Good afternoon. My name is Julian, and I will be your conference operator for today. At this time, I would like to welcome everyone to Southern Company's Third Quarter 2024 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. As a reminder, this conference is being recorded. It is now my pleasure to introduce Mr. Greg MacLeod. Thank you. You may begin.

Thank you, Julian. Good afternoon and welcome to Southern Company's Third Quarter 2024 Earnings Call. Joining me today are Chris Womack, Chairman, President, and Chief Executive Officer of Southern Company; and Dan Tucker, Chief Financial Officer. Let me remind you that we will make forward-looking statements today in addition to providing historical information. Various important factors could cause actual results to differ materially from those indicated in the forward-looking statements, including those discussed in our Form 10-K, Form 10-Q and subsequent filings. In addition, we will present non-GAAP financial information on this call. Reconciliations to the applicable GAAP measure are included in the financial information we released this morning, as well as the slides for this conference call, which are both available on our Investor Relations website at investor.southerncompany.com. I'll now turn the call over to Chris Womack.

Thank you, Greg. Good afternoon and thank you for joining us today. Our entire company, including our premier state-regulated electric, gas, and utilities, continued to perform well during the third quarter, especially as our dedicated employees across Southern Company came together as one team in response to Hurricane Helene. The resolve and professionalism of our employees have never been more evident than demonstrated through the recent storm restoration efforts in Georgia. Before Dan provides an overview of our financial results, I'd like to share our story from this unprecedented weather event. Hurricane Helene was a storm of historic magnitude. Its aftermath was met with an extraordinary response from our dedicated team across Southern Company, our mutual assistance partners, state and local first responders, as well as emergency management agencies and government officials across Georgia. Persistent rain, extreme flooding, and heavy winds resulted in what can only be characterized as devastation to many of the communities we serve, with destruction stretching hundreds of miles impacting the eastern two-thirds of the entire state. Ultimately, the damage caused by Hurricane Helene was the most destructive in Georgia Power's 140-year history, exceeding the damage caused by the three largest storms to impact Georgia Power's service territory combined. Helene entered southern Georgia as a Category 1 hurricane and resulted in 53 out of the 159 counties in the state being declared major disaster areas by the Federal Emergency Management Agency. With considerable damage to transmission infrastructure, nearly 12,000 damaged utility poles, and some 1,500 miles of downed wires, the equivalent of the distance between Atlanta and Phoenix, Arizona, our customers experienced over 1.5 million outages in the wake of the storm. With the support of resources from across North America, a workforce of well over 20,000 worked around the clock to safely reconnect customers through extremely difficult conditions. Commensurate with the devastation seen in our communities, much of our utility infrastructure was damaged beyond near repair, and a significant portion of our system in the affected regions requires a complete rebuild. Thanks to the contributions of our utility industry partners, and especially thanks to the unwavering commitment of our own hardworking dedicated crews, many of whom lived in the same communities and some of whom endured destruction to their own homes, the restoration and rebuilding efforts were 95% complete within eight days, with power restored to over half a million customers within the first 48 hours. We are incredibly proud of our team's response and eternally grateful to be a part of an industry that works so well together in times of need. Many of the communities we are privileged to serve across eastern Georgia have a long road ahead to recovery. Georgia Power, Atlanta Gas Light, and Southern Company are contributing to organizations to aid these communities, and Georgia Power has taken additional steps to provide support and resources to our customers in Georgia. In our business model, customers are at the center of everything we do, and our commitment to the communities and customers we serve has never been more important than in times like these. I am extremely proud of our team's exceptional efforts to clearly demonstrate that we are a citizen wherever we serve each and every day. Dan, I'll now turn the call over to you for a financial update.

