0000092122so:WholesaleElectricRevenuesMember2022-01-012022-09-30NaturalGasDistributionMember2022-07-012022-09-300000092122us-gaap:CashFlowHedgingMemberso:SouthernCompanyGasMemberus-gaap:InterestRateContractMemberus-gaap:InterestExpenseMember2022-07-012022-09-30
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20222023
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 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
September 30, 20222023
The Southern CompanyPar Value $5 Per Share1,088,672,8281,090,619,349 
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
8
PART I—FINANCIAL INFORMATION
Item 1.
10
Item 2.
100
Item 3.
158160
Item 4.
158160
PART II—OTHER INFORMATION
Item 1.
159161
Item 1A.
159161
Item 2.Unregistered Sales of Equity Securities and Use of ProceedsInapplicable
Item 3.Defaults Upon Senior SecuritiesInapplicable
Item 4.Mine Safety DisclosuresInapplicable
Item 5.
Inapplicable161
Item 6.
159161
163164
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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
ASUAccounting Standards Update
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
Cooperative EnergyElectric generation and transmission cooperative in Mississippi
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
FASBFinancial Accounting Standards Board
FCCFederal Communications Commission
FERCFederal Energy Regulatory Commission
FFBFederal Financing Bank
First SolarFirst Solar Electric, LLC
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
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DEFINITIONS
(continued)
TermMeaning
Georgia PowerGeorgia Power Company
GHGGreenhouse gas
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 Power
Gulf Power Company, until January 1, 2019 a wholly-owned subsidiary of Southern Company;
effective January 1, 2021, Gulf Power Company merged with and into Florida Power and Light
Company, with Florida Power and Light Company remaining as the surviving company
4
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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
Illinois CommissionIllinois Commerce Commission
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
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DEFINITIONS
(continued)
TermMeaning
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
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 LincSouthern Communications Services, Inc., a wholly-owned subsidiary of Southern Company,
doing business as Southern Linc
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 CommissionVirginia State Corporation Commission
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
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DEFINITIONS
(continued)
TermMeaning
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 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 andUnit 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 Plant Vogtle Unit 4, inspections and the timely submittal by Southern Nuclear of the ITAAC documentation and the related investigations, reviews, and approvals by the NRC necessary to support NRC authorization to load fuel;matters; 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, or challenges yet to be identified, at Plant Vogtle Units 3 andUnit 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 past and ongoing 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 andUnit 4 not to proceed with construction;
•the ability of certain other Vogtle Owners to tender a portion of their ownership interests to Georgia Power following certain construction cost increases, including the purported exercises by OPC and Dalton of their tender options and related litigation;
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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;
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
(continued)
•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 COVID-19, 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.
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PART I
Item 1. Financial Statements (Unaudited).
 Page
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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
For the Three Months Ended September 30,For the Nine Months Ended September 30, For the Three Months Ended September 30,For the Nine Months Ended September 30,
2022202120222021 2023202220232022
(in millions)(in millions) (in millions)(in millions)
Operating Revenues:Operating Revenues:Operating Revenues:
Retail electric revenuesRetail electric revenues$5,961 $4,551 $14,363 $11,492 Retail electric revenues$5,139 $5,961 $12,597 $14,363 
Wholesale electric revenuesWholesale electric revenues1,197 731 2,798 1,822 Wholesale electric revenues727 1,197 1,930 2,798 
Other electric revenuesOther electric revenues185 179 554 525 Other electric revenues203 185 602 554 
Natural gas revenues (includes alternative revenue programs of
$(1), $(1), $—, and $3, respectively)
857 623 3,998 2,994 
Natural gas revenues (includes alternative revenue programs of
$—, $(1), $11, and $—, respectively)
Natural gas revenues (includes alternative revenue programs of
$—, $(1), $11, and $—, respectively)
689 857 3,417 3,998 
Other revenuesOther revenues178 154 519 513 Other revenues222 178 662 519 
Total operating revenuesTotal operating revenues8,378 6,238 22,232 17,346 Total operating revenues6,980 8,378 19,208 22,232 
Operating Expenses:Operating Expenses:Operating Expenses:
FuelFuel2,423 1,234 5,249 2,930 Fuel1,367 2,423 3,376 5,249 
Purchased powerPurchased power645 288 1,285 712 Purchased power207 645 680 1,285 
Cost of natural gasCost of natural gas294 129 1,840 943 Cost of natural gas102 294 1,199 1,840 
Cost of other salesCost of other sales92 71 275 255 Cost of other sales126 92 381 275 
Other operations and maintenanceOther operations and maintenance1,547 1,446 4,621 4,257 Other operations and maintenance1,424 1,527 4,352 4,568 
Depreciation and amortizationDepreciation and amortization922 896 2,728 2,658 Depreciation and amortization1,143 922 3,365 2,728 
Taxes other than income taxesTaxes other than income taxes352 312 1,073 969 Taxes other than income taxes341 352 1,076 1,073 
Estimated loss on Plant Vogtle Units 3 and 4Estimated loss on Plant Vogtle Units 3 and 4(70)264 (18)772 Estimated loss on Plant Vogtle Units 3 and 4160 (70)160 (18)
Gain on dispositions, net(20)(125)(53)(179)
Total operating expensesTotal operating expenses6,185 4,515 17,000 13,317 Total operating expenses4,870 6,185 14,589 17,000 
Operating IncomeOperating Income2,193 1,723 5,232 4,029 Operating Income2,110 2,193 4,619 5,232 
Other Income and (Expense):Other Income and (Expense):Other Income and (Expense):
Allowance for equity funds used during constructionAllowance for equity funds used during construction59 49 163 140 Allowance for equity funds used during construction66 59 200 163 
Earnings from equity method investmentsEarnings from equity method investments28 30 109 35 Earnings from equity method investments32 28 110 109 
Interest expense, net of amounts capitalizedInterest expense, net of amounts capitalized(511)(451)(1,461)(1,352)Interest expense, net of amounts capitalized(620)(511)(1,812)(1,461)
Other income (expense), netOther income (expense), net132 131 414 290 Other income (expense), net141 132 428 414 
Total other income and (expense)Total other income and (expense)(292)(241)(775)(887)Total other income and (expense)(381)(292)(1,074)(775)
Earnings Before Income TaxesEarnings Before Income Taxes1,901 1,482 4,457 3,142 Earnings Before Income Taxes1,729 1,901 3,545 4,457 
Income taxesIncome taxes414 372 891 550 Income taxes297 414 492 891 
Consolidated Net IncomeConsolidated Net Income1,487 1,110 3,566 2,592 Consolidated Net Income1,432 1,487 3,053 3,566 
Dividends on preferred stock of subsidiariesDividends on preferred stock of subsidiaries3 4 10 11 Dividends on preferred stock of subsidiaries— 3 — 10 
Net income (loss) attributable to noncontrolling interestsNet income (loss) attributable to noncontrolling interests12 5 (55)(27)Net income (loss) attributable to noncontrolling interests10 12 (68)(55)
Consolidated Net Income Attributable to
Southern Company		Consolidated Net Income Attributable to
Southern Company		$1,472 $1,101 $3,611 $2,608 Consolidated Net Income Attributable to
Southern Company		$1,422 $1,472 $3,121 $3,611 
Common Stock Data:Common Stock Data:Common Stock Data:
Earnings per share -Earnings per share -Earnings per share -
BasicBasic$1.36 $1.04 $3.38 $2.46 Basic$1.30 $1.36 $2.86 $3.38 
DilutedDiluted$1.35 $1.03 $3.36 $2.44 Diluted$1.29 $1.35 $2.84 $3.36 
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)
BasicBasic1,082 1,061 1,070 1,060 Basic1,092 1,082 1,092 1,070 
DilutedDiluted1,088 1,068 1,076 1,067 Diluted1,099 1,088 1,098 1,076 
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 September 30,For the Nine Months Ended September 30, For the Three Months Ended September 30,For the Nine Months Ended September 30,
2022202120222021 2023202220232022
(in millions)(in millions) (in millions)(in millions)
Consolidated Net IncomeConsolidated Net Income$1,487 $1,110 $3,566 $2,592 Consolidated Net Income$1,432 $1,487 $3,053 $3,566 
Other comprehensive income:Other comprehensive income:Other comprehensive income:
Qualifying hedges:Qualifying hedges:Qualifying hedges:
Changes in fair value, net of tax of
$2, $1, $(5), and $(4), respectively
— 1 (27)(15)
Reclassification adjustment for amounts included in net income,
net of tax of $8, $10, $32, and $27, respectively
26 31 100 81 
Changes in fair value, net of tax of
$3, $2, $(11), and $(5), respectively
Changes in fair value, net of tax of
$3, $2, $(11), and $(5), respectively
2 — (34)(27)
Reclassification adjustment for amounts included in net income,
net of tax of $12, $8, $25, and $32, respectively
Reclassification adjustment for amounts included in net income,
net of tax of $12, $8, $25, and $32, respectively
36 26 70 100 
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, $1, $3, and $4, respectively
2 4 8 10 
Reclassification adjustment for amounts included in net income,
net of tax of $—, $1, $—, and $3, respectively
Reclassification adjustment for amounts included in net income,
net of tax of $—, $1, $—, and $3, respectively
— 2 1 8 
Total other comprehensive incomeTotal other comprehensive income28 36 81 76 Total other comprehensive income38 28 37 81 
Comprehensive IncomeComprehensive Income1,515 1,146 3,647 2,668 Comprehensive Income1,470 1,515 3,090 3,647 
Dividends on preferred stock of subsidiariesDividends on preferred stock of subsidiaries3 4 10 11 Dividends on preferred stock of subsidiaries— 3 — 10 
Comprehensive income (loss) attributable to noncontrolling interestsComprehensive income (loss) attributable to noncontrolling interests12 5 (55)(27)Comprehensive income (loss) attributable to noncontrolling interests10 12 (68)(55)
Consolidated Comprehensive Income Attributable to
Southern Company		Consolidated Comprehensive Income Attributable to
Southern Company		$1,500 $1,137 $3,692 $2,684 Consolidated Comprehensive Income Attributable to
Southern Company		$1,460 $1,500 $3,158 $3,692 
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 STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Nine Months Ended September 30, For the Nine Months Ended September 30,
20222021 20232022
(in millions) (in millions)
Operating Activities:Operating Activities:Operating Activities:
Consolidated net incomeConsolidated net income$3,566 $2,592 Consolidated net income$3,053 $3,566 
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, total3,084 2,944 Depreciation and amortization, total3,699 3,084 
Deferred income taxesDeferred income taxes608 89 Deferred income taxes(52)608 
Utilization of federal investment tax creditsUtilization of federal investment tax credits266 256 Utilization of federal investment tax credits195 266 
Allowance for equity funds used during constructionAllowance for equity funds used during construction(163)(140)Allowance for equity funds used during construction(200)(163)
Mark-to-market adjustments(33)147 
Pension, postretirement, and other employee benefitsPension, postretirement, and other employee benefits(322)(218)Pension, postretirement, and other employee benefits(397)(322)
Settlement of asset retirement obligationsSettlement of asset retirement obligations(314)(341)Settlement of asset retirement obligations(444)(314)
Stock based compensation expenseStock based compensation expense116 134 Stock based compensation expense119 116 
Estimated loss on Plant Vogtle Units 3 and 4Estimated loss on Plant Vogtle Units 3 and 4(18)772 Estimated loss on Plant Vogtle Units 3 and 4160 (18)
Storm damage accrualsStorm damage accruals160 166 Storm damage accruals41 160 
Gain on dispositions, net(41)(171)
Natural gas cost under recovery – long-termNatural gas cost under recovery – long-term207 (79)Natural gas cost under recovery – long-term— 207 
Retail fuel cost under recovery – long-termRetail fuel cost under recovery – long-term(1,701)(209)Retail fuel cost under recovery – long-term(157)(1,701)
Other, netOther, net(45)156 Other, net(67)(119)
Changes in certain current assets and liabilities —Changes in certain current assets and liabilities —Changes in certain current assets and liabilities —
-Receivables-Receivables(327)2 -Receivables524 (316)
-Retail fuel cost under recovery-Retail fuel cost under recovery513 (104)
-Fossil fuel for generation-Fossil fuel for generation(254)(76)
-Materials and supplies-Materials and supplies(271)(138)
-Materials and supplies(138)(91)
-Natural gas for sale, net of temporary LIFO liquidation(136)20 
-Natural gas cost under recovery-Natural gas cost under recovery(124)(432)-Natural gas cost under recovery108 (124)
-Other current assets-Other current assets(343)(180)-Other current assets(32)(310)
-Accounts payable-Accounts payable805 (45)-Accounts payable(1,031)805 
-Accrued taxes-Accrued taxes167 288 -Accrued taxes376 167 
-Accrued compensation-Accrued compensation(123)(93)-Accrued compensation(197)(123)
-Accrued interest(101)(110)
-Retail fuel cost over recovery(1)(150)
-Customer refunds-Customer refunds(177)(52)
-Natural gas cost over recovery-Natural gas cost over recovery165 — 
-Other current liabilities-Other current liabilities(32)(226)-Other current liabilities66 (82)
Net cash provided from operating activitiesNet cash provided from operating activities5,017 5,081 Net cash provided from operating activities5,740 5,017 
Investing Activities:Investing Activities:Investing Activities:
Business acquisitions, net of cash acquired— (345)
Property additionsProperty additions(5,502)(5,222)Property additions(6,561)(5,502)
Nuclear decommissioning trust fund purchasesNuclear decommissioning trust fund purchases(858)(1,301)Nuclear decommissioning trust fund purchases(885)(858)
Nuclear decommissioning trust fund salesNuclear decommissioning trust fund sales854 1,297 Nuclear decommissioning trust fund sales879 854 
Proceeds from dispositionsProceeds from dispositions120 160 Proceeds from dispositions165 120 
Cost of removal, net of salvageCost of removal, net of salvage(518)(282)Cost of removal, net of salvage(421)(518)
Change in construction payables, netChange in construction payables, net241 15 
Payments pursuant to LTSAs(121)(145)
Other investing activitiesOther investing activities73 (12)Other investing activities(139)(63)
Net cash used for investing activitiesNet cash used for investing activities(5,952)(5,850)Net cash used for investing activities(6,721)(5,952)
Financing Activities:Financing Activities:Financing Activities:
Decrease in notes payable, netDecrease in notes payable, net(349)(203)Decrease in notes payable, net(298)(349)
Proceeds —Proceeds —Proceeds —
Long-term debtLong-term debt3,800 6,793 Long-term debt7,812 3,800 
Short-term borrowingsShort-term borrowings1,200 325 Short-term borrowings250 1,200 
Common stockCommon stock1,803 62 Common stock26 1,803 
Redemptions and repurchases —Redemptions and repurchases —Redemptions and repurchases —
Long-term debtLong-term debt(1,932)(3,060)Long-term debt(3,567)(1,932)
Short-term borrowingsShort-term borrowings(900)(25)Short-term borrowings(850)(900)
Capital contributions from noncontrolling interestsCapital contributions from noncontrolling interests73 415 Capital contributions from noncontrolling interests21 73 
Distributions to noncontrolling interestsDistributions to noncontrolling interests(175)(204)Distributions to noncontrolling interests(148)(175)
Payment of common stock dividendsPayment of common stock dividends(2,166)(2,077)Payment of common stock dividends(2,271)(2,166)
Other financing activitiesOther financing activities(235)(224)Other financing activities(141)(235)
Net cash provided from financing activitiesNet cash provided from financing activities1,119 1,802 Net cash provided from financing activities834 1,119 
Net Change in Cash, Cash Equivalents, and Restricted CashNet Change in Cash, Cash Equivalents, and Restricted Cash184 1,033 Net Change in Cash, Cash Equivalents, and Restricted Cash(147)184 
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$2,013 $2,101 Cash, Cash Equivalents, and Restricted Cash at End of Period$1,890 $2,013 
Supplemental Cash Flow Information:Supplemental Cash Flow Information:Supplemental Cash Flow Information:
Cash paid during the period for —Cash paid during the period for —Cash paid during the period for —
Interest (net of $74 and $68 capitalized for 2022 and 2021, respectively)$1,425 $1,417 
Interest (net of $97 and $74 capitalized for 2023 and 2022, respectively)Interest (net of $97 and $74 capitalized for 2023 and 2022, respectively)$1,694 $1,425 
Income taxes, netIncome taxes, net160 92 Income taxes, net11 160 
Noncash transactions —Noncash transactions —Noncash transactions —
Accrued property additions at end of periodAccrued property additions at end of period872 915 Accrued property additions at end of period1,224 872 
Contributions from noncontrolling interests— 89 
Contributions of wind turbine equipment— 82 
Right-of-use assets obtained under leases141 92 
Reassessment of right-of-use assets under operating leases40 — 
Right-of-use assets obtained under operating leasesRight-of-use assets obtained under operating leases76 27 
Right-of-use assets obtained under finance leasesRight-of-use assets obtained under finance leases3 114 
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.
13
    Table of Contents                                Index to Financial Statements
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
AssetsAssetsAt September 30, 2022At December 31, 2021AssetsAt September 30, 2023At December 31, 2022
(in millions) (in millions)
Current Assets:Current Assets:Current Assets:
Cash and cash equivalentsCash and cash equivalents$2,009 $1,798 Cash and cash equivalents$1,676 $1,917 
Receivables —Receivables —Receivables —
Customer accountsCustomer accounts2,223 1,806 Customer accounts2,230 2,128 
Unbilled revenuesUnbilled revenues593 711 Unbilled revenues547 1,012 
Under recovered fuel clause revenuesUnder recovered fuel clause revenues757 10 
Other accounts and notesOther accounts and notes533 523 Other accounts and notes553 637 
Accumulated provision for uncollectible accountsAccumulated provision for uncollectible accounts(80)(78)Accumulated provision for uncollectible accounts(78)(71)
Materials and suppliesMaterials and supplies1,657 1,543 Materials and supplies1,913 1,664 
Fossil fuel for generationFossil fuel for generation526 450 Fossil fuel for generation829 575 
Natural gas for saleNatural gas for sale498 362 Natural gas for sale406 438 
Prepaid expensesPrepaid expenses373 330 Prepaid expenses321 347 
Assets from risk management activities, net of collateralAssets from risk management activities, net of collateral289 151 Assets from risk management activities, net of collateral36 115 
Regulatory assets – asset retirement obligationsRegulatory assets – asset retirement obligations284 219 Regulatory assets – asset retirement obligations358 332 
Natural gas cost under recovery390 266 
Other regulatory assetsOther regulatory assets746 653 Other regulatory assets996 968 
Other current assetsOther current assets322 231 Other current assets544 344 
Total current assetsTotal current assets10,363 8,965 Total current assets11,088 10,416 
Property, Plant, and Equipment:Property, Plant, and Equipment:Property, Plant, and Equipment:
In serviceIn service116,236 115,592 In service125,573 117,529 
Less: Accumulated depreciationLess: Accumulated depreciation34,922 34,079 Less: Accumulated depreciation37,199 35,297 
Plant in service, net of depreciationPlant in service, net of depreciation81,314 81,513 Plant in service, net of depreciation88,374 82,232 
Other utility plant, netOther utility plant, net602 — Other utility plant, net522 599 
Nuclear fuel, at amortized costNuclear fuel, at amortized cost840 824 Nuclear fuel, at amortized cost862 843 
Construction work in progressConstruction work in progress10,773 8,771 Construction work in progress8,496 10,896 
Total property, plant, and equipmentTotal property, plant, and equipment93,529 91,108 Total property, plant, and equipment98,254 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 value2,031 2,542 Nuclear decommissioning trusts, at fair value2,207 2,145 
Equity investments in unconsolidated subsidiariesEquity investments in unconsolidated subsidiaries1,292 1,282 Equity investments in unconsolidated subsidiaries1,376 1,443 
Other intangible assets, net of amortization of $331 and $307, respectively415 445 
Other intangible assets, net of amortization of $367 and $340, respectivelyOther intangible assets, net of amortization of $367 and $340, respectively377 406 
Miscellaneous property and investmentsMiscellaneous property and investments590 653 Miscellaneous property and investments651 602 
Total other property and investmentsTotal other property and investments9,608 10,202 Total other property and investments9,772 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 amortization1,560 1,701 Operating lease right-of-use assets, net of amortization1,467 1,531 
Deferred charges related to income taxesDeferred charges related to income taxes854 824 Deferred charges related to income taxes889 866 
Prepaid pension costsPrepaid pension costs2,019 1,657 Prepaid pension costs2,574 2,290 
Unamortized loss on reacquired debtUnamortized loss on reacquired debt243 258 Unamortized loss on reacquired debt224 238 
Deferred under recovered fuel clause revenuesDeferred under recovered fuel clause revenues1,697 410 Deferred under recovered fuel clause revenues1,279 2,056 
Regulatory assets – asset retirement obligations, deferredRegulatory assets – asset retirement obligations, deferred6,519 5,466 Regulatory assets – asset retirement obligations, deferred5,629 5,764 
Other regulatory assets, deferredOther regulatory assets, deferred6,121 5,577 Other regulatory assets, deferred5,666 5,918 
Other deferred charges and assetsOther deferred charges and assets1,492 1,366 Other deferred charges and assets1,479 1,485 
Total deferred charges and other assetsTotal deferred charges and other assets20,505 17,259 Total deferred charges and other assets19,207 20,148 
Total AssetsTotal Assets$134,005 $127,534 Total Assets$138,321 $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
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
Liabilities and Stockholders' EquityLiabilities and Stockholders' EquityAt September 30, 2022At December 31, 2021Liabilities and Stockholders' EquityAt September 30, 2023At December 31, 2022
(in millions) (in millions)
Current Liabilities:Current Liabilities:Current Liabilities:
Securities due within one yearSecurities due within one year$3,241 $2,157 Securities due within one year$3,076 $4,285 
Notes payableNotes payable1,398 1,440 Notes payable1,726 2,609 
Accounts payableAccounts payable3,079 2,169 Accounts payable2,942 3,525 
Customer depositsCustomer deposits516 479 Customer deposits511 502 
Accrued taxes —Accrued taxes —Accrued taxes —
Accrued income taxesAccrued income taxes129 50 Accrued income taxes177 60 
Other accrued taxesOther accrued taxes882 641 Other accrued taxes862 764 
Accrued interestAccrued interest431 533 Accrued interest573 614 
Accrued compensationAccrued compensation961 1,070 Accrued compensation936 1,127 
Asset retirement obligationsAsset retirement obligations689 697 Asset retirement obligations727 694 
Liabilities from risk management activities, net of collateralLiabilities from risk management activities, net of collateral232 178 
Operating lease obligationsOperating lease obligations191 250 Operating lease obligations181 197 
Natural gas cost over recoveryNatural gas cost over recovery165 — 
Other regulatory liabilitiesOther regulatory liabilities440 563 Other regulatory liabilities163 382 
Other current liabilitiesOther current liabilities844 872 Other current liabilities943 787 
Total current liabilitiesTotal current liabilities12,801 10,921 Total current liabilities13,214 15,724 
Long-term DebtLong-term Debt50,427 50,120 Long-term Debt56,003 50,656 
Deferred Credits and Other Liabilities:Deferred Credits and Other Liabilities:Deferred Credits and Other Liabilities:
Accumulated deferred income taxesAccumulated deferred income taxes9,916 8,862 Accumulated deferred income taxes10,774 10,036 
Deferred credits related to income taxesDeferred credits related to income taxes5,271 5,401 Deferred credits related to income taxes4,813 5,235 
Accumulated deferred ITCsAccumulated deferred ITCs2,154 2,216 Accumulated deferred ITCs2,071 2,133 
Employee benefit obligationsEmployee benefit obligations1,466 1,550 Employee benefit obligations1,184 1,238 
Operating lease obligations, deferredOperating lease obligations, deferred1,393 1,503 Operating lease obligations, deferred1,320 1,388 
Asset retirement obligations, deferredAsset retirement obligations, deferred11,007 10,990 Asset retirement obligations, deferred9,872 10,146 
Other cost of removal obligationsOther cost of removal obligations1,950 2,103 Other cost of removal obligations1,940 1,903 
Other regulatory liabilities, deferredOther regulatory liabilities, deferred536 485 Other regulatory liabilities, deferred660 733 
Other deferred credits and liabilitiesOther deferred credits and liabilities1,366 816 Other deferred credits and liabilities1,166 1,167 
Total deferred credits and other liabilitiesTotal deferred credits and other liabilities35,059 33,926 Total deferred credits and other liabilities33,800 33,979 
Total LiabilitiesTotal Liabilities98,287 94,967 Total Liabilities103,017 100,359 
Redeemable Preferred Stock of Subsidiaries242 291 
Total Stockholders' Equity (See accompanying statements)
Total Stockholders' Equity (See accompanying statements)
35,476 32,276 
Total Stockholders' Equity (See accompanying statements)
35,304 34,532 
Total Liabilities and Stockholders' EquityTotal Liabilities and Stockholders' Equity$134,005 $127,534 Total Liabilities and Stockholders' Equity$138,321 $134,891 
The accompanying notes as they relate to Southern Company are an integral part of these condensed consolidated financial statements.
15
    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— — — 7 (2)2 — — 7 
Balance at March 31, 2022Balance at March 31, 20221,064 (1)5,286 11,994 (49)11,261 (195)4,332 32,629 
Consolidated net income (loss)Consolidated net income (loss)— — — — — 1,107 — (22)1,085 
Other comprehensive incomeOther comprehensive income— — — — — — 11 — 11 
Stock issuedStock issued— — 2 21 — — — — 23 
Stock-based compensationStock-based compensation— — — 14 — — — — 14 
Cash dividends of $0.68 per shareCash dividends of $0.68 per share— — — — — (723)— — (723)
Distributions to noncontrolling interestsDistributions to noncontrolling interests— — — — — — — (28)(28)
OtherOther— — — 1 (2)1 — — — Other— — — 4 (2)— — — 2 
Balance at June 30, 20211,060 (1)5,274 11,886 (48)11,442 (355)4,547 32,746 
Balance at June 30, 2022Balance at June 30, 20221,064 (1)5,288 12,033 (51)11,645 (184)4,282 33,013 
Consolidated net incomeConsolidated net income— — — — — 1,101 — 5 1,106 Consolidated net income— — — — — 1,472 — 12 1,484 
Other comprehensive incomeOther comprehensive income— — — — — — 36 — 36 Other comprehensive income— — — — — — 28 — 28 
Stock issuedStock issued1 — 4 34 — — — — 38 Stock issued26 — 129 1,613 — — — — 1,742 
Stock-based compensationStock-based compensation— — — 22 — — — — 22 Stock-based compensation— — — 15 — — — — 15 
Cash dividends of $0.66 per share— — — — — (700)— — (700)
Cash dividends of $0.68 per shareCash dividends of $0.68 per share— — — — — (741)— — (741)
Capital contributions from
noncontrolling interests		— — — — — — — 72 72 
Distributions to noncontrolling interestsDistributions to noncontrolling interests— — — — — — — (94)(94)Distributions to noncontrolling interests— — — — — — — (57)(57)
OtherOther— — — (10)2 1 — — (7)Other— — — (4)(1)(2)(1)— (8)
Balance at September 30, 20211,061 (1)$5,278 $11,932 $(46)$11,844 $(319)$4,530 $33,219 
Balance at September 30, 2022Balance at September 30, 20221,090 (1)$5,417 $13,657 $(52)$12,374 $(157)$4,237 $35,476 
16
    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, 20211,061 (1)$5,279 $11,950 $(47)$10,929 $(237)$4,402 $32,276 
Balance at December 31, 2022Balance at December 31, 20221,090 (1)$5,417 $13,673 $(53)$11,538 $(167)$4,124 $34,532 
Consolidated net income (loss)Consolidated net income (loss)— — — — — 1,032 — (45)987 Consolidated net income (loss)— — — — — 862 — (63)799 
Other comprehensive income— — — — — — 42 — 42 
Other comprehensive income (loss)Other comprehensive income (loss)— — — — — — (44)— (44)
Stock issuedStock issued3 — 7 31 — — — — 38 Stock issued2 — 4 11 — — — — 15 
Stock-based compensationStock-based compensation— — — 6 — — — — 6 Stock-based compensation— — — 29 — — — — 29 
Cash dividends of $0.66 per share— — — — — (702)— — (702)
Cash dividends of $0.68 per shareCash dividends of $0.68 per share— — — — — (742)— — (742)
Capital contributions from
noncontrolling interests		Capital contributions from
noncontrolling interests		— — — — — — — 73 73 Capital contributions from
noncontrolling interests		— — — — — — — 21 21 
Distributions to noncontrolling interestsDistributions to noncontrolling interests— — — — — — — (98)(98)Distributions to noncontrolling interests— — — — — — — (48)(48)
OtherOther— — — 7 (2)2 — — 7 Other— — — 2 (2)— — — — 
Balance at March 31, 20221,064 (1)5,286 11,994 (49)11,261 (195)4,332 32,629 
Balance at March 31, 2023Balance at March 31, 20231,092 (1)5,421 13,715 (55)11,658 (211)4,034 34,562 
Consolidated net income (loss)Consolidated net income (loss)— — — — — 1,107 — (22)1,085 Consolidated net income (loss)— — — — — 838 — (15)823 
Other comprehensive incomeOther comprehensive income— — — — — — 11 — 11 Other comprehensive income— — — — — — 43 — 43 
Stock issuedStock issued— — 2 21 — — — — 23 Stock issued— — 1 6 — — — — 7 
Stock-based compensationStock-based compensation— — — 14 — — — — 14 Stock-based compensation— — — 19 — — — — 19 
Cash dividends of $0.68 per share— — — — — (723)— — (723)
Cash dividends of $0.70 per shareCash dividends of $0.70 per share— — — — — (764)— — (764)
Distributions to noncontrolling interestsDistributions to noncontrolling interests— — — — — — — (28)(28)Distributions to noncontrolling interests— — — — — — — (42)(42)
OtherOther— — — 4 (2)— — — 2 Other— — — 2 (1)— — (1)— 
Balance at June 30, 20221,064 (1)5,288 12,033 (51)11,645 (184)4,282 33,013 
Balance at June 30, 2023Balance at June 30, 20231,092 (1)5,422 13,742 (56)11,732 (168)3,976 34,648 
Consolidated net incomeConsolidated net income— — — — — 1,472 — 12 1,484 Consolidated net income— — — — — 1,422 — 10 1,432 
Other comprehensive incomeOther comprehensive income— — — — — — 28 — 28 Other comprehensive income— — — — — — 38 — 38 
Stock issuedStock issued26 — 129 1,613 — — — — 1,742 Stock issued— — — 4 — — — — 4 
Stock-based compensationStock-based compensation— — — 15 — — — — 15 Stock-based compensation— — — 7 — — — — 7 
Cash dividends of $0.68 per share— — — — — (741)— — (741)
Cash dividends of $0.70 per shareCash dividends of $0.70 per share— — — — — (765)— — (765)
Distributions to noncontrolling interestsDistributions to noncontrolling interests— — — — — — — (57)(57)Distributions to noncontrolling interests— — — — — — — (59)(59)
OtherOther— — — (4)(1)(2)(1)— (8)Other— — — (2)(1)2 — — (1)
Balance at September 30, 20221,090 (1)$5,417 $13,657 $(52)$12,374 $(157)$4,237 $35,476 
Balance at September 30, 2023Balance at September 30, 20231,092 (1)$5,422 $13,751 $(57)$12,391 $(130)$3,927 $35,304 

The accompanying notes as they relate to Southern Company are an integral part of these condensed consolidated financial statements.

17
    Table of Contents                                Index to Financial Statements

ALABAMA POWER COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
 
For the Three Months Ended September 30,For the Nine Months Ended September 30,For the Three Months Ended September 30,For the Nine Months Ended September 30,
2022202120222021 2023202220232022
(in millions)(in millions) (in millions)(in millions)
Operating Revenues:Operating Revenues:Operating Revenues:
Retail revenuesRetail revenues$2,008 $1,651 $5,015 $4,357 Retail revenues$1,860 $2,008 $4,708 $5,015 
Wholesale revenues, non-affiliatesWholesale revenues, non-affiliates250 107 522 285 Wholesale revenues, non-affiliates106 250 358 522 
Wholesale revenues, affiliatesWholesale revenues, affiliates70 53 170 109 Wholesale revenues, affiliates14 70 43 170 
Other revenuesOther revenues116 93 316 268 Other revenues103 116 311 316 
Total operating revenuesTotal operating revenues2,444 1,904 6,023 5,019 Total operating revenues2,083 2,444 5,420 6,023 
Operating Expenses:Operating Expenses:Operating Expenses:
FuelFuel666 373 1,399 927 Fuel402 666 1,013 1,399 
Purchased power, non-affiliatesPurchased power, non-affiliates185 76 347 173 Purchased power, non-affiliates42 185 197 347 
Purchased power, affiliatesPurchased power, affiliates113 45 260 114 Purchased power, affiliates80 113 193 260 
Other operations and maintenanceOther operations and maintenance418 401 1,270 1,175 Other operations and maintenance411 418 1,275 1,270 
Depreciation and amortizationDepreciation and amortization220 214 652 640 Depreciation and amortization351 220 1,045 652 
Taxes other than income taxesTaxes other than income taxes106 99 309 303 Taxes other than income taxes110 106 333 309 
Total operating expensesTotal operating expenses1,708 1,208 4,237 3,332 Total operating expenses1,396 1,708 4,056 4,237 
Operating IncomeOperating Income736 696 1,786 1,687 Operating Income687 736 1,364 1,786 
Other Income and (Expense):Other Income and (Expense):Other Income and (Expense):
Allowance for equity funds used during constructionAllowance for equity funds used during construction18 14 51 38 Allowance for equity funds used during construction23 18 65 51 
Interest expense, net of amounts capitalizedInterest expense, net of amounts capitalized(98)(84)(278)(252)Interest expense, net of amounts capitalized(104)(98)(311)(278)
Other income (expense), netOther income (expense), net38 29 101 93 Other income (expense), net38 38 117 101 
Total other income and (expense)Total other income and (expense)(42)(41)(126)(121)Total other income and (expense)(43)(42)(129)(126)
Earnings Before Income TaxesEarnings Before Income Taxes694 655 1,660 1,566 Earnings Before Income Taxes644 694 1,235 1,660 
Income taxesIncome taxes166 152 394 366 Income taxes79 166 103 394 
Net IncomeNet Income528 503 1,266 1,200 Net Income565 528 1,132 1,266 
Dividends on Preferred StockDividends on Preferred Stock3 4 10 11 Dividends on Preferred Stock— 3 — 10 
Net Income After Dividends on Preferred StockNet Income After Dividends on Preferred Stock$525 $499 $1,256 $1,189 Net Income After Dividends on Preferred Stock$565 $525 $1,132 $1,256 

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
 
For the Three Months Ended September 30,For the Nine Months Ended September 30,For the Three Months Ended September 30,For the Nine Months Ended September 30,
2022202120222021 2023202220232022
(in millions)(in millions) (in millions)(in millions)
Net IncomeNet Income$528 $503 $1,266 $1,200 Net Income$565 $528 $1,132 $1,266 
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 $1, respectively
1 4 (1)3 
Reclassification adjustment for amounts included in net income,
net of tax of $—, $—, $1, and $1, respectively
1 1 3 3 
Changes in fair value, net of tax of
$—, $—, $—, and $—, respectively
Changes in fair value, net of tax of
$—, $—, $—, and $—, respectively
— 1 1 (1)
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 1 3 
Total other comprehensive incomeTotal other comprehensive income2 5 2 6 Total other comprehensive income1 2 2 2 
Comprehensive IncomeComprehensive Income$530 $508 $1,268 $1,206 Comprehensive Income$566 $530 $1,134 $1,268 
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 STATEMENTS OF CASH FLOWS (UNAUDITED)
 
For the Nine Months Ended September 30, For the Nine Months Ended September 30,
20222021 20232022
(in millions) (in millions)
Operating Activities:Operating Activities:Operating Activities:
Net incomeNet income$1,266 $1,200 Net income$1,132 $1,266 
Adjustments to reconcile net income to net cash provided from operating activities —Adjustments to reconcile net income to net cash provided from operating activities —Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, totalDepreciation and amortization, total817 748 Depreciation and amortization, total1,158 817 
Deferred income taxesDeferred income taxes210 104 Deferred income taxes(210)210 
Pension, postretirement, and other employee benefitsPension, postretirement, and other employee benefits(85)(74)Pension, postretirement, and other employee benefits(148)(85)
Settlement of asset retirement obligationsSettlement of asset retirement obligations(139)(152)Settlement of asset retirement obligations(188)(139)
Retail fuel cost under recovery – long-termRetail fuel cost under recovery – long-term(413)— Retail fuel cost under recovery – long-term— (413)
Other, netOther, net(98)(51)Other, net(21)(98)
Changes in certain current assets and liabilities —Changes in certain current assets and liabilities —Changes in certain current assets and liabilities —
-Receivables-Receivables(296)(128)-Receivables(108)(296)
-Fossil fuel stock-Fossil fuel stock(40)91 -Fossil fuel stock(113)(40)
-Prepayments(34)(24)
-Retail fuel cost under recovery-Retail fuel cost under recovery(93)(79)-Retail fuel cost under recovery334 (93)
-Other current assets-Other current assets(41)(32)-Other current assets(124)(75)
-Accounts payable-Accounts payable(22)(230)-Accounts payable(358)(22)
-Accrued taxes-Accrued taxes110 178 -Accrued taxes271 110 
-Other current liabilities-Other current liabilities(70)(132)-Other current liabilities(103)(70)
Net cash provided from operating activitiesNet cash provided from operating activities1,072 1,419 Net cash provided from operating activities1,522 1,072 
Investing Activities:Investing Activities:Investing Activities:
Property additionsProperty additions(1,483)(1,235)Property additions(1,377)(1,483)
Nuclear decommissioning trust fund purchasesNuclear decommissioning trust fund purchases(273)(536)Nuclear decommissioning trust fund purchases(226)(273)
Nuclear decommissioning trust fund salesNuclear decommissioning trust fund sales273 536 Nuclear decommissioning trust fund sales226 273 
Cost of removal, net of salvageCost of removal, net of salvage(163)(93)Cost of removal, net of salvage(128)(163)
Change in construction payablesChange in construction payables(68)36 
Other investing activitiesOther investing activities5 (7)Other investing activities27 (31)
Net cash used for investing activitiesNet cash used for investing activities(1,641)(1,335)Net cash used for investing activities(1,546)(1,641)
Financing Activities:Financing Activities:Financing Activities:
Proceeds —Proceeds —
Senior notesSenior notes200 1,700 
Proceeds — Senior notes1,700 600 
Revenue bondsRevenue bonds326 — 
Other long-term debtOther long-term debt28 — 
Redemptions — Senior notesRedemptions — Senior notes— (550)
Redemptions —
Senior notes(550)(200)
Other long-term debt— (206)
Capital contributions from parent companyCapital contributions from parent company660 630 Capital contributions from parent company380 660 
Payment of common stock dividendsPayment of common stock dividends(762)(738)Payment of common stock dividends(856)(762)
Other financing activitiesOther financing activities(81)(30)Other financing activities(12)(81)
Net cash provided from financing activitiesNet cash provided from financing activities967 56 Net cash provided from financing activities66 967 
Net Change in Cash, Cash Equivalents, and Restricted CashNet Change in Cash, Cash Equivalents, and Restricted Cash398 140 Net Change in Cash, Cash Equivalents, and Restricted Cash42 398 
Cash, Cash Equivalents, and Restricted Cash at Beginning of PeriodCash, Cash Equivalents, and Restricted Cash at Beginning of Period1,060 530 Cash, Cash Equivalents, and Restricted Cash at Beginning of Period687 1,060 
Cash, Cash Equivalents, and Restricted Cash at End of PeriodCash, Cash Equivalents, and Restricted Cash at End of Period$1,458 $670 Cash, Cash Equivalents, and Restricted Cash at End of Period$729 $1,458 
Supplemental Cash Flow Information:Supplemental Cash Flow Information:Supplemental Cash Flow Information:
Cash paid during the period for —Cash paid during the period for —Cash paid during the period for —
Interest (net of $14 and $11 capitalized for 2022 and 2021, respectively)$278 $246 
Interest (net of $21 and $14 capitalized for 2023 and 2022, respectively)Interest (net of $21 and $14 capitalized for 2023 and 2022, respectively)$329 $278 
Income taxes, netIncome taxes, net178 183 Income taxes, net152 178 
Noncash transactions —Noncash transactions —Noncash transactions —
Accrued property additions at end of periodAccrued property additions at end of period186 178 Accrued property additions at end of period114 186 
Right-of-use assets obtained under leases9 2 
Right-of-use assets obtained under operating leasesRight-of-use assets obtained under operating leases28 7 
Right-of-use assets obtained under finance leasesRight-of-use assets obtained under finance leases3 2 
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)
 
AssetsAssetsAt September 30, 2022At December 31, 2021AssetsAt September 30, 2023At December 31, 2022
(in millions)(in millions)
Current Assets:Current Assets:Current Assets:
Cash and cash equivalentsCash and cash equivalents$1,458 $1,060 Cash and cash equivalents$621 $687 
Receivables —Receivables —Receivables —
Customer accountsCustomer accounts573 410 Customer accounts624 431 
Unbilled revenuesUnbilled revenues146 138 Unbilled revenues162 174 
AffiliatedAffiliated84 37 Affiliated113 101 
Other accounts and notesOther accounts and notes131 55 Other accounts and notes114 153 
Accumulated provision for uncollectible accountsAccumulated provision for uncollectible accounts(13)(14)Accumulated provision for uncollectible accounts(16)(14)
Fossil fuel stockFossil fuel stock199 159 Fossil fuel stock342 229 
Materials and suppliesMaterials and supplies568 548 Materials and supplies624 557 
Prepaid expensesPrepaid expenses67 41 Prepaid expenses72 65 
Other regulatory assetsOther regulatory assets298 208 Other regulatory assets549 474 
Other current assetsOther current assets129 67 Other current assets171 67 
Total current assetsTotal current assets3,640 2,709 Total current assets3,376 2,924 
Property, Plant, and Equipment:Property, Plant, and Equipment:Property, Plant, and Equipment:
In serviceIn service33,042 33,135 In service34,313 33,472 
Less: Accumulated provision for depreciationLess: Accumulated provision for depreciation10,393 10,313 Less: Accumulated provision for depreciation11,042 10,470 
Plant in service, net of depreciationPlant in service, net of depreciation22,649 22,822 Plant in service, net of depreciation23,271 23,002 
Other utility plant, netOther utility plant, net602 — Other utility plant, net522 599 
Nuclear fuel, at amortized costNuclear fuel, at amortized cost242 247 Nuclear fuel, at amortized cost240 239 
Construction work in progressConstruction work in progress1,524 1,147 Construction work in progress1,759 1,526 
Total property, plant, and equipmentTotal property, plant, and equipment25,017 24,216 Total property, plant, and equipment25,792 25,366 
Other Property and Investments:Other Property and Investments:Other Property and Investments:
Nuclear decommissioning trusts, at fair valueNuclear decommissioning trusts, at fair value1,067 1,325 Nuclear decommissioning trusts, at fair value1,165 1,127 
Equity investments in unconsolidated subsidiariesEquity investments in unconsolidated subsidiaries58 57 Equity investments in unconsolidated subsidiaries53 57 
Miscellaneous property and investmentsMiscellaneous property and investments128 126 Miscellaneous property and investments156 124 
Total other property and investmentsTotal other property and investments1,253 1,508 Total other property and investments1,374 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 amortization70 108 Operating lease right-of-use assets, net of amortization88 71 
Deferred charges related to income taxesDeferred charges related to income taxes248 240 Deferred charges related to income taxes263 250 
Prepaid pension and other postretirement benefit costsPrepaid pension and other postretirement benefit costs605 513 Prepaid pension and other postretirement benefit costs735 657 
Regulatory assets – asset retirement obligationsRegulatory assets – asset retirement obligations1,952 1,547 Regulatory assets – asset retirement obligations1,881 1,845 
Other regulatory assets, deferredOther regulatory assets, deferred2,048 1,807 Other regulatory assets, deferred1,706 2,107 
Other deferred charges and assetsOther deferred charges and assets413 334 Other deferred charges and assets455 442 
Total deferred charges and other assetsTotal deferred charges and other assets5,336 4,549 Total deferred charges and other assets5,128 5,372 
Total AssetsTotal Assets$35,246 $32,982 Total Assets$35,670 $34,970 
The accompanying notes as they relate to Alabama Power are an integral part of these condensed financial statements.

20
    Table of Contents                                Index to Financial Statements
ALABAMA POWER COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)
 
Liabilities and Stockholder's EquityLiabilities and Stockholder's EquityAt September 30, 2022At December 31, 2021Liabilities and Stockholder's EquityAt September 30, 2023At December 31, 2022
(in millions) (in millions)
Current Liabilities:Current Liabilities:Current Liabilities:
Securities due within one yearSecurities due within one year$202 $751 Securities due within one year$522 $301 
Accounts payable —Accounts payable —Accounts payable —
AffiliatedAffiliated401 309 Affiliated305 443 
OtherOther376 459 Other377 641 
Customer depositsCustomer deposits106 106 Customer deposits105 106 
Accrued taxesAccrued taxes209 98 Accrued taxes305 57 
Accrued interestAccrued interest86 100 Accrued interest84 120 
Accrued compensationAccrued compensation200 219 Accrued compensation193 229 
Asset retirement obligationsAsset retirement obligations327 320 Asset retirement obligations342 330 
Other regulatory liabilitiesOther regulatory liabilities89 215 Other regulatory liabilities28 96 
Other current liabilitiesOther current liabilities97 125 Other current liabilities158 91 
Total current liabilitiesTotal current liabilities2,093 2,702 Total current liabilities2,419 2,414 
Long-term DebtLong-term Debt10,628 8,936 Long-term Debt10,661 10,329 
Deferred Credits and Other Liabilities:Deferred Credits and Other Liabilities:Deferred Credits and Other Liabilities:
Accumulated deferred income taxesAccumulated deferred income taxes3,829 3,573 Accumulated deferred income taxes4,082 3,981 
Deferred credits related to income taxesDeferred credits related to income taxes1,930 1,968 Deferred credits related to income taxes1,626 1,925 
Accumulated deferred ITCsAccumulated deferred ITCs82 88 Accumulated deferred ITCs76 81 
Employee benefit obligationsEmployee benefit obligations171 171 Employee benefit obligations146 145 
Operating lease obligationsOperating lease obligations65 66 Operating lease obligations81 67 
Asset retirement obligations, deferredAsset retirement obligations, deferred3,987 4,014 Asset retirement obligations, deferred3,859 3,957 
Other cost of removal obligations57 192 
Other regulatory liabilities, deferredOther regulatory liabilities, deferred226 210 Other regulatory liabilities, deferred284 315 
Other deferred credits and liabilitiesOther deferred credits and liabilities62 58 Other deferred credits and liabilities85 69 
Total deferred credits and other liabilitiesTotal deferred credits and other liabilities10,409 10,340 Total deferred credits and other liabilities10,239 10,540 
Total LiabilitiesTotal Liabilities23,130 21,978 Total Liabilities23,319 23,283 
Redeemable Preferred Stock242 291 
Common Stockholder's Equity (See accompanying statements)
Common Stockholder's Equity (See accompanying statements)
11,874 10,713 
Common Stockholder's Equity (See accompanying statements)
12,351 11,687 
Total Liabilities and Stockholder's EquityTotal Liabilities and Stockholder's Equity$35,246 $32,982 Total Liabilities and Stockholder's Equity$35,670 $34,970 
The accompanying notes as they relate to Alabama Power are an integral part of these condensed financial statements.
21
    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)		TotalNumber 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 
Net income after dividends on
preferred stock		— — — 499 — 499 
Capital contributions from parent company— — 9 — — 9 
Other comprehensive income— — — — 5 5 
Cash dividends on common stock— — — (246)— (246)
Other— — — — (1)(1)
Balance at September 30, 202131 $1,222 $6,050 $3,644 $(13)$10,903 
(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		Net income after dividends on
preferred stock		— — — 383 — 383 Net income after dividends on
preferred stock		— — — 383 — 383 
Capital contributions from parent companyCapital contributions from parent company— — 32 — — 32 Capital contributions from parent company— — 32 — — 32 
Other comprehensive incomeOther comprehensive income— — — — 1 1 Other comprehensive income— — — — 1 1 
Cash dividends on common stockCash dividends on common stock— — — (254)— (254)Cash dividends on common stock— — — (254)— (254)
Balance at June 30, 2022Balance at June 30, 202231 1,222 6,714 3,670 (12)11,594 Balance at June 30, 202231 1,222 6,714 3,670 (12)11,594 
Net income after dividends on
preferred stock		Net income after dividends on
preferred stock		— — — 525 — 525 Net income after dividends on
preferred stock		— — — 525 — 525 
Capital contributions from parent companyCapital contributions from parent company— — 7 — — 7 Capital contributions from parent company— — 7 — — 7 
Other comprehensive incomeOther comprehensive income— — — — 2 2 Other comprehensive income— — — — 2 2 
Cash dividends on common stockCash dividends on common stock— — — (254)— (254)Cash dividends on common stock— — — (254)— (254)
Balance at September 30, 2022Balance at September 30, 202231 $1,222 $6,721 $3,941 $(10)$11,874 Balance at September 30, 202231 $1,222 $6,721 $3,941 $(10)$11,874 
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 
Net income after dividends on
preferred stock		Net income after dividends on
preferred stock		— — — 312 — 312 
Capital contributions from parent companyCapital contributions from parent company— — 29 — — 29 
Cash dividends on common stockCash dividends on common stock— — — (286)— (286)
Balance at June 30, 2023Balance at June 30, 202331 1,222 7,069 3,760 (9)12,042 
Net income after dividends on
preferred stock		Net income after dividends on
preferred stock		— — — 565 — 565 
Capital contributions from parent companyCapital contributions from parent company— — 28 — — 28 
Other comprehensive incomeOther comprehensive income— — — — 1 1 
Cash dividends on common stockCash dividends on common stock— — — (285)— (285)
Balance at September 30, 2023Balance at September 30, 202331 $1,222 $7,097 $4,040 $(8)$12,351 
The accompanying notes as they relate to Alabama Power are an integral part of these condensed financial statements.

22
    Table of Contents                                Index to Financial Statements

GEORGIA POWER COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
For the Three Months Ended September 30,For the Nine Months Ended September 30, For the Three Months Ended September 30,For the Nine Months Ended September 30,
2022202120222021 2023202220232022
(in millions)(in millions) (in millions)(in millions)
Operating Revenues:Operating Revenues:Operating Revenues:
Retail revenuesRetail revenues$3,703 $2,652 $8,629 $6,465 Retail revenues$2,996 $3,703 $7,142 $8,629 
Wholesale revenuesWholesale revenues56 63 186 143 Wholesale revenues69 56 147 186 
Other revenuesOther revenues130 141 403 442 Other revenues172 130 516 403 
Total operating revenuesTotal operating revenues3,889 2,856 9,218 7,050 Total operating revenues3,237 3,889 7,805 9,218 
Operating Expenses:Operating Expenses:Operating Expenses:
FuelFuel841 432 1,887 1,088 Fuel576 841 1,392 1,887 
Purchased power, non-affiliatesPurchased power, non-affiliates304 173 700 461 Purchased power, non-affiliates131 304 397 700 
Purchased power, affiliatesPurchased power, affiliates571 288 1,100 573 Purchased power, affiliates221 571 579 1,100 
Other operations and maintenanceOther operations and maintenance595 544 1,686 1,558 Other operations and maintenance512 595 1,505 1,686 
Depreciation and amortizationDepreciation and amortization359 345 1,066 1,025 Depreciation and amortization429 359 1,248 1,066 
Taxes other than income taxesTaxes other than income taxes155 130 420 365 Taxes other than income taxes144 155 406 420 
Estimated loss on Plant Vogtle Units 3 and 4Estimated loss on Plant Vogtle Units 3 and 4(70)264 (18)772 Estimated loss on Plant Vogtle Units 3 and 4160 (70)160 (18)
Total operating expensesTotal operating expenses2,755 2,176 6,841 5,842 Total operating expenses2,173 2,755 5,687 6,841 
Operating IncomeOperating Income1,134 680 2,377 1,208 Operating Income1,064 1,134 2,118 2,377 
Other Income and (Expense):Other Income and (Expense):Other Income and (Expense):
Allowance for equity funds used during constructionAllowance for equity funds used during construction37 33 102 94 Allowance for equity funds used during construction37 37 121 102 
Interest expense, net of amounts capitalizedInterest expense, net of amounts capitalized(123)(106)(347)(315)Interest expense, net of amounts capitalized(166)(123)(472)(347)
Other income (expense), netOther income (expense), net36 42 140 124 Other income (expense), net45 36 125 140 
Total other income and (expense)Total other income and (expense)(50)(31)(105)(97)Total other income and (expense)(84)(50)(226)(105)
Earnings Before Income TaxesEarnings Before Income Taxes1,084 649 2,272 1,111 Earnings Before Income Taxes980 1,084 1,892 2,272 
Income taxesIncome taxes226 113 421 81 Income taxes200 226 345 421 
Net IncomeNet Income$858 $536 $1,851 $1,030 Net Income$780 $858 $1,547 $1,851 
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
For the Three Months Ended September 30,For the Nine Months Ended September 30, For the Three Months Ended September 30,For the Nine Months Ended September 30,
2022202120222021 2023202220232022
(in millions)(in millions) (in millions)(in millions)
Net IncomeNet Income$858 $536 $1,851 $1,030 Net Income$780 $858 $1,547 $1,851 
Other comprehensive income:Other comprehensive income:Other comprehensive income:
Qualifying hedges:Qualifying hedges:Qualifying hedges:
Changes in fair value, net of tax of
$—, $—, $8, and $—, respectively
— — 23 — 
Reclassification adjustment for amounts included in net income,
net of tax of $—, $1, $1, and $2, respectively
1 2 4 5 
Changes in fair value, net of tax of
$—, $—, $(1), and $8, respectively
Changes in fair value, net of tax of
$—, $—, $(1), and $8, respectively
— — (1)23 
Reclassification adjustment for amounts included in net income,
net of tax of $—, $—, $1, and $1, respectively
Reclassification adjustment for amounts included in net income,
net of tax of $—, $—, $1, and $1, respectively
1 1 3 4 
Total other comprehensive incomeTotal other comprehensive income1 2 27 5 Total other comprehensive income1 1 2 27 
Comprehensive IncomeComprehensive Income$859 $538 $1,878 $1,035 Comprehensive Income$781 $859 $1,549 $1,878 
The accompanying notes as they relate to Georgia Power are an integral part of these condensed financial statements.
23
    Table of Contents                                Index to Financial Statements
GEORGIA POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Nine Months Ended September 30, For the Nine Months Ended September 30,
20222021 20232022
(in millions) (in millions)
Operating Activities:Operating Activities:Operating Activities:
Net incomeNet income$1,851 $1,030 Net income$1,547 $1,851 
Adjustments to reconcile net income to net cash provided from operating activities —Adjustments to reconcile net income to net cash provided from operating activities —Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, totalDepreciation and amortization, total1,211 1,164 Depreciation and amortization, total1,411 1,211 
Deferred income taxesDeferred income taxes266 (299)Deferred income taxes102 266 
Utilization of federal investment tax credits49 19 
Allowance for equity funds used during constructionAllowance for equity funds used during construction(102)(94)Allowance for equity funds used during construction(121)(102)
Pension, postretirement, and other employee benefitsPension, postretirement, and other employee benefits(178)(112)Pension, postretirement, and other employee benefits(207)(178)
Settlement of asset retirement obligationsSettlement of asset retirement obligations(149)(154)Settlement of asset retirement obligations(228)(149)
Storm damage accrualsStorm damage accruals160 160 Storm damage accruals24 160 
Retail fuel cost under recovery – long-termRetail fuel cost under recovery – long-term(1,287)(203)Retail fuel cost under recovery – long-term(157)(1,287)
Estimated loss on Plant Vogtle Units 3 and 4Estimated loss on Plant Vogtle Units 3 and 4(18)772 Estimated loss on Plant Vogtle Units 3 and 4160 (18)
Other, netOther, net(71)70 Other, net(12)(22)
Changes in certain current assets and liabilities —Changes in certain current assets and liabilities —Changes in certain current assets and liabilities —
-Receivables-Receivables(321)(85)-Receivables(311)(321)
-Retail fuel cost under recovery-Retail fuel cost under recovery204 — 
-Fossil fuel stock-Fossil fuel stock(23)77 -Fossil fuel stock(138)(23)
-Materials and supplies-Materials and supplies(67)(60)-Materials and supplies(135)(67)
-Contract assets-Contract assets(51)(32)-Contract assets(57)(51)
-Other current assets-Other current assets(72)(20)-Other current assets16 (72)
-Accounts payable-Accounts payable211 164 -Accounts payable(142)211 
-Accrued taxes-Accrued taxes151 154 -Accrued taxes118 151 
-Retail fuel cost over recovery— (113)
-Customer refunds-Customer refunds(121)1 
-Other current liabilities-Other current liabilities(78)(88)-Other current liabilities16 (79)
Net cash provided from operating activitiesNet cash provided from operating activities1,482 2,350 Net cash provided from operating activities1,969 1,482 
Investing Activities:Investing Activities:Investing Activities:
Property additionsProperty additions(2,658)(2,411)Property additions(3,501)(2,556)
Nuclear decommissioning trust fund purchasesNuclear decommissioning trust fund purchases(585)(766)Nuclear decommissioning trust fund purchases(659)(585)
Nuclear decommissioning trust fund salesNuclear decommissioning trust fund sales581 761 Nuclear decommissioning trust fund sales654 581 
Cost of removal, net of salvageCost of removal, net of salvage(250)(99)Cost of removal, net of salvage(191)(250)
Change in construction payables, net of joint owner portionChange in construction payables, net of joint owner portion148 (68)Change in construction payables, net of joint owner portion338 148 
Contributions in aid of construction102 71 
Proceeds from dispositionsProceeds from dispositions56 4 Proceeds from dispositions59 56 
Other investing activitiesOther investing activities(47)(64)Other investing activities(76)(47)
Net cash used for investing activitiesNet cash used for investing activities(2,653)(2,572)Net cash used for investing activities(3,376)(2,653)
Financing Activities:Financing Activities:Financing Activities:
Increase (decrease) in notes payable, net415 (60)
Increase in notes payable, netIncrease in notes payable, net50 415 
Proceeds —Proceeds —Proceeds —
Senior notesSenior notes1,500 750 Senior notes1,750 1,500 
Pollution control revenue bonds— 122 
FFB loan— 371 
Short-term borrowingsShort-term borrowings650 — Short-term borrowings250 650 
Revenue bondsRevenue bonds229 — 
Redemptions and repurchases —Redemptions and repurchases —Redemptions and repurchases —
Senior notesSenior notes(400)(325)Senior notes(800)(400)
Pollution control revenue bonds(53)(69)
Short-term borrowingsShort-term borrowings(650)(250)
FFB loanFFB loan(66)(75)FFB loan(64)(66)
Short-term borrowings(250)— 
Revenue bondsRevenue bonds— (53)
Other long-term debtOther long-term debt(125)— Other long-term debt— (125)
Capital contributions from parent companyCapital contributions from parent company813 1,054 Capital contributions from parent company1,837 813 
Payment of common stock dividendsPayment of common stock dividends(1,268)(1,237)Payment of common stock dividends(1,392)(1,268)
Other financing activitiesOther financing activities(45)(26)Other financing activities(27)(45)
Net cash provided from financing activitiesNet cash provided from financing activities1,171 505 Net cash provided from financing activities1,183 1,171 
Net Change in Cash, Cash Equivalents, and Restricted CashNet Change in Cash, Cash Equivalents, and Restricted Cash— 283 Net Change in Cash, Cash Equivalents, and Restricted Cash(224)— 
Cash, Cash Equivalents, and Restricted Cash at Beginning of PeriodCash, Cash Equivalents, and Restricted Cash at Beginning of Period33 9 Cash, Cash Equivalents, and Restricted Cash at Beginning of Period480 33 
Cash, Cash Equivalents, and Restricted Cash at End of PeriodCash, Cash Equivalents, and Restricted Cash at End of Period$33 $292 Cash, Cash Equivalents, and Restricted Cash at End of Period$256 $33 
Supplemental Cash Flow Information:Supplemental Cash Flow Information:Supplemental Cash Flow Information:
Cash paid during the period for —Cash paid during the period for —Cash paid during the period for —
Interest (net of $52 and $47 capitalized for 2022 and 2021, respectively)$332 $325 
Interest (net of $63 and $52 capitalized for 2023 and 2022, respectively)Interest (net of $63 and $52 capitalized for 2023 and 2022, respectively)$439 $332 
Income taxes, netIncome taxes, net151 237 Income taxes, net74 151 
Noncash transactions —Noncash transactions —Noncash transactions —
Accrued property additions at end of periodAccrued property additions at end of period609 477 Accrued property additions at end of period942 609 
Right-of-use assets obtained under operating leasesRight-of-use assets obtained under operating leases7 (3)Right-of-use assets obtained under operating leases17 7 
Right-of-use assets obtained under finance leasesRight-of-use assets obtained under finance leases112 — Right-of-use assets obtained under finance leases18 112 
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)
 
AssetsAssetsAt September 30, 2022At December 31, 2021AssetsAt September 30, 2023At December 31, 2022
(in millions) (in millions)
Current Assets:Current Assets:Current Assets:
Cash and cash equivalentsCash and cash equivalents$33 $33 Cash and cash equivalents$173 $364 
Receivables —Receivables —Receivables —
Customer accounts, netCustomer accounts, net866 547 Customer accounts, net1,056 735 
Unbilled revenuesUnbilled revenues267 231 Unbilled revenues250 309 
Under recovered fuel clause revenuesUnder recovered fuel clause revenues730 — 
Joint owner accountsJoint owner accounts64 116 Joint owner accounts157 128 
AffiliatedAffiliated66 25 Affiliated75 53 
Other accounts and notesOther accounts and notes30 44 Other accounts and notes70 62 
Fossil fuel stockFossil fuel stock272 248 Fossil fuel stock429 291 
Materials and suppliesMaterials and supplies713 670 Materials and supplies856 729 
Regulatory assets – asset retirement obligationsRegulatory assets – asset retirement obligations244 178 Regulatory assets – asset retirement obligations183 158 
Assets from risk management activities88 48 
Other regulatory assetsOther regulatory assets299 289 Other regulatory assets379 324 
Other current assetsOther current assets212 130 Other current assets266 246 
Total current assetsTotal current assets3,154 2,559 Total current assets4,624 3,399 
Property, Plant, and Equipment:Property, Plant, and Equipment:Property, Plant, and Equipment:
In serviceIn service41,159 41,332 In service48,083 41,879 
Less: Accumulated provision for depreciationLess: Accumulated provision for depreciation12,942 12,854 Less: Accumulated provision for depreciation13,771 13,115 
Plant in service, net of depreciationPlant in service, net of depreciation28,217 28,478 Plant in service, net of depreciation34,312 28,764 
Nuclear fuel, at amortized costNuclear fuel, at amortized cost598 577 Nuclear fuel, at amortized cost622 604 
Construction work in progressConstruction work in progress8,053 6,688 Construction work in progress5,055 8,103 
Total property, plant, and equipmentTotal property, plant, and equipment36,868 35,743 Total property, plant, and equipment39,989 37,471 
Other Property and Investments:Other Property and Investments:Other Property and Investments:
Nuclear decommissioning trusts, at fair valueNuclear decommissioning trusts, at fair value964 1,217 Nuclear decommissioning trusts, at fair value1,042 1,018 
Equity investments in unconsolidated subsidiariesEquity investments in unconsolidated subsidiaries51 50 Equity investments in unconsolidated subsidiaries47 51 
Miscellaneous property and investmentsMiscellaneous property and investments87 69 Miscellaneous property and investments131 107 
Total other property and investmentsTotal other property and investments1,102 1,336 Total other property and investments1,220 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 amortization1,034 1,157 Operating lease right-of-use assets, net of amortization914 1,007 
Deferred charges related to income taxesDeferred charges related to income taxes573 550 Deferred charges related to income taxes595 583 
Prepaid pension costsPrepaid pension costs697 563 Prepaid pension costs839 738 
Deferred under recovered fuel clause revenuesDeferred under recovered fuel clause revenues1,697 410 Deferred under recovered fuel clause revenues1,279 2,056 
Regulatory assets – asset retirement obligations, deferredRegulatory assets – asset retirement obligations, deferred4,323 3,688 Regulatory assets – asset retirement obligations, deferred3,508 3,671 
Other regulatory assets, deferredOther regulatory assets, deferred2,579 1,964 Other regulatory assets, deferred2,685 2,522 
Other deferred charges and assetsOther deferred charges and assets519 491 Other deferred charges and assets496 540 
Total deferred charges and other assetsTotal deferred charges and other assets11,422 8,823 Total deferred charges and other assets10,316 11,117 
Total AssetsTotal Assets$52,546 $48,461 Total Assets$56,149 $53,163 
The accompanying notes as they relate to Georgia Power are an integral part of these condensed financial statements.

