~~0000092122us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberso:SouthernCompanyGasMemberus-gaap:CashEquivalentsMember2022-03-31~~0000092122so:AlabamaPowerMemberso:WholesaleElectricNonPPARevenuesMember2021-04-012021-06-300000092122us-gaap:CashFlowHedgingMemberus-gaap:OtherNonoperatingIncomeExpenseMemberso:SouthernPowerMemberus-gaap:ForeignExchangeContractMember2021-04-012021-06-30

Table of Contents Index to Financial Statements

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31,~~June 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission
File Number

Registrant,
State of Incorporation,
Address and Telephone Number

I.R.S. Employer
Identification No.

1-3526

The Southern Company

58-0690070

(A Delaware Corporation)

30 Ivan Allen Jr. Boulevard, N.W.

Atlanta, Georgia 30308

(404) 506-5000

1-3164

Alabama Power Company

63-0004250

(An Alabama Corporation)

600 North 18th Street

Birmingham, Alabama 35203

(205) 257-1000

1-6468

Georgia Power Company

58-0257110

(A Georgia Corporation)

241 Ralph McGill Boulevard, N.E.

Atlanta, Georgia 30308

(404) 506-6526

001-11229

Mississippi Power Company

64-0205820

(A Mississippi Corporation)

2992 West Beach Boulevard

Gulfport, Mississippi 39501

(228) 864-1211

001-37803

Southern Power Company

58-2598670

(A Delaware Corporation)

30 Ivan Allen Jr. Boulevard, N.W.

Atlanta, Georgia 30308

(404) 506-5000

1-14174

Southern Company Gas

58-2210952

(A Georgia Corporation)

Ten Peachtree Place, N.E.

Atlanta, Georgia 30309

(404) 584-4000

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Securities registered pursuant to Section 12(b) of the Act:


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 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
The Southern Company	Series 2021B 1.875% Fixed-to-Fixed Reset Rate Junior Subordinated Notes due 2081	SO 81	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

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrants were required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Registrant

Large Accelerated Filer

Accelerated
Filer

Non-accelerated Filer

Smaller
Reporting
Company

Emerging
Growth
Company

The Southern Company

Alabama Power Company

Georgia Power Company

Mississippi Power Company

Southern Power Company

Southern Company Gas

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ (Response applicable to all registrants.)


Registrant	Description of Common Stock	Shares Outstanding at ~~March 31,~~June 30, 2022
The Southern Company	Par Value $5 Per Share	~~1,062,524,675~~1,063,001,320
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

This combined Form 10-Q is separately filed by The Southern Company, Alabama Power Company, Georgia Power Company, Mississippi Power Company, Southern Power Company, and Southern Company Gas. Information contained herein relating to any individual registrant is filed by such registrant on its own behalf. Each registrant makes no representation as to information relating to the other registrants.

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TABLE OF CONTENTS


		Page

	Definitions	4
	Cautionary Statement Regarding Forward-Looking Information	7

	PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	8696
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	~~128~~149
Item 4.	Controls and Procedures	~~128~~149

	PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	~~129~~150
Item 1A.	Risk Factors	~~129~~150
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.	Exhibits	~~129~~150

	Signatures	~~132~~153

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DEFINITIONS


Term			Meaning
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
Atlanta Gas Light			Atlanta Gas Light Company, a wholly-owned subsidiary of Southern Company Gas
Bechtel			Bechtel Power Corporation, the primary contractor for the remaining construction activities for Plant Vogtle Units 3 and 4
Bechtel Agreement			The 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
Clean Air Act			Clean Air Act Amendments of 1990
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
ECCR			Georgia Power's Environmental Compliance Cost Recovery tariff
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
FERC			Federal Energy Regulatory Commission
FFB			Federal Financing Bank
Fitch			Fitch Ratings, Inc.
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, 2021, as applicable
GAAP			U.S. generally accepted accounting principles
Georgia Power			Georgia Power Company
GRAM			Atlanta Gas Light's Georgia Rate Adjustment Mechanism
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; effective January 1, 2021, Gulf Power Company merged with and into Florida Power and Light Company, with Florida Power and Light Company remaining as the surviving company

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DEFINITIONS

(continued)


Term			Meaning
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

~~Table of ContentsIndex to Financial Statements~~

~~DEFINITIONS~~

~~(continued)~~


~~Term~~			~~Meaning~~
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
IRP			Integrated resource plan
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
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 tariff
NDR			Alabama Power's Natural Disaster Reserve
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
OPC			Oglethorpe Power Corporation (an electric membership corporation)
PennEast Pipeline			PennEast Pipeline Company, LLC, a joint venture in which Southern Company Gas has a 20% ownership interest
PEP			Mississippi Power's Performance Evaluation Plan
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

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DEFINITIONS

(continued)


Term			Meaning
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
SEGCO			Southern Electric Generating Company, 50% owned by each of Alabama Power and Georgia Power

~~Table of ContentsIndex to Financial Statements~~

~~DEFINITIONS~~

~~(continued)~~


~~Term~~			~~Meaning~~
Sequent			Sequent Energy Management, L.P. and Sequent Energy Canada Corp., wholly-owned subsidiaries of Southern Company Gas through June 30, 2021
SNG			Southern Natural Gas Company, L.L.C., a pipeline system in which Southern Company Gas has a 50% ownership interest
SOFR			Secured Overnight Financing Rate
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, SEGCO, 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 Marketer), 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 and battery energy storage 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
Toshiba			Toshiba Corporation, the parent company of Westinghouse
traditional electric operating companies			Alabama Power, Georgia Power, and Mississippi Power
VCM			Vogtle Construction Monitoring
VIE			Variable interest entity
Virginia Natural Gas			Virginia Natural Gas, Inc., a wholly-owned subsidiary of Southern Company Gas
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,~~OPC, 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

Table of Contents Index to Financial Statements

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This Quarterly Report on Form 10-Q contains forward-looking statements. Forward-looking statements include, among other things, statements concerning the potential and expected effects of the continued COVID-19 pandemic, regulated rates, the strategic goals for the business, customer and sales growth, economic conditions, cost recovery and other rate actions, projected equity ratios, current and proposed environmental regulations and related compliance plans and estimated expenditures, pending or potential litigation matters, access to sources of capital, financing activities, completion dates and costs of construction projects, matters related to the abandonment of the Kemper IGCC, completion of announced acquisitions, filings with state and federal regulatory authorities, and estimated construction plans and expenditures. In some cases, forward-looking statements can be identified by terminology such as "may," "will," "could," "would," "should," "expects," "plans," "anticipates," "believes," "estimates," "projects," "predicts," "potential," or "continue" or the negative of these terms or other similar terminology. There are various factors that could cause actual results to differ materially from those suggested by the forward-looking statements; accordingly, there can be no assurance that such indicated results will be realized. These factors include:

•the impact of recent and future federal and state regulatory changes, including tax, environmental, and other laws and regulations to which Southern Company and its subsidiaries are subject, as well as changes in application of existing laws and regulations;

•the potential effects of the continued COVID-19 pandemic, including, but not limited to, those described in Item 1A "Risk Factors" of the Form 10-K;

•the extent and timing of costs and legal requirements related to CCR;

•current and future litigation or regulatory investigations, proceedings, or inquiries, including litigation and other disputes related to the Kemper County energy ~~facility;~~facility and Plant Vogtle Units 3 and 4;

•the effects, extent, and timing of the entry of additional competition in the markets in which Southern Company's subsidiaries operate, including from the development and deployment of alternative energy sources;

•variations in demand for electricity and natural gas;

•available sources and costs of natural gas and other fuels and commodities;

•the ability to complete necessary or desirable pipeline expansion or infrastructure projects, limits on pipeline capacity, and operational interruptions to natural gas distribution and transmission activities;

•transmission constraints;

•effects of inflation;

•the ability to control costs and avoid cost and schedule overruns during the development, construction, and operation of facilities or other projects, including Plant Vogtle Units 3 and 4 (which includes components based on new technology that only within the last few years began initial operation in the global nuclear industry at this scale) and Plant Barry Unit 8, due to current and/or future challenges which include, but are not limited to, changes in labor costs, availability, and productivity; challenges with management of contractors or vendors; subcontractor performance; adverse weather conditions; shortages, delays, increased costs, or inconsistent quality of equipment, materials, and labor; contractor or supplier delay; delays due to judicial or regulatory action; nonperformance under construction, operating, or other agreements; operational readiness, including specialized operator training and required site safety programs; engineering or design problems or any remediation related thereto; design and other licensing-based compliance matters, including, for nuclear units, inspections and the timely submittal by Southern Nuclear of the ITAAC documentation for each unit and the related investigations, reviews, and approvals by the NRC necessary to support NRC authorization to load fuel; challenges with start-up activities, including major equipment failure, or system integration; and/or operational performance; and challenges related to the COVID-19 pandemic;

•the ability to overcome or mitigate the current challenges at Plant Vogtle Units 3 and 4, as described in Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction" in Item 1 herein, that could further impact the cost and schedule for the project;

•legal proceedings and regulatory approvals and actions related to construction projects, such as Plant Vogtle Units 3 and 4 and Plant Barry Unit 8, including PSC approvals and FERC and NRC actions;

•under certain specified circumstances, a decision by holders of more than 10% of the ownership interests of Plant Vogtle Units 3 and 4 not to proceed with ~~construction and~~ construction;

•the ability of other Vogtle Owners to tender a portion of their ownership interests to Georgia Power following certain construction cost ~~increases;~~increases, including the purported exercises by OPC and Dalton of their tender options and related litigation initiated by OPC and MEAG Power;

Table of Contents Index to Financial Statements

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

(continued)

•in the event Georgia Power becomes obligated to provide funding to MEAG Power with respect to the portion of MEAG Power's ownership interest in Plant Vogtle Units 3 and 4 involving JEA, any inability of Georgia Power to receive repayment of such funding;

•the ability to construct facilities in accordance with the requirements of permits and licenses (including satisfaction of NRC requirements), to satisfy any environmental performance standards and the requirements of tax credits and other incentives, and to integrate facilities into the Southern Company system upon completion of construction;

•investment performance of the employee and retiree benefit plans and nuclear decommissioning trust funds;

•advances in technology, including the pace and extent of development of low- to no-carbon energy technologies and negative carbon concepts;

•performance of counterparties under ongoing renewable energy partnerships and development agreements;

•state and federal rate regulations and the impact of pending and future rate cases and negotiations, including rate actions relating to ROE, equity ratios, additional generating capacity, and fuel and other cost recovery mechanisms;

•the ability to successfully operate the traditional electric operating companies' and SEGCO's generation, transmission, and distribution facilities, Southern Power's generation facilities, and Southern Company Gas' natural gas distribution and storage facilities and the successful performance of necessary corporate functions;

•the inherent risks involved in operating and constructing nuclear generating facilities;

•the inherent risks involved in transporting and storing natural gas;

•the performance of projects undertaken by the non-utility businesses and the success of efforts to invest in and develop new opportunities;

•internal restructuring or other restructuring options that may be pursued;

•potential business strategies, including acquisitions or dispositions of assets or businesses, which cannot be assured to be completed or beneficial to Southern Company or its subsidiaries;

•the ability of counterparties of Southern Company and its subsidiaries to make payments as and when due and to perform as required;

•the ability to obtain new short- and long-term contracts with wholesale customers;

•the direct or indirect effect on the Southern Company system's business resulting from cyber intrusion or physical attack and the threat of physical attacks;

•interest rate fluctuations and financial market conditions and the results of financing efforts;

•access to capital markets and other financing sources;

•changes in Southern Company's and any of its subsidiaries' credit ratings;

•the replacement of LIBOR with an alternative reference rate;

•the ability of the traditional electric operating companies to obtain additional generating capacity (or sell excess generating capacity) at competitive prices;

•catastrophic events such as fires, earthquakes, explosions, floods, tornadoes, hurricanes and other storms, droughts, pandemic health events, political unrest, wars, or other similar occurrences;

•the direct or indirect effects on the Southern Company system's business resulting from incidents affecting the U.S. electric grid, natural gas pipeline infrastructure, or operation of generating or storage resources;

•impairments of goodwill or long-lived assets;

•the effect of accounting pronouncements issued periodically by standard-setting bodies; and

•other factors discussed elsewhere herein and in other reports (including the Form 10-K) filed by the Registrants from time to time with the SEC.

The Registrants expressly disclaim any obligation to update any forward-looking statements.

Table of Contents Index to Financial Statements

PART I

Item 1. Financial Statements (Unaudited).


			Page
The Southern Company and Subsidiary Companies:
Condensed Consolidated Statements of Income			10
Condensed Consolidated Statements of Comprehensive Income			11
Condensed Consolidated Statements of Cash Flows			12
Condensed Consolidated Balance Sheets			13
Condensed Consolidated Statements of Stockholders' Equity			15

Alabama Power Company:
Condensed Statements of Income			1617
Condensed Statements of Comprehensive Income			1617
Condensed Statements of Cash Flows			1718
Condensed Balance Sheets			1819
Condensed Statements of Common Stockholder's Equity			2021

Georgia Power Company:
Condensed Statements of Income			2122
Condensed Statements of Comprehensive Income			2122
Condensed Statements of Cash Flows			2223
Condensed Balance Sheets			2324
Condensed Statements of Common Stockholder's Equity			2526

Mississippi Power Company:
Condensed Statements of Income ~~and~~			27
Condensed Statements of Comprehensive Income			2627
Condensed Statements of Cash Flows			2728
Condensed Balance Sheets			2829
Condensed Statements of Common Stockholder's Equity			3031

Southern Power Company and Subsidiary Companies:
Condensed Consolidated Statements of Income			3132
Condensed Consolidated Statements of Comprehensive Income			3132
Condensed Consolidated Statements of Cash Flows			3233
Condensed Consolidated Balance Sheets			3334
Condensed Consolidated Statements of Stockholders' Equity			3536

Southern Company Gas and Subsidiary Companies:
Condensed Consolidated Statements of Income			3637
Condensed Consolidated Statements of Comprehensive Income			3637
Condensed Consolidated Statements of Cash Flows			3738
Condensed Consolidated Balance Sheets			3839
Condensed Consolidated Statements of Stockholder's Equity			4041

Combined Notes to the Condensed Financial Statements			4142

Table of Contents Index to Financial Statements

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)


		For the Three Months Ended March 31,			For the Three Months Ended June 30,						For the Six Months Ended June 30,
			2022			2021			2022		2021		2022		2021
		(in millions)			(in millions)						(in millions)
Operating Revenues:	Operating Revenues:							Operating Revenues:
Retail electric revenues	Retail electric revenues		$	3,613		$	3,342	Retail electric revenues	$	4,789	$	3,599	$	8,402	$	6,941
Wholesale electric revenues	Wholesale electric revenues		664			545		Wholesale electric revenues	937		546		1,601		1,091
Other electric revenues	Other electric revenues		177			170		Other electric revenues	192		175		370		346
Natural gas revenues (includes alternative revenue programs of $— and $2, respectively)			2,058			1,694
Natural gas revenues (includes alternative revenue programs of $2, $2, $1, and $4, respectively)								Natural gas revenues (includes alternative revenue programs of $2, $2, $1, and $4, respectively)	1,083		677		3,140		2,371
Other revenues	Other revenues		136			159		Other revenues	205		201		341		359
Total operating revenues	Total operating revenues		6,648			5,910		Total operating revenues	7,206		5,198		13,854		11,108
Operating Expenses:	Operating Expenses:							Operating Expenses:
Fuel	Fuel		1,111			848		Fuel	1,715		848		2,826		1,696
Purchased power	Purchased power		232			207		Purchased power	408		217		640		424
Cost of natural gas	Cost of natural gas		1,095			583		Cost of natural gas	452		231		1,546		814
Cost of other sales	Cost of other sales		69			82		Cost of other sales	114		103		183		185
Other operations and maintenance	Other operations and maintenance		1,516			1,372		Other operations and maintenance	1,558		1,438		3,075		2,810
Depreciation and amortization	Depreciation and amortization		892			871		Depreciation and amortization	913		891		1,805		1,762
Taxes other than income taxes	Taxes other than income taxes		372			345		Taxes other than income taxes	349		313		721		657
Estimated loss on Plant Vogtle Units 3 and 4	Estimated loss on Plant Vogtle Units 3 and 4		—			48		Estimated loss on Plant Vogtle Units 3 and 4	52		460		52		508

Gain on dispositions, net	Gain on dispositions, net		(23)			(44)		Gain on dispositions, net	(10)		(11)		(33)		(54)
Total operating expenses	Total operating expenses		5,264			4,312		Total operating expenses	5,551		4,490		10,815		8,802
Operating Income	Operating Income		1,384			1,598		Operating Income	1,655		708		3,039		2,306
Other Income and (Expense):	Other Income and (Expense):							Other Income and (Expense):
Allowance for equity funds used during construction	Allowance for equity funds used during construction		51			46		Allowance for equity funds used during construction	53		45		104		90
Earnings from equity method investments			46			45
Earnings (loss) from equity method investments								Earnings (loss) from equity method investments	34		(40)		80		5
Interest expense, net of amounts capitalized	Interest expense, net of amounts capitalized		(462)			(450)		Interest expense, net of amounts capitalized	(488)		(450)		(950)		(901)

Other income (expense), net	Other income (expense), net		145			58		Other income (expense), net	139		101		283		160
Total other income and (expense)	Total other income and (expense)		(220)			(301)		Total other income and (expense)	(262)		(344)		(483)		(646)
Earnings Before Income Taxes	Earnings Before Income Taxes		1,164			1,297		Earnings Before Income Taxes	1,393		364		2,556		1,660
Income taxes			173			190
Income taxes (benefit)								Income taxes (benefit)	304		(12)		477		178
Consolidated Net Income	Consolidated Net Income		991			1,107		Consolidated Net Income	1,089		376		2,079		1,482

Dividends on preferred stock of subsidiaries	Dividends on preferred stock of subsidiaries		4			4		Dividends on preferred stock of subsidiaries	4		4		7		7
Net loss attributable to noncontrolling interests	Net loss attributable to noncontrolling interests		(45)			(32)		Net loss attributable to noncontrolling interests	(22)		—		(67)		(33)
Consolidated Net Income Attributable to Southern Company	Consolidated Net Income Attributable to Southern Company		$	1,032		$	1,135	Consolidated Net Income Attributable to Southern Company	$	1,107	$	372	$	2,139	$	1,508
Common Stock Data:	Common Stock Data:							Common Stock Data:
Earnings per share -	Earnings per share -							Earnings per share -
Basic	Basic		$	0.97		$	1.07	Basic	$	1.04	$	0.35	$	2.01	$	1.42
Diluted	Diluted		$	0.97		$	1.06	Diluted	$	1.03	$	0.35	$	2.00	$	1.41
Average number of shares of common stock outstanding (in millions)	Average number of shares of common stock outstanding (in millions)							Average number of shares of common stock outstanding (in millions)
Basic	Basic		1,063			1,060		Basic	1,065		1,061		1,064		1,060
Diluted	Diluted		1,069			1,066		Diluted	1,072		1,067		1,070		1,066

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

Table of Contents Index to Financial Statements

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)


		For the Three Months Ended March 31,			For the Three Months Ended June 30,						For the Six Months Ended June 30,
			2022			2021			2022		2021		2022		2021
		(in millions)			(in millions)						(in millions)
Consolidated Net Income	Consolidated Net Income		$	991		$	1,107	Consolidated Net Income	$	1,089	$	376	$	2,079	$	1,482
Other comprehensive income:	Other comprehensive income:							Other comprehensive income:
Qualifying hedges:	Qualifying hedges:							Qualifying hedges:
Changes in fair value, net of tax of $8 and $(10), respectively			19			(30)
Reclassification adjustment for amounts included in net income, net of tax of $6 and $18, respectively			20			55
Changes in fair value, net of tax of $(15), $5, $(7), and $(5), respectively								Changes in fair value, net of tax of $(15), $5, $(7), and $(5), respectively	(45)		14		(26)		(16)
Reclassification adjustment for amounts included in net income, net of tax of $17, $(1), $24, and $17, respectively								Reclassification adjustment for amounts included in net income, net of tax of $17, $(1), $24, and $17, respectively	54		(5)		74		50
Pension and other postretirement benefit plans:	Pension and other postretirement benefit plans:							Pension and other postretirement benefit plans:

Reclassification adjustment for amounts included in net income, net of tax of $1 and $1, respectively			3			3
Reclassification adjustment for amounts included in net income, net of tax of $1, $2, $2, and $3, respectively								Reclassification adjustment for amounts included in net income, net of tax of $1, $2, $2, and $3, respectively	2		3		5		6
Total other comprehensive income	Total other comprehensive income		42			28		Total other comprehensive income	11		12		53		40
Comprehensive Income	Comprehensive Income		1,033			1,135		Comprehensive Income	1,100		388		2,132		1,522

Dividends on preferred stock of subsidiaries	Dividends on preferred stock of subsidiaries		4			4		Dividends on preferred stock of subsidiaries	4		4		7		7
Comprehensive loss attributable to noncontrolling interests	Comprehensive loss attributable to noncontrolling interests		(45)			(32)		Comprehensive loss attributable to noncontrolling interests	(22)		—		(67)		(33)
Consolidated Comprehensive Income Attributable to Southern Company	Consolidated Comprehensive Income Attributable to Southern Company		$	1,074		$	1,163	Consolidated Comprehensive Income Attributable to Southern Company	$	1,118	$	384	$	2,192	$	1,548

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

Table of Contents Index to Financial Statements

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


		For the Three Months Ended March 31,					For the Six Months Ended June 30,
		2022		2021			2022		2021
		(in millions)					(in millions)
Operating Activities:	Operating Activities:					Operating Activities:
Consolidated net income	Consolidated net income	$	991	$	1,107	Consolidated net income	$	2,079	$	1,482
Adjustments to reconcile consolidated net income to net cash provided from operating activities —	Adjustments to reconcile consolidated net income to net cash provided from operating activities —					Adjustments to reconcile consolidated net income to net cash provided from operating activities —
Depreciation and amortization, total	Depreciation and amortization, total	989		964		Depreciation and amortization, total	1,995		1,949
Deferred income taxes	Deferred income taxes	40		140		Deferred income taxes	240		(101)

Utilization of federal investment tax credits						Utilization of federal investment tax credits	281		224
Allowance for equity funds used during construction	Allowance for equity funds used during construction	(51)		(46)		Allowance for equity funds used during construction	(104)		(90)

Mark-to-market adjustments						Mark-to-market adjustments	14		136
Pension, postretirement, and other employee benefits	Pension, postretirement, and other employee benefits	(123)		(78)		Pension, postretirement, and other employee benefits	(211)		(115)
Settlement of asset retirement obligations	Settlement of asset retirement obligations	(87)		(109)		Settlement of asset retirement obligations	(198)		(228)
Stock based compensation expense	Stock based compensation expense	85		83		Stock based compensation expense	100		105

Estimated loss on Plant Vogtle Units 3 and 4	Estimated loss on Plant Vogtle Units 3 and 4	—		48		Estimated loss on Plant Vogtle Units 3 and 4	52		508

Storm damage accruals	Storm damage accruals	52		54		Storm damage accruals	107		112

Gain on dispositions, net		(20)		(41)

Natural gas cost under recovery – long-term	Natural gas cost under recovery – long-term	162		(185)		Natural gas cost under recovery – long-term	192		(119)
Retail fuel cost under recovery – long-term	Retail fuel cost under recovery – long-term	(130)		—		Retail fuel cost under recovery – long-term	(729)		—
Other, net	Other, net	7		114		Other, net	21		117
Changes in certain current assets and liabilities —	Changes in certain current assets and liabilities —					Changes in certain current assets and liabilities —
-Receivables	-Receivables	(217)		308		-Receivables	(637)		29
-Prepayments	-Prepayments	(86)		(98)		-Prepayments	(90)		(79)

-Materials and supplies	-Materials and supplies	(28)		(27)		-Materials and supplies	(109)		(57)
-Natural gas for sale, net of temporary LIFO liquidation	-Natural gas for sale, net of temporary LIFO liquidation	450		456		-Natural gas for sale, net of temporary LIFO liquidation	335		375
-Natural gas cost under recovery	-Natural gas cost under recovery	(40)		(487)		-Natural gas cost under recovery	(94)		(485)
-Other current assets	-Other current assets	87		90		-Other current assets	12		94
-Accounts payable	-Accounts payable	132		(216)		-Accounts payable	703		(177)
-Accrued taxes	-Accrued taxes	(58)		(212)		-Accrued taxes	(150)		(157)
-Accrued compensation	-Accrued compensation	(470)		(417)		-Accrued compensation	(260)		(238)
-Accrued interest		(128)		(90)

-Retail fuel cost over recovery	-Retail fuel cost over recovery	—		(53)		-Retail fuel cost over recovery	—		(146)

-Other current liabilities	-Other current liabilities	35		(63)		-Other current liabilities	30		(235)
Net cash provided from operating activities	Net cash provided from operating activities	1,592		1,242		Net cash provided from operating activities	3,579		2,904
Investing Activities:	Investing Activities:					Investing Activities:
Business acquisitions, net of cash acquired	Business acquisitions, net of cash acquired	—		(345)		Business acquisitions, net of cash acquired	—		(345)

Property additions	Property additions	(1,419)		(1,678)		Property additions	(3,213)		(3,384)

Nuclear decommissioning trust fund purchases	Nuclear decommissioning trust fund purchases	(294)		(550)		Nuclear decommissioning trust fund purchases	(628)		(930)
Nuclear decommissioning trust fund sales	Nuclear decommissioning trust fund sales	289		546		Nuclear decommissioning trust fund sales	624		926
Proceeds from dispositions						Proceeds from dispositions	119		25
Cost of removal, net of salvage						Cost of removal, net of salvage	(377)		(184)

Cost of removal, net of salvage		(227)		(85)
Change in construction payables, net		23		(116)

Payments pursuant to LTSAs	Payments pursuant to LTSAs	(37)		(60)		Payments pursuant to LTSAs	(81)		(114)
Other investing activities	Other investing activities	110		45		Other investing activities	96		(20)
Net cash used for investing activities	Net cash used for investing activities	(1,555)		(2,243)		Net cash used for investing activities	(3,460)		(4,026)
Financing Activities:	Financing Activities:					Financing Activities:
Increase in notes payable, net	Increase in notes payable, net	137		182		Increase in notes payable, net	263		492
Proceeds —	Proceeds —					Proceeds —
Long-term debt	Long-term debt	700		2,150		Long-term debt	2,200		4,646

Short-term borrowings	Short-term borrowings	850		325		Short-term borrowings	1,200		325
Common stock	Common stock	38		14		Common stock	61		24

Redemptions and repurchases —	Redemptions and repurchases —					Redemptions and repurchases —
Long-term debt	Long-term debt	(977)		(384)		Long-term debt	(1,851)		(2,477)

Short-term borrowings	Short-term borrowings	(100)		(25)		Short-term borrowings	(400)		(25)
Capital contributions from noncontrolling interests	Capital contributions from noncontrolling interests	73		313		Capital contributions from noncontrolling interests	73		343
Distributions to noncontrolling interests	Distributions to noncontrolling interests	(97)		(46)		Distributions to noncontrolling interests	(115)		(113)

Payment of common stock dividends	Payment of common stock dividends	(702)		(678)		Payment of common stock dividends	(1,425)		(1,377)

Other financing activities	Other financing activities	(115)		(117)		Other financing activities	(219)		(167)
Net cash provided from (used for) financing activities	Net cash provided from (used for) financing activities	(193)		1,734		Net cash provided from (used for) financing activities	(213)		1,671
Net Change in Cash, Cash Equivalents, and Restricted Cash	Net Change in Cash, Cash Equivalents, and Restricted Cash	(156)		733		Net Change in Cash, Cash Equivalents, and Restricted Cash	(94)		549
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	1,829		1,068		Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	1,829		1,068
Cash, Cash Equivalents, and Restricted Cash at End of Period	Cash, Cash Equivalents, and Restricted Cash at End of Period	$	1,673	$	1,801	Cash, Cash Equivalents, and Restricted Cash at End of Period	$	1,735	$	1,617
Supplemental Cash Flow Information:	Supplemental Cash Flow Information:					Supplemental Cash Flow Information:
Cash paid (received) during the period for —
Interest (net of $23 and $21 capitalized for 2022 and 2021, respectively)		$	515	$	519
Cash paid during the period for —						Cash paid during the period for —
Interest (net of $46 and $43 capitalized for 2022 and 2021, respectively)						Interest (net of $46 and $43 capitalized for 2022 and 2021, respectively)	$	836	$	884
Income taxes, net	Income taxes, net	(8)		(51)		Income taxes, net	157		88
Noncash transactions —	Noncash transactions —					Noncash transactions —
Accrued property additions at end of period	Accrued property additions at end of period	863		872		Accrued property additions at end of period	837		943
Contributions from noncontrolling interests	Contributions from noncontrolling interests	—		89		Contributions from noncontrolling interests	—		89
Contributions of wind turbine equipment	Contributions of wind turbine equipment	—		82		Contributions of wind turbine equipment	—		82
Right-of-use assets obtained under leases	Right-of-use assets obtained under leases	3		76		Right-of-use assets obtained under leases	15		90
Reassessment of right-of-use assets under operating leases	Reassessment of right-of-use assets under operating leases	40		—		Reassessment of right-of-use assets under operating leases	40		—

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

Table of Contents Index to Financial Statements

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


Assets	Assets	At March 31, 2022		At December 31, 2021		Assets	At June 30, 2022		At December 31, 2021
		(in millions)					(in millions)
Current Assets:	Current Assets:					Current Assets:
Cash and cash equivalents	Cash and cash equivalents	$	1,662	$	1,798	Cash and cash equivalents	$	1,724	$	1,798

Receivables —	Receivables —					Receivables —
Customer accounts	Customer accounts	2,006		1,806		Customer accounts	2,277		1,806

Unbilled revenues	Unbilled revenues	638		711		Unbilled revenues	807		711

Other accounts and notes	Other accounts and notes	509		523		Other accounts and notes	534		523
Accumulated provision for uncollectible accounts	Accumulated provision for uncollectible accounts	(89)		(78)		Accumulated provision for uncollectible accounts	(94)		(78)
Materials and supplies	Materials and supplies	1,571		1,543		Materials and supplies	1,641		1,543
Fossil fuel for generation	Fossil fuel for generation	411		450		Fossil fuel for generation	431		450
Natural gas for sale	Natural gas for sale	121		362		Natural gas for sale	209		362

Prepaid expenses	Prepaid expenses	739		330		Prepaid expenses	528		330

Assets from risk management activities, net of collateral	Assets from risk management activities, net of collateral	405		151		Assets from risk management activities, net of collateral	247		151
Regulatory assets – asset retirement obligations	Regulatory assets – asset retirement obligations	241		219		Regulatory assets – asset retirement obligations	263		219
Natural gas cost under recovery	Natural gas cost under recovery	306		266		Natural gas cost under recovery	361		266

Other regulatory assets	Other regulatory assets	576		653		Other regulatory assets	641		653
Other current assets	Other current assets	201		231		Other current assets	212		231
Total current assets	Total current assets	9,297		8,965		Total current assets	9,781		8,965
Property, Plant, and Equipment:	Property, Plant, and Equipment:					Property, Plant, and Equipment:
In service	In service	116,259		115,592		In service	117,418		115,592
Less: Accumulated depreciation	Less: Accumulated depreciation	34,645		34,079		Less: Accumulated depreciation	35,203		34,079
Plant in service, net of depreciation	Plant in service, net of depreciation	81,614		81,513		Plant in service, net of depreciation	82,215		81,513

Nuclear fuel, at amortized cost	Nuclear fuel, at amortized cost	839		824		Nuclear fuel, at amortized cost	837		824
Construction work in progress	Construction work in progress	9,337		8,771		Construction work in progress	9,770		8,771
Total property, plant, and equipment	Total property, plant, and equipment	91,790		91,108		Total property, plant, and equipment	92,822		91,108
Other Property and Investments:	Other Property and Investments:					Other Property and Investments:
Goodwill	Goodwill	5,280		5,280		Goodwill	5,280		5,280
Nuclear decommissioning trusts, at fair value	Nuclear decommissioning trusts, at fair value	2,403		2,542		Nuclear decommissioning trusts, at fair value	2,150		2,542
Equity investments in unconsolidated subsidiaries	Equity investments in unconsolidated subsidiaries	1,293		1,282		Equity investments in unconsolidated subsidiaries	1,305		1,282
Other intangible assets, net of amortization of $317 and $307, respectively		435		445
Other intangible assets, net of amortization of $326 and $307, respectively						Other intangible assets, net of amortization of $326 and $307, respectively	425		445

Miscellaneous property and investments	Miscellaneous property and investments	633		653		Miscellaneous property and investments	576		653
Total other property and investments	Total other property and investments	10,044		10,202		Total other property and investments	9,736		10,202
Deferred Charges and Other Assets:	Deferred Charges and Other Assets:					Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization	Operating lease right-of-use assets, net of amortization	1,693		1,701		Operating lease right-of-use assets, net of amortization	1,623		1,701
Deferred charges related to income taxes	Deferred charges related to income taxes	833		824		Deferred charges related to income taxes	843		824
Prepaid pension costs	Prepaid pension costs	1,772		1,657		Prepaid pension costs	1,893		1,657

Unamortized loss on reacquired debt	Unamortized loss on reacquired debt	257		258		Unamortized loss on reacquired debt	248		258
Regulatory assets – asset retirement obligations, deferred	Regulatory assets – asset retirement obligations, deferred	5,683		5,466		Regulatory assets – asset retirement obligations, deferred	5,982		5,466
Other regulatory assets, deferred	Other regulatory assets, deferred	5,372		5,577		Other regulatory assets, deferred	5,448		5,577

Other deferred charges and assets	Other deferred charges and assets	1,898		1,776		Other deferred charges and assets	2,393		1,776
Total deferred charges and other assets	Total deferred charges and other assets	17,508		17,259		Total deferred charges and other assets	18,430		17,259
Total Assets	Total Assets	$	128,639	$	127,534	Total Assets	$	130,769	$	127,534

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

Table of Contents Index to Financial Statements

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


Liabilities and Stockholders' Equity	Liabilities and Stockholders' Equity	At March 31, 2022		At December 31, 2021		Liabilities and Stockholders' Equity	At June 30, 2022		At December 31, 2021
		(in millions)					(in millions)
Current Liabilities:	Current Liabilities:					Current Liabilities:
Securities due within one year	Securities due within one year	$	1,193	$	2,157	Securities due within one year	$	1,052	$	2,157

Notes payable	Notes payable	2,330		1,440		Notes payable	2,510		1,440

Accounts payable	Accounts payable	2,251		2,169		Accounts payable	2,908		2,169
Customer deposits	Customer deposits	454		479		Customer deposits	461		479
Accrued taxes —	Accrued taxes —					Accrued taxes —
Accrued income taxes	Accrued income taxes	57		50		Accrued income taxes	17		50

Other accrued taxes	Other accrued taxes	415		641		Other accrued taxes	635		641
Accrued interest	Accrued interest	404		533		Accrued interest	553		533

Accrued compensation	Accrued compensation	574		1,070		Accrued compensation	807		1,070
Asset retirement obligations	Asset retirement obligations	695		697		Asset retirement obligations	693		697

Operating lease obligations	Operating lease obligations	245		250		Operating lease obligations	232		250
Other regulatory liabilities	Other regulatory liabilities	711		563		Other regulatory liabilities	557		563
Other current liabilities	Other current liabilities	1,105		872		Other current liabilities	1,062		872
Total current liabilities	Total current liabilities	10,434		10,921		Total current liabilities	11,487		10,921
Long-term Debt	Long-term Debt	50,633		50,120		Long-term Debt	51,204		50,120
Deferred Credits and Other Liabilities:	Deferred Credits and Other Liabilities:					Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	Accumulated deferred income taxes	9,506		8,862		Accumulated deferred income taxes	9,620		8,862
Deferred credits related to income taxes	Deferred credits related to income taxes	5,365		5,401		Deferred credits related to income taxes	5,318		5,401
Accumulated deferred ITCs	Accumulated deferred ITCs	2,196		2,216		Accumulated deferred ITCs	2,175		2,216
Employee benefit obligations	Employee benefit obligations	1,526		1,550		Employee benefit obligations	1,509		1,550
Operating lease obligations, deferred	Operating lease obligations, deferred	1,521		1,503		Operating lease obligations, deferred	1,464		1,503
Asset retirement obligations, deferred	Asset retirement obligations, deferred	11,016		10,990		Asset retirement obligations, deferred	11,010		10,990

Other cost of removal obligations	Other cost of removal obligations	2,030		2,103		Other cost of removal obligations	1,993		2,103
Other regulatory liabilities, deferred	Other regulatory liabilities, deferred	526		485		Other regulatory liabilities, deferred	536		485

Other deferred credits and liabilities	Other deferred credits and liabilities	966		816		Other deferred credits and liabilities	1,198		816
Total deferred credits and other liabilities	Total deferred credits and other liabilities	34,652		33,926		Total deferred credits and other liabilities	34,823		33,926
Total Liabilities	Total Liabilities	95,719		94,967		Total Liabilities	97,514		94,967
Redeemable Preferred Stock of Subsidiaries	Redeemable Preferred Stock of Subsidiaries	291		291		Redeemable Preferred Stock of Subsidiaries	242		291

Total Stockholders' Equity (See accompanying statements)	Total Stockholders' Equity (See accompanying statements)	32,629		32,276		Total Stockholders' Equity (See accompanying statements)	33,013		32,276
Total Liabilities and Stockholders' Equity	Total Liabilities and Stockholders' Equity	$	128,639	$	127,534	Total Liabilities and Stockholders' Equity	$	130,769	$	127,534

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

Table of Contents Index to Financial Statements

SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)


		Southern Company Common Stockholders' Equity																								Southern Company Common Stockholders' Equity
		Number of Common Shares		Common Stock								Accumulated Other Comprehensive Income (Loss)														Number of Common Shares					Common Stock															Accumulated Other Comprehensive Income (Loss)
		Issued	Treasury	Par Value		Paid-In Capital		Treasury		Retained Earnings				Noncontrolling Interests		Total				Issued						Treasury			Par Value		Paid-In Capital				Treasury				Retained Earnings				Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interests			Total
		(in millions)																					(in millions)
Balance at December 31, 2020	Balance at December 31, 2020	1,058	(1)	$	5,268	$	11,834	$	(46)	$	11,311			$	(395)			$	4,262					$	32,234		Balance at December 31, 2020	1,058		(1)			$	5,268			$	11,834			$	(46)				$	11,311	$	(395)			$	4,262	$	32,234
Consolidated net income (loss)	Consolidated net income (loss)	—	—	—		—		—		1,135		—				(32)					1,103			Consolidated net income (loss)		—			—		—				—				—				1,135			—				(32)		1,103
Other comprehensive income	Other comprehensive income	—	—	—		—		—		—		28				—					28			Other comprehensive income		—			—		—				—				—				—			28				—		28
Stock issued	Stock issued	2	—	5		9		—		—		—				—					14			Stock issued		2			—		5				9				—				—			—				—		14
Stock-based compensation	Stock-based compensation	—	—	—		9		—		—		—				—					9			Stock-based compensation		—			—		—				9				—				—			—				—		9

Cash dividends of $0.64 per share	Cash dividends of $0.64 per share	—	—	—		—		—		(678)		—				—					(678)			Cash dividends of $0.64 per share		—			—		—				—				—				(678)			—				—		(678)

Capital contributions from noncontrolling interests	Capital contributions from noncontrolling interests	—	—	—		—		—		—		—				403					403			Capital contributions from noncontrolling interests		—			—		—				—				—				—			—				403		403
Distributions to noncontrolling interests	Distributions to noncontrolling interests	—	—	—		—		—		—		—				(46)					(46)			Distributions to noncontrolling interests		—			—		—				—				—				—			—				(46)		(46)

Other	Other	—	—	—		2		—		—		—				(1)					1			Other		—			—		—				2				—				—			—				(1)		1
Balance at March 31, 2021	Balance at March 31, 2021	1,060	(1)	$	5,273	$	11,854	$	(46)	$	11,768	$	(367)			$	4,586				$	33,068		Balance at March 31, 2021		1,060			(1)		5,273				11,854				(46)				11,768			(367)				4,586		33,068
Consolidated net income																								Consolidated net income		—			—		—				—				—				372			—				—		372
Other comprehensive income																								Other comprehensive income		—			—		—				—				—				—			12				—		12
Stock issued																								Stock issued		—			—		1				9				—				—			—				—		10
Stock-based compensation																								Stock-based compensation		—			—		—				22				—				—			—				—		22

Cash dividends of $0.66 per share																								Cash dividends of $0.66 per share		—			—		—				—				—				(699)			—				—		(699)

Capital contributions from noncontrolling interests																								Capital contributions from noncontrolling interests		—			—		—				—				—				—			—				29		29
Distributions to noncontrolling interests																								Distributions to noncontrolling interests		—			—		—				—				—				—			—				(68)		(68)

Other																								Other		—			—		—				1				(2)				1			—				—		—
Balance at June 30, 2021																								Balance at June 30, 2021		1,060			(1)		$	5,274			$	11,886			$	(48)			$	11,442		$	(355)			$	4,547	$	32,746

Balance at December 31, 2021 1,061 (1) $ 5,279 $ 11,950 $ (47) $ 10,929 $ (237) $ 4,402 $ 32,276
Consolidated net income (loss) — — — — — 1,032 — (45) 987
Other comprehensive income — — — — — — 42 — 42
Stock issued 3 — 7 31 — — — — 38
Stock-based compensation — — — 6 — — — — 6
Cash dividends of $0.66 per share — — — — — (702) — — (702)
Capital contributions from
noncontrolling interests — — — — — — — 73 73
Distributions to noncontrolling interests — — — — — — — (98) (98)
Other — — — 7 (2) 2 — — 7
Balance at March 31, 2022 1,064 (1) $ 5,286 $ 11,994 $ (49) $ 11,261 $ (195) $ 4,332 $ 32,629

Table of ContentsIndex to Financial Statements

SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)


	Southern Company Common Stockholders' Equity
	Number of Common Shares		Common 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, 2021	1,061	(1)	$	5,279	$	11,950	$	(47)	$	10,929	$	(237)		$	4,402		$	32,276
Consolidated net income (loss)	—	—	—		—		—		1,032		—			(45)			987
Other comprehensive income	—	—	—		—		—		—		42			—			42
Stock issued	3	—	7		31		—		—		—			—			38
Stock-based compensation	—	—	—		6		—		—		—			—			6

Cash dividends of $0.66 per share	—	—	—		—		—		(702)		—			—			(702)

Capital contributions from noncontrolling interests	—	—	—		—		—		—		—			73			73
Distributions to noncontrolling interests	—	—	—		—		—		—		—			(98)			(98)



Other	—	—	—		7		(2)		2		—			—			7
Balance at March 31, 2022	1,064	(1)	5,286		11,994		(49)		11,261		(195)			4,332			32,629
Consolidated net income (loss)	—	—	—		—		—		1,107		—			(22)			1,085
Other comprehensive income	—	—	—		—		—		—		11			—			11
Stock issued	—	—	2		21		—		—		—			—			23
Stock-based compensation	—	—	—		14		—		—		—			—			14

Cash dividends of $0.68 per share	—	—	—		—		—		(723)		—			—			(723)


Distributions to noncontrolling interests	—	—	—		—		—		—		—			(28)			(28)




Other	—	—	—		4		(2)		—		—			—			2
Balance at June 30, 2022	1,064	(1)	$	5,288	$	12,033	$	(51)	$	11,645	$	(184)		$	4,282		$	33,013

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

1516

Table of Contents Index to Financial Statements

ALABAMA POWER COMPANY

CONDENSED STATEMENTS OF INCOME (UNAUDITED)


		For the Three Months Ended March 31,			For the Three Months Ended June 30,						For the Six Months Ended June 30,
			2022			2021			2022		2021		2022		2021
		(in millions)			(in millions)						(in millions)
Operating Revenues:	Operating Revenues:							Operating Revenues:
Retail revenues	Retail revenues		$	1,379		$	1,352	Retail revenues	$	1,629	$	1,354	$	3,008	$	2,706
Wholesale revenues, non-affiliates	Wholesale revenues, non-affiliates		114			92		Wholesale revenues, non-affiliates	159		85		272		178
Wholesale revenues, affiliates	Wholesale revenues, affiliates		65			32		Wholesale revenues, affiliates	34		24		100		55
Other revenues	Other revenues		91			83		Other revenues	109		93		200		176
Total operating revenues	Total operating revenues		1,649			1,559		Total operating revenues	1,931		1,556		3,580		3,115
Operating Expenses:	Operating Expenses:							Operating Expenses:
Fuel	Fuel		333			291		Fuel	401		263		733		554
Purchased power, non-affiliates	Purchased power, non-affiliates		67			50		Purchased power, non-affiliates	95		48		162		97
Purchased power, affiliates	Purchased power, affiliates		26			30		Purchased power, affiliates	121		39		147		69
Other operations and maintenance	Other operations and maintenance		409			361		Other operations and maintenance	441		413		852		775
Depreciation and amortization	Depreciation and amortization		215			211		Depreciation and amortization	218		214		432		425
Taxes other than income taxes	Taxes other than income taxes		104			103		Taxes other than income taxes	100		101		204		203
Total operating expenses	Total operating expenses		1,154			1,046		Total operating expenses	1,376		1,078		2,530		2,123
Operating Income	Operating Income		495			513		Operating Income	555		478		1,050		992
Other Income and (Expense):	Other Income and (Expense):							Other Income and (Expense):
Allowance for equity funds used during construction	Allowance for equity funds used during construction		16			12		Allowance for equity funds used during construction	17		12		33		24
Interest expense, net of amounts capitalized	Interest expense, net of amounts capitalized		(89)			(84)		Interest expense, net of amounts capitalized	(91)		(84)		(180)		(168)
Other income (expense), net	Other income (expense), net		36			32		Other income (expense), net	27		33		61		62
Total other income and (expense)	Total other income and (expense)		(37)			(40)		Total other income and (expense)	(47)		(39)		(86)		(82)
Earnings Before Income Taxes	Earnings Before Income Taxes		458			473		Earnings Before Income Taxes	508		439		964		910
Income taxes	Income taxes		107			110		Income taxes	121		104		227		213
Net Income	Net Income		351			363		Net Income	387		335		737		697
Dividends on Preferred Stock	Dividends on Preferred Stock		4			4		Dividends on Preferred Stock	4		4		7		7
Net Income After Dividends on Preferred Stock	Net Income After Dividends on Preferred Stock		$	347		$	359	Net Income After Dividends on Preferred Stock	$	383	$	331	$	730	$	690

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

For the Three Months Ended March 31,
2022 2021
(in millions)
Net Income $ 351 $ 363
Other comprehensive income:
Qualifying hedges:
Changes in fair value, net of tax of $(1) and $—, respectively (1) —
Reclassification adjustment for amounts included in net income,
net of tax of $— and $—, respectively
1 1
Total other comprehensive income — 1
Comprehensive Income $ 351 $ 364

~~The accompanying notes as they relate to Alabama Power are an integral part of these condensed financial statements.~~

~~Table of ContentsIndex to Financial Statements~~

~~ALABAMA POWER COMPANY~~

~~CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)~~

For the Three Months Ended March 31,
2022 2021
(in millions)
Operating Activities:
Net income $ 351 $ 363
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total 250 248
Deferred income taxes 35 33
Pension, postretirement, and other employee benefits (48) (29)
Settlement of asset retirement obligations (38) (49)
Retail fuel cost under recovery – long-term (46) —
Other, net (27) (14)
Changes in certain current assets and liabilities —
-Receivables (4) 40
-Fossil fuel stock 23 38
-Prepayments (85) (73)
-Other current assets (10) (16)
-Accounts payable (237) (299)
-Accrued taxes 102 104
-Accrued compensation (99) (105)
-Retail fuel cost over recovery — (18)
-Other current liabilities (13) (9)
Net cash provided from operating activities 154 214
Investing Activities:
Property additions (343) (466)
Nuclear decommissioning trust fund purchases (72) (310)
Nuclear decommissioning trust fund sales 72 310
Cost of removal, net of salvage (60) (23)
Change in construction payables 39 32
Other investing activities (1) (9)
Net cash used for investing activities (365) (466)
Financing Activities:
Proceeds — Senior notes 700 —
Redemptions — Senior notes (550) —
Capital contributions from parent company 625 600
Payment of common stock dividends (254) (246)
Other financing activities (17) (13)
Net cash provided from financing activities 504 341
Net Change in Cash, Cash Equivalents, and Restricted Cash 293 89
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period 1,060 530
Cash, Cash Equivalents, and Restricted Cash at End of Period $ 1,353 $ 619
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $4 and $3 capitalized for 2022 and 2021, respectively) $ 110 $ 93
Noncash transactions —
Accrued property additions at end of period 188 198
Right-of-use assets obtained under leases 1 1


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2022		2021		2022		2021
	(in millions)				(in millions)
Net Income	$	387	$	335	$	737	$	697
Other comprehensive income:
Qualifying hedges:
Changes in fair value, net of tax of $—, $—, $(1), and $—, respectively	—		—		(1)		—
Reclassification adjustment for amounts included in net income, net of tax of $—, $—, $1, and $1, respectively	1		1		2		2
Total other comprehensive income	1		1		1		2
Comprehensive Income	$	388	$	336	$	738	$	699

The accompanying notes as they relate to Alabama Power are an integral part of these condensed financial statements.

Table of Contents Index to Financial Statements

ALABAMA POWER COMPANY

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)


	For the Six Months Ended June 30,
	2022		2021
	(in millions)
Operating Activities:
Net income	$	737	$	697
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total	494		496
Deferred income taxes	117		87

Pension, postretirement, and other employee benefits	(59)		(39)
Settlement of asset retirement obligations	(91)		(104)

Retail fuel cost under recovery – long-term	(191)		—

Other, net	(67)		(35)
Changes in certain current assets and liabilities —
-Receivables	(296)		(85)

-Prepayments	(69)		(53)

-Other current assets	(33)		(23)
-Accounts payable	14		(236)

-Accrued compensation	(55)		(60)


-Other current liabilities	9		(61)
Net cash provided from operating activities	510		584
Investing Activities:
Property additions	(759)		(844)
Nuclear decommissioning trust fund purchases	(180)		(473)
Nuclear decommissioning trust fund sales	180		473
Cost of removal, net of salvage	(104)		(56)
Change in construction payables	(8)		25
Other investing activities	(18)		(18)
Net cash used for investing activities	(889)		(893)
Financing Activities:


Proceeds — Senior notes	700		600





Redemptions — Senior notes	(550)		(200)



Capital contributions from parent company	656		624
Payment of common stock dividends	(508)		(492)
Other financing activities	(71)		(26)
Net cash provided from financing activities	227		506
Net Change in Cash, Cash Equivalents, and Restricted Cash	(152)		197
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	1,060		530
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	908	$	727
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $9 and $7 capitalized for 2022 and 2021, respectively)	$	166	$	154
Income taxes, net	192		171
Noncash transactions —
Accrued property additions at end of period	141		191
Right-of-use assets obtained under leases	6		2

The accompanying notes as they relate to Alabama Power are an integral part of these condensed financial statements.

Table of ContentsIndex to Financial Statements

ALABAMA POWER COMPANY

CONDENSED BALANCE SHEETS (UNAUDITED)


Assets	Assets	At March 31, 2022		At December 31, 2021		Assets	At June 30, 2022		At December 31, 2021
		(in millions)					(in millions)
Current Assets:	Current Assets:					Current Assets:
Cash and cash equivalents	Cash and cash equivalents	$	1,353	$	1,060	Cash and cash equivalents	$	908	$	1,060
Receivables —	Receivables —					Receivables —
Customer accounts	Customer accounts	417		410		Customer accounts	501		410
Unbilled revenues	Unbilled revenues	127		138		Unbilled revenues	189		138

Affiliated	Affiliated	36		37		Affiliated	85		37
Other accounts and notes	Other accounts and notes	64		55		Other accounts and notes	101		55
Accumulated provision for uncollectible accounts	Accumulated provision for uncollectible accounts	(15)		(14)		Accumulated provision for uncollectible accounts	(14)		(14)
Fossil fuel stock	Fossil fuel stock	136		159		Fossil fuel stock	161		159
Materials and supplies	Materials and supplies	550		548		Materials and supplies	568		548

Prepaid expenses	Prepaid expenses	126		41		Prepaid expenses	147		41
Other regulatory assets	Other regulatory assets	191		208		Other regulatory assets	263		208
Other current assets	Other current assets	131		67		Other current assets	113		67
Total current assets	Total current assets	3,116		2,709		Total current assets	3,022		2,709
Property, Plant, and Equipment:	Property, Plant, and Equipment:					Property, Plant, and Equipment:
In service	In service	33,333		33,135		In service	33,596		33,135
Less: Accumulated provision for depreciation	Less: Accumulated provision for depreciation	10,451		10,313		Less: Accumulated provision for depreciation	10,589		10,313
Plant in service, net of depreciation	Plant in service, net of depreciation	22,882		22,822		Plant in service, net of depreciation	23,007		22,822

Nuclear fuel, at amortized cost	Nuclear fuel, at amortized cost	246		247		Nuclear fuel, at amortized cost	251		247
Construction work in progress	Construction work in progress	1,249		1,147		Construction work in progress	1,319		1,147
Total property, plant, and equipment	Total property, plant, and equipment	24,377		24,216		Total property, plant, and equipment	24,577		24,216
Other Property and Investments:	Other Property and Investments:					Other Property and Investments:
Nuclear decommissioning trusts, at fair value	Nuclear decommissioning trusts, at fair value	1,257		1,325		Nuclear decommissioning trusts, at fair value	1,124		1,325
Equity investments in unconsolidated subsidiaries	Equity investments in unconsolidated subsidiaries	57		57		Equity investments in unconsolidated subsidiaries	56		57
Miscellaneous property and investments	Miscellaneous property and investments	126		126		Miscellaneous property and investments	128		126
Total other property and investments	Total other property and investments	1,440		1,508		Total other property and investments	1,308		1,508
Deferred Charges and Other Assets:	Deferred Charges and Other Assets:					Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization	Operating lease right-of-use assets, net of amortization	97		108		Operating lease right-of-use assets, net of amortization	89		108
Deferred charges related to income taxes	Deferred charges related to income taxes	243		240		Deferred charges related to income taxes	246		240
Prepaid pension and other postretirement benefit costs	Prepaid pension and other postretirement benefit costs	546		513		Prepaid pension and other postretirement benefit costs	568		513

Regulatory assets – asset retirement obligations	Regulatory assets – asset retirement obligations	1,663		1,547		Regulatory assets – asset retirement obligations	1,845		1,547
Other regulatory assets, deferred	Other regulatory assets, deferred	1,717		1,807		Other regulatory assets, deferred	1,860		1,807
Other deferred charges and assets	Other deferred charges and assets	371		334		Other deferred charges and assets	395		334
Total deferred charges and other assets	Total deferred charges and other assets	4,637		4,549		Total deferred charges and other assets	5,003		4,549
Total Assets	Total Assets	$	33,570	$	32,982	Total Assets	$	33,910	$	32,982

The accompanying notes as they relate to Alabama Power are an integral part of these condensed financial statements.

1819

Table of Contents Index to Financial Statements

ALABAMA POWER COMPANY

CONDENSED BALANCE SHEETS (UNAUDITED)


Liabilities and Stockholder's Equity	Liabilities and Stockholder's Equity	At March 31, 2022		At December 31, 2021		Liabilities and Stockholder's Equity	At June 30, 2022		At December 31, 2021
		(in millions)					(in millions)
Current Liabilities:	Current Liabilities:					Current Liabilities:
Securities due within one year	Securities due within one year	$	201	$	751	Securities due within one year	$	201	$	751

Accounts payable —	Accounts payable —					Accounts payable —
Affiliated	Affiliated	194		309		Affiliated	414		309
Other	Other	372		459		Other	351		459
Customer deposits	Customer deposits	106		106		Customer deposits	107		106

Accrued taxes	Accrued taxes	200		98		Accrued taxes	128		98
Accrued interest	Accrued interest	77		100		Accrued interest	109		100

Accrued compensation	Accrued compensation	124		219		Accrued compensation	174		219

Asset retirement obligations	Asset retirement obligations	322		320		Asset retirement obligations	325		320
Other regulatory liabilities	Other regulatory liabilities	148		215		Other regulatory liabilities	133		215
Other current liabilities	Other current liabilities	128		125		Other current liabilities	121		125
Total current liabilities	Total current liabilities	1,872		2,702		Total current liabilities	2,063		2,702
Long-term Debt	Long-term Debt	9,631		8,936		Long-term Debt	9,633		8,936
Deferred Credits and Other Liabilities:	Deferred Credits and Other Liabilities:					Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	Accumulated deferred income taxes	3,619		3,573		Accumulated deferred income taxes	3,719		3,573
Deferred credits related to income taxes	Deferred credits related to income taxes	1,959		1,968		Deferred credits related to income taxes	1,944		1,968
Accumulated deferred ITCs	Accumulated deferred ITCs	86		88		Accumulated deferred ITCs	84		88
Employee benefit obligations	Employee benefit obligations	179		171		Employee benefit obligations	176		171
Operating lease obligations	Operating lease obligations	64		66		Operating lease obligations	66		66
Asset retirement obligations, deferred	Asset retirement obligations, deferred	4,013		4,014		Asset retirement obligations, deferred	3,998		4,014
Other cost of removal obligations	Other cost of removal obligations	144		192		Other cost of removal obligations	106		192
Other regulatory liabilities, deferred	Other regulatory liabilities, deferred	224		210		Other regulatory liabilities, deferred	227		210

Other deferred credits and liabilities	Other deferred credits and liabilities	56		58		Other deferred credits and liabilities	58		58
Total deferred credits and other liabilities	Total deferred credits and other liabilities	10,344		10,340		Total deferred credits and other liabilities	10,378		10,340
Total Liabilities	Total Liabilities	21,847		21,978		Total Liabilities	22,074		21,978
Redeemable Preferred Stock	Redeemable Preferred Stock	291		291		Redeemable Preferred Stock	242		291

Common Stockholder's Equity (See accompanying statements)	Common Stockholder's Equity (See accompanying statements)	11,432		10,713		Common Stockholder's Equity (See accompanying statements)	11,594		10,713
Total Liabilities and Stockholder's Equity	Total Liabilities and Stockholder's Equity	$	33,570	$	32,982	Total Liabilities and Stockholder's Equity	$	33,910	$	32,982

The accompanying notes as they relate to Alabama Power are an integral part of these condensed financial statements.

