Southern Co (SOMN) 2005 Q3 法說會逐字稿

Good afternoon. My name is Lee and I will be your conference facilitator. At this time I would like to welcome everyone to the Southern Company third quarter 2005 earnings conference.

All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be a question-and-answer period. [OPERATOR INSTRUCTIONS]

I would now like to turn the call over to Mr. David Ratcliffe, President, Chairman, and Chief Executive Officer. You may begin your conference, sir.

Thank you, Lee. And good afternoon, and thank all of you for joining us.

I'm pleased to be with you for our third quarter earnings call. Joining me today is Tom Fanning, our Chief Financial Officer.

Let me remind you that we will be making forward-looking statements today in addition to providing historical information. There are various important factors that could cause actual results to differ materially from those indicated in the forward-looking statements, including those discussed in our Form 10-K and other SEC filings.

As you can see from the materials we released this morning, we had a solid quarter, despite taking a direct hit from Hurricane Katrina last month. Our businesses are performing well and we're on track to exceed our financial targets for the year.

Meeting financial and operational targets is a key criteria used to evaluate our performance but there's another measurement that's just as relevant. Namely, how a company and its employees respond when they are tested.

And during the past 12 months we've certainly been tested by the three major hurricanes striking our service territory. The most recent for us was Hurricane Katrina and her 35-foot storm surge which came ashore at the Louisiana and Mississippi border on August 29th.

Immediately following the storm, a total of 971,000 customers were without service across our system, including all of Mississippi Power Company's customers and 49% of Alabama Power Company's customers. In addition, 65% of Mississippi Power's transmission and distribution network was damaged and 1,000 miles of line were on the ground.

Damage to other facilities included plant Watson near Gulfport, Mississippi, where all six units were out of service. In addition, all 140,000 square feet of Mississippi Power's corporate office space was unusable along with three customer service centers.

Adding to the challenges on day one, there was no telephone or cellular service other than our own Southern Link wireless communications system.

Even before Katrina hit the Gulf Coast, the employees at Mississippi Power and their colleagues throughout Southern Company were in action. Their work to restore service to our customers was nothing short of heroic.

In only nine days 75% of the customers who could take service had their power restored, and 12 days after the storm power was restored to everyone who could receive it.

In the front page article entitled, "The Little Company That Could, "USA Today" chronicles the professionalism that Mississippi Power employees showed in managing the restoration process. The article has also detailed the combined response by all of our companies as well as the crews from other utilities and outside contractors required to get the lights back on.

Nearly 11,000 personnel from outside of Mississippi Power helped with restoration efforts. And we owe all of these men and women a huge debt of gratitude for their assistance and hard work.

Convoys of bucket trucks from all over the United States rolled into Mississippi and they were a most welcome sight.

The three storms that have directly impacted our service territory recently, Ivan, Dennis, and Katrina clearly demonstrate the inherent benefits off our integrated system. Five operating companies working together with coordinated planning, clear lines of communication and strong logistical support made for a timely response following each storm.

Today, some eight weeks after Katrina, the people of coastal Mississippi are putting their lives back in order. The recovery process will take time and will not happen overnight.

Having spent five years at Mississippi Power, I know the residents of coastal Mississippi are up to the task of rebuilding their communities. Governor Haley Barbour immediately appointed a commission to spearhead the effort.

The Recovery, Rebuilding and Renewal Commission, also called the Renaissance Commission, is putting together a blueprint for a new coastal Mississippi. The task force will examine not only what the new Mississippi Gulf coast will look like, but what assistance will be required from both the government and private sector in order to make it happen.

One of the first priorities was to implement legislation allowing the gaming industry, a major source of tax revenue in the region and for the state, to land base their operations, helping reduce damage from future storms. That legislation is already in place.

Throughout the rebuilding process, Mississippi Power Company will work closely with officials and community leaders and I'm very optimistic about the long-term future of coastal Mississippi.

At this point, I'll turn the call over to Tom Fanning for a discussion of our financial highlights for the third quarter and our earning guidance for the remainder of the year.

Thank you, David.

Our third quarter was marked by the solid performance of our retail business, and as I'll discuss in a few minutes, much of it related to the economy to sustain customer growth, customer usage, and weather.

We earned $0.97 a share in the third quarter of this year. This compares to $0.87 per share in the third quarter of 2004.

For the first nine months of this year, our earnings are $1.92 per share. That's an increase of $0.12 a share over the earnings we reported for the first nine months of 2004.

