowing to in-service. identifying was milestone that do are with hundreds in we regulator. frankly still fuel components, the in those have We we're are But doing. with Frankly, months. less the the or probably six startup will Those of allowed think months, and but we there within it it scheduled be that most major thought think

Operator

line Please next proceed from Ali SunTrust. our of comes of And Agha question. question the your with

Ali Agha

First question, to I clarify. wanted just

at you there? So going you're your et targeted milestones now what's on through the right as productivities biggest these and out see Vogtle, that cetera, as bottleneck looking

Thomas Fanning

question. we see. I That's always would that go something to Look, a wonderful

going think XX-XX it, shift is far of with reduction walkover, good at kind the do. most I XX-XX would very I as a big When them small these work. spaces to of productive a of most you on confined challenging don't so to work about been it rebaselining, in we've suggested XX-XX, on we actually but, Now workplace. people I on-site, the relationship the say -- a gratified we to because a second hours getting and want be getting work a at trained these is we're put getting moving And we've people Still, from in to were it's argue been performed deal. the electrical electrical on the good

bit. about that other even you so to think lessen when more all people, about into path. And result so should one second add rebaselining, Well, So loss is productivity. and to of -- though confident critical that a containment personnel. we're move rebase the area now, the point, why improved people to crowded the supervisory of more felt We're shift, of need we problem the that being issue. kind we critical is worry bring the we got of I many rebaselining the going path -- actually you and going that in critical reason our It reasons as November it remains One path. but remains our a finishing

been job are say backfill us all roughly will much a supervisory do working so on Like, weeks, of people of Bart, stuff every say, people. people team executing oversight done. that one I communicate great get the hell Jack a in however, friend not this their great Brendan I Brian, with is a partnership Bechtel more slam Now Futcher, effective two dunk. to those of my with a on-site I leaders has

So intense just we should on have continue to that. focus

increasing know, want just I it. to I you bandwidth. had this our say don't however, call We're if to So last thing, wingspan.

the I week. from think we just did, XXX, XXX last Moving

XXX the we in doable, more is from months timeframe, require Moving will an supervision to resources. our XXX but productive. big is effective require the it think deal. probably average more That's stay on to will X It

Ali Agha

But just to outlook, as well. you tend all for us when year estimates you wanted I question. did the Second talk the for range gave you quarter point for us to on got a give you've second there. single you out quarter, like the the also first about clarify quarterly

looking the of to point you point the those you're estimates, full-year wanted range the layout high-end, relationship of the single what's So that at or I clear quarterly estimates for target midpoint single guidance the between that just sort the when us? be and

Thomas Fanning

is I talking. Guidance quarterly hit new estimates. they hit quit When not this us we to okay? right. going exactly want It's I'm fact, over But the say Ali, Hey, do to turn Drew. to I'll guidance, in range. you are, for it estimates,

expected about confident working fact, is we value. to have with the estimate, the feel Drew and We value. here expected you The working range you structured midpoint of we very range. best an But with in the tell it our can our efforts I the ability. all beat CFO, being our intense when with is, operations give So that's the just right? people,

Andrew Evans

target would for a to trying out. result of to Not come, going and it. to Based we're something easier give mid economic second year-end. lot the add. we us move to It's is as that to we're think we set goal on quarter of to a produce come for you estimates our through we When conditions, an for range sort first where provide indication

earlier Third quarter move of quite last start this year. has If target a in largest to probably be think contribution quarter is been which point, around relatively, guidance the get most to it. we've the up, to at generally in would little the I earnings, I trying as a had middle bit we significantly able Ali, colder think last well, year. year, than were range range the running year a our of certainly in what annual We But we and the so bit higher did to range. a we're beginning

Thomas Fanning

push time, we in last the in year, as in it But my we because was now that roles CFO. October change revenue commented high XX least Yes. higher That’s only only I the crazy And knowledge back institutional at at that end quarter, a is call. summer. quarter think on the typically range this years and here, goes readdress third other than like have the various of we've here to range. through even our got get our guidance We which experience

a But is at within well FD we a standpoint, really you our have all range. now. typically If look we right track do record, from the range

Ali Agha

overall cost Lastly, at Tom, the Vogtle? after X comes after come look both online? it remind cost the Commission us? just Georgia does -- Unit remind units it is impudency us Is or just of when Can online

Thomas Fanning

begin process we processes Unit on months. will mean, the have so fuel think a Unit I'm I every Well, And undergo load. Yes. X I then on that sorry, VCM six X,

that So November I to if let April -- on XXXX find date the see it, the me schedule is is can be expected

Andrew Evans

XXXX. April

Thomas Fanning

the kind XXXX. would of that. be April of initiation XXXX

Ali Agha

so Thanks much.

