Well, good morning, everyone. I'm always amazed at what our creative folks can put together. It's such a wonderful presentation of our new technology and everything else. I love this theme. We've used a variety of people to help us think through how to present messages. Frank Luntz is a pretty famous pollster and whatever. His statement is that the word imagine is the most powerful word in the English language that evokes positive thoughts. It's so important right now in a day where we officially now, I've kind of done a lot of soft openings, but officially now roll out the idea of an aspiration, a commitment to a low to no carbon future. Imagine what it's going to take to get there. There is no company, and I'll go through this a little bit here.
There is no company that is positioned not only for what we've done, but what we will do. Inventing the future, investing in the real solutions that'll get us there. Very proud to be with you all today. Hey, one thing. Next Monday is Memorial Day, and I'm so proud to associate with our shareholders our commitment to veterans. If the veterans in the audience would please stand, let's give them a hand. There we go. Look at this. You all are American heroes, and we appreciate your service deeply. Thank you. Okay. Let's go ahead and get going here. I'm Tom Fanning. I'm Chairman, President, and CEO of The Southern Company, and welcome to our 2018 shareholders meeting. Before we get started, I'd like to call on Chris Womack. Chris, where are you?
Here.
That will give us our safety briefing.
Good morning. If there's an emergency, we'll dial 911 either from your cellphone or from the house phone. We have emergency medical technicians outside the double doors behind us, as well as fire extinguishers. If we have to exit this place, we'll go out the double doors and onto the patio. Hopefully it won't be raining, but that's what we'll exit to. If there's a tornado, we'll go out these double doors, down the hall to the right, and on the second right, we'll go to the Loblolly Conference Room. That's your safety briefing for this AGM meeting. Back to you, Tom.
If it's raining or a tornado, we will hold Chris personally responsible. Thank you, Chris. Great stuff. There's so much excitement going on today. In fact, we had an announcement at 7:30 today. I'll cover that again in a meeting. There's so much going on. When I get to the business portion of the meeting, I'll go through some remarks. That's exciting. One other thing I just want to start the meeting off with. Art Beattie, where are you? Art, stand up my man. Art Beattie is the current Chief Financial Officer of Southern Company, and he has been a friend of mine, gosh, what, since like 1980 or so. I think that's a typo, actually. He's been with us 42 years, and he certainly is deserving of time off.
We've been through some pretty rough seas together. Art has always been a steady guy at the helm. He's as credible as anybody I've ever met. He's calm, steady, conservative. He's the guy that really has his hand on the wheel and steers this great ship through all these waters. Art, thank you so much for your partnership. Thank you for your contribution. Thank you, sir. Now let me turn to the business of the annual meeting. Please be aware that this meeting will be conducted as set forth in the agenda and order of business in accordance with the rules and procedures made available to each of you at your seats. Our meeting, as I said before, is Imagine. We are challenged to imagine the future of energy, even as our industry landscape is changing.
As I said, at Southern Company, we're not just adapting to change. We are driving change and leading the way with a huge commitment to develop this nation's energy future. We invite you to imagine with us a future ripe with possibility as we explore some of the ways in which the talent and resources of this company are being shaped and leveraged to make a better world. Of course, as with every year, we will discuss our efforts and achievements in 2017 and provide you an update for 2018. First, however, I would like to recognize the members of our management team who really go shoulder to shoulder and drive this change with us here today. Will the officers of Southern Company and the officers of our subsidiary companies please stand and let our stockholders recognize you? Best team in the world. Thank you, folks.
The order of the meeting will be as follows. First, we will conduct the formal business portion of the meeting in which we will vote on certain issues. I will provide the business overview that I mentioned just a second ago. We will conclude with my favorite part, the question and answer period. This year, we are webcasting for the first time this meeting on the internet. You'll be able to get a replay of this meeting on our website tomorrow. However, right now, we respectfully request that no cameras, sound, or video recording equipment be used during the meeting. We will now move to the formal business portion of our meeting. Deloitte & Touche has been appointed by the Audit Committee as the company's independent registered public accounting firm for 2018. John Black and Adam Greenfield of Deloitte & Touche are present here today.
Mr. Black, Mr. Greenfield, please stand, and if you'd like to make a statement, you may take this opportunity to do so. Thank you, John. Appreciate it. Thanks for your work. For many years, as with this year, the board has appointed IVS Associates to serve as our independent inspector of election for the annual meeting. Creighton Dunlap is present on behalf of IVS Associates and is acting as inspector for this meeting. Mr. Dunlap, please stand. Mr. Dunlap, where are you? There you are. Fantastic. Thank you, sir. Appreciate your help. All right. Myra Vieira, corporate secretary of the company, has confirmed that shares representing over 87% of the issued and outstanding common stock are represented in person or by proxy at this meeting. We have a quorum necessary to conduct our business.
There are four items that were included in the proxy statement to be voted on today. The first item for vote is the election of 15 directors. I will now present those individuals who have been nominated to serve as a director. Folks, as I call your name, please stand, face the audience, and remain standing until everyone has been introduced. First, Juanita Baranco, Executive Vice President, Chief Operating Officer of Baranco Automotive Group. Jon A. Boscia, Retired President of Boardroom Advisors LLC, and the Retired President of Sun Life Financial. Hal Clark, Retired Senior Advisor of Evercore. David Grain, Founder, Chief Executive Officer, and Managing Director of Grain Management. Ronnie Hage, Retired President and Chief Executive Officer of the Polymer Group. Linda Hudson, Founder, Chairman, and Chief Executive Officer of the Cardea Group, and Retired President and Chief Executive Officer of BAE Systems.
Don James, Retired Chairman of the Board and Chief Executive Officer of Vulcan Materials. Johnny Johns, Chairman and Chief Executive Officer of Protective Life Corporation. Dr. Dale Klein, Associate Vice Chancellor of Research of the University of Texas System and former Chairman of the United States Nuclear Regulatory Commission. Dr. Ernie Moniz, Cecil and Ida Green Professor of Physics and Engineering Systems, Emeritus Special Advisor to the MIT president, and former United States Secretary of Energy. Bill Smith, Chairman of the Board, President, and Chief Executive Officer of Capital City Bank Group. Dr. Steven Specker, assuming his re-election, our incoming Lead Independent Director, Chief Executive Officer of TAE Technologies Inc., and the Retired President and Chief Executive Officer of the Electric Power Research Institute. Larry Thompson, our outgoing Lead Independent Director, counsel to Finch McCranie LLP, and the Retired Executive Vice President, General Counsel, and Corporate Secretary to PepsiCo.
Jenner Wood, Retired Corporate Executive Vice President, Wholesale Banking of SunTrust Banks. These individuals and I have been nominated for election to the board of directors. Please give them a round of applause, and we'll let them sit down. Thank you, folks. The second item for vote is an advisory vote on executive officer compensation, often called a say on pay vote. The third item for vote is the appointment of Deloitte & Touche LLP as our independent publicly registered accounting firm for 2018. The fourth item for vote is a stockholder proposal to amend our proxy access bylaw. Questions during this portion of the meeting are limited to the four items up for vote at this annual meeting. We will first ask for questions on the company's proposals, then we will address the stockholder proposal.
Are there any questions on the company's proposals, items one through three in the proxy statement? Okay, thank you very much. We will now address the stockholder proposal, item four in the proxy statement. We've been advised that Michael Pate will present the stockholder proposal on behalf of John Chevedden. Mike, are you here? There you go. Thank you.
Hold the floor. Enhance shareholder proxy access.
Can we get his mic up, please? There we go. Go ahead, sir.
Enhance shareholders proxy access, sponsored by John Chevedden of Redondo Beach, California. Stockholders ask the board of directors to amend the proxy access bylaw provisions in any associated documents to include below the two changes. The purpose is to decrease the average amount of company common stock the average member of the nominating group would be required to own for three years to equal the total stock ownership requirements to form a nomination group. It is also to increase the possible number of proxy access director candidates. The first change is no limit shall be placed on the number of stockholders who can combine their shares to equal the 3% of common stock required to nominate directors under the company proxy access provisions. The second change, the number of shareholder-nominated candidates eligible to appear on the company ballot will be 25% of the director positions.
Even if the 20 largest public pension funds were able to combine their stock ownership, they would not meet the current 3% stock ownership required for a continuous three-year at most companies, according to the Council of Institutional Investors. The proposal addresses the situation that the company now has with proxy access, ironically, for only the largest shareholders who can be the most unlikely shareholders to use it. For 20 shareholders to make use of the current proxy access, the average stock ownership for such a group of 20 Southern Company shareholders would be $75 million each. Plus, it might take an average current stock ownership of $150 million each, when any stock held for less than three continuous years is subtracted. Please vote yes, enhanced shareholders proxy access Proposal four.