1920

Table of Contents Index to Financial Statements

ALABAMA POWER COMPANY

CONDENSED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY (UNAUDITED)


		Number of Common Shares Issued	Common Stock		Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total			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, 2020	Balance at December 31, 2020	31	$	1,222	$	5,413	$	3,194	$	(19)	$	9,810	Balance at December 31, 2020	31	$	1,222	$	5,413	$	3,194	$	(19)	$	9,810
Net income after dividends on preferred stock	Net income after dividends on preferred stock	—	—		—		359		—		359		Net income after dividends on preferred stock	—	—		—		359		—		359

Capital contributions from parent company	Capital contributions from parent company	—	—		602		—		—		602		Capital contributions from parent company	—	—		602		—		—		602
Other comprehensive income	Other comprehensive income	—	—		—		—		1		1		Other comprehensive income	—	—		—		—		1		1
Cash dividends on common stock	Cash dividends on common stock	—	—		—		(246)		—		(246)		Cash dividends on common stock	—	—		—		(246)		—		(246)

Balance at March 31, 2021	Balance at March 31, 2021	31	$	1,222	$	6,015	$	3,307	$	(18)	$	10,526	Balance at March 31, 2021	31	1,222		6,015		3,307		(18)		10,526
Net income after dividends on preferred stock													Net income after dividends on preferred stock	—	—		—		331		—		331

Capital contributions from parent company													Capital contributions from parent company	—	—		26		—		—		26
Other comprehensive income													Other comprehensive income	—	—		—		—		1		1
Cash dividends on common stock													Cash dividends on common stock	—	—		—		(246)		—		(246)
Other													Other	—	—		—		(1)		—		(1)
Balance at June 30, 2021													Balance at June 30, 2021	31	$	1,222	$	6,041	$	3,391	$	(17)	$	10,637

Balance at December 31, 2021	Balance at December 31, 2021	31	$	1,222	$	6,056	$	3,448	$	(13)	$	10,713	Balance at December 31, 2021	31	$	1,222	$	6,056	$	3,448	$	(13)	$	10,713
Net income after dividends on preferred stock	Net income after dividends on preferred stock	—	—		—		347		—		347		Net income after dividends on preferred stock	—	—		—		347		—		347

Capital contributions from parent company	Capital contributions from parent company	—	—		626		—		—		626		Capital contributions from parent company	—	—		626		—		—		626

Cash dividends on common stock	Cash dividends on common stock	—	—		—		(254)		—		(254)		Cash dividends on common stock	—	—		—		(254)		—		(254)

Balance at March 31, 2022	Balance at March 31, 2022	31	$	1,222	$	6,682	$	3,541	$	(13)	$	11,432	Balance at March 31, 2022	31	1,222		6,682		3,541		(13)		11,432
Net income after dividends on preferred stock													Net income after dividends on preferred stock	—	—		—		383		—		383

Capital contributions from parent company													Capital contributions from parent company	—	—		32		—		—		32
Other comprehensive income													Other comprehensive income	—	—		—		—		1		1
Cash dividends on common stock													Cash dividends on common stock	—	—		—		(254)		—		(254)

Balance at June 30, 2022													Balance at June 30, 2022	31	$	1,222	$	6,714	$	3,670	$	(12)	$	11,594

The accompanying notes as they relate to Alabama Power are an integral part of these condensed financial statements.

2021

Table of Contents Index to Financial Statements

GEORGIA POWER COMPANY

CONDENSED STATEMENTS OF INCOME (UNAUDITED)


		For the Three Months Ended March 31,			For the Three Months Ended June 30,						For the Six Months Ended June 30,
			2022			2021			2022		2021		2022		2021
		(in millions)			(in millions)						(in millions)
Operating Revenues:	Operating Revenues:							Operating Revenues:
Retail revenues	Retail revenues		$	2,017		$	1,787	Retail revenues	$	2,908	$	2,026	$	4,926	$	3,813
Wholesale revenues	Wholesale revenues		66			43		Wholesale revenues	64		36		130		80

Other revenues	Other revenues		125			140		Other revenues	149		163		272		302
Total operating revenues	Total operating revenues		2,208			1,970		Total operating revenues	3,121		2,225		5,328		4,195
Operating Expenses:	Operating Expenses:							Operating Expenses:
Fuel	Fuel		419			313		Fuel	628		343		1,046		656
Purchased power, non-affiliates	Purchased power, non-affiliates		150			144		Purchased power, non-affiliates	246		144		396		288
Purchased power, affiliates	Purchased power, affiliates		206			136		Purchased power, affiliates	323		149		529		285
Other operations and maintenance	Other operations and maintenance		517			474		Other operations and maintenance	573		542		1,091		1,015
Depreciation and amortization	Depreciation and amortization		351			338		Depreciation and amortization	356		342		706		680
Taxes other than income taxes	Taxes other than income taxes		125			116		Taxes other than income taxes	141		118		265		235
Estimated loss on Plant Vogtle Units 3 and 4	Estimated loss on Plant Vogtle Units 3 and 4		—			48		Estimated loss on Plant Vogtle Units 3 and 4	52		460		52		508
Total operating expenses	Total operating expenses		1,768			1,569		Total operating expenses	2,319		2,098		4,085		3,667
Operating Income	Operating Income		440			401		Operating Income	802		127		1,243		528
Other Income and (Expense):	Other Income and (Expense):							Other Income and (Expense):
Allowance for equity funds used during construction	Allowance for equity funds used during construction		32			31		Allowance for equity funds used during construction	33		30		65		61
Interest expense, net of amounts capitalized	Interest expense, net of amounts capitalized		(107)			(104)		Interest expense, net of amounts capitalized	(117)		(106)		(224)		(210)
Other income (expense), net	Other income (expense), net		50			41		Other income (expense), net	54		42		103		83
Total other income and (expense)	Total other income and (expense)		(25)			(32)		Total other income and (expense)	(30)		(34)		(56)		(66)
Earnings Before Income Taxes	Earnings Before Income Taxes		415			369		Earnings Before Income Taxes	772		93		1,187		462
Income taxes			30			18
Income taxes (benefit)								Income taxes (benefit)	164		(50)		194		(32)
Net Income	Net Income		$	385		$	351	Net Income	$	608	$	143	$	993	$	494

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

For the Three Months Ended March 31,
2022 2021
(in millions)
Net Income $ 385 $ 351
Other comprehensive income:
Qualifying hedges:
Changes in fair value, net of tax of $3 and $—, respectively 9 —
Reclassification adjustment for amounts included in net income,
net of tax of $1 and $—, respectively
1 2
Total other comprehensive income 10 2
Comprehensive Income $ 395 $ 353

~~The accompanying notes as they relate to Georgia Power are an integral part of these condensed financial statements.~~

~~Table of ContentsIndex to Financial Statements~~

~~GEORGIA POWER COMPANY~~

~~CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)~~

For the Three Months Ended March 31,
2022 2021
(in millions)
Operating Activities:
Net income $ 385 $ 351
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total 397 384
Deferred income taxes (6) (86)
Pension, postretirement, and other employee benefits (63) (43)
Settlement of asset retirement obligations (41) (49)
Storm damage accruals 53 53
Retail fuel cost under recovery – long-term (84) —
Estimated loss on Plant Vogtle Units 3 and 4 — 48
Other, net (85) (19)
Changes in certain current assets and liabilities —
-Receivables — 176
-Prepaid income taxes (36) —
-Other current assets 22 4
-Accounts payable 39 (74)
-Accrued taxes (78) (110)
-Accrued compensation (79) (68)
-Accrued interest (43) (34)
-Other current liabilities (20) (44)
Net cash provided from operating activities 361 489
Investing Activities:
Property additions (749) (775)
Nuclear decommissioning trust fund purchases (221) (241)
Nuclear decommissioning trust fund sales 217 236
Cost of removal, net of salvage (140) (40)
Change in construction payables, net of joint owner portion 14 (103)
Proceeds from dispositions 56 1
Other investing activities 14 9
Net cash used for investing activities (809) (913)
Financing Activities:
Increase in notes payable, net 410 145
Proceeds —
Senior notes — 750
Short-term borrowings 450 —
Redemptions and repurchases —
Senior notes (400) (325)
FFB loan (24) (25)
Capital contributions from parent company 445 330
Payment of common stock dividends (423) (412)
Other financing activities (17) (19)
Net cash provided from financing activities 441 444
Net Change in Cash, Cash Equivalents, and Restricted Cash (7) 20
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period 33 9
Cash, Cash Equivalents, and Restricted Cash at End of Period $ 26 $ 29
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $16 and $15 capitalized for 2022 and 2021, respectively) $ 139 $ 128
Noncash transactions —
Accrued property additions at end of period 459 445
Right-of-use assets obtained under operating leases 1 3


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2022		2021		2022		2021
	(in millions)				(in millions)
Net Income	$	608	$	143	$	993	$	494
Other comprehensive income:
Qualifying hedges:
Changes in fair value, net of tax of $4, $—, $8, and $—, respectively	15		—		23		—
Reclassification adjustment for amounts included in net income, net of tax of $—, $1, $1, and $1, respectively	1		1		3		3
Total other comprehensive income	16		1		26		3
Comprehensive Income	$	624	$	144	$	1,019	$	497

The accompanying notes as they relate to Georgia Power are an integral part of these condensed financial statements.

Table of Contents Index to Financial Statements

GEORGIA POWER COMPANY

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)


	For the Six Months Ended June 30,
	2022		2021
	(in millions)
Operating Activities:
Net income	$	993	$	494
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total	803		772
Deferred income taxes	72		(309)

Allowance for equity funds used during construction	(65)		(61)


Pension, postretirement, and other employee benefits	(114)		(59)

Settlement of asset retirement obligations	(91)		(100)
Storm damage accruals	107		107
Retail fuel cost under recovery – long-term	(538)		—


Estimated loss on Plant Vogtle Units 3 and 4	52		508
Other, net	7		90
Changes in certain current assets and liabilities —
-Receivables	(424)		(73)
-Fossil fuel stock	31		55

-Materials and supplies	(46)		(46)

-Other current assets	(25)		15
-Accounts payable	235		83

-Accrued compensation	(50)		(39)
-Retail fuel cost over recovery	—		(113)


-Other current liabilities	(21)		(11)
Net cash provided from operating activities	926		1,313
Investing Activities:
Property additions	(1,654)		(1,575)
Nuclear decommissioning trust fund purchases	(448)		(458)
Nuclear decommissioning trust fund sales	444		453
Cost of removal, net of salvage	(207)		(73)
Change in construction payables, net of joint owner portion	51		(72)

Contributions in aid of construction	109		45
Proceeds from dispositions	56		3

Other investing activities	(19)		(53)
Net cash used for investing activities	(1,668)		(1,730)
Financing Activities:
Increase in notes payable, net	—		250
Proceeds —
Senior notes	1,500		750

FFB loan	—		371
Short-term borrowings	650		—

Redemptions and repurchases —

Senior notes	(400)		(325)
Pollution control revenue bonds	—		(69)
FFB loan	(45)		(45)
Short-term borrowings	(250)		—
Other long-term debt	(125)		—

Capital contributions from parent company	491		368
Payment of common stock dividends	(845)		(824)


Other financing activities	(37)		(19)
Net cash provided from financing activities	939		457
Net Change in Cash, Cash Equivalents, and Restricted Cash	197		40
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	33		9
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	230	$	49
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $33 and $30 capitalized for 2022 and 2021, respectively)	$	188	$	182
Income taxes, net	106		139
Noncash transactions —
Accrued property additions at end of period	500		476
Right-of-use assets obtained under operating leases	1		3

The accompanying notes as they relate to Georgia Power are an integral part of these condensed financial statements.

Table of ContentsIndex to Financial Statements

GEORGIA POWER COMPANY

CONDENSED BALANCE SHEETS (UNAUDITED)


Assets	Assets	At March 31, 2022		At December 31, 2021		Assets	At June 30, 2022		At December 31, 2021
		(in millions)					(in millions)
Current Assets:	Current Assets:					Current Assets:
Cash and cash equivalents	Cash and cash equivalents	$	26	$	33	Cash and cash equivalents	$	230	$	33

Receivables —	Receivables —					Receivables —
Customer accounts, net	Customer accounts, net	561		547		Customer accounts, net	830		547
Unbilled revenues	Unbilled revenues	216		231		Unbilled revenues	450		231

Joint owner accounts	Joint owner accounts	60		116		Joint owner accounts	44		116

Affiliated	Affiliated	12		25		Affiliated	54		25
Other accounts and notes	Other accounts and notes	35		44		Other accounts and notes	33		44

Fossil fuel stock	Fossil fuel stock	231		248		Fossil fuel stock	218		248
Materials and supplies	Materials and supplies	681		670		Materials and supplies	712		670

Regulatory assets – storm damage		4		48

Regulatory assets – asset retirement obligations	Regulatory assets – asset retirement obligations	200		178		Regulatory assets – asset retirement obligations	222		178
Assets from risk management activities	Assets from risk management activities	162		48		Assets from risk management activities	94		48
Other regulatory assets	Other regulatory assets	248		241		Other regulatory assets	244		289
Other current assets	Other current assets	124		130		Other current assets	124		130
Total current assets	Total current assets	2,560		2,559		Total current assets	3,255		2,559
Property, Plant, and Equipment:	Property, Plant, and Equipment:					Property, Plant, and Equipment:
In service	In service	41,592		41,332		In service	42,067		41,332
Less: Accumulated provision for depreciation	Less: Accumulated provision for depreciation	13,029		12,854		Less: Accumulated provision for depreciation	13,233		12,854
Plant in service, net of depreciation	Plant in service, net of depreciation	28,563		28,478		Plant in service, net of depreciation	28,834		28,478

Nuclear fuel, at amortized cost	Nuclear fuel, at amortized cost	593		577		Nuclear fuel, at amortized cost	586		577
Construction work in progress	Construction work in progress	7,086		6,688		Construction work in progress	7,420		6,688
Total property, plant, and equipment	Total property, plant, and equipment	36,242		35,743		Total property, plant, and equipment	36,840		35,743
Other Property and Investments:	Other Property and Investments:					Other Property and Investments:
Nuclear decommissioning trusts, at fair value	Nuclear decommissioning trusts, at fair value	1,146		1,217		Nuclear decommissioning trusts, at fair value	1,025		1,217
Equity investments in unconsolidated subsidiaries	Equity investments in unconsolidated subsidiaries	51		50		Equity investments in unconsolidated subsidiaries	51		50
Miscellaneous property and investments	Miscellaneous property and investments	74		69		Miscellaneous property and investments	75		69
Total other property and investments	Total other property and investments	1,271		1,336		Total other property and investments	1,151		1,336
Deferred Charges and Other Assets:	Deferred Charges and Other Assets:					Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization	Operating lease right-of-use assets, net of amortization	1,120		1,157		Operating lease right-of-use assets, net of amortization	1,083		1,157
Deferred charges related to income taxes	Deferred charges related to income taxes	557		550		Deferred charges related to income taxes	564		550
Prepaid pension costs	Prepaid pension costs	608		563		Prepaid pension costs	652		563
Deferred under recovered fuel clause revenues	Deferred under recovered fuel clause revenues	494		410		Deferred under recovered fuel clause revenues	948		410
Regulatory assets – asset retirement obligations, deferred	Regulatory assets – asset retirement obligations, deferred	3,781		3,688		Regulatory assets – asset retirement obligations, deferred	3,896		3,688
Other regulatory assets, deferred	Other regulatory assets, deferred	2,067		1,964		Other regulatory assets, deferred	2,073		1,964
Other deferred charges and assets	Other deferred charges and assets	506		491		Other deferred charges and assets	512		491
Total deferred charges and other assets	Total deferred charges and other assets	9,133		8,823		Total deferred charges and other assets	9,728		8,823
Total Assets	Total Assets	$	49,206	$	48,461	Total Assets	$	50,974	$	48,461

The accompanying notes as they relate to Georgia Power are an integral part of these condensed financial statements.

2324

Table of Contents Index to Financial Statements

GEORGIA POWER COMPANY

CONDENSED BALANCE SHEETS (UNAUDITED)


Liabilities and Stockholder's Equity	Liabilities and Stockholder's Equity	At March 31, 2022		At December 31, 2021		Liabilities and Stockholder's Equity	At June 30, 2022		At December 31, 2021
		(in millions)					(in millions)
Current Liabilities:	Current Liabilities:					Current Liabilities:
Securities due within one year	Securities due within one year	$	275	$	675	Securities due within one year	$	248	$	675
Notes payable	Notes payable	860		—		Notes payable	400		—
Accounts payable —	Accounts payable —					Accounts payable —
Affiliated	Affiliated	548		757		Affiliated	863		757
Other	Other	873		702		Other	892		702
Customer deposits	Customer deposits	257		259		Customer deposits	255		259

Accrued taxes	Accrued taxes	196		335		Accrued taxes	322		335
Accrued interest	Accrued interest	93		136		Accrued interest	150		136

Accrued compensation	Accrued compensation	124		232		Accrued compensation	174		232
Operating lease obligations	Operating lease obligations	156		156		Operating lease obligations	157		156
Asset retirement obligations	Asset retirement obligations	314		317		Asset retirement obligations	312		317

Other regulatory liabilities	Other regulatory liabilities	336		280		Other regulatory liabilities	260		280

Other current liabilities	Other current liabilities	292		254		Other current liabilities	258		254
Total current liabilities	Total current liabilities	4,324		4,103		Total current liabilities	4,291		4,103
Long-term Debt	Long-term Debt	13,088		13,109		Long-term Debt	14,450		13,109
Deferred Credits and Other Liabilities:	Deferred Credits and Other Liabilities:					Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	Accumulated deferred income taxes	3,155		3,019		Accumulated deferred income taxes	3,318		3,019
Deferred credits related to income taxes	Deferred credits related to income taxes	2,303		2,321		Deferred credits related to income taxes	2,283		2,321
Accumulated deferred ITCs	Accumulated deferred ITCs	326		328		Accumulated deferred ITCs	323		328
Employee benefit obligations	Employee benefit obligations	390		402		Employee benefit obligations	384		402
Operating lease obligations, deferred	Operating lease obligations, deferred	989		999		Operating lease obligations, deferred	950		999
Asset retirement obligations, deferred	Asset retirement obligations, deferred	6,526		6,507		Asset retirement obligations, deferred	6,537		6,507

Other deferred credits and liabilities	Other deferred credits and liabilities	456		439		Other deferred credits and liabilities	541		439
Total deferred credits and other liabilities	Total deferred credits and other liabilities	14,145		14,015		Total deferred credits and other liabilities	14,336		14,015
Total Liabilities	Total Liabilities	31,557		31,227		Total Liabilities	33,077		31,227

Common Stockholder's Equity (See accompanying statements)	Common Stockholder's Equity (See accompanying statements)	17,649		17,234		Common Stockholder's Equity (See accompanying statements)	17,897		17,234
Total Liabilities and Stockholder's Equity	Total Liabilities and Stockholder's Equity	$	49,206	$	48,461	Total Liabilities and Stockholder's Equity	$	50,974	$	48,461

The accompanying notes as they relate to Georgia Power are an integral part of these condensed financial statements.

2425

Table of Contents Index to Financial Statements

GEORGIA POWER COMPANY

CONDENSED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY (UNAUDITED)


		Number of Common Shares Issued	Common Stock		Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total			Number of Common Shares Issued	Common Stock		Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
		(in millions)												(in millions)
Balance at December 31, 2020	Balance at December 31, 2020	9	$	398	$	12,361	$	3,789	$	(47)	$	16,501	Balance at December 31, 2020	9	$	398	$	12,361	$	3,789	$	(47)	$	16,501
Net income	Net income	—	—		—		351		—		351		Net income	—	—		—		351		—		351

Capital contributions from parent company	Capital contributions from parent company	—	—		332		—		—		332		Capital contributions from parent company	—	—		332		—		—		332
Other comprehensive income	Other comprehensive income	—	—		—		—		2		2		Other comprehensive income	—	—		—		—		2		2
Cash dividends on common stock	Cash dividends on common stock	—	—		—		(412)		—		(412)		Cash dividends on common stock	—	—		—		(412)		—		(412)

Balance at March 31, 2021	Balance at March 31, 2021	9	$	398	$	12,693	$	3,728	$	(45)	$	16,774	Balance at March 31, 2021	9	398		12,693		3,728		(45)		16,774
Net income													Net income	—	—		—		143		—		143

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	—	—		—		(412)		—		(412)

Balance at June 30, 2021													Balance at June 30, 2021	9	$	398	$	12,733	$	3,459	$	(44)	$	16,546

Balance at December 31, 2021	Balance at December 31, 2021	9	$	398	$	14,153	$	2,724	$	(41)	$	17,234	Balance at December 31, 2021	9	$	398	$	14,153	$	2,724	$	(41)	$	17,234
Net income	Net income	—	—		—		385		—		385		Net income	—	—		—		385		—		385

Capital contributions from parent company	Capital contributions from parent company	—	—		443		—		—		443		Capital contributions from parent company	—	—		443		—		—		443
Other comprehensive income	Other comprehensive income	—	—		—		—		10		10		Other comprehensive income	—	—		—		—		10		10
Cash dividends on common stock	Cash dividends on common stock	—	—		—		(423)		—		(423)		Cash dividends on common stock	—	—		—		(423)		—		(423)

Balance at March 31, 2022	Balance at March 31, 2022	9	$	398	$	14,596	$	2,686	$	(31)	$	17,649	Balance at March 31, 2022	9	398		14,596		2,686		(31)		17,649
Net income													Net income	—	—		—		608		—		608

Capital contributions from parent company													Capital contributions from parent company	—	—		46		—		—		46
Other comprehensive income													Other comprehensive income	—	—		—		—		16		16
Cash dividends on common stock													Cash dividends on common stock	—	—		—		(422)		—		(422)

Balance at June 30, 2022													Balance at June 30, 2022	9	$	398	$	14,642	$	2,872	$	(15)	$	17,897

The accompanying notes as they relate to Georgia Power are an integral part of these condensed financial statements.

2526

Table of Contents Index to Financial Statements

MISSISSIPPI POWER COMPANY

CONDENSED STATEMENTS OF INCOME ~~AND~~(UNAUDITED)


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2022		2021		2022		2021
	(in millions)				(in millions)
Operating Revenues:
Retail revenues	$	252	$	219	$	469	$	422
Wholesale revenues, non-affiliates	63		54		131		117
Wholesale revenues, affiliates	107		25		149		57
Other revenues	12		5		20		14
Total operating revenues	434		303		769		610
Operating Expenses:
Fuel and purchased power	207		102		339		208


Other operations and maintenance	91		76		167		144
Depreciation and amortization	45		44		90		91
Taxes other than income taxes	32		32		61		63

Total operating expenses	375		254		657		506
Operating Income	59		49		112		104
Other Income and (Expense):

Interest expense, net of amounts capitalized	(14)		(14)		(27)		(29)
Other income (expense), net	12		11		22		20
Total other income and (expense)	(2)		(3)		(5)		(9)
Earnings Before Income Taxes	57		46		107		95
Income taxes	12		8		20		12
Net Income	$	45	$	38	$	87	$	83

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

For the Three Months Ended March 31,
2022 2021
(in millions)
Operating Revenues:
Retail revenues $ 217 $ 204
Wholesale revenues, non-affiliates 68 63
Wholesale revenues, affiliates 42 33
Other revenues 8 7
Total operating revenues 335 307
Operating Expenses:
Fuel and purchased power 132 106
Other operations and maintenance 76 68
Depreciation and amortization 45 47
Taxes other than income taxes 29 31
Total operating expenses 282 252
Operating Income 53 55
Other Income and (Expense):
Interest expense, net of amounts capitalized (13) (14)
Other income (expense), net 10 8
Total other income and (expense) (3) (6)
Earnings Before Income Taxes 50 49
Income taxes 8 4
Net Income and Comprehensive Income $ 42 $ 45

~~The accompanying notes as they relate to Mississippi Power are an integral part of these condensed financial statements.~~

~~Table of ContentsIndex to Financial Statements~~

~~MISSISSIPPI POWER COMPANY~~

~~CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)~~

For the Three Months Ended March 31,
2022 2021
(in millions)
Operating Activities:
Net income $ 42 $ 45
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total 55 53
Deferred income taxes (5) 4
Other, net 17 (14)
Changes in certain current assets and liabilities —
-Receivables (7) 7
-Retail fuel cost under recovery (11) —
-Other current assets (11) 1
-Accounts payable (9) (30)
-Accrued taxes (63) (75)
-Accrued compensation (18) (16)
-Other current liabilities (6) (13)
Net cash used for operating activities (16) (38)
Investing Activities:
Property additions (45) (45)
Construction payables (8) (8)
Payments pursuant to LTSAs (8) (7)
Other investing activities (7) (7)
Net cash used for investing activities (68) (67)
Financing Activities:
Increase in notes payable, net 25 29
Capital contributions from parent company 50 100
Payment of common stock dividends (43) (39)
Net cash provided from financing activities 32 90
Net Change in Cash, Cash Equivalents, and Restricted Cash (52) (15)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period 61 39
Cash, Cash Equivalents, and Restricted Cash at End of Period $ 9 $ 24
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest $ 22 $ 16
Noncash transactions — Accrued property additions at end of period 17 26


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2022		2021		2022		2021
	(in millions)				(in millions)
Net Income	$	45	$	38	$	87	$	83
Other comprehensive income:
Qualifying hedges:

Reclassification adjustment for amounts included in net income, net of tax of $—, $—, $—, and $—, respectively	—		—		—		1
Total other comprehensive income	—		—		—		1
Comprehensive Income	$	45	$	38	$	87	$	84

The accompanying notes as they relate to Mississippi Power are an integral part of these condensed financial statements.

Table of Contents Index to Financial Statements

MISSISSIPPI POWER COMPANY

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)


	For the Six Months Ended June 30,
	2022		2021
	(in millions)
Operating Activities:
Net income	$	87	$	83
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total	110		106







Other, net	13		(28)
Changes in certain current assets and liabilities —
-Receivables	(92)		1
-Retail fuel cost under recovery	(25)		—


-Other current assets	(23)		(4)
-Accounts payable	79		(33)
-Accrued taxes	(36)		(51)


-Retail fuel cost over recovery	—		(15)



-Other current liabilities	(1)		(18)
Net cash provided from operating activities	112		41
Investing Activities:
Property additions	(87)		(90)
Construction payables	(16)		(3)



Payments pursuant to LTSAs	(15)		(14)
Other investing activities	(15)		(10)
Net cash used for investing activities	(133)		(117)
Financing Activities:
Increase (decrease) in notes payable, net	16		(25)

Proceeds — Senior notes	—		525















Capital contributions from parent company	51		101

Payment of common stock dividends	(85)		(79)
Other financing activities	—		(7)
Net cash provided from (used for) financing activities	(18)		515
Net Change in Cash, Cash Equivalents, and Restricted Cash	(39)		439
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	61		39
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	22	$	478
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest	$	26	$	31
Income taxes, net	5		7

Noncash transactions — Accrued property additions at end of period	9		31

The accompanying notes as they relate to Mississippi Power are an integral part of these condensed financial statements.

Table of ContentsIndex to Financial Statements

MISSISSIPPI POWER COMPANY

CONDENSED BALANCE SHEETS (UNAUDITED)


Assets	Assets	At March 31, 2022		At December 31, 2021		Assets	At June 30, 2022		At December 31, 2021
		(in millions)					(in millions)
Current Assets:	Current Assets:					Current Assets:
Cash and cash equivalents	Cash and cash equivalents	$	9	$	61	Cash and cash equivalents	$	22	$	61
Receivables —	Receivables —					Receivables —
Customer accounts, net	Customer accounts, net	65		37		Customer accounts, net	89		37
Unbilled revenues	Unbilled revenues	36		34		Unbilled revenues	44		34

Affiliated	Affiliated	17		29		Affiliated	76		29
Other accounts and notes	Other accounts and notes	30		28		Other accounts and notes	37		28

Fossil fuel stock	Fossil fuel stock	30		28		Fossil fuel stock	33		28
Materials and supplies	Materials and supplies	72		70		Materials and supplies	76		70
Assets from risk management activities	Assets from risk management activities	94		28		Assets from risk management activities	62		28
Other regulatory assets	Other regulatory assets	61		54		Other regulatory assets	62		54

Other current assets	Other current assets	10		13		Other current assets	15		13
Total current assets	Total current assets	424		382		Total current assets	516		382
Property, Plant, and Equipment:	Property, Plant, and Equipment:					Property, Plant, and Equipment:
In service	In service	5,149		5,106		In service	5,197		5,106
Less: Accumulated provision for depreciation	Less: Accumulated provision for depreciation	1,626		1,591		Less: Accumulated provision for depreciation	1,648		1,591
Plant in service, net of depreciation	Plant in service, net of depreciation	3,523		3,515		Plant in service, net of depreciation	3,549		3,515

Construction work in progress	Construction work in progress	111		127		Construction work in progress	127		127
Total property, plant, and equipment	Total property, plant, and equipment	3,634		3,642		Total property, plant, and equipment	3,676		3,642
Other Property and Investments	Other Property and Investments	177		179		Other Property and Investments	175		179
Deferred Charges and Other Assets:	Deferred Charges and Other Assets:					Deferred Charges and Other Assets:

Deferred charges related to income taxes	Deferred charges related to income taxes	30		31		Deferred charges related to income taxes	30		31
Prepaid pension costs	Prepaid pension costs	85		79		Prepaid pension costs	91		79
Regulatory assets – asset retirement obligations	Regulatory assets – asset retirement obligations	235		232		Regulatory assets – asset retirement obligations	236		232
Other regulatory assets, deferred	Other regulatory assets, deferred	298		317		Other regulatory assets, deferred	286		317
Accumulated deferred income taxes	Accumulated deferred income taxes	115		118		Accumulated deferred income taxes	112		118

Other deferred charges and assets	Other deferred charges and assets	127		100		Other deferred charges and assets	129		100
Total deferred charges and other assets	Total deferred charges and other assets	890		877		Total deferred charges and other assets	884		877
Total Assets	Total Assets	$	5,125	$	5,080	Total Assets	$	5,251	$	5,080

The accompanying notes as they relate to Mississippi Power are an integral part of these condensed financial statements.

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Table of Contents Index to Financial Statements

MISSISSIPPI POWER COMPANY

CONDENSED BALANCE SHEETS (UNAUDITED)


Liabilities and Stockholder's Equity	Liabilities and Stockholder's Equity	At March 31, 2022		At December 31, 2021		Liabilities and Stockholder's Equity	At June 30, 2022		At December 31, 2021
		(in millions)					(in millions)
Current Liabilities:	Current Liabilities:					Current Liabilities:
Securities due within one year	Securities due within one year	$	1	$	1	Securities due within one year	$	1	$	1

Notes payable	Notes payable	25		—		Notes payable	16		—

Accounts payable —	Accounts payable —					Accounts payable —
Affiliated	Affiliated	58		81		Affiliated	129		81
Other	Other	53		47		Other	62		47

Accrued taxes	Accrued taxes	56		120		Accrued taxes	83		120

Accrued compensation	Accrued compensation	20		36		Accrued compensation	28		36

Asset retirement obligations	Asset retirement obligations	28		30		Asset retirement obligations	24		30

Other regulatory liabilities	Other regulatory liabilities	120		59		Other regulatory liabilities	92		59

Other current liabilities	Other current liabilities	55		65		Other current liabilities	96		65
Total current liabilities	Total current liabilities	416		439		Total current liabilities	531		439

Long-term Debt	Long-term Debt	1,510		1,510		Long-term Debt	1,510		1,510
Deferred Credits and Other Liabilities:	Deferred Credits and Other Liabilities:					Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	Accumulated deferred income taxes	462		464		Accumulated deferred income taxes	466		464
Deferred credits related to income taxes	Deferred credits related to income taxes	269		269		Deferred credits related to income taxes	265		269

Employee benefit obligations	Employee benefit obligations	88		88		Employee benefit obligations	88		88

Asset retirement obligations, deferred	Asset retirement obligations, deferred	161		160		Asset retirement obligations, deferred	162		160

Other cost of removal obligations	Other cost of removal obligations	194		195		Other cost of removal obligations	193		195
Other regulatory liabilities, deferred	Other regulatory liabilities, deferred	84		64		Other regulatory liabilities, deferred	91		64
Other deferred credits and liabilities	Other deferred credits and liabilities	24		24		Other deferred credits and liabilities	24		24
Total deferred credits and other liabilities	Total deferred credits and other liabilities	1,282		1,264		Total deferred credits and other liabilities	1,289		1,264
Total Liabilities	Total Liabilities	3,208		3,213		Total Liabilities	3,330		3,213

Common Stockholder's Equity (See accompanying statements)	Common Stockholder's Equity (See accompanying statements)	1,917		1,867		Common Stockholder's Equity (See accompanying statements)	1,921		1,867
Total Liabilities and Stockholder's Equity	Total Liabilities and Stockholder's Equity	$	5,125	$	5,080	Total Liabilities and Stockholder's Equity	$	5,251	$	5,080

The accompanying notes as they relate to Mississippi Power are an integral part of these condensed financial statements.

2930

Table of Contents Index to Financial Statements

MISSISSIPPI POWER COMPANY

CONDENSED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY (UNAUDITED)


		Number of Common Shares Issued	Common Stock		Paid-In Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income (Loss)		Total			Number of Common Shares Issued	Common Stock		Paid-In Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income (Loss)		Total
		(in millions)												(in millions)
Balance at December 31, 2020	Balance at December 31, 2020	1	$	38	$	4,460	$	(2,754)	$	(2)	$	1,742	Balance at December 31, 2020	1	$	38	$	4,460	$	(2,754)	$	(2)	$	1,742
Net income	Net income	—	—		—		45		—		45		Net income	—	—		—		45		—		45

Capital contributions from parent company	Capital contributions from parent company	—	—		100		—		—		100		Capital contributions from parent company	—	—		100		—		—		100

Cash dividends on common stock	Cash dividends on common stock	—	—		—		(39)		—		(39)		Cash dividends on common stock	—	—		—		(39)		—		(39)

Balance at March 31, 2021	Balance at March 31, 2021	1	$	38	$	4,560	$	(2,748)	$	(2)	$	1,848	Balance at March 31, 2021	1	38		4,560		(2,748)		(2)		1,848
Net income													Net income	—	—		—		38		—		38

Capital contributions from parent company													Capital contributions from parent company	—	—		2		—		—		2

Cash dividends on common stock													Cash dividends on common stock	—	—		—		(39)		—		(39)
Other													Other	—	—		—		(1)		1		—
Balance at June 30, 2021													Balance at June 30, 2021	1	$	38	$	4,562	$	(2,750)	$	(1)	$	1,849

Balance at December 31, 2021	Balance at December 31, 2021	1	$	38	$	4,582	$	(2,753)	$	—	$	1,867	Balance at December 31, 2021	1	$	38	$	4,582	$	(2,753)	$	—	$	1,867
Net income	Net income	—	—		—		42		—		42		Net income	—	—		—		42		—		42

Capital contributions from parent company	Capital contributions from parent company	—	—		51		—		—		51		Capital contributions from parent company	—	—		51		—		—		51

Cash dividends on common stock	Cash dividends on common stock	—	—		—		(43)		—		(43)		Cash dividends on common stock	—	—		—		(43)		—		(43)

Balance at March 31, 2022	Balance at March 31, 2022	1	$	38	$	4,633	$	(2,754)	$	—	$	1,917	Balance at March 31, 2022	1	38		4,633		(2,754)		—		1,917
Net income													Net income	—	—		—		45		—		45

Capital contributions from parent company													Capital contributions from parent company	—	—		1		—		—		1

Cash dividends on common stock													Cash dividends on common stock	—	—		—		(42)		—		(42)

Balance at June 30, 2022													Balance at June 30, 2022	1	$	38	$	4,634	$	(2,751)	$	—	$	1,921

The accompanying notes as they relate to Mississippi Power are an integral part of these condensed financial statements.

3031

Table of Contents Index to Financial Statements

SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)


		For the Three Months Ended March 31,			For the Three Months Ended June 30,						For the Six Months Ended June 30,
			2022			2021			2022		2021		2022		2021
		(in millions)			(in millions)						(in millions)
Operating Revenues:	Operating Revenues:							Operating Revenues:
Wholesale revenues, non-affiliates	Wholesale revenues, non-affiliates		$	426		$	355	Wholesale revenues, non-affiliates	$	658	$	373	$	1,084	$	728
Wholesale revenues, affiliates	Wholesale revenues, affiliates		105			81		Wholesale revenues, affiliates	232		112		337		193
Other revenues	Other revenues		8			4		Other revenues	9		5		17		9
Total operating revenues	Total operating revenues		539			440		Total operating revenues	899		490		1,438		930
Operating Expenses:	Operating Expenses:							Operating Expenses:
Fuel	Fuel		232			141		Fuel	437		140		669		281
Purchased power	Purchased power		21			20		Purchased power	68		25		89		46

Other operations and maintenance	Other operations and maintenance		105			101		Other operations and maintenance	115		111		220		211
Depreciation and amortization	Depreciation and amortization		120			119		Depreciation and amortization	131		132		251		251
Taxes other than income taxes	Taxes other than income taxes		13			12		Taxes other than income taxes	12		12		25		24

Gain on dispositions, net	Gain on dispositions, net		(2)			(39)		Gain on dispositions, net	—		—		(2)		(39)
Total operating expenses	Total operating expenses		489			354		Total operating expenses	763		420		1,252		774
Operating Income	Operating Income		50			86		Operating Income	136		70		186		156
Other Income and (Expense):	Other Income and (Expense):							Other Income and (Expense):
Interest expense, net of amounts capitalized	Interest expense, net of amounts capitalized		(37)			(38)		Interest expense, net of amounts capitalized	(36)		(37)		(73)		(75)
Other income (expense), net	Other income (expense), net		2			7		Other income (expense), net	1		1		3		8
Total other income and (expense)	Total other income and (expense)		(35)			(31)		Total other income and (expense)	(35)		(36)		(70)		(67)
Earnings Before Income Taxes	Earnings Before Income Taxes		15			55		Earnings Before Income Taxes	101		34		116		89
Income taxes (benefit)	Income taxes (benefit)		(12)			(10)		Income taxes (benefit)	25		(2)		13		(11)
Net Income	Net Income		27			65		Net Income	76		36		103		100
Net loss attributable to noncontrolling interests	Net loss attributable to noncontrolling interests		(45)			(32)		Net loss attributable to noncontrolling interests	(22)		—		(67)		(33)
Net Income Attributable to Southern Power	Net Income Attributable to Southern Power		$	72		$	97	Net Income Attributable to Southern Power	$	98	$	36	$	170	$	133

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

For the Three Months Ended March 31,
2022 2021
(in millions)
Net Income $ 27 $ 65
Other comprehensive income:
Qualifying hedges:
Changes in fair value, net of tax of $(6) and $(11), respectively (17) (33)
Reclassification adjustment for amounts included in net income,
net of tax of $7 and $15, respectively
22 48
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 5 16
Comprehensive Income 32 81
Comprehensive loss attributable to noncontrolling interests (45) (32)
Comprehensive Income Attributable to Southern Power $ 77 $ 113

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

~~Table of ContentsIndex to Financial Statements~~

~~SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)~~

For the Three Months Ended March 31,
2022 2021
(in millions)
Operating Activities:
Net income $ 27 $ 65
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total 126 125
Deferred income taxes 12 (8)
Amortization of investment tax credits (15) (15)
Gain on dispositions, net (2) (39)
Other, net (3) (4)
Changes in certain current assets and liabilities —
-Receivables 11 23
-Prepaid income taxes (8) 16
-Other current assets — 3
-Accounts payable (21) 19
-Accrued taxes 7 5
-Other current liabilities (17) (3)
Net cash provided from operating activities 117 187
Investing Activities:
Business acquisitions, net of cash acquired — (345)
Property additions (19) (147)
Proceeds from dispositions 29 17
Change in construction payables (31) (7)
Payments pursuant to LTSAs (15) (27)
Other investing activities (1) 5
Net cash used for investing activities (37) (504)
Financing Activities:
Increase (decrease) in notes payable, net (3) 140
Proceeds — Senior notes — 400
Return of capital to parent company — (271)
Capital contributions from noncontrolling interests 73 313
Distributions to noncontrolling interests (97) (46)
Payment of common stock dividends (49) (51)
Other financing activities — (7)
Net cash provided from (used for) financing activities (76) 478
Net Change in Cash, Cash Equivalents, and Restricted Cash 4 161
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period 135 182
Cash, Cash Equivalents, and Restricted Cash at End of Period $ 139 $ 343
Supplemental Cash Flow Information:
Cash paid (received) during the period for —
Interest (net of $— and $1 capitalized for 2022 and 2021, respectively) $ 29 $ 26
Income taxes, net (8) (2)
Noncash transactions —
Contributions from noncontrolling interests — 89
Contributions of wind turbine equipment — 82
Accrued property additions at end of period 46 60
Right-of-use assets obtained under operating leases — 65
Reassessment of right-of-use assets under operating leases 40 —


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2022		2021		2022		2021
	(in millions)				(in millions)
Net Income	$	76	$	36	$	103	$	100
Other comprehensive income (loss):
Qualifying hedges:
Changes in fair value, net of tax of $(18), $2, $(23), and $(8), respectively	(54)		6		(72)		(26)
Reclassification adjustment for amounts included in net income, net of tax of $19, $(3), $26, and $13, respectively	57		(9)		79		38
Pension and other postretirement benefit plans:


Reclassification adjustment for amounts included in net income, net of tax of $—, $1, $—, and $1, respectively	—		—		1		1
Total other comprehensive income (loss)	3		(3)		8		13
Comprehensive Income	79		33		111		113
Comprehensive loss attributable to noncontrolling interests	(22)		—		(67)		(33)
Comprehensive Income Attributable to Southern Power	$	101	$	33	$	178	$	146

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

Table of Contents Index to Financial Statements

SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED ~~BALANCE SHEETS~~STATEMENTS OF CASH FLOWS (UNAUDITED)

Assets At March 31, 2022 At December 31, 2021
(in millions)
Current Assets:
Cash and cash equivalents $ 130 $ 107
Receivables —
Customer accounts, net 160 139
Affiliated 26 51
Other 21 29
Materials and supplies 108 106
Prepaid income taxes 468 27
Other current assets 49 46
Total current assets 962 505
Property, Plant, and Equipment:
In service 14,594 14,585
Less: Accumulated provision for depreciation 3,341 3,241
Plant in service, net of depreciation 11,253 11,344
Construction work in progress 49 45
Total property, plant, and equipment 11,302 11,389
Other Property and Investments:
Intangible assets, net of amortization of $114 and $109, respectively 278 282
Equity investments in unconsolidated subsidiaries 56 86
Net investment in sales-type leases 159 161
Total other property and investments 493 529
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization 517 479
Prepaid LTSAs 219 210
Income taxes receivable, non-current 23 20
Other deferred charges and assets 250 258
Total deferred charges and other assets 1,009 967
Total Assets $ 13,766 $ 13,390


	For the Six Months Ended June 30,
	2022		2021
	(in millions)
Operating Activities:
Net income	$	103	$	100
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total	264		264
Deferred income taxes	14		(20)
Utilization of federal investment tax credits	239		205
Amortization of investment tax credits	(29)		(29)







Gain on dispositions, net	(2)		(39)
Other, net	(25)		(18)
Changes in certain current assets and liabilities —
-Receivables	(161)		(91)

-Prepaid income taxes	22		28
-Other current assets	(6)		2
-Accounts payable	114		14
-Accrued taxes	42		8


-Other current liabilities	(23)		(13)
Net cash provided from operating activities	552		411
Investing Activities:
Business acquisitions, net of cash acquired	—		(345)
Property additions	(34)		(224)
Proceeds from dispositions	48		17

Change in construction payables	(54)		(14)

Payments pursuant to LTSAs	(33)		(47)


Other investing activities	—		12
Net cash used for investing activities	(73)		(601)
Financing Activities:
Increase (decrease) in notes payable, net	94		(56)
Proceeds —
Senior notes	—		400


Capital contributions from parent company	326		4



Redemptions — Senior notes	(677)		—

Return of capital to parent company	—		(271)
Capital contributions from noncontrolling interests	73		343
Distributions to noncontrolling interests	(115)		(113)

Payment of common stock dividends	(99)		(102)
Other financing activities	(5)		(9)
Net cash provided from (used for) financing activities	(403)		196
Net Change in Cash, Cash Equivalents, and Restricted Cash	76		6
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	135		183
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	211	$	189
Supplemental Cash Flow Information:
Cash paid (received) during the period for —
Interest (net of $— and $2 capitalized for 2022 and 2021, respectively)	$	91	$	91
Income taxes, net	(263)		(189)
Noncash transactions —
Contributions from noncontrolling interests	—		89
Contributions of wind turbine equipment	—		82
Accrued property additions at end of period	28		59
Right-of-use assets obtained under operating leases	—		65
Reassessment of right-of-use assets under operating leases	40		—

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

~~Table of Contents~~ �� ~~Index to Financial Statements~~

~~SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES~~

~~CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)~~

Liabilities and Stockholders' Equity At March 31, 2022 At December 31, 2021
(in millions)
Current Liabilities:
Securities due within one year $ 666 $ 679
Notes payable 208 211
Accounts payable —
Affiliated 82 92
Other 67 85
Accrued taxes 21 14
Accrued interest 32 32
Other current liabilities 121 140
Total current liabilities 1,197 1,253
Long-term Debt 2,999 3,009
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 661 215
Accumulated deferred ITCs 1,600 1,614
Operating lease obligations 535 497
Other deferred credits and liabilities 218 204
Total deferred credits and other liabilities 3,014 2,530
Total Liabilities 7,210 6,792
Total Stockholders' Equity (See accompanying statements)
6,556 6,598
Total Liabilities and Stockholders' Equity $ 13,766 $ 13,390

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

Table of Contents Index to Financial Statements

SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED ~~STATEMENTS OF STOCKHOLDERS' EQUITY~~BALANCE SHEETS (UNAUDITED)

Paid-In
Capital Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss) Total Common
Stockholders' Equity Noncontrolling Interests Total
(in millions)
Balance at December 31, 2020 $ 914 $ 1,522 $ (67) $ 2,369 $ 4,262 $ 6,631
Net income (loss) — 97 — 97 (32) 65
Return of capital to parent company (271) — — (271) — (271)
Other comprehensive income — — 16 16 — 16
Cash dividends on common stock — (51) — (51) — (51)
Capital contributions from
noncontrolling interests — — — — 403 403
Distributions to noncontrolling interests — — — — (46) (46)
Other (2) 1 (1) (2) (1) (3)
Balance at March 31, 2021 $ 641 $ 1,569 $ (52) $ 2,158 $ 4,586 $ 6,744

Balance at December 31, 2021 $ 638 $ 1,585 $ (27) $ 2,196 $ 4,402 $ 6,598
Net income (loss) — 72 — 72 (45) 27
Other comprehensive income — — 5 5 — 5
Cash dividends on common stock — (49) — (49) — (49)
Capital contributions from
noncontrolling interests — — — — 73 73
Distributions to noncontrolling interests — — — — (98) (98)
Balance at March 31, 2022 $ 638 $ 1,608 $ (22) $ 2,224 $ 4,332 $ 6,556


Assets	At June 30, 2022		At December 31, 2021
	(in millions)
Current Assets:
Cash and cash equivalents	$	202	$	107
Receivables —
Customer accounts, net	278		139
Affiliated	83		51
Other	19		29

Materials and supplies	108		106

Prepaid income taxes	5		27




Other current assets	48		46
Total current assets	743		505
Property, Plant, and Equipment:
In service	14,637		14,585
Less: Accumulated provision for depreciation	3,462		3,241
Plant in service, net of depreciation	11,175		11,344
Construction work in progress	34		45

Total property, plant, and equipment	11,209		11,389
Other Property and Investments:

Intangible assets, net of amortization of $119 and $109, respectively	274		282
Equity investments in unconsolidated subsidiaries	49		86
Net investment in sales-type leases	156		161
Total other property and investments	479		529
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization	493		479
Prepaid LTSAs	192		210




Other deferred charges and assets	286		278
Total deferred charges and other assets	971		967
Total Assets	$	13,402	$	13,390

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

Table of ContentsIndex to Financial Statements

SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


Liabilities and Stockholders' Equity	At June 30, 2022		At December 31, 2021
	(in millions)
Current Liabilities:
Securities due within one year	$	—	$	679
Notes payable	306		211
Accounts payable —
Affiliated	192		92
Other	77		85

Accrued taxes	56		14

Accrued interest	24		32



Other current liabilities	89		140
Total current liabilities	744		1,253
Long-term Debt	2,964		3,009
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	471		215
Accumulated deferred ITCs	1,585		1,614





Operating lease obligations	514		497
Other deferred credits and liabilities	245		204
Total deferred credits and other liabilities	2,815		2,530
Total Liabilities	6,523		6,792










Total Stockholders' Equity (See accompanying statements)	6,879		6,598
Total Liabilities and Stockholders' Equity	$	13,402	$	13,390

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

Table of Contents Index to Financial Statements

SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)


	Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Common Stockholders' Equity		Noncontrolling Interests		Total
	(in millions)
Balance at December 31, 2020	$	914	$	1,522	$	(67)	$	2,369	$	4,262	$	6,631
Net income (loss)	—		97		—		97		(32)		65
Return of capital to parent company	(271)		—		—		(271)		—		(271)

Other comprehensive income	—		—		16		16		—		16
Cash dividends on common stock	—		(51)		—		(51)		—		(51)

Capital contributions from noncontrolling interests	—		—		—		—		403		403
Distributions to noncontrolling interests	—		—		—		—		(46)		(46)



Other	(2)		1		(1)		(2)		(1)		(3)
Balance at March 31, 2021	641		1,569		(52)		2,158		4,586		6,744
Net income	—		36		—		36		—		36


Other comprehensive income (loss)	—		—		(3)		(3)		—		(3)
Cash dividends on common stock	—		(51)		—		(51)		—		(51)

Capital contributions from noncontrolling interests	—		—		—		—		29		29
Distributions to noncontrolling interests	—		—		—		—		(68)		(68)




Other	2		—		1		3		—		3
Balance at June 30, 2021	$	643	$	1,554	$	(54)	$	2,143	$	4,547	$	6,690




Balance at December 31, 2021	$	638	$	1,585	$	(27)	$	2,196	$	4,402	$	6,598
Net income (loss)	—		72		—		72		(45)		27


Other comprehensive income	—		—		5		5		—		5
Cash dividends on common stock	—		(49)		—		(49)		—		(49)

Capital contributions from noncontrolling interests	—		—		—		—		73		73
Distributions to noncontrolling interests	—		—		—		—		(98)		(98)




Balance at March 31, 2022	638		1,608		(22)		2,224		4,332		6,556
Net income (loss)	—		98		—		98		(22)		76

Capital contributions from parent company	322		—		—		322		—		322
Other comprehensive income	—		—		3		3		—		3
Cash dividends on common stock	—		(50)		—		(50)		—		(50)


Distributions to noncontrolling interests	—		—		—		—		(28)		(28)





Balance at June 30, 2022	$	960	$	1,656	$	(19)	$	2,597	$	4,282	$	6,879

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

Table of ContentsIndex to Financial Statements

SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)


		For the Three Months Ended March 31,			For the Three Months Ended June 30,						For the Six Months Ended June 30,
			2022			2021			2022		2021		2022		2021
		(in millions)			(in millions)						(in millions)
Operating Revenues:	Operating Revenues:							Operating Revenues:
Natural gas revenues (includes revenue taxes of $71 and $54, respectively)			$	2,058		$	1,692
Natural gas revenues (includes revenue taxes of $33, $23, $104, and $77, respectively)								Natural gas revenues (includes revenue taxes of $33, $23, $104, and $77, respectively)	$	1,081	$	675	$	3,139	$	2,367
Alternative revenue programs	Alternative revenue programs		—			2		Alternative revenue programs	2		2		1		4

Total operating revenues	Total operating revenues		2,058			1,694		Total operating revenues	1,083		677		3,140		2,371
Operating Expenses:	Operating Expenses:							Operating Expenses:
Cost of natural gas	Cost of natural gas		1,095			583		Cost of natural gas	452		231		1,546		814

Other operations and maintenance	Other operations and maintenance		305			299		Other operations and maintenance	266		233		570		532
Depreciation and amortization	Depreciation and amortization		137			130		Depreciation and amortization	138		133		275		263
Taxes other than income taxes	Taxes other than income taxes		100			81		Taxes other than income taxes	62		49		163		130

Total operating expenses	Total operating expenses		1,637			1,093		Total operating expenses	918		646		2,554		1,739
Operating Income	Operating Income		421			601		Operating Income	165		31		586		632
Other Income and (Expense):	Other Income and (Expense):							Other Income and (Expense):
Earnings from equity method investments			40			41
Earnings (loss) from equity method investments								Earnings (loss) from equity method investments	31		(52)		71		(11)
Interest expense, net of amounts capitalized	Interest expense, net of amounts capitalized		(61)			(60)		Interest expense, net of amounts capitalized	(61)		(59)		(122)		(118)
Other income (expense), net	Other income (expense), net		16			(63)		Other income (expense), net	16		(14)		32		(78)
Total other income and (expense)	Total other income and (expense)		(5)			(82)		Total other income and (expense)	(14)		(125)		(19)		(207)
Earnings Before Income Taxes			416			519
Income taxes			97			121
Net Income			$	319		$	398
Earnings (Loss) Before Income Taxes								Earnings (Loss) Before Income Taxes	151		(94)		567		425
Income taxes (benefit)								Income taxes (benefit)	36		(29)		134		92
Net Income (Loss)								Net Income (Loss)	$	115	$	(65)	$	433	$	333

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

For the Three Months Ended March 31,
2022 2021
(in millions)
Net Income $ 319 $ 398
Other comprehensive income:
Qualifying hedges:
Changes in fair value, net of tax of $10 and $—, respectively 26 1
Reclassification adjustment for amounts included in net income,
net of tax of $(2) and $1, respectively
(6) 3
Total other comprehensive income 20 4
Comprehensive Income $ 339 $ 402

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

~~Table of ContentsIndex to Financial Statements~~

~~SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)~~

For the Three Months Ended March 31,
2022 2021
(in millions)
Operating Activities:
Net income $ 319 $ 398
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total 137 130
Deferred income taxes 5 160
Mark-to-market adjustments (38) 64
Natural gas cost under recovery – long-term 162 (185)
Other, net 41 5
Changes in certain current assets and liabilities —
-Receivables (115) 74
-Natural gas for sale, net of temporary LIFO liquidation 450 456
-Prepaid income taxes 34 (51)
-Natural gas cost under recovery (40) (487)
-Other current assets 39 17
-Accounts payable (23) (7)
-Accrued taxes 54 10
-Other current liabilities (1) (34)
Net cash provided from operating activities 1,024 550
Investing Activities:
Property additions (247) (251)
Cost of removal, net of salvage (20) (16)
Change in construction payables, net (5) (47)
Other investing activities 1 6
Net cash used for investing activities (271) (308)
Financing Activities:
Decrease in notes payable, net (577) (127)
Proceeds — Short-term borrowings — 300
Redemptions —
Short-term borrowings (100) —
Medium-term notes — (30)
Capital contributions from parent company 39 39
Payment of common stock dividends (130) (132)
Net cash provided from (used for) financing activities (768) 50
Net Change in Cash, Cash Equivalents, and Restricted Cash (15) 292
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period 48 19
Cash, Cash Equivalents, and Restricted Cash at End of Period $ 33 $ 311
Supplemental Cash Flow Information:
Cash paid (received) during the period for —
Interest (net of $2 capitalized for both 2022 and 2021) $ 55 $ 52
Income taxes, net — (1)
Noncash transactions — Accrued property additions at end of period 107 95


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2022		2021		2022		2021
	(in millions)				(in millions)
Net Income (Loss)	$	115	$	(65)	$	433	$	333
Other comprehensive income (loss):
Qualifying hedges:
Changes in fair value, net of tax of $(2), $3, $8, and $3, respectively	(5)		8		22		9
Reclassification adjustment for amounts included in net income, net of tax of $(3), $—, $(5), and $1, respectively	(7)		—		(13)		3



Total other comprehensive income (loss)	(12)		8		9		12
Comprehensive Income	$	103	$	(57)	$	442	$	345

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

Table of Contents Index to Financial Statements

SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	For the Six Months Ended June 30,
	2022		2021
	(in millions)
Operating Activities:
Net income	$	433	$	333
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total	275		263
Deferred income taxes	35		110




Mark-to-market adjustments	13		137
Impairment of PennEast Pipeline investment	—		82

Natural gas cost under recovery – long-term	192		(119)
Other, net	42		15
Changes in certain current assets and liabilities —
-Receivables	244		262
-Natural gas for sale, net of temporary LIFO liquidation	335		375
-Prepaid income taxes	(70)		(129)
-Natural gas cost under recovery	(94)		(485)
-Other current assets	19		7
-Accounts payable	101		(42)
-Accrued taxes	(41)		1

-Other current liabilities	(6)		(88)
Net cash provided from operating activities	1,478		722
Investing Activities:
Property additions	(637)		(635)
Cost of removal, net of salvage	(53)		(44)




Other investing activities	32		11
Net cash used for investing activities	(658)		(668)
Financing Activities:
Increase (decrease) in notes payable, net	(593)		210

Proceeds — Short-term borrowings	50		300


Redemptions —


Short-term borrowings	(150)		—
Senior notes	—		(300)


Medium-term notes	(46)		(30)
Capital contributions from parent company	349		60
Payment of common stock dividends	(260)		(265)

Net cash used for financing activities	(650)		(25)
Net Change in Cash, Cash Equivalents, and Restricted Cash	170		29
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	48		19
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	218	$	48
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $4 and $3 capitalized for 2022 and 2021, respectively)	$	129	$	127
Income taxes, net	210		100
Noncash transactions — Accrued property additions at end of period	126		137

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

Table of ContentsIndex to Financial Statements

SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


Assets	Assets	At March 31, 2022		At December 31, 2021		Assets	At June 30, 2022		At December 31, 2021
		(in millions)					(in millions)
Current Assets:	Current Assets:					Current Assets:
Cash and cash equivalents	Cash and cash equivalents	$	31	$	45	Cash and cash equivalents	$	217	$	45
Receivables —	Receivables —					Receivables —

Customer accounts	Customer accounts	603		462		Customer accounts	379		462
Unbilled revenues	Unbilled revenues	245		278		Unbilled revenues	109		278

Other accounts and notes	Other accounts and notes	52		49		Other accounts and notes	53		49
Accumulated provision for uncollectible accounts	Accumulated provision for uncollectible accounts	(51)		(39)		Accumulated provision for uncollectible accounts	(55)		(39)

Natural gas for sale	Natural gas for sale	121		362		Natural gas for sale	209		362

Prepaid expenses	Prepaid expenses	88		114		Prepaid expenses	185		114
Assets from risk management activities, net of collateral	Assets from risk management activities, net of collateral	53		33		Assets from risk management activities, net of collateral	22		33
Natural gas cost under recovery	Natural gas cost under recovery	306		266		Natural gas cost under recovery	361		266

Other regulatory assets	Other regulatory assets	104		136		Other regulatory assets	105		136
Other current assets	Other current assets	47		49		Other current assets	53		49
Total current assets	Total current assets	1,599		1,755		Total current assets	1,638		1,755
Property, Plant, and Equipment:	Property, Plant, and Equipment:					Property, Plant, and Equipment:
In service	In service	19,035		18,880		In service	19,362		18,880
Less: Accumulated depreciation	Less: Accumulated depreciation	5,159		5,067		Less: Accumulated depreciation	5,201		5,067
Plant in service, net of depreciation	Plant in service, net of depreciation	13,876		13,813		Plant in service, net of depreciation	14,161		13,813
Construction work in progress	Construction work in progress	768		684		Construction work in progress	776		684
Total property, plant, and equipment	Total property, plant, and equipment	14,644		14,497		Total property, plant, and equipment	14,937		14,497
Other Property and Investments:	Other Property and Investments:					Other Property and Investments:
Goodwill	Goodwill	5,015		5,015		Goodwill	5,015		5,015
Equity investments in unconsolidated subsidiaries	Equity investments in unconsolidated subsidiaries	1,178		1,173		Equity investments in unconsolidated subsidiaries	1,134		1,173
Other intangible assets, net of amortization of $148 and $145, respectively		34		37
Other intangible assets, net of amortization of $151 and $145, respectively						Other intangible assets, net of amortization of $151 and $145, respectively	31		37
Miscellaneous property and investments	Miscellaneous property and investments	19		19		Miscellaneous property and investments	19		19
Total other property and investments	Total other property and investments	6,246		6,244		Total other property and investments	6,199		6,244
Deferred Charges and Other Assets:	Deferred Charges and Other Assets:					Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization	Operating lease right-of-use assets, net of amortization	67		70		Operating lease right-of-use assets, net of amortization	63		70
Prepaid pension costs	Prepaid pension costs	183		175		Prepaid pension costs	192		175

Other regulatory assets, deferred	Other regulatory assets, deferred	508		689		Other regulatory assets, deferred	459		689

Other deferred charges and assets	Other deferred charges and assets	130		130		Other deferred charges and assets	130		130
Total deferred charges and other assets	Total deferred charges and other assets	888		1,064		Total deferred charges and other assets	844		1,064
Total Assets	Total Assets	$	23,377	$	23,560	Total Assets	$	23,618	$	23,560

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

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SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


Liabilities and Stockholder's Equity	Liabilities and Stockholder's Equity	At March 31, 2022		At December 31, 2021		Liabilities and Stockholder's Equity	At June 30, 2022		At December 31, 2021
		(in millions)					(in millions)
Current Liabilities:	Current Liabilities:					Current Liabilities:
Securities due within one year	Securities due within one year	$	46	$	47	Securities due within one year	$	—	$	47
Notes payable	Notes payable	532		1,209		Notes payable	516		1,209

Accounts payable —	Accounts payable —					Accounts payable —
Affiliated	Affiliated	40		58		Affiliated	54		58
Other	Other	349		361		Other	494		361
Customer deposits	Customer deposits	72		95		Customer deposits	81		95

Accrued taxes	Accrued taxes	191		124		Accrued taxes	74		124
Accrued interest	Accrued interest	68		59		Accrued interest	58		59

Accrued compensation	Accrued compensation	66		110		Accrued compensation	91		110

Temporary LIFO liquidation	Temporary LIFO liquidation	209		—		Temporary LIFO liquidation	177		—

Other regulatory liabilities	Other regulatory liabilities	72		8		Other regulatory liabilities	37		8
Other current liabilities	Other current liabilities	140		155		Other current liabilities	161		155
Total current liabilities	Total current liabilities	1,785		2,226		Total current liabilities	1,743		2,226
Long-term Debt	Long-term Debt	6,814		6,855		Long-term Debt	6,785		6,855
Deferred Credits and Other Liabilities:	Deferred Credits and Other Liabilities:					Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	Accumulated deferred income taxes	1,568		1,555		Accumulated deferred income taxes	1,595		1,555
Deferred credits related to income taxes	Deferred credits related to income taxes	808		816		Deferred credits related to income taxes	800		816

Employee benefit obligations	Employee benefit obligations	168		176		Employee benefit obligations	168		176

Operating lease obligations	Operating lease obligations	58		59		Operating lease obligations	55		59
Other cost of removal obligations	Other cost of removal obligations	1,692		1,683		Other cost of removal obligations	1,694		1,683
Accrued environmental remediation	Accrued environmental remediation	189		197		Accrued environmental remediation	181		197

Other deferred credits and liabilities	Other deferred credits and liabilities	120		77		Other deferred credits and liabilities	137		77
Total deferred credits and other liabilities	Total deferred credits and other liabilities	4,603		4,563		Total deferred credits and other liabilities	4,630		4,563
Total Liabilities	Total Liabilities	13,202		13,644		Total Liabilities	13,158		13,644

Common Stockholder's Equity (See accompanying statements)	Common Stockholder's Equity (See accompanying statements)	10,175		9,916		Common Stockholder's Equity (See accompanying statements)	10,460		9,916
Total Liabilities and Stockholder's Equity	Total Liabilities and Stockholder's Equity	$	23,377	$	23,560	Total Liabilities and Stockholder's Equity	$	23,618	$	23,560

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

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SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (UNAUDITED)


		Paid-In Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income (Loss)		Total			Paid-In Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income (Loss)		Total
		(in millions)									(in millions)
Balance at December 31, 2020	Balance at December 31, 2020	$	9,930	$	(141)	$	(22)	$	9,767	Balance at December 31, 2020	$	9,930	$	(141)	$	(22)	$	9,767
Net income	Net income	—		398		—		398		Net income	—		398		—		398

Capital contributions from parent company	Capital contributions from parent company	57		—		—		57		Capital contributions from parent company	57		—		—		57
Other comprehensive income	Other comprehensive income	—		—		4		4		Other comprehensive income	—		—		4		4
Cash dividends on common stock	Cash dividends on common stock	—		(132)		—		(132)		Cash dividends on common stock	—		(132)		—		(132)

Balance at March 31, 2021	Balance at March 31, 2021	9,987		125		(18)		10,094		Balance at March 31, 2021	9,987		125		(18)		10,094
Net loss										Net loss	—		(65)		—		(65)

Capital contributions from parent company										Capital contributions from parent company	25		—		—		25
Other comprehensive income										Other comprehensive income	—		—		8		8
Cash dividends on common stock										Cash dividends on common stock	—		(133)		—		(133)

Balance at June 30, 2021										Balance at June 30, 2021	$	10,012	$	(73)	$	(10)	$	9,929

Balance at December 31, 2021	Balance at December 31, 2021	$	10,024	$	(132)	$	24	$	9,916	Balance at December 31, 2021	$	10,024	$	(132)	$	24	$	9,916
Net income	Net income	—		319		—		319		Net income	—		319		—		319

Capital contributions from parent company	Capital contributions from parent company	50		—		—		50		Capital contributions from parent company	50		—		—		50
Other comprehensive income	Other comprehensive income	—		—		20		20		Other comprehensive income	—		—		20		20
Cash dividends on common stock	Cash dividends on common stock	—		(130)		—		(130)		Cash dividends on common stock	—		(130)		—		(130)

Balance at March 31, 2022	Balance at March 31, 2022	$	10,074	$	57	$	44	$	10,175	Balance at March 31, 2022	10,074		57		44		10,175
Net income										Net income	—		115		—		115

Capital contributions from parent company										Capital contributions from parent company	312		—		—		312
Other comprehensive income (loss)										Other comprehensive income (loss)	—		—		(12)		(12)
Cash dividends on common stock										Cash dividends on common stock	—		(130)		—		(130)

Balance at June 30, 2022										Balance at June 30, 2022	$	10,386	$	42	$	32	$	10,460

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

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS

FOR

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

ALABAMA POWER COMPANY

GEORGIA POWER COMPANY

MISSISSIPPI POWER COMPANY

SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES

SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES

(UNAUDITED)

INDEX TO THE NOTES TO THE CONDENSED FINANCIAL STATEMENTS

INDEX TO APPLICABLE NOTES TO FINANCIAL STATEMENTS BY REGISTRANT

The following unaudited notes to the condensed financial statements are a combined presentation; however, information contained herein relating to any individual Registrant is filed by such Registrant on its own behalf and each Registrant makes no representation as to information related to the other Registrants. The list below indicates the Registrants to which each footnote applies.


