Southern Co (SOMN) 2012 Q4 法說會逐字稿

Good afternoon. My name is Kimika and I will be your conference operator today. At this time, I would like to welcome everyone to the Southern Company fourth quarter 2012 earnings call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.

I would now like to turn the call over to Mr. Dan Tucker, Vice President of Investor Relations and Financial Planning. Please go ahead, sir.

Thank you, Kimika. Welcome to Southern Company's fourth quarter 2012 earnings call. Joining me this afternoon are Tom Fanning, Chairman, President and Chief Executive Officer of Southern Company, and Art Beattie, Chief Financial Officer.

Let me remind you that we will make forward-looking statements today, in addition to providing historical information. Various important factors could cause actual results to differ materially from those indicated in the forward-looking statements, including those discussed in our Form 10-K and subsequent filings. In addition, we will present non-GAAP financial information on this call. Reconciliations to the applicable GAAP measure are included in the financial information we've released this morning, as well as the slides for this conference call. To follow along during the call, you can access these slides in our Investor Relations website, at www.southerncompany.com. In addition, these slides are now available to download or print.

We plan to cover a lot on today's call. Tom will provide an update on the Company's five strategic priorities, along with a few highlights of our 2012 operations. Art will then provide an overview of our 2012 financial results and economic outlook and our 2013 sales forecast, highlights of our latest capital expenditure and financing plans, and finally, our earnings guidance and dividend objective. After closing remarks from Tom, we will move to Q&A. As always, our goal will be to engage in a full and open discussion, but we also want to be respectful of your time. Therefore, based on feedback we've received from many of you, we will make every effort to end today's conference call no later than 2.15 PM. At this time, I'll turn the call over to Tom Fanning.

Good afternoon, and thank you for joining us. Overall, 2012 was an outstanding year for Southern Company. As we move into 2013 and beyond, I'd like to provide you with an update of our five strategic priorities.

The first priority is excel at the fundamentals. First and foremost, I want to commend our employees for one of our safest years on record. Nothing is more important than the well-being of our employees, which requires constant focus and an unwavering commitment that we will return each one of them home to their families in good health at the end of each work day. While we were not perfect in this regard in 2012, I'm very proud of our employees' commitment to our Target Zero safety philosophy.

We also recorded another year of outstanding operational results. The peak season equivalent forced outage rate for our fossil hydro generation fleet has been the leader in the industry for six years running and eight of the last nine. We have also continued our superior performance in transmission and distribution reliability, and our customers continue to benefit from our trend of improvement over the last decade. We continued the ongoing transformation in our generation mix, generating more energy from natural gas than coal for the first time in our history. Largely as a result of our diverse portfolio and the ability to respond to low gas prices, our customers benefited from approximately $1 billion in fuel savings as compared with 2011. Our operational performance, along with our strong commitment to service, resulted in top quartile rankings for customer satisfaction for all four of our regulated utilities in 2012.

All of these operational accomplishments are evidence of Southern Company excelling at the fundamentals, but this priority is a broader objective than indicated by any of these metrics. In fact, each of the other four priorities I'll discuss is an extension of this first priority.

The second priority is achieving success with our major construction projects, specifically Plant Vogtle Units 3 and 4 and the Kemper project, both of which are continuing to progress in an outstanding manner. While projects of this scale and magnitude always face unforeseen challenges, we continue to demonstrate our ability to constructively manage those issues and achieve a favorable outcome. Since our receipt of the first ever combined construction and operating licenses from the NRC in February, 2012, significant progress has been made on both units, with construction now approximately one-third complete.

Specific accomplishments include complete assembly of the Unit 3 containment vessel bottom head, 40% completion of the Unit 3 cooling tower, and 90% completion of the Unit 4 containment vessel bottom head. We have also begun assembly of the Unit 4 condenser. In addition, on Tuesday the NRC issued no objection letters in response to our preliminary amendment requests. This enables final work to be completed prior to the pouring of base mat concrete. We intend to pour concrete following the expected issuance of the license amendments later this quarter. We are anticipating the Georgia Public Service Commission's response to the seventh Vogtle construction monitoring report on February 19, and expect to file the eighth construction monitoring report in late February.

Meanwhile, the Kemper project is now 75% complete and remains on track for its May, 2014 commercial operation date. To date, approximately $2.5 billion has been spent on the project. The plant is scheduled to begin start-up activities this summer, with first fire going to the CTs in June, and the first gasifier heat-up taking place in December. Reliable syn gas is expected to begin flowing to the CTs in February, 2014.

As many of you are aware, Mississippi Power signed an agreement with the Mississippi Public Service Commission last week that includes a procedural schedule and framework for cost recovery for the Kemper project. This settlement demonstrates, once again, our long-standing practice of engaging with regulators to achieve constructive solutions and provides a greater level of transparency on cost recovery for this project. We held a separate analyst call regarding this settlement last Friday. A replay and related documents can be found on our Investor Relations website.

As an update since that call, Mississippi made its first filing under the settlement agreement this past Friday. The Company asked for $172 million in rate relief, which represents a 21% increase in customer bills. If approved, we expect those rates to be implemented as early as April, 2013.

Also, the legislation permitting securitization and multi-year rate stabilization has been sponsored by the chairs of the House Public Utilities Committee and the Senate Energy Committee. Both bills have been single referred and passed out of their respective committees earlier today. We look forward to monitoring their progress over the next few weeks. Overall, we continue to anticipate that Vogtle Units 3 and 4 and the Kemper project will benefit our customers with clean, safe, reliable and affordable energy for decades to come.

The third priority involves promoting a sensible national energy policy. This is an area that is especially important right now, with the fiscal issues the country is facing and the potential for economic recovery on the horizon. We have seen some progress in this area recently, with the December passage of a bill that preserves a rational approach for dividend and capital gains taxes, a discussion in which we were particularly active. This development should help maintain our ability to attract capital for future energy infrastructure investments. But more work remains to be accomplished, and we will continue to have an active voice in those debates. We will continue to argue for a balanced you approach to energy resources, an emphasis on energy innovation through proprietary research and development, and the importance of restoring America's financial integrity, all for the benefit of the customers we serve.

The fourth priority is promoting Smart Energy. As you know, we achieved a major milestone in 2012 with the completion of 4.4 million Smart Meter installations in Georgia, Alabama and Florida. We believe, however, that the concept of Smart Energy involves more than just the building of a smarter grid. It's a much broader concept that also includes generation, transmission, distribution, and the beyond- the-meter uses of electro technologies. In fact, it's really more than all of that. It's really about energy innovation and the ways in which we can use technology to help drive better service and reliability for our customers. We will continue to dedicate ourselves toward achieving that outcome.