25
    Table of Contents                                Index to Financial Statements
GEORGIA POWER COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)
 
Liabilities and Stockholder's EquityLiabilities and Stockholder's EquityAt September 30, 2022At December 31, 2021Liabilities and Stockholder's EquityAt September 30, 2023At December 31, 2022
(in millions) (in millions)
Current Liabilities:Current Liabilities:Current Liabilities:
Securities due within one yearSecurities due within one year$900 $675 Securities due within one year$503 $901 
Notes payableNotes payable814 — Notes payable1,250 1,600 
Accounts payable —Accounts payable —Accounts payable —
AffiliatedAffiliated880 757 Affiliated770 928 
OtherOther1,025 702 Other1,632 1,076 
Customer depositsCustomer deposits254 259 Customer deposits251 252 
Accrued taxesAccrued taxes486 335 Accrued taxes620 508 
Accrued interestAccrued interest127 136 Accrued interest178 157 
Accrued compensationAccrued compensation213 232 Accrued compensation205 254 
Operating lease obligationsOperating lease obligations148 156 Operating lease obligations134 151 
Asset retirement obligationsAsset retirement obligations309 317 Asset retirement obligations328 295 
Other regulatory liabilitiesOther regulatory liabilities197 280 Other regulatory liabilities22 170 
Other current liabilitiesOther current liabilities243 254 Other current liabilities421 286 
Total current liabilitiesTotal current liabilities5,596 4,103 Total current liabilities6,314 6,578 
Long-term DebtLong-term Debt13,831 13,109 Long-term Debt15,522 14,009 
Deferred Credits and Other Liabilities:Deferred Credits and Other Liabilities:Deferred Credits and Other Liabilities:
Accumulated deferred income taxesAccumulated deferred income taxes3,588 3,019 Accumulated deferred income taxes3,914 3,707 
Deferred credits related to income taxesDeferred credits related to income taxes2,264 2,321 Deferred credits related to income taxes2,171 2,244 
Accumulated deferred ITCsAccumulated deferred ITCs321 328 Accumulated deferred ITCs311 319 
Employee benefit obligationsEmployee benefit obligations370 402 Employee benefit obligations291 318 
Operating lease obligations, deferredOperating lease obligations, deferred854 999 Operating lease obligations, deferred744 851 
Asset retirement obligations, deferredAsset retirement obligations, deferred6,547 6,507 Asset retirement obligations, deferred5,567 5,739 
Other deferred credits and liabilitiesOther deferred credits and liabilities518 439 Other deferred credits and liabilities458 540 
Total deferred credits and other liabilitiesTotal deferred credits and other liabilities14,462 14,015 Total deferred credits and other liabilities13,456 13,718 
Total LiabilitiesTotal Liabilities33,889 31,227 Total Liabilities35,292 34,305 
Common Stockholder's Equity (See accompanying statements)
Common Stockholder's Equity (See accompanying statements)
18,657 17,234 
Common Stockholder's Equity (See accompanying statements)
20,857 18,858 
Total Liabilities and Stockholder's EquityTotal Liabilities and Stockholder's Equity$52,546 $48,461 Total Liabilities and Stockholder's Equity$56,149 $53,163 
The accompanying notes as they relate to Georgia Power are an integral part of these condensed financial statements.
26
    Table of Contents                                Index to Financial Statements
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 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 
Net income— — — 536 — 536 
Capital contributions from parent company— — 690 — — 690 
Other comprehensive income— — — — 2 2 
Cash dividends on common stock— — — (413)— (413)
Balance at September 30, 20219 $398 $13,423 $3,582 $(42)$17,361 
(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 incomeNet income— — — 608 — 608 Net income— — — 608 — 608 
Capital contributions from parent companyCapital contributions from parent company— — 46 — — 46 Capital contributions from parent company— — 46 — — 46 
Other comprehensive incomeOther comprehensive income— — — — 16 16 Other comprehensive income— — — — 16 16 
Cash dividends on common stockCash dividends on common stock— — — (422)— (422)Cash dividends on common stock— — — (422)— (422)
Balance at June 30, 2022Balance at June 30, 20229 398 14,642 2,872 (15)17,897 Balance at June 30, 20229 398 14,642 2,872 (15)17,897 
Net incomeNet income— — — 858 — 858 Net income— — — 858 — 858 
Capital contributions from parent companyCapital contributions from parent company— — 324 — — 324 Capital contributions from parent company— — 324 — — 324 
Other comprehensive incomeOther comprehensive income— — — — 1 1 Other comprehensive income— — — — 1 1 
Cash dividends on common stockCash dividends on common stock— — — (423)— (423)Cash dividends on common stock— — — (423)— (423)
Balance at September 30, 2022Balance at September 30, 20229 $398 $14,966 $3,307 $(14)$18,657 Balance at September 30, 20229 $398 $14,966 $3,307 $(14)$18,657 
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 
Net incomeNet income— — — 471 — 471 
Capital contributions from parent companyCapital contributions from parent company— — 33 — — 33 
Other comprehensive incomeOther comprehensive income— — — — 1 1 
Cash dividends on common stockCash dividends on common stock— — — (464)— (464)
Balance at June 30, 2023Balance at June 30, 20239 398 16,411 2,686 (11)19,484 
Net incomeNet income— — — 780 — 780 
Capital contributions from parent companyCapital contributions from parent company— — 1,056 — — 1,056 
Other comprehensive incomeOther comprehensive income— — — — 1 1 
Cash dividends on common stockCash dividends on common stock— — — (464)— (464)
Balance at September 30, 2023Balance at September 30, 20239 $398 $17,467 $3,002 $(10)$20,857 
The accompanying notes as they relate to Georgia Power are an integral part of these condensed financial statements.

27
    Table of Contents                                Index to Financial Statements

MISSISSIPPI POWER COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
For the Three Months Ended September 30,For the Nine Months Ended September 30,
 2022202120222021
 (in millions)(in millions)
Operating Revenues:
Retail revenues$250 $248 $718 $670 
Wholesale revenues, non-affiliates60 60 191 178 
Wholesale revenues, affiliates187 62 336 120 
Other revenues13 8 34 20 
Total operating revenues510 378 1,279 988 
Operating Expenses:
Fuel and purchased power262 145 601 351 
Other operations and maintenance86 85 252 230 
Depreciation and amortization45 46 135 138 
Taxes other than income taxes32 33 93 96 
Total operating expenses425 309 1,081 815 
Operating Income85 69 198 173 
Other Income and (Expense):
Interest expense, net of amounts capitalized(15)(16)(42)(45)
Other income (expense), net9 7 32 27 
Total other income and (expense)(6)(9)(10)(18)
Earnings Before Income Taxes79 60 188 155 
Income taxes17 10 38 22 
Net Income$62 $50 $150 $133 

CONDENSED STATEMENTS OFAND COMPREHENSIVE INCOME (UNAUDITED)
For the Three Months Ended September 30,For the Nine Months Ended September 30,
 2022202120222021
 (in millions)(in millions)
Net Income$62 $50 $150 $133 
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$62 $50 $150 $134 
For the Three Months Ended September 30,For the Nine Months Ended September 30,
 2023202220232022
 (in millions)(in millions)
Operating Revenues:
Retail revenues$284 $250 $747 $718 
Wholesale revenues, non-affiliates77 60 201 191 
Wholesale revenues, affiliates65 187 158 336 
Other revenues10 13 31 34 
Total operating revenues436 510 1,137 1,279 
Operating Expenses:
Fuel and purchased power169 262 416 601 
Other operations and maintenance84 86 258 252 
Depreciation and amortization48 45 139 135 
Taxes other than income taxes32 32 92 93 
Total operating expenses333 425 905 1,081 
Operating Income103 85 232 198 
Other Income and (Expense):
Interest expense, net of amounts capitalized(19)(15)(53)(42)
Other income (expense), net9 9 29 32 
Total other income and (expense)(10)(6)(24)(10)
Earnings Before Income Taxes93 79 208 188 
Income taxes18 17 35 38 
Net Income and Comprehensive Income$75 $62 $173 $150 
The accompanying notes as they relate to Mississippi Power are an integral part of these condensed financial statements.












28
    Table of Contents                                Index to Financial Statements
MISSISSIPPI POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Nine Months Ended September 30,For the Nine Months Ended September 30,
20222021 20232022
(in millions) (in millions)
Operating Activities:Operating Activities:Operating Activities:
Net incomeNet income$150 $133 Net income$173 $150 
Adjustments to reconcile net income to net cash provided from operating activities —Adjustments to reconcile net income to net cash provided from operating activities —Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, totalDepreciation and amortization, total164 161 Depreciation and amortization, total171 164 
Deferred income taxesDeferred income taxes(10)(4)
Pension, postretirement, and other employee benefitsPension, postretirement, and other employee benefits(15)(12)
Settlement of asset retirement obligationsSettlement of asset retirement obligations(15)(18)Settlement of asset retirement obligations(12)(15)
Other, netOther, net20 (20)Other, net12 36 
Changes in certain current assets and liabilities —Changes in certain current assets and liabilities —Changes in certain current assets and liabilities —
-Receivables-Receivables(58)(19)-Receivables55 (49)
-Retail fuel cost under recovery-Retail fuel cost under recovery(24)(9)
-Other current assets-Other current assets(17)(9)-Other current assets14 (17)
-Accounts payable-Accounts payable41 (12)-Accounts payable(83)41 
-Accrued taxes-Accrued taxes(3)(20)-Accrued taxes(16)(3)
-Accrued compensation-Accrued compensation(5)(5)
-Retail fuel cost over recovery— (19)
-Other current liabilities-Other current liabilities(3)(18)-Other current liabilities— 2 
Net cash provided from operating activitiesNet cash provided from operating activities279 159 Net cash provided from operating activities260 279 
Investing Activities:Investing Activities:Investing Activities:
Property additionsProperty additions(165)(135)Property additions(231)(165)
Cost of removal, net of salvageCost of removal, net of salvage(21)(20)
Construction payablesConstruction payables(9)(11)Construction payables(5)(9)
Payments pursuant to LTSAsPayments pursuant to LTSAs(23)(21)Payments pursuant to LTSAs(21)(23)
Other investing activitiesOther investing activities(22)(15)Other investing activities(2)(2)
Net cash used for investing activitiesNet cash used for investing activities(219)(182)Net cash used for investing activities(280)(219)
Financing Activities:Financing Activities:Financing Activities:
Decrease in notes payable, net— (25)
Increase in notes payable, netIncrease in notes payable, net20 — 
Proceeds — Senior notesProceeds — Senior notes— 525 Proceeds — Senior notes100 — 
Redemptions —
Other revenue bonds— (270)
Other long-term debt— (75)
Capital contributions from parent companyCapital contributions from parent company55 103 Capital contributions from parent company8 55 
Payment of common stock dividendsPayment of common stock dividends(128)(118)Payment of common stock dividends(139)(128)
Other financing activitiesOther financing activities1 (10)Other financing activities(1)1 
Net cash provided from (used for) financing activities(72)130 
Net cash used for financing activitiesNet cash used for financing activities(12)(72)
Net Change in Cash, Cash Equivalents, and Restricted CashNet Change in Cash, Cash Equivalents, and Restricted Cash(12)107 Net Change in Cash, Cash Equivalents, and Restricted Cash(32)(12)
Cash, Cash Equivalents, and Restricted Cash at Beginning of PeriodCash, Cash Equivalents, and Restricted Cash at Beginning of Period61 39 Cash, Cash Equivalents, and Restricted Cash at Beginning of Period59 61 
Cash, Cash Equivalents, and Restricted Cash at End of PeriodCash, Cash Equivalents, and Restricted Cash at End of Period$49 $146 Cash, Cash Equivalents, and Restricted Cash at End of Period$27 $49 
Supplemental Cash Flow Information:Supplemental Cash Flow Information:Supplemental Cash Flow Information:
Cash paid during the period for —Cash paid during the period for —Cash paid during the period for —
InterestInterest$49 $53 Interest$53 $49 
Income taxes, netIncome taxes, net18 11 Income taxes, net33 18 
Noncash transactions — Accrued property additions at end of period16 23 
Noncash transactions —Noncash transactions —
Accrued property additions at end of periodAccrued property additions at end of period20 16 
Right-of-use assets obtained under operating leasesRight-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.
29
    Table of Contents                                Index to Financial Statements
MISSISSIPPI POWER COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)
 
AssetsAssetsAt September 30, 2022At December 31, 2021AssetsAt September 30, 2023At December 31, 2022
(in millions) (in millions)
Current Assets:Current Assets:Current Assets:
Cash and cash equivalentsCash and cash equivalents$49 $61 Cash and cash equivalents$27 $59 
Receivables —Receivables —Receivables —
Customer accounts, netCustomer accounts, net71 37 Customer accounts, net78 47 
Unbilled revenuesUnbilled revenues43 34 Unbilled revenues41 47 
AffiliatedAffiliated39 29 Affiliated38 82 
Other accounts and notesOther accounts and notes34 28 Other accounts and notes22 35 
Fossil fuel stockFossil fuel stock37 28 Fossil fuel stock37 44 
Materials and suppliesMaterials and supplies80 70 Materials and supplies85 80 
Assets from risk management activities69 28 
Other regulatory assetsOther regulatory assets60 54 Other regulatory assets54 72 
Other current assetsOther current assets16 13 Other current assets10 38 
Total current assetsTotal current assets498 382 Total current assets392 504 
Property, Plant, and Equipment:Property, Plant, and Equipment:Property, Plant, and Equipment:
In serviceIn service5,209 5,106 In service5,473 5,254 
Less: Accumulated provision for depreciationLess: Accumulated provision for depreciation1,669 1,591 Less: Accumulated provision for depreciation1,763 1,689 
Plant in service, net of depreciationPlant in service, net of depreciation3,540 3,515 Plant in service, net of depreciation3,710 3,565 
Construction work in progressConstruction work in progress168 127 Construction work in progress183 208 
Total property, plant, and equipmentTotal property, plant, and equipment3,708 3,642 Total property, plant, and equipment3,893 3,773 
Other Property and InvestmentsOther Property and Investments171 179 Other Property and Investments160 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 costs97 79 Prepaid pension costs123 109 
Regulatory assets – asset retirement obligationsRegulatory assets – asset retirement obligations238 232 Regulatory assets – asset retirement obligations241 239 
Other regulatory assets, deferredOther regulatory assets, deferred271 317 Other regulatory assets, deferred246 249 
Accumulated deferred income taxesAccumulated deferred income taxes108 118 Accumulated deferred income taxes95 107 
Other deferred charges and assetsOther deferred charges and assets130 100 Other deferred charges and assets79 94 
Total deferred charges and other assetsTotal deferred charges and other assets874 877 Total deferred charges and other assets813 828 
Total AssetsTotal Assets$5,251 $5,080 Total Assets$5,258 $5,272 
The accompanying notes as they relate to Mississippi Power are an integral part of these condensed financial statements.

30
    Table of Contents                                Index to Financial Statements
MISSISSIPPI POWER COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)
 
Liabilities and Stockholder's EquityLiabilities and Stockholder's EquityAt September 30, 2022At December 31, 2021Liabilities and Stockholder's EquityAt September 30, 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$201 $1 
Notes payableNotes payable20 — 
Accounts payable —Accounts payable —Accounts payable —
AffiliatedAffiliated96 81 Affiliated79 121 
OtherOther68 47 Other61 106 
Accrued taxesAccrued taxes116 120 Accrued taxes108 124 
Accrued compensationAccrued compensation33 36 Accrued compensation32 37 
Asset retirement obligationsAsset retirement obligations20 30 Asset retirement obligations26 37 
Other regulatory liabilitiesOther regulatory liabilities102 59 Other regulatory liabilities30 43 
Other current liabilitiesOther current liabilities80 65 Other current liabilities74 85 
Total current liabilitiesTotal current liabilities516 439 Total current liabilities631 554 
Long-term DebtLong-term Debt1,509 1,510 Long-term Debt1,443 1,544 
Deferred Credits and Other Liabilities:Deferred Credits and Other Liabilities:Deferred Credits and Other Liabilities:
Accumulated deferred income taxesAccumulated deferred income taxes465 464 Accumulated deferred income taxes466 466 
Deferred credits related to income taxesDeferred credits related to income taxes258 269 Deferred credits related to income taxes229 253 
Employee benefit obligationsEmployee benefit obligations86 88 Employee benefit obligations67 69 
Asset retirement obligations, deferredAsset retirement obligations, deferred162 160 Asset retirement obligations, deferred145 142 
Other cost of removal obligationsOther cost of removal obligations197 195 Other cost of removal obligations192 196 
Other regulatory liabilities, deferredOther regulatory liabilities, deferred87 64 Other regulatory liabilities, deferred81 96 
Other deferred credits and liabilitiesOther deferred credits and liabilities25 24 Other deferred credits and liabilities30 21 
Total deferred credits and other liabilitiesTotal deferred credits and other liabilities1,280 1,264 Total deferred credits and other liabilities1,210 1,243 
Total LiabilitiesTotal Liabilities3,305 3,213 Total Liabilities3,284 3,341 
Common Stockholder's Equity (See accompanying statements)
Common Stockholder's Equity (See accompanying statements)
1,946 1,867 
Common Stockholder's Equity (See accompanying statements)
1,974 1,931 
Total Liabilities and Stockholder's EquityTotal Liabilities and Stockholder's Equity$5,251 $5,080 Total Liabilities and Stockholder's Equity$5,258 $5,272 
The accompanying notes as they relate to Mississippi Power are an integral part of these condensed financial statements.
31
    Table of Contents                                Index to Financial Statements
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 stock— — — (39)— (39)
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 
Net income— — — 50 — 50 
Capital contributions from parent company— — 3 — — 3 
Cash dividends on common stock— — — (39)— (39)
Balance at September 30, 20211 $38 $4,565 $(2,739)$(1)$1,863 
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 stockCash dividends on common stock— — — (43)— (43)Cash dividends on common stock— — — (43)(43)
Balance at March 31, 2022Balance at March 31, 20221 38 4,633 (2,754)— 1,917 Balance at March 31, 20221 38 4,633 (2,754)1,917 
Net incomeNet income— — — 45 — 45 Net income— — — 45 45 
Capital contributions from parent companyCapital contributions from parent company— — 1 — — 1 Capital contributions from parent company— — 1 — 1 
Cash dividends on common stockCash dividends on common stock— — — (42)— (42)Cash dividends on common stock— — — (42)(42)
Balance at June 30, 2022Balance at June 30, 20221 38 4,634 (2,751)— 1,921 Balance at June 30, 20221 38 4,634 (2,751)1,921 
Net incomeNet income— — — 62 — 62 Net income— — — 62 62 
Capital contributions from parent companyCapital contributions from parent company— — 5 — — 5 Capital contributions from parent company— — 5 — 5 
Cash dividends on common stockCash dividends on common stock— — — (42)— (42)Cash dividends on common stock— — — (42)(42)
Balance at September 30, 2022Balance at September 30, 20221 $38 $4,639 $(2,731)$— $1,946 Balance at September 30, 20221 $38 $4,639 $(2,731)$1,946 
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 
Net incomeNet income— — — 40 40 
Capital contributions from parent companyCapital contributions from parent company— — 12 — 12 
Cash dividends on common stockCash dividends on common stock— — — (47)(47)
Balance at June 30, 2023Balance at June 30, 20231 38 4,664 (2,754)1,948 
Net incomeNet income— — — 75 75 
Return of capital to parent companyReturn of capital to parent company— — (3)— (3)
Cash dividends on common stockCash dividends on common stock— — — (46)(46)
Balance at September 30, 2023Balance at September 30, 20231 $38 $4,661 $(2,725)$1,974 
The accompanying notes as they relate to Mississippi Power are an integral part of these condensed financial statements.

32
    Table of Contents                                Index to Financial Statements

SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
For the Three Months Ended September 30,For the Nine Months Ended September 30, For the Three Months Ended September 30,For the Nine Months Ended September 30,
2022202120222021 2023202220232022
(in millions)(in millions) (in millions)(in millions)
Operating Revenues:Operating Revenues:Operating Revenues:
Wholesale revenues, non-affiliatesWholesale revenues, non-affiliates$835 $503 $1,918 $1,231 Wholesale revenues, non-affiliates$479 $835 $1,234 $1,918 
Wholesale revenues, affiliatesWholesale revenues, affiliates336 167 673 361 Wholesale revenues, affiliates156 336 406 673 
Other revenuesOther revenues9 9 27 18 Other revenues18 9 46 27 
Total operating revenuesTotal operating revenues1,180 679 2,618 1,610 Total operating revenues653 1,180 1,686 2,618 
Operating Expenses:Operating Expenses:Operating Expenses:
FuelFuel605 259 1,274 540 Fuel196 605 526 1,274 
Purchased powerPurchased power144 41 233 86 Purchased power33 144 87 233 
Other operations and maintenanceOther operations and maintenance113 94 331 308 Other operations and maintenance104 113 327 332 
Depreciation and amortizationDepreciation and amortization133 132 384 383 Depreciation and amortization130 133 380 384 
Taxes other than income taxesTaxes other than income taxes13 12 38 35 Taxes other than income taxes13 13 38 38 
Loss on sales-type leases— 15 1 15 
Gain on dispositions, netGain on dispositions, net— — (2)(39)Gain on dispositions, net— — (20)(2)
Total operating expensesTotal operating expenses1,008 553 2,259 1,328 Total operating expenses476 1,008 1,338 2,259 
Operating IncomeOperating Income172 126 359 282 Operating Income177 172 348 359 
Other Income and (Expense):Other Income and (Expense):Other Income and (Expense):
Interest expense, net of amounts capitalizedInterest expense, net of amounts capitalized(32)(36)(105)(111)Interest expense, net of amounts capitalized(32)(32)(98)(105)
Other income (expense), netOther income (expense), net3 2 5 10 Other income (expense), net4 3 8 5 
Total other income and (expense)Total other income and (expense)(29)(34)(100)(101)Total other income and (expense)(28)(29)(90)(100)
Earnings Before Income TaxesEarnings Before Income Taxes143 92 259 181 Earnings Before Income Taxes149 143 258 259 
Income taxes (benefit)36 9 49 (3)
Income taxesIncome taxes39 36 38 49 
Net IncomeNet Income107 83 210 184 Net Income110 107 220 210 
Net income (loss) attributable to noncontrolling interestsNet income (loss) attributable to noncontrolling interests12 5 (55)(27)Net income (loss) attributable to noncontrolling interests10 12 (68)(55)
Net Income Attributable to Southern PowerNet Income Attributable to Southern Power$95 $78 $265 $211 Net Income Attributable to Southern Power$100 $95 $288 $265 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
 
For the Three Months Ended September 30,For the Nine Months Ended September 30, For the Three Months Ended September 30,For the Nine Months Ended September 30,
2022202120222021 2023202220232022
(in millions)(in millions) (in millions)(in millions)
Net IncomeNet Income$107 $83 $210 $184 Net Income$110 $107 $220 $210 
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
$(11), $(7), $(35), and $(16), respectively
(35)(21)(106)(48)
Reclassification adjustment for amounts included in net income,
net of tax of $9, $9, $35, and $22, respectively
28 27 106 66 
Changes in fair value, net of tax of
$(2), $(11), $(3), and $(35), respectively
Changes in fair value, net of tax of
$(2), $(11), $(3), and $(35), respectively
(13)(35)(17)(106)
Reclassification adjustment for amounts included in net income,
net of tax of $4, $9, $6, and $35, respectively
Reclassification adjustment for amounts included in net income,
net of tax of $4, $9, $6, and $35, respectively
17 28 24 106 
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 $—, $—, $—, and $1, respectively
— 1 1 2 
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 income (loss)Total other comprehensive income (loss)(7)7 1 20 Total other comprehensive income (loss)4 (7)7 1 
Comprehensive IncomeComprehensive Income100 90 211 204 Comprehensive Income114 100 227 211 
Comprehensive income (loss) attributable to noncontrolling interestsComprehensive income (loss) attributable to noncontrolling interests12 5 (55)(27)Comprehensive income (loss) attributable to noncontrolling interests10 12 (68)(55)
Comprehensive Income Attributable to Southern PowerComprehensive Income Attributable to Southern Power$88 $85 $266 $231 Comprehensive Income Attributable to Southern Power$104 $88 $295 $266 
The accompanying notes as they relate to Southern Power are an integral part of these condensed consolidated financial statements.
33
    Table of Contents                                Index to Financial Statements
SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

For the Nine Months Ended September 30, For the Nine Months Ended September 30,
20222021 20232022
(in millions) (in millions)
Operating Activities:Operating Activities:Operating Activities:
Net incomeNet income$210 $184 Net income$220 $210 
Adjustments to reconcile net income to net cash provided from operating activities —Adjustments to reconcile net income to net cash provided from operating activities —Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, totalDepreciation and amortization, total404 402 Depreciation and amortization, total395 404 
Deferred income taxesDeferred income taxes21 (16)Deferred income taxes1 21 
Utilization of federal investment tax creditsUtilization of federal investment tax credits218 237 Utilization of federal investment tax credits179 218 
Amortization of investment tax creditsAmortization of investment tax credits(44)(44)Amortization of investment tax credits(44)(44)
Gain on dispositions, netGain on dispositions, net(2)(39)Gain on dispositions, net(20)(2)
Other, netOther, net1 14 Other, net4 1 
Changes in certain current assets and liabilities —Changes in certain current assets and liabilities —Changes in certain current assets and liabilities —
-Receivables-Receivables(124)(117)-Receivables100 (124)
-Prepaid income taxes-Prepaid income taxes22 63 -Prepaid income taxes31 22 
-Other current assets-Other current assets(15)(5)-Other current assets(14)(15)
-Accounts payable-Accounts payable95 55 -Accounts payable(70)95 
-Accrued taxes-Accrued taxes55 15 -Accrued taxes9 55 
-Other current liabilities-Other current liabilities(14)1 -Other current liabilities8 (14)
Net cash provided from operating activitiesNet cash provided from operating activities827 750 Net cash provided from operating activities799 827 
Investing Activities:Investing Activities:Investing Activities:
Business acquisitions, net of cash acquired— (345)
Acquisitions, net of cash acquiredAcquisitions, net of cash acquired(181)— 
Property additionsProperty additions(64)(355)Property additions(40)(64)
Proceeds from dispositionsProceeds from dispositions48 22 Proceeds from dispositions59 48 
Change in construction payablesChange in construction payables(60)(22)Change in construction payables(18)(60)
Payments pursuant to LTSAsPayments pursuant to LTSAs(52)(61)Payments pursuant to LTSAs(49)(52)
Other investing activitiesOther investing activities— 8 Other investing activities5 — 
Net cash used for investing activitiesNet cash used for investing activities(128)(753)Net cash used for investing activities(224)(128)
Financing Activities:Financing Activities:Financing Activities:
Decrease in notes payable, net(5)(148)
Increase (decrease) in notes payable, netIncrease (decrease) in notes payable, net136 (5)
Proceeds — Senior notes— 400 
Redemptions — Senior notesRedemptions — Senior notes(677)— Redemptions — Senior notes(290)(677)
Capital contributions from parent companyCapital contributions from parent company330 4 Capital contributions from parent company16 330 
Return of capital to parent company— (271)
Capital contributions from noncontrolling interestsCapital contributions from noncontrolling interests73 415 Capital contributions from noncontrolling interests21 73 
Distributions to noncontrolling interestsDistributions to noncontrolling interests(175)(204)Distributions to noncontrolling interests(148)(175)
Payment of common stock dividendsPayment of common stock dividends(148)(153)Payment of common stock dividends(189)(148)
Other financing activitiesOther financing activities(1)(10)Other financing activities3 (1)
Net cash provided from (used for) financing activities(603)33 
Net cash used for financing activitiesNet cash used for financing activities(451)(603)
Net Change in Cash, Cash Equivalents, and Restricted CashNet Change in Cash, Cash Equivalents, and Restricted Cash96 30 Net Change in Cash, Cash Equivalents, and Restricted Cash124 96 
Cash, Cash Equivalents, and Restricted Cash at Beginning of PeriodCash, Cash Equivalents, and Restricted Cash at Beginning of Period135 183 Cash, Cash Equivalents, and Restricted Cash at Beginning of Period133 135 
Cash, Cash Equivalents, and Restricted Cash at End of PeriodCash, Cash Equivalents, and Restricted Cash at End of Period$231 $213 Cash, Cash Equivalents, and Restricted Cash at End of Period$257 $231 
Supplemental Cash Flow Information:Supplemental Cash Flow Information:Supplemental Cash Flow Information:
Cash paid (received) during the period for —Cash paid (received) during the period for —Cash paid (received) during the period for —
Interest (net of $— and $5 capitalized for 2022 and 2021, respectively)$120 $118 
Interest (net of $1 and $— capitalized for 2023 and 2022, respectively)Interest (net of $1 and $— capitalized for 2023 and 2022, respectively)$103 $120 
Income taxes, netIncome taxes, net(202)(235)Income taxes, net(124)(202)
Noncash transactions —Noncash transactions —Noncash transactions —
Contributions from noncontrolling interests— 89 
Contributions of wind turbine equipment— 82 
Accrued property additions at end of periodAccrued property additions at end of period30 53 Accrued property additions at end of period23 30 
Right-of-use assets obtained under operating leasesRight-of-use assets obtained under operating leases— 66 Right-of-use assets obtained under operating leases7 — 
Reassessment of right-of-use assets under operating leasesReassessment of right-of-use assets under operating leases40 — 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.
34
    Table of Contents                                Index to Financial Statements
SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
AssetsAssetsAt September 30, 2022At December 31, 2021AssetsAt September 30, 2023At December 31, 2022
(in millions) (in millions)
Current Assets:Current Assets:Current Assets:
Cash and cash equivalentsCash and cash equivalents$229 $107 Cash and cash equivalents$236 $131 
Receivables —Receivables —Receivables —
Customer accounts, netCustomer accounts, net232 139 Customer accounts, net164 226 
AffiliatedAffiliated95 51 Affiliated60 51 
OtherOther24 29 Other44 70 
Materials and suppliesMaterials and supplies112 106 Materials and supplies84 88 
Prepaid income taxesPrepaid income taxes5 27 Prepaid income taxes130 5 
Other current assetsOther current assets51 46 Other current assets71 50 
Total current assetsTotal current assets748 505 Total current assets789 621 
Property, Plant, and Equipment:Property, Plant, and Equipment:Property, Plant, and Equipment:
In serviceIn service14,641 14,585 In service14,678 14,658 
Less: Accumulated provision for depreciationLess: Accumulated provision for depreciation3,589 3,241 Less: Accumulated provision for depreciation4,001 3,661 
Plant in service, net of depreciationPlant in service, net of depreciation11,052 11,344 Plant in service, net of depreciation10,677 10,997 
Construction work in progressConstruction work in progress48 45 Construction work in progress224 41 
Total property, plant, and equipmentTotal property, plant, and equipment11,100 11,389 Total property, plant, and equipment10,901 11,038 
Other Property and Investments:Other Property and Investments:Other Property and Investments:
Intangible assets, net of amortization of $124 and $109, respectively268 282 
Intangible assets, net of amortization of $143 and $129, respectivelyIntangible assets, net of amortization of $143 and $129, respectively248 263 
Equity investments in unconsolidated subsidiariesEquity investments in unconsolidated subsidiaries49 86 Equity investments in unconsolidated subsidiaries— 49 
Net investment in sales-type leasesNet investment in sales-type leases155 161 Net investment in sales-type leases150 154 
Total other property and investmentsTotal other property and investments472 529 Total other property and investments398 466 
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 amortization491 479 Operating lease right-of-use assets, net of amortization490 489 
Prepaid LTSAsPrepaid LTSAs210 210 Prepaid LTSAs225 193 
Other deferred charges and assetsOther deferred charges and assets262 278 Other deferred charges and assets287 274 
Total deferred charges and other assetsTotal deferred charges and other assets963 967 Total deferred charges and other assets1,002 956 
Total AssetsTotal Assets$13,283 $13,390 Total Assets$13,090 $13,081 
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 BALANCE SHEETS (UNAUDITED)
Liabilities and Stockholders' EquityLiabilities and Stockholders' EquityAt September 30, 2022At December 31, 2021Liabilities and Stockholders' EquityAt September 30, 2023At December 31, 2022
(in millions) (in millions)
Current Liabilities:Current Liabilities:Current Liabilities:
Securities due within one yearSecurities due within one year$290 $679 Securities due within one year$— $290 
Notes payableNotes payable208 211 Notes payable359 225 
Accounts payable —Accounts payable —Accounts payable —
AffiliatedAffiliated179 92 Affiliated80 139 
OtherOther70 85 Other43 67 
Accrued taxesAccrued taxes208 14 Accrued taxes33 24 
Accrued interestAccrued interest22 32 Accrued interest22 28 
Other current liabilitiesOther current liabilities96 140 Other current liabilities117 111 
Total current liabilitiesTotal current liabilities1,073 1,253 Total current liabilities654 884 
Long-term DebtLong-term Debt2,642 3,009 Long-term Debt2,687 2,689 
Deferred Credits and Other Liabilities:Deferred Credits and Other Liabilities:Deferred Credits and Other Liabilities:
Accumulated deferred income taxesAccumulated deferred income taxes315 215 Accumulated deferred income taxes619 279 
Accumulated deferred ITCsAccumulated deferred ITCs1,571 1,614 Accumulated deferred ITCs1,512 1,556 
Operating lease obligationsOperating lease obligations515 497 Operating lease obligations516 514 
Other deferred credits and liabilitiesOther deferred credits and liabilities287 204 Other deferred credits and liabilities259 243 
Total deferred credits and other liabilitiesTotal deferred credits and other liabilities2,688 2,530 Total deferred credits and other liabilities2,906 2,592 
Total LiabilitiesTotal Liabilities6,403 6,792 Total Liabilities6,247 6,165 
Total Stockholders' Equity (See accompanying statements)
Total Stockholders' Equity (See accompanying statements)
6,880 6,598 
Total Stockholders' Equity (See accompanying statements)
6,843 6,916 
Total Liabilities and Stockholders' EquityTotal Liabilities and Stockholders' Equity$13,283 $13,390 Total Liabilities and Stockholders' Equity$13,090 $13,081 
The accompanying notes as they relate to Southern Power are an integral part of these condensed consolidated financial statements.
36
    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 InterestsTotalPaid-In
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Total Common
Stockholders' Equity		Noncontrolling InterestsTotal
(in millions)(in millions)
Balance at December 31, 2020$914 $1,522 $(67)$2,369 $4,262 $6,631 
Balance at December 31, 2021Balance at December 31, 2021$638 $1,585 $(27)$2,196 $4,402 $6,598 
Net income (loss)Net income (loss)— 97 — 97 (32)65 Net income (loss)— 72 — 72 (45)27 
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, 2021643 1,554 (54)2,143 4,547 6,690 
Net income— 78 — 78 5 83 
Other comprehensive incomeOther comprehensive income— — 7 7 — 7 Other comprehensive income— — 5 5 — 5 
Cash dividends on common stockCash dividends on common stock— (51)— (51)— (51)Cash dividends on common stock— (49)— (49)— (49)
Capital contributions from
noncontrolling interests		Capital contributions from
noncontrolling interests		— — — — 73 73 Capital contributions from
noncontrolling interests		— — — — 73 73 
Distributions to noncontrolling interestsDistributions to noncontrolling interests— — — — (95)(95)Distributions to noncontrolling interests— — — — (98)(98)
Balance at March 31, 2022Balance at March 31, 2022638 1,608 (22)2,224 4,332 6,556 
Net income (loss)Net income (loss)— 98 — 98 (22)76 
Balance at September 30, 2021$643 $1,581 $(47)$2,177 $4,530 $6,707 
Capital contributions from parent companyCapital contributions from parent company322 — — 322 — 322 
Other comprehensive incomeOther comprehensive income— — 3 3 — 3 
Cash dividends on common stockCash dividends on common stock— (50)— (50)— (50)
Distributions to noncontrolling interestsDistributions to noncontrolling interests— — — — (28)(28)
Balance at June 30, 2022Balance at June 30, 2022960 1,656 (19)2,597 4,282 6,879 
Net incomeNet income— 95 — 95 12 107 
Capital contributions from parent companyCapital contributions from parent company9 — — 9 — 9 
Other comprehensive income (loss)Other comprehensive income (loss)— — (7)(7)— (7)
Cash dividends on common stockCash dividends on common stock— (49)— (49)— (49)
Distributions to noncontrolling interestsDistributions to noncontrolling interests— — — — (57)(57)
OtherOther— (1)(1)(2)— (2)
Balance at September 30, 2022Balance at September 30, 2022$969 $1,701 $(27)$2,643 $4,237 $6,880 
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, 20231,069 1,780 (25)2,824 4,034 6,858 
Net income (loss)— 85 — 85 (15)70 
Capital contributions from parent company14 — — 14 — 14 
Other comprehensive income— — 10 10 — 10 
Cash dividends on common stock— (63)— (63)— (63)
Distributions to noncontrolling interests— — — — (42)(42)
Other— — 1 1 (1)— 
Balance at June 30, 20231,083 1,802 (14)2,871 3,976 6,847 
Net income— 100 — 100 10 110 
Capital contributions from parent company3 — — 3 — 3 
Other comprehensive income— — 4 4 — 4 
Cash dividends on common stock— (63)— (63)— (63)
Distributions to noncontrolling interests— — — — (59)(59)
Other1 — — 1 — 1 
Balance at September 30, 2023$1,087 $1,839 $(10)$2,916 $3,927 $6,843 
The accompanying notes as they relate to Southern Power are an integral part of these condensed consolidated financial statements.
37
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, 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, 2022960 1,656 (19)2,597 4,282 6,879 
Net income— 95 — 95 12 107 
Capital contributions from parent company9 — — 9 — 9 
Other comprehensive income (loss)— — (7)(7)— (7)
Cash dividends on common stock— (49)— (49)— (49)
Distributions to noncontrolling interests— — — — (57)(57)
Other— (1)(1)(2)— (2)
Balance at September 30, 2022$969 $1,701 $(27)$2,643 $4,237 $6,880 
The accompanying notes as they relate to Southern Power are an integral part of these condensed consolidated financial statements.
38
    Table of Contents                                Index to Financial Statements

SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
For the Three Months Ended September 30,For the Nine Months Ended September 30, For the Three Months Ended September 30,For the Nine Months Ended September 30,
2022202120222021 2023202220232022
(in millions)(in millions) (in millions)(in millions)
Operating Revenues:Operating Revenues:Operating Revenues:
Natural gas revenues (includes revenue taxes of
$15, $12, $118, and $89, respectively)
$858 $624 $3,998 $2,991 
Alternative revenue programs(1)(1)— 3 
Natural gas revenues (includes revenue taxes of
$11, $15, $103, and $118, respectively)
Natural gas revenues (includes revenue taxes of
$11, $15, $103, and $118, respectively)
$689 $857 $3,417 $3,998 
Total operating revenuesTotal operating revenues857 623 3,998 2,994 Total operating revenues689 857 3,417 3,998 
Operating Expenses:Operating Expenses:Operating Expenses:
Cost of natural gasCost of natural gas294 129 1,840 943 Cost of natural gas102 294 1,199 1,840 
Other operations and maintenanceOther operations and maintenance252 238 829 776 Other operations and maintenance264 252 879 824 
Depreciation and amortizationDepreciation and amortization140 133 414 396 Depreciation and amortization145 140 429 414 
Taxes other than income taxesTaxes other than income taxes45 36 208 166 Taxes other than income taxes42 45 203 208 
Gain on dispositions, net
— (121)(5)(127)
Total operating expensesTotal operating expenses731 415 3,286 2,154 Total operating expenses553 731 2,710 3,286 
Operating IncomeOperating Income126 208 712 840 Operating Income136 126 707 712 
Other Income and (Expense):Other Income and (Expense):Other Income and (Expense):
Earnings from equity method investmentsEarnings from equity method investments34 25 105 14 Earnings from equity method investments32 34 104 105 
Interest expense, net of amounts capitalizedInterest expense, net of amounts capitalized(65)(57)(187)(175)Interest expense, net of amounts capitalized(77)(65)(226)(187)
Other income (expense), netOther income (expense), net15 13 47 (66)Other income (expense), net19 15 50 47 
Total other income and (expense)Total other income and (expense)(16)(19)(35)(227)Total other income and (expense)(26)(16)(72)(35)
Earnings Before Income TaxesEarnings Before Income Taxes110 189 677 613 Earnings Before Income Taxes110 110 635 677 
Income taxesIncome taxes27 133 161 224 Income taxes28 27 160 161 
Net IncomeNet Income$83 $56 $516 $389 Net Income$82 $83 $475 $516 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
 
For the Three Months Ended September 30,For the Nine Months Ended September 30, For the Three Months Ended September 30,For the Nine Months Ended September 30,
2022202120222021 2023202220232022
(in millions)(in millions) (in millions)(in millions)
Net IncomeNet Income$83 $56 $516 $389 Net Income$82 $83 $475 $516 
Other comprehensive income:Other comprehensive income:Other comprehensive income:
Qualifying hedges:Qualifying hedges:Qualifying hedges:
Changes in fair value, net of tax of
$8, $8, $16, and $11, respectively
19 23 39 32 
Reclassification adjustment for amounts included in net income,
net of tax of $(2), $—, $(7), and $1, respectively
(5)(2)(17)1 
Changes in fair value, net of tax of
$(2), $8, $(11), and $16, respectively
Changes in fair value, net of tax of
$(2), $8, $(11), and $16, respectively
(6)19 (30)39 
Reclassification adjustment for amounts included in net income,
net of tax of $7, $(2), $15, and $(7), respectively
Reclassification adjustment for amounts included in net income,
net of tax of $7, $(2), $15, and $(7), respectively
16 (5)37 (17)
Total other comprehensive incomeTotal other comprehensive income14 21 22 33 Total other comprehensive income10 14 7 22 
Comprehensive IncomeComprehensive Income$97 $77 $538 $422 Comprehensive Income$92 $97 $482 $538 
The accompanying notes as they relate to Southern Company Gas are an integral part of these condensed consolidated financial statements.
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Table of ContentsIndex to Financial Statements
SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 For the Nine Months Ended September 30,
 20232022
 (in millions)
Operating Activities:
Net income$475 $516 
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total429 414 
Deferred income taxes75 109 
Natural gas cost under recovery – long-term— 207 
Other, net(15)(12)
Changes in certain current assets and liabilities —
-Receivables776 301 
-Natural gas for sale, net of temporary LIFO liquidation31 (136)
-Prepaid income taxes12 (77)
-Natural gas cost under recovery108 (124)
-Other current assets(32)7 
-Accounts payable(346)342 
-Natural gas cost over recovery165 — 
-Other current liabilities(34)(15)
Net cash provided from operating activities1,644 1,532 
Investing Activities:
Property additions(1,151)(1,063)
Cost of removal, net of salvage(82)(84)
Change in construction payables, net(38)(103)
Other investing activities45 11 
Net cash used for investing activities(1,226)(1,239)
Financing Activities:
Decrease in notes payable, net(493)(749)
Proceeds —
Senior notes500 500 
First mortgage bonds125 100 
Short-term borrowings— 50 
Other long-term debt29 — 
Redemptions —
Short-term borrowings(200)(150)
Medium-term notes— (46)
Capital contributions from parent company377 357 
Payment of common stock dividends(439)(389)
Other financing activities(1)14 
Net cash used for financing activities(102)(313)
Net Change in Cash, Cash Equivalents, and Restricted Cash316 (20)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period83 48 
Cash, Cash Equivalents, and Restricted Cash at End of Period$399 $28 
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $12 and $7 capitalized for 2023 and 2022, respectively)$214 $186 
Income taxes, net70 193 
Noncash transactions —
Accrued property additions at end of period139 10 
Right-of-use assets obtained under operating leases3 — 
The accompanying notes as they relate to Southern Company Gas are an integral part of these condensed consolidated financial statements.
39
    Table of Contents                                Index to Financial Statements
SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 For the Nine Months Ended September 30,
 20222021
 (in millions)
Operating Activities:
Net income$516 $389 
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total414 396 
Deferred income taxes109 289 
Mark-to-market adjustments(34)147 
Impairment of PennEast Pipeline investment— 84 
Gain on dispositions, net(5)(127)
Natural gas cost under recovery – long-term207 (79)
Other, net27 32 
Changes in certain current assets and liabilities —
-Receivables301 311 
-Natural gas for sale, net of temporary LIFO liquidation(136)20 
-Prepaid income taxes(77)(148)
-Natural gas cost under recovery(124)(432)
-Other current assets7 (98)
-Accounts payable342 30 
-Other current liabilities(15)(57)
Net cash provided from operating activities1,532 757 
Investing Activities:
Property additions(1,063)(1,045)
Cost of removal, net of salvage(84)(74)
Change in construction payables, net(103)4 
Proceeds from dispositions— 126 
Other investing activities11 23 
Net cash used for investing activities(1,239)(966)
Financing Activities:
Increase (decrease) in notes payable, net(749)38 
Proceeds —
Short-term borrowings50 300 
First mortgage bonds100 100 
Senior notes500 450 
Redemptions —
Short-term borrowings(150)— 
Senior notes— (300)
Medium-term notes(46)(30)
Capital contributions from parent company357 63 
Payment of common stock dividends(389)(397)
Other financing activities14 (2)
Net cash provided from (used for) financing activities(313)222 
Net Change in Cash, Cash Equivalents, and Restricted Cash(20)13 
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period48 19 
Cash, Cash Equivalents, and Restricted Cash at End of Period$28 $32 
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $7 and $6 capitalized for 2022 and 2021, respectively)$186 $173 
Income taxes, net193 85 
Noncash transactions — Accrued property additions at end of period10 146 
The accompanying notes as they relate to Southern Company Gas are an integral part of these condensed consolidated financial statements.
40
Table of ContentsIndex to Financial Statements
SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
AssetsAssetsAt September 30, 2022At December 31, 2021AssetsAt September 30, 2023At December 31, 2022
(in millions)(in millions)
Current Assets:Current Assets:  Current Assets:  
Cash and cash equivalentsCash and cash equivalents$26 $45 Cash and cash equivalents$397 $81 
Receivables —Receivables —  Receivables —  
Customer accountsCustomer accounts296 462 Customer accounts242 616 
Unbilled revenuesUnbilled revenues122 278 Unbilled revenues74 453 
Other accounts and notesOther accounts and notes58 49 Other accounts and notes52 76 
Accumulated provision for uncollectible accountsAccumulated provision for uncollectible accounts(41)(39)Accumulated provision for uncollectible accounts(53)(50)
Natural gas for saleNatural gas for sale498 362 Natural gas for sale406 438 
Prepaid expensesPrepaid expenses192 114 Prepaid expenses92 93 
Natural gas cost under recoveryNatural gas cost under recovery390 266 Natural gas cost under recovery— 108 
Other regulatory assetsOther regulatory assets121 136 Other regulatory assets144 119 
Other current assetsOther current assets118 82 Other current assets108 104 
Total current assetsTotal current assets1,780 1,755 Total current assets1,462 2,038 
Property, Plant, and Equipment:Property, Plant, and Equipment:  Property, Plant, and Equipment:  
In serviceIn service19,656 18,880 In service20,459 19,723 
Less: Accumulated depreciationLess: Accumulated depreciation5,270 5,067 Less: Accumulated depreciation5,454 5,276 
Plant in service, net of depreciationPlant in service, net of depreciation14,386 13,813 Plant in service, net of depreciation15,005 14,447 
Construction work in progressConstruction work in progress871 684 Construction work in progress1,158 909 
Total property, plant, and equipmentTotal property, plant, and equipment15,257 14,497 Total property, plant, and equipment16,163 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 subsidiaries1,125 1,173 Equity investments in unconsolidated subsidiaries1,243 1,276 
Other intangible assets, net of amortization of $154 and $145, respectively28 37 
Other intangible assets, net of amortization of $163 and $156, respectivelyOther intangible assets, net of amortization of $163 and $156, respectively19 26 
Miscellaneous property and investmentsMiscellaneous property and investments27 19 Miscellaneous property and investments24 28 
Total other property and investmentsTotal other property and investments6,195 6,244 Total other property and investments6,301 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 amortization61 70 Operating lease right-of-use assets, net of amortization47 57 
Prepaid pension costsPrepaid pension costs200 175 Prepaid pension costs205 183 
Other regulatory assets, deferredOther regulatory assets, deferred468 689 Other regulatory assets, deferred483 497 
Other deferred charges and assetsOther deferred charges and assets136 130 Other deferred charges and assets162 145 
Total deferred charges and other assetsTotal deferred charges and other assets865 1,064 Total deferred charges and other assets897 882 
Total AssetsTotal Assets$24,097 $23,560 Total Assets$24,823 $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 September 30, 2022At December 31, 2021Liabilities and Stockholder's EquityAt September 30, 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$400 $400 
Notes payableNotes payable360 1,209 Notes payable75 768 
Accounts payable —Accounts payable —Accounts payable —
AffiliatedAffiliated64 58 Affiliated62 104 
OtherOther592 361 Other374 701 
Customer depositsCustomer deposits137 95 Customer deposits133 125 
Accrued taxesAccrued taxes71 124 Accrued taxes75 77 
Accrued interestAccrued interest67 59 Accrued interest79 67 
Accrued compensationAccrued compensation92 110 Accrued compensation85 105 
Natural gas cost over recoveryNatural gas cost over recovery165 — 
Other regulatory liabilitiesOther regulatory liabilities15 8 Other regulatory liabilities44 36 
Other current liabilitiesOther current liabilities168 155 Other current liabilities146 187 
Total current liabilitiesTotal current liabilities1,566 2,226 Total current liabilities1,638 2,570 
Long-term DebtLong-term Debt7,361 6,855 Long-term Debt7,657 7,042 
Deferred Credits and Other Liabilities:Deferred Credits and Other Liabilities:Deferred Credits and Other Liabilities:
Accumulated deferred income taxesAccumulated deferred income taxes1,662 1,555 Accumulated deferred income taxes1,629 1,560 
Deferred credits related to income taxesDeferred credits related to income taxes793 816 Deferred credits related to income taxes766 788 
Employee benefit obligationsEmployee benefit obligations158 176 Employee benefit obligations108 120 
Operating lease obligationsOperating lease obligations53 59 Operating lease obligations40 51 
Other cost of removal obligationsOther cost of removal obligations1,696 1,683 Other cost of removal obligations1,748 1,707 
Accrued environmental remediationAccrued environmental remediation217 197 Accrued environmental remediation202 207 
Other deferred credits and liabilitiesOther deferred credits and liabilities153 77 Other deferred credits and liabilities202 179 
Total deferred credits and other liabilitiesTotal deferred credits and other liabilities4,732 4,563 Total deferred credits and other liabilities4,695 4,612 
Total LiabilitiesTotal Liabilities13,659 13,644 Total Liabilities13,990 14,224 
Common Stockholder's Equity (See accompanying statements)
Common Stockholder's Equity (See accompanying statements)
10,438 9,916 
Common Stockholder's Equity (See accompanying statements)
10,833 10,397 
Total Liabilities and Stockholder's EquityTotal Liabilities and Stockholder's Equity$24,097 $23,560 Total Liabilities and Stockholder's Equity$24,823 $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 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, 202110,012 (73)(10)9,929 
Net income— 56 — 56 
Capital contributions from parent company2 — — 2 
Other comprehensive income— — 21 21 
Cash dividends on common stock— (132)— (132)
Balance at September 30, 2021$10,014 $(149)$11 $9,876 
(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, 202210,074 57 44 10,175 
Net incomeNet income— 115 — 115 Net income— 115 — 115 
Capital contributions from parent companyCapital contributions from parent company312 — — 312 Capital contributions from parent company312 — — 312 
Other comprehensive income (loss)Other comprehensive income (loss)— — (12)(12)Other comprehensive income (loss)— — (12)(12)
Cash dividends on common stockCash dividends on common stock— (130)— (130)Cash dividends on common stock— (130)— (130)
Balance at June 30, 2022Balance at June 30, 202210,386 42 32 10,460 Balance at June 30, 202210,386 42 32 10,460 
Net incomeNet income— 83 — 83 Net income— 83 — 83 
Capital contributions from parent companyCapital contributions from parent company11 — — 11 Capital contributions from parent company11 — — 11 
Other comprehensive incomeOther comprehensive income— — 14 14 Other comprehensive income— — 14 14 
Cash dividends on common stockCash dividends on common stock— (130)— (130)Cash dividends on common stock— (130)— (130)
Balance at September 30, 2022Balance at September 30, 2022$10,397 $(5)$46 $10,438 Balance at September 30, 2022$10,397 $(5)$46 $10,438 
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, 202310,649 83 21 10,753 
Net incomeNet income— 85 — 85 
Capital contributions from parent companyCapital contributions from parent company40 — — 40 
Other comprehensive incomeOther comprehensive income— — 7 7 
Cash dividends on common stockCash dividends on common stock— (147)— (147)
Balance at June 30, 2023Balance at June 30, 202310,689 21 28 10,738 
Net incomeNet income— 82 — 82 
Capital contributions from parent companyCapital contributions from parent company149 — — 149 
Other comprehensive incomeOther comprehensive income— — 10 10 
Cash dividends on common stockCash dividends on common stock— (146)— (146)
Balance at September 30, 2023Balance at September 30, 2023$10,838 $(43)$38 $10,833 
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
4544
B
4849
C
60
D
6465
E
6971
F
7273
G
7476
H
7577
I
7880
J
8384
K
9496
L
9596