Thanks Chris and good afternoon everyone. Before I walk through the third quarter financial results, I'd like to briefly address the costs associated with the recovery efforts Chris just described related to Hurricane Helene. The initial estimated cost for this historic storm-related restoration and rebuild is approximately $1.1 billion. The unprecedented destruction associated with this weather event, combined with impacts of inflation on the cost of contract labor, supplies, food, fuel, and lodging, contribute to the overall cost. Our estimate is subject to change over the next several months as estimates are replaced with bills from our mutual assistance partners as we complete the final cleanup of damaged equipment and as we work to ensure the impacted areas are restored to meet our standards for long-term reliability. That is not to suggest that our estimate is likely to materially change, but rather to acknowledge that it takes time to fully capture the ultimate cost of such an extensive endeavor. Turning now to our financial results. For the third quarter of 2024, our adjusted earnings were $1.43 per share, $0.01 higher than the third quarter of 2023. The primary drivers of our performance for the quarter compared to last year were continued investment in our state-regulated utilities and customer growth. This was mostly offset by higher interest, depreciation, and other operating expenses. And for the nine months ended September 30th, 2024, our adjusted earnings per share were $3.56 compared with adjusted earnings per share of $3.01 for the same period in 2023. One of the largest drivers in our year-to-date results compared with the prior year is weather-related impacts from an extremely mild first half of 2023, contrasted with the weather effects we've experienced thus far in 2024. A complete reconciliation of the year-over-year earnings is included in the materials we released this morning. Our adjusted EPS estimate for the fourth quarter is $0.49 per share, which combined with our year-to-date performance, would represent full-year adjusted earnings of $4.05 per share. After excluding a 0.4% negative impact of lost sales that resulted from the damage caused by Hurricane Helene, weather-normalized total retail electricity sales were essentially flat compared with the third quarter of 2023. The broad strength of the economy in the Southeast was exhibited in the quarter by strong electricity sales in the chemical, pipeline, and transportation segments, as well as data center power usage, which continued its positive trend and was up 10% year-over-year. And while weather-normalized residential electricity usage per customer was slightly down in the quarter, we saw strong residential customer additions of 12,000 in our electric businesses and 7,000 new customers in our natural gas distribution businesses. The economic development activity across our electric service territories remains robust, and our pipeline continues to grow at a historic pace. 42 companies either established or expanded operations in our service territory in the third quarter, generating over 5,000 potential new jobs and representing capital investments totaling approximately $2.6 billion. Alabama Power's economic activity this quarter represented its strongest quarter in several years led by announcements in metals, renewable energy, and the chemicals segment. The combined pipeline for new industrial and other large load commercial customers across our three-state electric utility footprint continues to grow. The upcoming quarterly large load economic development report to be filed with the Georgia Public Service Commission is expected to reflect that Georgia Power's potential load additions and its economic development pipeline have grown to over 36 gigawatts by the mid-2030s with 8 gigawatts committed. Chris, I'll turn the call back over to you.

Thanks, Dan. We have delivered exceptional operational and solid financial results through the first three quarters of the year, and we are well positioned to finish the year strong. Our team's resilience in the face of a historic storm highlights our dedication to the customers and the communities we are privileged to serve, and I am extremely grateful and proud to be a part of their team. It is certainly an exciting time for our great company and for this industry. With supportive states and constructive regulation, along with our portfolio of state-regulated electric and gas utilities, we are well positioned for the opportunity presented by this extraordinary energy demand growth our industry is projecting in the coming years. As we work to help our states grow and partner with the communities we are privileged to serve, our disciplined approach, combined with the orderly planning and regulatory processes across our utility service territories, should support mutual benefits for all of our stakeholders including our existing customers. Let me conclude by saying I am very excited about our future. Operator, we are now ready to take questions.

Thank you. We will now be conducting a question-and-answer session. Our first question comes from Carly Davenport, Goldman Sachs.

Hi, good afternoon – Thanks for taking the question. Maybe just to start on the storm cost side. I appreciate the color on the kind of $1.1 billion estimate at this point. Will all of that be deferred? And can you just talk through the process and the timing for filing for recovery of those costs in Georgia?

Yes. Typically, we prefer not to anticipate upcoming regulatory processes or make predictions about the commission's final decisions. It's important to note that historically, they have been supportive, and the recovery has been timely and balanced for both the company and its customers. Regarding our current situation, all costs have been deferred, and we still have work to do in refining estimates into more concrete figures. However, we do not anticipate any significant changes in that area. Additionally, we will undergo a process to ascertain how much of these costs will be categorized as capital expenditures for new assets versus operational costs for crew support and wire reinstallation. The latter typically resembles operational and maintenance expenses but will still be deferred and may be recovered differently from capital costs.

