Profits at Atlanta-based Southern Company rose 7% in the third quarter compared to last year. But executives signaled Thursday that the damage caused by Hurricane Helene, which the company called the most destructive storm in its history, could create headwinds and potentially lead to increased costs for customers.
Southern — the parent of Georgia Power, the state’s largest electric utility — reported net income of $1.5 billion from July through September, up from $1.4 billion during the same period last year.
The company’s year-to-date profits are up even more compared to 2023. Southern said it raked in $3.9 billion in the first nine months of 2024, up from $3.1 billion a year ago, an increase of 26%. Operating revenues so far this year climbed to $20.4 billion, a jump of 6% compared to 2023.
Georgia Power — the company’s most profitable subsidiary, which earned more than $1 billion in the quarter — bore the brunt of the damage Helene caused in the state when it hit in September. The storm made landfall on Sept. 26 as a Category 4 hurricane in Florida’s Big Bend region before moving into Georgia with hurricane-force winds and torrential rains.
Helene knocked out power to roughly half of Georgia Power’s 2.7 million customers in the state and caused severe damage to the company’s electric infrastructure, damaging 11,800 power poles and 5,800 transformers, plus forcing the replacement of more than 1,500 miles of power lines.
In a statement, Southern President and CEO Chris Womack praised the company’s response to the storm.
“We are thankful for the thousands of lineworkers, technicians and support staff who joined first responders, emergency management agencies and officials from the local, state and federal government, industry partners and an extraordinary mutual assistance workforce with tireless dedication to restore service to customers across Georgia,” Womack said.
The company says it has restored electricity to all its customers but that the severe damage the storm caused to the electric grid will take longer to repair.
So far, Southern estimates Helene caused $1.1 billion in damages across its system, the company’s chief financial officer, Dan Tucker, told investors on an earnings call Thursday. But all of those costs have been deferred, Tucker said, meaning the expenses are not reflected on the company’s third quarter balance sheet.
Southern still is parsing which Helene expenses are capital costs for rebuilding physical infrastructure — like transmission lines and substations — and which fall into the operating expense bucket. Utilities like Georgia Power earn profits on capital costs, and right now Tucker said it appears likely the company’s storm expenses will “skew” in that direction.
Still, any Helene-related costs would need to be approved by the Georgia Public Service Commission before they can be passed on to any Georgia customers.
HYOSUB SHIN / AJC
HYOSUB SHIN / AJC
Tucker declined to get specific about when — and how much — Georgia Power might seek to charge customers for Helene’s damage, but hinted that the recovery likely would be spread over several years.
“Without being too precise about history, I think it’s fair to say it has depended on the magnitude of the storm and the circumstances at the time,” Tucker said on the earnings call. “The recovery periods have been from a couple of years to as many as six years, depending on how big the balance was and what else was being factored into rates at the same time.”
In the meantime, Georgia Power temporarily has suspended electricity disconnections, waived late fees and taken other steps to help customers who were affected by Hurricane Helene.
The company said increased revenues from its regulated utilities — which include Georgia Power, Alabama Power and Mississippi Power — helped drive up third quarter profits. Earnings partially were offset by several factors, including higher maintenance expenses, income taxes, interest and the depreciation of certain assets, the company said.
Since late 2022, Georgia Power has benefited from a series of electricity rate increases approved by the Republican-controlled PSC, which regulates the utility. Most were approved unanimously.
Those include hikes to cover billions in cost overruns incurred in the Plant Vogtle nuclear power plant’s expansion, and to pay for transmission upgrades the company has said it needs. A separate increase to pay for fuel expenses was passed on to ratepayers last year, too, though Georgia Power does not earn profits on those costs.
Since early 2023, the rate increases have combined to send the monthly bill up roughly $38 for an average residential customer who uses 1,000 kilowatt-hours of electricity a month. Another rate hike is set to kick in at the start of 2025, which could add another $7 to customers’ monthly power costs, the Southern Environmental Law Center says.
As a regulated utility, Georgia Power does not get to keep all the net income it earns; its customers could get some money back if its profits remain up.
The PSC lowered the top end of Georgia Power’s earnings band by a hair, from 12% to 11.9%, in late 2022 with a 4-1 vote. For any profits above that 11.9% mark, Georgia Power gets to keep 20%, but must apply another 40% of the earnings to pay for its regulatory obligations, like cleaning up coal ash the company has stored around the state. The remaining 40% would be refunded directly to customers.
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