0000092122so:~~WholesaleElectricRevenuesMember2022-01-012022-09-30~~GeorgiaPowerMemberso:OtherNaturalGasGasMarketingServicesMember2022-01-012022-06-300000092122so:SouthernCompanyGasMemberus-gaap:IntersegmentEliminationMember2023-01-012023-06-30

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2022~~2023

☐ 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 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 ~~September~~June 30, ~~2022~~2023
The Southern Company	Par Value $5 Per Share	~~1,088,672,828~~1,090,546,579
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.

Table of Contents Index to Financial Statements

TABLE OF CONTENTS


		Page

	Definitions	4
	Cautionary Statement Regarding Forward-Looking Information	87

	PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	109
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	~~100~~95
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	~~158~~149
Item 4.	Controls and Procedures	~~158~~149

	PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	~~159~~150
Item 1A.	Risk Factors	~~159~~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~~150
Item 6.	Exhibits	~~159~~150

	Signatures	~~163~~154

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DEFINITIONS


Term			Meaning
~~2019~~2022 ARP			Alternate Rate Plan approved by the Georgia PSC in ~~2019~~2022 for Georgia Power for the years ~~2020~~2023 through ~~2022~~2025
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
Cooperative Energy			Electric generation and transmission cooperative in Mississippi
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~~ECO Plan			~~Georgia~~Mississippi Power's ~~Environmental Compliance Cost Recovery tariff~~environmental compliance overview plan
ELG			Effluent limitations guidelines
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
FCC			Federal Communications Commission
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,~~2022, as applicable
GAAP			U.S. generally accepted accounting principles
Georgia Power			Georgia Power Company
GHG			Greenhouse gas
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
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
Heating Degree Days			A measure of weather, calculated when the average daily temperatures are less than 65 degrees Fahrenheit
Heating Season			The period from November through March when Southern Company Gas' natural gas usage and operating revenues are generally higher
HLBV			Hypothetical liquidation at book value
IGCC			Integrated coal gasification combined cycle, the technology originally approved for Mississippi Power's Kemper County energy facility
IIC			Intercompany Interchange Contract
Illinois Commission			Illinois Commerce Commission
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
N/M			Not meaningful
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, Rate CNP PPA, and Rate CNP ~~PPA~~Depreciation
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

~~Table of ContentsIndex to Financial Statements~~

~~DEFINITIONS~~

~~(continued)~~


~~Term~~			~~Meaning~~
Registrants			Southern Company, Alabama Power, Georgia Power, Mississippi Power, Southern Power Company, and Southern Company Gas
ROE			Return on equity
S&P			S&P Global Ratings, a division of S&P Global Inc.

Table of ContentsIndex to Financial Statements

DEFINITIONS

(continued)


Term			Meaning
SAVE			Steps to Advance Virginia's Energy, an infrastructure replacement program at Virginia Natural Gas
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
~~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 Linc			Southern Communications Services, Inc., a wholly-owned subsidiary of Southern Company, doing business as Southern Linc
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
SRR			Mississippi Power's System Restoration Rider, a tariff for retail property damage cost recovery and reserve
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 Commission			Virginia State Corporation Commission
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, OPC, MEAG Power, and Dalton

~~Table of ContentsIndex to Financial Statements~~

~~DEFINITIONS~~

~~(continued)~~


~~Term~~			~~Meaning~~
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

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

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

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

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

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

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

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

•variations in demand for electricity and natural gas;

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

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

•transmission constraints;

•~~effects of inflation;~~

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

•the ability to overcome or mitigate the current challenges, or challenges yet to be identified, at Plant Vogtle ~~Units 3 and~~Unit 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;

•the ~~ability~~notices of ~~certain other Vogtle Owners to~~ tender by OPC and Dalton of a portion of their ownership interests in Plant Vogtle Units 3 and 4 to Georgia Power, ~~following certain construction cost increases,~~ including ~~the purported exercises by OPC and Dalton of their tender options and~~ related litigation;

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 and battery energy storage technologies and negative carbon concepts;

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

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

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

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

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

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

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

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

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

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

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

•global and U.S. economic conditions, including impacts from recession, inflation, interest rate fluctuations, and financial market conditions, and the results of financing efforts;

•access to capital markets and other financing sources;

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

•the replacement of LIBOR with an alternative reference rate;

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

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

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

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

•impairments of goodwill or long-lived assets;

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

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

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

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			1110
Condensed Consolidated Statements of Comprehensive Income			1211
Condensed Consolidated Statements of Cash Flows			1312
Condensed Consolidated Balance Sheets			1413
Condensed Consolidated Statements of Stockholders' Equity			1615

Alabama Power Company:
Condensed Statements of Income			1816
Condensed Statements of Comprehensive Income			1816
Condensed Statements of Cash Flows			1917
Condensed Balance Sheets			2018
Condensed Statements of Common Stockholder's Equity			2220

Georgia Power Company:
Condensed Statements of Income			2321
Condensed Statements of Comprehensive Income			2321
Condensed Statements of Cash Flows			2422
Condensed Balance Sheets			2523
Condensed Statements of Common Stockholder's Equity			2725

Mississippi Power Company:
Condensed Statements of Income			28
~~Condensed Statements of~~ and Comprehensive Income			2826
Condensed Statements of Cash Flows			2927
Condensed Balance Sheets			3028
Condensed Statements of Common Stockholder's Equity			3230

Southern Power Company and Subsidiary Companies:
Condensed Consolidated Statements of Income			3331
Condensed Consolidated Statements of Comprehensive Income			3331
Condensed Consolidated Statements of Cash Flows			3432
Condensed Consolidated Balance Sheets			3533
Condensed Consolidated Statements of Stockholders' Equity			3735

Southern Company Gas and Subsidiary Companies:
Condensed Consolidated Statements of Income			3936
Condensed Consolidated Statements of Comprehensive Income			3936
Condensed Consolidated Statements of Cash Flows			4037
Condensed Consolidated Balance Sheets			4138
Condensed Consolidated Statements of Stockholder's Equity			4340

Combined Notes to the Condensed Financial Statements			4441

109

Table of Contents Index to Financial Statements

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)


		For the Three Months Ended September 30,				For the Nine Months Ended September 30,					For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
		(in millions)				(in millions)					(in millions)				(in millions)
Operating Revenues:	Operating Revenues:									Operating Revenues:
Retail electric revenues	Retail electric revenues	$	5,961	$	4,551	$	14,363	$	11,492	Retail electric revenues	$	3,859	$	4,789	$	7,458	$	8,402
Wholesale electric revenues	Wholesale electric revenues	1,197		731		2,798		1,822		Wholesale electric revenues	605		937		1,203		1,601
Other electric revenues	Other electric revenues	185		179		554		525		Other electric revenues	209		192		399		370
Natural gas revenues (includes alternative revenue programs of $(1), $(1), $—, and $3, respectively)		857		623		3,998		2,994
Natural gas revenues (includes alternative revenue programs of $—, $2, $11, and $1, respectively)										Natural gas revenues (includes alternative revenue programs of $—, $2, $11, and $1, respectively)	852		1,083		2,728		3,140
Other revenues	Other revenues	178		154		519		513		Other revenues	223		205		440		341
Total operating revenues	Total operating revenues	8,378		6,238		22,232		17,346		Total operating revenues	5,748		7,206		12,228		13,854
Operating Expenses:	Operating Expenses:									Operating Expenses:
Fuel	Fuel	2,423		1,234		5,249		2,930		Fuel	959		1,715		2,009		2,826
Purchased power	Purchased power	645		288		1,285		712		Purchased power	231		408		473		640
Cost of natural gas	Cost of natural gas	294		129		1,840		943		Cost of natural gas	199		452		1,097		1,546
Cost of other sales	Cost of other sales	92		71		275		255		Cost of other sales	128		114		255		183
Other operations and maintenance	Other operations and maintenance	1,547		1,446		4,621		4,257		Other operations and maintenance	1,489		1,548		2,929		3,042
Depreciation and amortization	Depreciation and amortization	922		896		2,728		2,658		Depreciation and amortization	1,112		913		2,222		1,805
Taxes other than income taxes	Taxes other than income taxes	352		312		1,073		969		Taxes other than income taxes	340		349		734		721
Estimated loss on Plant Vogtle Units 3 and 4	Estimated loss on Plant Vogtle Units 3 and 4	(70)		264		(18)		772		Estimated loss on Plant Vogtle Units 3 and 4	—		52		—		52

Gain on dispositions, net		(20)		(125)		(53)		(179)

Total operating expenses	Total operating expenses	6,185		4,515		17,000		13,317		Total operating expenses	4,458		5,551		9,719		10,815
Operating Income	Operating Income	2,193		1,723		5,232		4,029		Operating Income	1,290		1,655		2,509		3,039
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	59		49		163		140		Allowance for equity funds used during construction	70		53		135		104
Earnings from equity method investments	Earnings from equity method investments	28		30		109		35		Earnings from equity method investments	29		34		78		80
Interest expense, net of amounts capitalized	Interest expense, net of amounts capitalized	(511)		(451)		(1,461)		(1,352)		Interest expense, net of amounts capitalized	(610)		(488)		(1,192)		(950)

Other income (expense), net	Other income (expense), net	132		131		414		290		Other income (expense), net	142		139		286		283
Total other income and (expense)	Total other income and (expense)	(292)		(241)		(775)		(887)		Total other income and (expense)	(369)		(262)		(693)		(483)
Earnings Before Income Taxes	Earnings Before Income Taxes	1,901		1,482		4,457		3,142		Earnings Before Income Taxes	921		1,393		1,816		2,556
Income taxes	Income taxes	414		372		891		550		Income taxes	98		304		194		477
Consolidated Net Income	Consolidated Net Income	1,487		1,110		3,566		2,592		Consolidated Net Income	823		1,089		1,622		2,079

Dividends on preferred stock of subsidiaries	Dividends on preferred stock of subsidiaries	3		4		10		11		Dividends on preferred stock of subsidiaries	—		4		—		7
Net income (loss) attributable to noncontrolling interests		12		5		(55)		(27)
Net loss attributable to noncontrolling interests										Net loss attributable to noncontrolling interests	(15)		(22)		(78)		(67)
Consolidated Net Income Attributable to Southern Company	Consolidated Net Income Attributable to Southern Company	$	1,472	$	1,101	$	3,611	$	2,608	Consolidated Net Income Attributable to Southern Company	$	838	$	1,107	$	1,700	$	2,139
Common Stock Data:	Common Stock Data:									Common Stock Data:
Earnings per share -	Earnings per share -									Earnings per share -
Basic	Basic	$	1.36	$	1.04	$	3.38	$	2.46	Basic	$	0.77	$	1.04	$	1.56	$	2.01
Diluted	Diluted	$	1.35	$	1.03	$	3.36	$	2.44	Diluted	$	0.76	$	1.03	$	1.55	$	2.00
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	1,082		1,061		1,070		1,060		Basic	1,092		1,065		1,092		1,064
Diluted	Diluted	1,088		1,068		1,076		1,067		Diluted	1,098		1,072		1,098		1,070

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

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Table of Contents Index to Financial Statements

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)


		For the Three Months Ended September 30,				For the Nine Months Ended September 30,					For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
		(in millions)				(in millions)					(in millions)				(in millions)
Consolidated Net Income	Consolidated Net Income	$	1,487	$	1,110	$	3,566	$	2,592	Consolidated Net Income	$	823	$	1,089	$	1,622	$	2,079
Other comprehensive income:
Other comprehensive income (loss):										Other comprehensive income (loss):
Qualifying hedges:	Qualifying hedges:									Qualifying hedges:
Changes in fair value, net of tax of $2, $1, $(5), and $(4), respectively		—		1		(27)		(15)
Reclassification adjustment for amounts included in net income, net of tax of $8, $10, $32, and $27, respectively		26		31		100		81
Changes in fair value, net of tax of $9, $(15), $(14), and $(7), respectively										Changes in fair value, net of tax of $9, $(15), $(14), and $(7), respectively	28		(45)		(36)		(26)
Reclassification adjustment for amounts included in net income, net of tax of $6, $17, $13, and $24, respectively										Reclassification adjustment for amounts included in net income, net of tax of $6, $17, $13, and $24, respectively	15		54		34		74
Pension and other postretirement benefit plans:	Pension and other postretirement benefit plans:									Pension and other postretirement benefit plans:

Reclassification adjustment for amounts included in net income, net of tax of $1, $1, $3, and $4, respectively		2		4		8		10
Total other comprehensive income		28		36		81		76
Reclassification adjustment for amounts included in net income, net of tax of $—, $1, $—, and $2, respectively										Reclassification adjustment for amounts included in net income, net of tax of $—, $1, $—, and $2, respectively	—		2		—		5
Total other comprehensive income (loss)										Total other comprehensive income (loss)	43		11		(2)		53
Comprehensive Income	Comprehensive Income	1,515		1,146		3,647		2,668		Comprehensive Income	866		1,100		1,620		2,132

Dividends on preferred stock of subsidiaries	Dividends on preferred stock of subsidiaries	3		4		10		11		Dividends on preferred stock of subsidiaries	—		4		—		7
Comprehensive income (loss) attributable to noncontrolling interests		12		5		(55)		(27)
Comprehensive loss attributable to noncontrolling interests										Comprehensive loss attributable to noncontrolling interests	(15)		(22)		(78)		(67)
Consolidated Comprehensive Income Attributable to Southern Company	Consolidated Comprehensive Income Attributable to Southern Company	$	1,500	$	1,137	$	3,692	$	2,684	Consolidated Comprehensive Income Attributable to Southern Company	$	881	$	1,118	$	1,698	$	2,192

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

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Table of Contents Index to Financial Statements

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


		For the Nine Months Ended September 30,					For the Six Months Ended June 30,
		2022		2021			2023		2022
		(in millions)					(in millions)
Operating Activities:	Operating Activities:					Operating Activities:
Consolidated net income	Consolidated net income	$	3,566	$	2,592	Consolidated net income	$	1,622	$	2,079
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	3,084		2,944		Depreciation and amortization, total	2,436		1,995
Deferred income taxes	Deferred income taxes	608		89		Deferred income taxes	(34)		240
Utilization of federal investment tax credits	Utilization of federal investment tax credits	266		256		Utilization of federal investment tax credits	110		281
Allowance for equity funds used during construction	Allowance for equity funds used during construction	(163)		(140)		Allowance for equity funds used during construction	(135)		(104)
Mark-to-market adjustments		(33)		147

Pension, postretirement, and other employee benefits	Pension, postretirement, and other employee benefits	(322)		(218)		Pension, postretirement, and other employee benefits	(245)		(211)
Settlement of asset retirement obligations	Settlement of asset retirement obligations	(314)		(341)		Settlement of asset retirement obligations	(276)		(198)
Stock based compensation expense	Stock based compensation expense	116		134		Stock based compensation expense	111		100

Estimated loss on Plant Vogtle Units 3 and 4	Estimated loss on Plant Vogtle Units 3 and 4	(18)		772		Estimated loss on Plant Vogtle Units 3 and 4	—		52

Storm damage accruals	Storm damage accruals	160		166		Storm damage accruals	27		107

Gain on dispositions, net		(41)		(171)

Natural gas cost under recovery – long-term	Natural gas cost under recovery – long-term	207		(79)		Natural gas cost under recovery – long-term	—		192
Retail fuel cost under recovery – long-term	Retail fuel cost under recovery – long-term	(1,701)		(209)		Retail fuel cost under recovery – long-term	108		(729)
Other, net	Other, net	(45)		156		Other, net	(50)		34
Changes in certain current assets and liabilities —	Changes in certain current assets and liabilities —					Changes in certain current assets and liabilities —
-Receivables	-Receivables	(327)		2		-Receivables	735		(637)
-Prepayments						-Prepayments	(64)		(90)
-Fossil fuel for generation						-Fossil fuel for generation	(308)		20
-Materials and supplies						-Materials and supplies	(202)		(109)
-Natural gas for sale, net of temporary LIFO liquidation						-Natural gas for sale, net of temporary LIFO liquidation	196		335

-Other current assets						-Other current assets	103		(101)
-Accounts payable						-Accounts payable	(997)		703

-Accrued compensation						-Accrued compensation	(378)		(260)

-Materials and supplies		(138)		(91)
-Natural gas for sale, net of temporary LIFO liquidation		(136)		20
-Natural gas cost under recovery		(124)		(432)
-Other current assets		(343)		(180)
-Accounts payable		805		(45)
-Accrued taxes		167		288
-Accrued compensation		(123)		(93)
-Accrued interest		(101)		(110)
-Retail fuel cost over recovery		(1)		(150)

-Customer refunds						-Customer refunds	(121)		—
-Natural gas cost over recovery						-Natural gas cost over recovery	161		—
-Other current liabilities	-Other current liabilities	(32)		(226)		-Other current liabilities	101		(120)
Net cash provided from operating activities	Net cash provided from operating activities	5,017		5,081		Net cash provided from operating activities	2,900		3,579
Investing Activities:	Investing Activities:					Investing Activities:
Business acquisitions, net of cash acquired		—		(345)

Property additions	Property additions	(5,502)		(5,222)		Property additions	(3,898)		(3,213)

Nuclear decommissioning trust fund purchases	Nuclear decommissioning trust fund purchases	(858)		(1,301)		Nuclear decommissioning trust fund purchases	(726)		(628)
Nuclear decommissioning trust fund sales	Nuclear decommissioning trust fund sales	854		1,297		Nuclear decommissioning trust fund sales	720		624
Proceeds from dispositions	Proceeds from dispositions	120		160		Proceeds from dispositions	126		119
Cost of removal, net of salvage	Cost of removal, net of salvage	(518)		(282)		Cost of removal, net of salvage	(270)		(377)
Change in construction payables, net						Change in construction payables, net	(140)		(3)

Payments pursuant to LTSAs		(121)		(145)
Other investing activities	Other investing activities	73		(12)		Other investing activities	(100)		18
Net cash used for investing activities	Net cash used for investing activities	(5,952)		(5,850)		Net cash used for investing activities	(4,288)		(3,460)
Financing Activities:	Financing Activities:					Financing Activities:
Decrease in notes payable, net		(349)		(203)
Increase (decrease) in notes payable, net						Increase (decrease) in notes payable, net	(375)		263
Proceeds —	Proceeds —					Proceeds —
Long-term debt	Long-term debt	3,800		6,793		Long-term debt	5,541		2,200

Short-term borrowings	Short-term borrowings	1,200		325		Short-term borrowings	250		1,200
Common stock	Common stock	1,803		62		Common stock	22		61

Redemptions and repurchases —	Redemptions and repurchases —					Redemptions and repurchases —
Long-term debt	Long-term debt	(1,932)		(3,060)		Long-term debt	(1,300)		(1,851)

Short-term borrowings	Short-term borrowings	(900)		(25)		Short-term borrowings	(850)		(400)
Capital contributions from noncontrolling interests	Capital contributions from noncontrolling interests	73		415		Capital contributions from noncontrolling interests	21		73
Distributions to noncontrolling interests	Distributions to noncontrolling interests	(175)		(204)		Distributions to noncontrolling interests	(87)		(115)

Payment of common stock dividends	Payment of common stock dividends	(2,166)		(2,077)		Payment of common stock dividends	(1,506)		(1,425)

Other financing activities	Other financing activities	(235)		(224)		Other financing activities	(121)		(219)
Net cash provided from financing activities		1,119		1,802
Net cash provided from (used for) financing activities						Net cash provided from (used for) financing activities	1,595		(213)
Net Change in Cash, Cash Equivalents, and Restricted Cash	Net Change in Cash, Cash Equivalents, and Restricted Cash	184		1,033		Net Change in Cash, Cash Equivalents, and Restricted Cash	207		(94)
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	2,037		1,829
Cash, Cash Equivalents, and Restricted Cash at End of Period	Cash, Cash Equivalents, and Restricted Cash at End of Period	$	2,013	$	2,101	Cash, Cash Equivalents, and Restricted Cash at End of Period	$	2,244	$	1,735
Supplemental Cash Flow Information:	Supplemental Cash Flow Information:					Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $74 and $68 capitalized for 2022 and 2021, respectively)		$	1,425	$	1,417
Cash paid (received) during the period for —						Cash paid (received) during the period for —
Interest (net of $66 and $46 capitalized for 2023 and 2022, respectively)						Interest (net of $66 and $46 capitalized for 2023 and 2022, respectively)	$	1,043	$	836
Income taxes, net	Income taxes, net	160		92		Income taxes, net	(40)		157
Noncash transactions —	Noncash transactions —					Noncash transactions —
Accrued property additions at end of period	Accrued property additions at end of period	872		915		Accrued property additions at end of period	810		837
Contributions from noncontrolling interests		—		89
Contributions of wind turbine equipment		—		82
Right-of-use assets obtained under leases		141		92
Reassessment of right-of-use assets under operating leases		40		—

Right-of-use assets obtained under operating leases						Right-of-use assets obtained under operating leases	44		13
Right-of-use assets obtained under finance leases						Right-of-use assets obtained under finance leases	1		2
Reassessment of right-of-use assets under operating leases						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.

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Table of Contents Index to Financial Statements

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


Assets	Assets	At September 30, 2022		At December 31, 2021		Assets	At June 30, 2023		At December 31, 2022
		(in millions)					(in millions)
Current Assets:	Current Assets:					Current Assets:
Cash and cash equivalents	Cash and cash equivalents	$	2,009	$	1,798	Cash and cash equivalents	$	2,123	$	1,917

Receivables —	Receivables —					Receivables —
Customer accounts	Customer accounts	2,223		1,806		Customer accounts	1,852		2,128

Unbilled revenues	Unbilled revenues	593		711		Unbilled revenues	682		1,012

Under recovered fuel clause revenues						Under recovered fuel clause revenues	728		10

Other accounts and notes	Other accounts and notes	533		523		Other accounts and notes	568		637
Accumulated provision for uncollectible accounts	Accumulated provision for uncollectible accounts	(80)		(78)		Accumulated provision for uncollectible accounts	(84)		(71)
Materials and supplies	Materials and supplies	1,657		1,543		Materials and supplies	1,846		1,664
Fossil fuel for generation	Fossil fuel for generation	526		450		Fossil fuel for generation	883		575
Natural gas for sale	Natural gas for sale	498		362		Natural gas for sale	234		438

Prepaid expenses	Prepaid expenses	373		330		Prepaid expenses	504		347

Assets from risk management activities, net of collateral	Assets from risk management activities, net of collateral	289		151		Assets from risk management activities, net of collateral	51		115
Regulatory assets – asset retirement obligations	Regulatory assets – asset retirement obligations	284		219		Regulatory assets – asset retirement obligations	352		332
Natural gas cost under recovery	Natural gas cost under recovery	390		266		Natural gas cost under recovery	—		108

Other regulatory assets	Other regulatory assets	746		653		Other regulatory assets	930		860
Other current assets	Other current assets	322		231		Other current assets	310		344
Total current assets	Total current assets	10,363		8,965		Total current assets	10,979		10,416
Property, Plant, and Equipment:	Property, Plant, and Equipment:					Property, Plant, and Equipment:
In service	In service	116,236		115,592		In service	119,852		117,529
Less: Accumulated depreciation	Less: Accumulated depreciation	34,922		34,079		Less: Accumulated depreciation	36,500		35,297
Plant in service, net of depreciation	Plant in service, net of depreciation	81,314		81,513		Plant in service, net of depreciation	83,352		82,232
Other utility plant, net	Other utility plant, net	602		—		Other utility plant, net	546		599
Nuclear fuel, at amortized cost	Nuclear fuel, at amortized cost	840		824		Nuclear fuel, at amortized cost	877		843
Construction work in progress	Construction work in progress	10,773		8,771		Construction work in progress	11,992		10,896
Total property, plant, and equipment	Total property, plant, and equipment	93,529		91,108		Total property, plant, and equipment	96,767		94,570
Other Property and Investments:	Other Property and Investments:					Other Property and Investments:
Goodwill	Goodwill	5,280		5,280		Goodwill	5,161		5,161
Nuclear decommissioning trusts, at fair value	Nuclear decommissioning trusts, at fair value	2,031		2,542		Nuclear decommissioning trusts, at fair value	2,298		2,145
Equity investments in unconsolidated subsidiaries	Equity investments in unconsolidated subsidiaries	1,292		1,282		Equity investments in unconsolidated subsidiaries	1,382		1,443
Other intangible assets, net of amortization of $331 and $307, respectively		415		445
Other intangible assets, net of amortization of $358 and $340, respectively						Other intangible assets, net of amortization of $358 and $340, respectively	386		406

Miscellaneous property and investments	Miscellaneous property and investments	590		653		Miscellaneous property and investments	618		602
Total other property and investments	Total other property and investments	9,608		10,202		Total other property and investments	9,845		9,757
Deferred Charges and Other Assets:	Deferred Charges and Other Assets:					Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization	Operating lease right-of-use assets, net of amortization	1,560		1,701		Operating lease right-of-use assets, net of amortization	1,481		1,531
Deferred charges related to income taxes	Deferred charges related to income taxes	854		824		Deferred charges related to income taxes	892		866
Prepaid pension costs	Prepaid pension costs	2,019		1,657		Prepaid pension costs	2,478		2,290

Unamortized loss on reacquired debt	Unamortized loss on reacquired debt	243		258		Unamortized loss on reacquired debt	229		238
Deferred under recovered fuel clause revenues	Deferred under recovered fuel clause revenues	1,697		410		Deferred under recovered fuel clause revenues	1,489		2,056
Regulatory assets – asset retirement obligations, deferred	Regulatory assets – asset retirement obligations, deferred	6,519		5,466		Regulatory assets – asset retirement obligations, deferred	5,681		5,764
Other regulatory assets, deferred	Other regulatory assets, deferred	6,121		5,577		Other regulatory assets, deferred	5,806		5,918

Other deferred charges and assets	Other deferred charges and assets	1,492		1,366		Other deferred charges and assets	1,469		1,485
Total deferred charges and other assets	Total deferred charges and other assets	20,505		17,259		Total deferred charges and other assets	19,525		20,148
Total Assets	Total Assets	$	134,005	$	127,534	Total Assets	$	137,116	$	134,891

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

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Table of Contents Index to Financial Statements

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


Liabilities and Stockholders' Equity	Liabilities and Stockholders' Equity	At September 30, 2022		At December 31, 2021		Liabilities and Stockholders' Equity	At June 30, 2023		At December 31, 2022
		(in millions)					(in millions)
Current Liabilities:	Current Liabilities:					Current Liabilities:
Securities due within one year	Securities due within one year	$	3,241	$	2,157	Securities due within one year	$	4,063	$	4,285