Here's the breakout of our earnings for the third quarter compared with the same period last year. First, the negative factors.

Increased O&M costs compared to the third quarter of 2004 reduced our earnings by $0.08 a share. Even so, some normal O&M work scheduled for the third quarter was deferred as crews were deployed to Mississippi, Louisiana, and Texas to help with repairs from hurricanes Katrina and Rita.

In addition, some scheduled generation outages were postponed to ensure reliability of our energy supply during the storm. We plan to complete as much of this work as possible in the fourth quarter.

Expenses at the parent company and other subsidiaries reduced our earnings by $0.03 a share. This reduction was due largely to storm-related insurance deductibles.

Now, for a breakout of the positive factors.

Continued customer growth, increased consumption among residential and commercial customers and market-driven revenue increases in the industrial segment added $0.08 a share to our earnings. As a side note, our sales to industrial customers declined by 1.1%, due to the impact of hurricanes Dennis and Katrina.

Without the hurricane factor, industrial sales would have increased by about 1.1%.

Warmer-than-normal weather, particularly in the month of September, compared to a cooler-than-normal third quarter in 2004, added $0.08 a share to our earnings.

Weather for July and August was normal, despite a very mild start to July. However, the month of September was the warmest September in 25 years.

Concluding with our retail business, the net impact of regulatory changes in Georgia added $0.02 a share to our earnings.

Our competitive generation business added $0.02 a share to our earnings. This increase is largely due to new contracts with electric membership cooperatives in the Southeast as well as additional earnings from the Oleander unit that we purchased earlier this year from Constellation Energy.

Finally, an intra-year timing difference in our synfuel business added a penny a share to our earnings. So overall, our third quarter came in at $0.97 a share compared to $0.87 a share in the same period last year.

Before I discuss our earnings estimate for the third quarter, I'd like to briefly review the status of the recovery of damage and expenses from Hurricane Katrina at Mississippi Power and Alabama Power.

As you know, Mississippi Power maintains an accumulated provision for property damage to cover the cost of damages from major storms to its transmission and distribution network, and the cost of uninsured damages to its generation facilities and other property. On August 31, the balance in the storm accrual was nearly $6 million.

Mississippi Power currently estimates the cost of repairing damage to its facilities and restoring service to customers will be approximately 245 million to $295 million. The Company has requested an accounting order from the State Public Service Commission to defer the uninsured storm-related costs above the accumulated provision.

Mississippi Power is working with the Commission to recover its costs over an appropriate period of time.

Turning to the hurricane damage at Alabama Power, the Company's balance in the natural disaster reserve was approximately $4 million at the end of the second quarter. Alabama Power currently estimates the cost of repairing damage to its facilities from Katrina will be approximately 70 million to $85 million, of which approximately 40 million to $50 million is expected to relate to operating and maintenance expenses.

Alabama Power is working with the Public Service Commission to recover the negative disaster reserve balance.

Finally, as we mentioned in the last earnings call, we have signed a letter of intent to negotiate the sale of the assets of Southern Company Gas to the Cobb Electric Membership cooperative located North of Atlanta. Negotiations are nearly complete.

At this point, we are awaiting a decision by the Public Service Commission on Cobb EMC's request to market natural gas in Georgia. We expect this transaction to be completed in the fourth quarter of this year.

The issue of fuel supply and price continues to be a national concern and while we're not immune, we are well positioned to manage the fuel issue for our customers. From a reliability standpoint, our service has not been compromised due to the unavailability of fuel.

Despite the impact of hurricane-related disruptions to oil and gas production, and supply chain constraints affecting coal deliveries, our fuel inventories have remained more than sufficient to meet our needs.

Meanwhile, our fuel mix continues to benefit our customers. While our fuel costs are certainly increasing with the continued rise in commodity prices, we are fortunate to be less dependent on oil and gas as a fuel than most other utilities.

Our fuel mix from an energy production standpoint consists of 70% coal, 16% nuclear, 9% gas, and 5% hydro. So compared with natural gas, about 90% of our fuel is relatively low cost.

As a rough comparison, natural gas spot prices have increased 81% over the past year, whereas the marginal cost of coal delivered to Southern has risen by only 9%.

Turning now to our earnings outlook for the remainder of the year, it's clear that our businesses are continuing to perform better than expected. Our earnings for the first nine months of this year are $1.92 per share, and our estimate for the fourth quarter is $0.20 per share.

Our fourth quarter estimate is $0.07 a share lower than the fourth quarter of 2004 actual of $0.27 a share.

