Cautionary Note Regarding Forward-Looking Statements

Transcription

1 Second Quarter 2012 Earnings Conference Call July 25,

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 anticipated fuel source mix, earnings per share, financing activities, expected completion of construction projects, sales growth, the economy, economic recovery, job creation, and capital expenditures. 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 forwardlooking 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), and the effects of energy conservation measures; available sources and costs of fuels; effects of inflation; ability to control costs and avoid cost overruns during the development and construction of facilities; 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, utilization of investment tax credits, 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, which cannot be assured to be completed 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 Southern Company 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 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 Southern Company 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 A Diverse Generation Portfolio Benefits our Customers Capacity Factors YTD 2011 YTD 2012 Change Coal - PRB 77% 62% (15%) Coal - Non-PRB 50% 30% (20%) Gas - Combined Cycle 55% 72% +17% Generation Mix YTD 2011 Hydro Nuclear 16% Coal Gas/Oil 53% 28% YTD 2012 Hydro Nuclear Coal 17% Coal 35% Gas/Oil 46% 3

4 Low Cost Additions to our Energy Mix 6 Variable Cost to Customers $5 / MMBtu /kwh 0 Vogtle 3&4 (excluding PTCs) Ratcliffe IGCC Natural Gas Combined Cycle ($2-$7 / MMBtu) $3 / MMBtu Chart reflects cost ranges for later this decade, although the variable cost benefits and lower potential volatility relative to natural gas are projected to be substantial over the life of the assets Variable costs for Ratcliffe IGCC includes offsets from contracted byproduct sales 4

5 Plant Ratcliffe IGCC in Kemper County Target Completion: May 2014 Current estimate of $2.88B Appeal pending before MS Supreme Court for financing costs during construction ti Overall cost to customers projected to be less than certified 5

6 Vogtle Units 3 & 4 Progress to Date Installed 600 tons of rebar in turbine island Installed 3,500 tons of rebar and 20,000 cubic yards of concrete for cooling towers Total concrete produced by onsite batch plant 150,000 cubic yards Work is progressing on the nuclear islands Successfully completed 1,500 ton load test with the Heavy Lift Derrick Independent monitor: Georgia Power continues to manage the project well Recommends that the commission approve all costs incurred during this reporting period For more photos and videos, please see the following website: 6

7 Vogtle 3 & 4 Over the Next Several Months Unit 3 nuclear island rebar Complete Fall 2012 Current Expectations In Progress Unit 3 turbine building mudmat and foundation installation Nuclear island modules assembly Assembly of Unit 4 containment vessel bottom head Complete Fall 2012 Ongoing Complete Spring 2013 Upcoming Unit 3 nuclear island first nuclear concrete Start Fall 2012 Unit 3 reactor vessel at site Arrive in Fall

8 Other 21st Century Generation Projects Plant McDonough-Atkinson Unit 5 on line April 26th Efficient 840MW natural gas combined cycle Unit 6 on schedule for Q4 Nacogdoches Power Project On line June 23rd 100MW biomass plant 20 year PPA with City of Austin Apex Solar A S l Facility F ilit 20MW PV solar on line July 21st Partnership with Turner Renewable Energy 25 year PPA with Nevada Power Company 8

9 Q vs. Q EPS Drivers Usage & Economic Growth Other Revenue Effects Weather -2 Non-Fuel O&M -1 D&A -1 Interest 2 Income Taxes 1-2 Parent Shares 69 Traditional Operating Companies -1 Q ex-items Q ex-items* * Excludes +2 EPS impact of insurance recovery related to the MC Asset Recovery settlement 9

10 Q Retail Sales Growth As Reported Weather Normal Residential (4.3%) 2.1% Commercial (1.4%) 12% 1.2% Industrial (0.1%) (0.1%) Total Retail (1.9%) 1.0% ~20,000 New Residential Customers in 2012 Industrial Highlights 20,000 Q vs. Q ,000 Q1 +15K Q2 +5K Pipelines +12% Transportation +9% Lumber +7% 0 Fabricated Metals +6% Jan Feb Mar Apr May Jun 10

