SO - Earnings call transcript Q2 2019

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Operator

Good morning. My name is Ciglan, and I will be your conference operator today. At this time, I would like to welcome everyone to The Southern Company Second 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.

to call like to now will turn over the Mr. I Investor Relations Gammill, Director. Scott sir. Please go ahead,

Scott Gammill

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

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

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

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

time, Fanning. At to the turn this over call Tom I'll

Tom Fanning

you morning. meet for above we per strong Good earnings And Scott. XXXX. remain Thanks, track for and thank morning, This earnings joining target reported full year estimate on substantially us. share all our our to

Our resilience has a been far the in summer demonstrated in electric so hot southeast. what system has

during by We achievement Unit X demonstrated Plant also of meaningful Vogtle to X as several continue at and make progress the milestones quarter. the

progressing active of year. We’ll this In well cover through addition, regulatory we all today. are an calendar this

XXXX we So X. in-service let approved and and meeting continues focused remain me Units and regulatory progress start Vogtle with make on November an November update site on Vogtle. date to The X the for XX

to date. plan Our month currently site a remains November strategy the in on margin and aggressive provides of to place six an working the

reserve the though expectation the And have change months of contingency the in not will this our allocated ahead. in our for project this at time. contingency, no we we utilize reflects There presence a likely any that total estimated is costs

for Unit stated we on major staffing X, adequate of energization we In achieved the milestones, and project. May, productivity. quarter is call, focus milestone achievement for the our supported initial during first As major by a

installed middle addition, rotor we the In Unit for set and containment for X. Unit the generator X ring

our we procurement In approximately aggressive activities, schedule August, milestone initial next Overall engineering project the including test with X, integrated major activities entire expect plan XX% complete. to for on the and site's and begin work flush plan. Unit is

For XX% complete Unit is year X direct XX% a with to construction target approach end. by

The site with three the a over earned XXX,XXX average XXX,XXX approximately hours of earned weeks is averaged year-to-date hours through past July.

next site XXX,XXX later aggressive Now the work starting hours average sustained earned for this recall, year an year. weekly into a time requires of period of plan

November To average we through hours we meet regulatory the week which testing, completion construction earned that for is the of of essentially the the the approved unit. functional phase schedule, X estimate would approximately Unit to start hot per need XXX,XXX

we craft hiring over night working supervision in X,XXX resources been additional We've and day and the people on successful have shifts. now and site across

result of these risen weekly and are production a to capacity As working productivity constructions gain we improvement. hiring efforts has

Unit an we effect. or recently As our Difficulty], example scope most we X, a for see electrical essentially S-curve for sawtooth [Technical

in craft of then skilled we field new of levels and initially number significant a add see improve. earned workforce we the modest improvement should productivity As supervision, matures as hours

our trailing recent is data. this statistic. four-week most in see can CPI You effect a

so or the over X doubled. However electrical Unit month for have than last more earned hours our

performance. will meet to order need improve sustain in forward site we the aggressive this Looking and work to plan

milestones increase craft floor aggressive in the be We to fluctuations to in As would of surprising to add meet believe see we as system support on in note, the new months not and ahead final we plan. site are activities. turnover it continue track CPI the a more upcoming

ready X and for end be major testing. completion flush which control room to near to the of same vessel have open site as for expect the milestone the Slide testing, added the to integrated to the of we should forward X Around we another time, Unit the looking main Now begin year, have track.

reactor Open and between as verifies and This the pipes that the vessel testing cold primary spring. that set hydro begin we the is anticipate activities function pumps, which testing up systems motors, valve and designed. water of a next flows key to will leading

next The which From systems, the certifying fuel year final will would as it site work functional plan. aggressive end meet start major site And to testing. work to occur plan and we we of primarily we is said day. every challenging construction by milestone hot work load the up on is the leading there the focus of previously, aggressive under

Ultimately success is XXXX cost approved on bringing what continue November we have in-service dates. regulatory contingency sufficient that today, and the know on this before or Vogtle Based expect and online Units X schedule we and meet to we objective. X to XXXX

Drew I'll quarterly cover to greater now turn to our over the call performance detail. in

Andrew Evans

of quarter an line reported per Tom. achieved estimate call of earnings an basis, Thanks, morning, the earnings adjusted XXXX. higher $X.XX Happy last good on Week. quarter share with $X.XX of provided XXXX In second $X.XX than in Shark the per And in share and we the adjusted our we basis second on everyone. of on

with partially normal quarterly The pricing, utilities, net impact our on and primary changes the weather usage earnings by as drivers result last offset than year at changes regulated warmer compared are in of of rates divestitures. our higher to a of associated results revenues and

package. and the normal. XXXX, normal across reported of Temperatures the warmer earnings the reconciliation benefit is results second than compared May our Southeast resulting in of benefit the detailed significantly morning's in release of service in and adjusted including warmest and last included $X.XX quarter of XX A our this years, during versus were last territory year $X.XX to

across service at the year. Taking Customer customer These be the expectations our our across population gas XX,XXX to first put to regulated territories. customers the additions our we of full track continues and franchises us Southeast electric electric same a utilities and XX,XXX residential the experienced residential to look last added our gains We comparable driven job half growth. primarily customers over customer nearly residential and natural gas meet growth year on and in period are growth growth by strong for in in growth year.

retail just down in sales efficiency including continued due technology across sales. were a factors, over industrial and adjusted of energy year-over-year all X% and electric weakness advances to combination Weather segments continued customer

no well sales a a glass concerns particularly in some share trade, Industrial and in a chemicals changes year-to-date impact levels global earnings and to essentially as impact. on XXXX primary strong timing. stone, were per clay $X.XX down trade metals, and On were as adjusted and production basis, due weather dollar's with

clear, been for second normal despite year aggregate the has an warmer than To basis the weather normal on be quarter period.

normal the a XXXX weather. quarter for third adjusted estimate is on per share Our basis of with $X.XX

assess earnings for our We quarter. the guidance year the full third after will range

Turning its now The on to $XXX Austin sale remains to is updates Facility of Dakota successfully to North some and Commission sale Minnesota this million. Xcel closed the requirements. close expected approvals State and Nacogdoches subject on Energy to Plant Generating capital June Southern of In Power fall. for Mankato to

