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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 20212022
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from           to            
Commission
File Number		Registrant,
State of Incorporation,
Address and Telephone Number		I.R.S. Employer
Identification No.
1-3526The Southern Company58-0690070
(A Delaware Corporation)
30 Ivan Allen Jr. Boulevard, N.W.
Atlanta, Georgia 30308
(404) 506-5000
1-3164Alabama Power Company63-0004250
(An Alabama Corporation)
600 North 18th Street
Birmingham, Alabama 35203
(205) 257-1000
1-6468Georgia Power Company58-0257110
(A Georgia Corporation)
241 Ralph McGill Boulevard, N.E.
Atlanta, Georgia 30308
(404) 506-6526
001-11229Mississippi Power Company64-0205820
(A Mississippi Corporation)
2992 West Beach Boulevard
Gulfport, Mississippi 39501
(228) 864-1211
001-37803Southern Power Company58-2598670
(A Delaware Corporation)
30 Ivan Allen Jr. Boulevard, N.W.
Atlanta, Georgia 30308
(404) 506-5000
1-14174Southern Company Gas58-2210952
(A Georgia Corporation)
Ten Peachtree Place, N.E.
Atlanta, Georgia 30309
(404) 584-4000

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Securities registered pursuant to Section 12(b) of the Act:
RegistrantTitle of Each ClassTrading
Symbol(s)		Name of Each Exchange
on Which Registered
The Southern CompanyCommon Stock, par value $5 per shareSONew York Stock Exchange
(NYSE)
The Southern CompanySeries 2016A 5.25% Junior Subordinated Notes due 2076SOJBNYSE
The Southern CompanySeries 2017B 5.25% Junior Subordinated Notes due 2077SOJCNYSE
The Southern Company2019 Series A Corporate UnitsSOLNNYSE
The Southern CompanySeries 2020A 4.95% Junior Subordinated Notes due 2080SOJDNYSE
The Southern CompanySeries 2020C 4.20% Junior Subordinated Notes due 2060SOJENYSE
The Southern CompanySeries 2021B 1.875% Fixed-to-Fixed Reset Rate Junior Subordinated Notes due 2081SO 81NYSE
Alabama Power Company5.00% Series Class A Preferred StockALP PR QNYSE
Georgia Power CompanySeries 2017A 5.00% Junior Subordinated Notes due 2077GPJANYSE
Southern Power CompanySeries 2016A 1.000% Senior Notes due 2022SO/22BNYSE
Southern Power CompanySeries 2016B 1.850% Senior Notes due 2026SO/26ANYSE
Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes þ No ¨
Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrants were required to submit such files). Yes þ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
RegistrantLarge Accelerated FilerAccelerated
Filer		Non-accelerated FilerSmaller
Reporting
Company		Emerging
Growth
Company
The Southern CompanyX
Alabama Power CompanyX
Georgia Power CompanyX
Mississippi Power CompanyX
Southern Power CompanyX
Southern Company GasX
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ (Response applicable to all registrants.)
RegistrantDescription of Common StockShares Outstanding at March 31, 20212022
The Southern CompanyPar Value $5 Per Share1,058,630,3851,062,524,675 
Alabama Power CompanyPar Value $40 Per Share30,537,500 
Georgia Power CompanyWithout Par Value9,261,500 
Mississippi Power CompanyWithout Par Value1,121,000 
Southern Power CompanyPar Value $0.01 Per Share1,000 
Southern Company GasPar Value $0.01 Per Share100 
This combined Form 10-Q is separately filed by The Southern Company, Alabama Power Company, Georgia Power Company, Mississippi Power Company, Southern Power Company, and Southern Company Gas. Information contained herein relating to any individual registrant is filed by such registrant on its own behalf. Each registrant makes no representation as to information relating to the other registrants.
2
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TABLE OF CONTENTS
  Page
4
87
PART I—FINANCIAL INFORMATION
Item 1.
109
Item 2.
8586
Item 3.
132128
Item 4.
132128
PART II—OTHER INFORMATION
Item 1.
133129
Item 1A.
133129
Item 2.Unregistered Sales of Equity Securities and Use of ProceedsInapplicable
Item 3.Defaults Upon Senior SecuritiesInapplicable
Item 4.Mine Safety DisclosuresInapplicable
Item 5.Other InformationInapplicable
Item 6.
133129
136132
3
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DEFINITIONS
TermMeaning
2019 ARPAlternate Rate Plan approved by the Georgia PSC in 2019 for Georgia Power for the years 2020 through 2022
AFUDCAllowance for funds used during construction
Alabama PowerAlabama Power Company
Amended and Restated Loan Guarantee AgreementLoan guarantee agreement entered into by Georgia Power with the DOE in 2014, as amended and restated in March 2019, under which the proceeds of borrowings may be used to reimburse Georgia Power for Eligible Project Costs incurred in connection with its construction of Plant Vogtle Units 3 and 4
AROAsset retirement obligation
Atlanta Gas LightAtlanta Gas Light Company, a wholly-owned subsidiary of Southern Company Gas
Atlantic Coast PipelineAtlantic Coast Pipeline, LLC, a joint venture to construct and operate a natural gas pipeline in which Southern Company Gas held a 5% interest through March 24, 2020
BechtelBechtel Power Corporation, the primary contractor for the remaining construction activities for Plant Vogtle Units 3 and 4
Bechtel AgreementThe 2017 construction completion agreement between the Vogtle Owners and Bechtel
CCRCoal combustion residuals
Chattanooga GasChattanooga Gas Company, a wholly-owned subsidiary of Southern Company Gas
CODCommercial operation date
Contractor Settlement AgreementThe December 31, 2015 agreement between Westinghouse and the Vogtle Owners resolving disputes between the Vogtle Owners and the EPC Contractor under the Vogtle 3 and 4 Agreement
COVID-19The novel coronavirus disease declared a pandemic by the World Health Organization and the Centers for Disease Control and Prevention in March 2020
CWIPConstruction work in progress
DaltonCity 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 PipelineA pipeline facility in Georgia in which Southern Company Gas has a 50% undivided ownership interest
DOEU.S. Department of Energy
ECO PlanECCRMississippiGeorgia Power's environmental compliance overview planEnvironmental Compliance Cost Recovery tariff
Eligible Project CostsCertain costs of construction relating to Plant Vogtle Units 3 and 4 that are eligible for financing under the loan guarantee program established under Title XVII of the Energy Policy Act of 2005
EPAU.S. Environmental Protection Agency
EPC ContractorWestinghouse and its affiliate, WECTEC Global Project Services Inc.; the former engineering, procurement, and construction contractor for Plant Vogtle Units 3 and 4
FERCFederal Energy Regulatory Commission
FFBFederal Financing Bank
FFB Credit FacilitiesNote purchase agreements among the DOE, Georgia Power, and the FFB and related promissory notes which provide for two multi-advance term loan facilities
FitchFitch Ratings, Inc.
Form 10-KAnnual Report on Form 10-K of Southern Company, Alabama Power, Georgia Power, Mississippi Power, Southern Power, and Southern Company Gas for the year ended December 31, 2020,2021, as applicable
GAAPU.S. generally accepted accounting principles
Georgia PowerGeorgia Power Company
GRAMAtlanta Gas Light's Georgia Rate Adjustment Mechanism
Guarantee Settlement AgreementThe June 9, 2017 settlement agreement between the Vogtle Owners and Toshiba related to certain payment obligations of the EPC Contractor guaranteed by Toshiba
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DEFINITIONS
(continued)
TermMeaning
Gulf PowerGulf Power Company, until January 1, 2019 a wholly-owned subsidiary of Southern Company; effective January 1, 2021, Gulf Power Company merged with and into Florida Power and Light Company, with Florida Power and Light Company remaining as the surviving company
Heating Degree DaysA measure of weather, calculated when the average daily temperatures are less than 65 degrees Fahrenheit
Heating SeasonThe period from November through March when Southern Company Gas' natural gas usage and operating revenues are generally higher
4
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DEFINITIONS
(continued)
TermMeaning
HLBVHypothetical liquidation at book value
IGCCIntegrated coal gasification combined cycle, the technology originally approved for Mississippi Power's Kemper County energy facility
IICIntercompany Interchange Contract
IRPIntegrated resource plan
ITAACInspections, Tests, Analyses, and Acceptance Criteria, standards established by the NRC
ITCInvestment tax credit
JEAJacksonville Electric Authority
Jefferson IslandJefferson Island Storage and Hub, L.L.C, which owns a natural gas storage facility in Louisiana consisting of two salt dome caverns; a subsidiary of Southern Company Gas through December 1, 2020
KWHKilowatt-hour
LIBORLondon Interbank Offered Rate
LIFOLast-in, first-out
LOCOMLower of weighted average cost or current market price
LTSALong-term service agreement
MarketersMarketers selling retail natural gas in Georgia and certificated by the Georgia PSC
MEAG PowerMunicipal Electric Authority of Georgia
Mississippi PowerMississippi Power Company
Mississippi Power Rate Case Settlement AgreementSettlement agreement between Mississippi Power and the Mississippi Public
Utilities Staff approved by the Mississippi PSC in March 2020 related to Mississippi Power's base rate case filed in 2019
mmBtuMillion British thermal units
Moody'sMoody's Investors Service, Inc.
MRAMunicipal and Rural Associations
MWMegawatt
natural gas distribution utilitiesSouthern Company Gas' natural gas distribution utilities (Nicor Gas, Atlanta Gas Light, Virginia Natural Gas, and Chattanooga Gas)
NCCRGeorgia Power's Nuclear Construction Cost Recovery tariff
NDRAlabama Power's Natural Disaster Reserve
Nicor GasNorthern Illinois Gas Company, a wholly-owned subsidiary of Southern Company Gas
NRCU.S. Nuclear Regulatory Commission
NYMEXNew York Mercantile Exchange, Inc.
OCIOther comprehensive income
PennEast PipelinePennEast Pipeline Company, LLC, a joint venture to construct and operate a natural gas pipeline in which Southern Company Gas has a 20% ownership interest
PEPMississippi Power's Performance Evaluation Plan
Pivotal LNGPivotal LNG, Inc., through March 24, 2020, a wholly-owned subsidiary of Southern Company Gas
PowerSecurePowerSecure, Inc., a wholly-owned subsidiary of Southern Company
PowerSouthPowerSouth Energy Cooperative
PPAPower purchase agreements, as well as, for Southern Power, contracts for differences that provide the owner of a renewable facility a certain fixed price for the electricity sold to the grid
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DEFINITIONS
(continued)
TermMeaning
PSCPublic Service Commission
PTCProduction tax credit
Rate CNPAlabama Power's Rate Certificated New Plant, consisting of Rate CNP New Plant, Rate CNP Compliance, and Rate CNP PPA
Rate ECRAlabama Power's Rate Energy Cost Recovery
Rate RSEAlabama Power's Rate Stabilization and Equalization
RegistrantsSouthern Company, Alabama Power, Georgia Power, Mississippi Power, Southern Power Company, and Southern Company Gas
ROEReturn on equity
S&PS&P Global Ratings, a division of S&P Global Inc.
SCSSouthern Company Services, Inc., the Southern Company system service company and a wholly-owned subsidiary of Southern Company
SECU.S. Securities and Exchange Commission
SEGCOSouthern Electric Generating Company, 50% owned by each of Alabama Power and Georgia Power
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DEFINITIONS
(continued)
TermMeaning
SequentSequent Energy Management, L.P. and Sequent Energy Canada Corp., wholly-owned subsidiaries of Southern Company Gas through June 30, 2021
SNGSouthern Natural Gas Company, L.L.C., a pipeline system in which Southern Company Gas has a 50% ownership interest
SOFRSecured Overnight Financing Rate
Southern CompanyThe Southern Company
Southern Company GasSouthern Company Gas and its subsidiaries
Southern Company Gas CapitalSouthern Company Gas Capital Corporation, a 100%-owned subsidiary of Southern Company Gas
Southern Company power poolThe operating arrangement whereby the integrated generating resources of the traditional electric operating companies and Southern Power (excluding subsidiaries) are subject to joint commitment and dispatch in order to serve their combined load obligations
Southern Company systemSouthern Company, the traditional electric operating companies, Southern Power, Southern Company Gas, Southern Electric Generating Company,SEGCO, Southern Nuclear, SCS, Southern Communications Services, Inc., PowerSecure, and other subsidiaries
Southern HoldingsSouthern Company Holdings, Inc., a wholly-owned subsidiary of Southern Company
Southern NuclearSouthern Nuclear Operating Company, Inc., a wholly-owned subsidiary of Southern Company
Southern PowerSouthern Power Company and its subsidiaries
SouthStarSouthStar Energy Services, LLC (a Marketer), a wholly-owned subsidiary of Southern Company Gas
SP SolarSP Solar Holdings I, LP, a limited partnership indirectly owning substantially all of Southern Power's solar and battery energy storage facilities, in which Southern Power has a 67% ownership interest
SP WindSP Wind Holdings II, LLC, a holding company owning a portfolio of eight operating wind facilities, in which Southern Power is the controlling partner in a tax equity arrangement
Subsidiary RegistrantsAlabama Power, Georgia Power, Mississippi Power, Southern Power, and Southern Company Gas
Tax ReformThe impact of the Tax Cuts and Jobs Act, which became effective on January 1, 2018
ToshibaToshiba Corporation, the parent company of Westinghouse
traditional electric operating companiesAlabama Power, Georgia Power, and Mississippi Power
VCMVogtle Construction Monitoring
VIEVariable interest entity
Virginia Natural GasVirginia Natural Gas, Inc., a wholly-owned subsidiary of Southern Company Gas
Vogtle 3 and 4 AgreementAgreement entered into with the EPC Contractor in 2008 by Georgia Power, acting for itself and as agent for the Vogtle Owners, and rejected in bankruptcy in July 2017, pursuant to which the EPC Contractor agreed to design, engineer, procure, construct, and test Plant Vogtle Units 3 and 4
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DEFINITIONS
(continued)
TermMeaning
Vogtle OwnersGeorgia Power, Oglethorpe Power Corporation, MEAG Power, and Dalton
Vogtle Services AgreementThe June 2017 services agreement between the Vogtle Owners and the EPC Contractor, as amended and restated in July 2017, for the EPC Contractor to transition construction management of Plant Vogtle Units 3 and 4 to Southern Nuclear and to provide ongoing design, engineering, and procurement services to Southern Nuclear
WACOGWeighted average cost of gas
WestinghouseWestinghouse Electric Company LLC
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This Quarterly Report on Form 10-Q contains forward-looking statements. Forward-looking statements include, among other things, statements concerning the potential and expected effects of the continued COVID-19 pandemic, regulated rates, the strategic goals for the business, customer and sales growth, economic conditions, cost recovery and other rate actions, projected equity ratios, current and proposed environmental regulations and related compliance plans and estimated expenditures, pending or potential litigation matters, access to sources of capital, financing activities, completion dates and costs of construction projects, matters related to the abandonment of the Kemper IGCC, completion of announced dispositions,acquisitions, filings with state and federal regulatory authorities, and estimated construction plans and expenditures. In some cases, forward-looking statements can be identified by terminology such as "may," "will," "could," "would," "should," "expects," "plans," "anticipates," "believes," "estimates," "projects," "predicts," "potential," or "continue" or the negative of these terms or other similar terminology. There are various factors that could cause actual results to differ materially from those suggested by the forward-looking statements; accordingly, there can be no assurance that such indicated results will be realized. These factors include:

•the impact of recent and future federal and state regulatory changes, including tax, environmental, and other laws and regulations to which Southern Company and its subsidiaries are subject, as well as changes in application of existing laws and regulations;
•the potential effects of the continued COVID-19 pandemic, including, but not limited to, those described in Item 1A "Risk Factors" of the Form 10-K;
•the extent and timing of costs and legal requirements related to CCR;
•current and future litigation or regulatory investigations, proceedings, or inquiries, including litigation and other disputes related to the Kemper County energy facility;
•the effects, extent, and timing of the entry of additional competition in the markets in which Southern Company's subsidiaries operate, including from the development and deployment of alternative energy sources;
•variations in demand for electricity and natural gas;
•available sources and costs of natural gas and other fuels;fuels and commodities;
•the ability to complete necessary or desirable pipeline expansion or infrastructure projects, limits on pipeline capacity, and operational interruptions to natural gas distribution and transmission activities;
•transmission constraints;
•effects of inflation;
•the ability to control costs and avoid cost and schedule overruns during the development, construction, and operation of facilities or other projects, including Plant Vogtle Units 3 and 4 (which includes components based on new technology that only within the last few years began initial operation in the global nuclear industry at this scale) and Plant Barry Unit 8, due to current andand/or future challenges which include, but are not limited to, changes in labor costs, availability, and productivity; challenges with management of contractors or vendors; subcontractor performance; adverse weather conditions; shortages, delays, increased costs, or inconsistent quality of equipment, materials, and labor; contractor or supplier delay; delays due to judicial or regulatory action; nonperformance under construction, operating, or other agreements; operational readiness, including specialized operator training and required site safety programs; engineering or design problems;problems or any remediation related thereto; design and other licensing-based compliance matters, including, for nuclear units, inspections and the timely submittal by Southern Nuclear of the ITAAC documentation for each unit and the related investigations, reviews, and approvals by the NRC necessary to support NRC authorization to load fuel; challenges with start-up activities, including major equipment failure, or system integration; and/or operational performance; and challenges related to the COVID-19 pandemic;
•the ability to overcome or mitigate the current challenges at Plant Vogtle Units 3 and 4, as described in Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction" in Item 1 herein, that could further impact the cost and schedule for the project;
•legal proceedings and regulatory approvals and actions related to construction projects, such as Plant Vogtle Units 3 and 4 and Plant Barry Unit 8, and pipeline projects, including PSC approvals and FERC and NRC actions;
•under certain specified circumstances, a decision by holders of more than 10% of the ownership interests of Plant Vogtle Units 3 and 4 not to proceed with construction and the ability of other Vogtle Owners to tender a portion of their ownership interests to Georgia Power following certain construction cost increases;
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
(continued)
•in the event Georgia Power becomes obligated to provide funding to MEAG Power with respect to the portion of MEAG Power's ownership interest in Plant Vogtle Units 3 and 4 involving JEA, any inability of Georgia Power to receive repayment of such funding;
•the ability to construct facilities in accordance with the requirements of permits and licenses (including satisfaction of NRC requirements), to satisfy any environmental performance standards and the requirements of tax credits and other incentives, and to integrate facilities into the Southern Company system upon completion of construction;
•investment performance of the employee and retiree benefit plans and nuclear decommissioning trust funds;
•advances in technology, including the pace and extent of development of low- to no-carbon energy technologies and negative carbon concepts;
•performance of counterparties under ongoing renewable energy partnerships and development agreements;
•state and federal rate regulations and the impact of pending and future rate cases and negotiations, including rate actions relating to ROE, equity ratios, additional generating capacity, and fuel and other cost recovery mechanisms;
•the ability to successfully operate the traditional electric utilities' generating,operating companies' and SEGCO's generation, transmission, and distribution facilities, Southern Power's generation facilities, and Southern Company Gas' natural gas distribution and storage facilities and the successful performance of necessary corporate functions;
•the inherent risks involved in operating and constructing nuclear generating facilities;
•the inherent risks involved in transporting and storing natural gas;
•the performance of projects undertaken by the non-utility businesses and the success of efforts to invest in and develop new opportunities;
•internal restructuring or other restructuring options that may be pursued;
•potential business strategies, including acquisitions or dispositions of assets or businesses, which cannot be assured to be completed or beneficial to Southern Company or its subsidiaries;
•the ability of counterparties of Southern Company and its subsidiaries to make payments as and when due and to perform as required;
•the ability to obtain new short- and long-term contracts with wholesale customers;
•the direct or indirect effect on the Southern Company system's business resulting from cyber intrusion or physical attack and the threat of physical attacks;
•interest rate fluctuations and financial market conditions and the results of financing efforts;
•access to capital markets and other financing sources;
•changes in Southern Company's and any of its subsidiaries' credit ratings;
•changes in the method of determining LIBOR or the replacement of LIBOR with an alternative reference rate;
•the ability of Southern Company'sthe traditional electric utilitiesoperating companies to obtain additional generating capacity (or sell excess generating capacity) at competitive prices;
•catastrophic events such as fires, earthquakes, explosions, floods, tornadoes, hurricanes and other storms, droughts, pandemic health events, political unrest, wars, or other similar occurrences;
•the direct or indirect effects on the Southern Company system's business resulting from incidents affecting the U.S. electric grid, natural gas pipeline infrastructure, or operation of generating or storage resources;
•impairments of goodwill or long-lived assets;
•the effect of accounting pronouncements issued periodically by standard-setting bodies; and
•other factors discussed elsewhere herein and in other reports (including the Form 10-K) filed by the Registrants from time to time with the SEC.
The Registrants expressly disclaim any obligation to update any forward-looking statements.
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PART I
Item 1. Financial Statements (Unaudited).
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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
For the Three Months Ended March 31, For the Three Months Ended March 31,
20212020 20222021
(in millions) (in millions)
Operating Revenues:Operating Revenues:Operating Revenues:
Retail electric revenuesRetail electric revenues$3,342 $3,078 Retail electric revenues$3,613 $3,342 
Wholesale electric revenuesWholesale electric revenues545 418 Wholesale electric revenues664 545 
Other electric revenuesOther electric revenues170 151 Other electric revenues177 170 
Natural gas revenues (includes alternative revenue programs of $2 and $9, respectively)1,694 1,249 
Natural gas revenues (includes alternative revenue programs of $— and $2, respectively)Natural gas revenues (includes alternative revenue programs of $— and $2, respectively)2,058 1,694 
Other revenuesOther revenues159 122 Other revenues136 159 
Total operating revenuesTotal operating revenues5,910 5,018 Total operating revenues6,648 5,910 
Operating Expenses:Operating Expenses:Operating Expenses:
FuelFuel848 636 Fuel1,111 848 
Purchased powerPurchased power207 181 Purchased power232 207 
Cost of natural gasCost of natural gas583 439 Cost of natural gas1,095 583 
Cost of other salesCost of other sales82 55 Cost of other sales69 82 
Other operations and maintenanceOther operations and maintenance1,372 1,296 Other operations and maintenance1,516 1,372 
Depreciation and amortizationDepreciation and amortization871 857 Depreciation and amortization892 871 
Taxes other than income taxesTaxes other than income taxes345 330 Taxes other than income taxes372 345 
Estimated loss on Plant Vogtle Units 3 and 4Estimated loss on Plant Vogtle Units 3 and 448 0 Estimated loss on Plant Vogtle Units 3 and 4— 48 
(Gain) loss on dispositions, net(44)(39)
Gain on dispositions, netGain on dispositions, net(23)(44)
Total operating expensesTotal operating expenses4,312 3,755 Total operating expenses5,264 4,312 
Operating IncomeOperating Income1,598 1,263 Operating Income1,384 1,598 
Other Income and (Expense):Other Income and (Expense):Other Income and (Expense):
Allowance for equity funds used during constructionAllowance for equity funds used during construction46 34 Allowance for equity funds used during construction51 46 
Earnings from equity method investmentsEarnings from equity method investments45 42 Earnings from equity method investments46 45 
Interest expense, net of amounts capitalizedInterest expense, net of amounts capitalized(450)(456)Interest expense, net of amounts capitalized(462)(450)
Other income (expense), netOther income (expense), net58 103 Other income (expense), net145 58 
Total other income and (expense)Total other income and (expense)(301)(277)Total other income and (expense)(220)(301)
Earnings Before Income TaxesEarnings Before Income Taxes1,297 986 Earnings Before Income Taxes1,164 1,297 
Income taxesIncome taxes190 145 Income taxes173 190 
Consolidated Net IncomeConsolidated Net Income1,107 841 Consolidated Net Income991 1,107 
Dividends on preferred stock of subsidiariesDividends on preferred stock of subsidiaries4 4 Dividends on preferred stock of subsidiaries4 4 
Net loss attributable to noncontrolling interestsNet loss attributable to noncontrolling interests(32)(31)Net loss attributable to noncontrolling interests(45)(32)
Consolidated Net Income Attributable to
Southern Company		Consolidated Net Income Attributable to
Southern Company		$1,135 $868 Consolidated Net Income Attributable to
Southern Company		$1,032 $1,135 
Common Stock Data:Common Stock Data:Common Stock Data:
Earnings per share -Earnings per share -Earnings per share -
BasicBasic$1.07 $0.82 Basic$0.97 $1.07 
DilutedDiluted$1.06 $0.81 Diluted$0.97 $1.06 
Average number of shares of common stock outstanding (in millions)Average number of shares of common stock outstanding (in millions)Average number of shares of common stock outstanding (in millions)
BasicBasic1,060 1,057 Basic1,063 1,060 
DilutedDiluted1,066 1,067 Diluted1,069 1,066 
The accompanying notes as they relate to Southern Company are an integral part of these condensed consolidated financial statements.
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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
 
For the Three Months Ended March 31, For the Three Months Ended March 31,
20212020 20222021
(in millions) (in millions)
Consolidated Net IncomeConsolidated Net Income$1,107 $841 Consolidated Net Income$991 $1,107 
Other comprehensive income (loss):
Other comprehensive income:Other comprehensive income:
Qualifying hedges:Qualifying hedges:Qualifying hedges:
Changes in fair value, net of tax of $(10) and $(30), respectively(30)(86)
Reclassification adjustment for amounts included in net income,
net of tax of $18 and $13, respectively
55 38 
Changes in fair value, net of tax of $8 and $(10), respectivelyChanges in fair value, net of tax of $8 and $(10), respectively19 (30)
Reclassification adjustment for amounts included in net income,
net of tax of $6 and $18, respectively
Reclassification adjustment for amounts included in net income,
net of tax of $6 and $18, respectively
20 55 
Pension and other postretirement benefit plans:Pension and other postretirement benefit plans:Pension and other postretirement benefit plans:
Reclassification adjustment for amounts included in net income,
net of tax of $1 and $2, respectively
3 1 
Total other comprehensive income (loss)28 (47)
Reclassification adjustment for amounts included in net income,
net of tax of $1 and $1, respectively
Reclassification adjustment for amounts included in net income,
net of tax of $1 and $1, respectively
3 3 
Total other comprehensive incomeTotal other comprehensive income42 28 
Comprehensive IncomeComprehensive Income1,135 794 Comprehensive Income1,033 1,135 
Dividends on preferred stock of subsidiariesDividends on preferred stock of subsidiaries4 4 Dividends on preferred stock of subsidiaries4 4 
Comprehensive loss attributable to noncontrolling interestsComprehensive loss attributable to noncontrolling interests(32)(31)Comprehensive loss attributable to noncontrolling interests(45)(32)
Consolidated Comprehensive Income Attributable to
Southern Company		Consolidated Comprehensive Income Attributable to
Southern Company		$1,163 $821 Consolidated Comprehensive Income Attributable to
Southern Company		$1,074 $1,163 
The accompanying notes as they relate to Southern Company are an integral part of these condensed consolidated financial statements.

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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Three Months Ended March 31, For the Three Months Ended March 31,
20212020 20222021
(in millions) (in millions)
Operating Activities:Operating Activities:Operating Activities:
Consolidated net incomeConsolidated net income$1,107 $841 Consolidated net income$991 $1,107 
Adjustments to reconcile consolidated net income to net cash provided from operating activities —Adjustments to reconcile consolidated net income to net cash provided from operating activities —Adjustments to reconcile consolidated net income to net cash provided from operating activities —
Depreciation and amortization, totalDepreciation and amortization, total964 949 Depreciation and amortization, total989 964 
Deferred income taxesDeferred income taxes140 (58)Deferred income taxes40 140 
Allowance for equity funds used during constructionAllowance for equity funds used during construction(46)(34)Allowance for equity funds used during construction(51)(46)
Pension, postretirement, and other employee benefitsPension, postretirement, and other employee benefits(78)(67)Pension, postretirement, and other employee benefits(123)(78)
Settlement of asset retirement obligationsSettlement of asset retirement obligations(109)(86)Settlement of asset retirement obligations(87)(109)
Stock based compensation expenseStock based compensation expense83 72 Stock based compensation expense85 83 
Estimated loss on Plant Vogtle Units 3 and 4Estimated loss on Plant Vogtle Units 3 and 448 0 Estimated loss on Plant Vogtle Units 3 and 4— 48 
Storm damage accrualsStorm damage accruals54 56 Storm damage accruals52 54 
(Gain) loss on dispositions, net(41)(38)
Gain on dispositions, netGain on dispositions, net(20)(41)
Natural gas cost under recovery – long-termNatural gas cost under recovery – long-term(185)0 Natural gas cost under recovery – long-term162 (185)
Retail fuel cost under recovery – long-termRetail fuel cost under recovery – long-term(130)— 
Other, netOther, net114 55 Other, net7 114 
Changes in certain current assets and liabilities —Changes in certain current assets and liabilities —Changes in certain current assets and liabilities —
-Receivables-Receivables308 317 -Receivables(217)308 
-Prepayments-Prepayments(98)(110)-Prepayments(86)(98)
-Materials and supplies-Materials and supplies(28)(27)
-Natural gas for sale, net of temporary LIFO liquidation-Natural gas for sale, net of temporary LIFO liquidation456 246 -Natural gas for sale, net of temporary LIFO liquidation450 456 
-Natural gas cost under recovery-Natural gas cost under recovery(487)0 -Natural gas cost under recovery(40)(487)
-Other current assets-Other current assets63 (67)-Other current assets87 90 
-Accounts payable-Accounts payable(216)(504)-Accounts payable132 (216)
-Accrued taxes-Accrued taxes(212)(102)-Accrued taxes(58)(212)
-Accrued compensation-Accrued compensation(417)(473)-Accrued compensation(470)(417)
-Accrued interest-Accrued interest(90)(60)-Accrued interest(128)(90)
-Retail fuel cost over recovery-Retail fuel cost over recovery— (53)
-Customer refunds0 (103)
-Other current liabilities-Other current liabilities(116)60 -Other current liabilities35 (63)
Net cash provided from operating activitiesNet cash provided from operating activities1,242 894 Net cash provided from operating activities1,592 1,242 
Investing Activities:Investing Activities:Investing Activities:
Business acquisitions, net of cash acquiredBusiness acquisitions, net of cash acquired(345)0 Business acquisitions, net of cash acquired— (345)
Property additionsProperty additions(1,678)(1,560)Property additions(1,419)(1,678)
Nuclear decommissioning trust fund purchasesNuclear decommissioning trust fund purchases(550)(254)Nuclear decommissioning trust fund purchases(294)(550)
Nuclear decommissioning trust fund salesNuclear decommissioning trust fund sales546 249 Nuclear decommissioning trust fund sales289 546 
Proceeds from dispositions20 982 
Cost of removal, net of salvageCost of removal, net of salvage(85)(69)Cost of removal, net of salvage(227)(85)
Change in construction payables, netChange in construction payables, net(116)(141)Change in construction payables, net23 (116)
Payments pursuant to LTSAsPayments pursuant to LTSAs(60)(26)Payments pursuant to LTSAs(37)(60)
Other investing activitiesOther investing activities25 (70)Other investing activities110 45 
Net cash used for investing activitiesNet cash used for investing activities(2,243)(889)Net cash used for investing activities(1,555)(2,243)
Financing Activities:Financing Activities:Financing Activities:
Increase (decrease) in notes payable, net182 (685)
Increase in notes payable, netIncrease in notes payable, net137 182 
Proceeds —Proceeds —Proceeds —
Long-term debtLong-term debt2,150 2,653 Long-term debt700 2,150 
Short-term borrowingsShort-term borrowings850 325 
Common stockCommon stock14 52 Common stock38 14 
Short-term borrowings325 565 
Redemptions and repurchases —Redemptions and repurchases —Redemptions and repurchases —
Long-term debtLong-term debt(384)(1,481)Long-term debt(977)(384)
Short-term borrowingsShort-term borrowings(25)(100)Short-term borrowings(100)(25)
Capital contributions from noncontrolling interestsCapital contributions from noncontrolling interests313 16 Capital contributions from noncontrolling interests73 313 
Distributions to noncontrolling interestsDistributions to noncontrolling interests(46)(48)Distributions to noncontrolling interests(97)(46)
Payment of common stock dividendsPayment of common stock dividends(678)(655)Payment of common stock dividends(702)(678)
Other financing activitiesOther financing activities(117)(132)Other financing activities(115)(117)
Net cash provided from financing activities1,734 185 
Net cash provided from (used for) financing activitiesNet cash provided from (used for) financing activities(193)1,734 
Net Change in Cash, Cash Equivalents, and Restricted CashNet Change in Cash, Cash Equivalents, and Restricted Cash733 190 Net Change in Cash, Cash Equivalents, and Restricted Cash(156)733 
Cash, Cash Equivalents, and Restricted Cash at Beginning of PeriodCash, Cash Equivalents, and Restricted Cash at Beginning of Period1,068 1,978 Cash, Cash Equivalents, and Restricted Cash at Beginning of Period1,829 1,068 
Cash, Cash Equivalents, and Restricted Cash at End of PeriodCash, Cash Equivalents, and Restricted Cash at End of Period$1,801 $2,168 Cash, Cash Equivalents, and Restricted Cash at End of Period$1,673 $1,801 
Supplemental Cash Flow Information:Supplemental Cash Flow Information:Supplemental Cash Flow Information:
Cash paid (received) during the period for —Cash paid (received) during the period for —Cash paid (received) during the period for —
Interest (net of $21 and $20 capitalized for 2021 and 2020, respectively)$519 $490 
Interest (net of $23 and $21 capitalized for 2022 and 2021, respectively)Interest (net of $23 and $21 capitalized for 2022 and 2021, respectively)$515 $519 
Income taxes, netIncome taxes, net(51)(16)Income taxes, net(8)(51)
Noncash transactions —Noncash transactions —Noncash transactions —
Accrued property additions at end of periodAccrued property additions at end of period872 733 Accrued property additions at end of period863 872 
Contributions from noncontrolling interestsContributions from noncontrolling interests89 0 Contributions from noncontrolling interests— 89 
Contributions of wind turbine equipmentContributions of wind turbine equipment82 17 Contributions of wind turbine equipment— 82 
Right-of-use assets obtained under leasesRight-of-use assets obtained under leases76 28 Right-of-use assets obtained under leases3 76 
Reassessment of right-of-use assets under operating leasesReassessment of right-of-use assets under operating leases40 — 
The accompanying notes as they relate to Southern Company are an integral part of these condensed consolidated financial statements.
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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
AssetsAssetsAt March 31, 2021At December 31, 2020AssetsAt March 31, 2022At December 31, 2021
(in millions) (in millions)
Current Assets:Current Assets:Current Assets:
Cash and cash equivalentsCash and cash equivalents$1,770 $1,065 Cash and cash equivalents$1,662 $1,798 
Receivables —Receivables —Receivables —
Customer accountsCustomer accounts1,716 1,753 Customer accounts2,006 1,806 
Energy marketing412 516 
Unbilled revenuesUnbilled revenues544 672 Unbilled revenues638 711 
Other accounts and notesOther accounts and notes478 512 Other accounts and notes509 523 
Accumulated provision for uncollectible accountsAccumulated provision for uncollectible accounts(124)(118)Accumulated provision for uncollectible accounts(89)(78)
Materials and suppliesMaterials and supplies1,504 1,478 Materials and supplies1,571 1,543 
Fossil fuel for generationFossil fuel for generation494 550 Fossil fuel for generation411 450 
Natural gas for saleNatural gas for sale197 460 Natural gas for sale121 362 
Prepaid expensesPrepaid expenses657 276 Prepaid expenses739 330 
Assets from risk management activities, net of collateralAssets from risk management activities, net of collateral100 147 Assets from risk management activities, net of collateral405 151 
Regulatory assets – asset retirement obligationsRegulatory assets – asset retirement obligations214 214 Regulatory assets – asset retirement obligations241 219 
Natural gas cost under recoveryNatural gas cost under recovery487 0 Natural gas cost under recovery306 266 
Other regulatory assetsOther regulatory assets788 810 Other regulatory assets576 653 
Other current assetsOther current assets232 282 Other current assets201 231 
Total current assetsTotal current assets9,469 8,617 Total current assets9,297 8,965 
Property, Plant, and Equipment:Property, Plant, and Equipment:Property, Plant, and Equipment:
In serviceIn service111,579 110,516 In service116,259 115,592 
Less: Accumulated depreciationLess: Accumulated depreciation32,887 32,397 Less: Accumulated depreciation34,645 34,079 
Plant in service, net of depreciationPlant in service, net of depreciation78,692 78,119 Plant in service, net of depreciation81,614 81,513 
Nuclear fuel, at amortized costNuclear fuel, at amortized cost820 818 Nuclear fuel, at amortized cost839 824 
Construction work in progressConstruction work in progress9,525 8,697 Construction work in progress9,337 8,771 
Total property, plant, and equipmentTotal property, plant, and equipment89,037 87,634 Total property, plant, and equipment91,790 91,108 
Other Property and Investments:Other Property and Investments:Other Property and Investments:
GoodwillGoodwill5,280 5,280 Goodwill5,280 5,280 
Nuclear decommissioning trusts, at fair valueNuclear decommissioning trusts, at fair value2,346 2,303 Nuclear decommissioning trusts, at fair value2,403 2,542 
Equity investments in unconsolidated subsidiariesEquity investments in unconsolidated subsidiaries1,368 1,362 Equity investments in unconsolidated subsidiaries1,293 1,282 
Other intangible assets, net of amortization of $339 and $328, respectively477 487 
Leveraged leases562 556 
Other intangible assets, net of amortization of $317 and $307, respectivelyOther intangible assets, net of amortization of $317 and $307, respectively435 445 
Miscellaneous property and investmentsMiscellaneous property and investments463 398 Miscellaneous property and investments633 653 
Total other property and investmentsTotal other property and investments10,496 10,386 Total other property and investments10,044 10,202 
Deferred Charges and Other Assets:Deferred Charges and Other Assets:Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortizationOperating lease right-of-use assets, net of amortization1,821 1,802 Operating lease right-of-use assets, net of amortization1,693 1,701 
Deferred charges related to income taxesDeferred charges related to income taxes803 796 Deferred charges related to income taxes833 824 
Prepaid pension costsPrepaid pension costs1,772 1,657 
Unamortized loss on reacquired debtUnamortized loss on reacquired debt274 280 Unamortized loss on reacquired debt257 258 
Regulatory assets – asset retirement obligations, deferredRegulatory assets – asset retirement obligations, deferred4,966 4,934 Regulatory assets – asset retirement obligations, deferred5,683 5,466 
Other regulatory assets, deferredOther regulatory assets, deferred7,263 7,198 Other regulatory assets, deferred5,372 5,577 
Other deferred charges and assetsOther deferred charges and assets1,264 1,288 Other deferred charges and assets1,898 1,776 
Total deferred charges and other assetsTotal deferred charges and other assets16,391 16,298 Total deferred charges and other assets17,508 17,259 
Total AssetsTotal Assets$125,393 $122,935 Total Assets$128,639 $127,534 
The accompanying notes as they relate to Southern Company are an integral part of these condensed consolidated financial statements.

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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
Liabilities and Stockholders' EquityLiabilities and Stockholders' EquityAt March 31, 2021At December 31, 2020Liabilities and Stockholders' EquityAt March 31, 2022At December 31, 2021
(in millions) (in millions)
Current Liabilities:Current Liabilities:Current Liabilities:
Securities due within one yearSecurities due within one year$3,535 $3,507 Securities due within one year$1,193 $2,157 
Notes payableNotes payable1,092 609 Notes payable2,330 1,440 
Energy marketing trade payables475 494 
Accounts payableAccounts payable2,058 2,312 Accounts payable2,251 2,169 
Customer depositsCustomer deposits470 487 Customer deposits454 479 
Accrued taxes —Accrued taxes —Accrued taxes —
Accrued income taxesAccrued income taxes71 130 Accrued income taxes57 50 
Other accrued taxesOther accrued taxes412 699 Other accrued taxes415 641 
Accrued interestAccrued interest423 513 Accrued interest404 533 
Accrued compensationAccrued compensation584 1,025 Accrued compensation574 1,070 
Asset retirement obligationsAsset retirement obligations642 585 Asset retirement obligations695 697 
Operating lease obligationsOperating lease obligations244 241 Operating lease obligations245 250 
Other regulatory liabilitiesOther regulatory liabilities462 509 Other regulatory liabilities711 563 
Other current liabilitiesOther current liabilities1,118 968 Other current liabilities1,105 872 
Total current liabilitiesTotal current liabilities11,586 12,079 Total current liabilities10,434 10,921 
Long-term DebtLong-term Debt46,727 45,073 Long-term Debt50,633 50,120 
Deferred Credits and Other Liabilities:Deferred Credits and Other Liabilities:Deferred Credits and Other Liabilities:
Accumulated deferred income taxesAccumulated deferred income taxes8,839 8,175 Accumulated deferred income taxes9,506 8,862 
Deferred credits related to income taxesDeferred credits related to income taxes5,676 5,767 Deferred credits related to income taxes5,365 5,401 
Accumulated deferred ITCsAccumulated deferred ITCs2,214 2,235 Accumulated deferred ITCs2,196 2,216 
Employee benefit obligationsEmployee benefit obligations2,091 2,213 Employee benefit obligations1,526 1,550 
Operating lease obligations, deferredOperating lease obligations, deferred1,652 1,611 Operating lease obligations, deferred1,521 1,503 
Asset retirement obligations, deferredAsset retirement obligations, deferred10,043 10,099 Asset retirement obligations, deferred11,016 10,990 
Accrued environmental remediation208 216 
Other cost of removal obligationsOther cost of removal obligations2,215 2,211 Other cost of removal obligations2,030 2,103 
Other regulatory liabilities, deferredOther regulatory liabilities, deferred226 251 Other regulatory liabilities, deferred526 485 
Other deferred credits and liabilitiesOther deferred credits and liabilities557 480 Other deferred credits and liabilities966 816 
Total deferred credits and other liabilitiesTotal deferred credits and other liabilities33,721 33,258 Total deferred credits and other liabilities34,652 33,926 
Total LiabilitiesTotal Liabilities92,034 90,410 Total Liabilities95,719 94,967 
Redeemable Preferred Stock of SubsidiariesRedeemable Preferred Stock of Subsidiaries291 291 Redeemable Preferred Stock of Subsidiaries291 291 
Total Stockholders' Equity (See accompanying statements)
Total Stockholders' Equity (See accompanying statements)
33,068 32,234 
Total Stockholders' Equity (See accompanying statements)
32,629 32,276 
Total Liabilities and Stockholders' EquityTotal Liabilities and Stockholders' Equity$125,393 $122,935 Total Liabilities and Stockholders' Equity$128,639 $127,534 
The accompanying notes as they relate to Southern Company are an integral part of these condensed consolidated financial statements.
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SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
Southern Company Common Stockholders' EquitySouthern Company Common Stockholders' Equity
Number of
Common Shares		Common StockAccumulated
Other
Comprehensive Income
(Loss)		 Number of
Common Shares		Common StockAccumulated
Other
Comprehensive Income
(Loss)
IssuedTreasuryPar ValuePaid-In CapitalTreasuryRetained EarningsNoncontrolling InterestsTotal IssuedTreasuryPar ValuePaid-In CapitalTreasuryRetained EarningsAccumulated
Other
Comprehensive Income
(Loss)		Noncontrolling InterestsTotal
(in millions) (in millions)
Balance at December 31, 20191,054 (1)$5,257 $11,734 $(42)$10,877 $(321)$4,254 $31,759 
Balance at December 31, 2020Balance at December 31, 20201,058 (1)$5,268 $11,834 $(46)$11,311 $(395)$4,262 $32,234 
Consolidated net income (loss)Consolidated net income (loss)— — — — — 868 — (31)837 Consolidated net income (loss)— — — — — 1,135 — (32)1,103 
Other comprehensive income (loss)— — — — — — (47)— (47)
Other comprehensive incomeOther comprehensive income— — — — — — 28 — 28 
Stock issuedStock issued3 — 9 43 — — — — 52 Stock issued2 — 5 9 — — — — 14 
Stock-based compensationStock-based compensation— — — 5 — — — — 5 Stock-based compensation— — — 9 — — — — 9 
Cash dividends of $0.62 per share— — — — — (655)— — (655)
Cash dividends of $0.64 per shareCash dividends of $0.64 per share— — — — — (678)— — (678)
Capital contributions from
noncontrolling interests		Capital contributions from
noncontrolling interests		— — — — — — — 16 16 Capital contributions from
noncontrolling interests		— — — — — — — 403 403 
Distributions to noncontrolling interestsDistributions to noncontrolling interests— — — — — — — (48)(48)Distributions to noncontrolling interests— — — — — — — (46)(46)
OtherOther— — — — (2)(2)1 — (3)Other— — — 2 — — — (1)1 
Balance at March 31, 20201,057 (1)$5,266 $11,782 $(44)$11,088 $(367)$4,191 $31,916 
Balance at March 31, 2021Balance at March 31, 20211,060 (1)$5,273 $11,854 $(46)$11,768 $(367)$4,586 $33,068 
Balance at December 31, 20201,058 (1)$5,268 $11,834 $(46)$11,311 $(395)$4,262 $32,234 
Balance at December 31, 2021Balance at December 31, 20211,061 (1)$5,279 $11,950 $(47)$10,929 $(237)$4,402 $32,276 
Consolidated net income (loss)Consolidated net income (loss)— — — — — 1,135 — (32)1,103 Consolidated net income (loss)— — — — — 1,032 — (45)987 
Other comprehensive incomeOther comprehensive income— — — — — — 28 — 28 Other comprehensive income— — — — — — 42 — 42 
Stock issuedStock issued2 — 5 9 — — — — 14 Stock issued3 — 7 31 — — — — 38 
Stock-based compensationStock-based compensation— — — 9 — — — — 9 Stock-based compensation— — — 6 — — — — 6 
Cash dividends of $0.64 per share— — — — — (678)— — (678)
Cash dividends of $0.66 per shareCash dividends of $0.66 per share— — — — — (702)— — (702)
Capital contributions from
noncontrolling interests		Capital contributions from
noncontrolling interests		— — — — — — — 403 403 Capital contributions from
noncontrolling interests		— — — — — — — 73 73 
Distributions to noncontrolling interestsDistributions to noncontrolling interests— — — — — — — (46)(46)Distributions to noncontrolling interests— — — — — — — (98)(98)
OtherOther— — — 2 — — — (1)1 Other— — — 7 (2)2 — — 7 
Balance at March 31, 20211,060 (1)$5,273 $11,854 $(46)$11,768 $(367)$4,586 $33,068 
Balance at March 31, 2022Balance at March 31, 20221,064 (1)$5,286 $11,994 $(49)$11,261 $(195)$4,332 $32,629 
The accompanying notes as they relate to Southern Company are an integral part of these condensed consolidated financial statements.

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ALABAMA POWER COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
 
For the Three Months Ended March 31,For the Three Months Ended March 31,
20212020 20222021
(in millions) (in millions)
Operating Revenues:Operating Revenues:Operating Revenues:
Retail revenuesRetail revenues$1,352 $1,205 Retail revenues$1,379 $1,352 
Wholesale revenues, non-affiliatesWholesale revenues, non-affiliates92 56 Wholesale revenues, non-affiliates114 92 
Wholesale revenues, affiliatesWholesale revenues, affiliates32 19 Wholesale revenues, affiliates65 32 
Other revenuesOther revenues83 71 Other revenues91 83 
Total operating revenuesTotal operating revenues1,559 1,351 Total operating revenues1,649 1,559 
Operating Expenses:Operating Expenses:Operating Expenses:
FuelFuel291 215 Fuel333 291 
Purchased power, non-affiliatesPurchased power, non-affiliates50 40 Purchased power, non-affiliates67 50 
Purchased power, affiliatesPurchased power, affiliates30 18 Purchased power, affiliates26 30 
Other operations and maintenanceOther operations and maintenance361 350 Other operations and maintenance409 361 
Depreciation and amortizationDepreciation and amortization211 200 Depreciation and amortization215 211 
Taxes other than income taxesTaxes other than income taxes103 106 Taxes other than income taxes104 103 
Total operating expensesTotal operating expenses1,046 929 Total operating expenses1,154 1,046 
Operating IncomeOperating Income513 422 Operating Income495 513 
Other Income and (Expense):Other Income and (Expense):Other Income and (Expense):
Allowance for equity funds used during constructionAllowance for equity funds used during construction12 10 Allowance for equity funds used during construction16 12 
Interest expense, net of amounts capitalizedInterest expense, net of amounts capitalized(84)(88)Interest expense, net of amounts capitalized(89)(84)
Other income (expense), netOther income (expense), net32 24 Other income (expense), net36 32 
Total other income and (expense)Total other income and (expense)(40)(54)Total other income and (expense)(37)(40)
Earnings Before Income TaxesEarnings Before Income Taxes473 368 Earnings Before Income Taxes458 473 
Income taxesIncome taxes110 84 Income taxes107 110 
Net IncomeNet Income363 284 Net Income351 363 
Dividends on Preferred StockDividends on Preferred Stock4 4 Dividends on Preferred Stock4 4 
Net Income After Dividends on Preferred StockNet Income After Dividends on Preferred Stock$359 $280 Net Income After Dividends on Preferred Stock$347 $359 


CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
 
For the Three Months Ended March 31,For the Three Months Ended March 31,
20212020 20222021
(in millions) (in millions)
Net IncomeNet Income$363 $284 Net Income$351 $363 
Other comprehensive income (loss):
Other comprehensive income:Other comprehensive income:
Qualifying hedges:Qualifying hedges:Qualifying hedges:
Reclassification adjustment for amounts included in net income,
net of tax of $0 and $0, respectively
1 1 
Total other comprehensive income (loss)1 1 
Changes in fair value, net of tax of $(1) and $—, respectivelyChanges in fair value, net of tax of $(1) and $—, respectively(1)— 
Reclassification adjustment for amounts included in net income,
net of tax of $— and $—, respectively
Reclassification adjustment for amounts included in net income,
net of tax of $— and $—, respectively
1 1 
Total other comprehensive incomeTotal other comprehensive income— 1 
Comprehensive IncomeComprehensive Income$364 $285 Comprehensive Income$351 $364 
The accompanying notes as they relate to Alabama Power are an integral part of these condensed financial statements.
16
Table of ContentsIndex to Financial Statements
ALABAMA POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
 For the Three Months Ended March 31,
 20222021
 (in millions)
Operating Activities:
Net income$351 $363 
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total250 248 
Deferred income taxes35 33 
Pension, postretirement, and other employee benefits(48)(29)
Settlement of asset retirement obligations(38)(49)
Retail fuel cost under recovery – long-term(46)— 
Other, net(27)(14)
Changes in certain current assets and liabilities —
-Receivables(4)40 
-Fossil fuel stock23 38 
-Prepayments(85)(73)
-Other current assets(10)(16)
-Accounts payable(237)(299)
-Accrued taxes102 104 
-Accrued compensation(99)(105)
-Retail fuel cost over recovery— (18)
-Other current liabilities(13)(9)
Net cash provided from operating activities154 214 
Investing Activities:
Property additions(343)(466)
Nuclear decommissioning trust fund purchases(72)(310)
Nuclear decommissioning trust fund sales72 310 
Cost of removal, net of salvage(60)(23)
Change in construction payables39 32 
Other investing activities(1)(9)
Net cash used for investing activities(365)(466)
Financing Activities:
Proceeds — Senior notes700 — 
Redemptions — Senior notes(550)— 
Capital contributions from parent company625 600 
Payment of common stock dividends(254)(246)
Other financing activities(17)(13)
Net cash provided from financing activities504 341 
Net Change in Cash, Cash Equivalents, and Restricted Cash293 89 
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period1,060 530 
Cash, Cash Equivalents, and Restricted Cash at End of Period$1,353 $619 
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $4 and $3 capitalized for 2022 and 2021, respectively)$110 $93 
Noncash transactions —
Accrued property additions at end of period188 198 
Right-of-use assets obtained under leases1 1 
The accompanying notes as they relate to Alabama Power are an integral part of these condensed financial statements.
17
    Table of Contents                                Index to Financial Statements
ALABAMA POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
 For the Three Months Ended March 31,
 20212020
 (in millions)
Operating Activities:
Net income$363 $284 
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total248 241 
Deferred income taxes33 10 
Pension, postretirement, and other employee benefits(29)(25)
Settlement of asset retirement obligations(49)(46)
Other, net(15)10 
Changes in certain current assets and liabilities —
-Receivables40 93 
-Fossil fuel stock38 (15)
-Prepayments(73)(80)
-Materials and supplies(4)(22)
-Other current assets(11)(14)
-Accounts payable(299)(305)
-Accrued taxes104 100 
-Accrued compensation(105)(111)
-Retail fuel cost over recovery(18)47 
-Other current liabilities(9)(12)
Net cash provided from operating activities214 155 
Investing Activities:
Property additions(466)(340)
Nuclear decommissioning trust fund purchases(310)(81)
Nuclear decommissioning trust fund sales310 81 
Cost of removal, net of salvage(23)(15)
Change in construction payables32 (65)
Other investing activities(9)(4)
Net cash used for investing activities(466)(424)
Financing Activities:
Redemptions — Pollution control revenue bonds0 (87)
Capital contributions from parent company600 610 
Payment of common stock dividends(246)(239)
Other financing activities(13)(11)
Net cash provided from financing activities341 273 
Net Change in Cash, Cash Equivalents, and Restricted Cash89 4 
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period530 894 
Cash, Cash Equivalents, and Restricted Cash at End of Period$619 $898 
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $3 capitalized for both 2021 and 2020)$93 $92 
Noncash transactions —
Accrued property additions at end of period198 135 
Right-of-use assets obtained under leases1 3 
The accompanying notes as they relate to Alabama Power are an integral part of these condensed financial statements.
18
Table of ContentsIndex to Financial Statements
ALABAMA POWER COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)
 
AssetsAssetsAt March 31, 2021At December 31, 2020AssetsAt March 31, 2022At December 31, 2021
(in millions)(in millions)
Current Assets:Current Assets:Current Assets:
Cash and cash equivalentsCash and cash equivalents$619 $530 Cash and cash equivalents$1,353 $1,060 
Receivables —Receivables —Receivables —
Customer accountsCustomer accounts394 429 Customer accounts417 410 
Unbilled revenuesUnbilled revenues124 152 Unbilled revenues127 138 
AffiliatedAffiliated35 31 Affiliated36 37 
Other accounts and notesOther accounts and notes71 66 Other accounts and notes64 55 
Accumulated provision for uncollectible accountsAccumulated provision for uncollectible accounts(33)(43)Accumulated provision for uncollectible accounts(15)(14)
Fossil fuel stockFossil fuel stock197 235 Fossil fuel stock136 159 
Materials and suppliesMaterials and supplies550 546 Materials and supplies550 548 
Prepaid expensesPrepaid expenses114 42 Prepaid expenses126 41 
Other regulatory assetsOther regulatory assets224 226 Other regulatory assets191 208 
Other current assetsOther current assets43 33 Other current assets131 67 
Total current assetsTotal current assets2,338 2,247 Total current assets3,116 2,709 
Property, Plant, and Equipment:Property, Plant, and Equipment:Property, Plant, and Equipment:
In serviceIn service32,015 31,816 In service33,333 33,135 
Less: Accumulated provision for depreciationLess: Accumulated provision for depreciation10,123 10,009 Less: Accumulated provision for depreciation10,451 10,313 
Plant in service, net of depreciationPlant in service, net of depreciation21,892 21,807 Plant in service, net of depreciation22,882 22,822 
Nuclear fuel, at amortized costNuclear fuel, at amortized cost268 270 Nuclear fuel, at amortized cost246 247 
Construction work in progressConstruction work in progress1,052 866 Construction work in progress1,249 1,147 
Total property, plant, and equipmentTotal property, plant, and equipment23,212 22,943 Total property, plant, and equipment24,377 24,216 
Other Property and Investments:Other Property and Investments:Other Property and Investments:
Nuclear decommissioning trusts, at fair valueNuclear decommissioning trusts, at fair value1,198 1,157 Nuclear decommissioning trusts, at fair value1,257 1,325 
Equity investments in unconsolidated subsidiariesEquity investments in unconsolidated subsidiaries63 63 Equity investments in unconsolidated subsidiaries57 57 
Miscellaneous property and investmentsMiscellaneous property and investments128 131 Miscellaneous property and investments126 126 
Total other property and investmentsTotal other property and investments1,389 1,351 Total other property and investments1,440 1,508 
Deferred Charges and Other Assets:Deferred Charges and Other Assets:Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortizationOperating lease right-of-use assets, net of amortization140 151 Operating lease right-of-use assets, net of amortization97 108 
Deferred charges related to income taxesDeferred charges related to income taxes237 235 Deferred charges related to income taxes243 240 
Prepaid pension and other postretirement benefit costsPrepaid pension and other postretirement benefit costs546 513 
Regulatory assets – asset retirement obligationsRegulatory assets – asset retirement obligations1,446 1,441 Regulatory assets – asset retirement obligations1,663 1,547 
Other regulatory assets, deferredOther regulatory assets, deferred2,161 2,162 Other regulatory assets, deferred1,717 1,807 
Other deferred charges and assetsOther deferred charges and assets282 273 Other deferred charges and assets371 334 
Total deferred charges and other assetsTotal deferred charges and other assets4,266 4,262 Total deferred charges and other assets4,637 4,549 
Total AssetsTotal Assets$31,205 $30,803 Total Assets$33,570 $32,982 
The accompanying notes as they relate to Alabama Power are an integral part of these condensed financial statements.