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
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

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

(A) INTRODUCTION

The condensed quarterly financial statements of each Registrant included herein have been prepared by such Registrant, without audit, pursuant to the rules and regulations of the SEC. The Condensed Balance Sheets at December 31, 2021 have been derived from the audited financial statements of each Registrant. In the opinion of each Registrant's management, the information regarding such Registrant furnished herein reflects all adjustments, which, except as otherwise disclosed, are of a normal recurring nature, necessary to present fairly the results of operations for the periods ended ~~March 31,~~June 30, 2022 and 2021. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although each Registrant believes that the disclosures regarding such Registrant are adequate to make the information presented not misleading. Disclosures which would substantially duplicate the disclosures in the Form 10-K and details which have not changed significantly in amount or composition since the filing of the Form 10-K are generally omitted from this Quarterly Report on Form 10-Q unless specifically required by GAAP. Therefore, these Condensed Financial Statements should be read in conjunction with the financial statements and the notes thereto included in the Form 10-K. Due to the seasonal variations in the demand for energy and other factors, operating results for the periods presented are not necessarily indicative of the operating results to be expected for the full year.

Certain prior year data presented in the financial statements have been reclassified to conform to the current year presentation. These reclassifications had no impact on the overall results of operations, financial position, or cash flows of any Registrant.

Goodwill and Other Intangible Assets

Goodwill at ~~March 31,~~June 30, 2022 and December 31, 2021 was as follows:


	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 is not amortized, but is subject to an annual impairment test during the fourth quarter of each year, or more frequently if impairment indicators arise.

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Other intangible assets were as follows:


		At March 31, 2022						At December 31, 2021							At June 30, 2022						At December 31, 2021
		Gross Carrying Amount		Accumulated Amortization		Other Intangible Assets, Net		Gross Carrying Amount		Accumulated Amortization		Other Intangible Assets, Net			Gross Carrying Amount		Accumulated Amortization		Other Intangible Assets, Net		Gross Carrying Amount		Accumulated Amortization		Other Intangible Assets, Net
		(in millions)						(in millions)							(in millions)						(in millions)
Southern Company	Southern Company													Southern Company
Other intangible assets subject to amortization:	Other intangible assets subject to amortization:													Other intangible assets subject to amortization:
Customer relationships	Customer relationships	$	212	$	(152)	$	60	$	212	$	(150)	$	62	Customer relationships	$	212	$	(157)	$	55	$	212	$	(150)	$	62
Trade names	Trade names	64		(41)		23		64		(38)		26		Trade names	64		(41)		23		64		(38)		26
PPA fair value adjustments	PPA fair value adjustments	390		(114)		276		390		(109)		281		PPA fair value adjustments	390		(119)		271		390		(109)		281
Other	Other	11		(10)		1		11		(10)		1		Other	10		(9)		1		11		(10)		1
Total other intangible assets subject to amortization	Total other intangible assets subject to amortization	$	677	$	(317)	$	360	$	677	$	(307)	$	370	Total other intangible assets subject to amortization	$	676	$	(326)	$	350	$	677	$	(307)	$	370
Other intangible assets not subject to amortization:	Other intangible assets not subject to amortization:													Other intangible assets not subject to amortization:
Federal Communications Commission licenses	Federal Communications Commission licenses	75		—		75		75		—		75		Federal Communications Commission licenses	75		—		75		75		—		75
Total other intangible assets	Total other intangible assets	$	752	$	(317)	$	435	$	752	$	(307)	$	445	Total other intangible assets	$	751	$	(326)	$	425	$	752	$	(307)	$	445

Southern Power	Southern Power													Southern Power
Other intangible assets subject to amortization:	Other intangible assets subject to amortization:													Other intangible assets subject to amortization:
PPA fair value adjustments	PPA fair value adjustments	$	390	$	(114)	$	276	$	390	$	(109)	$	281	PPA fair value adjustments	$	390	$	(119)	$	271	$	390	$	(109)	$	281

Southern Company Gas	Southern Company Gas													Southern Company Gas
Other intangible assets subject to amortization:	Other intangible assets subject to amortization:													Other intangible assets subject to amortization:
Gas marketing services	Gas marketing services													Gas marketing services
Customer relationships	Customer relationships	$	156	$	(132)	$	24	$	156	$	(130)	$	26	Customer relationships	$	156	$	(135)	$	21	$	156	$	(130)	$	26
Trade names	Trade names	26		(16)		10		26		(15)		11		Trade names	26		(16)		10		26		(15)		11
Total other intangible assets subject to amortization	Total other intangible assets subject to amortization	$	182	$	(148)	$	34	$	182	$	(145)	$	37	Total other intangible assets subject to amortization	$	182	$	(151)	$	31	$	182	$	(145)	$	37

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(UNAUDITED)

Amortization associated with other intangible assets was as follows:


	~~Three Months Ended~~
	~~March 31, 2022~~
	~~(in millions)~~
~~Southern Company(a)~~	$	10
~~Southern Power(b)~~	5
~~Southern Company Gas~~	3


	Three Months Ended		Six Months Ended
	June 30, 2022
	(in millions)
Southern Company(a)	$	9	$	19
Southern Power(b)	5		10
Southern Company Gas	2		5

(a)Includes $5 million and $10 million for the three and six months ended June 30, 2022, respectively, recorded as a reduction to operating revenues.

(b)Recorded as a reduction to operating revenues.

Cash, Cash Equivalents, and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed balance sheets that total to the amount shown in the condensed statements of cash flows for the applicable Registrants:


		Southern Company				Southern Power				Southern Company Gas					Southern Company				Southern Power				Southern Company Gas
		March 31, 2022		December 31, 2021		March 31, 2022		December 31, 2021		March 31, 2022		December 31, 2021			June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021
		(in millions)													(in millions)
Cash and cash equivalents	Cash and cash equivalents	$	1,662	$	1,798	$	130	$	107	$	31	$	45	Cash and cash equivalents	$	1,724	$	1,798	$	202	$	107	$	217	$	45

Restricted cash(a):	Restricted cash(a):													Restricted cash(a):
Other current assets	Other current assets	2		2		—		—		2		2		Other current assets	2		2		—		—		2		2
Other deferred charges and assets	Other deferred charges and assets	9		29		9		29		—		—		Other deferred charges and assets	9		29		9		29		—		—
Total cash, cash equivalents, and restricted cash(b)	Total cash, cash equivalents, and restricted cash(b)	$	1,673	$	1,829	$	139	$	135	$	33	$	48	Total cash, cash equivalents, and restricted cash(b)	$	1,735	$	1,829	$	211	$	135	$	218	$	48

(a)For Southern Power, ~~restricted cash~~ reflects $9 million and $10 million at ~~March 31,~~June 30, 2022 and December 31, 2021, respectively, held to fund estimated construction completion costs at the Deuel Harvest wind facility and $19 million at December 31, 2021 related to tax equity contributions restricted until the Garland battery energy storage facility achieved final contracted capacity. For Southern Company Gas, reflects ~~restricted cash held as~~ collateral for workers' compensation, life insurance, and long-term disability insurance.

(b)Total may not add due to rounding.

Natural Gas for Sale

With the exception of Nicor Gas, Southern Company Gas records natural gas inventories on a WACOG basis. For any declines in market prices below the WACOG considered to be other than temporary, an adjustment is recorded to reduce the value of natural gas inventories to market value. Nicor Gas' natural gas inventory is carried at cost on a LIFO basis. Inventory decrements occurring during the year that are restored prior to year end are charged to cost of natural gas at the estimated annual replacement cost. Inventory decrements that are not restored prior to year end are charged to cost of natural gas at the actual LIFO cost of the inventory layers liquidated.

Southern Company Gas recorded no material adjustments to natural gas inventories for either period presented. Nicor Gas' inventory decrement at ~~March 31,~~June 30, 2022 is expected to be restored prior to year end.

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(UNAUDITED)

Depreciation and Amortization

See Note 5 to the financial statements under "Depreciation and Amortization – Southern Power" in Item 8 of the Form 10-K for additional information.

Effective January 1, 2022, Southern Power revised the depreciable lives of its wind generating facilities from up to 30 years to up to 35 years. This revision resulted in an immaterial decrease in depreciation for the three and six months ended ~~March 31,~~June 30, 2022 and is expected to result in an immaterial decrease in annual depreciation for 2022.

(B) REGULATORY MATTERS

See Note 2 to the financial statements in Item 8 of the Form 10-K for additional information relating to regulatory matters.

The recovery balances for certain retail regulatory clauses of the traditional electric operating companies and Southern Company Gas at ~~March 31,~~June 30, 2022 and December 31, 2021 were as follows:


Regulatory Clause	Regulatory Clause	Balance Sheet Line Item	March 31, 2022		December 31, 2021		Regulatory Clause	Balance Sheet Line Item	June 30, 2022		December 31, 2021
			(in millions)						(in millions)
Alabama Power	Alabama Power						Alabama Power

Rate CNP Compliance	Rate CNP Compliance	Other regulatory assets, deferred	$	12	$	16	Rate CNP Compliance	Other regulatory assets, deferred	$	29	$	16

Rate CNP PPA	Rate CNP PPA	Other regulatory assets, deferred	84		84		Rate CNP PPA	Other regulatory assets, deferred	93		84

Retail Energy Cost Recovery(*)							Retail Energy Cost Recovery(*)	Other regulatory assets, current	60		—
								Other regulatory assets, deferred	191		126
Retail Energy Cost Recovery(*)		Other regulatory assets, deferred	46		126

Georgia Power	Georgia Power						Georgia Power

Fuel Cost Recovery	Fuel Cost Recovery	Deferred under recovered fuel clause revenues	$	494	$	410	Fuel Cost Recovery	Deferred under recovered fuel clause revenues	$	948	$	410

Mississippi Power	Mississippi Power						Mississippi Power

Fuel Cost Recovery	Fuel Cost Recovery	Other customer accounts receivable	$	16	$	4	Fuel Cost Recovery	Other customer accounts receivable	$	29	$	4
Ad Valorem Tax	Ad Valorem Tax	Other regulatory assets, current	12		12		Ad Valorem Tax	Other regulatory assets, current	12		12
		Other regulatory assets, deferred	33		37			Other regulatory assets, deferred	29		37

Southern Company Gas	Southern Company Gas						Southern Company Gas

Natural Gas Cost Recovery	Natural Gas Cost Recovery	Natural gas cost under recovery	$	306	$	266	Natural Gas Cost Recovery	Natural gas cost under recovery	$	361	$	266
		Other regulatory assets, deferred	44		207			Other regulatory assets, deferred	15		207
		Other regulatory liabilities, current	13		—

(*)In accordance with an Alabama PSC order issued on February 1, 2022, Alabama Power applied $126 million of its 2021 Rate RSE refund to reduce the Rate ECR under recovered balance.

Alabama Power

Certificate of Convenience and Necessity

On ~~March 25,~~July 12, 2022, the ~~FERC~~Alabama PSC approved and, on July 15, 2022, issued its order regarding Alabama Power's petition for a certificate of convenience and necessity (CCN) which authorizes Alabama Power to complete the acquisition of the Calhoun Generating Station, which was approved by the FERC on March 25, 2022, and is expected to ~~be completed~~close by September 30, 2022. ~~The completion~~Alabama Power expects to recover all approved costs associated with the acquisition through existing rate mechanisms as outlined in Note 2 to the financial statements in Item 8 of the ~~acquisition remains~~Form 10-K. The Alabama PSC's order is subject to ~~approval by the Alabama PSC.~~any rehearing request or judicial appeal filed on or before August 15, 2022. The ultimate outcome of this matter cannot be determined at this time.

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Rate ECR

On July 12, 2022, the Alabama PSC approved an adjustment to Rate ECR from 1.960 cents per KWH to 2.557 cents per KWH, or approximately $310 million annually, effective with August 2022 billings. The approved increase in the Rate ECR factor will have no significant effect on Alabama Power's net income, but will increase operating cash flows related to fuel cost recovery. The rate will adjust to 5.910 cents per KWH in January 2025 absent a further order from the Alabama PSC.

Rate NDR

On July 12, 2022, the Alabama PSC approved modifications to Rate NDR, which include an adjustment to the charges to establish and maintain the reserve and an adjustment to the recovery period for any existing deferred storm-related operations and maintenance costs and future reserve deficits from 24 months to 48 months. As modified, the maximum total Rate NDR charge to recover a deficit is limited to $5.00 per month per non-residential customer account and $2.50 per month per residential customer account.

At June 30, 2022, Alabama Power's NDR balance was $103 million. Beginning with August 2022 billings, the reserve establishment charge will be suspended and the reserve maintenance charge will be activated as a result of the NDR balance exceeding $75 million. Alabama Power expects to collect $6 million in the second half of 2022 and approximately $12 million annually beginning in 2023 under Rate NDR unless the NDR balance falls below $50 million. Alabama Power continues to have the authority to accrue additional amounts to the NDR as circumstances warrant.

Reliability Reserve Accounting Order

On July 12, 2022, the Alabama PSC approved an accounting order authorizing Alabama Power to create a reliability reserve separate from the NDR and transition the previous Rate NDR authority related to reliability expenditures to the reliability reserve. Alabama Power may make accruals to the reliability reserve if the NDR balance exceeds $35 million.

Renewable Generation Certificate

Through the issuance of a Renewable Generation Certificate (RGC), Alabama Power is authorized by the Alabama PSC to procure up to 500 MWs of renewable capacity and energy by September 16, 2027 and to market the related energy and environmental attributes to customers and other third parties. In April 2022, 1 of the existing solar projects which was expected to be served through a PPA commencing in first quarter 2024 was terminated, resulting in the restoration of 80 MWs of capacity under the RGC. The ultimate outcome of this matter cannot be determined at this time.

Georgia Power

Rate Plans

2022 Base Rate Case

On June 24, 2022, Georgia Power filed a base rate case (Georgia Power 2022 Base Rate Case) with the Georgia PSC. The filing proposes continuation of a three-year alternate rate plan with requested rate increases totaling $852 million, $107 million, and $45 million effective January 1, 2023, January 1, 2024, and January 1, 2025, respectively. These increases are based on a proposed retail ROE of 11.00% using the currently approved equity ratio of 56% and reflect levelized revenue requirements during the three-year period, with the exception of incremental compliance costs related to CCR AROs, Demand-Side Management (DSM) programs, and related adjustments to the Municipal Franchise Fee tariff.

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(UNAUDITED)

Georgia Power has requested recovery of the proposed increases through its existing base rate tariffs as follows:

~~Rate Plan~~


Tariff	2023		2024		2025
	(in millions)
Traditional base	$	739	$	—	$	—
ECCR
Traditional	(1)		—		—
CCR ARO(a)	64		78		47
DSM(a)	30		27		(2)
Municipal Franchise Fee	20		2		1
Total(b)	$	852	$	107	$	45

(a)As determined by the Georgia PSC through annual compliance filings.

(b)Totals may not add due to rounding.

Georgia Power's filing primarily reflects requests to (i) recover the costs of recent and future capital investments in the electric grid including the transmission and distribution systems and the continuation of its grid investment plan, all designed to support customer long-term reliability and resiliency needs, (ii) recover the cost of coal-fired generation units proposed for retirement, or made unavailable, as requested in the 2022 IRP, as Georgia Power continues the transition of the generation fleet to more economical and cleaner resources, (iii) make the necessary investments and recover costs to comply with federal and state environmental regulations, including costs associated with the CCR AROs related to ash pond and landfill closures and post-closure care, and (iv) reduce operating costs despite significant inflationary pressures. In addition, the filing includes the following provisions:

•Continuation of an allowed retail ROE range of 9.50% to 12.00%.

•Continuation of the process whereby 80% of any earnings above the top of the allowed ROE range are shared with Georgia Power's customers and the remaining 20% are retained by Georgia Power.

•Continuation of the option to file an Interim Cost Recovery tariff in the event earnings are projected to fall below the bottom of the allowed ROE range during the three-year term of the plan.

Georgia Power expects the Georgia PSC to render a final decision in this matter on December 20, 2022. The ultimate outcome of this matter cannot be determined at this time.

2019 ARP

In 2020, the Georgia PSC denied a motion for reconsideration filed by ~~the~~ Sierra Club regarding the Georgia PSC's decision in the 2019 ARP allowing Georgia Power to recover compliance costs for CCR AROs. The Superior Court of Fulton County subsequently affirmed the Georgia PSC's decision and, in October 2021, the Georgia Court of Appeals affirmed the Superior Court of Fulton County's order. In December 2021, ~~the~~ Sierra Club filed a petition for writ of certiorari to the Georgia Supreme ~~Court. The ultimate outcome of this~~Court, which was denied on July 14, 2022. This matter ~~cannot be determined at this time.~~is now concluded. See Note 6 to the financial statements in Item 8 of the Form 10-K for additional information regarding Georgia Power's AROs.

Integrated Resource ~~Plan~~Plans

In ~~light of the ongoing~~response to supply chain challenges in the solar industry, the Georgia ~~Power amended the~~PSC approved Georgia Power's request to amend 970 MWs of utility-scale solar PPAs that were authorized by the Georgia PSC in Georgia Power's 2019 IRP. The amendments extended the required commercial operation dates for the PPAs from 2023 to 2024.

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(UNAUDITED)

On July 21, 2022, the Georgia PSC approved the 2022 IRP, as modified by a stipulated agreement among Georgia Power, the staff of the Georgia PSC, and certain intervenors and as further modified by the Georgia PSC. In the 2022 IRP decision, the Georgia PSC approved the following requests:

•Decertification and retirement of Plant Wansley Units 1 and 2 (926 MWs based on 53.5% ownership) by August 31, 2022 and reclassification to regulatory asset accounts of the remaining net book values ($302 million and $279 million for Unit 1 and Unit 2, respectively, at June 30, 2022) and any remaining unusable materials and supplies inventories upon retirement. The regulatory asset accounts for the net book values of the units will be amortized at a rate equal to the unit depreciation rates authorized in ~~its~~the 2019 ~~Integrated Resource Plan~~ARP through December 31, 2022. In the Georgia Power 2022 Base Rate Case, Georgia Power requested recovery of the remaining regulatory asset balances for the net book values of the units through 2030 and requested that the timing of recovery of the regulatory asset account for the unusable materials and supplies inventories be determined in a future base rate case.

•Decertification and retirement of Plant Scherer Unit 3 (614 MWs based on 75% ownership) by December 31, 2028 and reclassification to ~~extend~~regulatory asset accounts of the remaining net book value (approximately $614 million at June 30, 2022) and any remaining unusable materials and supplies inventory to regulatory asset accounts upon retirement. The timing of recovery for these regulatory assets is expected to be determined in a future base rate case.

•Decertification and retirement of Plant Gaston Units 1 through 4 (500 MWs based on 50% ownership through SEGCO) by ~~one year the in-service dates for solar generation resources~~December 31, 2028. See Note 7 to the ~~end~~financial statements under "SEGCO" in Item 8 of ~~2024.~~the Form 10-K for additional information.

•Georgia Power's environmental compliance strategy, including approval of Georgia Power's plans to address CCR at its ash ponds and landfills. Recovery of the related costs is expected to be determined in future base rate cases. The Georgia PSC's approval included a change in the method of closure for 1 ash pond. Georgia Power is currently evaluating the related impact on its cost estimates and AROs; however, it is not expected to be material.

•Installation of environmental controls at Plants Bowen and Scherer for compliance with rules related to effluent limitations guidelines.

•Initiation of a license renewal application with the NRC for Plant Hatch.

•Investments related to the continued hydro operations of Plants Sinclair and Burton.

•Provisional authorization for development of a 265-MW battery energy storage facility with expected commercial operation in 2026.

•Issuance of requests for proposals (RFP) for 2,300 MWs of renewable resources, an additional 500 MWs of energy storage, and up to 140 MWs of biomass generation.

•Related transmission projects necessary to support the generation facilities plan.

•Certification of 6 PPAs (including 5 affiliate PPAs with Southern Power that are subject to approval by the FERC) with capacities of 1,567 MWs beginning in 2024, 380 MWs beginning in 2025, and 228 MWs beginning in 2028, procured through RFPs authorized in the 2019 IRP. See Note (F) under "Georgia Power Lease Modification" for additional information.

The Georgia PSC deferred a decision on the requested decertification and retirement of Plant Bowen Units 1 and 2 (1,400 MWs) to the 2025 IRP and rejected Georgia Power's request to certify approximately 88 MWs of wholesale capacity to be placed in retail rate base between January 1, 2024 and January 1, 2025. Georgia Power may offer such capacity in the wholesale market or to the retail jurisdiction in a future regulatory proceeding.

The ultimate outcome of these matters cannot be determined at this time.

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(UNAUDITED)

Nuclear Construction

In 2009, the Georgia PSC certified construction of Plant Vogtle Units 3 and 4, in which Georgia Power holds a 45.7% ownership interest. In 2012, the NRC issued the related combined construction and operating licenses, which allowed full construction of the 2 AP1000 nuclear units (with electric generating capacity of approximately 1,100 MWs each) and related facilities to begin. Until March 2017, construction on Plant Vogtle Units 3 and 4 continued under the Vogtle 3 and 4 Agreement, which was a substantially fixed price agreement.

In connection with the EPC Contractor's bankruptcy filing in March 2017, Georgia Power, acting for itself and as agent for the other Vogtle Owners, entered into several transitional arrangements to allow construction to continue. In July 2017, Georgia Power, acting for itself and as agent for the other Vogtle Owners, entered into the Vogtle Services Agreement, whereby Westinghouse provides facility design and engineering services, procurement and technical support, and staff augmentation on a time and materials cost basis. The Vogtle Services Agreement provides that it will continue until the start-up and testing of Plant Vogtle Units 3 and 4 are complete and electricity is generated and sold from both units. The Vogtle Services Agreement is terminable by the Vogtle Owners upon 30 days' written notice.

In October 2017, Georgia Power, acting for itself and as agent for the other Vogtle Owners, executed the Bechtel Agreement, ~~a cost reimbursable plus fee arrangement, whereby~~under which 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, and mandatory prepayment events.

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~~(UNAUDITED)~~

Cost and Schedule

Georgia Power's approximate proportionate share of the remaining estimated capital cost to complete Plant Vogtle Units 3 and 4, including contingency, through the end of the first quarter 2023 and the fourth quarter 2023, respectively, is as follows:


	(in millions)
Base project capital cost forecast(a)(b)	$	~~10,294~~10,393
Construction contingency estimate	~~107~~60

Total project capital cost forecast(a)(b)	~~10,401~~10,453
Net investment at ~~March 31,~~June 30, 2022(b)	~~(8,715)~~(8,966)
Remaining estimate to complete	$	~~1,686~~1,487

(a)Includes approximately $590 million of costs that are not shared with the other Vogtle Owners and approximately ~~$440~~$455 million of incremental costs under the cost-sharing and tender provisions of the joint ownership agreements described below. Excludes financing costs expected to be capitalized through AFUDC of approximately ~~$377~~$385 million, of which ~~$221~~$247 million had been accrued through ~~March 31,~~June 30, 2022.

(b)Net of $1.7 billion received from Toshiba under the Guarantee Settlement Agreement and approximately $188 million in related customer refunds.

Georgia Power estimates that its financing costs for construction of Plant Vogtle Units 3 and 4 will total approximately $3.4 billion, of which $3.0 billion had been incurred through ~~March 31,~~June 30, 2022.

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(UNAUDITED)

As part of its ongoing processes, Southern Nuclear continues to evaluate cost and schedule forecasts on a regular basis to incorporate current information available, particularly in the areas of engineering support, commodity installation, system turnovers and related test results, and workforce statistics. Southern Nuclear establishes aggressive target values for monthly construction production and system turnover activities, which are reflected in the site work plans.

Since March 2020, the number of active COVID-19 cases at the site has fluctuated consistent with the surrounding area and impacted productivity levels and pace of activity completion, with the site experiencing peaks in the number of active cases in January 2021, August 2021, and January 2022. Georgia Power estimates the productivity impacts of the COVID-19 pandemic have consumed approximately three to four months of schedule margin previously embedded in the site work plan for Unit 3 and Unit 4. As of ~~March 31,~~June 30, 2022, Georgia Power's proportionate share of the estimated incremental cost associated with COVID-19 mitigation actions and impacts on construction productivity is estimated to be between $160 million and $200 million and is included in the total project capital cost forecast. The continuing effects of the COVID-19 pandemic could further disrupt or delay construction and testing activities at Plant Vogtle Units 3 and 4.

Fuel load for Unit 3 is projected during the ~~third quarter or the~~ fourth quarter 2022 with an in-service date projected during ~~the fourth quarter 2022 or~~ the first quarter 2023. Unit 3's projected schedule primarily depends on ~~improvements in overall construction productivity and production levels,~~ the volume and completion of construction remediation work, completion of work packages, including inspection records, and other documentation necessary to submit the remaining ITAACs and begin fuel load, the pace of system and area turnovers, and the progression of startup and other testing. An in-service date during the ~~third quarter or the~~ fourth quarter 2023 for Unit 4 is projected. Unit 4's projected schedule primarily depends on Unit 3 progress through fuel load, startup, and testing; overall construction productivity and production levels improving, ~~as well as~~particularly in electrical installation, including terminations; and appropriate levels of craft laborers, particularly electricians and pipefitters, being added and maintained. Any further delays could result in later in-service ~~dates.~~dates and cost increases.

During the first ~~quarter~~half of 2022, established construction contingency totaling ~~$43~~$126 million was assigned to the base capital cost forecast for costs primarily associated with construction productivity, the pace of system turnovers, additional craft and support resources, and procurement for Units 3 and 4. Georgia Power also increased its total project capital cost forecast as of June 30, 2022 by adding $36 million to replenish construction contingency. After considering the significant level of uncertainty that exists regarding the future recoverability of these costs since the ultimate outcome of these matters is subject to the outcome of future assessments by management, as well as Georgia PSC decisions in future regulatory proceedings, Georgia Power recorded a pre-tax charge to income in the second quarter 2022 of $36 million ($27 million after tax) for the increase in the total project capital cost forecast. Georgia Power may request the Georgia PSC to evaluate those expenditures for rate recovery during the prudence review following the Unit 4 fuel load pursuant to the twenty-fourth VCM stipulation described below.

As Unit 3 completes system turnover from construction and moves to testing and transition to operations, ongoing and potential future challenges include construction productivity, completion of construction remediation work,

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~~NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)~~

~~(UNAUDITED)~~

completion of work packages, including inspection records, and other documentation necessary to submit the remaining ITAACs and begin fuel load, and final component and pre-operational tests. As Unit 4 progresses through construction and continues to transition into testing, ongoing and potential future challenges include the pace and quality of electrical installation; availability of craft and supervisory resources, including the temporary diversion of such resources to support Unit 3 construction efforts; the pace of work package closures and system turnovers; and the timeframe and duration of hot functional and other testing. As construction, including subcontract work, continues on both Units 3 and 4, ongoing or future challenges include management of contractors and vendors; subcontractor performance; supervision of craft labor and related productivity, particularly in the installation of electrical, mechanical, and instrumentation and controls commodities, ability to attract and retain craft labor, and/or related cost escalation; and procurement and related installation. New challenges may arise, particularly as Units 3 and 4 move into initial testing and start-up, which may result in required engineering changes or remediation related to plant systems, structures, or components (some of which are based on new technology that only within the last few years began initial operation in the global nuclear industry at this scale). The ongoing and potential future challenges described above may change the projected schedule and estimated cost.

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(UNAUDITED)

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. ~~In addition, certain~~Additional license amendment requests ~~have been~~also may be filed ~~and approved or are pending before~~with the NRC. Processes are in place that are designed to ensure compliance with the requirements specified in the Westinghouse Design Control Document and the combined construction and operating licenses, including inspections by Southern Nuclear and the NRC that occur throughout construction. In connection with the additional construction remediation work described above, Southern Nuclear reviewed the project's construction quality programs and, where needed, is implementing improvement plans consistent with these processes. On March 25, 2022, the NRC completed its follow-up inspection related to the November 2021 final significance report on its special inspection to review the root cause of this additional construction remediation work and the corresponding corrective action plans. The NRC closed the two white findings identified in November 2021 and returned Vogtle Unit 3 to the NRC's baseline inspection program.

Various design and other licensing-based compliance matters, including the timely submittal by Southern Nuclear of the ITAAC documentation for each unit and the related reviews and approvals by the NRC necessary to support NRC authorization to load fuel, have arisen or may arise, which may result in additional license amendments or require other resolution. If any license amendment requests or other licensing-based compliance issues, including inspections and ITAACs, are not resolved in a timely manner, there may be delays in the project schedule that could result in increased costs.

The ultimate outcome of these matters cannot be determined at this time. However, any extension of the in-service date beyond the first quarter 2023 for Unit 3 or the fourth quarter 2023 for Unit 4, including the current level of cost sharing described below, is estimated to result in additional base capital costs for Georgia Power of up to ~~$60~~$35 million per month for Unit 3 and ~~$40~~$45 million per month for Unit 4, as well as the related AFUDC and any additional related construction, support resources, or testing costs. While Georgia Power is not precluded from seeking retail recovery of any future capital cost forecast increase other than the amounts related to the cost-sharing and tender provisions of the joint ownership agreements described below, management will ultimately determine whether or not to seek recovery. Any further changes to the capital cost forecast that are not expected to be recoverable through regulated rates will be required to be charged to income and such charges could be material.

Joint Owner Contracts

In November 2017, the Vogtle Owners entered into an amendment to their joint ownership agreements for Plant Vogtle Units 3 and 4 to provide for, among other conditions, additional Vogtle Owner approval requirements. 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

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Nuclear for any action or inaction in connection with their performance as agent for the Vogtle Owners is limited to removal of Georgia Power and/or Southern Nuclear as agent, except in cases of willful misconduct.

Amendments to the Vogtle Joint Ownership Agreements

In connection with a September 2018 vote by the Vogtle Owners to continue construction, Georgia Power entered into (i) a binding term sheet (Vogtle Owner Term Sheet) with the other Vogtle Owners and MEAG Power's wholly-owned subsidiaries MEAG Power SPVJ, LLC (MEAG SPVJ), MEAG Power SPVM, LLC (MEAG SPVM), and MEAG Power SPVP, LLC (MEAG SPVP) to take certain actions which partially mitigate potential financial exposure for the other Vogtle Owners, including additional amendments to the Vogtle Joint Ownership Agreements and the purchase of PTCs from the other Vogtle Owners at pre-established prices, and (ii) a term sheet (MEAG Term Sheet) with MEAG Power and MEAG SPVJ to provide up to $300 million of funding with respect to MEAG SPVJ's ownership interest in Plant Vogtle Units 3 and 4 under certain circumstances. In January 2019, Georgia Power, MEAG Power, and MEAG SPVJ entered into an agreement to implement the provisions of the MEAG Term Sheet. In February 2019, Georgia Power, the other Vogtle Owners, and MEAG Power's wholly-owned subsidiaries

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MEAG SPVJ, MEAG SPVM, and MEAG SPVP entered into certain amendments to the Vogtle Joint Ownership Agreements to implement the provisions of the Vogtle Owner Term Sheet (Global Amendments).

Pursuant to the Global Amendments: (i) each Vogtle Owner must pay its proportionate share of qualifying construction costs for Plant Vogtle Units 3 and 4 based on its ownership percentage up to the estimated cost at completion (EAC) for Plant Vogtle Units 3 and 4 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 cost forecast is so revised to tender a portion of its ownership interest to Georgia Power in exchange for Georgia Power's agreement to pay 100% of such Vogtle Owner's remaining share of total construction costs in excess of the EAC in the nineteenth VCM plus $2.1 billion.

For purposes of the foregoing provisions, qualifying construction costs will not include costs (i) resulting from force majeure events, including epidemics and quarantines, governmental actions or inactions (or significant delays associated with issuance of such actions) that affect the licensing, completion, start-up, operations, or financing of Plant Vogtle Units 3 and 4, administrative proceedings or litigation regarding ITAAC or other regulatory challenges to commencement of operation of Plant Vogtle Units 3 and 4, and changes in laws or regulations governing Plant Vogtle Units 3 and 4, (ii) legal fees and legal expenses incurred due to litigation with contractors or subcontractors that are not subsidiaries or affiliates of Southern Company, and (iii) additional costs caused by requests from the Vogtle Owners other than Georgia Power, except for the exercise of a right to vote granted under the Vogtle Joint Ownership Agreements, that increase costs by $100,000 or more.

In addition, pursuant to the Global Amendments, the holders of at least 90% of the ownership interests in Plant Vogtle Units 3 and 4 must vote to continue construction if certain adverse events 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

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recovery, or for which Georgia Power elects not to seek cost recovery, through retail rates; and (iv) an incremental extension of one year or more from the seventeenth VCM report estimated in-service dates of November 2021 and November 2022 for Units 3 and 4, respectively. The schedule extension announced in February 2022 triggered the requirement for a vote to continue construction. Effective February 25, 2022, all of the Vogtle Owners had voted to continue construction.

Georgia Power and the other Vogtle Owners do not agree on either the starting dollar amount for the determination of cost increases subject to the cost-sharing and tender provisions of the Global Amendments or the extent to which COVID-19-related costs impact those provisions. Based on the definition in the Global Amendments, Georgia Power believes the starting dollar amount is $18.38 billion and the current project capital cost forecast exceeds the cost-sharing provision threshold, but not the tender provision threshold. The other Vogtle Owners have notified Georgia Power that they believe the current project capital cost forecast exceeds the cost-sharing thresholds and triggers the tender provisions under the Global Amendments. Georgia Power recorded a pre-tax ~~charge~~charges to income in the fourth quarter 2021 and the second quarter 2022 of approximately $440 million ($328 million after tax) and $16 million ($12 million after tax), respectively, associated with these cost-sharing and tender provisions, which is are

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included in the total project capital cost forecast. Georgia Power may be required to record further pre-tax charges to income of up to approximately ~~$460~~$480 million associated with these provisions based on the current project capital cost forecast. Georgia Power's incremental charges associated with these provisions, which relate to the other Vogtle Owners' share of costs, will not be recovered from retail customers. In October 2021, Georgia Power and the other Vogtle Owners entered into an agreement, which was modified on June 3, 2022, to clarify the process for the tender provisions of the Global Amendments to provide for a decision between 120 and ~~180~~194 days after the tender option is triggered, which the other Vogtle Owners assert occurred on February 14, 2022, and would require the other Vogtle Owners to notify Georgia Power of their intent to exercise their tender options by August 27, 2022. On June 17, 2022 and July 26, 2022, OPC and Dalton, respectively, notified Georgia Power of their purported exercises of their tender options. On June 18, 2022, OPC and MEAG Power each filed a separate lawsuit against Georgia Power in the Superior Court of Fulton County, Georgia seeking a declaratory judgment that the starting dollar amount is $17.1 billion and that the cost-sharing and tender provisions have been triggered. The lawsuits also assert other claims, including breach of contract allegations, and seek, among other remedies, damages and injunctive relief requiring Georgia Power to track and allocate construction costs consistent with MEAG Power's and OPC's interpretations of the Global Amendments. On July 25, 2022, Georgia Power filed its answer in the lawsuit filed by MEAG Power and included counterclaims seeking a declaratory judgment that the starting dollar amount is $18.38 billion and that costs related to force majeure events are excluded prior to calculating the cost-sharing and tender provisions and when calculating Georgia Power's related financial obligations.

Georgia Power's ownership interest in Plant Vogtle Units 3 and 4 continues to be 45.7%; however, it could increase if one or more of the other Vogtle Owners effectively exercise the option to tender a portion of their ownership interest to Georgia Power and require Georgia Power to pay 100% of the remaining share of the costs necessary to complete Plant Vogtle Units 3 and 4. Georgia Power's incremental ownership interest would be calculated and conveyed to Georgia Power after Plant Vogtle Units 3 and 4 are placed in service.

The ultimate outcome of these matters cannot be determined at this time.

Regulatory Matters

In 2009, the Georgia PSC voted to certify construction of Plant Vogtle Units 3 and 4 with a certified capital cost of $4.418 billion. In addition, in 2009 the Georgia PSC approved inclusion of the Plant Vogtle Units 3 and 4 related CWIP accounts in rate base, and the State of Georgia enacted the Georgia Nuclear Energy Financing Act, which allows Georgia Power to recover financing costs for Plant Vogtle Units 3 and 4. Financing costs are recovered on all applicable certified costs through annual adjustments to the NCCR tariff up to the certified capital cost of $4.418 billion. At ~~March 31,~~June 30, 2022, Georgia Power had recovered approximately $2.8 billion of financing costs. Financing costs related to capital costs above $4.418 billion are being recognized through AFUDC and are expected to be recovered through retail rates over the life of Plant Vogtle Units 3 and 4; however, Georgia Power is not recording AFUDC related to any capital costs in excess of the total deemed reasonable by the Georgia PSC (currently $7.3 billion) and not requested for rate recovery. In November 2021, the Georgia PSC approved Georgia Power's request to decrease the NCCR tariff by $78 million annually, effective January 1, 2022.

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,

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2018 order, resolved the following regulatory matters related to Plant Vogtle Units 3 and 4: (i) none of the $3.3 billion of costs incurred through December 31, 2015 and reflected in the fourteenth VCM report should be disallowed from rate base on the basis of imprudence; (ii) the Contractor Settlement Agreement was reasonable and

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prudent and none of the $0.3 billion paid pursuant to the Contractor Settlement Agreement should be disallowed from rate base on the basis of imprudence; (iii) (a) capital costs incurred up to $5.68 billion would be presumed to be reasonable and prudent with the burden of proof on any party challenging such costs, (b) Georgia Power would have the burden to show that any capital costs above $5.68 billion were prudent, and (c) a revised capital cost forecast of $7.3 billion (after reflecting the impact of payments received under the Guarantee Settlement Agreement and related customer refunds) was found reasonable; (iv) construction of Plant Vogtle Units 3 and 4 should be completed, with Southern Nuclear serving as project manager and Bechtel as primary contractor; (v) approved and deemed reasonable Georgia Power's revised schedule placing Plant Vogtle Units 3 and 4 in service in November 2021 and November 2022, respectively; (vi) confirmed that the revised cost forecast does not represent a cost cap and that a prudence proceeding on cost recovery will occur following Unit 4 fuel load, consistent with applicable Georgia law; (vii) reduced the ROE used to calculate the NCCR tariff (a) from 10.95% (the ROE rate setting point authorized by the Georgia PSC in the 2013 alternate rate plan) to 10.00% effective January 1, 2016, (b) from 10.00% to 8.30%, effective January 1, 2020, and (c) from 8.30% to 5.30%, effective January 1, 2021 (provided that the ROE in no case will be less than Georgia Power's average cost of long-term debt); (viii) reduced the ROE used for AFUDC equity for Plant Vogtle Units 3 and 4 from 10.00% to Georgia Power's average cost of long-term debt, effective January 1, 2018; and (ix) agreed that effective the first month after Unit 3 reaches commercial operation, retail base rates would be adjusted to include the costs related to Unit 3 and common facilities deemed prudent in the Vogtle Cost Settlement Agreement (see Note 2 to the financial statements under "Georgia Power – Plant Vogtle Unit 3 and Common Facilities Rate Proceeding" in Item 8 of the Form 10-K for additional information). The January 11, 2018 order also stated that if Plant Vogtle Units 3 and 4 are not commercially operational by June 1, 2021 and June 1, 2022, respectively, the ROE used to calculate the NCCR tariff will be further reduced by 10 basis points each month (but not lower than Georgia Power's average cost of long-term debt) until the respective Unit is commercially operational. The ROE reductions negatively impacted earnings by approximately $270 million in 2021 and are estimated to have negative earnings impacts of approximately $300 million and ~~$265~~$250 million in 2022 and 2023, 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 the August 2021 order approving the twenty-fourth VCM report, the Georgia PSC approved a stipulation addressing the following matters: (i) beginning with its twenty-fifth VCM report, Georgia Power will continue to report to the Georgia PSC all costs incurred during the period for review and will request for approval costs up to the $7.3 billion determined to be reasonable in the Georgia PSC's seventeenth VCM order and (ii) Georgia Power will not seek rate recovery of the $0.7 billion increase to the base capital cost forecast included in the nineteenth VCM report and charged to income by Georgia Power in the second quarter 2018. In addition, the stipulation confirms Georgia Power may request verification and approval of costs above $7.3 billion for inclusion in rate base at a later time, but no earlier than the prudence review contemplated by the seventeenth VCM order described previously.

The Georgia PSC has approved 25 VCM reports covering periods through June 30, 2021. These reports reflect total construction capital costs incurred of $7.9 billion (net of $1.7 billion of payments received under the Guarantee Settlement Agreement and approximately $188 million in related customer refunds), of which the Georgia PSC has verified and approved $7.3 billion as described above. The Georgia ~~Power filed its~~PSC has reviewed the twenty-sixth VCM report, ~~with the Georgia PSC on February 17, 2022, reflecting~~which reflects $584 million of additional construction capital costs incurred through December 31, ~~2021 and~~2021. Georgia Power expects to file its twenty-seventh VCM report with the ~~total~~Georgia PSC by August 31, 2022, which will reflect the revised capital cost forecast ~~described above.~~discussed above and $522 million of construction capital costs incurred from January 1, 2022 through June 30, 2022.

The ultimate outcome of these matters cannot be determined at this time.

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Mississippi Power

Performance Evaluation Plan

On ~~March 15,~~June 7, 2022, the Mississippi ~~Power submitted its~~PSC approved Mississippi Power's annual retail PEP filing for 2022, ~~to the Mississippi PSC, which requested a 1.9%, or~~resulting in an annual increase in revenues of approximately $18 million, ~~annual increase in revenues,~~or 1.9%, primarily due to increases in ~~investment,~~rate base, operations and maintenance expenses, and depreciation and amortization. ~~In accordance with the PEP rate schedule, the~~The rate increase became effective with the first billing cycle of April 2022 ~~subject to refund. The related proceedings are expected to conclude~~ in ~~summer 2022; however,~~accordance with the ~~ultimate outcome of this matter cannot be determined at this time.~~PEP rate schedule.

Ad Valorem Tax Adjustment

On ~~April 13,~~June 7, 2022, the Mississippi ~~Power submitted its~~PSC approved Mississippi Power's annual ad valorem tax adjustment filing for 2022, ~~which requested a $5 million~~resulting in an annual increase in ~~revenues.~~ revenues of $5 million, effective with the first billing cycle of July 2022.

Municipal and Rural Associations Tariff

On May 26, 2022, Mississippi Power and Cooperative Energy executed an amended shared service agreement (SSA) under which Cooperative Energy will continue to decrease its use of Mississippi Power's generation services under the MRA tariff up to 2.5% annually through 2035. At June 30, 2022, Mississippi Power is serving approximately 400 MWs of Cooperative Energy's annual demand. Beginning in 2036, Cooperative Energy will provide 100% of its electricity requirements at the MRA delivery points under the tariff. Neither party has the option to cancel the amended SSA. On June 30, 2022, Mississippi Power filed a request with the FERC for approval of the amended SSA.

On July 15, 2022, Mississippi Power filed a request with the FERC for a $23 million increase in annual wholesale base revenues under the MRA tariff and requested an effective date of July 15, 2022.

The ultimate outcome of ~~this matter~~these matters cannot be determined at this time.

Southern Company Gas

Infrastructure Replacement Programs and Capital Projects

Capital expenditures incurred under specific infrastructure replacement programs and capital projects during the first ~~three~~six months of 2022 were as follows:


Utility	Program	~~Three~~Six Months Ended ~~March 31,~~June 30, 2022
		(in millions)
Nicor Gas	Investing in Illinois	$	51177
Virginia Natural Gas	Steps to Advance Virginia's Energy	1433
Atlanta Gas Light	System Reinforcement Rider	1428
Chattanooga Gas	Pipeline Replacement Program	12
Total		$	80240

Rate Proceedings

Atlanta Gas Light

On July 1, 2022, Atlanta Gas Light filed its annual GRAM update with the Georgia PSC. The filing requests an annual base rate increase of $53 million based on the projected 12-month period beginning January 1, 2023. Resolution of the GRAM filing is expected by December 28, 2022, with the new rates effective January 1, 2023. The ultimate outcome of this matter cannot be determined at this time.

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Virginia Natural Gas

On May 31, 2022, Virginia Natural Gas filed a notice of intent with the Virginia State Corporation Commission to file a base rate case later in the third quarter 2022. The ultimate outcome of this matter cannot be determined at this time.

See Note 3 to the financial statements in Item 8 of the Form 10-K for information relating to various lawsuits and other contingencies.

General Litigation Matters

The Registrants are involved in various matters being litigated and regulatory matters. The ultimate outcome of such pending or potential litigation or regulatory matters against each Registrant and any subsidiaries cannot be determined at this time; however, for current proceedings not specifically reported herein, management does not anticipate that the ultimate liabilities, if any, arising from such current proceedings would have a material effect on such Registrant's financial statements.

The Registrants believe the pending legal challenges discussed below have no merit; however, the ultimate outcome of these matters cannot be determined at this time.

Southern Company

In February 2017, Jean Vineyard and Judy Mesirov each filed a shareholder derivative lawsuit in the U.S. District Court for the Northern District of Georgia. Each of these lawsuits ~~names~~named as defendants Southern Company, certain of its directors, certain of its current and former officers, and certain former Mississippi Power officers. In 2017, these 2 shareholder derivative lawsuits were consolidated in the U.S. District Court for the Northern District of

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Georgia. The complaints ~~allege~~alleged 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~~alleged that the defendants were unjustly enriched and caused the waste of corporate assets and also ~~allege~~alleged that the individual defendants violated their fiduciary duties.

In May 2017, Helen E. Piper Survivor's Trust filed a shareholder derivative lawsuit in the Superior Court of Gwinnett County, Georgia that ~~names~~named as defendants Southern Company, certain of its directors, certain of its current and former officers, and certain former Mississippi Power officers. The complaint ~~alleges~~alleged that the individual defendants, among other things, breached their fiduciary duties in connection with schedule delays and cost overruns associated with the construction of the Kemper County energy facility. The complaint further ~~alleges~~alleged that the individual defendants authorized or failed to correct false and misleading statements regarding the Kemper County energy facility schedule and cost and failed to implement necessary internal controls to prevent harm to Southern Company. In August 2019, the court granted a motion filed by the plaintiff in July 2019 to substitute a new named plaintiff, Martin J. Kobuck, in place of Helen E. Piper Survivor's Trust.

The plaintiffs in each of these cases ~~seek~~sought to recover, on behalf of Southern Company, unspecified actual damages and, on each plaintiff's own behalf, attorneys' fees and costs in bringing the lawsuit. The plaintiffs also ~~seek~~sought certain changes to Southern Company's corporate governance and internal processes. On January 21, 2022, the plaintiffs in the federal court action filed a motion for preliminary approval of settlement, together with an executed stipulation of settlement, which ~~applies~~applied to both actions. On ~~March 11,~~June 9, 2022, the U.S. District Court for the Northern District of Georgia granted final approval of the settlement and, on June 16, 2022, the Superior Court of Gwinnett County, Georgia entered an order ~~preliminarily approving~~awarding attorneys' fees and expenses related to the ~~settlement.~~Martin J. Kobuck lawsuit. The ~~proposed~~ settlement consists of an aggregate payment by Southern Company's insurers of approximately $4.5 million for attorneys' fees and expenses, as well as adoption of various corporate governance reforms by Southern Company. ~~The terms~~These matters are now concluded.

Table of ~~the proposed settlement and the corporate governance reforms remain subject~~ContentsIndex to ~~final approval by the court.~~Financial Statements

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Georgia Power

In 2011, plaintiffs filed a putative class action against Georgia Power in the Superior Court of Fulton County, Georgia alleging that Georgia Power's collection in rates of amounts for municipal franchise fees (which fees are paid to municipalities) exceeded the amounts allowed in orders of the Georgia PSC and alleging certain state law claims. This case has been ruled upon and appealed numerous times over the last several years. In 2019, the Georgia PSC issued an order that found Georgia Power has appropriately implemented the municipal franchise fee schedule. In March 2021, the Superior Court of Fulton County granted class certification and Georgia Power's motion for summary judgment and the plaintiffs filed a notice of appeal. In April 2021, Georgia Power filed a notice of cross appeal on the issue of class certification. In December 2021, the Georgia Court of Appeals affirmed the Superior Court's ruling that granted summary judgment to Georgia Power and dismissed Georgia Power's cross appeal on the issue of class certification as moot. Also in December 2021, the plaintiffs filed a petition for writ of certiorari to the Georgia Supreme Court. The amount of any possible losses cannot be estimated at this time because, among other factors, it is unknown whether any losses would be subject to recovery from any municipalities.

In July 2020, a group of individual plaintiffs filed a complaint in the Superior Court of Fulton County, Georgia against Georgia Power alleging that releases from Plant Scherer have impacted groundwater, surface water, and air, resulting in alleged personal injuries and property damage. The plaintiffs seek an unspecified amount of monetary damages including punitive damages, a medical monitoring fund, and injunctive relief. Georgia Power has filed multiple motions to dismiss the complaint. In October 2021, 3 additional complaints were filed in the Superior Court of Monroe County, Georgia against Georgia Power alleging that releases from Plant Scherer have impacted groundwater and air, resulting in alleged personal injuries and property damage. The plaintiffs seek an unspecified amount of monetary damages including punitive damages. In November 2021, Georgia Power filed a notice to remove the 3 cases pending in the Superior Court of Monroe County, Georgia to the U.S. District Court for the Middle District of Georgia. On February 7, 2022, 4 additional complaints were filed in the Superior Court of Monroe County, Georgia against Georgia Power seeking damages for alleged personal injuries or property damage. On March 9, 2022, Georgia Power filed a notice to remove the 4 cases pending in the Superior Court of Monroe

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County, Georgia to the U.S. District Court for the Middle District of Georgia. The amount of any possible losses from these matters cannot be estimated at this time.

Mississippi Power

In 2018, Ray C. Turnage and 10 other individual plaintiffs filed a putative class action complaint against Mississippi Power and the 3 then-serving members of the Mississippi PSC in the U.S. District Court for the Southern District of Mississippi, which was amended in March 2019 to include 4 additional plaintiffs. Mississippi Power received Mississippi PSC approval in 2013 to charge a mirror CWIP rate premised upon including in its rate base pre-construction and construction costs for the Kemper IGCC prior to placing the Kemper IGCC into service. The Mississippi Supreme Court reversed that approval and ordered Mississippi Power to refund the amounts paid by customers under the previously-approved mirror CWIP rate. The plaintiffs allege that the initial approval process, and the amount approved, were improper and make claims for gross negligence, reckless conduct, and intentional wrongdoing. They also allege that Mississippi Power underpaid customers by up to $23.5 million in the refund process by applying an incorrect interest rate. The plaintiffs seek to recover, on behalf of themselves and their putative class, actual damages, punitive damages, pre-judgment interest, post-judgment interest, attorney's fees, and costs. The district court dismissed the amended complaint; however, in March 2020, the plaintiffs filed a motion seeking to name the new members of the Mississippi PSC, the Mississippi Development Authority, and Southern Company as additional defendants and add a cause of action against all defendants based on a dormant commerce clause theory under the U.S. Constitution. In July 2020, the plaintiffs filed a motion for leave to file a third amended complaint, which included the same federal claims as the proposed second amended complaint, as well as several additional state law claims based on the allegation that Mississippi Power failed to disclose the annual percentage rate of interest applicable to refunds. In November 2020, the district court denied each of the plaintiffs' pending motions and entered final judgment in favor of Mississippi Power. In January 2021, the district court denied further motions by the plaintiffs to vacate the judgment and to file a revised second amended complaint. In February 2021, the plaintiffs filed a notice of appeal with the U.S. Court of Appeals for the Fifth Circuit. On March 21, 2022, the

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U.S. Court of Appeals for the Fifth Circuit issued an opinion affirming the dismissal of the claims against the Mississippi PSC defendants but reversing the dismissal of the claims against Mississippi Power. The appellate court remanded the case to the U.S. District Court for the Southern District of Mississippi for further proceedings. ~~The appellate court's decision is not final until~~On May 31, 2022, the ~~opportunity~~U.S. Court of Appeals for the Fifth Circuit denied a petition by Mississippi Power for a rehearing en banc ~~is resolved.~~and the case was remanded back to the trial court for further proceedings. On June 17, 2022, Mississippi Power filed with the trial court a motion to dismiss the complaint. An adverse outcome in this proceeding could have a material impact on Mississippi Power's financial statements.

