Southern Company’s data center pipeline keeps filling up

The company had inked deals for roughly 8,000 megawatts of electricity out of the 10,000 megawatts that the Georgia Public Service Commission approved last year before OpenAI’s project was announced.

“ … Our OpenAI contract in Georgia pushes us beyond our recently approved capacity by right around 1 gigawatt,” said Chris Womack, chairman, president and chief executive of Southern. A gigawatt is 1,000 megawatts.

Georgia Power likely will meet that need through what’s known as dispatchable capacity, which is electricity that it can be programmed to increase or decrease based upon a variety of factors, including demand and market price. Georgia Power in April issued a proposal for between 2,000 megawatts and 6,000 megawatts of capacity that it said it will need by 2032 and 2033.

The rush in electricity demand growth will continue as the amount of data centers coming to Georgia shows no signs of slowing, executives said during the company’s afternoon conference call with analysts.

Southern said electricity sales from data centers alone jumped 55% from a year ago, and Southern has inked deals totaling 17,000 megawatts of power for large-load customers through the middle of the next decade. That includes customers across Georgia, Alabama and Mississippi.

Southern’s pipeline of perspective deals now stands at 75 gigawatts. This includes sites as large as OpenAI’s in other parts of Georgia, company officials said.

“The growth has just been fantastic in that portfolio of data centers and large-load customers that we’re currently serving,” David Poroch, Southern’s chief financial officer, said.

More customers and increased electricity use across the board boosted Southern’s second-quarter earnings to $1.2 billion, or $1.03 a share, up from $880 million or 80 cents a share during the same time a year ago. Electricity sales for the first six months of the year are the highest in nearly two decades.

Southern’s electric companies in Alabama and Mississippi either are eyeing or have signed power agreement deals with data centers but not at the same rate as in Georgia, which real estate analysts say is the fastest-growing market for new data center construction in the U.S.

The company’s earnings show that Southern can still make money even after freezing electricity rates and then slightly lowering monthly bills at Georgia Power, its largest electric company. Those agreements came after six bill increases in three years drew the ire of customers and led to the ouster of two members of what was then an all-Republican PSC last year.

While those bill cuts were welcome relief to customers, they usually ruffle feathers with investors, who expect electric companies to meet certain profit expectations. Yet one Wall Street analyst asked whether Georgia Power would be able to continue its rate-freezing trend in the future.

“Is there an opportunity to come back with a bigger rate credit here?” asked Julien Dumoulin-Smith, an analyst with investment banking firm Jefferies.

Womack acknowledged the benefits of holding rates steady but said he would not jump ahead of any discussions with Georgia Power’s regulator.

Credit: Miguel Martinez-Jimenez

Credit: Miguel Martinez-Jimenez

“As we continue to sign these contracts, there are conversations that we’ll have and have other considerations about what’s possible,” he said.

Womack also touted the symbolic ratepayer protection pledge that Southern signed last week along with state governors, utilities, electric cooperatives, data center operators and other entities. The White House initiative is designed to shield customers from the cost of data centers as mounting backlash over rising electricity bills, land and water usage threatens their growth.

President Donald Trump is among those that said the U.S. must continue to support data centers so it can be a global leader in artificial intelligence.

Womack said he hopes that lower bills and a stronger economy will deflect from what he and others call political “noise” about data centers.

“Once again, I’ll say we’ve got to do a better job,” he said. “Hyperscalers need to do a better job of explaining the benefits and value and dispelling some of the misinformation that’s out there on social media.”

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