Sarah, thank you for coming and thank you for presenting that proposal. We appreciate that. Okay. Excuse me. The board statement in opposition to this proposal is on pages 93 and 94 of the proxy statement. Are there any other questions on this stockholder proposal, which is Item four in the proxy statement? Thank you. The polls are now open, and we will proceed with the balloting. If you've already voted, there's nothing else you need to do at this time. If you have not voted, or if you want to change your vote, please raise your hand and a representative will provide you with a ballot. We got a hand here, a hand here, a couple over there, one over here. There we go. One right here.
When your ballot has been marked and signed, after you get done, raise your hand and the ballot will be collected. Let's give everyone a minute. Everybody good? Has everybody collected the ballots? Have all the ballots been collected? Still have one here. There we go. Thank you, sir. Over here, we're good? Have all the ballots been collected? Okay, still have that. Got it. Everybody else good? Looking around. Nope, not yet. All right. All right. Is that good? Everybody good then? Thank you. All right. The polls are now closed. I have a preliminary voting report based on the votes received prior to the commencement of this meeting. Item one, all 15 nominees for director have been reelected with each director having received at least 96% of the votes in favor.
Item two, say on pay vote has been approved, receiving 95% of the votes in favor. Item three, the appointment of Deloitte & Touche as the company's independent registered public accounting firm for 2018 has been ratified, receiving 98% of the votes in favor. John, you did it again. Item four, the stockholder proposal to amend our proxy access bylaws has not been approved, receiving 20% of the votes in favor. The shares represented by ballots collected during this meeting will be included in the final voting report, which will be filed with the SEC in the next few days. This ends the formal business portion of the meeting. I'd like to offer some comments on the state of our company, and then we'll have a question and answer period. First, I would like to declare that the formal portion of our 2018 annual stockholders meeting is hereby adjourned.
This is one of the great overheads ever. Oops, let me go back. There we go. Many of you have been here before. I'm looking around the room. Sam, you could probably recite that from memory, I bet. "Let me caution you," is what this says, "that I will be making forward-looking statements today in addition to talking about historical information. There are important factors that could cause our actual results to differ materially." From the forward-looking statements, including those factors discussed in our Form 10-K and other SEC filings. Okay? Let's move to the business update. The foundation of the investment in Southern Company stock really is focused on the dividend. Once again, the board has seen fit to approve an $0.08 increase in our dividends per share.
You see, we picked that up last year, really with the closing, ultimately, of the AGL Resources, now Southern Company Gas acquisition. We're increasing the pace of growth of our dividends per share. I'm so proud to say that really since 1948, which is really the origins of Southern Company as a holding company, we have either increased or kept constant. We've never cut the dividend here. That matters so much to your return. Over the last 20 years, about 70% of your return is tied up with the dividend. As you can see, this is so important for us to keep this momentum. You can see, in the last 20 years, this company has been a terrific investment. Really, that's the kind of people we like.
We always talk about our return as risk-adjusted returns. I always love to talk about the low risk profile. This first chart is the notion of risk. That is that Southern Company, among the 500 companies in the S&P 500, has, again, the fourth lowest beta. It's a measure of volatility in the market. If your beta is equal to 1, that means you have the same risk as if you owned every stock in the S&P 500. Southern Company, even with building a nuclear plant and everything else going on, has the fourth lowest beta in the S&P 500. That means while you can't guarantee anything into the future, you can rest assured that this company is on a conservative posture. We run our business that way, and we have our business mix built that way.
Certainly, risk and return, you can see we're very interest rate sensitive. Our dividend yield is around 5%. As interest rates move up, our stock price kind of moves down. That kind of speaks to some of our return. You can see, going back, dividends actually matter more than prices. We'll keep that going over time. Okay? Let's think about where we're headed. We have lots of exciting things to talk about. I want to first hit a issue that I think has been with us for a long time. When you consider Southern Company as an investor, one of the things you're investing in is the economy of the Southeast.
You can see, this is regular and sustainable, I think, based on this economy compared to the other economies in the U.S., the Southeast is a darn good place to do business. We typically outperform national averages regularly. Just in 2017, Southern Company's territory, we're on a brisk recovery, I think the new tax law that was passed is breathing more oxygen into that recovery. For the year, 9 of our top 10 industrial segments showed year-over-year improvement. That's really good stuff. If you think about Georgia, particularly the Atlanta area, we continue to have the kind of demographics necessary to continue to grow this business. Overall, we've been in a pretty historic recovery since the recession that we had that was so damaging to so many people. I think we have the basis to continue to grow.
There's a whole lot of other factors we have to watch, including policy decisions and event risk, a variety of other things. But I think the Southeast, the place that we are serving for the most part with our integrated regulated businesses, even Illinois and Virginia and other places with Southern Company Gas, we're in good spots. I think the fundamentals of our business are in really good shape. I'm going to talk about this one a minute, but let me hit you with even some new news that I don't even have a slide for. Just happened this morning. We announced that we sold, we closed on the sale of some solar assets. I think I mentioned this last year that we were thinking about it.
We took one-third of our solar assets and sold those to investors that will be part of our ownership mix. We're one of the biggest investors in solar. In some years, we've been the biggest in the U.S. In any way, I think we're one of the top 3 in the U.S. investing in solar, you know that solar has been a fundamental of mine. I've always liked that as the most favorable renewable for the Southeast. Wind will matter and other things will matter, but I've always been a solar advocate. Anyway, we sold a one-third interest in that, we will get $1.175 billion as a result of that transaction. Good stuff. It's also marginally accretive to earnings per share, so it'll help our earnings as well. Good stuff.
Let me turn to the other big announcement that we made Monday, we've been working on this for a long time. Let me first say, this was a transaction. It's actually 3 transactions, Gulf Power, Florida City Gas, and two generating plants owned by Southern Power. We call them Oleander and Plant Stanton. It was very rigorously debated at the board. I got to tell you I used to be, at one time in my career, CEO of Gulf Power. A predecessor of mine, Ed Addison, was CEO of Gulf Power. Paul Bowers, where are you? Grew up at Gulf Power. Mark Crosswhite, where are you? CEO of Gulf Power. We have so many people that have a major part of their careers, part of their corporate DNA, if you will, tied up with that company.
That company is one of the finest companies in our system, moreover, one of the finest companies in the electric utility industry. What I can tell you about that deal is we were approached by NextEra really starting about mid-December. Me and their CEO, Jim Robo, and then a host of people, worked over the forthcoming months to execute a transaction that I think really helps us. One of the things I want you to know, especially when you consider the whole package, it was a terrific deal. I just want to speak about Gulf Power quickly. The sale of Gulf Power at the price we got was the highest valuation accorded an electric utility in the history of the industry, as far as we can tell. Citigroup advisors helped us on this transaction.
It was the most valuable transaction in the history of the utility industry, That's a testament to the thousands of people, A, that got that company to where it is, and B, that looks forward to where it may be. When you think about buying a company or buying an asset or something, it requires a premium. I would say market, a lot of times, has been at least 15%-20%. NextEra is buying Gulf Power for nearly 100% premium. In fact, the collection of Gulf Power, Florida City Gas, and these plants, Oleander and Stanton, extraordinarily valuable to us. It increases earnings per share. It also improves our balance sheet, We're actually increasing the target of our debt targets so that we are having more financial flexibility than we've had in many, many years. Such a good deal for us.
Really, I guess, this is the third deal. If we go solar first in the Florida City, Gulf Power, Stanton, Oleander second. Southern Company Gas. We completed that deal. We closed it in 2016. 2017 was the first full year of operation as part of the family. Drew Evans, where are you? Right there. Drew runs a terrific business at Southern Company Gas. We added to that the SONAT, the Southern Natural Gas resources deal, the pipeline that we bought 50% interest from Rich Kinder at Kinder Morgan. Son of a gun, that business has done beautifully. In fact, when we bought it's actually produced probably 30%-40% more earnings than we thought. It has really contributed well, and it is faithful to our investment thesis of low risk, safe, predictable, sustainable earning streams.
In fact, most of the earnings growth coming out of Southern Company Gas now is related to pipeline replacement programs that are really set in place by rate riders in each of our major jurisdictions that are related to improving the safety of our infrastructure. You know, that's kind of a theme in America today. That's exactly what we're doing at Southern Company Gas. It's been a great business for us. Vogtle 3 and 4, I know you folks are all interested in that. Am I. Good heavens, I spend a ton of time with the team looking at making sure that this project is being navigated successfully. Really, the last meeting we had, we were still in the throes of deciding whether to go forward with this project or not, ultimately needing approval by the Georgia Public Service Commission.
