Southern Company

Southern has approved 1,137 MW of new solar power purchase agreements along with a new backup power deal for a data center campus, adding long-term contracted revenue to the utility's portfolio. The approvals put a fresh spotlight on how Southern's earnings stack up against its current valuation, with the stock trading at a P/E of 21.5x, slightly above the Electric Utilities industry average of 20.1x and a touch higher than its peer group at 21.1x. Southern has delivered a total return of 63.3% over the past 5 years. Because the newly approved solar contracts and backup power deal are tied to long-term service and power agreements, the market may be willing to keep paying a modest premium multiple for earnings tied to regulated or contracted cash flows. One top community narrative on Simply Wall St puts Southern at 14% undervalued, citing the successful operation and integration of the new Vogtle nuclear units alongside ongoing grid enhancements.

Elon Musk told his audience on Monday that AI data centers are resulting in lower electricity prices for consumers, amplifying a post claiming Georgia Power's new large-load contracts will save customers nearly a billion dollars, or about $180 per year per bill. National price data contradicts that claim: the Consumer Price Index for electricity in the U.S. city average rose about 4.1% from September 2025 to August 2026, outpacing headline CPI at 3.4%, with the average U.S. price at 19.6 cents per kilowatt-hour in August 2026. Southern Company, the Georgia Power parent, told investors on its July 30, 2026 earnings call that data-center usage was 55% higher than in the second quarter of 2025 and that Georgia Power signed a 3.2 gigawatt, 25-year contract with OpenAI near Savannah, part of over 17 gigawatts of contracts and large-load agreements expected by the mid-2030s. Vistra, the independent power producer, said on its August 7, 2026 call that year-to-date ERCOT wholesale prices were $30 per megawatt hour, too low to fund new construction, while its Q2 Ongoing Operations Adjusted EBITDA jumped more than 30% year over year to $1.77 billion. Even so, Vistra shares are down 30.21% over the past year and 11.95% year to date to $141.63, while Southern Company is up just 2.12% year to date, and the $180 figure Musk cited applies to a specific contract structure at a single regional utility.

Southern Company subsidiary PowerSecure has agreed with Keel Infrastructure Corp. to provide a fully integrated backup resiliency solution for Keel's data center campus in Moses Lake, WA. Under the agreement, PowerSecure will design and deliver a customized standby power system built on its modular PowerBlocks platform, which combines on-site generation, controls and electrical infrastructure, and will also support peak shaving to help the campus optimize energy use during periods of high system demand. The two companies established their partnership earlier this year and quickly aligned on system requirements and the delivery schedule for the campus. The deal expands PowerSecure's exposure to the data center industry, one of the fastest-growing sources of electricity demand, as grid constraints make it harder for new data centers to secure sufficient power through traditional utility connections. Southern Company currently carries a Zacks Rank #3 (Hold), while Keel Infrastructure carries a Zacks Rank #2 (Buy).

Georgia Power has received approval from the Georgia Public Service Commission for 1,137 megawatts of new solar power purchase agreements through its CARES 2023 and CARES 2025 request for proposals programs. The approval covers seven solar PPAs, with projects in Appling County at 78 MW, Decatur County at 130 MW, Jefferson County at 194 MW, Sumter County at 200 MW, Warren County at 150 MW, Emanuel County at 185 MW and Irwin County at 200 MW, expected to begin commercial operation as early as 2029. The procurement under the 2023 program period represents the largest single solar procurement in Georgia Power's history, following 1,068 MW of projects approved for the CARES 2023 program in September 2025 in Coffee, Jefferson, Laurens, Mitchell and Wilkinson counties. Wilson Mallard, director of renewable development for Georgia Power, said the agreements will deliver affordable and reliable energy at a fixed price and add more than 1,100 megawatts of renewable resources to the company's generation portfolio. Georgia Power also recently opened enrollment for the new CARES Customer Identified Resource program, approved for up to 3,000 additional MW of renewable projects, split between a utility-scale program for customers with annual demand above 3 MW and a distributed generation program for customers with demand between 1 MW and 3 MW.

