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GPJA Georgia Power

Filed: 28 Apr 21, 8:00pm
0000092122us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FixedIncomeFundsMemberso:SouthernCompanyGasMember2021-03-31
    Table of Contents                                Index to Financial Statements
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 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
Alabama Power Company5.00% Series Class A Preferred StockALP PR QNYSE
Georgia Power CompanySeries 2017A 5.00% Junior Subordinated Notes due 2077GPJANYSE
Southern Power CompanySeries 2016A 1.000% Senior Notes due 2022SO/22BNYSE
Southern Power CompanySeries 2016B 1.850% Senior Notes due 2026SO/26ANYSE
Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes þ No ¨
Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrants were required to submit such files). Yes þ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
RegistrantLarge Accelerated FilerAccelerated
Filer
Non-accelerated FilerSmaller
Reporting
Company
Emerging
Growth
Company
The Southern CompanyX
Alabama Power CompanyX
Georgia Power CompanyX
Mississippi Power CompanyX
Southern Power CompanyX
Southern Company GasX
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No þ (Response applicable to all registrants.)
RegistrantDescription of Common StockShares Outstanding at March 31, 2021
The Southern CompanyPar Value $5 Per Share1,058,630,385 
Alabama Power CompanyPar Value $40 Per Share30,537,500 
Georgia Power CompanyWithout Par Value9,261,500 
Mississippi Power CompanyWithout Par Value1,121,000 
Southern Power CompanyPar Value $0.01 Per Share1,000 
Southern Company GasPar Value $0.01 Per Share100 
This combined Form 10-Q is separately filed by The Southern Company, Alabama Power Company, Georgia Power Company, Mississippi Power Company, Southern Power Company, and Southern Company Gas. Information contained herein relating to any individual registrant is filed by such registrant on its own behalf. Each registrant makes no representation as to information relating to the other registrants.
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TABLE OF CONTENTS
  Page
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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DEFINITIONS
TermMeaning
2019 ARPAlternate Rate Plan approved by the Georgia PSC in 2019 for Georgia Power for the years 2020 through 2022
AFUDCAllowance for funds used during construction
Alabama PowerAlabama Power Company
Amended and Restated Loan Guarantee AgreementLoan guarantee agreement entered into by Georgia Power with the DOE in 2014, as amended and restated in March 2019, under which the proceeds of borrowings may be used to reimburse Georgia Power for Eligible Project Costs incurred in connection with its construction of Plant Vogtle Units 3 and 4
AROAsset retirement obligation
Atlanta Gas LightAtlanta Gas Light Company, a wholly-owned subsidiary of Southern Company Gas
Atlantic Coast PipelineAtlantic Coast Pipeline, LLC, a joint venture to construct and operate a natural gas pipeline in which Southern Company Gas held a 5% interest through March 24, 2020
BechtelBechtel Power Corporation, the primary contractor for the remaining construction activities for Plant Vogtle Units 3 and 4
Bechtel AgreementThe 2017 construction completion agreement between the Vogtle Owners and Bechtel
CCRCoal combustion residuals
Chattanooga GasChattanooga Gas Company, a wholly-owned subsidiary of Southern Company Gas
CODCommercial operation date
Contractor Settlement AgreementThe December 31, 2015 agreement between Westinghouse and the Vogtle Owners resolving disputes between the Vogtle Owners and the EPC Contractor under the Vogtle 3 and 4 Agreement
COVID-19The novel coronavirus disease declared a pandemic by the World Health Organization and the Centers for Disease Control and Prevention in March 2020
CWIPConstruction work in progress
DaltonCity of Dalton, Georgia, an incorporated municipality in the State of Georgia, acting by and through its Board of Water, Light, and Sinking Fund Commissioners
Dalton PipelineA pipeline facility in Georgia in which Southern Company Gas has a 50% undivided ownership interest
DOEU.S. Department of Energy
ECO PlanMississippi Power's environmental compliance overview plan
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
GRAMAtlanta Gas Light's Georgia Rate Adjustment Mechanism
Guarantee Settlement AgreementThe June 9, 2017 settlement agreement between the Vogtle Owners and Toshiba related to certain payment obligations of the EPC Contractor guaranteed by Toshiba
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DEFINITIONS
(continued)
TermMeaning
Gulf PowerGulf Power Company, until January 1, 2019 a wholly-owned subsidiary of Southern Company; effective January 1, 2021, Gulf Power Company merged with and into Florida Power and Light Company, with Florida Power and Light Company remaining as the surviving company
Heating Degree DaysA measure of weather, calculated when the average daily temperatures are less than 65 degrees Fahrenheit
Heating SeasonThe period from November through March when Southern Company Gas' natural gas usage and operating revenues are generally higher
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
Nicor GasNorthern Illinois Gas Company, a wholly-owned subsidiary of Southern Company Gas
NRCU.S. Nuclear Regulatory Commission
NYMEXNew York Mercantile Exchange, Inc.
OCIOther comprehensive income
PennEast PipelinePennEast Pipeline Company, LLC, a joint venture to construct and operate a natural gas pipeline in which Southern Company Gas has a 20% ownership interest
PEPMississippi Power's Performance Evaluation Plan
Pivotal LNGPivotal LNG, Inc., through March 24, 2020, a wholly-owned subsidiary of Southern Company Gas
PowerSecurePowerSecure, Inc., a wholly-owned subsidiary of Southern Company
PowerSouthPowerSouth Energy Cooperative
PPAPower purchase agreements, as well as, for Southern Power, contracts for differences that provide the owner of a renewable facility a certain fixed price for the electricity sold to the grid
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DEFINITIONS
(continued)
TermMeaning
PSCPublic Service Commission
PTCProduction tax credit
Rate CNPAlabama Power's Rate Certificated New Plant, consisting of Rate CNP New Plant, Rate CNP Compliance, and Rate CNP PPA
Rate ECRAlabama Power's Rate Energy Cost Recovery
Rate RSEAlabama Power's Rate Stabilization and Equalization
RegistrantsSouthern Company, Alabama Power, Georgia Power, Mississippi Power, Southern Power Company, and Southern Company Gas
ROEReturn on equity
S&PS&P Global Ratings, a division of S&P Global Inc.
SCSSouthern Company Services, Inc., the Southern Company system service company and a wholly-owned subsidiary of Southern Company
SECU.S. Securities and Exchange Commission
SEGCOSouthern Electric Generating Company, 50% owned by each of Alabama Power and Georgia Power
SequentSequent Energy Management, L.P. and Sequent Energy Canada Corp., wholly-owned subsidiaries of Southern Company Gas
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, Southern Electric Generating Company, 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 facilities, in which Southern Power has a 67% ownership interest
SP WindSP Wind Holdings II, LLC, a holding company owning a portfolio of eight operating wind facilities, in which Southern Power is the controlling partner in a tax equity arrangement
Subsidiary RegistrantsAlabama Power, Georgia Power, Mississippi Power, Southern Power, and Southern Company Gas
Tax ReformThe impact of the Tax Cuts and Jobs Act, which became effective on January 1, 2018
ToshibaToshiba Corporation, the parent company of Westinghouse
traditional electric operating companiesAlabama Power, Georgia Power, and Mississippi Power
VCMVogtle Construction Monitoring
VIEVariable interest entity
Virginia Natural GasVirginia Natural Gas, Inc., a wholly-owned subsidiary of Southern Company Gas
Vogtle 3 and 4 AgreementAgreement entered into with the EPC Contractor in 2008 by Georgia Power, acting for itself and as agent for the Vogtle Owners, and rejected in bankruptcy in July 2017, pursuant to which the EPC Contractor agreed to design, engineer, procure, construct, and test Plant Vogtle Units 3 and 4
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DEFINITIONS
(continued)
TermMeaning
Vogtle OwnersGeorgia Power, Oglethorpe Power Corporation, MEAG Power, and Dalton
Vogtle Services AgreementThe June 2017 services agreement between the Vogtle Owners and the EPC Contractor, as amended and restated in July 2017, for the EPC Contractor to transition construction management of Plant Vogtle Units 3 and 4 to Southern Nuclear and to provide ongoing design, engineering, and procurement services to Southern Nuclear
WACOGWeighted average cost of gas
WestinghouseWestinghouse Electric Company LLC
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This Quarterly Report on Form 10-Q contains forward-looking statements. Forward-looking statements include, among other things, statements concerning the potential and expected effects of the COVID-19 pandemic, regulated rates, the strategic goals for the business, customer and sales growth, economic conditions, cost recovery and other rate actions, projected equity ratios, current and proposed environmental regulations and related compliance plans and estimated expenditures, pending or potential litigation matters, access to sources of capital, financing activities, completion dates and costs of construction projects, matters related to the abandonment of the Kemper IGCC, completion of announced dispositions, 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; 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 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, Plant Barry Unit 8, and pipeline projects, including PSC approvals and FERC and NRC actions;
under certain specified circumstances, a decision by holders of more than 10% of the ownership interests of Plant Vogtle Units 3 and 4 not to proceed with construction and the ability of other Vogtle Owners to tender a portion of their ownership interests to Georgia Power following certain construction cost increases;
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
(continued)
in the event Georgia Power becomes obligated to provide funding to MEAG Power with respect to the portion of MEAG Power's ownership interest in Plant Vogtle Units 3 and 4 involving JEA, any inability of Georgia Power to receive repayment of such funding;
the ability to construct facilities in accordance with the requirements of permits and licenses (including satisfaction of NRC requirements), to satisfy any environmental performance standards and the requirements of tax credits and other incentives, and to integrate facilities into the Southern Company system upon completion of construction;
investment performance of the employee and retiree benefit plans and nuclear decommissioning trust funds;
advances in technology, including the pace and extent of development of low- to no-carbon energy technologies and negative carbon concepts;
performance of counterparties under ongoing renewable energy partnerships and development agreements;
state and federal rate regulations and the impact of pending and future rate cases and negotiations, including rate actions relating to ROE, equity ratios, additional generating capacity, and fuel and other cost recovery mechanisms;
the ability to successfully operate the 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 March 31,
 20212020
 (in millions)
Operating Revenues:
Retail electric revenues$3,342 $3,078 
Wholesale electric revenues545 418 
Other electric revenues170 151 
Natural gas revenues (includes alternative revenue programs of $2 and $9, respectively)1,694 1,249 
Other revenues159 122 
Total operating revenues5,910 5,018 
Operating Expenses:
Fuel848 636 
Purchased power207 181 
Cost of natural gas583 439 
Cost of other sales82 55 
Other operations and maintenance1,372 1,296 
Depreciation and amortization871 857 
Taxes other than income taxes345 330 
Estimated loss on Plant Vogtle Units 3 and 448 
(Gain) loss on dispositions, net(44)(39)
Total operating expenses4,312 3,755 
Operating Income1,598 1,263 
Other Income and (Expense):
Allowance for equity funds used during construction46 34 
Earnings from equity method investments45 42 
Interest expense, net of amounts capitalized(450)(456)
Other income (expense), net58 103 
Total other income and (expense)(301)(277)
Earnings Before Income Taxes1,297 986 
Income taxes190 145 
Consolidated Net Income1,107 841 
Dividends on preferred stock of subsidiaries4 
Net loss attributable to noncontrolling interests(32)(31)
Consolidated Net Income Attributable to
   Southern Company
$1,135 $868 
Common Stock Data:
Earnings per share -
Basic$1.07 $0.82 
Diluted$1.06 $0.81 
Average number of shares of common stock outstanding (in millions)
Basic1,060 1,057 
Diluted1,066 1,067 
The accompanying notes as they relate to Southern Company are an integral part of these condensed consolidated financial statements.
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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
 
 For the Three Months Ended March 31,
 20212020
 (in millions)
Consolidated Net Income$1,107 $841 
Other comprehensive income (loss):
Qualifying hedges:
Changes in fair value, net of tax of $(10) and $(30), respectively(30)(86)
Reclassification adjustment for amounts included in net income,
   net of tax of $18 and $13, respectively
55 38 
Pension and other postretirement benefit plans:
Reclassification adjustment for amounts included in net income,
   net of tax of $1 and $2, respectively
3 
Total other comprehensive income (loss)28 (47)
Comprehensive Income1,135 794 
Dividends on preferred stock of subsidiaries4 
Comprehensive loss attributable to noncontrolling interests(32)(31)
Consolidated Comprehensive Income Attributable to
   Southern Company
$1,163 $821 
The accompanying notes as they relate to Southern Company are an integral part of these condensed consolidated financial statements.

