Commission File Number | Registrant, State of Incorporation, Address and Telephone Number | I.R.S. Employer Identification No. |
1-3526 | The Southern Company | 58-0690070 |
1-3164 | Alabama Power Company | 63-0004250 |
1-6468 | Georgia Power Company | 58-0257110 |
001-11229 | Mississippi Power Company | 64-0205820 |
001-37803 | Southern Power Company | 58-2598670 |
1-14174 | Southern Company Gas | 58-2210952 |
Registrant | Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||||||||
The Southern Company | Common Stock, par value $5 per share | SO | New York Stock Exchange | ||||||||
(NYSE) | |||||||||||
The Southern Company | Series 2015A 6.25% Junior Subordinated Notes due 2075 | SOJA | NYSE | ||||||||
The Southern Company | Series 2016A 5.25% Junior Subordinated Notes due 2076 | SOJB | NYSE | ||||||||
The Southern Company | Series 2017B 5.25% Junior Subordinated Notes due 2077 | SOJC | NYSE | ||||||||
The Southern Company | 2019 Series A Corporate Units | SOLN | NYSE | ||||||||
The Southern Company | Series 2020A 4.95% Junior Subordinated Notes due 2080 | SOJD | NYSE | ||||||||
The Southern Company | Series 2020C 4.20% Junior Subordinated Notes due 2060 | SOJE | NYSE | ||||||||
Alabama Power Company | 5.00% Series Class A Preferred Stock | ALP PR Q | NYSE | ||||||||
Georgia Power Company | Series 2017A 5.00% Junior Subordinated Notes due 2077 | GPJA | NYSE | ||||||||
Southern Power Company | Series 2016A 1.000% Senior Notes due 2022 | SO/22B | NYSE | ||||||||
Southern Power Company | Series 2016B 1.850% Senior Notes due 2026 | SO/26A | NYSE |
Registrant | Large Accelerated Filer | Accelerated Filer | Non-accelerated Filer | Smaller Reporting Company | Emerging Growth Company | ||||||||||||
The Southern Company | X | ||||||||||||||||
Alabama Power Company | X | ||||||||||||||||
Georgia Power Company | X | ||||||||||||||||
Mississippi Power Company | X | ||||||||||||||||
Southern Power Company | X | ||||||||||||||||
Southern Company Gas | X |
Registrant | Description of Common Stock | Shares Outstanding at | |||||||
The Southern Company | Par Value $5 Per Share | ||||||||
Alabama Power Company | Par Value $40 Per Share | 30,537,500 | |||||||
Georgia Power Company | Without Par Value | 9,261,500 | |||||||
Mississippi Power Company | Without Par Value | 1,121,000 | |||||||
Southern Power Company | Par Value $0.01 Per Share | 1,000 | |||||||
Southern Company Gas | Par Value $0.01 Per Share | 100 |
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 Proceeds | Inapplicable | ||||||
Item 3. | Defaults Upon Senior Securities | Inapplicable | ||||||
Item 4. | Mine Safety Disclosures | Inapplicable | ||||||
Item 5. | Other Information | Inapplicable | ||||||
Item 6. | ||||||||
Term | Meaning | ||||
2013 ARP | Alternate Rate Plan approved by the Georgia PSC in 2013 for Georgia Power for the years 2014 through 2016 and subsequently extended through 2019 | ||||
2019 ARP | Alternate Rate Plan approved by the Georgia PSC in 2019 for Georgia Power for the years 2020 through 2022 | ||||
AFUDC | Allowance for funds used during construction | ||||
Alabama Power | Alabama Power Company | ||||
Amended and Restated Loan Guarantee Agreement | Loan 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 | ||||
ARO | Asset retirement obligation | ||||
ASU | Accounting Standards Update | ||||
Atlanta Gas Light | Atlanta Gas Light Company, a wholly-owned subsidiary of Southern Company Gas | ||||
Atlantic Coast Pipeline | Atlantic 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 | ||||
Autauga Combined Cycle Acquisition | |||||
Bechtel | Bechtel Power Corporation, the primary contractor for the remaining construction activities for Plant Vogtle Units 3 and 4 | ||||
Bechtel Agreement | The October 23, 2017 construction completion agreement between the Vogtle Owners and Bechtel | ||||
CCR | Coal combustion residuals | ||||
CCR Rule | Disposal of Coal Combustion Residuals from Electric Utilities final rule published by the EPA in 2015 | ||||
Chattanooga Gas | Chattanooga Gas Company, a wholly-owned subsidiary of Southern Company Gas | ||||
COD | Commercial operation date | ||||
Contractor Settlement Agreement | The 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-19 | The novel coronavirus disease declared a pandemic by the World Health Organization and the Centers for Disease Control and Prevention in March 2020 | ||||
CWIP | Construction work in progress | ||||
Dalton | City 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 Pipeline | A pipeline facility in Georgia in which Southern Company Gas has a 50% undivided ownership interest | ||||
DOE | U.S. Department of Energy | ||||
ECO Plan | Mississippi Power's environmental compliance overview plan | ||||
Eligible Project Costs | Certain 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 | ||||
EPA | U.S. Environmental Protection Agency | ||||
EPC Contractor | Westinghouse and its affiliate, WECTEC Global Project Services Inc.; the former engineering, procurement, and construction contractor for Plant Vogtle Units 3 and 4 | ||||
FASB | Financial Accounting Standards Board | ||||
FERC | Federal Energy Regulatory Commission | ||||
FFB | Federal Financing Bank | ||||
FFB Credit Facilities | Note purchase agreements among the DOE, Georgia Power, and the FFB and related promissory notes which provide for two multi-advance term loan facilities | ||||
Fitch | Fitch Ratings, Inc. |
Term | Meaning | |||||
Form 10-K | Annual 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, 2019, as applicable | |||||
GAAP | U.S. generally accepted accounting principles | |||||
Georgia Power | Georgia Power Company | |||||
GRAM | Atlanta Gas Light's Georgia | |||||
Guarantee Settlement Agreement | The June 9, 2017 settlement agreement between the Vogtle Owners and Toshiba related to certain payment obligations of the EPC Contractor guaranteed by Toshiba | |||||
Gulf Power | Gulf Power Company, until January 1, 2019 a wholly-owned subsidiary of Southern Company | |||||
Heating Degree Days | A measure of weather, calculated when the average daily temperatures are less than 65 degrees Fahrenheit | |||||
Heating Season | The period from November through March when Southern Company Gas' natural gas usage and operating revenues are generally higher | |||||
HLBV | Hypothetical liquidation at book value | |||||
IGCC | Integrated coal gasification combined cycle, the technology originally approved for Mississippi Power's Kemper County energy facility | |||||
IIC | Intercompany Interchange Contract | |||||
ITAAC | Inspections, Tests, Analyses, and Acceptance Criteria, standards established by the NRC | |||||
ITC | Investment tax credit | |||||
JEA | Jacksonville Electric Authority | |||||
KWH | Kilowatt-hour | |||||
LIBOR | London Interbank Offered Rate | |||||
LIFO | Last-in, first-out | |||||
LOCOM | Lower of weighted average cost or current market price | |||||
LTSA | Long-term service agreement | |||||
Marketers | Marketers selling retail natural gas in Georgia and certificated by the Georgia PSC | |||||
MEAG Power | Municipal Electric Authority of Georgia | |||||
Mississippi Power | Mississippi Power Company | |||||
mmBtu | Million British thermal units | |||||
Moody's | Moody's Investors Service, Inc. | |||||
MRA | Municipal and Rural Associations | |||||
MW | Megawatt | |||||
natural gas distribution utilities | Southern Company Gas' natural gas distribution utilities (Nicor Gas, Atlanta Gas Light, Virginia Natural Gas, and Chattanooga Gas) | |||||
NCCR | Georgia Power's Nuclear Construction Cost Recovery | |||||
NDR | Alabama Power's Natural Disaster Reserve | |||||
NextEra Energy | NextEra Energy, Inc. | |||||
Nicor Gas | Northern Illinois Gas Company, a wholly-owned subsidiary of Southern Company Gas | |||||
NRC | U.S. Nuclear Regulatory Commission | |||||
NYMEX | New York Mercantile Exchange, Inc. | |||||
OCI | Other comprehensive income | |||||
Part A CCR Rule | Holistic Approach to Closure Part A final rule published by the EPA on August 28, 2020 | |||||
PennEast Pipeline | PennEast Pipeline Company, LLC, a joint venture to construct and operate a natural gas pipeline in which Southern Company Gas has a 20% ownership interest | |||||
PEP | Mississippi Power's Performance Evaluation Plan |
Pivotal LNG | Pivotal LNG, Inc., through March 24, 2020 a wholly-owned subsidiary of Southern Company Gas |
Meaning | |||||
PowerSecure | PowerSecure, Inc., a wholly-owned subsidiary of Southern Company | ||||
PPA | Power 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 | ||||
PSC | Public Service Commission | ||||
PTC | Production tax credit | ||||
Rate CNP | Alabama Power's Rate Certificated New Plant, consisting of Rate CNP New Plant, Rate CNP Compliance, and Rate CNP PPA | ||||
Rate ECR | Alabama Power's Rate Energy Cost Recovery | ||||
Rate NDR | Alabama Power's Rate Natural Disaster Reserve | ||||
Rate RSE | Alabama Power's Rate Stabilization and Equalization | ||||
Registrants | Southern Company, Alabama Power, Georgia Power, Mississippi Power, Southern Power Company, and Southern Company Gas | ||||
ROE | Return on equity | ||||
S&P | S&P Global Ratings, a division of S&P Global Inc. | ||||
SCS | Southern Company Services, Inc., the Southern Company system service company and a wholly-owned subsidiary of Southern Company | ||||
SEC | U.S. Securities and Exchange Commission | ||||
SNG | Southern Natural Gas Company, L.L.C., a pipeline system in which Southern Company Gas has a 50% ownership interest | ||||
Southern Company | The Southern Company | ||||
Southern Company Gas | Southern Company Gas and its subsidiaries | ||||
Southern Company Gas Capital | Southern Company Gas Capital Corporation, a 100%-owned subsidiary of Southern Company Gas | ||||
Southern Company power pool | The 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 system | Southern 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 Holdings | Southern Company Holdings, Inc., a wholly-owned subsidiary of Southern Company | ||||
Southern Nuclear | Southern Nuclear Operating Company, Inc., a wholly-owned subsidiary of Southern Company | ||||
Southern Power | Southern Power Company and its subsidiaries | ||||
SouthStar | SouthStar Energy Services, LLC, a wholly-owned subsidiary of Southern Company Gas | ||||
SP Solar | SP 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 Wind | SP 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 Registrants | Alabama Power, Georgia Power, Mississippi Power, Southern Power, and Southern Company Gas | ||||
Tax Reform | The impact of the Tax Cuts and Jobs Act, which became effective on January 1, 2018 | ||||
Toshiba | Toshiba Corporation, the parent company of Westinghouse | ||||
traditional electric operating companies | Alabama Power, Georgia Power, and Mississippi Power | ||||
Triton | Triton Container Investments, LLC, an investment of Southern Company Gas through May 29, 2019 | ||||
VCM | Vogtle Construction Monitoring | ||||
VIE | Variable interest entity | ||||
Virginia Commission | Virginia State Corporation Commission | ||||
Virginia Natural Gas | Virginia Natural Gas, Inc., a wholly-owned subsidiary of Southern Company Gas |
Term | Meaning | ||||
Vogtle 3 and 4 Agreement | Agreement entered into with the EPC Contractor in 2008 by Georgia Power, acting for itself and as agent for the Vogtle Owners, and rejected in bankruptcy in July 2017, pursuant to which the EPC Contractor agreed to design, engineer, procure, construct, and test Plant Vogtle Units 3 and 4 | ||||
Vogtle Owners | Georgia Power, Oglethorpe Power Corporation, MEAG Power, and Dalton | ||||
Vogtle Services Agreement | The 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 | ||||
WACOG | Weighted average cost of gas | ||||
Westinghouse | Westinghouse Electric Company LLC | ||||
Xcel | Xcel Energy Inc. |
Page | |||||
For the Three Months Ended March 31, | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||
(in millions) | (in millions) | (in millions) | ||||||||||||||||||||||||||||
Operating Revenues: | Operating Revenues: | |||||||||||||||||||||||||||||
Retail electric revenues | $ | 3,078 | $ | 3,084 | Retail electric revenues | $ | 4,243 | $ | 4,512 | $ | 10,503 | $ | 11,136 | |||||||||||||||||
Wholesale electric revenues | 418 | 499 | Wholesale electric revenues | 584 | 625 | 1,473 | 1,667 | |||||||||||||||||||||||
Other electric revenues | 151 | 168 | Other electric revenues | 164 | 163 | 484 | 492 | |||||||||||||||||||||||
Natural gas revenues (includes alternative revenue programs of $9 and $(2), respectively) | 1,249 | 1,474 | ||||||||||||||||||||||||||||
Natural gas revenues (includes alternative revenue programs of $(1), $0, $6, and $0, respectively) | Natural gas revenues (includes alternative revenue programs of $(1), $0, $6, and $0, respectively) | 477 | 498 | 2,362 | 2,661 | |||||||||||||||||||||||||
Other revenues | 122 | 187 | Other revenues | 152 | 197 | 436 | 549 | |||||||||||||||||||||||
Total operating revenues | 5,018 | 5,412 | Total operating revenues | 5,620 | 5,995 | 15,258 | 16,505 | |||||||||||||||||||||||
Operating Expenses: | Operating Expenses: | |||||||||||||||||||||||||||||
Fuel | 636 | 850 | Fuel | 933 | 1,072 | 2,190 | 2,836 | |||||||||||||||||||||||
Purchased power | 181 | 170 | Purchased power | 230 | 254 | 611 | 625 | |||||||||||||||||||||||
Cost of natural gas | 439 | 686 | Cost of natural gas | 71 | 79 | 654 | 956 | |||||||||||||||||||||||
Cost of other sales | 55 | 118 | Cost of other sales | 72 | 114 | 201 | 316 | |||||||||||||||||||||||
Other operations and maintenance | 1,296 | 1,314 | Other operations and maintenance | 1,286 | 1,296 | 3,785 | 3,898 | |||||||||||||||||||||||
Depreciation and amortization | 857 | 751 | Depreciation and amortization | 889 | 760 | 2,619 | 2,267 | |||||||||||||||||||||||
Taxes other than income taxes | 330 | 329 | Taxes other than income taxes | 304 | 303 | 932 | 931 | |||||||||||||||||||||||
Estimated loss on Plant Vogtle Units 3 and 4 | Estimated loss on Plant Vogtle Units 3 and 4 | 0 | 0 | 149 | 0 | |||||||||||||||||||||||||
Impairment charges | Impairment charges | 0 | 110 | 0 | 142 | |||||||||||||||||||||||||
(Gain) loss on dispositions, net | (39 | ) | (2,497 | ) | (Gain) loss on dispositions, net | 0 | (6) | (39) | (2,512) | |||||||||||||||||||||
Total operating expenses | 3,755 | 1,721 | Total operating expenses | 3,785 | 3,982 | 11,102 | 9,459 | |||||||||||||||||||||||
Operating Income | 1,263 | 3,691 | Operating Income | 1,835 | 2,013 | 4,156 | 7,046 | |||||||||||||||||||||||
Other Income and (Expense): | Other Income and (Expense): | |||||||||||||||||||||||||||||
Allowance for equity funds used during construction | 34 | 32 | Allowance for equity funds used during construction | 38 | 33 | 106 | 96 | |||||||||||||||||||||||
Earnings from equity method investments | 42 | 48 | Earnings from equity method investments | 33 | 39 | 105 | 120 | |||||||||||||||||||||||
Interest expense, net of amounts capitalized | (456 | ) | (430 | ) | Interest expense, net of amounts capitalized | (443) | (434) | (1,343) | (1,294) | |||||||||||||||||||||
Impairment of leveraged lease | Impairment of leveraged lease | 0 | 0 | (154) | 0 | |||||||||||||||||||||||||
Other income (expense), net | 103 | 78 | Other income (expense), net | 113 | 61 | 319 | 239 | |||||||||||||||||||||||
Total other income and (expense) | (277 | ) | (272 | ) | Total other income and (expense) | (259) | (301) | (967) | (839) | |||||||||||||||||||||
Earnings Before Income Taxes | 986 | 3,419 | Earnings Before Income Taxes | 1,576 | 1,712 | 3,189 | 6,207 | |||||||||||||||||||||||
Income taxes | 145 | 1,360 | Income taxes | 293 | 367 | 443 | 1,872 | |||||||||||||||||||||||
Consolidated Net Income | 841 | 2,059 | Consolidated Net Income | 1,283 | 1,345 | 2,746 | 4,335 | |||||||||||||||||||||||
Dividends on preferred stock of subsidiaries | 4 | 4 | Dividends on preferred stock of subsidiaries | 4 | 4 | 11 | 11 | |||||||||||||||||||||||
Net loss attributable to noncontrolling interests | (31 | ) | (29 | ) | ||||||||||||||||||||||||||
Net income attributable to noncontrolling interests | Net income attributable to noncontrolling interests | 28 | 25 | 3 | 26 | |||||||||||||||||||||||||
Consolidated Net Income Attributable to Southern Company | $ | 868 | $ | 2,084 | Consolidated Net Income Attributable to Southern Company | $ | 1,251 | $ | 1,316 | $ | 2,732 | $ | 4,298 | |||||||||||||||||
Common Stock Data: | Common Stock Data: | |||||||||||||||||||||||||||||
Earnings per share - | Earnings per share - | |||||||||||||||||||||||||||||
Basic | $ | 0.82 | $ | 2.01 | Basic | $ | 1.18 | $ | 1.26 | $ | 2.58 | $ | 4.12 | |||||||||||||||||
Diluted | $ | 0.81 | $ | 1.99 | Diluted | $ | 1.18 | $ | 1.25 | $ | 2.57 | $ | 4.09 | |||||||||||||||||
Average number of shares of common stock outstanding (in millions) | Average number of shares of common stock outstanding (in millions) | |||||||||||||||||||||||||||||
Basic | 1,057 | 1,038 | Basic | 1,058 | 1,048 | 1,058 | 1,043 | |||||||||||||||||||||||
Diluted | 1,067 | 1,045 | Diluted | 1,064 | 1,057 | 1,064 | 1,051 |
For the Three Months Ended March 31, | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||
(in millions) | (in millions) | (in millions) | ||||||||||||||||||||||||||||
Consolidated Net Income | $ | 841 | $ | 2,059 | Consolidated Net Income | $ | 1,283 | $ | 1,345 | $ | 2,746 | $ | 4,335 | |||||||||||||||||
Other comprehensive income (loss): | Other comprehensive income (loss): | |||||||||||||||||||||||||||||
Qualifying hedges: | Qualifying hedges: | |||||||||||||||||||||||||||||
Changes in fair value, net of tax of $(30) and $(9), respectively | (86 | ) | (28 | ) | ||||||||||||||||||||||||||
Reclassification adjustment for amounts included in net income, net of tax of $13 and $9, respectively | 38 | 28 | ||||||||||||||||||||||||||||
Changes in fair value, net of tax of $17, $(33), $(9), and $(54), respectively | Changes in fair value, net of tax of $17, $(33), $(9), and $(54), respectively | 49 | (92) | (26) | (152) | |||||||||||||||||||||||||
Reclassification adjustment for amounts included in net income, net of tax of $(11), $17, $(1), and $25, respectively | Reclassification adjustment for amounts included in net income, net of tax of $(11), $17, $(1), and $25, respectively | (32) | 50 | (3) | 74 | |||||||||||||||||||||||||
Pension and other postretirement benefit plans: | Pension and other postretirement benefit plans: | |||||||||||||||||||||||||||||
Reclassification adjustment for amounts included in net income, net of tax of $2 and $-, respectively | 1 | — | ||||||||||||||||||||||||||||
Reclassification adjustment for amounts included in net income, net of tax of $1, $0, $3, and $0, respectively | Reclassification adjustment for amounts included in net income, net of tax of $1, $0, $3, and $0, respectively | 3 | 1 | 6 | 2 | |||||||||||||||||||||||||
Total other comprehensive income (loss) | (47 | ) | — | Total other comprehensive income (loss) | 20 | (41) | (23) | (76) | ||||||||||||||||||||||
Comprehensive Income | 794 | 2,059 | Comprehensive Income | 1,303 | 1,304 | 2,723 | 4,259 | |||||||||||||||||||||||
Dividends on preferred stock of subsidiaries | 4 | 4 | Dividends on preferred stock of subsidiaries | 4 | 4 | 11 | 11 | |||||||||||||||||||||||
Comprehensive loss attributable to noncontrolling interests | (31 | ) | (29 | ) | ||||||||||||||||||||||||||
Comprehensive income attributable to noncontrolling interests | Comprehensive income attributable to noncontrolling interests | 28 | 25 | 3 | 26 | |||||||||||||||||||||||||
Consolidated Comprehensive Income Attributable to Southern Company | $ | 821 | $ | 2,084 | Consolidated Comprehensive Income Attributable to Southern Company | $ | 1,271 | $ | 1,275 | $ | 2,709 | $ | 4,222 |
For the Three Months Ended March 31, | For the Nine Months Ended September 30, | |||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||
(in millions) | (in millions) | |||||||||||||||||
Operating Activities: | Operating Activities: | |||||||||||||||||
Consolidated net income | $ | 841 | $ | 2,059 | Consolidated net income | $ | 2,746 | $ | 4,335 | |||||||||
Adjustments to reconcile consolidated net income to net cash provided from operating activities — | Adjustments to reconcile consolidated net income to net cash provided from operating activities — | |||||||||||||||||
Depreciation and amortization, total | 949 | 851 | Depreciation and amortization, total | 2,903 | 2,514 | |||||||||||||
Deferred income taxes | (58 | ) | 191 | Deferred income taxes | (196) | 253 | ||||||||||||
Utilization of federal investment tax credits | Utilization of federal investment tax credits | 319 | 722 | |||||||||||||||
Allowance for equity funds used during construction | (34 | ) | (32 | ) | Allowance for equity funds used during construction | (106) | (96) | |||||||||||
Pension, postretirement, and other employee benefits | (67 | ) | (53 | ) | Pension, postretirement, and other employee benefits | (190) | (114) | |||||||||||
Settlement of asset retirement obligations | (86 | ) | (62 | ) | Settlement of asset retirement obligations | (315) | (225) | |||||||||||
Stock based compensation expense | 72 | 64 | Stock based compensation expense | 99 | 87 | |||||||||||||
Estimated loss on Plant Vogtle Units 3 and 4 | Estimated loss on Plant Vogtle Units 3 and 4 | 149 | 0 | |||||||||||||||
Storm damage reserve accruals | Storm damage reserve accruals | 171 | 34 | |||||||||||||||
Impairment charges | Impairment charges | 154 | 142 | |||||||||||||||
(Gain) loss on dispositions, net | (38 | ) | (2,503 | ) | (Gain) loss on dispositions, net | (36) | (2,517) | |||||||||||
Other, net | 111 | 71 | Other, net | 93 | (20) | |||||||||||||
Changes in certain current assets and liabilities — | Changes in certain current assets and liabilities — | |||||||||||||||||
-Receivables | 317 | 378 | -Receivables | 125 | 588 | |||||||||||||
-Prepayments | (110 | ) | (129 | ) | -Prepayments | (39) | 61 | |||||||||||
-Natural gas for sale | 246 | 363 | ||||||||||||||||
-Materials and supplies | -Materials and supplies | (141) | (31) | |||||||||||||||
-Other current assets | (67 | ) | 17 | -Other current assets | (80) | (31) | ||||||||||||
-Accounts payable | (504 | ) | (783 | ) | -Accounts payable | (428) | (1,155) | |||||||||||
-Accrued taxes | (102 | ) | 928 | -Accrued taxes | 289 | 679 | ||||||||||||
-Accrued compensation | (473 | ) | (489 | ) | -Accrued compensation | (183) | (191) | |||||||||||
-Retail fuel cost over recovery | -Retail fuel cost over recovery | 158 | 31 | |||||||||||||||
-Customer refunds | -Customer refunds | (226) | (30) | |||||||||||||||
-Other current liabilities | (103 | ) | (127 | ) | -Other current liabilities | (46) | (155) | |||||||||||
Net cash provided from operating activities | 894 | 744 | Net cash provided from operating activities | 5,220 | 4,881 | |||||||||||||
Investing Activities: | Investing Activities: | |||||||||||||||||
Property additions | (1,560 | ) | (1,678 | ) | Property additions | (5,365) | (5,417) | |||||||||||
Nuclear decommissioning trust fund purchases | (254 | ) | (197 | ) | Nuclear decommissioning trust fund purchases | (714) | (683) | |||||||||||
Nuclear decommissioning trust fund sales | 249 | 192 | Nuclear decommissioning trust fund sales | 708 | 678 | |||||||||||||
Proceeds from dispositions and asset sales | 982 | 4,427 | Proceeds from dispositions and asset sales | 987 | 5,036 | |||||||||||||
Cost of removal, net of salvage | (69 | ) | (89 | ) | Cost of removal, net of salvage | (233) | (290) | |||||||||||
Change in construction payables, net | (141 | ) | (146 | ) | Change in construction payables, net | (40) | (132) | |||||||||||
Investment in unconsolidated subsidiaries | (77 | ) | (10 | ) | Investment in unconsolidated subsidiaries | (79) | (141) | |||||||||||
Payments pursuant to LTSAs | (26 | ) | (28 | ) | Payments pursuant to LTSAs | (139) | (139) | |||||||||||
Other investing activities | 7 | (17 | ) | Other investing activities | (17) | 15 | ||||||||||||
Net cash provided from (used for) investing activities | (889 | ) | 2,454 | |||||||||||||||
Net cash used for investing activities | Net cash used for investing activities | (4,892) | (1,073) | |||||||||||||||
Financing Activities: | Financing Activities: | |||||||||||||||||
Increase (decrease) in notes payable, net | (685 | ) | 86 | |||||||||||||||
Decrease in notes payable, net | Decrease in notes payable, net | (1,534) | (773) | |||||||||||||||
Proceeds — | Proceeds — | |||||||||||||||||
Long-term debt | 2,653 | 1,220 | Long-term debt | 7,543 | 4,737 | |||||||||||||
Common stock | 52 | 224 | Common stock | 63 | 623 | |||||||||||||
Short-term borrowings | 565 | — | Short-term borrowings | 615 | 250 | |||||||||||||
Redemptions and repurchases — | Redemptions and repurchases — | |||||||||||||||||
Long-term debt | (1,481 | ) | (2,429 | ) | Long-term debt | (2,472) | (3,216) | |||||||||||
Short-term borrowings | (100 | ) | (1,750 | ) | Short-term borrowings | (840) | (1,850) | |||||||||||
Distributions to noncontrolling interests | (48 | ) | (36 | ) | Distributions to noncontrolling interests | (164) | (125) | |||||||||||
Capital contributions from noncontrolling interests | Capital contributions from noncontrolling interests | 173 | 11 | |||||||||||||||
Purchase of membership interests from noncontrolling interests | Purchase of membership interests from noncontrolling interests | (60) | 0 | |||||||||||||||
Payment of common stock dividends | (655 | ) | (623 | ) | Payment of common stock dividends | (2,008) | (1,919) | |||||||||||
Other financing activities | (116 | ) | (45 | ) | Other financing activities | (239) | (130) | |||||||||||
Net cash provided from (used for) financing activities | 185 | (3,353 | ) | Net cash provided from (used for) financing activities | 1,077 | (2,392) | ||||||||||||
Net Change in Cash, Cash Equivalents, and Restricted Cash | 190 | (155 | ) | Net Change in Cash, Cash Equivalents, and Restricted Cash | 1,405 | 1,416 | ||||||||||||
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period | 1,978 | 1,519 | Cash, Cash Equivalents, and Restricted Cash at Beginning of Period | 1,978 | 1,519 | |||||||||||||
Cash, Cash Equivalents, and Restricted Cash at End of Period | $ | 2,168 | $ | 1,364 | Cash, Cash Equivalents, and Restricted Cash at End of Period | $ | 3,383 | $ | 2,935 | |||||||||
Supplemental Cash Flow Information: | Supplemental Cash Flow Information: | |||||||||||||||||
Cash paid (received) during the period for — | ||||||||||||||||||
Interest (net of $20 and $18 capitalized for 2020 and 2019, respectively) | $ | 490 | $ | 462 | ||||||||||||||
Cash paid during the period for — | Cash paid during the period for — | |||||||||||||||||
Interest (net of $61 and $55 capitalized for 2020 and 2019, respectively) | Interest (net of $61 and $55 capitalized for 2020 and 2019, respectively) | $ | 1,346 | $ | 1,318 | |||||||||||||
Income taxes, net | (16 | ) | — | Income taxes, net | 66 | 265 | ||||||||||||
Noncash transactions — | Noncash transactions — | |||||||||||||||||
Accrued property additions at end of period | 733 | 899 | Accrued property additions at end of period | 917 | 953 | |||||||||||||
Right-of-use assets obtained under operating leases | 24 | 15 | Right-of-use assets obtained under operating leases | 158 | 76 | |||||||||||||
Right-of-use assets obtained under finance leases | 4 | 29 | Right-of-use assets obtained under finance leases | 8 | 31 |
Assets | At March 31, 2020 | At December 31, 2019 | Assets | At September 30, 2020 | At December 31, 2019 | |||||||||||||||||
(in millions) | (in millions) | |||||||||||||||||||||
Current Assets: | Current Assets: | |||||||||||||||||||||
Cash and cash equivalents | $ | 2,164 | $ | 1,975 | Cash and cash equivalents | $ | 3,379 | $ | 1,975 | |||||||||||||
Receivables — | Receivables — | |||||||||||||||||||||
Customer accounts receivable | 1,603 | 1,614 | Customer accounts receivable | 1,778 | 1,614 | |||||||||||||||||
Energy marketing receivables | 291 | 428 | Energy marketing receivables | 328 | 428 | |||||||||||||||||
Unbilled revenues | 522 | 599 | Unbilled revenues | 503 | 599 | |||||||||||||||||
Other accounts and notes receivable | 560 | 817 | Other accounts and notes receivable | 506 | 817 | |||||||||||||||||
Accumulated provision for uncollectible accounts | (53 | ) | (49 | ) | Accumulated provision for uncollectible accounts | (99) | (49) | |||||||||||||||
Materials and supplies | 1,405 | 1,388 | Materials and supplies | 1,522 | 1,388 | |||||||||||||||||
Fossil fuel for generation | 577 | 521 | Fossil fuel for generation | 506 | 521 | |||||||||||||||||
Natural gas for sale | 233 | 479 | Natural gas for sale | 448 | 479 | |||||||||||||||||
Prepaid expenses | 667 | 314 | Prepaid expenses | 299 | 314 | |||||||||||||||||
Assets from risk management activities, net of collateral | 134 | 183 | Assets from risk management activities, net of collateral | 135 | 183 | |||||||||||||||||
Regulatory assets – asset retirement obligations | 272 | 287 | Regulatory assets – asset retirement obligations | 246 | 287 | |||||||||||||||||
Other regulatory assets | 876 | 885 | Other regulatory assets | 813 | 885 | |||||||||||||||||
Assets held for sale | — | 188 | Assets held for sale | 0 | 188 | |||||||||||||||||
Other current assets | 179 | 188 | Other current assets | 210 | 188 | |||||||||||||||||
Total current assets | 9,430 | 9,817 | Total current assets | 10,574 | 9,817 | |||||||||||||||||
Property, Plant, and Equipment: | Property, Plant, and Equipment: | |||||||||||||||||||||
In service | 105,931 | 105,114 | In service | 108,831 | 105,114 | |||||||||||||||||
Less: Accumulated depreciation | 31,180 | 30,765 | Less: Accumulated depreciation | 32,099 | 30,765 | |||||||||||||||||
Plant in service, net of depreciation | 74,751 | 74,349 | Plant in service, net of depreciation | 76,732 | 74,349 | |||||||||||||||||
Nuclear fuel, at amortized cost | 854 | 851 | Nuclear fuel, at amortized cost | 804 | 851 | |||||||||||||||||
Construction work in progress | 8,360 | 7,880 | Construction work in progress | 8,861 | 7,880 | |||||||||||||||||
Total property, plant, and equipment | 83,965 | 83,080 | Total property, plant, and equipment | 86,397 | 83,080 | |||||||||||||||||
Other Property and Investments: | Other Property and Investments: | |||||||||||||||||||||
Goodwill | 5,280 | 5,280 | Goodwill | 5,280 | 5,280 | |||||||||||||||||
Equity investments in unconsolidated subsidiaries | 1,386 | 1,303 | Equity investments in unconsolidated subsidiaries | 1,358 | 1,303 | |||||||||||||||||
Other intangible assets, net of amortization of $292 and $280 at March 31, 2020 and December 31, 2019, respectively | 523 | 536 | ||||||||||||||||||||
Other intangible assets, net of amortization of $316 and $280 at September 30, 2020 and December 31, 2019, respectively | Other intangible assets, net of amortization of $316 and $280 at September 30, 2020 and December 31, 2019, respectively | 499 | 536 | |||||||||||||||||||
Nuclear decommissioning trusts, at fair value | 1,787 | 2,036 | Nuclear decommissioning trusts, at fair value | 2,109 | 2,036 | |||||||||||||||||
Leveraged leases | 795 | 788 | Leveraged leases | 653 | 788 | |||||||||||||||||
Miscellaneous property and investments | 407 | 391 | Miscellaneous property and investments | 403 | 391 | |||||||||||||||||
Total other property and investments | 10,178 | 10,334 | Total other property and investments | 10,302 | 10,334 | |||||||||||||||||
Deferred Charges and Other Assets: | Deferred Charges and Other Assets: | |||||||||||||||||||||
Operating lease right-of-use assets, net of amortization | 1,770 | 1,800 | Operating lease right-of-use assets, net of amortization | 1,791 | 1,800 | |||||||||||||||||
Deferred charges related to income taxes | 798 | 798 | Deferred charges related to income taxes | 799 | 798 | |||||||||||||||||
Unamortized loss on reacquired debt | 297 | 300 | Unamortized loss on reacquired debt | 285 | 300 | |||||||||||||||||
Regulatory assets – asset retirement obligations, deferred | 4,384 | 4,094 | Regulatory assets – asset retirement obligations, deferred | 4,984 | 4,094 | |||||||||||||||||
Other regulatory assets, deferred | 6,763 | 6,805 | Other regulatory assets, deferred | 6,502 | 6,805 | |||||||||||||||||
Assets held for sale, deferred | — | 601 | Assets held for sale, deferred | 0 | 601 | |||||||||||||||||
Other deferred charges and assets | 1,267 | 1,071 | Other deferred charges and assets | 1,524 | 1,071 | |||||||||||||||||
Total deferred charges and other assets | 15,279 | 15,469 | Total deferred charges and other assets | 15,885 | 15,469 | |||||||||||||||||
Total Assets | $ | 118,852 | $ | 118,700 | Total Assets | $ | 123,158 | $ | 118,700 |
Liabilities and Stockholders' Equity | At March 31, 2020 | At December 31, 2019 | Liabilities and Stockholders' Equity | At September 30, 2020 | At December 31, 2019 | |||||||||||||||||
(in millions) | (in millions) | |||||||||||||||||||||
Current Liabilities: | Current Liabilities: | |||||||||||||||||||||
Securities due within one year | $ | 1,809 | $ | 2,989 | Securities due within one year | $ | 4,378 | $ | 2,989 | |||||||||||||
Notes payable | 1,710 | 2,055 | Notes payable | 171 | 2,055 | |||||||||||||||||
Energy marketing trade payables | 298 | 442 | Energy marketing trade payables | 361 | 442 | |||||||||||||||||
Accounts payable | 1,653 | 2,115 | Accounts payable | 1,924 | 2,115 | |||||||||||||||||
Customer deposits | 491 | 496 | Customer deposits | 496 | 496 | |||||||||||||||||
Accrued taxes — | Accrued taxes — | |||||||||||||||||||||
Accrued income taxes | 25 | — | Accrued income taxes | 75 | 0 | |||||||||||||||||
Other accrued taxes | 338 | 659 | Other accrued taxes | 742 | 659 | |||||||||||||||||
Accrued interest | 414 | 474 | Accrued interest | 421 | 474 | |||||||||||||||||
Accrued compensation | 502 | 992 | Accrued compensation | 843 | 992 | |||||||||||||||||
Asset retirement obligations | 514 | 504 | Asset retirement obligations | 640 | 504 | |||||||||||||||||
Other regulatory liabilities | 701 | 756 | Other regulatory liabilities | 616 | 756 | |||||||||||||||||
Liabilities held for sale | — | 5 | Liabilities held for sale | 0 | 5 | |||||||||||||||||
Operating lease obligations | 230 | 229 | Operating lease obligations | 235 | 229 | |||||||||||||||||
Other current liabilities | 868 | 830 | Other current liabilities | 848 | 830 | |||||||||||||||||
Total current liabilities | 9,553 | 12,546 | Total current liabilities | 11,750 | 12,546 | |||||||||||||||||
Long-term Debt | 44,235 | 41,798 | Long-term Debt | 45,581 | 41,798 | |||||||||||||||||
Deferred Credits and Other Liabilities: | Deferred Credits and Other Liabilities: | |||||||||||||||||||||
Accumulated deferred income taxes | 8,398 | 7,888 | Accumulated deferred income taxes | 8,342 | 7,888 | |||||||||||||||||
Deferred credits related to income taxes | 5,954 | 6,078 | Deferred credits related to income taxes | 5,763 | 6,078 | |||||||||||||||||
Accumulated deferred ITCs | 2,271 | 2,291 | Accumulated deferred ITCs | 2,251 | 2,291 | |||||||||||||||||
Employee benefit obligations | 1,778 | 1,814 | Employee benefit obligations | 1,753 | 1,814 | |||||||||||||||||
Operating lease obligations, deferred | 1,610 | 1,615 | Operating lease obligations, deferred | 1,570 | 1,615 | |||||||||||||||||
Asset retirement obligations, deferred | 9,296 | 9,282 | Asset retirement obligations, deferred | 10,020 | 9,282 | |||||||||||||||||
Accrued environmental remediation | 230 | 234 | Accrued environmental remediation | 220 | 234 | |||||||||||||||||
Other cost of removal obligations | 2,251 | 2,239 | Other cost of removal obligations | 2,231 | 2,239 | |||||||||||||||||
Other regulatory liabilities, deferred | 368 | 256 | Other regulatory liabilities, deferred | 315 | 256 | |||||||||||||||||
Other deferred credits and liabilities | 701 | 609 | Other deferred credits and liabilities | 571 | 609 | |||||||||||||||||
Total deferred credits and other liabilities | 32,857 | 32,306 | Total deferred credits and other liabilities | 33,036 | 32,306 | |||||||||||||||||
Total Liabilities | 86,645 | 86,650 | Total Liabilities | 90,367 | 86,650 | |||||||||||||||||
Redeemable Preferred Stock of Subsidiaries | 291 | 291 | Redeemable Preferred Stock of Subsidiaries | 291 | 291 | |||||||||||||||||
Total Stockholders' Equity (See accompanying statements) | 31,916 | 31,759 | Total Stockholders' Equity (See accompanying statements) | 32,500 | 31,759 | |||||||||||||||||
Total Liabilities and Stockholders' Equity | $ | 118,852 | $ | 118,700 | Total Liabilities and Stockholders' Equity | $ | 123,158 | $ | 118,700 |