Notes payable	Notes payable	1,398		1,440		Notes payable	1,647		2,609

Accounts payable	Accounts payable	3,079		2,169		Accounts payable	2,493		3,525
Customer deposits	Customer deposits	516		479		Customer deposits	493		502
Accrued taxes —	Accrued taxes —					Accrued taxes —
Accrued income taxes	Accrued income taxes	129		50		Accrued income taxes	76		60

Other accrued taxes	Other accrued taxes	882		641		Other accrued taxes	627		764
Accrued interest	Accrued interest	431		533		Accrued interest	652		614

Accrued compensation	Accrued compensation	961		1,070		Accrued compensation	719		1,127
Asset retirement obligations	Asset retirement obligations	689		697		Asset retirement obligations	715		694

Liabilities from risk management activities, net of collateral						Liabilities from risk management activities, net of collateral	261		178

Operating lease obligations	Operating lease obligations	191		250		Operating lease obligations	195		197
Natural gas cost over recovery						Natural gas cost over recovery	161		—
Other regulatory liabilities	Other regulatory liabilities	440		563		Other regulatory liabilities	268		382
Other current liabilities	Other current liabilities	844		872		Other current liabilities	870		787
Total current liabilities	Total current liabilities	12,801		10,921		Total current liabilities	13,240		15,724
Long-term Debt	Long-term Debt	50,427		50,120		Long-term Debt	55,134		50,656
Deferred Credits and Other Liabilities:	Deferred Credits and Other Liabilities:					Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	Accumulated deferred income taxes	9,916		8,862		Accumulated deferred income taxes	10,623		10,036
Deferred credits related to income taxes	Deferred credits related to income taxes	5,271		5,401		Deferred credits related to income taxes	4,965		5,235
Accumulated deferred ITCs	Accumulated deferred ITCs	2,154		2,216		Accumulated deferred ITCs	2,091		2,133
Employee benefit obligations	Employee benefit obligations	1,466		1,550		Employee benefit obligations	1,217		1,238
Operating lease obligations, deferred	Operating lease obligations, deferred	1,393		1,503		Operating lease obligations, deferred	1,356		1,388
Asset retirement obligations, deferred	Asset retirement obligations, deferred	11,007		10,990		Asset retirement obligations, deferred	10,127		10,146

Other cost of removal obligations	Other cost of removal obligations	1,950		2,103		Other cost of removal obligations	1,932		1,903
Other regulatory liabilities, deferred	Other regulatory liabilities, deferred	536		485		Other regulatory liabilities, deferred	691		733

Other deferred credits and liabilities	Other deferred credits and liabilities	1,366		816		Other deferred credits and liabilities	1,092		1,167
Total deferred credits and other liabilities	Total deferred credits and other liabilities	35,059		33,926		Total deferred credits and other liabilities	34,094		33,979
Total Liabilities	Total Liabilities	98,287		94,967		Total Liabilities	102,468		100,359
Redeemable Preferred Stock of Subsidiaries		242		291

Total Stockholders' Equity (See accompanying statements)	Total Stockholders' Equity (See accompanying statements)	35,476		32,276		Total Stockholders' Equity (See accompanying statements)	34,648		34,532
Total Liabilities and Stockholders' Equity	Total Liabilities and Stockholders' Equity	$	134,005	$	127,534	Total Liabilities and Stockholders' Equity	$	137,116	$	134,891

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

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Table of Contents Index to Financial Statements

SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)


		Southern Company Common Stockholders' Equity																								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		1,058	(1)	$	5,268	$	11,834	$	(46)	$	11,311			$	(395)			$	4,262					$	32,234
Balance at December 31, 2021																								Balance at December 31, 2021		1,061	(1)	$	5,279	$	11,950	$	(47)			$	10,929			$	(237)				$	4,402			$	32,276
Consolidated net income (loss)	Consolidated net income (loss)	—	—	—		—		—		1,135		—				(32)					1,103			Consolidated net income (loss)		—	—	—		—		—		1,032				—					(45)				987
Other comprehensive income		—	—	—		—		—		—		28				—					28
Stock issued		2	—	5		9		—		—		—				—					14
Stock-based compensation		—	—	—		9		—		—		—				—					9

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

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

Other		—	—	—		2		—		—		—				(1)					1
Balance at March 31, 2021		1,060	(1)	5,273		11,854		(46)		11,768		(367)				4,586					33,068
Consolidated net income		—	—	—		—		—		372		—				—					372
Other comprehensive income	Other comprehensive income	—	—	—		—		—		—		12				—					12			Other comprehensive income		—	—	—		—		—		—				42					—				42
Stock issued	Stock issued	—	—	1		9		—		—		—				—					10			Stock issued		3	—	7		31		—		—				—					—				38
Stock-based compensation	Stock-based compensation	—	—	—		22		—		—		—				—					22			Stock-based compensation		—	—	—		6		—		—				—					—				6

Cash dividends of $0.66 per share	Cash dividends of $0.66 per share	—	—	—		—		—		(699)		—				—					(699)			Cash dividends of $0.66 per share		—	—	—		—		—		(702)				—					—				(702)

Capital contributions from noncontrolling interests	Capital contributions from noncontrolling interests	—	—	—		—		—		—		—				29					29			Capital contributions from noncontrolling interests		—	—	—		—��		—		—				—					73				73
Distributions to noncontrolling interests	Distributions to noncontrolling interests	—	—	—		—		—		—		—				(68)					(68)			Distributions to noncontrolling interests		—	—	—		—		—		—				—					(98)				(98)

Other	Other	—	—	—		1		(2)		1		—				—					—			Other		—	—	—		7		(2)		2				—					—				7
Balance at June 30, 2021		1,060	(1)	5,274		11,886		(48)		11,442		(355)				4,547					32,746
Consolidated net income		—	—	—		—		—		1,101		—				5					1,106
Balance at March 31, 2022																								Balance at March 31, 2022		1,064	(1)	5,286		11,994		(49)		11,261				(195)					4,332				32,629
Consolidated net income (loss)																								Consolidated net income (loss)		—	—	—		—		—		1,107				—					(22)				1,085
Other comprehensive income	Other comprehensive income	—	—	—		—		—		—		36				—					36			Other comprehensive income		—	—	—		—		—		—				11					—				11

Stock issued	Stock issued	1	—	4		34		—		—		—				—					38			Stock issued		—	—	2		21		—		—				—					—				23
Stock-based compensation	Stock-based compensation	—	—	—		22		—		—		—				—					22			Stock-based compensation		—	—	—		14		—		—				—					—				14

Cash dividends of $0.66 per share		—	—	—		—		—		(700)		—				—					(700)
Cash dividends of $0.68 per share																								Cash dividends of $0.68 per share		—	—	—		—		—		(723)				—					—				(723)

Capital contributions from noncontrolling interests		—	—	—		—		—		—		—				72					72

Distributions to noncontrolling interests	Distributions to noncontrolling interests	—	—	—		—		—		—		—				(94)					(94)			Distributions to noncontrolling interests		—	—	—		—		—		—				—					(28)				(28)

Other	Other	—	—	—		(10)		2		1		—				—					(7)			Other		—	—	—		4		(2)		—				—					—				2
Balance at September 30, 2021		1,061	(1)	$	5,278	$	11,932	$	(46)	$	11,844	$	(319)			$	4,530				$	33,219
Balance at June 30, 2022																								Balance at June 30, 2022		1,064	(1)	$	5,288	$	12,033	$	(51)	$	11,645			$	(184)				$	4,282			$	33,013

~~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
Balance at December 31, 2022																						Balance at December 31, 2022		1,090	(1)	$	5,417	$	13,673	$	(53)	$	11,538	$	(167)	$	4,124	$	34,532
Consolidated net income (loss)	Consolidated net income (loss)	—	—	—		—		—		1,032		—				(45)				987		Consolidated net income (loss)		—	—	—		—		—		862		—		(63)		799
Other comprehensive income		—	—	—		—		—		—		42				—				42
Other comprehensive income (loss)																						Other comprehensive income (loss)		—	—	—		—		—		—		(44)		—		(44)
Stock issued	Stock issued	3	—	7		31		—		—		—				—				38		Stock issued		2	—	4		11		—		—		—		—		15
Stock-based compensation	Stock-based compensation	—	—	—		6		—		—		—				—				6		Stock-based compensation		—	—	—		29		—		—		—		—		29

Cash dividends of $0.66 per share		—	—	—		—		—		(702)		—				—				(702)
Cash dividends of $0.68 per share																						Cash dividends of $0.68 per share		—	—	—		—		—		(742)		—		—		(742)

Capital contributions from noncontrolling interests	Capital contributions from noncontrolling interests	—	—	—		—		—		—		—				73				73		Capital contributions from noncontrolling interests		—	—	—		—		—		—		—		21		21
Distributions to noncontrolling interests	Distributions to noncontrolling interests	—	—	—		—		—		—		—				(98)				(98)		Distributions to noncontrolling interests		—	—	—		—		—		—		—		(48)		(48)

Other	Other	—	—	—		7		(2)		2		—				—				7		Other		—	—	—		2		(2)		—		—		—		—
Balance at March 31, 2022		1,064	(1)	5,286		11,994		(49)		11,261		(195)				4,332				32,629
Balance at March 31, 2023																						Balance at March 31, 2023		1,092	(1)	5,421		13,715		(55)		11,658		(211)		4,034		34,562
Consolidated net income (loss)	Consolidated net income (loss)	—	—	—		—		—		1,107		—				(22)				1,085		Consolidated net income (loss)		—	—	—		—		—		838		—		(15)		823
Other comprehensive income	Other comprehensive income	—	—	—		—		—		—		11				—				11		Other comprehensive income		—	—	—		—		—		—		43		—		43
Stock issued	Stock issued	—	—	2		21		—		—		—				—				23		Stock issued		—	—	1		6		—		—		—		—		7
Stock-based compensation	Stock-based compensation	—	—	—		14		—		—		—				—				14		Stock-based compensation		—	—	—		19		—		—		—		—		19

Cash dividends of $0.68 per share		—	—	—		—		—		(723)		—				—				(723)
Cash dividends of $0.70 per share																						Cash dividends of $0.70 per share		—	—	—		—		—		(764)		—		—		(764)

Distributions to noncontrolling interests	Distributions to noncontrolling interests	—	—	—		—		—		—		—				(28)				(28)		Distributions to noncontrolling interests		—	—	—		—		—		—		—		(42)		(42)

Other	Other	—	—	—		4		(2)		—		—				—				2		Other		—	—	—		2		(1)		—		—		(1)		—
Balance at June 30, 2022		1,064	(1)	5,288		12,033		(51)		11,645		(184)				4,282				33,013
Consolidated net income		—	—	—		—		—		1,472		—				12				1,484
Other comprehensive income		—	—	—		—		—		—		28				—				28

Stock issued		26	—	129		1,613		—		—		—				—				1,742
Stock-based compensation		—	—	—		15		—		—		—				—				15

Cash dividends of $0.68 per share		—	—	—		—		—		(741)		—				—				(741)

Distributions to noncontrolling interests		—	—	—		—		—		—		—				(57)				(57)
Balance at June 30, 2023																						Balance at June 30, 2023		1,092	(1)	$	5,422	$	13,742	$	(56)	$	11,732	$	(168)	$	3,976	$	34,648

Other		—	—	—		(4)		(1)		(2)		(1)				—				(8)
Balance at September 30, 2022		1,090	(1)	$	5,417	$	13,657	$	(52)	$	12,374	$	(157)			$	4,237			$	35,476

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

1715

Table of Contents Index to Financial Statements

ALABAMA POWER COMPANY

CONDENSED STATEMENTS OF INCOME (UNAUDITED)


		For the Three Months Ended September 30,				For the Nine Months Ended September 30,					For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
		(in millions)				(in millions)					(in millions)				(in millions)
Operating Revenues:	Operating Revenues:									Operating Revenues:
Retail revenues	Retail revenues	$	2,008	$	1,651	$	5,015	$	4,357	Retail revenues	$	1,467	$	1,629	$	2,848	$	3,008
Wholesale revenues, non-affiliates	Wholesale revenues, non-affiliates	250		107		522		285		Wholesale revenues, non-affiliates	112		159		252		272
Wholesale revenues, affiliates	Wholesale revenues, affiliates	70		53		170		109		Wholesale revenues, affiliates	10		34		29		100
Other revenues	Other revenues	116		93		316		268		Other revenues	100		109		207		200
Total operating revenues	Total operating revenues	2,444		1,904		6,023		5,019		Total operating revenues	1,689		1,931		3,336		3,580
Operating Expenses:	Operating Expenses:									Operating Expenses:
Fuel	Fuel	666		373		1,399		927		Fuel	303		401		611		733
Purchased power, non-affiliates	Purchased power, non-affiliates	185		76		347		173		Purchased power, non-affiliates	54		95		155		162
Purchased power, affiliates	Purchased power, affiliates	113		45		260		114		Purchased power, affiliates	54		121		113		147
Other operations and maintenance	Other operations and maintenance	418		401		1,270		1,175		Other operations and maintenance	440		441		862		852
Depreciation and amortization	Depreciation and amortization	220		214		652		640		Depreciation and amortization	349		218		694		432
Taxes other than income taxes	Taxes other than income taxes	106		99		309		303		Taxes other than income taxes	107		100		223		204
Total operating expenses	Total operating expenses	1,708		1,208		4,237		3,332		Total operating expenses	1,307		1,376		2,658		2,530
Operating Income	Operating Income	736		696		1,786		1,687		Operating Income	382		555		678		1,050
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	18		14		51		38		Allowance for equity funds used during construction	21		17		42		33
Interest expense, net of amounts capitalized	Interest expense, net of amounts capitalized	(98)		(84)		(278)		(252)		Interest expense, net of amounts capitalized	(105)		(91)		(208)		(180)
Other income (expense), net	Other income (expense), net	38		29		101		93		Other income (expense), net	39		27		79		61
Total other income and (expense)	Total other income and (expense)	(42)		(41)		(126)		(121)		Total other income and (expense)	(45)		(47)		(87)		(86)
Earnings Before Income Taxes	Earnings Before Income Taxes	694		655		1,660		1,566		Earnings Before Income Taxes	337		508		591		964
Income taxes	Income taxes	166		152		394		366		Income taxes	25		121		23		227
Net Income	Net Income	528		503		1,266		1,200		Net Income	312		387		568		737
Dividends on Preferred Stock	Dividends on Preferred Stock	3		4		10		11		Dividends on Preferred Stock	—		4		—		7
Net Income After Dividends on Preferred Stock	Net Income After Dividends on Preferred Stock	$	525	$	499	$	1,256	$	1,189	Net Income After Dividends on Preferred Stock	$	312	$	383	$	568	$	730

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)


		For the Three Months Ended September 30,				For the Nine Months Ended September 30,					For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
		(in millions)				(in millions)					(in millions)				(in millions)
Net Income	Net Income	$	528	$	503	$	1,266	$	1,200	Net Income	$	312	$	387	$	568	$	737
Other comprehensive income:	Other comprehensive income:									Other comprehensive income:
Qualifying hedges:	Qualifying hedges:									Qualifying hedges:
Changes in fair value, net of tax of $—, $1, $—, and $1, respectively		1		4		(1)		3
Reclassification adjustment for amounts included in net income, net of tax of $—, $—, $1, and $1, respectively		1		1		3		3
Changes in fair value, net of tax of $—, $—, $—, and $(1), respectively										Changes in fair value, net of tax of $—, $—, $—, and $(1), respectively	—		—		—		(1)
Reclassification adjustment for amounts included in net income, net of tax of $—, $—, $—, and $1, respectively										Reclassification adjustment for amounts included in net income, net of tax of $—, $—, $—, and $1, respectively	—		1		1		2
Total other comprehensive income	Total other comprehensive income	2		5		2		6		Total other comprehensive income	—		1		1		1
Comprehensive Income	Comprehensive Income	$	530	$	508	$	1,268	$	1,206	Comprehensive Income	$	312	$	388	$	569	$	738

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

1816

Table of Contents Index to Financial Statements

ALABAMA POWER COMPANY

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)


		For the Nine Months Ended September 30,					For the Six Months Ended June 30,
		2022		2021			2023		2022
		(in millions)					(in millions)
Operating Activities:	Operating Activities:					Operating Activities:
Net income	Net income	$	1,266	$	1,200	Net income	$	568	$	737
Adjustments to reconcile net income to net cash provided from operating activities —	Adjustments to reconcile net income to net cash provided from operating activities —					Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total	Depreciation and amortization, total	817		748		Depreciation and amortization, total	770		494
Deferred income taxes	Deferred income taxes	210		104		Deferred income taxes	(142)		117

Pension, postretirement, and other employee benefits	Pension, postretirement, and other employee benefits	(85)		(74)		Pension, postretirement, and other employee benefits	(91)		(59)
Settlement of asset retirement obligations	Settlement of asset retirement obligations	(139)		(152)		Settlement of asset retirement obligations	(116)		(91)

Retail fuel cost under recovery – long-term	Retail fuel cost under recovery – long-term	(413)		—		Retail fuel cost under recovery – long-term	236		(191)

Other, net	Other, net	(98)		(51)		Other, net	(60)		(67)
Changes in certain current assets and liabilities —	Changes in certain current assets and liabilities —					Changes in certain current assets and liabilities —
-Receivables	-Receivables	(296)		(128)		-Receivables	16		(296)
-Fossil fuel stock	-Fossil fuel stock	(40)		91		-Fossil fuel stock	(117)		(2)
-Prepayments	-Prepayments	(34)		(24)		-Prepayments	(61)		(69)

-Retail fuel cost under recovery		(93)		(79)

-Other current assets	-Other current assets	(41)		(32)		-Other current assets	(112)		(31)
-Accounts payable	-Accounts payable	(22)		(230)		-Accounts payable	(363)		14
-Accrued taxes	-Accrued taxes	110		178		-Accrued taxes	183		(15)

-Accrued compensation						-Accrued compensation	(76)		(55)

-Other current liabilities	-Other current liabilities	(70)		(132)		-Other current liabilities	21		24
Net cash provided from operating activities	Net cash provided from operating activities	1,072		1,419		Net cash provided from operating activities	656		510
Investing Activities:	Investing Activities:					Investing Activities:
Property additions	Property additions	(1,483)		(1,235)		Property additions	(865)		(759)
Nuclear decommissioning trust fund purchases	Nuclear decommissioning trust fund purchases	(273)		(536)		Nuclear decommissioning trust fund purchases	(150)		(180)
Nuclear decommissioning trust fund sales	Nuclear decommissioning trust fund sales	273		536		Nuclear decommissioning trust fund sales	150		180
Cost of removal, net of salvage	Cost of removal, net of salvage	(163)		(93)		Cost of removal, net of salvage	(83)		(104)

Change in construction payables						Change in construction payables	(79)		(8)
Other investing activities	Other investing activities	5		(7)		Other investing activities	16		(18)
Net cash used for investing activities	Net cash used for investing activities	(1,641)		(1,335)		Net cash used for investing activities	(1,011)		(889)
Financing Activities:	Financing Activities:					Financing Activities:

Proceeds — Senior notes		1,700		600
Proceeds —						Proceeds —
Senior notes						Senior notes	200		700

Other long-term debt						Other long-term debt	17		—

Redemptions —

Senior notes		(550)		(200)
Redemptions — Senior notes						Redemptions — Senior notes	—		(550)

Other long-term debt		—		(206)

Capital contributions from parent company	Capital contributions from parent company	660		630		Capital contributions from parent company	352		656
Payment of common stock dividends	Payment of common stock dividends	(762)		(738)		Payment of common stock dividends	(571)		(508)
Other financing activities	Other financing activities	(81)		(30)		Other financing activities	(9)		(71)
Net cash provided from financing activities		967		56
Net cash provided from (used for) financing activities						Net cash provided from (used for) financing activities	(11)		227
Net Change in Cash, Cash Equivalents, and Restricted Cash	Net Change in Cash, Cash Equivalents, and Restricted Cash	398		140		Net Change in Cash, Cash Equivalents, and Restricted Cash	(366)		(152)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	1,060		530		Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	687		1,060
Cash, Cash Equivalents, and Restricted Cash at End of Period	Cash, Cash Equivalents, and Restricted Cash at End of Period	$	1,458	$	670	Cash, Cash Equivalents, and Restricted Cash at End of Period	$	321	$	908
Supplemental Cash Flow Information:	Supplemental Cash Flow Information:					Supplemental Cash Flow Information:
Cash paid during the period for —	Cash paid during the period for —					Cash paid during the period for —
Interest (net of $14 and $11 capitalized for 2022 and 2021, respectively)		$	278	$	246
Interest (net of $13 and $9 capitalized for 2023 and 2022, respectively)						Interest (net of $13 and $9 capitalized for 2023 and 2022, respectively)	$	192	$	166
Income taxes, net	Income taxes, net	178		183		Income taxes, net	52		192
Noncash transactions —	Noncash transactions —					Noncash transactions —
Accrued property additions at end of period	Accrued property additions at end of period	186		178		Accrued property additions at end of period	103		141
Right-of-use assets obtained under leases		9		2

Right-of-use assets obtained under operating leases						Right-of-use assets obtained under operating leases	21		5
Right-of-use assets obtained under finance leases						Right-of-use assets obtained under finance leases	1		1

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	At June 30, 2023		At December 31, 2022
	(in millions)
Current Assets:
Cash and cash equivalents	$	321	$	687
Receivables —
Customer accounts	487		431
Unbilled revenues	184		174


Affiliated	99		101
Other accounts and notes	98		153
Accumulated provision for uncollectible accounts	(15)		(14)
Fossil fuel stock	346		229
Materials and supplies	607		557

Prepaid expenses	102		65
Other regulatory assets	513		474
Other current assets	64		67
Total current assets	2,806		2,924
Property, Plant, and Equipment:
In service	34,127		33,472
Less: Accumulated provision for depreciation	10,893		10,470
Plant in service, net of depreciation	23,234		23,002
Other utility plant, net	546		599
Nuclear fuel, at amortized cost	255		239
Construction work in progress	1,600		1,526
Total property, plant, and equipment	25,635		25,366
Other Property and Investments:
Nuclear decommissioning trusts, at fair value	1,205		1,127
Equity investments in unconsolidated subsidiaries	54		57
Miscellaneous property and investments	126		124
Total other property and investments	1,385		1,308
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization	86		71
Deferred charges related to income taxes	259		250
Prepaid pension and other postretirement benefit costs	702		657

Regulatory assets – asset retirement obligations	1,817		1,845
Other regulatory assets, deferred	1,937		2,107
Other deferred charges and assets	433		442
Total deferred charges and other assets	5,234		5,372
Total Assets	$	35,060	$	34,970

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)


Liabilities and Stockholder's Equity	At June 30, 2023		At December 31, 2022
	(in millions)
Current Liabilities:
Securities due within one year	$	523	$	301

Accounts payable —
Affiliated	291		443
Other	372		641
Customer deposits	105		106


Accrued taxes	217		57
Accrued interest	123		120

Accrued compensation	156		229

Asset retirement obligations	338		330
Other regulatory liabilities	85		96
Other current liabilities	138		91
Total current liabilities	2,348		2,414
Long-term Debt	10,321		10,329
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	4,031		3,981
Deferred credits related to income taxes	1,742		1,925
Accumulated deferred ITCs	78		81
Employee benefit obligations	147		145
Operating lease obligations	80		67
Asset retirement obligations, deferred	3,896		3,957

Other regulatory liabilities, deferred	290		315

Other deferred credits and liabilities	85		69
Total deferred credits and other liabilities	10,349		10,540
Total Liabilities	23,018		23,283









Common Stockholder's Equity (See accompanying statements)	12,042		11,687
Total Liabilities and Stockholder's Equity	$	35,060	$	34,970

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 ~~BALANCE SHEETS~~STATEMENTS OF COMMON STOCKHOLDER'S EQUITY (UNAUDITED)

Assets At September 30, 2022 At December 31, 2021
(in millions)
Current Assets:
Cash and cash equivalents $ 1,458 $ 1,060
Receivables —
Customer accounts 573 410
Unbilled revenues 146 138
Affiliated 84 37
Other accounts and notes 131 55
Accumulated provision for uncollectible accounts (13) (14)
Fossil fuel stock 199 159
Materials and supplies 568 548
Prepaid expenses 67 41
Other regulatory assets 298 208
Other current assets 129 67
Total current assets 3,640 2,709
Property, Plant, and Equipment:
In service 33,042 33,135
Less: Accumulated provision for depreciation 10,393 10,313
Plant in service, net of depreciation 22,649 22,822
Other utility plant, net 602 —
Nuclear fuel, at amortized cost 242 247
Construction work in progress 1,524 1,147
Total property, plant, and equipment 25,017 24,216
Other Property and Investments:
Nuclear decommissioning trusts, at fair value 1,067 1,325
Equity investments in unconsolidated subsidiaries 58 57
Miscellaneous property and investments 128 126
Total other property and investments 1,253 1,508
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization 70 108
Deferred charges related to income taxes 248 240
Prepaid pension and other postretirement benefit costs 605 513
Regulatory assets – asset retirement obligations 1,952 1,547
Other regulatory assets, deferred 2,048 1,807
Other deferred charges and assets 413 334
Total deferred charges and other assets 5,336 4,549
Total Assets $ 35,246 $ 32,982


	Number of Common Shares Issued	Common Stock		Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
	(in millions)
Balance at December 31, 2021	31	$	1,222	$	6,056	$	3,448	$	(13)	$	10,713
Net income after dividends on preferred stock	—	—		—		347		—		347

Capital contributions from parent company	—	—		626		—		—		626

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

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

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

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









Balance at December 31, 2022	31	$	1,222	$	6,710	$	3,764	$	(9)	$	11,687
Net income after dividends on preferred stock	—	—		—		255		—		255

Capital contributions from parent company	—	—		330		—		—		330

Cash dividends on common stock	—	—		—		(285)		—		(285)

Balance at March 31, 2023	31	1,222		7,040		3,734		(9)		11,987
Net income after dividends on preferred stock	—	—		—		312		—		312

Capital contributions from parent company	—	—		29		—		—		29

Cash dividends on common stock	—	—		—		(286)		—		(286)

Balance at June 30, 2023	31	$	1,222	$	7,069	$	3,760	$	(9)	$	12,042

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~~

GEORGIA POWER COMPANY

CONDENSED ~~BALANCE SHEETS~~STATEMENTS OF INCOME (UNAUDITED)


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
	(in millions)				(in millions)
Operating Revenues:
Retail revenues	$	2,165	$	2,908	$	4,146	$	4,926
Wholesale revenues	47		64		78		130

