Company: SOJE
Filing Date: 2025-02-20
Form Type: 10-K
Source: 0000092122-25-000018
Chunk: 4261

Company: SOUTHERN CO
Filing Date: 2025-02-20
Form: 10-K
Item: Item 1A
Chunk 4261
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 MANAGEMENT'S DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL – "Construction Programs" in Item 7 herein for additional information.

Once facilities become operational, ongoing capital expenditures are required to maintain safe and reliable levels of operation. Significant portions of the traditional electric operating companies' existing facilities were constructed many years ago. Older equipment, even if maintained in accordance with good engineering practices, may require significant expenditures to maintain efficiency, to comply with environmental requirements, to provide safe and reliable operations, and/or to meet related retirement obligations.

Southern Company Gas' significant investment in pipeline development projects involves financial and execution risks.

Southern Company Gas, through SNG, has approved a significant investment in a pipeline development project. The pipeline development project will be constructed and operated by a third party. If the third party fails to perform in a proper manner, the book value of the investment could be impaired and Southern Company Gas could lose part or all of its investment. In addition, Southern Company Gas is required to fulfill capital obligations related to other pipelines in which Southern Company Gas has an ownership interest or, as necessary, guarantee the obligations related thereto.

With respect to the pipeline development project, Southern Company Gas will rely on its joint venture partner for construction management and will not exercise direct control over the process. The project is dependent on contractors for successful and timely completion. Further, the development of the pipeline project involves numerous regulatory, environmental, construction, safety, political, and legal uncertainties and may require a significant investment. This project may not be completed on schedule, at the budgeted cost, or at all. There may be cost overruns and construction difficulties that cause Southern Company Gas' investment to exceed its initial expectations, which may impact the earnings of the joint venture partnership. Moreover, Southern Company Gas' net income will not materially increase immediately upon the expenditure of funds on this pipeline project. Pipeline construction occurs over an extended period of time, and Southern Company Gas' net income will not be materially impacted unless and until the project is placed in service.

See MANAGEMENT'S DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL – "Construction Programs" in Item 7 herein for information regarding this project.

FINANCIAL, ECONOMIC, AND MARKET RISKS

The electric generation and energy marketing operations of the traditional electric operating companies and Southern Power and the natural gas operations of Southern Company Gas are subject to changes in energy prices and fuel costs.

The generation, energy marketing, and natural gas operations of the Southern Company system are subject to changes in