The fifth priority -- and it's really the foundation of our business -- is about valuing and developing our people. We will continue to drive performance and accountability in 2013, while also continuing our emphasis on succession planning and cross-training. Over the past two years, we have transferred some 700 employees across system lines, improving the breadth and depth of our expertise and sharpening the skill sets of many of our key leaders. We will continue with this approach in 2013 and beyond.

I'll now turn the call over to Art for a financial and economic review.

Thanks, Tom. As you can see from the materials we released this morning, we had strong 2012 results for both the fourth quarter and the full year. For the fourth quarter of 2012, we earned $0.44 per share, compared to $0.30 per share in the fourth quarter of 2011. For the full year 2012, we earned $2.70 per share compared to $2.57 per share in 2011. Our full year 2012 results include a $21 million net benefit, or $0.02 per share, recorded during the second quarter of 2012 for an insurance recovery associated with the 2009 Mirant bankruptcy settlement. Excluding this item, full year 2012 earnings were $2.68, compared with $2.57 per share for 2011. As a reminder, our earnings per share guidance for 2012 was $2.58 to $2.70, and our adjusted results were in the top end of that range.

Several factors affected our year-over-year results for 2012. Two of the most significant drivers were the weather and our ability to respond to it, as reflected in our successful effort to improve operating efficiencies in our business units. Weather in 2012 for our service territory was milder than normal across most of the year, which had a negative impact of $0.11 per share. Weather in 2011 was quite the opposite, driving a positive $0.09 per share impact. This means that weather had a negative $0.20 per share impact year-over-year. Largely offsetting this impact was reduced non-fuel O&M for our traditional operating companies, which drove a positive $0.11 per share contribution for 2012, as compared to 2011.

The other significant driver for 2012 as compared to 2011 was retail revenue effects for our traditional operating companies, which contributed a positive $0.22 per share. In our slides, we have provided a summary of all the year-over-year EPS drivers for 2012. We have also included drivers for the fourth quarter in the appendix, for your reference.

Turning now to a discussion of our retail sales results for 2012. Total weather normal retail sales for the full year grew 0.4% over 2011 and 1.7% for the fourth quarter. Industrial sales grew at 0.2% for the full year 2012. After a weak third quarter, fourth quarter industrial sales grew 1.2% over the fourth quarter of 2011. During the fourth quarter of 2012, six of our top seven industrial segments reflected energy sales growth over the same period in 2011. Chemicals, our largest segment, grew 2% for the quarter. Other highlights for the fourth quarter include automotive manufacturing with energy growth -- sales growth of 7%, petroleum refining with 6%, and lumber with 9%. This expansion in fourth quarter energy usage was supported by 3% year-over-year growth in manufacturing jobs, twice the national rate, and 1.4% growth in total employment in our geographic footprint.

We ended 2012 with 23,000 additional residential customers. This helped drive weather normal growth of 1.1% in residential sales, our strongest annual growth in that sector since the recession began. While our fourth quarter numbers reflect the benefit of additional customers, they also reflect the expected reversal of the year-over-year revenue anomalies to which we alluded in our last earnings call. As a reminder, we explained that Georgia Power had refined its methodology for calculating unbilled sales using Smart Meter data, which provides greater accuracy compared to previous years in which the process required more estimates.

As we peel back the numbers and look across our operating companies, we are very encouraged by what we see in the residential sector, with overall growth of 1.1% in 2012, about half of which is accounted by customer growth and the rest by increases in usage, indicative of a strengthening economy. Despite promising trends in industrial and residential sales, our commercial sales had remained essentially flat on a weather normal basis.

From an economic development standpoint, the potential project pipeline in our service territories remains robust. The current projection includes more than 300 potential projects, representing up to 40,000 jobs and $9 billion in capital investment. The recent announcement of General Motors adding more than 1,000 highly skilled IT jobs in Atlanta for its new IT service center is evidence of the type of projects our jurisdictions pursue. This announcement adds to a string of 1,000-plus job announcements in 2012 that included major companies like Airbus, Caterpillar, Ingalls Shipbuilding and Baxter International. In fact, since the fourth quarter of 2010, we have seen a total of 10 such announcements, representing nearly $6 billion in capital expenditures. However, many companies continue to delay final decisions on expansions and relocations until Congress further resolves looming fiscal issues. These conditions, which were noted during our last earnings call, continue to persist, despite Congressional action in December on income, dividend and capital gains taxes.

Earlier this month, we re-engaged with our economic roundtable participants. As a reminder, this group consists of several regional economists and executives from a handful of our largest customers. The roundtable participants helped to validate the observations we gleaned from our fourth quarter sales results and the assumptions we've made in our 2013 forecast, which include forecasted GDP growth of approximately 2%. Most of the economists believe that most of this growth will be driven by the higher than 2% growth in the second half of 2013, offsetting what is likely to be a slow start for 2013, while Congress contemplates its fiscal issues.

Most outlooks include an assumption for an improved global economy in 2013 which could positively affect exports out of our region. Industrial production is seen as improving with an emphasis on business-oriented goods. Participants also observed that housing markets in the region are continuing to rebound, with foreclosures decreasing and inventories of developed lots falling towards replacement levels. These trends, along with continued positive migration into the region, bode well for continued residential customer growth in our markets. Finally, our roundtable participants were cautious in their outlook for the commercial sector, but do see growth emerging, particularly in the private sectors.

That brings us to a forecast of total retail sales for 2013, which we are projecting at 1%. This forecast is essentially the midpoint of a potential -- a range of potential economic scenarios that result in sales growth of between 0.7% and 1.3%. Industrial sales growth is projected to be 2% for 2013. This growth rate is reflective of previously announced industrial expansions, as well as a continuation of some of the increased activity we saw in the fourth quarter of 2012. Commercial sales growth is projected to be 0.5%, while residential sales are expected to grow at 0.6%. Our residential customer growth assumptions for 2013 are consistent with our 2012 results of 23,000 new customers.

