0000092122so:AlabamaPowerMemberso:WholesaleElectricNonPPARevenuesMember2021-04-012021-06-300000092122us-gaap:CashFlowHedgingMemberus-gaap:OtherNonoperatingIncomeExpenseMemberso:SouthernPowerMemberus-gaap:ForeignExchangeContractMember2021-04-012021-06-300000092122us-gaap:FairValueMeasurementsRecurringMemberso:SouthernPowerMember2023-03-31
    Table of Contents                                Index to Financial Statements
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 June 30, 2022March 31, 2023
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 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 Stock
Shares Outstanding at June 30, 2022
March 31, 2023
The Southern CompanyPar Value $5 Per Share1,063,001,3201,090,402,540 
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.
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TABLE OF CONTENTS
  Page
4
7
PART I—FINANCIAL INFORMATION
Item 1.
9
Item 2.
9689
Item 3.
149132
Item 4.
149132
PART II—OTHER INFORMATION
Item 1.
150133
Item 1A.
150133
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.
150133
153136
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DEFINITIONS
TermMeaning
20192022 ARPAlternate Rate Plan approved by the Georgia PSC in 20192022 for Georgia Power for the years 20202023 through 20222025
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
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
CCR RuleDisposal of Coal Combustion Residuals from Electric Utilities final rule published by the EPA in 2015
Chattanooga GasChattanooga Gas Company, a wholly-owned subsidiary of Southern Company Gas
Clean Air ActClean Air Act Amendments of 1990
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
ECCRECO PlanGeorgiaMississippi Power's Environmental Compliance Cost Recovery tariffenvironmental compliance overview plan
ELGEffluent limitations guidelines
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
FCCFederal Communications Commission
FERCFederal Energy Regulatory Commission
FFBFederal Financing Bank
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, 2021,2022, 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
Gulf PowerHeating Degree DaysGulf Power Company, until January 1, 2019 a wholly-owned subsidiaryA measure 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 asweather, calculated when the surviving companyaverage daily temperatures are less than 65 degrees Fahrenheit
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DEFINITIONS
(continued)
TermMeaning
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
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
KWHKilowatt-hour
LIBORLondon Interbank Offered Rate
LIFOLast-in, first-out
LOCOMLower of weighted average cost or current market price
LTSALong-term service agreement
MEAG PowerMunicipal Electric Authority of Georgia
Mississippi PowerMississippi Power Company
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
N/MNot meaningful
NRCU.S. Nuclear Regulatory Commission
NYMEXNew York Mercantile Exchange, Inc.
OCIOther comprehensive income
OPCOglethorpe Power Corporation (an electric membership corporation)
PennEast PipelinePennEast Pipeline Company, LLC, a joint venture in which Southern Company Gas has a 20% ownership interest
PEPMississippi Power's Performance Evaluation Plan
PowerSecurePowerSecure, Inc., a wholly-owned subsidiary of Southern Company
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
PSCPublic Service Commission
PTCProduction tax credit
Rate CNPAlabama Power's Rate Certificated New Plant, consisting of Rate CNP New Plant, Rate CNP Compliance, Rate CNP PPA, and Rate CNP PPADepreciation
Rate ECRAlabama Power's Rate Energy Cost Recovery
Rate NDRAlabama Power's Rate Natural Disaster Reserve
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.
SAVESteps to Advance Virginia's Energy, an infrastructure replacement program at Virginia Natural Gas
SCSSouthern Company Services, Inc., the Southern Company system service company and a wholly-owned subsidiary of Southern Company
SECU.S. Securities and Exchange Commission
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DEFINITIONS
(continued)
TermMeaning
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
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, 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
SRRMississippi Power's System Restoration Rider, a tariff for retail property damage cost recovery and reserve
Subsidiary RegistrantsAlabama Power, Georgia Power, Mississippi Power, Southern Power, and Southern Company Gas
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
Vogtle OwnersGeorgia Power, OPC, 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, including inflation, 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 acquisitions,dispositions, 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 and Plant Vogtle Units 3 and 4;
•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 and commodities;
•the ability to complete necessary or desirable pipeline expansion or infrastructure projects, limits on pipeline capacity, public and policymaker support for such projects, 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 and/or future challenges which include, but are not limited to, changes in labor costs, availability, and productivity; challenges with the 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; the impacts of inflation; 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 or any remediation related thereto; design and other licensing-based compliance matters including, for nuclear units,Plant Vogtle Unit 4, 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; andcontinued challenges related to the COVID-19 pandemic;pandemic or future pandemic health events; continued public and policymaker support for projects; environmental and geological conditions; delays or increased costs to interconnect facilities to transmission grids; and increased financing costs as a result of changes in market interest rates or as a result of project delays;
•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, 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;
•the abilitynotices of other Vogtle Owners to tender by OPC and Dalton of a portion of their ownership interests in Plant Vogtle Units 3 and 4 to Georgia Power, following certain construction cost increases, including the purported exercises by OPC and Dalton of their tender options and related litigation initiated by OPC and MEAG Power;litigation;
7
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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 and battery energy storage 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 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 cyber and physical attacks;
•global and U.S. economic conditions, including impacts from recession, inflation, 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;
•the replacement of LIBOR with an alternative reference rate;
•the ability of the traditional electric operating 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 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 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.
8
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PART I
Item 1. Financial Statements (Unaudited).
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    Table of Contents                                Index to Financial Statements

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
For the Three Months Ended June 30,For the Six Months Ended June 30, For the Three Months Ended March 31,
2022202120222021 20232022
(in millions)(in millions) (in millions)
Operating Revenues:Operating Revenues:Operating Revenues:
Retail electric revenuesRetail electric revenues$4,789 $3,599 $8,402 $6,941 Retail electric revenues$3,599 $3,613 
Wholesale electric revenuesWholesale electric revenues937 546 1,601 1,091 Wholesale electric revenues599 664 
Other electric revenuesOther electric revenues192 175 370 346 Other electric revenues190 177 
Natural gas revenues (includes alternative revenue programs of
$2, $2, $1, and $4, respectively)
1,083 677 3,140 2,371 
Natural gas revenues (includes alternative revenue programs of $12 and $—, respectively)Natural gas revenues (includes alternative revenue programs of $12 and $—, respectively)1,875 2,058 
Other revenuesOther revenues205 201 341 359 Other revenues217 136 
Total operating revenuesTotal operating revenues7,206 5,198 13,854 11,108 Total operating revenues6,480 6,648 
Operating Expenses:Operating Expenses:Operating Expenses:
FuelFuel1,715 848 2,826 1,696 Fuel1,050 1,111 
Purchased powerPurchased power408 217 640 424 Purchased power242 232 
Cost of natural gasCost of natural gas452 231 1,546 814 Cost of natural gas898 1,095 
Cost of other salesCost of other sales114 103 183 185 Cost of other sales127 69 
Other operations and maintenanceOther operations and maintenance1,558 1,438 3,075 2,810 Other operations and maintenance1,482 1,516 
Depreciation and amortizationDepreciation and amortization913 891 1,805 1,762 Depreciation and amortization1,111 892 
Taxes other than income taxesTaxes other than income taxes349 313 721 657 Taxes other than income taxes394 372 
Estimated loss on Plant Vogtle Units 3 and 452 460 52 508 
Gain on dispositions, netGain on dispositions, net(10)(11)(33)(54)Gain on dispositions, net(42)(23)
Total operating expensesTotal operating expenses5,551 4,490 10,815 8,802 Total operating expenses5,262 5,264 
Operating IncomeOperating Income1,655 708 3,039 2,306 Operating Income1,218 1,384 
Other Income and (Expense):Other Income and (Expense):Other Income and (Expense):
Allowance for equity funds used during constructionAllowance for equity funds used during construction53 45 104 90 Allowance for equity funds used during construction65 51 
Earnings (loss) from equity method investments34 (40)80 5 
Earnings from equity method investmentsEarnings from equity method investments48 46 
Interest expense, net of amounts capitalizedInterest expense, net of amounts capitalized(488)(450)(950)(901)Interest expense, net of amounts capitalized(582)(462)
Other income (expense), netOther income (expense), net139 101 283 160 Other income (expense), net147 145 
Total other income and (expense)Total other income and (expense)(262)(344)(483)(646)Total other income and (expense)(322)(220)
Earnings Before Income TaxesEarnings Before Income Taxes1,393 364 2,556 1,660 Earnings Before Income Taxes896 1,164 
Income taxes (benefit)304 (12)477 178 
Income taxesIncome taxes97 173 
Consolidated Net IncomeConsolidated Net Income1,089 376 2,079 1,482 Consolidated Net Income799 991 
Dividends on preferred stock of subsidiariesDividends on preferred stock of subsidiaries4 4 7 7 Dividends on preferred stock of subsidiaries— 4 
Net loss attributable to noncontrolling interestsNet loss attributable to noncontrolling interests(22)— (67)(33)Net loss attributable to noncontrolling interests(63)(45)
Consolidated Net Income Attributable to
Southern Company		Consolidated Net Income Attributable to
Southern Company		$1,107 $372 $2,139 $1,508 Consolidated Net Income Attributable to
Southern Company		$862 $1,032 
Common Stock Data:Common Stock Data:Common Stock Data:
Earnings per share -Earnings per share -Earnings per share -
BasicBasic$1.04 $0.35 $2.01 $1.42 Basic$0.79 $0.97 
DilutedDiluted$1.03 $0.35 $2.00 $1.41 Diluted$0.79 $0.97 
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)
BasicBasic1,065 1,061 1,064 1,060 Basic1,091 1,063 
DilutedDiluted1,072 1,067 1,070 1,066 Diluted1,098 1,069 
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 June 30,For the Six Months Ended June 30, For the Three Months Ended March 31,
2022202120222021 20232022
(in millions)(in millions) (in millions)
Consolidated Net IncomeConsolidated Net Income$1,089 $376 $2,079 $1,482 Consolidated Net Income$799 $991 
Other comprehensive income:
Other comprehensive income (loss):Other comprehensive income (loss):
Qualifying hedges:Qualifying hedges:Qualifying hedges:
Changes in fair value, net of tax of
$(15), $5, $(7), and $(5), respectively
(45)14 (26)(16)
Reclassification adjustment for amounts included in net income,
net of tax of $17, $(1), $24, and $17, respectively
54 (5)74 50 
Changes in fair value, net of tax of $(23) and $8, respectivelyChanges in fair value, net of tax of $(23) and $8, respectively(63)19 
Reclassification adjustment for amounts included in net income,
net of tax of $7 and $6, respectively
Reclassification adjustment for amounts included in net income,
net of tax of $7 and $6, respectively
19 20 
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, $2, $2, and $3, respectively
2 3 5 6 
Total other comprehensive income11 12 53 40 
Reclassification adjustment for amounts included in net income,
net of tax of $— and $1, respectively
Reclassification adjustment for amounts included in net income,
net of tax of $— and $1, respectively
— 3 
Total other comprehensive income (loss)Total other comprehensive income (loss)(44)42 
Comprehensive IncomeComprehensive Income1,100 388 2,132 1,522 Comprehensive Income755 1,033 
Dividends on preferred stock of subsidiariesDividends on preferred stock of subsidiaries4 4 7 7 Dividends on preferred stock of subsidiaries— 4 
Comprehensive loss attributable to noncontrolling interestsComprehensive loss attributable to noncontrolling interests(22)— (67)(33)Comprehensive loss attributable to noncontrolling interests(63)(45)
Consolidated Comprehensive Income Attributable to
Southern Company		Consolidated Comprehensive Income Attributable to
Southern Company		$1,118 $384 $2,192 $1,548 Consolidated Comprehensive Income Attributable to
Southern Company		$818 $1,074 
The accompanying notes as they relate to Southern Company are an integral part of these condensed consolidated financial statements.

11
    Table of Contents                                Index to Financial Statements
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Six Months Ended June 30, For the Three Months Ended March 31,
20222021 20232022
(in millions) (in millions)
Operating Activities:Operating Activities:Operating Activities:
Consolidated net incomeConsolidated net income$2,079 $1,482 Consolidated net income$799 $991 
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, total1,995 1,949 Depreciation and amortization, total1,233 989 
Deferred income taxes240 (101)
Utilization of federal investment tax credits281 224 
Allowance for equity funds used during constructionAllowance for equity funds used during construction(104)(90)Allowance for equity funds used during construction(65)(51)
Mark-to-market adjustments14 136 
Pension, postretirement, and other employee benefitsPension, postretirement, and other employee benefits(211)(115)Pension, postretirement, and other employee benefits(126)(123)
Settlement of asset retirement obligationsSettlement of asset retirement obligations(198)(228)Settlement of asset retirement obligations(113)(87)
Stock based compensation expenseStock based compensation expense100 105 Stock based compensation expense92 85 
Estimated loss on Plant Vogtle Units 3 and 452 508 
Storm damage accruals107 112 
Natural gas cost under recovery – long-termNatural gas cost under recovery – long-term192 (119)Natural gas cost under recovery – long-term— 162 
Retail fuel cost under recovery – long-termRetail fuel cost under recovery – long-term(729)— Retail fuel cost under recovery – long-term454 (130)
Other, netOther, net21 117 Other, net51 79 
Changes in certain current assets and liabilities —Changes in certain current assets and liabilities —Changes in certain current assets and liabilities —
-Receivables-Receivables(637)29 -Receivables319 (217)
-Prepayments-Prepayments(90)(79)-Prepayments(100)(86)
-Fossil fuel for generation-Fossil fuel for generation(203)39 
-Materials and supplies-Materials and supplies(109)(57)-Materials and supplies(98)(28)
-Natural gas for sale, net of temporary LIFO liquidation-Natural gas for sale, net of temporary LIFO liquidation335 375 -Natural gas for sale, net of temporary LIFO liquidation267 450 
-Natural gas cost under recovery(94)(485)
-Other current assets-Other current assets12 94 -Other current assets143 8 
-Accounts payable-Accounts payable703 (177)-Accounts payable(1,056)132 
-Accrued taxes-Accrued taxes(150)(157)-Accrued taxes(237)(58)
-Accrued compensation-Accrued compensation(260)(238)-Accrued compensation(478)(470)
-Retail fuel cost over recovery— (146)
-Accrued interest-Accrued interest(127)(128)
-Natural gas cost over recovery-Natural gas cost over recovery117 — 
-Other current liabilities-Other current liabilities30 (235)-Other current liabilities(28)35 
Net cash provided from operating activitiesNet cash provided from operating activities3,579 2,904 Net cash provided from operating activities844 1,592 
Investing Activities:Investing Activities:Investing Activities:
Business acquisitions, net of cash acquired— (345)
Property additionsProperty additions(3,213)(3,384)Property additions(1,850)(1,419)
Nuclear decommissioning trust fund purchasesNuclear decommissioning trust fund purchases(628)(930)Nuclear decommissioning trust fund purchases(256)(294)
Nuclear decommissioning trust fund salesNuclear decommissioning trust fund sales624 926 Nuclear decommissioning trust fund sales251 289 
Proceeds from dispositionsProceeds from dispositions119 25 Proceeds from dispositions103 91 
Cost of removal, net of salvageCost of removal, net of salvage(377)(184)Cost of removal, net of salvage(135)(227)
Change in construction payables, netChange in construction payables, net(140)23 
Payments pursuant to LTSAs(81)(114)
Other investing activitiesOther investing activities96 (20)Other investing activities(91)(18)
Net cash used for investing activitiesNet cash used for investing activities(3,460)(4,026)Net cash used for investing activities(2,118)(1,555)
Financing Activities:Financing Activities:Financing Activities:
Increase in notes payable, netIncrease in notes payable, net263 492 Increase in notes payable, net187 137 
Proceeds —Proceeds —Proceeds —
Long-term debtLong-term debt2,200 4,646 Long-term debt1,979 700 
Short-term borrowingsShort-term borrowings1,200 325 Short-term borrowings100 850 
Common stockCommon stock61 24 Common stock15 38 
Redemptions and repurchases —Redemptions and repurchases —Redemptions and repurchases —
Long-term debtLong-term debt(1,851)(2,477)Long-term debt(575)(977)
Short-term borrowingsShort-term borrowings(400)(25)Short-term borrowings(400)(100)
Capital contributions from noncontrolling interestsCapital contributions from noncontrolling interests73 343 Capital contributions from noncontrolling interests21 73 
Distributions to noncontrolling interestsDistributions to noncontrolling interests(115)(113)Distributions to noncontrolling interests(48)(97)
Payment of common stock dividendsPayment of common stock dividends(1,425)(1,377)Payment of common stock dividends(742)(702)
Other financing activitiesOther financing activities(219)(167)Other financing activities(83)(115)
Net cash provided from (used for) financing activitiesNet cash provided from (used for) financing activities(213)1,671 Net cash provided from (used for) financing activities454 (193)
Net Change in Cash, Cash Equivalents, and Restricted CashNet Change in Cash, Cash Equivalents, and Restricted Cash(94)549 Net Change in Cash, Cash Equivalents, and Restricted Cash(820)(156)
Cash, Cash Equivalents, and Restricted Cash at Beginning of PeriodCash, Cash Equivalents, and Restricted Cash at Beginning of Period1,829 1,068 Cash, Cash Equivalents, and Restricted Cash at Beginning of Period2,037 1,829 
Cash, Cash Equivalents, and Restricted Cash at End of PeriodCash, Cash Equivalents, and Restricted Cash at End of Period$1,735 $1,617 Cash, Cash Equivalents, and Restricted Cash at End of Period$1,217 $1,673 
Supplemental Cash Flow Information:Supplemental Cash Flow Information:Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $46 and $43 capitalized for 2022 and 2021, respectively)$836 $884 
Cash paid (received) during the period for —Cash paid (received) during the period for —
Interest (net of $32 and $23 capitalized for 2023 and 2022, respectively)Interest (net of $32 and $23 capitalized for 2023 and 2022, respectively)$652 $515 
Income taxes, netIncome taxes, net157 88 Income taxes, net(9)(8)
Noncash transactions —Noncash transactions —Noncash transactions —
Accrued property additions at end of periodAccrued property additions at end of period837 943 Accrued property additions at end of period833 863 
Contributions from noncontrolling interests— 89 
Contributions of wind turbine equipment— 82 
Right-of-use assets obtained under leases15 90 
Reassessment of right-of-use assets under operating leases40 — 
Right-of-use assets obtained under operating leasesRight-of-use assets obtained under operating leases26 3 
Right-of-use assets obtained under finance leasesRight-of-use assets obtained under finance leases1 — 
Reassessment of right-of-use assets under operating leasesReassessment of right-of-use assets under operating leases— 40 
The accompanying notes as they relate to Southern Company are an integral part of these condensed consolidated financial statements.
12
    Table of Contents                                Index to Financial Statements
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
AssetsAssetsAt June 30, 2022At December 31, 2021AssetsAt March 31, 2023At December 31, 2022
(in millions) (in millions)
Current Assets:Current Assets:Current Assets:
Cash and cash equivalentsCash and cash equivalents$1,724 $1,798 Cash and cash equivalents$1,053 $1,917 
Receivables —Receivables —Receivables —
Customer accountsCustomer accounts2,277 1,806 Customer accounts1,890 2,128 
Unbilled revenuesUnbilled revenues807 711 Unbilled revenues596 1,012 
Under recovered fuel clause revenuesUnder recovered fuel clause revenues484 10 
Other accounts and notesOther accounts and notes534 523 Other accounts and notes510 637 
Accumulated provision for uncollectible accountsAccumulated provision for uncollectible accounts(94)(78)Accumulated provision for uncollectible accounts(80)(71)
Materials and suppliesMaterials and supplies1,641 1,543 Materials and supplies1,756 1,664 
Fossil fuel for generationFossil fuel for generation431 450 Fossil fuel for generation778 575 
Natural gas for saleNatural gas for sale209 362 Natural gas for sale216 438 
Prepaid expensesPrepaid expenses528 330 Prepaid expenses626 347 
Assets from risk management activities, net of collateralAssets from risk management activities, net of collateral247 151 Assets from risk management activities, net of collateral53 115 
Regulatory assets – asset retirement obligationsRegulatory assets – asset retirement obligations263 219 Regulatory assets – asset retirement obligations342 332 
Natural gas cost under recoveryNatural gas cost under recovery361 266 Natural gas cost under recovery— 108 
Other regulatory assetsOther regulatory assets641 653 Other regulatory assets936 860 
Other current assetsOther current assets212 231 Other current assets395 344 
Total current assetsTotal current assets9,781 8,965 Total current assets9,555 10,416 
Property, Plant, and Equipment:Property, Plant, and Equipment:Property, Plant, and Equipment:
In serviceIn service117,418 115,592 In service118,690 117,529 
Less: Accumulated depreciationLess: Accumulated depreciation35,203 34,079 Less: Accumulated depreciation35,990 35,297 
Plant in service, net of depreciationPlant in service, net of depreciation82,215 81,513 Plant in service, net of depreciation82,700 82,232 
Other utility plant, netOther utility plant, net571 599 
Nuclear fuel, at amortized costNuclear fuel, at amortized cost837 824 Nuclear fuel, at amortized cost849 843 
Construction work in progressConstruction work in progress9,770 8,771 Construction work in progress11,510 10,896 
Total property, plant, and equipmentTotal property, plant, and equipment92,822 91,108 Total property, plant, and equipment95,630 94,570 
Other Property and Investments:Other Property and Investments:Other Property and Investments:
GoodwillGoodwill5,280 5,280 Goodwill5,161 5,161 
Nuclear decommissioning trusts, at fair valueNuclear decommissioning trusts, at fair value2,150 2,542 Nuclear decommissioning trusts, at fair value2,245 2,145 
Equity investments in unconsolidated subsidiariesEquity investments in unconsolidated subsidiaries1,305 1,282 Equity investments in unconsolidated subsidiaries1,408 1,443 
Other intangible assets, net of amortization of $326 and $307, respectively425 445 
Other intangible assets, net of amortization of $350 and $340, respectivelyOther intangible assets, net of amortization of $350 and $340, respectively397 406 
Miscellaneous property and investmentsMiscellaneous property and investments576 653 Miscellaneous property and investments616 602 
Total other property and investmentsTotal other property and investments9,736 10,202 Total other property and investments9,827 9,757 
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 amortization1,623 1,701 Operating lease right-of-use assets, net of amortization1,505 1,531 
Deferred charges related to income taxesDeferred charges related to income taxes843 824 Deferred charges related to income taxes876 866 
Prepaid pension costsPrepaid pension costs1,893 1,657 Prepaid pension costs2,384 2,290 
Unamortized loss on reacquired debtUnamortized loss on reacquired debt248 258 Unamortized loss on reacquired debt234 238 
Deferred under recovered fuel clause revenuesDeferred under recovered fuel clause revenues1,702 2,056 
Regulatory assets – asset retirement obligations, deferredRegulatory assets – asset retirement obligations, deferred5,982 5,466 Regulatory assets – asset retirement obligations, deferred5,701 5,764 
Other regulatory assets, deferredOther regulatory assets, deferred5,448 5,577 Other regulatory assets, deferred5,886 5,918 
Other deferred charges and assetsOther deferred charges and assets2,393 1,776 Other deferred charges and assets1,456 1,485 
Total deferred charges and other assetsTotal deferred charges and other assets18,430 17,259 Total deferred charges and other assets19,744 20,148 
Total AssetsTotal Assets$130,769 $127,534 Total Assets$134,756 $134,891 
The accompanying notes as they relate to Southern Company are an integral part of these condensed consolidated financial statements.

13
    Table of Contents                                Index to Financial Statements
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
Liabilities and Stockholders' EquityLiabilities and Stockholders' EquityAt June 30, 2022At December 31, 2021Liabilities and Stockholders' EquityAt March 31, 2023At December 31, 2022
(in millions) (in millions)
Current Liabilities:Current Liabilities:Current Liabilities:
Securities due within one yearSecurities due within one year$1,052 $2,157 Securities due within one year$4,363 $4,285 
Notes payableNotes payable2,510 1,440 Notes payable2,554 2,609 
Accounts payableAccounts payable2,908 2,169 Accounts payable2,365 3,525 
Customer depositsCustomer deposits461 479 Customer deposits475 502 
Accrued taxes —Accrued taxes —Accrued taxes —
Accrued income taxesAccrued income taxes17 50 Accrued income taxes52 60 
Other accrued taxesOther accrued taxes635 641 Other accrued taxes435 764 
Accrued interestAccrued interest553 533 Accrued interest487 614 
Accrued compensationAccrued compensation807 1,070 Accrued compensation617 1,127 
Asset retirement obligationsAsset retirement obligations693 697 Asset retirement obligations709 694 
Liabilities from risk management activities, net of collateralLiabilities from risk management activities, net of collateral318 178 
Operating lease obligationsOperating lease obligations232 250 Operating lease obligations199 197 
Natural gas cost over recoveryNatural gas cost over recovery117 — 
Other regulatory liabilitiesOther regulatory liabilities557 563 Other regulatory liabilities287 382 
Other current liabilitiesOther current liabilities1,062 872 Other current liabilities915 787 
Total current liabilitiesTotal current liabilities11,487 10,921 Total current liabilities13,893 15,724 
Long-term DebtLong-term Debt51,204 50,120 Long-term Debt52,060 50,656 
Deferred Credits and Other Liabilities:Deferred Credits and Other Liabilities:Deferred Credits and Other Liabilities:
Accumulated deferred income taxesAccumulated deferred income taxes9,620 8,862 Accumulated deferred income taxes10,488 10,036 
Deferred credits related to income taxesDeferred credits related to income taxes5,318 5,401 Deferred credits related to income taxes5,107 5,235 
Accumulated deferred ITCsAccumulated deferred ITCs2,175 2,216 Accumulated deferred ITCs2,112 2,133 
Employee benefit obligationsEmployee benefit obligations1,509 1,550 Employee benefit obligations1,222 1,238 
Operating lease obligations, deferredOperating lease obligations, deferred1,464 1,503 Operating lease obligations, deferred1,374 1,388 
Asset retirement obligations, deferredAsset retirement obligations, deferred11,010 10,990 Asset retirement obligations, deferred10,209 10,146 
Other cost of removal obligationsOther cost of removal obligations1,993 2,103 Other cost of removal obligations1,921 1,903 
Other regulatory liabilities, deferredOther regulatory liabilities, deferred536 485 Other regulatory liabilities, deferred690 733 
Other deferred credits and liabilitiesOther deferred credits and liabilities1,198 816 Other deferred credits and liabilities1,118 1,167 
Total deferred credits and other liabilitiesTotal deferred credits and other liabilities34,823 33,926 Total deferred credits and other liabilities34,241 33,979 
Total LiabilitiesTotal Liabilities97,514 94,967 Total Liabilities100,194 100,359 
Redeemable Preferred Stock of Subsidiaries242 291 
Total Stockholders' Equity (See accompanying statements)
Total Stockholders' Equity (See accompanying statements)
33,013 32,276 
Total Stockholders' Equity (See accompanying statements)
34,562 34,532 
Total Liabilities and Stockholders' EquityTotal Liabilities and Stockholders' Equity$130,769 $127,534 Total Liabilities and Stockholders' Equity$134,756 $134,891 
The accompanying notes as they relate to Southern Company are an integral part of these condensed consolidated financial statements.
14
    Table of Contents                                Index to Financial Statements
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, 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 income— — — — — — 28 — 28 
Stock issued2 — 5 9 — — — — 14 
Stock-based compensation— — — 9 — — — — 9 
Cash dividends of $0.64 per share— — — — — (678)— — (678)
Capital contributions from
noncontrolling interests		— — — — — — — 403 403 
Distributions to noncontrolling interests— — — — — — — (46)(46)
Other— — — 2 — — — (1)1 
Balance at March 31, 20211,060 (1)5,273 11,854 (46)11,768 (367)4,586 33,068 
Consolidated net income— — — — — 372 — — 372 
Other comprehensive incomeOther comprehensive income— — — — — — 12 — 12 Other comprehensive income— — — — — — 42 — 42 
Stock issuedStock issued— — 1 9 — — — — 10 Stock issued3 — 7 31 — — — — 38 
Stock-based compensationStock-based compensation— — — 22 — — — — 22 Stock-based compensation— — — 6 — — — — 6 
Cash dividends of $0.66 per shareCash dividends of $0.66 per share— — — — — (699)— — (699)Cash dividends of $0.66 per share— — — — — (702)— — (702)
Capital contributions from
noncontrolling interests		Capital contributions from
noncontrolling interests		— — — — — — — 29 29 Capital contributions from
noncontrolling interests		— — — — — — — 73 73 
Distributions to noncontrolling interestsDistributions to noncontrolling interests— — — — — — — (68)(68)Distributions to noncontrolling interests— — — — — — — (98)(98)
OtherOther— — — 1 (2)1 — — — Other— — — 7 (2)2 — — 7 
Balance at June 30, 20211,060 (1)$5,274 $11,886 $(48)$11,442 $(355)$4,547 $32,746 
Balance at March 31, 2022Balance at March 31, 20221,064 (1)$5,286 $11,994 $(49)$11,261 $(195)$4,332 $32,629 
15
Balance at December 31, 20221,090 (1)$5,417 $13,673 $(53)$11,538 $(167)$4,124 $34,532 
Consolidated net income (loss)— — — — — 862 — (63)799 
Other comprehensive income (loss)— — — — — — (44)— (44)
Stock issued2 — 4 11 — — — — 15 
Stock-based compensation— — — 29 — — — — 29 
Cash dividends of $0.68 per share— — — — — (742)— — (742)
Capital contributions from
   noncontrolling interests		— — — — — — — 21 21 
Distributions to noncontrolling interests— — — — — — — (48)(48)
Other— — — 2 (2)— — — — 
Balance at March 31, 20231,092 (1)$5,421 $13,715 $(55)$11,658 $(211)$4,034 $34,562 

Table of ContentsIndex to Financial Statements
SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
Southern Company Common Stockholders' Equity
 Number of
Common Shares		Common StockAccumulated
Other
Comprehensive Income
(Loss)
 IssuedTreasuryPar ValuePaid-In CapitalTreasuryRetained EarningsNoncontrolling InterestsTotal
 (in millions)
Balance at December 31, 20211,061 (1)$5,279 $11,950 $(47)$10,929 $(237)$4,402 $32,276 
Consolidated net income (loss)— — — — — 1,032 — (45)987 
Other comprehensive income— — — — — — 42 — 42 
Stock issued3 — 7 31 — — — — 38 
Stock-based compensation— — — 6 — — — — 6 
Cash dividends of $0.66 per share— — — — — (702)— — (702)
Capital contributions from
   noncontrolling interests		— — — — — — — 73 73 
Distributions to noncontrolling interests— — — — — — — (98)(98)
Other— — — 7 (2)2 — — 7 
Balance at March 31, 20221,064 (1)5,286 11,994 (49)11,261 (195)4,332 32,629 
Consolidated net income (loss)— — — — — 1,107 — (22)1,085 
Other comprehensive income— — — — — — 11 — 11 
Stock issued— — 2 21 — — — — 23 
Stock-based compensation— — — 14 — — — — 14 
Cash dividends of $0.68 per share— — — — — (723)— — (723)
Distributions to noncontrolling interests— — — — — — — (28)(28)
Other— — — 4 (2)— — — 2 
Balance at June 30, 20221,064 (1)$5,288 $12,033 $(51)$11,645 $(184)$4,282 $33,013 
The accompanying notes as they relate to Southern Company are an integral part of these condensed consolidated financial statements.

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    Table of Contents                                Index to Financial Statements

ALABAMA POWER COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
 
For the Three Months Ended June 30,For the Six Months Ended June 30,For the Three Months Ended March 31,
2022202120222021 20232022
(in millions)(in millions) (in millions)
Operating Revenues:Operating Revenues:Operating Revenues:
Retail revenuesRetail revenues$1,629 $1,354 $3,008 $2,706 Retail revenues$1,381 $1,379 
Wholesale revenues, non-affiliatesWholesale revenues, non-affiliates159 85 272 178 Wholesale revenues, non-affiliates141 114 
Wholesale revenues, affiliatesWholesale revenues, affiliates34 24 100 55 Wholesale revenues, affiliates19 65 
Other revenuesOther revenues109 93 200 176 Other revenues106 91 
Total operating revenuesTotal operating revenues1,931 1,556 3,580 3,115 Total operating revenues1,647 1,649 
Operating Expenses:Operating Expenses:Operating Expenses:
FuelFuel401 263 733 554 Fuel308 333 
Purchased power, non-affiliatesPurchased power, non-affiliates95 48 162 97 Purchased power, non-affiliates101 67 
Purchased power, affiliatesPurchased power, affiliates121 39 147 69 Purchased power, affiliates59 26 
Other operations and maintenanceOther operations and maintenance441 413 852 775 Other operations and maintenance424 409 
Depreciation and amortizationDepreciation and amortization218 214 432 425 Depreciation and amortization345 215 
Taxes other than income taxesTaxes other than income taxes100 101 204 203 Taxes other than income taxes115 104 
Total operating expensesTotal operating expenses1,376 1,078 2,530 2,123 Total operating expenses1,352 1,154 
Operating IncomeOperating Income555 478 1,050 992 Operating Income295 495 
Other Income and (Expense):Other Income and (Expense):Other Income and (Expense):
Allowance for equity funds used during constructionAllowance for equity funds used during construction17 12 33 24 Allowance for equity funds used during construction21 16 
Interest expense, net of amounts capitalizedInterest expense, net of amounts capitalized(91)(84)(180)(168)Interest expense, net of amounts capitalized(103)(89)
Other income (expense), netOther income (expense), net27 33 61 62 Other income (expense), net40 36 
Total other income and (expense)Total other income and (expense)(47)(39)(86)(82)Total other income and (expense)(42)(37)
Earnings Before Income TaxesEarnings Before Income Taxes508 439 964 910 Earnings Before Income Taxes253 458 
Income taxes121 104 227 213 
Income taxes (benefit)Income taxes (benefit)(2)107 
Net IncomeNet Income387 335 737 697 Net Income255 351 
Dividends on Preferred StockDividends on Preferred Stock4 4 7 7 Dividends on Preferred Stock— 4 
Net Income After Dividends on Preferred StockNet Income After Dividends on Preferred Stock$383 $331 $730 $690 Net Income After Dividends on Preferred Stock$255 $347 

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
 
For the Three Months Ended June 30,For the Six Months Ended June 30,For the Three Months Ended March 31,
2022202120222021 20232022
(in millions)(in millions) (in millions)
Net IncomeNet Income$387 $335 $737 $697 Net Income$255 $351 
Other comprehensive income:Other comprehensive income:Other comprehensive income:
Qualifying hedges:Qualifying hedges:Qualifying hedges:
Changes in fair value, net of tax of
$—, $—, $(1), and $—, respectively
— — (1)— 
Reclassification adjustment for amounts included in net income,
net of tax of $—, $—, $1, and $1, respectively
1 1 2 2 
Changes in fair value, net of tax of $— and $(1), respectivelyChanges in fair value, net of tax of $— and $(1), 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 
Total other comprehensive incomeTotal other comprehensive income1 1 1 2 Total other comprehensive income— — 
Comprehensive IncomeComprehensive Income$388 $336 $738 $699 Comprehensive Income$255 $351 
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,
 20232022
 (in millions)
Operating Activities:
Net income$255 $351 
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total398 250 
Deferred income taxes(75)35 
Pension, postretirement, and other employee benefits(51)(48)
Settlement of asset retirement obligations(52)(38)
Retail fuel cost under recovery – long-term100 (46)
Other, net(3)(27)
Changes in certain current assets and liabilities —
-Receivables90 (4)
-Fossil fuel stock(78)23 
-Prepayments(89)(85)
-Other current assets(37)(10)
-Accounts payable(400)(237)
-Accrued taxes109 102 
-Accrued compensation(102)(99)
-Other current liabilities(35)(13)
Net cash provided from operating activities30 154 
Investing Activities:
Property additions(389)(343)
Nuclear decommissioning trust fund purchases(87)(72)
Nuclear decommissioning trust fund sales87 72 
Cost of removal, net of salvage(41)(60)
Change in construction payables(70)39 
Other investing activities(9)(1)
Net cash used for investing activities(509)(365)
Financing Activities:
Increase in notes payable, net170 — 
Proceeds —
Senior notes— 700 
Other long-term debt16 — 
Redemptions — Senior notes— (550)
Capital contributions from parent company325 625 
Payment of common stock dividends(285)(254)
Other financing activities(7)(17)
Net cash provided from financing activities219 504 
Net Change in Cash, Cash Equivalents, and Restricted Cash(260)293 
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period687 1,060 
Cash, Cash Equivalents, and Restricted Cash at End of Period$427 $1,353 
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $7 and $4 capitalized for 2023 and 2022, respectively)$138 $110 
Noncash transactions —
Accrued property additions at end of period111 188 
Right-of-use assets obtained under operating leases13 1 
Right-of-use assets obtained under finance leases1 — 
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 Six Months Ended June 30,
 20222021
 (in millions)
Operating Activities:
Net income$737 $697 
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total494 496 
Deferred income taxes117 87 
Pension, postretirement, and other employee benefits(59)(39)
Settlement of asset retirement obligations(91)(104)
Retail fuel cost under recovery – long-term(191)— 
Other, net(67)(35)
Changes in certain current assets and liabilities —
-Receivables(296)(85)
-Prepayments(69)(53)
-Other current assets(33)(23)
-Accounts payable14 (236)
-Accrued compensation(55)(60)
-Other current liabilities9 (61)
Net cash provided from operating activities510 584 
Investing Activities:
Property additions(759)(844)
Nuclear decommissioning trust fund purchases(180)(473)
Nuclear decommissioning trust fund sales180 473 
Cost of removal, net of salvage(104)(56)
Change in construction payables(8)25 
Other investing activities(18)(18)
Net cash used for investing activities(889)(893)
Financing Activities:
Proceeds — Senior notes700 600 
Redemptions — Senior notes(550)(200)
Capital contributions from parent company656 624 
Payment of common stock dividends(508)(492)
Other financing activities(71)(26)
Net cash provided from financing activities227 506 
Net Change in Cash, Cash Equivalents, and Restricted Cash(152)197 
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period1,060 530 
Cash, Cash Equivalents, and Restricted Cash at End of Period$908 $727 
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $9 and $7 capitalized for 2022 and 2021, respectively)$166 $154 
Income taxes, net192 171 
Noncash transactions —
Accrued property additions at end of period141 191 
Right-of-use assets obtained under leases6 2 
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 June 30, 2022At December 31, 2021AssetsAt March 31, 2023At December 31, 2022
(in millions)(in millions)
Current Assets:Current Assets:Current Assets:
Cash and cash equivalentsCash and cash equivalents$908 $1,060 Cash and cash equivalents$427 $687 
Receivables —Receivables —Receivables —
Customer accountsCustomer accounts501 410 Customer accounts446 431 
Unbilled revenuesUnbilled revenues189 138 Unbilled revenues129 174 
AffiliatedAffiliated85 37 Affiliated98 101 
Other accounts and notesOther accounts and notes101 55 Other accounts and notes86 153 
Accumulated provision for uncollectible accountsAccumulated provision for uncollectible accounts(14)(14)Accumulated provision for uncollectible accounts(15)(14)
Fossil fuel stockFossil fuel stock161 159 Fossil fuel stock307 229 
Materials and suppliesMaterials and supplies568 548 Materials and supplies586 557 
Prepaid expensesPrepaid expenses147 41 Prepaid expenses136 65 
Other regulatory assetsOther regulatory assets263 208 Other regulatory assets485 474 
Other current assetsOther current assets113 67 Other current assets48 67 
Total current assetsTotal current assets3,022 2,709 Total current assets2,733 2,924 
Property, Plant, and Equipment:Property, Plant, and Equipment:Property, Plant, and Equipment:
In serviceIn service33,596 33,135 In service33,803 33,472 
Less: Accumulated provision for depreciationLess: Accumulated provision for depreciation10,589 10,313 Less: Accumulated provision for depreciation10,664 10,470 
Plant in service, net of depreciationPlant in service, net of depreciation23,007 22,822 Plant in service, net of depreciation23,139 23,002 
Other utility plant, netOther utility plant, net571 599 
Nuclear fuel, at amortized costNuclear fuel, at amortized cost251 247 Nuclear fuel, at amortized cost238 239 
Construction work in progressConstruction work in progress1,319 1,147 Construction work in progress1,510 1,526 
Total property, plant, and equipmentTotal property, plant, and equipment24,577 24,216 Total property, plant, and equipment25,458 25,366 
Other Property and Investments:Other Property and Investments:Other Property and Investments:
Nuclear decommissioning trusts, at fair valueNuclear decommissioning trusts, at fair value1,124 1,325 Nuclear decommissioning trusts, at fair value1,170 1,127 
Equity investments in unconsolidated subsidiariesEquity investments in unconsolidated subsidiaries56 57 Equity investments in unconsolidated subsidiaries55 57 
Miscellaneous property and investmentsMiscellaneous property and investments128 126 Miscellaneous property and investments125 124 
Total other property and investmentsTotal other property and investments1,308 1,508 Total other property and investments1,350 1,308 
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 amortization89 108 Operating lease right-of-use assets, net of amortization81 71 
Deferred charges related to income taxesDeferred charges related to income taxes246 240 Deferred charges related to income taxes253 250 
Prepaid pension and other postretirement benefit costsPrepaid pension and other postretirement benefit costs568 513 Prepaid pension and other postretirement benefit costs689 657 
Regulatory assets – asset retirement obligationsRegulatory assets – asset retirement obligations1,845 1,547 Regulatory assets – asset retirement obligations1,827 1,845 
Other regulatory assets, deferredOther regulatory assets, deferred1,860 1,807 Other regulatory assets, deferred2,034 2,107 
Other deferred charges and assetsOther deferred charges and assets395 334 Other deferred charges and assets454 442 
Total deferred charges and other assetsTotal deferred charges and other assets5,003 4,549 Total deferred charges and other assets5,338 5,372 
Total AssetsTotal Assets$33,910 $32,982 Total Assets$34,879 $34,970 
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 June 30, 2022At December 31, 2021Liabilities and Stockholder's EquityAt March 31, 2023At December 31, 2022
(in millions) (in millions)
Current Liabilities:Current Liabilities:Current Liabilities:
Securities due within one yearSecurities due within one year$201 $751 Securities due within one year$323 $301 
Notes payableNotes payable170 — 
Accounts payable —Accounts payable —Accounts payable —
AffiliatedAffiliated414 309 Affiliated242 443 
OtherOther351 459 Other380 641 
Customer depositsCustomer deposits107 106 Customer deposits105 106 
Accrued taxesAccrued taxes128 98 Accrued taxes148 57 
Accrued interestAccrued interest109 100 Accrued interest78 120 
Accrued compensationAccrued compensation174 219 Accrued compensation133 229 
Asset retirement obligationsAsset retirement obligations325 320 Asset retirement obligations334 330 
Other regulatory liabilitiesOther regulatory liabilities133 215 Other regulatory liabilities74 96 
Other current liabilitiesOther current liabilities121 125 Other current liabilities132 91 
Total current liabilitiesTotal current liabilities2,063 2,702 Total current liabilities2,119 2,414 
Long-term DebtLong-term Debt9,633 8,936 Long-term Debt10,322 10,329 
Deferred Credits and Other Liabilities:Deferred Credits and Other Liabilities:Deferred Credits and Other Liabilities:
Accumulated deferred income taxesAccumulated deferred income taxes3,719 3,573 Accumulated deferred income taxes3,997 3,981 
Deferred credits related to income taxesDeferred credits related to income taxes1,944 1,968 Deferred credits related to income taxes1,836 1,925 
Accumulated deferred ITCsAccumulated deferred ITCs84 88 Accumulated deferred ITCs79 81 
Employee benefit obligationsEmployee benefit obligations176 171 Employee benefit obligations149 145 
Operating lease obligationsOperating lease obligations66 66 Operating lease obligations75 67 
Asset retirement obligations, deferredAsset retirement obligations, deferred3,998 4,014 Asset retirement obligations, deferred3,940 3,957 
Other cost of removal obligations106 192 
Other regulatory liabilities, deferredOther regulatory liabilities, deferred227 210 Other regulatory liabilities, deferred300 315 
Other deferred credits and liabilitiesOther deferred credits and liabilities58 58 Other deferred credits and liabilities75 69 
Total deferred credits and other liabilitiesTotal deferred credits and other liabilities10,378 10,340 Total deferred credits and other liabilities10,451 10,540 
Total LiabilitiesTotal Liabilities22,074 21,978 Total Liabilities22,892 23,283 
Redeemable Preferred Stock242 291 
Common Stockholder's Equity (See accompanying statements)
Common Stockholder's Equity (See accompanying statements)
11,594 10,713 
Common Stockholder's Equity (See accompanying statements)
11,987 11,687 
Total Liabilities and Stockholder's EquityTotal Liabilities and Stockholder's Equity$33,910 $32,982 Total Liabilities and Stockholder's Equity$34,879 $34,970 
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, 202031 $1,222 $5,413 $3,194 $(19)$9,810 
Net income after dividends on
preferred stock		— — — 359 — 359 
Capital contributions from parent company— — 602 — — 602 
Other comprehensive income— — — — 1 1 
Cash dividends on common stock— — — (246)— (246)
Balance at March 31, 202131 1,222 6,015 3,307 (18)10,526 
Net income after dividends on
preferred stock		— — — 331 — 331 
Capital contributions from parent company— — 26 — — 26 
Other comprehensive income— — — — 1 1 
Cash dividends on common stock— — — (246)— (246)
Other— — — (1)— (1)
Balance at June 30, 202131 $1,222 $6,041 $3,391 $(17)$10,637 
Number of
Common
Shares
Issued		Common
Stock		Paid-In
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Total
(in millions)
Balance at December 31, 2021Balance at December 31, 202131 $1,222 $6,056 $3,448 $(13)$10,713 Balance 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 Net income after dividends on
preferred stock		— — — 347 — 347 
Capital contributions from parent companyCapital contributions from parent company— — 626 — — 626 Capital contributions from parent company— — 626 — — 626 
Cash dividends on common stockCash dividends on common stock— — — (254)— (254)Cash dividends on common stock— — — (254)— (254)
Balance at March 31, 2022Balance at March 31, 202231 1,222 6,682 3,541 (13)11,432 Balance at March 31, 202231 $1,222 $6,682 $3,541 $(13)$11,432 
Net income after dividends on
preferred stock		— — — 383 — 383 
Capital contributions from parent company— — 32 — — 32 
Other comprehensive income— — — — 1 1 
Cash dividends on common stock— — — (254)— (254)
Balance at June 30, 202231 $1,222 $6,714 $3,670 $(12)$11,594 
Balance at December 31, 2022Balance at December 31, 202231 $1,222 $6,710 $3,764 $(9)$11,687 
Net income after dividends on
preferred stock		Net income after dividends on
preferred stock		— — — 255 — 255 
Capital contributions from parent companyCapital contributions from parent company— — 330 — — 330 
Cash dividends on common stockCash dividends on common stock— — — (285)— (285)
Balance at March 31, 2023Balance at March 31, 202331 $1,222 $7,040 $3,734 $(9)$11,987 
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