Son of a gun, I got to tell you, when you think about carrying forward that decision, another company decided not to go forward. We are going forward. It took a lot of heavy lifting. When you look at the things up here, I just want to call some things out. First of all, Westinghouse went bankrupt. Westinghouse, 100% owned by a company named Toshiba out of Japan. As part of the contractual obligation, Toshiba, which was in financial duress itself, owed us $3.7 billion. I can tell you when that happened, a lot of people said to me, "Good luck getting the money." Son of a gun. A lot of people today are losing faith in the institutions in government and the people that are running them. I can tell you the United States government helped us an enormous amount.
I would call out specifically people like Energy Secretary Rick Perry, people like Commerce Secretary Wilbur Ross, Vice President Mike Pence. We worked together with the Japanese government and Toshiba, we got 100% recovery, cash in our pockets on $3.7 billion. That was an awfully big deal. We would not have gone forward without that help. Secondly, Steve Kuczynski, where are you, Steve? Right there. CEO of our nuclear business. We had to take Westinghouse out of the prime contractor role to complete the plant. Steve led the effort to put new people in place, now we, Southern Nuclear, the company that Steve runs, is the primary contractor, and our primary subcontractor is Bechtel. A world-class nuclear construction company. I regularly talk now, probably every two to three weeks, I have a conversation with Brendan Bechtel himself.
We have the highest level of attention on the site. It was a major move to get Bechtel in and have us step in. We still have an interest in making sure that Westinghouse survives well and goes forward. We still need their rights to the intellectual property for the AP1000 technology, which I believe today is the best nuclear technology on the planet. It was a big deal to get that second step done. Third, we had nuclear production tax credits. Okay. A little wonky here. In the tax code, at the time these things were put in place, in the tax code, they were put in as a tax preference item as an incentive for companies to go do new nuclear. There was a sunset date on those tax credits.
With the bankruptcy, with the schedule changes and everything else, we had to work in Congress to essentially now eliminate that sunset date. I can tell you, Congress did a heck of a job. When I think about the House, I think about folks like Kevin McCarthy, Kevin Brady. In the Senate, Johnny Isakson, senator from Georgia, did just a terrific job marshaling the resources and support of the Senate. Mitch McConnell, under his leadership, we got that done. That was worth $1 billion to us. That was a big deal. Finally, again, in DOE, the Secretary of Energy, Rick Perry, and the team that he has in place helped us extend a program, frankly, Ernie, that was started when Ernie Moniz was Energy Secretary, until we got additional loan guarantees.
When you think about the $3.7 billion in the new contracts and the $1 billion of production tax credits and the extension of loan guarantees, every penny of that benefit goes to customers to keep prices low. What I can tell you today is that we are still able to deliver that plant at a rate increase less than the rate increase that was projected when that plant was approved by the Georgia Public Service Commission many years ago. We still had to get the approval to go forward. What the Georgia Public Service Commission ultimately decided this year was that the new cost, new schedule, was reasonable. That was a big deal. Second, this, again, sounds a little geeky, decoupling of units 3 and 4. In the old rate setting, we would only get in service when both units were completed.
Decoupling means that we can declare unit 3 in service when it's completed. We're projecting right now that that is November 2021. Separately, we can declare unit 4 in service when it goes in. That would be November 2022. That was an important management and cost objective for us, we got that done. In order to get that done, we had to accept some lower returns during the construction period. That's what we gave up in order to get that deal done. The Georgia Public Service Commission showed tremendous leadership. I can tell you that the current estimates, we're on track for successful completion. In order to be successful, we need a boatload of support by so many people. Where's Brent Booker? Brent, where are you? You're around here. Stand up, man. Come on.
Brent Booker is an American hero, the secretary treasurer of North America's Building Trades. Sean McGarvey is the number 2 guy, essentially, of that. Brent is on site all the time. His leadership and significant engagement in marshaling the resources of so many thousands of people that are going to be necessary, skilled labor to get that nuclear plant complete and create a national security imperative for America to stay involved in nuclear development. We really need the cooperation of your team, you guys have been champions. Brent, thank you very much. Please give him a hand. I mentioned that national security imperative. It is an imperative for the U.S. to remain engaged in new nuclear development. This is something that actually I spend a decent amount of time on.
You must know that there are people in the world that don't like us. You must also know that the sanctity of our electricity system in America is paramount to our national security. If somebody was ever able to interrupt the sustained delivery of electricity in large parts of the U.S., that would be a bad day in America. I lead an organization, there's actually 16 of them under Homeland Security that essentially create, they're thought of as segments of American commerce. I help lead the electricity segment. What's interesting is in that segment, we include not only investor-owned utilities, but also municipal and cooperative utilities. That's the Electricity Subsector Coordinating Council. We have been called out by a group that reports to the president, has for decades, it's called NIAC. Boy, you get in the Federal government, you get these acronyms, man, it's unbelievable.
National Infrastructure Advisory Council. NIAC has called out the Electricity Subsector Coordinating Council, the electricity arm that is responsible for assuring the long-term sanctity of the electricity network as, along with finance, the best developed, best organized, most effective responses in this very important national security effort. What I've been doing lately, in the past year or so, is acting on a further recommendation by NIAC, and that is to say that among the 16 different segments of commerce, three of them are designated as what they call lifeline sectors. That would be finance, electricity, and telecom. What we're doing right now is pulling together another wonderful acronym, probably has a terrible name called SICC. Now that I think about it. But it's not S-I-C-K, it's S-I-C-C, Strategic Infrastructure Coordinating Council.
SICC is the union of finance, electricity, and telecom, and what we have done together, and we have a meeting in the White House coming up, I think it's in July. We have created a joint threat matrix where the three industries together evaluate, if you will imagine on the kind of vertical axis, the magnitudes of threats, and on the X-axis, the likelihood of those threats. That's a big deal because once you array all the threats on that kind of axis, then what you're able to do is rationally allocate resources, time, attention, money. We're working together as we never have before to jointly defend, better prepare for, and ultimately, if that day ever comes, respond to an existential threat. Big deal. The second thing that we have done now is created a wish list.
How can we better interface with the White House, the administration, and Congress? It's not just the federal government and all the three-letter agencies that you can imagine, FBI, CIA, DIA, DOD, et cetera. 87% of the critical infrastructure is owned by private industry. We're working together. Let's not forget about state and local governments. We're intervening now with the states, and we're also working to create a rational international policy. This is a big deal, and I want you to know it's very important work that we do. One of the other things that's very interesting at the ESCC is not just national security work for cyber and physical threats. We have also assumed responsibility for helping to coordinate across the United States responses to natural disasters.
What I've got up here is some facts around Hurricane Irma, but we really started this with Hurricane Harvey, that big storm that sat over Houston and produced enormous flooding. We started there. I can tell you, Alabama specifically, I remember one day we sent over I got a call, and what I'll do is lead an industry call that helps people coordinate. Everybody around the United States helps out. I remember I got a call one day that said, "Hey, look, we need more drones because we can't even get equipment in because of the flooding." I think within two hours, Patrick O'Neill doesn't get enough credit, and all our system air folks, but we got a whole lot of drones sent over and drone pilots, the people that actually do the little joystick. We sent them over within two hours. Alabama Power also delivered.
I was there Monday, at a facility. What was the name of the facility?
Varnen.
Varnen, where they have a state-of-the-art training facility. One of the things that were on display was amphibious equipment that we have that would go out into swampy areas or flooded areas to help restore. We sent that equipment over to Houston. Big efforts to do that. Irma is the one that really impacted us. It came up across the peninsula of Florida and really over Georgia. If you think about it, we had over 1 million customers that were impacted, 8,000 personnel from Southern Company. We had help from other places in the United States, were really involved in that restoration. Man, oh, man, think about it. We beat our target by two days. We restored power to those 1 million customers in five days. That is astounding. I got to tell you something else.
PowerSecure had customers all through the peninsula of Florida. You saw that a little bit on the video. That hospital, I think, was in Miami. PowerSecure's customers were reliable. They were up 98% of the time during that intense storm. PowerSecure is doing us great service. Puerto Rico. Holy smokes, we've heard about that. No company supported the Puerto Rico restoration effort more than we did. I can tell you, I work with people inside the White House like Tom Bossert, who now has since left. He was on the National Security Council working to get our involvement in the restoration. In fact, Puerto Rico resisted that and tried to restore their own power at first. We were a little late to the game. Finally, Puerto Rico let us in and we really came in in a big way.
