Cautionary Note Regarding Forward-Looking Statements

Transcription

1 Third Quarter 2012 Earnings Conference Call November 5,

2 Cautionary Note Regarding Forward-Looking Statements Certain information contained in this presentation ti is forward-looking information based on current expectations ti and plans thatt involve risks and uncertainties. ti Forward-looking information includes, among other things, statements concerning completion of ongoing construction projects, benefits to customers, earnings per share, the economic recovery, customer growth, estimated costs for new generation resources, and future plans and projections. Southern Company cautions that there are certain factors that can cause actual results to differ materially from the forward-looking information that has been provided. The reader is cautioned not to put undue reliance on this forward-looking information, which is not a guarantee of future performance and is subject to a number of uncertainties and other factors, many of which are outside the control of Southern Company; accordingly, there can be no assurance that such suggested results will be realized. The following factors, in addition to those discussed in Southern Company s Annual Report on Form 10-K for the year ended December 31, 2011, and subsequent securities filings, could cause actual results to differ materially from management expectations as suggested by such forward-looking information: the impact of recent and future federal and state regulatory changes, including legislative and regulatory initiatives regarding deregulation and restructuring of the electric utility industry, implementation of the Energy Policy Act of 2005, environmental laws including regulation of water, coal combustion byproducts, and emissions of sulfur, nitrogen, carbon, soot, particulate matter, hazardous air pollutants, including mercury, and other substances, financial reform legislation, and also changes in tax and other laws and regulations to which Southern Company and its subsidiaries are subject, as well as changes in application of existing laws and regulations; current and future litigation, regulatory investigations, proceedings, or inquiries, including the pending Environmental Protection Agency civil actions against certain Southern Company subsidiaries, Federal Energy Regulatory Commission matters, and Internal Revenue Service and state tax audits; the effects, extent, and timing of the entry of additional competition in the markets in which Southern Company s subsidiaries operate; variations in demand for electricity, including those relating to weather, the general economy and recovery from the recent recession, population and business growth (and declines), the effects of energy conservation measures, and any potential economic impacts resulting from federal fiscal and budgetary decisions; available sources and costs of fuels; effects of inflation; ability to control costs and avoid cost overruns during the development and construction of facilities, which includes projects involving facility designs that have not been finalized or previously constructed; investment performance of Southern Company s employee benefit plans and nuclear decommissioning trust funds; advances in technology; state and federal rate regulations and the impact of pending and future rate cases and negotiations, including rate actions relating to fuel and other cost recovery mechanisms; regulatory approvals and actions related to the Plant Vogtle expansion, including Georgia Public Service Commission approvals, Nuclear Regulatory Commission actions, and potential U.S. Department of Energy loan guarantees; regulatory approvals and actions related to the Kemper County integrated coal gasification combined cycle facility, including Mississippi Public Service Commission approvals, potential U.S. Department of Energy loan guarantees, the South Mississippi Electric Power Association purchase decision, satisfaction of requirements to utilize investment tax credits and grants, and the outcome of any further proceedings regarding the Mississippi Public Service Commission s issuance of the certificate of public convenience and necessity; the performance of projects undertaken by the non-utility businesses and the success of efforts to invest in and develop new opportunities; internal restructuring or other restructuring options that may be pursued; potential business strategies, including acquisitions or dispositions of assets or businesses, whichcannotbeassuredtobecompleted or beneficial to Southern Company or its subsidiaries; the ability of counterparties of Southern Company and its subsidiaries to make payments as and when due and to perform as required; the ability to obtain new short- and long-term contracts with wholesale customers; the direct or indirect effect on the Southern Company system s business resulting from terrorist incidents and the threat of terrorist incidents, including cyber intrusion; interest rate fluctuations and financial market conditions and the results of financing efforts, including Southern Company s and its subsidiaries credit ratings; the impacts of any potential U.S. credit rating downgrade or other sovereign financial issues, including impacts on interest rates, access to capital markets, impacts on currency exchange rates, counterparty performance, and the economy in general, as well as potential impacts on the availability or benefits of proposed U.S. Department of Energy loan guarantees; the ability of Southern Company and its subsidiaries to obtain additional generating g capacity at competitive prices; catastrophic events such as fires, earthquakes, explosions, floods, hurricanes, droughts, pandemic health events such as influenzas, or other similar occurrences; the direct or indirect effects on the Southern Company system s business resulting from incidents affecting the U.S. electric grid or operation of generating resources; and the effect of accounting pronouncements issued periodically by standard setting bodies. Southern Company expressly disclaims any obligation to update any forward-looking information. 2

3 Business Update Customer Satisfaction All four operating companies in top quartile among U.S. utilities Smart Meters Reliability Peak-Season EFOR Fossil/Hydro 2.8% Nuclear 0.37% (3 of 6 units at 0.0%) Continued strong performance for Transmission & Distribution networks Over 4.4M deployed ahead of schedule Enhanced reliability and ability to respond Avoided approximately 40 million miles of driving by meter readers 3

4 Vogtle Units 3 & 4 Construction Progress Received Unit 4 condenser Unit 3 Turbine Island Completed fabrication of Unit 3 reactor vessel Completed Unit 3 turbine building foundation Completed fabrication of Unit 3 containment vessel bottom head U it 3 C li T F d ti Completed fabrication of module CR10 (cradle for containment vessel) Completed Unit 3 cooling tower foundation and ring beam Performed nuclear basemat test pour Unit 3 Cooling Tower Foundation 4