GEORGIA POWER COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
For the Three Months Ended June 30,For the Six Months Ended June 30, For the Three Months Ended March 31,
2022202120222021 20232022
(in millions)(in millions) (in millions)
Operating Revenues:Operating Revenues:Operating Revenues:
Retail revenuesRetail revenues$2,908 $2,026 $4,926 $3,813 Retail revenues$1,981 $2,017 
Wholesale revenuesWholesale revenues64 36 130 80 Wholesale revenues31 66 
Other revenuesOther revenues149 163 272 302 Other revenues164 125 
Total operating revenuesTotal operating revenues3,121 2,225 5,328 4,195 Total operating revenues2,176 2,208 
Operating Expenses:Operating Expenses:Operating Expenses:
FuelFuel628 343 1,046 656 Fuel402 419 
Purchased power, non-affiliatesPurchased power, non-affiliates246 144 396 288 Purchased power, non-affiliates123 150 
Purchased power, affiliatesPurchased power, affiliates323 149 529 285 Purchased power, affiliates206 206 
Other operations and maintenanceOther operations and maintenance573 542 1,091 1,015 Other operations and maintenance496 517 
Depreciation and amortizationDepreciation and amortization356 342 706 680 Depreciation and amortization408 351 
Taxes other than income taxesTaxes other than income taxes141 118 265 235 Taxes other than income taxes131 125 
Estimated loss on Plant Vogtle Units 3 and 452 460 52 508 
Total operating expensesTotal operating expenses2,319 2,098 4,085 3,667 Total operating expenses1,766 1,768 
Operating IncomeOperating Income802 127 1,243 528 Operating Income410 440 
Other Income and (Expense):Other Income and (Expense):Other Income and (Expense):
Allowance for equity funds used during constructionAllowance for equity funds used during construction33 30 65 61 Allowance for equity funds used during construction40 32 
Interest expense, net of amounts capitalizedInterest expense, net of amounts capitalized(117)(106)(224)(210)Interest expense, net of amounts capitalized(146)(107)
Other income (expense), netOther income (expense), net54 42 103 83 Other income (expense), net45 50 
Total other income and (expense)Total other income and (expense)(30)(34)(56)(66)Total other income and (expense)(61)(25)
Earnings Before Income TaxesEarnings Before Income Taxes772 93 1,187 462 Earnings Before Income Taxes349 415 
Income taxes (benefit)164 (50)194 (32)
Income taxesIncome taxes53 30 
Net IncomeNet Income$608 $143 $993 $494 Net Income$296 $385 
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
For the Three Months Ended June 30,For the Six Months Ended June 30, For the Three Months Ended March 31,
2022202120222021 20232022
(in millions)(in millions) (in millions)
Net IncomeNet Income$608 $143 $993 $494 Net Income$296 $385 
Other comprehensive income:Other comprehensive income:Other comprehensive income:
Qualifying hedges:Qualifying hedges:Qualifying hedges:
Changes in fair value, net of tax of
$4, $—, $8, and $—, respectively
15 — 23 — 
Reclassification adjustment for amounts included in net income,
net of tax of $—, $1, $1, and $1, respectively
1 1 3 3 
Changes in fair value, net of tax of $— and $3, respectivelyChanges in fair value, net of tax of $— and $3, respectively(1)9 
Reclassification adjustment for amounts included in net income,
net of tax of $— and $1, respectively
Reclassification adjustment for amounts included in net income,
net of tax of $— and $1, respectively
1 1 
Total other comprehensive incomeTotal other comprehensive income16 1 26 3 Total other comprehensive income— 10 
Comprehensive IncomeComprehensive Income$624 $144 $1,019 $497 Comprehensive Income$296 $395 
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,
 20232022
 (in millions)
Operating Activities:
Net income$296 $385 
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total455 397 
Deferred income taxes57 (6)
Allowance for equity funds used during construction(40)(32)
Pension, postretirement, and other employee benefits(64)(63)
Settlement of asset retirement obligations(54)(41)
Storm damage accruals8 53 
Retail fuel cost under recovery – long-term354 (84)
Other, net(40)(54)
Changes in certain current assets and liabilities —
-Receivables(136)— 
-Fossil fuel stock(107)18 
-Materials and supplies(46)(11)
-Other current assets6 (20)
-Accounts payable(293)39 
-Accrued taxes(266)(78)
-Accrued compensation(85)(79)
-Customer refunds(103)2 
-Accrued interest(23)(43)
-Other current liabilities28 (22)
Net cash provided from (used for) operating activities(53)361 
Investing Activities:
Property additions(1,042)(749)
Nuclear decommissioning trust fund purchases(169)(221)
Nuclear decommissioning trust fund sales164 217 
Cost of removal, net of salvage(64)(140)
Change in construction payables, net of joint owner portion(27)14 
Proceeds from dispositions56 56 
Other investing activities(35)14 
Net cash used for investing activities(1,117)(809)
Financing Activities:
Increase in notes payable, net465 410 
Proceeds —
Revenue bonds229 — 
Short-term borrowings100 450 
Redemptions and repurchases —
Senior notes— (400)
FFB loan(21)(24)
Short-term borrowings(200)— 
Capital contributions from parent company750 445 
Payment of common stock dividends(464)(423)
Other financing activities(9)(17)
Net cash provided from financing activities850 441 
Net Change in Cash, Cash Equivalents, and Restricted Cash(320)(7)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period480 33 
Cash, Cash Equivalents, and Restricted Cash at End of Period$160 $26 
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $21 and $16 capitalized for 2023 and 2022, respectively)$159 $139 
Noncash transactions —
Accrued property additions at end of period548 459 
Right-of-use assets obtained under operating leases3 1 
The accompanying notes as they relate to Georgia Power are an integral part of these condensed financial statements.
22
    Table of Contents                                Index to Financial Statements
GEORGIA POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
 For the Six Months Ended June 30,
 20222021
 (in millions)
Operating Activities:
Net income$993 $494 
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total803 772 
Deferred income taxes72 (309)
Allowance for equity funds used during construction(65)(61)
Pension, postretirement, and other employee benefits(114)(59)
Settlement of asset retirement obligations(91)(100)
Storm damage accruals107 107 
Retail fuel cost under recovery – long-term(538)— 
Estimated loss on Plant Vogtle Units 3 and 452 508 
Other, net7 90 
Changes in certain current assets and liabilities —
-Receivables(424)(73)
-Fossil fuel stock31 55 
-Materials and supplies(46)(46)
-Other current assets(25)15 
-Accounts payable235 83 
-Accrued compensation(50)(39)
-Retail fuel cost over recovery— (113)
-Other current liabilities(21)(11)
Net cash provided from operating activities926 1,313 
Investing Activities:
Property additions(1,654)(1,575)
Nuclear decommissioning trust fund purchases(448)(458)
Nuclear decommissioning trust fund sales444 453 
Cost of removal, net of salvage(207)(73)
Change in construction payables, net of joint owner portion51 (72)
Contributions in aid of construction109 45 
Proceeds from dispositions56 3 
Other investing activities(19)(53)
Net cash used for investing activities(1,668)(1,730)
Financing Activities:
Increase in notes payable, net— 250 
Proceeds —
Senior notes1,500 750 
FFB loan— 371 
Short-term borrowings650 — 
Redemptions and repurchases —
Senior notes(400)(325)
Pollution control revenue bonds— (69)
FFB loan(45)(45)
Short-term borrowings(250)— 
Other long-term debt(125)— 
Capital contributions from parent company491 368 
Payment of common stock dividends(845)(824)
Other financing activities(37)(19)
Net cash provided from financing activities939 457 
Net Change in Cash, Cash Equivalents, and Restricted Cash197 40 
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period33 9 
Cash, Cash Equivalents, and Restricted Cash at End of Period$230 $49 
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $33 and $30 capitalized for 2022 and 2021, respectively)$188 $182 
Income taxes, net106 139 
Noncash transactions —
Accrued property additions at end of period500 476 
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.
23
Table of ContentsIndex to Financial Statements
GEORGIA POWER COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)
 
AssetsAssetsAt June 30, 2022At December 31, 2021AssetsAt March 31, 2023At December 31, 2022
(in millions) (in millions)
Current Assets:Current Assets:Current Assets:
Cash and cash equivalentsCash and cash equivalents$230 $33 Cash and cash equivalents$— $364 
Receivables —Receivables —Receivables —
Customer accounts, netCustomer accounts, net830 547 Customer accounts, net597 735 
Unbilled revenuesUnbilled revenues450 231 Unbilled revenues197 309 
Under recovered fuel clause revenuesUnder recovered fuel clause revenues447 — 
Joint owner accountsJoint owner accounts44 116 Joint owner accounts100 128 
AffiliatedAffiliated54 25 Affiliated59 53 
Other accounts and notesOther accounts and notes33 44 Other accounts and notes45 62 
Fossil fuel stockFossil fuel stock218 248 Fossil fuel stock399 291 
Materials and suppliesMaterials and supplies712 670 Materials and supplies774 729 
Regulatory assets – asset retirement obligationsRegulatory assets – asset retirement obligations222 178 Regulatory assets – asset retirement obligations166 158 
Assets from risk management activities94 48 
Other regulatory assetsOther regulatory assets244 289 Other regulatory assets377 324 
Other current assetsOther current assets124 130 Other current assets264 246 
Total current assetsTotal current assets3,255 2,559 Total current assets3,425 3,399 
Property, Plant, and Equipment:Property, Plant, and Equipment:Property, Plant, and Equipment:
In serviceIn service42,067 41,332 In service42,465 41,879 
Less: Accumulated provision for depreciationLess: Accumulated provision for depreciation13,233 12,854 Less: Accumulated provision for depreciation13,383 13,115 
Plant in service, net of depreciationPlant in service, net of depreciation28,834 28,478 Plant in service, net of depreciation29,082 28,764 
Nuclear fuel, at amortized costNuclear fuel, at amortized cost586 577 Nuclear fuel, at amortized cost611 604 
Construction work in progressConstruction work in progress7,420 6,688 Construction work in progress8,639 8,103 
Total property, plant, and equipmentTotal property, plant, and equipment36,840 35,743 Total property, plant, and equipment38,332 37,471 
Other Property and Investments:Other Property and Investments:Other Property and Investments:
Nuclear decommissioning trusts, at fair valueNuclear decommissioning trusts, at fair value1,025 1,217 Nuclear decommissioning trusts, at fair value1,075 1,018 
Equity investments in unconsolidated subsidiariesEquity investments in unconsolidated subsidiaries51 50 Equity investments in unconsolidated subsidiaries50 51 
Miscellaneous property and investmentsMiscellaneous property and investments75 69 Miscellaneous property and investments116 107 
Total other property and investmentsTotal other property and investments1,151 1,336 Total other property and investments1,241 1,176 
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 amortization1,083 1,157 Operating lease right-of-use assets, net of amortization974 1,007 
Deferred charges related to income taxesDeferred charges related to income taxes564 550 Deferred charges related to income taxes592 583 
Prepaid pension costsPrepaid pension costs652 563 Prepaid pension costs771 738 
Deferred under recovered fuel clause revenuesDeferred under recovered fuel clause revenues948 410 Deferred under recovered fuel clause revenues1,702 2,056 
Regulatory assets – asset retirement obligations, deferredRegulatory assets – asset retirement obligations, deferred3,896 3,688 Regulatory assets – asset retirement obligations, deferred3,635 3,671 
Other regulatory assets, deferredOther regulatory assets, deferred2,073 1,964 Other regulatory assets, deferred2,576 2,522 
Other deferred charges and assetsOther deferred charges and assets512 491 Other deferred charges and assets489 540 
Total deferred charges and other assetsTotal deferred charges and other assets9,728 8,823 Total deferred charges and other assets10,739 11,117 
Total AssetsTotal Assets$50,974 $48,461 Total Assets$53,737 $53,163 
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 BALANCE SHEETS (UNAUDITED)
 
Liabilities and Stockholder's EquityLiabilities and Stockholder's EquityAt June 30, 2022At December 31, 2021Liabilities and Stockholder's EquityAt March 31, 2023At December 31, 2022
(in millions) (in millions)
Current Liabilities:Current Liabilities:Current Liabilities:
Securities due within one yearSecurities due within one year$248 $675 Securities due within one year$901 $901 
Notes payableNotes payable400 — Notes payable1,965 1,600 
Accounts payable —Accounts payable —Accounts payable —
AffiliatedAffiliated863 757 Affiliated606 928 
OtherOther892 702 Other1,099 1,076 
Customer depositsCustomer deposits255 259 Customer deposits251 252 
Accrued taxesAccrued taxes322 335 Accrued taxes222 508 
Accrued interestAccrued interest150 136 Accrued interest133 157 
Accrued compensationAccrued compensation174 232 Accrued compensation133 254 
Operating lease obligationsOperating lease obligations157 156 Operating lease obligations154 151 
Asset retirement obligationsAsset retirement obligations312 317 Asset retirement obligations308 295 
Other regulatory liabilitiesOther regulatory liabilities260 280 Other regulatory liabilities47 170 
Other current liabilitiesOther current liabilities258 254 Other current liabilities426 286 
Total current liabilitiesTotal current liabilities4,291 4,103 Total current liabilities6,245 6,578 
Long-term DebtLong-term Debt14,450 13,109 Long-term Debt14,219 14,009 
Deferred Credits and Other Liabilities:Deferred Credits and Other Liabilities:Deferred Credits and Other Liabilities:
Accumulated deferred income taxesAccumulated deferred income taxes3,318 3,019 Accumulated deferred income taxes3,818 3,707 
Deferred credits related to income taxesDeferred credits related to income taxes2,283 2,321 Deferred credits related to income taxes2,220 2,244 
Accumulated deferred ITCsAccumulated deferred ITCs323 328 Accumulated deferred ITCs316 319 
Employee benefit obligationsEmployee benefit obligations384 402 Employee benefit obligations310 318 
Operating lease obligations, deferredOperating lease obligations, deferred950 999 Operating lease obligations, deferred840 851 
Asset retirement obligations, deferredAsset retirement obligations, deferred6,537 6,507 Asset retirement obligations, deferred5,820 5,739 
Other deferred credits and liabilitiesOther deferred credits and liabilities541 439 Other deferred credits and liabilities506 540 
Total deferred credits and other liabilitiesTotal deferred credits and other liabilities14,336 14,015 Total deferred credits and other liabilities13,830 13,718 
Total LiabilitiesTotal Liabilities33,077 31,227 Total Liabilities34,294 34,305 
Common Stockholder's Equity (See accompanying statements)
Common Stockholder's Equity (See accompanying statements)
17,897 17,234 
Common Stockholder's Equity (See accompanying statements)
19,443 18,858 
Total Liabilities and Stockholder's EquityTotal Liabilities and Stockholder's Equity$50,974 $48,461 Total Liabilities and Stockholder's Equity$53,737 $53,163 
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, 20209 $398 $12,361 $3,789 $(47)$16,501 
Net income— — — 351 — 351 
Capital contributions from parent company— — 332 — — 332 
Other comprehensive income— — — — 2 2 
Cash dividends on common stock— — — (412)— (412)
Balance at March 31, 20219 398 12,693 3,728 (45)16,774 
Net income— — — 143 — 143 
Capital contributions from parent company— — 40 — — 40 
Other comprehensive income— — — — 1 1 
Cash dividends on common stock— — — (412)— (412)
Balance at June 30, 20219 $398 $12,733 $3,459 $(44)$16,546 
Number of
Common
Shares
Issued		Common
Stock		Paid-In
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Total
(in millions)
Balance at December 31, 2021Balance at December 31, 20219 $398 $14,153 $2,724 $(41)$17,234 Balance at December 31, 20219 $398 $14,153 $2,724 $(41)$17,234 
Net incomeNet income— — — 385 — 385 Net income— — — 385 — 385 
Capital contributions from parent companyCapital contributions from parent company— — 443 — — 443 Capital contributions from parent company— — 443 — — 443 
Other comprehensive incomeOther comprehensive income— — — — 10 10 Other comprehensive income— — — — 10 10 
Cash dividends on common stockCash dividends on common stock— — — (423)— (423)Cash dividends on common stock— — — (423)— (423)
Balance at March 31, 2022Balance at March 31, 20229 398 14,596 2,686 (31)17,649 Balance at March 31, 20229 $398 $14,596 $2,686 $(31)$17,649 
Net income— — — 608 — 608 
Capital contributions from parent company— — 46 — — 46 
Other comprehensive income— — — — 16 16 
Cash dividends on common stock— — — (422)— (422)
Balance at June 30, 20229 $398 $14,642 $2,872 $(15)$17,897 
Balance at December 31, 2022Balance at December 31, 20229 $398 $15,626 $2,846 $(12)$18,858 
Net incomeNet income— — — 296 — 296 
Capital contributions from parent companyCapital contributions from parent company— — 752 — — 752 
Cash dividends on common stockCash dividends on common stock— — — (464)— (464)
OtherOther— — — 1 — 1 
Balance at March 31, 2023Balance at March 31, 20239 $398 $16,378 $2,679 $(12)$19,443 
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 June 30,For the Six Months Ended June 30,For the Three Months Ended March 31,
2022202120222021 20232022
(in millions)(in millions) (in millions)
Operating Revenues:Operating Revenues:Operating Revenues:
Retail revenuesRetail revenues$252 $219 $469 $422 Retail revenues$236 $217 
Wholesale revenues, non-affiliatesWholesale revenues, non-affiliates63 54 131 117 Wholesale revenues, non-affiliates68 68 
Wholesale revenues, affiliatesWholesale revenues, affiliates107 25 149 57 Wholesale revenues, affiliates75 42 
Other revenuesOther revenues12 5 20 14 Other revenues11 8 
Total operating revenuesTotal operating revenues434 303 769 610 Total operating revenues390 335 
Operating Expenses:Operating Expenses:Operating Expenses:
Fuel and purchased powerFuel and purchased power207 102 339 208 Fuel and purchased power151 132 
Other operations and maintenanceOther operations and maintenance91 76 167 144 Other operations and maintenance82 76 
Depreciation and amortizationDepreciation and amortization45 44 90 91 Depreciation and amortization47 45 
Taxes other than income taxesTaxes other than income taxes32 32 61 63 Taxes other than income taxes32 29 
Total operating expensesTotal operating expenses375 254 657 506 Total operating expenses312 282 
Operating IncomeOperating Income59 49 112 104 Operating Income78 53 
Other Income and (Expense):Other Income and (Expense):Other Income and (Expense):
Interest expense, net of amounts capitalizedInterest expense, net of amounts capitalized(14)(14)(27)(29)Interest expense, net of amounts capitalized(16)(13)
Other income (expense), netOther income (expense), net12 11 22 20 Other income (expense), net9 10 
Total other income and (expense)Total other income and (expense)(2)(3)(5)(9)Total other income and (expense)(7)(3)
Earnings Before Income TaxesEarnings Before Income Taxes57 46 107 95 Earnings Before Income Taxes71 50 
Income taxesIncome taxes12 8 20 12 Income taxes13 8 
Net Income$45 $38 $87 $83 
Net Income and Comprehensive IncomeNet Income and Comprehensive Income$58 $42 
The accompanying notes as they relate to Mississippi Power are an integral part of these condensed financial statements.












26
Table of ContentsIndex to Financial Statements
MISSISSIPPI POWER COMPANY
CONDENSED STATEMENTS OF COMPREHENSIVE INCOMECASH FLOWS (UNAUDITED)
For the Three Months Ended June 30,For the Six Months Ended June 30,
 2022202120222021
 (in millions)(in millions)
Net Income$45 $38 $87 $83 
Other comprehensive income:
Qualifying hedges:
Reclassification adjustment for amounts included in net income,
   net of tax of $—, $—, $—, and $—, respectively
— — — 1 
Total other comprehensive income— — — 1 
Comprehensive Income$45 $38 $87 $84 
For the Three Months Ended March 31,
 20232022
 (in millions)
Operating Activities:
Net income$58 $42 
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total58 55 
Settlement of asset retirement obligations(3)(5)
Other, net(5)17 
Changes in certain current assets and liabilities —
-Receivables73 (7)
-Retail fuel cost under recovery(23)(11)
-Other current assets(1)(11)
-Accounts payable(74)(9)
-Accrued taxes(62)(63)
-Accrued compensation(17)(18)
-Other current liabilities(7)(6)
Net cash used for operating activities(3)(16)
Investing Activities:
Property additions(94)(45)
Construction payables(9)(8)
Payments pursuant to LTSAs(8)(8)
Other investing activities(6)(7)
Net cash used for investing activities(117)(68)
Financing Activities:
Increase in notes payable, net126 25 
Capital contributions from parent company— 50 
Payment of common stock dividends(46)(43)
Other financing activities(1)— 
Net cash provided from financing activities79 32 
Net Change in Cash, Cash Equivalents, and Restricted Cash(41)(52)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period59 61 
Cash, Cash Equivalents, and Restricted Cash at End of Period$18 $9 
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest$25 $22 
Noncash transactions —
Accrued property additions at end of period13 17 
Right-of-use assets obtained under operating leases1 — 
The accompanying notes as they relate to Mississippi Power are an integral part of these condensed financial statements.
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    Table of Contents                                Index to Financial Statements
MISSISSIPPI POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Six Months Ended June 30,
 20222021
 (in millions)
Operating Activities:
Net income$87 $83 
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total110 106 
Other, net13 (28)
Changes in certain current assets and liabilities —
-Receivables(92)1 
-Retail fuel cost under recovery(25)— 
-Other current assets(23)(4)
-Accounts payable79 (33)
-Accrued taxes(36)(51)
-Retail fuel cost over recovery— (15)
-Other current liabilities(1)(18)
Net cash provided from operating activities112 41 
Investing Activities:
Property additions(87)(90)
Construction payables(16)(3)
Payments pursuant to LTSAs(15)(14)
Other investing activities(15)(10)
Net cash used for investing activities(133)(117)
Financing Activities:
Increase (decrease) in notes payable, net16 (25)
Proceeds — Senior notes— 525 
Capital contributions from parent company51 101 
Payment of common stock dividends(85)(79)
Other financing activities— (7)
Net cash provided from (used for) financing activities(18)515 
Net Change in Cash, Cash Equivalents, and Restricted Cash(39)439 
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period61 39 
Cash, Cash Equivalents, and Restricted Cash at End of Period$22 $478 
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest$26 $31 
Income taxes, net5 7 
Noncash transactions — Accrued property additions at end of period9 31 
The accompanying notes as they relate to Mississippi Power are an integral part of these condensed financial statements.
28
Table of ContentsIndex to Financial Statements
MISSISSIPPI POWER COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)
 
AssetsAssetsAt June 30, 2022At December 31, 2021AssetsAt March 31, 2023At December 31, 2022
(in millions) (in millions)
Current Assets:Current Assets:Current Assets:
Cash and cash equivalentsCash and cash equivalents$22 $61 Cash and cash equivalents$18 $59 
Receivables —Receivables —Receivables —
Customer accounts, netCustomer accounts, net89 37 Customer accounts, net69 47 
Unbilled revenuesUnbilled revenues44 34 Unbilled revenues37 47 
AffiliatedAffiliated76 29 Affiliated26 82 
Other accounts and notesOther accounts and notes37 28 Other accounts and notes29 35 
Fossil fuel stockFossil fuel stock33 28 Fossil fuel stock51 44 
Materials and suppliesMaterials and supplies76 70 Materials and supplies80 80 
Assets from risk management activities62 28 
Other regulatory assetsOther regulatory assets62 54 Other regulatory assets80 72 
Other current assetsOther current assets15 13 Other current assets13 38 
Total current assetsTotal current assets516 382 Total current assets403 504 
Property, Plant, and Equipment:Property, Plant, and Equipment:Property, Plant, and Equipment:
In serviceIn service5,197 5,106 In service5,319 5,254 
Less: Accumulated provision for depreciationLess: Accumulated provision for depreciation1,648 1,591 Less: Accumulated provision for depreciation1,723 1,689 
Plant in service, net of depreciationPlant in service, net of depreciation3,549 3,515 Plant in service, net of depreciation3,596 3,565 
Construction work in progressConstruction work in progress127 127 Construction work in progress225 208 
Total property, plant, and equipmentTotal property, plant, and equipment3,676 3,642 Total property, plant, and equipment3,821 3,773 
Other Property and InvestmentsOther Property and Investments175 179 Other Property and Investments165 167 
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 taxes30 31 Deferred charges related to income taxes29 30 
Prepaid pension costsPrepaid pension costs91 79 Prepaid pension costs114 109 
Regulatory assets – asset retirement obligationsRegulatory assets – asset retirement obligations236 232 Regulatory assets – asset retirement obligations239 239 
Other regulatory assets, deferredOther regulatory assets, deferred286 317 Other regulatory assets, deferred253 249 
Accumulated deferred income taxesAccumulated deferred income taxes112 118 Accumulated deferred income taxes103 107 
Other deferred charges and assetsOther deferred charges and assets129 100 Other deferred charges and assets89 94 
Total deferred charges and other assetsTotal deferred charges and other assets884 877 Total deferred charges and other assets827 828 
Total AssetsTotal Assets$5,251 $5,080 Total Assets$5,216 $5,272 
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 June 30, 2022At December 31, 2021Liabilities and Stockholder's EquityAt March 31, 2023At December 31, 2022
(in millions) (in millions)
Current Liabilities:Current Liabilities:Current Liabilities:
Securities due within one yearSecurities due within one year$1 $1 Securities due within one year$1 $1 
Notes payableNotes payable16 — Notes payable126 — 
Accounts payable —Accounts payable —Accounts payable —
AffiliatedAffiliated129 81 Affiliated69 121 
OtherOther62 47 Other75 106 
Accrued taxesAccrued taxes83 120 Accrued taxes62 124 
Accrued compensationAccrued compensation28 36 Accrued compensation20 37 
Asset retirement obligationsAsset retirement obligations24 30 Asset retirement obligations35 37 
Other regulatory liabilitiesOther regulatory liabilities92 59 Other regulatory liabilities25 43 
Other current liabilitiesOther current liabilities96 65 Other current liabilities81 85 
Total current liabilitiesTotal current liabilities531 439 Total current liabilities494 554 
Long-term DebtLong-term Debt1,510 1,510 Long-term Debt1,544 1,544 
Deferred Credits and Other Liabilities:Deferred Credits and Other Liabilities:Deferred Credits and Other Liabilities:
Accumulated deferred income taxesAccumulated deferred income taxes466 464 Accumulated deferred income taxes470 466 
Deferred credits related to income taxesDeferred credits related to income taxes265 269 Deferred credits related to income taxes247 253 
Employee benefit obligationsEmployee benefit obligations88 88 Employee benefit obligations69 69 
Asset retirement obligations, deferredAsset retirement obligations, deferred162 160 Asset retirement obligations, deferred143 142 
Other cost of removal obligationsOther cost of removal obligations193 195 Other cost of removal obligations196 196 
Other regulatory liabilities, deferredOther regulatory liabilities, deferred91 64 Other regulatory liabilities, deferred84 96 
Other deferred credits and liabilitiesOther deferred credits and liabilities24 24 Other deferred credits and liabilities26 21 
Total deferred credits and other liabilitiesTotal deferred credits and other liabilities1,289 1,264 Total deferred credits and other liabilities1,235 1,243 
Total LiabilitiesTotal Liabilities3,330 3,213 Total Liabilities3,273 3,341 
Common Stockholder's Equity (See accompanying statements)
Common Stockholder's Equity (See accompanying statements)
1,921 1,867 
Common Stockholder's Equity (See accompanying statements)
1,943 1,931 
Total Liabilities and Stockholder's EquityTotal Liabilities and Stockholder's Equity$5,251 $5,080 Total Liabilities and Stockholder's Equity$5,216 $5,272 
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 Number of
Common
Shares
Issued		Common
Stock		Paid-In
Capital		Retained
Earnings (Accumulated Deficit)		Total
(in millions) (in millions)
Balance at December 31, 20201 $38 $4,460 $(2,754)$(2)$1,742 
Balance at December 31, 2021Balance at December 31, 20211 $38 $4,582 $(2,753)$1,867 
Net incomeNet income— — — 45 — 45 Net income— — — 42 42 
Capital contributions from parent companyCapital contributions from parent company— — 100 — — 100 Capital contributions from parent company— — 51 — 51 
Cash dividends on common stockCash dividends on common stock— — — (39)— (39)Cash dividends on common stock— — — (43)(43)
Balance at March 31, 20211 38 4,560 (2,748)(2)1,848 
Net income— — — 38 — 38 
Capital contributions from parent company— — 2 — — 2 
Cash dividends on common stock— — — (39)— (39)
Other— — — (1)1 — 
Balance at June 30, 20211 $38 $4,562 $(2,750)$(1)$1,849 
Balance at March 31, 2022Balance at March 31, 20221 $38 $4,633 $(2,754)$1,917 
Balance at December 31, 20211 $38 $4,582 $(2,753)$— $1,867 
Net income— — — 42 — 42 
Capital contributions from parent company— — 51 — — 51 
Cash dividends on common stock— — — (43)— (43)
Balance at March 31, 20221 38 4,633 (2,754)— 1,917 
Net income— — — 45 — 45 
Capital contributions from parent company— — 1 — — 1 
Cash dividends on common stock— — — (42)— (42)
Balance at June 30, 20221 $38 $4,634 $(2,751)$— $1,921 
Balance at December 31, 2022Balance at December 31, 20221 $38 $4,652 $(2,759)$1,931 
Net incomeNet income— — — 58 58 
Cash dividends on common stockCash dividends on common stock— — — (46)(46)
Balance at March 31, 2023Balance at March 31, 20231 $38 $4,652 $(2,747)$1,943 
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 June 30,For the Six Months Ended June 30, For the Three Months Ended March 31,
2022202120222021 20232022
(in millions)(in millions) (in millions)
Operating Revenues:Operating Revenues:Operating Revenues:
Wholesale revenues, non-affiliatesWholesale revenues, non-affiliates$658 $373 $1,084 $728 Wholesale revenues, non-affiliates$362 $426 
Wholesale revenues, affiliatesWholesale revenues, affiliates232 112 337 193 Wholesale revenues, affiliates135 105 
Other revenuesOther revenues9 5 17 9 Other revenues11 8 
Total operating revenuesTotal operating revenues899 490 1,438 930 Total operating revenues508 539 
Operating Expenses:Operating Expenses:Operating Expenses:
FuelFuel437 140 669 281 Fuel191 232 
Purchased powerPurchased power68 25 89 46 Purchased power26 21 
Other operations and maintenanceOther operations and maintenance115 111 220 211 Other operations and maintenance107 105 
Depreciation and amortizationDepreciation and amortization131 132 251 251 Depreciation and amortization128 120 
Taxes other than income taxesTaxes other than income taxes12 12 25 24 Taxes other than income taxes13 13 
Gain on dispositions, netGain on dispositions, net— — (2)(39)Gain on dispositions, net(20)(2)
Total operating expensesTotal operating expenses763 420 1,252 774 Total operating expenses445 489 
Operating IncomeOperating Income136 70 186 156 Operating Income63 50 
Other Income and (Expense):Other Income and (Expense):Other Income and (Expense):
Interest expense, net of amounts capitalizedInterest expense, net of amounts capitalized(36)(37)(73)(75)Interest expense, net of amounts capitalized(33)(37)
Other income (expense), netOther income (expense), net1 1 3 8 Other income (expense), net2 2 
Total other income and (expense)Total other income and (expense)(35)(36)(70)(67)Total other income and (expense)(31)(35)
Earnings Before Income TaxesEarnings Before Income Taxes101 34 116 89 Earnings Before Income Taxes32 15 
Income taxes (benefit)Income taxes (benefit)25 (2)13 (11)Income taxes (benefit)(7)(12)
Net IncomeNet Income76 36 103 100 Net Income39 27 
Net loss attributable to noncontrolling interestsNet loss attributable to noncontrolling interests(22)— (67)(33)Net loss attributable to noncontrolling interests(63)(45)
Net Income Attributable to Southern PowerNet Income Attributable to Southern Power$98 $36 $170 $133 Net Income Attributable to Southern Power$102 $72 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
 
For the Three Months Ended June 30,For the Six Months Ended June 30, For the Three Months Ended March 31,
2022202120222021 20232022
(in millions)(in millions) (in millions)
Net IncomeNet Income$76 $36 $103 $100 Net Income$39 $27 
Other comprehensive income (loss):Other comprehensive income (loss):Other comprehensive income (loss):
Qualifying hedges:Qualifying hedges:Qualifying hedges:
Changes in fair value, net of tax of
$(18), $2, $(23), and $(8), respectively
(54)6 (72)(26)
Reclassification adjustment for amounts included in net income,
net of tax of $19, $(3), $26, and $13, respectively
57 (9)79 38 
Pension and other postretirement benefit plans:
Changes in fair value, net of tax of $(3) and $(6), respectivelyChanges in fair value, net of tax of $(3) and $(6), respectively(8)(17)
Reclassification adjustment for amounts included in net income,
net of tax of $— and $7, respectively
Reclassification adjustment for amounts included in net income,
net of tax of $— and $7, respectively
1 22 
Reclassification adjustment for amounts included in net income,
net of tax of $—, $1, $—, and $1, respectively
— — 1 1 
Total other comprehensive income (loss)Total other comprehensive income (loss)3 (3)8 13 Total other comprehensive income (loss)(7)5 
Comprehensive IncomeComprehensive Income79 33 111 113 Comprehensive Income32 32 
Comprehensive loss attributable to noncontrolling interestsComprehensive loss attributable to noncontrolling interests(22)— (67)(33)Comprehensive loss attributable to noncontrolling interests(63)(45)
Comprehensive Income Attributable to Southern PowerComprehensive Income Attributable to Southern Power$101 $33 $178 $146 Comprehensive Income Attributable to Southern Power$95 $77 
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 ContentsIndex to Financial Statements
SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 For the Three Months Ended March 31,
 20232022
 (in millions)
Operating Activities:
Net income$39 $27 
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total133 126 
Deferred income taxes3 12 
Amortization of investment tax credits(15)(15)
Gain on dispositions, net(20)(2)
Other, net(14)(3)
Changes in certain current assets and liabilities —
-Receivables120 11 
-Prepaid income taxes15 (8)
-Other current assets(13)— 
-Accounts payable(92)(21)
-Accrued compensation(13)(13)
-Other current liabilities(8)3 
Net cash provided from operating activities135 117 
Investing Activities:
Property additions(11)(19)
Proceeds from dispositions46 29 
Change in construction payables(15)(31)
Payments pursuant to LTSAs(16)(15)
Other investing activities— (1)
Net cash provided from (used for) investing activities4 (37)
Financing Activities:
Decrease in notes payable, net(59)(3)
Capital contributions from noncontrolling interests21 73 
Distributions to noncontrolling interests(48)(97)
Payment of common stock dividends(63)(49)
Other financing activities3 — 
Net cash used for financing activities(146)(76)
Net Change in Cash, Cash Equivalents, and Restricted Cash(7)4 
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period133 135 
Cash, Cash Equivalents, and Restricted Cash at End of Period$126 $139 
Supplemental Cash Flow Information:
Cash paid (received) during the period for —
Interest$30 $29 
Income taxes, net(9)(8)
Noncash transactions —
Accrued property additions at end of period12 46 
Reassessment of right-of-use assets under operating leases— 40 
The accompanying notes as they relate to Southern Power are an integral part of these condensed consolidated financial statements.
32
    Table of Contents                                Index to Financial Statements
SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSBALANCE SHEETS (UNAUDITED)

 For the Six Months Ended June 30,
 20222021
 (in millions)
Operating Activities:
Net income$103 $100 
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total264 264 
Deferred income taxes14 (20)
Utilization of federal investment tax credits239 205 
Amortization of investment tax credits(29)(29)
Gain on dispositions, net(2)(39)
Other, net(25)(18)
Changes in certain current assets and liabilities —
-Receivables(161)(91)
-Prepaid income taxes22 28 
-Other current assets(6)2 
-Accounts payable114 14 
-Accrued taxes42 8 
-Other current liabilities(23)(13)
Net cash provided from operating activities552 411 
Investing Activities:
Business acquisitions, net of cash acquired— (345)
Property additions(34)(224)
Proceeds from dispositions48 17 
Change in construction payables(54)(14)
Payments pursuant to LTSAs(33)(47)
Other investing activities— 12 
Net cash used for investing activities(73)(601)
Financing Activities:
Increase (decrease) in notes payable, net94 (56)
Proceeds —
Senior notes— 400 
Capital contributions from parent company326 4 
Redemptions — Senior notes(677)— 
Return of capital to parent company— (271)
Capital contributions from noncontrolling interests73 343 
Distributions to noncontrolling interests(115)(113)
Payment of common stock dividends(99)(102)
Other financing activities(5)(9)
Net cash provided from (used for) financing activities(403)196 
Net Change in Cash, Cash Equivalents, and Restricted Cash76 6 
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period135 183 
Cash, Cash Equivalents, and Restricted Cash at End of Period$211 $189 
Supplemental Cash Flow Information:
Cash paid (received) during the period for —
Interest (net of $— and $2 capitalized for 2022 and 2021, respectively)$91 $91 
Income taxes, net(263)(189)
Noncash transactions —
Contributions from noncontrolling interests— 89 
Contributions of wind turbine equipment— 82 
Accrued property additions at end of period28 59 
Right-of-use assets obtained under operating leases— 65 
Reassessment of right-of-use assets under operating leases40 — 
AssetsAt March 31, 2023At December 31, 2022
 (in millions)
Current Assets:
Cash and cash equivalents$123 $131 
Receivables —
Customer accounts, net133 226 
Affiliated39 51 
Other71 70 
Materials and supplies85 88 
Prepaid income taxes291 5 
Other current assets59 50 
Total current assets801 621 
Property, Plant, and Equipment:
In service14,635 14,658 
Less: Accumulated provision for depreciation3,760 3,661 
Plant in service, net of depreciation10,875 10,997 
Construction work in progress43 41 
Total property, plant, and equipment10,918 11,038 
Other Property and Investments:
Intangible assets, net of amortization of $134 and $129, respectively258 263 
Equity investments in unconsolidated subsidiaries— 49 
Net investment in sales-type leases152 154 
Total other property and investments410 466 
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization487 489 
Prepaid LTSAs208 193 
Other deferred charges and assets310 274 
Total deferred charges and other assets1,005 956 
Total Assets$13,134 $13,081 
The accompanying notes as they relate to Southern Power are an integral part of these condensed consolidated financial statements.
33
Table of ContentsIndex to Financial Statements
SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
AssetsAt June 30, 2022At December 31, 2021
 (in millions)
Current Assets:
Cash and cash equivalents$202 $107 
Receivables —
Customer accounts, net278 139 
Affiliated83 51 
Other19 29 
Materials and supplies108 106 
Prepaid income taxes5 27 
Other current assets48 46 
Total current assets743 505 
Property, Plant, and Equipment:
In service14,637 14,585 
Less: Accumulated provision for depreciation3,462 3,241 
Plant in service, net of depreciation11,175 11,344 
Construction work in progress34 45 
Total property, plant, and equipment11,209 11,389 
Other Property and Investments:
Intangible assets, net of amortization of $119 and $109, respectively274 282 
Equity investments in unconsolidated subsidiaries49 86 
Net investment in sales-type leases156 161 
Total other property and investments479 529 
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization493 479 
Prepaid LTSAs192 210 
Other deferred charges and assets286 278 
Total deferred charges and other assets971 967 
Total Assets$13,402 $13,390 
The accompanying notes as they relate to Southern Power are an integral part of these condensed consolidated financial statements.
34
    Table of Contents                                Index to Financial Statements
SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
Liabilities and Stockholders' EquityLiabilities and Stockholders' EquityAt June 30, 2022At December 31, 2021Liabilities and Stockholders' EquityAt March 31, 2023At December 31, 2022
(in millions) (in millions)
Current Liabilities:Current Liabilities:Current Liabilities:
Securities due within one yearSecurities due within one year$— $679 Securities due within one year$291 $290 
Notes payableNotes payable306 211 Notes payable165 225 
Accounts payable —Accounts payable —Accounts payable —
AffiliatedAffiliated192 92 Affiliated71 139 
OtherOther77 85 Other31 67 
Accrued taxesAccrued taxes56 14 Accrued taxes22 24 
Accrued interestAccrued interest24 32 Accrued interest27 28 
Other current liabilitiesOther current liabilities89 140 Other current liabilities90 111 
Total current liabilitiesTotal current liabilities744 1,253 Total current liabilities697 884 
Long-term DebtLong-term Debt2,964 3,009 Long-term Debt2,700 2,689 
Deferred Credits and Other Liabilities:Deferred Credits and Other Liabilities:Deferred Credits and Other Liabilities:
Accumulated deferred income taxesAccumulated deferred income taxes471 215 Accumulated deferred income taxes581 279 
Accumulated deferred ITCsAccumulated deferred ITCs1,585 1,614 Accumulated deferred ITCs1,541 1,556 
Operating lease obligationsOperating lease obligations514 497 Operating lease obligations510 514 
Other deferred credits and liabilitiesOther deferred credits and liabilities245 204 Other deferred credits and liabilities247 243 
Total deferred credits and other liabilitiesTotal deferred credits and other liabilities2,815 2,530 Total deferred credits and other liabilities2,879 2,592 
Total LiabilitiesTotal Liabilities6,523 6,792 Total Liabilities6,276 6,165 
Total Stockholders' Equity (See accompanying statements)
Total Stockholders' Equity (See accompanying statements)
6,879 6,598 
Total Stockholders' Equity (See accompanying statements)
6,858 6,916 
Total Liabilities and Stockholders' EquityTotal Liabilities and Stockholders' Equity$13,402 $13,390 Total Liabilities and Stockholders' Equity$13,134 $13,081 
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 STATEMENTS 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, 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 
Balance at December 31, 2022$1,069 $1,741 $(18)$2,792 $4,124 $6,916 
Net income (loss)— 102 — 102 (63)39 
Other comprehensive income (loss)— — (7)(7)— (7)
Cash dividends on common stock— (63)— (63)— (63)
Capital contributions from
   noncontrolling interests		— — — — 21 21 
Distributions to noncontrolling interests— — — — (48)(48)
Balance at March 31, 2023$1,069 $1,780 $(25)$2,824 $4,034 $6,858 
The accompanying notes as they relate to Southern Power are an integral part of these condensed consolidated financial statements.
35
    Table of Contents                                Index to Financial Statements
SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS 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, 2021641 1,569 (52)2,158 4,586 6,744 
Net income— 36 — 36 — 36 
Other comprehensive income (loss)— — (3)(3)— (3)
Cash dividends on common stock— (51)— (51)— (51)
Capital contributions from
   noncontrolling interests		— — — — 29 29 
Distributions to noncontrolling interests— — — — (68)(68)
Other2 — 1 3 — 3 
Balance at June 30, 2021$643 $1,554 $(54)$2,143 $4,547 $6,690 
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, 2022638 1,608 (22)2,224 4,332 6,556 
Net income (loss)— 98 — 98 (22)76 
Capital contributions from parent company322 — — 322 — 322 
Other comprehensive income— — 3 3 — 3 
Cash dividends on common stock— (50)— (50)— (50)
Distributions to noncontrolling interests— — — — (28)(28)
Balance at June 30, 2022$960 $1,656 $(19)$2,597 $4,282 $6,879 
The accompanying notes as they relate to Southern Power are an integral part of these condensed consolidated financial statements.
36
Table of ContentsIndex to Financial Statements

SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
For the Three Months Ended June 30,For the Six Months Ended June 30, For the Three Months Ended March 31,
2022202120222021 20232022
(in millions)(in millions) (in millions)
Operating Revenues:Operating Revenues:Operating Revenues:
Natural gas revenues (includes revenue taxes of
$33, $23, $104, and $77, respectively)
$1,081 $675 $3,139 $2,367 
Alternative revenue programs2 2 1 4 
Natural gas revenues (includes revenue taxes of $66 and $71, respectively)Natural gas revenues (includes revenue taxes of $66 and $71, respectively)$1,875 $2,058 
Total operating revenuesTotal operating revenues1,083 677 3,140 2,371 Total operating revenues1,875 2,058 
Operating Expenses:Operating Expenses:Operating Expenses:
Cost of natural gasCost of natural gas452 231 1,546 814 Cost of natural gas898 1,095 
Other operations and maintenanceOther operations and maintenance266 233 570 532 Other operations and maintenance305 305 
Depreciation and amortizationDepreciation and amortization138 133 275 263 Depreciation and amortization141 137 
Taxes other than income taxesTaxes other than income taxes62 49 163 130 Taxes other than income taxes102 100 
Total operating expensesTotal operating expenses918 646 2,554 1,739 Total operating expenses1,446 1,637 
Operating IncomeOperating Income165 31 586 632 Operating Income429 421 
Other Income and (Expense):Other Income and (Expense):Other Income and (Expense):
Earnings (loss) from equity method investments31 (52)71 (11)
Earnings from equity method investmentsEarnings from equity method investments45 40 
Interest expense, net of amounts capitalizedInterest expense, net of amounts capitalized(61)(59)(122)(118)Interest expense, net of amounts capitalized(76)(61)
Other income (expense), netOther income (expense), net16 (14)32 (78)Other income (expense), net14 16 
Total other income and (expense)Total other income and (expense)(14)(125)(19)(207)Total other income and (expense)(17)(5)
Earnings (Loss) Before Income Taxes151 (94)567 425 
Income taxes (benefit)36 (29)134 92 
Net Income (Loss)$115 $(65)$433 $333 
Earnings Before Income TaxesEarnings Before Income Taxes412 416 
Income taxesIncome taxes103 97 
Net IncomeNet Income$309 $319 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
 