One of the first companies, you may have heard about Whitefish. There's a lot of controversy about that billing, Whitefish. Along the way, PowerSecure came in. Our rates were substantially less than Whitefish. We've been engaged in a renewal project, and we'll see what else now is left in front of us as an ongoing relationship. PowerSecure did a terrific job in helping restore the power in Puerto Rico. Beyond that, Southern Company provided more than 1,000 people there. What I'd like to do now. Right now, we have 99% of customers across the island are now receiving electricity. I have a team of folks here. Please stand. Once again, American heroes. Here's the thing. Yeah, please. Stay standing. I mentioned to you that we got 1 million customers restored in five days.
Think about the extent of the work that had to be done in Puerto Rico. Not only getting there, getting material there, the duration of the assignment was enormous. These guys left their families. We made provisions for them to leave their work, and they traveled and lived in Puerto Rico for weeks and weeks and weeks to get it done. Let me just call them out, and please raise your hand. Mark Atkins. Mark was there with me Monday. Mark, great job. Randall Pinkston, been around forever. Thanks, Randall. Appreciate your work. Enya Rodriguez Santiago. There you go. Kim Drake. Terrific. Kim, how long were you there?
74 days.
74 days away from home. Diana Rivera. Diana, thank you. Aaron Strickland. Fantastic. Folks, thank you for what you've done. That was a great job in restoring the power, but it was a huge sacrifice, and we appreciate it. Thank you. You're what makes us great. Appreciate it. Before all these announcements, we were going to make the big theme here planning for a low/no carbon future, right? We have so much exciting stuff, but I think this is exciting. I have told you for years, and I just remain so convicted in this, that The Southern Company is doing more than anybody in our industry to invent the solutions of the future. I get so tired of talking about the data of how much carbon we've reduced. Okay, great. Congratulations. Good job.
What are you doing about it to get there where you need to be in the future? We're the only company in our industry still invested in a robust way in proprietary research and development. So much of our work in the past, before I became chairman, R&D-wise, was focused on protecting coal. No longer. We are completely indifferent as to fuel, and now we're making a commitment to providing, in the future, a low to no carbon electricity generation portfolio. There are five big pathways that we are going to execute on to make sure that happens. You'll see it's more nuclear, more renewables. One of the things I want you to hear me clearly on, the solutions may not exist today.
This kind of commitment, I think, requires a bit of vision and courage, oh, and by the way, investment in order to make that future happen. This company is doing it. I'm really proud to roll out officially today that we will create a low to no carbon future by 2050. Let's go through those pathways. Nuclear. We're clearly in the leadership role on what you heard on the thing is the Gen III, the AP1000. We're the only game in town in America, which really is a national security concern to develop new nuclear. Even more than that, Steve Kuczynski and others are working on the Gen IV reactors, the molten salt reactors, the next generation, the failure-free kind of nuclear fuel processes. That's kind of what you think, a 2030, 2035, somewhere in there solution.
Not only are we doing what's required today, we're investing in the technology of the future that will help us in an emission-free way into the middle of this period. I'll just say, Dr. Steven Specker is CEO of a company that's working on fusion reactors, harnessing the power of the sun. I don't know. This is Gen 7. Oh, it's actually sooner than that, right? We're working on it. We are attracted to people that are committed to providing not rhetoric, but real solutions for the future. Solar. I've told you about solar. I'm a big advocate for solar. At times, we've been the largest owner of solar. We're top three for sure. We continue to love that. I love the idea of creating a generation resource next to the load center. Wind is important.
When I think about where Southern Power is going to invest its capital in the next 3 to 5 years, it's almost all wind. My only issue with wind for the Southeast, anyway, is that the best wind resources are generally in the plains, upper plains, and all that. What we have to do, generally speaking, where there's really good wind resources, there are no people. What you got to do is move the energy produced by that wind resource, very valuable stuff, over long-haul transmission systems to move into our load centers. That's not the best electricity design. You'd rather have the resource near the load center. That's okay. It will play an important role in advancing us to a low to no carbon future. Big advocate of wind.
We're going to look to invest about half a billion a year or so in wind largely. Here's the thing that I think I'm really excited about, and it is so distinctive by Southern. In other words, Southern's distinctive on nuclear. I think I mentioned we're the only one playing, we're doing all the R&D. We're one of the biggest owners of solar, we're pivoting to wind, now here's another distinctive advantage of Southern I want you to be proud of your company. Remaining the leader in innovation and investment in research and development, we remain invested in carbon capture. Where's Drew? When we made the investment in AGL Resources, now Southern Company Gas, before we made that investment, during my time as chairman, before I became chairman, 70% of our energy came from coal. Now it's down to about 26%, 28%. Okay?
I'm really moving away from coal in a big way, and what we're doing with gas is moving a lot of that to renewables and gas. In fact, I'll say this. Before I became chairman, nearly zero of our energy was produced by renewables now, and we're about the size of the nation of Australia from an energy production standpoint. Excuse me. We're now about 9%-10% from renewables. We've made a big move there. Big move in gas. We were in the, I don't know, single digits, right around 10%, and now we're up to 48%-50% from gas. I always think about gas as a bridge to the future. The U.S. has made a technology revolution that has availed to us clean, safe, reliable, affordable energy in the form of gas. Good stuff. Gas has carbon.
We're going to need to deal with the carbon effluent through carbon capture technology. We can't step away from that now. If we're going to get to a low to no carbon future, I still think we need to advance technology. You'll be glad to know that Southern Company runs the nation's Carbon Capture Research Center in Wilsonville, Alabama. Oh, by the way, we run the International Carbon Capture Research Center. We're doing pre-combustion capture, post-combustion capture. We're doing so much more than anybody else in that very important role. If we're going to get to low to no carbon, we're still going to have to deal with the carbon atom, and we're doing the work. The other thing we're doing is storage. Very interesting stuff. One of my great themes, and it really comes up here, is electrify everything. Okay? Part of that is transportation.
Michael Britt here runs the Southern Company Energy Innovation Center, working with a variety of people around the U.S. to figure out solutions for the future. Storage is really important. Today, the best batteries available are these lithium-ion batteries. You've heard all about Tesla and the whatever, the gigabit, whatever. I think we're going to need technology innovation there. We're going to need the next material science innovations that will allow us to do storage at scale. We're working on that. R&D. Bunch of R&D folks were in the bar last night. Where are you guys? Right here, raise your hands. Right there. Everybody in R&D, yeah. Everybody knows who you are now. Anyway, they're here, and they're working on these issues. Man, it's exciting stuff. Finally, energy efficiency. I'm going to close with a little bit of this, too.
One of the ways that we can be achieving this very important goal is to electrify everything. One of the best ways we can do that is with electric transportation, using electricity to displace nasty imported foreign oil. Boy, we can do some stuff here. When we think about the kind of meager pace of growth in the electricity industry, everybody says, "Oh, man, energy efficiency means use less." Well, in many respects, it doesn't mean use less. It means that my product that you consume is so valuable, so cheap, so useful that you'll use more. You'll buy an electric car. We're going to raffle those off out there at the end of the meeting. Son of a gun, we're gonna have a modern fleet. When you think about autonomous vehicles, they will almost certainly be electric driven. Really cool stuff.
Energy efficiency doesn't mean the end of our product. I think it is a bright beginning and stuff that we are investing in. I'm going to transition to my close, but before I do, I want to call out the wonderful work that the people of Southern Company do. These are some of the superlatives. You can see eighth consecutive year, that's unprecedented for the history of Southern Company as being among the most admired in our industry. One of the other things I want you to see just as your eye goes up and down that list is this innovation disruptor. Those kinds of things are really important, and I think Southern Company has a reputation right now of being one of the most innovative and potentially disruptive companies in our industry. Those were global awards. Here's industry awards.
You can see that all of our companies participate in leadership roles in our industry, every one of them. One of the things I'm so proud of here is just the emergency recovery and the safety performance that we do. There is no job that is worth leaving in worse of a condition than in which you arrived. In terms of customer satisfaction, this company has led forever. I forget the statistic, but it's around eight of the last nine years we've led the industry in customer satisfaction. I remember one of the years when I was chairman, we were second only to Federal Express in terms of customer satisfaction in the U.S. among any industry. We do a great job. We are customer-centric in everything we do. Environmental. We continue to make great strides.