Got it. Okay. That's super helpful. Thank you. And then maybe just pivoting to the load growth side. I appreciate the updates there on the pipeline in Georgia. Could you just talk a little bit about how that pipeline has developed and also the commitments? In the context of the upcoming IRP filing in Georgia, how are you thinking about the potential magnitude or mix of that filing just based on what you've seen so far in terms of how that large load pipeline has developed and how that pipeline has converted to actual customer commitments?

Yes, that's an excellent question, Carly. To address it, without getting ahead of the actual processes or filings, Georgia Power is making this quarterly filing with the PSC to provide better clarity for all involved as we approach the next formal process. Since initiating that process, we have not only maintained momentum but also seen an increase in the size of the pipeline, along with continual commitments within it. Currently, we have 8,000 megawatts committed for the mid-2030s timeframe, compared to about 3,600 megawatts at the time of our filing last fall with the Public Service Commission. We're pleased to see this progress continuing.

Carly, one thing I would add, and we talk about it a lot as we go through kind of our narrative about how this process works and I talk a lot about our orderly processes. And I think as you look forward to this next large load filing and then as the company prepares for the Integrated Resource Planning process, I think that demonstrates that process that's in place to clearly demonstrate what's real. And then how we price this and just how we work our way through bringing these projects online, but just working through an orderly process, because there's a lot of activity up in the marketplace. But I think we owe it to our regulatory bodies, but also to all of our states to make sure we're being very diligent as we work through this process to bring these projects online.

Got it. Very clear. Thanks so much for your time.

Thank you. Our next question comes from Shar Pourreza of Guggenheim Partners.

Hey, guys, Chris and Dan.

Hey, Chris.

Hey, Chris. I just wanted to maybe start with Southern Power for a second, sort of this push for resource adequacy being so front and center in almost every jurisdiction. I mean, Southern Power is predominantly contracted, but I have to imagine kind of the off-takers want to stick with the assets. Are you seeing kind of any opportunities around restriking the contracts and extending the tenors? Are you seeing opportunities as contracts roll off? And how do we think about pricing kind of in this environment and what it could also mean for Southern Power's growth? Thanks.

Let me start, Shar, and provide some context on Southern Power. We have always aimed for Southern Power to have a risk profile similar to that of our regulated business. This means focusing on long-term contracts with creditworthy counterparties and avoiding fuel risk. Specifically, the natural gas generation portfolio is largely secured, with over 90% of it covered through the end of this decade. It is only after this point that we will have contracts up for renewal. Of course, we will have the chance to renew or extend these contracts well before the decade ends. In this context, when we compare current contract rates to projected capacity values in the future, it appears that these values have essentially doubled. This presents a long-term opportunity to enhance returns within Southern Power. There is significant interest in that capacity. Additionally, we consistently receive inquiries from customers looking to add new assets, be it natural gas or renewables, in the Southeast and other markets, particularly where we have renewable energy. Our customer mix remains similar to what we currently serve, including load-serving entities such as investor-owned utilities, municipalities, and cooperatives, as well as a substantial number of large commercial and industrial clients directly through contracts. While these contracts may exist in structured markets, they ultimately involve direct agreements with individual customers. We are exploring these opportunities while maintaining our disciplined approach of long-term contracts, creditworthy counterparties, and no fuel risk.

Got it. But that discipline doesn't really curtail or put a ceiling on how big you expect Southern Power to get, because the opportunities are pretty sizable?

Yes, I think that's right, Shar. And just historically, and I think even going forward, we are a regulated utility holding company and we have this incredibly attractive complementary wholesale generation business that we've never wanted to get outsized relative to our retail business, our retail electric business, or gas business. That said, the regulated utility business is growing so fast right now. I have no concerns about Southern Power's growth rate outstripping that.

But Shar, just always remember we talk about being disciplined. And just know that in the midst of all this opportunity, we will remain very disciplined as we move through this period.

Got it. Okay. Perfect. And then just lastly just on follow-up on Carly's just fine-tuning. Just Dan, do you have any sense you've got an estimated cost number there? You said $1.1 billion it could change. But do you have any sense on how much of that could be capital versus O&M? And then how do we sort of think about the timing of that recovery going into a GRC, as we're thinking about bill impact and customer affordability right? So there's a bunch of things happening at once and this is a big GRC coming up. So how do we sort of think about the risks there?

