Georgia Power's Q3 Earnings Surge on Strong Revenue Growth

TL;DR

**GPJA is powering up, with strong revenue and net income growth making it a solid buy despite rising operating costs.**

AI Summary

GEORGIA POWER CO reported robust financial performance for the three and nine months ended September 30, 2025. For the three-month period, total operating revenues increased by 7.5% to $7.823 billion from $7.274 billion in the prior year, driven by a 6.3% rise in retail electric revenues to $5.707 billion and a 15.4% increase in wholesale electric revenues to $832 million. Net income attributable to common stockholders for the three months grew by 10.9% to $1.018 billion from $918 million. For the nine-month period, total operating revenues climbed 10.7% to $22.572 billion from $20.383 billion, with retail electric revenues up 9.2% to $15.065 billion. Net income attributable to common stockholders for the nine months increased by 10.3% to $2.949 billion from $2.673 billion. Operating expenses also rose, with fuel costs up 17.4% to $1.345 billion for the three months and 18.2% to $3.753 billion for the nine months, reflecting higher energy prices. Depreciation and amortization expenses increased significantly by 17.5% to $1.422 billion for the three months and 13.9% to $4.030 billion for the nine months, indicating substantial capital investments. The company's strategic outlook includes managing environmental compliance costs related to new EPA rules and ongoing construction projects, such as the Vogtle nuclear expansion, which continue to impact financial results.

Why It Matters

Georgia Power's strong revenue and net income growth signal a healthy demand for electricity in its service area, which is positive for investors seeking stable utility returns. The significant increase in depreciation and amortization expenses, alongside higher fuel costs, highlights the ongoing capital intensity of the utility sector and potential pressures on future rates for customers. For employees, continued investment in infrastructure and compliance suggests job stability and potential for new projects. The broader market will watch how Georgia Power manages rising operating expenses, particularly fuel and environmental compliance, as these could set precedents for other regulated utilities facing similar challenges and competitive pressures from alternative energy sources.

Risk Assessment

Risk Level: medium — The risk level is medium due to rising operating expenses, specifically a 17.4% increase in fuel costs to $1.345 billion for the three months ended September 30, 2025, and a 17.5% increase in depreciation and amortization to $1.422 billion. Additionally, the filing mentions ongoing legal proceedings and regulatory investigations, including those related to the Kemper County energy facility, which could introduce financial uncertainties.

Analyst Insight

Investors should consider holding or initiating a position in GEORGIA POWER CO (GPJA) given its consistent revenue and net income growth. Monitor future filings for trends in fuel costs and capital expenditures, as these will be key drivers of profitability and potential rate adjustments. The company's ability to recover environmental compliance costs will be crucial.

Financial Highlights

revenue

$7.823B

operating Margin

33.1%

net Income

$1.018B

revenue Growth

+7.5%

Revenue Breakdown

Key Numbers

• $7.823B — Total operating revenues (Increased by 7.5% for the three months ended September 30, 2025)
• $1.018B — Net income attributable to common stockholders (Increased by 10.9% for the three months ended September 30, 2025)
• $22.572B — Total operating revenues (Increased by 10.7% for the nine months ended September 30, 2025)
• $2.949B — Net income attributable to common stockholders (Increased by 10.3% for the nine months ended September 30, 2025)
• $1.345B — Fuel expenses (Increased by 17.4% for the three months ended September 30, 2025)
• $1.422B — Depreciation and amortization (Increased by 17.5% for the three months ended September 30, 2025)
• 6.3% — Retail electric revenues growth (Increased to $5.707 billion for the three months ended September 30, 2025)
• 15.4% — Wholesale electric revenues growth (Increased to $832 million for the three months ended September 30, 2025)
• 9.2% — Retail electric revenues growth (Increased to $15.065 billion for the nine months ended September 30, 2025)
• 13.9% — Depreciation and amortization growth (Increased to $4.030 billion for the nine months ended September 30, 2025)

Key Players & Entities

• GEORGIA POWER CO (company) — Registrant
• The Southern Company (company) — Parent company
• EPA (regulator) — U.S. Environmental Protection Agency
• Georgia PSC (regulator) — Georgia Public Service Commission
• Vogtle Owners (company) — Owners of the Vogtle nuclear expansion project
• SEC (regulator) — U.S. Securities and Exchange Commission
• Alabama Power Company (company) — Subsidiary Registrant
• Mississippi Power Company (company) — Subsidiary Registrant
• Southern Power Company (company) — Subsidiary Registrant
• Southern Company Gas (company) — Subsidiary Registrant