Now I'd like to update you on our latest capital expenditure forecast and our financing plans. Our three-year forecast for capital expenditures totals $16.5 billion. As in previous years, the largest component of our forecast is maintenance, which totals $4.2 billion for the three-year period. Environmental compliance spending, including our capital cost to comply with the MATS rule, is also significant, at $3.6 billion. Of the $2.4 billion three-year total CapEx for Southern Power, approximately $2 billion is allocated as place holders for potential acquisitions or new self-built projects that fit Southern Power's rigid investment criteria, including the requirement for long-term contracts with credit-worthy counter parties.

These place holders contemplate additional solar projects, primarily in the southwestern United States, and efficient natural gas generation projects, which are a prominent part of Southern Power's portfolio. As mentioned in our last earnings call, we are exploring opportunities to apply our low risk business model in other regions of the country, where co-ops, municipals and perhaps even other investor-owned utilities would benefit from securing long-term capacity through bilateral agreements.

Moving now to our financing plan. Our forecast assumes long-term security issuances of $9 billion for 2013 to 2015. This financing plan does not assume any refunding or refinancing of existing securities, something we have done extensively over the past few years to lower the average cost of our portfolio to 3.8%, while lengthening the average maturity to 15 years. We continue to target a consolidated equity ratio of approximately 44%. Based on the capital expenditure forecast of our traditional operating companies alone, we do not anticipate any equity needs for the three-year period. To the extent Southern Power finds projects that meet its rigorous investment criteria, we could need as much as $300 million in any one year.

Now I'd like to share our earnings guidance for 2013. For 2013, we are establishing an annual guidance range of $2.68 to $2.80, which represents a growth rate of approximately 4% over our 2012 EPS guidance range and encompasses numerous planning scenarios for normal variances in weather, the economy and operating expenses. Our long-term earnings growth rate is 4% to 6%, represented by a range extrapolated from the top and bottom of our 2013 annual guidance. This slight revision in our long-term growth rate is consistent with the significant reduction we've seen in environmental compliance capital, which has been further reduced in our latest update to reflect the longer compliance horizon for potential coal ash and water rules, and the cumulative effect of slow economic growth over the past few years.

One final note on our earnings outlook. Our first quarter 2013 earnings per share estimate is $0.51. As most Southern Company investors know, our common dividend has been a key component of our value proposition for decades. 2012 marked the 11th year in a row that our dividend was increased, a practice that continued, even during the difficult economic times of just a few years ago. We have always taken the long-term view of dividends and recognized that the informational content of our policy around dividends and actions is important. Supported by the earnings growth assumed in our guidance, our financial plan contemplates a growing dividend, consistent with the path chartered over the past several years.

I'll now turn the call back over to Tom for his closing remarks.

Thanks, Art. I am always proud and almost never surprised by our ability to deliver superior results. For more than a decade now, Southern Company has maintained a singular, steadfast commitment to a low risk, customer focused business model that in turn has resulted in an outstanding track record of operational and financial performance. Our ability to sustainably deliver clean, safe, reliable, and affordable electricity continues to be the foundation for our success.

We maintain that same focus for Southern Power, remaining committed to a low risk business model that delivers exceptional value to shareholders. As we do with our traditional operating companies, we keep it very simple with Southern Power. In short, we require Southern Power to first, sign long-term bilateral contracts; second, partner with credit-worthy counter parties, primarily co-ops and municipals; and third, take no or minimal fuel or transmission risk. Sticking to this model has produced solid results for Southern Power since it was formed in 2001 and has kept that business unit poised to deliver continued value and growth going forward.

Our ultimate objective is to deliver superior risk adjusted total shareholder return. Over the last decade, this has been driven by strong earned returns for our traditional operating companies, steadily growing cash flow and earnings at Southern Power, stable earnings per share growth, and finally, a sustainable, growing dividend. All of this, while maintaining the best overall financial integrity and credit ratings in the industry.

In today's uncertain world, none of us in this industry know what challenges may lie ahead. Southern Company has demonstrated a track record of anticipating future challenges and managing them successfully for the benefit of our customers and our investors. We appreciate your interest in Southern Company and we take seriously our obligation to build successfully for the future.

We are now ready to take your questions. So Operator, we'll now take the first question.

Thank you.

(Operator Instructions)

Our first question is from the line of Greg Gordon with ISI Group. Please proceed with your question.

Thanks. Can you hear me?

Hello, Greg. How are you? Yes.

I can't complain. Always looking good on Bloomberg, as usual.

(Laughter) That's enough out of you.

So when I look at your earnings growth forecast for the next several years, as articulated by the growth rate, your growth rate -- the high end is slightly lower; you're at 4% to 6% versus what you thought you could do on a multi-year basis off of last year's base earnings, which was 4% to 7%. And I know a lot of stuff moves around in your CapEx forecast, where you're spending money, how you're financing it. But if you could summarize what are the key factors that have caused you to reduce the high end of the growth rate for us, that would be helpful.

Yes, it was simple. What we said last year -- I know we've got a lot of questions before about how do you hit 7% growth year over year over year? And it really dealt with the outcome on the MATS compliance. Remember, last year and even the years before, we were projecting, with the proposed MATS rule, something like 17 baghouses. As a result of the final rule -- recall there were like 11 comments, 11 major segments of comments that were filed by EEI that we were pretty influential in. One of those dealt with schedule; 10 of them dealt with some technical issues that were critically important. And as a result of the resolution of at least 4 of those 10, it's caused us not to build 17 baghouses, but 4. There are other corresponding changes, but the net effect is that CapEx over the three-year period is less than what we would have projected.

The other thing that is in our CapEx that you will notice is that we have pushed out CapEx associated with ash and water. So we'll see how that resolves itself. But in the three-year period, we're not showing any CapEx associated with proposed rules there. That's the difference.

Got you.

And so it doesn't have to do in any meaningful way with a re-evaluation of what you think your authorized returns will be? Or whether or not certain assets are going to go fully into rates over time, like Vogtle or the way the Kemper County plant is going to be treated?

Has absolutely nothing to do with those issues.

Okay. Thank you, Tom.

Yes.

Thank you. Our next question is from the line of Paul Ridzon with KeyBanc. Please proceed with your question.

Hello, Paul.

Good afternoon. Can you hear me?

Yes.

Can you just comment your expectations for O&M relative to '12 and your '13 guidance? And then secondly -- probably five years, six years back, you were pretty bullish on the outlook for Southern Power and then you tapered expectations a little bit. It sounds like you're getting more positive. Is that a fair read of your commentary?

Yes. Paul, let me deal with your O&M question first.