Thomas Fanning

want helpful are add just yes, But, for way. to I very the clarity. VCMs These along

Operator

And our of the Bank. next Please question of Arnold Deutsche comes question. with Jonathan line proceed your from

Jonathan Arnold

are of factoring some a in I change this as that? of the missed you if in to already. that But part or calls. apologies rebaseline on quick any question answered Just been the I has you and report anything contingency there the Vogtle

Thomas Fanning

to No. around it The used contingency XXX% million. not of $XXX I any remains, have we And date. dollars think, from

Operator

Please line Lapides Goldman Sachs. with of Michael your question. of next proceed our question And the comes from

Michael Lapides

to the a topic change little bit. want I

know, you at kind touched talk if coal And retirement you're the line? another capacity looking five gigawatts replace X next, coal retirements. replace I might a) of coming? And that round years you over Can go of of the on you to about: some when another you to how those how see the capacity? three units that whether You don't off fleet -- need b)

Thomas Fanning

response and started Well, actually, -- thinking can customers a so to there. been plant better stuff think with is Clean reliable, had is for by would came safe, fleet remember to in the I cheap a has the And Clean that clean, we we directional of so has this, only retirement Essentially, put call that change prices, that accelerated. way preserve it's DC about EPA, about benefits in fuel we executing even daylong that about Plan generation Power Plan, the of I about Gosh, a what that before forth revolution transitioning the the interesting meeting way we very to the drilling continued balance Power the say was best been benefit rationally plan. on affordable. of the been we've gas

would say has been factor. that I So a

Georgia, renewables more big in of and system, to that's our greater a has in don't run penetration IRP, want is going we in lesser other very extent front its One Georgia interesting. factor been particularly to Alabama. process. The through factor that

So and strategy carries resources. frankly, that the account all of overlay an us through a take XXXX, of to total these decisions have -- there of maybe we into diminishment to

it going keep you're to carbon on must capture alive, coal have If technology it.

general, need We to over down continue staying gas R&D solutions. in preserved. about going being to those for invest think But you coal in place, in time, the renewables, natural its more nuclear

X one that. Gen we'll complete X. We'll the of Probably think the X reactors. to and XXXXs about called this XXs, nuclear will so complete So in Vogtle phase

I continue we where we road, nuclear for to if serious in to think carbon, or the news. XX, three call. as for that need down be will But to XX be for a I us, nation more That's to the in going two technology. think are do need be to won't invest you my but about add administration we

that's this of be more thing interesting other could The just acceleration of kind transition. here, there

the much so about various be only, on rather things he's rhetoric Specker in the I Dr. capture. Ernie are our industry, proprietary, we is technology only our really that working Director. Moniz biggest Lead that we Frankly, is think Steven unique investing, board. APRI. there the on say We're The by a by wouldn't development. it's to people of funder There's robust, and and far in are research I in key going our on carbon board. about storage but lead way. out

approaches see forward to money a old XXX-year business all really there the guys happen. is commercial point, make, that stuff on to We industrial grids, moving sell We're where don't move solutions. trying One location And very this a micro just future. are the rely so will, that this characteristic. selling of the where change to very from and we option. we but away to are customer's may in is had making, central-station small, important And our you invent putting and on and model, energy last create these rhetoric called created have miniaturization, they if

very now Southern management subsidiary aligning idea. the Our and We advance to fuel have subsidiary Power, had perhaps are closely we Sequent, another with PowerSecure, this really working deployed.

PowerSecure, deployed micro with grids. Southern Company has of XX% the nation's now

and take of model hold the America, effect starts to kind may will of fleet the generating help have that if that it. in transition accelerate on So different an business

Except answer. So, we strategy sorry of big to a a place. say in shorthand, long-winded have

thinking about business model. have important an the change We on in the option

by some We that speed these of have Ultimately, our important the effect transition. tactically, have items that on investments that in made states. are decisions must be will

Michael Lapides

one up. see Georgia the especially, you potential longer-dated? Tom, overtime more maybe outside given Or follow Hey, but that of couple years, benefits years, X X next you that's Do meaning kind ITC in Mississippi? maybe Alabama, rollout to PPC, for of quick the do in of renewable change think significant

Thomas Fanning

issue really any of reliable, innovative, affordable. things they customers. of doing benefit considering know. -- you back both actively generation. look and any don't think at Alabama for in of the our those if commissions, clean, They track get being a all of are I the don't sources terrific and commissions particular creative, on They I have of Listen, attractiveness safe, in of record Mississippi, augmented