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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 For the Three Months Ended March 31,
 20212020
 (in millions)
Operating Activities:
Consolidated net income$1,107 $841 
Adjustments to reconcile consolidated net income to net cash provided from operating activities —
Depreciation and amortization, total964 949 
Deferred income taxes140 (58)
Allowance for equity funds used during construction(46)(34)
Pension, postretirement, and other employee benefits(78)(67)
Settlement of asset retirement obligations(109)(86)
Stock based compensation expense83 72 
Estimated loss on Plant Vogtle Units 3 and 448 
Storm damage accruals54 56 
(Gain) loss on dispositions, net(41)(38)
Natural gas cost under recovery – long-term(185)
Other, net114 55 
Changes in certain current assets and liabilities —
-Receivables308 317 
-Prepayments(98)(110)
-Natural gas for sale, net of temporary LIFO liquidation456 246 
-Natural gas cost under recovery(487)
-Other current assets63 (67)
-Accounts payable(216)(504)
-Accrued taxes(212)(102)
-Accrued compensation(417)(473)
-Accrued interest(90)(60)
-Customer refunds0 (103)
-Other current liabilities(116)60 
Net cash provided from operating activities1,242 894 
Investing Activities:
Business acquisitions, net of cash acquired(345)
Property additions(1,678)(1,560)
Nuclear decommissioning trust fund purchases(550)(254)
Nuclear decommissioning trust fund sales546 249 
Proceeds from dispositions20 982 
Cost of removal, net of salvage(85)(69)
Change in construction payables, net(116)(141)
Payments pursuant to LTSAs(60)(26)
Other investing activities25 (70)
Net cash used for investing activities(2,243)(889)
Financing Activities:
Increase (decrease) in notes payable, net182 (685)
Proceeds —
Long-term debt2,150 2,653 
Common stock14 52 
Short-term borrowings325 565 
Redemptions and repurchases —
Long-term debt(384)(1,481)
Short-term borrowings(25)(100)
Capital contributions from noncontrolling interests313 16 
Distributions to noncontrolling interests(46)(48)
Payment of common stock dividends(678)(655)
Other financing activities(117)(132)
Net cash provided from financing activities1,734 185 
Net Change in Cash, Cash Equivalents, and Restricted Cash733 190 
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period1,068 1,978 
Cash, Cash Equivalents, and Restricted Cash at End of Period$1,801 $2,168 
Supplemental Cash Flow Information:
Cash paid (received) during the period for —
Interest (net of $21 and $20 capitalized for 2021 and 2020, respectively)$519 $490 
Income taxes, net(51)(16)
Noncash transactions —
Accrued property additions at end of period872 733 
Contributions from noncontrolling interests89 
Contributions of wind turbine equipment82 17 
Right-of-use assets obtained under leases76 28 
The accompanying notes as they relate to Southern Company are an integral part of these condensed consolidated financial statements.
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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
AssetsAt March 31, 2021At December 31, 2020
 (in millions)
Current Assets:
Cash and cash equivalents$1,770 $1,065 
Receivables —
Customer accounts1,716 1,753 
Energy marketing412 516 
Unbilled revenues544 672 
Other accounts and notes478 512 
Accumulated provision for uncollectible accounts(124)(118)
Materials and supplies1,504 1,478 
Fossil fuel for generation494 550 
Natural gas for sale197 460 
Prepaid expenses657 276 
Assets from risk management activities, net of collateral100 147 
Regulatory assets – asset retirement obligations214 214 
Natural gas cost under recovery487 
Other regulatory assets788 810 
Other current assets232 282 
Total current assets9,469 8,617 
Property, Plant, and Equipment:
In service111,579 110,516 
Less: Accumulated depreciation32,887 32,397 
Plant in service, net of depreciation78,692 78,119 
Nuclear fuel, at amortized cost820 818 
Construction work in progress9,525 8,697 
Total property, plant, and equipment89,037 87,634 
Other Property and Investments:
Goodwill5,280 5,280 
Nuclear decommissioning trusts, at fair value2,346 2,303 
Equity investments in unconsolidated subsidiaries1,368 1,362 
Other intangible assets, net of amortization of $339 and $328, respectively477 487 
Leveraged leases562 556 
Miscellaneous property and investments463 398 
Total other property and investments10,496 10,386 
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization1,821 1,802 
Deferred charges related to income taxes803 796 
Unamortized loss on reacquired debt274 280 
Regulatory assets – asset retirement obligations, deferred4,966 4,934 
Other regulatory assets, deferred7,263 7,198 
Other deferred charges and assets1,264 1,288 
Total deferred charges and other assets16,391 16,298 
Total Assets$125,393 $122,935 
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 BALANCE SHEETS (UNAUDITED)
 
Liabilities and Stockholders' EquityAt March 31, 2021At December 31, 2020
 (in millions)
Current Liabilities:
Securities due within one year$3,535 $3,507 
Notes payable1,092 609 
Energy marketing trade payables475 494 
Accounts payable2,058 2,312 
Customer deposits470 487 
Accrued taxes —
Accrued income taxes71 130 
Other accrued taxes412 699 
Accrued interest423 513 
Accrued compensation584 1,025 
Asset retirement obligations642 585 
Operating lease obligations244 241 
Other regulatory liabilities462 509 
Other current liabilities1,118 968 
Total current liabilities11,586 12,079 
Long-term Debt46,727 45,073 
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes8,839 8,175 
Deferred credits related to income taxes5,676 5,767 
Accumulated deferred ITCs2,214 2,235 
Employee benefit obligations2,091 2,213 
Operating lease obligations, deferred1,652 1,611 
Asset retirement obligations, deferred10,043 10,099 
Accrued environmental remediation208 216 
Other cost of removal obligations2,215 2,211 
Other regulatory liabilities, deferred226 251 
Other deferred credits and liabilities557 480 
Total deferred credits and other liabilities33,721 33,258 
Total Liabilities92,034 90,410 
Redeemable Preferred Stock of Subsidiaries291 291 
Total Stockholders' Equity (See accompanying statements)
33,068 32,234 
Total Liabilities and Stockholders' Equity$125,393 $122,935 
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
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 
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 
The accompanying notes as they relate to Southern Company are an integral part of these condensed consolidated financial statements.

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    Table of Contents                                Index to Financial Statements

ALABAMA POWER COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
 
For the Three Months Ended March 31,
 20212020
 (in millions)
Operating Revenues:
Retail revenues$1,352 $1,205 
Wholesale revenues, non-affiliates92 56 
Wholesale revenues, affiliates32 19 
Other revenues83 71 
Total operating revenues1,559 1,351 
Operating Expenses:
Fuel291 215 
Purchased power, non-affiliates50 40 
Purchased power, affiliates30 18 
Other operations and maintenance361 350 
Depreciation and amortization211 200 
Taxes other than income taxes103 106 
Total operating expenses1,046 929 
Operating Income513 422 
Other Income and (Expense):
Allowance for equity funds used during construction12 10 
Interest expense, net of amounts capitalized(84)(88)
Other income (expense), net32 24 
Total other income and (expense)(40)(54)
Earnings Before Income Taxes473 368 
Income taxes110 84 
Net Income363 284 
Dividends on Preferred Stock4 
Net Income After Dividends on Preferred Stock$359 $280 


CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
 
For the Three Months Ended March 31,
 20212020
 (in millions)
Net Income$363 $284 
Other comprehensive income (loss):
Qualifying hedges:
Reclassification adjustment for amounts included in net income,
   net of tax of $0 and $0, respectively
1 
Total other comprehensive income (loss)1 
Comprehensive Income$364 $285 
The accompanying notes as they relate to Alabama Power are an integral part of these condensed financial statements.
17

    Table of Contents                                Index to Financial Statements
ALABAMA POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
 For the Three Months Ended March 31,
 20212020
 (in millions)
Operating Activities:
Net income$363 $284 
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total248 241 
Deferred income taxes33 10 
Pension, postretirement, and other employee benefits(29)(25)
Settlement of asset retirement obligations(49)(46)
Other, net(15)10 
Changes in certain current assets and liabilities —
-Receivables40 93 
-Fossil fuel stock38 (15)
-Prepayments(73)(80)
-Materials and supplies(4)(22)
-Other current assets(11)(14)
-Accounts payable(299)(305)
-Accrued taxes104 100 
-Accrued compensation(105)(111)
-Retail fuel cost over recovery(18)47 
-Other current liabilities(9)(12)
Net cash provided from operating activities214 155 
Investing Activities:
Property additions(466)(340)
Nuclear decommissioning trust fund purchases(310)(81)
Nuclear decommissioning trust fund sales310 81 
Cost of removal, net of salvage(23)(15)
Change in construction payables32 (65)
Other investing activities(9)(4)
Net cash used for investing activities(466)(424)
Financing Activities:
Redemptions — Pollution control revenue bonds0 (87)
Capital contributions from parent company600 610 
Payment of common stock dividends(246)(239)
Other financing activities(13)(11)
Net cash provided from financing activities341 273 
Net Change in Cash, Cash Equivalents, and Restricted Cash89 
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period530 894 
Cash, Cash Equivalents, and Restricted Cash at End of Period$619 $898 
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $3 capitalized for both 2021 and 2020)$93 $92 
Noncash transactions —
Accrued property additions at end of period198 135 
Right-of-use assets obtained under leases1 
The accompanying notes as they relate to Alabama Power are an integral part of these condensed financial statements.
18

    Table of Contents                                Index to Financial Statements
ALABAMA POWER COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)
 
AssetsAt March 31, 2021At December 31, 2020
(in millions)
Current Assets:
Cash and cash equivalents$619 $530 
Receivables —
Customer accounts394 429 
Unbilled revenues124 152 
Affiliated35 31 
Other accounts and notes71 66 
Accumulated provision for uncollectible accounts(33)(43)
Fossil fuel stock197 235 
Materials and supplies550 546 
Prepaid expenses114 42 
Other regulatory assets224 226 
Other current assets43 33 
Total current assets2,338 2,247 
Property, Plant, and Equipment:
In service32,015 31,816 
Less: Accumulated provision for depreciation10,123 10,009 
Plant in service, net of depreciation21,892 21,807 
Nuclear fuel, at amortized cost268 270 
Construction work in progress1,052 866 
Total property, plant, and equipment23,212 22,943 
Other Property and Investments:
Nuclear decommissioning trusts, at fair value1,198 1,157 
Equity investments in unconsolidated subsidiaries63 63 
Miscellaneous property and investments128 131 
Total other property and investments1,389 1,351 
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization140 151 
Deferred charges related to income taxes237 235 
Regulatory assets – asset retirement obligations1,446 1,441 
Other regulatory assets, deferred2,161 2,162 
Other deferred charges and assets282 273 
Total deferred charges and other assets4,266 4,262 
Total Assets$31,205 $30,803 
The accompanying notes as they relate to Alabama Power are an integral part of these condensed financial statements.

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    Table of Contents                                Index to Financial Statements
ALABAMA POWER COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)
 
Liabilities and Stockholder's EquityAt March 31, 2021At December 31, 2020
 (in millions)
Current Liabilities:
Securities due within one year$815 $311 
Accounts payable —
Affiliated220 316 
Other392 545 
Customer deposits105 104 
Accrued taxes257 152 
Accrued interest75 90 
Accrued compensation113 212 
Asset retirement obligations275 254 
Other regulatory liabilities98 108 
Other current liabilities108 107 
Total current liabilities2,458 2,199 
Long-term Debt8,055 8,558 
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes3,318 3,273 
Deferred credits related to income taxes2,006 2,016 
Accumulated deferred ITCs92 94 
Employee benefit obligations187 214 
Operating lease obligations112 119 
Asset retirement obligations, deferred3,688 3,720 
Other cost of removal obligations320 335 
Other regulatory liabilities, deferred98 124 
Other deferred credits and liabilities54 50 
Total deferred credits and other liabilities9,875 9,945 
Total Liabilities20,388 20,702 
Redeemable Preferred Stock291 291 
Common Stockholder's Equity (See accompanying statements)
10,526 9,810 
Total Liabilities and Stockholder's Equity$31,205 $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 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 
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 
The accompanying notes as they relate to Alabama Power are an integral part of these condensed financial statements.