For the Three Months Ended June 30,For the Six Months Ended June 30, For the Three Months Ended March 31,
2022202120222021 20232022
(in millions)(in millions) (in millions)
Net Income (Loss)$115 $(65)$433 $333 
Net IncomeNet Income$309 $319 
Other comprehensive income (loss):Other comprehensive income (loss):Other comprehensive income (loss):
Qualifying hedges:Qualifying hedges:Qualifying hedges:
Changes in fair value, net of tax of
$(2), $3, $8, and $3, respectively
(5)8 22 9 
Reclassification adjustment for amounts included in net income,
net of tax of $(3), $—, $(5), and $1, respectively
(7)— (13)3 
Changes in fair value, net of tax of $(10) and $10, respectivelyChanges in fair value, net of tax of $(10) and $10, respectively(24)26 
Reclassification adjustment for amounts included in net income,
net of tax of $6 and $(2), respectively
Reclassification adjustment for amounts included in net income,
net of tax of $6 and $(2), respectively
14 (6)
Total other comprehensive income (loss)Total other comprehensive income (loss)(12)8 9 12 Total other comprehensive income (loss)(10)20 
Comprehensive IncomeComprehensive Income$103 $(57)$442 $345 Comprehensive Income$299 $339 
The accompanying notes as they relate to Southern Company Gas are an integral part of these condensed consolidated financial statements.
36
Table of ContentsIndex to Financial Statements
SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 For the Three Months Ended March 31,
 20232022
 (in millions)
Operating Activities:
Net income$309 $319 
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total141 137 
Deferred income taxes27 5 
Mark-to-market adjustments13 (38)
Natural gas cost under recovery – long-term— 162 
Other, net(15)41 
Changes in certain current assets and liabilities —
-Receivables266 (115)
-Natural gas for sale, net of temporary LIFO liquidation267 450 
-Prepaid income taxes33 34 
-Other current assets90 (1)
-Accounts payable(303)(23)
-Accrued taxes36 54 
-Natural gas cost over recovery117 — 
-Other current liabilities(3)(1)
Net cash provided from operating activities978 1,024 
Investing Activities:
Property additions(299)(247)
Cost of removal, net of salvage(24)(20)
Change in construction payables, net(53)(5)
Other investing activities(3)1 
Net cash used for investing activities(379)(271)
Financing Activities:
Decrease in notes payable, net(448)(577)
Redemptions — Short-term borrowings(200)(100)
Capital contributions from parent company192 39 
Payment of common stock dividends(146)(130)
Other financing activities9 — 
Net cash used for financing activities(593)(768)
Net Change in Cash, Cash Equivalents, and Restricted Cash6 (15)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period83 48 
Cash, Cash Equivalents, and Restricted Cash at End of Period$89 $33 
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $4 and $2 capitalized for 2023 and 2022, respectively)$76 $55 
Noncash transactions — Accrued property additions at end of period124 107 
The accompanying notes as they relate to Southern Company Gas are an integral part of these condensed consolidated financial statements.
37
    Table of Contents                                Index to Financial Statements
SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 For the Six Months Ended June 30,
 20222021
 (in millions)
Operating Activities:
Net income$433 $333 
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total275 263 
Deferred income taxes35 110 
Mark-to-market adjustments13 137 
Impairment of PennEast Pipeline investment— 82 
Natural gas cost under recovery – long-term192 (119)
Other, net42 15 
Changes in certain current assets and liabilities —
-Receivables244 262 
-Natural gas for sale, net of temporary LIFO liquidation335 375 
-Prepaid income taxes(70)(129)
-Natural gas cost under recovery(94)(485)
-Other current assets19 7 
-Accounts payable101 (42)
-Accrued taxes(41)1 
-Other current liabilities(6)(88)
Net cash provided from operating activities1,478 722 
Investing Activities:
Property additions(637)(635)
Cost of removal, net of salvage(53)(44)
Other investing activities32 11 
Net cash used for investing activities(658)(668)
Financing Activities:
Increase (decrease) in notes payable, net(593)210 
Proceeds — Short-term borrowings50 300 
Redemptions —
Short-term borrowings(150)— 
Senior notes— (300)
Medium-term notes(46)(30)
Capital contributions from parent company349 60 
Payment of common stock dividends(260)(265)
Net cash used for financing activities(650)(25)
Net Change in Cash, Cash Equivalents, and Restricted Cash170 29 
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period48 19 
Cash, Cash Equivalents, and Restricted Cash at End of Period$218 $48 
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $4 and $3 capitalized for 2022 and 2021, respectively)$129 $127 
Income taxes, net210 100 
Noncash transactions — Accrued property additions at end of period126 137 
The accompanying notes as they relate to Southern Company Gas are an integral part of these condensed consolidated financial statements.
38
Table of ContentsIndex to Financial Statements
SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
AssetsAssetsAt June 30, 2022At December 31, 2021AssetsAt March 31, 2023At December 31, 2022
(in millions)(in millions)
Current Assets:Current Assets:  Current Assets:  
Cash and cash equivalentsCash and cash equivalents$217 $45 Cash and cash equivalents$88 $81 
Receivables —Receivables —  Receivables —  
Customer accountsCustomer accounts379 462 Customer accounts586 616 
Unbilled revenuesUnbilled revenues109 278 Unbilled revenues218 453 
Other accounts and notesOther accounts and notes53 49 Other accounts and notes73 76 
Accumulated provision for uncollectible accountsAccumulated provision for uncollectible accounts(55)(39)Accumulated provision for uncollectible accounts(58)(50)
Natural gas for saleNatural gas for sale209 362 Natural gas for sale216 438 
Prepaid expensesPrepaid expenses185 114 Prepaid expenses74 93 
Assets from risk management activities, net of collateral22 33 
Natural gas cost under recoveryNatural gas cost under recovery361 266 Natural gas cost under recovery— 108 
Other regulatory assetsOther regulatory assets105 136 Other regulatory assets126 119 
Other current assetsOther current assets53 49 Other current assets118 104 
Total current assetsTotal current assets1,638 1,755 Total current assets1,441 2,038 
Property, Plant, and Equipment:Property, Plant, and Equipment:  Property, Plant, and Equipment:  
In serviceIn service19,362 18,880 In service19,918 19,723 
Less: Accumulated depreciationLess: Accumulated depreciation5,201 5,067 Less: Accumulated depreciation5,350 5,276 
Plant in service, net of depreciationPlant in service, net of depreciation14,161 13,813 Plant in service, net of depreciation14,568 14,447 
Construction work in progressConstruction work in progress776 684 Construction work in progress996 909 
Total property, plant, and equipmentTotal property, plant, and equipment14,937 14,497 Total property, plant, and equipment15,564 15,356 
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 subsidiaries1,134 1,173 Equity investments in unconsolidated subsidiaries1,282 1,276 
Other intangible assets, net of amortization of $151 and $145, respectively31 37 
Other intangible assets, net of amortization of $159 and $156, respectivelyOther intangible assets, net of amortization of $159 and $156, respectively23 26 
Miscellaneous property and investmentsMiscellaneous property and investments19 19 Miscellaneous property and investments29 28 
Total other property and investmentsTotal other property and investments6,199 6,244 Total other property and investments6,349 6,345 
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 amortization63 70 Operating lease right-of-use assets, net of amortization55 57 
Prepaid pension costsPrepaid pension costs192 175 Prepaid pension costs190 183 
Other regulatory assets, deferredOther regulatory assets, deferred459 689 Other regulatory assets, deferred478 497 
Other deferred charges and assetsOther deferred charges and assets130 130 Other deferred charges and assets145 145 
Total deferred charges and other assetsTotal deferred charges and other assets844 1,064 Total deferred charges and other assets868 882 
Total AssetsTotal Assets$23,618 $23,560 Total Assets$24,222 $24,621 
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 EquityLiabilities and Stockholder's EquityAt June 30, 2022At December 31, 2021Liabilities and Stockholder's EquityAt March 31, 2023At December 31, 2022
(in millions)(in millions)
Current Liabilities:Current Liabilities:Current Liabilities:
Securities due within one yearSecurities due within one year$— $47 Securities due within one year$401 $400 
Notes payableNotes payable516 1,209 Notes payable120 768 
Accounts payable —Accounts payable —Accounts payable —
AffiliatedAffiliated54 58 Affiliated91 104 
OtherOther494 361 Other361 701 
Customer depositsCustomer deposits81 95 Customer deposits99 125 
Accrued taxesAccrued taxes74 124 Accrued taxes113 77 
Accrued interestAccrued interest58 59 Accrued interest69 67 
Accrued compensationAccrued compensation91 110 Accrued compensation68 105 
Temporary LIFO liquidationTemporary LIFO liquidation177 — Temporary LIFO liquidation45 — 
Natural gas cost over recoveryNatural gas cost over recovery117 — 
Other regulatory liabilitiesOther regulatory liabilities37 8 Other regulatory liabilities104 36 
Other current liabilitiesOther current liabilities161 155 Other current liabilities208 187 
Total current liabilitiesTotal current liabilities1,743 2,226 Total current liabilities1,796 2,570 
Long-term DebtLong-term Debt6,785 6,855 Long-term Debt7,055 7,042 
Deferred Credits and Other Liabilities:Deferred Credits and Other Liabilities:Deferred Credits and Other Liabilities:
Accumulated deferred income taxesAccumulated deferred income taxes1,595 1,555 Accumulated deferred income taxes1,583 1,560 
Deferred credits related to income taxesDeferred credits related to income taxes800 816 Deferred credits related to income taxes781 788 
Employee benefit obligationsEmployee benefit obligations168 176 Employee benefit obligations112 120 
Operating lease obligationsOperating lease obligations55 59 Operating lease obligations50 51 
Other cost of removal obligationsOther cost of removal obligations1,694 1,683 Other cost of removal obligations1,725 1,707 
Accrued environmental remediationAccrued environmental remediation181 197 Accrued environmental remediation200 207 
Other deferred credits and liabilitiesOther deferred credits and liabilities137 77 Other deferred credits and liabilities167 179 
Total deferred credits and other liabilitiesTotal deferred credits and other liabilities4,630 4,563 Total deferred credits and other liabilities4,618 4,612 
Total LiabilitiesTotal Liabilities13,158 13,644 Total Liabilities13,469 14,224 
Common Stockholder's Equity (See accompanying statements)
Common Stockholder's Equity (See accompanying statements)
10,460 9,916 
Common Stockholder's Equity (See accompanying statements)
10,753 10,397 
Total Liabilities and Stockholder's EquityTotal Liabilities and Stockholder's Equity$23,618 $23,560 Total Liabilities and Stockholder's Equity$24,222 $24,621 
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, 2020$9,930 $(141)$(22)$9,767 
Net income— 398 — 398 
Capital contributions from parent company57 — — 57 
Other comprehensive income— — 4 4 
Cash dividends on common stock— (132)— (132)
Balance at March 31, 20219,987 125 (18)10,094 
Net loss— (65)— (65)
Capital contributions from parent company25 — — 25 
Other comprehensive income— — 8 8 
Cash dividends on common stock— (133)— (133)
Balance at June 30, 2021$10,012 $(73)$(10)$9,929 
Paid-In
Capital		Retained
Earnings
(Accumulated Deficit)		Accumulated
Other
Comprehensive
Income (Loss)		Total
(in millions)
Balance at December 31, 2021Balance at December 31, 2021$10,024 $(132)$24 $9,916 Balance at December 31, 2021$10,024 $(132)$24 $9,916 
Net incomeNet income— 319 — 319 Net income— 319 — 319 
Capital contributions from parent companyCapital contributions from parent company50 — — 50 Capital contributions from parent company50 — — 50 
Other comprehensive incomeOther comprehensive income— — 20 20 Other comprehensive income— — 20 20 
Cash dividends on common stockCash dividends on common stock— (130)— (130)Cash dividends on common stock— (130)— (130)
Balance at March 31, 2022Balance at March 31, 202210,074 57 44 10,175 Balance at March 31, 2022$10,074 $57 $44 $10,175 
Net income— 115 — 115 
Capital contributions from parent company312 — — 312 
Other comprehensive income (loss)— — (12)(12)
Cash dividends on common stock— (130)— (130)
Balance at June 30, 2022$10,386 $42 $32 $10,460 
Balance at December 31, 2022Balance at December 31, 2022$10,445 $(79)$31 $10,397 
Net incomeNet income— 309 — 309 
Capital contributions from parent companyCapital contributions from parent company203 — — 203 
Other comprehensive income (loss)Other comprehensive income (loss)— — (10)(10)
Cash dividends on common stockCash dividends on common stock— (146)— (146)
OtherOther1 (1)— — 
Balance at March 31, 2023Balance at March 31, 2023$10,649 $83 $21 $10,753 
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
5753
D
6057
E
6660
F
6863
G
7065
H
7166
I
7469
J
7874
K
91
L
9286



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 at December 31, 20212022 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 June 30, 2022March 31, 2023 and 2021.2022. 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, 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 June 30, 2022March 31, 2023 and December 31, 20212022 was as follows:
Goodwill
(in millions)
Southern Company$5,2805,161 
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 during the fourth quarter of each year, 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 June 30, 2022At December 31, 2021At March 31, 2023At December 31, 2022
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:
Subject to amortization:Subject to amortization:
Customer relationshipsCustomer relationships$212 $(157)$55 $212 $(150)$62 Customer relationships$212 $(164)$48 $212 $(162)$50 
Trade namesTrade names64 (41)23 64 (38)26 Trade names64 (47)17 64 (44)20 
PPA fair value adjustmentsPPA fair value adjustments390 (119)271 390 (109)281 PPA fair value adjustments390 (134)256 390 (129)261 
OtherOther10 (9)1 11 (10)1 Other6 (5)1 5 (5)— 
Total other intangible assets subject to amortization$676 $(326)$350 $677 $(307)$370 
Other intangible assets not subject to amortization:
Federal Communications Commission licenses75 — 75 75 — 75 
Total subject to amortizationTotal subject to amortization$672 $(350)$322 $671 $(340)$331 
Not subject to amortization:Not subject to amortization:
FCC licensesFCC licenses75 — 75 75 — 75 
Total other intangible assetsTotal other intangible assets$751 $(326)$425 $752 $(307)$445 Total other intangible assets$747 $(350)$397 $746 $(340)$406 
Southern Power
Other intangible assets subject to amortization:
Southern Power(*)
Southern Power(*)
PPA fair value adjustmentsPPA fair value adjustments$390 $(119)$271 $390 $(109)$281 PPA fair value adjustments$390 $(134)$256 $390 $(129)$261 
Southern Company Gas
Other intangible assets subject to amortization:
Southern Company Gas(*)
Southern Company Gas(*)
Gas marketing servicesGas marketing servicesGas marketing services
Customer relationshipsCustomer relationships$156 $(135)$21 $156 $(130)$26 Customer relationships$156 $(140)$16 $156 $(139)$17 
Trade namesTrade names26 (16)10 26 (15)11 Trade names26 (19)7 26 (17)9 
Total other intangible assets subject to amortization$182 $(151)$31 $182 $(145)$37 
Total other intangible assetsTotal other intangible assets$182 $(159)$23 $182 $(156)$26 
44
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
amortization.
Amortization associated with other intangible assets was as follows:
Three Months EndedSix Months EndedThree Months Ended
June 30, 2022March 31, 2023March 31, 2022
(in millions)(in millions)
Southern Company(a)
Southern Company(a)
$9 $19 
Southern Company(a)
$10 $10 
Southern Power(b)
Southern Power(b)
5 10 
Southern Power(b)
5 5 
Southern Company GasSouthern Company Gas2 5 Southern Company Gas3 3 
(a)Includes $5 million and $10 million for the three and six months ended June 30, 2022, respectively, recorded as a reduction to operating revenues.revenues for both periods presented.
(b)Recorded as a reduction to operating revenues.
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 applicable Registrants:
Southern
Company		Southern
Power		Southern
Company Gas
June 30, 2022December 31, 2021June 30, 2022December 31, 2021June 30, 2022December 31, 2021
(in millions)
Cash and cash equivalents$1,724 $1,798 $202 $107 $217 $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)
$1,735 $1,829 $211 $135 $218 $48 
43
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Southern CompanyGeorgia PowerSouthern PowerSouthern
Company Gas
(in millions)
At March 31, 2023
Cash and cash equivalents$1,053 $— $123 $88 
Restricted cash(a):
Other current assets117 115 — 2 
Other deferred charges and assets47 45 3 — 
Total cash, cash equivalents, and restricted cash(b)
$1,217 $160 $126 $89 
At December 31, 2022
Cash and cash equivalents$1,917 $364 $131 $81 
Restricted cash(a):
Other current assets62 60 — 2 
Other deferred charges and assets58 56 3 — 
Total cash, cash equivalents, and restricted cash(b)
$2,037 $480 $133 $83 
(a)For Georgia Power, reflects $116 million at both March 31, 2023 and December 31, 2022 related to proceeds from the issuance of solid waste disposal facility revenue bonds in 2022 and $44 million at March 31, 2023 related to funds from a Georgia Housing and Finance Authority (GHFA) rental assistance program used to offset qualifying customers' past due balances, which expired on March 31, 2023 and will be returned to the GHFA. For Southern Power, reflects $9 million and $10$3 million at June 30, 2022both March 31, 2023 and December 31, 2021, respectively,2022 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.facility. For Southern Company Gas, reflects collateral for workers' compensation, life insurance, and long-term disability insurance.
(b)Total may not add due to rounding.
Natural Gas for Sale
With the exception of Nicor Gas, Southern Company Gas 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 endyear-end are charged to cost of natural gas at the estimated annual replacement cost. Inventory decrements that are not restored prior to year endyear-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 June 30, 2022March 31, 2023 is expected to be restored prior to year end.year-end.
Storm Damage Reserves
See Note 1 to the financial statements in Item 8 of the Form 10-K under "Storm Damage and Reliability Reserves" for additional information.
Storm damage reserve activity for the traditional electric operating companies during the three months ended March 31, 2023 was as follows:
Southern
Company		Alabama PowerGeorgia PowerMississippi
Power
 (in millions)
Balance at December 31, 2022$216 $97 $83 $36 
Accrual13 3 8 2 
Weather-related damages(43)(12)(31)— 
Balance at March 31, 2023$186 $88 $60 $38 
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Depreciation and AmortizationAsset Retirement Obligations
See Note 56 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, SouthernFollowing initial criticality on March 6, 2023, Georgia Power revised the depreciable livesrecorded AROs of its wind generating facilities from upapproximately $90 million related to 30 years to up to 35 years. This revision resulted in an immaterial decrease in depreciationPlant Vogtle Unit 3. See Note (B) under "Georgia Power – Nuclear Construction" for the threeadditional information on construction and six months ended June 30, 2022start-up of Plant Vogtle Units 3 and is expected to result in an immaterial decrease in annual depreciation for 2022.4.
(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 June 30, 2022March 31, 2023 and December 31, 20212022 were as follows:
Regulatory ClauseRegulatory ClauseBalance Sheet Line ItemJune 30,
2022		December 31, 2021Regulatory ClauseBalance Sheet Line ItemMarch 31,
2023		December 31, 2022
(in millions)(in millions)
Alabama PowerAlabama PowerAlabama Power
Rate CNP ComplianceRate CNP ComplianceOther regulatory assets, deferred$29 $16 Rate CNP ComplianceOther regulatory assets, current$23 $47 
Other regulatory assets, deferred18 — 
Rate CNP PPARate CNP PPAOther regulatory assets, deferred93 84 Rate CNP PPAOther regulatory assets, current17 18 
Other regulatory assets, deferred100 102 
Retail Energy Cost Recovery(*)
Other regulatory assets, current60 — 
Other regulatory assets, deferred191 126 
Retail Energy Cost RecoveryRetail Energy Cost RecoveryOther regulatory assets, current101 102 
Other regulatory assets, deferred420 520 
Georgia PowerGeorgia PowerGeorgia Power
Fuel Cost Recovery(*)
Fuel Cost Recovery(*)
Receivables – under recovered fuel clause revenues$447 $— 
Deferred under recovered fuel clause revenues1,702 2,056 
Fuel Cost RecoveryDeferred under recovered fuel clause revenues$948 $410 
Mississippi PowerMississippi PowerMississippi Power
Fuel Cost RecoveryFuel Cost RecoveryOther customer accounts receivable$29 $4 Fuel Cost RecoveryReceivables – customer accounts, net$25 $1 
Ad Valorem TaxAd Valorem TaxOther regulatory assets, current12 12 Ad Valorem TaxOther regulatory assets, current9 12 
Other regulatory assets, deferred29 37 Other regulatory assets, deferred19 19 
Southern Company GasSouthern Company GasSouthern Company Gas
Natural Gas Cost RecoveryNatural Gas Cost RecoveryNatural gas cost under recovery$361 $266 Natural Gas Cost RecoveryNatural gas cost under recovery$— $108 
Other regulatory assets, deferred15 207 Natural gas cost over recovery117 — 
(*)In accordance with an Alabama PSC order issued on February 1, 2022, AlabamaSee "Georgia Power applied $126 million of its 2021 Rate RSE refund to reduce the Rate ECR under recovered balance.– Fuel Cost Recovery" herein for additional information.
Alabama Power
CertificateCertificates of Convenience and Necessity
On July 12, 2022,In 2020, the Alabama PSC approved and, on July 15, 2022, issued its order regarding Alabama Power's petition for a certificate of convenience and necessity (CCN)authorizing Alabama Power's construction of Plant Barry Unit 8 and the recovery of estimated actual in-service costs of $652 million. At March 31, 2023, project expenditures associated with Plant Barry Unit 8 totaled approximately $541 million, of which authorizes Alabama Power to complete the acquisition of the Calhoun Generating Station, which$536 million and $5 million was approved by the FERC on March 25, 2022,included in CWIP and property, plant, and equipment in service, respectively. The unit is expected to close by September 30, 2022. Alabama Power expects to recover all approved costs associated with the acquisition through existing rate mechanisms as outlinedbe placed in Note 2 to the financial statementsservice in Item 8 of the Form 10-K. The Alabama PSC's order is subject to any rehearing request or judicial appeal filed on or before August 15, 2022.November 2023. The ultimate outcome of this matter cannot be determined at this time.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Rate ECRCNP New Plant
On July 12, 2022,March 24, 2023, Alabama Power filed Rate CNP New Plant with the Alabama PSC approvedto recover costs associated with the acquisition of the Central Alabama Generating Station. The filing reflected an adjustment to Rate ECR from 1.960 cents per KWH to 2.557 cents per KWH, or approximately $310annual increase in retail revenues of $78 million annually, effective with August 2022June 2023 billings. The approved increase in the Rate ECR factor will have no significant effect on Alabama Power's net income, but will increase operating cash flows related to fuel cost recovery. The rate will adjust to 5.910 cents per KWH in January 2025 absent a further order from the Alabama PSC.
Rate NDR
On July 12, 2022, the Alabama PSC approved modifications to Rate NDR, which include an adjustment to the charges to establish and maintain the reserve and an adjustment to the recovery period for any existing deferred storm-related operations and maintenance costs and future reserve deficits from 24 months to 48 months. As modified, the maximum total Rate NDR charge to recover a deficit is limited to $5.00 per month per non-residential customer account and $2.50 per month per residential customer account.
At June 30, 2022, Alabama Power's NDR balance was $103 million. Beginning with August 2022 billings, the reserve establishment charge will be suspended and the reserve maintenance charge will be activated as a result of the NDR balance exceeding $75 million.Through May 2023, Alabama Power expects to collect $6 million inrecover substantially all costs associated with the second half of 2022 and approximately $12 million annually beginning in 2023 underCentral Alabama Generating Station through Rate NDR unless the NDR balance falls below $50 million. Alabama Power continues to have the authority to accrue additional amountsRSE, offset by revenues from a power sales agreement. See Note 15 to the NDR as circumstances warrant.
Reliability Reserve Accounting Order
On July 12, 2022,financial statements under "Alabama Power" in Item 8 of the Alabama PSC approved an accounting order authorizing Alabama Power to create a reliability reserve separate from the NDR and transition the previous Rate NDR authority related to reliability expenditures to the reliability reserve. Alabama Power may make accruals to the reliability reserve if the NDR balance exceeds $35 million.Form 10-K for additional information.
Renewable Generation Certificate
Through the issuance of a Renewable Generation Certificate (RGC), Alabama Power is authorized by the Alabama PSC to procure up to 500 MWs of renewable capacity and energy by September 16, 2027 and to market the related energy and environmental attributes to customers and other third parties. InOn April 2022, 14, 2023, the Alabama PSC approved two new solar PPAs totaling 160 MWs. Alabama Power has procured solar capacity totaling approximately 490 MWs under the RGC.
Georgia Power
Fuel Cost Recovery
On February 28, 2023, Georgia Power filed a request with the Georgia PSC to increase fuel rates. On April 13, 2023, Georgia Power and the staff of the existing solar projectsGeorgia PSC reached a stipulated agreement that includes the following terms: (i) Georgia Power would update fuel rates from the original request for revised fuel costs and to reflect a three-year recovery period, starting June 1, 2023, for $2.2 billion of the under recovered fuel balance and (ii) Georgia Power would be required to file its next fuel case no later than February 28, 2026. On April 24, 2023, Georgia Power filed an updated request reflecting a 54% increase in fuel rates effective June 1, 2023, which wasis expected to increase annual billings by approximately $1.1 billionand includes recovery of the under recovered fuel balance described above. Changes in fuel rates have no significant effect on Georgia Power's net income but do impact the related operating cash flows. Georgia Power expects the Georgia PSC to make a final decision on this matter on May 16, 2023. The ultimate outcome of this matter cannot be served throughdetermined at this time.
Integrated Resource Plans
In August 2022, Restore Chattooga Gorge Coalition (RCG) filed a PPA commencing in first quarter 2024 was terminated, resultingpetition in the restorationSuperior Court of 80 MWsFulton County, Georgia against Georgia Power and the Georgia PSC. The petition challenges Georgia Power's plan to expend $115 million to modernize Plant Tugalo, as approved in the 2019 IRP, and seeks judicial review of capacity under the RGC.Georgia PSC's order in the 2022 IRP proceeding with respect to the denial of RCG's challenge to the modernization plan. In November 2022, Georgia Power and the Georgia PSC both filed motions to dismiss the RCG petition. The ultimate outcome of this matter cannot be determined at this time.
Georgia Power
Rate Plans
2022 Base Rate Case
On June 24, 2022, Georgia Power filed a base rate case (Georgia Power 2022 Base Rate Case) with the Georgia PSC. The filing proposes continuation of a three-year alternate rate plan with requested rate increases totaling $852 million, $107 million, and $45 million effective January 1, 2023, January 1, 2024, and January 1, 2025, respectively. These increases are based on a proposed retail ROE of 11.00% using the currently approved equity ratio of 56% and reflect levelized revenue requirements during the three-year period, with the exception of incremental compliance costs related to CCR AROs, Demand-Side Management (DSM) programs, and related adjustments to the Municipal Franchise Fee tariff.
47
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Georgia Power has requested recovery of the proposed increases through its existing base rate tariffs as follows:
Tariff202320242025
(in millions)
Traditional base$739 $— $— 
ECCR
Traditional(1)— — 
CCR ARO(a)
64 78 47 
DSM(a)
30 27 (2)
Municipal Franchise Fee20 2 1 
Total(b)
$852 $107 $45 
(a)As determined by the Georgia PSC through annual compliance filings.
(b)Totals may not add due to rounding.
Georgia Power's filing primarily reflects requests to (i) recover the costs of recent and future capital investments in the electric grid including the transmission and distribution systems and the continuation of its grid investment plan, all designed to support customer long-term reliability and resiliency needs, (ii) recover the cost of coal-fired generation units proposed for retirement, or made unavailable, as requested in the 2022 IRP, as Georgia Power continues the transition of the generation fleet to more economical and cleaner resources, (iii) make the necessary investments and recover costs to comply with federal and state environmental regulations, including costs associated with the CCR AROs related to ash pond and landfill closures and post-closure care, and (iv) reduce operating costs despite significant inflationary pressures. In addition, the filing includes the following provisions:
•Continuation of an allowed retail ROE range of 9.50% to 12.00%.
•Continuation of the process whereby 80% of any earnings above the top of the allowed ROE range are shared with Georgia Power's customers and the remaining 20% are retained by Georgia Power.
•Continuation of the option to file an Interim Cost Recovery tariff in the event earnings are projected to fall below the bottom of the allowed ROE range during the three-year term of the plan.
Georgia Power expects the Georgia PSC to render a final decision in this matter on December 20, 2022. The ultimate outcome of this matter cannot be determined at this time.
2019 ARP
In 2020, the Georgia PSC denied a motion for reconsideration filed by Sierra Club regarding the Georgia PSC's decision in the 2019 ARP allowing Georgia Power to recover compliance costs for CCR AROs. The Superior Court of Fulton County subsequently affirmed the Georgia PSC's decision and, in October 2021, the Georgia Court of Appeals affirmed the Superior Court of Fulton County's order. In December 2021, Sierra Club filed a petition for writ of certiorari to the Georgia Supreme Court, which was denied on July 14, 2022. This matter is now concluded. 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 Plans
In response to supply chain challenges in the solar industry, the Georgia PSC approved Georgia Power's request to amend 970 MWs of utility-scale solar PPAs that were authorized by the Georgia PSC in Georgia Power's 2019 IRP. The amendments extended the required commercial operation dates for the PPAs from 2023 to 2024.
48
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
On July 21, 2022, the Georgia PSC approved the 2022 IRP, as modified by a stipulated agreement among Georgia Power, the staff of the Georgia PSC, and certain intervenors and as further modified by the Georgia PSC. In the 2022 IRP decision, the Georgia PSC approved the following requests:
•Decertification and retirement of Plant Wansley Units 1 and 2 (926 MWs based on 53.5% ownership) by August 31, 2022 and reclassification to regulatory asset accounts of the remaining net book values ($302 million and $279 million for Unit 1 and Unit 2, respectively, at June 30, 2022) and any remaining unusable materials and supplies inventories upon retirement. The regulatory asset accounts for the net book values of the units will be amortized at a rate equal to the unit depreciation rates authorized in the 2019 ARP through December 31, 2022. In the Georgia Power 2022 Base Rate Case, Georgia Power requested recovery of the remaining regulatory asset balances for the net book values of the units through 2030 and requested that the timing of recovery of the regulatory asset account for the unusable materials and supplies inventories be determined in a future base rate case.
•Decertification and retirement of Plant Scherer Unit 3 (614 MWs based on 75% ownership) by December 31, 2028 and reclassification to regulatory asset accounts of the remaining net book value (approximately $614 million at June 30, 2022) and any remaining unusable materials and supplies inventory to regulatory asset accounts upon retirement. The timing of recovery for these regulatory assets is expected to be determined in a future base rate case.
•Decertification and retirement of Plant Gaston Units 1 through 4 (500 MWs based on 50% ownership through SEGCO) by December 31, 2028. See Note 7 to the financial statements under "SEGCO" in Item 8 of the Form 10-K for additional information.
•Georgia Power's environmental compliance strategy, including approval of Georgia Power's plans to address CCR at its ash ponds and landfills. Recovery of the related costs is expected to be determined in future base rate cases. The Georgia PSC's approval included a change in the method of closure for 1 ash pond. Georgia Power is currently evaluating the related impact on its cost estimates and AROs; however, it is not expected to be material.
•Installation of environmental controls at Plants Bowen and Scherer for compliance with rules related to effluent limitations guidelines.
•Initiation of a license renewal application with the NRC for Plant Hatch.
•Investments related to the continued hydro operations of Plants Sinclair and Burton.
•Provisional authorization for development of a 265-MW battery energy storage facility with expected commercial operation in 2026.
•Issuance of requests for proposals (RFP) for 2,300 MWs of renewable resources, an additional 500 MWs of energy storage, and up to 140 MWs of biomass generation.
•Related transmission projects necessary to support the generation facilities plan.
•Certification of 6 PPAs (including 5 affiliate PPAs with Southern Power that are subject to approval by the FERC) with capacities of 1,567 MWs beginning in 2024, 380 MWs beginning in 2025, and 228 MWs beginning in 2028, procured through RFPs authorized in the 2019 IRP. See Note (F) under "Georgia Power Lease Modification" for additional information.
The Georgia PSC deferred a decision on the requested decertification and retirement of Plant Bowen Units 1 and 2 (1,400 MWs) to the 2025 IRP and rejected Georgia Power's request to certify approximately 88 MWs of wholesale capacity to be placed in retail rate base between January 1, 2024 and January 1, 2025. Georgia Power may offer such capacity in the wholesale market or to the retail jurisdiction in a future regulatory proceeding.
The ultimate outcome of these matters cannot be determined at this time.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Nuclear Construction
In 2009, the Georgia PSC certified construction of Plant Vogtle Units 3 and 4, in which Georgia Power currently holds a 45.7% ownership interest. In 2012, the NRC issued the related combined construction and operating licenses, which allowed full construction of the 2two 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
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
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, under which Bechtel is reimbursed for actual costs plus a base fee and an at-risk fee, 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, 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.
Cost and Schedule
Georgia Power's approximate proportionate share of the remaining estimated capital cost to complete Plant Vogtle Units 3 and 4, including contingency, through the end of the firstsecond quarter 2023 and the fourthfirst quarter 2023,2024, respectively, is as follows:
(in millions)
Base project capital cost forecast(a)(b)
$10,39310,553 
Construction contingency estimate6040 
Total project capital cost forecast(a)(b)
10,45310,593 
Net investment at June 30, 2022March 31, 2023(b)
(8,966)(9,747)
Remaining estimate to complete$1,487846 
(a)Includes approximately $590$610 million of costs that are not shared with the other Vogtle Owners, including $33 million of construction monitoring costs approved for recovery by the Georgia PSC in its nineteenth VCM order,and approximately $455$407 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 $385$418 million, of which $247$334 million had been accrued through June 30, 2022.March 31, 2023.
(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 $3.4$3.5 billion, of which $3.0$3.3 billion had been incurred through June 30, 2022.
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March 31, 2023.
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 start-up testing and related test results, 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, which are reflected in the site work plans.
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, with the site experiencing peaks in the number of active cases in January 2021, August 2021, and 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.plans. As of June 30, 2022,March 31, 2023, 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 capital cost forecast. The continuing effects of theFuture COVID-19 pandemicvariants could further disrupt or delay construction and testing activitiesactivities.
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On March 6, 2023, Unit 3 achieved self-sustaining nuclear fission, commonly referred to as initial criticality, and, on April 1, 2023, the generator successfully synchronized to the power grid and generated electricity for the first time. Operators continue to perform tests at Plant Vogtle Units 3various power levels to help ensure the reactor performs as designed, and 4.
Fuel load forSouthern Nuclear continues to remediate various equipment and component issues as they are identified. Based on the expected duration of start-up testing, Unit 3 is projected to be placed in service during May or June 2023. Hot functional testing for Unit 4 commenced on March 20, 2023, with fuel load projected to occur in the third quarter 2023. Unit 4 is projected to be placed in service during late fourth quarter 2022 with an in-service date projected during2023 or the first quarter 2023. Unit 3's projected schedule primarily depends on 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 fourth quarter 2023 for Unit 4 is projected. Unit 4's projected schedule primarily depends on Unit 3 progress through fuel load, startup, and testing; overall construction productivity and production levels improving, particularly in electrical installation, including terminations; and appropriate levels of craft laborers, particularly electricians and pipefitters, being added and maintained. Any further delays could result in later in-service dates and cost increases.2024.
During the first half of 2022,quarter 2023, established construction contingency totaling $126$20 million was assigned to the base capital cost forecast for costs primarily associated with construction productivity, the pace of system turnovers, additional craft and support resources,resources.
The projected schedule for Unit 3 primarily depends on the progression of pre-operational testing and procurementstart-up, which may be impacted by further equipment, component, and/or other operational challenges. The projected schedule for Units 3 and 4. Georgia Power also increased its total project capital cost forecast as of June 30, 2022 by adding $36 million to replenish 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 in the second quarter 2022 of $36 million ($27 million after tax) for the increase in the total project capital cost forecast. Georgia Power may request the Georgia PSC to evaluate those expenditures for rate recovery during the prudence review following the Unit 4 fuel load pursuant to the twenty-fourth VCM stipulation described below.
Asprimarily depends on potential impacts arising from Unit 4 testing activities overlapping with Unit 3 completes system turnover from constructionstart-up and moves to testing and transition to operations, ongoing and potential future challenges includecommissioning; maintaining overall construction productivity completionand production levels, particularly in subcontractor scopes of construction remediation work, completionwork; and maintaining appropriate levels 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.craft laborers. As Unit 4 progresses throughcompletes construction and continues to transitiontransitions further into testing, ongoing and potential future challenges include the duration of hot functional testing; the timeframe and duration of other testing; the pace and quality of electricalremaining commodities installation; availabilitythe completion of craft and supervisory resources, including the temporary diversion of such resourcesdocumentation to support Unit 3 construction efforts;ITAAC submittals; the pace of remaining work package closures and system turnovers; and the timeframeavailability of craft, supervisory, and duration of hot functional and other testing. As construction, including subcontract work, continues on both Units 3 and 4, ongoingtechnical support resources. Ongoing or future challenges for both units also include 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 and related installation.escalation. New challenges also may continue to arise, particularly as UnitsUnit 3 completes start-up and commissioning and Unit 4 movemoves further into initial testing and start-up, which may result in required engineering changes or remediation related to 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). The ongoing and potential futureThese challenges described above may change the projectedresult in further schedule and estimated cost.
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delays and/or cost increases.
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. Additional license amendment requests also may be filed with the NRC. Processes are in place that are designed to ensure 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 withWith the additional construction remediation work described above, Southern Nuclear reviewedreceipt of the project's construction quality programs and, where needed,NRC's 103(g) finding in August 2022, Unit 3 is implementing improvement plans consistent with these processes. On March 25, 2022, the NRC completed its follow-up inspection related to the November 2021 final significance report on its special inspection to review the root cause of this additional construction remediation work and the corresponding corrective action plans. The NRC closed the two white findings identified in November 2021 and returned Vogtle Unit 3now subject to the NRC's baseline inspection program.
operating reactor oversight process and must meet applicable technical and operational requirements contained in its operating license. 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 orfor Unit 4, may arise, which may result in additional license amendmentsamendment requests or require other resolution. If any license amendment requests or other licensing-based compliance issues, including inspections and ITAACs for Unit 4, are not resolved in a timely manner, there may be delays in the project schedule that could result in increased costs.
The ultimate outcome of these matters cannot be determined at this time. However, any extension of the in-service date beyond the firstsecond quarter 2023 for Unit 3 or the fourthfirst quarter 20232024 for Unit 4, including the current level ofjoint owner cost sharing and tender impacts described below, is estimated to result in additional base capital costs for Georgia Power of up to $35$15 million per month for Unit 3 and $45$35 million per month for Unit 4, as well as the related 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.
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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 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.
Amendments to the Vogtle Joint Ownership Agreements
In connection with a September 2018 vote by the Vogtle 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
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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).
Pursuant 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, of which formed the basis of Georgia Power's forecast ofshare is $8.4 billion in the nineteenth VCM(VCM 19 Forecast Amount), 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 19 Forecast Amount (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 19 Forecast Amount (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. IfThe Global Amendments provide that if the EAC is revised and exceeds the EAC in the nineteenth VCM 19 Forecast Amount 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 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 19 Forecast Amount 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 (Project 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
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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 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 from the 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,construction and 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 exceedsapproved by the cost-sharing thresholds and triggersVogtle Owners in February 2022 triggered the tender provisions under the Global Amendments. Georgia Power recorded pre-tax charges to income in the fourth quarter 2021 and the second quarter 2022 of approximately $440 million ($328 million after tax) and $16 million ($12 million after tax), respectively, associated with these cost-sharing and tender provisions, which are
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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 $480 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.provisions. In October 2021, Georgia Power and the other Vogtle Owners entered into an agreement, which was modified on June 3, 2022, to clarify the process for the tender provisions of the Global Amendments to provide for a decision between 120 and 194 days after the tender option is triggered, which the other Vogtle Owners assert occurred on February 14, 2022 and would require the other Vogtle Owners to notify Georgia Power of their intent to exercise their tender options by August 27, 2022. On June 17, 2022 and July 26, 2022, OPC and Dalton, respectively, notified Georgia Power of their purported exercises of their tender options. OnGeorgia Power did not accept these purported tender exercises.
In June 18, 2022, OPC and MEAG Power each filed a separate lawsuit against Georgia Power in the Superior Court of Fulton County, Georgia seeking a declaratory judgment that the starting dollar amount is $17.1 billion and that the cost-sharing and tender provisions havehad been triggered. The lawsuits also assert other claims, including breach of contract allegations, and seek, among other remedies, damages and injunctive relief requiring Georgia Power to track and allocate construction costs consistent with MEAG Power's and OPC's interpretations of the Global Amendments. OnIn July 25, 2022, Georgia Power filed its answeranswers in the lawsuitlawsuits filed by MEAG Power and OPC and included counterclaims seeking a declaratory judgment that the starting dollar amount is $18.38 billion and that costs related to force majeure events are excluded prior to calculating the cost-sharing and tender provisions and when calculating Georgia Power's related financial obligations. In September 2022, Dalton filed complaints in each of these lawsuits. Also in September 2022, Georgia Power and MEAG Power reached an agreement to resolve their dispute regarding the proper interpretation of the cost-sharing and tender provisions of the Global Amendments. Under the terms of the agreement, among other items, (i) MEAG Power will not exercise its tender option and will retain its full ownership interest in Plant Vogtle Units 3 and 4; (ii) Georgia Power will reimburse a portion of MEAG Power's costs of construction for Plant Vogtle Units 3 and 4 as such costs are incurred and with no further adjustment for force majeure costs, which payments will total approximately $92 million based on the current project capital cost forecast; and (iii) Georgia Power will reimburse 20% of MEAG Power's costs of construction with respect to any amounts over the current project capital cost forecast, with no further adjustment for force majeure costs. In addition, MEAG Power agreed to vote to continue construction upon occurrence of a Project Adverse Event unless the commercial operation date of either of Plant Vogtle Unit 3 or Unit 4 is not projected to occur by December 31, 2025. In October 2022, MEAG Power and Georgia Power filed a notice of settlement and voluntary dismissal of their pending litigation, including Georgia Power's counterclaim, and Dalton dismissed its related complaint.
Georgia Power recorded pre-tax charges to income through the fourth quarter 2022 of $407 million ($304 million after tax) associated with the cost-sharing and tender provisions of the Global Amendments, including the settlement with MEAG Power. This total is included in the total project capital cost forecast and will not be recovered from retail customers. The settlement with MEAG Power does not resolve the separate pending litigation with OPC, including Dalton's associated complaint, described above. Georgia Power may be required to record further pre-tax charges to income of up to approximately $345 million associated with the cost-sharing and tender provisions of the Global Amendments for OPC and Dalton based on the current project capital cost forecast.
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 effectively exercise the option to tender a portion of their ownership interest to. Georgia Power believes the increases in the total project capital cost forecast through December 31, 2022 triggered the tender provisions, but Georgia Power disagrees with OPC and Dalton on the tender provisions trigger date. Valid notices of tender from OPC and Dalton would require Georgia Power to pay 100% of thetheir respective remaining shareshares of the costs
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necessary to complete Plant Vogtle Units 3 and 4. Georgia Power's incremental ownership interest wouldwill 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 June 30, 2022,March 31, 2023, Georgia Power had recovered approximately $2.8$2.9 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 is not recording 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 2021,December 2022, the Georgia PSC approved Georgia Power's requestfiling to decreaseincrease the NCCR tariff by $78$36 million annually, effective January 1, 2022.2023.
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, 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
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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 and that a prudence proceeding on cost recovery will 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)at that time) 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 effective the first month after Unit 3 reaches 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 (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
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(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 $270$300 million in 20212022 and are estimated to have negative earnings impacts of approximately $300 million and $250$270 million in 20222023 and 2023, respectively.$60 million in 2024. 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 25 VCM reports covering periods through June 30, 2021. These reports reflect total construction capital costs incurred of $7.9 billion (net of $1.7 billion of payments received under the Guarantee Settlement Agreement and approximately $188 million in related customer refunds), of which the Georgia PSC has verified and approved $7.3 billion as described above. The Georgia PSC also has reviewed the twenty-sixthtwo additional VCM report,reports, which reflects $584 millionreflected $1.1 billion of additional construction capital costs incurred through December 31, 2021.June 30, 2022. Georgia Power expects to filefiled its twenty-seventhtwenty-eighth VCM report with the Georgia PSC by August 31, 2022,on February 16, 2023, which will reflectreflected the revised capital cost forecast discusseddescribed above and $522$461 million of construction capital costs incurred from JanuaryJuly 1, 2022 through June 30,December 31, 2022.
The ultimate outcome of these matters cannot be determined at this time.
Mississippi Power
Performance Evaluation Plan
On March 15, 2023, Mississippi Power submitted its annual retail PEP filing for 2023 to the Mississippi PSC indicating no change in retail rates. The ultimate outcome of this matter cannot be determined at this time.
Ad Valorem Tax Adjustment
On March 31, 2023, Mississippi Power submitted its annual ad valorem tax adjustment filing for 2023, which requested a $7 million annual decrease in revenues. The ultimate outcome of this matter cannot be determined at this time.
Environmental Compliance Overview Plan
On April 4, 2023, the Mississippi PSC approved Mississippi Power's annual ECO Plan filing, resulting in a $3 million annual increase in revenues effective with the first billing cycle of May 2023.
System Restoration Rider
On April 4, 2023, the Mississippi PSC approved Mississippi Power's annual SRR filing, which indicated no change in retail rates. Mississippi Power's minimum annual SRR accrual was increased from $8 million to $12 million.
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Mississippi Power
Performance Evaluation Plan
On June 7, 2022, the Mississippi PSC approved Mississippi Power's annual retail PEP filing for 2022, resulting in an annual increase in revenues of approximately $18 million, or 1.9%, primarily due to increases in rate base, operations and maintenance expenses, and depreciation and amortization. The rate increase became effective with the first billing cycle of April 2022 in accordance with the PEP rate schedule.
Ad Valorem Tax Adjustment
On June 7, 2022, the Mississippi PSC approved Mississippi Power's annual ad valorem tax adjustment filing for 2022, resulting in an annual increase in revenues of $5 million, effective with the first billing cycle of July 2022.
Municipal and Rural Associations Tariff
On May 26, 2022, Mississippi Power and Cooperative Energy executed an amended shared service agreement (SSA) under which Cooperative Energy will continue to decrease its use of Mississippi Power's generation services under the MRA tariff up to 2.5% annually through 2035. At June 30, 2022, Mississippi Power is serving approximately 400 MWs of Cooperative Energy's annual demand. Beginning in 2036, Cooperative Energy will provide 100% of its electricity requirements at the MRA delivery points under the tariff. Neither party has the option to cancel the amended SSA. On June 30, 2022, Mississippi Power filed a request with the FERC for approval of the amended SSA.
On July 15, 2022, Mississippi Power filed a request with the FERC for a $23 million increase in annual wholesale base revenues under the MRA tariff and requested an effective date of July 15, 2022.
The ultimate outcome of these matters 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 sixthree months of 20222023 were as follows:
UtilityProgramSix
Three Months
Ended June 30, 2022
March 31, 2023
(in millions)
Nicor GasInvesting in Illinois$17762 
Virginia Natural GasSteps to Advance Virginia's EnergySAVE3320 
Atlanta Gas LightSystem Reinforcement Rider2832 
Chattanooga GasPipeline Replacement Program21 
Total$240115 
Rate Proceedings
Atlanta Gas Light
On July 1, 2022, Atlanta Gas Light filed its annual GRAM update with the Georgia PSC. The filing requests an annual base rate increase of $53 million based on the projected 12-month period beginning January 1, 2023. Resolution of the GRAM filing is expected by December 28, 2022, with the new rates effective January 1, 2023. The ultimate outcome of this matter cannot be determined at this time.
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(UNAUDITED)
Virginia Natural Gas
On May 31, 2022, Virginia Natural Gas filed a notice of intent with the Virginia State Corporation Commission to file a base rate case later in the third quarter 2022. The ultimate outcome of this matter cannot be determined at this time.
(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
Alabama Power
In February 2017, Jean Vineyard and Judy Mesirov eachSeptember 2022, Mobile Baykeeper filed a shareholder derivative lawsuitcitizen suit in the U.S. District Court for the NorthernSouthern District of Georgia. Each of these lawsuits named as defendants Southern Company, certain of its directors, certain of its currentAlabama alleging that Alabama Power's plan to close the Plant Barry ash pond utilizing a closure-in-place methodology violates the Resource Conservation and former officers,Recovery Act (RCRA) 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 Georgia. The complaints allegedregulations governing CCR. Among other relief requested, Mobile Baykeeper seeks a declaratory judgment that the defendants caused Southern Company to make false or misleading statements regarding the Kemper County energy facility costRCRA and schedule. Further, the complaints alleged that the defendants were unjustly enrichedregulations governing CCR are being violated, preliminary and caused the waste of corporate assets and also alleged 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 named as defendants Southern Company, certain of its directors, certain of its current and former officers, and certain former Mississippi Power officers. The complaint alleged 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 alleged 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 controlsinjunctive relief to prevent harm to Southern Company. In August 2019,implementation of Alabama Power's closure plan and the court granteddevelopment of 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 sought 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 sought certain changes to Southern Company's corporate governance and internal processes.closure plan that satisfies regulations governing CCR requirements. On January 21,December 19, 2022, the plaintiffs in the federal court actionAlabama Power filed a motion for preliminary approvalto dismiss the case. On January 31, 2023, the EPA issued a Notice of settlement, togetherPotential Violations associated with Alabama Power's plan to close the Plant Barry ash pond. Alabama Power submitted responses on March 20, 2023, March 24, 2023, and April 3, 2023 affirming its position that it is in compliance with CCR requirements. The ultimate outcome of these matters cannot be determined at this time but could have an executed stipulation of settlement, which appliedimpact on Alabama Power's ARO estimates. See Note 6 to both actions. On June 9, 2022, the U.S. District Court for the Northern District of Georgia granted final approvalfinancial statements in Item 8 of the settlement and, on June 16, 2022, the Superior CourtForm 10-K for a discussion of Gwinnett County, Georgia entered an order awarding attorneys' fees and expenses related to the Martin J. Kobuck lawsuit. The settlement consists of an aggregate payment by Southern Company's insurers of approximately $4.5 million for attorneys' fees and expenses, as well as adoption of various corporate governance reforms by Southern Company. These matters are now concluded.Alabama Power's ARO liabilities.
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(UNAUDITED)
Georgia Power
Municipal Franchise Fees
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
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(UNAUDITED)
claims. This case has been ruled upon and appealed numerous times over the last several years. In 2019, the Georgia PSC issued an order that found Georgia Power has appropriately implemented the municipal franchise fee schedule. In March 2021, the Superior Court of Fulton County granted class certification and Georgia Power's motion for summary judgment and the plaintiffs filed a notice of appeal. In April 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, itCourt, which was denied on January 27, 2023. On February 6, 2023, the plaintiffs filed a motion for reconsideration with the Georgia Supreme Court, which was denied on February 16, 2023. This matter is unknown whether any losses would be subject to recovery from any municipalities.now concluded.
Plant Scherer
In July 2020, a group of individual plaintiffs filed a complaint, which was amended in December 2022, in the Superior Court of Fulton County, Georgia against Georgia Power alleging that releases fromthe construction and operation of Plant Scherer havehas 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 December 2022, the Superior Court of Fulton County, Georgia granted Georgia Power's motion to transfer the case to the Superior Court of Monroe County, Georgia.
In October 2021 3and February 2022, a total of seven 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 seeksought an unspecified amount of monetary damages including punitive damages. In November 2021 and March 2022, Georgia Power removed these cases to the U.S. District Court for the Middle District of Georgia. In November 2022, the plaintiffs voluntarily dismissed their complaints without prejudice. Georgia Power anticipates that these plaintiffs will refile their complaints.
On January 9, 2023, an additional complaint was filed in the Superior Court of Monroe County, Georgia against Georgia Power alleging that the construction and operation of Plant Scherer have impacted groundwater and air, resulting in alleged personal injuries. The plaintiff sought an unspecified amount of monetary damages, including punitive damages. On January 19, 2023, Georgia Power filed a notice to remove the 3 cases pending in the Superior Court of Monroe County, Georgiacase to the U.S. District Court for the Middle District of Georgia. On February 7, 2022, 4 additional complaints were filed in21, 2023, the Superior Court of Monroe County, Georgia againstplaintiff voluntarily dismissed the complaint without prejudice. Georgia Power seeking damages for alleged personal injuries or property damage. On March 9, 2022, Georgia Power filed a notice to removeanticipates that this plaintiff will refile the 4 cases pending in the Superior Court of Monroe County, Georgia to the U.S. District Court for the Middle District of Georgia. complaint.
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 3three then-serving members of the Mississippi PSC in the U.S. District Court for the Southern District of Mississippi, which was amended in March 2019 to include 4four 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 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. The district court dismissed the amended complaint; 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
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(UNAUDITED)
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. In January 2021, the district court denied further motions by the plaintiffs to vacate the judgment and to file a revised second amended complaint. In February 2021, the plaintiffs filed a notice of appeal with the U.S. Court of Appeals for the Fifth Circuit. OnIn March 21, 2022, the
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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. OnIn May 31, 2022, the U.S. Court of Appeals for the Fifth Circuit denied a petition by Mississippi Power for a rehearing en banc and remanded the case was remanded back to the trial courtU.S. District Court for the Southern District of Mississippi for further proceedings. OnIn June 17, 2022, Mississippi Power filed with the trial court a motion to dismiss the complaint.complaint with prejudice, which was granted on March 15, 2023. On March 28, 2023, the plaintiffs filed a notice of appeal with the U.S. Court of Appeals for the Fifth Circuit. An adverse outcome in this proceeding could have a material impact on Mississippi Power's financial statements.
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 $17$15 million at June 30, 2022both March 31, 2023 and December 31, 2021, respectively.2022. 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 $241$243 million and $249$256 million at June 30, 2022March 31, 2023 and December 31, 2021,2022, respectively, 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
Mississippi PowerTraditional Electric Operating Companies
In conjunctionApril 2019, Bellsouth Telecommunications d/b/a AT&T Alabama (AT&T) filed a complaint against Alabama Power with Southern Company's 2019 salethe FCC alleging that the pole rental rate AT&T is required to pay pursuant to the parties' joint use agreement is unjust and unreasonable under federal law. The complaint sought a new rate and approximately $87 million in refunds of Gulf Power, NextEra Energy, Inc. held back $75 million of the purchase price pending Mississippi Power and Gulf Power negotiating a mutually acceptable revised operating agreement for Plant Daniel. On July 12, 2022, the co-owners executed a revised operating agreement and Southern Company subsequently received the remaining $75 million of the purchase price. The revised operating agreement contains dispatch proceduresalleged overpayments for the 2 jointly-owned coal unitspreceding six years. In August 2019, the FCC stayed the case in favor of arbitration, which AT&T has not pursued. The ultimate outcome of this matter cannot be determined at Plant Daniel such that Mississippi Power will designate 1 of the 2 units as primary and the other as secondary in lieu of each company separately owning 100% of a single generating unit. Mississippi Power has the option to purchase its co-owner's ownership interest for $1 on January 15, 2024, provided that Mississippi Power exercises the option no later than 120 days prior to that date. The revised operating agreement is not expected tothis time, but an adverse outcome could have a material impact on the financial statements of Southern Company and Alabama Power. Georgia Power and Mississippi Power's financial statements.Power have joint use agreements with other AT&T affiliates.
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(UNAUDITED)
Mississippi Power
In August 2022, the Mississippi Department of Revenue (Mississippi DOR) completed an audit of sales and use taxes paid by Mississippi Power from 2016 to 2019 and entered a final assessment, indicating a total amount due of $28 million, including associated penalties and interest. Additional interest of approximately $1 million was estimated through March 31, 2023. Mississippi Power does not agree with the audit findings and, in October 2022, filed an administrative appeal with the Mississippi DOR. See Note 153 to the financial statements under "Southern Company" in Item 8 of the Form 10-K under "Other Matters – Mississippi Power – Department of Revenue Audit" for additional information regarding a Mississippi PSC accounting order related to the saletax audit proceeding. The ultimate outcome of Gulf Power.this matter cannot be determined at this time.
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(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 and six months ended June 30, 2022March 31, 2023 and 2021:2022:
Southern CompanyAlabama PowerGeorgia PowerMississippi PowerSouthern PowerSouthern Company GasSouthern CompanyAlabama PowerGeorgia PowerMississippi PowerSouthern PowerSouthern Company Gas
(in millions)(in millions)
Three Months Ended June 30, 2022
Three Months Ended March 31, 2023Three Months Ended March 31, 2023
Operating revenuesOperating revenuesOperating revenues
Retail electric revenuesRetail electric revenuesRetail electric revenues
ResidentialResidential$1,655 $617 $962 $76 $— $— Residential$1,525 $659 $801 $65 $— $— 
CommercialCommercial1,387 410 900 77 — — Commercial1,251 430 753 68 — — 
IndustrialIndustrial1,005 368 553 84 — — Industrial789 398 313 78 — — 
OtherOther25 3 20 2 — — Other27 3 22 2 — — 
Total retail electric revenuesTotal retail electric revenues4,072 1,398 2,435 239 — — Total retail electric revenues3,592 1,490 1,889 213 — — 
Natural gas distribution revenuesNatural gas distribution revenuesNatural gas distribution revenues
ResidentialResidential474 — — — — 474 Residential896 — — — — 896 
CommercialCommercial130 — — — — 130 Commercial232 — — — — 232 
TransportationTransportation276 — — — — 276 Transportation319 — — — — 319 
IndustrialIndustrial16 — — — — 16 Industrial23 — — — — 23 
OtherOther67 — — — — 67 Other117 — — — — 117 
Total natural gas distribution revenuesTotal natural gas distribution revenues963 — — — — 963 Total natural gas distribution revenues1,587 — — — — 1,587 
Wholesale electric revenuesWholesale electric revenuesWholesale electric revenues
PPA energy revenuesPPA energy revenues585 108 40 5 441 — PPA energy revenues284 72 12 4 202 — 
PPA capacity revenuesPPA capacity revenues136 40 12 — 85 — PPA capacity revenues190 60 11 32 89 — 
Non-PPA revenuesNon-PPA revenues62 35 6 169 196 — Non-PPA revenues36 20 3 107 103 — 
Total wholesale electric revenuesTotal wholesale electric revenues783 183 58 174 722 — Total wholesale electric revenues510 152 26 143 394 — 
Other natural gas revenuesOther natural gas revenuesOther natural gas revenues
Gas marketing servicesGas marketing services90 — — — — 90 Gas marketing services231 — — — — 231 
Other natural gas revenuesOther natural gas revenues10 — — — — 10 Other natural gas revenues11 — — — — 11 
Total natural gas revenuesTotal natural gas revenues100 — — — — 100 Total natural gas revenues242 — — — — 242 
Other revenuesOther revenues308 63 121 9 9 — Other revenues310 54 132 11 11 — 
Total revenue from contracts with customersTotal revenue from contracts with customers6,226 1,644 2,614 422 731 1,063 Total revenue from contracts with customers6,241 1,696 2,047 367 405 1,829 
Other revenue sources(a)
980 287 507 12 168 20 
Other revenue sources(*)
Other revenue sources(*)
239 (49)129 23 103 46 
Total operating revenuesTotal operating revenues$7,206 $1,931 $3,121 $434 $899 $1,083 Total operating revenues$6,480 $1,647 $2,176 $390 $508 $1,875 
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(UNAUDITED)
Southern CompanyAlabama PowerGeorgia PowerMississippi PowerSouthern PowerSouthern Company Gas
(in millions)
Six Months Ended June 30, 2022
Operating revenues
Retail electric revenues
Residential$3,179 $1,250 $1,783 $146 $— $— 
Commercial2,567 786 1,638 143 — — 
Industrial1,732 691 887 154 — — 
Other51 7 40 4 — — 
Total retail electric revenues7,529 2,734 4,348 447 — — 
Natural gas distribution revenues
Residential1,490 — — — — 1,490 
Commercial400 — — — — 400 
Transportation613 — — — — 613 
Industrial48 — — — — 48 
Other195 — — — — 195 
Total natural gas distribution revenues2,746 — — — — 2,746 
Wholesale electric revenues
PPA energy revenues930 168 72 8 694 — 
PPA capacity revenues268 78 23 3 166 — 
Non-PPA revenues124 99 15 271 269 — 
Total wholesale electric revenues1,322 345 110 282 1,129 — 
Other natural gas revenues
Gas marketing services333 — — — — 333 
Other natural gas revenues26 — — — — 26 
Total natural gas revenues359 — — — — 359 
Other revenues530 109 216 17 17 — 
Total revenue from contracts with customers12,486 3,188 4,674 746 1,146 3,105 
Other revenue sources(a)
1,368 392 654 23 292 35 
Total operating revenues$13,854 $3,580 $5,328 $769 $1,438 $3,140 
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Southern CompanyAlabama PowerGeorgia PowerMississippi PowerSouthern PowerSouthern Company Gas
(in millions)
Three Months Ended March 31, 2022
Operating revenues
Retail electric revenues
Residential$1,525 $634 $821 $70 $— $— 
Commercial1,178 375 738 65 — — 
Industrial727 323 334 70 — — 
Other26 4 20 2 — — 
Total retail electric revenues3,456 1,336 1,913 207 — — 
Natural gas distribution revenues
Residential1,016 — — — — 1,016 
Commercial270 — — — — 270 
Transportation337 — — — — 337 
Industrial32 — — — — 32 
Other129 — — — — 129 
Total natural gas distribution revenues1,784 — — — — 1,784 
Wholesale electric revenues
PPA energy revenues342 59 32 3 251 — 
PPA capacity revenues134 39 12 3 81 — 
Non-PPA revenues58 64 9 102 73 — 
Total wholesale electric revenues534 162 53 108 405 — 
Other natural gas revenues
Gas marketing services243 — — — — 243 
Other natural gas revenues16 — — — — 16 
Total natural gas revenues259 — — — — 259 
Other revenues225 48 95 9 8 — 
Total revenue from contracts with customers6,258 1,546 2,061 324 413 2,043 
Other revenue sources(*)
390 103 147 11 126 15 
Total operating revenues$6,648 $1,649 $2,208 $335 $539 $2,058 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Southern CompanyAlabama PowerGeorgia PowerMississippi PowerSouthern PowerSouthern Company Gas
(in millions)
Three Months Ended June 30, 2021
Operating revenues
Retail electric revenues
Residential$1,469 $553 $852 $64 $— $— 
Commercial1,176 386 724 66 — — 
Industrial728 334 321 73 — — 
Other23 4 17 2 — — 
Total retail electric revenues3,396 1,277 1,914 205 — — 
Natural gas distribution revenues
Residential311 — — — — 311 
Commercial73 — — — — 73 
Transportation247 — — — — 247 
Industrial8 — — — — 8 
Other59 — — — — 59 
Total natural gas distribution revenues698 — — — — 698 
Wholesale electric revenues
PPA energy revenues209 38 16 2 158 — 
PPA capacity revenues118 29 14 1 75 — 
Non-PPA revenues55 25 3 75 78 — 
Total wholesale electric revenues382 92 33 78 311 — 
Other natural gas revenues
Wholesale gas services578 — — — — 578 
Gas marketing services63 — — — — 63 
Other natural gas revenues10 — — — — 10 
Total natural gas revenues651 — — — — 651 
Other revenues295 52 137 7 5 — 
Total revenue from contracts with customers5,422 1,421 2,084 290 316 1,349 
Other revenue sources(a)
1,179 135 141 13 174 731 
Other adjustments(b)
(1,403)— — — — (1,403)
Total operating revenues$5,198 $1,556 $2,225 $303 $490 $677 
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Southern CompanyAlabama PowerGeorgia PowerMississippi PowerSouthern PowerSouthern Company Gas
(in millions)
Six Months Ended June 30, 2021
Operating revenues
Retail electric revenues
Residential$2,936 $1,181 $1,627 $128 $— $— 
Commercial2,294 758 1,410 126 — — 
Industrial1,397 654 606 137 — — 
Other47 9 34 4 — — 
Total retail electric revenues6,674 2,602 3,677 395 — — 
Natural gas distribution revenues
Residential925 — — — — 925 
Commercial243 — — — — 243 
Transportation536 — — — — 536 
Industrial24 — — — — 24 
Other155 — — — — 155 
Total natural gas distribution revenues1,883 — — — — 1,883 
Wholesale electric revenues
PPA energy revenues422 81 30 7 313 — 
PPA capacity revenues237 58 27 4 150 — 
Non-PPA revenues119 57 12 162 139 — 
Total wholesale electric revenues778 196 69 173 602 — 
Other natural gas revenues
Wholesale gas services2,168 — — — — 2,168 
Gas marketing services257 — — — — 257 
Other natural gas revenues17 — — — — 17 
Total natural gas revenues2,442 — — — — 2,442 
Other revenues542 97 249 14 9 — 
Total revenue from contracts with customers12,319 2,895 3,995 582 611 4,325 
Other revenue sources(a)
2,488 220 200 28 319 1,745 
Other adjustments(b)
(3,699)— — — — (3,699)
Total operating revenues$11,108 $3,115 $4,195 $610 $930 $2,371 
(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 information on the sale of Sequent and components of wholesale gas services' operating 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 June 30, 2022March 31, 2023 and December 31, 2021:2022:
Southern CompanyAlabama PowerGeorgia PowerMississippi PowerSouthern PowerSouthern Company Gas
(in millions)
Accounts Receivable
At June 30, 2022$3,021 $773 $1,217 $95 $278 $504 
At December 31, 20212,504 589 736 73 149 753 
Contract Assets
At June 30, 2022$102 $— $38 $— $— $— 
At December 31, 2021117 2 63 — 1 — 
Contract Liabilities
At June 30, 2022$70 $3 $25 $4 $1 $— 
At December 31, 202157 4 14 — 1 — 
Southern CompanyAlabama PowerGeorgia PowerMississippi PowerSouthern PowerSouthern Company Gas
(in millions)
Accounts Receivable
At March 31, 2023$2,433 $622 $672 $79 $119 $853 
At December 31, 20223,123 696 922 92 237 1,107 
Contract Assets
At March 31, 2023$160 $3 $74 $— $— $19 
At December 31, 2022156 2 89 — — — 
Contract Liabilities
At March 31, 2023$61 $2 $14 $1 $1 $— 
At December 31, 202245 4 9 — 1 — 
At June 30, 2022 and December 31, 2021,Contract assets for Georgia Power had contract assets primarily relatedrelate to 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, and unregulated service agreements, where payment is contingent on project completion. Contract liabilities for Georgia Power primarily relate to cash collections recognized in advance of revenue for unregulated service agreements. At March 31, 2023, Southern Company Gas' contract assets relate to work performed on an energy efficiency enhancement and upgrade contract with the U.S. General Services Administration. Southern Company Gas receives cash advances from a third-party financial institution to fund work performed, of which approximately $30 million had been received at March 31, 2023. These advances have been accounted for as long-term debt on the balance sheets. See Note 1 to the financial statements under "Affiliate Transactions" in Item 8 of the Form 10-K for additional information regarding the construction contract. At March 31, 2023 and December 31, 2022, Southern Company's unregulated distributed generation business had $63contract assets of $64 million and $50$65 million, respectively, and contract liabilities of contract assets and $38$44 million and $39$32 million, of contract liabilities at June 30, 2022 and December 31, 2021, respectively, for outstanding performance obligations.
Revenues recognized in the three and six months ended June 30, 2022,March 31, 2023, which were included in contract liabilities at December 31, 2021,2022, were $10 million and $19 million respectively, for Southern Company and immaterial for the other Registrants.
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(UNAUDITED)
Remaining Performance Obligations
The Subsidiary Registrants havemay enter into long-term contracts with customers in which revenues are recognized as performance obligations are satisfied over the contract term. For the traditional electric operating companiesAlabama Power, Georgia Power, and Southern Power, these 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. For Southern Company Gas, these contracts involve energy infrastructure enhancement and upgrade projects for certain governmental customers.primarily relate to the U.S. General Services Administration contract described above. 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 June 30, 2022March 31, 2023 are expected to be recognized as follows:
2022 (remaining)2023202420252026Thereafter
(in millions)
Southern Company$347 $617 $414 $322 $307 $2,340 
Alabama Power15 24 7 5 — — 
Georgia Power39 63 30 22 11 21 
Southern Power184 347 344 294 299 2,334 
Southern Company Gas16 29 29 — — — 
Revenue expected to be recognized for performance obligations remaining at June 30, 2022 was immaterial for Mississippi Power.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
2023 (remaining)2024202520262027Thereafter
(in millions)
Southern Company$632 $553 $347 $315 $319 $2,089 
Alabama Power17 7 6 — — — 
Georgia Power68 60 25 13 14 23 
Southern Power268 345 302 303 310 2,077 
Southern Company Gas15 29 — — — — 
Lease Income
Lease income for the three and six months ended June 30,March 31, 2023 and 2022 and 2021 is as follows:
Southern
Company		Alabama PowerGeorgia PowerMississippi
Power		Southern PowerSouthern Company GasSouthern
Company		Alabama PowerGeorgia PowerMississippi
Power		Southern PowerSouthern Company Gas
(in millions) (in millions)
For the Three Months Ended June 30, 2022
For the Three Months Ended March 31, 2023For the Three Months Ended March 31, 2023
Lease income - interest income on sales-type leasesLease income - interest income on sales-type leases$7 $— $— $4 $3 $— Lease income - interest income on sales-type leases$6 $— $— $4 $2 $— 
Lease income - operating leasesLease income - operating leases52 19 8 — 21 9 Lease income - operating leases49 18 7 1 21 9 
Variable lease incomeVariable lease income129 — — — 138 — Variable lease income69 — — — 75 — 
Total lease incomeTotal lease income$188 $19 $8 $4 $162 $9 Total lease income$124 $18 $7 $5 $98 $9 
For the Six Months Ended June 30, 2022
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$13 $— $— $8 $5 $— Lease income - interest income on sales-type leases$6 $— $— $4 $2 $— 
Lease income - operating leasesLease income - operating leases105 39 16 1 42 18 Lease income - operating leases51 20 8 — 21 9 
Variable lease incomeVariable lease income211 — — — 227 — Variable lease income84 — — — 90 — 
Total lease incomeTotal lease income$329 $39 $16 $9 $274 $18 Total lease income$141 $20 $8 $4 $113 $9 
For the Three Months Ended June 30, 2021
Lease income - interest income on sales-type leases$4 $— $— $4 $— $— 
Lease income - operating leases56 21 10 — 21 9 
Variable lease income128 (1)— — 138 — 
Total lease income$188 $20 $10 $4 $159 $9 
For the Six Months Ended June 30, 2021
Lease income - interest income on sales-type leases$7 $— $— $7 $— $— 
Lease income - operating leases112 41 21 1 42 17 
Variable lease income212 — — — 228 — 
Total lease income$331 $41 $21 $8 $270 $17 
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 Company
At March 31, 2023 and December 31, 2022, Southern Holdings had equity method investments totaling $120 million and $112 million, respectively, primarily related to investments in venture capital funds focused on energy and utility investments. Earnings from these investments were immaterial for both periods presented.
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 June 30, 2022 and December 31, 2021, SP Solar had total assets of $6.0 billion and $6.1 billion, respectively, total liabilities of $386 million and $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
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
SP Solar and SP Wind
At March 31, 2023 and December 31, 2022, SP Solar had total assets of $5.8 billion and $5.9 billion, respectively, total liabilities of $0.4 billion, and noncontrolling interests of $1.0 billion and $1.1 billion, respectively. 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 June 30, 2022March 31, 2023 and December 31, 2021,2022, SP Wind had total assets of $2.3$2.2 billion, total liabilities of $212$172 million and $130$169 million, respectively, and noncontrolling interests of $40 million and $41 million, respectively.$39 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 3three financial investors in accordance with the limited liability agreement.
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 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 June 30, 2022March 31, 2023 and December 31, 2021,2022, the other VIEs had total assets of $1.8 billion, and $1.9 billion, respectively, total liabilities of $253 million and $263 million, respectively,$0.2 billion, and noncontrolling interests of $858 million and $886 million, respectively.$0.8 billion. 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 June 30, 2022 and December 31, 2021,2022, Southern Power had equity method investments in wind and battery energy storage projects totaling $49 millionmillion. During the first quarter 2023, Southern Power sold its remaining equity method investments in the projects and $86 million, respectively.received proceeds of $50 million. Earnings (loss) from these investments, were immaterial for both periods presented. Duringincluding the six months ended June 30, 2022, Southern Power sold equity method investments in wind projects and received proceeds totaling $38 million. The gains associated with the sales, were immaterial.
Southern Company Gas
Equity Method Investments
The carrying amounts of Southern Company Gas' equity method investments at June 30, 2022 and December 31, 2021 and related earnings (loss) from those investmentsimmaterial for the three and six months ended June 30, 2022March 31, 2023 and 2021 were as follows:
Investment BalanceJune 30, 2022December 31, 2021
(in millions)
SNG$1,099 $1,129 
Other(*)
35 44 
Total$1,134 $1,173 
(*)Balance at June 30, 2022 reflects a $9 million distribution from PennEast Pipeline.2022.
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(UNAUDITED)
Three Months Ended June 30,Six Months Ended June 30,
Earnings (Loss) from Equity Method Investments2022202120222021
(in millions)
SNG$31 $28 $70 $66 
PennEast Pipeline(*)
— (81)— (79)
Other— 1 1 2 
Total$31 $(52)$71 $(11)
Southern Company Gas
(*)Includes a pre-tax impairment chargeEquity Method Investments
The carrying amounts of $82 million ($58 million after tax)Southern Company Gas' equity method investments at March 31, 2023 and December 31, 2022 and related earnings from those investments for the three and six months ended June 30, 2021. See Note 7March 31, 2023 and 2022 were as follows:
Investment BalanceMarch 31, 2023December 31, 2022
(in millions)
SNG$1,249 $1,243 
Other33 33 
Total$1,282 $1,276 
Three Months Ended March 31,
Earnings from Equity Method Investments20232022
(in millions)
SNG$44 $39 
Other1 1 
Total$45 $40 
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
(F) FINANCING AND LEASES
Bank Credit Arrangements
See Note 8 to the financial statements under "Bank Credit Arrangements" in Item 8 of the Form 10-K for additional information.
At June 30, 2022,March 31, 2023, committed credit arrangements with banks were as follows:
ExpiresExpires
CompanyCompany2023202420252026TotalUnusedExpires within
One Year		Company2023202420252026TotalUnusedExpires within
One Year
(in millions)(in millions)
Southern Company parentSouthern Company parent$— $— $— $2,000 $2,000 $1,998 $— Southern Company parent$— $— $— $2,000 $2,000 $1,998 $— 
Alabama PowerAlabama Power— 550 — 700 1,250 1,250 — Alabama Power— 550 — 700 1,250 1,250 — 
Georgia PowerGeorgia Power— — — 1,750 1,750 1,726 — Georgia Power— — — 1,750 1,750 1,726 — 
Mississippi PowerMississippi Power— 150 125 — 275 275 — Mississippi Power— 150 125 — 275 225 — 
Southern Power(a)
Southern Power(a)
— — — 600 600 568 — 
Southern Power(a)
— — — 600 600 587 — 
Southern Company Gas(b)
Southern Company Gas(b)
250 — — 1,500 1,750 1,748 250 
Southern Company Gas(b)
250 — — 1,500 1,750 1,748 250 
SEGCOSEGCO30 — — — 30 30 30 SEGCO30 — — — 30 30 30 
Southern CompanySouthern Company$280 $700 $125 $6,550 $7,655 $7,595 $280 Southern Company$280 $700 $125 $6,550 $7,655 $7,564 $280 
(a)Does not include Southern Power Company's 2 $75 million and $100 million continuing letter of credit facilities for standby letters of credit, expiring in 20232025 and 2025,2026, respectively, of which $11$9 million and $5$16 million, respectively, was unused at June 30, 2022.March 31, 2023. In March 2023, Southern Power amended the $100 million letter of credit facility, which, among other things, extended the expiration date from 2025 to 2026 and increased the amount from $75 million. 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 $800 million of the credit arrangement expiring in 2026. 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 the multi-year credit arrangement expiring in 2026, the allocations between Southern Company Gas Capital and Nicor Gas may be adjusted. Nicor Gas is also the borrower ofunder a new $250 million credit arrangement expiring in 2023.
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
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
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 June 30, 2022,March 31, 2023, 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.
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 June 30, 2022March 31, 2023 was approximately $1.5$1.7 billion (comprised of approximately $789 million at Alabama Power, $672$819 million at Georgia Power, and $34$69 million at Mississippi Power). In addition, at June 30, 2022,March 31, 2023, Alabama Power and Georgia Power had approximately $445$120 million and $285 million, respectively, of fixed rate revenue bonds outstanding that are required to be remarketed within the next 12 months.
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Equity Units
Table of ContentsIndex to Financial Statements

NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Convertible Senior Notes
In May 2022,February 2023, Southern Company remarketed $862.5issued $1.5 billion aggregate principal amount of Series 2023A 3.875% Convertible Senior Notes due December 15, 2025 (Series 2023A Convertible Senior Notes). In March 2023, Southern Company issued an additional $225 million aggregate principal amount of the Series 2023A Convertible Senior Notes upon the exercise by the initial purchasers of their over-allotment option.
Interest on the Series 2023A Convertible Senior Notes is payable semiannually, beginning June 15, 2023. The Series 2023A Convertible Senior Notes will mature on December 15, 2025, unless earlier converted or repurchased, but are not redeemable at the option of Southern Company. The Series 2023A Convertible Senior Notes are direct, unsecured, and unsubordinated obligations of Southern Company, ranking equally with all of Southern Company's other unsecured and unsubordinated indebtedness from time to time outstanding, and are effectively subordinated to all secured indebtedness of Southern Company.
Holders may convert their Series 2023A Convertible Senior Notes at their option prior to the close of business on the business day preceding September 15, 2025, but only under the following circumstances:
•during any calendar quarter (and only during such calendar quarter), if the last reported sale price of Southern Company's common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day as determined by Southern Company;
•during the five business day period after any 10 consecutive trading day period (Measurement Period) in which the trading price per $1,000 principal amount of Series 2023A Convertible Senior Notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price of the common stock and the conversion rate on each such trading day; or
•upon the occurrence of certain corporate events specified in the indenture governing the Series 2023A Convertible Senior Notes.
On or after September 15, 2025, a holder may convert all or any portion of its Series 2019A Remarketable Junior Subordinated2023A Convertible Senior Notes due August 1, 2024 (2019A RSNs) and $862.5 millionat any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date regardless of the foregoing conditions.
Southern Company will settle conversions of the Series 2023A Convertible Senior Notes by paying cash up to the aggregate principal amount of itsthe Series 2019B Remarketable Junior Subordinated2023A Convertible Senior Notes due August 1, 2027 (2019B RSNs)to be converted and paying or delivering, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock, at Southern Company's election, in respect of the remainder, if any, of Southern Company's conversion obligation in excess of the aggregate principal amount of the Series 2023A Convertible Senior Notes being converted. The Series 2023A Convertible Senior Notes are initially convertible at a rate of 11.8818 shares of common stock per $1,000 principal amount converted, which is approximately equal to $84.16 per share of common stock. The conversion rate will be subject to adjustment upon the occurrence of certain specified events but will not be adjusted for accrued and unpaid interest. In addition, upon the occurrence of a make-whole fundamental change (as defined in the indenture governing the Series 2023A Convertible Senior Notes), pursuant toSouthern Company will, in certain circumstances, increase the termsconversion rate by a number of its 2019 Series A Equity Units (Equity Units). Inadditional shares of common stock for conversions in connection with the remarketing,make-whole fundamental change.
Upon the interest rates onoccurrence of a fundamental change (as defined in the 2019A RSNs andindenture governing the 2019B RSNs were reset to 4.475% and 5.113%Series 2023A Convertible Senior Notes), respectively, payable on a semi-annual basis, andholders of the Series 2023A Convertible Senior Notes may require Southern Company ceased to have the ability to redeem these securities prior to maturity or to defer interest payments. Southern Company did not receive any proceeds from the remarketing, which were used to purchase all or a portfolioportion of treasury securities maturing on July 28, 2022. On August 1, 2022, the proceeds from this maturing portfolio will be usedtheir Series 2023A Convertible Senior Notes, in principal amounts equal to settle the purchase contracts entered into as$1,000 or an integral multiple thereof, for cash at a partprice equal to 100% of the Equity Unitsprincipal amount of the Series 2023A Convertible Senior Notes to be purchased plus any accrued and Southern Company expectsunpaid interest.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Earnings per Share
For Southern Company, the only differencesdifference in computing basic and diluted earnings per share are(EPS) is attributable to awards outstanding under stock-based compensation plans and the Equity Units issued in 2019. Earnings per shareSeries 2023A Convertible Senior Notes. EPS dilution resulting from stock-based compensation plans and the Equity Units issuance is determined using the treasury stock method and EPS dilution resulting from the Series 2023A Convertible Senior Notes is determined using the net share settlement method. See Note 8 to the financial statements under "Equity Units" in Item 8 of the Form 10-K and "Equity Units" herein for information on the equity units and Note 12 to the financial statements in Item 8 of the Form 10-K and "Convertible Senior Notes" herein for information on stock-based compensation plans.additional information. Shares used to compute diluted earnings per shareEPS were as follows:
Three Months Ended June 30,Six Months Ended June 30,Three Months Ended March 31,
202220212022202120232022
(in millions) (in millions)
As reported sharesAs reported shares1,065 1,061 1,064 1,060 As reported shares1,091 1,063 
Effect of stock-based compensationEffect of stock-based compensation5 6 5 6 Effect of stock-based compensation7 6 
Effect of equity units2 — 1 — 
Diluted sharesDiluted shares1,072 1,067 1,070 1,066 Diluted shares1,098 1,069 
For all periods presented,the three months ended March 31, 2023, there were no anti-dilutive shares. For the three months ended March 31, 2022, an immaterial number of stock-based compensation awards was not included inexcluded from the diluted earnings per shareEPS calculation because the awards were anti-dilutive.
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For both periods presented, there was no dilution resulting from the Series 2023A Convertible Senior Notes.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Southern Company Leveraged Lease
See Note 9 to the financial statements in Item 8 of the Form 10-K for information on a leveraged lease agreement related to energy generation. OnIn June 30, 2022, the Southern Holdings subsidiary operating the generating plant for the lessee provided notice to the lessee to terminate the related operating and maintenance agreement effective June 30, 2023. Subsequently, the lessee failed to make the semi-annual lease payment due in December 2022. As a result, the Southern Holdings subsidiary was unable to make its corresponding payment to the holders of the underlying non-recourse debt related to the generation assets. The parties to the lease have entered into a forbearance agreement are currently negotiating a potentialwhich suspends the related contractual rights of the parties while they continue restructuring negotiations, which could result in rescission of the termination notice. The ultimate outcome of this matter cannot be determined at this time, but is not expected to have a material impact on Southern Company's financial statements.
Georgia Power Lease Modification
See Note 9 Southern Company will continue to monitor the financial statements in Item 8operational performance of the Form 10-K for information on Georgia Power's leases. Subsequentunderlying assets and evaluate the ability of the lessee to June 30, 2022, Georgia Power recognizedcontinue to make the required lease payments and meet its obligations associated with a lease modification related to an existing non-affiliate PPA which converted from an operating lease to a finance lease upon its approval infuture closure or retirement of the 2022 IRP. As a result, Georgia Power will remove operating lease right-of-usegeneration assets net of amortization of $17 million and lease obligations of $18 million maturing through 2024 and will record finance lease right-of-use assets of $110 million and lease obligations of $111 million maturing through 2039.associated properties, including the dry ash landfill.
(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
Southern Company had federal ITC and PTC carryforwards (primarily related to Southern Power) totaling $0.9 billion at June 30, 2022 compared to $1.2 billion at December 31, 2021.
The federal PTC and ITC carryforwards begin expiring in 2032, but are expected to be fully utilized by 2025. 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, the purchase of rights to additional PTCs of Plant Vogtle Units 3 and 4 pursuant to certain joint ownership agreements, an increase in Georgia Power's ownership interest percentage in Plant Vogtle Units 3 and 4, 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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(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.
Southern Company
Southern Company's effective tax rate was 18.7%10.8% for the sixthree months ended June 30, 2022March 31, 2023 compared to 10.7%14.9% for the corresponding period in 2021.2022. The effective tax rate decrease was primarily due to an increase in the flowback of certain excess deferred income taxes at Alabama Power in 2023, partially offset by the flowback of certain excess deferred income taxes ending in 2022 at Georgia Power.
Alabama Power
Alabama Power's effective tax benefit rate was (0.8)% for the three months ended March 31, 2023 compared to an effective tax rate of 23.3% for the corresponding period in 2022. The effective tax rate decrease was primarily due to an increase in the flowback of certain excess deferred income taxes in 2023. See Note 2 to the financial statements under "Alabama Power – Excess Accumulated Deferred Income Tax Accounting Order" in Item 8 of the Form 10-K for additional information.
Georgia Power
Georgia Power's effective tax rate was 15.1% for the three months ended March 31, 2023 compared to 7.3% for the corresponding period in 2022. The effective tax rate increase was primarily due to the flowback of certain excess deferred income taxes ending in 2022.
Southern Power
Southern Power's effective tax benefit rate was (20.7)% for the three months ended March 31, 2023 compared to (80.0)% for the corresponding period in 2022. The effective tax rate increase was primarily due to higher pre-tax earnings and an adjustment related to a prior year state tax credit carryforward at Georgia Power in 2022.
Georgia Power
Georgia Power's effective tax rate was 16.4% for the six months ended June 30, 2022 compared to a tax benefit rateimpacts of (6.9)% for the corresponding period in 2021. The effective tax rate increase was primarily due to higher pre-tax earnings and an adjustment related to a prior year state tax credit carryforward in 2022.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Mississippi Power
Mississippi Power's effective tax rate was 18.8% for the six months ended June 30, 2022 compared to 12.6% for the corresponding period in 2021. The effective tax rate increase was primarily due to a decrease in the flowback of excess deferred income taxes in 2022.
Southern Power
Southern Power's effective tax rate was 11.2% for the six months ended June 30, 2022 compared to a tax benefit rate of (12.8)% for the corresponding period in 2021. The effective tax rate increase was primarily due to higher pre-tax earnings in 2022 and a change in state apportionment methodology resulting from tax legislation enacted by the State of Alabama in the first quarter 2021, partially offset by higher wind PTCs in 2022.noncontrolling interests.
(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). No mandatory contributions to the qualified pension plan are anticipated for the year ending December 31, 2022.2023. 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 and six months ended June 30,March 31, 2023 and 2022 and 2021 are presented in the following tables.
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(UNAUDITED)
Southern
Company		Alabama
Power		Georgia
Power		Mississippi
Power		Southern PowerSouthern Company GasSouthern
Company		Alabama
Power		Georgia
Power		Mississippi
Power		Southern PowerSouthern Company Gas
(in millions)(in millions)
Three Months Ended June 30, 2022
Three Months Ended March 31, 2023Three Months Ended March 31, 2023
Pension PlansPension PlansPension Plans
Service costService cost$103 $24 $26 $4 $3 $8 Service cost$69 $16 $17 $3 $2 $6 
Interest costInterest cost102 24 30 4 1 7 Interest cost156 36 48 7 2 11 
Expected return on plan assetsExpected return on plan assets(317)(75)(100)(14)(4)(24)Expected return on plan assets(307)(74)(96)(14)(4)(22)
Amortization:Amortization:Amortization:
Prior service costsPrior service costs— — 1 — — — Prior service costs— — — — — (1)
Regulatory assetRegulatory asset— — — — — 4 Regulatory asset— — — — — 4 
Net loss60 15 19 4 — 1 
Net periodic pension cost (income)$(52)$(12)$(24)$(2)$— $(4)
Net (gain) lossNet (gain) loss8 2 3 — — (1)
Net periodic pension incomeNet periodic pension income$(74)$(20)$(28)$(4)$— $(3)
Postretirement BenefitsPostretirement BenefitsPostretirement Benefits
Service costService cost$5 $2 $1 $— $— $— Service cost$4 $1 $1 $— $— $— 
Interest costInterest cost11 2 3 1 — 1 Interest cost18 4 6 1 — 2 
Expected return on plan assetsExpected return on plan assets(20)(8)(6)(1)— (1)Expected return on plan assets(21)(8)(7)(1)— (2)
Amortization:Amortization:Amortization:
Regulatory assetRegulatory asset— — — — — 1 Regulatory asset— — — — — 2 
Net loss— — 1 — — — 
Net gainNet gain(3)(1)(1)— — (1)
Net periodic postretirement benefit cost (income)Net periodic postretirement benefit cost (income)$(4)$(4)$(1)$— $— $1 Net periodic postretirement benefit cost (income)$(2)$(4)$(1)$— $— $1 
Six Months Ended June 30, 2022
Pension Plans
Service cost$206 $49 $52 $8 $5 $17 
Interest cost204 48 61 9 3 14 
Expected return on plan assets(633)(152)(199)(29)(8)(46)
Amortization:
Prior service costs— — 1 — — (1)
Regulatory asset— — — — — 8 
Net loss120 31 37 7 1 3 
Net periodic pension cost (income)$(103)$(24)$(48)$(5)$1 $(5)
Postretirement Benefits
Service cost$11 $3 $3 $— $— $1 
Interest cost21 5 7 1 — 2 
Expected return on plan assets(40)(16)(13)(1)— (3)
Amortization:
Regulatory asset— — — — — 3 
Net (gain)/loss— — 1 — — (1)
Net periodic postretirement benefit cost (income)$(8)$(8)$(2)$— $— $2 
7267
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Southern
Company		Alabama
Power		Georgia
Power		Mississippi
Power		Southern PowerSouthern Company GasSouthern
Company		Alabama
Power		Georgia
Power		Mississippi
Power		Southern PowerSouthern Company Gas
(in millions)(in millions)
Three Months Ended June 30, 2021
Three Months Ended March 31, 2022Three Months Ended March 31, 2022
Pension PlansPension PlansPension Plans
Service costService cost$108 $25 $28 $5 $3 $9 Service cost$103 $25 $26 $4 $2 $9 
Interest costInterest cost86 21 26 4 1 6 Interest cost102 24 31 5 2 7 
Expected return on plan assetsExpected return on plan assets(297)(71)(94)(13)(4)(22)Expected return on plan assets(316)(77)(99)(15)(4)(22)
Amortization:Amortization:Amortization:
Prior service costsPrior service costs— — 1 — — — Prior service costs— — — — — (1)
Regulatory assetRegulatory asset— — — — — 4 Regulatory asset— — — — — 4 
Net lossNet loss79 20 25 3 1 3 Net loss60 16 18 3 1 2 
Net periodic pension cost (income)Net periodic pension cost (income)$(24)$(5)$(14)$(1)$1 $— Net periodic pension cost (income)$(51)$(12)$(24)$(3)$1 $(1)
Postretirement BenefitsPostretirement BenefitsPostretirement Benefits
Service costService cost$6 $2 $1 $— $— $1 Service cost$6 $1 $2 $— $— $— 
Interest costInterest cost9 2 3 1 — 1 Interest cost10 3 4 — — 1 
Expected return on plan assetsExpected return on plan assets(19)(7)(6)(1)— (2)Expected return on plan assets(20)(8)(7)— — (2)
Amortization:Amortization:Amortization:
Prior service costs(1)— — — — — 
Regulatory assetRegulatory asset— — — — — 1 Regulatory asset— — — — — 2 
Net loss1 — — — — — 
Net periodic postretirement benefit cost (income)Net periodic postretirement benefit cost (income)$(4)$(3)$(2)$— $— $1 Net periodic postretirement benefit cost (income)$(4)$(4)$(1)$— $— $1 
Six Months Ended June 30, 2021
Pension Plans
Service cost$217 $51 $56 $9 $5 $18 
Interest cost173 41 52 8 2 12 
Expected return on plan assets(595)(143)(188)(27)(7)(43)
Amortization:
Prior service costs— — 1 — — (1)
Regulatory asset— — — — — 8 
Net loss157 41 50 7 2 6 
Net periodic pension cost (income)$(48)$(10)$(29)$(3)$2 $— 
Postretirement Benefits
Service cost$12 $3 $3 $— $— $1 
Interest cost17 4 6 1 — 2 
Expected return on plan assets(38)(14)(13)(1)— (4)
Amortization:
Prior service costs(1)— — — — — 
Regulatory asset— — — — — 3 
Net (gain)/loss2 — 1 — — (1)
Net periodic postretirement benefit cost (income)$(8)$(7)$(3)$— $— $1 
7368
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
(I) FAIR VALUE MEASUREMENTS
At June 30, 2022,March 31, 2023, 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:
At June 30, 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
At March 31, 2023At March 31, 2023Quoted 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)
$43 $408 $— $— $451 
Energy-related derivatives(a)
$4 $100 $— $— $104 
Interest rate derivativesInterest rate derivatives— 2 — — 2 
Investments in trusts:(b)(c)
Investments in trusts:(b)(c)
Investments in trusts:(b)(c)
Domestic equityDomestic equity643 168 — — 811 Domestic equity680 192 — — 872 
Foreign equityForeign equity122 144 — — 266 Foreign equity138 162 — — 300 
U.S. Treasury and government agency securitiesU.S. Treasury and government agency securities— 273 — — 273 U.S. Treasury and government agency securities— 316 — — 316 
Municipal bondsMunicipal bonds— 56 — — 56 Municipal bonds— 48 — — 48 
Pooled funds – fixed incomePooled funds – fixed income— 9 — — 9 Pooled funds – fixed income— 7 — — 7 
Corporate bondsCorporate bonds1 445 — — 446 Corporate bonds— 403 — — 403 
Mortgage and asset backed securitiesMortgage and asset backed securities— 89 — — 89 Mortgage and asset backed securities— 90 — — 90 
Private equityPrivate equity— — — 164 164 Private equity— — — 160 160 
Cash and cash equivalentsCash and cash equivalents3 — — — 3 Cash and cash equivalents2 — — — 2 
OtherOther36 17 — — 53 Other40 12 — 9 61 
Cash equivalentsCash equivalents1,058 10 — — 1,068 Cash equivalents433 13 — — 446 
Other investmentsOther investments9 27 — — 36 Other investments9 29 8 — 46 
TotalTotal$1,915 $1,646 $— $164 $3,725 Total$1,306 $1,374 $8 $169 $2,857 
Liabilities:Liabilities:Liabilities:
Energy-related derivatives(a)
Energy-related derivatives(a)
$16 $88 $— $— $104 
Energy-related derivatives(a)
$40 $354 $— $— $394 
Interest rate derivativesInterest rate derivatives— 214 — — 214 Interest rate derivatives— 261 — — 261 
Foreign currency derivativesForeign currency derivatives— 228 — — 228 Foreign currency derivatives— 218 — — 218 
Contingent considerationContingent consideration— — 14 — 14 Contingent consideration— — 12 — 12 
OtherOther— 13 — — 13 Other— 13 — — 13 
TotalTotal$16 $543 $14 $— $573 Total$40 $846 $12 $— $898 
7469
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Fair Value Measurements Using:Fair Value Measurements Using:
At June 30, 2022Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Net Asset Value as a Practical Expedient (NAV)Total
At March 31, 2023At March 31, 2023Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Net Asset Value as a Practical Expedient (NAV)Total
(in millions)(in millions)
Alabama PowerAlabama PowerAlabama Power
Assets:Assets:Assets:
Energy-related derivativesEnergy-related derivatives$— $131 $— $— $131 Energy-related derivatives$— $32 $— $— $32 
Nuclear decommissioning trusts:(b)
Nuclear decommissioning trusts:(b)
Nuclear decommissioning trusts:(b)
Domestic equityDomestic equity391 159 — — 550 Domestic equity404 185 — — 589 
Foreign equityForeign equity122 — — — 122 Foreign equity138 — — — 138 
U.S. Treasury and government agency securitiesU.S. Treasury and government agency securities— 17 — — 17 U.S. Treasury and government agency securities— 19 — — 19 
Municipal bondsMunicipal bonds— 2 — — 2 Municipal bonds— 1 — — 1 
Corporate bondsCorporate bonds1 227 — — 228 Corporate bonds— 223 — — 223 
Mortgage and asset backed securitiesMortgage and asset backed securities— 20 — — 20 Mortgage and asset backed securities— 22 — — 22 
Private equityPrivate equity— — — 164 164 Private equity— — — 160 160 
OtherOther20 — — — 20 Other7 — — 9 16 
Cash equivalentsCash equivalents677 10 — — 687 Cash equivalents193 13 — — 206 
Other investmentsOther investments— 27 — — 27 Other investments— 29 — — 29 
TotalTotal$1,211 $593 $— $164 $1,968 Total$742 $524 $— $169 $1,435 
Liabilities:Liabilities:Liabilities:
Energy-related derivativesEnergy-related derivatives$— $23 $— $— $23 Energy-related derivatives$— $96 $— $— $96 
Georgia PowerGeorgia PowerGeorgia Power
Assets:Assets:Assets:
Energy-related derivativesEnergy-related derivatives$— $137 $— $— $137 Energy-related derivatives$— $22 $— $— $22 
Nuclear decommissioning trusts:(b)(c)
Nuclear decommissioning trusts:(b)(c)
Nuclear decommissioning trusts:(b)(c)
Domestic equityDomestic equity252 1 — — 253 Domestic equity276 1 — — 277 
Foreign equityForeign equity— 142 — — 142 Foreign equity— 161 — — 161 
U.S. Treasury and government agency securitiesU.S. Treasury and government agency securities— 256 — — 256 U.S. Treasury and government agency securities— 297 — — 297 
Municipal bondsMunicipal bonds— 54 — — 54 Municipal bonds— 47 — — 47 
Corporate bondsCorporate bonds— 218 — — 218 Corporate bonds— 180 — — 180 
Mortgage and asset backed securitiesMortgage and asset backed securities— 69 — — 69 Mortgage and asset backed securities— 68 — — 68 
OtherOther16 17 — — 33 Other33 12 — — 45 
Cash equivalents98 — — — 98 
TotalTotal$366 $894 $— $— $1,260 Total$309 $788 $— $— $1,097 
Liabilities:Liabilities:Liabilities:
Energy-related derivativesEnergy-related derivatives$— $29 $— $— $29 Energy-related derivatives$— $132 $— $— $132 
Interest rate derivativesInterest rate derivatives— 1 — — 1 
TotalTotal$— $133 $— $— $133 
7570
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Fair Value Measurements Using:Fair Value Measurements Using:
At June 30, 2022Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Net Asset Value as a Practical Expedient (NAV)Total
At March 31, 2023At March 31, 2023Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Net Asset Value as a Practical Expedient (NAV)Total
(in millions)(in millions)
Mississippi PowerMississippi PowerMississippi Power
Assets:Assets:Assets:
Energy-related derivativesEnergy-related derivatives$— $121 $— $— $121 Energy-related derivatives$— $35 $— $— $35 
Cash equivalentsCash equivalents3 — — — 3 
TotalTotal$3 $35 $— $— $38 
Liabilities:Liabilities:Liabilities:
Energy-related derivativesEnergy-related derivatives$— $14 $— $— $14 Energy-related derivatives$— $62 $— $— $62 
Southern PowerSouthern PowerSouthern Power
Assets:Assets:Assets:
Energy-related derivativesEnergy-related derivatives$— $6 $— $— $6 Energy-related derivatives$— $5 $— $— $5 
Cash equivalentsCash equivalents13 — — — 13 
TotalTotal$13 $5 $— $— $18 
Liabilities:Liabilities:Liabilities:
Energy-related derivativesEnergy-related derivatives$— $1 $— $— $1 Energy-related derivatives$— $14 $— $— $14 
Foreign currency derivativesForeign currency derivatives— 45 — — 45 Foreign currency derivatives— 47 — — 47 
Contingent considerationContingent consideration— — 14 — 14 Contingent consideration— — 12 — 12 
OtherOther— 13 — — 13 Other— 13 — — 13 
TotalTotal$— $59 $14 $— $73 Total$— $74 $12 $— $86 
Southern Company GasSouthern Company GasSouthern Company Gas
Assets:Assets:Assets:
Energy-related derivatives(a)
Energy-related derivatives(a)
$43 $13 $— $— $56 
Energy-related derivatives(a)
$4 $6 $— $— $10 
Interest rate derivativesInterest rate derivatives— 1 — — 1 
Non-qualified deferred compensation trusts:Non-qualified deferred compensation trusts:Non-qualified deferred compensation trusts:
Domestic equityDomestic equity— 8 — — 8 Domestic equity— 6 — — 6 
Foreign equityForeign equity— 2 — — 2 Foreign equity— 1 — — 1 
Pooled funds – fixed incomePooled funds – fixed income— 9 — — 9 Pooled funds – fixed income— 7 — — 7 
Cash equivalentsCash equivalents3 — — — 3 Cash equivalents2 — — — 2 
Cash equivalents and restricted cashCash equivalents and restricted cash192 — — — 192 Cash equivalents and restricted cash55 — — — 55 
TotalTotal$238 $32 $— $— $270 Total$61 $21 $— $— $82 
Liabilities:Liabilities:Liabilities:
Energy-related derivatives(a)
Energy-related derivatives(a)
$16 $20 $— $— $36 
Energy-related derivatives(a)
$40 $50 $— $— $90 
Interest rate derivativesInterest rate derivatives— 62 — — 62 Interest rate derivatives— 72 — — 72 
TotalTotal$16 0$82 0$— $— 0$98 Total$40 $122 $— $— $162 
(a)Excludes cash collateral of $13$60 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.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
(c)Includes investment securities pledged to creditors and collateral received and excludes payables related to the securities lending program. At June 30, 2022,March 31, 2023, approximately $65$37 million of the fair market value of Georgia Power's nuclear decommissioning trust funds' securities were on loan to creditors under the funds' managers' securities lending program. See Note 6 to the financial statements in Item 8 of the Form 10-K for additional information.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Southern Company, Alabama Power, and Georgia Power continue to elect the option to fair value investment securities held in the nuclear decommissioning trust funds. The fair value of the funds, including reinvested interest and dividends and excluding the funds' expenses, increased (decreased) by the amounts shown in the table below for the three and six months ended June 30, 2022March 31, 2023 and 2021.2022. The changes were recorded as a change to the regulatory assets and liabilities related to AROs for Georgia Power and Alabama Power, respectively.
Three Months Ended
Fair value increases (decreases)Fair value increases (decreases)Three Months Ended June 30, 2022Three Months Ended June 30, 2021Six Months Ended June 30, 2022Six Months Ended June 30, 2021Fair value increases (decreases)March 31, 2023March 31, 2022
(in millions)(in millions)
Southern CompanySouthern Company$(230)$125 $(380)$164 Southern Company$102 $(150)
Alabama PowerAlabama Power(125)77 (192)118 Alabama Power45 (67)
Georgia PowerGeorgia Power(105)48 (188)46 Georgia Power57 (83)
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.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
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
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
contingent consideration reflects the net present value of expected payments and any periodic change arising from forecasted generation is expected to be immaterial.
Southern 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.
"Other investments" includeprimarily includes 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 June 30, 2022,March 31, 2023, the fair value measurements of private equitymarket 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 $164$169 million and unfunded commitments related to the private equitymarket investments totaled $91$75 million. Private equitymarket investments include high-quality private equity funds across several market sectors, and funds that invest in real estate assets.assets, and a private credit fund. Private equitymarket funds do not have redemption rights. Distributions from these funds will be received as the underlying investments in the funds are liquidated.
At June 30, 2022,March 31, 2023, 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 billions)(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$52.0 $9.8 $14.6 $1.5 $3.0 $6.8 Carrying amount$56.1 $10.6 $14.9 $1.5 $3.0 $7.5 
Fair valueFair value48.0 9.0 13.7 1.3 2.9 6.2 Fair value51.6 9.5 13.7 1.3 2.9 6.7 
(*)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.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
(J) DERIVATIVES
The 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 used various contracts in its commercial activities that generally met 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
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
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.
Energy-Related Derivatives
The Subsidiary 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 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.
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.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
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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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
At June 30, 2022,March 31, 2023, 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(*)
27320302025
Southern Company(*)
43720302028
Alabama PowerAlabama Power652026—Alabama Power11120262023
Georgia PowerGeorgia Power752025—Georgia Power12220262023
Mississippi PowerMississippi Power712026—Mississippi Power8620272023
Southern PowerSouthern Power42030—Southern Power1120302023
Southern Company Gas(*)
Southern Company Gas(*)
5820242025
Southern Company Gas(*)
10720282028
(*)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 64.4113.6 million mmBtu and short natural gas positions of 6.46.6 million mmBtu at June 30, 2022,March 31, 2023, 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 1522 million mmBtu for Southern Company, which includes 46 million mmBtu for Alabama Power, 58 million mmBtu for Georgia Power, 23 million mmBtu for Mississippi Power, and 45 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 June 30, 2023 total $12March 31, 2024 are $(42) million for both Southern Company, and$(12) million for Southern Power, $(30) million for Southern Company Gas, and are immaterial for the other Registrants.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
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 June 30, 2022,March 31, 2023, 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 June 30, 2022Notional
Amount		Weighted
Average Interest
Rate Paid		Interest
Rate
Received		Hedge
Maturity
Date		Fair Value Gain (Loss) at March 31, 2023
(in millions) (in millions) (in millions) (in millions)
Cash Flow Hedges of Existing Debt
Alabama Power$50 —3.18%August 2027$— 
Cash Flow Hedges of Forecasted DebtCash Flow Hedges of Forecasted Debt
Georgia PowerGeorgia Power$750 3.63%N/AFebruary 2033$(1)
Southern Company parentSouthern Company parent500 3.47%N/AJune
2033		— 
Southern Company GasSouthern Company Gas250 —3.26%August 2032(5)Southern Company Gas250 3.40%N/AAugust
2033		1 
Fair Value Hedges of Existing DebtFair Value Hedges of Existing DebtFair Value Hedges of Existing Debt
Southern Company parentSouthern Company parent400 1.75%1-month LIBOR + 0.68%March 2028(39)Southern Company parent400 1-month LIBOR + 0.68%1.75%March 2028(45)
Southern Company parentSouthern Company parent1,000 3.70%1-month LIBOR + 2.36%April
2030		(113)Southern Company parent1,000 1-month LIBOR + 2.36%3.70%April
2030		(142)
Southern Company GasSouthern Company Gas500 1.75%1-month LIBOR + 0.38%January 2031(57)Southern Company Gas500 1-month LIBOR + 0.38%1.75%January 2031(71)
Southern CompanySouthern Company$2,200 $(214)Southern Company$3,400 $(258)
For cash flow hedges of 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 June 30, 2023 total $(16)March 31, 2024 are $(15) million for Southern Company and are immaterial for the other Registrants. Deferred gains and losses related to interest rate derivatives are expected to be amortized into earnings through 2052 for Southern Company, Alabama Power, and Georgia Power, 2028 for Mississippi Power, and 2046 for Southern Company Gas.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
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. 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, 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 June 30, 2022,March 31, 2023, the following foreign currency derivatives were outstanding:
Pay NotionalPay
Rate		Receive NotionalReceive
Rate		Hedge
Maturity Date		Fair Value Gain (Loss) at June 30, 2022Pay NotionalPay
Rate		Receive NotionalReceive
Rate		Hedge
Maturity Date		Fair Value Gain (Loss) at March 31, 2023
(in millions)(in millions) (in millions)(in millions)(in millions) (in millions)
Cash Flow Hedges of Existing DebtCash Flow Hedges of Existing Debt
Southern PowerSouthern Power$564 3.78%€500 1.85%June 2026$(47)
Fair Value Hedges of Existing DebtFair Value Hedges of Existing DebtFair Value Hedges of Existing Debt
Southern Company parentSouthern Company parent$1,476 3.39%€1,250 1.88%September 2027$(183)Southern Company parent1,476 3.39%1,250 1.88%September 2027(171)
Cash Flow Hedges of Existing Debt
Southern Power564 3.78%500 1.85%June 2026(45)
Southern CompanySouthern Company$2,040 €1,750 $(228)Southern Company$2,040 €1,750 $(218)
For cash flow hedges of foreign currency derivatives, the estimated pre-tax losses expected to be reclassified from accumulated OCI to earnings for the 12-month period ending June 30, 2023March 31, 2024 are $11 million for Southern Company and Southern Power.
Derivative Financial Statement Presentation and Amounts
The 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 sheets are presented net to the extent that there are netting arrangements or similar agreements with the counterparties.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
The fair value of energy-related derivatives, interest rate derivatives, and foreign currency derivatives was reflected in the balance sheets as follows:
At June 30, 2022At December 31, 2021At March 31, 2023At December 31, 2022
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 purposes
Energy-related derivatives:
Assets from risk management activities/Other current liabilities$267 $49 $129 $30 
Energy-related derivatives designated as hedging instruments for regulatory purposesEnergy-related derivatives designated as hedging instruments for regulatory purposes
Assets from risk management activities/Liabilities from risk management activitiesAssets from risk management activities/Liabilities from risk management activities$41 $230 $123 $121 
Other deferred charges and assets/Other deferred credits and liabilitiesOther deferred charges and assets/Other deferred credits and liabilities144 37 72 6 Other deferred charges and assets/Other deferred credits and liabilities53 113 52 44 
Total derivatives designated as hedging instruments for regulatory purposesTotal derivatives designated as hedging instruments for regulatory purposes$411 $86 $201 $36 Total derivatives designated as hedging instruments for regulatory purposes94 343 175 165 
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 liabilities$17 $5 $7 $5 
Assets from risk management activities/Liabilities from risk management activitiesAssets from risk management activities/Liabilities from risk management activities— 38 3 27 
Other deferred charges and assets/Other deferred credits and liabilitiesOther deferred charges and assets/Other deferred credits and liabilities6 — 1 — Other deferred charges and assets/Other deferred credits and liabilities4 4 6 4 
Interest rate derivatives:Interest rate derivatives:Interest rate derivatives:
Assets from risk management activities/Other current liabilities— 19 19 — 
Assets from risk management activities/Liabilities from risk management activitiesAssets from risk management activities/Liabilities from risk management activities2 71 12 62 
Other deferred charges and assets/Other deferred credits and liabilitiesOther deferred charges and assets/Other deferred credits and liabilities— 195 — 29 Other deferred charges and assets/Other deferred credits and liabilities— 191 — 240 
Foreign currency derivatives:Foreign currency derivatives:Foreign currency derivatives:
Assets from risk management activities/Other current liabilities— 36 — 39 
Assets from risk management activities/Liabilities from risk management activitiesAssets from risk management activities/Liabilities from risk management activities— 35 — 34 
Other deferred charges and assets/Other deferred credits and liabilitiesOther deferred charges and assets/Other deferred credits and liabilities— 192 — 40 Other deferred charges and assets/Other deferred credits and liabilities— 183 — 182 
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$23 $447 $27 $113 Total derivatives designated as hedging instruments in cash flow and fair value hedges6 522 21 549 
Derivatives not designated as hedging instruments
Energy-related derivatives:
Assets from risk management activities/Other current liabilities$15 $12 $9 $4 
Energy-related derivatives not designated as hedging instrumentsEnergy-related derivatives not designated as hedging instruments
Assets from risk management activities/Liabilities from risk management activitiesAssets from risk management activities/Liabilities from risk management activities4 8 13 13 
Other deferred charges and assets/Other deferred credits and liabilitiesOther deferred charges and assets/Other deferred credits and liabilities2 1 1 — Other deferred charges and assets/Other deferred credits and liabilities2 1 2 1 
Total derivatives not designated as hedging instrumentsTotal derivatives not designated as hedging instruments$17 $13 $10 $4 Total derivatives not designated as hedging instruments6 9 15 14 
Gross amounts recognizedGross amounts recognized$451 $546 $238 $153 Gross amounts recognized106 874 211 728 
Gross amounts offset(a)
Gross amounts offset(a)
(87)(74)(25)(28)
Gross amounts offset(a)
(57)(118)(70)(111)
Net amounts recognized in the Balance Sheets(b)
Net amounts recognized in the Balance Sheets(b)
$364 $472 $213 $125 
Net amounts recognized in the Balance Sheets(b)
$49 $756 $141 $617 
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
At June 30, 2022At December 31, 2021At March 31, 2023At December 31, 2022
Derivative Category and Balance Sheet LocationDerivative Category and Balance Sheet LocationAssetsLiabilitiesAssetsLiabilitiesDerivative Category and Balance Sheet LocationAssetsLiabilitiesAssetsLiabilities
(in millions)(in millions)
Alabama Power(c)Alabama Power(c)Alabama Power(c)
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:
Energy-related derivatives designated as hedging instruments for regulatory purposesEnergy-related derivatives designated as hedging instruments for regulatory purposes
Other current assets/Other current liabilitiesOther current assets/Other current liabilities$76 $6 $30 $9 Other current assets/Other current liabilities$14 $54 $42 $21 
Other deferred charges and assets/Other deferred credits and liabilitiesOther deferred charges and assets/Other deferred credits and liabilities55 17 25 2 Other deferred charges and assets/Other deferred credits and liabilities18 42 20 18 
Total derivatives designated as hedging instruments for regulatory purposesTotal derivatives designated as hedging instruments for regulatory purposes$131 $23 $55 $11 Total derivatives designated as hedging instruments for regulatory purposes32 96 62 39 
Gross amounts offsetGross amounts offset(20)(20)(5)(5)Gross amounts offset(28)(28)(24)(24)
Net amounts recognized in the Balance SheetsNet amounts recognized in the Balance Sheets$111 $3 $50 $6 Net amounts recognized in the Balance Sheets$4 $68 $38 $15 
Georgia PowerGeorgia PowerGeorgia Power
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:
Energy-related derivatives designated as hedging instruments for regulatory purposesEnergy-related derivatives designated as hedging instruments for regulatory purposes
Assets from risk management activities/Other current liabilitiesAssets from risk management activities/Other current liabilities$10 $86 $36 $43 
Other deferred charges and assets/Other deferred credits and liabilitiesOther deferred charges and assets/Other deferred credits and liabilities11 45 6 18 
Total derivatives designated as hedging instruments for regulatory purposesTotal derivatives designated as hedging instruments for regulatory purposes21 131 42 61 
Interest rate derivatives designated as hedging instruments in cash flow and fair value hedgesInterest rate derivatives designated as hedging instruments in cash flow and fair value hedges
Assets from risk management activities/Other current liabilitiesAssets from risk management activities/Other current liabilities— 1 — — 
Energy-related derivatives not designated as hedging instrumentsEnergy-related derivatives not designated as hedging instruments
Other current assets/Other current liabilitiesOther current assets/Other current liabilities1 1 — 1 
Gross amounts recognizedGross amounts recognized22 133 42 62 
Gross amounts offsetGross amounts offset(19)(19)(21)(21)
Net amounts recognized in the Balance SheetsNet amounts recognized in the Balance Sheets$3 $114 $21 $41 
Mississippi Power(c)
Mississippi Power(c)
Energy-related derivatives designated as hedging instruments for regulatory purposesEnergy-related derivatives designated as hedging instruments for regulatory purposes
Assets from risk management activities/Other current liabilitiesAssets from risk management activities/Other current liabilities$102 $15 $54 $6 Assets from risk management activities/Other current liabilities$11 $37 $33 $24 
Other deferred charges and assets/Other deferred credits and liabilitiesOther deferred charges and assets/Other deferred credits and liabilities35 14 21 2 Other deferred charges and assets/Other deferred credits and liabilities24 25 26 8 
Total derivatives designated as hedging instruments for regulatory purposesTotal derivatives designated as hedging instruments for regulatory purposes$137 $29 $75 $8 Total derivatives designated as hedging instruments for regulatory purposes35 62 59 32 
Gross amounts offsetGross amounts offset(21)(21)(8)(8)Gross amounts offset(25)(25)(17)(17)
Net amounts recognized in the Balance SheetsNet amounts recognized in the Balance Sheets$116 $8 $67 $— Net amounts recognized in the Balance Sheets$10 $37 $42 $15 
Mississippi Power
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:
Assets from risk management activities/Other current liabilities$67 $8 $30 $3 
Other deferred charges and assets/Other deferred credits and liabilities54 6 26 2 
Total derivatives designated as hedging instruments for regulatory purposes$121 $14 $56 $5 
Gross amounts offset(11)(11)(4)(4)
Net amounts recognized in the Balance Sheets$110 $3 $52 $1 
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
At June 30, 2022At December 31, 2021At March 31, 2023At December 31, 2022
Derivative Category and Balance Sheet LocationDerivative Category and Balance Sheet LocationAssetsLiabilitiesAssetsLiabilitiesDerivative Category and Balance Sheet LocationAssetsLiabilitiesAssetsLiabilities
(in millions)(in millions)
Southern PowerSouthern PowerSouthern Power
Derivatives designated as hedging instruments in cash flow and fair value hedgesDerivatives designated as hedging instruments in cash flow and fair value hedgesDerivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:Energy-related derivatives:Energy-related derivatives:
Other current assets/Other current liabilitiesOther current assets/Other current liabilities$— $— $2 $— Other current assets/Other current liabilities$— $12 $— $12 
Other deferred charges and assets/Other deferred credits and liabilitiesOther deferred charges and assets/Other deferred credits and liabilities4 — 1 — Other deferred charges and assets/Other deferred credits and liabilities4 — 5 — 
Foreign currency derivatives:Foreign currency derivatives:Foreign currency derivatives:
Other current assets/Other current liabilitiesOther current assets/Other current liabilities— 11 — 16 Other current assets/Other current liabilities— 11 — 11 
Other deferred charges and assets/Other deferred credits and liabilitiesOther deferred charges and assets/Other deferred credits and liabilities— 34 — — Other deferred charges and assets/Other deferred credits and liabilities— 36 — 36 
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$4 $45 $3 $16 Total derivatives designated as hedging instruments in cash flow and fair value hedges4 59 5 59 
Derivatives not designated as hedging instruments
Energy-related derivatives:
Energy-related derivatives not designated as hedging instrumentsEnergy-related derivatives not designated as hedging instruments
Other current assets/Other current liabilitiesOther current assets/Other current liabilities$1 $1 $1 $— Other current assets/Other current liabilities— 2 2 — 
Other deferred charges and assets/Other deferred credits and liabilitiesOther deferred charges and assets/Other deferred credits and liabilities1 — — — Other deferred charges and assets/Other deferred credits and liabilities1 — 1 — 
Total derivatives not designated as hedging instrumentsTotal derivatives not designated as hedging instruments$2 $1 $1 $— Total derivatives not designated as hedging instruments1 2 3 — 
Gross amounts recognizedGross amounts recognized$6 $46 $4 $16 Gross amounts recognized5 61 8 59 
Gross amounts offset(1)(1)— — 