Other revenues	179		149		343		272
Total operating revenues	2,391		3,121		4,567		5,328
Operating Expenses:
Fuel	414		628		816		1,046
Purchased power, non-affiliates	142		246		266		396
Purchased power, affiliates	152		323		358		529
Other operations and maintenance	496		573		991		1,091
Depreciation and amortization	411		356		819		706
Taxes other than income taxes	132		141		263		265
Estimated loss on Plant Vogtle Units 3 and 4	—		52		—		52
Total operating expenses	1,747		2,319		3,513		4,085
Operating Income	644		802		1,054		1,243
Other Income and (Expense):
Allowance for equity funds used during construction	43		33		83		65
Interest expense, net of amounts capitalized	(160)		(117)		(306)		(224)
Other income (expense), net	36		54		80		103
Total other income and (expense)	(81)		(30)		(143)		(56)
Earnings Before Income Taxes	563		772		911		1,187
Income taxes	92		164		144		194
Net Income	$	471	$	608	$	767	$	993

Liabilities and Stockholder's Equity At September 30, 2022 At December 31, 2021
(in millions)
Current Liabilities:
Securities due within one year $ 202 $ 751
Accounts payable —
Affiliated 401 309
Other 376 459
Customer deposits 106 106
Accrued taxes 209 98
Accrued interest 86 100
Accrued compensation 200 219
Asset retirement obligations 327 320
Other regulatory liabilities 89 215
Other current liabilities 97 125
Total current liabilities 2,093 2,702
Long-term Debt 10,628 8,936
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 3,829 3,573
Deferred credits related to income taxes 1,930 1,968
Accumulated deferred ITCs 82 88
Employee benefit obligations 171 171
Operating lease obligations 65 66
Asset retirement obligations, deferred 3,987 4,014
Other cost of removal obligations 57 192
Other regulatory liabilities, deferred 226 210
Other deferred credits and liabilities 62 58
Total deferred credits and other liabilities 10,409 10,340
Total Liabilities 23,130 21,978
Redeemable Preferred Stock 242 291
Common Stockholder's Equity (See accompanying statements)
11,874 10,713
Total Liabilities and Stockholder's Equity $ 35,246 $ 32,982

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
	(in millions)				(in millions)
Net Income	$	471	$	608	$	767	$	993
Other comprehensive income:
Qualifying hedges:
Changes in fair value, net of tax of $(1), $4, $(1), and $8, respectively	—		15		(1)		23
Reclassification adjustment for amounts included in net income, net of tax of $—, $—, $1, and $1, respectively	1		1		2		3
Total other comprehensive income	1		16		1		26
Comprehensive Income	$	472	$	624	$	768	$	1,019

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

Table of Contents Index to Financial Statements

~~ALABAMA POWER COMPANY~~

~~CONDENSED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY (UNAUDITED)~~

Number of
Common
Shares
Issued Common
Stock Paid-In
Capital Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss) Total
(in millions)
Balance at December 31, 2020 31 $ 1,222 $ 5,413 $ 3,194 $ (19) $ 9,810
Net income after dividends on
   preferred stock — — — 359 — 359
Capital contributions from parent company — — 602 — — 602
Other comprehensive income — — — — 1 1
Cash dividends on common stock — — — (246) — (246)
Balance at March 31, 2021 31 1,222 6,015 3,307 (18) 10,526
Net income after dividends on
   preferred stock — — — 331 — 331
Capital contributions from parent company — — 26 — — 26
Other comprehensive income — — — — 1 1
Cash dividends on common stock — — — (246) — (246)
Other — — — (1) — (1)
Balance at June 30, 2021 31 1,222 6,041 3,391 (17) 10,637
Net income after dividends on
   preferred stock — — — 499 — 499
Capital contributions from parent company — — 9 — — 9
Other comprehensive income — — — — 5 5
Cash dividends on common stock — — — (246) — (246)
Other — — — — (1) (1)
Balance at September 30, 2021 31 $ 1,222 $ 6,050 $ 3,644 $ (13) $ 10,903
Balance at December 31, 2021 31 $ 1,222 $ 6,056 $ 3,448 $ (13) $ 10,713
Net income after dividends on
   preferred stock — — — 347 — 347
Capital contributions from parent company — — 626 — — 626
Cash dividends on common stock — — — (254) — (254)
Balance at March 31, 2022 31 1,222 6,682 3,541 (13) 11,432
Net income after dividends on
   preferred stock — — — 383 — 383
Capital contributions from parent company — — 32 — — 32
Other comprehensive income — — — — 1 1
Cash dividends on common stock — — — (254) — (254)
Balance at June 30, 2022 31 1,222 6,714 3,670 (12) 11,594
Net income after dividends on
   preferred stock — — — 525 — 525
Capital contributions from parent company — — 7 — — 7
Other comprehensive income — — — — 2 2
Cash dividends on common stock — — — (254) — (254)
Balance at September 30, 2022 31 $ 1,222 $ 6,721 $ 3,941 $ (10) $ 11,874

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

~~Table of ContentsIndex to Financial Statements~~

GEORGIA POWER COMPANY

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

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2022 2021 2022 2021
(in millions) (in millions)
Operating Revenues:
Retail revenues $ 3,703 $ 2,652 $ 8,629 $ 6,465
Wholesale revenues 56 63 186 143
Other revenues 130 141 403 442
Total operating revenues 3,889 2,856 9,218 7,050
Operating Expenses:
Fuel 841 432 1,887 1,088
Purchased power, non-affiliates 304 173 700 461
Purchased power, affiliates 571 288 1,100 573
Other operations and maintenance 595 544 1,686 1,558
Depreciation and amortization 359 345 1,066 1,025
Taxes other than income taxes 155 130 420 365
Estimated loss on Plant Vogtle Units 3 and 4 (70) 264 (18) 772
Total operating expenses 2,755 2,176 6,841 5,842
Operating Income 1,134 680 2,377 1,208
Other Income and (Expense):
Allowance for equity funds used during construction 37 33 102 94
Interest expense, net of amounts capitalized (123) (106) (347) (315)
Other income (expense), net 36 42 140 124
Total other income and (expense) (50) (31) (105) (97)
Earnings Before Income Taxes 1,084 649 2,272 1,111
Income taxes 226 113 421 81
Net Income $ 858 $ 536 $ 1,851 $ 1,030

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

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2022 2021 2022 2021
(in millions) (in millions)
Net Income $ 858 $ 536 $ 1,851 $ 1,030
Other comprehensive income:
Qualifying hedges:
Changes in fair value, net of tax of
$—, $—, $8, and $—, respectively
— — 23 —
Reclassification adjustment for amounts included in net income,
net of tax of $—, $1, $1, and $2, respectively
1 2 4 5
Total other comprehensive income 1 2 27 5
Comprehensive Income $ 859 $ 538 $ 1,878 $ 1,035


	For the Six Months Ended June 30,
	2023		2022
	(in millions)
Operating Activities:
Net income	$	767	$	993
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total	919		803
Deferred income taxes	86		72

Allowance for equity funds used during construction	(83)		(65)


Pension, postretirement, and other employee benefits	(136)		(114)

Settlement of asset retirement obligations	(141)		(91)
Storm damage accruals	16		107
Retail fuel cost under recovery – long-term	(128)		(538)


Estimated loss on Plant Vogtle Units 3 and 4	—		52
Other, net	(34)		7
Changes in certain current assets and liabilities —
-Receivables	(35)		(424)
-Fossil fuel stock	(166)		31

-Materials and supplies	(103)		(46)

-Other current assets	34		(25)
-Accounts payable	(151)		235
-Accrued taxes	(109)		(11)
-Accrued compensation	(72)		(50)

-Customer refunds	(121)		—

-Other current liabilities	33		(10)
Net cash provided from operating activities	576		926
Investing Activities:
Property additions	(2,047)		(1,545)
Nuclear decommissioning trust fund purchases	(576)		(448)
Nuclear decommissioning trust fund sales	570		444
Cost of removal, net of salvage	(127)		(207)
Change in construction payables, net of joint owner portion	(75)		51
Payments pursuant to LTSAs	(40)		(9)

Proceeds from dispositions	56		56

Other investing activities	(21)		(10)
Net cash used for investing activities	(2,260)		(1,668)
Financing Activities:
Increase in notes payable, net	95		—
Proceeds —
Senior notes	1,750		1,500
Revenue bonds	229		—

Short-term borrowings	250		650

Redemptions and repurchases —

Senior notes	(100)		(400)

FFB loan	(43)		(45)
Short-term borrowings	(650)		(250)
Other long-term debt	—		(125)

Capital contributions from parent company	782		491
Payment of common stock dividends	(928)		(845)


Other financing activities	(21)		(37)
Net cash provided from financing activities	1,364		939
Net Change in Cash, Cash Equivalents, and Restricted Cash	(320)		197
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	480		33
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	160	$	230
Supplemental Cash Flow Information:
Cash paid (received) during the period for —
Interest (net of $44 and $33 capitalized for 2023 and 2022, respectively)	$	270	$	188
Income taxes, net	(5)		106
Noncash transactions —
Accrued property additions at end of period	510		500
Right-of-use assets obtained under operating leases	8		1

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

2322

Table of Contents Index to Financial Statements

GEORGIA POWER COMPANY

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

For the Nine Months Ended September 30,
2022 2021
(in millions)
Operating Activities:
Net income $ 1,851 $ 1,030
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total 1,211 1,164
Deferred income taxes 266 (299)
Utilization of federal investment tax credits 49 19
Allowance for equity funds used during construction (102) (94)
Pension, postretirement, and other employee benefits (178) (112)
Settlement of asset retirement obligations (149) (154)
Storm damage accruals 160 160
Retail fuel cost under recovery – long-term (1,287) (203)
Estimated loss on Plant Vogtle Units 3 and 4 (18) 772
Other, net (71) 70
Changes in certain current assets and liabilities —
-Receivables (321) (85)
-Fossil fuel stock (23) 77
-Materials and supplies (67) (60)
-Contract assets (51) (32)
-Other current assets (72) (20)
-Accounts payable 211 164
-Accrued taxes 151 154
-Retail fuel cost over recovery — (113)
-Other current liabilities (78) (88)
Net cash provided from operating activities 1,482 2,350
Investing Activities:
Property additions (2,658) (2,411)
Nuclear decommissioning trust fund purchases (585) (766)
Nuclear decommissioning trust fund sales 581 761
Cost of removal, net of salvage (250) (99)
Change in construction payables, net of joint owner portion 148 (68)
Contributions in aid of construction 102 71
Proceeds from dispositions 56 4
Other investing activities (47) (64)
Net cash used for investing activities (2,653) (2,572)
Financing Activities:
Increase (decrease) in notes payable, net 415 (60)
Proceeds —
Senior notes 1,500 750
Pollution control revenue bonds — 122
FFB loan — 371
Short-term borrowings 650 —
Redemptions and repurchases —
Senior notes (400) (325)
Pollution control revenue bonds (53) (69)
FFB loan (66) (75)
Short-term borrowings (250) —
Other long-term debt (125) —
Capital contributions from parent company 813 1,054
Payment of common stock dividends (1,268) (1,237)
Other financing activities (45) (26)
Net cash provided from financing activities 1,171 505
Net Change in Cash, Cash Equivalents, and Restricted Cash — 283
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period 33 9
Cash, Cash Equivalents, and Restricted Cash at End of Period $ 33 $ 292
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $52 and $47 capitalized for 2022 and 2021, respectively) $ 332 $ 325
Income taxes, net 151 237
Noncash transactions —
Accrued property additions at end of period 609 477
Right-of-use assets obtained under operating leases 7 (3)
Right-of-use assets obtained under finance leases 112 —


Assets	At June 30, 2023		At December 31, 2022
	(in millions)
Current Assets:
Cash and cash equivalents	$	44	$	364

Receivables —
Customer accounts, net	757		735
Unbilled revenues	348		309
Under recovered fuel clause revenues	695		—
Joint owner accounts	160		128

Affiliated	76		53
Other accounts and notes	39		62

Fossil fuel stock	458		291
Materials and supplies	828		729




Regulatory assets – asset retirement obligations	176		158

Other regulatory assets	354		324
Other current assets	178		246
Total current assets	4,113		3,399
Property, Plant, and Equipment:
In service	42,960		41,879
Less: Accumulated provision for depreciation	13,452		13,115
Plant in service, net of depreciation	29,508		28,764

Nuclear fuel, at amortized cost	622		604
Construction work in progress	8,890		8,103
Total property, plant, and equipment	39,020		37,471
Other Property and Investments:
Nuclear decommissioning trusts, at fair value	1,093		1,018
Equity investments in unconsolidated subsidiaries	48		51
Miscellaneous property and investments	125		107
Total other property and investments	1,266		1,176
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization	943		1,007
Deferred charges related to income taxes	601		583
Prepaid pension costs	805		738
Deferred under recovered fuel clause revenues	1,489		2,056
Regulatory assets – asset retirement obligations, deferred	3,624		3,671
Other regulatory assets, deferred	2,589		2,522
Other deferred charges and assets	551		540
Total deferred charges and other assets	10,602		11,117
Total Assets	$	55,001	$	53,163

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)


Liabilities and Stockholder's Equity	At June 30, 2023		At December 31, 2022
	(in millions)
Current Liabilities:
Securities due within one year	$	801	$	901
Notes payable	1,295		1,600
Accounts payable —
Affiliated	718		928
Other	1,124		1,076
Customer deposits	252		252


Accrued taxes	401		508
Accrued interest	173		157

Accrued compensation	151		254
Operating lease obligations	149		151
Asset retirement obligations	320		295


Other regulatory liabilities	25		170


Other current liabilities	393		286
Total current liabilities	5,802		6,578
Long-term Debt	15,934		14,009
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	3,881		3,707
Deferred credits related to income taxes	2,195		2,244
Accumulated deferred ITCs	314		319
Employee benefit obligations	303		318
Operating lease obligations, deferred	813		851
Asset retirement obligations, deferred	5,779		5,739

Other deferred credits and liabilities	496		540
Total deferred credits and other liabilities	13,781		13,718
Total Liabilities	35,517		34,305









Common Stockholder's Equity (See accompanying statements)	19,484		18,858
Total Liabilities and Stockholder's Equity	$	55,001	$	53,163

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 ~~BALANCE SHEETS~~STATEMENTS OF COMMON STOCKHOLDER'S EQUITY (UNAUDITED)

Assets At September 30, 2022 At December 31, 2021
(in millions)
Current Assets:
Cash and cash equivalents $ 33 $ 33
Receivables —
Customer accounts, net 866 547
Unbilled revenues 267 231
Joint owner accounts 64 116
Affiliated 66 25
Other accounts and notes 30 44
Fossil fuel stock 272 248
Materials and supplies 713 670
Regulatory assets – asset retirement obligations 244 178
Assets from risk management activities 88 48
Other regulatory assets 299 289
Other current assets 212 130
Total current assets 3,154 2,559
Property, Plant, and Equipment:
In service 41,159 41,332
Less: Accumulated provision for depreciation 12,942 12,854
Plant in service, net of depreciation 28,217 28,478
Nuclear fuel, at amortized cost 598 577
Construction work in progress 8,053 6,688
Total property, plant, and equipment 36,868 35,743
Other Property and Investments:
Nuclear decommissioning trusts, at fair value 964 1,217
Equity investments in unconsolidated subsidiaries 51 50
Miscellaneous property and investments 87 69
Total other property and investments 1,102 1,336
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization 1,034 1,157
Deferred charges related to income taxes 573 550
Prepaid pension costs 697 563
Deferred under recovered fuel clause revenues 1,697 410
Regulatory assets – asset retirement obligations, deferred 4,323 3,688
Other regulatory assets, deferred 2,579 1,964
Other deferred charges and assets 519 491
Total deferred charges and other assets 11,422 8,823
Total Assets $ 52,546 $ 48,461


	Number of Common Shares Issued	Common Stock		Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
	(in millions)
Balance at December 31, 2021	9	$	398	$	14,153	$	2,724	$	(41)	$	17,234
Net income	—	—		—		385		—		385

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

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

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

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








Balance at December 31, 2022	9	$	398	$	15,626	$	2,846	$	(12)	$	18,858
Net income	—	—		—		296		—		296

Capital contributions from parent company	—	—		752		—		—		752

Cash dividends on common stock	—	—		—		(464)		—		(464)
Other	—	—		—		1		—		1
Balance at March 31, 2023	9	398		16,378		2,679		(12)		19,443
Net income	—	—		—		471		—		471

Capital contributions from parent company	—	—		33		—		—		33
Other comprehensive income	—	—		—		—		1		1
Cash dividends on common stock	—	—		—		(464)		—		(464)

Balance at June 30, 2023	9	$	398	$	16,411	$	2,686	$	(11)	$	19,484

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)~~

Liabilities and Stockholder's Equity At September 30, 2022 At December 31, 2021
(in millions)
Current Liabilities:
Securities due within one year $ 900 $ 675
Notes payable 814 —
Accounts payable —
Affiliated 880 757
Other 1,025 702
Customer deposits 254 259
Accrued taxes 486 335
Accrued interest 127 136
Accrued compensation 213 232
Operating lease obligations 148 156
Asset retirement obligations 309 317
Other regulatory liabilities 197 280
Other current liabilities 243 254
Total current liabilities 5,596 4,103
Long-term Debt 13,831 13,109
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 3,588 3,019
Deferred credits related to income taxes 2,264 2,321
Accumulated deferred ITCs 321 328
Employee benefit obligations 370 402
Operating lease obligations, deferred 854 999
Asset retirement obligations, deferred 6,547 6,507
Other deferred credits and liabilities 518 439
Total deferred credits and other liabilities 14,462 14,015
Total Liabilities 33,889 31,227
Common Stockholder's Equity (See accompanying statements)
18,657 17,234
Total Liabilities and Stockholder's Equity $ 52,546 $ 48,461

~~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 COMMON STOCKHOLDER'S EQUITY (UNAUDITED)~~

Number of
Common
Shares
Issued Common
Stock Paid-In
Capital Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss) Total
(in millions)
Balance at December 31, 2020 9 $ 398 $ 12,361 $ 3,789 $ (47) $ 16,501
Net income — — — 351 — 351
Capital contributions from parent company — — 332 — — 332
Other comprehensive income — — — — 2 2
Cash dividends on common stock — — — (412) — (412)
Balance at March 31, 2021 9 398 12,693 3,728 (45) 16,774
Net income — — — 143 — 143
Capital contributions from parent company — — 40 — — 40
Other comprehensive income — — — — 1 1
Cash dividends on common stock — — — (412) — (412)
Balance at June 30, 2021 9 398 12,733 3,459 (44) 16,546
Net income — — — 536 — 536
Capital contributions from parent company — — 690 — — 690
Other comprehensive income — — — — 2 2
Cash dividends on common stock — — — (413) — (413)
Balance at September 30, 2021 9 $ 398 $ 13,423 $ 3,582 $ (42) $ 17,361
Balance at December 31, 2021 9 $ 398 $ 14,153 $ 2,724 $ (41) $ 17,234
Net income — — — 385 — 385
Capital contributions from parent company — — 443 — — 443
Other comprehensive income — — — — 10 10
Cash dividends on common stock — — — (423) — (423)
Balance at March 31, 2022 9 398 14,596 2,686 (31) 17,649
Net income — — — 608 — 608
Capital contributions from parent company — — 46 — — 46
Other comprehensive income — — — — 16 16
Cash dividends on common stock — — — (422) — (422)
Balance at June 30, 2022 9 398 14,642 2,872 (15) 17,897
Net income — — — 858 — 858
Capital contributions from parent company — — 324 — — 324
Other comprehensive income — — — — 1 1
Cash dividends on common stock — — — (423) — (423)
Balance at September 30, 2022 9 $ 398 $ 14,966 $ 3,307 $ (14) $ 18,657

~~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

MISSISSIPPI POWER COMPANY

CONDENSED STATEMENTS OF INCOME ~~(UNAUDITED)~~

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2022 2021 2022 2021
(in millions) (in millions)
Operating Revenues:
Retail revenues $ 250 $ 248 $ 718 $ 670
Wholesale revenues, non-affiliates 60 60 191 178
Wholesale revenues, affiliates 187 62 336 120
Other revenues 13 8 34 20
Total operating revenues 510 378 1,279 988
Operating Expenses:
Fuel and purchased power 262 145 601 351
Other operations and maintenance 86 85 252 230
Depreciation and amortization 45 46 135 138
Taxes other than income taxes 32 33 93 96
Total operating expenses 425 309 1,081 815
Operating Income 85 69 198 173
Other Income and (Expense):
Interest expense, net of amounts capitalized (15) (16) (42) (45)
Other income (expense), net 9 7 32 27
Total other income and (expense) (6) (9) (10) (18)
Earnings Before Income Taxes 79 60 188 155
Income taxes 17 10 38 22
Net Income $ 62 $ 50 $ 150 $ 133

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

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2022 2021 2022 2021
(in millions) (in millions)
Net Income $ 62 $ 50 $ 150 $ 133
Other comprehensive income:
Qualifying hedges:
Reclassification adjustment for amounts included in net income,
net of tax of $—, $—, $—, and $—, respectively
— — — 1
Total other comprehensive income — — — 1
Comprehensive Income $ 62 $ 50 $ 150 $ 134


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
	(in millions)				(in millions)
Operating Revenues:
Retail revenues	$	227	$	252	$	464	$	469
Wholesale revenues, non-affiliates	56		63		124		131
Wholesale revenues, affiliates	18		107		93		149
Other revenues	10		12		21		20
Total operating revenues	311		434		702		769
Operating Expenses:
Fuel and purchased power	96		207		246		339


Other operations and maintenance	91		91		175		167
Depreciation and amortization	45		45		92		90
Taxes other than income taxes	28		32		60		61

Total operating expenses	260		375		573		657
Operating Income	51		59		129		112
Other Income and (Expense):

Interest expense, net of amounts capitalized	(18)		(14)		(34)		(27)
Other income (expense), net	11		12		20		22
Total other income and (expense)	(7)		(2)		(14)		(5)
Earnings Before Income Taxes	44		57		115		107
Income taxes	4		12		17		20
Net Income and Comprehensive Income	$	40	$	45	$	98	$	87

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 Nine Months Ended September 30,					For the Six Months Ended June 30,
		2022		2021			2023		2022
		(in millions)					(in millions)
Operating Activities:	Operating Activities:					Operating Activities:
Net income	Net income	$	150	$	133	Net income	$	98	$	87
Adjustments to reconcile net income to net cash provided from operating activities —	Adjustments to reconcile net income to net cash provided from operating activities —					Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total	Depreciation and amortization, total	164		161		Depreciation and amortization, total	113		110
Deferred income taxes						Deferred income taxes	(8)		(2)

Pension, postretirement, and other employee benefits						Pension, postretirement, and other employee benefits	(10)		(8)
Settlement of asset retirement obligations	Settlement of asset retirement obligations	(15)		(18)		Settlement of asset retirement obligations	(7)		(9)

Other, net	Other, net	20		(20)		Other, net	4		32
Changes in certain current assets and liabilities —	Changes in certain current assets and liabilities —					Changes in certain current assets and liabilities —
-Receivables	-Receivables	(58)		(19)		-Receivables	73		(92)

-Retail fuel cost under recovery						-Retail fuel cost under recovery	(23)		(25)

-Other current assets	-Other current assets	(17)		(9)		-Other current assets	(11)		(23)
-Accounts payable	-Accounts payable	41		(12)		-Accounts payable	(79)		79
-Accrued taxes	-Accrued taxes	(3)		(20)		-Accrued taxes	(61)		(36)

-Accrued compensation						-Accrued compensation	(14)		(9)

-Retail fuel cost over recovery		—		(19)

-Other current liabilities	-Other current liabilities	(3)		(18)		-Other current liabilities	7		8
Net cash provided from operating activities	Net cash provided from operating activities	279		159		Net cash provided from operating activities	82		112
Investing Activities:	Investing Activities:					Investing Activities:
Property additions	Property additions	(165)		(135)		Property additions	(164)		(87)
Construction payables	Construction payables	(9)		(11)		Construction payables	(3)		(16)

Payments pursuant to LTSAs	Payments pursuant to LTSAs	(23)		(21)		Payments pursuant to LTSAs	(15)		(15)
Other investing activities	Other investing activities	(22)		(15)		Other investing activities	(11)		(15)
Net cash used for investing activities	Net cash used for investing activities	(219)		(182)		Net cash used for investing activities	(193)		(133)
Financing Activities:	Financing Activities:					Financing Activities:
Decrease in notes payable, net		—		(25)
Increase in notes payable, net						Increase in notes payable, net	53		16

Proceeds — Senior notes	Proceeds — Senior notes	—		525		Proceeds — Senior notes	100		—

Redemptions —

Other revenue bonds		—		(270)
Other long-term debt		—		(75)

Capital contributions from parent company	Capital contributions from parent company	55		103		Capital contributions from parent company	11		51

Payment of common stock dividends	Payment of common stock dividends	(128)		(118)		Payment of common stock dividends	(93)		(85)
Other financing activities		1		(10)

Net cash provided from (used for) financing activities	Net cash provided from (used for) financing activities	(72)		130		Net cash provided from (used for) financing activities	71		(18)
Net Change in Cash, Cash Equivalents, and Restricted Cash	Net Change in Cash, Cash Equivalents, and Restricted Cash	(12)		107		Net Change in Cash, Cash Equivalents, and Restricted Cash	(40)		(39)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	61		39		Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	59		61
Cash, Cash Equivalents, and Restricted Cash at End of Period	Cash, Cash Equivalents, and Restricted Cash at End of Period	$	49	$	146	Cash, Cash Equivalents, and Restricted Cash at End of Period	$	19	$	22
Supplemental Cash Flow Information:	Supplemental Cash Flow Information:					Supplemental Cash Flow Information:
Cash paid during the period for —	Cash paid during the period for —					Cash paid during the period for —
Interest	Interest	$	49	$	53	Interest	$	34	$	26
Income taxes, net	Income taxes, net	18		11		Income taxes, net	31		5

Noncash transactions — Accrued property additions at end of period		16		23
Noncash transactions —						Noncash transactions —
Accrued property additions at end of period						Accrued property additions at end of period	22		9
Right-of-use assets obtained under operating leases						Right-of-use assets obtained under operating leases	1		—

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	At June 30, 2023		At December 31, 2022
	(in millions)
Current Assets:
Cash and cash equivalents	$	19	$	59
Receivables —
Customer accounts, net	68		47
Unbilled revenues	47		47

Affiliated	20		82
Other accounts and notes	26		35

Fossil fuel stock	58		44
Materials and supplies	83		80

Other regulatory assets	67		72

Other current assets	12		38
Total current assets	400		504
Property, Plant, and Equipment:
In service	5,417		5,254
Less: Accumulated provision for depreciation	1,729		1,689
Plant in service, net of depreciation	3,688		3,565