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 K
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 September 30, 20222023 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.
Recently Adopted Accounting Standards
In March 2020 and December 2022, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting and ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, respectively, providing temporary guidance to ease the potential burden in accounting for reference rate reform primarily resulting from the discontinuation of LIBOR through December 31, 2024. See Note 1 to the financial statements under "Recently Adopted Accounting Standards" in Item 8 of the Form 10-K for additional information on the temporary guidance.
Certain provisions in PPAs at Southern Power include references to LIBOR. Contract amendments have been executed to change to a SOFR-based interest rate. Southern Power adopted and applied the practical expedients guidance to these PPAs. Additionally, the Registrants referenced LIBOR for certain debt and hedging arrangements. As of July 1, 2023, all of the debt and hedging arrangements of the Registrants have transitioned to a SOFR-based interest rate based on the terms of the agreements. There were no material impacts from the transition to SOFR and no impacts to any existing accounting conclusions. See Note (J) under "Interest Rate Derivatives" for additional information.
Goodwill and Other Intangible Assets
Goodwill at September 30, 20222023 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 goodwill impairment indicators arise.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Other intangible assets were as follows:
At September 30, 2022At December 31, 2021At September 30, 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$212$(159)$53$212 $(150)$62 Customer relationships$211 $(169)$42 $212 $(162)$50 
Trade namesTrade names64(44)2064 (38)26 Trade names63 (50)13 64 (44)20 
PPA fair value adjustmentsPPA fair value adjustments390(124)266390 (109)281 PPA fair value adjustments390 (143)247 390 (129)261 
OtherOther5(4)111 (10)1 Other5 (5)— 5 (5)— 
Total other intangible assets subject to amortization$671 $(331)$340 $677 $(307)$370 
Other intangible assets not subject to amortization:
Federal Communications Commission licenses75 — 75 75 — 75 
Total subject to amortizationTotal subject to amortization$669 $(367)$302 $671 $(340)$331 
Not subject to amortization:Not subject to amortization:
FCC licensesFCC licenses75 — 75 75 — 75 
Total other intangible assetsTotal other intangible assets$746 $(331)$415 $752 $(307)$445 Total other intangible assets$744 $(367)$377 $746 $(340)$406 
Southern Power
Other intangible assets subject to amortization:
Southern Power(*)
Southern Power(*)
PPA fair value adjustmentsPPA fair value adjustments$390 $(124)$266 $390 $(109)$281 PPA fair value adjustments$390 $(143)$247 $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 $(137)$19 $156 $(130)$26 Customer relationships$156 $(143)$13 $156 $(139)$17 
Trade namesTrade names26 (17)9 26 (15)11 Trade names26 (20)6 26 (17)9 
Total other intangible assets subject to amortization$182 $(154)$28 $182 $(145)$37 
Total other intangible assetsTotal other intangible assets$182 $(163)$19 $182 $(156)$26 
(*) All subject to amortization.
Amortization associated with other intangible assets was as follows:
Three Months EndedNine Months EndedThree Months EndedNine Months Ended
September 30, 2023September 30, 2022
(in millions)
Southern Company(a)
$10 $27 $11 $30 
Southern Power(b)
5 14 5 15 
Southern Company Gas3 7 4 9 
(a)Includes $5 million, $14 million, $5 million, and $15 million for the three and nine months ended September 30, 2023 and 2022, respectively, recorded as a reduction to operating revenues.
(b)Recorded as a reduction to operating revenues.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Amortization associated with other intangible assets was as follows:
Three Months EndedNine Months Ended
September 30, 2022
(in millions)
Southern Company(a)
$11 $30 
Southern Power(b)
5 15 
Southern Company Gas4 9 
(a)Includes $5 million and $15 million for the three and nine months ended September 30, 2022, respectively, recorded as a reduction to operating revenues.
(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		Southern CompanyAlabama PowerGeorgia PowerSouthern PowerSouthern
Company Gas
September 30,
2022
December 31, 2021
September 30,
2022
December 31, 2021
September 30,
2022
December 31, 2021(in millions)
(in millions)
At September 30, 2023At September 30, 2023
Cash and cash equivalentsCash and cash equivalents$2,009 $1,798 $229 $107 $26 $45 Cash and cash equivalents$1,676 $621 $173 $236 $397 
Restricted cash(a):
Restricted cash(a):
Restricted cash(a):
Other current assetsOther current assets2 2 — — 2 2 Other current assets176 108 48 18 2 
Other deferred charges and assetsOther deferred charges and assets3 29 3 29 — — Other deferred charges and assets38 — 35 3 — 
Total cash, cash equivalents, and restricted cash(b)
Total cash, cash equivalents, and restricted cash(b)
$2,013 $1,829 $231 $135 $28 $48 
Total cash, cash equivalents, and restricted cash(b)
$1,890 $729 $256 $257 $399 
At December 31, 2022At December 31, 2022
Cash and cash equivalentsCash and cash equivalents$1,917 $687 $364 $131 $81 
Restricted cash(a):
Restricted cash(a):
Other current assetsOther current assets62 — 60 — 2 
Other deferred charges and assetsOther deferred charges and assets58 — 56 3 — 
Total cash, cash equivalents, and restricted cash(b)
Total cash, cash equivalents, and restricted cash(b)
$2,037 $687 $480 $133 $83 
(a)For Alabama Power, balance at September 30, 2023 reflects proceeds from the issuance of solid waste disposal facility revenue bonds in 2023. For Georgia Power, reflects proceeds from the issuance of solid waste disposal facility revenue bonds in 2022. For Southern Power, reflects $3 million and $10$18 million at September 30, 20222023 resulting from an arbitration interim award held to fund future replacement costs and $3 million at both September 30, 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. See Note (C) under "General Litigation Matters – Southern Power" for additional information. 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 had noGas' inventory decrement at September 30, 2022.2023 is expected to be restored prior to year-end.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
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 nine months ended September 30, 2023 was as follows:
Southern
Company(*)
Alabama Power
Georgia Power(*)
Mississippi
Power
 (in millions)
Balance at December 31, 2022$216 $97 $83 $36 
Accrual42 9 24 9 
Weather-related damages(242)(35)(204)(3)
Balance at September 30, 2023$16 $71 $(97)$42 
(*)See Note (B) under "Georgia Power – Storm Damage Recovery" for additional information.
Asset Retirement Obligations
See Note 6 to the financial statements in Item 8 of the Form 10-K for additional information.
Following initial criticality on March 6, 2023, Georgia Power recorded AROs of approximately $90 million related to Plant Vogtle Unit 3. See Note (B) under "Georgia Power – Nuclear Construction" for additional information on Plant Vogtle Units 3 and 4.
In September 2023, Georgia Power recorded a net decrease of approximately $175 million to its AROs related to the CCR Rule and the related state rule resulting from changes in estimates, including lower future inflation rates and the timing of closure activities.
In June 2023, Alabama Power completed an updated decommissioning cost site study for Plant Farley. The estimated cost of decommissioning based on the study resulted in a decrease in Alabama Power's ARO liability of approximately $15 million. See "Nuclear Decommissioning" herein for additional information.
Nuclear Decommissioning
See Note 6 to the financial statements in Item 8 of the Form 10-K under "Nuclear Decommissioning" for additional information. Site study cost is the estimate to decommission a specific facility as of the site study year. The decommissioning cost estimates are based on removal of the plant from service and prompt dismantlement. The actual decommissioning costs may vary from these estimates because of changes in the assumed date of decommissioning, changes in NRC requirements, or changes in the assumptions used in making these estimates.
47
    Table of Contents                                Index to Financial Statements

NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
DepreciationThe estimated costs of decommissioning Plant Farley based on Alabama Power's June 2023 site study are as follows:
Plant Farley
Decommissioning periods:
Beginning year2037
Completion year2087
(in millions)
Site study costs:
Radiated structures$1,402 
Spent fuel management513 
Non-radiated structures133 
Total site study costs$2,048 
For ratemaking purposes, Alabama Power's decommissioning costs are based on the site study. Significant assumptions used to determine these costs for ratemaking were an estimated inflation rate of 4.5% and Amortizationan estimated trust earnings rate of 7.0%.
Amounts previously contributed to the external trust funds are currently projected to be adequate to meet the updated decommissioning obligations. Alabama Power's site-specific estimates of decommissioning costs for Plant Farley are updated every five years. The next site study for Alabama Power is expected to be completed in 2028. Projections of funds are reviewed with the Alabama PSC to ensure that, over time, the deposits and earnings of the funds in the external trust will provide adequate funding to cover the site-specific costs. If necessary, Alabama Power would seek the Alabama PSC's approval to address any changes in a manner consistent with NRC and other applicable requirements.
Income Taxes
In the third quarter 2023, Georgia Power started generating advanced nuclear PTCs for Plant Vogtle Unit 3 beginning on the in-service date of July 31, 2023. PTCs are recognized as an income tax benefit based on KWH production. In addition, pursuant to the Global Amendments to the Vogtle Joint Ownership Agreements (as defined in Note (B) under "Georgia Power – Nuclear Construction – Joint Owner Contracts"), Georgia Power is purchasing advanced nuclear PTCs for Plant Vogtle Unit 3 from certain other Vogtle Owners. The gain recognized on the purchase of the joint owner PTCs is recognized as an income tax benefit. See Note 51 to the financial statements under "Depreciation and Amortization""Income Taxes" in Item 8 of the Form 10-K for additional information.
Alabama Power
On September 23, 2022, the FERC authorized Alabama Powerinformation regarding accounting policies related to use updated depreciation rates from its 2021 depreciation study effective January 1, 2023. The study was also provided to the Alabama PSC, and the new depreciation rates will be reflected in Alabama Power's future rate filings.income taxes. See Note 2 to the financial statements(B) under "Alabama Power" in Item 8 of the Form 10-K"Georgia Power – Nuclear Construction" for additional information regarding Plant Vogtle Units 3 and 4. Also see Note (G) under "Current and Deferred Income Taxes"for additional information.
Southern Power
48
Effective January 1, 2022, Southern Power revised the depreciable lives
Table of its wind generating facilities from upContentsIndex to 30 years to up to 35 years. This revision resulted in an immaterial decrease in depreciation for the three and nine months ended September 30, 2022.Financial Statements

NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
(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 September 30, 20222023 and December 31, 20212022 were as follows:
Regulatory ClauseRegulatory ClauseBalance Sheet Line ItemSeptember 30,
2022		December 31, 2021Regulatory ClauseBalance Sheet Line ItemSeptember 30,
2023		December 31, 2022
(in millions)(in millions)
Alabama PowerAlabama PowerAlabama Power
Rate CNP ComplianceRate CNP ComplianceOther regulatory liabilities, deferred$4 $— Rate CNP ComplianceOther regulatory liabilities, deferred$3 $— 
Other regulatory assets, deferred— 16 Other regulatory assets, current— 47 
Rate CNP PPARate CNP PPAOther regulatory assets, deferred125 84 Rate CNP PPAOther regulatory assets, current17 18 
Other regulatory assets, deferred90 102 
Retail Energy Cost Recovery(*)
Other regulatory assets, current93 — 
Other regulatory assets, deferred413 126 
Retail Energy Cost RecoveryRetail Energy Cost RecoveryOther regulatory assets, current208 102 
Other regulatory assets, deferred80 520 
Georgia PowerGeorgia PowerGeorgia Power
Fuel Cost Recovery(*)
Fuel Cost Recovery(*)
Receivables – under recovered fuel clause revenues$730 $— 
Deferred under recovered fuel clause revenues1,279 2,056 
Fuel Cost RecoveryDeferred under recovered fuel clause revenues$1,697 $410 
Mississippi PowerMississippi PowerMississippi Power
Fuel Cost RecoveryFuel Cost RecoveryOther customer accounts receivable$13 $4 Fuel Cost RecoveryReceivables – customer accounts, net$25 $1 
Ad Valorem TaxAd Valorem TaxOther regulatory assets, current12 12 Ad Valorem TaxOther regulatory assets, current3 12 
Other regulatory assets, deferred22 37 Other regulatory assets, deferred11 19 
Southern Company GasSouthern Company GasSouthern Company Gas
Natural Gas Cost RecoveryNatural Gas Cost RecoveryNatural gas cost under recovery$390 $266 Natural Gas Cost RecoveryNatural gas cost under recovery$— $108 
Other regulatory assets, deferred— 207 Natural gas cost over recovery165 — 
(*)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.
48
Table of ContentsIndex to Financial Statements

NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Alabama Power
Certificates of Convenience and Necessity
On July 12, 2022,In 2020, the Alabama PSC approved a certificate of convenience and necessity (CCN) authorizing Alabama Power to complete the acquisition of the Calhoun Generating Station, which was approved by the FERC on March 25, 2022. The transaction closed on September 30, 2022 and, on October 3, 2022, Alabama Power filed Rate CNP New Plant with the Alabama PSC to recover the related costs. The filing reflected an increase in annual revenues of $34 million, or 0.6%, effective with the billing month of November 2022. Alabama Power expects to recover all approved costs associated with the acquisition through existing rate mechanisms as outlined in Note 2 to the financial statements in Item 8 of the Form 10-K. See Note (K) under "Alabama Power" for additional information.
With the completion of the Calhoun Generating Station acquisition, Alabama Power expects to retire Plant Barry Unit 5 as early as 2023. In September 2022, Alabama Power reclassified approximately $600 million for Plant Barry Unit 5 from plant in service, net of depreciation to other utility plant, net and will continue to depreciate the asset according to the original depreciation rates. At retirement, Alabama Power will reclassify the remaining net investment costs of the unit to a regulatory asset to be recovered over the unit's remaining useful life, as established prior to the decision to retire, through Rate CNP Compliance. See Note 2 to the financial statements under "Alabama Power – Environmental Accounting Order" in Item 8 of the Form 10-K for additional information.
In its 2020 order authorizing the CCN for Alabama Power's construction of Plant Barry Unit 8 and the Alabama PSC authorized recovery of estimated actual in-service costs of $652 million. At September 30, 2022,2023, project expenditures associated with Plant Barry Unit 8 totaled approximately $583 million, of which $578 million and $5 million was included in CWIP totaled approximately $484 million and property, plant, and equipment in service, respectively. On November 1, 2023, the unit is expected to bewas placed in service in November 2023.service. The ultimate outcome of this matter cannot be determined at this time.
Rate ECRExcess Accumulated Deferred Income Tax Accounting Order
On July 12, 2022,October 3, 2023, the Alabama PSC approvedissued an adjustmentorder modifying its December 2022 order and authorizing Alabama Power to Rate ECR from 1.960 cents per KWH to 2.557 cents per KWH, or(i) flow back in 2023 approximately $310$24 million annually, effective with August 2022 billings. The approved increase in the Rate ECR factor has no significant effect on Alabama Power's netof certain federal excess accumulated deferred income but does 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 ordertaxes resulting from the Alabama PSC.
Rate NDR
On July 12, 2022,Tax Cuts and Jobs Act of 2017 and (ii) make available any remaining balance of excess accumulated deferred income taxes at the Alabama PSC approved modifications to Rate NDR, which include an adjustment toend of 2023 for 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.
Beginning with August 2022 billings, the reserve establishment charge was suspended and the reserve maintenance charge was activated as a resultbenefit of the NDR balance exceeding $75 million. Alabama Power expects to collect $6 millioncustomers in the second half2024 and/or 2025. The ultimate outcome of 2022 and approximately $12 million annually beginning in 2023 under Rate NDR unless the NDR balance falls below $50 million. At September 30, 2022, Alabama Power's NDR balance was $103 million. Alabama Power continues to have the authority to accrue additional amounts to the NDR as circumstances warrant.this matter cannot be determined at this time.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Reliability Reserve Accounting OrderRate CNP 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 accounting order authorizingannual increase in retail revenues of $78 million effective with June 2023 billings. Through May 2023, Alabama Power to createrecovered substantially all costs associated with the Central Alabama Generating Station through Rate RSE, offset by revenues from a reliability reserve separate frompower sales agreement. On May 24, 2023, the NDR and transition the previous Rate NDR authority related to reliability expendituresCentral Alabama Generating Station was placed into retail service. See Note 15 to the reliability reserve. Alabama Power may make accruals tofinancial statements under "Alabama Power" in Item 8 of 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, one of the existing solar projects which was expected to be served through a PPA commencing in first quarter 2024 was terminated, resulting in the restoration of 80 MWs of capacity under the RGC. On October 4, 2022,2023, the Alabama PSC approved two new solar PPAs totaling 160 MWs. Upon approval of these PPAs, Alabama Power hashad procured solar capacity totaling approximately 330490 MWs under the RGC's original 500-MW limit.
On June 14, 2023, the Alabama PSC issued an order approving modifications to Alabama Power's RGC. The modifications authorized Alabama Power to procure an additional 2,400 MWs of renewable capacity and energy by June 14, 2029 and to market the related energy and environmental attributes to customers and other third parties. The modifications also increased the size of allowable renewable projects from 80 MWs to 200 MWs and increased the annual approval limit from 160 MWs to 400 MWs.
Reliability Reserve Accounting Order
On July 11, 2023, the Alabama PSC issued an order authorizing Alabama Power to expand the existing authority of its reliability reserve to include certain production-related expenses that are intended to maintain reliability in between scheduled generating unit maintenance outages.
On August 18, 2023, Alabama Power notified the Alabama PSC of its intent to use a portion of its $166 million reliability reserve balance during 2023. The ultimate outcome of this matter cannot be determined at this time.
Georgia Power
Rate Plans
In accordance with the terms of the 2022 Base Rate Case
On June 24, 2022,ARP, on October 2, 2023, Georgia Power filed a base rate case (Georgia Power 2022 Base Rate Case) with the Georgia PSC. The filing, as modified on August 22, 2022, proposes a three-year alternate rate plan with requested rate increases totaling $889 million, $107 million, and $45 millionfollowing tariff adjustments to become effective January 1, 2023, January 1, 2024 and January 1, 2025, respectively. These increases are based on a proposed retail ROE of 11.00% usingpending approval by the currently approved equity ratio of 56% and reflect levelized revenue requirements duringGeorgia PSC:
•increase traditional base tariffs by approximately $275 million;
•decrease the three-year period, withEnvironmental Compliance Cost Recovery tariff by approximately $99 million;
•increase the exception of incremental compliance costs related to CCR AROs, Demand-Side Management (DSM) programs,tariffs by approximately $10 million; and related adjustments to
•increase the Municipal Franchise Fee tariff.tariffs by approximately $5 million.
The ultimate outcome of this matter cannot be determined at this time.
Plant Vogtle Unit 3 and Common Facilities Rate Proceeding
In compliance with a Georgia PSC order approved in November 2021, Georgia Power has requested recoveryincreased annual retail base rates by $318 million effective August 1, 2023 based on the in-service date of the proposed increases through its existing base rate tariffs as follows:
Tariff202320242025
(in millions)
Traditional base$762 $— $— 
ECCR
Traditional5 — — 
CCR ARO(a)
64 78 47 
DSM(a)
37 27 (2)
Municipal Franchise Fee21 2 1 
Total(b)
$889 $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 recentJuly 31, 2023 for Plant Vogtle Unit 3. See "Plant Vogtle Units 3 and future capital investments in the electric grid including the transmission4 Prudency Proceeding" and distribution systems"Nuclear Construction" herein for additional information on Plant Vogtle Units 3 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 costs4.
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Plant Vogtle Units 3 and 4 Prudency Proceeding
On August 30, 2023, as provided for in the December 2017 Georgia PSC approval of the seventeenth VCM report, Georgia Power filed with the Georgia PSC an application to adjust rates to include reasonable and prudent Plant Vogtle Units 3 and 4 costs (Application). The Application provides the necessary support to justify the reasonableness, prudence, and recovery of $8.826 billion in total construction and capital costs, $1.07 billion in associated retail rate base items, and the operating costs related to the full operation and output of Plant Vogtle Units 3 and 4. Through the VCM process, the Georgia PSC has verified and approved all expenditures up to the revised approved construction and capital cost of $7.3 billion and has reviewed, but not verified and approved, all expenditures through December 31, 2022 above that amount.
Also on August 30, 2023, the staff of the Georgia PSC filed a stipulated agreement (Prudency Stipulation) among Georgia Power, the staff of the Georgia PSC, and certain intervenors. The Prudency Stipulation is intended to resolve all issues for determination by the Georgia PSC regarding the reasonableness, prudence, and cost recovery for the remaining costs not already in retail base rates, after considering many of the issues raised by the staff of the Georgia PSC and intervenors in prior VCM proceedings, including the extended construction time, required rework, scheduling of activities, and challenges with testing and productivity. If the Prudency Stipulation is approved, Georgia Power will recover $7.562 billion in total construction and capital costs and associated retail rate base items of $1.02 billion, which includes AFUDC financing costs above $4.418 billion (the Georgia PSC-certified amount) up to $7.562 billion.
The Prudency Stipulation also provides for the recovery of projected operations and maintenance expenses, depreciation expense, nuclear decommissioning accruals, and property taxes, net of projected production tax credits. After considering construction and capital costs already in retail base rates of $2.1 billion and $362 million of associated retail rate base items (approved by the Georgia PSC in November 2021), and upon achieving commercial operation of Unit 4, Georgia Power will include in retail rate base the remaining $5.462 billion of construction and capital costs as well as $656 million of associated retail rate base items.
Under the terms of the Prudency Stipulation, when the rate adjustment occurs, Georgia Power's NCCR tariff will cease to be collected and financing costs will be included in Georgia Power's general revenue requirements. Additionally, if commercial operation for Unit 4 is not achieved by March 31, 2024, Georgia Power's ROE used to determine the NCCR tariff and calculate AFUDC will be reduced to zero, which would result in an estimated negative impact to earnings of approximately $12 million per month until commercial operation for Unit 4 is achieved. The Prudency Stipulation also provides that as of each Unit's respective first refueling outage, if the respective Unit's performance has materially deviated from expected performance, the Georgia PSC may order Georgia Power to credit customers for operations and maintenance expenses or disallow costs associated with the CCR AROs relatedrepair or replacement of any system, structure, or component found to ash pondhave caused the material deviation in performance if proven to be the result of imprudent engineering, construction, procurement, testing, or start-up.
If the Prudency Stipulation is approved by the Georgia PSC, annual retail base revenues will increase approximately $729 million 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 allowedaverage retail ROE range of 9.50% to 12.00%.
•Continuationbase rates will be adjusted by approximately 5% (net of the process whereby 80% of any earnings above the topelimination of the allowed ROE range are shared with Georgia Power's customers andNCCR tariff described above) effective the remaining 20% are retained by Georgia Power.
•Continuationfirst day 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.month after Unit 4 achieves commercial operation.
Georgia Power expects the Georgia PSC to render a final decision in this matteron these matters on December 20, 2022.19, 2023. The ultimate outcome of this matterthese matters 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 See "Plant Vogtle Unit 3 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-KCommon Facilities Rate Proceeding" and "Nuclear Construction" herein for additional information regarding Georgia Power's AROs.on Plant Vogtle Units 3 and 4.
Integrated Resource PlansFuel Cost Recovery
In response to supply chain challenges in the solar industry,On May 16, 2023, 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.
On July 21, 2022, the Georgia PSC approved the 2022 IRP, as modified by a stipulatedstipulation agreement amongbetween Georgia Power and the staff of the Georgia PSC and certain intervenors and as further modifiedto increase annual fuel billings by the Georgia PSC. In the 2022 IRP decision, the Georgia PSC approved the following requests:
•54%, or approximately $1.1 billion,Decertification and retirement of Plant Wansley Unitseffective June 1, and 2 (926 MWs based on 53.5% ownership), which occurred on August 31, 2022, and reclassification to regulatory asset accounts of the remaining net book values and any remaining unusable materials and supplies inventories upon retirement.2023. The regulatory asset accountsincrease includes a three-year recovery period for the remaining net book values of the units ($299 million and $277 million for Unit 1 and Unit 2, respectively, at September 30, 2022) are being 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 $608 million at September 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$2.2 billion of Georgia Power's plansunder recovered fuel balance at May 31, 2023. Under the approved stipulation agreement, Georgia Power is allowed to address CCR atadjust its ash ponds and landfills. Recovery offuel cost recovery rates under an interim fuel rider prior to the related costs is expectednext fuel case, subject to be determined in future base rate cases. The Georgia PSC's approval included a maximum 40% cumulative change, in the method of closure for one ashif its
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pond.under or over recovered fuel balance accumulated since May 31, 2023 exceeds $200 million. Georgia Power is currently evaluatingscheduled to file its next fuel case no later than February 28, 2026. Changes in fuel rates have no significant effect on Southern Company's or Georgia Power's net income but do impact the related impact on its cost estimates and AROs; however, it is not expected to be material.operating cash flows.
•Installation of environmental controls at Plants Bowen and Scherer for compliance with rules related to effluent limitations guidelines.Integrated Resource Plans
•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 six PPAs (including five 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.
OnIn August 26, 2022, Restore Chattooga Gorge Coalition (RCG) filed a petition in the Superior Court of Fulton County, Georgia against Georgia Power and the Georgia PSC. The petition challenges Georgia Power's plan to expend $115 million to modernize Plant Tugalo (a hydro facility), as approved in the 2019 IRP, and seeks judicial review of the Georgia PSC's order in the 2022 IRP proceeding with respect to the denial of RCG's challenge to the modernization plan. On October 23, 2023, the court granted Georgia Power's and the Georgia PSC's motions to dismiss the RCG petition. RCG has until November 22, 2023 to file a notice of appeal.
On October 27, 2023, Georgia Power filed an updated IRP (2023 IRP Update) with the Georgia PSC, which sets forth a plan to support the recent increase in the state of Georgia's projected energy needs since the 2022 IRP. In the 2023 IRP Update, Georgia Power requested the following:
•Authority to develop, own, and operate up to 1,400 MWs from three simple cycle combustion turbines at Plant Yates.
•Approval to pursue potential acquisition of an additional ownership interest in an existing generation asset within the Southern Company system's retail electric service territory.
•Certification of an affiliate PPA with Mississippi Power for 750 MWs starting January 2024 through December 2028.
•Certification of a non-affiliate PPA for 230 MWs starting the month after conclusion of the 2023 IRP Update proceeding continuing through December 2028.
•Authority to develop, own, and operate up to 1,000 MWs of battery energy storage facilities collocated with existing and new Georgia Power-owned solar facilities.
•Approval of transmission projects necessary to support the generation resources requested in the 2023 IRP Update.
The schedule for the Georgia PSC to consider the 2023 IRP Update has not been determined. Georgia Power has requested that the Georgia PSC evaluate the 2023 IRP Update by the end of April 2024.
The ultimate outcome of these matters cannot be determined at this time.
Storm Damage Recovery
Georgia Power is recovering $31 million annually under the 2022 ARP for incremental operating and maintenance costs of damage from major storms to its transmission and distribution facilities. During August 2023, Hurricane Idalia caused significant damage to Georgia Power's transmission and distribution facilities. The incremental restoration costs related to this hurricane deferred in the regulatory asset for storm damage totaled approximately $110 million. At September 30, 2023, Georgia Power's regulatory asset balance related to storm damage was $97 million. The rate of storm damage cost recovery is expected to be adjusted in future regulatory proceedings as necessary. As a result of this regulatory treatment, costs related to storms are not expected to have a material impact on Southern Company's or Georgia Power's net income but do impact the related operating cash flows.
Nuclear Construction
In 2009, the Georgia PSC certified construction of Plant Vogtle Units 3 and 4, in which Georgia Power holds a 45.7% ownership interest. In 2012, the NRC issued the related combined construction and operating licenses, which allowed full construction of the two 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.
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In connection with the EPC Contractor's bankruptcy filing in March 2017, Georgia Power, acting for itself and as agent for the other Vogtle Owners, entered into several transitional arrangements to allow construction to continue. In July 2017, Georgia Power, acting for itself and as agent for the other Vogtle Owners, entered into the Vogtle Services Agreement, whereby Westinghouse provides facility design and engineering services, procurement and technical support, and staff augmentation on a time and materials cost basis. The Vogtle Services Agreement provides that it will continue until the start-up and testing of Plant Vogtle Units 3 and 4 are complete and electricity is generated and sold from both units. The Vogtle Services Agreement is terminable by the Vogtle Owners upon 30 days' written notice.
In October 2017, Georgia Power, acting for itself and as agent for the other Vogtle Owners, executed the Bechtel Agreement, 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
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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 first quarterJuly 2023 and the fourth quarter 2023,March 2024, respectively, is as follows:
(in millions)
Base project capital cost forecast(a)(b)
$10,33410,736 
Construction contingency estimate4917 
Total project capital cost forecast(a)(b)
10,38310,753 
Net investment at September 30, 20222023(b)
(9,280)(10,495)
Remaining estimate to complete$1,103258 
(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 $353$567 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$420 million, of which $275$385 million had been accrued through September 30, 2022.2023.
(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 $3.1$3.4 billion had been incurred through September 30, 2022.2023.
Georgia Power placed Unit 3 in service on July 31, 2023. See "Plant Vogtle Unit 3 and Common Facilities Rate Proceeding" herein for additional information.
As part of its ongoing processes, Southern Nuclear continues to evaluate cost and schedule forecasts for Unit 4 on a regular basis to incorporate current information available, particularly in the areas of engineering support, commodity installation, system turnoversstart-up testing and related test results, engineering support, system turnovers, and workforce statistics. Southern Nuclear establishes aggressive target values for monthly construction productiontesting and system turnover activities, which are reflected in the site work plans.plan for Unit 4.
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
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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 September 30, 2022,2023, 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 andapproximately $200 million and is included in the total project capital cost forecast. The continuing effects of the COVID-19 pandemic could further disrupt or delay construction and testing activities at Plant Vogtle Units 3 and 4.
On July 29, 2022, Southern Nuclear announced that all Unit 3 ITAACs had been submitted to the NRC. On August 3, 2022, the NRC published its 103(g) finding that the acceptance criteria in the combined license for Unit 3 had been met, which allowed nuclear fuel to be loaded and allows start-up testing to begin. Fuel load for Unit 3 was completed on October 17, 2022, and the unit is projected to be placed in service by the end of the first quarter 2023. Unit 4 is projected to be placed in service by the end of the fourth quarter 2023.
During the first nine months of 2022,2023, established construction contingency totaling $170$43 million was assigned to the base capital cost forecast for costs primarily associated with construction productivity, the paceUnit 3 schedule extension and completion of system turnovers,start-up and pre-operational testing, including continued need of support resources for Unit 3 testing, as well as additional craft and support resources and procurementsubcontract work for Units 3Unit 4.
Hot functional testing for Unit 4 was completed on May 1, 2023. On July 20, 2023, Southern Nuclear announced that all Unit 4 ITAACs had been submitted to the NRC, and, 4.on July 28, 2023, the NRC published its 103(g) finding that the accepted criteria in the combined license for Unit 4 had been met, which allowed nuclear fuel to be loaded and start-up testing to begin. Fuel load for Unit 4 was completed on August 19, 2023. On October 6, 2023, Georgia Power also increased its total
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project capital cost forecast by adding $36 million and $32 million to replenish construction contingency in the second quarter 2022 and the third quarter 2022, respectively.
After considering the significant level of uncertaintyannounced 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 pre-tax charges to income in the second quarter 2022 and the third quarter 2022 of $36 million ($27 million after tax) and $32 million ($24 million after tax), respectively, for the increases 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.
The projected schedule for Unit 3 primarily depends on the pace of system and area transitions to operations, including the completion of closure documentation necessary to support start-up testing, and the progression of start-up, final component, and pre-operational testing which mayfor Plant Vogtle Unit 4, Southern Nuclear identified a motor fault in one of four reactor coolant pumps (RCPs) and has started the process to replace this RCP with an on-site spare RCP from inventory. Considering this remediation and the remaining pre-operational testing, Unit 4 is projected to be impacted by equipmentplaced in service during the first quarter 2024.
With Unit 3's four RCPs operating as designed, Southern Nuclear believes that the motor fault on this single Unit 4 RCP is an isolated event. However, any findings related to the root cause of the motor fault on the single Unit 4 RCP could require engineering changes or remediation related to the other operational failures.seven Unit 3 and Unit 4 RCPs. The projected schedule for Unit 4 primarilysignificantly depends on Unit 3 progress through start-upthe pace and testing; overall construction productivitysuccess of replacing the RCP, which involves removing and production levels improving, particularly in electrical installation, including terminations; and appropriate levels of craft laborers, particularly electricians, being added and maintained.re-installing commodities around the RCP. As Unit 4 progresses through constructioncompletes the RCP replacement, including any associated repairs to other RCPs, and continues to transitiontransitions further into testing, ongoing and potential future challenges include the management of contractors and vendors, subcontractor performance, the availability of materials and parts, and/or related cost escalation; the pace and quality of electrical, mechanical, and instrumentation and controls commodities installation;remaining work package closures; the availability of craft, supervisory, and supervisory resources, including the temporary diversion of such resources totechnical support Unit 3; the pace of work package closures and system turnovers;resources; and the timeframe and duration of hot functionalfinal component and otherpre-operational testing. Ongoing or future challenges for both units also include management of contractors and vendors; subcontractor performance; supervision of craft labor and related productivity; ability to attract and retain craft labor; and/or related cost escalation. New challenges also may continue to arise particularly as Units 3 andUnit 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). These challenges may result in further schedule 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. 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. On March 25, 2022, the NRC completed a follow-up inspection related to the November 2021 final significance report on its special inspection to review the root cause of additional construction remediation work identified in 2021 and Southern Nuclear's corresponding corrective action plans. The NRC closed the two white findings identified in November 2021 and returned Vogtle Unit 3 to the NRC's baseline inspection program.
With the receipt of the NRC's 103(g) finding, Unitfindings for Units 3 and 4 in August 2022 and July 2023, respectively, the site is now undersubject to the NRC's operating reactor oversight process and must meet applicable technical and operational requirements contained within Unit 3'sin its operating license. Various design and other licensing-based compliance matters including the timely submittal by Southern Nuclear of the ITAAC documentation and the related reviews and approvals by the NRC necessary to support NRC authorization to load fuel for Unit 4, may arise, which may result in additional license amendment 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 Unit 4 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 first quarter 2023 for Unit 3 or the fourth quarter 2023March 2024 for Unit 4, including the current level ofjoint owner cost sharing impacts described below, is estimated to result in additional base capital costs for Georgia Power of up to $15$25 million per month, for Unit 3 and $35 million per month for Unit 4, as well as the related AFUDC and any additional related construction, support resources, or testing costs. WhilePursuant to Georgia Power is not precluded from seeking retail recovery ofPower's Application and the Prudency Stipulation (as discussed under "Plant Vogtle Units 3 and 4 Prudency Proceeding" herein), any futurefurther changes to the capital cost forecast increase other than the amounts relatedare not expected to the cost-sharingbe recoverable through regulated rates and will be required to be charged to income. Such charges could be material.
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and tender provisions of the joint ownership agreements described below, management will ultimately determine whether or not to seek recovery. Any further changes to the capital cost forecast that are not expected to be recoverable through regulated rates will be required to be charged to income and such charges could be material.
Joint Owner Contracts
In November 2017, the Vogtle Owners entered into an amendment to their joint ownership agreements for Plant Vogtle Units 3 and 4 to provide for, among other conditions, additional Vogtle Owner approval requirements. Effective in August 2018, the Vogtle Owners further amended the joint ownership agreements to clarify and provide procedures for certain provisions of the joint ownership agreements related to adverse events that require the vote of the holders of at least 90% of the ownership interests in Plant Vogtle Units 3 and 4 to continue construction (as amended, and together with the November 2017 amendment, the Vogtle Joint Ownership Agreements). The Vogtle Joint Ownership Agreements also confirm that the Vogtle Owners' sole recourse against Georgia Power or Southern 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 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 paypaid 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 bewas 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 bewas 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. The Global Amendments provide that if the EAC iswas revised and exceedsexceeded the EAC in the nineteenth VCM 19 Forecast Amount by more than $2.1 billion, each of the other Vogtle Owners will havehad a one-time option at the time the project budget cost forecast iswas 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
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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 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-servicein-
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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. The filing of the Application with the Georgia PSC, which included Georgia Power's public announcement of its intention not to submit for rate recovery an amount that is greater than the first 6% of costs during any six-month VCM reporting period, triggered the requirement for a vote to continue construction and all the Vogtle Owners voted to continue construction. See "Plant Vogtle Units 3 and 4 Prudency Proceeding" herein for additional information on Georgia Power's prudency application filing.
Georgia Power and the other Vogtle Owners dodid 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 believebelieved the current capital cost expenditures have already exceeded the cost-sharing thresholds and the current project capital cost forecast triggersapproved by the Vogtle Owners in February 2022 triggered the tender provisions under the Global Amendments.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. On June 17, 2022 and July 26, 2022, OPC and Dalton, respectively, notified Georgia Power of their purported exercises of their tender options. Georgia Power did not accept these purported tender exercises.
OnIn 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 and July 28, 2022, Georgia Power filed its answers in the lawsuits filed by MEAG Power and OPC respectively, 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. OnIn September 26, 2022, Dalton filed complaints in each of these lawsuits. On
Also in September 29, 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 payreimburse 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 $79$92 million based on the current project capital cost forecast; and (iii) Georgia Power will payreimburse 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. OnIn October 4, 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.
On October 5, 2023 and October 17, 2023, Georgia Power reached agreements with OPC and Dalton, respectively, to resolve its respective dispute with each of OPC and Dalton regarding the proper interpretation of the cost-sharing and tender provisions of the joint ownership agreements relating to the Global Amendments. Under the terms of the agreements with OPC and Dalton, among other items, (i) each of OPC and Dalton retracted its exercise of the tender option and will retain its full ownership interest in Plant Vogtle Units 3 and 4, (ii) Georgia Power made payments immediately after execution of the agreements of $308 million and $17 million to OPC and Dalton, respectively, representing payment for a portion of each of OPC's and Dalton's costs of construction for Plant Vogtle Units 3 and 4 previously incurred, (iii) Georgia Power will pay a portion of each of OPC's and Dalton's further 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 be in an aggregate amount of approximately $105 million and $6 million for OPC and Dalton, respectively, based on the current project capital cost forecast, and (iv) Georgia Power will pay 66% of each of OPC's and Dalton's costs of construction with respect to any amounts above the current project capital cost forecast, with no further adjustment for force majeure costs. On October 23, 2023, OPC, Dalton, and
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noticeGeorgia Power filed a stipulation of settlement and voluntary dismissal with prejudice of their pending litigation described above, including Georgia Power's counterclaim, and, on October 6, 2022, Dalton dismissed its related complaint.counterclaims.
Georgia Power recorded pre-tax charges (credits) to income inthrough the fourth quarter 2021, the second quarter 2022, and the third quarter 2022 of approximately $440$407 million ($328304 million after tax), $16 million ($12 million after tax), and $(102) million ($(76) million after tax), respectively, associated with the cost-sharing and tender provisions of the Global Amendments, including the settlement with MEAG Power. Based on the current project capital cost forecast and the settlements with OPC and Dalton described above, Georgia Power whichrecorded a pre-tax charge to income of approximately $160 million ($120 million after tax) in the third quarter 2023. These charges are 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 $300 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 OPC or Dalton effectively exercises the option to tender a portion of their ownership interest to Georgia Power and require Georgia Power to pay 100% of the remaining share of the costs necessary to complete Plant Vogtle Units 3 and 4. Georgia Power's incremental ownership interest would be calculated and conveyed to Georgia Power after Plant Vogtle Units 3 and 4 are placed in service.
The ultimate outcome of these matters cannot be determined at this time.
Regulatory Matters
In 2009, the Georgia PSC voted to certify construction of Plant Vogtle Units 3 and 4 with a certified capital cost of $4.418 billion. In addition, in 2009 the Georgia PSC approved inclusion of the Plant Vogtle Units 3 and 4 related CWIP accounts in rate base, and the State of Georgia enacted the Georgia Nuclear Energy Financing Act, which allows Georgia Power to recover financing costs for Plant Vogtle Units 3 and 4. Financing costs are recovered on all applicable certified costs through annual adjustments to the NCCR tariff up to the certified capital cost of $4.418 billion. At September 30, 2022,2023, Georgia Power had recovered approximately $2.8$3.0 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. On November 1, 2023, Georgia Power filed a request to continue the current NCCR tariff for 2024, pending Georgia PSC approval. See "Plant Vogtle Units 3 and 4 Prudency Proceeding" herein for additional information on the NCCR tariff following commercial operation of Unit 4.
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 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
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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%,
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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 AgreementAgreement. On July 31, 2023, Georgia Power notified the Georgia PSC that Unit 3 had reached commercial operation, and, effective August 1, 2023, Georgia Power adjusted retail base rates for Unit 3 and the common facilities shared between Units 3 and 4 (see Note 2 to the financial statements under "Georgia Power – Plant"Plant Vogtle Unit 3 and Common Facilities Rate Proceeding" in Item 8 of the Form 10-Kherein for additional information). On August 19, 2023, fuel load for Unit 4 was completed, and, on August 30, 2023, Georgia Power filed an application to adjust rates to include reasonable and prudent Plant Vogtle Units 3 and 4 costs (see "Plant Vogtle Units 3 and 4 Prudency Proceeding" herein for additional information).
The January 11, 2018 order also stated that if Plant Vogtle Units 3 and 4 are not commercially operational by June 1, 2021 and June 1, 2022, respectively, the ROE used to calculate the NCCR tariff will be further reduced by 10 basis points each month (but not lower than Georgia Power's average cost of long-term debt) until the respective Unit is commercially operational. The ROE reductions negatively impacted earnings by approximately $270$300 million in 20212022 and are estimated to have negative earnings impacts of approximately $300 million and $250$290 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. See "Plant Vogtle Units 3 and 4 Prudency Proceeding" herein for additional information on impacts to the NCCR tariff if commercial operation for Unit 4 is not achieved by March 31, 2024.
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 August 2021 stipulation confirmsconfirmed that 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. See "Plant Vogtle Units 3 and 4 Prudency Proceeding" herein for additional information on Georgia Power's request for verification and approval of costs above $7.3 billion for inclusion in rate base.
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-sixththree additional VCM report,reports, which reflects $584 millionreflected $1.6 billion of additional construction capital costs incurred through December 31, 2021.2022. Georgia Power filed its twenty-seventhtwenty-ninth VCM report with the Georgia PSC on August 31, 2022,30, 2023, which reflects the revised capital cost forecast as of June 30, 20222023 of $10.5$10.6 billion and $522$390 million of construction capital costs incurred from January 1, 20222023 through June 30, 2022.2023.
The ultimate outcome of these matters cannot be determined at this time.
Mississippi Power
Performance Evaluation Plan
On June 7, 2022,13, 2023, the Mississippi PSC approved Mississippi Power's annual retail PEP filing for 2022, resulting2023 indicating no change 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.retail rates.
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Ad Valorem Tax Adjustment
On June 7, 2022,May 2, 2023, the Mississippi PSC approved Mississippi Power's annual ad valorem tax adjustment filing for 2022,2023, resulting in ana $7 million annual increasedecrease in revenues of $5 million, effective with the first billing cycle of July 2022.June 2023.
Mississippi Power's operating revenues are adjusted for differences in actual recoverable ad valorem taxes and amounts billed in accordance with the currently approved cost recovery rate. Accordingly, changes in the billing factor should have no significant effect on Mississippi Power's revenues or net income but will affect operating cash flows.
Environmental Compliance Overview Plan
On April 4, 2023, the Mississippi PSC approved Mississippi Power's annual ECO Plan filing for 2023, 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.
Municipal and Rural Associations Tariff
On August 26, 2022,October 27, 2023, the FERC accepted an amended shared serviceapproved a settlement agreement (SSA) betweenfiled by Mississippi Power and Cooperative Energy effectiveon July 1, 2022, under which Cooperative Energy will continue31, 2023 related to decrease its use of Mississippi Power's generation services under the MRA tariff up to 2.5% annually through 2035. At September 30,July 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 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. Cooperative Energy has filedtariff. The settlement agreement provides for a complaint with the FERC challenging the new rates. On September 13, 2022, the FERC issued an order accepting Mississippi Power's request$16 million increase in annual wholesale base revenues, effective September 14, 2022, subjectand a refund to refund,customers of approximately $6 million primarily related to the difference between the approved rates and establishing hearinginterim rates.
Integrated Resource Plans
In October 2023, Mississippi Power signed an affiliate PPA with Georgia Power for 750 MWs of capacity and settlement judge procedures. The ultimate outcomeenergy starting January 2024 through December 2028. In order to fulfill this agreement and serve the interests of this matter cannot be determined at this time.customers, Mississippi Power will need to delay the anticipated retirement of certain electric generating units, as identified in its 2021 IRP. Mississippi Power is expected to file its next IRP in April 2024 in accordance with the rules and orders of the Mississippi PSC.
Southern Company Gas
Infrastructure Replacement Programs and Capital Projects
Capital expenditures incurred under specific infrastructure replacement programs and capital projects during the first nine months of 20222023 were as follows:
UtilityProgram
Nine Months
Ended
September 30, 20222023
(in millions)
Nicor GasInvesting in Illinois$311320 
Virginia Natural GasSAVE5256 
Atlanta Gas LightSystem Reinforcement Rider5184 
Chattanooga GasPipeline Replacement Program27 
Total$416467 
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Nicor Gas
On June 15, 2023, the Illinois Commission concluded its review of the Qualifying Infrastructure Plant (QIP) capital investments by Nicor Gas for calendar year 2019 under the QIP Rider, also referred to as Investing in Illinois, program. The Illinois Commission disallowed $32 million of the $415 million of capital investments commissioned in 2019, together with the related return on investment. Nicor Gas recorded a pre-tax charge to income in the second quarter 2023 of $38 million ($28 million after tax) associated with the disallowance of capital investments. The disallowance is reflected on the statement of income as an $8 million reduction to revenues and a $30 million increase in operating expenses. On August 3, 2023, the Illinois Commission denied a rehearing request filed by Nicor Gas. On August 24, 2023, Nicor Gas filed a notice of appeal with the Illinois Appellate Court. Nicor Gas defends these investments in infrastructure as prudently incurred. The Illinois Commission has not yet conducted its review for calendar years 2020 through 2022 or the nine months ended September 30, 2023. Any further disallowance by the Illinois Commission could be material. The ultimate outcome of these matters cannot be determined at this time.
Rate Proceedings
Atlanta Gas Light
On July 1, 2022,14, 2023, 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, 2023.2024. Resolution of the GRAM filing is expected by December 28, 2022,31, 2023, with the new rates effective January 1, 2023.2024. The ultimate outcome of this matter cannot be determined at this time.
Virginia Natural Gas
On August 1, 2022,28, 2023, the Virginia Commission approved a stipulation agreement related to Virginia Natural Gas filed aGas' August 2022 general base rate case with the Virginia Commission seeking anfiling. The approved agreement provides for a $48 million increase in annual base rate revenues, of $69 million, including $15 million related to the recovery of investments under the SAVE program, primarily to recover investments and increased costs associated with infrastructure, technology, and workforce development. The requested increase is based on a projected 12-month period beginning January 1, 2023, aan ROE of 10.35%9.70%, and an equity ratio of 53.2%49.06%. Rate adjustments are expected to beInterim rates became effective January 1, 2023, subject to refund. Therefund, based on Virginia Commission is expected to rule on theNatural Gas' original requested increase of approximately $69 million. Refunds to customers related to the difference between the approved rates effective September 1, 2023 and the interim rates will be completed later in the thirdfourth quarter 2023. The ultimate outcome of this matter cannot be determined at this time.
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(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.
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Southern Company and Mississippi Power
In February 2017, Jean Vineyard and Judy Mesirov each filed2010, the DOE, through a shareholder derivative lawsuit in the U.S. District Court for the Northern Districtcooperative agreement with SCS, agreed to fund $270 million of Georgia. Each of these lawsuits named as defendants Southern Company, certain of its directors, certain of its current and former officers, and certain former Mississippi Power officers. In 2017, these two shareholder derivative lawsuits were consolidated in the U.S. District Court for the Northern District of Georgia. The complaints alleged that the defendants caused Southern Company to make false or misleading statements regarding the Kemper County energy facility cost and schedule. Further,through the complaints alleged thatgrants awarded to the defendants were unjustly enriched and causedproject by the waste of corporate assets and also alleged thatDOE under the individual defendants violated their fiduciary duties.
Clean Coal Power Initiative Round 2. In May 2017, Helen E. Piper Survivor's Trust filed a shareholder derivative lawsuit2016, additional DOE grants in the Superior Courtamount 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$137 million were awarded to the Kemper County energy facility. The complaint further alleged thatIn 2018, Mississippi Power filed with the individual defendants authorized or failedDOE its request for property closeout certification under the contract related to correct falsethe $387 million of total grants received. In 2020, Mississippi Power and misleading statements regardingSouthern Company executed an agreement with the Kemper County energy facility scheduleDOE completing Mississippi Power's request, which enabled Mississippi Power to proceed with full dismantlement of the abandoned gasifier-related assets and cost and failed to implement necessary internal controls to prevent harm to Southern Company.site restoration activities. In Augustconnection with the DOE closeout discussions, in 2019, the court granted a motion filed byCivil Division of the plaintiff in July 2019 to substitute a new named plaintiff, Martin J. Kobuck, in placeDepartment of Helen E. Piper Survivor's Trust.
The plaintiffs in each of these cases sought to recover, on behalf ofJustice informed Southern Company unspecified actual damages and on each plaintiff's own behalf, attorneys' fees and costs in bringingMississippi Power of a civil investigation related to the lawsuit. The plaintiffs also sought certain changes to Southern Company's corporate governance and internal processes.DOE grants. On January 21, 2022, the plaintiffs in the federal court action filed a motion for preliminary approval of settlement, together with an executed stipulation of settlement, which applied to both actions. On June 9, 2022,August 4, 2023, the U.S. District Court for the Northern District of Georgia granted final approvalunsealed a civil action in which defendants Southern Company, SCS, and Mississippi Power are alleged to have violated certain provisions of the settlementFalse Claims Act by fraudulently inducing the DOE to disburse funds pursuant to the grants. The federal government declined to intervene in the action. On October 30, 2023, the plaintiff, a former SCS employee, filed an amended complaint, again alleging certain violations of the False Claims Act. The plaintiff seeks to recover all damages incurred personally and on June 16, 2022,behalf of the Superior Court of Gwinnett County, Georgia entered an order awarding attorneys' fees and expenses related togovernment caused by the Martin J. Kobuck lawsuit. The settlement consisted of an aggregate payment by Southern Company's insurers of approximately $4.5 million for attorneys' fees and expenses,defendants' alleged violations, as well as adoptiontreble damages and attorneys' fees, among other relief. The ultimate outcome of various corporate governance reforms bythis matter cannot be determined at this time; however, an adverse outcome could have a material impact on Southern Company. These matters are now concluded.Company's and Mississippi Power's financial statements.
Alabama Power
OnIn September 26, 2022, Mobile Baykeeper through its counsel Southern Environmental Law Center, filed a citizen suit in the U.S. District Court for the Southern District of Alabama alleging that Alabama Power's plan to close the Plant Barry ash pond utilizing a closure-in-place methodology violates the Resource Conservation and Recovery Act (RCRA) and regulations governing CCR. Among other relief requested, Mobile Baykeeper seeks a declaratory judgment that the RCRA and regulations governing CCR are being violated, preliminary and injunctive relief to
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prevent implementation of Alabama Power's closure plan and the development of a closure plan that satisfies regulations governing CCR requirements. On December 19, 2022, Alabama Power filed a motion to dismiss the case. On September 30, 2023, the magistrate judge issued a report and recommendation to deny Alabama Power's motion to dismiss, to which Alabama Power has filed objections.
On January 31, 2023, the EPA issued a Notice of Potential Violations associated with Alabama Power's plan to close the Plant Barry ash pond. Alabama Power has affirmed to the EPA 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 a material impact on Alabama Power's ARO estimates and cash flows. 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.liabilities.
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 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
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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. In December 2022, the Superior Court of Fulton County, Georgia Power has filed multiplegranted Georgia Power's motion to transfer the case to the Superior Court of Monroe County, Georgia. On May 9, 2023, the Superior Court of Monroe County, Georgia denied Georgia Power's motion to dismiss the case for lack of subject matter jurisdiction. On July 27, 2023, the Superior Court of Monroe County, Georgia denied the remaining motions to dismiss certain claims and plaintiffs that Georgia Power filed at the complaint. outset of the case.
In October 2021, threeFebruary 2022, and January 2023, a total of eight 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,After Georgia Power filed a notice to remove the threeremoved these cases pending in the Superior Court of Monroe County, Georgia to the U.S. District Court for the Middle District of Georgia, the plaintiffs voluntarily dismissed their complaints without prejudice in November 2022 and January 2023. On May 12, 2023, the plaintiffs in the cases originally filed in October 2021, February 2022, and January 2023 refiled their eight complaints in the Superior Court of Monroe County, Georgia. On February 7, 2022, four additional complaints wereAlso on May 12, 2023, a new complaint was filed in the Superior Court of Monroe County, Georgia against Georgia Power seeking damages foralleging that the construction and operation of Plant Scherer have impacted groundwater and air, resulting in alleged personal injuries or property damage.injuries. The plaintiff seeks an unspecified amount of monetary damages, including punitive damages. On March 9, 2022,May 18, 2023, Georgia Power filed a notice to remove the fourremoved all of these cases pending in the Superior Court of Monroe County, Georgia to the U.S. District Court for the Middle District of Georgia. The plaintiffs are requesting the court remand the cases back to the Superior Court of Monroe County, Georgia.
The amount of any possible lossesloss, if any, 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 three 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 four 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 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
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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
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(UNAUDITED)
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 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. 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 to the U.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.
Southern Power
In July 2021, Southern Power and certain of its subsidiaries filed an arbitration demand with the American Arbitration Association against First Solar for defective design of actuators on trackers and inverters installed by First Solar under the engineering, procurement, and construction agreements associated with five solar projects owned by Southern Power and partners and managed by Southern Power. In February 2023, arbitration hearings concluded. In July 2023, an interim award of approximately $36 million was entered in favor of Southern Power and was subsequently received in September 2023. The interim award included $18 million representing recovery of losses associated with replacement costs, penalty payments, and lost revenues previously incurred. This recovery is reflected in Southern Power's third quarter and year-to-date 2023 statements of income as an $11 million reduction to other operations and maintenance expense and a $7 million increase in other revenues, with $6 million allocated through noncontrolling interests to Southern Power's partners. The remaining $18 million in award proceeds received in excess of the losses incurred is recognized on the balance sheet at September 30, 2023 as restricted cash and a liability to fund future replacement costs. The parties are awaiting issuance of a final award. The ultimate outcome of this matter cannot be determined at this time.
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$14 million and $17$15 million at September 30, 20222023 and December 31, 2021,2022, respectively. Georgia Power has been designated or identified as a potentially responsible party at sites governed by the Georgia Hazardous Site Response Act and/or by the federal Comprehensive Environmental Response, Compensation, and Liability Act, and assessment and potential cleanup of such sites is expected.
Southern Company Gas' environmental remediation liability was $270$234 million and $249$256 million at September 30, 20222023 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.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
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 two 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 one of the two 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 Mississippi Power's financial statements. See Note 15 to the financial statements under "Southern Company" in Item 8 of the Form 10-K for additional information regarding the sale of GulfSouthern Company and Alabama Power. Georgia Power and Mississippi Power have joint use agreements with other AT&T affiliates.
OnMississippi Power
In August 31, 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. In October 2022, Mississippi Power does not agree with the audit findings and expects to exercise its rights tofiled an administrative appeal with the Mississippi DOR contesting the assessment. On October 2, 2023, Mississippi Power and the Mississippi DOR reached a settlement agreement on an assessment of approximately $11 million including associated penalties and interest, $7 million of which was previously paid by Mississippi Power. On October 30, 2022. Excluding amounts associated with the gasifier5, 2023, Mississippi Power made a final $4 million payment and other abandoned Kemper IGCC assets, Mississippi Power's sales and use taxes are generally authorized for rate recovery; however, the ultimate outcome ofconsiders this matter cannot be determined at this time.closed.
Pursuant to an accounting order approved by the Mississippi PSC in December 2022, Mississippi Power deferred $3 million of the agreed upon assessment related to taxes and associated interest to a regulatory asset for disposition in a future rate proceeding.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
(D) REVENUE FROM CONTRACTS WITH CUSTOMERS AND LEASE INCOME
Revenue from Contracts with Customers
The Registrants generate revenues from a variety of sources, some of which are not accounted for as revenue from contracts with customers, such as leases, derivatives, and certain cost recovery mechanisms. See Note 1 to the financial statements under "Revenues" in Item 8 of the Form 10-K for additional information on the revenue policies of the Registrants. See "Lease Income" herein and Note (J) for additional information on revenue accounted for under lease and derivative accounting guidance, respectively.
The following table disaggregates revenue from contracts with customers for the three and nine months ended September 30, 20222023 and 2021:2022:
Southern CompanyAlabama PowerGeorgia PowerMississippi PowerSouthern PowerSouthern Company Gas
(in millions)
Three Months Ended September 30, 2022
Operating revenues
Retail electric revenues
Residential$2,104 $799 $1,212 $93 $— $— 
Commercial1,637 499 1,051 87 — — 
Industrial1,183 452 642 89 — — 
Other27 3 22 2 — — 
Total retail electric revenues4,951 1,753 2,927 271 — — 
Natural gas distribution revenues
Residential331 — — — — 331 
Commercial93 — — — — 93 
Transportation259 — — — — 259 
Industrial12 — — — — 12 
Other49 — — — — 49 
Total natural gas distribution revenues744 — — — — 744 
Wholesale electric revenues
PPA energy revenues812 187 40 4 591 — 
PPA capacity revenues175 56 12 1 107 — 
Non-PPA revenues58 67 4 242 303 — 
Total wholesale electric revenues1,045 310 56 247 1,001 — 
Other natural gas revenues
Gas marketing services84 — — — — 84 
Other natural gas revenues15 — — — — 15 
Total natural gas revenues99 — — — — 99 
Other revenues277 65 110 13 9 — 
Total revenue from contracts with customers7,116 2,128 3,093 531 1,010 843 
Other revenue sources(a)
1,262 316 796 (21)170 14 
Total operating revenues$8,378 $2,444 $3,889 $510 $1,180 $857 
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Southern CompanyAlabama PowerGeorgia PowerMississippi PowerSouthern PowerSouthern Company GasSouthern CompanyAlabama PowerGeorgia PowerMississippi PowerSouthern PowerSouthern Company Gas
(in millions)(in millions)
Nine Months Ended September 30, 2022
Three Months Ended September 30, 2023Three Months Ended September 30, 2023
Operating revenuesOperating revenuesOperating revenues
Retail electric revenuesRetail electric revenuesRetail electric revenues
ResidentialResidential$5,282 $2,049 $2,995 $238 $— $— Residential$2,543 $969 $1,473 $101 $— $— 
CommercialCommercial4,202 1,285 2,688 229 — — Commercial1,845 599 1,151 95 — — 
IndustrialIndustrial2,914 1,143 1,529 242 — — Industrial1,116 498 528 90 — — 
OtherOther79 10 62 7 — — Other30 3 25 2 — — 
Total retail electric revenuesTotal retail electric revenues12,477 4,487 7,274 716 — — Total retail electric revenues5,534 2,069 3,177 288 — — 
Natural gas distribution revenuesNatural gas distribution revenuesNatural gas distribution revenues
ResidentialResidential1,821 — — — — 1,821 Residential217 — — — — 217 
CommercialCommercial493 — — — — 493 Commercial56 — — — — 56 
TransportationTransportation872 — — — — 872 Transportation275 — — — — 275 
IndustrialIndustrial60 — — — — 60 Industrial4 — — — — 4 
OtherOther244 — — — — 244 Other60 — — — — 60 
Total natural gas distribution revenuesTotal natural gas distribution revenues3,490 — — — — 3,490 Total natural gas distribution revenues612 — — — — 612 
Wholesale electric revenuesWholesale electric revenuesWholesale electric revenues
PPA energy revenuesPPA energy revenues1,739 354 112 11 1,285 — PPA energy revenues317 66 31 2 226 — 
PPA capacity revenuesPPA capacity revenues443 135 35 4 273 — PPA capacity revenues151 26 13 3 110 — 
Non-PPA revenuesNon-PPA revenues182 166 19 511 572 — Non-PPA revenues101 15 21 137 126 — 
Total wholesale electric revenuesTotal wholesale electric revenues2,364 655 166 526 2,130 — Total wholesale electric revenues569 107 65 142 462 — 
Other natural gas revenuesOther natural gas revenuesOther natural gas revenues
Gas marketing servicesGas marketing services417 — — — — 417 Gas marketing services54 — — — — 54 
Other natural gas revenuesOther natural gas revenues41 — — — — 41 Other natural gas revenues8 — — — — 8 
Total natural gas revenuesTotal natural gas revenues458 — — — — 458 Total natural gas revenues62 — — — — 62 
Other revenuesOther revenues810 173 327 34 27 — Other revenues330 54 146 10 18 — 
Total revenue from contracts with customersTotal revenue from contracts with customers19,599 5,315 7,767 1,276 2,157 3,948 Total revenue from contracts with customers7,107 2,230 3,388 440 480 674 
Other revenue sources(a)
2,633 708 1,451 3 461 50 
Other revenue sources(*)
Other revenue sources(*)
(127)(147)(151)(4)173 15 
Total operating revenuesTotal operating revenues$22,232 $6,023 $9,218 $1,279 $2,618 $3,998 Total operating revenues$6,980 $2,083 $3,237 $436 $653 $689 
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Southern CompanyAlabama PowerGeorgia PowerMississippi PowerSouthern PowerSouthern Company GasSouthern CompanyAlabama PowerGeorgia PowerMississippi PowerSouthern PowerSouthern Company Gas
(in millions)(in millions)
Three Months Ended September 30, 2021
Nine Months Ended September 30, 2023Nine Months Ended September 30, 2023
Operating revenuesOperating revenuesOperating revenues
Retail electric revenuesRetail electric revenuesRetail electric revenues
ResidentialResidential$1,974 $750 $1,138 $86 $— $— Residential$5,717 $2,277 $3,202 $238 $— $— 
CommercialCommercial1,432 471 882 79 — — Commercial4,464 1,493 2,733 238 — — 
IndustrialIndustrial902 394 428 80 — — Industrial2,770 1,324 1,195 251 — — 
OtherOther24 4 18 2 — — Other84 10 68 6 — — 
Total retail electric revenuesTotal retail electric revenues4,332 1,619 2,466 247 — — Total retail electric revenues13,035 5,104 7,198 733 — — 
Natural gas distribution revenuesNatural gas distribution revenuesNatural gas distribution revenues
ResidentialResidential218 — — — — 218 Residential1,443 — — — — 1,443 
CommercialCommercial55 — — — — 55 Commercial370 — — — — 370 
TransportationTransportation239 — — — — 239 Transportation878 — — — — 878 
IndustrialIndustrial6 — — — — 6 Industrial33 — — — — 33 
OtherOther31 — — — — 31 Other228 — — — — 228 
Total natural gas distribution revenuesTotal natural gas distribution revenues549 — — — — 549 Total natural gas distribution revenues2,952 — — — — 2,952 
Wholesale electric revenuesWholesale electric revenuesWholesale electric revenues
PPA energy revenuesPPA energy revenues359 61 41 2 261 — PPA energy revenues853 196 66 8 601 — 
PPA capacity revenuesPPA capacity revenues125 14 14 1 97 — PPA capacity revenues490 130 38 36 289 — 
Non-PPA revenuesNon-PPA revenues63 54 3 120 134 — Non-PPA revenues199 49 30 315 312 — 
Total wholesale electric revenuesTotal wholesale electric revenues547 129 58 123 492 — Total wholesale electric revenues1,542 375 134 359 1,202 — 
Other natural gas revenuesOther natural gas revenuesOther natural gas revenues
Gas marketing servicesGas marketing services45 — — — — 45 Gas marketing services358 — — — — 358 
Other natural gas revenuesOther natural gas revenues11 — — — — 11 Other natural gas revenues28 — — — — 28 
Total natural gas revenuesTotal natural gas revenues56 — — — — 56 Total natural gas revenues386 — — — — 386 
Other revenuesOther revenues248 53 112 8 9 — Other revenues971 159 422 31 46 — 
Total revenue from contracts with customersTotal revenue from contracts with customers5,732 1,801 2,636 378 501 605 Total revenue from contracts with customers18,886 5,638 7,754 1,123 1,248 3,338 
Other revenue sources(a)
506 103 220 — 178 18 
Other revenue sources(*)
Other revenue sources(*)
322 (218)51 14 438 79 
Total operating revenuesTotal operating revenues$6,238 $1,904 $2,856 $378 $679 $623 Total operating revenues$19,208 $5,420 $7,805 $1,137 $1,686 $3,417 
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Southern CompanyAlabama PowerGeorgia PowerMississippi PowerSouthern PowerSouthern Company GasSouthern CompanyAlabama PowerGeorgia PowerMississippi PowerSouthern PowerSouthern Company Gas
(in millions)(in millions)
Nine Months Ended September 30, 2021
Three Months Ended September 30, 2022Three Months Ended September 30, 2022
Operating revenuesOperating revenuesOperating revenues
Retail electric revenuesRetail electric revenuesRetail electric revenues
ResidentialResidential$4,910 $1,931 $2,765 $214 $— $— Residential$2,104 $799 $1,212 $93 $— $— 
CommercialCommercial3,727 1,229 2,293 205 — — Commercial1,637 499 1,051 87 — — 
IndustrialIndustrial2,299 1,048 1,034 217 — — Industrial1,183 452 642 89 — — 
OtherOther70 13 51 6 — — Other27 3 22 2 — — 
Total retail electric revenuesTotal retail electric revenues11,006 4,221 6,143 642 — — Total retail electric revenues4,951 1,753 2,927 271 — — 
Natural gas distribution revenuesNatural gas distribution revenuesNatural gas distribution revenues
ResidentialResidential1,143 — — — — 1,143 Residential331 — — — — 331 
CommercialCommercial298 — — — — 298 Commercial93 — — — — 93 
TransportationTransportation775 — — — — 775 Transportation259 — — — — 259 
IndustrialIndustrial29 — — — — 29 Industrial12 — — — — 12 
OtherOther187 — — — — 187 Other49 — — — — 49 
Total natural gas distribution revenuesTotal natural gas distribution revenues2,432 — — — — 2,432 Total natural gas distribution revenues744 — — — — 744 
Wholesale electric revenuesWholesale electric revenuesWholesale electric revenues
PPA energy revenuesPPA energy revenues782 143 71 9 575 — PPA energy revenues812 187 40 4 591 — 
PPA capacity revenuesPPA capacity revenues375 86 41 4 247 — PPA capacity revenues175 56 12 1 107 — 
Non-PPA revenuesNon-PPA revenues181 108 14 283 273 — Non-PPA revenues58 67 4 242 303 — 
Total wholesale electric revenuesTotal wholesale electric revenues1,338 337 126 296 1,095 — Total wholesale electric revenues1,045 310 56 247 1,001 — 
Other natural gas revenuesOther natural gas revenuesOther natural gas revenues
Wholesale gas services2,168 — — — — 2,168 
Gas marketing servicesGas marketing services303 — — — — 303 Gas marketing services84 — — — — 84 
Other natural gas revenuesOther natural gas revenues27 — — — — 27 Other natural gas revenues15 — — — — 15 
Total natural gas revenuesTotal natural gas revenues2,498 — — — — 2,498 Total natural gas revenues99 — — — — 99 
Other revenuesOther revenues792 150 362 22 18 — Other revenues277 65 110 13 9 — 
Total revenue from contracts with customersTotal revenue from contracts with customers18,066 4,708 6,631 960 1,113 4,930 Total revenue from contracts with customers7,116 2,128 3,093 531 1,010 843 
Other revenue sources(a)
2,979 311 419 28 497 1,763 
Other adjustments(b)
(3,699)— — — — (3,699)
Other revenue sources(*)
Other revenue sources(*)
1,262 316 796 (21)170 14 
Total operating revenuesTotal operating revenues$17,346 $5,019 $7,050 $988 $1,610 $2,994 Total operating revenues$8,378 $2,444 $3,889 $510 $1,180 $857 
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(a)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Southern CompanyAlabama PowerGeorgia PowerMississippi PowerSouthern PowerSouthern Company Gas
(in millions)
Nine Months Ended September 30, 2022
Operating revenues
Retail electric revenues
Residential$5,282 $2,049 $2,995 $238 $— $— 
Commercial4,202 1,285 2,688 229 — — 
Industrial2,914 1,143 1,529 242 — — 
Other79 10 62 7 — — 
Total retail electric revenues12,477 4,487 7,274 716 — — 
Natural gas distribution revenues
Residential1,821 — — — — 1,821 
Commercial493 — — — — 493 
Transportation872 — — — — 872 
Industrial60 — — — — 60 
Other244 — — — — 244 
Total natural gas distribution revenues3,490 — — — — 3,490 
Wholesale electric revenues
PPA energy revenues1,739 354 112 11 1,285 — 
PPA capacity revenues443 135 35 4 273 — 
Non-PPA revenues182 166 19 511 572 — 
Total wholesale electric revenues2,364 655 166 526 2,130 — 
Other natural gas revenues
Gas marketing services417 — — — — 417 
Other natural gas revenues41 — — — — 41 
Total natural gas revenues458 — — — — 458 
Other revenues810 173 327 34 27 — 
Total revenue from contracts with customers19,599 5,315 7,767 1,276 2,157 3,948 
Other revenue sources(*)
2,633 708 1,451 3 461 50 
Total operating revenues$22,232 $6,023 $9,218 $1,279 $2,618 $3,998 
(*)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 (including those related to fuel costs) 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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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(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 September 30, 20222023 and December 31, 2021:2022:
Southern CompanyAlabama PowerGeorgia PowerMississippi PowerSouthern PowerSouthern Company Gas
(in millions)
Accounts Receivable
At September 30, 2022$2,760 $800 $1,035 $98 $264 $433 
At December 31, 20212,504 589 736 73 149 753 
Contract Assets
At September 30, 2022$178 $5 $114 $— $— $— 
At December 31, 2021117 2 63 — 1 — 
Contract Liabilities
At September 30, 2022$56 $5 $6 $7 $2 $— 
At December 31, 202157 4 14 — 1 — 
Southern CompanyAlabama PowerGeorgia PowerMississippi PowerSouthern PowerSouthern Company Gas
(in millions)
Accounts Receivable
At September 30, 2023$2,680 $858 $1,175 $106 $138 $331 
At December 31, 20223,123 696 922 92 237 1,107 
Contract Assets
At September 30, 2023$267 $6 $146 $— $— $41 
At December 31, 2022156 2 89 — — — 
Contract Liabilities
At September 30, 2023$62 $— $8 $2 $8 $— 
At December 31, 202245 4 9 — 1 — 
At September 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 September 30, 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 $51 million had been received at September 30, 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 September 30, 2023 and December 31, 2022, Southern Company's unregulated distributed generation business had $59contract assets of $75 million and $50$65 million, respectively, and contract liabilities of contract assets and $37$47 million and $39$32 million, of contract liabilities at September 30, 2022 and December 31, 2021, respectively, for outstanding performance obligations.
Revenues recognized in the three and nine months ended September 30, 2022,2023, which were included in contract liabilities at December 31, 2021,2022, were $13 million and $32 million, respectively, for Southern Company and immaterial for the otherapplicable Registrants. Contract liabilities are primarily classified as current on the balance sheets as the corresponding revenues are generally expected to be recognized within one year.
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 September 30, 2022 are expected to be recognized as follows:
2022 (remaining)2023202420252026Thereafter
(in millions)
Southern Company$243 $619 $434 $322 $307 $2,340 
Alabama Power8 24 7 5 — — 
Georgia Power20 70 34 22 11 21 
Southern Power80 341 344 294 299 2,334 
Southern Company Gas12 29 29 — — — 
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Revenue expectedfixed price contracts. Revenues from contracts with customers related to be recognized forthese performance obligations remaining at September 30, 2022 w2023 are expected to be recognized as immaterial for Mississippi Power.follows:
2023 (remaining)2024202520262027Thereafter
(in millions)
Southern Company$166 $599 $359 $318 $319 $2,245 
Alabama Power10 24 8 — — — 
Georgia Power23 66 34 14 14 23 
Southern Power84 356 302 303 310 2,233 
Southern Company Gas4 29 — — — — 
Lease Income
Lease income for the three and nine months ended September 30, 20222023 and 20212022 is as follows:
Southern
Company		Alabama PowerGeorgia PowerMississippi
Power		Southern PowerSouthern Company GasSouthern
Company		Alabama PowerGeorgia PowerMississippi
Power		Southern PowerSouthern Company Gas
(in millions)
For the Three Months Ended September 30, 2023For the Three Months Ended September 30, 2023
Lease income - interest income on sales-type leasesLease income - interest income on sales-type leases$6 $— $— $4 $2 $— 
Lease income - operating leasesLease income - operating leases36 3 7 — 21 9 
Variable lease incomeVariable lease income134 — — — 144 — 
Total lease incomeTotal lease income$176 $3 $7 $4 $167 $9 
For the Nine Months Ended September 30, 2023For the Nine Months Ended September 30, 2023
Lease income - interest income on sales-type leasesLease income - interest income on sales-type leases$18 $— $— $11 $7 $— 
Lease income - operating leasesLease income - operating leases129 32 22 2 64 27 
Variable lease incomeVariable lease income327 1 — — 351 — 
Total lease incomeTotal lease income$474 $33 $22 $13 $422 $27 
(in millions)
For the Three Months Ended September 30, 2022
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$7 $— $— $4 $3 $— 
Lease income - operating leasesLease income - operating leases50 19 8 1 21 9 Lease income - operating leases50 19 8 1 21 9 
Variable lease incomeVariable lease income139 — — — 145 — Variable lease income139 — — — 145 — 
Total lease incomeTotal lease income$196 $19 $8 $5 $169 $9 Total lease income$196 $19 $8 $5 $169 $9 
For the Nine Months Ended September 30, 2022
Lease income - interest income on sales-type leasesLease income - interest income on sales-type leases$19 $— $— $11 $8 $— Lease income - interest income on sales-type leases$19 $— $— $11 $8 $— 
Lease income - operating leasesLease income - operating leases149 58 24 1 64 27 Lease income - operating leases149 58 24 1 64 27 
Variable lease incomeVariable lease income355 1 — — 372 — Variable lease income355 1 — — 372 — 
Total lease incomeTotal lease income$523 $59 $24 $12 $444 $27 Total lease income$523 $59 $24 $12 $444 $27 
For the Three Months Ended September 30, 2021
Lease income - interest income on sales-type leases$4 $— $— $4 $— $— 
Lease income - operating leases56 21 11 — 21 9 
Variable lease income143 — — — 151 — 
Total lease income$203 $21 $11 $4 $172 $9 
For the Nine Months Ended September 30, 2021
Lease income - interest income on sales-type leases$11 $— $— $10 $— $— 
Lease income - operating leases168 62 31 1 64 26 
Variable lease income355 — — — 379 — 
Total lease income$534 $62 $31 $11 $443 $26 
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.
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(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 September 30, 2023 and December 31, 2022, Southern Holdings had equity method investments totaling $126 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 all 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.
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(UNAUDITED)
SP Solar and SP Wind
At September 30, 20222023 and December 31, 2021,2022, SP Solar had total assets of $6.0$5.8 billion and $6.1$5.9 billion, respectively, total liabilities of $0.4 billion, and noncontrolling interests of $1.1 billion. Cash distributions from SP Solar are allocated 67% to Southern Power and 33% to Global Atlanticthe limited partner 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 September 30, 20222023 and December 31, 2021,2022, SP Wind had total assets of $2.3$2.2 billion, total liabilities of $191$184 million and $130$169 million, respectively, and noncontrolling interests of $40$38 million and $41$39 million, respectively. 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 three 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 September 30, 20222023 and December 31, 2021,2022, the other VIEs had total assets of $1.9$1.7 billion and $1.8 billion, respectively, total liabilities of $0.2 billion, and $0.3 billion, respectively, and noncontrolling interests of $0.8 billion and $0.9 billion, respectively.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 September 30, 2022 and December 31, 2021, Southern Power had equity method investments in wind and battery energy storage projects totaling $49 million and $86 million, respectively. Earnings (loss) from these investments were immaterial for all periods presented. During the nine months ended September 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.
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Equity Method Investments
At December 31, 2022, Southern Power had equity method investments in wind and battery energy storage projects totaling $49 million. During the first quarter 2023, Southern Power sold its remaining equity method investments in the projects and received proceeds of $50 million. Earnings (loss) from these investments, including the gains associated with the sales, were immaterial for all periods presented.
Southern Company Gas
Equity Method Investments
The carrying amounts of Southern Company Gas' equity method investments at September 30, 20222023 and December 31, 20212022 and related earnings (loss) from those investments for the three and nine months ended September 30, 20222023 and 20212022 were as follows:
Investment BalanceInvestment BalanceSeptember 30, 2022December 31, 2021Investment BalanceSeptember 30, 2023December 31, 2022
(in millions)(in millions)
SNGSNG$1,091 $1,129 SNG$1,210 $1,243 
Other(*)
34 44 
OtherOther33 33 
TotalTotal$1,125 $1,173 Total$1,243 $1,276 
(*)Balance at September 30, 2022 reflects an $11 million distribution received in 2022 from PennEast Pipeline.
Three Months Ended September 30,Nine Months Ended September 30,
Earnings (Loss) from Equity Method Investments2022202120222021
(in millions)
SNG$34 $27 $104 $93 
PennEast Pipeline(*)
— (2)— (81)
Other— — 1 2 
Total$34 $25 $105 $14 
(*)Primarily reflects pre-tax impairment charges. See Note 7 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.
Three Months Ended September 30,Nine Months Ended September 30,
Earnings from Equity Method Investments2023202220232022
(in millions)
SNG$32 $34 $104 $104 
Other— — — 1 
Total$32 $34 $104 $105 
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(F) FINANCING AND LEASES
Bank Credit Arrangements
See Note 8 to the financial statements under "Bank Credit Arrangements" in Item 8 of the Form 10-K for additional information.
At September 30, 2022,2023, committed credit arrangements with banks were as follows:
ExpiresExpires
CompanyCompany2023202420252026TotalUnusedExpires within
One Year		Company2024202520262028TotalUnusedExpires within
One Year
(in millions)(in millions)
Southern Company parent(a)Southern Company parent(a)$— $— $— $2,000 $2,000 $1,998 $— Southern Company parent(a)$150 $— $— $1,850 $2,000 $1,998 $150 
Alabama PowerAlabama Power— 550 — 700 1,250 1,250 — Alabama Power— — 650 700 1,350 1,350 — 
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— 125 150 — 275 275 — 
Southern Power(a)(b)
Southern Power(a)(b)
— — — 600 600 569 — 
Southern Power(a)(b)
— — — 600 600 589 — 
Southern Company Gas(b)(c)
Southern Company Gas(b)(c)
250 — — 1,500 1,750 1,748 250 
Southern Company Gas(b)(c)
100 — — 1,500 1,600 1,598 100 
SEGCOSEGCO30 — — — 30 30 30 SEGCO30 — — — 30 30 30 
Southern CompanySouthern Company$280 $700 $125 $6,550 $7,655 $7,596 $280 Southern Company$280 $125 $800 $6,400 $7,605 $7,566 $280 
(a)Arrangement expiring in 2028 represents a $2.45 billion combined arrangement for Southern Company and Southern Power as borrowers. Pursuant to the combined facility, the allocations between Southern Company and Southern Power may be adjusted.
(b)Does not include Southern Power Company's two $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 September 30, 2022.2023. 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)(c)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 2026.2028. Southern Company Gas' committed credit arrangement expiring in 20262028 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 2026,2028, the allocations between Southern Company Gas Capital and Nicor Gas may be adjusted. Nicor Gas is also the borrower ofunder a new $250$100 million credit arrangement expiring in 2023.2024.
As reflected in the table above, in March 2022,May 2023, Southern Company and Southern Power combined and extended their multi-year credit arrangements previously maturing in 2026, resulting in a single aggregate $2.45 billion facility (currently allocated $1.85 billion for Southern Company and $600 million for Southern Power) maturing in 2028. Pursuant to the combined facility, the allocations between Southern Company and Southern Power may be adjusted. Alabama Power, Georgia Power, and Southern Company Gas Capital, along with Nicor Gas, amended and restated certain of their multi-year credit arrangements, which, among other things, extended the maturity dates from 2026 to 2028. Mississippi Power amended and restated certain of its $125multi-year credit arrangements aggregating $150 million, revolvingwhich, among other things, extended the maturity dates from 2024 to 2026. Nicor Gas also entered into a $100 million credit arrangement maturing in 2024 to replace its $250 million credit arrangement that expired in 2023. In June 2023, Southern Company also entered into a new $150 million credit arrangement maturing in 2024. In August 2023, Alabama Power amended and restated one of its multi-year credit arrangements, which, among other things, extended the maturity date from 20232024 to 20252026 and allows forincreased the borrowing based on term SOFR.capacity from $550 million to $650 million.
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Subject to applicable market conditions, Southern Company and its subsidiaries expect to renew or replace their bank credit arrangements as needed, prior to expiration. In connection therewith, Southern Company and its subsidiaries may extend the maturity dates and/or increase or decrease the lending commitments thereunder.
These bank credit arrangements, as well as the term loan arrangements of the Registrants, Nicor Gas, and SEGCO, contain covenants that limit debt levels and contain cross-acceleration or, in the case of Southern Power, cross-default provisions to other indebtedness (including guarantee obligations) that are restricted only to the indebtedness of the individual company. Such cross-default provisions to other indebtedness would trigger an event of default if Southern Power defaulted on indebtedness or guarantee obligations over a specified threshold. SuchThe 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 September 30, 2022,2023, 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 certain revenue bonds of the traditional electric operating companies and the commercial paper programs of the Registrants, Nicor Gas, and SEGCO. At September 30, 2023, outstanding variable rate demand revenue bonds of the traditional electric operating companies with allocated liquidity support totaled approximately $1.7 billion (comprised of approximately $818 million at Alabama Power, $819 million at Georgia Power, and $69 million at Mississippi Power). In addition, at September 30, 2023, Alabama Power and Georgia Power had approximately $120 million and $325 million, respectively, of fixed rate revenue bonds outstanding that are required to be remarketed within the next 12 months. The variable rate demand revenue bonds and fixed rate revenue bonds required to be remarketed within the next 12 months are classified as long-term debt on the balance sheets as a result of available long-term committed credit.
Convertible Senior Notes
In February 2023, Southern Company issued $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, which began on 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.
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(UNAUDITED)
AOn or after September 15, 2025, a holder may convert all or any portion of the unused credit with banks is allocated to provide liquidity supportits Series 2023A Convertible Senior Notes at any time prior to the revenue bondsclose of business on the second scheduled trading day immediately preceding the maturity date regardless of the traditional electric operating companies and the commercial paper programsforegoing conditions.
Southern Company will settle conversions of the Registrants, Nicor Gas, and SEGCO. The amount of variable rate revenue bonds ofSeries 2023A Convertible Senior Notes by paying cash up to the traditional electric operating companies outstanding requiring liquidity support at September 30, 2022 was approximately $1.4 billion (comprised of approximately $789 million at Alabama Power, $619 million at Georgia Power, and $34 million at Mississippi Power). In addition, at September 30, 2022, Georgia Power had approximately $288 million of fixed rate revenue bonds outstanding that are required to be remarketed within the next 12 months.
Equity Units
In May 2022, Southern Company remarketed $862.5 million aggregate principal amount of itsthe Series 2019A Remarketable Junior Subordinated2023A Convertible Senior Notes due August 1, 2024 (2019A RSNs)to be converted and $862.5 millionpaying 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 itsthe Series 2019B Remarketable Junior Subordinated2023A Convertible Senior Notes due August 1, 2027 (2019B RSNs), pursuant to the termsbeing converted. The Series 2023A Convertible Senior Notes are initially convertible at a rate of its 2019 Series A Equity Units (Equity Units). In connection with the remarketing, the interest rates on the 2019A RSNs and the 2019B RSNs were reset to 4.475% and 5.113%, respectively, payable on a semi-annual basis, and 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 a portfolio of treasury securities maturing on July 28, 2022. On August 1, 2022, the proceeds from this portfolio were used to settle the purchase contracts entered into as part of the Equity Units and Southern Company issued approximately 25.2 million11.8818 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 received proceedsunpaid interest. In addition, upon the occurrence of $1.725 billion. At September 30, 2022a make-whole fundamental change (as defined in the indenture governing the Series 2023A Convertible Senior Notes), Southern Company will, in certain circumstances, increase the conversion rate by a number of additional shares of common stock for conversions in connection with the make-whole fundamental change.
Upon the occurrence of a fundamental change (as defined in the indenture governing the Series 2023A Convertible Senior Notes), holders of the Series 2023A Convertible Senior Notes may require Southern Company to purchase all or a portion of their Series 2023A Convertible Senior Notes, in principal amounts equal to $1,000 or an integral multiple thereof, for cash at a price equal to 100% of the principal amount of the Series 2023A Convertible Senior Notes to be purchased plus any accrued and December 31, 2021, the 2019A RSNs and the 2019B RSNs are included in long-term debt on Southern Company's consolidated balance sheets.unpaid interest.
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 until they were settled in August 2022. 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 September 30,Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
20222021202220212023202220232022
(in millions) (in millions)
As reported sharesAs reported shares1,082 1,061 1,070 1,060 As reported shares1,092 1,082 1,092 1,070 
Effect of stock-based compensationEffect of stock-based compensation6 7 6 7 Effect of stock-based compensation7 6 6 6 
Diluted sharesDiluted shares1,088 1,068 1,076 1,067 Diluted shares1,099 1,088 1,098 1,076 
For all periods presented, 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.
For all periods presented, there was no dilution resulting from the Series 2023A Convertible Senior Notes.
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 agreement are currently negotiating a potential restructuring,entered into forbearance agreements which could result in rescissionsuspended the related contractual rights 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.parties while they continued restructuring negotiations, during which
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(UNAUDITED)
Georgia Power Lease Modification
See Note 9the termination date for the operating and maintenance agreement was delayed until July 31, 2023. The negotiations were completed on July 14, 2023, resulting in the Southern Holdings subsidiary agreeing to continue operating the plant for the lessee until the lessee's associated power off-take agreement ends in 2032, subject to certain terms and conditions. The restructuring had no material impact on Southern Company's financial statements in Item 8statements. Southern Company will continue to monitor the operational performance of the Form 10-K for information on Georgia Power's leases. In July 2022, Georgia Power recognizedunderlying assets and evaluate the ability of the lessee to continue to meet its obligations, including those 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 removed from its balance sheet operating lease right-of-usegeneration assets net of amortization of $17 million and lease obligations of $18 million maturing through 2024 and recorded finance lease right-of-use assets of $112 million and lease obligations of $113 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 $1.0 billion and $1.1 billion at September 30, 2022 compared to $1.2 billion at2023 and December 31, 2021.2022, respectively.
TheSouthern Company's federal PTC and ITC carryforwards begin expiring in 2032,2031, but are expected to be fully utilized by 2025.2028. 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, transfer of eligible credits, and potential income tax rate changes. In the third quarter 2023, Georgia Power started generating advanced nuclear PTCs for Plant Vogtle Unit 3 beginning on the in-service date of July 31, 2023. In addition, pursuant to the Global Amendments to the Vogtle Joint Ownership Agreements (as defined in Note (B) under "Georgia Power – Nuclear Construction – Joint Owner Contracts"), Georgia Power is purchasing advanced nuclear PTCs for Plant Vogtle Unit 3 from certain other Vogtle Owners. 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.
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 20.0%13.9% for the nine months ended September 30, 20222023 compared to 17.5%20.0% for the corresponding period in 2021.2022. The effective tax rate increasedecrease was primarily due to higheran increase in the flowback of certain excess deferred income taxes at Alabama Power in 2023, lower pre-tax earnings in 2023, and an adjustment related to a prior year state tax credit carryforwardcarryforwards and the related valuation allowance at Georgia Power in 2022 and 2023, partially offset by additionalthe flowback of certain excess deferred income taxes ending in 2022 at Georgia Power.
Alabama Power
Alabama Power's effective tax expenserate was 8.3% for the nine months ended September 30, 2023 compared to 23.7% for the corresponding period in 2021 as a result2022. The effective tax rate decrease was primarily due to an increase in the flowback of the sale of Sequent.certain excess deferred income taxes in 2023. See Note 152 to the financial statements under "Southern Company Gas""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 18.5% for the nine months ended September 30, 2022 compared to 7.3% 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.
Mississippi Power
Mississippi Power's effective tax rate was 20.1% for the nine months ended September 30, 2022 compared to 14.3% 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.
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(UNAUDITED)
Georgia Power
Georgia Power's effective tax rate was 18.2% for the nine months ended September 30, 2023 compared to 18.5% for the corresponding period in 2022. The effective tax rate decrease was primarily due to an adjustment related to state tax credit carryforwards in 2022, a decrease in a valuation allowance on certain state tax credit carryforwards in 2023, and lower pre-tax earnings in 2023, largely offset by the flowback of certain excess deferred income taxes ending in 2022.
Mississippi Power
Mississippi Power's effective tax rate was 16.9% for the nine months ended September 30, 2023 compared to 20.1% 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.
Southern Power
Southern Power's effective tax rate was 18.8%14.8% for the nine months ended September 30, 20222023 compared to a tax benefit rate of (1.6)%18.8% for the corresponding period in 2021.2022. The effective tax rate increasedecrease was primarily due to higher pre-tax earnings in 2022 and a changechanges in state apportionment methodology resulting from tax legislation enacted by the State of AlabamaTennessee in the first quarter 2021, partially offset by higher wind PTCs in 2022.May 2023.
Southern Company Gas
Southern Company Gas' effective tax rate was 23.7% for the nine months ended September 30, 2022 compared to 36.6% for the corresponding period in 2021. The effective tax rate decrease was primarily due to additional tax expense in 2021 as a result of the sale of Sequent. See Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.
Unrecognized Tax Benefits
Southern Company's and Southern Company Gas'Georgia Power's unrecognized tax positions balances at September 30, 20222023 were $79$167 million and $32$86 million, respectively, compared to $47$80 million for Southern Company at December 31, 2021.2022. The increases from prior periods are primarily related to the amendment of certain 20182019 through 2021 state tax filing positions related to Southern Company Gas dispositions.tax credit utilization. If accepted byeffective settlement of the states,positions is favorable, these positions would decrease Southern Company's and Southern Company Gas' annualGeorgia Power's effective tax rates. The ultimate outcome of thesethis unrecognized tax benefitsbenefit, of which a portion is expected to be resolved within the next 12 months, is dependent on acceptance by eachthe state or expiration of related statute of limitations.
Subsequent to September 30, 2023, a statute of limitations expired related to a 2019 state tax filing position to exclude certain gains from 2019 dispositions from taxation in a certain unitary state. This $44 million tax position and is not expected torelated interest will be resolvedrecognized in the next 12 months.fourth quarter 2023 and will decrease Southern Company's annual effective tax rate.
(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 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 nine months ended September 30, 20222023 and 20212022 are presented in the following tables.
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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 September 30, 2022
Three Months Ended September 30, 2023Three Months Ended September 30, 2023
Pension PlansPension PlansPension Plans
Service costService cost$103 $25 $26 $5 $2 $9 Service cost$69 $16 $17 $2 $2 $6 
Interest costInterest cost102 24 31 5 2 7 Interest cost156 37 48 7 2 11 
Expected return on plan assetsExpected return on plan assets(316)(77)(99)(15)(4)(22)Expected return on plan assets(307)(75)(97)(13)(4)(22)
Amortization:Amortization:Amortization:
Prior service costsPrior service costs— — — — — (1)Prior service costs— — — — — (1)
Regulatory assetRegulatory asset— — — — — 3 Regulatory asset— — — — — 4 
Net loss60 16 18 2 1 2 
Net periodic pension cost (income)$(51)$(12)$(24)$(3)$1 $(2)
Net (gain) lossNet (gain) loss8 2 4 1 — (1)
Net periodic pension incomeNet periodic pension income$(74)$(20)$(28)$(3)$— $(3)
Postretirement BenefitsPostretirement BenefitsPostretirement Benefits
Service costService cost$6 $2 $2 $1 $1 $— Service cost$4 $1 $1 $— $— $— 
Interest costInterest cost10 3 4 — — 1 Interest cost18 5 6 1 — 2 
Expected return on plan assetsExpected return on plan assets(20)(9)(8)— — (2)Expected return on plan assets(21)(9)(7)(1)— (2)
Amortization:Amortization:Amortization:
Prior service costsPrior service costs(1)— — — — — Prior service costs— — 1 — — — 
Regulatory assetRegulatory asset— — — — — 2 Regulatory asset— — — — — 2 
Net (gain)/loss1 — — — — (1)
Net gainNet gain(4)(1)(1)— — (1)
Net periodic postretirement benefit cost (income)Net periodic postretirement benefit cost (income)$(4)$(4)$(2)$1 $1 $— Net periodic postretirement benefit cost (income)$(3)$(4)$— $— $— $1 
Nine Months Ended September 30, 2022
Nine Months Ended September 30, 2023Nine Months Ended September 30, 2023
Pension PlansPension PlansPension Plans
Service costService cost$309 $74 $78 $13 $7 $26 Service cost$207 $48 $51 $8 $5 $18 
Interest costInterest cost306 72 92 14 5 21 Interest cost469 109 143 21 6 32 
Expected return on plan assetsExpected return on plan assets(949)(229)(298)(44)(12)(68)Expected return on plan assets(922)(223)(289)(41)(12)(65)
Amortization:Amortization:Amortization:
Prior service costsPrior service costs— — 1 — — (2)Prior service costs— — 1 — — (2)
Regulatory assetRegulatory asset— — — — — 11 Regulatory asset— — — — — 11 
Net loss180 47 55 9 2 5 
Net periodic pension cost (income)$(154)$(36)$(72)$(8)$2 $(7)
Net (gain) lossNet (gain) loss24 7 10 1 — (3)
Net periodic pension incomeNet periodic pension income$(222)$(59)$(84)$(11)$(1)$(9)
Postretirement BenefitsPostretirement BenefitsPostretirement Benefits
Service costService cost$17 $5 $5 $1 $1 $1 Service cost$11 $3 $3 $— $— $1 
Interest costInterest cost31 8 11 1 — 4 Interest cost53 13 19 2 — 6 
Expected return on plan assetsExpected return on plan assets(60)(25)(21)(1)— (6)Expected return on plan assets(62)(26)(22)(1)— (5)
Amortization:Amortization:Amortization:
Prior service costsPrior service costs(1)— — — — — Prior service costs1 — 1 — — — 
Regulatory assetRegulatory asset— — — — — 5 Regulatory asset— — — — — 5 
Net (gain)/loss1 — 1 — — (2)
Net gainNet gain(10)(2)(3)— — (3)
Net periodic postretirement benefit cost (income)Net periodic postretirement benefit cost (income)$(12)$(12)$(4)$1 $1 $2 Net periodic postretirement benefit cost (income)$(7)$(12)$(2)$1 $— $4 
7678
    Table of Contents                                Index to Financial Statements