Net amounts recognized in the Balance SheetsNet amounts recognized in the Balance Sheets$5 $45 $4 $16 Net amounts recognized in the Balance Sheets$5 $61 $8 $59 
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
At June 30, 2022At December 31, 2021At March 31, 2023At December 31, 2022
Derivative Category and Balance Sheet LocationDerivative Category and Balance Sheet LocationAssetsLiabilitiesAssetsLiabilitiesDerivative Category and Balance Sheet LocationAssetsLiabilitiesAssetsLiabilities
(in millions)(in millions)
Southern Company GasSouthern Company GasSouthern Company Gas
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:
Assets from risk management activities/Other current liabilities$23 $19 $15 $12 
Energy-related derivatives designated as hedging instruments for regulatory purposesEnergy-related derivatives designated as hedging instruments for regulatory purposes
Other current assets/Other current liabilitiesOther current assets/Other current liabilities$6 $53 $12 $33 
Other deferred charges and assets/Other deferred credits and liabilitiesOther deferred charges and assets/Other deferred credits and liabilities— 1 — — 
Total derivatives designated as hedging instruments for regulatory purposesTotal derivatives designated as hedging instruments for regulatory purposes$23 $19 $15 $12 Total derivatives designated as hedging instruments for regulatory purposes6 54 12 33 
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 liabilities$17 $5 $5 $5 
Other current assets/Other current liabilitiesOther current assets/Other current liabilities— 26 3 15 
Other deferred charges and assets/Other deferred credits and liabilitiesOther deferred charges and assets/Other deferred credits and liabilities2 — — — Other deferred charges and assets/Other deferred credits and liabilities— 4 1 4 
Interest rate derivatives:Interest rate derivatives:Interest rate derivatives:
Assets from risk management activities/Liabilities from risk management activities-current— — 6 — 
Other current assets/Other current liabilitiesOther current assets/Other current liabilities1 19 — 14 
Other deferred charges and assets/Other deferred credits and liabilitiesOther deferred charges and assets/Other deferred credits and liabilities— 62 — 6 Other deferred charges and assets/Other deferred credits and liabilities— 53 — 72 
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$19 $67 $11 $11 Total derivatives designated as hedging instruments in cash flow and fair value hedges1 102 4 105 
Derivatives not designated as hedging instruments
Energy-related derivatives:
Assets from risk management activities/Other current liabilities$13 $11 $8 $4 
Energy-related derivatives not designated as hedging instrumentsEnergy-related derivatives not designated as hedging instruments
Other current assets/Other current liabilitiesOther current assets/Other current liabilities3 5 11 12 
Other deferred charges and assets/Other deferred credits and liabilitiesOther deferred charges and assets/Other deferred credits and liabilities1 1 1 — Other deferred charges and assets/Other deferred credits and liabilities1 1 1 1 
Total derivatives not designated as hedging instrumentsTotal derivatives not designated as hedging instruments$14 $12 $9 $4 Total derivatives not designated as hedging instruments4 6 12 13 
Gross amounts recognizedGross amounts recognized$56 $98 $35 $27 Gross amounts recognized11 162 28 151 
Gross amounts offset(a)
Gross amounts offset(a)
(34)(21)(8)(11)
Gross amounts offset(a)
18 (43)— (41)
Net amounts recognized in the Balance Sheets(b)
Net amounts recognized in the Balance Sheets(b)
$22 $77 $27 $16 
Net amounts recognized in the Balance Sheets(b)
$29 $119 $28 $110 
(a)Gross amounts offset includeincludes cash collateral held on deposit in broker margin accounts of $13$60 million and $3$41 million at June 30, 2022March 31, 2023 and December 31, 2021,2022, respectively.
(b)Net amounts of derivative instruments outstanding exclude immaterial premium and intrinsic value associated with weather derivatives at December 31, 2021. There were no such amounts at June 30, 2022.for both periods presented.
(c)Energy-related derivatives not designated as hedging instruments were immaterial for the traditional electric operating companies at June 30, 2022. There were no such instrumentsAlabama Power and Mississippi Power for the traditional electric operating companies at December 31, 2021.both periods presented.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
At June 30, 2022March 31, 2023 and December 31, 2021,2022, the pre-tax effects of unrealized derivative gains (losses) arising from energy-related derivative instruments designated as regulatory hedging instruments and deferred were as follows:
Regulatory Hedge Unrealized Gain (Loss) Recognized in the Balance SheetRegulatory Hedge Unrealized Gain (Loss) Recognized in the Balance SheetRegulatory Hedge Unrealized Gain (Loss) Recognized in the Balance Sheet
Derivative Category and Balance Sheet
Location		Derivative Category and Balance Sheet
Location		Southern
Company		Alabama
Power		Georgia
Power		Mississippi
Power		Southern Company GasDerivative Category and Balance Sheet
Location		Southern
Company		Alabama
Power		Georgia
Power		Mississippi
Power		Southern Company Gas
(in millions) (in millions)
At June 30, 2022:
At March 31, 2023:At March 31, 2023:
Energy-related derivatives:Energy-related derivatives:Energy-related derivatives:
Other regulatory assets, currentOther regulatory assets, current$(26)$(2)$(6)$(3)$(15)Other regulatory assets, current$(198)$(44)$(78)$(29)$(47)
Other regulatory assets, deferredOther regulatory assets, deferred(3)(1)(1)(1)— Other regulatory assets, deferred(67)(24)(35)(8)— 
Other regulatory liabilities, currentOther regulatory liabilities, current234 72 93 62 7 Other regulatory liabilities, current19 3 2 3 11 
Other regulatory liabilities, deferredOther regulatory liabilities, deferred110 39 22 49 — Other regulatory liabilities, deferred9 1 1 7 — 
Total energy-related derivative gains (losses)Total energy-related derivative gains (losses)$315 $108 $108 $107 $(8)Total energy-related derivative gains (losses)$(237)$(64)$(110)$(27)$(36)
At December 31, 2021:
At December 31, 2022:At December 31, 2022:
Energy-related derivatives:Energy-related derivatives:Energy-related derivatives:
Other regulatory assets, currentOther regulatory assets, current$(17)$(6)$— $— $(11)Other regulatory assets, current$(71)$(8)$(26)$(13)$(24)
Other regulatory assets, deferredOther regulatory assets, deferred(23)(7)(14)(2)— 
Other regulatory liabilities, currentOther regulatory liabilities, current107 28 48 27 4 Other regulatory liabilities, current72 29 19 22 2 
Other regulatory liabilities, deferredOther regulatory liabilities, deferred65 22 19 24 — Other regulatory liabilities, deferred31 9 2 20 — 
Total energy-related derivative gains (losses)Total energy-related derivative gains (losses)$155 $44 $67 $51 $(7)Total energy-related derivative gains (losses)$9 $23 $(19)$27 $(22)
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
For the three and six months ended June 30,March 31, 2023 and 2022, and 2021, the pre-tax effects of cash flow and fair value hedge accounting on accumulated OCI for the applicable Registrants were as follows:
Gain (Loss) Recognized in OCI on DerivativeFor the Three Months Ended June 30,For the Six Months Ended June 30,
2022202120222021
Gain (Loss) Recognized in OCI on DerivativesGain (Loss) Recognized in OCI on DerivativesFor the Three Months Ended March 31,
20232022
(in millions)(in millions)
Southern CompanySouthern CompanySouthern Company
Cash flow hedges:Cash flow hedges:Cash flow hedges:
Energy-related derivativesEnergy-related derivatives$(1)$16 $41 $20 Energy-related derivatives$(45)$42 
Interest rate derivativesInterest rate derivatives21 (1)30 2 Interest rate derivatives(13)9 
Foreign currency derivativesForeign currency derivatives(74)4 (102)(43)Foreign currency derivatives— (28)
Fair value hedges(*):
Fair value hedges(*):
Fair value hedges(*):
Foreign currency derivativesForeign currency derivatives(7)— (3)— Foreign currency derivatives(28)4 
TotalTotal$(61)$19 $(34)$(21)Total$(86)$27 
Georgia PowerGeorgia PowerGeorgia Power
Cash flow hedges:Cash flow hedges:
Interest rate derivativesInterest rate derivatives$19 $— $31 $— Interest rate derivatives$(1)$12 
Southern PowerSouthern PowerSouthern Power
Cash flow hedges:Cash flow hedges:Cash flow hedges:
Energy-related derivativesEnergy-related derivatives$2 $5 $7 $8 Energy-related derivatives$(11)$5 
Foreign currency derivativesForeign currency derivatives(74)4 (102)(43)Foreign currency derivatives— (28)
TotalTotal$(72)$9 $(95)$(35)Total$(11)$(23)
Southern Company GasSouthern Company GasSouthern Company Gas
Cash flow hedges:Cash flow hedges:Cash flow hedges:
Energy-related derivativesEnergy-related derivatives$(2)$11 $35 $12 Energy-related derivatives$(34)$37 
Interest rate derivativesInterest rate derivatives(5)— (5)— Interest rate derivatives1 — 
TotalTotal$(7)$11 $30 $12 Total$(33)$37 
(*)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 and six months ended June 30, 2022 and 2021,March 31, 2023, the pre-tax effects of interest rateenergy-related derivatives designated as cash flow hedging instruments on accumulated OCI were immaterial for the other Registrants.Alabama Power and Mississippi Power. There were no such instruments for Alabama Power and Mississippi Power at March 31, 2022.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
For the three and six months ended June 30,March 31, 2023 and 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 June 30,For the Six Months Ended June 30,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,
202220212022202120232022
(in millions)(in millions)
Southern CompanySouthern CompanySouthern Company
Total cost of natural gasTotal cost of natural gas$452 $231 $1,546 $814 Total cost of natural gas$898 $1,095 
Gain (loss) on energy-related cash flow hedges(a)
Gain (loss) on energy-related cash flow hedges(a)
10 1 18 (2)
Gain (loss) on energy-related cash flow hedges(a)
(20)9 
Total depreciation and amortizationTotal depreciation and amortization913 891 1,805 1,762 Total depreciation and amortization1,111 892 
Gain (loss) on energy-related cash flow hedges(a)
Gain (loss) on energy-related cash flow hedges(a)
4 1 6 4 
Gain (loss) on energy-related cash flow hedges(a)
(9)2 
Total interest expense, net of amounts capitalizedTotal interest expense, net of amounts capitalized(488)(450)(950)(901)Total interest expense, net of amounts capitalized(582)(462)
Gain (loss) on interest rate cash flow hedges(a)
Gain (loss) on interest rate cash flow hedges(a)
(6)(7)(13)(14)
Gain (loss) on interest rate cash flow hedges(a)
(4)(7)
Gain (loss) on foreign currency cash flow hedges(a)
Gain (loss) on foreign currency cash flow hedges(a)
(7)(6)(13)(12)
Gain (loss) on foreign currency cash flow hedges(a)
(3)(6)
Gain (loss) on interest rate fair value hedges(b)
Gain (loss) on interest rate fair value hedges(b)
(76)(3)(198)(12)
Gain (loss) on interest rate fair value hedges(b)
43 (123)
Total other income (expense), netTotal other income (expense), net139 101 283 160 Total other income (expense), net147 145 
Gain (loss) on foreign currency cash flow hedges(a)(c)
Gain (loss) on foreign currency cash flow hedges(a)(c)
(73)17 (97)(43)
Gain (loss) on foreign currency cash flow hedges(a)(c)
10 (25)
Gain (loss) on foreign currency fair value hedgesGain (loss) on foreign currency fair value hedges(96)— (121)— Gain (loss) on foreign currency fair value hedges(2)(24)
Amount excluded from effectiveness testing recognized in earningsAmount excluded from effectiveness testing recognized in earnings7 — 3 — Amount excluded from effectiveness testing recognized in earnings28 (4)
Southern PowerSouthern PowerSouthern Power
Total depreciation and amortizationTotal depreciation and amortization$131 $132 $251 $251 Total depreciation and amortization$128 $120 
Gain (loss) on energy-related cash flow hedges(a)
Gain (loss) on energy-related cash flow hedges(a)
4 1 6 4 
Gain (loss) on energy-related cash flow hedges(a)
(9)2 
Total interest expense, net of amounts capitalizedTotal interest expense, net of amounts capitalized(36)(37)(73)(75)Total interest expense, net of amounts capitalized(33)(37)
Gain (loss) on foreign currency cash flow hedges(a)
Gain (loss) on foreign currency cash flow hedges(a)
(7)(6)(13)(12)
Gain (loss) on foreign currency cash flow hedges(a)
(3)(6)
Total other income (expense), netTotal other income (expense), net1 1 3 8 Total other income (expense), net2 2 
Gain (loss) on foreign currency cash flow hedges(a)(c)
Gain (loss) on foreign currency cash flow hedges(a)(c)
(73)17 (97)(43)
Gain (loss) on foreign currency cash flow hedges(a)(c)
10 (25)
Southern Company GasSouthern Company GasSouthern Company Gas
Total cost of natural gasTotal cost of natural gas$452 $231 $1,546 $814 Total cost of natural gas$898 $1,095 
Gain (loss) on energy-related cash flow hedges(a)
Gain (loss) on energy-related cash flow hedges(a)
10 — 18 (2)
Gain (loss) on energy-related cash flow hedges(a)
(20)9 
Total interest expense, net of amounts capitalizedTotal interest expense, net of amounts capitalized(61)(59)(122)(118)Total interest expense, net of amounts capitalized(76)(61)
Gain (loss) on interest rate cash flow hedges(a)
Gain (loss) on interest rate cash flow hedges(a)
(1)(1)(1)(1)
Gain (loss) on interest rate cash flow hedges(a)
(1)(1)
Gain (loss) on interest rate fair value hedges(b)
Gain (loss) on interest rate fair value hedges(b)
(22)4 (57)4 
Gain (loss) on interest rate fair value hedges(b)
13 (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 and six months ended June 30, 2022 and 2021, theThe 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.companies for both periods presented.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
At June 30, 2022March 31, 2023 and December 31, 2021,2022, 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 ItemCarrying Amount of the Hedged ItemCumulative Amount of Fair Value Hedging Adjustment included in Carrying Amount of the Hedged Item
Balance Sheet Location of Hedged ItemsBalance Sheet Location of Hedged ItemsAt June 30, 2022At December 31, 2021At June 30, 2022At December 31, 2021Balance Sheet Location of Hedged ItemsAt March 31, 2023At December 31, 2022At March 31, 2023At December 31, 2022
(in millions)(in millions)(in millions)(in millions)
Southern CompanySouthern CompanySouthern Company
Long-term debtLong-term debt$(2,981)$(3,280)$192 $9 Long-term debt$(3,007)$(2,927)$228 $282 
Southern Company GasSouthern Company GasSouthern Company Gas
Long-term debtLong-term debt$(437)$(493)$59 $2 Long-term debt$(428)$(415)$69 $81 
For the three and six months ended June 30,March 31, 2023 and 2022, and 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 June 30,
Six Months Ended
June 30,
Three Months Ended
March 31,
Derivatives in Non-Designated Hedging RelationshipsDerivatives in Non-Designated Hedging RelationshipsStatements of Income Location2022202120222021Derivatives in Non-Designated Hedging RelationshipsStatements of Income Location20232022
(in millions)(in millions)(in millions)
Energy-related derivatives:Energy-related derivatives:
Natural gas revenues(*)
$(15)$(103)$(13)$(120)Energy-related derivatives:
Natural gas revenues(*)
$— $2 
Cost of natural gas(25)9 (5)16 Cost of natural gas13 21 
Total derivatives in non-designated hedging relationshipsTotal derivatives in non-designated hedging relationships$(40)$(94)$(18)$(104)Total derivatives in non-designated hedging relationships$13 $23 
(*)Excludes immaterial gains (losses) recorded in natural gas revenues associated with weather derivatives for allboth periods presented.
For the three and six months ended June 30,March 31, 2023 and 2022, and 2021, the pre-tax effects of energy-related derivatives not designated as hedging instruments were immaterial for the other Registrants.
Contingent Features
The 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. Generally, collateral may be provided by a Southern Company guaranty, letter of credit, or cash. At June 30, 2022,March 31, 2023, the Registrants had no collateral posted with derivative counterparties to satisfy these arrangements.
For the applicable Registrants,Southern Company and Southern Power, the fair value of interest rate 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 $73 million and $23 million, respectively, at March 31, 2023. For the traditional electric operating companies and Southern Power, 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 at June 30, 2022.March 31, 2023. 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 continued participating in the Southern Company power pool through July 13, 2022.
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.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
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
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
these accounts and the associated margin requirements. At June 30, 2022,March 31, 2023, cash collateral posted in these accounts was immaterial.$15 million for Southern Power and immaterial for Alabama Power. 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 June 30, 2022,March 31, 2023, cash collateral held on deposit in broker margin accounts was $13$60 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.
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.
(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 six months ended June 30, 2022, Southern Power completed construction of and placed in service the remaining 40 MWs of the Tranquillity battery energy storage facility and the remaining 15 MWs of the Garland battery energy storage facility.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Project FacilityResource
Approximate Nameplate Capacity (MW)
LocationCODPPA Contract Period
Projects Completed During the Six Months Ended June 30, 2022
Garland Solar Storage(a)
Battery energy storage system88Kern County, CA
September 2021
through February 2022(b)
20 years
Tranquillity Solar Storage(a)
Battery energy storage system72Fresno County, CA
November 2021
through March 2022(c)
20 years
(a)Southern Power consolidates each project's operating results in its financial statements and the tax equity partner and two other partners each own a noncontrolling interest.
(b)The facility has a total capacity of 88 MWs, of which 73 MWs were placed in service in 2021 and 15 MWs were placed in service in February 2022.
(c)The facility has a total capacity of 72 MWs, of which 32 MWs were placed in service in 2021 and 40 MWs were placed in service in March 2022.
Southern Company Gas
On May 20, 2022, Southern Company Gas received the final $5 million contingent payment from Dominion Modular LNG Holdings, Inc. in connection with its 2020 sale of Pivotal LNG, Inc.
(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 are vertically integrated utilities providing electric service in 3three 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 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 $232$135 million and $337$105 million for the three and six months ended June 30,March 31, 2023 and 2022, respectively, and $112 million and $193 million for the three and six months ended June 30, 2021, respectively. Revenues from sales of natural gas from Southern Company Gas to the traditional electric operating companies and Southern Power were immaterial for allboth periods presented. Revenues from sales of natural gas from Southern Company Gas (prior to its sale of Sequent) to Southern Power were $6 million and $18 million for the three and six months ended June 30, 2021, respectively. 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 and deploying microgrids for commercial, industrial, governmental, and utility customers, as well as investments in telecommunications and, for the three and six months ended June 30, 2021,March 31, 2022, 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 and six months ended June 30,March 31, 2023 and 2022 and 2021 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 June 30, 2022
Three Months Ended March 31, 2023Three Months Ended March 31, 2023
Operating revenuesOperating revenues$5,563 $899 $(456)$6,006 $1,083 $159 $(42)$7,206 Operating revenues$4,113 $508 $(138)$4,483 $1,875 $166 $(44)$6,480 
Segment net income (loss)(a)(b)
Segment net income (loss)(a)(b)
1,036 98 — 1,134 115 (137)(5)1,107 
Segment net income (loss)(a)(b)
610 102 — 712 309 (154)(5)862 
Six Months Ended June 30, 2022
Operating revenues$9,778 $1,438 $(700)$10,516 $3,140 $283 $(85)$13,854 
Segment net income (loss)(a)(b)
1,811 170 — 1,981 433 (263)(12)2,139 
At June 30, 2022
At March 31, 2023At March 31, 2023
GoodwillGoodwill$— $2 $— $2 $5,015 $263 $— $5,280 Goodwill$— $2 $— $2 $5,015 $144 $— $5,161 
Total assetsTotal assets92,742 13,402 (787)105,357 23,618 2,457 (663)130,769 Total assets96,223 13,134 (575)108,782 24,222 2,606 (854)134,756 
Three Months Ended June 30, 2021
Operating revenues$4,031 $490 $(114)$4,407 $677 $154 $(40)$5,198 
Segment net income (loss)(a)(b)(c)
511 36 — 547 (65)(108)(2)372 
Six Months Ended June 30, 2021
Three Months Ended March 31, 2022Three Months Ended March 31, 2022
Operating revenuesOperating revenues$7,795 $930 $(201)$8,524 $2,371 $288 $(75)$11,108 Operating revenues$4,191 $539 $(221)$4,509 $2,058 $123 $(42)$6,648 
Segment net income (loss)(d)(a)
Segment net income (loss)(d)(a)
1,267 133 — 1,400 333 (216)(9)1,508 
Segment net income (loss)(d)(a)
774 72 — 846 319 (125)(8)1,032 
At December 31, 2021
At December 31, 2022At December 31, 2022
GoodwillGoodwill$— $2 $— $2 $5,015 $263 $— $5,280 Goodwill$— $2 $— $2 $5,015 $144 $— $5,161 
Total assetsTotal assets89,051 13,390 (667)101,774 23,560 2,975 (775)127,534 Total assets95,861 13,081 (659)108,283 24,621 2,665 (678)134,891 
(a)Attributable to Southern Company.
(b)For the traditional electric operating companies,Southern Power, includes a $16 million pre-tax charges at Georgia Power for estimated losses associated with the construction of Plant Vogtle Units 3 and 4 of $52 milliongain ($3912 million after tax) foron the three and six months ended June 30, 2022 and $460 million ($343 million after tax) and $508 million ($379 million after tax) for the three and six months ended June 30, 2021, respectively. See Note (B) and Note 2 to the financial statements in Item 8sale of the Form 10-K under "Georgia Power – Nuclear Construction" for additional information.spare parts.
(c)For Southern Company Gas, includes a pre-tax impairment charge of $82 million ($58 million after tax) related to its equity method investment in the PennEast Pipeline project. See Note 7 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.
(d)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 Note 15 to the financial statements under "Southern Power – Development Projects" in Item 8 of the Form 10-K for additional information.
Products and Services
 Electric Utilities' Revenues
RetailWholesaleOtherTotal
(in millions)
Three Months Ended June 30, 2022$4,789 $937 $280 $6,006 
Three Months Ended June 30, 20213,599 546 262 4,407 
Six Months Ended June 30, 2022$8,402 $1,601 $513 $10,516 
Six Months Ended June 30, 20216,941 1,091 492 8,524 
 Electric Utilities' Revenues
RetailWholesaleOtherTotal
(in millions)
Three Months Ended March 31, 2023$3,599 $599 $285 $4,483 
Three Months Ended March 31, 20223,613 664 232 4,509 
 Southern Company Gas' Revenues
Gas
Distribution
Operations		Gas
Marketing
Services		OtherTotal
(in millions)
Three Months Ended March 31, 2023$1,610 $246 $19 $1,875 
Three Months Ended March 31, 20221,791 243 24 2,058 
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
 Southern Company Gas' Revenues
Gas
Distribution
Operations
Wholesale
Gas
Services(*)
Gas
Marketing
Services		OtherTotal
(in millions)
Three Months Ended June 30, 2022$975 $— $92 $16 $1,083 
Three Months Ended June 30, 2021706 (110)64 17 677 
Six Months Ended June 30, 2022$2,765 $— $335 $40 $3,140 
Six Months Ended June 30, 20211,898 188 259 26 2,371 
(*)Prior to the sale of Sequent, the revenues for wholesale gas services were 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.
Southern Company Gas
Southern Company Gas manages its business through 3three reportable segments – gas distribution operations, gas pipeline investments, 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 for additional information on the 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 4four states.
Gas pipeline investments consists of joint ventures in natural gas pipeline investments including a 50% interest in SNG 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 includes a 20% ownership interest in the PennEast Pipeline project, which was cancelled in September 2021. See Note 7 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.
Through July 1, 2021, wholesale gas services provided 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. Additionally, wholesale gas services engaged in natural gas storage and gas pipeline arbitrage and related activities.
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.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Business segment financial data for the three and six months ended June 30, 2022 and 2021 was as follows:
Gas Distribution OperationsGas Pipeline Investments
Wholesale Gas Services(a)
Gas Marketing ServicesTotalAll OtherEliminationsConsolidated
(in millions)
Three Months Ended June 30, 2022
Operating revenues$980 $8 $— $92 $1,080 $10 $(7)$1,083 
Segment net income (loss)92 23 — 1 116 (1)— 115 
Six Months Ended June 30, 2022
Operating revenues$2,782 $16 $— $335 $3,133 $26 $(19)$3,140 
Segment net income (loss)306 52 — 67 425 8 — 433 
Total assets at June 30, 202221,183 1,433 — 1,554 24,170 11,999 (12,551)23,618 
Three Months Ended June 30, 2021
Operating revenues$710 $8 $(110)$64 $672 $11 $(6)$677 
Segment net income (loss)(b)
80 (36)(112)6 (62)(3)— (65)
Six Months Ended June 30, 2021
Operating revenues$1,910 $16 $188 $259 $2,373 $18 $(20)$2,371 
Segment net income (loss)(b)
263 (7)14 62 332 1 — 333 
Total assets at December 31, 202120,917 1,467 31 1,556 23,971 12,114 (12,525)23,560 
(a)As The all other column included a result of thenatural gas storage facility in Texas through its sale of Sequent, wholesale gas services is no longer a reportable segment for the three and six months ended June 30,in November 2022. Prior to the sale of Sequent, the revenues for wholesale gas services were 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 June 30, 2021$1,292 $27 $1,319 $1,429 $(110)
Six Months Ended June 30, 20213,881 90 3,971 3,783 188 
(b)For gas pipeline investments, includes a pre-tax impairment charge of $82 million ($58 million after tax) related to the equity method investment in the PennEast Pipeline project. See Note 715 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.information, including the sale of a natural gas storage facility in California expected to be completed later in 2023.
Business segment financial data for the three months ended March 31, 2023 and 2022 was as follows:
Gas Distribution OperationsGas
Pipeline Investments		Gas Marketing ServicesTotalAll OtherEliminationsConsolidated
(in millions)
Three Months Ended March 31, 2023
Operating revenues$1,618 $8 $246 $1,872 $12 $(9)$1,875 
Segment net income221 31 50 302 7 — 309 
Total assets at March 31, 202322,223 1,583 1,596 25,402 9,598 (10,778)24,222 
Three Months Ended March 31, 2022
Operating revenues$1,803 $8 $243 $2,054 $16 $(12)$2,058 
Segment net income214 29 66 309 10 — 319 
Total assets at December 31, 202222,040 1,577 1,616 25,233 8,943 (9,555)24,621 
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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
9790
Results of Operations
10092
Southern Company
10092
Alabama Power
10998
Georgia Power
114103
Mississippi Power
120107
Southern Power
124110
Southern Company Gas
127113
Future Earnings Potential
135118
Accounting Policies
138122
Financial Condition and Liquidity
139122
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), 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, 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)(K) to the Condensed Financial Statements herein for additional information on segment reporting. Alabama Power, Georgia Power, and Mississippi Power each operate with one reportable business segment, since substantially all of their business is providing electric service to customers. Southern Power also operates its business with one reportable business segment, the sale of electricity in the competitive wholesale market. 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 and Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K, respectively.10-K.
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
Alabama Power
During the first three months of 2023, Alabama Power continued construction of Plant Barry Unit 8, which is expected to be placed in service in November 2023. At March 31, 2023, project expenditures associated with Plant Barry Unit 8 totaled approximately $541 million.
On July 12, 2022,March 24, 2023, Alabama Power filed Rate CNP New Plant with the Alabama PSC approved the following items:
•Alabama Power's petition for a certificate of convenience and necessity, which authorizes Alabama Power to completerecover costs associated with the acquisition of the CalhounCentral Alabama Generating Station. This transaction is expected to close by September 30, 2022.
•AnThe filing reflected an annual increase to Rate ECRin retail revenues of $78 million effective with August 2022 billings, which is expected to result in an increase of approximately $310 million annually. The approved increase in the Rate ECR factor will have no significant effect on Alabama Power's net income, but will increase operating cash flows related to fuel cost recovery.
•Modifications to Rate NDR.
•An accounting order authorizingJune 2023 billings. Through May 2023, Alabama Power expects to createrecover substantially all costs associated with the Central Alabama Generating Station through Rate RSE, offset by revenues from a reliability reserve separate from the NDR and transition the previous Rate NDR authority related to reliability expenditures to the reliability reserve. Alabama Power may make accruals to the reliability reserve if the NDR balance exceeds $35 million.power sales agreement.
See Note (B) to the Condensed Financial Statements under "Alabama Power" herein for additional information.
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, including contingency, through the end of the firstsecond quarter 2023 and the fourthfirst quarter 2023,2024, respectively, is $10.5$10.6 billion.
Fuel loadOn March 6, 2023, Unit 3 achieved self-sustaining nuclear fission, commonly referred to as initial criticality, and, on April 1, 2023, the generator successfully synchronized to the power grid and generated electricity for the first time. Operators continue to perform tests at various power levels to help ensure the reactor performs as designed, and Southern Nuclear continues to remediate various equipment and component issues as they are identified. Based on the expected duration of start-up testing, Unit 3 is projected to be placed in service during the fourth quarter 2022 with an in-service date projected during the first quarterMay or June 2023. Unit 3'sThe projected schedule for Unit 3 primarily depends on the volumeprogression of pre-operational testing and completion of construction remediation work, completion of work packages, including inspection records, and other documentation necessarystart-up,
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
to submit the remaining ITAACs and beginwhich may be impacted by further equipment, component, and/or other operational challenges. Hot functional testing for Unit 4 commenced on March 20, 2023, with fuel load projected to occur in the pace of system and area turnovers, and the progression of startup and other testing. An in-service datethird quarter 2023. Unit 4 is projected to be placed in service during thelate fourth quarter 2023 or the first quarter 2024. The projected schedule for Unit 4 is projected. Unit 4's projected schedule primarily depends on potential impacts arising from Unit 4 testing activities overlapping with Unit 3 progress through fuel load, startup,start-up and testing;commissioning; maintaining overall construction productivity and production levels, improving, particularly in electrical installation, including terminations;subcontractor scopes of work; and maintaining appropriate levels of craft laborers, particularly electricians and pipefitters, being added and maintained.laborers. Any further delays could result in later in-service dates and cost increases.
During the first half of 2022,quarter 2023, established construction contingency totaling $126$20 million was assigned to the base capital cost forecast for costs primarily associated with construction productivity, the pace of system turnovers, additional craft and support resources, and procurement for Units 3 and 4. Georgia Power also increased its total project capital cost forecast as of June 30, 2022 by adding $36 million to replenish 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 in the second quarter 2022 of $36 million ($27 million after tax) for the increase in the total project capital cost forecast. Georgia Power may request the Georgia PSC to evaluate those expenditures for rate recovery during the prudence review following the Unit 4 fuel load pursuant to the twenty-fourth VCM stipulation described in Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction – Regulatory Matters" herein.resources.
Georgia Power and the other 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 Global Amendments (as defined in Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction – Joint Owner Contracts" herein). The other Vogtle Owners have notified Georgia Power that they believe the current project capital cost forecast exceedsapproved by the cost-sharing thresholds and triggersVogtle Owners in February 2022 triggered the tender provisions under the Global Amendments. Georgia Power recorded pre-tax charges to income in the fourth quarter 2021 and the second quarter 2022 of approximately $440 million ($328 million after tax) and $16 million ($12 million after tax), respectively, associated with these cost-sharing and tender provisions, which are 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 $480 million associated with these provisions based on the current project capital cost forecast. provisions.
In October 2021, Georgia Power and the other Vogtle Owners entered into an agreement, which was modified on June 3, 2022, to clarify the process for the tender provisions of the Global Amendments to provide for a decision between 120 and 194 days after the tender option is triggered, which the other Vogtle Owners assert occurred on February 14, 2022 and would require the other Vogtle Owners to notify Georgia Power of their intent to exercise their tender options by August 27, 2022. On June 17, 2022 and July 26, 2022, OPC and Dalton, respectively, notified Georgia Power of their purported exercises of their tender options. OnGeorgia Power did not accept these purported tender exercises. In June 18, 2022, OPC and MEAG Power each filed a separate lawsuit against Georgia Power in the Superior Court of Fulton County, Georgia seeking a declaratory judgment that the starting dollar amount is $17.1 billion and that the cost-sharing and tender provisions havehad been triggered. OnIn July 25, 2022, Georgia Power filed its answeranswers in the lawsuitlawsuits filed by MEAG Power and OPC and included counterclaims seeking a declaratory judgment that the starting dollar amount is $18.38 billion and that costs related to force majeure events are excluded prior to calculating the cost-sharing and tender provisions and when calculating Georgia Power's related financial obligations.
The ultimate impact In September 2022, Dalton filed complaints in each of these matters onlawsuits.
Also in September 2022, Georgia Power and MEAG Power reached an agreement to resolve their dispute regarding the construction scheduleproper interpretation of the cost-sharing and project capital cost forecasttender provisions of the Global Amendments. Under the terms of the agreement, among other items, (i) MEAG Power will not exercise its tender option and will retain its full ownership interest in Plant Vogtle Units 3 and 4; (ii) Georgia Power will reimburse a portion of MEAG Power's costs of construction for Plant Vogtle Units 3 and 4 cannotas such costs are incurred and with no further adjustment for force majeure costs, which payments will total approximately $92 million based on the current project capital cost forecast; and (iii) Georgia Power will reimburse 20% of MEAG Power's costs of construction with respect to any amounts over the current project capital cost forecast, with no further adjustment for force majeure costs. In October 2022, MEAG Power and Georgia Power filed a notice of settlement and voluntary dismissal of the pending litigation described above, including Georgia Power's counterclaim, and Dalton dismissed its related complaint.
Georgia Power recorded pre-tax charges to income through the fourth quarter 2022 of $407 million ($304 million after tax) associated with the cost-sharing and tender provisions of the Global Amendments, including the settlement with MEAG Power. This total is included in the total project capital cost forecast and will not be determined at this time. See Note (B)recovered from retail customers. The settlement with MEAG Power does not resolve the separate pending litigation with OPC, including Dalton's associated complaint, described above. Georgia Power may be required to record further pre-tax charges to income of up to approximately $345 million associated with the Condensed Financial Statements under "Georgiacost-sharing and tender provisions of the Global Amendments for OPC and Dalton based on the current project capital cost forecast.
Georgia Power's ownership interest in Plant Vogtle Units 3 and 4 continues to be 45.7%. Georgia Power – Nuclear Construction" herein for additional information.believes the increases in the total project capital cost forecast through December 31, 2022 triggered the tender provisions, but Georgia Power disagrees with OPC and Dalton on the tender provisions trigger date. Valid notices of tender from OPC and Dalton would require Georgia Power to pay 100% of their respective remaining shares of the costs necessary to complete Plant Vogtle Units 3 and 4. Georgia Power's incremental ownership interest will be calculated and conveyed to Georgia Power after Plant Vogtle Units 3 and 4 are placed in service.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
2022 Base Rate CaseThe ultimate impact of these matters on the construction schedule and project capital cost forecast and related cost recovery 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.
Fuel Cost Recovery
On June 24, 2022,February 28, 2023, Georgia Power filed a base rate case (Georgia Power 2022 Base Rate Case)request with the Georgia PSC. The filing proposesPSC to increase fuel rates. On April 24, 2023, Georgia Power filed an updated request reflecting a three-year alternate rate plan with requested rate increases totaling $852 million, $107 million, and $45 million54% increase in fuel rates effective JanuaryJune 1, 2023, January 1, 2024, and January 1, 2025, respectively.which is expected to increase annual billings by approximately $1.1 billion. Changes in fuel rates have no significant effect on Georgia Power's net income but do impact the related operating cash flows. Georgia Power expects the Georgia PSC to rendermake a final decision inon this matter on December 20, 2022.May 16, 2023. The ultimate outcome of this matter cannot be determined at this time. See Note (B) to the Condensed Financial Statements under "Georgia Power – Rate Plans – 2022 Base Rate Case"Fuel Cost Recovery" herein for additional information.
Integrated Resource Plan
On July 21, 2022, the Georgia PSC approved Georgia Power's triennial IRP (2022 IRP), as modified by a stipulated agreement among Georgia Power, the staff of the Georgia PSC, and certain intervenors and as further modified by the Georgia PSC. In the 2022 IRP decision, the Georgia PSC approved several requests, including the following:
•Decertification and retirement of Plant Wansley Units 1 and 2 (926 MWs based on 53.5% ownership) by August 31, 2022 and Plant Scherer Unit 3 (614 MWs based on 75% ownership) by December 31, 2028, as well as the reclassification to regulatory asset accounts of the remaining net book values of these units and any remaining unusable materials and supplies inventories upon retirement.
•Decertification and retirement of Plant Gaston Units 1 through 4 (500 MWs based on 50% ownership through SEGCO) by December 31, 2028. See Note 7 to the financial statements under "SEGCO" in Item 8 of the Form 10-K for additional information.
•Georgia Power's environmental compliance strategy, including approval of Georgia Power's plans to address CCR at its ash ponds and landfills.
The Georgia PSC deferred a decision on the requested decertification and retirement of Plant Bowen Units 1 and 2 (1,400 MWs) to the 2025 IRP.
See Note (B) to the Condensed Financial Statements under "Georgia Power – Integrated Resource Plans" herein for additional information.
Mississippi Power
On June 7, 2022, the Mississippi PSC approved Mississippi Power's annual retail PEP filing for 2022, resulting in an annual increase in revenues of approximately $18 million, or 1.9%. The rate increase became effective with the first billing cycle of April 2022 in accordance with the PEP rate schedule.
On May 26, 2022, Mississippi Power and Cooperative Energy executed an amended shared service agreement (SSA) under which Cooperative Energy will continue to decrease its use of Mississippi Power's generation services under the MRA tariff up to 2.5% annually through 2035. At June 30, 2022, Mississippi Power is serving approximately 400 MWs of Cooperative Energy's annual demand.Beginning in 2036, Cooperative Energy will provide 100% of its electricity requirements at the MRA delivery points under the tariff. Neither party has the option to cancel the amended SSA. On June 30, 2022, Mississippi Power filed a request with the FERC for approval of the amended SSA. Mississippi Power expects to remarket this capacity, including the potential development of future arrangements with Cooperative Energy.
On July 15, 2022, Mississippi Power filed a request with the FERC for a $23 million increase in annual wholesale base revenues under the MRA tariff effective July 15, 2022, subject to refund. 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.
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AND RESULTS OF OPERATIONS (Continued)
Southern Power
During the six months ended June 30, 2022, Southern Power completed construction of and placed in service the remaining 40 MWs of the Tranquillity battery energy storage facility and the remaining 15 MWs of the Garland battery energy storage facility. See Note (K) to the Condensed Financial Statements under "Southern Power" herein for additional information.
At June 30, 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 facilities' net book value (or expected in-service value for facilities under construction) as the investment amount was 96% through 2026 and 92% through 2031, with an average remaining contract duration of approximately 13 years.
Southern Company Gas
On May 31, 2022, Virginia Natural Gas filed a notice of intent with the Virginia State Corporation Commission to file a base rate case later in the third quarter 2022.
On July 1, 2022, Atlanta Gas Light filed its annual GRAM update with the Georgia PSC. The filing requests an annual base rate increase of $53 million based on the projected 12-month period beginning January 1, 2023. Resolution of the GRAM filing is expected by December 28, 2022, with the new rates effective January 1, 2023.
The ultimate outcome of these matters cannot be determined at this time.
RESULTS OF OPERATIONS
Southern Company
Net Income
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$735N/M$63141.8
N/M - Not meaningful
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$(170)(16.5)
Consolidated net income attributable to Southern Company was $1.1$0.9 billion ($1.040.79 per share) in the secondfirst quarter 20222023 compared to $0.4$1.0 billion ($0.350.97 per share) for the corresponding period in 2021. For year-to-date 2022, consolidated net income attributable2022. The decrease was primarily due to Southern Company was $2.1 billion ($2.01 per share)higher depreciation and amortization, a decrease in retail electric revenues associated with milder weather in the first quarter 2023 compared to $1.5 billion ($1.42 per share) for the corresponding period in 2021. The increases were primarily due to decreases of $304 million2022, and $340 million in the second quarter and year-to-date 2022, respectively, in after-tax charges related to the construction of Plant Vogtle Units 3 and 4, an after-tax charge of $58 million in the second quarter 2021 related to the PennEast pipeline project at Southern Company Gas,higher interest expense, partially offset by an increase in retail electric revenues associated with rates and pricing and warmer weather, and an increase in natural gasother revenues.
Retail Electric Revenues
In the first quarter 2023, retail electric revenues from base rate increaseswere $3.60 billion compared to $3.61 billion for the corresponding period in 2022. Details of the changes in retail electric revenues were as follows:
 