If you look over the last three or four years, none of those years was normal in terms of our O&M spend. We were either holding back or spending more because of good weather. So it's an excellent question. Let's approach it this way, from giving you a baseline to work with. If you take 2012 non-fuel O&M and you add $200 million to $250 million back to that number and then grow that number by 3.5% to 4%, we think you're going to be in the ballpark of what a normal level of non-fuel O&M would be that we're expecting.

Now, the second part of your question relates to Southern Power.

So let me jump on that one.

I guess it's on your slide package; on page 20, we have some charts that shows a variety of statistics, including Southern Power net income. You may note that in 2012, we had our best year ever, earning net income at $175 million. We did have one downturn. That was in '10, and that was really associated with the downturn in the economy. So that kind of explains that.

Yes, we are bullish for Southern Power. They have this wonderful, I think, business model that we've replicated to have a risk profile similar to our traditional operating companies, whereby we have the long-term bilateral contracts, credit worthy counter parties, little or no fuel or transmission risks. We think that works wonderfully. We think, frankly, we've been turning down business, outside the Southeast. And we think that we're willing to consider some projects outside the Southeast, but which meet our rigorous business model. Frankly, we think this is a gap that we could help fill in some of the deregulated markets, particularly, in the near term, Texas and MISO. So let's just see what happens there.

Otherwise, we've been reasonably active in the renewables space. So you've noticed our announcements on solar projects. We've done the biomass deal, been immensely successful there in Texas. So I think we can continue that track record and continue to build for the future.

And just your financing plans, excluding any opportunities at Southern Power -- did I hear you say there's no equity needs? Does that mean no DRIP or new program shares? How should I interpret that?

Yes, we would -- in 2012, Paul, we actually bought back some shares with the proceeds from stock options that basically left us at close to a zero point in 2012. We would expect to do the same thing, outside of Southern Power's equation, in '13 through '15, as well.

So basically, again, excluding assumptions around Southern Power, a flattish share count for the next few years.

Yes.

Thank you very much.

Thank you. Our next question is from the line of Ali Agha with SunTrust. Please proceed with your question.

Thank you. Good afternoon.

How are you?

Good, thanks.

When I look at your -- again, going back to your '13 guidance. If I look at 2012, you reported $2.68, and then you told us that weather was abnormal, hurt you by about $0.11. So on a weather-normalized basis, you would have been around $2.79, if my math is right. So your '13 guidance -- $2.68 to $2.80 -- at best you're flat and could be down, if you take the midpoint or lower. I know Art talked about O&M. But is there anything else that's causing -- assuming normalized weather, why would you guys be flat at best in '13 versus '12?

Well, Ali, again, we talked a lot in the last call about the uncertainty around the economic outcomes in '13; and we're still allowing for, I guess, some of that downside effect, because there's still a lot of unknowns out there. There's still a lot of people on the sidelines waiting for signals to move ahead. And that has nothing to do with -- you've added back weather to the number without considering what we would have done with O&M. And the facts are, we cut a drastic amount of O&M in 2012 in order to offset that weather impact. And so you can't make the single assumption that your earnings would have been if weather had been normal, just adding back that piece. It just doesn't work that way.

Think about it. We improved earnings by $0.11, and we had headwinds of year-over-year weather of $0.20. So we've been through this before, I think. We do manage our O&M based on the stress of the system, based on weather. Also, with the advent of weather-related revenues, we take advantage to, in essence, fix the roof while the sun is out and actually add to our maintenance. The evidence that this all works is borne by the fact that our operational performance, in terms of our generation fleet, in terms of our transmission distribution, in terms of our customer satisfaction numbers, are spectacular.

And Tom, if I could take it a little further, because in your assumptions you have assumed 1% weather-normalized sales growth, midpoint for '13. As I recall the old equation, that equates to about $0.08 or $0.09 of earnings incrementally in '13. It looks to me that it's all coming back to the cost side, going back, Art, to your point about the comparisons. Is that fair? Because you're getting weather-normalized sales growth in there; and yet, again, you're seeing flattish comparisons. Is it all coming on the cost side?

I hate to say that it's all coming on one side. I think what we've been able to demonstrate on the cost side is that we've been able to manage our business exceptionally well from an operational and customer standpoint and respond to changing conditions, be they economic, be they weather, be whatever. This notion of Value Line counting Southern as one of the handful of companies they follow, as having an earnings predictability score of 100%. While we can never predict the future, we've been able to provide for earnings per share growth over the years that is regular, predictable, sustainable. And that strategy has enabled us to have a dividend policy that likewise is regular, predictable, and sustainable, and allows us to have dividend increases even during downturns in the economy, when a lot of people pulled back.

I think the strategy we're putting forward here, with the earnings per share range that we have and forward expectations of 4% to 6% earnings per share growth, will enable us to continue in that vein for years to come.

Ali, I think there's another element there, as well. When you think about economic growth, we certainly didn't get the weather-normal sales growth we expected in '12, so you're starting from a lower base there. And our growth rate around the economy and our sales growth continues to be less than historical levels. So until we get back -- all of our segments back -- into full engagement, it's going to be difficult to move the range higher than what we have outlined here.

Just for Tom, one quick one on the contractor dispute at Vogtle -- any updates to share?

Not really. I really don't have much to say there.

Fair enough. Thank you.

Yes, sir. Thank you.

Thank you. Our next question is from the line of Daniel Eggers with Credit Suisse. Please proceed with your question.

Hello, Dan.

Hello. Good afternoon. This is actually Kevin on his team. Sorry, he couldn't appear.

I guess, another question on demand growth. So I guess we fully appreciate your comments regarding uncertainty around DC policy and the evolution of your tone from cautiously optimistic to just cautious last quarter. But nonetheless, it sure seems like the Southeast continues to outpace the rest of the country. And so how should we think about the visible industrial recovery working into a residential demand recovery? And what do you think the likelihood is that we're actually receiving the residential recovery today, but --

I wish you guys could see how we obsessively prepare for these calls. And we really work on our language and trying to -- we really struggled with what our language should be about our expectations. And I forget what we said, we were optimistically cautious this time.

Listen, we are seeing signs of recovery here. You know, while we did see a flattening in the last half of '12 of industrial sales, when we look at our economic development backlog and we have -- think about this. Only 0.3% of manufacturing facilities employ 1,000 people or more. The Southeast over the last two years has gotten 10 of those. And in fact, we've gotten 5 recently. And some of those could be significant. Airbus has1,000 people, direct employees; but we think 4,000 indirect. You add on top of that Caterpillar and Baxter and Ingalls and a variety of other things -- GM IT workers -- and we're starting to see, I think, in the residential and the customer growth numbers, the fact that we are adding jobs in the Southeast.