Environmental Remediation

The Southern Company system must comply with environmental laws and regulations governing the handling and disposal of waste and releases of hazardous substances. Under these various laws and regulations, the Southern Company system could incur substantial costs to clean up affected sites. The traditional electric operating companies and the natural gas distribution utilities in Illinois and Georgia have each received authority from their respective state PSCs or other applicable state regulatory agencies to recover approved environmental remediation costs through regulatory mechanisms. These regulatory mechanisms are adjusted annually or as necessary within limits approved by the state PSCs or other applicable state regulatory agencies.

Georgia Power's environmental remediation liability was $16 million and $17 million at ~~March 31,~~June 30, 2022 and December 31, 2021, respectively. Georgia Power has been designated or identified as a potentially responsible party at sites governed by the Georgia Hazardous Site Response Act and/or by the federal Comprehensive Environmental Response, Compensation, and Liability Act, and assessment and potential cleanup of such sites is expected.

Southern Company Gas' environmental remediation liability was $241 million and $249 million at ~~both March 31,~~June 30, 2022 and December 31, 2021, respectively, based on the estimated cost of environmental investigation and remediation associated with known former manufactured gas plant operating sites.

The ultimate outcome of these matters cannot be determined at this time; however, as a result of the regulatory treatment for environmental remediation expenses described above, the final disposition of these matters is not expected to have a material impact on the financial statements of the applicable Registrants.

Other Matters

Mississippi Power

In conjunction with Southern Company's 2019 sale of Gulf Power, NextEra Energy, Inc. held back $75 million of the purchase price pending Mississippi Power and Gulf Power negotiating a mutually acceptable revised operating agreement for Plant Daniel. On July 12, 2022, the co-owners executed a revised operating agreement and Southern Company subsequently received the remaining $75 million of the purchase price. The revised operating agreement contains dispatch procedures for the 2 jointly-owned coal units at Plant Daniel such that Mississippi Power will designate 1 of the 2 units as primary and the other as secondary in lieu of each company separately owning 100% of a single generating unit. Mississippi Power has the option to purchase its co-owner's ownership interest for $1 on January 15, 2024, provided that Mississippi Power exercises the option no later than 120 days prior to that date. The revised operating agreement is not expected to have a material impact on Mississippi Power's financial statements. See Note 15 to the financial statements under "Southern Company" in Item 8 of the Form 10-K for additional information regarding the sale of Gulf Power.

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(D) REVENUE FROM CONTRACTS WITH CUSTOMERS AND LEASE INCOME

Revenue from Contracts with Customers

The Registrants generate revenues from a variety of sources, some of which are not accounted for as revenue from contracts with customers, such as leases, derivatives, and certain cost recovery mechanisms. See Note 1 to the financial statements under "Revenues" in Item 8 of the Form 10-K for additional information on the revenue policies of the Registrants. See "Lease Income" herein and Note (J) for additional information on revenue accounted for under lease and derivative accounting guidance, respectively.

The following table disaggregates revenue from contracts with customers for the three and six months ended ~~March 31,~~June 30, 2022 and 2021:


		Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas			Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
		(in millions)													(in millions)

Three Months Ended March 31, 2022
Three Months Ended June 30, 2022														Three Months Ended June 30, 2022
Operating revenues	Operating revenues													Operating revenues
Retail electric revenues	Retail electric revenues													Retail electric revenues
Residential	Residential	$	1,525	$	634	$	821	$	70	$	—	$	—	Residential	$	1,655	$	617	$	962	$	76	$	—	$	—
Commercial	Commercial	1,178		375		738		65		—		—		Commercial	1,387		410		900		77		—		—
Industrial	Industrial	727		323		334		70		—		—		Industrial	1,005		368		553		84		—		—
Other	Other	26		4		20		2		—		—		Other	25		3		20		2		—		—
Total retail electric revenues	Total retail electric revenues	3,456		1,336		1,913		207		—		—		Total retail electric revenues	4,072		1,398		2,435		239		—		—
Natural gas distribution revenues	Natural gas distribution revenues													Natural gas distribution revenues
Residential	Residential	1,016		—		—		—		—		1,016		Residential	474		—		—		—		—		474
Commercial	Commercial	270		—		—		—		—		270		Commercial	130		—		—		—		—		130
Transportation	Transportation	337		—		—		—		—		337		Transportation	276		—		—		—		—		276
Industrial	Industrial	32		—		—		—		—		32		Industrial	16		—		—		—		—		16
Other	Other	129		—		—		—		—		129		Other	67		—		—		—		—		67
Total natural gas distribution revenues	Total natural gas distribution revenues	1,784		—		—		—		—		1,784		Total natural gas distribution revenues	963		—		—		—		—		963
Wholesale electric revenues	Wholesale electric revenues													Wholesale electric revenues
PPA energy revenues	PPA energy revenues	342		59		32		3		251		—		PPA energy revenues	585		108		40		5		441		—
PPA capacity revenues	PPA capacity revenues	134		39		12		3		81		—		PPA capacity revenues	136		40		12		—		85		—
Non-PPA revenues	Non-PPA revenues	58		64		9		102		73		—		Non-PPA revenues	62		35		6		169		196		—
Total wholesale electric revenues	Total wholesale electric revenues	534		162		53		108		405		—		Total wholesale electric revenues	783		183		58		174		722		—
Other natural gas revenues	Other natural gas revenues													Other natural gas revenues

Gas marketing services	Gas marketing services	243		—		—		—		—		243		Gas marketing services	90		—		—		—		—		90
Other natural gas revenues	Other natural gas revenues	16		—		—		—		—		16		Other natural gas revenues	10		—		—		—		—		10
Total natural gas revenues	Total natural gas revenues	259		—		—		—		—		259		Total natural gas revenues	100		—		—		—		—		100
Other revenues	Other revenues	225		48		95		9		8		—		Other revenues	308		63		121		9		9		—
Total revenue from contracts with customers	Total revenue from contracts with customers	6,258		1,546		2,061		324		413		2,043		Total revenue from contracts with customers	6,226		1,644		2,614		422		731		1,063
Other revenue sources(a)	Other revenue sources(a)	390		103		147		11		126		15		Other revenue sources(a)	980		287		507		12		168		20

Total operating revenues	Total operating revenues	$	6,648	$	1,649	$	2,208	$	335	$	539	$	2,058	Total operating revenues	$	7,206	$	1,931	$	3,121	$	434	$	899	$	1,083

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		Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas			Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
		(in millions)													(in millions)
Three Months Ended March 31, 2021
Six Months Ended June 30, 2022														Six Months Ended June 30, 2022
Operating revenues	Operating revenues													Operating revenues
Retail electric revenues	Retail electric revenues													Retail electric revenues
Residential	Residential	$	1,468	$	628	$	776	$	64	$	—	$	—	Residential	$	3,179	$	1,250	$	1,783	$	146	$	—	$	—
Commercial	Commercial	1,117		372		686		59		—		—		Commercial	2,567		786		1,638		143		—		—
Industrial	Industrial	668		320		284		64		—		—		Industrial	1,732		691		887		154		—		—
Other	Other	24		5		17		2		—		—		Other	51		7		40		4		—		—
Total retail electric revenues	Total retail electric revenues	3,277		1,325		1,763		189		—		—		Total retail electric revenues	7,529		2,734		4,348		447		—		—
Natural gas distribution revenues	Natural gas distribution revenues													Natural gas distribution revenues
Residential	Residential	614		—		—		—		—		614		Residential	1,490		—		—		—		—		1,490
Commercial	Commercial	170		—		—		—		—		170		Commercial	400		—		—		—		—		400
Transportation	Transportation	288		—		—		—		—		288		Transportation	613		—		—		—		—		613
Industrial	Industrial	16		—		—		—		—		16		Industrial	48		—		—		—		—		48
Other	Other	97		—		—		—		—		97		Other	195		—		—		—		—		195
Total natural gas distribution revenues	Total natural gas distribution revenues	1,185		—		—		—		—		1,185		Total natural gas distribution revenues	2,746		—		—		—		—		2,746
Wholesale electric revenues	Wholesale electric revenues													Wholesale electric revenues
PPA energy revenues	PPA energy revenues	212		43		13		4		156		—		PPA energy revenues	930		168		72		8		694		—
PPA capacity revenues	PPA capacity revenues	119		29		13		3		75		—		PPA capacity revenues	268		78		23		3		166		—
Non-PPA revenues	Non-PPA revenues	67		32		9		88		61		—		Non-PPA revenues	124		99		15		271		269		—
Total wholesale electric revenues	Total wholesale electric revenues	398		104		35		95		292		—		Total wholesale electric revenues	1,322		345		110		282		1,129		—
Other natural gas revenues	Other natural gas revenues													Other natural gas revenues

Wholesale gas services		1,590		—		—		—		—		1,590

Gas marketing services	Gas marketing services	194		—		—		—		—		194		Gas marketing services	333		—		—		—		—		333
Other natural gas revenues	Other natural gas revenues	7		—		—		—		—		7		Other natural gas revenues	26		—		—		—		—		26
Total natural gas revenues	Total natural gas revenues	1,791		—		—		—		—		1,791		Total natural gas revenues	359		—		—		—		—		359
Other revenues	Other revenues	249		46		113		8		4		—		Other revenues	530		109		216		17		17		—
Total revenue from contracts with customers	Total revenue from contracts with customers	6,900		1,475		1,911		292		296		2,976		Total revenue from contracts with customers	12,486		3,188		4,674		746		1,146		3,105
Other revenue sources(a)	Other revenue sources(a)	1,306		84		59		15		144		1,014		Other revenue sources(a)	1,368		392		654		23		292		35
Other adjustments(b)		(2,296)		—		—		—		—		(2,296)

Total operating revenues	Total operating revenues	$	5,910	$	1,559	$	1,970	$	307	$	440	$	1,694	Total operating revenues	$	13,854	$	3,580	$	5,328	$	769	$	1,438	$	3,140

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	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Three Months Ended June 30, 2021
Operating revenues
Retail electric revenues
Residential	$	1,469	$	553	$	852	$	64	$	—	$	—
Commercial	1,176		386		724		66		—		—
Industrial	728		334		321		73		—		—
Other	23		4		17		2		—		—
Total retail electric revenues	3,396		1,277		1,914		205		—		—
Natural gas distribution revenues
Residential	311		—		—		—		—		311
Commercial	73		—		—		—		—		73
Transportation	247		—		—		—		—		247
Industrial	8		—		—		—		—		8
Other	59		—		—		—		—		59
Total natural gas distribution revenues	698		—		—		—		—		698
Wholesale electric revenues
PPA energy revenues	209		38		16		2		158		—
PPA capacity revenues	118		29		14		1		75		—
Non-PPA revenues	55		25		3		75		78		—
Total wholesale electric revenues	382		92		33		78		311		—
Other natural gas revenues

Wholesale gas services	578		—		—		—		—		578
Gas marketing services	63		—		—		—		—		63
Other natural gas revenues	10		—		—		—		—		10
Total natural gas revenues	651		—		—		—		—		651
Other revenues	295		52		137		7		5		—
Total revenue from contracts with customers	5,422		1,421		2,084		290		316		1,349
Other revenue sources(a)	1,179		135		141		13		174		731
Other adjustments(b)	(1,403)		—		—		—		—		(1,403)
Total operating revenues	$	5,198	$	1,556	$	2,225	$	303	$	490	$	677

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	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Six Months Ended June 30, 2021
Operating revenues
Retail electric revenues
Residential	$	2,936	$	1,181	$	1,627	$	128	$	—	$	—
Commercial	2,294		758		1,410		126		—		—
Industrial	1,397		654		606		137		—		—
Other	47		9		34		4		—		—
Total retail electric revenues	6,674		2,602		3,677		395		—		—
Natural gas distribution revenues
Residential	925		—		—		—		—		925
Commercial	243		—		—		—		—		243
Transportation	536		—		—		—		—		536
Industrial	24		—		—		—		—		24
Other	155		—		—		—		—		155
Total natural gas distribution revenues	1,883		—		—		—		—		1,883
Wholesale electric revenues
PPA energy revenues	422		81		30		7		313		—
PPA capacity revenues	237		58		27		4		150		—
Non-PPA revenues	119		57		12		162		139		—
Total wholesale electric revenues	778		196		69		173		602		—
Other natural gas revenues

Wholesale gas services	2,168		—		—		—		—		2,168
Gas marketing services	257		—		—		—		—		257
Other natural gas revenues	17		—		—		—		—		17
Total natural gas revenues	2,442		—		—		—		—		2,442
Other revenues	542		97		249		14		9		—
Total revenue from contracts with customers	12,319		2,895		3,995		582		611		4,325
Other revenue sources(a)	2,488		220		200		28		319		1,745
Other adjustments(b)	(3,699)		—		—		—		—		(3,699)
Total operating revenues	$	11,108	$	3,115	$	4,195	$	610	$	930	$	2,371

(a)Other revenue sources relate to revenues from customers accounted for as derivatives and leases, alternative revenue programs at Southern Company Gas, and cost recovery mechanisms and revenues that meet other scope exceptions for revenues from contracts with customers at the traditional electric operating companies.

(b)Other adjustments relate to the cost of Southern Company Gas' energy and risk management activities. Wholesale gas services revenues are presented net of the related costs of those activities on the statement of income. See Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K and Note (L) under "Southern Company Gas" for information on the sale of Sequent and components of wholesale gas services' operating revenues, respectively.

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Contract Balances

The following table reflects the closing balances of receivables, contract assets, and contract liabilities related to revenues from contracts with customers at ~~March 31,~~June 30, 2022 and December 31, 2021:


		Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas			Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
		(in millions)													(in millions)
Accounts Receivable	Accounts Receivable													Accounts Receivable
At March 31, 2022		$	2,571	$	616	$	695	$	85	$	128	$	865
At June 30, 2022														At June 30, 2022	$	3,021	$	773	$	1,217	$	95	$	278	$	504
At December 31, 2021	At December 31, 2021	2,504		589		736		73		149		753		At December 31, 2021	2,504		589		736		73		149		753
Contract Assets	Contract Assets													Contract Assets
At March 31, 2022		$	81	$	2	$	31	$	—	$	—	$	—
At June 30, 2022														At June 30, 2022	$	102	$	—	$	38	$	—	$	—	$	—
At December 31, 2021	At December 31, 2021	117		2		63		—		1		—		At December 31, 2021	117		2		63		—		1		—
Contract Liabilities	Contract Liabilities													Contract Liabilities
At March 31, 2022		$	72	$	3	$	13	$	2	$	1	$	—
At June 30, 2022														At June 30, 2022	$	70	$	3	$	25	$	4	$	1	$	—
At December 31, 2021	At December 31, 2021	57		4		14		—		1		—		At December 31, 2021	57		4		14		—		1		—

At ~~March 31,~~June 30, 2022 and December 31, 2021, Georgia Power had contract assets primarily related to retail customer fixed bill programs, where the payment is contingent upon Georgia Power's continued performance and the customer's continued participation in the program over a one-year contract term, and unregulated service agreements, where payment is contingent on project completion. Contract liabilities for Georgia Power relate to cash collections recognized in advance of revenue for unregulated service agreements. Southern Company's unregulated distributed generation business had ~~$47~~$63 million and $50 million of contract assets and ~~$54~~$38 million and $39 million of contract liabilities at ~~March 31,~~June 30, 2022 and December 31, 2021, respectively, for outstanding performance obligations.

Revenues recognized in the three and six months ended ~~March 31,~~June 30, 2022, which were included in contract liabilities at December 31, 2021, were $10 million and $19 million, respectively, for Southern Company and immaterial for ~~all~~the other Registrants.

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Remaining Performance Obligations

The Subsidiary Registrants have long-term contracts with customers in which revenues are recognized as performance obligations are satisfied over the contract term. For the traditional electric operating companies and Southern Power, these contracts primarily relate to PPAs whereby electricity and generation capacity are provided to a customer. The revenue recognized for the delivery of electricity is variable; however, certain PPAs include a fixed payment for fixed generation capacity over the term of the contract. For Southern Company Gas, these contracts involve energy infrastructure enhancement and upgrade projects for certain governmental customers. Southern Company's unregulated distributed generation business also has partially satisfied performance obligations related to certain fixed price contracts. Revenues from contracts with customers related to these performance obligations remaining at ~~March 31,~~June 30, 2022 are expected to be recognized as follows:


		2022 (remaining)		2023		2024		2025		2026		Thereafter			2022 (remaining)		2023		2024		2025		2026		Thereafter
		(in millions)													(in millions)
Southern Company	Southern Company	$	529	$	459	$	351	$	321	$	307	$	2,345	Southern Company	$	347	$	617	$	414	$	322	$	307	$	2,340
Alabama Power	Alabama Power	24		24		7		5		—		—		Alabama Power	15		24		7		5		—		—
Georgia Power	Georgia Power	55		55		26		22		11		21		Georgia Power	39		63		30		22		11		21

Southern Power	Southern Power	252		294		310		294		299		2,339		Southern Power	184		347		344		294		299		2,334
Southern Company Gas														Southern Company Gas	16		29		29		—		—		—

Revenue expected to be recognized for performance obligations remaining at ~~March 31,~~June 30, 2022 was immaterial for Mississippi ~~Power and Southern Company Gas.~~Power.

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Lease Income

Lease income for the three and six months ended ~~March 31,~~June 30, 2022 and 2021 is as follows:


		Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas			Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
		(in millions)													(in millions)

For the Three Months Ended March 31, 2022
For the Three Months Ended June 30, 2022														For the Three Months Ended June 30, 2022
Lease income - interest income on sales-type leases	Lease income - interest income on sales-type leases	$	6	$	—	$	—	$	4	$	2	$	—	Lease income - interest income on sales-type leases	$	7	$	—	$	—	$	4	$	3	$	—
Lease income - operating leases	Lease income - operating leases	51		20		8		—		21		9		Lease income - operating leases	52		19		8		—		21		9
Variable lease income	Variable lease income	84		—		—		—		90		—		Variable lease income	129		—		—		—		138		—
Total lease income	Total lease income	$	141	$	20	$	8	$	4	$	113	$	9	Total lease income	$	188	$	19	$	8	$	4	$	162	$	9

For the Three Months Ended March 31, 2021
For the Six Months Ended June 30, 2022														For the Six Months Ended June 30, 2022
Lease income - interest income on sales-type leases	Lease income - interest income on sales-type leases	$	3	$	—	$	—	$	3	$	—	$	—	Lease income - interest income on sales-type leases	$	13	$	—	$	—	$	8	$	5	$	—
Lease income - operating leases	Lease income - operating leases	55		21		10		—		21		9		Lease income - operating leases	105		39		16		1		42		18
Variable lease income	Variable lease income	84		—		—		—		90		—		Variable lease income	211		—		—		—		227		—
Total lease income	Total lease income	$	142	$	21	$	10	$	3	$	111	$	9	Total lease income	$	329	$	39	$	16	$	9	$	274	$	18

For the Three Months Ended June 30, 2021														For the Three Months Ended June 30, 2021
Lease income - interest income on sales-type leases														Lease income - interest income on sales-type leases	$	4	$	—	$	—	$	4	$	—	$	—
Lease income - operating leases														Lease income - operating leases	56		21		10		—		21		9
Variable lease income														Variable lease income	128		(1)		—		—		138		—
Total lease income														Total lease income	$	188	$	20	$	10	$	4	$	159	$	9

For the Six Months Ended June 30, 2021														For the Six Months Ended June 30, 2021
Lease income - interest income on sales-type leases														Lease income - interest income on sales-type leases	$	7	$	—	$	—	$	7	$	—	$	—
Lease income - operating leases														Lease income - operating leases	112		41		21		1		42		17
Variable lease income														Variable lease income	212		—		—		—		228		—
Total lease income														Total lease income	$	331	$	41	$	21	$	8	$	270	$	17

Lease payments received under tolling arrangements and PPAs consist of either scheduled payments or variable payments based on the amount of energy produced by the underlying electric generating units. Lease income for Alabama Power and Southern Power is included in wholesale revenues.

(E) CONSOLIDATED ENTITIES AND EQUITY METHOD INVESTMENTS

See Note 7 to the financial statements in Item 8 of the Form 10-K for additional information.

Southern Power

Variable Interest Entities

Southern Power has certain subsidiaries that are determined to be VIEs. Southern Power is considered the primary beneficiary of these VIEs because it controls the most significant activities of the VIEs, including operating and maintaining the respective assets, and has the obligation to absorb expected losses of these VIEs to the extent of its equity interests.

SP Solar and SP Wind

At ~~March 31,~~June 30, 2022 and December 31, 2021, SP Solar had total assets of $6.0 billion and $6.1 billion, respectively, total liabilities of ~~$407~~$386 million and $408 million, respectively, and noncontrolling interests of $1.1 billion. Cash distributions from SP Solar are allocated 67% to Southern Power and 33% to Global Atlantic in accordance with

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(UNAUDITED)

their partnership interest percentage. Under the terms of the limited partnership agreement, distributions without limited partner consent are limited to available cash and SP Solar is obligated to distribute all such available cash to its partners each quarter. Available cash includes all cash generated in the quarter subject to the maintenance of appropriate operating reserves.

At ~~March 31,~~June 30, 2022 and December 31, 2021, SP Wind had total assets of $2.3 billion, total liabilities of ~~$180~~$212 million and $130 million, respectively, and noncontrolling interests of $40 million and $41 ~~million.~~million, respectively. Under the terms of the limited liability agreement, distributions without Class A member consent are limited to available cash and SP Wind is obligated to distribute all such available cash to its members each quarter. Available cash includes all cash generated in the quarter subject to the maintenance of appropriate operating reserves. Cash distributions from SP Wind are generally allocated 60% to Southern Power and 40% to the 3 financial investors in accordance with the limited liability agreement.

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~~(UNAUDITED)~~

Southern Power consolidates both SP Solar and SP Wind, as the primary beneficiary, since it controls the most significant activities of each entity, including operating and maintaining their assets. Certain transfers and sales of the assets in the VIEs are subject to partner consent and the liabilities are non-recourse to the general credit of Southern Power. Liabilities consist of customary working capital items and do not include any long-term debt.

Other Variable Interest Entities

Southern Power has other consolidated VIEs that relate to certain subsidiaries that have either sold noncontrolling interests to tax equity investors or acquired less than a 100% interest from facility developers. These entities are considered VIEs because the arrangements are structured similar to a limited partnership and the noncontrolling members do not have substantive kick-out rights.

At ~~March 31,~~June 30, 2022 and December 31, 2021, the other VIEs had total assets of $1.8 billion and $1.9 billion, respectively, total liabilities of ~~$248~~$253 million and $263 million, respectively, and noncontrolling interests of ~~$876~~$858 million and $886 million, respectively. Under the terms of the partnership agreements, distributions of all available cash are required each month or quarter and additional distributions require partner consent.

Equity Method Investments

At ~~March 31,~~June 30, 2022 and December 31, 2021, Southern Power had equity method investments in wind and battery energy storage projects totaling ~~$56~~$49 million and $86 million, respectively. Earnings (loss) from these investments were immaterial for both periods presented. During the ~~first quarter~~six months ended June 30, 2022, Southern Power sold an equity method ~~investment~~investments in a wind ~~project~~projects and received proceeds ~~of $31~~totaling $38 million. The ~~gain~~gains associated with the ~~transaction was~~sales were immaterial.

Southern Company Gas

Equity Method Investments

The carrying amounts of Southern Company Gas' equity method investments at ~~March 31,~~June 30, 2022 and December 31, 2021 and related earnings (loss) from those investments for the three and six months ended ~~March 31,~~June 30, 2022 and 2021 were as follows:


Investment Balance	Investment Balance	March 31, 2022		December 31, 2021		Investment Balance	June 30, 2022		December 31, 2021
		(in millions)					(in millions)
SNG	SNG	$	1,138	$	1,129	SNG	$	1,099	$	1,129
Other(*)	Other(*)	40		44		Other(*)	35		44
Total	Total	$	1,178	$	1,173	Total	$	1,134	$	1,173

(*)Balance at ~~March 31,~~June 30, 2022 reflects a $4$9 million distribution from PennEast Pipeline.

Three Months Ended March 31,
Earnings from Equity Method Investments 2022 2021
(in millions)
SNG $ 39 $ 38
Other(*)
1 3
Total $ 40 $ 41

~~(*)Earnings primarily result from AFUDC equity recorded by the project entity.~~

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	Three Months Ended June 30,				Six Months Ended June 30,
Earnings (Loss) from Equity Method Investments	2022		2021		2022		2021
	(in millions)
SNG	$	31	$	28	$	70	$	66
PennEast Pipeline(*)	—		(81)		—		(79)
Other	—		1		1		2
Total	$	31	$	(52)	$	71	$	(11)

(*)Includes a pre-tax impairment charge of $82 million ($58 million after tax) for the three and six months ended June 30, 2021. See Note 7 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.

(F) FINANCING AND LEASES

Bank Credit Arrangements

See Note 8 to the financial statements under "Bank Credit Arrangements" in Item 8 of the Form 10-K for additional information.

At ~~March 31,~~June 30, 2022, committed credit arrangements with banks were as follows:


		Expires													Expires
Company	Company	2022		2024		2025		2026		Total		Unused				Expires within One Year		Company	2023		2024		2025		2026		Total		Unused		Expires within One Year
		(in millions)												(in millions)
Southern Company parent	Southern Company parent	$	—	$	—	$	—	$	2,000	$	2,000	$	1,998			$	—	Southern Company parent	$	—	$	—	$	—	$	2,000	$	2,000	$	1,998	$	—
Alabama Power	Alabama Power	—		550		—		700		1,250		1,250				—		Alabama Power	—		550		—		700		1,250		1,250		—
Georgia Power	Georgia Power	—		—		—		1,750		1,750		1,726				—		Georgia Power	—		—		—		1,750		1,750		1,726		—
Mississippi Power	Mississippi Power	—		150		125		—		275		255				—		Mississippi Power	—		150		125		—		275		275		—
Southern Power(a)	Southern Power(a)	—		—		—		600		600		568				—		Southern Power(a)	—		—		—		600		600		568		—
Southern Company Gas(b)	Southern Company Gas(b)	250		—		—		1,500		1,750		1,747				250		Southern Company Gas(b)	250		—		—		1,500		1,750		1,748		250
SEGCO	SEGCO	30		—		—		—		30		30				30		SEGCO	30		—		—		—		30		30		30
Southern Company	Southern Company	$	280	$	700	$	125	$	6,550	$	7,655	$	7,574			$	280	Southern Company	$	280	$	700	$	125	$	6,550	$	7,655	$	7,595	$	280

(a)Does not include Southern Power Company's 2 $75 million continuing letter of credit facilities for standby letters of credit, expiring in 2023 and 2025, respectively, of which $11 million and ~~$19~~$5 million, respectively, was unused at ~~March 31,~~June 30, 2022. Southern Power's subsidiaries are not parties to its bank credit arrangements or letter of credit facilities.

(b)Southern Company Gas, as the parent entity, guarantees the obligations of Southern Company Gas Capital, which is the borrower of $800 million of the credit arrangement expiring in ~~2026 and all $250 million of the arrangement expiring in 2022.~~2026. Southern Company Gas' committed credit arrangement expiring in 2026 also includes $700 million for which Nicor Gas is the borrower and which is restricted for working capital needs of Nicor Gas. Pursuant to the multi-year credit arrangement expiring in 2026, the allocations between Southern Company Gas Capital and Nicor Gas may be adjusted. Nicor Gas is also the borrower of a new $250 million credit arrangement expiring in 2023.

As reflected in the table above, in March 2022, Mississippi Power amended and restated its $125 million revolving credit arrangement, which among other things, extended the maturity date from 2023 to 2025 and allows for borrowing based on term SOFR.

Subject to applicable market conditions, Southern Company and its subsidiaries expect to renew or replace their bank credit arrangements as needed, prior to expiration. In connection therewith, Southern Company and its subsidiaries may extend the maturity dates and/or increase or decrease the lending commitments thereunder.

These bank credit arrangements, as well as the term loan arrangements of the Registrants, Nicor Gas, and SEGCO, contain covenants that limit debt levels and contain cross-acceleration or, in the case of Southern Power, cross-default provisions to other indebtedness (including guarantee obligations) that are restricted only to the indebtedness

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(UNAUDITED)

of the individual company. Such cross-default provisions to other indebtedness would trigger an event of default if Southern Power defaulted on indebtedness or guarantee obligations over a specified threshold. Such cross-acceleration provisions to other indebtedness would trigger an event of default if the applicable borrower defaulted on indebtedness, the payment of which was then accelerated. At ~~March 31,~~June 30, 2022, the Registrants, Nicor Gas, and SEGCO were in compliance with all such covenants. None of the bank credit arrangements contain material adverse change clauses at the time of borrowings.

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~~(UNAUDITED)~~

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 ~~March 31,~~June 30, 2022 was approximately $1.5 billion (comprised of approximately $789 million at Alabama Power, $672 million at Georgia Power, and $34 million at Mississippi Power). In addition, at ~~March 31,~~June 30, 2022, Georgia Power had approximately ~~$330~~$445 million of fixed rate revenue bonds outstanding that are required to be remarketed within the next 12 months.

Equity Units

In May 2022, Southern Company remarketed $862.5 million aggregate principal amount of its Series 2019A Remarketable Junior Subordinated Notes due August 1, 2024 (2019A RSNs) and $862.5 million aggregate principal amount of its Series 2019B Remarketable Junior Subordinated Notes due August 1, 2027 (2019B RSNs), pursuant to the terms of its 2019 Series A Equity Units (Equity Units). In connection with the remarketing, the interest rates on the 2019A RSNs and the 2019B RSNs were reset to 4.475% and 5.113%, respectively, payable on a semi-annual basis, and Southern Company ceased to have the ability to redeem these securities prior to maturity or to defer interest payments. Southern Company did not receive any proceeds from the remarketing, which were used to purchase a portfolio of treasury securities maturing on July 28, 2022. On August 1, 2022, the proceeds from this maturing portfolio will be used to settle the purchase contracts entered into as a part of the Equity Units and Southern Company expects to issue approximately 25.2 million shares of common stock. At June 30, 2022 and December 31, 2021, the 2019A RSNs and the 2019B RSNs are included in long-term debt on Southern Company's consolidated balance sheets.

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 the ~~equity units~~Equity Units issued in 2019. Earnings per share dilution resulting from stock-based compensation plans and the ~~equity units~~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 and "Equity Units" herein for information on the equity units and Note 12 to the financial statements in Item 8 of the Form 10-K for information on stock-based compensation plans. Shares used to compute diluted earnings per share were as follows:


		Three Months Ended March 31,			Three Months Ended June 30,			Six Months Ended June 30,
			2022	2021			2022	2021	2022	2021
			(in millions)				(in millions)
As reported shares	As reported shares		1,063	1,060		As reported shares	1,065	1,061	1,064	1,060
Effect of stock-based compensation	Effect of stock-based compensation		6	6		Effect of stock-based compensation	5	6	5	6

Effect of equity units						Effect of equity units	2	—	1	—
Diluted shares	Diluted shares		1,069	1,066		Diluted shares	1,072	1,067	1,070	1,066

AnFor all periods presented, an immaterial number of stock-based compensation awards was not included in the diluted earnings per share calculation because the awards were ~~anti-dilutive~~anti-dilutive.

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(UNAUDITED)

Southern Company Leveraged Lease

See Note 9 to the financial statements in Item 8 of the Form 10-K for information on a leveraged lease agreement related to energy generation. On June 30, 2022, the Southern Holdings subsidiary operating the generating plant for the ~~three months ended March 31,~~lessee provided notice to the lessee to terminate the related operating and maintenance agreement effective June 30, 2023. The parties to the lease agreement are currently negotiating a potential restructuring, which could result in rescission of the termination notice. The ultimate outcome of this matter cannot be determined at this time but is not expected to have a material impact on Southern Company's financial statements.

Georgia Power Lease Modification

See Note 9 to the financial statements in Item 8 of the Form 10-K for information on Georgia Power's leases. Subsequent to June 30, 2022, Georgia Power recognized a lease modification related to an existing non-affiliate PPA which converted from an operating lease to a finance lease upon its approval in the 2022 IRP. As a result, Georgia Power will remove operating lease right-of-use assets, net of amortization of $17 million and ~~2021.~~lease obligations of $18 million maturing through 2024 and will record finance lease right-of-use assets of $110 million and lease obligations of $111 million maturing through 2039.

(G) INCOME TAXES

See Note 10 to the financial statements in Item 8 of the Form 10-K for additional tax information.

Current and Deferred Income Taxes

Tax Credit and Net Operating Loss Carryforwards

Southern Company had federal ITC and PTC carryforwards (primarily related to Southern Power) totaling $0.9 billion at June 30, 2022 compared to $1.2 billion at December 31, 2021.

The federal PTC and ITC carryforwards begin expiring in 2032, but are expected to be fully utilized by 2025. The utilization of each Registrant's estimated tax credit and state net operating loss carryforwards and related valuation allowances could be impacted by numerous factors, including the acquisition of additional renewable projects, ~~an increase in Georgia Power's ownership interest percentage in Plant Vogtle Units 3 and 4,~~ the purchase of rights to additional PTCs of Plant Vogtle Units 3 and 4 pursuant to certain joint ownership agreements, an increase in Georgia Power's ownership interest percentage in Plant Vogtle Units 3 and 4, changes in taxable income projections, and potential income tax rate changes. See Note (B) and Note 2 to the financial statements in Item 8 of the Form 10-K under "Georgia Power – Nuclear Construction" for additional information on Plant Vogtle Units 3 and 4.

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~~(UNAUDITED)~~

Effective Tax Rate

Southern Company's effective tax rate is typically lower than the statutory rate due to employee stock plans' dividend deduction, non-taxable AFUDC equity at the traditional electric operating companies, flowback of excess deferred income taxes at the regulated utilities, and federal income tax benefits from ITCs and PTCs primarily at Southern Power.

Details of significant changes in the effective tax rate for the applicable Registrants are provided herein.

Southern Company

Southern Company's effective tax rate was 18.7% for the six months ended June 30, 2022 compared to 10.7% for the corresponding period in 2021. The effective tax rate increase was primarily due to higher pre-tax earnings and an adjustment related to a prior year state tax credit carryforward at Georgia Power in 2022.

Georgia Power

Georgia Power's effective tax rate was 16.4% for the six months ended June 30, 2022 compared to a tax benefit rate of (6.9)% for the corresponding period in 2021. The effective tax rate increase was primarily due to higher pre-tax earnings and an adjustment related to a prior year state tax credit carryforward in 2022.

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(UNAUDITED)

Mississippi Power

Mississippi Power's effective tax rate was ~~16.4%~~18.8% for the ~~three~~six months ended ~~March 31,~~June 30, 2022 compared to ~~8.4%~~12.6% for the corresponding period in 2021. The effective tax rate increase was primarily due to a decrease in the flowback of excess deferred income taxes ~~beginning~~ in ~~April 2021.~~2022.

Southern Power

Southern Power's effective tax ~~benefit~~ rate was ~~(80.0)%~~11.2% for the ~~three~~six months ended ~~March 31,~~June 30, 2022 compared to ~~(17.3)~~a tax benefit rate of (12.8)% for the corresponding period in 2021. The effective tax rate ~~decrease~~increase was primarily due to ~~lower~~higher pre-tax earnings ~~and higher wind PTCs~~ in 2022 ~~partially offset by changes~~and a change in state apportionment methodology resulting from tax legislation enacted by the State of Alabama in ~~February 2021.~~the first quarter 2021, partially offset by higher wind PTCs in 2022.

(H) RETIREMENT BENEFITS

The Southern Company system has a qualified defined benefit, trusteed, pension plan covering substantially all employees, with the exception of employees at PowerSecure. The qualified pension plan is funded in accordance with requirements of the Employee Retirement Income Security Act of 1974, as amended (ERISA). No mandatory contributions to the qualified pension plan are anticipated for the year ending December 31, 2022. The Southern Company system also provides certain non-qualified defined benefits for a select group of management and highly compensated employees, which are funded on a cash basis. In addition, the Southern Company system provides certain medical care and life insurance benefits for retired employees through other postretirement benefit plans. The traditional electric operating companies fund other postretirement trusts to the extent required by their respective regulatory commissions. Southern Company Gas has a separate unfunded supplemental retirement health care plan that provides medical care and life insurance benefits to employees of discontinued businesses.

During the first quarter 2022, the qualified pension plan achieved the predetermined funding threshold whereby the asset allocation was adjusted to invest a larger portion of the portfolio in fixed rate debt securities.

See Note 11 to the financial statements in Item 8 of the Form 10-K for additional information.

On each Registrant's condensed statements of income, the service cost component of net periodic benefit costs is included in other operations and maintenance expenses and all other components of net periodic benefit costs are included in other income (expense), net. Components of the net periodic benefit costs for the three and six months ended ~~March 31,~~June 30, 2022 and 2021 are presented in the following tables.

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		Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas			Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
		(in millions)													(in millions)

Three Months Ended March 31, 2022
Three Months Ended June 30, 2022														Three Months Ended June 30, 2022
Pension Plans	Pension Plans													Pension Plans
Service cost	Service cost	$	103	$	25	$	26	$	4	$	2	$	9	Service cost	$	103	$	24	$	26	$	4	$	3	$	8
Interest cost	Interest cost	102		24		31		5		2		7		Interest cost	102		24		30		4		1		7
Expected return on plan assets	Expected return on plan assets	(316)		(77)		(99)		(15)		(4)		(22)		Expected return on plan assets	(317)		(75)		(100)		(14)		(4)		(24)
Amortization:	Amortization:													Amortization:
Prior service costs	Prior service costs	—		—		—		—		—		(1)		Prior service costs	—		—		1		—		—		—
Regulatory asset	Regulatory asset	—		—		—		—		—		4		Regulatory asset	—		—		—		—		—		4
Net loss	Net loss	60		16		18		3		1		2		Net loss	60		15		19		4		—		1
Net periodic pension cost (income)	Net periodic pension cost (income)	$	(51)	$	(12)	$	(24)	$	(3)	$	1	$	(1)	Net periodic pension cost (income)	$	(52)	$	(12)	$	(24)	$	(2)	$	—	$	(4)

Postretirement Benefits	Postretirement Benefits													Postretirement Benefits
Service cost	Service cost	$	6	$	1	$	2	$	—	$	—	$	—	Service cost	$	5	$	2	$	1	$	—	$	—	$	—
Interest cost	Interest cost	10		3		4		—		—		1		Interest cost	11		2		3		1		—		1
Expected return on plan assets	Expected return on plan assets	(20)		(8)		(7)		—		—		(2)		Expected return on plan assets	(20)		(8)		(6)		(1)		—		(1)
Amortization:	Amortization:													Amortization:

Regulatory asset	Regulatory asset	—		—		—		—		—		2		Regulatory asset	—		—		—		—		—		1
Net loss														Net loss	—		—		1		—		—		—
Net periodic postretirement benefit cost (income)														Net periodic postretirement benefit cost (income)	$	(4)	$	(4)	$	(1)	$	—	$	—	$	1

Six Months Ended June 30, 2022														Six Months Ended June 30, 2022
Pension Plans														Pension Plans
Service cost														Service cost	$	206	$	49	$	52	$	8	$	5	$	17
Interest cost														Interest cost	204		48		61		9		3		14
Expected return on plan assets														Expected return on plan assets	(633)		(152)		(199)		(29)		(8)		(46)
Amortization:														Amortization:
Prior service costs														Prior service costs	—		—		1		—		—		(1)
Regulatory asset														Regulatory asset	—		—		—		—		—		8
Net loss														Net loss	120		31		37		7		1		3
Net periodic pension cost (income)														Net periodic pension cost (income)	$	(103)	$	(24)	$	(48)	$	(5)	$	1	$	(5)

Postretirement Benefits														Postretirement Benefits
Service cost														Service cost	$	11	$	3	$	3	$	—	$	—	$	1
Interest cost														Interest cost	21		5		7		1		—		2
Expected return on plan assets														Expected return on plan assets	(40)		(16)		(13)		(1)		—		(3)
Amortization:														Amortization:

Regulatory asset														Regulatory asset	—		—		—		—		—		3
Net (gain)/loss														Net (gain)/loss	—		—		1		—		—		(1)
Net periodic postretirement benefit cost (income)	Net periodic postretirement benefit cost (income)	$	(4)	$	(4)	$	(1)	$	—	$	—	$	1	Net periodic postretirement benefit cost (income)	$	(8)	$	(8)	$	(2)	$	—	$	—	$	2

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Southern
Company Alabama
Power Georgia
Power Mississippi
Power Southern Power Southern Company Gas
(in millions)
Three Months Ended March 31, 2021
Pension Plans
Service cost $ 109 $ 26 $ 28 $ 4 $ 2 $ 9
Interest cost 87 20 26 4 1 6
Expected return on plan assets (298) (72) (94) (14) (3) (21)
Amortization:
Prior service costs — — — — — (1)
Regulatory asset — — — — — 4
Net loss 78 21 25 4 1 3
Net periodic pension cost (income) $ (24) $ (5) $ (15) $ (2) $ 1 $ —
Postretirement Benefits
Service cost $ 6 $ 1 $ 2 $ — $ — $ —
Interest cost 8 2 3 — — 1
Expected return on plan assets (19) (7) (7) — — (2)
Amortization:
Regulatory asset — — — — — 2
Net (gain)/loss 1 — 1 — — (1)
Net periodic postretirement benefit cost (income) $ (4) $ (4) $ (1) $ — $ — $ —


	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Three Months Ended June 30, 2021
Pension Plans
Service cost	$	108	$	25	$	28	$	5	$	3	$	9
Interest cost	86		21		26		4		1		6
Expected return on plan assets	(297)		(71)		(94)		(13)		(4)		(22)
Amortization:
Prior service costs	—		—		1		—		—		—
Regulatory asset	—		—		—		—		—		4
Net loss	79		20		25		3		1		3
Net periodic pension cost (income)	$	(24)	$	(5)	$	(14)	$	(1)	$	1	$	—

Postretirement Benefits
Service cost	$	6	$	2	$	1	$	—	$	—	$	1
Interest cost	9		2		3		1		—		1
Expected return on plan assets	(19)		(7)		(6)		(1)		—		(2)
Amortization:
Prior service costs	(1)		—		—		—		—		—
Regulatory asset	—		—		—		—		—		1
Net loss	1		—		—		—		—		—
Net periodic postretirement benefit cost (income)	$	(4)	$	(3)	$	(2)	$	—	$	—	$	1

Six Months Ended June 30, 2021
Pension Plans
Service cost	$	217	$	51	$	56	$	9	$	5	$	18
Interest cost	173		41		52		8		2		12
Expected return on plan assets	(595)		(143)		(188)		(27)		(7)		(43)
Amortization:
Prior service costs	—		—		1		—		—		(1)
Regulatory asset	—		—		—		—		—		8
Net loss	157		41		50		7		2		6
Net periodic pension cost (income)	$	(48)	$	(10)	$	(29)	$	(3)	$	2	$	—

Postretirement Benefits
Service cost	$	12	$	3	$	3	$	—	$	—	$	1
Interest cost	17		4		6		1		—		2
Expected return on plan assets	(38)		(14)		(13)		(1)		—		(4)
Amortization:
Prior service costs	(1)		—		—		—		—		—
Regulatory asset	—		—		—		—		—		3
Net (gain)/loss	2		—		1		—		—		(1)
Net periodic postretirement benefit cost (income)	$	(8)	$	(7)	$	(3)	$	—	$	—	$	1

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(UNAUDITED)

(I) FAIR VALUE MEASUREMENTS

At ~~March 31,~~June 30, 2022, assets and liabilities measured at fair value on a recurring basis during the period, together with their associated level of the fair value hierarchy, were as follows:


		Fair Value Measurements Using:											Fair Value Measurements Using:
At March 31, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Net Asset Value as a Practical Expedient (NAV)		Total
At June 30, 2022												At June 30, 2022	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Net Asset Value as a Practical Expedient (NAV)		Total
		(in millions)											(in millions)
Southern Company	Southern Company											Southern Company
Assets:	Assets:											Assets:
Energy-related derivatives(a)	Energy-related derivatives(a)	$	74	$	473	$	—	$	—	$	547	Energy-related derivatives(a)	$	43	$	408	$	—	$	—	$	451
Interest rate derivatives		—		17		—		—		17

Investments in trusts:(b)(c)	Investments in trusts:(b)(c)											Investments in trusts:(b)(c)
Domestic equity	Domestic equity	754		202		—		—		956		Domestic equity	643		168		—		—		811
Foreign equity	Foreign equity	143		167		—		—		310		Foreign equity	122		144		—		—		266
U.S. Treasury and government agency securities	U.S. Treasury and government agency securities	—		290		—		—		290		U.S. Treasury and government agency securities	—		273		—		—		273
Municipal bonds	Municipal bonds	—		53		—		—		53		Municipal bonds	—		56		—		—		56
Pooled funds – fixed income	Pooled funds – fixed income	—		10		—		—		10		Pooled funds – fixed income	—		9		—		—		9
Corporate bonds	Corporate bonds	1		490		—		—		491		Corporate bonds	1		445		—		—		446
Mortgage and asset backed securities	Mortgage and asset backed securities	—		88		—		—		88		Mortgage and asset backed securities	—		89		—		—		89
Private equity	Private equity	—		—		—		156		156		Private equity	—		—		—		164		164
Cash and cash equivalents	Cash and cash equivalents	3		—		—		—		3		Cash and cash equivalents	3		—		—		—		3
Other	Other	42		25		—		—		67		Other	36		17		—		—		53
Cash equivalents	Cash equivalents	1,182		17		—		—		1,199		Cash equivalents	1,058		10		—		—		1,068
Other investments	Other investments	9		32		—		—		41		Other investments	9		27		—		—		36
Total	Total	$	2,208	$	1,864	$	—	$	156	$	4,228	Total	$	1,915	$	1,646	$	—	$	164	$	3,725
Liabilities:	Liabilities:											Liabilities:
Energy-related derivatives(a)	Energy-related derivatives(a)	$	3	$	7	$	—	$	—	$	10	Energy-related derivatives(a)	$	16	$	88	$	—	$	—	$	104
Interest rate derivatives	Interest rate derivatives	—		139		—		—		139		Interest rate derivatives	—		214		—		—		214
Foreign currency derivatives	Foreign currency derivatives	—		130		—		—		130		Foreign currency derivatives	—		228		—		—		228
Contingent consideration	Contingent consideration	—		—		14		—		14		Contingent consideration	—		—		14		—		14
Other	Other	—		13		—		—		13		Other	—		13		—		—		13
Total	Total	$	3	$	289	$	14	$	—	$	306	Total	$	16	$	543	$	14	$	—	$	573

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		Fair Value Measurements Using:											Fair Value Measurements Using:
At March 31, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Net Asset Value as a Practical Expedient (NAV)		Total
At June 30, 2022												At June 30, 2022	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Net Asset Value as a Practical Expedient (NAV)		Total
		(in millions)											(in millions)
Alabama Power	Alabama Power											Alabama Power
Assets:	Assets:											Assets:
Energy-related derivatives	Energy-related derivatives	$	—	$	128	$	—	$	—	$	128	Energy-related derivatives	$	—	$	131	$	—	$	—	$	131

Nuclear decommissioning trusts:(b)	Nuclear decommissioning trusts:(b)											Nuclear decommissioning trusts:(b)
Domestic equity	Domestic equity	452		193		—		—		645		Domestic equity	391		159		—		—		550
Foreign equity	Foreign equity	143		—		—		—		143		Foreign equity	122		—		—		—		122
U.S. Treasury and government agency securities	U.S. Treasury and government agency securities	—		21		—		—		21		U.S. Treasury and government agency securities	—		17		—		—		17
Municipal bonds	Municipal bonds	—		2		—		—		2		Municipal bonds	—		2		—		—		2
Corporate bonds	Corporate bonds	1		253		—		—		254		Corporate bonds	1		227		—		—		228
Mortgage and asset backed securities	Mortgage and asset backed securities	—		20		—		—		20		Mortgage and asset backed securities	—		20		—		—		20
Private equity	Private equity	—		—		—		156		156		Private equity	—		—		—		164		164
Other	Other	14		—		—		—		14		Other	20		—		—		—		20
Cash equivalents	Cash equivalents	1,129		17		—		—		1,146		Cash equivalents	677		10		—		—		687
Other investments	Other investments	—		32		—		—		32		Other investments	—		27		—		—		27
Total	Total	$	1,739	$	666	$	—	$	156	$	2,561	Total	$	1,211	$	593	$	—	$	164	$	1,968
Liabilities:	Liabilities:											Liabilities:
Energy-related derivatives	Energy-related derivatives	$	—	$	2	$	—	$	—	$	2	Energy-related derivatives	$	—	$	23	$	—	$	—	$	23

Georgia Power	Georgia Power											Georgia Power
Assets:	Assets:											Assets:
Energy-related derivatives	Energy-related derivatives	$	—	$	179	$	—	$	—	$	179	Energy-related derivatives	$	—	$	137	$	—	$	—	$	137
Interest rate derivatives		—		12		—		—		12

Nuclear decommissioning trusts:(b)(c)	Nuclear decommissioning trusts:(b)(c)											Nuclear decommissioning trusts:(b)(c)
Domestic equity	Domestic equity	302		1		—		—		303		Domestic equity	252		1		—		—		253
Foreign equity	Foreign equity	—		165		—		—		165		Foreign equity	—		142		—		—		142
U.S. Treasury and government agency securities	U.S. Treasury and government agency securities	—		269		—		—		269		U.S. Treasury and government agency securities	—		256		—		—		256
Municipal bonds	Municipal bonds	—		51		—		—		51		Municipal bonds	—		54		—		—		54
Corporate bonds	Corporate bonds	—		237		—		—		237		Corporate bonds	—		218		—		—		218
Mortgage and asset backed securities	Mortgage and asset backed securities	—		68		—		—		68		Mortgage and asset backed securities	—		69		—		—		69
Other	Other	28		25		—		—		53		Other	16		17		—		—		33

Cash equivalents												Cash equivalents	98		—		—		—		98
Total	Total	$	330	$	1,007	$	—	$	—	$	1,337	Total	$	366	$	894	$	—	$	—	$	1,260
Liabilities:	Liabilities:											Liabilities:
Energy-related derivatives	Energy-related derivatives	$	—	$	1	$	—	$	—	$	1	Energy-related derivatives	$	—	$	29	$	—	$	—	$	29

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		Fair Value Measurements Using:														Fair Value Measurements Using:
At March 31, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Net Asset Value as a Practical Expedient (NAV)			Total
At June 30, 2022															At June 30, 2022	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Net Asset Value as a Practical Expedient (NAV)			Total
		(in millions)														(in millions)
Mississippi Power	Mississippi Power														Mississippi Power
Assets:	Assets:														Assets:
Energy-related derivatives	Energy-related derivatives	$	—		$	138		$	—	$	—		$	138	Energy-related derivatives	$	—		$	121		$	—	$	—		$	121

Liabilities:	Liabilities:														Liabilities:
Energy-related derivatives	Energy-related derivatives	$	—		$	2		$	—	$	—		$	2	Energy-related derivatives	$	—		$	14		$	—	$	—		$	14

Southern Power	Southern Power														Southern Power
Assets:	Assets:														Assets:
Energy-related derivatives	Energy-related derivatives	$	—		$	8		$	—	$	—		$	8	Energy-related derivatives	$	—		$	6		$	—	$	—		$	6

Liabilities:	Liabilities:														Liabilities:

Energy-related derivatives															Energy-related derivatives	$	—		$	1		$	—	$	—		$	1
Foreign currency derivatives	Foreign currency derivatives	$	—		$	43		$	—	$	—		$	43	Foreign currency derivatives	—			45			—		—			45
Contingent consideration	Contingent consideration	—			—			14		—			14		Contingent consideration	—			—			14		—			14
Other	Other	—			13			—		—			13		Other	—			13			—		—			13
Total	Total	$	—		$	56		$	14	$	—		$	70	Total	$	—		$	59		$	14	$	—		$	73

Southern Company Gas	Southern Company Gas														Southern Company Gas
Assets:	Assets:														Assets:
Energy-related derivatives(a)	Energy-related derivatives(a)	$	74		$	20		$	—	$	—		$	94	Energy-related derivatives(a)	$	43		$	13		$	—	$	—		$	56

Non-qualified deferred compensation trusts:	Non-qualified deferred compensation trusts:														Non-qualified deferred compensation trusts:
Domestic equity	Domestic equity	—			8			—		—			8		Domestic equity	—			8			—		—			8
Foreign equity	Foreign equity	—			2			—		—			2		Foreign equity	—			2			—		—			2
Pooled funds – fixed income	Pooled funds – fixed income	—			10			—		—			10		Pooled funds – fixed income	—			9			—		—			9
Cash equivalents	Cash equivalents	3			—			—		—			3		Cash equivalents	3			—			—		—			3

Cash equivalents and restricted cash															Cash equivalents and restricted cash	192			—			—		—			192

Total	Total	$	77		$	40		$	—	$	—		$	117	Total	$	238		$	32		$	—	$	—		$	270
Liabilities:	Liabilities:														Liabilities:
Energy-related derivatives(a)	Energy-related derivatives(a)	$	3		$	1		$	—	$	—		$	4	Energy-related derivatives(a)	$	16		$	20		$	—	$	—		$	36
Interest rate derivatives	Interest rate derivatives	—			36			—		—			36		Interest rate derivatives	—			62			—		—			62

Total	Total	$	3	0	$	37	0	$	—	$	—	0	$	40	Total	$	16	0	$	82	0	$	—	$	—	0	$	98

(a)Excludes cash collateral of ~~$36~~$13 million.

(b)Excludes receivables related to investment income, pending investment sales, payables related to pending investment purchases, and currencies. See Note 6 to the financial statements in Item 8 of the Form 10-K for additional information.

(c)Includes investment securities pledged to creditors and collateral received and excludes payables related to the securities lending program. At ~~March 31,~~June 30, 2022, approximately ~~$72~~$65 million of the fair market value of Georgia Power's nuclear decommissioning trust funds' securities were on loan to creditors under the funds' managers' securities lending program. See Note 6 to the financial statements in Item 8 of the Form 10-K for additional information.

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Southern Company, Alabama Power, and Georgia Power continue to elect the option to fair value investment securities held in the nuclear decommissioning trust funds. The fair value of the funds, including reinvested interest and dividends and excluding the funds' expenses, increased (decreased) by the amounts shown in the table below for the three and six months ended ~~March 31,~~June 30, 2022 and 2021. The changes were recorded as a change to the regulatory assets and liabilities related to AROs for Georgia Power and Alabama Power, respectively.


Fair value increases (decreases)	Fair value increases (decreases)	Three Months Ended March 31, 2022		Three Months Ended March 31, 2021		Fair value increases (decreases)	Three Months Ended June 30, 2022		Three Months Ended June 30, 2021		Six Months Ended June 30, 2022		Six Months Ended June 30, 2021
		(in millions)					(in millions)
Southern Company	Southern Company	$	(150)	$	39	Southern Company	$	(230)	$	125	$	(380)	$	164
Alabama Power	Alabama Power	(67)		41		Alabama Power	(125)		77		(192)		118
Georgia Power	Georgia Power	(83)		(2)		Georgia Power	(105)		48		(188)		46

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 it is primarily obligated to make generation-based payments to the seller, which commenced at the commercial operation of the respective facility and continue through 2026. The obligations are categorized as Level 3 under Fair Value Measurements as the fair value is determined using significant unobservable inputs for the forecasted facility generation in MW-hours, as well as other inputs such as a fixed dollar amount per MW-hour, and a discount rate. The fair value of ~~contingent consideration reflects the net present value of expected payments and any periodic change arising from forecasted generation is expected to be immaterial.~~

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contingent consideration reflects the net present value of expected payments and any periodic change arising from forecasted generation is expected to be immaterial.

Southern Power also has payment obligations through 2040 whereby it must reimburse the transmission owners for interconnection facilities and network upgrades constructed to support connection of a Southern Power generating facility to the transmission system. The obligations are categorized as Level 2 under Fair Value Measurements as the fair value is determined using observable inputs for the contracted amounts and reimbursement period, as well as a discount rate. The fair value of the obligations reflects the net present value of expected payments.

"Other investments" 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.

At ~~March 31,~~June 30, 2022, the fair value measurements of private equity investments held in Alabama Power's nuclear decommissioning trusts that are calculated at net asset value per share (or its equivalent) as a practical expedient totaled ~~$156~~$164 million and unfunded commitments related to the private equity investments totaled ~~$84~~$91 million. Private equity investments include high-quality private equity funds across several market sectors and funds that invest in real estate assets. Private equity funds do not have redemption rights. Distributions from these funds will be received as the underlying investments in the funds are liquidated.

At ~~March 31,~~June 30, 2022, other financial instruments for which the carrying amount did not equal fair value were as follows:


		Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas(*)			Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas(*)
		(in billions)													(in billions)
Long-term debt, including securities due within one year:	Long-term debt, including securities due within one year:													Long-term debt, including securities due within one year:
Carrying amount	Carrying amount	$	51.6	$	9.8	$	13.2	$	1.5	$	3.7	$	6.9	Carrying amount	$	52.0	$	9.8	$	14.6	$	1.5	$	3.0	$	6.8
Fair value	Fair value	51.9		10.0		13.5		1.5		3.8		6.9		Fair value	48.0		9.0		13.7		1.3		2.9		6.2

(*)The long-term debt of Southern Company Gas is recorded at amortized cost, including the fair value adjustments at the effective date of the 2016 merger with Southern Company. Southern Company Gas amortizes the fair value adjustments over the remaining lives of the respective bonds, the latest being through 2043.

The fair values are determined using Level 2 measurements and are based on quoted market prices for the same or similar issues or on the current rates available to the Registrants.

(J) DERIVATIVES

The Registrants are exposed to market risks, including commodity price risk, interest rate risk, weather risk, and occasionally foreign currency exchange rate risk. To manage the volatility attributable to these exposures, each company nets its exposures, where possible, to take advantage of natural offsets and enters into various derivative transactions for the remaining exposures pursuant to each company's policies in areas such as counterparty exposure and risk management practices. Prior to the sale of Sequent on July 1, 2021, Southern Company Gas' wholesale gas operations used various contracts in its commercial activities that generally met the definition of derivatives. For the traditional electric operating companies, Southern Power, and Southern Company Gas' other businesses, each company's policy is that derivatives are to be used primarily for hedging purposes and mandates strict adherence to all applicable risk management policies. Derivative positions are monitored using techniques including, but not limited to, market valuation, value at risk, stress testing, and sensitivity analysis. Derivative instruments are recognized at fair value in the balance sheets as either assets or liabilities and are presented on a net basis. See Note (I) for additional fair value information. In the statements of cash flows, any cash impacts of settled energy-related and interest rate derivatives are recorded as operating activities. Any cash impacts of settled foreign currency derivatives are classified as operating or financing activities to correspond with the classification of the hedged interest or principal, respectively. See Note 1 to the financial statements under "Financial Instruments" in Item 8 of

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(UNAUDITED)

the Form 10-K for additional information. See Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information regarding the sale of Sequent.

