Southern Company (“Southern”) is pursuing one of the largest electric system expansions in its history.[1] In Georgia, where 80% of projected demand would serve artificial intelligence (AI) data centers,[2] Southern has proposed a $20 billion record-breaking system buildout.[3] Although this plan is designed primarily to serve data center demand, residential and small-business customers are still expected to face bill increases, and could shoulder even higher costs if the anticipated data-center load does not materialize.[4]

The durability of AI-related power demand is uncertain. Technology companies often submit power requests without secured financing or tenants, and many negotiate with multiple utilities simultaneously, leading to inflated forecasts.[5] The AI-driven data center boom is already showing signs of volatility. Last quarter, Southern reported that 14.3 gigawatts (GW) of data center projects were withdrawn, producing a net 6 GW decline in its power connection queue—an unprecedented reversal for a market that had been expanding rapidly.[6]

Even data centers that do get built may never use the massive power loads now assumed. Rapid innovation in chips, cooling, and ultra-efficient architecture is on track to materially shrink data center electricity demand in the future.[7]

Against this backdrop, investors are concerned that Southern is committing capital to infrastructure for demand that may never materialize. If data center customers shrink loads or withdraw from contracts, overbuilt assets could burden existing ratepayers and potentially shareholders. This risk is amplified by Southern’s plan to build new fossil-fuel generation which carries volatile fuel prices and decades-long cost obligations.

As regulators increase their focus on affordability, Southern may find it harder to gain approval to charge existing customers for new projects. If regulators reject or limit cost recovery, shareholders may be forced to absorb the losses. That risk is particularly acute in Georgia, which ranks 35th nationally for energy affordability.[8]

These risks are compounded by Southern’s failure to require firm financial commitments from large-load customers before launching major infrastructure projects. Other utilities, recognizing the danger of overbuilding, have put safeguards in place. Dominion Energy in Virginia and AEP in Ohio both require binding commitments from all new data center customers.[9]

Southern, in contrast, undertakes project-by-project negotiations, and does not require safeguards such as long-term contracts, milestone payments, or minimum demand charges for all large-load customers. To date, only a small subset of Southern’s contracted large-load customers are subject to such accountability provisions.[10] Without stronger requirements, Southern risks building costly infrastructure for customers who may delay, downsize, or cancel projects—shifting costs onto ratepayers and, potentially, shareholders.

[1] https://www.southerncompany.com/sustainability/our-customers.html

[2] https://apnews.com/article/georgia-power-data-centers-d15f7793c6b79444908ca8a7b68f7ef1

[3] https://cleanenergy.org/news/lame-duck-georgia-commission-could-lock-customers-into-high-cost-gas-plants-until-2075/

[4] https://cleanenergy.org/news/lame-duck-georgia-commission-could-lock-customers-into-high-cost-gas-plants-until-2075/

[5] https://www.latitudemedia.com/news/phantom-data-centers-are-flooding-the-load-queue/

[6] https://www.utilitydive.com/news/georgia-power-large-load-data-centers/806300/

[7] https://today.ucsd.edu/story/new-cooling-tech-could-curb-data-centers-rising-energy-demands

[8] https://alec.org/wp-content/uploads/2025/04/ALEC_EnergyAffordability2025.pdf, p.13

[9] https://www.datacenterdynamics.com/en/news/virginia-regulators-approve-new-rate-class-for-data-centers-and-other-large-loads/; https://www.utilitydive.com/news/Ohio-regulators-approve-aep-data-center-interconnection-rules/752690/

[10] https://www.utilitydive.com/news/georgia-power-large-load-data-centers/806300/