$XXX issuances proceeds from higher of approximately than million internal is Year-to-date which plans resulted forecasted. have in equity

for needs billion. stands XXXX equity $X Southern's at roughly now

significant evaluate and through remain us. our continue have and for source Financial to efficiently the to and to our top investors all equity. strong equity robust internal options benefits customers projected capacity we plans, a stability equity metrics to our While needs priority fill provide we credit

turn like over a regulatory the for on Before the give the to to brief I back our of call Tom, year. calendar update remainder I'd

case as the Georgia with filed Public Georgia we get Public the in scheduled Light Nicor quarter base as well Commission file Service rate conclude Commission Gas with in cases in expect Georgia rate and fourth Illinois of pending As proceedings, Power a Mississippi XXXX. [Technical Mississippi Gas Power Atlanta to June, rate XXXX. base the for the we case Difficulty] these to in late to Service is that

Plan earlier ruling highlight received in that Tom will Power Georgia the of and Resource outcomes Lastly a its proceeding. in Integrated on few a July final

Tom, back you. call to I’ll turn the over

Tom Fanning

Thanks, Drew.

Georgia Georgia the years an this over clean, Georgia mentioned reliable in three the energy Resource IRP month the next XXXX a the customers to Plan company X-X or files to X.X and Integrated PSC XX affordable Power outlines earlier and how plan continue deliver approved Recall, every the will Powers million Drew years. improved vote. As safe, IRP

generation X,XXX megawatts. nearly plan X,XXX of of addition The the totaling of megawatts retirement renewable the five units includes and new approved fired generation coal -

As nearly the to to renewable Georgia its a X,XXX megawatts result, the company's XX% intends increasing generation Power grow capacity portfolio XX%. than to more XXXX total renewable by by

of to a as company storage. approval will and received systems megawatts in position help Power own Georgia battery energy which energy XX operate storage leader the also

many these that levels ash are including strategy In Powers to will approved, our customers the benefit addition, on We environmental plans ahead. compliance ponds. years Georgia outcome constructive believe close in all XX was

we’re In particularly items to a few highlight newsworthy which proud. closing, like I'd of

satisfaction For in a the customer Electric Power row, Georgia by in among Satisfaction for XXXX third year Customer Study. large in Utility one ranked its Power utilities the J.D. Residential was south number

to corporate Georgia Gas multiple customer Power service. recognized Chattanooga Virginia category communications utilities, score and reliability, by gas as of and for most the its of XXXX the outside the named Cogent Alabama utility partners smart Syndicated save the achieved citizenship, natural its recently including Birmingham. of industry highest star Gas based factors, in as neighborhood alliance Power project and in Two trusted on business efficiency our were energy Natural

diversity Company was DiversityInc. named consecutive the fourth by XX the for for addition Southern among In companies year top

Our future team success commitment change diversity achieve of in I'm to our us accomplishments. and our and culture we standing to build long as of energy. embedded is better inclusion proud very and these anticipate for allows the

are both regulatory our remain perspective. milestones the we and Unit on with very of from our see first on franchises operating November regulated online we and Again, November level half continue a date Vogtle. high key XXXX we operational the We bringing and pleased a are financial XXXX. X their performance approved by focused in year, and Through X of achieving to

in-depth keeping are and look another the to We forward you informed to update third providing the at end of quarter. committed

us to we're So for this take ready questions. now thank Operator, morning. joining you

Operator

comes the proceed with Gordon [Operator your ISI. you. question. first Instructions] Our Evercore question of Thank Greg from line Please with

Tom Fanning

Hey, Greg.

Greg Gordon

timeframe know of your hours review why where Morning, XX came questions. can Vogtle to to and XX need might ability continuing couple just project. of on filing that to is their their the Can Commission last I you improvements be scepticism? within on more you sceptical optimism type the to November on of be only of cautious staff your you to the last Georgia think see the - the the in your comment. now dissonance Tom. in Congratulations out of it you A the execute and April sort between productivity in of

Tom Fanning

Glad sure. do to Yeah, that.

that the a virtually. First reasonably in of should We or sit I every phone think know, was of it's other sit that those respect staff meeting the know members fair that people all, it - that you on I key Jacobs and report. folks we Dr. in write should everybody whether report, think the

in they're and with meetings they're me in Nuclear there Southern Drew team. co-owners management, the Bowers with the and all Paul and Bechtel, and So with

everybody. the for I paragraph. think of you first think And in other So that's table are number statement positive is going through. read report Number the one, about we're that two, should cards the very the I paragraphs all on important one that process the a

world. took own the plants how look That's expertise from the they do we and by really a nuclear you we third have a I this. our success leading team building example; think opinion our completed I over show since people far these know own of you But and mentioned, in belief are Browns is where Chick, the would been the at that track to who are put our Glen contractor the about of just most to great certainly we've came the relationship the look know find a point to respect nuclear with that plant players record differences when Bechtel, would - at And the think certainly by whether capability, and is led I recent we own for from Bechtel. project our plant, Brendan Westinghouse; confident. around Ferry they go it able

ago only In his not I with Riley. or was but two dad fact, weekend Brendan

is there team recently, been I but but look only The that approaches think think everything think you our could to doing tested certainly Ferry take, build also approach are I on and believe different there, that know we we we how not at China nuclear site has Browns in and we're plants sound.

practices There are suited. looked us, everybody could opinion cards. - is conviction we're are it's our no but that that is co-owners well that that about a for believe our discussion and somebody hidden we and NRC doing sound. secrets, that, there's believes in open its not oh no the reasonable that Everything and our It's only anybody very different have

So time script front. you We on And other I general just do the goes a reasonably those effect. on I about that of need ramp really up look say we work electrical would to the would important. or what in it at data. of are talking comments. little bit say this things are believe sawtooth do I we track spent to that to how