~~Table of ContentsIndex to Financial Statements~~

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~~(UNAUDITED)~~

Energy-Related Derivatives

The Subsidiary Registrants enter into energy-related derivatives to hedge exposures to electricity, natural gas, and other fuel price changes. However, due to cost-based rate regulations and other various cost recovery mechanisms, the traditional electric operating companies and the natural gas distribution utilities have limited exposure to market volatility in energy-related commodity prices. Each of the traditional electric operating companies and certain of the natural gas distribution utilities of Southern Company Gas manage fuel-hedging programs, implemented per the guidelines of their respective state PSCs or other applicable state regulatory agencies, through the use of financial derivative contracts, which are expected to continue to mitigate price volatility. The traditional electric operating companies (with respect to wholesale generating capacity) and Southern Power have limited exposure to market volatility in energy-related commodity prices because their long-term sales contracts shift substantially all fuel cost responsibility to the purchaser. However, the traditional electric operating companies and Southern Power may be exposed to market volatility in energy-related commodity prices to the extent any uncontracted capacity is used to sell electricity. Southern Company Gas retains exposure to price changes that can, in a volatile energy market, be material and can adversely affect its results of operations.

Southern Company Gas also enters into weather derivative contracts as economic hedges in the event of warmer-than-normal weather. Exchange-traded options are carried at fair value, with changes reflected in operating revenues. Non-exchange-traded options are accounted for using the intrinsic value method. Changes in the intrinsic value for non-exchange-traded contracts are reflected in operating revenues.

Energy-related derivative contracts are accounted for under one of three methods:

•Regulatory Hedges – Energy-related derivative contracts designated as regulatory hedges relate primarily to the traditional electric operating companies' and the natural gas distribution utilities' fuel-hedging programs, where gains and losses are initially recorded as regulatory liabilities and assets, respectively, and then are included in fuel expense as the underlying fuel is used in operations and ultimately recovered through an approved cost recovery mechanism.

•Cash Flow Hedges – Gains and losses on energy-related derivatives designated as cash flow hedges (which are mainly used to hedge anticipated purchases and sales) are initially deferred in accumulated OCI before being recognized in the statements of income in the same period and in the same income statement line item as the earnings effect of the hedged transactions.

•Not Designated – Gains and losses on energy-related derivative contracts that are not designated or fail to qualify as hedges are recognized in the statements of income as incurred.

Some energy-related derivative contracts require physical delivery as opposed to financial settlement, and this type of derivative is both common and prevalent within the electric and natural gas industries. When an energy-related derivative contract is settled physically, any cumulative unrealized gain or loss is reversed and the contract price is recognized in the respective line item representing the actual price of the underlying goods being delivered.

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At ~~March 31,~~June 30, 2022, the net volume of energy-related derivative contracts for natural gas positions, together with the longest hedge date over which the respective entity is hedging its exposure to the variability in future cash flows for forecasted transactions and the longest non-hedge date for derivatives not designated as hedges, were as follows:


		Net Purchased mmBtu	Longest Hedge Date	Longest Non-Hedge Date		Net Purchased mmBtu	Longest Hedge Date	Longest Non-Hedge Date
		(in millions)				(in millions)
Southern Company(*)	Southern Company(*)	279	2030	2025	Southern Company(*)	273	2030	2025
Alabama Power	Alabama Power	65	2025	—	Alabama Power	65	2026	—
Georgia Power	Georgia Power	75	2024	—	Georgia Power	75	2025	—
Mississippi Power	Mississippi Power	71	2026	—	Mississippi Power	71	2026	—
Southern Power	Southern Power	4	2030	—	Southern Power	4	2030	—
Southern Company Gas(*)	Southern Company Gas(*)	64	2024	2025	Southern Company Gas(*)	58	2024	2025

(*)Southern Company Gas' derivative instruments include both long and short natural gas positions. A long position is a contract to purchase natural gas and a short position is a contract to sell natural gas. Southern Company Gas' volume represents the net of long natural gas positions of ~~66.2~~64.4 million mmBtu and short natural gas positions of ~~2.6~~6.4 million mmBtu at ~~March 31,~~June 30, 2022, which is also included in Southern Company's total volume.

In addition to the volumes discussed above, the traditional electric operating companies and Southern Power enter into physical natural gas supply contracts that provide the option to sell back excess natural gas due to operational constraints. The maximum expected volume of natural gas subject to such a feature is 1815 million mmBtu for Southern Company, which includes 4 million mmBtu for Alabama Power, 65 million mmBtu for Georgia Power, 32 million mmBtu for Mississippi Power, and 54 million mmBtu for Southern Power.

For cash flow hedges of energy-related derivatives, the estimated pre-tax gains expected to be reclassified from accumulated OCI to earnings for the 12-month period ending ~~March 31,~~June 30, 2023 ~~are $29~~total $12 million for both Southern Company ~~$26 million for~~and Southern Company Gas and are immaterial for ~~all~~the other Registrants.

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Interest Rate Derivatives

Southern Company and certain subsidiaries may enter into interest rate derivatives to hedge exposure to changes in interest rates. Derivatives related to existing variable rate securities or forecasted transactions are accounted for as cash flow hedges where the derivatives' fair value gains or losses are recorded in OCI and are reclassified into earnings at the same time and presented on the same income statement line item as the earnings effect of the hedged transactions. Derivatives related to existing fixed rate securities are accounted for as fair value hedges, where the derivatives' fair value gains or losses and hedged items' fair value gains or losses are both recorded directly to earnings on the same income statement line item. Fair value gains or losses on derivatives that are not designated or fail to qualify as hedges are recognized in the statements of income as incurred.

At ~~March 31,~~June 30, 2022, the following interest rate derivatives were outstanding:


		Notional Amount		Interest Rate Received	Weighted Average Interest Rate Paid	Hedge Maturity Date	Fair Value Gain (Loss) at March 31, 2022			Notional Amount		Interest Rate Received	Weighted Average Interest Rate Paid	Hedge Maturity Date	Fair Value Gain (Loss) at June 30, 2022
		(in millions)					(in millions)			(in millions)					(in millions)
Cash Flow Hedges of Forecasted Debt

Georgia Power		$	200	1.87%	—	February 2032	$	8
Georgia Power		100		2.27%	—	November 2051	4

Cash Flow Hedges of Existing Debt	Cash Flow Hedges of Existing Debt								Cash Flow Hedges of Existing Debt
Southern Company parent		100		2.58%	—	April 2027	(1)
Alabama Power									Alabama Power	$	50	—	3.18%	August 2027	$	—
Southern Company Gas									Southern Company Gas	250		—	3.26%	August 2032	(5)
Fair Value Hedges of Existing Debt	Fair Value Hedges of Existing Debt								Fair Value Hedges of Existing Debt
Southern Company parent	Southern Company parent	400		1.75%	1-month LIBOR + 0.68%	March 2028	(29)		Southern Company parent	400		1.75%	1-month LIBOR + 0.68%	March 2028	(39)
Southern Company parent	Southern Company parent	1,000		3.70%	1-month LIBOR + 2.36%	April 2030	(69)		Southern Company parent	1,000		3.70%	1-month LIBOR + 2.36%	April 2030	(113)
Southern Company Gas	Southern Company Gas	500		1.75%	1-month LIBOR + 0.38%	January 2031	(35)		Southern Company Gas	500		1.75%	1-month LIBOR + 0.38%	January 2031	(57)
Southern Company	Southern Company	$	2,300				$	(122)	Southern Company	$	2,200				$	(214)

For cash flow ~~hedge~~hedges of interest rate derivatives, the estimated pre-tax gains (losses) expected to be reclassified from accumulated OCI to interest expense for the 12-month period ending ~~March 31,~~June 30, 2023 total ~~$(20)~~$(16) million for Southern Company and are immaterial for ~~all~~the other Registrants. Deferred gains and losses related to interest rate derivatives are expected to be amortized into earnings through ~~2051~~2052 for Southern Company, Alabama Power, and Georgia Power, 2028 for Mississippi Power, and 2046 for Southern Company Gas.

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Foreign Currency Derivatives

Southern Company and certain subsidiaries, including Southern Power, may enter into foreign currency derivatives to hedge exposure to changes in foreign currency exchange rates, such as that arising from the issuance of debt denominated in a currency other than U.S. dollars. Derivatives related to forecasted transactions are accounted for as cash flow hedges where the derivatives' fair value gains or losses are recorded in OCI and are reclassified into earnings at the same time and on the same income statement line as the earnings effect of the hedged transactions, including foreign currency gains or losses arising from changes in the U.S. currency exchange rates. Derivatives related to existing fixed rate securities are accounted for as fair value hedges, where the derivatives' fair value gains or losses and hedged items' fair value gains or losses are both recorded directly to earnings on the same income statement line item, including foreign currency gains or losses arising from changes in the U.S. currency exchange rates. Southern Company has elected to exclude the cross-currency basis spread from the assessment of effectiveness in the fair value hedges of its foreign currency risk and record any difference between the change in the fair value of the excluded components and the amounts recognized in earnings as a component of OCI.

At ~~March 31,~~June 30, 2022, the following foreign currency derivatives were outstanding:


		Pay Notional		Pay Rate	Receive Notional		Receive Rate	Hedge Maturity Date	Fair Value Gain (Loss) at March 31, 2022			Pay Notional		Pay Rate	Receive Notional		Receive Rate	Hedge Maturity Date	Fair Value Gain (Loss) at June 30, 2022
		(in millions)			(in millions)				(in millions)			(in millions)			(in millions)				(in millions)
Fair Value Hedges of Existing Debt	Fair Value Hedges of Existing Debt										Fair Value Hedges of Existing Debt
Southern Company parent	Southern Company parent	$	1,476	3.39%	€	1,250	1.88%	September 2027	$	(87)	Southern Company parent	$	1,476	3.39%	€	1,250	1.88%	September 2027	$	(183)

Cash Flow Hedges of Existing Debt	Cash Flow Hedges of Existing Debt										Cash Flow Hedges of Existing Debt

Southern Power	Southern Power	$	677	2.95%	€	600	1.00%	June 2022	$	(24)	Southern Power	564		3.78%	500		1.85%	June 2026	(45)
Southern Power		564		3.78%	500		1.85%	June 2026	(19)
Southern Power total		$	1,241		€	1,100			$	(43)

Southern Company	Southern Company	$	2,717		€	2,350			$	(130)	Southern Company	$	2,040		€	1,750			$	(228)

~~The~~For cash flow hedges of foreign currency derivatives, the estimated pre-tax losses ~~related to Southern Power's foreign currency derivatives accounted for as cash flow hedges~~ expected to be reclassified from accumulated OCI to earnings for the 12-month period ending ~~March 31,~~June 30, 2023 are ~~$17 million.~~$11 million for Southern Company and Southern Power.

Derivative Financial Statement Presentation and Amounts

The Registrants enter into derivative contracts that may contain certain provisions that permit intra-contract netting of derivative receivables and payables for routine billing and offsets related to events of default and settlements. Southern Company and certain subsidiaries also utilize master netting agreements to mitigate exposure to counterparty credit risk. These agreements may contain provisions that permit netting across product lines and against cash collateral. The fair value amounts of derivative assets and liabilities on the balance sheets are presented net to the extent that there are netting arrangements or similar agreements with the counterparties.

7382

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

The fair value of energy-related derivatives, interest rate derivatives, and foreign currency derivatives was reflected in the balance sheets as follows:


		At March 31, 2022				At December 31, 2021					At June 30, 2022				At December 31, 2021
Derivative Category and Balance Sheet Location	Derivative Category and Balance Sheet Location	Assets		Liabilities		Assets		Liabilities		Derivative Category and Balance Sheet Location	Assets		Liabilities		Assets		Liabilities
		(in millions)									(in millions)
Southern Company	Southern Company									Southern Company
Derivatives designated as hedging instruments for regulatory purposes	Derivatives designated as hedging instruments for regulatory purposes									Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:	Energy-related derivatives:									Energy-related derivatives:
Assets from risk management activities/Other current liabilities	Assets from risk management activities/Other current liabilities	$	381	$	1	$	129	$	30	Assets from risk management activities/Other current liabilities	$	267	$	49	$	129	$	30
Other deferred charges and assets/Other deferred credits and liabilities	Other deferred charges and assets/Other deferred credits and liabilities	116		6		72		6		Other deferred charges and assets/Other deferred credits and liabilities	144		37		72		6

Total derivatives designated as hedging instruments for regulatory purposes	Total derivatives designated as hedging instruments for regulatory purposes	$	497	$	7	$	201	$	36	Total derivatives designated as hedging instruments for regulatory purposes	$	411	$	86	$	201	$	36
Derivatives designated as hedging instruments in cash flow and fair value hedges	Derivatives designated as hedging instruments in cash flow and fair value hedges									Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:	Energy-related derivatives:									Energy-related derivatives:
Assets from risk management activities/Other current liabilities	Assets from risk management activities/Other current liabilities	$	28	$	2	$	7	$	5	Assets from risk management activities/Other current liabilities	$	17	$	5	$	7	$	5
Other deferred charges and assets/Other deferred credits and liabilities	Other deferred charges and assets/Other deferred credits and liabilities	5		—		1		—		Other deferred charges and assets/Other deferred credits and liabilities	6		—		1		—
Interest rate derivatives:	Interest rate derivatives:									Interest rate derivatives:
Assets from risk management activities/Other current liabilities	Assets from risk management activities/Other current liabilities	17		3		19		—		Assets from risk management activities/Other current liabilities	—		19		19		—
Other deferred charges and assets/Other deferred credits and liabilities	Other deferred charges and assets/Other deferred credits and liabilities	—		136		—		29		Other deferred charges and assets/Other deferred credits and liabilities	—		195		—		29
Foreign currency derivatives:	Foreign currency derivatives:									Foreign currency derivatives:
Assets from risk management activities/Other current liabilities	Assets from risk management activities/Other current liabilities	—		59		—		39		Assets from risk management activities/Other current liabilities	—		36		—		39
Other deferred charges and assets/Other deferred credits and liabilities	Other deferred charges and assets/Other deferred credits and liabilities	—		71		—		40		Other deferred charges and assets/Other deferred credits and liabilities	—		192		—		40
Total derivatives designated as hedging instruments in cash flow and fair value hedges	Total derivatives designated as hedging instruments in cash flow and fair value hedges	$	50	$	271	$	27	$	113	Total derivatives designated as hedging instruments in cash flow and fair value hedges	$	23	$	447	$	27	$	113
Derivatives not designated as hedging instruments	Derivatives not designated as hedging instruments									Derivatives not designated as hedging instruments
Energy-related derivatives:	Energy-related derivatives:									Energy-related derivatives:
Assets from risk management activities/Other current liabilities	Assets from risk management activities/Other current liabilities	$	16	$	2	$	9	$	4	Assets from risk management activities/Other current liabilities	$	15	$	12	$	9	$	4
Other deferred charges and assets/Other deferred credits and liabilities	Other deferred charges and assets/Other deferred credits and liabilities	1		—		1		—		Other deferred charges and assets/Other deferred credits and liabilities	2		1		1		—

Total derivatives not designated as hedging instruments	Total derivatives not designated as hedging instruments	$	17	$	2	$	10	$	4	Total derivatives not designated as hedging instruments	$	17	$	13	$	10	$	4
Gross amounts recognized	Gross amounts recognized	$	564	$	280	$	238	$	153	Gross amounts recognized	$	451	$	546	$	238	$	153
Gross amounts offset(a)	Gross amounts offset(a)	(45)		(9)		(25)		(28)		Gross amounts offset(a)	(87)		(74)		(25)		(28)
Net amounts recognized in the Balance Sheets(b)	Net amounts recognized in the Balance Sheets(b)	$	519	$	271	$	213	$	125	Net amounts recognized in the Balance Sheets(b)	$	364	$	472	$	213	$	125

7483

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(UNAUDITED)


		At March 31, 2022				At December 31, 2021					At June 30, 2022				At December 31, 2021
Derivative Category and Balance Sheet Location	Derivative Category and Balance Sheet Location	Assets		Liabilities		Assets		Liabilities		Derivative Category and Balance Sheet Location	Assets		Liabilities		Assets		Liabilities
		(in millions)									(in millions)
Alabama Power	Alabama Power									Alabama Power
Derivatives designated as hedging instruments for regulatory purposes	Derivatives designated as hedging instruments for regulatory purposes									Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:	Energy-related derivatives:									Energy-related derivatives:
Other current assets/Other current liabilities	Other current assets/Other current liabilities	$	87	$	—	$	30	$	9	Other current assets/Other current liabilities	$	76	$	6	$	30	$	9
Other deferred charges and assets/Other deferred credits and liabilities	Other deferred charges and assets/Other deferred credits and liabilities	41		2		25		2		Other deferred charges and assets/Other deferred credits and liabilities	55		17		25		2
Total derivatives designated as hedging instruments for regulatory purposes	Total derivatives designated as hedging instruments for regulatory purposes	$	128	$	2	$	55	$	11	Total derivatives designated as hedging instruments for regulatory purposes	$	131	$	23	$	55	$	11

Gross amounts offset	Gross amounts offset	(2)		(2)		(5)		(5)		Gross amounts offset	(20)		(20)		(5)		(5)
Net amounts recognized in the Balance Sheets	Net amounts recognized in the Balance Sheets	$	126	$	—	$	50	$	6	Net amounts recognized in the Balance Sheets	$	111	$	3	$	50	$	6

Georgia Power	Georgia Power									Georgia Power
Derivatives designated as hedging instruments for regulatory purposes	Derivatives designated as hedging instruments for regulatory purposes									Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:	Energy-related derivatives:									Energy-related derivatives:
Assets from risk management activities/Other current liabilities	Assets from risk management activities/Other current liabilities	$	150	$	—	$	54	$	6	Assets from risk management activities/Other current liabilities	$	102	$	15	$	54	$	6
Other deferred charges and assets/Other deferred credits and liabilities	Other deferred charges and assets/Other deferred credits and liabilities	29		1		21		2		Other deferred charges and assets/Other deferred credits and liabilities	35		14		21		2
Total derivatives designated as hedging instruments for regulatory purposes	Total derivatives designated as hedging instruments for regulatory purposes	$	179	$	1	$	75	$	8	Total derivatives designated as hedging instruments for regulatory purposes	$	137	$	29	$	75	$	8
Derivatives designated as hedging instruments in cash flow and fair value hedges
Interest rate derivatives:
Assets from risk management activities/Other current liabilities		$	12	$	—	$	—	$	—

Total derivatives designated as hedging instruments in cash flow and fair value hedges		$	12	$	—	$	—	$	—
Gross amounts recognized		$	191	$	1	$	75	$	8

Gross amounts offset	Gross amounts offset	(1)		(1)		(8)		(8)		Gross amounts offset	(21)		(21)		(8)		(8)
Net amounts recognized in the Balance Sheets	Net amounts recognized in the Balance Sheets	$	190	$	—	$	67	$	—	Net amounts recognized in the Balance Sheets	$	116	$	8	$	67	$	—

Mississippi Power	Mississippi Power									Mississippi Power
Derivatives designated as hedging instruments for regulatory purposes	Derivatives designated as hedging instruments for regulatory purposes									Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:	Energy-related derivatives:									Energy-related derivatives:
Assets from risk management activities/Other current liabilities	Assets from risk management activities/Other current liabilities	$	94	$	—	$	30	$	3	Assets from risk management activities/Other current liabilities	$	67	$	8	$	30	$	3
Other deferred charges and assets/Other deferred credits and liabilities	Other deferred charges and assets/Other deferred credits and liabilities	44		2		26		2		Other deferred charges and assets/Other deferred credits and liabilities	54		6		26		2
Total derivatives designated as hedging instruments for regulatory purposes	Total derivatives designated as hedging instruments for regulatory purposes	$	138	$	2	$	56	$	5	Total derivatives designated as hedging instruments for regulatory purposes	$	121	$	14	$	56	$	5

Gross amounts offset	Gross amounts offset	(2)		(2)		(4)		(4)		Gross amounts offset	(11)		(11)		(4)		(4)
Net amounts recognized in the Balance Sheets	Net amounts recognized in the Balance Sheets	$	136	$	—	$	52	$	1	Net amounts recognized in the Balance Sheets	$	110	$	3	$	52	$	1

7584

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(UNAUDITED)


		At March 31, 2022				At December 31, 2021					At June 30, 2022				At December 31, 2021
Derivative Category and Balance Sheet Location	Derivative Category and Balance Sheet Location	Assets		Liabilities		Assets		Liabilities		Derivative Category and Balance Sheet Location	Assets		Liabilities		Assets		Liabilities
		(in millions)									(in millions)
Southern Power	Southern Power									Southern Power
Derivatives designated as hedging instruments in cash flow and fair value hedges	Derivatives designated as hedging instruments in cash flow and fair value hedges									Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:	Energy-related derivatives:									Energy-related derivatives:
Other current assets/Other current liabilities	Other current assets/Other current liabilities	$	3	$	—	$	2	$	—	Other current assets/Other current liabilities	$	—	$	—	$	2	$	—
Other deferred charges and assets/Other deferred credits and liabilities	Other deferred charges and assets/Other deferred credits and liabilities	3		—		1		—		Other deferred charges and assets/Other deferred credits and liabilities	4		—		1		—
Foreign currency derivatives:	Foreign currency derivatives:									Foreign currency derivatives:
Other current assets/Other current liabilities	Other current assets/Other current liabilities	—		35		—		16		Other current assets/Other current liabilities	—		11		—		16
Other deferred charges and assets/Other deferred credits and liabilities	Other deferred charges and assets/Other deferred credits and liabilities	—		8		—		—		Other deferred charges and assets/Other deferred credits and liabilities	—		34		—		—
Total derivatives designated as hedging instruments in cash flow and fair value hedges	Total derivatives designated as hedging instruments in cash flow and fair value hedges	$	6	$	43	$	3	$	16	Total derivatives designated as hedging instruments in cash flow and fair value hedges	$	4	$	45	$	3	$	16
Derivatives not designated as hedging instruments	Derivatives not designated as hedging instruments									Derivatives not designated as hedging instruments
Energy-related derivatives:	Energy-related derivatives:									Energy-related derivatives:
Other current assets/Other current liabilities	Other current assets/Other current liabilities	$	2	$	—	$	1	$	—	Other current assets/Other current liabilities	$	1	$	1	$	1	$	—
Other deferred charges and assets/Other deferred credits and liabilities										Other deferred charges and assets/Other deferred credits and liabilities	1		—		—		—

Total derivatives not designated as hedging instruments										Total derivatives not designated as hedging instruments	$	2	$	1	$	1	$	—
Gross amounts recognized	Gross amounts recognized	$	8	$	43	$	4	$	16	Gross amounts recognized	$	6	$	46	$	4	$	16
Gross amounts offset	Gross amounts offset	—		—		—		—		Gross amounts offset	(1)		(1)		—		—
Net amounts recognized in the Balance Sheets	Net amounts recognized in the Balance Sheets	$	8	$	43	$	4	$	16	Net amounts recognized in the Balance Sheets	$	5	$	45	$	4	$	16

7685

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)


		At March 31, 2022				At December 31, 2021					At June 30, 2022				At December 31, 2021
Derivative Category and Balance Sheet Location	Derivative Category and Balance Sheet Location	Assets		Liabilities		Assets		Liabilities		Derivative Category and Balance Sheet Location	Assets		Liabilities		Assets		Liabilities
		(in millions)									(in millions)
Southern Company Gas	Southern Company Gas									Southern Company Gas
Derivatives designated as hedging instruments for regulatory purposes	Derivatives designated as hedging instruments for regulatory purposes									Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:	Energy-related derivatives:									Energy-related derivatives:
Assets from risk management activities/Other current liabilities	Assets from risk management activities/Other current liabilities	$	49	$	1	$	15	$	12	Assets from risk management activities/Other current liabilities	$	23	$	19	$	15	$	12
Other deferred charges and assets/Other deferred credits and liabilities		3		—		—		—

Total derivatives designated as hedging instruments for regulatory purposes	Total derivatives designated as hedging instruments for regulatory purposes	$	52	$	1	$	15	$	12	Total derivatives designated as hedging instruments for regulatory purposes	$	23	$	19	$	15	$	12
Derivatives designated as hedging instruments in cash flow and fair value hedges	Derivatives designated as hedging instruments in cash flow and fair value hedges									Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:	Energy-related derivatives:									Energy-related derivatives:
Assets from risk management activities/Other current liabilities	Assets from risk management activities/Other current liabilities	$	25	$	2	$	5	$	5	Assets from risk management activities/Other current liabilities	$	17	$	5	$	5	$	5
Other deferred charges and assets/Other deferred credits and liabilities	Other deferred charges and assets/Other deferred credits and liabilities	2		—		—		—		Other deferred charges and assets/Other deferred credits and liabilities	2		—		—		—
Interest rate derivatives:	Interest rate derivatives:									Interest rate derivatives:
Assets from risk management activities/Liabilities from risk management activities-current	Assets from risk management activities/Liabilities from risk management activities-current	—		—		6		—		Assets from risk management activities/Liabilities from risk management activities-current	—		—		6		—
Other deferred charges and assets/Other deferred credits and liabilities	Other deferred charges and assets/Other deferred credits and liabilities	—		36		—		6		Other deferred charges and assets/Other deferred credits and liabilities	—		62		—		6
Total derivatives designated as hedging instruments in cash flow and fair value hedges	Total derivatives designated as hedging instruments in cash flow and fair value hedges	$	27	$	38	$	11	$	11	Total derivatives designated as hedging instruments in cash flow and fair value hedges	$	19	$	67	$	11	$	11
Derivatives not designated as hedging instruments	Derivatives not designated as hedging instruments									Derivatives not designated as hedging instruments
Energy-related derivatives:	Energy-related derivatives:									Energy-related derivatives:
Assets from risk management activities/Other current liabilities	Assets from risk management activities/Other current liabilities	$	14	$	1	$	8	$	4	Assets from risk management activities/Other current liabilities	$	13	$	11	$	8	$	4
Other deferred charges and assets/Other deferred credits and liabilities	Other deferred charges and assets/Other deferred credits and liabilities	1		—		1		—		Other deferred charges and assets/Other deferred credits and liabilities	1		1		1		—

Total derivatives not designated as hedging instruments	Total derivatives not designated as hedging instruments	$	15	$	1	$	9	$	4	Total derivatives not designated as hedging instruments	$	14	$	12	$	9	$	4
Gross amounts recognized	Gross amounts recognized	$	94	$	40	$	35	$	27	Gross amounts recognized	$	56	$	98	$	35	$	27
Gross amounts offset(a)	Gross amounts offset(a)	(40)		(4)		(8)		(11)		Gross amounts offset(a)	(34)		(21)		(8)		(11)
Net amounts recognized in the Balance Sheets(b)	Net amounts recognized in the Balance Sheets(b)	$	54	$	36	$	27	$	16	Net amounts recognized in the Balance Sheets(b)	$	22	$	77	$	27	$	16

(a)Gross amounts offset include cash collateral held on deposit in broker margin accounts of ~~$36~~$13 million and $3 million at ~~March 31,~~June 30, 2022 and December 31, 2021, respectively.

(b)Net amounts of derivative instruments outstanding exclude immaterial premium and intrinsic value associated with weather derivatives ~~for both periods presented.~~at December 31, 2021. There were no such amounts at June 30, 2022.

Energy-related derivatives not designated as hedging instruments were immaterial for the traditional electric operating companies at ~~March 31,~~June 30, 2022. There were no such instruments for the traditional electric operating companies at December 31, 2021.

7786

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

At ~~March 31,~~June 30, 2022 and December 31, 2021, the pre-tax effects of unrealized derivative gains (losses) arising from energy-related derivative instruments designated as regulatory hedging instruments and deferred were as follows:


Regulatory Hedge Unrealized Gain (Loss) Recognized in the Balance Sheet	Regulatory Hedge Unrealized Gain (Loss) Recognized in the Balance Sheet											Regulatory Hedge Unrealized Gain (Loss) Recognized in the Balance Sheet
Derivative Category and Balance Sheet Location	Derivative Category and Balance Sheet Location	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Company Gas		Derivative Category and Balance Sheet Location	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Company Gas
		(in millions)											(in millions)
At March 31, 2022:
At June 30, 2022:												At June 30, 2022:
Energy-related derivatives:	Energy-related derivatives:											Energy-related derivatives:

Other regulatory assets, current												Other regulatory assets, current	$	(26)	$	(2)	$	(6)	$	(3)	$	(15)
Other regulatory assets, deferred												Other regulatory assets, deferred	(3)		(1)		(1)		(1)		—

Other regulatory liabilities, current	Other regulatory liabilities, current	$	353	$	87	$	150	$	94	$	22	Other regulatory liabilities, current	234		72		93		62		7
Other regulatory liabilities, deferred	Other regulatory liabilities, deferred	111		39		28		42		2		Other regulatory liabilities, deferred	110		39		22		49		—
Total energy-related derivative gains (losses)	Total energy-related derivative gains (losses)	$	464	$	126	$	178	$	136	$	24	Total energy-related derivative gains (losses)	$	315	$	108	$	108	$	107	$	(8)

At December 31, 2021:	At December 31, 2021:											At December 31, 2021:
Energy-related derivatives:	Energy-related derivatives:											Energy-related derivatives:
Other regulatory assets, current	Other regulatory assets, current	$	(17)	$	(6)	$	—	$	—	$	(11)	Other regulatory assets, current	$	(17)	$	(6)	$	—	$	—	$	(11)

Other regulatory liabilities, current	Other regulatory liabilities, current	107		28		48		27		4		Other regulatory liabilities, current	107		28		48		27		4
Other regulatory liabilities, deferred	Other regulatory liabilities, deferred	65		22		19		24		—		Other regulatory liabilities, deferred	65		22		19		24		—
Total energy-related derivative gains (losses)	Total energy-related derivative gains (losses)	$	155	$	44	$	67	$	51	$	(7)	Total energy-related derivative gains (losses)	$	155	$	44	$	67	$	51	$	(7)

7887

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

For the three and six months ended ~~March 31,~~June 30, 2022 and 2021, the pre-tax effects of cash flow and fair value hedge accounting on accumulated OCI were as follows:


Gain (Loss) Recognized in OCI on Derivative	Gain (Loss) Recognized in OCI on Derivative	For the Three Months Ended March 31,			Gain (Loss) Recognized in OCI on Derivative		For the Three Months Ended June 30,				For the Six Months Ended June 30,
			2022				2021	Gain (Loss) Recognized in OCI on Derivative	2022		2021		2022		2021
		(in millions)					(in millions)
Southern Company	Southern Company								Southern Company
Cash flow hedges:	Cash flow hedges:							Cash flow hedges:
Energy-related derivatives	Energy-related derivatives		$	42	$	5		Energy-related derivatives	$	(1)	$	16	$	41	$	20
Interest rate derivatives	Interest rate derivatives		9		3			Interest rate derivatives	21		(1)		30		2
Foreign currency derivatives	Foreign currency derivatives		(28)		(47)			Foreign currency derivatives	(74)		4		(102)		(43)
Fair value hedges(*):	Fair value hedges(*):							Fair value hedges(*):
Foreign currency derivatives	Foreign currency derivatives		4		—			Foreign currency derivatives	(7)		—		(3)		—
Total	Total		$	27	$	(39)		Total	$	(61)	$	19	$	(34)	$	(21)

Georgia Power	Georgia Power							Georgia Power
Cash flow hedges:

Interest rate derivatives	Interest rate derivatives		$	12	$	—		Interest rate derivatives	$	19	$	—	$	31	$	—

Southern Power	Southern Power							Southern Power
Cash flow hedges:	Cash flow hedges:							Cash flow hedges:
Energy-related derivatives	Energy-related derivatives		$	5	$	4		Energy-related derivatives	$	2	$	5	$	7	$	8

Foreign currency derivatives	Foreign currency derivatives		(28)		(47)			Foreign currency derivatives	(74)		4		(102)		(43)
Total	Total		$	(23)	$	(43)		Total	$	(72)	$	9	$	(95)	$	(35)
Southern Company Gas	Southern Company Gas							Southern Company Gas
Cash flow hedges:	Cash flow hedges:							Cash flow hedges:
Energy-related derivatives	Energy-related derivatives		$	37	$	1		Energy-related derivatives	$	(2)	$	11	$	35	$	12

Interest rate derivatives								Interest rate derivatives	(5)		—		(5)		—
Total								Total	$	(7)	$	11	$	30	$	12

(*)Represents amounts excluded from the assessment of effectiveness for which the difference between changes in fair value and periodic amortization is recorded in OCI.

For the three and six months ended ~~March 31,~~June 30, 2022 and 2021, the pre-tax effects of interest rate derivatives designated as cash flow hedging instruments on accumulated OCI were immaterial for the other Registrants.

7988

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

For the three and six months ended ~~March 31,~~June 30, 2022 and 2021, the pre-tax effects of cash flow and fair value hedge accounting on income were as follows:


Location and Amount of Gain (Loss) Recognized in Income on Cash Flow and Fair Value Hedging Relationships	Location and Amount of Gain (Loss) Recognized in Income on Cash Flow and Fair Value Hedging Relationships	For the Three Months Ended March 31,			Location and Amount of Gain (Loss) Recognized in Income on Cash Flow and Fair Value Hedging Relationships		For the Three Months Ended June 30,					For the Six Months Ended June 30,
																		For the Three Months Ended June 30,				For the Six Months Ended June 30,
			2022				2021	Location and Amount of Gain (Loss) Recognized in Income on Cash Flow and Fair Value Hedging Relationships	2022			2021			2022
		(in millions)					(in millions)
Southern Company	Southern Company
Total cost of natural gas	Total cost of natural gas		$	1,095	$	583			Total cost of natural gas		$	452		$	231		$	1,546		$	814
Gain (loss) on energy-related cash flow hedges(a)	Gain (loss) on energy-related cash flow hedges(a)		9		(3)			Gain (loss) on energy-related cash flow hedges(a)	10			1			18			(2)
Total depreciation and amortization	Total depreciation and amortization		892		871			Total depreciation and amortization	913			891			1,805			1,762
Gain (loss) on energy-related cash flow hedges(a)	Gain (loss) on energy-related cash flow hedges(a)		2		3			Gain (loss) on energy-related cash flow hedges(a)	4			1			6			4
Total interest expense, net of amounts capitalized	Total interest expense, net of amounts capitalized		(462)		(450)			Total interest expense, net of amounts capitalized	(488)			(450)			(950)			(901)
Gain (loss) on interest rate cash flow hedges(a)	Gain (loss) on interest rate cash flow hedges(a)		(7)		(7)			Gain (loss) on interest rate cash flow hedges(a)	(6)			(7)			(13)			(14)
Gain (loss) on foreign currency cash flow hedges(a)	Gain (loss) on foreign currency cash flow hedges(a)		(6)		(6)			Gain (loss) on foreign currency cash flow hedges(a)	(7)			(6)			(13)			(12)
Gain (loss) on interest rate fair value hedges(b)	Gain (loss) on interest rate fair value hedges(b)		(123)		(10)			Gain (loss) on interest rate fair value hedges(b)	(76)			(3)			(198)			(12)
Total other income (expense), net	Total other income (expense), net		145		58			Total other income (expense), net	139			101			283			160
Gain (loss) on foreign currency cash flow hedges(a)(c)	Gain (loss) on foreign currency cash flow hedges(a)(c)		(25)		(60)			Gain (loss) on foreign currency cash flow hedges(a)(c)	(73)			17			(97)			(43)
Gain (loss) on foreign currency fair value hedges	Gain (loss) on foreign currency fair value hedges		(24)		—			Gain (loss) on foreign currency fair value hedges	(96)			—			(121)			—
Amount excluded from effectiveness testing recognized in earnings	Amount excluded from effectiveness testing recognized in earnings		(4)		—			Amount excluded from effectiveness testing recognized in earnings	7			—			3			—

Southern Power	Southern Power							Southern Power
Total depreciation and amortization	Total depreciation and amortization		$	120	$	119		Total depreciation and amortization	$	131		$	132		$	251		$	251
Gain (loss) on energy-related cash flow hedges(a)	Gain (loss) on energy-related cash flow hedges(a)		2		3			Gain (loss) on energy-related cash flow hedges(a)	4			1			6			4
Total interest expense, net of amounts capitalized	Total interest expense, net of amounts capitalized		(37)		(38)			Total interest expense, net of amounts capitalized	(36)			(37)			(73)			(75)
Gain (loss) on foreign currency cash flow hedges(a)	Gain (loss) on foreign currency cash flow hedges(a)		(6)		(6)			Gain (loss) on foreign currency cash flow hedges(a)	(7)			(6)			(13)			(12)
Total other income (expense), net	Total other income (expense), net		2		7			Total other income (expense), net	1			1			3			8
Gain (loss) on foreign currency cash flow hedges(a)(c)	Gain (loss) on foreign currency cash flow hedges(a)(c)		(25)		(60)			Gain (loss) on foreign currency cash flow hedges(a)(c)	(73)			17			(97)			(43)
Southern Company Gas	Southern Company Gas							Southern Company Gas
Total cost of natural gas	Total cost of natural gas		$	1,095	$	583		Total cost of natural gas	$	452		$	231		$	1,546		$	814
Gain (loss) on energy-related cash flow hedges(a)	Gain (loss) on energy-related cash flow hedges(a)		9		—			Gain (loss) on energy-related cash flow hedges(a)	10			—			18			(2)
Total interest expense, net of amounts capitalized	Total interest expense, net of amounts capitalized		(61)		(60)			Total interest expense, net of amounts capitalized	(61)			(59)			(122)			(118)
Gain (loss) on interest rate cash flow hedges(a)	Gain (loss) on interest rate cash flow hedges(a)		(1)		—			Gain (loss) on interest rate cash flow hedges(a)	(1)			(1)			(1)			(1)
Gain (loss) on interest rate fair value hedges(b)	Gain (loss) on interest rate fair value hedges(b)		(36)		—			Gain (loss) on interest rate fair value hedges(b)	(22)			4			(57)			4

(a)Reclassified from accumulated OCI into earnings.

(b)For fair value hedges, changes in the fair value of the derivative contracts are generally equal to changes in the fair value of the underlying debt and have no material impact on income.

(c)The reclassification from accumulated OCI into other income (expense), net completely offsets currency gains and losses arising from changes in the U.S. currency exchange rates used to record the euro-denominated notes.

For the three and six months ended ~~March 31,~~June 30, 2022 and 2021, the pre-tax effects of cash flow and fair value hedge accounting on income for energy-related derivatives and interest rate derivatives were immaterial for the traditional electric operating companies.

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(UNAUDITED)

At ~~March 31,~~June 30, 2022 and December 31, 2021, the following amounts were recorded on the balance sheets related to cumulative basis adjustments for fair value hedges:


		Carrying Amount of the Hedged Item				Cumulative Amount of Fair Value Hedging Adjustment included in Carrying Amount of the Hedged Item					Carrying Amount of the Hedged Item				Cumulative Amount of Fair Value Hedging Adjustment included in Carrying Amount of the Hedged Item
Balance Sheet Location of Hedged Items	Balance Sheet Location of Hedged Items	At March 31, 2022		At December 31, 2021		At March 31, 2022		At December 31, 2021		Balance Sheet Location of Hedged Items	At June 30, 2022		At December 31, 2021		At June 30, 2022		At December 31, 2021
		(in millions)				(in millions)					(in millions)				(in millions)
Southern Company	Southern Company									Southern Company

Long-term debt	Long-term debt	$	(3,136)	$	(3,280)	$	126	$	9	Long-term debt	$	(2,981)	$	(3,280)	$	192	$	9

Southern Company Gas	Southern Company Gas									Southern Company Gas

Long-term debt	Long-term debt	$	(459)	$	(493)	$	37	$	2	Long-term debt	$	(437)	$	(493)	$	59	$	2

For the three and six months ended ~~March 31,~~June 30, 2022 and 2021, the pre-tax effects of energy-related derivatives not designated as hedging instruments on the statements of income of Southern Company and Southern Company Gas were as follows:


				Gain (Loss)						Gain (Loss)
			Three Months Ended March 31,						Three Months Ended June 30,					Six Months Ended June 30,
Derivatives in Non-Designated Hedging Relationships	Derivatives in Non-Designated Hedging Relationships	Statements of Income Location		2022		2021		Derivatives in Non-Designated Hedging Relationships	Statements of Income Location	2022		2021			2022		2021
			(in millions)						(in millions)					(in millions)

Energy-related derivatives:	Energy-related derivatives:	Natural gas revenues(*)		$	2	$	(17)	Energy-related derivatives:	Natural gas revenues(*)	$	(15)	$	(103)		$	(13)	$	(120)
									Cost of natural gas	(25)		9			(5)		16
		Cost of natural gas		21		7
Total derivatives in non-designated hedging relationships	Total derivatives in non-designated hedging relationships			$	23	$	(10)	Total derivatives in non-designated hedging relationships		$	(40)	$	(94)		$	(18)	$	(104)

(*)Excludes immaterial gains (losses) recorded in natural gas revenues associated with weather derivatives for all periods presented.

For the three and six months ended ~~March 31,~~June 30, 2022 and 2021, ~~the pre-tax effects of interest rate derivatives not designated as hedging instruments were immaterial for Southern Company and Southern Company Gas and~~ the pre-tax effects of energy-related derivatives not designated as hedging instruments were immaterial for ~~all~~the other Registrants.

Contingent Features

The Registrants do not have any credit arrangements that would require material changes in payment schedules or terminations as a result of a credit rating downgrade. There are certain derivatives that could require collateral, but not accelerated payment, in the event of various credit rating changes of certain Southern Company subsidiaries. At ~~March 31,~~June 30, 2022, the Registrants had no collateral posted with derivative counterparties to satisfy these arrangements.

For the applicable Registrants, the fair value of interest rate and energy-related derivative liabilities with contingent features and the maximum potential collateral requirements arising from the credit-risk-related contingent features, at a rating below BBB- and/or Baa3, were immaterial at ~~March 31,~~June 30, 2022. The maximum potential collateral requirements arising from the credit-risk-related contingent features for the traditional electric operating companies and Southern Power include certain agreements that could require collateral in the event that one or more Southern Company power pool participants has a credit rating change to below investment grade. Following the sale of Gulf Power to NextEra Energy, Inc., Gulf Power ~~has~~ continued participating in the Southern Company power ~~pool; however, the parties currently expect this participation to end during the third quarter~~pool through July 13, 2022.

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~~NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)~~

~~(UNAUDITED)~~

Generally, collateral may be provided by a Southern Company guaranty, letter of credit, or cash. If collateral is required, fair value amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral are not offset against fair value amounts recognized for derivatives executed with the same counterparty.

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Alabama Power and Southern Power maintain accounts with certain regional transmission organizations to facilitate financial derivative transactions and they may be required to post collateral based on the value of the positions in these accounts and the associated margin requirements. At ~~March 31,~~June 30, 2022, cash collateral posted in these accounts was immaterial. Southern Company Gas maintains accounts with brokers or the clearing houses of certain exchanges to facilitate financial derivative transactions. Based on the value of the positions in these accounts and the associated margin requirements, Southern Company Gas may be required to deposit cash into these accounts. At ~~March 31,~~June 30, 2022, cash collateral held on deposit in broker margin accounts was ~~$36~~$13 million.

The Registrants are exposed to losses related to financial instruments in the event of counterparties' nonperformance. The Registrants only enter into agreements and material transactions with counterparties that have investment grade credit ratings by Moody's and S&P or with counterparties who have posted collateral to cover potential credit exposure. The Registrants have also established risk management policies and controls to determine and monitor the creditworthiness of counterparties in order to mitigate their exposure to counterparty credit risk.

Southern Company Gas uses established credit policies to determine and monitor the creditworthiness of counterparties, including requirements to post collateral or other credit security, as well as the quality of pledged collateral. Collateral or credit security is most often in the form of cash or letters of credit from an investment-grade financial institution, but may also include cash or U.S. government securities held by a trustee. Prior to entering a physical transaction, Southern Company Gas assigns its counterparties an internal credit rating and credit limit based on the counterparties' Moody's, S&P, and Fitch ratings, commercially available credit reports, and audited financial statements. Southern Company Gas may require counterparties to pledge additional collateral when deemed necessary.

Southern Company Gas utilizes netting agreements whenever possible to mitigate exposure to counterparty credit risk. Netting agreements enable Southern Company Gas to net certain assets and liabilities by counterparty across product lines and against cash collateral, provided the netting and cash collateral agreements include such provisions. While the amounts due from, or owed to, counterparties are settled net, they are recorded on a gross basis on the balance sheet as energy marketing receivables and energy marketing payables.

The Registrants do not anticipate a material adverse effect on their respective financial statements as a result of counterparty nonperformance.

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~~NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)~~

~~(UNAUDITED)~~

(K) ACQUISITIONS AND DISPOSITIONS

See Note 15 to the financial statements in Item 8 of the Form 10-K for additional information.

Southern Power

Construction Projects

During the ~~three~~six months ended ~~March 31,~~June 30, 2022, Southern Power completed construction of and placed in service the remaining 40 MWs of the Tranquillity battery energy storage facility and the remaining 15 MWs of the Garland battery energy storage facility.

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Project Facility

Resource

Approximate Nameplate Capacity (MW)

Location

COD

PPA Contract Period

Projects Completed During the ~~Three~~Six Months Ended ~~March 31,~~June 30, 2022

Garland Solar Storage(a)

Battery energy storage system

Kern County, CA

September 2021

through February 2022(b)

20 years

Tranquillity Solar Storage(a)

Battery energy storage system

Fresno County, CA

November 2021

through March 2022(c)

20 years

(a)Southern Power consolidates each project's operating results in its financial statements and the tax equity partner and two other partners each own a noncontrolling interest.

(b)The facility has a total capacity of 88 MWs, of which 73 MWs were placed in service in 2021 and 15 MWs were placed in service in February 2022.

(c)The facility has a total capacity of 72 MWs, of which 32 MWs were placed in service in 2021 and 40 MWs were placed in service in March 2022.

Southern Company Gas

On May 20, 2022, Southern Company Gas received the final $5 million contingent payment from Dominion Modular LNG Holdings, Inc. in connection with its 2020 sale of Pivotal LNG, Inc.

(L) SEGMENT AND RELATED INFORMATION

Southern Company

The primary businesses of the Southern Company system are electricity sales by the traditional electric operating companies and Southern Power and the distribution of natural gas by Southern Company Gas. The traditional electric operating companies are vertically integrated utilities providing electric service in 3 Southeastern states. Southern Power develops, constructs, acquires, owns, and manages power generation assets, including renewable energy and battery energy storage projects, and sells electricity at market-based rates in the wholesale market. Southern Company Gas distributes natural gas through its natural gas distribution utilities and is involved in several other complementary businesses including gas pipeline investments and gas marketing services. Prior to the sale of Sequent on July 1, 2021, Southern Company Gas' other businesses also included wholesale gas services.

Southern Company's reportable business segments are the sale of electricity by the traditional electric operating companies, the sale of electricity in the competitive wholesale market by Southern Power, and the sale of natural gas and other complementary products and services by Southern Company Gas. Revenues from sales by Southern Power to the traditional electric operating companies were ~~$105~~$232 million and ~~$81~~$337 million for the three and six months ended ~~March 31,~~June 30, 2022, respectively, and $112 million and $193 million for the three and six months ended June 30, 2021, respectively. Revenues from sales of natural gas from Southern Company Gas to the traditional electric operating companies were immaterial for ~~both~~all periods presented. Revenues from sales of natural gas from Southern Company Gas (prior to its sale of Sequent) to Southern Power were ~~$12~~$6 million and $18 million for the three and six months ended ~~March 31,~~June 30, 2021, ~~which represented sales from Sequent prior to its sale.~~respectively. The "All Other" column includes the Southern Company parent entity, which does not allocate operating expenses to business segments. Also, this category includes segments below the quantitative threshold for separate disclosure. These segments include providing distributed energy and resilience solutions and deploying microgrids for commercial, industrial, governmental, and utility customers, as well as investments in telecommunications and, for the three and six months ended ~~March 31,~~June 30, 2021, leveraged lease projects. All other inter-segment revenues are not material.

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(UNAUDITED)

Financial data for business segments and products and services for the three and six months ended ~~March 31,~~June 30, 2022 and 2021 was as follows:


		Electric Utilities																	Electric Utilities
		Traditional Electric Operating Companies		Southern Power		Eliminations		Total		Southern Company Gas		All Other		Eliminations		Consolidated			Traditional Electric Operating Companies		Southern Power		Eliminations		Total		Southern Company Gas		All Other		Eliminations		Consolidated
		(in millions)																	(in millions)

Three Months Ended March 31, 2022
Three Months Ended June 30, 2022																		Three Months Ended June 30, 2022
Operating revenues																		Operating revenues	$	5,563	$	899	$	(456)	$	6,006	$	1,083	$	159	$	(42)	$	7,206
Segment net income (loss)(a)(b)																		Segment net income (loss)(a)(b)	1,036		98		—		1,134		115		(137)		(5)		1,107
Six Months Ended June 30, 2022																		Six Months Ended June 30, 2022
Operating revenues	Operating revenues	$	4,191	$	539	$	(221)	$	4,509	$	2,058	$	123	$	(42)	$	6,648	Operating revenues	$	9,778	$	1,438	$	(700)	$	10,516	$	3,140	$	283	$	(85)	$	13,854
Segment net income (loss)~~(a)~~(b)	Segment net income (loss)~~(a)~~(b)	774		72		—		846		319		(125)		(8)		1,032		Segment net income (loss)~~(a)~~(b)	1,811		170		—		1,981		433		(263)		(12)		2,139
At March 31, 2022
At June 30, 2022																		At June 30, 2022
Goodwill	Goodwill	$	—	$	2	$	—	$	2	$	5,015	$	263	$	—	$	5,280	Goodwill	$	—	$	2	$	—	$	2	$	5,015	$	263	$	—	$	5,280
Total assets	Total assets	90,460		13,766		(627)		103,599		23,377		4,236		(2,573)		128,639		Total assets	92,742		13,402		(787)		105,357		23,618		2,457		(663)		130,769

Three Months Ended March 31, 2021
Three Months Ended June 30, 2021																		Three Months Ended June 30, 2021
Operating revenues																		Operating revenues	$	4,031	$	490	$	(114)	$	4,407	$	677	$	154	$	(40)	$	5,198
Segment net income (loss)(a)(b)(c)																		Segment net income (loss)(a)(b)(c)	511		36		—		547		(65)		(108)		(2)		372
Six Months Ended June 30, 2021																		Six Months Ended June 30, 2021
Operating revenues	Operating revenues	$	3,764	$	440	$	(87)	$	4,117	$	1,694	$	134	$	(35)	$	5,910	Operating revenues	$	7,795	$	930	$	(201)	$	8,524	$	2,371	$	288	$	(75)	$	11,108
Segment net income (loss)~~(c)~~(d)	Segment net income (loss)~~(c)~~(d)	756		97		—		853		398		(108)		(8)		1,135		Segment net income (loss)~~(c)~~(d)	1,267		133		—		1,400		333		(216)		(9)		1,508
At December 31, 2021	At December 31, 2021																	At December 31, 2021
Goodwill	Goodwill	$	—	$	2	$	—	$	2	$	5,015	$	263	$	—	$	5,280	Goodwill	$	—	$	2	$	—	$	2	$	5,015	$	263	$	—	$	5,280
Total assets	Total assets	89,051		13,390		(667)		101,774		23,560		2,975		(775)		127,534		Total assets	89,051		13,390		(667)		101,774		23,560		2,975		(775)		127,534

(a)Attributable to Southern Company.

(b)For the traditional electric operating companies, includes a pre-tax ~~charge of $48 million ($36 million after tax)~~charges at Georgia Power for estimated losses associated with the construction of Plant Vogtle Units 3 and 4.4 of $52 million ($39 million after tax) for the three and six months ended June 30, 2022 and $460 million ($343 million after tax) and $508 million ($379 million after tax) for the three and six months ended June 30, 2021, respectively. See Note (B) and Note 2 to the financial statements in Item 8 of the Form 10-K under "Georgia Power – Nuclear Construction" for additional information.

(c)For Southern Company Gas, includes a pre-tax impairment charge of $82 million ($58 million after tax) related to its equity method investment in the PennEast Pipeline project. See Note 7 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.

(d)For Southern Power, includes gains on wind turbine equipment contributed to various equity method investments totaling approximately $37 million pre-tax ($28 million after tax). See Note 15 to the financial statements under "Southern Power – Development Projects" in Item 8 of the Form 10-K for additional information.

Products and Services

Electric Utilities' Revenues
Retail Wholesale Other Total
(in millions)
Three Months Ended March 31, 2022 $ 3,613 $ 664 $ 232 $ 4,509
Three Months Ended March 31, 2021 3,342 545 230 4,117


	Electric Utilities' Revenues
	Retail		Wholesale		Other		Total
	(in millions)
Three Months Ended June 30, 2022	$	4,789	$	937	$	280	$	6,006
Three Months Ended June 30, 2021	3,599		546		262		4,407
Six Months Ended June 30, 2022	$	8,402	$	1,601	$	513	$	10,516
Six Months Ended June 30, 2021	6,941		1,091		492		8,524

Southern Company Gas' Revenues
Gas
Distribution
Operations
Wholesale
Gas
Services(*)
Gas
Marketing
Services Other Total
(in millions)
Three Months Ended March 31, 2022 $ 1,791 $ — $ 243 $ 24 $ 2,058
Three Months Ended March 31, 2021 1,192 298 195 9 1,694

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(UNAUDITED)


	Southern Company Gas' Revenues
	Gas Distribution Operations		Wholesale Gas Services(*)		Gas Marketing Services		Other		Total
	(in millions)
Three Months Ended June 30, 2022	$	975	$	—	$	92	$	16	$	1,083
Three Months Ended June 30, 2021	706		(110)		64		17		677
Six Months Ended June 30, 2022	$	2,765	$	—	$	335	$	40	$	3,140
Six Months Ended June 30, 2021	1,898		188		259		26		2,371

(*)Prior to the sale of Sequent, the revenues for wholesale gas services were netted with costs associated with its energy and risk management activities. See "Southern Company Gas" herein and Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.

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~~NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)~~

~~(UNAUDITED)~~

Southern Company Gas

Southern Company Gas manages its business through 3 reportable segments – gas distribution operations, gas pipeline investments, and gas marketing services. Prior to the sale of Sequent on July 1, 2021, Southern Company Gas' reportable segments also included wholesale gas services. The non-reportable segments are combined and presented as all other. See Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information on the sale of Sequent.

Gas distribution operations is the largest component of Southern Company Gas' business and includes natural gas local distribution utilities that construct, manage, and maintain intrastate natural gas pipelines and gas distribution facilities in 4 states.

Gas pipeline investments consists of joint ventures in natural gas pipeline investments including a 50% interest in SNG and a 50% joint ownership interest in the Dalton Pipeline. These natural gas pipelines enable the provision of diverse sources of natural gas supplies to the customers of Southern Company Gas. Gas pipeline investments also includes a 20% ownership interest in the PennEast Pipeline project, which was cancelled in September 2021. See Note 7 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.

Through July 1, 2021, wholesale gas services provided natural gas asset management and/or related logistics services for each of Southern Company Gas' utilities except Nicor Gas as well as for non-affiliated companies. Additionally, wholesale gas services engaged in natural gas storage and gas pipeline arbitrage and related activities.

Gas marketing services provides natural gas marketing to end-use customers primarily in Georgia and Illinois through SouthStar.

The all other column includes segments and subsidiaries that fall below the quantitative threshold for separate disclosure, including storage and fuels operations.

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(UNAUDITED)

Business segment financial data for the three and six months ended ~~March 31,~~June 30, 2022 and 2021 was as follows:


		Gas Distribution Operations		Gas Pipeline Investments		Wholesale Gas Services(*)		Gas Marketing Services		Total		All Other		Eliminations		Consolidated			Gas Distribution Operations		Gas Pipeline Investments		Wholesale Gas Services(a)		Gas Marketing Services		Total		All Other		Eliminations		Consolidated
		(in millions)																	(in millions)

Three Months Ended March 31, 2022
Three Months Ended June 30, 2022																		Three Months Ended June 30, 2022
Operating revenues	Operating revenues	$	1,803	$	8	$	—	$	243	$	2,054	$	16	$	(12)	$	2,058	Operating revenues	$	980	$	8	$	—	$	92	$	1,080	$	10	$	(7)	$	1,083
Segment net income (loss)	Segment net income (loss)	214		29		—		66		309		10		—		319		Segment net income (loss)	92		23		—		1		116		(1)		—		115
Total assets at March 31, 2022		21,034		1,473		—		1,640		24,147		12,017		(12,787)		23,377

Three Months Ended March 31, 2021
Six Months Ended June 30, 2022																		Six Months Ended June 30, 2022
Operating revenues																		Operating revenues	$	2,782	$	16	$	—	$	335	$	3,133	$	26	$	(19)	$	3,140
Segment net income (loss)																		Segment net income (loss)	306		52		—		67		425		8		—		433
Total assets at June 30, 2022																		Total assets at June 30, 2022	21,183		1,433		—		1,554		24,170		11,999		(12,551)		23,618
Three Months Ended June 30, 2021																		Three Months Ended June 30, 2021
Operating revenues																		Operating revenues	$	710	$	8	$	(110)	$	64	$	672	$	11	$	(6)	$	677
Segment net income (loss)(b)																		Segment net income (loss)(b)	80		(36)		(112)		6		(62)		(3)		—		(65)
Six Months Ended June 30, 2021																		Six Months Ended June 30, 2021
Operating revenues	Operating revenues	$	1,200	$	8	$	298	$	195	$	1,701	$	7	$	(14)	$	1,694	Operating revenues	$	1,910	$	16	$	188	$	259	$	2,373	$	18	$	(20)	$	2,371
Segment net income (loss)(b)	Segment net income (loss)(b)	183		29		126		56		394		4		—		398		Segment net income (loss)(b)	263		(7)		14		62		332		1		—		333
Total assets at December 31, 2021	Total assets at December 31, 2021	20,917		1,467		31		1,556		23,971		12,114		(12,525)		23,560		Total assets at December 31, 2021	20,917		1,467		31		1,556		23,971		12,114		(12,525)		23,560

~~(*)~~(a)As a result of the sale of Sequent, wholesale gas services is no longer a reportable segment for the three and six months ended ~~March 31,~~June 30, 2022. Prior to the sale of Sequent, the revenues for wholesale gas services were netted with costs associated with its energy and risk management activities. A reconciliation of operating revenues and intercompany revenues is shown in the following table.

Third Party Gross Revenues Intercompany Revenues Total Gross Revenues Less Gross Gas Costs Operating Revenues
(in millions)
Three Months Ended March 31, 2021 $ 2,588 $ 63 $ 2,651 $ 2,353 $ 298


	Third Party Gross Revenues		Intercompany Revenues		Total Gross Revenues		Less Gross Gas Costs		Operating Revenues
	(in millions)

Three Months Ended June 30, 2021	$	1,292	$	27	$	1,319	$	1,429	$	(110)

Six Months Ended June 30, 2021	3,881		90		3,971		3,783		188

(b)For gas pipeline investments, includes a pre-tax impairment charge of $82 million ($58 million after tax) related to the equity method investment in the PennEast Pipeline project. See Note 7 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.