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    Table of Contents                                Index to Financial Statements

GEORGIA POWER COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
 For the Three Months Ended March 31,
 20212020
 (in millions)
Operating Revenues:
Retail revenues$1,787 $1,675 
Wholesale revenues43 26 
Other revenues140 124 
Total operating revenues1,970 1,825 
Operating Expenses:
Fuel313 231 
Purchased power, non-affiliates144 129 
Purchased power, affiliates136 129 
Other operations and maintenance474 465 
Depreciation and amortization338 352 
Taxes other than income taxes116 113 
Estimated loss on Plant Vogtle Units 3 and 448 
Total operating expenses1,569 1,419 
Operating Income401 406 
Other Income and (Expense):
Interest expense, net of amounts capitalized(104)(111)
Other income (expense), net72 52 
Total other income and (expense)(32)(59)
Earnings Before Income Taxes369 347 
Income taxes18 16 
Net Income$351 $331 
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
 For the Three Months Ended March 31,
 20212020
 (in millions)
Net Income$351 $331 
Other comprehensive income (loss):
Qualifying hedges:
Changes in fair value, net of tax of $0 and $(1), respectively0 (2)
Reclassification adjustment for amounts included in net income,
   net of tax of $0 and $1, respectively
2 
Total other comprehensive income (loss)2 (1)
Comprehensive Income$353 $330 
The accompanying notes as they relate to Georgia Power are an integral part of these condensed financial statements.
22

    Table of Contents                                Index to Financial Statements
GEORGIA POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
 For the Three Months Ended March 31,
 20212020
 (in millions)
Operating Activities:
Net income$351 $331 
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total384 396 
Deferred income taxes(86)(73)
Pension, postretirement, and other employee benefits(43)(40)
Settlement of asset retirement obligations(49)(33)
Storm damage accruals53 53 
Retail fuel cost over recovery – long-term0 90 
Estimated loss on Plant Vogtle Units 3 and 448 
Other, net(19)(52)
Changes in certain current assets and liabilities —
-Receivables176 22 
-Fossil fuel stock10 (42)
-Other current assets(7)(15)
-Accounts payable(74)(69)
-Accrued taxes(110)(156)
-Accrued compensation(68)(87)
-Customer refunds0 (107)
-Other current liabilities(77)(5)
Net cash provided from operating activities489 213 
Investing Activities:
Property additions(775)(849)
Nuclear decommissioning trust fund purchases(241)(173)
Nuclear decommissioning trust fund sales236 167 
Cost of removal, net of salvage(40)(34)
Change in construction payables, net of joint owner portion(103)(46)
Proceeds from dispositions1 142 
Other investing activities9 (2)
Net cash used for investing activities(913)(795)
Financing Activities:
Increase in notes payable, net145 11 
Proceeds —
Senior notes750 1,500 
Pollution control revenue bonds0 53 
Short-term borrowings0 200 
Redemptions and repurchases —
Senior notes(325)(950)
Pollution control revenue bonds0 (148)
FFB loan(25)(16)
Capital contributions from parent company330 500 
Payment of common stock dividends(412)(385)
Other financing activities(19)(23)
Net cash provided from financing activities444 742 
Net Change in Cash, Cash Equivalents, and Restricted Cash20 160 
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period9 52 
Cash, Cash Equivalents, and Restricted Cash at End of Period$29 $212 
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $15 and $11 capitalized for 2021 and 2020, respectively)$128 $122 
Noncash transactions —
Accrued property additions at end of period445 472 
Right-of-use assets obtained under operating leases3 10 
The accompanying notes as they relate to Georgia Power are an integral part of these condensed financial statements.
23

    Table of Contents                                Index to Financial Statements
GEORGIA POWER COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)
 
AssetsAt March 31, 2021At December 31, 2020
 (in millions)
Current Assets:
Cash and cash equivalents$29 $
Receivables —
Customer accounts532 621 
Unbilled revenues196 233 
Joint owner accounts124 123 
Affiliated22 21 
Other accounts and notes35 67 
Accumulated provision for uncollectible accounts(26)(26)
Fossil fuel stock268 278 
Materials and supplies610 592 
Regulatory assets – storm damage213 213 
Regulatory assets – asset retirement obligations175 166 
Other regulatory assets250 248 
Other current assets114 143 
Total current assets2,542 2,688 
Property, Plant, and Equipment:
In service39,857 39,682 
Less: Accumulated provision for depreciation12,421 12,251 
Plant in service, net of depreciation27,436 27,431 
Nuclear fuel, at amortized cost553 548 
Construction work in progress7,394 6,857 
Total property, plant, and equipment35,383 34,836 
Other Property and Investments:
Nuclear decommissioning trusts, at fair value1,149 1,145 
Equity investments in unconsolidated subsidiaries51 51 
Miscellaneous property and investments66 63 
Total other property and investments1,266 1,259 
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization1,273 1,308 
Deferred charges related to income taxes532 527 
Regulatory assets – asset retirement obligations, deferred3,310 3,291 
Other regulatory assets, deferred2,609 2,692 
Other deferred charges and assets434 479 
Total deferred charges and other assets8,158 8,297 
Total Assets$47,349 $47,080 
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)
 
Liabilities and Stockholder's EquityAt March 31, 2021At December 31, 2020
 (in millions)
Current Liabilities:
Securities due within one year$87 $542 
Notes payable205 60 
Accounts payable —
Affiliated472 597 
Other732 753 
Customer deposits272 276 
Accrued taxes239 407 
Accrued interest96 130 
Accrued compensation123 233 
Operating lease obligations151 151 
Asset retirement obligations304 287 
Over recovered fuel clause revenues83 113 
Other regulatory liabilities235 228 
Other current liabilities242 254 
Total current liabilities3,241 4,031 
Long-term Debt13,278 12,428 
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes3,303 3,272 
Deferred credits related to income taxes2,517 2,588 
Accumulated deferred ITCs271 273 
Employee benefit obligations539 586 
Operating lease obligations, deferred1,149 1,156 
Asset retirement obligations, deferred5,971 5,978 
Other deferred credits and liabilities306 267 
Total deferred credits and other liabilities14,056 14,120 
Total Liabilities30,575 30,579 
Common Stockholder's Equity (See accompanying statements)
16,774 16,501 
Total Liabilities and Stockholder's Equity$47,349 $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 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, 2020$398 $11,464 $3,702 $(52)$15,512 
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 
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

MISSISSIPPI POWER COMPANY
CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)
 
For the Three Months Ended March 31,
 20212020
 (in millions)
Operating Revenues:
Retail revenues$204 $199 
Wholesale revenues, non-affiliates63 51 
Wholesale revenues, affiliates33 21 
Other revenues7 
Total operating revenues307 277 
Operating Expenses:
Fuel101 79 
Purchased power5 
Other operations and maintenance68 76 
Depreciation and amortization47 42 
Taxes other than income taxes31 29 
Total operating expenses252 231 
Operating Income55 46 
Other Income and (Expense):
Interest expense, net of amounts capitalized(14)(16)
Other income (expense), net8 
Total other income and (expense)(6)(8)
Earnings Before Income Taxes49 38 
Income taxes4 
Net Income and Comprehensive Income$45 $32 
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    Table of Contents                                Index to Financial Statements
MISSISSIPPI POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Three Months Ended March 31,
 20212020
 (in millions)
Operating Activities:
Net income$45 $32 
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total53 44 
Other, net(10)(3)
Changes in certain current assets and liabilities —
-Receivables7 14 
-Other current assets1 (10)
-Accounts payable(30)(24)
-Accrued taxes(75)(54)
-Accrued compensation(16)(19)
-Other current liabilities(13)
Net cash used for operating activities(38)(17)
Investing Activities:
Property additions(45)(50)
Construction payables(8)(10)
Payments pursuant to LTSAs(7)(5)
Other investing activities(7)(6)
Net cash used for investing activities(67)(71)
Financing Activities:
Increase in notes payable, net29 
Proceeds —
Short-term borrowings0 40 
Other long-term debt0 100 
Redemptions — Senior notes0 (275)
Capital contributions from parent company100 75 
Return of capital to parent company0 (37)
Payment of common stock dividends(39)
Other financing activities0 (1)
Net cash provided from (used for) financing activities90 (98)
Net Change in Cash, Cash Equivalents, and Restricted Cash(15)(186)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period39 286 
Cash, Cash Equivalents, and Restricted Cash at End of Period$24 $100 
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $0 and $0 capitalized for 2021 and 2020, respectively)$16 $18 
Noncash transactions — Accrued property additions at end of period26 25 
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 BALANCE SHEETS (UNAUDITED)
 
AssetsAt March 31, 2021At December 31, 2020
 (in millions)
Current Assets:
Cash and cash equivalents$24 $39 
Receivables —
Customer accounts, net50 34 
Unbilled revenues33 38 
Affiliated17 32 
Other accounts and notes29 32 
Fossil fuel stock17 24 
Materials and supplies67 65 
Other regulatory assets49 60 
Other current assets20 20 
Total current assets306 344 
Property, Plant, and Equipment:
In service5,037 5,011 
Less: Accumulated provision for depreciation1,579 1,545 
Plant in service, net of depreciation3,458 3,466 
Construction work in progress163 146 
Total property, plant, and equipment3,621 3,612 
Other Property and Investments149 151 
Deferred Charges and Other Assets:
Deferred charges related to income taxes32 32 
Regulatory assets – asset retirement obligations211 201 
Other regulatory assets, deferred386 388 
Accumulated deferred income taxes126 129 
Other deferred charges and assets64 55 
Total deferred charges and other assets819 805 
Total Assets$4,895 $4,912 
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)
 
Liabilities and Stockholder's EquityAt March 31, 2021At December 31, 2020
 (in millions)
Current Liabilities:
Securities due within one year$421 $406 
Notes payable54 25 
Accounts payable —
Affiliated50 63 
Other84 109 
Accrued taxes39 114 
Accrued interest14 15 
Accrued compensation18 34 
Asset retirement obligations40 27 
Over recovered regulatory clause liabilities26 34 
Other regulatory liabilities36 49 
Other current liabilities38 40 
Total current liabilities820 916 
Long-term Debt996 1,013 
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes463 447 
Deferred credits related to income taxes285 287 
Employee benefit obligations107 113 
Asset retirement obligations, deferred134 150 
Other cost of removal obligations194 194 
Other regulatory liabilities, deferred14 15 
Other deferred credits and liabilities34 35 
Total deferred credits and other liabilities1,231 1,241 
Total Liabilities3,047 3,170 
Common Stockholder's Equity (See accompanying statements)
1,848 1,742 
Total Liabilities and Stockholder's Equity$4,895 $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 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, 2020$38 $4,487 $(2,800)$(3)$1,722 
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 
The accompanying notes as they relate to Mississippi Power are an integral part of these condensed financial statements.