5 Vogtle Units 3 & 4 Upcoming Construction Unit 3 rebar, embeds, basemat concrete Set CR10 (cradle for containment vessel) Dec 2012 Q Receive reactor vessel Dec 2012 Ship & receive turbine generator, accumulator tanks, heat exchanger, core make-up tanks, Q reactor coolant piping Set containment vessel bottom head (Unit 3) Q Ship & receive steam generators, pressurizer, spent fuel storage racks Q Concrete Test Pour 5

6 Vogtle Units 3 & 4 Regulatory NRC approved two LARs related to rebar design and basemat thickness PSC approved 6th Vogtle Construction Monitoring Report (VCM) Current estimate of $6.2B lower than original certified cost of $6.4B* EPC agreement significantly insulates customers 7 th VCM Overall costs to customers projected to be less than when originally certified in 2009 Potential additional customer benefits of up to $2B further reduce lifecycle costs See VCM: Figure B Page 7 See VCM: Figure A Page 5 * Projected cost data above does not include the potential impact of current disputes with contractors 6 7th VCM online:

7 Plant Ratcliffe IGCC Progress CO2 Absorbers Status: Project 70% complete Target T t in-service: i i May M 2014 Gasifier Lift Complete: p Gasifier bottom lifts CO2 absorbers installed Reservoir fill underwayy 7

8 Plant Ratcliffe IGCC Upcoming Construction Gasifier Center Lifts Q Gasifier Top Lifts Air Compressor Installed Q Q Operational Mine Commercial Operation Q First Fire Combustion Turbine Q Steam Turbine Sync to Grid Q First Gasifier Heat Heat-up up Q

9 Q vs. Q EPS Drivers $1.11 $ D&A Interest Income Taxes Southern Power Shares Usage & Economic Growth Other Revenue Effects Weather Non-Fuel Expense Traditional Operating Companies +5 Q Q

10 2012 Retail Sales Growth vs Q3 Year-to-Date As Reported Weather Normal As Reported Weather Normal Residential (7.2%) (2.1%) (8.3%) (0.1%) Commercial (2.4%) (0.1%) (2.3%) 0.0% Industrial (1.9%) (1.9%) (0.1%) (0.1%) Total Retail (4.0%) (1.4%) (3.7%) (0.1%) Slowing in export volume consistent with slowing global demand Lingering uncertainty around upcoming elections, Fiscal Cliff, and global economy Current economic indicators reflect a mixed outlook 10

11 Economic Policy Uncertainty Index Businesses appear to be waiting to expand. Economic development pipeline includes over 300 projects. 11

12 2012 Earnings Per Share Q4 Estimate t = $0.38 to $0.40 per share 12

13 21 st Century Coal Gasification Technology Allows for low-carbon generation using an affordable, abundant, low-rank coal resources Utilized at Plant Ratcliffe in Kemper Co, MS Formed alliance with KBR to market the technology worldwide 13

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15 Appendix / Other Slides 15

16 Capacity Factors Generation Portfolio Diversity Q3 Year-to-Date Coal PRB 88% 75% 81% 66% Coal Non-PRB 56% 41% 52% 34% Gas Combined Cycle 69% 77% 60% 74% Generation Mix Q3 Year-to-Date Coal 51% 41% 52% 37% Gas/Oil 34% 43% 31% 45% Nuclear 14% 15% 15% 16% Hydro 1% 1% 2% 2% 16

17 Financing Plan ($ millions) 2012 Issued through 10/31/2012 Remaining Total Alabama $ 650 $ 350 $ 1,000 $ 450 $ 650 Georgia 2, ,534 1,400 1,200 Gulf Mississippi Southern Power Holding Company Long-Term Security Issuances $ 3,510 $ 824 $ 4,334 $ 3,100 $ 3,000 Net as of 9/30/2012 Common Equity Issuances $ 264 see note $ 0 $ 0 $ 700 Notes Long-term security issuances include funding of maturities Vogtle and Kemper DOE Loans could be $3.8 billion to $4.3 billion over the next three years In addition to the remaining 2012 issuances above, $163 million of callable debt is being evaluated for refunding Proceeds from stock option exercises for all of 2012, including the first nine months, projected to be utilized to buy back shares during the remainder of the year 17

18 2012 Capital Markets Financings through 10/31/2012 APC GPC Gulf Issues Total ($M) Avg. Coupon Avg. Term $ % 13 yr $2, % 19 yr $ % 10 yr MPC 3 $ % 24 yr Total Company 13 $3, % 19 yr Issuances by Tenor 5Y $335M 3Y $800M 10Y $500M 30Y $1,849M 18

19 Our Debt Portfolio Continues to Compare Favorably Peer Comparison 9/30/ % 7.00% Ameren Corp. 4% 6.00% Avera Ave erage Cost Cost (%) (%) 6.50% 5.50% 5.00% 6.00% 4.50% 550% 5.50% 4.00% 3.50% 5.00% AEP 6% Entergy Dominion 7% Entergy Corp. 37% NextEra 19% Exelon Corp. 0% Public Service Enterprise 4% Duke Energy 1% Con Edison 2% PG&E 1% Wisconsin Energy 11% Alabama 8% Gulf 28% Mississippi 5% AEP Dominion FPL Group Public Service Enterprise Wisconsin Energy Group Exelon Southern Co. 9% Georgia 8% Ameren Progress Energy Con Ed 3.00% Duke Energy 4.50% 2.50% Source: Citi Black line represents average A/BBB+ utility yield curve for 5 previous years. %s represent % of fixed rate debt with a par call feature. Average Average Life Life (yrs) (yrs) Source: Citi 19