Southern Company Common Stockholders' Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Number of Common Shares | Common Stock | Accumulated Other Comprehensive Income (Loss) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issued | Treasury | Par Value | Paid-In Capital | Treasury | Retained Earnings | Noncontrolling Interests | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2018 | 1,035 | (1) | $ | 5,164 | $ | 11,094 | $ | (38) | $ | 8,706 | $ | (203) | $ | 4,316 | $ | 29,039 | ||||||||||||||||||||||||||||||||||||||||
Consolidated net income (loss) | — | — | — | — | — | 2,084 | — | (29) | 2,055 | |||||||||||||||||||||||||||||||||||||||||||||||
Stock issued | 6 | — | 28 | 196 | — | — | — | — | 224 | |||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | 24 | — | — | — | — | 24 | |||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends of $0.60 per share | — | — | — | — | — | (623) | — | — | (623) | |||||||||||||||||||||||||||||||||||||||||||||||
Contributions from noncontrolling interests | — | — | — | — | — | — | — | 3 | 3 | |||||||||||||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | — | — | (41) | (41) | |||||||||||||||||||||||||||||||||||||||||||||||
Other | — | — | — | 7 | (2) | — | — | 1 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2019 | 1,041 | (1) | 5,192 | 11,321 | (40) | 10,167 | (203) | 4,250 | 30,687 | |||||||||||||||||||||||||||||||||||||||||||||||
Consolidated net income | — | — | — | — | — | 899 | — | 29 | 928 | |||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | — | — | (35) | — | (35) | |||||||||||||||||||||||||||||||||||||||||||||||
Stock issued | 5 | — | 25 | 203 | — | — | — | — | 228 | |||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | 11 | — | — | — | — | 11 | |||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends of $0.62 per share | — | — | — | — | — | (646) | — | — | (646) | |||||||||||||||||||||||||||||||||||||||||||||||
Contributions from noncontrolling interests | — | — | — | — | — | — | — | 2 | 2 | |||||||||||||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | — | — | (47) | (47) | |||||||||||||||||||||||||||||||||||||||||||||||
Other | — | — | — | 5 | (1) | — | — | (1) | 3 | |||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2019 | 1,046 | (1) | 5,217 | 11,540 | (41) | 10,420 | (238) | 4,233 | 31,131 | |||||||||||||||||||||||||||||||||||||||||||||||
Consolidated net income | — | — | — | — | — | 1,316 | — | 25 | 1,341 | |||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | — | — | (41) | — | (41) | |||||||||||||||||||||||||||||||||||||||||||||||
Issuance of equity units | — | — | — | (198) | — | — | — | — | (198) | |||||||||||||||||||||||||||||||||||||||||||||||
Stock issued | 4 | — | 17 | 154 | — | — | — | — | 171 | |||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | 12 | — | — | — | — | 12 | |||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends of $0.62 per share | — | — | — | — | — | (649) | — | — | (649) | |||||||||||||||||||||||||||||||||||||||||||||||
Contributions from noncontrolling interests | — | — | — | — | — | — | — | 63 | 63 | |||||||||||||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | — | — | (43) | (43) | |||||||||||||||||||||||||||||||||||||||||||||||
Other | — | — | — | 4 | 0 | — | — | 0 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2019 | 1,050 | (1) | $ | 5,234 | $ | 11,512 | $ | (41) | $ | 11,087 | $ | (279) | $ | 4,278 | $ | 31,791 | ||||||||||||||||||||||||||||||||||||||||
Southern Company Common Stockholders' Equity | |||||||||||||||||||||||||||||||||
Number of Common Shares | Common Stock | Accumulated Other Comprehensive Income (Loss) | |||||||||||||||||||||||||||||||
Issued | Treasury | Par Value | Paid-In Capital | Treasury | Retained Earnings | Noncontrolling Interests | Total | ||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||||
Balance at December 31, 2018 | 1,035 | (1 | ) | $ | 5,164 | $ | 11,094 | $ | (38 | ) | $ | 8,706 | $ | (203 | ) | $ | 4,316 | $ | 29,039 | ||||||||||||||
Consolidated net income attributable to Southern Company | — | — | — | — | — | 2,084 | — | — | 2,084 | ||||||||||||||||||||||||
Stock issued | 6 | — | 28 | 196 | — | — | — | — | 224 | ||||||||||||||||||||||||
Stock-based compensation | — | — | — | 24 | — | — | — | — | 24 | ||||||||||||||||||||||||
Cash dividends of $0.60 per share | — | — | — | — | — | (622 | ) | — | — | (622 | ) | ||||||||||||||||||||||
Contributions from noncontrolling interests | — | — | — | — | — | — | — | 3 | 3 | ||||||||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | — | — | (41 | ) | (41 | ) | ||||||||||||||||||||||
Net income (loss) attributable to noncontrolling interests | — | — | — | — | — | — | — | (29 | ) | (29 | ) | ||||||||||||||||||||||
Other | — | — | — | 7 | (2 | ) | (1 | ) | — | 1 | 5 | ||||||||||||||||||||||
Balance at March 31, 2019 | 1,041 | (1 | ) | $ | 5,192 | $ | 11,321 | $ | (40 | ) | $ | 10,167 | $ | (203 | ) | $ | 4,250 | $ | 30,687 |
Balance at December 31, 2019 | 1,054 | (1 | ) | $ | 5,257 | $ | 11,734 | $ | (42 | ) | $ | 10,877 | $ | (321 | ) | $ | 4,254 | $ | 31,759 | ||||||||||||||
Consolidated net income attributable to Southern Company | — | — | — | — | — | 868 | — | — | 868 | ||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | — | — | (47 | ) | — | (47 | ) | ||||||||||||||||||||||
Stock issued | 3 | — | 9 | 43 | — | — | — | — | 52 | ||||||||||||||||||||||||
Stock-based compensation | — | — | — | 5 | — | — | — | — | 5 | ||||||||||||||||||||||||
Cash dividends of $0.62 per share | — | — | — | — | — | (655 | ) | — | — | (655 | ) | ||||||||||||||||||||||
Contributions from noncontrolling interests | — | — | — | — | — | — | — | 16 | 16 | ||||||||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | — | — | (48 | ) | (48 | ) | ||||||||||||||||||||||
Net income (loss) attributable to noncontrolling interests | — | — | — | — | — | — | — | (31 | ) | (31 | ) | ||||||||||||||||||||||
Other | — | — | — | — | (2 | ) | (2 | ) | 1 | — | (3 | ) | |||||||||||||||||||||
Balance at March 31, 2020 | 1,057 | (1 | ) | $ | 5,266 | $ | 11,782 | $ | (44 | ) | $ | 11,088 | $ | (367 | ) | $ | 4,191 | $ | 31,916 |
Southern Company Common Stockholders' Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Number of Common Shares | Common Stock | Accumulated Other Comprehensive Income (Loss) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issued | Treasury | Par Value | Paid-In Capital | Treasury | Retained Earnings | Noncontrolling Interests | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2019 | 1,054 | (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 | 3 | — | 9 | 43 | — | — | — | — | 52 | |||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | 5 | — | — | — | — | 5 | |||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends of $0.62 per share | — | — | — | — | — | (655) | — | — | (655) | |||||||||||||||||||||||||||||||||||||||||||||||
Contributions from noncontrolling interests | — | — | — | — | — | — | — | 16 | 16 | |||||||||||||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | — | — | (48) | (48) | |||||||||||||||||||||||||||||||||||||||||||||||
Other | — | — | — | — | (2) | (2) | 1 | — | (3) | |||||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2020 | 1,057 | (1) | 5,266 | 11,782 | (44) | 11,088 | (367) | 4,191 | 31,916 | |||||||||||||||||||||||||||||||||||||||||||||||
Consolidated net income | — | — | — | — | — | 612 | — | 5 | 617 | |||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | 4 | — | 4 | |||||||||||||||||||||||||||||||||||||||||||||||
Stock issued | — | — | — | 7 | — | — | — | — | 7 | |||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | 11 | — | — | — | — | 11 | |||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends of $0.64 per share | — | — | — | — | — | (677) | — | — | (677) | |||||||||||||||||||||||||||||||||||||||||||||||
Contributions from noncontrolling interests | — | — | — | — | — | — | — | 165 | 165 | |||||||||||||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | — | — | (70) | (70) | |||||||||||||||||||||||||||||||||||||||||||||||
Other | — | — | — | (13) | — | 1 | — | — | (12) | |||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2020 | 1,057 | (1) | 5,266 | 11,787 | (44) | 11,024 | (363) | 4,291 | 31,961 | |||||||||||||||||||||||||||||||||||||||||||||||
Consolidated net income | — | — | — | — | — | 1,251 | — | 28 | 1,279 | |||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | 20 | — | 20 | |||||||||||||||||||||||||||||||||||||||||||||||
Stock issued | — | — | 1 | 3 | — | — | — | — | 4 | |||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | 15 | — | — | — | — | 15 | |||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends of $0.64 per share | — | — | — | — | — | (676) | — | — | (676) | |||||||||||||||||||||||||||||||||||||||||||||||
Contributions from noncontrolling interests | — | — | — | — | — | — | — | 2 | 2 | |||||||||||||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | — | — | (51) | (51) | |||||||||||||||||||||||||||||||||||||||||||||||
Purchase of membership interests from noncontrolling interests | — | — | — | 5 | — | — | — | (60) | (55) | |||||||||||||||||||||||||||||||||||||||||||||||
Other | — | 0 | 0 | 0 | 0 | 1 | (1) | 1 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2020 | 1,057 | (1) | $ | 5,267 | $ | 11,810 | $ | (44) | $ | 11,600 | $ | (344) | $ | 4,211 | $ | 32,500 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
(in millions) | (in millions) | ||||||||||||||||||||||
Operating Revenues: | |||||||||||||||||||||||
Retail revenues | $ | 1,575 | $ | 1,694 | $ | 4,003 | $ | 4,286 | |||||||||||||||
Wholesale revenues, non-affiliates | 73 | 71 | 184 | 194 | |||||||||||||||||||
Wholesale revenues, affiliates | 11 | 2 | 36 | 66 | |||||||||||||||||||
Other revenues | 70 | 74 | 222 | 216 | |||||||||||||||||||
Total operating revenues | 1,729 | 1,841 | 4,445 | 4,762 | |||||||||||||||||||
Operating Expenses: | |||||||||||||||||||||||
Fuel | 306 | 310 | 721 | 864 | |||||||||||||||||||
Purchased power, non-affiliates | 64 | 77 | 153 | 160 | |||||||||||||||||||
Purchased power, affiliates | 44 | 73 | 93 | 164 | |||||||||||||||||||
Other operations and maintenance | 387 | 409 | 1,078 | 1,221 | |||||||||||||||||||
Depreciation and amortization | 205 | 195 | 606 | 593 | |||||||||||||||||||
Taxes other than income taxes | 103 | 101 | 311 | 301 | |||||||||||||||||||
Total operating expenses | 1,109 | 1,165 | 2,962 | 3,303 | |||||||||||||||||||
Operating Income | 620 | 676 | 1,483 | 1,459 | |||||||||||||||||||
Other Income and (Expense): | |||||||||||||||||||||||
Allowance for equity funds used during construction | 12 | 13 | 34 | 41 | |||||||||||||||||||
Interest expense, net of amounts capitalized | (84) | (83) | (255) | (248) | |||||||||||||||||||
Other income (expense), net | 30 | 11 | 78 | 36 | |||||||||||||||||||
Total other income and (expense) | (42) | (59) | (143) | (171) | |||||||||||||||||||
Earnings Before Income Taxes | 578 | 617 | 1,340 | 1,288 | |||||||||||||||||||
Income taxes | 130 | 144 | 307 | 295 | |||||||||||||||||||
Net Income | 448 | 473 | 1,033 | 993 | |||||||||||||||||||
Dividends on Preferred Stock | 4 | 4 | 11 | 11 | |||||||||||||||||||
Net Income After Dividends on Preferred Stock | $ | 444 | $ | 469 | $ | 1,022 | $ | 982 |
For the Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
(in millions) | |||||||
Operating Revenues: | |||||||
Retail revenues | $ | 1,205 | $ | 1,213 | |||
Wholesale revenues, non-affiliates | 56 | 61 | |||||
Wholesale revenues, affiliates | 19 | 60 | |||||
Other revenues | 71 | 74 | |||||
Total operating revenues | 1,351 | 1,408 | |||||
Operating Expenses: | |||||||
Fuel | 215 | 301 | |||||
Purchased power, non-affiliates | 40 | 37 | |||||
Purchased power, affiliates | 18 | 21 | |||||
Other operations and maintenance | 350 | 409 | |||||
Depreciation and amortization | 200 | 199 | |||||
Taxes other than income taxes | 106 | 103 | |||||
Total operating expenses | 929 | 1,070 | |||||
Operating Income | 422 | 338 | |||||
Other Income and (Expense): | |||||||
Allowance for equity funds used during construction | 10 | 14 | |||||
Interest expense, net of amounts capitalized | (88 | ) | (83 | ) | |||
Other income (expense), net | 24 | 14 | |||||
Total other income and (expense) | (54 | ) | (55 | ) | |||
Earnings Before Income Taxes | 368 | 283 | |||||
Income taxes | 84 | 62 | |||||
Net Income | 284 | 221 | |||||
Dividends on Preferred Stock | 4 | 4 | |||||
Net Income After Dividends on Preferred Stock | $ | 280 | $ | 217 |
For the Three Months Ended March 31, | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||
(in millions) | (in millions) | (in millions) | ||||||||||||||||||||||||||||
Net Income | $ | 284 | $ | 221 | Net Income | $ | 448 | $ | 473 | $ | 1,033 | $ | 993 | |||||||||||||||||
Other comprehensive income (loss): | Other comprehensive income (loss): | |||||||||||||||||||||||||||||
Qualifying hedges: | Qualifying hedges: | |||||||||||||||||||||||||||||
Reclassification adjustment for amounts included in net income, net of tax of $- and $-, respectively | 1 | 1 | ||||||||||||||||||||||||||||
Reclassification adjustment for amounts included in net income, net of tax of $0, $0, $1, and $1, respectively | Reclassification adjustment for amounts included in net income, net of tax of $0, $0, $1, and $1, respectively | 1 | 1 | 3 | 3 | |||||||||||||||||||||||||
Total other comprehensive income (loss) | 1 | 1 | Total other comprehensive income (loss) | 1 | 1 | 3 | 3 | |||||||||||||||||||||||
Comprehensive Income | $ | 285 | $ | 222 | Comprehensive Income | $ | 449 | $ | 474 | $ | 1,036 | $ | 996 |
For the Three Months Ended March 31, | For the Nine Months Ended September 30, | |||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||
(in millions) | (in millions) | |||||||||||||||||
Operating Activities: | Operating Activities: | |||||||||||||||||
Net income | $ | 284 | $ | 221 | Net income | $ | 1,033 | $ | 993 | |||||||||
Adjustments to reconcile net income to net cash provided from operating activities — | Adjustments to reconcile net income to net cash provided from operating activities — | |||||||||||||||||
Depreciation and amortization, total | 241 | 244 | Depreciation and amortization, total | 731 | 756 | |||||||||||||
Deferred income taxes | 10 | — | Deferred income taxes | 71 | 148 | |||||||||||||
Allowance for equity funds used during construction | (10 | ) | (14 | ) | Allowance for equity funds used during construction | (34) | (41) | |||||||||||
Pension, postretirement, and other employee benefits | (25 | ) | (18 | ) | Pension, postretirement, and other employee benefits | (71) | (30) | |||||||||||
Settlement of asset retirement obligations | (46 | ) | (18 | ) | Settlement of asset retirement obligations | (157) | (76) | |||||||||||
Other, net | 20 | 26 | Other, net | 69 | 18 | |||||||||||||
Changes in certain current assets and liabilities — | Changes in certain current assets and liabilities — | |||||||||||||||||
-Receivables | 93 | 105 | -Receivables | (130) | (115) | |||||||||||||
-Prepayments | (80 | ) | (78 | ) | -Prepayments | (32) | (30) | |||||||||||
-Materials and supplies | (22 | ) | (4 | ) | -Materials and supplies | (55) | 11 | |||||||||||
-Other current assets | (29 | ) | 19 | -Other current assets | (32) | (30) | ||||||||||||
-Accounts payable | (305 | ) | (286 | ) | -Accounts payable | (248) | (267) | |||||||||||
-Accrued taxes | 100 | 80 | -Accrued taxes | 142 | 149 | |||||||||||||
-Accrued compensation | (111 | ) | (122 | ) | -Accrued compensation | (55) | (55) | |||||||||||
-Retail fuel cost over recovery | 47 | 2 | -Retail fuel cost over recovery | 74 | 21 | |||||||||||||
-Customer refunds | -Customer refunds | (64) | (28) | |||||||||||||||
-Other current liabilities | (12 | ) | (11 | ) | -Other current liabilities | (13) | 47 | |||||||||||
Net cash provided from operating activities | 155 | 146 | Net cash provided from operating activities | 1,229 | 1,471 | |||||||||||||
Investing Activities: | Investing Activities: | |||||||||||||||||
Property additions | (340 | ) | (390 | ) | Property additions | (1,460) | (1,239) | |||||||||||
Nuclear decommissioning trust fund purchases | (81 | ) | (68 | ) | Nuclear decommissioning trust fund purchases | (213) | (201) | |||||||||||
Nuclear decommissioning trust fund sales | 81 | 68 | Nuclear decommissioning trust fund sales | 213 | 201 | |||||||||||||
Cost of removal, net of salvage | (15 | ) | (16 | ) | Cost of removal, net of salvage | (68) | (79) | |||||||||||
Change in construction payables | (65 | ) | (95 | ) | Change in construction payables | (46) | (99) | |||||||||||
Other investing activities | (4 | ) | (10 | ) | Other investing activities | (17) | (22) | |||||||||||
Net cash used for investing activities | (424 | ) | (511 | ) | Net cash used for investing activities | (1,591) | (1,439) | |||||||||||
Financing Activities: | Financing Activities: | |||||||||||||||||
Proceeds — Capital contributions from parent company | 610 | 1,232 | ||||||||||||||||
Proceeds — | Proceeds — | |||||||||||||||||
Senior notes | Senior notes | 600 | 600 | |||||||||||||||
Capital contributions from parent company | Capital contributions from parent company | 649 | 1,252 | |||||||||||||||
Pollution control revenue bonds | Pollution control revenue bonds | 87 | 0 | |||||||||||||||
Redemptions — | Redemptions — | |||||||||||||||||
Pollution control revenue bonds | (87 | ) | — | Pollution control revenue bonds | (87) | 0 | ||||||||||||
Senior notes | — | (200 | ) | Senior notes | 0 | (200) | ||||||||||||
Payment of common stock dividends | (239 | ) | (211 | ) | Payment of common stock dividends | (718) | (633) | |||||||||||
Other financing activities | (11 | ) | (10 | ) | Other financing activities | (26) | (27) | |||||||||||
Net cash provided from financing activities | 273 | 811 | Net cash provided from financing activities | 505 | 992 | |||||||||||||
Net Change in Cash, Cash Equivalents, and Restricted Cash | 4 | 446 | Net Change in Cash, Cash Equivalents, and Restricted Cash | 143 | 1,024 | |||||||||||||
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period | 894 | 313 | Cash, Cash Equivalents, and Restricted Cash at Beginning of Period | 894 | 313 | |||||||||||||
Cash, Cash Equivalents, and Restricted Cash at End of Period | $ | 898 | $ | 759 | Cash, Cash Equivalents, and Restricted Cash at End of Period | $ | 1,037 | $ | 1,337 | |||||||||
Supplemental Cash Flow Information: | Supplemental Cash Flow Information: | |||||||||||||||||
Cash paid during the period for — | Cash paid during the period for — | |||||||||||||||||
Interest (net of $3 and $5 capitalized for 2020 and 2019, respectively) | $ | 92 | $ | 89 | ||||||||||||||
Interest (net of $11 and $15 capitalized for 2020 and 2019, respectively) | Interest (net of $11 and $15 capitalized for 2020 and 2019, respectively) | $ | 249 | $ | 246 | |||||||||||||
Income taxes, net | Income taxes, net | 203 | 89 | |||||||||||||||
Noncash transactions — | Noncash transactions — | |||||||||||||||||
Accrued property additions at end of period | 135 | 176 | Accrued property additions at end of period | 154 | 173 | |||||||||||||
Right-of-use assets obtained under operating leases | 2 | 2 | Right-of-use assets obtained under operating leases | 63 | 7 | |||||||||||||
Right-of-use assets obtained under finance leases | 1 | — | Right-of-use assets obtained under finance leases | 2 | 1 |
Assets | At March 31, 2020 | At December 31, 2019 | Assets | At September 30, 2020 | At December 31, 2019 | |||||||||||||||||
(in millions) | (in millions) | |||||||||||||||||||||
Current Assets: | Current Assets: | |||||||||||||||||||||
Cash and cash equivalents | $ | 898 | $ | 894 | Cash and cash equivalents | $ | 1,037 | $ | 894 | |||||||||||||
Receivables — | Receivables — | |||||||||||||||||||||
Customer accounts receivable | 377 | 425 | Customer accounts receivable | 499 | 425 | |||||||||||||||||
Unbilled revenues | 117 | 134 | Unbilled revenues | 138 | 134 | |||||||||||||||||
Affiliated | 40 | 37 | Affiliated | 37 | 37 | |||||||||||||||||
Other accounts and notes receivable | 41 | 72 | Other accounts and notes receivable | 84 | 72 | |||||||||||||||||
Accumulated provision for uncollectible accounts | (19 | ) | (22 | ) | Accumulated provision for uncollectible accounts | (32) | (22) | |||||||||||||||
Fossil fuel stock | 227 | 212 | Fossil fuel stock | 208 | 212 | |||||||||||||||||
Materials and supplies | 531 | 512 | Materials and supplies | 562 | 512 | |||||||||||||||||
Prepaid expenses | 119 | 50 | Prepaid expenses | 71 | 50 | |||||||||||||||||
Other regulatory assets | 242 | 242 | Other regulatory assets | 207 | 242 | |||||||||||||||||
Other current assets | 37 | 30 | Other current assets | 42 | 30 | |||||||||||||||||
Total current assets | 2,610 | 2,586 | Total current assets | 2,853 | 2,586 | |||||||||||||||||
Property, Plant, and Equipment: | Property, Plant, and Equipment: | |||||||||||||||||||||
In service | 30,348 | 30,023 | In service | 31,355 | 30,023 | |||||||||||||||||
Less: Accumulated provision for depreciation | 9,608 | 9,540 | Less: Accumulated provision for depreciation | 9,920 | 9,540 | |||||||||||||||||
Plant in service, net of depreciation | 20,740 | 20,483 | Plant in service, net of depreciation | 21,435 | 20,483 | |||||||||||||||||
Nuclear fuel, at amortized cost | 290 | 296 | Nuclear fuel, at amortized cost | 257 | 296 | |||||||||||||||||
Construction work in progress | 777 | 890 | Construction work in progress | 926 | 890 | |||||||||||||||||
Total property, plant, and equipment | 21,807 | 21,669 | Total property, plant, and equipment | 22,618 | 21,669 | |||||||||||||||||
Other Property and Investments: | Other Property and Investments: | |||||||||||||||||||||
Equity investments in unconsolidated subsidiaries | 64 | 66 | Equity investments in unconsolidated subsidiaries | 63 | 66 | |||||||||||||||||
Nuclear decommissioning trusts, at fair value | 855 | 1,023 | Nuclear decommissioning trusts, at fair value | 1,039 | 1,023 | |||||||||||||||||
Miscellaneous property and investments | 129 | 128 | Miscellaneous property and investments | 130 | 128 | |||||||||||||||||
Total other property and investments | 1,048 | 1,217 | Total other property and investments | 1,232 | 1,217 | |||||||||||||||||
Deferred Charges and Other Assets: | Deferred Charges and Other Assets: | |||||||||||||||||||||
Operating lease right-of-use assets, net of amortization | 124 | 132 | Operating lease right-of-use assets, net of amortization | 162 | 132 | |||||||||||||||||
Deferred charges related to income taxes | 243 | 244 | Deferred charges related to income taxes | 242 | 244 | |||||||||||||||||
Deferred under recovered regulatory clause revenues | 37 | 40 | Deferred under recovered regulatory clause revenues | 62 | 40 | |||||||||||||||||
Regulatory assets – asset retirement obligations | 1,224 | 1,019 | Regulatory assets – asset retirement obligations | 1,475 | 1,019 | |||||||||||||||||
Other regulatory assets, deferred | 1,968 | 1,976 | Other regulatory assets, deferred | 1,923 | 1,976 | |||||||||||||||||
Other deferred charges and assets | 307 | 269 | Other deferred charges and assets | 402 | 269 | |||||||||||||||||
Total deferred charges and other assets | 3,903 | 3,680 | Total deferred charges and other assets | 4,266 | 3,680 | |||||||||||||||||
Total Assets | $ | 29,368 | $ | 29,152 | Total Assets | $ | 30,969 | $ | 29,152 |
Liabilities and Stockholder's Equity | At March 31, 2020 | At December 31, 2019 | Liabilities and Stockholder's Equity | At September 30, 2020 | At December 31, 2019 | |||||||||||||||||
(in millions) | (in millions) | |||||||||||||||||||||
Current Liabilities: | Current Liabilities: | |||||||||||||||||||||
Securities due within one year | $ | 296 | $ | 251 | Securities due within one year | $ | 496 | $ | 251 | |||||||||||||
Accounts payable — | Accounts payable — | |||||||||||||||||||||
Affiliated | 212 | 316 | Affiliated | 272 | 316 | |||||||||||||||||
Other | 271 | 514 | Other | 353 | 514 | |||||||||||||||||
Customer deposits | 101 | 100 | Customer deposits | 104 | 100 | |||||||||||||||||
Accrued taxes | 168 | 78 | Accrued taxes | 210 | 78 | |||||||||||||||||
Accrued interest | 82 | 92 | Accrued interest | 83 | 92 | |||||||||||||||||
Accrued compensation | 105 | 216 | Accrued compensation | 172 | 216 | |||||||||||||||||
Asset retirement obligations | 201 | 195 | Asset retirement obligations | 251 | 195 | |||||||||||||||||
Other regulatory liabilities | 155 | 193 | Other regulatory liabilities | 144 | 193 | |||||||||||||||||
Other current liabilities | 109 | 105 | Other current liabilities | 116 | 105 | |||||||||||||||||
Total current liabilities | 1,700 | 2,060 | Total current liabilities | 2,201 | 2,060 | |||||||||||||||||
Long-term Debt | 8,141 | 8,270 | Long-term Debt | 8,622 | 8,270 | |||||||||||||||||
Deferred Credits and Other Liabilities: | Deferred Credits and Other Liabilities: | |||||||||||||||||||||
Accumulated deferred income taxes | 3,283 | 3,260 | Accumulated deferred income taxes | 3,372 | 3,260 | |||||||||||||||||
Deferred credits related to income taxes | 1,946 | 1,960 | Deferred credits related to income taxes | 1,917 | 1,960 | |||||||||||||||||
Accumulated deferred ITCs | 99 | 100 | Accumulated deferred ITCs | 96 | 100 | |||||||||||||||||
Employee benefit obligations | 198 | 206 | Employee benefit obligations | 191 | 206 | |||||||||||||||||
Operating lease obligations | 103 | 107 | Operating lease obligations | 121 | 107 | |||||||||||||||||
Asset retirement obligations, deferred | 3,330 | 3,345 | Asset retirement obligations, deferred | 3,707 | 3,345 | |||||||||||||||||
Other cost of removal obligations | 402 | 412 | Other cost of removal obligations | 360 | 412 | |||||||||||||||||
Other regulatory liabilities, deferred | 225 | 146 | Other regulatory liabilities, deferred | 137 | 146 | |||||||||||||||||
Other deferred credits and liabilities | 41 | 40 | Other deferred credits and liabilities | 39 | 40 | |||||||||||||||||
Total deferred credits and other liabilities | 9,627 | 9,576 | Total deferred credits and other liabilities | 9,940 | 9,576 | |||||||||||||||||
Total Liabilities | 19,468 | 19,906 | Total Liabilities | 20,763 | 19,906 | |||||||||||||||||
Redeemable Preferred Stock | 291 | 291 | Redeemable Preferred Stock | 291 | 291 | |||||||||||||||||
Common Stockholder's Equity (See accompanying statements) | 9,609 | 8,955 | Common Stockholder's Equity (See accompanying statements) | 9,915 | 8,955 | |||||||||||||||||
Total Liabilities and Stockholder's Equity | $ | 29,368 | $ | 29,152 | Total Liabilities and Stockholder's Equity | $ | 30,969 | $ | 29,152 |
Number of Common Shares Issued | Common Stock | Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | Number of Common Shares Issued | Common Stock | Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||||||||||||||||||||||||||||||||||
(in millions) | (in millions) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2018 | 31 | $ | 1,222 | $ | 3,508 | $ | 2,775 | $ | (28 | ) | $ | 7,477 | Balance at December 31, 2018 | 31 | $ | 1,222 | $ | 3,508 | $ | 2,775 | $ | (28) | $ | 7,477 | |||||||||||||||||||||||||||||||||
Net income after dividends on preferred stock | — | — | — | 217 | — | 217 | Net income after dividends on preferred stock | — | — | — | 217 | — | 217 | ||||||||||||||||||||||||||||||||||||||||||||
Capital contributions from parent company | — | — | 1,236 | — | — | 1,236 | Capital contributions from parent company | — | — | 1,236 | — | — | 1,236 | ||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | 1 | 1 | Other comprehensive income | — | — | — | — | 1 | 1 | ||||||||||||||||||||||||||||||||||||||||||||
Cash dividends on common stock | — | — | — | (211 | ) | — | (211 | ) | Cash dividends on common stock | — | — | — | (211) | — | (211) | ||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2019 | 31 | $ | 1,222 | $ | 4,744 | $ | 2,781 | $ | (27 | ) | $ | 8,720 | Balance at March 31, 2019 | 31 | 1,222 | 4,744 | 2,781 | (27) | 8,720 | ||||||||||||||||||||||||||||||||||||||
Net income after dividends on preferred stock | Net income after dividends on preferred stock | — | — | — | 296 | — | 296 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Capital contributions from parent company | Capital contributions from parent company | — | — | 23 | — | — | 23 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | Other comprehensive income | — | — | — | — | 1 | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends on common stock | Cash dividends on common stock | — | — | — | (211) | — | (211) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2019 | Balance at June 30, 2019 | 31 | 1,222 | 4,767 | 2,866 | (26) | 8,829 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net income after dividends on preferred stock | Net income after dividends on preferred stock | — | — | — | 469 | — | 469 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Return of capital to parent company | Return of capital to parent company | — | — | (2) | — | — | (2) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | Other comprehensive income | — | — | — | — | 1 | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends on common stock | Cash dividends on common stock | — | — | — | (211) | — | (211) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2019 | Balance at September 30, 2019 | 31 | $ | 1,222 | $ | 4,765 | $ | 3,124 | $ | (25) | $ | 9,086 | |||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2019 | 31 | $ | 1,222 | $ | 4,755 | $ | 3,001 | $ | (23 | ) | $ | 8,955 | Balance at December 31, 2019 | 31 | $ | 1,222 | $ | 4,755 | $ | 3,001 | $ | (23) | $ | 8,955 | |||||||||||||||||||||||||||||||||
Net income after dividends on preferred stock | — | — | — | 280 | — | 280 | Net income after dividends on preferred stock | — | — | — | 280 | — | 280 | ||||||||||||||||||||||||||||||||||||||||||||
Capital contributions from parent company | — | — | 612 | — | — | 612 | Capital contributions from parent company | — | — | 612 | — | — | 612 | ||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | 1 | 1 | Other comprehensive income | — | — | — | — | 1 | 1 | ||||||||||||||||||||||||||||||||||||||||||||
Cash dividends on common stock | — | — | — | (239 | ) | — | (239 | ) | Cash dividends on common stock | — | — | — | (239) | — | (239) | ||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2020 | 31 | $ | 1,222 | $ | 5,367 | $ | 3,042 | $ | (22 | ) | $ | 9,609 | Balance at March 31, 2020 | 31 | 1,222 | 5,367 | 3,042 | (22) | 9,609 | ||||||||||||||||||||||||||||||||||||||
Net income after dividends on preferred stock | Net income after dividends on preferred stock | — | — | — | 298 | — | 298 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Capital contributions from parent company | Capital contributions from parent company | — | — | 1 | — | — | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | Other comprehensive income | — | — | — | — | 1 | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends on common stock | Cash dividends on common stock | — | — | — | (239) | — | (239) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2020 | Balance at June 30, 2020 | 31 | 1,222 | 5,368 | 3,101 | (21) | 9,670 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net income after dividends on preferred stock | Net income after dividends on preferred stock | — | — | — | 444 | — | 444 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Capital contributions from parent company | Capital contributions from parent company | — | — | 40 | — | — | 40 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | Other comprehensive income | — | — | — | — | 1 | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends on common stock | Cash dividends on common stock | — | — | — | (240) | — | (240) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2020 | Balance at September 30, 2020 | 31 | $ | 1,222 | $ | 5,408 | $ | 3,305 | $ | (20) | $ | 9,915 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
(in millions) | (in millions) | ||||||||||||||||||||||
Operating Revenues: | |||||||||||||||||||||||
Retail revenues | $ | 2,435 | $ | 2,567 | $ | 5,870 | $ | 6,181 | |||||||||||||||
Wholesale revenues | 34 | 39 | 85 | 107 | |||||||||||||||||||
Other revenues | 148 | 149 | 416 | 418 | |||||||||||||||||||
Total operating revenues | 2,617 | 2,755 | 6,371 | 6,706 | |||||||||||||||||||
Operating Expenses: | |||||||||||||||||||||||
Fuel | 368 | 443 | 826 | 1,132 | |||||||||||||||||||
Purchased power, non-affiliates | 146 | 151 | 409 | 393 | |||||||||||||||||||
Purchased power, affiliates | 142 | 150 | 393 | 460 | |||||||||||||||||||
Other operations and maintenance | 483 | 473 | 1,411 | 1,385 | |||||||||||||||||||
Depreciation and amortization | 358 | 250 | 1,064 | 733 | |||||||||||||||||||
Taxes other than income taxes | 123 | 127 | 344 | 348 | |||||||||||||||||||
Estimated loss on Plant Vogtle Units 3 and 4 | 0 | 0 | 149 | 0 | |||||||||||||||||||
Total operating expenses | 1,620 | 1,594 | 4,596 | 4,451 | |||||||||||||||||||
Operating Income | 997 | 1,161 | 1,775 | 2,255 | |||||||||||||||||||
Other Income and (Expense): | |||||||||||||||||||||||
Interest expense, net of amounts capitalized | (106) | (103) | (322) | (304) | |||||||||||||||||||
Other income (expense), net | 54 | 36 | 156 | 113 | |||||||||||||||||||
Total other income and (expense) | (52) | (67) | (166) | (191) | |||||||||||||||||||
Earnings Before Income Taxes | 945 | 1,094 | 1,609 | 2,064 | |||||||||||||||||||
Income taxes | 172 | 255 | 198 | 466 | |||||||||||||||||||
Net Income | $ | 773 | $ | 839 | $ | 1,411 | $ | 1,598 | |||||||||||||||
For the Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
(in millions) | |||||||
Operating Revenues: | |||||||
Retail revenues | $ | 1,675 | $ | 1,668 | |||
Wholesale revenues | 26 | 32 | |||||
Other revenues | 124 | 133 | |||||
Total operating revenues | 1,825 | 1,833 | |||||
Operating Expenses: | |||||||
Fuel | 231 | 299 | |||||
Purchased power, non-affiliates | 129 | 118 | |||||
Purchased power, affiliates | 129 | 176 | |||||
Other operations and maintenance | 465 | 446 | |||||
Depreciation and amortization | 352 | 240 | |||||
Taxes other than income taxes | 113 | 106 | |||||
Total operating expenses | 1,419 | 1,385 | |||||
Operating Income | 406 | 448 | |||||
Other Income and (Expense): | |||||||
Interest expense, net of amounts capitalized | (111 | ) | (96 | ) | |||
Other income (expense), net | 52 | 40 | |||||
Total other income and (expense) | (59 | ) | (56 | ) | |||
Earnings Before Income Taxes | 347 | 392 | |||||
Income taxes | 16 | 81 | |||||
Net Income | $ | 331 | $ | 311 |
For the Three Months Ended March 31, | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||
(in millions) | (in millions) | (in millions) | ||||||||||||||||||||||||||||
Net Income | $ | 331 | $ | 311 | Net Income | $ | 773 | $ | 839 | $ | 1,411 | $ | 1,598 | |||||||||||||||||
Other comprehensive income (loss): | Other comprehensive income (loss): | |||||||||||||||||||||||||||||
Qualifying hedges: | Qualifying hedges: | |||||||||||||||||||||||||||||
Changes in fair value, net of tax of $(1) and $-, respectively | (2 | ) | — | |||||||||||||||||||||||||||
Reclassification adjustment for amounts included in net income, net of tax of $1 and $-, respectively | 1 | 1 | ||||||||||||||||||||||||||||
Changes in fair value, net of tax of $0, $(12), $(1), and $(21), respectively | Changes in fair value, net of tax of $0, $(12), $(1), and $(21), respectively | 0 | (35) | (2) | (62) | |||||||||||||||||||||||||
Reclassification adjustment for amounts included in net income, net of tax of $0, $0, $2, and $0, respectively | Reclassification adjustment for amounts included in net income, net of tax of $0, $0, $2, and $0, respectively | 2 | 0 | 4 | 1 | |||||||||||||||||||||||||
Total other comprehensive income (loss) | (1 | ) | 1 | Total other comprehensive income (loss) | 2 | (35) | 2 | (61) | ||||||||||||||||||||||
Comprehensive Income | $ | 330 | $ | 312 | Comprehensive Income | $ | 775 | $ | 804 | $ | 1,413 | $ | 1,537 |
For the Three Months Ended March 31, | For the Nine Months Ended September 30, | |||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||
(in millions) | (in millions) | |||||||||||||||||
Operating Activities: | Operating Activities: | |||||||||||||||||
Net income | $ | 331 | $ | 311 | Net income | $ | 1,411 | $ | 1,598 | |||||||||
Adjustments to reconcile net income to net cash provided from operating activities — | Adjustments to reconcile net income to net cash provided from operating activities — | |||||||||||||||||
Depreciation and amortization, total | 396 | 287 | Depreciation and amortization, total | 1,206 | 887 | |||||||||||||
Deferred income taxes | (73 | ) | 127 | Deferred income taxes | (167) | 145 | ||||||||||||
Allowance for equity funds used during construction | Allowance for equity funds used during construction | (63) | (49) | |||||||||||||||