It do hit we to did than need believe sustain it. we that call need Bechtel as would the slower we're we and to we're the but of to schedule. not believe it wanted, then start to on a that to that's better, it a do numbers We But we reasonably we unexpected. sawtooth. improve hitting little front terms probably we now if their track little the describe S-curve that hit electrical want and in completely work we

is are every beat far the time but milestone to We the we a the site maintain every date I glad the into readily we like we in-service time we the is that in okay. - to those… further margin aggressive plan so But I'm anything achieve with hours And think admit, milestones aggressive or and November you'd of to, aggressive reflective fact success. plan go Greg aggressive, XXX,XXX build and consistent beat site plan. ultimately

Greg Gordon

questions. said a it. you in quarter hottest things sort on Two had Not know, quick One that extremely the you’ve And of you thorough. May that’s years. you basis XX I the know in know, said just I you that evened is appreciate out. more have year-to-date

that was out incremental usage much of driven suss or - much it in how directly weather - you sort came usage quarter is the how whether the earnings or event how of… much weather the from how can and But it of much

Tom Fanning

Sure…

Greg Gordon

carve [indiscernible] clear out? that you that to were able

Andrew Evans

year put but This But at a Greg. year, you the normal We the $X.XX X, last impact relative for it entire is about relative actually $X.XX expectations and weather the Yeah, was course consumption. normal. is I if about quarter over Drew. Slide penny of about the it to weather actually to our think to in for look second relative down

side, general trends see about on then conservation in and As it you residential energy just X% in at we electricity commercial we look the that's really efficiency think did classes, a in a of pause. sales. are total pervasive and individual bit usage know, and of particularly describes a downtick the economy of a industrial We good portion a

of that a XX% Trade to capital seeing vacuum or production to the over dollar to capital exports the term an and good economy. a that's for little strong that with in long – and section general deployment are of of signaled good we're sort that's a weakening just economy upon deployment barrier in about dependent skirmishes really a us bit its

Tom Fanning

Hey, Greg.

here Let me quick. real jump in

know them, I a correct morning Browns last another Bar. conversation for cramp. ready kind one in a brain don't mind had of issue, was my on on me I CNBC. Watts completed I why, was had I getting the Ferry this Let

So anyway…

Greg Gordon

don't think I thank that. have would But you. caught anybody

Tom Fanning

Yeah.

You bet…

Greg Gordon

Have morning, a great guys.

Tom Fanning

Thank it. Yeah. Appreciate you, buddy.

Operator

next Merrill with one Dumoulin-Smith proceed of Bank Lynch. question. with Our Please Julien your America question of comes

Tom Fanning

morning. Good Hey.

Andrew Evans

for joining us. Julien, thanks

Julien Dumoulin-Smith

into on be or going that that follow to some talk on or - mean, little that to that a are risks opinion we a read really the in a and follow into potentially would both Is greatest question up got up where difference or confidence specific up. contingency. I listen, you contingency. Greg's Where could kind of might and elements clearly staff if any elaborate wanted Hey, you how shall progress you say Then rather. and I to Hey and about what that thank you between of eating where there staff I element? little using specific you you variables be against contingency are bit bit. using

Tom Fanning

we into that we everything of just I a basic the put new let and July percent concept create we with knew Yeah. Well, said some we estimate. contingency year me created then a right? that ago, mean, let's estimate estimate start the the above When

basically over allows if current you you'll To have reverse period don't the extent And a that in for that contingency the statement going time. reasonable expectation the would contingency, things you the made not know spend we're we to it. to use that have we

a think don't everything is to for reverse that will today. that reverse believe we there we point We a still it. think likelihood we use position have that we're Otherwise this At know contingency. we'd in reasonable to we

as contingency, place. we we we Look keep the the and we to position all in will our right assessment think that keep use continually contingency order current make we books is Now, now minuses. that cost the in the period I at That very gratified we must and on will. we're going forward? re-evaluate probably touched and pluses it of haven't look it

daily own You allowances that kind evaluate must own we of and change. a activity as for our against of kind and imagine reserves that our

we've own projects. of only to reason. is million still any or when in we there and lumpy to what do. caution our My on XXX caution but know My is only future been contingency to people on And kind contingency. of go million it we years haven't to and and today these manage a know, be there's maybe is million, people XX and three site, to may surprised able touched with the be we you XXX both far if So for pluses don't cost our reserves with the minuses

Andrew Evans

concept, number our of contingency look by about as the level monitors perhaps a I reintroduce excess I think I system a to if complete. have If percentage of a total of complete, sort independent and a estimate times supported XX% at to that Julien, report. we're maintaining we of in that's of that And it's estimate could talked

in consumption less longer is get said, this view at next we'll period some you But of in the which of great of our to over we stand measure nevertheless, if year. comfort some where pace a when Tom I a we middle As certain. little probably point we the in do it certain is think take us time,

Tom Fanning

numbers, a And says We're month And that what your contingency to let's right? But from a can minute from on having and away, functional year a round is away different of hot Unit about months or fuel. X six a forms take test for five little lot focus here. loading more, away maybe then in-service. you're an six

We uncertainties at us month every the gives the upon agreed November ultimately regulatory unit, that that are more to go every rapidly approaching, be we staying with to quarter able that certainty by least schedule process. hit eliminating respect with we'll

So that's a big deal.

X. you know, of now. happening the essentially things as These test And Unit construction. is are functional hot That's right completion

I yesterday procure think we I've announced sent that that out mentioned we've fuel. a on TV to contract

So use is or us. these fast contingency of to times Unit least at going X not approaching, in front right we're on are whether

are of right making progress. lot a whole now we So

Julien Dumoulin-Smith

of the If I your in participation do you budget. do out IRP how Nice. can RFPs subsequent how your now? I and about that understanding outlook. sort developments the guys in reflecting have here done will process But you on you together solar latest IRP and and follow own about and think the CapEx cadence followed back up Georgia think reflecting of historically the after that all come fact up the know just

Tom Fanning

that, what's want Julien, them you point that? we is on comment sorry. of it did work me with how to on I'm question, the the

Julien Dumoulin-Smith

generation CapEx further here from about do How procurement think you IRP? the from the any reflecting benefits

Tom Fanning

Thank you. of January, of the I historical which we been Yeah, see of call be as our practice, CapEx end the know, you what saying. first the year we'll will - update - February. will probably you're Xst end

we're getting So ready now.