Yes. On your first point, Shar, it's just too early to say. I think intuitively, we believe it will likely skew at least a little more capital than historically. But in terms of what that actually looks like, it's hard to say. The reason that that's our belief is simply because of the magnitude of rebuilding that occurred in this storm. And then in terms of the process, again you know us and go back to Chris' comments. We're going to remain disciplined and part of our discipline is not getting ahead and making assumptions about what our regulatory processes will be. There's going to be lots of variables, not only the split of the capital versus this other piece, but just what else is being considered at the time. And I think the most important thing to look back on is the constructive approach that the commission has taken historically.

Perfect. I appreciate it guys. Thanks so much.

Thanks, Shar. Take care.

Thank you. Our next question comes from Ross Fowler, Bank of America.

Hey, Ross.

Good morning, Chris, good morning, Dan. So maybe following on the Shar's question he asked most of it. But Dan, maybe not commenting on whatever happens in the future. But in the past, sort of as you work through storm recovery processes in Georgia, this isn't the first hurricane you've ever had. What is the typical sort of cash recovery lag? Can you remind us what that looks like? And then does that create an opportunity for securitization? Can that be done in the state? And then how do you sort of finance the gap between the expenses that have gone out on the balance sheet versus the actual cash recovery going forward?

Yes. Look, I think the PSC has in their hands every tool at their disposal to overlay kind of a flexible approach to this. Without being too precise about the history, I think it's fair to say it has depended on the magnitude of the storm and the circumstances at the time, but the recovery periods have been from a couple of years to as many as six years depending on how big the balance was and what else was kind of being factored into rates at the same time.

Okay. Perfect. Thank you.

You bet.

Our next question comes from Nick Campanella, Barclays.

Hey, Nick.

Hey. Good afternoon, everyone. Thanks for taking my question. I just wanted to kind of get your perspective 36 gigawatts is a big number. You already have eight committed to your point. It just kind of seems like there's pressure higher on your load outlook every quarter here. And you have seen some peers in the space starting to kind of revise numbers specifically kind of EPS outlooks on this. And I'm just kind of curious, is there a tipping point for you into where you would essentially need to kind of reevaluate the 5% to 7%? Is there a point where the plant can sustain a rate base growth figure even with that financing drag that would kind of put you above that 5% to 7% range? Thanks.

Sure. I'll start with my previous comments on the growth rate. I do not expect any changes in the near term regarding what we've discussed. To clarify, the 36 gigawatts we mentioned is targeted for the mid-2030s, which is a long-term goal, not something expected in 2024, 2025, or 2026. Opportunities for acceleration are also long-term. Historically, I have indicated that if this momentum continues, it is less about our pipeline and more about the commitments and the risk-adjusted outlook on sales and the capital needed to meet demand. If that momentum endures, there may be a chance to reassess our growth prospects in the latter half of our outlook. As things stand today, I don't believe the growth rate of five to seven percent will change, but we will evaluate it when the time comes. You highlighted many factors at play. Earlier this year, we indicated that our long-term sales growth for the latter part of our plan was close to 6%. When we update our plan in February, I wouldn't be surprised if that figure is higher. In February, we will present our capital plan, and we have already disclosed several incremental components to our capital strategy this year, including some Southern Power projects and the Georgia Power Integrated Resource Plan updates around storage and plant Yates certification. We are also aware of the details surrounding the Southern Natural pipeline, which we own 50% of. These known factors alone represent about $3 billion of additional capital relative to our $48 billion plan. Given what we've observed, it would not surprise me if there are several billion dollars more included in our February plan. We are taking a long-term perspective and remain disciplined in how we approach opportunities.

That's great, Dan. I appreciate all that context. Thank you for that. And I know the IRP filing is coming. You guys have been kind of leader in the nuclear space. Can you just kind of talk about how this fits into the company's wider generation outlook, even if it's not kind of at the consolidated level? Are there re-licensing opportunities? Are there uprate opportunities to consider? And there was discussion about a potential multi-state framework? Is that something that you are part of? Maybe you could talk about this a little bit. Thanks.