The Southern Company has cleared the Georgia Public Service Commission review for Georgia Power to serve an OpenAI data center project in Effingham County, Georgia, under a 25-year agreement covering approximately 3.2 gigawatts of new demand. Georgia Power says OpenAI will pay the full infrastructure and electric-service costs and provide financial assurances to protect existing customers. The projected customer benefit includes about $950 million in annual rate relief beginning in 2029, totaling $2.847 billion from 2029 through 2031, which represents $180 of annual relief for a typical residential customer, though these figures compare with otherwise applicable rates and do not guarantee absolute bill reductions. The deal includes up to one gigawatt of flexible demand response, but the remaining load still requires timely grid investments. The savings estimate depends on Georgia Power's broader large-load portfolio, and the utility has agreed to backstop certain new-generation costs through 2031 if contracts do not materialize as expected.

Georgia Power announced that its contract to serve OpenAI's new project in Effingham County has been approved by the Georgia Public Service Commission, marking the latest step in a portfolio of large-load contracts expected to deliver approximately $950 million in annual savings beginning in 2029. The company now projects that typical residential customers will save at least $15 per month, or $180 per year, up from its December 2025 commitment of $102 per year. The increased savings stem from projected incremental revenue from new large-load customers, boosting customer benefits to $2.847 billion over 2029-2031. Under the OpenAI agreement, which includes 3,200 megawatts of new demand, OpenAI will pay the full cost of infrastructure and commit up to 1,000 megawatts of flexible demand response. This approval follows a base rate freeze in July 2025 and a plan to lower overall rates approved in May 2026, with CEO Kim Greene emphasizing that growth is not pushing rates up in Georgia.

Southern Company reported second-quarter 2026 adjusted earnings of $1.13 per share, beating the Zacks Consensus Estimate of $1.01 per share by 11.88% and rising 22.8% from 92 cents a year earlier. Operating revenues edged up 0.1% to $6.98 billion but missed the consensus mark of $7.36 billion. Data center usage jumped 55% as large-load customers continued to ramp demand, and the company added about 6 gigawatts of large-load contracts since its first-quarter call, bringing total contracted demand to 17 gigawatts across 31 projects. Southern now expects full-year 2026 adjusted earnings to be near or at the top of its $4.50-to-$4.60 per share guided range.

The 180 MW Phase II portion of the Millers Branch Solar Facility in Haskell County, Texas has achieved commercial operation. The capacity was contracted through Sustainability Roundtable, Inc's Net Zero Consortium for Buyers by Cisco, Juniper Networks (now part of Hewlett Packard Enterprise), Bio-Rad Laboratories, Cadence Design Systems, IDEXX Laboratories, Inc., PTC, and a large healthcare company, which signed an aggregated virtual power purchase agreement with Southern Power Company for the renewable energy credits the project generates. Cisco serves as the anchor buyer for a 50 MW portion, Juniper Networks for 40 MW, Bio-Rad, Cadence, IDEXX, and the healthcare company each for 20 MW, and PTC for 10 MW. This Phase II follows the 200 MW Phase I that reached operation in December 2025 with Thermo Fisher Scientific as sole offtaker, and together with later phases the consortium has surpassed a gigawatt of new renewable energy development. The NZCB is now working toward its Next Gigawatt of Advanced Market Commitments, aiming to bring more than 2 GW of new clean energy online through over $1.5 billion in long-term procurements across North America, Europe, and India.

