Profits at the utility giant Southern Company fell slightly in the first quarter compared to last year, in part due to the record warmth Georgia and other states in its service territory have experienced so far in 2023.
Southern earned profits of $862 million in the first quarter, down from $1.03 billion during the same period last year. Company revenues in the first three months of this year also fell by a hair compared to a year ago, sinking 1.5% to $6.5 billion.
Higher interest rates contributed to the lower profits, along with the company’s debt obligations and the depreciation of certain assets. But new Southern President Chris Womack said the Southeast’s abnormally warm winter played a key role in lowering profits.
“Southern Company delivered a solid start to 2023 despite the mildest weather on record for a first quarter in the Southeastern United States,” said Womack, who is taking the top job at Southern after leading Georgia Power, its largest subsidiary. At the end of the company’s annual shareholder meeting next month, Womack will also assume the mantle of CEO.
Added Womack, “We are encouraged by continued strong residential customer growth in both the electric and gas sectors, as well as healthy economies and a robust economic development pipeline in our service footprint.”
Temperatures in Georgia averaged 56.4 degrees from January through March, according to data from the federal National Oceanic and Atmospheric Administration. That’s 6.4 degrees warmer than what was considered normal during the 20th century, making it the hottest three-month period to start the year in 129 years.
Alabama and Mississippi, where Southern subsidiaries Alabama Power and Mississippi Power operate, were also far warmer than normal. Average temperatures in Alabama from January to March were the second-hottest on record, while Mississippi’s start to the year was its fourth-warmest.
That exceptional warmth tamped down customer demand for home heating, one of the largest energy expenses in most homes. The burning of fossil fuels at power plants, like many of those that Southern operates, is contributing to rising temperatures globally.
Southern did say its decline in profits were partially offset by rate increases at its regulated utilities. Last December, regulators at the Georgia Public Service Commission approved a rate hike that drove up the average Georgia Power customer’s monthly bill by nearly $4 a month. More rate increases are on the horizon, possibly as soon as June.
On the company’s earnings call Thursday, Southern executives also told investors that announcements of massive electric vehicle and solar projects in the Southeast from Hyundai Motor Group, Rivian and Qcells — plus their suppliers — show that the region’s economy is strong, even as economic jitters persist elsewhere.
“We once again saw record levels of economic development activity, with job creation and capital investment announcements at all-time highs in the first quarter,” said Dan Tucker, Southern’s chief financial officer.
The company did not announce any new delays or increases in its cost estimates to complete the two new nuclear reactors at Plant Vogtle near Augusta.
The first of the two units, Unit 3, is still expected to begin sending power to hundreds of thousands of Georgia homes by May or June.
Its twin, Unit 4, is projected to be finished by the end of this year or the first quarter of 2024, the company said. Once complete, the units will be the first new commercial nuclear reactors built in the U.S. in more than three decades.
But both units have been plagued by delays and are more than six years behind schedule. Meanwhile, their total price tag has ballooned to above $35 billion, more than double what was initially forecast.
A note of disclosure
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