			Page
Combined Management's Discussion and Analysis of Financial Condition and Results of Operations
Overview			8797
Results of Operations			88100
Southern Company			88100
Alabama Power			95109
Georgia Power			99114
Mississippi Power			~~103~~120
Southern Power			~~106~~124
Southern Company Gas			~~109~~127
Future Earnings Potential			~~115~~135
Accounting Policies			~~117~~138
Financial Condition and Liquidity			~~118~~139

The following Management's Discussion and Analysis of Financial Condition and Results of Operations is a combined presentation; however, information contained herein relating to any individual Registrant is filed by such Registrant on its own behalf and each Registrant makes no representation as to information related to the other Registrants.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

OVERVIEW

Southern Company is a holding company that owns all of the common stock of three traditional electric operating companies (Alabama Power, Georgia Power, and Mississippi Power), Southern Power, and Southern Company Gas and owns other direct and indirect subsidiaries. The primary businesses of the Southern Company system are electricity sales by the traditional electric operating companies and Southern Power and the distribution of natural gas by Southern Company Gas. Southern Company's reportable segments are the sale of electricity by the traditional electric operating companies, the sale of electricity in the competitive wholesale market by Southern Power, and the sale of natural gas and other complementary products and services by Southern Company Gas. Southern Company Gas' reportable segments are gas distribution operations, gas pipeline investments, and gas marketing services. Prior to the sale of Sequent on July 1, 2021, Southern Company Gas' reportable segments also included wholesale gas services. See Note (L) to the Condensed Financial Statements herein for additional information on segment reporting. For additional information on the Registrants' primary business activities and the sale of Sequent, see BUSINESS – "The Southern Company System" in Item 1 of the Form 10-K and Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K, respectively.

The Registrants continue to focus on several key performance indicators. For the traditional electric operating companies and Southern Company Gas, these indicators include, but are not limited to, customer satisfaction, plant availability, electric and natural gas system reliability, and execution of major construction projects. For Southern Power, these indicators include, but are not limited to, the equivalent forced outage rate and contract availability to evaluate operating results and help ensure its ability to meet its contractual commitments to customers. In addition, Southern Company and the Subsidiary Registrants focus on earnings per share and net income, respectively, as a key performance indicator.

Recent Developments

Alabama Power

On July 12, 2022, the Alabama PSC approved the following items:

•Alabama Power's petition for a certificate of convenience and necessity, which authorizes Alabama Power to complete the acquisition of the Calhoun Generating Station. This transaction is expected to close by September 30, 2022.

•An increase to Rate ECR effective with August 2022 billings, which is expected to result in an increase of approximately $310 million annually. The approved increase in the Rate ECR factor will have no significant effect on Alabama Power's net income, but will increase operating cash flows related to fuel cost recovery.

•Modifications to Rate NDR.

•An accounting order authorizing Alabama Power to create a reliability reserve separate from the NDR and transition the previous Rate NDR authority related to reliability expenditures to the reliability reserve. Alabama Power may make accruals to the reliability reserve if the NDR balance exceeds $35 million.

See Note (B) to the Condensed Financial Statements under "Alabama Power" herein for additional information.

Georgia Power

Plant Vogtle Units 3 and 4 Construction and Start-Up Status

Construction continues on Plant Vogtle Units 3 and 4 (with electric generating capacity of approximately 1,100 MWs each), in which Georgia Power currently holds a 45.7% ownership interest. Georgia Power's share of the total project capital cost forecast to complete Plant Vogtle Units 3 and 4, including contingency, through the end of the first quarter 2023 and the fourth quarter 2023, respectively, is ~~$10.4~~$10.5 billion.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

to submit the remaining ITAACs and begin fuel load, the pace of system and area turnovers, and the progression of startup and other testing. An in-service date during the ~~third quarter or the~~ fourth quarter 2023 for Unit 4 is projected. Unit 4's projected schedule primarily depends on Unit 3 progress through fuel load, startup, and testing; overall construction productivity and production levels improving, ~~as well as~~particularly in electrical installation, including terminations; and appropriate levels of craft laborers, particularly electricians and pipefitters, being added and maintained. Any further delays could result in later in-service ~~dates.~~dates and cost increases.

During the first half of 2022, established construction contingency totaling $126 million was assigned to the base capital cost forecast for costs primarily associated with construction productivity, the pace of system turnovers, additional craft and support resources, and procurement for Units 3 and 4. Georgia Power also increased its total project capital cost forecast as of June 30, 2022 by adding $36 million to replenish construction contingency. After considering the significant level of uncertainty that exists regarding the future recoverability of these costs since the ultimate outcome of these matters is subject to the outcome of future assessments by management, as well as Georgia PSC decisions in future regulatory proceedings, Georgia Power recorded a pre-tax charge to income in the second quarter 2022 of $36 million ($27 million after tax) for the increase in the total project capital cost forecast. Georgia Power may request the Georgia PSC to evaluate those expenditures for rate recovery during the prudence review following the Unit 4 fuel load pursuant to the twenty-fourth VCM stipulation described in Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction – Regulatory Matters" herein.

Georgia Power and the other Vogtle Owners do not agree on the starting dollar amount for the determination of cost increases subject to the cost-sharing and tender provisions of the Global Amendments (as defined in Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction – Joint Owner Contracts" herein). The other Vogtle Owners have notified Georgia Power that they believe the current project capital cost forecast exceeds the cost-sharing thresholds and triggers the tender provisions under the Global Amendments. Georgia Power recorded pre-tax charges to income in the fourth quarter 2021 and the second quarter 2022 of approximately $440 million ($328 million after tax) and $16 million ($12 million after tax), respectively, associated with these cost-sharing and tender provisions, which are included in the total project capital cost forecast. Georgia Power may be required to record further pre-tax charges to income of up to approximately $480 million associated with these provisions based on the current project capital cost forecast. In October 2021, Georgia Power and the other Vogtle Owners entered into an agreement, which was modified on June 3, 2022, to clarify the process for the tender provisions of the Global Amendments to provide for a decision between 120 and ~~180~~194 days after the tender option is triggered, which the other Vogtle Owners assert occurred on February 14, ~~2022.~~

~~Table~~2022, and would require the other Vogtle Owners to notify Georgia Power of ~~ContentsIndex~~their intent to ~~Financial Statements~~

~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION~~

~~AND RESULTS OF OPERATIONS (Continued)~~

~~During~~exercise their tender options by August 27, 2022. On June 17, 2022 and July 26, 2022, OPC and Dalton, respectively, notified Georgia Power of their purported exercises of their tender options. On June 18, 2022, OPC and MEAG Power each filed a separate lawsuit against Georgia Power in the ~~first quarter~~Superior Court of Fulton County, Georgia seeking a declaratory judgment that the starting dollar amount is $17.1 billion and that the cost-sharing and tender provisions have been triggered. On July 25, 2022, ~~established construction contingency totaling $43 million was assigned~~Georgia Power filed its answer in the lawsuit filed by MEAG Power and included counterclaims seeking a declaratory judgment that the starting dollar amount is $18.38 billion and that costs related to force majeure events are excluded prior to calculating the ~~base capital cost forecast for costs primarily associated with construction productivity, the pace of system turnovers,~~cost-sharing and ~~support resources for Units 3~~tender provisions and 4.when calculating Georgia Power's related financial obligations.

The ultimate impact of these matters on the construction schedule and project capital cost forecast for Plant Vogtle Units 3 and 4 cannot be determined at this time. See Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction" herein for additional information.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

2022 Base Rate ~~Plan~~Case

On June 24, 2022, Georgia Power ~~is required to file its next general~~filed a base rate case ~~by June 24,~~(Georgia Power 2022 Base Rate Case) with the Georgia PSC. The filing proposes a three-year alternate rate plan with requested rate increases totaling $852 million, $107 million, and $45 million effective January 1, 2023, January 1, 2024, and January 1, 2025, respectively. Georgia Power expects the Georgia PSC to render a final decision in this matter on December 20, 2022. The ultimate outcome of this matter cannot be determined at this time. See Note (B) to the Condensed Financial Statements under "Georgia Power – Rate Plans – 2022 Base Rate Case" herein for additional information.

Integrated Resource Plan

On July 21, 2022, the Georgia PSC approved Georgia Power's triennial IRP (2022 IRP), as modified by a stipulated agreement among Georgia Power, the staff of the Georgia PSC, and certain intervenors and as further modified by the Georgia PSC. In the 2022 IRP decision, the Georgia PSC approved several requests, including the following:

•Decertification and retirement of Plant Wansley Units 1 and 2 (926 MWs based on 53.5% ownership) by August 31, 2022 and Plant Scherer Unit 3 (614 MWs based on 75% ownership) by December 31, 2028, as well as the reclassification to regulatory asset accounts of the remaining net book values of these units and any remaining unusable materials and supplies inventories upon retirement.

•Decertification and retirement of Plant Gaston Units 1 through 4 (500 MWs based on 50% ownership through SEGCO) by December 31, 2028. See Note 7 to the financial statements under ~~"Georgia Power – Rate Plans"~~"SEGCO" in Item 8 of the Form 10-K for additional information.

•Georgia Power's environmental compliance strategy, including approval of Georgia Power's plans to address CCR at its ash ponds and landfills.

The Georgia PSC deferred a decision on the requested decertification and retirement of Plant Bowen Units 1 and 2 (1,400 MWs) to the 2025 IRP.

See Note (B) to the Condensed Financial Statements under "Georgia Power – Integrated Resource Plans" herein for additional information.

Mississippi Power

On May 26, 2022, Mississippi Power and Cooperative Energy executed an amended shared service agreement (SSA) under which Cooperative Energy will continue to decrease its use of Mississippi Power's generation services under the MRA tariff up to 2.5% annually through 2035. At June 30, 2022, Mississippi Power is serving approximately 400 MWs of Cooperative Energy's annual demand.Beginning in 2036, Cooperative Energy will provide 100% of its electricity requirements at the MRA delivery points under the tariff. Neither party has the option to cancel the amended SSA. On June 30, 2022, Mississippi Power filed a request with the FERC for approval of the amended SSA. Mississippi Power expects to remarket this capacity, including the potential development of future arrangements with Cooperative Energy.

On July 15, 2022, Mississippi Power filed a request with the FERC for a $23 million increase in annual wholesale base revenues under the MRA tariff effective July 15, 2022, subject to refund. ~~The related proceedings are expected to conclude in summer 2022; however, the~~The ultimate outcome of this matter cannot be determined at this time.

See Note (B) to the Condensed Financial Statements under "Mississippi Power" herein for additional information.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Southern Power

At ~~March 31,~~June 30, 2022, Southern Power's average investment coverage ratio for its generating assets, including those owned with various partners, based on the ratio of investment under contract to total investment using the respective facilities' net book value (or expected in-service value for facilities under construction) as the investment amount was ~~95%~~96% through 2026 and 92% through 2031, with an average remaining contract duration of approximately 13 years.

Southern Company Gas

On ~~April 7,~~May 31, 2022, Virginia Natural Gas ~~notified~~filed a notice of intent with the Virginia State Corporation Commission ~~of its intent~~ to file a base rate case later in the third quarter 2022.

The ultimate outcome of ~~this matter~~these matters cannot be determined at this time.

RESULTS OF OPERATIONS

Southern Company

Net Income

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$(103) (9.1)

Second Quarter 2022 vs. Second Quarter 2021

Year-To-Date 2022 vs. Year-To-Date 2021

(change in millions)

(% change)

(change in millions)

(% change)

$735

N/M

$631

41.8

N/M - Not meaningful

Consolidated net income attributable to Southern Company was ~~$1.0~~$1.1 billion ($~~0.97~~1.04 per share) ~~for first~~in the second quarter 2022 compared to ~~$1.1~~$0.4 billion ($~~1.07~~0.35 per share) for the corresponding period in 2021. For year-to-date 2022, consolidated net income attributable to Southern Company was $2.1 billion ($2.01 per share) compared to $1.5 billion ($1.42 per share) for the corresponding period in 2021. The ~~decrease was~~increases were primarily due to decreases of $304 million and $340 million in the ~~first~~second quarter and year-to-date 2022, respectively, in after-tax charges related to the construction of Plant Vogtle Units 3 and 4, an after-tax charge of $58 million in the second quarter 2021 ~~net income of $126 million~~related to the PennEast pipeline project at ~~Sequent, which was sold on July 1, 2021,~~Southern Company Gas, an increase in retail electric revenues associated with rates and ~~higher non-fuel operations~~pricing and ~~maintenance costs, partially offset by~~warmer weather, and an increase in natural gas revenues from base rate increases and continued infrastructure ~~replacement, an~~replacement. The second quarter 2021 net loss of $112 million at Sequent, which was sold on July 1, 2021, also contributed to the net income increase in ~~retail electric revenues primarily from base tariff~~the second quarter 2022. These increases ~~in accordance with Georgia Power's 2019 ARP,~~were partially offset by higher non-fuel operations and ~~a $36 million after-tax charge in the first quarter 2021 related to the construction of Plant Vogtle Units 3 and 4.~~maintenance costs.

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AND RESULTS OF OPERATIONS (Continued)

Retail Electric Revenues

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$271 8.1


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$1,190	33.1	$1,461	21.0

In the ~~first~~second quarter 2022, retail electric revenues were ~~$3.6~~$4.8 billion compared to ~~$3.3~~$3.6 billion for the corresponding period in 2021. For year-to-date 2022, retail electric revenues were $8.4 billion compared to $6.9 billion for the corresponding period in 2021.

Details of the changes in retail electric revenues were as follows:


		First Quarter 2022			Second Quarter 2022						Year-To-Date 2022
			(in millions)			(% change)			(in millions)		(% change)		(in millions)		(% change)
Retail electric – prior year	Retail electric – prior year		$	3,342				Retail electric – prior year	$	3,599			$	6,941
Estimated change resulting from –	Estimated change resulting from –							Estimated change resulting from –
Rates and pricing	Rates and pricing		56			1.7	%	Rates and pricing	237		6.6	%	293		4.2	%
Sales growth	Sales growth		20			0.6		Sales growth	66		1.9		85		1.2
Weather	Weather		16			0.5		Weather	145		4.0		161		2.3
Fuel and other cost recovery	Fuel and other cost recovery		179			5.3		Fuel and other cost recovery	742		20.6		922		13.3
Retail electric – current year	Retail electric – current year		$	3,613		8.1	%	Retail electric – current year	$	4,789	33.1	%	$	8,402	21.0	%

Revenues associated with changes in rates and pricing increased in the ~~first~~second quarter and year-to-date 2022 when compared to the corresponding ~~period~~periods in 2021. The ~~increase was~~increases were primarily due to higher contributions from commercial and industrial customers with variable demand-driven pricing, base tariff increases in accordance with Georgia Power's 2019 ~~ARP.~~ARP, and pricing effects associated with residential customer usage. See Note 2 to the financial statements under "Georgia Power – Rate Plans" in Item 8 of the Form 10-K for additional information.

Revenues attributable to changes in sales increased in the ~~first~~second quarter and year-to-date 2022 when compared to the corresponding periods in 2021. Weather-adjusted residential KWH sales increased 1.0% in the second quarter 2022 when compared to the corresponding period in ~~2021.~~2021 primarily due to strong customer growth, partially offset by decreased customer usage. Weather-adjusted residential KWH sales decreased ~~1.1%~~0.1% for year-to-date 2022 when compared to the corresponding period in 2021 and weather-adjusted commercial KWH sales increased ~~1.9%~~2.2% and 2.1% in the ~~first~~second quarter and year-to-date 2022, respectively, when compared to the corresponding ~~period~~periods in 2021 primarily due to impacts on customer usage from increased activity outside the home ~~following the expiration~~as customers return to pre-pandemic levels of ~~COVID-19 restrictions.~~activity. Increased customer growth ~~partially~~largely offset the decrease in customer usage impacting year-to-date 2022 residential KWH sales and contributed to the increase in commercial KWH sales. Industrial KWH sales increased ~~1.7%~~3.7% and 2.8% in the ~~first~~second quarter and year-to-date 2022, respectively, when compared to the corresponding ~~period~~periods in 2021 primarily due to strength in the pipeline ~~segment.~~and paper sectors, partially offset by a decrease in the chemicals sector.

Fuel and other cost recovery revenues increased ~~$179~~$742 million and $922 million in the ~~first~~second quarter and year-to-date 2022, respectively, compared to the corresponding ~~period~~periods in 2021 primarily due to higher fuel and purchased power ~~costs.~~costs and an increase in the volume of KWHs generated. Electric rates for the traditional electric operating companies include provisions to adjust billings for fluctuations in fuel costs, including the energy component of purchased power costs. Under these provisions, fuel revenues generally equal fuel expenses, including the energy component of PPA costs, and do not affect net income. The traditional electric operating companies each have one or more regulatory mechanisms to recover other costs such as environmental and other compliance costs, storm damage, new plants, and PPA capacity costs.

~~Wholesale Electric Revenues~~

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$119 21.8

In the first quarter 2022, wholesale electric revenues were $664 million compared to $545 million for the corresponding period in 2021. The increase was primarily due to a $117 million increase in energy revenues in the first quarter 2022 as a result of higher natural gas prices when compared See Note 2 to the ~~corresponding period~~financial statements in ~~2021~~Item 8 of the Form 10-K and ~~an increase in~~Note (B) to the ~~volume of KWHs sold at Southern Power primarily associated with natural gas PPAs.~~Condensed Financial Statements herein for additional information.

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AND RESULTS OF OPERATIONS (Continued)

Wholesale Electric Revenues


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$391	71.6	$510	46.7

In the second quarter 2022, wholesale electric revenues were $937 million compared to $546 million for the corresponding period in 2021. For year-to-date 2022, wholesale electric revenues were $1.6 billion compared to $1.1 billion for the corresponding period in 2021. The increases were primarily due to increases of $376 million and $493 million in the second quarter and year-to-date 2022, respectively, in energy revenues as a result of fuel and purchased power price increases when compared to the corresponding periods in 2021 and an increase in the volume of KWHs sold primarily associated with sales under natural gas PPAs at Southern Power. In addition, increases in capacity revenues of $15 million and $18 million in the second quarter and year-to-date 2022, respectively, were primarily due to increased capacity sales under natural gas PPAs at Southern Power.

Wholesale electric revenues consist of revenues from PPAs and short-term opportunity sales. Wholesale electric revenues from PPAs (other than solar and wind PPAs) have both capacity and energy components. Capacity revenues generally represent the greatest contribution to net income and are designed to provide recovery of fixed costs plus a return on investment. Energy revenues will vary depending on fuel prices, the market prices of wholesale energy compared to the Southern Company system's generation, demand for energy within the Southern Company system's electric service territory, and the availability of the Southern Company system's generation. Increases and decreases in energy revenues that are driven by fuel prices are accompanied by an increase or decrease in fuel costs and do not have a significant impact on net income. Energy sales from solar and wind PPAs do not have a capacity charge and customers either purchase the energy output of a dedicated renewable facility through an energy charge or through a fixed price related to the energy. As a result, the ability to recover fixed and variable operations and maintenance expenses is dependent upon the level of energy generated from these facilities, which can be impacted by weather conditions, equipment performance, transmission constraints, and other factors. Wholesale electric revenues at Mississippi Power include FERC-regulated municipal and rural association sales under cost-based tariffs as well as market-based sales. Short-term opportunity sales are made at market-based rates that generally provide a margin above the Southern Company system's variable cost to produce the energy.

Other Electric Revenues


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$17	9.7	$24	6.9

In the second quarter 2022, other electric revenues were $192 million compared to $175 million for the corresponding period in 2021. For year-to-date 2022, other electric revenues were $370 million compared to $346 million for the corresponding period in 2021. The increases in the second quarter and year-to-date 2022 were primarily due to increases of $19 million and $27 million, respectively, in transmission revenues, $5 million and $8 million, respectively, in cogeneration steam revenues associated with higher natural gas prices at Alabama Power, and $4 million and $5 million, respectively, in rent revenues at the traditional electric operating companies, partially offset by decreases of $12 million and $20 million, respectively, resulting from the termination of a transmission service contract at Georgia Power.

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AND RESULTS OF OPERATIONS (Continued)

Natural Gas Revenues

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$364 21.5


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$406	60.0	$769	32.4

In the ~~first~~second quarter 2022, natural gas revenues were ~~$2.1~~$1.1 billion compared to ~~$1.7~~$677 million for the corresponding period in 2021. For year-to-date 2022, natural gas revenues were $3.1 billion compared to $2.4 billion for the corresponding period in 2021.

Details of the changes in natural gas revenues were as follows:


		First Quarter 2022			Second Quarter 2022						Year-To-Date 2022
			(in millions)			(% change)			(in millions)		(% change)		(in millions)		(% change)
Natural gas revenues – prior year	Natural gas revenues – prior year		$	1,694				Natural gas revenues – prior year	$	677			$	2,371
Estimated change resulting from –	Estimated change resulting from –							Estimated change resulting from –
Infrastructure replacement programs and base rate changes	Infrastructure replacement programs and base rate changes		86			5.1	%	Infrastructure replacement programs and base rate changes	46		6.8	%	132		5.6	%
Gas costs and other cost recovery	Gas costs and other cost recovery		544			32.1		Gas costs and other cost recovery	239		35.3		783		33.0
Gas marketing services	Gas marketing services		18			1.1		Gas marketing services	(5)		(0.7)		13		0.5
Wholesale gas services	Wholesale gas services		(297)			(17.5)		Wholesale gas services	110		16.2		(187)		(7.9)
Other	Other		13			0.7		Other	16		2.4		28		1.2
Natural gas revenues – current year	Natural gas revenues – current year		$	2,058		21.5	%	Natural gas revenues – current year	$	1,083	60.0	%	$	3,140	32.4	%

Revenues from infrastructure replacement programs and base rate changes at the natural gas distribution utilities increased in the ~~first~~second quarter and year-to-date 2022 compared to the corresponding ~~period~~periods in 2021 primarily due to rate increases at Nicor Gas, Atlanta Gas Light, and Chattanooga Gas and continued investment in infrastructure replacement. See Note 2 to the financial statements under "Southern Company Gas – Rate Proceedings" in Item 8 of the Form 10-K for additional information.

Revenues associated with gas costs and other cost recovery increased in the ~~first~~second quarter and year-to-date 2022 compared to the corresponding ~~period~~periods in 2021 primarily due to higher volumes of natural gas sold and higher natural gas cost recovery. Natural gas distribution rates include provisions to adjust billings for fluctuations in natural gas costs. Therefore, gas costs recovered through natural gas revenues generally equal the amount expensed in cost of natural gas and do not affect net income from the natural gas distribution utilities.

Revenues from gas marketing services ~~increased~~decreased in the ~~first~~second quarter 2022 compared to the corresponding period in 2021 ~~primarily~~due to unrealized hedge losses and warmer weather in the second quarter 2022. For year-to-date 2022, revenues increased compared to the corresponding period in 2021 due to higher commodity prices and higher sales to commercial customers.

The changes in revenues related to Southern Company Gas' wholesale gas services were due to the sale of Sequent on July 1, 2021. See Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.

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AND RESULTS OF OPERATIONS (Continued)

The change in revenues related to Southern Company Gas' wholesale gas services was due to the sale of Sequent on July 1, 2021. See Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.

Other Revenues

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$(23) (14.5)


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$4	2.0	$(18)	(5.0)

~~In the first quarter~~For year-to-date 2022, other revenues were ~~$136~~$341 million compared to ~~$159~~$359 million for the corresponding period in 2021. The decrease was primarily due to a ~~$14~~net decrease of $22 million ~~decrease at PowerSecure primarily related to distributed infrastructure and energy efficiency projects and a $6 million decrease~~ in unregulated sales ~~associated with~~at Georgia Power primarily due to the timing of revenue recognition for a large, ongoing power delivery construction and maintenance contract, partially offset by increases associated with more energy conservation projects ~~at Georgia Power.~~performed in 2022.

Fuel and Purchased Power Expenses


		First Quarter 2022 vs. First Quarter 2021			Second Quarter 2022 vs. Second Quarter 2021					Year-To-Date 2022 vs. Year-To-Date 2021
			(change in millions)			(% change)		(change in millions)		(% change)	(change in millions)		(% change)
Fuel	Fuel		$	263		31.0	Fuel	$	867	102.2	$	1,130	66.6
Purchased power	Purchased power		25			12.1	Purchased power	191		88.0	216		50.9
Total fuel and purchased power expenses	Total fuel and purchased power expenses		$	288			Total fuel and purchased power expenses	$	1,058		$	1,346

In the ~~first~~second quarter 2022, total fuel and purchased power expenses were ~~$1.3~~$2.1 billion compared to $1.1 billion for the corresponding period in 2021. The increase was primarily the result of ~~a $247~~an $853 million increase in the average cost of fuel and purchased power and a ~~$41~~$205 million increase in the volume of KWHs generated and purchased.

For year-to-date 2022, total fuel and purchased power expenses were $3.5 billion compared to $2.1 billion for the corresponding period in 2021. The increase was primarily the result of a $1.1 billion increase in the average cost of fuel and purchased power and a $239 million increase in the volume of KWHs generated and purchased.

Fuel and purchased power energy transactions at the traditional electric operating companies are generally offset by fuel revenues and do not have a significant impact on net income. See Note 2 to the financial statements in Item 8 of the Form 10-K for additional information. Fuel expenses incurred under Southern Power's PPAs are generally the responsibility of the counterparties and do not significantly impact net income.

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AND RESULTS OF OPERATIONS (Continued)

Details of the Southern Company system's generation and purchased power were as follows:


		First Quarter 2022	First Quarter 2021		Second Quarter 2022	Second Quarter 2021	Year-To-Date 2022	Year-To-Date 2021
Total generation (in billions of KWHs)(a)	Total generation (in billions of KWHs)(a)	46	43	Total generation (in billions of KWHs)(a)	46	43	92	86
Total purchased power (in billions of KWHs)	Total purchased power (in billions of KWHs)	4	4	Total purchased power (in billions of KWHs)	6	4	11	8
Sources of generation (percent)(a) —	Sources of generation (percent)(a) —			Sources of generation (percent)(a) —
Gas	Gas	46	46	Gas	49	47	47	46
Coal	Coal	23	24	Coal	22	22	23	23
Nuclear	Nuclear	17	17	Nuclear	16	18	16	18
Hydro	Hydro	6	5	Hydro	3	4	5	4
Wind, Solar, and Other	Wind, Solar, and Other	8	8	Wind, Solar, and Other	10	9	9	9
Cost of fuel, generated (in cents per net KWH)—	Cost of fuel, generated (in cents per net KWH)—			Cost of fuel, generated (in cents per net KWH)—
Gas(a)	Gas(a)	3.53	2.55	Gas(a)	5.59	2.58	4.60	2.56
Coal	Coal	3.11	2.82	Coal	3.50	2.87	3.30	2.85
Nuclear	Nuclear	0.72	0.75	Nuclear	0.72	0.75	0.72	0.75
Average cost of fuel, generated (in cents per net KWH)(a)	Average cost of fuel, generated (in cents per net KWH)(a)	2.86	2.26	Average cost of fuel, generated (in cents per net KWH)(a)	4.13	2.28	3.50	2.27
Average cost of purchased power (in cents per net KWH)(b)	Average cost of purchased power (in cents per net KWH)(b)	5.58	5.10	Average cost of purchased power (in cents per net KWH)(b)	7.83	5.65	6.90	5.37

(a)Excludes Central Alabama Generating Station KWHs and associated cost of fuel as its fuel is provided by the purchaser under a power sales agreement. See Note 15 to the financial statements under "Alabama Power" in Item 8 of the Form 10-K for additional information.

(b)Average cost of purchased power includes fuel purchased by the Southern Company system for tolling agreements where power is generated by the provider.

Fuel

In the ~~first~~second quarter 2022, fuel expense was ~~$1.1~~$1.7 billion compared to $0.8 billion for the corresponding period in 2021. The increase was primarily due to a ~~38.4%~~116.7% increase in the average cost of natural gas per KWH generated, a ~~10.3%~~23.2% decrease in the volume of KWHs generated by hydro, a 22.0% increase in the average cost of coal per KWH generated, ~~and~~ a ~~4.6%~~10.4% increase in the volume of KWHs generated by natural gas, and a 9.0% increase in the volume of KWHs generated by coal.

For year-to-date 2022, fuel expense was $2.8 billion compared to $1.7 billion for the corresponding period in 2021. The increase was primarily due to a 79.7% increase in the average cost of natural gas per KWH generated, a 15.8% increase in the average cost of coal per KWH generated, a 7.6% increase in the volume of KWHs generated by natural gas, and a 5.8% increase in the volume of KWHs generated by coal, partially offset by a ~~41.2%~~9.8% increase in the volume of KWHs generated by hydro.

Purchased Power

In the ~~first~~second quarter 2022, purchased power expense was ~~$232~~$408 million compared to ~~$207~~$217 million for the corresponding period in 2021. The increase was primarily due to a ~~9.4%~~38.6% increase in the average cost per KWH purchased primarily due to higher natural gas and coal prices and a ~~4.6%~~55.3% increase in the volume of KWHs purchased.

For year-to-date 2022, purchased power expense was $640 million compared to $424 million for the corresponding period in 2021. The increase was primarily due to a 28.5% increase in the average cost per KWH purchased primarily due to higher natural gas and coal prices and a 29.4% increase in the volume of KWHs purchased.

Energy purchases will vary depending on demand for energy within the Southern Company system's electric service territory, the market prices of wholesale energy as compared to the cost of the Southern Company system's generation, and the availability of the Southern Company system's generation.

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AND RESULTS OF OPERATIONS (Continued)

Cost of Natural Gas

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$512 87.8


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$221	95.7	$732	89.9

In the second quarter 2022, cost of natural gas was $452 million compared to $231 million for the corresponding period in 2021. For year-to-date 2022, cost of natural gas was $1.5 billion compared to $814 million for the corresponding period in 2021. The increases reflect higher gas cost recovery as a result of increases of 153.2% and 119.4% in natural gas prices in the second quarter and year-to-date 2022, respectively, compared to the corresponding periods in 2021.

Cost of Other Sales


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$11	10.7	$(2)	(1.1)

In the second quarter 2022, cost of other sales was $114 million compared to $103 million for the corresponding period in 2021. The increase was primarily due to increases of $14 million related to distributed infrastructure projects at PowerSecure, $7 million associated with unregulated merchandising and energy services expenses at Alabama Power, and $5 million related to unregulated construction and maintenance contracts at Mississippi Power, partially offset by a $16 million decrease associated with unregulated power delivery construction and maintenance projects at Georgia Power.

For year-to-date 2022, cost of other sales was $183 million compared to $185 million for the corresponding period in 2021. The decrease was primarily due to a decrease of $26 million associated with unregulated power delivery construction and maintenance projects at Georgia Power, largely offset by increases of $14 million related to distributed infrastructure projects at PowerSecure, $5 million related to unregulated construction and maintenance contracts at Mississippi Power, and $5 million associated with unregulated merchandising and energy services expenses at Alabama Power.

Other Operations and Maintenance Expenses


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$120	8.3	$265	9.4

In the second quarter 2022, other operations and maintenance expenses were $1.6 billion compared to $1.4 billion for the corresponding period in 2021. Other operations and maintenance expenses increased $124 million, excluding expenses related to Sequent in the second quarter 2021. The increase was primarily due to increases of $29 million in transmission and distribution expenses primarily related to line maintenance, $22 million in generation expenses primarily related to scheduled outage and maintenance costs, $13 million in compensation and benefit expenses, $9 million associated with more unregulated energy conservation projects in 2022 at Georgia Power, $8 million in expenses at Southern Company Gas passed through directly to customers, primarily related to bad debt, and $6 million in amortization of cloud software.

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~~the natural gas distribution utilities. Cost of natural gas at the natural gas distribution utilities represented 90% of total cost of natural gas for the first quarter 2022.~~

In the first quarter 2022, cost of natural gas was $1.1 billion compared to $0.6 billion for the corresponding period in 2021. The increase reflects higher gas cost recovery as a result of an 83.9% increase in natural gas prices in the first quarter 2022 compared to the corresponding period in 2021.

~~Cost of Other Sales~~

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$(13) (15.9)

In the first quarter 2022, cost of other sales was $69 million compared to $82 million for the corresponding period in 2021. The decrease was primarily due to decreases of $9 million at Georgia Power primarily associated with unregulated power delivery construction and maintenance projects and $4 million related to distributed infrastructure and energy efficiency projects at PowerSecure.

~~Other Operations and Maintenance Expenses~~

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$144 10.5

~~In the first quarter~~For year-to-date 2022, other operations and maintenance expenses were ~~$1.5~~$3.1 billion compared to ~~$1.4~~$2.8 billion for the corresponding period in 2021. Excluding ~~$48~~$53 million of expenses related to Sequent in 2021, other operations and maintenance expenses increased ~~$192~~$318 million. The increase was primarily due to increases of ~~$66~~$86 million in transmission and distribution expenses primarily related to line maintenance, ~~$58~~$80 million in generation expenses primarily related to scheduled outage and maintenance ~~and $16~~costs, $24 million in expenses at Southern Company Gas passed through directly to customers, primarily related to bad ~~debt.~~debt, $23 million in compensation and benefit expenses, and $8 million in amortization of cloud software.

Depreciation and Amortization

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$21 2.4


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$22	2.5	$43	2.4

In the ~~first~~second quarter 2022, depreciation and amortization was ~~$892~~$913 million compared to ~~$871~~$891 million for the corresponding period in 2021. For year-to-date 2022, depreciation and amortization was $1.81 billion compared to $1.76 billion for the corresponding period in 2021. The ~~increase was~~increases were primarily due to additional plant in service.

Taxes Other Than Income Taxes

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$27 7.8


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$36	11.5	$64	9.7

In the ~~first~~second quarter 2022, taxes other than income taxes were ~~$372~~$349 million compared to ~~$345~~$313 million for the corresponding period in 2021. For year-to-date 2022, taxes other than income taxes were $721 million compared to $657 million for the corresponding period in 2021. The ~~increase~~increases primarily ~~reflects~~ anreflect an increase in revenue tax expenses as a result of higher natural gas revenues at Nicor Gas and an increase in municipal franchise fees related to higher retail revenues at Georgia Power.

~~Table of ContentsIndex to Financial Statements~~

~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION~~

~~AND RESULTS OF OPERATIONS (Continued)~~

Estimated Loss on Plant Vogtle Units 3 and 4

~~First Quarter 2022 vs. First Quarter 2021~~

~~(change in millions)~~

~~(% change)~~

~~$(48)~~

~~N/M~~

~~N/M - Not meaningful~~


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$(408)	(88.7)	$(456)	(89.8)

In the ~~first~~second quarter 2022 and 2021, ~~a $48 million~~Georgia Power recorded estimated probable ~~loss~~losses on Plant Vogtle Units 3 and 4 ~~was~~of $52 million and $460 million, respectively. For year-to-date 2022 and 2021, Georgia Power recorded ~~at Georgia Power.~~estimated probable losses on Plant Vogtle Units 3 and 4 totaling $52 million and $508 million, respectively. The ~~loss reflects~~losses reflect revisions to the total project capital cost forecast to complete construction and start-up of Plant Vogtle Units 3 and 4. See Note (B) to the Condensed Financial Statements herein and Note 2 to the financial statements in Item 8 of the Form 10-K under "Georgia Power – Nuclear Construction" for additional information.

Gain on Dispositions, Net

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$(21) (47.7)


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$(1)	(9.1)	$(21)	(38.9)

~~In the first quarter~~For year-to-date 2022, gain on dispositions, net was ~~$23~~$33 million compared to ~~$44~~$54 million for the corresponding period in 2021. The ~~first quarter 2022 amount includes $17 million in gains from sales of integrated transmission system assets at Georgia Power. The first quarter 2021 amount includes~~decrease reflects a $39 million ~~in gains~~gain at Southern Power primarily from contributions of wind turbine equipment to various equity method ~~investments.~~investments in 2021, partially offset by a $17 million gain from sales of

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AND RESULTS OF OPERATIONS (Continued)

integrated transmission system assets at Georgia Power in 2022. See Note 15 to the financial statements under "Southern Power – Development Projects" in Item 8 of the Form 10-K for additional information.

Earnings (Loss) from Equity Method Investments

Second Quarter 2022 vs. Second Quarter 2021

Year-To-Date 2022 vs. Year-To-Date 2021

(change in millions)

(% change)

(change in millions)

(% change)

$74

N/M

$75

N/M

N/M - Not meaningful

In the second quarter 2022, earnings from equity method investments were $34 million compared to a loss of $40 million for the corresponding period in 2021. For year-to-date 2022, earnings from equity method investments were $80 million compared to $5 million for the corresponding period in 2021. The increases were primarily due to a pre-tax impairment charge of $82 million in the second quarter 2021 related to the PennEast Pipeline project at Southern Company Gas. See Note 7 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K and Note (E) to the Condensed Financial Statements herein under "Southern Company Gas" for additional information.

Interest Expense, Net of Amounts Capitalized

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$12 2.7


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$38	8.4	$49	5.4

In the ~~first~~second quarter 2022, interest expense, net of amounts capitalized was ~~$462~~$488 million compared to $450 million for the corresponding period in 2021. The increase was primarily due to higher average outstanding borrowings.

For year-to-date 2022, interest expense, net of amounts capitalized was $950 million compared to $901 million for the corresponding period in 2021. The increase was primarily due to higher average outstanding borrowings, partially offset by lower interest rates on newly issued debt relative to the debt that was retired since the ~~first~~second quarter 2021.

See FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" and "Financing Activities" herein for additional information on borrowings.

Other Income (Expense), Net

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$87 150.0


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$38	37.6	$123	76.9

In the ~~first~~second quarter 2022, other income (expense), net was ~~$145~~$139 million compared to ~~$58~~$101 million for the corresponding period in 2021. The increase was primarily due to ~~$75 million in~~ charitable contributions of $26 million at Southern Company Gas in the ~~first~~second quarter 2021 and a ~~$13~~$16 million increase in non-service cost-related retirement benefits income.

For year-to-date 2022, other income (expense), net was $283 million compared to $160 million for the corresponding period in 2021. The increase was primarily due to charitable contributions of $101 million at Southern Company Gas for year-to-date 2021 and a $30 million increase in non-service cost-related retirement benefits income.

See Note (H) to the Condensed Financial Statements herein for additional information.

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Income Taxes (Benefit)

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$(17) (8.9)

Second Quarter 2022 vs. Second Quarter 2021

Year-To-Date 2022 vs. Year-To-Date 2021

(change in millions)

(% change)

(change in millions)

(% change)

$316

N/M

$299

N/M

N/M - Not meaningful

In the ~~first~~second quarter 2022, income tax expense was $304 million compared to income tax benefit of $12 million for the corresponding period in 2021. For year-to-date 2022, income taxes were ~~$173~~$477 million compared to ~~$190~~$178 million for the corresponding period in 2021. The ~~decrease was~~increases were primarily due to ~~a decrease of~~ ~~$40 million at Southern Company Gas' wholesale gas services business as a result of the sale of Sequent on July 1, 2021, partially offset by $16 million of tax benefits~~an increase in pre-tax earnings and an adjustment in the ~~first~~second quarter ~~2021 resulting from new legislation that changed Southern Power's~~2022 related to a prior year state ~~apportionment methodology.~~tax credit carryforward at Georgia Power. See Note (G) to the Condensed Financial Statements herein for additional information.

Net Loss Attributable to Noncontrolling Interests

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$13 40.6

Second Quarter 2022 vs. Second Quarter 2021

Year-To-Date 2022 vs. Year-To-Date 2021

(change in millions)

(% change)

(change in millions)

(% change)

$22

N/M

$34

N/M

N/M - Not meaningful

Substantially all noncontrolling interests relate to renewable projects at Southern Power. In the ~~first~~second quarter 2022, net loss attributable to noncontrolling interests was ~~$45~~$22 million compared to ~~$32~~an immaterial loss for the corresponding period in 2021. For year-to-date 2022, net loss attributable to noncontrolling interests was $67 million compared to $33 million for the corresponding period in 2021. The increased ~~loss was~~losses attributable to noncontrolling interests were primarily due to ~~loss allocations to Southern Power's partners in the Garland and Tranquillity battery energy storage facilities and~~ higher HLBV loss allocations to Southern Power's ~~wind~~ tax equity partners, ~~including new partnerships entered into during 2021. The increased loss allocations were~~ partially offset by higher income allocations to Southern Power's ~~solar~~ equity partners.

Alabama Power

Net Income

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$(12) (3.3)


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$52	15.7	$40	5.8

Alabama Power's net income after dividends on preferred stock in the ~~first~~second quarter 2022 was ~~$347~~$383 million compared to ~~$359~~$331 million for the corresponding period in 2021. ~~The~~ ~~decrease~~Alabama Power's net income after dividends on preferred stock for year-to-date 2022 was $730 million compared to $690 million for the corresponding period in 2021. These increases were primarily due to an increase in ~~non-fuel operations~~retail revenues associated with warmer weather in Alabama Power's service territory in the second quarter and ~~maintenance expenses,~~year-to-date 2022 compared to the corresponding periods in 2021 and sales growth, partially offset by an increase in ~~retail revenues resulting from sales growth in the first quarter 2022 compared to the corresponding period in 2021.~~operations and maintenance expenses.

Retail Revenues

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$27 2.0


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$275	20.3	$302	11.2

In the ~~first~~second quarter 2022, retail revenues were ~~$1.38~~$1.63 billion compared to $1.35 billion for the corresponding period in 2021. For year-to-date 2022, retail revenues were $3.01 billion compared to $2.71 billion for the corresponding period in 2021.

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Details of the changes in retail revenues were as follows:


		First Quarter 2022			Second Quarter 2022						Year-To-Date 2022
			(in millions)			(% change)			(in millions)		(% change)		(in millions)		(% change)
Retail – prior year	Retail – prior year		$	1,352				Retail – prior year	$	1,354			$	2,706
Estimated change resulting from –	Estimated change resulting from –							Estimated change resulting from –
Rates and pricing	Rates and pricing		—			—	%	Rates and pricing	4		0.3	%	3		0.1	%
Sales growth	Sales growth		14			1.0		Sales growth	19		1.4		34		1.3
Weather	Weather		1			0.1		Weather	63		4.6		64		2.4
Fuel and other cost recovery	Fuel and other cost recovery		12			0.9		Fuel and other cost recovery	189		14.0		201		7.4
Retail – current year	Retail – current year		$	1,379		2.0	%	Retail – current year	$	1,629	20.3	%	$	3,008	11.2	%

Revenues attributable to changes in sales increased in the ~~first~~second quarter and year-to-date 2022 when compared to the corresponding periods in 2021. Weather-adjusted residential KWH sales decreased 1.4% and 0.3% in the second quarter and year-to-date 2022, respectively, when compared to the corresponding periods in 2021 primarily due to decreased customer usage. Weather-adjusted commercial KWH sales decreased 0.2% in the second quarter 2022 when compared to the corresponding period in ~~2021.~~2021 primarily due to decreased customer usage. Weather-adjusted ~~residential and~~ commercial KWH sales increased ~~0.6% and 1.0%,~~ ~~respectively, in the first quarter~~0.4% for year-to-date 2022 when compared to the corresponding period in 2021 primarily due to customer growth. Industrial KWH sales increased ~~0.1%~~ 3.9% and 2.0% in the ~~first~~second quarter and year-to-date 2022, respectively, when compared to the corresponding ~~period~~periods in 2021 primarily due to ~~a recovering industrial class that continues to experience disruptions~~increases in ~~supply chain~~the pipeline, mining, and ~~business operations.~~pulp and paper sectors, partially offset by decreases in the chemicals sector.

Fuel and other cost recovery revenues increased in the ~~first~~second quarter and year-to-date 2022 when compared to the corresponding ~~period~~periods in 2021 primarily due to increases in the volume of KWHs generated and the average cost of fuel.

Electric rates include provisions to recognize the recovery of fuel costs, purchased power costs, PPAs certificated by the Alabama PSC, and costs associated with the NDR. Under these provisions, fuel and other cost recovery revenues generally equal fuel and other cost recovery expenses and do not affect net income. See Note 2 to the financial statements under "Alabama Power" in Item 8 of the Form 10-K for additional information.

Wholesale Revenues – Non-Affiliates

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$22 23.9


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$74	87.1	$94	52.8

In the ~~first~~second quarter 2022, wholesale revenues from sales to non-affiliates were ~~$114~~$159 million compared to ~~$92~~$85 million for the corresponding period in 2021. For year-to-date 2022, wholesale revenues from sales to non-affiliates were $272 million compared to $178 million for the corresponding period in 2021. The ~~increase was~~increases for the second quarter and year-to-date 2022 were primarily due to ~~a 16.2% increase~~increases of 41.8% and 27.3%, respectively, in KWH sales as a result of ~~cooler~~increased opportunity sales due to warmer weather in the ~~first~~second quarter and year-to-date 2022 compared to the corresponding ~~period~~periods in 2021, as well as ~~a 6.0% increase~~increases of 31.4% and 20.5%, respectively, in the price of energy due to higher natural gas prices.

Wholesale revenues from sales to non-affiliates will vary depending on fuel prices, the market prices of wholesale energy compared to the cost of Alabama Power's and the Southern Company system's generation, demand for energy within the Southern Company system's electric service territory, and the availability of the Southern Company system's generation. Increases and decreases in energy revenues that are driven by fuel prices are accompanied by an increase or decrease in fuel costs and do not affect net income. Short-term opportunity energy sales are also included in wholesale energy sales to non-affiliates. These opportunity sales are made at market-based rates that generally provide a margin above Alabama Power's variable cost to produce the energy.

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AND RESULTS OF OPERATIONS (Continued)

Wholesale Revenues – Affiliates

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$33 103.1


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$10	41.7	$45	81.8

In the ~~first~~second quarter 2022, wholesale revenues from sales to affiliates were ~~$65~~$34 million compared to ~~$32~~$24 million for the corresponding period in 2021. The increase was primarily due to a ~~47.1%~~154.8% increase in the price of energy due to higher natural gas prices, partially offset by a 42.5% decrease in KWH sales due to lower cost system resources compared to Alabama Power's generation.

For year-to-date 2022, wholesale revenues from sales to affiliates were $100 million compared to $55 million for the corresponding period in 2021. The increase was primarily due to a 72.1% increase in the price of energy due to higher natural gas prices and a ~~40.3%~~5.1% increase in KWH sales due to lower cost resources as ~~a result of increased generation demand as a result of cooler weather in the first quarter 2022~~ compared to ~~the corresponding period in 2021.~~available affiliate company generation.

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.

Other Revenues


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$16	17.2	$24	13.6

In the second quarter 2022, other revenues were $109 million compared to $93 million for the corresponding period in 2021. For year-to-date 2022, other revenues were $200 million compared to $176 million for the corresponding period in 2021. The second quarter and year-to-date 2022 increases were primarily due to increases of $5 million and $8 million, respectively, in cogeneration steam revenue associated with higher natural gas prices, $4 million and $7 million, respectively, in transmission revenues, and $3 million and $4 million, respectively, in rent revenues.

Fuel and Purchased Power Expenses


		First Quarter 2022 vs. First Quarter 2021			Second Quarter 2022 vs. Second Quarter 2021					Year-To-Date 2022 vs. Year-To-Date 2021
			(change in millions)			(% change)		(change in millions)		(% change)	(change in millions)		(% change)
Fuel	Fuel		$	42		14.4	Fuel	$	138	52.5	$	179	32.3
Purchased power – non-affiliates	Purchased power – non-affiliates		17			34.0	Purchased power – non-affiliates	47		97.9	65		67.0
Purchased power – affiliates	Purchased power – affiliates		(4)			(13.3)	Purchased power – affiliates	82		210.3	78		113.0
Total fuel and purchased power expenses	Total fuel and purchased power expenses		$	55			Total fuel and purchased power expenses	$	267		$	322

In the ~~first~~second quarter 2022, total fuel and purchased power expenses were ~~$426~~$617 million compared to ~~$371~~$350 million for the corresponding period in 2021. The increase was primarily due to a ~~$39~~$199 million increase in the ~~average~~ cost of fuel and purchased power and a ~~$16~~$67 million increase related to the volume of KWHs generated and purchased.

For year-to-date 2022, total fuel and purchased power expenses were $1.04 billion compared to $720 million for the corresponding period in 2021. The increase was primarily due to a $235 million increase in the cost of fuel and purchased power and an $87 million increase related to the volume of KWHs generated and purchased.

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AND RESULTS OF OPERATIONS (Continued)

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.

~~Table of ContentsIndex to Financial Statements~~

~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION~~

~~AND RESULTS OF OPERATIONS (Continued)~~

Details of Alabama Power's generation and purchased power were as follows:


		First Quarter 2022	First Quarter 2021		Second Quarter 2022	Second Quarter 2021	Year-To-Date 2022	Year-To-Date 2021
Total generation (in billions of KWHs)(a)	Total generation (in billions of KWHs)(a)	15	15	Total generation (in billions of KWHs)(a)	13	13	29	28
Total purchased power (in billions of KWHs)	Total purchased power (in billions of KWHs)	2	1	Total purchased power (in billions of KWHs)	3	2	4	3
Sources of generation (percent)(a) —	Sources of generation (percent)(a) —			Sources of generation (percent)(a) —
Coal	Coal	42	46	Coal	45	43	44	45
Nuclear	Nuclear	25	25	Nuclear	25	25	25	25
Gas	Gas	19	19	Gas	22	22	20	20
Hydro	Hydro	14	10	Hydro	8	10	11	10
Cost of fuel, generated (in cents per net KWH) —	Cost of fuel, generated (in cents per net KWH) —			Cost of fuel, generated (in cents per net KWH) —
Coal	Coal	2.90	2.75	Coal	3.35	2.73	3.11	2.74
Nuclear	Nuclear	0.67	0.72	Nuclear	0.67	0.69	0.67	0.71
Gas(a)	Gas(a)	3.45	2.51	Gas(a)	4.88	2.47	4.17	2.49
Average cost of fuel, generated (in cents per net KWH)(a)	Average cost of fuel, generated (in cents per net KWH)(a)	2.36	2.14	Average cost of fuel, generated (in cents per net KWH)(a)	2.98	2.10	2.66	2.12
Average cost of purchased power (in cents per net KWH)(b)	Average cost of purchased power (in cents per net KWH)(b)	6.82	6.52	Average cost of purchased power (in cents per net KWH)(b)	8.88	5.57	8.12	5.99

(b)Average cost of purchased power includes fuel, energy, and transmission purchased by Alabama Power for tolling agreements where power is generated by the provider.

Fuel

In the ~~first~~second quarter 2022, fuel expense was ~~$333~~$401 million compared to ~~$291~~$263 million for the corresponding period in 2021. The increase was primarily due to a ~~37.5%~~97.6% increase in the average cost of natural gas per KWH generated, which excludes tolling agreements, a 22.7% increase in the average cost of coal per KWH generated, a 5.2% increase in the volume of KWHs generated by coal, and a 24.7% decrease in the volume of KWHs generated by hydro facilities as a result of less rainfall in the second quarter 2022 compared to the corresponding period in 2021.

For year-to-date 2022, fuel expense was $733 million compared to $554 million for the corresponding period in 2021. The increase was primarily due to a 67.5% increase in the average cost of natural gas per KWH generated, which excludes tolling agreements, and a ~~6.3%~~13.5% increase in the average cost of coal per KWH generated, partially offset by a 12.7% increase in the volume of KWHs generated by ~~natural gas, partially offset by~~hydro facilities as a ~~49.0% increase~~result of more rainfall for year-to-date 2022 compared to the corresponding period in ~~the volume of KWHs generated by hydro.~~2021.

Purchased Power – Non-Affiliates

In the ~~first~~second quarter 2022, purchased power expense from non-affiliates was ~~$67~~$95 million compared to ~~$50~~$48 million for the corresponding period in 2021. The increase was primarily due to a ~~29.9%~~ 67.4% increase in the volume of KWHs purchased as a result of ~~cooler~~warmer weather in the second quarter 2022 compared to the corresponding period in 2021, as well as a ~~9.8%~~ 32.6% increase in the average cost per KWH purchased due to higher natural gas and coal prices.

For year-to-date 2022, purchased power expense from non-affiliates was $162 million compared to $97 million for the corresponding period in 2021. The increase was primarily due to a 48.1% increase in the volume of KWHs purchased as a result of warmer weather for year-to-date 2022 compared to the corresponding period in 2021, as well as a 22.5% increase in the average cost per KWH purchased due to higher natural gas and coal prices.

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Energy purchases from non-affiliates will vary depending on the market prices of wholesale energy as compared to the cost of the Southern Company system's generation, demand for energy within the Southern Company system's electric service territory, and the availability of the Southern Company system's generation.

Purchased Power – Affiliates

~~For first~~In the second quarter 2022, purchased power expense from affiliates was ~~$26~~$121 million compared to ~~$30~~$39 million for the corresponding period in 2021. The ~~decrease~~increase was primarily due to a ~~17.7% decrease in the volume of KWHs purchased as a result of increased generation compared to the corresponding period in 2021, partially offset by a 5.6% increase~~102.3% increase in the average cost per KWH purchased due to higher natural gas ~~prices.~~and coal prices and a 54.4% increase in the volume of KWHs purchased as a result of warmer weather in the second quarter 2022 compared to the corresponding period in 2021.

For year-to-date 2022, purchased power expense from affiliates was $147 million compared to $69 million for the corresponding period in 2021. The increase was primarily due to a 61.5% increase in the average cost per KWH purchased due to higher natural gas and coal prices and a 32.1% increase in the volume of KWHs purchased as a result of warmer weather for year-to-date 2022 compared to the corresponding period in 2021.

Energy purchases from affiliates will vary depending on demand for energy and the availability and cost of generating resources at each company within the Southern Company system. These purchases are made in accordance with the IIC or other contractual agreements, as approved by the FERC.

Other Operations and Maintenance Expenses


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$28	6.8	$77	9.9

In the second quarter 2022, other operations and maintenance expenses were $441 million compared to $413 million for the corresponding period in 2021. For year-to-date 2022, other operations and maintenance expenses were $852 million compared to $775 million for the corresponding period in 2021. The increases for the second quarter and year-to-date 2022 were primarily due to increases of $11 million and $39 million, respectively, in generation expenses associated with scheduled outages and maintenance and Rate CNP Compliance-related expenses, $9 million and $23 million, respectively, in transmission and distribution expenses primarily associated with line maintenance, and $3 million and $6 million, respectively, in customer service and sales expenses primarily associated with contract services. See Note 2 to the financial statements under "Alabama Power – Rate CNP Compliance" in Item 8 of the Form 10-K for additional information.

Interest Expense, Net of Amounts Capitalized


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$7	8.3	$12	7.1

For year-to-date 2022, interest expense, net of amounts capitalized was $180 million compared to $168 million for the corresponding period in 2021. The increase was primarily due to an increase associated with higher average outstanding borrowings. See FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" and "Financing Activities" herein for additional information on borrowings.

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~~Other Operations and Maintenance Expenses~~Income Taxes

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$48 13.3


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$17	16.3	$14	6.6

In the ~~first~~second quarter 2022, ~~other operations and maintenance expenses~~income taxes were ~~$409~~ $121 million compared to ~~$361~~$104 million for the corresponding period in 2021. For year-to-date 2022, income taxes were $227 million compared to $213 million for the corresponding period in 2021. The ~~increase was~~increases were primarily due to increases of $26 million in generation expenses associated with scheduled outages and maintenance and Rate CNP Compliance-related expenses and $12 million in transmission and distribution expenses primarily associated with line maintenance. See Note 2 to the financial statements under "Alabama Power – Rate CNP Compliance" in Item 8 of the Form 10-K for additional information.higher pre-tax earnings.

Georgia Power

Net Income

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$34 9.7


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$465	325.2	$499	101.0

Georgia Power's net income in the ~~first~~second quarter 2022 was ~~$385~~$608 million compared to ~~$351~~$143 million for the corresponding period in 2021. For year-to-date 2022 net income was $1.0 billion compared to $0.5 billion for the corresponding period in 2021. The ~~increase was~~increases were primarily due to ~~higher~~increases in retail revenues ~~primarily from base tariff increases~~associated with rates and pricing and warmer weather in ~~accordance with the 2019 ARP and a $36 million after-tax charge~~Georgia Power's service territory in the ~~first~~second quarter and year-to-date 2022 compared to the corresponding periods in 2021 and decreases of $304 million and $340 million in the second quarter and year-to-date 2022, respectively, in after-tax charges related to the construction of Plant Vogtle Units 3 and 4, partially offset by higher non-fuel operations and maintenance costs.

See Note (B) to the Condensed Financial Statements herein and Note 2 to the financial statements in Item 8 of the Form 10-K under "Georgia Power – Nuclear Construction" for additional information regarding Plant Vogtle Units 3 and 4.

Retail Revenues

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$230 12.9


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$882	43.5	$1,113	29.2

In the ~~first~~second quarter 2022, retail revenues were ~~$2.02~~$2.91 billion compared to ~~$1.79~~$2.03 billion for the corresponding period in 2021. For year-to-date 2022, retail revenues were $4.93 billion compared to $3.81 billion for the corresponding period in 2021.

Details of the changes in retail revenues were as follows:


		First Quarter 2022			Second Quarter 2022						Year-To-Date 2022
			(in millions)			(% change)			(in millions)		(% change)		(in millions)		(% change)
Retail – prior year	Retail – prior year		$	1,787				Retail – prior year	$	2,026			$	3,813
Estimated change resulting from –	Estimated change resulting from –							Estimated change resulting from –
Rates and pricing	Rates and pricing		53			3.0	%	Rates and pricing	231		11.4	%	285		7.5	%
Sales growth	Sales growth		2			0.1		Sales growth	45		2.2		47		1.2
Weather	Weather		18			1.0		Weather	72		3.5		91		2.4
Fuel cost recovery	Fuel cost recovery		157			8.8		Fuel cost recovery	534		26.4		690		18.1
Retail – current year	Retail – current year		$	2,017		12.9	%	Retail – current year	$	2,908	43.5	%	$	4,926	29.2	%

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AND RESULTS OF OPERATIONS (Continued)

Revenues associated with changes in rates and pricing increased in the ~~first~~second quarter and year-to-date 2022 when compared to the corresponding ~~period~~periods in 2021. The ~~increase was~~increases were primarily due to higher contributions from commercial and industrial customers with variable demand-driven pricing, base tariff increases in accordance with the 2019 ~~ARP.~~ARP, and pricing effects associated with residential customer usage. See Note 2 to the financial statements under "Georgia Power – Rate Plans" in Item 8 of the Form 10-K for additional information.

Revenues attributable to changes in sales increased in the ~~first~~second quarter and year-to-date 2022 when compared to the corresponding ~~period~~periods in 2021. Weather-adjusted residential KWH sales ~~decreased 2.3%~~increased 2.6% in the second quarter 2022 and were flat year-to-date 2022 and weather-adjusted commercial KWH sales increased ~~2.2%~~3.2% and 2.7% in the ~~first~~second quarter and year-to-date 2022, respectively, when compared to the corresponding ~~period~~periods in 2021 primarily due to the impacts on customer usage from increased activity outside the home following the expiration of COVID-19 ~~restrictions. Increased~~restrictions and customer ~~growth partially offset the decrease in residential KWH sales and contributed to the increase in commercial KWH sales.~~growth. Weather-adjusted industrial KWH sales increased ~~3.6%~~3.1% and 3.3% in the ~~first~~second quarter and year-to-date 2022, respectively, when compared to the corresponding ~~period~~periods in 2021 primarily due to ~~strength~~increases in the paper and pipeline ~~segment.~~sectors, partially offset by a decrease in the chemicals sector.

