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ALP-PQ Alabama Power

Filed: 3 Nov 21, 8:00pm
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    Table of Contents                                Index to Financial Statements
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
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


    Table of Contents                                Index to Financial Statements
Securities registered pursuant to Section 12(b) of the Act:
RegistrantTitle of Each ClassTrading
Symbol(s)
Name of Each Exchange
on Which Registered
The Southern CompanyCommon Stock, par value $5 per shareSONew York Stock Exchange
(NYSE)
The Southern CompanySeries 2016A 5.25% Junior Subordinated Notes due 2076SOJBNYSE
The Southern CompanySeries 2017B 5.25% Junior Subordinated Notes due 2077SOJCNYSE
The Southern Company2019 Series A Corporate UnitsSOLNNYSE
The Southern CompanySeries 2020A 4.95% Junior Subordinated Notes due 2080SOJDNYSE
The Southern CompanySeries 2020C 4.20% Junior Subordinated Notes due 2060SOJENYSE
The Southern CompanySeries 2021B 1.875% Fixed-to-Fixed Reset Rate Junior Subordinated Notes due 2081SO 81NYSE
Alabama Power Company5.00% Series Class A Preferred StockALP PR QNYSE
Georgia Power CompanySeries 2017A 5.00% Junior Subordinated Notes due 2077GPJANYSE
Southern Power CompanySeries 2016A 1.000% Senior Notes due 2022SO/22BNYSE
Southern Power CompanySeries 2016B 1.850% Senior Notes due 2026SO/26ANYSE
Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes þ No ¨
Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrants were required to submit such files). Yes þ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
RegistrantLarge Accelerated FilerAccelerated
Filer
Non-accelerated FilerSmaller
Reporting
Company
Emerging
Growth
Company
The Southern CompanyX
Alabama Power CompanyX
Georgia Power CompanyX
Mississippi Power CompanyX
Southern Power CompanyX
Southern Company GasX
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No þ (Response applicable to all registrants.)
RegistrantDescription of Common StockShares Outstanding at September 30, 2021
The Southern CompanyPar Value $5 Per Share1,059,803,931 
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                                Index to Financial Statements
TABLE OF CONTENTS
  Page
PART I—FINANCIAL INFORMATION
Item 1.
Item 2.
Item 3.
Item 4.
PART II—OTHER INFORMATION
Item 1.
Item 1A.
Item 2.Unregistered Sales of Equity Securities and Use of ProceedsInapplicable
Item 3.Defaults Upon Senior SecuritiesInapplicable
Item 4.Mine Safety DisclosuresInapplicable
Item 5.Other InformationInapplicable
Item 6.
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    Table of Contents                                Index to Financial Statements

DEFINITIONS
TermMeaning
2019 ARPAlternate Rate Plan approved by the Georgia PSC in 2019 for Georgia Power for the years 2020 through 2022
AFUDCAllowance for funds used during construction
Alabama PowerAlabama Power Company
Amended and Restated Loan Guarantee AgreementLoan guarantee agreement entered into by Georgia Power with the DOE in 2014, as amended and restated in March 2019, under which the proceeds of borrowings may be used to reimburse Georgia Power for Eligible Project Costs incurred in connection with its construction of Plant Vogtle Units 3 and 4
AROAsset retirement obligation
Atlanta Gas LightAtlanta Gas Light Company, a wholly-owned subsidiary of Southern Company Gas
Atlantic Coast PipelineAtlantic Coast Pipeline, LLC, a joint venture to construct and operate a natural gas pipeline in which Southern Company Gas held a 5% interest through March 24, 2020
BechtelBechtel Power Corporation, the primary contractor for the remaining construction activities for Plant Vogtle Units 3 and 4
Bechtel AgreementThe 2017 construction completion agreement between the Vogtle Owners and Bechtel
CCRCoal combustion residuals
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
CODCommercial operation date
Contractor Settlement AgreementThe December 31, 2015 agreement between Westinghouse and the Vogtle Owners resolving disputes between the Vogtle Owners and the EPC Contractor under the Vogtle 3 and 4 Agreement
COVID-19The novel coronavirus disease declared a pandemic by the World Health Organization and the Centers for Disease Control and Prevention in March 2020
CWIPConstruction work in progress
DaltonCity of Dalton, Georgia, an incorporated municipality in the State of Georgia, acting by and through its Board of Water, Light, and Sinking Fund Commissioners
Dalton PipelineA pipeline facility in Georgia in which Southern Company Gas has a 50% undivided ownership interest
DOEU.S. Department of Energy
ECCRGeorgia Power's Environmental Compliance Cost Recovery tariff
ECO PlanMississippi Power's environmental compliance overview plan
ELG RulesThe EPA's steam electric effluent limitations guidelines (ELG) rule (finalized in 2015) and the ELG reconsideration rule (finalized in October 2020)
Eligible Project CostsCertain costs of construction relating to Plant Vogtle Units 3 and 4 that are eligible for financing under the loan guarantee program established under Title XVII of the Energy Policy Act of 2005
EPAU.S. Environmental Protection Agency
EPC ContractorWestinghouse and its affiliate, WECTEC Global Project Services Inc.; the former engineering, procurement, and construction contractor for Plant Vogtle Units 3 and 4
FERCFederal Energy Regulatory Commission
FFBFederal Financing Bank
FFB Credit FacilitiesNote purchase agreements among the DOE, Georgia Power, and the FFB and related promissory notes which provide for two multi-advance term loan facilities
FitchFitch Ratings, Inc.
Form 10-KAnnual Report on Form 10-K of Southern Company, Alabama Power, Georgia Power, Mississippi Power, Southern Power, and Southern Company Gas for the year ended December 31, 2020, as applicable
GAAPU.S. generally accepted accounting principles
Georgia PowerGeorgia Power Company
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    Table of Contents                                Index to Financial Statements

DEFINITIONS
(continued)
TermMeaning
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 PowerGulf Power Company, until January 1, 2019 a wholly-owned subsidiary of Southern Company; effective January 1, 2021, Gulf Power Company merged with and into Florida Power and Light Company, with Florida Power and Light Company remaining as the surviving company
Heating Degree DaysA measure of weather, calculated when the average daily temperatures are less than 65 degrees Fahrenheit
Heating SeasonThe period from November through March when Southern Company Gas' natural gas usage and operating revenues are generally higher
HLBVHypothetical liquidation at book value
IGCCIntegrated coal gasification combined cycle, the technology originally approved for Mississippi Power's Kemper County energy facility
IICIntercompany Interchange Contract
IRPIntegrated resource plan
ITAACInspections, Tests, Analyses, and Acceptance Criteria, standards established by the NRC
ITCInvestment tax credit
JEAJacksonville Electric Authority
Jefferson IslandJefferson Island Storage and Hub, L.L.C, which owns a natural gas storage facility in Louisiana consisting of two salt dome caverns; a subsidiary of Southern Company Gas through December 1, 2020
KWHKilowatt-hour
LIBORLondon Interbank Offered Rate
LIFOLast-in, first-out
LOCOMLower of weighted average cost or current market price
LTSALong-term service agreement
MarketersMarketers selling retail natural gas in Georgia and certificated by the Georgia PSC
MEAG PowerMunicipal Electric Authority of Georgia
Mississippi PowerMississippi Power Company
Mississippi Power Rate Case Settlement AgreementSettlement agreement between Mississippi Power and the Mississippi Public Utilities Staff approved by the Mississippi PSC in March 2020 related to Mississippi Power's base rate case filed in 2019
mmBtuMillion British thermal units
Moody'sMoody's Investors Service, Inc.
MRAMunicipal and Rural Associations
MWMegawatt
natural gas distribution utilitiesSouthern Company Gas' natural gas distribution utilities (Nicor Gas, Atlanta Gas Light, Virginia Natural Gas, and Chattanooga Gas)
NCCRGeorgia Power's Nuclear Construction Cost Recovery
NDRAlabama Power's Natural Disaster Reserve
Nicor GasNorthern Illinois Gas Company, a wholly-owned subsidiary of Southern Company Gas
NRCU.S. Nuclear Regulatory Commission
NYMEXNew York Mercantile Exchange, Inc.
OCIOther comprehensive income
PennEast PipelinePennEast Pipeline Company, LLC, a joint venture in which Southern Company Gas has a 20% ownership interest
PEPMississippi Power's Performance Evaluation Plan
Pivotal LNGPivotal LNG, Inc., through March 24, 2020, a wholly-owned subsidiary of Southern Company Gas
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    Table of Contents                                Index to Financial Statements

DEFINITIONS
(continued)
TermMeaning
PowerSecurePowerSecure, Inc., a wholly-owned subsidiary of Southern Company
PowerSouthPowerSouth Energy Cooperative
PPAPower purchase agreements, as well as, for Southern Power, contracts for differences that provide the owner of a renewable facility a certain fixed price for the electricity sold to the grid
PSCPublic Service Commission
PTCProduction tax credit
Rate CNPAlabama Power's Rate Certificated New Plant, consisting of Rate CNP New Plant, Rate CNP Compliance, and Rate CNP PPA
Rate ECRAlabama Power's Rate Energy Cost Recovery
Rate RSEAlabama Power's Rate Stabilization and Equalization
RegistrantsSouthern Company, Alabama Power, Georgia Power, Mississippi Power, Southern Power Company, and Southern Company Gas
ROEReturn on equity
S&PS&P Global Ratings, a division of S&P Global Inc.
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
Southern CompanyThe Southern Company
Southern Company GasSouthern Company Gas and its subsidiaries
Southern Company Gas CapitalSouthern Company Gas Capital Corporation, a 100%-owned subsidiary of Southern Company Gas
Southern Company power poolThe operating arrangement whereby the integrated generating resources of the traditional electric operating companies and Southern Power (excluding subsidiaries) are subject to joint commitment and dispatch in order to serve their combined load obligations
Southern Company systemSouthern Company, the traditional electric operating companies, Southern Power, Southern Company Gas, SEGCO, Southern Nuclear, SCS, Southern Communications Services, Inc., PowerSecure, and other subsidiaries
Southern HoldingsSouthern Company Holdings, Inc., a wholly-owned subsidiary of Southern Company
Southern NuclearSouthern Nuclear Operating Company, Inc., a wholly-owned subsidiary of Southern Company
Southern PowerSouthern Power Company and its subsidiaries
SouthStarSouthStar Energy Services, LLC (a Marketer), a wholly-owned subsidiary of Southern Company Gas
SP SolarSP Solar Holdings I, LP, a limited partnership indirectly owning substantially all of Southern Power's solar and battery energy storage facilities, in which Southern Power has a 67% ownership interest
SP WindSP Wind Holdings II, LLC, a holding company owning a portfolio of eight operating wind facilities, in which Southern Power is the controlling partner in a tax equity arrangement
Subsidiary RegistrantsAlabama Power, Georgia Power, Mississippi Power, Southern Power, and Southern Company Gas
Tax ReformThe impact of the Tax Cuts and Jobs Act, which became effective on January 1, 2018
ToshibaToshiba Corporation, the parent company of Westinghouse
traditional electric operating companiesAlabama Power, Georgia Power, and Mississippi Power
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    Table of Contents                                Index to Financial Statements