Yes. Look, there's obviously a lot in that question as well. Let's just put it in the context of the IRP, just not going to get ahead of any regulatory processes, but let's talk about what that process looks like, right? At the end of the day, it's reflecting and projecting out scenarios under various moving parts, environmental rules, the cost of natural gas over time, the cost of capital over time. And those scenarios are solving for the most economic, reliable way to serve customers in the long term. Is it possible that one of those scenario model runs spits out a nuclear uprate or a new nuclear unit as the solution in the model? Sure, it might. Does that mean that's a recommendation? No. Does that mean that's a path we've embarked on? No. Does that mean it's an option that is worth preserving and considering down the road? Of course, it is. But there's a lot that's going to take place before we get to that point. I think what you hear a lot of us in the industry talking about is that new nuclear is super important for this country, but in order to get to the right place, there's got to be better risk mitigation than exists today. That's got to come from changes with the federal government, that could come from some of these conversations with these large technology companies. We're talking to as many of these companies as anyone. I'd argue we're having conversations with the majority of them, not just around nuclear, but just around different ways to solve for this load equation. So it's part of a broader conversation, but our discipline around this, and I'll tell you as my discipline as CFO, we're not going down that path until the risk is mitigated. But Chris, what would you add?

I agree with you, Dan. There is significant work to be done on the federal level if this country is to adopt more nuclear energy. Southern Company has been in discussions with most, if not all, of the major hyperscalers about nuclear options and other solutions to meet their data center demands, but we face many risks that need to be managed. The potential risks are just too substantial. We are hopeful and are pushing for the government to take actions that will help reduce the risks for shareholders and current customers. However, we will not proceed until we have a clearer understanding of how these risks can be addressed. We are optimistic that collaboration between the federal government and hyperscalers will lead to progress in addressing these needs while also helping to mitigate some of the associated risks.

I appreciate your perspective on it and look forward to seeing you in Florida. Thanks.

Great. Thank you very much.

Thank you.

Thank you. Our next question comes from Jamieson Ward, Jefferies.

Hey, everyone. It's Julien here. Thanks for taking my question. I'd like to follow up on Nick's comment about the nuclear aspect. There's clearly a lot of focus there. You all were leaders in the initial phase of the last build-out cycle. Could you provide more details on your approach to preserving options over time? It seems like this isn't something that would be ready to announce in the near future, especially with the hyperscaler specifics. I want to clarify that this might be more preliminary compared to what some of your competitors are doing. I'm curious about how far along you are in this area, considering your expertise, whether it's in SMR or similar technology.

No. I think you mentioned it earlier. We have experience with Vanguard and understand the risks involved. As we discussed earlier, before we can proceed, we need to find ways to reduce the risks for our shareholders and our customers regarding nuclear. That's our current situation. We will go through the IRP processes, exploring various models and scenarios that may arise. However, the risk issues associated with nuclear are significant and well-known to us, so we need to address those before we can consider the opportunities for moving forward.

Okay. Thank you. Our next question comes from Jeremy Tonet, JPMorgan.

Hey, Jeremy.

Hi. Good afternoon. Happy Halloween. If I could just continue on the nuclear side a bit here. And I know you touched on uprates there a bit. But just wanted to see at a high level if you could share any thoughts at all as far as what the opportunity set, the range of I guess uprate potential there. And I know that there's a lot of variables in play economics and all the other factors that you've listed. Just wondering directionally if you could give us any thoughts there?

Yes, I understand your question, Jeremy. We won't get ahead of any regulatory processes, but I can provide some insights. While this is not specific to Georgia Power, it applies to Georgia Power, Alabama Power, and our co-owners. We have six legacy units that have potential for uprates, although historically many of these have not been economically viable. The benefits from the IRA and other legislation are making these uprates more feasible. However, they still require a significant amount of capital and time, though they come with much less risk compared to a new nuclear project. We are actively evaluating this option, and if the timing is right, we will present it as a possibility.

Great. Thank you for that. And then I just want to kind of shift gears given the big call on generation as you've outlined there. Just wondering any thoughts you could share with I guess coal retirement timelines? What could be impacted there? And then even as it relates to carbon capture is that something that you see as plausible for coal or gas? Or just any thoughts as it relates to Southern?

We are closely monitoring the EPA regulations regarding coal retirements, which will guide our planning processes and inform us about the duration of those projects. What was the second part of your question?

Just as it relates to carbon capture potential for both the coal and gas.