The U.S. Department of Energy's Office of Energy Dominance Financing, formerly the Loan Programs Office, has closed a loan of up to $3.26 billion to American Electric Power Texas, marking its third utility financing and underscoring a major redirection of federal energy lending since the Working Families Tax Cuts Act passed. The office now holds more than $289 billion in available loan authority, making it the world's largest energy lender, and is deploying it almost exclusively toward baseload generation, transmission, and nuclear projects while restructuring or eliminating over $83 billion in Biden-era loans and commitments, including about $9.5 billion in wind and solar projects. Key transactions include a $26.5 billion loan package to Southern Company subsidiaries, the largest in DOE history, expected to save customers over $7 billion and support more than 16 gigawatts of firm power, and a conditional commitment for $17.5 billion in American Nuclear Supply Chain Loans to finance components for 10 large-scale reactors. The AEP Texas loan will fund about 100 transmission projects across Texas, saving more than one million households and businesses approximately $685 million over 30 years. EDF Director Gregory A. Beard said the prior administration's policies undermined the grid with intermittent technologies, and the office's first-year record signals that federal capital will now flow through a narrow gate focused on affordable, reliable, and secure energy.

The Southern Company now expects its full-year 2026 adjusted earnings per share to be near or at the top of its $4.50 to $4.60 guidance range, driven by a 3.2-gigawatt, 25-year electric service contract with OpenAI and accelerating large-load demand across its Southeast service territory. Georgia Power signed the OpenAI agreement, which includes 1 gigawatt of flexible demand response and will begin phased service in 2028, contributing to a total of over 17 gigawatts of contracts and large-load agreements across Southern's electric subsidiaries by the mid-2030s. Second-quarter adjusted EPS came in at $1.13, 13 cents above the company's estimate, while first-half adjusted EPS reached $2.46, well ahead of expectations. Data center usage surged 55% year-over-year in the second quarter, pushing system-wide data center load above 1.2 gigawatts. The company also reduced its projected remaining equity need by 2030 to $1.1 billion after sourcing $700 million through its at-the-market program, and reiterated its target of 17% funds from operations to debt by 2029.

Southern Company has become a notable AI infrastructure story in the utility sector, with its stock up nearly 12% year to date. The company reported a 42% year-over-year increase in data center sales for the first quarter and signed a 25-year power deal with OpenAI for a planned $30 billion data center in Georgia requiring about 3.2 gigawatts starting in 2028. Southern now has more than 11 gigawatts of contracted large-load customers, with another 6 gigawatts in finalizing stages and 6 gigawatts in late-stage development, totaling 23 gigawatts contracted or close to it, and a prospective pipeline exceeding 75 gigawatts. Its five-year capital plan has grown to $81 billion, up 28% since January 2025, including 10 gigawatts of new generation and over 500 miles of transmission lines. Management guides for roughly 10% electric sales growth from 2026 through 2030 and 7% to 9% adjusted EPS growth through 2028 and beyond, though risks include regulatory approval, high net debt above $75 billion, and the conversion of the large-load pipeline into actual demand.

Georgia Power, a Southern Company subsidiary, has completed the Moody Battery Energy Storage System in Georgia, one of the largest battery storage projects in the region. The facility is paired with solar resources and is part of Southern's broader push to integrate storage with renewables across the state. Southern is progressing additional energy storage projects to support clean energy deployment and grid reliability. The new facility provides investors with concrete data on how the company is addressing long-term power needs in Georgia beyond typical earnings updates.

Southern Company shares have risen 11% year to date to $96.78, sitting modestly below a widely followed fair value estimate of about $101.34, as investor attention turns to upcoming earnings and new battery storage projects. The company is advancing large-scale electrification projects, including hyperscaler data centers and industrial developments across Alabama, Georgia, and Mississippi, which have led to regulatory approvals and filings for up to 10 gigawatts of new generation and $13 billion of incremental capital investment. While the fair value narrative suggests Southern is modestly undervalued, its current price-to-earnings ratio of 25 times sits above the US Electric Utilities industry average of 22.2 times and the peer average of 21.1 times, though it is close to the fair ratio of 25.7 times. The higher capital plan and reliance on fresh equity and regulatory approvals could pressure earnings per share and weaken the undervaluation case.