DEFINITIONS
(continued)
TermMeaning
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, Oglethorpe Power Corporation, MEAG Power, and Dalton
Vogtle Services AgreementThe June 2017 services agreement between the Vogtle Owners and the EPC Contractor, as amended and restated in July 2017, for the EPC Contractor to transition construction management of Plant Vogtle Units 3 and 4 to Southern Nuclear and to provide ongoing design, engineering, and procurement services to Southern Nuclear
WACOGWeighted average cost of gas
WestinghouseWestinghouse Electric Company LLC
Williams Field Services GroupWilliams Field Services Group, LLC
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    Table of Contents                                Index to Financial Statements
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 COVID-19 pandemic, regulated rates, the strategic goals for the business, customer and sales growth, economic conditions, cost recovery and other rate actions, projected equity ratios, current and proposed environmental regulations and related compliance plans and estimated expenditures, pending or potential litigation matters, access to sources of capital, financing activities, completion dates and costs of construction projects, matters related to the abandonment of the Kemper IGCC, completion of announced acquisitions, filings with state and federal regulatory authorities, and estimated construction plans and expenditures. In some cases, forward-looking statements can be identified by terminology such as "may," "will," "could," "would," "should," "expects," "plans," "anticipates," "believes," "estimates," "projects," "predicts," "potential," or "continue" or the negative of these terms or other similar terminology. There are various factors that could cause actual results to differ materially from those suggested by the forward-looking statements; accordingly, there can be no assurance that such indicated results will be realized. These factors include:

the impact of recent and future federal and state regulatory changes, including tax, environmental, and other laws and regulations to which Southern Company and its subsidiaries are subject, as well as changes in application of existing laws and regulations;
the potential effects of the continued COVID-19 pandemic, including, but not limited to, those described in Item 1A "Risk Factors" of the Form 10-K;
the extent and timing of costs and legal requirements related to CCR;
current and future litigation or regulatory investigations, proceedings, or inquiries, including litigation and other disputes related to the Kemper County energy facility;
the effects, extent, and timing of the entry of additional competition in the markets in which Southern Company's subsidiaries operate, including from the development and deployment of alternative energy sources;
variations in demand for electricity and natural gas;
available sources and costs of natural gas and other fuels;
the ability to complete necessary or desirable pipeline expansion or infrastructure projects, limits on pipeline capacity, and operational interruptions to natural gas distribution and transmission activities;
transmission constraints;
effects of inflation;
the ability to control costs and avoid cost and schedule overruns during the development, construction, and operation of facilities or other projects, including Plant Vogtle Units 3 and 4 (which includes components based on new technology that only within the last few years began initial operation in the global nuclear industry at this scale) and Plant Barry Unit 8, due to current and future challenges which include, but are not limited to, changes in labor costs, availability, and productivity; challenges with management of contractors or vendors; subcontractor performance; adverse weather conditions; shortages, delays, increased costs, or inconsistent quality of equipment, materials, and labor; contractor or supplier delay; delays due to judicial or regulatory action; nonperformance under construction, operating, or other agreements; operational readiness, including specialized operator training and required site safety programs; engineering or design problems or any remediation related thereto; design and other licensing-based compliance matters, including, for nuclear units, inspections and the timely submittal by Southern Nuclear of the ITAAC documentation for each unit and the related investigations, reviews, and approvals by the NRC necessary to support NRC authorization to load fuel; challenges with start-up activities, including major equipment failure, or system integration; and/or operational performance; and challenges related to the COVID-19 pandemic;
the ability to overcome or mitigate the current challenges at Plant Vogtle Units 3 and 4, as described in Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction" in Item 1 herein, that could further impact the cost and schedule for the project;
legal proceedings and regulatory approvals and actions related to construction projects, such as Plant Vogtle Units 3 and 4 and Plant Barry Unit 8, including PSC approvals and FERC and NRC actions;
under certain specified circumstances, a decision by holders of more than 10% of the ownership interests of Plant Vogtle Units 3 and 4 not to proceed with construction and the ability of other Vogtle Owners to tender a portion of their ownership interests to Georgia Power following certain construction cost increases;
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    Table of Contents                                Index to Financial Statements
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
(continued)
in the event Georgia Power becomes obligated to provide funding to MEAG Power with respect to the portion of MEAG Power's ownership interest in Plant Vogtle Units 3 and 4 involving JEA, any inability of Georgia Power to receive repayment of such funding;
the ability to construct facilities in accordance with the requirements of permits and licenses (including satisfaction of NRC requirements), to satisfy any environmental performance standards and the requirements of tax credits and other incentives, and to integrate facilities into the Southern Company system upon completion of construction;
investment performance of the employee and retiree benefit plans and nuclear decommissioning trust funds;
advances in technology, including the pace and extent of development of low- to no-carbon energy technologies and negative carbon concepts;
performance of counterparties under ongoing renewable energy partnerships and development agreements;
state and federal rate regulations and the impact of pending and future rate cases and negotiations, including rate actions relating to ROE, equity ratios, additional generating capacity, and fuel and other cost recovery mechanisms;
the ability to successfully operate the electric utilities' generating, transmission, and distribution facilities and Southern Company Gas' natural gas distribution and storage facilities and the successful performance of necessary corporate functions;
the inherent risks involved in operating and constructing nuclear generating facilities;
the inherent risks involved in transporting and storing natural gas;
the performance of projects undertaken by the non-utility businesses and the success of efforts to invest in and develop new opportunities;
internal restructuring or other restructuring options that may be pursued;
potential business strategies, including acquisitions or dispositions of assets or businesses, which cannot be assured to be completed or beneficial to Southern Company or its subsidiaries;
the ability of counterparties of Southern Company and its subsidiaries to make payments as and when due and to perform as required;
the ability to obtain new short- and long-term contracts with wholesale customers;
the direct or indirect effect on the Southern Company system's business resulting from cyber intrusion or physical attack and the threat of physical attacks;
interest rate fluctuations and financial market conditions and the results of financing efforts;
access to capital markets and other financing sources;
changes in Southern Company's and any of its subsidiaries' credit ratings;
changes in the method of determining LIBOR or the replacement of LIBOR with an alternative reference rate;
the ability of Southern Company's electric utilities 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, or other similar occurrences;
the direct or indirect effects on the Southern Company system's business resulting from incidents affecting the U.S. electric grid, natural gas pipeline infrastructure, or operation of generating or storage resources;
impairments of goodwill or long-lived assets;
the effect of accounting pronouncements issued periodically by standard-setting bodies; and
other factors discussed elsewhere herein and in other reports (including the Form 10-K) filed by the Registrants from time to time with the SEC.
The Registrants expressly disclaim any obligation to update any forward-looking statements.
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PART I
Item 1. Financial Statements (Unaudited).
 Page
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    Table of Contents                                Index to Financial Statements

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
 For the Three Months Ended September 30,For the Nine Months Ended September 30,
 2021202020212020
 (in millions)(in millions)
Operating Revenues:
Retail electric revenues$4,551 $4,243 $11,492 $10,503 
Wholesale electric revenues731 584 1,822 1,473 
Other electric revenues179 164 525 484 
Natural gas revenues (includes alternative revenue programs of
   $(1), $(1), $3, and $6, respectively)
623 477 2,994 2,362 
Other revenues154 152 513 436 
Total operating revenues6,238 5,620 17,346 15,258 
Operating Expenses:
Fuel1,234 933 2,930 2,190 
Purchased power288 230 712 611 
Cost of natural gas129 71 943 654 
Cost of other sales71 72 255 201 
Other operations and maintenance1,446 1,286 4,257 3,785 
Depreciation and amortization896 889 2,658 2,619 
Taxes other than income taxes312 304 969 932 
Estimated loss on Plant Vogtle Units 3 and 4264 — 772 149 
(Gain) loss on dispositions, net(125)— (179)(39)
Total operating expenses4,515 3,785 13,317 11,102 
Operating Income1,723 1,835 4,029 4,156 
Other Income and (Expense):
Allowance for equity funds used during construction49 38 140 106 
Earnings from equity method investments30 33 35 105 
Interest expense, net of amounts capitalized(451)(443)(1,352)(1,343)
Impairment of leveraged leases — (7)(154)
Other income (expense), net131 113 297 319 
Total other income and (expense)(241)(259)(887)(967)
Earnings Before Income Taxes1,482 1,576 3,142 3,189 
Income taxes372 293 550 443 
Consolidated Net Income1,110 1,283 2,592 2,746 
Dividends on preferred stock of subsidiaries4 11 11 
Net income (loss) attributable to noncontrolling interests5 28 (27)
Consolidated Net Income Attributable to
   Southern Company
$1,101 $1,251 $2,608 $2,732 
Common Stock Data:
Earnings per share -
Basic$1.04 $1.18 $2.46 $2.58 
Diluted$1.03 $1.18 $2.44 $2.57 
Average number of shares of common stock outstanding (in millions)
Basic1,061 1,058 1,060 1,058 
Diluted1,068 1,064 1,067 1,064 
The accompanying notes as they relate to Southern Company are an integral part of these condensed consolidated financial statements.
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    Table of Contents                                Index to Financial Statements
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,
 2021202020212020
 (in millions)(in millions)
Consolidated Net Income$1,110 $1,283 $2,592 $2,746 
Other comprehensive income (loss):
Qualifying hedges:
Changes in fair value, net of tax of
   $1, $17, $(4), and $(9), respectively
1 49 (15)(26)
Reclassification adjustment for amounts included in net income,
   net of tax of $10, $(11), $27, and $(1), respectively
31 (32)81 (3)
Pension and other postretirement benefit plans:
Reclassification adjustment for amounts included in net income,
   net of tax of $1, $1, $4, and $3, respectively
4 10 
Total other comprehensive income (loss)36 20 76 (23)
Comprehensive Income1,146 1,303 2,668 2,723 
Dividends on preferred stock of subsidiaries4 11 11 
Comprehensive income (loss) attributable to noncontrolling interests5 28 (27)
Consolidated Comprehensive Income Attributable to
   Southern Company
$1,137 $1,271 $2,684 $2,709 
The accompanying notes as they relate to Southern Company are an integral part of these condensed consolidated financial statements.

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    Table of Contents                                Index to Financial Statements
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 For the Nine Months Ended September 30,
 20212020
 (in millions)
Operating Activities:
Consolidated net income$2,592 $2,746 
Adjustments to reconcile consolidated net income to net cash provided from operating activities —
Depreciation and amortization, total2,944 2,903 
Deferred income taxes89 (196)
Utilization of federal investment tax credits256 319 
Pension, postretirement, and other employee benefits(218)(190)
Settlement of asset retirement obligations(341)(315)
Stock based compensation expense134 99 
Estimated loss on Plant Vogtle Units 3 and 4772 149 
Storm damage accruals166 171 
Impairment charges91 154 
(Gain) loss on dispositions, net(171)(36)
Retail fuel cost under recovery – long-term(209)— 
Other, net(7)(14)
Changes in certain current assets and liabilities —
-Receivables2 125 
-Materials and supplies(91)(141)
-Natural gas cost under recovery(432)— 
-Other current assets(160)(119)
-Accounts payable(45)(428)
-Accrued taxes288 289 
-Accrued compensation(93)(183)
-Accrued interest(110)(52)
-Retail fuel cost over recovery(150)158 
-Customer refunds(58)(226)
-Other current liabilities(168)
Net cash provided from operating activities5,081 5,220 
Investing Activities:
Business acquisitions, net of cash acquired(345)(81)
Property additions(5,222)(5,365)
Nuclear decommissioning trust fund purchases(1,301)(714)
Nuclear decommissioning trust fund sales1,297 708 
Proceeds from dispositions160 987 
Cost of removal, net of salvage(282)(233)
Payments pursuant to LTSAs(145)(139)
Other investing activities(12)(55)
Net cash used for investing activities(5,850)(4,892)
Financing Activities:
Decrease in notes payable, net(203)(1,534)
Proceeds —
Long-term debt6,793 7,543 
Common stock62 63 
Short-term borrowings325 615 
Redemptions and repurchases —
Long-term debt(3,060)(2,472)
Short-term borrowings(25)(840)
Capital contributions from noncontrolling interests415 173 
Distributions to noncontrolling interests(204)(164)
Payment of common stock dividends(2,077)(2,008)
Other financing activities(224)(299)
Net cash provided from financing activities1,802 1,077 
Net Change in Cash, Cash Equivalents, and Restricted Cash1,033 1,405 
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period1,068 1,978 
Cash, Cash Equivalents, and Restricted Cash at End of Period$2,101 $3,383 
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $68 and $61 capitalized for 2021 and 2020, respectively)$1,417 $1,346 
Income taxes, net92 66 
Noncash transactions —
Accrued property additions at end of period915 917 
Contributions from noncontrolling interests89 
Contributions of wind turbine equipment82 17 
Right-of-use assets obtained under leases92 166 
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)
 