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    Table of Contents                                Index to Financial Statements

SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
 For the Three Months Ended March 31,
 20212020
 (in millions)
Operating Revenues:
Wholesale revenues, non-affiliates$355 $286 
Wholesale revenues, affiliates81 86 
Other revenues4 
Total operating revenues440 375 
Operating Expenses:
Fuel141 107 
Purchased power20 14 
Other operations and maintenance101 79 
Depreciation and amortization119 117 
Taxes other than income taxes12 
(Gain) loss on dispositions, net(39)(39)
Total operating expenses354 287 
Operating Income86 88 
Other Income and (Expense):
Interest expense, net of amounts capitalized(38)(39)
Other income (expense), net7 
Total other income and (expense)(31)(37)
Earnings Before Income Taxes55 51 
Income taxes (benefit)(10)
Net Income65 44 
Net loss attributable to noncontrolling interests(32)(31)
Net Income Attributable to Southern Power$97 $75 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
 
 For the Three Months Ended March 31,
 20212020
 (in millions)
Net Income$65 $44 
Other comprehensive income (loss):
Qualifying hedges:
Changes in fair value, net of tax of $(11) and $(21), respectively(33)(62)
Reclassification adjustment for amounts included in net income,
   net of tax of $15 and $10, respectively
48 28 
Pension and other postretirement benefit plans:
Reclassification adjustment for amounts included in net income,
   net of tax of $0 and $0, respectively
1 
Total other comprehensive income (loss)16 (33)
Comprehensive Income81 11 
Comprehensive loss attributable to noncontrolling interests(32)(31)
Comprehensive Income Attributable to Southern Power$113 $42 
The accompanying notes as they relate to Southern Power are an integral part of these condensed consolidated financial statements.
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SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
 For the Three Months Ended March 31,
 20212020
 (in millions)
Operating Activities:
Net income$65 $44 
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total125 123 
Deferred income taxes(8)(36)
Amortization of investment tax credits(15)(14)
(Gain) loss on dispositions, net(39)(39)
Other, net(4)(10)
Changes in certain current assets and liabilities —
-Receivables23 
-Prepaid income taxes16 51 
-Other current assets3 (2)
-Accounts payable19 (34)
-Accrued taxes5 
-Other current liabilities(3)(13)
Net cash provided from operating activities187 83 
Investing Activities:
Business acquisitions, net of cash acquired(345)
Property additions(147)(47)
Proceeds from dispositions17 660 
Change in construction payables(7)(15)
Payments pursuant to LTSAs(27)(15)
Other investing activities5 17 
Net cash provided from (used for) investing activities(504)600 
Financing Activities:
Increase (decrease) in notes payable, net140 (449)
Proceeds — Senior notes400 
Redemptions — Short-term borrowings0 (100)
Return of capital to parent company(271)
Capital contributions from noncontrolling interests313 16 
Distributions to noncontrolling interests(46)(48)
Payment of common stock dividends(51)(50)
Other financing activities(7)(1)
Net cash provided from (used for) financing activities478 (632)
Net Change in Cash, Cash Equivalents, and Restricted Cash161 51 
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period182 279 
Cash, Cash Equivalents, and Restricted Cash at End of Period$343 $330 
Supplemental Cash Flow Information:
Cash paid (received) during the period for —
Interest (net of $1 and $4 capitalized for 2021 and 2020, respectively)$26 $28 
Income taxes, net(2)(5)
Noncash transactions —
Contributions from noncontrolling interests89 
Contributions of wind turbine equipment82 17 
Accrued property additions at end of period60 27 
Right-of-use assets obtained under operating leases65 
The accompanying notes as they relate to Southern Power are an integral part of these condensed consolidated financial statements.
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SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
AssetsAt March 31, 2021At December 31, 2020
 (in millions)
Current Assets:
Cash and cash equivalents$314 $182 
Receivables —
Customer accounts, net123 125 
Affiliated17 37 
Other18 27 
Materials and supplies157 157 
Prepaid income taxes368 11 
Other current assets31 36 
Total current assets1,028 575 
Property, Plant, and Equipment:
In service14,313 13,904 
Less: Accumulated provision for depreciation2,916 2,842 
Plant in service, net of depreciation11,397 11,062 
Construction work in progress219 127 
Total property, plant, and equipment11,616 11,189 
Other Property and Investments:
Intangible assets, net of amortization of $94 and $89, respectively297 302 
Equity investments in unconsolidated subsidiaries84 19 
Total other property and investments381 321 
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization478 415 
Prepaid LTSAs178 155 
Accumulated deferred income taxes0 262 
Income taxes receivable, non-current28 25 
Other deferred charges and assets286 293 
Total deferred charges and other assets970 1,150 
Total Assets$13,995 $13,235 
The accompanying notes as they relate to Southern Power are an integral part of these condensed consolidated financial statements.
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SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
Liabilities and Stockholders' EquityAt March 31, 2021At December 31, 2020
 (in millions)
Current Liabilities:
Securities due within one year$300 $299 
Notes payable315 175 
Accounts payable —
Affiliated44 65 
Other127 92 
Accrued taxes —
Accrued income taxes10 
Other accrued taxes15 22 
Accrued interest35 32 
Other current liabilities132 132 
Total current liabilities978 825 
Long-term Debt3,730 3,393 
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes230 123 
Accumulated deferred ITCs1,658 1,672 
Operating lease obligations487 426 
Other deferred credits and liabilities168 165 
Total deferred credits and other liabilities2,543 2,386 
Total Liabilities7,251 6,604 
Total Stockholders' Equity (See accompanying statements)
6,744 6,631 
Total Liabilities and Stockholders' Equity$13,995 $13,235 
The accompanying notes as they relate to Southern Power are an integral part of these condensed consolidated financial statements.
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SOUTHERN POWER COMPANY 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, 2020$909 $1,510 $(59)$2,360 $4,191 $6,551 
Balance at December 31, 2020$914 $1,522 $(67)$2,369 $4,262 $6,631 
Net income (loss) 97  97 (32)65 
Return of capital to parent company(271)— — (271)— (271)
Other comprehensive income  16 16  16 
Cash dividends on common stock (51) (51) (51)
Capital contributions from
   noncontrolling interests
    403 403 
Distributions to noncontrolling interests    (46)(46)
Other(2)1 (1)(2)(1)(3)
Balance at March 31, 2021$641 $1,569 $(52)$2,158 $4,586 $6,744 
The accompanying notes as they relate to Southern Power are an integral part of these condensed consolidated financial statements.
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SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
 For the Three Months Ended March 31,
 20212020
 (in millions)
Operating Revenues:
Natural gas revenues (includes revenue taxes of $54 and $47, respectively)$1,692 $1,240 
Alternative revenue programs2 
Total operating revenues1,694 1,249 
Operating Expenses:
Cost of natural gas583 439 
Other operations and maintenance299 258 
Depreciation and amortization130 120 
Taxes other than income taxes81 72 
Total operating expenses1,093 889 
Operating Income601 360 
Other Income and (Expense):
Earnings from equity method investments41 43 
Interest expense, net of amounts capitalized(60)(58)
Other income (expense), net(63)
Total other income and (expense)(82)(6)
Earnings Before Income Taxes519 354 
Income taxes121 79 
Net Income$398 $275 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
 
 For the Three Months Ended March 31,
 20212020
 (in millions)
Net Income$398 $275 
Other comprehensive income (loss):
Qualifying hedges:
Changes in fair value, net of tax of $0 and $(7), respectively1 (20)
Reclassification adjustment for amounts included in net income,
   net of tax of $1 and $2, respectively
3 
Total other comprehensive income (loss)4 (15)
Comprehensive Income$402 $260 
The accompanying notes as they relate to Southern Company Gas are an integral part of these condensed consolidated financial statements.
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SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 For the Three Months Ended March 31,
 20212020
 (in millions)
Operating Activities:
Net income$398 $275 
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total130 120 
Deferred income taxes160 22 
Mark-to-market adjustments64 13 
Natural gas cost under recovery – long-term(185)
Other, net5 (19)
Changes in certain current assets and liabilities —
-Receivables74 112 
-Natural gas for sale, net of temporary LIFO liquidation456 246 
-Natural gas cost under recovery(487)
-Other current assets(34)33 
-Accounts payable(7)(185)
-Accrued taxes10 27 
-Accrued compensation0 (42)
-Other current liabilities(34)41 
Net cash provided from operating activities550 643 
Investing Activities:
Property additions(251)(261)
Cost of removal, net of salvage(16)(15)
Change in construction payables, net(47)(18)
Investment in unconsolidated subsidiaries(1)(77)
Proceeds from dispositions0 178 
Other investing activities7 
Net cash used for investing activities(308)(193)
Financing Activities:
Decrease in notes payable, net(127)(39)
Proceeds — Short-term borrowings300 
Redemptions — Medium-term notes(30)
Capital contributions from parent company39 
Payment of common stock dividends(132)(133)
Other financing activities0 (13)
Net cash provided from (used for) financing activities50 (185)
Net Change in Cash, Cash Equivalents, and Restricted Cash292 265 
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period19 49 
Cash, Cash Equivalents, and Restricted Cash at End of Period$311 $314 
Supplemental Cash Flow Information:
Cash paid (received) during the period for —
Interest (net of $2 capitalized for both 2021 and 2020)$52 $49 
Income taxes, net(1)(12)
Noncash transactions — Accrued property additions at end of period95 104 
The accompanying notes as they relate to Southern Company Gas are an integral part of these condensed consolidated financial statements.
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SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
AssetsAt March 31, 2021At December 31, 2020
(in millions)
Current Assets:  
Cash and cash equivalents$309 $17 
Receivables —  
Energy marketing412 516 
Customer accounts452 353 
Unbilled revenues161 219 
Affiliated2 
Other accounts and notes43 51 
Accumulated provision for uncollectible accounts(51)(40)
Natural gas for sale197 460 
Prepaid expenses97 48 
Assets from risk management activities, net of collateral68 118 
Natural gas cost under recovery487 
Other regulatory assets84 102 
Other current assets39 38 
Total current assets2,300 1,886 
Property, Plant, and Equipment:  
In service17,866 17,611 
Less: Accumulated depreciation4,893 4,821 
Plant in service, net of depreciation12,973 12,790 
Construction work in progress636 648 
Total property, plant, and equipment13,609 13,438 
Other Property and Investments:
Goodwill5,015 5,015 
Equity investments in unconsolidated subsidiaries1,290 1,290 
Other intangible assets, net of amortization of $199 and $195, respectively47 51 
Miscellaneous property and investments20 19 
Total other property and investments6,372 6,375 
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization80 81 
Other regulatory assets, deferred786 615 
Other deferred charges and assets230 235 
Total deferred charges and other assets1,096 931 
Total Assets$23,377 $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 March 31, 2021At December 31, 2020
(in millions)
Current Liabilities:
Securities due within one year$302 $333 
Notes payable497 324 
Energy marketing trade payables475 494 
Accounts payable —
Affiliated49 56 
Other346 373 
Customer deposits76 90 
Accrued taxes94 83 
Accrued interest68 58 
Accrued compensation107 106 
Other regulatory liabilities92 122 
Temporary LIFO liquidation194 
Other current liabilities166 150 
Total current liabilities2,466 2,189 
Long-term Debt6,286 6,293 
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes1,427 1,265 
Deferred credits related to income taxes839 847 
Employee benefit obligations273 283 
Operating lease obligations65 67 
Other cost of removal obligations1,668 1,649 
Accrued environmental remediation208 216 
Other deferred credits and liabilities51 54 
Total deferred credits and other liabilities4,531 4,381 
Total Liabilities13,283 12,863 
Common Stockholder's Equity (See accompanying statements)
10,094 9,767 
Total Liabilities and Stockholder's Equity$23,377 $22,630 
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, 2020$9,695 $(56)$(8)$9,631 
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, 2021$9,987 $125 $(18)$10,094 
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
Georgia PowerA, B, C, D, F, G, H, I, J
Mississippi PowerA, B, C, D, F, G, H, I, J
Southern PowerA, C, D, E, F, G, H, I, J, K
Southern Company GasA, B, C, D, E, F, G, H, I, J, K, L