Now, remember our earnings in the fourth quarter of 2004 included the resolution of two tax items. One related to merit, and the other to synfuels, the net of which increased those earnings by $0.03 a share.

So excluding these one-time items, our earnings for the fourth quarter of 2004 were $0.24 a share. So our $0.20 a share estimate, which is $0.04 a share difference from 2004, is driven by several factors.

Among them, a combination of increased maintenance spending, mostly for projects deferred during storm restoration, higher interest rates and working capital requirements in both our retail regulated business and parent company, lost revenue at Mississippi resulting from the hurricane and an anticipated change in accounting treatment for our leasing business.

These items are partially offset by the sustained growth we've seen in our competitive generation business for new contracts. However, given that our earnings for the nine months are now $1.92, we expect to exceed the top end of our range of $2.04 to $2.09 per share for the full year, with an estimate of $2.12 for the year.

Finally, on a sustainable basis or excluding $0.11 per share from synfuel operations, our estimate for 2005 is $2.01 per share.

At this point, I'd like to turn things back over to David for his concluding remarks.

As Tom has outlined, our businesses are performing very well. With the regulatory activity we completed last year, we have a stable and predictable source of earnings from our regulated businesses through the end of 2007.

Our competitive generation business continues to produce excellent results as well. You may have seen earlier this month where we announced a new wholesale contract to supply Progress Energy Florida with 424 megawatts of power to begin in 2011.

This contract along with other wholesale energy agreements we signed recently indicates that we're on track with our strategy of growing our competitive generation business in the super Southeast region.

In conclusion, our focus will continue to be on reliability, price and customer satisfaction, while at the same time, providing our shareholders with attractive low risk returns. I'm confident that we have the team in place to deliver these goals.

At this point, Tom and I will be happy to take any questions you might have. And Lee, we'll take the first questions now.

[OPERATOR INSTRUCTIONS] We'll pause for just a moment to compile the Q&A roster. Your first question is from the line of David Schanzer with Janney Montgomery Scott.

Yes, good afternoon.

David, how are you?

All right. I think a little better than you guys have been, weatherwise, anyway. On the subject of weather, if there weren't any additional storms from now on out, what would be, is there an estimate of the earnings effect of just lost demand?

The only kind of estimate we've given on that would be in the 8-K that we filed associated with Katrina. At that point, we talked about Mississippi having a revenue impact of between 12 and 14 million for the third quarter and 10 and 12 million for the fourth quarter. I think our actual loss in revenue in Mississippi was around 9.

That's about the impact that we've disclosed. There's other kind of anecdotes that cause us to think through what that effect might be.

Certainly, with every hurricane we see a loss in revenue that's followed by a rebound of economic activity, and certainly we've seen that in things like in building materials, carpet. And I think our experience with Ivan last year in Gulf has caused us to believe that those recovery periods are generally pretty quick.

The other impact that we're seeing this year is essentially where are the people. We disclosed in that 8-K that we lost 19,500 customers.

Some interesting anecdotes. 80% of the people filing for FEMA assistance are using as the mailing address the same zip code in which they live so I would say that the customers that were in Mississippi, so that the customers that we're talking about, the 19,500, most of them are still in Mississippi. They may be in FEMA housing they may be in apartments, they may be living with relatives but they're still there. So my sense is consumption, probably down still, is going to be maybe a little better than we think.

The other effect we're seeing is the migration of people leaving Orleans and Louisiana, and here again, I can only offer anecdotes but we've seen something like 40,000 heads of households filing for FEMA assistance in metro Atlanta. We're seeing 10,000 kids enrolled in Atlanta schools. We're seeing more people throughout the Southeast.

So from a customer standpoint and therefore that will lead to revenue, my sense is there may be some upside long-term.

Okay. Great. One other just real quick thing. I take it there has not been any movement in terms of the lawsuit with Mirant? That's just slogging through the normal legal process?

I think that's right.

That's correct.

Okay. Thanks.

Thank you.

Your next question comes from the line of Barbara Chapman with Guardian Life Insurance Company.

Hi. Can you please discuss the elimination of the cross defaults and the Southern Company guarantee in the Southern Power credit facility?

It is my policy not to have cross default language. It's funny you should ask that.

One of our financial philosophies here at Southern is what I call credit segregation. That is, if there's any credit issue within any of our subs, we like to contain that issue within the sub. And so elimination of any kind of cost default language is something that we absolutely pursue as a policy.

Why was it in there and what was the history? Was it in there from the inception?