Pension, postretirement, and other employee benefits | (40 | ) | (35 | ) | Pension, postretirement, and other employee benefits | (98) | (85) | |||||||||||
Settlement of asset retirement obligations | (33 | ) | (34 | ) | Settlement of asset retirement obligations | (130) | (110) | |||||||||||
Storm damage reserve accruals | 53 | 7 | Storm damage reserve accruals | 160 | 22 | |||||||||||||
Retail fuel cost over recovery – long-term | 90 | — | ||||||||||||||||
Estimated loss on Plant Vogtle Units 3 and 4 | Estimated loss on Plant Vogtle Units 3 and 4 | 149 | 0 | |||||||||||||||
Other, net | (52 | ) | (25 | ) | Other, net | 12 | 40 | |||||||||||
Changes in certain current assets and liabilities — | Changes in certain current assets and liabilities — | |||||||||||||||||
-Receivables | 22 | 91 | -Receivables | (168) | (128) | |||||||||||||
-Fossil fuel stock | (42 | ) | (41 | ) | ||||||||||||||
-Prepaid income taxes | — | (73 | ) | -Prepaid income taxes | 0 | 102 | ||||||||||||
-Materials and supplies | -Materials and supplies | (74) | (2) | |||||||||||||||
-Contract assets | -Contract assets | (34) | (33) | |||||||||||||||
-Other current assets | (15 | ) | 33 | -Other current assets | (31) | (13) | ||||||||||||
-Accounts payable | (69 | ) | (166 | ) | -Accounts payable | 25 | (134) | |||||||||||
-Accrued taxes | (156 | ) | (245 | ) | -Accrued taxes | 44 | 138 | |||||||||||
-Accrued compensation | (87 | ) | (67 | ) | -Accrued compensation | (36) | (12) | |||||||||||
-Retail fuel cost over recovery | -Retail fuel cost over recovery | 84 | 0 | |||||||||||||||
-Customer refunds | (107 | ) | 32 | -Customer refunds | (162) | 18 | ||||||||||||
-Other current liabilities | (5 | ) | 10 | -Other current liabilities | (3) | (19) | ||||||||||||
Net cash provided from operating activities | 213 | 212 | Net cash provided from operating activities | 2,125 | 2,365 | |||||||||||||
Investing Activities: | Investing Activities: | |||||||||||||||||
Property additions | (849 | ) | (875 | ) | Property additions | (2,519) | (2,581) | |||||||||||
Nuclear decommissioning trust fund purchases | (173 | ) | (129 | ) | Nuclear decommissioning trust fund purchases | (500) | (483) | |||||||||||
Nuclear decommissioning trust fund sales | 167 | 124 | Nuclear decommissioning trust fund sales | 495 | 477 | |||||||||||||
Cost of removal, net of salvage | (34 | ) | (58 | ) | Cost of removal, net of salvage | (93) | (136) | |||||||||||
Change in construction payables, net of joint owner portion | (46 | ) | (38 | ) | Change in construction payables, net of joint owner portion | (14) | (75) | |||||||||||
Payments pursuant to LTSAs | Payments pursuant to LTSAs | (44) | (17) | |||||||||||||||
Proceeds from dispositions and asset sales | 142 | 7 | Proceeds from dispositions and asset sales | 143 | 9 | |||||||||||||
Other investing activities | (2 | ) | (11 | ) | Other investing activities | 6 | 13 | |||||||||||
Net cash used for investing activities | (795 | ) | (980 | ) | Net cash used for investing activities | (2,526) | (2,793) | |||||||||||
Financing Activities: | Financing Activities: | |||||||||||||||||
Increase (decrease) in notes payable, net | 11 | (19 | ) | |||||||||||||||
Decrease in notes payable, net | Decrease in notes payable, net | (115) | (294) | |||||||||||||||
Proceeds — | Proceeds — | |||||||||||||||||
FFB loan | — | 835 | FFB loan | 519 | 835 | |||||||||||||
Senior notes | 1,500 | — | Senior notes | 1,500 | 750 | |||||||||||||
Pollution control revenue bonds | 53 | 343 | Pollution control revenue bonds | 53 | 584 | |||||||||||||
Short-term borrowings | 200 | — | Short-term borrowings | 250 | 250 | |||||||||||||
Capital contributions from parent company | 500 | 27 | Capital contributions from parent company | 1,379 | 82 | |||||||||||||
Redemptions and repurchases — | Redemptions and repurchases — | |||||||||||||||||
Senior notes | (950 | ) | — | Senior notes | (950) | 0 | ||||||||||||
Pollution control revenue bonds | (148 | ) | (108 | ) | Pollution control revenue bonds | (148) | (223) | |||||||||||
Short-term borrowings | Short-term borrowings | (375) | 0 | |||||||||||||||
FFB loan | (16 | ) | — | FFB loan | (55) | 0 | ||||||||||||
Payment of common stock dividends | (385 | ) | (394 | ) | Payment of common stock dividends | (1,156) | (1,182) | |||||||||||
Other financing activities | (23 | ) | (19 | ) | Other financing activities | (35) | (37) | |||||||||||
Net cash provided from financing activities | 742 | 665 | Net cash provided from financing activities | 867 | 765 | |||||||||||||
Net Change in Cash, Cash Equivalents, and Restricted Cash | 160 | (103 | ) | Net Change in Cash, Cash Equivalents, and Restricted Cash | 466 | 337 | ||||||||||||
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period | 52 | 112 | Cash, Cash Equivalents, and Restricted Cash at Beginning of Period | 52 | 112 | |||||||||||||
Cash, Cash Equivalents, and Restricted Cash at End of Period | $ | 212 | $ | 9 | Cash, Cash Equivalents, and Restricted Cash at End of Period | $ | 518 | $ | 449 | |||||||||
Supplemental Cash Flow Information: | Supplemental Cash Flow Information: | |||||||||||||||||
Cash paid during the period for — | Cash paid during the period for — | |||||||||||||||||
Interest (net of $11 and $8 capitalized for 2020 and 2019, respectively) | $ | 122 | $ | 92 | ||||||||||||||
Interest (net of $34 and $25 capitalized for 2020 and 2019, respectively) | Interest (net of $34 and $25 capitalized for 2020 and 2019, respectively) | $ | 316 | $ | 296 | |||||||||||||
Income taxes, net | Income taxes, net | 311 | 45 | |||||||||||||||
Noncash transactions — | Noncash transactions — | |||||||||||||||||
Accrued property additions at end of period | 472 | 607 | Accrued property additions at end of period | 523 | 589 | |||||||||||||
Right-of-use assets obtained under operating leases | 10 | 4 | Right-of-use assets obtained under operating leases | 30 | 18 | |||||||||||||
Right-of-use assets obtained under finance leases | — | 28 | Right-of-use assets obtained under finance leases | 0 | 24 |
Assets | At March 31, 2020 | At December 31, 2019 | Assets | At September 30, 2020 | At December 31, 2019 | |||||||||||||||||
(in millions) | (in millions) | |||||||||||||||||||||
Current Assets: | Current Assets: | |||||||||||||||||||||
Cash and cash equivalents | $ | 212 | $ | 52 | Cash and cash equivalents | $ | 518 | $ | 52 | |||||||||||||
Receivables — | Receivables — | |||||||||||||||||||||
Customer accounts receivable | 545 | 533 | Customer accounts receivable | 715 | 533 | |||||||||||||||||
Unbilled revenues | 195 | 203 | Unbilled revenues | 237 | 203 | |||||||||||||||||
Joint owner accounts receivable | 129 | 136 | Joint owner accounts receivable | 120 | 136 | |||||||||||||||||
Affiliated | 24 | 21 | Affiliated | 17 | 21 | |||||||||||||||||
Other accounts and notes receivable | 44 | 209 | Other accounts and notes receivable | 39 | 209 | |||||||||||||||||
Accumulated provision for uncollectible accounts | (2 | ) | (2 | ) | Accumulated provision for uncollectible accounts | (29) | (2) | |||||||||||||||
Fossil fuel stock | 315 | 272 | Fossil fuel stock | 269 | 272 | |||||||||||||||||
Materials and supplies | 513 | 501 | Materials and supplies | 572 | 501 | |||||||||||||||||
Prepaid expenses | 38 | 63 | ||||||||||||||||||||
Regulatory assets – storm damage reserves | 213 | 213 | Regulatory assets – storm damage reserves | 213 | 213 | |||||||||||||||||
Regulatory assets – asset retirement obligations | 235 | 254 | Regulatory assets – asset retirement obligations | 209 | 254 | |||||||||||||||||
Other regulatory assets | 295 | 263 | Other regulatory assets | 251 | 263 | |||||||||||||||||
Other current assets | 69 | 77 | Other current assets | 162 | 140 | |||||||||||||||||
Total current assets | 2,825 | 2,795 | Total current assets | 3,293 | 2,795 | |||||||||||||||||
Property, Plant, and Equipment: | Property, Plant, and Equipment: | |||||||||||||||||||||
In service | 38,436 | 38,137 | In service | 39,170 | 38,137 | |||||||||||||||||
Less: Accumulated provision for depreciation | 11,929 | 11,753 | Less: Accumulated provision for depreciation | 12,139 | 11,753 | |||||||||||||||||
Plant in service, net of depreciation | 26,507 | 26,384 | Plant in service, net of depreciation | 27,031 | 26,384 | |||||||||||||||||
Nuclear fuel, at amortized cost | 563 | 555 | Nuclear fuel, at amortized cost | 547 | 555 | |||||||||||||||||
Construction work in progress | 6,187 | 5,650 | Construction work in progress | 6,752 | 5,650 | |||||||||||||||||
Total property, plant, and equipment | 33,257 | 32,589 | Total property, plant, and equipment | 34,330 | 32,589 | |||||||||||||||||
Other Property and Investments: | Other Property and Investments: | |||||||||||||||||||||
Equity investments in unconsolidated subsidiaries | 52 | 52 | Equity investments in unconsolidated subsidiaries | 50 | 52 | |||||||||||||||||
Nuclear decommissioning trusts, at fair value | 932 | 1,013 | Nuclear decommissioning trusts, at fair value | 1,070 | 1,013 | |||||||||||||||||
Miscellaneous property and investments | 65 | 64 | Miscellaneous property and investments | 67 | 64 | |||||||||||||||||
Total other property and investments | 1,049 | 1,129 | Total other property and investments | 1,187 | 1,129 | |||||||||||||||||
Deferred Charges and Other Assets: | Deferred Charges and Other Assets: | |||||||||||||||||||||
Operating lease right-of-use assets, net of amortization | 1,401 | 1,428 | Operating lease right-of-use assets, net of amortization | 1,345 | 1,428 | |||||||||||||||||
Deferred charges related to income taxes | 519 | 519 | Deferred charges related to income taxes | 522 | 519 | |||||||||||||||||
Regulatory assets – asset retirement obligations, deferred | 2,970 | 2,865 | Regulatory assets – asset retirement obligations, deferred | 3,307 | 2,865 | |||||||||||||||||
Other regulatory assets, deferred | 2,677 | 2,716 | Other regulatory assets, deferred | 2,521 | 2,716 | |||||||||||||||||
Other deferred charges and assets | 481 | 500 | Other deferred charges and assets | 541 | 500 | |||||||||||||||||
Total deferred charges and other assets | 8,048 | 8,028 | Total deferred charges and other assets | 8,236 | 8,028 | |||||||||||||||||
Total Assets | $ | 45,179 | $ | 44,541 | Total Assets | $ | 47,046 | $ | 44,541 |
Liabilities and Stockholder's Equity | At March 31, 2020 | At December 31, 2019 | Liabilities and Stockholder's Equity | At September 30, 2020 | At December 31, 2019 | |||||||||||||||||
(in millions) | (in millions) | |||||||||||||||||||||
Current Liabilities: | Current Liabilities: | |||||||||||||||||||||
Securities due within one year | $ | 74 | $ | 1,025 | Securities due within one year | $ | 531 | $ | 1,025 | |||||||||||||
Notes payable | 451 | 365 | Notes payable | 0 | 365 | |||||||||||||||||
Accounts payable — | Accounts payable — | |||||||||||||||||||||
Affiliated | 389 | 512 | Affiliated | 561 | 512 | |||||||||||||||||
Other | 723 | 711 | Other | 731 | 711 | |||||||||||||||||
Customer deposits | 284 | 283 | Customer deposits | 280 | 283 | |||||||||||||||||
Accrued taxes | 239 | 407 | Accrued taxes | 415 | 407 | |||||||||||||||||
Accrued interest | 97 | 118 | Accrued interest | 100 | 118 | |||||||||||||||||
Accrued compensation | 120 | 233 | Accrued compensation | 198 | 233 | |||||||||||||||||
Operating lease obligations | 147 | 144 | Operating lease obligations | 151 | 144 | |||||||||||||||||
Asset retirement obligations | 272 | 265 | Asset retirement obligations | 351 | 265 | |||||||||||||||||
Over recovered fuel clause revenues | Over recovered fuel clause revenues | 84 | 0 | |||||||||||||||||||
Other regulatory liabilities | 342 | 447 | Other regulatory liabilities | 302 | 447 | |||||||||||||||||
Other current liabilities | 233 | 187 | Other current liabilities | 201 | 187 | |||||||||||||||||
Total current liabilities | 3,371 | 4,697 | Total current liabilities | 3,905 | 4,697 | |||||||||||||||||
Long-term Debt | 12,297 | 10,791 | Long-term Debt | 12,314 | 10,791 | |||||||||||||||||
Deferred Credits and Other Liabilities: | Deferred Credits and Other Liabilities: | |||||||||||||||||||||
Accumulated deferred income taxes | 3,255 | 3,257 | Accumulated deferred income taxes | 3,296 | 3,257 | |||||||||||||||||
Deferred credits related to income taxes | 2,792 | 2,862 | Deferred credits related to income taxes | 2,664 | 2,862 | |||||||||||||||||
Accumulated deferred ITCs | 253 | 255 | Accumulated deferred ITCs | 272 | 255 | |||||||||||||||||
Employee benefit obligations | 497 | 540 | Employee benefit obligations | 486 | 540 | |||||||||||||||||
Operating lease obligations, deferred | 1,280 | 1,282 | Operating lease obligations, deferred | 1,163 | 1,282 | |||||||||||||||||
Asset retirement obligations, deferred | 5,547 | 5,519 | Asset retirement obligations, deferred | 5,901 | 5,519 | |||||||||||||||||
Other deferred credits and liabilities | 375 | 273 | Other deferred credits and liabilities | 339 | 273 | |||||||||||||||||
Total deferred credits and other liabilities | 13,999 | 13,988 | Total deferred credits and other liabilities | 14,121 | 13,988 | |||||||||||||||||
Total Liabilities | 29,667 | 29,476 | Total Liabilities | 30,340 | 29,476 | |||||||||||||||||
Common Stockholder's Equity (See accompanying statements) | 15,512 | 15,065 | Common Stockholder's Equity (See accompanying statements) | 16,706 | 15,065 | |||||||||||||||||
Total Liabilities and Stockholder's Equity | $ | 45,179 | $ | 44,541 | Total Liabilities and Stockholder's Equity | $ | 47,046 | $ | 44,541 |
Number of Common Shares Issued | Common Stock | Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | Number of Common Shares Issued | Common Stock | Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||||||||||||||||||||||||||||||||||
(in millions) | (in millions) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2018 | 9 | $ | 398 | $ | 10,322 | $ | 3,612 | $ | (9 | ) | $ | 14,323 | Balance at December 31, 2018 | 9 | $ | 398 | $ | 10,322 | $ | 3,612 | $ | (9) | $ | 14,323 | |||||||||||||||||||||||||||||||||
Net income | — | — | — | 311 | — | 311 | Net income | — | — | — | 311 | — | 311 | ||||||||||||||||||||||||||||||||||||||||||||
Capital contributions from parent company | — | — | 29 | — | — | 29 | Capital contributions from parent company | — | — | 29 | — | — | 29 | ||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | 1 | 1 | Other comprehensive income | — | — | — | — | 1 | 1 | ||||||||||||||||||||||||||||||||||||||||||||
Cash dividends on common stock | — | — | — | (394 | ) | — | (394 | ) | Cash dividends on common stock | — | — | — | (394) | — | (394) | ||||||||||||||||||||||||||||||||||||||||||
Other | — | — | (1 | ) | — | — | (1 | ) | Other | — | — | (1) | — | — | (1) | ||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2019 | 9 | $ | 398 | $ | 10,350 | $ | 3,529 | $ | (8 | ) | $ | 14,269 | Balance at March 31, 2019 | 9 | 398 | 10,350 | 3,529 | (8) | 14,269 | ||||||||||||||||||||||||||||||||||||||
Net income | Net income | — | — | — | 448 | — | 448 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Capital contributions from parent company | Capital contributions from parent company | — | — | 20 | — | — | 20 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | Other comprehensive income (loss) | — | — | — | — | (27) | (27) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends on common stock | Cash dividends on common stock | — | — | — | (394) | — | (394) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other | Other | — | — | 1 | (1) | — | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2019 | Balance at June 30, 2019 | 9 | 398 | 10,371 | 3,582 | (35) | 14,316 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | Net income | — | — | — | 839 | — | 839 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Capital contributions from parent company | Capital contributions from parent company | — | — | 38 | — | — | 38 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | Other comprehensive income (loss) | — | — | — | — | (35) | (35) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends on common stock | Cash dividends on common stock | — | — | — | (394) | — | (394) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other | Other | — | — | (1) | 1 | — | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2019 | Balance at September 30, 2019 | 9 | $ | 398 | $ | 10,408 | $ | 4,028 | $ | (70) | $ | 14,764 | |||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2019 | 9 | $ | 398 | $ | 10,962 | $ | 3,756 | $ | (51 | ) | $ | 15,065 | Balance at December 31, 2019 | 9 | $ | 398 | $ | 10,962 | $ | 3,756 | $ | (51) | $ | 15,065 | |||||||||||||||||||||||||||||||||
Net income | — | — | — | 331 | — | 331 | Net income | — | — | — | 331 | — | 331 | ||||||||||||||||||||||||||||||||||||||||||||
Capital contributions from parent company | — | — | 502 | — | — | 502 | Capital contributions from parent company | — | — | 502 | — | — | 502 | ||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | (1 | ) | (1 | ) | Other comprehensive income (loss) | — | — | — | — | (1) | (1) | ||||||||||||||||||||||||||||||||||||||||||
Cash dividends on common stock | — | — | — | (385 | ) | — | (385 | ) | Cash dividends on common stock | — | — | — | (385) | — | (385) | ||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2020 | 9 | $ | 398 | $ | 11,464 | $ | 3,702 | $ | (52 | ) | $ | 15,512 | Balance at March 31, 2020 | 9 | 398 | 11,464 | 3,702 | (52) | 15,512 | ||||||||||||||||||||||||||||||||||||||
Net income | Net income | — | — | — | 308 | — | 308 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Capital contributions from parent company | Capital contributions from parent company | — | — | 1 | — | — | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | Other comprehensive income | — | — | — | — | 2 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends on common stock | Cash dividends on common stock | — | — | — | (386) | — | (386) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2020 | Balance at June 30, 2020 | 9 | 398 | 11,465 | 3,624 | (50) | 15,437 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | Net income | — | — | — | 773 | — | 773 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Capital contributions from parent company | Capital contributions from parent company | — | — | 880 | — | — | 880 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | Other comprehensive income | — | — | — | — | 2 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends on common stock | Cash dividends on common stock | — | — | — | (386) | — | (386) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2020 | Balance at September 30, 2020 | 9 | $ | 398 | $ | 12,345 | $ | 4,011 | $ | (48) | $ | 16,706 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
(in millions) | (in millions) | ||||||||||||||||||||||
Operating Revenues: | |||||||||||||||||||||||
Retail revenues | $ | 232 | $ | 251 | $ | 630 | $ | 669 | |||||||||||||||
Wholesale revenues, non-affiliates | 61 | 64 | 164 | 178 | |||||||||||||||||||
Wholesale revenues, affiliates | 36 | 51 | 82 | 109 | |||||||||||||||||||
Other revenues | 7 | 4 | 19 | 14 | |||||||||||||||||||
Total operating revenues | 336 | 370 | 895 | 970 | |||||||||||||||||||
Operating Expenses: | |||||||||||||||||||||||
Fuel | 103 | 121 | 266 | 319 | |||||||||||||||||||
Purchased power | 6 | 6 | 18 | 15 | |||||||||||||||||||
Other operations and maintenance | 62 | 72 | 202 | 204 | |||||||||||||||||||
Depreciation and amortization | 47 | 48 | 135 | 144 | |||||||||||||||||||
Taxes other than income taxes | 31 | 30 | 90 | 85 | |||||||||||||||||||
Total operating expenses | 249 | 277 | 711 | 767 | |||||||||||||||||||
Operating Income | 87 | 93 | 184 | 203 | |||||||||||||||||||
Other Income and (Expense): | |||||||||||||||||||||||
Interest expense, net of amounts capitalized | (14) | (17) | (45) | (52) | |||||||||||||||||||
Other income (expense), net | 6 | 4 | 19 | 15 | |||||||||||||||||||
Total other income and (expense) | (8) | (13) | (26) | (37) | |||||||||||||||||||
Earnings Before Income Taxes | 79 | 80 | 158 | 166 | |||||||||||||||||||
Income taxes | 12 | 15 | 20 | 27 | |||||||||||||||||||
Net Income | $ | 67 | $ | 65 | $ | 138 | $ | 139 | |||||||||||||||
For the Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
(in millions) | |||||||
Operating Revenues: | |||||||
Retail revenues | $ | 199 | $ | 203 | |||
Wholesale revenues, non-affiliates | 51 | 57 | |||||
Wholesale revenues, affiliates | 21 | 22 | |||||
Other revenues | 6 | 5 | |||||
Total operating revenues | 277 | 287 | |||||
Operating Expenses: | |||||||
Fuel | 79 | 93 | |||||
Purchased power | 5 | 3 | |||||
Other operations and maintenance | 76 | 61 | |||||
Depreciation and amortization | 42 | 48 | |||||
Taxes other than income taxes | 29 | 26 | |||||
Total operating expenses | 231 | 231 | |||||
Operating Income | 46 | 56 | |||||
Other Income and (Expense): | |||||||
Interest expense, net of amounts capitalized | (16 | ) | (17 | ) | |||
Other income (expense), net | 8 | 5 | |||||
Total other income and (expense) | (8 | ) | (12 | ) | |||
Earnings Before Income Taxes | 38 | 44 | |||||
Income taxes | 6 | 7 | |||||
Net Income | $ | 32 | $ | 37 |
For the Three Months Ended March 31, | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||
(in millions) | (in millions) | (in millions) | ||||||||||||||||||||||||||||
Net Income | $ | 32 | $ | 37 | Net Income | $ | 67 | $ | 65 | $ | 138 | $ | 139 | |||||||||||||||||
Other comprehensive income (loss): | Other comprehensive income (loss): | |||||||||||||||||||||||||||||
Qualifying hedges: | Qualifying hedges: | |||||||||||||||||||||||||||||
Changes in fair value, net of tax of $- and $-, respectively | — | — | ||||||||||||||||||||||||||||
Reclassification adjustment for amounts included in net income, net of tax of $- and $-, respectively | — | — | ||||||||||||||||||||||||||||
Reclassification adjustment for amounts included in net income, net of tax of $0, $0, $0, and $0, respectively | Reclassification adjustment for amounts included in net income, net of tax of $0, $0, $0, and $0, respectively | 0 | 0 | 1 | 1 | |||||||||||||||||||||||||
Total other comprehensive income (loss) | — | — | Total other comprehensive income (loss) | 0 | 0 | 1 | 1 | |||||||||||||||||||||||
Comprehensive Income | $ | 32 | $ | 37 | Comprehensive Income | $ | 67 | $ | 65 | $ | 139 | $ | 140 |
For the Three Months Ended March 31, | For the Nine Months Ended September 30, | |||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||
(in millions) | (in millions) | |||||||||||||||||
Operating Activities: | Operating Activities: | |||||||||||||||||
Net income | $ | 32 | $ | 37 | Net income | $ | 138 | $ | 139 | |||||||||
Adjustments to reconcile net income to net cash provided from operating activities — | Adjustments to reconcile net income to net cash provided from operating activities — | |||||||||||||||||
Depreciation and amortization, total | 44 | 50 | Depreciation and amortization, total | 142 | 148 | |||||||||||||
Deferred income taxes | (4 | ) | (8 | ) | Deferred income taxes | (19) | 10 | |||||||||||
Settlement of asset retirement obligations | (3 | ) | (8 | ) | Settlement of asset retirement obligations | (16) | (28) | |||||||||||
Other, net | 4 | 4 | Other, net | 9 | 8 | |||||||||||||
Changes in certain current assets and liabilities — | Changes in certain current assets and liabilities — | |||||||||||||||||
-Receivables | 14 | 11 | -Receivables | (3) | (11) | |||||||||||||
-Other current assets | (10 | ) | 7 | -Other current assets | (7) | 18 | ||||||||||||
-Accounts payable | (24 | ) | (38 | ) | -Accounts payable | (54) | (26) | |||||||||||
-Accrued taxes | (54 | ) | (62 | ) | -Accrued taxes | 15 | (12) | |||||||||||
-Accrued compensation | (19 | ) | (22 | ) | -Accrued compensation | (8) | (10) | |||||||||||
-Other current liabilities | 3 | 6 | -Other current liabilities | (11) | 6 | |||||||||||||
Net cash used for operating activities | (17 | ) | (23 | ) | ||||||||||||||
Net cash provided from operating activities | Net cash provided from operating activities | 186 | 242 | |||||||||||||||
Investing Activities: | Investing Activities: | |||||||||||||||||
Property additions | (50 | ) | (45 | ) | Property additions | (174) | (134) | |||||||||||
Construction payables | (10 | ) | (8 | ) | Construction payables | 7 | (16) | |||||||||||
Payments pursuant to LTSAs | (5 | ) | (5 | ) | Payments pursuant to LTSAs | (20) | (18) | |||||||||||
Other investing activities | (6 | ) | (5 | ) | Other investing activities | (13) | (30) | |||||||||||
Net cash used for investing activities | (71 | ) | (63 | ) | Net cash used for investing activities | (200) | (198) | |||||||||||
Financing Activities: | Financing Activities: | |||||||||||||||||
Proceeds — | Proceeds — | |||||||||||||||||
Capital contributions from parent company | 75 | — | Capital contributions from parent company | 80 | 2 | |||||||||||||
Short-term borrowings | 40 | — | Short-term borrowings | 40 | 0 | |||||||||||||
Pollution control revenue bonds | — | 43 | Pollution control revenue bonds | 34 | 43 | |||||||||||||
Other long-term debt | 100 | — | Other long-term debt | 100 | 0 | |||||||||||||
Redemptions — Senior notes | (275 | ) | — | |||||||||||||||
Redemptions — | Redemptions — | |||||||||||||||||
Senior notes | Senior notes | (275) | 0 | |||||||||||||||
Short-term borrowings | Short-term borrowings | (40) | 0 | |||||||||||||||
Pollution control revenue bonds | Pollution control revenue bonds | (41) | 0 | |||||||||||||||
Return of capital to parent company | (37 | ) | (38 | ) | Return of capital to parent company | (74) | (113) | |||||||||||
Payment of common stock dividends | Payment of common stock dividends | (37) | 0 | |||||||||||||||
Other financing activities | (1 | ) | — | Other financing activities | (1) | (1) | ||||||||||||
Net cash provided from (used for) financing activities | (98 | ) | 5 | |||||||||||||||
Net cash used for financing activities | Net cash used for financing activities | (214) | (69) | |||||||||||||||
Net Change in Cash, Cash Equivalents, and Restricted Cash | (186 | ) | (81 | ) | Net Change in Cash, Cash Equivalents, and Restricted Cash | (228) | (25) | |||||||||||
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period | 286 | 293 | Cash, Cash Equivalents, and Restricted Cash at Beginning of Period | 286 | 293 | |||||||||||||
Cash, Cash Equivalents, and Restricted Cash at End of Period | $ | 100 | $ | 212 | Cash, Cash Equivalents, and Restricted Cash at End of Period | $ | 58 | $ | 268 | |||||||||
Supplemental Cash Flow Information: | Supplemental Cash Flow Information: | |||||||||||||||||
Cash paid during the period for — | Cash paid during the period for — | |||||||||||||||||
Interest (net of $- and $- capitalized for 2020 and 2019, respectively) | $ | 18 | $ | 13 | ||||||||||||||
Interest (net of $0 and $(1) capitalized for 2020 and 2019, respectively) | Interest (net of $0 and $(1) capitalized for 2020 and 2019, respectively) | $ | 49 | $ | 55 | |||||||||||||
Income taxes, net | Income taxes, net | 9 | 0 | |||||||||||||||
Noncash transactions — Accrued property additions at end of period | 25 | 27 | Noncash transactions — Accrued property additions at end of period | 42 | 20 |
Assets | At March 31, 2020 | At December 31, 2019 | Assets | At September 30, 2020 | At December 31, 2019 | |||||||||||||||||
(in millions) | (in millions) | |||||||||||||||||||||
Current Assets: | Current Assets: | |||||||||||||||||||||
Cash and cash equivalents | $ | 100 | $ | 286 | Cash and cash equivalents | $ | 58 | $ | 286 | |||||||||||||
Receivables — | Receivables — | |||||||||||||||||||||
Customer accounts receivable | 32 | 35 | Customer accounts receivable | 46 | 35 | |||||||||||||||||
Unbilled revenues | 33 | 39 | Unbilled revenues | 40 | 39 | |||||||||||||||||
Affiliated | 25 | 27 | Affiliated | 14 | 27 | |||||||||||||||||
Other accounts and notes receivable | 23 | 26 | Other accounts and notes receivable | 34 | 26 | |||||||||||||||||
Fossil fuel stock | 24 | 26 | Fossil fuel stock | 19 | 26 | |||||||||||||||||
Materials and supplies | 59 | 61 | Materials and supplies | 63 | 61 | |||||||||||||||||
Other regulatory assets | 85 | 99 | Other regulatory assets | 60 | 99 | |||||||||||||||||
Other current assets | 10 | 10 | Other current assets | 19 | 10 | |||||||||||||||||
Total current assets | 391 | 609 | Total current assets | 353 | 609 | |||||||||||||||||
Property, Plant, and Equipment: | Property, Plant, and Equipment: | |||||||||||||||||||||
In service | 4,900 | 4,857 | In service | 4,966 | 4,857 | |||||||||||||||||
Less: Accumulated provision for depreciation | 1,489 | 1,463 | Less: Accumulated provision for depreciation | 1,553 | 1,463 | |||||||||||||||||
Plant in service, net of depreciation | 3,411 | 3,394 | Plant in service, net of depreciation | 3,413 | 3,394 | |||||||||||||||||
Construction work in progress | 127 | 126 | Construction work in progress | 140 | 126 | |||||||||||||||||
Total property, plant, and equipment | 3,538 | 3,520 | Total property, plant, and equipment | 3,553 | 3,520 | |||||||||||||||||
Other Property and Investments | 131 | 131 | Other Property and Investments | 149 | 131 | |||||||||||||||||
Deferred Charges and Other Assets: | Deferred Charges and Other Assets: | |||||||||||||||||||||
Deferred charges related to income taxes | 32 | 32 | Deferred charges related to income taxes | 32 | 32 | |||||||||||||||||
Regulatory assets – asset retirement obligations | 197 | 210 | Regulatory assets – asset retirement obligations | 202 | 210 | |||||||||||||||||
Other regulatory assets, deferred | 386 | 360 | Other regulatory assets, deferred | 357 | 360 | |||||||||||||||||
Accumulated deferred income taxes | 137 | 139 | Accumulated deferred income taxes | 130 | 139 | |||||||||||||||||
Other deferred charges and assets | 48 | 34 | Other deferred charges and assets | 72 | 34 | |||||||||||||||||
Total deferred charges and other assets | 800 | 775 | Total deferred charges and other assets | 793 | 775 | |||||||||||||||||
Total Assets | $ | 4,860 | $ | 5,035 | Total Assets | $ | 4,848 | $ | 5,035 |
Liabilities and Stockholder's Equity | At March 31, 2020 | At December 31, 2019 | Liabilities and Stockholder's Equity | At September 30, 2020 | At December 31, 2019 | |||||||||||||||||
(in millions) | (in millions) | |||||||||||||||||||||
Current Liabilities: | Current Liabilities: | |||||||||||||||||||||
Securities due within one year | $ | 7 | $ | 281 | Securities due within one year | $ | 0 | $ | 281 | |||||||||||||
Notes payable | 40 | — | ||||||||||||||||||||
Accounts payable — | Accounts payable — | |||||||||||||||||||||
Affiliated | 62 | 76 | Affiliated | 54 | 76 | |||||||||||||||||
Other | 56 | 75 | Other | 50 | 75 | |||||||||||||||||
Accrued taxes | 51 | 105 | Accrued taxes | 120 | 105 | |||||||||||||||||
Accrued interest | 14 | 15 | Accrued interest | 14 | 15 | |||||||||||||||||
Accrued compensation | 16 | 35 | Accrued compensation | 28 | 35 | |||||||||||||||||
Asset retirement obligations | 28 | 33 | Asset retirement obligations | 23 | 33 | |||||||||||||||||
Over recovered regulatory clause liabilities | 32 | 29 | Over recovered regulatory clause liabilities | 31 | 29 | |||||||||||||||||
Other regulatory liabilities | 54 | 21 | Other regulatory liabilities | 56 | 21 | |||||||||||||||||
Other current liabilities | 69 | 64 | Other current liabilities | 42 | 64 | |||||||||||||||||
Total current liabilities | 429 | 734 | Total current liabilities | 418 | 734 | |||||||||||||||||
Long-term Debt | 1,406 | 1,308 | Long-term Debt | 1,402 | 1,308 | |||||||||||||||||
Deferred Credits and Other Liabilities: | Deferred Credits and Other Liabilities: | |||||||||||||||||||||
Accumulated deferred income taxes | 422 | 424 | Accumulated deferred income taxes | 422 | 424 | |||||||||||||||||
Deferred credits related to income taxes | 320 | 352 | Deferred credits related to income taxes | 299 | 352 | |||||||||||||||||
Employee benefit obligations | 98 | 99 | Employee benefit obligations | 95 | 99 | |||||||||||||||||
Asset retirement obligations, deferred | 158 | 157 | Asset retirement obligations, deferred | 158 | 157 | |||||||||||||||||
Other cost of removal obligations | 192 | 189 | Other cost of removal obligations | 195 | 189 | |||||||||||||||||
Other regulatory liabilities, deferred | 71 | 76 | Other regulatory liabilities, deferred | 64 | 76 | |||||||||||||||||
Other deferred credits and liabilities | 42 | 44 | Other deferred credits and liabilities | 35 | 44 | |||||||||||||||||
Total deferred credits and other liabilities | 1,303 | 1,341 | Total deferred credits and other liabilities | 1,268 | 1,341 | |||||||||||||||||
Total Liabilities | 3,138 | 3,383 | Total Liabilities | 3,088 | 3,383 | |||||||||||||||||
Common Stockholder's Equity (See accompanying statements) | 1,722 | 1,652 | Common Stockholder's Equity (See accompanying statements) | 1,760 | 1,652 | |||||||||||||||||
Total Liabilities and Stockholder's Equity | $ | 4,860 | $ | 5,035 | Total Liabilities and Stockholder's Equity | $ | 4,848 | $ | 5,035 |
Number of Common Shares Issued | Common Stock | Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | Number of Common Shares Issued | Common Stock | Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||||||||||||||||||||||||||||||||||
(in millions) | (in millions) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2018 | 1 | $ | 38 | $ | 4,546 | $ | (2,971 | ) | $ | (4 | ) | $ | 1,609 | Balance at December 31, 2018 | 1 | $ | 38 | $ | 4,546 | $ | (2,971) | $ | (4) | $ | 1,609 | ||||||||||||||||||||||||||||||||
Net income | — | — | — | 37 | — | 37 | Net income | — | — | — | 37 | — | 37 | ||||||||||||||||||||||||||||||||||||||||||||
Return of capital to parent company | — | — | (38 | ) | — | — | (38 | ) | Return of capital to parent company | — | — | (38) | — | — | (38) | ||||||||||||||||||||||||||||||||||||||||||
Capital contributions from parent company | — | — | 2 | — | — | 2 | Capital contributions from parent company | — | — | 2 | — | — | 2 | ||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2019 | 1 | $ | 38 | $ | 4,510 | $ | (2,934 | ) | $ | (4 | ) | $ | 1,610 | Balance at March 31, 2019 | 1 | 38 | 4,510 | (2,934) | (4) | 1,610 | |||||||||||||||||||||||||||||||||||||
Net income | Net income | — | — | — | 37 | — | 37 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Return of capital to parent company | Return of capital to parent company | — | — | (38) | — | — | (38) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Capital contributions from parent company | Capital contributions from parent company | — | — | 8 | — | — | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2019 | Balance at June 30, 2019 | 1 | 38 | 4,480 | (2,897) | (4) | 1,617 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | Net income | — | — | — | 65 | — | 65 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Return of capital to parent company | Return of capital to parent company | — | — | (43) | — | — | (43) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2019 | Balance at September 30, 2019 | 1 | $ | 38 | $ | 4,437 | $ | (2,832) | $ | (4) | $ | 1,639 | |||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2019 | 1 | $ | 38 | $ | 4,449 | $ | (2,832 | ) | $ | (3 | ) | $ | 1,652 | Balance at December 31, 2019 | 1 | $ | 38 | $ | 4,449 | $ | (2,832) | $ | (3) | $ | 1,652 | ||||||||||||||||||||||||||||||||
Net income | — | — | — | 32 | — | 32 | Net income | — | — | — | 32 | — | 32 | ||||||||||||||||||||||||||||||||||||||||||||
Return of capital to parent company | — | — | (37 | ) | — | — | (37 | ) | Return of capital to parent company | — | — | (37) | — | — | (37) | ||||||||||||||||||||||||||||||||||||||||||
Capital contributions from parent company | — | — | 76 | — | — | 76 | Capital contributions from parent company | — | — | 76 | — | — | 76 | ||||||||||||||||||||||||||||||||||||||||||||
Other | — | — | (1 | ) | — | — | (1 | ) | Other | — | — | (1) | — | — | (1) | ||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2020 | 1 | $ | 38 | $ | 4,487 | $ | (2,800 | ) | $ | (3 | ) | $ | 1,722 | Balance at March 31, 2020 | 1 | 38 | 4,487 | (2,800) | (3) | 1,722 | |||||||||||||||||||||||||||||||||||||
Net income | Net income | — | — | — | 39 | — | 39 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Return of capital to parent company | Return of capital to parent company | — | — | (37) | — | — | (37) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2020 | Balance at June 30, 2020 | 1 | 38 | 4,450 | (2,761) | (3) | 1,724 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | Net income | — | — | — | 67 | — | 67 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Capital contributions from parent company | Capital contributions from parent company | — | — | 6 | — | — | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends on common stock | Cash dividends on common stock | — | — | — | (37) | — | (37) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2020 | Balance at September 30, 2020 | 1 | $ | 38 | $ | 4,456 | $ | (2,731) | $ | (3) | $ | 1,760 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