Construction work in progress	177		208
Total property, plant, and equipment	3,865		3,773
Other Property and Investments	162		167
Deferred Charges and Other Assets:

Deferred charges related to income taxes	29		30
Prepaid pension costs	118		109
Regulatory assets – asset retirement obligations	240		239
Other regulatory assets, deferred	258		249
Accumulated deferred income taxes	100		107

Other deferred charges and assets	77		94
Total deferred charges and other assets	822		828
Total Assets	$	5,249	$	5,272

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)


Liabilities and Stockholder's Equity	At June 30, 2023		At December 31, 2022
	(in millions)
Current Liabilities:
Securities due within one year	$	201	$	1


Notes payable	53		—

Accounts payable —
Affiliated	74		121
Other	70		106



Accrued taxes	63		124


Accrued compensation	24		37

Asset retirement obligations	26		37

Other regulatory liabilities	35		43


Other current liabilities	86		85
Total current liabilities	632		554



Long-term Debt	1,444		1,544
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	467		466
Deferred credits related to income taxes	232		253

Employee benefit obligations	68		69

Asset retirement obligations, deferred	149		142

Other cost of removal obligations	197		196
Other regulatory liabilities, deferred	79		96
Other deferred credits and liabilities	33		21
Total deferred credits and other liabilities	1,225		1,243
Total Liabilities	3,301		3,341








Common Stockholder's Equity (See accompanying statements)	1,948		1,931
Total Liabilities and Stockholder's Equity	$	5,249	$	5,272

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 ~~BALANCE SHEETS~~STATEMENTS OF COMMON STOCKHOLDER'S EQUITY (UNAUDITED)

Assets At September 30, 2022 At December 31, 2021
(in millions)
Current Assets:
Cash and cash equivalents $ 49 $ 61
Receivables —
Customer accounts, net 71 37
Unbilled revenues 43 34
Affiliated 39 29
Other accounts and notes 34 28
Fossil fuel stock 37 28
Materials and supplies 80 70
Assets from risk management activities 69 28
Other regulatory assets 60 54
Other current assets 16 13
Total current assets 498 382
Property, Plant, and Equipment:
In service 5,209 5,106
Less: Accumulated provision for depreciation 1,669 1,591
Plant in service, net of depreciation 3,540 3,515
Construction work in progress 168 127
Total property, plant, and equipment 3,708 3,642
Other Property and Investments 171 179
Deferred Charges and Other Assets:
Deferred charges related to income taxes 30 31
Prepaid pension costs 97 79
Regulatory assets – asset retirement obligations 238 232
Other regulatory assets, deferred 271 317
Accumulated deferred income taxes 108 118
Other deferred charges and assets 130 100
Total deferred charges and other assets 874 877
Total Assets $ 5,251 $ 5,080


	Number of Common Shares Issued	Common Stock		Paid-In Capital		Retained Earnings (Accumulated Deficit)		Total
	(in millions)
Balance at December 31, 2021	1	$	38	$	4,582	$	(2,753)	$	1,867
Net income	—	—		—		42		42

Capital contributions from parent company	—	—		51		—		51


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

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


Capital contributions from parent company	—	—		1		—		1

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

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









Balance at December 31, 2022	1	$	38	$	4,652	$	(2,759)	$	1,931
Net income	—	—		—		58		58




Cash dividends on common stock	—	—		—		(46)		(46)

Balance at March 31, 2023	1	38		4,652		(2,747)		1,943
Net income	—	—		—		40		40


Capital contributions from parent company	—	—		12		—		12

Cash dividends on common stock	—	—		—		(47)		(47)

Balance at June 30, 2023	1	$	38	$	4,664	$	(2,754)	$	1,948

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)~~

Liabilities and Stockholder's Equity At September 30, 2022 At December 31, 2021
(in millions)
Current Liabilities:
Securities due within one year $ 1 $ 1
Accounts payable —
Affiliated 96 81
Other 68 47
Accrued taxes 116 120
Accrued compensation 33 36
Asset retirement obligations 20 30
Other regulatory liabilities 102 59
Other current liabilities 80 65
Total current liabilities 516 439
Long-term Debt 1,509 1,510
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 465 464
Deferred credits related to income taxes 258 269
Employee benefit obligations 86 88
Asset retirement obligations, deferred 162 160
Other cost of removal obligations 197 195
Other regulatory liabilities, deferred 87 64
Other deferred credits and liabilities 25 24
Total deferred credits and other liabilities 1,280 1,264
Total Liabilities 3,305 3,213
Common Stockholder's Equity (See accompanying statements)
1,946 1,867
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.~~

~~Table of ContentsIndex to Financial Statements~~

~~MISSISSIPPI POWER COMPANY~~

~~CONDENSED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY (UNAUDITED)~~

Number of
Common
Shares
Issued Common
Stock Paid-In
Capital Retained
Earnings (Accumulated Deficit) Accumulated
Other
Comprehensive
Income (Loss) Total
(in millions)
Balance at December 31, 2020 1 $ 38 $ 4,460 $ (2,754) $ (2) $ 1,742
Net income — — — 45 — 45
Capital contributions from parent company — — 100 — — 100
Cash dividends on common stock — — — (39) — (39)
Balance at March 31, 2021 1 38 4,560 (2,748) (2) 1,848
Net income — — — 38 — 38
Capital contributions from parent company — — 2 — — 2
Cash dividends on common stock — — — (39) — (39)
Other — — — (1) 1 —
Balance at June 30, 2021 1 38 4,562 (2,750) (1) 1,849
Net income — — — 50 — 50
Capital contributions from parent company — — 3 — — 3
Cash dividends on common stock — — — (39) — (39)
Balance at September 30, 2021 1 $ 38 $ 4,565 $ (2,739) $ (1) $ 1,863
Balance at December 31, 2021 1 $ 38 $ 4,582 $ (2,753) $ — $ 1,867
Net income — — — 42 — 42
Capital contributions from parent company — — 51 — — 51
Cash dividends on common stock — — — (43) — (43)
Balance at March 31, 2022 1 38 4,633 (2,754) — 1,917
Net income — — — 45 — 45
Capital contributions from parent company — — 1 — — 1
Cash dividends on common stock — — — (42) — (42)
Balance at June 30, 2022 1 38 4,634 (2,751) — 1,921
Net income — — — 62 — 62
Capital contributions from parent company — — 5 — — 5
Cash dividends on common stock — — — (42) — (42)
Balance at September 30, 2022 1 $ 38 $ 4,639 $ (2,731) $ — $ 1,946

~~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

SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)


		For the Three Months Ended September 30,				For the Nine Months Ended September 30,					For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
		(in millions)				(in millions)					(in millions)				(in millions)
Operating Revenues:	Operating Revenues:									Operating Revenues:
Wholesale revenues, non-affiliates	Wholesale revenues, non-affiliates	$	835	$	503	$	1,918	$	1,231	Wholesale revenues, non-affiliates	$	393	$	658	$	755	$	1,084
Wholesale revenues, affiliates	Wholesale revenues, affiliates	336		167		673		361		Wholesale revenues, affiliates	116		232		251		337
Other revenues	Other revenues	9		9		27		18		Other revenues	16		9		27		17
Total operating revenues	Total operating revenues	1,180		679		2,618		1,610		Total operating revenues	525		899		1,033		1,438
Operating Expenses:	Operating Expenses:									Operating Expenses:
Fuel	Fuel	605		259		1,274		540		Fuel	139		437		330		669
Purchased power	Purchased power	144		41		233		86		Purchased power	28		68		54		89

Other operations and maintenance	Other operations and maintenance	113		94		331		308		Other operations and maintenance	117		115		224		220
Depreciation and amortization	Depreciation and amortization	133		132		384		383		Depreciation and amortization	122		131		250		251
Taxes other than income taxes	Taxes other than income taxes	13		12		38		35		Taxes other than income taxes	12		12		25		25

Loss on sales-type leases		—		15		1		15

Gain on dispositions, net	Gain on dispositions, net	—		—		(2)		(39)		Gain on dispositions, net	—		—		(20)		(2)
Total operating expenses	Total operating expenses	1,008		553		2,259		1,328		Total operating expenses	418		763		863		1,252
Operating Income	Operating Income	172		126		359		282		Operating Income	107		136		170		186
Other Income and (Expense):	Other Income and (Expense):									Other Income and (Expense):
Interest expense, net of amounts capitalized	Interest expense, net of amounts capitalized	(32)		(36)		(105)		(111)		Interest expense, net of amounts capitalized	(33)		(36)		(66)		(73)
Other income (expense), net	Other income (expense), net	3		2		5		10		Other income (expense), net	2		1		4		3
Total other income and (expense)	Total other income and (expense)	(29)		(34)		(100)		(101)		Total other income and (expense)	(31)		(35)		(62)		(70)
Earnings Before Income Taxes	Earnings Before Income Taxes	143		92		259		181		Earnings Before Income Taxes	76		101		108		116
Income taxes (benefit)	Income taxes (benefit)	36		9		49		(3)		Income taxes (benefit)	6		25		(1)		13
Net Income	Net Income	107		83		210		184		Net Income	70		76		109		103
Net income (loss) attributable to noncontrolling interests		12		5		(55)		(27)
Net loss attributable to noncontrolling interests										Net loss attributable to noncontrolling interests	(15)		(22)		(78)		(67)
Net Income Attributable to Southern Power	Net Income Attributable to Southern Power	$	95	$	78	$	265	$	211	Net Income Attributable to Southern Power	$	85	$	98	$	187	$	170

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2022 2021 2022 2021
(in millions) (in millions)
Net Income $ 107 $ 83 $ 210 $ 184
Other comprehensive income (loss):
Qualifying hedges:
Changes in fair value, net of tax of
    $(11), $(7), $(35), and $(16), respectively
(35) (21) (106) (48)
Reclassification adjustment for amounts included in net income,
   net of tax of $9, $9, $35, and $22, respectively
28 27 106 66
Pension and other postretirement benefit plans:
Reclassification adjustment for amounts included in net income,
   net of tax of $—, $—, $—, and $1, respectively
— 1 1 2
Total other comprehensive income (loss) (7) 7 1 20
Comprehensive Income 100 90 211 204
Comprehensive income (loss) attributable to noncontrolling interests 12 5 (55) (27)
Comprehensive Income Attributable to Southern Power $ 88 $ 85 $ 266 $ 231


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
	(in millions)				(in millions)
Net Income	$	70	$	76	$	109	$	103
Other comprehensive income:
Qualifying hedges:
Changes in fair value, net of tax of $2, $(18), $(1), and $(23), respectively	5		(54)		(4)		(72)
Reclassification adjustment for amounts included in net income, net of tax of $2, $19, $2, and $26, respectively	5		57		7		79
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	10		3		3		8
Comprehensive Income	80		79		112		111
Comprehensive loss attributable to noncontrolling interests	(15)		(22)		(78)		(67)
Comprehensive Income Attributable to Southern Power	$	95	$	101	$	190	$	178

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

3331

Table of Contents Index to Financial Statements

SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


		For the Nine Months Ended September 30,					For the Six Months Ended June 30,
		2022		2021			2023		2022
		(in millions)					(in millions)
Operating Activities:	Operating Activities:					Operating Activities:
Net income	Net income	$	210	$	184	Net income	$	109	$	103
Adjustments to reconcile net income to net cash provided from operating activities —	Adjustments to reconcile net income to net cash provided from operating activities —					Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total	Depreciation and amortization, total	404		402		Depreciation and amortization, total	260		264
Deferred income taxes	Deferred income taxes	21		(16)		Deferred income taxes	(14)		14
Utilization of federal investment tax credits	Utilization of federal investment tax credits	218		237		Utilization of federal investment tax credits	99		239
Amortization of investment tax credits	Amortization of investment tax credits	(44)		(44)		Amortization of investment tax credits	(29)		(29)

Gain on dispositions, net	Gain on dispositions, net	(2)		(39)		Gain on dispositions, net	(20)		(2)
Other, net	Other, net	1		14		Other, net	(19)		(25)
Changes in certain current assets and liabilities —	Changes in certain current assets and liabilities —					Changes in certain current assets and liabilities —
-Receivables	-Receivables	(124)		(117)		-Receivables	77		(161)

-Prepaid income taxes	-Prepaid income taxes	22		63		-Prepaid income taxes	9		22
-Other current assets	-Other current assets	(15)		(5)		-Other current assets	(13)		(6)
-Accounts payable	-Accounts payable	95		55		-Accounts payable	(91)		114
-Accrued taxes	-Accrued taxes	55		15		-Accrued taxes	8		42

-Accrued compensation						-Accrued compensation	(11)		(8)
-Other current liabilities	-Other current liabilities	(14)		1		-Other current liabilities	(8)		(15)
Net cash provided from operating activities	Net cash provided from operating activities	827		750		Net cash provided from operating activities	357		552
Investing Activities:	Investing Activities:					Investing Activities:
Business acquisitions, net of cash acquired		—		(345)

Property additions	Property additions	(64)		(355)		Property additions	(25)		(34)
Proceeds from dispositions	Proceeds from dispositions	48		22		Proceeds from dispositions	59		48

Change in construction payables	Change in construction payables	(60)		(22)		Change in construction payables	(20)		(54)

Payments pursuant to LTSAs	Payments pursuant to LTSAs	(52)		(61)		Payments pursuant to LTSAs	(31)		(33)

Other investing activities	Other investing activities	—		8		Other investing activities	(1)		—
Net cash used for investing activities	Net cash used for investing activities	(128)		(753)		Net cash used for investing activities	(18)		(73)
Financing Activities:	Financing Activities:					Financing Activities:
Decrease in notes payable, net		(5)		(148)
Increase (decrease) in notes payable, net						Increase (decrease) in notes payable, net	(124)		94

Proceeds — Senior notes		—		400

Redemptions — Senior notes	Redemptions — Senior notes	(677)		—		Redemptions — Senior notes	—		(677)

Capital contributions from parent company	Capital contributions from parent company	330		4		Capital contributions from parent company	13		326
Return of capital to parent company		—		(271)

Capital contributions from noncontrolling interests	Capital contributions from noncontrolling interests	73		415		Capital contributions from noncontrolling interests	21		73
Distributions to noncontrolling interests	Distributions to noncontrolling interests	(175)		(204)		Distributions to noncontrolling interests	(87)		(115)

Payment of common stock dividends	Payment of common stock dividends	(148)		(153)		Payment of common stock dividends	(126)		(99)
Other financing activities	Other financing activities	(1)		(10)		Other financing activities	3		(5)
Net cash provided from (used for) financing activities		(603)		33
Net cash used for financing activities						Net cash used for financing activities	(300)		(403)
Net Change in Cash, Cash Equivalents, and Restricted Cash	Net Change in Cash, Cash Equivalents, and Restricted Cash	96		30		Net Change in Cash, Cash Equivalents, and Restricted Cash	39		76
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	135		183		Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	133		135
Cash, Cash Equivalents, and Restricted Cash at End of Period	Cash, Cash Equivalents, and Restricted Cash at End of Period	$	231	$	213	Cash, Cash Equivalents, and Restricted Cash at End of Period	$	172	$	211
Supplemental Cash Flow Information:	Supplemental Cash Flow Information:					Supplemental Cash Flow Information:
Cash paid (received) during the period for —	Cash paid (received) during the period for —					Cash paid (received) during the period for —
Interest (net of $— and $5 capitalized for 2022 and 2021, respectively)		$	120	$	118
Interest						Interest	$	74	$	91
Income taxes, net	Income taxes, net	(202)		(235)		Income taxes, net	(64)		(263)
Noncash transactions —	Noncash transactions —					Noncash transactions —
Contributions from noncontrolling interests		—		89
Contributions of wind turbine equipment		—		82

Accrued property additions at end of period	Accrued property additions at end of period	30		53		Accrued property additions at end of period	7		28
Right-of-use assets obtained under operating leases		—		66

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 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)


Assets	At June 30, 2023		At December 31, 2022
	(in millions)
Current Assets:
Cash and cash equivalents	$	169	$	131
Receivables —
Customer accounts, net	157		226
Affiliated	64		51
Other	67		70

Materials and supplies	82		88

Prepaid income taxes	228		5




Other current assets	54		50
Total current assets	821		621
Property, Plant, and Equipment:
In service	14,675		14,658
Less: Accumulated provision for depreciation	3,875		3,661
Plant in service, net of depreciation	10,800		10,997
Construction work in progress	18		41

Total property, plant, and equipment	10,818		11,038
Other Property and Investments:

Intangible assets, net of amortization of $139 and $129, respectively	253		263
Equity investments in unconsolidated subsidiaries	—		49
Net investment in sales-type leases	151		154
Total other property and investments	404		466
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization	485		489
Prepaid LTSAs	209		193




Other deferred charges and assets	309		274
Total deferred charges and other assets	1,003		956
Total Assets	$	13,046	$	13,081

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, 2023		At December 31, 2022
	(in millions)
Current Liabilities:
Securities due within one year	$	291	$	290
Notes payable	100		225
Accounts payable —
Affiliated	73		139
Other	30		67

Accrued taxes	31		24

Accrued interest	24		28



Other current liabilities	88		111
Total current liabilities	637		884
Long-term Debt	2,699		2,689
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	598		279
Accumulated deferred ITCs	1,527		1,556





Operating lease obligations	510		514
Other deferred credits and liabilities	228		243
Total deferred credits and other liabilities	2,863		2,592
Total Liabilities	6,199		6,165










Total Stockholders' Equity (See accompanying statements)	6,847		6,916
Total Liabilities and Stockholders' Equity	$	13,046	$	13,081

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 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, 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

Assets At September 30, 2022 At December 31, 2021
(in millions)
Current Assets:
Cash and cash equivalents $ 229 $ 107
Receivables —
Customer accounts, net 232 139
Affiliated 95 51
Other 24 29
Materials and supplies 112 106
Prepaid income taxes 5 27
Other current assets 51 46
Total current assets 748 505
Property, Plant, and Equipment:
In service 14,641 14,585
Less: Accumulated provision for depreciation 3,589 3,241
Plant in service, net of depreciation 11,052 11,344
Construction work in progress 48 45
Total property, plant, and equipment 11,100 11,389
Other Property and Investments:
Intangible assets, net of amortization of $124 and $109, respectively 268 282
Equity investments in unconsolidated subsidiaries 49 86
Net investment in sales-type leases 155 161
Total other property and investments 472 529
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization 491 479
Prepaid LTSAs 210 210
Other deferred charges and assets 262 278
Total deferred charges and other assets 963 967
Total Assets $ 13,283 $ 13,390




Balance at December 31, 2022	$	1,069	$	1,741	$	(18)	$	2,792	$	4,124	$	6,916
Net income (loss)	—		102		—		102		(63)		39


Other comprehensive income (loss)	—		—		(7)		(7)		—		(7)
Cash dividends on common stock	—		(63)		—		(63)		—		(63)

Capital contributions from noncontrolling interests	—		—		—		—		21		21
Distributions to noncontrolling interests	—		—		—		—		(48)		(48)




Balance at March 31, 2023	1,069		1,780		(25)		2,824		4,034		6,858
Net income (loss)	—		85		—		85		(15)		70

Capital contributions from parent company	14		—		—		14		—		14
Other comprehensive income	—		—		10		10		—		10
Cash dividends on common stock	—		(63)		—		(63)		—		(63)


Distributions to noncontrolling interests	—		—		—		—		(42)		(42)




Other	—		—		1		1		(1)		—
Balance at June 30, 2023	$	1,083	$	1,802	$	(14)	$	2,871	$	3,976	$	6,847

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 September 30, 2022 At December 31, 2021
(in millions)
Current Liabilities:
Securities due within one year $ 290 $ 679
Notes payable 208 211
Accounts payable —
Affiliated 179 92
Other 70 85
Accrued taxes 208 14
Accrued interest 22 32
Other current liabilities 96 140
Total current liabilities 1,073 1,253
Long-term Debt 2,642 3,009
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 315 215
Accumulated deferred ITCs 1,571 1,614
Operating lease obligations 515 497
Other deferred credits and liabilities 287 204
Total deferred credits and other liabilities 2,688 2,530
Total Liabilities 6,403 6,792
Total Stockholders' Equity (See accompanying statements)
6,880 6,598
Total Liabilities and Stockholders' Equity $ 13,283 $ 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 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
Net income — 78 — 78 5 83
Other comprehensive income — — 7 7 — 7
Cash dividends on common stock — (51) — (51) — (51)
Capital contributions from
   noncontrolling interests — — — — 73 73
Distributions to noncontrolling interests — — — — (95) (95)
Balance at September 30, 2021 $ 643 $ 1,581 $ (47) $ 2,177 $ 4,530 $ 6,707

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

~~Table of ContentsIndex to Financial Statements~~

~~SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES~~

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

Paid-In
Capital Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss) Total Common
Stockholders' Equity Noncontrolling Interests Total
(in millions)
Balance at December 31, 2021 $ 638 $ 1,585 $ (27) $ 2,196 $ 4,402 $ 6,598
Net income (loss) — 72 — 72 (45) 27
Other comprehensive income — — 5 5 — 5
Cash dividends on common stock — (49) — (49) — (49)
Capital contributions from
noncontrolling interests — — — — 73 73
Distributions to noncontrolling interests — — — — (98) (98)
Balance at March 31, 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
Net income — 95 — 95 12 107
Capital contributions from parent company 9 — — 9 — 9
Other comprehensive income (loss) — — (7) (7) — (7)
Cash dividends on common stock — (49) — (49) — (49)
Distributions to noncontrolling interests — — — — (57) (57)
Other — (1) (1) (2) — (2)
Balance at September 30, 2022 $ 969 $ 1,701 $ (27) $ 2,643 $ 4,237 $ 6,880

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

Table of Contents Index to Financial Statements

SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)


		For the Three Months Ended September 30,				For the Nine Months Ended September 30,					For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
		(in millions)				(in millions)					(in millions)				(in millions)
Operating Revenues:	Operating Revenues:									Operating Revenues:
Natural gas revenues (includes revenue taxes of $15, $12, $118, and $89, respectively)		$	858	$	624	$	3,998	$	2,991
Alternative revenue programs		(1)		(1)		—		3
Natural gas revenues (includes revenue taxes of $25, $33, $91, and $104, respectively)										Natural gas revenues (includes revenue taxes of $25, $33, $91, and $104, respectively)	$	852	$	1,083	$	2,728	$	3,140

Total operating revenues	Total operating revenues	857		623		3,998		2,994		Total operating revenues	852		1,083		2,728		3,140
Operating Expenses:	Operating Expenses:									Operating Expenses:
Cost of natural gas	Cost of natural gas	294		129		1,840		943		Cost of natural gas	199		452		1,097		1,546

Other operations and maintenance	Other operations and maintenance	252		238		829		776		Other operations and maintenance	309		266		615		570
Depreciation and amortization	Depreciation and amortization	140		133		414		396		Depreciation and amortization	143		138		284		275
Taxes other than income taxes	Taxes other than income taxes	45		36		208		166		Taxes other than income taxes	59		62		161		163

Gain on dispositions, net		—		(121)		(5)		(127)

Total operating expenses	Total operating expenses	731		415		3,286		2,154		Total operating expenses	710		918		2,157		2,554
Operating Income	Operating Income	126		208		712		840		Operating Income	142		165		571		586
Other Income and (Expense):	Other Income and (Expense):									Other Income and (Expense):
Earnings from equity method investments	Earnings from equity method investments	34		25		105		14		Earnings from equity method investments	28		31		72		71
Interest expense, net of amounts capitalized	Interest expense, net of amounts capitalized	(65)		(57)		(187)		(175)		Interest expense, net of amounts capitalized	(73)		(61)		(150)		(122)
Other income (expense), net	Other income (expense), net	15		13		47		(66)		Other income (expense), net	17		16		32		32
Total other income and (expense)	Total other income and (expense)	(16)		(19)		(35)		(227)		Total other income and (expense)	(28)		(14)		(46)		(19)
Earnings Before Income Taxes	Earnings Before Income Taxes	110		189		677		613		Earnings Before Income Taxes	114		151		525		567
Income taxes	Income taxes	27		133		161		224		Income taxes	29		36		132		134
Net Income	Net Income	$	83	$	56	$	516	$	389	Net Income	$	85	$	115	$	393	$	433

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2022 2021 2022 2021
(in millions) (in millions)
Net Income $ 83 $ 56 $ 516 $ 389
Other comprehensive income:
Qualifying hedges:
Changes in fair value, net of tax of
$8, $8, $16, and $11, respectively
19 23 39 32
Reclassification adjustment for amounts included in net income,
net of tax of $(2), $—, $(7), and $1, respectively
(5) (2) (17) 1
Total other comprehensive income 14 21 22 33
Comprehensive Income $ 97 $ 77 $ 538 $ 422


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
	(in millions)				(in millions)
Net Income	$	85	$	115	$	393	$	433
Other comprehensive income (loss):
Qualifying hedges:
Changes in fair value, net of tax of $—, $(2), $(9), and $8, respectively	—		(5)		(24)		22
Reclassification adjustment for amounts included in net income, net of tax of $3, $(3), $9, and $(5), respectively	7		(7)		21		(13)



Total other comprehensive income (loss)	7		(12)		(3)		9
Comprehensive Income	$	92	$	103	$	390	$	442

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

3936

Table of Contents Index to Financial Statements

SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


		For the Nine Months Ended September 30,					For the Six Months Ended June 30,
		2022		2021			2023		2022
		(in millions)					(in millions)
Operating Activities:	Operating Activities:					Operating Activities:
Net income	Net income	$	516	$	389	Net income	$	393	$	433
Adjustments to reconcile net income to net cash provided from operating activities —	Adjustments to reconcile net income to net cash provided from operating activities —					Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total	Depreciation and amortization, total	414		396		Depreciation and amortization, total	284		275
Deferred income taxes	Deferred income taxes	109		289		Deferred income taxes	52		35

Mark-to-market adjustments		(34)		147
Impairment of PennEast Pipeline investment		—		84
Gain on dispositions, net		(5)		(127)

Natural gas cost under recovery – long-term	Natural gas cost under recovery – long-term	207		(79)		Natural gas cost under recovery – long-term	—		192

Other, net	Other, net	27		32		Other, net	12		55
Changes in certain current assets and liabilities —	Changes in certain current assets and liabilities —					Changes in certain current assets and liabilities —
-Receivables	-Receivables	301		311		-Receivables	667		244
-Natural gas for sale, net of temporary LIFO liquidation	-Natural gas for sale, net of temporary LIFO liquidation	(136)		20		-Natural gas for sale, net of temporary LIFO liquidation	196		335
-Prepaid income taxes	-Prepaid income taxes	(77)		(148)		-Prepaid income taxes	(3)		(70)
-Natural gas cost under recovery		(124)		(432)