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    Table of Contents                                Index to Financial Statements
ALABAMA POWER COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)
 
Liabilities and Stockholder's EquityLiabilities and Stockholder's EquityAt March 31, 2021At December 31, 2020Liabilities and Stockholder's EquityAt March 31, 2022At December 31, 2021
(in millions) (in millions)
Current Liabilities:Current Liabilities:Current Liabilities:
Securities due within one yearSecurities due within one year$815 $311 Securities due within one year$201 $751 
Accounts payable —Accounts payable —Accounts payable —
AffiliatedAffiliated220 316 Affiliated194 309 
OtherOther392 545 Other372 459 
Customer depositsCustomer deposits105 104 Customer deposits106 106 
Accrued taxesAccrued taxes257 152 Accrued taxes200 98 
Accrued interestAccrued interest75 90 Accrued interest77 100 
Accrued compensationAccrued compensation113 212 Accrued compensation124 219 
Asset retirement obligationsAsset retirement obligations275 254 Asset retirement obligations322 320 
Other regulatory liabilitiesOther regulatory liabilities98 108 Other regulatory liabilities148 215 
Other current liabilitiesOther current liabilities108 107 Other current liabilities128 125 
Total current liabilitiesTotal current liabilities2,458 2,199 Total current liabilities1,872 2,702 
Long-term DebtLong-term Debt8,055 8,558 Long-term Debt9,631 8,936 
Deferred Credits and Other Liabilities:Deferred Credits and Other Liabilities:Deferred Credits and Other Liabilities:
Accumulated deferred income taxesAccumulated deferred income taxes3,318 3,273 Accumulated deferred income taxes3,619 3,573 
Deferred credits related to income taxesDeferred credits related to income taxes2,006 2,016 Deferred credits related to income taxes1,959 1,968 
Accumulated deferred ITCsAccumulated deferred ITCs92 94 Accumulated deferred ITCs86 88 
Employee benefit obligationsEmployee benefit obligations187 214 Employee benefit obligations179 171 
Operating lease obligationsOperating lease obligations112 119 Operating lease obligations64 66 
Asset retirement obligations, deferredAsset retirement obligations, deferred3,688 3,720 Asset retirement obligations, deferred4,013 4,014 
Other cost of removal obligationsOther cost of removal obligations320 335 Other cost of removal obligations144 192 
Other regulatory liabilities, deferredOther regulatory liabilities, deferred98 124 Other regulatory liabilities, deferred224 210 
Other deferred credits and liabilitiesOther deferred credits and liabilities54 50 Other deferred credits and liabilities56 58 
Total deferred credits and other liabilitiesTotal deferred credits and other liabilities9,875 9,945 Total deferred credits and other liabilities10,344 10,340 
Total LiabilitiesTotal Liabilities20,388 20,702 Total Liabilities21,847 21,978 
Redeemable Preferred StockRedeemable Preferred Stock291 291 Redeemable Preferred Stock291 291 
Common Stockholder's Equity (See accompanying statements)
Common Stockholder's Equity (See accompanying statements)
10,526 9,810 
Common Stockholder's Equity (See accompanying statements)
11,432 10,713 
Total Liabilities and Stockholder's EquityTotal Liabilities and Stockholder's Equity$31,205 $30,803 Total Liabilities and Stockholder's Equity$33,570 $32,982 
The accompanying notes as they relate to Alabama Power are an integral part of these condensed financial statements.
2019
    Table of Contents                                Index to Financial Statements
ALABAMA POWER COMPANY
CONDENSED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY (UNAUDITED)
Number of
Common
Shares
Issued		Common
Stock		Paid-In
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Total
(in millions)
Balance at December 31, 201931 $1,222 $4,755 $3,001 $(23)$8,955 
Net income after dividends on
preferred stock		— — — 280 — 280 
Capital contributions from parent company— — 612 — — 612 
Other comprehensive income— — — — 1 1 
Cash dividends on common stock— — — (239)— (239)
Balance at March 31, 202031 $1,222 $5,367 $3,042 $(22)$9,609 
Number of
Common
Shares
Issued		Common
Stock		Paid-In
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Total
(in millions)
Balance at December 31, 2020Balance at December 31, 202031 $1,222 $5,413 $3,194 $(19)$9,810 Balance at December 31, 202031 $1,222 $5,413 $3,194 $(19)$9,810 
Net income after dividends on
preferred stock		Net income after dividends on
preferred stock		— — — 359 — 359 Net income after dividends on
preferred stock		— — — 359 — 359 
Capital contributions from parent companyCapital contributions from parent company— — 602 — — 602 Capital contributions from parent company— — 602 — — 602 
Other comprehensive incomeOther comprehensive income— — — — 1 1 Other comprehensive income— — — — 1 1 
Cash dividends on common stockCash dividends on common stock— — — (246)— (246)Cash dividends on common stock— — — (246)— (246)
Balance at March 31, 2021Balance at March 31, 202131 $1,222 $6,015 $3,307 $(18)$10,526 Balance at March 31, 202131 $1,222 $6,015 $3,307 $(18)$10,526 
Balance at December 31, 2021Balance at December 31, 202131 $1,222 $6,056 $3,448 $(13)$10,713 
Net income after dividends on
preferred stock		Net income after dividends on
preferred stock		— — — 347 — 347 
Capital contributions from parent companyCapital contributions from parent company— — 626 — — 626 
Cash dividends on common stockCash dividends on common stock— — — (254)— (254)
Balance at March 31, 2022Balance at March 31, 202231 $1,222 $6,682 $3,541 $(13)$11,432 
The accompanying notes as they relate to Alabama Power are an integral part of these condensed financial statements.

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GEORGIA POWER COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
For the Three Months Ended March 31, For the Three Months Ended March 31,
20212020 20222021
(in millions) (in millions)
Operating Revenues:Operating Revenues:Operating Revenues:
Retail revenuesRetail revenues$1,787 $1,675 Retail revenues$2,017 $1,787 
Wholesale revenuesWholesale revenues43 26 Wholesale revenues66 43 
Other revenuesOther revenues140 124 Other revenues125 140 
Total operating revenuesTotal operating revenues1,970 1,825 Total operating revenues2,208 1,970 
Operating Expenses:Operating Expenses:Operating Expenses:
FuelFuel313 231 Fuel419 313 
Purchased power, non-affiliatesPurchased power, non-affiliates144 129 Purchased power, non-affiliates150 144 
Purchased power, affiliatesPurchased power, affiliates136 129 Purchased power, affiliates206 136 
Other operations and maintenanceOther operations and maintenance474 465 Other operations and maintenance517 474 
Depreciation and amortizationDepreciation and amortization338 352 Depreciation and amortization351 338 
Taxes other than income taxesTaxes other than income taxes116 113 Taxes other than income taxes125 116 
Estimated loss on Plant Vogtle Units 3 and 4Estimated loss on Plant Vogtle Units 3 and 448 0 Estimated loss on Plant Vogtle Units 3 and 4— 48 
Total operating expensesTotal operating expenses1,569 1,419 Total operating expenses1,768 1,569 
Operating IncomeOperating Income401 406 Operating Income440 401 
Other Income and (Expense):Other Income and (Expense):Other Income and (Expense):
Allowance for equity funds used during constructionAllowance for equity funds used during construction32 31 
Interest expense, net of amounts capitalizedInterest expense, net of amounts capitalized(104)(111)Interest expense, net of amounts capitalized(107)(104)
Other income (expense), netOther income (expense), net72 52 Other income (expense), net50 41 
Total other income and (expense)Total other income and (expense)(32)(59)Total other income and (expense)(25)(32)
Earnings Before Income TaxesEarnings Before Income Taxes369 347 Earnings Before Income Taxes415 369 
Income taxesIncome taxes18 16 Income taxes30 18 
Net IncomeNet Income$351 $331 Net Income$385 $351 
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
 For the Three Months Ended March 31,
 20212020
 (in millions)
Net Income$351 $331 
Other comprehensive income (loss):
Qualifying hedges:
Changes in fair value, net of tax of $0 and $(1), respectively0 (2)
Reclassification adjustment for amounts included in net income,
   net of tax of $0 and $1, respectively
2 1 
Total other comprehensive income (loss)2 (1)
Comprehensive Income$353 $330 
 For the Three Months Ended March 31,
 20222021
 (in millions)
Net Income$385 $351 
Other comprehensive income:
Qualifying hedges:
Changes in fair value, net of tax of $3 and $—, respectively9 — 
Reclassification adjustment for amounts included in net income,
   net of tax of $1 and $—, respectively
1 2 
Total other comprehensive income10 2 
Comprehensive Income$395 $353 
The accompanying notes as they relate to Georgia Power are an integral part of these condensed financial statements.
21
Table of ContentsIndex to Financial Statements
GEORGIA POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
 For the Three Months Ended March 31,
 20222021
 (in millions)
Operating Activities:
Net income$385 $351 
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total397 384 
Deferred income taxes(6)(86)
Pension, postretirement, and other employee benefits(63)(43)
Settlement of asset retirement obligations(41)(49)
Storm damage accruals53 53 
Retail fuel cost under recovery – long-term(84)— 
Estimated loss on Plant Vogtle Units 3 and 4— 48 
Other, net(85)(19)
Changes in certain current assets and liabilities —
-Receivables— 176 
-Prepaid income taxes(36)— 
-Other current assets22 4 
-Accounts payable39 (74)
-Accrued taxes(78)(110)
-Accrued compensation(79)(68)
-Accrued interest(43)(34)
-Other current liabilities(20)(44)
Net cash provided from operating activities361 489 
Investing Activities:
Property additions(749)(775)
Nuclear decommissioning trust fund purchases(221)(241)
Nuclear decommissioning trust fund sales217 236 
Cost of removal, net of salvage(140)(40)
Change in construction payables, net of joint owner portion14 (103)
Proceeds from dispositions56 1 
Other investing activities14 9 
Net cash used for investing activities(809)(913)
Financing Activities:
Increase in notes payable, net410 145 
Proceeds —
Senior notes— 750 
Short-term borrowings450 — 
Redemptions and repurchases —
Senior notes(400)(325)
FFB loan(24)(25)
Capital contributions from parent company445 330 
Payment of common stock dividends(423)(412)
Other financing activities(17)(19)
Net cash provided from financing activities441 444 
Net Change in Cash, Cash Equivalents, and Restricted Cash(7)20 
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period33 9 
Cash, Cash Equivalents, and Restricted Cash at End of Period$26 $29 
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $16 and $15 capitalized for 2022 and 2021, respectively)$139 $128 
Noncash transactions —
Accrued property additions at end of period459 445 
Right-of-use assets obtained under operating leases1 3 
The accompanying notes as they relate to Georgia Power are an integral part of these condensed financial statements.
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    Table of Contents                                Index to Financial Statements
GEORGIA POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
 For the Three Months Ended March 31,
 20212020
 (in millions)
Operating Activities:
Net income$351 $331 
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total384 396 
Deferred income taxes(86)(73)
Pension, postretirement, and other employee benefits(43)(40)
Settlement of asset retirement obligations(49)(33)
Storm damage accruals53 53 
Retail fuel cost over recovery – long-term0 90 
Estimated loss on Plant Vogtle Units 3 and 448 0 
Other, net(19)(52)
Changes in certain current assets and liabilities —
-Receivables176 22 
-Fossil fuel stock10 (42)
-Other current assets(7)(15)
-Accounts payable(74)(69)
-Accrued taxes(110)(156)
-Accrued compensation(68)(87)
-Customer refunds0 (107)
-Other current liabilities(77)(5)
Net cash provided from operating activities489 213 
Investing Activities:
Property additions(775)(849)
Nuclear decommissioning trust fund purchases(241)(173)
Nuclear decommissioning trust fund sales236 167 
Cost of removal, net of salvage(40)(34)
Change in construction payables, net of joint owner portion(103)(46)
Proceeds from dispositions1 142 
Other investing activities9 (2)
Net cash used for investing activities(913)(795)
Financing Activities:
Increase in notes payable, net145 11 
Proceeds —
Senior notes750 1,500 
Pollution control revenue bonds0 53 
Short-term borrowings0 200 
Redemptions and repurchases —
Senior notes(325)(950)
Pollution control revenue bonds0 (148)
FFB loan(25)(16)
Capital contributions from parent company330 500 
Payment of common stock dividends(412)(385)
Other financing activities(19)(23)
Net cash provided from financing activities444 742 
Net Change in Cash, Cash Equivalents, and Restricted Cash20 160 
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period9 52 
Cash, Cash Equivalents, and Restricted Cash at End of Period$29 $212 
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $15 and $11 capitalized for 2021 and 2020, respectively)$128 $122 
Noncash transactions —
Accrued property additions at end of period445 472 
Right-of-use assets obtained under operating leases3 10 
The accompanying notes as they relate to Georgia Power are an integral part of these condensed financial statements.
23
Table of ContentsIndex to Financial Statements
GEORGIA POWER COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)
 
AssetsAssetsAt March 31, 2021At December 31, 2020AssetsAt March 31, 2022At December 31, 2021
(in millions) (in millions)
Current Assets:Current Assets:Current Assets:
Cash and cash equivalentsCash and cash equivalents$29 $9 Cash and cash equivalents$26 $33 
Receivables —Receivables —Receivables —
Customer accounts532 621 
Customer accounts, netCustomer accounts, net561 547 
Unbilled revenuesUnbilled revenues196 233 Unbilled revenues216 231 
Joint owner accountsJoint owner accounts124 123 Joint owner accounts60 116 
AffiliatedAffiliated22 21 Affiliated12 25 
Other accounts and notesOther accounts and notes35 67 Other accounts and notes35 44 
Accumulated provision for uncollectible accounts(26)(26)
Fossil fuel stockFossil fuel stock268 278 Fossil fuel stock231 248 
Materials and suppliesMaterials and supplies610 592 Materials and supplies681 670 
Regulatory assets – storm damageRegulatory assets – storm damage213 213 Regulatory assets – storm damage4 48 
Regulatory assets – asset retirement obligationsRegulatory assets – asset retirement obligations175 166 Regulatory assets – asset retirement obligations200 178 
Assets from risk management activitiesAssets from risk management activities162 48 
Other regulatory assetsOther regulatory assets250 248 Other regulatory assets248 241 
Other current assetsOther current assets114 143 Other current assets124 130 
Total current assetsTotal current assets2,542 2,688 Total current assets2,560 2,559 
Property, Plant, and Equipment:Property, Plant, and Equipment:Property, Plant, and Equipment:
In serviceIn service39,857 39,682 In service41,592 41,332 
Less: Accumulated provision for depreciationLess: Accumulated provision for depreciation12,421 12,251 Less: Accumulated provision for depreciation13,029 12,854 
Plant in service, net of depreciationPlant in service, net of depreciation27,436 27,431 Plant in service, net of depreciation28,563 28,478 
Nuclear fuel, at amortized costNuclear fuel, at amortized cost553 548 Nuclear fuel, at amortized cost593 577 
Construction work in progressConstruction work in progress7,394 6,857 Construction work in progress7,086 6,688 
Total property, plant, and equipmentTotal property, plant, and equipment35,383 34,836 Total property, plant, and equipment36,242 35,743 
Other Property and Investments:Other Property and Investments:Other Property and Investments:
Nuclear decommissioning trusts, at fair valueNuclear decommissioning trusts, at fair value1,149 1,145 Nuclear decommissioning trusts, at fair value1,146 1,217 
Equity investments in unconsolidated subsidiariesEquity investments in unconsolidated subsidiaries51 51 Equity investments in unconsolidated subsidiaries51 50 
Miscellaneous property and investmentsMiscellaneous property and investments66 63 Miscellaneous property and investments74 69 
Total other property and investmentsTotal other property and investments1,266 1,259 Total other property and investments1,271 1,336 
Deferred Charges and Other Assets:Deferred Charges and Other Assets:Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortizationOperating lease right-of-use assets, net of amortization1,273 1,308 Operating lease right-of-use assets, net of amortization1,120 1,157 
Deferred charges related to income taxesDeferred charges related to income taxes532 527 Deferred charges related to income taxes557 550 
Prepaid pension costsPrepaid pension costs608 563 
Deferred under recovered fuel clause revenuesDeferred under recovered fuel clause revenues494 410 
Regulatory assets – asset retirement obligations, deferredRegulatory assets – asset retirement obligations, deferred3,310 3,291 Regulatory assets – asset retirement obligations, deferred3,781 3,688 
Other regulatory assets, deferredOther regulatory assets, deferred2,609 2,692 Other regulatory assets, deferred2,067 1,964 
Other deferred charges and assetsOther deferred charges and assets434 479 Other deferred charges and assets506 491 
Total deferred charges and other assetsTotal deferred charges and other assets8,158 8,297 Total deferred charges and other assets9,133 8,823 
Total AssetsTotal Assets$47,349 $47,080 Total Assets$49,206 $48,461 
The accompanying notes as they relate to Georgia Power are an integral part of these condensed financial statements.

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GEORGIA POWER COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)
 
Liabilities and Stockholder's EquityLiabilities and Stockholder's EquityAt March 31, 2021At December 31, 2020Liabilities and Stockholder's EquityAt March 31, 2022At December 31, 2021
(in millions) (in millions)
Current Liabilities:Current Liabilities:Current Liabilities:
Securities due within one yearSecurities due within one year$87 $542 Securities due within one year$275 $675 
Notes payableNotes payable205 60 Notes payable860 — 
Accounts payable —Accounts payable —Accounts payable —
AffiliatedAffiliated472 597 Affiliated548 757 
OtherOther732 753 Other873 702 
Customer depositsCustomer deposits272 276 Customer deposits257 259 
Accrued taxesAccrued taxes239 407 Accrued taxes196 335 
Accrued interestAccrued interest96 130 Accrued interest93 136 
Accrued compensationAccrued compensation123 233 Accrued compensation124 232 
Operating lease obligationsOperating lease obligations151 151 Operating lease obligations156 156 
Asset retirement obligationsAsset retirement obligations304 287 Asset retirement obligations314 317 
Over recovered fuel clause revenues83 113 
Other regulatory liabilitiesOther regulatory liabilities235 228 Other regulatory liabilities336 280 
Other current liabilitiesOther current liabilities242 254 Other current liabilities292 254 
Total current liabilitiesTotal current liabilities3,241 4,031 Total current liabilities4,324 4,103 
Long-term DebtLong-term Debt13,278 12,428 Long-term Debt13,088 13,109 
Deferred Credits and Other Liabilities:Deferred Credits and Other Liabilities:Deferred Credits and Other Liabilities:
Accumulated deferred income taxesAccumulated deferred income taxes3,303 3,272 Accumulated deferred income taxes3,155 3,019 
Deferred credits related to income taxesDeferred credits related to income taxes2,517 2,588 Deferred credits related to income taxes2,303 2,321 
Accumulated deferred ITCsAccumulated deferred ITCs271 273 Accumulated deferred ITCs326 328 
Employee benefit obligationsEmployee benefit obligations539 586 Employee benefit obligations390 402 
Operating lease obligations, deferredOperating lease obligations, deferred1,149 1,156 Operating lease obligations, deferred989 999 
Asset retirement obligations, deferredAsset retirement obligations, deferred5,971 5,978 Asset retirement obligations, deferred6,526 6,507 
Other deferred credits and liabilitiesOther deferred credits and liabilities306 267 Other deferred credits and liabilities456 439 
Total deferred credits and other liabilitiesTotal deferred credits and other liabilities14,056 14,120 Total deferred credits and other liabilities14,145 14,015 
Total LiabilitiesTotal Liabilities30,575 30,579 Total Liabilities31,557 31,227 
Common Stockholder's Equity (See accompanying statements)
Common Stockholder's Equity (See accompanying statements)
16,774 16,501 
Common Stockholder's Equity (See accompanying statements)
17,649 17,234 
Total Liabilities and Stockholder's EquityTotal Liabilities and Stockholder's Equity$47,349 $47,080 Total Liabilities and Stockholder's Equity$49,206 $48,461 
The accompanying notes as they relate to Georgia Power are an integral part of these condensed financial statements.
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GEORGIA POWER COMPANY
CONDENSED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY (UNAUDITED)
Number of
Common
Shares
Issued		Common
Stock		Paid-In
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Total
(in millions)
Balance at December 31, 20199 $398 $10,962 $3,756 $(51)$15,065 
Net income— — — 331 — 331 
Capital contributions from parent company— — 502 — — 502 
Other comprehensive income (loss)— — — — (1)(1)
Cash dividends on common stock— — — (385)— (385)
Balance at March 31, 20209 $398 $11,464 $3,702 $(52)$15,512 
Number of
Common
Shares
Issued		Common
Stock		Paid-In
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Total
(in millions)
Balance at December 31, 2020Balance at December 31, 20209 $398 $12,361 $3,789 $(47)$16,501 Balance at December 31, 20209 $398 $12,361 $3,789 $(47)$16,501 
Net incomeNet income— — — 351 — 351 Net income— — — 351 — 351 
Capital contributions from parent companyCapital contributions from parent company— — 332 — — 332 Capital contributions from parent company— — 332 — — 332 
Other comprehensive incomeOther comprehensive income— — — — 2 2 Other comprehensive income— — — — 2 2 
Cash dividends on common stockCash dividends on common stock— — — (412)— (412)Cash dividends on common stock— — — (412)— (412)
Balance at March 31, 2021Balance at March 31, 20219 $398 $12,693 $3,728 $(45)$16,774 Balance at March 31, 20219 $398 $12,693 $3,728 $(45)$16,774 
Balance at December 31, 2021Balance at December 31, 20219 $398 $14,153 $2,724 $(41)$17,234 
Net incomeNet income— — — 385 — 385 
Capital contributions from parent companyCapital contributions from parent company— — 443 — — 443 
Other comprehensive incomeOther comprehensive income— — — — 10 10 
Cash dividends on common stockCash dividends on common stock— — — (423)— (423)
Balance at March 31, 2022Balance at March 31, 20229 $398 $14,596 $2,686 $(31)$17,649 
The accompanying notes as they relate to Georgia Power are an integral part of these condensed financial statements.

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MISSISSIPPI POWER COMPANY
CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)
 
For the Three Months Ended March 31,For the Three Months Ended March 31,
20212020 20222021
(in millions) (in millions)
Operating Revenues:Operating Revenues:Operating Revenues:
Retail revenuesRetail revenues$204 $199 Retail revenues$217 $204 
Wholesale revenues, non-affiliatesWholesale revenues, non-affiliates63 51 Wholesale revenues, non-affiliates68 63 
Wholesale revenues, affiliatesWholesale revenues, affiliates33 21 Wholesale revenues, affiliates42 33 
Other revenuesOther revenues7 6 Other revenues8 7 
Total operating revenuesTotal operating revenues307 277 Total operating revenues335 307 
Operating Expenses:Operating Expenses:Operating Expenses:
Fuel101 79 
Purchased power5 5 
Fuel and purchased powerFuel and purchased power132 106 
Other operations and maintenanceOther operations and maintenance68 76 Other operations and maintenance76 68 
Depreciation and amortizationDepreciation and amortization47 42 Depreciation and amortization45 47 
Taxes other than income taxesTaxes other than income taxes31 29 Taxes other than income taxes29 31 
Total operating expensesTotal operating expenses252 231 Total operating expenses282 252 
Operating IncomeOperating Income55 46 Operating Income53 55 
Other Income and (Expense):Other Income and (Expense):Other Income and (Expense):
Interest expense, net of amounts capitalizedInterest expense, net of amounts capitalized(14)(16)Interest expense, net of amounts capitalized(13)(14)
Other income (expense), netOther income (expense), net8 8 Other income (expense), net10 8 
Total other income and (expense)Total other income and (expense)(6)(8)Total other income and (expense)(3)(6)
Earnings Before Income TaxesEarnings Before Income Taxes49 38 Earnings Before Income Taxes50 49 
Income taxesIncome taxes4 6 Income taxes8 4 
Net Income and Comprehensive IncomeNet Income and Comprehensive Income$45 $32 Net Income and Comprehensive Income$42 $45 
The accompanying notes as they relate to Mississippi Power are an integral part of these condensed financial statements.
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MISSISSIPPI POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Three Months Ended March 31,For the Three Months Ended March 31,
20212020 20222021
(in millions) (in millions)
Operating Activities:Operating Activities:Operating Activities:
Net incomeNet income$45 $32 Net income$42 $45 
Adjustments to reconcile net income to net cash provided from operating activities —Adjustments to reconcile net income to net cash provided from operating activities —Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, totalDepreciation and amortization, total53 44 Depreciation and amortization, total55 53 
Deferred income taxesDeferred income taxes(5)4 
Other, netOther, net(10)(3)Other, net17 (14)
Changes in certain current assets and liabilities —Changes in certain current assets and liabilities —Changes in certain current assets and liabilities —
-Receivables-Receivables7 14 -Receivables(7)7 
-Retail fuel cost under recovery-Retail fuel cost under recovery(11)— 
-Other current assets-Other current assets1 (10)-Other current assets(11)1 
-Accounts payable-Accounts payable(30)(24)-Accounts payable(9)(30)
-Accrued taxes-Accrued taxes(75)(54)-Accrued taxes(63)(75)
-Accrued compensation-Accrued compensation(16)(19)-Accrued compensation(18)(16)
-Other current liabilities-Other current liabilities(13)3 -Other current liabilities(6)(13)
Net cash used for operating activitiesNet cash used for operating activities(38)(17)Net cash used for operating activities(16)(38)
Investing Activities:Investing Activities:Investing Activities:
Property additionsProperty additions(45)(50)Property additions(45)(45)
Construction payablesConstruction payables(8)(10)Construction payables(8)(8)
Payments pursuant to LTSAsPayments pursuant to LTSAs(7)(5)Payments pursuant to LTSAs(8)(7)
Other investing activitiesOther investing activities(7)(6)Other investing activities(7)(7)
Net cash used for investing activitiesNet cash used for investing activities(67)(71)Net cash used for investing activities(68)(67)
Financing Activities:Financing Activities:Financing Activities:
Increase in notes payable, netIncrease in notes payable, net29 0 Increase in notes payable, net25 29 
Proceeds —
Short-term borrowings0 40 
Other long-term debt0 100 
Redemptions — Senior notes0 (275)
Capital contributions from parent companyCapital contributions from parent company100 75 Capital contributions from parent company50 100 
Return of capital to parent company0 (37)
Payment of common stock dividendsPayment of common stock dividends(39)0 Payment of common stock dividends(43)(39)
Other financing activities0 (1)
Net cash provided from (used for) financing activities90 (98)
Net cash provided from financing activitiesNet cash provided from financing activities32 90 
Net Change in Cash, Cash Equivalents, and Restricted CashNet Change in Cash, Cash Equivalents, and Restricted Cash(15)(186)Net Change in Cash, Cash Equivalents, and Restricted Cash(52)(15)
Cash, Cash Equivalents, and Restricted Cash at Beginning of PeriodCash, Cash Equivalents, and Restricted Cash at Beginning of Period39 286 Cash, Cash Equivalents, and Restricted Cash at Beginning of Period61 39 
Cash, Cash Equivalents, and Restricted Cash at End of PeriodCash, Cash Equivalents, and Restricted Cash at End of Period$24 $100 Cash, Cash Equivalents, and Restricted Cash at End of Period$9 $24 
Supplemental Cash Flow Information:Supplemental Cash Flow Information:Supplemental Cash Flow Information:
Cash paid during the period for —Cash paid during the period for —Cash paid during the period for —
Interest (net of $0 and $0 capitalized for 2021 and 2020, respectively)$16 $18 
InterestInterest$22 $16 
Noncash transactions — Accrued property additions at end of periodNoncash transactions — Accrued property additions at end of period26 25 Noncash transactions — Accrued property additions at end of period17 26 
The accompanying notes as they relate to Mississippi Power are an integral part of these condensed financial statements.
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MISSISSIPPI POWER COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)
 
AssetsAssetsAt March 31, 2021At December 31, 2020AssetsAt March 31, 2022At December 31, 2021
(in millions) (in millions)
Current Assets:Current Assets:Current Assets:
Cash and cash equivalentsCash and cash equivalents$24 $39 Cash and cash equivalents$9 $61 
Receivables —Receivables —Receivables —
Customer accounts, netCustomer accounts, net50 34 Customer accounts, net65 37 
Unbilled revenuesUnbilled revenues33 38 Unbilled revenues36 34 
AffiliatedAffiliated17 32 Affiliated17 29 
Other accounts and notesOther accounts and notes29 32 Other accounts and notes30 28 
Fossil fuel stockFossil fuel stock17 24 Fossil fuel stock30 28 
Materials and suppliesMaterials and supplies67 65 Materials and supplies72 70 
Assets from risk management activitiesAssets from risk management activities94 28 
Other regulatory assetsOther regulatory assets49 60 Other regulatory assets61 54 
Other current assetsOther current assets20 20 Other current assets10 13 
Total current assetsTotal current assets306 344 Total current assets424 382 
Property, Plant, and Equipment:Property, Plant, and Equipment:Property, Plant, and Equipment:
In serviceIn service5,037 5,011 In service5,149 5,106 
Less: Accumulated provision for depreciationLess: Accumulated provision for depreciation1,579 1,545 Less: Accumulated provision for depreciation1,626 1,591 
Plant in service, net of depreciationPlant in service, net of depreciation3,458 3,466 Plant in service, net of depreciation3,523 3,515 
Construction work in progressConstruction work in progress163 146 Construction work in progress111 127 
Total property, plant, and equipmentTotal property, plant, and equipment3,621 3,612 Total property, plant, and equipment3,634 3,642 
Other Property and InvestmentsOther Property and Investments149 151 Other Property and Investments177 179 
Deferred Charges and Other Assets:Deferred Charges and Other Assets:Deferred Charges and Other Assets:
Deferred charges related to income taxesDeferred charges related to income taxes32 32 Deferred charges related to income taxes30 31 
Prepaid pension costsPrepaid pension costs85 79 
Regulatory assets – asset retirement obligationsRegulatory assets – asset retirement obligations211 201 Regulatory assets – asset retirement obligations235 232 
Other regulatory assets, deferredOther regulatory assets, deferred386 388 Other regulatory assets, deferred298 317 
Accumulated deferred income taxesAccumulated deferred income taxes126 129 Accumulated deferred income taxes115 118 
Other deferred charges and assetsOther deferred charges and assets64 55 Other deferred charges and assets127 100 
Total deferred charges and other assetsTotal deferred charges and other assets819 805 Total deferred charges and other assets890 877 
Total AssetsTotal Assets$4,895 $4,912 Total Assets$5,125 $5,080 
The accompanying notes as they relate to Mississippi Power are an integral part of these condensed financial statements.

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MISSISSIPPI POWER COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)
 
Liabilities and Stockholder's EquityLiabilities and Stockholder's EquityAt March 31, 2021At December 31, 2020Liabilities and Stockholder's EquityAt March 31, 2022At December 31, 2021
(in millions) (in millions)
Current Liabilities:Current Liabilities:Current Liabilities:
Securities due within one yearSecurities due within one year$421 $406 Securities due within one year$1 $1 
Notes payableNotes payable54 25 Notes payable25 — 
Accounts payable —Accounts payable —Accounts payable —
AffiliatedAffiliated50 63 Affiliated58 81 
OtherOther84 109 Other53 47 
Accrued taxesAccrued taxes39 114 Accrued taxes56 120 
Accrued interest14 15 
Accrued compensationAccrued compensation18 34 Accrued compensation20 36 
Asset retirement obligationsAsset retirement obligations40 27 Asset retirement obligations28 30 
Over recovered regulatory clause liabilities26 34 
Other regulatory liabilitiesOther regulatory liabilities36 49 Other regulatory liabilities120 59 
Other current liabilitiesOther current liabilities38 40 Other current liabilities55 65 
Total current liabilitiesTotal current liabilities820 916 Total current liabilities416 439 
Long-term DebtLong-term Debt996 1,013 Long-term Debt1,510 1,510 
Deferred Credits and Other Liabilities:Deferred Credits and Other Liabilities:Deferred Credits and Other Liabilities:
Accumulated deferred income taxesAccumulated deferred income taxes463 447 Accumulated deferred income taxes462 464 
Deferred credits related to income taxesDeferred credits related to income taxes285 287 Deferred credits related to income taxes269 269 
Employee benefit obligationsEmployee benefit obligations107 113 Employee benefit obligations88 88 
Asset retirement obligations, deferredAsset retirement obligations, deferred134 150 Asset retirement obligations, deferred161 160 
Other cost of removal obligationsOther cost of removal obligations194 194 Other cost of removal obligations194 195 
Other regulatory liabilities, deferredOther regulatory liabilities, deferred14 15 Other regulatory liabilities, deferred84 64 
Other deferred credits and liabilitiesOther deferred credits and liabilities34 35 Other deferred credits and liabilities24 24 
Total deferred credits and other liabilitiesTotal deferred credits and other liabilities1,231 1,241 Total deferred credits and other liabilities1,282 1,264 
Total LiabilitiesTotal Liabilities3,047 3,170 Total Liabilities3,208 3,213 
Common Stockholder's Equity (See accompanying statements)
Common Stockholder's Equity (See accompanying statements)
1,848 1,742 
Common Stockholder's Equity (See accompanying statements)
1,917 1,867 
Total Liabilities and Stockholder's EquityTotal Liabilities and Stockholder's Equity$4,895 $4,912 Total Liabilities and Stockholder's Equity$5,125 $5,080 
The accompanying notes as they relate to Mississippi Power are an integral part of these condensed financial statements.
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MISSISSIPPI POWER COMPANY
CONDENSED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY (UNAUDITED)
Number of
Common
Shares
Issued		Common
Stock		Paid-In
Capital		Retained
Earnings (Accumulated Deficit)		Accumulated
Other
Comprehensive
Income (Loss)		Total
(in millions)
Balance at December 31, 20191 $38 $4,449 $(2,832)$(3)$1,652 
Net income— — — 32 — 32 
Capital contributions from parent company— — 76 — — 76 
Return of capital to parent company— — (37)— — (37)
Other— — (1)— — (1)
Balance at March 31, 20201 $38 $4,487 $(2,800)$(3)$1,722 
Number of
Common
Shares
Issued		Common
Stock		Paid-In
Capital		Retained
Earnings (Accumulated Deficit)		Accumulated
Other
Comprehensive
Income (Loss)		Total
(in millions)
Balance at December 31, 2020Balance at December 31, 20201 $38 $4,460 $(2,754)$(2)$1,742 Balance at December 31, 20201 $38 $4,460 $(2,754)$(2)$1,742 
Net incomeNet income— — — 45 — 45 Net income— — — 45 — 45 
Capital contributions from parent companyCapital contributions from parent company— — 100 — — 100 
Capital contributions from parent company— — 100 — — 100 
Cash dividends on common stockCash dividends on common stock— — — (39)— (39)Cash dividends on common stock— — — (39)— (39)
Balance at March 31, 2021Balance at March 31, 20211 $38 $4,560 $(2,748)$(2)$1,848 Balance at March 31, 20211 $38 $4,560 $(2,748)$(2)$1,848 
Balance at December 31, 2021Balance at December 31, 20211 $38 $4,582 $(2,753)$— $1,867 
Net incomeNet income— — — 42 — 42 
Capital contributions from parent companyCapital contributions from parent company— — 51 — — 51 
Cash dividends on common stockCash dividends on common stock— — — (43)— (43)
Balance at March 31, 2022Balance at March 31, 20221 $38 $4,633 $(2,754)$— $1,917 
The accompanying notes as they relate to Mississippi Power are an integral part of these condensed financial statements.

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SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
For the Three Months Ended March 31, For the Three Months Ended March 31,
20212020 20222021
(in millions) (in millions)
Operating Revenues:Operating Revenues:Operating Revenues:
Wholesale revenues, non-affiliatesWholesale revenues, non-affiliates$355 $286 Wholesale revenues, non-affiliates$426 $355 
Wholesale revenues, affiliatesWholesale revenues, affiliates81 86 Wholesale revenues, affiliates105 81 
Other revenuesOther revenues4 3 Other revenues8 4 
Total operating revenuesTotal operating revenues440 375 Total operating revenues539 440 
Operating Expenses:Operating Expenses:Operating Expenses:
FuelFuel141 107 Fuel232 141 
Purchased powerPurchased power20 14 Purchased power21 20 
Other operations and maintenanceOther operations and maintenance101 79 Other operations and maintenance105 101 
Depreciation and amortizationDepreciation and amortization119 117 Depreciation and amortization120 119 
Taxes other than income taxesTaxes other than income taxes12 9 Taxes other than income taxes13 12 
(Gain) loss on dispositions, net(39)(39)
Gain on dispositions, netGain on dispositions, net(2)(39)
Total operating expensesTotal operating expenses354 287 Total operating expenses489 354 
Operating IncomeOperating Income86 88 Operating Income50 86 
Other Income and (Expense):Other Income and (Expense):Other Income and (Expense):
Interest expense, net of amounts capitalizedInterest expense, net of amounts capitalized(38)(39)Interest expense, net of amounts capitalized(37)(38)
Other income (expense), netOther income (expense), net7 2 Other income (expense), net2 7 
Total other income and (expense)Total other income and (expense)(31)(37)Total other income and (expense)(35)(31)
Earnings Before Income TaxesEarnings Before Income Taxes55 51 Earnings Before Income Taxes15 55 
Income taxes (benefit)Income taxes (benefit)(10)7 Income taxes (benefit)(12)(10)
Net IncomeNet Income65 44 Net Income27 65 
Net loss attributable to noncontrolling interestsNet loss attributable to noncontrolling interests(32)(31)Net loss attributable to noncontrolling interests(45)(32)
Net Income Attributable to Southern PowerNet Income Attributable to Southern Power$97 $75 Net Income Attributable to Southern Power$72 $97 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
 
For the Three Months Ended March 31, For the Three Months Ended March 31,
20212020 20222021
(in millions) (in millions)
Net IncomeNet Income$65 $44 Net Income$27 $65 
Other comprehensive income (loss):
Other comprehensive income:Other comprehensive income:
Qualifying hedges:Qualifying hedges:Qualifying hedges:
Changes in fair value, net of tax of $(11) and $(21), respectively(33)(62)
Reclassification adjustment for amounts included in net income,
net of tax of $15 and $10, respectively
48 28 
Changes in fair value, net of tax of $(6) and $(11), respectivelyChanges in fair value, net of tax of $(6) and $(11), respectively(17)(33)
Reclassification adjustment for amounts included in net income,
net of tax of $7 and $15, respectively
Reclassification adjustment for amounts included in net income,
net of tax of $7 and $15, respectively
22 48 
Pension and other postretirement benefit plans:Pension and other postretirement benefit plans:Pension and other postretirement benefit plans:
Reclassification adjustment for amounts included in net income,
net of tax of $0 and $0, respectively
1 1 
Total other comprehensive income (loss)16 (33)
Reclassification adjustment for amounts included in net income,
net of tax of $— and $—, respectively
Reclassification adjustment for amounts included in net income,
net of tax of $— and $—, respectively
— 1 
Total other comprehensive incomeTotal other comprehensive income5 16 
Comprehensive IncomeComprehensive Income81 11 Comprehensive Income32 81 
Comprehensive loss attributable to noncontrolling interestsComprehensive loss attributable to noncontrolling interests(32)(31)Comprehensive loss attributable to noncontrolling interests(45)(32)
Comprehensive Income Attributable to Southern PowerComprehensive Income Attributable to Southern Power$113 $42 Comprehensive Income Attributable to Southern Power$77 $113 
The accompanying notes as they relate to Southern Power are an integral part of these condensed consolidated financial statements.
31
Table of ContentsIndex to Financial Statements
SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 For the Three Months Ended March 31,
 20222021
 (in millions)
Operating Activities:
Net income$27 $65 
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total126 125 
Deferred income taxes12 (8)
Amortization of investment tax credits(15)(15)
Gain on dispositions, net(2)(39)
Other, net(3)(4)
Changes in certain current assets and liabilities —
-Receivables11 23 
-Prepaid income taxes(8)16 
-Other current assets— 3 
-Accounts payable(21)19 
-Accrued taxes7 5 
-Other current liabilities(17)(3)
Net cash provided from operating activities117 187 
Investing Activities:
Business acquisitions, net of cash acquired— (345)
Property additions(19)(147)
Proceeds from dispositions29 17 
Change in construction payables(31)(7)
Payments pursuant to LTSAs(15)(27)
Other investing activities(1)5 
Net cash used for investing activities(37)(504)
Financing Activities:
Increase (decrease) in notes payable, net(3)140 
Proceeds — Senior notes— 400 
Return of capital to parent company— (271)
Capital contributions from noncontrolling interests73 313 
Distributions to noncontrolling interests(97)(46)
Payment of common stock dividends(49)(51)
Other financing activities— (7)
Net cash provided from (used for) financing activities(76)478 
Net Change in Cash, Cash Equivalents, and Restricted Cash4 161 
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period135 182 
Cash, Cash Equivalents, and Restricted Cash at End of Period$139 $343 
Supplemental Cash Flow Information:
Cash paid (received) during the period for —
Interest (net of $— and $1 capitalized for 2022 and 2021, respectively)$29 $26 
Income taxes, net(8)(2)
Noncash transactions —
Contributions from noncontrolling interests— 89 
Contributions of wind turbine equipment— 82 
Accrued property additions at end of period46 60 
Right-of-use assets obtained under operating leases— 65 
Reassessment of right-of-use assets under operating leases40 — 
The accompanying notes as they relate to Southern Power are an integral part of these condensed consolidated financial statements.
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    Table of Contents                                Index to Financial Statements
SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSBALANCE SHEETS (UNAUDITED)
 
 For the Three Months Ended March 31,
 20212020
 (in millions)
Operating Activities:
Net income$65 $44 
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total125 123 
Deferred income taxes(8)(36)
Amortization of investment tax credits(15)(14)
(Gain) loss on dispositions, net(39)(39)
Other, net(4)(10)
Changes in certain current assets and liabilities —
-Receivables23 5 
-Prepaid income taxes16 51 
-Other current assets3 (2)
-Accounts payable19 (34)
-Accrued taxes5 8 
-Other current liabilities(3)(13)
Net cash provided from operating activities187 83 
Investing Activities:
Business acquisitions, net of cash acquired(345)0 
Property additions(147)(47)
Proceeds from dispositions17 660 
Change in construction payables(7)(15)
Payments pursuant to LTSAs(27)(15)
Other investing activities5 17 
Net cash provided from (used for) investing activities(504)600 
Financing Activities:
Increase (decrease) in notes payable, net140 (449)
Proceeds — Senior notes400 0 
Redemptions — Short-term borrowings0 (100)
Return of capital to parent company(271)0 
Capital contributions from noncontrolling interests313 16 
Distributions to noncontrolling interests(46)(48)
Payment of common stock dividends(51)(50)
Other financing activities(7)(1)
Net cash provided from (used for) financing activities478 (632)
Net Change in Cash, Cash Equivalents, and Restricted Cash161 51 
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period182 279 
Cash, Cash Equivalents, and Restricted Cash at End of Period$343 $330 
Supplemental Cash Flow Information:
Cash paid (received) during the period for —
Interest (net of $1 and $4 capitalized for 2021 and 2020, respectively)$26 $28 
Income taxes, net(2)(5)
Noncash transactions —
Contributions from noncontrolling interests89 0 
Contributions of wind turbine equipment82 17 
Accrued property additions at end of period60 27 
Right-of-use assets obtained under operating leases65 0 
AssetsAt March 31, 2022At December 31, 2021
 (in millions)
Current Assets:
Cash and cash equivalents$130 $107 
Receivables —
Customer accounts, net160 139 
Affiliated26 51 
Other21 29 
Materials and supplies108 106 
Prepaid income taxes468 27 
Other current assets49 46 
Total current assets962 505 
Property, Plant, and Equipment:
In service14,594 14,585 
Less: Accumulated provision for depreciation3,341 3,241 
Plant in service, net of depreciation11,253 11,344 
Construction work in progress49 45 
Total property, plant, and equipment11,302 11,389 
Other Property and Investments:
Intangible assets, net of amortization of $114 and $109, respectively278 282 
Equity investments in unconsolidated subsidiaries56 86 
Net investment in sales-type leases159 161 
Total other property and investments493 529 
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization517 479 
Prepaid LTSAs219 210 
Income taxes receivable, non-current23 20 
Other deferred charges and assets250 258 
Total deferred charges and other assets1,009 967 
Total Assets$13,766 $13,390 
The accompanying notes as they relate to Southern Power are an integral part of these condensed consolidated financial statements.
33
Table of Contents                    ��           Index to Financial Statements
SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
Liabilities and Stockholders' EquityAt March 31, 2022At December 31, 2021
 (in millions)
Current Liabilities:
Securities due within one year$666 $679 
Notes payable208 211 
Accounts payable —
Affiliated82 92 
Other67 85 
Accrued taxes21 14 
Accrued interest32 32 
Other current liabilities121 140 
Total current liabilities1,197 1,253 
Long-term Debt2,999 3,009 
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes661 215 
Accumulated deferred ITCs1,600 1,614 
Operating lease obligations535 497 
Other deferred credits and liabilities218 204 
Total deferred credits and other liabilities3,014 2,530 
Total Liabilities7,210 6,792 
Total Stockholders' Equity (See accompanying statements)
6,556 6,598 
Total Liabilities and Stockholders' Equity$13,766 $13,390 
The accompanying notes as they relate to Southern Power are an integral part of these condensed consolidated financial statements.
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    Table of Contents                                Index to Financial Statements
SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETSSTATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
Paid-In
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Total Common
Stockholders' Equity		Noncontrolling InterestsTotal
(in millions)
Balance at December 31, 2020$914 $1,522 $(67)$2,369 $4,262 $6,631 
Net income (loss)— 97 — 97 (32)65 
Return of capital to parent company(271)— — (271)— (271)
Other comprehensive income— — 16 16 — 16 
Cash dividends on common stock— (51)— (51)— (51)
Capital contributions from
   noncontrolling interests		— — — — 403 403 
Distributions to noncontrolling interests— — — — (46)(46)
Other(2)1 (1)(2)(1)(3)
Balance at March 31, 2021$641 $1,569 $(52)$2,158 $4,586 $6,744 
AssetsAt March 31, 2021At December 31, 2020
 (in millions)
Current Assets:
Cash and cash equivalents$314 $182 
Receivables —
Customer accounts, net123 125 
Affiliated17 37 
Other18 27 
Materials and supplies157 157 
Prepaid income taxes368 11 
Other current assets31 36 
Total current assets1,028 575 
Property, Plant, and Equipment:
In service14,313 13,904 
Less: Accumulated provision for depreciation2,916 2,842 
Plant in service, net of depreciation11,397 11,062 
Construction work in progress219 127 
Total property, plant, and equipment11,616 11,189 
Other Property and Investments:
Intangible assets, net of amortization of $94 and $89, respectively297 302 
Equity investments in unconsolidated subsidiaries84 19 
Total other property and investments381 321 
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization478 415 
Prepaid LTSAs178 155 
Accumulated deferred income taxes0 262 
Income taxes receivable, non-current28 25 
Other deferred charges and assets286 293 
Total deferred charges and other assets970 1,150 
Total Assets$13,995 $13,235 
The accompanying notes as they relate to Southern Power are an integral part of these condensed consolidated financial statements.
34
Table of ContentsIndex to Financial Statements
SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
Liabilities and Stockholders' EquityAt March 31, 2021At December 31, 2020
 (in millions)
Current Liabilities:
Securities due within one year$300 $299 
Notes payable315 175 
Accounts payable —
Affiliated44 65 
Other127 92 
Accrued taxes —
Accrued income taxes10 8 
Other accrued taxes15 22 
Accrued interest35 32 
Other current liabilities132 132 
Total current liabilities978 825 
Long-term Debt3,730 3,393 
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes230 123 
Accumulated deferred ITCs1,658 1,672 
Operating lease obligations487 426 
Other deferred credits and liabilities168 165 
Total deferred credits and other liabilities2,543 2,386 
Total Liabilities7,251 6,604 
Total Stockholders' Equity (See accompanying statements)
6,744 6,631 
Total Liabilities and Stockholders' Equity$13,995 $13,235 
Balance at December 31, 2021$638 $1,585 $(27)$2,196 $4,402 $6,598 
Net income (loss)— 72 — 72 (45)27 
Other comprehensive income— — 5 5 — 5 
Cash dividends on common stock— (49)— (49)— (49)
Capital contributions from
   noncontrolling interests		— — — — 73 73 
Distributions to noncontrolling interests— — — — (98)(98)
Balance at March 31, 2022$638 $1,608 $(22)$2,224 $4,332 $6,556 
The accompanying notes as they relate to Southern Power are an integral part of these condensed consolidated financial statements.
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SOUTHERN POWER COMPANY GAS AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITYINCOME (UNAUDITED)
Paid-In
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Total Common
Stockholders' Equity		Noncontrolling InterestsTotal
(in millions)
Balance at December 31, 2019$909 $1,485 $(26)$2,368 $4,254 $6,622 
Net income (loss)— 75 — 75 (31)44 
Other comprehensive income (loss)— — (33)(33)— (33)
Cash dividends on common stock— (50)— (50)— (50)
Capital contributions from
   noncontrolling interests		— — — — 16 16 
Distributions to noncontrolling interests— — — — (48)(48)
Balance at March 31, 2020$909 $1,510 $(59)$2,360 $4,191 $6,551 
Balance at December 31, 2020$914 $1,522 $(67)$2,369 $4,262 $6,631 
Net income (loss)— 97 — 97 (32)65 
Return of capital to parent company(271)— — (271)— (271)
Other comprehensive income— — 16 16 — 16 
Cash dividends on common stock— (51)— (51)— (51)
Capital contributions from
   noncontrolling interests		— — — — 403 403 
Distributions to noncontrolling interests— — — — (46)(46)
Other(2)1 (1)(2)(1)(3)
Balance at March 31, 2021$641 $1,569 $(52)$2,158 $4,586 $6,744 
 For the Three Months Ended March 31,
 20222021
 (in millions)
Operating Revenues:
Natural gas revenues (includes revenue taxes of $71 and $54, respectively)$2,058 $1,692 
Alternative revenue programs— 2 
Total operating revenues2,058 1,694 
Operating Expenses:
Cost of natural gas1,095 583 
Other operations and maintenance305 299 
Depreciation and amortization137 130 
Taxes other than income taxes100 81 
Total operating expenses1,637 1,093 
Operating Income421 601 
Other Income and (Expense):
Earnings from equity method investments40 41 
Interest expense, net of amounts capitalized(61)(60)
Other income (expense), net16 (63)
Total other income and (expense)(5)(82)
Earnings Before Income Taxes416 519 
Income taxes97 121 
Net Income$319 $398 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
 For the Three Months Ended March 31,
 20222021
 (in millions)
Net Income$319 $398 
Other comprehensive income:
Qualifying hedges:
Changes in fair value, net of tax of $10 and $—, respectively26 1 
Reclassification adjustment for amounts included in net income,
   net of tax of $(2) and $1, respectively
(6)3 
Total other comprehensive income20 4 
Comprehensive Income$339 $402 
The accompanying notes as they relate to Southern PowerCompany Gas are an integral part of these condensed consolidated financial statements.
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SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOMECASH FLOWS (UNAUDITED)
 For the Three Months Ended March 31,
 20212020
 (in millions)
Operating Revenues:
Natural gas revenues (includes revenue taxes of $54 and $47, respectively)$1,692 $1,240 
Alternative revenue programs2 9 
Total operating revenues1,694 1,249 
Operating Expenses:
Cost of natural gas583 439 
Other operations and maintenance299 258 
Depreciation and amortization130 120 
Taxes other than income taxes81 72 
Total operating expenses1,093 889 
Operating Income601 360 
Other Income and (Expense):
Earnings from equity method investments41 43 
Interest expense, net of amounts capitalized(60)(58)
Other income (expense), net(63)9 
Total other income and (expense)(82)(6)
Earnings Before Income Taxes519 354 
Income taxes121 79 
Net Income$398 $275 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
 For the Three Months Ended March 31,
 20212020
 (in millions)
Net Income$398 $275 
Other comprehensive income (loss):
Qualifying hedges:
Changes in fair value, net of tax of $0 and $(7), respectively1 (20)
Reclassification adjustment for amounts included in net income,
   net of tax of $1 and $2, respectively
3 5 
Total other comprehensive income (loss)4 (15)
Comprehensive Income$402 $260 
 For the Three Months Ended March 31,
 20222021
 (in millions)
Operating Activities:
Net income$319 $398 
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total137 130 
Deferred income taxes5 160 
Mark-to-market adjustments(38)64 
Natural gas cost under recovery – long-term162 (185)
Other, net41 5 
Changes in certain current assets and liabilities —
-Receivables(115)74 
-Natural gas for sale, net of temporary LIFO liquidation450 456 
-Prepaid income taxes34 (51)
-Natural gas cost under recovery(40)(487)
-Other current assets39 17 
-Accounts payable(23)(7)
-Accrued taxes54 10 
-Other current liabilities(1)(34)
Net cash provided from operating activities1,024 550 
Investing Activities:
Property additions(247)(251)
Cost of removal, net of salvage(20)(16)
Change in construction payables, net(5)(47)
Other investing activities1 6 
Net cash used for investing activities(271)(308)
Financing Activities:
Decrease in notes payable, net(577)(127)
Proceeds — Short-term borrowings— 300 
Redemptions —
Short-term borrowings(100)— 
Medium-term notes— (30)
Capital contributions from parent company39 39 
Payment of common stock dividends(130)(132)
Net cash provided from (used for) financing activities(768)50 
Net Change in Cash, Cash Equivalents, and Restricted Cash(15)292 
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period48 19 
Cash, Cash Equivalents, and Restricted Cash at End of Period$33 $311 
Supplemental Cash Flow Information:
Cash paid (received) during the period for —
Interest (net of $2 capitalized for both 2022 and 2021)$55 $52 
Income taxes, net— (1)
Noncash transactions — Accrued property additions at end of period107 95 
The accompanying notes as they relate to Southern Company Gas are an integral part of these condensed consolidated financial statements.
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SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 For the Three Months Ended March 31,
 20212020
 (in millions)
Operating Activities:
Net income$398 $275 
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total130 120 
Deferred income taxes160 22 
Mark-to-market adjustments64 13 
Natural gas cost under recovery – long-term(185)0 
Other, net5 (19)
Changes in certain current assets and liabilities —
-Receivables74 112 
-Natural gas for sale, net of temporary LIFO liquidation456 246 
-Natural gas cost under recovery(487)0 
-Other current assets(34)33 
-Accounts payable(7)(185)
-Accrued taxes10 27 
-Accrued compensation0 (42)
-Other current liabilities(34)41 
Net cash provided from operating activities550 643 
Investing Activities:
Property additions(251)(261)
Cost of removal, net of salvage(16)(15)
Change in construction payables, net(47)(18)
Investment in unconsolidated subsidiaries(1)(77)
Proceeds from dispositions0 178 
Other investing activities7 0 
Net cash used for investing activities(308)(193)
Financing Activities:
Decrease in notes payable, net(127)(39)
Proceeds — Short-term borrowings300 0 
Redemptions — Medium-term notes(30)0 
Capital contributions from parent company39 0 
Payment of common stock dividends(132)(133)
Other financing activities0 (13)
Net cash provided from (used for) financing activities50 (185)
Net Change in Cash, Cash Equivalents, and Restricted Cash292 265 
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period19 49 
Cash, Cash Equivalents, and Restricted Cash at End of Period$311 $314 
Supplemental Cash Flow Information:
Cash paid (received) during the period for —
Interest (net of $2 capitalized for both 2021 and 2020)$52 $49 
Income taxes, net(1)(12)
Noncash transactions — Accrued property additions at end of period95 104 
The accompanying notes as they relate to Southern Company Gas are an integral part of these condensed consolidated financial statements.
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Table of ContentsIndex to Financial Statements
SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
AssetsAssetsAt March 31, 2021At December 31, 2020AssetsAt March 31, 2022At December 31, 2021
(in millions)(in millions)
Current Assets:Current Assets:  Current Assets:  
Cash and cash equivalentsCash and cash equivalents$309 $17 Cash and cash equivalents$31 $45 
Receivables —Receivables —  Receivables —  
Energy marketing412 516 
Customer accountsCustomer accounts452 353 Customer accounts603 462 
Unbilled revenuesUnbilled revenues161 219 Unbilled revenues245 278 
Affiliated2 4 
Other accounts and notesOther accounts and notes43 51 Other accounts and notes52 49 
Accumulated provision for uncollectible accountsAccumulated provision for uncollectible accounts(51)(40)Accumulated provision for uncollectible accounts(51)(39)
Natural gas for saleNatural gas for sale197 460 Natural gas for sale121 362 
Prepaid expensesPrepaid expenses97 48 Prepaid expenses88 114 
Assets from risk management activities, net of collateralAssets from risk management activities, net of collateral68 118 Assets from risk management activities, net of collateral53 33 
Natural gas cost under recoveryNatural gas cost under recovery487 0 Natural gas cost under recovery306 266 
Other regulatory assets84 102 
Other regulatory assetsOther regulatory assets104 136 
Other current assetsOther current assets39 38 Other current assets47 49 
Total current assetsTotal current assets2,300 1,886 Total current assets1,599 1,755 
Property, Plant, and Equipment:Property, Plant, and Equipment:  Property, Plant, and Equipment:  
In serviceIn service17,866 17,611 In service19,035 18,880 
Less: Accumulated depreciationLess: Accumulated depreciation4,893 4,821 Less: Accumulated depreciation5,159 5,067 
Plant in service, net of depreciationPlant in service, net of depreciation12,973 12,790 Plant in service, net of depreciation13,876 13,813 
Construction work in progressConstruction work in progress636 648 Construction work in progress768 684 
Total property, plant, and equipmentTotal property, plant, and equipment13,609 13,438 Total property, plant, and equipment14,644 14,497 
Other Property and Investments:Other Property and Investments:Other Property and Investments:
GoodwillGoodwill5,015 5,015 Goodwill5,015 5,015 
Equity investments in unconsolidated subsidiariesEquity investments in unconsolidated subsidiaries1,290 1,290 Equity investments in unconsolidated subsidiaries1,178 1,173 
Other intangible assets, net of amortization of $199 and $195, respectively47 51 
Other intangible assets, net of amortization of $148 and $145, respectivelyOther intangible assets, net of amortization of $148 and $145, respectively34 37 
Miscellaneous property and investmentsMiscellaneous property and investments20 19 Miscellaneous property and investments19 19 
Total other property and investmentsTotal other property and investments6,372 6,375 Total other property and investments6,246 6,244 
Deferred Charges and Other Assets:Deferred Charges and Other Assets:Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortizationOperating lease right-of-use assets, net of amortization80 81 Operating lease right-of-use assets, net of amortization67 70 
Prepaid pension costsPrepaid pension costs183 175 
Other regulatory assets, deferredOther regulatory assets, deferred786 615 Other regulatory assets, deferred508 689 
Other deferred charges and assetsOther deferred charges and assets230 235 Other deferred charges and assets130 130 
Total deferred charges and other assetsTotal deferred charges and other assets1,096 931 Total deferred charges and other assets888 1,064 
Total AssetsTotal Assets$23,377 $22,630 Total Assets$23,377 $23,560 
The accompanying notes as they relate to Southern Company Gas are an integral part of these condensed consolidated financial statements.