(in millions) | (in millions) | ||||||||||||||||||||||
Operating Revenues: | |||||||||||||||||||||||
Wholesale revenues, non-affiliates | $ | 418 | $ | 455 | $ | 1,047 | $ | 1,197 | |||||||||||||||
Wholesale revenues, affiliates | 101 | 116 | 279 | 320 | |||||||||||||||||||
Other revenues | 4 | 3 | 11 | 10 | |||||||||||||||||||
Total operating revenues | 523 | 574 | 1,337 | 1,527 | |||||||||||||||||||
Operating Expenses: | |||||||||||||||||||||||
Fuel | 137 | 166 | 346 | 449 | |||||||||||||||||||
Purchased power | 19 | 26 | 52 | 82 | |||||||||||||||||||
Other operations and maintenance | 89 | 85 | 245 | 250 | |||||||||||||||||||
Depreciation and amortization | 129 | 120 | 367 | 357 | |||||||||||||||||||
Taxes other than income taxes | 10 | 10 | 29 | 32 | |||||||||||||||||||
(Gain) loss on dispositions, net | 0 | 0 | (39) | (23) | |||||||||||||||||||
Total operating expenses | 384 | 407 | 1,000 | 1,147 | |||||||||||||||||||
Operating Income | 139 | 167 | 337 | 380 | |||||||||||||||||||
Other Income and (Expense): | |||||||||||||||||||||||
Interest expense, net of amounts capitalized | (36) | (43) | (114) | (127) | |||||||||||||||||||
Other income (expense), net | 13 | 6 | 19 | 48 | |||||||||||||||||||
Total other income and (expense) | (23) | (37) | (95) | (79) | |||||||||||||||||||
Earnings Before Income Taxes | 116 | 130 | 242 | 301 | |||||||||||||||||||
Income taxes (benefit) | 14 | 19 | 27 | (41) | |||||||||||||||||||
Net Income | 102 | 111 | 215 | 342 | |||||||||||||||||||
Net income attributable to noncontrolling interests | 28 | 25 | 3 | 26 | |||||||||||||||||||
Net Income Attributable to Southern Power | $ | 74 | $ | 86 | $ | 212 | $ | 316 |
For the Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
(in millions) | |||||||
Operating Revenues: | |||||||
Wholesale revenues, non-affiliates | $ | 286 | $ | 352 | |||
Wholesale revenues, affiliates | 86 | 87 | |||||
Other revenues | 3 | 4 | |||||
Total operating revenues | 375 | 443 | |||||
Operating Expenses: | |||||||
Fuel | 107 | 145 | |||||
Purchased power | 14 | 24 | |||||
Other operations and maintenance | 79 | 83 | |||||
Depreciation and amortization | 117 | 119 | |||||
Taxes other than income taxes | 9 | 11 | |||||
(Gain) loss on dispositions, net | (39 | ) | 1 | ||||
Total operating expenses | 287 | 383 | |||||
Operating Income | 88 | 60 | |||||
Other Income and (Expense): | |||||||
Interest expense, net of amounts capitalized | (39 | ) | (44 | ) | |||
Other income (expense), net | 2 | 2 | |||||
Total other income and (expense) | (37 | ) | (42 | ) | |||
Earnings Before Income Taxes | 51 | 18 | |||||
Income taxes (benefit) | 7 | (9 | ) | ||||
Net Income | 44 | 27 | |||||
Net loss attributable to noncontrolling interests | (31 | ) | (29 | ) | |||
Net Income Attributable to Southern Power | $ | 75 | $ | 56 |
For the Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
(in millions) | |||||||
Net Income | $ | 44 | $ | 27 | |||
Other comprehensive income (loss): | |||||||
Qualifying hedges: | |||||||
Changes in fair value, net of tax of $(21) and $(10), respectively | (62 | ) | (29 | ) | |||
Reclassification adjustment for amounts included in net income, net of tax of $10 and $8, respectively | 28 | 25 | |||||
Pension and other postretirement benefit plans: | |||||||
Reclassification adjustment for amounts included in net income, net of tax of $- and $-, respectively | 1 | — | |||||
Total other comprehensive income (loss) | (33 | ) | (4 | ) | |||
Comprehensive Income | 11 | 23 | |||||
Comprehensive loss attributable to noncontrolling interests | (31 | ) | (29 | ) | |||
Comprehensive Income Attributable to Southern Power | $ | 42 | $ | 52 |
For the Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
(in millions) | |||||||
Operating Activities: | |||||||
Net income | $ | 44 | $ | 27 | |||
Adjustments to reconcile net income to net cash provided from operating activities — | |||||||
Depreciation and amortization, total | 123 | 125 | |||||
Deferred income taxes | (36 | ) | 17 | ||||
Amortization of investment tax credits | (14 | ) | (14 | ) | |||
(Gain) loss on dispositions, net | (39 | ) | — | ||||
Other, net | (10 | ) | (7 | ) | |||
Changes in certain current assets and liabilities — | |||||||
-Receivables | 5 | 10 | |||||
-Prepaid income taxes | 51 | (9 | ) | ||||
-Other current assets | (2 | ) | 3 | ||||
-Accounts payable | (34 | ) | (32 | ) | |||
-Accrued taxes | 8 | 5 | |||||
-Other current liabilities | (13 | ) | (15 | ) | |||
Net cash provided from operating activities | 83 | 110 | |||||
Investing Activities: | |||||||
Property additions | (47 | ) | (66 | ) | |||
Proceeds from dispositions and asset sales | 660 | — | |||||
Change in construction payables | (15 | ) | (7 | ) | |||
Payments pursuant to LTSAs | (15 | ) | (15 | ) | |||
Other investing activities | 17 | 9 | |||||
Net cash provided from (used for) investing activities | 600 | (79 | ) | ||||
Financing Activities: | |||||||
Increase (decrease) in notes payable, net | (449 | ) | 5 | ||||
Redemptions — Short-term borrowings | (100 | ) | — | ||||
Distributions to noncontrolling interests | (48 | ) | (36 | ) | |||
Capital contributions from noncontrolling interests | 16 | 3 | |||||
Payment of common stock dividends | (50 | ) | (51 | ) | |||
Other financing activities | (1 | ) | — | ||||
Net cash used for financing activities | (632 | ) | (79 | ) | |||
Net Change in Cash, Cash Equivalents, and Restricted Cash | 51 | (48 | ) | ||||
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period | 279 | 181 | |||||
Cash, Cash Equivalents, and Restricted Cash at End of Period | $ | 330 | $ | 133 | |||
Supplemental Cash Flow Information: | |||||||
Cash paid (received) during the period for — | |||||||
Interest (net of $4 capitalized for both 2020 and 2019) | $ | 28 | $ | 28 | |||
Income taxes, net | (5 | ) | 1 | ||||
Noncash transactions — Accrued property additions at end of period | 27 | 19 |
Assets | At March 31, 2020 | At December 31, 2019 | ||||||
(in millions) | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 330 | $ | 279 | ||||
Receivables — | ||||||||
Customer accounts receivable | 109 | 107 | ||||||
Affiliated | 26 | 30 | ||||||
Other | 54 | 73 | ||||||
Materials and supplies | 198 | 191 | ||||||
Prepaid income taxes | 452 | 36 | ||||||
Other current assets | 24 | 43 | ||||||
Total current assets | 1,193 | 759 | ||||||
Property, Plant, and Equipment: | ||||||||
In service | 13,282 | 13,270 | ||||||
Less: Accumulated provision for depreciation | 2,580 | 2,464 | ||||||
Plant in service, net of depreciation | 10,702 | 10,806 | ||||||
Construction work in progress | 534 | 515 | ||||||
Total property, plant, and equipment | 11,236 | 11,321 | ||||||
Other Property and Investments: | ||||||||
Intangible assets, net of amortization of $74 and $69 at March 31, 2020 and December 31, 2019, respectively | 317 | 322 | ||||||
Equity investments in unconsolidated subsidiaries | 45 | 28 | ||||||
Total other property and investments | 362 | 350 | ||||||
Deferred Charges and Other Assets: | ||||||||
Operating lease right-of-use assets, net of amortization | 368 | 369 | ||||||
Prepaid LTSAs | 134 | 128 | ||||||
Accumulated deferred income taxes | 129 | 551 | ||||||
Income taxes receivable, non-current | 8 | 5 | ||||||
Assets held for sale | — | 601 | ||||||
Other deferred charges and assets | 216 | 216 | ||||||
Total deferred charges and other assets | 855 | 1,870 | ||||||
Total Assets | $ | 13,646 | $ | 14,300 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
(in millions) | (in millions) | ||||||||||||||||||||||
Net Income | $ | 102 | $ | 111 | $ | 215 | $ | 342 | |||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||||||
Qualifying hedges: | |||||||||||||||||||||||
Changes in fair value, net of tax of $15, $(18), $(2), and $(28), respectively | 44 | (53) | (6) | (84) | |||||||||||||||||||
Reclassification adjustment for amounts included in net income, net of tax of $(13), $15, $(8), and $21, respectively | (36) | 45 | (24) | 64 | |||||||||||||||||||
Pension and other postretirement benefit plans: | |||||||||||||||||||||||
Reclassification adjustment for amounts included in net income, net of tax of $0, $0, $0, and $0, respectively | 0 | 0 | 2 | 0 | |||||||||||||||||||
Total other comprehensive income (loss) | 8 | (8) | (28) | (20) | |||||||||||||||||||
Comprehensive Income | 110 | 103 | 187 | 322 | |||||||||||||||||||
Comprehensive income attributable to noncontrolling interests | 28 | 25 | 3 | 26 | |||||||||||||||||||
Comprehensive Income Attributable to Southern Power | $ | 82 | $ | 78 | $ | 184 | $ | 296 |
Liabilities and Stockholders' Equity | At March 31, 2020 | At December 31, 2019 | ||||||
(in millions) | ||||||||
Current Liabilities: | ||||||||
Securities due within one year | $ | 824 | $ | 824 | ||||
Notes payable | — | 549 | ||||||
Accounts payable — | ||||||||
Affiliated | 43 | 56 | ||||||
Other | 59 | 85 | ||||||
Accrued taxes — | ||||||||
Accrued income taxes | 9 | — | ||||||
Other accrued taxes | 20 | 26 | ||||||
Accrued interest | 36 | 32 | ||||||
Other current liabilities | 119 | 132 | ||||||
Total current liabilities | 1,110 | 1,704 | ||||||
Long-term Debt | 3,545 | 3,574 | ||||||
Deferred Credits and Other Liabilities: | ||||||||
Accumulated deferred income taxes | 114 | 115 | ||||||
Accumulated deferred ITCs | 1,717 | 1,731 | ||||||
Operating lease obligations | 375 | 376 | ||||||
Other deferred credits and liabilities | 234 | 178 | ||||||
Total deferred credits and other liabilities | 2,440 | 2,400 | ||||||
Total Liabilities | 7,095 | 7,678 | ||||||
Total Stockholders' Equity (See accompanying statements) | 6,551 | 6,622 | ||||||
Total Liabilities and Stockholders' Equity | $ | 13,646 | $ | 14,300 |
For the Nine Months Ended September 30, | |||||||||||
2020 | 2019 | ||||||||||
(in millions) | |||||||||||
Operating Activities: | |||||||||||
Net income | $ | 215 | $ | 342 | |||||||
Adjustments to reconcile net income to net cash provided from operating activities — | |||||||||||
Depreciation and amortization, total | 386 | 377 | |||||||||
Deferred income taxes | (59) | (122) | |||||||||
Utilization of federal investment tax credits | 318 | 705 | |||||||||
Amortization of investment tax credits | (44) | (136) | |||||||||
(Gain) loss on dispositions, net | (39) | (24) | |||||||||
Other, net | (16) | (19) | |||||||||
Changes in certain current assets and liabilities — | |||||||||||
-Receivables | (28) | 15 | |||||||||
-Prepaid income taxes | 74 | 33 | |||||||||
-Other current assets | (17) | (3) | |||||||||
-Accounts payable | (12) | (5) | |||||||||
-Accrued taxes | 21 | 66 | |||||||||
-Other current liabilities | (25) | (8) | |||||||||
Net cash provided from operating activities | 774 | 1,221 | |||||||||
Investing Activities: | |||||||||||
Business acquisitions, net of cash acquired | (81) | (50) | |||||||||
Property additions | (135) | (284) | |||||||||
Proceeds from dispositions and asset sales | 663 | 572 | |||||||||
Investment in unconsolidated subsidiaries | 0 | (116) | |||||||||
Payments pursuant to LTSAs | (61) | (85) | |||||||||
Other investing activities | 38 | (1) | |||||||||
Net cash provided from investing activities | 424 | 36 | |||||||||
Financing Activities: | |||||||||||
Decrease in notes payable, net | (449) | 0 | |||||||||
Proceeds — Capital contributions from parent company | 0 | 59 | |||||||||
Redemptions — | |||||||||||
Short-term borrowings | (100) | (100) | |||||||||
Senior notes | (300) | 0 | |||||||||
Return of capital to parent company | 0 | (755) | |||||||||
Distributions to noncontrolling interests | (164) | (125) | |||||||||
Capital contributions from noncontrolling interests | 173 | 11 | |||||||||
Purchase of membership interests from noncontrolling interests | (60) | 0 | |||||||||
Payment of common stock dividends | (151) | (154) | |||||||||
Other financing activities | (9) | (6) | |||||||||
Net cash used for financing activities | (1,060) | (1,070) | |||||||||
Net Change in Cash, Cash Equivalents, and Restricted Cash | 138 | 187 | |||||||||
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period | 279 | 181 | |||||||||
Cash, Cash Equivalents, and Restricted Cash at End of Period | $ | 417 | $ | 368 | |||||||
Supplemental Cash Flow Information: | |||||||||||
Cash paid (received) during the period for — | |||||||||||
Interest (net of $10 and $11 capitalized for 2020 and 2019, respectively) | $ | 123 | $ | 133 | |||||||
Income taxes, net | (278) | (612) | |||||||||
Noncash transactions — | |||||||||||
Accrued property additions at end of period | 44 | 41 | |||||||||
Right-of-use assets obtained under operating leases | 30 | 0 |
Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Common Stockholders' Equity | Noncontrolling Interests | Total | ||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Balance at December 31, 2018 | $ | 1,600 | $ | 1,352 | $ | 16 | $ | 2,968 | $ | 4,316 | $ | 7,284 | |||||||||||
Net income attributable to Southern Power | — | 56 | — | 56 | — | 56 | |||||||||||||||||
Capital contributions from parent company | 1 | — | — | 1 | — | 1 | |||||||||||||||||
Other comprehensive income (loss) | — | — | (4 | ) | (4 | ) | — | (4 | ) | ||||||||||||||
Cash dividends on common stock | — | (51 | ) | — | (51 | ) | — | (51 | ) | ||||||||||||||
Capital contributions from noncontrolling interests | — | — | — | — | 3 | 3 | |||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | (41 | ) | (41 | ) | |||||||||||||||
Net income (loss) attributable to noncontrolling interests | — | — | — | — | (29 | ) | (29 | ) | |||||||||||||||
Other | (1 | ) | (1 | ) | — | (2 | ) | 1 | (1 | ) | |||||||||||||
Balance at March 31, 2019 | $ | 1,600 | $ | 1,356 | $ | 12 | $ | 2,968 | $ | 4,250 | $ | 7,218 |
Balance at December 31, 2019 | $ | 909 | $ | 1,485 | $ | (26 | ) | $ | 2,368 | $ | 4,254 | $ | 6,622 | ||||||||||
Net income attributable to Southern Power | — | 75 | — | 75 | — | 75 | |||||||||||||||||
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 | ) | |||||||||||||||
Net income (loss) attributable to noncontrolling interests | — | — | — | — | (31 | ) | (31 | ) | |||||||||||||||
Balance at March 31, 2020 | $ | 909 | $ | 1,510 | $ | (59 | ) | $ | 2,360 | $ | 4,191 | $ | 6,551 |
Assets | At September 30, 2020 | At December 31, 2019 | ||||||||||||
(in millions) | ||||||||||||||
Current Assets: | ||||||||||||||
Cash and cash equivalents | $ | 416 | $ | 279 | ||||||||||
Receivables — | ||||||||||||||
Customer accounts receivable | 135 | 107 | ||||||||||||
Affiliated | 41 | 30 | ||||||||||||
Other | 37 | 73 | ||||||||||||
Materials and supplies | 204 | 191 | ||||||||||||
Prepaid income taxes | 33 | 36 | ||||||||||||
Other current assets | 37 | 43 | ||||||||||||
Total current assets | 903 | 759 | ||||||||||||
Property, Plant, and Equipment: | ||||||||||||||
In service | 13,600 | 13,270 | ||||||||||||
Less: Accumulated provision for depreciation | 2,776 | 2,464 | ||||||||||||
Plant in service, net of depreciation | 10,824 | 10,806 | ||||||||||||
Construction work in progress | 335 | 515 | ||||||||||||
Total property, plant, and equipment | 11,159 | 11,321 | ||||||||||||
Other Property and Investments: | ||||||||||||||
Intangible assets, net of amortization of $84 and $69 at September 30, 2020 and December 31, 2019, respectively | 307 | 322 | ||||||||||||
Equity investments in unconsolidated subsidiaries | 19 | 28 | ||||||||||||
Total other property and investments | 326 | 350 | ||||||||||||
Deferred Charges and Other Assets: | ||||||||||||||
Operating lease right-of-use assets, net of amortization | 395 | 369 | ||||||||||||
Prepaid LTSAs | 160 | 128 | ||||||||||||
Accumulated deferred income taxes | 231 | 551 | ||||||||||||
Income taxes receivable, non-current | 13 | 5 | ||||||||||||
Assets held for sale | 0 | 601 | ||||||||||||
Other deferred charges and assets | 237 | 216 | ||||||||||||
Total deferred charges and other assets | 1,036 | 1,870 | ||||||||||||
Total Assets | $ | 13,424 | $ | 14,300 |
Liabilities and Stockholders' Equity | At September 30, 2020 | At December 31, 2019 | ||||||||||||
(in millions) | ||||||||||||||
Current Liabilities: | ||||||||||||||
Securities due within one year | $ | 525 | $ | 824 | ||||||||||
Notes payable | 0 | 549 | ||||||||||||
Accounts payable — | ||||||||||||||
Affiliated | 49 | 56 | ||||||||||||
Other | 69 | 85 | ||||||||||||
Accrued taxes — | ||||||||||||||
Accrued income taxes | 9 | 0 | ||||||||||||
Other accrued taxes | 31 | 26 | ||||||||||||
Accrued interest | 26 | 32 | ||||||||||||
Other current liabilities | 104 | 132 | ||||||||||||
Total current liabilities | 813 | 1,704 | ||||||||||||
Long-term Debt | 3,630 | 3,574 | ||||||||||||
Deferred Credits and Other Liabilities: | ||||||||||||||
Accumulated deferred income taxes | 117 | 115 | ||||||||||||
Accumulated deferred ITCs | 1,687 | 1,731 | ||||||||||||
Operating lease obligations | 404 | 376 | ||||||||||||
Other deferred credits and liabilities | 162 | 178 | ||||||||||||
Total deferred credits and other liabilities | 2,370 | 2,400 | ||||||||||||
Total Liabilities | 6,813 | 7,678 | ||||||||||||
Total Stockholders' Equity (See accompanying statements) | 6,611 | 6,622 | ||||||||||||
Total Liabilities and Stockholders' Equity | $ | 13,424 | $ | 14,300 |
Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Common Stockholders' Equity | Noncontrolling Interests | Total | ||||||||||||||||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2018 | $ | 1,600 | $ | 1,352 | $ | 16 | $ | 2,968 | $ | 4,316 | $ | 7,284 | |||||||||||||||||||||||||||||||||||
Net income (loss) | — | 56 | — | 56 | (29) | 27 | |||||||||||||||||||||||||||||||||||||||||
Capital contributions from parent company | 1 | — | — | 1 | — | 1 | |||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | (4) | (4) | — | (4) | |||||||||||||||||||||||||||||||||||||||||
Cash dividends on common stock | — | (51) | — | (51) | — | (51) | |||||||||||||||||||||||||||||||||||||||||
Capital contributions from noncontrolling interests | — | — | — | — | 3 | 3 | |||||||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | (41) | (41) | |||||||||||||||||||||||||||||||||||||||||
Other | (1) | (1) | — | (2) | 1 | (1) | |||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2019 | 1,600 | 1,356 | 12 | 2,968 | 4,250 | 7,218 | |||||||||||||||||||||||||||||||||||||||||
Net income | — | 174 | — | 174 | 29 | 203 | |||||||||||||||||||||||||||||||||||||||||
Return of capital to parent company | (505) | — | — | (505) | — | (505) | |||||||||||||||||||||||||||||||||||||||||
Capital contributions from parent company | 7 | — | — | 7 | — | 7 | |||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | (8) | (8) | — | (8) | |||||||||||||||||||||||||||||||||||||||||
Cash dividends on common stock | — | (52) | — | (52) | — | (52) | |||||||||||||||||||||||||||||||||||||||||
Capital contributions from noncontrolling interests | — | — | — | — | 2 | 2 | |||||||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | (47) | (47) | |||||||||||||||||||||||||||||||||||||||||
Other | — | 1 | — | 1 | (1) | 0 | |||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2019 | 1,102 | 1,479 | 4 | 2,585 | 4,233 | 6,818 | |||||||||||||||||||||||||||||||||||||||||
Net income | — | 86 | — | 86 | 25 | 111 | |||||||||||||||||||||||||||||||||||||||||
Return of capital to parent company | (250) | — | — | (250) | — | (250) | |||||||||||||||||||||||||||||||||||||||||
Capital contributions from parent company | 53 | — | — | 53 | — | 53 | |||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | (8) | (8) | — | (8) | |||||||||||||||||||||||||||||||||||||||||
Cash dividends on common stock | — | (51) | — | (51) | — | (51) | |||||||||||||||||||||||||||||||||||||||||
Capital contributions from noncontrolling interests | — | — | — | — | 63 | 63 | |||||||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | (43) | (43) | |||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2019 | $ | 905 | $ | 1,514 | $ | (4) | $ | 2,415 | $ | 4,278 | $ | 6,693 |
Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Common Stockholders' Equity | Noncontrolling Interests | Total | ||||||||||||||||||||||||||||||||||||||||||
(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 | |||||||||||||||||||||||||||||||||||||||||
Net income | — | 63 | — | 63 | 5 | 68 | |||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | (3) | (3) | — | (3) | |||||||||||||||||||||||||||||||||||||||||
Cash dividends on common stock | — | (50) | — | (50) | — | (50) | |||||||||||||||||||||||||||||||||||||||||
Capital contributions from noncontrolling interests | — | — | — | — | 165 | 165 | |||||||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | (70) | (70) | |||||||||||||||||||||||||||||||||||||||||
Other | (2) | 0 | 0 | (2) | 0 | (2) | |||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2020 | 907 | 1,523 | (62) | 2,368 | 4,291 | 6,659 | |||||||||||||||||||||||||||||||||||||||||
Net income | — | 74 | — | 74 | 28 | 102 | |||||||||||||||||||||||||||||||||||||||||
Return of capital to parent company | (4) | — | — | (4) | — | (4) | |||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | 8 | 8 | — | 8 | |||||||||||||||||||||||||||||||||||||||||
Cash dividends on common stock | — | (51) | — | (51) | — | (51) | |||||||||||||||||||||||||||||||||||||||||
Capital contributions from noncontrolling interests | — | — | — | — | 2 | 2 | |||||||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | (51) | (51) | |||||||||||||||||||||||||||||||||||||||||
Purchase of membership interests from noncontrolling interests | 5 | — | — | 5 | (60) | (55) | |||||||||||||||||||||||||||||||||||||||||
Other | 0 | 0 | — | 0 | 1 | 1 | |||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2020 | $ | 908 | $ | 1,546 | $ | (54) | $ | 2,400 | $ | 4,211 | $ | 6,611 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
(in millions) | (in millions) | ||||||||||||||||||||||
Operating Revenues: | |||||||||||||||||||||||
Natural gas revenues (includes revenue taxes of $10, $10, $79, and $88, respectively) | $ | 478 | $ | 498 | $ | 2,356 | $ | 2,661 | |||||||||||||||
Alternative revenue programs | (1) | 0 | 6 | 0 | |||||||||||||||||||
Total operating revenues | 477 | 498 | 2,362 | 2,661 | |||||||||||||||||||
Operating Expenses: | |||||||||||||||||||||||
Cost of natural gas | 71 | 79 | 654 | 956 | |||||||||||||||||||
Other operations and maintenance | 217 | 208 | 696 | 642 | |||||||||||||||||||
Depreciation and amortization | 125 | 121 | 368 | 359 | |||||||||||||||||||
Taxes other than income taxes | 35 | 33 | 154 | 161 | |||||||||||||||||||
Impairment charges | 0 | 92 | 0 | 92 | |||||||||||||||||||
Total operating expenses | 448 | 533 | 1,872 | 2,210 | |||||||||||||||||||
Operating Income (Loss) | 29 | (35) | 490 | 451 | |||||||||||||||||||
Other Income and (Expense): | |||||||||||||||||||||||
Earnings from equity method investments | 33 | 35 | 106 | 115 | |||||||||||||||||||
Interest expense, net of amounts capitalized | (57) | (56) | (171) | (174) | |||||||||||||||||||
Other income (expense), net | 12 | 5 | 33 | 16 | |||||||||||||||||||
Total other income and (expense) | (12) | (16) | (32) | (43) | |||||||||||||||||||
Earnings (Loss) Before Income Taxes | 17 | (51) | 458 | 408 | |||||||||||||||||||
Income taxes (benefit) | 3 | (22) | 98 | 61 | |||||||||||||||||||
Net Income (Loss) | $ | 14 | $ | (29) | $ | 360 | $ | 347 | |||||||||||||||
For the Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
(in millions) | |||||||
Operating Revenues: | |||||||
Natural gas revenues (includes revenue taxes of $47 and $55, respectively) | $ | 1,240 | $ | 1,476 | |||
Alternative revenue programs | 9 | (2 | ) | ||||
Total operating revenues | 1,249 | 1,474 | |||||
Operating Expenses: | |||||||
Cost of natural gas | 439 | 686 | |||||
Other operations and maintenance | 258 | 235 | |||||
Depreciation and amortization | 120 | 118 | |||||
Taxes other than income taxes | 72 | 82 | |||||
Total operating expenses | 889 | 1,121 | |||||
Operating Income | 360 | 353 | |||||
Other Income and (Expense): | |||||||
Earnings from equity method investments | 43 | 48 | |||||
Interest expense, net of amounts capitalized | (58 | ) | (59 | ) | |||
Other income (expense), net | 9 | 5 | |||||
Total other income and (expense) | (6 | ) | (6 | ) | |||
Earnings Before Income Taxes | 354 | 347 | |||||
Income taxes | 79 | 77 | |||||
Net Income | $ | 275 | $ | 270 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||||||||||
For the Three Months Ended March 31, | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||
2020 | 2019 | (in millions) | (in millions) | |||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||
Net Income | $ | 275 | $ | 270 | ||||||||||||||||||||||||||
Net Income (Loss) | Net Income (Loss) | $ | 14 | $ | (29) | $ | 360 | $ | 347 | |||||||||||||||||||||
Other comprehensive income (loss): | Other comprehensive income (loss): | |||||||||||||||||||||||||||||
Qualifying hedges: | Qualifying hedges: | |||||||||||||||||||||||||||||
Changes in fair value, net of tax of $(7) and $-, respectively | (20 | ) | — | |||||||||||||||||||||||||||
Reclassification adjustment for amounts included in net income, net of tax of $2 and $-, respectively | 5 | — | ||||||||||||||||||||||||||||
Changes in fair value, net of tax of $1, $(3), $(6), and $(4), respectively | Changes in fair value, net of tax of $1, $(3), $(6), and $(4), respectively | 4 | (3) | (17) | (6) | |||||||||||||||||||||||||
Reclassification adjustment for amounts included in net income, net of tax of $0, $0, $2, and $0, respectively | Reclassification adjustment for amounts included in net income, net of tax of $0, $0, $2, and $0, respectively | 1 | 0 | 7 | 0 | |||||||||||||||||||||||||
Pension and other postretirement benefit plans: | Pension and other postretirement benefit plans: | |||||||||||||||||||||||||||||
Reclassification adjustment for amounts included in net income, net of tax of $1 and $-, respectively | — | (1 | ) | |||||||||||||||||||||||||||
Reclassification adjustment for amounts included in net income, net of tax of $0, $0, $1, and $(1), respectively | Reclassification adjustment for amounts included in net income, net of tax of $0, $0, $1, and $(1), respectively | 0 | 0 | 0 | (1) | |||||||||||||||||||||||||
Total other comprehensive income (loss) | (15 | ) | (1 | ) | Total other comprehensive income (loss) | 5 | (3) | (10) | (7) | |||||||||||||||||||||
Comprehensive Income | $ | 260 | $ | 269 | Comprehensive Income | $ | 19 | $ | (32) | $ | 350 | $ | 340 |
For the Three Months Ended March 31, | For the Nine Months Ended September 30, | |||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||
(in millions) | (in millions) | |||||||||||||||||
Operating Activities: | Operating Activities: | |||||||||||||||||
Net income | $ | 275 | $ | 270 | Net income | $ | 360 | $ | 347 | |||||||||
Adjustments to reconcile net income to net cash provided from operating activities — | Adjustments to reconcile net income to net cash provided from operating activities — | |||||||||||||||||
Depreciation and amortization, total | 120 | 118 | Depreciation and amortization, total | 368 | 359 | |||||||||||||
Deferred income taxes | 22 | 42 | Deferred income taxes | (1) | 96 | |||||||||||||
Mark-to-market adjustments | 13 | 45 | Mark-to-market adjustments | 104 | 44 | |||||||||||||
Impairment charges | Impairment charges | 0 | 92 | |||||||||||||||
Other, net | (19 | ) | (20 | ) | Other, net | (20) | (58) | |||||||||||
Changes in certain current assets and liabilities — | Changes in certain current assets and liabilities — | |||||||||||||||||
-Receivables | 112 | 238 | -Receivables | 403 | 832 | |||||||||||||
-Natural gas for sale | 246 | 363 | -Natural gas for sale | 26 | 49 | |||||||||||||
-Other current assets | 33 | 59 | -Other current assets | (45) | 45 | |||||||||||||
-Accounts payable | (185 | ) | (353 | ) | -Accounts payable | (75) | (607) | |||||||||||
-Accrued taxes | 27 | 21 | -Accrued taxes | 7 | (68) | |||||||||||||
-Accrued compensation | (42 | ) | (50 | ) | -Accrued compensation | (17) | (34) | |||||||||||
-Other current liabilities | 41 | (50 | ) | -Other current liabilities | 12 | (48) | ||||||||||||
Net cash provided from operating activities | 643 | 683 | Net cash provided from operating activities | 1,122 | 1,049 | |||||||||||||
Investing Activities: | Investing Activities: | |||||||||||||||||
Property additions | (261 | ) | (256 | ) | Property additions | (1,045) | (1,008) | |||||||||||
Cost of removal, net of salvage | (15 | ) | (12 | ) | Cost of removal, net of salvage | (60) | (59) | |||||||||||
Change in construction payables, net | (18 | ) | 1 | Change in construction payables, net | 25 | 57 | ||||||||||||
Investment in unconsolidated subsidiaries | (77 | ) | (10 | ) | Investment in unconsolidated subsidiaries | (79) | (25) | |||||||||||
Proceeds from dispositions and asset sales | 178 | — | Proceeds from dispositions and asset sales | 178 | 32 | |||||||||||||
Other investing activities | — | (13 | ) | Other investing activities | 8 | 14 | ||||||||||||
Net cash used for investing activities | (193 | ) | (290 | ) | Net cash used for investing activities | (973) | (989) | |||||||||||
Financing Activities: | Financing Activities: | |||||||||||||||||
Decrease in notes payable, net | (39 | ) | (289 | ) | Decrease in notes payable, net | (500) | (383) | |||||||||||
Proceeds — | Proceeds — | |||||||||||||||||
First mortgage bonds | First mortgage bonds | 150 | 200 | |||||||||||||||
Capital contributions from parent company | Capital contributions from parent company | 215 | 820 | |||||||||||||||
Senior notes | Senior notes | 500 | 0 | |||||||||||||||
Redemptions — | Redemptions — | |||||||||||||||||
First mortgage bonds | First mortgage bonds | 0 | (50) | |||||||||||||||
Senior notes | Senior notes | 0 | (300) | |||||||||||||||
Payment of common stock dividends | (133 | ) | (118 | ) | Payment of common stock dividends | (399) | (353) | |||||||||||
Other financing activities | (13 | ) | 5 | Other financing activities | (3) | (2) | ||||||||||||
Net cash used for financing activities | (185 | ) | (402 | ) | Net cash used for financing activities | (37) | (68) | |||||||||||
Net Change in Cash, Cash Equivalents, and Restricted Cash | 265 | (9 | ) | Net Change in Cash, Cash Equivalents, and Restricted Cash | 112 | (8) | ||||||||||||
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period | 49 | 70 | Cash, Cash Equivalents, and Restricted Cash at Beginning of Period | 49 | 70 | |||||||||||||
Cash, Cash Equivalents, and Restricted Cash at End of Period | $ | 314 | $ | 61 | Cash, Cash Equivalents, and Restricted Cash at End of Period | $ | 161 | $ | 62 | |||||||||
Supplemental Cash Flow Information: | Supplemental Cash Flow Information: | |||||||||||||||||
Cash paid (received) during the period for — | ||||||||||||||||||
Interest (net of $2 capitalized for both 2020 and 2019) | $ | 49 | $ | 55 | ||||||||||||||
Cash paid during the period for — | Cash paid during the period for — | |||||||||||||||||
Interest (net of $5 capitalized for both 2020 and 2019) | Interest (net of $5 capitalized for both 2020 and 2019) | $ | 162 | $ | 180 | |||||||||||||
Income taxes, net | (12 | ) | (1 | ) | Income taxes, net | 45 | 48 | |||||||||||
Noncash transactions — Accrued property additions at end of period | 104 | 98 | Noncash transactions — Accrued property additions at end of period | 146 | 154 |
Assets | At March 31, 2020 | At December 31, 2019 | Assets | At September 30, 2020 | At December 31, 2019 | |||||||||||||||||
(in millions) | (in millions) | |||||||||||||||||||||
Current Assets: | Current Assets: | |||||||||||||||||||||
Cash and cash equivalents | $ | 311 | $ | 46 | Cash and cash equivalents | $ | 157 | $ | 46 | |||||||||||||
Receivables — | Receivables — | |||||||||||||||||||||
Energy marketing receivables | 291 | 428 | Energy marketing receivables | 328 | 428 | |||||||||||||||||
Customer accounts receivable | 407 | 323 | Customer accounts receivable | 214 | 323 | |||||||||||||||||
Unbilled revenues | 136 | 183 | Unbilled revenues | 60 | 183 | |||||||||||||||||
Affiliated | 3 | 5 | Affiliated | 3 | 5 | |||||||||||||||||
Other accounts and notes receivable | 102 | 114 | Other accounts and notes receivable | 42 | 114 | |||||||||||||||||
Accumulated provision for uncollectible accounts | (25 | ) | (18 | ) | Accumulated provision for uncollectible accounts | (34) | (18) | |||||||||||||||
Natural gas for sale | 233 | 479 | Natural gas for sale | 448 | 479 | |||||||||||||||||
Prepaid expenses | 53 | 65 | Prepaid expenses | 92 | 65 | |||||||||||||||||
Assets from risk management activities, net of collateral | 119 | 177 | Assets from risk management activities, net of collateral | 75 | 177 | |||||||||||||||||
Other regulatory assets | 69 | 92 | Other regulatory assets | 110 | 92 | |||||||||||||||||
Assets held for sale | — | 171 | Assets held for sale | 0 | 171 | |||||||||||||||||
Other current assets | 43 | 41 | Other current assets | 43 | 41 | |||||||||||||||||
Total current assets | 1,742 | 2,106 | Total current assets | 1,538 | 2,106 | |||||||||||||||||
Property, Plant, and Equipment: | Property, Plant, and Equipment: | |||||||||||||||||||||
In service | 16,456 | 16,344 | In service | 17,202 | 16,344 | |||||||||||||||||
Less: Accumulated depreciation | 4,651 | 4,650 | Less: Accumulated depreciation | 4,761 | 4,650 | |||||||||||||||||
Plant in service, net of depreciation | 11,805 | 11,694 | Plant in service, net of depreciation | 12,441 | 11,694 | |||||||||||||||||
Construction work in progress | 680 | 613 | Construction work in progress | 655 | 613 | |||||||||||||||||
Total property, plant, and equipment | 12,485 | 12,307 | Total property, plant, and equipment | 13,096 | 12,307 | |||||||||||||||||
Other Property and Investments: | Other Property and Investments: | |||||||||||||||||||||
Goodwill | 5,015 | 5,015 | Goodwill | 5,015 | 5,015 | |||||||||||||||||
Equity investments in unconsolidated subsidiaries | 1,333 | 1,251 | Equity investments in unconsolidated subsidiaries | 1,301 | 1,251 | |||||||||||||||||
Other intangible assets, net of amortization of $181 and $176 at March 31, 2020 and December 31, 2019, respectively | 65 | 70 | ||||||||||||||||||||
Other intangible assets, net of amortization of $191 and $176 at September 30, 2020 and December 31, 2019, respectively | Other intangible assets, net of amortization of $191 and $176 at September 30, 2020 and December 31, 2019, respectively | 55 | 70 | |||||||||||||||||||
Miscellaneous property and investments | 20 | 20 | Miscellaneous property and investments | 20 | 20 | |||||||||||||||||
Total other property and investments | 6,433 | 6,356 | Total other property and investments | 6,391 | 6,356 | |||||||||||||||||
Deferred Charges and Other Assets: | Deferred Charges and Other Assets: | |||||||||||||||||||||
Operating lease right-of-use assets, net of amortization | 91 | 93 | Operating lease right-of-use assets, net of amortization | 85 | 93 | |||||||||||||||||
Other regulatory assets, deferred | 605 | 618 | Other regulatory assets, deferred | 580 | 618 | |||||||||||||||||
Other deferred charges and assets | 261 | 207 | Other deferred charges and assets | 242 | 207 | |||||||||||||||||
Total deferred charges and other assets | 957 | 918 | Total deferred charges and other assets | 907 | 918 | |||||||||||||||||
Total Assets | $ | 21,617 | $ | 21,687 | Total Assets | $ | 21,932 | $ | 21,687 |
Liabilities and Stockholder's Equity | At March 31, 2020 | At December 31, 2019 | Liabilities and Stockholder's Equity | At September 30, 2020 | At December 31, 2019 | |||||||||||||||||
(in millions) | (in millions) | |||||||||||||||||||||
Current Liabilities: | Current Liabilities: | |||||||||||||||||||||
Securities due within one year | Securities due within one year | $ | 334 | $ | 0 | |||||||||||||||||
Notes payable | $ | 611 | $ | 650 | Notes payable | 150 | 650 | |||||||||||||||
Energy marketing trade payables | 298 | 442 | Energy marketing trade payables | 361 | 442 | |||||||||||||||||
Accounts payable — | Accounts payable — | |||||||||||||||||||||
Affiliated | 39 | 41 | Affiliated | 46 | 41 | |||||||||||||||||
Other | 258 | 315 | Other | 341 | 315 | |||||||||||||||||
Customer deposits | 89 | 96 | Customer deposits | 94 | 96 | |||||||||||||||||
Accrued taxes — | ||||||||||||||||||||||
Accrued income taxes | 37 | — | ||||||||||||||||||||