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 September 30, 2021
Pension Plans
Service cost$109 $26 $28 $4 $2 $10 
Interest cost87 20 26 4 2 6 
Expected return on plan assets(298)(72)(94)(14)(4)(21)
Amortization:
Prior service costs— — — — — (1)
Regulatory asset— — — — — 3 
Net loss78 21 25 4 1 3 
Net periodic pension cost (income)$(24)$(5)$(15)$(2)$1 $— 
Postretirement Benefits
Service cost$6 $2 $2 $1 $1 $— 
Interest cost9 2 3 — — 1 
Expected return on plan assets(19)(8)(7)(1)— (2)
Amortization:
Regulatory asset— — — — — 2 
Net (gain)/loss1 — 1 — — (1)
Net periodic postretirement benefit cost (income)$(3)$(4)$(1)$— $1 $— 
Nine Months Ended September 30, 2021
Three Months Ended September 30, 2022Three Months Ended September 30, 2022
Pension PlansPension PlansPension Plans
Service costService cost$326 $77 $84 $13 $7 $28 Service cost$103 $25 $26 $5 $2 $9 
Interest costInterest cost260 61 78 12 4 18 Interest cost102 24 31 5 2 7 
Expected return on plan assetsExpected return on plan assets(893)(215)(282)(41)(11)(64)Expected return on plan assets(316)(77)(99)(15)(4)(22)
Amortization:Amortization:Amortization:
Prior service costsPrior service costs— — 1 — — (2)Prior service costs— — — — — (1)
Regulatory assetRegulatory asset— — — — — 11 Regulatory asset— — — — — 3 
Net lossNet loss235 62 75 11 3 9 Net loss60 16 18 2 1 2 
Net periodic pension cost (income)Net periodic pension cost (income)$(72)$(15)$(44)$(5)$3 $— Net periodic pension cost (income)$(51)$(12)$(24)$(3)$1 $(2)
Postretirement BenefitsPostretirement BenefitsPostretirement Benefits
Service costService cost$18 $5 $5 $1 $1 $1 Service cost$6 $2 $2 $1 $1 $— 
Interest costInterest cost26 6 9 1 — 3 Interest cost10 3 4 — — 1 
Expected return on plan assetsExpected return on plan assets(57)(22)(20)(2)— (6)Expected return on plan assets(20)(9)(8)— — (2)
Amortization:Amortization:Amortization:
Prior service costsPrior service costs(1)— — — — — Prior service costs(1)— — — — — 
Regulatory assetRegulatory asset— — — — — 5 Regulatory asset— — — — — 2 
Net (gain)/lossNet (gain)/loss3 — 2 — — (2)Net (gain)/loss1 — — — — (1)
Net periodic postretirement benefit cost (income)Net periodic postretirement benefit cost (income)$(11)$(11)$(4)$— $1 $1 Net periodic postretirement benefit cost (income)$(4)$(4)$(2)$1 $1 $— 
Nine Months Ended September 30, 2022Nine Months Ended September 30, 2022
Pension PlansPension Plans
Service costService cost$309 $74 $78 $13 $7 $26 
Interest costInterest cost306 72 92 14 5 21 
Expected return on plan assetsExpected return on plan assets(949)(229)(298)(44)(12)(68)
Amortization:Amortization:
Prior service costsPrior service costs— — 1 — — (2)
Regulatory assetRegulatory asset— — — — — 11 
Net lossNet loss180 47 55 9 2 5 
Net periodic pension cost (income)Net periodic pension cost (income)$(154)$(36)$(72)$(8)$2 $(7)
Postretirement BenefitsPostretirement Benefits
Service costService cost$17 $5 $5 $1 $1 $1 
Interest costInterest cost31 8 11 1 — 4 
Expected return on plan assetsExpected return on plan assets(60)(25)(21)(1)— (6)
Amortization:Amortization:
Prior service costsPrior service costs(1)— — — — — 
Regulatory assetRegulatory asset— — — — — 5 
Net (gain) lossNet (gain) loss1 — 1 — — (2)
Net periodic postretirement benefit cost (income)Net periodic postretirement benefit cost (income)$(12)$(12)$(4)$1 $1 $2 
7779
    Table of Contents                                Index to Financial Statements

NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
(I) FAIR VALUE MEASUREMENTS
At September 30, 2022,2023, 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 September 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 September 30, 2023At September 30, 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)
$49 $454 $— $— $503 
Energy-related derivatives(a)
$7 $73 $— $— $80 
Investments in trusts:(c)(b)
Investments in trusts:(c)(b)
Investments in trusts:(c)(b)
Domestic equityDomestic equity610 161 — — 771 Domestic equity692 196 — — 888 
Foreign equityForeign equity111 129 — — 240 Foreign equity131 154 — — 285 
U.S. Treasury and government agency securitiesU.S. Treasury and government agency securities— 265 — — 265 U.S. Treasury and government agency securities— 337 — — 337 
Municipal bondsMunicipal bonds— 52 — — 52 Municipal bonds— 42 — — 42 
Pooled funds – fixed incomePooled funds – fixed income— 7 — — 7 Pooled funds – fixed income— 6 — — 6 
Corporate bondsCorporate bonds— 438 — — 438 Corporate bonds— 368 — — 368 
Mortgage and asset backed securitiesMortgage and asset backed securities— 87 — — 87 Mortgage and asset backed securities— 85 — — 85 
Private equityPrivate equity— — — 156 156 Private equity— — — 169 169 
Cash and cash equivalentsCash and cash equivalents4 — — — 4 Cash and cash equivalents3 — — — 3 
OtherOther17 13 — — 30 Other33 3 — 8 44 
Cash equivalents1,402 18 — — 1,420 
Cash equivalents and restricted cashCash equivalents and restricted cash919 11 — — 930 
Other investmentsOther investments9 26 — — 35 Other investments9 34 8 — 51 
TotalTotal$2,202 $1,650 $— $156 $4,008 Total$1,794 $1,309 $8 $177 $3,288 
Liabilities:Liabilities:Liabilities:
Energy-related derivatives(a)
Energy-related derivatives(a)
$20 $141 $— $— $161 
Energy-related derivatives(a)
$34 $217 $— $— $251 
Interest rate derivativesInterest rate derivatives— 311 — — 311 Interest rate derivatives— 351 — — 351 
Foreign currency derivativesForeign currency derivatives— 323 — — 323 Foreign currency derivatives— 192 — — 192 
Contingent considerationContingent consideration— — 14 — 14 Contingent consideration5 — 19 — 24 
OtherOther— 13 — — 13 Other— 13 — — 13 
TotalTotal$20 $788 $14 $— $822 Total$39 $773 $19 $— $831 
7880
    Table of Contents                                Index to Financial Statements

NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Fair Value Measurements Using:Fair Value Measurements Using:
At September 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 September 30, 2023At September 30, 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$— $147 $— $— $147 Energy-related derivatives$— $26 $— $— $26 
Nuclear decommissioning trusts:(b)
Nuclear decommissioning trusts:(b)
Nuclear decommissioning trusts:(b)
Domestic equityDomestic equity370 152 — — 522 Domestic equity404 188 — — 592 
Foreign equityForeign equity111 — — — 111 Foreign equity131 — — — 131 
U.S. Treasury and government agency securitiesU.S. Treasury and government agency securities— 15 — — 15 U.S. Treasury and government agency securities— 20 — — 20 
Municipal bondsMunicipal bonds— 2 — — 2 Municipal bonds— 1 — — 1 
Corporate bondsCorporate bonds— 230 — — 230 Corporate bonds— 215 — — 215 
Mortgage and asset backed securitiesMortgage and asset backed securities— 20 — — 20 Mortgage and asset backed securities— 22 — — 22 
Private equityPrivate equity— — — 156 156 Private equity— — — 169 169 
OtherOther10 — — — 10 Other10 — — 8 18 
Cash equivalents1,225 18 — — 1,243 
Cash equivalents and restricted cashCash equivalents and restricted cash489 11 — — 500 
Other investmentsOther investments— 26 — — 26 Other investments— 34 — — 34 
TotalTotal$1,716 $610 $— $156 $2,482 Total$1,034 $517 $— $177 $1,728 
Liabilities:Liabilities:Liabilities:
Energy-related derivativesEnergy-related derivatives$— $35 $— $— $35 Energy-related derivatives$— $75 $— $— $75 
Georgia PowerGeorgia PowerGeorgia Power
Assets:Assets:Assets:
Energy-related derivativesEnergy-related derivatives$— $145 $— $— $145 Energy-related derivatives$— $14 $— $— $14 
Nuclear decommissioning trusts:(b)(c)
Nuclear decommissioning trusts:(b)
Nuclear decommissioning trusts:(b)
Domestic equityDomestic equity240 1 — — 241 Domestic equity288 1 — — 289 
Foreign equityForeign equity— 128 — — 128 Foreign equity— 153 — — 153 
U.S. Treasury and government agency securitiesU.S. Treasury and government agency securities— 250 — — 250 U.S. Treasury and government agency securities— 317 — — 317 
Municipal bondsMunicipal bonds— 50 — — 50 Municipal bonds— 41 — — 41 
Corporate bondsCorporate bonds— 208 — — 208 Corporate bonds— 153 — — 153 
Mortgage and asset backed securitiesMortgage and asset backed securities— 67 — — 67 Mortgage and asset backed securities— 63 — — 63 
OtherOther7 13 — — 20 Other23 3 — — 26 
TotalTotal$247 $862 $— $— $1,109 Total$311 $745 $— $— $1,056 
Liabilities:Liabilities:Liabilities:
Energy-related derivativesEnergy-related derivatives$— $51 $— $— $51 Energy-related derivatives$— $83 $— $— $83 
7981
    Table of Contents                                Index to Financial Statements

NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Fair Value Measurements Using:Fair Value Measurements Using:
At September 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 September 30, 2023At September 30, 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$— $133 $— $— $133 Energy-related derivatives$— $24 $— $— $24 
Cash equivalentsCash equivalents30 — — — 30 Cash equivalents3 — — — 3 
TotalTotal$30 $133 $— $— $163 Total$3 $24 $— $— $27 
Liabilities:Liabilities:Liabilities:
Energy-related derivativesEnergy-related derivatives$— $24 $— $— $24 Energy-related derivatives$— $44 $— $— $44 
Southern PowerSouthern PowerSouthern Power
Assets:Assets:Assets:
Energy-related derivativesEnergy-related derivatives$— $7 $— $— $7 Energy-related derivatives$— $5 $— $— $5 
Cash equivalentsCash equivalents23 — — — 23 
TotalTotal$23 $5 $— $— $28 
Liabilities:Liabilities:Liabilities:
Energy-related derivativesEnergy-related derivatives$— $13 $— $— $13 Energy-related derivatives$— $6 $— $— $6 
Foreign currency derivativesForeign currency derivatives— 80 — — 80 Foreign currency derivatives— 42 — — 42 
Contingent considerationContingent consideration— — 14 — 14 Contingent consideration5 — 19 — 24 
OtherOther— 13 — — 13 Other— 13 — — 13 
TotalTotal$— $106 $14 $— $120 Total$5 $61 $19 $— $85 
Southern Company GasSouthern Company GasSouthern Company Gas
Assets:Assets:Assets:
Energy-related derivatives(a)
Energy-related derivatives(a)
$49 $22 $— $— $71 
Energy-related derivatives(a)
$7 $4 $— $— $11 
Non-qualified deferred compensation trusts:Non-qualified deferred compensation trusts:Non-qualified deferred compensation trusts:
Domestic equityDomestic equity— 8 — — 8 Domestic equity— 7 — — 7 
Foreign equityForeign equity— 1 — — 1 Foreign equity— 1 — — 1 
Pooled funds – fixed incomePooled funds – fixed income— 7 — — 7 Pooled funds – fixed income— 6 — — 6 
Cash equivalentsCash equivalents4 — — — 4 Cash equivalents3 — — — 3 
Cash equivalentsCash equivalents294 — — — 294 
TotalTotal$53 $38 $— $— $91 Total$304 $18 $— $— $322 
Liabilities:Liabilities:Liabilities:
Energy-related derivatives(a)
Energy-related derivatives(a)
$20 $17 $— $— $37 
Energy-related derivatives(a)
$34 $9 $— $— $43 
Interest rate derivativesInterest rate derivatives— 87 — — 87 Interest rate derivatives— 99 — — 99 
TotalTotal$20 $104 $— $— $124 Total$34 $108 $— $— $142 
(a)Excludes cash collateral of $15$49 million.
(b)Excludes receivables related to investment income, pending investment sales, payables related to pending investment purchases, and currencies. See Note 6 to the financial statements in Item 8 of the Form 10-K for additional information.
(c)Includes investment securities pledged to creditors and collateral received and excludes payables related to the securities lending program. At September 30, 2022, approximately $46 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.
8082
    Table of Contents                                Index to Financial Statements

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 nine months ended September 30, 20222023 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 EndedNine Months Ended
Fair value increases (decreases)Fair value increases (decreases)Three Months Ended September 30, 2022Three Months Ended September 30, 2021Nine Months Ended September 30, 2022Nine Months Ended September 30, 2021Fair value increases (decreases)September 30, 2023September 30, 2022September 30, 2023September 30, 2022
(in millions)(in millions)
Southern CompanySouthern Company$(106)$9 $(486)$173 Southern Company$(4)$(106)$211 $(486)
Alabama PowerAlabama Power(53)15 (245)133 Alabama Power(36)(53)54 (245)
Georgia PowerGeorgia Power(53)(6)(241)40 Georgia Power32 (53)157 (241)
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.
8183
    Table of Contents                                Index to Financial Statements

NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Southern Power has contingent payment obligations related to certaintwo of its acquisitions whereby it is primarily obligated to make generation-based payments to the seller, which commencedcommencing at the commercial operation of the respectiveeach facility and continuecontinuing through 2026.2026 and 2035, respectively. The obligations are primarily categorized as Level 3 under Fair Value Measurements as the fair value is determined using significant unobservable inputs for the forecasted facilityfacility's generation in MW-hours, as well as other inputs such as a fixed dollar amount per MW-hour, and a discount rate. The fair value of contingent consideration reflects the net present value of expected payments and any periodic change arising from forecasted generation is expected to be immaterial.
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 September 30, 2022,2023, 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 $156$177 million and unfunded commitments related to the private equitymarket investments totaled $84$72 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 September 30, 2022,2023, 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$53.4 $10.8 $14.5 $1.5 $2.9 $7.4 Carrying amount$58.8 $11.2 $15.8 $1.6 $2.7 $8.1 
Fair valueFair value46.4 9.3 12.6 1.2 2.7 6.3 Fair value50.8 9.4 13.4 1.3 2.4 6.5 
(*)The long-term debtcarrying amount of Southern Company Gas is recorded at amortized cost, including theGas' long-term debt includes fair value adjustments atfrom 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
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
to correspond with the classification of the hedged interest or principal, respectively. See Note 1 to the financial statements under "Financial Instruments" in Item 8 of the Form 10-K for additional information. See Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information regarding the sale of Sequent.
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.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Energy-related derivative contracts are accounted for under one of three methods:
•Regulatory Hedges – Energy-related derivative contracts designated as regulatory hedges relate primarily to the traditional electric operating companies' and the natural gas distribution utilities' fuel-hedging programs, where gains and losses are initially recorded as regulatory liabilities and assets, respectively, and then are included in fuel expense as the underlying fuel is used in operations and ultimately recovered through an approved cost recovery mechanism.
•Cash Flow Hedges – Gains and losses on energy-related derivatives designated as cash flow hedges (which are mainly used to hedge anticipated purchases and sales) are initially deferred in accumulated OCI before being recognized in the statements of income in the same period and in the same income statement line item as the earnings effect of the hedged transactions.
•Not Designated – Gains and losses on energy-related derivative contracts that are not designated or fail to qualify as hedges are recognized in the statements of income as incurred.
Some energy-related derivative contracts require physical delivery as opposed to financial settlement, and this type of derivative is both common and prevalent within the electric and natural gas industries. When an energy-related derivative contract is settled physically, any cumulative unrealized gain or loss is reversed and the contract price is recognized in the respective line item representing the actual price of the underlying goods being delivered.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
At September 30, 2022,2023, 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(*)
39920302025
Southern Company(*)
42220302028
Alabama PowerAlabama Power1052026—Alabama Power1092026—
Georgia PowerGeorgia Power1162025—Georgia Power1042026—
Mississippi PowerMississippi Power822027—Mississippi Power802027—
Southern PowerSouthern Power1120302023Southern Power820302024
Southern Company Gas(*)
Southern Company Gas(*)
8520252025
Southern Company Gas(*)
12120272028
(*)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 135.5 million mmBtu long natural gas positions of 95.7and 14.2 million mmBtu and short natural gas positions of 10.6 million mmBtu at September 30, 2022,2023, 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 1514 million mmBtu for Southern Company, which includes 4 million mmBtu for Alabama Power, 5 million mmBtu for Georgia Power, 2 million mmBtu for Mississippi Power, and 43 million mmBtu for Southern Power.
For cash flow hedges of energy-related derivatives, the estimated pre-tax gains (losses)losses expected to be reclassified from accumulated OCI to earnings for the 12-month period ending September 30, 20232024 are $17$30 million for Southern Company, $26$25 million for Southern Company Gas, and immaterial for the other Registrants.Southern Power.
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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.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
At September 30, 2022,2023, 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 September 30, 2022Notional
Amount		Weighted
Average Interest
Rate Paid		Interest
Rate
Received		Hedge
Maturity
Date		Fair Value Gain (Loss) at September 30, 2023
(in millions) (in millions) (in millions) (in millions)
Cash Flow Hedges of Existing Debt
Southern Company parent$175 —4.25%September 2025$— 
Southern Company parent175 —3.83%August 2032— 
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(57)Southern Company parent$400 1-month SOFR + 0.80%1.75%March 2028$(56)
Southern Company parentSouthern Company parent1,000 3.70%1-month LIBOR + 2.36%April
2030		(167)Southern Company parent1,000 1-month SOFR + 2.48%3.70%April
2030		(196)
Southern Company GasSouthern Company Gas500 1.75%1-month LIBOR + 0.38%January 2031(87)Southern Company Gas500 1-month SOFR + 0.49%1.75%January 2031(99)
Southern CompanySouthern Company$2,250 $(311)Southern Company$1,900 $(351)
For cash flow hedges of interest rate derivatives, the estimated pre-tax gains (losses)losses expected to be reclassified from accumulated OCI to interest expense for the 12-month period ending September 30, 20232024 are $(17)$19 million for Southern Company and immaterial for the other Registrants.traditional electric operating companies and Southern Company Gas. 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 September 30, 2022,2023, the following foreign currency derivatives were outstanding:
Pay NotionalPay
Rate		Receive NotionalReceive
Rate		Hedge
Maturity Date		Fair Value Gain (Loss) at September 30, 2022Pay NotionalPay
Rate		Receive NotionalReceive
Rate		Hedge
Maturity Date		Fair Value Gain (Loss) at September 30, 2023
(in millions)(in millions) (in millions)(in millions)(in millions) (in millions)
Cash Flow Hedges of Existing DebtCash Flow Hedges of Existing DebtCash Flow Hedges of Existing Debt
Southern PowerSouthern Power$564 3.78%€500 1.85%June 2026$(80)Southern Power$564 3.78%€500 1.85%June 2026$(42)
Fair Value Hedges of Existing DebtFair Value Hedges of Existing DebtFair Value Hedges of Existing Debt
Southern Company parentSouthern Company parent1,476 3.39%1,250 1.88%September 2027(243)Southern Company parent1,476 3.39%1,250 1.88%September 2027(150)
Southern CompanySouthern Company$2,040 €1,750 $(323)Southern Company$2,040 €1,750 $(192)
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 September 30, 20232024 are $12$10 million for Southern Power.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
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 September 30, 2022At December 31, 2021
Derivative Category and Balance Sheet LocationAssetsLiabilitiesAssetsLiabilities
(in millions)(in millions)
Southern Company
Energy-related derivatives designated as hedging instruments for regulatory purposes
Assets from risk management activities/Other current liabilities$299 $70 $129 $30 
Other deferred charges and assets/Other deferred credits and liabilities150 59 72 6 
Total derivatives designated as hedging instruments for regulatory purposes449 129 201 36 
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Assets from risk management activities/Other current liabilities27 13 7 5 
Other deferred charges and assets/Other deferred credits and liabilities7 1 1 — 
Interest rate derivatives:
Assets from risk management activities/Other current liabilities— 44 19 — 
Other deferred charges and assets/Other deferred credits and liabilities— 266 — 29 
Foreign currency derivatives:
Assets from risk management activities/Other current liabilities— 37 — 39 
Other deferred charges and assets/Other deferred credits and liabilities— 285 — 40 
Total derivatives designated as hedging instruments in cash flow and fair value hedges34 646 27 113 
Energy-related derivatives not designated as hedging instruments
Assets from risk management activities/Other current liabilities19 18 9 4 
Other deferred charges and assets/Other deferred credits and liabilities2 1 1 — 
Total derivatives not designated as hedging instruments21 19 10 4 
Gross amounts recognized504 794 238 153 
Gross amounts offset(a)
(113)(128)(25)(28)
Net amounts recognized in the Balance Sheets(b)
$391 $666 $213 $125 
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
At September 30, 2022At December 31, 2021
Derivative Category and Balance Sheet LocationAssetsLiabilitiesAssetsLiabilities
(in millions)(in millions)
Alabama Power
Energy-related derivatives designated as hedging instruments for regulatory purposes
Other current assets/Other current liabilities$90 $12 $30 $9 
Other deferred charges and assets/Other deferred credits and liabilities57 23 25 2 
Total derivatives designated as hedging instruments for regulatory purposes147 35 55 11 
Gross amounts offset(31)(31)(5)(5)
Net amounts recognized in the Balance Sheets$116 $4 $50 $6 
Georgia Power
Energy-related derivatives designated as hedging instruments for regulatory purposes
Assets from risk management activities/Other current liabilities$107 $28 $54 $6 
Other deferred charges and assets/Other deferred credits and liabilities38 23 21 2 
Total derivatives designated as hedging instruments for regulatory purposes145 51 75 8 
Energy-related derivatives not designated as hedging instruments
Other current assets/Other current liabilities1 — — — 
Gross amounts recognized146 51 75 8 
Gross amounts offset(41)(41)(8)(8)
Net amounts recognized in the Balance Sheets$105 $10 $67 $— 
Mississippi Power
Energy-related derivatives designated as hedging instruments for regulatory purposes
Assets from risk management activities/Other current liabilities$78 $12 $30 $3 
Other deferred charges and assets/Other deferred credits and liabilities55 12 26 2 
Total derivatives designated as hedging instruments for regulatory purposes133 24 56 5 
Gross amounts offset(20)(20)(4)(4)
Net amounts recognized in the Balance Sheets$113 $4 $52 $1 
At September 30, 2023At December 31, 2022
Derivative Category and Balance Sheet LocationAssetsLiabilitiesAssetsLiabilities
(in millions)(in millions)
Southern Company
Energy-related derivatives designated as hedging instruments for regulatory purposes
Assets from risk management activities/Liabilities from risk management activities$34 $134 $123 $121 
Other deferred charges and assets/Other deferred credits and liabilities36 77 52 44 
Total derivatives designated as hedging instruments for regulatory purposes70 211 175 165 
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Assets from risk management activities/Liabilities from risk management activities— 28 3 27 
Other deferred charges and assets/Other deferred credits and liabilities4 2 6 4 
Interest rate derivatives:
Assets from risk management activities/Liabilities from risk management activities— 80 12 62 
Other deferred charges and assets/Other deferred credits and liabilities— 271 — 240 
Foreign currency derivatives:
Assets from risk management activities/Liabilities from risk management activities— 35 — 34 
Other deferred charges and assets/Other deferred credits and liabilities— 157 — 182 
Total derivatives designated as hedging instruments in cash flow and fair value hedges4 573 21 549 
Energy-related derivatives not designated as hedging instruments
Assets from risk management activities/Liabilities from risk management activities5 8 13 13 
Other deferred charges and assets/Other deferred credits and liabilities1 2 2 1 
Total derivatives not designated as hedging instruments6 10 15 14 
Gross amounts recognized80 794 211 728 
Gross amounts offset(a)
(37)(86)(70)(111)
Net amounts recognized in the Balance Sheets(b)
$43 $708 $141 $617 
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
At September 30, 2022At December 31, 2021
Derivative Category and Balance Sheet LocationAssetsLiabilitiesAssetsLiabilities
(in millions)(in millions)
Southern Power
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Other current assets/Other current liabilities$— $10 $2 $— 
Other deferred charges and assets/Other deferred credits and liabilities5 1 1 — 
Foreign currency derivatives:
Other current assets/Other current liabilities— 12 — 16 
Other deferred charges and assets/Other deferred credits and liabilities— 68 — — 
Total derivatives designated as hedging instruments in cash flow and fair value hedges5 91 3 16 
Energy-related derivatives not designated as hedging instruments
Other current assets/Other current liabilities2 2 1 — 
Gross amounts recognized7 93 4 16 
Gross amounts offset(3)(3)— — 
Net amounts recognized in the Balance Sheets$4 $90 $4 $16 
Southern Company Gas
Energy-related derivatives designated as hedging instruments for regulatory purposes
Other current assets/Other current liabilities$24 $17 $15 $12 
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Other current assets/Other current liabilities26 3 5 5 
Other deferred charges and assets/Other deferred credits and liabilities3 — — — 
Interest rate derivatives:
Other current assets/Other current liabilities— 13 6 — 
Other deferred charges and assets/Other deferred credits and liabilities— 74 — 6 
Total derivatives designated as hedging instruments in cash flow and fair value hedges29 90 11 11 
Energy-related derivatives not designated as hedging instruments
Other current assets/Other current liabilities16 16 8 4 
Other deferred charges and assets/Other deferred credits and liabilities2 1 1 — 
Total derivatives not designated as hedging instruments18 17 9 4 
Gross amounts recognized71 124 35 27 
Gross amounts offset(a)
(18)(33)(8)(11)
Net amounts recognized in the Balance Sheets(b)
$53 $91 $27 $16 
(a)Gross amounts offset includes cash collateral held on deposit in broker margin accounts of $15 million and $3 million at September 30, 2022 and December 31, 2021, respectively.
(b)Net amounts of derivative instruments outstanding exclude immaterial premium and intrinsic value associated with weather derivatives for all periods presented.
At September 30, 2023At December 31, 2022
Derivative Category and Balance Sheet LocationAssetsLiabilitiesAssetsLiabilities
(in millions)(in millions)
Alabama Power(c)
Energy-related derivatives designated as hedging instruments for regulatory purposes
Other current assets/Other current liabilities$15 $46 $42 $21 
Other deferred charges and assets/Other deferred credits and liabilities11 29 20 18 
Total derivatives designated as hedging instruments for regulatory purposes26 75 62 39 
Gross amounts offset(17)(17)(24)(24)
Net amounts recognized in the Balance Sheets$9 $58 $38 $15 
Georgia Power
Energy-related derivatives designated as hedging instruments for regulatory purposes
Other current assets/Other current liabilities$4 $57 $36 $43 
Other deferred charges and assets/Other deferred credits and liabilities10 26 6 18 
Total derivatives designated as hedging instruments for regulatory purposes14 83 42 61 
Energy-related derivatives not designated as hedging instruments
Other current assets/Other current liabilities— — — 1 
Gross amounts recognized14 83 42 62 
Gross amounts offset(11)(11)(21)(21)
Net amounts recognized in the Balance Sheets$3 $72 $21 $41 
Mississippi Power(c)
Energy-related derivatives designated as hedging instruments for regulatory purposes
Other current assets/Other current liabilities$9 $22 $33 $24 
Other deferred charges and assets/Other deferred credits and liabilities15 22 26 8 
Total derivatives designated as hedging instruments for regulatory purposes24 44 59 32 
Gross amounts offset(17)(17)(17)(17)
Net amounts recognized in the Balance Sheets$7 $27 $42 $15 
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Energy-related derivatives not designated as hedging instruments were immaterial for Alabama Power and Mississippi Power at September 30, 2022. There were no such instruments for the traditional electric operating companies at December 31, 2021.
At September 30, 2022 and December 31, 2021, the pre-tax effects of unrealized derivative gains (losses) arising from energy-related derivative instruments designated as regulatory hedging instruments and deferred were as follows:
Regulatory Hedge Unrealized Gain (Loss) Recognized in the Balance Sheet
Derivative Category and Balance Sheet
Location		Southern
Company		Alabama
Power		Georgia
Power		Mississippi
Power		Southern Company Gas
 (in millions)
At September 30, 2022:
Energy-related derivatives:
Other regulatory assets, current$(17)$(2)$(8)$(3)$(4)
Other regulatory assets, deferred(6)(2)(3)(1)— 
Other regulatory liabilities, current246 80 87 69 10 
Other regulatory liabilities, deferred98 36 18 44 — 
Total energy-related derivative gains (losses)$321 $112 $94 $109 $6 
At December 31, 2021:
Energy-related derivatives:
Other regulatory assets, current$(17)$(6)$— $— $(11)
Other regulatory liabilities, current107 28 48 27 4 
Other regulatory liabilities, deferred65 22 19 24 — 
Total energy-related derivative gains (losses)$155 $44 $67 $51 $(7)
At September 30, 2023At December 31, 2022
Derivative Category and Balance Sheet LocationAssetsLiabilitiesAssetsLiabilities
(in millions)(in millions)
Southern Power
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Other current assets/Other current liabilities$— $5 $— $12 
Other deferred charges and assets/Other deferred credits and liabilities4 — 5 — 
Foreign currency derivatives:
Other current assets/Other current liabilities— 11 — 11 
Other deferred charges and assets/Other deferred credits and liabilities— 31 — 36 
Total derivatives designated as hedging instruments in cash flow and fair value hedges4 47 5 59 
Energy-related derivatives not designated as hedging instruments
Other current assets/Other current liabilities1 1 2 — 
Other deferred charges and assets/Other deferred credits and liabilities— — 1 — 
Total derivatives not designated as hedging instruments1 1 3 — 
Gross amounts recognized5 48 8 59 
Gross amounts offset(1)(1)— — 
Net amounts recognized in the Balance Sheets$4 $47 $8 $59 
Southern Company Gas
Energy-related derivatives designated as hedging instruments for regulatory purposes
Other current assets/Other current liabilities$6 $9 $12 $33 
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Other current assets/Other current liabilities— 23 3 15 
Other deferred charges and assets/Other deferred credits and liabilities— 2 1 4 
Interest rate derivatives:
Other current assets/Other current liabilities— 21 — 14 
Other deferred charges and assets/Other deferred credits and liabilities— 78 — 72 
Total derivatives designated as hedging instruments in cash flow and fair value hedges— 124 4 105 
Energy-related derivatives not designated as hedging instruments
Other current assets/Other current liabilities4 7 11 12 
Other deferred charges and assets/Other deferred credits and liabilities1 2 1 1 
Total derivatives not designated as hedging instruments5 9 12 13 
Gross amounts recognized11 142 28 151 
Gross amounts offset(a)
9 (40)— (41)
Net amounts recognized in the Balance Sheets(b)
$20 $102 $28 $110 
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
For the three(a)Gross amounts offset includes cash collateral held on deposit in broker margin accounts of $49 million and nine months ended$41 million at September 30, 2023 and December 31, 2022, respectively.
(b)Net amounts of derivative instruments outstanding exclude immaterial premium and 2021,intrinsic value associated with weather derivatives for both periods presented.
(c)Energy-related derivatives not designated as hedging instruments were immaterial for Alabama Power and Mississippi Power at December 31, 2022. There were no such instruments for Alabama Power and Mississippi Power at September 30, 2023.
At September 30, 2023 and December 31, 2022, the pre-tax effects of cash flowunrealized derivative gains (losses) arising from energy-related derivative instruments designated as regulatory hedging instruments and fair value hedge accounting on accumulated OCIdeferred were as follows:
Gain (Loss) Recognized in OCI on DerivativeFor the Three Months Ended September 30,For the Nine Months Ended September 30,
2022202120222021
(in millions)(in millions)
Southern Company
Cash flow hedges:
Energy-related derivatives$11 $38 $51 $59 
Interest rate derivatives6 5 36 7 
Foreign currency derivatives(35)(36)(137)(79)
Fair value hedges(*):
Foreign currency derivatives20 (4)18 (4)
Total$2 $3 $(32)$(17)
Georgia Power
Interest rate derivatives$— $— $31 $— 
Southern Power
Cash flow hedges:
Energy-related derivatives$(11)$8 $(4)$16 
Foreign currency derivatives(35)(36)(137)(79)
Total$(46)$(28)$(141)$(63)
Southern Company Gas
Cash flow hedges:
Energy-related derivatives$22 $30 $55 $43 
Interest rate derivatives5 — — — 
Total$27 $30 $55 $43 
(*)Represents amounts excluded from the assessment of effectiveness for which the difference between changes in fair value and periodic amortization is recorded in OCI.
For the three and nine months ended September 30, 2022 and 2021, the pre-tax effects of interest rate derivatives designated as cash flow hedging instruments on accumulated OCI were immaterial for the other Registrants.
Regulatory Hedge Unrealized Gain (Loss) Recognized in the Balance Sheet
Derivative Category and Balance Sheet
Location		Southern
Company		Alabama
Power		Georgia
Power		Mississippi
Power		Southern Company Gas
 (in millions)
At September 30, 2023:
Energy-related derivatives:
Other regulatory assets, current$(113)$(39)$(54)$(16)$(4)
Other regulatory assets, deferred(48)(19)(18)(11)— 
Other regulatory liabilities, current23 8 1 4 10 
Other regulatory liabilities, deferred6 1 2 3 — 
Total energy-related derivative gains (losses)$(132)$(49)$(69)$(20)$6 
At December 31, 2022:
Energy-related derivatives:
Other regulatory assets, current$(71)$(8)$(26)$(13)$(24)
Other regulatory assets, deferred(23)(7)(14)(2)— 
Other regulatory liabilities, current72 29 19 22 2 
Other regulatory liabilities, deferred31 9 2 20 — 
Total energy-related derivative gains (losses)$9 $23 $(19)$27 $(22)
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
For the three and nine months ended September 30, 2023 and 2022, the pre-tax effects of cash flow and 2021,fair value hedge accounting on accumulated OCI for the applicable Registrants were as follows:
Gain (Loss) Recognized in OCI on DerivativesFor the Three Months Ended September 30,For the Nine Months Ended September 30,
2023202220232022
(in millions)(in millions)
Southern Company
Cash flow hedges:
Energy-related derivatives$(4)$11 $(55)$51 
Interest rate derivatives(3)6 (12)36 
Foreign currency derivatives(15)(35)(6)(137)
Fair value hedges(*):
Foreign currency derivatives27 20 28 18 
Total$5 $2 $(45)$(32)
Georgia Power
Cash flow hedges:
Interest rate derivatives$— $— $(3)$31 
Southern Power
Cash flow hedges:
Energy-related derivatives$— $(11)$(14)$(4)
Foreign currency derivatives(15)(35)(6)(137)
Total$(15)$(46)$(20)$(141)
Southern Company Gas
Cash flow hedges:
Energy-related derivatives$(4)$22 $(41)$55 
Interest rate derivatives(4)5 — — 
Total$(8)$27 $(41)$55 
(*)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 nine months ended September 30, 2022, the pre-tax effects of interest rate derivatives designated as cash flow hedging instruments on accumulated OCI were immaterial for Alabama Power and there were no such effects in 2023.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
For the three and nine months ended September 30, 2023 and 2022, 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 September 30,For the Nine Months Ended September 30,Location and Amount of Gain (Loss) Recognized in Income on Cash Flow and Fair Value Hedging RelationshipsFor the Three Months Ended September 30,For the Nine Months Ended September 30,
Location and Amount of Gain (Loss) Recognized in Income on Cash Flow and Fair Value Hedging RelationshipsFor the Three Months Ended September 30,For the Nine Months Ended September 30,
20222021202220212023202220232022
(in millions)(in millions)
Southern CompanySouthern CompanySouthern Company
Total cost of natural gasTotal cost of natural gas$294 $129 $1,840 $943 Total cost of natural gas$102 $294 $1,199 $1,840 
Gain (loss) on energy-related cash flow hedges(a)
Gain (loss) on energy-related cash flow hedges(a)
(4)9 (32)28 
Total other operations and maintenanceTotal other operations and maintenance1,424 1,527 4,352 4,568 
Gain (loss) on energy-related cash flow hedges(a)
Gain (loss) on energy-related cash flow hedges(a)
9 2 28 — 
Gain (loss) on energy-related cash flow hedges(a)
(1)— (2)— 
Total depreciation and amortizationTotal depreciation and amortization922 896 2,728 2,658 Total depreciation and amortization1,143 922 3,365 2,728 
Gain (loss) on energy-related cash flow hedges(a)
Gain (loss) on energy-related cash flow hedges(a)
(1)3 5 6 
Gain (loss) on energy-related cash flow hedges(a)
(5)(1)(18)5 
Total interest expense, net of amounts capitalizedTotal interest expense, net of amounts capitalized(511)(451)(1,461)(1,352)Total interest expense, net of amounts capitalized(620)(511)(1,812)(1,461)
Gain (loss) on interest rate cash flow hedges(a)
Gain (loss) on interest rate cash flow hedges(a)
(7)(7)(19)(20)
Gain (loss) on interest rate cash flow hedges(a)
(22)(7)(31)(19)
Gain (loss) on foreign currency cash flow hedges(a)
Gain (loss) on foreign currency cash flow hedges(a)
(3)(6)(16)(18)
Gain (loss) on foreign currency cash flow hedges(a)
(3)(3)(8)(16)
Gain (loss) on interest rate fair value hedges(b)
Gain (loss) on interest rate fair value hedges(b)
(102)(4)(300)(16)
Gain (loss) on interest rate fair value hedges(b)
(47)(102)(50)(300)
Total other income (expense), netTotal other income (expense), net132 131 414 290 Total other income (expense), net141 132 428 414 
Gain (loss) on foreign currency cash flow hedges(a)(c)
Gain (loss) on foreign currency cash flow hedges(a)(c)
(32)(34)(129)(76)
Gain (loss) on foreign currency cash flow hedges(a)(c)
(14)(32)(4)(129)
Gain (loss) on foreign currency fair value hedgesGain (loss) on foreign currency fair value hedges(59)(32)(180)(32)Gain (loss) on foreign currency fair value hedges(7)(59)19 (180)
Amount excluded from effectiveness testing recognized in earningsAmount excluded from effectiveness testing recognized in earnings(21)4 (17)4 Amount excluded from effectiveness testing recognized in earnings(27)(21)(28)(17)
Southern PowerSouthern PowerSouthern Power
Total depreciation and amortizationTotal depreciation and amortization$133 $132 $384 $383 Total depreciation and amortization$130 $133 $380 $384 
Gain (loss) on energy-related cash flow hedges(a)
Gain (loss) on energy-related cash flow hedges(a)
(1)3 5 6 
Gain (loss) on energy-related cash flow hedges(a)
(5)(1)(18)5 
Total interest expense, net of amounts capitalizedTotal interest expense, net of amounts capitalized(32)(36)(105)(111)Total interest expense, net of amounts capitalized(32)(32)(98)(105)
Gain (loss) on foreign currency cash flow hedges(a)
Gain (loss) on foreign currency cash flow hedges(a)
(3)(6)(16)(18)
Gain (loss) on foreign currency cash flow hedges(a)
(3)(3)(8)(16)
Total other income (expense), netTotal other income (expense), net3 2 5 10 Total other income (expense), net4 3 8 5 
Gain (loss) on foreign currency cash flow hedges(a)(c)
Gain (loss) on foreign currency cash flow hedges(a)(c)
(32)(34)(129)(76)
Gain (loss) on foreign currency cash flow hedges(a)(c)
(14)(32)(4)(129)
Southern Company GasSouthern Company GasSouthern Company Gas
Total cost of natural gasTotal cost of natural gas$294 $129 $1,840 $943 Total cost of natural gas$102 $294 $1,199 $1,840 
Gain (loss) on energy-related cash flow hedges(a)
Gain (loss) on energy-related cash flow hedges(a)
9 2 28 — 
Gain (loss) on energy-related cash flow hedges(a)
(4)9 (32)28 
Total other operations and maintenanceTotal other operations and maintenance264 252 879 824 
Gain (loss) on energy-related cash flow hedges(a)
Gain (loss) on energy-related cash flow hedges(a)
(1)— (2)— 
Total interest expense, net of amounts capitalizedTotal interest expense, net of amounts capitalized(65)(57)(187)(175)Total interest expense, net of amounts capitalized(77)(65)(226)(187)
Gain (loss) on interest rate cash flow hedges(a)
Gain (loss) on interest rate cash flow hedges(a)
(2)(1)(3)(2)
Gain (loss) on interest rate cash flow hedges(a)
(18)(2)(18)(3)
Gain (loss) on interest rate fair value hedges(b)
Gain (loss) on interest rate fair value hedges(b)
(30)— (87)2 
Gain (loss) on interest rate fair value hedges(b)
(11)(30)(14)(87)
(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 nine months ended September 30, 2022 and 2021, theThe pre-tax effects of cash flow and fair value hedge accounting on income for interest rate derivatives were immaterial for Alabama Power, Georgia Power, and Mississippi Power.the traditional electric operating companies for all periods presented.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
At September 30, 20222023 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 September 30, 2022At December 31, 2021At September 30, 2022At December 31, 2021Balance Sheet Location of Hedged ItemsAt September 30, 2023At December 31, 2022At September 30, 2023At December 31, 2022
(in millions)(in millions)(in millions)(in millions)
Southern CompanySouthern CompanySouthern Company
Long-term debtLong-term debt$(2,788)$(3,280)$306 $9 Long-term debt$(2,873)$(2,927)$328 $282 
Southern Company GasSouthern Company GasSouthern Company Gas
Long-term debtLong-term debt$(411)$(493)$86 $2 Long-term debt$(402)$(415)$95 $81 
For the three and nine months ended September 30, 20222023 and 2021,2022, 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 September 30,
Nine Months Ended
September 30,
Three Months Ended September 30,
Nine Months Ended
September 30,
Derivatives in Non-Designated Hedging RelationshipsDerivatives in Non-Designated Hedging RelationshipsStatements of Income Location2022202120222021Derivatives in Non-Designated Hedging RelationshipsStatements of Income Location2023202220232022
(in millions)(in millions)(in millions)(in millions)
Energy-related derivatives:Energy-related derivatives:
Natural gas revenues(*)
$3 $(2)$(10)$(122)Energy-related derivatives:
Natural gas revenues(*)
$— $3 $— $(10)
Cost of natural gas(2)20 (7)36 Cost of natural gas7 (2)36 (7)
Total derivatives in non-designated hedging relationshipsTotal derivatives in non-designated hedging relationships$1 $18 $(17)$(86)Total derivatives in non-designated hedging relationships$7 $1 $36 $(17)
(*)Excludes $14 million of gains for the nine months ended September 30, 2023, and immaterial gains (losses)amounts for all other periods presented, recorded in natural gas revenues associated with weather derivatives for all periods presented.derivatives.
For the three and nine months ended September 30, 20222023 and 2021,2022, 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 September 30, 2022,2023, the Registrants had no collateral posted with derivative counterparties to satisfy these arrangements.
For Southern Company, and Southern Power, the fair value of foreign currency derivative liabilities and 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 $156was $78 million and $38 million, respectively at September 30, 2022.2023. For Southern Power, the fair value of foreign currency 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, was $20 million at September 30, 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 September 30, 2022.2023. 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.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
require collateral in the event that one or more Southern Company power pool participants has a credit rating change to below investment grade.
Alabama Power and Southern Power maintain accounts with certain regional transmission organizations to facilitate financial derivative transactions and they may be required to post collateral based on the value of the positions in these accounts and the associated margin requirements. At September 30, 2022,2023, cash collateral posted in these accounts was immaterial.$18 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 September 30, 2022,2023, cash collateral held on deposit in broker margin accounts was $15$49 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.
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(K) ACQUISITIONS AND DISPOSITIONS
See Note 15 to the financial statements in Item 8 of the Form 10-K for additional information.
Alabama Power
On September 30, 2022, Alabama Power completed its acquisition of the Calhoun Generating Station, which was accounted for as an asset acquisition. The total purchase price was $179 million, of which $171 million was related to net assets recorded within property, plant, and equipment on the balance sheet and the remainder primarily related to fossil fuel stock and materials and supplies. See Note (B) and Note 15 to the financial statements in Item 8 of the Form 10-K under "Alabama Power" for additional information.
Southern Power
Construction Projects
During the nine months ended September 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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(UNAUDITED)
Project FacilityResource
Approximate Nameplate Capacity (MW)
LocationCODPPA Contract Period
Projects Completed During(K) ACQUISITIONS AND DISPOSITIONS
See Note 15 to the Nine Months Ended September 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 andin Item 8 of the tax equity partner and two other partners each own a noncontrolling interest.Form 10-K for additional information.
Southern Power
Asset Acquisitions
Southern Power's asset acquisitions during the nine months ended September 30, 2023 are detailed in the following table:
Project FacilityResourceSeller
Approximate Nameplate Capacity (MW)
LocationSouthern Power Ownership PercentageExpected CODPPA Contract Period
Millers Branch(*)
SolarEDF Renewables, Inc.200Haskell County, TX100%Fourth quarter 202520 years
South CheyenneSolarHanwha Q Cells USA Corp.150Laramie County, WY100%First quarter 202420 years
(b)(*)The facility has a totalproject includes an option to expand capacity of 88 MWs, ofup to an additional 300 MWs.
The aggregate purchase price for the two projects was $193 million, which 73 MWs were placedis primarily recorded within construction work 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.progress on the balance sheet.
Southern Company Gas
Sale of Natural Gas Storage Facilities
On September 7, 2022, certain affiliates of22, 2023, Southern Company Gas entered into agreements to sell twocompleted the sale of its California natural gas storage facilities locatedfacility, resulting in California and Texas for an aggregate purchase price of $186 million, plus working capital and certain other adjustments. Completion of the sales is subject to material closing conditions, including, among others, release of a Southern Company Gas parent guarantee, approval from the California Public Utility Commission without a material burdensome condition, and the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The parent guarantee release was executed on October 20, 2022, which resolved a material closing condition. As a result, Southern Company Gas expects to record pre-tax impairment charges totaling approximately $125 million ($95 million after tax) in the fourth quarter 2022. The sale of the Texas facility is expected to be completed later in the fourth quarter 2022, and the sale of the California facility is expected to be completed during 2023; however, the ultimate outcome of these matters cannot be determined at this time.
Sale of Pivotal LNG
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.immaterial loss.
(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 three 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.
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(UNAUDITED)
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 $156 million and $406 million for the three and nine months ended September 30, 2023, respectively, and $336 million and $673 million for the three and nine months ended September 30, 2022, respectively, and $167 million and $361 million for the three and nine months ended September 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 all periods presented. Revenues from sales of natural gas from Southern Company Gas (prior to its sale of Sequent) to Southern Power were $18 million for the nine months ended September 30, 2021. 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 nine months ended September 30, 2021, leveraged lease projects.telecommunications. 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 nine months ended September 30, 20222023 and 20212022 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 September 30, 2023Three Months Ended September 30, 2023
Operating revenuesOperating revenues$5,674 $653 $(160)$6,167 $689 $154 $(30)$6,980 
Segment net income (loss)(b)(c)
Segment net income (loss)(b)(c)
1,419 100 — 1,519 82 (179)— 1,422 
Nine Months Ended September 30, 2023Nine Months Ended September 30, 2023
Operating revenuesOperating revenues$14,145 $1,686 $(417)$15,414 $3,417 $499 $(122)$19,208 
Segment net income (loss)(b)(d)
Segment net income (loss)(b)(d)
2,852 288 — 3,140 475 (490)(4)3,121 
At September 30, 2023At September 30, 2023
GoodwillGoodwill$— $2 $— $2 $5,015 $144 $— $5,161 
Total assetsTotal assets99,464 13,090 (568)111,986 24,823 2,370 (858)138,321 
Three Months Ended September 30, 2022Three Months Ended September 30, 2022Three Months Ended September 30, 2022
Operating revenuesOperating revenues$6,938 $1,180 $(691)$7,427 $857 $135 $(41)$8,378 Operating revenues$6,938 $1,180 $(691)$7,427 $857 $135 $(41)$8,378 
Segment net income (loss)(b)(c)
1,445 95 — 1,540 83 (152)1 1,472 
Segment net income (loss)(c)(b)
Segment net income (loss)(c)(b)
1,445 95 — 1,540 83 (152)1 1,472 
Nine Months Ended September 30, 2022Nine Months Ended September 30, 2022Nine Months Ended September 30, 2022
Operating revenuesOperating revenues$16,716 $2,618 $(1,391)$17,943 $3,998 $418 $(127)$22,232 Operating revenues$16,716 $2,618 $(1,391)$17,943 $3,998 $418 $(127)$22,232 
Segment net income (loss)(b)(d)
3,256 265 — 3,521 516 (415)(11)3,611 
At September 30, 2022
Segment net income (loss)(e)(b)
Segment net income (loss)(e)(b)
3,256 265 — 3,521 516 (415)(11)3,611 
At December 31, 2022At December 31, 2022
GoodwillGoodwill$— $2 $— $2 $5,015 $263 $— $5,280 Goodwill$— $2 $— $2 $5,015 $144 $— $5,161 
Total assetsTotal assets95,659 13,283 (748)108,194 24,097 2,372 (658)134,005 Total assets95,861 13,081 (659)108,283 24,621 2,665 (678)134,891 
Three Months Ended September 30, 2021
Operating revenues$5,018 $679 $(170)$5,527 $623 $124 $(36)$6,238 
Segment net income (loss)(c)(b)
1,085 78 — 1,163 56 (121)3 1,101 
Nine Months Ended September 30, 2021
Operating revenues$12,813 $1,610 $(372)$14,051 $2,994 $412 $(111)$17,346 
Segment net income (loss)(e)(b)
2,352 211 — 2,563 389 (338)(6)2,608 
At December 31, 2021
Goodwill$— $2 $— $2 $5,015 $263 $— $5,280 
Total assets89,051 13,390 (667)101,774 23,560 2,975 (775)127,534 
(a)Attributable to Southern Company.
(b)For the traditional electric operating companies, includes pre-tax charges (credits) to income at Georgia Power for the estimated probable loss associated with the construction of Plant Vogtle Units 3 and 4 of $160 million ($120 million after tax) for the three and nine months ended September 30, 2023 and $(70) million ($(52) million after tax) and $(18) million ($(13) million after tax) for the three and nine months ended September 30, 2022, respectively, and $264 million ($197 million after tax) and $772 million ($576 million after tax) for the three and nine months ended September 30, 2021, respectively. See Note (B) and Note 2 to the financial statements in Item 8 of the Form 10-K under "Georgia Power – Nuclear Construction" for additional information.
(c)For Southern Company Gas,Power, includes an $18 million pre-tax loss recovery ($9 million after tax and partnership allocations) for the three and nine months ended September 30, 2023 related to an arbitration interim award and a $16 million pre-tax gain of $121 million ($9312 million after tax) related to itson the sale of Sequent, as well asspare parts for the resulting $85 million of additional tax expense as a result of the sale.nine months ended September 30, 2023. See Note 15 to the financial statements(C) under "Southern Company Gas" in Item 8 of the Form 10-K"General Litigation Matters – Southern Power" for additional information.
(d)For Southern Power,Company Gas, includes gains on wind turbine equipment contributed to various equity method investments totalinga pre-tax charge of approximately $37$38 million pre-tax ($28 million after tax). associated with the disallowance of certain capital expenditures at Nicor Gas. See Note 15 to the financial statements under "Southern Power – Development Projects" in Item 8 of the Form 10-K for additional information.
(e)For Southern Company Gas, includes pre-tax impairment charges totaling $84 million ($67 million after tax) related to its equity method investment in the PennEast Pipeline project. See Note 7 to the financial statements(B) under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.
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(UNAUDITED)
Products and Services
Electric Utilities' Revenues Electric Utilities' Revenues
RetailWholesaleOtherTotalRetailWholesaleOtherTotal
(in millions)(in millions)
Three Months Ended September 30, 2023Three Months Ended September 30, 2023$5,139 $727 $301 $6,167 
Three Months Ended September 30, 2022Three Months Ended September 30, 2022$5,961 $1,197 $269 $7,427 Three Months Ended September 30, 20225,961 1,197 269 7,427 
Three Months Ended September 30, 20214,551 731 245 5,527 
Nine Months Ended September 30, 2023Nine Months Ended September 30, 2023$12,597 $1,930 $887 $15,414 
Nine Months Ended September 30, 2022Nine Months Ended September 30, 2022$14,363 $2,798 $782 $17,943 Nine Months Ended September 30, 202214,363 2,798 782 17,943 
Nine Months Ended September 30, 202111,492 1,822 737 14,051 
Southern Company Gas' Revenues Southern Company Gas' Revenues
Gas
Distribution
Operations
Wholesale
Gas
Services(*)
Gas
Marketing
Services		OtherTotalGas
Distribution
Operations		Gas
Marketing
Services		OtherTotal
(in millions)(in millions)
Three Months Ended September 30, 2023Three Months Ended September 30, 2023$617 $56 $16 $689 
Three Months Ended September 30, 2022Three Months Ended September 30, 2022$748 $— $85 $24 $857 Three Months Ended September 30, 2022748 85 24 857 
Three Months Ended September 30, 2021553 — 52 18 623 
Nine Months Ended September 30, 2023Nine Months Ended September 30, 2023$2,989 $376 $52 $3,417 
Nine Months Ended September 30, 2022Nine Months Ended September 30, 2022$3,513 $— $420 $65 $3,998 Nine Months Ended September 30, 20223,513 420 65 3,998 
Nine Months Ended September 30, 20212,451 188 311 44 2,994 
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(*)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.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Southern Company Gas
Southern Company Gas manages its business through three 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 four 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. The all other column included a natural gas storage facility in Texas through its sale in November 2022 and a natural gas storage facility in California through its sale in September 2023. See Note 15 to the financial statements in Item 8 of the Form 10-K and Note (K) under "Southern Company Gas" for information regarding agreements by certain affiliates of Southern Company Gas to sell two natural gas storage facilities.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
additional information.
Business segment financial data for the three and nine months ended September 30, 20222023 and 20212022 was as follows:
Gas Distribution OperationsGas Pipeline Investments
Wholesale Gas Services(a)
Gas Marketing ServicesTotalAll OtherEliminationsConsolidatedGas Distribution OperationsGas
Pipeline Investments		Gas Marketing ServicesTotalAll OtherEliminationsConsolidated
(in millions)(in millions)
Three Months Ended September 30, 2023Three Months Ended September 30, 2023
Operating revenuesOperating revenues$619 $8 $56 $683 $8 $(2)$689 
Segment net income (loss)Segment net income (loss)70 24 2 96 (14)— 82 
Nine Months Ended September 30, 2023Nine Months Ended September 30, 2023
Operating revenuesOperating revenues$3,002 $24 $376 $3,402 $30 $(15)$3,417 
Segment net income(*)
Segment net income(*)
352 73 59 484 (9)— 475 
Total assets at September 30, 2023Total assets at September 30, 202322,625 1,542 1,519 25,686 9,795 (10,658)24,823 
Three Months Ended September 30, 2022Three Months Ended September 30, 2022Three Months Ended September 30, 2022
Operating revenuesOperating revenues$751 $8 $— $85 $844 $16 $(3)$857 Operating revenues$751 $8 $85 $844 $16 $(3)$857 
Segment net income (loss)59 24 — (2)81 2 — 83 
Segment net income (loss)(c)
Segment net income (loss)(c)
59 24 (2)81 2 — 83 
Nine Months Ended September 30, 2022Nine Months Ended September 30, 2022Nine Months Ended September 30, 2022
Operating revenuesOperating revenues$3,533 $24 $— $420 $3,977 $43 $(22)$3,998 Operating revenues$3,533 $24 $420 $3,977 $43 $(22)$3,998 
Segment net income (loss)365 76 — 65 506 10 — 516 
Total assets at September 30, 202221,605 1,425 — 1,595 24,625 9,100 (9,628)24,097 
Three Months Ended September 30, 2021
Operating revenues$556 $8 $— $52 $616 $11 $(4)$623 
Segment net income (loss)(c)
45 10 94 (2)147 (91)— 56 
Nine Months Ended September 30, 2021
Operating revenues$2,466 $24 $188 $311 $2,989 $29 $(24)$2,994 
Segment net income (loss)(b)(c)(d)
308 3 108 60 479 (90)— 389 
Total assets at December 31, 202120,917 1,467 31 1,556 23,971 12,114 (12,525)23,560 
Segment net incomeSegment net income365 76 65 506 10 — 516 
Total assets at December 31, 2022Total assets at December 31, 202222,040 1,577 1,616 25,233 8,943 (9,555)24,621 
(a)As a result of the sale of Sequent, wholesale gas services is no longer a reportable segment for the three and nine months ended September 30, 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)
Nine Months Ended September 30, 2021$3,881 $90 $3,971 $3,783 $188 
(b)(*)For wholesale gas services,distribution operations, includes a pre-tax gaincharge of $121approximately $38 million ($9328 million after tax) related toassociated with the saledisallowance of Sequent.certain capital expenditures at Nicor Gas. See Note 15 to the financial statements(B) under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.
(c)For the "All Other" column, includes $85 million of additional tax expense as a result of the sale. See Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.
(d)For gas pipeline investments, includes pre-tax impairment charges totaling $84 million ($67 million after tax) 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.
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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
101
Results of Operations
105106
Southern Company
105106
Alabama Power
114115
Georgia Power
119121
Mississippi Power
125127
Southern Power
129132
Southern Company Gas
133136
Future Earnings Potential
141142
Accounting Policies
145147
Financial Condition and Liquidity
146148
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) 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
On July 12, 2022, the Alabama PSC approved the following items:
•Alabama Power's petition for a certificate of convenience and necessity authorizing Alabama Power to complete the acquisition of the Calhoun Generating Station. The transaction closed on September 30, 2022 and, on October 3, 2022,March 24, 2023, Alabama Power filed Rate CNP New Plant with the Alabama PSC to recover costs associated with the related costs.acquisition of the Central Alabama Generating Station. The filing reflected an annual increase in annualretail revenues of $34$78 million or 0.6%, effective with June 2023 billings. Through May 2023, Alabama Power recovered substantially all costs associated with the billing month of November 2022.Central Alabama Generating Station through Rate RSE, offset by revenues from a power sales agreement. On May 24, 2023, the Central Alabama Generating Station was placed into retail service.
•An increaseOn June 14, 2023, the Alabama PSC issued an order approving modifications to Rate ECR 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 has no significant effect on Alabama Power's net income, but does increase operating cash flowsRenewable Generation Certificate. The modifications authorized Alabama Power to procure an additional 2,400 MWs of renewable capacity and energy by June 14, 2029 and to market the related energy and environmental attributes to fuel cost recovery.customers and other third parties. The modifications also increased the size of allowable renewable projects from 80 MWs to 200 MWs and increased the annual approval limit from 160 MWs to 400 MWs.
•Modifications to Rate NDR.
•An accountingOn July 11, 2023, the Alabama PSC issued an order authorizing Alabama Power to create aexpand the existing authority of its reliability reserve separate from the NDR and transition the previous Rate NDR authority related to include certain production-related expenses that are intended to maintain reliability expenditures to the reliability reserve.in periods between scheduled generating unit outages.
On August 18, 2023, Alabama Power may make accrualsnotified the Alabama PSC of its intent to theuse a portion of its $166 million reliability reserve if the NDR balance exceeds $35 million.
See Note (B) to the Condensed Financial Statements under "Alabama Power" herein for additional information.during 2023. The ultimate outcome of this matter cannot be determined at this time.
On September 23,October 3, 2023, the Alabama PSC issued an order modifying its December 2022 the FERC authorizedorder and authorizing Alabama Power to use updated depreciation rates(i) flow back in 2023 approximately $24 million of certain federal excess accumulated deferred income taxes resulting from its 2021 depreciation study effective January 1, 2023.the Tax Cuts and Jobs Act of 2017 and (ii) make available any remaining balance of excess accumulated deferred income taxes at the end of 2023 for the benefit of customers in 2024 and/or 2025. The study was also provided to the Alabama PSC, and the new depreciation rates willultimate outcome of this matter cannot be reflected in Alabama Power's future rate filings. See FUTURE EARNINGS POTENTIAL – "Regulatory Matters – Alabama Power" herein for additional information.determined at this time.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
On November 1, 2023, Alabama Power placed Plant Barry Unit 8 in service. At September 30, 2023, project expenditures associated with Plant Barry Unit 8 totaled approximately $583 million.
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
ConstructionGeorgia Power placed Plant Vogtle Unit 3 in service on July 31, 2023 and continues construction on Plant Vogtle Units 3 andUnit 4 (with(each with electric generating capacity of approximately 1,100 MWs each)MWs), in which Georgia Power currentlyit 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 first quarterJuly 2023 and the fourth quarter 2023,March 2024, respectively, is $10.4$10.8 billion.
Hot functional testing for Unit 4 was completed on May 1, 2023. On July 29, 2022,20, 2023, Southern Nuclear announced that all Unit 34 ITAACs had been submitted to the NRC. On August 3, 2022,NRC, and, on July 28, 2023, the NRC published its 103(g) finding that the acceptanceaccepted criteria in the combined license for Unit 34 had been met, which allowed nuclear fuel to be loaded and allows start-up testing to begin. Fuel load for Unit 34 was completed on August 19, 2023. On October 17, 2022, and6, 2023, Georgia Power announced that during the unit is projected to be placed in service by the end of the first quarter 2023. The projected schedule for Unit 3 primarily depends on the pace of system and area transitions to operations, including the completion of closure documentation necessary to support start-up testing, and the progression of start-up, final component, and pre-operational testing which may be impacted by equipment or other operational failures.for Plant Vogtle Unit 4, Southern Nuclear identified a motor fault in one of four reactor coolant pumps (RCPs) and has started the process to replace this RCP with an on-site spare RCP from inventory. Considering this remediation and the remaining pre-operational testing, Unit 4 is projected to be placed in service byduring the end of the fourthfirst quarter 2023.2024. The projected schedule for Unit 4 primarilysignificantly depends on the pace and success of replacing the RCP, which involves removing and re-installing commodities around the RCP. In addition, any findings related to the root cause of the motor fault on the single Unit 4 RCP could require engineering changes or remediation related to the other seven Unit 3 progress through start-up and testing; overall construction productivity and production levels improving, particularly in electrical installation, including terminations; and appropriate levels of craft laborers, particularly electricians, being added and maintained.Unit 4 RCPs. Any further delays could result in a later in-service datesdate and cost increases.
During the first nine months of 2022,2023, established construction contingency totaling $170$43 million was assigned to the base capital cost forecast for costs primarily associated with construction productivity, the paceUnit 3 schedule extension and completion of system turnovers,start-up and pre-operational testing, including continued need of support resources for Unit 3 testing, as well as additional craft and support resources and procurementsubcontract work for Units 3 andUnit 4. Georgia Power also increased its total project capital cost forecast by adding $36 million and $32 million to replenish construction contingency in the second quarter 2022 and the third quarter 2022, respectively. 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 pre-tax charges to income in the second quarter 2022 and the third quarter 2022 of $36 million ($27 million after tax) and $32 million ($24 million after tax), respectively, for the increases 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.
Georgia Power and the other Vogtle Owners dodid 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 believebelieved the current capital cost expenditures have already exceeded the cost-sharing thresholds and the current project capital cost forecast triggersapproved by the Vogtle Owners in February 2022 triggered the tender provisions under the Global Amendments.provisions.
OnIn 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 and July 28, 2022, Georgia Power filed its answers in the lawsuits filed by MEAG Power and OPC respectively, 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. OnIn September 26, 2022, Dalton filed complaints in each of these lawsuits.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
OnAlso in September 29, 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 payreimburse 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 $79$92 million based on the current project capital cost forecast; and (iii) Georgia Power will payreimburse 20% of MEAG Power's costs of construction with respect to any
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
amounts over the current project capital cost forecast, with no further adjustment for force majeure costs. OnIn October 4, 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 on October 6, 2022, Dalton dismissed its related complaint.
On October 5, 2023 and October 17, 2023, Georgia Power reached agreements with OPC and Dalton, respectively, to resolve its respective dispute with each of OPC and Dalton regarding the proper interpretation of the cost-sharing and tender provisions of the joint ownership agreements relating to the Global Amendments. Under the terms of the agreements with OPC and Dalton, among other items, (i) each of OPC and Dalton retracted its exercise of the tender option and will retain its full ownership interest in Plant Vogtle Units 3 and 4, (ii) Georgia Power made payments immediately after execution of the agreements of $308 million and $17 million to OPC and Dalton, respectively, representing payment for a portion of each of OPC's and Dalton's costs of construction for Plant Vogtle Units 3 and 4 previously incurred, (iii) Georgia Power will pay a portion of each of OPC's and Dalton's further 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 be in an aggregate amount of approximately $105 million and $6 million for OPC and Dalton, respectively, based on the current project capital cost forecast, and (iv) Georgia Power will pay 66% of each of OPC's and Dalton's costs of construction with respect to any amounts above the current project capital cost forecast, with no further adjustment for force majeure costs. On October 23, 2023, OPC, Dalton, and Georgia Power filed a stipulation of dismissal with prejudice of their litigation described above, including Georgia Power's counterclaims.
Georgia Power recorded pre-tax charges (credits) to income inthrough the fourth quarter 2021, the second quarter 2022, and the third quarter 2022 of approximately $440$407 million ($328304 million after tax), $16 million ($12 million after tax), and $(102) million ($(76) million after tax), respectively, associated with the cost-sharing and tender provisions of the Global Amendments, including the settlement with MEAG Power. Based on the current project capital cost forecast and the settlements with OPC and Dalton described above, Georgia Power whichrecorded a pre-tax charge to income of approximately $160 million ($120 million after tax) in the third quarter 2023. These charges are included in the total project capital cost forecast. The settlement with MEAG Power doesforecast and will not resolve the separate pending litigation with OPC, including Dalton's associated complaint. Georgia Power may be required to record further pre-tax charges to income of up to approximately $300 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.recovered from retail customers.
The 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.
2022 BasePlant Vogtle Unit 3 and Common Facilities Rate CaseProceeding
In compliance with a Georgia PSC order approved in November 2021, Georgia Power increased annual retail base rates by $318 million effective August 1, 2023 based on the in-service date of July 31, 2023 for Plant Vogtle Unit 3. See Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction" herein for additional information on Plant Vogtle Units 3 and 4.
Plant Vogtle Units 3 and 4 Prudency Proceeding
On June 24, 2022,August 30, 2023, as provided for in the December 2017 Georgia PSC approval of the seventeenth VCM report, Georgia Power filed a base rate case (Georgia Power 2022 Base Rate Case) with the Georgia PSC.PSC an application to adjust rates to include reasonable and prudent Plant Vogtle Units 3 and 4 costs (Application). The filing, as modifiedApplication provides the necessary support to justify the reasonableness, prudence, and recovery of $8.826 billion in total construction and capital costs, $1.07 billion in associated retail rate base items, and the operating costs related to the full operation and output of Plant Vogtle Units 3 and 4.
Also on August 22, 2022, proposes30, 2023, the staff of the Georgia PSC filed a three-year alternatestipulated agreement (Prudency Stipulation) among Georgia Power, the staff of the Georgia PSC, and certain intervenors. If the Prudency Stipulation is approved, Georgia Power will recover $7.562 billion in total construction and capital costs and associated retail rate plan with requestedbase items of $1.02 billion, which includes AFUDC financing costs above $4.418 billion (the Georgia PSC-certified amount) up to $7.562 billion.
The Prudency Stipulation also provides for the recovery of projected operations and maintenance expenses, depreciation expense, nuclear decommissioning accruals, and property taxes, net of projected production tax credits.
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AND RESULTS OF OPERATIONS (Continued)
After considering construction and capital costs already in retail base rates of $2.1 billion and $362 million of associated retail rate increases totaling $889base items (approved by the Georgia PSC in November 2021), and upon achieving commercial operation of Unit 4, Georgia Power will include in retail rate base the remaining $5.462 billion of construction and capital costs as well as $656 million $107of associated retail rate base items.
If the Prudency Stipulation is approved by the Georgia PSC, annual retail base revenues will increase approximately $729 million and $45 millionthe average retail base rates will be adjusted by approximately 5% effective January 1, 2023, January 1, 2024, and January 1, 2025, respectively. the first day of the month after Unit 4 achieves commercial operation.
Georgia Power expects the Georgia PSC to render a final decision in this matteron these matters on December 20, 2022.19, 2023. The ultimate outcome of these matters cannot be determined at this time. See Note (B) to the Condensed Financial Statements under "Georgia Power – Plant Vogtle Units 3 and 4 Prudency Proceeding" herein for additional information.
Rate Plans
In accordance with the terms of the 2022 ARP, on October 2, 2023, Georgia Power filed tariff adjustments to become effective January 1, 2024 that would result in a net increase in rates of $191 million pending approval by the Georgia PSC. 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"Plans" herein for additional information.
Fuel Cost Recovery
On May 16, 2023, the Georgia PSC approved a stipulation agreement between Georgia Power and the staff of the Georgia PSC to increase annual fuel billings by 54%, or approximately $1.1 billion,effective June 1, 2023. The increase reflects a three-year recovery period for $2.2 billion of Georgia Power's under recovered fuel balance at May 31, 2023. Changes in fuel rates have no significant effect on Southern Company's or Georgia Power's net income but do impact the related operating cash flows. See Note (B) to the Condensed Financial Statements under "Georgia Power – Fuel Cost Recovery" herein for additional information.
Integrated Resource Plan
On July 21, 2022,October 27, 2023, Georgia Power filed an updated IRP (2023 IRP Update) with the Georgia PSC, approved Georgia Power's triennial IRP (2022 IRP), as modified bywhich sets forth a stipulated agreement among Georgia Power,plan to support the staffrecent increase in the state of Georgia's projected energy needs since the 2022 IRP. The schedule for the Georgia PSC and certain intervenors and as further modified byto consider the 2023 IRP Update has not been determined. Georgia PSC. In the 2022 IRP decision,Power has requested that the Georgia PSC approved several requests, includingevaluate the following:
•Decertification and retirement2023 IRP Update by the end of Plant Wansley Units 1 and 2 (926 MWs based on 53.5% ownership), which occurred on 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 accountsApril 2024. The ultimate outcome 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 CCRthis matter cannot be determined 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.
this time. See Note (B) to the Condensed Financial Statements under "Georgia Power – Integrated Resource Plans" herein for additional information.
Mississippi Power
On October 27, 2023, the FERC approved a settlement agreement filed by Mississippi Power and Cooperative Energy on July 31, 2023 related to Mississippi Power's July 2022 request for a $23 million increase in annual wholesale base revenues under the MRA tariff. The settlement agreement provides for a $16 million increase in annual wholesale base revenues, effective September 14, 2022, and a refund to customers of approximately $6 million primarily related to the difference between the approved rates and interim rates.
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AND RESULTS OF OPERATIONS (Continued)
MississippiSouthern Power
On June 7, 2022,September 20, 2023, Southern Power acquired 100% of the Mississippi PSC approved Mississippi Power's annual retail PEP filing for 2022, resultingmembership interests in the 200-MW Millers Branch solar project located in Haskell County, Texas from EDF Renewables Development, Inc. and is continuing development and construction. The facility's output is contracted under a 20-year PPA and commercial operation is expected to occur in the fourth quarter 2025. The project includes an annual increaseoption to expand capacity up to an additional 300 MWs.
On September 22, 2023, Southern Power acquired 100% of the membership interests in revenues of approximately $18 million, or 1.9%.the 150-MW South Cheyenne solar project located in Laramie County, Wyoming from Hanwha Q Cells USA Corp. and is continuing construction. The rate increase became effective withfacility's output is contracted under a 20-year PPA and commercial operation is expected to occur in the first billing cycle of April 2022 in accordance with the PEP rate schedule.quarter 2024.
On August 26, 2022, the FERC accepted an amended shared service agreement (SSA) between Mississippi Power and Cooperative Energy, effective July 1, 2022, 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 September 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. 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 and requested an effective date of July 15, 2022. Cooperative Energy has filed a complaint with FERC challenging the new rates. On September 13, 2022, the FERC issued an order accepting Mississippi Power's request effective September 14, 2022, subject to refund, and establishing hearing and settlement judge procedures. The ultimate outcome of this matterthese matters cannot be determined at this time.
See Note (B) to the Condensed Financial Statements under "Mississippi Power" herein for additional information.
Southern Power
During the nine months ended September 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 September 30, 2022,2023, 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 95%97% through 20262027 and 92%91% through 2031,2032, with an average remaining contract duration of approximately 13 years.
Southern Company Gas
On July 1, 2022,14, 2023, 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, 2023.2024. Resolution of the GRAM filing is expected by December 28, 2022,31, 2023, with the new rates effective January 1, 2023.2024.
On August 1, 2022,28, 2023, the Virginia Commission approved a stipulation agreement related to Virginia Natural Gas filed aGas' August 2022 general base rate case with the Virginia Commission seeking anfiling. The approved agreement provides for a $48 million increase in annual base rate revenues, of $69 million, including $15 million related to the recovery of investments under the SAVE program, primarily to recover investments and increased costs associated with infrastructure, technology, and workforce development. The requested increase is based on a projected 12-month period beginning January 1, 2023, aan ROE of 10.35%9.70%, and an equity ratio of 53.2%49.06%. Rate adjustments are expected to beInterim rates became effective January 1, 2023, subject to refund. Therefund, based on Virginia Commission is expected to rule on theNatural Gas' original requested increase of approximately $69 million. Refunds to customers related to the difference between the approved rates effective September 1, 2023 and the interim rates will be completed later in the thirdfourth quarter 2023.
On September 7, 2022, certain affiliatesJune 15, 2023, the Illinois Commission concluded its review of Southern Companythe Qualifying Infrastructure Plant (QIP) capital investments by Nicor Gas entered into agreementsfor calendar year 2019 under the QIP Rider, also referred to sell two natural gas storage facilities locatedas Investing in California and Texas for an aggregate purchase priceIllinois, program. The Illinois Commission disallowed $32 million of $186the $415 million plus workingof capital and certain other adjustments. On October 20, 2022,investments commissioned in 2019, together with the releaserelated return on investment. Nicor Gas recorded a pre-tax charge to income in the second quarter 2023 of a Southern Company Gas parent guarantee was executed, which resolved a material closing condition. As a result, Southern Company Gas expects to record pre-tax impairment charges totaling approximately $125$38 million ($9528 million after tax) associated with the disallowance of capital investments. The disallowance is reflected on the statement of income as an $8 million reduction to revenues and a $30 million increase in operating expenses. On August 3, 2023, the fourth quarterIllinois Commission denied a rehearing request filed by Nicor Gas. On August 24, 2023, Nicor Gas filed a notice of appeal with the Illinois Appellate Court. Nicor Gas defends these investments in infrastructure as prudently incurred. The Illinois Commission has not yet conducted its review for calendar years 2020 through 2022 or the nine months ended September 30, 2023. Any further disallowance by the Illinois Commission could be material.
The ultimate outcome of these matters cannot be determined at this time. See Note (B) to the Condensed Financial Statements under "Southern Company Gas" herein for additional information.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
2022. See Note (K) to the Condensed Financial Statements under "Southern Company Gas" herein for additional information.
The ultimate outcome of these matters cannot be determined at this time.
RESULTS OF OPERATIONS
Southern Company
Net Income
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$37133.7$1,00338.5
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$(50)(3.4)$(490)(13.6)
Consolidated net income attributable to Southern Company was $1.5 billion ($1.36 per share) in the third quarter 20222023 was $1.4 billion ($1.30 per share) compared to $1.1$1.5 billion ($1.041.36 per share) for the corresponding period in 2021. Consolidated net income attributable to Southern Company2022. The decrease was $3.6 billion ($3.38 per share) for year-to-date 2022 compared to $2.6 billion ($2.46 per share) for the corresponding period in 2021. The increases were primarily due to decreasesan increase of $249$172 million and $589 million in the third quarter and year-to-date 2022, respectively, in after-tax charges related to the construction of Plant Vogtle Units 3 and 4, increaseshigher depreciation and amortization, and higher interest expense, partially offset by an increase in retail electric revenues associated with warmer weather and rates and pricing, warmerlower non-fuel operations and maintenance costs, a decrease in income tax expense, and an increase in other revenues.
Consolidated net income attributable to Southern Company for year-to-date 2023 was $3.1 billion ($2.86 per share) compared to $3.6 billion ($3.38 per share) for the corresponding period in 2022. The decrease was primarily due to an increase of $133 million in after-tax charges related to the construction of Plant Vogtle Units 3 and 4, higher depreciation and amortization, higher interest expense, and a decrease in retail electric revenues associated with milder weather in the first and sales growth,second quarters of 2023 compared to the corresponding periods in 2022, partially offset by lower non-fuel operations and increasesmaintenance costs, an increase in other revenues, an increase in natural gas revenues from base rate increases and continued infrastructure replacement, partially offset by higher non-fuel operations and maintenance costs. The increase for year-to-date 2022 also reflects after-tax charges totaling $67 milliona decrease in 2021 related to the PennEast Pipeline project at Southern Company Gas.income tax expense.
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 Power – Nuclear Construction"Power" for additional information regarding Plant Vogtle Units 3 and 4 and Note 7 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information on the PennEast Pipeline project.information.
Retail Electric Revenues
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$1,41031.0$2,87125.0
In the third quarter 2022,2023, retail electric revenues were $6.0$5.1 billion compared to $4.6$6.0 billion for the corresponding period in 2021.2022. For year-to-date 2022,2023, retail electric revenues were $14.4$12.6 billion compared to $11.5$14.4 billion for the corresponding period in 2021.
2022. Details of the changes in retail electric revenues were as follows:
 Third Quarter 2022Year-To-Date 2022
(in millions)(% change)(in millions)(% change)
Retail electric – prior year$4,551 $11,492 
Estimated change resulting from –
Rates and pricing165 3.6 %458 4.0 %
Sales growth73 1.6 158 1.4 
Weather26 0.6 188 1.6 
Fuel and other cost recovery1,146 25.2 2,067 18.0 
Retail electric – current year$5,961 31.0 %$14,363 25.0 %
 Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
Rates and pricing$76 1.3 %$63 0.4 %
Sales decline(28)(0.5)(48)(0.3)
Weather132 2.2 (194)(1.4)
Fuel and other cost recovery(1,002)(16.8)(1,587)(11.0)
Retail electric revenues$(822)(13.8)%$(1,766)(12.3)%
Revenues associated with changes in rates and pricing increased in the third quarter and year-to-date 2023 when compared to the corresponding periods in 2022 primarily due to base tariff increases in accordance with Georgia Power's 2022 ARP and an increase in Rate CNP Compliance revenues at Alabama Power, partially offset by lower contributions from commercial and industrial customers with variable demand-driven pricing and a decrease in the revenues recognized under the NCCR tariff, both at Georgia Power. In addition, in the third quarter and year-to-date 2023, revenues associated with Rate CNP Depreciation increased $94 million and $234 million, respectively, and were fully offset by customer bill credits related to the flowback of excess accumulated deferred income taxes at Alabama Power. See Note 2 to the financial statements under "Alabama Power" and "Georgia Power" 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)
Revenues associated withattributable to changes in rates and pricing increasedsales decreased in the third quarter and year-to-date 20222023 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 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 third quarter and year-to-date 2022 when compared to the corresponding periods in 2021.2022. Weather-adjusted residential KWH sales increased 1.3%decreased 1.8% and 0.4% in the third quarter and year-to-date 2022, respectively, and weather-adjusted commercial KWH sales increased 2.0% in both the third quarter and year-to-date 2022 when compared to the corresponding periods in 2021 primarily due to customer growth. In addition, commercial customer usage increased in the third quarter and year-to-date 2022 and residential customer usage decreased for year-to-date 2022 when compared to the corresponding periods in 2021 as customers return to pre-pandemic levels of activity outside the home. Industrial KWH sales increased 2.2% and 2.6% in the third quarter and year-to-date 2022,2023, respectively, when compared to the corresponding periods in 20212022 primarily due to increasesdecreased customer usage, partially offset by customer growth. Weather-adjusted commercial KWH sales increased 1.3% in both the third quarter and year-to-date 2023 when compared to the corresponding periods in 2022 primarily due to increased customer usage and customer growth. Industrial KWH sales decreased 2.3% and 2.1% in the pipelinethird quarter and paper sectors, partially offset byyear-to-date 2023, respectively, when compared to the corresponding periods in 2022 primarily due to a decrease in the chemicals and forest products sectors. Also contributing to the year-to-date 2023 industrial KWH sales decrease was a decrease in the textiles sector.
Fuel and other cost recovery revenues increased $1.1decreased $1.0 billion and $2.1$1.6 billion in the third quarter and year-to-date 2022,2023, respectively, compared to the corresponding periods in 20212022 primarily due to higherlower 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.
Wholesale Electric Revenues
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$46663.7$97653.6
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$(470)(39.3)$(868)(31.0)
In the third quarter 2022,2023, wholesale electric revenues were $1.2$0.7 billion compared to $731 million for the corresponding period in 2021. For year-to-date 2022, wholesale electric revenues were $2.8 billion compared to $1.8$1.2 billion for the corresponding period in 2021.2022. The increases weredecrease was primarily due to increasesa decrease of $437$452 million and $930 million in the third quarter and year-to-date 2022, respectively, in energy revenues as a result of fuel and purchased power price increasesdecreases when compared to the corresponding periodsperiod in 2021, an increase2022 and a net decrease in the volume of KWHs sold primarily associated with natural gas PPAs at Southern Power, and increased opportunityPower. In addition, a decrease in capacity revenues of $18 million primarily resulted from power sales agreements that ended in May 2023 at Alabama Power, partially offset by an increase related to new capacity contracts at Georgia Power.
For year-to-date 2023, wholesale electric revenues were $1.9 billion compared to $2.8 billion for the corresponding period in 2022. The decrease was primarily due to warmer weather.a decrease of $892 million in energy revenues as a result of fuel and purchased power price decreases when compared to the corresponding period in 2022 and a net decrease in the volume of KWHs sold primarily associated with natural gas PPAs at Southern Power. The decrease in energy revenues was partially offset by an increase in capacity revenues of $24 million primarily resulting from a net increase in capacity sales from natural gas PPAs at Southern Power and an increase related to new capacity contracts at Georgia 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
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
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
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$63.4$295.5
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$189.7$488.7
In the third quarter 2022,2023, other electric revenues were $185$203 million compared to $179$185 million for the corresponding period in 2021.2022. The increase was primarily due to increases of $14$10 million resulting from receipts of liquidated damages associated with generation facility production guarantees and an arbitration interim award at Southern Power, $10 million in retail solar program fees at Georgia Power, and $9 million in transmission revenues primarily associated with open access transmission tariff sales, and $7partially offset by a decrease of $11 million in cogeneration steam revenuesrevenue primarily associated with higherlower natural gas prices at Alabama Power.
For year-to-date 2023, other electric revenues were $602 million compared to $554 million for the corresponding period in 2022. The increase was primarily due to increases of $19 million resulting from receipts of liquidated damages associated with generation facility production guarantees and an arbitration interim award at Southern Power, partially offset by a $14$18 million increasein transmission revenues primarily associated with open access transmission tariff sales, $18 million in realized lossesgains associated with price stability products for retail customers on variable demand-driven pricing tariffs at Georgia Power.
For year-to-date 2022, other electric revenues were $554 million compared to $525 million for the corresponding period in 2021. The increase was primarily due to increases of $41 million in transmission revenues primarily associated with open access transmission tariff sales, $15 million in cogeneration steam revenues associated with higher natural gas prices at Alabama Power, and $13$18 million in outdoor lighting sales at Georgia Power, partially offset by a decrease of $26 million resulting from the termination of a transmission service contract and an increase of $21$23 million in realized lossescogeneration steam revenue primarily associated with price stability productslower natural gas prices at Alabama Power.
See Note (C) to the Condensed Financial Statements under "General Litigation Matters – Southern Power" herein for retail customers on variable demand-driven pricing tariffs, both at Georgia Power.additional information.
Natural Gas Revenues
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$23437.6$1,00433.5
In the third quarter 2022,2023, natural gas revenues were $857 million compared to $623 million for the corresponding period in 2021. For year-to-date 2022, natural gas revenues were $4.0$0.7 billion compared to $3.0$0.9 billion for the corresponding period in 2021.
2022. For year-to-date 2023, natural gas revenues were $3.4 billion compared to $4.0 billion for the corresponding period in 2022. Details of the changes in natural gas revenues were as follows:
Third Quarter 2022Year-To-Date 2022
(in millions)(% change)(in millions)(% change)
Natural gas revenues – prior year$623 $2,994 
Estimated change resulting from –
Infrastructure replacement programs and base rate changes54 8.7 %186 6.2 %
Gas costs and other cost recovery172 27.6 955 31.9 
Gas marketing services1 0.2 14 0.5 
Wholesale gas services— — (187)(6.2)
Other7 1.1 36 1.1 
Natural gas revenues – current year$857 37.6 %$3,998 33.5 %
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
Infrastructure replacement programs and rate changes$9 1.1 %$97 2.4 %
Gas costs and other cost recovery(181)(21.1)(645)(16.1)
Gas marketing services(22)(2.6)(44)(1.1)
Other26 3.0 11 0.3 
Natural gas revenues$(168)(19.6)%$(581)(14.5)%
Revenues from infrastructure replacement programs and base rate changes at the natural gas distribution utilities increased in the third quarter and year-to-date 20222023 compared to the corresponding periods 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. The year-to-date 2023 increase was partially offset by a regulatory disallowance at Nicor Gas. See Note 2 to the financial statements under "Southern Company Gas – Rate Proceedings" in Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements under "Southern Company Gas – Infrastructure Replacement Programs and Capital Projects" herein for additional information.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Revenues associated withfrom gas costs and other cost recovery increaseddecreased in the third quarter and year-to-date 20222023 compared to the corresponding periods in 20212022 primarily due to higherlower natural gas cost recovery.recovery associated with lower natural gas prices, the timing of natural gas purchases, and 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 increased fordecreased in the third quarter and year-to-date 20222023 compared to the corresponding periodperiods in 20212022 primarily due to higher commoditylower natural gas prices and higher sales to commercial customers.
The changes in year-to-date 2022 revenues related to Southern Company Gas' 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.lower variable price spreads.
Other Revenues
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$2415.6$61.2
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$4424.7$14327.6
In the third quarter 2022,2023, other revenues were $178$222 million compared to $154$178 million for the corresponding period in 2021. The increase was primarily due to a $15 million increase in unregulated sales at the traditional electric operating companies primarily associated with power delivery construction and maintenance projects, energy conservation projects, and lighting. Also contributing to the increase was a $9 million increase primarily related to distributed infrastructure projects at PowerSecure.
2022. For year-to-date 2022,2023, other revenues were $519$662 million compared to $513$519 million for the corresponding period in 2021.2022. The increase wasincreases in the third quarter and year-to-date 2023 were primarily due to increases of $10$9 million and $41 million, respectively, in unregulated sales associated with power delivery construction and maintenance projects at MississippiGeorgia Power, $12 million and $40 million, respectively, related to distributed infrastructure projects at PowerSecure, $9 million and $26 million, respectively, primarily related to sales associated with commercial customers at Southern Linc, $4 million and $20 million, respectively, in unregulated energy conservation projects at Georgia Power, $8 million in unregulated lighting sales of products and services at Alabama Power, and $5$11 million primarily related to distribution infrastructure projects at PowerSecure, partially offset by a $28and $16 million, decreaserespectively, associated with the timing of revenue recognition for a large, ongoing power delivery construction and maintenance contractenergy conservation projects at Georgia Power.
Fuel and Purchased Power Expenses
Third Quarter 2022 vs.
Third Quarter 2021
Year-To-Date 2022 vs.
Year-To-Date 2021
Third Quarter 2023 vs.
Third Quarter 2022
Year-To-Date 2023 vs.
Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change) (change in millions)(% change)(change in millions)(% change)
FuelFuel$1,189 96.4$2,319 79.1Fuel$(1,056)(43.6)$(1,873)(35.7)
Purchased powerPurchased power357 124.0573 80.5Purchased power(438)(67.9)(605)(47.1)
Total fuel and purchased power expensesTotal fuel and purchased power expenses$1,546 $2,892 Total fuel and purchased power expenses$(1,494)$(2,478)
In the third quarter 2022,2023, total fuel and purchased power expenses were $3.1$1.6 billion compared to $1.5$3.1 billion for the corresponding period in 2021.2022. The increasedecrease was primarily the result ofdue to a $1.2 billion increasedecrease in the average cost of fuel and purchased power and a $310$262 million increasenet decrease in the volume of KWHs generated and purchased.
For year-to-date 2022,2023, total fuel and purchased power expenses were $6.5$4.1 billion compared to $3.6$6.5 billion for the corresponding period in 2021.2022. The increasedecrease was primarily the result ofdue to a $2.4$2.1 billion increasedecrease in the average cost of fuel and purchased power and a $523$349 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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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Details of the Southern Company system's generation and purchased power were as follows:
Third Quarter 2022Third Quarter 2021Year-To-Date 2022Year-To-Date 2021Third Quarter 2023Third Quarter 2022Year-To-Date 2023Year-To-Date 2022
Total generation (in billions of KWHs)(a)(b)
Total generation (in billions of KWHs)(a)(b)
5050141136
Total generation (in billions of KWHs)(a)(b)
5350141141
Total purchased power (in billions of KWHs)
Total purchased power (in billions of KWHs)
952013
Total purchased power (in billions of KWHs)
591420
Sources of generation (percent)(a) —
Sources of generation (percent)(a) —
Sources of generation (percent)(a) —
GasGas54485047Gas54545450
CoalCoal21262224Coal21211822
Nuclear16161617
Nuclear(b)
Nuclear(b)
16161716
HydroHydro2344Hydro2234
Wind, Solar, and OtherWind, Solar, and Other7788Wind, Solar, and Other7788
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)
6.753.385.422.87
Gas(a)
2.806.752.785.42
CoalCoal4.122.823.582.84Coal4.524.124.403.58
Nuclear0.710.780.720.76
Nuclear(b)
Nuclear(b)
0.790.710.740.72
Average cost of fuel, generated (in cents per net KWH)(a)(b)
Average cost of fuel, generated (in cents per net KWH)(a)(b)
5.052.754.072.45
Average cost of fuel, generated (in cents per net KWH)(a)(b)
2.845.052.714.07
Average cost of purchased power (in cents per net KWH)(b)(c)
Average cost of purchased power (in cents per net KWH)(b)(c)
8.946.457.845.77
Average cost of purchased power (in cents per net KWH)(b)(c)
4.808.945.087.84
(a)Excludes Central Alabama Generating Station KWHs and associated cost of fuel through July 12, 2022 as its fuel was 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)Excludes KWHs generated from test period energy at Plant Vogtle Unit 3 prior to its in-service date. The related fuel costs are charged to CWIP in accordance with FERC guidance. See Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction" herein for additional information on Plant Vogtle Units 3 and 4.
(c)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 third quarter 2022,2023, fuel expense was $2.4$1.4 billion compared to $1.2$2.4 billion for the corresponding period in 2021.2022. The increasedecrease was primarily due to a 99.7% increase58.5% decrease in the average cost of natural gas per KWH generated, partially offset by a 52.7% decrease in the volume of KWHs generated by hydro, a 46.1% increase in the average cost of coal per KWH generated, and a 13.0%10.0% increase in the volume of KWHs generated by natural gas, partially offset bynuclear, a 19.0% decrease in the volume of KWHs generated by coal.
For year-to-date 2022, fuel expense was $5.2 billion compared to $2.9 billion for the corresponding period in 2021. The increase was primarily due to an 88.9% increase in the average cost of natural gas per KWH generated, a 26.1%9.7% increase in the average cost of coal per KWH generated, a 9.6%6.4% increase in the volume of KWHs generated by coal, and a 6.0% increase in the volume of KWHs generated by natural gas.
For year-to-date 2023, fuel expense was $3.4 billion compared to $5.2 billion for the corresponding period in 2022. The decrease was primarily due to a 48.7% decrease in the average cost of natural gas per KWH generated and a 20.4% decrease in the volume of KWHs generated by coal, partially offset by a 22.9% increase in the average cost of coal per KWH generated, an 8.7%11.0% decrease in the volume of KWHs generated by hydro, partially offset byand a 4.1% decrease9.0% increase in the volume of KWHs generated by coal.natural gas.
Purchased Power
In the third quarter 2022,2023, purchased power expense was $645$207 million compared to $288$645 million for the corresponding period in 2021.2022. For year-to-date 2023, purchased power expense was $0.7 billion compared to $1.3 billion for the corresponding period in 2022. The increase wasdecreases for the third quarter and year-to-date 2023 were primarily due to a 38.6% increasedecreases of 46.3% and 35.2%, respectively, in the average cost per KWH purchased primarily due to highera decrease in natural gas and coal prices and an 87.2% increase in the volumedecreases of KWHs purchased.
For year-to-date 2022, purchased power expense was $1.3 billion compared to $712 million for the corresponding period in 2021. The increase was primarily due to a 35.9% increase in the average cost per KWH purchased primarily due to higher natural gas48.1% and coal prices and a 50.9% increase29.0%, respectively, in the volume of KWHs purchased.
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    Table of Contents                                Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Energy purchases will vary depending on demand for energy within the Southern Company system's electric service territory, the market prices of wholesale energy as compared to the cost of the Southern Company system's generation, and the availability of the Southern Company system's generation.
Cost of Natural Gas
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$165N/M$89795.1
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$(192)(65.3)$(641)(34.8)
Excluding Atlanta Gas Light, which does not sell natural gas to end-use customers, natural gas distribution rates include provisions to adjust billings for fluctuations in natural gas costs. Therefore, gas costs recovered through natural gas revenues generally equal the amount expensed in cost of natural gas and do not affect net income from the natural gas distribution utilities. Cost of natural gas at the natural gas distribution utilities represented 78%76% and 87%84% of the total cost of natural gas in the third quarter and year-to-date 2022,2023, respectively.
In the third quarter 2022,2023, cost of natural gas was $294$102 million compared to $129$294 million for the corresponding period in 2021.2022. For year-to-date 2022,2023, cost of natural gas was $1.8$1.2 billion compared to $943 million$1.8 billion for the corresponding period in 2021.2022. The increasesdecreases reflect higherlower gas cost recovery as a result of increasesdecreases of 104%69% and 113%60% in natural gas prices in the third quarter and year-to-date 2022,2023, respectively, compared to the corresponding periods in 2021.2022.
Cost of Other Sales
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$2129.6$207.8
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$3437.0$10638.5
In the third quarter 2022,2023, cost of other sales was $92$126 million compared to $71$92 million for the corresponding period in 2021. The increase was primarily related to distributed infrastructure projects at PowerSecure.
For year-to-date 2022, cost of other sales was $275 million compared to $255 million for the corresponding period in 2021.2022. The increase was primarily due to increases of $32$12 million related to distributed infrastructure projects at PowerSecure, $9 million related to unregulated power delivery construction and maintenance projects at Mississippi Power, and $9 million primarily associated with unregulated merchandising and energy services expenses at Alabama Power, partially offset by a decrease of $32 million associated withfrom unregulated power delivery construction and maintenance projects at Georgia Power.Power, $7 million at Southern Linc primarily related to sales associated with commercial customers, $6 million related to distributed infrastructure projects at PowerSecure, and $5 million related to energy service contracts at Southern Company Gas.
Other Operations and Maintenance Expenses
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$1017.0$3648.6
In the third quarter 2022,For year-to-date 2023, cost of other operations and maintenance expenses were $1.5 billionsales was $381 million compared to $1.4 billion$275 million for the corresponding period in 2021.2022. The increase was primarily due to increases of $49$35 million from unregulated power delivery construction and maintenance projects at Georgia Power, $23 million at Southern Linc primarily related to sales associated with commercial customers, $21 million related to distributed infrastructure projects at PowerSecure, $20 million related to energy service contracts at Southern Company Gas, and $10 million in expenses related to unregulated products and services at Alabama Power.
Other Operations and Maintenance Expenses
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$(103)(6.7)$(216)(4.7)
In the third quarter 2023, other operations and maintenance expenses were $1.4 billion compared to $1.5 billion for the corresponding period in 2022. The decrease was primarily due to decreases of $88 million in transmission and distribution expenses primarily related to line maintenance, $18$45 million in customer accounts, customer service, and sales expenses primarily related to bad debt expenses, payment convenience fees, and labor, $12storm damage recovery as authorized in Georgia Power's 2022 ARP, $22 million in compensationtechnology infrastructure and benefit expenses,application production costs, and $10$14 million in generation expenses primarily related to scheduled outage and maintenance costs.
For year-to-date 2022, other operations andnon-outage maintenance expenses were $4.6 billion compared to $4.3 billion for the corresponding period in 2021. Excluding $53and planned outages, partially offset by a $23 million of expenses related to Sequent in 2021, other operations and
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
increase in generation environmental projects primarily at Georgia Power and a $14 million gain recorded in the third quarter 2022 as a result of the early termination of the transition services agreement related to the 2019 sale of Gulf Power.
For year-to-date 2023, other operations and maintenance expenses increased $417 million.were $4.4 billion compared to $4.6 billion for the corresponding period in 2022. The increasedecrease was primarily due to increasesdecreases of $135$147 million in transmission and distribution expenses primarily related to line maintenance, $90$136 million in storm damage recovery as authorized in Georgia Power's 2022 ARP, $91 million in generation non-outage maintenance expenses primarily related to scheduled outage and maintenance costs, $38 million in compensationplanned outages, and benefit expenses, $30$32 million in expenses at Southern Company Gas passed through directly to customers primarily related to bad debt and $21energy efficiency programs at Southern Company Gas, partially offset by a $47 million increase in customer accounts, customer service,technology infrastructure and sales expensesapplication production costs, a $43 million increase in generation environmental projects primarily at Georgia Power, $30 million related to bad debt expenses, payment convenience fees,a regulatory disallowance at Nicor Gas, a $25 million decrease in nuclear property insurance refunds at Georgia Power and labor.Alabama Power, a $16 million increase in employee compensation and benefits, and a $14 million gain recorded in the third quarter 2022 as a result of the early termination of the transition services agreement related to the 2019 sale of Gulf Power.
See Note (B) to the Condensed Financial Statements under "Southern Company Gas – Infrastructure Replacement Programs and Capital Projects" herein for additional information on the regulatory disallowance at Nicor Gas and 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
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$262.9$702.6
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$22124.0$63723.4
In the third quarter 2022,2023, depreciation and amortization was $922$1.1 billion compared to $0.9 billion for the corresponding period in 2022. For year-to-date 2023, depreciation and amortization was $3.4 billion compared to $2.7 billion for the corresponding period in 2022. The increases in the third quarter and year-to-date 2023 were primarily due to increases of $181 million and $544 million, respectively, resulting from higher depreciation rates at Alabama Power and Georgia Power and increases of $28 million and $74 million, respectively, from additional plant in service. See Notes 2 and 5 to the financial statements under "Alabama Power" and "Depreciation and Amortization," respectively, in Item 8 of the Form 10-K for additional information.
Taxes Other Than Income Taxes
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$(11)(3.1)$30.3
In the third quarter 2023, taxes other than income taxes were $341 million compared to $896$352 million for the corresponding period in 2021. 2022. The decrease was primarily due to decreases of $15 million in municipal franchise fees resulting from lower retail revenues at Georgia Power, partially offset by an increase of $4 million in property taxes primarily at Georgia Power resulting from an increase in the assessed value of property.
For year-to-date 2022, depreciation and amortization was $2.732023, taxes other than income taxes were $1.08 billion compared to $2.66$1.07 billion for the corresponding period in 2021.2022. The increases wereincrease was primarily due to additional plantincreases of $26 million in service, including continued infrastructure investmentsproperty taxes primarily at the natural gas distribution utilities.
Taxes Other Than Income Taxes
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$4012.8$10410.7
In the third quarter 2022, taxes other than income taxes were $352 million compared to $312 million for the corresponding period in 2021. For year-to-date 2022, taxes other than income taxes were $1.1 billion compared to $969 million for the corresponding period in 2021. The increases primarily reflectGeorgia Power resulting from an increase in the assessed value of property, $18 million in utility license taxes at Alabama Power, and $8 million in payroll taxes primarily at Southern Company Gas, largely offset by decreases of $33 million in municipal franchise fees resulting from lower retail revenues at Georgia Power and an increase$15 million in revenue tax expenses at Southern Company Gas.
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AND RESULTS OF OPERATIONS (Continued)
Estimated Loss on Plant Vogtle Units 3 and 4
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$(334)N/M$(790)N/M
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$230N/M$178N/M
Georgia Power recorded pre-tax charges (credits) to income for the estimated probable loss on Plant Vogtle Units 3 and 4 totaling $(70)$160 million and $264$(70) million in the third quarter 2023 and 2022, respectively, and 2021, respectively,$160 million and $(18) million and $772 million for year-to-date 20222023 and 2021,2022, respectively. The charges (credits) reflectreflected revisions to the total project capital cost forecast to complete construction and start-up of Plant Vogtle Units 3 and 4. See Note (B) to the Condensed Financial Statements herein and Note 2 to the financial statements in Item 8 of the Form 10-K under "Georgia Power – Nuclear Construction" for additional information.
Gain on Dispositions, Net
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$(105)(84.0)$(126)(70.4)
In the third quarter 2022, gain on dispositions, net was $20 million compared to $125 million for the corresponding period in 2021. For year-to-date 2022, gain on dispositions, net was $53 million compared to $179 million for the corresponding period in 2021. The decreases primarily reflect a $121 million gain at Southern Company Gas related to the sale of Sequent in the third quarter 2021, partially offset by a $14 million gain recorded in the third quarter
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AND RESULTS OF OPERATIONS (Continued)
2022 as a result of the early termination of the transition services agreement related to the 2019 sale of Gulf Power. The year-to-date 2022 decrease also 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 integrated transmission system assets at Georgia Power in 2022. See Note 15 to the financial statements under "Southern Power – Development Projects" and "Southern Company Gas – Sale of Sequent" in Item 8 of the Form 10-K for additional information.
Allowance for Equity Funds Used During Construction
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$1020.4$2316.4
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$711.9$3722.7
In the third quarter 2022,2023, allowance for equity funds used during construction was $59$66 million compared to $49$59 million for the corresponding period in 2021.2022. For year-to-date 2022,2023, allowance for equity funds used during construction was $163$200 million compared to $140$163 million for the corresponding period in 2021.2022. The increases were primarily associated with an increase in capital expenditures related to Plant Barry Unit 8 construction, as well as an increase in capital expenditures related to hydro production, both at Alabama Power and transmission and distribution projects relatedPower. Also contributing to grid modernizationthe increase for year-to-date 2023 was an increase in capital expenditures subject to AFUDC at Georgia Power.
Earnings from Equity Method Investments
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$(2)(6.7)$74N/M
For year-to-date 2022, earnings from equity method investments were $109 million compared to $35 million for the corresponding period in 2021. The increase was primarily due to pre-tax impairment charges in 2021 totaling $84 million related to the PennEast Pipeline project at Southern Company Gas, partially offset by a $16 million decrease at Southern Holdings primarily due to a decrease in investment income. See Note 72 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K and Note (E)(B) to the Condensed Financial Statements herein under "Southern Company Gas""Alabama Power – Certificates of Convenience and Necessity" for additional information.
Interest Expense, Net of Amounts Capitalized
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$6013.3$1098.1
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$10921.3$35124.0
In the third quarter 2022,2023, interest expense, net of amounts capitalized was $511$620 million compared to $451$511 million for the corresponding period in 2021. The increase was primarily due to increases of approximately $28 million due to higher average outstanding borrowings and $28 million due to higher interest rates.
2022. For year-to-date 2022,2023, interest expense, net of amounts capitalized was $1.5$1.8 billion compared to $1.4$1.5 billion for the corresponding period in 2021.2022. The increase wasincreases in the third quarter and year-to-date 2023 primarily duereflect approximately $63 million and $222 million, respectively, related to higher interest rates and $48 million and $134 million, respectively, related to higher average outstanding borrowings.
See FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" and "Financing Activities" herein for additional information on borrowings.
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AND RESULTS OF OPERATIONS (Continued)
Other Income (Expense), Net
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$10.8$12442.8
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$96.8$143.4
For year-to-date 2022,2023, other income (expense), net was $414$428 million compared to $290$414 million for the corresponding period in 2021.2022. The increase was primarily due to charitable contributions of $101a $29 million increase in interest income, a $13 million decrease in non-operating benefit-related expenses at Alabama Power, an $8 million gain on investments at Southern Company Gas during the first and second quarters of 2021Holdings, and a $44$6 million increasedecrease in non-operating marketing expenses at Georgia Power, partially offset by decreases of $30 million in non-service cost-related retirement benefits income.income and $13 million in customer charges related to contributions in aid of construction at Georgia Power. See Note (H) to the Condensed Financial Statements herein for additional information.
Income Taxes
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$4211.3$34162.0
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$(117)(28.3)$(399)(44.8)
In the third quarter 2022,2023, income taxes were $414$297 million compared to $372$414 million for the corresponding period in 2021.2022. For year-to-date 2022,2023, income taxes were $891$492 million compared to $550$891 million for the corresponding period in 2021.2022. The increasesdecreases were primarily due to higherlower pre-tax earnings, an increase in the flowback of certain excess deferred income taxes at Alabama Power, and a decrease in a valuation allowance on certain state tax credit carryforwards at Georgia Power in 2023, partially offset by $113 million of additional tax expense in 2021 resulting from Southern Company Gas' sale of Sequenta decrease in the third quarter 2021. Theflowback of certain excess deferred income taxes at Georgia Power that ended in 2022. Also contributing to the year-to-date 2022 increase2023 decrease was also due to 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 Income (Loss) Attributable to Noncontrolling Interests
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$7N/M$(28)N/M
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$(2)(16.7)$(13)(23.6)
Substantially all noncontrolling interests relate to renewable projects at Southern Power. In the third quarter 2022,2023, net income attributable to noncontrolling interests was $12$10 million compared to $5$12 million for the corresponding period in 2021.2022. The increasedecrease was primarily due to lower$7 million in higher HLBV loss allocations to Southern Power's wind tax equity partners, including losslargely offset by an allocation impacts associated with the Garland battery energy storage facility being placed in service in the third quarter 2021, and higher income allocationsof $6 million to Southern Power's equity partners.partners related to an arbitration interim award.
For year-to-date 2022,2023, net loss attributable to noncontrolling interests was $55$68 million compared to $27$55 million for the corresponding period in 2021.2022. The increased lossincrease was primarily due to $16 million in higher HLBV loss allocations to Southern Power's wind tax equity partners partially offset by loss allocation impacts associated with the Garland battery energy storage facility being placedand $12 million in service in the third quarter 2021 and higherlower income allocations to Southern Power's equity partners, partially offset by $15 million in lower loss allocations to Southern Power's battery energy storage partners.
See Notes 9 and 15Note (C) to the financial statementsCondensed Financial Statements under "Lessor" and "Southern Power," respectively, in Item 8 of the Form 10-K"General Litigation Matters – Southern Power" herein for additional information.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Alabama Power
Net Income
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$265.2$675.6
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$407.6$(124)(9.9)
Alabama Power's net income after dividends on preferred stock in the third quarter 20222023 was $525$565 million compared to $499$525 million for the corresponding period in 2021. 2022. The increase was primarily due to a decrease in income tax expense and an increase in retail revenues associated with Rate CNP Compliance and warmer weather in Alabama Power's service territory in the third quarter 2023 compared to the corresponding period in 2022. These increases to income were partially offset by an increase in depreciation and amortization associated with a change in depreciation rates effective January 2023.
Alabama Power's net income after dividends on preferred stock for year-to-date 20222023 was $1.26$1.13 billion compared to $1.19$1.26 billion for the corresponding period in 2021. These increases were2022. The decrease was primarily due to an increase in depreciation rates effective January 2023, a decrease in retail revenues associated with warmermilder weather in Alabama Power's service territory in 2022the first and second quarters of 2023 compared to the corresponding periods in 20212022, and sales growth,an increase in capacity-related expenses. These decreases to income were partially offset by higher non-fuel operationsa decrease in income tax expense and maintenance costs.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.
Retail Revenues
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$35721.6$65815.1
In the third quarter 2022,2023, retail revenues were $2.01$1.86 billion compared to $1.65$2.01 billion for the corresponding period in 2021.2022. For year-to-date 2022,2023, retail revenues were $5.02$4.71 billion compared to $4.36$5.02 billion for the corresponding period in 2021.
2022. Details of the changes in retail revenues were as follows:
 Third Quarter 2022Year-To-Date 2022
(in millions)(% change)(in millions)(% change)
Retail – prior year$1,651 $4,357 
Estimated change resulting from –
Rates and pricing3 0.2 %7 0.2 %
Sales growth20 1.2 53 1.2 
Weather25 1.5 88 2.0 
Fuel and other cost recovery309 18.7 510 11.7 
Retail – current year$2,008 21.6 %$5,015 15.1 %
 
