Dive Brief:
- Southern announced first quarter earnings of $351 million for 2014, compared to $81 million for first quarter 2013.
- The high earnings were due to unusually high demand last winter and electric sales growth, with kilowatt-hour sales rising 7.1% over Q1 2013.
- Southern pointed to progress at the planned Vogtle nuclear power plant and the Kemper coal gasification plant. Vogtle is on track for units 3 and 4 to be completed by end of 2018, while Kemper is finally moving towards a switch-on date after delays caused by bad weather and labor issues.
- Southern added to its renewable portfolio by acquiring a 20 MW solar plant in California. Southern now has 222 MW of solar capacity.
Dive Insight:
Southern's earnings spotlighted the ongoing issues with the Kemper project. Although net income was high, Kemper cost Southern an extra $333 million over the first quarter in increased labor costs. The project has been delayed by a combination of low productivity, high labor turnover and poor weather. Southern execs did not provide any new details on when construction would be completed, but the combined cycle part of generating plant is expected to operate this summer, according to CEO Tom Fanning.
Southern's electric sales looked particularly impressive, with residential sales clocking in 14.8% growth over the same period last year. However, Southern execs were unsure how much of that is a direct result of the weather, pinning down weather-normalized residential sales at only 1.2% growth over last year. "But when we look at industrial sales, [they] are largely not weather normalized," said CFO Art Beattie. "When we have a 2.8% increase in industrial sales, that’s a very good strong indicator."