Southern Company has entered a 25-year agreement to supply power to OpenAI's planned data center in Georgia. The long-term contract supports OpenAI's energy needs for a large-scale computing facility in the state. The project is expected to bring economic growth, new jobs, and infrastructure investment to the surrounding communities. Southern's stock trades at $97.25, with a year-to-date return of 11.6% and a five-year return of 83.1%. The agreement highlights Southern's role in supplying electricity to energy-intensive technology projects while maintaining grid reliability.

Southern Co declared a quarterly dividend of $0.76 per share, in line with its previous payout. The dividend is payable on September 8 to shareholders of record as of August 17, with the ex-dividend date also set for August 17. Based on the announcement, the forward yield stands at 3.17%.

Georgia Power has introduced a Customer Protection Pledge that reaffirms its strategy to manage rapid growth while protecting residential and small business customers from higher electric rates. The pledge, announced by chairman, president and CEO Kim Greene, outlines six key points including ensuring new large-energy users pay their way, investing in grid reliability, and negotiating fairly for property. The company says its approach has already enabled an earlier base rate freeze and will provide annual savings of $102 for the typical residential customer beginning in 2029. Georgia Power notes that its rates have averaged 15 percent below the national average since 1990, and its Grid Investment Program improved reliability for more than 500,000 customers in 2025 alone.

Southern Company shares have risen 8.7% over the past month, outperforming the Zacks Utility-Electric Power industry's 7.6% gain and the broader utility sector's 5.9% advance. The company is benefiting from exceptional data center-driven demand growth, with management disclosing 23 gigawatts of contracted or late-stage large-load demand, including more than 11 gigawatts under executed agreements, and a pipeline exceeding 75 gigawatts. Southern Company is also entering a multi-year investment cycle, with Georgia Power proposing an additional 2 to 6 gigawatts of new generation resources, while the board approved its 25th consecutive annual dividend increase, extending a record of 79 consecutive years without reducing the annual dividend. However, significant capital spending could pressure returns, rising financing costs remain a headwind, and heavy dependence on AI and large-load customers ties future growth to a single rapidly evolving industry. The stock currently carries a Zacks Rank of 3, or Hold, with analysts suggesting new investors wait for a better entry point.

Georgia Power has opened enrollment for the new Clean and Renewable Energy Subscription Customer Identified Resource program, known as CARES CIR, which allows commercial and industrial customers to identify and subscribe to additional renewable energy projects. Approved by the Georgia Public Service Commission in the 2025 Integrated Resource Plan, the program is authorized for up to 3,000 additional megawatts of renewable energy and is divided into two tracks: CARES CIR Utility-Scale for customers with annual energy demands above 3 megawatts subscribing to projects larger than 6 megawatts, and CARES CIR Distributed Generation for customers with demands between 1 and 3 megawatts subscribing to locally sourced solar projects ranging from 250 kilowatts to 6 megawatts. The company has procured more than 2,200 megawatts of new solar in the last two years through its broader CARES program, including 1,068 megawatts of solar power purchase agreements and 91 megawatts of battery storage approved last year, plus an additional 385 megawatts of solar PPAs recently filed for approval, bringing the 2023 request for proposals total to more than 1.4 gigawatts pending final approval. Through the CARES 2025 request for proposals, Georgia Power has signed five contracts for 752 megawatts across Appling, Decatur, Jefferson, Sumter, and Warren counties.

The U.S. Department of Energy announced it is providing loans to help finance five nuclear projects centered on Westinghouse and its AP1000 reactor. The program aims to shorten manufacturing and delivery times for reactor components by having Westinghouse partner with up to five utilities or energy companies, with each loan supporting two reactors at a project site. Westinghouse will procure needed goods at fixed prices, and each project will be jointly owned by Westinghouse and its partner, with both entities required to commit $500 million in project equity apiece. Westinghouse has signed letters of intent with seven potential partners, though none have been publicly identified. The initiative is expected to benefit nuclear industry players such as Cameco, GE Vernova, Southern, Dominion Energy, and Constellation Energy.