AssetsAt September 30, 2021At December 31, 2020
 (in millions)
Current Assets:
Cash and cash equivalents$2,078 $1,065 
Receivables —
Customer accounts1,831 1,753 
Energy marketing 516 
Unbilled revenues535 672 
Other accounts and notes611 512 
Accumulated provision for uncollectible accounts(72)(118)
Materials and supplies1,504 1,478 
Fossil fuel for generation386 550 
Natural gas for sale368 460 
Prepaid expenses329 276 
Assets from risk management activities, net of collateral365 147 
Regulatory assets – asset retirement obligations233 214 
Natural gas cost under recovery432 — 
Other regulatory assets792 810 
Other current assets282 282 
Total current assets9,674 8,617 
Property, Plant, and Equipment:
In service114,166 110,516 
Less: Accumulated depreciation33,723 32,397 
Plant in service, net of depreciation80,443 78,119 
Nuclear fuel, at amortized cost805 818 
Construction work in progress9,611 8,697 
Total property, plant, and equipment90,859 87,634 
Other Property and Investments:
Goodwill5,280 5,280 
Nuclear decommissioning trusts, at fair value2,446 2,303 
Equity investments in unconsolidated subsidiaries1,278 1,362 
Other intangible assets, net of amortization of $296 and $328, respectively455 487 
Leveraged leases575 556 
Miscellaneous property and investments586 398 
Total other property and investments10,620 10,386 
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization1,724 1,802 
Deferred charges related to income taxes815 796 
Unamortized loss on reacquired debt263 280 
Regulatory assets – asset retirement obligations, deferred5,418 4,934 
Other regulatory assets, deferred6,902 7,198 
Other deferred charges and assets1,586 1,288 
Total deferred charges and other assets16,708 16,298 
Total Assets$127,861 $122,935 
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' EquityAt September 30, 2021At December 31, 2020
 (in millions)
Current Liabilities:
Securities due within one year$3,286 $3,507 
Notes payable707 609 
Energy marketing trade payables 494 
Accounts payable2,229 2,312 
Customer deposits493 487 
Accrued taxes —
Accrued income taxes149 130 
Other accrued taxes797 699 
Accrued interest404 513 
Accrued compensation908 1,025 
Asset retirement obligations690 585 
Operating lease obligations246 241 
Other regulatory liabilities555 509 
Other current liabilities795 968 
Total current liabilities11,259 12,079 
Long-term Debt48,843 45,073 
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes8,916 8,175 
Deferred credits related to income taxes5,485 5,767 
Accumulated deferred ITCs2,230 2,235 
Employee benefit obligations1,849 2,213 
Operating lease obligations, deferred1,495 1,611 
Asset retirement obligations, deferred10,919 10,099 
Accrued environmental remediation203 216 
Other cost of removal obligations2,164 2,211 
Other regulatory liabilities, deferred351 251 
Other deferred credits and liabilities637 480 
Total deferred credits and other liabilities34,249 33,258 
Total Liabilities94,351 90,410 
Redeemable Preferred Stock of Subsidiaries291 291 
Total Stockholders' Equity (See accompanying statements)
33,219 32,234 
Total Liabilities and Stockholders' Equity$127,861 $122,935 
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' Equity
 Number of
Common Shares
Common StockAccumulated
Other
Comprehensive Income
(Loss)
 IssuedTreasuryPar ValuePaid-In CapitalTreasuryRetained EarningsNoncontrolling InterestsTotal
 (in millions)
Balance at December 31, 20191,054 (1)$5,257 $11,734 $(42)$10,877 $(321)$4,254 $31,759 
Consolidated net income (loss)— — — — — 868 — (31)837 
Other comprehensive income (loss)— — — — — — (47)— (47)
Stock issued— 43��— — — — 52 
Stock-based compensation— — — — — — — 
Cash dividends of $0.62 per share— — — — — (655)— — (655)
Capital contributions from
   noncontrolling interests
— — — — — — — 16 16 
Distributions to noncontrolling interests— — — — — — — (48)(48)
Other— — — — (2)(2)— (3)
Balance at March 31, 20201,057 (1)5,266 11,782 (44)11,088 (367)4,191 31,916 
Consolidated net income— — — — — 612 — 617 
Other comprehensive income— — — — — — — 
Stock issued— — — — — — — 
Stock-based compensation— — — 11 — — — — 11 
Cash dividends of $0.64 per share— — — — — (677)— — (677)
Capital contributions from
   noncontrolling interests
— — — — — — — 165 165 
Distributions to noncontrolling interests— — — — — — — (70)(70)
Other— — — (13)— — — (12)
Balance at June 30, 20201,057 (1)5,266 11,787 (44)11,024 (363)4,291 31,961 
Consolidated net income— — — — — 1,251 — 28 1,279 
Other comprehensive income— — — — — — 20 — 20 
Stock issued— — — — — — 
Stock-based compensation— — — 15 — — — — 15 
Cash dividends of $0.64 per share— — — — — (676)— — (676)
Capital contributions from
   noncontrolling interests
— — — — — — — 
Distributions to noncontrolling interests— — — — — — — (51)(51)
Purchase of membership interests
   from noncontrolling interests
— — — — — — (60)(55)
Other— — — — — (1)
Balance at September 30, 20201,057 (1)$5,267 $11,810 $(44)$11,600 $(344)$4,211 $32,500 
16

    Table of Contents                                Index to Financial Statements
SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
Southern Company Common Stockholders' Equity
 Number of
Common Shares
Common StockAccumulated
Other
Comprehensive Income
(Loss)
 IssuedTreasuryPar ValuePaid-In CapitalTreasuryRetained EarningsNoncontrolling InterestsTotal
 (in millions)
Balance at December 31, 20201,058 (1)$5,268 $11,834 $(46)$11,311 $(395)$4,262 $32,234 
Consolidated net income (loss)     1,135  (32)1,103 
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 income      12  12 
Stock issued  1 9     10 
Stock-based compensation   22     22 
Cash dividends of $0.66 per share     (699)  (699)
Capital contributions from
   noncontrolling interests
       29 29 
Distributions to noncontrolling interests       (68)(68)
Other   1 (2)1    
Balance at June 30, 20211,060 (1)5,274 11,886 (48)11,442 (355)4,547 32,746 
Consolidated net income     1,101  5 1,106 
Other comprehensive income      36  36 
Stock issued1  4 34     38 
Stock-based compensation   22     22 
Cash dividends of $0.66 per share     (700)  (700)
Capital contributions from
   noncontrolling interests
       72 72 
Distributions to noncontrolling interests       (94)(94)
Other   (10)2 1   (7)
Balance at September 30, 20211,061 (1)$5,278 $11,932 $(46)$11,844 $(319)$4,530 $33,219 
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,
 2021202020212020
 (in millions)(in millions)
Operating Revenues:
Retail revenues$1,651 $1,575 $4,357 $4,003 
Wholesale revenues, non-affiliates107 73 285 184 
Wholesale revenues, affiliates53 11 109 36 
Other revenues93 70 268 222 
Total operating revenues1,904 1,729 5,019 4,445 
Operating Expenses:
Fuel373 306 927 721 
Purchased power, non-affiliates76 64 173 153 
Purchased power, affiliates45 44 114 93 
Other operations and maintenance401 387 1,175 1,078 
Depreciation and amortization214 205 640 606 
Taxes other than income taxes99 103 303 311 
Total operating expenses1,208 1,109 3,332 2,962 
Operating Income696 620 1,687 1,483 
Other Income and (Expense):
Allowance for equity funds used during construction14 12 38 34 
Interest expense, net of amounts capitalized(84)(84)(252)(255)
Other income (expense), net29 30 93 78 
Total other income and (expense)(41)(42)(121)(143)
Earnings Before Income Taxes655 578 1,566 1,340 
Income taxes152 130 366 307 
Net Income503 448 1,200 1,033 
Dividends on Preferred Stock4 11 11 
Net Income After Dividends on Preferred Stock$499 $444 $1,189 $1,022 


CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
 
For the Three Months Ended September 30,For the Nine Months Ended September 30,
 2021202020212020
 (in millions)(in millions)
Net Income$503 $448 $1,200 $1,033 
Other comprehensive income (loss):
Qualifying hedges:
Changes in fair value, net of tax of $1, $—, $1, and $—, respectively4 — 3 — 
Reclassification adjustment for amounts included in net income,
   net of tax of $—, $—, $1, and $1, respectively
1 3 
Total other comprehensive income (loss)5 6 
Comprehensive Income$508 $449 $1,206 $1,036 
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,
 20212020
 (in millions)
Operating Activities:
Net income$1,200 $1,033 
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total748 731 
Deferred income taxes104 71 
Pension, postretirement, and other employee benefits(74)(71)
Settlement of asset retirement obligations(152)(157)
Other, net(51)33 
Changes in certain current assets and liabilities —
-Receivables(128)(130)
-Fossil fuel stock91 
-Prepayments(24)(32)
-Materials and supplies(13)(55)
-Retail fuel cost under recovery(79)— 
-Other current assets(19)(35)
-Accounts payable(230)(248)
-Accrued taxes178 142 
-Accrued compensation(37)(55)
-Retail fuel cost over recovery(18)74 
-Other current liabilities(77)(76)
Net cash provided from operating activities1,419 1,229 
Investing Activities:
Property additions(1,235)(1,460)
Nuclear decommissioning trust fund purchases(536)(213)
Nuclear decommissioning trust fund sales536 213 
Cost of removal, net of salvage(93)(68)
Change in construction payables12 (46)
Other investing activities(19)(17)
Net cash used for investing activities(1,335)(1,591)
Financing Activities:
Proceeds —
Senior notes600 600 
Pollution control revenue bonds 87 
Redemptions —
Senior notes(200)— 
Pollution control revenue bonds (87)
Other long-term debt(206)— 
Capital contributions from parent company630 649 
Payment of common stock dividends(738)(718)
Other financing activities(30)(26)
Net cash provided from financing activities56 505 
Net Change in Cash, Cash Equivalents, and Restricted Cash140 143 
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period530 894 
Cash, Cash Equivalents, and Restricted Cash at End of Period$670 $1,037 
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $11 capitalized for both 2021 and 2020)$246 $249 
Income taxes, net183 203 
Noncash transactions —
Accrued property additions at end of period178 154 
Right-of-use assets obtained under leases2 65 
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)
 