First Quarter 2023 vs.
First Quarter 2022
(change in millions)(% change)
Rates and pricing$97 2.7 %
Sales growth7 0.2 
Weather(152)(4.2)
Fuel and other cost recovery34 0.9 
Retail electric revenues$(14)(0.4)%
Revenues associated with changes in rates and continued infrastructure replacement. The secondpricing increased in the first quarter 2021 net loss of $112 million at Sequent, which was sold on July 1, 2021, also contributed2023 when compared to the net incomecorresponding period in 2022. The increase was primarily due to an increase in the second quarter 2022. TheseRate CNP Compliance revenues at Alabama Power and base tariff increases in accordance with Georgia Power's 2022 ARP. In addition, revenues associated with Rate CNP Depreciation increased $73 million and were partiallyfully offset by higher non-fuel operationscustomer bill credits of $73 million related to the flowback of excess accumulated deferred income taxes at Alabama Power. See Note 2 to the financial statements under "Alabama Power" and maintenance costs."Georgia Power – Rate Plans" 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)
Retail Electric Revenues
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$1,19033.1$1,46121.0
In the second quarter 2022, retail electric revenues were $4.8 billion compared to $3.6 billion for the corresponding period in 2021. For year-to-date 2022, retail electric revenues were $8.4 billion compared to $6.9 billion for the corresponding period in 2021.
Details of the changes in retail electric revenues were as follows:
 Second Quarter 2022Year-To-Date 2022
(in millions)(% change)(in millions)(% change)
Retail electric – prior year$3,599 $6,941 
Estimated change resulting from –
Rates and pricing237 6.6 %293 4.2 %
Sales growth66 1.9 85 1.2 
Weather145 4.0 161 2.3 
Fuel and other cost recovery742 20.6 922 13.3 
Retail electric – current year$4,789 33.1 %$8,402 21.0 %
Revenues associated with changes in rates and pricing increased in the second quarter and year-to-date 2022 when compared to the corresponding periods in 2021. The increases were primarily due to higher contributions from commercial and industrial customers with variable demand-driven pricing, base tariff increases in accordance with Georgia Power's 2019 ARP, and pricing effects associated with residential customer usage. See Note 2 to the financial statements under "Georgia Power – Rate Plans" in Item 8 of the Form 10-K for additional information.
Revenues attributable to changes in sales increased in the secondfirst quarter and year-to-date 2022 when compared to the corresponding periods in 2021. Weather-adjusted residential KWH sales increased 1.0% in the second quarter 20222023 when compared to the corresponding period in 2021 primarily due to strong customer growth, partially offset by decreased customer usage.2022. Weather-adjusted residential and commercial KWH sales decreased 0.1% for year-to-date 2022increased 1.2% and 1.8%, respectively, in the first quarter 2023 when compared to the corresponding period in 20212022 primarily due to residential customer growth and weather-adjustedincreased commercial usage. Commercial customer usage increased as customers continued their return to regular business trends. Industrial KWH sales increased 2.2% and 2.1%decreased 1.6% in the secondfirst quarter and year-to-date 2022, respectively,2023 when compared to the corresponding periodsperiod in 20212022 primarily due to impacts on customer usage from increased activity outside the home as customers return to pre-pandemic levels of activity. Increased customer growth largely offset the decrease in customer usage impacting year-to-date 2022 residential KWH sales and contributed to the increase in commercial KWH sales. Industrial KWH sales increased 3.7% and 2.8% in the second quarter and year-to-date 2022, respectively, when compared to the corresponding periods in 2021 primarily due to strength in the pipeline and paper sectors, partially offset by a decrease in the chemicals sector.sector, partially offset by increases in the pipeline and primary metals sectors.
Fuel and other cost recovery revenues increased $742 million and $922$34 million in the secondfirst quarter and year-to-date 2022, respectively,2023 compared to the corresponding periodsperiod in 20212022 primarily due to higher recoverable fuel and purchased power costs and an increase in the volume of KWHs generated.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. See Note 2 to the financial statements in Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements herein for additional information.
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AND RESULTS OF OPERATIONS (Continued)
Wholesale Electric Revenues
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$39171.6$51046.7
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$(65)(9.8)
In the secondfirst quarter 2022,2023, wholesale electric revenues were $937$599 million compared to $546$664 million for the corresponding period in 2021. For year-to-date 2022, wholesale electric revenues were $1.6 billion compared to $1.1 billion for the corresponding period in 2021.2022. The increases weredecrease was primarily due to increases of $376a $97 million and $493 milliondecrease in energy revenues in the secondfirst quarter and year-to-date 2022, respectively, in energy revenues2023 as a result of fuel and purchased power price increasesdecreases when compared to the corresponding periodsperiod in 20212022 and an increasea net decrease in the volume of KWHs sold primarily associated with sales under natural gas PPAs at Southern Power. In addition, increasesThe decrease in energy revenues was partially offset by an increase in capacity revenues of $15 million and $18$32 million in the secondfirst quarter 2023 primarily resulting from a new power sales agreement that began in July 2022 at Alabama Power and year-to-date 2022, respectively, were primarily due to increaseda net increase in capacity sales underfrom natural gas PPAs at Southern Power.
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.
Other Electric Revenues
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$179.7$246.9
In the second quarter 2022, other electric revenues were $192 million compared to $175 million for the corresponding period in 2021. For year-to-date 2022, other electric revenues were $370 million compared to $346 million for the corresponding period in 2021. The increases in the second quarter and year-to-date 2022 were primarily due to increases of $19 million and $27 million, respectively, in transmission revenues, $5 million and $8 million, respectively, in cogeneration steam revenues associated with higher natural gas prices at Alabama Power, and $4 million and $5 million, respectively, in rent revenues at the traditional electric operating companies, partially offset by decreases of $12 million and $20 million, respectively, resulting from the termination of a transmission service contract at Georgia Power.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Natural GasOther Electric Revenues
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$40660.0$76932.4
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$137.3
In the secondfirst quarter 2022, natural gas2023, other electric revenues were $1.1 billion$190 million compared to $677$177 million for the corresponding period in 2021. For year-to-date 2022,2022. The increase was primarily due to an increase of $7 million in transmission revenues at the traditional electric operating companies and Southern Power, an increase of $6 million in outdoor lighting sales at Georgia Power, and a $4 million gain on the resale of gas at Alabama Power, partially offset by a $5 million decrease in cogeneration steam revenue primarily associated with lower natural gas prices at Alabama Power.
Natural Gas Revenues
In the first quarter 2023, natural gas revenues were $3.1$1.9 billion compared to $2.4$2.1 billion for the corresponding period in 2021.
2022. Details of the changes in natural gas revenues were as follows:
Second Quarter 2022Year-To-Date 2022
(in millions)(% change)(in millions)(% change)
Natural gas revenues – prior year$677 $2,371 
Estimated change resulting from –
Infrastructure replacement programs and base rate changes46 6.8 %132 5.6 %
Gas costs and other cost recovery239 35.3 783 33.0 
Gas marketing services(5)(0.7)13 0.5 
Wholesale gas services110 16.2 (187)(7.9)
Other16 2.4 28 1.2 
Natural gas revenues – current year$1,083 60.0 %$3,140 32.4 %
First Quarter 2023 vs.
First Quarter 2022
(change in millions)(% change)
Infrastructure replacement programs and rate changes$50 2.4 %
Gas costs and other cost recovery(199)(9.7)
Gas marketing services(21)(1.0)
Other(13)(0.6)
Natural gas revenues$(183)(8.9)%
Revenues from infrastructure replacement programs and base rate changes at the natural gas distribution utilities increased in the secondfirst quarter and year-to-date 20222023 compared to the corresponding periodsperiod in 20212022 primarily due to rate increases at Nicor Gas, Atlanta Gas Light, and Chattanooga Gasthe natural gas distribution utilities 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 withfrom gas costs and other cost recovery increaseddecreased in the secondfirst quarter and year-to-date 20222023 compared to the corresponding periodsperiod in 20212022 primarily due to higher volumeslower natural gas cost recovery associated with the timing of natural gas soldpurchases and higher natural gas cost recovery.the recovery of those costs from 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.
Revenues from gas marketing services decreased in the secondfirst quarter 20222023 compared to the corresponding period in 20212022 primarily due to lower natural gas prices and the timing of unrealized hedge losses, partially offset by higher variable price spreads in Georgia and warmer weatherIllinois and higher customer count in Georgia.
Other Revenues
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$8159.6
In the secondfirst quarter 2022. For year-to-date 2022,2023, other revenues increasedwere $217 million compared to $136 million for the corresponding period in 20212022. The increase was primarily due to higher commodity prices and higher sales to commercial customers.
The changes in revenuesincreases of $36 million related to Southern Company Gas' wholesale gasdistributed infrastructure projects at PowerSecure, $24 million in unregulated sales associated with power delivery construction and maintenance projects primarily at Georgia Power, and $15 million in unregulated sales of products and services were 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.at Alabama Power.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Other Revenues
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$42.0$(18)(5.0)
For year-to-date 2022, other revenues were $341 million compared to $359 million for the corresponding period in 2021. The decrease was primarily due to a net decrease of $22 million in unregulated sales at Georgia Power primarily due to the timing of revenue recognition for a large, ongoing power delivery construction and maintenance contract, partially offset by increases associated with more energy conservation projects performed in 2022.
Fuel and Purchased Power Expenses
Second Quarter 2022 vs.
Second Quarter 2021
Year-To-Date 2022 vs.
Year-To-Date 2021
First Quarter 2023 vs.
First Quarter 2022
(change in millions)(% change)(change in millions)(% change) (change in millions)(% change)
FuelFuel$867 102.2$1,130 66.6Fuel$(61)(5.5)
Purchased powerPurchased power191 88.0216 50.9Purchased power10 4.3
Total fuel and purchased power expensesTotal fuel and purchased power expenses$1,058 $1,346 Total fuel and purchased power expenses$(51)
In the secondfirst quarter 2022,2023, total fuel and purchased power expenses were $2.1$1.29 billion compared to $1.1$1.34 billion for the corresponding period in 2021.2022. The increasedecrease was primarily the result of an $853due to a $42 million increasedecrease in the average cost of fuel and purchased power and a $205$9 million increase in the volume of KWHs generated and purchased.
For year-to-date 2022, total fuel and purchased power expenses were $3.5 billion compared to $2.1 billion for the corresponding period in 2021. The increase was primarily the result of a $1.1 billion increase in the average cost of fuel and purchased power and a $239 million increasenet decrease 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:
Second Quarter 2022Second Quarter 2021Year-To-Date 2022Year-To-Date 2021First Quarter 2023First Quarter 2022
Total generation (in billions of KWHs)(a)
Total generation (in billions of KWHs)(a)
46439286
Total generation (in billions of KWHs)(a)
4446
Total purchased power (in billions of KWHs)
Total purchased power (in billions of KWHs)
64118
Total purchased power (in billions of KWHs)
54
Sources of generation (percent)(a) —
Sources of generation (percent)(a) —
Sources of generation (percent)(a) —
GasGas49474746Gas5446
CoalCoal22222323Coal1523
NuclearNuclear16181618Nuclear1717
HydroHydro3454Hydro56
Wind, Solar, and OtherWind, Solar, and Other10999Wind, Solar, and Other98
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)
5.592.584.602.56
Gas(a)
3.133.53
CoalCoal3.502.873.302.85Coal4.023.11
NuclearNuclear0.720.750.720.75Nuclear0.710.72
Average cost of fuel, generated (in cents per net KWH)(a)
Average cost of fuel, generated (in cents per net KWH)(a)
4.132.283.502.27
Average cost of fuel, generated (in cents per net KWH)(a)
2.802.86
Average cost of purchased power (in cents per net KWH)(b)
Average cost of purchased power (in cents per net KWH)(b)
7.835.656.905.37
Average cost of purchased power (in cents per net KWH)(b)
5.505.58
(a)Excludes Central Alabama Generating Station KWHs and associated cost of fuel through July 12, 2022 as its fuel iswas previously 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.
Fuel
In the secondfirst quarter 2022,2023, fuel expense was $1.7$1.05 billion compared to $0.8$1.11 billion for the corresponding period in 2021.2022. The increasedecrease was primarily due to a 116.7% increase39.1% decrease in the volume of KWHs generated by coal and an 11.3% decrease in the average cost of natural gas per KWH generated, partially offset by a 23.2% decrease in the volume of KWHs generated by hydro, a 22.0%29.3% increase in the average cost of coal per KWH generated, a 10.4%16.3% increase in the volume of KWHs generated by natural gas, and a 9.0% increase in the volume of KWHs generated by coal.
For year-to-date 2022, fuel expense was $2.8 billion compared to $1.7 billion for the corresponding period in 2021. The increase was primarily due to a 79.7% increase in the average cost of natural gas per KWH generated, a 15.8% increase in the average cost of coal per KWH generated, a 7.6% increase in the volume of KWHs generated by natural gas, and a 5.8% increase in the volume of KWHs generated by coal, partially offset by a 9.8% increase13.9% decrease in the volume of KWHs generated by hydro.
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AND RESULTS OF OPERATIONS (Continued)
Purchased Power
In the secondfirst quarter 2022,2023, purchased power expense was $408$242 million compared to $217$232 million for the corresponding period in 2021.2022. The increase was primarily due to a 38.6%1.7% increase in the volume of KWHs purchased, partially offset by a 1.4% decrease in the average cost per KWH purchased primarily due to highera decrease in natural gas and coal prices and a 55.3% increase in the volume of KWHs purchased.
For year-to-date 2022, purchased power expense was $640 million compared to $424 million for the corresponding period in 2021. The increase was primarily due to a 28.5% increase in the average cost per KWH purchased primarily due to higher natural gas and coal prices and a 29.4% increase in the volume of KWHs purchased.prices.
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.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Cost of Natural Gas
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$22195.7$73289.9
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$(197)(18.0)
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 88% and 89%85% of the total cost of natural gas in the secondfirst quarter and year-to-date 2022, respectively.2023.
In the secondfirst quarter 2022,2023, cost of natural gas was $452 million$0.9 billion compared to $231 million$1.1 billion for the corresponding period in 2021. For year-to-date 2022, cost of natural gas was $1.5 billion compared to $814 million for the corresponding period in 2021.2022. The increases reflect higherdecrease reflects lower gas cost recovery as a result of increases of 153.2% and 119.4%a 31% decrease in natural gas prices in the secondfirst quarter and year-to-date 2022, respectively,2023 compared to the corresponding periodsperiod in 2021.2022.
Cost of Other Sales
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$1110.7$(2)(1.1)
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$5884.1
In the secondfirst quarter 2022,2023, cost of other sales was $114$127 million compared to $103$69 million for the corresponding period in 2021.2022. The increase was primarily due to increases of $14a $29 million increase related to distributed infrastructure projects at PowerSecure $7and a $24 million associated with unregulated merchandising and energy services expenses at Alabama Power, and $5 million related to unregulated construction and maintenance contracts at Mississippi Power, partially offset by a $16 million decrease associated withincrease from unregulated power delivery construction and maintenance projects primarily at Georgia Power.
For year-to-date 2022, cost of other sales was $183 million compared to $185 million for the corresponding period in 2021. The decrease was primarily due to a decrease of $26 million associated with unregulated power delivery construction and maintenance projects at Georgia Power, largely offset by increases of $14 million related to distributed infrastructure projects at PowerSecure, $5 million related to unregulated construction and maintenance contracts at Mississippi Power, and $5 million associated with unregulated merchandising and energy services expenses at Alabama Power.
Other Operations and Maintenance Expenses
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$1208.3$2659.4
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$(34)(2.2)
In the secondfirst quarter 2022,2023, other operations and maintenance expenses were $1.6$1.48 billion compared to $1.4$1.52 billion for the corresponding period in 2021. Other operations and maintenance expenses increased $124 million, excluding expenses related to Sequent in the second quarter 2021.2022. The increasedecrease was primarily due to increasesdecreases of $29$45 million in storm damage recovery as authorized in Georgia Power's 2022 ARP, $44 million in generation expenses primarily associated with non-outage and scheduled outage maintenance costs, and $31 million in transmission and distribution expenses primarily related to line maintenance, $22partially offset by a $39 million increase in generation expenses primarily related to scheduled outagetechnology infrastructure and maintenanceapplication production costs, $13a $25 million decrease in nuclear property insurance refunds at Georgia Power and Alabama Power, a $12 million increase in compensation and benefit expenses, and a $9 million associated with more unregulated energy conservation projects in 2022 at Georgia Power, $8 million in expenses at Southern Company Gas passed through directly to customers, primarilyincrease related to bad debt,the injuries and $6 million in amortization of cloud software.damages reserves at Alabama Power and Georgia Power.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
For year-to-date 2022, other operationsDepreciation and maintenance expenses were $3.1Amortization
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$21924.6
In the first quarter 2023, depreciation and amortization was $1.1 billion compared to $2.8$0.9 billion for the corresponding period in 2021. Excluding $53 million of expenses related to Sequent in 2021, other operations and maintenance expenses increased $318 million.2022. The increase was primarily due to increasesan increase of $86$179 million resulting from higher depreciation rates at Alabama Power and Georgia Power and an increase of $26 million from additional plant in transmissionservice. See Notes 2 and distribution expenses primarily related5 to line maintenance, $80 million in generation expenses primarily related to scheduled outagethe financial statements under "Alabama Power" and maintenance costs, $24 million in expenses at Southern Company Gas passed through directly to customers, primarily related to bad debt, $23 million in compensation and benefit expenses, and $8 million in amortization of cloud software.
Depreciation"Depreciation and Amortization," respectively, in Item 8 of the Form 10-K for additional information.
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$222.5$432.4
Taxes Other Than Income Taxes
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$225.9
In the secondfirst quarter 2022, depreciation and amortization was $9132023, taxes other than income taxes were $394 million compared to $891$372 million for the corresponding period in 2021. For year-to-date 2022, depreciation2022. The increase primarily reflects a $13 million increase in property taxes at the traditional electric operating companies and amortization was $1.81 billion compared to $1.76 billion for the corresponding perioda $9 million increase in 2021. The increases were primarily due to additional plant in service.utility license taxes at Alabama Power.
Taxes Other Than Income TaxesGain on Dispositions, Net
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$3611.5$649.7
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$1982.6
In the secondfirst quarter 2022, taxes other than income taxes were $3492023, gain on dispositions, net was $42 million compared to $313$23 million for the corresponding period in 2021. For year-to-date 2022, taxes other than income taxes were $7212022. The increase was primarily due to a gain on the sale of spare parts at Southern Power in 2023.
Allowance for Equity Funds Used During Construction
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$1427.5
In the first quarter 2023, allowance for equity funds used during construction was $65 million compared to $657$51 million for the corresponding period in 2021.2022. The increasesincrease was primarily reflectassociated with an increase in revenue tax expenses as a result of higher natural gas revenuescapital expenditures subject to AFUDC at Nicor GasGeorgia Power and an increase in municipal franchise feescapital expenditures related to higher retail revenuesPlant Barry Unit 8 construction at GeorgiaAlabama Power.
Estimated Loss on Plant Vogtle Units 3 and 4
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$(408)(88.7)$(456)(89.8)
In the second quarter 2022 and 2021, Georgia Power recorded estimated probable losses on Plant Vogtle Units 3 and 4 of $52 million and $460 million, respectively. For year-to-date 2022 and 2021, Georgia Power recorded estimated probable losses on Plant Vogtle Units 3 and 4 totaling $52 million and $508 million, respectively. The losses reflect 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 and Note (B) to the Condensed Financial Statements herein under "Georgia"Alabama Power – Nuclear Construction"Certificates of Convenience and Necessity" for additional information.
Gain on Dispositions, Net
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$(1)(9.1)$(21)(38.9)
For year-to-date 2022, gain on dispositions, net was $33 million compared to $54 million for the corresponding period in 2021. The decrease reflects a $39 million gain at Southern Power primarily from contributions of wind turbine equipment to various equity method investments in 2021, partially offset by a $17 million gain from sales of
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
integrated transmission system assets at Georgia Power in 2022. See Note 15 to the financial statements under "Southern Power – Development Projects" in Item 8 of the Form 10-K for additional information.
Earnings (Loss) from Equity Method Investments
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$74N/M$75N/M
N/M - Not meaningful
In the second quarter 2022, earnings from equity method investments were $34 million compared to a loss of $40 million for the corresponding period in 2021. For year-to-date 2022, earnings from equity method investments were $80 million compared to $5 million for the corresponding period in 2021. The increases were primarily due to a pre-tax impairment charge of $82 million in the second quarter 2021 related to the PennEast Pipeline project at Southern Company Gas. See Note 7 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K and Note (E) to the Condensed Financial Statements herein under "Southern Company Gas" for additional information.
Interest Expense, Net of Amounts Capitalized
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$388.4$495.4
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$12026.0
In the secondfirst quarter 2022,2023, interest expense, net of amounts capitalized was $488$582 million compared to $450$462 million for the corresponding period in 2021.2022. The increase was primarily duereflects approximately $62 million related to higher interest rates and $39 million related to higher average outstanding borrowings.
For year-to-date 2022, interest expense, net of amounts capitalized was $950 million compared to $901 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 second quarter 2021.
See FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" and "Financing Activities" herein for additional information on borrowings.
Other Income (Expense), NetTaxes
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$3837.6$12376.9
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$(76)(43.9)
In the secondfirst quarter 2022, other2023, income (expense), net was $139taxes were $97 million compared to $101$173 million for the corresponding period in 2021.2022. The increasedecrease was primarily due to charitable contributions of $26 million at Southern Company Gaslower pre-tax earnings and an increase in the second quarter 2021 andflowback of certain excess deferred income taxes at Alabama Power, partially offset by a $16 million increasedecrease in non-service cost-related retirement benefits income.
For year-to-date 2022, otherthe flowback of certain excess deferred income (expense), net was $283 million compared to $160 million for the corresponding periodtaxes at Georgia Power that ended in 2021. The increase was primarily due to charitable contributions of $101 million at Southern Company Gas for year-to-date 2021 and a $30 million increase in non-service cost-related retirement benefits income.
2022. See Note (H)(G) to the Condensed Financial Statements herein for additional information.
Net Loss Attributable to Noncontrolling Interests
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$(18)(40.0)
Substantially all noncontrolling interests relate to renewable projects at Southern Power. In the first quarter 2023, net loss attributable to noncontrolling interests was $63 million compared to $45 million for the corresponding period in 2022. The increased loss was primarily due to $16 million in higher HLBV loss allocations to Southern Power's wind tax equity partners due to higher wind PTCs in 2023.
Alabama Power
Net Income
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$(92)(26.5)
Alabama Power's net income after dividends on preferred stock in the first quarter 2023 was $255 million compared to $347 million for the corresponding period in 2022. The decrease was primarily due to an increase in depreciation rates effective January 2023, a decrease in weather-related revenues due to milder weather in Alabama Power's service territory in the first quarter 2023 compared to the corresponding period in 2022, and a decrease in customer usage. These decreases to income were partially offset by a decrease in income tax expense and an increase in Rate CNP Compliance revenues. See Note 2 to the financial statements in Item 8 of the Form 10-K under "Alabama Power" for additional information.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Income Taxes (Benefit)
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$316N/M$299N/M
N/M - Not meaningful
In the second quarter 2022, income tax expense was $304 million compared to income tax benefit of $12 million for the corresponding period in 2021. For year-to-date 2022, income taxes were $477 million compared to $178 million for the corresponding period in 2021. The increases were primarily due to an increase in pre-tax earnings and an adjustment in the second quarter 2022 related to a prior year state tax credit carryforward at Georgia Power. See Note (G) to the Condensed Financial Statements herein for additional information.
Net Loss Attributable to Noncontrolling Interests
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$22N/M$34N/M
N/M - Not meaningful
Substantially all noncontrolling interests relate to renewable projects at Southern Power. In the second quarter 2022, net loss attributable to noncontrolling interests was $22 million compared to an immaterial loss for the corresponding period in 2021. For year-to-date 2022, net loss attributable to noncontrolling interests was $67 million compared to $33 million for the corresponding period in 2021. The increased losses attributable to noncontrolling interests were primarily due to higher HLBV loss allocations to Southern Power's tax equity partners, partially offset by higher income allocations to Southern Power's equity partners.
Alabama Power
Net Income
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$5215.7$405.8
Alabama Power's net income after dividends on preferred stock in the second quarter 2022 was $383 million compared to $331 million for the corresponding period in 2021. Alabama Power's net income after dividends on preferred stock for year-to-date 2022 was $730 million compared to $690 million for the corresponding period in 2021. These increases were primarily due to an increase in retail revenues associated with warmer weather in Alabama Power's service territory in the second quarter and year-to-date 2022 compared to the corresponding periods in 2021 and sales growth, partially offset by an increase in operations and maintenance expenses.
Retail Revenues
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$27520.3$30211.2
In both the secondfirst quarter 2023 and 2022, retail revenues were $1.63 billion compared to $1.35 billion for the corresponding period in 2021. For year-to-date 2022, retail revenues were $3.01 billion compared to $2.71 billion for the corresponding period in 2021.
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AND RESULTS OF OPERATIONS (Continued)
$1.38 billion. Details of the changes in retail revenues were as follows:
 Second Quarter 2022Year-To-Date 2022
(in millions)(% change)(in millions)(% change)
Retail – prior year$1,354 $2,706 
Estimated change resulting from –
Rates and pricing4 0.3 %3 0.1 %
Sales growth19 1.4 34 1.3 
Weather63 4.6 64 2.4 
Fuel and other cost recovery189 14.0 201 7.4 
Retail – current year$1,629 20.3 %$3,008 11.2 %
 