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SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
Liabilities and Stockholder's EquityAt March 31, 2021At December 31, 2020
(in millions)
Current Liabilities:
Securities due within one year$302 $333 
Notes payable497 324 
Energy marketing trade payables475 494 
Accounts payable —
Affiliated49 56 
Other346 373 
Customer deposits76 90 
Accrued taxes94 83 
Accrued interest68 58 
Accrued compensation107 106 
Other regulatory liabilities92 122 
Temporary LIFO liquidation194 0 
Other current liabilities166 150 
Total current liabilities2,466 2,189 
Long-term Debt6,286 6,293 
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes1,427 1,265 
Deferred credits related to income taxes839 847 
Employee benefit obligations273 283 
Operating lease obligations65 67 
Other cost of removal obligations1,668 1,649 
Accrued environmental remediation208 216 
Other deferred credits and liabilities51 54 
Total deferred credits and other liabilities4,531 4,381 
Total Liabilities13,283 12,863 
Common Stockholder's Equity (See accompanying statements)
10,094 9,767 
Total Liabilities and Stockholder's Equity$23,377 $22,630 

Liabilities and Stockholder's EquityAt March 31, 2022At December 31, 2021
(in millions)
Current Liabilities:
Securities due within one year$46 $47 
Notes payable532 1,209 
Accounts payable —
Affiliated40 58 
Other349 361 
Customer deposits72 95 
Accrued taxes191 124 
Accrued interest68 59 
Accrued compensation66 110 
Temporary LIFO liquidation209 — 
Other regulatory liabilities72 8 
Other current liabilities140 155 
Total current liabilities1,785 2,226 
Long-term Debt6,814 6,855 
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes1,568 1,555 
Deferred credits related to income taxes808 816 
Employee benefit obligations168 176 
Operating lease obligations58 59 
Other cost of removal obligations1,692 1,683 
Accrued environmental remediation189 197 
Other deferred credits and liabilities120 77 
Total deferred credits and other liabilities4,603 4,563 
Total Liabilities13,202 13,644 
Common Stockholder's Equity (See accompanying statements)
10,175 9,916 
Total Liabilities and Stockholder's Equity$23,377 $23,560 
The accompanying notes as they relate to Southern Company Gas are an integral part of these condensed consolidated financial statements.


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SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (UNAUDITED)
Paid-In
Capital		Retained
Earnings
(Accumulated Deficit)		Accumulated
Other
Comprehensive
Income (Loss)		Total
(in millions)
Balance at December 31, 2019$9,697 $(198)$7 $9,506 
Net income— 275 — 275 
Return of capital to parent company(2)— — (2)
Other comprehensive income (loss)— — (15)(15)
Cash dividends on common stock— (133)— (133)
Balance at March 31, 2020$9,695 $(56)$(8)$9,631 
Paid-In
Capital		Retained
Earnings
(Accumulated Deficit)		Accumulated
Other
Comprehensive
Income (Loss)		Total
(in millions)
Balance at December 31, 2020Balance at December 31, 2020$9,930 $(141)$(22)$9,767 Balance at December 31, 2020$9,930 $(141)$(22)$9,767 
Net incomeNet income— 398 — 398 Net income— 398 — 398 
Capital contributions from parent companyCapital contributions from parent company57 — — 57 Capital contributions from parent company57 — — 57 
Other comprehensive incomeOther comprehensive income— — 4 4 Other comprehensive income— — 4 4 
Cash dividends on common stockCash dividends on common stock— (132)— (132)Cash dividends on common stock— (132)— (132)
Balance at March 31, 2021Balance at March 31, 2021$9,987 $125 $(18)$10,094 Balance at March 31, 20219,987 125 (18)10,094 
Balance at December 31, 2021Balance at December 31, 2021$10,024 $(132)$24 $9,916 
Net incomeNet income— 319 — 319 
Capital contributions from parent companyCapital contributions from parent company50 — — 50 
Other comprehensive incomeOther comprehensive income— — 20 20 
Cash dividends on common stockCash dividends on common stock— (130)— (130)
Balance at March 31, 2022Balance at March 31, 2022$10,074 $57 $44 $10,175 
The accompanying notes as they relate to Southern Company Gas are an integral part of these condensed consolidated financial statements.

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS
FOR
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
ALABAMA POWER COMPANY
GEORGIA POWER COMPANY
MISSISSIPPI POWER COMPANY
SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES
(UNAUDITED)


INDEX TO THE NOTES TO THE CONDENSED FINANCIAL STATEMENTS
NotePage
A
4342
B
4645
C
5452
D
5755
E
6058
F
6260
G
6361
H
6462
I
6664
J
7169
K
8083
L
8283



INDEX TO APPLICABLE NOTES TO FINANCIAL STATEMENTS BY REGISTRANT
The following unaudited notes to the condensed financial statements are a combined presentation; however, information contained herein relating to any individual Registrant is filed by such Registrant on its own behalf and each Registrant makes no representation as to information related to the other Registrants. The list below indicates the Registrants to which each footnote applies.
RegistrantApplicable Notes
Southern CompanyA, B, C, D, E, F, G, H, I, J, K, L
Alabama PowerA, B, C, D, F, G, H, I, J
Georgia PowerA, B, C, D, F, G, H, I, J
Mississippi PowerA, B, C, D, F, G, H, I, J
Southern PowerA, C, D, E, F, G, H, I, J, K
Southern Company GasA, B, C, D, E, F, G, H, I, J, K, L

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
(A) INTRODUCTION
The condensed quarterly financial statements of each Registrant included herein have been prepared by such Registrant, without audit, pursuant to the rules and regulations of the SEC. The Condensed Balance Sheets as ofat December 31, 20202021 have been derived from the audited financial statements of each Registrant. In the opinion of each Registrant's management, the information regarding such Registrant furnished herein reflects all adjustments, which, except as otherwise disclosed, are of a normal recurring nature, necessary to present fairly the results of operations for the periods ended March 31, 20212022 and 2020.2021. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although each Registrant believes that the disclosures regarding such Registrant are adequate to make the information presented not misleading. Disclosures which would substantially duplicate the disclosures in the Form 10-K and details which have not changed significantly in amount or composition since the filing of the Form 10-K are generally omitted from this Quarterly Report on Form 10-Q unless specifically required by GAAP. Therefore, these Condensed Financial Statements should be read in conjunction with the financial statements and the notes thereto included in the Form 10-K. Due to the seasonal variations in the demand for energy and other factors, including the impacts of the COVID-19 pandemic, operating results for the periods presented are not necessarily indicative of the operating results to be expected for the full year.
Certain prior year data presented in the financial statements have been reclassified to conform to the current year presentation. These reclassifications had no impact on the overall results of operations, financial position, or cash flows of any Registrant.
Goodwill and Other Intangible Assets
Goodwill at March 31, 20212022 and December 31, 20202021 was as follows:
Goodwill
(in millions)
Southern Company$5,280 
Southern Company Gas:
Gas distribution operations$4,034 
Gas marketing services981 
Southern Company Gas total$5,015 
Goodwill is not amortized, but is subject to an annual impairment test induring the fourth quarter of theeach year, and on an interim basis as events and changes in circumstances occur.or more frequently if impairment indicators arise.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Other intangible assets were as follows:
At March 31, 2021At December 31, 2020At March 31, 2022At December 31, 2021
Gross Carrying AmountAccumulated AmortizationOther
Intangible Assets, Net		Gross Carrying AmountAccumulated AmortizationOther
Intangible Assets, Net		Gross Carrying AmountAccumulated AmortizationOther
Intangible Assets, Net		Gross Carrying AmountAccumulated AmortizationOther
Intangible Assets, Net
(in millions)(in millions)(in millions)(in millions)
Southern CompanySouthern CompanySouthern Company
Other intangible assets subject to amortization:Other intangible assets subject to amortization:Other intangible assets subject to amortization:
Customer relationshipsCustomer relationships$212 $(139)$73 $212 $(135)$77 Customer relationships$212 $(152)$60 $212 $(150)$62 
Trade namesTrade names64 (33)31 64 (31)33 Trade names64 (41)23 64 (38)26 
Storage and transportation contracts64 (64)0 64 (64)0 
PPA fair value adjustmentsPPA fair value adjustments390 (94)296 390 (89)301 PPA fair value adjustments390 (114)276 390 (109)281 
OtherOther11 (9)2 10 (9)1 Other11 (10)1 11 (10)1 
Total other intangible assets subject to amortizationTotal other intangible assets subject to amortization$741 $(339)$402 $740 $(328)$412 Total other intangible assets subject to amortization$677 $(317)$360 $677 $(307)$370 
Other intangible assets not subject to amortization:Other intangible assets not subject to amortization:Other intangible assets not subject to amortization:
Federal Communications Commission licensesFederal Communications Commission licenses75 — 75 75 — 75 Federal Communications Commission licenses75 — 75 75 — 75 
Total other intangible assetsTotal other intangible assets$816 $(339)$477 $815 $(328)$487 Total other intangible assets$752 $(317)$435 $752 $(307)$445 
Southern PowerSouthern PowerSouthern Power
Other intangible assets subject to amortization:Other intangible assets subject to amortization:Other intangible assets subject to amortization:
PPA fair value adjustmentsPPA fair value adjustments$390 $(94)$296 $390 $(89)$301 PPA fair value adjustments$390 $(114)$276 $390 $(109)$281 
Southern Company GasSouthern Company GasSouthern Company Gas
Other intangible assets subject to amortization:Other intangible assets subject to amortization:Other intangible assets subject to amortization:
Gas marketing servicesGas marketing servicesGas marketing services
Customer relationshipsCustomer relationships$156 $(122)$34 $156 $(119)$37 Customer relationships$156 $(132)$24 $156 $(130)$26 
Trade namesTrade names26 (13)13 26 (12)14 Trade names26 (16)10 26 (15)11 
Wholesale gas services
Storage and transportation contracts64 (64)0 64 (64)0 
Total other intangible assets subject to amortizationTotal other intangible assets subject to amortization$246 $(199)$47 $246 $(195)$51 Total other intangible assets subject to amortization$182 $(148)$34 $182 $(145)$37 
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Amortization associated with other intangible assets was as follows:
Three Months Ended
March 31, 20212022
(in millions)
Southern Company(a)
$1110 
Southern Power(b)
5 
Southern Company Gas(c)
43 
(a)Includes $5 million recorded as a reduction to operating revenues.
(b)Recorded as a reduction to operating revenues.
(c)Relates to gas marketing services.
Cash, Cash Equivalents, and Restricted Cash
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed balance sheets that total to the amount shown in the condensed statements of cash flows for the Registrants that hadapplicable Registrants:
Southern
Company		Southern
Power		Southern
Company Gas
March 31, 2022December 31, 2021March 31, 2022December 31, 2021March 31, 2022December 31, 2021
(in millions)
Cash and cash equivalents$1,662 $1,798 $130 $107 $31 $45 
Restricted cash(a):
Other current assets2 2 — — 2 2 
Other deferred charges and assets9 29 9 29 — — 
Total cash, cash equivalents, and restricted cash(b)
$1,673 $1,829 $139 $135 $33 $48 
(a)For Southern Power, restricted cash reflects $9 million and $10 million at March 31, 2021 and/or2022 and December 31, 2020:
Southern
Company		Southern PowerSouthern
Company Gas
March 31, 2021December 31, 2020March 31, 2021March 31, 2021December 31, 2020
(in millions)(in millions)(in millions)
Cash and cash equivalents$1,770 $1,065 $314 $309 $17 
Restricted cash(a):
Other current assets2 2 0 2 2 
Other deferred charges and assets29 0 29 0 0 
Total cash, cash equivalents, and restricted cash$1,801 $1,068 (b)$343 $311 $19 
(a)2021, respectively, held to fund estimated construction completion costs at the Deuel Harvest wind facility and $19 million at December 31, 2021 related to tax equity contributions restricted until the Garland battery energy storage facility achieved final contracted capacity. For Southern Company Gas, reflects restricted cash held as collateral for workers' compensation, life insurance, and long-term disability insurance. For Southern Power, reflects restricted cash held for construction payables.
(b)Total doesmay not add due to rounding.
Natural Gas for Sale
With the exception of Nicor Gas, Southern Company Gas' natural gas distribution utilities recordGas records natural gas inventories on a WACOG basis. For any declines in market prices below the WACOG considered to be other than temporary, an adjustment is recorded to reduce the value of natural gas inventories to market value. Nicor Gas' natural gas inventory is carried at cost on a LIFO basis. Inventory decrements occurring during the year that are restored prior to year end are charged to cost of natural gas at the estimated annual replacement cost. Inventory decrements that are not restored prior to year end are charged to cost of natural gas at the actual LIFO cost of the inventory layers liquidated.
Southern Company Gas recorded no material adjustments to natural gas inventories for either period presented. Nicor Gas' inventory decrement at March 31, 20212022 is expected to be restored prior to year end.
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Depreciation and Amortization
See Note 5 to the financial statements under "Depreciation and Amortization – Southern Power" in Item 8 of the Form 10-K for additional information.
Effective January 1, 2022, Southern Power revised the depreciable lives of its wind generating facilities from up to 30 years to up to 35 years. This revision resulted in an immaterial decrease in depreciation for the three months ended March 31, 2022 and is expected to result in an immaterial decrease in annual depreciation for 2022.
(B) REGULATORY MATTERS
See Note 2 to the financial statements in Item 8 of the Form 10-K for additional information relating to regulatory matters.
The recovery balances for certain retail regulatory clauses of the traditional electric operating companies and Southern Company Gas at March 31, 20212022 and December 31, 20202021 were as follows:
Regulatory ClauseRegulatory ClauseBalance Sheet Line ItemMarch 31,
2021		December 31, 2020Regulatory ClauseBalance Sheet Line ItemMarch 31,
2022		December 31, 2021
(in millions)(in millions)
Alabama PowerAlabama PowerAlabama Power
Rate CNP ComplianceRate CNP ComplianceOther regulatory liabilities, current$33 $28 Rate CNP ComplianceOther regulatory assets, deferred$12 $16 
Rate CNP PPARate CNP PPAOther regulatory assets, deferred58 58 Rate CNP PPAOther regulatory assets, deferred84 84 
Retail Energy Cost RecoveryOther regulatory liabilities, current0 18 
Other regulatory assets, deferred15 0 
Natural Disaster ReserveOther regulatory liabilities, deferred52 77 
Retail Energy Cost Recovery(*)
Retail Energy Cost Recovery(*)
Other regulatory assets, deferred46 126 
Georgia PowerGeorgia PowerGeorgia Power
Fuel Cost RecoveryFuel Cost RecoveryOver recovered fuel clause revenues$83 $113 Fuel Cost RecoveryDeferred under recovered fuel clause revenues$494 $410 
Mississippi PowerMississippi PowerMississippi Power
Fuel Cost RecoveryFuel Cost RecoveryOver recovered regulatory clause liabilities$18 $24 Fuel Cost RecoveryOther customer accounts receivable$16 $4 
Ad Valorem TaxAd Valorem TaxOther regulatory assets, current12 11 Ad Valorem TaxOther regulatory assets, current12 12 
Other regulatory assets, deferred45 41 Other regulatory assets, deferred33 37 
Property Damage ReserveOther regulatory liabilities, deferred0 4 
Other regulatory assets, deferred1 0 
Southern Company GasSouthern Company GasSouthern Company Gas
Natural Gas Cost Recovery(*)
Other regulatory liabilities$12 $88 
Natural Gas Cost RecoveryNatural Gas Cost RecoveryNatural gas cost under recovery$306 $266 
Natural gas cost under recovery487 0 Other regulatory assets, deferred44 207 
Other regulatory assets, deferred185 0 Other regulatory liabilities, current13 — 
(*)The significant change duringIn accordance with an Alabama PSC order issued on February 1, 2022, Alabama Power applied $126 million of its 2021 Rate RSE refund to reduce the three months ended March 31, 2021 was primarily driven by an increase in the cost of gas purchased in February 2021 resulting from Winter Storm Uri.Rate ECR under recovered balance.
Alabama Power
Certificate of Convenience and Necessity
EnergyOn March 25, 2022, the FERC approved Alabama Gasp, Inc., and the Sierra Club filed requests for reconsideration and rehearing with the Alabama PSC regarding the certificate of convenience and necessity (CCN) issued to Alabama Power in August 2020, which authorized, among other things, the construction of Plant Barry Unit 8 and thePower's acquisition of the Central AlabamaCalhoun Generating Station. In December 2020,Station, which is expected to be completed by September 30, 2022. The completion of the acquisition remains subject to approval by the Alabama PSC issued an order denying the requests. On January 7, 2021, Energy Alabama and Gasp, Inc. filed judicial appeals regarding both the Alabama PSC's August 2020 CCN order and the December 2020 order denying reconsideration and rehearing. On February 23, 2021, Alabama Power filed a motion to intervene in the appeal and, on March 9, 2021, the Circuit Court of Montgomery County, Alabama granted the motion. At March 31, 2021, expenditures associated with the construction of Plant Barry Unit 8 included in CWIP totaled approximately $161 million.PSC. The ultimate outcome of this matter cannot be determined at this time.
Plant Greene County
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Alabama Power jointly owns Plant Greene County with an affiliate, Mississippi Power. See Note 5 under "Joint Ownership Agreements" in Item 8 of the Form 10-K for additional information.
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On April 15, 2021, Mississippi Power filed its 2021 IRP with the Mississippi PSC, which includes a schedule to retire its 40% ownership interest in Plant Greene County Units 1 and 2 in December 2025 and 2026, respectively, consistent with each unit's remaining useful life. Mississippi Power's IRP is subject to a review period during which the Mississippi PSC may note any deficiencies which could require re-evaluation or resubmission of the IRP. If no deficiencies are noted, the Mississippi PSC's review will conclude on August 13, 2021.
The Plant Greene County unit retirements identified by Mississippi Power require the completion of transmission and system reliability improvements, as well as agreement by Alabama Power. Alabama Power will continue to monitor the status of Mississippi Power's IRP and associated regulatory processes, as well as the transmission and system reliability improvements. Currently, Alabama Power plans to retire Plant Greene County Units 1 and 2 at the dates indicated. The ultimate outcome of this matter cannot be determined at this time.
Georgia Power
Rate Plan
Effective January 1, 2021, Georgia Power reduced its amortization of costs associated with CCR AROs by approximately $90 million as approved by the Georgia PSC in conjunction with Georgia Power's annual compliance filings.
In February 2020, the Georgia PSC denied a motion for reconsideration filed by the Sierra Club regarding the Georgia PSC's decision in the 2019 ARP allowing Georgia Power to recover compliance costs for CCR AROs,AROs. The Superior Court of Fulton County subsequently affirmed the Georgia PSC's decision and, in December 2020,October 2021, the Georgia Court of Appeals affirmed the Superior Court of Fulton County affirmed the decision of the Georgia PSC. On January 5,County's order. In December 2021, the Sierra Club filed a noticepetition for writ of appeal withcertiorari to the Georgia Court of Appeals.Supreme Court. The ultimate outcome of this matter cannot be determined at this time.
See Note 6 to the financial statements in Item 8 of the Form 10-K for additional information regarding Georgia Power's AROs.
Integrated Resource Plan
In light of the ongoing supply chain challenges in the solar industry, Georgia Power amended the 970 MWs of utility-scale PPAs authorized in its 2019 Integrated Resource Plan to extend by one year the in-service dates for solar generation resources to the end of 2024.
Nuclear Construction
In 2009, the Georgia PSC certified construction of Plant Vogtle Units 3 and 4, in which Georgia Power holds a 45.7% ownership interest. In 2012, the NRC issued the related combined construction and operating licenses, which allowed full construction of the 2 AP1000 nuclear units (with electric generating capacity of approximately 1,100 MWs each) and related facilities to begin. Until March 2017, construction on Plant Vogtle Units 3 and 4 continued under the Vogtle 3 and 4 Agreement, which was a substantially fixed price agreement.
In connection with the EPC Contractor's bankruptcy filing in March 2017, Georgia Power, acting for itself and as agent for the other Vogtle Owners, entered into several transitional arrangements to allow construction to continue. In July 2017, Georgia Power, acting for itself and as agent for the other Vogtle Owners, entered into the Vogtle Services Agreement, whereby Westinghouse provides facility design and engineering services, procurement and technical support, and staff augmentation on a time and materials cost basis. The Vogtle Services Agreement provides that it will continue until the start-up and testing of Plant Vogtle Units 3 and 4 are complete and electricity is generated and sold from both units. The Vogtle Services Agreement is terminable by the Vogtle Owners upon 30 days' written notice.
In October 2017, Georgia Power, acting for itself and as agent for the other Vogtle Owners, executed the Bechtel Agreement, a cost reimbursable plus fee arrangement, whereby Bechtel is reimbursed for actual costs plus a base fee and an at-risk fee, which is subject to adjustment based on Bechtel's performance against cost and schedule targets. Each Vogtle Owner is severally (not jointly) liable for its proportionate share, based on its ownership interest, of all amounts owed to Bechtel under the Bechtel Agreement. The Vogtle Owners may terminate the Bechtel Agreement at any time for their convenience, provided that the Vogtle Owners will be required to pay amounts related to work performed prior to the termination (including the applicable portion of the base fee), certain termination-related costs, and, at certain stages of the work, the applicable portion of the at-risk fee. Bechtel may terminate the Bechtel Agreement under certain circumstances, including certain Vogtle Owner suspensions of work,
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certain breaches of the Bechtel Agreement by the Vogtle Owners, Vogtle Owner insolvency, and certain other events.
See Note 8 to the financial statements under "Long-term Debt – DOE Loan Guarantee Borrowings" in Item 8 of the Form 10-K for information on the Amended and Restated Loan Guarantee Agreement, including applicable covenants, events of default, and mandatory prepayment events, and conditionsevents.
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Cost and Schedule
Georgia Power's approximate proportionate share of the remaining estimated capital cost to complete Plant Vogtle Units 3 and 4, by December 2021including contingency, through the end of the first quarter 2023 and November 2022,the fourth quarter 2023, respectively, is as follows:
(in millions)
Base project capital cost forecast(a)(b)
$8,61910,294 
Construction contingency estimate136107 
Total project capital cost forecast(a)(b)
8,75510,401 
Net investment as ofat March 31, 20212022(b)
(7,560)(8,715)
Remaining estimate to complete(a)
$1,1951,686 
(a)Includes approximately $590 million of costs that are not shared with the other Vogtle Owners and approximately $440 million of incremental costs under the cost-sharing and tender provisions of the joint ownership agreements described below. Excludes financing costs expected to be capitalized through AFUDC of approximately $250$377 million, of which $118$221 million had been accrued through March 31, 2021.2022.
(b)Net of $1.7 billion received from Toshiba under the Guarantee Settlement Agreement and approximately $188 million in related customer refunds.
Georgia Power estimates that its financing costs for construction of Plant Vogtle Units 3 and 4 will total approximately $3.0$3.4 billion, of which $2.7$3.0 billion had been incurred through March 31, 2021.2022.
As part of its ongoing processes, Southern Nuclear continues to evaluate cost and schedule forecasts on a regular basis to incorporate current information available, particularly in the areas of engineering support, commodity installation, system turnovers and related test results, and workforce statistics. Southern Nuclear establishes aggressive target values for monthly construction production and system turnover activities, as part of a strategy that was designed to maintain margin towhich are reflected in the regulatory-approved in-service dates of November 2021 for Unit 3 and November 2022 for Unit 4.site work plans.
In mid-March 2020, Southern Nuclear began implementing policies and procedures designed to mitigate the risk of transmission of COVID-19 at the construction site, including worker distancing measures, isolating individuals who have tested positive for COVID-19, are showing symptoms consistent with COVID-19, are being tested for COVID-19, or have been in close contact with such persons, requiring self-quarantine, and adopting additional precautionary measures. Since March 2020, the number of active COVID-19 cases at the site has fluctuated consistent with the surrounding area and impacted productivity levels and pace of activity completion. The lower productivity levelscompletion, with the site experiencing peaks in the number of active cases in January 2021, August 2021, and slower pace of activity completion contributed to a backlog to the aggressive site work plan established at the beginning of 2020.January 2022. Georgia Power estimates the productivity impacts of the COVID-19 pandemic have consumed approximately three to four months of schedule margin previously embedded in the site work plan for Unit 3 and Unit 4. In addition,As of March 31, 2022, Georgia Power's proportionate share of the estimated incremental cost associated with COVID-19 mitigation actions and impacts on construction productivity is estimated to be between $160 million and $200 million and is included in the total project continued to face challenges including, but not limited to, higher than expected absenteeism; overallcapital cost forecast. The continuing effects of the COVID-19 pandemic could further disrupt or delay construction and subcontractor labor productivity; system turnovertesting activities at Plant Vogtle Units 3 and testing activities; and electrical equipment and commodity installation. As a result of these factors, in January 2021, Southern Nuclear further extended certain milestone dates, including the start of hot functional testing and fuel4.
Fuel load for Unit 3 from those establishedis projected during the third quarter or the fourth quarter 2022 with an in-service date projected during the fourth quarter 2022 or the first quarter 2023. Unit 3's projected schedule primarily depends on improvements in October 2020.
Followingoverall construction productivity and production levels, the January 2021 milestone extensions, Southern Nuclear has been performing additionalvolume and completion of construction remediation work, primarily related to electrical commodity installations,completion of work packages, including inspection records, and other documentation necessary to ensure qualitysubmit the remaining ITAACs and design standards are met as system turnovers are completed to support hot functional testing andbegin fuel load, for Unit 3. Hot functional testing commenced in late April 2021the pace of system and area turnovers, and the site work plan currently targets fuel load for Unit 3 inprogression of startup and other testing. An in-service date during the third quarter 2021or the fourth quarter 2023 for Unit 4 is projected. Unit 4's projected schedule primarily depends on overall construction productivity and an in-service dateproduction levels improving as well as appropriate levels of December 2021. As the site work plan includes minimal margin to these milestone dates, any delaycraft laborers, particularly electricians and pipefitters, being added and maintained. Any further delays could result in anlater in-service date indates.
During the first quarter 2022, established construction contingency totaling $43 million was assigned to the base capital cost forecast for costs primarily associated with construction productivity, the pace of system turnovers, and support resources for Units 3 and 4.
As Unit 3. Achievement3 completes system turnover from construction and moves to testing and transition to operations, ongoing and potential future challenges include construction productivity, completion of theconstruction remediation work,
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extended milestone dates established in January 2021 forcompletion of work packages, including inspection records, and other documentation necessary to submit the remaining ITAACs and begin fuel load, and final component and pre-operational tests. As Unit 4 which are expectedprogresses through construction and continues to transition into testing, ongoing and potential future challenges include the pace and quality of electrical installation; availability of craft and supervisory resources, including the temporary diversion of such resources to support a regulatory-approved in-service date of November 2022, primarily depends on overall construction productivity and production levels significantly improving as well as appropriate levels of craft laborers, particularly electrical and pipefitter craft labor, being added and maintained.
Considering the factors above, during the first quarter 2021, approximately $84 million of the construction contingency established in the fourth quarter 2020 was assigned to the base capital cost forecast for costs primarily associated with the schedule extension for Unit 3 to December 2021, construction productivity, support resources,efforts; the pace of work package closures and construction remediation work. Georgia Power increased its total capital cost forecast assystem turnovers; and the timeframe and duration of March 31, 2021 by adding $48 million to the remaining construction contingency.
After considering the significant level of uncertainty that exists regarding the future recoverability of these costs since the ultimate outcome of these matters is subject to the outcome of future assessments by management, as well as Georgia PSC decisions in future regulatory proceedings, Georgia Power recorded a pre-tax charge to income of $48 million ($36 million after tax) for the increase in the total project capital cost forecast as of March 31, 2021. Ashot functional and when these amounts are spent, Georgia Power may request the Georgia PSC to evaluate those expenditures for rate recovery.
In addition, the continuing effects of the COVID-19 pandemic could further disrupt or delay construction and testing activities at Plant Vogtle Units 3 and 4. Georgia Power's proportionate share of the estimated incremental cost associated with COVID-19 mitigation actions and impacts on construction productivity is currently estimated to be between $150 million and $190 million and is included in the total project capital cost forecast. Estimated costs associated with near-term COVID-19 mitigation actions and related impacts on construction productivity are also included in the total project capital cost forecast described above.
other testing. As construction, including subcontract work, continues on both Units 3 and testing and system turnover activities increase,4, ongoing or future challenges withinclude management of contractors and vendors; subcontractor performance; supervision of craft labor and related productivity, particularly in the installation of electrical, mechanical, and instrumentation and controls commodities, ability to attract and retain craft labor, and/or related cost escalation; and procurement fabrication, delivery, assembly, installation, system turnover, and therelated installation. New challenges may arise, particularly as Units 3 and 4 move into initial testing and start-up, including anywhich may result in required engineering changes or any remediation related thereto, ofto plant systems, structures, or components (some of which are based on new technology that only within the last few years began initial operation in the global nuclear industry at this scale), any of which. The ongoing and potential future challenges described above may require additional labor and/or materials; or other issues could arise and change the projected schedule and estimated cost.
There have been technical and procedural challenges to the construction and licensing of Plant Vogtle Units 3 and 4 at the federal and state level and additional challenges may arise. In addition, certain license amendment requests have been filed and approved or are pending before the NRC. Processes are in place that are designed to assureensure compliance with the requirements specified in the Westinghouse Design Control Document and the combined construction and operating licenses, including inspections by Southern Nuclear and the NRC that occur throughout construction. In connection with the additional construction remediation work described above, Southern Nuclear reviewed the project's construction quality programs and, where needed, is implementing improvement plans consistent with these processes. Findings resulting from such inspections could require additional remediation and/or further NRC oversight. In addition, certain license amendment requests have been filed and approved or are pending before the NRC. On March 15, 2021,25, 2022, the NRC issued an appealable order denyingcompleted its follow-up inspection related to the Blue Ridge Environmental Defense League's (BREDL) December 2020 motionNovember 2021 final significance report on its special inspection to reopen proceedings on BREDL's petition challenging a license amendment request.review the root cause of this additional construction remediation work and the corresponding corrective action plans. The staff ofNRC closed the NRC has issued the requested amendment.
In September 2020, Southern Nuclear notified the NRC of its intent to load fuel fortwo white findings identified in November 2021 and returned Vogtle Unit 3 in 2021. to the NRC's baseline inspection program.
Various design and other licensing-based compliance matters, including the timely submittal by Southern Nuclear of the ITAAC documentation for each unit and the related reviews and approvals by the NRC necessary to support NRC authorization to load fuel, have arisen or may arise, which may result in additional license amendments or require other resolution. If any license amendment requests or other licensing-based compliance issues, including inspections and ITAACs, are not resolved in a timely manner, there may be delays in the project schedule that could result in increased costs.
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(UNAUDITED)
The ultimate outcome of these matters cannot be determined at this time. However, any extension of the in-service date beyond December 2021the first quarter 2023 for Unit 3 or November 2022the fourth quarter 2023 for Unit 4, including the current level of cost sharing described below, is currently estimated to result in additional base capital costs for Georgia Power of approximately $25up to $60 million per month for Unit 3 and approximately $15$40 million per month for Unit 4, as well as the related AFUDC.AFUDC and any additional related construction, support resources, or testing costs. While Georgia Power is not precluded from seeking retail recovery of any future capital cost forecast increase other than the amounts related to the cost-sharing and tender provisions of the joint ownership agreements described below, management will ultimately determine whether or not to seek recovery. Any further changes to the capital cost forecast that are not expected to be recoverable through regulated rates will be required to be charged to income and such charges could be material.
Joint Owner Contracts
In November 2017, the Vogtle Owners entered into an amendment to their joint ownership agreements for Plant Vogtle Units 3 and 4 to provide for, among other conditions, additional Vogtle Owner approval requirements. Effective in August 2018, the Vogtle Owners further amended the joint ownership agreements to clarify and provide procedures for certain provisions of the joint ownership agreements related to adverse events that require the vote of the holders of at least 90% of the ownership interests in Plant Vogtle Units 3 and 4 to continue construction (as amended, and together with the November 2017 amendment, the Vogtle Joint Ownership Agreements). The Vogtle Joint Ownership Agreements also confirm that the Vogtle Owners' sole recourse against Georgia Power or Southern
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(UNAUDITED)
Nuclear for any action or inaction in connection with their performance as agent for the Vogtle Owners is limited to removal of Georgia Power and/or Southern Nuclear as agent, except in cases of willful misconduct.
As a result of an increase in the total project capital cost forecast and Georgia Power's decision not to seek rate recovery of the increase in the base capital costs in conjunction with the nineteenth VCM report in 2018, the holders of at least 90% of the ownership interests in Plant Vogtle Units 3 and 4 were required to vote to continue construction. In September 2018, the Vogtle Owners unanimously voted to continue construction of Plant Vogtle Units 3 and 4.
Amendments to the Vogtle Joint Ownership Agreements
In connection with a September 2018 vote by the voteVogtle Owners to continue construction, Georgia Power entered into (i) a binding term sheet (Vogtle Owner Term Sheet) with the other Vogtle Owners and MEAG Power's wholly-owned subsidiaries MEAG Power SPVJ, LLC (MEAG SPVJ), MEAG Power SPVM, LLC (MEAG SPVM), and MEAG Power SPVP, LLC (MEAG SPVP) to take certain actions which partially mitigate potential financial exposure for the other Vogtle Owners, including additional amendments to the Vogtle Joint Ownership Agreements and the purchase of PTCs from the other Vogtle Owners at pre-established prices, and (ii) a term sheet (MEAG Term Sheet) with MEAG Power and MEAG SPVJ to provide up to $300 million of funding with respect to MEAG SPVJ's ownership interest in Plant Vogtle Units 3 and 4 under certain circumstances. In January 2019, Georgia Power, MEAG Power, and MEAG SPVJ entered into an agreement to implement the provisions of the MEAG Term Sheet. In February 2019, Georgia Power, the other Vogtle Owners, and MEAG Power's wholly-owned subsidiaries MEAG SPVJ, MEAG SPVM, and MEAG SPVP entered into certain amendments to the Vogtle Joint Ownership Agreements to implement the provisions of the Vogtle Owner Term Sheet (Global Amendments).
As previously disclosed, pursuantPursuant to the Global Amendments: (i) each Vogtle Owner must pay its proportionate share of qualifying construction costs for Plant Vogtle Units 3 and 4 based on its ownership percentage up to the estimated cost at completion (EAC) for Plant Vogtle Units 3 and 4 which formed the basis of Georgia Power's forecast of $8.4 billion in the nineteenth VCM plus $800 million; (ii) Georgia Power will be responsible for 55.7% of actual qualifying construction costs between $800 million and $1.6 billion over the EAC in the nineteenth VCM (resulting in $80 million of potential additional costs to Georgia Power), with the remaining Vogtle Owners responsible for 44.3% of such costs pro rata in accordance with their respective ownership interests; and (iii) Georgia Power will be responsible for 65.7% of qualifying construction costs between $1.6 billion and $2.1 billion over the EAC in the nineteenth VCM (resulting in a further $100 million of potential additional costs to Georgia Power), with the remaining Vogtle Owners responsible for 34.3% of such costs pro rata in accordance with their respective ownership interests. If the EAC is revised and exceeds the EAC in the nineteenth VCM by more than $2.1 billion, each of the other Vogtle Owners will have a one-time option at the time the project budget cost forecast is
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(UNAUDITED)
so revised to tender a portion of its ownership interest to Georgia Power in exchange for Georgia Power's agreement to pay 100% of such Vogtle Owner's remaining share of total construction costs in excess of the EAC in the nineteenth VCM plus $2.1 billion.
For purposes of the foregoing provisions, qualifying construction costs will not include costs (i) resulting from force majeure events, including epidemics and quarantines, governmental actions or inactions (or significant delays associated with issuance of such actions) that affect the licensing, completion, start-up, operations, or financing of Plant Vogtle Units 3 and 4, administrative proceedings or litigation regarding ITAAC or other regulatory challenges to commencement of operation of Plant Vogtle Units 3 and 4, and changes in laws or regulations governing Plant Vogtle Units 3 and 4, (ii) legal fees and legal expenses incurred due to litigation with contractors or subcontractors that are not subsidiaries or affiliates of Southern Company, and (iii) additional costs caused by requests from the Vogtle Owners other than Georgia Power, except for the exercise of a right to vote granted under the Vogtle Joint Ownership Agreements, that increase costs by $100,000 or more.
In addition, pursuant to the Global Amendments, the holders of at least 90% of the ownership interests in Plant Vogtle Units 3 and 4 must vote to continue construction if certain adverse events occur, including, among other events: (i) the bankruptcy of Toshiba; (ii) the termination or rejection in bankruptcy of certain agreements, including the Vogtle Services Agreement, the Bechtel Agreement, or the agency agreement with Southern Nuclear; (iii) Georgia Power's public announcement of its intention not to submit for rate recovery any portion of its investment in Plant Vogtle Units 3 and 4 or the Georgia PSC determines that any of Georgia Power's costs relating to the construction of Plant Vogtle Units 3 and 4 will not be recovered in retail rates, excluding any additional amounts paid by Georgia Power on behalf of the other Vogtle Owners pursuant to the Global Amendments described above and the first 6% of costs during any six-month VCM reporting period that are disallowed by the Georgia PSC for
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(UNAUDITED)
recovery, or for which Georgia Power elects not to seek cost recovery, through retail rates; and (iv) an incremental extension of one year or more overfrom the most recently approved schedule.seventeenth VCM report estimated in-service dates of November 2021 and November 2022 for Units 3 and 4, respectively. The schedule extension announced in February 2022 triggered the requirement for a vote to continue construction. Effective February 25, 2022, all of the Vogtle Owners had voted to continue construction.
Georgia Power and the other Vogtle Owners do not agree on either the starting dollar amount for the determination of cost increases subject to the cost-sharing and tender provisions of the Global Amendments or the extent to which COVID-19-related costs impact those provisions. Based on the definition in the Global Amendments, Georgia Power believes the starting dollar amount is $18.38 billion and the current project capital cost forecast exceeds the cost-sharing provision threshold, but not the tender provision threshold. The other Vogtle Owners have notified Georgia Power that they believe the current project capital cost forecast exceeds the cost-sharing thresholds and triggers the tender provisions under the Global Amendments. Georgia Power recorded a pre-tax charge to income in the fourth quarter 2021 of approximately $440 million ($328 million after tax) associated with these cost-sharing and tender provisions, which is included in the total project capital cost forecast. Georgia Power may be required to record further pre-tax charges to income of up to approximately $460 million associated with these provisions based on the current project capital cost forecast. Georgia Power's incremental charges associated with these provisions, which relate to the other Vogtle Owners' share of costs, will not be recovered from retail customers. In October 2021, Georgia Power and the other Vogtle Owners entered into an agreement to clarify the process for the tender provisions of the Global Amendments to provide for a decision between 120 and 180 days after the tender option is triggered, which the other Vogtle Owners assert occurred on February 14, 2022.
Georgia Power's ownership interest in Plant Vogtle Units 3 and 4 continues to be 45.7%; however, it could increase if one or more of the other Vogtle Owners exercise the option to tender a portion of their ownership interest to Georgia Power and require Georgia Power to pay 100% of the remaining share of the costs necessary to complete Plant Vogtle Units 3 and 4. Georgia Power's incremental ownership interest would be calculated and conveyed to Georgia Power after Plant Vogtle Units 3 and 4 are placed in service.
The ultimate outcome of these matters cannot be determined at this time.
Regulatory Matters
In 2009, the Georgia PSC voted to certify construction of Plant Vogtle Units 3 and 4 with a certified capital cost of $4.418 billion. In addition, in 2009 the Georgia PSC approved inclusion of the Plant Vogtle Units 3 and 4 related CWIP accounts in rate base, and the State of Georgia enacted the Georgia Nuclear Energy Financing Act, which allows Georgia Power to recover financing costs for Plant Vogtle Units 3 and 4. Financing costs are recovered on all applicable certified costs through annual adjustments to the NCCR tariff up to the certified capital cost of $4.418 billion. At March 31, 2021,2022, Georgia Power had recovered approximately $2.6$2.8 billion of financing costs. Financing costs related to capital costs above $4.418 billion are being recognized through AFUDC and are expected to be recovered through retail rates over the life of Plant Vogtle Units 3 and 4; however, Georgia Power willis not recordrecording AFUDC related to any capital costs in excess of the total deemed reasonable by the Georgia PSC (currently $7.3 billion) and not requested for rate recovery. In November 2020,2021, the Georgia PSC approved Georgia Power's request to decrease the NCCR tariff by $142$78 million annually, effective January 1, 2021.2022.
Georgia Power is required to file semi-annual VCM reports with the Georgia PSC by February 28 and August 31 of each year. In 2013, in connection with the eighth VCM report, the Georgia PSC approved a stipulation between Georgia Power and the staff of the Georgia PSC to waive the requirement to amend the Plant Vogtle Units 3 and 4 certificate in accordance with the 2009 certification order until the completion of Plant Vogtle Unit 3, or earlier if deemed appropriate by the Georgia PSC and Georgia Power.
In 2016, the Georgia PSC voted to approve a settlement agreement (Vogtle Cost Settlement Agreement) resolving certain prudency matters in connection with the fifteenth VCM report. In December 2017, the Georgia PSC voted to approve (and issued its related order on January 11, 2018) Georgia Power's seventeenth VCM report and modified the Vogtle Cost Settlement Agreement. The Vogtle Cost Settlement Agreement, as modified by the January 11,
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2018 order, resolved the following regulatory matters related to Plant Vogtle Units 3 and 4: (i) none of the $3.3 billion of costs incurred through December 31, 2015 and reflected in the fourteenth VCM report should be disallowed from rate base on the basis of imprudence; (ii) the Contractor Settlement Agreement was reasonable and prudent and none of the $0.3 billion paid pursuant to the Contractor Settlement Agreement should be disallowed from rate base on the basis of imprudence; (iii) (a) capital costs incurred up to $5.68 billion would be presumed to be reasonable and prudent with the burden of proof on any party challenging such costs, (b) Georgia Power would have the burden to show that any capital costs above $5.68 billion were prudent, and (c) a revised capital cost forecast of $7.3 billion (after reflecting the impact of payments received under the Guarantee Settlement Agreement and related customer refunds) was found reasonable; (iv) construction of Plant Vogtle Units 3 and 4 should be completed, with Southern Nuclear serving as project manager and Bechtel as primary contractor; (v) approved and deemed reasonable Georgia Power's revised schedule placing Plant Vogtle Units 3 and 4 in service in November 2021 and November 2022, respectively; (vi) confirmed that the revised cost forecast does not represent a cost cap
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(UNAUDITED)
and that a prudence decisionsproceeding on cost recovery will be made at a later date,occur following Unit 4 fuel load, consistent with applicable Georgia law; (vii) reduced the ROE used to calculate the NCCR tariff (a) from 10.95% (the ROE rate setting point authorized by the Georgia PSC in the 2013 alternate rate plan) to 10.00% effective January 1, 2016, (b) from 10.00% to 8.30%, effective January 1, 2020, and (c) from 8.30% to 5.30%, effective January 1, 2021 (provided that the ROE in no case will be less than Georgia Power's average cost of long-term debt); (viii) reduced the ROE used for AFUDC equity for Plant Vogtle Units 3 and 4 from 10.00% to Georgia Power's average cost of long-term debt, effective January 1, 2018; and (ix) agreed that uponeffective the first month after Unit 3 reachingreaches commercial operation, retail base rates would be adjusted to include the costs related to Unit 3 and common facilities deemed prudent in the Vogtle Cost Settlement Agreement.Agreement (see Note 2 to the financial statements under "Georgia Power – Plant Vogtle Unit 3 and Common Facilities Rate Proceeding" in Item 8 of the Form 10-K for additional information). The January 11, 2018 order also stated that if Plant Vogtle Units 3 and 4 are not commercially operational by June 1, 2021 and June 1, 2022, respectively, the ROE used to calculate the NCCR tariff will be further reduced by 10 basis points each month (but not lower than Georgia Power's average cost of long-term debt) until the respective Unit is commercially operational. The ROE reductions negatively impacted earnings by approximately $150$270 million in 20202021 and are estimated to have negative earnings impacts of approximately $300 million and $265 million in 2022 and $200 million in 2021 and 2022,2023, respectively. In its January 11, 2018 order, the Georgia PSC also stated if other conditions change and assumptions upon which Georgia Power's seventeenth VCM report are based do not materialize, the Georgia PSC reserved the right to reconsider the decision to continue construction.
In the August 2021 order approving the twenty-fourth VCM report, the Georgia PSC approved a stipulation addressing the following matters: (i) beginning with its twenty-fifth VCM report, Georgia Power will continue to report to the Georgia PSC all costs incurred during the period for review and will request for approval costs up to the $7.3 billion determined to be reasonable in the Georgia PSC's seventeenth VCM order and (ii) Georgia Power will not seek rate recovery of the $0.7 billion increase to the base capital cost forecast included in the nineteenth VCM report and charged to income by Georgia Power in the second quarter 2018. In addition, the stipulation confirms Georgia Power may request verification and approval of costs above $7.3 billion for inclusion in rate base at a later time, but no earlier than the prudence review contemplated by the seventeenth VCM order described previously.
The Georgia PSC has approved 2325 VCM reports covering periods through June 30, 2020, including2021. These reports reflect total construction capital costs incurred through that date of $8.1$7.9 billion (before(net of $1.7 billion of payments received under the Guarantee Settlement Agreement and approximately $188 million in related customer refunds). The Georgia PSC's order approving the twenty-third VCM report also instructed Georgia Power and the staff, of which the Georgia PSC to develop a mutually-agreeable recommendation to the Georgia PSC by the end of March 2021 regarding the procedure forhas verified and the timing, form, and substance of the rate adjustment filing related to the Unit 3 and common facility costs. On March 31, 2021, the staff of the Georgia PSC, on behalf of itself and Georgia Power, requested an extension through April 30, 2021.approved $7.3 billion as described above. Georgia Power filed its twenty-fourthtwenty-sixth VCM report with the Georgia PSC on February 18, 2021, covering the period from July 1, 2020 through December 31, 2020, requesting approval17, 2022, reflecting $584 million of $670 million ofadditional construction capital costs incurred during that period.through December 31, 2021 and the total capital cost forecast described above.
The ultimate outcome of these matters cannot be determined at this time.
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(UNAUDITED)
Mississippi Power
Performance Evaluation Plan
On March 15, 2021,2022, Mississippi Power submitted its annual retail PEP filing for 20212022 to the Mississippi PSC, which requested a 1.8%1.9%, or approximately $16$18 million, annual increase in revenues, primarily due to increasedincreases in investment, operations and amortizationmaintenance expenses, and lower sales.depreciation and amortization. In accordance with the PEP rate schedule, the rate increase became effective with the first billing cycle of April 2021,2022, subject to refund. The ultimate outcome of this matter cannot be determined at this time.
Integrated Resource Plan
In December 2020, the Mississippi PSC issued an order in the Reserve Margin Plan docket requiring Mississippi Power to incorporate into its 2021 IRP a schedule reflecting the retirement of 950 MWs of fossil-steam generation by year-end 2027 to reduce Mississippi Power's excess reserve margin. On April 15, 2021, Mississippi Power filed its 2021 IRP with the Mississippi PSC. The filing includes a schedule to retire Plant Watson Unit 4 (268 MWs) and Mississippi Power's 40% ownership interest in Plant Greene County Units 1 and 2 (103 MWs each) in December 2023, 2025, and 2026, respectively, consistent with each unit's remaining useful life in the most recent approved depreciation studies. In addition, the schedule reflects the early retirement of Mississippi Power's 50% undivided ownership interest in Plant Daniel Units 1 and 2 (502 MWs) by the end of 2027. The Plant Greene County unit retirements require the completion by Alabama Power of transmission and system reliability improvements, as well as agreement by Alabama Power.
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The remaining net book value of Plant Daniel Units 1 and 2 was approximately $531 million at March 31, 2021. Mississippi Power expects to reclassify the net book value remaining at retirement to a regulatory asset to be amortized over a period to be determined by the Mississippi PSC in futurerelated proceedings consistent with the December 2020 order. The Plant Watson and Greene County units are expected to be fully depreciated upon retirement.
The 2021 IRP is subject to a review period during whichconclude in summer 2022; however, the Mississippi PSC may note any deficiencies which could require re-evaluation or resubmission of the IRP. If no deficiencies are noted, the Mississippi PSC's review will conclude on August 13, 2021.
The ultimate outcome of this matter cannot be determined at this time.
Ad Valorem Tax Adjustment
On April 6, 2021, the13, 2022, Mississippi PSC approved Mississippi Power'sPower submitted its annual ad valorem tax adjustment filing for 2021,2022, which requested ana $5 million annual increase in revenuesrevenues. The ultimate outcome of approximately $28 million, including approximately $19 million of ad valorem taxes previously recovered through PEP in accordance with the Mississippi Power Rate Case Settlement Agreement. The rate became effective with the first billing cycle of May 2021.this matter cannot be determined at this time.
Southern Company Gas
Infrastructure Replacement Programs and Capital Projects
Capital expenditures incurred under specific infrastructure replacement programs and capital projects during the first three months of 20212022 were as follows:
UtilityProgramThree Months Ended
March 31, 20212022
(in millions)
Nicor GasInvesting in Illinois$4551 
Virginia Natural GasSteps to Advance Virginia's Energy914 
Atlanta Gas LightSystem Reinforcement Rider14 
Chattanooga GasPipeline Replacement Program1 
Total$5480 
Atlanta Gas Light
On April 28, 2021, Atlanta Gas Light filed its first Integrated Capacity and Delivery Plan (i-CDP) with the Georgia PSC, which includes a series of ongoing and proposed pipeline safety, reliability, and growth programs for the next 10 years (2022 through 2031), as well as the required capital investments and related costs to implement the programs. The i-CDP reflects capital investments totaling approximately $0.5 billion to $0.6 billion annually.
Recovery of the related revenue requirements will be included in either subsequent annual GRAM filings or the new System Reinforcement Rider for authorized large pressure improvement and system reliability projects. The i-CDP is subject to a five-month review period, which may be extended. The ultimate outcome of this matter cannot be determined at this time.
Virginia Natural Gas
On April 6, 2021, the Virginia State Corporation Commission approved a motion filed by Virginia Natural Gas to withdraw the application for its 9.5-mile interconnect project due to a change in the capacity needs of one of the project's customers. No further action is necessary and this matter is now concluded.
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(UNAUDITED)
Deferral of Incremental COVID-19 Costs
Nicor Gas
On March 18, 2021, the Illinois Commission approved a phased-in schedule for disconnections related to non-payment. Nicor Gas began certain disconnections in late April 2021 and will resume normal disconnections in June 2021. Nicor Gas will continue certain flexible credit and collection procedures until mid-2021.
(C) CONTINGENCIES
See Note 3 to the financial statements in Item 8 of the Form 10-K for information relating to various lawsuits and other contingencies.
General Litigation Matters
The Registrants are involved in various matters being litigated and regulatory matters. The ultimate outcome of such pending or potential litigation or regulatory matters against each Registrant and any subsidiaries cannot be determined at this time; however, for current proceedings not specifically reported herein, management does not anticipate that the ultimate liabilities, if any, arising from such current proceedings would have a material effect on such Registrant's financial statements.
The Registrants believe the pending legal challenges discussed below have no merit; however, the ultimate outcome of these matters cannot be determined at this time.
Southern Company
In February 2017, Jean Vineyard and Judy Mesirov each filed a shareholder derivative lawsuit in the U.S. District Court for the Northern District of Georgia. Each of these lawsuits names as defendants Southern Company, certain of its directors, certain of its current and former officers, and certain former Mississippi Power officers. In 2017, these 2 shareholder derivative lawsuits were consolidated in the U.S. District Court for the Northern District of
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(UNAUDITED)
Georgia. The complaints allege that the defendants caused Southern Company to make false or misleading statements regarding the Kemper County energy facility cost and schedule. Further, the complaints allege that the defendants were unjustly enriched and caused the waste of corporate assets and also allege that the individual defendants violated their fiduciary duties.
In May 2017, Helen E. Piper Survivor's Trust filed a shareholder derivative lawsuit in the Superior Court of Gwinnett County, Georgia that names as defendants Southern Company, certain of its directors, certain of its current and former officers, and certain former Mississippi Power officers. The complaint alleges that the individual defendants, among other things, breached their fiduciary duties in connection with schedule delays and cost overruns associated with the construction of the Kemper County energy facility. The complaint further alleges that the individual defendants authorized or failed to correct false and misleading statements regarding the Kemper County energy facility schedule and cost and failed to implement necessary internal controls to prevent harm to Southern Company. In August 2019, the court granted a motion filed by the plaintiff in July 2019 to substitute a new named plaintiff, Martin J. Kobuck, in place of Helen E. Piper Survivor's Trust.
The plaintiffs in each of these cases seek to recover, on behalf of Southern Company, unspecified actual damages and, on each plaintiff's own behalf, attorneys' fees and costs in bringing the lawsuit. The plaintiffs also seek certain changes to Southern Company's corporate governance and internal processes. In 2018,On January 21, 2022, the plaintiffs in the federal court in each caseaction filed a motion for preliminary approval of settlement, together with an executed stipulation of settlement, which applies to both actions. On March 11, 2022, the U.S. District Court for the Northern District of Georgia entered an order staying each lawsuit until 30 days afterpreliminarily approving the settlement. The proposed settlement consists of a securities class action filed in January 2017 againstan aggregate payment by Southern Company, certainCompany's insurers of its currentapproximately $4.5 million for attorneys' fees and former officers, and certain former Mississippi Power officers. In September 2020, the plaintiffs in each case filed a status report noting the settlementexpenses, as well as adoption of various corporate governance reforms by Southern Company. The terms of the securities class actionproposed settlement and informing the court thatcorporate governance reforms remain subject to final approval by the parties had scheduled mediation, which occurred in November 2020. The parties in each case did not reach settlement but continue to explore possible resolution. Each case is stayed while the parties discuss potential resolution.court.
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Georgia Power
In 2011, plaintiffs filed a putative class action against Georgia Power in the Superior Court of Fulton County, Georgia alleging that Georgia Power's collection in rates of amounts for municipal franchise fees (which fees are paid to municipalities) exceeded the amounts allowed in orders of the Georgia PSC and alleging certain state law claims. This case has been ruled upon and appealed numerous times over the last several years. In one recent appeal, the Georgia Supreme Court remanded the case and noted that the trial court could refer the matter to the Georgia PSC to interpret its tariffs. Following a motion by Georgia Power, in February 2019, the Superior Court of Fulton County ordered the parties to submit petitions to the Georgia PSC for a declaratory ruling and also conditionally certified the proposed class. In March 2019, Georgia Power and the plaintiffs filed petitions with the Georgia PSC seeking confirmation of the proper application of the municipal franchise fee schedule pursuant to the Georgia PSC's orders. Also in March 2019, Georgia Power appealed the class certification decision to the Georgia Court of Appeals. In October 2019, the Georgia PSC issued an order that found Georgia Power has appropriately implemented the municipal franchise fee schedule. In March 2020, the Georgia Court of Appeals vacated the Superior Court of Fulton County's February 2019 order granting conditional class certification and remanded the case to the Superior Court of Fulton County for further proceedings. In September 2020, the plaintiffs and Georgia Power each filed motions for summary judgment and the plaintiffs renewed their motion for class certification. On March 16, 2021, the Superior Court of Fulton County granted class certification and Georgia Power's motion for summary judgment. On March 22, 2021,judgment and the plaintiffs filed a notice of appeal, and, onappeal. In April 2, 2021, Georgia Power filed a notice of cross appeal on the issue of class certification. In December 2021, the Georgia Court of Appeals affirmed the Superior Court's ruling that granted summary judgment to Georgia Power and dismissed Georgia Power's cross appeal on the issue of class certification as moot. Also in December 2021, the plaintiffs filed a petition for writ of certiorari to the Georgia Supreme Court. The amount of any possible losses cannot be estimated at this time because, among other factors, it is unknown whether any losses would be subject to recovery from any municipalities.
In July 2020, a group of individual plaintiffs filed a complaint in the Superior Court of Fulton County, Georgia against Georgia Power alleging that releases from Plant Scherer have impacted groundwater, surface water, and air, resulting in alleged personal injuries and property damage. The plaintiffs seek an unspecified amount of monetary damages including punitive damages, a medical monitoring fund, and injunctive relief. Georgia Power has filed multiple motions to dismiss the complaint. In September 2020,October 2021, 3 additional complaints were filed in the Superior Court of Monroe County, Georgia against Georgia Power alleging that releases from Plant Scherer have impacted groundwater and air, resulting in alleged personal injuries and property damage. The plaintiffs seek an unspecified amount of monetary damages including punitive damages. In November 2021, Georgia Power filed a motionnotice to dismiss.remove the 3 cases pending in the Superior Court of Monroe County, Georgia to the U.S. District Court for the Middle District of Georgia. On February 7, 2022, 4 additional complaints were filed in the Superior Court of Monroe County, Georgia against Georgia Power seeking damages for alleged personal injuries or property damage. On March 9, 2022, Georgia Power filed a notice to remove the 4 cases pending in the Superior Court of Monroe
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County, Georgia to the U.S. District Court for the Middle District of Georgia. The amount of any possible losses from these matters cannot be estimated at this time.
Mississippi Power
In 2018, Ray C. Turnage and 10 other individual plaintiffs filed a putative class action complaint against Mississippi Power and the 3 then-serving members of the Mississippi PSC in the U.S. District Court for the Southern District of Mississippi.Mississippi, which was amended in March 2019 to include 4 additional plaintiffs. Mississippi Power received Mississippi PSC approval in 2013 to charge a mirror CWIP rate premised upon including in its rate base pre-construction and construction costs for the Kemper IGCC prior to placing the Kemper IGCC into service. The Mississippi Supreme Court reversed that approval and ordered Mississippi Power to refund the amounts paid by customers under the previously-approved mirror CWIP rate. The plaintiffs allege that the initial approval process, and the amount approved, were improper.improper and make claims for gross negligence, reckless conduct, and intentional wrongdoing. They also allege that Mississippi Power underpaid customers by up to $23.5 million in the refund process by applying an incorrect interest rate. The plaintiffs seek to recover, on behalf of themselves and their putative class, actual damages, punitive damages, pre-judgment interest, post-judgment interest, attorney's fees, and costs. In response to Mississippi Power and the Mississippi PSC each filing a motion to dismiss, the plaintiffs filed an amended complaint in March 2019. The amended complaint included 4 additional plaintiffs and additional claims for gross negligence, reckless conduct, and intentional wrongdoing. Mississippi Power and the Mississippi PSC each filed a motion to dismissdistrict court dismissed the amended complaint, which occurred in May 2020 and March 2020, respectively. Alsocomplaint; however, in March 2020, the plaintiffs filed a motion seeking to name the new members of the Mississippi PSC, the Mississippi Development Authority, and Southern Company as additional defendants and add a cause of action against all defendants based on a dormant commerce clause theory under the U.S. Constitution. In July 2020, the plaintiffs filed a motion for leave to file a third amended complaint, which included the same federal claims as the proposed second amended complaint, as well as several additional state law claims based on the allegation that Mississippi Power failed to disclose the annual percentage rate of interest applicable to refunds. In November 2020, the district court denied each of the plaintiffs' pending motions and entered final judgment in favor of Mississippi Power. OnIn January 22, 2021, the district court denied further motions by the plaintiffs to vacate the judgment and to file a revised second
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(UNAUDITED)
amended complaint. OnIn February 19, 2021, the plaintiffs filed a notice of appeal with the U.S. Court of Appeals for the Fifth Circuit. On March 21, 2022, the U.S. Court of Appeals for the Fifth Circuit issued an opinion affirming the dismissal of the claims against the Mississippi PSC defendants but reversing the dismissal of the claims against Mississippi Power. The appellate court remanded the case to the U.S. District Court for the Southern District of Mississippi for further proceedings. The appellate court's decision is not final until the opportunity for rehearing en banc is resolved. An adverse outcome in this proceeding could have a material impact on Mississippi Power's financial statements.
See Note 3 to the financial statements under "Other Matters – Mississippi Power – Kemper County Energy Facility" in Item 8 of the Form 10-K for additional information.
Environmental Remediation
The Southern Company system must comply with environmental laws and regulations governing the handling and disposal of waste and releases of hazardous substances. Under these various laws and regulations, the Southern Company system could incur substantial costs to clean up affected sites. The traditional electric operating companies and the natural gas distribution utilities in Illinois and Georgia have each received authority from their respective state PSCs or other applicable state regulatory agencies to recover approved environmental remediation costs through regulatory mechanisms. These regulatory mechanisms are adjusted annually or as necessary within limits approved by the state PSCs or other applicable state regulatory agencies.
Georgia Power's environmental remediation liability was $16 million and $15$17 million at March 31, 20212022 and December 31, 2020,2021, respectively. Georgia Power has been designated or identified as a potentially responsible party at sites governed by the Georgia Hazardous Site Response Act and/or by the federal Comprehensive Environmental Response, Compensation, and Liability Act, and assessment and potential cleanup of such sites is expected.
Southern Company Gas' environmental remediation liability was $240$249 million and $245 million as ofat both March 31, 20212022 and December 31, 2020, respectively,2021 based on the estimated cost of environmental investigation and remediation associated with known former manufactured gas plant operating sites.
The ultimate outcome of these matters cannot be determined at this time; however, as a result of the regulatory treatment for environmental remediation expenses described above, the final disposition of these matters is not expected to have a material impact on the financial statements of the applicable Registrants.
Other Matters
Southern Company Gas
PennEast Pipeline Project
Work continues with state and federal agencies to obtain the required permits to begin construction of the PennEast Pipeline. Expected project costs for Southern Company Gas total approximately $300 million, excluding financing costs. The ultimate outcome of the PennEast Pipeline construction project cannot be determined at this time; however, any work delays, whether caused by judicial or regulatory action, abnormal weather, or other conditions, may result in additional cost or schedule modifications or, ultimately, in project cancellation, any of which could result in impairment of Southern Company Gas' investment ($93 million at March 31, 2021) and could have a significant impact on Southern Company's financial statements and a material impact on Southern Company Gas' financial statements. See Note (E) under "Southern Company Gas" for additional information.
SNG
As a 50% equity investor in SNG, Southern Company Gas is required to make additional capital contributions as necessary pursuant to the terms of its operating agreement with SNG. SNG has $300 million of debt maturing in June 2021 that it anticipates refinancing prior to its maturity. If SNG is unable to refinance or otherwise satisfy this debt obligation, Southern Company Gas has committed to fund up to $150 million as a contingent capital contribution. See Note (E) under "Southern Company Gas" for additional information.
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(UNAUDITED)
(D) REVENUE FROM CONTRACTS WITH CUSTOMERS AND LEASE INCOME
Revenue from Contracts with Customers
The Registrants generate revenues from a variety of sources, some of which are not accounted for as revenue from contracts with customers, such as leases, derivatives, and certain cost recovery mechanisms. See Note 1 to the financial statements under "Revenues" in Item 8 of the Form 10-K for additional information on the revenue policies of the Registrants. See "Lease Income" herein and Note (J) for additional information on revenue accounted for under lease and derivative accounting guidance, respectively.
The following table disaggregates revenue from contracts with customers for the three months ended March 31, 20212022 and 2020:2021:
Southern CompanyAlabama PowerGeorgia PowerMississippi PowerSouthern PowerSouthern Company GasSouthern CompanyAlabama PowerGeorgia PowerMississippi PowerSouthern PowerSouthern Company Gas
(in millions)(in millions)
Three Months Ended March 31, 2021
Three Months Ended March 31, 2022Three Months Ended March 31, 2022
Operating revenuesOperating revenuesOperating revenues
Retail electric revenuesRetail electric revenuesRetail electric revenues
ResidentialResidential$1,468 $628 $776 $64 $0 $0 Residential$1,525 $634 $821 $70 $— $— 
CommercialCommercial1,117 372 686 59 0 0 Commercial1,178 375 738 65 — — 
IndustrialIndustrial668 320 284 64 0 0 Industrial727 323 334 70 — — 
OtherOther24 5 17 2 0 0 Other26 4 20 2 — — 
Total retail electric revenuesTotal retail electric revenues3,277 1,325 1,763 189 0 0 Total retail electric revenues3,456 1,336 1,913 207 — — 
Natural gas distribution revenuesNatural gas distribution revenuesNatural gas distribution revenues
ResidentialResidential614 0 0 0 0 614 Residential1,016 — — — — 1,016 
CommercialCommercial170 0 0 0 0 170 Commercial270 — — — — 270 
TransportationTransportation288 0 0 0 0 288 Transportation337 — — — — 337 
IndustrialIndustrial16 0 0 0 0 16 Industrial32 — — — — 32 
OtherOther97 0 0 0 0 97 Other129 — — — — 129 
Total natural gas distribution revenuesTotal natural gas distribution revenues1,185 0 0 0 0 1,185 Total natural gas distribution revenues1,784 — — — — 1,784 
Wholesale electric revenuesWholesale electric revenuesWholesale electric revenues
PPA energy revenuesPPA energy revenues212 43 13 4 156 0 PPA energy revenues342 59 32 3 251 — 
PPA capacity revenuesPPA capacity revenues119 29 13 3 75 — PPA capacity revenues134 39 12 3 81 — 
Non-PPA revenuesNon-PPA revenues67 32 9 88 61 0 Non-PPA revenues58 64 9 102 73 — 
Total wholesale electric revenuesTotal wholesale electric revenues398 104 35 95 292 0 Total wholesale electric revenues534 162 53 108 405 — 
Other natural gas revenuesOther natural gas revenuesOther natural gas revenues
Wholesale gas services1,590 0 0 0 0 1,590 
Gas marketing servicesGas marketing services194 0 0 0 0 194 Gas marketing services243 — — — — 243 
Other natural gas revenuesOther natural gas revenues7 0 0 0 0 7 Other natural gas revenues16 — — — — 16 
Total natural gas revenuesTotal natural gas revenues1,791 0 0 0 0 1,791 Total natural gas revenues259 — — — — 259 
Other revenuesOther revenues249 46 113 8 4 0 Other revenues225 48 95 9 8 — 
Total revenue from contracts with customersTotal revenue from contracts with customers6,900 1,475 1,911 292 296 2,976 Total revenue from contracts with customers6,258 1,546 2,061 324 413 2,043 
Other revenue sources(a)
Other revenue sources(a)
1,306 84 59 15 144 1,014 
Other revenue sources(a)
390 103 147 11 126 15 
Other adjustments(b)
(2,296)0 0 0 0 (2,296)
Total operating revenuesTotal operating revenues$5,910 $1,559 $1,970 $307 $440 $1,694 Total operating revenues$6,648 $1,649 $2,208 $335 $539 $2,058 
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(UNAUDITED)
Southern CompanyAlabama PowerGeorgia PowerMississippi PowerSouthern PowerSouthern Company GasSouthern CompanyAlabama PowerGeorgia PowerMississippi PowerSouthern PowerSouthern Company Gas
(in millions)(in millions)
Three Months Ended March 31, 2020
Three Months Ended March 31, 2021Three Months Ended March 31, 2021
Operating revenuesOperating revenuesOperating revenues
Retail electric revenuesRetail electric revenuesRetail electric revenues
ResidentialResidential$1,370 $553 $760 $57 $0 $0 Residential$1,468 $628 $776 $64 $— $— 
CommercialCommercial1,146 364 720 62 0 0 Commercial1,117 372 686 59 — — 
IndustrialIndustrial680 321 281 78 0 0 Industrial668 320 284 64 — — 
OtherOther23 5 16 2 0 0 Other24 5 17 2 — — 
Total retail electric revenuesTotal retail electric revenues3,219 1,243 1,777 199 0 0 Total retail electric revenues3,277 1,325 1,763 189 — — 
Natural gas distribution revenuesNatural gas distribution revenuesNatural gas distribution revenues
ResidentialResidential496 0 0 0 0 496 Residential614 — — — — 614 
CommercialCommercial130 0 0 0 0 130 Commercial170 — — — — 170 
TransportationTransportation264 0 0 0 0 264 Transportation288 — — — — 288 
IndustrialIndustrial12 0 0 0 0 12 Industrial16 — — — — 16 
OtherOther97 0 0 0 0 97 Other97 — — — — 97 
Total natural gas distribution revenuesTotal natural gas distribution revenues999 0 0 0 0 999 Total natural gas distribution revenues1,185 — — — — 1,185 
Wholesale electric revenuesWholesale electric revenuesWholesale electric revenues
PPA energy revenuesPPA energy revenues159 27 9 2 125 0 PPA energy revenues212 43 13 4 156 — 
PPA capacity revenuesPPA capacity revenues105 27 12 1 66 0 PPA capacity revenues119 29 13 3 75 — 
Non-PPA revenuesNon-PPA revenues51 19 2 69 58 0 Non-PPA revenues67 32 9 88 61 — 
Total wholesale electric revenuesTotal wholesale electric revenues315 73 23 72 249 0 Total wholesale electric revenues398 104 35 95 292 — 
Other natural gas revenuesOther natural gas revenuesOther natural gas revenues
Wholesale gas servicesWholesale gas services396 0 0 0 0 396 Wholesale gas services1,590 — — — — 1,590 
Gas marketing servicesGas marketing services163 0 0 0 0 163 Gas marketing services194 — — — — 194 
Other natural gas revenuesOther natural gas revenues7 0 0 0 0 7 Other natural gas revenues7 — — — — 7 
Total natural gas revenuesTotal natural gas revenues566 0 0 0 0 566 Total natural gas revenues1,791 — — — — 1,791 
Other revenuesOther revenues192 37 95 5 3 0 Other revenues249 46 113 8 4 — 
Total revenue from contracts with customersTotal revenue from contracts with customers5,291 1,353 1,895 276 252 1,565 Total revenue from contracts with customers6,900 1,475 1,911 292 296 2,976 
Other revenue sources(a)
Other revenue sources(a)
868 (2)(70)1 123 825 
Other revenue sources(a)
1,306 84 59 15 144 1,014 
Other adjustments(b)
Other adjustments(b)
(1,141)0 0 0 0 (1,141)
Other adjustments(b)
(2,296)— — — — (2,296)
Total operating revenuesTotal operating revenues$5,018 $1,351 $1,825 $277 $375 $1,249 Total operating revenues$5,910 $1,559 $1,970 $307 $440 $1,694 
(a)Other revenue sources relate to revenues from customers accounted for as derivatives and leases, alternative revenue programs at Southern Company Gas, and cost recovery mechanisms and revenues that meet other scope exceptions for revenues from contracts with customers at the traditional electric operating companies.
(b)Other adjustments relate to the cost of Southern Company Gas' energy and risk management activities. Wholesale gas services revenues are presented net of the related costs of those activities on the statement of income. See Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K and Note (L) under "Southern Company Gas" for additional information on the sale of Sequent and components of wholesale gas services' operating revenues.revenues, respectively.
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(UNAUDITED)
Contract Balances
The following table reflects the closing balances of receivables, contract assets, and contract liabilities related to revenues from contracts with customers at March 31, 20212022 and December 31, 2020:2021:
Southern CompanyAlabama PowerGeorgia PowerMississippi PowerSouthern PowerSouthern Company Gas
(in millions)
Accounts Receivable
As of March 31, 2021$2,375 $567 $679 $87 $85 $778 
As of December 31, 20202,614 632 806 77 112 788 
Contract Assets
As of March 31, 2021$106 $1 $47 $0 $0 $0 
As of December 31, 2020158 2 71 0 0 0 
Contract Liabilities
As of March 31, 2021$75 $4 $34 $1 $1 $1 
As of December 31, 202061 6 27 1 1 1 
Southern CompanyAlabama PowerGeorgia PowerMississippi PowerSouthern PowerSouthern Company Gas
(in millions)
Accounts Receivable
At March 31, 2022$2,571 $616 $695 $85 $128 $865 
At December 31, 20212,504 589 736 73 149 753 
Contract Assets
At March 31, 2022$81 $2 $31 $— $— $— 
At December 31, 2021117 2 63 — 1 — 
Contract Liabilities
At March 31, 2022$72 $3 $13 $2 $1 $— 
At December 31, 202157 4 14 — 1 — 
As ofAt March 31, 20212022 and December 31, 2020,2021, Georgia Power had contract assets primarily related to unregulated service agreements, where payment is contingent on project completion, and fixed retail customer fixed bill programs, where the payment is contingent upon Georgia Power's continued performance and the customer's continued participation in the program over a one-year contract term.term, and unregulated service agreements, where payment is contingent on project completion. Contract liabilities for Georgia Power relate to cash collections recognized in advance of revenue for certain unregulated service agreements. Alabama Power had contract liabilities for outstanding performance obligations primarily related to pole attachment and extended service agreements. Southern Company's unregulated distributed generation business had $55$47 million and $81$50 million of contract assets and $34$54 million and $27$39 million of contract liabilities at March 31, 20212022 and December 31, 2020,2021, respectively, for outstanding performance obligations.
Revenues recognized in the three months ended March 31, 2021,2022, which were included in contract liabilities at December 31, 2020,2021, were immaterial for all Registrants.
Remaining Performance Obligations
The traditional electric operating companies and Southern PowerSubsidiary Registrants have long-term contracts with customers in which revenues are recognized as performance obligations are satisfied over the contract term. These contracts primarily relate to PPAs wherebyFor the traditional electric operating companies and Southern Power, providethese contracts primarily relate to PPAs whereby electricity and generation capacity are provided to a customer. The revenue recognized for the delivery of electricity is variable; however, certain PPAs include a fixed payment for fixed generation capacity over the term of the contract. Southern Company's unregulated distributed generation business also has partially satisfied performance obligations related to certain fixed price contracts. Revenues from contracts with customers related to these performance obligations remaining at March 31, 20212022 are expected to be recognized as follows:
2021 (remaining)2022202320242025Thereafter2022 (remaining)2023202420252026Thereafter
(in millions)(in millions)
Southern CompanySouthern Company$485 $408 $340 $327 $307 $2,666 Southern Company$529 $459 $351 $321 $307 $2,345 
Alabama PowerAlabama Power24 31 24 7 5 0 Alabama Power24 24 7 5 — — 
Georgia PowerGeorgia Power57 51 36 24 21 41 Georgia Power55 55 26 22 11 21 
Southern PowerSouthern Power213 287 280 296 280 2,644 Southern Power252 294 310 294 299 2,339 
Revenue expected to be recognized for performance obligations remaining at March 31, 20212022 was immaterial for Mississippi Power and Southern Company Gas.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Lease Income
Lease income for the three months ended March 31, 20212022 and 20202021 is as follows:
Southern
Company		Alabama PowerGeorgia PowerMississippi
Power		Southern PowerSouthern Company GasSouthern
Company		Alabama PowerGeorgia PowerMississippi
Power		Southern PowerSouthern Company Gas
(in millions)
For the Three Months Ended March 31, 2022For the Three Months Ended March 31, 2022
Lease income - interest income on sales-type leasesLease income - interest income on sales-type leases$6 $— $— $4 $2 $— 
Lease income - operating leasesLease income - operating leases51 20 8 — 21 9 
Variable lease incomeVariable lease income84 — — — 90 — 
Total lease incomeTotal lease income$141 $20 $8 $4 $113 $9 
(in millions)
For the Three Months Ended March 31, 2021For the Three Months Ended March 31, 2021For the Three Months Ended March 31, 2021
Lease income - interest income on sales-type leasesLease income - interest income on sales-type leases$3 $0 $0 $3 $0 $0 Lease income - interest income on sales-type leases$3 $— $— $3 $— $— 
Lease income - operating leasesLease income - operating leases55 21 10 0 21 9 Lease income - operating leases55 21 10 — 21 9 
Variable lease incomeVariable lease income84 0 0 0 90 0 Variable lease income84 — — — 90 — 
Total lease incomeTotal lease income$142 $21 $10 $3 $111 $9 Total lease income$142 $21 $10 $3 $111 $9 
For the Three Months Ended March 31, 2020
Lease income - interest income on sales-type leases$3 $0 $0 $3 $0 $0 
Lease income - operating leases51 6 16 0 24 9 
Variable lease income74 0 0 0 80 0 
Total lease income$128 $6 $16 $3 $104 $9 
Lease payments received under tolling arrangements and PPAs consist of either scheduled payments or variable payments based on the amount of energy produced by the underlying electric generating units. Lease income for Alabama Power and Southern Power is included in wholesale revenues.
(E) CONSOLIDATED ENTITIES AND EQUITY METHOD INVESTMENTS
See Note 7 to the financial statements in Item 8 of the Form 10-K for additional information.
Southern Power
Variable Interest Entities
Southern Power has certain subsidiaries that are determined to be VIEs. Southern Power is considered the primary beneficiary of these VIEs because it controls the most significant activities of the VIEs, including operating and maintaining the respective assets, and has the obligation to absorb expected losses of these VIEs to the extent of its equity interests.
SP Solar and SP Wind
At March 31, 20212022 and December 31, 2020,2021, SP Solar had total assets of $6.0 billion and $6.1 billion, respectively, total liabilities of $377$407 million and $387$408 million, respectively, and noncontrolling interests of $1.1 billion. Cash distributions from SP Solar are allocated 67% to Southern Power and 33% to Global Atlantic in accordance with their partnership interest percentage. Under the terms of the limited partnership agreement, distributions without limited partner consent are limited to available cash and SP Solar is obligated to distribute all such available cash to its partners each quarter. Available cash includes all cash generated in the quarter subject to the maintenance of appropriate operating reserves.
At March 31, 20212022 and December 31, 2020,2021, SP Wind had total assets of $2.4$2.3 billion, total liabilities of $171$180 million and $138$130 million, respectively, and noncontrolling interests of $42 million and $43 million, respectively.$41 million. Under the terms of the limited liability agreement, distributions without Class A member consent are limited to available cash and SP Wind is obligated to distribute all such available cash to its members each quarter. Available cash includes all cash generated in the quarter subject to the maintenance of appropriate operating reserves. Cash distributions from SP Wind are generally allocated 60% to Southern Power and 40% to the 3 financial investors in accordance with the limited liability agreement.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Southern Power consolidates both SP Solar and SP Wind, as the primary beneficiary, since it controls the most significant activities of each entity, including operating and maintaining their assets. Certain transfers and sales of the assets in the VIEs are subject to partner consent and the liabilities are non-recourse to the general credit of Southern Power. Liabilities consist of customary working capital items and do not include any long-term debt.
Other Variable Interest Entities
Southern Power has other consolidated VIEs that relate to certain subsidiaries that have either sold noncontrolling interests to tax-equitytax equity investors or acquired less than a 100% interest from facility developers. These entities are considered VIEs because the arrangements are structured similar to a limited partnership and the noncontrolling members do not have substantive kick-out rights.
At March 31, 20212022 and December 31, 2020,2021, the other VIEs had total assets of $1.9$1.8 billion and $1.1$1.9 billion, respectively, total liabilities of $260$248 million and $110$263 million, respectively, and noncontrolling interests of $926$876 million and $454$886 million, respectively. Under the terms of the partnership agreements, distributions of all available cash are required each month or quarter and additional distributions require partner consent.
Equity Method Investments
At March 31, 20212022 and December 31, 2020,2021, Southern Power had equity method investments in wind and battery energy storage projects totaling $84$56 million and $19$86 million, respectively. Earnings (loss) from these investments were immaterial for both periods presented. During the first quarter 2022, Southern Power sold an equity method investment in a wind project and received proceeds of $31 million. The gain associated with the transaction was immaterial.
Southern Company Gas
Equity Method Investments
The carrying amounts of Southern Company Gas' equity method investments as ofat March 31, 2022 and December 31, 2021 and December 31, 2020 and related incomeearnings from those investments for the three months ended March 31, 20212022 and 20202021 were as follows:
Investment BalanceInvestment BalanceMarch 31, 2021December 31, 2020Investment BalanceMarch 31, 2022December 31, 2021
(in millions)(in millions)
SNGSNG$1,164 $1,167 SNG$1,138 $1,129 
PennEast Pipeline(*)
93 91 
Other33 32 
Other(*)
Other(*)
40 44 
TotalTotal$1,290 $1,290 Total$1,178 $1,173 
(*)See Note (C) under "Other Matters – Southern Company Gas" for additional information.Balance at March 31, 2022 reflects a $4 million distribution from PennEast Pipeline.
Three Months Ended March 31,
Earnings from Equity Method InvestmentsEarnings from Equity Method InvestmentsThree Months Ended
March 31, 2021		Three Months Ended
March 31, 2020		Earnings from Equity Method Investments20222021
(in millions)(in millions)
SNGSNG$38 $37 SNG$39 $38 
PennEast Pipeline(a)
2 2 
Other(a)(b)
1 4 
Other(*)
Other(*)
1 3 
TotalTotal$41 $43 Total$40 $41 
(a)(*)Earnings primarily result from AFUDC equity recorded by the project entity.
(b)On March 24, 2020, Southern Company Gas completed the sale of its interests in Atlantic Coast Pipeline and Pivotal LNG. See Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
(F) FINANCING
Bank Credit Arrangements
See Note 8 to the financial statements under "Bank Credit Arrangements" in Item 8 of the Form 10-K for additional information.
At March 31, 2021,2022, committed credit arrangements with banks were as follows:
ExpiresExpires
CompanyCompany2021202220232024TotalUnusedDue within One YearCompany2022202420252026TotalUnusedExpires within One Year
(in millions)(in millions)
Southern Company parentSouthern Company parent$0 $0 $0 $2,000 $2,000 $1,999 $0 Southern Company parent$— $— $— $2,000 $2,000 $1,998 $— 
Alabama PowerAlabama Power3 525 0 800 1,328 1,328 3 Alabama Power— 550 — 700 1,250 1,250 — 
Georgia PowerGeorgia Power0 0 0 1,750 1,750 1,728 0 Georgia Power— — — 1,750 1,750 1,726 — 
Mississippi PowerMississippi Power0 150 125 0 275 250 0 Mississippi Power— 150 125 — 275 255 — 
Southern Power(a)
Southern Power(a)
0 0 0 600 600 568 0 
Southern Power(a)
— — — 600 600 568 — 
Southern Company Gas(b)
Southern Company Gas(b)
0 0 0 1,750 1,750 1,745 0 
Southern Company Gas(b)
250 — — 1,500 1,750 1,747 250 
SEGCOSEGCO30 0 0 0 30 30 30 SEGCO30 — — — 30 30 30 
Southern CompanySouthern Company$33 $675 $125 $6,900 $7,733 $7,648 $33 Southern Company$280 $700 $125 $6,550 $7,655 $7,574 $280 
(a)Does not include Southern Power Company's 2 $75 million and $60 million continuing letter of credit facilities for standby letters of credit, expiring in 2023 and 2025, respectively, of which $12$11 million and $1$19 million, respectively, was unused at March 31, 2021.2022. Southern Power's subsidiaries are not parties to its bank credit arrangements or letter of credit facilities.
(b)Southern Company Gas, as the parent entity, guarantees the obligations of Southern Company Gas Capital, which is the borrower of $1.05 billion$800 million of this arrangement.the arrangement expiring in 2026 and all $250 million of the arrangement expiring in 2022. Southern Company Gas' committed credit arrangement expiring in 2026 also includes $700 million for which Nicor Gas is the borrower and which is restricted for working capital needs of Nicor Gas. Pursuant to thisthe multi-year credit arrangement expiring in 2026, the allocations between Southern Company Gas Capital and Nicor Gas may be adjusted.
As reflected in the table above, in March 2022, Mississippi Power amended and restated its $125 million revolving credit arrangement, which among other things, extended the maturity date from 2023 to 2025 and allows for borrowing based on term SOFR.
Subject to applicable market conditions, Southern Company and its subsidiaries expect to renew or replace their bank credit arrangements as needed, prior to expiration. In connection therewith, Southern Company and its subsidiaries may extend the maturity dates and/or increase or decrease the lending commitments thereunder.
These bank credit arrangements, as well as the term loan arrangements of the Registrants, Nicor Gas, and SEGCO, contain covenants that limit debt levels and contain cross-acceleration or, in the case of Southern Power, cross-default provisions to other indebtedness (including guarantee obligations) that are restricted only to the indebtedness of the individual company. Such cross-default provisions to other indebtedness would trigger an event of default if Southern Power defaulted on indebtedness or guarantee obligations over a specified threshold. Such cross-acceleration provisions to other indebtedness would trigger an event of default if the applicable borrower defaulted on indebtedness, the payment of which was then accelerated. At March 31, 2021,2022, the Registrants, Nicor Gas, and SEGCO were in compliance with all such covenants. None of the bank credit arrangements contain material adverse change clauses at the time of borrowings.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
A portion of the unused credit with banks is allocated to provide liquidity support to the revenue bonds of the traditional electric operating companies and the commercial paper programs of the Registrants, Nicor Gas, and Nicor Gas.SEGCO. The amount of variable rate revenue bonds of the traditional electric operating companies outstanding requiring liquidity support at March 31, 20212022 was approximately $1.4$1.5 billion (comprised of approximately $854$789 million at Alabama Power, $550$672 million at Georgia Power, and $34 million at Mississippi Power). In addition, at March 31, 2021,2022, Georgia Power and Mississippi Power had approximately $174$330 million and $50 million, respectively, of fixed rate revenue bonds outstanding that are required to be remarketed within the next 12 months.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Earnings per Share
For Southern Company, the only differences in computing basic and diluted earnings per share are attributable to awards outstanding under stock-based compensation plans and the equity units issued in 2019. Earnings per share dilution resulting from stock-based compensation plans and the equity units issuance is determined using the treasury stock method. See Note 8 to the financial statements under "Equity Units" in Item 8 of the Form 10-K for information on the equity units and Note 12 to the financial statements in Item 8 of the Form 10-K for information on stock-based compensation plans. Shares used to compute diluted earnings per share were as follows:
Three Months Ended March 31,
Three Months Ended
March 31, 2021
Three Months Ended
March 31, 2020
20222021
(in millions) (in millions)
As reported sharesAs reported shares1,060 1,057 As reported shares1,063 1,060 
Effect of stock-based compensationEffect of stock-based compensation6 7 Effect of stock-based compensation6 6 
Effect of equity units0 3 
Diluted sharesDiluted shares1,066 1,067 Diluted shares1,069 1,066 
An immaterial number of stock-based compensation awards was not included in the diluted earnings per share calculation because the awards were anti-dilutive for the three months ended March 31, 20212022 and 2020.2021.
(G) INCOME TAXES
See Note 10 to the financial statements in Item 8 of the Form 10-K for additional tax information.
Current and Deferred Income Taxes
Tax Credit and Net Operating Loss Carryforwards
The utilization of each Registrant's estimated tax credit and state net operating loss carryforwards and related valuation allowances could be impacted by numerous factors, including the acquisition of additional renewable projects, an increase in Georgia Power's ownership interest percentage in Plant Vogtle Units 3 and 4, the purchase of rights to additional PTCs of Plant Vogtle Units 3 and 4 pursuant to certain joint ownership agreements, potential impacts of the COVID-19 pandemic, changes in taxable income projections, and potential income tax rate changes. See Note (B) and Note 2 to the financial statements in Item 8 of the Form 10-K under "Georgia Power – Nuclear Construction" for additional information on Plant Vogtle Units 3 and 4.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Effective Tax Rate
Southern Company's effective tax rate is typically lower than the statutory rate due to employee stock plans' dividend deduction, non-taxable AFUDC equity at the traditional electric operating companies, flowback of excess deferred income taxes at the regulated utilities, and federal income tax benefits from ITCs and PTCs primarily at Southern Power.
Details of significant changes in the effective tax rate for the applicable Registrants are provided herein.
Mississippi Power
Mississippi Power's effective tax rate was 8.4%16.4% for the three months ended March 31, 20212022 compared to 16.2%8.4% for the corresponding period in 2020.2021. The effective tax rate decreaseincrease was primarily due to an increasea decrease in the flowback of excess deferred income taxes beginning in April 2020 as authorized in the Mississippi Power Rate Case Settlement Agreement. See Note 2 to the financial statements under "Mississippi Power – 2019 Base Rate Case" in Item 8 of the Form 10-K for additional information.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
2021.
Southern Power
Southern Power's effective tax benefit rate was (17.3)(80.0)% for the three months ended March 31, 20212022 compared to an effective tax rate of 13.5%(17.3)% for the corresponding period in 2020.2021. The effective tax rate decrease was primarily due to lower pre-tax earnings and higher wind PTCs in 2022, partially offset by changes in state apportionment methodology resulting from tax legislation enacted by the State of Alabama in February 2021, as well as the tax impact from the sale of Plant Mankato in January 2020. See Note 15 to the financial statements under "Southern Power" in Item 8 of the Form 10-K for additional information.2021.
(H) RETIREMENT BENEFITS
The Southern Company system has a qualified defined benefit, trusteed, pension plan covering substantially all employees, with the exception of employees at PowerSecure. The qualified pension plan is funded in accordance with requirements of the Employee Retirement Income Security Act of 1974, as amended (ERISA). NaNNo mandatory contributions to the qualified pension plan are anticipated for the year ending December 31, 2021.2022. The Southern Company system also provides certain non-qualified defined benefits for a select group of management and highly compensated employees, which are funded on a cash basis. In addition, the Southern Company system provides certain medical care and life insurance benefits for retired employees through other postretirement benefit plans. The traditional electric operating companies fund other postretirement trusts to the extent required by their respective regulatory commissions. Southern Company Gas has a separate unfunded supplemental retirement health care plan that provides medical care and life insurance benefits to employees of discontinued businesses.
During the first quarter 2022, the qualified pension plan achieved the predetermined funding threshold whereby the asset allocation was adjusted to invest a larger portion of the portfolio in fixed rate debt securities.
See Note 11 to the financial statements in Item 8 of the Form 10-K for additional information.
On each Registrant's condensed statements of income, the service cost component of net periodic benefit costs is included in other operations and maintenance expenses and all other components of net periodic benefit costs are included in other income (expense), net. Components of the net periodic benefit costs for the three months ended March 31, 20212022 and 20202021 are presented in the following tables.
Three Months Ended
March 31, 2021		Southern
Company		Alabama
Power		Georgia
Power		Mississippi
Power		Southern PowerSouthern Company Gas
 (in millions)
Pension Plans
Service cost$109 $26 $28 $4 $2 $9 
Interest cost87 20 26 4 1 6 
Expected return on plan assets(298)(72)(94)(14)(3)(21)
Amortization:
Prior service costs0 0 0 0 0 (1)
Regulatory asset0 0 0 0 0 4 
Net (gain)/loss78 21 25 4 1 3 
Net periodic pension cost (income)$(24)$(5)$(15)$(2)$1 $0 
Postretirement Benefits
Service cost$6 $1 $2 $0 $0 $0 
Interest cost8 2 3 0 0 1 
Expected return on plan assets(19)(7)(7)0 0 (2)
Amortization:
Regulatory asset0 0 0 0 0 2 
Net (gain)/loss1 0 1 0 0 (1)
Net periodic postretirement benefit cost (income)$(4)$(4)$(1)$0 $0 $0 
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Three Months Ended
March 31, 2020		Southern
Company		Alabama
Power		Georgia
Power		Mississippi
Power		Southern PowerSouthern Company Gas
(in millions)Southern
Company		Alabama
Power		Georgia
Power		Mississippi
Power		Southern PowerSouthern Company Gas
(in millions)
Three Months Ended March 31, 2022Three Months Ended March 31, 2022
Pension PlansPension PlansPension Plans
Service costService cost$94 $22 $24 $4 $2 $8 Service cost$103 $25 $26 $4 $2 $9 
Interest costInterest cost108 25 33 5 1 8 Interest cost102 24 31 5 2 7 
Expected return on plan assetsExpected return on plan assets(275)(66)(87)(13)(3)(19)Expected return on plan assets(316)(77)(99)(15)(4)(22)
Amortization:Amortization:Amortization:
Prior service costsPrior service costs1 0 0 0 0 (1)Prior service costs— — — — — (1)
Regulatory assetRegulatory asset0 0 0 0 0 4 Regulatory asset— — — — — 4 
Net (gain)/loss67 18 22 3 1 2 
Net lossNet loss60 16 18 3 1 2 
Net periodic pension cost (income)Net periodic pension cost (income)$(5)$(1)$(8)$(1)$1 $2 Net periodic pension cost (income)$(51)$(12)$(24)$(3)$1 $(1)
Postretirement BenefitsPostretirement BenefitsPostretirement Benefits
Service costService cost$5 $2 $1 $0 $0 $0 Service cost$6 $1 $2 $— $— $— 
Interest costInterest cost13 3 5 0 0 2 Interest cost10 3 4 — — 1 
Expected return on plan assetsExpected return on plan assets(18)(7)(7)0 0 (2)Expected return on plan assets(20)(8)(7)— — (2)
Amortization:Amortization:Amortization:
Regulatory assetRegulatory asset0 0 0 0 0 2 Regulatory asset— — — — — 2 
Net (gain)/loss1 0 1 0 0 (1)
Net periodic postretirement benefit cost (income)Net periodic postretirement benefit cost (income)$1 $(2)$0 $0 $0 $1 Net periodic postretirement benefit cost (income)$(4)$(4)$(1)$— $— $1 
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(UNAUDITED)
Southern
Company		Alabama
Power		Georgia
Power		Mississippi
Power		Southern PowerSouthern Company Gas
(in millions)
Three Months Ended March 31, 2021
Pension Plans
Service cost$109 $26 $28 $4 $2 $9 
Interest cost87 20 26 4 1 6 
Expected return on plan assets(298)(72)(94)(14)(3)(21)
Amortization:
Prior service costs— — — — — (1)
Regulatory asset— — — — — 4 
Net loss78 21 25 4 1 3 
Net periodic pension cost (income)$(24)$(5)$(15)$(2)$1 $— 
Postretirement Benefits
Service cost$6 $1 $2 $— $— $— 
Interest cost8 2 3 — — 1 
Expected return on plan assets(19)(7)(7)— — (2)
Amortization:
Regulatory asset— — — — — 2 
Net (gain)/loss1 — 1 — — (1)
Net periodic postretirement benefit cost (income)$(4)$(4)$(1)$— $— $— 