of But the storage project. the ponds, up this I ARO the consider IRP with the when you approval CapEx of you ash is would consider direction kind associated with that when argue probably associate

You swing when solar. know, its the that obviously in

the of and little later bought I Power looks be Southern If in bidders, to hard what remember Power Power solar, the you any in can other by And then successful road. development today. think of Georgia but a last came a that's a predict like But swing won new down Southern that CapEx the year, activity don't did. also lot

Julien Dumoulin-Smith

can what's piece? to glad the ARO piece actually. and clarify brought With of the here, Alabama, ARO is versus I'm looking the incremental to Look, you specially it respect forward up and it. reflected already obviously I that Georgia how If much just

Tom Fanning

Yeah, year and is in like it if the to over environmental of this year today, generally plan our is something it about represented really obligation XX% the make at you a look period. investment ARO XX five plan, that

billion modernization those So over largely the investments. look investments the and at infrastructure $XX are five will transmission think if we - that of environmental we years, centered the environmental we next invest distribution around

modernization being I the think renewable issue second into XXXX as rate kind to is of generating the and in your that or we fleet give would question which growth of - durability about view invested rate total some the as generation, of post, more a plan around post year the movement being a capital you're - base.\ to our plan total half XXXX

have bearing. a taking say, per coal a plant of of preserving notion system economic here. the some on the that could retiring a also first put that had One time And event the in interesting of not help ways. emergency is in in we in resilience, of of is the as of bearing that we reserve a could resilience ideas out knowledge inactive have anyway IRP a it the for place in and a Anyway, kind history whole ideas there's dispatch, that is all those that we introduced it other one matter section of my variety in a things this but

clarify but would think We - trend know - the we are. next But that. general you year will certainly I be north I where of

Julien Dumoulin-Smith

there. it guys leave much. Thank I'll right. All it. Got you Yeah. very

Tom Fanning

you my friend. Thank

Operator

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

Tom Fanning

Hello, Praful.

Praful Mehta

doing? are Thanks so you How Hi. much.

Tom Fanning

Terrific. well? Hope you're

Praful Mehta

Excellent, excellent.

keeping for that Could the so that you you a highlighted as contingency color what all guess on put you for keep out it just least you in to give the have want to plan? far. to the at you there it pointed understand in to right I as answers contingency you justification on some that on wanted it thank now plan. clarify, you just specifically the the So against allows keep

Tom Fanning

It's the just general uncertainty to in it done part about will be and work done. the schedule on remaining be which

You you're know, there's just to guess finish, years X I three everybody remind Unit you know to away, round number.

So now lot happen that there a is could between and then.

I lack are lack have of - what clarity the And know you the in with hope, could unknown happen, a call what the of think a could bearing. unknowns they certainly

opinion know also also of risk And register. should We in a that's fine. this little You the report a the staff. difference keep is by a perfectly bit

you subcontractor we we like contingency. continually the has at And relation it's XX look what that performance been go a but of we those. actually things. is do how of our really kind kind the Its So just of to their know, cost. XX about bigger things And top we assessment - startup with analyze big we that, reassess top And construction testing. to kinds than

it contingency there's about place. going work rework test just that enough schedule that the knows. uncertainty impact we The to have reason or a it I why some But keep it know, could be the should mean, doesn't and the in go equipment way as to remaining the you testing, it need or that's who you you through other that think may should thing of

gratified. do haven't mistake, Make it are if in be But yet. We we surprised hit the no we future. don't

Praful Mehta

Any China. Got on any in of you you. unplanned reason has terms for some issue the is know Vogtle design what there that of be super have you're there. kind that color secondly aware of And That’s been as become could comparable helpful well? in for Understood. that a plans that could problem color. Maybe outages I that. there

Tom Fanning

about lot sure. RCP no first. it's reactor been of. we design Yeah, effect. the don't pump is discussion I and think there's discussion of we're know, Number clear the a question root pretty coolant Last issue you two, There the aware cause know that around,

site. out I of soon the a think But is discussion on that coming really between and matter reasonably Westinghouse. reports that Chinese

But one has speed significant But for outage site that the they equipment them systemic recovery to XX been have of no sense reason RCPs there or knowledge there our have our of no and or site, on issue that that's is really whatever is the aware that just we're they could That's improved design that for to on only is answer. the whatever. of.

Praful Mehta

Thanks and to of the way. Okay, great. that get out good

how And anything about should about finally quickly from perspective all issuance the timing, So a the just options about what equity appreciate that. that thinking on there and then we are options is thinking be we timing around should the as and you're think that well?

Tom Fanning

are and We've what sure a we that divestiture is to capital on do raising last that year business down for any year Probably years. two been core half, making slimming and I think accretive terms probably over we've shown our really of in a of expectations equity. the good or discipline focused our

and seen particular of think I this You of sale pending know, our activity sale period Nacogdoches the Mankato. some you've in with in

We've business of services out other the done sold PowerSecure. streamlining of parts a of XXXX. business Nicore the some also across the from part cleanup shipping and very utility We've that recently acquisition lease was small program discharged after container

options months. the the $XXX which because of last another accelerated that a internal The component and million internal of options programs the to about generate count over of have on date, all exercise share plans that to per bit of have through plan an is in working appreciation annum reduce few share the price share drip we really issuance. burden So we've had the

we the possibly to we satisfy we as that, perspective from the say want $X be just just I'd investor can. so an options considerate And at us available of as to to remaining look as billion all

plan route use Our can meet we we other accretive would only though internal plan. we all be our to would to do using simply capital the it that options that with place, is in plans have

Praful Mehta

helpful, much. guys. Got it. so Thanks Super

Tom Fanning

Thank you.