FAQ

Risk Factors

• Environmental Compliance Costs [high — regulatory]: The company faces increasing costs associated with environmental compliance, particularly new EPA rules. These regulations may require significant capital expenditures and operational changes, impacting profitability.
• Vogtle Nuclear Expansion [high — operational]: The ongoing construction and operation of the Vogtle nuclear expansion project continue to be a significant financial factor. Delays or cost overruns could negatively affect financial performance and cash flows.
• Fuel and Energy Price Volatility [medium — market]: Fluctuations in fuel costs, such as natural gas, and purchased power prices directly impact operating expenses. For the three months ended September 30, 2025, fuel costs increased by 17.4% to $1,345 million, reflecting higher energy prices.
• Capital Investment Requirements [medium — financial]: Substantial capital investments, evidenced by a 17.5% increase in depreciation and amortization expenses to $1,422 million for the three months ended September 30, 2025, require significant funding and can impact leverage ratios.

Industry Context

The electric utility sector is characterized by significant capital intensity, regulatory oversight, and a growing focus on environmental sustainability and grid modernization. Companies like Georgia Power are navigating the transition to cleaner energy sources while managing the costs of large-scale infrastructure projects and evolving environmental regulations.

Regulatory Implications

Georgia Power operates under strict regulatory frameworks that influence its pricing, operations, and capital investments. New EPA rules present compliance challenges and potential cost increases, while regulatory approvals are critical for major projects like the Vogtle expansion.

What Investors Should Do

1. Monitor fuel cost trends and their impact on operating margins, given the 17.4% increase in fuel expenses for the quarter.
2. Assess the financial implications of the Vogtle nuclear expansion, including any potential cost overruns or delays, as it remains a key driver of capital expenditure.
3. Evaluate the company's strategy for managing environmental compliance costs related to new EPA regulations and their potential impact on future profitability.
4. Analyze the growth drivers in retail and wholesale electric revenues to understand the sustainability of the current revenue trajectory.

Glossary

Depreciation and amortization

The systematic allocation of the cost of a tangible asset (depreciation) or an intangible asset (amortization) over its useful life. It represents the 'using up' of an asset's value. (A significant increase of 17.5% to $1.422 billion for the three months ended September 30, 2025, indicates substantial capital investments in infrastructure and assets.)

Allowance for equity funds used during construction (AFUDC)

A regulatory accounting practice that allows utilities to include the cost of financing construction projects in the rate base, earning a return on the equity portion of construction funds. (This is a common component in utility financial statements, impacting reported income and the cost of new projects like Vogtle.)

Operating Income

Profitability from a company's core business operations, calculated as total operating revenues minus total operating expenses. (Georgia Power reported a strong operating income of $2.594 billion for the three months ended September 30, 2025, up from $2.368 billion in the prior year.)

Year-Over-Year Comparison

Compared to the prior year, Georgia Power Co. has demonstrated strong top-line growth, with total operating revenues increasing by 7.5% for the three months and 10.7% for the nine months ended September 30, 2025. Net income also saw a healthy increase of 10.9% and 10.3% respectively. However, operating expenses, particularly fuel costs (up 17.4%) and depreciation/amortization (up 17.5%), have risen significantly, indicating inflationary pressures and ongoing capital deployment. New risks related to environmental compliance and continued capital intensity from projects like Vogtle are prominent.

Key Financial Figures

• $5 — outhern Company Common Stock, par value $5 per share SO New York Stock Exchange (
• $40 — 04,843 Alabama Power Company Par Value $40 Per Share 30,537,500 Georgia Power Com
• $0.01 — 1,000 Southern Power Company Par Value $0.01 Per Share 1,000 Southern Company Gas P

Filing Documents

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—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION

Financial Statements (Unaudited)