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
(I) FAIR VALUE MEASUREMENTS
As ofAt March 31, 2021,2022, assets and liabilities measured at fair value on a recurring basis during the period, together with their associated level of the fair value hierarchy, were as follows:
Fair Value Measurements Using:Fair Value Measurements Using:
As of March 31, 2021:Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Net Asset Value as a Practical Expedient (NAV)Total
At March 31, 2022At March 31, 2022Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Net Asset Value as a Practical Expedient (NAV)Total
(in millions)(in millions)
Southern CompanySouthern CompanySouthern Company
Assets:Assets:Assets:
Energy-related derivatives(a)
Energy-related derivatives(a)
$372 $179 $34 $— $585 
Energy-related derivatives(a)
$74 $473 $— $— $547 
Interest rate derivativesInterest rate derivatives0 10 0 — 10 Interest rate derivatives— 17 — — 17 
Foreign currency derivatives0 41 0 — 41 
Investments in trusts:(b)(c)
Investments in trusts:(b)(c)
Investments in trusts:(b)(c)
Domestic equityDomestic equity782 214 0 — 996 Domestic equity754 202 — — 956 
Foreign equityForeign equity145 197 0 — 342 Foreign equity143 167 — — 310 
U.S. Treasury and government agency securitiesU.S. Treasury and government agency securities0 325 0 — 325 U.S. Treasury and government agency securities— 290 — — 290 
Municipal bondsMunicipal bonds0 45 0 — 45 Municipal bonds— 53 — — 53 
Pooled funds – fixed incomePooled funds – fixed income0 18 0 — 18 Pooled funds – fixed income— 10 — — 10 
Corporate bondsCorporate bonds5 436 0 — 441 Corporate bonds1 490 — — 491 
Mortgage and asset backed securitiesMortgage and asset backed securities0 81 0 — 81 Mortgage and asset backed securities— 88 — — 88 
Private equityPrivate equity0 0 0 83 83 Private equity— — — 156 156 
Cash and cash equivalentsCash and cash equivalents3 — — — 3 
OtherOther50 7 0 — 57 Other42 25 — — 67 
Cash equivalentsCash equivalents1,121 11 0 — 1,132 Cash equivalents1,182 17 — — 1,199 
Other investmentsOther investments9 33 0 — 42 Other investments9 32 — — 41 
TotalTotal$2,484 $1,597 $34 $83 $4,198 Total$2,208 $1,864 $— $156 $4,228 
Liabilities:Liabilities:Liabilities:
Energy-related derivatives(a)
Energy-related derivatives(a)
$359 $158 $6 $— $523 
Energy-related derivatives(a)
$3 $7 $— $— $10 
Interest rate derivativesInterest rate derivatives— 139 — — 139 
Foreign currency derivativesForeign currency derivatives0 23 0 — 23 Foreign currency derivatives— 130 — — 130 
Contingent considerationContingent consideration0 0 16 — 16 Contingent consideration— — 14 — 14 
OtherOther— 13 — — 13 
TotalTotal$359 $181 $22 $— $562 Total$3 $289 $14 $— $306 
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Fair Value Measurements Using:
At March 31, 2022Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Net Asset Value as a Practical Expedient (NAV)Total
(in millions)
Alabama Power
Assets:
Energy-related derivatives$— $128 $— $— $128 
Nuclear decommissioning trusts:(b)
Domestic equity452 193 — — 645 
Foreign equity143 — — — 143 
U.S. Treasury and government agency securities— 21 — — 21 
Municipal bonds— 2 — — 2 
Corporate bonds1 253 — — 254 
Mortgage and asset backed securities— 20 — — 20 
Private equity— — — 156 156 
Other14 — — — 14 
Cash equivalents1,129 17 — — 1,146 
Other investments— 32 — — 32 
Total$1,739 $666 $— $156 $2,561 
Liabilities:
Energy-related derivatives$— $2 $— $— $2 
Georgia Power
Assets:
Energy-related derivatives$— $179 $— $— $179 
Interest rate derivatives— 12 — — 12 
Nuclear decommissioning trusts:(b)(c)
Domestic equity302 1 — — 303 
Foreign equity— 165 — — 165 
U.S. Treasury and government agency securities— 269 — — 269 
Municipal bonds— 51 — — 51 
Corporate bonds— 237 — — 237 
Mortgage and asset backed securities— 68 — — 68 
Other28 25 — — 53 
Total$330 $1,007 $— $— $1,337 
Liabilities:
Energy-related derivatives$— $1 $— $— $1 
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(UNAUDITED)
Fair Value Measurements Using:
As of March 31, 2021:Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Net Asset Value as a Practical Expedient (NAV)Total
(in millions)
Alabama Power
Assets:
Energy-related derivatives$0 $12 $0 $— $12 
Nuclear decommissioning trusts:(b)
Domestic equity448 205 0 — 653 
Foreign equity145 15 0 — 160 
U.S. Treasury and government agency securities0 20 0 — 20 
Municipal bonds0 1 0 — 1 
Corporate bonds5 235 0 — 240 
Mortgage and asset backed securities0 26 0 — 26 
Private equity0 0 0 83 83 
Other27 0 0 — 27 
Cash equivalents401 11 0 — 412 
Other investments0 33 0 — 33 
Total$1,026 $558 $0 $83 $1,667 
Liabilities:
Energy-related derivatives$0 $4 $0 $— $4 
Georgia Power
Assets:
Energy-related derivatives$0 $17 $0 $— $17 
Nuclear decommissioning trusts:(b)(c)
Domestic equity334 1 0 — 335 
Foreign equity0 179 0 — 179 
U.S. Treasury and government agency securities0 305 0 — 305 
Municipal bonds0 44 0 — 44 
Corporate bonds0 201 0 — 201 
Mortgage and asset backed securities0 55 0 — 55 
Other23 7 0 — 30 
Total$357 $809 $0 $— $1,166 
Liabilities:
Energy-related derivatives$0 $8 $0 $— $8 
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(UNAUDITED)
Fair Value Measurements Using:Fair Value Measurements Using:
As of March 31, 2021:Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Net Asset Value as a Practical Expedient (NAV)Total
At March 31, 2022At March 31, 2022Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Net Asset Value as a Practical Expedient (NAV)Total
(in millions)(in millions)
Mississippi PowerMississippi PowerMississippi Power
Assets:Assets:Assets:
Energy-related derivativesEnergy-related derivatives$0 $11 $0 $— $11 Energy-related derivatives$— $138 $— $— $138 
Liabilities:Liabilities:Liabilities:
Energy-related derivativesEnergy-related derivatives$0 $6 $0 $— $6 Energy-related derivatives$— $2 $— $— $2 
Southern PowerSouthern PowerSouthern Power
Assets:Assets:Assets:
Energy-related derivativesEnergy-related derivatives$0 $1 $0 $— $1 Energy-related derivatives$— $8 $— $— $8 
Foreign currency derivatives0 41 0 — 41 
Cash equivalents115 0 0 — 115 
Total$115 $42 $0 $— $157 
Liabilities:Liabilities:Liabilities:
Energy-related derivatives$0 $1 $0 $— $1 
Foreign currency derivativesForeign currency derivatives0 23 0 — 23 Foreign currency derivatives$— $43 $— $— $43 
Contingent considerationContingent consideration0 0 16 — 16 Contingent consideration— — 14 — 14 
OtherOther— 13 — — 13 
TotalTotal$0 $24 $16 $— $40 Total$— $56 $14 $— $70 
Southern Company GasSouthern Company GasSouthern Company Gas
Assets:Assets:Assets:
Energy-related derivatives(a)
Energy-related derivatives(a)
$372 $138 $34 $— $544 
Energy-related derivatives(a)
$74 $20 $— $— $94 
Non-qualified deferred compensation trusts:Non-qualified deferred compensation trusts:Non-qualified deferred compensation trusts:
Domestic equityDomestic equity0 8 0 — 8 Domestic equity— 8 — — 8 
Foreign equityForeign equity0 3 0 — 3 Foreign equity— 2 — — 2 
Pooled funds – fixed incomePooled funds – fixed income0 18 0 — 18 Pooled funds – fixed income— 10 — — 10 
Cash equivalentsCash equivalents3 — — — 3 
Cash equivalents and restricted cash284 0 0 — 284 
TotalTotal$656 $167 $34 $— $857 Total$77 $40 $— $— $117 
Liabilities:Liabilities:Liabilities:
Energy-related derivatives(a)
Energy-related derivatives(a)
$359 $139 $6 $— $504 
Energy-related derivatives(a)
$3 $1 $— $— $4 
Interest rate derivativesInterest rate derivatives— 36 — — 36 
TotalTotal$3 0$37 0$— $— 0$40 
(a)Excludes cash collateral of $27$36 million.
(b)Excludes receivables related to investment income, pending investment sales, payables related to pending investment purchases, and currencies. See Note 6 to the financial statements in Item 8 of the Form 10-K for additional information.
(c)Includes investment securities pledged to creditors and collateral received and excludes payables related to the securities lending program. As ofAt March 31, 2021,2022, approximately $34$72 million of the fair market value of Georgia Power's nuclear decommissioning trust funds' securities were on loan to creditors under the funds' managers' securities lending program. See Note 6 to the financial statements in Item 8 of the Form 10-K for additional information.
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(UNAUDITED)
Southern Company, Alabama Power, and Georgia Power continue to elect the option to fair value investment securities held in the nuclear decommissioning trust funds. The fair value of the funds, including reinvested interest and dividends and excluding the funds' expenses, increased (decreased) by the amounts shown in the table below for the three months ended March 31, 20212022 and 2020.2021. The changes were recorded as a change to the regulatory assets and liabilities related to AROs for Georgia Power and Alabama Power, respectively.
Fair value increases (decreases)Fair value increases (decreases)Three Months Ended
March 31, 2021		Three Months Ended
March 31, 2020		Fair value increases (decreases)Three Months Ended March 31, 2022Three Months Ended March 31, 2021
(in millions)(in millions)
Southern CompanySouthern Company$39 $(247)Southern Company$(150)$39 
Alabama PowerAlabama Power41 (167)Alabama Power(67)41 
Georgia PowerGeorgia Power(2)(80)Georgia Power(83)(2)
Valuation Methodologies
The energy-related derivatives primarily consist of exchange-traded and over-the-counter financial products for natural gas and physical power products, including, from time to time, basis swaps. These are standard products used within the energy industry and are valued using the market approach. The inputs used are mainly from observable market sources, such as forward natural gas prices, power prices, implied volatility, and overnight index swap interest rates. Interest rate derivatives are also standard over-the-counter products that are valued using observable market data and assumptions commonly used by market participants. The fair value of interest rate derivatives reflects the net present value of expected payments and receipts under the swap agreement based on the market's expectation of future interest rates. Additional inputs to the net present value calculation may include the contract terms, counterparty credit risk, and occasionally, implied volatility of interest rate options. The fair value of cross-currency swaps reflects the net present value of expected payments and receipts under the swap agreement based on the market's expectation of future foreign currency exchange rates. Additional inputs to the net present value calculation may include the contract terms, counterparty credit risk, and discount rates. The interest rate derivatives and cross-currency swaps are categorized as Level 2 under Fair Value Measurements as these inputs are based on observable data and valuations of similar instruments. See Note (J) for additional information on how these derivatives are used.
For fair value measurements of the investments within the nuclear decommissioning trusts and the non-qualified deferred compensation trusts, external pricing vendors are designated for each asset class with each security specifically assigned a primary pricing source. For investments held within commingled funds, fair value is determined at the end of each business day through the net asset value, which is established by obtaining the underlying securities' individual prices from the primary pricing source. A market price secured from the primary source vendor is then evaluated by management in its valuation of the assets within the trusts. As a general approach, fixed income market pricing vendors gather market data (including indices and market research reports) and integrate relative credit information, observed market movements, and sector news into proprietary pricing models, pricing systems, and mathematical tools. Dealer quotes and other market information, including live trading levels and pricing analysts' judgments, are also obtained when available.
The NRC requires licensees of commissioned nuclear power reactors to establish a plan for providing reasonable assurance of funds for future decommissioning. See Note 6 to the financial statements under "Nuclear Decommissioning" in Item 8 of the Form 10-K for additional information.
Southern Power has contingent payment obligations related to certain acquisitions whereby it is primarily obligated to make generation-based payments to the seller, which commenced at the commercial operation of the respective facility and continue through 2026. The obligations are categorized as Level 3 under Fair Value Measurements as the fair value is determined using significant unobservable inputs for the forecasted facility generation in MW-hours, as well as other inputs such as a fixed dollar amount per MW-hour, and a discount rate. The fair value of contingent consideration reflects the net present value of expected payments and any periodic change arising from forecasted generation is expected to be immaterial.
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contingent considerationSouthern Power also has payment obligations through 2040 whereby it must reimburse the transmission owners for interconnection facilities and network upgrades constructed to support connection of a Southern Power generating facility to the transmission system. The obligations are categorized as Level 2 under Fair Value Measurements as the fair value is determined using observable inputs for the contracted amounts and reimbursement period, as well as a discount rate. The fair value of the obligations reflects the net present value of expected payments and any periodic change arising from forecasted generation is expected to be immaterial.payments.
"Other investments" include investments traded in the open market that have maturities greater than 90 days, which are categorized as Level 2 under Fair Value Measurements and are comprised of corporate bonds, bank certificates of deposit, treasury bonds, and/or agency bonds.
At March 31, 2021,2022, the fair value measurements of private equity investments held in Alabama Power's nuclear decommissioning trusts that are calculated at net asset value per share (or its equivalent) as a practical expedient totaled $83$156 million and unfunded commitments related to the private equity investments totaled $68$84 million. Private equity investments include high-quality private equity funds across several market sectors and funds that invest in real estate assets. Private equity funds do not have redemption rights. Distributions from these funds will be received as the underlying investments in the funds are liquidated.
At March 31, 2021,2022, other financial instruments for which the carrying amount did not equal fair value were as follows:
Southern
Company		Alabama PowerGeorgia PowerMississippi PowerSouthern Power
Southern Company Gas(*)
Southern
Company		Alabama PowerGeorgia PowerMississippi PowerSouthern Power
Southern Company Gas(*)
(in millions)(in billions)
Long-term debt, including securities due within one year:Long-term debt, including securities due within one year:Long-term debt, including securities due within one year:
Carrying amountCarrying amount$50,035 $8,866 $13,220 $1,398 $4,030 $6,588 Carrying amount$51.6 $9.8 $13.2 $1.5 $3.7 $6.9 
Fair valueFair value54,113 9,821 14,291 1,507 4,347 7,264 Fair value51.9 10.0 13.5 1.5 3.8 6.9 
(*)The long-term debt of Southern Company Gas is recorded at amortized cost, including the fair value adjustments at the effective date of the 2016 merger with Southern Company. Southern Company Gas amortizes the fair value adjustments over the remaining lives of the respective bonds, the latest being through 2043.
The fair values are determined using Level 2 measurements and are based on quoted market prices for the same or similar issues or on the current rates available to the Registrants.
Commodity Contracts with Level 3 Valuation Inputs
As of March 31, 2021, the fair value of Southern Company Gas' Level 3 physical natural gas forward contracts was $28 million. Since commodity contracts classified as Level 3 typically include a combination of observable and unobservable components, the changes in fair value may include amounts due in part to observable market factors, or changes to assumptions on the unobservable components. The following table includes transfers to Level 3, which represent the fair value of Southern Company Gas' commodity derivative contracts that include a significant unobservable component for the first time during the period.
Three Months Ended
March 31, 2021
(in millions)
Beginning balance$28 
Instruments realized or otherwise settled during period(2)
Changes in fair value2 
Ending balance$28 
Changes in fair value of Level 3 instruments represent changes in gains and losses for the periods that are reported on Southern Company Gas' statements of income in natural gas revenues.
The valuation of certain commodity contracts requires the use of certain unobservable inputs. All forward pricing used in the valuation of such contracts is directly based on third-party market data, such as broker quotes and exchange settlements, when that data is available. If third-party market data is not available, then industry standard
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(UNAUDITED)
methodologies are used to develop inputs that maximize the use of relevant observable inputs and minimize the use of unobservable inputs. Observable inputs, including some forward prices used for determining fair value, reflect the best available market information. Unobservable inputs are updated using industry standard techniques such as extrapolation, combining observable forward inputs supplemented by historical market and other relevant data. Level 3 physical natural gas forward contracts include unobservable forward price inputs (ranging from $(0.07) to $0.30 per mmBtu). Forward price increases (decreases) as of March 31, 2021 would have resulted in higher (lower) values on a net basis.
(J) DERIVATIVES
Southern Company, the traditional electric operating companies, Southern Power, and Southern Company GasThe Registrants are exposed to market risks, including commodity price risk, interest rate risk, weather risk, and occasionally foreign currency exchange rate risk. To manage the volatility attributable to these exposures, each company nets its exposures, where possible, to take advantage of natural offsets and enters into various derivative transactions for the remaining exposures pursuant to each company's policies in areas such as counterparty exposure and risk management practices. Prior to the sale of Sequent on July 1, 2021, Southern Company Gas' wholesale gas operations useused various contracts in its commercial activities that generally meetmet the definition of derivatives. For the traditional electric operating companies, Southern Power, and Southern Company Gas' other businesses, each company's policy is that derivatives are to be used primarily for hedging purposes and mandates strict adherence to all applicable risk management policies. Derivative positions are monitored using techniques including, but not limited to, market valuation, value at risk, stress testing, and sensitivity analysis. Derivative instruments are recognized at fair value in the balance sheets as either assets or liabilities and are presented on a net basis. See Note (I) for additional fair value information. In the statements of cash flows, any cash impacts of settled energy-related and interest rate derivatives are recorded as operating activities. Any cash impacts of settled foreign currency derivatives are classified as operating or financing activities to correspond with the classification of the hedged interest or principal, respectively. See Note 1 to the financial statements under "Financial Instruments" in Item 8 of the Form 10-K for additional information. See Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information regarding the sale of Sequent.
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Energy-Related Derivatives
The traditional electric operating companies, Southern Power, and Southern Company GasSubsidiary Registrants enter into energy-related derivatives to hedge exposures to electricity, natural gas, and other fuel price changes. However, due to cost-based rate regulations and other various cost recovery mechanisms, the traditional electric operating companies and the natural gas distribution utilities have limited exposure to market volatility in energy-related commodity prices. Each of the traditional electric operating companies and certain of the natural gas distribution utilities of Southern Company Gas manage fuel-hedging programs, implemented per the guidelines of their respective state PSCs or other applicable state regulatory agencies, through the use of financial derivative contracts, which are expected to continue to mitigate price volatility. The traditional electric operating companies (with respect to wholesale generating capacity) and Southern Power have limited exposure to market volatility in energy-related commodity prices because their long-term sales contracts shift substantially all fuel cost responsibility to the purchaser. However, the traditional electric operating companies and Southern Power may be exposed to market volatility in energy-related commodity prices to the extent any uncontracted capacity is used to sell electricity. Southern Company Gas retains exposure to price changes that can, in a volatile energy market, be material and can adversely affect its results of operations.
Southern Company Gas also enters into weather derivative contracts as economic hedges of operating margins in the event of warmer-than-normal weather. Exchange-traded options are carried at fair value, with changes reflected in operating revenues. Non-exchange-traded options are accounted for using the intrinsic value method. Changes in the intrinsic value for non-exchange-traded contracts are reflected in operating revenues.
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Energy-related derivative contracts are accounted for under one of three methods:
•Regulatory Hedges – Energy-related derivative contracts designated as regulatory hedges relate primarily to the traditional electric operating companies' and the natural gas distribution utilities' fuel-hedging programs, where gains and losses are initially recorded as regulatory liabilities and assets, respectively, and then are included in fuel expense as the underlying fuel is used in operations and ultimately recovered through an approved cost recovery mechanism.
•Cash Flow Hedges – Gains and losses on energy-related derivatives designated as cash flow hedges (which are mainly used to hedge anticipated purchases and sales) are initially deferred in accumulated OCI before being recognized in the statements of income in the same period and in the same income statement line item as the earnings effect of the hedged transactions.
•Not Designated – Gains and losses on energy-related derivative contracts that are not designated or fail to qualify as hedges are recognized in the statements of income as incurred.
Some energy-related derivative contracts require physical delivery as opposed to financial settlement, and this type of derivative is both common and prevalent within the electric and natural gas industries. When an energy-related derivative contract is settled physically, any cumulative unrealized gain or loss is reversed and the contract price is recognized in the respective line item representing the actual price of the underlying goods being delivered.
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At March 31, 2021,2022, the net volume of energy-related derivative contracts for natural gas positions, together with the longest hedge date over which the respective entity is hedging its exposure to the variability in future cash flows for forecasted transactions and the longest non-hedge date for derivatives not designated as hedges, were as follows:
Net
Purchased
mmBtu		Longest
Hedge
Date		Longest
Non-Hedge
Date		Net
Purchased
mmBtu		Longest
Hedge
Date		Longest
Non-Hedge
Date
(in millions)(in millions)
Southern Company(*)
Southern Company(*)
90720302031
Southern Company(*)
27920302025
Alabama PowerAlabama Power732024—Alabama Power652025—
Georgia PowerGeorgia Power1252024—Georgia Power752024—
Mississippi PowerMississippi Power852024—Mississippi Power712026—
Southern PowerSouthern Power920302021Southern Power42030—
Southern Company Gas(*)
Southern Company Gas(*)
61520232031
Southern Company Gas(*)
6420242025
(*)Southern Company Gas' derivative instruments include both long and short natural gas positions. A long position is a contract to purchase natural gas and a short position is a contract to sell natural gas. Southern Company Gas' volume represents the net of long natural gas positions of 4.4 billion66.2 million mmBtu and short natural gas positions of 3.8 billion2.6 million mmBtu as ofat March 31, 2021,2022, which is also included in Southern Company's total volume.
In addition to the volumes discussed above, the traditional electric operating companies and Southern Power enter into physical natural gas supply contracts that provide the option to sell back excess natural gas due to operational constraints. The maximum expected volume of natural gas subject to such a feature is 3918 million mmBtu for Southern Company, which includes 104 million mmBtu for Alabama Power, 126 million mmBtu for Georgia Power, 53 million mmBtu for Mississippi Power, and 125 million mmBtu for Southern Power.
For cash flow hedges of energy-related derivatives, the estimated pre-tax gains (losses) expected to be reclassified from accumulated OCI to earnings for the 12-month period ending March 31, 20222023 are $29 million for Southern Company, $26 million for Southern Company Gas, and immaterial for all other Registrants.
Interest Rate Derivatives
Southern Company and certain subsidiaries may enter into interest rate derivatives to hedge exposure to changes in interest rates. The derivatives employed as hedging instruments are structured to minimize ineffectiveness. Derivatives related to existing variable rate securities or forecasted transactions are accounted for as cash flow
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Interest Rate Derivatives
Southern Company and certain subsidiaries may enter into interest rate derivatives to hedge exposure to changes in interest rates. Derivatives related to existing variable rate securities or forecasted transactions are accounted for as cash flow hedges where the derivatives' fair value gains or losses are recorded in OCI and are reclassified into earnings at the same time and presented on the same income statement line item as the earnings effect of the hedged transactions. Derivatives related to existing fixed rate securities are accounted for as fair value hedges, where the derivatives' fair value gains or losses and hedged items' fair value gains or losses are both recorded directly to earnings on the same income statement line item. Fair value gains or losses on derivatives that are not designated or fail to qualify as hedges are recognized in the statements of income as incurred.
At March 31, 2021,2022, the following interest rate derivatives were outstanding:
Notional
Amount		Interest
Rate
Received		Weighted
Average
Interest
Rate Paid		Hedge
Maturity
Date		Fair Value Gain (Loss) at March 31, 2021Notional
Amount		Interest
Rate
Received		Weighted
Average
Interest
Rate Paid		Hedge
Maturity
Date		Fair Value Gain (Loss) at March 31, 2022
(in millions) (in millions) (in millions) (in millions)
Cash Flow Hedges of Forecasted DebtCash Flow Hedges of Forecasted Debt
Georgia PowerGeorgia Power$200 1.87%—February 2032$8 
Georgia PowerGeorgia Power100 2.27%—November 20514 
Cash Flow Hedges of Existing DebtCash Flow Hedges of Existing DebtCash Flow Hedges of Existing Debt
Mississippi Power$60 1-month LIBOR0.58%December 2021$0 
Southern Company parentSouthern Company parent100 2.58%—April 2027(1)
Fair Value Hedges of Existing DebtFair Value Hedges of Existing DebtFair Value Hedges of Existing Debt
Southern Company parentSouthern Company parent1,500 2.35%1-month LIBOR + 0.87%July 202110 Southern Company parent400 1.75%1-month LIBOR + 0.68%March 2028(29)
Southern Company parentSouthern Company parent1,000 3.70%1-month LIBOR + 2.36%April
2030		(69)
Southern Company GasSouthern Company Gas500 1.75%1-month LIBOR + 0.38%January 2031(35)
Southern CompanySouthern Company$1,560 $10 Southern Company$2,300 $(122)
For cash flow hedge interest rate derivatives, the estimated pre-tax gains (losses) expected to be reclassified from accumulated OCI to interest expense for the 12-month period ending March 31, 20222023 total $(25)$(20) million for Southern Company and are immaterial for all other Registrants. Deferred gains and losses related to interest rate derivatives are expected to be amortized into earnings through 20462051 for the Southern Company, parent entity, 2035 for Alabama Power, 2044 forand Georgia Power, 2028 for Mississippi Power, and 2046 for Southern Company Gas.
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Foreign Currency Derivatives
Southern Company and certain subsidiaries, including Southern Power, may enter into foreign currency derivatives to hedge exposure to changes in foreign currency exchange rates, such as that arising from the issuance of debt denominated in a currency other than U.S. dollars. Derivatives related to forecasted transactions are accounted for as cash flow hedges where the derivatives' fair value gains or losses are recorded in OCI and are reclassified into earnings at the same time and on the same income statement line as the earnings effect of the hedged transactions, including foreign currency gains or losses arising from changes in the U.S. currency exchange rates. The derivatives employedDerivatives related to existing fixed rate securities are accounted for as hedging instrumentsfair value hedges, where the derivatives' fair value gains or losses and hedged items' fair value gains or losses are structuredboth recorded directly to minimize ineffectiveness.earnings on the same income statement line item, including foreign currency gains or losses arising from changes in the U.S. currency exchange rates. Southern Company has elected to exclude the cross-currency basis spread from the assessment of effectiveness in the fair value hedges of its foreign currency risk and record any difference between the change in the fair value of the excluded components and the amounts recognized in earnings as a component of OCI.
At March 31, 2021,2022, the following foreign currency derivatives were outstanding:
Pay NotionalPay RateReceive NotionalReceive RateHedge
Maturity Date		Fair Value Gain (Loss) at March 31, 2021Pay NotionalPay
Rate		Receive NotionalReceive
Rate		Hedge
Maturity Date		Fair Value Gain (Loss) at March 31, 2022
(in millions)(in millions) (in millions)
Fair Value Hedges of Existing DebtFair Value Hedges of Existing Debt
Southern Company parentSouthern Company parent$1,476 3.39%€1,250 1.88%September 2027$(87)
(in millions)(in millions) (in millions)
Cash Flow Hedges of Existing DebtCash Flow Hedges of Existing DebtCash Flow Hedges of Existing Debt
Southern PowerSouthern Power$677 2.95%€600 1.00%June 2022$9 Southern Power$677 2.95%€600 1.00%June 2022$(24)
Southern PowerSouthern Power564 3.78%500 1.85%June 20269 Southern Power564 3.78%500 1.85%June 2026(19)
Total$1,241 €1,100 $18 
Southern Power totalSouthern Power total$1,241 €1,100 $(43)
Southern CompanySouthern Company$2,717 €2,350 $(130)
The estimated pre-tax gains (losses)losses related to Southern Power's foreign currency derivatives accounted for as cash flow hedges expected to be reclassified from accumulated OCI to earnings for the 12-month period ending March 31, 20222023 are $2$17 million.
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Derivative Financial Statement Presentation and Amounts
Southern Company, the traditional electric operating companies, Southern Power, and Southern Company GasThe Registrants enter into derivative contracts that may contain certain provisions that permit intra-contract netting of derivative receivables and payables for routine billing and offsets related to events of default and settlements. Southern Company and certain subsidiaries also utilize master netting agreements to mitigate exposure to counterparty credit risk. These agreements may contain provisions that permit netting across product lines and against cash collateral. The fair value amounts of derivative assets and liabilities on the balance sheetsheets are presented net to the extent that there are netting arrangements or similar agreements with the counterparties.
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(UNAUDITED)
The fair value of energy-related derivatives, interest rate derivatives, and foreign currency derivatives was reflected in the balance sheets as follows:
As of March 31, 2021As of December 31, 2020At March 31, 2022At December 31, 2021
Derivative Category and Balance Sheet LocationDerivative Category and Balance Sheet LocationAssetsLiabilitiesAssetsLiabilitiesDerivative Category and Balance Sheet LocationAssetsLiabilitiesAssetsLiabilities
(in millions)(in millions)
Southern CompanySouthern CompanySouthern Company
Derivatives designated as hedging instruments for regulatory purposesDerivatives designated as hedging instruments for regulatory purposesDerivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:Energy-related derivatives:Energy-related derivatives:
Assets from risk management activities/Other current liabilitiesAssets from risk management activities/Other current liabilities$30 $4 $24 $11 Assets from risk management activities/Other current liabilities$381 $1 $129 $30 
Other deferred charges and assets/Other deferred credits and liabilitiesOther deferred charges and assets/Other deferred credits and liabilities16 15 18 19 Other deferred charges and assets/Other deferred credits and liabilities116 6 72 6 
Total derivatives designated as hedging instruments for regulatory purposesTotal derivatives designated as hedging instruments for regulatory purposes$46 $19 $42 $30 Total derivatives designated as hedging instruments for regulatory purposes$497 $7 $201 $36 
Derivatives designated as hedging instruments in cash flow and fair value hedgesDerivatives designated as hedging instruments in cash flow and fair value hedgesDerivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:Energy-related derivatives:Energy-related derivatives:
Assets from risk management activities/Other current liabilitiesAssets from risk management activities/Other current liabilities$2 $1 $3 $5 Assets from risk management activities/Other current liabilities$28 $2 $7 $5 
Other deferred charges and assets/Other deferred credits and liabilitiesOther deferred charges and assets/Other deferred credits and liabilities5 — 1 — 
Interest rate derivatives:Interest rate derivatives:Interest rate derivatives:
Assets from risk management activities/Other current liabilitiesAssets from risk management activities/Other current liabilities10 0 20 0 Assets from risk management activities/Other current liabilities17 3 19 — 
Other deferred charges and assets/Other deferred credits and liabilitiesOther deferred charges and assets/Other deferred credits and liabilities— 136 — 29 
Foreign currency derivatives:Foreign currency derivatives:Foreign currency derivatives:
Assets from risk management activities/Other current liabilitiesAssets from risk management activities/Other current liabilities0 23 0 23 Assets from risk management activities/Other current liabilities— 59 — 39 
Other deferred charges and assets/Other deferred credits and liabilitiesOther deferred charges and assets/Other deferred credits and liabilities41 0 87 0 Other deferred charges and assets/Other deferred credits and liabilities— 71 — 40 
Total derivatives designated as hedging instruments in cash flow and fair value hedgesTotal derivatives designated as hedging instruments in cash flow and fair value hedges$53 $24 $110 $28 Total derivatives designated as hedging instruments in cash flow and fair value hedges$50 $271 $27 $113 
Derivatives not designated as hedging instrumentsDerivatives not designated as hedging instrumentsDerivatives not designated as hedging instruments
Energy-related derivatives:Energy-related derivatives:Energy-related derivatives:
Assets from risk management activities/Other current liabilitiesAssets from risk management activities/Other current liabilities$265 $265 $388 $331 Assets from risk management activities/Other current liabilities$16 $2 $9 $4 
Other deferred charges and assets/Other deferred credits and liabilitiesOther deferred charges and assets/Other deferred credits and liabilities272 237 270 232 Other deferred charges and assets/Other deferred credits and liabilities1 — 1 — 
Total derivatives not designated as hedging instrumentsTotal derivatives not designated as hedging instruments$537 $502 $658 $563 Total derivatives not designated as hedging instruments$17 $2 $10 $4 
Gross amounts recognizedGross amounts recognized$636 $545 $810 $621 Gross amounts recognized$564 $280 $238 $153 
Gross amounts offset(a)
Gross amounts offset(a)
(450)(477)(529)(557)
Gross amounts offset(a)
(45)(9)(25)(28)
Net amounts recognized in the Balance Sheets(b)
Net amounts recognized in the Balance Sheets(b)
$186 $68 $281 $64 
Net amounts recognized in the Balance Sheets(b)
$519 $271 $213 $125 
74
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
As of March 31, 2021As of December 31, 2020At March 31, 2022At December 31, 2021
Derivative Category and Balance Sheet LocationDerivative Category and Balance Sheet LocationAssetsLiabilitiesAssetsLiabilitiesDerivative Category and Balance Sheet LocationAssetsLiabilitiesAssetsLiabilities
(in millions)(in millions)
Alabama PowerAlabama PowerAlabama Power
Derivatives designated as hedging instruments for regulatory purposesDerivatives designated as hedging instruments for regulatory purposesDerivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:Energy-related derivatives:Energy-related derivatives:
Other current assets/Other current liabilitiesOther current assets/Other current liabilities$7 $0 $7 $2 Other current assets/Other current liabilities$87 $— $30 $9 
Other deferred charges and assets/Other deferred credits and liabilitiesOther deferred charges and assets/Other deferred credits and liabilities5 4 5 5 Other deferred charges and assets/Other deferred credits and liabilities41 2 25 2 
Total derivatives designated as hedging instruments for regulatory purposesTotal derivatives designated as hedging instruments for regulatory purposes$12 $4 $12 $7 Total derivatives designated as hedging instruments for regulatory purposes$128 $2 $55 $11 
Gross amounts recognized$12 $4 $12 $7 
Gross amounts offsetGross amounts offset(4)(4)(7)(7)Gross amounts offset(2)(2)(5)(5)
Net amounts recognized in the Balance SheetsNet amounts recognized in the Balance Sheets$8 $0 $5 $0 Net amounts recognized in the Balance Sheets$126 $— $50 $6 
Georgia PowerGeorgia PowerGeorgia Power
Derivatives designated as hedging instruments for regulatory purposesDerivatives designated as hedging instruments for regulatory purposesDerivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:Energy-related derivatives:Energy-related derivatives:
Other current assets/Other current liabilities$11 $2 $7 $5 
Assets from risk management activities/Other current liabilitiesAssets from risk management activities/Other current liabilities$150 $— $54 $6 
Other deferred charges and assets/Other deferred credits and liabilitiesOther deferred charges and assets/Other deferred credits and liabilities29 1 21 2 
Total derivatives designated as hedging instruments for regulatory purposesTotal derivatives designated as hedging instruments for regulatory purposes$179 $1 $75 $8 
Derivatives designated as hedging instruments in cash flow and fair value hedgesDerivatives designated as hedging instruments in cash flow and fair value hedges
Interest rate derivatives:Interest rate derivatives:
Assets from risk management activities/Other current liabilitiesAssets from risk management activities/Other current liabilities$12 $— $— $— 
Total derivatives designated as hedging instruments in cash flow and fair value hedgesTotal derivatives designated as hedging instruments in cash flow and fair value hedges$12 $— $— $— 
Gross amounts recognizedGross amounts recognized$191 $1 $75 $8 
Gross amounts offsetGross amounts offset(1)(1)(8)(8)
Net amounts recognized in the Balance SheetsNet amounts recognized in the Balance Sheets$190 $— $67 $— 
Mississippi PowerMississippi Power
Derivatives designated as hedging instruments for regulatory purposesDerivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:Energy-related derivatives:
Assets from risk management activities/Other current liabilitiesAssets from risk management activities/Other current liabilities$94 $— $30 $3 
Other deferred charges and assets/Other deferred credits and liabilitiesOther deferred charges and assets/Other deferred credits and liabilities6 6 8 8 Other deferred charges and assets/Other deferred credits and liabilities44 2 26 2 
Total derivatives designated as hedging instruments for regulatory purposesTotal derivatives designated as hedging instruments for regulatory purposes$17 $8 $15 $13 Total derivatives designated as hedging instruments for regulatory purposes$138 $2 $56 $5 
Gross amounts recognized$17 $8 $15 $13 
Gross amounts offsetGross amounts offset(7)(7)(12)(12)Gross amounts offset(2)(2)(4)(4)
Net amounts recognized in the Balance SheetsNet amounts recognized in the Balance Sheets$10 $1 $3 $1 Net amounts recognized in the Balance Sheets$136 $— $52 $1 
Mississippi Power
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:
Other current assets/Other current liabilities$6 $1 $4 $3 
Other deferred charges and assets/Other deferred credits and liabilities5 5 5 6 
Total derivatives designated as hedging instruments for regulatory purposes$11 $6 $9 $9 
Gross amounts recognized$11 $6 $9 $9 
Gross amounts offset(5)(5)(7)(7)
Net amounts recognized in the Balance Sheets$6 $1 $2 $2 
75
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
As of March 31, 2021As of December 31, 2020
Derivative Category and Balance Sheet LocationAssetsLiabilitiesAssetsLiabilities
(in millions)(in millions)
Southern Power
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Other current assets/Other current liabilities$1 $0 $2 $2 
Foreign currency derivatives:
Other current assets/Other current liabilities0 23 0 23 
Other deferred charges and assets/Other deferred credits and liabilities41 0 87 0 
Total derivatives designated as hedging instruments in cash flow and fair value hedges$42 $23 $89 $25 
Derivatives not designated as hedging instruments
Energy-related derivatives:
Other current assets/Other current liabilities$0 $0 $0 $1 
Total derivatives not designated as hedging instruments$0 $0 $0 $1 
Net amounts recognized in the Balance Sheets$42 $23 $89 $26 
Southern Company Gas
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:
Assets from risk management activities/Other current liabilities$6 $1 $6 $1 
Total derivatives designated as hedging instruments for regulatory purposes$6 $1 $6 $1 
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Assets from risk management activities/Other current liabilities$1 $1 $1 $3 
Total derivatives designated as hedging instruments in cash flow and fair value hedges$1 $1 $1 $3 
Derivatives not designated as hedging instruments
Energy-related derivatives:
Assets from risk management activities/Other current liabilities$265 $265 $388 $330 
Other deferred charges and assets/Other deferred credits and liabilities272 237 270 232 
Total derivatives not designated as hedging instruments$537 $502 $658 $562 
Gross amounts of recognized$544 $504 $665 $566 
Gross amounts offset(a)
(434)(461)(503)(531)
Net amounts recognized in the Balance Sheets(b)
$110 $43 $162 $35 
(a)Gross amounts offset include cash collateral held on deposit in broker margin accounts of $27 million and $28 million as of March 31, 2021 and December 31, 2020, respectively.
(b)Net amounts of derivative instruments outstanding exclude immaterial premium and intrinsic value associated with weather derivatives for both periods presented.
At March 31, 2022At December 31, 2021
Derivative Category and Balance Sheet LocationAssetsLiabilitiesAssetsLiabilities
(in millions)(in millions)
Southern Power
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Other current assets/Other current liabilities$3 $— $2 $— 
Other deferred charges and assets/Other deferred credits and liabilities3 — 1 — 
Foreign currency derivatives:
Other current assets/Other current liabilities— 35 — 16 
Other deferred charges and assets/Other deferred credits and liabilities— 8 — — 
Total derivatives designated as hedging instruments in cash flow and fair value hedges$6 $43 $3 $16 
Derivatives not designated as hedging instruments
Energy-related derivatives:
Other current assets/Other current liabilities$2 $— $1 $— 
Gross amounts recognized$8 $43 $4 $16 
Gross amounts offset— — — — 
Net amounts recognized in the Balance Sheets$8 $43 $4 $16 
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
The traditional electric operating companies had
At March 31, 2022At December 31, 2021
Derivative Category and Balance Sheet LocationAssetsLiabilitiesAssetsLiabilities
(in millions)(in millions)
Southern Company Gas
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:
Assets from risk management activities/Other current liabilities$49 $1 $15 $12 
Other deferred charges and assets/Other deferred credits and liabilities3 — — — 
Total derivatives designated as hedging instruments for regulatory purposes$52 $1 $15 $12 
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Assets from risk management activities/Other current liabilities$25 $2 $5 $5 
Other deferred charges and assets/Other deferred credits and liabilities2 — — — 
Interest rate derivatives:
Assets from risk management activities/Liabilities from risk management activities-current— — 6 — 
Other deferred charges and assets/Other deferred credits and liabilities— 36 — 6 
Total derivatives designated as hedging instruments in cash flow and fair value hedges$27 $38 $11 $11 
Derivatives not designated as hedging instruments
Energy-related derivatives:
Assets from risk management activities/Other current liabilities$14 $1 $8 $4 
Other deferred charges and assets/Other deferred credits and liabilities1 — 1 — 
Total derivatives not designated as hedging instruments$15 $1 $9 $4 
Gross amounts recognized$94 $40 $35 $27 
Gross amounts offset(a)
(40)(4)(8)(11)
Net amounts recognized in the Balance Sheets(b)
$54 $36 $27 $16 
(a)Gross amounts offset include cash collateral held on deposit in broker margin accounts of $36 million and $3 million at March 31, 2022 and December 31, 2021, respectively.
(b)Net amounts of derivative instruments outstanding exclude immaterial energy-relatedpremium and intrinsic value associated with weather derivatives for both periods presented.
Energy-related derivatives not designated as hedging instruments were immaterial for the traditional electric operating companies at March 31, 2021 and2022. There were no such instruments for the traditional electric operating companies at December 31, 2020.2021.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
At March 31, 20212022 and December 31, 2020,2021, the pre-tax effects of unrealized derivative gains (losses) arising from energy-related derivative instruments designated as regulatory hedging instruments and deferred were as follows:
Regulatory Hedge Unrealized Gain (Loss) Recognized in the Balance Sheet
Derivative Category and Balance Sheet
Location		Southern
Company		Alabama
Power		Georgia
Power		Mississippi
Power		Southern Company Gas
 (in millions)
At March 31, 2021:
Energy-related derivatives:
Other regulatory assets, deferred$(2)$0 $(1)$(1)$0 
Other regulatory liabilities, current24 7 9 5 3 
Other regulatory liabilities, deferred3 1 1 1 0 
Total energy-related derivative gains (losses)$25 $8 $9 $5 $3 
At December 31, 2020:
Energy-related derivatives:
Other regulatory assets, deferred$(2)$0 $(1)$(1)$0 
Other regulatory liabilities, current12 5 2 1 4 
Other regulatory liabilities, deferred2 1 1 0 0 
Total energy-related derivative gains (losses)$12 $6 $2 $0 $4 
For the three months ended March 31, 2021 and 2020, the pre-tax effects of cash flow hedge accounting on accumulated OCI were as follows:
Gain (Loss) Recognized in OCI on DerivativeFor the Three Months Ended March 31,
20212020
(in millions)
Southern Company
Energy-related derivatives$5 $(4)
Interest rate derivatives3 (26)
Foreign currency derivatives(47)(83)
Total$(39)$(113)
Southern Power
Energy-related derivatives$4 $0 
Foreign currency derivatives(47)(83)
Total$(43)$(83)
Southern Company Gas
Energy-related derivatives$1 $(4)
Interest rate derivatives0 (23)
Total$1 $(27)
For the three months ended March 31, 2021 and 2020, the pre-tax effects of energy-related derivatives and interest rate derivatives designated as cash flow hedging instruments on accumulated OCI were immaterial for the other Registrants.
Regulatory Hedge Unrealized Gain (Loss) Recognized in the Balance Sheet
Derivative Category and Balance Sheet
Location		Southern
Company		Alabama
Power		Georgia
Power		Mississippi
Power		Southern Company Gas
 (in millions)
At March 31, 2022:
Energy-related derivatives:
Other regulatory liabilities, current$353 $87 $150 $94 $22 
Other regulatory liabilities, deferred111 39 28 42 2 
Total energy-related derivative gains (losses)$464 $126 $178 $136 $24 
At December 31, 2021:
Energy-related derivatives:
Other regulatory assets, current$(17)$(6)$— $— $(11)
Other regulatory liabilities, current107 28 48 27 4 
Other regulatory liabilities, deferred65 22 19 24 — 
Total energy-related derivative gains (losses)$155 $44 $67 $51 $(7)
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
For the three months ended March 31, 2022 and 2021, the pre-tax effects of cash flow and 2020,fair value hedge accounting on accumulated OCI were as follows:
Gain (Loss) Recognized in OCI on DerivativeFor the Three Months Ended March 31,
20222021
(in millions)
Southern Company
Cash flow hedges:
Energy-related derivatives$42 $5 
Interest rate derivatives9 3 
Foreign currency derivatives(28)(47)
Fair value hedges(*):
Foreign currency derivatives4 — 
Total$27 $(39)
Georgia Power
Cash flow hedges:
Interest rate derivatives$12 $— 
Southern Power
Cash flow hedges:
Energy-related derivatives$5 $4 
Foreign currency derivatives(28)(47)
Total$(23)$(43)
Southern Company Gas
Cash flow hedges:
Energy-related derivatives$37 $1 
(*)Represents amounts excluded from the assessment of effectiveness for which the difference between changes in fair value and periodic amortization is recorded in OCI.
For the three months ended March 31, 2022 and 2021, the pre-tax effects of interest rate derivatives designated as cash flow hedging instruments on accumulated OCI were immaterial for the other Registrants.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
For the three months ended March 31, 2022 and 2021, the pre-tax effects of cash flow and fair value hedge accounting on income were as follows:
Location and Amount of Gain (Loss) Recognized in Income on Cash Flow and Fair Value Hedging RelationshipsLocation and Amount of Gain (Loss) Recognized in Income on Cash Flow and Fair Value Hedging RelationshipsFor the Three Months Ended March 31,Location and Amount of Gain (Loss) Recognized in Income on Cash Flow and Fair Value Hedging RelationshipsFor the Three Months Ended March 31,
Location and Amount of Gain (Loss) Recognized in Income on Cash Flow and Fair Value Hedging RelationshipsFor the Three Months Ended March 31,
20212020Location and Amount of Gain (Loss) Recognized in Income on Cash Flow and Fair Value Hedging Relationships20222021
(in millions)(in millions)
Southern CompanySouthern Company
Total cost of natural gasTotal cost of natural gas$583 $439 Total cost of natural gas$1,095 $583 
Gain (loss) on energy-related cash flow hedges(a)
Gain (loss) on energy-related cash flow hedges(a)
(3)(7)
Gain (loss) on energy-related cash flow hedges(a)
9 (3)
Total depreciation and amortizationTotal depreciation and amortization871 857 Total depreciation and amortization892 871 
Gain (loss) on energy-related cash flow hedges(a)
Gain (loss) on energy-related cash flow hedges(a)
3 (1)
Gain (loss) on energy-related cash flow hedges(a)
2 3 
Total interest expense, net of amounts capitalizedTotal interest expense, net of amounts capitalized(450)(456)Total interest expense, net of amounts capitalized(462)(450)
Gain (loss) on interest rate cash flow hedges(a)
Gain (loss) on interest rate cash flow hedges(a)
(7)(6)
Gain (loss) on interest rate cash flow hedges(a)
(7)(7)
Gain (loss) on foreign currency cash flow hedges(a)
Gain (loss) on foreign currency cash flow hedges(a)
(6)(6)
Gain (loss) on foreign currency cash flow hedges(a)
(6)(6)
Gain (loss) on interest rate fair value hedges(b)
Gain (loss) on interest rate fair value hedges(b)
(10)29 
Gain (loss) on interest rate fair value hedges(b)
(123)(10)
Total other income (expense), netTotal other income (expense), net58 103 Total other income (expense), net145 58 
Gain (loss) on foreign currency cash flow hedges(a)(c)
Gain (loss) on foreign currency cash flow hedges(a)(c)
(60)(31)
Gain (loss) on foreign currency cash flow hedges(a)(c)
(25)(60)
Gain (loss) on foreign currency fair value hedgesGain (loss) on foreign currency fair value hedges(24)— 
Amount excluded from effectiveness testing recognized in earningsAmount excluded from effectiveness testing recognized in earnings(4)— 
Southern PowerSouthern PowerSouthern Power
Total depreciation and amortizationTotal depreciation and amortization$119 $117 Total depreciation and amortization$120 $119 
Gain (loss) on energy-related cash flow hedges(a)
Gain (loss) on energy-related cash flow hedges(a)
3 (1)
Gain (loss) on energy-related cash flow hedges(a)
2 3 
Total interest expense, net of amounts capitalizedTotal interest expense, net of amounts capitalized(38)(39)Total interest expense, net of amounts capitalized(37)(38)
Gain (loss) on foreign currency cash flow hedges(a)
Gain (loss) on foreign currency cash flow hedges(a)
(6)(6)
Gain (loss) on foreign currency cash flow hedges(a)
(6)(6)
Total other income (expense), netTotal other income (expense), net7 2 Total other income (expense), net2 7 
Gain (loss) on foreign currency cash flow hedges(a)(c)
Gain (loss) on foreign currency cash flow hedges(a)(c)
(60)(31)
Gain (loss) on foreign currency cash flow hedges(a)(c)
(25)(60)
Southern Company GasSouthern Company Gas
Total cost of natural gasTotal cost of natural gas$1,095 $583 
Gain (loss) on energy-related cash flow hedges(a)
Gain (loss) on energy-related cash flow hedges(a)
9 — 
Total interest expense, net of amounts capitalizedTotal interest expense, net of amounts capitalized(61)(60)
Gain (loss) on interest rate cash flow hedges(a)
Gain (loss) on interest rate cash flow hedges(a)
(1)— 
Gain (loss) on interest rate fair value hedges(b)
Gain (loss) on interest rate fair value hedges(b)
(36)— 
(a)Reclassified from accumulated OCI into earnings.
(b)For fair value hedges, changes in the fair value of the derivative contracts are generally equal to changes in the fair value of the underlying debt and have no material impact on income.
(c)The reclassification from accumulated OCI into other income (expense), net completely offsets currency gains and losses arising from changes in the U.S. currency exchange rates used to record the euro-denominated notes.
For the three months ended March 31, 20212022 and 2020,2021, the pre-tax effects of cash flow and fair value hedge accounting on income for energy-related derivatives and interest rate derivatives were immaterial for the traditional electric operating companies and Southern Company Gas.
As of March 31, 2021 and December 31, 2020, the following amounts were recorded on the balance sheets related to cumulative basis adjustments for fair value hedges:
Carrying Amount of the Hedged ItemCumulative Amount of Fair Value Hedging Adjustment included in Carrying Amount of the Hedged Item
Balance Sheet Location of Hedged ItemsAs of March 31, 2021As of December 31, 2020As of March 31, 2021As of December 31, 2020
(in millions)(in millions)
Southern Company
Securities due within one year$(1,505)$(1,509)$(5)$(10)
companies.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
At March 31, 2022 and December 31, 2021, the following amounts were recorded on the balance sheets related to cumulative basis adjustments for fair value hedges:
Carrying Amount of the Hedged ItemCumulative Amount of Fair Value Hedging Adjustment included in Carrying Amount of the Hedged Item
Balance Sheet Location of Hedged ItemsAt March 31, 2022At December 31, 2021At March 31, 2022At December 31, 2021
(in millions)(in millions)
Southern Company
Long-term debt$(3,136)$(3,280)$126 $9 
Southern Company Gas
Long-term debt$(459)$(493)$37 $2 
For the three months ended March 31, 20212022 and 2020,2021, the pre-tax effects of energy-related derivatives not designated as hedging instruments on the statements of income of Southern Company and Southern Company Gas were as follows:
Gain (Loss)Gain (Loss)
Three Months Ended March 31,Three Months Ended March 31,
Derivatives in Non-Designated Hedging RelationshipsDerivatives in Non-Designated Hedging RelationshipsStatements of Income Location20212020Derivatives in Non-Designated Hedging RelationshipsStatements of Income Location20222021
(in millions)(in millions)
Energy-related derivatives:Energy-related derivatives:
Natural gas revenues(*)
$(17)$70 Energy-related derivatives:
Natural gas revenues(*)
$2 $(17)
Cost of natural gas7 7 Cost of natural gas21 7 
Total derivatives in non-designated hedging relationshipsTotal derivatives in non-designated hedging relationships$(10)$77 Total derivatives in non-designated hedging relationships$23 $(10)
(*)Excludes immaterial gains (losses) recorded in natural gas revenues associated with weather derivatives for all periods presented.
For the three months ended March 31, 2022 and 2021, the pre-tax effects of interest rate derivatives not designated as hedging instruments were immaterial for Southern Company and 2020,Southern Company Gas and the pre-tax effects of energy-related derivatives not designated as hedging instruments were immaterial for all other Registrants.
Contingent Features
Southern Company, the traditional electric operating companies, Southern Power, and Southern Company GasThe Registrants do not have any credit arrangements that would require material changes in payment schedules or terminations as a result of a credit rating downgrade. There are certain derivatives that could require collateral, but not accelerated payment, in the event of various credit rating changes of certain Southern Company subsidiaries. At March 31, 2021,2022, the Registrants had 0no collateral posted with derivative counterparties to satisfy these arrangements.
At March 31, 2021,For the applicable Registrants, had no interest rate derivative liabilities with contingent features. At March 31, 2021, the fair value of interest rate and energy-related derivative liabilities with contingent features and the maximum potential collateral requirements arising from the credit-risk-related contingent features, at a rating below BBB- and/or Baa3, were immaterial for all Registrants.at March 31, 2022. The maximum potential collateral requirements arising from the credit-risk-related contingent features for the traditional electric operating companies and Southern Power include certain agreements that could require collateral in the event that one or more Southern Company power pool participants has a credit rating change to below investment grade. Following the sale of Gulf Power to NextEra Energy, Inc., Gulf Power is continuing to participatehas continued participating in the Southern Company power pool for a defined transition period that, subject to certain potential adjustments, is scheduledpool; however, the parties currently expect this participation to end on January 1, 2024.during the third quarter 2022.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Generally, collateral may be provided by a Southern Company guaranty, letter of credit, or cash. If collateral is required, fair value amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral are not offset against fair value amounts recognized for derivatives executed with the same counterparty.
Alabama Power and Southern Power maintain accounts with certain regional transmission organizations to facilitate financial derivative transactions and they may be required to post collateral based on the value of the positions in these accounts and the associated margin requirements. At March 31, 2021,2022, cash collateral posted in these accounts was immaterial. Southern Company Gas maintains accounts with brokers or the clearing houses of certain exchanges to facilitate financial derivative transactions. Based on the value of the positions in these accounts and the associated margin requirements, Southern Company Gas may be required to deposit cash into these accounts. At March 31, 2021,2022, cash collateral held on deposit in broker margin accounts was $27$36 million.
The Registrants are exposed to losses related to financial instruments in the event of counterparties' nonperformance. The Registrants only enter into agreements and material transactions with counterparties that have investment grade credit ratings by Moody's and S&P or with counterparties who have posted collateral to cover potential credit exposure. The Registrants have also established risk management policies and controls to determine and monitor the creditworthiness of counterparties in order to mitigate their exposure to counterparty credit risk.
79
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Southern Company Gas uses established credit policies to determine and monitor the creditworthiness of counterparties, including requirements to post collateral or other credit security, as well as the quality of pledged collateral. Collateral or credit security is most often in the form of cash or letters of credit from an investment-grade financial institution, but may also include cash or U.S. government securities held by a trustee. Prior to entering a physical transaction, Southern Company Gas assigns its counterparties an internal credit rating and credit limit based on the counterparties' Moody's, S&P, and Fitch ratings, commercially available credit reports, and audited financial statements. Southern Company Gas may require counterparties to pledge additional collateral when deemed necessary.
Southern Company Gas utilizes netting agreements whenever possible to mitigate exposure to counterparty credit risk. Netting agreements enable Southern Company Gas to net certain assets and liabilities by counterparty across product lines and against cash collateral, provided the netting and cash collateral agreements include such provisions. While the amounts due from, or owed to, counterparties are settled net, they are recorded on a gross basis on the balance sheet as energy marketing receivables and energy marketing payables.
The Registrants do not anticipate a material adverse effect on their respective financial statements as a result of counterparty nonperformance.
82
(K) ACQUISITIONS AND DISPOSITIONS
See Note 15 to the financial statements in Item 8 of the Form 10-K for additional information.
Southern Company
The following table provides Southern Company's major classes of assets classified as held for sale at March 31, 2021 and December 31, 2020:
Southern Company
At March 31,At December 31,
20212020
(in millions)
Assets Held for Sale:
Total property, plant, and equipment$7 $8 
Leveraged leases52 52 
Total Assets Held for Sale$59 $60 
Southern Company's asset sales, both individually and combined, do not represent a strategic shift in operations that has, or is expected to have, a major effect on operations and financial results; therefore, none of the assets have been classified as discontinued operations for any of the periods presented.
Southern Power
Asset Acquisition
During the three months ended March 31, 2021, Southern Power acquired a controlling membership interest in the wind facility listed below. Acquisition-related costs were expensed as incurred and were not material.
Project FacilityResourceSeller
Approximate Nameplate Capacity (MW)
LocationSouthern Power Ownership PercentageCODPPA Contract Period
Deuel Harvest(*)
WindInvenergy Renewables, LLC300Deuel County, SD
100% of
Class B
February 2021
25 years
and
15 years
(*)On March 26, 2021, Southern Power acquired a controlling interest in the facility and consolidates the project's operating results in its financial statements. On March 30, 2021, Southern Power completed a tax equity transaction whereby it received $220 million. The tax equity partner, which is the Class A member, and Invenergy Renewables, LLC each own a noncontrolling interest.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
(K) ACQUISITIONS AND DISPOSITIONS
See Note 15 to the financial statements in Item 8 of the Form 10-K for additional information.
Southern Power
Construction Projects
During the three months ended March 31, 2021,2022, Southern Power continuedcompleted construction of and placed in service the Garland andremaining 40 MWs of the Tranquillity battery energy storage facilitiesfacility and the Glass Sands windremaining 15 MWs of the Garland battery energy storage facility. Total aggregate construction costs, excluding acquisition costs, are expected to be between $392 million and $460 million for the facilities under construction. At March 31, 2021, total costs of construction incurred for these projects were $158 million and are included in CWIP. The ultimate outcome of these matters cannot be determined at this time.
Project FacilityResource
Approximate Nameplate Capacity (MW)
LocationActual/Expected CODPPA Contract Period
Projects Under Construction atCompleted During the Three Months Ended March 31, 20212022
Garland Solar Storage(a)
Battery energy storage system88Kern County, CA
September 2021
Third quarter 2021through February 2022(b)
20 years
Tranquillity Solar Storage(a)
Battery energy storage system72Fresno County, CAFourth quarter
November 2021
20 years
Glass Sandsthrough March 2022(b)(c)
Wind118Murray County, OKFourth quarter 20211220 years
(a)In December 2020, Southern Power restructuredconsolidates each project's operating results in its ownership offinancial statements and the project by contributing the Class A membership interests to an existing partnershiptax equity partner and selling 100% of the Class B membership interests while retaining the controllingtwo other partners each own a noncontrolling interest. Prior to commercial operation, Southern Power may restructure the project ownership again and enter into additional partnerships, but expects to retain the controlling interest. The ultimate outcome of this matter cannot be determined at this time.
(b)In December 2020, Southern Power purchased 100%The facility has a total capacity of the membership interests88 MWs, of the Glass Sands facility.
Development Projects
Southern Power continues to evaluatewhich 73 MWs were placed in service in 2021 and refine the deployment of the remaining wind turbine equipment purchased15 MWs were placed in 2016 and 2017 to development and construction projects. During the three months ended March 31, 2021, gains on wind turbine equipment contributed to various equity method investments totaled approximately $37 million.
Southern Company Gas
Sale of Sequent
On April 28, 2021, certain affiliates of Southern Company Gas entered into an agreement for the sale of Sequent for a purchase price of $50 million, plus working capital and certain other adjustments. The net book value of Sequent at March 31, 2021, excluding working capital, was $46 million; however, any potential gain or loss on the sale will be based,service in large part, on the fair value of the open derivative positions as of the date of closing. See Notes (I) and (J) for information on fair value and derivatives outstanding at March 31, 2021.
Southern Company Gas has existing agreements in place in which it guarantees the payment performance of Sequent. Southern Company Gas will continue to guarantee payment performance for Sequent after the transaction closes for a period of time as the buyer obtains releases from these obligations. As of March 31, 2021, the obligations subject to the payment performance guarantee totaled $279 million. Changes in the price of natural gas, market conditions, and the number of open contracts will change the amount that Southern Company Gas is required to guarantee for Sequent each month. The maximum potential exposure over the period of the payment performance guarantee generally is capped at $1 billion. At closing, the buyer (an investment-grade entity) will issue a payment performance guarantee to Southern Company Gas, equal to the outstanding guarantee obligation throughout this period. Further, Southern Company Gas will retain responsibility for certain potential obligations that may arise from transactions during Winter Storm Uri. The completion of the transaction is subject to the satisfaction or waiver of certain conditions, including, among other customary closing conditions, the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The transaction is expected to be completed during the third quarter 2021; however, the ultimate outcome of this matter cannot be determined at this time.
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(c)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
SaleThe facility has a total capacity of Pivotal LNG
In connection with its March 2020 sale72 MWs, of Pivotal LNG, Southern Company Gas was entitled to 2 $5 million payments contingent upon Dominion Modular LNG Holdings, Inc. meeting certain milestones related to Pivotal LNG. Southern Company Gas received the first payment on April 22,which 32 MWs were placed in service in 2021 and expects to receive the second payment40 MWs were placed in August 2021.service in March 2022.
(L) SEGMENT AND RELATED INFORMATION
Southern Company
The primary businesses of the Southern Company system are electricity sales by the traditional electric operating companies and Southern Power and the distribution of natural gas by Southern Company Gas. The traditional electric operating companies – Alabama Power, Georgia Power, and Mississippi Power – are vertically integrated utilities providing electric service in 3 Southeastern states. Southern Power develops, constructs, acquires, owns, and manages power generation assets, including renewable energy and battery energy storage projects, and sells electricity at market-based rates in the wholesale market. Southern Company Gas distributes natural gas through its natural gas distribution utilities and is involved in several other complementary businesses including gas pipeline investments wholesale gas services, and gas marketing services. Prior to the sale of Sequent on July 1, 2021, Southern Company Gas' other businesses also included wholesale gas services.
Southern Company's reportable business segments are the sale of electricity by the traditional electric operating companies, the sale of electricity in the competitive wholesale market by Southern Power, and the sale of natural gas and other complementary products and services by Southern Company Gas. Revenues from sales by Southern Power to the traditional electric operating companies were $105 million and $81 million for the three months ended March 31, 2022 and 2021, and $86 million for the three months ended March 31, 2020.respectively. Revenues from sales of natural gas from Southern Company Gas to the traditional electric operating companies were immaterial for the three months ended March 31, 2021 and 2020.both periods presented. Revenues from sales of natural gas from Southern Company Gas to Southern Power were $12 million for the three months ended March 31, 2021, and $10 million for the three months ended March 31, 2020.which represented sales from Sequent prior to its sale. The "All Other" column includes the Southern Company parent entity, which does not allocate operating expenses to business segments. Also, this category includes segments below the quantitative threshold for separate disclosure. These segments include providing distributed energy and resilience solutions to electric utilities and theirdeploying microgrids for commercial, industrial, governmental, and utility customers, in the areas of distributed generation, energy storage and renewables, and energy efficiency, as well as investments in telecommunications and, for the three months ended March 31, 2021, leveraged lease projects. All other inter-segment revenues are not material.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Financial data for business segments and products and services for the three months ended March 31, 20212022 and 20202021 was as follows:
Electric UtilitiesElectric Utilities
Traditional
Electric Operating
Companies		Southern
Power		EliminationsTotalSouthern Company GasAll
Other		EliminationsConsolidatedTraditional
Electric Operating
Companies		Southern
Power		EliminationsTotalSouthern Company GasAll
Other		EliminationsConsolidated
(in millions)(in millions)
Three Months Ended March 31, 2021
Three Months Ended March 31, 2022Three Months Ended March 31, 2022
Operating revenuesOperating revenues$3,764 $440 $(87)$4,117 $1,694 $134 $(35)$5,910 Operating revenues$4,191 $539 $(221)$4,509 $2,058 $123 $(42)$6,648 
Segment net income (loss)(c)(a)
Segment net income (loss)(c)(a)
756 97 0 853 398 (108)(8)1,135 
Segment net income (loss)(c)(a)
774 72 — 846 319 (125)(8)1,032 
At March 31, 2021
At March 31, 2022At March 31, 2022
GoodwillGoodwill$0 $2 $0 $2 $5,015 $263 $0 $5,280 Goodwill$— $2 $— $2 $5,015 $263 $— $5,280 
Total assetsTotal assets86,053 13,995 (637)99,411 23,377 3,392 (787)125,393 Total assets90,460 13,766 (627)103,599 23,377 4,236 (2,573)128,639 
Three Months Ended March 31, 2020
Three Months Ended March 31, 2021Three Months Ended March 31, 2021
Operating revenuesOperating revenues$3,407 $375 $(87)$3,695 $1,249 $114 $(40)$5,018 Operating revenues$3,764 $440 $(87)$4,117 $1,694 $134 $(35)$5,910 
Segment net income (loss)(d)(c)
Segment net income (loss)(d)(c)
642 75 0 717 275 (121)(3)868 
Segment net income (loss)(d)(c)
756 97 — 853 398 (108)(8)1,135 
At December 31, 2020
At December 31, 2021At December 31, 2021
GoodwillGoodwill$0 $2 $0 $2 $5,015 $263 $0 $5,280 Goodwill$— $2 $— $2 $5,015 $263 $— $5,280 
Total assetsTotal assets85,486 13,235 (680)98,041 22,630 3,168 (904)122,935 Total assets89,051 13,390 (667)101,774 23,560 2,975 (775)127,534 
(a)Attributable to Southern Company.
(b)For the traditional electric operating companies, includes a pre-tax charge of $48 million pre-tax charge ($36 million after tax) at Georgia Power for estimated loss onlosses associated with the construction of Plant Vogtle Units 3 and 4. See Note (B) and Note 2 to the financial statements in Item 8 of the Form 10-K under "Georgia Power – Nuclear Construction" for additional information.
(c)For Southern Power, includes gains on wind turbine equipment contributed to various equity method investments totaling approximately $37 million pre-tax ($28 million after tax). See Notes (E) and (K) under "Southern Power" for additional information.
(d)For Southern Power, includes a $39 million pre-tax gain ($23 million gain after tax) on the sale of Plant Mankato. See Note 15 to the financial statements under "Southern Power – Development Projects" in Item 8 of the Form 10-K under "Southern Power" for additional information.
Products and Services
Electric Utilities' Revenues Electric Utilities' Revenues
RetailWholesaleOtherTotalRetailWholesaleOtherTotal
(in millions)(in millions)
Three Months Ended March 31, 2022Three Months Ended March 31, 2022$3,613 $664 $232 $4,509 
Three Months Ended March 31, 2021Three Months Ended March 31, 2021$3,342 $545 $230 $4,117 Three Months Ended March 31, 20213,342 545 230 4,117 
Three Months Ended March 31, 20203,078 418 199 3,695 
Southern Company Gas' Revenues Southern Company Gas' Revenues
Gas
Distribution
Operations
Wholesale
Gas
Services(*)
Gas
Marketing
Services		OtherTotalGas
Distribution
Operations
Wholesale
Gas
Services(*)
Gas
Marketing
Services		OtherTotal
(in millions)(in millions)
Three Months Ended March 31, 2022Three Months Ended March 31, 2022$1,791 $— $243 $24 $2,058 
Three Months Ended March 31, 2021Three Months Ended March 31, 2021$1,192 $298 $195 $9 $1,694 Three Months Ended March 31, 20211,192 298 195 9 1,694 
Three Months Ended March 31, 20201,013 51 177 8 1,249 
(*)ThePrior to the sale of Sequent, the revenues for wholesale gas services arewere netted with costs associated with its energy and risk management activities. See "Southern Company Gas" herein and Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Southern Company Gas
Southern Company Gas manages its business through 43 reportable segments – gas distribution operations, gas pipeline investments, wholesale gas services, and gas marketing services. Prior to the sale of Sequent on July 1, 2021, Southern Company Gas' reportable segments also included wholesale gas services. The non-reportable segments are combined and presented as all other. See Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K under "Southern Company Gas" for additional information on the disposition activities described herein.sale of Sequent.
Gas distribution operations is the largest component of Southern Company Gas' business and includes natural gas local distribution utilities that construct, manage, and maintain intrastate natural gas pipelines and gas distribution facilities in 4 states.
Gas pipeline investments consists of joint ventures in natural gas pipeline investments including a 50% interest in SNG a 20% ownership interest in the PennEast Pipeline project, and a 50% joint ownership interest in the Dalton Pipeline. These natural gas pipelines enable the provision of diverse sources of natural gas supplies to the customers of Southern Company Gas. Gas pipeline investments also includedincludes a 5%20% ownership interest in the Atlantic CoastPennEast Pipeline construction project, priorwhich was cancelled in September 2021. See Note 7 to its sale on March 24, 2020.the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.
WholesaleThrough July 1, 2021, wholesale gas services providesprovided natural gas asset management and/or related logistics services for each of Southern Company Gas' utilities except Nicor Gas as well as for non-affiliated companies. The Virginia Natural Gas asset management agreement ended on March 31, 2021 and was not extended. Additionally, wholesale gas services engagesengaged in natural gas storage and gas pipeline arbitrage and related activities. See Note (K) under "Southern Company Gas" for information regarding the sale of Sequent, which is expected to be completed during the third quarter 2021.
Gas marketing services provides natural gas marketing to end-use customers primarily in Georgia and Illinois through SouthStar.
The all other column includes segments and subsidiaries that fall below the quantitative threshold for separate disclosure, including storage and fuels operations. The all other column included Jefferson Island through its sale on December 1, 2020 and Pivotal LNG through its sale on March 24, 2020.
Business segment financial data for the three months ended March 31, 20212022 and 20202021 was as follows:
Gas Distribution OperationsGas Pipeline Investments
Wholesale Gas Services(*)
Gas Marketing ServicesTotalAll OtherEliminationsConsolidatedGas Distribution OperationsGas Pipeline Investments
Wholesale Gas Services(*)
Gas Marketing ServicesTotalAll OtherEliminationsConsolidated
(in millions)(in millions)
Three Months Ended March 31, 2022Three Months Ended March 31, 2022
Operating revenuesOperating revenues$1,803 $8 $— $243 $2,054 $16 $(12)$2,058 
Segment net income (loss)Segment net income (loss)214 29 — 66 309 10 — 319 
Total assets at
March 31, 2022
Total assets at
March 31, 2022
21,034 1,473 — 1,640 24,147 12,017 (12,787)23,377 
Three Months Ended March 31, 2021Three Months Ended March 31, 2021Three Months Ended March 31, 2021
Operating revenuesOperating revenues$1,200 $8 $298 $195 $1,701 $7 $(14)$1,694 Operating revenues$1,200 $8 $298 $195 $1,701 $7 $(14)$1,694 
Segment net income (loss)Segment net income (loss)183 29 126 56 394 4 0 398 Segment net income (loss)183 29 126 56 394 4 — 398 
Total assets at
March 31, 2021
20,161 1,596 939 1,553 24,249 11,477 (12,349)23,377 
Three Months Ended March 31, 2020
Operating revenues$1,020 $8 $51 $177 $1,256 $8 $(15)$1,249 
Segment net income (loss)164 30 23 57 274 1 0 275 
Total assets at
December 31, 2020
19,090 1,597 850 1,503 23,040 11,336 (11,746)22,630 
Total assets at
December 31, 2021
Total assets at
December 31, 2021
20,917 1,467 31 1,556 23,971 12,114 (12,525)23,560 
(*)TheAs a result of the sale of Sequent, wholesale gas services is no longer a reportable segment for the three months ended March 31, 2022. Prior to the sale of Sequent, the revenues for wholesale gas services arewere netted with costs associated with its energy and risk management activities. A reconciliation of operating revenues and intercompany revenues is shown in the following table.
Third Party Gross RevenuesIntercompany RevenuesTotal Gross RevenuesLess Gross Gas CostsOperating Revenues
(in millions)
Three Months Ended March 31, 2021$2,588 $63 $2,651 $2,353 $298 
Three Months Ended March 31, 20201,185 29 1,214 1,163 51 
Third Party Gross RevenuesIntercompany RevenuesTotal Gross RevenuesLess Gross Gas CostsOperating Revenues
(in millions)
Three Months Ended March 31, 2021$2,588 $63 $2,651 $2,353 $298 
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Page
Combined Management's Discussion and Analysis of Financial Condition and Results of Operations
Overview
8687
Results of Operations
88
Southern Company
88
Alabama Power
9495
Georgia Power
9899
Mississippi Power
102103
Southern Power
105106
Southern Company Gas
108109
Future Earnings Potential
116115
Accounting Policies
119117
Financial Condition and Liquidity
120118
The following Management's Discussion and Analysis of Financial Condition and Results of Operations is a combined presentation; however, information contained herein relating to any individual Registrant is filed by such Registrant on its own behalf and each Registrant makes no representation as to information related to the other Registrants.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
Southern Company is a holding company that owns all of the common stock of three traditional electric operating companies (Alabama Power, Georgia Power, and Mississippi Power), as well as Southern Power, and Southern Company Gas and owns other direct and indirect subsidiaries. The primary businesses of the Southern Company system are electricity sales by the traditional electric operating companies and Southern Power and the distribution of natural gas by Southern Company Gas. Southern Company's reportable segments are the sale of electricity by the traditional electric operating companies, the sale of electricity in the competitive wholesale market by Southern Power, and the sale of natural gas and other complementary products and services by Southern Company Gas. Southern Company Gas' reportable segments are gas distribution operations, gas pipeline investments, wholesale gas services, and gas marketing services. Prior to the sale of Sequent on July 1, 2021, Southern Company Gas' reportable segments also included wholesale gas services. See Note (L) to the Condensed Financial Statements herein for additional information on segment reporting. For additional information on the Registrants' primary business activities and the sale of Sequent, see BUSINESS – "The Southern Company System" in Item 1 of the Form 10-K.10-K and Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K, respectively.
The Registrants continue to focus on several key performance indicators. For the traditional electric operating companies and Southern Company Gas, these indicators include, but are not limited to, customer satisfaction, plant availability, electric and natural gas system reliability, and execution of major construction projects. For Southern Power, these indicators include, but are not limited to, the equivalent forced outage rate and contract availability to evaluate operating results and help ensure its ability to meet its contractual commitments to customers. In addition, Southern Company and the Subsidiary Registrants focus on earnings per share and net income, respectively, as a key performance indicator.
Recent Developments
Georgia Power
Plant Vogtle Units 3 and 4 Construction and Start-Up Status
Construction continues on Plant Vogtle Units 3 and 4 (with electric generating capacity of approximately 1,100 MWs each), in which Georgia Power currently holds a 45.7% ownership interest. Georgia Power's share of the total project capital cost forecast to complete Plant Vogtle Units 3 and 4, by December 2021including contingency, through the end of the first quarter 2023 and November 2022,the fourth quarter 2023, respectively, is $8.76$10.4 billion.
Fuel load for Unit 3 is projected during the third quarter or the fourth quarter 2022 with an in-service date projected during the fourth quarter 2022 or the first quarter 2023. Unit 3's projected schedule primarily depends on improvements in overall construction productivity and production levels, the volume and completion of construction remediation work, completion of work packages, including inspection records, and other documentation necessary to submit the remaining ITAACs and begin fuel load, the pace of system and area turnovers, and the progression of startup and other testing. An in-service date during the third quarter or the fourth quarter 2023 for Unit 4 is projected. Unit 4's projected schedule primarily depends on overall construction productivity and production levels improving as well as appropriate levels of craft laborers, particularly electricians and pipefitters, being added and maintained. Any further delays could result in later in-service dates.
Georgia Power estimatesand the productivity impactsother Vogtle Owners do not agree on the starting dollar amount for the determination of cost increases subject to the cost-sharing and tender provisions of the COVID-19 pandemic have consumed approximately three to four months of schedule margin previously embedded in the site work plan for Unit 3 and Unit 4. In addition, throughout 2020, the project continued to face challenges as describedGlobal Amendments (as defined in Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction" herein. As a result of these factors, in January 2021, Southern Nuclear further extended certain milestone dates, includingConstruction – Joint Owner Contracts" herein). The other Vogtle Owners have notified Georgia Power that they believe the start of hot functional testing and fuel load for Unit 3, from those established in October 2020.
Following the January 2021 milestone extensions, Southern Nuclear has been performing additional construction remediation work, primarily related to electrical commodity installations, necessary to ensure quality and design standards are met as system turnovers are completed to support hot functional testing and fuel load for Unit 3. Hot functional testing commenced in late April 2021 and the site work plan currently targets fuel load for Unit 3 in the third quarter 2021 and an in-service date of December 2021. As the site work plan includes minimal margin to these milestone dates, any delay could result in an in-service date in the first quarter 2022 for Unit 3. Achievement of the extended milestone dates established in January 2021 for Unit 4, which are expected to support a regulatory-approved in-service date of November 2022, primarily depends on overall construction productivity and production levels significantly improving as well as appropriate levels of craft laborers, particularly electrical and pipefitter craft labor, being added and maintained.
Considering the factors above, during the first quarter 2021, approximately $84 million of the construction contingency established in the fourth quarter 2020 was assigned to the basecurrent project capital cost forecast exceeds the cost-sharing thresholds and triggers the tender provisions under the Global Amendments. In October 2021, Georgia Power and the other Vogtle Owners entered into an agreement to clarify the process for costs primarily associated with the schedule extensiontender provisions of the Global Amendments to provide for Unit 3 to December 2021, construction productivity, support resources,a decision between 120 and 180 days after the tender option is triggered, which the other Vogtle Owners assert occurred on February 14, 2022.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
andDuring the first quarter 2022, established construction remediation work. Georgia Power increased its totalcontingency totaling $43 million was assigned to the base capital cost forecast asfor costs primarily associated with construction productivity, the pace of March 31, 2021 by adding $48 million to the remaining construction contingency.
After considering the significant level of uncertainty that exists regarding the future recoverability of these costs since the ultimate outcome of these matters is subject to the outcome of future assessments by management, as well as Georgia PSC decisions in future regulatory proceedings, Georgia Power recorded a pre-tax charge to income of $48 million ($36 million after tax)system turnovers, and support resources for the increase in the total project capital cost forecast as of March 31, 2021. AsUnits 3 and when these amounts are spent, Georgia Power may request the Georgia PSC to evaluate those expenditures for rate recovery.4.
The ultimate impact of the COVID-19 pandemic and other factorsthese matters on the construction schedule and budgetproject capital cost forecast for Plant Vogtle Units 3 and 4 cannot be determined at this time. See Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction" herein for additional information.
Rate Plan
Georgia Power is required to file its next general base rate case by June 24, 2022. See Note 2 to the financial statements under "Georgia Power – Rate Plans" in Item 8 of the Form 10-K for additional information.
Mississippi Power
On March 15, 2021,2022, Mississippi Power submitted its annual retail PEP filing for 20212022 to the Mississippi PSC, which requested a 1.8%1.9%, or approximately $16$18 million, annual increase in revenues. In accordance with the PEP rate schedule, the rate increase became effective with the first billing cycle of April 2021,2022, subject to refund.The Mississippi PSC isrelated proceedings are expected to rule on this request laterconclude in summer 2022; however, the second quarter 2021. The ultimate outcome of this matter cannot be determined at this time.
On April 6, 2021, the Mississippi PSC approved Mississippi Power's annual ad valorem tax adjustment filing for 2021, which requested an annual increase in revenues of approximately $28 million. The rate became effective with the first billing cycle of May 2021.
On April 15, 2021, Mississippi Power filed its 2021 IRP with the Mississippi PSC. The filing includes a schedule to retire Plant Watson Unit 4 (268 MWs) and Mississippi Power's 40% ownership interest in Plant Greene County Units 1 and 2 (103 MWs each) in December 2023, 2025, and 2026, respectively, consistent with each unit's remaining useful life in the most recent approved depreciation studies. In addition, the schedule reflects the early retirement of Mississippi Power's 50% undivided ownership interest in Plant Daniel Units 1 and 2 (502 MWs) by the end of 2027. The ultimate outcome of this matter cannot be determined at this time.
See Note (B) to the Condensed Financial Statements under "Mississippi Power" herein for additional information.
Southern Power
During the three months ended March 31, 2021,2022, Southern Power continuedcompleted construction of and placed in service the 88-MW Garland and 72-MWremaining 40 MWs of the Tranquillity battery energy storage facilitiesfacility and the 118-MW Glass Sands windremaining 15 MWs of the Garland battery energy storage facility. On March 26, 2021, Southern Power purchased a controlling membership interest in the approximately 300-MW Deuel Harvest wind facility located in Deuel County, South Dakota from Invenergy Renewables, LLC. See Note (K) to the Condensed Financial Statements under "Southern Power" herein for additional information.
At March 31, 2021,2022, Southern Power's average investment coverage ratio for its generating assets, including those owned with various partners, based on the ratio of investment under contract to total investment using the respective generation facilities' net book value (or expected in-service value for facilities under construction) as the investment amount was 93%95% through 20252026 and 90%92% through 2030,2031, with an average remaining contract duration of approximately 1413 years.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Southern Company Gas