AssetsAt September 30, 2021At December 31, 2020
(in millions)
Current Assets:
Cash and cash equivalents$670 $530 
Receivables —
Customer accounts497 429 
Unbilled revenues151 152 
Affiliated53 31 
Other accounts and notes101 66 
Accumulated provision for uncollectible accounts(18)(43)
Fossil fuel stock144 235 
Materials and supplies556 546 
Prepaid expenses65 42 
Other regulatory assets289 226 
Other current assets107 33 
Total current assets2,615 2,247 
Property, Plant, and Equipment:
In service32,787 31,816 
Less: Accumulated provision for depreciation10,298 10,009 
Plant in service, net of depreciation22,489 21,807 
Nuclear fuel, at amortized cost241 270 
Construction work in progress1,129 866 
Total property, plant, and equipment23,859 22,943 
Other Property and Investments:
Nuclear decommissioning trusts, at fair value1,259 1,157 
Equity investments in unconsolidated subsidiaries57 63 
Miscellaneous property and investments129 131 
Total other property and investments1,445 1,351 
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization119 151 
Deferred charges related to income taxes238 235 
Regulatory assets – asset retirement obligations1,580 1,441 
Other regulatory assets, deferred2,100 2,162 
Other deferred charges and assets348 273 
Total deferred charges and other assets4,385 4,262 
Total Assets$32,304 $30,803 
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 EquityAt September 30, 2021At December 31, 2020
 (in millions)
Current Liabilities:
Securities due within one year$616 $311 
Accounts payable —
Affiliated299 316 
Other370 545 
Customer deposits106 104 
Accrued taxes331 152 
Accrued interest79 90 
Accrued compensation191 212 
Asset retirement obligations308 254 
Other regulatory liabilities72 108 
Other current liabilities122 107 
Total current liabilities2,494 2,199 
Long-term Debt8,443 8,558 
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes3,425 3,273 
Deferred credits related to income taxes1,973 2,016 
Accumulated deferred ITCs89 94 
Employee benefit obligations136 214 
Operating lease obligations69 119 
Asset retirement obligations, deferred4,015 3,720 
Other cost of removal obligations261 335 
Other regulatory liabilities, deferred139 124 
Other deferred credits and liabilities66 50 
Total deferred credits and other liabilities10,173 9,945 
Total Liabilities21,110 20,702 
Redeemable Preferred Stock291 291 
Common Stockholder's Equity (See accompanying statements)
10,903 9,810 
Total Liabilities and Stockholder's Equity$32,304 $30,803 
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)
Total
(in millions)
Balance at December 31, 201931 $1,222 $4,755 $3,001 $(23)$8,955 
Net income after dividends on
   preferred stock
— — — 280 — 280 
Capital contributions from parent company— — 612 — — 612 
Other comprehensive income— — — — 
Cash dividends on common stock— — — (239)— (239)
Balance at March 31, 202031 1,222 5,367 3,042 (22)9,609 
Net income after dividends on
   preferred stock
— — — 298 — 298 
Capital contributions from parent company— — — — 
Other comprehensive income— — — — 
Cash dividends on common stock— — — (239)— (239)
Balance at June 30, 202031 1,222 5,368 3,101 (21)9,670 
Net income after dividends on
   preferred stock
— — — 444 — 444 
Capital contributions from parent company— — 40 — — 40 
Other comprehensive income— — — — 
Cash dividends on common stock— — — (240)— (240)
Balance at September 30, 202031 $1,222 $5,408 $3,305 $(20)$9,915 
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 
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,
 2021202020212020
 (in millions)(in millions)
Operating Revenues:
Retail revenues$2,652 $2,435 $6,465 $5,870 
Wholesale revenues63 34 143 85 
Other revenues141 148 442 416 
Total operating revenues2,856 2,617 7,050 6,371 
Operating Expenses:
Fuel432 368 1,088 826 
Purchased power, non-affiliates173 146 461 409 
Purchased power, affiliates288 142 573 393 
Other operations and maintenance544 483 1,558 1,411 
Depreciation and amortization345 358 1,025 1,064 
Taxes other than income taxes130 123 365 344 
Estimated loss on Plant Vogtle Units 3 and 4264 — 772 149 
Total operating expenses2,176 1,620 5,842 4,596 
Operating Income680 997 1,208 1,775 
Other Income and (Expense):
Allowance for equity funds used during construction33 22 94 63 
Interest expense, net of amounts capitalized(106)(106)(315)(322)
Other income (expense), net42 32 124 93 
Total other income and (expense)(31)(52)(97)(166)
Earnings Before Income Taxes649 945 1,111 1,609 
Income taxes113 172 81 198 
Net Income$536 $773 $1,030 $1,411 
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
 For the Three Months Ended September 30,For the Nine Months Ended September 30,
 2021202020212020
 (in millions)(in millions)
Net Income$536 $773 $1,030 $1,411 
Other comprehensive income (loss):
Qualifying hedges:
Changes in fair value, net of tax of
   $—, $—, $—, and $(1), respectively
 —  (2)
Reclassification adjustment for amounts included in net income,
   net of tax of $1, $—, $2, and $2, respectively
2 5 
Total other comprehensive income (loss)2 5 
Comprehensive Income$538 $775 $1,035 $1,413 
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,
 20212020
 (in millions)
Operating Activities:
Net income$1,030 $1,411 
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total1,164 1,206 
Deferred income taxes(299)(167)
Allowance for equity funds used during construction(94)(63)
Pension, postretirement, and other employee benefits(112)(98)
Settlement of asset retirement obligations(154)(130)
Storm damage accruals160 160 
Retail fuel cost under recovery – long-term(203)— 
Estimated loss on Plant Vogtle Units 3 and 4772 149 
Other, net88 11 
Changes in certain current assets and liabilities —
-Receivables(85)(168)
-Fossil fuel stock77 
-Materials and supplies(60)(74)
-Other current assets(51)(69)
-Accounts payable164 25 
-Accrued taxes154 44 
-Retail fuel cost over recovery(113)84 
-Customer refunds(5)(162)
-Other current liabilities(83)(38)
Net cash provided from operating activities2,350 2,125 
Investing Activities:
Property additions(2,411)(2,519)
Nuclear decommissioning trust fund purchases(766)(500)
Nuclear decommissioning trust fund sales761 495 
Cost of removal, net of salvage(99)(93)
Change in construction payables, net of joint owner portion(68)(14)
Payments pursuant to LTSAs(38)(44)
Contributions in aid of construction71 18 
Proceeds from dispositions4 143 
Other investing activities(26)(12)
Net cash used for investing activities(2,572)(2,526)
Financing Activities:
Decrease in notes payable, net(60)(115)
Proceeds —
Senior notes750 1,500 
Pollution control revenue bonds122 53 
FFB loan371 519 
Short-term borrowings 250 
Redemptions and repurchases —
Senior notes(325)(950)
Pollution control revenue bonds(69)(148)
Short-term borrowings (375)
FFB loan(75)(55)
Capital contributions from parent company1,054 1,379 
Payment of common stock dividends(1,237)(1,156)
Other financing activities(26)(35)
Net cash provided from financing activities505 867 
Net Change in Cash, Cash Equivalents, and Restricted Cash283 466 
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period9 52 
Cash, Cash Equivalents, and Restricted Cash at End of Period$292 $518 
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $47 and $34 capitalized for 2021 and 2020, respectively)$325 $316 
Income taxes, net237 311 
Noncash transactions —
Accrued property additions at end of period477 523 
Right-of-use assets obtained under operating leases(3)30 
The accompanying notes as they relate to Georgia Power are an integral part of these condensed financial statements.
24

    Table of Contents                                Index to Financial Statements
GEORGIA POWER COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)
 
AssetsAt September 30, 2021At December 31, 2020
 (in millions)
Current Assets:
Cash and cash equivalents$292 $
Receivables —
Customer accounts689 621 
Unbilled revenues258 233 
Joint owner accounts106 123 
Affiliated41 21 
Other accounts and notes46 67 
Accumulated provision for uncollectible accounts(2)(26)
Fossil fuel stock201 278 
Materials and supplies647 592 
Regulatory assets – storm damage102 213 
Regulatory assets – asset retirement obligations191 166 
Other regulatory assets243 248 
Other current assets255 143 
Total current assets3,069 2,688 
Property, Plant, and Equipment:
In service40,831 39,682 
Less: Accumulated provision for depreciation12,743 12,251 
Plant in service, net of depreciation28,088 27,431 
Nuclear fuel, at amortized cost564 548 
Construction work in progress7,337 6,857 
Total property, plant, and equipment35,989 34,836 
Other Property and Investments:
Nuclear decommissioning trusts, at fair value1,187 1,145 
Equity investments in unconsolidated subsidiaries50 51 
Miscellaneous property and investments66 63 
Total other property and investments1,303 1,259 
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization1,193 1,308 
Deferred charges related to income taxes544 527 
Regulatory assets – asset retirement obligations, deferred3,607 3,291 
Other regulatory assets, deferred2,515 2,692 
Other deferred charges and assets712 479 
Total deferred charges and other assets8,571 8,297 
Total Assets$48,932 $47,080 
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 EquityAt September 30, 2021At December 31, 2020
 (in millions)
Current Liabilities:
Securities due within one year$672 $542 
Notes payable 60 
Accounts payable —
Affiliated719 597 
Other761 753 
Customer deposits263 276 
Accrued taxes457 407 
Accrued interest98 130 
Accrued compensation207 233 
Operating lease obligations153 151 
Asset retirement obligations333 287 
Over recovered fuel clause revenues 113 
Other regulatory liabilities360 228 
Other current liabilities198 254 
Total current liabilities4,221 4,031 
Long-term Debt13,064 12,428 
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes3,222 3,272 
Deferred credits related to income taxes2,386 2,588 
Accumulated deferred ITCs321 273 
Employee benefit obligations461 586 
Operating lease obligations, deferred1,008 1,156 
Asset retirement obligations, deferred6,432 5,978 
Other deferred credits and liabilities456 267 
Total deferred credits and other liabilities14,286 14,120 
Total Liabilities31,571 30,579 
Common Stockholder's Equity (See accompanying statements)
17,361 16,501 
Total Liabilities and Stockholder's Equity$48,932 $47,080 
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
 (in millions)
Balance at December 31, 2019$398 $10,962 $3,756 $(51)$15,065 
Net income— — — 331 — 331 
Capital contributions from parent company— — 502 — — 502 
Other comprehensive income (loss)— — — — (1)(1)
Cash dividends on common stock— — — (385)— (385)
Balance at March 31, 2020398 11,464 3,702 (52)15,512 
Net income— — — 308 — 308 
Capital contributions from parent company— — — — 
Other comprehensive income— — — — 
Cash dividends on common stock— — — (386)— (386)
Balance at June 30, 2020398 11,465 3,624 (50)15,437 
Net income— — — 773 — 773 
Capital contributions from parent company— — 880 — — 880 
Other comprehensive income— — — — 
Cash dividends on common stock— — — (386)— (386)
Balance at September 30, 2020$398 $12,345 $4,011 $(48)$16,706 
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 
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,
 2021202020212020
 (in millions)(in millions)
Operating Revenues:
Retail revenues$248 $232 $670 $630 
Wholesale revenues, non-affiliates60 61 178 164 
Wholesale revenues, affiliates62 36 120 82 
Other revenues8 20 19 
Total operating revenues378 336 988 895 
Operating Expenses:
Fuel139 103 330 266 
Purchased power6 21 18 
Other operations and maintenance85 62 230 202 
Depreciation and amortization46 47 138 135 
Taxes other than income taxes33 31 96 90 
Total operating expenses309 249 815 711 
Operating Income69 87 173 184 
Other Income and (Expense):
Interest expense, net of amounts capitalized(16)(14)(45)(45)
Other income (expense), net7 27 19 
Total other income and (expense)(9)(8)(18)(26)
Earnings Before Income Taxes60 79 155 158 
Income taxes10 12 22 20 
Net Income$50 $67 $133 $138 
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
For the Three Months Ended September 30,For the Nine Months Ended September 30,
 2021202020212020
 (in millions)(in millions)
Net Income$50 $67 $133 $138 
Other comprehensive income (loss):
Qualifying hedges:
Reclassification adjustment for amounts included in net income,
   net of tax of $—, $—, $—, and $—, respectively
 — 1 
Total other comprehensive income (loss) — 1 
Comprehensive Income$50 $67 $134 $139 
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,
 20212020
 (in millions)
Operating Activities:
Net income$133 $138 
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total161 142 
Settlement of asset retirement obligations(18)(16)
Other, net(20)(11)
Changes in certain current assets and liabilities —
-Receivables(19)(3)
-Other current assets(9)(7)
-Accounts payable(12)(54)
-Accrued taxes(20)15 
-Retail fuel cost over recovery(19)— 
-Other current liabilities(18)(18)
Net cash provided from operating activities159 186 
Investing Activities:
Property additions(135)(174)
Construction payables(11)
Payments pursuant to LTSAs(21)(20)
Other investing activities(15)(13)
Net cash used for investing activities(182)(200)
Financing Activities:
Decrease in notes payable, net(25)— 
Proceeds —
Senior notes525 — 
Short-term borrowings 40 
Pollution control revenue bonds 34 
Other long-term debt 100 
Redemptions —
Senior notes (275)
Short-term borrowings (40)
Pollution control revenue bonds (41)
Other revenue bonds(270)— 
Other long-term debt(75)— 
Capital contributions from parent company103 80 
Return of capital to parent company (74)
Payment of common stock dividends(118)(37)
Other financing activities(10)(1)
Net cash provided from (used for) financing activities130 (214)
Net Change in Cash, Cash Equivalents, and Restricted Cash107 (228)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period39 286 
Cash, Cash Equivalents, and Restricted Cash at End of Period$146 $58 
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest$53 $49 
Income taxes, net11 
Noncash transactions — Accrued property additions at end of period23 42 
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)
 