-Other current assets	-Other current assets	7		(98)		-Other current assets	79		(75)
-Accounts payable	-Accounts payable	342		30		-Accounts payable	(276)		101

-Natural gas cost over recovery						-Natural gas cost over recovery	161		—
-Other current liabilities	-Other current liabilities	(15)		(57)		-Other current liabilities	(35)		(47)
Net cash provided from operating activities	Net cash provided from operating activities	1,532		757		Net cash provided from operating activities	1,530		1,478
Investing Activities:	Investing Activities:					Investing Activities:
Property additions	Property additions	(1,063)		(1,045)		Property additions	(741)		(637)
Cost of removal, net of salvage	Cost of removal, net of salvage	(84)		(74)		Cost of removal, net of salvage	(50)		(53)
Change in construction payables, net	Change in construction payables, net	(103)		4		Change in construction payables, net	11		13

Proceeds from dispositions		—		126

Other investing activities	Other investing activities	11		23		Other investing activities	19		19
Net cash used for investing activities	Net cash used for investing activities	(1,239)		(966)		Net cash used for investing activities	(761)		(658)
Financing Activities:	Financing Activities:					Financing Activities:
Increase (decrease) in notes payable, net		(749)		38
Decrease in notes payable, net						Decrease in notes payable, net	(372)		(593)
Proceeds —	Proceeds —					Proceeds —
Short-term borrowings	Short-term borrowings	50		300		Short-term borrowings	—		50
First mortgage bonds		100		100
Senior notes		500		450

Other long-term debt						Other long-term debt	19		—
Redemptions —	Redemptions —					Redemptions —

Short-term borrowings	Short-term borrowings	(150)		—		Short-term borrowings	(200)		(150)
Senior notes		—		(300)

Medium-term notes	Medium-term notes	(46)		(30)		Medium-term notes	—		(46)
Capital contributions from parent company	Capital contributions from parent company	357		63		Capital contributions from parent company	238		349
Payment of common stock dividends	Payment of common stock dividends	(389)		(397)		Payment of common stock dividends	(293)		(260)
Other financing activities		14		(2)
Net cash provided from (used for) financing activities		(313)		222

Net cash used for financing activities						Net cash used for financing activities	(608)		(650)
Net Change in Cash, Cash Equivalents, and Restricted Cash	Net Change in Cash, Cash Equivalents, and Restricted Cash	(20)		13		Net Change in Cash, Cash Equivalents, and Restricted Cash	161		170
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	48		19		Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	83		48
Cash, Cash Equivalents, and Restricted Cash at End of Period	Cash, Cash Equivalents, and Restricted Cash at End of Period	$	28	$	32	Cash, Cash Equivalents, and Restricted Cash at End of Period	$	244	$	218
Supplemental Cash Flow Information:	Supplemental Cash Flow Information:					Supplemental Cash Flow Information:
Cash paid during the period for —	Cash paid during the period for —					Cash paid during the period for —
Interest (net of $7 and $6 capitalized for 2022 and 2021, respectively)		$	186	$	173
Interest (net of $8 and $4 capitalized for 2023 and 2022, respectively)						Interest (net of $8 and $4 capitalized for 2023 and 2022, respectively)	$	145	$	129
Income taxes, net	Income taxes, net	193		85		Income taxes, net	85		210
Noncash transactions — Accrued property additions at end of period		10		146
Noncash transactions —						Noncash transactions —
Accrued property additions at end of period						Accrued property additions at end of period	189		126
Right-of-use assets obtained under operating leases						Right-of-use assets obtained under operating leases	2		—

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

4037

Table of Contents Index to Financial Statements

SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


Assets	Assets	At September 30, 2022		At December 31, 2021		Assets	At June 30, 2023		At December 31, 2022
		(in millions)					(in millions)
Current Assets:	Current Assets:					Current Assets:
Cash and cash equivalents	Cash and cash equivalents	$	26	$	45	Cash and cash equivalents	$	242	$	81
Receivables —	Receivables —					Receivables —

Customer accounts	Customer accounts	296		462		Customer accounts	319		616
Unbilled revenues	Unbilled revenues	122		278		Unbilled revenues	86		453

Other accounts and notes	Other accounts and notes	58		49		Other accounts and notes	77		76
Accumulated provision for uncollectible accounts	Accumulated provision for uncollectible accounts	(41)		(39)		Accumulated provision for uncollectible accounts	(62)		(50)

Natural gas for sale	Natural gas for sale	498		362		Natural gas for sale	234		438

Prepaid expenses	Prepaid expenses	192		114		Prepaid expenses	115		93

Natural gas cost under recovery	Natural gas cost under recovery	390		266		Natural gas cost under recovery	—		108

Other regulatory assets	Other regulatory assets	121		136		Other regulatory assets	127		119
Other current assets	Other current assets	118		82		Other current assets	119		104
Total current assets	Total current assets	1,780		1,755		Total current assets	1,257		2,038
Property, Plant, and Equipment:	Property, Plant, and Equipment:					Property, Plant, and Equipment:
In service	In service	19,656		18,880		In service	20,113		19,723
Less: Accumulated depreciation	Less: Accumulated depreciation	5,270		5,067		Less: Accumulated depreciation	5,411		5,276
Plant in service, net of depreciation	Plant in service, net of depreciation	14,386		13,813		Plant in service, net of depreciation	14,702		14,447
Construction work in progress	Construction work in progress	871		684		Construction work in progress	1,179		909
Total property, plant, and equipment	Total property, plant, and equipment	15,257		14,497		Total property, plant, and equipment	15,881		15,356
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	1,125		1,173		Equity investments in unconsolidated subsidiaries	1,252		1,276
Other intangible assets, net of amortization of $154 and $145, respectively		28		37
Other intangible assets, net of amortization of $161 and $156, respectively						Other intangible assets, net of amortization of $161 and $156, respectively	21		26
Miscellaneous property and investments	Miscellaneous property and investments	27		19		Miscellaneous property and investments	25		28
Total other property and investments	Total other property and investments	6,195		6,244		Total other property and investments	6,313		6,345
Deferred Charges and Other Assets:	Deferred Charges and Other Assets:					Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization	Operating lease right-of-use assets, net of amortization	61		70		Operating lease right-of-use assets, net of amortization	55		57
Prepaid pension costs	Prepaid pension costs	200		175		Prepaid pension costs	197		183

Other regulatory assets, deferred	Other regulatory assets, deferred	468		689		Other regulatory assets, deferred	477		497

Other deferred charges and assets	Other deferred charges and assets	136		130		Other deferred charges and assets	151		145
Total deferred charges and other assets	Total deferred charges and other assets	865		1,064		Total deferred charges and other assets	880		882
Total Assets	Total Assets	$	24,097	$	23,560	Total Assets	$	24,331	$	24,621

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

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SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


Liabilities and Stockholder's Equity	Liabilities and Stockholder's Equity	At September 30, 2022		At December 31, 2021		Liabilities and Stockholder's Equity	At June 30, 2023		At December 31, 2022
		(in millions)					(in millions)
Current Liabilities:	Current Liabilities:					Current Liabilities:
Securities due within one year	Securities due within one year	$	—	$	47	Securities due within one year	$	401	$	400
Notes payable	Notes payable	360		1,209		Notes payable	196		768

Accounts payable —	Accounts payable —					Accounts payable —
Affiliated	Affiliated	64		58		Affiliated	125		104
Other	Other	592		361		Other	423		701
Customer deposits	Customer deposits	137		95		Customer deposits	115		125

Accrued taxes	Accrued taxes	71		124		Accrued taxes	63		77
Accrued interest	Accrued interest	67		59		Accrued interest	68		67

Accrued compensation	Accrued compensation	92		110		Accrued compensation	70		105

Natural gas cost over recovery						Natural gas cost over recovery	161		—
Other regulatory liabilities	Other regulatory liabilities	15		8		Other regulatory liabilities	85		36
Other current liabilities	Other current liabilities	168		155		Other current liabilities	176		187
Total current liabilities	Total current liabilities	1,566		2,226		Total current liabilities	1,883		2,570
Long-term Debt	Long-term Debt	7,361		6,855		Long-term Debt	7,050		7,042
Deferred Credits and Other Liabilities:	Deferred Credits and Other Liabilities:					Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	Accumulated deferred income taxes	1,662		1,555		Accumulated deferred income taxes	1,611		1,560
Deferred credits related to income taxes	Deferred credits related to income taxes	793		816		Deferred credits related to income taxes	774		788

Employee benefit obligations	Employee benefit obligations	158		176		Employee benefit obligations	109		120

Operating lease obligations	Operating lease obligations	53		59		Operating lease obligations	48		51
Other cost of removal obligations	Other cost of removal obligations	1,696		1,683		Other cost of removal obligations	1,735		1,707
Accrued environmental remediation	Accrued environmental remediation	217		197		Accrued environmental remediation	190		207

Other deferred credits and liabilities	Other deferred credits and liabilities	153		77		Other deferred credits and liabilities	193		179
Total deferred credits and other liabilities	Total deferred credits and other liabilities	4,732		4,563		Total deferred credits and other liabilities	4,660		4,612
Total Liabilities	Total Liabilities	13,659		13,644		Total Liabilities	13,593		14,224

Common Stockholder's Equity (See accompanying statements)	Common Stockholder's Equity (See accompanying statements)	10,438		9,916		Common Stockholder's Equity (See accompanying statements)	10,738		10,397
Total Liabilities and Stockholder's Equity	Total Liabilities and Stockholder's Equity	$	24,097	$	23,560	Total Liabilities and Stockholder's Equity	$	24,331	$	24,621

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

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SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (UNAUDITED)


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

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

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

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

Balance at June 30, 2021		10,012		(73)		(10)		9,929
Net income		—		56		—		56

Capital contributions from parent company		2		—		—		2
Other comprehensive income		—		—		21		21
Cash dividends on common stock		—		(132)		—		(132)

Balance at September 30, 2021		$	10,014	$	(149)	$	11	$	9,876
											(in millions)
Balance at December 31, 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		Net income	—		115		—		115

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

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

Balance at December 31, 2022										Balance at December 31, 2022	$	10,445	$	(79)	$	31	$	10,397
Net income	Net income	—		83		—		83		Net income	—		309		—		309

Capital contributions from parent company										Capital contributions from parent company	203		—		—		203
Other comprehensive income (loss)										Other comprehensive income (loss)	—		—		(10)		(10)
Cash dividends on common stock										Cash dividends on common stock	—		(146)		—		(146)
Other										Other	1		(1)		—		—
Balance at March 31, 2023										Balance at March 31, 2023	10,649		83		21		10,753
Net income										Net income	—		85		—		85

Capital contributions from parent company	Capital contributions from parent company	11		—		—		11		Capital contributions from parent company	40		—		—		40
Other comprehensive income	Other comprehensive income	—		—		14		14		Other comprehensive income	—		—		7		7
Cash dividends on common stock	Cash dividends on common stock	—		(130)		—		(130)		Cash dividends on common stock	—		(147)		—		(147)

Balance at September 30, 2022		$	10,397	$	(5)	$	46	$	10,438
Balance at June 30, 2023										Balance at June 30, 2023	$	10,689	$	21	$	28	$	10,738

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 K
Georgia Power			A, B, C, D, F, G, H, I, J
Mississippi Power			A, B, C, D, F, G, H, I, J
Southern Power			A, C, D, E, F, G, H, I, J K
Southern Company Gas			A, B, C, D, E, F, G, H, I, J, K L

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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~~2022 have been derived from the audited financial statements of each Registrant. In the opinion of each Registrant's management, the information regarding such Registrant furnished herein reflects all adjustments, which, except as otherwise disclosed, are of a normal recurring nature, necessary to present fairly the results of operations for the periods ended ~~September~~June 30, ~~2022~~2023 and ~~2021.~~2022. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although each Registrant believes that the disclosures regarding such Registrant are adequate to make the information presented not misleading. Disclosures which would substantially duplicate the disclosures in the Form 10-K and details which have not changed significantly in amount or composition since the filing of the Form 10-K are generally omitted from this Quarterly Report on Form 10-Q unless specifically required by GAAP. Therefore, these Condensed Financial Statements should be read in conjunction with the financial statements and the notes thereto included in the Form 10-K. Due to the seasonal variations in the demand for energy and other factors, operating results for the periods presented are not necessarily indicative of the operating results to be expected for the full year.

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

Goodwill and Other Intangible Assets

Goodwill at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 was as follows:


	Goodwill
	(in millions)
Southern Company	$	~~5,280~~5,161
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 goodwill impairment indicators arise.

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Other intangible assets were as follows:


		At September 30, 2022						At December 31, 2021							At June 30, 2023						At December 31, 2022
		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:
Subject to amortization:														Subject to amortization:
Customer relationships	Customer relationships	$	212	$	(159)	$	53	$	212	$	(150)	$	62	Customer relationships	$	212	$	(167)	$	45	$	212	$	(162)	$	50
Trade names	Trade names	64		(44)		20		64		(38)		26		Trade names	64		(49)		15		64		(44)		20
PPA fair value adjustments	PPA fair value adjustments	390		(124)		266		390		(109)		281		PPA fair value adjustments	390		(139)		251		390		(129)		261
Other	Other	5		(4)		1		11		(10)		1		Other	3		(3)		—		5		(5)		—
Total other intangible assets subject to amortization		$	671	$	(331)	$	340	$	677	$	(307)	$	370
Other intangible assets not subject to amortization:
Federal Communications Commission licenses		75		—		75		75		—		75
Total subject to amortization														Total subject to amortization	$	669	$	(358)	$	311	$	671	$	(340)	$	331
Not subject to amortization:														Not subject to amortization:
FCC licenses														FCC licenses	75		—		75		75		—		75
Total other intangible assets	Total other intangible assets	$	746	$	(331)	$	415	$	752	$	(307)	$	445	Total other intangible assets	$	744	$	(358)	$	386	$	746	$	(340)	$	406

Southern Power
Other intangible assets subject to amortization:
Southern Power(*)														Southern Power(*)
PPA fair value adjustments	PPA fair value adjustments	$	390	$	(124)	$	266	$	390	$	(109)	$	281	PPA fair value adjustments	$	390	$	(139)	$	251	$	390	$	(129)	$	261

Southern Company Gas
Other intangible assets subject to amortization:
Southern Company Gas(*)														Southern Company Gas(*)

Gas marketing services	Gas marketing services													Gas marketing services
Customer relationships	Customer relationships	$	156	$	(137)	$	19	$	156	$	(130)	$	26	Customer relationships	$	156	$	(142)	$	14	$	156	$	(139)	$	17
Trade names	Trade names	26		(17)		9		26		(15)		11		Trade names	26		(19)		7		26		(17)		9
Total other intangible assets subject to amortization		$	182	$	(154)	$	28	$	182	$	(145)	$	37
Total other intangible assets														Total other intangible assets	$	182	$	(161)	$	21	$	182	$	(156)	$	26

(*) All subject to amortization.

Amortization associated with other intangible assets was as follows:


	Three Months Ended		Six Months Ended		Three Months Ended		Six Months Ended
	June 30, 2023				June 30, 2022
	(in millions)
Southern Company(a)	$	9	$	18	$	9	$	19
Southern Power(b)	5		10		5		10
Southern Company Gas	2		5		2		5

(a)Includes $5 million, $10 million, $5 million, and $10 million for the three and six months ended June 30, 2023 and 2022, respectively, recorded as a reduction to operating revenues.

(b)Recorded as a reduction to operating revenues.

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

~~Amortization associated with other intangible assets was as follows:~~

Three Months Ended Nine Months Ended
September 30, 2022
(in millions)
Southern Company(a)
$ 11 $ 30
Southern Power(b)
5 15
Southern Company Gas 4 9

~~(a)Includes $5 million and $15 million for the three and nine months ended September 30, 2022, respectively, recorded as a reduction to operating revenues.~~

~~(b)Recorded as a reduction to operating revenues.~~

Cash, Cash Equivalents, and Restricted Cash

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


		Southern Company				Southern Power				Southern Company Gas					Southern Company		Georgia Power		Southern Power		Southern Company Gas
		September 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021			(in millions)
		(in millions)
At June 30, 2023														At June 30, 2023
Cash and cash equivalents	Cash and cash equivalents	$	2,009	$	1,798	$	229	$	107	$	26	$	45	Cash and cash equivalents	$	2,123	$	44	$	169	$	242
Restricted cash(a):	Restricted cash(a):													Restricted cash(a):
Other current assets	Other current assets	2		2		—		—		2		2		Other current assets	83		80		—		3
Other deferred charges and assets	Other deferred charges and assets	3		29		3		29		—		—		Other deferred charges and assets	39		36		3		—
Total cash, cash equivalents, and restricted cash(b)	Total cash, cash equivalents, and restricted cash(b)	$	2,013	$	1,829	$	231	$	135	$	28	$	48	Total cash, cash equivalents, and restricted cash(b)	$	2,244	$	160	$	172	$	244

At December 31, 2022														At December 31, 2022
Cash and cash equivalents														Cash and cash equivalents	$	1,917	$	364	$	131	$	81
Restricted cash(a):														Restricted cash(a):
Other current assets														Other current assets	62		60		—		2
Other deferred charges and assets														Other deferred charges and assets	58		56		3		—
Total cash, cash equivalents, and restricted cash(b)														Total cash, cash equivalents, and restricted cash(b)	$	2,037	$	480	$	133	$	83

(a)For Georgia Power, reflects $116 million at both June 30, 2023 and December 31, 2022 related to proceeds from the issuance of solid waste disposal facility revenue bonds in 2022. For Southern Power, reflects $3 million ~~and $10 million~~ at ~~September~~both June 30, ~~2022~~2023 and December 31, ~~2021, respectively,~~2022 held to fund estimated construction completion costs at the Deuel Harvest wind ~~facility and $19 million at December 31, 2021 related to tax equity contributions restricted until the Garland battery energy storage facility achieved final contracted capacity.~~facility. For Southern Company Gas, reflects collateral for workers' compensation, life insurance, and long-term disability insurance.

(b)Total may not add due to rounding.

Natural Gas for Sale

With the exception of Nicor Gas, Southern Company Gas records natural gas inventories on a WACOG basis. For any declines in market prices below the WACOG considered to be other than temporary, an adjustment is recorded to reduce the value of natural gas inventories to market value. Nicor Gas' natural gas inventory is carried at cost on a LIFO basis. Inventory decrements occurring during the year that are restored prior to ~~year end~~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~~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 had no~~Gas' inventory decrement at ~~September~~June 30, ~~2022.~~2023 is expected to be restored prior to year-end.

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

~~Depreciation and Amortization~~Storm Damage Reserves

See Note 51 to the financial statements in Item 8 of the Form 10-K under ~~"Depreciation~~"Storm Damage and ~~Amortization"~~Reliability Reserves" for additional information.

Storm damage reserve activity for the traditional electric operating companies during the six months ended June 30, 2023 was as follows:


	Southern Company		Alabama Power		Georgia Power		Mississippi Power
	(in millions)
Balance at December 31, 2022	$	216	$	97	$	83	$	36
Accrual	28		6		16		6
Weather-related damages	(85)		(24)		(58)		(3)
Balance at June 30, 2023	$	159	$	79	$	41	$	39

Asset Retirement Obligations

See Note 6 to the financial statements in Item 8 of the Form 10-K for additional information.

~~Alabama~~Following initial criticality on March 6, 2023, Georgia Power recorded AROs of approximately $90 million related to Plant Vogtle Unit 3. See Note (B) under "Georgia Power – Nuclear Construction" for additional information on Plant Vogtle Units 3 and 4.

~~On September 23, 2022, the FERC authorized~~In June 2023, Alabama Power ~~to use~~completed an updated ~~depreciation rates from its 2021 depreciation~~decommissioning cost site study ~~effective January 1, 2023.~~for Plant Farley. The estimated cost of decommissioning based on the study ~~was also provided to the Alabama PSC, and the new depreciation rates will be reflected~~resulted in a decrease in Alabama Power's ~~future rate filings.~~ ARO liability of approximately $15 million. See "Nuclear Decommissioning" herein for additional information.

Nuclear Decommissioning

See Note 26 to the financial statements ~~under "Alabama Power"~~ in Item 8 of the Form 10-K under "Nuclear Decommissioning" for additional information. Site study cost is the estimate to decommission a specific facility as of the site study year. The decommissioning cost estimates are based on prompt dismantlement and removal of the plant from service. The actual decommissioning costs may vary from these estimates because of changes in the assumed date of decommissioning, changes in NRC requirements, or changes in the assumptions used in making these estimates.

~~Southern~~The estimated costs of decommissioning Plant Farley based on Alabama Power's June 2023 site study are as follows:


	Plant Farley
Decommissioning periods:
Beginning year	2037
Completion year	2087

	(in millions)
Site study costs:
Radiated structures	$	1,402
Spent fuel management	513
Non-radiated structures	133
Total site study costs	$	2,048

For ratemaking purposes, Alabama Power's decommissioning costs are based on the site study. Significant assumptions used to determine these costs for ratemaking were an estimated inflation rate of 4.5% and an estimated trust earnings rate of 7.0%.

Table of ContentsIndex to Financial Statements

NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Amounts previously contributed to the external trust funds are currently projected to be adequate to meet the updated decommissioning obligations. Alabama Power's site-specific estimates of decommissioning costs for Plant Farley are updated every five years. The next site study for Alabama Power

~~Effective January 1, 2022, Southern~~ is expected to be completed in 2028. Projections of funds are reviewed with the Alabama PSC to ensure that, over time, the deposits and earnings of the funds in the external trust will provide adequate funding to cover the site-specific costs. If necessary, Alabama Power ~~revised~~would seek the ~~depreciable lives of its wind generating facilities from up~~Alabama PSC's approval to ~~30 years to up to 35 years. This revision resulted~~address any changes in ~~an immaterial decrease in depreciation for the three~~a manner consistent with NRC and ~~nine months ended September 30, 2022.~~other applicable requirements.

(B) REGULATORY MATTERS

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

The recovery balances for certain retail regulatory clauses of the traditional electric operating companies and Southern Company Gas at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 were as follows:


Regulatory Clause	Regulatory Clause	Balance Sheet Line Item	September 30, 2022		December 31, 2021		Regulatory Clause	Balance Sheet Line Item	June 30, 2023		December 31, 2022
			(in millions)						(in millions)
Alabama Power	Alabama Power						Alabama Power

Rate CNP Compliance	Rate CNP Compliance	Other regulatory liabilities, deferred	$	4	$	—	Rate CNP Compliance	Other regulatory assets, current	$	20	$	47
		Other regulatory assets, deferred	—		16
								Other regulatory assets, deferred	40		—
Rate CNP PPA	Rate CNP PPA	Other regulatory assets, deferred	125		84		Rate CNP PPA	Other regulatory assets, current	17		18
								Other regulatory assets, deferred	95		102

Retail Energy Cost Recovery(*)		Other regulatory assets, current	93		—
		Other regulatory assets, deferred	413		126

Retail Energy Cost Recovery							Retail Energy Cost Recovery	Other regulatory assets, current	146		102
								Other regulatory assets, deferred	283		520
Georgia Power	Georgia Power						Georgia Power
Fuel Cost Recovery(*)							Fuel Cost Recovery(*)	Receivables – under recovered fuel clause revenues	$	695	$	—
								Deferred under recovered fuel clause revenues	1,489		2,056
Fuel Cost Recovery		Deferred under recovered fuel clause revenues	$	1,697	$	410

Mississippi Power	Mississippi Power						Mississippi Power

Fuel Cost Recovery	Fuel Cost Recovery	Other customer accounts receivable	$	13	$	4	Fuel Cost Recovery	Receivables – customer accounts, net	$	24	$	1
Ad Valorem Tax	Ad Valorem Tax	Other regulatory assets, current	12		12		Ad Valorem Tax	Other regulatory assets, current	6		12
		Other regulatory assets, deferred	22		37			Other regulatory assets, deferred	16		19

Southern Company Gas	Southern Company Gas						Southern Company Gas

Natural Gas Cost Recovery	Natural Gas Cost Recovery	Natural gas cost under recovery	$	390	$	266	Natural Gas Cost Recovery	Natural gas cost under recovery	$	—	$	108
		Other regulatory assets, deferred	—		207			Natural gas cost over recovery	161		—

(*)~~In accordance with an Alabama PSC order issued on February 1, 2022, Alabama~~See "Georgia Power ~~applied $126 million of its 2021 Rate RSE refund to reduce the Rate ECR under recovered balance.~~– Fuel Cost Recovery" herein for additional information.

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~~(UNAUDITED)~~

Alabama Power

Certificates of Convenience and Necessity

~~On July 12, 2022,~~In 2020, the Alabama PSC approved a certificate of convenience and necessity ~~(CCN)~~ authorizing ~~Alabama Power to complete the acquisition of the Calhoun Generating Station, which was approved by the FERC on March 25, 2022. The transaction clo~~sed on September 30, 2022 and, on October 3, 2022, Alabama Power filed Rate CNP New Plant with the Alabama PSC to recover the related costs. The filing reflected an increase in annual revenues of $34 million, or 0.6%, effective with the billing month of November 2022. Alabama Power expects to recover all approved costs associated with the acquisition through existing rate mechanisms as outlined in Note 2 to the financial statements in Item 8 of the Form 10-K. See Note (K) under "Alabama Power" for additional information.

With the completion of the Calhoun Generating Station acquisition, Alabama Power expects to retire Plant Barry Unit 5 as early as 2023. In September 2022, Alabama Power reclassified approximately $600 million for Plant Barry Unit 5 from plant in service, net of depreciation to other utility plant, net and will continue to depreciate the asset according to the original depreciation rates. At retirement, Alabama Power will reclassify the remaining net investment costs of the unit to a regulatory asset to be recovered over the unit's remaining useful life, as established prior to the decision to retire, through Rate CNP Compliance. See Note 2 to the financial statements under "Alabama Power – Environmental Accounting Order" in Item 8 of the Form 10-K for additional information.

~~In its 2020 order authorizing the CCN for~~ Alabama Power's construction of Plant Barry Unit 8 and the ~~Alabama PSC authorized~~ recovery of estimated ~~actual~~ in-service costs of $652 million. At ~~September~~June 30, ~~2022,~~2023, project expenditures associated with Plant Barry Unit 8 totaled approximately $568 million, of which $563 million and $5 million was included in CWIP ~~totaled approximately $484 million~~ and ~~the~~property, plant, and equipment in service, respectively. The unit is expected to be placed in service in November 2023. The ultimate outcome of this matter cannot be determined at this time.