Fuel revenues and costs are allocated between retail and wholesale jurisdictions. Retail fuel cost recovery revenues increased in the ~~first~~second quarter and year-to-date 2022 when compared to the corresponding ~~period~~periods in 2021 due to higher fuel and purchased power costs. Electric rates include provisions to adjust billings for fluctuations in fuel costs, including the energy component of purchased power costs. Under these fuel cost recovery provisions, fuel revenues generally equal fuel expenses and do not affect net income. See Note 2 to the financial statements under "Georgia Power – Fuel Cost Recovery" in Item 8 of the Form 10-K for additional information.

Wholesale Revenues

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$23 53.5


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$28	77.8	$50	62.5

In the ~~first~~second quarter 2022, wholesale revenues were ~~$66~~$64 million compared to ~~$43~~$36 million for the corresponding period in 2021. For year-to-date 2022, wholesale revenues were $130 million compared to $80 million for the corresponding period in 2021. The ~~increase was~~increases were primarily due to increases of ~~$18~~$28 million and $46 million in the second quarter and year-to-date 2022, respectively, related to the average cost of fuel primarily due to higher natural gas and coal ~~prices and $7~~prices. Also contributing to the increase for year-to-date 2022 was a $6 million increase in KWH sales associated with higher market ~~demand~~ ~~as a result of cooler weather in the first quarter 2022 compared to the corresponding period in 2021, partially offset by a decrease of $4 million in capacity revenues from shared Southern Company power pool sales in accordance with the IIC.~~demand.

Wholesale revenues from sales to non-affiliates consist of PPAs and short-term opportunity sales. Wholesale revenues from PPAs have both capacity and energy components. Wholesale capacity revenues from PPAs are recognized in amounts billable under the contract terms and provide for recovery of fixed costs and a return on investment. Wholesale revenues from sales to non-affiliates will vary depending on fuel prices, the market prices of wholesale energy compared to the cost of Georgia Power's and the Southern Company system's generation, demand for energy within the Southern Company system's electric service territory, and the availability of the Southern Company system's generation. Increases and decreases in energy revenues that are driven by fuel prices are accompanied by an increase or decrease in fuel costs and do not have a significant impact on net income. Short-term opportunity sales are made at market-based rates that generally provide a margin above Georgia Power's variable cost of energy.

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Other Revenues

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$(15) (10.7)


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$(14)	(8.6)	$(30)	(9.9)

In the ~~first~~second quarter 2022, other revenues were ~~$125~~$149 million compared to ~~$140~~$163 million for the corresponding period in 2021. For year-to-date 2022, other revenues were $272 million compared to $302 million for the corresponding period in 2021. The ~~decrease was~~decreases for the second quarter and year-to-date 2022 were primarily due to decreases of $8$12 million and $20 million, respectively, resulting from the termination of a transmission service contract and $6net decreases of $8 million and $15 million, respectively, in unregulated sales ~~associated with~~primarily due to the timing of revenue recognition for a large, ongoing power delivery construction and maintenance ~~projects.~~contract, partially offset by increases associated with more energy conservation projects performed in 2022 and outdoor lighting sales growth. The decreases were also partially offset by increases of $9 million and $10 million, respectively, in open access transmission tariff sales.

Fuel and Purchased Power Expenses


		First Quarter 2022 vs. First Quarter 2021			Second Quarter 2022 vs. Second Quarter 2021					Year-to-Date 2022 vs. Year-to-Date 2021
			(change in millions)			(% change)		(change in millions)		(% change)	(change in millions)		(% change)
Fuel	Fuel		$	106		33.9	Fuel	$	285	83.1	$	390	59.5
Purchased power – non-affiliates	Purchased power – non-affiliates		6			4.2	Purchased power – non-affiliates	102		70.8	108		37.5
Purchased power – affiliates	Purchased power – affiliates		70			51.5	Purchased power – affiliates	174		116.8	244		85.6
Total fuel and purchased power expenses	Total fuel and purchased power expenses		$	182			Total fuel and purchased power expenses	$	561		$	742

In the ~~first~~second quarter 2022, total fuel and purchased power expenses were ~~$775 million~~$1.20 billion compared to ~~$593 million~~$0.64 billion for the corresponding period in 2021. For year-to-date 2022, total fuel and purchased power expenses were $1.97 billion compared to $1.23 billion for the corresponding period in 2021. The ~~increase was~~increases for the second quarter and year-to-date 2022 were primarily due to ~~an increase~~increases of ~~$133~~$474 million and $609 million, respectively, related to the average cost of fuel and purchased power and ~~an increase~~increases of ~~$49~~$87 million and $133 million, respectively, related to the volume of KWHs generated and purchased.

Fuel and purchased power energy transactions do not have a significant impact on earnings since these fuel expenses are generally offset by fuel revenues through Georgia Power's fuel cost recovery mechanism. See Note 2 to the financial statements under "Georgia Power – Fuel Cost Recovery" in Item 8 of the Form 10-K for additional information.

~~Details of Georgia Power's generation and purchased power were as follows:~~

First Quarter 2022 First Quarter 2021
Total generation (in billions of KWHs)
15 14
Total purchased power (in billions of KWHs)
8 7
Sources of generation (percent) —
Gas 46 47
Coal 25 22
Nuclear 24 27
Hydro and other 5 4
Cost of fuel, generated (in cents per net KWH) —
Gas 3.58 2.58
Coal 3.41 2.91
Nuclear 0.77 0.78
Average cost of fuel, generated (in cents per net KWH)
2.83 2.15
Average cost of purchased power (in cents per net KWH)(*)
4.81 4.22

~~(*)Average cost of purchased power includes fuel purchased by Georgia Power for tolling agreements where power is generated by the provider.~~

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AND RESULTS OF OPERATIONS (Continued)

Details of Georgia Power's generation and purchased power were as follows:


	Second Quarter 2022	Second Quarter 2021	Year-To-Date 2022	Year-To-Date 2021
Total generation (in billions of KWHs)	15	15	30	30
Total purchased power (in billions of KWHs)	8	7	16	14
Sources of generation (percent) —
Gas	45	46	45	47

Nuclear	27	28	25	27
Coal	24	22	25	22
Hydro and other	4	4	5	4
Cost of fuel, generated (in cents per net KWH) —
Gas	5.10	2.65	4.34	2.62
Coal	3.68	3.09	3.54	3.01
Nuclear	0.76	0.80	0.76	0.79

Average cost of fuel, generated (in cents per net KWH)	3.52	2.21	3.18	2.18
Average cost of purchased power (in cents per net KWH)(*)	8.22	4.77	6.58	4.49

(*)Average cost of purchased power includes fuel purchased by Georgia Power for tolling agreements where power is generated by the provider.

Fuel

In the ~~first~~second quarter 2022, fuel expense was ~~$419~~$628 million compared to ~~$313~~$343 million for the corresponding period in 2021. The increase was primarily due to increases of ~~38.8%~~92.5% and ~~17.2%~~19.1% in the average cost per KWH generated by natural gas and coal, respectively, and an 11.1% increase in the volume of KWHs generated by coal.

For year-to-date 2022, fuel expense was $1.05 billion compared to $0.66 billion for the corresponding period in 2021. The increase was primarily due to increases of 65.6% and 17.6% in the average cost per KWH generated by natural gas and coal, respectively, and a ~~19.5%~~15.2% increase in the volume of KWHs generated by coal.

Purchased Power – ~~Affiliates~~Non-Affiliates

In the ~~first~~second quarter 2022, purchased power expense from ~~affiliates~~non-affiliates was ~~$206~~$246 million compared to ~~$136~~$144 million for the corresponding period in 2021. For year-to-date 2022, purchased power expense from non-affiliates was $396 million compared to $288 million for the corresponding period in 2021. The ~~increase was~~increases for the second quarter and year-to-date 2022 were primarily due to ~~an increase~~increases of ~~25.7%~~73.9% and 32.7%, respectively, in the volume of KWHs purchased due to higher demand primarily driven by warmer weather in the second quarter 2022 and increases of 17.0% and 16.1%, respectively, in the average cost per KWH purchased primarily due to higher natural gas and coal prices.

Purchased Power – Affiliates

In the second quarter 2022, purchased power expense from affiliates was $323 million compared to $149 million for the corresponding period in 2021. For year-to-date 2022, purchased power expense from affiliates was $529 million compared to $285 million for the corresponding period in 2021. The increases for the second quarter and year-to-date 2022 were primarily due to increases of 127.0% and 74.3%, respectively, in the average cost per KWH purchased primarily due to higher natural gas and coal prices. The increase for year-to-date 2022 was also due to an

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AND RESULTS OF OPERATIONS (Continued)

increase of ~~18.3%~~9.9% in the volume of KWHs purchased due to lower cost Southern Company system resources as compared to available Georgia Power-owned generation.

Energy purchases from affiliates will vary depending on the demand and the availability and cost of generating resources at each company within the Southern Company system. These purchases are made in accordance with the IIC or other contractual agreements, all as approved by the FERC.

Other Operations and Maintenance Expenses

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$43 9.1


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$31	5.7	$76	7.5

In the ~~first~~second quarter 2022, other operations and maintenance expenses were ~~$517~~$573 million compared to ~~$474~~$542 million for the corresponding period in 2021. The increase was primarily due to increases of ~~$45~~$14 million in transmission and distribution expenses primarily associated with line maintenance, ~~and $19~~$9 million associated with more unregulated energy conservation projects in 2022, $8 million in generation expenses primarily related to non-outage maintenance costs, $8 million in certain compensation and benefit expenses, $7 million in legal and regulatory expenses, and $4 million in amortization of cloud software, partially offset by ~~$17~~a decrease of $16 million ~~in gains from sales of integrated transmission system assets~~related to unregulated power delivery construction and ~~a $9 million reduction in billing adjustments with integrated transmission system owners largely resulting from a terminated transmission service agreement.~~maintenance projects.

~~Depreciation~~For year-to-date 2022, other operations and ~~Amortization~~

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$13 3.8

~~In the first quarter 2022, depreciation and amortization was $351 million~~maintenance expenses were $1.09 billion compared to ~~$338 million~~$1.02 billion for the corresponding period in 2021. The increase was primarily due to increases of $49 million in transmission and distribution expenses primarily associated with line maintenance, $27 million in generation expenses primarily related to non-outage maintenance costs, $11 million in certain compensation and benefit expenses, $7 million in legal and regulatory expenses, and $5 million in amortization of cloud software, partially offset by a decrease of $26 million related to unregulated power delivery construction and maintenance projects and $17 million in gains from sales of integrated transmission system assets.

Depreciation and Amortization


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$14	4.1	$26	3.8

In the second quarter 2022, depreciation and amortization was $356 million compared to $342 million for the corresponding period in 2021. For year-to-date 2022, depreciation and amortization was $706 million compared to $680 million for the corresponding period in 2021. The increases for the second quarter and year-to-date 2022 were primarily due to additional plant in ~~service.~~service and increases of $4 million and $6 million, respectively, in amortization of regulatory assets related to CCR AROs under the terms of the 2019 ARP. See Note 2 to the financial statements in Item 8 of the Form 10-K under "Georgia Power – Rate Plans – 2019 ARP" for additional information on recovery of CCR AROs.

Taxes Other Than Income Taxes

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$9 7.8


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$23	19.5	$30	12.8

In the ~~first~~second quarter 2022, taxes other than income taxes was ~~$125~~$141 million compared to ~~$116~~$118 million for the corresponding period in 2021. For year-to-date 2022, taxes other than income taxes was $265 million compared to $235 million for the corresponding period in 2021. The ~~increase was~~increases were primarily due to ~~an increase~~increases in municipal franchise fees largely related to higher retail revenues.

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AND RESULTS OF OPERATIONS (Continued)

Estimated Loss on Plant Vogtle Units 3 and 4

~~First Quarter 2022 vs. First Quarter 2021~~

~~(change in millions)~~

~~(% change)~~

~~$(48)~~

~~N/M~~

~~N/M - Not meaningful~~


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$(408)	(88.7)	$(456)	(89.8)

Interest Expense, Net of Amounts Capitalized


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$11	10.4	$14	6.7

In the second quarter 2022, interest expense, net of amounts capitalized was $117 million compared to $106 million for the corresponding period in 2021. For year-to-date 2022, interest expense, net of amounts capitalized was $224 million compared to $210 million for the corresponding period in 2021. The increases were primarily associated with higher average outstanding borrowings. See FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" and "Financing Activities" herein for additional information on borrowings.

Other Income (Expense), Net

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$9 22.0


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$12	28.6	$20	24.1

In the ~~first~~second quarter 2022, other income (expense), net was ~~$50~~$54 million compared to ~~$41~~$42 million for the corresponding period in 2021. For year-to-date 2022, other income (expense), net was $103 million compared to $83 million for the corresponding period in 2021. The ~~increase was~~increases for the second quarter and year-to-date 2022 were primarily due to increases of $3$7 million and $10 million, respectively, in customer charges related to contributions in aid of construction and $3$4 million and $7 million, respectively, in non-service cost-related retirement benefits income. See Note (H) to the Condensed Financial Statements herein for additional information on retirement benefits.

Income Taxes (Benefit)

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$12 66.7

Second Quarter 2022 vs. Second Quarter 2021

Year-To-Date 2022 vs. Year-To-Date 2021

(change in millions)

(% change)

(change in millions)

(% change)

$214

N/M

$226

N/M

N/M - Not meaningful

In the ~~first~~second quarter 2022, income ~~taxes were $30~~tax expense was $164 million compared to ~~$18~~income tax benefit of $50 million for the corresponding period in 2021. For year-to-date 2022, income tax expense was $194 million compared to income tax benefit of $32 million for the corresponding period in 2021. The ~~increase was~~increases were primarily due to ~~the~~a reduction in pre-tax earnings largely resulting from higher charges in the ~~first~~second quarter and year-to-date 2021 ~~resulting from a charge~~ associated with the construction of Plant Vogtle Units 3 and 4.4 and an adjustment in the second quarter 2022 related to a prior year state tax credit carryforward. See Note (B) to the Condensed Financial Statements herein and Note 2 to the financial ~~statements in Item 8 of the Form 10-K under "Georgia Power – Nuclear Construction" for additional information.~~

~~Mississippi Power~~

~~Net Income~~

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$(3) (6.7)

~~Mississippi Power's net income in the first quarter 2022 was$42 million compared to $45 million for the corresponding period in 2021. The decrease~~ ~~was primarily due to an increase in operations and maintenance expenses, largely offset by an increase in revenues.~~

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

~~Retail Revenues~~statements in Item 8 of the Form 10-K under "Georgia Power – Nuclear Construction" and Note (G) to the Condensed Financial Statements herein for additional information.

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$13 6.4

InMississippi Power

Net Income


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$7	18.4	$4	4.8

Mississippi Power's net income in the ~~first~~second quarter 2022 ~~retail revenues were $217~~was $45 million compared to ~~$204~~$38 million for the corresponding period in 2021. For year-to-date 2022, net income was $87 million compared to $83 million for the corresponding period in 2021. The increases were primarily due to an increase in revenues, partially offset by an increase in operations and maintenance expenses. The year-to-date increase was also partially offset by an increase in income taxes.

Retail Revenues


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$33	15.1	$47	11.1

In the second quarter 2022, retail revenues were $252 million compared to $219 million for the corresponding period in 2021. For year-to-date 2022, retail revenues were $469 million compared to $422 million for the corresponding period in 2021.

Details of the changes in retail revenues were as follows:


		First Quarter 2022			Second Quarter 2022						Year-To-Date 2022
			(in millions)			(% change)			(in millions)		(% change)		(in millions)		(% change)
Retail – prior year	Retail – prior year		$	204				Retail – prior year	$	219			$	422
Estimated change resulting from –	Estimated change resulting from –							Estimated change resulting from –
Rates and pricing	Rates and pricing		3			1.5	%	Rates and pricing	2		0.9	%	5		1.2	%
Sales growth	Sales growth		1			0.5		Sales growth	2		0.9		4		0.9
Weather	Weather		(2)			(1.0)		Weather	9		4.1		7		1.7
Fuel and other cost recovery	Fuel and other cost recovery		11			5.4		Fuel and other cost recovery	20		9.1		31		7.3
Retail – current year	Retail – current year		$	217		6.4	%	Retail – current year	$	252	15.0	%	$	469	11.1	%

Revenues associated with changes in rates and pricing increased i inn the ~~first~~second quarter and year-to-date 2022 when compared to the corresponding ~~period~~periods in 2021 primarily due to new PEP rates that became effective for the first billing cycle of April ~~2021.~~2022, partially offset by a decrease in revenues associated with a tolling arrangement. See Note 2 to the financial statements under "Mississippi Power – Performance Evaluation Plan" in Item 8 of the Form 10-K for additional information.

Revenues attributable to changes in sales increased in the ~~first~~second quarter and year-to-date 2022 when compared to the corresponding ~~period~~periods in 2021. Weather-adjusted residential ~~and commercial~~ KWH sales ~~increased 0.8% and 2.9%, respectively, i~~decreased 0.4% in the ~~n the first~~second quarter 2022 when compared to the corresponding period in 2021 due to ~~increased~~ a decrease in customer ~~usage and customer growth.~~ ~~Industrial~~usage. Weather-adjusted residential KWH sales ~~decreased~~increased 0.2% for ~~0.1% in the~~ ~~first quarter~~year-to-date 2022 when compared to the corresponding period in ~~2021.~~2021due to customer growth. Weather-adjusted commercial KWH sales increased 1.2% and 2.0% in the second quarter and year-to-date 2022, respectively, when compared to the corresponding periods in 2021 due to customer growth. Industrial KWH sales increased 3.4% and 1.8% in the second quarter and year-to-date 2022, respectively, when

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AND RESULTS OF OPERATIONS (Continued)

compared to the corresponding periods in 2021 primarily due to increases in the petroleum, pipeline, and transportation sectors.

Fuel and other cost recovery revenues increased in the ~~first~~second quarter and year-to-date 2022 when compared to the corresponding ~~period~~periods in 2021 primarily as a result of higher recoverable fuel ~~costs~~costs. . Recoverable fuel costs include fuel and purchased power expenses reduced by the fuel portion of wholesale revenues from energy sold to customers outside Mississippi Power's service territory. Electric rates include provisions to adjust billings for fluctuations in fuel costs, including the energy component of purchased power costs. Under these provisions, fuel revenues generally equal fuel expenses, including the energy component of purchased power costs, and do not affect net income. See Note 2 to the financial statements in Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements herein under "Mississippi Power" for additional information.

Wholesale Revenues – Non-Affiliates

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$5 7.9


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$9	16.7	$14	12.0

In the ~~first~~second quarter 2022, wholesale revenues from sales to non-affiliates were ~~$68~~$63 million compared to ~~$63~~$54 million for the corresponding period in 2021. For year-to-date 2022, wholesale revenues from sales to non-affiliates were $131 million compared to $117 million for the corresponding period in 2021. The ~~increase~~increases ~~was~~were primarily due to higher fuel costs and ~~customer usage.~~an increase in base revenue from MRA customers primarily due to warmer weather in 2022.

Wholesale revenues from sales to non-affiliates will vary depending on fuel prices, the market prices of wholesale energy compared to the cost of Mississippi Power's and the Southern Company system's generation, demand for energy within the Southern Company system's electric service territory, and the availability of the Southern Company system's generation. Increases and decreases in energy revenues that are driven by fuel prices are

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~~AND RESULTS OF OPERATIONS (Continued)~~

accompanied by an increase or decrease in fuel costs and do not have a significant impact on net income. In addition, Mississippi Power provides service under long-term contracts with rural electric cooperative associations and municipalities located in southeastern Mississippi under cost-based electric tariffs which are subject to regulation by the FERC. See Note 2 to the financial statements under "Mississippi Power" in Item 8 of the Form 10-K for additional information. See Note (B) to the Condensed Financial Statements under "Mississippi Power – Municipal and Rural Associations Tariff" herein for additional information.

Wholesale Revenues – Affiliates

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$9 27.3

Second Quarter 2022 vs. Second Quarter 2021

Year-To-Date 2022 vs. Year-To-Date 2021

(change in millions)

(% change)

(change in millions)

(% change)

$82

N/M

$92

N/M

N/M - Not meaningful

In the ~~first~~second quarter 2022, wholesale revenues from sales to affiliates were ~~$42~~$107 million compared to ~~$33~~$25 million for the corresponding period in 2021. The increase was primarily due to increases of $69 million associated with higher fuel prices, primarily driven by natural gas, and $13 million associated with higher KWH sales due to lower cost resources as compared to the available affiliate company generation.

For year-to-date 2022, wholesale revenues from sales to affiliates were $149 million compared to $57 million for the corresponding period in 2021. The increase was primarily due to ~~an increase~~increases of ~~$14~~$84 million associated with higher fuel prices, primarily driven by natural gas, ~~prices, partially offset by a decrease of $4~~and $7 million associated with higher KWH sales due to lower ~~KWH sales.~~cost resources as compared to the available affiliate company generation.

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Other Revenues

Second Quarter 2022 vs. Second Quarter 2021

Year-To-Date 2022 vs. Year-To-Date 2021

(change in millions)

(% change)

(change in millions)

(% change)

N/M

42.9

N/M - Not meaningful

In the second quarter 2022, other revenues were $12 million compared to $5 million for the corresponding period in 2021. For year-to-date 2022, other revenues were $20 million compared to $14 million for the corresponding period in 2021. The increases were primarily due to a $5 million increase in unregulated sales associated with power delivery construction and maintenance projects and outdoor lighting.

Fuel and Purchased Power Expenses


		First Quarter 2022 vs. First Quarter 2021			Second Quarter 2022 vs. Second Quarter 2021					Year-to-Date 2022 vs. Year-to-Date 2021
			(change in millions)			(% change)		(change in millions)		(% change)	(change in millions)		(% change)
Fuel	Fuel		$	26		24.5	Fuel	$	105	116.0	$	130	67.9
Purchased power	Purchased power		—			—	Purchased power	—		1.9	1		6.8
Total fuel and purchased power expenses	Total fuel and purchased power expenses		$	26			Total fuel and purchased power expenses	$	105		$	131

In the ~~first~~second quarter 2022, total fuel and purchased power expenses were $~~132~~207 million compared to ~~$106~~$102 million for the corresponding period in 2021. The increase was due to a $92 million increase in the average cost of fuel and purchased power and a $13 million net increase associated with the volume of KWHs generated and purchased.

For year-to-date 2022, total fuel and purchased power expenses were $339 million compared to $208 million for the corresponding period in 2021. The increase was primarily due to a ~~a $33~~$126 million increase in the average cost of fuel ~~partially offset by~~and purchased power and a $7$5 million ~~decrease~~net increase associated with the volume of KWHs generated and ~~purchased.~~purchased.

Fuel and purchased power energy transactions do not have a significant impact on earnings since energy expenses are generally offset by energy revenues through Mississippi Power's fuel cost recovery clause.

Details of Mississippi Power's generation and purchased power were as follows:


		First Quarter 2022	First Quarter 2021		Second Quarter 2022	Second Quarter 2021	Year-To-Date 2022	Year-To-Date 2021
Total generation (in millions of KWHs)	Total generation (in millions of KWHs)	4,074	4,324	Total generation (in millions of KWHs)	4,483	3,813	8,557	8,137
Total purchased power (in millions of KWHs)	Total purchased power (in millions of KWHs)	120	121	Total purchased power (in millions of KWHs)	166	317	286	438
Sources of generation (percent) –	Sources of generation (percent) –			Sources of generation (percent) –
Gas	Gas	92	91	Gas	88	91	90	91
Coal	Coal	8	9	Coal	12	9	10	9
Cost of fuel, generated (in cents per net KWH) –	Cost of fuel, generated (in cents per net KWH) –			Cost of fuel, generated (in cents per net KWH) –
Gas	Gas	3.30	2.41	Gas	4.73	2.50	4.04	2.45
Coal	Coal	3.74	3.17	Coal	3.95	3.06	3.86	3.12
Average cost of fuel, generated (in cents per net KWH)	Average cost of fuel, generated (in cents per net KWH)	3.34	2.49	Average cost of fuel, generated (in cents per net KWH)	4.63	2.56	4.02	2.52
Average cost of purchased power (in cents per net KWH)	Average cost of purchased power (in cents per net KWH)	4.54	4.08	Average cost of purchased power (in cents per net KWH)	6.57	3.38	5.72	3.57

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AND RESULTS OF OPERATIONS (Continued)

Fuel

In the ~~first~~second quarter 2022, fuel expense was ~~$132~~$196 million compared to ~~$106~~$91 million for the corresponding period in 2021. The increase was due to an 89.2% increase in the average cost of natural gas per KWH generated, a 29.1% increase in the average cost of coal per KWHs generated, a 52.1% increase in the volume of KWHs generated by coal, and a 16.0% increase in the volume of KWHs generated by natural gas.

For year-to-date 2022, fuel expense was $322 million compared to $192 million for the corresponding period in 2021. The increase was due to a 64.9% increase in the average cost of natural gas per KWH generated, a 23.7% increase in the average cost of coal per KWHs generated, a 15.5% increase in the volume of KWHs generated by coal, and a 4.2% increase in the volume of KWHs generated by natural gas.

Other Operations and Maintenance Expenses


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$15	19.7	$23	16.0

In the second quarter 2022, other operations and maintenance expenses were $91 million compared to $76 million for the corresponding period in 2021. The increase was due to ~~a 36.9% increase~~increases of $5 million related to unregulated construction and maintenance contracts, $3 million associated with storm reserve accruals, and $3 million in ~~the average cost of natural gas per KWH generated~~transmission and an 18.0% increase in the average cost of coal per KWHs generated, partially offset by a 16.9% decrease in the volume of KWHs generated by coal and a 6.1% decrease in the volume of KWHs generated by natural gas.distribution expenses primarily associated with line maintenance.

~~Other Operations and Maintenance Expenses~~

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$8 11.8

~~In the first quarter~~For year-to-date 2022, other operations and maintenance expenses were ~~$76~~$167 million compared to ~~$68~~$144 million for the corresponding period in 2021. The increase was primarily due to increases of $6 million in transmission and distribution expenses primarily associated with line maintenance, $5 million related to unregulated construction and maintenance contracts, $4 million associated with storm reserve accruals, and $4 million associated with the Kemper County energy facility (primarily related to ~~additional dismantlement activities and~~ lower salvage proceeds in 2022 as compared to 2021) ~~and~~.

See Note 2 to the financial statements in Item 8 of the Form 10-K under "Mississippi Power – System Restoration Rider" for additional information on storm reserve accruals.

Income Taxes


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$4	50.0	$8	66.7

For year-to-date 2022, income taxes were $20 million compared to $12 million for the corresponding period in 2021. A reduction in the flowback of excess deferred income taxes associated with new PEP rates that became effective in April 2022 contributed $5 million to the increase, which also reflects $3 million ~~in distribution and transmission operations and maintenance activities.~~due to higher pre-tax earnings. See Note (G) to the Condensed Financial Statements herein for additional information.

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Southern Power

Net Income Attributable to Southern Power

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$(25) (25.8)


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$62	172.2	$37	27.8

Net income attributable to Southern Power in the ~~first~~second quarter 2022 was ~~$72~~$98 million compared to ~~$97~~$36 million for the corresponding period in 2021. ~~The decrease~~Net income attributable to Southern Power for year-to-date 2022 was $170 million compared to $133 million for the corresponding period in 2021.The increases were primarily due to higher revenues driven by higher market prices of energy and new natural gas PPAs, as well as higher HLBV income associated with tax equity partnerships. The year-to-date increase was partially offset by gains from the contributions of wind turbine equipment to various equity method investments in the first quarter 2021.

Operating Revenues

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$99 22.5


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$409	83.5	$508	54.6

Total operating revenues include PPA capacity revenues, which are derived primarily from long-term contracts involving natural gas facilities, and PPA energy revenues from Southern Power's generation facilities. To the extent Southern Power has capacity not contracted under a PPA, it may sell power into an accessible wholesale market, or, to the extent those generation assets are part of the FERC-approved IIC, it may sell power into the Southern Company power pool.

Natural Gas Capacity and Energy Revenue

Capacity revenues generally represent the greatest contribution to operating income and are designed to provide recovery of fixed costs plus a return on investment.

Energy is generally sold at variable cost or is indexed to published natural gas indices. Energy revenues will vary depending on the energy demand of Southern Power's customers and their generation capacity, as well as the market prices of wholesale energy compared to the cost of Southern Power's energy. Energy revenues also include fees for support services, fuel storage, and unit start charges. Increases and decreases in energy revenues under PPAs that are driven by fuel or purchased power prices are accompanied by an increase or decrease in fuel and purchased power costs and do not have a significant impact on net income.

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Solar and Wind Energy Revenue

Southern Power's energy sales from solar and wind generating facilities are predominantly through long-term PPAs that do not have capacity revenue. Customers either purchase the energy output of a dedicated renewable facility through an energy charge or pay a fixed price related to the energy generated from the respective facility and sold to the grid. As a result, Southern Power's ability to recover fixed and variable operations and maintenance expenses is dependent upon the level of energy generated from these facilities, which can be impacted by weather conditions, equipment performance, transmission constraints, and other factors.

See FUTURE EARNINGS POTENTIAL – "Southern Power's Power Sales Agreements" in Item 7 of the Form 10-K for additional information regarding Southern Power's PPAs.

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Operating Revenues Details

Details of Southern Power's operating revenues were as follows:


		First Quarter 2022		First Quarter 2021			Second Quarter 2022		Second Quarter 2021		Year-To-Date 2022		Year-To-Date 2021
		(in millions)					(in millions)
PPA capacity revenues	PPA capacity revenues	$	102	$	96	PPA capacity revenues	$	109	$	96	$	214	$	192
PPA energy revenues	PPA energy revenues	345		245		PPA energy revenues	579		296		921		541
Total PPA revenues	Total PPA revenues	447		341		Total PPA revenues	688		392		1,135		733
Non-PPA revenues	Non-PPA revenues	84		95		Non-PPA revenues	202		93		286		188
Other revenues	Other revenues	8		4		Other revenues	9		5		17		9
Total operating revenues	Total operating revenues	$	539	$	440	Total operating revenues	$	899	$	490	$	1,438	$	930

In the ~~first~~second quarter 2022, total operating revenues were ~~$539~~$899 million, reflecting a ~~$99~~$409 million, or ~~23%~~83%, increase from the corresponding period in 2021. The increase in operating revenues was primarily due to the following:

•PPA capacity revenues increased $6$13 million, or 6%14%, primarily due to new natural gas PPAs and increased capacity sales under existing natural gas PPAs, partially offset by the contractual expiration of natural gas PPAs.

•PPA energy revenues increased ~~$100~~$283 million, or ~~41%~~96%, primarily due to a ~~$59~~$212 million increase in sales under existing natural gas PPAs resulting from a ~~$37~~$171 million increase in the price of fuel and purchased power and a ~~$22~~$41 million increase in the volume of KWHs sold. Also contributing to the increase was a ~~$47~~$77 million increase in sales associated with new natural gas PPAs.

•Non-PPA revenues increased $109 million, or 117%, primarily due to a $124 million increase in the market price of energy, partially offset by a $16 million decrease in the volume of KWHs sold through short-term sales.

For year-to-date 2022, total operating revenues were $1.4 billion, reflecting a $508 million, or 55%, increase from the corresponding period in 2021. The increase in operating revenues was primarily due to the following:

•PPA capacity revenues increased $22 million, or 11%, primarily due to new natural gas PPAs and increased capacity sales under existing natural gas PPAs, partially offset by the contractual expiration of natural gas PPAs.

•PPA energy revenues increased $380 million, or 70%, primarily due to a $271 million increase in sales under existing natural gas PPAs resulting from a $207 million increase in the price of fuel and purchased power and a $64 million increase in the volume of KWHs sold. Also contributing to the increase was a $124 million increase in sales associated with new natural gas PPAs, partially offset by a ~~$13~~$17 million decrease due to the contractual expiration of natural gas PPAs.

•Non-PPA revenues ~~decreased $11~~increased $98 million, or ~~12%~~52%, primarily due to a ~~$12~~$129 million increase in the market price of energy, partially offset by a $29 million decrease in the volume of KWHs sold through short-term sales.

125

~~Fuel and Purchased Power Expenses~~

~~Details of Southern Power's generation and purchased power were as follows:~~

First Quarter 2022 First Quarter 2021
(in billions of KWHs)
Generation 11.0 9.4
Purchased power 0.5 0.6
Total generation and purchased power 11.5 10.0
Total generation and purchased power
(excluding solar, wind, fuel cells, and tolling agreements)
6.9 6.1

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Fuel and Purchased Power Expenses

Details of Southern Power's generation and purchased power were as follows:


	Second Quarter 2022	Second Quarter 2021	Year-To-Date 2022	Year-To-Date 2021
	(in billions of KWHs)
Generation	12.8	10.3	23.9	19.7
Purchased power	0.7	0.7	1.1	1.3
Total generation and purchased power	13.5	11.0	25.0	21.0

Total generation and purchased power (excluding solar, wind, fuel cells, and tolling agreements)	7.5	6.3	14.4	12.4

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:


		First Quarter 2022 vs. First Quarter 2021			Second Quarter 2022 vs. Second Quarter 2021					Year-to-Date 2022 vs. Year-to-Date 2021
			(change in millions)			(% change)		(change in millions)		(% change)	(change in millions)		(% change)
Fuel	Fuel		$	91		64.5	Fuel	$	297	212.1	$	388	138.1
Purchased power	Purchased power		1			5.0	Purchased power	43		172.0	43		93.5
Total fuel and purchased power expenses	Total fuel and purchased power expenses		$	92			Total fuel and purchased power expenses	$	340		$	431

In the ~~first~~second quarter 2022, total fuel and purchased power expenses increased ~~$92~~$340 million, or ~~57%~~206%, compared to the corresponding period in ~~2021 primarily~~2021. Fuel expense increased $297 million due to a ~~$68~~$266 million increase inassociated with the average cost of fuel ~~per KWH generated~~ and a ~~$23~~$31 million increase associated with the volume of KWHs generated. Purchased power expense increased $43 million primarily due to an increase in the average cost of purchased power.

For year-to-date 2022, total fuel and purchased power expenses increased $431 million, or 132%, compared to the corresponding period in 2021. Fuel expense increased $388 million due to a $333 million increase associated with the average cost of fuel and a $55 million increase associated with the volume of KWHs generated. Purchased power expense increased $43 million primarily due to an increase in the average cost of purchased power.

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AND RESULTS OF OPERATIONS (Continued)

Gain on Dispositions, Net

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$(37) (94.9)


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$—	—	$(37)	(94.9)

~~In the first quarter~~For year-to-date 2022, gain on dispositions, net was $2 million compared to $39 million for the corresponding period in 2021. The decrease primarily resulted from gains associated with contributions of wind turbine equipment to various equity method investments in the first quarter 2021. See Note 15 to the financial statements under "Southern Power – Development Projects" in Item 8 of the Form 10-K and Note (E) to the Condensed Financial Statements under "Southern Power" herein for additional information.

Income Taxes (Benefit)

Second Quarter 2022 vs. Second Quarter 2021

Year-To-Date 2022 vs. Year-To-Date 2021

(change in millions)

(% change)

(change in millions)

(% change)

$27

N/M

$24

N/M

N/M - Not meaningful

In the second quarter 2022, income tax expense was $25 million compared to a benefit of $2 million for the corresponding period in 2021. The change was primarily due to higher pre-tax earnings, partially offset by higher wind PTCs.

For year-to-date 2022, income tax expense was $13 million compared to a benefit of $11 million for the corresponding period in 2021. The change was primarily due to higher pre-tax earnings for year-to-date 2022 and a change in state apportionment methodology resulting from tax legislation enacted by the State of Alabama in the first quarter 2021, partially offset by higher wind PTCs for year-to-date 2022.

Net Loss Attributable to Noncontrolling Interests

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$13 40.6

Second Quarter 2022 vs. Second Quarter 2021

Year-To-Date 2022 vs. Year-To-Date 2021

(change in millions)

(% change)

(change in millions)

(% change)

$22

N/M

$34

103.0

N/M - Not meaningful

In the ~~first~~second quarter 2022, net loss attributable to noncontrolling interests was ~~$45~~$22 million compared to ~~$32~~an immaterial loss for the corresponding period in 2021. For year-to-date 2022, net loss attributable to noncontrolling interests was $67 million compared to $33 million for the corresponding period in 2021. The increased ~~loss was~~losses attributable to noncontrolling interests were primarily due to ~~loss allocations to the partners in the Garland and Tranquillity battery energy storage facilities and~~ higher HLBV loss allocations to ~~wind~~ tax equity partners, ~~including new partnerships entered into during 2021. The increased loss allocations were~~ partially offset by higher income allocations to ~~solar~~ equity partners.

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~~AND RESULTS OF OPERATIONS (Continued)~~

Southern Company Gas

Operating Metrics

Southern Company Gas continues to focus on several operating metrics, including Heating Degree Days, customer count, and volumes of natural gas sold.

Southern Company Gas measures weather and the effect on its business using Heating Degree Days. Generally, increased Heating Degree Days result in higher demand for natural gas on Southern Company Gas' distribution system. Southern Company Gas has various regulatory mechanisms, such as weather and revenue normalization and straight-fixed-variable rate design, which limit its exposure to weather changes within typical ranges in each of its utility's respective service territory. Southern Company Gas also utilizes weather hedges to limit the negative income impacts in the event of warmer-than-normal weather.

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The number of customers served by gas distribution operations and gas marketing services can be impacted by natural gas prices, economic conditions, and competition from alternative fuels. Gas distribution operations and gas marketing services' customers are primarily located in Georgia and Illinois.

Southern Company Gas' natural gas volume metrics for gas distribution operations and gas marketing services illustrate the effects of weather and customer demand for natural gas.

Seasonality of Results

During the Heating Season, natural gas usage and operating revenues are generally higher as more customers are connected to the gas distribution systems and natural gas usage is higher in periods of colder weather. Prior to the sale of Sequent on July 1, 2021, wholesale gas services' operating revenues occasionally were impacted due to peak usage by power generators in response to summer energy demands. Southern Company Gas' base operating expenses, excluding cost of natural gas, bad debt expense, and certain incentive compensation costs, are incurred relatively evenly throughout the year. Seasonality also affects the comparison of certain balance sheet items across quarters, including receivables, unbilled revenues, natural gas for sale, and notes payable. However, these items are comparable when reviewing Southern Company Gas' annual results. Thus, Southern Company Gas' operating results for the interim periods presented are not necessarily indicative of annual results and can vary significantly from quarter to quarter.

Net Income

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$(79) (19.8)

Second Quarter 2022 vs. Second Quarter 2021

Year-To-Date 2022 vs. Year-To-Date 2021

(change in millions)

(% change)

(change in millions)

(% change)

$180

N/M

$100

30.0

N/M - Not meaningful

In the ~~first~~second quarter 2022, net inincom~~come~~e was ~~$319~~$115 million compared to ~~$398~~a net loss of $65 million for the corresponding period in 2021. The ~~first~~second quarter 2021 results include ~~$126~~$112 million of net ~~income~~loss from Sequent, which was sold on July 1, 2021. Net income increased ~~$31~~$59 million at gas pipeline investments primarily as a result of a 2021 impairment charge related to the PennEast pipeline project and $12 million at gas distribution operations primarily due to base rate increases and continued investment in infrastructure replacement.

For year-to-date 2022, net income was $433 million compared to $333 million for the corresponding period in 2021. Net income increased $59 million at gas pipeline investments as a result of a 2021 impairment charge related to the PennEast pipeline project, $43 million at gas distribution operations primarily due to base rate increases and continued investment in infrastructure replacement, and ~~$10~~$5 million at gas marketing services primarily related to higher commodity prices and higher sales to commercial customers. The year-to-date 2021 results also included $14 million of net income from Sequent, which was sold on July 1, 2021.

See Notes 2, 7, and 15 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

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$364 21.5


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$406	60.0	$769	32.4

In the second quarter 2022, natural gas revenues, including alternative revenue programs, ~~first quarter~~were $1.1 billion compared to $677 million for the corresponding period in 2021. For year-to-date 2022, natural gas revenues, including alternative revenue programs, were $~~2.1~~3.1 billion compared to ~~$1.7~~$2.4 billion for the corresponding period in 2021.

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AND RESULTS OF OPERATIONS (Continued)

Details of the changes in natural gas revenues, including alternative revenue programs, were as follows:


		First Quarter 2022			Second Quarter 2022						Year-To-Date 2022
			(in millions)			(% change)			(in millions)		(% change)		(in millions)		(% change)
Natural gas revenues – prior year	Natural gas revenues – prior year		$	1,694				Natural gas revenues – prior year	$	677			$	2,371
Estimated change resulting from –	Estimated change resulting from –							Estimated change resulting from –
Infrastructure replacement programs and base rate changes	Infrastructure replacement programs and base rate changes		86			5.1	%	Infrastructure replacement programs and base rate changes	46		6.8	%	132		5.6	%
Gas costs and other cost recovery	Gas costs and other cost recovery		544			32.1		Gas costs and other cost recovery	239		35.3		783		33.0
Gas marketing services	Gas marketing services		18			1.1		Gas marketing services	(5)		(0.7)		13		0.5
Wholesale gas services	Wholesale gas services		(297)			(17.5)		Wholesale gas services	110		16.2		(187)		(7.9)

Other	Other		13			0.7		Other	16		2.4		28		1.2
Natural gas revenues – current year	Natural gas revenues – current year		$	2,058		21.5	%	Natural gas revenues – current year	$	1,083	60.0	%	$	3,140	32.4	%

Revenues from infrastructure replacement programs and base rate ~~chang~~eschanges increased in the ~~first~~second quarter and year-to-date 2022 compared to the corresponding ~~period~~periods in 2021 primarily due to rate increases at Nicor Gas, Atlanta Gas Light, and Chattanooga Gas and continued investment in infrastructure replacement. See Note 2 to the financial statements under "Southern Company Gas – Rate Proceedings" in Item 8 of the Form 10-K for additional information.

Revenues associated with gas costs and other cost recovery increased in the ~~first~~second quarter and year-to-date 2022 compared to the corresponding ~~period~~periods in 2021 primarily due to higher volumes of natural gas sold and higher natural gas cost recovery. See "Cost of Natural Gas" herein for additional information. Revenue impacts from weather and customer growth are described further below.

Revenues from gas marketing services ~~increased~~decreased in the ~~first~~second quarter 2022 compared to the corresponding period in 2021 ~~primarily~~due to unrealized hedge losses and warmer weather in the second quarter 2022. Revenues from gas marketing services increased for year-to-date 2022 compared to the corresponding period in 2021 due to higher commodity prices and higher sales to commercial customers.

The ~~change~~changes in revenues related to wholesale gas services ~~was~~were due to the sale of Sequent on July 1, 2021. See Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.

Southern Company Gas' natural gas distribution utilities have various regulatory mechanisms that limit their exposure to weather changes. Southern Company Gas also uses hedges for any remaining exposure to warmer-than-normal weather in Illinois for gas distribution operations and in Illinois and Georgia for gas marketing services; therefore, weather typically does not have a significant net income impact. The following table presents Heating Degree Days information for Illinois and Georgia, the primary locations where Southern Company Gas' operations are impacted by weather.


		First Quarter			2022 vs. normal	2022 vs. 2021		Second Quarter						2022 vs. normal	2022 vs. 2021			Year-to-Date				2022 vs. normal	2022 vs. 2021
			Normal(*)	2022	2021		colder (warmer)					Normal(*)	2022	2021		(warmer)				Normal(*)	2022	2021		colder (warmer)
		(in thousands)						(in thousands)										(in thousands)
Illinois	Illinois		2,999	3,007	2,947		0.3	%	2.0	%	Illinois	645	620	634		(3.9)	%	(2.2)	%	3,644	3,627	3,580		(0.5)	%	1.3	%
Georgia	Georgia		1,302	1,251	1,254		(3.9)	%	(0.2)	%	Georgia	126	110	142		(12.7)	%	(22.5)	%	1,428	1,361	1,396		(4.7)	%	(2.5)	%

(*)Normal represents the 10-year average from January 1, 2012 through ~~March 31,~~June 30, 2021 for Illinois at Chicago Midway International Airport and for Georgia at Atlanta Hartsfield-Jackson International Airport, based on information obtained from the National Oceanic and Atmospheric Administration, National Climatic Data Center.

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AND RESULTS OF OPERATIONS (Continued)

The following table provides the number of customers served by Southern Company Gas at ~~March 31,~~June 30, 2022 and 2021:


		March 31,							June 30,
		2022		2021		2022 vs. 2021			2022		2021		2022 vs. 2021
		(in thousands, except market share %)				(% change)			(in thousands, except market share %)				(% change)
Gas distribution operations	Gas distribution operations	4,358		4,335		0.5	%	Gas distribution operations	4,314		4,300		0.3	%
Gas marketing services	Gas marketing services							Gas marketing services
Energy customers(*)	Energy customers(*)	598		667		(10.3)	%	Energy customers(*)	610		612		(0.3)	%
Market share of energy customers in Georgia	Market share of energy customers in Georgia	28.7	%	28.9	%			Market share of energy customers in Georgia	28.6	%	29.1	%

(*)Gas marketing services' customers are primarily located in Georgia and Illinois. ~~March 31, 2021 also includes approximately 50,000 customers in Ohio contracted through an annual auction process to serve for 12 months beginning April 1, 2020.~~

Southern Company Gas anticipates customer growth and uses a variety of targeted marketing programs to attract new customers and to retain existing customers.

Cost of Natural Gas

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$512 87.8


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$221	95.7	$732	89.9

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 ~~represent~~ed ~~90%~~represented 88% and 89% of the total cost of natural gas in the ~~first~~second quarter ~~2022.~~and year-to-date 2022, respectively. See MANAGEMENT'S DISCUSSION AND ANALYSIS – RESULTS OF OPERATIONS – "Southern Company Gas – Cost of Natural Gas" in Item 7 of the Form 10-K and "Natural Gas Revenues, including Alternative Revenue Programs" herein for additional information.

In the ~~first~~second quarter 2022, cost of natural gas was ~~$1.1 billion~~$452 million compared to ~~$583~~$231 million for the corresponding period in 2021. For year-to-date 2022, cost of natural gas was $1.5 billion compared to $814 million for the corresponding period in 2021. The ~~increase reflects~~increases reflect higher gas cost recovery as a result of ~~an 83.9% increase~~increases of 153.2% and 119.4% in natural gas prices in the ~~first~~second quarter and year-to-date 2022, respectively, compared to the corresponding ~~period~~periods in 2021.

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AND RESULTS OF OPERATIONS (Continued)

The following table details the volumes of natural gas sold during all periods presented.


		First Quarter		2022 vs. 2021		Second Quarter			2022 vs. 2021			Year-to-Date		2022 vs. 2021
		2022	2021			2022		2021				2022	2021
Gas distribution operations (mmBtu in millions)	Gas distribution operations (mmBtu in millions)				Gas distribution operations (mmBtu in millions)
Firm	Firm		304	288	5.6	%	Firm	111	103	7.8	%		415	391	6.1	%
Interruptible	Interruptible		25	26	(3.8)		Interruptible	22	23	(4.3)			47	50	(6.0)
Total	Total		329	314	4.8	%	Total	133	126	5.6	%		462	441	4.8	%
Wholesale gas services (mmBtu in millions/day)	Wholesale gas services (mmBtu in millions/day)				Wholesale gas services (mmBtu in millions/day)
Daily physical sales(*)	Daily physical sales(*)		—	7.1	(100.0)	%	Daily physical sales(*)	—	6.1	(100.0)	%		—	6.6	(100.0)	%
Gas marketing services (mmBtu in millions)	Gas marketing services (mmBtu in millions)				Gas marketing services (mmBtu in millions)
Firm:	Firm:						Firm:
Georgia	Georgia		16	19	(15.8)	%	Georgia	5	4	25.0	%		21	23	(8.7)	%
Illinois	Illinois		3	4	(25.0)		Illinois	1	1	—			4	5	(20.0)

Other	Other		4	6	(33.3)		Other	3	2	50.0			7	8	(12.5)
Interruptible large commercial and industrial	Interruptible large commercial and industrial		4	4	—		Interruptible large commercial and industrial	3	3	—			7	7	—
Total	Total		27	33	(18.2)	%	Total	12	10	20.0	%		39	43	(9.3)	%

(*)As a result of the sale of Sequent, wholesale gas services had no sales in the ~~first~~second quarter and year-to-date 2022. See Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.

Other Operations and Maintenance Expenses

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$6 2.0


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$33	14.2	$38	7.1

In the second quarter 2022, other operations and maintenance expenses were $266 million ~~first~~compared to $233 million for the corresponding period in 2021. Other operations and maintenance expenses increased approximately $37 million excluding expenses related to Sequent in the second quarter 2021. The increase was primarily due to higher compensation and benefit expenses and higher expenses passed through directly to customers primarily related to bad debt at gas distribution operations.

For year-to-date 2022, other operations and maintenance expenses were ~~$305~~$570 million compared to ~~$299~~$532 million for the corresponding period in 2021.Excluding ~~$48~~$53 million of expenses related to Sequent infor year-to-date 2021, other operations and maintenance expenses increased approximately ~~$54~~$91 million. The increase was primarily due to increases of ~~$18~~$33 million in compensation and benefit expenses, ~~$16~~$24 million in expenses passed through directly to customers primarily related to bad debt at gas distribution operations, ~~and $6~~$16 million in technology-related costs, $8 million in customer ~~account expenses.~~accounts expenses, and $7 million in expenses primarily related to higher fuel costs.

Depreciation and Amortization

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$7 5.4


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$5	3.8	$12	4.6

~~In the~~ ~~first quarter~~For year-to-date 2022, depreciation and amortization was ~~$137~~$275 million compared to ~~$130~~$263 million for the corresponding period in 2021. The increase was primarily due to continued infrastructure investments at the natural gas distribution utilities.

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AND RESULTS OF OPERATIONS (Continued)

Taxes Other Than Income Taxes

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$19 23.5


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$13	26.5	$33	25.4

In the ~~first~~second quarter 2022, taxes other than income taxes were ~~$100~~$62 million compared to ~~$81~~$49 million for the corresponding period in 2021. For year-to-date 2022, taxes other than income taxes were $163 million compared to $130 million for the corresponding period in 2021. The ~~increase~~increases primarily ~~reflects~~reflect an increase in revenue tax expenses as a result of higher natural gas revenues at Nicor Gas. These revenue tax expenses are passed directly to customers and have no impact on net income.

Earnings (Loss) from Equity Method Investments

Second Quarter 2022 vs. Second Quarter 2021

Year-To-Date 2022 vs. Year-To-Date 2021

(change in millions)

(% change)

(change in millions)

(% change)

$83

159.6

$82

N/M

N/M - Not meaningful

In the second quarter 2022, earnings from equity method investments were $31 million compared to a loss of $52 million for the corresponding period in 2021. For year-to-date 2022, earnings from equity method investments were $71 million compared to a loss of $11 million for the corresponding period in 2021. The changes were primarily due to a pre-tax impairment charge of $82 million recorded in the second quarter 2021 related to the PennEast Pipeline project. See Note 7 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K and Note (E) to the Condensed Financial Statements herein under "Southern Company Gas" for additional information.

Other Income (Expense), Net

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$79 125.4


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$30	214.3	$110	141.0

In the ~~first~~second quarter 2022, other income (expense), net was ~~$16~~$16 million of income compared to ~~$63~~$14 million of expense for the corresponding period in 2021. For year-to-date 2022, other income (expense), net was $32 million of income compared to $78 million of expense for the corresponding period in 2021. The ~~change was~~changes were largely due to charitable contributions of ~~$75~~$26 million and $101 million in the ~~first~~second quarter ~~2021.~~and year-to-date 2021, respectively.

Income Taxes (Benefit)

First Quarter 2022 vs. First Quarter 2021
(change in millions) (% change)
$(24) (19.8)


Second Quarter 2022 vs. Second Quarter 2021		Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions)	(% change)	(change in millions)	(% change)
$65	224.1	$42	45.7

In the ~~first~~ second quarter 2022, income ~~taxe~~tax expenses was $36 million compared to income tax benefit of $29 million for the corresponding period in 2021. The change was primarily due to the pre-tax impairment charge at gas pipeline investments in 2021 related to the PennEast Pipeline project, a pre-tax loss at wholesale gas services in the second quarter 2021, and higher pre-tax earnings primarily at gas distribution operations.

For year-to-date 2022, income taxes were ~~$97~~$134 million compared to ~~$121~~$92 million for the corresponding period in 2021. The ~~decrease~~increase was primarily due to ~~a decrease of $40 million~~the pre-tax impairment charge at ~~wholesale~~ gas ~~services including Sequent, which was sold on July 1,~~pipeline investments in 2021 ~~partially offset by~~ related to the PennEast Pipeline project and higher pre-tax earnings ~~from~~primarily at gas distribution operations.

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AND RESULTS OF OPERATIONS (Continued)

See Note 7 to the ~~other segments~~.financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information on the impairment charge related to the PennEast Pipeline project.

Segment Information

Operating revenues, operating expenses, and net income (loss) for each segment are provided in the table below. See Note (L) to the Condensed Financial Statements under "Southern Company Gas" herein for additional information.


		First Quarter 2022						First Quarter 2021							2022						2021
		Operating Revenues		Operating Expenses		Net Income (Loss)		Operating Revenues		Operating Expenses		Net Income (Loss)			Operating Revenues		Operating Expenses		Net Income (Loss)		Operating Revenues		Operating Expenses		Net Income (Loss)
		(in millions)						(in millions)							(in millions)						(in millions)
Second Quarter														Second Quarter
Gas distribution operations	Gas distribution operations	$	1,803	$	1,475	$	214	$	1,200	$	913	$	183	Gas distribution operations	$	980	$	819	$	92	$	710	$	564	$	80
Gas pipeline investments	Gas pipeline investments	8		3		29		8		3		29		Gas pipeline investments	8		2		23		8		3		(36)
Wholesale gas services(*)	Wholesale gas services(*)	—		—		—		298		56		126		Wholesale gas services(*)	—		—		—		(110)		11		(112)
Gas marketing services	Gas marketing services	243		150		66		195		120		56		Gas marketing services	92		90		1		64		54		6
All other	All other	16		21		10		7		15		4		All other	10		14		(1)		11		20		(3)
Intercompany eliminations	Intercompany eliminations	(12)		(12)		—		(14)		(14)		—		Intercompany eliminations	(7)		(7)		—		(6)		(6)		—
Consolidated	Consolidated	$	2,058	$	1,637	$	319	$	1,694	$	1,093	$	398	Consolidated	$	1,083	$	918	$	115	$	677	$	646	$	(65)

Year-to-Date														Year-to-Date
Gas distribution operations														Gas distribution operations	$	2,782	$	2,293	$	306	$	1,910	$	1,477	$	263
Gas pipeline investments														Gas pipeline investments	16		5		52		16		6		(7)
Wholesale gas services(*)														Wholesale gas services(*)	—		—		—		188		67		14
Gas marketing services														Gas marketing services	335		240		67		259		174		62
All other														All other	26		35		8		18		35		1
Intercompany eliminations														Intercompany eliminations	(19)		(19)		—		(20)		(20)		—
Consolidated														Consolidated	$	3,140	$	2,554	$	433	$	2,371	$	1,739	$	333

(*)As a result of the sale of Sequent, wholesale gas services is no longer a reportable segment for the ~~first~~second quarter and year-to-date 2022. See Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.

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~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION~~

~~AND RESULTS OF OPERATIONS (Continued)~~

Gas Distribution Operations

Gas distribution operations is the largest component of Southern Company Gas' business and is subject to regulation and oversight by regulatory agencies in each of the states it serves. These agencies approve natural gas rates designed to provide Southern Company Gas with the opportunity to generate revenues to recover the cost of natural gas delivered to its customers and its fixed and variable costs, including depreciation, interest expense, operations and maintenance, taxes, and overhead costs, and to earn a reasonable return on its investments.

With the exception of Atlanta Gas Light, Southern Company Gas' second largest utility that operates in a deregulated natural gas market and has a straight-fixed-variable rate design that minimizes the variability of its revenues based on consumption, the earnings of the natural gas distribution utilities can be affected by customer consumption patterns that are a function of weather conditions, price levels for natural gas, and general economic conditions that may impact customers' ability to pay for natural gas consumed. Southern Company Gas has various regulatory and other mechanisms, such as weather and revenue normalization mechanisms and weather derivative instruments, that limit its exposure to changes in customer consumption, including weather changes within typical ranges in its natural gas distribution utilities' service territories. See Note 2 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.

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AND RESULTS OF OPERATIONS (Continued)

In the ~~first~~second quarter and year-to-date 2022, net income increased ~~$31~~$12 million, or ~~16.9%~~15.0%, and $43 million, or 16.3%, respectively, when compared to the corresponding ~~period~~periods in 2021, as described further below:

•Operating revenues increased ~~$603~~$270 million and $872 million, respectively, when compared to the corresponding periods in 2021 primarily due to higher gas cost recovery, rate increases, and continued investment in infrastructure replacement. Gas costs recovered through natural gas revenues generally equal the amount expensed in cost of natural gas.

•Operating expenses increased ~~$562~~$255 million and $816 million, respectively, when compared to the corresponding periods in 2021 primarily due to ~~a $479~~increases of $195 million ~~increase~~and $673 million, respectively, in the cost of gas as a result of higher natural gas prices and higher volumes sold compared to 2021, ~~as well as~~ higher compensation expenses, and higher depreciation resulting from additional assets placed in service. The increase in operating expenses also includes higher costs passed through directly to customers, primarily related to bad debt expenses and revenue taxes.

•Other income and (expense) increased $4 million and $9 million, respectively, when compared to the corresponding periods in 2021, primarily due to an increase in non-service cost-related retirement benefits income. See Note (H) to the Condensed Financial Statements herein for additional information.

•Interest expense, net of amounts capitalized increased $3 million and $6 million, respectively, when compared to the corresponding periods in 2021 primarily due to additional debt issued to finance continued investments. See FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" and "Financing Activities" herein for additional information on borrowings.

•Income taxes increased ~~$12~~$4 million and $16 million, respectively, when compared to the corresponding periods in 2021 primarily due to higher pre-tax earnings.

Gas Pipeline Investments

Gas pipeline investments consists primarily of joint ventures in natural gas pipeline investments including SNG, Dalton Pipeline, and PennEast Pipeline. See Note (E) to the Condensed Financial Statements under "Southern Company Gas" herein for additional information.

Net income increased $59 million for both the second quarter and year-to-date 2022 when compared to the corresponding periods in 2021. The increases were primarily due to a pre-tax impairment charge of $82 million ($58 million after tax) in the second quarter 2021 related to the equity method investment in the PennEast Pipeline project. See Note 7 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.

Gas Marketing Services

Gas marketing services provides energy-related products and services to natural gas markets and participants in customer choice programs that were approved in various states to increase competition. These programs allow customers to choose their natural gas supplier while the local distribution utility continues to provide distribution and transportation services. Gas marketing services is weather sensitive and uses a variety of hedging strategies, such as weather derivative instruments and other risk management tools, to partially mitigate potential weather impacts.

In the ~~first~~second quarter 2022, net income ~~increased $10~~decreased $5 million, or ~~17.9%~~83.3%, when compared to the corresponding period in 2021. The decrease was primarily due to an increase of $36 million in operating expenses primarily due to $32 million in higher cost of gas, largely offset by a related increase of $28 million in operating revenues.

For year-to-date 2022, net income increased $5 million, or 8.1%, when compared to the corresponding period in 2021. The increase was primarily due to a ~~$48~~$76 million increase in operating revenues as a result of higher commodity prices and higher sales to commercial customers, partially offset by a ~~$30~~$66 million increase in operating expenses primarily due to higher cost of natural gas and an increase of $8$5 million in income taxes as a result of higher pre-tax earnings.