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
(A) INTRODUCTION
The condensed quarterly financial statements of each Registrant included herein have been prepared by such Registrant, without audit, pursuant to the rules and regulations of the SEC. The Condensed Balance Sheets as of 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 March 31, 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 March 31, 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 March 31, 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 $(139)$73 $212 $(135)$77 
Trade names64 (33)31 64 (31)33 
Storage and transportation contracts64 (64)64 (64)
PPA fair value adjustments390 (94)296 390 (89)301 
Other11 (9)10 (9)
Total other intangible assets subject to amortization$741 $(339)$402 $740 $(328)$412 
Other intangible assets not subject to amortization:
Federal Communications Commission licenses75 — 75 75 — 75 
Total other intangible assets$816 $(339)$477 $815 $(328)$487 
Southern Power
Other intangible assets subject to amortization:
PPA fair value adjustments$390 $(94)$296 $390 $(89)$301 
Southern Company Gas
Other intangible assets subject to amortization:
Gas marketing services
Customer relationships$156 $(122)$34 $156 $(119)$37 
Trade names26 (13)13 26 (12)14 
Wholesale gas services
Storage and transportation contracts64 (64)64 (64)
Total other intangible assets subject to amortization$246 $(199)$47 $246 $(195)$51 
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Amortization associated with other intangible assets was as follows:
Three Months Ended
March 31, 2021
(in millions)
Southern Company(a)
$11 
Southern Power(b)
Southern Company Gas(c)
(a)Includes $5 million recorded as a reduction to operating revenues.
(b)Recorded as a reduction to operating revenues.
(c)Relates to gas marketing services.
Restricted Cash
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed balance sheets that total to the amount shown in the condensed statements of cash flows for the Registrants that had restricted cash at March 31, 2021 and/or December 31, 2020:
Southern
Company
Southern PowerSouthern
Company Gas
March 31, 2021December 31, 2020March 31, 2021March 31, 2021December 31, 2020
(in millions)(in millions)(in millions)
Cash and cash equivalents$1,770 $1,065 $314 $309 $17 
Restricted cash(a):
Other current assets
Other deferred charges and assets29 29 
Total cash, cash equivalents, and restricted cash$1,801 $1,068 (b)$343 $311 $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 does not add due to rounding.
Natural Gas for Sale
With the exception of Nicor Gas, Southern Company Gas' natural gas distribution utilities record natural gas inventories on a WACOG basis. For any declines in market prices below the WACOG considered to be other than temporary, an adjustment is recorded to reduce the value of natural gas inventories to market value. Nicor Gas' natural gas inventory is carried at cost on a LIFO basis. Inventory decrements occurring during the year that are restored prior to year end are charged to cost of natural gas at the estimated annual replacement cost. Inventory decrements that are not restored prior to year end are charged to cost of natural gas at the actual LIFO cost of the inventory layers liquidated.
Southern Company Gas recorded no material adjustments to natural gas inventories for either period presented. Nicor Gas' inventory decrement at March 31, 2021 is expected to be restored prior to year end.
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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 March 31, 2021 and December 31, 2020 were as follows:
Regulatory ClauseBalance Sheet Line ItemMarch 31,
2021
December 31, 2020
(in millions)
Alabama Power
Rate CNP ComplianceOther regulatory liabilities, current$33 $28 
Rate CNP PPAOther regulatory assets, deferred58 58 
Retail Energy Cost RecoveryOther regulatory liabilities, current0 18 
Other regulatory assets, deferred15 
Natural Disaster ReserveOther regulatory liabilities, deferred52 77 
Georgia Power
Fuel Cost RecoveryOver recovered fuel clause revenues$83 $113 
Mississippi Power
Fuel Cost RecoveryOver recovered regulatory clause liabilities$18 $24 
Ad Valorem TaxOther regulatory assets, current12 11 
Other regulatory assets, deferred45 41 
Property Damage ReserveOther regulatory liabilities, deferred0 
Other regulatory assets, deferred1 
Southern Company Gas
Natural Gas Cost Recovery(*)
Other regulatory liabilities$12 $88 
Natural gas cost under recovery487 
Other regulatory assets, deferred185 
(*)The significant change during the three months ended March 31, 2021 was primarily driven by an increase in the cost of gas purchased in February 2021 resulting from Winter Storm Uri.
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 judicial appeals regarding both the Alabama PSC's August 2020 CCN order and the December 2020 order denying reconsideration and rehearing. On February 23, 2021, Alabama Power filed a motion to intervene in the appeal and, on March 9, 2021, the Circuit Court of Montgomery County, Alabama granted the motion. At March 31, 2021, expenditures associated with the construction of Plant Barry Unit 8 included in CWIP totaled approximately $161 million. The ultimate outcome of this matter cannot be determined at this time.
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.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
On April 15, 2021, Mississippi Power filed its 2021 IRP with the Mississippi PSC, which includes a schedule to retire its 40% ownership interest in Plant Greene County Units 1 and 2 in December 2025 and 2026, respectively, consistent with each unit's remaining useful life. Mississippi Power's IRP is subject to a review period during which the Mississippi PSC may note any deficiencies which could require re-evaluation or resubmission of the IRP. If no deficiencies are noted, the Mississippi PSC's review will conclude on August 13, 2021.
The Plant Greene County unit retirements identified by Mississippi Power require the completion of transmission and system reliability improvements, as well as agreement by Alabama Power. Alabama Power will continue to monitor the status of Mississippi Power's IRP and associated regulatory processes, as well as the transmission and system reliability improvements. Currently, Alabama Power plans to retire Plant Greene County Units 1 and 2 at the dates indicated. The ultimate outcome of this matter cannot be determined at this time.
Georgia Power
Rate Plan
Effective January 1, 2021, Georgia Power reduced its amortization of costs associated with CCR AROs by approximately $90 million as approved by the Georgia PSC in conjunction with Georgia Power's annual compliance filings.
In February 2020, the Georgia PSC denied a motion for reconsideration filed by the Sierra Club regarding the Georgia PSC's decision in the 2019 ARP allowing Georgia Power to recover compliance costs for CCR AROs, and, in December 2020, the Superior Court of Fulton County affirmed the decision of the Georgia PSC. On January 5, 2021, the Sierra Club filed a notice of appeal with the Georgia Court of Appeals. 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.
Nuclear Construction
In 2009, the Georgia PSC certified construction of Plant Vogtle Units 3 and 4, in which Georgia Power holds a 45.7% ownership interest. In 2012, the NRC issued the related combined construction and operating licenses, which allowed full construction of the 2 AP1000 nuclear units (with electric generating capacity of approximately 1,100 MWs each) and related facilities to begin. Until March 2017, construction on Plant Vogtle Units 3 and 4 continued under the Vogtle 3 and 4 Agreement, which was a substantially fixed price agreement.
In connection with the EPC Contractor's bankruptcy filing in March 2017, Georgia Power, acting for itself and as agent for the other Vogtle Owners, entered into several transitional arrangements to allow construction to continue. In July 2017, Georgia Power, acting for itself and as agent for the other Vogtle Owners, entered into the Vogtle Services Agreement, whereby Westinghouse provides facility design and engineering services, procurement and technical support, and staff augmentation on a time and materials cost basis. The Vogtle Services Agreement provides that it will continue until the start-up and testing of Plant Vogtle Units 3 and 4 are complete and electricity is generated and sold from both units. The Vogtle Services Agreement is terminable by the Vogtle Owners upon 30 days' written notice.
In October 2017, Georgia Power, acting for itself and as agent for the other Vogtle Owners, executed the Bechtel Agreement, a cost reimbursable plus fee arrangement, whereby Bechtel is reimbursed for actual costs plus a base fee and an at-risk fee, which is subject to adjustment based on Bechtel's performance against cost and schedule targets. Each Vogtle Owner is severally (not jointly) liable for its proportionate share, based on its ownership interest, of all amounts owed to Bechtel under the Bechtel Agreement. The Vogtle Owners may terminate the Bechtel Agreement at any time for their convenience, provided that the Vogtle Owners will be required to pay amounts related to work performed prior to the termination (including the applicable portion of the base fee), certain termination-related costs, and, at certain stages of the work, the applicable portion of the at-risk fee. Bechtel may terminate the Bechtel Agreement under certain circumstances, including certain Vogtle Owner suspensions of work,
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certain breaches of the Bechtel Agreement by the Vogtle Owners, Vogtle Owner insolvency, and certain other events.
See Note 8 to the financial statements under "Long-term Debt – DOE Loan Guarantee Borrowings" in Item 8 of the Form 10-K for information on the Amended and Restated Loan Guarantee Agreement, including applicable covenants, events of default, 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 by December 2021 and November 2022, respectively, is as follows:
(in millions)
Base project capital cost forecast(a)(b)
$8,619 
Construction contingency estimate136 
Total project capital cost forecast(a)(b)
8,755 
Net investment as of March 31, 2021(b)
(7,560)
Remaining estimate to complete(a)
$1,195 
(a)    Excludes financing costs expected to be capitalized through AFUDC of approximately $250 million, of which $118 million had been accrued through March 31, 2021.
(b)    Net of $1.7 billion received from Toshiba under the Guarantee Settlement Agreement and approximately $188 million in related customer refunds.
Georgia Power estimates that its financing costs for construction of Plant Vogtle Units 3 and 4 will total approximately $3.0 billion, of which $2.7 billion had been incurred through March 31, 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 as part of a strategy that was designed to maintain margin to the regulatory-approved in-service dates of November 2021 for Unit 3 and November 2022 for Unit 4.
In mid-March 2020, Southern Nuclear began implementing policies and procedures designed to mitigate the risk of transmission of COVID-19 at the construction site, including worker distancing measures, isolating individuals who have tested positive for COVID-19, are showing symptoms consistent with COVID-19, are being tested for COVID-19, or have been in close contact with such persons, requiring self-quarantine, and adopting additional precautionary measures. Since March 2020, the number of active cases at the site has fluctuated and impacted productivity levels and pace of activity completion. The lower productivity levels and slower pace of activity completion 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, primarily related to electrical commodity installations, necessary to ensure quality and design standards are met as system turnovers are completed to support hot functional testing and fuel load for Unit 3. Hot functional testing commenced in late April 2021 and the site work plan currently targets fuel load for Unit 3 in the third quarter 2021 and an in-service date of December 2021. As the site work plan includes minimal margin to these milestone dates, any delay could result in an in-service date in the first quarter 2022 for Unit 3. Achievement of the
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extended milestone dates established in January 2021 for Unit 4, which are expected to support a regulatory-approved in-service date of November 2022, primarily depends on overall construction productivity and production levels significantly improving as well as appropriate levels of craft laborers, particularly electrical and pipefitter craft labor, being added and maintained.
Considering the factors above, during the first quarter 2021, approximately $84 million of the construction contingency established in the fourth quarter 2020 was assigned to the base capital cost forecast for costs primarily associated with the schedule extension for Unit 3 to December 2021, construction productivity, support resources, and construction remediation work. Georgia Power increased its total capital cost forecast as of March 31, 2021 by adding $48 million to the remaining construction contingency.
After considering the significant level of uncertainty that exists regarding the future recoverability of these costs since the ultimate outcome of these matters is subject to the outcome of future assessments by management, as well as Georgia PSC decisions in future regulatory proceedings, Georgia Power recorded a pre-tax charge to income of $48 million ($36 million after tax) for the increase in the total project capital cost forecast as of March 31, 2021. As and when these amounts are spent, Georgia Power may request the Georgia PSC to evaluate those expenditures for rate recovery.
In addition, the continuing effects of the COVID-19 pandemic could further disrupt or delay construction and testing activities at Plant Vogtle Units 3 and 4. Georgia Power's proportionate share of the estimated incremental cost associated with COVID-19 mitigation actions and impacts on construction productivity is currently estimated to be between $150 million and $190 million and is included in the total project capital cost forecast. Estimated costs associated with near-term COVID-19 mitigation actions and related impacts on construction productivity are also included in the total project capital cost forecast described above.
As construction, including subcontract work, continues and testing and system turnover activities increase, 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), any of which may require additional labor and/or materials; or other issues could arise and change the projected schedule and estimated cost.