~~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 has no significant effect on Alabama Power's net income, but does increase operating cash flows related to fuel cost recovery. The rate will adjust to 5.910 cents per KWH in January 2025 absent a further 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.

Beginning with August 2022 billings, the reserve establishment charge was suspended and the reserve maintenance charge was 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. At September 30, 2022, Alabama Power's NDR balance was $103 million. Alabama Power continues to have the authority to accrue additional amounts to the NDR as circumstances warrant.

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~~Reliability Reserve Accounting Order~~Rate CNP New Plant

On ~~July 12, 2022,~~March 24, 2023, Alabama Power filed Rate CNP New Plant with the Alabama PSC ~~approved~~to recover costs associated with the acquisition of the Central Alabama Generating Station. The filing reflected an ~~accounting order authorizing~~annual increase in retail revenues of $78 million effective with June 2023 billings. Through May 2023, Alabama Power ~~to create~~recovered substantially all costs associated with the Central Alabama Generating Station through Rate RSE, offset by revenues from a ~~reliability reserve separate from~~power sales agreement. On May 24, 2023, the ~~NDR and transition the previous Rate NDR authority related to reliability expenditures~~Central Alabama Generating Station was placed into retail service. See Note 15 to the ~~reliability reserve. Alabama Power may make accruals to~~financial statements under "Alabama Power" in Item 8 of the ~~reliability reserve if the NDR balance exceeds $35 million.~~Form 10-K for additional information.

Renewable Generation Certificate

Through the issuance of a Renewable Generation Certificate (RGC), Alabama Power is authorized by the Alabama PSC to procure ~~up to 500 MWs of~~ renewable capacity and energy ~~by September 16, 2027~~ and to market the related energy and environmental attributes to customers and other third parties. InOn April 2022, one of the existing solar projects which was expected to be served through a PPA commencing in first quarter 2024 was terminated, resulting in the restoration of 80 MWs of capacity under the RGC. On October 4, ~~2022,~~2023, the Alabama PSC approved two new solar PPAs totaling 160 MWs. Upon approval of these PPAs, Alabama Power ~~has~~had procured solar capacity totaling approximately ~~330~~490 MWs under the RGC's original 500-MW limit.

On June 14, 2023, the Alabama PSC issued an order approving modifications to Alabama Power's RGC. The ~~ultimate outcome~~modifications authorized Alabama Power to procure an additional 2,400 MWs of ~~this matter cannot be determined at this time.~~renewable capacity and energy by June 14, 2029 and to market the related energy and environmental attributes to customers and other third parties. The modifications also increased the size of allowable renewable projects from 80 MWs to 200 MWs and increased the annual approval limit from 160 MWs to 400 MWs.

Reliability Reserve Accounting Order

On July 11, 2023, the Alabama PSC issued an order authorizing Alabama Power to expand the existing authority of its reliability reserve to include certain production-related expenses that are intended to maintain reliability in between scheduled generating unit maintenance outages.

Georgia Power

Plant Vogtle Unit 3 and Common Facilities Rate ~~Plans~~Proceeding

~~2022 Base Rate Case~~

~~On June 24, 2022,~~In compliance with a Georgia PSC order approved in November 2021, Georgia Power ~~filed a~~increased annual retail base rate case (Georgia Power 2022 Base Rate Case) with the Georgia PSC. The filing, as modified on August 22, 2022, proposes a three-year alternate rate plan with requested rate increases totaling $889 million, $107 million, and $45rates by $318 million effective ~~January~~August 1, 2023 ~~January 1, 2024, and January 1, 2025, respectively. These increases are~~ based on ~~a proposed retail ROE~~the actual in-service date of ~~11.00% using the currently approved equity ratio of 56%~~July 31, 2023 for Plant Vogtle Unit 3.

See "Nuclear Construction" herein for additional information on Plant Vogtle Units 3 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.4.

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

Tariff 2023 2024 2025
(in millions)
Traditional base $ 762 $ — $ —
ECCR
Traditional 5 — —
CCR ARO(a)
64 78 47
DSM(a)
37 27 (2)
Municipal Franchise Fee 21 2 1
Total(b)
$ 889 $ 107 $ 45
Fuel Cost Recovery

~~(a)As determined by~~On May 16, 2023, the Georgia PSC ~~through annual compliance filings.~~

~~(b)Totals may not add due to rounding.~~

approved a stipulation agreement between 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~~Power and the ~~continuation~~staff 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

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~~(UNAUDITED)~~

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~~increase annual fuel billings by 54%, or approximately $1.1 billion,effective June 1, 2023. The increase includes a ~~final decision in this matter on December 20, 2022. The ultimate outcome~~three-year recovery period for $2.2 billion of ~~this matter cannot be determined~~Georgia Power's under recovered fuel balance at ~~this time.~~

~~2019 ARP~~

~~In 2020,~~May 31, 2023. Under the ~~Georgia PSC denied a motion for reconsideration filed by Sierra Club regarding the Georgia PSC's decision in the 2019 ARP allowing~~approved stipulation agreement, Georgia Power is allowed 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, Sierra Club filed a petition for writ of certiorariadjust its fuel cost recovery rates under an interim fuel rider prior to the next fuel case, subject to a maximum 40% cumulative change, if its under or over recovered fuel balance accumulated since May 31, 2023 exceeds $200 million. Georgia ~~Supreme Court, which was denied~~Power is scheduled to file its next fuel case no later than February 28, 2026. Changes in fuel rates have no significant effect on ~~July 14, 2022. This matter 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.~~net income but do impact the related operating cash flows.

Integrated Resource Plans

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

On July 21, 2022, the Georgia PSC approved the 2022 IRP, as modified by a 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), which occurred on~~ August 31, 2022, and reclassification to regulatory asset accounts of the remaining net book values and any remaining unusable materials and supplies inventories upon retirement. The regulatory asset accounts for the remaining net book values of the units ($299 million and $277 million for Unit 1 and Unit 2, respectively, at September 30, 2022) are being amortized at a rate equal to the unit depreciation rates authorized in the 2019 ARP through December 31, 2022. In the Georgia Power 2022 Base Rate Case, Georgia Power requested recovery of the remaining regulatory asset balances for the net book values of the units through 2030 and requested that the timing of recovery of the regulatory asset account for the unusable materials and supplies inventories be determined in a future base rate case.

•Decertification and retirement of Plant Scherer Unit 3 (614 MWs based on 75% ownership) by December 31, 2028 and reclassification to regulatory asset accounts of the remaining net book value (approximately $608 million at September 30, 2022) and any remaining unusable materials and supplies inventory to regulatory asset accounts upon retirement. The timing of recovery for these regulatory assets is expected to be determined in a future base rate case.

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

•Georgia Power's environmental compliance strategy, including approval 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 one ash

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~~(UNAUDITED)~~

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

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

~~On August 26,~~ 2022, Restore Chattooga Gorge Coalition (RCG) filed a petition in the Superior Court of Fulton County, Georgia against Georgia Power and the Georgia PSC. The petition challenges Georgia Power's plan to expend $115 million to modernize Plant Tugalo (a hydro facility), as approved in the 2019 IRP, and seeks judicial review of the Georgia PSC's order in the 2022 IRP proceeding with respect to the denial of RCG's challenge to the

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(UNAUDITED)

modernization plan.

In November 2022, Georgia Power and the Georgia PSC both filed motions to dismiss the RCG petition. The ultimate outcome of ~~these matters~~this matter cannot be determined at this time.

Nuclear Construction

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

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

In October 2017, Georgia Power, acting for itself and as agent for the other Vogtle Owners, executed the Bechtel Agreement, under which Bechtel is reimbursed for actual costs plus a base fee and an at-risk fee, subject to adjustment based on Bechtel's performance against cost and schedule targets. Each Vogtle Owner is severally (not jointly) liable for its proportionate share, based on its ownership interest, of all amounts owed to Bechtel under the Bechtel Agreement. The Vogtle Owners may terminate the Bechtel Agreement at any time for their convenience, provided that the Vogtle Owners will be required to pay amounts related to work performed prior to the termination (including the applicable portion of the base fee), certain termination-related costs, and, at certain stages of the

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work, the applicable portion of the at-risk fee. Bechtel may terminate the Bechtel Agreement under certain circumstances, including certain Vogtle Owner suspensions of work, certain breaches of the Bechtel Agreement by the Vogtle Owners, Vogtle Owner insolvency, and certain other events.

See Note 8 to the financial statements under "Long-term Debt – DOE Loan Guarantee Borrowings" in Item 8 of the Form 10-K for information on the Amended and Restated Loan Guarantee Agreement, including applicable covenants, events of default, and mandatory prepayment events.

Cost and Schedule

Georgia Power's approximate proportionate share of the remaining estimated capital cost to complete Plant Vogtle Units 3 and 4, including contingency, through ~~the end of the first quarter~~July 2023 and ~~the fourth quarter 2023,~~March 2024, respectively, is as follows:


	(in millions)
Base project capital cost forecast(a)(b)	$	~~10,334~~10,576
Construction contingency estimate	4917

Total project capital cost forecast(a)(b)	~~10,383~~10,593
Net investment at ~~September~~June 30, ~~2022~~2023(b)	~~(9,280)~~(9,944)
Remaining estimate to complete	$	~~1,103~~649

(a)Includes approximately ~~$590~~$610 million of costs that are not shared with the other Vogtle Owners, including $33 million of construction monitoring costs approved for recovery by the Georgia PSC in its nineteenth VCM order,and approximately ~~$353~~$407 million of incremental costs under the cost-sharing and tender provisions of the joint ownership agreements described below. Excludes financing costs expected to be capitalized through AFUDC of approximately ~~$385~~$422 million, of which ~~$275~~$365 million had been accrued through ~~September~~June 30, ~~2022.~~2023.

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

Georgia Power estimates that its financing costs for construction of Plant Vogtle Units 3 and 4 will total approximately ~~$3.4~~$3.5 billion, of which ~~$3.1~~$3.4 billion had been incurred through ~~September~~June 30, ~~2022.~~2023.

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On March 6, 2023, Unit 3 achieved self-sustaining nuclear fission, commonly referred to as initial criticality, and, on April 1, 2023, the generator successfully synchronized to the power grid and generated electricity for the first time. Georgia Power placed Unit 3 in service on July 31, 2023. See "Plant Vogtle Unit 3 and Common Facilities Rate Proceeding" herein for additional information.

As part of its ongoing processes, Southern Nuclear continues to evaluate cost and schedule forecasts for Unit 4 on a regular basis to incorporate current information available, particularly in the areas of ~~engineering support, commodity installation, system turnovers~~start-up testing and related test results, engineering support, commodity installations, system turnovers, 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.~~plan for Unit 4.

Since March 2020, the number of active COVID-19 cases at the site has fluctuated consistent with the surrounding area and impacted productivity levels and pace of activity completion, with the site experiencing peaks in the number of active cases in January 2021, August 2021, and January 2022. Georgia Power estimates the productivity impacts of the COVID-19 pandemic have consumed approximately three to four months of schedule margin previously embedded in the site work ~~plan for Unit 3 and Unit 4.~~plans. As of ~~September~~June 30, ~~2022,~~2023, Georgia Power's proportionate share of the estimated incremental cost associated with COVID-19 mitigation actions and impacts on construction productivity is estimated to be ~~between $160 million and~~approximately $200 million and is included in the total project capital cost forecast. ~~The continuing effects of the COVID-19 pandemic could further disrupt or delay construction and testing activities at Plant Vogtle Units 3 and 4.~~

On July 29, 2022, Southern Nuclear announced that all Unit 3 ITAACs had been submitted to the NRC. On August 3, 2022, the NRC published its 103(g) finding that the acceptance criteria in the combined license for Unit 3 had been met, which allowed nuclear fuel to be loaded and allows start-up testing to begin. Fuel load for Unit 3 was completed on October 17, 2022, and the unit is projected to be placed in service by the end of the first quarter 2023. Unit 4 is projected to be placed in service by the end of the fourth quarter 2023.

Hot functional testing for Unit 4 was completed on May 1, 2023. On July 20, 2023, Southern Nuclear announced that all Unit 4 ITAACs had been submitted to the NRC, and, ~~4. Georgia Power also increased~~on July 28, 2023, the NRC published its ~~total~~

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~~project capital cost forecast by adding $36 million and $32 million to replenish construction contingency~~103(g) finding that the accepted criteria in the ~~second quarter 2022 and the third quarter 2022, respectively.~~

After considering the significant level of uncertainty that exists regarding the future recoverability of these costs since the ultimate outcome of these matters is subject to the outcome of future assessments by management, as well as Georgia PSC decisions in future regulatory proceedings, Georgia Power recorded pre-tax charges to income in the second quarter 2022 and the third quarter 2022 of $36 million ($27 million after tax) and $32 million ($24 million after tax), respectively,combined license for ~~the increases in the total project capital cost forecast. Georgia Power may request the Georgia PSC to evaluate those expenditures for rate recovery during the prudence review following the~~ Unit 4 had been met, which allows nuclear fuel to be loaded and start-up testing to begin. Fuel load ~~pursuant~~for Unit 4 is projected to be completed by the ~~twenty-fourth VCM stipulation described below.~~end of October 2023. Unit 4 is projected to be placed in service during late fourth quarter 2023 or the first quarter 2024.

The projected schedule for Unit ~~3 primarily~~4 significantly depends on the pace of system and area transitions to operations, including the completion of closure documentation necessary to support start-up testing, and the progression of start-up, final component, and pre-operational testing, which may be impacted by equipment or other operational failures. The projected schedule for Unit 4 primarily depends on Unit 3 progress through start-up and testing;maintaining overall construction productivity and production levels, ~~improving,~~ particularly in ~~electrical installation, including terminations; and appropriate levels~~completing remaining subcontractor scopes of work while reducing the level of craft laborers ~~particularly electricians, being added and maintained.~~based on work remaining. As Unit 4 ~~progresses through~~completes construction and ~~continues to transition~~transitions further into testing, ongoing and potential future challenges include the pace and quality of ~~electrical, mechanical,~~remaining commodity installations, the management of contractors and ~~instrumentation~~vendors, subcontractor performance, the availability of materials and ~~controls commodities installation;~~parts, and/or related cost escalation; the pace of remaining work package closures; the availability of craft, supervisory, and ~~supervisory resources, including the temporary diversion of such resources to~~technical support ~~Unit 3; the pace of work package closures and system turnovers;~~resources; and the timeframe and duration of ~~hot functional~~final component and ~~other~~pre-operational testing. Ongoing or future challenges for both units also include management of contractors and vendors; subcontractor performance; supervision of craft labor and related productivity; ability to attract and retain craft labor; and/or related cost escalation. New challenges also may continue to arise ~~particularly~~ as ~~Units 3 and~~Unit 4 ~~move~~moves further into ~~initial~~ testing and start-up, which may result in required engineering changes or remediation related to plant systems, structures, or components (some of which are based on new technology that only within the last few years began initial operation in the global nuclear industry at this scale). These challenges may result in further schedule delays and/or cost increases.

There have been technical and procedural challenges to the construction and licensing of Plant Vogtle Units 3 and 4 at the federal and state level and additional challenges may arise. Processes are in place that are designed to ensure compliance with the requirements specified in the Westinghouse Design Control Document and the combined construction and operating licenses, including inspections by Southern Nuclear and the NRC that occur throughout construction. On March 25, 2022, the NRC completed a follow-up inspection related to the November 2021 final significance report on its special inspection to review the root cause of additional construction remediation work identified in 2021 and Southern Nuclear's corresponding corrective action plans. The NRC closed the two white findings identified in November 2021 and returned Vogtle Unit 3 to the NRC's baseline inspection program.

With the receipt of the NRC's 103(g) ~~finding, Unit~~findings for Units 3 and 4 in August 2022 and July 2023, respectively, the site is ~~now under~~subject to the NRC's operating reactor oversight process and must meet applicable technical and operational requirements contained ~~within Unit 3's~~in its operating license. Various design and other licensing-based compliance matters including the timely submittal by Southern Nuclear of the ITAAC documentation and the related reviews and approvals by the NRC necessary to support NRC authorization to load fuel for Unit 4, may arise, which may result in additional license amendment requests or require other resolution. If any license amendment requests or other licensing-based compliance issues ~~including inspections and ITAACs for Unit 4,~~ are not resolved in a timely manner, there may be delays in the Unit 4 project schedule that could result in increased costs.

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The ultimate outcome of these matters cannot be determined at this time. However, any extension of the in-service date beyond ~~the first quarter 2023 for Unit 3 or the fourth quarter 2023~~March 2024 for Unit 4, including the ~~current level of~~joint owner cost sharing and tender impacts described below, is estimated to result in additional base capital costs for Georgia Power of up to ~~$15~~$45 million per month, ~~for Unit 3 and $35 million per month for Unit 4,~~ as well as the related AFUDC and any additional related construction, support resources, or testing costs. 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

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and tender provisions of the joint ownership agreements described below, management will ultimately determine whether or not to seek recovery. Any further changes to the capital cost forecast that are not expected to be recoverable through regulated rates will be required to be charged to income and such charges could be material.

Joint Owner Contracts

In November 2017, the Vogtle Owners entered into an amendment to their joint ownership agreements for Plant Vogtle Units 3 and 4 to provide for, among other conditions, additional Vogtle Owner approval requirements. Effective in August 2018, the Vogtle Owners further amended the joint ownership agreements to clarify and provide procedures for certain provisions of the joint ownership agreements related to adverse events that require the vote of the holders of at least 90% of the ownership interests in Plant Vogtle Units 3 and 4 to continue construction (as amended, and together with the November 2017 amendment, the Vogtle Joint Ownership Agreements). The Vogtle Joint Ownership Agreements also confirm that the Vogtle Owners' sole recourse against Georgia Power or Southern Nuclear for any action or inaction in connection with their performance as agent for the Vogtle Owners is limited to removal of Georgia Power and/or Southern Nuclear as agent, except in cases of willful misconduct.

Amendments to the Vogtle Joint Ownership Agreements

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

Pursuant to the Global Amendments: (i) each Vogtle Owner must 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, of which ~~formed the basis of~~ Georgia Power's ~~forecast of~~share is $8.4 billion ~~in the nineteenth VCM~~(VCM 19 Forecast Amount), 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 19 Forecast Amount (resulting in $80 million of potential additional costs to Georgia Power), with the remaining Vogtle Owners responsible for 44.3% of such costs pro rata in accordance with their respective ownership interests; and (iii) Georgia Power will be responsible for 65.7% of qualifying construction costs between $1.6 billion and $2.1 billion over the ~~EAC in the nineteenth~~ VCM 19 Forecast Amount (resulting in a further $100 million of potential additional costs to Georgia Power), with the remaining Vogtle Owners responsible for 34.3% of such costs pro rata in accordance with their respective ownership interests. The Global Amendments provide that if the EAC is revised and exceeds the ~~EAC in the nineteenth~~ VCM 19 Forecast Amount 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 19 Forecast Amount plus $2.1 billion.

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For purposes of the foregoing provisions, qualifying construction costs will not include costs (i) resulting from force majeure events, including epidemics and quarantines, governmental actions or inactions (or significant delays associated with issuance of such actions) that affect the licensing, completion, start-up, operations, or financing of Plant Vogtle Units 3 and 4, administrative proceedings or litigation regarding ITAAC or other regulatory challenges to commencement of operation of Plant Vogtle Units 3 and 4, and changes in laws or regulations governing Plant Vogtle Units 3 and 4, (ii) legal fees and legal expenses incurred due to litigation with contractors or subcontractors

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that are not subsidiaries or affiliates of Southern Company, and (iii) additional costs caused by requests from the Vogtle Owners other than Georgia Power, except for the exercise of a right to vote granted under the Vogtle Joint Ownership Agreements, that increase costs by $100,000 or more.

In addition, pursuant to the Global Amendments, the holders of at least 90% of the ownership interests in Plant Vogtle Units 3 and 4 must vote to continue construction if certain adverse events (Project Adverse Events) occur, including, among other events: (i) the bankruptcy of Toshiba; (ii) the termination or rejection in bankruptcy of certain agreements, including the Vogtle Services Agreement, the Bechtel Agreement, or the agency agreement with Southern Nuclear; (iii) Georgia Power's public announcement of its intention not to submit for rate recovery any portion of its investment in Plant Vogtle Units 3 and 4 or the Georgia PSC determines that any of Georgia Power's costs relating to the construction of Plant Vogtle Units 3 and 4 will not be recovered in retail rates, excluding any additional amounts paid by Georgia Power on behalf of the other Vogtle Owners pursuant to the Global Amendments described above and the first 6% of costs during any six-month VCM reporting period that are disallowed by the Georgia PSC for recovery, or for which Georgia Power elects not to seek cost recovery, through retail rates; and (iv) an incremental extension of one year or more from the seventeenth VCM report estimated in-service dates of November 2021 and November 2022 for Units 3 and 4, respectively. The schedule extension announced in February 2022 triggered the requirement for a vote to continue ~~construction. Effective February 25, 2022,~~construction and all of the Vogtle Owners ~~had~~ voted to continue construction.

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 capital cost expenditures have already exceeded the cost-sharing thresholds and the current~~ project capital cost forecast ~~triggers~~approved by the Vogtle Owners in February 2022 triggered the tender ~~provisions under the Global Amendments.~~provisions. In ~~October 2021, Georgia Power and the other Vogtle Owners entered into an agreement, which was modified on~~ June 3, 2022, to clarify the process for the tender provisions of the Global Amendments to provide for a decision between 120 and 194 days after the tender option is triggered, which the other Vogtle Owners assert occurred on February 14, 2022. On June 17, 2022 and July ~~26,~~ 2022, OPC and Dalton, respectively, notified Georgia Power of their purported exercises of their tender options. Georgia Power did not accept these purported tender exercises.

OnIn June ~~18,~~ 2022, OPC and MEAG Power each filed a separate lawsuit against Georgia Power in the Superior Court of Fulton County, Georgia seeking a declaratory judgment that the starting dollar amount is $17.1 billion and that the cost-sharing and tender provisions ~~have~~had been triggered. The lawsuits also assert other claims, including breach of contract allegations, and seek, among other remedies, damages and injunctive relief requiring Georgia Power to track and allocate construction costs consistent with MEAG Power's and OPC's interpretations of the Global Amendments. OnIn July ~~25, 2022 and July 28,~~ 2022, Georgia Power filed its answers in the lawsuits filed by MEAG Power and OPC ~~respectively,~~ and included counterclaims seeking a declaratory judgment that the starting dollar amount is $18.38 billion and that costs related to force majeure events are excluded prior to calculating the cost-sharing and tender provisions and when calculating Georgia Power's related financial obligations. OnIn September ~~26,~~ 2022, Dalton filed complaints in each of these lawsuits. OnAlso in September ~~29,~~ 2022, Georgia Power and MEAG Power reached an agreement to resolve their dispute regarding the proper interpretation of the cost-sharing and tender provisions of the Global Amendments. Under the terms of the agreement, among other items, (i) MEAG Power will not exercise its tender option and will retain its full ownership interest in Plant Vogtle Units 3 and 4; (ii) Georgia Power will ~~pay~~reimburse a portion of MEAG Power's costs of construction for Plant Vogtle Units 3 and 4 as such costs are incurred and with no further adjustment for force majeure costs, which payments will total approximately ~~$79~~$92 million based on the current project capital cost forecast; and (iii) Georgia Power will ~~pay~~reimburse 20% of MEAG Power's costs of construction with respect to any amounts over the current project capital cost forecast, with no further adjustment for force majeure costs. In addition, MEAG Power agreed to vote to continue construction upon occurrence of a Project Adverse Event unless the commercial operation date of either of Plant Vogtle Unit 3 or Unit 4 is not projected to occur by December 31, 2025. OnIn October 4, 2022, MEAG Power and Georgia Power filed a notice of settlement and

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~~notice of settlement and~~ voluntary dismissal of their pending litigation, including Georgia Power's counterclaim, and ~~on October 6, 2022,~~ Dalton dismissed its related complaint.

Georgia Power recorded pre-tax charges ~~(credits)~~ to income inthrough the fourth quarter ~~2021, the second quarter 2022, and the third quarter~~ 2022 of ~~approximately $440~~$407 million ($~~328~~304 million after tax)~~, $16 million ($12 million after tax), and $(102) million ($(76) million after tax), respectively,~~ associated with the cost-sharing and tender provisions of the Global Amendments, including the settlement with MEAG ~~Power, which are~~Power. This total is included in the total project capital cost forecast and will not be recovered from retail customers. The settlement with MEAG Power does not resolve the separate pending litigation with OPC, including Dalton's associated complaint, described above. Georgia Power may be required to record further pre-tax charges to income of up to approximately ~~$300~~$345 million associated with the cost-sharing and tender provisions of the Global Amendments for OPC and Dalton based on the current project capital cost forecast.

Georgia Power's ownership interest in Plant Vogtle Units 3 and 4 continues to be 45.7%~~; however, it could increase if OPC or Dalton effectively exercises the option to tender a portion of their ownership interest to~~. Georgia Power believes the increases in the total project capital cost forecast through December 31, 2022 triggered the tender provisions, but Georgia Power disagrees with OPC and Dalton on the tender provisions trigger date. Valid notices of tender from OPC and Dalton would require Georgia Power to pay 100% of ~~the~~their respective remaining ~~share~~shares of the costs necessary to complete Plant Vogtle Units 3 and 4. Georgia Power's incremental ownership interest ~~would~~will be calculated and conveyed to Georgia Power after Plant Vogtle Units 3 and 4 are placed in service.

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

Regulatory Matters

In 2009, the Georgia PSC voted to certify construction of Plant Vogtle Units 3 and 4 with a certified capital cost of $4.418 billion. In addition, in 2009 the Georgia PSC approved inclusion of the Plant Vogtle Units 3 and 4 related CWIP accounts in rate base, and the State of Georgia enacted the Georgia Nuclear Energy Financing Act, which allows Georgia Power to recover financing costs for Plant Vogtle Units 3 and 4. Financing costs are recovered on all applicable certified costs through annual adjustments to the NCCR tariff up to the certified capital cost of $4.418 billion. At ~~September~~June 30, ~~2022,~~2023, Georgia Power had recovered approximately ~~$2.8~~$3.0 billion of financing costs. Financing costs related to capital costs above $4.418 billion are being recognized through AFUDC and are expected to be recovered through retail rates over the life of Plant Vogtle Units 3 and 4; however, Georgia Power is not recording AFUDC related to any capital costs in excess of the total deemed reasonable by the Georgia PSC (currently $7.3 billion) and not requested for rate recovery. In ~~November 2021,~~December 2022, the Georgia PSC approved Georgia Power's ~~request~~filing to ~~decrease~~increase the NCCR tariff by ~~$78~~$36 million annually, effective January 1, ~~2022.~~2023.

