Southern Co: Disclose Assumptions Behind Fossil Fuel Investments

WHEREAS: Southern Company, one of America's largest energy holding companies, projects a 6% annual increase in electric load between 2025 and 2028, primarily driven by manufacturing and data center expansion.[1] To meet this demand, Southern is investing in new methane gas capacity and possibly delaying retirement of its coal plants.[2] Southern posits that fossil fuels are required to meet growing demand while maintaining reliability and affordability. However, investors will benefit from access to the basic assumptions underlying this conclusion to promote confidence that the Company has fully assessed the risks and benefits of new and continued investments in fossil fuels.

Continued investments in fossil fuels are concerning to investors for three reasons:

1. Fossil fuel generation, including burning of coal, puts the company at risk of overshooting its greenhouse gas reduction targets and further exposes the company to climate-related risks. According to the Rocky Mountain Institute’s modeling, Southern is currently the U.S. power utility most misaligned with the Paris Agreement’s 1.5oC decarbonization path.[3]

2. If Southern does not prioritize decarbonization, some of the new load it is forecasting may not materialize. Many of Southern’s customers driving the increased energy demand, including Meta, Alphabet, Digital Realty, and Equinix, have aggressive renewable energy targets and are locating data centers where their renewable energy needs can be met.[4]

3. Leading energy experts are advising investors that electricity demand can be met without new fossil fuels, and that underinvestment in renewables is consequential.[5]

Due to these concerns, investors are seeking assurance that Southern’s investments in new fossil fuel capacity are grounded in sound market projections and aligned with the most current data on renewable and fossil fuel developments. Without this transparency, investors cannot accurately evaluate key aspects of Southern's strategy including its likelihood of overshooting climate targets, its ability to meet customer demand for renewable energy, and whether Southern is leveraging technological advancements or overestimating the competitiveness of legacy technologies.

Peer utilities Duke Indiana, Dominion South Carolina, Duke Carolinas, and AES Indiana provide comparatively more transparency, with the latter disclosing projected cost, capacity, and lifespan assumptions for solar, wind, batteries, and methane gas through[6] Southern’s failure to disclose energy resource plans. Further, companies failing to model and disclose these assumptions risk falling behind competitors in innovation, compliance, and customer retention.

BE IT RESOLVED: To allow informed decision making, shareholders request that Southern Company disclose the primary assumptions underpinning its decision to increase reliance on fossil fuel-based energy production rather than renewables. This disclosure should omit proprietary or competitively sensitive information.

[1] https://s27.q4cdn.com/273397814/files/doc_financials/2024/q3/v4/SO-2024-Q3-Earnings-Call-Final.pdf, p.10

[2] https://www.utilitydive.com/news/georgia-power-approval-plant-yates-irp/713404/; https://www.bloomberg.com/news/articles/2024-11-12/southern-ceo-says-extending-coal-among-options-to-meet-ai-demand

[3] https://utilitytransitionhub.rmi.org/climate-alignment/

[4] https://sustainability.atmeta.com/blog/2024/10/14/our-approach-to-clean-and-renewable-energy/; https://sustainability.google/progress/energy/; https://www.digitalrealty.com/about/esg/clean-energy; https://sustainability.equinix.com/environment/renewable-energy-scaling-our-impact/

[5] https://energyinnovation.org/wp-content/uploads/MEETING-GROWING-ELECTRICITY-DEMAND-WITHOUT-GAS.pdf; https://rmi.org/wp-content/uploads/dlm_uploads/2024/09/peak_grid_solutions_for_CW_RC.pdf; Non-Pipeline-Alternatives-Report_EDF_Feb2024.pdf

[6] https://www.duke-energy.com/-/media/pdfs/for-your-home/dei-irp/2024-plan-and-attachments/vol-i-complete-2024-dei-irp-plan.pdf?rev=93f4e009ddfc44b0baa3f94f3e195b4a, p.253; https://cdn-dominionenergy-prd-001.azureedge.net/-/media/pdfs/global/company/irp/sc/desc-integrated-resource-plan-2024.pdf?rev=42a0728dbf894c979aefc95151401fcb, p.59-64; https://www.duke-energy.com/-/media/pdfs/our-company/carolinas-resource-plan/chapter-2-methodology-and-key-assumptions.pdf?rev=44036eb8cc98429c92e7ac00bea5f445, p.32-39; https://www.aesindiana.com/sites/default/files/2022-12/AES-Indiana-2022-IRP-Volume-I.pdf, p.74

Resolution Details

Company: Southern Co

Lead Filers: As You Sow

Year: 2025

Filing Date:
December 2024

Initiative(s): Climate Emissions Reduction Targets and Actions