I remember one time a couple of years ago, Georgia Power was named the IOU Investor-Owned Utility of the Year by the solar industry. We continue to be in the top five. Corporate stewardship is something we probably don't talk enough about, but we really do a lot. The Fish and Wildlife Foundation, among others. We really do a lot to make the communities better off because we're there. This is one of the ways we do that. The technology transfer awards really speak to our R&D. In fact, Electric Power Research Institute, that's the thing that before Dr. Specker was running his nuclear business, he was the CEO of that. I think we're the biggest funder to EPRI in the industry. Culture. Boy, oh, boy, this has been a real imperative of mine since I became CEO here.
If you just look about it, America's best employers. I'll bet you it's pretty uncommon for electric utilities to be viewed as that in the U.S., and we are. Look at what we've done in terms of diversity. 50 best companies in the U.S. Black Enterprise and DiversityInc. We talked about military service. We're the number three company in the U.S. supporting veterans. Number seven by another Best for Vets in the top 100. Number seven there. Top 10 employer, number five there. These are among all the companies in the U.S. We love veterans working with us. They understand teamwork. They understand commitment to mission. They understand safety. Really well done. You can see the rest of these things, really good. Okay. This company is run by thousands and thousands of people that make thousands of great decisions every day.
They have brought us to a point, the people that preceded me to the people that exist right now, to make this an iconic company in America. It's something that I'm so proud of, and I'm sure you are, too, as our owners. Boy, this is good stuff. You know what? It's not enough. I would argue that the employees here, understanding how good they are, can't let their hubris overtake their good sense and vision and courage. Therefore, what we have to do is have this kind of burning desire in our gut to make today better than yesterday, tomorrow better than today. Sometimes, as I talk about vision and courage, sometimes that means that we've got to depart from tradition. We've got to depart from past historical practice that has served us so well.
For a lot of what's going on in the U.S. right now, particularly in the realm of technology innovation, because technology is enabling it, because customers are requiring it, this centuries-old business model of making, moving, and selling energy up to a meter is now being fundamentally changed. We could sit back and build walls and try and sit on the beach, but the waves of change are coming and coming and coming. What I love to tell people is you cannot keep the waves off the beach. You can either sit and try and play defense and defend, or you can lean in and play offense and try to engage in this technology change, in this changing marketplace, and really invent our future. There is no company like that in the industry that Southern does. Nobody.
The really important investment we made back in 2016 was to move forward with PowerSecure, which has the idea not of make, move, sell to a meter, but rather make, move, sell on the customer premises. PowerSecure is the nation's leader. It promotes, has led the U.S. in the development of microgrids. Number 1 in the U.S., PowerSecure. We've done so many important jobs. I can't talk about a major computer company, but we did their beautiful global new world headquarters. Get on Google. Actually, get on the internet. I shouldn't say Google. That would offend the company that I'm talking about. I'm not allowed to say. Boy, oh, boy, they're doing great work. Now, it's a peanut of a business right now, okay? They're making money.
In fact, this year, I think we'll make more money than we thought we would, really because of Puerto Rico. This is a very small but a very important bet on the future. It's very interesting to see how this will develop. What I want you to know as shareholders is we are playing offense. We are not going to just let this happen. We are going to influence the outcome so that decades from now, my job is to turn this company over to the new leaders of the future who will be ever stronger. Thank you so much for your partnership in making that future possible. As shareholders, we so respect your ability to invest in anything in the world you want to.
Investing in The Southern Company is a very important, bright bet on not only the future of the Southeast, but the future of the United States. Thank you very much. Now, what I want to do is go to the question and answer period. What I'd like to do now is take any questions from anybody that has a question. We have people stationed around. I see Carmen Hagraft right there with a little sign. Step up to a mic, and we'll get a sign on you. Promise me we won't hit you in the head with it. Love to take your questions now. Sam, why don't you lead us off?
Okay.
Thanks for being here. Sam Booher, one of the great guys in the Southeast. Yeah.
Sam Collier.
Oh, Sam Collier. I'm sorry.
I'll just announce myself as I would.
Sorry
as your folks would. Sam Collier from Atlanta, Georgia with 82 shares.
Thank you, sir.
I first of all want to bring greetings from folks who could not be here today, so if I may. On behalf of members of the Interfaith Center on Corporate Responsibility, ICCR, especially the Sisters of Saint Dominic of Caldwell, the Sisters of Charity of Saint Elizabeth, and colleagues from Ceres, we congratulate the board and management for preparing the report, "Planning for a Low-Carbon Future." Increasingly, this is their statement. Increasingly, we see that investor concerns and expectations continue to rise on the issue of climate change mitigation and adaptation across industry sectors. We are encouraged by Southern's step in publishing this report. It is critical that our company develop and implement metrics, targets, strategies, risk management, and governance protocols to address climate change with haste. This report, long awaited, though not as fully developed with timelines we believe are needed, will move the company forward.
ICCR members will work diligently with the company to ensure action follows and transparency is evident in meeting goals. Two areas needing greater vibrancy in the report include energy efficiency and renewables. As recent announcements make clear, big risky bets have forced the company to divest valuable assets. We encourage the company to also consider additional investments in energy efficiency and distributed resources, which can be actualized more quickly and pose lower risk. Finally, the report targets 2050 for a low to no carbon date. We urge the company to aim for ambitious mid-century goals.
Thank you, sir.
That's the report.
You know what? We love Sister Pat and Sister Barbara, personal friends of mine. They've both been under the weather a bit, and we've gone to see them. They came to our stakeholder meeting in D.C. Terrific folks, so we miss them. Thank you for reading that on their behalf.
Oh, certainly. Just couple more comments.
Please do.
Our colleagues at Ceres would like to add that increasingly we see that investor concern and expectations continue to rise on the issue of climate change mitigation and adaptation. The group Climate Action 100+ with 279 investors and over representing $30 trillion in assets are urging companies to take climate risks seriously and develop comprehensive carbon transition plans. We are encouraged by Southern's step and hope to see more in the future. Of course, Ceres looks at the entire sector.
Yeah.
We're very glad for that. From my standpoint, I'd like to pass along greetings from someone, Marianangeles Gutierrez, who was here for the last two years as a millennial voice speaking in here, and she would like to be here, but she's actually become so motivated and inspired by this work that she's taken on that she went back to Emory's graduate school, and she's now working on a development and climate degree, and she's interning. She left last week for India to intern on climate adaptation and the implementation gap.
Wow
that India faces as they adapt to climate change.
When you think about it, climate change and what we're going to do about carbon is a global issue. Investing in those kinds of countries, third world countries particularly, are really important in developing a really comprehensive solution. It isn't just the United States' issue, it's a global issue.
Absolutely. I have one further thing.
Yes, sir, Sam.
This is finally from me. I want to thank you. I appreciate your team and all the great work that's been done to listen to stakeholders and shareholders and engage and try to get to solutions to the problem. I really appreciate that very much. The report mentions two types of risk, fuel risk and carbon risk, and I think those are appropriately addressed. It's a good beginning to addressing those risks. There's a third risk that I think the report does position our company for, and that is the risk that in case 97% of the scientists are actually correct, and we have major climate disruptions that really change the political calculus in a rapid way, this positions the company to be ready to, if the reductions come or are called on to come faster.
Sure
The company's prepared for this. I thank you very much. It's another type of risk management that I think this report really positions the company for.
Well, Sam, thank you so much. I appreciate your constant attendance at these things. You've been a great friend of the company. Thank you. Sam Booher. Man, I'm sorry. We got him. Come on, Sam. Sam, were you alpha customer on solar panels on your rooftop?
Yes, sir.
The number one customer, the first customer, I followed his leadership. I got solar panels, too. Anyway, thank you for being here, another long-term friend of the company. Thank you, sir.
Well, you just took out my first sentence in my comments.
My management council complains about that, too.
My wife and I are very pleased to have our solar panels that you installed on our home. Being retired military, I'm also very pleased with all of the military installations in Southern's area now have solar panel fields on their bases that provide sufficient energy solar power if the grid were to ever go down. Second, since 2010, I've been personally tracking how Georgia Power produces its electricity. In 2010, it was renewables 0, coal 46%. Every year since then, you have improved in both of these areas. In 2017, it was renewable 6% solar and wind, and coal reduced to 26%. I like better the numbers you gave today. Thank you. I hope Southern Company is able to continue to increase its solar wind and continue to reduce its coal use. Thank you, sir.
You bet. Thank you. Appreciate it. Again, thanks for your friendship. The other thing I just want to pick up on the two Sams here. We really do try to listen. We think engagement, particularly where we have differences of opinion, is really helpful, and it has moved the ball. I think the environmental movement in the U.S. has improved America. We take that seriously, and we appreciate your partnership in finding those future solutions. Thank you. Yes, number 2, we'll catch you second.