First Quarter 2023 vs.
First Quarter 2022
(change in millions)(% change)
Rates and pricing$58 4.2 %
Sales decline(17)(1.3)
Weather(61)(4.4)
Fuel and other cost recovery22 1.6 
Retail revenues$2 0.1 %
Revenues attributable toassociated with changes in salesrates and pricing increased inthe secondfirst quarter and year-to-date 2022 when compared to the corresponding periods in 2021. Weather-adjusted residential KWH sales decreased 1.4% and 0.3% in the second quarter and year-to-date 2022, respectively, when compared to the corresponding periods in 2021 primarily due to decreased customer usage. Weather-adjusted commercial KWH sales decreased 0.2% in the second quarter 20222023 when compared to the corresponding period in 20212022 primarily due to an increase in Rate CNP Compliance revenues. In addition, revenues associated with Rate CNP Depreciation increased $73 million and were fully offset by customer bill credits of $73 million related to the flowback of excess accumulated deferred income taxes. See Note 2 to the financial statements under "Alabama Power" in Item 8 of the Form 10-K for additional information.
Revenues attributable to changes in sales decreased customer usage. Weather-adjusted commercial KWH sales increased 0.4% for year-to-date 2022in the first quarter 2023 when compared to the corresponding period in 2021 primarily due to customer growth. Industrial2022. Weather-adjusted residential KWH sales increased 3.9%0.1% and 2.0% weather-adjusted commercial KWH sales decreased 0.3% in the secondfirst quarter and year-to-date 2022, respectively,2023 when compared to the corresponding periodsperiod in 20212022. The residential and commercial changes were primarily due to increasesresidential customer growth and a decrease in the pipeline, mining, and pulp and paper sectors, partially offset bycommercial usage, respectively. Industrial KWH sales decreased 2.4% primarily due to decreases in the chemicals sector, partially offset by an increase in the primary metals sector.
Fuel and other cost recovery revenues increased in the secondfirst quarter and year-to-date 20222023 when compared to the corresponding periodsperiod in 20212022 primarily due to increases in the volumeas a result of KWHs generated and the average cost of fuel.higher recoverable fuel costs.
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 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
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$7487.1$9452.8
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$2723.7
In the secondfirst quarter 2022,2023, wholesale revenues from sales to non-affiliates were $159$141 million compared to $85$114 million for the corresponding period in 2021. For year-to-date 2022, wholesale revenues from sales to non-affiliates were $272 million compared to $178 million for the corresponding period in 2021.2022. The increases for the second quarter and year-to-date 2022 wereincrease was primarily due to increasesan 18.1% increase in the volume of 41.8% and 27.3%, respectively, in KWH sales asand a result of increased opportunity sales due to warmer weather in the second quarter and year-to-date 2022 compared to the corresponding periods in 2021, as well as increases of 31.4% and 20.5%, respectively,4.8% increase in the price of energy both due to higher natural gas prices.a new power sales agreement that began in July 2022.
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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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Wholesale Revenues – Affiliates
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$1041.7$4581.8
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$(46)(70.8)
In the secondfirst quarter 2022,2023, wholesale revenues from sales to affiliates were $34$19 million compared to $24$65 million for the corresponding period in 2021.2022. The increasedecrease was primarily due to a 154.8% increase63.5% decrease in the volume of KWH sales due to higher demand for Southern Company system lower cost generation and an 18.2% decrease in the price of energy due to higherlower natural gas prices, partially offset by a 42.5% decrease in KWH sales due to lower cost system resources compared to Alabama Power's generation.
For year-to-date 2022, wholesale revenues from sales to affiliates were $100 million compared to $55 million for the corresponding period in 2021. The increase was primarily due to a 72.1% increase in the price of energy due to higher natural gas prices and a 5.1% increase in KWH sales due to lower cost resources as compared to available affiliate company generation.prices.
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. TheseEnergy revenues related to 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.
Other Revenues
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$1617.2$2413.6
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$1516.5
In the secondfirst quarter 2022,2023, other revenues were $109$106 million compared to $93$91 million for the corresponding period in 2021. For year-to-date 2022, other revenues were $200 million compared to $176 million for the corresponding period in 2021.2022. The second quarter and year-to-date 2022 increases wereincrease was primarily due to increasesan increase of $15 million in unregulated sales of products and services and a $4 million gain on the resale of gas, partially offset by a $5 million and $8 million, respectively,decrease in cogeneration steam revenue primarily associated with higherlower natural gas prices, $4 million and $7 million, respectively, in transmission revenues, and $3 million and $4 million, respectively, in rent revenues.prices.
Fuel and Purchased Power Expenses
Second Quarter 2022 vs.
Second Quarter 2021
Year-To-Date 2022 vs.
Year-To-Date 2021
First Quarter 2023 vs.
First Quarter 2022
(change in millions)(% change)(change in millions)(% change)(change in millions)(% change)
FuelFuel$138 52.5 $179 32.3 Fuel$(25)(7.5)
Purchased power – non-affiliatesPurchased power – non-affiliates47 97.9 65 67.0 Purchased power – non-affiliates34 50.7 
Purchased power – affiliatesPurchased power – affiliates82 210.3 78 113.0 Purchased power – affiliates33 126.9 
Total fuel and purchased power expensesTotal fuel and purchased power expenses$267 $322 Total fuel and purchased power expenses$42 
In the secondfirst quarter 2022,2023, total fuel and purchased power expenses were $617$468 million compared to $350$426 million for the corresponding period in 2021.2022. The increase was primarily due to a $199$39 million increase in the cost of fuel and purchased power and a $67 millionnet increase related to the volume of KWHs generated and purchased.
For year-to-date 2022, total fuelpurchased and purchased power expenses were $1.04 billion compared to $720a $3 million for the corresponding period in 2021. The increase was primarily due to a $235 millionnet increase in the cost of fuel and purchased power and an $87 million increase related to the volume of KWHs generated and purchased.
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AND RESULTS OF OPERATIONS (Continued)
power.
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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AND RESULTS OF OPERATIONS (Continued)
Details of Alabama Power's generation and purchased power were as follows:
Second Quarter 2022Second Quarter 2021Year-To-Date 2022Year-To-Date 2021First Quarter 2023First Quarter 2022
Total generation (in billions of KWHs)(a)
Total generation (in billions of KWHs)(a)
13132928
Total generation (in billions of KWHs)(a)
1415
Total purchased power (in billions of KWHs)
Total purchased power (in billions of KWHs)
3243
Total purchased power (in billions of KWHs)
32
Sources of generation (percent)(a) —
Sources of generation (percent)(a) —
Sources of generation (percent)(a) —
CoalCoal45434445Coal3042
NuclearNuclear25252525Nuclear2825
GasGas22222020Gas2919
HydroHydro8101110Hydro1314
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) —
CoalCoal3.352.733.112.74Coal3.332.90
NuclearNuclear0.670.690.670.71Nuclear0.670.67
Gas(a)
Gas(a)
4.882.474.172.49
Gas(a)
3.373.45
Average cost of fuel, generated (in cents per net KWH)(a)
Average cost of fuel, generated (in cents per net KWH)(a)
2.982.102.662.12
Average cost of fuel, generated (in cents per net KWH)(a)
2.492.36
Average cost of purchased power (in cents per net KWH)(b)
Average cost of purchased power (in cents per net KWH)(b)
8.885.578.125.99
Average cost of purchased power (in cents per net KWH)(b)
6.356.82
(a)Excludes Central Alabama Generating Station KWHs and associated cost of fuel through July 12, 2022 as its fuel iswas previously 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 secondfirst quarter 2022,2023, fuel expense was $401$308 million compared to $263$333 million for the corresponding period in 2021.2022. The increasedecrease was primarily due to a 97.6% increase35.0% decrease in the volume of KWHs generated by coal and a 2.3% decrease in the average cost of natural gas per KWH generated, which excludes tolling agreements, partially offset by a 22.7%36.6% increase in the volume of KWHs generated by natural gas, a 14.8% increase in the average cost of coal per KWH generated, a 5.2% increase in the volume of KWHs generated by coal, and a 24.7%12.8% decrease in the volume of KWHs generated by hydro facilities as a result of less rainfall in the secondfirst quarter 20222023 compared to the corresponding period in 2021.2022.
For year-to-date 2022, fuelPurchased Power – Non-Affiliates
In the first quarter 2023, purchased power expense from non-affiliates was $733$101 million compared to $554$67 million for the corresponding period in 2021. The increase was primarily due to a 67.5% increase in the average cost of natural gas per KWH generated, which excludes tolling agreements, and a 13.5% increase in the average cost of coal per KWH generated, partially offset by a 12.7% increase in the volume of KWHs generated by hydro facilities as a result of more rainfall for year-to-date 2022 compared to the corresponding period in 2021.
Purchased Power – Non-Affiliates
In the second quarter 2022, purchased power expense from non-affiliates was $95 million compared to $48 million for the corresponding period in 2021.2022. The increase was primarily due to a 67.4% 57.6% increase in the volume of KWHs purchased as a result of warmer weather in the second quarter 2022 compareddue to the corresponding period in 2021, as well as a 32.6% increaseavailability of lower cost generation from market resources, partially offset by an 18.7% decrease in the average cost per KWH purchased due to highera decrease in natural gas and coal prices.
For year-to-date 2022, purchased power expense from non-affiliates was $162 million compared to $97 million for the corresponding period in 2021. The increase was primarily due to a 48.1% increase in the volume of KWHs purchased as a result of warmer weather for year-to-date 2022 compared to the corresponding period in 2021, as well as a 22.5% increase in the average cost per KWH purchased due to higher natural gas and coal prices.
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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 the secondfirst quarter 2022,2023, purchased power expense from affiliates was $121$59 million compared to $39$26 million for the corresponding period in 2021.2022. The increase was primarily due to an 82.5% increase in the volume of KWHs purchased due to the availability of lower cost gas generation in the Southern Company system and a 102.3% increase22.3% increase in the average cost per KWH purchased due to higher natural gas and coal prices and a 54.4% increase in the volumepurchase of KWHs purchased as a result of warmer weather in the second quarter 2022 compared to the corresponding period in 2021.
For year-to-date 2022, purchased power expense from affiliates was $147 million compared to $69 millionadditional capacity for the corresponding period in 2021. The increase was primarily due to a 61.5% increase in the average cost per KWH purchased due to higher natural gas and coal prices and a 32.1% increase in the volume of KWHs purchased as a result of warmer weather for year-to-date 2022 compared to the corresponding period in 2021.reliability.
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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Other Operations and Maintenance Expenses
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$286.8$779.9
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$153.7
In the secondfirst quarter 2022,2023, other operations and maintenance expenses were $441$424 million compared to $413$409 million for the corresponding period in 2021. For year-to-date 2022, other operations2022. The increase was primarily due to a $14 million decrease in nuclear property insurance refunds and maintenanceincreases of $8 million in expenses related to unregulated products and services, $7 million in technology infrastructure and application production costs, $5 million related to the injuries and damages reserve, $4 million in employee compensation and benefits, and $3 million in bad debt expense. The increases were $852partially offset by a $30 million decrease in generation expenses primarily associated with planned outages and maintenance.
Depreciation and Amortization
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$13060.5
In the first quarter 2023, depreciation and amortization was $345 million compared to $775$215 million for the corresponding period in 2021.2022. The increases for the second quarter and year-to-date 2022 wereincrease was primarily due to increases of $11 millionan increase in depreciation rates effective in 2023. See Notes 2 and $39 million, respectively, in generation expenses associated with scheduled outages and maintenance and Rate CNP Compliance-related expenses, $9 million and $23 million, respectively, in transmission and distribution expenses primarily associated with line maintenance, and $3 million and $6 million, respectively, in customer service and sales expenses primarily associated with contract services. See Note 25 to the financial statements under "Alabama Power – Rate CNP Compliance"Power" and "Depreciation and Amortization," respectively, in Item 8 of the Form 10-K for additional information.
Interest Expense, Net of Amounts CapitalizedTaxes Other Than Income Taxes
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$78.3$127.1
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$1110.6
For year-to-date 2022, interest expense, net of amounts capitalized wasIn the first quarter 2023, taxes other than income taxes were $180$115 million compared to $168$104 million for the corresponding period in 2021.2022. The increase was primarily due to an increase in utility license taxes.
Interest Expense, Net of Amounts Capitalized
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$1415.7
In the first quarter 2023, interest expense, net of amounts capitalized was $103 million compared to $89 million for the corresponding period in 2022. The increase was primarily associated with increases of approximately $11 million related to higher average outstanding borrowings.borrowings and $5 million related to higher interest rates. See FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" and "Financing Activities" herein for additional information on borrowings.
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Income Taxes (Benefit)
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$1716.3$146.6
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$(109)N/M
In the secondfirst quarter 2022,2023, income taxes were $121tax benefit was $2 million compared to $104income tax expense of $107 million for the corresponding period in 2021. For year-to-date 2022, income taxes were $227 million compared to $213 million for the corresponding period in 2021.2022. The increases werechange was primarily due to higheran increase in the flowback of certain excess deferred income taxes and lower pre-tax earnings.earnings in the first quarter 2023. See Note 2 to the financial statements under "Alabama Power – Excess Accumulated Deferred Income Tax Accounting Order" in Item 8 of the Form 10-K and Note (G) to the Condensed Financial Statements herein for additional information.
Georgia Power
Net Income
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$465325.2$499101.0
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$(89)(23.1)
Georgia Power's net income in the secondfirst quarter 20222023 was $608$296 million compared to $143$385 million for the corresponding period in 2021. For year-to-date 2022 net income2022. The decrease was $1.0 billion compared to $0.5 billion for the corresponding period in 2021. The increases were primarily due to increasesa decrease in retail revenues associated with rates and pricing and warmermilder weather in Georgia Power's service territory in the secondfirst quarter and year-to-date 20222023 compared to the corresponding periodsperiod in 2021 and decreases2022. Partially offsetting this net income reduction were the impacts of $304 million and $340 million in the second quarter and year-to-date 2022 respectively, in after-tax charges related to the construction of Plant Vogtle Units 3 and 4,ARP effective January 1, 2023, including increased retail rates, partially offset by higher non-fuel operationsdepreciation and maintenance costs.
amortization. See Note (B) to the Condensed Financial Statements herein and Note 2 to the financial statements under "Georgia Power" in Item 8 of the Form 10-K under "Georgia Power – Nuclear Construction" for additional information regarding Plant Vogtle Units 3 and 4.information.
Retail Revenues
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$88243.5$1,11329.2
In the secondfirst quarter 2022,2023, retail revenues were $2.91$1.98 billion compared to $2.03$2.02 billion for the corresponding period in 2021. For year-to-date 2022, retail revenues were $4.93 billion compared to $3.81 billion for the corresponding period in 2021.
2022. Details of the changes in retail revenues were as follows:
Second Quarter 2022Year-To-Date 2022
First Quarter 2023 vs.
First Quarter 2022
(in millions)(% change)(in millions)(% change)(change in millions)(% change)
Retail – prior year$2,026 $3,813 
Estimated change resulting from –
Rates and pricingRates and pricing231 11.4 %285 7.5 %Rates and pricing$34 1.7 %
Sales growthSales growth45 2.2 47 1.2 Sales growth23 1.1 
WeatherWeather72 3.5 91 2.4 Weather(85)(4.2)
Fuel cost recoveryFuel cost recovery534 26.4 690 18.1 Fuel cost recovery(8)(0.4)
Retail – current year$2,908 43.5 %$4,926 29.2 %
Retail revenuesRetail revenues$(36)(1.8)%
Revenues associated with changes in rates and pricing increased in the first quarter 2023 when compared to the corresponding period in 2022. The increase was primarily due to base tariff increases in accordance with the 2022 ARP. See Note 2 to the financial statements under "Georgia Power – Rate Plans" in Item 8 of the Form 10-K for additional information.
Revenues attributable to changes in sales increased in the first quarter 2023 when compared to the corresponding period in 2022. Weather-adjusted residential and commercial KWH sales increased 2.2% and 2.5%, respectively, primarily due to increased customer usage and customer growth. Commercial customer usage increased as customers continued their return to regular business trends. Weather-adjusted industrial KWH sales decreased 2.1% primarily due to decreases in the textile, chemical, and rubber sectors, partially offset by increases in the electronic, transportation, and pipeline sectors.
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Revenues associated with changes in rates and pricing increased in the second quarter and year-to-date 2022 when compared to the corresponding periods in 2021. The increases were primarily due to higher contributions from commercial and industrial customers with variable demand-driven pricing, base tariff increases in accordance with the 2019 ARP, and pricing effects associated with residential customer usage. See Note 2 to the financial statements under "Georgia Power – Rate Plans" in Item 8 of the Form 10-K for additional information.
Revenues attributable to changes in sales increased in the second quarter and year-to-date 2022 when compared to the corresponding periods in 2021. Weather-adjusted residential KWH sales increased 2.6% in the second quarter 2022 and were flat year-to-date 2022 and weather-adjusted commercial KWH sales increased 3.2% and 2.7% in the second quarter and year-to-date 2022, respectively, when compared to the corresponding periods in 2021 primarily due to the impacts on customer usage from increased activity outside the home following the expiration of COVID-19 restrictions and customer growth. Weather-adjusted industrial KWH sales increased 3.1% and 3.3% in the second quarter and year-to-date 2022, respectively, when compared to the corresponding periods in 2021 primarily due to increases in the paper and pipeline sectors, partially offset by a decrease in the chemicals sector.
Fuel revenues and costs are allocated between retail and wholesale jurisdictions. Retail fuel cost recovery revenues increaseddecreased in the secondfirst quarter and year-to-date 20222023 when compared to the corresponding periodsperiod in 20212022 due to higherlower 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 (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 – Fuel Cost Recovery" in Item 8 of the Form 10-K for additional information.
Wholesale Revenues
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$2877.8$5062.5
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$(35)(53.0)
In the secondfirst quarter 2022,2023, wholesale revenues were $64$31 million compared to $36$66 million for the corresponding period in 2021. For year-to-date 2022, wholesale revenues were $130 million compared to $80 million for the corresponding period in 2021.2022. The increases weredecrease was primarily due to increases of $28a $23 million decrease in KWH sales associated with lower market demand and $46a $5 million in the second quarter and year-to-date 2022, respectively,decrease related to the average cost of fuel primarilyper KWH sold due to higher natural gaslower Southern Company system fuel and coal prices. Also contributing to the increase for year-to-date 2022 was a $6 million increase in KWH sales associated with higher market demand.purchased power costs.
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. TheseEnergy revenues related to these transactions do not have a significant impact on earnings since this energy is generally sold at marginal cost.
Other Revenues
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$3931.2
In the first quarter 2023, other revenues were $164 million compared to $125 million for the corresponding period in 2022. The increase was primarily due to increases of $34 million in unregulated sales associated with power delivery construction and maintenance, outdoor lighting, and energy conservation projects.
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Other Revenues
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$(14)(8.6)$(30)(9.9)
In the second quarter 2022, other revenues were $149 million compared to $163 million for the corresponding period in 2021. For year-to-date 2022, other revenues were $272 million compared to $302 million for the corresponding period in 2021. The decreases for the second quarter and year-to-date 2022 were primarily due to decreases of $12 million and $20 million, respectively, resulting from the termination of a transmission service contract and net decreases of $8 million and $15 million, respectively, in unregulated sales primarily due to the timing of revenue recognition for a large, ongoing power delivery construction and maintenance contract, partially offset by increases associated with more energy conservation projects performed in 2022 and outdoor lighting sales growth. The decreases were also partially offset by increases of $9 million and $10 million, respectively, in open access transmission tariff sales.
Fuel and Purchased Power Expenses
Second Quarter 2022 vs.
Second Quarter 2021
Year-to-Date 2022 vs.
Year-to-Date 2021
First Quarter 2023 vs.
First Quarter 2022
(change in millions)(% change)(change in millions)(% change)(change in millions)(% change)
FuelFuel$285 83.1 $390 59.5 Fuel$(17)(4.1)
Purchased power – non-affiliatesPurchased power – non-affiliates102 70.8 108 37.5 Purchased power – non-affiliates(27)(18.0)
Purchased power – affiliatesPurchased power – affiliates174 116.8 244 85.6 Purchased power – affiliates— — 
Total fuel and purchased power expensesTotal fuel and purchased power expenses$561 $742 Total fuel and purchased power expenses$(44)
In the secondfirst quarter 2022,2023, total fuel and purchased power expenses were $1.20 billion$731 million compared to $0.64 billion$775 million for the corresponding period in 2021. For year-to-date 2022, total fuel2022. The decrease was due to a decrease of $55 million related to the volume of KWHs generated and purchased, power expenses were $1.97 billion compared to $1.23 billion for the corresponding period in 2021. The increases for the second quarter and year-to-date 2022 were primarily due to increasespartially offset by a net increase of $474$11 million and $609 million, respectively, related to the average cost of fuel and purchased power and increases of $87 million and $133 million, respectively, related to the volume of KWHs generated and purchased.power.
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 (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 – 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 2023First Quarter 2022
Total generation (in billions of KWHs)
1315
Total purchased power (in billions of KWHs)
88
Sources of generation (percent) —
Gas5546
Nuclear2624
Coal1425
Hydro and other55
Cost of fuel, generated (in cents per net KWH) —
Gas3.573.58
Nuclear0.750.77
Coal5.243.41
Average cost of fuel, generated (in cents per net KWH)
3.052.83
Average cost of purchased power (in cents per net KWH)(*)
4.524.81
(*)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 2023, fuel expense was $402 million compared to $419 million for the corresponding period in 2022. The decrease was primarily due to a 48.4% decrease in the volume of KWHs generated by coal, partially offset by increases of 53.7% in the average cost per KWH generated by coal and 6.4% in the volume of KWHs generated by natural gas.
Purchased Power – Non-Affiliates
In the first quarter 2023, purchased power expense from non-affiliates was $123 million compared to $150 million for the corresponding period in 2022. The decrease was primarily due to a 33.3% decrease in the volume of KWHs
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Details of Georgia Power's generation and purchased power were as follows:
Second Quarter 2022Second Quarter 2021Year-To-Date 2022Year-To-Date 2021
Total generation (in billions of KWHs)
15153030
Total purchased power (in billions of KWHs)
871614
Sources of generation (percent) —
Gas45464547
Nuclear27282527
Coal24222522
Hydro and other4454
Cost of fuel, generated (in cents per net KWH) —
Gas5.102.654.342.62
Coal3.683.093.543.01
Nuclear0.760.800.760.79
Average cost of fuel, generated (in cents per net KWH)
3.522.213.182.18
Average cost of purchased power (in cents per net KWH)(*)
8.224.776.584.49
(*)Average cost of purchased power includes fuel purchased by Georgia Power for tolling agreements where power is generatedand other Southern Company system units generally dispatched at a lower cost than available market resources, partially offset by the provider.
Fuel
In the second quarter 2022, fuel expense was $628 million compared to $343 million for the corresponding period in 2021. Thea 23.6% increase was primarily due to increases of 92.5% and 19.1% in the average cost per KWH generated by natural gas and coal, respectively, and an 11.1% increase in the volume of KWHs generated by coal.
For year-to-date 2022, fuel expense was $1.05 billion compared to $0.66 billion for the corresponding period in 2021. The increase was primarily due to increases of 65.6% and 17.6% in the average cost per KWH generated by natural gas and coal, respectively, and a 15.2% increase in the volume of KWHs generated by coal.
Purchased Power – Non-Affiliates
In the second quarter 2022, purchased power expense from non-affiliates was $246 million compared to $144 million for the corresponding period in 2021. For year-to-date 2022, purchased power expense from non-affiliates was $396 million compared to $288 million for the corresponding period in 2021. The increases for the second quarter and year-to-date 2022 were primarily due to increases of 73.9% and 32.7%, respectively, in the volume of KWHs purchased due to higher demand primarily driven by warmer weather in the second quarter 2022 and increases of 17.0% and 16.1%, respectively, in the average cost per KWH purchased primarily due to higher natural gas and coal 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 the second quarter 2022, purchasedPurchased power expense from affiliates was $323$206 million compared to $149 million forin both the corresponding periodfirst quarter 2023 and 2022 and reflects a 14.3% increase in 2021. For year-to-date 2022,the volume of KWHs purchased, power expense from affiliates was $529 million compared to $285 million for the corresponding period in 2021. The increases for the second quarter and year-to-date 2022 were primarily due to increases of 127.0% and 74.3%, respectively,offset by a 14.1% decrease in the average cost per KWH purchased primarily due to higher natural gas and coal prices. The increase for year-to-date 2022 was also due to an
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AND RESULTS OF OPERATIONS (Continued)
increase of 9.9% in the volume of KWHs purchased due to lower cost Southern Company system resources as compared to available Georgia Power-owned generation.
Energy purchases from affiliates will vary depending on the demand 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, all as approved by the FERC.
Other Operations and Maintenance Expenses
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$315.7$767.5
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$(21)(4.1)
In the secondfirst quarter 2022,2023, other operations and maintenance expenses were $573$496 million compared to $542$517 million for the corresponding period in 2021.2022. The decrease was primarily due to decreases of $45 million in storm damage recovery as authorized in the 2022 ARP, $25 million in distribution and transmission expenses primarily associated with line maintenance, and $14 million in generation expenses primarily due to non-outage maintenance partially offset by scheduled generation outages. These decreases were partially offset by increases of $24 million in technology infrastructure and application production costs and $20 million from unregulated power delivery construction and maintenance and energy conservation projects, as well as a $12 million decrease in nuclear property insurance refunds. See Note 2 to the financial statements under "Georgia Power – Storm Damage Recovery" in Item 8 of the Form 10-K for additional information.
Depreciation and Amortization
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$5716.2
In the first quarter 2023, depreciation and amortization was $408 million compared to $351 million for the corresponding period in 2022. The increase was primarily due to increases of $14$47 million resulting from higher depreciation rates as authorized in transmissionthe 2022 ARP and distribution expenses primarily associated with line maintenance, $9$14 million associated with more unregulated energy conservation projects in 2022, $8 million in generation expenses primarily related to non-outage maintenance costs, $8 million in certain compensation and benefit expenses, $7 million in legal and regulatory expenses, and $4 million in amortization of cloud software, partially offset by a decrease of $16 million related to unregulated power delivery construction and maintenance projects.
For year-to-date 2022, other operations and maintenance expenses were $1.09 billion compared to $1.02 billion for the corresponding period in 2021. The increase was primarily due to increases of $49 million in transmission and distribution expenses primarily associated with line maintenance, $27 million in generation expenses primarily related to non-outage maintenance costs, $11 million in certain compensation and benefit expenses, $7 million in legal and regulatory expenses, and $5 million in amortization of cloud software, partially offset by a decrease of $26 million related to unregulated power delivery construction and maintenance projects and $17 million in gains from sales of integrated transmission system assets.
Depreciation and Amortization
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$144.1$263.8
In the second quarter 2022, depreciation and amortization was $356 million compared to $342 million for the corresponding period in 2021. For year-to-date 2022, depreciation and amortization was $706 million compared to $680 million for the corresponding period in 2021. The increases for the second quarter and year-to-date 2022 were primarily due to additional plant in service and increases of $4 million and $6 million, respectively, in amortization of regulatory assets related to CCR AROs under the terms of the 2019 ARP.service. See Note 25 to the financial statements under "Depreciation and Amortization" in Item 8 of the Form 10-K under "Georgia Power – Rate Plans – 2019 ARP" for additional information on recovery of CCR AROs.
Taxes Other Than Income Taxes
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$2319.5$3012.8
In the second quarter 2022, taxes other than income taxes was $141 million compared to $118 million for the corresponding period in 2021. For year-to-date 2022, taxes other than income taxes was $265 million compared to $235 million for the corresponding period in 2021. The increases were primarily due to increases in municipal franchise fees largely related to higher retail revenues.information.
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Estimated Loss on Plant Vogtle Units 3 and 4Allowance for Equity Funds Used During Construction
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$(408)(88.7)$(456)(89.8)
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$825.0
In the secondfirst quarter 2022 and 2021, Georgia Power recorded estimated probable losses on Plant Vogtle Units 3 and 4 of $522023, allowance for equity funds used during construction was $40 million and $460compared to $32 million respectively. For year-to-date 2022 and 2021, Georgia Power recorded estimated probable losses on Plant Vogtle Units 3 and 4 totaling $52 million and $508 million, respectively.for the corresponding period in 2022. The losses reflect revisionsincrease was primarily due to the total projectan increase in capital cost forecastexpenditures subject 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.AFUDC.
Interest Expense, Net of Amounts Capitalized
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$1110.4$146.7
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$3936.4
In the secondfirst quarter 2022,2023, interest expense, net of amounts capitalized was $117$146 million compared to $106$107 million for the corresponding period in 2021. For year-to-date 2022, interest expense, net of amounts capitalized2022. The increase was $224 million compared to $210 million for the corresponding period in 2021. The increases were primarily associated with increases of approximately $21 million related to higher average outstanding borrowings.borrowings and $19 million related to higher interest rates. See FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" and "Financing Activities" herein for additional information on borrowings.
Other Income (Expense), NetTaxes
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$1228.6$2024.1
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$2376.7
In the secondfirst quarter 2023, income taxes were $53 million compared to $30 million for the corresponding period in 2022. The increase was primarily due to the flowback of certain excess deferred income taxes that ended in 2022, otherpartially offset by lower pre-tax earnings. See Note (G) to the Condensed Financial Statements herein for additional information.
Mississippi Power
Net Income
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$1638.1
Mississippi Power's net income (expense), netin the first quarter 2023 was $54$58 million compared to $42 million for the corresponding period in 2021. For year-to-date 2022, other income (expense), net2022. The increase was $103 million compared to $83 million for the corresponding period in 2021. The increases for the second quarter and year-to-date 2022 were primarily due to increases of $7 millionan increase in affiliate wholesale capacity revenues, partially offset by an increase in non-fuel operations and $10 million, respectively, in customer charges related to contributions in aid of construction and $4 million and $7 million, respectively, 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 (Benefit)
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$214N/M$226N/M
N/M - Not meaningful
In the second quarter 2022, income tax expense was $164 million compared to income tax benefit of $50 million for the corresponding period in 2021. For year-to-date 2022, income tax expense was $194 million compared to income tax benefit of $32 million for the corresponding period in 2021. The increases were primarily due to a reduction in pre-tax earnings largely resulting from higher charges in the second quarter and year-to-date 2021 associated with the construction of Plant Vogtle Units 3 and 4 and an adjustment in the second quarter 2022 related to a prior year state tax credit carryforward. See Note (B) to the Condensed Financial Statements herein and Note 2 to the financialmaintenance expenses.
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statements in Item 8 ofRetail Revenues
In the Form 10-K under "Georgia Power – Nuclear Construction" and Note (G) to the Condensed Financial Statements herein for additional information.
Mississippi Power
Net Income
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$718.4$44.8
Mississippi Power's net income in the secondfirst quarter 2022 was2023, retail revenues were $45236 million compared to $38$217 million for the corresponding period in 2021. For year-to-date 2022, net income was $87 million compared to $83 million for the corresponding period in 2021. The increases were primarily due to an increase in revenues, partially offset by an increase in operations and maintenance expenses. The year-to-date increase was also partially offset by an increase in income taxes.
Retail Revenues
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$3315.1$4711.1
In the second quarter 2022, retail revenues were $252 million compared to $219 million for the corresponding period in 2021. For year-to-date 2022, retail revenues were $469 million compared to $422 million for the corresponding period in 2021.
2022. Details of the changes in retail revenues were as follows:
 Second Quarter 2022Year-To-Date 2022
 (in millions)(% change)(in millions)(% change)
Retail – prior year$219 $422 
Estimated change resulting from –
Rates and pricing2 0.9 %5 1.2 %
Sales growth2 0.9 4 0.9 
Weather9 4.1 7 1.7 
Fuel and other cost recovery20 9.1 31 7.3 
Retail – current year$252 15.0 %$469 11.1 %
 