I don't know.

Because I don't know if I was more surprised that you removed it or that it was in there to begin with.

I'm not aware of any material cost default language that was in there. I tell you what, call us back and we'll go through the documents in the past but that's certainly something that I feel pretty strongly about. People here at Southern know that.

It was a disclosure that hit the 10-Q for June.

Okay. We'll take a look at it.

Okay. Thank you.

Thank you. Appreciate your call.

Your next question is from the line of Scott Engstrom with Satellite Asset Management.

Hey, guys. Hey, Tom.

Hey, Scott.

A question for you on the quarter. The net income grew like 77 million, the biggest, very big chunk, 68 million was at Georgia Power, was the weather, was it materially intense in Atlanta? Was there, I mean was there something seasonal as well about the rate hike this year that hit particularly in the third quarter? Can you just talk about why it was so concentrated at Georgia?

Well you kind of had three effects going on there when you think about just revenue. You had price increases from the rate case in the prior year, you had fuel, you had weather. Those three things taken together really added to revenue.

And one other issue that arose from a wholesale standpoint, Georgia added in January of this year the EMC 30 wholesale contract, which was a substantial contributor.

Okay. So most of the growth from Georgia is really top line or net of fuel margins really growth?

Yes, that's right.

And then on the, just generally about costs related to the hurricane, was there any, in a sense I don't know if shifting is the right word, but to the extent that people went to Mississippi to work there, were there less O&M at the other operating subs that get piled into hurricane costs?

Exactly. And in fact that's what I alluded to in the script.

You know, it's not like those people weren't doing work back at Georgia and elsewhere. And therefore, what we have planned for the fourth quarter is some of that O&M to be made up.

Okay. Then last thing, just on share count, I think in the quarter, you guys were buying back shares related to employee options or other options that were exercised in the year. Can we expect share count to be flat essentially going forward this year, next year?

That's exactly right. It's just a little technical matter.

What I like to say kind of broadly is that there'll be no new material share issuances planned at least by the financial plan we had in place, until around 2009. Now, as a technical matter, when employees exercise their options, we issue new shares. In order to counteract that effect we repurchase those shares, not those shares but other shares on the open market, so that's what you're seeing.

Great. Thanks very much, guys.

Thank you. Appreciate the call.

Your next question comes from the line of Ted Haines with Citigroup.

Good afternoon.

Good afternoon.

Hi. I was just actually, I had a question on your wholesale sales volumes looked like they increased even though the volumes related to weather consumption increased at the retail side. Can you kind of walk through what was driving the additional megawatt hour sales there?

The megawatt hour sales on the wholesale side are going to be driven by the Oleander contract and also the EMC 30 contract. Those are the two big net new items you'll see this year.

Okay. So those contracts actually added volume, not just repricing?

Sure.

Okay. And I guess the other question was this. You mentioned, I think briefly, the drag on the parent company increased year-over-year and some of it was related to some of the hurricane insurance proceeds or something?

Yes.

Could you kind of walk through what the big prices of that drag increase was?

Yes, we have a captive insurance policy inside the system which accounts for about a little over a cent and a half. It essentially, you should think of it as the deductible for the insurance we have for general property associated with hurricanes. So that's mostly what that is.

All right. So then we should, in the fourth quarter, that should go back to a more normal rate?

Yes, that's like an expense is the way you ought to view that. You know, the other stuff is, I guess there is a cent associated with Southern Gas, that will turn around the end of the year once we complete the sale.

Okay. All right. Thank you very much.

Yes, sir. Thank you.

Your next question comes from the line of Dan Eggers with CSFB.

Hey, good afternoon, guys.

Hey, Dan.

First question, because weather was good and you probably lost some demand, is it fair to assume that there was a pretty big offset between what you lost from the hurricanes and what you picked up because the hot September? That if we were to think about this, it would net-net look like a normal type weather environment?

Let me give you that. There's a good stat there. If you look at our total retail sales statistic, it shows a big increase 5.2%. If you weather adjust it and then hurricane adjust it, and I know I'm in some art here, I think you're going to end up with a number that looks around 2.5%, which does look normal to good. Let me put it that way.

So if we were to think about what in the future a normal third quarter baseline would be, we're probably not too far away with this quarter barring the facts that O&M came in a little skinny because you guys were working on the hurricanes?

Oh no, I think weather overwhelmed the negative effect of the hurricane.