Third Quarter 2023 vs.
Third Quarter 2022
Year-To-Date 2023 vs.
 Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
Rates and pricing$62 3.1 %$178 3.5 %
Sales decline(2)(0.1)(36)(0.7)
Weather35 1.7 (84)(1.7)
Fuel and other cost recovery(243)(12.1)(365)(7.3)
Retail revenues$(148)(7.4)%$(307)(6.2)%
Revenues attributable toassociated with changes in salesrates and pricing increased inthe third quarter and year-to-date 20222023 when compared to the corresponding periods in 2021. Weather-adjusted residential KWH sales decreased 0.4% and 0.3%2022 primarily due to an increase in Rate CNP Compliance revenues. In addition, in the third quarter and year-to-date 2023, revenues associated with Rate CNP Depreciation increased $94 million and $234 million, respectively, and were fully offset by customer bill credits 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 in the third quarter and year-to-date 2023 when compared to the corresponding periods in 2022. Weather-adjusted residential KWH sales decreased 0.8% in the third quarter 2023 compared to the corresponding period in 2022 primarily due to decreased customer usage and remained flat for year-to-date 2023 when compared to the corresponding period in 2022. Weather-adjusted commercial KWH sales increased 1.1% and 0.8% in the third quarter and year-to-date 2023, respectively, when compared to the corresponding periods in 20212022 primarily due to decreasedincreases in customer usage. Weather-adjusted commercialusage and customer growth. Industrial KWH sales decreased 0.7% in the third quarter 2022 when compared to the corresponding period in 2021 primarily due to decreased customer usage. Weather-adjusted commercial KWH sales were flat for year-to-date 2022 when compared to the corresponding period in 2021. Industrial KWH sales increased 2.9%4.8% and 2.3%3.9% in the third quarter and year-to-date 2022,2023, respectively, when compared to the corresponding periods in 2021 primarily due to increases in the forest product and pipeline sectors, partially offset by decreases in the chemicals sector.
Fuel and other cost recovery revenues increased in the third quarter and year-to-date 2022 when compared to the corresponding periods in 2021 primarily due to increases in the volume of KWHs generated and the average cost of fuel.
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AND RESULTS OF OPERATIONS (Continued)
the chemicals and forest products sectors. Also contributing to the industrial KWH sales decrease in the third quarter 2023 was a decrease in the primary metals sector.
Fuel and other cost recovery revenues decreased in the third quarter and year-to-date 2023 when compared to the corresponding periods in 2022 primarily as a result of lower fuel and purchased power 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
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$143N/M$23783.2
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$(144)(57.6)$(164)(31.4)
In the third quarter 2022,2023, wholesale revenues from sales to non-affiliates were $250$106 million compared to $107$250 million for the corresponding period in 2021. 2022. The decrease was primarily due to a 47.0% decrease in the volume of KWHs sold as a result of power sales agreements that ended in May 2023 and a 19.8% decrease in the price of energy primarily as a result of lower natural gas prices in the third quarter 2023 compared to the corresponding period in 2022.
For year-to-date 2022,2023, wholesale revenues from sales to non-affiliates were $522$358 million compared to $285$522 million for the corresponding period in 2021.2022. The increases for the third quarter and year-to-date 2022 weredecrease was primarily due to increases of 75.9% and 41.8%, respectively,a 20.4% decrease in the price of energy due to higher natural gas prices, as well as increases of 32.3% and 29.3%, respectively, in KWH salesprimarily as a result of increased opportunity saleslower natural gas prices and a 13.8% decrease in the volume of KWHs sold due to warmerlower customer demand as a result of milder weather in the third quarter and year-to-date 20222023 compared to the corresponding periodsperiod in 2021.2022.
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.
Wholesale Revenues – Affiliates
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$1732.1$6156.0
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$(56)(80.0)$(127)(74.7)
In the third quarter 2022,2023, wholesale revenues from sales to affiliates were $70$14 million compared to $53$70 million for the corresponding period in 2021.2022. For year-to-date 2023, wholesale revenues from sales to affiliates were $43 million compared to $170 million for the corresponding period in 2022. The increase wasdecreases for the third quarter and year-to-date 2023 were primarily due to a 142.2% increasedecreases of 60.6% and 45.6%, respectively, in the price of energy due to higherlower natural gas prices partially offset by a 45.7% decreaseand 51.2% and 53.5%, respectively, in the volume of KWH sales due to the availabilitylower customer demand as a result of lower cost Southern Company system resourcesmilder weather in 2023 compared to Alabama Power's generation.
For year-to-date 2022, wholesale revenues from sales to affiliates were $170 million compared to $109 million for the corresponding periodperiods in 2021. The increase was primarily due to an 84.7% increase in the price of energy due to higher natural gas prices, partially offset by a 15.3% decrease in KWH sales due to the availability of lower cost Southern Company system resources compared to Alabama Power's generation.2022.
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.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Other Revenues
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$2324.7$4817.9
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$(13)(11.2)$(5)(1.6)
In the third quarter 2022,2023, other revenues were $116$103 million compared to $93$116 million for the corresponding period in 2021.2022. For year-to-date 2022,2023, other revenues were $316$311 million compared to $268$316 million for the corresponding period in 2021.2022. The decreases for the third quarter and year-to-date 2022 increases2023 were primarily due to increasesdecreases of $7$11 million and $15$23 million, respectively, in cogeneration steam revenue primarily associated with higherlower natural gas prices, $6 million and $13 million, respectively, in transmission revenues primarily due to open access transmission tariff sales, and $3 million and $8 million, respectively, in unregulated lighting sales.prices. The decrease for year-to-date 2022 increase also included2023 was largely offset by a $5$20 million increase in energy services revenue.unregulated sales of products and services.
Fuel and Purchased Power Expenses
Third Quarter 2022 vs.
Third Quarter 2021
Year-To-Date 2022 vs.
Year-To-Date 2021
Third Quarter 2023 vs.
Third Quarter 2022
Year-To-Date 2023 vs.
Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)(change in millions)(% change)(change in millions)(% change)
FuelFuel$293 78.6 $472 50.9 Fuel$(264)(39.6)$(386)(27.6)
Purchased power – non-affiliatesPurchased power – non-affiliates109 143.4 174 100.6 Purchased power – non-affiliates(143)(77.3)(150)(43.2)
Purchased power – affiliatesPurchased power – affiliates68 151.1 146 128.1 Purchased power – affiliates(33)(29.2)(67)(25.8)
Total fuel and purchased power expensesTotal fuel and purchased power expenses$470 $792 Total fuel and purchased power expenses$(440)$(603)
In the third quarter 2022,2023, total fuel and purchased power expenses were $964$524 million compared to $494$964 million for the corresponding period in 2021.2022. For year-to-date 2023, total fuel and purchased power expenses were $1.40 billion compared to $2.01 billion for the corresponding period in 2022. The increase was primarilydecreases for the third quarter and year-to-date 2023 were due to a $257decreases of $301 million increaseand $540 million, respectively, in the average cost of fuel and purchased power and a $213decreases of $139 million increase related to the volume of KWHs generated and purchased.
For year-to-date 2022, total fuel and purchased power expenses were $2.01 billion compared to $1.21 billion for the corresponding period in 2021. The increase was primarily due to a $518$63 million, increase in the cost of fuel and purchased power and a $274 million increaserespectively, related to the volume of KWHs generated and purchased.
Fuel and purchased power energy transactions do not have a significant impact on earnings, since energy expenses are generally offset by energy revenues through Alabama Power's energy cost recovery clause. See Note 2 to the financial statements under "Alabama Power – Rate ECR" in Item 8 of the Form 10-K for additional information.
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Details of Alabama Power's generation and purchased power were as follows:
Third Quarter 2022Third Quarter 2021Year-To-Date 2022Year-To-Date 2021Third Quarter 2023Third Quarter 2022Year-To-Date 2023Year-To-Date 2022
Total generation (in billions of KWHs)(a)
Total generation (in billions of KWHs)(a)
16164545
Total generation (in billions of KWHs)(a)
15164345
Total purchased power (in billions of KWHs)
Total purchased power (in billions of KWHs)
4295
Total purchased power (in billions of KWHs)
3489
Sources of generation (percent)(a) —
Sources of generation (percent)(a) —
Sources of generation (percent)(a) —
CoalCoal47504547Coal40473545
GasGas31283023
NuclearNuclear22242425Nuclear26222724
Gas28182319
HydroHydro3889Hydro3388
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) —
CoalCoal3.892.853.402.78Coal3.573.893.483.40
Gas(a)
Gas(a)
3.076.553.055.20
NuclearNuclear0.670.730.670.71Nuclear0.680.670.680.67
Gas(a)
6.553.035.202.68
Average cost of fuel, generated (in cents per net KWH)(a)
Average cost of fuel, generated (in cents per net KWH)(a)
3.912.333.132.20
Average cost of fuel, generated (in cents per net KWH)(a)
2.643.912.513.13
Average cost of purchased power (in cents per net KWH)(b)
Average cost of purchased power (in cents per net KWH)(b)
8.557.968.336.70
Average cost of purchased power (in cents per net KWH)(b)
4.578.554.978.33
(a)Excludes Central Alabama Generating Station KWHs and associated cost of fuel through July 12, 2022 as its fuel was 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 third quarter 2022,2023, fuel expense was $666$402 million compared to $373$666 million for the corresponding period in 2021.2022. The increasedecrease was primarily due to a 116.2% increase53.1% decrease in the average cost of natural gas per KWH generated, which excludes tolling agreements, a 36.5% increase in the average cost of coal per KWH generated, a 56.8%and an 18.9% decrease in the volume of KWHs generated by hydro facilities as a result of less rainfall in the third quarter 2022 compared to the corresponding period in 2021, and a 46.9% increase in the volume of KWHs generated by natural gas.coal.
For year-to-date 2022,2023, fuel expense was $1.4$1.01 billion compared to $0.9$1.40 billion for the corresponding period in 2021.2022. The increasedecrease was primarily due to a 94.0% increase41.3% decrease in the average cost of natural gas per KWH generated, which excludes tolling agreements, and a 22.3% increase25.3% decrease in the average costvolume of KWHs generated by coal, per KWH generated, an 18.3%partially offset by a 23.4% increase in the volume of KWHs generated by natural gas and an 8.5%a 10.6% decrease in the volume of KWHs generated by hydro facilities as a result of less rainfall for year-to-date 20222023 compared to the corresponding period in 2021.2022.
Purchased Power – Non-Affiliates
In the third quarter 2022,2023, purchased power expense from non-affiliates was $185$42 million compared to $76$185 million for the corresponding period in 2021. The increase2022. For year-to-date 2023, purchased power expense from non-affiliates was primarily due$197 million compared to a 193.7% increase in the volume of KWHs purchased as a result of warmer weather in the third quarter 2022 compared to$347 million for the corresponding period in 2021, partially offset by an 11.2% decrease2022. The decreases for the third quarter and year-to-date 2023 were primarily due to decreases of 41.0% and 37.6%, respectively, in the average cost per KWH purchased due to fixed capacity costs allocated acrosslower purchase prices as a higher levelresult of generation.
For year-to-date 2022, purchased power expense from non-affiliates was $347 million compared to $173 million for the corresponding period in 2021. The increase was primarily due to a 100.5% increaselower natural gas prices and decreases of 64.2% and 21.8%, respectively, 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 an 8.2% increase in the average cost per KWH purchased due to higher natural gasa new PPA that began in July 2022 and coal prices.
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AND RESULTS OF OPERATIONS (Continued)
ended in May 2023.
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 third quarter 2022,2023, purchased power expense from affiliates was $113$80 million compared to $45$113 million for the corresponding period in 2021.2022. For year-to-date 2023, purchased power expense from affiliates was $193 million
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compared to $260 million for the corresponding period in 2022. The increase wasdecreases for the third quarter and year-to-date 2023 were primarily due to an 84.5% increasedecreases of 65.8% and 51.3%, respectively, in the average cost per KWH purchased due to higherlower purchase prices as a result of lower natural gas prices, partially offset by increases of 107.6% and coal prices and a 36.4% increase52.6%, respectively, in the volume of KWHs purchased as a resultdue to the availability of warmer weatherlower cost gas generation in the third quarter 2022 compared to the corresponding period in 2021.
For year-to-date 2022, purchased power expense from affiliates was $260 million compared to $114 million for the corresponding period in 2021. The increase was primarily due to a 71.0% increase in the average cost per KWH purchased due to higher natural gas and coal prices and a 33.6% 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.Southern Company system.
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.
Other Operations and Maintenance Expenses
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$174.2$958.1
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$(7)(1.7)$50.4
In the third quarter 2022,2023, other operations and maintenance expenses were $418$411 million compared to $401$418 million for the corresponding period in 2021. 2022. The decrease was primarily due to decreases of $15 million in transmission and distribution expenses related to line maintenance, $9 million in technology infrastructure and application production costs, and $9 million in certain employee compensation and benefit expenses. The decreases were largely offset by an increase of $26 million in planned outages and generation non-outage maintenance expenses.
For year-to-date 2022,2023, other operations and maintenance expenses were $1.27$1.28 billion compared to $1.18$1.27 billion for the corresponding period in 2021.2022. The increases for the third quarter and year-to-date 2022 wereincrease was primarily due to a $14 million decrease in nuclear property insurance refunds and increases of $18$19 million in expenses related to unregulated products and $41services, $9 million respectively, in transmissiontechnology infrastructure and distributionapplication production costs, and $9 million in customer accounts expenses primarily associated with line maintenance and $6 million and $12 million, respectively, in customer accounts, customer service, and sales expenses primarily associated with labor and bad debt expense. The increase for the third quarter 2022 was partiallyincreases were largely offset by a $15decreases of $21 million decrease in generation expenses primarily associated with scheduledplanned outages and generation non-outage maintenance expenses, $15 million in certain employee compensation and benefit expenses, and $10 million in transmission and distribution related to line maintenance.
Depreciation and Amortization
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$13159.5$39360.3
In the third quarter 2023, depreciation and amortization was $351 million compared to $220 million for the corresponding period in 2022. For year-to-date 2023, depreciation and amortization was $1.05 billion compared to $652 million for the corresponding period in 2022. The year-to-date 2022 increase also included a $24 millionincreases were primarily due to an increase in generation expenses primarily associated with scheduled outagesdepreciation rates effective in 2023. See Notes 2 and maintenance and Rate CNP Compliance-related expenses. 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.
Allowance for Equity Funds Used During ConstructionTaxes Other Than Income Taxes
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
Third Quarter 2023 vs. Third Quarter 2022Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(change in millions)(% change)(change in millions)(% change)(change in millions)(% change)(change in millions)(% change)
$4$428.6$1334.2$43.8$247.8
For year-to-date 2022, allowance for equity funds used during construction was $51In the third quarter 2023, taxes other than income taxes were $110 million compared to $38$106 million for the corresponding period in 2021.2022. For year-to-date 2023, taxes other than income taxes were $333 million compared to $309 million for the corresponding period in 2022. The increase for year-to-date 2022 wasincreases were primarily due to an increase in capital expenditures related to Plant Barry Unit 8 construction.
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Interest Expense, Net of Amounts Capitalized
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$1416.7$2610.3
In the third quarter 2022, interest expense, net of amounts capitalized was $98 million compared to $84 million for the corresponding period in 2021. For year-to-date 2022, interest expense, net of amounts capitalized was $278 million compared to $252 million for the corresponding period in 2021. The increases were primarily due to higher average outstanding borrowings. See FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" and "Financing Activities" herein for additional information on borrowings.
Income Taxes
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$149.2$287.7
In the third quarter 2022, income taxes were $166 million compared to $152 million for the corresponding period in 2021. For year-to-date 2022, income taxes were $394 million compared to $366 million for the corresponding period in 2021. The increases were primarily due to higher pre-tax earnings.
Georgia Power
Net Income
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$32260.1$82179.7
Georgia Power's net income in the third quarter 2022 was $858 million compared to $536 million for the corresponding period in 2021. For year-to-date 2022 net income was $1.85 billion compared to $1.03 billion for the corresponding period in 2021. The increases were primarily due to decreases of $249 million and $589 million in the third quarter and year-to-date 2022, respectively, in after-tax charges related to the construction of Plant Vogtle Units 3 and 4 and increases in retail revenues associated with rates and pricing and sales growth, partially offset by higher non-fuel operations and maintenance costs. The increase for year-to-date 2022 was also due to warmer weather in Georgia Power's service territory compared to the corresponding period in 2021.
See Note (B) to the Condensed Financial Statements herein and Note 2 to the financial statements in Item 8 of the Form 10-K under "Georgia Power – Nuclear Construction" for additional information regarding Plant Vogtle Units 3 and 4.
Retail Revenues
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$1,05139.6$2,16433.5
In the third quarter 2022, retail revenues were $3.70 billion compared to $2.65 billion for the corresponding period in 2021. For year-to-date 2022, retail revenues were $8.63 billion compared to $6.47 billion for the corresponding period in 2021.utility license taxes.
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Allowance for Equity Funds Used During Construction
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$527.8$1427.5
In the third quarter 2023, allowance for equity funds used during construction was $23 million compared to $18 million for the corresponding period in 2022. For year-to-date 2023, allowance for equity funds used during construction was $65 million compared to $51 million for the corresponding period in 2022. The increases were primarily due to an increase in capital expenditures related to Plant Barry Unit 8 construction, as well as an increase in capital expenditures related to hydro production. See Note (B) to the Condensed Financial Statements under "Alabama Power – Certificates of Convenience and Necessity" herein for additional information.
Interest Expense, Net of Amounts Capitalized
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$66.1$3311.9
In the third quarter 2023, interest expense, net of amounts capitalized was $104 million compared to $98 million for the corresponding period in 2022. For year-to-date 2023, interest expense, net of amounts capitalized was $311 million compared to $278 million for the corresponding period in 2022. The increases for the third quarter and year-to-date 2023 were primarily associated with increases of approximately $5 million and $25 million, respectively, related to higher average outstanding borrowings and $4 million and $15 million, respectively, related to higher interest rates. See FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" herein for additional information on borrowings.
Other Income (Expense), Net
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$——$1615.8
For year-to-date 2023, other income (expense), net was $117 million compared to $101 million for the corresponding period in 2022. The increase was primarily due to a decrease in non-operating benefit-related expenses and an increase in interest income, partially offset by a decrease in non-service cost-related retirement benefits income. See Note (H) to the Condensed Financial Statements herein for additional information.
Income Taxes
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$(87)(52.4)$(291)(73.9)
In the third quarter 2023, income taxes were $79 million compared to $166 million for the corresponding period in 2022. For year-to-date 2023, income taxes were $103 million compared to $394 million for the corresponding period in 2022. The decreases were primarily due to an increase in the flowback of certain excess deferred income taxes and lower pre-tax earnings. 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.
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Georgia Power
Net Income
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$(78)(9.1)$(304)(16.4)
Georgia Power's net income in the third quarter 2023 was $780 million compared to $858 million for the corresponding period in 2022. The decrease was primarily due to an increase of $172 million in after-tax charges related to the construction of Plant Vogtle Units 3 and 4, as well as higher interest expense, partially offset by an increase in retail revenues associated with warmer weather in the third quarter 2023 compared to the corresponding period in 2022 and lower non-fuel operations and maintenance costs. Also partially offsetting the net income reductions were the impacts of the 2022 ARP effective January 1, 2023, including increased retail rates, largely offset by higher depreciation and amortization.
For year-to-date 2023, net income was $1.55 billion compared to $1.85 billion for the corresponding period in 2022. The decrease was primarily due to a decrease in retail revenues associated with lower contributions from variable demand-driven pricing and milder weather in the first and second quarters of 2023 compared to the corresponding periods in 2022, an increase of $133 million in after-tax charges related to the construction of Plant Vogtle Units 3 and 4, and higher interest expense, partially offset by lower non-fuel operations and maintenance costs. Also partially offsetting the net income reductions were the impacts of the 2022 ARP effective January 1, 2023, including increased retail rates, largely offset by higher depreciation and amortization.
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" for additional information.
Retail Revenues
In the third quarter 2023, retail revenues were $3.00 billion compared to $3.70 billion for the corresponding period in 2022. For year-to-date 2023, retail revenues were $7.14 billion compared to $8.63 billion for the corresponding period in 2022. Details of the changes in retail revenues were as follows:
 Third Quarter 2022Year-To-Date 2022
(in millions)(% change)(in millions)(% change)
Retail – prior year$2,652 $6,465 
Estimated change resulting from –
Rates and pricing157 5.9 %442 6.8 %
Sales growth54 2.0 101 1.6 
Weather(1)— 89 1.4 
Fuel cost recovery841 31.7 1,532 23.7 
Retail – current year$3,703 39.6 %$8,629 33.5 %
 