Operator

SunTrust. with proceed Agha following of with Our Ali question Please concern your question. line

Tom Fanning

Good Ali. morning. Hello,

Ali Agha

Good Tom, Morning, morning. Drew.

in you they approach wanted report question, Anything the you of on have the back Tom surprised Vogtle. that of just First you make on come do that the staff to there what kind that to and taking. are criticism all

I focusing think testing any on thoughts completion on focus construction know, a premature you in their there? words versus

Tom Fanning

remember and up we Not lot to Yeah. about attention this attention of do ramp hours it. been whether remember some paid mean, there the discussion of the too have and DCMs I I about points in raised can had things. past concern worked. Sure, commentary you really. paid can And could they the to we a absolutely. no ours not raised know, in was enough that I milestones much and over past other

I October's in can Well, I call to that fact, just last our listen watch we started have. if demonstrated about ramp how am sure we we've see don't enough and and rhetoric - earnings hours, know the you up saying the

So I aware That's they're They're know, the well They're and I We're staff. issue. get issues, know of doing. the what those out people. respect job. the issues. that's adversarial their concerned pointing we you like And we said all

hours of now really kind have we commodity focusing In good terms of of and material right work think of it's site or milestones. a the or evaluating kind balance whether whatever the on of process process, on we

kind about equal. think all to created are easy very how hours It's of not

three, calls instructive. think giving some start that equal. deploy to hours you place. milestones we and we some new it's saying down productive critical the and guess But hours example, two started do to we're you I these our guys They and this why hours we're that's think to we to weekly created was go are we things this rebase that's maybe ago, For that important when lining not we all as with tried to hours have put about In of labor words, because path. hours nothing and illustrative talking to about of other ability are earnings in

just me example. you Let give an

XXX,XXX now hours week, are week have We accrue worked ramped hours that all to at per count work. we hours around per up productive

XXX,XXX to where and Essentially XXX why to want allows site. on we say between That's believe get and delta some confidence. the effect headroom number. to S-curve that XXX, productivity have this to we us So or be sawtooth we increase it's

about order all meetings attend, intentional deferring in before. built about a attend, we NRC Bechtel milestone, these that This attend, a we some strategy we of start completely, they attends. have lot understand, very the in idea This to nuclear people work plants we a that is this talk

And helps start all us. these we in But required hours the yeah, are test. order really to not schedule aggressive a think keeping system to

In of already the serve reducing will in some that in future fact, benefits some us hours. well activities testing uncovered the have

we point. But think So balance, sure, right doing we're the the it's accept thing. a so we

Ali Agha

it. Got

that fact came this well the that you budgeting quarter, clarify, to know the weather in what you quarter was you just or were above for related. Secondly, primarily all

else caused weather or much something your to you so better come normal was expectation? original was than there better that so Given than in much

Tom Fanning

underlying the utilities are I great. think doing

hot or whether we we'll things continue the to of particularly Let me reasonably - summer, investments The a month there's our temporary in a have made expect but just anybody years we've you start kind our at blackouts didn’t that. nobody's not look over resilience to proven else, and the make you there. of know, throw if resilience the system, May. had benefit around like business. States, it, like folks we've where issues United at We've customers had These to and

our happy so, with the I And we're system. very think operation of

we for don't just work service thousands and do deliver but is for talk a it day. think on about these of like things me support customer earnings say, we every satisfaction, also our leads employees the let often wonderful call, example, to service, Georgia ability our of in hard that customer And indicator Power

would doesn't include, don't $X.XX earnings, The not year. of did include Gulf Puerto divested that considerably recall that added I I say share other know thing to Power did, Rico we per $X.XX this is last

on So franchise businesses wonderfully are all fronts well. our doing

Ali Agha

Okay. Last question.

that you are year budget out are normalized half correctly, weather X%. at you still If I up the think the get been the down I As X% or so. re-looking or first there? recall pointed has confident through about can to Are sales flat you you for

Andrew Evans

season warmer it we - and No considerably February time exaggerated normalization laid I we think warmer quarters with opposite over have at projection very look were was the I normal think I - we in out. are two We've to it was than I've than a with it that period. where was think May considerably in now normal. confident whether had probably that longer

right our still year. have growth, the two And would so job residential adjusted effect - strength that But normal migration to serve on sales. exaggerating weather these be things for of and given the economies tend range of an in estimates pretty confident here, the the underlying

Tom Fanning

gratified customer with growth. We’re

think X%, of what add, just would a more that’s is onetime industrial I of these down see that these thing like we other forward X%. like effect, some timing, really We in kind effects. The going number being a results absent the

why So of the Fed in what thinking little I very look kind think clear about bit a doing. they're it's on economy a the of plateauing is that's and that we're

are But operating the execution expenses by level. the the managing other and our token, Drew's companies leadership company under at

results. Power Georgia top know, We are now. example, O&M delivering for quartile you terrific right

Andrew Evans

see, it accommodate So be whatever variances organic we're it sales. we in to be able weather or

Ali Agha

Understood. Thank you.

Andrew Evans

Thank sir. you,

Operator

Weinstein from comes of Michael the question. line Suisse. question proceed following with Our Credit your with Please

Tom Fanning

Michael. Hey,

Michael Weinstein

Hey, slide, for - Tom. that Performance the SPI reason there? look what Directs how just at it's driving you Hi, since wondering up and Index know, I'm creeping the May that? the what's the when what's you uptick on

Tom Fanning

it's hit our Let of me to did July. Oh week. get slide. yes. that Obviously, on the numbers Xth We

Michael Weinstein

to it expect you So down. come back

Tom Fanning

Yeah, yeah.

Michael Weinstein

And Got on the All ARO… you. right.

Tom Fanning

just… Michael, And

Michael Weinstein

Go ahead.