On April 28, 2021, Atlanta7, 2022, Virginia Natural Gas Light filednotified the Virginia State Corporation Commission of its first Integrated Capacity and Delivery Plan (i-CDP) withintent to file a base rate case in the Georgia PSC, which includes a series of ongoing and proposed pipeline safety, reliability, and growth programs for the next 10 years, as well as the required capital investments and related costs to implement the programs. The i-CDP is subject to a five-month review period, which may be extended. See Note (B) to the Condensed Financial Statements under "Southern Company Gas" herein for additional information.
Also on April 28, 2021, certain affiliates of Southern Company Gas entered into an agreement for the sale of Sequent. See Note (K) to the Condensed Financial Statements under "Southern Company Gas" herein for additional information.
third quarter 2022. The ultimate outcome of these mattersthis matter cannot be determined at this time.
RESULTS OF OPERATIONS
Southern Company
Net Income
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$26730.8
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$(103)(9.1)
Consolidated net income attributable to Southern Company was $1.0 billion ($0.97 per share) for first quarter 2022 compared to $1.1 billion ($1.07 per share) in the first quarter 2021 compared to $0.9 billion ($0.82 per share) for the corresponding period in 2020.2021. The increasedecrease was primarily due to increasesthe first quarter 2021 net income of $126 million at Sequent, which was sold on July 1, 2021, and higher non-fuel operations and maintenance costs, partially offset by an increase in both natural gas revenues from base rate increases and continued infrastructure replacement, an increase in retail electric revenues primarily associatedfrom base tariff increases in accordance with colder weatherGeorgia Power's 2019 ARP, and a $36 million after-tax charge in the first quarter 2021 as comparedrelated to the first quarter 2020, partially offset by higher costconstruction of natural gas.
Retail Electric Revenues
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$2648.6
In the first quarter 2021, retail electric revenues were $3.3 billion compared to $3.1 billion for the corresponding period in 2020.
Details of the changes in retail electric revenues were as follows:
 First Quarter 2021
(in millions)(% change)
Retail electric – prior year$3,078 
Estimated change resulting from –
Rates and pricing25 0.8 %
Sales decline(15)(0.5)
Weather89 2.9 
Fuel and other cost recovery165 5.4 
Retail electric – current year$3,342 8.6 %
Revenues associated with changes in ratesPlant Vogtle Units 3 and pricing increased in the first quarter 2021 when compared to the corresponding period in 2020 primarily due to an increase in Alabama Power's Rate RSE effective January 1, 2021, partially offset by decreases in Georgia Power's NCCR tariff effective January 1, 2021 and in Mississippi Power's base rates effective in April 2020. See Note 2 to the financial statements under "Alabama Power – Rate RSE" and4.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
"MississippiRetail Electric Revenues
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$2718.1
In the first quarter 2022, retail electric revenues were $3.6 billion compared to $3.3 billion for the corresponding period in 2021.
Details of the changes in retail electric revenues were as follows:
 First Quarter 2022
(in millions)(% change)
Retail electric – prior year$3,342 
Estimated change resulting from –
Rates and pricing56 1.7 %
Sales growth20 0.6 
Weather16 0.5 
Fuel and other cost recovery179 5.3 
Retail electric – current year$3,613 8.1 %
Revenues associated with changes in rates and pricing increased in the first quarter 2022 when compared to the corresponding period in 2021. The increase was primarily due to base tariff increases in accordance with Georgia Power's 2019 ARP. See Note 2 to the financial statements under "Georgia Power – 2019 Base Rate Case"Plans" in Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction – Regulatory Matters" herein for additional information.
Revenues attributable to changes in sales decreasedincreased in the first quarter 20212022 when compared to the corresponding period in 2020 primarily driven by continued impacts of the COVID-19 pandemic.2021. Weather-adjusted residential KWH sales decreased 1.1% and weather-adjusted commercial KWH sales increased 1.1%1.9% in the first quarter 20212022 when compared to the corresponding period in 20202021 primarily due to impacts on customer growth. Weather-adjustedusage from increased activity outside the home following the expiration of COVID-19 restrictions. Increased customer growth partially offset the decrease in residential KWH sales and contributed to the increase in commercial KWH sales. Industrial KWH sales decreased 3.1%increased 1.7% in the first quarter 20212022 when compared to the corresponding period in 20202021 primarily due to lower customer usage resulting from changes in consumer and business behavior in response to the COVID-19 pandemic. Industrial KWH sales decreased 3.0%strength in the first quarter 2021 when compared to the corresponding period in 2020 primarily as a result of disruptions in supply chain and business operations related to the COVID-19 pandemic, non-pandemic related customer closures, and maintenance outages.pipeline segment.
Fuel and other cost recovery revenues increased $165$179 million in the first quarter 20212022 compared to the corresponding period in 20202021 primarily due to higher fuel and purchased power costs. Electric rates for the traditional electric operating companies include provisions to adjust billings for fluctuations in fuel costs, including the energy component of purchased power costs. Under these provisions, fuel revenues generally equal fuel expenses, including the energy component of PPA costs, and do not affect net income. The traditional electric operating companies each have one or more regulatory mechanisms to recover other costs such as environmental and other compliance costs, storm damage, new plants, and PPA capacity costs.
Wholesale Electric Revenues
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$12730.4
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$11921.8
In the first quarter 2022, wholesale electric revenues were $664 million compared to $545 million for the corresponding period in 2021. The increase was primarily due to a $117 million increase in energy revenues in the first quarter 2022 as a result of higher natural gas prices when compared to the corresponding period in 2021 and an increase in the volume of KWHs sold at Southern Power primarily associated with natural gas PPAs.
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AND RESULTS OF OPERATIONS (Continued)
Wholesale electric revenues consist of revenues from PPAs and short-term opportunity sales. Wholesale electric revenues from PPAs (other than solar and wind PPAs) have both capacity and energy components. Capacity revenues generally represent the greatest contribution to net income and are designed to provide recovery of fixed costs plus a return on investment. Energy revenues will vary depending on fuel prices, the market prices of wholesale energy compared to the Southern Company system's generation, demand for energy within the Southern Company system's electric service territory, and the availability of the Southern Company system's generation. Increases and decreases in energy revenues that are driven by fuel prices are accompanied by an increase or decrease in fuel costs and do not have a significant impact on net income. Energy sales from solar and wind PPAs do not have a capacity charge and customers either purchase the energy output of a dedicated renewable facility through an energy charge or through a fixed price related to the energy. As a result, the ability to recover fixed and variable operations and maintenance expenses is dependent upon the level of energy generated from these facilities, which can be impacted by weather conditions, equipment performance, transmission constraints, and other factors. Wholesale electric revenues at Mississippi Power include FERC-regulated municipal and rural association sales under cost-based tariffs as well as market-based sales. Short-term opportunity sales are made at market-based rates that generally provide a margin above the Southern Company system's variable cost to produce the energy.
In the first quarter 2021, wholesale electric revenues were $545 million compared to $418 million for the corresponding period in 2020. The increase reflects an increase of $102 million in energy revenues primarily resulting from higher natural gas prices when compared to the corresponding period in 2020. In addition, an increase in capacity revenues of $25 million was primarily due to a power sales agreement at Alabama Power which began in September 2020 and new natural gas PPAs at Southern Power.
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Other ElectricNatural Gas Revenues
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$1912.6
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$36421.5
In the first quarter 2021, other electric revenues were $170 million compared to $151 million for the corresponding period in 2020. The increase was primarily due to increases of $9 million in transmission services, $3 million in customer fees at the traditional electric operating companies, and $3 million in outdoor lighting at Georgia Power.
Natural Gas Revenues
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$44535.6
In the first quarter 2021,2022, natural gas revenues were $1.7$2.1 billion compared to $1.2$1.7 billion for the corresponding period in 2020.2021.
Details of the changes in natural gas revenues were as follows:
First Quarter 2021First Quarter 2022
(in millions)(% change)(in millions)(% change)
Natural gas revenues – prior yearNatural gas revenues – prior year$1,249 Natural gas revenues – prior year$1,694 
Estimated change resulting from –Estimated change resulting from –Estimated change resulting from –
Infrastructure replacement programs and base rate changesInfrastructure replacement programs and base rate changes38 3.0 %Infrastructure replacement programs and base rate changes86 5.1 %
Gas costs and other cost recoveryGas costs and other cost recovery152 12.2 Gas costs and other cost recovery544 32.1 
Gas marketing servicesGas marketing services18 1.1 
Wholesale gas servicesWholesale gas services247 19.8 Wholesale gas services(297)(17.5)
OtherOther8 0.6 Other13 0.7 
Natural gas revenues – current yearNatural gas revenues – current year$1,694 35.6 %Natural gas revenues – current year$2,058 21.5 %
Revenues from infrastructure replacement programs and base rate changes at the natural gas distribution utilities increased in the first quarter 20212022 compared to the corresponding period in 20202021 primarily due to rate increases at Atlanta Gas Light Virginia Natural Gas, and Chattanooga Gas and continued investment in infrastructure replacement. See Note 2 to the financial statements under "Southern Company Gas – Rate Proceedings" in Item 8 of the Form 10-K for additional information.
Revenues associated with gas costs and other cost recovery increased in the first quarter 20212022 compared to the corresponding period in 20202021 primarily due to higher volumes of natural gas sold and higher natural gas cost recovery. Natural gas distribution rates include provisions to adjust billings for fluctuations in natural gas costs. Therefore, gas costs recovered through natural gas revenues generally equal the amount expensed in cost of natural gas and do not affect net income from the natural gas distribution utilities.
Revenues from Southern Company Gas' wholesale gas marketing services business increased in the first quarter 20212022 compared to the corresponding period in 20202021 primarily due to higher commodity prices and higher sales to commercial activities as a result of Winter Storm Uri, partially offset by derivative losses. See Note (K) to the Condensed Financial Statements under "Southern Company Gas" herein for information regarding the sale of Sequent, which is expected to be completed during the third quarter 2021.customers.
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The change in revenues related to Southern Company Gas' wholesale gas services was due to the sale of Sequent on July 1, 2021. See Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.
Other Revenues
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$3730.3
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$(23)(14.5)
In the first quarter 2021,2022, other revenues were $159$136 million compared to $122$159 million for the corresponding period in 2020.2021. The increasedecrease was primarily relatesdue to a $24$14 million increase indecrease at PowerSecure primarily related to distributed infrastructure and energy efficiency projects at PowerSecure and an increase of $10a $6 million decrease in unregulated sales associated with power delivery construction and maintenance contractsprojects at Georgia Power.
Fuel and Purchased Power Expenses
First Quarter 2021 vs. First Quarter 2020 First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change) (change in millions)(% change)
FuelFuel$212 33.3Fuel$263 31.0
Purchased powerPurchased power26 14.4Purchased power25 12.1
Total fuel and purchased power expensesTotal fuel and purchased power expenses$238 Total fuel and purchased power expenses$288 
In the first quarter 2021,2022, total fuel and purchased power expenses were $1.1$1.3 billion compared to $0.8$1.1 billion for the corresponding period in 2020.2021. The increase was primarily the result of a $159$247 million increase in the average cost of fuel and purchased power and a $79$41 million net increase in the volume of KWHs generated and purchased.
Fuel and purchased power energy transactions at the traditional electric operating companies are generally offset by fuel revenues and do not have a significant impact on net income. See Note 2 to the financial statements in Item 8 of the Form 10-K for additional information. Fuel expenses incurred under Southern Power's PPAs are generally the responsibility of the counterparties and do not significantly impact net income.
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AND RESULTS OF OPERATIONS (Continued)
Details of the Southern Company system's generation and purchased power were as follows:
First Quarter 2021First Quarter 2020First Quarter 2022First Quarter 2021
Total generation (in billions of KWHs)(a)
Total generation (in billions of KWHs)(a)
4342
Total generation (in billions of KWHs)(a)
4643
Total purchased power (in billions of KWHs)
Total purchased power (in billions of KWHs)
45
Total purchased power (in billions of KWHs)
44
Sources of generation (percent)(a) —
Sources of generation (percent)(a) —
Sources of generation (percent)(a) —
GasGas4653Gas4646
CoalCoal2414Coal2324
NuclearNuclear1718Nuclear1717
HydroHydro58Hydro65
Wind, Solar, and OtherWind, Solar, and Other87Wind, Solar, and Other88
Cost of fuel, generated (in cents per net KWH)—
Cost of fuel, generated (in cents per net KWH)—
Cost of fuel, generated (in cents per net KWH)—
Gas(a)
Gas(a)
2.551.95
Gas(a)
3.532.55
CoalCoal3.112.82
NuclearNuclear0.750.78Nuclear0.720.75
Coal2.822.88
Average cost of fuel, generated (in cents per net KWH)(a)
Average cost of fuel, generated (in cents per net KWH)(a)
2.261.86
Average cost of fuel, generated (in cents per net KWH)(a)
2.862.26
Average cost of purchased power (in cents per net KWH)(b)
Average cost of purchased power (in cents per net KWH)(b)
5.103.90
Average cost of purchased power (in cents per net KWH)(b)
5.585.10
(a)First quarter 2021 excludesExcludes Central Alabama Generating Station KWHs and associated cost of fuel as its fuel is provided by the purchaser under a power sales agreement. See Note 15 to the financial statements under "Alabama Power" in Item 8 of the Form 10-K for additional information.
(b)Average cost of purchased power includes fuel purchased by the Southern Company system for tolling agreements where power is generated by the provider.
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AND RESULTS OF OPERATIONS (Continued)
Fuel
In the first quarter 2021,2022, fuel expense was $848 million$1.1 billion compared to $636 million$0.8 billion for the corresponding period in 2020.2021. The increase was primarily due to a 79.2% increase in the volume of KWHs generated by coal, a 43.4% decrease in the volume of KWHs generated by hydro, and a 30.8%38.4% increase in the average cost of natural gas per KWH generated, partially offset by a 9.1% decrease10.3% increase in the average cost of coal per KWH generated, and a 4.6% increase in the volume of KWHs generated by natural gas, andpartially offset by a 2.1% decrease41.2% increase in the average costvolume of coal per KWH generated.KWHs generated by hydro.
Purchased Power
In the first quarter 2021,2022, purchased power expense was $207$232 million compared to $181$207 million for the corresponding period in 2020.2021. The increase was primarily due to a 30.8%9.4% increase in the average cost per KWH purchased primarily due to higher natural gas prices partially offset by an 8.4% decreaseand a 4.6% increase in the volume of KWHs purchased.
Energy purchases will vary depending on demand for energy within the Southern Company system's electric service territory, the market prices of wholesale energy as compared to the cost of the Southern Company system's generation, and the availability of the Southern Company system's generation.
Cost of Natural Gas
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$14432.8
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$51287.8
Excluding Atlanta Gas Light, which does not sell natural gas to end-use customers, natural gas distribution rates include provisions to adjust billings for fluctuations in natural gas costs. Therefore, gas costs recovered through natural gas revenues generally equal the amount expensed in cost of natural gas and do not affect net income from the natural gas distribution utilities. Cost of natural gas at the natural gas distribution utilities represented 86% of total cost of natural gas for the first quarter 2021.
In the first quarter 2021, cost of natural gas was $583 million compared to $439 million for the corresponding period in 2020. The increase reflects higher volumes sold due to colder weather and higher gas cost recovery in the first quarter 2021 compared to the corresponding period in 2020. The increase also reflects a 38% increase in natural gas prices in the first quarter 2021 compared to the corresponding period in 2020.
Cost of Other Sales
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$2749.1
In the first quarter 2021, cost of other sales was $82 million compared to $55 million for the corresponding period in 2020. The increase primarily relates to a $14 million increase in distributed infrastructure and energy efficiency projects at PowerSecure and an increase of $8 million in unregulated power delivery construction and maintenance contracts at Georgia Power.
Other Operations and Maintenance Expenses
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$765.9
In the first quarter 2021, other operations and maintenance expenses were $1.37 billion compared to $1.30 billion for the corresponding period in 2020. The increase reflects a $55 million increase in employee compensation and
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benefit expenses, primarilythe natural gas distribution utilities. Cost of natural gas at Southern Company Gas, and a $15 million decrease in nuclear property insurance refunds at Alabama Power and Georgia Power.
Depreciation and Amortization
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$141.6
the natural gas distribution utilities represented 90% of total cost of natural gas for the first quarter 2022.
In the first quarter 2021, depreciation and amortization2022, cost of natural gas was $871$1.1 billion compared to $0.6 billion for the corresponding period in 2021. The increase reflects higher gas cost recovery as a result of an 83.9% increase in natural gas prices in the first quarter 2022 compared to the corresponding period in 2021.
Cost of Other Sales
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$(13)(15.9)
In the first quarter 2022, cost of other sales was $69 million compared to $857$82 million for the corresponding period in 2020.2021. The decrease was primarily due to decreases of $9 million at Georgia Power primarily associated with unregulated power delivery construction and maintenance projects and $4 million related to distributed infrastructure and energy efficiency projects at PowerSecure.
Other Operations and Maintenance Expenses
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$14410.5
In the first quarter 2022, other operations and maintenance expenses were $1.5 billion compared to $1.4 billion for the corresponding period in 2021. Excluding $48 million of expenses related to Sequent in 2021, other operations and maintenance expenses increased $192 million. The increase was primarily reflects a $37due to increases of $66 million in transmission and distribution expenses primarily related to line maintenance, $58 million in generation expenses primarily related to scheduled outage and maintenance, and $16 million in expenses at Southern Company Gas passed through directly to customers, primarily related to bad debt.
Depreciation and Amortization
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$212.4
In the first quarter 2022, depreciation and amortization was $892 million compared to $871 million for the corresponding period in 2021. The increase in depreciation associated withwas primarily due to additional plant in service, partially offset by decreased amortization of regulatory assets related to CCR AROs of $22 million under the terms of Georgia Power's 2019 ARP. See Note (B) to the Condensed Financial Statements under "Georgia Power – Rate Plan" herein and Note 2 to the financial statements under "Georgia Power – Rate Plans – 2019 ARP" in Item 8 of the Form 10-K for additional information regarding Georgia Power's recovery of costs associated with CCR AROs.service.
Taxes Other Than Income Taxes
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$154.5
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$277.8
In the first quarter 2021,2022, taxes other than income taxes were $345$372 million compared to $330$345 million for the corresponding period in 2020.2021. The increase primarily reflects increased property taxes and anan increase in revenue tax expenses as a result of higher natural gas revenues at Southern Company Gas.
Estimated Loss on Plant Vogtle Units 3Nicor Gas and 4
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$48N/M
N/M - Not meaningful
In the first quarter 2021, an estimated probable loss of $48 million was recordedincrease in municipal franchise fees related to higher retail revenues at Georgia Power to reflect its revised total project capital cost forecast to complete construction and start-up of Plant Vogtle Units 3 and 4. See Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction" herein for additional information.
(Gain) Loss on Dispositions, Net
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$512.8
In the first quarter 2021, (gain) loss on dispositions, net was $44 million compared to $39 million for the corresponding period in 2020. The first quarter 2021 amount includes $39 million in gains at Southern Power, primarily from contributions of wind turbine equipment to various equity method investments, and $4 million in gains from property sales at Alabama Power. In the first quarter 2020, Southern Power recorded a $39 million gain related to the sale of Plant Mankato. See Notes (E) and (K) to the Condensed Financial Statements under "Southern Power" herein and Note 15 to the financial statements under "Southern Power – Sales of Natural Gas and Biomass Plants" in Item 8 of the Form 10-K for additional information.
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Allowance for Equity Funds Used During ConstructionEstimated Loss on Plant Vogtle Units 3 and 4
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$1235.3
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$(48)N/M
N/M - Not meaningful
In the first quarter 2021, allowance for equity funds used duringa $48 million estimated probable loss on Plant Vogtle Units 3 and 4 was recorded at Georgia Power. The loss reflects revisions to the total project capital cost forecast to complete construction was $46 million compared to $34 million for the corresponding period in 2020. The increase was primarily due to an increase in AFUDC equity associated with the constructionand start-up of Plant Vogtle Units 3 and 4. See Note (B) to the Condensed Financial Statements herein and Note 2 to the financial statements in Item 8 of the Form 10-K under "Georgia Power – Nuclear Construction" herein for additional information regarding Plant Vogtle Units 3 and 4.information.
Gain on Dispositions, Net
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$(21)(47.7)
In the first quarter 2022, gain on dispositions, net was $23 million compared to $44 million for the corresponding period in 2021. The first quarter 2022 amount includes $17 million in gains from sales of integrated transmission system assets at Georgia Power. The first quarter 2021 amount includes $39 million in gains at Southern Power primarily from contributions of wind turbine equipment to various equity method investments. See Note 15 to the financial statements under "Southern Power – Development Projects" in Item 8 of the Form 10-K for additional information.
Interest Expense, Net of Amounts Capitalized
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$122.7
In the first quarter 2022, interest expense, net of amounts capitalized was $462 million compared to $450 million for the corresponding period in 2021. The increase was primarily due to higher average outstanding borrowings, partially offset by lower interest rates on newly issued debt relative to the debt that was retired since the first quarter 2021.
Other Income (Expense), Net
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$(45)(43.7)
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$87150.0
In the first quarter 2021,2022, other income (expense), net was $58$145 million compared to $103$58 million for the corresponding period in 2020.2021. The decreaseincrease was primarily due to $75 million in charitable contributions at Southern Company Gas in the first quarter 2021 partially offset byand a $27$13 million increase in non-service cost-related retirement benefits income. See Note (H) to the Condensed Financial Statements herein for additional information.
Income Taxes
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$4531.0
In the first quarter 2021, income taxes were $190 million compared to $145 million for the corresponding period in 2020. The increase was primarily due to higher pre-tax earnings, partially offset by $16 million in tax benefits resulting from new legislation that changed Southern Power's state apportionment methodology. See Note (G) to the Condensed Financial Statements herein and MANAGEMENT'S DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL – "Income Tax Matters – Alabama State Tax Reform Legislation" in Item 7 of the Form 10-K for additional information.
Alabama Power
Net Income
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$7928.2
Alabama Power's net income after dividends on preferred stock for the first quarter 2021 was $359 million compared to $280 million for the corresponding period in 2020. The increase was primarily due to an increase in retail revenues associated with an increase in Rate RSE effective in January 2021 and colder weather in Alabama Power's service territory in the first quarter 2021 compared to the corresponding period in 2020.
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Retail RevenuesIncome Taxes
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$14712.2
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$(17)(8.9)
In the first quarter 2022, income taxes were $173 million compared to $190 million for the corresponding period in 2021. The decrease was primarily due to a decrease of $40 million at Southern Company Gas' wholesale gas services business as a result of the sale of Sequent on July 1, 2021, partially offset by $16 million of tax benefits in the first quarter 2021 resulting from new legislation that changed Southern Power's state apportionment methodology. See Note (G) to the Condensed Financial Statements herein for additional information.
Net Loss Attributable to Noncontrolling Interests
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$1340.6
Substantially all noncontrolling interests relate to renewable projects at Southern Power. In the first quarter 2022, net loss attributable to noncontrolling interests was $45 million compared to $32 million for the corresponding period in 2021. The increased loss was primarily due to loss allocations to Southern Power's partners in the Garland and Tranquillity battery energy storage facilities and higher HLBV loss allocations to Southern Power's wind tax equity partners, including new partnerships entered into during 2021. The increased loss allocations were partially offset by higher income allocations to Southern Power's solar equity partners.
Alabama Power
Net Income
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$(12)(3.3)
Alabama Power's net income after dividends on preferred stock in the first quarter 2022 was $347 million compared to $359 million for the corresponding period in 2021. The decrease was primarily due to an increase in non-fuel operations and maintenance expenses, partially offset by an increase in retail revenues resulting from sales growth in the first quarter 2022 compared to the corresponding period in 2021.
Retail Revenues
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$272.0
In the first quarter 2022, retail revenues were $1.35$1.38 billion compared to $1.21$1.35 billion for the corresponding period in 2020.2021.
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AND RESULTS OF OPERATIONS (Continued)
Details of the changes in retail revenues were as follows:
First Quarter 2021 First Quarter 2022
(in millions)(% change)(in millions)(% change)
Retail – prior yearRetail – prior year$1,205 Retail – prior year$1,352 
Estimated change resulting from –Estimated change resulting from –Estimated change resulting from –
Rates and pricingRates and pricing50 4.1 %Rates and pricing— — %
Sales decline(4)(0.3)
Sales growthSales growth14 1.0 
WeatherWeather39 3.2 Weather1 0.1 
Fuel and other cost recoveryFuel and other cost recovery62 5.2 Fuel and other cost recovery12 0.9 
Retail – current yearRetail – current year$1,352 12.2 %Retail – current year$1,379 2.0 %
Revenues associated withattributable to changes in rates and pricingsales increased in the first quarter 20212022 when compared to the corresponding period in 2020 primarily due to a Rate RSE increase effective January 1, 2021. See Note 2 to the financial statements under "Alabama Power – Rate RSE" in Item 8 of the Form 10-K for additional information.
Revenues attributable to changes inWeather-adjusted residential and commercial KWH sales decreasedincreased 0.6% and 1.0%, respectively, in the first quarter 20212022 when compared to the corresponding period in 2020. Weather-adjusted residential2021 primarily due to customer growth. Industrial KWH sales were relatively flatincreased 0.1% in the first quarter 20212022 when compared to the corresponding period in 2020. Weather-adjusted commercial KWH sales decreased 2.1% in the first quarter 2021 when compared to the corresponding period in 2020 primarily due to changesa recovering industrial class that continues to experience disruptions in consumersupply chain and business behavior in response to the COVID-19 pandemic. Industrial KWH sales decreased 5.4% in the first quarter 2021 when compared to the corresponding period in 2020 primarily as a result of customer closures and maintenance outages, as well as continued consumer responses to the COVID-19 pandemic.operations.
Fuel and other cost recovery revenues increased in the first quarter 20212022 when compared to the corresponding period in 20202021 primarily due to increases in generationthe volume of KWHs generated and the average cost of fuel.
Electric rates include provisions to recognize the recovery of fuel costs, purchased power costs, PPAs certificated by the Alabama PSC, and costs associated with the natural disaster reserve.NDR. Under these provisions, fuel and other cost recovery revenues generally equal fuel and other cost recovery expenses and do not affect net income. See Note 2 to the financial statements under "Alabama Power" in Item 8 of the Form 10-K for additional information.
Wholesale Revenues – Non-Affiliates
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$3664.3
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$2223.9
In the first quarter 2022, wholesale revenues from sales to non-affiliates were $114 million compared to $92 million for the corresponding period in 2021. The increase was primarily due to a 16.2% increase in KWH sales as a result of cooler weather in the first quarter 2022 compared to the corresponding period in 2021, as well as a 6.0% increase in the price of energy due to higher natural gas prices.
Wholesale revenues from sales to non-affiliates will vary depending on fuel prices, the market prices of wholesale energy compared to the cost of Alabama Power's and the Southern Company system's generation, demand for energy within the Southern Company system's electric service territory, and the availability of the Southern Company system's generation. Increases and decreases in energy revenues that are driven by fuel prices are accompanied by an increase or decrease in fuel costs and do not affect net income. Short-term opportunity energy sales are also included in wholesale energy sales to non-affiliates. These opportunity sales are made at market-based rates that generally provide a margin above Alabama Power's variable cost to produce the energy.
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Wholesale Revenues – Affiliates
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$33103.1
In the first quarter 2021,2022, wholesale revenues from sales to non-affiliatesaffiliates were $92$65 million compared to $56$32 million for the corresponding period in 2020.2021. The increase consisted ofwas primarily due to a $19 million47.1% increase in the price of energy revenues primarily due to higher natural gas prices and a $17 million40.3% increase in capacity revenues primarily relatedKWH sales as a result of increased generation demand as a result of cooler weather in the first quarter 2022 compared to a power sales agreement that beganthe corresponding period in September 2020.
Wholesale Revenues – Affiliates
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$1368.4
2021.
Wholesale revenues from sales to affiliated companies will vary depending on demand and the availability and cost of generating resources at each company. These affiliate sales are made in accordance with the IIC, as approved by the FERC. These transactions do not have a significant impact on earnings since this energy is generally sold at marginal cost and energy purchases are generally offset by energy revenues through Alabama Power's energy cost recovery clause.
In the first quarter 2021, wholesale revenues from sales to affiliates were $32 million compared to $19 million for the corresponding period in 2020. The increase was primarily due to a 40.5% increase in the price of energy and an 18.7% increase in KWH sales due to increased coal generation as the result of higher natural gas prices in the first quarter 2021 compared to the corresponding period in 2020.
Other Revenues
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$1216.9
In the first quarter 2021, other revenues were $83 million compared to $71 million for the corresponding period in 2020. The increase was primarily due to increases of $7 million in transmission and energy service revenues and $2 million in customer fees.
Fuel and Purchased Power Expenses
First Quarter 2021 vs. First Quarter 2020
First Quarter 2022 vs.
First Quarter 2021
(change in millions)(% change)(change in millions)(% change)
FuelFuel$76 35.3 Fuel$42 14.4 
Purchased power – non-affiliatesPurchased power – non-affiliates10 25.0 Purchased power – non-affiliates17 34.0 
Purchased power – affiliatesPurchased power – affiliates12 66.7 Purchased power – affiliates(4)(13.3)
Total fuel and purchased power expensesTotal fuel and purchased power expenses$98 Total fuel and purchased power expenses$55 
In the first quarter 2021,2022, total fuel and purchased power expenses were $371$426 million compared to $273$371 million for the corresponding period in 2020.2021. The increase was primarily due to a $59 million increase related to the volume of KWHs generated and purchased and a $39 million increase in the average cost of fuel and purchased power.power and a $16 million increase related to the volume of KWHs generated and purchased.
Fuel and purchased power energy transactions do not have a significant impact on earnings, since energy expenses are generally offset by energy revenues through Alabama Power's energy cost recovery clause. See Note 2 to the financial statements under "Alabama Power – Rate ECR" in Item 8 of the Form 10-K for additional information.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Details of Alabama Power's generation and purchased power were as follows:
First Quarter 2021First Quarter 2020First Quarter 2022First Quarter 2021
Total generation (in billions of KWHs)(a)
Total generation (in billions of KWHs)(a)
1514
Total generation (in billions of KWHs)(a)
1515
Total purchased power (in billions of KWHs)
Total purchased power (in billions of KWHs)
11
Total purchased power (in billions of KWHs)
21
Sources of generation (percent)(a) —
Sources of generation (percent)(a) —
Sources of generation (percent)(a) —
CoalCoal4634Coal4246
NuclearNuclear2528Nuclear2525
GasGas1920Gas1919
HydroHydro1018Hydro1410
Cost of fuel, generated (in cents per net KWH) —
Cost of fuel, generated (in cents per net KWH) —
Cost of fuel, generated (in cents per net KWH) —
CoalCoal2.752.64Coal2.902.75
NuclearNuclear0.720.76Nuclear0.670.72
Gas(a)
Gas(a)
2.512.19
Gas(a)
3.452.51
Average cost of fuel, generated (in cents per net KWH)(a)
Average cost of fuel, generated (in cents per net KWH)(a)
2.141.88
Average cost of fuel, generated (in cents per net KWH)(a)
2.362.14
Average cost of purchased power (in cents per net KWH)(b)
Average cost of purchased power (in cents per net KWH)(b)
6.524.86
Average cost of purchased power (in cents per net KWH)(b)
6.826.52
(a)First quarter 2021 excludesExcludes Central Alabama Generating Station KWHs and associated cost of fuel as its fuel is provided by the purchaser under a power sales agreement. See Note 15 to the financial statements under "Alabama Power" in Item 8 of the Form 10-K for additional information.
(b)Average cost of purchased power includes fuel, energy, and transmission purchased by Alabama Power for tolling agreements where power is generated by the provider.
Fuel
In the first quarter 2021,2022, fuel expense was $291$333 million compared to $215$291 million for the corresponding period in 2020.2021. The increase was primarily due to a 44.6%37.5% increase in the average cost of natural gas per KWH generated, which excludes tolling agreements, and a 6.3% increase in the volume of KWHs generated by coal,natural gas, partially offset by a 44.0% decrease49.0% increase in the volume of KWHs generated by hydro, and a 14.6% increase in the average cost of KWHs generated by natural gas, which excludes tolling agreements.hydro.
Purchased Power – Non-Affiliates
In the first quarter 2021,2022, purchased power expense from non-affiliates was $50$67 million compared to $40$50 million for the corresponding period in 2020.2021. The increase was primarily due to a 31.1%29.9% increase in the volume of KWHs purchased as a result of cooler weather in 2022 compared to the corresponding period in 2021, as well as a 9.8% increase in the average cost per KWH purchased as a result ofdue to higher natural gas prices and a 12.9% increase in the volume of KWHs purchased due to a PPA which began in September 2020.prices.
Energy purchases from non-affiliates will vary depending on the market prices of wholesale energy as compared to
the cost of the Southern Company system's generation, demand for energy within the Southern Company system's
electric service territory, and the availability of the Southern Company system's generation.
Purchased Power – Affiliates
In theFor first quarter 2021,2022, purchased power expense from affiliates was $30$26 million compared to $18$30 million for the corresponding period in 2020.2021. The increasedecrease was primarily due to a 39.9%17.7% decrease in the volume of KWHs purchased as a result of increased generation compared to the corresponding period in 2021, partially offset by a 5.6% increase in the average cost per KWH purchased as a result ofdue to higher natural gas prices and a 17.9% increase in the volume of KWHs purchased due to colder weather in the first quarter 2021 when compared to the corresponding period in 2020.prices.
Energy purchases from affiliates will vary depending on demand for energy and the availability and cost of generating resources at each company within the Southern Company system. These purchases are made in accordance with the IIC or other contractual agreements, as approved by the FERC.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Other Operations and Maintenance Expenses
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$113.1
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$4813.3
In the first quarter 2021,2022, other operations and maintenance expenses were $361 $409 million compared to $350$361 million for the corresponding period in 2020.2021. The increase was primarily due to an increaseincreases of $10$26 million related to reliability NDR credits applied in 2020generation expenses associated with scheduled outages and a $6 million reduction in nuclear property insurance refunds. These increases were partially offset by a $3 million decrease inmaintenance and Rate CNP Compliance-related expenses.expenses and $12 million in transmission and distribution expenses primarily associated with line maintenance. See Note 2 to the financial statements under "Alabama Power – Rate NDR" and " – Rate CNP Compliance" in Item 8 of the Form 10-K for additional information.
Depreciation and Amortization
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$115.5
In the first quarter 2021, depreciation and amortization was $211 million compared to $200 million for the corresponding period in 2020. The increase was primarily due to additional plant in service, including the purchase of the Central Alabama Generating Station in August 2020. See Note 15 to the financial statements under "Alabama Power" in Item 8 of the Form 10-K for additional information.
Other Income (Expense), Net
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$833.3
In the first quarter 2021, other income (expense), net was $32 million compared to $24 million for the corresponding period in 2020. The increase was primarily due to an increase in non-service cost-related retirement benefits income. See Note (H) to the Condensed Financial Statements herein for additional information.
Income Taxes
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$2631.0
In the first quarter 2021, income taxes were $110 million compared to $84 million for the corresponding period in 2020. The increase was primarily due to higher pre-tax earnings.
Georgia Power
Net Income
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$206.0
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$349.7
Georgia Power's net income forin the first quarter 20212022 was $351$385 million compared to $331$351 million for the corresponding period in 2020.2021. The increase was primarily due to higher retail revenues associatedprimarily from base tariff increases in accordance with colder weather in the first quarter 2021 compared to the corresponding period in 2020, partially offset by2019 ARP and a $36 million after-tax charge in the first quarter 2021 related to the construction of Plant Vogtle Units 3 and 4.4, partially offset by higher non-fuel operations and maintenance costs. See Note (B) to the Condensed Financial Statements herein and Note 2 to the financial statements in Item 8 of the Form 10-K under "Georgia Power – Nuclear Construction" for additional information regarding Plant Vogtle Units 3 and 4.
Retail Revenues
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$23012.9
In the first quarter 2022, retail revenues were $2.02 billion compared to $1.79 billion for the corresponding period in 2021.
Details of the changes in retail revenues were as follows:
 First Quarter 2022
(in millions)(% change)
Retail – prior year$1,787 
Estimated change resulting from –
Rates and pricing53 3.0 %
Sales growth2 0.1 
Weather18 1.0 
Fuel cost recovery157 8.8 
Retail – current year$2,017 12.9 %
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
the Condensed Financial Statements under "Georgia Power – Nuclear Construction" herein for additional information regarding Plant Vogtle Units 3 and 4.
Retail Revenues
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$1126.7
In the first quarter 2021, retail revenues were $1.79 billion compared to $1.68 billion for the corresponding period in 2020.
Details of the changes in retail revenues were as follows:
 First Quarter 2021
(in millions)(% change)
Retail – prior year$1,675 
Estimated change resulting from –
Rates and pricing(18)(1.1)%
Sales decline(6)(0.4)
Weather42 2.5 
Fuel cost recovery94 5.7 
Retail – current year$1,787 6.7 %
Revenues associated with changes in rates and pricing decreasedincreased in the first quarter 20212022 when compared to the corresponding period in 2020.2021. The decreaseincrease was primarily due to a decreasebase tariff increases in accordance with the NCCR tariff effective January 1, 2021.2019 ARP. See Note (B)2 to the Condensed Financial Statementsfinancial statements under "Georgia Power – Nuclear Construction – Regulatory Matters" hereinRate Plans" in Item 8 of the Form 10-K for additional information.
Revenues attributable to changes in sales decreasedincreased in the first quarter 20212022 when compared to the corresponding period in 2020 primarily due to continued impacts of the COVID-19 pandemic, partially offset by customer growth.2021. Weather-adjusted residential KWH sales decreased 2.3% and weather-adjusted commercial KWH sales increased 2.0%2.2% in the first quarter 2021 when compared to corresponding period in 2020 primarily due to customer growth. Weather-adjusted commercial KWH sales decreased 3.3% in the first quarter 20212022 when compared to the corresponding period in 20202021 primarily due to lowerthe impacts on customer usage resulting from changesincreased activity outside the home following the expiration of COVID-19 restrictions. Increased customer growth partially offset the decrease in consumerresidential KWH sales and business behavior in responsecontributed to the COVID-19 pandemic, partially offset by customer growth.increase in commercial KWH sales. Weather-adjusted industrial KWH sales increased 1.1%3.6% in the first quarter 20212022 when compared to the corresponding period in 20202021 primarily as a result of increasesdue to strength in the pipeline and lumber segments, partially offset by reductions in the textiles, transportation, and chemicals segments as a result of disruptions in supply chain and business operations related to the COVID-19 pandemic.segment.
Fuel revenues and costs are allocated between retail and wholesale jurisdictions. Retail fuel cost recovery revenues increased in the first quarter 20212022 when compared to the corresponding period in 20202021 due to higher fuel and purchased power costs. Electric rates include provisions to adjust billings for fluctuations in fuel costs, including the energy component of purchased power costs. Under these fuel cost recovery provisions, fuel revenues generally equal fuel expenses and do not affect net income. See Note 2 to the financial statements under "Georgia Power – Fuel Cost Recovery" in Item 8 of the Form 10-K for additional information.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Wholesale Revenues
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$1765.4
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$2353.5
In the first quarter 2022, wholesale revenues were $66 million compared to $43 million for the corresponding period in 2021. The increase was primarily due to increases of $18 million related to the average cost of fuel primarily due to higher natural gas and coal prices and $7 million in KWH sales associated with higher market demand as a result of cooler weather in the first quarter 2022 compared to the corresponding period in 2021, partially offset by a decrease of $4 million in capacity revenues from shared Southern Company power pool sales in accordance with the IIC.
Wholesale revenues from sales to non-affiliates consist of PPAs and short-term opportunity sales. Wholesale revenues from PPAs have both capacity and energy components. Wholesale capacity revenues from PPAs are recognized in amounts billable under the contract terms and provide for recovery of fixed costs and a return on investment. Wholesale revenues from sales to non-affiliates will vary depending on fuel prices, the market prices of wholesale energy compared to the cost of Georgia Power's and the Southern Company system's generation, demand for energy within the Southern Company system's electric service territory, and the availability of the Southern Company system's generation. Increases and decreases in energy revenues that are driven by fuel prices are accompanied by an increase or decrease in fuel costs and do not have a significant impact on net income. Short-term opportunity sales are made at market-based rates that generally provide a margin above Georgia Power's variable cost of energy.
Wholesale revenues from sales to affiliated companies will vary depending on demand and the availability and cost of generating resources at each company. These affiliate sales are made in accordance with the IIC, as approved by the FERC. These transactions do not have a significant impact on earnings since this energy is generally sold at marginal cost.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Other Revenues
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$(15)(10.7)
In the first quarter 2021, wholesale2022, other revenues were $43$125 million compared to $26$140 million for the corresponding period in 2020.2021. The increasedecrease was primarily due to higher natural gas prices.
Other Revenues
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$1612.9
Indecreases of $8 million resulting from the first quarter 2021, other revenues were $140 million compared to $124 million for the corresponding period in 2020. The increase was primarily due to an increasetermination of $13a transmission service contract and $6 million in unregulated sales associated with power delivery construction and maintenance contracts and outdoor lighting.projects.
Fuel and Purchased Power Expenses
First Quarter 2021 vs. First Quarter 2020
First Quarter 2022 vs.
First Quarter 2021
(change in millions)(% change)(change in millions)(% change)
FuelFuel$82 35.5 Fuel$106 33.9 
Purchased power – non-affiliatesPurchased power – non-affiliates15 11.6 Purchased power – non-affiliates6 4.2 
Purchased power – affiliatesPurchased power – affiliates7 5.4 Purchased power – affiliates70 51.5 
Total fuel and purchased power expensesTotal fuel and purchased power expenses$104 Total fuel and purchased power expenses$182 
In the first quarter 2021,2022, total fuel and purchased power expenses were $593$775 million compared to $489$593 million for the corresponding period in 2020.2021. The increase was due to a $77an increase of $133 million increase related to the average cost of fuel and purchased power and a $27an increase of $49 million net increase related to the volume of KWHs generated and purchased.
Fuel and purchased power energy transactions do not have a significant impact on earnings since these fuel expenses are generally offset by fuel revenues through Georgia Power's fuel cost recovery mechanism. See Note 2 to the financial statements under "Georgia Power – Fuel Cost Recovery" in Item 8 of the Form 10-K for additional information.
Details of Georgia Power's generation and purchased power were as follows:
First Quarter 2022First Quarter 2021
Total generation (in billions of KWHs)
1514
Total purchased power (in billions of KWHs)
87
Sources of generation (percent) —
Gas4647
Coal2522
Nuclear2427
Hydro and other54
Cost of fuel, generated (in cents per net KWH) —
Gas3.582.58
Coal3.412.91
Nuclear0.770.78
Average cost of fuel, generated (in cents per net KWH)
2.832.15
Average cost of purchased power (in cents per net KWH)(*)
4.814.22
(*)Average cost of purchased power includes fuel purchased by Georgia Power for tolling agreements where power is generated by the provider.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Details of Georgia Power's generation and purchased power were as follows:
First Quarter 2021First Quarter 2020
Total generation (in billions of KWHs)
1413
Total purchased power (in billions of KWHs)
79
Sources of generation (percent) —
Gas4758
Nuclear2727
Coal228
Hydro and other47
Cost of fuel, generated (in cents per net KWH) —
Gas2.582.12
Nuclear0.780.80
Coal2.913.83
Average cost of fuel, generated (in cents per net KWH)
2.151.87
Average cost of purchased power (in cents per net KWH)(*)
4.223.17
(*)Average cost of purchased power includes fuel purchased by Georgia Power for tolling agreements where power is generated by the provider.
Fuel
In the first quarter 2021,2022, fuel expense was $313$419 million compared to $231$313 million for the corresponding period in 2020.2021. The increase was primarily due to increases of 38.8% and 17.2% in the average cost per KWH generated by natural gas and coal, respectively, and a 19.5% increase in the volume of KWHs generated by coal.
Purchased Power – Affiliates
In the first quarter 2022, purchased power expense from affiliates was $206 million compared to $136 million for the corresponding period in 2021. The increase was primarily due to an increase of 232.9% in the volume of KWHs generated by coal and an increase of 21.7% in the average cost of natural gas per KWH generated.
Purchased Power – Non-Affiliates
In the first quarter 2021, purchased power expense from non-affiliates was $144 million compared to $129 million in the corresponding period in 2020. The increase was primarily due to a 24.1% increase25.7% in the average cost per KWH purchased primarily due to higher natural gas and coal prices partially offset by a 9.8% decreaseand an increase of 18.3% in the volume of KWHs purchased as Georgia Power units generally dispatched at adue to lower cost thanSouthern Company system resources as compared to available market resources.Georgia Power-owned generation.
Energy purchases from non-affiliatesaffiliates will vary depending on the market prices of wholesale energy as compared todemand and the availability and cost of the Southern Company system's generation, demand for energygenerating resources at each company within the Southern Company system's electric service territory, andsystem. These purchases are made in accordance with the availability ofIIC or other contractual agreements, all as approved by the Southern Company system's generation.FERC.
Other Operations and Maintenance Expenses
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$91.9
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$439.1
In the first quarter 2021,2022, other operations and maintenance expenses were $474$517 million compared to $465$474 million for the corresponding period in 2020.2021. The increase was primarily due to increases of $45 million in transmission and distribution expenses primarily associated with line maintenance and $19 million in generation expenses primarily related to non-outage maintenance costs, partially offset by $17 million in gains from sales of integrated transmission system assets and a $9 million decreasereduction in nuclear property insurance refunds and an increase in expenses of $8 million related to unregulated power delivery construction and maintenance contracts, partially offset bybilling adjustments with integrated transmission system owners largely resulting from a decrease of $9 million in non-outage generation maintenance costs primarily associated with coal generation and the timing of maintenance activities.terminated transmission service agreement.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Depreciation and Amortization
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$(14)(4.0)
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$133.8
In the first quarter 2021,2022, depreciation and amortization was $338$351 million compared to $352$338 million for the corresponding period in 2020.2021. The decreaseincrease was primarily reflects decreased amortization of regulatory assets relateddue to CCR AROs of $22 million under the terms of the 2019 ARP, partially offset by a $10 million increase in depreciation associated with additional plant in service. See Note (B) to the Condensed Financial Statements under "Georgia Power – Rate Plan" herein and Note 2 to the financial statements under "Georgia Power – Rate Plans – 2019 ARP" in Item 8 of the Form 10-K for additional information regarding recovery of costs associated with CCR AROs.
Estimated Loss on Plant Vogtle Units 3 and 4Taxes Other Than Income Taxes
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$48N/M
N/M - Not meaningful
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$97.8
In the first quarter 2021, an estimated probable loss of $48 million2022, taxes other than income taxes was recorded to reflect Georgia Power's revised total project capital cost forecast to complete construction and start-up of Plant Vogtle Units 3 and 4. See Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction" herein for additional information.
Other Income (Expense), Net
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$2038.5
In the first quarter 2021, other income (expense), net was $72$125 million compared to $52$116 million for the corresponding period in 2020. The increase was primarily due to an increase of $12 million in non-service cost-related retirement benefits income and an increase of $7 million in AFUDC equity associated with the construction of Plant Vogtle Units 3 and 4. See Note (H) to the Condensed Financial Statements herein for additional information on retirement benefits and Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction" herein for additional information regarding Plant Vogtle Units 3 and 4.
Mississippi Power
Net Income
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$1340.6
In the first quarter 2021, net income was $45 million compared to $32 million for the corresponding period in 2020.2021. The increase was primarily due to an increase in base revenues primarily duemunicipal franchise fees largely related to colder weather in the first quarter 2021 compared to the corresponding period in 2020, partially offset by decreased customer usage as a result of the COVID-19 pandemic, and a decrease in operations and maintenance expenses, partially offset by an increase in depreciation and amortization.higher retail revenues.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Retail RevenuesEstimated Loss on Plant Vogtle Units 3 and 4
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$52.5
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$(48)N/M
N/M - Not meaningful
In the first quarter 2021, retail revenues were $204a $48 million estimated probable loss on Plant Vogtle Units 3 and 4 was recorded at Georgia Power. The loss reflects revisions to the total project capital cost forecast to complete construction and start-up of Plant Vogtle Units 3 and 4. See Note (B) to the Condensed Financial Statements herein and Note 2 to the financial statements in Item 8 of the Form 10-K under "Georgia Power – Nuclear Construction" for additional information.
Other Income (Expense), Net
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$922.0
In the first quarter 2022, other income (expense), net was $50 million compared to $199$41 million for the corresponding period in 2020.2021. The increase was primarily due to increases of $3 million in customer charges related to contributions in aid of construction and $3 million in non-service cost-related retirement benefits income. See Note (H) to the Condensed Financial Statements herein for additional information on retirement benefits.
Income Taxes
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$1266.7
In the first quarter 2022, income taxes were $30 million compared to $18 million for the corresponding period in 2021. The increase was primarily due to the reduction in pre-tax earnings in the first quarter 2021 resulting from a charge associated with the construction of Plant Vogtle Units 3 and 4. See Note (B) to the Condensed Financial Statements herein and Note 2 to the financial statements in Item 8 of the Form 10-K under "Georgia Power – Nuclear Construction" for additional information.
Mississippi Power
Net Income
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$(3)(6.7)
Mississippi Power's net income in the first quarter 2022 was$42 million compared to $45 million for the corresponding period in 2021. The decrease was primarily due to an increase in operations and maintenance expenses, largely offset by an increase in revenues.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Retail Revenues
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$136.4
In the first quarter 2022, retail revenues were $217 million compared to $204 million for the corresponding period in 2021.
Details of the changes in retail revenues were as follows:
First Quarter 2021 First Quarter 2022
(in millions)(% change) (in millions)(% change)
Retail – prior yearRetail – prior year$199 Retail – prior year$204 
Estimated change resulting from –Estimated change resulting from –Estimated change resulting from –
Rates and pricingRates and pricing(7)(3.5)%Rates and pricing3 1.5 %
Sales decline(5)(2.5)
Sales growthSales growth1 0.5 
WeatherWeather8 4.0 Weather(2)(1.0)
Fuel and other cost recoveryFuel and other cost recovery9 4.5 Fuel and other cost recovery11 5.4 
Retail – current yearRetail – current year$204 2.5 %Retail – current year$217 6.4 %
Revenues associated with changes in rates and pricing decreasedincreased in the first quarter 20212022 when compared to the corresponding period in 20202021 primarily due to decreases in baseto new PEP rates that became effective infor the first billing cycle of April 2020 in accordance with the Mississippi Power Rate Case Settlement Agreement.2021. See Note 2 to the financial statements under "Mississippi Power – 2019 Base Rate Case"Performance Evaluation Plan" in Item 8 of the Form 10-K for additional information.
Revenues attributable to changes in sales decreased increased in the first quarter 20212022 when compared to the corresponding period in 2020 primarily due to continued impacts of the COVID-19 pandemic.2021. Weather-adjusted residential and commercial KWH sales decreased 0.7% in increased 0.8% and 2.9%, respectively, in the first quarter 2021 primarily due to decreased customer usage. Weather-adjusted commercial KWH sales decreased 4.3% in the first quarter 2021 primarily due to lower customer usage resulting from changes in consumer and business behavior in response to the COVID-19 pandemic. Industrial KWH sales decreased 10.7% in the first quarter 2021 as a result of disruptions in supply chain and business operations driven by the COVID-19 pandemic and non-pandemic related customer outages.
Fuel and other cost recovery revenues increased in the first quarter 20212022 when compared to the corresponding period in 20202021 due to increased customer usage and customer growth. Industrial KWH sales decreased 0.1% in the first quarter 2022 when compared to the corresponding period in 2021.
Fuel and other cost recovery revenues increased in the first quarter 2022 when compared to the corresponding period in 2021 primarily as a result of higher recoverable fuel costs.costs. Recoverable fuel costs include fuel and purchased power expenses reduced by the fuel portion of wholesale revenues from energy sold to customers outside Mississippi Power's service territory. Electric rates include provisions to adjust billings for fluctuations in fuel costs, including the energy component of purchased power costs. Under these provisions, fuel revenues generally equal fuel expenses, including the energy component of purchased power costs, and do not affect net income.
Wholesale Revenues – Non-Affiliates
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$1223.5
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$57.9
In the first quarter 2022, wholesale revenues from sales to non-affiliates were $68 million compared to $63 million for the corresponding period in 2021. The increase was primarily due to higher fuel costs and customer usage.
Wholesale revenues from sales to non-affiliates will vary depending on fuel prices, the market prices of wholesale energy compared to the cost of Mississippi Power's and the Southern Company system's generation, demand for energy within the Southern Company system's electric service territory, and the availability of the Southern Company system's generation. Increases and decreases in energy revenues that are driven by fuel prices are accompanied by an increase or decrease in fuel costs and do not have a significant impact on net income. In addition, Mississippi Power provides service under long-term contracts with rural electric cooperative associations
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
accompanied by an increase or decrease in fuel costs and do not have a significant impact on net income. In addition, Mississippi Power provides service under long-term contracts with rural electric cooperative associations and municipalities located in southeastern Mississippi under cost-based electric tariffs which are subject to regulation by the FERC. See Note 2 to the financial statements under "Mississippi Power" in Item 8 of the Form 10-K for additional information.
Wholesale Revenues – Affiliates
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$927.3
In the first quarter 2021,2022, wholesale revenues from sales to non-affiliatesaffiliates were $63$42 million compared to $51$33 million for the corresponding period in 2020.2021. The increase was primarily due to increases in revenue from MRA customers as a resultan increase of colder weather and$14 million associated with higher fuel costs in the first quarter 2021 compared to the corresponding period in 2020,natural gas prices, partially offset by decreased customer usage as a resultdecrease of the COVID-19 pandemic.
Wholesale Revenues – Affiliates
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$1257.1
$4 million associated with lower KWH sales.
Wholesale revenues from sales to affiliated companies will vary depending on demand and the availability and cost of generating resources at each company. These affiliate sales are made in accordance with the IIC, as approved by the FERC. These transactions do not have a significant impact on earnings since this energy is generally sold at marginal cost.
In the first quarter 2021, wholesale revenues from sales to affiliates were $33 million compared to $21 million for the corresponding period in 2020. The increase was primarily associated with an increase in the average cost of fuel.
Fuel and Purchased Power Expenses
First Quarter 2021 vs. First Quarter 2020
First Quarter 2022 vs.
First Quarter 2021
(change in millions)(% change)(change in millions)(% change)
FuelFuel$22 27.8Fuel$26 24.5
Purchased powerPurchased power— —Purchased power— —
Total fuel and purchased power expensesTotal fuel and purchased power expenses$22 Total fuel and purchased power expenses$26 
In the first quarter 2021,2022, total fuel and purchased power expenses were $106$132 million compared to $84$106 million for the corresponding period in 2020.2021. The increase was primarily due to a higher$33 million increase in the average cost of fuel, and an increasepartially offset by a $7 million decrease associated with the volume of KWHs generated.generated and purchased.
Fuel and purchased power energy transactions do not have a significant impact on earnings since energy expenses are generally offset by energy revenues through Mississippi Power's fuel cost recovery clause.
Details of Mississippi Power's generation and purchased power were as follows:
First Quarter 2021
First
Quarter
2020
First Quarter 2022First Quarter 2021
Total generation (in millions of KWHs)
Total generation (in millions of KWHs)
4,3244,167
Total generation (in millions of KWHs)
4,0744,324
Total purchased power (in millions of KWHs)
Total purchased power (in millions of KWHs)
121188
Total purchased power (in millions of KWHs)
120121
Sources of generation (percent) –
Sources of generation (percent) –
Sources of generation (percent) –
GasGas9291
CoalCoal93Coal89
Cost of fuel, generated (in cents per net KWH) –
Cost of fuel, generated (in cents per net KWH) –
GasGas9197Gas3.302.41
Cost of fuel, generated (in cents per net KWH) –
CoalCoal3.174.30Coal3.743.17
Gas2.411.95
Average cost of fuel, generated (in cents per net KWH)
Average cost of fuel, generated (in cents per net KWH)
2.492.02
Average cost of fuel, generated (in cents per net KWH)
3.342.49
Average cost of purchased power (in cents per net KWH)
Average cost of purchased power (in cents per net KWH)
4.082.64
Average cost of purchased power (in cents per net KWH)
4.544.08
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Fuel
In the first quarter 2021,2022, fuel expense was $101$132 million compared to $79$106 million for the corresponding period in 2020.2021. The increase was due to a 225.3% increase in the volume of KWHs generated by coal and a 23.6%36.9% increase in the average cost of natural gas per KWH generated partially offset by a 26.3% decreaseand an 18.0% increase in the average cost of coal per KWHKWHs generated, partially offset by a 16.9% decrease in the volume of KWHs generated by coal and a 3.4%6.1% decrease in the volume of KWHs generated by natural gas.
Other Operations and Maintenance Expenses
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$(8)(10.5)
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$811.8
In the first quarter 2021,2022, other operations and maintenance expenses were $68$76 million compared to $76$68 million for the corresponding period in 2020. 2021. The decrease increase was primarily due to decreasesincreases of $6 million related to planned generation outage costs and $4 million associated with the Kemper County energy facility primarily related to an increase in salvage proceeds and a decrease in ongoing period costs.
Depreciation and Amortization
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$511.9
In the first quarter 2021, depreciation and amortization was $47 million compared to $42 million for the corresponding period in 2020. The increase was primarily due to a $3 million increase in depreciation(primarily related to additional plantdismantlement activities and lower salvage proceeds in service2022 as compared to 2021) and an increase$3 million in depreciation rates in accordance with the Mississippi Power Rate Case Settlement Agreementdistribution and a $2 million increase due to amortization of a regulatory asset associated with an ARO in accordance with the Mississippi Power Rate Case Settlement Agreement. See Note 2 to the financial statements under "Mississippi Power – 2019 Base Rate Case" in Item 8 of the Form 10-K for additional information.transmission operations and maintenance activities.
Southern Power
Net Income Attributable to Southern Power
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$2229.3
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$(25)(25.8)
Net income attributable to Southern Power in the first quarter 20212022 was $97$72 million compared to $75$97 million for the corresponding period in 2020.2021. The increasedecrease was primarily due to a $16 million tax benefit duegains from the contributions of wind turbine equipment to changesvarious equity method investments in state apportionment methodology resulting from tax legislation enacted by the State of Alabama in Februaryfirst quarter 2021.
Operating Revenues
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$6517.3
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$9922.5
Total operating revenues include PPA capacity revenues, which are derived primarily from long-term contracts involving natural gas facilities, and PPA energy revenues from Southern Power's generation facilities. To the extent Southern Power has capacity not contracted under a PPA, it may sell power into an accessible wholesale market, or, to the extent those generation assets are part of the FERC-approved IIC, it may sell power into the Southern Company power pool.
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AND RESULTS OF OPERATIONS (Continued)
Natural Gas Capacity and Energy Revenue
Capacity revenues generally represent the greatest contribution to operating income and are designed to provide recovery of fixed costs plus a return on investment.
Energy is generally sold at variable cost or is indexed to published natural gas indices. Energy revenues will vary depending on the energy demand of Southern Power's customers and their generation capacity, as well as the market prices of wholesale energy compared to the cost of Southern Power's energy. Energy revenues also include fees for support services, fuel storage, and unit start charges. Increases and decreases in energy revenues under PPAs that are driven by fuel or purchased power prices are accompanied by an increase or decrease in fuel and purchased power costs and do not have a significant impact on net income.
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AND RESULTS OF OPERATIONS (Continued)
Solar and Wind Energy Revenue
Southern Power's energy sales from solar and wind generating facilities are predominantly through long-term PPAs that do not have capacity revenue. Customers either purchase the energy output of a dedicated renewable facility through an energy charge or pay a fixed price related to the energy generated from the respective facility and sold to the grid. As a result, Southern Power's ability to recover fixed and variable operations and maintenance expenses is dependent upon the level of energy generated from these facilities, which can be impacted by weather conditions, equipment performance, transmission constraints, and other factors.
See FUTURE EARNINGS POTENTIAL – "Southern Power's Power Sales Agreements" in Item 7 of the Form 10-K for additional information regarding Southern Power's PPAs.
Operating Revenues Details
Details of Southern Power's operating revenues were as follows:
First Quarter 2021First Quarter 2020First Quarter 2022First Quarter 2021
(in millions)(in millions)
PPA capacity revenuesPPA capacity revenues$96 $90 PPA capacity revenues$102 $96 
PPA energy revenuesPPA energy revenues245 205 PPA energy revenues345 245 
Total PPA revenuesTotal PPA revenues341 295 Total PPA revenues447 341 
Non-PPA revenuesNon-PPA revenues95 77 Non-PPA revenues84 95 
Other revenuesOther revenues4 3 Other revenues8 4 
Total operating revenuesTotal operating revenues$440 $375 Total operating revenues$539 $440 
In the first quarter 2021,2022, total operating revenues were $440$539 million, reflecting a $65$99 million, or 17%23%, increase from the corresponding period in 2020.2021. The increase in operating revenues was primarily due to the following:
•PPA capacity revenues increased $6 million, or 7%6%, primarily due to new natural gas PPAs and increased capacity onsales under existing contracts,natural gas PPAs, partially offset by the disposition of Plant Mankato in the first quarter 2020 and the contractual expiration of a natural gas PPA in November 2020.PPAs.
•PPA energy revenues increased $40$100 million, or 20%41%, primarily due to a $35$59 million increase in sales fromunder existing natural gas facilitiesPPAs resulting from a $42$37 million increase in the price of fuel and purchased power partially offset byand a $7$22 million decreaseincrease in the volume of KWHs sold. In addition,Also contributing to the increase reflects $6was a $47 million increase in sales fromassociated with new wind facilities placed in service subsequentnatural gas PPAs, partially offset by a $13 million decrease due to the first quarter 2020.contractual expiration of natural gas PPAs.
•Non-PPA revenues increased $18decreased $11 million, or 23%12%, primarily due to a $38 million increase in the market price of energy, partially offset by a $20$12 million decrease in the volume of KWHs sold through short-term sales.
Fuel and Purchased Power Expenses
Details of Southern Power's generation and purchased power were as follows:
 First Quarter 2022First Quarter 2021
(in billions of KWHs)
Generation11.09.4
Purchased power0.50.6
Total generation and purchased power11.510.0
Total generation and purchased power
(excluding solar, wind, fuel cells, and tolling agreements)
6.96.1
106
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Fuel and Purchased Power Expenses
Details of Southern Power's generation and purchased power were as follows:
 First Quarter 2021First
Quarter
2020
(in billions of KWHs)
Generation9.410.7
Purchased power0.60.7
Total generation and purchased power1011.4
Total generation and purchased power, excluding solar, wind, and tolling agreements6.17.2
Southern Power's PPAs for natural gas generation generally provide that the purchasers are responsible for either procuring the fuel (tolling agreements) or reimbursing Southern Power for substantially all of the cost of fuel relating to the energy delivered under such PPAs. Consequently, changes in such fuel costs are generally accompanied by a corresponding change in related fuel revenues and do not have a significant impact on net income. Southern Power is responsible for the cost of fuel for generating units that are not covered under PPAs. Power from these generating units is sold into the wholesale market or into the Southern Company power pool for capacity owned directly by Southern Power.
Purchased power expenses will vary depending on demand, availability, and the cost of generating resources throughout the Southern Company system and other contract resources. Load requirements are submitted to the Southern Company power pool on an hourly basis and are fulfilled with the lowest cost alternative, whether that is generation owned by Southern Power, an affiliate company, or external parties. Such purchased power costs are generally recovered through PPA revenues.
Details of Southern Power's fuel and purchased power expenses were as follows:
First Quarter 2021 vs. First Quarter 2020
First Quarter 2022 vs.
First Quarter 2021
(change in millions)(% change) (change in millions)(% change)
FuelFuel$34 31.8Fuel$91 64.5
Purchased powerPurchased power6 42.9Purchased power1 5.0
Total fuel and purchased power expensesTotal fuel and purchased power expenses$40 Total fuel and purchased power expenses$92 
In the first quarter 2021,2022, total fuel and purchased power expenses increased $40$92 million, or 33%57%, compared to the corresponding period in 2020. Fuel expense increased $34 million2021 primarily due to a $50$68 million increase in the average cost of fuel per KWH generated partially offset byand a $16$23 million decreaseincrease associated with the volume of KWHs generated. Purchased power expense increased $6 million due to an $8 million increase associated with the average cost of purchased power, partially offset by a $2 million decrease associated with the volume of KWHs purchased.
Other Operations and Maintenance ExpensesGain on Dispositions, Net
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$2227.8
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$(37)(94.9)
In the first quarter 2021, other operations and maintenance expenses were $1012022, gain on dispositions, net was $2 million compared to $79$39 million for the corresponding period in 2020.2021. The increasedecrease primarily resulted from gains associated with contributions of wind turbine equipment to various equity method investments in the first quarter 2021. See Note 15 to the financial statements under "Southern Power – Development Projects" in Item 8 of the Form 10-K and Note (E) to the Condensed Financial Statements under "Southern Power" herein for additional information.
Net Loss Attributable to Noncontrolling Interests
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$1340.6
In the first quarter 2022, net loss attributable to noncontrolling interests was $45 million compared to $32 million for the corresponding period in 2021. The increased loss was primarily due to an $8 million increase in scheduled outage and maintenance expenses, $6 million in expenses relatedloss allocations to the allocation of uncollected settlementspartners in the Garland and Tranquillity battery energy storage facilities and higher HLBV loss allocations to wind tax equity partners, including new partnerships entered into during 2021. The increased loss allocations were partially offset by the Energy Reliability Council of Texas market as a result of Winter Storm Uri, and $2 million in expenses associated with new wind facilities placed in service subsequenthigher income allocations to the first quarter 2020.solar equity partners.
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AND RESULTS OF OPERATIONS (Continued)
(Gain) Loss on Dispositions, Net
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$——
In the first quarter 2021, gains on dispositions totaled $39 million primarily from contributions of wind turbine equipment to various equity method investments. A $39 million gain was also recorded in the first quarter 2020 related to the sale of Plant Mankato. See Notes (E) and (K) to the Condensed Financial Statements under "Southern Power" herein and Note 15 to the financial statements under "Southern Power – Sales of Natural Gas and Biomass Plants" in Item 8 of the Form 10-K for additional information.
Income Taxes (Benefit)
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$(17)(242.9)
In the first quarter 2021, income tax benefit was $10 million compared to income tax expense of $7 million for the corresponding period in 2020. The change was primarily due to changes in state apportionment methodology resulting from tax legislation enacted by the State of Alabama in February 2021, as well as the tax impact from the sale of Plant Mankato in January 2020. See Note (G) to the Condensed Financial Statements herein, MANAGEMENT'S DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL – "Income Tax Matters – Alabama State Tax Reform Legislation" in Item 7 of the Form 10-K, and Note 15 to the financial statements under "Southern Power" in Item 8 of the Form 10-K for additional information.
Southern Company Gas
Operating Metrics
Southern Company Gas continues to focus on several operating metrics, including Heating Degree Days, customer count, and volumes of natural gas sold.
Southern Company Gas measures weather and the effect on its business using Heating Degree Days. Generally, increased Heating Degree Days result in higher demand for natural gas on Southern Company Gas' distribution system. Southern Company Gas has various regulatory mechanisms, such as weather and revenue normalization and straight-fixed-variable rate design, which limit its exposure to weather changes within typical ranges in each of its utility's respective service territory. Southern Company Gas also utilizes weather hedges to limit the negative income impacts in the event of warmer-than-normal weather.
The number of customers served by gas distribution operations and gas marketing services can be impacted by natural gas prices, economic conditions, and competition from alternative fuels. Gas distribution operations and gas marketing services' customers are primarily located in Georgia and Illinois.
Southern Company Gas' natural gas volume metrics for gas distribution operations and gas marketing services illustrate the effects of weather and customer demand for natural gas. Wholesale gas services' physical sales volumes represent the daily average natural gas volumes sold to its customers.
Seasonality of Results
During the Heating Season, natural gas usage and operating revenues are generally higher as more customers are connected to the gas distribution systems and natural gas usage is higher in periods of colder weather. Occasionally inPrior to the summer,sale of Sequent on July 1, 2021, wholesale gas services' operating revenues areoccasionally were impacted due to peak usage by power generators in response to summer energy demands. Southern Company Gas' base operating expenses, excluding cost of natural gas, bad debt expense, and certain incentive compensation costs, are incurred relatively evenly throughout the year.
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AND RESULTS OF OPERATIONS (Continued)
Seasonality also affects the comparison of certain balance sheet items across quarters, including receivables, unbilled revenues, natural gas for sale, and notes payable. However, these items are comparable when reviewing Southern Company Gas' annual results. Thus, Southern Company Gas' operating results for the interim periods presented are not necessarily indicative of annual results and can vary significantly from quarter to quarter.
Net Income
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$12344.7
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$(79)(19.8)
In the first quarter 2021,2022, net incomeincome was $398$319 million compared to $275$398 million for the corresponding period in 2020.2021. The increasefirst quarter 2021 results include $126 million of net income from Sequent, which was primarily due to a $103sold on July 1, 2021. Net income increased $31 million increase at wholesale gas services primarily due to higher commercial activities as a result of Winter Storm Uri and a $19 million increase at gas distribution operations primarily due to base rate increases and continued investment in infrastructure replacement.replacement and $10 million at gas marketing services primarily related to higher commodity prices and higher sales to commercial customers. See NoteNotes 2 and 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.
Natural Gas Revenues, including Alternative Revenue Programs
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$44535.6
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$36421.5
In the first quarter 2021,2022, natural gas revenues, including alternative revenue programs, were $1.7$2.1 billion compared to $1.2$1.7 billion for the corresponding period in 2020.
Details of the changes in natural gas revenues, including alternative revenue programs, were as follows:
First Quarter 2021
(in millions)(% change)
Natural gas revenues – prior year$1,249 
Estimated change resulting from –
Infrastructure replacement programs and base rate changes38 3.0 %
Gas costs and other cost recovery152 12.2 
Wholesale gas services247 19.8 
Other8 0.6 
Natural gas revenues – current year$1,694 35.6 %
Revenues from infrastructure replacement programs and base rate changes increased in the first quarter 2021 compared to the corresponding period in 2020 primarily due to rate increases at Atlanta Gas Light, Virginia Natural Gas, and Chattanooga Gas and continued investment in infrastructure replacement. See Note 2 to the financial statements under "Southern Company Gas – Rate Proceedings" in Item 8 of the Form 10-K for additional information.
Revenues associated with gas costs and other cost recovery increased in the first quarter 2021 compared to the corresponding period in 2020 primarily due to higher volumes sold and higher gas cost recovery. See "Cost of Natural Gas" herein for additional information. Revenue impacts from weather and customer growth are described further below.
Revenues from wholesale gas services increased in the first quarter 2021 compared to the corresponding period in 2020 due to higher commercial activities as a result of Winter Storm Uri, partially offset by derivative losses. See "Segment Information – Wholesale Gas Services" herein for additional information. Also see Note (K) to the Condensed Financial Statements under "Southern Company Gas" herein for information regarding the sale of Sequent, which is expected to be completed during the third quarter 2021.
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AND RESULTS OF OPERATIONS (Continued)
Details of the changes in natural gas revenues, including alternative revenue programs, were as follows:
First Quarter 2022
(in millions)(% change)
Natural gas revenues – prior year$1,694 
Estimated change resulting from –
Infrastructure replacement programs and base rate changes86 5.1 %
Gas costs and other cost recovery544 32.1 
Gas marketing services18 1.1 
Wholesale gas services(297)(17.5)
Other13 0.7 
Natural gas revenues – current year$2,058 21.5 %
Revenues from infrastructure replacement programs and base rate changes increased in the first quarter 2022 compared to the corresponding period in 2021 primarily due to rate increases at Atlanta Gas Light and Chattanooga Gas and continued investment in infrastructure replacement. See Note 2 to the financial statements under "Southern Company Gas – Rate Proceedings" in Item 8 of the Form 10-K for additional information.
Revenues associated with gas costs and other cost recovery increased in the first quarter 2022 compared to the corresponding period in 2021 primarily due to higher volumes of natural gas sold and higher natural gas cost recovery. See "Cost of Natural Gas" herein for additional information. Revenue impacts from weather and customer growth are described further below.
Revenues from gas marketing services increased in the first quarter 2022 compared to the corresponding period in 2021 primarily due to higher commodity prices and higher sales to commercial customers.
The change in revenues related to wholesale gas services was due to the sale of Sequent on July 1, 2021. See Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.
Southern Company Gas' natural gas distribution utilities have various regulatory mechanisms that limit their exposure to weather changes. Southern Company Gas also uses hedges for any remaining exposure to warmer-than-normal weather in Illinois for gas distribution operations and in Illinois and Georgia for gas marketing services; therefore, weather typically does not have a significant net income impact. The following table presents Heating Degree Days information for Illinois and Georgia, the primary locations where Southern Company Gas' operations are impacted by weather.
First Quarter2021 vs. normal2021 vs. 2020First Quarter2022 vs. normal2022 vs. 2021
Normal(*)
20212020colder (warmer)
Normal(*)
20222021colder (warmer)
(in thousands)(in thousands)
IllinoisIllinois3,024 2,947 2,759 (2.5)%6.8 %Illinois2,999 3,007 2,947 0.3 %2.0 %
GeorgiaGeorgia1,326 1,254 1,091 (5.4)%14.9 %Georgia1,302 1,251 1,254 (3.9)%(0.2)%
(*)Normal represents the 10-year averageaverage from January 1, 20112012 through March 31, 20202021 for Illinois at Chicago Midway International Airport and for Georgia at Atlanta Hartsfield-Jackson International Airport, based on information obtained from the National Oceanic and Atmospheric Administration, National Climatic Data Center.
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AND RESULTS OF OPERATIONS (Continued)
The following table provides the number of customers served by Southern Company Gas at March 31, 20212022 and 2020:2021:
March 31,March 31,
202120202021 vs. 2020202220212022 vs. 2021
(in thousands, except market share %)(% change)(in thousands, except market share %)(% change)
Gas distribution operationsGas distribution operations4,335 4,298 0.9 %Gas distribution operations4,358 4,335 0.5 %
Gas marketing servicesGas marketing servicesGas marketing services
Energy customers(*)
Energy customers(*)
667 638 4.5 %
Energy customers(*)
598 667 (10.3)%
Market share of energy customers in GeorgiaMarket share of energy customers in Georgia28.9 %28.8 %0.3 %Market share of energy customers in Georgia28.7 %28.9 %
(*)Gas marketing services' customers are primarily located in Georgia and Illinois. March 31, 2021 also includes approximately 50,000 customers in Ohio contracted through an annual auction process to serve for 12 months beginning April 1, 2020.