I issues. a of do think those they terrific balancing job

area to is So of those the consider next things years. will particular emphasis the certainly, five we One in three military. other

think You been two kind Commission. the was or say, of may either I congressional McConnell. by description, forth to private know Mitch And than, appointment other a one the personnel. weird or Solarium I've -- think, My that's I'm citizens I put that know personnel anyway, appointed military that I only

and of Speaking with. or that of do is that will military in, digital military a Part and DoD will go next in operating energy that future how resilience in up Part their cyber the about go about operations. okay? own think they doctor forward to the doctor, tied environment,

our capability to and listen, United they bearing to the back? fight and think or So has wars there their cyber Southeast grids States. maintain and advancement infrastructure, rest That kinetic learn own on micro the to of the wars. certainly do a about distinct to ability their thinking are of of distributed How in

in So future. we're the doctor currently, participating an not insight only military creating in but

as some of the an of see may adopter You military these early concepts.

Operator

question from our comes And the questions. Weinstein. of proceed line Please Michael final your with

Michael Weinstein

follow-up. costs you could over the how ramp summer maybe, are the despite and Hey, just after quick guys, increasing heavy months throughout explain the on the Back up next in workers Vogtle, that? eight

Thomas Fanning

Give little sorry. I'm What you for? a there. me more looking are

Michael Weinstein

despite unchanged you Yes. the of in keeping the the How ramp estimates are work costs, levels? project up

Thomas Fanning

Okay.

with ramp budget, same work we so remember, November a work frame. is schedule amount In other levels associated have a 'XX, schedule, is say November mean, 'XX, also in designed is this words, we in the if up a a I different and accomplish to time of So what that 'XX. 'XX, cost

reduced amount of hours actually rebaseline, changing XXX,XXX not hours, of amount in fact, changing in the bit, the we're little because Just we're workflows, total. from the a and hours over

So costs estimate within that.

costs So whether eight refer XXX And shape. creating that considered we've up from for of the to is we an kind to and shape period. XXX, I in a that balance scheduling ramp only of months

see flood week, would would people, CPI very you XXX,XXX you if the efficiency try a There tremendous our with to say, try to have are no I let's go cost statistics. consistent. with get inefficiency. concept people, where think the flood is they is The -- way to fuel we you where this site problem per is hours we in would you might

last CPI week, think. So hours XXX,XXX recent I I think did statistics, the we most X.XX, at

measure we're X.XX. to try against the that X.XX baseline to give We CPI budget. I basically you showing hour one you that its effective think says a cost what deliver total cumulative is performance. What to

say as total estimates. So then below as X.X, we long our we're within staying cost

it. of kind you that's about So way think should

with managing some still and a November wee So now. we're hours, to we right when bit, you actually think The hit of the said work. increasing margin changed costs able just we we and went work how shape the are down in

still we're are estimates therefore within for costs. X.X, well total the budget still the cost Our below and

Michael Weinstein

is, cost issue. for I be is what of shift, to that you're to So The saying that to mean, don't going more right? is essentially, besides a hiring workers expect attract an higher not be second you labor going

Thomas Fanning

Yes, incorporated. we've already

that an that of when estimate. you that up. kind a if to with And number. reasonable other work We If remember pay, million $XX top-decile correctly, recall, we I picked was numbers went the handle that's we

last that -- we manage that one took we'll so current Within of July, course, think managed point, into contingency. all estimate, we okay. And We've we we more account hitting without re-estimated as well. When But re-estimated this element. cost we see. when this we're

Michael Weinstein

Right.

Okay. Thanks very much.

Thomas Fanning

hope got that I you Yes. it.

If you didn't, back. please us call

Michael Weinstein

do. We'll

Operator

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

Thomas Fanning

X things. Well, Company other as ratios of always, we issue variety importance thank of the Company. X. feel at enough, Southern This I you you Southern nationally following really and you of when never I while PE say compelled with think now a thank when about right all important the Vogtle look a is you and and value for

at to of business over. course, But the Thousands great and of of doing way of work and we have, to there been my we X, over making to sense on people continue over execute As has of a thousands Vogtle perform and, Vogtle the lot and the X we is do. decisions rest continue is hard great.

risk a we As a work is objectives. you we We'll Vogtle sense as company. to continue X, basis. on can soon. We interest these and as big X See to terrific execute Thanks on adjusted to everybody. my through our This appreciate hard follow your investment. continue in is on

Operator

XXXX Ladies gentlemen, and earnings sir. you, this call. the concludes Thank quarter first Company Southern

your lines. now may disconnect You

The Southern Company (SO) 1 May 192019 Q1 Earnings call transcript