Chris Womack: Angie, there are a lot of considerations that go into that decision. And yeah, we want to connect them to our grid. And yeah, we’ll have conversations with them about renewable resources and the mix. But those are conversations that we do have with them, recognizing what upgrade may be made on the system, locations, where they are. So there are a lot of kind of really detailed conversations, engineering conversations that go into making those final decisions that also then ultimately impact the pricing for that service.
Agnieszka Storozynski: But again, it’s not self-supply, right? So they use Georgia Power, for example, as a first source of power.
Chris Womack: Absolutely. Yes, that’s correct.
Agnieszka Storozynski: Okay. And then secondly, again, I know this question has been asked over and over. Just hard to believe that the load growth is not having a bigger impact on your earnings growth? And again, I don’t even imagine this is like an emerging markets sort of pace of load growth, especially for Georgia and those outer years, and yet there’s no impact from — again, from our vantage point on your earnings growth. Is it just because the interest expense drag is so pronounced that it absorbs the help that you’re getting from higher load growth?
Dan Tucker: Yes, Angie, it’s a few things. Certainly, relative to where we were a year ago, and I think we’ve said this before, in a higher for longer environment, certainly, interest is a bigger headwind going forward. But the bigger dynamic in your question is around what we’re actually investing in to serve this load or why we’re investing. So keep in mind, the 6% for Southern Company sales growth and 9% for Georgia Power, that’s kilowatt hour usage. That’s the growth in the total kilowatt hours used. What we invest to do is serve the peaks. And so that looks a little different than the 24/7. We’ve got a lot of resources. We just may have to incrementally add resources to serve the peaks, and that’s what you’re seeing largely in the capital deployment. And net-net, we’re comfortably in that 5% to 7% growth range.
Agnieszka Storozynski: Okay. Understood. Thank you.
Chris Womack: Thank you.
Operator: Thank you. Our next question is from the line of Paul Fremont with Ladenburg. Please go ahead. Your line is open.
Chris Womack: How are you doing, Paul?
Paul Fremont: Great. Congratulations on the good quarter.
Chris Womack: Thank you very much.
Paul Fremont: Just to clarify, if you were not to get sort of the higher growth rate in sales after 2025, would that have an impact or change — potentially change your 5% to 7% growth target?
Dan Tucker: No.
Paul Fremont: Okay. Great. And then I noticed that the gas capital spending is roughly unchanged. Can you sort of share with us what you’re anticipating is going to happen in Illinois? And is there spending that’s being shifted from Nicor to any of the other gas subsidiary?
Chris Womack: And yes, I think you got it just right. I mean, we see the opportunities to have some increased capital spending in Atlanta around the operations here in Georgia. So we think that allows that gas investments to be stable going forward. So I think you’ve spoken to it just right.
Dan Tucker: Yes. And any changes in Illinois are modest, to be fair. I mean — and the outcome there for us, while disappointing, also provided a bit of a road map as to how to be successful going forward in navigating that jurisdiction in terms of just the things we’ve got to make sure we do as we deploy capital. And keep in mind, a huge, vast majority of the capital that’s deployed for Nicor Gas is compliance related. And so there’s only so much to kind of not do in the first place.
Paul Fremont: Great. And then my last question. I mean, generally speaking, when we think of EPS growth, with respect to rate base growth, there tends to be dilution to the rate base to the level of rate base growth because a portion or the equity portion is funded either by parent debt or by parent equity. So can you help us sort of understand at 6% rate base growth, is it possible for you to achieve? Or how would you achieve sort of the high end of your growth target?
Dan Tucker: Yes. Great question, Paul. So again, we were at 6% growth last year in rate base. We’ve added $5 billion of incremental capital to that. It’s — we kind of characterize it as approximately 6, but then also the shares we’re issuing, and I think I mentioned this earlier, was that equates to a fraction of a percentage and it’s kind of just in the rounding. We feel very comfortable that net-net, how all these things stack up is a conservative achievable forecast.
Paul Fremont: Great. That’s it for me. Thank you very much.
Chris Womack: Thank you.
Operator: Thank you. Our next question is from the line of Travis Miller with Morningstar. Please go ahead. Your line is open.
Travis Miller: Hello, everyone. Thank you.
Chris Womack: Thanks Travis.
Dan Tucker : Thanks Travis.
Travis Miller: You’ve answered almost all of my questions. I do want to follow-up on that dividend, it was one of my questions. Just to clarify what you said, you would expect the dividend growth to stay below earnings growth for at least a couple of more years. Did I hear that correctly?