Southern Company Gas anticipates continued customer growth as it expects continued low natural gas prices. Southern Company Gasand uses a variety of targeted marketing programs to attract new customers and to retain existing customers.
Cost of Natural Gas
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$14432.8
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$51287.8
Excluding Atlanta Gas Light, which does not sell natural gas to end-use customers, natural gas distribution rates include provisions to adjust billings for fluctuations in natural gas costs. Therefore, gas costs recovered through natural gas revenues generally equal the amount expensed in cost of natural gas and do not affect net income from gas distribution operations. Cost of natural gas at gas distribution operations represented 86% represented 90%of the total cost of natural gas forin the first quarter 2021.2022. See MANAGEMENT'S DISCUSSION AND ANALYSIS – RESULTS OF OPERATIONS – "Southern Company Gas – Cost of Natural Gas" in Item 7 of the Form 10-K and "Natural Gas Revenues, including Alternative Revenue Programs" herein for additional information.
In the first quarter 2021,2022, cost of natural gas was $583 million$1.1 billion compared to $439$583 million for the corresponding period in 2020. 2021. The increase reflects higher volumes sold due to colder weather and higher gas cost recovery in the first quarter 2021 compared to the corresponding period in 2020. The increase also reflectsas a 38%result of an 83.9% increase in natural gas prices in the first quarter 20212022 compared to the corresponding period in 2020.2021.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
The following table details the volumes of natural gas sold duringduring all periods presented.
First Quarter2021 vs. 2020First Quarter2022 vs. 2021
2021202020222021
Gas distribution operations (mmBtu in millions)
Gas distribution operations (mmBtu in millions)
Gas distribution operations (mmBtu in millions)
FirmFirm288 258 11.6 %Firm304 288 5.6 %
InterruptibleInterruptible26 24 8.3 Interruptible25 26 (3.8)
TotalTotal314 282 11.3 %Total329 314 4.8 %
Wholesale gas services (mmBtu in millions/day)
Wholesale gas services (mmBtu in millions/day)
Wholesale gas services (mmBtu in millions/day)
Daily physical sales7.1 6.9 2.9 %
Daily physical sales(*)
Daily physical sales(*)
— 7.1 (100.0)%
Gas marketing services (mmBtu in millions)
Gas marketing services (mmBtu in millions)
Gas marketing services (mmBtu in millions)
Firm:Firm:Firm:
GeorgiaGeorgia19 14 35.7 %Georgia16 19 (15.8)%
IllinoisIllinois4 5 (20.0)Illinois3 4 (25.0)
OtherOther6 5 20.0 Other4 6 (33.3)
Interruptible large commercial and industrialInterruptible large commercial and industrial4 4 — Interruptible large commercial and industrial4 4 — 
TotalTotal33 28 17.9 %Total27 33 (18.2)%
(*)As a result of the sale of Sequent, wholesale gas services had no sales in the first quarter 2022. See Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.
Other Operations and Maintenance Expenses
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$4115.9
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$62.0
In the first quarter 2022, other operations and maintenance expenses were $305 million compared to $299 million for the corresponding period in 2021.Excluding $48 million of expenses related to Sequent in 2021, other operations and maintenance expenses were $299increased approximately $54 million. The increase was primarily due to increases of $18 million in compensation and benefit expenses, $16 million in expenses passed through directly to customers primarily related to bad debt at distribution operations, and $6 million in customer account expenses.
Depreciation and Amortization
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$75.4
In the first quarter 2022, depreciation and amortization was $137 million compared to $258$130 million for the corresponding period in 2020. The increase was primarily due to higher compensation expense at wholesale gas services.
Depreciation and Amortization
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$108.3
In the first quarter 2021, depreciation and amortization was $130 million compared to $120 million for the corresponding period in 2020.2021. The increase was primarily due to continued infrastructure investments at the natural gas distribution utilities.
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AND RESULTS OF OPERATIONS (Continued)
Taxes Other Than Income Taxes
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$912.5
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$1923.5
In the first quarter 2021,2022, taxes other than income taxes were $81$100 million compared to $72$81 million for the corresponding period in 2020.2021. The increase primarily reflects an increase in revenue tax expenses as a result of higher natural gas revenues at Nicor Gas. These revenue tax expenses are passed directly to customers and have no impact on net income.
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Other Income (Expense), Net
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$(72)(800.0)
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$79125.4
In the first quarter 2021,2022, other income (expense), net was $16 million of income compared to $63 million of expense compared to $9 million of income for the correspondingcorresponding period in 2020.2021. The increase in other expensechange was primarilylargely due to charitable contributions of $75 million in charitable contributions in the first quarter 2021.
Income Taxes
First Quarter 2021 vs. First Quarter 2020
(change in millions)(% change)
$4253.2
First Quarter 2022 vs. First Quarter 2021
(change in millions)(% change)
$(24)(19.8)
In the first quarter 2021,2022, income taxestaxes were $121$97 million compared to $79$121 million for the corresponding period in 2020.2021. The increasedecrease was primarilyprimarily due to higher pre-tax earningsa decrease of $40 million at wholesale gas services and gas distribution operations.
Performance and Non-GAAP Measures
Adjusted operating margin is a non-GAAP measure that is calculated as operating revenues less cost of natural gas, cost ofincluding Sequent, which was sold on July 1, 2021, partially offset by higher pre-tax earnings from the other sales, and revenue tax expense. Adjusted operating margin excludes other operations and maintenance expenses, depreciation and amortization, and taxes other than income taxes, which are included in the calculation of operating income as calculated in accordance with GAAP and reflected in the statements of income. The presentation of adjusted operating margin is believed to provide useful information regarding the contribution resulting from base rate changes, infrastructure replacement programs and capital projects, and customer growth at gas distribution operations since the cost of natural gas and revenue tax expense can vary significantly and are generally billed directly to customers. Southern Company Gas further believes that utilizing adjusted operating margin at gas pipeline investments, wholesale gas services, and gas marketing services allows it to focus on a direct measure of performance before overhead costs. The applicable reconciliation of operating income to adjusted operating margin is provided herein.
Adjusted operating margin should not be considered an alternative to, or a more meaningful indicator of, Southern Company Gas' operating performance than operating income as determined in accordance with GAAP. In addition, Southern Company Gas' adjusted operating margin may not be comparable to similarly titled measures of other companies.
Detailed variance explanations of Southern Company Gas' financial performance are provided herein.
Reconciliations of operating income to adjusted operating margin are as follows:
First Quarter 2021First Quarter 2020
(in millions)
Operating Income$601 $360 
Other operating expenses(a)
510 450 
Revenue taxes(b)
(53)(45)
Adjusted Operating Margin$1,058 $765 
(a)segmentsIncludes other operations and maintenance, depreciation and amortization, and taxes other than income taxes..
(b)Nicor Gas' revenue tax expenses, which are passed through directly to customers.
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Segment Information
Adjusted operating margin,Operating revenues, operating expenses, and net income (loss) for each segment are provided in the table below. See Note (L) to the Condensed Financial Statements under "Southern Company Gas" herein for additional information.
First Quarter 2021First Quarter 2020 First Quarter 2022First Quarter 2021
 Adjusted Operating Margin(*)
Operating Expenses(*)
Net Income (Loss)
Adjusted Operating Margin(*)
Operating Expenses(*)
Net Income (Loss) Operating RevenuesOperating ExpensesNet Income (Loss)Operating RevenuesOperating ExpensesNet Income (Loss)
(in millions)(in millions)(in millions)(in millions)
Gas distribution operationsGas distribution operations$644 $357 $183 $595 $340 $164 Gas distribution operations$1,803 $1,475 $214 $1,200 $913 $183 
Gas pipeline investmentsGas pipeline investments8 3 29 8 3 30 Gas pipeline investments8 3 29 8 3 29 
Wholesale gas services297 55 126 50 17 23 
Wholesale gas services(*)
Wholesale gas services(*)
— — — 298 56 126 
Gas marketing servicesGas marketing services104 29 56 107 30 57 Gas marketing services243 150 66 195 120 56 
All otherAll other7 15 4 6 16 1 All other16 21 10 7 15 4 
Intercompany eliminationsIntercompany eliminations(2)(2)— (1)(1)— Intercompany eliminations(12)(12)— (14)(14)— 
ConsolidatedConsolidated$1,058 $457 $398 $765 $405 $275 Consolidated$2,058 $1,637 $319 $1,694 $1,093 $398 
(*)Adjusted operating margin and operating expenses are adjustedAs a result of the sale of Sequent, wholesale gas services is no longer a reportable segment for Nicor Gas' revenue tax expenses, which are passed through directlythe first quarter 2022. See Note 15 to customers.the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.
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AND RESULTS OF OPERATIONS (Continued)
Gas Distribution Operations
Gas distribution operations is the largest component of Southern Company Gas' business and is subject to regulation and oversight by regulatory agencies in each of the states it serves. These agencies approve natural gas rates designed to provide Southern Company Gas with the opportunity to generate revenues to recover the cost of natural gas delivered to its customers and its fixed and variable costs, including depreciation, interest expense, operations and maintenance, taxes, and overhead costs, and to earn a reasonable return on its investments.
With the exception of Atlanta Gas Light, Southern Company Gas' second largest utility that operates in a deregulated natural gas market and has a straight-fixed-variable rate design that minimizes the variability of its revenues based on consumption, the earnings of the natural gas distribution utilities can be affected by customer consumption patterns that are a function of weather conditions, price levels for natural gas, and general economic conditions that may impact customers' ability to pay for natural gas consumed. Southern Company Gas has various regulatory and other mechanisms, such as weather and revenue normalization mechanisms and weather derivative instruments, that limit its exposure to changes in customer consumption, including weather changes within typical ranges in its natural gas distributiondistribution utilities' service territories.
In the first quarter 2021, net income increased $19 million, or 11.6%, compared to the corresponding period in 2020. The $49 million increase in adjusted operating margin primarily reflects rate increases for Atlanta Gas Light, Virginia Natural Gas, and Chattanooga Gas and continued investment in infrastructure replacement. The $17 million increase in operating expenses includes higher depreciation primarily due to additional assets placed in service and higher compensation expenses. The $5 million increase in interest expense net of amounts capitalized is primarily due to additional debt issued to finance continued investments. The $6 million increase in income tax expense is primarily due to higher pre-tax earnings. See Note 2 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.
In the first quarter 2022, net income increased $31 million, or 16.9%, when compared to the corresponding period in 2021, as described further below:
•Operating revenues increased $603 million primarily due to higher gas cost recovery, rate increases, and continued investment in infrastructure replacement. Gas costs recovered through natural gas revenues generally equal the amount expensed in cost of natural gas.
•Operating expenses increased $562 million primarily due to a $479 million increase in the cost of gas as a result of higher natural gas prices and higher volumes sold compared to 2021, as well as higher compensation expenses and depreciation resulting from additional assets placed in service. The increase in operating expenses also includes higher costs passed through directly to customers, primarily related to bad debt expenses and revenue taxes.
•Income taxes increased $12 million primarily due to higher pre-tax earnings.
Gas Pipeline Investments
Gas pipeline investments consists primarily of joint ventures in natural gas pipeline investments including SNG, PennEast Pipeline, Dalton Pipeline, and Atlantic Coast Pipeline (until its sale on March 24, 2020).PennEast Pipeline. See Note (E) to the Condensed Financial Statements under "Southern Company Gas" herein and Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.
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Wholesale Gas Services
Wholesale gas services is involved in asset management and optimization, storage, transportation, producer and peaking services, natural gas supply, natural gas services, and wholesale gas marketing. Southern Company Gas has positioned the business to generate positive economic earnings on an annual basis even under low volatility market conditions that can result from a number of factors. When market price volatility increases, wholesale gas services is well positioned to capture significant value and generate stronger results. Operating expenses primarily reflect employee compensation and benefits.
In the first quarter 2021, net income increased $103 million, or 447.8%, compared to the corresponding period in 2020. The increase primarily relates to a $247 million increase in adjusted operating margin, partially offset by a $38 million increase in operating expenses primarily related to an increase in variable compensation. The increase was also partially offset by a $75 million increase in other income (expenses) related to higher charitable contributions and a $31 million increase in income tax expense due to higher pre-tax earnings.
Details of the changes in adjusted operating margin are provided in the table below.
First Quarter 2021First Quarter 2020
(in millions)
Commercial activity recognized$315 $(20)
Gain (loss) on storage derivatives(2)(6)
Gain (loss) on transportation and forward commodity derivatives(15)77 
LOCOM adjustments, net of current period recoveries(1)(1)
Adjusted operating margin$297 $50 
Change in Commercial Activity
The commercial activity at wholesale gas services includes recognition of storage and transportation values that were generated in prior periods, which reflect the impact of prior period hedge gains and losses as associated physical transactions occur. The increase in commercial activity in the first quarter 2021 compared to the corresponding period in 2020 was primarily due to natural gas price volatility that was generated by cold weather, particularly in the Midwest and Texas, resulting in wider transportation spreads.
Change in Storage and Transportation Derivatives
Volatility in the natural gas market arises from a number of factors, such as weather fluctuations or changes in supply or demand for natural gas in different regions of the U.S. The volatility of natural gas commodity prices has a significant impact on Southern Company Gas' customer rates, long-term competitive position against other energy sources, and the ability of wholesale gas services to capture value from locational and seasonal spreads. Forward storage or time spreads applicable to the locations of wholesale gas services' specific storage positions in 2021 resulted in storage derivative losses. Transportation and forward commodity derivative losses in the first quarter 2021 are a result of widening transportation spreads.
Withdrawal Schedule and Physical Transportation Transactions
The expected natural gas withdrawals from storage and expected offset to prior hedge losses/gains associated with the transportation portfolio of wholesale gas services are presented in the following table, along with the net operating revenues expected at the time of withdrawal from storage and the physical flow of natural gas between contracted transportation receipt and delivery points. Wholesale gas services' expected net operating revenues exclude storage and transportation demand charges, as well as other variable fuel, withdrawal, receipt, and delivery charges, and exclude estimated profit sharing under asset management agreements. Further, the amounts that are realizable in future periods are based on the inventory withdrawal schedule, planned physical flow of natural gas between the transportation receipt and delivery points, and forward natural gas prices at March 31, 2021. A portion
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of wholesale gas services' storage inventory and transportation capacity is economically hedged with futures contracts, which results in the realization of substantially fixed net operating revenues.
 Storage withdrawal schedule
Total storage(a)
Expected net operating
gains (losses)(b)
Physical transportation transactions – expected net operating gains (losses)(c)
(in mmBtu in millions)(in millions)(in millions)
202111 $6 $— 
2022 and thereafter6 5 15 
Total at March 31, 202117 $11 $15 
(a)At March 31, 2021, the WACOG of wholesale gas services' expected natural gas withdrawals from storage was $1.85 per mmBtu.
(b)Represents expected operating gains from planned storage withdrawals associated with existing inventory positions and could change as wholesale gas services adjusts its daily injection and withdrawal plans in response to changes in future market conditions and forward NYMEX price fluctuations.
(c)Represents the expected net gains during the periods in which the derivatives will be settled and the physical transportation transactions will occur that offset the derivative gains and losses previously recognized.
The unrealized storage and transportation derivative gains do not change the underlying economic value of wholesale gas services' storage and transportation positions and will be reversed when the related transactions occur and are recognized. For more information on wholesale gas services' energy marketing and risk management activities, see MANAGEMENT'S DISCUSSION AND ANALYSIS – FINANCIAL CONDITION AND LIQUIDITY – "Market Price Risk" in Item 7 of the Form 10-K.
Gas Marketing Services
Gas marketing services provides energy-related products and services to natural gas markets and participants in customer choice programs that were approved in various states to increase competition. These programs allow customers to choose their natural gas supplier while the local distribution utility continues to provide distribution and transportation services. Gas marketing services is weather sensitive and uses a variety of hedging strategies, such as weather derivative instruments and other risk management tools, to partially mitigate potential weather impacts.
All Other
All other includes natural gas storage businesses, including Jefferson Island through its sale on December 1, 2020, fuels operations through the sale of Southern Company Gas' interest in Pivotal LNG on March 24, 2020, AGL Services Company, and Southern Company Gas Capital, as well as various corporate operating expenses that are not allocated to the reportable segments and interest income (expense) associated with affiliate financing arrangements. See Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information on the sale of its interest in Pivotal LNG and the sale of Jefferson Island.
Segment Reconciliations
Reconciliations of operating income to adjusted operating margin forIn the first quarter 2021 and 2020 are reflected in the following tables. See Note (L)2022, net income increased $10 million, or 17.9%, when compared to the Condensed Financial Statements herein for additional information.corresponding period in 2021. The increase was primarily due to a $48 million increase in operating revenues as a result of higher commodity prices and higher sales to commercial customers, partially offset by a $30 million increase in operating expenses primarily due to higher cost of natural gas and an increase of $8 million in income taxes as a result of higher pre-tax earnings.
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First Quarter 2021
Gas Distribution OperationsGas Pipeline InvestmentsWholesale Gas ServicesGas Marketing ServicesAll OtherIntercompany EliminationConsolidated
(in millions)
Operating Income (Loss)$287 $5 $242 $75 $(8)$— $601 
Other operating expenses(a)
410 3 55 29 15 (2)510 
Revenue tax expense(b)
(53)— — — — — (53)
Adjusted Operating Margin$644 $8 $297 $104 $7 $(2)$1,058 
All Other
First Quarter 2020
Gas Distribution OperationsGas Pipeline InvestmentsWholesale Gas ServicesGas Marketing ServicesAll OtherIntercompany EliminationConsolidated
(in millions)
Operating Income (Loss)$255 $5 $33 $77 $(10)$— $360 
Other operating expenses(a)
385 3 17 30 16 (1)450 
Revenue tax expense(b)
(45)— — — — — (45)
Adjusted Operating Margin$595 $8 $50 $107 $6 $(1)$765 
All other includes natural gas storage businesses, a renewable natural gas business, AGL Services Company, and Southern Company Gas Capital, as well as various corporate operating expenses that are not allocated to the reportable segments and interest income (expense) associated with affiliate financing arrangements.
(a)Includes other operationsIn the first quarter 2022, net income increased $6 million, or 150%, when compared to the corresponding period in 2021. Operating revenues increased $9 million primarily related to higher demand fees and maintenance, depreciationfavorable hedge gains at the natural gas storage businesses and amortization, and taxes other than income taxes.
(b)Nicor Gas' revenue taxhigher sales from the renewable natural gas business, partially offset by a $6 million increase in operating expenses which are passed through directlyprimarily due to customers.higher cost of natural gas.
FUTURE EARNINGS POTENTIAL
Each Registrant's results of operations are not necessarily indicative of its future earnings potential. The level of the Registrants' future earnings depends on numerous factors that affect the opportunities, challenges, and risks of the Registrants' primary businesses of selling electricity and/or distributing natural gas, as described further herein.
For the traditional electric operating companies, these factors include the ability to maintain constructive regulatory environments that allow for the timely recovery of prudently-incurred costs during a time of increasing costs, including those related to projected long-term demand growth, stringent environmental standards, including CCR rules, safety, system reliability and resiliency, fuel, restoration following major storms, and capital expenditures, including constructing new electric generating plants and expanding and improving the transmission and distribution systems; continued customer growth,growth; and the trend of reduced electricity usage per customer, especially in residential and commercial markets. For Georgia Power, completing construction of Plant Vogtle Units 3 and 4 and the related cost recovery proceedings is another major factor.
Earnings in the electricity business will also depend upon maintaining and growing sales, considering, among other things, the adoption and/or penetration rates of increasingly energy-efficient technologies and increasing volumes of electronic commerce transactions, which could contribute to a net reduction in customer usage.
Global and U.S. economic conditions have been significantly affected by a series of demand and supply shocks that caused a global and national economic recession in 2020. Most prominently, the COVID-19 pandemic has negatively impacted global supply chains and business operations as suppliers continue to experience difficulties keeping up with strong demand for factory goods, which is being driven by low business inventories. In addition, rising inflation in 2021 and 2022 has resulted in increasing costs for many goods and services. As a result of persistently high inflation, interest rates have been on the rise and are expected to continue rising in the near term. The combination of rising inoculation rates in the U.S. population and the recent federal COVID-19 relief package is expectedcontributed to help boostincreased economic recovery in 2021.2021 and has sustained the current economic expansion through the first quarter 2022; however, fiscal support of business and personal incomes is declining. Russia's invasion of Ukraine has intensified supply chain disruptions and heightened uncertainty surrounding the near-term outlook for the broader economy and the economy within the Southern Company system's service territory. The drivers, speed, and depth of the 2020 economic contraction were unprecedented and have reduced energy demand across the Southern Company system's service territory, primarily in the commercial and industrial classes. The negative impacts, which startedRetail electric revenues attributable to changes in late-March 2020, of the COVID-19 pandemic and related recession on the Southern Company system's retail electric sales began to improve in the middle of May 2020; however, retail electric revenuesincreased in the first quarter 2022 when compared to the corresponding period in 2021 primarily due to the normalization of economic activity; however, retail electric sales continued to be negatively impacted by the COVID-19 pandemic. Recovery is expectedpandemic when compared to continue into the second halfpre-pandemic trends. The impacts of 2021, butnew COVID-19 variants, responses to the COVID-19 pandemic by both customers and governments, inflation, rising interest rates, and the unresolved geopolitical tensions relating to Russia's invasion of Ukraine could significantly affect the pacesustainability of recovery. current economic growth. See RESULTS OF OPERATIONS herein for information on COVID-19-related impacts on energy demand in the Southern Company system's service territory during the first quarter 2022.
The ultimate extentlevel of future earnings for Southern Power's competitive wholesale electric business depends on numerous factors including the parameters of the negative impact on revenues depends onwholesale market and the depth and durationefficient operation of its wholesale generating assets; Southern Power's ability to execute its growth strategy through the economic contraction indevelopment or acquisition of renewable
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the Southern Company system's service territory and cannot be determined at this time. See RESULTS OF OPERATIONS herein for information on COVID-19-related impacts on energy demand in the Southern Company system's service territory during the first quarter 2021.
The level of future earnings for Southern Power's competitive wholesale electric business depends on numerous factors including Southern Power's ability to execute its growth strategy through the development or acquisition of renewable facilities and other energy projects while containing costs, as well ascosts; regulatory matters, creditworthiness of customers,matters; customer creditworthiness; total electric generating capacity available in Southern Power's market areas, andareas; Southern Power's ability to successfully remarket capacity as current contracts expire. In addition,expire; renewable portfolio standards,standards; availability of federal and state ITCs and PTCs, which could be impacted by future tax credits,legislation; transmission constraints,constraints; cost of generation from units within the Southern Company power pool,pool; and operational limitations could influence Southern Power's future earnings.limitations.
The level of future earnings for Southern Company Gas' primary business of distributing natural gas and its complementary businesses in the gas pipeline investments wholesale gas services, and gas marketing services sectors depends on numerous factors. These factors include the natural gas distribution utilities' ability to maintain constructive regulatory environments that allow for the timely recovery of prudently-incurred costs, including those related to projected long-term demand growth, safety, system reliability and resiliency, natural gas, and capital expenditures, including expanding and improving the natural gas distribution systems; the completion and subsequent operation of ongoing infrastructure and other construction projects, creditworthinessprojects; customer creditworthiness; certain policies to limit the use of customers,natural gas, such as the potential across certain parts of the U.S. for state or municipal bans on the use of natural gas; and Southern Company Gas' ability to optimize its transportation and storage positions and to re-contract storage rates at favorable prices. The volatility of natural gas prices has an impact on Southern Company Gas' customer rates, its long-term competitive position against other energy sources, and the ability of Southern Company Gas' gas marketing services and wholesale gas services businessesbusiness to capture value from locational and seasonal spreads. Additionally, changes in commodity prices, primarily driven by tight gas supplies, geopolitical events, and diminished gas production, subject a portion of Southern Company Gas' operations to earnings variability. Over the longer term, volatility is expected to be low to moderatevariability and locational and/or transportation spreads are expected to decrease as new pipelines are built to reduce the existing supply constraintshave recently resulted in the shale areas of the Northeast U.S. To the extent these pipelines are delayed or not built, volatility could increase. See Note 3 to the financial statements in Item 8 of the Form 10-K and Note (C) to the Condensed Financial Statements herein under "Other Matters – Southern Company Gas" for additional information on permitting challenges experienced by the PennEast Pipeline.higher natural gas prices. Additional economic factors may contribute to this environment, includingenvironment. If current economic conditions continue to improve, the demand for natural gas may increase, which may cause natural gas prices to rise and drive higher volatility in the natural gas markets on a longer-term basis. Alternatively, a significant drop in oil and natural gas prices which could lead to a consolidation of natural gas producers or reduced levels of natural gas production. In addition, if the COVID-19 pandemic results in continued economic uncertainty for a sustained period, demand for natural gas may decrease, resulting in further downward pressure on natural gas prices and lower volatility in the natural gas markets on a longer-term basis.
Earnings for both the electricity and natural gas businesses are subject to a variety of other factors. These factors include weather, competition, developing new and maintaining existing energy contracts and associated load requirements with wholesale customers, energy conservation practiced by customers, the use of alternative energy sources by customers, government incentives to reduce overall energy usage, the prices of electricity and natural gas, costs and availability of labor and materials in a time of rising costs and supply chain disruptions, and the price elasticity of demand. Demand for electricity and natural gas in the Registrants' service territories is primarily driven by the pace of economic growth or decline that may be affected by changes in regional and global economic conditions, which may impact future earnings.
As part of its ongoing effort to adapt to changing market conditions, Southern Company continues to evaluate and consider a wide array of potential business strategies. These strategies may include business combinations, partnerships, and acquisitions involving other utility or non-utility businesses or properties, disposition of, or the sale of interests in, certain assets or businesses, internal restructuring, or some combination thereof. Furthermore, Southern Company may engage in new business ventures that arise from competitive and regulatory changes in the utility industry. Pursuit of any of the above strategies, or any combination thereof, may significantly affect the business operations, risks, and financial condition of Southern Company. In addition, Southern Power and Southern Company Gas regularly consider and evaluate joint development arrangements as well as acquisitions and dispositions of businesses and assets as part of their business strategies. See Note 15 to the financial statements in Item 8 of the Form 10-K and Note (K) to the Condensed Financial Statements herein for additional information.
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For additional information relating to these issues, see RISK FACTORS in Item 1A and MANAGEMENT'S DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL in Item 7 of the Form 10-K.
Environmental Matters
See MANAGEMENT'S DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL – "Environmental Matters" in Item 7 and Note 3 to the financial statements under "Environmental Remediation" in Item 8 of the Form 10-K, as well as Note (C) to the Condensed Financial Statements under "Environmental Remediation" herein, for additional information.
Environmental Laws and Regulations
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Alabama Power is assessing the viability of complying with the EPA's steam electric effluent limitations guidelines (ELG) rule (finalized in 2015) and the ELG reconsideration rule (finalized in October 2020) (ELG rules) for certain of its coal units (totaling approximately 2,000 MWs) due to the timing and anticipated cost to comply with the ELG rules. The results of the assessment could accelerate a determination to discontinue or modify operation of the units. Alabama Power will review all of the facts and circumstances and evaluate all alternatives prior to reaching a final determination. The units under evaluation have net book values totaling approximately $2.3 billion at March 31, 2021. Additionally, net capitalized asset retirement costs associated with these facilities totaled approximately $900 million at March 31, 2021. Alabama Power is authorized to establish a regulatory asset to record the unrecovered investment costs, including the plant asset balance and the costs associated with site removal and closure, associated with future unit retirements caused by environmental regulations. The regulatory asset would be amortized and recovered over an affected unit's remaining useful life, as established prior to the decision regarding early retirement, through Rate CNP Compliance. See Note 2 to the financial statements under "Alabama Power – Rate CNP Compliance" and " – Environmental Accounting Order" in Item 8 of the Form 10-K for additional information. The ultimate outcome of this matter cannot be determined at this time.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Regulatory Matters
See OVERVIEW – "Recent Developments" and Note 2 to the financial statements in Item 8 of the Form 10-K, OVERVIEW – "Recent Developments" herein, and Note (B) to the Condensed Financial Statements herein for a discussion of regulatory matters related to Alabama Power, Georgia Power, Mississippi Power, and Southern Company Gas, including items that could impact the applicable registrants'Registrants' future earnings, cash flows, and/or financial condition.
Construction Programs
The Subsidiary Registrants are engaged in continuous construction programs to accommodate existing and estimated future loads on their respective systems. The Southern Company system intendsstrategy continues to continue its strategy ofinclude developing and constructing new electric generating facilities, expanding and improving the electric transmission and electric and natural gas distribution systems, and undertaking projects to comply with environmental laws and regulations.
For the traditional electric operating companies, major generation construction projects are subject to state PSC approval in order to be included in retail rates. The largest construction project currently underway in the Southern Company system is Plant Vogtle Units 3 and 4. See Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction" herein for additional information. Also see Note 2 to the financial statements under "Alabama Power – Certificates of Convenience and Necessity" in Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements herein under "Alabama Power" for information regarding Alabama Power's construction of Plant Barry Unit 8.
See Note 15 to the financial statements in Item 8 of the Form 10-K and Note (K) to the Condensed Financial Statements herein under "Southern Power" for additional information about costs relating to Southern Power's acquisitions that involve construction of renewable energy facilities.
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Southern Company Gas is engaged in various infrastructure improvement programs designed to update or expand the natural gas distribution systems of the natural gas distribution utilities to improve reliability and meet operational flexibility and growth. The natural gas distribution utilities recover their investment and a return associated with these infrastructure programs through their regulated rates. See NotesNote 2 and 3 to the financial statements in Item 8 of the Form 10-K and NotesNote (B) and (C) to the Condensed Financial Statements herein under "Southern Company Gas" and "Other Matters – Southern Company Gas – PennEast Pipeline Project," respectively, for additional information on Southern Company Gas' construction program.
See FINANCIAL CONDITION AND LIQUIDITY – "Cash Requirements" herein for additional information regarding the Registrants' capital requirements for their construction programs.
General Litigation and Other Matters
The Registrants are involved in various matters being litigated and/or regulatory and other matters that could affect future earnings, cash flows, and/or financial condition. The ultimate outcome of such pending or potential litigation against each Registrant and any subsidiaries or regulatory and other matters cannot be determined at this time; however, for current proceedings and/or matters not specifically reported herein or in Notes (B) and (C) to the Condensed Financial Statements herein, management does not anticipate that the ultimate liabilities, if any, arising from such current proceedings and/or matters would have a material effect on such Registrant's financial statements. See Notes (B) and (C) to the Condensed Financial Statements for a discussion of various contingencies, including matters being litigated, regulatory matters, and other matters which may affect future earnings potential.
Alabama Power
On March 10, 2021, Alabama Power executed a coordinated planning and operations agreement with PowerSouth, with a minimum term of 10 years. The agreement, which includes combined operations (including joint commitment and dispatch), is expected to create energy cost savings and enhanced system reliability for both parties. Projected revenues are expected to offset any increased administrative costs incurred by Alabama Power; therefore, no material impact to net income is expected. Alabama Power has the right to participate in a portion of PowerSouth's future incremental load growth. Implementation of the agreement is subject to certain regulatory approvals, including approvals of the Rural Utilities Service, the SERC Reliability Corporation, and the FERC, and is expected to be completed by March 2022. The ultimate outcome of this matter cannot be determined at this time.
ACCOUNTING POLICIES
See MANAGEMENT'S DISCUSSION AND ANALYSIS – ACCOUNTING POLICIES in Item 7 of the Form 10-K for a complete discussion of the Registrants' critical accounting policies and estimates, as well as recently issued accounting standards.
Application
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
The Registrants prepare their financial statements in accordance with GAAP. Significant accounting policies are described in the notes to the financial statements in Item 8 of the Form 10-K. In the application of these policies, certain estimates are made that may have a material impact on the Registrants' results of operations and related disclosures. Different assumptions and measurements could produce estimates that are significantly different from those recorded in the financial statements.
Estimated Cost, Schedule, and Rate Recovery for the Construction of Plant Vogtle Units 3 and 4
(Southern Company and Georgia Power)
Following milestone extensions in January 2021, Southern Nuclear has been performing additional construction remediation work, primarily related to electrical commodity installations, necessary to ensure quality and design standards are met as system turnovers are completed to support hot functional testing and fuel load for Unit 3. Hot functional testing commenced in late April 2021 and the site work plan currently targets fuel load for Unit 3 in the third quarter 2021 and an in-service date of December 2021. As the site work plan includes minimal margin to these
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AND RESULTS OF OPERATIONS (Continued)
milestone dates, any delay could result in an in-service date in the first quarter 2022 for Unit 3. Achievement of the extended milestone dates established in January 2021 for Unit 4, which are expected to support a regulatory-approved in-service date of November 2022, primarily depends on overall construction productivity and production levels significantly improving as well as appropriate levels of craft laborers, particularly electrical and pipefitter craft labor, being added and maintained.
Considering the factors above, during the first quarter 2021, approximately $84 million of the construction contingency established in the fourth quarter 2020 was assigned to the base capital cost forecast for costs primarily associated with the schedule extension for Unit 3 to December 2021, construction productivity, support resources, and construction remediation work. Georgia Power increased its total capital cost forecast as of March 31, 2021 by adding $48 million to the remaining construction contingency. Georgia Power's revised base capital cost forecast and contingency to complete construction and start-up of Plant Vogtle Units 3 and 4 is $8.62 billion and $0.14 billion, respectively, for a total capital cost forecast of $8.76 billion (net of $1.7 billion received under the Guarantee Settlement Agreement and approximately $188 million in related customer refunds).
After considering the significant level of uncertainty that exists regarding the future recoverability of these costs since the ultimate outcome of these matters is subject to the outcome of future assessments by management, as well as Georgia PSC decisions in future regulatory proceedings, Georgia Power recorded a pre-tax charge to income of $48 million ($36 million after tax) for the increase in the total project capital cost forecast as of March 31, 2021. As and when these amounts are spent, Georgia Power may request the Georgia PSC to evaluate those expenditures for rate recovery.
The ultimate impact of these matters on the construction schedule and budget for Plant Vogtle Units 3 and 4 cannot be determined at this time. See Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction" herein for additional information.
FINANCIAL CONDITION AND LIQUIDITY
Overview
See MANAGEMENT'S DISCUSSION AND ANALYSIS – FINANCIAL CONDITION AND LIQUIDITY – "Overview" in Item 7 of the Form 10-K for additional information. The financial condition of each Registrant remained stable at March 31, 2021.2022. The Registrants intend to continue to monitor their access to short-term and long-term capital markets as well as their bank credit arrangements to meet future capital and liquidity needs. See "Cash Requirements," "Sources of Capital," and "Financing Activities" herein and Note (K) to the Condensed Financial Statements herein for additional information.
At the end of the first quarter 2021,2022, the market price of Southern Company's common stock was $62.16$72.51 per share (based on the closing price as reported on the NYSE) and the book value was $26.90$26.63 per share, representing a market-to-book ratio of 231%272%, compared to $61.43, $26.48,$68.58, $26.30, and 232%261%, respectively, at the end of 2020.2021. Southern Company's common stock dividend for the first quarter 20212022 was $0.64$0.66 per share compared to $0.62$0.64 per share in the first quarter 2020.2021.
Cash Requirements
See MANAGEMENT'S DISCUSSION AND ANALYSIS – FINANCIAL CONDITION AND LIQUIDITY – "Cash Requirements" in Item 7 of the Form 10-K for a description of the Registrants' significant cash requirements.
The Registrants' significant cash requirements include estimated capital expenditures associated with their construction programs. The construction programs are subject to periodic review and revision, and actual construction costs may vary from these estimates because of numerous factors. These factors include: changes in business conditions; changes in load projections; changes in environmental laws and regulations; the outcome of any legal challenges to environmental rules; changes in electric generating plants, including unit retirements and replacements and adding or changing fuel sources at existing electric generating units, to meet regulatory requirements; changes in FERC rules and regulations; state regulatory agency approvals; changes in the expected
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AND RESULTS OF OPERATIONS (Continued)
environmental compliance program; changes in legislation;legislation and/or regulation; the cost, availability, and efficiency of construction labor, equipment, and materials; project scope and design changes; abnormal weather; delays in construction due to judicial or regulatory action; storm impacts; and the cost of capital. The continued impacts of the COVID-19 pandemic could also impair the ability to develop, construct, and operate facilities, as discussed further in Item 1A of the Form 10-K. In addition, there can be no assurance that costs related to capital expenditures and AROs will be fully recovered. Additionally, expenditures associated with Southern Power's planned acquisitions may vary due to market opportunities and the execution of its growth strategy. See Note 15 to the financial statements in Item 8 of the Form 10-K and Note (K) to the Condensed Financial Statements herein under "Southern Power" for additional information regarding Southern Power's plant acquisitions and construction projects.
The construction program of Georgia Power includes Plant Vogtle Units 3 and 4, which includes components based on new technology that only within the last few years began initial operation in the global nuclear industry at this scale and which may be subject to additional revised cost estimates during construction. See Note 2 to the financial statements in Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements herein under "Georgia Power – Nuclear Construction" for information regarding Plant Vogtle Units 3 and 4 and additional factors that may impact construction expenditures.
Long-term debt maturities and the interest payable on long-term debt each represent a significant cash requirement for the Registrants. See "Financing Activities" herein for information on changes in the Registrants' long-term debt balances since December 31, 2020.2021.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Sources of Capital
See MANAGEMENT'S DISCUSSION AND ANALYSIS – FINANCIAL CONDITION AND LIQUIDITY – "Sources"Sources of Capital" in Item 7 of the Form 10-K for additional information. Southern Company intends to meet its future capital needs through operating cash flows, borrowings from financial institutions, and debt and equity issuances in the capital markets.issuances. Equity capital can be provided from any combination of Southern Company's stock plans, private placements, or public offerings. With the exception of the settlement later in 2022 of stock purchase contracts associated with its equity units, Southern Company does not expect to issue any equity in the capital markets through 2025.2026, but may issue equity through its stock plans during this time. See Note 8 to the financial statements under "Equity Units" in Item 8 of the Form 10-K for information on stock purchase contracts associated with Southern Company's equity units.additional information.
The Subsidiary Registrants plan to obtain the funds to meet their future capital needs from sources similar to those they used in the past, which were primarily from operating cash flows, external securities issuances, borrowings from financial institutions, and equity contributions from Southern Company. In addition, Georgia Power plans to utilize borrowings from the FFB (as discussed further in Note 8 to the financial statements under "Long-term Debt – DOE Loan Guarantee Borrowings" in Item 8 of the Form 10-K) and Southern Power plans to utilize tax equity partnership contributions (as discussed further herein).
The amount, type, and timing of any financings in 2021,2022, as well as in subsequent years, will be contingent on investment opportunities and the Registrants' capital requirements and will depend upon prevailing market conditions, regulatory approvals (for certain of the Subsidiary Registrants), and other factors. See "Cash Requirements" and "Financing Activities" herein for additional information.
Southern Power utilizes tax equity partnerships as one of its financing sources, where the tax partner takes significantly all of the federal tax benefits. These tax equity partnerships are consolidated in Southern Power's financial statements and are accounted for using HLBV methodology to allocate partnership gains and losses. In
March 2021,During the first quarter 2022, Southern Power obtained tax equity funding for the Deuel Harvest wind facility and received proceeds of $220 million. In addition, during the first three months of 2021, Southern Power receivedexisting tax equity fundingpartnerships totaling $17 million from existing partnerships.$51 million. See Note 1 to the financial statements under "General" in Item 8 of the Form 10-K and Note (K) to the Condensed Financial Statements under "Southern Power" herein for additional information.
By regulation, Nicor Gas is restricted, to the extent of its retained earnings balance, in the amount it can dividend or loan to affiliates and is not permitted to make money pool loans to affiliates. At March 31, 2021,2022, the amount of subsidiary retained earnings restricted to dividend totaled $1.1$1.4 billion. This restriction did not impact Southern
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AND RESULTS OF OPERATIONS (Continued)
Company Gas' ability to meet its cash obligations, nor does management expect such restriction to materially impact Southern Company Gas' ability to meet its currently anticipated cash obligations.
Certain Registrants' current liabilities frequently exceed their current assets because of long-term debt maturities and the periodic use of short-term debt as a funding source, as well as significant seasonal fluctuations in cash needs. The Registrants generally plan to refinance long-term debt as it matures. The following table shows the amount by which current liabilities exceeded current assets at March 31, 20212022 for the applicable Registrants:
At March 31, 2021Southern CompanyAlabama PowerGeorgia
Power		Mississippi PowerSouthern Company Gas
At March 31, 2022At March 31, 2022Southern CompanyGeorgia
Power		Southern PowerSouthern Company Gas
(in millions)(in millions)
Current liabilities in excess of current assetsCurrent liabilities in excess of current assets$2,117 $120 $699 $514 $166 Current liabilities in excess of current assets$1,137 $1,764 $235 $186 
The Registrants believe the need for working capital can be adequately met by utilizing operating cash flows, as well as commercial paper, lines of credit, and short-term bank notes, as market conditions permit. In addition, under certain circumstances, the Subsidiary Registrants may utilize equity contributions and/or loans from Southern Company.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Bank Credit Arrangements
At March 31, 2021,2022, the Registrants' unused committed credit arrangements with banks were as follows:
At March 31, 2021Southern
Company
parent		Alabama PowerGeorgia
Power		Mississippi Power
Southern
 Power(a)
Southern Company Gas(b)
SEGCOSouthern
Company
At March 31, 2022At March 31, 2022Southern
Company
parent		Alabama PowerGeorgia
Power		Mississippi Power
Southern
 Power(a)
Southern Company Gas(b)
SEGCOSouthern
Company
(in millions)(in millions)
Unused committed creditUnused committed credit$1,999 $1,328 $1,728 $250 $568 $1,745 $30 $7,648 Unused committed credit$1,998 $1,250 $1,726 $255 $568 $1,747 $30 $7,574 
(a)At March 31, 2021,2022, Southern Power also had two continuing letters of credit facilities for standby letters of credit, of which $13$30 million was unused. Southern Power's subsidiaries are not parties to its bank credit arrangements or letter of credit facilities.
(b)Includes $1.045$1.047 billion and $700 million at Southern Company Gas Capital and Nicor Gas, respectively.
Subject to applicable market conditions, the Registrants, Nicor Gas, and SEGCO expect to renew or replace their bank credit arrangements as needed, prior to expiration. In connection therewith, the Registrants, Nicor Gas, and SEGCO may extend the maturity dates and/or increase or decrease the lending commitments thereunder.
A portion of the unused credit with banks is allocated to provide liquidity support to the revenue bonds of the traditional electric operating companies and the commercial paper programs of the Registrants, Nicor Gas, and SEGCO. The amount of variable rate revenue bonds of the traditional electric operating companies outstanding requiring liquidity support at March 31, 20212022 was approximately $1.4$1.5 billion (comprised of approximately $854$789 million at Alabama Power, $550$672 million at Georgia Power, and $34 million at Mississippi Power). In addition, at March 31, 2021,2022, Georgia Power and Mississippi Power had approximately $174$330 million and $50 million, respectively, of fixed rate revenue bonds outstanding that are required to be remarketed within the next 12 months.
See Note 8 to the financial statements in Item 8 of the Form 10-K and Note (F) to the Condensed Financial Statements herein under "Bank Credit Arrangements" for additional information.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Short-term Borrowings
The Registrants, Nicor Gas, and SEGCO make short-term borrowings primarily through commercial paper programs that have the liquidity support of the committed bank credit arrangements described above. Southern Power's subsidiaries are not issuers or obligors under its commercial paper program. Commercial paper and short-term bank term loans are included in notes payable in the balance sheets. Details of the Registrants' short-term borrowings were as follows:
Short-term Debt at
March 31, 2021
Short-term Debt During the Period(*)
Short-term Debt at
March 31, 2022
Short-term Debt During the Period(*)
Amount
Outstanding		Weighted
Average
Interest
Rate		Average
Amount
Outstanding		Weighted
Average
Interest
Rate		Maximum
Amount
Outstanding		 Amount
Outstanding		Weighted
Average
Interest
Rate		Average
Amount
Outstanding		Weighted
Average
Interest
Rate		Maximum
Amount
Outstanding
(in millions)(in millions)(in millions) (in millions)(in millions)(in millions)
Southern CompanySouthern Company$1,092 0.3 %$998 0.2 %$1,520 Southern Company$2,330 0.9 %$1,878 0.5 %$2,894 
Alabama PowerAlabama Power— — 46 0.1 200 Alabama Power— — 4 0.6 100 
Georgia PowerGeorgia Power205 0.2 51 0.2 230 Georgia Power860 0.9 290 0.7 900 
Mississippi PowerMississippi Power54 0.2 20 0.2 64 Mississippi Power25 1.5 10 0.8 71 
Southern PowerSouthern Power315 0.2 147 0.2 520 Southern Power208 0.9 164 0.4 220 
Southern Company Gas:Southern Company Gas:Southern Company Gas:
Southern Company Gas CapitalSouthern Company Gas Capital$— — %$221 0.2 %$345 Southern Company Gas Capital$259 0.9 %$312 0.4 %$379 
Nicor GasNicor Gas497 0.5 120 0.3 520 Nicor Gas273 0.8 551 0.5 830 
Southern Company Gas TotalSouthern Company Gas Total$497 0.5 %$341 0.3 %Southern Company Gas Total$532 0.8 %$863 0.5 %
(*)Average and maximum amounts are based upon daily balances during the three-month period ended March 31, 2021.2022.
Analysis of Cash Flows
Net cash flows provided from (used for) operating, investing, and financing activities for the three months ended March 31, 20212022 and 20202021 are presented in the following table:
Net cash provided from
(used for):		Net cash provided from
(used for):		Southern CompanyAlabama PowerGeorgia
Power		Mississippi PowerSouthern PowerSouthern Company GasNet cash provided from
(used for):		Southern CompanyAlabama PowerGeorgia
Power		Mississippi PowerSouthern PowerSouthern Company Gas
(in millions)
Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2022
Operating activitiesOperating activities$1,592 $154 $361 $(16)$117 $1,024 
Investing activitiesInvesting activities(1,555)(365)(809)(68)(37)(271)
Financing activitiesFinancing activities(193)504 441 32 (76)(768)
(in millions)
Three Months Ended March 31, 2021Three Months Ended March 31, 2021
Three Months Ended
March 31, 2021
Operating activitiesOperating activities$1,242 $214 $489 $(38)$187 $550 Operating activities$1,242 $214 $489 $(38)$187 $550 
Investing activitiesInvesting activities(2,243)(466)(913)(67)(504)(308)Investing activities(2,243)(466)(913)(67)(504)(308)
Financing activitiesFinancing activities1,734 341 444 90 478 50 Financing activities1,734 341 444 90 478 50 
Three Months Ended March 31, 2020
Operating activities$894 $155 $213 $(17)$83 $643 
Investing activities(889)(424)(795)(71)600 (193)
Financing activities185 273 742 (98)(632)(185)
Fluctuations in cash flows from financing activities vary from year to year based on capital needs and the maturity or redemption of securities.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Southern Company
Net cash provided from operating activities increased $0.3 billion for the three months ended March 31, 2021 as compared to the corresponding period in 2020 primarily due to the timing of vendor payments and customer bill credits issued in February 2020 at Georgia Power associated with Tax Reform, partially offset by under recovered natural gas costs at Southern Company Gas resulting from Winter Storm Uri.
The net cash used for investing activities for the three months ended March 31, 2021 was primarily related to the Subsidiary Registrants' construction programs.
The net cash provided from financing activities for the three months ended March 31, 2021 was primarily related to net issuances of long-term debt, short-term bank loans, and commercial paper, partially offset by common stock dividend payments.
Alabama Power
Net cash provided from operating activities increased $59$350 million for the three months ended March 31, 20212022 as compared to the corresponding period in 20202021 primarily due to an increase in retail revenues associated with an increase in Rate RSE effective in January 2021increased natural gas cost recovery at the natural gas distribution utilities and colder weather in Alabama Power's service territory in the first quarter 2021 compared to the corresponding period in 2020, as well as the timing of fossil fuel stock and materials and supplies purchases,vendor payments, partially offset by lower fuel cost recovery and the timing of customer receivable collections.
The net cash used for investing activities for the three months ended March 31, 2022 was primarily related to the Subsidiary Registrants' construction programs.
The net cash used for financing activities for the three months ended March 31, 2022 was primarily related to common stock dividend payments and net redemptions of long-term debt, largely offset by an increase in short-term debt.
Alabama Power
Net cash provided from operating activities decreased $60 million for the three months ended March 31, 2022 as compared to the corresponding period in 2021 primarily due to the timing of customer receivable collections, decreased fuel cost recovery, and the timing of fuel stock purchases, partially offset by the timing of vendor payments.
The net cash used for investing activities for the three months ended March 31, 2022 was primarily related to gross property additions.
The net cash provided from financing activities for the three months ended March 31, 20212022 was primarily related to a capital contributioncontributions from Southern Company and the net issuance of long-term debt, partially offset by common stock dividend payments.
Georgia Power
Net cash provided from operating activities increased $276decreased $128 million for the three months ended March 31, 20212022 as compared to the corresponding period in 20202021 primarily due to the timing of customer receivable collections as well as customer bill credits issued in February 2020 associated with Tax Reform.and decreased fuel cost recovery, partially offset by the timing of vendor payments.
The net cash used for investing activities for the three months ended March 31, 20212022 was primarily related to gross property additions, including a total of approximately $350$240 million related to the construction of Plant Vogtle Units 3 and 4. See Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction" herein for additional information on construction of Plant Vogtle Units 3 and 4.
The net cash provided from financing activities for the three months ended March 31, 20212022 was primarily related to net issuances of senior notes,an increase in short-term borrowings and capital contributions from Southern Company, and an increase in notes payable, partially offset by common stock dividend payments.payments and the redemption of senior notes.
Mississippi Power
Net cash used for operating activities increased $21decreased $22 million for the three months ended March 31, 20212022 as compared to the corresponding period in 20202021 primarily due to the timing of ad valorem taxvendor payments.
The net cash used for investing activities for the three months ended March 31, 20212022 was primarily related to gross property additions.
The net cash provided from financing activities for the three months ended March 31, 20212022 was primarily related to capital contributions from Southern Company and an increase in commercial papershort-term borrowings, partially offset by common stock dividend payments.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Southern Power
Net cash provided from operating activities increased $104decreased $70 million for the three months ended March 31, 20212022 as compared to the corresponding period in 20202021 primarily due to the timing of vendor payments to PPA counterparties and the timing of receipts from affiliated companies.customer receivable collections.
The net cash used for investing activities for the three months ended March 31, 20212022 was primarily related to the acquisition of the Deuel Harvest wind facility and ongoing construction activities.payments. See Note (K) to the Condensed Financial Statements under "Southern Power" herein for additional information.
The net cash provided fromused for financing activities for the three months ended March 31, 20212022 was primarily related to the issuance of senior notes, net capital contributions from noncontrolling interests, and an increase in commercial paper borrowings, partially offset by a return of capital to Southern Company and common stock dividend payments.payments and a net capital distribution to noncontrolling interests.
Southern Company Gas
Net cash provided from operating activities decreased $93increased $474 million for the three months ended March 31, 20212022 as compared to the corresponding period in 20202021 primarily due to increased natural gas cost under recovery, reflecting an increase in the cost of gas purchased during Winter Storm Uri, andpartially offset by the timing of customer receivable collections partially offset by temporary LIFO liquidation, and the timing of vendor payments..
The net cash used for investing activities for the three months ended March 31, 20212022 was primarily related to construction of transportation and distribution assets recovered through base rates and infrastructure investment recovered through replacement programs at gas distribution operations.
The net cash provided fromused for financing activities for the three months ended March 31, 20212022 was primarily related to the issuance net repayments of short-term debt and common stock dividend payments, partially offset by capital contributions from Southern Company, partially offset by common stock dividend payments and repayments of commercial paper borrowings.Company.
Significant Balance Sheet Changes
Southern Company
Significant balance sheet changes for the three months ended March 31, 20212022 included:
•an increase of $1.7$0.9 billion in long-termnotes payable due to an increase in short-term bank debt (including amounts due within one year) related to new issuances;and commercial paper borrowings;
•an increase of $1.4$0.7 billion in total property, plant, and equipment primarily related to the Subsidiary Registrants' construction programs, as well as Southern Power's acquisition of the Deuel Harvest wind facility;programs;
•an increaseincreases of $0.8 billion in total stockholders' equity primarily related to net income, partially offset by common stock dividend payments;
•an increase of $0.7$0.6 billion in accumulated deferred income taxes and $0.4 billion in prepaid expenses primarily related to the expected utilization of tax creditsITCs in 2021;2022;
•an increase of $0.7 billion in cash and cash equivalents, as discussed further under "Analysis of Cash Flows – Southern Company" herein;
•an increasea decrease of $0.5 billion in natural gas cost under recovery, which was impacted by an increase in Southern Company Gas' costaccrued compensation due to the timing of gas purchased during Winter Storm Uri;payments; and
•an increasea decrease of $0.5 billion in notes payable relatedlong-term debt (including securities due within one year) primarily due to net issuancesthe redemption of short-term bank debt and commercial paper.senior notes.
See "Financing Activities" herein and Notes (B) and (K)Note (G) to the Condensed Financial Statements herein for additional information.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Alabama Power
Significant balance sheet changes for the three months ended March 31, 20212022 included:
•an increase of $716$719 million in common stockholder's equity primarily due to capital contributions from Southern Company;
•an increase of $269$293 million in cash and cash equivalents, as discussed further under "Analysis of Cash Flows – Alabama Power" herein;
•an increase of $161 million in total property, plant, and equipment primarily related to construction of distribution and transmission facilities, construction of Plant Barry Unit 8, and the installation of equipment to comply with environmental standards; and
•a decreasean increase of $153$145 million in other accounts payablelong-term debt (including securities due within one year) primarily due to the timing of vendor payments.a net increase in outstanding senior notes.
See "Financing Activities – Alabama Power" herein for additional information.
Georgia Power
Significant balance sheet changes for the three months ended March 31, 20212022 included:
•an increase of $547$860 million in notes payable due to an increase in short-term bank debt and commercial paper borrowings;
•an increase of $499 million in total property, plant, and equipment primarily related to the construction of generation, transmission, and distribution facilities, including $291$303 million for Plant Vogtle Units 3 and 4 (net of a pre-tax charge of $48 million for an estimated probable loss);4;
•an increasea decrease of $395$421 million in long-term debt (including securities due within one year) primarily due to a net increase in outstandingthe redemption of senior notes; and
•an increase of $273$415 million in common stockholder's equity primarily due to capital contributions from Southern Company.
See "Financing Activities – Georgia Power" herein and Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction" herein for additional information.
Mississippi Power
Significant balance sheet changes for the three months ended March 31, 20212022 included:
•an increaseincreases of $106$66 million in common stockholder's equityassets from risk management activities and $61 million in other regulatory liabilities, current primarily from capital contributions from Southern Companydue to unrealized gains on short-term energy-related derivatives;
•a decrease of $64 million in accrued taxes primarily due to the payment of ad valorem taxes; and
•a decrease of $75$52 million in accrued taxes primarily duecash and cash equivalents, as discussed further under "Analysis of Cash Flows – Mississippi Power" herein.
See Note (J) to the payment of ad valorem taxes.Condensed Financial Statements herein for additional information.
Southern Power
Significant balance sheet changes for the three months ended March 31, 2021 included:
•an increase2022 included increases of $409 million in property, plant, and equipment in service primarily due to the acquisition of the Deuel Harvest wind facility;
•an increase of $357$441 million in prepaid income taxes a decrease of $262and $446 million in accumulated deferred income tax assets, and a $107 million increase in accumulated deferred income tax liabilities primarily related to the expected utilization of ITCs in 2021; and
•an increase of $337 million in long-term debt primarily related to the issuance of senior notes.
2022. See "Financing Activities – Southern Power" herein and Note (K)(G) to the Condensed Financial Statements herein for additional information.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Southern Company Gas
Significant balance sheet changes for the three months ended March 31, 20212022 included:
•increasesa decrease of $487$677 million in natural gas cost under recovery, $171 million in other regulatory assets, deferred,notes payable due to repayments of short-term debt and $162 million in accumulated deferred income taxes, all primarily related to natural gas cost under recovery, reflecting an increase in the cost of gas purchased during Winter Storm Uri;commercial paper borrowings;
•an increase of $327$259 million in common stockholder's equity primarily related to net income and capital contributions from Southern Company, partially offset by dividends paid to Southern Company;
•an increase of $292 million in cash and cash equivalents, as discussed further under "Analysis of Cash Flows – Southern Company Gas" herein;
•a decrease of $263$241 million in natural gas for sale primarily due to higher volumes of natural gas sold;
•an increase of $194$209 million in temporary LIFO liquidation due to higheruse of stored natural gas;
•a decrease of $181 million in other regulatory assets, deferred primarily due to a $163 million reduction in natural gas prices during Winter Storm Uri;cost under recovery;
•an increase of $173 million in notes payable due to issuances of short-term borrowings; and
•an increase of $171$147 million in total property, plant, and equipment primarily related to the construction of transportation and distribution assets recovered through base rates and infrastructure investment recovered through replacement programs.programs; and
•an increase of $141 million in customer accounts receivable due to the timing of collections.
See "Financing Activities – Southern Company Gas" herein and Note (B) to the Condensed Financial Statements herein for additional information.
Financing Activities
The following table outlines the Registrants' long-term debt financing activities for the first three months of 2021:2022:
Senior NotesMaturities and Redemptions
CompanyCompanyIssuancesMaturities, Redemptions, and Repurchases
Other Long-Term Debt Redemptions
and Maturities(*)
CompanySenior Note IssuancesSenior
Notes
Other Long-Term Debt(*)
(in millions)(in millions)
Southern Company parent$1,000 $— $— 
Alabama PowerAlabama Power$700 $550 $— 
Georgia PowerGeorgia Power750 325 26 Georgia Power— 400 24 
Southern Power400 — — 
Southern Company Gas— — 30 
OtherOther— — 3 Other— — 3 
Southern CompanySouthern Company$2,150 $325 $59 Southern Company$700 $950 $27 
(*)Includes reductions in finance lease obligations resulting from cash payments under finance leases and, for Georgia Power, principal amortization payments totaling $24 million for FFB borrowings. See Note 8 to the financial statements under "Long-term Debt – DOE Loan Guarantee Borrowings" in Item 8 of the Form 10-K for additional information.
Except as otherwise described herein, the Registrants used the proceeds of debt issuances for their redemptions and maturities shown in the table above, to repay short-term indebtedness, and for general corporate purposes, including working capital. The Subsidiary Registrants also used the proceeds for their construction programs.
In addition to any financings that may be necessary to meet capital requirements and contractual obligations, the Registrants plan to continue, when economically feasible, a program to retire higher-cost securities and replace these obligations with lower-cost capital if market conditions permit.
Southern Company
During the first three months of 2021,quarter 2022, Southern Company issued approximately 2.22.6 million shares of common stock primarily through employee equity compensation plans and received proceeds of approximately $14$38 million.
In January 2021,March 2022, Southern Company borrowed $25entered into a $400 million pursuant to a short-term uncommittedfloating rate bank credit arrangement, which it repaid in March 2021.loan bearing interest based on term SOFR.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
In February 2021, Southern Company issued $600 million aggregate principal amount of Series 2021A 0.60% Senior Notes due February 26, 2024 and $400 million aggregate principal amount of Series 2021B 1.75% Senior Notes due March 15, 2028.
Alabama Power
In March 2021,February 2022, Alabama Power extended the maturity dates from March 2021 to March 2026 on its three bank term loan agreements with an aggregate principal amount of $45 million, bearing interest based on three-month LIBOR.
Georgia Power
In February 2021, Georgia Power issued $750 million aggregate principal amount of Series 2021A 3.25% Senior Notes due March 15, 2051. An amount equal to the net proceeds of the senior notes is being allocated to finance or refinance, in whole or in part, one or more renewable energy projects and/or expenditures and programs related to enabling opportunities for diverse and small businesses/suppliers.
In March 2021, Georgia Power redeemed all $325$550 million aggregate principal amount of its Series 2016B 2.40%2017A 2.45% Senior Notes due April 1, 2021.
Also in March 2021, Georgia Power extended the maturity date of its $125 million term loan from June 2021 to June30, 2022.
During the three months endedIn March 31, 2021, Georgia2022, Alabama Power madeissued $700 million aggregate principal amortization paymentsamount of $25 million under the FFB Credit Facilities. AtSeries 2022A 3.05% Senior Notes due March 31, 2021, the outstanding principal balance under the FFB Credit Facilities was $4.6 billion. See Note 8 to the financial statements under "Long-Term Debt – DOE Loan Guarantee Borrowings" in Item 8 of the Form 10-K for additional information.15, 2032.
SouthernGeorgia Power
In January 2021, Southern2022, Georgia Power issuedredeemed all $400 million aggregate principal amount of its Series 2021A 0.90%2012B 2.85% Senior Notes due JanuaryMay 15, 2026. An amount equal2022.
In February 2022, Georgia Power borrowed $250 million pursuant to a short-term uncommitted bank credit arrangement bearing interest at a rate agreed upon by Georgia Power and the net proceeds ofbank from time to time and payable on demand, following specified notice by the senior notes is being allocatedbank.
In March 2022, Georgia Power entered into a $200 million short-term floating rate bank loan bearing interest based on term SOFR.
Subsequent to finance or refinance, in whole or in part, one or more renewable energy projects.March 31, 2022, Georgia Power entered into an additional $200 million short-term floating rate bank loan bearing interest based on term SOFR.
Mississippi Power
In March 2022, Mississippi Power borrowed $20 million (short term) pursuant to its $125 million revolving credit arrangement bearing interest based on term SOFR.
Southern Company Gas
During the first quarter 2022, Nicor Gas repaid one of its three $100 million short-term floating rate bank loans entered into in March 2021. Nicor Gas repaid $50 million of one of the other loans and increased the borrowing amount under the other loan to $150 million. In February 2021,addition, both loans were renewed and amended to extend the maturity dates and change the interest rate provisions so the loans bear interest based on term SOFR.
Subsequent to March 31, 2022, Atlanta Gas Light repaid at maturity $30$36 million aggregate principal amount of 9.1% medium-term notes.
In March 2021, Nicor Gas entered into three short-term floatingnotes with a weighted average interest rate bank loans in an aggregate principal amount of $300 million, each bearing interest based on one-month LIBOR.8.65%.
Credit Rating Risk
At March 31, 2021,2022, the Registrants did not have any credit arrangements that would require material changes in payment schedules or terminations as a result of a credit rating downgrade.
There are certain contracts that could require collateral, but not accelerated payment, in the event of a credit rating change of certain Registrants to BBB and/or Baa2 or below. These contracts are primarily for physical electricity and natural gas purchases and sales, fuel purchases, fuel transportation and storage, energy price risk management, transmission, interest rate management, and, for Georgia Power, construction of new generation at Plant Vogtle Units 3 and 4.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
The maximum potential collateral requirements under these contracts at March 31, 20212022 were as follows:
Credit RatingsCredit Ratings
Southern Company(*)
Alabama PowerGeorgia PowerMississippi Power
Southern
Power(*)
Southern Company GasCredit Ratings
Southern Company(*)
Alabama PowerGeorgia PowerMississippi Power
Southern
Power(*)
Southern Company Gas
(in millions)(in millions)
At BBB and/or Baa2At BBB and/or Baa2$38 $1 $— $— $37 $— At BBB and/or Baa2$37 $1 $— $— $36 $— 
At BBB- and/or Baa3At BBB- and/or Baa3433 2 61 1 371 — At BBB- and/or Baa3427 2 61 1 365 — 
At BB+ and/or Ba1 or belowAt BB+ and/or Ba1 or below1,938 366 965 308 1,210 10 At BB+ and/or Ba1 or below1,946 405 924 305 1,202 5 
(*)Southern Power has PPAs that could require collateral, but not accelerated payment, in the event of a downgrade of Southern Power's credit. The PPAs require credit assurances without stating a specific credit rating. The amount of collateral required would depend upon actual losses resulting from a credit downgrade. Southern Power had $105 million of cash collateral posted related to PPA requirements at March 31, 2021.2022.
The amounts in the previous table for the traditional electric operating companies and Southern Power include certain agreements that could require collateral if either Alabama Power or Georgia Power has a credit rating change to below investment grade. Generally, collateral may be provided by a Southern Company guaranty, letter of credit, or cash. Additionally, a credit rating downgrade could impact the ability of the Registrants to access capital markets and would be likely to impact the cost at which they do so.
On February 22, 2022, Fitch downgraded the senior unsecured long-term debt rating of Georgia Power to BBB+ from A- with a stable outlook.
Market Price Risk
Other thanAlso on February 22, 2022, Fitch revised the Southern Company Gas items discussed below, there were no material changes to the Registrants' disclosures about market price risk during the first quarter 2021. For an in-depth discussionratings outlook of Southern Company, Gas' market price risks, see MANAGEMENT'S DISCUSSION AND ANALYSIS – FINANCIAL CONDITION AND LIQUIDITY – "Market Price Risk" in Item 7 of the Form 10-K. Also see Notes (I)Alabama Power, Southern Power, Nicor Gas, and (J)SEGCO to the Condensed Financial Statements herein for information relating to derivative instruments.
Southern Company Gas is exposed to market risks, including commodity price risk, interest rate risk, and weather risk. Due to various cost recovery mechanisms, the natural gas distribution utilities that sell natural gas directly to end-use customers continue to have limited exposure to market volatility of natural gas prices. Certain of the natural gas distribution utilities manage fuel-hedging programs implemented per the guidelines of their respective state regulatory agencies to hedge the impact of market fluctuations in natural gas prices for customers. In addition, certain of Southern Company Gas' non-regulated operations routinely utilize various types of derivative instruments to economically hedge certain commodity price and weather risks inherent in the natural gas industry. These instruments include a variety of exchange-traded and over-the-counter energy contracts, such as forward contracts, futures contracts, options contracts, and swap agreements. Some of these economic hedge activities may not qualify, or may not be designated, for hedge accounting treatment.negative from stable.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
For the periods presented below, the changes in net fair value of Southern Company Gas' energy-related derivative contracts were as follows:
First Quarter 2021First Quarter 2020
(in millions)
Contracts outstanding at beginning of period, assets (liabilities), net$101 $70 
Contracts realized or otherwise settled(48)(91)
Current period changes(*)
(13)59 
Contracts outstanding at the end of period, assets (liabilities), net$40 $38 
Netting of cash collateral27 128 
Cash collateral and net fair value of contracts outstanding at end of period$67 $166 
(*)Current period changes also include the fair value of new contracts entered into during the period, if any.
The maturities of Southern Company Gas' derivative contracts at March 31, 2021 were as follows:
Fair Value Measurements of Contracts at
March 31, 2021
Total
Fair Value		Maturity
20212022 – 20232024 – 2025
(in millions)
Level 1(a)
$13 $11 $(12)$14 
Level 2(b)
(1)(1)(2)2 
Level 3(c)
28 9 8 11 
Fair value of contracts outstanding at end of period(d)
$40 $19 $(6)$27 
(a)Valued using NYMEX futures prices.
(b)Valued using basis transactions that represent the cost to transport natural gas from a NYMEX delivery point to the contract delivery point. These transactions are based on quotes obtained either through electronic trading platforms or directly from brokers.
(c)Valued using a combination of observable and unobservable inputs.
(d)Excludes cash collateral of$27 million.
Southern Company Gas Value at Risk (VaR)
VaR is the maximum potential loss in portfolio value over a specified time period that is not expected to be exceeded within a given degree of probability. Southern Company Gas' VaR may not be comparable to that of other companies due to differences in the factors used to calculate VaR. Southern Company Gas' VaR is determined on a 95% confidence interval and a one-day holding period, which means that 95% of the time, the risk of loss in a day from a portfolio of positions is expected to be less than or equal to the amount of VaR calculated. The open exposure of Southern Company Gas is managed in accordance with established policies that limit market risk and require daily reporting of potential financial exposure to senior management. Because Southern Company Gas generally manages physical gas assets and economically protects its positions by hedging in the futures markets, Southern Company Gas' open exposure is generally mitigated. Southern Company Gas employs daily risk testing, using both VaR and stress testing, to evaluate the risk of its positions.
Southern Company Gas actively monitors open commodity positions and the resulting VaR and maintains a relatively small risk exposure as total buy volume is close to sell volume, with minimal open natural gas price risk. Based on a 95% confidence interval and employing a one-day holding period, SouthStar's portfolio of positions for all periods presented was immaterial.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Southern Company Gas' wholesale gas services segment had the following VaRs at March 31:
20212020
(in millions)
Period end(*)
$1.1 $4.2 
Average3.2 2.1 
High(*)
55.3 4.2 
Low0.9 1.3 
(*)The VaR at March 31, 2021 reflects significant natural gas price increases in Sequent's key markets driven by a disruption in natural gas supplies and an increase in usage due to Winter Storm Uri that extended from the Gulf Coast to across the mid-west. VaR returned to typical levels as temperatures and natural gas supplies normalized.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
During the three months ended March 31, 2021,2022, there were no material changes to Southern Company's, Alabama Power's, Georgia Power's, Mississippi Power's, and Southern Power's, or Southern Company Gas' disclosures about market risk. For additional market risk disclosures relating to Southern Company Gas, see MANAGEMENT'S DISCUSSION AND ANALYSIS – FINANCIAL CONDITION AND LIQUIDITY – "Market Price Risk" herein. For an in-depth discussion of each Registrant's market risks, see MANAGEMENT'S DISCUSSION AND ANALYSIS – FINANCIAL CONDITION AND LIQUIDITY – "Market Price Risk" in Item 7 of the Form 10-K and Note 1 to the financial statements under "Financial Instruments" and Notes 13 and 14 to the financial statements in Item 8 of the Form 10-K, as well as Notes (I) and (J) to the Condensed Financial Statements herein.
Item 4. Controls and Procedures.
(a)Evaluation of disclosure controls and procedures.
As of the end of the period covered by this Quarterly Report on Form 10-Q, Southern Company, Alabama Power, Georgia Power, Mississippi Power, Southern Power, and Southern Company Gas conducted separate evaluations under the supervision and with the participation of each company's management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the disclosure controls and procedures (as defined in Sections 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended). Based upon these evaluations, the Chief Executive Officer and the Chief Financial Officer, in each case, concluded that the disclosure controls and procedures are effective.
(b)    Changes in internal controls over financial reporting.
There have been no changes in Southern Company's, Alabama Power's, Georgia Power's, Mississippi Power's, Southern Power's or Southern Company Gas' internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) during the first quarter 20212022 that have materially affected or are reasonably likely to materially affect Southern Company's, Alabama Power's, Georgia Power's, Mississippi Power's, Southern Power's or Southern Company Gas' internal control over financial reporting.
In January 2022, Southern Company, Alabama Power, Georgia Power, and Mississippi Power implemented new financial accounting and reporting applications. As a result, there were certain changes to processes and procedures, which resulted in changes to Southern Company's, Alabama Power's, Georgia Power's, and Mississippi Power's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended). These changes include automation of certain previously manual controls. These changes in internal controls were not made in response to any identified internal control deficiency.
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PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
See the Notes to the Condensed Financial Statements herein for information regarding certain legal and administrative proceedings in which the Registrants are involved. The Registrants' threshold for disclosing material environmental legal proceedings involving a governmental authority where potential monetary sanctions are involved is $1 million.
Item 1A. Risk Factors.
See RISK FACTORS in Item 1A of the Form 10-K for a discussion of the risk factors of the Registrants. There have been no material changes to these risk factors from those previously disclosed in the Form 10-K.
Item 6. Exhibits.
The exhibits below with an asterisk (*) preceding the exhibit number are filed herewith. The remaining exhibits have previously been filed with the SEC and are incorporated herein by reference. The exhibits marked with a pound sign (#) are management contracts or compensatory plans or arrangements.
(4) Instruments Describing Rights of Security Holders, Including Indentures
Southern Company
(a)1-
Twenty-Second Supplemental Indenture to Senior Note Indenture dated as of February 26, 2021, providing for amendments to the Senior Note Indenture and for the issuance of the Series 2021A 0.60% Senior Notes due February 26, 2024. (Designated in Form 8-K dated February 23, 2021, File No. 1-3526, as Exhibit 4.4(a))
(a)2-
Twenty-Third Supplemental Indenture to Senior Note Indenture dated as of February 26, 2021, providing for the issuance of the Series 2021B 1.75% Senior Notes due March 15, 2028. (Designated in Form 8-K dated February 23, 2021, File No. 1-3526, as Exhibit 4.4(b))
GeorgiaAlabama Power
(b)-
Sixty-Third Supplemental Indenture to Senior Note Indenture dated as of February 26, 2021,March 7, 2022, providing for amendments to the Senior Note Indenture and for the issuance of the Series 2021A 3.25%2022A 3.05% Senior Notes due March 15, 2051.2032. (Designated in Form 8-K dated February 22, 2021,March 2, 2022, File No. 1-1-6468,3164, as Exhibit 4.4.26)
(10) Material Contracts
Southern Company
#*(a)1-
*(a)2-
*(a)3-
#*(a)4-
#*(a)5-
Alabama Power
#(b)1-Form of Terms for Named Executive Officer Equity Awards Granted under The Southern Company 2021 Equity and Incentive Compensation Plan. See Exhibit 10(a)1 herein.
(b)2-Fifth Amendment to The Southern Company Employee Savings Plan. See Exhibit 10(a)2 herein.
(b)3-Sixth Amendment to The Southern Company Employee Savings Plan. See Exhibit 10(a)3 herein.
#(b)4-Fourth Amendment No. 2 to The Southern Company Change in Control Benefits Protection Plan, effective as of February 26, 2021.Deferred Compensation Plan. See Exhibit 10(a)4 herein.
#(b)5-Eighth Amendment to The Southern Company Supplemental Benefit Plan. See Exhibit 10(a)5 herein.
(24) Power of Attorney and Resolutions
Southern Company
(a)-
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Alabama Power
(b)-
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Georgia Power
(c)1-
(c)2-
Mississippi Power
(d)1-
Southern Power
(e)1-
Southern Company Gas
(f)1-
(f)2-
(31) Section 302 Certifications
Southern Company
*(a)1-
*(a)2-
Alabama Power
*(b)1-
*(b)2-
Georgia Power
*(c)1-
*(c)2-
Mississippi Power
*(d)1-
*(d)2-
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Southern Power
*(e)1-
*(e)2-
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Southern Company Gas
*(f)1-
*(f)2-
(32) Section 906 Certifications
Southern Company
*(a)-
Alabama Power
*(b)-
Georgia Power
*(c)-
Mississippi Power
*(d)-
Southern Power
*(e)-
Southern Company Gas
*(f)-
(101) Interactive Data Files
*INS-XBRL Instance Document – The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
*SCH-XBRL Taxonomy Extension Schema Document
*CAL-XBRL Taxonomy Calculation Linkbase Document
*DEF-XBRL Definition Linkbase Document
*LAB-XBRL Taxonomy Label Linkbase Document
*PRE-XBRL Taxonomy Presentation Linkbase Document
(104) Cover Page Interactive Data File
*Formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.
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THE SOUTHERN COMPANY
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof included in such company's report.
 