Tom Fanning

I'm sorry. quick, Real

That exclude was script July. we to weeks. three If of last you about heard talked Xth the the in

Michael Weinstein

you. Got

Tom Fanning

a And four is we're showing statistic remember average. week the here

of it's July. picking So up Xth

Michael Weinstein

ash far spread the and and IRP comments spending about and so the also just filing can in if flexibility a much the rate and you coal you how on case do case. in given that larger out going know forward, have there remediation rate was on amount, amounts the on filings public spending IRO, you how Hey, wondering is time? the the concerns Right. over rate flexibility How that

Tom Fanning

Yes.

got going executive away. that the but privilege they on to and So deferred, am Drew's XXXX. XXXX, this hasn't it's using Drew, now stuff, lead was let's increase team Georgia the tag this because I great had an increase since

years. about frame looking nine forward. increase, reference So the In the years other years about, when kind is last three six that words, you increase Power of talking Georgia no is of think

the years, nine context So about talking of increase about think the they're in okay.

to so quartile results deliver easily And manage O&M. what now done order is other top They're and they've some things. in

kind points. You interesting of have data some

Andrew Evans

been the Well, with XX the the to of your than X% you it's point around or to burden the impact if eight at rate rate unchanged customer rates increases less think over year and I have wallet that total period share been that. basically bill proposed have over in case, look

Michael that tell is the I really slim. would ARO, partially related to today that have implications your $XX question estimate today its related to will that accurate chances how billion program of today's are unfold. The we you it what best for - of be might investment being rate. overly

the We total will modify the that as amount and plan the period, proceed of over we expenditure so will change. change will timing

ultimately customers. will is - have feature for recovery that Georgia same reduce burden Commission the think Power different and the I ways flexibility Recovery a which reduce we considering of is lot and are on the

Tom Fanning

we the There think and agreed I the upon have the balance an whole state is and And with EPD there. between what thing. right we Drew must do plan a raises point

Drew we a have recovery. as points out, and correctly we of So then a out what how have

front be and subject not rate will certainly we're the to going that that. the So case of of get in

out manner I'm worked be will in constructive that a So confident.

Michael Weinstein

you. Got

very you much. Okay. Thank

Tom Fanning

Thank bet. You you.

Operator

the question. Michael with Please Goldman proceed line Our Sachs. following your question of Lapides comes with from

Tom Fanning

Michael. are Hey, you? How

Michael Lapides

Thanks for the Tom. fine question. quick. taking Real I'm

A, fleet similar think system. you impacts Alabama? your doing with coal when you'll this B, all transformation need for of retirements. jurisdiction a How the the thinking and how about, in are incremental in lot large fleet across transmission extra renewables with seeing the You're gigawatt transformation other of you And the start

Tom Fanning

Yeah.

that's terrific a question. So

of one In markets. in is, decisions, the Southeast IRP, IRP process fact, transmission the able really organized love around of we that's to so-called we the in are the iterate reasons why part and our generation difficult

In future and of fact, included closures an projects. around some transmission in some the the major in is fact iteration in flexibility potential

which go of east you plant the down three the For Bowen, in that Georgia building example, kind of to next Northeast sense. there to I know east bolster of we want a or do that know road, it whether system makes of some lot is transmission more our years we

we years the about our talked south bottom transmission along of For system. have improvements

Mississippi it So southern a that used highway, across from to to into Gulf. shows increases let's go Alabama it we the - call used kind of

your decisions transmission generation is So the important. of was iteration question? the What really around part - generation and transmission other

Michael Lapides

so if mostly you you that Alabama your when out all? see playing Well, far because transformation think when do it about playing a you do just if Georgia. been do see out Alabama, see - sizable, in happening fleet it's you When

Tom Fanning

different a they - going than here's megawatts a so process process thousand public gas. retire did they Well, are has Georgia. and that more Alabama a under of Alabama to procure have announce been coal to

may We is this But between Alabama end they commission. by that clarity more their a undertake the of give think year. that and that really process will

stay you So just tuned.

Michael Lapides

housekeeping think pretty about in a the of a think I'm I just financials trying then about bit low, packet, Drew. - year tax look little was the the one you at to your just in in XX%. the rate tax of how like half And your know, - second Okay. quarter for if looks Drew, it in the rates? like to sub

Andrew Evans

think question I that normalized what base will have a we But that probably sale detail year. don't think different the the into tax get and I'll significantly experienced were impacts last amortizations our system current be two more subsidiaries. your on I in boiler in when we drivers rate I ITC to and answer period think biggest the probably room. of

on that we period sale of in the credits on Nacogdoches. had was recorded from the investment our impact tax gain investment rate tax there gain fact, a effective the the Triton current some In and on biggest

we've portfolio that little bit been a cleanup the the doing. So of modulated by

Tom Fanning

guess we've PowerSecure. at but really, business. of piece off services announced I And business another it A sell utility we did

Andrew Evans

just on sharpen That helps that. focus our

Michael Lapides

Tom, Drew it, Got offline. for I'll up Thank responding. follow guys. you,

Tom Fanning

being great Thank Always with you. you.

Operator

Our the following from Please Sophie with with question proceed of KeyBanc. Karp your line comes question.

Tom Fanning

you? are How morning. good Hey

Sophie Karp

quarter my and you Morning, the guys. question. for Congrats thank taking on

Tom Fanning

delighted. Oh,

Sophie Karp

a in about any the if about going but so on to you your rate and going you are guess, and ask expectations to changes ground? jurisdiction what is are It's gears going been been year. kind Mississippi. commission of this case little what there some and there's this to bit I switch you're forward the later shape for maybe up go how I the in seeing wanted quiet, a

Tom Fanning

it's been think I everybody for Yeah, I quiet that's and think. good

place plant event. you in And You then we say know, continues after its got a footing Ratcliffe, County the Kemper I plant regain gas Mississippi way. in constructive to would know, the very since

front look be I So since fair certainly and been very process determine filed get it's then We constructive. think been going would it. really - I a they'll it's going not in good. think what's to we're and to to of I would it forward very say what about But

Sophie Karp

But your time framework has been long correct? really for there a place in

Tom Fanning

to was gosh, believe is over in or about evaluation absolutely, there, they place years, time think the which XXXX, there modified when I I performance goes CFO I put came it The plan back was from Oh, but that not. the Australia. it

So XX it's years. about old that

Sophie Karp

the And in edges should changes Yeah. this kind and the or stays of think also around place we... framework you maybe – should that just do

Tom Fanning

Yeah.

and fact, around year go In all RAC of been has three electric plan different know, Georgia them and process great. all utilities our processes through of have you and That Alabama three great terrific. is kind has you The performance plan of are the look been what, evaluation we great.

At when end lowest prices for we've look results the say States. produce I they here's at got and in day great mean. I it, And what customers the among of United the the terrific

issues results, than regulator business more average. Customer is with of to produce the that great satisfaction I very handle XX% We're able our high. together think has kind now than better everybody. thorny Georgia national helps to

are these of different them of each well. So mechanisms while work each

Sophie Karp

Thank you. it. Got

Tom Fanning

bet. You

Andrew Evans

Thanks, Sophie.