Other accrued taxes | 61 | 71 | ||||||||||||||||||||
Accrued taxes | Accrued taxes | 78 | 71 | |||||||||||||||||||
Accrued interest | 64 | 52 | Accrued interest | 66 | 52 | |||||||||||||||||
Accrued compensation | 58 | 100 | Accrued compensation | 83 | 100 | |||||||||||||||||
Liabilities from risk management activities, net of collateral | 41 | 21 | Liabilities from risk management activities, net of collateral | 31 | 21 | |||||||||||||||||
Other regulatory liabilities | 149 | 94 | Other regulatory liabilities | 112 | 94 | |||||||||||||||||
Other current liabilities | 121 | 128 | Other current liabilities | 128 | 128 | |||||||||||||||||
Total current liabilities | 1,826 | 2,010 | Total current liabilities | 1,824 | 2,010 | |||||||||||||||||
Long-term Debt | 5,836 | 5,845 | Long-term Debt | 6,127 | 5,845 | |||||||||||||||||
Deferred Credits and Other Liabilities: | Deferred Credits and Other Liabilities: | |||||||||||||||||||||
Accumulated deferred income taxes | 1,235 | 1,219 | Accumulated deferred income taxes | 1,213 | 1,219 | |||||||||||||||||
Deferred credits related to income taxes | 867 | 874 | Deferred credits related to income taxes | 854 | 874 | |||||||||||||||||
Employee benefit obligations | 252 | 265 | Employee benefit obligations | 247 | 265 | |||||||||||||||||
Operating lease obligations | 76 | 78 | Operating lease obligations | 70 | 78 | |||||||||||||||||
Other cost of removal obligations | 1,625 | 1,606 | Other cost of removal obligations | 1,642 | 1,606 | |||||||||||||||||
Accrued environmental remediation | 230 | 233 | Accrued environmental remediation | 220 | 233 | |||||||||||||||||
Other deferred credits and liabilities | 39 | 51 | Other deferred credits and liabilities | 50 | 51 | |||||||||||||||||
Total deferred credits and other liabilities | 4,324 | 4,326 | Total deferred credits and other liabilities | 4,296 | 4,326 | |||||||||||||||||
Total Liabilities | 11,986 | 12,181 | Total Liabilities | 12,247 | 12,181 | |||||||||||||||||
Common Stockholder's Equity (See accompanying statements) | 9,631 | 9,506 | Common Stockholder's Equity (See accompanying statements) | 9,685 | 9,506 | |||||||||||||||||
Total Liabilities and Stockholder's Equity | $ | 21,617 | $ | 21,687 | Total Liabilities and Stockholder's Equity | $ | 21,932 | $ | 21,687 |
Paid-In Capital | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Income (Loss) | Total | Paid-In Capital | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Income (Loss) | Total | |||||||||||||||||||||||||||||||||||||||||||
(in millions) | (in millions) | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2018 | $ | 8,856 | $ | (312 | ) | $ | 26 | $ | 8,570 | Balance at December 31, 2018 | $ | 8,856 | $ | (312) | $ | 26 | $ | 8,570 | ||||||||||||||||||||||||||||||||
Net income | — | 270 | — | 270 | Net income | —�� | 270 | — | 270 | |||||||||||||||||||||||||||||||||||||||||
Capital contributions from parent company | 17 | — | — | 17 | Capital contributions from parent company | 17 | — | — | 17 | |||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | (1 | ) | (1 | ) | Other comprehensive income (loss) | — | — | (1) | (1) | |||||||||||||||||||||||||||||||||||||||
Cash dividends on common stock | — | (118 | ) | — | (118 | ) | Cash dividends on common stock | — | (118) | — | (118) | |||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2019 | $ | 8,873 | $ | (160 | ) | $ | 25 | $ | 8,738 | Balance at March 31, 2019 | 8,873 | (160) | 25 | 8,738 | ||||||||||||||||||||||||||||||||||||
Net income | Net income | — | 106 | — | 106 | |||||||||||||||||||||||||||||||||||||||||||||
Capital contributions from parent company | Capital contributions from parent company | 35 | — | — | 35 | |||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | Other comprehensive income (loss) | — | — | (3) | (3) | |||||||||||||||||||||||||||||||||||||||||||||
Cash dividends on common stock | Cash dividends on common stock | — | (117) | — | (117) | |||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2019 | Balance at June 30, 2019 | 8,908 | (171) | 22 | 8,759 | |||||||||||||||||||||||||||||||||||||||||||||
Net loss | Net loss | — | (29) | — | (29) | |||||||||||||||||||||||||||||||||||||||||||||
Capital contributions from parent company | Capital contributions from parent company | 784 | — | — | 784 | |||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | Other comprehensive income (loss) | — | — | (3) | (3) | |||||||||||||||||||||||||||||||||||||||||||||
Cash dividends on common stock | Cash dividends on common stock | — | (118) | — | (118) | |||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2019 | Balance at September 30, 2019 | $ | 9,692 | $ | (318) | $ | 19 | $ | 9,393 | |||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2019 | $ | 9,697 | $ | (198 | ) | $ | 7 | $ | 9,506 | Balance at December 31, 2019 | $ | 9,697 | $ | (198) | $ | 7 | $ | 9,506 | ||||||||||||||||||||||||||||||||
Net income | — | 275 | — | 275 | Net income | — | 275 | — | 275 | |||||||||||||||||||||||||||||||||||||||||
Return of capital to parent company | (2 | ) | — | — | (2 | ) | Return of capital to parent company | (2) | — | — | (2) | |||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | (15 | ) | (15 | ) | Other comprehensive income (loss) | — | — | (15) | (15) | |||||||||||||||||||||||||||||||||||||||
Cash dividends on common stock | — | (133 | ) | — | (133 | ) | Cash dividends on common stock | — | (133) | — | (133) | |||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2020 | $ | 9,695 | $ | (56 | ) | $ | (8 | ) | $ | 9,631 | Balance at March 31, 2020 | 9,695 | (56) | (8) | 9,631 | |||||||||||||||||||||||||||||||||||
Net income | Net income | — | 71 | — | 71 | |||||||||||||||||||||||||||||||||||||||||||||
Capital contributions from parent company | Capital contributions from parent company | 200 | — | — | 200 | |||||||||||||||||||||||||||||||||||||||||||||
Cash dividends on common stock | Cash dividends on common stock | — | (133) | — | (133) | |||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2020 | Balance at June 30, 2020 | 9,895 | (118) | (8) | 9,769 | |||||||||||||||||||||||||||||||||||||||||||||
Net income | Net income | — | 14 | — | 14 | |||||||||||||||||||||||||||||||||||||||||||||
Capital contributions from parent company | Capital contributions from parent company | 30 | — | — | 30 | |||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | Other comprehensive income | — | — | 5 | 5 | |||||||||||||||||||||||||||||||||||||||||||||
Cash dividends on common stock | Cash dividends on common stock | — | (133) | — | (133) | |||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2020 | Balance at September 30, 2020 | $ | 9,925 | $ | (237) | $ | (3) | $ | 9,685 |
Note | Page | |||||||
A | ||||||||
B | ||||||||
C | ||||||||
D | ||||||||
E | ||||||||
F | ||||||||
G | ||||||||
H | ||||||||
I | ||||||||
J | ||||||||
K | ||||||||
L |
Registrant | Applicable Notes | ||||
Southern Company | A, B, C, D, E, F, G, H, I, J, K, L | ||||
Alabama Power | A, B, C, D, F, G, H, I, J, K | ||||
Georgia Power | A, B, C, D, F, G, H, I, J | ||||
Mississippi Power | A, B, C, D, F, G, H, I, J | ||||
Southern Power | A, C, D, E, F, G, H, I, J, K | ||||
Southern Company Gas | A, B, C, D, E, F, G, H, I, J, K, L |
Goodwill | |||
(in millions) | |||
Southern Company | $ | 5,280 | |
Southern Company Gas: | |||
Gas distribution operations | $ | 4,034 | |
Gas marketing services | 981 | ||
Southern Company Gas total | $ | 5,015 |
Goodwill | ||||||||
(in millions) | ||||||||
Southern Company | $ | 5,280 | ||||||
Southern Company Gas: | ||||||||
Gas distribution operations | $ | 4,034 | ||||||
Gas marketing services | 981 | |||||||
Southern Company Gas total | $ | 5,015 |
At September 30, 2020 | At December 31, 2019 | ||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Other Intangible Assets, Net | Gross Carrying Amount | Accumulated Amortization | Other Intangible Assets, Net | ||||||||||||||||||
(in millions) | (in millions) | ||||||||||||||||||||||
Southern Company | |||||||||||||||||||||||
Other intangible assets subject to amortization: | |||||||||||||||||||||||
Customer relationships | $ | 212 | $ | (130) | $ | 82 | $ | 212 | $ | (116) | $ | 96 | |||||||||||
Trade names | 64 | (30) | 34 | 64 | (25) | 39 | |||||||||||||||||
Storage and transportation contracts | 64 | (64) | 0 | 64 | (62) | 2 | |||||||||||||||||
PPA fair value adjustments | 390 | (84) | 306 | 390 | (69) | 321 | |||||||||||||||||
Other | 10 | (8) | 2 | 11 | (8) | 3 | |||||||||||||||||
Total other intangible assets subject to amortization | $ | 740 | $ | (316) | $ | 424 | $ | 741 | $ | (280) | $ | 461 | |||||||||||
Other intangible assets not subject to amortization: | |||||||||||||||||||||||
Federal Communications Commission licenses | 75 | — | 75 | 75 | — | 75 | |||||||||||||||||
Total other intangible assets | $ | 815 | $ | (316) | $ | 499 | $ | 816 | $ | (280) | $ | 536 | |||||||||||
Southern Power | |||||||||||||||||||||||
Other intangible assets subject to amortization: | |||||||||||||||||||||||
PPA fair value adjustments | $ | 390 | $ | (84) | $ | 306 | $ | 390 | $ | (69) | $ | 321 | |||||||||||
Southern Company Gas | |||||||||||||||||||||||
Other intangible assets subject to amortization: | |||||||||||||||||||||||
Gas marketing services | |||||||||||||||||||||||
Customer relationships | $ | 156 | $ | (115) | $ | 41 | $ | 156 | $ | (104) | $ | 52 | |||||||||||
Trade names | 26 | (12) | 14 | 26 | (10) | 16 | |||||||||||||||||
Wholesale gas services | |||||||||||||||||||||||
Storage and transportation contracts | 64 | (64) | 0 | 64 | (62) | 2 | |||||||||||||||||
Total other intangible assets subject to amortization | $ | 246 | $ | (191) | $ | 55 | $ | 246 | $ | (176) | $ | 70 |
At March 31, 2020 | At December 31, 2019 | ||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Other Intangible Assets, Net | Gross Carrying Amount | Accumulated Amortization | Other Intangible Assets, Net | ||||||||||||||
(in millions) | (in millions) | ||||||||||||||||||
Southern Company | |||||||||||||||||||
Other intangible assets subject to amortization: | |||||||||||||||||||
Customer relationships | $ | 212 | $ | (121 | ) | $ | 91 | $ | 212 | $ | (116 | ) | $ | 96 | |||||
Trade names | 64 | (26 | ) | 38 | 64 | (25 | ) | 39 | |||||||||||
Storage and transportation contracts | 64 | (63 | ) | 1 | 64 | (62 | ) | 2 | |||||||||||
PPA fair value adjustments | 390 | (74 | ) | 316 | 390 | (69 | ) | 321 | |||||||||||
Other | 10 | (8 | ) | 2 | 11 | (8 | ) | 3 | |||||||||||
Total other intangible assets subject to amortization | $ | 740 | $ | (292 | ) | $ | 448 | $ | 741 | $ | (280 | ) | $ | 461 | |||||
Other intangible assets not subject to amortization: | |||||||||||||||||||
Federal Communications Commission licenses | 75 | — | 75 | 75 | — | 75 | |||||||||||||
Total other intangible assets | $ | 815 | $ | (292 | ) | $ | 523 | $ | 816 | $ | (280 | ) | $ | 536 | |||||
Southern Power | |||||||||||||||||||
Other intangible assets subject to amortization: | |||||||||||||||||||
PPA fair value adjustments | $ | 390 | $ | (74 | ) | $ | 316 | $ | 390 | $ | (69 | ) | $ | 321 | |||||
Southern Company Gas | |||||||||||||||||||
Other intangible assets subject to amortization: | |||||||||||||||||||
Gas marketing services | |||||||||||||||||||
Customer relationships | $ | 156 | $ | (108 | ) | $ | 48 | $ | 156 | $ | (104 | ) | $ | 52 | |||||
Trade names | 26 | (10 | ) | 16 | 26 | (10 | ) | 16 | |||||||||||
Wholesale gas services | |||||||||||||||||||
Storage and transportation contracts | 64 | (63 | ) | 1 | 64 | (62 | ) | 2 | |||||||||||
Total other intangible assets subject to amortization | $ | 246 | $ | (181 | ) | $ | 65 | $ | 246 | $ | (176 | ) | $ | 70 |
Three Months Ended | Nine Months Ended | |||||||
September 30, 2020 | ||||||||
(in millions) | ||||||||
Southern Company(a) | $ | 12 | $ | 37 | ||||
Southern Power(b) | $ | 5 | $ | 15 | ||||
Southern Company Gas | ||||||||
Gas marketing services | $ | 4 | $ | 13 | ||||
Wholesale gas services(b) | 1 | 2 | ||||||
Southern Company Gas total | $ | 5 | $ | 15 |
Three Months Ended | |||
March 31, 2020 | |||
(in millions) | |||
Southern Company(a) | $ | 12 | |
Southern Power(b) | $ | 5 | |
Southern Company Gas | |||
Gas marketing services | $ | 4 | |
Wholesale gas services(b) | 1 | ||
Southern Company Gas total | $ | 5 |
Southern Company | Southern Power | Southern Company Gas | ||||||||||||||||||||||||
At September 30, 2020 | At December 31, 2019 | At September 30, 2020 | At September 30, 2020 | At December 31, 2019 | ||||||||||||||||||||||
(in millions) | (in millions) | (in millions) | ||||||||||||||||||||||||
Cash and cash equivalents | $ | 3,379 | $ | 1,975 | $ | 416 | $ | 157 | $ | 46 | ||||||||||||||||
Restricted cash(a): | ||||||||||||||||||||||||||
Other accounts and notes receivable | 0 | 3 | 0 | 0 | 3 | |||||||||||||||||||||
Other current assets | 4 | 0 | 0 | 4 | 0 | |||||||||||||||||||||
Other deferred charges and assets | 1 | 0 | 1 | 0 | 0 | |||||||||||||||||||||
Total cash, cash equivalents, and restricted cash | $ | 3,383 | (b) | $ | 1,978 | $ | 417 | $ | 161 | $ | 49 |
Southern Company | Southern Company Gas | ||||||||||||||
At March 31, 2020 | At December 31, 2019 | At March 31, 2020 | At December 31, 2019 | ||||||||||||
(in millions) | (in millions) | ||||||||||||||
Cash and cash equivalents | $ | 2,164 | $ | 1,975 | $ | 311 | $ | 46 | |||||||
Restricted cash(a): | |||||||||||||||
Other accounts and notes receivable | — | 3 | — | 3 | |||||||||||
Other current assets | 3 | — | 3 | — | |||||||||||
Total cash, cash equivalents, and restricted cash | $ | 2,168 | (b) | $ | 1,978 | $ | 314 | $ | 49 |
Southern Company | Alabama Power | Georgia Power | |||||||||
(in millions) | |||||||||||
Balance at December 31, 2019 | $ | 9,786 | $ | 3,540 | $ | 5,784 | |||||
Liabilities incurred | 15 | 0 | 10 | ||||||||
Liabilities settled | (315) | (157) | (130) | ||||||||
Accretion | 308 | 113 | 177 | ||||||||
Cash flow revisions | 866 | 462 | 411 | ||||||||
Balance at September 30, 2020 | $ | 10,660 | $ | 3,958 | $ | 6,252 |
Regulatory Clause | Balance Sheet Line Item | March 31, 2020 | December 31, 2019 | ||||
(in millions) | |||||||
Alabama Power | |||||||
Rate CNP Compliance | Other regulatory liabilities, current | $ | 35 | $ | 55 | ||
Other regulatory liabilities, deferred | 17 | 7 | |||||
Rate CNP PPA | Deferred under recovered regulatory clause revenues | 37 | 40 | ||||
Retail Energy Cost Recovery | Other regulatory liabilities, current | 74 | 32 | ||||
Other regulatory liabilities, deferred | 22 | 17 | |||||
Natural Disaster Reserve | Other regulatory liabilities, current | 27 | 37 | ||||
Other regulatory liabilities, deferred | 104 | 113 | |||||
Georgia Power | |||||||
Fuel Cost Recovery | Other current liabilities | $ | 6 | $ | — | ||
Other deferred credits and liabilities | 163 | 73 | |||||
Mississippi Power | |||||||
Fuel Cost Recovery | Over recovered regulatory clause liabilities | $ | 25 | $ | 23 | ||
Ad Valorem Tax | Other regulatory assets | 11 | 47 | ||||
Other regulatory assets, deferred | 38 | — | |||||
Property Damage Reserve | Other regulatory liabilities, deferred | 53 | 54 | ||||
Southern Company Gas | |||||||
Natural Gas Cost Recovery | Other regulatory liabilities | $ | 84 | $ | 74 |
Regulatory Clause | Balance Sheet Line Item | September 30, 2020 | December 31, 2019 | ||||||||
(in millions) | |||||||||||
Alabama Power | |||||||||||
Rate CNP Compliance | Other regulatory liabilities, current | $ | 12 | $ | 55 | ||||||
Other regulatory liabilities, deferred | 38 | 7 | |||||||||
Rate CNP PPA | Deferred under recovered regulatory clause revenues | 62 | 40 | ||||||||
Retail Energy Cost Recovery | Other regulatory liabilities, current | 107 | 32 | ||||||||
Other regulatory liabilities, deferred | 16 | 17 | |||||||||
Natural Disaster Reserve | Other regulatory liabilities, current | 7 | 37 | ||||||||
Other regulatory liabilities, deferred | 51 | 113 | |||||||||
Georgia Power | |||||||||||
Fuel Cost Recovery | Over recovered fuel clause revenues | $ | 84 | $ | 0 | ||||||
Other deferred credits and liabilities | 67 | 73 | |||||||||
Mississippi Power | |||||||||||
Fuel Cost Recovery | Over recovered regulatory clause liabilities | $ | 23 | $ | 23 | ||||||
Ad Valorem Tax | Other regulatory assets | 11 | 47 | ||||||||
Other regulatory assets, deferred | 36 | 0 | |||||||||
Property Damage Reserve | Other regulatory liabilities, deferred | 48 | 54 | ||||||||
Southern Company Gas | |||||||||||
Natural Gas Cost Recovery | Other regulatory liabilities | $ | 84 | $ | 74 |
(in billions) | |||
Base project capital cost forecast(a)(b) | $ | 8.2 | |
Construction contingency estimate | 0.2 | ||
Total project capital cost forecast(a)(b) | 8.4 | ||
Net investment as of March 31, 2020(b) | (6.2 | ) | |
Remaining estimate to complete(a) | $ | 2.2 |
(in billions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Base project capital cost forecast(a)(b)
(a) Excludes financing costs expected to be capitalized through AFUDC of approximately $240 million, of which $71 million had been accrued through September 30, 2020. (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 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. 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 total pre-tax charge to income of $149 million ($111 million after tax) for the increase in the total project capital cost forecast as of June 30, 2020. As and when During the third quarter 2020, approximately $5 million of the construction contingency established in the second quarter 2020 was assigned to the base capital cost forecast for cost risks primarily associated with construction productivity and field support. In April 2019, Southern Nuclear established aggressive target values for monthly construction production and system turnover activities as part of a strategy to maintain and, where possible, build margin to the regulatory-approved in-service dates of November 2021 for Unit 3 and November 2022 for Unit 4. Through early 2020, the project faced challenges with the April 2019 aggressive strategy targets including, but not limited to, electrical and pipefitting labor productivity and work package closure rates, In February 2020, Southern Nuclear updated its cost and schedule forecast, which, at that time, did not change the total project capital cost forecast and confirmed the expected in-service dates of November 2021 for Unit 3 and 52 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) November 2022 for Unit 4. This update included initiatives to improve productivity while refining and extending system turnover plans and certain near-term milestone dates. Other milestone dates did not change. Achievement of the February 2020 aggressive site work plan 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. To 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 53 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) In addition, the continuing effects of the COVID-19 pandemic could further disrupt or delay construction, testing, supervisory, and support activities at Plant Vogtle Units 3 and 4. 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. As a result of such compliance processes, certain license amendment requests have been filed and approved or are pending before the NRC. 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. As part of the aggressive site work plan, in January 2020, Southern Nuclear notified the NRC of its intent to load fuel in 2020. On June 15, 2020, the NRC rejected Nuclear Watch South's April 20, 2020 The ultimate outcome of these matters cannot be determined at this time. However, any extension of the regulatory-approved project schedule is currently estimated to result in additional base capital costs of approximately $50 million per month, based on Georgia Power's ownership interests, and AFUDC of approximately $10 million per month. 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. 54 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) 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 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 55 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) 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. 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 amounts paid pursuant to the Contractor Settlement Agreement should be disallowed from rate base on the basis of imprudence; (iii) (a) capital costs incurred up to $5.68 billion would be presumed to be reasonable and prudent with the burden of proof on any party challenging such costs, (b) Georgia Power would have the burden to show that any capital costs above $5.68 billion were prudent, and (c) a revised capital cost forecast of $7.3 billion (after reflecting the impact of payments received under the Guarantee Settlement Agreement and related customer refunds) was found reasonable; (iv) construction of Plant Vogtle Units 3 and 4 should be completed, with Southern Nuclear serving as project manager and Bechtel as primary contractor; (v) approved and deemed reasonable Georgia Power's revised schedule placing Plant Vogtle Units 3 and 4 in service in November 2021 and November 2022, respectively; (vi) confirmed that the revised cost forecast does not represent a cost cap and that 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 ARP) 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 carrying costs on those capital costs 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 $75 million in 2019 and are estimated to have negative earnings impacts of approximately $145 million, $255 million, and $200 million in 2020, 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. In February 2018, Georgia Interfaith Power & Light, Inc. (GIPL) and Partnership for Southern Equity, Inc. (PSE) filed a petition appealing the Georgia PSC's January 11, 2018 order with the Fulton County Superior Court. In March 2018, Georgia Watch filed a similar appeal to the Fulton County Superior Court for judicial review of the Georgia PSC's decision and denial of Georgia Watch's motion for reconsideration. In December 2018, the Fulton County Superior Court granted Georgia Power's motion to dismiss the 2 appeals. In January 2019, GIPL, PSE, and Georgia Watch filed an appeal of this decision with the Georgia Court of Appeals. In October 2019, the Georgia Court of Appeals issued an opinion affirming the Fulton County Superior Court's ruling that the Georgia PSC's January 11, 2018 order was not a final, appealable decision. In addition, the Georgia Court of Appeals remanded the 56 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) case to the Fulton County Superior Court to clarify its ruling as to whether the petitioners showed that review of the Georgia PSC's final order would not provide them an adequate remedy. On April 21, 2020, the Fulton County Superior Court The Georgia PSC has approved The ultimate outcome of these matters cannot be determined at this time. Mississippi Power 2019 Base Rate Case On March 17, 2020, the Mississippi PSC approved a settlement agreement between Mississippi Power and the Mississippi Public Utilities Staff related to Mississippi Power's base rate case filed in November 2019 (Mississippi Power Rate Case Settlement Agreement). Under the terms of the Mississippi Power Rate Case Settlement Agreement, annual retail rates decreased approximately $16.7 million, or 1.85%, effective for the first billing cycle of April 2020, based on a test year period of January 1, 2020 through December 31, 2020, a 53% average equity ratio, an allowed maximum actual equity ratio of 55% by the end of 2020, and a 7.57% return on investment. Additionally, the approved Mississippi Power Rate Case Settlement Agreement: (i) established common amortization periods of four years for regulatory assets and three years for regulatory liabilities included in the approved revenue requirement, including those related to unprotected deferred income taxes; (ii) established new depreciation rates reflecting an annual increase in depreciation of approximately $10 million; and (iii) excluded certain compensation costs totaling approximately $3.9 million. It also eliminated separate rates for costs associated with Plant Ratcliffe and energy efficiency initiatives and includes such costs in the PEP, ECO Plan, and ad valorem tax adjustment factor, as applicable. In accordance with the previous order of the Mississippi PSC suspending the operation of PEP and the ECO Plan for 2018 through 2020, Mississippi Power plans to resume PEP proceedings and ECO Plan filings for 2021. Performance Evaluation Plan Deferral of Incremental COVID-19 Costs On April 14, 2020 and May 12, 2020, in order to mitigate the economic impact of the COVID-19 pandemic on customers, the Mississippi PSC approved 57 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) Municipal and Rural Associations Tariff On June 25, 2020, the FERC accepted Mississippi Power's April 27, 2020 Southern Company Gas Rate Proceedings On June 1, 2020, Virginia Natural Gas filed a general rate case with the Virginia Commission seeking an increase On July 1, 2020, Atlanta Gas Light filed its 2020 GRAM filing with the Georgia PSC. The filing requests an annual base rate increase of $37.6 million based on the projected 12-month period beginning January 1, 2021, which does not exceed the 5% limitation established by the Georgia PSC in its December 2019 approval of Atlanta Gas Light's general base rate case. Resolution of the 2020 GRAM filing is expected by December 31, 2020, with rates effective January 1, 2021. The ultimate outcome of these matters cannot be determined at this time. Deferral of Incremental COVID-19 Costs Atlanta Gas Light On April 30, 2020, in response to the COVID-19 pandemic, the Georgia PSC approved orders directing Atlanta Gas Light to continue its previous, voluntary suspension of customer disconnections. On June 22, 2020, the Georgia PSC ordered Atlanta Gas Light to resume customer disconnections beginning July 1, 2020, with exceptions for customers still covered by a shelter-in-place order. The orders provide the Marketers, including SouthStar, with a mechanism to receive credits from Atlanta Gas Light for the base rates it charged to the Marketers of non-paying customers during the suspension. Atlanta Gas Light expects to recover these credits through the annual revenue true-up process within its future GRAM filings, which would impact rates starting on January 1, 2022. The ultimate outcome of this matter cannot be determined at this time. On 58 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) Virginia Natural Gas In response to the COVID-19 pandemic, the Virginia Commission issued orders requiring Virginia Natural Gas to suspend disconnections beginning on March 16, 2020 and also to suspend late payment and reconnection fees beginning on April 9, 2020, both of which expired on October 5, 2020. On April 29, 2020, the Virginia Commission authorized Virginia Natural Gas to defer the following COVID-19 pandemic-related costs as a regulatory asset: incremental uncollectible expense incurred, suspended late fees, suspended reconnection charges, carrying costs, and other incremental prudently incurred costs associated with the COVID-19 pandemic. Specific recovery of the amounts deferred in a regulatory asset will be addressed in a future rate proceeding. At September 30, 2020, Virginia Natural Gas' related regulatory asset was $1 million. The ultimate outcome of this matter cannot be determined at this time. Infrastructure Replacement Programs and Capital Projects In December 2019, Virginia Natural Gas filed (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 other 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 January 2017, a securities class action complaint was filed 59 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) District of Georgia entered an order staying all deadlines in the case pending mediation. The stay automatically expired on March 31, 2020; however, in light of the COVID-19 pandemic, the U.S. District Court for the Northern District of Georgia vacated all existing discovery deadlines until 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. Each plaintiff seeks 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. Each plaintiff also seeks certain changes to Southern Company's corporate governance and internal processes. In 2018, the court entered an order staying this lawsuit until 30 days after the resolution of any dispositive motions or any settlement, whichever is earlier, in the securities class action. On September 25, 2020, the plaintiffs filed a status report noting the settlement of the securities class action and informing the court that the parties have scheduled mediation of this case later in the fourth quarter 2020. 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. The plaintiff seeks to recover, on behalf of Southern Company, unspecified actual damages and disgorgement of profits and, on its behalf, attorneys' fees and costs in bringing the lawsuit. The plaintiff also seeks certain unspecified changes to Southern Company's corporate governance and internal processes. In 2018, the court entered an order staying this lawsuit until 30 days after the resolution of any dispositive motions or any settlement, whichever is earlier, in the securities class action. 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. On September 30, 2020, the plaintiffs filed a status report noting the settlement of the securities class action and informing the court that the parties have scheduled mediation of this case later in the fourth quarter 2020. 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 60 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) Appeals. In October 2019, the Georgia PSC issued an order that found On July 29, 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. Mississippi Power In May 2018, Southern Company and Mississippi Power received a notice of dispute and arbitration demand filed by Martin Product Sales, LLC (Martin) based on 2 agreements, both related to Kemper IGCC byproducts for which Mississippi Power provided termination notices in 2017. Martin alleges breach of contract, breach of good faith and fair dealing, fraud and misrepresentation, and civil conspiracy and makes a claim for damages in the amount of approximately $143 million, as well as additional unspecified damages, attorney's fees, costs, and interest. A portion of the claim for damages was on behalf of Martin Transport, Inc. (Martin Transport), an affiliate of Martin. In May 2019, the arbitration panel denied Mississippi Power's and Southern Company's motions to dismiss. In September 2019, Martin Transport filed a separate complaint against Mississippi Power in the Circuit Court of Kemper County, Mississippi alleging claims of fraud, negligent misrepresentation, promissory estoppel, and equitable estoppel, each arising out of the same alleged facts and circumstances that underlie Martin's arbitration demand. Martin Transport seeks compensatory damages of $5 million and punitive damages of $50 million. In November 2019, Martin Transport's claim was combined with the Martin arbitration case and the separate court case was dismissed. In December 2019, Southern Company and Mississippi Power each filed motions for summary judgment on all claims. On February 17, 2020, the arbitration panel granted Southern Company's motion and dismissed Southern Company from the arbitration. On March 12, 2020, the arbitration panel denied Mississippi Power's motions for summary judgment. In November 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 have each filed a motion to dismiss the amended complaint. On March 27, 2020, the Mississippi PSC's motion to dismiss was granted. Also on March 27, 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 61 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) motion for leave to file a second amended complaint. On May 26, 2020, the court granted Mississippi Power's motion to dismiss the first amended complaint filed in See Note 2 to the financial statements under "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 compliance 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 $15 million at both In December 2019, Mississippi Power entered into an agreement with the Mississippi Commission on Environmental Quality related to groundwater conditions arising from the closed ash pond at Plant Watson. Mississippi Power will complete an assessment and remediation consistent with the requirements of the agreement and the CCR Rule. Potential remediation activities and related cost estimates are pending the result of further site assessment and cannot be determined at this time. Mississippi Power expects to recover the retail portion of remedial costs through the ECO Plan and the wholesale portion through MRA rates. Southern Company Gas' environmental remediation liability was remediation expenditures are generally recoverable from customers through rate mechanisms approved by the applicable state regulatory agencies of the natural gas distribution utilities. 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. Nuclear Fuel Disposal Costs On August 13, 2020, Alabama Power and Georgia Power filed amended complaints in each of the lawsuits against the U.S. government in the Court of Federal Claims for the costs of continuing to store spent nuclear fuel at Plants Farley, Hatch, and Vogtle Units 1 and 2. The amended complaints add damages from January 1, 2018 to December 31, 2019 to the claim period. Damages will continue to accumulate until the issue is resolved, the U.S. government disposes of Alabama Power's and Georgia Power's spent nuclear fuel pursuant to its contractual obligations, or alternative storage is otherwise provided. No amounts have been recognized in the financial statements as of September 30, 2020 for any potential recoveries from the pending lawsuits. The final outcome of these matters cannot be determined at this time. However, Alabama Power and Georgia Power expect to credit any recoveries for 62 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) the benefit of customers in accordance with direction from their respective PSC; therefore, no material impact on Southern Company's, Alabama Power's, or Georgia Power's net income is expected. Other Matters See Notes 1 and 3 under "Leveraged Leases" and "Other Matters – Southern Company," respectively, in Item 8 of the Form 10-K for discussion of challenges associated with a leveraged lease agreement with a subsidiary of Southern Holdings. While all required lease payments through September 30, 2020 have been paid in full, the operational and remarketing risks and the resulting cash liquidity challenges persist and significant concerns continue regarding the lessee's ability to make the remaining required semi-annual lease payments to the Southern Holdings subsidiary through the term of the lease. In its annual impairment analysis of the expected residual value of the generation assets and the overall collectability of the related lease receivable, Southern Company uses multiple scenarios of long-term market energy prices to estimate the cash flows expected to be received from remarketing the generation assets following the expiration of the existing PPA in 2032 and the residual value of the generation assets at the end of the lease in 2047. Southern Company received the latest annual forecasts of natural gas prices during the second quarter 2020 and considered the significant decline in forecasted prices to be an indicator of potential impairment that required an interim impairment assessment. Accordingly, consistent with prior years, Southern Company evaluated the recoverability of the lease receivable and the expected residual value of the generation assets under various natural gas price scenarios. Based on the current forecasts of energy prices in the years following the expiration of the existing PPA, Southern Company concluded that it is no longer probable that any of the associated rental payments will be received, because it is no longer probable the generation assets will be successfully remarketed and continue to operate after that date. During the second quarter 2020, Southern Company revised the estimated cash flows to be received under the leveraged lease to reflect this conclusion, which resulted in a full impairment of the lease investment and a pre-tax charge to earnings of $154 million ($74 million after tax). If any future lease payment due prior to the expiration of the associated PPA is not paid in full, the Southern Holdings subsidiary may be unable to make its corresponding payment to the holders of the underlying non-recourse debt related to the generation assets. Failure to make the required payment to the debtholders could represent an event of default that would give the debtholders the right to foreclose on, and take ownership of, the generation assets, in effect terminating the lease. As the remaining amount of the lease investment was charged against earnings in the second quarter 2020, termination would not be expected to result in additional charges. Southern Company will continue to monitor the operational performance of the underlying assets and evaluate the ability of the lessee to continue to make the required lease payments and meet its obligations associated with a future closure or retirement of the generation assets and associated properties, including the dry ash landfill. Mississippi Power Kemper County Energy Facility See Note 2 to the financial statements under "Mississippi Power – Kemper County Energy Facility" in Item 8 of the Form 10-K for additional information. As the mining permit holder, Liberty Fuels Company, LLC has a legal obligation to perform mine reclamation and Mississippi Power has a contractual obligation to fund all reclamation activities related to the lignite mine and equipment and mineral reserves located around the Kemper County energy facility site. As a result of the abandonment of the Kemper IGCC, final mine reclamation began in 2018 and is expected to be substantially completed in 2020, with monitoring expected to continue through 2027. See Note 6 to the financial statements in Item 8 of the Form 10-K for additional information. For year-to-date 2020, Mississippi Power recorded pre-tax (and after-tax) charges to income totaling $2 million primarily associated with abandonment and related closure costs and ongoing period costs, net of salvage proceeds, 63 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) for the mine and gasifier-related assets at the Kemper County energy facility. Dismantlement of the abandoned gasifier-related assets and site restoration activities are expected to be completed in In Plant Daniel In conjunction with Southern Company's sale of Gulf Power, Mississippi Power and Gulf Power agreed to seek a restructuring of their 50% undivided ownership interests in Plant Daniel such that each of them would, after the restructuring, own 100% of a generating unit. On April 24, 2020, Mississippi Power and Gulf Power amended the terms of the agreement to extend the deadline from May 1, 2020 to August 1, 2020 for Mississippi Power to notify Gulf Power of which generating unit it has selected for 100% ownership. The parties agreed not to select a specific unit by August 1, 2020 and are continuing negotiations on a mutually acceptable revised operating agreement. The impacts of operating the units on an individual basis continue to be evaluated by Mississippi Power and any transfer of ownership would be subject to approval by the FERC and the Mississippi PSC. The ultimate outcome of this matter cannot be determined at this time. Southern Company Gas See Notes 3 and 7 to the financial statements in Item 8 of the Form 10-K under "Other Matters – Southern Company Gas" and "Southern Company Gas," respectively, and Note (E) under On March 24, 2020, Southern Company Gas completed the sale of its interest in Atlantic Coast Pipeline. See Note (K) under "Southern Company Gas" for additional information. On February 20, 2020, the FERC approved a two-year extension for PennEast Pipeline to complete the project by January 19, 2022. In September 2019, an appellate court ruled that the PennEast Pipeline does not have federal eminent domain authority over lands in which a state has property rights interests. On June 29, 2020, the U.S. Supreme Court requested the U.S. Solicitor General to provide an opinion on PennEast Pipeline's petition for a writ of certiorari seeking its review of the appellate court's decision. Expected project costs related to the PennEast Pipeline 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 64 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) cancellation, any of which could result in impairment of Southern Company Gas' investment and could have a significant impact on Southern Company's financial statements and a material impact on Southern Company Gas' financial statements. (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 65 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) The following