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AND RESULTS OF OPERATIONS (Continued)

All Other

All other includes natural gas storage businesses, a renewable natural gas business, AGL Services Company, and Southern Company Gas Capital, as well as various corporate operating expenses that are not allocated to the reportable segments and interest income (expense) associated with affiliate financing arrangements.

~~In the first quarter~~For year-to-date 2022, net income increased $6$7 million ~~or 150%,~~ when compared to the corresponding period in 2021. Operating revenues increased $9$8 million primarily related to higher demand fees and favorable hedge gains at the natural gas storage businesses and higher sales from the renewable natural gas ~~business, partially offset by a $6 million increase in operating expenses primarily due to higher cost of natural gas.~~business.

FUTURE EARNINGS POTENTIAL

Each Registrant's results of operations are not necessarily indicative of its future earnings potential. The level of the Registrants' future earnings depends on numerous factors that affect the opportunities, challenges, and risks of the Registrants' primary businesses of selling electricity and/or distributing natural gas, as described further herein.

For the traditional electric operating companies, these factors include the ability to maintain constructive regulatory environments that allow for the timely recovery of prudently-incurred costs during a time of increasing costs, including those related to projected long-term demand growth, stringent environmental standards, including CCR rules, safety, system reliability and resiliency, fuel, restoration following major storms, and capital expenditures, including constructing new electric generating plants and expanding and improving the transmission and distribution systems; continued customer growth; and the ~~trend~~trends of higher inflation and reduced electricity usage per customer, especially in residential and commercial markets. For Georgia Power, completing construction of Plant Vogtle Units 3 and 4 and the related cost recovery proceedings is another major factor.

Earnings in the electricity business will also depend upon maintaining and growing sales, considering, among other things, the adoption and/or penetration rates of increasingly energy-efficient technologies and increasing volumes of electronic commerce transactions, which could contribute to a net reduction in customer usage.

Global and U.S. economic conditions have been significantly affected by a series of demand and supply shocks that caused a global and national economic recession in 2020. The drivers, speed, and depth of the 2020 economic contraction were unprecedented and continue to reduce energy demand across the Southern Company system's service territory, primarily in the commercial class. Retail electric revenues attributable to changes in sales increased in the first half of 2022 when compared to the corresponding period in 2021 primarily due to the normalization of economic activity; however, total retail electric sales for the Southern Company system continued to be negatively impacted by the COVID-19 pandemic when compared to pre-pandemic trends. Most prominently, the COVID-19 pandemic has negatively impacted global supply chains and business operations as suppliers continue to experience difficulties keeping up with strong demand for factory goods, which is being driven by low business inventories. In addition, rising inflation in 2021 and 2022 has resulted in increasing costs for many goods and services. As a result of persistently high inflation, interest rates have been on the rise and are expected to continue rising in the near term. ~~The combination~~Based on these factors, the probability of ~~rising inoculation rates in~~ the U.S. ~~population and the federal COVID-19 relief package contributed to increased economic recovery in 2021 and~~economy falling into a recession has sustained the current economic expansion through the first quarter 2022; however, fiscal support of business and personal incomes is declining. Russia's invasion of Ukraine has intensified supply chain disruptions and heightened uncertainty surrounding the near-term outlook for the broader economy and the economy within the Southern Company system's service territory. The drivers, speed, and depth of the 2020 economic contraction were unprecedented and have reduced energy demand across the Southern Company system's service territory, primarily in the commercial and industrial classes. Retail electric revenues attributable to changes in sales increased in the first quarter 2022 when compared to the corresponding period in 2021 primarily due to the normalization of economic activity; however, retail electric sales continued to be negatively impacted by the COVID-19 pandemic when compared to pre-pandemic trends.heightened. The impacts of new COVID-19 variants, responses to the COVID-19 pandemic by both customers and governments, ~~inflation, rising interest rates,~~ongoing geopolitical threats, such as the escalation of the Russia-Ukraine war, and the ~~unresolved geopolitical tensions relating to Russia's invasion~~potential of ~~Ukraine~~future COVID-19-related lockdowns in Asian markets or elsewhere could ~~significantly affect~~further disrupt global supply chains and increase the ~~sustainability~~severity of ~~current~~a possible economic ~~growth.~~downturn in the Southern Company system's service territory. See RESULTS OF OPERATIONS herein for information on COVID-19-related impacts on energy demand in the Southern Company system's service territory during the first ~~quarter~~half of 2022.

The level of future earnings for Southern Power's competitive wholesale electric business depends on numerous factors including the parameters of the wholesale market and the efficient operation of its wholesale generating assets; Southern Power's ability to execute its growth strategy through the development or acquisition of renewable

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facilities and other energy projects while containing costs; regulatory matters; customer creditworthiness; total electric generating capacity available in Southern Power's market areas; Southern Power's ability to successfully remarket capacity as current contracts expire; renewable portfolio standards; availability of federal and state ITCs

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and PTCs, which could be impacted by future tax legislation; transmission constraints; cost of generation from units within the Southern Company power pool; and operational limitations.

The level of future earnings for Southern Company Gas' primary business of distributing natural gas and its complementary businesses in the gas pipeline investments and gas marketing services sectors depends on numerous factors. These factors include the natural gas distribution utilities' ability to maintain constructive regulatory environments that allow for the timely recovery of prudently-incurred costs, including those related to projected long-term demand growth, safety, system reliability and resiliency, natural gas, and capital expenditures, including expanding and improving the natural gas distribution systems; the completion and subsequent operation of ongoing infrastructure and other construction projects; customer creditworthiness; certain policies to limit the use of natural gas, such as the potential across certain parts of the U.S. for state or municipal bans on the use of natural gas; and Southern Company Gas' ability 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 business to capture value from locational and seasonal spreads. Additionally, changes in commodity prices, primarily driven by tight gas supplies, geopolitical events, and diminished gas production, subject a portion of Southern Company Gas' operations to earnings variability and have recently resulted in higher natural gas prices. Additional economic factors may contribute to this environment. ~~If current economic conditions continue to improve, the~~The demand for natural gas may increase, which may cause natural gas prices to rise and drive higher volatility in the natural gas markets on a longer-term basis. Alternatively, a significant drop in oil and natural gas prices could lead to a consolidation of natural gas producers or reduced levels of natural gas production.

Earnings for both the electricity and natural gas businesses are subject to a variety of other factors. These factors include ~~weather, competition,~~weather; competition; developing new and maintaining existing energy contracts and associated load requirements with wholesale ~~customers,~~customers; energy conservation practiced by ~~customers,~~customers; the use of alternative energy sources by ~~customers,~~customers; government incentives to reduce overall energy ~~usage,~~usage; the prices of electricity and natural ~~gas,~~gas; costs and availability of labor and materials in a time of rising costs, impacted by heightened inflation caused by unprecedented shocks to the broader economy, and supply chain ~~disruptions,~~disruptions; and the price elasticity of demand. Demand for electricity and natural gas in the Registrants' service territories is primarily driven by the pace of economic growth or decline that may be affected by changes in regional and global economic conditions, which may impact future earnings.

As part of its ongoing effort to adapt to changing market conditions, Southern Company continues to evaluate and consider a wide array of potential business strategies. These strategies may include business combinations, partnerships, and acquisitions involving other utility or non-utility businesses or properties, disposition of, or the sale of interests in, certain assets or businesses, internal restructuring, or some combination thereof. Furthermore, Southern Company may engage in new business ventures that arise from competitive and regulatory changes in the utility industry. Pursuit of any of the above strategies, or any combination thereof, may significantly affect the business operations, risks, and financial condition of Southern Company. In addition, Southern Power and Southern Company Gas regularly consider and evaluate joint development arrangements as well as acquisitions and dispositions of businesses and assets as part of their business strategies. See Note 15 to the financial statements in Item 8 of the Form 10-K and Note (K) to the Condensed Financial Statements herein for additional information.

For additional information relating to these issues, see RISK FACTORS in Item 1A and MANAGEMENT'S DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL in Item 7 of the Form 10-K.

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 "Environmental Remediation" herein, for additional information.

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Environmental Laws and Regulations

Coal Combustion Residuals

On July 20, 2022, Mobile Baykeeper, through its counsel Southern Environmental Law Center, released an advance notice of intent to sue Alabama Power for alleged violations of the Resource Conservation and Recovery Act (RCRA) and regulations governing CCR. Mobile Baykeeper claims that Alabama Power's plan to close the Plant Barry ash pond under the closure-in-place methodology violates regulations governing CCR and the RCRA. Under the RCRA, Mobile Baykeeper is required to give Alabama Power advance notice of intent at least 60 days before filing suit. See Note 6 to the financial statements in Item 8 of the Form 10-K for a discussion of Alabama Power's ARO liabilities related to facilities that are subject to the CCR Rule and the related state rule. The ultimate outcome of this matter cannot be determined at this time.

Global Climate Issues

On June 30, 2022, the U.S. Supreme Court issued an opinion limiting the EPA's authority to regulate greenhouse gas emissions under the Clean Air Act. The Court's review in the case focused on whether the EPA's authority under the Clean Air Act allows the EPA to regulate the electric industry in a manner as broad as the Clean Power Plan (CPP), which was repealed and replaced by the Affordable Clean Energy rule (ACE Rule). The Court held that the generation shifting to lower carbon emitting sources approach in the CPP is not authorized by the Clean Air Act. However, the Court did not decide whether the EPA may adopt measures only applied at the individual electric generating source, which is the basis for the ACE Rule. The EPA has announced its intent to propose a rule for existing power plants pursuant to the Clean Air Act by March 2023. The ultimate impact of the Court's decision cannot be determined at this time.

Regulatory Matters

See Note 2 to the financial statements in Item 8 of the Form 10-K, OVERVIEW – "Recent Developments" herein, and Note (B) to the Condensed Financial Statements herein for a discussion of regulatory matters related to Alabama Power, Georgia Power, Mississippi Power, and Southern Company Gas, including items that could impact the applicable Registrants' future earnings, cash flows, and/or financial condition.

Construction Programs

The Subsidiary Registrants are engaged in continuous construction programs to accommodate existing and estimated future loads on their respective systems. The Southern Company system strategy continues to include developing and constructing new electric generating facilities, expanding and improving the electric transmission and electric and natural gas distribution systems, and undertaking projects to comply with environmental laws and regulations.

For the traditional electric operating companies, major generation construction projects are subject to state PSC approval in order to be included in retail rates. The largest construction project currently underway in the Southern Company system is Plant Vogtle Units 3 and 4. See Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction" herein for additional information. Also see Note 2 to the financial statements under "Alabama Power – Certificates of Convenience and Necessity" in Item 8 of the Form 10-K for information regarding Alabama Power's construction of Plant Barry Unit 8.

See Note 15 to the financial statements in Item 8 of the Form 10-K and Note (K) to the Condensed Financial Statements herein under "Southern Power" for information about costs relating to Southern Power's construction of renewable energy facilities.

Southern Company Gas is engaged in various infrastructure improvement programs designed to update or expand the natural gas distribution systems of the natural gas distribution utilities to improve reliability and meet operational flexibility and growth. The natural gas distribution utilities recover their investment and a return associated with these infrastructure programs through their regulated rates. See Note 2 to the financial statements in

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Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements herein under "Southern Company Gas" for additional information on Southern Company Gas' construction program.

See FINANCIAL CONDITION AND LIQUIDITY – "Cash Requirements" herein for additional information regarding the Registrants' capital requirements for their construction programs.

General Litigation and Other Matters

The Registrants are involved in various matters being litigated and/or regulatory and other matters that could affect future earnings, cash flows, and/or financial condition. The ultimate outcome of such pending or potential litigation against each Registrant and any subsidiaries or regulatory and other matters cannot be determined at this time; however, for current proceedings and/or matters not specifically reported herein or in Notes (B) and (C) to the Condensed Financial Statements herein, management does not anticipate that the ultimate liabilities, if any, arising from such current proceedings and/or matters would have a material effect on such Registrant's financial statements. See Notes (B) and (C) to the Condensed Financial Statements for a discussion of various contingencies, including matters being litigated, regulatory matters, and other matters which may affect future earnings potential.

ACCOUNTING POLICIES

See MANAGEMENT'S DISCUSSION AND ANALYSIS – ACCOUNTING POLICIES in Item 7 of the Form 10-K for a complete discussion of the Registrants' critical accounting policies and estimates, as well as recently issued accounting standards.

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Critical Accounting Policies and Estimates

The Registrants prepare their financial statements in accordance with GAAP. Significant accounting policies are described in the notes to the financial statements in Item 8 of the Form 10-K. In the application of these policies, certain estimates are made that may have a material impact on the Registrants' results of operations and related disclosures. Different assumptions and measurements could produce estimates that are significantly different from those recorded in the financial statements.

Estimated Cost, Schedule, and Rate Recovery for the Construction of Plant Vogtle Units 3 and 4

(Southern Company and Georgia Power)

As of June 30, 2022, Georgia Power revised its total project capital cost forecast to $10.5 billion (net of $1.7 billion received under the Guarantee Settlement Agreement and approximately $188 million in related customer refunds). This forecast includes construction contingency of $60 million and is based on projected in-service dates at the end of the first quarter 2023 and the fourth quarter 2023 for Units 3 and 4, respectively.

The projected schedule for Unit 3 primarily depends on the volume and completion of construction remediation work, completion of work packages, including inspection records, and other documentation necessary to submit the remaining ITAACs and begin fuel load, the pace of system and area turnovers, and the progression of startup and other testing. Unit 4's projected schedule primarily depends on Unit 3 progress through fuel load, startup, and testing; overall construction productivity and production levels improving, particularly in electrical installation, including terminations; and appropriate levels of craft laborers, particularly electricians and pipefitters, being added and maintained. Any further delays could result in later in-service dates and cost increases.

Georgia Power and the other Vogtle Owners do not agree on either the starting dollar amount for the determination of cost increases subject to the cost-sharing and tender provisions of the Global Amendments (as defined in Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction – Joint Owner Contracts"

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herein) or the extent to which COVID-19-related costs impact those provisions. Georgia Power recorded an additional pre-tax charge to income in the second quarter 2022 of approximately $16 million ($12 million after tax) associated with these cost-sharing and tender provisions, which is included in the total project capital cost forecast. Georgia Power may be required to record further pre-tax charges to income of up to approximately $480 million associated with these provisions based on the current project capital cost forecast. In October 2021, Georgia Power and the other Vogtle Owners entered into an agreement, which was modified on June 3, 2022, to clarify the process for the tender provisions of the Global Amendments to provide for a decision between 120 and 194 days after the tender option is triggered, which the other Vogtle Owners assert occurred on February 14, 2022, and would require the other Vogtle Owners to notify Georgia Power of their intent to exercise their tender options by August 27, 2022. On June 17, 2022 and July 26, 2022, OPC and Dalton, respectively, notified Georgia Power of their purported exercises of their tender options.

The ultimate outcome of these matters cannot be determined at this time. However, any extension of the in-service date beyond the first quarter 2023 for Unit 3 or the fourth quarter 2023 for Unit 4, including the current level of cost sharing described in Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction" herein, is estimated to result in additional base capital costs for Georgia Power of up to $35 million per month for Unit 3 and $45 million per month for Unit 4, as well as the related AFUDC and any additional related construction, support resources, or testing costs. See Note 2 to the financial statements in Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements herein under "Georgia Power – Nuclear Construction" for additional information.

FINANCIAL CONDITION AND LIQUIDITY

Overview

See MANAGEMENT'S DISCUSSION AND ANALYSIS – FINANCIAL CONDITION AND LIQUIDITY – "Overview" in Item 7 of the Form 10-K for additional information. The financial condition of each Registrant remained stable at ~~March 31,~~June 30, 2022. The Registrants intend to continue to monitor their access to short-term and long-term capital markets as well as their bank credit arrangements to meet future capital and liquidity needs. See "Cash Requirements," "Sources of Capital," and "Financing Activities" herein for additional information.

At the end of the ~~first~~second quarter 2022, the market price of Southern Company's common stock was ~~$72.51~~$71.31 per share (based on the closing price as reported on the NYSE) and the book value was ~~$26.63~~$27.03 per share, representing a market-to-book ratio of ~~272%~~264%, compared to $68.58, $26.30, and 261%, respectively, at the end of 2021. Southern Company's common stock dividend for the ~~first~~second quarter 2022 was ~~$0.66~~$0.68 per share compared to ~~$0.64~~$0.66 per share in the ~~first~~second quarter 2021.

Cash Requirements

See MANAGEMENT'S DISCUSSION AND ANALYSIS – FINANCIAL CONDITION AND LIQUIDITY – "Cash Requirements" in Item 7 of the Form 10-K for a description of the Registrants' significant cash requirements.

The Registrants' significant cash requirements include estimated capital expenditures associated with their construction programs. The construction programs are subject to periodic review and revision, and actual construction costs may vary from these estimates because of numerous factors. These factors include: changes in business conditions; changes in load projections; changes in environmental laws and regulations; the outcome of any legal challenges to environmental rules; changes in electric generating plants, including unit retirements and replacements and adding or changing fuel sources at existing electric generating units, to meet regulatory requirements; changes in FERC rules and regulations; state regulatory agency approvals; changes in the expected environmental compliance program; changes in legislation and/or regulation; the cost, availability, and efficiency of construction labor, equipment, and materials; project scope and design changes; abnormal weather; delays in construction due to judicial or regulatory action; storm impacts; and the cost of capital. The continued impacts of the COVID-19 pandemic could also impair the ability to develop, construct, and operate facilities, as discussed further in Item 1A of the Form 10-K. In addition, there can be no assurance that costs related to capital expenditures

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and AROs will be fully recovered. Additionally, expenditures associated with Southern Power's planned acquisitions may vary due to market opportunities and the execution of its growth strategy. See Note 15 to the financial statements in Item 8 of the Form 10-K and Note (K) to the Condensed Financial Statements herein under "Southern Power" for additional information regarding Southern Power's plant acquisitions and construction projects.

The construction program of Georgia Power includes Plant Vogtle Units 3 and 4, which includes components based on new technology that only within the last few years began initial operation in the global nuclear industry at this scale and which may be subject to additional revised cost estimates during construction. See Note 2 to the financial statements in Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements herein under "Georgia Power – Nuclear Construction" for information regarding Plant Vogtle Units 3 and 4 and additional factors that may impact construction expenditures.

Long-term debt maturities and the interest payable on long-term debt each represent a significant cash requirement for the Registrants. See "Financing Activities" herein for information on changes in the Registrants' long-term debt balances since December 31, 2021.

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Sources of Capital

See MANAGEMENT'S DISCUSSION AND ANALYSIS – FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" in Item 7 of the Form 10-K for additional information. Southern Company intends to meet its future capital needs through operating cash flows, borrowings from financial institutions, and debt and equity issuances. Equity capital can be provided from any combination of Southern Company's stock plans, private placements, or public offerings. With the exception of the settlement ~~later in~~on August 1, 2022 of stock purchase contracts associated with its equity units, Southern Company does not expect to issue any equity in the capital markets through 2026, but may issue equity through its stock plans during this time. See Note 8 to the financial statements ~~under "Equity Units"~~ in Item 8 of the Form 10-K and Note (F) to the Condensed Financial Statements herein under "Equity Units" for additional information.

The Subsidiary Registrants plan to obtain the funds to meet their future capital needs from sources similar to those they used in the past, which were primarily from operating cash flows, external securities issuances, borrowings from financial institutions, and equity contributions from Southern Company. In addition, Southern Power plans to utilize tax equity partnership contributions (as discussed further herein). During the six months ended June 30, 2022, Southern Power utilized tax credits, which provided $239 million in operating cash flows.

The amount, type, and timing of any financings in 2022, as well as in subsequent years, will be contingent on investment opportunities and the Registrants' capital requirements and will depend upon prevailing market conditions, regulatory approvals (for certain of the Subsidiary Registrants), and other factors. See "Cash Requirements" and "Financing Activities" herein for additional information.

Southern Power utilizes tax equity partnerships as one of its financing sources, where the tax partner takes significantly all of the federal tax benefits. These tax equity partnerships are consolidated in Southern Power's financial statements and are accounted for using HLBV methodology to allocate partnership gains and losses. During the first ~~quarter~~half of 2022, Southern Power obtained tax equity funding for existing tax equity partnerships totaling $51 million. See Note 1 to the financial statements under "General" in Item 8 of the Form 10-K and Note (K) to the Condensed Financial Statements under "Southern Power" herein for additional information.

By regulation, Nicor Gas is restricted, to the extent of its retained earnings balance, in the amount it can dividend or loan to affiliates and is not permitted to make money pool loans to affiliates. At ~~March 31,~~June 30, 2022, the amount of subsidiary retained earnings restricted to dividend totaled $1.4 billion. This restriction did not impact Southern Company Gas' ability to meet its cash obligations, nor does management expect such restriction to materially impact Southern Company Gas' ability to meet its currently anticipated cash obligations.

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Certain Registrants' current liabilities frequently exceed their current assets because of long-term debt maturities and the periodic use of short-term debt as a funding source, as well as significant seasonal fluctuations in cash needs. The Registrants generally plan to refinance long-term debt as it matures. The following table shows the amount by which current liabilities exceeded current assets at ~~March 31,~~June 30, 2022 for the applicable Registrants:


At March 31, 2022		Southern Company		Georgia Power		Southern Power			Southern Company Gas
At June 30, 2022											At June 30, 2022	Southern Company		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
		(in millions)						(in millions)
Current liabilities in excess of current assets	Current liabilities in excess of current assets	$	1,137	$	1,764	$	235		$	186	Current liabilities in excess of current assets	$	1,706	$	1,036	$	15	$	1	$	105

The Registrants believe the need for working capital can be adequately met by utilizing operating cash flows, as well as commercial paper, lines of credit, and short-term bank notes, as market conditions permit. In addition, under certain circumstances, the Subsidiary Registrants may utilize equity contributions and/or loans from Southern Company.

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Bank Credit Arrangements

At ~~March 31,~~June 30, 2022, the Registrants' unused committed credit arrangements with banks were as follows:


At March 31, 2022		Southern Company parent		Alabama Power		Georgia Power		Mississippi Power		Southern Power(a)		Southern Company Gas(b)		SEGCO		Southern Company
At June 30, 2022																		At June 30, 2022	Southern Company parent		Alabama Power		Georgia Power		Mississippi Power		Southern Power(a)		Southern Company Gas(b)		SEGCO		Southern Company
		(in millions)																	(in millions)
Unused committed credit	Unused committed credit	$	1,998	$	1,250	$	1,726	$	255	$	568	$	1,747	$	30	$	7,574	Unused committed credit	$	1,998	$	1,250	$	1,726	$	275	$	568	$	1,748	$	30	$	7,595

(a)At ~~March 31,~~June 30, 2022, Southern Power also had two continuing letters of credit facilities for standby letters of credit, of which ~~$30~~$16 million was unused. Southern Power's subsidiaries are not parties to its bank credit arrangements or letter of credit facilities.

(b)Includes ~~$1.047 billion~~$798 million and ~~$700~~$950 million at Southern Company Gas Capital and Nicor Gas, respectively.

Subject to applicable market conditions, the Registrants, Nicor Gas, and SEGCO expect to renew or replace their bank credit arrangements as needed, prior to expiration. In connection therewith, the Registrants, Nicor Gas, and SEGCO may extend the maturity dates and/or increase or decrease the lending commitments thereunder.

See Note 8 to the financial statements in Item 8 of the Form 10-K and Note (F) to the Condensed Financial Statements herein under "Bank Credit Arrangements" for additional information.

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Short-term Borrowings

The Registrants, Nicor Gas, and SEGCO make short-term borrowings primarily through commercial paper programs that have the liquidity support of the committed bank credit arrangements described above. Southern Power's subsidiaries are not issuers or obligors under its commercial paper program. Commercial paper and short-term bank term loans are included in notes payable in the balance sheets. Details of the Registrants' short-term borrowings were as follows:


		Short-term Debt at March 31, 2022				Short-term Debt During the Period(*)							Short-term Debt at June 30, 2022				Short-term Debt During the Period(*)
		Amount Outstanding		Weighted Average Interest Rate		Average Amount Outstanding		Weighted Average Interest Rate		Maximum Amount Outstanding			Amount Outstanding		Weighted Average Interest Rate		Average Amount Outstanding		Weighted Average Interest Rate		Maximum Amount Outstanding
		(in millions)				(in millions)				(in millions)			(in millions)				(in millions)				(in millions)
Southern Company	Southern Company	$	2,330	0.9	%	$	1,878	0.5	%	$	2,894	Southern Company	$	2,510	2.0	%	$	2,061	1.2	%	$	2,588
Alabama Power	Alabama Power	—		—		4		0.6		100		Alabama Power	—		—		10		0.8		100
Georgia Power	Georgia Power	860		0.9		290		0.7		900		Georgia Power	400		1.8		551		1.1		916
Mississippi Power	Mississippi Power	25		1.5		10		0.8		71		Mississippi Power	16		2.1		21		2.0		35
Southern Power	Southern Power	208		0.9		164		0.4		220		Southern Power	306		1.9		115		1.3		350
Southern Company Gas:	Southern Company Gas:											Southern Company Gas:
Southern Company Gas Capital	Southern Company Gas Capital	$	259	0.9	%	$	312	0.4	%	$	379	Southern Company Gas Capital	$	316	2.0	%	$	314	1.2	%	$	446
Nicor Gas	Nicor Gas	273		0.8		551		0.5		830		Nicor Gas	200		2.1		203		1.2		273
Southern Company Gas Total	Southern Company Gas Total	$	532	0.8	%	$	863	0.5	%			Southern Company Gas Total	$	516	2.0	%	$	517	1.2	%

(*)Average and maximum amounts are based upon daily balances during the three-month period ended ~~March 31,~~June 30, 2022.

Analysis of Cash Flows

Net cash flows provided from (used for) operating, investing, and financing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021 are presented in the following table:


Net cash provided from (used for):	Net cash provided from (used for):	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas		Net cash provided from (used for):	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
		(in millions)													(in millions)
Three Months Ended March 31, 2022
Six Months Ended June 30, 2022														Six Months Ended June 30, 2022
Operating activities	Operating activities	$	1,592	$	154	$	361	$	(16)	$	117	$	1,024	Operating activities	$	3,579	$	510	$	926	$	112	$	552	$	1,478
Investing activities	Investing activities	(1,555)		(365)		(809)		(68)		(37)		(271)		Investing activities	(3,460)		(889)		(1,668)		(133)		(73)		(658)
Financing activities	Financing activities	(193)		504		441		32		(76)		(768)		Financing activities	(213)		227		939		(18)		(403)		(650)

Three Months Ended March 31, 2021
Six Months Ended June 30, 2021														Six Months Ended June 30, 2021
Operating activities	Operating activities	$	1,242	$	214	$	489	$	(38)	$	187	$	550	Operating activities	$	2,904	$	584	$	1,313	$	41	$	411	$	722
Investing activities	Investing activities	(2,243)		(466)		(913)		(67)		(504)		(308)		Investing activities	(4,026)		(893)		(1,730)		(117)		(601)		(668)
Financing activities	Financing activities	1,734		341		444		90		478		50		Financing activities	1,671		506		457		515		196		(25)

Fluctuations in cash flows from financing activities vary from year to year based on capital needs and the maturity or redemption of securities.

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AND RESULTS OF OPERATIONS (Continued)

Southern Company

Net cash provided from operating activities increased ~~$350~~$675 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022 as compared to the corresponding period in 2021 primarily due to the timing of vendor payments and increased natural gas cost recovery at the natural gas distribution utilities, ~~and the timing of vendor payments,~~ partially offset by the timing of customer receivable ~~collections.~~collections and decreased fuel cost recovery at the traditional electric operating companies.

The net cash used for investing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2022 was primarily related to the Subsidiary Registrants' construction programs.

The net cash used for financing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2022 was primarily related to common stock dividend payments, ~~and net redemptions of long-term debt,~~ largely offset by an increase in short-term debt and net issuances of long-term debt.

Alabama Power

Net cash provided from operating activities decreased ~~$60~~$74 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022 as compared to the corresponding period in 2021 primarily due to the timing of customer receivable collections and decreased fuel cost recovery, ~~and the timing of fuel stock purchases,~~ partially offset by the timing of vendor ~~payments.~~payments and customer refunds issued in 2021.

The net cash used for investing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2022 was primarily related to gross property additions.

The net cash provided from financing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2022 was primarily related to capital contributions from Southern Company and the net issuance of long-term debt, partially offset by common stock dividend payments.

Georgia Power

Net cash provided from operating activities decreased ~~$128~~$387 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022 as compared to the corresponding period in 2021 primarily due to decreased fuel cost recovery and the timing of customer receivable collections, ~~and decreased fuel cost recovery,~~ partially offset by the timing of vendor payments.

The net cash used for investing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2022 was primarily related to gross property additions, including a total of approximately ~~$240~~$500 million related to the construction of Plant Vogtle Units 3 and 4. See Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction" herein for additional information on construction of Plant Vogtle Units 3 and 4.

The net cash provided from financing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2022 was primarily related to ~~an increase in short-term borrowings and~~net issuances of senior notes, capital contributions from Southern Company, and a net increase in short-term borrowings, partially offset by common stock dividend ~~payments and the redemption of senior notes.~~payments.

Mississippi Power

Net cash ~~used for~~provided from operating activities ~~decreased $22~~increased $71 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022 as compared to the corresponding period in 2021 primarily due to the timing of vendor ~~payments.~~payments, partially offset by the timing of customer receivable collections.

The net cash used for investing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2022 was primarily related to gross property additions.

The net cash ~~provided from~~used for financing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2022 was primarily related to common stock dividend payments, partially offset by capital contributions from Southern Company and an increase in ~~short-term borrowings, partially offset by common stock dividend payments.~~commercial paper borrowings.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Southern Power

Net cash provided from operating activities ~~decreased $70~~increased $141 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022 as compared to the corresponding period in 2021 primarily due to an increase in wholesale revenues driven by higher market prices of energy, the timing of vendor payments, and an increase in the utilization of tax credits in 2022, partially offset by the timing of customer receivable collections.

The net cash used for investing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2022 was primarily related to construction payments. See Note (K) to the Condensed Financial Statements under "Southern Power" herein for additional information.

The net cash used for financing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2022 was primarily related to the repayment of senior notes at maturity, common stock dividend payments, and a net capital ~~distribution~~distributions to noncontrolling ~~interests.~~interests, partially offset by a capital contribution from Southern Company and an increase in commercial paper borrowings.

Southern Company Gas

Net ~~cash~~cash provided from operating activities increased ~~$474~~$756 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022 as compared to the corresponding period in 2021 primarily due to increased natural gas cost recovery ~~partially offset by~~and the timing of ~~customer receivable collections~~.vendor payments.

The net cash used for investing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2022 was primarily related to construction of transportation and distribution assets recovered through base rates and infrastructure investment recovered through replacement programs at gas distribution operations.

The net cash used for financing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2022 was primarily related to net repayments of short-term debt, ~~and~~ common stock dividend payments, and repayment of medium-term notes, partially offset by capital contributions from Southern Company.

Significant Balance Sheet Changes

Southern Company

Significant balance sheet changes for the ~~three~~six months ended ~~March 31,~~June 30, 2022 included:

•an increase of ~~$0.9~~$1.7 billion in total property, plant, and equipment primarily related to the Subsidiary Registrants' construction programs;

•an increase of $1.1 billion in notes payable due to an increase in short-term bank debt and commercial paper borrowings;

•an increase of ~~$0.7 billion in total property, plant, and equipment primarily related to the Subsidiary Registrants' construction programs;~~

•~~increases of $0.6~~$0.8 billion in accumulated deferred income taxes ~~and $0.4 billion in prepaid expenses~~ primarily related to the ~~expected~~ utilization of ITCs in ~~2022;~~2022 and an increase in under recovered fuel clause revenues, as discussed further below;

•~~a decrease~~an increase of $0.7 billion in total stockholders' equity primarily related to net income, partially offset by common stock dividend payments;

•an increase of $0.7 billion in accounts payable primarily related to the timing of vendor payments;

•an increase of $0.6 billion in other deferred charges and assets primarily related to an increase in under recovered fuel clause revenues at Georgia Power due to higher fuel and purchased power costs;

•an increase of $0.5 billion in ~~accrued compensation~~regulatory assets associated with AROs primarily due to a decrease of $0.4 billion in the fair value of the investments held in Alabama Power's and Georgia Power's nuclear decommissioning trusts; and

•an increase of $0.5 billion in customer accounts receivable primarily related to the timing of ~~payments; and~~

•~~a decrease of $0.5 billion in long-term debt (including securities due within one year) primarily due to the redemption of senior notes.~~collections.

See "Financing Activities" herein and ~~Note~~Notes (B), (G), and (I) to the Condensed Financial Statements herein for additional information.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Alabama Power

Significant balance sheet changes for the ~~three~~six months ended ~~March 31,~~June 30, 2022 included:

•an increase of ~~$719~~$881 million in common stockholder's equity primarily due to capital contributions from Southern Company, partially offset by dividends paid to Southern Company;

•an increase of ~~$293 million in cash and cash equivalents, as discussed further under "Analysis of Cash Flows – Alabama Power" herein;~~

•~~an increase of $161~~$361 million in total property, plant, and equipment primarily related to construction of distribution and transmission facilities, construction of Plant Barry Unit 8, and the installation of equipment to comply with environmental standards; and

•an increase of ~~$145~~$298 million in ~~long-term debt (including securities due within one year)~~regulatory assets associated with AROs primarily due to a ~~net increase~~decrease of $201 million in ~~outstanding senior notes.~~the fair value of the investments held in Alabama Power's nuclear decommissioning trust.

See ~~"Financing Activities – Alabama Power"~~Note (I) to the Condensed Financial Statements herein for additional information.

Georgia Power

Significant balance sheet changes for the ~~three~~six months ended ~~March 31,~~June 30, 2022 included:

•an increase of ~~$860 million in notes payable due to an increase in short-term bank debt and commercial paper borrowings;~~

•~~an increase of $499 million~~$1.1 billion in total property, plant, and equipment primarily related to the construction of generation, transmission, and distribution facilities, including ~~$303~~$534 million for Plant Vogtle Units 3 and 4;4 (net of a pre-tax charge of $52 million recorded in the second quarter 2022 for estimated probable loss);

•~~a decrease~~an increase of ~~$421~~$914 million in long-term debt (including securities due within one year) primarily due to ~~the redemption~~net issuances of senior notes; ~~and~~

•an increase of ~~$415~~$663 million in common stockholder's equity primarily due to net income and capital contributions from Southern ~~Company.~~Company, partially offset by dividends paid to Southern Company;

•an increase of $538 million in deferred under recovered fuel clause revenues due to higher fuel and purchased power costs;

•an increase of $400 million in notes payable due to an increase in short-term bank debt;

•an increase of $299 million in accumulated deferred income taxes primarily due to the increase in under recovered fuel clause revenues and the expected reduction in federal and state credit carryforward balances in 2022;

•an increase of $283 million in customer accounts receivable primarily due to higher customer usage and the timing of collections; and

•an increase of $252 million in regulatory assets associated with AROs primarily due to a decrease of $192 million in the fair value of the investments held in Georgia Power's nuclear decommissioning trust.

See "Financing Activities – Georgia Power" herein and Note (B) ~~to the Condensed Financial Statements~~ under "Georgia Power – Nuclear Construction" and Note (I) to the Condensed Financial Statements herein for additional information.

Mississippi Power

Significant balance sheet changes for the ~~three~~six months ended ~~March 31,~~June 30, 2022 included:

•~~increases~~an increase of ~~$66~~$54 million in ~~assets~~common stockholder's equity related to net income and capital contributions from ~~risk management activities and $61 million in other regulatory liabilities, current primarily due~~Southern Company, partially offset by dividends paid to ~~unrealized gains on short-term energy-related derivatives;~~

•~~a decrease of $64 million in accrued taxes primarily due to the payment of ad valorem taxes;~~Southern Company; and

•~~a decrease~~an increase of $52 million in ~~cash and cash equivalents, as discussed further~~customer accounts receivables primarily due to fuel under ~~"Analysis of Cash Flows – Mississippi Power" herein.~~recovery.

~~See Note (J) to the Condensed Financial Statements herein for additional information.~~

~~Southern Power~~

Significant balance sheet changes for the three months ended March 31, 2022 included increases of $441 million in prepaid income taxes and $446 million in accumulated deferred income tax liabilities primarily related to the expected utilization of ITCs in 2022. See Note (G) to the Condensed Financial Statements herein for additional information.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Southern Power

Significant balance sheet changes for the six months ended June 30, 2022 included:

•a decrease of $724 million in long-term debt (including securities due within one year) primarily due to the redemption of senior notes;

•an increase of $281 million in common stockholder's equity primarily due to capital contributions from Southern Company and net income, partially offset by common stock dividend payments and distributions to noncontrolling interests; and

•an increase of $256 million in accumulated deferred income tax liabilities primarily related to the utilization of ITCs in 2022.

See "Financing Activities – Southern Power" herein and Note (G) to the Condensed Financial Statements herein for additional information.

Southern Company Gas

Significant balance sheet changes for the ~~three~~six months ended ~~March 31,~~June 30, 2022 included:

•a decrease of ~~$677~~$693 million in notes payable due to repayments of short-term debt and commercial paper borrowings;

•an increase of ~~$259~~$544 million in common stockholder's equity related to net income and capital contributions from Southern Company, partially offset by dividends paid to Southern Company;

•~~a decrease of $241 million in natural gas for sale primarily due to higher volumes of natural gas sold;~~

•an increase of ~~$209 million in temporary LIFO liquidation due to use of stored natural gas;~~

•~~a decrease of $181 million in other regulatory assets, deferred primarily due to a $163 million reduction in natural gas cost under recovery;~~

•~~an increase of $147~~$440 million in total property, plant, and equipment primarily related to the construction of transportation and distribution assets ~~recovered through base rates~~ and additional infrastructure ~~investment recovered through replacement programs;~~investment; and

•~~an increase~~a decrease of ~~$141~~$230 million in ~~customer accounts receivable~~other regulatory assets, deferred primarily due to ~~the timing of collections~~.a $192 million reduction in natural gas cost under recovery.

See "Financing Activities – Southern Company Gas" herein and Note (B) to the Condensed Financial Statements herein for additional information.

Financing Activities

The following table outlines the Registrants' long-term debt financing activities for the first ~~three~~six months of 2022:


				Maturities and Redemptions							Maturities and Redemptions
Company	Company	Senior Note Issuances				Senior Notes		Other Long-Term Debt(*)		Company	Senior Note Issuances		Senior Notes		Other Long-Term Debt(*)
		(in millions)			(in millions)

Alabama Power	Alabama Power	$	700			$	550	$	—	Alabama Power	$	700	$	550	$	—
Georgia Power	Georgia Power	—				400		24		Georgia Power	1,500		400		171

Southern Power										Southern Power	—		677		—
Southern Company Gas										Southern Company Gas	—		—		46
Other	Other	—				—		3		Other	—		—		7

Southern Company	Southern Company	$	700			$	950	$	27	Southern Company	$	2,200	$	1,627	$	224

(*)Includes reductions in finance lease obligations resulting from cash payments under finance leases and, for Georgia Power, principal amortization payments totaling ~~$24~~$45 million for FFB borrowings. See Note 8 to the financial statements under "Long-term Debt – DOE Loan Guarantee Borrowings" in Item 8 of the Form 10-K for additional information.

Except as otherwise described herein, the Registrants used the proceeds of debt issuances for their redemptions and maturities shown in the table above, to repay short-term indebtedness, and for general corporate purposes, including working capital. The Subsidiary Registrants also used the proceeds for their construction programs.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

In addition to any financings that may be necessary to meet capital requirements and contractual obligations, the Registrants plan to continue, when economically feasible, a program to retire higher-cost securities and replace these obligations with lower-cost capital if market conditions permit.

Southern Company

During the first ~~quarter~~half of 2022, Southern Company issued approximately ~~2.6~~3.1 million shares of common stock primarily through employee equity compensation plans and received proceeds of approximately ~~$38~~$61 million.

In March 2022, Southern Company entered into a $400 million short-term floating rate bank loan bearing interest based on term SOFR.

~~125~~

In May 2022, Southern Company borrowed $100 million pursuant to a short-term uncommitted bank credit arrangement bearing interest at a rate agreed upon by Southern Company and the bank from time to time and payable on demand, following specified notice by the bank.

~~Table of ContentsIndex~~See Note (F) to the Condensed Financial Statements herein under "Equity Units" for information regarding Southern Company's May 2022 remarketing of its Series 2019A and Series 2019B Remarketable Junior Subordinated Notes. Southern Company did not receive any proceeds from the remarketing.

~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION~~

~~AND RESULTS OF OPERATIONS (Continued)~~

Alabama Power

In February 2022, Alabama Power redeemed all $550 million aggregate principal amount of its Series 2017A 2.45% Senior Notes due March 30, 2022.

In March 2022, Alabama Power issued $700 million aggregate principal amount of Series 2022A 3.05% Senior Notes due March 15, 2032.

In June 2022, Alabama Power redeemed the following series of preferred stock: 4.20% Preferred Stock, Par Value $100 Per Share, 4.60% Preferred Stock, Par Value $100 Per Share, 4.92% Preferred Stock, Par Value $100 Per Share, 4.52% Preferred Stock, Par Value $100 Per Share, 4.64% Preferred Stock, Par Value $100 Per Share, and 4.72% Preferred Stock, Par Value $100 Per Share. The redemption price per share for each series of preferred stock equaled the redemption price per share provided in Note 8 to the financial statements under "Outstanding Classes of Capital Stock – Alabama Power" in Item 8 of the Form 10-K, plus accrued and unpaid dividends to the redemption date.

Georgia Power

In January 2022, Georgia Power redeemed all $400 million aggregate principal amount of its Series 2012B 2.85% Senior Notes due May 15, 2022.

In February 2022, Georgia Power borrowed $250 million pursuant to a short-term uncommitted bank credit arrangement, ~~bearing interest at a rate agreed upon by Georgia Power and the bank from time to time and payable on demand, following specified notice by the bank.~~which it repaid in May 2022.

In each of March and April 2022, Georgia Power entered into a $200 million short-term floating rate bank loan bearing interest based on term SOFR.

~~Subsequent to March 31,~~In May 2022, Georgia Power ~~entered into an additional $200~~issued $700 million ~~short-term floating rate~~aggregate principal amount of Series 2022A 4.70% Senior Notes due May 15, 2032 and $800 million aggregate principal amount of Series 2022B 5.125% Senior Notes due May 15, 2052. An amount equal to the net proceeds of the Series 2022B Senior Notes will be allocated to finance or refinance, in whole or in part, one or more renewable energy projects and/or expenditures and programs related to enabling opportunities for diverse and small businesses/suppliers.

In May 2022, Georgia Power repaid its $125 million long-term bank loan ~~bearing interest based on term SOFR.~~that was scheduled to mature in June 2022.

Subsequent to June 30, 2022, Georgia Power repaid at maturity $53 million aggregate principal amount of Development Authority of Floyd County (Georgia) Pollution Control Revenue Bonds (Georgia Power Company Plant Hammond Project), First Series 2010.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Mississippi Power

In ~~March~~June 2022, Mississippi Power ~~borrowed~~repaid $20 million, ~~(short term) pursuant to~~which was borrowed in March 2022 under its $125 million revolving credit ~~arrangement bearing interest based on term SOFR.~~arrangement.

Southern Power

In June 2022, Southern Power repaid at maturity €600 million (approximately $677 million) aggregate principal amount of Series 2016A 1.00% Senior Notes.

Southern Company Gas

During the first quarter 2022, Nicor Gas repaid one of its three $100 million short-term floating rate bank loans entered into in March 2021. Nicor Gas also repaid $50 million of one of the other loans and increased the borrowing amount under the other loan to $150 million. In addition, both loans were renewed and amended to extend the maturity dates and change the interest rate provisions so the loans bear interest based on term SOFR.

~~Subsequent to March 31,~~During the second quarter 2022, Atlanta Gas Light repaid at maturity ~~$36~~$46 million aggregate principal amount of medium-term notes with a weighted average interest rate of ~~8.65%~~8.63%.

Credit Rating Risk

At ~~March 31,~~June 30, 2022, the Registrants did not have any credit arrangements that would require material changes in payment schedules or terminations as a result of a credit rating downgrade.

There are certain contracts that could require collateral, but not accelerated payment, in the event of a credit rating change of certain Registrants to BBB and/or Baa2 or below. These contracts are primarily for physical electricity and natural gas purchases and sales, fuel purchases, fuel transportation and storage, energy price risk management, transmission, interest rate management, and, for Georgia Power, construction of new generation at Plant Vogtle Units 3 and 4.

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~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION~~

~~AND RESULTS OF OPERATIONS (Continued)~~

The maximum potential collateral requirements under these contracts at ~~March 31,~~June 30, 2022 were as follows:


Credit Ratings	Credit Ratings	Southern Company(*)		Alabama Power		Georgia Power		Mississippi Power		Southern Power(*)		Southern Company Gas		Credit Ratings	Southern Company(*)		Alabama Power		Georgia Power		Mississippi Power		Southern Power(*)		Southern Company Gas
		(in millions)													(in millions)
At BBB and/or Baa2	At BBB and/or Baa2	$	37	$	1	$	—	$	—	$	36	$	—	At BBB and/or Baa2	$	33	$	1	$	—	$	—	$	32	$	—
At BBB- and/or Baa3	At BBB- and/or Baa3	427		2		61		1		365		—		At BBB- and/or Baa3	414		2		61		1		353		—
At BB+ and/or Ba1 or below	At BB+ and/or Ba1 or below	1,946		405		924		305		1,202		5		At BB+ and/or Ba1 or below	1,948		416		917		316		1,215		7

(*)Southern Power has PPAs that could require collateral, but not accelerated payment, in the event of a downgrade of Southern Power's credit. The PPAs require credit assurances without stating a specific credit rating. The amount of collateral required would depend upon actual losses resulting from a credit downgrade. Southern Power had ~~$105~~$106 million of cash collateral posted related to PPA requirements at ~~March 31,~~June 30, 2022.

The amounts in the previous table for the traditional electric operating companies and Southern Power include certain agreements that could require collateral if either Alabama Power or Georgia Power has a credit rating change to below investment grade. Generally, collateral may be provided by a Southern Company guaranty, letter of credit, or cash. Additionally, a credit rating downgrade could impact the ability of the Registrants to access capital markets and would be likely to impact the cost at which they do so.

On February 22, 2022, Fitch downgraded the senior unsecured long-term debt rating of Georgia Power to BBB+ from A- with a stable outlook.

Also on February 22, 2022, Fitch revised the ratings outlook of Southern Company, Alabama Power, Southern Power, Nicor Gas, and SEGCO to negative from stable.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

During the ~~three~~six months ended ~~March 31,~~June 30, 2022, there were no material changes to Southern Company's, Alabama Power's, Georgia Power's, Mississippi Power's, Southern Power's, or Southern Company Gas' disclosures about market risk. For an in-depth discussion of each Registrant's market risks, see MANAGEMENT'S DISCUSSION AND ANALYSIS – FINANCIAL CONDITION AND LIQUIDITY – "Market Price Risk" in Item 7 of the Form 10-K and Note 1 to the financial statements under "Financial Instruments" and Notes 13 and 14 to the financial statements in Item 8 of the Form 10-K, as well as Notes (I) and (J) to the Condensed Financial Statements herein.

Item 4. Controls and Procedures.

(a)Evaluation of disclosure controls and procedures.

As of the end of the period covered by this Quarterly Report on Form 10-Q, Southern Company, Alabama Power, Georgia Power, Mississippi Power, Southern Power, and Southern Company Gas conducted separate evaluations under the supervision and with the participation of each company's management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the disclosure controls and procedures (as defined in Sections 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended). Based upon these evaluations, the Chief Executive Officer and the Chief Financial Officer, in each case, concluded that the disclosure controls and procedures are effective.

(b) Changes in internal controls over financial reporting.

There have been no changes in Southern Company's, Alabama Power's, Georgia Power's, Mississippi Power's, Southern Power's, or Southern Company Gas' internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) during the ~~first~~second quarter 2022 that have materially affected or are reasonably likely to materially affect Southern Company's, Alabama Power's, Georgia Power's, Mississippi Power's, Southern Power's, or Southern Company Gas' internal control over financial reporting.

In January 2022, Southern Company, Alabama Power, Georgia Power, and Mississippi Power implemented new financial accounting and reporting applications. As a result, there were certain changes to processes and procedures, which resulted in changes to Southern Company's, Alabama Power's, Georgia Power's, and Mississippi Power's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended). These changes include automation of certain previously manual controls. These changes in internal controls were not made in response to any identified internal control deficiency.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

See the Notes to the Condensed Financial Statements herein for information regarding certain legal and administrative proceedings in which the Registrants are involved. The Registrants' threshold for disclosing material environmental legal proceedings involving a governmental authority where potential monetary sanctions are involved is $1 million.

Item 1A. Risk Factors.

See RISK FACTORS in Item 1A of the Form 10-K for a discussion of the risk factors of the Registrants. There have been no material changes to these risk factors from those previously disclosed in the Form 10-K.

Item 6. Exhibits.

The exhibits below with an asterisk (*) preceding the exhibit number are filed herewith. The remaining exhibits have previously been filed with the SEC and are incorporated herein by reference. The exhibits marked with a pound sign (#) are management contracts or compensatory plans or arrangements.

(4) Instruments Describing Rights of Security Holders, Including Indentures

~~Alabama Power~~Southern Company

~~(b)~~(a)1

~~Sixty-Third~~Thirteenth Supplemental Indenture to ~~Senior~~Subordinated Note Indenture dated as of ~~March 7,~~May 9, 2022, providing for the ~~issuance~~remarketing of the Series 2019A Remarketable~~Series 2022A 3.05% Senior~~ Junior Subordinated Notes due ~~March 15, 2032~~August 1, 2024. (Designated in Form 8-K dated ~~March 2, 2022~~May 9 , 2022, File No. 1-1-3 ~~3164~~526 , as Exhibit 4.64(a).)

~~(10) Material Contracts~~(a)2

Fourteenth Supplemental Indenture to Subordinated Note Indenture dated as of May 9, 2022, providing for the remarketing of the Series 2019B Remarketable Junior Subordinated Notes due August 1, 2027. (Designated in Form 8-K dated May 9, 2022, File No. 1-3526, as Exhibit 4.4(b ).)

~~Southern Company~~

~~(a)1~~

~~Form of Terms for Named Executive Officer Equity Awards Granted under The Southern Company 2021 Equity and Incentive Compensation Plan.~~

Georgia Power

~~(a)2~~(c)1

~~Fifth Amendment~~Sixty-Fourth Supplemental Indenture to ~~The Southern Company Employee Savings Plan.~~Senior Note Indenture dated as of May 4, 2022, providing for the issuance of the Series 2022A 4.70% Senior Notes due May 15, 2032. (Designated in Form 8-K dated May 2 , 2022, File No. 1-6 4 68 , as Exhibit 4.2 (a )

~~(a)3~~

~~Sixth Amendment to The Southern Company Employee Savings Plan.~~

~~(a)4~~

~~Fourth Amendment to The Southern Company Deferred Compensation Plan.~~

~~(a)5~~

~~Eighth Amendment to The Southern Company Supplemental Benefit Plan.~~.)

~~Alabama Power~~

~~(b)1~~

~~Form of Terms for Named Executive Officer Equity Awards Granted under The Southern Company 2021 Equity and Incentive Compensation Plan. See Exhibit 10(a)1 herein.~~

~~(b)~~(c)2

~~Fifth Amendment~~Sixty-Fifth Supplemental Indenture to ~~The Southern Company Employee Savings Plan. See~~Senior Note Indenture dated as of May 4, 2022, providing for the issuance of the Series 2022B 5.125% Senior Notes due May 15, 2052. (Designated in Form 8-K dated May 2, 2022, File No. 1-6468, as Exhibit ~~10(a)2 herein.~~4.2(b ).

~~(b)3~~)

~~Sixth Amendment to The Southern Company Employee Savings Plan. See Exhibit 10(a)3 herein.~~

~~(b)4~~

~~Fourth Amendment to The Southern Company Deferred Compensation Plan. See Exhibit 10(a)4 herein.~~

~~(b)5~~

~~Eighth Amendment to The Southern Company Supplemental Benefit Plan. See Exhibit 10(a)5 herein.~~

(24) Power of Attorney and Resolutions

Southern Company

(a)

Power of Attorney and resolution. (Designated in the Form 10-K for the year ended December 31, 2021, File No. 1-3526 as Exhibit 24(a)1.)

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Alabama Power

(b)

Power of Attorney and resolution. (Designated in the Form 10-K for the year ended December 31, 2021, File No. 1-3164 as Exhibit 24(b)1.)

Georgia Power

(c)

Power of Attorney and resolution. (Designated in the Form 10-K for the year ended December 31, 2021, File No. 1-6468 as Exhibit 24(c)1.)

Mississippi Power

(d)

Power of Attorney and resolution. (Designated in the Form 10-K for the year ended December 31, 2021, File No. 001-11229 as Exhibit 24(d)1.)

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Southern Power

(e)1

Power of Attorney and resolution. (Designated in the Form 10-K for the year ended December 31, 2021, File No. 001-37803 as Exhibit 24(e)1.)

(e)2

Power of Attorney of Gary Kerr.

Southern Company Gas

(f)1

Power of Attorney and resolution. (Designated in the Form 10-K for the year ended December 31, 2021, File No. 1-14174 as Exhibit 24(f)1.)

(31) Section 302 Certifications

Southern Company

(a)1

Certificate of Southern Company's Chief Executive Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.

(a)2

Certificate of Southern Company's Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.

Alabama Power

(b)1

Certificate of Alabama Power's Chief Executive Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.

(b)2

Certificate of Alabama Power's Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.

Georgia Power

Certificate of Georgia Power's Chief Executive Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.

Certificate of Georgia Power's Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.

Mississippi Power

(d)1

Certificate of Mississippi Power's Chief Executive Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.

(d)2

Certificate of Mississippi Power's Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.

Southern Power

(e)1

Certificate of Southern Power Company's Chief Executive Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.

(e)2

Certificate of Southern Power Company's Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.

~~130~~

~~Table of ContentsIndex to Financial Statements~~

Southern Company Gas

(f)1

Certificate of Southern Company Gas' Chief Executive Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.

(f)2

Certificate of Southern Company Gas' Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.

(32) Section 906 Certifications

Southern Company

(a)

Certificate of Southern Company's Chief Executive Officer and Chief Financial Officer required by Section 906 of the Sarbanes-Oxley Act of 2002.

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Table of ContentsIndex to Financial Statements

Alabama Power

(b)

Certificate of Alabama Power's Chief Executive Officer and Chief Financial Officer required by Section 906 of the Sarbanes-Oxley Act of 2002.

Georgia Power

(c)

Certificate of Georgia Power's Chief Executive Officer and Chief Financial Officer required by Section 906 of the Sarbanes-Oxley Act of 2002.

Mississippi Power

(d)

Certificate of Mississippi Power's Chief Executive Officer and Chief Financial Officer required by Section 906 of the Sarbanes-Oxley Act of 2002.

Southern Power

(e)

Certificate of Southern Power Company's Chief Executive Officer and Chief Financial Officer required by Section 906 of the Sarbanes-Oxley Act of 2002.

Southern Company Gas

(f)

Certificate of Southern Company Gas' Chief Executive Officer and Chief Financial Officer required by Section 906 of the Sarbanes-Oxley Act of 2002.

(101) Interactive Data Files

INS

XBRL Instance Document – The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.

SCH

XBRL Taxonomy Extension Schema Document

CAL

XBRL Taxonomy Calculation Linkbase Document

DEF

XBRL Definition Linkbase Document

LAB

XBRL Taxonomy Label Linkbase Document

PRE

XBRL Taxonomy Presentation Linkbase Document

(104) Cover Page Interactive Data File

Formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.

~~131~~152

Table of Contents Index to Financial Statements

THE SOUTHERN COMPANY

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof included in such company's report.


						THE SOUTHERN COMPANY

By						Thomas A. Fanning
						Chairman, President, and Chief Executive Officer
						(Principal Executive Officer)

By						Daniel S. Tucker
						Executive Vice President and Chief Financial Officer
						(Principal Financial Officer)

By						/s/ Melissa K. Caen
						(Melissa K. Caen, Attorney-in-fact)

Date: ~~April~~July 27, 2022

~~132~~153

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ALABAMA POWER COMPANY

SIGNATURES


						ALABAMA POWER COMPANY

By						Mark A. Crosswhite
						Chairman, President, and Chief Executive Officer
						(Principal Executive Officer)

By						Philip C. Raymond
						Executive Vice President, Chief Financial Officer, and Treasurer
						(Principal Financial Officer)

By						/s/ Melissa K. Caen
						(Melissa K. Caen, Attorney-in-fact)

Date: ~~April~~July 27, 2022

~~133~~154

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GEORGIA POWER COMPANY

SIGNATURES


						GEORGIA POWER COMPANY

By						Christopher C. Womack
						Chairman, President, and Chief Executive Officer
						(Principal Executive Officer)

By						Aaron P. Abramovitz
						Executive Vice President, Chief Financial Officer, and Treasurer
						(Principal Financial Officer)

By						/s/ Melissa K. Caen
						(Melissa K. Caen, Attorney-in-fact)

Date: ~~April~~July 27, 2022

~~134~~155

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MISSISSIPPI POWER COMPANY

SIGNATURES


						MISSISSIPPI POWER COMPANY

By						Anthony L. Wilson
						Chairman, President, and Chief Executive Officer
						(Principal Executive Officer)

By						Moses H. Feagin
						Senior Vice President, Chief Financial Officer, and Treasurer
						(Principal Financial Officer)

By						/s/ Melissa K. Caen
						(Melissa K. Caen, Attorney-in-fact)

Date: ~~April~~July 27, 2022

~~135~~156

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SOUTHERN POWER COMPANY

SIGNATURES


						SOUTHERN POWER COMPANY

By						Christopher Cummiskey
						Chairman and Chief Executive Officer
						(Principal Executive Officer)

By						~~Elliott L. Spencer~~Gary Kerr
						Senior Vice President, Chief Financial Officer, and Treasurer
						(Principal Financial Officer)

By						/s/ Melissa K. Caen
						(Melissa K. Caen, Attorney-in-fact)

Date: ~~April~~July 27, 2022

~~136~~157

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SOUTHERN COMPANY GAS

SIGNATURES


						SOUTHERN COMPANY GAS

By						Kimberly S. Greene
						Chairman, President, and Chief Executive Officer
						(Principal Executive Officer)

By						David P. Poroch
						Executive Vice President, Chief Financial Officer, and Treasurer
						(Principal Financial Officer)

By						/s/ Melissa K. Caen
						(Melissa K. Caen, Attorney-in-fact)

Date: ~~April~~July 27, 2022

~~137~~158


Note		Page
A	Introduction	4243
B	Regulatory Matters	4546
C	Contingencies	5257
D	Revenue from Contracts with Customers and Lease Income	5560
E	Consolidated Entities and Equity Method Investments	5866
F	Financing and Leases	6068
G	Income Taxes	6170
H	Retirement Benefits	6271
I	Fair Value Measurements	6474
J	Derivatives	6978
K	Acquisitions and Dispositions	8391
L	Segment and Related Information	8392