Operator

question. JPMorgan. question comes following of Chris Our your Turnure proceed from line with with Please

Tom Fanning

you? are How Christopher. Hey,

Chris Turnure

Tom morning, Andrew. and Good

ones for in And any some next there on or side? particular could that Are power not included recurring gas up the question adjusted following a itself. for you the modeling of on quarter consider year? the your the Just we EPS items prior on in

Andrew Evans

In ex- question. your is items, I guess

the plants largely services the Non-repeatable construction by on wholesale disposition dominated small So would ex-items are sale integration future. out I gas back out. continue in I Kemper. charge for services which to under will probably year acquisition think were next backed wholesale gain we be of think we but would be And then had the Nacogdoches impacts, Mankato,

Tom Fanning

Chris. thought saying in Hey, were were our you there or... earnings adjusted I anything onetime

Chris Turnure

within the what driving adjusted number. Yeah. at was That's I

Tom Fanning

no… that Yeah. you junk weather But I other I of. aware we is to mean, Not mean, I'm than what talk like about that.

Chris Turnure

on sales or gains there? smaller No anything in

Tom Fanning

And one talking was time Drew that as we ex-portion about. into those tend push off to the

Andrew Evans

the small a penny, a than would deltas litigation income Yeah, did about We be but… didn't ‘XX bigger have so less a which in million, from Rico. did relates probably a of one revenue and share, to we Puerto ‘XX have penny Southern about settle some in Power $XX

Tom Fanning

significant. Nothing

Andrew Evans

significant. Nothing

Chris Turnure

think progress were the then And more on your among the Great. of other you for shift I recent here goal shift them July? I your commentary month in in able others then to tonight. over and June for Any to was question successfully day hire Okay. the think Vogtle, people XXX one

Tom Fanning

Yeah. yeah. - here's Well, the

we as out point to to tonight. we in are, we've since XX, where And between me you fact, the you go when the day breakdown was about differences remember start say adding we and you of where And going most Let we the last a people, as call. and added think give to shift. people fact gosh that wanted thousand on, in night XX the percentage were were, I

of XX, XX. kind we're Now

largely to the are all of going night shift. personnel additional So these

well. know that. boy But issues and working is all productivity so you there And that's

And you well done commentary, we're pretty on a quick just pipe to give fares.

need. As we've on track. we're we got all Electricians that

we'll add more. staffing. what happy we have But few need on We we're we are where with today, very probably a

Chris Turnure

for you Thank Great. the color.

Tom Fanning

You bet.

Operator

the from Howard proceed comes Weisel The with following Weil. line question question. Scotia with of Andrew Please your

Tom Fanning

you? are How Andrew. Hey,

Andrew Weisel

morning. Good thanks. good, Very

Tom Fanning

Good morning.

Andrew Weisel

also of on reliability think that some or excuse Georgia the how plant people additional of about keeping part example behind coal versus A and sales or but the X coal Could for retirements. strategy plant for around - potential Obviously wanted me. Bowen coal and X the we question retirements? retirements package, you is like follow economics some obviously other coal additional was IRP explain on those other that should units the

Tom Fanning

Yeah.

sort So of is really it lot again forms any that around and pressure there and things, clearly evaluate well-defined But type that. generation, generation, to reliability. It other of big and to of then process else, that in environment clear carbon economics on two coal. carbon emitting that’s very there's of which a coal goes regulatory everything regulatory

be under over so And time. will continue pressure therefore to coal

we just demonstrated IRP. in can't things some and shut that of You the those down

add your cheap probably been things is renewables the we do think we and not it X The other natural reserve continued a agreed out because lower as inactive Bowen plentiful time, taking and resilience example, has X pressure than variety in you a of add When nuclear. of as it of of that. notion of for matter and dispatch now. about a discussion over just dispatch to this be as Nobody curve it's to right is gas, point, it

weather other mathematical reliability says resilience deal and a resilience decades But and this I variances under conditions, long IRPs of and think founded the let is under are given the outages cost of outages of increasing and how of me reliability, acts variety be normal practices my that with the including and clear, system things. notion normal importance

have that's cyber had we on don't anticipate manage a where to my significant system we interruption or the or under gas proactively a skating of thinking in disruptions major a or attack to goes really we how ways operates currently hurricane conditions, to idea will the puck pipeline. Resilience happening. Are a whether abnormal snowstorm that be a what

is and standby, are we ideas are conversations the that really I'm these we're so commission. to need with like that with mean These where deal the I'm nationally. having important we into issues staff very with. And constructive sorry, These conversation that elevate get inactive reserve. And trying I to

Andrew Weisel

weather does could seen? we guidance, the favorable assume that have hot If this July you. you Thank me third one weather normal squeeze practice? quarter I or Okay. in Does On reflect follow-up. remind that will your

update offset trending to the the a should - know fair the the call, the you're to of I full but high would are might that favorable weather? there kind on as anything assume that then an guidance next should we range? be be you'll follow-up And to for quarterly of guidance end Or we consider toward it year,

Andrew Evans

expectation normal weather. Our for quarter for the - guidance third assume or does our the expectation

think think know actual seen to I probably answer our we've I volatility as the you month versus great that's simplest that's month best and projection prospective for and process planning.