Look, we could be conservative here. I mean, I'll admit that. But let me give you one more comment on the fiscal side. When we gave you the comment in October on that call -- I have to compliment our economic forecasting guys and the marketing people at Southern that are very close to their customers. I think we were right on the money with what happened in the economy in the Southeast. And I feel good about where we are now.

I think the issues -- remember we talked about uncertainty related to fiscal issues and the fiscal cliff and all that? We did avoid the fiscal cliff, in a so-called way. But I would argue what we really did was a tax patch. It was helpful, and certainly helpful to our industry and any dividend-related investment. But we still have fiscal issues to deal with. The constructive evolution of that discussion really goes to the notion, I think, that Congress will not use the national debt ceiling as hostage in these deliberations. Rather, moving to a more constructive approach, of proposing solutions, for example, that are sensible, like requiring the Senate to come up with a budget.

So we still have big issues, but I think the issues are being handled in a more constructive manner. And I think, therefore, our color on where we believe the economy is headed is slightly more bullish than we were, say, in the third quarter. We are expecting a back-end loaded economic recovery, but I feel pretty good about it right now, based on what we see.

Okay. I guess with those comments, then, I guess with the -- give us -- you have visibility into good backlog of industrial drops coming to your region. And then to Greg's question, it seems like the growth rate today was lower due to a deferral of CapEx versus an abandonment of CapEx? Should we assume that the growth rate -- the legacy growth rate of 5% to 7% -- could possibly return for the next guidance season, for 2014?

Who knows what will happen in the future? Yes, the near term -- the Greg Gordon answer was exactly the right answer. How we got to 7% before was building a lot of baghouses, with 17. It was that kind of CapEx environment. Because we were successful in arguing some of the technical issues on HAPs MACT for the benefit of our customers, we're not going to spend as much CapEx complying with MATS. And therefore, because we're deploying less capital, the growth rate drops, on the top side, from 7% to 6%.

But the fundamentals of our business remain strong. Who knows what happens outside the three-year period. And recall, the CapEx associated with ash and with 316B and a variety of those issues are really out of this three-year period. So the presumption that you're making is they're in the next three-year period. We'll see. We only comment on the three-year period we see ahead.

Look, I think the fundamentals for our business are exceedingly strong. And I think the cards we have, while we all have challenges, I'm very bullish on our ability to deal with the challenges of the future and maintain this kind of growth rate. I think our track record speaks for itself.

It does. Thank you.

Thank you.

Thank you. Our next question is from the line of Kit Konolige with BGC. Please proceed with your question.

Good afternoon, guys.

Hello, Kit.

With regard to Southern Power, does your interest in other regions now have anything to do with a perception that there's a lower growth rate in the core region?

You know, not really. But I mean, it is a little slower. When you think about our focus is on either renewables, and that has been where the renewables are -- desert Southwest largely, a little bit in Texas. Otherwise, gas fired generation. When you look at, I think, some of the flaws of the deregulated markets, the so-called organized markets, they've not been able to build, within those market structures, long-term capacity commitments.

We think we have demonstrated success and a business model which permit those kinds of investments to occur. So we see some attractive markets available. Southern Power has brought some of those deals back to us, and we have said no, that we like where we are. The question we've been asking ourselves, over the past year or so, is why not? Why shouldn't we pursue those kinds of opportunities, so long as we can still meet the rigorous business model that we have in place? I think we can do that.

And can you give us a little more color on -- a little closer view of what types of projects you'd be looking at, what regions> I think you mentioned Texas and MISO.

Kit, it would be similar to what we've been doing. Southern Power's capacity is something like 95% gas-fired. So it's going to be combined cycles, maybe some CTs. And the other thing I would just add to you, when we think about the Southern Power strategy, this is not a significant contributor in the next year or two or three. Rather, our strategy here positions us well long term. Said another way, we're going to be able to hit the 4% to 6% growth even without Southern Power adding new projects in any other region.

Great. Thank you.

Yes, sir. Thank you.

Thank you. Our next question is from the line of Mark Barnett with Morningstar. Please proceed with your question.

Good afternoon, guys.

Hello, Mark. How are you?

I'm doing very well, thanks. Just a couple quick questions.

I know this is kind of a ball that's going to stay up in the air until it doesn't, but do you have any update on your expectations for those DOE loans for Vogtle? I mean, whether around timing or size? I know you can replace them pretty easily, but just some general thoughts there.

Yes, Mark. This is Art.

We continue to negotiate with DOE. We've extended those discussions officially through mid-year. We've had some recent positive movement in those discussions, and we still remain hopeful that we'll be able to come to an agreement. But at the end of the day, we're still looking, too, at the fact that we've been able to finance a lot of Georgia Power's needs at record level of interest rate. So we still have to make the judgment about what's in the best interest of our customer. So we continue to move in that direction, and hopefully, we can come to some agreement with them on the loans this year. But you'll be hearing more about that throughout the year.

Okay. And in terms of maybe a follow-up to some of the other questions about Southern Power. You mentioned that there's going to be some upside. It's obviously going to be beyond the three-year window. Does that mean that you're not currently participating in any RFPs, whether in the Southeast or outside?

Really, I don't want to comment on anything they're doing from a commercial standpoint.

Fair enough.

-- in terms of participating with RFPs and everything else. If you just look at the trajectory of net income in the package that we've given you, I would follow, if I were doing planning assumptions, I would follow that trajectory.

Okay. Thanks. Appreciate it, guys.

Thank you.

(Operator Instructions)

Our next question is from the line of Paul Patterson with Glenrock Associates. Please proceed with your question.

Good morning, guys.

Hello, Paul.

I apologize if I missed this, but I notice that your growth -- I was wondering whether that 0.6% sales growth for GDP was still the case with your 2013 sales growth forecast? And if it is, am I looking at it in that you guys assuming something between -- something basically at the top end of about 2.2%, and something more likely in the midpoint, under 2%, for your GDP assumption?

GDP growth assumption's around 2%.

Around 2%, yes.

And therefore, our sales growth assumption is around 1%, with a range around that.

Okay. So you guys are now using about a 50% -- the 0.6% number is basically what you guys are still using, is that basically the way to think about it? There's been no change in that?

Yes, yes, yes.

Okay.

And you know, you can argue with that formulation. You know us, we like to be a little conservative.