THE SOUTHERN COMPANY
ByThomas A. Fanning
Chairman, President, and Chief Executive Officer
(Principal Executive Officer)
ByAndrew W. EvansDaniel S. Tucker
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
By/s/ Melissa K. Caen
(Melissa K. Caen, Attorney-in-fact)
Date: April 28, 202127, 2022
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ALABAMA POWER COMPANY
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof included in such company's report.
 
ALABAMA POWER COMPANY
ByMark A. Crosswhite
Chairman, President, and Chief Executive Officer
(Principal Executive Officer)
ByPhilip C. Raymond
Executive Vice President, Chief Financial Officer, and Treasurer
(Principal Financial Officer)
By/s/ Melissa K. Caen
(Melissa K. Caen, Attorney-in-fact)
Date: April 28, 202127, 2022
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GEORGIA POWER COMPANY
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof included in such company's report.
 
GEORGIA POWER COMPANY
ByW. Paul BowersChristopher C. Womack
Chairman, President, and Chief Executive Officer
(Principal Executive Officer)
ByDaniel S. TuckerAaron P. Abramovitz
Executive Vice President, Chief Financial Officer, and Treasurer
(Principal Financial Officer)
By/s/ Melissa K. Caen
(Melissa K. Caen, Attorney-in-fact)
Date: April 28, 202127, 2022
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MISSISSIPPI POWER COMPANY
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof included in such company's report.
 