AssetsAt September 30, 2021At December 31, 2020
 (in millions)
Current Assets:
Cash and cash equivalents$146 $39 
Receivables —
Customer accounts, net46 34 
Unbilled revenues39 38 
Affiliated45 32 
Other accounts and notes27 32 
Fossil fuel stock27 24 
Materials and supplies71 65 
Assets from risk management activities, net of collateral66 
Other regulatory assets54 60 
Other current assets11 19 
Total current assets532 344 
Property, Plant, and Equipment:
In service5,078 5,011 
Less: Accumulated provision for depreciation1,568 1,545 
Plant in service, net of depreciation3,510 3,466 
Construction work in progress117 146 
Total property, plant, and equipment3,627 3,612 
Other Property and Investments180 151 
Deferred Charges and Other Assets:
Deferred charges related to income taxes31 32 
Regulatory assets – asset retirement obligations231 201 
Other regulatory assets, deferred371 388 
Accumulated deferred income taxes119 129 
Other deferred charges and assets100 55 
Total deferred charges and other assets852 805 
Total Assets$5,191 $4,912 
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 EquityAt September 30, 2021At December 31, 2020
 (in millions)
Current Liabilities:
Securities due within one year$76 $406 
Notes payable 25 
Accounts payable —
Affiliated88 63 
Other61 109 
Accrued taxes94 114 
Accrued interest7 15 
Accrued compensation31 34 
Asset retirement obligations19 27 
Over recovered regulatory clause liabilities7 34 
Other regulatory liabilities104 49 
Other current liabilities50 40 
Total current liabilities537 916 
Long-term Debt1,509 1,013 
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes464 447 
Deferred credits related to income taxes276 287 
Employee benefit obligations94 113 
Asset retirement obligations, deferred175 150 
Other cost of removal obligations194 194 
Other regulatory liabilities, deferred48 15 
Other deferred credits and liabilities31 35 
Total deferred credits and other liabilities1,282 1,241 
Total Liabilities3,328 3,170 
Common Stockholder's Equity (See accompanying statements)
1,863 1,742 
Total Liabilities and Stockholder's Equity$5,191 $4,912 
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
 (in millions)
Balance at December 31, 2019$38 $4,449 $(2,832)$(3)$1,652 
Net income— — — 32 — 32 
Capital contributions from parent company— — 76 — — 76 
Return of capital to parent company— — (37)— — (37)
Other— — (1)— — (1)
Balance at March 31, 202038 4,487 (2,800)(3)1,722 
Net income— — — 39 — 39 
Return of capital to parent company— — (37)— — (37)
Balance at June 30, 202038 4,450 (2,761)(3)1,724 
Net income— — — 67 — 67 
Capital contributions from parent company— — — — 
Cash dividends on common stock— — — (37)— (37)
Balance at September 30, 2020$38 $4,456 $(2,731)$(3)$1,760 
Balance at December 31, 20201 $38 $4,460 $(2,754)$(2)$1,742 
Net income   45  45 
Capital contributions from parent company  100   100 
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 
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,
 2021202020212020
 (in millions)(in millions)
Operating Revenues:
Wholesale revenues, non-affiliates$503 $418 $1,231 $1,047 
Wholesale revenues, affiliates167 101 361 279 
Other revenues9 18 11 
Total operating revenues679 523 1,610 1,337 
Operating Expenses:
Fuel259 137 540 346 
Purchased power41 19 86 52 
Other operations and maintenance94 89 308 245 
Depreciation and amortization132 129 383 367 
Taxes other than income taxes12 10 35 29 
Loss on sales-type lease15 — 15 — 
(Gain) loss on dispositions, net — (39)(39)
Total operating expenses553 384 1,328 1,000 
Operating Income126 139 282 337 
Other Income and (Expense):
Interest expense, net of amounts capitalized(36)(36)(111)(114)
Other income (expense), net2 13 10 19 
Total other income and (expense)(34)(23)(101)(95)
Earnings Before Income Taxes92 116 181 242 
Income taxes (benefit)9 14 (3)27 
Net Income83 102 184 215 
Net income (loss) attributable to noncontrolling interests5 28 (27)
Net Income Attributable to Southern Power$78 $74 $211 $212 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
 
 For the Three Months Ended September 30,For the Nine Months Ended September 30,
 2021202020212020
 (in millions)(in millions)
Net Income$83 $102 $184 $215 
Other comprehensive income (loss):
Qualifying hedges:
Changes in fair value, net of tax of
   $(7), $15, $(16), and $(2), respectively
(21)44 (48)(6)
Reclassification adjustment for amounts included in net income,
   net of tax of $9, $(13), $22, and $(8), respectively
27 (36)66 (24)
Pension and other postretirement benefit plans:
Reclassification adjustment for amounts included in net income,
   net of tax of $—, $—, $1, and $—, respectively
1 — 2 
Total other comprehensive income (loss)7 20 (28)
Comprehensive Income90 110 204 187 
Comprehensive income (loss) attributable to noncontrolling interests5 28 (27)
Comprehensive Income Attributable to Southern Power$85 $82 $231 $184 
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,
 20212020
 (in millions)
Operating Activities:
Net income$184 $215 
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total402 386 
Deferred income taxes(16)(59)
Utilization of federal investment tax credits237 318 
Amortization of investment tax credits(44)(44)
(Gain) loss on dispositions, net(39)(39)
Other, net14 (16)
Changes in certain current assets and liabilities —
-Receivables(117)(28)
-Prepaid income taxes63 74 
-Other current assets(5)(17)
-Accounts payable55 (12)
-Accrued taxes15 21 
-Other current liabilities1 (25)
Net cash provided from operating activities750 774 
Investing Activities:
Business acquisitions, net of cash acquired(345)(81)
Property additions(355)(135)
Proceeds from dispositions22 663 
Change in construction payables(22)(12)
Payments pursuant to LTSAs(61)(61)
Other investing activities8 50 
Net cash provided from (used for) investing activities(753)424 
Financing Activities:
Decrease in notes payable, net(148)(449)
Proceeds — Senior notes400 — 
Redemptions —
Short-term borrowings (100)
Senior notes (300)
Return of capital to parent company(271)— 
Capital contributions from noncontrolling interests415 173 
Distributions to noncontrolling interests(204)(164)
Purchase of membership interests from noncontrolling interests (60)
Payment of common stock dividends(153)(151)
Other financing activities(6)(9)
Net cash provided from (used for) financing activities33 (1,060)
Net Change in Cash, Cash Equivalents, and Restricted Cash30 138 
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period183 279 
Cash, Cash Equivalents, and Restricted Cash at End of Period$213 $417 
Supplemental Cash Flow Information:
Cash paid (received) during the period for —
Interest (net of $5 and $10 capitalized for 2021 and 2020, respectively)$118 $123 
Income taxes, net(235)(278)
Noncash transactions —
Contributions from noncontrolling interests89 
Contributions of wind turbine equipment82 17 
Accrued property additions at end of period53 44 
Right-of-use assets obtained under operating leases66 30 
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)
 
AssetsAt September 30, 2021At December 31, 2020
 (in millions)
Current Assets:
Cash and cash equivalents$192 $182 
Receivables —
Customer accounts, net178 125 
Affiliated68 37 
Other53 27 
Materials and supplies103 157 
Prepaid income taxes15 11 
Other current assets56 36 
Total current assets665 575 
Property, Plant, and Equipment:
In service14,399 13,904 
Less: Accumulated provision for depreciation3,122 2,842 
Plant in service, net of depreciation11,277 11,062 
Construction work in progress274 127 
Total property, plant, and equipment11,551 11,189 
Other Property and Investments:
Intangible assets, net of amortization of $104 and $89, respectively288 302 
Equity investments in unconsolidated subsidiaries83 19 
Net investment in sales-type lease91 — 
Total other property and investments462 321 
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization475 415 
Prepaid LTSAs191 155 
Accumulated deferred income taxes 262 
Income taxes receivable, non-current33 25 
Other deferred charges and assets234 293 
Total deferred charges and other assets933 1,150 
Total Assets$13,611 $13,235 
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' EquityAt September 30, 2021At December 31, 2020
 (in millions)
Current Liabilities:
Securities due within one year$994 $299 
Notes payable27 175 
Accounts payable —
Affiliated110 65 
Other91 92 
Accrued taxes —
Accrued income taxes8 
Other accrued taxes27 22 
Accrued interest26 32 
Other current liabilities125 132 
Total current liabilities1,408 825 
Long-term Debt3,021 3,393 
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes156 123 
Accumulated deferred ITCs1,629 1,672 
Operating lease obligations489 426 
Other deferred credits and liabilities201 165 
Total deferred credits and other liabilities2,475 2,386 
Total Liabilities6,904 6,604 
Total Stockholders' Equity (See accompanying statements)
6,707 6,631 
Total Liabilities and Stockholders' Equity$13,611 $13,235 
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 InterestsTotal
(in millions)
Balance at December 31, 2019$909 $1,485 $(26)$2,368 $4,254 $6,622 
Net income (loss)— 75 — 75 (31)44 
Other comprehensive income (loss)— — (33)(33)— (33)
Cash dividends on common stock— (50)— (50)— (50)
Capital contributions from
   noncontrolling interests
— — — — 16 16 
Distributions to noncontrolling interests— — — — (48)(48)
Balance at March 31, 2020909 1,510 (59)2,360 4,191 6,551 
Net income— 63 — 63 68 
Other comprehensive income (loss)— — (3)(3)— (3)
Cash dividends on common stock— (50)— (50)— (50)
Capital contributions from
   noncontrolling interests
— — — — 165 165 
Distributions to noncontrolling interests— — — — (70)(70)
Other(2)— — (2)— (2)
Balance at June 30, 2020907 1,523 (62)2,368 4,291 6,659 
Net income— 74 — 74 28 102 
Return of capital to parent company(4)— — (4)— (4)
Other comprehensive income— — — 
Cash dividends on common stock— (51)— (51)— (51)
Capital contributions from
   noncontrolling interests
— — — — 
Distributions to noncontrolling interests— — — — (51)(51)
Purchase of membership interests
   from noncontrolling interests
— — (60)(55)
Other— — — — 
Balance at September 30, 2020$908 $1,546 $(54)$2,400 $4,211 $6,611 
37