Okay. And then when we look at --

Paul, let me add one thing. It's just kind of interesting. We always try and get [Lanyat]. There's been great interest in net of energy efficiency, are we still seeing consumption growth. And in fact, we are. We've done more science on that work that we showed a lot of you all in October -- or I guess it was November, at the financial conference. And in fact, what we're seeing is, for the Southeast anyway, energy efficiency has almost no influence on the consumption of our customers. 88% or so of usage can be explained by either the income growth of our customers, the price of our product, and weather. If you account for those three things, you're speaking for virtually all of the usage growth.

Okay. So you're seeing very little impact from energy efficiency in your service charge rates so far?

We are seeing energy efficiency, make no mistake. It's just not reducing usage. You may want to think about it as producing, in essence, a dividend to disposable personal income; and therefore, people are having more money to spend on more stuff.

I got you. So what they don't -- so what they save with various appliances, they're re-spending on other electric consumption. Is that the way to think about it?

Yes, and just think about where the economy is going. We all have these goofy devices. We all have iPads and iPhones, and bigger plasma TVs and everything else. And when we see the progression of people moving from small homes to apartments into now primary housing, we see a growth in square footage per person, if you will. We also have seen, associated with a recovering economy, growth in personal income. All of these things contribute to usage growth.

Okay. Now, with the residential sales growth doesn't seem very strong in the fourth quarter, and I'm sorry if I missed this again -- why was it so strong in the fourth quarter? Was it because of the employment figures you were talking about? I wasn't clear on that, exactly. It was 5%, if that's right.

Paul, you recall in the third quarter call, we talked about a lot of that unbilled issue that we thought was going to rebound in the fourth quarter. And that is in fact, is what happened. If you look back at the third quarter for residential sales, it was like negative 2.1%. In the fourth quarter, it was positive, around 5%, I think.

A little over 5%.

So what you saw here is a rebound. Now, the percentages aren't alike. But they shouldn't be, because you're moving kilowatt hours out of a very heavy quarter of usage into a quarter of usage which is rather light. So the percentages are going to get skewed.

Okay. Just on annual basis, we don't have any of that. Is that all evened out for the year, pretty much?

Yes. I think you're more comfortable, or more safe, looking at the year-to-date number.

Okay. I think the rest of my questions have been answered. Thanks so much.

Thank you. Our next question is from the line of Jonathan Arnold with Deutsche Bank. Please proceed with your question.

I'm sorry, our next question will come from the line of Brian Chin with Citigroup. Please proceed with your question.

Hello, Brian.

Hello. Good afternoon.

More of a federal policy question. There's been a lot of media chatter, since the inauguration speech, about Obama's inclusion of climate change in that. And Tom, obviously you're pretty close with a number of the key opinion makers in Congress and on Capitol Hill. With regards to this thought that the executive branch could try to resuscitate carbon regulation or a carbon tax, any updated thoughts there that you could give us relative to what you told us at EPI?

Yes. So I think there's very little chance of anything like that getting through Congress. So you're right to look at will EPA be able to put something in place that will advance that cause. Right now, we know that EPA is evaluating, or has made a proposal on new sources.

Interestingly, you know that Southern's the only company still committed to robust proprietary research and development. We developed our own technology. The Kemper County plant actually meets and exceeds the proposed new standards for carbon, for new generation. So that's kind of interesting. We'll see how that goes.

There's lots of comments going in, and we'll wait eagerly to see what the final rule looks like. But it is pretty clear that if the final rule is anything like the proposed rule, conventional coal generation's just not doable. So they're really making an energy policy statement there.

One of the things that I have been pretty vocal about here lately, and that is this energy policy issue -- I've been very clear that energy policy is the purview of Congress. Congress has the portfolio, really as we do, in thinking broadly about the ramifications of such policy mechanisms. For example, we say we need clean, safe, reliable, affordable energy. EPA will tend to focus on clean, without taking into account, perhaps, all the other issues that are so important to balance for our customers' welfare.

I go back to the families we serve, 48% of which make $40,000 or less. Those folks make tough kitchen table economic decisions every day. Their demand for energy is relatively inelastic. And so anything the EPA does which adds cost to energy tends to slow down our economic recovery and causes them to make choices for things like housing, healthcare, food, and education. These are broad policy areas that are better handled in Congress, rather than a single regulatory agency. We will be enjoined in this discussion as it evolves in the months ahead.

Great. And any thoughts on carbon regulation for pre-existing plants being executed by EPA without Congressional --?

We'll see. Nothing to say at this point.

Understood. Thanks.

You bet. Thank you.

Thank you. Our next question is from the line of Michael Lapides with Goldman Sachs Asset Management. Please proceed with your question.

Hello, guys.

Hello, Michael.

Hello, Tom. Hello, Art. Two questions, unrelated to each other.

First question -- can you talk a little bit about Vogtle, just in terms of there was some testimony in the seventh monitoring report regarding potential delays, especially if the concrete pour didn't occur in the fourth quarter of 2012? Just kind of give a broad update in terms of just where you are versus the schedule and how the schedule may or may not move.

And then second, when you think about Southern Power, there are more infrastructure funds and various energy funds out there than there probably are projects. And you have what is a collection of very good assets that, many of which are contracted for very long time. Just curious if you've thought about monetizing that business in terms of, is that a business that's potentially better off in the hands of an entity that might capitalize it with significantly more leverage than a publicly traded utility company might use?

Yes. So Michael, let me hit that last one first. We've chatted about that for years. Wait a minute. We are EVA-driven here. In other words, we always look at what is the return on invested capital versus our cost of capital. And if we can beat our cost of capital, we create value for shareholders at every dollar we invest. So that's kind of how we think about Southern Power.

And from time to time, there do develop in the market opportunities to monetize those assets. We certainly consider that. And you remember, one time it got pretty high. My caution to you there would be that we remain customer-focused. And many of our customers are co-ops and munis who have entrusted us with full requirements obligations for long periods of time. We want to honor the relationship we have with those customers. That's why we get the business. And so we're not going to just transact to get the next dollar. We want to be very careful to take a long-term view on developing the customer base and growing as much value in a sensible way as possible.

With respect to Vogtle, we've talked a lot about that in the past. And I'm going to point you to the VCM-7 testimony that you obviously are very aware of. And there was a lot of discussion back and forth about that. And recall that we were reluctant to weigh in, in a very specific way, in the VCM-7 discussion. It was clear that our contractors were operating on a mid-17, mid-18 schedule.