So as you know, we've been operating the National Carbon Capture Center now for some 50 years. Initially, we were doing a lot of carbon capture research around coal. We have shifted that research now to gas. We have a number of partners from the utility industry, but also partners from the oil and gas industry because we all recognize the vital role that natural gas will play in this economy and supporting electricity generation and knowing how important it will be to bring forth technology for carbon capture as well as sequestration. We continue to pursue this work. We know there's more research to be done to get this at a point where it's scalable, but we're going to continue to make this investment because we think gas will be essential for this country going forward. And we'll continue to invest in international carbon capture center, but also find other research opportunities to invest in carbon capture and research carbon capture.

That's very helpful. And one last quick one if I could sneak it in. Just as it relates to the pipes opportunity as you laid it out there, I think it was part of the $3 billion there. But just was wondering, I guess, if you could provide a little bit more color on what that could look like just size of gas you'd like to get into your service territory? And what type of time frame do you see this ultimately unfolding over?

Yeah. So there's a lot of details there on the gas procurement side Jeremy that we can't share. I mean that's proprietary information that's part of the project. There are contractual provisions between Southern Natural and all the off-takers. Suffice it to say, the existing Southern Natural pipe, our entities between our electric generation fleet and Atlanta Gas Light and the marketers in Georgia represent 50% of the offtake of the existing pipe. And I don't think it's unreasonable that with an expansion project that we have the opportunity to be a pretty large participant as well. As far as the timing of the project, again, I think all these details are probably out there in Kinder Morgan's materials. But just think about it essentially as a project that culminates sometime at the very back end of our forecast or late this decade.

Got it. Very helpful. Thank you.

You bet.

Thank you. Our next question comes from Paul Fremont, Ladenburg Thalmann.

Hi, Paul.

Hi, thanks. Thanks for taking my question. Would you consider at this point adding fossil generation at Southern Power given the significant demand that you're seeing for customers to add capacity?

Yes. Paul, Dan has referenced our model regarding Southern Power, which will significantly influence our upcoming work. As we evaluate potential projects, we will focus on creditworthy counterparties, avoiding fuel risk, and applying that discipline to shape our future at Southern Power. This approach will help us identify available opportunities and decide on our pursuits. However, it is too early to make any commitments or provide guidance on what may transpire in that area.

Yeah. If you think about the conversation we've already had along the way here, environmental rules, things like 111(d) and what happens there, pipeline infrastructure and its availability to do projects like that, if we can mitigate those risks or the contract is designed in such a way that more than pays for those risks then that's something we'll continue to keep on the table. So it's never a no. It's just a function of being consistent with our business model.

I believe it’s essential to stay disciplined. There's considerable enthusiasm in the market right now, but we need to remain true to our philosophy and values. We must let these principles guide us as we navigate the remarkable growth opportunities in this industry. Staying disciplined is crucial.

And I guess you've identified sort of eight gigawatts of committed load including 3.6 gigawatts that were included in the last IRP. So how much of the 4.4 remaining should we assume is paid for by an individual customer versus being socialized over your entire retail load?

Substantially all of it by specific customers.

Okay. So most of it would actually have a positive impact on customer bills?

Yeah. That is the objective as we overlay this disciplined and orderly process that there are mutual benefits of serving this load to the existing customer base.

And then last question for me. We've seen sort of endless legal challenges to new pipelines. Would an expansion of SONAT be subject to legal challenges? Or how should we think about that?

I think you have to believe it certainly has its susceptibilities as well. And I think that's again factored in the way Kinder Morgan is thinking about the timeline.

But you would need additional permitting and all the things that would sort of potentially lead to a legal fight?

Yeah. About 90% of this particular project is brownfield largely compression and looping. And so that greatly derisks the opportunity, but it doesn't mean there's a not still requirement, but you're not creating a brand new right of way for hundreds of miles and building new pipe. Great. Thank you very much. Thank you.

Hey Dan. Good afternoon. Thank you for your time. I have a broad question. What are your thoughts on SMR technology? You've likely seen announcements from your peers that are projected for the end of the decade. What has been your experience with this technology? Have you had any discussions about it? Do you believe it can be scaled? As a nuclear power operator, I would be interested in your perspective on the technology itself. Thank you.