    Table of Contents                                Index to Financial Statements
SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Total Common
Stockholders' Equity
Noncontrolling InterestsTotal
(in millions)
Balance at December 31, 2020$914 $1,522 $(67)$2,369 $4,262 $6,631 
Net income (loss) 97  97 (32)65 
Return of capital to parent company(271)— — (271)— (271)
Other comprehensive income  16 16  16 
Cash dividends on common stock (51) (51) (51)
Capital contributions from
   noncontrolling interests
    403 403 
Distributions to noncontrolling interests    (46)(46)
Other(2)1 (1)(2)(1)(3)
Balance at March 31, 2021641 1,569 (52)2,158 4,586 6,744 
Net income 36  36  36 
Other comprehensive income (loss)  (3)(3) (3)
Cash dividends on common stock (51) (51) (51)
Capital contributions from
   noncontrolling interests
    29 29 
Distributions to noncontrolling interests    (68)(68)
Other2  1 3  3 
Balance at June 30, 2021643 1,554 (54)2,143 4,547 6,690 
Net income 78  78 5 83 
Other comprehensive income  7 7  7 
Cash dividends on common stock (51) (51) (51)
Capital contributions from
   noncontrolling interests
    73 73 
Distributions to noncontrolling interests    (95)(95)
Balance at September 30, 2021$643 $1,581 $(47)$2,177 $4,530 $6,707 
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,
 2021202020212020
 (in millions)(in millions)
Operating Revenues:
Natural gas revenues (includes revenue taxes of
   $12, $10, $89, and $79, respectively)
$624 $478 $2,991 $2,356 
Alternative revenue programs(1)(1)3 
Total operating revenues623 477 2,994 2,362 
Operating Expenses:
Cost of natural gas129 71 943 654 
Other operations and maintenance238 217 776 694 
Depreciation and amortization133 125 396 368 
Taxes other than income taxes36 35 166 154 
(Gain) loss on dispositions, net
(121)— (127)
Total operating expenses415 448 2,154 1,872 
Operating Income208 29 840 490 
Other Income and (Expense):
Earnings from equity method investments25 33 14 106 
Interest expense, net of amounts capitalized(57)(57)(175)(171)
Other income (expense), net13 12 (66)33 
Total other income and (expense)(19)(12)(227)(32)
Earnings Before Income Taxes189 17 613 458 
Income taxes133 224 98 
Net Income$56 $14 $389 $360 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
 
 For the Three Months Ended September 30,For the Nine Months Ended September 30,
 2021202020212020
 (in millions)(in millions)
Net Income$56 $14 $389 $360 
Other comprehensive income (loss):
Qualifying hedges:
Changes in fair value, net of tax of
   $8, $1, $11, and $(6), respectively
23 32 (17)
Reclassification adjustment for amounts included in net income,
   net of tax of $—, $—, $1, and $2, respectively
(2)1 
Total other comprehensive income (loss)21 33 (10)
Comprehensive Income$77 $19 $422 $350 
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,
 20212020
 (in millions)
Operating Activities:
Net income$389 $360 
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total396 368 
Deferred income taxes289 (1)
Mark-to-market adjustments147 104 
Impairment of PennEast Pipeline investment84 — 
(Gain) loss on dispositions, net(127)
Natural gas cost under recovery – long-term(79)— 
Other, net32 (21)
Changes in certain current assets and liabilities —
-Receivables311 403 
-Prepaid income taxes(148)(19)
-Natural gas cost under recovery(432)— 
-Other current assets(78)(1)
-Accounts payable30 (75)
-Other current liabilities(57)
Net cash provided from operating activities757 1,122 
Investing Activities:
Property additions(1,045)(1,045)
Cost of removal, net of salvage(74)(60)
Investment in unconsolidated subsidiaries(3)(79)
Proceeds from dispositions126 178 
Other investing activities30 33 
Net cash used for investing activities(966)(973)
Financing Activities:
Increase (decrease) in notes payable, net38 (500)
Proceeds —
Short-term borrowings300 — 
First mortgage bonds100 150 
Senior notes450 500 
Redemptions —
Senior notes(300)— 
Medium-term notes(30)— 
Capital contributions from parent company63 215 
Payment of common stock dividends(397)(399)
Other financing activities(2)(3)
Net cash provided from (used for) financing activities222 (37)
Net Change in Cash, Cash Equivalents, and Restricted Cash13 112 
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period19 49 
Cash, Cash Equivalents, and Restricted Cash at End of Period$32 $161 
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $6 and $5 capitalized for 2021 and 2020, respectively)$173 $162 
Income taxes, net85 45 
Noncash transactions — Accrued property additions at end of period146 146 
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)
 
AssetsAt September 30, 2021At December 31, 2020
(in millions)
Current Assets:  
Cash and cash equivalents$29 $17 
Receivables —  
Energy marketing 516 
Customer accounts249 353 
Unbilled revenues70 219 
Affiliated1 
Other accounts and notes39 51 
Accumulated provision for uncollectible accounts(37)(40)
Natural gas for sale368 460 
Prepaid expenses181 48 
Assets from risk management activities, net of collateral75 118 
Natural gas cost under recovery432 — 
Other regulatory assets137 102 
Other current assets44 38 
Total current assets1,588 1,886 
Property, Plant, and Equipment:  
In service18,527 17,611 
Less: Accumulated depreciation5,004 4,821 
Plant in service, net of depreciation13,523 12,790 
Construction work in progress691 648 
Total property, plant, and equipment14,214 13,438 
Other Property and Investments:
Goodwill5,015 5,015 
Equity investments in unconsolidated subsidiaries1,174 1,290 
Other intangible assets, net of amortization of $142 and $195, respectively40 51 
Miscellaneous property and investments20 19 
Total other property and investments6,249 6,375 
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization72 81 
Other regulatory assets, deferred634 615 
Other deferred charges and assets201 235 
Total deferred charges and other assets907 931 
Total Assets$22,958 $22,630 
The accompanying notes as they relate to Southern Company Gas are an integral part of these condensed consolidated financial statements.

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SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

Liabilities and Stockholder's EquityAt September 30, 2021At December 31, 2020
(in millions)
Current Liabilities:
Securities due within one year$47 $333 
Notes payable662 324 
Energy marketing trade payables 494 
Accounts payable —
Affiliated42 56 
Other399 373 
Customer deposits106 90 
Accrued taxes79 83 
Accrued interest68 58 
Accrued compensation87 106 
Temporary LIFO liquidation18 — 
Other regulatory liabilities18 122 
Other current liabilities154 150 
Total current liabilities1,680 2,189 
Long-term Debt6,766 6,293 
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes1,571 1,265 
Deferred credits related to income taxes822 847 
Employee benefit obligations260 283 
Operating lease obligations60 67 
Other cost of removal obligations1,675 1,649 
Accrued environmental remediation203 216 
Other deferred credits and liabilities45 54 
Total deferred credits and other liabilities4,636 4,381 
Total Liabilities13,082 12,863 
Common Stockholder's Equity (See accompanying statements)
9,876 9,767 
Total Liabilities and Stockholder's Equity$22,958 $22,630 
The accompanying notes as they relate to Southern Company Gas are an integral part of these condensed consolidated financial statements.


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SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (UNAUDITED)
 Paid-In
Capital
Retained
Earnings
(Accumulated Deficit)
Accumulated
Other
Comprehensive
Income (Loss)
Total
 (in millions)
Balance at December 31, 2019$9,697 $(198)$$9,506 
Net income— 275 — 275 
Return of capital to parent company(2)— — (2)
Other comprehensive income (loss)— — (15)(15)
Cash dividends on common stock— (133)— (133)
Balance at March 31, 20209,695 (56)(8)9,631 
Net income— 71 — 71 
Capital contributions from parent company200 — — 200 
Cash dividends on common stock— (133)— (133)
Balance at June 30, 20209,895 (118)(8)9,769 
Net income— 14 — 14 
Capital contributions from parent company30 — — 30 
Other comprehensive income— — 
Cash dividends on common stock— (133)— (133)
Balance at September 30, 2020$9,925 $(237)$(3)$9,685 
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 
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