There was a schedule that our contractors were following. We had not agreed to that schedule. Recall that the commercial dispute we have with our contractors deals with delays that came from the licensing from the DCD to the COL and how that may manifest itself in the project. What I would do, I think most constructively here, is point you to our filing in VCM-8, which will be at the end of February, in which we will provide more clarity about our point of view on schedule.

Got it. Okay. Thank you very much, Tom -- much appreciated, guys.

You bet. Thank you.

Thank you. Our next question is from the line of Jonathan Arnold with Deutsche Bank. Please proceed with your question.

Hello. Good afternoon, guys.

Hello, Jonathan.

Sorry about before. I cut myself off.

Tom, one question I have just on the growth story is, you described 2013 as being a weak first half and then something of a rebound in the second half and then it nets out to 1%. So what kind of sales growth are you embedding in your 4% to 6% earnings growth assumption beyond '13? And how do the segment pieces look versus what you've shown us on '13, which I guess is a bit weighted to industrial and less residential.

The longer term -- I guess the longer -- the question we'll go to, Jonathan -- make sure I'm answering this right, is a longer term GDP expectation. And we think that our electricity sales will migrate upwards into, say, a 1.4%, 1.5% kind of range for years beyond this year. Is that helpful?

So that's what underpins your 4% to 6%? Or if we see that, could it nudge you back up again, or is that --?

Yes, yes, exactly. So let's just -- I'm sorry, go ahead.

Just to be clear. The 4% to 6% is predicated on 1%, or more like 1.5%, or am I getting too cute with the numbers?

You're a little cute. But it's 1% this year, and beyond this year 1.4% going forward. But the bigger indicator, I think, is watch CapEx. If you look at rate base growth, based on the CapEx we're showing, roughly $5.5 billion a year, augmented by whatever Southern Power does opportunistically, I feel very confident in our 4% to 6% range.

Okay. That's helpful. Thank you, Tom.

And then, can I also ask on Vogtle? And there's been these press reports about the vessel being stranded in the port and issues with the railcar. Can you give us your version of what's going on with that story -- how big an issue is it? Is it not an issue?

Yes. I hope I don't offend anybody. I think it's been over-reported a bit. The vessel never really left the car. We turned the car back up. We put it back in the port. And they're managing it. It provides interesting pictures, but I don't think it's particularly important. We'll be able to manage that little bump in the road, excuse the pun, and we'll continue with our progress in an outstanding way.

So, not something that will influence you one way or the other, really?

No, sir.

Okay. Thank you.

You bet.

Thank you. Our next question is from the line of Anthony Crowdell with Jefferies. Please proceed with your question.

Question on Kemper. In the press, some of the utility press had a story on Monday about the Supreme Court in Mississippi was questioning the constitutionality of the settlement you entered into last Thursday. Can you provide any color on that?

Yes, Anthony, this is Art.

There are a couple issues at the Supreme Court, one being the Sierra Club's appeal. There is another issue that is brought by an individual out of Hattiesburg that is challenging the constitutionality of the Base Load Act, basically that would provide for cash CWIP before the plan was operational.

And then he third one was this issue of actually the Company -- it was really muted by the Company and the Commission agreeing to the settlement agreement. And in front of the Supreme Court, those folks had basically put that issue in abeyance. Our expectation is, ultimately, that piece will be dismissed.

So of the three pieces, one has kind of been muted by the settlement agreement. We think it will be dismissed in the future. The second is an individual from Hattiesburg. On the other side is the Attorney General of Mississippi. And then the third is just Sierra Club appealing the second amended certificate, which we think is fine.

Is there a time frame when the Supreme Court has to act on this, or they actually don't have a window of when they have to give a decision on it?

No time frame that we know of.

Great. That's all, guys. Thank you very much.

You bet.

Thank you. Our next question is from the line of Andrew Weisel with Macquarie Capital. Please proceed with your question.

Hello. It's actually Angie Storozynski.

Most of my questions have been asked and answered, but I have a question regarding the O&M reduction in the fourth quarter. Could you tell us how much of that was associated with the Hurricane Sandy?

Yes, Angie, there was a number of things that influenced the fourth quarter, and one of those was -- you hit it right on the head -- was our sending, I can't remember the number --

2,400.

-- people up north for -- some were there for up to two weeks. So that helped offset some O&M that we expected to be spent in our service territory.

That was about $0.01. Little under $0.01, but you round up to $0.01.

Some other issues were, bad debt expense was way down. It was not only down in the fourth quarter, but it was actually down throughout the year, compared year-over-year. That provided basically another $0.01 of benefit.

And that was lower bills. So you had the benefit of lower fuel expense. You had mild weather. You had personal income growth associated with the economy. So as, essentially, disposable income went up, bad debt expense went down.

Yes. And then there were a variety of small accounting adjustments that might add to $0.005, maybe a little more. I won't go into that detail. But we also had lower O&M than expected. We kind of back-ended our activities on O&M through the third and fourth quarter, and so that's why you saw more of it in the fourth. But the facts are that because we ran so much gas generation last year, we were able to push a lot of maintenance outages that may have been scheduled on some of our coal units, because they just weren't needed as much and we had some room to work there.

In fact -- what was it? Our Eastern coal unit had a capacity factor in the high 20s. So they just weren't stressed very much. The other thing is, along with Smart Grid, along with our Smart Meters, along with a variety of other initiatives that we have in place, the system is just operating more efficiently. We make systematic improvements in our business practices. We create optionality in our expenses. And I think our 26,000 employees did a great job.

Okay. Secondly, the share buyback in the fourth quarter -- I might have missed that in previous quarters. Have you done that before?

Well, we were trying to target our -- match our equity with what was going on in our construction program. And we target approximately a 44% equity ratio. So in order to get there, we had talked about -- I guess two quarters ago, two calls ago -- about buying back some of that equity that was being issued, to keep us at a certain target. We ended up the year at a 43.7% equity ratio, which is right where we like to see it. So we're right on target with where we expect it.

And at the same time, we also funded a pension. Of how much?

That's true. We put $445 million into our pension this year, at the end of 2012. Our PBO funding ratio was at 90% for the pension liability. And it's 84% when you throw in the non-qualified liabilities.

So we're in great shape there.

So we're in great shape, from that perspective.

So we really took advantage of good performance. Go ahead. I'm sorry.