Tom Fanning

be got upon CFO, There's the all CFO. beat a remember. used and right through a about Mississippi we There they and each together There’s joke joke go this, Power up meetings what tell numbers these was - just where CFO are. Drew I I to the of a among a work to joke. other

and Drew really Mississippi general, time work are to for that sets Power And get and team all number positive CFO one are numbers. and in Frances But permanent variances she temporary of how that's our our Turnage, said hard variances of a all you negative her guys. good

Andrew Evans

us just And you our know, for update not expectations quarter appropriate an it's to today.

a The get season come year really be is you summer. and we'll think good how sense the of the we Let's going through summer to out. able the heating give bulk of to

Tom Fanning

something didn't guys the estimate implies you that question, fourth for answer When but and Drew gives And ask quarter. question. the the you ahead a go third I'll quarter

we you look easily. we historically can pretty think handle If that

Andrew Weisel

Great. guys. Thank you,

Tom Fanning

bet. You

Operator

proceed Our with Please following Morningstar Research. Charles with question of question. comes from the Fishman your line

Tom Fanning

for Thanks us. morning. good Hello, joining

Charles Fishman

gas renewables What Tom, the coal we just on XX chart, If assume out Hey, hand XX, if slide question look I nuclear pie down. cheap. at gas? natural mix. one right let's generation years natural up, up, stays in happens obviously and look

Tom Fanning

this great stuff. is Oh Yeah.

that actually in of freedom there lot So degrees question, is a right. of

you years. this. But XX let So give me

We so is man This years have time in now. but fact, as old years - XX this COO. Oh ago. ago, I'm XX ago, to my years goes telling back XX stories

matrix low started the of prices high do and high of And medium weighted medium carbon. coal, cost low probability of high three medium carbon prices, cost We gas and way a carbon. about by we and or essentially using low three think to

we comes into estimate the do that the have carbon we up probability that IRP with prices probability when in an come a So terms go dominant we IRP. actually solution, and of as up

would manipulate we at manipulate zero, meaning to and happens carbon put in and The new that, what tonne. $XX use it a It's prices that change tonne. our input a $XX say, $XX very easy

And so about analysis we go through that. all sorts of stress

why the that's see of this why been to Here's no judgment going gas you're low bought solution and a guarantee, and my gas sense kind I variances, we for big mean, us. forever. to that's great my is has continue gas today cheap

So you're going time remain see to X gas you're significantly, renewables diminish. addition reasonably north, to migrate going see improve you're and going coal of see to with nuclear X see over will Vogtle constant. then you And the

a thing. of a a that's think matter matter of I economics. of It's lot whole

standpoint Now just these to strategies from whether away energy talking an I've resiliency a coal diminishes standpoint been from goes or goes capacity to.

gas to upon of we're So technology were knows? working to depends natural carbon. that the think we least one innovations I or made to we in where continues no commitment, on. gate, at the say the low is two out How who big This first stay mix

deals fuel a robust gas then manage that how we hydrocarbon of and One see continue to to period we type. doing come have capturing you'll in positive carbon it ultimately are If really atoms going with time. long looking with natural success something be for off kind the of could carbon

storage. is one other The

beyond today renewables. you see ion may in a much lithium you If the bigger of kind penetration technology we succeed storage of see

big kind are the those swing points. So of

Charles Fishman

Thank Okay. you. Fascinating.

Tom Fanning

sir. Yes,

Operator

of Our your Covello Phil comes line Please the question. question with from with ExodusPoint. following proceed

Tom Fanning

us. joining for Thanks

Unidentified Analyst

Andy. actually Hey, it's

Tom Fanning

you? are Oh, Andy. How

Unidentified Analyst

Hopefully you're still thankful.

Tom Fanning

well Yeah, know, much. pretty you

Unidentified Analyst

question. Just very, very quick numbers

it so was So the guess months like the be - you're I third $XX fourth giving the XXX that quarter. the $X.XX for trailing XX would in because like just quarter,

or to So What normal drivers? again fourth like something drives quarter the that? weather, assuming you the like what know, are $X.XX

Andrew Evans

This is Drew.

years on $X.XX And five its earned whether something last to is the Southern ROEs. results we've has in the at been third sort era really the quarter gas, in bimodal of sort reported modern in range. look the what you and of ultimately modal impact with If our quarter been

we we'll of move we as earn in a will so sense better through - allowed. of in third terms the where And quarter have be versus move

quarter we’ll it third reflective be the customer reserves large quarter either for of be fourth refund or a to will taken supplement In the the poor in sort fourth. weather the of in

of And that's the so third I think fourth think quarters. and about how - third we of kind interplay

last consistent with is five we've or up what our four experience think very set years. over I the

Tom Fanning

In in that third we've the other if earnings over beneficial quarter. we less have essentially words very fourth had in the produces weather And quarter earnings. therefore,

Unidentified Analyst

what happened last… that’s So

Tom Fanning

tended where what earned results. have sharing ‘XX $X.XX and we And And therefore we didn't fourth we to to better kind you're in of - ‘XX give seeing that Andy weather you and in quarter earned have just we less $X.XX. and

Unidentified Analyst

much. Okay. That's perfect answer. Thank you very

Operator

question-and-answer Sir, are today's session. closing conclude there any remarks. will That

Tom Fanning

the And I promise in not de XX to last greatest Tour talk about France the years.

took my anniversary would great over think earnings You afternoon. Art know, it's I the the first and from after call the him expect call me my interesting company from this a this of I This period is I with for - important a Beattie, is personally.

improvements wire. and to year know pipe had met the whether think from I'm on occur. and We've would I over around milestones advancing in And centered largely sort If the of think terms what Vogtle and that that really made that to and that was of I the really last year construction. we've structural conversation because not labour we've about iron completion converted we've or was a X we've that the our conversation fact put moved concrete you X commitment of in enjoy ourselves, major force of from into last

a got on. focus what's us, ahead If I want to that we've we major of people of look at couple milestones

terms a we little it's we've turnover. think major or promising moved myopic of visas and think rates hourly and get their milestones in I about bit Canadian I and overly that think on

effort. meet will this through ultimately allow the cost reserves we investors, with for very the us talk that both time of about maintain open we and I we're think And commitments. in the we're advancing very I and of shape good a It's meet the November been those in company XX in of XX. to important expectations a our As in that is commission to with I that terms completion - which think think success fact we think year of

Andrew Evans

report of point, happy ahead, think chickens lot gun this to son happy you got counting Hey said ago and an we be this, we're first at put know, I'll work but is year. And the card, six they if a only great you ahead. of cherry at XXXX the year that year, one would that this be first with nobody's on with half we what any a of it's awfully a important you lies months look

you So good we'll we'll Thanks so we that keep Take joining we and working soon. to and morning far. for continue the see us care. everybody deliver this results have hopefully

Operator

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

disconnect. may now You

The Southern Company (SO) 31 Jul 192019 Q2 Earnings call transcript