Item 1. Financial Statements (Unaudited) 9

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 97

Quantitative and Qualitative Disclosures about Market Risk

Item 3. Quantitative and Qualitative Disclosures about Market Risk 150

Controls and Procedures

Item 4. Controls and Procedures 150

—OTHER INFORMATION

PART II—OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 151

Risk Factors

Item 1A. Risk Factors 151

Unregistered Sales of Equity Securities and Use of Proceeds Inapplicable

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Inapplicable

Defaults Upon Senior Securities Inapplicable

Item 3. Defaults Upon Senior Securities Inapplicable

Mine Safety Disclosures Inapplicable

Item 4. Mine Safety Disclosures Inapplicable

Other Information

Item 5. Other Information 151

Exhibits

Item 6. Exhibits 151

Signatures

Signatures 155 3 Table of Contents Index to Financial Statements DEFINITIONS Term Meaning 2022 ARP Alternate Rate Plan approved by the Georgia PSC in 2022 for Georgia Power for the years 2023 through 2025 2023 IRP Update Georgia Power's updated IRP filed in 2023 and approved by the Georgia PSC in April 2024 as modified by a stipulation among Georgia Power, the staff of the Georgia PSC, and certain intervenors 2024 ELG Rule Final rule published by the EPA in May 2024 revising the steam effluent guidelines 2024 GHG Rules Final rules published by the EPA in May 2024 for existing fossil fuel-fired steam electric generating units and new fossil fuel-fired combustion turbines and combined cycle generation facilities 2024 Legacy Rule Final rule published by the EPA in May 2024 related to legacy surface impoundments and CCR management units AFUDC Allowance for funds used during construction AGL Services Company AGL Services Company, Inc., the Southern Company Gas system service company and a wholly-owned subsidiary of Southern Company Gas Alabama Power Alabama Power Company ARO Asset retirement obligation Atlanta Gas Light Atlanta Gas Light Company, a wholly-owned subsidiary of Southern Company Gas CAMT Corporate alternative minimum tax CCR Coal combustion residuals CCR Rule Disposal of Coal Combustion Residuals from Electric Utilities final rule published by the EPA in 2015 Chattanooga Gas Chattanooga Gas Company, a wholly-owned subsidiary of Southern Company Gas Clean Air Act Clean Air Act Amendments of 1990 COD Commercial operation date CODM Chief operating decision maker CWIP Construction work in progress Dalton City of Dalton, Georgia, an incorporated municipality in the state of Georgia, acting by and through its Board of Water, Light, and Sinking Fund Commissioners Dalton Pipeline A pipeline facility in Georgia in which Southern Company Gas has a 50% undivided ownership interest DOE U.S. Department of Energy ECCR Geo

Financial Statements (Unaudited)

Item 1. Financial Statements (Unaudited). Page The Southern Company and Subsidiary Companies: Condensed Consolidated Statements of Income 10 Condensed Consolidated Statements of Comprehensive Income 11 Condensed Consolidated Statements of Cash Flows 12 Condensed Consolidated Balance Sheets 13 Condensed Consolidated Statements of Stockholders' Equity 15 Alabama Power Company: Condensed Statements of Income 17 Condensed Statements of Comprehensive Income 17 Condensed Statements of Cash Flows 18 Condensed Balance Sheets 19 Condensed Statements of Common Stockholder's Equity 21 Georgia Power Company: Condensed Statements of Income 22 Condensed Statements of Comprehensive Income 22 Condensed Statements of Cash Flows 23 Condensed Balance Sheets 24 Condensed Statements of Common Stockholder's Equity 26 Mississippi Power Company: Condensed Statements of Income 27 Condensed Statements of Comprehensive Income 27 Condensed Statements of Cash Flows 28 Condensed Balance Sheets 29 Condensed Statements of Common Stockholder's Equity 31 Southern Power Company and Subsidiary Companies: Condensed Consolidated Statements of Income 32 Condensed Consolidated Statements of Comprehensive Income (Loss) 32 Condensed Consolidated Statements of Cash Flows 33 Condensed Consolidated Balance Sheets 34 Condensed Consolidated Statements of Stockholders' Equity 36 Southern Company Gas and Subsidiary Companies: Condensed Consolidated Statements of Income 38 Condensed Consolidated Statements of Comprehensive Income 38 Condensed Consolidated Statements of Cash Flows 39 Condensed Consolidated Balance Sheets 40 Condensed Consolidated Statements of Stockholder's Equity 42 Combined Notes to the Condensed Financial Statements 43 9 Table of Contents Index to Financial Statements THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) For the Three M

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