MISSISSIPPI POWER COMPANY
ByAnthony L. Wilson
Chairman, President, and Chief Executive Officer
(Principal Executive Officer)
ByMoses H. Feagin
Senior Vice President, Chief Financial Officer, and Treasurer
(Principal Financial Officer)
By/s/ Melissa K. Caen
(Melissa K. Caen, Attorney-in-fact)
Date: April 28, 202127, 2022
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SOUTHERN POWER COMPANY
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof included in such company's report.
 
SOUTHERN POWER COMPANY
ByChristopher Cummiskey
Chairman and Chief Executive Officer
(Principal Executive Officer)
ByElliott L. Spencer
Senior Vice President, Chief Financial Officer, and Treasurer
(Principal Financial Officer)
By/s/ Melissa K. Caen
(Melissa K. Caen, Attorney-in-fact)
Date: April 28, 202127, 2022
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SOUTHERN COMPANY GAS
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof included in such company's report.
 
SOUTHERN COMPANY GAS
ByKimberly S. Greene
Chairman, President, and Chief Executive Officer
(Principal Executive Officer)
ByDavid P. Poroch
Executive Vice President, Chief Financial Officer, and Treasurer
(Principal Financial Officer)
By/s/ Melissa K. Caen
(Melissa K. Caen, Attorney-in-fact)
Date: April 28, 202127, 2022

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