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, 2020 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, 2021 and 2020. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although each Registrant believes that the disclosures regarding such Registrant are adequate to make the information presented not misleading. Disclosures which would substantially duplicate the disclosures in the Form 10-K and details which have not changed significantly in amount or composition since the filing of the Form 10-K are generally omitted from this Quarterly Report on Form 10-Q unless specifically required by GAAP. Therefore, these Condensed Financial Statements should be read in conjunction with the financial statements and the notes thereto included in the Form 10-K. Due to the seasonal variations in the demand for energy and other factors, including the impacts of the COVID-19 pandemic, operating results for the periods presented are not necessarily indicative of the operating results to be expected for the full year.
Certain prior year data presented in the financial statements have been reclassified to conform to the current year presentation. These reclassifications had no impact on the overall results of operations, financial position, or cash flows of any Registrant.
Goodwill and Other Intangible Assets
Goodwill at September 30, 2021 and December 31, 2020 was as follows:
Goodwill
(in millions)
Southern Company$5,280 
Southern Company Gas:
Gas distribution operations$4,034 
Gas marketing services981 
Southern Company Gas total$5,015 
Goodwill is not amortized but is subject to an annual impairment test in the fourth quarter of the year and on an interim basis as events and changes in circumstances occur.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Other intangible assets were as follows:
At September 30, 2021At December 31, 2020
Gross Carrying AmountAccumulated AmortizationOther
Intangible Assets, Net
Gross Carrying AmountAccumulated AmortizationOther
Intangible Assets, Net
(in millions)(in millions)
Southern Company
Other intangible assets subject to amortization:
Customer relationships$212 $(148)$64 $212 $(135)$77 
Trade names64 (36)28 64 (31)33 
Storage and transportation contracts(*)
— — — 64 (64)— 
PPA fair value adjustments390 (104)286 390 (89)301 
Other10 (8)10 (9)
Total other intangible assets subject to amortization$676 $(296)$380 $740 $(328)$412 
Other intangible assets not subject to amortization:
Federal Communications Commission licenses75 — 75 75 — 75 
Total other intangible assets$751 $(296)$455 $815 $(328)$487 
Southern Power
Other intangible assets subject to amortization:
PPA fair value adjustments$390 $(104)$286 $390 $(89)$301 
Southern Company Gas
Other intangible assets subject to amortization:
Gas marketing services
Customer relationships$156 $(128)$28 $156 $(119)$37 
Trade names26 (14)12 26 (12)14 
Wholesale gas services
Storage and transportation contracts(*)
— — — 64 (64)— 
Total other intangible assets subject to amortization$182 $(142)$40 $246 $(195)$51 
(*)See Note (K) under "Southern Company Gas" for information regarding the sale of Sequent.
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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, 2021
(in millions)
Southern Company(a)
$11 $33 
Southern Power(b)
15 
Southern Company Gas(c)
11 
(a)Includes $5 million and $15 million for the three and nine months ended September 30, 2021, respectively, recorded as a reduction to operating revenues.
(b)Recorded as a reduction to operating revenues.
(c)Relates to gas marketing services.
Cash, Cash Equivalents, and Restricted Cash
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed balance sheets that total to the amount shown in the condensed statements of cash flows for the applicable Registrants:
Southern
Company
Southern PowerSouthern
Company Gas
September 30, 2021December 31, 2020September 30, 2021September 30, 2021December 31, 2020
(in millions)(in millions)(in millions)
Cash and cash equivalents$2,078 $1,065 $192 $29 $17 
Restricted cash(a):
Other current assets— 
Other deferred charges and assets21 — 21 — — 
Total cash, cash equivalents, and restricted cash(b)
$2,101 $1,068 $213 $32 $19 
(a)For Southern Company Gas, reflects restricted cash held as collateral for workers' compensation, life insurance, and long-term disability insurance. For Southern Power, reflects restricted cash held for construction payables.
(b)Total 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 end are charged to cost of natural gas at the estimated annual replacement cost. Inventory decrements that are not restored prior to year end are charged to cost of natural gas at the actual LIFO cost of the inventory layers liquidated.
Southern Company Gas recorded no material adjustments to natural gas inventories for any period presented. Nicor Gas' inventory decrement at September 30, 2021 is expected to be restored prior to year end.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Asset Retirement Obligations
See Note 6 to the financial statements in Item 8 of the Form 10-K for additional information.
Details of changes in AROs for Southern Company, Alabama Power, Georgia Power, and Mississippi Power during the first nine months of 2021 are shown in the following table. There were no material changes in AROs for the other Registrants during the first nine months of 2021.
Southern CompanyAlabama PowerGeorgia
Power
Mississippi Power
(in millions)
Balance at December 31, 2020$10,684 $3,974 $6,265 $176 
Liabilities incurred17 — — 
Liabilities settled(341)(152)(154)(18)
Accretion304 116 176 
Cash flow revisions945 385 475 30 
Balance at September 30, 2021$11,609 $4,323 $6,765 $194 
In August 2021, Alabama Power recorded an increase of approximately $385 million to its AROs related to the CCR Rule and the related state rule based on updated estimates for post-closure costs at its ash ponds and inflation rates.
In September 2021, Georgia Power recorded an increase of approximately $435 million to its AROs related to the CCR Rule and the related state rule based on updated estimates for inflation rates and the timing of closure activities.
In September 2021, Mississippi Power recorded an increase of approximately $30 million to its AROs related to the CCR Rule based on updated estimates for the timing of closure activities, post-closure costs at one of its ash ponds, and inflation rates.
The traditional electric operating companies have periodically updated, and expect to continue periodically updating, their related cost estimates and ARO liabilities for each CCR unit as additional information related to these assumptions becomes available. Some of these updates have been, and future updates may be, material. Additionally, the closure designs and plans in the States of Alabama and Georgia are subject to approval by environmental regulatory agencies. Absent continued recovery of ARO costs through regulated rates, results of operations, cash flows, and financial condition for Southern Company and the traditional electric operating companies could be materially impacted. See Note (B) under "Georgia Power – Rate Plan" for additional information. The ultimate outcome of these matters cannot be determined at this time.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
(B) REGULATORY MATTERS
See Note 2 to the financial statements in Item 8 of the Form 10-K for additional information relating to regulatory matters.
The recovery balances for certain retail regulatory clauses of the traditional electric operating companies and Southern Company Gas at September 30, 2021 and December 31, 2020 were as follows:
Regulatory ClauseBalance Sheet Line ItemSeptember 30,
2021
December 31, 2020
(in millions)
Alabama Power
Rate CNP ComplianceOther regulatory liabilities, current$ $28 
Other regulatory liabilities, deferred24 — 
Rate CNP PPAOther regulatory assets, deferred88 58 
Retail Energy Cost RecoveryOther regulatory liabilities, current 18 
Other regulatory assets, current79 — 
Other regulatory assets, deferred6 — 
Natural Disaster ReserveOther regulatory liabilities, deferred36 77 
Georgia Power
Fuel Cost RecoveryOver recovered fuel clause revenues$ $113 
Other deferred charges and assets203 — 
Mississippi Power
Fuel Cost RecoveryOver recovered regulatory clause liabilities$5 $24 
Ad Valorem TaxOther regulatory assets, current12 11 
Other regulatory assets, deferred39 41 
Property Damage ReserveOther regulatory liabilities, deferred 
Other regulatory assets, deferred16 — 
Southern Company Gas
Natural Gas Cost Recovery(*)
Other regulatory liabilities$ $88 
Natural gas cost under recovery432 — 
Other regulatory assets, deferred79 — 
(*)The significant change during the nine months ended September 30, 2021 was primarily driven by an increase in the cost of gas purchased in February 2021 resulting from Winter Storm Uri.
Alabama Power
Certificate of Convenience and Necessity
Energy Alabama, Gasp, Inc., and the Sierra Club filed requests for reconsideration and rehearing with the Alabama PSC regarding the certificate of convenience and necessity (CCN) issued to Alabama Power in August 2020, which authorized, among other things, the construction of Plant Barry Unit 8 and the acquisition of the Central Alabama Generating Station. In December 2020, the Alabama PSC issued an order denying the requests. On January 7, 2021, Energy Alabama and Gasp, Inc. filed a judicial appeal regarding both the Alabama PSC's August 2020 CCN order and the December 2020 order denying reconsideration and rehearing. On March 9, 2021, the Circuit Court of Montgomery County, Alabama granted a motion by Alabama Power to intervene in the appeal. On August 27, 2021, the court affirmed both the August 2020 and December 2020 Alabama PSC orders. On October 7, 2021, Energy Alabama and Gasp, Inc. filed an unopposed motion for voluntary dismissal of their direct appeal previously
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
filed on January 7, 2021. This matter is now concluded. At September 30, 2021, expenditures associated with the construction of Plant Barry Unit 8 included in CWIP totaled approximately $222 million.
Plant Greene County
Alabama Power jointly owns Plant Greene County with an affiliate, Mississippi Power. See Note 5 under "Joint Ownership Agreements" in Item 8 of the Form 10-K for additional information.
On September 9, 2021, the Mississippi PSC issued an order confirming the conclusion of its review of Mississippi Power's 2021 IRP with no deficiencies identified. Mississippi Power's 2021 IRP includes a schedule to retire Mississippi Power's 40% ownership interest in Plant Greene County Units 1 and 2 in December 2025 and 2026, respectively, consistent with each unit's remaining useful life. The Plant Greene County unit retirements identified by Mississippi Power require the completion of transmission and system reliability improvements, as well as agreement by Alabama Power. Alabama Power will continue to monitor the status of the transmission and system reliability improvements. Currently, Alabama Power plans to retire Plant Greene County Units 1 and 2 at the dates indicated. The ultimate outcome of this matter cannot be determined at this time.
Rate NDR
Based on an order from the Alabama PSC, when Alabama Power's NDR balance falls below $50 million, a reserve establishment charge will be activated and the ongoing reserve maintenance charge will be concurrently suspended until the NDR balance reaches $75 million. At September 30, 2021, Alabama Power's NDR balance was $36 million. Effective with October 2021 billings, the reserve maintenance charge component of Rate NDR was suspended and the reserve establishment charge was activated. Alabama Power expects to collect approximately $4 million in the fourth quarter 2021 and $16 million annually under Rate NDR until the NDR balance is restored to $75 million.
Calhoun Generating Station Acquisition
On September 23, 2021, Alabama Power entered into an agreement to acquire all of the equity interests in Calhoun Power Company, LLC, which owns and operates a 743-MW winter peak, simple-cycle, combustion turbine generation facility in Calhoun County, Alabama (Calhoun Generating Station). The total purchase price associated with the acquisition is approximately $180 million, subject to working capital adjustments. The completion of the acquisition is subject to the satisfaction and waiver of certain conditions, including, among other customary conditions, approval by the Alabama PSC and the FERC, as well as the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. Alabama Power expects to complete the transaction by September 30, 2022.
On October 28, 2021, Alabama Power filed a petition for a CCN with the Alabama PSC to procure additional generating capacity through the acquisition of the Calhoun Generating Station.
Upon certification, Alabama Power expects to recover costs associated with the Calhoun Generating Station through its existing rate structure, primarily Rate CNP New Plant, Rate CNP Compliance, Rate ECR, and Rate RSE.
The ultimate outcome of this matter cannot be determined at this time.
Georgia Power
Rate Plan
Effective January 1, 2021, Georgia Power reduced its amortization of costs associated with CCR AROs by approximately $90 million as approved by the Georgia PSC in conjunction with Georgia Power's annual compliance filings.
In February 2020, the Georgia PSC denied a motion for reconsideration filed by the Sierra Club regarding the Georgia PSC's decision in the 2019 ARP allowing Georgia Power to recover compliance costs for CCR AROs, and, in December 2020, the Superior Court of Fulton County affirmed the decision of the Georgia PSC. On October 25,
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
2021, the Georgia Court of Appeals affirmed the Superior Court of Fulton County's December 2020 order. On November 3, 2021, the Sierra Club filed a motion for reconsideration with the Georgia Court of Appeals. The ultimate outcome of this matter cannot be determined at this time.
In accordance with the terms of the 2019 ARP, on October 1, 2021, Georgia Power filed the following tariff adjustments to become effective January 1, 2022 pending approval by the Georgia PSC:
increase traditional base tariffs by approximately $192 million;
decrease the ECCR tariff by approximately $12 million;
decrease Demand-Side Management tariffs by approximately $25 million; and
increase Municipal Franchise Fee tariffs by approximately $2 million.
The ultimate outcome of this matter cannot be determined at this time.
See Note 6 to the financial statements in Item 8 of the Form 10-K for additional information regarding Georgia Power's AROs.
Plant Vogtle Unit 3 and Common Facilities Rate Proceeding
On June 15, 2021, Georgia Power filed an application with the Georgia PSC to adjust retail base rates to include the portion of costs related to its investment in Plant Vogtle Unit 3 and the common facilities shared between Plant Vogtle Units 3 and 4 (Common Facilities) previously deemed prudent by the Georgia PSC ($2.38 billion), as well as the related costs of operation. On November 2, 2021, the Georgia PSC voted to approve Georgia Power's application as filed, with the following modifications pursuant to a stipulated agreement between Georgia Power and the staff of the Georgia PSC. Georgia Power will include in rate base $2.1 billion of the $2.38 billion previously deemed prudent by the Georgia PSC and will recover the related depreciation expense through retail base rates. Financing costs on the remaining portion of the total Unit 3 and the Common Facilities construction costs will continue to be recovered through the NCCR tariff or deferred. Georgia Power will defer as a regulatory asset the remaining depreciation expense (approximately $38 million annually) until Unit 4 costs are placed in retail base rates. In addition, the stipulated agreement clarified that following the prudency review, the remaining amount to be placed in retail base rates will be net of the proceeds from the Guarantee Settlement Agreement and will not be used to offset imprudent costs, if any.
The related increase in annual retail base rates of approximately $302 million also includes recovery of all projected operations and maintenance expenses for Unit 3 and the Common Facilities and other related costs of operation, partially offset by the related production tax credits, and will become effective the month after Unit 3 is placed in service. This increase will be partially offset by a decrease in the NCCR tariff of approximately $78 million expected to be effective January 1, 2022.