Tom, we have Norman Slosky from Atlanta. He owns 250 shares and wants to talk about Regional Greenhouse Gas Initiative.
I love it. Norman, good to see you.
Thank you. Thank you very much. Thank you very much for this report.
Yeah. Good stuff.
This is a big deal.
Yeah, it is.
One of the things that Southern Company has done in its forecasting and modeling is postulating a price for carbon: $10, $20, $50 a ton, not knowing exactly what it's going to cost in the future. What I'd like to propose is Southern Company supporting the Regional Greenhouse Gas Initiative, RGGI. As you probably know, Virginia has proposed joining RGGI, and I think Dominion Energy has supported that. They're joining. Instead of coming up of imagining a price, this would be a market-based price.
That's right.
In other words, would be the real market, the real thing. It's not regulated by, quote, "government." This is based on the market. It's more of a cap and trade kind of model. Georgia and Alabama and Mississippi have a lot of timber, a lot of places that can capture carbon. You have a nice infrastructure for doing that. This is a good model for The Southern Company to follow in the future. It's probably going to present its challenges, like anything else. I think it's a more realistic model, more market-based model for The Southern Company to follow. Again, I want to thank you, Jeff Burleson, and his team in Birmingham.
Where's Jeff? Jeff, hey, great job.
This is a big deal. Thank the company for listening to shareholders.
You bet
Paying attention to shareholders. This is a governance issue.
Yep.
Thanking the board of directors for following that. Thank you.
The board's terrific. Thank you. Hey, we debate this idea of things like carbon markets and cap and trade systems and everything else. You do point out, I think, the most important point. You all should know that as we developed our integrated resource plans, which is really our long-term view of how we should evolve the generation portfolio in the future, we do already take into account, in coming up with the optimal portfolio, costs of carbon, zero, $10, $20 a ton, whatever. That is already in the generation that we are rolling out. What I like about that is it gives us a long-term planning tool. We're not exposed to period-to-period volatility that trading schemes can give you. Inherently, the decision to buy and build assets in our business are the longest term.
I would argue that one of the failures of current so-called organized markets in America is that they don't value enough the long-term characteristic of base load capacity or the kinds of decisions we have to make. They tend to force people to chase near-term resources that are optimal in the next period or the next year or the next two years rather than the next 20 years. Respectfully, I get it. We continue to look at it. We'll continue to consider it. I really like what we do better than in some of those other places. We get the same idea here. We've got to value carbon and what that means. I'm with you. Yes, number four.
I'd like to introduce Eleanor Hand of Atlanta, who owns 500 shares, and her question is energy efficiency can benefit our company.
Eleanor, great to be with you again.
Thank you, Tom. I was glad to see that you had energy efficiency listed as one of your bright stars.
You bet. It is going to be imperative to get that future.
It is an important and viable source of power also.
Yep. That is right.
In 2017, ACEEE released its first utility energy efficiency scorecard. Georgia Power and Alabama Power were among the bottom 10 performers. ACEEE noted utilities in the Northeast and Western regions tended to be most efficient in the nation, while the Southeast was the lowest scoring region. The top 10 utilities spent an average of 6% of their revenue on energy efficiency programs, while the bottom 10 invested an average of 0.7%. The overall investment average was 2.7%. Energy efficiency has many well-recognized and understood benefits. It is generally less expensive than electricity itself. It reduces pollution, increases comfort, and can provide cost relief to low and fixed income ratepayers. Energy efficiency also reduces exposure to electricity price variability, reducing risk and its attendant costs for the utility.
Every kilowatt hour of saved electricity is one less kilowatt that has to be bought on volatile wholesale markets or in long-term contracts that has to be hedged through financial investments as in new power plants. Given that some extreme weather events are likely to become more common and more extreme, it will be increasingly important to recognize energy efficiency investments to manage this growing volatility risk. Policies such as revenue decoupling and financial performance incentives can support energy efficiency programs. Utilities can strongly influence what states legislate and regulators propose and approve. I want to repeat that. Utilities can strongly influence what states legislate and regulators propose and approve. I have four questions. What plans does our company have for improving our record in energy efficiency programs? Will our company be willing to establish strong savings targets?
Have we considered pay-and-save programs for our customers? Will we be willing to encourage and influence legislation and regulatory policies that will provide a financial incentive to our company to have more effective energy efficiency programs?
Terrific stuff, Eleanor. Thank you.
Thank you.
Hey, boy, you hit a lot there. I tried to make some notes along the way. You heard me. Energy efficiency is critical to us achieving what we need to do. I think energy efficiency shouldn't be thought of as, again, a defensive thing, use less, that people are against. We're certainly not that way. Energy efficiency should create an environment where people will use more. Let me give you the demographic. I know you've heard this in the past, those of you that have been here for a number of years. 46% of our customer base makes less than $40,000 a year. When you think about their disposable income, their household budget, energy share is typically a much bigger deal than what it is for rich folks.
If you think about coming back to my role with the Fed, I've been chair of the Atlanta Fed for three years. I was chair of the Conference of Chairs, the advisory board of the big Fed. One of the things the Fed wrestles with is this notion that since we've had the recession, the recovery has really gone to the top 30% of Americans, and the bottom 70% have really struggled. Good energy policy, number one, is one of the most important things we can do as a nation to improve our standing in a globally competitive economic environment. The second thing it can do is provide those most in need more benefits, and for their children, a better place to live, better medical care, better education. Really good stuff. We can get more jobs, more personal income growth.
Energy efficiency is one of the ways that we can really kickstart that. We're very invested in trying to do that. Energy efficiency takes some really different paths. One of the things we developed at the Energy Innovation Center, what do you call your urban, the vertical farms? Is that what you call them, vertical farms?
Vertical farms, controlled environment agriculture.
We're taking old abandoned office buildings and stuff like that, we're putting agriculture in a vertical sense. You may have heard about this idea of urban deserts where people are living in the cities, have long supply chains to get fresh food and vegetables, things like that. We can really improve that. That's energy efficiency working to make people's lives better. That's a big deal. Prices. You got to be a little careful when you do comparisons, when you call out people that are doing more energy efficiency than we are. Remember, energy efficiency is an investment that offsets energy, okay? You're going to see more investment where the energy is priced higher. Where you see Northeast, California, all that stuff, they have the highest prices in the United States. You will typically see more penetration of energy efficiency. That doesn't excuse us.
I'm just telling you, watch out for rankings. Northeast is going to be way more expensive than we are, they're less reliable. Southeast has the best reliability, the lowest prices, best customer service anywhere. We need to continue to play offense on energy efficiency. One other important point you made that, man, I am all over it, we need to do more. Everybody on this line right here, whether it's Mississippi Power, Alabama Power, Georgia Power, Gulf Power, we've learned from gas. You mentioned about decoupling, and you didn't say this, but you said this also, I'll say it for you. Fixed variable pricing systems are so important. The gas industry, Drew, what was that? 10, 15 years ago.
Seven, eight.
Started adopting, 20 years ago. Started adopting different rate models that caused them to be more indifferent to the sale of the commodity, that's what we need to do, too. I absolutely agree with that. I don't know whether we need to go all the way to decoupling, but more of an emphasis on fixed variable pricing is something that I think will help everybody down the road. Really good stuff. Thank you.
Thank you.
You're hitting a priority of ours. Thank you very much. Yes.
Tom, Joyce Lanning of Birmingham, Alabama, holds 155 shares. Joyce would like to ask a question about passing on a livable world.
You bet. Hey, Joyce
Well, I'll just pile on the congratulations on this Planning for a Low-Carbon Future.
Thank you.
before you had to do it. We didn't vote, 46% last year.
There's a little bit of perversion there, I actually love doing things without being forced to.
Yeah, of course the bad news is we don't get Sister Barbara and Sister Pat. Thanks to Sam Collier for bringing their message to us.
Yeah, they're great friends.
Yeah.
As are you. Thank you.
Well, I really would like to pick up on something you said about we can't keep the waves off the beach.
That's right.
We have to lean in and play
Yeah
offense and influence the outcome. You know we have a little bit of a difference of opinion about a price on carbon, not a cost that you use internally
That's right.
a true market price. I really want to congratulate you, as you know, on choosing Dr. Moniz as one of your new board members because he, as Secretary of Energy, has shown his real interest in passing on a livable world by properly pricing carbon in the market, not a trading scheme.
That's right.
As I said last year, there are some options there. I would really encourage you to get to the table and not be on the menu for the many companies that are sitting down and coming up with a market price. I taught economics in college very briefly, and in a market economy, if the price signal is wrong, you do not get the motion toward the proper distribution of resources. That's where we are with carbon. I appreciate your voluntary steps, but you can move the market very well if you step up and can't keep the waves off the beach for this one.