First Quarter 2023 vs.
First Quarter 2022
 (change in millions)(% change)
Rates and pricing$4 1.8 %
Sales growth2 1.0 
Weather(6)(2.8)
Fuel and other cost recovery19 8.8 
Retail revenues$19 8.8 %
Revenues associated with changes in rates and pricing increased in in the secondfirst quarter and year-to-date 20222023 when compared to the corresponding periodsperiod in 20212022 primarily due toto new PEP rates that became effective for the first billing cycle of April 2022 partially offset by a decrease in revenues associated with a tolling arrangement.and ECO Plan rates that became effective for the first billing cycle of May 2022. See Note 2 to the financial statements under "Mississippi Power – Performance Evaluation Plan" and " – Environmental Compliance Overview Plan" in Item 8 of the Form 10-K for additional information.
Revenues attributable to changes in salesincreasedin the secondfirst quarter and year-to-date 2022 when compared to the corresponding periods in 2021. Weather-adjusted residential KWH sales decreased 0.4% in the second quarter 20222023 when compared to the corresponding period in 20212022. Weather-adjusted residential KWH sales decreased 2.1% in the first quarter 2023 when compared to the corresponding period in 2022 due to a decrease in customer usage. Weather-adjusted residentialWeather-adjusted commercial KWH sales increased 0.2% for year-to-date 20223.2% in the first quarter 2023 when compared to the corresponding period in 20212022 due to an increase in customer growth. Weather-adjusted commercialusage. Industrial KWH sales increased 1.2% and 2.0%5.5% in the secondfirst quarter and year-to-date 2022, respectively,2023 when compared to the corresponding periodsperiod in 2021 due to customer growth. Industrial KWH sales increased 3.4% and 1.8% in the second quarter and year-to-date 2022 respectively, when
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compared to the corresponding periods in 2021 primarily due to increases in the non-manufacturing, petroleum, and pipeline and transportation sectors.sectors, partially offset by decreases in the chemicals sector.
Fuel and other cost recovery revenuerevenues s increased in the secondfirst quarter and year-to-date 20222023 when compared to the corresponding periodsperiod in 20212022 primarily as a result of higher recoverable fuel costs. RRecoverableecoverable 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. 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 "Mississippi Power" for additional information.
Wholesale Revenues – Non-AffiliatesAffiliates
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$916.7$1412.0
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$3378.6
In the secondfirst quarter 2022, wholesale revenues from sales to non-affiliates were $63 million compared to $54 million for the corresponding period in 2021. For year-to-date 2022, wholesale revenues from sales to non-affiliates were $131 million compared to $117 million for the corresponding period in 2021. The increases were primarily due to higher fuel costs and an increase in base revenue from MRA customers primarily due to warmer weather in 2022.
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 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. See Note (B) to the Condensed Financial Statements under "Mississippi Power – Municipal and Rural Associations Tariff" herein for additional information.
Wholesale Revenues – Affiliates
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$82N/M$92N/M
N/M - Not meaningful
In the second quarter 2022,2023, wholesale revenues from sales to affiliates were $10775 million compared to $25$42 million for the corresponding period in 2021.2022. The increase was primarily due to increases of $69 million associated with higher fuel prices, primarily driven by natural gas, and $13 million associated with higher KWH sales due to lower cost resources as compared to the available affiliate company generation.
For year-to-date 2022, wholesalea $29 million increase in capacity revenues resulting from sales to affiliates were $149an increase in pricing and volume of generation reserves and a $17 million compared to $57 million for the corresponding period in 2021. The increase was primarily due to increases of $84 million associated with higher fuel prices, primarily driven by natural gas, and $7 million associated with higher KWH sales, due topartially offset by a $13 million decrease associated with lower cost resources as compared to the available affiliate company generationnatural gas prices..
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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. TheseEnergy revenues related to these transactions do not have a significant impact on earnings since this energy is generally sold at marginal cost.
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Other Revenues
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$7N/M$642.9
N/M - Not meaningful
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$337.5
In the secondfirst quarter 2022,2023, other revenues were $1211 million compared to $5$8 million for the corresponding period in 2021. For year-to-date 2022, other revenues were $20 million compared to $14 million for the corresponding period in 2021.2022. The increases were primarilyincrease was due to a $5 millionan increase in unregulated sales associated with power delivery construction and maintenance projects and outdoor lighting.projects.
Fuel and Purchased Power Expenses
Second Quarter 2022 vs.
Second Quarter 2021
Year-to-Date 2022 vs.
Year-to-Date 2021
First Quarter 2023 vs.
First Quarter 2022
(change in millions)(% change)(change in millions)(% change)(change in millions)(% change)
FuelFuel$105 116.0$130 67.9Fuel$21 16.7
Purchased powerPurchased power— 1.91 6.8Purchased power(2)(31.0)
Total fuel and purchased power expensesTotal fuel and purchased power expenses$105 $131 Total fuel and purchased power expenses$19 
In the secondfirst quarter 2022,2023, total fuel and purchased power expenses were $207151 million compared to $102$132 million for the corresponding period in 2021.2022. Theincrease was due to a $92$12 million increase inrelated to the volume of KWHs generated and a $7 million increase related to the average cost of fuel and purchased power and a $13 million net increase associated with the volume of KWHs generated and purchased.
For year-to-date 2022, total fuel and purchased power expenses were $339 million compared to $208 million for the corresponding period in 2021. The increase was primarily due to a $126 million increase in the average cost of fuel and purchased power and a $5 million net increase associated with the volume of KWHs generated and purchased.power.
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:
Second Quarter 2022Second Quarter 2021Year-To-Date 2022Year-To-Date 2021First Quarter 2023First Quarter 2022
Total generation (in millions of KWHs)
Total generation (in millions of KWHs)
4,4833,8138,5578,137
Total generation (in millions of KWHs)
4,4434,074
Total purchased power (in millions of KWHs)
Total purchased power (in millions of KWHs)
166317286438
Total purchased power (in millions of KWHs)
100120
Sources of generation (percent) –
Sources of generation (percent) –
Sources of generation (percent) –
GasGas88919091Gas9492
CoalCoal129109Coal68
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) –
GasGas4.732.504.042.45Gas3.343.30
CoalCoal3.953.063.863.12Coal5.783.74
Average cost of fuel, generated (in cents per net KWH)
Average cost of fuel, generated (in cents per net KWH)
4.632.564.022.52
Average cost of fuel, generated (in cents per net KWH)
3.513.34
Average cost of purchased power (in cents per net KWH)
Average cost of purchased power (in cents per net KWH)
6.573.385.723.57
Average cost of purchased power (in cents per net KWH)
4.104.54
Fuel
In the first quarter 2023, fuel expense was $147 million compared to $126 million for the corresponding period in 2022. The increase was due to a 13.6% increase in the volume of KWHs generated by natural gas, a 1.2% increase in the average cost of natural gas per KWH generated, and a 54.5% increase in the average cost of coal per KWH generated, partially offset by a 17.3% decrease in the volume of KWHs generated by coal.
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Fuel
In the second quarter 2022, fuel expense was $196 million compared to $91 million for the corresponding period in 2021. The increase was due to an 89.2% increase in the average cost of natural gas per KWH generated, a 29.1% increase in the average cost of coal per KWHs generated, a 52.1% increase in the volume of KWHs generated by coal, and a 16.0% increase in the volume of KWHs generated by natural gas.
For year-to-date 2022, fuel expense was $322 million compared to $192 million for the corresponding period in 2021. The increase was due to a 64.9% increase in the average cost of natural gas per KWH generated, a 23.7% increase in the average cost of coal per KWHs generated, a 15.5% increase in the volume of KWHs generated by coal, and a 4.2% increase in the volume of KWHs generated by natural gas.
Other Operations and Maintenance Expenses
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$1519.7$2316.0
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$67.9
In the secondfirst quarter 2022,2023, other operations and maintenance expenses were $91$82 million compared to $76 million for the corresponding period in 2021.2022. The increase was primarily due to increases of $5$2 million related toin technology infrastructure and application production costs and $2 million in unregulated power delivery construction and maintenance contracts, $3projects.
Income Taxes
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$562.5
In the first quarter 2023, income taxes were $13 million associated with storm reserve accruals, and $3 million in transmission and distribution expenses primarily associated with line maintenance.
For year-to-date 2022, other operations and maintenance expenses were $167 million compared to $144$8 million for the corresponding period in 2021.2022. The increase was primarily due to increases of $6 million in transmission and distribution expenses primarily associated with line maintenance, $5 million related to unregulated construction and maintenance contracts, $4 million associated with storm reserve accruals, and $4 million associated with the Kemper County energy facility (primarily related to lower salvage proceeds in 2022 as compared to 2021).
See Note 2 to the financial statements in Item 8 of the Form 10-K under "Mississippi Power – System Restoration Rider" for additional information on storm reserve accruals.
Income Taxes
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$450.0$866.7
For year-to-date 2022, income taxes were $20 million compared to $12 million for the corresponding period in 2021. A reduction in the flowback of excess deferred income taxes associated with new PEP rates that became effective in April 2022 contributed $5 million to the increase, which also reflects $3 million due to higher pre-tax earnings. See Note (G) to the Condensed Financial Statements herein for additional information.
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Southern Power
Net Income Attributable to Southern Power
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$62172.2$3727.8
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$3041.7
Net income attributable to Southern Power in the secondfirst quarter 20222023 was $98$102 million compared to $36$72 million for the corresponding period in 2021. Net income attributable to Southern Power for year-to-date 20222022. The increase was $170 million compared to $133 million for the corresponding period in 2021.The increases were primarily due to higher revenues driven by higher market pricesa gain on the sale of energyspare parts and new natural gas PPAs, as well as higher HLBV income associated with tax equity partnerships. The year-to-date increase was partially offset by gains from the contributions of wind turbine equipment to various equity method investments in the first quarter 2021.
Operating Revenues
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$40983.5$50854.6
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$(31)(5.8)
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.
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
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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.
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.
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Operating Revenues Details
Details of Southern Power's operating revenues were as follows:
Second Quarter 2022Second Quarter 2021Year-To-Date 2022Year-To-Date 2021First Quarter 2023First Quarter 2022
(in millions)(in millions)
PPA capacity revenuesPPA capacity revenues$109 $96 $214 $192 PPA capacity revenues$112 $102 
PPA energy revenuesPPA energy revenues579 296 921 541 PPA energy revenues277 345 
Total PPA revenuesTotal PPA revenues688 392 1,135 733 Total PPA revenues389 447 
Non-PPA revenuesNon-PPA revenues202 93 286 188 Non-PPA revenues108 84 
Other revenuesOther revenues9 5 17 9 Other revenues11 8 
Total operating revenuesTotal operating revenues$899 $490 $1,438 $930 Total operating revenues$508 $539 
In the secondfirst quarter 2022,2023, total operating revenues were $899$508 million, reflecting a $409$31 million, or 83%5.8%, increasedecrease from the corresponding period in 2021.2022. The increasedecrease in operating revenues was primarily due to the following:
•PPA capacity revenues increased $13$10 million, or 14%9.8%, primarily due to newa net increase in MW capacity under contract from natural gas PPAs and increased capacity sales under existing natural gas PPAs, partially offset by the contractual expiration ofan increase associated with a change in rates from natural gas PPAs.
•PPA energy revenues increased $283decreased $68 million, or 96%19.7%, primarily due to a $212$38 million increasedecrease in sales under existing natural gas PPAs resulting from a $171$43 million increasedecrease in the price of fuel and purchased power, andpartially offset by a $41$5 million increase in the volume of KWHs sold. Also contributing to the increasedecrease was a $77$21 million increasedecrease in sales associated with expired natural gas PPAs, net of new natural gas PPAs.
•Non-PPA revenues increased $109$24 million, or 117%28.6%, primarily due to a $124$58 million increase in the market price of energy, partially offset by a $16 million decrease in the volume of KWHs sold through short-term sales.
For year-to-date 2022, total operating revenues were $1.4 billion, reflecting a $508 million, or 55%, increase from the corresponding period in 2021. The increase in operating revenues was primarily due to the following:
•PPA capacity revenues increased $22 million, or 11%, primarily due to new natural gas PPAs and increased capacity sales, under existing natural gas PPAs, partially offset by the contractual expiration of natural gas PPAs.
•PPA energy revenues increased $380 million, or 70%, primarily due to a $271 million increase in sales under existing natural gas PPAs resulting from a $207 million increase in the price of fuel and purchased power and a $64 million increase in the volume of KWHs sold. Also contributing to the increase was a $124 million increase in sales associated with new natural gas PPAs, partiallylargely offset by a $17$34 million decrease due to the contractual expiration of natural gas PPAs.
•Non-PPA revenues increased $98 million, or 52%, primarily due to a $129 million increase in the market price of energy, partially offset by a $29 million decrease in the volume of KWHs sold through short-term sales.energy.
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AND RESULTS OF OPERATIONS (Continued)
Fuel and Purchased Power Expenses
Details of Southern Power's generation and purchased power were as follows:
Second Quarter 2022Second Quarter 2021Year-To-Date 2022Year-To-Date 2021 First Quarter 2023First Quarter 2022
(in billions of KWHs)(in billions of KWHs)
GenerationGeneration12.810.323.919.7Generation12.311.0
Purchased powerPurchased power0.70.71.11.3Purchased power0.70.5
Total generation and purchased powerTotal generation and purchased power13.511.025.021.0Total generation and purchased power13.011.5
Total generation and purchased power
(excluding solar, wind, fuel cells, and tolling agreements)
Total generation and purchased power
(excluding solar, wind, fuel cells, and tolling agreements)
7.56.314.412.4
Total generation and purchased power
(excluding solar, wind, fuel cells, and tolling agreements)
8.46.9
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:
Second Quarter 2022 vs.
Second Quarter 2021
Year-to-Date 2022 vs.
Year-to-Date 2021
First Quarter 2023 vs.
First Quarter 2022
(change in millions)(% change)(change in millions)(% change) (change in millions)(% change)
FuelFuel$297 212.1$388 138.1Fuel$(41)(17.7)
Purchased powerPurchased power43 172.043 93.5Purchased power5 23.8
Total fuel and purchased power expensesTotal fuel and purchased power expenses$340 $431 Total fuel and purchased power expenses$(36)
In the secondfirst quarter 2022,2023, total fuel and purchased power expenses increased $340decreased $36 million, or 206%14.2%, compared to the corresponding period in 2021.2022. Fuel expense increased $297decreased $41 million due to a $266an $84 million increasedecrease associated with the average cost of fuel, andpartially offset by a $31$43 million increase associated with the volume of KWHs generated. Purchased power expense increased $43$5 million primarily due to an increase in the average cost of purchased power.
For year-to-date 2022, total fuel and purchased power expenses increased $431 million, or 132%, compared to the corresponding period in 2021. Fuel expense increased $388 million due to a $333 million increase associated with the average cost of fuel and a $55$11 million increase associated with the volume of KWHs generated. Purchased power expense increased $43purchased, largely offset by a $7 million primarily due to an increase indecrease associated with the average cost of purchased power.
Depreciation and Amortization
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$86.7
In the first quarter 2023, depreciation and amortization was $128 million compared to $120 million for the corresponding period in 2022. The increase was primarily due to capital improvements at natural gas generating facilities.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Gain on Dispositions, Net
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$——$(37)(94.9)
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$18N/M
For year-to-date 2022,In the first quarter 2023, gain on dispositions, net was $2$20 million compared to $39 million for the corresponding period in 2021. The decrease 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.
Income Taxes (Benefit)
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$27N/M$24N/M
N/M - Not meaningful
In the second quarter 2022, income tax expense was $25 million compared to a benefit of $2 million for the corresponding period in 2021.2022. The increase was primarily due to a $16 million gain on the sale of spare parts in 2023.
Interest Expense, Net of Amounts Capitalized
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$(4)(10.8)
In the first quarter 2023, interest expense, net of amounts capitalized was $33 million compared to $37 million for the corresponding period in 2022. The decrease was primarily due to lower average outstanding borrowings.
Income Taxes (Benefit)
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$541.7
In the first quarter 2023, income tax benefit was $7 million compared to $12 million for the corresponding period in 2022. The change was primarily due to higher pre-tax earnings partially offset by higher wind PTCs.
For year-to-date 2022, income tax expense was $13 million comparedin 2023. See Note (G) to a benefit of $11 millionthe Condensed Financial Statements herein for the corresponding period in 2021. The change was primarily due to higher pre-tax earnings for year-to-date 2022 and a change in state apportionment methodology resulting from tax legislation enacted by the State of Alabama in the first quarter 2021, partially offset by higher wind PTCs for year-to-date 2022.additional information.
Net Loss Attributable to Noncontrolling Interests
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$22N/M$34103.0
N/M - Not meaningful
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$(18)(40.0)
In the secondfirst quarter 2022,2023, net loss attributable to noncontrolling interests was $22$63 million compared to an immaterial loss for the corresponding period in 2021. For year-to-date 2022, net loss attributable to noncontrolling interests was $67 million compared to $33$45 million for the corresponding period in 2021.2022. The increased losses attributable to noncontrolling interests wereloss was primarily due to $16 million in higher HLBV loss allocations to wind tax equity partners partially offset bydue to higher income allocations to equity partners.wind PTCs in 2023.
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.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
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.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
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.
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. Prior to the sale of Sequent on July 1, 2021, wholesale gas services' operating revenues occasionally 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. 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
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$180N/M$10030.0
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$(10)(3.1)
N/M - Not meaningful
In the secondfirst quarter 2022,2023, net incomeincome was $115$309 million compared to a net loss of $65$319 million for the corresponding period in 2021.2022. The second quarter 2021 results include $112decrease was primarily due to a $16 million of net loss from Sequent, which was sold on July 1, 2021. Net income increased $59 milliondecrease at gas pipeline investmentsmarketing services primarily as a result of a 2021 impairment charge related to the PennEast pipeline project and $12hedge losses, partially offset by a $7 million increase at gas distribution operations primarily due to base rate increases and continued investment in infrastructure replacement.
Natural Gas Revenues
For year-to-date 2022, net inIn the first quarter 2023,come was $433 million natural gas revenues were $1.9 billion compared to $333 million$2.1 billion for the corresponding period in 2021. Net income2022. Details of the changes in natural gas revenues were as follows:
First Quarter 2023 vs.
First Quarter 2022
(change in millions)(% change)
Infrastructure replacement programs and rate changes$50 2.4 %
Gas costs and other cost recovery(199)(9.7)
Gas marketing services(21)(1.0)
Other(13)(0.6)
Natural gas revenues$(183)(8.9)%
Revenues from infrastructure replacement programs and rate changes increased $59 million at gas pipeline investments as a result of a 2021 impairment charge relatedin the first quarter 2023 compared to the PennEast pipeline project, $43 million at gas distribution operationscorresponding period in 2022 primarily due to base rate increases at the natural gas distribution utilities and continued investment in infrastructure replacement, and $5 million at gas marketing services primarily related to higher commodity prices and higher sales to commercial customers. The year-to-date 2021 results also included $14 million of net income from Sequent, which was sold on July 1, 2021.
replacement. See NotesNote 2 7, and 15 to the financial statements under "Southern Company Gas"Gas – Rate Proceedings" in Item 8 of the Form 10-K for additional information.
Natural Gas Revenues including Alternative Revenue Programs
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$40660.0$76932.4
Infrom gas costs and other cost recovery decreased in the secondfirst quarter 2022, natural gas revenues, including alternative revenue programs, were $1.1 billion2023 compared to $677 million for the corresponding period in 2021. For year-to-date 2022 primarily due to lower natural gas revenues, including alternative revenue programs, were $3.1 billioncost recovery associated with the timing of natural gas purchases and the recovery of those costs from customers. 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 decreased in the first quarter 2023 compared to $2.4 billion for the corresponding period in 2021.2022 primarily due to lower natural gas prices and the timing of unrealized hedge losses, partially offset by higher variable price spreads in Georgia and Illinois and higher customer count in Georgia.
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 the majority of any remaining exposure
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Details of the changes in natural gas revenues, including alternative revenue programs, were as follows:
Second Quarter 2022Year-To-Date 2022
(in millions)(% change)(in millions)(% change)
Natural gas revenues – prior year$677 $2,371 
Estimated change resulting from –
Infrastructure replacement programs and base rate changes46 6.8 %132 5.6 %
Gas costs and other cost recovery239 35.3 783 33.0 
Gas marketing services(5)(0.7)13 0.5 
Wholesale gas services110 16.2 (187)(7.9)
Other16 2.4 28 1.2 
Natural gas revenues – current year$1,083 60.0 %$3,140 32.4 %
Revenues from infrastructure replacement programs and base rate changes increased in the second quarter and year-to-date 2022 compared to the corresponding periods in 2021 primarily due to rate increases at Nicor Gas, 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 second quarter and year-to-date 2022 compared to the corresponding periods 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 decreased in the second quarter 2022 compared to the corresponding period in 2021 due to unrealized hedge losses and warmer weather in the second quarter 2022. Revenues from gas marketing services increased for year-to-date 2022 compared to the corresponding period in 2021 due to higher commodity prices and higher sales to commercial customers.
The changes in revenues related to wholesale gas services were 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.
Second Quarter
2022
vs.
normal
2022
vs.
2021
Year-to-Date
2022
vs.
normal
2022
vs.
2021
First Quarter2023 vs. normal2023 vs. 2022
Normal(*)
20222021(warmer)
Normal(*)
20222021colder (warmer)
Normal(*)
20232022warmer
(in thousands)(in thousands)(in thousands)
IllinoisIllinois645 620 634 (3.9)%(2.2)%3,644 3,627 3,580 (0.5)%1.3 %Illinois3,064 2,661 3,007 (13.2)%(11.5)%
GeorgiaGeorgia126 110 142 (12.7)%(22.5)%1,428 1,361 1,396 (4.7)%(2.5)%Georgia1,329 908 1,251 (31.7)%(27.4)%
(*)Normal represents the 10-year average fromfrom January 1, 20122013 through June 30, 2021March 31, 2022 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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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
The following table provides the number of customers served by Southern Company Gas at June 30, 2022March 31, 2023 and 2021:2022:
June 30,March 31,
202220212022 vs. 2021202320222023 vs. 2022
(in thousands, except market share %)(% change)(in thousands, except market share %)(% change)
Gas distribution operationsGas distribution operations4,314 4,300 0.3 %Gas distribution operations4,375 4,358 0.4 %
Gas marketing servicesGas marketing servicesGas marketing services
Energy customers(*)
Energy customers(*)
610 612 (0.3)%
Energy customers(*)
635 598 6.2 %
Market share of energy customers in GeorgiaMarket share of energy customers in Georgia28.6 %29.1 %Market share of energy customers in Georgia29.8 %28.7 %
(*)Gas marketing services' customers are primarily located in Georgia and Illinois.
Southern Company Gas anticipates customer growth and uses a variety of targeted marketing programs to attract new customers and to retain existing customers.
Cost of Natural Gas
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$22195.7$73289.9
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$(197)(18.0)
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 88% and 89%85% of the total cost of natural gas in the secondfirst quarter and year-to-date 2022, respectively.2023. 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"Revenues" herein for additional information.
In the secondfirst quarter 2022,2023, cost of natural gas was $452 million$0.9 billion compared to $231 million$1.1 billion for the corresponding period in 2021. For year-to-date 2022, cost of natural gas was $1.5 billion compared to $814 million for the corresponding period in 2021.2022. The increases reflect higherdecrease reflects lower gas cost recovery as a result of increases of 153.2% and 119.4%a 31% decrease in natural gas prices in the secondfirst quarter and year-to-date 2022, respectively,2023 compared to the corresponding periodsperiod in 2021.2022.
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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 during allboth periods presented.
Second Quarter2022 vs. 2021Year-to-Date2022 vs. 2021
2022202120222021
Gas distribution operations (mmBtu in millions)
Firm111 103 7.8 %415 391 6.1 %
Interruptible22 23 (4.3)47 50 (6.0)
Total133 126 5.6 %462 441 4.8 %
Wholesale gas services (mmBtu in millions/day)
Daily physical sales(*)
— 6.1 (100.0)%— 6.6 (100.0)%
Gas marketing services (mmBtu in millions)
Firm:
Georgia5 4 25.0 %21 23 (8.7)%
Illinois1 1 — 4 5 (20.0)
Other3 2 50.0 7 8 (12.5)
Interruptible large commercial and industrial3 3 — 7 7 — 
Total12 10 20.0 %39 43 (9.3)%
(*)As a result of the sale of Sequent, wholesale gas services had no sales in the second quarter and year-to-date 2022. See Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.
First Quarter2023 vs. 2022
20232022
Gas distribution operations (mmBtu in millions)
Firm258 304 (15.1)%
Interruptible25 25 — 
Total283 329 (14.0)%
Gas marketing services (mmBtu in millions)
Firm:
Georgia13 16 (18.8)%
Illinois3 3 — 
Other5 4 25.0 
Interruptible large commercial and industrial4 4 — 
Total25 27 (7.4)%
Other Operations and Maintenance Expenses
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$3314.2$387.1
In the second quarter 2022, other operations and maintenance expenses were $266 million compared to $233 million for the corresponding period in 2021. Other operations and maintenance expenses increased approximately $37were $305 million excluding expenses related to Sequentfor both the first quarter 2023 and 2022 and reflect a $17 million increase in the second quarter 2021. The increase was primarily due to higher compensation and benefit expenses and higherbenefits, partially offset by a $12 million decrease in expenses passed through directly to customers primarily related to bad debt at gas distribution operations.
Interest Expense, Net of Amounts Capitalized
First Quarter 2023 vs. First Quarter 2022
(change in millions)(% change)
$1524.6
For year-to-date 2022, other operations and maintenanIn the ce expenses were $570first quarter 2023, interest expense, net of amounts capitalized was $76 million compared to $532$61 million for the corresponding period in 2021. Excluding $53 million of expenses related to Sequent for year-to-date 2021, other operations and maintenance expenses increased approximately $91 million. 2022. The increase was primarily due to increasesreflects higher interest rates and higher average outstanding debt. See FINANCIAL CONDITION AND LIQUIDITY – "Sources of $33 million in compensationCapital" and benefit expenses, $24 million in expenses passed through directly to customers primarily related to bad debt at gas distribution operations, $16 million in technology-related costs, $8 million in customer accounts expenses, and $7 million in expenses primarily related to higher fuel costs.
Depreciation and Amortization
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$53.8$124.6
For year-to-date 2022, depreciation and amortization was $275 million compared to $263 million"Financing Activities" herein for the corresponding period in 2021. The increase was primarily due to continued infrastructure investments at the natural gas distribution utilities.additional information on borrowings.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Taxes Other Than Income Taxes
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$1326.5$3325.4
In the second quarter 2022, taxes other than income taxes were $62 million compared to $49 million for the corresponding period in 2021. For year-to-date 2022, taxes other than income taxes were $163 million compared to $130 million for the corresponding period in 2021. The increases primarily reflect 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.
Earnings (Loss) from Equity Method Investments
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$83159.6$82N/M
N/M - Not meaningful
In the second quarter 2022, earnings from equity method investments were $31 million compared to a loss of $52 million for the corresponding period in 2021. For year-to-date 2022, earnings from equity method investments were $71 million compared to a loss of $11 million for the corresponding period in 2021. The changes were primarily due to a pre-tax impairment charge of $82 million recorded in the second quarter 2021 related to the PennEast Pipeline project. See Note 7 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K and Note (E) to the Condensed Financial Statements herein under "Southern Company Gas" for additional information.
Other Income (Expense), Net
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$30214.3$110141.0
In the second quarter 2022, other income (expense), net was $16 million of income compared to $14 million of expense for the corresponding period in 2021. For year-to-date 2022, other income (expense), net was $32 million of income compared to $78 million of expense for the corresponding period in 2021. The changes were largely due to charitable contributions of $26 million and $101 million in the second quarter and year-to-date 2021, respectively.
Income Taxes (Benefit)
Second Quarter 2022 vs. Second Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$65224.1$4245.7
In the second quarter 2022, income tax expense was $36 million compared to income tax benefit of $29 million for the corresponding period in 2021. The change was primarily due to the pre-tax impairment charge at gas pipeline investments in 2021 related to the PennEast Pipeline project, a pre-tax loss at wholesale gas services in the second quarter 2021, and higher pre-tax earnings primarily at gas distribution operations.
For year-to-date 2022, income taxes were $134 million compared to $92 million for the corresponding period in 2021. The increase was primarily due to the pre-tax impairment charge at gas pipeline investments in 2021 related to the PennEast Pipeline project and higher pre-tax earnings primarily at gas distribution operations.
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AND RESULTS OF OPERATIONS (Continued)
See Note 7 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information on the impairment charge related to the PennEast Pipeline project.
Segment Information
Operating revenues, operating expenses, and net income (loss) for each segment are provided in the table below. See Note (L)(K) to the Condensed Financial Statements under "Southern Company Gas" herein for additional information.
 20222021
 Operating RevenuesOperating ExpensesNet Income (Loss) Operating RevenuesOperating ExpensesNet Income (Loss)
(in millions)(in millions)
Second Quarter
Gas distribution operations$980 $819 $92 $710 $564 $80 
Gas pipeline investments8 2 23 8 3 (36)
Wholesale gas services(*)
— — — (110)11 (112)
Gas marketing services92 90 1 64 54 6 
All other10 14 (1)11 20 (3)
Intercompany eliminations(7)(7)— (6)(6)— 
Consolidated$1,083 $918 $115 $677 $646 $(65)
Year-to-Date
Gas distribution operations$2,782 $2,293 $306 $1,910 $1,477 $263 
Gas pipeline investments16 5 52 16 6 (7)
Wholesale gas services(*)
— — — 188 67 14 
Gas marketing services335 240 67 259 174 62 
All other26 35 8 18 35 1 
Intercompany eliminations(19)(19)— (20)(20)— 
Consolidated$3,140 $2,554 $433 $2,371 $1,739 $333 
(*)As a result of the sale of Sequent, wholesale gas services is no longer a reportable segment for the second quarter and year-to-date 2022. See Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.
 20232022
 Operating RevenuesOperating ExpensesNet Income Operating RevenuesOperating ExpensesNet Income
(in millions)(in millions)
First Quarter
Gas distribution operations$1,618 $1,264 $221 $1,803 $1,475 $214 
Gas pipeline investments8 3 31 8 3 29 
Gas marketing services246 175 50 243 150 66 
All other12 9 7 16 21 10 
Intercompany eliminations(9)(5)— (12)(12)— 
Consolidated$1,875 $1,446 $309 $2,058 $1,637 $319 
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 distribution utilities' service territories. 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 2023, net income increased $7 million, or 3.3%, when compared to the corresponding period in 2022, as described further below:
•Operating revenues decreased $185 million primarily due to lower gas cost over recovery, partially offset by 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 decreased $211 million primarily due to a $218 million decrease in cost of natural gas as a result of lower gas prices and lower volumes sold compared to 2022, partially offset by higher depreciation resulting from additional assets placed in service and higher compensation and benefits. The decrease in operating expenses also includes lower costs passed through directly to customers, primarily related to bad debt expenses and revenue taxes.
•Interest expense, net of amounts capitalized increased $13 million primarily due to higher interest rates and higher average outstanding debt.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
In the second quarter and year-to-date 2022, net income increased $12 million, or 15.0%, and $43 million, or 16.3%, respectively, when compared to the corresponding periods in 2021, as described further below:
•Operating revenues increased $270 million and $872 million, respectively, when compared to the corresponding periods in 2021 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 $255 million and $816 million, respectively, when compared to the corresponding periods in 2021 primarily due to increases of $195 million and $673 million, respectively, in the cost of gas as a result of higher natural gas prices and higher volumes sold compared to 2021, higher compensation expenses, and higher 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.
•Other income and (expense) increased $4 million and $9 million, respectively, when compared to the corresponding periods in 2021, 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.
•Interest expense, net of amounts capitalized increased $3 million and $6 million, respectively, when compared to the corresponding periods in 2021 primarily due to additional debt issued to finance continued investments. See FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" and "Financing Activities" herein for additional information on borrowings.
•Income taxes increased $4 million and $16 million, respectively, when compared to the corresponding periods in 2021 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 Dalton Pipeline, and PennEastDalton Pipeline. See Note (E) to the Condensed Financial Statements under "Southern Company Gas" herein for additional information.
NetIn the first quarter 2023, net income increased $59$2 million for both the second quarter and year-to-date 2022 when compared to the corresponding periods in 2021. The increases were primarily due to a pre-tax impairment chargehigher earnings at SNG resulting from higher revenues primarily due to increased demand, partially offset by higher interest expense, net of $82 million ($58 million after tax) in the second quarter 2021 related to the equity method investment in the PennEast Pipeline project. See Note 7 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.amounts capitalized.
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.
In the secondfirst quarter 2022,2023, net income decreased $5$16 million, or 83.3%24.2%, when compared to the corresponding period in 2021. The decrease was primarily due to an increase of $36 million in operating expenses primarily due to $32 million in higher cost of gas, largely offset by a related increase of $28 million in operating revenues.
For year-to-date 2022 net income increased $5 million, or 8.1%, when compared to the corresponding period in 2021. The increase was primarily due to a $76$25 million increase in operating revenues asexpenses primarily resulting from a result of higher commodity prices and higher sales to commercial customers, partially offset by a $66$22 million increase in operating expenses primarily due to higher cost of natural gas due to the timing of unrealized hedge losses, partially offset by lower gas prices and an increaselower volumes sold. Net income also reflects a decrease of $5$6 million in income taxes as a result of higherlower pre-tax earnings.
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All Other
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. All other included a natural gas storage facility in Texas through its sale in November 2022. See Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information, including the sale of a natural gas storage facility in California expected to be completed later in 2023.
For year-to-date 2022,In the first quarter 2023, net income increased $7decreased $3 million when compared to the corresponding period in 2021. Operating revenues increased $8 million2022. The change was primarily related to higher demand fees and favorable hedge gains at the natural gas storage businesses and higher sales from the renewable natural gas business.an increase in income taxes, largely offset by a decrease in operating expenses primarily related to lower depreciation in 2023.
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; and the trends of higher inflation and reduced electricity usage per customer, especially in residential and commercial markets. For Georgia Power, other major factors are completing construction and start-up of Plant Vogtle Units 3 and 4, meeting the related cost and schedule projections, and completing the related cost recovery proceedings is another major factor.proceedings.
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.
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Global and U.S. economic conditions have beencontinue to be significantly affected by a series of demand and supply shocks that caused a global and national economic recession in 2020. The drivers, speed,2020 and depth of the 2020 economic contraction were unprecedented and continue to reduce energy demand across the Southern Company system's service territory, primarily in the commercial class. Retail electric revenues attributable to changes in sales increased in the first half of 2022 when compared to the corresponding period in 2021 primarily due to the normalization of economic activity; however, total retail electric sales for the Southern Company system continued to be negativelyhave been further impacted by the COVID-19 pandemic when compared to pre-pandemic trends. Most prominently, the COVID-19 pandemic has negatively impacted global supply chainsinvasion of Ukraine 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 inflationsignificant declines in 2021 and 2022labor force participation rates. The confluence of these disruptions has resulted in increasingthe highest levels of inflation globally in 40 years and driven a significant policy response by central banks across the global economy. The U.S. Federal Reserve has increased policy interest rates faster than any rate increase cycle in the last 40 years and to levels high enough to slow economic activity. These actions and impacts, including increased costs for many goods and services. Asservices and borrowing costs, have led to a resultslowing of persistently high inflation, interest rates have been on the risesome economic activity and are expected to continue risinga significantly increased risk of recession. Recent challenges facing small and midsize banks may tighten lending standards, cause uncertainty in the near term. Based on these factors,banking sector, and further reduce economic growth. Additionally, inflation remains elevated in part due to continued supply chain and labor market constraints. Electricity sales across all classes have recovered to pre-COVID-19 pandemic levels and customer growth at both the probabilitytraditional electric operating companies and natural gas distribution utilities has remained strong. However, weakening economic activity increases the risk of slowing to declining energy sales. Additionally, the U.S. economy falling into a recessioncurrent economic environment has heightened. The impacts of new COVID-19 variants, responses toincreased the COVID-19 pandemic by both customers and governments, ongoing geopolitical threats, such as the escalation of the Russia-Ukraine war, and the potentialuncertainty of future COVID-19-related lockdowns in Asian markets or elsewhere could further disrupt global supply chainsenergy demand and increase the severity of a possible economic downturn in the Southern Company system's service territory.operating costs. See RESULTS OF OPERATIONS herein for information on COVID-19-related impacts on energy demandsales in the Southern Company system's service territory during the first halfthree months of 2022.2023.
The level of future earnings for Southern Power's competitive wholesale electric business depends on numerous factors including the parameters of the wholesale market and the efficient operation of its wholesale generating assets; Southern Power's ability to execute its growth strategy through the development or acquisition of renewable facilities and other energy projects while containing costs; regulatory matters; customer creditworthiness; total electric generating capacity available in Southern Power's market areas; Southern Power's ability to successfully remarket capacity as current contracts expire; renewable portfolio standards; continued availability of federal and state ITCs
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and PTCs, which could be impacted by future tax legislation; transmission constraints; cost of generation from units within the Southern Company power pool; and operational limitations. See MANAGEMENT'S DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL – "Income Tax Matters" in Item 7 of the Form 10-K for information regarding the Inflation Reduction Act's expansion of the availability of federal ITCs and PTCs.
The level of future earnings for Southern Company Gas' primary business of distributing natural gas and its complementary businesses in the gas pipeline investments 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; customer creditworthiness; and certain policies to limit the use of 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' abilitygas or policies designed to re-contract storage rates at favorable prices.promote electrification. 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 business 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 and have recently resultedmay result in higher natural gas prices. Additional economic factors may contribute to this environment. 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 could lead to a consolidation of natural gas producers or reduced levels of natural gas production.
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; customer energy conservation practiced by customers;practices; 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 offuel, labor, and materialsmaterial prices in a timean environment of rising costs, impacted by heightened inflation caused by unprecedented shocks to the broader economy, and material and labor supply chain disruptions; and the price elasticity of
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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.
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 "General Litigation Matters" and "Environmental Remediation" herein, for additional information.
Environmental Laws and Regulations
Air Quality
On February 13, 2023, the EPA published a final rule disapproving 19 state implementation plans (SIPs), including the States of Alabama and Mississippi, under the interstate transport (good neighbor) provisions of the Clean Air Act for the 2015 Ozone National Ambient Air Quality Standards (NAAQS). On March 14, 2023 and March 15, 2023, the State of Mississippi and Mississippi Power, respectively, challenged the EPA's disapproval of the Mississippi SIP in the U.S. Court of Appeals for the Fifth Circuit. On April 13, 2023 and April 14, 2023, the State of Alabama and Alabama Power, respectively, challenged the EPA's disapproval of the Alabama SIP in the U.S. Court of Appeals for the Eleventh Circuit. The ultimate impact of these cases cannot be determined at this time. As a result of the SIP disapprovals, on March 15, 2023, the EPA released the prepublication version of the 2015 Ozone NAAQS Good Neighbor federal implementation plan with initial compliance expected to begin in May 2023. The ultimate impact of the rule cannot be determined at this time; however, it will likely result in increased compliance costs for the traditional electric operating companies.
Water Quality
On March 29, 2023, the EPA published a proposed ELG Supplemental Rule revising certain effluent limits of the 2020 and 2015 ELG rules. The proposal imposes more stringent requirements for flue gas desulfurization wastewater, bottom ash transport water, and combustion residual leachate to be met no later than December 31, 2029. The EPA is also proposing that a limited number of facilities already achieving compliance with the 2020 ELG Reconsideration Rule be allowed to elect retirement or repowering by December 31, 2032 as opposed to meeting the new more stringent requirements. The proposal maintains the 2020 ELG Reconsideration Rule's permanent cessation of coal combustion subcategory allowing units to continue to operate until the end of 2028 without having to install additional technologies. A final rule is anticipated in 2024. The ultimate impact of this proposal cannot be determined at this time; however, it may result in significant compliance costs.
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Environmental Laws and Regulations
Coal Combustion Residuals
On July 20, 2022, Mobile Baykeeper, through its counsel Southern Environmental Law Center, released an advance notice of intent to sue Alabama Power for alleged violations of the Resource Conservation and Recovery Act (RCRA) and regulations governing CCR. Mobile Baykeeper claims that Alabama Power's plan to close the Plant Barry ash pond under the closure-in-place methodology violates regulations governing CCR and the RCRA. Under the RCRA, Mobile Baykeeper is required to give Alabama Power advance notice of intent at least 60 days before filing suit. See Note 6 to the financial statements in Item 8 of the Form 10-K for a discussion of Alabama Power's ARO liabilities related to facilities that are subject to the CCR Rule and the related state rule. The ultimate outcome of this matter cannot be determined at this time.
Global Climate Issues
On June 30, 2022, the U.S. Supreme Court issued an opinion limiting the EPA's authority to regulate greenhouse gas emissions under the Clean Air Act. The Court's review in the case focused on whether the EPA's authority under the Clean Air Act allows the EPA to regulate the electric industry in a manner as broad as the Clean Power Plan (CPP), which was repealed and replaced by the Affordable Clean Energy rule (ACE Rule). The Court held that the generation shifting to lower carbon emitting sources approach in the CPP is not authorized by the Clean Air Act. However, the Court did not decide whether the EPA may adopt measures only applied at the individual electric generating source, which is the basis for the ACE Rule. The EPA has announced its intent to propose a rule for existing power plants pursuant to the Clean Air Act by March 2023. The ultimate impact of the Court's decision cannot be determined at this time.
Regulatory Matters
See 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' 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 strategy continues to include 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 in Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements herein under "Alabama Power – Certificates of Convenience and Necessity" in Item 8 of the Form 10-K 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 information about costs relating to Southern Power's construction of renewable energy facilities.
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 resiliency, reduce emissions, 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 Note 2 to the financial statements in
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Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements herein under "Southern Company Gas" 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.
Southern Power's Power Sales Agreements
See MANAGEMENT'S DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL – "Southern Power's Power Sales Agreements" in Item 7 of the Form 10-K for additional information.
At March 31, 2023, 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 facilities' net book value (or expected in-service value for facilities under construction) as the investment amount was 96% through 2027 and 90% through 2032, with an average remaining contract duration of approximately 12 years.
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.
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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 of Critical Accounting Policies and Estimates
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)
As of June 30, 2022, Georgia Power revised its total project capital cost forecast to $10.5 billion (net of $1.7 billion received under the Guarantee Settlement Agreement and approximately $188 million in related customer refunds). This forecast includes construction contingency of $60 million and is based on projected in-service dates at the end of the first quarter 2023 and the fourth quarter 2023 for Units 3 and 4, respectively.
The projected schedule for Unit 3 primarily depends on 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. Unit 4's projected schedule primarily depends on Unit 3 progress through fuel load, startup, and testing; overall construction productivity and production levels improving, particularly in electrical installation, including terminations; and appropriate levels of craft laborers, particularly electricians and pipefitters, being added and maintained. Any further delays could result in later in-service dates and cost increases.
During the first half of 2022, established construction contingency totaling $126 million was assigned to the base capital cost forecast for costs primarily associated with construction productivity, the pace of system turnovers, additional craft and support resources, and procurement for Units 3 and 4. Georgia Power also increased its total project capital cost forecast as of June 30, 2022 and recorded a pre-tax charge of $36 million ($27 million after tax) to replenish construction contingency.
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 (as defined in Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction – Joint Owner Contracts"
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herein) or the extent to which COVID-19-related costs impact those provisions. Georgia Power recorded an additional pre-tax charge to income in the second quarter 2022 of approximately $16 million ($12 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 $480 million associated with these provisions based on the current project capital cost forecast. In October 2021, Georgia Power and the other Vogtle Owners entered into an agreement, which was modified on June 3, 2022, to clarify the process for the tender provisions of the Global Amendments to provide for a decision between 120 and 194 days after the tender option is triggered, which the other Vogtle Owners assert occurred on February 14, 2022, and would require the other Vogtle Owners to notify Georgia Power of their intent to exercise their tender options by August 27, 2022. On June 17, 2022 and July 26, 2022, OPC and Dalton, respectively, notified Georgia Power of their purported exercises of their tender options.
The ultimate outcome of these matters cannot be determined at this time. However, any extension of the in-service date beyond the first quarter 2023 for Unit 3 or the fourth quarter 2023 for Unit 4, including the current level of cost sharing described in Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction" herein, is estimated to result in additional base capital costs for Georgia Power of up to $35 million per month for Unit 3 and $45 million per month for Unit 4, as well as the related AFUDC and any additional related construction, support resources, or testing costs. 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 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 June 30, 2022.March 31, 2023. 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 for additional information.
At the end of the secondfirst quarter 2022,2023, the market price of Southern Company's common stock was $71.31$69.58 per share (based on the closing price as reported on the NYSE) and the book value was $27.03$28.00 per share, representing a market-to-book ratio of 264%249%, compared to $68.58, $26.30,$71.41, $27.93, and 261%256%, respectively, at the end of 2021.2022. Southern Company's common stock dividend for the secondfirst quarter 20222023 was $0.68 per share compared to $0.66 per share in the secondfirst quarter 2021.2022.
Cash Requirements
See MANAGEMENT'S DISCUSSION AND ANALYSIS – FINANCIAL CONDITION AND LIQUIDITY – "Cash"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. programs and, for the traditional electric operating companies, operating cash flows related to fuel cost under recovery. The fuel cost under recovery balances are primarily the result of higher than forecasted prices for natural gas and purchased power. See Note (B) to the Condensed Financial Statements herein under "Georgia Power – Fuel Cost Recovery" for additional information.
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 environmental compliance program; changes in 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
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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 under "Southern Power" 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.
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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, 2021.2022.
Sources of Capital
See MANAGEMENT'S DISCUSSION AND ANALYSIS – FINANCIAL CONDITION AND LIQUIDITY – "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, andhybrid, and/or equity 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 on August 1, 2022 of stock purchase contracts associated with its equity units, Southern Company does not expect to issue any equity in the capital markets through 2026, but may issue equity through its stock plans during this time. 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 "Equity Units" for 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. Operating cash flows provide a substantial portion of the Registrants' cash needs. In addition, Southern Power plans to utilize tax equity partnership contributions (as discussed further herein). During the six months ended June 30, 2022, SouthernGeorgia Power utilized tax credits, which provided $239 million inintends to continue utilizing short-term floating rate bank loans and commercial paper issuances to fund operating cash flows.flows related to fuel cost under recovery.
The amount, type, and timing of any financings in 2022,2023, 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. During the first half of 2022,three months ended March 31, 2023, Southern Power obtained tax equity funding for existing tax equity partnerships totaling $51$21 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 June 30, 2022,March 31, 2023, the amount of subsidiary retained earnings restricted to dividend totaled $1.4$1.6 billion. This restriction did not impact Southern 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.
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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 June 30, 2022March 31, 2023 for the applicable Registrants:
At June 30, 2022Southern CompanyGeorgia
Power		Mississippi PowerSouthern PowerSouthern Company Gas
At March 31, 2023At March 31, 2023Southern CompanyGeorgia
Power		Mississippi PowerSouthern Company Gas
(in millions)(in millions)
Current liabilities in excess of current assetsCurrent liabilities in excess of current assets$1,706 $1,036 $15 $1 $105 Current liabilities in excess of current assets$4,338 $2,820 $91 $355 
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.
Bank Credit Arrangements
At June 30, 2022,March 31, 2023, the Registrants' unused committed credit arrangements with banks were as follows:
At June 30, 2022Southern
Company
parent		Alabama PowerGeorgia
Power		Mississippi Power
Southern
 Power(a)
Southern Company Gas(b)
SEGCOSouthern
Company
At March 31, 2023At March 31, 2023Southern
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$1,998 $1,250 $1,726 $275 $568 $1,748 $30 $7,595 Unused committed credit$1,998 $1,250 $1,726 $225 $587 $1,748 $30 $7,564 
(a)At June 30, 2022,March 31, 2023, Southern Power also had two continuing letters of credit facilities for standby letters of credit, of which $16$25 million was unused. Southern Power's subsidiaries are not parties to its bank credit arrangements or letter of credit facilities.
(b)Includes $798 million and $950 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 June 30, 2022March 31, 2023 was approximately $1.5$1.7 billion (comprised of approximately $789 million at Alabama Power, $672$819 million at Georgia Power, and $34$69 million at Mississippi Power). In addition, at June 30, 2022,March 31, 2023, Alabama Power and Georgia Power had approximately $445$120 million and $285 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
June 30, 2022
Short-term Debt During the Period(*)
Short-term Debt at
March 31, 2023
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$2,510 2.0 %$2,061 1.2 %$2,588 Southern Company$2,554 5.5 %$2,753 5.2 %$3,270 
Alabama PowerAlabama Power— — 10 0.8 100 Alabama Power170 5.1 83 4.8 230 
Georgia PowerGeorgia Power400 1.8 551 1.1 916 Georgia Power1,965 5.5 1,671 5.3 2,025 
Mississippi PowerMississippi Power16 2.1 21 2.0 35 Mississippi Power126 5.6 49 5.1 136 
Southern PowerSouthern Power306 1.9 115 1.3 350 Southern Power165 5.6 179 5.1 267 
Southern Company Gas:Southern Company Gas:Southern Company Gas:
Southern Company Gas CapitalSouthern Company Gas Capital$316 2.0 %$314 1.2 %$446 Southern Company Gas Capital$120 5.6 %$215 4.9 %$297 
Nicor GasNicor Gas200 2.1 203 1.2 273 Nicor Gas— — 239 4.8 483 
Southern Company Gas TotalSouthern Company Gas Total$516 2.0 %$517 1.2 %Southern Company Gas Total$120 5.6 %$454 4.9 %
(*)Average and maximum amounts are based upon daily balances during the three-month period ended June 30, 2022.March 31, 2023.
Analysis of Cash Flows
Net cash flows provided from (used for) operating, investing, and financing activities for the sixthree months ended June 30,March 31, 2023 and 2022 and 2021 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)(in millions)
Six Months Ended June 30, 2022
Three Months Ended
March 31, 2023
Three Months Ended
March 31, 2023
Operating activitiesOperating activities$3,579 $510 $926 $112 $552 $1,478 Operating activities$844 $30 $(53)$(3)$135 $978 
Investing activitiesInvesting activities(3,460)(889)(1,668)(133)(73)(658)Investing activities(2,118)(509)(1,117)(117)4 (379)
Financing activitiesFinancing activities(213)227 939 (18)(403)(650)Financing activities454 219 850 79 (146)(593)
Six Months Ended June 30, 2021
Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2022
Operating activitiesOperating activities$2,904 $584 $1,313 $41 $411 $722 Operating activities$1,592 $154 $361 $(16)$117 $1,024 
Investing activitiesInvesting activities(4,026)(893)(1,730)(117)(601)(668)Investing activities(1,555)(365)(809)(68)(37)(271)
Financing activitiesFinancing activities1,671 506 457 515 196 (25)Financing activities(193)504 441 32 (76)(768)
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 $675 milliondecreased $0.7 billion for the sixthree months ended June 30, 2022March 31, 2023 as compared to the corresponding period in 20212022 primarily due to the timing of vendor payments and the timing of fossil fuel stock purchases, partially offset by increased natural gasfuel cost recovery at the natural gas distribution utilities, partially offset byand the timing of customer receivable collections and decreased fuel cost recovery at the traditional electric operating companies.collections.
The net cash used for investing activities for the sixthree months ended June 30, 2022March 31, 2023 was primarily related to the Subsidiary Registrants' construction programs.
The net cash used forprovided from financing activities for the sixthree months ended June 30, 2022March 31, 2023 was primarily related to common stock dividend payments, largely offset by an increase in short-term debt and net issuances of long-term debt.debt, partially offset by common stock dividend payments.
Alabama Power
Net cash provided from operating activities decreased $74$124 million for the sixthree months ended June 30, 2022March 31, 2023 as compared to the corresponding period in 20212022 primarily due to the timing of customer receivable collectionsvendor payments and decreased fuel cost recovery,stock purchases, partially offset by the timing of vendor payments and customer refunds issued in 2021.increased fuel cost recovery.
The net cash used for investing activities for the sixthree months ended June 30, 2022March 31, 2023 was primarily related to gross property additions.additions, including approximately $23 million related to the construction of Plant Barry Unit 8. See Note (B) to the Condensed Financial Statements under "Alabama Power" herein for additional information.
The net cash provided from financing activities for the sixthree months ended June 30, 2022March 31, 2023 was primarily related to capital contributions from Southern Company and the net issuance of long-term debt,an increase in short-term borrowings, partially offset by common stock dividend payments.
Georgia Power
Net cash provided fromused for operating activities decreased $387increased $414 million for the sixthree months ended June 30, 2022March 31, 2023 as compared to the corresponding period in 20212022 primarily due to decreased fuel cost recoverythe timing of vendor payments, higher payments for property taxes and municipal franchise fees, and the timing of customer receivable collections,fossil fuel stock purchases, partially offset by the timing of vendor payments.customer receivable collections.
The net cash used for investing activities for the sixthree months ended June 30, 2022March 31, 2023 was primarily related to gross property additions, including a total of approximately $500$225 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 sixthree months ended June 30, 2022March 31, 2023 was primarily related to net issuances of senior notes, capital contributions from Southern Company, and a net increase in short-term borrowings, and reofferings of pollution control revenue bonds, partially offset by common stock dividend payments.
Mississippi Power
Net cash provided fromused for operating activities increased $71decreased $13 million for the sixthree months ended June 30, 2022March 31, 2023 as compared to the corresponding period in 20212022 primarily due to the timing of vendor payments,customer receivable collections, partially offset by the timing of customer receivable collections.vendor payments.
The net cash used for investing activities for the sixthree months ended June 30, 2022March 31, 2023 was primarily related to gross property additions.
The net cash used forprovided from financing activities for the sixthree months ended June 30, 2022March 31, 2023 was primarily related to an increase in short-term borrowings, partially offset by common stock dividend payments, partially offset by capital contributions from Southern Company and an increase in commercial paper borrowings.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 $141$18 million for the sixthree months ended June 30, 2022March 31, 2023 as compared to the corresponding period in 20212022 primarily due to an increase in wholesale revenues driven by higher market prices of energy, the timing of vendor payments, and an increase in the utilization of tax credits in 2022,customer receivable collections, partially offset by the timing of customer receivable collections.vendor payments.
The net cash used forprovided from investing activities for the sixthree months ended June 30, 2022March 31, 2023 was primarily related to the sale of equity method investments in wind and battery energy storage projects, partially offset by ongoing construction payments. See Note (K) to the Condensed Financial Statements under "Southern Power" herein for additional information.activities.
The net cash used for financing activities for the sixthree months ended June 30, 2022March 31, 2023 was primarily related to the repayment of senior notes at maturity, common stock dividend payments, net repayments of short-term debt, and net capital distributions to noncontrolling interests, partially offset by a capital contribution from Southern Company and an increase in commercial paper borrowings.interests.
Southern Company Gas
Net caschash provided from operating activities increased $756decreased $46 million for the sixthree months ended June 30, 2022March 31, 2023 as compared to the corresponding period in 20212022 primarily due to increased naturallower gas cost recovery, timing of vendor payments, and a change in natural gas for sale, net of temporary LIFO liquidation due to use of stored natural gas, partially offset by the timing of vendor payments.customer receivable collections.
The net cash used for investing activities for the sixthree months ended June 30, 2022March 31, 2023 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 used for financing activities for the sixthree months ended June 30, 2022ended March 31, 2023 was primarily related to net repaymentsrepayment of short-term debt and common stock dividend payments, and repayment of medium-term notes, partially offset by capital contributions from Southern Company.
Significant Balance Sheet Changes
Southern Company
Significant balance sheet changes for the sixthree months ended June 30, 2022March 31, 2023 included:
•an increase of $1.7$1.5 billion in long-term debt (including securities due within one year) related to new issuances;
•a decrease of $1.2 billion in accounts payable primarily related to the timing of vendor payments;
•an increase of $1.1 billion in total property, plant, and equipment primarily related to the Subsidiary Registrants' construction programs;
•an increasea decrease of $1.1$0.9 billion in notes payablecash and cash equivalents, as discussed further under "Analysis of Cash Flows – Southern Company" herein;
•a decrease of $0.5 billion in accrued compensation due to an increase in short-term bank debt and commercial paper borrowings;the timing of payments;
•an increase of $0.8$0.5 billion in accumulated deferred income taxes primarily related to the expected utilization of ITCs in 2022 and2023, as well as an increase in under recovered fuel clause revenues, as discussed further below;property-related timing differences; and
•an increase of $0.7 billion in total stockholders' equity primarily related to net income, partially offset by common stock dividend payments;
•an increase of $0.7 billion in accounts payable primarily related to the timing of vendor payments;
•an increase of $0.6 billion in other deferred charges and assets primarily related to an increase in under recovered fuel clause revenues at Georgia Power due to higher fuel and purchased power costs;
•an increase of $0.5 billion in regulatory assets associated with AROs primarily due to a decrease of $0.4 billion in the fair value of the investments held in Alabama Power's and Georgia Power's nuclear decommissioning trusts; and
•an increase of $0.5 billion in customer accounts receivableunbilled revenues primarily related to the timing of collections.seasonality.
See "Financing Activities" herein and Notes (B), (G)(F), and (I)(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 sixthree months ended June 30, 2022March 31, 2023 included:
•an increase of $881$300 million in common stockholder's equity primarily due to capital contributions from Southern Company, partially offset by dividends paid to Southern Company;
•an increasea decrease of $361$261 million in total property, plant,other accounts payable primarily due to the timing of vendor payments;
•a decrease of $260 million in cash and equipment primarily relatedcash equivalents, as discussed further under "Analysis of Cash Flows – Alabama Power" herein;
•a decrease of $201 million in affiliated accounts payable due to constructionthe timing of distribution and transmission facilities, construction of Plant Barry Unit 8, and the installation of equipmentpayments to comply with environmental standards;affiliates; and
•an increase of $298$170 million in regulatory assets associated with AROsnotes payable primarily due to a decrease of $201 millionan increase in the fair value of the investments held in Alabama Power's nuclear decommissioning trust.commercial paper borrowings.
See Note (I) to the Condensed Financial Statements herein for additional information.
Georgia Power
Significant balance sheet changes for the sixthree months ended June 30, 2022March 31, 2023 included:
•an increase of $1.1 billion$861 million in total property, plant, and equipment primarily related to the construction of generation, transmission, and distribution facilities, including $534$270 million for Plant Vogtle Units 3 and 4 (net of a pre-tax charge of $52 million recorded in the second quarter 2022 for estimated probable loss);4;
•an increase of $914 million in long-term debt (including securities due within one year) primarily due to net issuances of senior notes;
•an increase of $663$585 million in common stockholder's equity primarily due to net income and capital contributions from Southern Company and net income, partially offset by dividends paid to Southern Company;
•an increase of $538 million in deferred under recovered fuel clause revenues due to higher fuel and purchased power costs;
•an increase of $400$365 million in notes payable primarily due to an increase in short-term bank debt;commercial paper;
•an increasea decrease of $299$364 million in accumulated deferred income taxes primarilycash and cash equivalents, as discussed further under "Analysis of Cash Flows – Georgia Power" herein;
•a decrease of $322 million in affiliated accounts payable due to the increase in under recovered fuel clause revenues and the expected reduction in federal and state credit carryforward balances in 2022;timing of payments to affiliates;
•an increasea decrease of $283$286 million in customer accounts receivableaccrued taxes primarily duerelated to higher customer usagepayments for municipal franchise fees and the timing of collections;property taxes; and
•an increase of $252$210 million in regulatory assets associated with AROslong-term debt (including securities due within one year) primarily due to a decreasereofferings of $192 million in the fair value of the investments held in Georgia Power's nuclear decommissioning trust.pollution control revenue bonds.
See "Financing Activities – Georgia Power" herein and Note (B) to the Condensed Financial Statements herein under "Georgia Power – Nuclear Construction" and Note (I) to the Condensed Financial Statements herein for additional information.
Mississippi Power
Significant balance sheet changes for the sixthree months ended June 30, 2022March 31, 2023 included:
•an increaseincrease of $54$126 million in common stockholder's equity relatednotes payable due to net incomean increase in short-term borrowings;
•a decrease of $62 million in accrued taxes primarily due to the payment of ad valorem taxes;
•decreases of $56 million in affiliated receivables and capital contributions from Southern Company, partially offset by dividends paid$52 million in affiliated accounts payable primarily due to Southern Company;fluctuations in affiliate sales/purchases and the timing of payments;
•an increase of $52$48 million in customer accounts receivablestotal property, plant, and equipment primarily duerelated to fuelthe construction of transmission and distribution facilities; and
•a decrease of $41 million in cash and cash equivalents, as discussed further under recovery."Analysis of Cash Flows – Mississippi Power" herein.
See "Financing Activities – Mississippi Power" herein for additional information.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Southern Power
Significant balance sheet changes for the sixthree months ended June 30, 2022March 31, 2023 included:
•a decreaseincreases of $724 million in long-term debt (including securities due within one year) primarily due to the redemption of senior notes;
•an increase of $281 million in common stockholder's equity primarily due to capital contributions from Southern Company and net income, partially offset by common stock dividend payments and distributions to noncontrolling interests; and
•an increase of $256$302 million in accumulated deferred income tax liabilities and $286 million in prepaid income taxes primarily related to the expected utilization of ITCs in 2022.2023 and
•a decrease of $120 million in total property, plant, and equipment primarily due to continued depreciation of assets.
See "Financing Activities – Southern Power" herein and Note (G) to the Condensed Financial Statements herein for additional information.
Southern Company Gas
Significant balance sheet changes for the sixthree months ended June 30, 2022March 31, 2023 included:
•a decrease of $693$648 million in notes payable due to repayments of short-term debt and commercial paper borrowings;
•an increase of $544$356 million in common stockholder's equity related to net income and capital contributions from Southern Company, partially offset by dividends paid to Southern Company;
•a decrease of $340 million in other accounts payable due to seasonality and the timing of vendor payments;
•a decrease of $268 million in total accounts receivable primarily related to a decrease of $235 million in unbilled revenues as a result of seasonality;
•a decrease of $222 million in natural gas for sale primarily due to the use of stored natural gas; and
•an increase of $440$208 million in total property, plant, and equipment primarily related to the construction of transportation and distribution assets and additional infrastructure investment; and
•a decrease of $230 million in other regulatory assets, deferred primarily due to a $192 million reduction in natural gas cost under recovery.investment.
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 sixthree months of 2022:2023:
Maturities and RedemptionsIssuances/ReofferingsMaturities and Redemptions
CompanyCompanySenior Note IssuancesSenior
Notes
Other Long-Term Debt(*)
CompanySenior
Notes		Revenue
Bonds		Other
Long-Term Debt
Other Long-
Term Debt(*)
(in millions)(in millions)
Southern Company parentSouthern Company parent$1,725 $— $— $550 
Alabama PowerAlabama Power$700 $550 $— Alabama Power— — 16 — 
Georgia PowerGeorgia Power1,500 400 171 Georgia Power— 229 — 22 
Southern Power— 677 — 
Southern Company GasSouthern Company Gas— — 46 Southern Company Gas— — 8 — 
OtherOther— — 7 Other— — — 3 
Southern CompanySouthern Company$2,200 $1,627 $224 Southern Company$1,725 $229 $24 $575 
(*)Includes reductions in finance lease obligations resulting from cash payments under finance leases and, for Georgia Power, principal amortization payments totaling $45$21 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.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
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 halfthree months of 2022, Southern Company issued approximately 3.11.6 million shares of common stock primarily through employee equity compensation plans and received proceeds of approximately $61$15 million.
In March 2022,January 2023, Southern Company entered intoredeemed all $550 million aggregate principal amount of its Series 2016B Junior Subordinated Notes due March 15, 2057.
In February 2023, Southern Company issued $1.5 billion aggregate principal amount of its Series 2023A 3.875% Convertible Senior Notes due December 15, 2025 (Series 2023A Convertible Senior Notes) in a $400private offering. In March 2023, Southern Company issued an additional $225 million short-termaggregate principal amount of the Series 2023A Convertible Senior Notes upon the exercise by the initial purchasers of their over-allotment option. See Note (F) to the Condensed Financial Statements under "Convertible Senior Notes" herein for additional information.
Alabama Power
During the first quarter 2023, a subsidiary of Alabama Power borrowed $16 million under a $39 million long-term floating rate bank loan bearing interest based on term SOFR.entered into in December 2022 with a maturity date of December 12, 2029.
Georgia Power
In May 2022, SouthernMarch 2023, Georgia Power reoffered to the public the following pollution control revenue bonds that previously had been purchased and were held by Georgia Power at December 31, 2022:
•approximately $28 million aggregate principal amount of Development Authority of Monroe County (Georgia) Pollution Control Revenue Bonds (Georgia Power Company Plant Scherer Project), Second Series 2006;
•approximately $89 million aggregate principal amount of Development Authority of Monroe County (Georgia) Pollution Control Revenue Bonds (Georgia Power Company Plant Scherer Project), Second Series 2009;
•approximately $49 million aggregate principal amount of Development Authority of Monroe County (Georgia) Pollution Control Revenue Bonds (Georgia Power Company Plant Scherer Project), First Series 2012;
•approximately $18 million aggregate principal amount of Development Authority of Monroe County (Georgia) Pollution Control Revenue Bonds (Georgia Power Company Plant Scherer Project), First Series 2013; and
•$46 million aggregate principal amount of Development Authority of Burke County (Georgia) Pollution Control Revenue Bonds (Georgia Power Company Plant Vogtle Project), First Series 1996.
Also in March 2023, Georgia Power borrowed $100 million pursuant to a short-term uncommitted bank credit arrangement bearing interest at a ratemutually agreed upon by Southern Company and the bank from time to timerate and payable on demand, following specified notice by the bank.
See Note (F)demand. Subsequent to the Condensed Financial Statements herein under "Equity Units" for information regarding Southern Company's May 2022 remarketing of its Series 2019A and Series 2019B Remarketable Junior Subordinated Notes. Southern Company did not receive any proceeds from the remarketing.
Alabama Power
In February 2022, Alabama Power redeemed all $550 million aggregate principal amount of its Series 2017A 2.45% Senior Notes due March 30, 2022.
In March 2022, Alabama Power issued $700 million aggregate principal amount of Series 2022A 3.05% Senior Notes due March 15, 2032.
In June 2022, Alabama Power redeemed the following series of preferred stock: 4.20% Preferred Stock, Par Value $100 Per Share, 4.60% Preferred Stock, Par Value $100 Per Share, 4.92% Preferred Stock, Par Value $100 Per Share, 4.52% Preferred Stock, Par Value $100 Per Share, 4.64% Preferred Stock, Par Value $100 Per Share, and 4.72% Preferred Stock, Par Value $100 Per Share. The redemption price per share for each series of preferred stock equaled the redemption price per share provided in Note 8 to the financial statements under "Outstanding Classes of Capital Stock – Alabama Power" in Item 8 of the Form 10-K, plus accrued and unpaid dividends to the redemption date.
Georgia Power
In January 2022, Georgia Power redeemed all $400 million aggregate principal amount of its Series 2012B 2.85% Senior Notes due May 15, 2022.
In February 2022,31, 2023, Georgia Power borrowed $250an additional $150 million pursuant to a short-term uncommitted bank credit arrangement, which it repaidunder the arrangement.
Also in May 2022.
In each of March and April 2022,2023, Georgia Power entered intorepaid at maturity a $200 million short-term floating rate bank loan bearing interest based on term SOFR.entered into in March 2022.
In May 2022,Subsequent to March 31, 2023, Georgia Power issued $700repaid at maturity $100 million aggregate principal amount of its Series 2022A 4.70%N 5.750% Senior Notes due May 15, 2032 and $800 million aggregate principal amount of Series 2022B 5.125% Senior Notes due May 15, 2052. An amount equalNotes.
Also subsequent to the net proceeds of the Series 2022B Senior Notes will be 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 May 2022, Georgia Power repaid its $125 million long-term bank loan that was scheduled to mature in June 2022.
Subsequent to June 30, 2022,March 31, 2023, Georgia Power repaid at maturity $53a $200 million aggregate principal amount of Development Authority of Floyd County (Georgia) Pollution Control Revenue Bonds (Georgia Power Company Plant Hammond Project), First Series 2010.short-term floating rate bank loan entered into in April 2022.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Mississippi Power
In June 2022,March 2023, Mississippi Power repaid $20borrowed $50 million which was borrowed in March 2022 underof short-term debt pursuant to its $125 million revolving credit arrangement.arrangement bearing interest based on term SOFR.
Southern Power
In June 2022,January 2023, Southern Power repaidborrowed $100 million pursuant to a short-term uncommitted bank credit arrangement bearing interest at maturity €600 million (approximately $677 million) aggregate principal amount of Series 2016A 1.00% Senior Notes.a mutually agreed upon rate and payable on demand.
Southern Company Gas
During the first quarter 2022,In February 2023, Nicor Gas repaid one of its three $100$150 million and $50 million short-term floating rate bank loans entered into in February 2022 and March 2021. Nicor Gas also repaid $50 million of one of the other loans and increased the borrowing amount under the other loan to $150 million. In 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.
During the second quarter 2022, Atlanta Gas Light repaid at maturity $46 million aggregate principal amount of medium-term notes with a weighted average interest rate of 8.63%.respectively.
Credit Rating Risk
At June 30, 2022,March 31, 2023, 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.
The maximum potential collateral requirements under these contracts at June 30, 2022March 31, 2023 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$33 $1 $— $— $32 $— At BBB and/or Baa2$33 $1 $— $— $32 $— 
At BBB- and/or Baa3At BBB- and/or Baa3414 2 61 1 353 — At BBB- and/or Baa3407 2 60 1 345 — 
At BB+ and/or Ba1 or belowAt BB+ and/or Ba1 or below1,948 416 917 316 1,215 7 At BB+ and/or Ba1 or below2,086 422 937 320 1,233 69 
(*)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 $106 million of cash collateral posted related to PPA requirements at June 30, 2022.March 31, 2023.
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.
Also on February 22, 2022, Fitch revised the ratings outlook of Southern Company, Alabama Power, Southern Power, Nicor Gas, and SEGCO to negative from stable.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
During the sixthree months ended June 30, 2022,March 31, 2023, there were no material changes to Southern Company's, Alabama Power's, Georgia Power's, Mississippi Power's, Southern Power's, or Southern Company Gas' disclosures about market risk. 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 controlscontrol 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 secondfirst quarter 20222023 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.
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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-
Thirteenth Supplemental Indenture to Subordinated Note Indenture dated as of May 9, 2022, providing for the remarketing of the Series 2019A Remarketable Junior Subordinated Notes due August 1, 2024. (Designated in Form 8-K dated May 9, 2022, File No. 1-3526, as Exhibit 4.4(a).)
(a)2-
Fourteenth Supplemental Indenture to Subordinated Note Indenture dated as of May 9, 2022, providing for the remarketing of the Series 2019B Remarketable Junior Subordinated Notes due August 1, 2027. (Designated in Form 8-K dated May 9, 2022, File No. 1-3526, as Exhibit 4.4(b).)
Georgia Power
(c)1-
Sixty-FourthTwenty-Seventh Supplemental Indenture to Senior Note Indenture dated as of May 4, 2022,February 28, 2023, providing for the issuance of the Series 2022A 4.70%2023A Convertible Senior Notes due MayDecember 15, 2032.2025. (Designated in Form 8-K dated May 2, 2022,February 28, 2023, File No. 1-6468,1-3526, as Exhibit 4.2(a)4.2.)
(c)2-
Sixty-Fifth Supplemental Indenture to Senior Note Indenture dated as of May 4, 2022, providing for the issuance of the Series 2022B 5.125% Senior Notes due May 15, 2052. (Designated in Form 8-K dated May 2, 2022, File No. 1-6468, as Exhibit 4.2(b).)
(24) Power of Attorney and Resolutions
Southern Company
(a)-
Alabama Power
(b)1-
*(b)2-
Georgia Power
(c)1-
*(c)2-
Mississippi Power
(d)-
Southern Power
(e)-
Southern Company Gas
(f)1-
*(f)2-
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Southern Power
(e)1-
*(e)2-
Southern Company Gas
(f)-
(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-
Southern Power
*(e)1-
*(e)2-
Southern Company Gas
*(f)1-
*(f)2-
(32) Section 906 Certifications
Southern Company
*(a)-
151
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Alabama Power
*(b)-
Georgia Power
*(c)-
134
Table of ContentsIndex to Financial Statements
Mississippi Power
*(d)-
Southern Power
*(e)-
Southern Company Gas
*(f)-
(101) Interactive Data Files
*INS-Inline 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-Inline XBRL Taxonomy Extension Schema Document
*CAL-Inline XBRL Taxonomy Calculation Linkbase Document
*DEF-Inline XBRL Definition Linkbase Document
*LAB-Inline XBRL Taxonomy Label Linkbase Document
*PRE-Inline 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)
ByDaniel S. Tucker
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
By/s/ Melissa K. Caen
(Melissa K. Caen, Attorney-in-fact)
Date: July 27, 2022April 26, 2023
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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. CrosswhiteJ. Jeffrey Peoples
Chairman, President, and Chief Executive Officer
(Principal Executive Officer)
ByPhilip C. RaymondMoses H. Feagin
Executive Vice President, Chief Financial Officer, and Treasurer
(Principal Financial Officer)
By/s/ Melissa K. Caen
(Melissa K. Caen, Attorney-in-fact)
Date: July 27, 2022April 26, 2023
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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
ByChristopher C. WomackKimberly S. Greene
Chairman, President, and Chief Executive Officer
(Principal Executive Officer)
ByAaron 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: July 27, 2022April 26, 2023
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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. FeaginMatthew P. Grice
Senior Vice President, Chief Financial Officer, and Treasurer
(Principal Financial Officer)
By/s/ Melissa K. Caen
(Melissa K. Caen, Attorney-in-fact)
Date: July 27, 2022April 26, 2023
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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)
ByGary Kerr
Senior Vice President, Chief Financial Officer, and Treasurer
(Principal Financial Officer)
By/s/ Melissa K. Caen
(Melissa K. Caen, Attorney-in-fact)
Date: July 27, 2022April 26, 2023
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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. GreeneJames Y. Kerr II
Chairman, President, and Chief Executive Officer
(Principal Executive Officer)
ByDavid P. PorochGrace A. Kolvereid
Executive Vice President, Chief Financial Officer, and Treasurer
(Principal Financial Officer)
By/s/ Melissa K. Caen
(Melissa K. Caen, Attorney-in-fact)
Date: July 27, 2022April 26, 2023

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