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(a)Other revenue sources primarily relate to revenues from customers accounted for as derivatives and leases, as well as alternative revenue programs at Southern Company Gas and other cost recovery mechanisms 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. 69 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
As of Revenues recognized by Southern Company in the three and nine months ended 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. Revenue from contracts with customers related to these performance obligations remaining at
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) Revenue expected to be recognized for performance obligations remaining at Lease Income Lease income for the three and nine months ended
Lease income for Southern Power is included in wholesale revenues. 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. As part of the Autauga Combined Cycle Acquisition, Alabama Power assumed an existing power sales agreement under which the full output of the generating facility remains committed to another third party for its remaining term of approximately three years. These revenues are included above as lease income from operating leases. See Note (B) and Note 15 to the financial statements in Item 8 of the Form 10-K under "Alabama Power" for additional information. Lease Receivables Mississippi Power completed construction of additional leased assets under an existing sales-type lease during the third quarter 2020. Upon completion of construction, the book value of $25 million was transferred from CWIP to lease receivables, of which $22 million and $3 million is included in other property and investments and other accounts and notes receivable, respectively, at September 30, 2020. The transfer represents a non-cash investing transaction for purposes of the statements of cash flows. 71 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) (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 At 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. 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 Equity Method Investments At 72 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) Southern Company Gas Equity Method Investments On March 24, 2020, Southern Company Gas completed the sale of its interests in Pivotal LNG and Atlantic Coast Pipeline. See Note (K) under "Southern Company Gas" for additional information. The carrying amounts of Southern Company Gas' equity method investments as of
(b)
SNG Selected financial information of SNG for the three and nine months ended
73 (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
(b)Southern Company Gas, as the parent entity, guarantees the obligations of Southern Company Gas Capital, which is the borrower of $1.25 billion of this arrangement. Southern Company Gas' committed credit arrangement also includes $500 million for which Nicor Gas is the borrower and which is restricted for working capital needs of Nicor Gas. Pursuant to this multi-year credit arrangement, the allocations between Southern Company Gas Capital and Nicor Gas may be adjusted. As reflected in the table above, in March 2020, Mississippi Power entered into a $125 million revolving credit facility that matures in March 2023. Subject to applicable market conditions, Southern Company and its subsidiaries expect to renew or replace their bank credit arrangements as needed, prior to expiration. In connection therewith, Southern Company and its subsidiaries may extend the maturity dates and/or increase or decrease the lending commitments thereunder. These bank credit arrangements, as well as the term loan arrangements of the Registrants and SEGCO, contain covenants that limit debt levels and contain cross-acceleration or, in the case of Southern Power, cross-default provisions to other indebtedness (including guarantee obligations) that are restricted only to the indebtedness of the individual company. Such cross-default provisions to other indebtedness would trigger an event of default if Southern Power defaulted on indebtedness or guarantee obligations over a specified threshold. Such cross-acceleration provisions to other indebtedness would trigger an event of default if the applicable borrower defaulted on indebtedness, the payment of which was then accelerated. At A portion of the unused credit with banks is allocated to provide liquidity support to the revenue bonds of the traditional electric operating companies and the commercial paper programs of the Registrants, Nicor Gas, and SEGCO. The amount of variable rate revenue bonds of the traditional electric operating companies outstanding requiring liquidity support at 74 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) Earnings per Share For Southern Company, the only differences in computing basic and diluted earnings per share are attributable to awards outstanding under stock-based compensation plans and plans and the equity units issuance is determined using the treasury stock method. See Note 8 to the financial statements under "Equity Units" in Item 8 of the Form 10-K for information on the August 2019 equity units issuance and Note 12 to the financial statements in Item 8 of the Form 10-K for information on stock-based compensation plans. Shares used to compute diluted earnings per share were as follows:
An immaterial number of stock-based compensation awards was not included in the diluted earnings per share calculation because the awards were anti-dilutive for the three and nine months ended An immaterial number of shares related to the equity units issued in August 2019 was included in the calculation of diluted earnings per share for the nine months ended September 30, 2020. There were no such amounts for all other periods presented. (G) INCOME TAXES See Note 10 to the financial statements in Item 8 of the Form 10-K for additional tax information. Current and Deferred Income Taxes Tax Credit and Net Operating Loss Carryforwards Southern Company had federal ITC and PTC carryforwards (primarily related to Southern Power) totaling $1.5 billion as of September 30, 2020 compared to $1.8 billion as of December 31, 2019. The federal ITC and PTC carryforwards begin expiring in 2034 and 2032, respectively, but are expected to be fully utilized by 2024. The utilization of each Registrants' estimated tax credit and net operating loss carryforwards and related valuation allowances could be impacted by numerous factors, including the acquisition of additional renewable projects, the purchase of rights to additional PTCs of Plant Vogtle Units 3 and 4 pursuant to certain joint ownership agreements, potential impacts of the COVID-19 pandemic, and changes in taxable income projections. See Note (B) and Note 2 to the financial statements in Item 8 of the Form 10-K under "Georgia Power – Nuclear Construction" for additional information on Plant Vogtle Units 3 and 4. Effective Tax Rate Details of significant changes in the effective tax rate for the applicable Registrants are provided herein. Southern Company Southern Company's effective tax rate is typically lower than the statutory rate due to employee stock plans' dividend deduction, non-taxable AFUDC equity at the traditional electric operating companies, flowback of excess deferred income taxes at the regulated utilities, and federal income tax benefits from ITCs and PTCs primarily at Southern Power. 75 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) Southern Company's effective tax rate was Georgia Power Georgia Power's effective tax rate was Mississippi Power Southern Power Southern Power's effective tax rate was Southern Company Gas' effective tax rate was 21.4% for the nine months ended September 30, 2020 compared to 15.0% for the corresponding period in 2019. The effective tax rate increase was primarily due to higher flowback of excess deferred income taxes in 2019, primarily at Atlanta Gas Light as previously authorized by the Georgia PSC, and the reversal of a federal tax valuation allowance in connection with Southern Company Gas' sale of its investment in Triton in 2019. See Notes 2 and 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information. (H) RETIREMENT BENEFITS The Southern Company system has a qualified defined benefit, trusteed, pension plan covering substantially all employees, with the exception of employees at PowerSecure. The qualified pension plan is funded in accordance with requirements of the Employee Retirement Income Security Act of 1974, as amended (ERISA). NaN mandatory contributions to the qualified pension plan are anticipated for the year ending December 31, 2020. The Southern Company system also provides certain non-qualified defined benefits for a select group of management and highly compensated employees, which are funded on a cash basis. In addition, the Southern Company system provides certain medical care and life insurance benefits for retired employees through other postretirement benefit plans. The traditional electric operating companies fund other postretirement trusts to the extent required by their respective regulatory commissions. Southern Company Gas has a separate unfunded supplemental retirement health care plan that provides medical care and life insurance benefits to employees of discontinued businesses. See Note 11 to the financial statements in Item 8 of the Form 10-K for additional information. Effective January 1, 2020, Southern Company adopted a change in method of calculating the market-related value of the liability-hedging securities included in its pension plan assets. The market-related value is used to determine the expected return on plan assets component of net periodic pension cost. Southern Company previously used the 76 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) calculated value approach for all plan assets, which smoothed asset returns and deferred gains and losses by amortizing them into the calculation of the market-related value over five years. Southern Company changed to the fair value approach for liability-hedging securities, which includes measuring the market-related value of that portion of the plan assets at fair value for purposes of determining the expected return on plan assets. The remaining asset classes of plan assets will continue to use the calculated value approach in determining the market-related value. Southern Company considers the fair value approach to be preferable because it results in a current reflection of changes in the value of plan assets in the measurement of net periodic pension cost. Southern Company evaluated the effect of this change in accounting method and deemed it immaterial to the historical and current financial statements of all Registrants and therefore did not account for the change retrospectively. The change in accounting principle was recorded through earnings as a prior period adjustment for the amounts related to the unregulated businesses of Southern Company and Southern Power. Amounts related to the traditional electric operating companies and the natural gas distribution utilities have been reflected as adjustments to regulatory assets as appropriate, consistent with the expected regulatory treatment. On each Registrant's condensed statements of income, the service cost component of net periodic benefit costs is included in other operations and maintenance expenses and all other components of net periodic benefit costs are included in other income (expense), net. Components of the net periodic benefit costs for the three and nine months ended
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80 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) (I) FAIR VALUE MEASUREMENTS As of
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(a)Energy-related derivatives exclude cash collateral of $70 million. (b)Excludes receivables related to investment income, pending investment sales, payables related to pending investment purchases, and currencies. See Note 6 to the financial statements in Item 8 of the Form 10-K for additional information. (c)Includes investment securities pledged to creditors and collateral received and excludes payables related to the securities lending program. As of September 30, 2020, approximately $25 million of the fair market value of Georgia Power's nuclear decommissioning trust funds' securities were on loan to creditors under the funds' managers' securities lending program. See Note 6 to the financial statements in Item 8 of the Form 10-K for additional information. 83
NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) Southern Company, Alabama Power, and Georgia Power continue to elect the option to fair value investment securities held in the nuclear decommissioning trust funds. The fair value of the funds, including reinvested interest and dividends and excluding the funds' expenses, increased (decreased) by the amounts shown in the table below for the three and nine months ended
Valuation Methodologies The energy-related derivatives primarily consist of exchange-traded and over-the-counter financial products for natural gas and physical power products, including, from time to time, basis swaps. These are standard products used within the energy industry and are valued using the market approach. The inputs used are mainly from observable market sources, such as forward natural gas prices, power prices, implied volatility, and overnight index swap interest rates. Interest rate derivatives are also standard over-the-counter products that are valued using observable market data and assumptions commonly used by market participants. The fair value of interest rate derivatives reflects the net present value of expected payments and receipts under the swap agreement based on the market's expectation of future interest rates. Additional inputs to the net present value calculation may include the contract terms, counterparty credit risk, and occasionally, implied volatility of interest rate options. The fair value of cross-currency swaps reflects the net present value of expected payments and receipts under the swap agreement based on the market's expectation of future foreign currency exchange rates. Additional inputs to the net present value calculation may include the contract terms, counterparty credit risk, and discount rates. The interest rate derivatives and cross-currency swaps are categorized as Level 2 under Fair Value Measurements as these inputs are based on observable data and valuations of similar instruments. See Note (J) for additional information on how these derivatives are used. For fair value measurements of the investments within the nuclear decommissioning trusts and the non-qualified deferred compensation trusts, external pricing vendors are designated for each asset class with each security specifically assigned a primary pricing source. For investments held within commingled funds, fair value is determined at the end of each business day through the net asset value, which is established by obtaining the underlying securities' individual prices from the primary pricing source. A market price secured from the primary source vendor is then evaluated by management in its valuation of the assets within the trusts. As a general approach, fixed income market pricing vendors gather market data (including indices and market research reports) and integrate relative credit information, observed market movements, and sector news into proprietary pricing models, pricing systems, and mathematical tools. Dealer quotes and other market information, including live trading levels and pricing analysts' judgments, are also obtained when available. The NRC requires licensees of commissioned nuclear power reactors to establish a plan for providing reasonable assurance of funds for future decommissioning. See Note 6 to the financial statements under "Nuclear Decommissioning" in Item 8 of the Form 10-K for additional information. Southern Power has contingent payment obligations related to certain acquisitions whereby Southern Power is primarily obligated to make generation-based payments to the seller, which commenced at the commercial operation of the respective facility and continue through 2026. The obligation is categorized as Level 3 under Fair Value Measurements as the fair value is determined using significant unobservable inputs for the forecasted facility generation in MW-hours, as well as other inputs such as a fixed dollar amount per MW-hour, and a discount rate. 84 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) The fair value of contingent consideration reflects the net present value of expected payments and any periodic change arising from forecasted generation is expected to be immaterial. "Other investments" include investments traded in the open market that have maturities greater than 90 days, which are categorized as Level 2 under Fair Value Measurements and are comprised of corporate bonds, bank certificates of deposit, treasury bonds, and/or agency bonds. As of As of
The fair values are determined using Level 2 measurements and are based on quoted market prices for the same or similar issues or on the current rates available to the Registrants. Commodity Contracts with Level 3 Valuation Inputs As of
Changes in fair value of Level 3 instruments represent changes in gains and losses for the periods that are reported on Southern Company Gas' statements of income in natural gas revenues. 85 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) The valuation of certain commodity contracts requires the use of certain unobservable inputs. All forward pricing used in the valuation of such contracts is directly based on third-party market data, such as broker quotes and exchange settlements, when that data is available. If third-party market data is not available, then industry standard methodologies are used to develop inputs that maximize the use of relevant observable inputs and minimize the use of unobservable inputs. Observable inputs, including some forward prices used for determining fair value, reflect the best available market information. Unobservable inputs are updated using industry standard techniques such as extrapolation, combining observable forward inputs supplemented by historical market and other relevant data. Level 3 physical natural gas forward contracts include unobservable forward price inputs (ranging from (J) DERIVATIVES Southern Company, the traditional electric operating companies, Southern Power, and Southern Company Gas are exposed to market risks, including commodity price risk, interest rate risk, weather risk, and occasionally foreign currency exchange rate risk. To manage the volatility attributable to these exposures, each company nets its exposures, where possible, to take advantage of natural offsets and enters into various derivative transactions for the remaining exposures pursuant to each company's policies in areas such as counterparty exposure and risk management practices. Southern Company Gas' wholesale gas operations use various contracts in its commercial activities that generally meet the definition of derivatives. For the traditional electric operating companies, Southern Power, and Southern Company Gas' other businesses, each company's policy is that derivatives are to be used primarily for hedging purposes and mandates strict adherence to all applicable risk management policies. Derivative positions are monitored using techniques including, but not limited to, market valuation, value at risk, stress testing, and sensitivity analysis. Derivative instruments are recognized at fair value in the balance sheets as either assets or liabilities and are presented on a net basis. See Note (I) for additional fair value information. In the statements of cash flows, any cash impacts of settled energy-related and interest rate derivatives are recorded as operating activities. Any cash impacts of settled foreign currency derivatives are classified as operating or financing activities to correspond with classification of the hedged interest or principal, respectively. See Note 1 to the financial statements under "Financial Instruments" in Item 8 of the Form 10-K for additional information. Energy-Related Derivatives The traditional electric operating companies, Southern Power, and Southern Company Gas enter into energy-related derivatives to hedge exposures to electricity, natural gas, and other fuel price changes. However, due to cost-based rate regulations and other various cost recovery mechanisms, the traditional electric operating companies and the natural gas distribution utilities have limited exposure to market volatility in energy-related commodity prices. Each of the traditional electric operating companies and certain of the natural gas distribution utilities of Southern Company Gas manage fuel-hedging programs, implemented per the guidelines of their respective state PSCs or other applicable state regulatory agencies, through the use of financial derivative contracts, which are expected to continue to mitigate price volatility. The traditional electric operating companies (with respect to wholesale generating capacity) and Southern Power have limited exposure to market volatility in energy-related commodity prices because their long-term sales contracts shift substantially all fuel cost responsibility to the purchaser. However, the traditional electric operating companies and Southern Power may be exposed to market volatility in energy-related commodity prices to the extent any uncontracted capacity is used to sell electricity. Southern Company Gas retains exposure to price changes that can, in a volatile energy market, be material and can adversely affect its results of operations. Southern Company Gas also enters into weather derivative contracts as economic hedges of operating margins in the event of warmer-than-normal weather. Exchange-traded options are carried at fair value, with changes reflected in operating revenues. Non-exchange-traded options are accounted for using the intrinsic value method. Changes in the intrinsic value for non-exchange-traded contracts are reflected in operating revenues. 86 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) Energy-related derivative contracts are accounted for under one of three methods:
Some energy-related derivative contracts require physical delivery as opposed to financial settlement, and this type of derivative is both common and prevalent within the electric and natural gas industries. When an energy-related derivative contract is settled physically, any cumulative unrealized gain or loss is reversed and the contract price is recognized in the respective line item representing the actual price of the underlying goods being delivered. At
At In addition to the volumes discussed above, the traditional electric operating companies and Southern Power enter into physical natural gas supply contracts that provide the option to sell back excess natural gas due to operational constraints. The maximum expected volume of natural gas subject to such a feature is For cash flow hedges of energy-related derivatives, the estimated pre-tax gains (losses) expected to be reclassified from accumulated OCI to earnings for the 12-month period ending 87 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) Interest Rate Derivatives Southern Company and certain subsidiaries may enter into interest rate derivatives to hedge exposure to changes in interest rates. The derivatives employed as hedging instruments are structured to minimize ineffectiveness. Derivatives related to existing variable rate securities or forecasted transactions are accounted for as cash flow hedges where the derivatives' fair value gains or losses are recorded in OCI and are reclassified into earnings at the same time and presented on the same income statement line item as the earnings effect of the hedged transactions. Derivatives related to existing fixed rate securities are accounted for as fair value hedges, where the derivatives' fair value gains or losses and hedged items' fair value gains or losses are both recorded directly to earnings on the same income statement line item. Fair value gains or losses on derivatives that are not designated or fail to qualify as hedges are recognized in the statements of income as incurred. At
Foreign Currency Derivatives Southern Company and certain subsidiaries, including Southern Power, may enter into foreign currency derivatives to hedge exposure to changes in foreign currency exchange rates, such as that arising from the issuance of debt denominated in a currency other than U.S. dollars. Derivatives related to forecasted transactions are accounted for as cash flow hedges where the derivatives' fair value gains or losses are recorded in OCI and are reclassified into earnings at the same time and on the same income statement line as the earnings effect of the hedged transactions, including foreign currency gains or losses arising from changes in the U.S. currency exchange rates. The derivatives employed as hedging instruments are structured to minimize ineffectiveness. At September 30, 2020, the following foreign currency derivatives were outstanding:
88 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED)
The estimated pre-tax gains (losses) related to Southern Power's foreign currency derivatives expected to be reclassified from accumulated OCI to earnings for the 12-month period ending Derivative Financial Statement Presentation and Amounts Southern Company, the traditional electric operating companies, Southern Power, and Southern Company Gas enter into derivative contracts that may contain certain provisions that permit intra-contract netting of derivative receivables and payables for routine billing and offsets related to events of default and settlements. Southern Company and certain subsidiaries also utilize master netting agreements to mitigate exposure to counterparty credit risk. These agreements may contain provisions that permit netting across product lines and against cash collateral. The fair value amounts of derivative assets and liabilities on the balance sheet are presented net to the extent that there are netting arrangements or similar agreements with the counterparties. 89 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) The fair value of energy-related derivatives, interest rate derivatives, and foreign currency derivatives was reflected in the balance sheets as follows:
90
NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED)
91
NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED)
92
NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED)
(a)Gross amounts offset include cash collateral held on deposit in broker margin accounts of $70 million and $99 million as of September 30, 2020 and December 31, 2019, respectively.
93 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) At
For the three and nine months ended
For the three and nine months ended 94 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) For the three and nine months ended
(a)Reclassified from accumulated OCI into earnings. (b)For fair value hedges, changes in the fair value of the derivative contracts are generally equal to changes in the fair value of the underlying debt and have no material impact on income. (c)The reclassification from accumulated OCI into other income (expense), net completely offsets currency gains and losses arising from changes in the U.S. currency exchange rates used to record the euro-denominated notes. For the three and nine months ended As of
95 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) For the three and nine months ended
For the three and nine months ended Contingent Features Southern Company, the traditional electric operating companies, Southern Power, and Southern Company Gas do not have any credit arrangements that would require material changes in payment schedules or terminations as a result of a credit rating downgrade. There are certain derivatives that could require collateral, but not accelerated payment, in the event of various credit rating changes of certain Southern Company subsidiaries. At For the Registrants with interest rate derivatives at Generally, collateral may be provided by a Southern Company guaranty, letter of credit, or cash. If collateral is required, fair value amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral are not offset against fair value amounts recognized for derivatives executed with the same counterparty. Alabama Power and Southern Power maintain accounts with certain regional transmission organizations to facilitate financial derivative transactions. Based on the value of the positions in these accounts and the associated margin requirements, Alabama Power and Southern Power may be required to post collateral. At The Registrants are exposed to losses related to financial instruments in the event of counterparties' nonperformance. The Registrants only enter into agreements and material transactions with counterparties that have 96 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) investment grade credit ratings by Moody's and S&P or with counterparties who have posted collateral to cover potential credit exposure. The Registrants have also established risk management policies and controls to determine and monitor the creditworthiness of counterparties in order to mitigate their exposure to counterparty credit risk. Prior to entering into a physical transaction, Southern Company Gas assigns physical wholesale counterparties an internal credit rating and credit limit based on the counterparties' Moody's, S&P, and Fitch ratings, commercially available credit reports, and audited financial statements. Southern Company Gas may require counterparties to pledge additional collateral when deemed necessary. In addition, Southern Company Gas conducts credit evaluations and obtains appropriate internal approvals for the counterparty's line of credit before any transaction with the counterparty is executed. In most cases, the counterparty must have an investment grade rating, which includes a minimum long-term debt rating of Baa3 from Moody's and BBB- from S&P. Generally, Southern Company Gas requires credit enhancements by way of a guaranty, cash deposit, or letter of credit for transaction counterparties that do not have investment grade ratings. Southern Company Gas also utilizes master netting agreements whenever possible to mitigate exposure to counterparty credit risk. When Southern Company Gas is engaged in more than one outstanding derivative transaction with the same counterparty and it also has a legally enforceable netting agreement with that counterparty, the "net" mark-to-market exposure represents the netting of the positive and negative exposures with that counterparty and a reasonable measure of Southern Company Gas' credit risk. Southern Company Gas also uses other netting agreements with certain counterparties with whom it conducts significant transactions. Master netting agreements enable Southern Company Gas to net certain assets and liabilities by counterparty. Southern Company Gas also nets across product lines and against cash collateral provided the master netting and cash collateral agreements include such provisions. Southern Company Gas may require counterparties to pledge additional collateral when deemed necessary. The Registrants do not anticipate a material adverse effect on their respective financial statements as a result of counterparty nonperformance. (K) ACQUISITIONS AND DISPOSITIONS See Note 15 to the financial statements in Item 8 of the Form 10-K for additional information, including details of assets and liabilities held for sale at December 31, 2019 for Southern Company, Southern Power, and Southern Company Gas. Alabama Power On 97 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) Southern Power Asset Acquisitions During the nine months ended September 30, 2020, Southern Power acquired a controlling interest in the wind facility listed below. Acquisition-related costs were expensed as incurred and were not material.