My last question is the load growth assumptions. I heard your views on energy efficiency. Now, when you look at the EIA, the Department of Energy's expectations of load growth, even they expect about 1%, or even slightly below 1%. So your 1.4% assumption -- is that a function of migration into the Southeast?

EIA does not account for weather. When you account for weather -- in fact, if EIA dials down their national projections for the Southeast and then you account for weather, they are right on where we are. That's the difference.

I think it's also to point out that nationally, there's a lot of talk about weather being hotter than normal last year. Actually, in the Southeast it was very mild. So that's something that's influencing their numbers, as well.

That's the point. So when you look at a hot weather year, and then you go to a normal weather year, the assumption would be, from EIA, that growth is low. Well, but when we do it, when we strip all the stuff out, and we can get very granular, I really believe our numbers.

I was actually referring to longer-term numbers, but that's fine. Thank you very much.

Yes, that's the same thing. Okay. Thank you.

Thank you. Our next question is from the line of Ashar Khan with Visium. Please proceed with your question.

Hello. Good afternoon.

Hello, Ashar.

Tom, can I just ask you -- I might have missed it, I apologize -- Southern Power's profile of earnings starting from what you reported '12 going forward -- what is incorporated in the three-year outlook or in the growth rate? I apologize. Might be repeating a question.

I don't think we really specifically said anything about that. We're kind of -- we were 175 this year. We're kind of looking at 190 -- 175, 190. We're looking at some projected growth every year out of those guys. We generally don't comment on anything beyond the current year for them. But you should expect some continued growth trajectory.

Okay. So you're saying this year between 175 and 190?

Yes, we're going to hold them accountable in their pay for improving on their performance in 2012.

Okay. I was just trying to think, you're putting in nearly 15% of your CapEx dollars into the subs, so there has to be some return coming from that CapEx dollars.

It depends on what the projects are. So if you do solar projects, which typically are much more near-term oriented in terms of their cash flow as a result of tax benefits, you tend to get more of a near-term pop. If you're dealing with gas combined cycle, those tend to have a longer construction period and longer-term profiles. So it just depends on what kind of projects they do.

Yes. But let me ask you, wouldn't you be more inclined to -- even my home utility over here in New York has gone into solar. Isn't solar and near term getting that more -- something more on your wish list versus building or getting -- acquiring a gas plant?

You know what? We really like long-term results. We are always cautious, as a matter of corporate dogma, not to invest in tax-advantaged investments as a primary strategy. Because that tends to be addictive behavior. In order to provide a long-term growth trajectory, you have near-term costs and you've got to double it for the next year and double it for the next year and double it for the next year. And then you'll find yourself some year, because of storm activity or a variety of other things, in carry-forward positions. And therefore, your tax benefits aren't worth what you thought they might be. I don't like, particularly, tax-advantaged investing as a long-term, good corporate growth strategy.

The other thing is, they could disappear with the hands of Congress at any time, right? We know that we're in a revenue-hungry Congress, and how long can Congress afford to hand out preferential treatment to the renewables industry? So there will be some tax-advantaged investing, in the form of solar investments. I get that. But we really like building long-term books of business that we've done successfully in the past.

Okay. Okay. And then can you just, Tom, I guess there was this corporation that you guys did with Turner, right? Where does that stand in this whole scheme of things?

Turner's been a great partner with us in co-investing. I guess, what is the ratio? 90 to 10? So we invest 90%, they invest 10%. And they're great guys.

So how much investment has gone into that joint venture, can I ask?

We don't disclose that.

Okay. Okay.

It's not much, from their side. I mean, what we do disclose --

I understand.

-- of the projects we've done, so --

Okay. I appreciate it. Thank you.

Thank you.

So, do we want to take one last question? One last question.

Thank you. Our next question will come from the line of Dan Jenkins with State of Wisconsin Investment Board. Please proceed.

Hello, Dan.

Hello. How are you?

Excellent. Hope you're well.

Yes. Good. Except for the snow that's falling up here.

I was wondering, when we think about O&M, you talked a little about what's going on, but you've also announced a number of plant retirements, particularly small coal plants and so forth. And how should we think about that affecting O&M? Will that just be replaced with some other costs? Or will those costs go away, related to those plants?

Well, they're factored into our plan. They'll disappear as we move through time. But those units are probably have capacity factors that are well below the number Tom mentioned a moment ago. So their O&M levels and operation levels aren't very high, to begin with. So they'll be factored into our plan, or reflected in our earnings growth rate.

Okay. And then I was curious -- in your last quarter, you included a couple slides that showed some upcoming construction for both Vogtle and Ratcliffe. And I just wondered if you could give us an update. Are those still the key items that we should be thinking about in the first half of '13, or are there any revisions to those slides?

Dan, Tom already mentioned, I think, in some of his remarks, we'll begin to finish up the rebar under these preliminary amendment requests that we have been given by the -- approved by the NRC. We plan to pour first nuclear concrete sometime in March. And after that, we can set the cradle which will hold the bottom head, and those are expected to be done in the second quarter of the year. So that will move things within the nuclear island on along a good bit. So that's kind of where we expect to go with -- at least this version of milestones.

And when -- given that you had the shipping problem with the vessel, when is that -- is that on site yet, or when will that be on site?

I would expect it's going to be on site within the next few weeks. Sometime within the quarter.

When is it critical that it be there, just so we can monitor that?

It's not critical at all. It's way down the list.

Okay. How about with Ratcliffe? You had a number of items that you listed there.

Well, you know, I think the pictures that we showed you on some of the slides do more justice than any of the specific descriptions, because you can see just by the pictures alone, year-over-year, that plant has come a long, long way. We've got specific work on the gasifiers going on. That's going to be completed sometime within the next quarter. And that is a critical piece of it. We still have piping that is being installed, as well. So those are kind of the critical elements, at this point.

Okay. That's all I had. Thank you.

Thank you, Dan.

Thank you. And at this time, there are no further questions, sir. Are there any closing remarks?

Yes. Thanks very much, Operator.

I just want to thank everybody on the phone, and I appreciate everybody's economy in their questions. We love to engage you in a very transparent way. We hope we've done that on this call. Certainly if there's any follow-up, Dan Tucker, Art, myself, Jimmy Stuart, others, are glad to engage you on any issues you want to follow up on.

Thank you for following our Company. We'll do our best to earn your trust in the months ahead. Thanks very much.

Thank you, sir. Ladies and gentlemen, this does conclude the Southern Company fourth quarter 2012 earnings call. You may now disconnect.