Dan Tucker : Yes. Yes, Travis. You did. And so again, our cadence of growth has been $0.08 per year for several years. I think it’s reasonable to expect that to continue, of course, it’s all subject to the Board’s oversight and approval. But what that will do is take us during this high period of CapEx, which hopefully goes on for a very long period of time, brings us comfortably down into the 60s from a payout ratio perspective. And so that’s a good place to be, and we’ll evaluate it every year with what the forecast looks like and what’s appropriate. Right now, I think the reasonable expectation is that continued modest growth, which is just below 3%.
Travis Miller: Yes. Okay, very good. And then obviously, a lot of talk about the demand growth. Put another way, what does demand growth mean for operating cost growth? Is there a tight correlation there if you get 6% or whatever percent annual demand growth? Should we also see a similar increase in operating costs? Or is there not a link there?
Dan Tucker : Yes. There’s certainly a relationship, I wouldn’t call it a correlation, but to the extent we’re building a new gas plant, certainly, that comes along with incremental O&M to the extent we’re building new transmission distribution lines, there’s some maintenance component to that. But that’s also part of the cost structure that we’re ensuring these new rates and revenues will cover such that the net result is the opportunity to put downward pressure on the existing rates.
Travis Miller: Okay. Got it. Thanks so much. That’s all I had.
Chris Womack: Thank you.
Operator: Thank you. Our next question is from the line of Ryan Levine with Citi. Please go ahead. Your line is open.
Ryan Levine: Hi, everybody.
Chris Womack: How are you doing?
Ryan Levine: Good. How are you? With Vogtle’s COD targeted for April freeing up some management attention and the personnel changes that were highlighted, do you see any meaningful opportunities to reduce O&M spending below the current guidance as time progresses? Or are these initiatives tabled, given all the opportunity in Georgia by the IRP process?
Chris Womack: No. I mean, we’re always looking across our hand and finding ways to be more efficient. I mean, so there’s ongoing efforts to — once again, as we look at affordability, I mean, we think about the opportunities to keep — to drive rates from pricing down because of sales growth and because of customer growth, but also making sure that we’re focused on looking internal in terms of being more efficient and finding ways to also drive down the cost of our O&M expenses. Also making sure, we take full advantage of fuel pricing. I mean, you see where natural gas prices are now. So looking across the entire portfolio, I mean, that is an ongoing continuous exercise that we’ll always focus on in terms of finding ways to drive down O&M and find ways to be more efficient.
Dan Tucker : Yes. And just as a nuance, all the costs associated with completing Vogtle 3 and 4 is a capital cost. And so those aren’t O&M costs that are an opportunity to reduce.
Chris Womack: Yes. And the last thing I’d add, even though we’ve had this focus on Vogtle, but it hasn’t kept us from paying attention to the fundamentals, to making sure that we provide the service that customers expect, but also being focused on the cost of our product.
Ryan Levine: Okay. And then what’s the peak hour load growth forecast in Georgia? And how much lower is that than the total kilowatt hour growth number that you cited? And as you’re looking to execute on this plan, how — are there any limitations with supply chains that could constrain growth opportunities via the IRP process?
Dan Tucker: Yeah. Look, on supply chain, I think we’re in terrific shape, given our scale and just — we’ve kind of seen this coming for a little while to the point where we can deploy the resources needed. On your peak question, we’ll have to follow-up with you on that, Ryan. Just let’s connect with the Investor Relations team and get you an answer then.
Ryan Levine: Okay. Thanks for taking my questions.
Dan Tucker: You bet.
Operator: Thank you. Our next question is from the line of Paul Patterson with Glenrock Associates. Please go ahead. Your line is open.
Chris Womack: Hi, Paul.
Paul Patterson: Hi. Good afternoon. Congratulations on this these opportunities that you guys have. Just with respect to the data center stuff, I mean, a; you did indicate in your prepared remarks, it seemed that this was based on actual activity, physical construction activity, et cetera. Is it correct to assume that these guys — these data centers, et cetera, have a price in mind? I mean, they wouldn’t be doing this. I mean, obviously, they’re using a large amount of electricity. It’s part of the economics of their determination to move that this — that they know how much they’re going to be essentially paying for power if they’re doing this, correct?
Chris Womack: I think there is — yes, I mean, they may not know exactly what the price will be. But once again, as we sit with them, understanding their needs, what their desires are and the level of service, I mean that all goes into consideration of what the ultimate price will be. I mean, the value, location, reliability, resiliency, all of those things go into consideration as we kind of price these projects out. And so that’s a part of the negotiation, that’s part of the conversation that we have with it.
Paul Patterson: Okay. In some jurisdictions, because they have their own backup power, because they have to be there in case there is an outage or something, they have to get approval from regulatory commissions, their respective state regulatory commissions. Is that the case in Georgia?
Chris Womack: No. I mean, like I said, I mean, we will — I mean…