Third Quarter 2023 vs.
Third Quarter 2022
Year-To-Date 2023 vs.
 Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
Rates and pricing$17 0.4 %$(115)(1.3)%
Sales decline(31)(0.8)(17)(0.2)
Weather88 2.4 (109)(1.3)
Fuel cost recovery(781)(21.1)(1,246)(14.4)
Retail revenues$(707)(19.1)%$(1,487)(17.2)%
Revenues associated with changes in rates and pricing increased in the third quarter and year-to-date 20222023 when compared to the corresponding periodsperiod in 2021. The increases were2022 primarily due to higherbase tariff increases in accordance with the 2022 ARP, partially offset by lower contributions from commercial and industrial customers with variable demand-driven pricing and a decrease in revenues recognized under the NCCR tariff. Revenues associated with changes in rates and pricing decreased for year-to-date 2023 when compared to the corresponding period in 2022 primarily due to lower contributions from commercial and industrial customers with variable demand-driven pricing and a decrease in revenues recognized under the NCCR tariff, partially offset by base tariff increases in accordance with the 2019 ARP, and pricing effects associated with customer usage.2022 ARP. See Note 2 to the financial statements under "Georgia Power – Rate Plans" and " – Nuclear Construction" in Item 8 of the Form 10-K for additional information.
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Revenues attributable to changes in sales increaseddecreased in the third quarter and year-to-date 20222023 when compared to the corresponding periods in 2021.2022. Weather-adjusted residential KWH sales increased 2.7%decreased 2.6% and 1.0%0.7% in the third quarter and year-to-date 2022,2023, respectively, when compared to the corresponding periods in 20212022 primarily due to decreased customer usage, partially offset by customer growth. The increase for the third quarter 2022 also reflects increased customer usage. Weather-adjusted commercial KWH sales increased 3.2%0.4% and 2.9%1.1% in the third quarter and year-to-date 2022,2023, respectively, when compared to the corresponding periods in 20212022 primarily due to impacts on customer usage from increased activity outside the home as customers return to pre-pandemic levels of activity, as well as customer growth. The increase in weather-adjusted commercial KWH sales in the third quarter 2023 was partially offset by decreased customer usage. Weather-adjusted industrial KWH sales increased 1.8% and 2.8%decreased 1.3% in the third quarter and year-to-date 2022, respectively,2023 when compared to the corresponding periodsperiod in 20212022 primarily due to increasesdecreases in the pipeline electronic, and paperchemicals sectors, partially offset by an increase in the paper sector. Weather-adjusted industrial KWH sales decreased 1.0% for year-to-date 2023 when compared to the corresponding period in 2022 primarily due to decreases in the chemicalstextile and textilesmining sectors, partially offset by increases in the paper and electronics sectors.
Fuel revenues and costs are allocated between retail and wholesale jurisdictions. Retail fuel cost recovery revenues increaseddecreased in the third quarter and year-to-date 20222023 when compared to the corresponding periods 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
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$(7)(11.1)$4330.1
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$1323.2$(39)(21.0)
In the third quarter 2022,2023, wholesale revenues were $56$69 million compared to $63$56 million for the corresponding period in 2021.2022. The increase was primarily due to a $22 million increase related to the volume of KWH sales associated with higher market demand and a $17 million increase related to new capacity contracts, partially offset by a $26 million decrease related to the average cost per KWH sold due to lower Southern Company system fuel and purchased power costs.
For year-to-date 2023, wholesale revenues were $147 million compared to $186 million for the corresponding period in 2022. The decrease was primarily due to a $22$41 million decrease inrelated to the average cost per KWH sold due to lower Southern Company system fuel and purchased power costs and a $13 million decrease related to the volume of KWH sales associated with lower market demand, and a $3 million decrease in capacity revenues due to the expiration of a non-affiliate PPA in 2021, largely offset by an increase of $20 million related to the average cost of fuel primarily due to higher natural gas and coal prices.
For year-to-date 2022, wholesale revenues were $186 million compared to $143 million for the corresponding period in 2021. The increase was primarily due to an increase of $60 million related to the average cost of fuel primarily due to higher natural gas and coal prices, partially offset by a $10$19 million decrease in KWH sales
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AND RESULTS OF OPERATIONS (Continued)
associated with lower market demand and an $8 million decrease innew capacity revenues due to the expiration of a non-affiliate PPA in 2021.contracts.
Wholesale revenues from sales to non-affiliates consist of PPAs and short-term opportunity sales. Wholesale revenues from PPAs have both capacity and energy components. Wholesale capacity revenues from PPAs are recognized in amounts billable under the contract terms and provide for recovery of fixed costs and a return on investment. Wholesale revenues from sales to non-affiliates will vary depending on fuel prices, the market prices of wholesale energy compared to the cost of Georgia Power's and the Southern Company system's generation, demand for energy within the Southern Company system's electric service territory, and the availability of the Southern Company system's generation. Increases and decreases in energy revenues that are driven by fuel prices are accompanied by an increase or decrease in fuel costs and do not have a significant impact on net income. Short-term opportunity sales are made at market-based rates that generally provide a margin above Georgia Power's variable cost of energy.
Wholesale revenues from sales to affiliated companies will vary depending on demand and the availability and cost of generating resources at each company. These affiliate sales are made in accordance with the IIC, as approved by the FERC. These transactions do not have a significant impact on earnings since this energy is generally sold at marginal cost.
Other Revenues
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$(11)(7.8)$(39)(8.8)
In the third quarter 2022, other revenues were $130 million compared to $141 million for the corresponding period in 2021. For year-to-date 2022, other revenues were $403 million compared to $442 million for the corresponding period in 2021. The decreases for the third quarter and year-to-date 2022 were primarily due to increases of $14 million and $21 million, respectively, in realized losses associated with price stability products for retail customers on variable demand-driven pricing tariffs, decreases of $9 million and $12 million, respectively, from retail solar programs as a result of higher avoided cost credits to customers, and $6 million and $26 million, respectively, resulting from the termination of a transmission service contract. These reductions were partially offset by increases of $8 million and $22 million, respectively, associated with unregulated outdoor lighting sales and energy conservation projects and $6 million and $16 million, respectively, in open access transmission tariff sales. Also contributing to the decrease for year-to-date 2022 was a decrease of $28 million associated with the timing of revenue recognition for a large, ongoing power delivery construction and maintenance contract.
Fuel and Purchased Power Expenses
Third Quarter 2022 vs.
Third Quarter 2021
Year-to-Date 2022 vs.
Year-to-Date 2021
(change in millions)(% change)(change in millions)(% change)
Fuel$409 94.7 $799 73.4 
Purchased power – non-affiliates131 75.7 239 51.8 
Purchased power – affiliates283 98.3 527 92.0 
Total fuel and purchased power expenses$823 $1,565 
In the third quarter 2022, total fuel and purchased power expenses were $1.7 billion compared to $0.9 billion for the corresponding period in 2021. For year-to-date 2022, total fuel and purchased power expenses were $3.7 billion compared to $2.1 billion for the corresponding period in 2021. The increases for the third quarter and year-to-date 2022 were primarily due to increases of $0.8 billion and $1.4 billion, respectively, related to the average cost of fuel
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
the FERC. Energy revenues related to these transactions do not have a significant impact on earnings since this energy is generally sold at marginal cost.
Other Revenues
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$4232.3$11328.0
In the third quarter 2023, other revenues were $172 million compared to $130 million for the corresponding period in 2022. For year-to-date 2023, other revenues were $516 million compared to $403 million for the corresponding period in 2022. The increases for the third quarter and year-to-date 2023 were primarily due to increases of $27 million and $78 million, respectively, in unregulated sales associated with power delivery construction and maintenance, outdoor lighting, and energy conservation projects, net increases of $7 million and $18 million, respectively, in realized gains associated with price stability products for retail customers on variable demand-driven pricing tariffs, and increases of $10 million in retail solar program fees. Also contributing to the increase for year-to-date 2023 was an $11 million increase in open access transmission tariff sales.
Fuel and Purchased Power Expenses
Third Quarter 2023 vs.
Third Quarter 2022
Year-To-Date 2023 vs.
Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
Fuel$(265)(31.5)$(495)(26.2)
Purchased power – non-affiliates(173)(56.9)(303)(43.3)
Purchased power – affiliates(350)(61.3)(521)(47.4)
Total fuel and purchased power expenses$(788)$(1,319)
In the third quarter 2023, total fuel and purchased power expenses were $0.9 billion compared to $1.7 billion for the corresponding period in 2022. For year-to-date 2023, total fuel and purchased power expenses were $2.4 billion compared to $3.7 billion for the corresponding period in 2022. The decreases for the third quarter and year-to-date 2023 were due to decreases of $689 million and $1.0 billion, respectively, related to the average cost of fuel and purchased power and net increasesdecreases of $30$99 million and $158$293 million, respectively, related to the volume of KWHs generated and purchased.
Fuel and purchased power energy transactions do not have a significant impact on earnings since these fuel expenses are generally offset by fuel revenues through Georgia Power's fuel cost recovery mechanism. See Note (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.
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AND RESULTS OF OPERATIONS (Continued)
Details of Georgia Power's generation and purchased power were as follows:
Third Quarter 2022Third Quarter 2021Year-To-Date 2022Year-To-Date 2021Third Quarter 2023Third Quarter 2022Year-To-Date 2023Year-To-Date 2022
Total generation (in billions of KWHs)(a)
Total generation (in billions of KWHs)(a)
15164546
Total generation (in billions of KWHs)(a)
18154645
Total purchased power (in billions of KWHs)
Total purchased power (in billions of KWHs)
11102723
Total purchased power (in billions of KWHs)
9112327
Sources of generation (percent) —
Sources of generation (percent) —
Sources of generation (percent) —
GasGas53454846Gas47535148
Nuclear28242626
Nuclear(a)
Nuclear(a)
26282726
CoalCoal16282224Coal25161922
Hydro and otherHydro and other3344Hydro and other2334
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) —
GasGas6.103.284.992.84Gas2.996.103.074.99
Nuclear(a)
Nuclear(a)
0.870.750.790.76
CoalCoal4.732.733.842.89Coal5.694.735.803.84
Nuclear0.750.830.760.80
Average cost of fuel, generated (in cents per net KWH)(a)
Average cost of fuel, generated (in cents per net KWH)(a)
4.322.513.562.30
Average cost of fuel, generated (in cents per net KWH)(a)
3.114.322.983.56
Average cost of purchased power (in cents per net KWH)(*)
10.145.248.004.80
Average cost of purchased power (in cents per net KWH)(b)
Average cost of purchased power (in cents per net KWH)(b)
4.5510.144.648.00
(*)(a)Excludes KWHs generated from test period energy at Plant Vogtle Unit 3 prior to its in-service date. The related fuel costs are charged to CWIP in accordance with FERC guidance. See Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction" herein for additional information on Plant Vogtle Units 3 and 4.
(b)Average cost of purchased power includes fuel purchased by Georgia Power for tolling agreements where power is generated by the provider.
Fuel
In the third quarter 2022,2023, fuel expense was $841$576 million compared to $432$841 million for the corresponding period in 2021.2022. The increasedecrease was primarily due to a decrease of 51.0% in the average cost per KWH generated by natural gas, partially offset by increases of 86.0%78.6% in the volume of KWHs generated by coal, 20.3% in the average cost per KWH generated by coal, 16.0% in the average cost per KWH generated by nuclear, 8.8% in the volume of KWHs generated by nuclear, and 73.3%3.0% in the volume of KWHs generated by natural gas.
For year-to-date 2023, fuel expense was $1.39 billion compared to $1.89 billion for the corresponding period in 2022. The decrease was primarily due to decreases of 38.5% in the average cost per KWH generated by natural gas and 10.2% in the volume of KWHs generated by coal, respectively,partially offset by increases of 51.0% in the average cost per KWH generated by coal and an 11.1% increase7.0% in the volume of KWHs generated by natural gas, partially offset by a 44.2% decrease in the volume of KWHs generated by coal.
For year-to-date 2022, fuel expense was $1.89 billion compared to $1.09 billion for the corresponding period in 2021. The increase was primarily due to increases of 75.7% and 32.9% in the average cost per KWH generated by natural gas and coal, respectively, partially offset by a 9.1% decrease in the volume of KWHs generated by coal.gas.
Purchased Power – Non-Affiliates
In the third quarter 2022,2023, purchased power expense from non-affiliates was $304$131 million compared to $173$304 million for the corresponding period in 2021.2022. For year-to-date 2022,2023, purchased power expense from non-affiliates was $700$397 million compared to $461$700 million for the corresponding period in 2021.2022. The increasesdecreases for the third quarter and year-to-date 20222023 were primarily due to increasesdecreases of 50.5%38.1% and 39.4%37.8%, respectively, in the volume of KWHs purchased primarily due to lessas Georgia Power and other Southern Company system units generally dispatched at a lower cost than available Georgia Power-owned coal generationmarket resources and increases of 53.1%45.1% and 31.6%24.1%, respectively, in the average cost per KWH purchased primarily due to higherlower 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.
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AND RESULTS OF OPERATIONS (Continued)
Purchased Power – Affiliates
In the third quarter 2022,2023, purchased power expense from affiliates was $571$221 million compared to $288$571 million for the corresponding period in 2021.2022. For year-to-date 2022,2023, purchased power expense from affiliates was $1.1 billion$579 million compared to $573 million$1.1 billion for the corresponding period in 2021.2022. The increasesdecreases for the third quarter and year-to-date 2022 were primarily due to increases2023 reflect decreases of 120.3%60.0% and 93.3%49.8%, respectively, in the average cost per KWH purchased primarily due to higherlower natural gas and coal prices. Also contributing to the decrease in the third quarter 2023 was a 5.5% decrease in the volume of KWHs purchased.
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
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$519.4$1288.2
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$(83)(13.9)$(181)(10.7)
In the third quarter 2022,2023, other operations and maintenance expenses were $595$512 million compared to $544$595 million for the corresponding period in 2021.2022. The increasedecrease was primarily due to increasesdecreases of $35$64 million in transmission and distribution expenses primarily associated with line maintenance, $10$45 million in storm damage recovery as authorized in the 2022 ARP, and $25 million in generation expenses primarily related to non-outage maintenance costs, and $9 million in certain compensation and benefit expenses,expenses. These decreases were partially offset by a decreaseincreases of $6$21 million related toin generation environmental projects and $20 million from unregulated power delivery construction and maintenance and energy conservation projects.
For year-to-date 2022,2023, other operations and maintenance expenses were $1.69$1.51 billion compared to $1.56$1.69 billion for the corresponding period in 2021.2022. The increasedecrease was primarily due to increasesdecreases of $80$136 million in storm damage recovery as authorized in the 2022 ARP, $121 million in transmission and distribution expenses primarily associated with line maintenance, $37$74 million in generation expenses primarily related to non-outage maintenance costs, $20expenses, and $14 million in certain employee compensation and benefit expenses, $11 million in legal and regulatory expenses, and $8 million in amortization of cloud software,expenses. These decreases were partially offset by a net decreaseincreases of $19$48 million related tofrom unregulated productspower delivery construction and servicesmaintenance and $17energy conservation projects, $41 million in gains from salesgeneration environmental projects, and $39 million in technology infrastructure and application production costs, 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 integrated transmission system assets.the Form 10-K for additional information.
Depreciation and Amortization
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$144.1$414.0
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$7019.5$18217.1
In the third quarter 2022,2023, depreciation and amortization was $359$429 million compared to $345$359 million for the corresponding period in 2021.2022. For year-to-date 2022,2023, depreciation and amortization was $1.07$1.25 billion compared to $1.03$1.07 billion for the corresponding period in 2021.2022. The increases for the third quarter and year-to-date 20222023 were primarily due to increases of $48 million and $142 million, respectively, resulting from higher depreciation rates as authorized in the 2022 ARP and $21 million and $51 million, respectively, associated with additional plant in service and increasesservice. Partially offsetting the increase for year-to-date 2023 was a decrease of $3$11 million and $9 million, respectively, in amortization of regulatory assets related to CCR AROs under the termsretirement of the 2019 ARP. certain generating units that ended in 2022.
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.information.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Taxes Other Than Income Taxes
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$2519.2$5515.1
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$(11)(7.1)$(14)(3.3)
In the third quarter 2022,2023, taxes other than income taxes were $155$144 million compared to $130$155 million for the corresponding period in 2021.2022. For year-to-date 2022,2023, taxes other than income taxes were $420$406 million compared to $365$420 million for the corresponding period in 2021.2022. The increasesdecreases for the third quarter and year-to-date 2023 were primarily due to increasesdecreases of $15 million and $33 million, respectively, in municipal franchise fees resulting from higherlower retail revenues.revenues, partially offset by increases of $3 million and $21 million, respectively, in property taxes primarily resulting from an increase in the assessed value of property.
Estimated Loss on Plant Vogtle Units 3 and 4
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$(334)N/M$(790)N/M
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$230N/M$178N/M
Georgia Power recorded pre-tax charges (credits) to income for the estimated probable loss on Plant Vogtle Units 3 and 4 totaling $(70)$160 million and $264$(70) million in the third quarter 2023 and 2022, respectively, and 2021, respectively,$160 million and $(18) million and $772 million for year-to-date 20222023 and 2021,2022, respectively. The charges (credits) reflectreflected revisions to the total project capital cost forecast to complete construction and start-up of Plant Vogtle Units 3 and 4. See Note (B) to the Condensed Financial Statements herein and Note 2 to the financial statements in Item 8 of the Form 10-K under "Georgia Power – Nuclear Construction" for additional information.
Allowance for Equity Funds Used During Construction
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$——$1918.6
For year-to-date 2023, allowance for equity funds used during construction was $121 million compared to $102 million for the corresponding period in 2022. The increase was primarily due to an increase in capital expenditures subject to AFUDC.
Interest Expense, Net of Amounts Capitalized
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$1716.0$3210.2
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$4335.0$12536.0
In the third quarter 2022,2023, interest expense, net of amounts capitalized was $123$166 million compared to $106$123 million for the corresponding period in 2021.2022. For year-to-date 2022,2023, interest expense, net of amounts capitalized was $347$472 million compared to $315$347 million for the corresponding period in 2021.2022. The increases for the third quarter and year-to-date 20222023 were primarily associated with increases of approximately $11$20 million and $23$64 million, respectively, related to higher average outstanding borrowings and $10$19 million and $12$59 million, respectively, 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), Net
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$(6)(14.3)$1612.9
For year-to-date 2022, other income (expense), net was $140 million compared to $124 million for the corresponding period in 2021. The increase was primarily due to an increase of $11 million in non-service cost-related retirement benefits income. See Note (H) to the Condensed Financial Statements herein for additional information on retirement benefits.
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AND RESULTS OF OPERATIONS (Continued)
Other Income Taxes(Expense), Net
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$113100.0$340N/M
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$925.0$(15)(10.7)
In the third quarter 2022,2023, other income taxes were $226(expense), net was $45 million compared to $113$36 million for the corresponding period in 2021. 2022. The increase was primarily due to a $6 million decrease in non-operating marketing expenses.
For year-to-date 2022,2023, other income taxes were $421(expense), net was $125 million compared to $81$140 million for the corresponding period in 2021.2022. The increasesdecrease was primarily due to a decrease of $13 million in customer charges related to contributions in aid of construction and a $7 million charge in the second quarter 2023 under a stipulation agreement approved by the Georgia PSC related to Georgia Power's fuel cost recovery case, partially offset by a $6 million decrease in non-operating marketing expenses. See Note (B) to the Condensed Financial Statements herein under "Georgia Power – Fuel Cost Recovery" for additional information.
Income Taxes
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$(26)(11.5)$(76)(18.1)
In the third quarter 2023, income taxes were $200 million compared to $226 million for the corresponding period in 2022. For year-to-date 2023, income taxes were $345 million compared to $421 million for the corresponding period in 2022. The decreases were primarily due to higherlower pre-tax earnings largely resulting from lowerhigher charges associated with the construction of Plant Vogtle Units 3 and 4. The4 and a decrease in a valuation allowance on certain state tax credit carryforwards in 2023, partially offset by the flowback of certain excess deferred income taxes that ended in 2022. Also contributing to the year-to-date increase also reflects2023 decrease was 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 financial statements in Item 8 of 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
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$1224.0$1712.8
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$1321.0$2315.3
Mississippi Power's net income infor the third quarter 20222023 was $62$75 million compared to $50$62 million for the corresponding period in 2021. For year-to-date 2022, net income2022. The increase was $150 million compared to $133 million for the corresponding period in 2021. The increases were primarily due to an increase in revenues due to warmer weather in the third quarter 2023 when compared to the corresponding period in 2022.
Mississippi Power's net income for year-to-date 2023 was $173 million compared to $150 million for the corresponding period in 2022. The increase was primarily due to an increase in affiliate wholesale capacity revenues, partially offset by an increase in income taxes. The year-to-date 2022 increase was also partially offset by higher non-fuel operations and maintenance costs.
Retail Revenues
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$20.8$487.2
In the third quarter 2022, retail revenues wereinterest expense.$250 million compared to $248 million for the corresponding period in 2021. For year-to-date 2022, retail revenues were $718 million compared to $670 million for the corresponding period in 2021.
Details of the changes in retail revenues were as follows:
 Third Quarter 2022Year-To-Date 2022
 (in millions)(% change)(in millions)(% change)
Retail – prior year$248 $670 
Estimated change resulting from –
Rates and pricing4 1.6 %9 1.3 %
Sales growth (decline)— — 3 0.5 
Weather3 1.2 10 1.5 
Fuel and other cost recovery(5)(2.0)26 3.9 
Retail – current year$250 0.8 %$718 7.2 %
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AND RESULTS OF OPERATIONS (Continued)
Retail Revenues
In the third quarter 2023, retail revenues were $284 million compared to $250 million for the corresponding period in 2022. For year-to-date 2023, retail revenues were $747 million compared to $718 million for the corresponding period in 2022. Details of the changes in retail revenues were as follows:
 
Third Quarter 2023 vs.
Third Quarter 2022
Year-To-Date 2023 vs.
 Year-To-Date 2022
 (change in millions)(% change)(change in millions)(% change)
Rates and pricing$(3)(1.2)%$2 0.2 %
Sales growth
5 2.0 4 0.6 
Weather9 3.6 (1)(0.1)
Fuel and other cost recovery23 9.2 24 3.3 
Retail revenues$34 13.6 %$29 4.0 %
Revenues associated with changes in rates and pricing increaseddecreased in the third quarter 2023 and increased year-to-date 20222023 when compared to the corresponding periods in 20212022. The third quarter 2023 decrease was primarily due to newlower contributions from commercial and industrial customers with variable demand-driven pricing and the expiration of a PEP ratessurcharge at the end of 2022 that became effective for the first billing cycle of April 2022, partially offset by a decrease inhigher revenues associated with a tolling arrangement. Seearrangement accounted for as a sales-type lease. The year-to-date 2023 increase was primarily due to ECO Plan rates that became effective in May 2022 and higher revenues associated with a tolling arrangement accounted for as a sales-type lease, partially offset by the expiration of the PEP surcharge at the end of 2022 that became effective for the first billing cycle of April 2022. See Notes 2 and 9 to the financial statements under "Mississippi Power" and "Lessor," respectively, in Item 8 of the Form 10-K and Note (B)(D) to the Condensed Financial Statements under "Mississippi Power – Performance Evaluation Plan""Lease Income" herein for additional information.
Revenues attributable to changes in salesincreaseddecreased in the third quarter 2022and year-to-date 2023 when compared to the corresponding periods in 2022. Weather-adjusted residential KWH sales increased0.9% in the third quarter 2023 when compared to the corresponding period in 2021. Revenues attributable2022 due to changesan increase in customer usage. Weather-adjusted residential KWH sales increased fordecreased0.3% year-to-date 20222023 when compared to the corresponding period in 2021. Weather-adjusted residential KWH sales decreased 3.3% and 1.2% in the third quarter and year-to-date 2022 respectively, when compared to the corresponding periods in 2021 due to a decrease in customer usage resulting from increased activity outside the home as customers return to pre-pandemic levels of activity. . Weather-adjusted commercial KWH salesincreased 0.3%11.8% and 1.3%6.4% in the third quarter and year-to-date 2022,2023, respectively, when compared to the corresponding periods in 20212022 due to sales growth customer growth.associated with new commercial contracts. Industrial KWH sales increased 1.9%1.1% and 1.8%1.3% in the third quarter and year-to-date 2022,2023, respectively, when compared to the corresponding periods in 20212022 primarily due to increasesan increase in the petroleum, pipeline, and transportation sectors.non-manufacturing sector, partially offset by a decrease in the chemicals sector.
Fuel and other cost recovery revenues decreased inincreased in the third quarter 2022and year-to-date 2023 when compared to the corresponding periodperiods in 20212022 primarily as a result of lower recoverable fuel costs. Fuel and other cost recovery revenues increased for year-to-date 2022 when compared to the corresponding period in 2021 primarily as a result of higher recoverable fuel costs.costs. Recoverable fuel costs include fuel and purchased power expenses reduced by the fuel and emissions 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-Affiliates
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$——$137.3
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$1728.3$105.2
For year-to-date 2022,In the third quarter 2023, wholesale revenues from sales to non-affiliates were $191$77 million compared to $178$60 million for the corresponding period in 2021.2022. The increase was primarily due to an $11 million increase associated with
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AND RESULTS OF OPERATIONS (Continued)
MRA customers and a $6 million increase associated with opportunity sales. The increase from MRA customers was primarily due to higher recoverable fuel costs and an increase in base revenue from MRA customers primarily due to increased demand as a result of weather impactsimpacts.
For year-to-date 2023, wholesale revenues from sales to non-affiliates were $201 million compared to $191 million for the corresponding period in 2022. The increase was due to a $6 million increase associated with MRA customers and a $4 million increase associated with opportunity sales. The increase from MRA customers was primarily due to a rate increase under the MRA tariff effective September 2022 and higher recoverable fuel costs, partially offset by a decrease in demand as a result of weather impacts.
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.
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AND RESULTS OF OPERATIONS (Continued)
Wholesale Revenues – Affiliates
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$125N/M$216N/M
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$(122)(65.2)$(178)(53.0)
In the third quarter 2022,2023, wholesale revenues from sales to affiliates were $187$65 million compared to $62$187 million for the corresponding period in 2021. 2022. The decrease was primarily due to a $141 million decrease associated with lower natural gas prices, partially offset by a $19 million increase associated with higher KWH sales.
For year-to-date 2022,2023, wholesale revenues from sales to affiliates were $336$158 million compared to $120$336 million for the corresponding period in 2021.2022. Theincreases were decrease was primarily due toincreases of $111 a $216 million and $197 million, respectively,decrease associated with higher fuel prices, primarily forlower natural gas prices, partially offset by a $29 million increase in capacity revenues resulting from an increase in pricing and $14volume of generation reserves and a $9 million and $19 million, respectively,increase associated with higher KWH sales due to lower cost available Mississippi Power resources as compared to the available affiliate company generation.sales.
Wholesale revenues from sales to affiliated companies will vary depending on demand and the availability and cost of generating resources at each company. These affiliate sales are made in accordance with the IIC, as approved by the FERC. 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
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$562.5$1470.0
In the third quarter 2022, other revenues were $13 million compared to $8 million for the corresponding period in 2021. For year-to-date 2022, other revenues were $34 million compared to $20 million for the corresponding period in 2021. The increases for the third quarter and year-to-date 2022 were primarily due to increases of $5 million and $10 million, respectively, in unregulated sales associated with power delivery construction and maintenance projects.
Fuel and Purchased Power Expenses
Third Quarter 2022 vs.
Third Quarter 2021
Year-to-Date 2022 vs.
Year-to-Date 2021
Third Quarter 2023 vs.
Third Quarter 2022
Year-To-Date 2023 vs.
Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)(change in millions)(% change)(change in millions)(% change)
FuelFuel$103 74.2$235 71.1Fuel$(80)(33.1)$(167)(29.6)
Purchased powerPurchased power14 250.015 70.6Purchased power(13)(65.0)(18)(50.0)
Total fuel and purchased power expensesTotal fuel and purchased power expenses$117 $250 Total fuel and purchased power expenses$(93)$(185)
In the third quarter 2022,2023, total fuel and purchased power expenses were $262$169 millioncompared to $145$262 million for the corresponding period in 2021. Theincrease was due to a $106 millionincrease related to the average cost of fuel and purchased power and an $11 million increase related to the volume of KWHs generated and purchased.
2022. For year-to-date 2022,2023, total fuel and purchased power expenses were $601$416 millioncompared to $351$601 million for the corresponding period in 2021.2022. Theincreasewas decreases for the third quarter and year-to-date 2023 were primarily due to a $233decreases of $122 millionincrease and $203 million, respectively, related to the average cost of fuel and purchased power and a $17 millionincrease related to the volume of KWHs generated.
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.
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average cost of fuel and purchased power, partially offset by net increases of $29 million and $18 million, respectively, related to the volume of KWHs generated and purchased.
Fuel and purchased power energy transactions do not have a significant impact on earnings since energy expenses are generally offset by energy revenues through Mississippi Power's fuel cost recovery clause.
Details of Mississippi Power's generation and purchased power were as follows:
Third Quarter 2022Third Quarter 2021Year-To-Date 2022Year-To-Date 2021Third Quarter 2023Third Quarter 2022Year-To-Date 2023Year-To-Date 2022
Total generation (in millions of KWHs)
Total generation (in millions of KWHs)
5,0934,87813,65013,016
Total generation (in millions of KWHs)
5,7835,09314,12313,650
Total purchased power (in millions of KWHs)
Total purchased power (in millions of KWHs)
241124527562
Total purchased power (in millions of KWHs)
153241427527
Sources of generation (percent) –
Sources of generation (percent) –
Sources of generation (percent) –
GasGas89938991Gas87899289
CoalCoal117119Coal1311811
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) –
GasGas5.102.994.432.66Gas2.525.102.724.43
CoalCoal4.503.164.123.13Coal5.494.505.644.12
Average cost of fuel, generated (in cents per net KWH)
Average cost of fuel, generated (in cents per net KWH)
5.023.004.402.70
Average cost of fuel, generated (in cents per net KWH)
2.925.022.974.40
Average cost of purchased power (in cents per net KWH)
Average cost of purchased power (in cents per net KWH)
8.154.516.833.78
Average cost of purchased power (in cents per net KWH)
4.618.154.276.83
Fuel
In the third quarter 2022,2023, fuel expense was $162 million compared to $242 million compared to $139 million for the corresponding period in 2021.2022. The increasedecrease was due to a 70.6%increase 50.6% decrease in the average cost of natural gas per KWH generated, partially offset by a 42.4%28.5% increase in the volume of KWHs generated by coal, a 22.0% increase in the average cost of coal per KWHsKWH generated, and a 61.3%13.5% increase in the volume of KWHs generated by coal.natural gas.
For year-to-date 2022,2023, fuel expense was $398 million compared to $565 million compared to $330 million for the corresponding period in 2021. The2022. Tincreasehe decrease was due to a 66.5%increase38.6% decrease in the average cost of natural gas per KWH generated and a 31.6%21.7% decrease in the volume of KWHs generated by coal, partially offset by a 36.9% increase in the average cost of coal per KWHsKWH generated a 30.2%increase in the volume of KWHs generated by coal, and a 2.4%7.5% increase in the volume of KWHs generated by natural gas.
Purchased Power
In the third quarter 2022,2023, purchased power expense was $20$7 million compared to $6$20 million for the corresponding period in 2021. The increasewas due to a 93.6% increase in the volume of KWHs purchased and an 80.7% increase in the average cost per KWH purchased.
2022. For year-to-date 2022,2023, purchased power expense was $36$18 million compared to $21$36 million for the corresponding period in 2021.2022. The increasedecreases for the third quarter and year-to-date 2023 were due to was primarily due to an 80.6% increase decreases of 43.4% and 37.5%, respectively, in the average cost per KWH purchased partially offset by a 6.3% decreaseprimarily due to lower natural gas prices and decreases of 36.4% and 18.9%, respectively, in the volume of KWHs purchased.
Energy purchases will vary depending on the market prices of wholesale energy asOther Operations and Maintenance Expenses
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$(2)(2.3)$62.4
For year-to-date 2023, other operations and maintenance expenses were $258 million compared to $252 million for the costcorresponding period in 2022. The increase was primarily due to increases of the Southern Company system's$5 million in generation demand for energy within the Southern Company system's electric service territory,expenses and the availability$4 million in storm reserve accruals, partially offset by a decrease of the Southern Company system's generation. These purchases are made$5 million in accordancesales and use taxes associated with the IIC or other contractual agreements, as approved by the FERC.Kemper County energy facility.
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Other OperationsSee Notes 2 and Maintenance Expenses
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$11.2$229.6
For year-to-date 2022, other operations and maintenance expenses were $252 million compared to $230 million for the corresponding period in 2021. The increase was primarily due to increases of $9 million related to unregulated power delivery construction and maintenance projects, $6 million associated with storm reserve accruals, $4 million in transmission and distribution line maintenance, and $4 million in sales and use taxes associated with the Kemper County energy facility. See Note 23 to the financial statements under "Mississippi Power – System Restoration Rider" and "Other Matters – Mississippi Power," respectively, in Item 8 of the Form 10-K and NoteNotes (B) and (C) to the Condensed Financial Statements under "Mississippi Power – System Restoration Rider" and "Other Matters – Mississippi Power"Power," respectively, herein for additional information.
Income TaxesInterest Expense, Net of Amounts Capitalized
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$770.0$1672.7
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$426.7$1126.2
In the third quarter 2022, income taxes were $172023, interest expense, net of amounts capitalized was $19 million compared to $10$15 million for the corresponding period in 2021.2022. For year-to-date 2022,2023, interest expense, net of amounts capitalized was $53 million compared to $42 million for the corresponding period in 2022. The increases for the third quarter and year-to-date 2023 were associated with increases of approximately $2 million and $8 million, respectively, related to higher interest rates and $2 million and $4 million, respectively, related to higher average outstanding borrowings. See FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" and "Financing Activities" herein for additional information on borrowings.
Income Taxes
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$15.9$(3)(7.9)
For year-to-date 2023, income taxes were $38$35 million compared to $22$38 million for the corresponding period in 2021.2022. The third quarter and year-to-date 2022 increasesdecrease was primarily relate due to a reductiondecrease of $3$7 million and $8 million, respectively, in associated with the flowback of certain excess deferred income taxes, largely offset by an increase of $5 million associated with new PEP rates that became effective in April 2022, as well as increases of $4 million and $8 million, respectively, 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
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$1721.8$5425.6
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$55.3$238.7
Net income attributable to Southern Power in the third quarter 20222023 was $95$100 million compared to $78$95 million for the corresponding period in 2021. 2022. The increase was primarily due to an arbitration interim award received for losses previously incurred, higher HLBV income associated with tax equity partnerships, and receipts of liquidated damages associated with generation facility production guarantees, partially offset by lower revenues driven by lower market prices of energy.
Net income attributable to Southern Power for year-to-date 20222023 was $265$288 million compared to $211$265 million for the corresponding period in 2021.2022. The increases wereincrease was primarily due to an arbitration interim award received for losses previously incurred, a gain on the sale of spare parts, higher revenues driven by higher market prices of energy, partially offset by higher other operations and maintenance expenses. Also contributing to the year-to-date 2022 increase were higher revenues from new natural gas PPAs and higherHLBV income associated with tax equity partnerships. The year-to-date 2022 increase was partially offset by gains from contributionspartnerships, and receipts of wind turbineliquidated damages and insurance proceeds related to generation facility production and equipment, to various equity method investments in the first quarter 2021 and a tax benefit due to a changeas well as changes in state apportionment methodology resulting fromrelated to tax legislation enacted by the State of Alabama in the first quarter 2021.Tennessee. These increases were largely offset by lower revenues driven by lower market prices of energy.
See Note 15(C) to the financial statementsCondensed Financial Statements under "Southern Power"General Litigation Matters – Development Projects" in Item 8 of the Form 10-KSouthern Power" herein for additional information.
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Operating Revenues
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$50173.8$1,00862.6
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$(527)(44.7)$(932)(35.6)
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 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
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dependent upon the level of energy generated from these facilities, which can be impacted by weather conditions, equipment performance, transmission constraints, and other factors.
See FUTURE EARNINGS POTENTIAL – "Southern Power's Power Sales Agreements" in Item 7 of the Form 10-K for additional information regarding Southern Power's PPAs.
Operating Revenues Details
Details of Southern Power's operating revenues were as follows:
Third Quarter 2022Third Quarter 2021Year-To-Date 2022Year-To-Date 2021Third Quarter 2023Third Quarter 2022Year-To-Date 2023Year-To-Date 2022
(in millions)(in millions)
PPA capacity revenuesPPA capacity revenues$131 $118 $344 $311 PPA capacity revenues$134 $131 $360 $344 
PPA energy revenuesPPA energy revenues736 413 1,657 954 PPA energy revenues370 736 953 1,657 
Total PPA revenuesTotal PPA revenues867 531 2,001 1,265 Total PPA revenues504 867 1,313 2,001 
Non-PPA revenuesNon-PPA revenues304 139 590 327 Non-PPA revenues131 304 327 590 
Other revenuesOther revenues9 9 27 18 Other revenues18 9 46 27 
Total operating revenuesTotal operating revenues$1,180 $679 $2,618 $1,610 Total operating revenues$653 $1,180 $1,686 $2,618 
In the third quarter 2023, total operating revenues were $653 million, reflecting a $527 million, or 44.7%, decrease from the corresponding period in 2022. The change in operating revenues was primarily due to the following:
•PPA energy revenues decreased $366 million, or 49.7%, primarily due to a $378 million decrease in sales under natural gas PPAs resulting from a $304 million decrease in the price of fuel and purchased power and a $75 million decrease in the volume of KWHs sold.
•Non-PPA revenues decreased $173 million, or 56.9%, primarily due to a $252 million decrease in the market price of energy, partially offset by a $76 million increase in the volume of KWHs sold through short-term sales.
•Other revenues increased $9 million, or 100.0%, primarily due to an arbitration interim award received for losses previously incurred. See Note (C) to the Condensed Financial Statements under "General Litigation Matters – Southern Power" herein for additional information.
For year-to-date 2023, total operating revenues were $1.7 billion, reflecting a $932 million, or 35.6%, decrease from the corresponding period in 2022. The change in operating revenues was primarily due to the following:
•PPA capacity revenues increased $16 million, or 4.7%, primarily due to a net increase in MW capacity under contract from natural gas PPAs and an increase associated with a change in rates from natural gas PPAs.
•PPA energy revenues decreased $704 million, or 42.5%, primarily due to a $706 million decrease in sales under natural gas PPAs resulting from a $577 million decrease in the price of fuel and purchased power and a $129 million decrease in the volume of KWHs sold.
•Non-PPA revenues decreased $263 million, or 44.6%, primarily due to a $522 million decrease in the market price of energy, partially offset by a $255 million increase in the volume of KWHs sold through short-term sales.
•Other revenues increased $19 million, or 70.4%, primarily due to receipts of liquidated damages associated with generation facility production guarantees, an arbitration interim award received for losses previously incurred, and business interruption insurance proceeds for damaged generation equipment. See Note (C) to the Condensed Financial Statements under "General Litigation Matters – Southern Power" herein for additional information.
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In the third quarter 2022, total operating revenues were $1.2 billion, reflecting a $501 million, or 74%, increase from the corresponding period in 2021. The increase in operating revenues was primarily due to the following:
•PPA capacity revenues increased $13 million, or 11%, primarily due to increased capacity sales under existing natural gas PPAs.
•PPA energy revenues increased $323 million, or 78%, primarily due to a $333 million increase in sales under existing natural gas PPAs resulting from a $287 million increase in the price of fuel and purchased power and a $45 million increase in the volume of KWHs sold.
•Non-PPA revenues increased $165 million, or 119%, due to a $172 million increase in the market price of energy, partially offset by a $7 million decrease in the volume of KWHs sold through short-term sales.
For year-to-date 2022, total operating revenues were $2.6 billion, reflecting a $1.0 billion, or 63%, increase from the corresponding period in 2021. The increase in operating revenues was primarily due to the following:
•PPA capacity revenues increased $33 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 $703 million, or 74%, primarily due to a $540 million increase in sales under existing natural gas PPAs resulting from a $442 million increase in the price of fuel and purchased power and a $98 million increase in the volume of KWHs sold. Also contributing to the increase was a $186 million increase in sales associated with new natural gas PPAs, partially offset by a $17 million decrease due to the contractual expiration of natural gas PPAs.
•Non-PPA revenues increased $263 million, or 80%, due to a $299 million increase in the market price of energy, partially offset by a $35 million decrease in the volume of KWHs sold through short-term sales.
Fuel and Purchased Power Expenses
Details of Southern Power's generation and purchased power were as follows:
Third Quarter 2022Third Quarter 2021Year-To-Date 2022Year-To-Date 2021 Third Quarter 2023Third Quarter 2022Year-To-Date 2023Year-To-Date 2022
(in billions of KWHs)(in billions of KWHs)
GenerationGeneration12.812.136.731.8Generation12.912.836.936.7
Purchased powerPurchased power1.20.82.32.0Purchased power0.81.22.42.3
Total generation and purchased powerTotal generation and purchased power14.012.939.033.8Total generation and purchased power13.714.039.339.0
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)
8.87.723.220.2
Total generation and purchased power
(excluding solar, wind, fuel cells, and tolling agreements)
8.58.824.723.2
Southern Power's PPAs for natural gas generation generally provide that the purchasers are responsible for either procuring the fuel (tolling agreements) or reimbursing Southern Power for substantially all of the cost of fuel relating to the energy delivered under such PPAs. Consequently, changes in such fuel costs are generally accompanied by a corresponding change in related fuel revenues and do not have a significant impact on net income. Southern Power is responsible for the cost of fuel for generating units that are not covered under PPAs. Power from these generating units is sold into the wholesale market or into the Southern Company power pool for capacity owned directly by Southern Power.
Purchased power expenses will vary depending on demand, availability, and the cost of generating resources throughout the Southern Company system and other contract resources. Load requirements are submitted to the Southern Company power pool on an hourly basis and are fulfilled with the lowest cost alternative, whether that is generation owned by Southern Power, an affiliate company, or external parties. Such purchased power costs are generally recovered through PPA revenues.
Details of Southern Power's fuel and purchased power expenses were as follows:
 
Third Quarter 2023 vs.
Third Quarter 2022
Year-To-Date 2023 vs.
Year-To-Date 2022
 (change in millions)(% change)(change in millions)(% change)
Fuel$(409)(67.6)$(748)(58.7)
Purchased power(111)(77.1)(146)(62.7)
Total fuel and purchased power expenses$(520)$(894)
In the third quarter 2023, total fuel and purchased power expenses decreased $520 million, or 69.4%, compared to the corresponding period in 2022. Fuel expense decreased $409 million primarily due to a $421 million decrease associated with the average cost of fuel. Purchased power expense decreased $111 million due to a $61 million decrease associated with the average cost of purchased power and a $50 million decrease associated with the volume of KWHs purchased.
For year-to-date 2023, total fuel and purchased power expenses decreased $894 million, or 59.3%, compared to the corresponding period in 2022. Fuel expense decreased $748 million due to an $835 million decrease associated with the average cost of fuel, partially offset by an $87 million increase associated with the volume of KWHs generated. Purchased power expense decreased $146 million primarily due to a $152 million decrease associated with the average cost of purchased power.
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Other Operations and Maintenance Expenses
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$(9)(8.0)$(5)(1.5)
In the third quarter 2023, other operations and maintenance expenses were $104 million compared to $113 million for the corresponding period in 2022. For year-to-date 2023, other operations and maintenance expenses were $327 million compared to $332 million for the corresponding period in 2022. The decreases were primarily due to $11 million from an arbitration interim award received for losses previously incurred. The year-to-date 2023 decrease was largely offset by an increase in generation maintenance expenses. See Note (C) to the Condensed Financial Statements under "General Litigation Matters – Southern Power" herein for additional information.
Gain on Dispositions, Net
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$——$18N/M
For year-to-date 2023, gain on dispositions, net was $20 million compared to $2 million for the corresponding period in 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
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$——$(7)(6.7)
For year-to-date 2023, interest expense, net of amounts capitalized was $98 million compared to $105 million for the corresponding period in 2022. The decrease was primarily due to lower average outstanding borrowings.
Income Taxes
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$38.3$(11)(22.4)
For year-to-date 2023, income tax expense was $38 million compared to $49 million for the corresponding period in 2022. The decrease was primarily due to a change in state apportionment methodology resulting from tax legislation enacted by the State of Tennessee in the second quarter 2023, partially offset by higher pre-tax earnings. See Note (G) to the Condensed Financial Statements herein for additional information.
Net Income (Loss) Attributable to Noncontrolling Interests
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$(2)(16.7)$(13)(23.6)
In the third quarter 2023, net income attributable to noncontrolling interests was $10 million compared to $12 million for the corresponding period in 2022. The decrease was primarily due to $7 million in higher HLBV loss allocations to wind tax equity partners, largely offset by an allocation of $6 million to equity partners related to an arbitration interim award received for losses previously incurred.
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Details of Southern Power's fuel and purchased power expenses were as follows:
 