Georgia Power is required to file semi-annual VCM reports with the Georgia PSC by February 28 and August 31 of each year. In 2013, in connection with the eighth VCM report, the Georgia PSC approved a stipulation between Georgia Power and the staff of the Georgia PSC to waive the requirement to amend the Plant Vogtle Units 3 and 4 certificate in accordance with the 2009 certification order until the completion of Plant Vogtle Unit 3, or earlier if deemed appropriate by the Georgia PSC and Georgia Power.

In 2016, the Georgia PSC voted to approve a settlement agreement (Vogtle Cost Settlement Agreement) resolving certain prudency matters in connection with the fifteenth VCM report. In December 2017, the Georgia PSC voted to approve (and issued its related order on January 11, 2018) Georgia Power's seventeenth VCM report and modified the Vogtle Cost Settlement Agreement. The Vogtle Cost Settlement Agreement, as modified by the January 11, 2018 order, resolved the following regulatory matters related to Plant Vogtle Units 3 and 4: (i) none of the $3.3 billion of costs incurred through December 31, 2015 and reflected in the fourteenth VCM report should be disallowed from rate base on the basis of imprudence; (ii) the Contractor Settlement Agreement was reasonable and prudent and none of the $0.3 billion paid pursuant to the Contractor Settlement Agreement should be disallowed from rate base on the basis of imprudence; (iii) (a) capital costs incurred up to $5.68 billion would be presumed to be reasonable and prudent with the burden of proof on any party challenging such costs, (b) Georgia Power would have the burden to show that any capital costs above $5.68 billion were prudent, and (c) a revised capital cost forecast of $7.3 billion (after reflecting the impact of payments received under the Guarantee Settlement Agreement and related customer refunds) was found reasonable; (iv) construction of Plant Vogtle Units 3 and 4 should be completed, with Southern Nuclear serving as project manager and Bechtel as primary contractor; (v) approved and

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~~completed, with Southern Nuclear serving as project manager and Bechtel as primary contractor; (v) approved and~~ deemed reasonable Georgia Power's revised schedule placing Plant Vogtle Units 3 and 4 in service in November 2021 and November 2022, respectively; (vi) confirmed that the revised cost forecast does not represent a cost cap and that a prudence proceeding on cost recovery will occur following Unit 4 fuel load, consistent with applicable Georgia law; (vii) reduced the ROE used to calculate the NCCR tariff (a) from 10.95% (the ROE rate setting point authorized by the Georgia PSC ~~in the 2013 alternate rate plan)~~at that time) to 10.00% effective January 1, 2016, (b) from 10.00% to 8.30%, 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~~Agreement. On July 31, 2023, Georgia Power notified the Georgia PSC that Unit 3 had reached commercial operation, and, effective August 1, 2023, Georgia Power adjusted retail base rates for Unit 3 and the common facilities shared between Units 3 and 4 (see ~~Note 2 to the financial statements under "Georgia Power – Plant~~"Plant Vogtle Unit 3 and Common Facilities Rate Proceeding" ~~in Item 8 of the Form 10-K~~herein for additional information). The January 11, 2018 order also stated that if Plant Vogtle Units 3 and 4 are not commercially operational by June 1, 2021 and June 1, 2022, respectively, the ROE used to calculate the NCCR tariff will be further reduced by 10 basis points each month (but not lower than Georgia Power's average cost of long-term debt) until the respective Unit is commercially operational. The ROE reductions negatively impacted earnings by approximately ~~$270~~$300 million in ~~2021~~2022 and are estimated to have negative earnings impacts of approximately ~~$300 million and $250~~$290 million in ~~2022~~2023 and ~~2023, respectively.~~$60 million in 2024. In its January 11, 2018 order, the Georgia PSC also stated if other conditions change and assumptions upon which Georgia Power's seventeenth VCM report are based do not materialize, the Georgia PSC reserved the right to reconsider the decision to continue construction.

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 PSC also has reviewed ~~the twenty-sixth~~two additional VCM ~~report,~~reports, which ~~reflects $584 million~~reflected $1.1 billion of additional construction capital costs incurred through ~~December 31, 2021.~~June 30, 2022. Georgia Power filed its ~~twenty-seventh~~twenty-eighth VCM report with the Georgia PSC on February 16, 2023, which reflected the capital cost forecast described above and $461 million of construction capital costs incurred from July 1, 2022 through December 31, 2022. Georgia Power expects to file its twenty-ninth VCM report with the Georgia PSC on August 31, ~~2022,~~2023, which ~~reflects~~will reflect the ~~revised~~ capital cost forecast ~~as of June 30, 2022 of $10.5 billion~~described above and ~~$522~~$390 million of construction capital costs incurred from January 1, ~~2022~~2023 through June 30, ~~2022.~~2023.

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

Mississippi Power

Performance Evaluation Plan

On June ~~7, 2022,~~13, 2023, the Mississippi PSC approved Mississippi Power's annual retail PEP filing for ~~2022, resulting~~2023 indicating no change in an annual increase in revenues of approximately $18 million, or 1.9%, primarily due to increases in rate base, operations and maintenance expenses, and depreciation and amortization. The rate increase became effective with the first billing cycle of April 2022 in accordance with the PEP rate schedule.retail rates.

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Ad Valorem Tax Adjustment

On ~~June 7, 2022,~~May 2, 2023, the Mississippi PSC approved Mississippi Power's annual ad valorem tax adjustment filing for ~~2022,~~2023, resulting in ana $7 million annual ~~increase~~decrease in revenues ~~of $5 million,~~ effective with the first billing cycle of ~~July 2022.~~June 2023.

Mississippi Power's operating revenues are adjusted for differences in actual recoverable ad valorem taxes and amounts billed in accordance with the currently approved cost recovery rate. Accordingly, changes in the billing factor should have no significant effect on Mississippi Power's revenues or net income but will affect operating cash flows.

Environmental Compliance Overview Plan

On April 4, 2023, the Mississippi PSC approved Mississippi Power's annual ECO Plan filing for 2023, resulting in a $3 million annual increase in revenues effective with the first billing cycle of May 2023.

System Restoration Rider

On April 4, 2023, the Mississippi PSC approved Mississippi Power's annual SRR filing, which indicated no change in retail rates. Mississippi Power's minimum annual SRR accrual was increased from $8 million to $12 million.

Municipal and Rural Associations Tariff

On ~~August 26, 2022, the FERC accepted an amended shared service agreement (SSA) between~~July 31, 2023, Mississippi Power and Cooperative Energy ~~effective July 1, 2022, under which Cooperative Energy will continue~~filed a settlement agreement with the FERC related to ~~decrease its use of~~ Mississippi Power's ~~generation services under the MRA tariff up to 2.5% annually through 2035. At September 30,~~July 2022 Mississippi Power is serving approximately 400 MWs of Cooperative Energy's annual demand. Beginning in 2036, Cooperative Energy will provide 100% of its electricity requirements at the MRA delivery points under the tariff. Neither party has the option to cancel the amended SSA.

~~On July 15, 2022, Mississippi Power filed a~~ request ~~with the FERC~~ for a $23 million increase in annual wholesale base revenues under the MRA ~~tariff and requested an effective date of July 15, 2022. Cooperative Energy has filed a complaint with~~tariff. Interim rates based on the ~~FERC challenging the new rates. On September 13, 2022, the FERC issued an order accepting Mississippi Power's~~initial request became effective September 14, 2022, subject to refund. The settlement agreement provides for a $16 million increase in annual wholesale base revenues and a refund ~~and establishing hearing and~~to customers of approximately $6 million. The settlement ~~judge procedures.~~agreement is subject to approval by the FERC. The ultimate outcome of this matter 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 ~~nine~~six months of ~~2022~~2023 were as follows:


Utility	Program	~~Nine~~ Six Months Ended ~~September~~ June 30, ~~2022~~2023
		(in millions)
Nicor Gas	Investing in Illinois	$	~~311~~196
Virginia Natural Gas	SAVE	5237
Atlanta Gas Light	System Reinforcement Rider	5157
Chattanooga Gas	Pipeline Replacement Program	24
Total		$	~~416~~294

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Nicor Gas

On June 15, 2023, the Illinois Commission concluded its review of the Qualifying Infrastructure Plant (QIP) capital investments by Nicor Gas for calendar year 2019 under the QIP Rider, or Investing in Illinois, program. The Illinois Commission disallowed $32 million of the $415 million of capital investments commissioned in 2019, together with the related return on investment. Nicor Gas recorded a pre-tax charge to income in the second quarter 2023 of $38 million ($28 million after tax) associated with the disallowance of capital investments. The disallowance is reflected on the income statement as an $8 million reduction to revenues and a $30 million increase in operating expenses. On July 14, 2023, Nicor Gas requested rehearing by the Illinois Commission, which is expected to render a decision by August 3, 2023. Nicor Gas defends these investments in infrastructure as prudently incurred and, if necessary, intends to appeal to the Illinois Appellate Court. The Illinois Commission has not yet conducted its review for calendar years 2020 through 2022 or the six months ended June 30, 2023. Any further disallowance by the Illinois Commission could be material. The ultimate outcome of these matters cannot be determined at this time.

Rate Proceedings

Atlanta Gas Light

On July ~~1, 2022,~~14, 2023, Atlanta Gas Light filed its annual GRAM update with the Georgia PSC. The filing requests an annual base rate increase of $53 million based on the projected 12-month period beginning January 1, ~~2023.~~2024. Resolution of the GRAM filing is expected by December ~~28, 2022,~~31, 2023, with ~~the~~ new rates effective January 1, ~~2023.~~2024. The ultimate outcome of this matter cannot be determined at this time.

Virginia Natural Gas

On ~~August 1, 2022,~~June 7, 2023, Virginia Natural Gas, ~~filed~~the Virginia Commission staff, and the Virginia Attorney General's Division of Consumer Counsel entered into a stipulation agreement related to Virginia Natural Gas' August 2022 general base rate case ~~with the Virginia Commission seeking an~~filing. The stipulation provides for a $48 million increase in annual base rate revenues, ~~of $69 million,~~ including ~~$15 million related to~~ the recovery of investments under the SAVE program, primarily to recover investments and increased costs associated with infrastructure, technology, and workforce development. The requested increase is based on a projected 12-month period beginning January 1, 2023, aan ROE of ~~10.35%~~9.70%, and an equity ratio of ~~53.2%~~49.06%. ~~Rate adjustments are expected to be~~Interim rates became effective January 1, 2023, subject to ~~refund.~~refund, based on Virginia Natural Gas' original requested increase of approximately $69 million. The Virginia Commission is expected to rule on this matter by the ~~requested increase in the third quarter~~end of 2023. The ultimate outcome of this matter is subject to a final order from the Virginia Commission and cannot be determined at this time.

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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 named as defendants Southern Company, certain of its directors, certain of its current and former officers, and certain former Mississippi Power officers. In 2017, these two shareholder derivative lawsuits were consolidated in the U.S. District Court for the Northern District of Georgia. The complaints alleged that the defendants caused Southern Company to make false or misleading statements regarding the Kemper County energy facility cost and schedule. Further, the complaints alleged that the defendants were unjustly enriched and caused the waste of corporate assets and also 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 named as defendants Southern Company, certain of its directors, certain of its current and former officers, and certain former Mississippi Power officers. The complaint alleged that the individual defendants, among other things, breached their fiduciary duties in connection with schedule delays and cost overruns associated with the construction of the Kemper County energy facility. The complaint further 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 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 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 applied to both actions. On 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 awarding attorneys' fees and expenses related to the Martin J. Kobuck lawsuit. The settlement consisted of an aggregate payment by Southern Company's insurers of approximately $4.5 million for attorneys' fees and expenses, as well as adoption of various corporate governance reforms by Southern Company. These matters are now concluded.

Alabama Power

OnIn September ~~26,~~ 2022, Mobile Baykeeper ~~through its counsel Southern Environmental Law Center,~~ filed a citizen suit in the U.S. District Court for the Southern District of Alabama alleging that Alabama Power's plan to close the Plant Barry ash pond utilizing a closure-in-place methodology violates the Resource Conservation and Recovery Act (RCRA) and regulations governing CCR. Among other relief requested, Mobile Baykeeper seeks a declaratory judgment that the RCRA and regulations ~~governing CCR are being violated, preliminary and injunctive relief to~~

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governing CCR are being violated, preliminary and injunctive relief to prevent implementation of Alabama Power's closure plan and the development of a closure plan that satisfies ~~regulations~~regulations governing CCR requirements. On December 19, 2022, Alabama Power filed a motion to dismiss the case.

On January 31, 2023, the EPA issued a Notice of Potential Violations associated with Alabama Power's plan to close the Plant Barry ash pond. Alabama Power has affirmed to the EPA its position that it is in compliance with CCR requirements.

The ultimate outcome of these matters cannot be determined at this time but could have a material impact on Alabama Power's ARO estimates and cash flows. See Note 6 to the financial statements in Item 8 of the Form 10-K for a discussion of Alabama Power's ARO ~~liabilities related to facilities that are subject to the CCR Rule and the related state rule. The ultimate outcome of this matter cannot be determined at this time.~~liabilities.

Georgia Power

Municipal Franchise Fees

In 2011, plaintiffs filed a putative class action against Georgia Power in the Superior Court of Fulton County, Georgia alleging that Georgia Power's collection in rates of amounts for municipal franchise fees (which fees are paid to municipalities) exceeded the amounts allowed in orders of the Georgia PSC and alleging certain state law claims. This case has been ruled upon and appealed numerous times over the last several years. In 2019, the Georgia PSC issued an order that found Georgia Power has appropriately implemented the municipal franchise fee schedule. In March 2021, the Superior Court of Fulton County granted class certification and Georgia Power's motion for summary judgment and the plaintiffs filed a notice of appeal. In April 2021, Georgia Power filed a notice of cross appeal on the issue of class certification. In December 2021, the Georgia Court of Appeals affirmed the Superior Court's ruling that granted summary judgment to Georgia Power and dismissed Georgia Power's cross appeal on the 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~~Court, which was denied on January 27, 2023. On February 6, 2023, the plaintiffs filed a motion for reconsideration with the Georgia Supreme Court, which was denied on February 16, 2023. This matter is ~~unknown whether any losses would be subject to recovery from any municipalities.~~now concluded.

Plant Scherer

In July 2020, a group of individual plaintiffs filed a complaint, which was amended in December 2022, in the Superior Court of Fulton County, Georgia against Georgia Power alleging that ~~releases from~~the construction and operation of Plant Scherer ~~have~~has impacted groundwater ~~surface water,~~ and air, resulting in alleged personal injuries and property damage. The plaintiffs seek an unspecified amount of monetary damages including punitive damages, a medical monitoring fund, and injunctive relief. In December 2022, the Superior Court of Fulton County, Georgia ~~Power has filed multiple~~granted Georgia Power's motion to transfer the case to the Superior Court of Monroe County, Georgia. On May 9, 2023, the Superior Court of Monroe County, Georgia denied Georgia Power's motion to dismiss the case for lack of subject matter jurisdiction. On July 27, 2023, the Superior Court of Monroe County, Georgia denied the remaining motions to dismiss certain claims and plaintiffs that Georgia Power filed at the ~~complaint.~~ outset of the case.

In October 2021, ~~three~~February 2022, and January 2023, a total of eight additional complaints were filed in the Superior Court of Monroe County, Georgia against Georgia Power alleging that releases from Plant Scherer have impacted groundwater and air, resulting in alleged personal injuries and property damage. The plaintiffs ~~seek~~sought an unspecified amount of monetary damages including punitive damages. ~~In November 2021,~~After Georgia Power ~~filed a notice to remove the three~~removed these cases ~~pending in the Superior Court of Monroe County, Georgia~~ to the U.S. District Court for the Middle District of Georgia, the plaintiffs voluntarily dismissed their complaints without prejudice in November 2022 and January 2023. On May 12, 2023, the plaintiffs in the cases originally filed in October 2021, February 2022, and January 2023 refiled their eight complaints in the Superior Court of Monroe County, Georgia. ~~On February 7, 2022, four additional complaints were~~Also on May 12, 2023, a new complaint was filed in the Superior Court of Monroe County, Georgia against Georgia Power ~~seeking damages for~~alleging that the construction and operation of Plant Scherer have impacted groundwater and air, resulting in alleged personal ~~injuries or property damage.~~injuries. The plaintiff seeks an unspecified amount of monetary damages, including punitive damages. On ~~March 9, 2022,~~May 18, 2023, Georgia Power ~~filed a notice to remove the four~~removed all of these cases ~~pending in the Superior Court of Monroe County, Georgia~~ to the U.S.

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District Court for the Middle District of Georgia. The plaintiffs are requesting the court remand the cases back to the Superior Court of Monroe County, Georgia.

The amount of any possible 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 three then-serving members of the Mississippi PSC in the U.S. District Court for the Southern District of Mississippi, which was amended in March 2019 to include four additional plaintiffs. Mississippi Power received Mississippi PSC approval in 2013 to charge a mirror CWIP rate premised upon including in its rate base pre-construction and construction costs for the Kemper IGCC prior to placing the Kemper IGCC into service. The Mississippi Supreme Court reversed that approval and ordered Mississippi Power to refund the amounts paid by customers under the previously-approved mirror CWIP rate. The plaintiffs allege that the initial approval process, and the amount approved, were improper and make claims for gross negligence, reckless conduct, and intentional wrongdoing. They also allege that Mississippi Power underpaid customers by up to $23.5 million in the refund process by applying an incorrect interest rate. The plaintiffs seek to recover, on behalf of themselves and their putative class, actual damages, punitive damages, pre-judgment interest, post-judgment interest, attorney's fees, and costs. The district court dismissed the amended complaint; however, in March 2020, the plaintiffs filed a motion seeking to name the new members of the Mississippi PSC, the Mississippi Development Authority, and Southern Company as additional defendants and add a cause of action against all defendants based on a dormant commerce clause theory under the U.S. Constitution. In July 2020, the plaintiffs filed a motion for leave to file a third amended complaint, which included the same federal claims as the proposed second amended complaint, as well as several

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additional state law claims based on the allegation that Mississippi Power failed to disclose the annual percentage rate of interest applicable to refunds. In November 2020, the district court denied each of the plaintiffs' pending motions and entered final judgment in favor of Mississippi Power. In January 2021, the district court denied further motions by the plaintiffs to vacate the judgment and to file a revised second amended complaint. In February 2021, the plaintiffs filed a notice of appeal with the U.S. Court of Appeals for the Fifth Circuit. OnIn March ~~21,~~ 2022, the U.S. Court of Appeals for the Fifth Circuit issued an opinion affirming the dismissal of the claims against the Mississippi PSC defendants but reversing the dismissal of the claims against Mississippi Power. OnIn May ~~31,~~ 2022, the U.S. Court of Appeals for the Fifth Circuit denied a petition by Mississippi Power for a rehearing en banc and remanded the case to the U.S. District Court for the Southern District of Mississippi for further proceedings. OnIn June ~~17,~~ 2022, Mississippi Power filed with the trial court a motion to dismiss the ~~complaint.~~complaint with prejudice, which was granted on March 15, 2023. On March 28, 2023, the plaintiffs filed a notice of appeal with the U.S. Court of Appeals for the Fifth Circuit. An adverse outcome in this proceeding could have a material impact on Mississippi Power's financial statements.

Environmental Remediation

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

Georgia Power's environmental remediation liability was ~~$16~~$14 million and ~~$17~~$15 million at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. Georgia Power has been designated or identified as a potentially responsible party at sites governed by the Georgia Hazardous Site Response Act and/or by the federal Comprehensive Environmental Response, Compensation, and Liability Act, and assessment and potential cleanup of such sites is expected.

Southern Company Gas' environmental remediation liability was ~~$270~~$230 million and ~~$249~~$256 million at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, based on the estimated cost of environmental investigation and remediation associated with known former manufactured gas plant operating sites.

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

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Other Matters

~~Mississippi Power~~Traditional Electric Operating Companies

In ~~conjunction~~April 2019, Bellsouth Telecommunications d/b/a AT&T Alabama (AT&T) filed a complaint against Alabama Power with ~~Southern Company's 2019 sale~~the FCC alleging that the pole rental rate AT&T is required to pay pursuant to the parties' joint use agreement is unjust and unreasonable under federal law. The complaint sought a new rate and approximately $87 million in refunds of Gulf Power, NextEra Energy, Inc. held back $75 million of the purchase price pending Mississippi Power and Gulf Power negotiating a mutually acceptable revised operating agreement for Plant Daniel. On July 12, 2022, the co-owners executed a revised operating agreement and Southern Company subsequently received the remaining $75 million of the purchase price. The revised operating agreement contains dispatch proceduresalleged overpayments for the ~~two jointly-owned coal units~~preceding six years. In August 2019, the FCC stayed the case in favor of arbitration, which AT&T has not pursued. The ultimate outcome of this matter cannot be determined at Plant Daniel such that Mississippi Power will designate one of the two units as primary and the other as secondary in lieu of each company separately owning 100% of a single generating unit. Mississippi Power has the option to purchase its co-owner's ownership interest for $1 on January 15, 2024, provided that Mississippi Power exercises the option no later than 120 days prior to that date. The revised operating agreement is not expected tothis time, but an adverse outcome could have a material impact on ~~Mississippi Power's financial statements. See Note 15 to~~ the financial statements ~~under "Southern Company" in Item 8~~ of ~~the Form 10-K for additional information regarding the sale of Gulf~~Southern Company and Alabama Power. Georgia Power and Mississippi Power have joint use agreements with other AT&T affiliates.

OnMississippi Power

In August ~~31,~~ 2022, the Mississippi Department of Revenue (Mississippi DOR) completed an audit of sales and use taxes paid by Mississippi Power from 2016 to 2019 and entered a final assessment, indicating a total amount due of $28 million, including associated penalties and interest. Additional interest of approximately $1 million was estimated through June 30, 2023. Mississippi Power does not agree with the audit findings and, ~~expects to exercise its rights to~~in October 2022, filed an administrative appeal with the Mississippi ~~DOR by October 30, 2022. Excluding amounts associated with~~DOR. See Note 3 to the ~~gasifier and other abandoned Kemper IGCC assets,~~financial statements in Item 8 of the Form 10-K under "Other Matters – Mississippi ~~Power's sales and use taxes are generally authorized~~Power – Department of Revenue Audit" for ~~rate recovery; however,~~information regarding a Mississippi PSC accounting order related to the tax audit proceeding. The ultimate outcome of this matter cannot be determined at this time.