(*)In May 2020, Southern Power purchased 100% of the Class A membership interests and now owns the controlling interest in the project, with the Class B member, Invenergy Renewables LLC, owning the noncontrolling interest. In March 2020, Southern Power entered into an agreement to acquire a controlling membership interest in an approximately 300-MW wind facility located in South Dakota. The acquisition is subject to FERC approval and certain other customary conditions to closing, including commercial operation of the facility, which is expected to occur in the Construction Projects During the construction incurred for these projects were
(a)In 2018, Southern Power purchased 100% of the membership interests of the Reading facility pursuant to a joint development arrangement. At the time the facility was placed in service, Southern Power recorded an operating lease right-of-use asset and an operating lease liability, each in the amount of $24 million. In June 2020, Southern Power completed a tax equity transaction whereby it received $156 million and now owns 100% of the Class B membership interests. (b)In October 2019, Southern Power purchased 100% of the membership interests of the Skookumchuck facility pursuant to a joint development arrangement. Southern Power expects to complete a tax equity transaction upon commercial operation and retain the Class B membership interests. Shortly after the completed tax equity transaction, Southern Power may sell a noncontrolling interest in these Class B membership interests to another partner. Southern Power would retain the controlling ownership interest in the facility. The ultimate outcome of these matters cannot be determined at this time. (c)Prior to commercial operation, Southern Power may enter into one or more partnerships, in which case it would ultimately own less than 100% of the Class B membership interests, but would retain ownership of the controlling interest. The ultimate outcome of this matter cannot be determined at this time. 98
Development Projects Southern Power continues to evaluate and refine the deployment of the remaining wind turbine equipment purchased in 2016 and 2017 to development and construction projects. During the Sales of Natural Gas and Biomass Plants On January 17, 2020, Southern Power completed the sale of its equity interests in Plant Mankato (including the 385-MW expansion unit completed in May 2019) to a subsidiary of Xcel for a purchase price of approximately Plants Nacogdoches (sold in June 2019) and Mankato represented individually significant components of Southern Power; therefore, pre-tax income for these components for the three months ended
Southern Company Gas On March 24, 2020, Southern Company Gas completed the sale of its interests in Pivotal LNG and Atlantic Coast Pipeline to Dominion Modular LNG Holdings, Inc. and Dominion Atlantic Coast Pipeline, LLC, respectively, with aggregate proceeds of $178 million, including (L) SEGMENT AND RELATED INFORMATION Southern Company The primary businesses of the Southern Company system are electricity sales by the traditional electric operating companies and Southern Power and the distribution of natural gas by Southern Company Gas. The traditional electric operating companies – Alabama Power, Georgia Power, and Mississippi Power – are vertically integrated utilities providing electric service in 3 Southeastern states. Southern Power develops, constructs, acquires, owns, and manages power generation assets, including renewable energy projects, and sells electricity at market-based rates in the wholesale market. Southern Company Gas distributes natural gas through its natural gas distribution utilities and is involved in several other complementary businesses including gas pipeline investments, wholesale gas services, and gas marketing services. 99 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) Southern Company's reportable business segments are the sale of electricity by the traditional electric operating companies, the sale of electricity in the competitive wholesale market by Southern Power, and the sale of natural gas and other complementary products and services by Southern Company Gas. Revenues from sales by Southern Power to the traditional electric operating companies were 100 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) Financial data for business segments and products and services for the three and nine months ended
101
NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED)
(*)The revenues for wholesale gas services are netted with costs associated with its energy and risk management activities. See "Southern Company Gas" herein for additional information. Southern Company Gas Southern Company Gas manages its business through 4 reportable segments – gas distribution operations, gas pipeline investments, wholesale gas services, and gas marketing services. The non-reportable segments are combined and presented as all other. Gas distribution operations is the largest component of Southern Company Gas' business and includes natural gas local distribution utilities that construct, manage, and maintain intrastate natural gas pipelines and gas distribution facilities in 4 states. Gas pipeline investments consists of joint ventures in natural gas pipeline investments including a 50% interest in SNG, a 20% ownership interest in the PennEast Pipeline construction project, a 50% joint ownership interest in the Dalton Pipeline, and a 5% ownership interest in the Atlantic Coast Pipeline construction project through its sale on March 24, 2020. These natural gas pipelines enable the provision of diverse sources of natural gas supplies to the customers of Southern Company Gas. Wholesale gas services provides natural gas asset management and/or related logistics services for each of Southern Company Gas' utilities except Nicor Gas as well as for non-affiliated companies. Additionally, wholesale gas services engages in natural gas storage and gas pipeline arbitrage and related activities. Gas marketing services provides natural gas marketing to end-use customers primarily in Georgia, Illinois, and The all other column includes segments below the quantitative threshold for separate disclosure, including natural gas storage businesses, fuels operations through the sale of Southern Company Gas' interest in Pivotal LNG on March 24, 2020, the investment in Triton through its sale on May 29, 2019, and other subsidiaries that fall below the quantitative threshold for separate disclosure. See Notes (E) and (K) under 102 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued) (UNAUDITED) Business segment financial data for the three and nine months ended
(a)The revenues for wholesale gas services are netted with costs associated with its energy and risk management activities. A reconciliation of operating revenues and intercompany revenues is shown in the following table.
(b)Segment net income (loss) for the "All Other" column includes a pre-tax impairment charge of $92 million ($65 million after tax) for the three and nine months ended September 30, 2019 related to a natural gas storage facility in Louisiana. See Note 3 to the financial statements under "Other Matters – Southern Company Gas – Natural Gas Storage Facilities" in Item 8 of the Form 10-K for additional information. 103
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following Management's Discussion and Analysis of Financial Condition and Results of Operations is a combined presentation; however, information contained herein relating to any individual Registrant is filed by such Registrant on its own behalf and each Registrant makes no representation as to information related to the other Registrants. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Southern Company is a holding company that owns all of the common stock of three traditional electric operating companies (Alabama Power, Georgia Power, and Mississippi Power), as well as Southern Power and Southern Company Gas, and owns other direct and indirect subsidiaries. The primary businesses of the Southern Company system are electricity sales by the traditional electric operating companies and Southern Power and the distribution of natural gas by Southern Company Gas. Southern Company's reportable segments are the sale of electricity by the traditional electric operating companies, the sale of electricity in the competitive wholesale market by Southern Power, and the sale of natural gas and other complementary products and services by Southern Company Gas. Southern Company Gas' reportable segments are gas distribution operations, gas pipeline investments, wholesale gas services, and gas marketing services. See Note (L) to the Condensed Financial Statements herein for additional information on segment reporting. For additional information on the Registrants' primary business activities, see BUSINESS – "The Southern Company System" in Item 1 of the Form 10-K. The Registrants continue to focus on several key performance indicators. For the traditional electric operating companies and Southern Company Gas, these indicators include, but are not limited to, customer satisfaction, plant availability, electric and natural gas system reliability, and execution of major construction projects. For Southern Power, these indicators include, but are not limited to, the equivalent forced outage rate and contract availability to evaluate operating results and help ensure its ability to meet its contractual commitments to customers. In addition, Southern Company and the Subsidiary Registrants focus on earnings per share and net income, respectively, as a key performance indicator. Recent Developments COVID-19 During March 2020, COVID-19 was declared a pandemic by the World Health Organization and the Centers for Disease Control and Prevention and has spread globally, including throughout the United States. The Southern Company system provides a critical service to its customers; therefore, it is essential that Southern Company system employees are able to continue to perform their critical duties safely and effectively. The Southern Company system has implemented applicable business continuity plans, including teleworking, canceling non-essential business travel, increasing cleaning frequency at business locations, implementing applicable safety and health guidelines issued by federal and state officials, and establishing protocols for required work on customer premises. To date, these procedures have been effective in maintaining the Southern Company system's critical operations. As a result of the COVID-19 pandemic, there have been economic disruptions in the Registrants' operating territories. The traditional electric operating companies and the natural gas distribution utilities Alabama Power On August 14, 2020, the Alabama PSC issued an order granting Alabama Power a certificate of convenience and necessity (CCN) to procure additional capacity, and, on August 31, 2020, Alabama Power completed the Autauga Combined Cycle Acquisition. On August 7, 2020, the Alabama PSC issued an order authorizing Alabama Power to reduce its over-collected fuel balance by $100 million and return that amount to customers in the form of bill credits for the billing month of October 2020. 105 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) See FUTURE EARNINGS POTENTIAL – "Regulatory Matters – Alabama Power" herein for additional information. Georgia Power Plant Vogtle Units 3 and 4 Status In 2009, the Georgia PSC certified construction of Plant Vogtle Units 3 and 4 (with electric generating capacity of approximately 1,100 MWs each) As of June 30, 2020, assignments of contingency to the 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 total pre-tax charge to income of $149 million ($111 million after tax) for the increase in the total project capital cost forecast as of June 30, 2020. As and when these amounts are spent, Georgia Power may request the Georgia PSC To address these The continuing effects of the COVID-19 pandemic could further disrupt or delay construction, testing, supervisory, and support activities at Plant Vogtle Units 3 and 4. See FUTURE EARNINGS POTENTIAL – "Construction Programs – Nuclear Mississippi Power On March 17, 2020, the Mississippi PSC approved a settlement agreement between Mississippi Power and the Mississippi Public Utilities Staff related to Mississippi Power's base rate case filed in November 2019 (Mississippi Power Rate Case Settlement Agreement). Under the terms of the Mississippi Power Rate Case Settlement Agreement, annual retail rates decreased approximately $16.7 million, or 1.85%, effective for the first billing cycle of April 2020. See FUTURE EARNINGS POTENTIAL – 106 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Southern Power During the On January 17, 2020, Southern Power completed the sale of its equity interests in Plant Mankato (including the 385-MW expansion unit completed in May 2019) to a subsidiary of Xcel for a purchase price of approximately In March 2020, Southern Power entered into an agreement to acquire a controlling membership interest in an approximately 300-MW wind facility located in South Dakota. The acquisition is subject to FERC approval and certain other customary conditions to closing, including commercial operation of the facility, which is expected to occur in the On May 1, 2020, Southern Power purchased a controlling interest in the 56-MW Beech Ridge II wind facility located in Greenbrier County, West Virginia from Invenergy Renewables LLC. The facility's output is contracted under a 12-year PPA. See Note (K) to the Condensed Financial Statements herein for additional information. At Southern Company Gas On March 24, 2020, Southern Company Gas completed the sale of its interests in Pivotal LNG and Atlantic Coast Pipeline with aggregate proceeds of $178 million, including On June 1, 2020, Virginia Natural Gas filed a general rate case with the Virginia Commission seeking an increase in rates ofapproximately $49.6 million based on a ROE of 10.35% and an equity ratio of 54%. Rate adjustments are expected to be effective November 1, 2020, subject to refund. The Virginia Commission is expected to rule on the requested increase in the second quarter 2021. On July 1, 2020, Atlanta Gas Light filed its 2020 GRAM filing with the Georgia PSC requesting an increase in annual base rates of $37.6 million. Resolution of the 2020 GRAM filing is expected by December 31, 2020, with rates effective January 1, 2021. See FUTURE EARNINGS POTENTIAL – "Regulatory Matters – Southern Company Gas" herein for additional information regarding Southern Company Gas' regulatory filings. The ultimate outcome of these matters cannot be determined at this time. 107 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) RESULTS OF OPERATIONS Southern Company Net Income
Consolidated net income attributable to Southern Company was Consolidated net income attributable to Southern Company was $2.7 billion ($2.58 per share) for year-to-date 2020 compared to $4.3 billion ($4.12 per share) for the corresponding period in 2019. The decrease was primarily due to the $2.5 billion ($1.3 billion after tax) Retail Electric Revenues
In the Details of the changes in retail electric revenues were as follows:
Revenues associated with changes in rates and pricing increased in the See Note 2 to the financial statements under "Alabama Power" and "Georgia Power" in Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements herein for additional information. 108 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Revenues attributable to changes in sales Fuel and other cost recovery revenues decreased Wholesale Electric Revenues
Wholesale electric revenues consist of revenues from PPAs and short-term opportunity sales. Wholesale electric revenues from PPAs (other than solar and wind PPAs) have both capacity and energy components. Capacity revenues generally represent the greatest contribution to net income and are designed to provide recovery of fixed costs plus a return on investment. Energy revenues will vary depending on fuel prices, the market prices of wholesale energy compared to the Southern Company system's generation, demand for energy within the Southern Company system's electric service territory, and the availability of the Southern Company system's generation. Increases and decreases in energy revenues that are driven by fuel prices are accompanied by an increase or decrease in fuel costs and do not have a significant impact on net income. Energy sales from solar and wind PPAs do not have a capacity charge and customers either purchase the energy output of a dedicated renewable facility through an energy charge or through a fixed price related to the energy. As a result, the ability to recover fixed and variable operations and maintenance expenses is dependent upon the level of energy generated from these facilities, which can be impacted by weather conditions, equipment performance, transmission constraints, and other factors. Wholesale electric revenues at Mississippi Power include FERC-regulated municipal and rural association sales under cost-based tariffs as well as market-based sales. Short-term opportunity sales are made at market-based rates that generally provide a margin above the Southern Company system's variable cost to produce the energy. In the 109 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Plant Mankato in the first quarter 2020. The year-to-date 2020 capacity revenue decrease was also due to Southern Power's
In the
Details of the changes in natural gas revenues were as follows:
Revenues Revenues Revenues 110 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Other Revenues
In the Fuel and Purchased Power Expenses
In the For year-to-date 2020, total fuel and purchased power expenses were $2.8 billion compared to $3.5 billion for the corresponding period in 2019. The decrease was primarily the result of a $329 million decrease in the average cost of fuel and purchased power and a Fuel and purchased power energy transactions at the traditional electric operating companies are generally offset by fuel revenues and do not have a significant impact on net income. See FUTURE EARNINGS POTENTIAL – "Regulatory Matters" herein for additional information. Fuel expenses incurred under Southern Power's PPAs are generally the responsibility of the counterparties and do not significantly impact net income. 111
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
(*)Average cost of purchased power includes fuel purchased by the Southern Company system for tolling agreements where power is generated by the provider. Fuel In the For year-to-date 2020, fuel expense was $2.2 billion compared to $2.8 billion for the corresponding period in 2019. The decrease was primarily due to a 30.3% decrease in the volume of KWHs generated by coal, an 18.8% decrease in the average cost of natural gas per KWH generated, and a 2.8% decrease in the volume of KWHs generated by natural gas, partially offset by a 1.0% increase in the average cost of coal per KWH generated. Purchased Power In the third quarter 2020, purchased power expense was $230 million compared to For year-to-date 2020, purchased power expense was $611 million compared to $625 million for the corresponding period in 2019. The decrease was primarily due to a 4.6% decrease in the average cost Cost of Natural Gas
Excluding Atlanta Gas Light, which does not sell natural gas to end-use customers, natural gas distribution rates include provisions to adjust billings for fluctuations in natural gas costs. Therefore, gas costs recovered through natural gas revenues generally equal the amount expensed in cost of natural gas and do not affect net income from 112 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) the natural gas distribution utilities. Cost of natural gas at the natural gas distribution utilities represented In the For year-to-date 2020, cost of natural gas was $654 million compared to $956 million for the corresponding period in 2019. The decrease reflects a Cost of Other Sales
In the Other Operations and Maintenance Expenses
In the third quarter 2020, other operations and maintenance expenses were $1.29 billion compared to $1.30 billion for the corresponding period in 2019. The decrease primarily
For year-to-date 2020, other operations and maintenance expenses were $3.8 billion compared to $3.9 billion for the corresponding period in 2019. The decrease reflects the impacts of cost containment activities implemented in 2020 to help offset the effects of the recessionary economy resulting from the COVID-19 pandemic. The decrease primarily results from decreases of $128 million in scheduled generation outage and maintenance expenses, $81 million in transmission and distribution expenses at the traditional electric operating companies, including $31 million of reliability NDR credits at Alabama Power, $37 million in compliance and environmental expenses at the traditional electric operating companies, and See Note 2 to the financial statements under "Alabama Power – Rate NDR" and " – Rate CNP Compliance" and "Georgia Power – Storm Damage Recovery" and Note 15 to the financial statements under "Southern Company" in Item 8 of the Form 10-K for additional information. 113 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Depreciation and Amortization
In the Estimated Loss on Plant Vogtle Units 3 and 4
N/M - Not meaningful In the second quarter 2020, an estimated probable loss of $149 million was recorded at Georgia Power to reflect its revised total project capital cost forecast to complete construction and start-up of Plant Vogtle Units 3 and 4. See Note (B) to the Condensed Financial Statements under "Nuclear Construction" herein for additional information. Impairment Charges
N/M - Not meaningful In the third quarter 2019, an asset impairment charge of $92 million was recorded at Southern Company Gas related to a natural gas storage facility in Louisiana. In the third quarter and year-to-date 2019, goodwill and asset impairment charges totaling $18 million and $50 million, respectively, were recorded related to the sale of PowerSecure's utility infrastructure services business and in contemplation of the sale of its lighting business. See Notes 3 and 15 to the financial statements under "Other Matters – Southern Company Gas – Natural Gas Storage Facilities" and "Southern Company," respectively, in Item 8 of the Form 10-K for additional information. (Gain) Loss on Dispositions, Net
N/M - Not meaningful 114 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Interest Expense, Net of Amounts Capitalized
In the See FINANCIAL CONDITION AND LIQUIDITY – "Financing Activities" herein and Note 8 to the financial statements in Item 8 of the Form 10-K for additional information. Impairment of Leveraged Lease
N/M - Not meaningful For year-to-date 2020, an impairment charge of $154 million was recorded related to a leveraged lease investment at Southern Holdings. See Note (C) to the Condensed Financial Statements under "Other Matters – Southern Company" herein for additional information. Other Income (Expense), Net
In the third quarter 2020, other income (expense), net was $113 million compared to $61 million for the corresponding period in 2019. For year-to-date 2020, other income (expense), net was $319 million compared to $239 million for the corresponding period in 2019. These increases were primarily related to increases in non-service cost-related retirement benefits income of $30 million and $88 million for the third quarter and year-to-date 2020, respectively, as well as $12 million of additional benefits associated with a litigation settlement at Southern Power in the second quarter 2019. The year-to-date 2020 increase was partially offset by the $36 million gain on the litigation settlement that was recorded in the second quarter 2019. See Note 3 to the financial statements under "General Litigation Matters – Southern Power" in Item 8 of the Form 10-K and Note (H) to the Condensed Financial Statements herein for additional information. Income Taxes
In the third quarter 2020, income taxes were $293 million compared to $367 million for the corresponding period in 2019. For year-to-date 2020, income taxes were $0.4 billion compared to $1.9 billion for the corresponding period in 2019. These decreases were primarily due to the flowback of excess deferred income taxes in 2020 as authorized in Georgia Power's 2019 ARP and lower pre-tax earnings. The year-to-date 2020 decrease also reflects the tax impacts of the sale of Gulf Power in 2019. See Notes 2, 3, and 15 to the financial statements under "Georgia Power – Rate Plans – Tax Reform Settlement Agreement," "Other Matters – Southern Company Gas – Natural Gas Storage Facilities," and "Southern Company," respectively, in Item 8 of the Form 10-K and Notes (B) and (G) to the 115 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Alabama Power Net Income
Alabama Power's net income after dividends on preferred stock for the Alabama Power's net income after dividends on preferred stock for year-to-date 2020 was $1.02 billion compared to $0.98 billion for the corresponding period in 2019. This increase was primarily due to a decrease in operations and maintenance expenses, Retail Revenues
In the 116 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Details of the changes in retail revenues were as follows:
Revenues associated with changes in rates and pricing Revenues attributable to changes in sales decreased in the Fuel and other cost recovery revenues decreased in the Electric rates include provisions to recognize the recovery of fuel costs, purchased power costs, PPAs certificated by the Alabama PSC, and costs associated with the natural disaster reserve. Under these provisions, fuel and other cost recovery revenues generally equal fuel and other cost recovery expenses and do not affect net income. See Note 2 to the financial statements under "Alabama Power" in Item 8 of the Form 10-K for additional information. Wholesale Revenues – Affiliates
Wholesale revenues from sales to affiliated companies will vary depending on demand and the availability and cost of generating resources at each company. These affiliate sales are made in accordance with the IIC, as approved by the FERC. These transactions do not have a significant impact on earnings since this energy is generally sold at marginal cost and energy purchases are generally offset by energy revenues through Alabama Power's energy cost recovery clause. 117 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Fuel and Purchased Power Expenses
In the For year-to-date 2020, total fuel and purchased power expenses were $0.97 billion compared to $1.19 billion for the corresponding period in 2019. The decrease was primarily due to a $193 million decrease in the volume of KWHs generated (excluding hydro) and purchased and a Fuel and purchased power energy transactions do not have a significant impact on earnings since energy expenses are generally offset by energy revenues through Alabama Power's energy cost recovery clause. See Note 2 to the financial statements under "Alabama Power – Rate ECR" in Item 8 of the Form 10-K for additional information. Details of Alabama Power's generation and purchased power were as follows:
(*)Average cost of purchased power includes fuel, energy, and transmission purchased by Alabama Power for tolling agreements where power is generated by the provider. 118
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Fuel In the For year-to-date 2020, fuel expense was $721 million compared to $864 million for the corresponding period in 2019. The decrease was primarily due to a 21.0% decrease in the average cost of natural gas per KWH generated, which excludes fuel associated with tolling agreements, an 18.6% decrease in the volume of KWHs generated by coal, and a 15.7% and an 8.5% increase in the volume of KWHs generated by hydro and nuclear, respectively.
In the Purchased Power – Affiliates In the third quarter 2020, purchased power expense from affiliates was $44 million compared to $73 million for the corresponding period in 2019. For year-to-date 2020, purchased power expense from affiliates was $93 million compared to $164 million for the corresponding period in 2019. These decreases were primarily due to reductions of 45.4% and 44.5%, respectively, in the amount of energy purchased due to milder weather during 2020 as compared to 2019. Energy purchases from affiliates will vary depending on demand and the availability and cost of generating resources at each company within the Southern Company system. These purchases are made in accordance with the IIC or other contractual agreements, all as approved by the FERC. Other Operations and Maintenance Expenses
In the third quarter 2020, other operations and maintenance expenses were $387 million compared to $409 million for the corresponding period in 2019. For year-to-date 2020, other operations and maintenance expenses were $1.08 billion compared to $1.22 billion for the corresponding period in 2019. These decreases reflect the impacts of cost containment activities implemented to help offset the effects of the recessionary economy resulting from the COVID-19 pandemic. The decreases primarily result from decreases of See Note 2 to the financial statements under "Alabama Power – Rate NDR" and " – Rate CNP Compliance" in Item 8 of the Form 10-K for additional information. 119 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Other Income (Expense), Net
In the Income Taxes
In the For year-to-date 2020, income taxes were $307 million compared to $295 million for the corresponding period in 2019. This increase was primarily due to higher pre-tax Georgia Power Net Income
Georgia Power's net income for the Retail Revenues
In the third quarter 2020, retail revenues were $2.44 billion compared to $2.57 billion for the corresponding period in 2019. For year-to-date 2020, retail revenues were $5.87 billion compared to $6.18 billion for the corresponding period in 2019. 120 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Details of the changes in retail revenues were as follows:
Revenues associated with changes in rates and pricing increased in the Revenues attributable to changes in sales Fuel revenues and costs are allocated between retail and wholesale jurisdictions. Retail fuel cost recovery revenues decreased in the
Wholesale revenues from sales to non-affiliates consist of PPAs and short-term opportunity sales. Wholesale revenues from PPAs have both capacity and energy components. Wholesale capacity revenues from PPAs are recognized in amounts billable under the contract terms and provide for recovery of fixed costs and a return on investment. Wholesale revenues from sales to non-affiliates will vary depending on fuel prices, the market prices of 121 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Wholesale revenues from sales to affiliated companies will vary depending on demand and the availability and cost of generating resources at each company. These affiliate sales are made in accordance with the IIC, as approved by the FERC. These transactions do not have a significant impact on earnings since this energy is generally sold at marginal costs. In the third quarter 2020, wholesale revenues were $34 million compared to $39 million for the corresponding period in 2019. For year-to-date 2020, wholesale revenues were $85 million compared to $107 million for the corresponding period in 2019. These decreases were primarily due to lower market demand largely resulting from the expiration of a non-affiliate PPA and lower energy prices. Fuel and Purchased Power Expenses
In the For year-to-date 2020, total fuel and purchased power expenses were $1.63 billion compared to $1.99 billion for the corresponding period in 2019. The decrease was due to a Fuel and purchased power energy transactions do not have a significant impact on earnings since these fuel expenses are generally offset by fuel revenues through Georgia Power's fuel cost recovery mechanism. See MANAGEMENT'S DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL – "Regulatory Matters – Georgia Power – Fuel Cost Recovery" in Item 7 of the Form 10-K for additional information. 122
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
(*)Average cost of purchased power includes fuel purchased by Georgia Power for tolling agreements where power is generated by the Fuel In the third quarter 2020, fuel expense was $368 million compared to $443 million for the corresponding period in 2019. For year-to-date 2020, fuel expense was $0.83 billion compared to $1.13 billion for the corresponding period in 2019. The decreases for the third quarter and year-to-date 2020 were primarily due to decreases of 25.7% and 50.3%, respectively, in the volume of KWHs generated by coal and decreases of 8.2% and 13.5%, respectively, in the average cost of Purchased Power – Affiliates Energy purchases from affiliates will vary depending on demand and the availability and cost of generating resources at each company within the Southern Company system. These purchases are made in accordance with the IIC or other contractual agreements, all as approved by the FERC. Other Operations and Maintenance Expenses
In the 123 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) maintenance. These decreases reflect the impacts of cost containment activities implemented to help offset the effects of the recessionary economy resulting from the COVID-19 pandemic. Also contributing to the offset was a decrease of $6 million in expenses from unregulated sales associated with new energy conservation projects. For year-to-date 2020, other operations and maintenance expenses were $1.41 billion compared to $1.39 billion for the corresponding period in 2019. The increase was primarily due to increases of $138 million in storm damage recovery as authorized in the 2019 ARP and $15 million in employee benefit expenses, partially offset by decreases of $42 million in distribution- and transmission-related expenses, $34 million associated with generation maintenance and scheduled outages, and $13 million associated with generation environmental projects. These decreases reflect the impacts of cost containment activities implemented to help offset the effects of the recessionary economy resulting from the COVID-19 pandemic. Other expense reductions include a decrease of $15 million related to See Note 2 to the financial statements under "Georgia Power – Storm Damage Recovery" in Item 8 of the Form 10-K for additional information. Depreciation and Amortization
In the Estimated Loss on Plant Vogtle Units 3 and 4
N/M - Not meaningful In the second quarter 2020, an estimated probable loss of $149 million was recorded to reflect Georgia Power's revised total project capital cost forecast to complete construction and start-up of Plant Vogtle Units 3 and 4. See Note (B) to the Condensed Financial Statements under "Nuclear Construction" herein for additional information. Interest Expense, Net of Amounts Capitalized
124 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) in amounts capitalized in connection with the construction of Plant Vogtle Units 3 and 4. See FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" and "Financing Activities" herein for additional information on borrowings and Note (B) to the Condensed Financial Statements under Other Income (Expense), Net
In the Income Taxes
In the Mississippi Power Net Income
Mississippi Power's net income for the For year-to-date 2020, net income was $138 million compared to $139 million for the corresponding period in 2019. The decrease was primarily due to a decrease in revenues as a result of a base rate reduction that became effective for the first billing cycle of April 2020, as well as a decrease in customer usage due to the COVID-19 pandemic, 125 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) and an increase in See MANAGEMENT'S DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL – "Regulatory Matters – Mississippi Power – 2019 Base Rate Case" herein and Note 2 to the financial statements under "Mississippi Power – Environmental Compliance Overview Plan" in Item 8 of the Form 10-K for additional information. Retail Revenues
In the Details of the changes in retail revenues were as follows:
Revenues attributable to changes in sales decreased in the Weather-adjusted residential KWH sales Fuel and other cost recovery revenues decreased 126 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) including the energy component of purchased power costs. Under these provisions, fuel revenues generally equal fuel expenses, including the energy component of purchased power costs, and do not affect net income. Wholesale Revenues – Non-Affiliates
Wholesale revenues from sales to non-affiliates will vary depending on fuel prices, the market prices of wholesale energy compared to the cost of Mississippi Power's and the Southern Company system's generation, demand for energy within the Southern Company system's electric service territory, and the availability of the Southern Company system's generation. Increases and decreases in energy revenues that are driven by fuel prices are accompanied by an increase or decrease in fuel costs and do not have a significant impact on net income. In addition, Mississippi Power provides service under long-term contracts with rural electric cooperative associations and municipalities located in southeastern Mississippi under cost-based electric tariffs which are subject to regulation by the FERC. See MANAGEMENT'S DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL – "Regulatory Matters – Mississippi Power" in Item 7 of the Form 10-K for additional information. Wholesale Revenues – Affiliates
Wholesale revenues from sales to affiliated companies will vary depending on demand and the availability and cost of generating resources at each company. These affiliate sales are made in accordance with the IIC, as approved by the FERC. These transactions do not have a significant impact on earnings since this energy is generally sold at marginal cost. In the For year-to-date 2020, wholesale revenues from sales to affiliates were $82 million compared to $109 million for the corresponding period in 2019. This decrease was primarily due to a 127 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Fuel and Purchased Power Expenses
In the For year-to-date 2020, total fuel and purchased power expenses were $284 million compared to $334 million for the corresponding period in 2019. The decrease was primarily due to a $47 million decrease related to the cost of fuel and purchased power primarily due to the lower average cost of natural Fuel and purchased power energy transactions do not have a significant impact on earnings since energy expenses are generally offset by energy revenues through Mississippi Power's fuel cost recovery clause. Details of Mississippi Power's generation and purchased power were as follows:
Fuel In the For year-to-date 2020, fuel expense was $266 million compared to $319 million for the corresponding period in 2019. This decrease was due to a 128 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Other Operations and Maintenance Expenses
In the For year-to-date 2020, other operations and maintenance expenses were $202 million compared to $204 million for the corresponding period in 2019. The decrease was primarily due to an $8 million decrease associated with the Kemper IGCC primarily related to an increase in salvage proceeds, largely offset by increases of $3 million in certain employee compensation expenses deferred in 2019, $2 million in vegetation management expenses, and $2 million in See Note 2 to the financial statements under "Mississippi Power – Kemper County Energy Facility" in Item 8 of the Form 10-K and Depreciation and Amortization
In the Interest Expense, Net of Amounts Capitalized
For year-to-date 2020, interest expense, net of amounts capitalized was $45 million compared to $52 million for the corresponding period in 2019. The decrease primarily resulted from a decrease in outstanding long-term borrowings. 129 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Income Taxes
For year-to-date 2020, income taxes were $20 million compared to $27 million for the corresponding period in 2019. The decrease was primarily due to a decrease of $9 million associated with the flowback of excess deferred income taxes as a result of the Mississippi Power Rate Case Settlement Agreement. See Note (G) to the Condensed Financial Statements herein for additional information. Southern Power Net Income Attributable to Southern Power
Net income attributable to Southern Power for the Net income attributable to Southern Power for year-to-date 2020 was $212 million compared to $316 million for the corresponding period in 2019. The decrease was primarily due to the See Note (K) to the Condensed Financial Statements under "Southern Power" herein and Note 15 to the financial statements under "Southern Power" in Item 8 of the Form 10-K for additional information. Operating Revenues
Total operating revenues include PPA capacity revenues, which are derived primarily from long-term contracts involving natural gas facilities and a biomass generating facility (through the second quarter 2019 sale of Plant Nacogdoches), and PPA energy revenues from Southern Power's generation facilities. To the extent Southern Power has capacity not contracted under a PPA, it may sell power into an accessible wholesale market, or, to the extent those generation assets are part of the FERC-approved IIC, it may sell power into the Southern Company power pool. Natural Gas and Biomass Capacity and Energy Revenue Capacity revenues generally represent the greatest contribution to operating income and are designed to provide recovery of fixed costs plus a return on investment. Energy is generally sold at variable cost or is indexed to published natural gas indices. Energy revenues will vary depending on the energy demand of Southern Power's customers and their generation capacity, as well as the market prices of wholesale energy compared to the cost of Southern Power's energy. Energy revenues also include fees for support services, fuel storage, and unit start charges. Increases and decreases in energy revenues under PPAs that are driven by fuel or purchased power prices are accompanied by an increase or decrease in fuel and purchased power costs and do not have a significant impact on net income. 130 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Solar and Wind Energy Revenue Southern Power's energy sales from solar and wind generating facilities are predominantly through long-term PPAs that do not have capacity revenue. Customers either purchase the energy output of a dedicated renewable facility through an energy charge or pay a fixed price related to the energy generated from the respective facility and sold to the grid. As a result, Southern Power's ability to recover fixed and variable operations and maintenance expenses is dependent upon the level of energy generated from these facilities, which can be impacted by weather conditions, equipment performance, transmission constraints, and other factors. See FUTURE EARNINGS POTENTIAL – Operating Revenues Details Details of Southern Power's operating revenues were as follows:
In the •PPA capacity revenues decreased •PPA energy revenues decreased $20 million, or 6%, due to a $29 million decrease in sales from natural gas facilities resulting from a $26 million decrease in the volume of KWHs sold due to reduced demand and a $3 million decrease in the average cost of fuel and purchased power. This decrease was partially offset by a $9 million increase in sales from a fuel cell project acquired in late 2019. •Non-PPA revenues decreased $17 million, or 17%, due to a $20 million decrease in the market price of energy, partially offset by a $3 million increase in the volume of KWHs sold through short-term sales. For year-to-date 2020, total operating revenues were $1.3 billion, reflecting a $190 million, or 12%, decrease from the corresponding period in 2019. The decrease in operating revenues was primarily due to the following: •PPA capacity revenues decreased $87 million, or 23%, primarily due to •PPA energy revenues decreased •Non-PPA revenues decreased 131 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Fuel and Purchased Power Expenses Details of Southern Power's generation and purchased power were as follows:
Southern Power's PPAs for natural gas generation generally provide that the purchasers are responsible for either procuring the fuel (tolling agreements) or reimbursing Southern Power for substantially all of the cost of fuel relating to the energy delivered under such PPAs. Consequently, changes in such fuel costs are generally accompanied by a corresponding change in related fuel revenues and do not have a significant impact on net income. Southern Power is responsible for the cost of fuel for generating units that are not covered under PPAs. Power from these generating units is sold into the wholesale market or into the Southern Company power pool for capacity owned directly by Southern Power. Purchased power expenses will vary depending on demand, availability, and the cost of generating resources throughout the Southern Company system and other contract resources. Load requirements are submitted to the Southern Company power pool on an hourly basis and are fulfilled with the lowest cost alternative, whether that is generation owned by Southern Power, an affiliate company, or external parties. Such purchased power costs are generally recovered through PPA revenues. Details of Southern Power's fuel and purchased power expenses were as follows:
In the For year-to-date 2020, total fuel and purchased power expenses decreased $133 million, or 25%, compared to the corresponding period in 2019. Fuel expense decreased $103 million due to a $97 million decrease in the average cost of fuel per KWH generated 132 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) (Gain) Loss on Dispositions, Net
N/M - Not meaningful
Interest Expense, Net of Amounts Capitalized
In the third quarter 2020, interest expense, net of amounts capitalized was $36 million compared to $43 million for the corresponding period in 2019. For year-to-date 2020, interest expense, net of amounts capitalized was $114 million compared to $127 million for the corresponding period in 2019. The decreases were primarily due to lower outstanding debt. See FINANCIAL CONDITION AND LIQUIDITY – "Financing Activities" herein for additional information. Other Income (Expense), Net
In the third quarter 2020, other income (expense), net was $13 million compared to $6 million for the corresponding period in 2019. The increase was primarily due to the resolution of certain contingencies in the third quarter 2020 associated with the Roserock solar facility litigation settlement in 2019. For year-to-date 2020, other income (expense), net was $19 million compared to $48 million for the corresponding period in 2019. The decrease was primarily due to a $36 million gain arising from the Roserock solar facility litigation settlement in the second quarter 2019, partially offset by the resolution of certain related contingencies in the third quarter 2020. See Note 3 to the financial statements in Item 8 of the Form 10-K under "General Litigation Matters – Southern Power" for additional information. Income Taxes (Benefit)
For year-to-date 2020, income tax expense was $27 million compared to a $41 million benefit for the corresponding period in 2019. The change was primarily due to a $75 million income tax benefit in 2019 resulting from ITCs recognized upon the sale of Plant Nacogdoches, partially offset by a decrease in income tax expense as a result of lower pre-tax earnings. See Notes (G) and (K) to the Condensed Financial Statements herein for additional information. 133 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Net Income Attributable to Noncontrolling Interests
For year-to-date 2020, net income attributable to noncontrolling interests was $3 million compared to $26 million for the corresponding period in 2019. The change was primarily due to an allocation of approximately $26 million of income to the noncontrolling interest partner related to the Roserock solar facility litigation settlement in the second quarter 2019. See Note 3 to the financial statements in Item 8 of the Form 10-K under "General Litigation Matters – Southern Power" for additional information. Southern Company Gas Operating Metrics Southern Company Gas continues to focus on several operating metrics, including Heating Degree Days, customer count, and volumes of natural gas sold. Southern Company Gas measures weather and the effect on its business using Heating Degree Days. Generally, increased Heating Degree Days result in higher demand for natural gas on Southern Company Gas' distribution system. Southern Company Gas has various regulatory mechanisms, such as weather and revenue normalization and straight-fixed-variable rate design, which limit its exposure to weather changes within typical ranges in each of its utility's respective service territory, including Nicor Gas following the approval of a revenue decoupling mechanism for residential customers in its The number of customers served by gas distribution operations and gas marketing services can be impacted by natural gas prices, economic conditions, and competition from alternative fuels. Gas distribution operations and gas marketing services' customers are primarily located in Georgia, Illinois, and Ohio. Southern Company Gas' natural gas volume metrics for gas distribution operations and gas marketing services illustrate the effects of weather and customer demand for natural gas. Wholesale gas services' physical sales volumes represent the daily average natural gas volumes sold to its customers. Seasonality of Results During the Heating Season, natural gas usage and operating revenues are generally higher as more customers are connected to the gas distribution systems and natural gas usage is higher in periods of colder weather. Occasionally in the summer, wholesale gas services' operating revenues are impacted due to peak usage by power generators in response to summer energy demands. Southern Company Gas' base operating expenses, excluding cost of natural gas, bad debt expense, and certain incentive compensation costs, are incurred relatively evenly throughout the year. Seasonality also affects the comparison of certain balance sheet items across quarters, including receivables, unbilled revenues, natural gas for sale, and notes payable. However, these items are comparable when reviewing Southern Company Gas' annual results. Thus, Southern Company Gas' operating results for the interim periods presented are not necessarily indicative of annual results and can vary significantly from quarter to quarter. Net Income (Loss)
In the 134 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) as a result of lower commercial activity and derivative losses. Also contributing to the increase was a $9 million increase at gas distribution operations primarily due to base rate increases for Nicor Gas and Atlanta Gas Light and continued investment in infrastructure replacement programs, partially offset by reduced flowback of excess deferred income taxes at Atlanta Gas Light in 2020. For year-to-date 2020, net income was $360 million compared to $347 million for the corresponding period in 2019. This increase was primarily due to a See Note 2 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information. Natural Gas Revenues, including Alternative Revenue Programs
In the Details of the changes in natural gas revenues, including alternative revenue programs, were as follows:
Revenues from infrastructure replacement programs and base rate changes increased in the Revenues associated with gas costs and other cost recovery decreased in the 135 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Revenues from wholesale gas services decreased in the Southern Company Gas hedged the majority of its exposure to warmer-than-normal weather in Illinois for gas distribution operations and in Illinois and Georgia for gas marketing services. During Heating Season, natural gas usage and operating revenues are generally higher. Weather typically does not have a significant net income impact other than during the Heating Season. The following table presents Heating Degree Days information for Illinois and Georgia, the primary locations where Southern Company Gas' operations are impacted by weather.