Third Quarter 2022 vs.
Third Quarter 2021
Year-to-Date 2022 vs.
Year-to-Date 2021
 (change in millions)(% change)(change in millions)(% change)
Fuel$346 133.6$734 135.9
Purchased power103 251.2147 170.9
Total fuel and purchased power expenses$449 $881 
In the third quarter 2022, total fuel and purchased power expenses increased $449 million, or 150%, compared to the corresponding period in 2021. Fuel expense increased $346 million due to a $323 million increase associated with the average cost of fuel and a $23 million increase associated with the volume of KWHs generated. Purchased power expense increased $103 million due to a $79 million increase associated with the average cost of purchased power and a $24 million increase associated with the volume of KWHs purchased.
For year-to-date 2022, total fuel and purchased power expenses increased $881 million, or 141%, compared to the corresponding period in 2021. Fuel expense increased $734 million due to a $651 million increase associated with the average cost of fuel and an $83 million increase associated with the volume of KWHs generated. Purchased power expense increased $147 million due to a $134 million increase associated with the average cost of purchased power and a $13 million increase associated with the volume of KWHs purchased.
Other Operations and Maintenance Expenses
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$1920.1$237.4
In the third quarter 2022, other operations and maintenance expenses were $113 million compared to $94 million for the corresponding period in 2021. For year-to-date 2022, other operations and maintenance expenses were $331 million compared to $308 million for the corresponding period in 2021. The increases for the third quarter and year-to-date 2022 were primarily due to increases of $11 million and $13 million, respectively, related to the timing of non-outage generation maintenance expenses. Also contributing to the year-to-date 2022 increase was an increase of $11 million in transmission expenses to serve new natural gas PPAs, partially offset by $6 million related to the allocation in 2021 of uncollected settlements by the Energy Reliability Council of Texas market as a result of Winter Storm Uri.
Loss on Sales-Type Lease
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$(15)(100.0)$(14)(93.4)
In the third quarter 2021, a $15 million loss on sales-type lease was recorded upon commencement of the Garland battery energy storage facility PPA, $10 million of which was allocated through noncontrolling interests to Southern Power's partners in the project. See Notes 9 and 15 to the financial statements under "Lessor" and "Southern Power," respectively, in Item 8 of the Form 10-K for additional information.
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Gain on Dispositions, Net
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$—N/M$(37)(94.9)
For year-to-date 2022, gain on dispositions, net was $2 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)
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$27N/M$52N/M
In the third quarter 2022, income tax expense was $36 million compared to $9 million for the corresponding period in 2021. 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 $49 million compared to a benefit of $3 million 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.
Net Income (Loss) Attributable to Noncontrolling Interests
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$7N/M$(28)N/M
In the third quarter 2022, net income attributable to noncontrolling interests was $12 million compared to $5 million for the corresponding period in 2021. The increase was primarily due to lower HLBV loss allocations to tax equity partners, including loss allocation impacts associated with the Garland battery energy storage facility being placed in service in the third quarter 2021, and higher income allocations to equity partners.
For year-to-date 2022,2023, net loss attributable to noncontrolling interests was $55$68 million compared to $27$55 million for the corresponding period in 2021.2022. The increased lossincrease was primarily due to $16 million in higher HLBV loss allocations to wind tax equity partners and $12 million in lower income allocations to equity partners, partially offset by $15 million in lower loss allocation impacts associated with the Garlandallocations to battery energy storage facility being placed in service in the third quarter 2021 and higher income allocations to equity partners.
See Notes 9 and 15Note (C) to the financial statementsCondensed Financial Statements under "Lessor" and "Southern Power," respectively, in Item 8 of the Form 10-K"General Litigation Matters – Southern Power" herein for additional information.
Southern Company Gas
Operating Metrics
Southern Company Gas continues to focus on several operating metrics, including Heating Degree Days, customer count, and volumes of natural gas sold.
Southern Company Gas measures weather and the effect on its business using Heating Degree Days. Generally, increased Heating Degree Days result in higher demand for natural gas on Southern Company Gas' distribution system. Southern Company Gas has various regulatory mechanisms, such as weather and revenue normalization and straight-fixed-variable rate design, which limit its exposure to weather changes within typical ranges in each of its
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utility's respective service territory. Southern Company Gas also utilizes weather hedges to limit the negative income impacts in the event of warmer-than-normal weather.
The number of customers served by gas distribution operations and gas marketing services can be impacted by natural gas prices, economic conditions, and competition from alternative fuels. Gas distribution operations and gas marketing services' customers are primarily located in Georgia and Illinois.
Southern Company Gas' natural gas volume metrics for gas distribution operations and gas marketing services illustrate the effects of weather and customer demand for natural gas.
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. Southern Company Gas' base operating expenses, excluding cost of natural gas and 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
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$2748.2$12732.6
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$(1)(1.2)$(41)(7.9)
In the third quarter 2022,Southern Company Gas' net income for year-to-date 2023 was $83$475 million compared to $56$516 million for the corresponding period in 2021. Net2022. The decrease was primarily due to lower net income increased $14 million at gas distribution operations primarily due to base rate increases and continued investment in infrastructure replacement and $14 million at gas pipeline investments primarily as a result of higher earnings at SNG and lower income taxes related to the PennEast Pipeline project. The third quarter 2021 results also included a $93 million after-tax gain and $85 million of additional tax expense as a result of the July 1, 2021 sale of Sequent.
For year-to-date 2022, net income was $516 million compared to $389 million for the corresponding period in 2021. Net income increased $73 million at gas pipeline investments primarily as a result of a 2021 impairment charge$28 million regulatory disallowance at Nicor Gas and a $6 million decrease in net income at gas marketing services primarily related to the PennEast Pipeline project and $57 million at gas distribution operations primarily due to base rate increases and continued investment in infrastructure replacement. The year-to-date 2021 results also included $108 million of net income from Sequent, including the $93 million after-tax gain, and $85 million of additional tax expense as a result of the July 1, 2021 sale of Sequent.
hedge losses. See Notes 2, 7, and 15Note (B) to the financial statementsCondensed Financial Statements under "Southern Company Gas" in Item 8 of the Form 10-KGas – Infrastructure Replacement Programs and Capital Projects" herein for additional information.
Natural Gas Revenues, including Alternative Revenue Programs
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$23437.6$1,00433.5
In the third quarter 2022, natural gas revenues, including alternative revenue programs, were $857 million compared to $623 million for the corresponding period in 2021. For year-to-date 2022, natural gas revenues, including alternative revenue programs, were $4.0 billion compared to $3.0 billion for the corresponding period in 2021.
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Natural Gas Revenues
In the third quarter 2023, natural gas revenues were $0.7 billion compared to $0.9 billion for the corresponding period in 2022. For year-to-date 2023, natural gas revenues were $3.4 billion compared to $4.0 billion for the corresponding period in 2022. Details of the changes in natural gas revenues including alternative revenue programs, were as follows:
Third Quarter 2022Year-To-Date 2022
(in millions)(% change)(in millions)(% change)
Natural gas revenues – prior year$623 $2,994 
Estimated change resulting from –
Infrastructure replacement programs and base rate changes54 8.7 %186 6.2 %
Gas costs and other cost recovery172 27.6 955 31.9 
Gas marketing services1 0.2 14 0.5 
Wholesale gas services— — (187)(6.2)
Other7 1.1 36 1.1 
Natural gas revenues – current year$857 37.6 %$3,998 33.5 %
Third Quarter 2023 vs.
Third Quarter 2022
Year-To-Date 2023 vs.
 Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
Infrastructure replacement programs and rate changes$9 1.1 %$97 2.4 %
Gas costs and other cost recovery(181)(21.1)(645)(16.1)
Gas marketing services(22)(2.6)(44)(1.1)
Other26 3.0 11 0.3 
Natural gas revenues$(168)(19.6)%$(581)(14.5)%
Revenues from infrastructure replacement programs and base rate changes increased in the third quarter and year-to-date 20222023 compared to the corresponding periods 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. The year-to-date 2023 increase was partially offset by a regulatory disallowance at Nicor Gas. See Note 2 to the financial statements under "Southern Company Gas – Rate Proceedings" in Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements under "Southern Company Gas – Infrastructure Replacement Programs and Capital Projects" herein for additional information.
Revenues associated withfrom gas costs and other cost recovery increaseddecreased in the third quarter and year-to-date 20222023 compared to the corresponding periods in 20212022 primarily due to higherlower natural gas cost recovery.recovery associated with lower natural gas prices, 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 increased fordecreased in the third quarter and year-to-date 20222023 compared to the corresponding periodperiods in 20212022 primarily due to higher commoditylower natural gas prices and higher sales to commercial customers.
The changes in year-to-date 2022 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.lower variable price spreads.
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 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.weather:
Third QuarterYear-to-Date
Third Quarter
2022
vs.
normal
2022
vs.
2021
Year-to-Date
2022
vs.
normal
2022
vs.
2021
2023 vs.
normal
2023 vs.
2022
2023 vs. normal2023 vs. 2022
Normal(*)
20222021colder (warmer)
Normal(*)
20222021colder (warmer)
Normal(*)
20232022warmerwarmer
Normal(*)
20232022warmer
(in thousands)(in thousands)(in thousands)(in thousands)
IllinoisIllinois42 56 14 33.3 %300.0 %3,686 3,683 3,594 (0.1)%2.5 %Illinois40 18 56 (55.0)%(67.9)%3,755 3,216 3,683 (14.4)%(12.7)%
GeorgiaGeorgia3 — 3 — %— %1,431 1,361 1,396 (4.9)%(2.5)%Georgia3 — — — %— %1,461 1,029 1,361 (29.6)%(24.4)%
(*)Normal represents the 10-year averageaverage from January 1, 20122013 through September 30, 20212022 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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The following table provides the number of customers served by Southern Company Gas at September 30, 20222023 and 2021:2022:
September 30,September 30,
202220212022 vs. 2021202320222023 vs. 2022
(in thousands, except market share %)(% change)(in thousands, except market share %)(% change)
Gas distribution operationsGas distribution operations4,300 4,283 0.4 %Gas distribution operations4,316 4,300 0.4 %
Gas marketing servicesGas marketing servicesGas marketing services
Energy customers(*)
Energy customers(*)
598 603 (0.8)%
Energy customers(*)
656 598 9.7 %
Market share of energy customers in GeorgiaMarket share of energy customers in Georgia28.3 %28.9 %Market share of energy customers in Georgia29.9 %28.3 %
(*)Gas marketing services' customers are primarily located in Georgia, Ohio, 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
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$165N/M$89795.1
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$(192)(65.3)$(641)(34.8)
Excluding Atlanta Gas Light, which does not sell natural gas to end-use customers, natural gas distribution rates include provisions to adjust billings for fluctuations in natural gas costs. Therefore, gas costs recovered through natural gas revenues generally equal the amount expensed in cost of natural gas and do not affect net income from gas distribution operations. Cost of natural gas at gas distribution operations represented 78%76% and 87%84% of the total cost of natural gas in the third quarter and year-to-date 2022,2023, respectively. 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 third quarter 2022,2023, cost of natural gas was $294$102 million compared to $129$294 million for the corresponding period in 2021.2022. For year-to-date 2022,2023, cost of natural gas was $1.8$1.2 billion compared to $943 million$1.8 billion for the corresponding period in 2021.2022. The increasesdecreases reflect higherlower gas cost recovery as a result of increasesdecreases of 104%69% and 113%60% in natural gas prices in the third quarter and year-to-date 2022,2023, respectively, compared to the corresponding periods in 2021.
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2022.
The following table details the volumes of natural gas sold during allboth periods presented.presented:
Third Quarter2022 vs. 2021Year-to-Date2022 vs. 2021
2022202120222021
Gas distribution operations (mmBtu in millions)
Firm70 74 (5.4)%485 465 4.3 %
Interruptible22 23 (4.3)69 73 (5.5)
Total92 97 (5.2)%554 538 3.0 %
Gas marketing services (mmBtu in millions)
Firm:
Georgia3 3 — %24 26 (7.7)%
Illinois— — — 4 5 (20.0)
Other2 2 — 8 10 (20.0)
Interruptible large commercial and industrial3 3 — 11 10 10.0 
Total8 8 — %47 51 (7.8)%
Other Operations and Maintenance Expenses
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$145.9$536.8
In the third quarter 2022, other operations and maintenance expenses were $252 million compared to $238 million for the corresponding period in 2021. The increase was primarily due to higher compensation and benefit expenses and higher expenses passed through directly to customers primarily related to bad debt at gas distribution operations.
For year-to-date 2022, other operations and maintenance expenses were $829 million compared to $776 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 $106 million. The increase was primarily due to increases of $47 million in compensation and benefit expenses, $30 million in expenses passed through directly to customers primarily related to bad debt at gas distribution operations, $18 million in customer accounts expenses, and $15 million in technology-related costs.
Depreciation and Amortization
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$75.3$184.5
In the third quarter 2022, depreciation and amortization was $140 million compared to $133 million for the corresponding period in 2021. For year-to-date 2022, depreciation and amortization was $414 million compared to $396 million for the corresponding period in 2021. The increases were primarily due to continued infrastructure investments at the natural gas distribution utilities.
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Taxes Other Than Income Taxes
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$925.0$4225.3
In the third quarter 2022, taxes other than income taxes were $45 million compared to $36 million for the corresponding period in 2021. For year-to-date 2022, taxes other than income taxes were $208 million compared to $166 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 and an increase in invested capital tax expense at Nicor Gas. Revenue tax expenses are passed through directly to customers and have no impact on net income.
Gain on Dispositions, Net
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$(121)(100.0)$(122)(96.1)
The sale of Sequent in the third quarter 2021 resulted in a gain on dispositions, net of $121 million. See Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.
Earnings from Equity Method Investments
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$936.0$91N/M
In the third quarter 2022, earnings from equity method investments were $34 million compared to $25 million for the corresponding period in 2021. The increase was primarily due to higher earnings at SNG resulting from higher revenues primarily due to increased demand.
For year-to-date 2022, earnings from equity method investments were $105 million compared to $14 million for the corresponding period in 2021. The increase was primarily due to pre-tax impairment charges totaling $84 million in 2021 related to the PennEast Pipeline project and higher earnings at SNG resulting from higher revenues primarily due to increased demand.
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
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$215.4$113N/M
For year-to-date 2022, other income (expense), net was $47 million of income compared to $66 million of expense for the corresponding period in 2021. The change was largely due to charitable contributions totaling $101 million during the first and second quarters of 2021 and an increase of $12 million at gas distribution operations primarily related to an increase in non-service cost-related retirement benefits income. See Note (H) to the Condensed Financial Statements herein for additional information.
Third QuarterYear-to-Date
202320222023 vs. 2022202320222023 vs. 2022
Gas distribution operations (mmBtu in millions)
Firm71 70 1.4 %429 485 (11.5)%
Interruptible22 22 — 70 69 1.4 
Total93 92 1.1 %499 554 (9.9)%
Gas marketing services (mmBtu in millions)
Firm:
Georgia3 3 — %21 24 (12.5)%
Illinois1 — 100.0 5 4 25.0 
Other3 2 50.0 9 8 12.5 
Interruptible large commercial and industrial2 3 (33.3)10 11 (9.1)
Total9 8 12.5 %45 47 (4.3)%
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Income TaxesOther Operations and Maintenance Expenses
Third Quarter 2022 vs. Third Quarter 2021Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)(% change)(change in millions)(% change)
$(106)(79.7)$(63)(28.1)
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$124.8$556.7
In the third quarter 2022, income taxes2023, other operations and maintenance expenses were$27 $264 million compared to $133$252 million for the corresponding period in 2021.2022. The increase for the third quarter 2023 was primarily due to increases of $8 million in compensation and benefits, $5 million related to energy service contracts, and $4 million at gas marketing services primarily related to customer service and information. The increases were partially offset by a decrease of $12 million in expenses passed through to customers primarily related to bad debt and energy efficiency programs at gas distribution operations.
For Fyear-to-date 2023or year-to-date 2022, income taxes, other operations and maintenance expenses were $161$879 million compared to $224$824 million for the corresponding period in 2021.2022. The decreases wereincrease was primarily the resultdue to increases of $113$52 million in compensation and benefits, $30 million related to a regulatory disallowance at Nicor Gas, and an increase of $20 million related to energy service contracts, partially offset by a decrease of $32 million in expenses passed through to customers primarily related to bad debt and energy efficiency programs at gas distribution operations. See Note (B) to the Condensed Financial Statements under "Southern Company Gas – Infrastructure Replacement Programs and Capital Projects" herein for additional tax expense ininformation on the regulatory disallowance.
Depreciation and Amortization
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$53.6$153.6
In the third quarter 2021 as a result of2023, depreciation and amortization was $145 million compared to $140 million for the sale of Sequent. Partially offsettingcorresponding period in 2022. For year-to-date 2023, depreciation and amortization was $429 million compared to $414 million for the corresponding period in 2022. The increases were primarily due to continued infrastructure investments at the natural gas distribution utilities.
Taxes Other Than Income Taxes
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$(3)(6.7)$(5)(2.4)
In the third quarter 20222023, taxes other than income taxes was $42 million compared to $45 million for the corresponding period in 2022. For year-to-date 2023, taxes other than income taxes was $203 million compared to $208 million for the corresponding period in 2022. The decreases for the third quarter and year-to-date 2023 were primarily due to decreases of $3 million and $15 million, respectively, in revenue taxes. The year-to-date 2023 decrease was an increase of $9 million in income tax expense at gas distribution operations primarily as a result of higher pre-tax earnings. The year-to-date 2022 decrease was partiallylargely offset by increases of $8 million and $2 million in income taxpayroll and property taxes, respectively.
Interest Expense, Net of Amounts Capitalized
Third Quarter 2023 vs. Third Quarter 2022Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)(% change)(change in millions)(% change)
$1218.5$3920.9
In the third quarter 2023, interest expense, net of $25amounts capitalized was $77 million at gas distribution operationscompared to $65 million for the corresponding period in 2022. For year-to-date 2023, interest expense, net of amounts capitalized was $226 million compared to $187 million for the corresponding period in 2022. The increases for the third quarter and year-to-date 2023 were primarily as a resultassociated with increases of higher pre-tax earningsapproximately $8 million and $20$31 million, at gas pipeline investments primarily from $18 millionrespectively,
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related to the PennEast Pipeline project.higher interest rates and approximately $3 million and $7 million, respectively, related to higher outstanding debt. See Notes 7FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" and 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K"Financing Activities" herein for additional information.information on borrowings.
Segment Information
Operating revenues, operating expenses, and net income (loss) for each segment are provided in the table below. See Note (L) to the Condensed Financial Statements under "Southern Company Gas" herein for additional information.
 20222021
 Operating RevenuesOperating ExpensesNet Income (Loss) Operating RevenuesOperating ExpensesNet Income (Loss)
(in millions)(in millions)
Third Quarter
Gas distribution operations$751 $629 $59 $556 $459 $45 
Gas pipeline investments8 3 24 8 3 10 
Wholesale gas services(*)
— — — — (120)94 
Gas marketing services85 87 (2)52 52 (2)
All other16 12 2 11 25 (91)
Intercompany eliminations(3)— — (4)(4)— 
Consolidated$857 $731 $83 $623 $415 $56 
Year-to-Date
Gas distribution operations$3,533 $2,922 $365 $2,466 $1,936 $308 
Gas pipeline investments24 8 76 24 9 3 
Wholesale gas services(*)
— — — 188 (53)108 
Gas marketing services420 327 65 311 226 60 
All other43 48 10 29 60 (90)
Intercompany eliminations(22)(19)— (24)(24)— 
Consolidated$3,998 $3,286 $516 $2,994 $2,154 $389 
(*)As a result of the sale of Sequent, wholesale gas services is no longer a reportable segment for the third 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 (Loss) Operating RevenuesOperating ExpensesNet Income (Loss)
(in millions)(in millions)
Third Quarter
Gas distribution operations$619 $485 $70 $751 $629 $59 
Gas pipeline investments8 2 24 8 3 24 
Gas marketing services56 53 2 85 87 (2)
All other8 12 (14)16 12 2 
Intercompany eliminations(2)1 — (3)— — 
Consolidated$689 $553 $82 $857 $731 $83 
Year-to-Date
Gas distribution operations$3,002 $2,386 $352 $3,533 $2,922 $365 
Gas pipeline investments24 7 73 24 8 76 
Gas marketing services376 292 59 420 327 65 
All other30 30 (9)43 48 10 
Intercompany eliminations(15)(5)— (22)(19)— 
Consolidated$3,417 $2,710 $475 $3,998 $3,286 $516 
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
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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 third quarter and year-to-date 2022,2023, net income increased $14$11 million, or 31.1%18.6%, and $57 million, or 18.5%, respectively, when compared to the corresponding periodsperiod in 2021,2022, as described further below:
•Operating revenues decreased $132 million primarily due to lower gas cost 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.
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•Operating expenses decreased $144 million primarily due to a $152 million decrease in cost of natural gas as a result of lower gas prices compared to 2022, partially offset by higher depreciation resulting from additional assets placed in service and an increase related to energy service contracts. The decrease in operating expenses also includes costs passed through directly to customers, primarily related to bad debt expenses, energy efficiency programs, and revenue taxes.
•Interest expense, net of amounts capitalized increased $195$7 million primarily due to higher interest rates and $1.07 billion, respectively,higher average outstanding debt.
For year-to-date 2023, net income decreased $13 million, or 3.6%, when compared to the corresponding periodsperiod in 20212022, as described further below:
•Operating revenues decreased $531 million primarily due to higherlower gas cost 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 increased $170decreased $536 million and $986 million, respectively, when compared to the corresponding periods in 2021 primarily due to increasesa $599 million decrease in cost of $129 million and $802 million, respectively, in the cost ofnatural gas as a result of higher naturallower gas prices and lower volumes sold compared to 2021, higher compensation and benefit expenses, and2022, partially offset by higher depreciation resulting from additional assets placed in service.service, higher compensation and benefits, $30 million related to the regulatory disallowance at Nicor Gas, and a $20 million increase related to energy service contracts. The increasedecrease in operating expenses also includes higher costs passed through directly to customers, primarily related to bad debt expenses, energy efficiency programs, and revenue taxes.
•Other income and (expense) increased $3 million and $12 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 $5$32 million and $11 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"higher interest rates and "Financing Activities" herein for additional information on borrowings.higher average outstanding debt.
•Income taxes increased $9decreased $13 million and $25 million, respectively, when comparedprimarily as a result of the tax benefit resulting from the regulatory disallowance at Nicor Gas.
See Note (B) to the corresponding periods in 2021 primarily due to higher pre-tax earnings.Condensed Financial Statements under "Southern Company Gas – Infrastructure Replacement Programs and Capital Projects" herein for additional information.
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.
In the third quarter 2022, net income increased $14 million when compared to the corresponding period in 2021 primarily due to higher earnings at SNG resulting from higher revenues primarily due to increased demand and lower income taxes related to the PennEast Pipeline project.
For year-to-date 2022, net income increased $73 million when compared to the corresponding period in 2021 primarily due to pre-tax impairment charges totaling $84 million ($67 million after tax) in 2021 related to the equity method investment in the PennEast Pipeline project and higher earnings at SNG resulting from higher revenues primarily due to increased demand. See Note 7 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.
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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 third quarter 2022,2023, net income was flatincreased $4 million, when compared to the corresponding period in 20212022 primarily due to an increase of $35a $39 million decrease in operating expenses primarily due to higher cost of gas, largely offset by a related increase of $33$29 million decrease in operating revenues.revenue primarily due to lower price spreads and lower gas prices and a $4 million increase in operations and maintenance expenses primarily related to customer service and information.
For year-to-date 2022,2023, net income increased $5decreased $6 million, or 8.3%9.2%, when compared to the corresponding period in 20212022 primarily due to a $109$44 million decrease in operating revenue, primarily due to lower price spreads, lower gas prices, and lower volumes sold, as well as a $9 million increase in operating revenues as a result of higher commodity pricesoperations and higher sales to commercial customers, partiallymaintenance expenses, largely offset by a $101$44 million increasedecrease in operating expenses primarily due to $95 million in higher cost of natural gas and an increasegas.
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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 and a natural gas storage facility in California through its sale in September 2023. 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 Company Gas" herein for information regarding agreements by certain affiliates of Southern Company Gas to sell two natural gas storage facilities.additional information.
In the third quarter 2022,2023, net income increased $93decreased $16 million when compared to the corresponding period in 2021. The change2022, primarily relatesdue to additional tax expense as a result of the sale of Sequent in 2021 and a decrease of $13 millionin operating revenue and increases in operating expenses, related to lower depreciation in 2022interest expenses, and transaction costs in 2021 related to the sale of Sequent.income taxes.
For year-to-date 2022,2023, net income increased $100decreased $19 million when compared to the corresponding period in 2021.2022. The change primarily relates to additional tax expense as a result of the sale of Sequent in 2021 and an increase in operating revenues of $14 milliondecrease was primarily related to higher demand feesa decrease in operating revenue and favorable hedge gains at the natural gas storage businesses, higher sales from the renewable natural gas business,increases in interest expenses and income taxes, partially offset by a decrease in operating expenses primarily related to lower depreciation in 2022.2023, lower cost of gas, and lower taxes other than income taxes.
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 Unit 4, meeting the related cost and schedule projections, and completing the related cost recovery proceedings for Plant Vogtle Units 3 and 4 and the related cost recovery proceedings is another major factor.4.
Earnings in the electricity business will also depend upon maintaining and growing sales, considering, among other things, the adoption and/or penetration rates of increasingly energy-efficient technologies and increasing volumes of electronic commerce transactions, which could contribute to a net reduction in customer usage.
Global and U.S. economic conditions continue to be significantly affected by a series of demand and supply shocks that caused a global and national economic recession in 2020 and have been further impacted by the invasion of Ukraine and significant declines in labor force participation rates. The confluence of these disruptions has resulted in the 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 interest rates faster than any rate increase cycle in the last 40 years and to levels high enough to slow economic activity and reduce inflation rates, although target inflation levels have not yet been achieved. These actions and impacts, including increased costs for goods and services and borrowing costs, have led to a slowing of some economic activity and an increased risk of recession. 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 traditional 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 current economic environment has increased the uncertainty of future energy demand and operating costs. See RESULTS OF OPERATIONS herein for information on energy sales in the Southern Company system's service territory during the first nine months of 2023.
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Global and U.S. economic conditions have been significantly affected by a series of demand and supply shocks that caused a global and national economic recession in 2020. The drivers, speed, 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 nine months 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 negatively impacted by the COVID-19 pandemic when compared to pre-pandemic trends. Most prominently, the COVID-19 pandemic has negatively impacted global supply chains and business operations as suppliers continue to experience difficulties keeping up with strong demand for factory goods, which is being driven by low business inventories. In addition, rising inflation in 2021 and 2022 has resulted in increasing costs for many goods and services. As a result of persistently high inflation, interest rates have been on the rise and are expected to continue rising in the near term, which has impacted, and may continue to impact, the Registrants' borrowing costs. Based on these factors, the probability of the U.S. economy falling into a recession has heightened. The impacts of new COVID-19 variants, responses to the COVID-19 pandemic by both customers and governments, ongoing geopolitical threats, such as the escalation of the Russia-Ukraine war, and the potential of future COVID-19-related lockdowns in Asia or elsewhere could further disrupt global supply chains and increase the severity of a possible economic downturn in the Southern Company system's service territory. See RESULTS OF OPERATIONS herein for information on COVID-19-related impacts on energy demand in the Southern Company system's service territory during the first nine months of 2022.
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, construction, 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 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" hereinin Item 7 of the Form 10-K for additional information on recent tax legislation expandingregarding the Inflation Reduction Act's expansion of the availability of federal ITCs and PTCs.PTCs and Note (K) to the Condensed Financial Statements under "Southern Power" herein for information regarding acquisitions.
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.gas or policies designed to 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
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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 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.
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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 August 30, 2022,February 13, 2023, the EPA found that 15 states,published a final rule disapproving 19 state implementation plans (SIPs), including the States of Alabama and Mississippi, failed to submit regional haze stateunder 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 May 11, 2023, the State of Mississippi and Mississippi Power filed a joint motion for stay of the EPA's disapproval of the Mississippi SIP, which was granted on June 8, 2023. On April 13, 2023 and April 14, 2023, the State of Alabama, Alabama Power, and PowerSouth Energy Cooperative challenged the EPA's disapproval of the Alabama SIP in the U.S. Court of Appeals for the Eleventh Circuit. On June 13, 2023, the State of Alabama, Alabama Power, and PowerSouth Energy Cooperative filed a joint motion for stay of the EPA's disapproval of the Alabama SIP, which was granted on August 17, 2023.
On June 5, 2023, the EPA published the 2015 Ozone NAAQS Good Neighbor federal implementation plans (FIP), which became effective on August 4, 2023. On June 16, 2023 and June 27, 2023, the State of Mississippi and Mississippi Power, respectively, challenged the FIP for Mississippi in the U.S. Court of Appeals for the second 10-year planning period (2018 through 2028) byFifth Circuit. On June 30, 2023, the State of Mississippi and Mississippi Power filed in the U.S. Court of Appeals for the Fifth Circuit a joint motion for stay of the FIP for Mississippi and a request to hold the case in abeyance pending resolution of the Mississippi SIP disapproval case. On July 20, 2023, the U.S. Court of Appeals for the Fifth Circuit denied the motion for stay but granted the motion to hold the case in abeyance. On August 4, 2023, the State of Alabama, Alabama Power, and PowerSouth Energy Cooperative challenged the FIP for Alabama in the U.S. Court of Appeals for the Eleventh Circuit. On August 16, 2023, the State of Alabama, Alabama Power, and PowerSouth Energy Cooperative filed in the U.S. Court of Appeals for the Eleventh Circuit a joint motion requesting an abeyance of the case pending resolution of the Alabama SIP disapproval case, which was granted on August 30, 2023.
On July 31, 2021. The finding of failure to submit establishes a two-year deadline for2023, the EPA to promulgate a Federal Implementation Plan (FIP) to address these requirementspublished an Interim Final Rule that stays the implementation of the FIPs for each applicable state unless, beforestates with judicially stayed SIP disapprovals, including Mississippi. On September 29, 2023, the EPA promulgates a FIP,published an updated Interim Final Rule addressing judicial stays of states' interstate transport SIP disapprovals, including Alabama. The Interim Final Rule revises the state submits, and the EPA approves, a state implementation plan that meets the requirements. existing regulations to maintain currently applicable trading programs for those states.
The ultimate outcomeimpact of this matter, including any potential impacts to Alabama Power, Mississippi Power,the rule and Southern Power,associated legal matters cannot be determined at this time.time; however, implementation of the FIPs will likely result in increased compliance costs for the traditional electric operating companies.
Global Climate IssuesWater Quality
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 allowsMarch 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 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.be met no later than December 31, 2029. The EPA has announced its intentis also proposing that a limited number of facilities already achieving compliance with the 2020 ELG Reconsideration Rule be allowed to propose aelect 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 for existing power plants pursuant to the Clean Air Act by March 2023.is anticipated in 2024. The ultimate impact of the Court's decisionthis proposal cannot be determined at this time.time; however, it may result in significant compliance costs.
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In 2021, Alabama Power submitted its notice of planned participation (NOPP) to the Alabama Department of Environmental Management (ADEM), which included plans to retire Plant Barry Unit 5. Alabama Power subsequently indicated that it expected to retire Plant Barry Unit 5 in late 2023 or early 2024 subject to certain operating conditions. Alabama Power has continued to evaluate operating conditions relevant to the expected retirement of Plant Barry Unit 5 in late 2023 or early 2024 and now expects the unit to remain in service beyond these periods. Alabama Power plans to retire the unit on or before the NOPP compliance date of December 31, 2028. The ultimate impact of this matter cannot be determined at this time.
Coal Combustion Residuals
On May 18, 2023, the EPA published a proposal to establish two new categories of federally regulated CCR, legacy surface impoundments and CCR management units (CCRMUs). The EPA is proposing to define a legacy surface impoundment as a CCR surface impoundment that no longer receives CCR but contained both CCR and liquids on or after October 19, 2015 and that is located at an inactive electric generating facility. The EPA is proposing that owners and operators of legacy surface impoundments comply with all of the existing CCR Rule requirements with the exception of location restrictions and liner demonstrations. The proposal establishes accelerated compliance deadlines for legacy surface impoundments to meet regulatory requirements, including a requirement to initiate closure within 12 months after the effective date of the final rule. The EPA is also proposing to define CCRMUs as any area of land on which any non-containerized accumulation of CCR is received, placed, or otherwise managed at any time, that is not a CCR unit, including inactive CCR landfills and CCR units that closed prior to October 17, 2015. The EPA's proposal would require evaluations to be completed at both active facilities and inactive facilities with one or more legacy surface impoundment. CCRMUs must comply with the CCR Rule's provisions for groundwater monitoring, corrective action, closure, and post-closure activities. 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.
On August 14, 2023, the EPA published a proposal to deny the ADEM's CCR permit program application. Alabama Power's permits to close its CCR facilities remain valid under state law. In the absence of an EPA-approved state permit program, CCR facilities in Alabama will remain subject to both the federal and state CCR rules.
Based on requirements for closure and monitoring of landfills and ash ponds pursuant to the CCR Rule and applicable state rules, the traditional electric operating companies have periodically updated, and expect to continue periodically updating, their related cost estimates and ARO liabilities for each CCR unit as additional information related to closure methodologies, schedules, and/or costs becomes available. Some of these updates have been, and future updates may be, material. Additionally, the closure designs and plans in the States of Alabama and Georgia are subject to approval by environmental regulatory agencies. Absent continued recovery of ARO costs through regulated rates, results of operations, cash flows, and financial condition for Southern Company and the traditional electric operating companies could be materially impacted. See Note 6 to the financial statements in Item 8 of the Form 10-K and Notes (A) and (C) to the Condensed Financial Statements under "Asset Retirement Obligations" and "General Litigation Matters – Alabama Power," respectively, herein for additional information.
Greenhouse Gases
On May 23, 2023, the EPA published the proposed GHG standards and state plan guidelines for fossil fuel-fired power plants. The proposal includes GHG limits for both new and existing units based on technologies such as carbon capture and sequestration, low-GHG hydrogen co-firing, and natural gas co-firing. The proposed standards for new combustion turbines include subcategories for different operational uses including peaking, intermediate, and base load. Compliance with new source standards, once finalized, begins when the unit comes online. The EPA proposes a phased approach for intermediate and base load units that increases in stringency over time. The proposed state plan guidelines for existing units include subcategories based on unit type, retirement date, size, and capacity factor. The EPA is proposing a 24-month state plan submission deadline for the existing unit implementation and proposes to potentially allow some limited form of trading and averaging for the state plans. Existing source compliance is proposed to begin as early as January 1, 2030, depending on the unit type and
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subcategory. The EPA also proposes to simultaneously repeal the Affordable Clean Energy rule. 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.
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.
Alabama Power
On September 23, 2022, the FERC authorizedJuly 14, 2023, Alabama Power issued a request for proposals of between 100 MWs and 1,200 MWs of capacity beginning no later than December 1, 2028, with consideration for commencement as early as 2025. Any purchases will depend upon the cost competitiveness of the respective offers, as well as other options available to use updated depreciation rates from its 2021 depreciation study effective January 1, 2023. The study was also provided toAlabama Power, and would ultimately require approval by the Alabama PSC, and the new depreciation rates willPSC. The ultimate outcome of this matter cannot be reflected in Alabama Power's future rate filings. The updated depreciation rates are expected to result in an approximately $500 million increase in annual depreciation expense. See Notes 2 and 5 to the financial statements under "Alabama Power" and "Depreciation and Amortization," respectively, in Item 8 of the Form 10-K for additional information.determined at this time.
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 andUnit 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 8.8, which was placed in service on November 1, 2023.
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" herein 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 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.
Income Tax Matters
In June 2023, the Internal Revenue Service issued temporary regulations related to the transferability of tax credits. Southern Company and certain subsidiaries are considering the sale of tax credits that are eligible to be transferred. See Note (G) to the Condensed Financial Statements herein for additional information. Additionally, see MANAGEMENT'S DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL – "Income Tax Matters" in Item 7 of the Form 10-K for additional information.
On August 16, 2022,information regarding the Inflation Reduction Act (IRA) was signed into law. The IRA extends, expands, and increasesAct's expansion of the availability of federal ITCs and PTCs for clean energy projects, allows PTCs for solar projects, adds ITCs for stand-alone energy storage projects with an option to elect out of the tax normalization requirement, and allows for the transferability of the tax credits. The IRA extends and increases the tax credits for carbon capture and sequestration projects and adds tax credits for clean hydrogen and nuclear projects. Additional ITC and PTC amounts are available if the projects meet domestic content requirements or are located in low-income or energy communities.PTCs.
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The IRA also enacted a 15% corporate minimum tax on book income, with some adjustments including adjustments for pension and tax depreciation. The 15% corporate minimum tax on book income can be reduced by energy tax credits.
For solar projects placed in service in 2022 through 2032, the IRA provides for a 30% ITC and an option to claim a PTC instead of an ITC. Starting in 2023 and through 2032, the IRA provides for a 30% ITC for stand-alone energy storage projects. For wind projects placed in service in 2022 through 2032, the IRA provides for a 100% PTC. The PTC rate for 2022 is 2.6 cents per KWH and will be adjusted for inflation annually. The same PTC rate applies for solar projects for which the PTC option has been elected. To realize the full value of ITCs and PTCs, the IRA requires satisfaction of prevailing wage and apprenticeship requirements.
Implementation of the IRA provisions is subject to the issuance of additional guidance by the U.S. Treasury Department, and the ultimate impacts cannot be determined at this time; however, the IRA is not expected to have a material impact on the Registrants' financial statements for the year ending December 31, 2022.
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.
Traditional Electric Operating Companies
See BUSINESS – "The Southern Company System – Traditional Electric Operating Companies" in Item 1 of the Form 10-K for information regarding the Southeast Energy Exchange Market (SEEM). On July 14, 2023, the U.S. Court of Appeals for the District of Columbia Circuit vacated the FERC's orders related to SEEM and remanded the proceeding to the FERC. The ultimate outcome of this matter cannot be determined at this time.
ACCOUNTING POLICIES
See MANAGEMENT'S DISCUSSION AND ANALYSIS – ACCOUNTING POLICIES in Item 7 of the Form 10-K for a complete discussion of the Registrants' critical accounting policies and estimates, as well as recently issued accounting standards.
Application 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)
On August 30, 2023, as provided for in the December 2017 Georgia PSC approval of the seventeenth VCM report, Georgia Power filed with the Georgia PSC an application to adjust rates to include reasonable and prudent Plant Vogtle Units 3 and 4 costs (Application). The Application provides the necessary support to justify the reasonableness, prudence, and recovery of $8.826 billion in total construction and capital costs, $1.07 billion in associated retail rate base items, and the operating costs related to the full operation and output of Plant Vogtle Units 3 and 4. Also on August 30, 2023, the staff of the Georgia PSC filed a stipulated agreement (Prudency Stipulation) among Georgia Power, the staff of the Georgia PSC, and certain intervenors. If the Prudency Stipulation is approved, Georgia Power will recover $7.562 billion in total construction and capital costs and associated retail rate base items of $1.02 billion, which includes AFUDC financing costs above $4.418 billion (the Georgia PSC-certified amount) up to $7.562 billion. Georgia Power expects the Georgia PSC to render a final decision on these matters on December 19, 2023.
As of September 30, 2022,2023, Georgia Power revised its total project capital cost forecast to $10.4$10.8 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 $49$17 million and is based on projectedthe actual in-service dates at the enddate of the first quarterJuly 2023 and the fourth quarter 2023 for Units 3 and 4, respectively.
The projected schedule for Unit 3 primarily depends on the paceand a projected in-service date of system and area transitions to operations, including the completion of closure documentation necessary to support start-up testing, and the progression of start-up, final component, and pre-operational testing, which may be impacted by equipment or other operational failures. The projected scheduleMarch 2024 for Unit 4 primarily depends on Unit 3 progress through start-up4.
On October 5, 2023 and testing; overall construction productivityOctober 17, 2023, Georgia Power reached agreements with OPC and production levels improving, particularly in electrical installation, including terminations;Dalton, respectively, to resolve its respective dispute with each of OPC and appropriate levelsDalton regarding the proper interpretation of craft laborers, particularly electricians, being addedthe cost-sharing and maintained. Any further delays could result in later in-service datestender provisions of the joint ownership agreements relating to the Global Amendments. Under the terms of the agreements with OPC and cost increases.Dalton, among other items, (i) each of OPC and Dalton retracted its exercise of the tender
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AND RESULTS OF OPERATIONS (Continued)
During the first nine months of 2022, established construction contingency totaling $170 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 and recorded pre-tax charges of $36 million ($27 million after tax) and $32 million ($24 million after tax) to replenish construction contingency in the second quarter 2022 and the third quarter 2022, respectively.
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" herein) or the extent to which COVID-19-related costs impact those 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. On June 17, 2022 and July 26, 2022, OPC and Dalton, respectively, notified Georgia Power of their purported exercises of their tender options. On September 29, 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;4, (ii) Georgia Power made payments immediately after execution of the agreements of $308 million and $17 million to OPC and Dalton, respectively, representing payment for a portion of each of OPC's and Dalton's costs of construction for Plant Vogtle Units 3 and 4 previously incurred, (iii) Georgia Power will pay a portion of MEAG Power'seach of OPC's and Dalton's further 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 totalbe in an aggregate amount of approximately $79$105 million and $6 million for OPC and Dalton, respectively, based on the current project capital cost forecast;forecast, and (iii)(iv) Georgia Power will pay 20%66% of MEAG Power'seach of OPC's and Dalton's costs of construction with respect to any amounts overabove the current project capital cost forecast, with no further adjustment for force majeure costs.
Georgia Power recorded additionala pre-tax charges (credits)charge to income in the second quarter 2022 and the third quarter 20222023 of approximately $16$160 million ($12120 million after tax) and $(102) million ($(76) million after tax), respectively, associated with the cost-sharing and tender provisions of the Global Amendments, including the settlementsettlements with MEAG Power,OPC and Dalton, which areis included in the total project capital cost forecast. The settlement with MEAG Power doesforecast and will not resolve the separate pending litigation with OPC, including Dalton's associated complaint, regarding the cost-sharing and tender provisions of the Global Amendments described in Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction – Joint Owner Contracts" herein. Georgia Power may be required to record further pre-tax charges to income of up to approximately $300 million associated with these provisions for OPC and Dalton based on the current project capital cost forecast.recovered from retail customers.
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 2023March 2024 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 $15$25 million per month, for Unit 3 and $35 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 under "Georgia Power – Nuclear Construction" and Note (B) to the Condensed Financial Statements herein under "Georgia Power – Plant Vogtle Units 3 and 4 Prudency Proceeding" and " – 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 September 30, 2022.2023. 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.
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At the end of the third quarter 2022,2023, the market price of Southern Company's common stock was $68.00$64.72 per share (based on the closing price as reported on the NYSE) and the book value was $28.69$28.77 per share, representing a market-to-book ratio of 237%225%, 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 third quarter 20222023 was $0.68$0.70 per share compared to $0.66$0.68 per share in the third quarter 2021.2022.
Cash Requirements
See MANAGEMENT'S DISCUSSION AND ANALYSIS – FINANCIAL CONDITION AND LIQUIDITY – "Cash Requirements" in Item 7 of the Form 10-K for a description of the Registrants' significant cash requirements.
The Registrants' significant cash requirements include estimated capital expenditures associated with their construction programs 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
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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 and AROs will be fully recovered. Additionally, expenditures associated with Southern Power's planned acquisitions may vary due to market opportunities and the execution of its growth strategy. See Note 15 to the financial statements in Item 8 of the Form 10-K and Note (K) to the Condensed Financial Statements herein under "Southern Power" for additional information regarding Southern Power's plant acquisitions and construction projects.
The construction program of Georgia Power includes Plant Vogtle Units 3 andUnit 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.
See Note (B) to the Condensed Financial Statements under "Georgia Power – Integrated Resource Plans" herein for information regarding Georgia Power's 2023 IRP Update, which includes requests that, if approved, would result in incremental cash requirements for capital expenditures and PPAs.
Southern Power's construction program includes the South Cheyenne and Millers Branch solar projects. The remaining aggregate construction costs for these projects are expected to be between $300 million and $375 million. The ultimate outcome of this matter cannot be determined at this time. See Note (K) to the Condensed Financial Statements under "Southern Power" herein for additional information.
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. 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.
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
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substantial portion of the Registrants' cash needs. During the nine months ended September 30, 2022, Southern Power utilized tax credits, which provided $218 million in operating cash flows. In addition, Southern Power plans to utilize tax equity partnership contributions (as discussed further herein). Georgia Power intends to utilize a mix of senior note issuances, short-term floating rate bank loans, and commercial paper issuances to fundcontinue funding operating cash flows related to fuel cost under recovery. Subsequent to September 30, 2022, Georgia Power borrowed $250 million pursuant to a short-term uncommitted bank credit arrangement and intends to borrow up to an additional $1.2 billion pursuant to a short-term floating rate bank loan in November 2022.
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 nine months ended September 30, 2022,2023, 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.
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AND RESULTS OF OPERATIONS (Continued)
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 September 30, 2022,2023, 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.
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 September 30, 20222023 for the applicable Registrants:
At September 30, 2022Southern CompanyGeorgia
Power		Mississippi PowerSouthern Power
At September 30, 2023At September 30, 2023Southern CompanyGeorgia
Power		Mississippi PowerSouthern Company Gas
(in millions)(in millions)
Current liabilities in excess of current assetsCurrent liabilities in excess of current assets$2,438 $2,442 $18 $325 Current liabilities in excess of current assets$2,126 $1,690 $239 $176 
The Registrants believe the need for working capital can be adequately met by utilizing operating cash flows, as well as commercial paper, lines of credit, and short-term bank notes, as market conditions permit. In addition, under certain circumstances, the Subsidiary Registrants may utilize equity contributions and/or loans from Southern Company.
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AND RESULTS OF OPERATIONS (Continued)
Bank Credit Arrangements
At September 30, 2022,2023, the Registrants' unused committed credit arrangements with banks were as follows:
At September 30, 2022Southern
Company
parent		Alabama PowerGeorgia
Power		Mississippi Power
Southern
 Power(a)
Southern Company Gas(b)
SEGCOSouthern
Company
At September 30, 2023At September 30, 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 $569 $1,748 $30 $7,596 Unused committed credit$1,998 $1,350 $1,726 $275 $589 $1,598 $30 $7,566 
(a)At September 30, 2022,2023, 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$800 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 thecertain revenue bonds of the traditional electric operating companies and the commercial paper programs of the Registrants, Nicor Gas, and SEGCO. The amount ofAt September 30, 2023, outstanding variable rate demand revenue bonds of the traditional electric operating companies outstanding requiringwith allocated liquidity support at September 30, 2022 wastotaled approximately $1.4$1.7 billion (comprised of approximately $789$818 million at Alabama Power, $619$819 million at Georgia Power, and $34$69 million at Mississippi Power). In addition, at September 30, 2022,2023, Alabama Power and Georgia Power had approximately $288$120 million and $325 million, respectively, of fixed rate revenue bonds outstanding that are required to be remarketed within the next 12 months. The variable rate demand revenue bonds and fixed rate revenue bonds required to be remarketed within the next 12 months are classified as long-term debt on the balance sheets as a result of available long-term committed credit.
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
September 30, 2022
Short-term Debt During the Period(*)
Short-term Debt at
September 30, 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$1,398 3.5 %$1,859 2.5 %$2,809 Southern Company$1,726 6.0 %$2,069 5.9 %$2,615 
Alabama PowerAlabama Power— — — — — Alabama Power— — 2 5.3 25 
Georgia PowerGeorgia Power814 3.4 443 2.7 815 Georgia Power1,250 6.2 1,534 6.0 1,910 
Mississippi PowerMississippi Power— — 3 2.1 23 Mississippi Power20 5.5 41 5.5 76 
Southern PowerSouthern Power208 3.6 199 2.5 306 Southern Power359 5.6 88 5.9 359 
Southern Company Gas:Southern Company Gas:Southern Company Gas:
Southern Company Gas CapitalSouthern Company Gas Capital$35 3.4 %$347 2.5 %$547 Southern Company Gas Capital$75 5.5 %$211 5.5 %$440 
Nicor Gas325 3.5 218 2.7 330 
Southern Company Gas Total$360 3.5 %$565 2.6 %
(*)Average and maximum amounts are based upon daily balances during the three-month period ended September 30, 2022.2023.
Analysis of Cash Flows
Net cash flows provided from (used for) operating, investing, and financing activities for the nine months ended September 30, 20222023 and 20212022 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)
Nine Months Ended
September 30, 2023
Nine Months Ended
September 30, 2023
Operating activitiesOperating activities$5,740 $1,522 $1,969 $260 $799 $1,644 
Investing activitiesInvesting activities(6,721)(1,546)(3,376)(280)(224)(1,226)
Financing activitiesFinancing activities834 66 1,183 (12)(451)(102)
(in millions)
Nine Months Ended September 30, 2022Nine Months Ended September 30, 2022
Nine Months Ended
September 30, 2022
Operating activitiesOperating activities$5,017 $1,072 $1,482 $279 $827 $1,532 Operating activities$5,017 $1,072 $1,482 $279 $827 $1,532 
Investing activitiesInvesting activities(5,952)(1,641)(2,653)(219)(128)(1,239)Investing activities(5,952)(1,641)(2,653)(219)(128)(1,239)
Financing activitiesFinancing activities1,119 967 1,171 (72)(603)(313)Financing activities1,119 967 1,171 (72)(603)(313)
Nine Months Ended September 30, 2021
Operating activities$5,081 $1,419 $2,350 $159 $750 $757 
Investing activities(5,850)(1,335)(2,572)(182)(753)(966)
Financing activities1,802 56 505 130 33 222 
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 decreased $64 millionincreased $0.7 billion for the nine months ended September 30, 20222023 as compared to the corresponding period in 20212022 primarily due to decreasedincreased fuel cost recovery at the traditional electric operating companies and the timing of customer receivable collections, largelypartially offset by the timing of vendor payments and increased natural gas cost recovery at the natural gas distribution utilities.payments.
The net cash used for investing activities for the nine months ended September 30, 20222023 was primarily related to the Subsidiary Registrants' construction programs.
The net cash provided from financing activities for the nine months ended September 30, 20222023 was primarily related to net issuances of long-term debt, and the issuance of common stock to settle the purchase contracts entered into as part of the 2019 Series A Equity Units (Equity Units) (as discussed in Note (F) to the Condensed Financial Statements under "Equity Units" herein), partially offset by common stock dividend payments.payments, net repayments of short-term bank loans, and a reduction in commercial paper borrowings.
Alabama Power
Net cash provided from operating activities decreased $347increased $450 million for the nine months ended September 30, 20222023 as compared to the corresponding period in 20212022 primarily due to decreasedan increase in fuel cost recovery and the timing of customer receivable collections, and fossil fuel stock purchases, partially offset by the timing of vendor payments.payments and fuel stock purchases.
The net cash used for investing activities for the nine months ended September 30, 20222023 was primarily related to gross property additions, including approximately $182$66 million related to the construction of Plant Barry Unit 8 and $171 million related to the acquisition of the Calhoun Generating Station.8. See NotesNote (B) and (K) to the Condensed Financial Statements under "Alabama Power" herein for additional information.
The net cash provided from financing activities for the nine months ended September 30, 20222023 was primarily related to the net issuance of long-term debt and capital contributions from Southern Company partiallyand issuances of revenue bonds and senior notes, largely offset by common stock dividend payments.
Georgia Power
Net cash provided from operating activities decreased $868increased $487 million for the nine months ended September 30, 20222023 as compared to the corresponding period in 20212022 primarily due to decreasedincreased fuel cost recovery, and the timing of customer receivable collections and fossil fuel stock purchases, partially offset by the timing of vendor payments.
The net cash used for investing activities for the nine months ended September 30, 20222023 was primarily related to gross property additions, including a total of approximately $820$590 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 nine months ended September 30, 20222023 was primarily related to capital contributions from Southern Company, net issuances of senior notes, a net increase in short-term borrowings, and capital contributions from Southern Company,reofferings of pollution control revenue bonds which were previously held by Georgia Power, partially offset by common stock dividend payments.payments and a net decrease in short-term borrowings.
Mississippi Power
Net cash provided from operating activities increased $120decreased $19 million for the nine months ended September 30, 20222023 as compared to the corresponding period in 20212022 primarily due to the timing of vendor payments, partially offset by the timing of customer receivable collections.
The net cash used for investing activities for the nine months ended September 30, 20222023 was primarily related to gross property additions.
The net cash used for financing activities for the nine months ended September 30, 20222023 was primarily related to common stock dividend payments, partially offset by capital contributions from Southern Company.the issuance of senior notes.
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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 $77decreased $28 million for the nine months ended September 30, 20222023 as compared to the corresponding period in 20212022 primarily due to an increase in wholesale revenues driven by higher market prices of energy and the timing of vendor payments and a change in the utilization of tax credits, partially offset by the timing of customer receivable collections.
The net cash used for investing activities for the nine months ended September 30, 20222023 was primarily related to the acquisitions of the South Cheyenne and Millers Branch solar facilities and ongoing construction payments.activities, partially offset by proceeds from the sale of equity investments. See Note (K) to the Condensed Financial Statements under "Southern Power" herein for additional information.
The net cash used for financing activities for the nine months ended September 30, 20222023 was primarily related to the repayment of senior notes at maturity, common stock dividend payments, and net capital distributions to noncontrolling interests, and a decrease in commercial paper borrowings, partially offset by a capital contributionnet proceeds from Southern Company.short-term debt.
Southern Company Gas
Net cashcash provided from operating activities increased $775$112 million for the nine months ended September 30, 20222023 as compared to the corresponding period in 20212022 primarily due to increased natural gas cost recovery andthe timing of customer receivable collections, partially offset by the timing of vendor payments, partially offset by an increase in natural gas for sale as a result of higher prices for natural gas purchases.payments.
The net cash used for investing activities for the nine months ended September 30, 20222023 was primarily related to construction of transportation and distribution assets recovered through base ratesrates and infrastructure investment recovered through replacement programs at gas distribution operations.
The net cash used for financing activities for the nine months endedended September 30, 20222023 was primarily related to repayment of short-term borrowings and common stock dividend payments, and net repayments of short-term debt, partially offset by net issuances of long-term debt and capital contributions from Southern Company.Company and proceeds from other long-term debt.
Significant Balance Sheet Changes
Southern Company
Significant balance sheet changes for the nine months ended September 30, 20222023 included:
•an increase of $3.2 billion in total stockholders' equity primarily related to net income and the issuance of common stock to settle the purchase contracts entered into as part of the Equity Units (as discussed in Note (F) to the Condensed Financial Statements under "Equity Units" herein), partially offset by common stock dividend payments;
•an increase of $2.4 billion in total property, plant, and equipment primarily related to the Subsidiary Registrants' construction programs, net of the reclassification of $0.6 billion to other regulatory assets and $0.4 billion to regulatory assets associated with AROs upon Georgia Power's retirement of Plant Wansley Units 1 and 2;
•an increase of $1.4$4.1 billion in long-term debt (including securities due within one year) related to new issuances;
•an increase of $1.3$3.7 billion in deferred under recovered fuel clause revenuestotal property, plant, and equipment primarily related to the Subsidiary Registrants' construction programs;
•a decrease of $0.9 billion in notes payable due to higher fuelthe repayment of short-term bank loans and purchased power costs at Georgia Power;a reduction in commercial paper borrowings;
•an increase of $1.1$0.8 billion in total stockholders' equity primarily related to net income, partially offset by common stock dividend payments;
•an increase of $0.7 billion in accumulated deferred income taxes primarily related to the expected utilization of ITCs in 2022 and the2023, as well as an increase in under recovered fuel clause revenues;property-related timing differences;
•an increasea decrease of $0.9$0.6 billion in accounts payable primarily related to the timing of vendor payments; and
•an increase of $0.7 billion in regulatory assets associated with AROs, net of the reclassification from property, plant, and equipment discussed above, primarily due to a decrease of $0.5 billion in the fair valueunbilled revenues as a result of the investments held in Alabama Power's and Georgia Power's nuclear decommissioning trusts; and
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•an increase of $0.6 billion in other deferred credits and liabilities primarily due to changes in the fair value of interest rate and foreign currency derivatives.seasonality.
See "Financing Activities" herein and Notes (B), (F), and (G), (I), and (J) to the Condensed Financial Statements herein for additional information.
Alabama Power
Significant balance sheet changes for the nine months ended September 30, 2022 included:
•an increase of $1.2 billion in common stockholder's equity primarily due to capital contributions from Southern Company, partially offset by dividends paid to Southern Company;
•an increase of $1.1 billion in long-term debt (including securities due within one year) primarily due to net issuances of senior notes;
•an increase of $0.8 billion in total property, plant, and equipment primarily related to the construction of Plant Barry Unit 8, the acquisition of the Calhoun Generating Station, and construction of distribution and transmission facilities;
•an increase of $0.4 billion in cash and cash equivalents, as discussed further under "Analysis of Cash Flows – Alabama Power" herein; and
•an increase of $0.4 billion in regulatory assets associated with AROs primarily due to a decrease of $0.3 billion in the fair value of the investments held in Alabama Power's nuclear decommissioning trust.
See "Financing Activities – Alabama Power" herein and Notes (I) and (K) to the Condensed Financial Statements herein for additional information.
Georgia Power
Significant balance sheet changes for the nine months ended September 30, 2022 included:
•an increase of $1.4 billion in common stockholder's equity primarily due to net income and capital contributions from Southern Company, partially offset by dividends paid to Southern Company;
•an increase of $1.3 billion in deferred under recovered fuel clause revenues due to higher fuel and purchased power costs;
•an increase of $1.1 billion in total property, plant, and equipment primarily related to the construction of generation, transmission, and distribution facilities, including $956 million for Plant Vogtle Units 3 and 4, net of $0.6 billion reclassified to other regulatory assets and $0.4 billion reclassified to regulatory assets associated with AROs due to the retirement of Plant Wansley Units 1 and 2 as approved in Georgia Power's 2022 IRP;
•an increase of $0.9 billion in long-term debt (including securities due within one year) primarily due to net issuances of senior notes;
•an increase of $0.8 billion in notes payable due to an increase in commercial paper and short-term bank debt;
•an increase of $0.6 billion in accumulated deferred income taxes primarily due to the increase in under recovered fuel clause revenues and the expected reduction in federal and state credit carryforward balances in 2022;
•an increase of $0.3 billion in regulatory assets associated with AROs, net of the reclassification from property, plant, and equipment discussed above, primarily due to a decrease in the fair value of the investments held in Georgia Power's nuclear decommissioning trust;
•an increase of $0.3 billion in other accounts payable due to the timing of vendor payments; and
•an increase of $0.3 billion in customer accounts receivable primarily due to higher customer usage and the timing of collections.
See "Financing Activities – Georgia Power" herein and Note (B) under "Georgia Power – Nuclear Construction" and " – Integrated Resource Plans" and Note (I) 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)
MississippiAlabama Power
Significant balance sheet changes for the nine months ended September 30, 20222023 included:
•an increase of $79$664 million in common stockholder's equity related to net income and capital contributions from Southern Company, partially offset by dividends paid to Southern Company and
•an increase of $66 million in total property, plant, and equipment primarily related to the construction of transmission and distribution facilities.
Southern Power
Significant balance sheet changes for the nine months ended September 30, 2022 included:
•a decrease of $756 million in long-term debt (including securities due within one year) primarily due to the redemption of senior notes;
•a decrease of $289 million in total property, plant, and equipment primarily due to continued depreciation of assets;
•an increase of $282 million in common stockholder's equity primarily due to capital contributions from Southern Company and net income, partially offset by dividends paid to Southern Company and distributions to noncontrolling interests; and
•increases of $194 million in accrued taxes and $100 million in accumulated deferred income tax liabilities primarily related to the expected utilization of ITCs in 2022.
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 nine months ended September 30, 2022 included:
•a decrease of $849 million in notes payable due to repayments of short-term debt and commercial paper borrowings;
•an increase of $760 million in total property, plant, and equipment primarily related to the construction of transportation and distribution assets and additional infrastructure investment;
•an increase of $522 million in common stockholder's equity related to net income and capital contributions from Southern Company, partially offset by dividends paid to Southern Company;
•an increase of $459$553 million in long-term debt (including securities due withwithin one year) primarily due to issuancesthe issuance of revenue bonds and senior notesnotes;
•an increase of $426 million in total property, plant, and first mortgage bonds, partially offset by the repayment of medium-term notes and adjustmentsequipment primarily related to fair value hedges;the construction of Plant Barry Unit 8 and transmission and distribution facilities;
•a decrease of $313 million in total accounts receivable primarily relating to decreases of $166 million in customer accounts receivable and $156 million in unbilled revenues as a result of seasonality;
•an increase of $231 million in other accounts payable due to seasonality and the timing of vendor payments; and
•a decrease of $221$401 million in other regulatory assets, deferred primarily due to a $207decrease in the under recovered fuel clause balance;
•a decrease of $299 million reduction in natural gas cost under recovery.deferred credits related to income taxes primarily due to the amortization of accumulated deferred income taxes; and
•a decrease of $264 million in other accounts payable primarily due to the timing of vendor payments.
See "Financing Activities – Alabama Power" herein and Notes (B) and (G) to the Condensed Financial Statements herein under "Alabama Power" for additional information.
Georgia Power
Significant balance sheet changes for the nine months ended September 30, 2023 included:
•an increase of $2.5 billion in total property, plant, and equipment primarily related to the construction of generation, transmission, and distribution facilities, including $944 million for Plant Vogtle Units 3 and 4;
•an increase of $2.0 billion in common stockholder's equity primarily due to capital contributions from Southern Company Gas"and net income, partially offset by dividends paid to Southern Company;
•an increase of $1.1 billion in long-term debt (including securities due within one year) primarily due to net issuances of senior notes;
•an increase of $556 million in other accounts payable primarily due to the timing of vendor payments;
•a decrease of $350 million in notes payable primarily due to repayments of short-term bank debt; and
•an increase of $321 million in customer accounts receivable, net primarily due to the timing of collections.
See "Financing Activities – Georgia Power" herein and Note (B) to the Condensed Financial Statements herein under "Georgia Power – Nuclear Construction" for additional information.
Mississippi Power
Significant balance sheet changes for the nine months ended September 30, 2023 included:
•an increase of $120 million in total property, plant, and equipment primarily related to the construction of transmission and distribution facilities;
•an increase of $99 million in long-term debt (including securities due within one year) primarily due to issuances of senior notes;
•a decrease of $45 million in other accounts payable due to the timing of vendor payments;
•decreases of $44 million in affiliated receivables and $42 million in affiliated accounts payable primarily due to fluctuations in affiliate sales/purchases and the timing of payments; and
•an increase of $43 million in common stockholder's equity related to net income and capital contributions from Southern Company, partially offset by dividends paid to Southern Company.
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 nine months ended September 30, 2023 included:
•increases of $340 million in accumulated deferred income tax liabilities and $125 million in prepaid income taxes primarily related to the expected utilization of ITCs in 2023;
•a decrease of $292 million in long-term debt (including securities due within one year) primarily related to the repayment of senior notes at maturity;
•a decrease of $137 million in total property, plant, and equipment due to the continued depreciation of assets, partially offset by an increase in construction work in progress, primarily related to the acquisition of the South Cheyenne and Millers Branch solar facilities;
•an increase of $134 million in notes payable primarily due to net issuances of commercial paper; and
•an increase of $105 million in cash and cash equivalents, as discussed further under "Analysis of Cash Flows – Southern Power" herein.
See "Financing Activities – Southern Power" herein and Notes (G) and (K) to the Condensed Financial Statements herein for additional information.
Southern Company Gas
Significant balance sheet changes for the nine months ended September 30, 2023 included:
•an increase of $807 million in total property, plant, and equipment primarily related to the construction of transportation and distribution assets and additional infrastructure investment;
•a decrease of $777 million in total accounts receivable primarily related to decreases of $379 million in unbilled revenues and $374 million in customer accounts receivable as a result of seasonality;
•a decrease of $693 million in notes payable due to a reduction in commercial paper borrowings and the repayment of short-term bank loans;
•an increase of $615 million in long-term debt due to issuances by Southern Company Gas Capital and Nicor Gas;
•an increase of $436 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 $327 million in other accounts payable due to seasonality and the timing of vendor payments; and
•an increase of $316 million in cash and cash equivalents, as discussed further under "Analysis of Cash Flows – Southern Company Gas" herein.
See "Financing Activities – Southern Company Gas" herein and Note (B) 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)
Financing Activities
The following table outlines the Registrants' long-term debt financing activities for the first nine months of 2022:2023:
IssuancesMaturities and RedemptionsIssuances and
Reofferings		Maturities and Redemptions
CompanyCompanySenior
Notes		Other
Long-Term Debt		Senior
Notes		Revenue
Bonds
Other
Long-Term Debt(a)
CompanySenior
Notes		Revenue
Bonds		Other Long-
Term Debt		Senior
Notes
Other Long-
Term Debt(a)
(in millions)(in millions)
Southern Company parentSouthern Company parent$4,525 $— $— $1,850 $550 
Alabama PowerAlabama Power$1,700 $— $550 $— $1 Alabama Power200 326 28 — 1 
Georgia PowerGeorgia Power1,500 — 400 53 201 Georgia Power1,750 229 — 800 72 
Mississippi PowerMississippi Power100 — — — — 
Southern PowerSouthern Power— — 677 — — Southern Power— — — 290 — 
Southern Company GasSouthern Company Gas500 100 — — 46 Southern Company Gas500 — 154 — — 
OtherOther— — — — 8 Other— — — — 6 
Elimination(b)
Elimination(b)
— — — — (4)
Elimination(b)
— — — — (3)
Southern CompanySouthern Company$3,700 $100 $1,627 $53 $252 Southern Company$7,075 $555 $182 $2,940 $626 
(a)Includes reductions in finance lease obligations resulting from cash payments under finance leases and, for Georgia Power, principal amortization payments totaling $66$64 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.
(b)Represents reductions in affiliate finance lease obligations at Georgia Power, which are eliminated in Southern Company's consolidated financial statements.
Except as otherwise described herein, the Registrants used the proceeds of debt issuances for their redemptions and maturities shown in the table above, to repay short-term indebtedness, and for general corporate purposes, including working capital. The Subsidiary Registrants also used the proceeds for their construction programs.
In addition to any financings that may be necessary to meet capital requirements and contractual obligations, the Registrants plan to continue, when economically feasible, a program to retire higher-cost securities and replace these obligations with lower-cost capital if market conditions permit.
Southern Company
During the first nine months of 2022,2023, Southern Company issued approximately 3.51.9 million shares of common stock primarily through employee equity compensation plans and received proceeds of approximately $78$26 million.
In May 2022,January 2023, Southern Company remarketed its Series 2019A and Series 2019B Remarketable Junior Subordinated Notes pursuant to the terms of its 2019 Series A Equity Units (Equity Units). Southern Company did not receive any proceeds from the remarketing, which were used to purchase a portfolio of treasury securities maturing on July 28, 2022. On August 1, 2022, the proceeds from this portfolio were used to settle the purchase contracts entered into as part of the Equity Units and Southern Company issued approximately 25.2 million shares of common stock and received proceeds of $1.725 billion. See Note (F) to the Condensed Financial Statements herein under "Equity Units" for additional information.
In March 2022, Southern Company entered into a $400 million short-term floating rate bank loan bearing interest based on term SOFR, which it repaid in August 2022.
In May 2022, Southern Company borrowed $100 million pursuant to a short-term uncommitted bank credit arrangement bearing interest at a mutually agreed upon rate, which it repaid in August 2022.
Subsequent to September 30, 2022, Southern Company issued $500 million aggregate principal amount of Series 2022A 5.15% Senior Notes due October 6, 2025 and $500 million aggregate principal amount of Series 2022B 5.70% Senior Notes due October 15, 2032.
Alabama Power
In February 2022, Alabama Power redeemed all $550 million aggregate principal amount of its Series 2017A 2.45%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 private offering. In March 30, 2022.
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Table2023, Southern Company issued an additional $225 million aggregate principal amount of ContentsIndexthe 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

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
under "Convertible Senior Notes" herein for additional information.
In March 2022, Alabama PowerMay 2023, Southern Company repaid at maturity $600 million aggregate principal amount of its 2021C Floating Rate Senior Notes.
Also in May 2023, Southern Company issued $700$750 million aggregate principal amount of Series 2022A 3.05%2023B 4.85% Senior Notes due MarchJune 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,2028 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.
In August 2022, Alabama Power issued $550$750 million aggregate principal amount of Series 2022B 3.75%2023C 5.20% Senior Notes due September 1, 2027 and $450 million aggregate principal amount of Series 2022C 3.94% Senior Notes due September 1, 2032. An amount equal to the net proceeds of the Series 2022C 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.
Subsequent to September 30, 2022, Alabama Power redeemed all of its 5.00% Class A Preferred Stock, Par Value $1 Per Share (Stated Capital $25 Per Share) at a redemption price of $25.00 per share plus accrued and unpaid dividends to the redemption date.
Georgia PowerJune 15, 2033.
In January 2022, Georgia Power redeemed all $400 millionJuly 2023, Southern Company repaid at maturity $1.25 billion aggregate principal amount of its Series 2012B 2.85% Senior Notes due May 15, 2022.
In February 2022, Georgia Power borrowed $250 million pursuant to a short-term uncommitted bank credit arrangement, which it repaid in May 2022.
In each of March and April 2022, Georgia Power entered into a $200 million short-term floating rate bank loan bearing interest based on term SOFR.
In May 2022, Georgia Power issued $700 million aggregate principal amount of Series 2022A 4.70% 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 equal 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.
In July 2022, Georgia Power repaid at maturity $53 million aggregate principal amount of Development Authority of Floyd County (Georgia) Pollution Control Revenue Bonds (Georgia Power Company Plant Hammond Project), First Series 2010.
Subsequent to September 30, 2022, Georgia Power borrowed $250 million pursuant to a short-term uncommitted bank credit arrangement bearing interest at a mutually agreed upon rate and payable on demand.
Mississippi Power
In June 2022, Mississippi Power repaid $20 million, which was borrowed in March 2022 under its $125 million revolving credit arrangement.
Southern Power
In June 2022, Southern Power repaid at maturity €600 million (approximately $677 million) aggregate principal amount of Series 2016A 1.00%2.95% Senior Notes.
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AND RESULTS OF OPERATIONS (Continued)
SubsequentIn September 2023, Southern Company issued $600 million aggregate principal amount of Series 2023D 5.50% Senior Notes due March 15, 2029 and $700 million aggregate principal amount of Series 2023E 5.70% Senior Notes due March 15, 2034.
Alabama Power
During the first nine months of 2023, a subsidiary of Alabama Power borrowed $19 million under a $39 million long-term floating rate bank loan entered into in December 2022 with a maturity date of December 12, 2029.
In May 2023, Alabama Power issued $200 million aggregate principal amount of Series 2023A Floating Rate Senior Notes due May 15, 2073.
In August 2023, the Walker County Economic and Industrial Development Authority issued for the benefit of Alabama Power $228 million aggregate principal amount of Solid Waste Disposal Revenue Bonds (Alabama Power Company Plant Gorgas Project), First Series 2023 ($140 million aggregate principal amount) and Second Series 2023 ($88 million aggregate principal amount) due August 1, 2063. The proceeds from the revenue bonds are being used to finance certain solid waste disposal facilities at Plant Gorgas.
Also in August 2023, the Industrial Development Board of the Town of West Jefferson issued for the benefit of Alabama Power $98 million aggregate principal amount of Solid Waste Disposal Revenue Bonds (Alabama Power Company Plant Miller Project), Series 2023 due August 1, 2063. The proceeds from the revenue bonds are being used to finance certain solid waste disposal facilities at Plant Miller.
In September 2023, a subsidiary of Alabama Power assumed two fixed rate bank loans totaling $9 million, both maturing on August 30, 2022,2028.
Georgia Power
In March 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 mutually agreed upon rate and payable on demand. In April 2023, Georgia Power borrowed an additional $150 million under the arrangement. In May 2023, Georgia Power repaid the aggregate $250 million outstanding.
Also in March 2023, Georgia Power repaid at maturity a $200 million short-term floating rate bank loan entered into in March 2022.
In April 2023, Georgia Power repaid at maturity $100 million aggregate principal amount of its Series N 5.750% Senior Notes.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Also in April 2023, Georgia Power repaid at maturity a $200 million short-term floating rate bank loan entered into in April 2022.
In May 2023, Georgia Power issued $750 million aggregate principal amount of Series 2023A 4.65% Senior Notes due May 16, 2028 and $1.0 billion aggregate principal amount of Series 2023B 4.95% Senior Notes due May 17, 2033.
In July 2023, Georgia Power repaid at maturity $700 million aggregate principal amount of its Series 2020A 2.10% Senior Notes.
Mississippi Power
In March 2023, Mississippi Power borrowed $50 million of short-term debt pursuant to its $125 million revolving credit arrangement, which it repaid in June 2023.
In June 2023, Mississippi Power issued in a private placement $65 million aggregate principal amount of Series 2023A 5.64% Senior Notes due July 15, 2026 and $35 million aggregate principal amount of Series 2023B 5.63% Senior Notes due July 15, 2033.
Southern Power
In January 2023, Southern Power borrowed $100 million pursuant to a short-term uncommitted bank credit arrangement bearing interest at a mutually agreed upon rate and payable on demand. During the second quarter 2023, Southern Power made net repayments of $50 million of the $100 million borrowed. Subsequent to September 30, 2023, Southern Power borrowed the remaining $50 million under the arrangement.
In September 2023, Southern Power repaid at maturity $290 million aggregate principal amount of its Series 2016C 2.75% Senior Notes.
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.2022, respectively.
During the second quarter 2022, Atlantafirst nine months of 2023, Southern Company Gas Light repaid at maturity $46received cash advances totaling $29 million aggregate principal amount of medium-term notes withunder a weighted average interest rate of 8.63%.long-term financing agreement related to a construction contract.
In August 2022,July 2023, Nicor Gas issued in a private placement $100$50 million aggregate principal amount of 2.21%5.28% Series First Mortgage Bonds due AugustJuly 31, 2032.2030 and $75 million aggregate principal amount of 5.43% Series First Mortgage Bonds due July 31, 2035. Subsequent to September 30, 2023, pursuant to the same agreement, Nicor Gas issued in a private placement $75 million aggregate principal amount of 5.67% Series First Mortgage Bonds due October 31, 2053 and $75 million aggregate principal amount of 5.77% Series First Mortgage Bonds due October 31, 2063.
In September 2022,2023, Southern Company Gas Capital issued $500 million aggregate principal amount of Series 2022A 5.15%2023A 5.75% Senior Notes due September 15, 2032,2033, guaranteed by Southern Company Gas.
Subsequent to September 30, 2023, Southern Company Gas Capital repaid at maturity $350 million aggregate principal amount of its 2.450% Senior Notes.
Credit Rating Risk
At September 30, 2022,2023, 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 generationservices at Plant Vogtle Units 3 and 4.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
The maximum potential collateral requirements under these contracts at September 30, 20222023 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 Baa3395 2 61 1 333 — At BBB- and/or Baa3415 2 60 1 353 — 
At BB+ and/or Ba1 or belowAt BB+ and/or Ba1 or below2,042 409 907 306 1,205 5 At BB+ and/or Ba1 or below2,084 411 939 315 1,275 16 
(*)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 September 30, 2022.2023.
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 theAugust 2, 2023, S&P revised its credit rating outlook for Southern Company and its subsidiaries to positive from stable.
On September 26, 2023, Moody's upgraded Mississippi Power's senior unsecured long-term debt rating ofto A3 from Baa1 and revised its rating outlook to stable from positive.
Also on September 26, 2023, Moody's revised its ratings outlooks for Southern Company and 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 negativepositive from stable.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
During the nine months ended September 30, 2022,2023, 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 SectionsRules 13a-15(e) and 15d-15(e) ofunder 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.
In July 2022, Southern Company, Alabama Power, Georgia Power, Mississippi Power, Southern Power, and Southern Company Gas implemented a new human resources and payroll application. In August 2022, Southern Company Gas implemented new financial accounting and reporting applications. As a result of these implementations, there were certainThere have been no changes to processes and procedures, which resulted in changes to Southern Company's, Alabama Power's, Georgia Power's, Mississippi Power's, Southern Power's, andor 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). These changes included automation of certain previously manual controls. These changes in internal controls were not made in response during the third quarter 2023 that have materially affected or are reasonably likely to any identifiedmaterially affect Southern Company's, Alabama Power's, Georgia Power's, Mississippi Power's, Southern Power's, or Southern Company Gas' internal control deficiency.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 5. Other Information.
There were no adoptions, modifications, or terminations of "Rule 10b5-1 trading arrangements" or "non-Rule 10b5-1 trading arrangements," as defined in Item 408(a) of Regulation S-K, during the three months ended September 30, 2023 by the Registrants' directors and "officers," as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended.
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.
(3) Articles of Incorporation and By-Laws
Alabama Power
*(b)1-
(4) Instruments Describing Rights of Security Holders, Including Indentures
Southern Company
(a)1-
Twenty-FifthThirtieth Supplemental Indenture to Senior Note Indenture dated as of October 6, 2022,September 8, 2023, providing for the issuance of the Series 2022A 5.15%2023D 5.50% Senior Notes due October 6, 2025.March 15, 2029. (Designated in Form 8-K dated October 3, 2022,September5, 2023, File No. 1-3526, as Exhibit 4.4(a)..)
(a)2-
Twenty-SixthThirty-First Supplemental Indenture to Senior Note Indenture dated as of October 6, 2022,September 8, 2023, providing for the issuance of the Series 2022B2023E 5.70% Senior Notes due OctoberMarch 15, 2032.2034. (Designated in Form 8-K dated October 3, 2022,September 5, 2023, File No. 1-3526, as Exhibit 4.4(b)..)
Alabama Power
(b)1-
Sixty-Fourth Supplemental Indenture to Senior Note Indenture dated as of August 12, 2022 providing for the issuance of the Series 2022B 3.75% Senior Notes due September 1, 2027. (Designated in Form 8-K dated August 9, 2022, File No. 1-3164, as Exhibit 4.6(a).)
(b)2
-
Sixty-Fifth Supplemental Indenture to Senior Note Indenture dated as of August 12, 2022 providing for the issuance of the Series 2022C 3.94% Senior Notes due September 1, 2032. (Designated in Form 8-K dated August 9, 2022, File No. 1-3164, as Exhibit 4.6(b).)
Southern Company Gas

(f)1-
Southern Company Gas Capital Corporation's Series 2022A 5.15%2023A 5.75% Senior Notes due September 30, 2032,15, 2033, Form of Note. (Designated in Form 8-K dated September 6, 2022,September 11, 2023. File No. 1-14174 as Exhibit 4.14.1..)

(f)2-
Southern Company Gas' Guarantee related to the Series 2022A 5.15%2023A 5.75% Senior Notes due September 30, 2032,15, 2023, Form of Guarantee. (DesignatedDesignated in Form 8-K dated September 6, 2022,11, 2023. File No. 1-14174 as Exhibit 4.34.3..)
(10) Material Contracts
Southern Company
#*(a)1(f)3-
#(a)2-
Southern Company Senior Executive Change in Control Severance Plan, Amended and Restated effective August 15, 2022. (Designated in Form 8-K dated August 15, 2022, File No. 1-3526, as Exhibit 10.2.)
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#*(a)3-
#*(a)4-
Alabama Power
#(b)1-Amended and Restated Southern Company Change In Control Benefits Protection Plan, effective August 15, 2022. See Exhibit 10(a)1 herein.
#(b)2-Southern Company Senior Executive Change in Control Severance Plan, Amended and Restated effective August 15, 2022. See Exhibit 10(a)2 herein.
#(b)3-Southern Company Executive Change In Control Severance Plan, Amended and Restated effective August 15, 2022. See Exhibit 10(a)3 herein.
(24) Power of Attorney and Resolutions
Southern Company
(a)1-

(a)2-
Alabama Power
(b)1-
(b)2-
Georgia Power
(c)1-
(c)2-
Mississippi Power
(d)-
Southern Power
(e)1-
(e)2-
Southern Company Gas
(f)1-
(f)2-
(31) Section 302 Certifications
Southern Company
*(a)1-
*(a)2-
Alabama Power
*(b)1-
*(b)2-
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Georgia Power
*(c)1-
*(c)2-
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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)-
Alabama Power
*(b)-
Georgia Power
*(c)-
Mississippi Power
*(d)-
Southern Power
*(e)-
Southern Company Gas
*(f)-
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(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. FanningChristopher C. Womack
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: October 26, 2022November 1, 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: October 26, 2022November 1, 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: October 26, 2022November 1, 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: October 26, 2022November 1, 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: October 26, 2022November 1, 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: October 26, 2022November 1, 2023

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