That's right.
It is going to happen.
Got to dive in the ocean.
It is going to happen, I encourage you. Also, I really agree with the issue of energy efficiency.
Yeah.
Electrifying as much as we can.
Yeah
depending on where those electrons come from.
That's right.
If they come from renewable.
If we can accomplish the aspiration, then electrifying everything is exactly the right thing to do.
Yeah, I agree.
Yeah.
Let's hurry up as fast as you can.
You got it.
Thank you very much.
Oh, Joyce. Thank you. You're always great. Thank you for being here. Yes. Number 4.
Tom, I would like to introduce Gary Henderson of Marietta, Georgia, 1,800 shares of stock. His subject question is GAAP accounting versus non-GAAP.
Gary, come on, man. Thank you.
Well, thank you. I had noticed that in our annual report that the GAAP accounting, we came very short of supporting the dividend. I'm sure that you and the Board and the other management members have a goal of restoring to the GAAP standards to where you can support the dividend as not having to resort to non-GAAP standards. Can you share with us when you expect to be able to return to that level of supporting the dividend using GAAP accounting standards?
Yes, sir. Well, we use GAAP accounting standards. What we do in the reporting that you're seeing is we take into account extraordinary items, including them and excluding them. That's really the point of your question.
Right.
The most important point you should start with is cash flow coverage.
Correct.
In other words, how much cash do you have to pay the dividend?
Correct.
That actually is more important than book earnings. In fact, this company has been so healthy in that regard. What's interesting is, and it's, again, I'm so proud to report on our progress. The new tax law that was passed was so valuable to America. I think is going to really breathe oxygen into this recovery. To our industry, I lobbied personally on these issues up in Congress. Tax reform is great for America, it provides an industry like ours with some many particular challenges. This is what we argued for. One of the things that to any other industry or most other industries, they eliminated the deductibility of interest.
Yeah.
We argued that we should keep that. Eliminating deductibility of interest in our industry would provide for a significant immediate price increase to customers. We did not want that. Because of the low-risk nature of our business, we like to have a decent amount of leverage. Again, that keeps prices low.
Right.
In order to keep that benefit, we had to give up on something else. What the rest of America essentially got outside our industry largely was expensing of CapEx. We gave up the accelerated depreciation associated with capital investing. That had the effect of reducing cash flow significantly.
Right.
Now, here's the benefit. We reduced marginal tax rates. Good stuff. We had this big body of good stuff, lower tax rates. We kept interest deductibility, which protected customers' bills, we lost cash flow. In order to return our cash flow to levels that supported our long-term financial integrity, we are essentially in the process of striking agreements at every one of our companies, to essentially create more equity on our balance sheet. More equity, less debt, that accounts for the reduced cash flow from losing expensing of depreciation. That's helpful. That trade, which has been done now, I think in Georgia and in Alabama and in Gulf. It's right in the process in Mississippi. AGL here in Atlanta. On the table in Illinois and Virginia. We're working through all those issues.
Our cash flow coverage of dividends, going back to that, is still very strong, that's why the board here recommended another $0.08 increase in dividends. With respect to the extraordinary items, that really goes to the heart of your question about GAAP versus non-GAAP.
Right.
I think for the first reporting period, Art, didn't we now show for this current period that our extraordinary items were actually beneficial to us rather than hurting us? The non-GAAP would actually make our financial statements look better, okay, than what they have been. Really what you're dealing with are one-time items, extraordinary items, that don't really represent the sustainable financial picture of the company.
Right.
I can tell you certainly now that we have Plant Ratcliffe behind us, we think we're going forward in a very strong way. You'll look at the variance of GAAP to non-GAAP is getting increasingly small. I know it's probably a longer answer than what you wanted.
Yeah.
It's really important for you all to understand the trade that we had to make at the federal tax level, and then going forward, not having Plant Ratcliffe in our forward, but rather rearview mirror, we're in good shape.
It's going to take another year or two?
Well, it's happening this year. In fact, you look at our financial statements this year, you would see that happen. It's unwinding positively.
Okay.
Okay?
Thank you.
Thank you. Appreciate it. I'm an old finance guy. I love that stuff. Here, let's go to one, then four.
Tom, I'd like to introduce David Vickers of Atlanta, Georgia. David holds 4,000 shares and would like to ask a question on stock price.
Terrific. David, welcome.
Thank you very much. You've mentioned all this wonderful stuff that we're doing, which is really fantastic. When do you think Wall Street's going to wake up and do something about the stock price, which has essentially been sort of flat the last couple of years?
Yeah. What's happened in the industry, let's just look, the whole industry has taken a few backward steps. This tends to be a dividend-oriented, yield-oriented investment. We tend to have modest growth with attractive dividend yields. With any income stock or dividend yield-oriented stock, as interest rates rise, the price kind of falls in order to keep the yield commensurate with rising interest rates. That's a trade. As the Fed raises interest rates, you will see kind of flattish to lackluster stock price appreciation. That's hit the whole industry, not just Southern. The second thing is really Plant Vogtle. I think people on this street tend to view Plant Vogtle as a risky enterprise. I would argue we got the best team on the planet focused on it, and we're going to continue to work through it. The challenge is on us to produce.
We've got to execute. We'll see how we go. Right now, I can report to you that our metrics broadly are in good shape, and we're making good progress. Thank you. Appreciate it. Yeah.
Tom, I would like to introduce John Quarterman from Lowndes County, Georgia. He has 225 shares. His question is on pipelines, coal, and solar power.
Well, John Quarterman, you're one of the great guys in America. Hang on. I got to tell you. I'm going to interject. We listened. Was it last year you were talking about you wanted more solar around your property and all that? Within the past year, Moody Air Force Base now has 32 megawatts of solar. How about that?
Good.
Cool stuff. Hey, the other thing, there's some equipment related to gas pipe stations, right? Where's Craig McGalliard? There you are. He is my AGL guy that's responsible for all of Southeast Georgia. He can help you with any particular problem you have with any equipment around your property. There he is. All right? Hey, man, we listen. Otherwise, what do you got, my man? Always great to have you here.
Apparently, you've been reading my notes already.
I really haven't.
This is not on my notes, but you told a joke, but you didn't tell us the punchline. A bunch of R&D people walk into a bar, and the next day they're famous. What'd they do? Maybe you'll tell us later what they did.
Yeah. Right.
I have here the traditional okra pickles gift.
Awesome. Thank you, buddy. Appreciate it.
I probably shouldn't tell you, a couple other people got them too this year.
Oh, man.
These will come up to you.
You know, my youngest son is now a farmer.
You said that, yes.
Yeah. Cool stuff.
It's a good thing to do. We also have yellow squash, unwaxed and pesticide free. Yes, this time I brought enough to share with your executives.
Dynamite. Thank you.
One more prop, if I can get it out of my pocket. Fresh dug potatoes with a little bit of field dirt still on them.
That's great, John.
Got a bag of them for you. Okay. As a shareholder and a landowner, you may have noticed, a farmer, I have two of your pipelines on my property, as you may have heard mentioned last year. I asked about help with the hissing sound. I think you've now pointed at one person to deal with the hissing sound. All I've seen is there's green slats on the fence around that Southern Natural Gas pipeline station of which you own half, I don't really understand. Question one is maybe somebody can explain how green plastic slats reduce noise.
Well, we'll get on that, bud.
I'd appreciate it.
You bet.
Your other pipeline, which you own 100% of, I think you spent about $8 billion to buy Atlanta Gas Light. Don't hold me to the exact price that way though.
Close enough, whatever.
Yeah. Okay. Well, suddenly, a few weeks ago, some black barrels labeled hydrocarbons appeared on inside of that chain link fence. I can't get a straight answer out of any of the local pipeline people. They say things like they've always been there from time to time. No one can ever remember seeing those before in decades. I'd like to know Oh, yes. They say the tarp they put over the barrels make them safe despite the 100-foot tall pine trees 20 feet away. I'd like to know, this is question number 2, what exactly is in those barrels? Why are they on my property? Is this typical of what shareholders can expect now on their properties since Southern Company's doing pipelines?
You know, this is one of my favorite things to do. Drew? Do you have any idea what? Yeah.
Absolutely. Just hydrocarbons.
Stand up. This is Drew Evans. He's the president of Southern Company Gas.
Sure. I know that there are two barrels on the property at the compressor station that exists. I think we're down to two recently, but we'll check with Craig. Those are hydrocarbons that come off the pipe. Barrels will contain them, and we'll see very little accumulation of them over the years.