The following table provides the number of customers served by Southern Company Gas at
Southern Company Gas anticipates Cost of Natural Gas
Excluding Atlanta Gas Light, which does not sell natural gas to end-use customers, natural gas distribution rates include provisions to adjust billings for fluctuations in natural gas costs. Therefore, gas costs recovered through natural gas revenues generally equal the amount expensed in cost of natural gas and do not affect net income from gas distribution operations. Cost of natural gas at gas distribution operations represented 136 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) of natural gas for the In the For year-to-date 2020, cost of natural gas was $654 million compared to $956 million for the corresponding period in 2019. This decrease reflects a The following table details the volumes of natural gas sold
Other Operations and Maintenance Expenses
In the 137 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Depreciation and
For year-to-date 2020, depreciation and Taxes Other Than Income Taxes
Impairment Charges
In the third quarter 2019, a $92 million impairment charge was recorded related to a natural gas storage facility in Louisiana. See Note 3 to the financial statements under "Other Matters – Southern Company Gas – Natural Gas Storage Facilities" in Item 8 of the Form 10-K for additional information. Earnings from Equity Method Investments
For year-to-date 2020, earnings from equity method investments were $106 million compared to $115 million for the corresponding period in 2019. The decrease primarily relates to lower earnings at SNG due to lower demand and firm revenues, the sale of Atlantic Coast Pipeline in the first quarter 2020, and the sale of Triton in the second quarter 2019. See Note (E) to the Condensed Financial Statements herein for additional information. Other Income (Expense), Net
In the third quarter 2020, other income (expense), net was $12 million compared to $5 million for the corresponding period in 2019. For year-to-date 2020, other income (expense), net was $33 million compared to $16 million for the corresponding period in 2019. These increases were primarily due to increases in non-service cost-related retirement benefits income. See Note (H) to the Condensed Financial Statements herein for additional information. 138 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
In the third quarter 2020, income taxes were $3 million compared to a $22 million benefit for the corresponding period in 2019. For year-to-date 2020, income taxes were $98 million compared to $61 million for the corresponding period in 2019. These increases were primarily due to a decrease in the flowback of excess deferred income taxes at Atlanta Gas Light as authorized by the Georgia PSC and higher pre-tax earnings. The year-to-date 2020 increase also includes the reversal of a federal income tax valuation allowance in connection with the sale of Triton in 2019. See Note (G) to the Condensed Financial Statements herein for additional information. Performance and Non-GAAP Measures Adjusted operating margin is a non-GAAP measure that is calculated as operating revenues less cost of natural gas, cost of other sales, and revenue tax expense. Adjusted operating margin excludes other operations and maintenance expenses, depreciation and amortization, Adjusted operating margin should not be considered an alternative to, or a more meaningful indicator of, Southern Company Gas' operating performance than operating income as determined in accordance with GAAP. In addition, Southern Company Gas' adjusted operating margin may not be comparable to similarly titled measures of other companies. Detailed variance explanations of Southern Company Gas' financial performance are provided herein. Reconciliations of operating income to adjusted operating margin are as follows:
(a)Includes other operations and maintenance, depreciation and amortization, taxes other than income taxes, and impairment charges. (b)Nicor Gas' revenue tax expenses, which are passed through directly to customers. 139
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Segment Information Adjusted operating margin, operating expenses, and net income for each segment are provided in the table below. See Note (L) to the Condensed Financial Statements under
(*)Adjusted operating margin and operating expenses are adjusted for Nicor Gas' revenue tax expenses, which are passed through directly to customers.
Gas Distribution Operations Gas distribution operations is the largest component of Southern Company Gas' business and is subject to regulation and oversight by regulatory agencies in each of the states it serves. These agencies approve natural gas rates designed to provide Southern Company Gas with the opportunity to generate revenues to recover the cost of natural gas delivered to its customers and its fixed and variable costs, including depreciation, interest expense, operations and maintenance, taxes, and overhead costs, and to earn a reasonable return on its investments. With the exception of Atlanta Gas Light, Southern Company Gas' second largest utility that operates in a deregulated natural gas market and has a straight-fixed-variable rate design that minimizes the variability of its revenues based on consumption, the earnings of the natural gas distribution utilities can be affected by customer consumption patterns that are a function of weather conditions, price levels for natural gas, and general economic conditions that may impact customers' ability to pay for natural gas consumed. Southern Company Gas has various 140 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) In the For year-to-date 2020, net income increased $56 million or 24.6%, compared to the corresponding period in 2019. The $154 million increase in adjusted operating margin primarily reflects base rate increases for Nicor Gas and Atlanta Gas Light and continued investments recovered through infrastructure replacement programs, partially offset by warmer weather, net of weather normalization mechanisms. The See Note 2 to the financial statements in Item 8 of the Form 10-K and Note (H) to the Condensed Financial Statements herein for additional information. Gas Pipeline Investments Gas pipeline investments consists primarily of joint ventures in natural gas pipeline investments including SNG, PennEast Pipeline, Dalton Pipeline, and Atlantic Coast Pipeline (until its sale on March 24, 2020). See Notes (E) and (K) to the Condensed Financial Statements under "Southern Company Gas" herein and Note 7 to the financial statements in Item 8 of the Form 10-K for additional information. In the For year-to-date 2020, net income increased $11 million, or 17.5%, compared to the corresponding period in 2019. This increase primarily relates to a $5 million decrease in interest expense, net of amounts capitalized and a $21 million decrease in income taxes primarily related to a 2019 increase associated with changes in state apportionment rates in 2019, partially offset by a $15 million decrease in earnings primarily at SNG. Wholesale Gas Services Wholesale gas services is involved in asset management and optimization, storage, transportation, producer and peaking services, natural gas supply, natural gas services, and wholesale gas marketing. Southern Company Gas has positioned the business to generate positive economic earnings on an annual basis even under low volatility market conditions that can result from a number of factors. When market price volatility increases, wholesale gas services is well positioned to capture significant value and generate stronger results. Operating expenses primarily reflect employee compensation and benefits. In the For year-to-date 2020, net income decreased $106 million, or 173.8%, compared to the corresponding period in 2019. This decrease primarily relates to a $142 million decrease in adjusted operating margin, partially offset by a $34 million decrease in income tax expense due to lower pre-tax earnings. 141 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Details of the changes in adjusted operating margin are provided in the table below.
Change in Commercial Activity The commercial activity at wholesale gas services includes recognition of storage and transportation values that were Change in Storage and Transportation Derivatives Volatility in the natural gas market arises from a number of factors, such as weather fluctuations or changes in supply or demand for natural gas in different regions of the U.S. The volatility of natural gas commodity prices has a significant impact on Southern Company Gas' customer rates, long-term competitive position against other energy sources, and the ability of wholesale gas services to capture value from locational and seasonal spreads. Forward storage or time spreads applicable to the locations of wholesale gas services' specific storage positions in 2020 resulted in storage derivative losses. Transportation and forward commodity derivative losses for the third quarter 2020 are a result of widening transportation spreads. Transportation and forward commodity derivative gains Withdrawal Schedule and Physical Transportation Transactions The expected natural gas withdrawals from storage and expected offset to prior hedge losses/gains associated with the transportation portfolio of wholesale gas services are presented in the following table, along with the net operating revenues expected at the time of withdrawal from storage and the physical flow of natural gas between contracted transportation receipt and delivery points. Wholesale gas services' expected net operating revenues exclude storage and transportation demand charges, as well as other variable fuel, withdrawal, receipt, and delivery charges, and exclude estimated profit sharing under asset management agreements. Further, the amounts that are realizable in future periods are based on the inventory withdrawal schedule, planned physical flow of natural gas between the transportation receipt and delivery points, and forward natural gas prices at 142 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
(a)At September 30, 2020, the WACOG of wholesale gas services' expected natural gas withdrawals from storage was $1.72 per mmBtu. (b)Represents expected operating gains from planned storage withdrawals associated with existing inventory positions and could change as wholesale gas services adjusts its daily injection and withdrawal plans in response to changes in future market conditions and forward NYMEX price fluctuations. (c)Represents the transportation derivative gains and (losses) that will be settled during the period and the physical transportation transactions that offset the derivative gains and losses previously recognized. The unrealized storage and transportation derivative gains do not change the underlying economic value of wholesale gas services' storage and transportation positions and will be reversed when the related transactions occur and are recognized. For more information on wholesale gas services' energy marketing and risk management activities, see MANAGEMENT'S DISCUSSION AND ANALYSIS – FINANCIAL CONDITION AND LIQUIDITY – "Market Price Risk" in Item 7 of the Form 10-K. Gas Marketing Services Gas marketing services provides energy-related products and services to natural gas markets and participants in customer choice programs that were approved in various states to increase competition. These programs allow customers to choose their natural gas supplier while the local distribution utility continues to provide distribution and transportation services. Gas marketing services is weather sensitive and uses a variety of hedging strategies, such as weather derivative instruments and other risk management tools, to partially mitigate potential weather impacts. All Other All other includes natural gas storage businesses, fuels operations through the sale of Southern Company Gas' interest in Pivotal LNG on March 24, 2020, the investment in Triton through its sale on May 29, 2019, AGL Services Company, and Southern Company Gas Capital, as well as various corporate operating expenses that are not allocated to the reportable segments and interest income (expense) associated with affiliate financing arrangements. See Note (K) to the Condensed Financial Statements under "Southern Company Gas" herein for additional information on the sale of its interest in Pivotal LNG. In the third quarter 2020, net loss decreased $52 million compared to the corresponding period in 2019. This decrease primarily reflects a $99 million decrease in operating expenses primarily related to an impairment charge in 2019 related to a natural gas storage facility in Louisiana, partially offset by a $42 million increase in income taxes associated with changes in state apportionment rates in 2019 and the reversal of a related federal income tax valuation allowance in connection with the sale of Triton in 2019. For year-to-date 2020, net loss decreased $47 million compared to the corresponding period in 2019. This decrease includes a $98 million decrease in operating expenses primarily related to an impairment charge in 2019 related to a natural gas storage facility in Louisiana and a $6 million increase in earnings from equity method investments primarily due to a pre-tax loss on the sale of Triton in 2019, partially offset by a $48 million increase in income taxes associated with changes in state apportionment rates in 2019 and the reversal of a related federal income tax valuation allowance in connection with the sale of Triton in 2019, a $3 million decrease in other income (expenses), and a $5 million increase in interest expense, net of amounts capitalized. 143 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Segment Reconciliations Reconciliations of operating income to adjusted operating margin for the
(a)Includes other operations and maintenance, depreciation and amortization, taxes other than income taxes, and impairment charges. (b)Nicor Gas' revenue tax expenses, which are passed through directly to customers. 144
FUTURE EARNINGS POTENTIAL Each Registrant's results of operations are not necessarily indicative of its future earnings potential. Recent disposition activities described under For the traditional electric operating companies, these factors include the ability to maintain constructive regulatory environments that allow for the timely recovery of prudently-incurred costs during a time of increasing costs, continued customer growth, and the trend of reduced electricity usage per customer, especially in residential and commercial markets. Other major factors include completing construction of Plant Vogtle Units 3 and 4 Earnings in the electricity business will also depend upon maintaining and growing sales, considering, among other things, the adoption and/or penetration rates of increasingly energy-efficient technologies and increasing volumes of electronic commerce transactions, Global and U.S. economic conditions have been significantly affected by a series of demand and supply The traditional electric operating companies have established installment payment plans to allow customers to repay over a period of time past due accounts resulting from the COVID-19 pandemic. See "Regulatory Matters" herein for additional information on the status of disconnections and the deferral of costs resulting from the COVID-19 pandemic at Georgia Power, Mississippi Power, and the natural gas distribution utilities. The ultimate outcome of these matters cannot be determined at this time. The level of future earnings for Southern Power's competitive wholesale electric business depends on numerous factors including Southern Power's ability to execute its growth strategy through the development or acquisition of renewable facilities and other energy projects while containing costs, as well as regulatory matters, creditworthiness of customers, total electric generating capacity available in Southern Power's market areas, and Southern Power's ability to successfully remarket capacity as current contracts expire. In addition, renewable portfolio standards, transmission constraints, cost of generation from units within the Southern Company power pool, and operational limitations could influence Southern Power's future earnings. The level of future earnings for Southern Company Gas' primary business of distributing natural gas and its complementary businesses in the gas pipeline investments, wholesale gas services, and gas marketing services sectors depends on numerous factors. These factors include the natural gas distribution utilities' ability to maintain constructive regulatory environments that allow for the timely recovery of prudently-incurred costs, the completion and subsequent operation of ongoing infrastructure and other construction projects, creditworthiness of customers, 145 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) and Southern Company Gas' ability to optimize its transportation and storage positions and to re-contract storage rates at favorable prices. The volatility of natural gas prices has an impact on Southern Company Gas' customer rates, its long-term competitive position against other energy sources, and the ability of Southern Company Gas' gas marketing services and wholesale gas services businesses to capture value from locational and seasonal spreads. Additionally, changes in commodity prices subject a portion of Southern Company Gas' operations to earnings variability. Over the longer term, volatility is expected to be low to moderate and locational and/or transportation spreads are expected to decrease as new pipelines are built to reduce the existing supply constraints in the shale areas of the Northeast U.S. To the extent these pipelines are further delayed or not built, volatility could increase. See "Construction Programs" herein for additional information on permitting challenges experienced by the PennEast Pipeline. Additional economic factors may contribute to this environment, including a significant drop in oil and natural gas prices, which could lead to consolidation of natural gas producers or reduced levels of natural gas production. In addition, if the COVID-19 pandemic results in a continued economic downturn for a sustained period, demand for natural gas may decrease, resulting in further downward pressure on natural gas prices and lower volatility in the natural gas markets on a longer-term basis. Earnings for both the electricity and natural gas businesses are subject to a variety of other factors. These factors include weather, competition, developing new and maintaining existing energy contracts and associated load requirements with wholesale customers, energy conservation practiced by customers, the use of alternative energy sources by customers, the prices of electricity and natural gas, and the price elasticity of demand. Demand for electricity and natural gas in the Registrants' service territories is primarily driven by the pace of economic growth or decline that may be affected by changes in regional and global economic conditions, which may impact future earnings. As part of its ongoing effort to adapt to changing market conditions, Southern Company continues to evaluate and consider a wide array of potential business strategies. These strategies may include business combinations, partnerships, and acquisitions involving other utility or non-utility businesses or properties, disposition of certain assets or businesses, internal restructuring, or some combination thereof. Furthermore, Southern Company may engage in new business ventures that arise from competitive and regulatory changes in the utility industry. Pursuit of any of the above strategies, or any combination thereof, may significantly affect the business operations, risks, and financial condition of Southern Company. In addition, Southern Power and Southern Company Gas regularly consider and evaluate joint development arrangements as well as acquisitions and dispositions of businesses and assets as part of their business strategies. For additional information relating to these issues, see RISK FACTORS in Item 1A and MANAGEMENT'S DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL in Item 7 of the Form 10-K and RISK FACTORS in Item 1A herein. Acquisitions and Dispositions See Note 15 to the financial statements in Item 8 of the Form 10-K and Note (K) to the Condensed Financial Statements herein for additional information. Alabama Power On Southern Power On January 17, 2020, Southern Power completed the sale of its equity interests in Plant Mankato (including the 385-MW expansion unit completed in May 2019) to a subsidiary of Xcel for a purchase price of approximately 146 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) In March 2020, Southern Power entered into an agreement to acquire a controlling membership interest in an approximately 300-MW wind facility located in South Dakota. The acquisition is subject to FERC approval and certain other customary conditions to closing, including commercial operation of the facility, which is expected to occur in the On May 1, 2020, Southern Power purchased a controlling interest in the 56-MW Beech Ridge II wind facility located in Greenbrier County, West Virginia from Invenergy Renewables LLC. The facility's output is contracted under a 12-year PPA. See Note (K) to the Condensed Financial Statements herein for additional information. Southern Power continues to evaluate and refine the deployment of the remaining wind turbine equipment purchased in 2016 and 2017 to development and construction projects. During the Southern Company Gas On March 24, 2020, Southern Company Gas completed the sale of its interests in Pivotal LNG and Atlantic Coast Pipeline to Dominion Modular LNG Holdings, Inc. and Dominion Atlantic Coast Pipeline, LLC, respectively, with aggregate proceeds of $178 million, including Environmental Matters See MANAGEMENT'S DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL – "Environmental Matters" in Item 7 and Note 3 to the financial statements under "Environmental Remediation" in Item 8 of the Form 10-K, as well as Note (C) to the Condensed Financial Statements under Water Quality On October 13, 2020, the EPA published the final effluent limitations guidelines reconsideration rule, which extends the latest applicability date to comply with the generally applicable limits for both flue gas desulfurization wastewater and bottom ash transport water to December 31, 2025. The rule also provides exemptions for low utilization of electric generating units and permanent cessation of coal combustion. The impact of the final rule on the traditional electric operating companies and SEGCO will depend on the incorporation of these new requirements into each generating unit's National Pollutant Discharge Elimination System permit and the outcome of any legal challenges and cannot be determined at this time. Coal Combustion Residuals On August 28, 2020, the EPA published the final Part A CCR Rule that requires facilities to cease placement of both CCR and non-CCR waste in unlined surface impoundments as soon as technically feasible, but no later than April 11, 2021. The rule allows extensions beyond April 11, 2021, provided certain conditions are met. Impacts to the Southern Company system are expected to be limited, as the traditional electric operating companies and SEGCO stopped sending coal ash from most of their generating units to unlined ponds in April 2019 and expect to stop sending coal ash from the remaining generating units within the timeframes allowed in the rule. In June 2020, Alabama Power recorded an increase of approximately $462 million to its AROs related to the CCR Rule and the related state rule primarily due to management's completion of a feasibility study and the related cost estimates during the second quarter 2020 for one of its ash ponds. Alabama Power's increase also reflects costs associated with the addition of a water treatment system to the design of another ash pond. The additional estimated 147 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) During the third quarter 2020, Georgia Power completed an assessment of its plans to close the ash ponds at all of its generating plants in compliance with the CCR Rule and the related state rule. The related cost estimates were further refined, including updates to long-term post-closure care requirements, market pricing, and timing of future cash outlays. As a result, in September 2020, Georgia Power recorded an increase of approximately $411 million to its AROs related to the CCR Rule and the related state rule. The traditional electric operating companies expect to continue updating their cost estimates and ARO liabilities periodically as additional information related to ash pond closure methodologies, schedules, and/or costs becomes available, and the changes could be material. Additionally, the closure designs and plans in the States of Alabama and Georgia are subject to approval by environmental regulatory agencies. Absent continued recovery of ARO costs through regulated rates, results of operations, cash flows, and financial condition for Southern Company and the traditional electric operating companies could be materially impacted. See Note 2 to the financial statements in Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements herein under "Georgia Power – Integrated Resource Plan" for additional information. The ultimate outcome of these matters cannot be determined at this time. See Note 6 to the financial statements in Item 8 of the Form 10-K and Note (A) to the Condensed Financial Statements under "Asset Retirement Obligations" herein for additional information. Regulatory Matters See Note 2 to the financial statements in Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements herein for additional information. Alabama Power Alabama Power's revenues from regulated retail operations are collected through various rate mechanisms subject to the oversight of the Alabama PSC. Alabama Power currently recovers its costs from the regulated retail business primarily through Rate RSE, Rate CNP, Rate ECR, and Rate NDR. In addition, the Alabama PSC issues accounting orders to address current events impacting Alabama Power. Petition for Certificate of Convenience and Necessity The Alabama PSC authorized the The Alabama Energy Alabama, Gasp, Inc., and the Sierra Club filed petitions for reconsideration and rehearing with the Alabama PSC. Alabama PSC action on these petitions is expected by November 10, 2020. Upon issuance of a written order reflecting such action, affected parties would have 30 days to pursue an appeal through the State of Alabama court system. 148 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Alabama Power expects to recover all approved costs associated with the CCN through existing rate mechanisms as outlined in Note 2 to the financial statements in Item 8 of the Form 10-K. The ultimate outcome of On August 7, 2020, the Alabama PSC issued an order authorizing Alabama Power to reduce its over-collected fuel balance by $100 million and return that amount to customers in the form of bill credits for the billing month of October 2020. Any portion of the $100 million undistributed following the bill credit process will remain in the Rate ECR regulatory liability for the benefit of customers. Rate NDR In the third quarter 2020, Alabama Power recorded $44 million against the NDR for damages incurred to its transmission and distribution facilities from Hurricane Sally. The NDR balance available for storm damages was $51 million as of September 30, 2020. If the balance falls below $50 million, a reserve establishment charge would be activated (and the ongoing reserve maintenance charge concurrently suspended) until the reserve balance reaches $75 million. Georgia Power Georgia Power's revenues from regulated retail operations are collected through various rate mechanisms subject to the oversight of the Georgia PSC. Georgia Power currently recovers its costs from the regulated retail business through an alternate rate plan, which includes traditional base tariffs, Demand-Side Management tariffs, the Rate Plans 2019 ARP In accordance with the terms of the 2019 ARP, on October 1, 2020, Georgia Power filed the following tariff adjustments to become effective January 1, 2021 pending approval by the Georgia PSC: •increase traditional base tariffs by approximately $120 million; •increase the ECCR tariff by approximately $2 million; •decrease Demand-Side Management tariffs by approximately $15 million; and •increase Municipal Franchise Fee tariffs by approximately $4 million. The ultimate outcome of this matter cannot be determined at this time. 2013 ARP In 2019, Georgia Power's retail ROE exceeded 12.00% and, under the modified sharing mechanism pursuant to the 2019 ARP, Georgia Power reduced regulatory assets by approximately $60 million and accrued refunds for retail customers of approximately $60 million. On September 1, 2020, the Georgia PSC authorized Georgia Power to issue customers bill credits prior to final review of the 2019 Annual Surveillance Report by the staff of the Georgia PSC. Georgia Power issued the bill credits in October 2020. Deferral of Incremental COVID-19 Costs On April 7, 2020 and June 2, 2020, in response to the COVID-19 pandemic, the Georgia PSC approved 149 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) deferral of other incremental costs associated with the COVID-19 pandemic. The period over which such costs will be recovered is expected to be determined in Georgia Power's next base rate case. At Integrated Resource Plan On March 5, 2020, the Sierra Club filed a petition for judicial review in the Superior Court of Fulton County to appeal the Georgia PSC's decision in the 2019 ARP allowing Georgia Power to recover compliance costs for CCR AROs. Georgia Power intervened in the appeal on June 22, 2020. The ultimate outcome of this matter cannot be determined at this time. Fuel Cost Recovery On Mississippi Power Mississippi Power's rates and charges for service to retail customers are subject to the regulatory oversight of the Mississippi PSC. Mississippi Power's rates are a combination of base rates and several separate cost recovery clauses for specific categories of costs. These separate cost recovery clauses address such items as fuel and purchased power, ad valorem taxes, property damage, and the costs of compliance with environmental laws and regulations. Costs not addressed through one of the specific cost recovery clauses are expected to be recovered through Mississippi Power's base rates. 2019 Base Rate Case On March 17, 2020, the Mississippi PSC approved the Mississippi Power Rate Case Settlement Agreement between Mississippi Power and the Mississippi Public Utilities Staff related to Mississippi Power's base rate case filed in November 2019. Under the terms of the Mississippi Power Rate Case Settlement Agreement, annual retail rates decreased approximately $16.7 million, or 1.85%, effective for the first billing cycle of April 2020, based on a test year period of January 1, 2020 through December 31, 2020, a 53% average equity ratio, an allowed maximum actual equity ratio of 55% by the end of 2020, and a 7.57% return on investment. Additionally, the approved Mississippi Power Rate Case Settlement Agreement: (i) established common amortization periods of four years for regulatory assets and three years for regulatory liabilities included in the approved revenue requirement, including those related to unprotected deferred income taxes; (ii) established new depreciation rates reflecting an annual increase in depreciation of approximately $10 million; and (iii) excluded certain compensation costs totaling approximately $3.9 million. It also eliminated separate rates for costs associated with Plant Ratcliffe and energy efficiency initiatives and includes such costs in the PEP, ECO Plan, and ad valorem tax adjustment factor, as applicable. In accordance with the previous order of the Mississippi PSC suspending the operation of PEP and the ECO Plan for 2018 through 2020, Mississippi Power plans to resume PEP proceedings and ECO Plan filings for 2021. Performance Evaluation Plan 150 Table of ContentsIndex to MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) include, Deferral of Incremental COVID-19 Costs On April 14, 2020 and May 12, 2020, in order to mitigate the economic impact of the COVID-19 pandemic on customers, the Mississippi PSC approved Municipal and Rural Associations Tariff On June 25, 2020, the FERC accepted Mississippi Power's April 27, 2020 Southern Company Gas The natural gas distribution utilities are subject to regulation and oversight by their respective state regulatory agencies for the rates charged to their customers and other matters. With the exception of Atlanta Gas Light, which does not sell natural gas to end-use customers, the natural gas distribution utilities are authorized by the relevant regulatory agencies in the states in which they serve to use natural gas cost recovery mechanisms that adjust rates to reflect changes in the wholesale cost of natural gas and ensure recovery of all costs prudently incurred in purchasing natural gas for customers. Natural gas cost recovery revenues are adjusted for differences in actual recoverable natural gas costs and amounts billed in current regulated rates. Changes in the billing factor will not have a significant effect on revenues or net income, but will affect cash flows. In addition to natural gas cost recovery mechanisms, there are other cost recovery mechanisms, such as regulatory riders, which vary by utility but allow recovery of certain costs, such as those related to infrastructure replacement programs, as well as environmental remediation, energy efficiency plans, and bad debt. The natural gas distribution utilities have various regulatory mechanisms to recover bad debt expense, which will mitigate potential increases in bad debt expense as a result of the COVID-19 pandemic. Nicor Gas fully recovers its bad debt expenses, both the gas and non-gas portions, through its purchased gas adjustment mechanism and separate bad debt rider. Virginia Natural Gas and Chattanooga Gas recover the gas portion of bad debt expense through their purchased gas adjustment mechanisms and the non-gas portion of bad debt expense through their base rates in accordance with established benchmarks. Atlanta Gas Light does not have material bad debt expense because its receivables are from Marketers, rather than end-use customers. Its tariff allows it to obtain credit security support from the Marketers in an amount equal to at least two times their estimated highest bill. Rate Proceedings On 151 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) On July 1, 2020, Atlanta Gas Light filed its 2020 GRAM filing with the Georgia PSC. The filing requests an annual base rate increase of The ultimate outcome of these matters cannot be determined at this time. Deferral of Incremental COVID-19 Costs Atlanta Gas On April 30, 2020, in response to Nicor Gas On March 18, 2020, in response to the COVID-19 pandemic, the Illinois Commission issued an order directing utilities to cease disconnections for non-payment and to suspend the imposition of late payment fees or penalties. In response to this order, on March 27, 2020, Nicor Gas and other utilities in Illinois filed their plans seeking cost recovery and providing more flexible credit and collection plans. On June 18, 2020, the Illinois Commission approved a stipulation pursuant to which the utilities will provide more flexible credit and collection procedures to assist customers with financial hardship and which authorizes a special purpose rider for recovery of the following COVID-19 pandemic-related impacts: incremental costs directly associated with the COVID-19 pandemic, net of the offset for COVID-19 pandemic-related credits received, foregone late fees, foregone reconnection charges, and the costs associated with a bill payment assistance program. Nicor Gas resumed late payment fees on July 27, 2020 and, on October 1, 2020, began recovery of the COVID-19 pandemic-related impacts through the special purpose rider, which will continue over a 24-month period. In response to an Illinois Commission request, Nicor Gas will continue to voluntarily suspend residential customer disconnections for non-payment through March 31, 2021. At September 30, 2020, Nicor Gas' related regulatory asset was $13 million. Virginia Natural Gas In response to the COVID-19 pandemic, the Virginia Commission issued orders requiring Virginia Natural Gas to suspend disconnections beginning on March 16, 2020 and also to suspend late payment and reconnection fees beginning on April 9, 2020, both of which expired on October 5, 2020. On April 29, 2020, the Virginia Commission authorized Virginia Natural Gas to defer the following COVID-19 pandemic-related costs as a regulatory asset: incremental uncollectible expense incurred, suspended late fees, suspended reconnection charges, carrying costs, and other incremental prudently incurred costs associated with the COVID-19 pandemic. Specific recovery of the amounts deferred in a regulatory asset will be addressed in a future rate proceeding. At September 30, 2020, Virginia Natural Gas' related regulatory asset was $1 million. The ultimate outcome of this matter cannot be determined at this time. 152 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Construction Programs Overview The Subsidiary Registrants are engaged in continuous construction programs to accommodate existing and estimated future loads on their respective systems. The Southern Company system intends to continue its strategy of developing and constructing new electric generating facilities, expanding and improving the electric transmission and electric and natural gas distribution systems, and undertaking projects to comply with environmental laws and regulations. For the traditional electric operating companies, major generation construction projects are subject to state PSC approval in order to be included in retail rates. The largest construction project currently underway in the Southern Company system is Plant Vogtle Units 3 and 4. See While Southern Power generally constructs and acquires generation assets covered by long-term PPAs, any uncontracted capacity could negatively affect future earnings. See "Southern Power" herein, "Acquisitions and Dispositions – Southern Power" herein, and Note (K) to the Condensed Financial Statements under Southern Company Gas is engaged in various infrastructure improvement programs designed to update or expand the natural gas distribution systems of the natural gas distribution utilities to improve reliability and meet operational flexibility and growth. The natural gas distribution utilities recover their investment and a return associated with these infrastructure programs through their regulated rates. See "Southern Company Gas" herein for additional information regarding infrastructure improvement programs at the natural gas distribution utilities and the PennEast See FINANCIAL CONDITION AND LIQUIDITY – Nuclear Construction See Note 2 to the financial statements under "Georgia Power – Nuclear Construction" in Item 8 of the Form 10-K for additional information regarding Georgia Power's construction of Plant Vogtle Units 3 and 4, the joint ownership agreements and related funding agreement, VCM reports, and the NCCR tariff. In 2009, the Georgia PSC certified construction of Plant Vogtle Units 3 and In connection with the EPC Contractor's bankruptcy filing, 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. 153 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) In October 2017, Georgia Power, acting for itself and as agent for the other Vogtle Owners, executed the Bechtel Agreement, a cost reimbursable plus fee arrangement, whereby Bechtel is reimbursed for actual costs plus a base fee and an at-risk fee, which is subject to adjustment based on Bechtel's performance against cost and schedule targets. Each Vogtle Owner is severally (not jointly) liable for its proportionate share, based on its ownership interest, of all amounts owed to Bechtel under the Bechtel Agreement. The Vogtle Owners may terminate the Bechtel Agreement at any time for their convenience, provided that the Vogtle Owners will be required to pay amounts related to work performed prior to the termination (including the applicable portion of the base fee), certain termination-related costs, and, at certain stages of the work, the applicable portion of the at-risk fee. Bechtel may terminate the Bechtel Agreement under certain circumstances, including certain Vogtle Owner suspensions of work, certain breaches of the Bechtel Agreement by the Vogtle Owners, Vogtle Owner insolvency, and certain other events. See Note 8 to the financial statements under "Long-term Debt – DOE Loan Guarantee Borrowings" in Item 8 of the Form 10-K for information on the Amended and Restated Loan Guarantee Agreement, including applicable covenants, events of default, mandatory prepayment events, and conditions to borrowing. Cost and Schedule Georgia Power's approximate proportionate share of the remaining estimated capital cost to complete Plant Vogtle Units 3 and 4 by the expected in-service dates of November 2021 and November 2022, respectively, is as follows:
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