Hot weather and high fuel costs in the first half of the year drove a huge jump in Southern Company’s earnings in the second quarter, the company announced Thursday.
The Atlanta-based utility giant reported profits of $1.1 billion in the second quarter, compared to $372 million during the same period a year ago. The company’s profits across the first six months of 2022 are also up, rising from $1.5 billion in the first half of 2021 to $2.1 billion this year.
Operating revenues were $7.2 billion in the second quarter, up 38.6 percent from a year ago.
Southern Company is the parent of Georgia Power, the state’s largest electric utility, as well as Atlanta Gas Light, Alabama Power, Mississippi Power and a constellation of other electricity and energy companies.
The first half of 2022 has been exceptionally warm across much of Southern’s service area. In Atlanta, the first six months of 2022 was one of the hottest starts to a year in the city’s recorded history. May to June was the second-hottest such period on record for the state of Mississippi and the ninth-warmest for Alabama.
The heat forced many customers’ air conditioners to work overtime, driving up electricity bills and in turn, the company’s profits. Scientists have found extreme heat events are growing more frequent and intense due to human-caused climate change.
On an earnings call Thursday, Southern’s chairman, president and CEO Thomas A. Fanning revealed that on June 15 — as temperatures in Atlanta reached 99 degrees, breaking a 70-year-old daily record — electricity demand on Southern’s system hit at an all-time high.
“During what was the second-hottest June in 50 years, we were able to maintain sufficient generating capacity reserves across daily peaks, including six days which peaked over 40,000 megawatts and an all-time peak load of 41,376 megawatts on June 15,” Fanning said.
Some of the highest natural gas prices in years, driven in part by Russia’s invasion of Ukraine, also helped boost Southern’s profits, the company said. Despite fears of a recession, the U.S. Energy Information Administration recently reported that demand for natural gas in the power sector remains high, a trend the agency expects to continue the rest of the year.
Fanning also said the two long-delayed new nuclear reactors under construction at Plant Vogtle remain on track, but said the units likely won’t be complete until the tail end of the company’s latest time frame. Georgia Power has said it expects to have Unit 3 operational by late this year or early 2023, with Unit 4 joining it by the third or fourth quarter of 2023.
Fanning said the company has just two remaining inspection certificates it needs to provide to federal regulators. Once those are submitted, he said, the company could receive the final approval to load fuel in coming weeks.
“To support an in-service date at the end of the first quarter of 2023, we will need to complete this work and load fuel by the end of October,” Fanning said.
The sharp rise in Southern’s profits come as Georgia Power has asked state regulators to approve a nearly 12% increase in the rates customers pay for their electricity over the next three years. Georgia Power says the rate hikes are needed to help the company modernize its grid, transition away from fossil fuels and improve customer service.
Proposed rate increases of $852 million, $107 million, and $45 million would take effect on January 1, 2023, January 1, 2024, and January 1, 2025, for a total cumulative increase of roughly $2.8 billion over those three years.
If approved, the average Georgia household could see their monthly power bill increase by $14.32 starting next year, for a total average annual increase of nearly $172. Monthly rates would rise in 2024 by an another $1.35 per month and by another $0.62 per month in 2025.
Hearings in Georgia Power’s rate case will begin in September, with the commission expected to make a final decision in late December.