See "Nuclear Construction" herein for additional information on Plant Vogtle Units 3 and 4.
Deferral of Incremental COVID-19 Costs
Since June 2021, Georgia Power has continued a review of bad debt amounts deferred under the Georgia PSC-approved methodology, including consideration of actual amounts repaid by customers from arrears and installment plans after the disconnection moratorium period ended in July 2020. As a result, Georgia Power has reduced the balance of deferred incremental costs by a total of approximately $23 million through September 30, 2021. At September 30, 2021, the incremental costs deferred totaled approximately $20 million, including approximately $1 million of incremental bad debt costs and $19 million of other incremental costs. The period over which these costs will be recovered is expected to be determined in Georgia Power's next base rate case. The ultimate outcome of this matter cannot be determined at this time.
Fuel Cost Recovery
Georgia Power has established fuel cost recovery rates approved by the Georgia PSC. On October 12, 2021, Georgia Power filed a notification and plan with the Georgia PSC to implement an interim fuel rider and increase
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
fuel rates by 15% effective January 1, 2022, which is expected to increase annual billings by approximately $252 million. The Georgia PSC has 30 days from the filing to approve the plan; however, if the Georgia PSC elects to take no action, the new rates become effective as requested. Georgia Power is currently scheduled to file its next fuel case by February 28, 2023. The ultimate outcome of this matter cannot be determined at this time.
Nuclear Construction
In 2009, the Georgia PSC certified construction of Plant Vogtle Units 3 and 4, in which Georgia Power holds a 45.7% ownership interest. In 2012, the NRC issued the related combined construction and operating licenses, which allowed full construction of the 2 AP1000 nuclear units (with electric generating capacity of approximately 1,100 MWs each) and related facilities to begin. Until March 2017, construction on Plant Vogtle Units 3 and 4 continued under the Vogtle 3 and 4 Agreement, which was a substantially fixed price agreement.
In connection with the EPC Contractor's bankruptcy filing in March 2017, Georgia Power, acting for itself and as agent for the other Vogtle Owners, entered into several transitional arrangements to allow construction to continue. In July 2017, Georgia Power, acting for itself and as agent for the other Vogtle Owners, entered into the Vogtle Services Agreement, whereby Westinghouse provides facility design and engineering services, procurement and technical support, and staff augmentation on a time and materials cost basis. The Vogtle Services Agreement provides that it will continue until the start-up and testing of Plant Vogtle Units 3 and 4 are complete and electricity is generated and sold from both units. The Vogtle Services Agreement is terminable by the Vogtle Owners upon 30 days' written notice.
In October 2017, Georgia Power, acting for itself and as agent for the other Vogtle Owners, executed the Bechtel Agreement, a cost reimbursable plus fee arrangement, whereby Bechtel is reimbursed for actual costs plus a base fee and an at-risk fee, which is subject to adjustment based on Bechtel's performance against cost and schedule targets. Each Vogtle Owner is severally (not jointly) liable for its proportionate share, based on its ownership interest, of all amounts owed to Bechtel under the Bechtel Agreement. The Vogtle Owners may terminate the Bechtel Agreement at any time for their convenience, provided that the Vogtle Owners will be required to pay amounts related to work performed prior to the termination (including the applicable portion of the base fee), certain termination-related costs, and, at certain stages of the work, the applicable portion of the at-risk fee. Bechtel may terminate the Bechtel Agreement under certain circumstances, including certain Vogtle Owner suspensions of work, 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, mandatory prepayment events, and conditions to borrowing.
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 September 2022 and June 2023, respectively, is as follows:
(in millions)
Base project capital cost forecast(a)(b)
$9,342 
Construction contingency estimate137 
Total project capital cost forecast(a)(b)
9,479 
Net investment at September 30, 2021(b)
(8,159)
Remaining estimate to complete$1,320 
(a)    Includes approximately $570 million of costs that are not shared with the other Vogtle Owners. Excludes financing costs expected to be capitalized through AFUDC of approximately $318 million, of which $169 million had been accrued through September 30, 2021.
(b)    Net of $1.7 billion received from Toshiba under the Guarantee Settlement Agreement and approximately $188 million in related customer refunds.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Georgia Power estimates that its financing costs for construction of Plant Vogtle Units 3 and 4 will total approximately $3.2 billion, of which $2.8 billion had been incurred through September 30, 2021.
As part of its ongoing processes, Southern Nuclear continues to evaluate cost and schedule forecasts on a regular basis to incorporate current information available, particularly in the areas of engineering support, commodity installation, system turnovers and related test results, and workforce statistics. Southern Nuclear establishes aggressive target values for monthly construction production and system turnover activities. Southern Nuclear's site work plans continue to reflect this approach in support of safely completing Units 3 and 4, while achieving the required construction quality.
In mid-March 2020, Southern Nuclear began implementing policies and procedures designed to mitigate the risk of transmission of COVID-19 at the construction site, including worker distancing measures; isolating individuals who tested positive for COVID-19, showed symptoms consistent with COVID-19, were being tested for COVID-19, or were in close contact with such persons; requiring self-quarantine; and adopting additional precautionary measures. Since March 2020, the number of active cases at the site has fluctuated and impacted productivity levels and pace of activity completion. Through June 2021, the site experienced an overall decline in the number of active cases since the peak in January 2021. During the third quarter 2021, the site experienced a similar peak in August 2021; however, the number of active cases since this peak has declined. The lower productivity levels and slower pace of activity completion experienced since March 2020 contributed to a backlog to the aggressive site work plan established at the beginning of 2020. Georgia Power estimates the productivity impacts of the COVID-19 pandemic have consumed approximately three to four months of schedule margin previously embedded in the site work plan for Unit 3 and Unit 4. In addition, the project continued to face challenges including, but not limited to, higher than expected absenteeism; overall construction and subcontractor labor productivity; system turnover and testing activities; and electrical equipment and commodity installation. As a result of these factors, in January 2021, Southern Nuclear further extended certain milestone dates, including the start of hot functional testing and fuel load for Unit 3, from those established in October 2020.
Following the January 2021 milestone extensions, Southern Nuclear has been performing additional construction remediation work necessary to ensure quality and design standards are met as system turnovers are completed to support hot functional testing, which was completed in July 2021, and fuel load for Unit 3. As a result of challenges including, but not limited to, construction productivity, construction remediation work, the pace of system turnovers, spent fuel pool repairs, and the timeframe and duration for hot functional and other testing, at the end of the second quarter 2021, Southern Nuclear further extended certain milestone dates, including the fuel load for Unit 3, from those established in January 2021. Through the third quarter 2021, the project continued to face challenges including, but not limited to, construction productivity, construction remediation work, and the pace of system turnovers. As a result of these continued challenges, at the end of the third quarter 2021, Southern Nuclear further extended certain milestone dates, including fuel load for Unit 3, from those established at the end of the second quarter 2021. The site work plan currently targets fuel load for Unit 3 in the first quarter 2022 and an in-service date of May 2022 and primarily depends on significant improvements in overall construction productivity and production levels, the volume of construction remediation work, the pace of system and area turnovers, and the progression of startup and other testing. As the site work plan includes minimal margin to these milestone dates, an in-service date in the third quarter 2022 for Unit 3 is projected, although any further delays could result in a later in-service date.
As the result of productivity challenges, at the end of the second quarter 2021, Southern Nuclear also further extended milestone dates for Unit 4 from those established in January 2021. These productivity challenges continued into the third quarter 2021 and some craft and support resources were diverted temporarily to support construction efforts on Unit 3. As a result of these factors, at the end of the third quarter 2021, Southern Nuclear further extended the milestone dates for Unit 4 from those established at the end of the second quarter 2021. The site work plan targets an in-service date of March 2023 for Unit 4 and primarily depends on overall construction productivity and production levels significantly improving as well as appropriate levels of craft laborers, particularly electricians and pipefitters, being added and maintained. As the site work plan includes minimal margin
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to the milestone dates, an in-service date in the second quarter 2023 for Unit 4 is projected, although any further delays could result in a later in-service date.
As of March 31, 2021, approximately $84 million of the construction contingency established in the fourth quarter 2020 was assigned to the base capital cost forecast for costs primarily associated with the schedule extension for Unit 3 to December 2021, construction productivity, support resources, and construction remediation work. Georgia Power increased its total capital cost forecast as of March 31, 2021 by adding $48 million to the remaining construction contingency. As of June 30, 2021, all of the remaining construction contingency previously established and an additional $341 million was assigned to the base capital cost forecast for costs primarily associated with the schedule extensions for Units 3 and 4, construction remediation work for Unit 3, and construction productivity and support resources for Units 3 and 4. Georgia Power also increased its total capital cost forecast as of June 30, 2021 by adding $119 million to replenish construction contingency. As a result of the factors discussed above, during the third quarter 2021, all of the remaining construction contingency previously established in the second quarter 2021 and an additional $127 million was assigned to the base capital cost forecast for costs primarily associated with the schedule extensions for Units 3 and 4, construction productivity and support resources for Units 3 and 4, and construction remediation work for Unit 3. Georgia Power also increased its total capital cost forecast as of September 30, 2021 by adding $137 million to replenish construction contingency.
After considering the significant level of uncertainty that exists regarding the future recoverability of these costs since the ultimate outcome of these matters is subject to the outcome of future assessments by management, as well as Georgia PSC decisions in future regulatory proceedings, Georgia Power recorded pre-tax charges to income in the first quarter 2021, the second quarter 2021, and the third quarter 2021 of $48 million ($36 million after tax), $460 million ($343 million after tax), and $264 million ($197 million after tax), respectively, for the increases in the total project capital cost forecast. As and when these amounts are spent, Georgia Power may request the Georgia PSC to evaluate those expenditures for rate recovery.
In addition, the continuing effects of the COVID-19 pandemic could further disrupt or delay construction and testing activities at Plant Vogtle Units 3 and 4. Georgia Power's proportionate share of the estimated incremental cost associated with COVID-19 mitigation actions and impacts on construction productivity is currently estimated to be between $160 million and $200 million and is included in the total project capital cost forecast.
As construction, including subcontract work, continues and testing and system turnover activities increase, ongoing or future challenges with management of contractors and vendors; subcontractor performance; supervision of craft labor and related productivity, particularly in the installation of electrical, mechanical, and instrumentation and controls commodities, ability to attract and retain craft labor, and/or related cost escalation; procurement, fabrication, delivery, assembly, installation, system turnover, and the initial testing and start-up, including any required engineering changes or any remediation related thereto, of 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), including the spent fuel pools, any of which may require additional labor and/or materials; or other issues could continue or arise and change the projected schedule and estimated cost.
There have been technical and procedural challenges to the construction and licensing of Plant Vogtle Units 3 and 4 at the federal and state level and additional challenges may arise. Processes are in place that are designed to ensure compliance with the requirements specified in the Westinghouse Design Control Document and the combined construction and operating licenses, including inspections by Southern Nuclear and the NRC that occur throughout construction. In connection with the additional construction remediation work described above, Southern Nuclear reviewed the project's construction quality programs and, where needed, is implementing improvement plans consistent with these processes. In June 2021, the NRC began a special inspection to review the root cause of this additional construction remediation work and the corresponding corrective action plans. On August 26, 2021, the NRC issued an inspection report with initial findings. Southern Nuclear had already identified and self-reported many of the issues in this report to the NRC and implemented corrective-action plans to resolve these issues. Southern Nuclear responded to the NRC's initial findings on October 5, 2021 and expects a final report from the NRC by November 24, 2021. Findings resulting from this or other inspections could require additional remediation
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and/or further NRC oversight. In addition, certain license amendment requests have been filed and approved or are pending before the NRC. On March 15, 2021, the NRC denied the Blue Ridge Environmental Defense League's (BREDL) December 2020 motion to reopen proceedings on BREDL's petition challenging a requested license amendment, which has been issued by the NRC staff.
The site work plan currently targets fuel load for Unit 3 in the first quarter 2022. Various design and other licensing-based compliance matters, including the timely submittal by Southern Nuclear of the ITAAC documentation for each unit and the related reviews and approvals by the NRC necessary to support NRC authorization to load fuel, have arisen or may arise, which may result in additional license amendments or require other resolution. If any license amendment requests or other licensing-based compliance issues, including inspections and ITAACs, are not resolved in a timely manner, there may be delays in the project schedule that could result in increased costs.
The ultimate outcome of these matters cannot be determined at this time. However, any extension of the in-service date beyond the third quarter 2022 for Unit 3 or the second quarter 2023 for Unit