Okay. Second question, just '06-'07 for synfuels, you guys hadn't hedged before. What is the status there? And kind of, what's the sensitivity to earnings, [inaudible] just oil prices where they are right now?

Absolutely. I've got a handy dandy chart. Let me just get to it.

But basically where oil prices are right now, we don't believe that there would be a phase-out for ours although it's right on the edge. We're right on. It's 61 bucks for NYMEX oil. We're at the bottom end of any range which would start a phase-out.

In 2007 the bottom end of the range is a little higher than that, and you know that in these statistics there's a host of assumptions about the rate of inflation and a variety of other things, so it's 62.5 would be the comparable number in '07.

The phase-out would begin, the phase-out would essentially reach about 50% level for '06 at about 68.30 something and about in '07, about 69.73. And as you know, we do not have a hedge in place for '06 and '07.

We certainly do have all of, well, not all of, but we certainly do have effectively this year's earnings hedged for synfuel. You may remember, too, synfuel represents $0.11 a share and we've reported earnings adjusted for synfuel of $2.01.

If you do the common math that people do and take 2006 and 2007, discount them at a rate like 10%, divide through by the number of shares, you get to a per share impact say at about a 34.5 share price of about $0.17. So that's kind of what's at risk here.

No, I understood. I just wanted to make sure we had our model dialed in right now. Last question for you, can you just give us a run down on opportunity sales in the quarter? Obviously, the wholesale prices were high, but so was in [inaudible] demand.

Let me give you the normal break down I give to everybody there.

Third quarter, Southern Power earned $39.2 million. Our imbedded wholesales, remember that's the operating companies, the retail companies, Georgia, Alabama, Gulf, Mississippi, Savannah, participation wholesale sales was 53.1, so total for the third quarter was 92.3.

That compares with 73 million last year for the same quarter, or a delta of 19.3. So 58% of our profits were on the imbedded side, 42% on Southern Power.

If you break it up between kind of the trading floor, the opportunity sales, plus other availability bonuses and other related profit opportunities, you had a breakout trading floor 24.8 contract, long-term contracts, remember these have kind of a weighted average life of over, you know, 14 years or so, $67.5 million, and that's 27% trading floor, 73% for the long-term contracts.

Thank you, guys.

You bet. Thank you.

As a reminder, if you would like to ask a question, please press star then the number one on your telephone keypad. Your next question comes from the line of Jonathan Arnold with Merrill Lynch.

Hi, Tom.

Hey, Jonathan. How are you?

Very good, thanks. Is it possible for you to give us an idea either through the year-to-date or based on this revised outlook for the full year what that, you know, roughly where we would be on a normalized basis? You've got obviously the weather in the third quarter but through the rest of the year as well?

You know, Jonathan I really haven't done that so I'm just kind of reluctant to give you some stuff off the top of my head. You know, it's easy to see that weather really helped us so far. Weather year-to-date is up I think $0.03, somewhere around there.

I would have to see kind of the rest of the influences. We'll be looking over our hand there as we progress in this quarter, but I really don't have an estimate. We can get back to you later on that.

Okay. Thank you.

Yes, sir, thank you.

Your next question comes from the line of Philson Yim with Morgan Stanley.

Hi, good afternoon. Tom, you had mentioned the 9% marginal increase in coal coasts, is that kind of the run rate we should use year-over-year as far as increasing coal costs?

Yes, I think it's reasonable.

I mean have you seen, I mean recently, PRB prices have been up significantly over third quarter, you know, we had the rail delivery problems in the spring, can you update us on kind of where the inventories are for coal and --

Sure.

And you know, what effect pricing is having?

We've seen, I guess we mentioned this a little bit, we've seen some interruptions but nothing material. You know that our, what I've said before, this is just a general number, because you got really evaluate this number on a plant by plant basis, so please accept this as a rule of thumb.

We look to have about 30 days of supply on the ground. That would be a normal full-load basis. So we entered the peak season with that, our peak season's not yet over, but we ended September with around 22 days. You may remember a similar statistic last year was around 26 days.

We're down a little bit, but I think a lot of that is hurricane-related. There were some interruptions for deliveries but nothing where any plan I think was compromised. So I think we're in great shape there.

Was there something else you wanted to know?

And so I mean, as far as you know, we're seeing some states on a, take a prudency review on coal procurement. I mean I know your jurisdiction going to be a little more supportive but have you seen signals of that yet or --

Well, no, we haven't. As you know, I know this sounds a bit like propaganda but I swear it's true, when you think about our constructive relationship with regulation here in the Southeast, I think it is driven by our high reliability, our low prices, and our really high customer satisfaction. That continues to drive our brand equity here in the Southeast.