There have been technical and procedural challenges to the construction and licensing of Plant Vogtle Units 3 and 4 at the federal and state level and additional challenges may arise. Processes are in place that are designed to assure compliance with the requirements specified in the Westinghouse Design Control Document and the combined construction and operating licenses, including inspections by Southern Nuclear and the NRC that occur throughout construction. In connection with the additional construction remediation work described above, Southern Nuclear reviewed the project's construction quality programs and, where needed, is implementing improvement plans consistent with these processes. Findings resulting from such inspections could require additional remediation and/or further NRC oversight. In addition, certain license amendment requests have been filed and approved or are pending before the NRC. On March 15, 2021, the NRC issued an appealable order denying the Blue Ridge Environmental Defense League's (BREDL) December 2020 motion to reopen proceedings on BREDL's petition challenging a license amendment request. The staff of the NRC has issued the requested amendment.
In September 2020, Southern Nuclear notified the NRC of its intent to load fuel for Unit 3 in 2021. 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, may arise, which may result in additional license amendments or require other resolution. If any license amendment requests or other licensing-based compliance issues, including inspections and ITAACs, are not resolved in a timely manner, there may be delays in the project schedule that could result in increased costs.
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The ultimate outcome of these matters cannot be determined at this time. However, any extension of the in-service date beyond December 2021 for Unit 3 or November 2022 for Unit 4 is currently estimated to result in additional base capital costs for Georgia Power of approximately $25 million per month for Unit 3 and approximately $15 million per month for Unit 4, as well as the related AFUDC. While Georgia Power is not precluded from seeking recovery of any future capital cost forecast increase, management will ultimately determine whether or not to seek recovery. Any further changes to the capital cost forecast that are not expected to be recoverable through regulated rates will be required to be charged to income and such charges could be material.
Joint Owner Contracts
In November 2017, the Vogtle Owners entered into an amendment to their joint ownership agreements for Plant Vogtle Units 3 and 4 to provide for, among other conditions, additional Vogtle Owner approval requirements. Effective in August 2018, the Vogtle Owners further amended the joint ownership agreements to clarify and provide procedures for certain provisions of the joint ownership agreements related to adverse events that require the vote of the holders of at least 90% of the ownership interests in Plant Vogtle Units 3 and 4 to continue construction (as amended, and together with the November 2017 amendment, the Vogtle Joint Ownership Agreements). The Vogtle Joint Ownership Agreements also confirm that the Vogtle Owners' sole recourse against Georgia Power or Southern Nuclear for any action or inaction in connection with their performance as agent for the Vogtle Owners is limited to removal of Georgia Power and/or Southern Nuclear as agent, except in cases of willful misconduct.
As a result of an increase in the total project capital cost forecast and Georgia Power's decision not to seek rate recovery of the increase in the base capital costs in conjunction with the nineteenth VCM report in 2018, the holders of at least 90% of the ownership interests in Plant Vogtle Units 3 and 4 were required to vote to continue construction. In September 2018, the Vogtle Owners unanimously voted to continue construction of Plant Vogtle Units 3 and 4.
Amendments to the Vogtle Joint Ownership Agreements
In connection with the vote to continue construction, Georgia Power entered into (i) a binding term sheet (Vogtle Owner Term Sheet) with the other Vogtle Owners and MEAG Power's wholly-owned subsidiaries MEAG Power SPVJ, LLC (MEAG SPVJ), MEAG Power SPVM, LLC (MEAG SPVM), and MEAG Power SPVP, LLC (MEAG SPVP) to take certain actions which partially mitigate potential financial exposure for the other Vogtle Owners, including additional amendments to the Vogtle Joint Ownership Agreements and the purchase of PTCs from the other Vogtle Owners at pre-established prices, and (ii) a term sheet (MEAG Term Sheet) with MEAG Power and MEAG SPVJ to provide up to $300 million of funding with respect to MEAG SPVJ's ownership interest in Plant Vogtle Units 3 and 4 under certain circumstances. In January 2019, Georgia Power, MEAG Power, and MEAG SPVJ entered into an agreement to implement the provisions of the MEAG Term Sheet. In February 2019, Georgia Power, the other Vogtle Owners, and MEAG Power's wholly-owned subsidiaries MEAG SPVJ, MEAG SPVM, and MEAG SPVP entered into certain amendments to the Vogtle Joint Ownership Agreements to implement the provisions of the Vogtle Owner Term Sheet (Global Amendments).
As previously disclosed, pursuant to the Global Amendments: (i) each Vogtle Owner must pay its proportionate share of qualifying construction costs for Plant Vogtle Units 3 and 4 based on its ownership percentage up to the estimated cost at completion (EAC) for Plant Vogtle Units 3 and 4 which formed the basis of Georgia Power's forecast of $8.4 billion in the nineteenth VCM plus $800 million; (ii) Georgia Power will be responsible for 55.7% of actual qualifying construction costs between $800 million and $1.6 billion over the EAC in the nineteenth VCM (resulting in $80 million of potential additional costs to Georgia Power), with the remaining Vogtle Owners responsible for 44.3% of such costs pro rata in accordance with their respective ownership interests; and (iii) Georgia Power will be responsible for 65.7% of qualifying construction costs between $1.6 billion and $2.1 billion over the EAC in the nineteenth VCM (resulting in a further $100 million of potential additional costs to Georgia Power), with the remaining Vogtle Owners responsible for 34.3% of such costs pro rata in accordance with their respective ownership interests. If the EAC is revised and exceeds the EAC in the nineteenth VCM by more than $2.1 billion, each of the other Vogtle Owners will have a one-time option at the time the project budget forecast is
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so revised to tender a portion of its ownership interest to Georgia Power in exchange for Georgia Power's agreement to pay 100% of such Vogtle Owner's remaining share of total construction costs in excess of the EAC in the nineteenth VCM plus $2.1 billion.
In addition, pursuant to the Global Amendments, the holders of at least 90% of the ownership interests in Plant Vogtle Units 3 and 4 must vote to continue construction if certain adverse events occur, including, among other events: (i) the bankruptcy of Toshiba; (ii) the termination or rejection in bankruptcy of certain agreements, including the Vogtle Services Agreement, the Bechtel Agreement, or the agency agreement with Southern Nuclear; (iii) Georgia Power's public announcement of its intention not to submit for rate recovery any portion of its investment in Plant Vogtle Units 3 and 4 or the Georgia PSC determines that any of Georgia Power's costs relating to the construction of Plant Vogtle Units 3 and 4 will not be recovered in retail rates, excluding any additional amounts paid by Georgia Power on behalf of the other Vogtle Owners pursuant to the Global Amendments described above and the first 6% of costs during any six-month VCM reporting period that are disallowed by the Georgia PSC for recovery, or for which Georgia Power elects not to seek cost recovery, through retail rates; and (iv) an incremental extension of one year or more over the most recently approved schedule.
The ultimate outcome of these matters cannot be determined at this time.
Regulatory Matters
In 2009, the Georgia PSC voted to certify construction of Plant Vogtle Units 3 and 4 with a certified capital cost of $4.418 billion. In addition, in 2009 the Georgia PSC approved inclusion of the Plant Vogtle Units 3 and 4 related CWIP accounts in rate base, and the State of Georgia enacted the Georgia Nuclear Energy Financing Act, which allows Georgia Power to recover financing costs for Plant Vogtle Units 3 and 4. Financing costs are recovered on all applicable certified costs through annual adjustments to the NCCR tariff up to the certified capital cost of $4.418 billion. At March 31, 2021, Georgia Power had recovered approximately $2.6 billion of financing costs. Financing costs related to capital costs above $4.418 billion are being recognized through AFUDC and are expected to be recovered through retail rates over the life of Plant Vogtle Units 3 and 4; however, Georgia Power will not record AFUDC related to any capital costs in excess of the total deemed reasonable by the Georgia PSC (currently $7.3 billion) and not requested for rate recovery. In November 2020, the Georgia PSC approved Georgia Power's request to decrease the NCCR tariff by $142 million annually, effective January 1, 2021.
Georgia Power is required to file semi-annual VCM reports with the Georgia PSC by February 28 and August 31 of each year. In 2013, in connection with the eighth VCM report, the Georgia PSC approved a stipulation between Georgia Power and the staff of the Georgia PSC to waive the requirement to amend the Plant Vogtle Units 3 and 4 certificate in accordance with the 2009 certification order until the completion of Plant Vogtle Unit 3, or earlier if deemed appropriate by the Georgia PSC and Georgia Power.
In 2016, the Georgia PSC voted to approve a settlement agreement (Vogtle Cost Settlement Agreement) resolving certain prudency matters in connection with the fifteenth VCM report. In December 2017, the Georgia PSC voted to approve (and issued its related order on January 11, 2018) Georgia Power's seventeenth VCM report and modified the Vogtle Cost Settlement Agreement. The Vogtle Cost Settlement Agreement, as modified by the January 11, 2018 order, resolved the following regulatory matters related to Plant Vogtle Units 3 and 4: (i) none of the $3.3 billion of costs incurred through December 31, 2015 and reflected in the fourteenth VCM report should be disallowed from rate base on the basis of imprudence; (ii) the Contractor Settlement Agreement was reasonable and prudent and none of the $0.3 billion paid pursuant to the Contractor Settlement Agreement should be disallowed from rate base on the basis of imprudence; (iii) (a) capital costs incurred up to $5.68 billion would be presumed to be reasonable and prudent with the burden of proof on any party challenging such costs, (b) Georgia Power would have the burden to show that any capital costs above $5.68 billion were prudent, and (c) a revised capital cost forecast of $7.3 billion (after reflecting the impact of payments received under the Guarantee Settlement Agreement and related customer refunds) was found reasonable; (iv) construction of Plant Vogtle Units 3 and 4 should be completed, with Southern Nuclear serving as project manager and Bechtel as primary contractor; (v) approved and deemed reasonable Georgia Power's revised schedule placing Plant Vogtle Units 3 and 4 in service in November 2021 and November 2022, respectively; (vi) confirmed that the revised cost forecast does not represent a cost cap
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and that prudence decisions on cost recovery will be made at a later date, consistent with applicable Georgia law; (vii) reduced the ROE used to calculate the NCCR tariff (a) from 10.95% (the ROE rate setting point authorized by the Georgia PSC in the 2013 alternate rate plan) to 10.00% effective January 1, 2016, (b) from 10.00% to 8.30%, effective January 1, 2020, and (c) from 8.30% to 5.30%, effective January 1, 2021 (provided that the ROE in no case will be less than Georgia Power's average cost of long-term debt); (viii) reduced the ROE used for AFUDC equity for Plant Vogtle Units 3 and 4 from 10.00% to Georgia Power's average cost of long-term debt, effective January 1, 2018; and (ix) agreed that upon Unit 3 reaching commercial operation, retail base rates would be adjusted to include the costs related to Unit 3 and common facilities deemed prudent in the Vogtle Cost Settlement Agreement. The January 11, 2018 order also stated that if Plant Vogtle Units 3 and 4 are not commercially operational by June 1, 2021 and June 1, 2022, respectively, the ROE used to calculate the NCCR tariff will be further reduced by 10 basis points each month (but not lower than Georgia Power's average cost of long-term debt) until the respective Unit is commercially operational. The ROE reductions negatively impacted earnings by approximately $150 million in 2020 and are estimated to have negative earnings impacts of approximately $265 million and $200 million in 2021 and 2022, respectively. In its January 11, 2018 order, the Georgia PSC also stated if other conditions change and assumptions upon which Georgia Power's seventeenth VCM report are based do not materialize, the Georgia PSC reserved the right to reconsider the decision to continue construction.
The Georgia PSC has approved 23 VCM reports covering periods through June 30, 2020, including total construction capital costs incurred through that date of $8.1 billion (before $1.7 billion of payments received under the Guarantee Settlement Agreement and approximately $188 million in related customer refunds). The Georgia PSC's order approving the twenty-third VCM report also instructed Georgia Power and the staff of the Georgia PSC to develop a mutually-agreeable recommendation to the Georgia PSC by the end of March 2021 regarding the procedure for and the timing, form, and substance of the rate adjustment filing related to the Unit 3 and common facility costs. On March 31, 2021, the staff of the Georgia PSC, on behalf of itself and Georgia Power, requested an extension through April 30, 2021. Georgia Power filed its twenty-fourth VCM report with the Georgia PSC on February 18, 2021, covering the period from July 1, 2020 through December 31, 2020, requesting approval of $670 million of construction capital costs incurred during that period.
The ultimate outcome of these matters cannot be determined at this time.
Mississippi Power
Performance Evaluation Plan
On March 15, 2021, Mississippi Power submitted its annual retail PEP filing for 2021 to the Mississippi PSC, which requested a 1.8%, or approximately $16 million, annual increase in revenues, primarily due to increased investment and amortization and lower sales. In accordance with the PEP rate schedule, the rate increase became effective with the first billing cycle of April 2021, subject to refund. The ultimate outcome of this matter cannot be determined at this time.