Yeah. Durgesh, this is Chris. And you've heard us talk before about our research and development organizations and the proprietary research that we do. We have partnered with a number of organizations for years, investing in SMR technology, researching SMR technology and Advanced Nuclear. We follow it. We work very closely with a lot of partners. A lot of work is being done, but there are very few projects that are moving forward. There's a lot of discussion about them. But I think there's just a lot more work to be done to finalize the designs and finalize the engineering. We're following it and involve very closely. We think it's very beneficial for us to follow but also to be engaged on multiple fronts. Even as we were building Vogtle Units 3 and 4, we continue to involve ourselves with Gen IV and additional advanced nuclear technology. That's kind of who we are and what we do as a company, and we're going to continue to do that. But from my perspective, there's still more work to be done before we get close to anything commercial. But there's a lot of talk out there, but I think there's more work and more design work and more engineering work to be done.

Given that approach, I think what it would be fair to say is that we view it as too early to put all of our eggs in one nuclear technology basket.

Very clear guys. I appreciate that added color. Thank you.

You're welcome.

Thank you. Our next question comes from Travis Miller, Morningstar Inc.

Good afternoon. Thank you. A quick follow-up on the storm costs. Did you have any storm cost reserves? Or how much did you use of those that was available?

There was not a reserve going into the storm. We actually had a very small balance to be recovered. So, this was additive to that. If you actually look at the balance, the balance is closer to $1.2 billion whereas this particular reserve was $1.1 billion.

Okay. Okay. And then higher level to serve that demand that you're talking about especially that 8 gigawatts if you were to decide to build say a gas unit or whatever today, in terms of supply chain, how long would it actually take you to get from concept today to flowing electrons to a new customer?

I'm going to begin, and Chris can join in. In response to the question, I'd like to clarify that we've already taken steps to prepare for this situation. We've positioned ourselves effectively in the queue for long-lead time equipment, and we've collaborated closely and successfully with our EPC partners recently. I would say we are several steps ahead in this process. However, we also need to consider what specific technology we are discussing, whether it's a combustion turbine or a combined cycle, as these have different timelines. Overall, Travis, I believe we're in a good position. Generally, it's a three to five-year timeframe to develop gas generation from start to finish. Given the nature of this load's long lead times, we're well prepared.

Yes. And I think if you look back at our Barry 8 Project at Alabama, that was a little bit over three years, I think in the construction of that unit so 800 megawatts combined cycle unit. So, we've had some good experiences of late with construction of those units.

Okay, that's great. And then what about T&D, is there any difference in terms of supply chain or timing of supplies T&D versus generation?

No, I think it all overlays pretty nicely. Our lead-times on large transformers and other major equipment longer than they used to be, yes. But we have visibility into that and are planning accordingly.

Okay, perfect. I appreciate it.

Thank you. And our next question comes from Paul Patterson, Glenrock Associates.

Hi. Happy Halloween.

It seems that everything is coming together, and I want to confirm that you see an improvement in the sales growth expectations you had earlier, along with the associated capital expenditures, correct?

Yes.

Okay. In the past, when discussing sales growth increases, there wasn't necessarily a direct impact on earnings. Given this more favorable outlook, how should we consider the potential implications for earnings?

Yes Paul, I will reiterate what I mentioned earlier. As long as we see this momentum continuing and stay disciplined about not moving too far ahead of any regulatory processes, we won't have a chance to offer a different outlook until the latter part of our plan. This is all about the long-term. While it's exciting and there's a lot of work happening for us and the whole industry, the impact will be felt in the later years of our forecast. It's not happening this year, or the next; it will be in 2028, 2029, 2030, and beyond.

I wanted to ensure there wasn't anything else I needed to consider. That's great. Lastly, regarding the storm costs, when you're deferring the expenses, is there some sort of return you expect? Should we think about this return in terms of debt return, or how should we analyze the return linked to the deferral?

Yes. It's typically been our cost of capital. But again, with the magnitude of it and with the nature of it, the commission has flexibility to adjust that just like they have done historically with us for other things with large under-recovered fuel balances having a different financing cost associated with it.

Okay. Thanks so much. I really appreciate.

You bet, Paul.

All right. Thank you. That will conclude today's Q&A session. I would now like to turn the call back to Chris Womack for closing comments.

Thank you all for joining us today. We are excited about our position in the company and pleased with our performance throughout the first three quarters of this year. Once again, we appreciate your time and wish everyone a happy Halloween. Thank you very much.

Thank you. That will conclude today's teleconference. You may disconnect your lines at this time.