I think we continue to deliver great reliability, low prices, and high customer satisfaction. And I think as a result, we continue to see this constructive relationship continue. And remember, that relative to just about anybody else around us, given our attractive fuel mix, our price increases are a lot less than other people's are.

Great. Thanks a lot.

Thank you.

Your next question comes from the line of Nathan Judge with Atlantic Equities.

Hello Tom.

Hey, Nathan, how are you?

I'm well, thank you. I just wanted to follow-up on the trading book. That 27%, is that correct for the total Southern Power?

Yes.

That seems to be a bit higher than normal. Is there anything particular or is that, am I mistaken on that?

No, you're right. If I look at the same period in '04 it was 21% versus 79. So that was just trading in general for the system.

I think one of the things that we benefited from, we get some heat rate guarantees in a lot of our contracts. The heat rate, the amount of heat rate guarantees is tied, frankly, to the value of it. It's tied to the price of natural gas.

As natural gas has risen, the value of those guarantees has risen. So you see some bit of that occur there.

Okay. Okay.

And hey, and one other thing, if you look at the weather pattern in September, it actually, in September, it was hot inside Georgia but not elsewhere, and so we typically didn't see the big increase in the trading floor. We really made all that 10 million delta between '05 and '04 in July and August. And it was just the reverse.

In other words, it was fairly mild to normal in Georgia, but really hot around us. And also we had a lot of hydro in Georgia at that time and so our [inaudible] influenced the hydro production gave us attractive profit margin. Those margins were typically, for that two-month period about $20 per megawatt hour.

Great. On kind of a more strategic level, you know, the question continues to be asked about ITC and the potential for your transmission. Can you just set this record straight on where you are on that, and, you know, what your potential review would be?

I'm not sure I understood exactly what you were, you're asking about ITC on transmission?

Yes, what is the potential for Southern Company to look at potentially IPL and its transmission system and what are the factors to take into play there?

I don't think at this point in time we don't have any intent to consider that. In fact, I'd go back and based on the recent experience that we've just been through, the value of having a vertically integrated business has been demonstrated very clearly in the response that you've seen from us and from Entergy in the response to hurricanes.

The notion of being able to move from the production of generation all the way to the distribution at the customer level is significant in our ability to respond in these cases and so we don't have any intent of looking at spinning out transmission.

And one other thing that's just interesting, and certainly, we've had people talk to us about it and we've certainly thought about it on our own, even years ago we thought about it, but the issue is this, if you're somehow able to attribute a higher market value to transmission in order to realize the benefit of that higher market value, you've got to pass along some increase in capital costs.

We think that keeping rates low is really important, for us in the Southeast, and in fact, any kind of transfer has the effect, we think, of perhaps increasing costs ultimately to our customer base and that's just not acceptable.

Sure. Absolutely. And just finally, can you just comment on where we are with the power market issue? Has there been any new developments with the new Chairman, et cetera?

Are you talking about the ISC proceeding in the market power --

Yes, sir.

We've had good discussions with the new Chairman and with the new Chief of Staff relative to the ISC matters, we're optimistic that we might be able to resolve those in the near-term. The market power discussions are ongoing for next year with hearings scheduled the early part of next year.

Okay. Thank you very much.

Thank you, Nathan.

As a reminder, if you would like to ask a question, please press star then the number one. We'll pause for another moment while we continue to queue the roster. Your final question comes from Amit with Banc of America.

Hey, Tom. Good afternoon.

How are you?

Great. Just a point of clarification. Did you say that the industrial sales would have actually been up 1.1% absent the hurricane?

I did.

Is most of that, was the impact mainly in Mississippi?

Yes.

Or -- I guess to some extent Alabama as well?

It was really Mississippi. Alabama had just minimal interruptions.

Our largest single customer in the whole Southern Electric system is the Chevron refinery in Pascagoula, Mississippi. It was out pretty much for September and even some in October but it's back now.

The only remaining industrial site we have that's still not up and running is Dupont in Mississippi. But it was a Mississippi effect.

Okay. So most of that load's actually back heading in the fourth quarter?

Sure is. Right.

Okay. Thanks.

Yup.

Lee, do have you any other questions?

There are no further questions at this time, sir.

Well, if there are no other questions, let me say again thank all of you for joining us and we look forward to talking with you first part of the year.

Ladies and gentlemen, this does conclude the call. You may now disconnect.