Integrated Resource Plan
In December 2020, the Mississippi PSC issued an order in the Reserve Margin Plan docket requiring Mississippi Power to incorporate into its 2021 IRP a schedule reflecting the retirement of 950 MWs of fossil-steam generation by year-end 2027 to reduce Mississippi Power's excess reserve margin. On April 15, 2021, Mississippi Power filed its 2021 IRP with the Mississippi PSC. The filing includes a schedule to retire Plant Watson Unit 4 (268 MWs) and Mississippi Power's 40% ownership interest in Plant Greene County Units 1 and 2 (103 MWs each) in December 2023, 2025, and 2026, respectively, consistent with each unit's remaining useful life in the most recent approved depreciation studies. In addition, the schedule reflects the early retirement of Mississippi Power's 50% undivided ownership interest in Plant Daniel Units 1 and 2 (502 MWs) by the end of 2027. The Plant Greene County unit retirements require the completion by Alabama Power of transmission and system reliability improvements, as well as agreement by Alabama Power.
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The remaining net book value of Plant Daniel Units 1 and 2 was approximately $531 million at March 31, 2021. Mississippi Power expects to reclassify the net book value remaining at retirement to a regulatory asset to be amortized over a period to be determined by the Mississippi PSC in future proceedings, consistent with the December 2020 order. The Plant Watson and Greene County units are expected to be fully depreciated upon retirement.
The 2021 IRP is subject to a review period during which the Mississippi PSC may note any deficiencies which could require re-evaluation or resubmission of the IRP. If no deficiencies are noted, the Mississippi PSC's review will conclude on August 13, 2021.
The ultimate outcome of this matter cannot be determined at this time.
Ad Valorem Tax Adjustment
On April 6, 2021, the Mississippi PSC approved Mississippi Power's annual ad valorem tax adjustment filing for 2021, which requested an annual increase in revenues of approximately $28 million, including approximately $19 million of ad valorem taxes previously recovered through PEP in accordance with the Mississippi Power Rate Case Settlement Agreement. The rate became effective with the first billing cycle of May 2021.
Southern Company Gas
Infrastructure Replacement Programs and Capital Projects
Capital expenditures incurred under specific infrastructure replacement programs during the first three months of 2021 were as follows:
UtilityProgramThree Months Ended
March 31, 2021
(in millions)
Nicor GasInvesting in Illinois$45 
Virginia Natural GasSteps to Advance Virginia's Energy
Total$54 
Atlanta Gas Light
On April 28, 2021, Atlanta Gas Light filed its first Integrated Capacity and Delivery Plan (i-CDP) with the Georgia PSC, which includes a series of ongoing and proposed pipeline safety, reliability, and growth programs for the next 10 years (2022 through 2031), as well as the required capital investments and related costs to implement the programs. The i-CDP reflects capital investments totaling approximately $0.5 billion to $0.6 billion annually.
Recovery of the related revenue requirements will be included in either subsequent annual GRAM filings or the new System Reinforcement Rider for authorized large pressure improvement and system reliability projects. The i-CDP is subject to a five-month review period, which may be extended. The ultimate outcome of this matter cannot be determined at this time.
Virginia Natural Gas
On April 6, 2021, the Virginia State Corporation Commission approved a motion filed by Virginia Natural Gas to withdraw the application for its 9.5-mile interconnect project due to a change in the capacity needs of one of the project's customers. No further action is necessary and this matter is now concluded.
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Deferral of Incremental COVID-19 Costs
Nicor Gas
On March 18, 2021, the Illinois Commission approved a phased-in schedule for disconnections related to non-payment. Nicor Gas began certain disconnections in late April 2021 and will resume normal disconnections in June 2021. Nicor Gas will continue certain flexible credit and collection procedures until mid-2021.
(C) CONTINGENCIES
See Note 3 to the financial statements in Item 8 of the Form 10-K for information relating to various lawsuits and other contingencies.
General Litigation Matters
The Registrants are involved in various matters being litigated and regulatory matters. The ultimate outcome of such pending or potential litigation or regulatory matters against each Registrant and any subsidiaries cannot be determined at this time; however, for current proceedings not specifically reported herein, management does not anticipate that the ultimate liabilities, if any, arising from such current proceedings would have a material effect on such Registrant's financial statements.
The Registrants believe the pending legal challenges discussed below have no merit; however, the ultimate outcome of these matters cannot be determined at this time.
Southern Company
In February 2017, Jean Vineyard and Judy Mesirov each filed a shareholder derivative lawsuit in the U.S. District Court for the Northern District of Georgia. Each of these lawsuits names as defendants Southern Company, certain of its directors, certain of its current and former officers, and certain former Mississippi Power officers. In 2017, these 2 shareholder derivative lawsuits were consolidated in the U.S. District Court for the Northern District of Georgia. The complaints allege that the defendants caused Southern Company to make false or misleading statements regarding the Kemper County energy facility cost and schedule. Further, the complaints allege that the defendants were unjustly enriched and caused the waste of corporate assets and also allege that the individual defendants violated their fiduciary duties.
In May 2017, Helen E. Piper Survivor's Trust filed a shareholder derivative lawsuit in the Superior Court of Gwinnett County, Georgia that names as defendants Southern Company, certain of its directors, certain of its current and former officers, and certain former Mississippi Power officers. The complaint alleges that the individual defendants, among other things, breached their fiduciary duties in connection with schedule delays and cost overruns associated with the construction of the Kemper County energy facility. The complaint further alleges that the individual defendants authorized or failed to correct false and misleading statements regarding the Kemper County energy facility schedule and cost and failed to implement necessary internal controls to prevent harm to Southern Company. In August 2019, the court granted a motion filed by the plaintiff in July 2019 to substitute a new named plaintiff, Martin J. Kobuck, in place of Helen E. Piper Survivor's Trust.
The plaintiffs in each of these cases seek to recover, on behalf of Southern Company, unspecified actual damages and, on each plaintiff's own behalf, attorneys' fees and costs in bringing the lawsuit. The plaintiffs also seek certain changes to Southern Company's corporate governance and internal processes. In 2018, the court in each case entered an order staying each lawsuit until 30 days after the settlement of a securities class action filed in January 2017 against Southern Company, certain of its current and former officers, and certain former Mississippi Power officers. In September 2020, the plaintiffs in each case filed a status report noting the settlement of the securities class action and informing the court that the parties had scheduled mediation, which occurred in November 2020. The parties in each case did not reach settlement but continue to explore possible resolution. Each case is stayed while the parties discuss potential resolution.
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Georgia Power
In 2011, plaintiffs filed a putative class action against Georgia Power in the Superior Court of Fulton County, Georgia alleging that Georgia Power's collection in rates of amounts for municipal franchise fees (which fees are paid to municipalities) exceeded the amounts allowed in orders of the Georgia PSC and alleging certain state law claims. This case has been ruled upon and appealed numerous times over the last several years. In one recent appeal, the Georgia Supreme Court remanded the case and noted that the trial court could refer the matter to the Georgia PSC to interpret its tariffs. Following a motion by Georgia Power, in February 2019, the Superior Court of Fulton County ordered the parties to submit petitions to the Georgia PSC for a declaratory ruling and also conditionally certified the proposed class. In March 2019, Georgia Power and the plaintiffs filed petitions with the Georgia PSC seeking confirmation of the proper application of the municipal franchise fee schedule pursuant to the Georgia PSC's orders. Also in March 2019, Georgia Power appealed the class certification decision to the Georgia Court of Appeals. In October 2019, the Georgia PSC issued an order that found Georgia Power has appropriately implemented the municipal franchise fee schedule. In March 2020, the Georgia Court of Appeals vacated the Superior Court of Fulton County's February 2019 order granting conditional class certification and remanded the case to the Superior Court of Fulton County for further proceedings. In September 2020, the plaintiffs and Georgia Power each filed motions for summary judgment and the plaintiffs renewed their motion for class certification. On March 16, 2021, the Superior Court of Fulton County granted class certification and Georgia Power's motion for summary judgment. On March 22, 2021, the plaintiffs filed a notice of appeal, and, on April 2, 2021, Georgia Power filed a notice of cross appeal on the issue of class certification. The amount of any possible losses cannot be estimated at this time because, among other factors, it is unknown whether any losses would be subject to recovery from any municipalities.
In July 2020, a group of individual plaintiffs filed a complaint in the Superior Court of Fulton County, Georgia against Georgia Power alleging that releases from Plant Scherer have impacted groundwater, surface water, and air, resulting in alleged personal injuries and property damage. The plaintiffs seek an unspecified amount of monetary damages including punitive damages, a medical monitoring fund, and injunctive relief. In September 2020, Georgia Power filed a motion to dismiss. The amount of any possible losses cannot be estimated at this time.
Mississippi Power
In 2018, Ray C. Turnage and 10 other individual plaintiffs filed a putative class action complaint against Mississippi Power and the 3 then-serving members of the Mississippi PSC in the U.S. District Court for the Southern District of Mississippi. Mississippi Power received Mississippi PSC approval in 2013 to charge a mirror CWIP rate premised upon including in its rate base pre-construction and construction costs for the Kemper IGCC prior to placing the Kemper IGCC into service. The Mississippi Supreme Court reversed that approval and ordered Mississippi Power to refund the amounts paid by customers under the previously-approved mirror CWIP rate. The plaintiffs allege that the initial approval process, and the amount approved, were improper. They also allege that Mississippi Power underpaid customers by up to $23.5 million in the refund process by applying an incorrect interest rate. The plaintiffs seek to recover, on behalf of themselves and their putative class, actual damages, punitive damages, pre-judgment interest, post-judgment interest, attorney's fees, and costs. In response to Mississippi Power and the Mississippi PSC each filing a motion to dismiss, the plaintiffs filed an amended complaint in March 2019. The amended complaint included 4 additional plaintiffs and additional claims for gross negligence, reckless conduct, and intentional wrongdoing. Mississippi Power and the Mississippi PSC each filed a motion to dismiss the amended complaint, which occurred in May 2020 and March 2020, respectively. Also in March 2020, the plaintiffs filed a motion seeking to name the new members of the Mississippi PSC, the Mississippi Development Authority, and Southern Company as additional defendants and add a cause of action against all defendants based on a dormant commerce clause theory under the U.S. Constitution. In July 2020, the plaintiffs filed a motion for leave to file a third amended complaint, which included the same federal claims as the proposed second amended complaint, as well as several additional state law claims based on the allegation that Mississippi Power failed to disclose the annual percentage rate of interest applicable to refunds. In November 2020, the court denied each of the plaintiffs' pending motions and entered final judgment in favor of Mississippi Power. On January 22, 2021, the court denied further motions by the plaintiffs to vacate the judgment and to file a revised second
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amended complaint. On February 19, 2021, the plaintiffs filed a notice of appeal with the U.S. Court of Appeals for the Fifth Circuit. An adverse outcome in this proceeding could have a material impact on Mississippi Power's financial statements.
See Note 3 to the financial statements under "Other Matters – Mississippi Power – Kemper County Energy Facility" in Item 8 of the Form 10-K for additional information.
Environmental Remediation
The Southern Company system must comply with environmental laws and regulations governing the handling and disposal of waste and releases of hazardous substances. Under these various laws and regulations, the Southern Company system could incur substantial costs to clean up affected sites. The traditional electric operating companies and the natural gas distribution utilities in Illinois and Georgia have each received authority from their respective state PSCs or other applicable state regulatory agencies to recover approved environmental remediation costs through regulatory mechanisms. These regulatory mechanisms are adjusted annually or as necessary within limits approved by the state PSCs or other applicable state regulatory agencies.
Georgia Power's environmental remediation liability was $16 million and $15 million at March 31, 2021 and December 31, 2020, respectively. Georgia Power has been designated or identified as a potentially responsible party at sites governed by the Georgia Hazardous Site Response Act and/or by the federal Comprehensive Environmental Response, Compensation, and Liability Act, and assessment and potential cleanup of such sites is expected.