You didn't answer the question of what hydrocarbons.
What are they?
Hydrocarbons that are within the gas stream that comes off of the Southern Company pipes.
I'll see if I can get a more specific answer from you after. I want to hold you.
Yeah. Thank you. We'll take this up with you personally.
Okay. All right. That was my personal questions. As Suwannee Riverkeeper-
Hey, John, excuse me. One more thing.
Drew is moving on to replace Art Beattie as CFO. Drew spent a long time as CFO at AGL Resources. He'll step into the Southern role. Kim Greene, stand up, please. Kim is now moving from Southern's Chief Operating Officer to becoming CEO of Southern Company Gas.
I should
Report to you.
All right.
That's exactly right.
Yes, you will.
What else you got, bud?
As Suwannee Riverkeeper, I'd like to invite you to the Wild & Scenic Film Festival in Valdosta, Georgia, on May 31st. That's Thursday of next week. We're showing a bunch of short films about wild and scenic rivers, oceans, and such, including the short film about the one wild and scenic river in Georgia, which is the Chattooga. Also coming up in June, we're having a songwriting contest. Do you write songs?
No.
Oh, too bad. That's June 23rd. We are still accepting sponsors. I don't know who might be interested. Okay. My question is about, last year I mentioned we don't want your coal ash in our landfills. Okay? My question is, why did Georgia Power yet again oppose two coal ash bills in the legislature?
Well, I don't know about the specific bills. Paul Bowers is here. He can help you out with that. I think one of the things I do, every one of these meetings, I try and make a little news just to keep things interesting and lively. I remember, what was it? Two or three years ago, I announced that we would exit all of our ash ponds and everything else. Every one of our subsidiaries is working on plans in conjunction with their environmental protection departments or whatever they are in whatever state they are, to get about that business. I think, is it by the end of 2019? Cleaning off the waterways. Yeah. That I think we'll be no longer depositing ash in ash ponds. We're making terrific progress. We're working on it, bud.
The two Sams kind of left me as the bad cop, I guess. I could spend a lot of time complimenting Southern Company. I'm trying to keep this brief, though. I know you appreciate that.
No, if you're going to compliment us, just go on.
All right.
No, I'm kidding.
Unlike a certain other electric utility very nearby, perhaps to the south, Southern Company holds its stockholder meetings where everybody can attend instead of halfway across the country. No one can match our genial host, Tom Fanning. Please, Tom Fanning.
Oh, jeez. No.
Okay, one last question. Yes, really, last question. Everybody's talking about how much solar power they have. I have 15 kilowatts on my farm workshop roof, and I have batteries matching three kilowatts of them, which means when the grid's down, I'm still up. I'm not implying anything about Georgia Power being down. I'm connected to Colquitt EMC. That would be load generation right next to the load.
Mm-hmm. That's right. That's why I like that.
Exactly. Okay. Now, you talked about the selling off a third of the solar portfolio. Yes, I saw the press release at 7:00 A.M. this morning, Global Atlantic Financial Corp. Neither that nor the annual report said why you're selling off the third of it. However, Bloomberg says it's because of Plant Vogtle.
Dead wrong.
That's what they said.
Well, they don't know.
Well-
Wait. Let me just hit that.
Uh-huh. Go ahead.
That is garbage logic. Here's what people have to understand. Our job is to provide for you the best shareholder value we can do. The offer we got for Gulf Power was the most valuable offer for any electric utility in the history of our industry. When you think about the price we got for Gulf Power, it was nearly 100% premium. I don't care whether there's Plant Vogtle or anything else, that is a deal as a fiduciary, a legal steward of your investment, that we must make. That was also true for Elizabethtown, that we did last year. You can create shareholder value whether you buy, a la AGL Resources, or sell, a la the solar deal or Gulf Power or whatever. We always have to do what's right for shareholders. That had nothing to do with Plant Vogtle.
Bloomberg also said it was to help pay off what Southern Company spent buying those pipeline companies.
Dead wrong. They're just wrong.
Okay. Well, you're partly answering my question. Which I haven't even asked yet. You've already indicated you know that everything is changing, and you can't keep the waves-
Off the beach.
Right. Pipelines won't keep those waves off the beach. The waves are solar and wind power. You-
Oh, yeah. Look, I think so, man. I think renewables is a really important technology that's going to have greater and greater and greater penetration. We need things to go along with them. You can't do it 100%. At least not now. Maybe we can with technology innovation in the future.
Well, as someone else mentioned, Southern Company has a huge territory, as you always mention, the biggest U.S. utility R&D operation. Yet in Puerto Rico, it's Tesla that's leading with generation right next to load with solar panels and batteries.
Hey, man, let me jump in there.
Okay.
Right now, we think there are potentially six to seven microgrid sites, potentially, that we're working on from PowerSecure to the nation of Puerto Rico. These are big customers. We're right in the hunt on that stuff right now. Don't think about Tesla being the leader. If there's going to be a leader down there, it's going to be us, I hope.
The power generation is coming from?
I use the idea of distributed infrastructure, which is bigger than generation. It will include distributed generation like solar or like a Bloom fuel cell or like whatever. Importantly, John, it includes the ancillary equipment around it, whether it's switchgear or storage devices or a variety of other things. Look, we are all about that kind of new business model. I think Puerto Rico is one of the great examples of where we may be able to deploy it right now. We're already number one in the United States in microgrids. Already number one. We'll continue that effort.
All righty. I'm for that, and thank you for clarifying that. My question is about that one-third of your solar portfolio being sold off.
Oh, yeah.
That is the question: why are you selling off our seed corn?
Oh, no. That's not seed corn. What people got to understand is we developed those projects, we invested in them, biggest investor in solar in the U.S. The projects exist. We're not closing the project. They're still there. All we're doing is making an economic sale. Recall that the economic profile of investment in solar is really driven by tax preference items. That's true for wind as well. In solar, you get investment tax credits. If I'll draw a finger in the air. If I were to look at the internal rate of return of a solar project, it goes boom in the first year with investment tax credits, and then it kind of dissipates down to zero.
So do the costs. No fuel.
Well, no, not for us because for an owner, maybe. For an owner of the project, the infrastructure, we have capital that we invested that we get an investment tax credit on, and we got to earn a return on and return of capital over the years. Here's the interesting thing. As we take advantage of the investment tax credit, you look at the rest of the earnings profile, it's darn near zero.
Here's two advantages by selling off just a third. If we were to sell everything, we would have a recapture by the federal government of the investment tax credit benefit. By selling off just a minority share, we get to keep all the investment tax credits that we earned, and all we're selling is a share of that zero-earning asset. By reducing a zero-earning asset, we actually add to the earnings per share broadly of our company. Secondly, we get to create cash flow.
Both of those things, the creation of cash flow and the reduction, and therefore accretion to earnings of a zero-earning asset, is very valuable to you as a shareholder. The projects remain, and they work great. We're still the majority owner. It's a great deal for us.
Thank you for the answer. That's why I asked the questions.
Super-duper, my friend. Always good.
Congratulations again.
Thank you. Always good having you here. You're always welcome to come. Thank you. Yes.
Tom, I would like to introduce Richard Alexander from Perry, Georgia. He has over 100 shares of stock, he's doing a follow-up to make a comment from last year's meeting.
Awesome. Richard, thank you for coming.
It's my pleasure to be here. Last year, when I asked you a question that was about a piece of real estate you own around Lake Sinclair, about the 1,000-foot tower, you gave me some really good advice. My question was, how are a lot of us who enjoy fishing and navigating in a lake going to find our way around if you take that dadgum 1,000-foot tower down, we've been looking at for a century and destroy it? Well, with a lot of sadness, I'd like to report that many of us miss that old tower. We've managed to use your good advice and your humor about getting us a compass.
Many of us found out that not only do we already have one in our cell phone, they actually supply maps of the lake, and we've been able to find our way around. Thank you, again, and you kind of remind me, your humor reminds me of Johnny Carson. Late at night, just before we start nodding off, he comes back with some great news with a straight face and has us laugh and wake us up. Thank you.
Richard, great. Isn't it fun always finding cool stuff for your boat? What else do we have? Thank you for that. Looks like, oh, do we have one more? Nope, just leaving. Don't you hate it when that happens? Everybody, thank you so much. Look, I know everybody's calendar is really busy. We're so honored that you would come here. I always love these annual meetings. It's always so much fun to meet you, shake your hand, to talk about the wonderful progress that these great leaders and the thousands of men and women of this company do every day. Thank you for being a shareholder. We appreciate your partnership. Have a wonderful, safe ride home. See you soon