11 Economic Roundtable GDP growth of approximately 2% in 2012 Global economic growth slowing Impacting the growth of U.S. industrial production o Partially offset by positive impact of low gas prices Low consumer confidence continues to drive a slower housing recovery Southeast growth expected to outpace nation 11

12 Compliance Capital Forecast ($ millions) Total Baghouses Additives Injection Systems Fuel Switching Transmission MATS $147 $440 $1,216 $1,803 Coal Combustion Residuals* Effluent Guidelines & 316(b) Other $9 $82 $401 $492 Total Compliance Capital $156 $523 $1,617 $2,295 * Assumes non-hazardous designation. All amounts are preliminary and remain subject to change. Any change will be reflected in the Form 10-Q. Totals may not add due to rounding. 12

13 Expected Long-term Implications to Coal Fleet 13 GW 3 GW 4 GW Flagship units, and smaller units utilizing common controls, available long term Candidates for retirement and potentially unavailable for long-term operations 3 GW 4 GW Fuel switching, primarily il natural gas 13

14 Financing Plan ($ millions) 2012 Issued Remaining Total Alabama $ 250 $ 500 $ 750 $ 450 $ 650 Georgia 1, ,534 1,400 1,200 Gulf Mississippi Southern Power Holding Company Long-Term Security Issuances $ 2,484 $ 1,775 $ 4,259 $ 3,100 $ 3,000 Common Equity Issuances $ 317 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, $580 million of callable debt is being evaluated for refunding Proceeds from stock option exercises for all of 2012, including the first six months, will be utilized to buy back shares during the remainder of the year 14

15 2012 Earnings Per Share Q3 Estimate = $1.12 per share Annual Guidance = $ $2.70 per share 15

16 Appendix 16

17 A Diverse Generation Portfolio Benefits our Customers Capacity Factors Q Q Change Coal - PRB 78% 70% (8%) Coal - Non-PRB 46% 26% (20%) Gas - Combined Cycle 55% 75% +20% Generation Mix Q Hydro Q Nuclear Nuclear 15% 16% Coal Gas 29% 54% Gas 45% Hydro Coal 38% 17

18 Updated Compliance Forecast ($ millions) Total Alabama Georgia Gulf Mississippi Other Subsidiaries MATS $147 $440 $1,216 $1,803 Alabama Georgia Gulf Mississippi Other Subsidiaries Other $9 $82 $401 $492 Total Compliance $156 $523 $1,617 $2,295 All amounts are preliminary and remain subject to change. Any change will be reflected in the Form 10-Q. Totals may not add due to rounding. 18

19 Change in Compliance Forecast (Compared to Prior Forecast) ($ millions) Total Alabama (104) (188) (203) (495) Georgia (69) (16) Gulf (11) (9) (63) (83) Mississippi (30) (93) (247) (370) Other Subsidiaries 0 (14) (66) (80) MATS ($214) ($319) ($398) ($931) Alabama (3) (137) (320) (460) Georgia (25) (107) (263) (395) Gulf (1) (21) (51) (73) Mississippi 0 (21) (65) (86) Other Subsidiaries Other ($29) ($286) ($698) ($1,014)* Total Compliance ($243) ($605) ($1,096) ($1,945) * Other dollars expected to be spent beyond 2014 no change in long-term compliance cost assumption for ash and water rules. All amounts are preliminary and remain subject to change. Any change will be reflected in the Form 10-Q. Totals may not add due to rounding. 19

20 Capital Forecast * ($ millions) Total Base 5,267 4,381 4,341 13,993 MATS Compliance ,216 1,803 Other Compliance Total Capex $5,423 $4,904 $5,958 $16,288 * Reflects updated environmental compliance decisions made through the second quarter All amounts are preliminary and remain subject to change. Any change will be reflected in the Form 10-Q. Totals may not add due to rounding. 20