Southern Company Gas' environmental remediation liability was $240 million and $245 million as of March 31, 2021 and December 31, 2020, respectively, based on the estimated cost of environmental investigation and remediation associated with known former manufactured gas plant operating sites.
The ultimate outcome of these matters cannot be determined at this time; however, as a result of the regulatory treatment for environmental remediation expenses described above, the final disposition of these matters is not expected to have a material impact on the financial statements of the applicable Registrants.
Other Matters
Southern Company Gas
PennEast Pipeline Project
Work continues with state and federal agencies to obtain the required permits to begin construction of the PennEast Pipeline. Expected project costs for Southern Company Gas total approximately $300 million, excluding financing costs. The ultimate outcome of the PennEast Pipeline construction project cannot be determined at this time; however, any work delays, whether caused by judicial or regulatory action, abnormal weather, or other conditions, may result in additional cost or schedule modifications or, ultimately, in project cancellation, any of which could result in impairment of Southern Company Gas' investment ($93 million at March 31, 2021) and could have a significant impact on Southern Company's financial statements and a material impact on Southern Company Gas' financial statements. See Note (E) under "Southern Company Gas" for additional information.
SNG
As a 50% equity investor in SNG, Southern Company Gas is required to make additional capital contributions as necessary pursuant to the terms of its operating agreement with SNG. SNG has $300 million of debt maturing in June 2021 that it anticipates refinancing prior to its maturity. If SNG is unable to refinance or otherwise satisfy this debt obligation, Southern Company Gas has committed to fund up to $150 million as a contingent capital contribution. See Note (E) under "Southern Company Gas" for additional information.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
(D) REVENUE FROM CONTRACTS WITH CUSTOMERS AND LEASE INCOME
Revenue from Contracts with Customers
The Registrants generate revenues from a variety of sources, some of which are not accounted for as revenue from contracts with customers, such as leases, derivatives, and certain cost recovery mechanisms. See Note 1 to the financial statements under "Revenues" in Item 8 of the Form 10-K for additional information on the revenue policies of the Registrants. See "Lease Income" herein and Note (J) for additional information on revenue accounted for under lease and derivative accounting guidance, respectively.
The following table disaggregates revenue from contracts with customers for the three months ended March 31, 2021 and 2020:
Southern CompanyAlabama PowerGeorgia PowerMississippi PowerSouthern PowerSouthern Company Gas
(in millions)
Three Months Ended March 31, 2021
Operating revenues
Retail electric revenues
Residential$1,468 $628 $776 $64 $0 $0 
Commercial1,117 372 686 59 0 0 
Industrial668 320 284 64 0 0 
Other24 5 17 2 0 0 
Total retail electric revenues3,277 1,325 1,763 189 0 0 
Natural gas distribution revenues
Residential614 0 0 0 0 614 
Commercial170 0 0 0 0 170 
Transportation288 0 0 0 0 288 
Industrial16 0 0 0 0 16 
Other97 0 0 0 0 97 
Total natural gas distribution revenues1,185 0 0 0 0 1,185 
Wholesale electric revenues
PPA energy revenues212 43 13 4 156 0 
PPA capacity revenues119 29 13 3 75  
Non-PPA revenues67 32 9 88 61 0 
Total wholesale electric revenues398 104 35 95 292 0 
Other natural gas revenues
Wholesale gas services1,590 0 0 0 0 1,590 
Gas marketing services194 0 0 0 0 194 
Other natural gas revenues7 0 0 0 0 7 
Total natural gas revenues1,791 0 0 0 0 1,791 
Other revenues249 46 113 8 4 0 
Total revenue from contracts with customers6,900 1,475 1,911 292 296 2,976 
Other revenue sources(a)
1,306 84 59 15 144 1,014 
Other adjustments(b)
(2,296)0 0 0 0 (2,296)
Total operating revenues$5,910 $1,559 $1,970 $307 $440 $1,694 
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Southern CompanyAlabama PowerGeorgia PowerMississippi PowerSouthern PowerSouthern Company Gas
(in millions)
Three Months Ended March 31, 2020
Operating revenues
Retail electric revenues
Residential$1,370 $553 $760 $57 $$
Commercial1,146 364 720 62 
Industrial680 321 281 78 
Other23 16 
Total retail electric revenues3,219 1,243 1,777 199 
Natural gas distribution revenues
Residential496 496 
Commercial130 130 
Transportation264 264 
Industrial12 12 
Other97 97 
Total natural gas distribution revenues999 999 
Wholesale electric revenues
PPA energy revenues159 27 125 
PPA capacity revenues105 27 12 66 
Non-PPA revenues51 19 69 58 
Total wholesale electric revenues315 73 23 72 249 
Other natural gas revenues
Wholesale gas services396 396 
Gas marketing services163 163 
Other natural gas revenues
Total natural gas revenues566 566 
Other revenues192 37 95 
Total revenue from contracts with customers5,291 1,353 1,895 276 252 1,565 
Other revenue sources(a)
868 (2)(70)123 825 
Other adjustments(b)
(1,141)(1,141)
Total operating revenues$5,018 $1,351 $1,825 $277 $375 $1,249 
(a)Other revenue sources relate to revenues from customers accounted for as derivatives and leases, alternative revenue programs at Southern Company Gas, and cost recovery mechanisms and revenues that meet other scope exceptions for revenues from contracts with customers at the traditional electric operating companies.
(b)Other adjustments relate to the cost of Southern Company Gas' energy and risk management activities. Wholesale gas services revenues are presented net of the related costs of those activities on the statement of income. See Note (L) under "Southern Company Gas" for additional information on the components of wholesale gas services' operating revenues.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Contract Balances
The following table reflects the closing balances of receivables, contract assets, and contract liabilities related to revenues from contracts with customers at March 31, 2021 and December 31, 2020:
Southern CompanyAlabama PowerGeorgia PowerMississippi PowerSouthern PowerSouthern Company Gas
(in millions)
Accounts Receivable
As of March 31, 2021$2,375 $567 $679 $87 $85 $778 
As of December 31, 20202,614 632 806 77 112 788 
Contract Assets
As of March 31, 2021$106 $$47 $$$
As of December 31, 2020158 71 
Contract Liabilities
As of March 31, 2021$75 $$34 $$$
As of December 31, 202061 27 
As of March 31, 2021 and December 31, 2020, Georgia Power had contract assets primarily related to unregulated service agreements, where payment is contingent on project completion, and fixed retail customer bill programs, where the payment is contingent upon Georgia Power's continued performance and the customer's continued participation in the program over a one-year contract term. Contract liabilities for Georgia Power relate to cash collections recognized in advance of revenue for certain unregulated service agreements. Alabama Power had contract liabilities for outstanding performance obligations primarily related to pole attachment and extended service agreements. Southern Company's unregulated distributed generation business had $55 million and $81 million of contract assets and $34 million and $27 million of contract liabilities at March 31, 2021 and December 31, 2020, respectively, for outstanding performance obligations.
Revenues recognized in the three months ended March 31, 2021, which were included in contract liabilities at December 31, 2020, were immaterial for all Registrants.
Remaining Performance Obligations
The traditional electric operating companies and Southern Power have long-term contracts with customers in which revenues are recognized as performance obligations are satisfied over the contract term. These contracts primarily relate to PPAs whereby the traditional electric operating companies and Southern Power provide electricity and generation capacity to a customer. The revenue recognized for the delivery of electricity is variable; however, certain PPAs include a fixed payment for fixed generation capacity over the term of the contract. Southern Company's unregulated distributed generation business also has partially satisfied performance obligations related to certain fixed price contracts. Revenues from contracts with customers related to these performance obligations remaining at March 31, 2021 are expected to be recognized as follows:
2021 (remaining)2022202320242025Thereafter
(in millions)
Southern Company$485 $408 $340 $327 $307 $2,666 
Alabama Power24 31 24 
Georgia Power57 51 36 24 21 41 
Southern Power213 287 280 296 280 2,644 
Revenue expected to be recognized for performance obligations remaining at March 31, 2021 was immaterial for Mississippi Power and Southern Company Gas.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Lease Income
Lease income for the three months ended March 31, 2021 and 2020 is as follows:
Southern
Company
Alabama PowerGeorgia PowerMississippi
Power
Southern PowerSouthern Company Gas
 (in millions)
For the Three Months Ended March 31, 2021
Lease income - interest income on sales-type leases$$$$$$
Lease income - operating leases55 21 10 21 
Variable lease income84 90 
Total lease income$142 $21 $10 $$111 $
For the Three Months Ended March 31, 2020
Lease income - interest income on sales-type leases$$$$$$
Lease income - operating leases51 16 24 
Variable lease income74 80 
Total lease income$128 $$16 $$104 $
Lease payments received under tolling arrangements and PPAs consist of either scheduled payments or variable payments based on the amount of energy produced by the underlying electric generating units. Lease income for Alabama Power and Southern Power is included in wholesale revenues.
(E) CONSOLIDATED ENTITIES AND EQUITY METHOD INVESTMENTS
See Note 7 to the financial statements in Item 8 of the Form 10-K for additional information.
Southern Power
Variable Interest Entities
Southern Power has certain subsidiaries that are determined to be VIEs. Southern Power is considered the primary beneficiary of these VIEs because it controls the most significant activities of the VIEs, including operating and maintaining the respective assets, and has the obligation to absorb expected losses of these VIEs to the extent of its equity interests.
SP Solar and SP Wind
At March 31, 2021 and December 31, 2020, SP Solar had total assets of $6.1 billion, total liabilities of $377 million and $387 million, respectively, and noncontrolling interests of $1.1 billion. Cash distributions from SP Solar are allocated 67% to Southern Power and 33% to Global Atlantic in accordance with their partnership interest percentage. Under the terms of the limited partnership agreement, distributions without limited partner consent are limited to available cash and SP Solar is obligated to distribute all such available cash to its partners each quarter. Available cash includes all cash generated in the quarter subject to the maintenance of appropriate operating reserves.
At March 31, 2021 and December 31, 2020, SP Wind had total assets of $2.4 billion, total liabilities of $171 million and $138 million, respectively, and noncontrolling interests of $42 million and $43 million, respectively. Under the terms of the limited liability agreement, distributions without Class A member consent are limited to available cash and SP Wind is obligated to distribute all such available cash to its members each quarter. Available cash includes all cash generated in the quarter subject to the maintenance of appropriate operating reserves. Cash distributions from SP Wind are generally allocated 60% to Southern Power and 40% to the 3 financial investors in accordance with the limited liability agreement.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Southern Power consolidates both SP Solar and SP Wind, as the primary beneficiary, since it controls the most significant activities of each entity, including operating and maintaining their assets. Certain transfers and sales of the assets in the VIEs are subject to partner consent and the liabilities are non-recourse to the general credit of Southern Power. Liabilities consist of customary working capital items and do not include any long-term debt.
Other Variable Interest Entities
Southern Power has other consolidated VIEs that relate to certain subsidiaries that have either sold noncontrolling interests to tax-equity investors or acquired less than a 100% interest from facility developers. These entities are considered VIEs because the arrangements are structured similar to a limited partnership and the noncontrolling members do not have substantive kick-out rights.
At March 31, 2021 and December 31, 2020, the other VIEs had total assets of $1.9 billion and $1.1 billion, respectively, total liabilities of $260 million and $110 million, respectively, and noncontrolling interests of $926 million and $454 million, respectively. Under the terms of the partnership agreements, distributions of all available cash are required each month or quarter and additional distributions require partner consent.
Equity Method Investments
At March 31, 2021 and December 31, 2020, Southern Power had equity method investments in wind and battery storage projects totaling $84 million and $19 million, respectively.
Southern Company Gas
Equity Method Investments
The carrying amounts of Southern Company Gas' equity method investments as of March 31, 2021 and December 31, 2020 and related income from those investments for the three months ended March 31, 2021 and 2020 were as follows:
Investment BalanceMarch 31, 2021December 31, 2020
(in millions)
SNG$1,164 $1,167 
PennEast Pipeline(*)
93 91 
Other33 32 
Total$1,290 $1,290 
(*)See Note (C) under "Other Matters – Southern Company Gas" for additional information.
Earnings from Equity Method InvestmentsThree Months Ended
March 31, 2021
Three Months Ended
March 31, 2020
(in millions)
SNG$38 $37 
PennEast Pipeline(a)
2 
Other(a)(b)
1 
Total$41 $43 
(a)Earnings primarily result from AFUDC equity recorded by the project entity.
(b)On March 24, 2020, Southern Company Gas completed the sale of its interests in Atlantic Coast Pipeline and Pivotal LNG. See Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
(F) FINANCING
Bank Credit Arrangements
See Note 8 to the financial statements under "Bank Credit Arrangements" in Item 8 of the Form 10-K for additional information.
At March 31, 2021, committed credit arrangements with banks were as follows:
Expires
Company2021202220232024TotalUnusedDue within One Year
(in millions)
Southern Company parent$$</