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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 ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021:~~2022:


		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 September 30, 2022
Three Months Ended June 30, 2023														Three Months Ended June 30, 2023
Operating revenues	Operating revenues													Operating revenues
Retail electric revenues	Retail electric revenues													Retail electric revenues
Residential	Residential	$	2,104	$	799	$	1,212	$	93	$	—	$	—	Residential	$	1,647	$	648	$	928	$	71	$	—	$	—
Commercial	Commercial	1,637		499		1,051		87		—		—		Commercial	1,370		465		830		75		—		—
Industrial	Industrial	1,183		452		642		89		—		—		Industrial	864		429		353		82		—		—
Other	Other	27		3		22		2		—		—		Other	27		3		22		2		—		—
Total retail electric revenues	Total retail electric revenues	4,951		1,753		2,927		271		—		—		Total retail electric revenues	3,908		1,545		2,133		230		—		—
Natural gas distribution revenues	Natural gas distribution revenues													Natural gas distribution revenues
Residential	Residential	331		—		—		—		—		331		Residential	330		—		—		—		—		330
Commercial	Commercial	93		—		—		—		—		93		Commercial	82		—		—		—		—		82
Transportation	Transportation	259		—		—		—		—		259		Transportation	284		—		—		—		—		284
Industrial	Industrial	12		—		—		—		—		12		Industrial	6		—		—		—		—		6
Other	Other	49		—		—		—		—		49		Other	51		—		—		—		—		51
Total natural gas distribution revenues	Total natural gas distribution revenues	744		—		—		—		—		744		Total natural gas distribution revenues	753		—		—		—		—		753
Wholesale electric revenues	Wholesale electric revenues													Wholesale electric revenues
PPA energy revenues	PPA energy revenues	812		187		40		4		591		—		PPA energy revenues	253		58		24		2		175		—
PPA capacity revenues	PPA capacity revenues	175		56		12		1		107		—		PPA capacity revenues	149		44		13		2		91		—
Non-PPA revenues	Non-PPA revenues	58		67		4		242		303		—		Non-PPA revenues	61		12		6		70		83		—
Total wholesale electric revenues	Total wholesale electric revenues	1,045		310		56		247		1,001		—		Total wholesale electric revenues	463		114		43		74		349		—
Other natural gas revenues	Other natural gas revenues													Other natural gas revenues

Gas marketing services	Gas marketing services	84		—		—		—		—		84		Gas marketing services	73		—		—		—		—		73
Other natural gas revenues	Other natural gas revenues	15		—		—		—		—		15		Other natural gas revenues	8		—		—		—		—		8
Total natural gas revenues	Total natural gas revenues	99		—		—		—		—		99		Total natural gas revenues	81		—		—		—		—		81
Other revenues	Other revenues	277		65		110		13		9		—		Other revenues	327		43		145		10		16		—
Total revenue from contracts with customers	Total revenue from contracts with customers	7,116		2,128		3,093		531		1,010		843		Total revenue from contracts with customers	5,532		1,702		2,321		314		365		834
Other revenue sources(a)		1,262		316		796		(21)		170		14
Other revenue sources(*)														Other revenue sources(*)	216		(13)		70		(3)		160		18

Total operating revenues	Total operating revenues	$	8,378	$	2,444	$	3,889	$	510	$	1,180	$	857	Total operating revenues	$	5,748	$	1,689	$	2,391	$	311	$	525	$	852

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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)
Nine Months Ended September 30, 2022
Six Months Ended June 30, 2023														Six Months Ended June 30, 2023
Operating revenues	Operating revenues													Operating revenues
Retail electric revenues	Retail electric revenues													Retail electric revenues
Residential	Residential	$	5,282	$	2,049	$	2,995	$	238	$	—	$	—	Residential	$	3,174	$	1,308	$	1,730	$	136	$	—	$	—
Commercial	Commercial	4,202		1,285		2,688		229		—		—		Commercial	2,619		894		1,582		143		—		—
Industrial	Industrial	2,914		1,143		1,529		242		—		—		Industrial	1,653		827		666		160		—		—
Other	Other	79		10		62		7		—		—		Other	54		6		44		4		—		—
Total retail electric revenues	Total retail electric revenues	12,477		4,487		7,274		716		—		—		Total retail electric revenues	7,500		3,035		4,022		443		—		—
Natural gas distribution revenues	Natural gas distribution revenues													Natural gas distribution revenues
Residential	Residential	1,821		—		—		—		—		1,821		Residential	1,226		—		—		—		—		1,226
Commercial	Commercial	493		—		—		—		—		493		Commercial	314		—		—		—		—		314
Transportation	Transportation	872		—		—		—		—		872		Transportation	603		—		—		—		—		603
Industrial	Industrial	60		—		—		—		—		60		Industrial	29		—		—		—		—		29
Other	Other	244		—		—		—		—		244		Other	168		—		—		—		—		168
Total natural gas distribution revenues	Total natural gas distribution revenues	3,490		—		—		—		—		3,490		Total natural gas distribution revenues	2,340		—		—		—		—		2,340
Wholesale electric revenues	Wholesale electric revenues													Wholesale electric revenues
PPA energy revenues	PPA energy revenues	1,739		354		112		11		1,285		—		PPA energy revenues	534		129		35		5		376		—
PPA capacity revenues	PPA capacity revenues	443		135		35		4		273		—		PPA capacity revenues	341		105		25		34		179		—
Non-PPA revenues	Non-PPA revenues	182		166		19		511		572		—		Non-PPA revenues	98		32		10		178		187		—
Total wholesale electric revenues	Total wholesale electric revenues	2,364		655		166		526		2,130		—		Total wholesale electric revenues	973		266		70		217		742		—
Other natural gas revenues	Other natural gas revenues													Other natural gas revenues

Gas marketing services	Gas marketing services	417		—		—		—		—		417		Gas marketing services	304		—		—		—		—		304
Other natural gas revenues	Other natural gas revenues	41		—		—		—		—		41		Other natural gas revenues	20		—		—		—		—		20
Total natural gas revenues	Total natural gas revenues	458		—		—		—		—		458		Total natural gas revenues	324		—		—		—		—		324
Other revenues	Other revenues	810		173		327		34		27		—		Other revenues	640		103		276		22		27		—
Total revenue from contracts with customers	Total revenue from contracts with customers	19,599		5,315		7,767		1,276		2,157		3,948		Total revenue from contracts with customers	11,777		3,404		4,368		682		769		2,664
Other revenue sources(a)		2,633		708		1,451		3		461		50
Other revenue sources(*)														Other revenue sources(*)	451		(68)		199		20		264		64

Total operating revenues	Total operating revenues	$	22,232	$	6,023	$	9,218	$	1,279	$	2,618	$	3,998	Total operating revenues	$	12,228	$	3,336	$	4,567	$	702	$	1,033	$	2,728

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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 September 30, 2021
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	$	1,974	$	750	$	1,138	$	86	$	—	$	—	Residential	$	1,655	$	617	$	962	$	76	$	—	$	—
Commercial	Commercial	1,432		471		882		79		—		—		Commercial	1,387		410		900		77		—		—
Industrial	Industrial	902		394		428		80		—		—		Industrial	1,005		368		553		84		—		—
Other	Other	24		4		18		2		—		—		Other	25		3		20		2		—		—
Total retail electric revenues	Total retail electric revenues	4,332		1,619		2,466		247		—		—		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	218		—		—		—		—		218		Residential	474		—		—		—		—		474
Commercial	Commercial	55		—		—		—		—		55		Commercial	130		—		—		—		—		130
Transportation	Transportation	239		—		—		—		—		239		Transportation	276		—		—		—		—		276
Industrial	Industrial	6		—		—		—		—		6		Industrial	16		—		—		—		—		16
Other	Other	31		—		—		—		—		31		Other	67		—		—		—		—		67
Total natural gas distribution revenues	Total natural gas distribution revenues	549		—		—		—		—		549		Total natural gas distribution revenues	963		—		—		—		—		963
Wholesale electric revenues	Wholesale electric revenues													Wholesale electric revenues
PPA energy revenues	PPA energy revenues	359		61		41		2		261		—		PPA energy revenues	585		108		40		5		441		—
PPA capacity revenues	PPA capacity revenues	125		14		14		1		97		—		PPA capacity revenues	136		40		12		—		85		—
Non-PPA revenues	Non-PPA revenues	63		54		3		120		134		—		Non-PPA revenues	62		35		6		169		196		—
Total wholesale electric revenues	Total wholesale electric revenues	547		129		58		123		492		—		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	45		—		—		—		—		45		Gas marketing services	90		—		—		—		—		90
Other natural gas revenues	Other natural gas revenues	11		—		—		—		—		11		Other natural gas revenues	10		—		—		—		—		10
Total natural gas revenues	Total natural gas revenues	56		—		—		—		—		56		Total natural gas revenues	100		—		—		—		—		100
Other revenues	Other revenues	248		53		112		8		9		—		Other revenues	308		63		121		9		9		—
Total revenue from contracts with customers	Total revenue from contracts with customers	5,732		1,801		2,636		378		501		605		Total revenue from contracts with customers	6,226		1,644		2,614		422		731		1,063
Other revenue sources(a)		506		103		220		—		178		18
Other revenue sources(*)														Other revenue sources(*)	980		287		507		12		168		20

Total operating revenues	Total operating revenues	$	6,238	$	1,904	$	2,856	$	378	$	679	$	623	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)
Nine Months Ended September 30, 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	$	4,910	$	1,931	$	2,765	$	214	$	—	$	—	Residential	$	3,179	$	1,250	$	1,783	$	146	$	—	$	—
Commercial	Commercial	3,727		1,229		2,293		205		—		—		Commercial	2,567		786		1,638		143		—		—
Industrial	Industrial	2,299		1,048		1,034		217		—		—		Industrial	1,732		691		887		154		—		—
Other	Other	70		13		51		6		—		—		Other	51		7		40		4		—		—
Total retail electric revenues	Total retail electric revenues	11,006		4,221		6,143		642		—		—		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	1,143		—		—		—		—		1,143		Residential	1,490		—		—		—		—		1,490
Commercial	Commercial	298		—		—		—		—		298		Commercial	400		—		—		—		—		400
Transportation	Transportation	775		—		—		—		—		775		Transportation	613		—		—		—		—		613
Industrial	Industrial	29		—		—		—		—		29		Industrial	48		—		—		—		—		48
Other	Other	187		—		—		—		—		187		Other	195		—		—		—		—		195
Total natural gas distribution revenues	Total natural gas distribution revenues	2,432		—		—		—		—		2,432		Total natural gas distribution revenues	2,746		—		—		—		—		2,746
Wholesale electric revenues	Wholesale electric revenues													Wholesale electric revenues
PPA energy revenues	PPA energy revenues	782		143		71		9		575		—		PPA energy revenues	930		168		72		8		694		—
PPA capacity revenues	PPA capacity revenues	375		86		41		4		247		—		PPA capacity revenues	268		78		23		3		166		—
Non-PPA revenues	Non-PPA revenues	181		108		14		283		273		—		Non-PPA revenues	124		99		15		271		269		—
Total wholesale electric revenues	Total wholesale electric revenues	1,338		337		126		296		1,095		—		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		2,168		—		—		—		—		2,168
Gas marketing services	Gas marketing services	303		—		—		—		—		303		Gas marketing services	333		—		—		—		—		333
Other natural gas revenues	Other natural gas revenues	27		—		—		—		—		27		Other natural gas revenues	26		—		—		—		—		26
Total natural gas revenues	Total natural gas revenues	2,498		—		—		—		—		2,498		Total natural gas revenues	359		—		—		—		—		359
Other revenues	Other revenues	792		150		362		22		18		—		Other revenues	530		109		216		17		17		—
Total revenue from contracts with customers	Total revenue from contracts with customers	18,066		4,708		6,631		960		1,113		4,930		Total revenue from contracts with customers	12,486		3,188		4,674		746		1,146		3,105
Other revenue sources(a)		2,979		311		419		28		497		1,763
Other adjustments(b)		(3,699)		—		—		—		—		(3,699)
Other revenue sources(*)														Other revenue sources(*)	1,368		392		654		23		292		35

Total operating revenues	Total operating revenues	$	17,346	$	5,019	$	7,050	$	988	$	1,610	$	2,994	Total operating revenues	$	13,854	$	3,580	$	5,328	$	769	$	1,438	$	3,140

~~(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 ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021:~~2022:

Southern Company Alabama Power Georgia Power Mississippi Power Southern Power Southern Company Gas
(in millions)
Accounts Receivable
At September 30, 2022 $ 2,760 $ 800 $ 1,035 $ 98 $ 264 $ 433
At December 31, 2021 2,504 589 736 73 149 753
Contract Assets
At September 30, 2022 $ 178 $ 5 $ 114 $ — $ — $ —
At December 31, 2021 117 2 63 — 1 —
Contract Liabilities
At September 30, 2022 $ 56 $ 5 $ 6 $ 7 $ 2 $ —
At December 31, 2021 57 4 14 — 1 —


	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Accounts Receivable
At June 30, 2023	$	2,423	$	670	$	986	$	101	$	126	$	461
At December 31, 2022	3,123		696		922		92		237		1,107
Contract Assets
At June 30, 2023	$	167	$	—	$	73	$	—	$	—	$	30
At December 31, 2022	156		2		89		—		—		—
Contract Liabilities
At June 30, 2023	$	73	$	1	$	28	$	3	$	1	$	—
At December 31, 2022	45		4��		9		—		1		—

~~At September 30, 2022 and December 31, 2021,~~Contract assets for Georgia Power ~~had contract assets~~ primarily ~~related~~relate to retail customer fixed bill programs, where the payment is contingent upon Georgia Power's continued performance and the customer's continued participation in the program over a one-year contract term, and unregulated service agreements, where payment is contingent on project completion. Contract liabilities for Georgia Power primarily relate to cash collections recognized in advance of revenue for unregulated service ~~agreements.~~agreements and retail customer fixed bill programs. At June 30, 2023, Southern Company Gas' contract assets relate to work performed on an energy efficiency enhancement and upgrade contract with the U.S. General Services Administration. Southern Company Gas receives cash advances from a third-party financial institution to fund work performed, of which approximately $41 million had been received at June 30, 2023. These advances have been accounted for as long-term debt on the balance sheets. See Note 1 to the financial statements under "Affiliate Transactions" in Item 8 of the Form 10-K for additional information regarding the construction contract. At June 30, 2023 and December 31, 2022, Southern Company's unregulated distributed generation business had ~~$59~~contract assets of $64 million and ~~$50~~$65 million, respectively, and contract liabilities of ~~contract assets and $37~~$42 million and ~~$39~~$32 million, ~~of contract liabilities at September 30, 2022 and December 31, 2021,~~ respectively, for outstanding performance obligations.

Revenues recognized in the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, which were included in contract liabilities at December 31, ~~2021,~~2022, were ~~$13 million and $32 million, respectively, for Southern Company and~~ immaterial for the ~~other~~applicable Registrants. Contract liabilities are primarily classified as current on the balance sheets as the corresponding revenues are generally expected to be recognized within one year.

Remaining Performance Obligations

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

2022 (remaining) 2023 2024 2025 2026 Thereafter
(in millions)
Southern Company $ 243 $ 619 $ 434 $ 322 $ 307 $ 2,340
Alabama Power 8 24 7 5 — —
Georgia Power 20 70 34 22 11 21
Southern Power 80 341 344 294 299 2,334
Southern Company Gas 12 29 29 — — —

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(UNAUDITED)

~~Revenue~~fixed price contracts. Revenues from contracts with customers related to these performance obligations remaining at June 30, 2023 are expected to be recognized ~~for performance obligations remaining at September 30, 2022 w~~as ~~immaterial for Mississippi Power.~~follows:


	2023 (remaining)		2024		2025		2026		2027		Thereafter
	(in millions)
Southern Company	$	333	$	544	$	351	$	316	$	319	$	2,089
Alabama Power	11		8		7		—		—		—
Georgia Power	43		58		28		14		14		23

Southern Power	188		358		302		303		310		2,077
Southern Company Gas	11		29		—		—		—		—

Lease Income

Lease income for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 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 September 30, 2022
For the Three Months Ended June 30, 2023														For the Three Months Ended June 30, 2023
Lease income - interest income on sales-type leases	Lease income - interest income on sales-type leases	$	7	$	—	$	—	$	4	$	3	$	—	Lease income - interest income on sales-type leases	$	6	$	—	$	—	$	4	$	2	$	—
Lease income - operating leases	Lease income - operating leases	50		19		8		1		21		9		Lease income - operating leases	42		11		7		1		21		9
Variable lease income	Variable lease income	139		—		—		—		145		—		Variable lease income	123		—		—		—		132		—
Total lease income	Total lease income	$	196	$	19	$	8	$	5	$	169	$	9	Total lease income	$	171	$	11	$	7	$	5	$	155	$	9

For the Nine Months Ended September 30, 2022
For the Six Months Ended June 30, 2023														For the Six Months Ended June 30, 2023
Lease income - interest income on sales-type leases	Lease income - interest income on sales-type leases	$	19	$	—	$	—	$	11	$	8	$	—	Lease income - interest income on sales-type leases	$	12	$	—	$	—	$	7	$	5	$	—
Lease income - operating leases	Lease income - operating leases	149		58		24		1		64		27		Lease income - operating leases	92		29		14		2		42		18
Variable lease income	Variable lease income	355		1		—		—		372		—		Variable lease income	192		—		—		—		207		—
Total lease income	Total lease income	$	523	$	59	$	24	$	12	$	444	$	27	Total lease income	$	296	$	29	$	14	$	9	$	254	$	18

For the Three Months Ended September 30, 2021
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	$	4	$	—	$	—	$	4	$	—	$	—	Lease income - interest income on sales-type leases	$	7	$	—	$	—	$	4	$	3	$	—
Lease income - operating leases	Lease income - operating leases	56		21		11		—		21		9		Lease income - operating leases	52		19		8		—		21		9
Variable lease income	Variable lease income	143		—		—		—		151		—		Variable lease income	129		—		—		—		138		—
Total lease income	Total lease income	$	203	$	21	$	11	$	4	$	172	$	9	Total lease income	$	188	$	19	$	8	$	4	$	162	$	9

For the Nine Months Ended September 30, 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	$	11	$	—	$	—	$	10	$	—	$	—	Lease income - interest income on sales-type leases	$	13	$	—	$	—	$	8	$	5	$	—
Lease income - operating leases	Lease income - operating leases	168		62		31		1		64		26		Lease income - operating leases	105		39		16		1		42		18
Variable lease income	Variable lease income	355		—		—		—		379		—		Variable lease income	211		—		—		—		227		—
Total lease income	Total lease income	$	534	$	62	$	31	$	11	$	443	$	26	Total lease income	$	329	$	39	$	16	$	9	$	274	$	18

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

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(UNAUDITED)

(E) CONSOLIDATED ENTITIES AND EQUITY METHOD INVESTMENTS

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

Southern Company

At June 30, 2023 and December 31, 2022, Southern Holdings had equity method investments totaling $122 million and $112 million, respectively, primarily related to investments in venture capital funds focused on energy and utility investments. Earnings from these investments were immaterial for all periods presented.

Southern Power

Variable Interest Entities

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

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

~~(UNAUDITED)~~

SP Solar and SP Wind

At ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, SP Solar had total assets of ~~$6.0~~$5.8 billion and ~~$6.1~~$5.9 billion, respectively, total liabilities of $0.4 billion, and noncontrolling interests of $1.0 billion and $1.1 ~~billion.~~billion, respectively. Cash distributions from SP Solar are allocated 67% to Southern Power and 33% to Global Atlantic in accordance with their partnership interest percentage. Under the terms of the limited partnership agreement, distributions without limited partner consent are limited to available cash and SP Solar is obligated to distribute all such available cash to its partners each quarter. Available cash includes all cash generated in the quarter subject to the maintenance of appropriate operating reserves.

At ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, SP Wind had total assets of ~~$2.3~~$2.2 billion, total liabilities of ~~$191~~$175 million and ~~$130~~$169 million, respectively, and noncontrolling interests of ~~$40 million and $41 million, respectively.~~$39 million. Under the terms of the limited liability agreement, distributions without Class A member consent are limited to available cash and SP Wind is obligated to distribute all such available cash to its members each quarter. Available cash includes all cash generated in the quarter subject to the maintenance of appropriate operating reserves. Cash distributions from SP Wind are generally allocated 60% to Southern Power and 40% to the three financial investors in accordance with the limited liability agreement.

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

Other Variable Interest Entities

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

At ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the other VIEs had total assets of ~~$1.9~~$1.7 billion and $1.8 billion, respectively, total liabilities of $0.2 billion, and ~~$0.3 billion, respectively, and~~ noncontrolling interests of $0.8 ~~billion and $0.9 billion, respectively.~~billion. Under the terms of the partnership agreements, distributions of all available cash are required each month or quarter and additional distributions require partner consent.

~~Equity Method Investments~~

At September 30, 2022 and December 31, 2021, Southern Power had equity method investments in wind and battery energy storage projects totaling $49 million and $86 million, respectively. Earnings (loss) from these investments were immaterial for all periods presented. During the nine months ended September 30, 2022, Southern Power sold equity method investments in wind projects and received proceeds totaling $38 million. The gains associated with the sales were immaterial.

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(UNAUDITED)

Equity Method Investments

At December 31, 2022, Southern Power had equity method investments in wind and battery energy storage projects totaling $49 million. During the first quarter 2023, Southern Power sold its remaining equity method investments in the projects and received proceeds of $50 million. Earnings (loss) from these investments, including the gains associated with the sales, were immaterial for all periods presented.

Southern Company Gas

Equity Method Investments

The carrying amounts of Southern Company Gas' equity method investments at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 and related earnings ~~(loss)~~ from those investments for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 were as follows:


Investment Balance	Investment Balance	September 30, 2022		December 31, 2021		Investment Balance	June 30, 2023		December 31, 2022
		(in millions)					(in millions)
SNG	SNG	$	1,091	$	1,129	SNG	$	1,220	$	1,243
Other(*)		34		44
Other						Other	32		33
Total	Total	$	1,125	$	1,173	Total	$	1,252	$	1,276

~~(*)Balance at September 30, 2022 reflects an $11 million distribution received in 2022 from PennEast Pipeline.~~

Three Months Ended September 30, Nine Months Ended September 30,
Earnings (Loss) from Equity Method Investments 2022 2021 2022 2021
(in millions)
SNG $ 34 $ 27 $ 104 $ 93
PennEast Pipeline(*)
— (2) — (81)
Other — — 1 2
Total $ 34 $ 25 $ 105 $ 14

~~(*)Primarily reflects pre-tax impairment charges. See Note 7 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.~~


	Three Months Ended June 30,				Six Months Ended June 30,
Earnings from Equity Method Investments	2023		2022		2023		2022
	(in millions)
SNG	$	28	$	31	$	72	$	70
Other	—		—		—		1
Total	$	28	$	31	$	72	$	71

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(UNAUDITED)

(F) FINANCING AND LEASES

Bank Credit Arrangements

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

At ~~September~~June 30, ~~2022,~~2023, committed credit arrangements with banks were as follows:


		Expires															Expires
Company	Company	2023		2024		2025		2026		Total		Unused			Expires within One Year			Company	2024		2025		2026		2028		Total		Unused		Expires within One Year
		(in millions)												(in millions)
Southern Company parent(a)	Southern Company parent(a)	$	—	$	—	$	—	$	2,000	$	2,000	$	1,998		$	—		Southern Company parent(a)	$	150	$	—	$	—	$	1,850	$	2,000	$	1,998	$	150
Alabama 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		275			—			Mississippi Power	—		125		150		—		275		275		—
Southern Power~~(a)~~(b)	Southern Power~~(a)~~(b)	—		—		—		600		600		569			—			Southern Power~~(a)~~(b)	—		—		—		600		600		589		—
Southern Company Gas~~(b)~~(c)	Southern Company Gas~~(b)~~(c)	250		—		—		1,500		1,750		1,748			250			Southern Company Gas~~(b)~~(c)	100		—		—		1,500		1,600		1,598		100
SEGCO	SEGCO	30		—		—		—		30		30			30			SEGCO	30		—		—		—		30		30		30
Southern Company	Southern Company	$	280	$	700	$	125	$	6,550	$	7,655	$	7,596		$	280		Southern Company	$	830	$	125	$	150	$	6,400	$	7,505	$	7,466	$	280

(a)Arrangement expiring in 2028 represents a $2.45 billion combined arrangement for Southern Company and Southern Power as borrowers. Pursuant to the combined facility, the allocations between Southern Company and Southern Power may be adjusted.

(b)Does not include Southern Power Company's ~~two~~ $75 million and $100 million continuing letter of credit facilities for standby letters of credit, expiring in ~~2023~~2025 and ~~2025,~~2026, respectively, of which ~~$11~~$9 million and $5$16 million, respectively, was unused at ~~September~~June 30, ~~2022.~~2023. In March 2023, Southern Power amended the $100 million letter of credit facility, which, among other things, extended the expiration date from 2025 to 2026 and increased the amount from $75 million. Southern Power's subsidiaries are not parties to its bank credit arrangements or letter of credit facilities.

~~(b)~~(c)Southern Company Gas, as the parent entity, guarantees the obligations of Southern Company Gas Capital, which is the borrower of $800 million of the credit arrangement expiring in ~~2026.~~2028. Southern Company Gas' committed credit arrangement expiring in ~~2026~~2028 also includes $700 million for which Nicor Gas is the borrower and which is restricted for working capital needs of Nicor Gas. Pursuant to the multi-year credit arrangement expiring in ~~2026,~~2028, the allocations between Southern Company Gas Capital and Nicor Gas may be adjusted. Nicor Gas is also the borrower ofunder a ~~new $250~~$100 million credit arrangement expiring in ~~2023.~~2024.

As reflected in the table above, in ~~March 2022, Mississippi~~May 2023, Southern Company and Southern Power combined and extended their multi-year credit arrangements previously maturing in 2026, resulting in a single aggregate $2.45 billion facility (currently allocated $1.85 billion for Southern Company and $600 million for Southern Power) maturing in 2028. Pursuant to the combined facility, the allocations between Southern Company and Southern Power may be adjusted. Alabama Power, Georgia Power, and Southern Company Gas Capital, along with Nicor Gas, amended and restated ~~its $125 million revolving~~certain of their multi-year credit ~~arrangement,~~arrangements, which, among other things, extended the maturity ~~date~~dates from 2026 to 2028. Mississippi Power amended and restated certain of its multi-year credit arrangements aggregating $150 million, which, among other things, extended the maturity dates from 2024 to 2026. Nicor Gas also entered into a $100 million credit arrangement maturing in 2024 to replace its $250 million credit arrangement that expired in 2023. In June 2023, ~~to 2025 and allows for borrowing based on term SOFR.~~Southern Company also entered into a new $150 million credit arrangement maturing in 2024.

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

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

Table of ContentsIndex 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~~ Financial Statements

NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

provisions to other indebtedness would trigger an event of default if the applicable borrower defaulted on indebtedness, the payment of which was then accelerated. At ~~September~~June 30, ~~2022,~~2023, the Registrants, Nicor Gas, and SEGCO were in compliance with all such covenants. None of the bank credit arrangements contain material adverse change clauses at the time of borrowings.

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

~~(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 ~~September~~June 30, ~~2022~~2023 was approximately $1.4 billion (comprised of approximately ~~$789~~$492 million at Alabama Power, ~~$619~~$819 million at Georgia Power, and ~~$34~~$69 million at Mississippi Power). In addition, at ~~September~~June 30, ~~2022,~~2023, Alabama Power and Georgia Power had approximately ~~$288~~$120 million and $225 million, respectively, of fixed rate revenue bonds outstanding that are required to be remarketed within the next 12 months.

~~Equity Units~~Convertible Senior Notes

In ~~May 2022,~~February 2023, Southern Company ~~remarketed $862.5~~issued $1.5 billion aggregate principal amount of Series 2023A 3.875% Convertible Senior Notes due December 15, 2025 (Series 2023A Convertible Senior Notes). In March 2023, Southern Company issued an additional $225 million aggregate principal amount of the Series 2023A Convertible Senior Notes upon the exercise by the initial purchasers of their over-allotment option.

Interest on the Series 2023A Convertible Senior Notes is payable semiannually, beginning June 15, 2023. The Series 2023A Convertible Senior Notes will mature on December 15, 2025, unless earlier converted or repurchased, but are not redeemable at the option of Southern Company. The Series 2023A Convertible Senior Notes are direct, unsecured, and unsubordinated obligations of Southern Company, ranking equally with all of Southern Company's other unsecured and unsubordinated indebtedness from time to time outstanding, and are effectively subordinated to all secured indebtedness of Southern Company.

Holders may convert their Series 2023A Convertible Senior Notes at their option prior to the close of business on the business day preceding September 15, 2025, but only under the following circumstances:

•during any calendar quarter (and only during such calendar quarter), if the last reported sale price of Southern Company's common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day as determined by Southern Company;

•during the five business day period after any 10 consecutive trading day period (Measurement Period) in which the trading price per $1,000 principal amount of Series 2023A Convertible Senior Notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price of the common stock and the conversion rate on each such trading day; or

•upon the occurrence of certain corporate events specified in the indenture governing the Series 2023A Convertible Senior Notes.

On or after September 15, 2025, a holder may convert all or any portion of its Series ~~2019A Remarketable Junior Subordinated~~2023A Convertible Senior Notes ~~due August 1, 2024 (2019A RSNs) and $862.5 million~~at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date regardless of the foregoing conditions.

Southern Company will settle conversions of the Series 2023A Convertible Senior Notes by paying cash up to the aggregate principal amount of ~~its~~the Series ~~2019B Remarketable Junior Subordinated~~2023A Convertible Senior Notes ~~due August 1, 2027 (2019B RSNs), pursuant~~ to be converted and paying or delivering, as 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 portfolio were used to settle the purchase contracts entered into as part of the Equity Units and Southern Company issued approximately 25.2 millioncase may be, cash, shares of common stock or a combination of cash and ~~received proceeds~~shares of ~~$1.725 billion. At September 30, 2022 and December 31, 2021, the 2019A RSNs and the 2019B RSNs are included in long-term debt on~~common stock, at Southern Company's ~~consolidated balance sheets.~~election, in respect of the remainder, if any, of Southern Company's conversion obligation in excess of the aggregate principal amount of the Series 2023A Convertible Senior Notes being converted. The Series 2023A Convertible Senior Notes are initially convertible at a rate of 11.8818 shares of common stock per $1,000 principal amount converted, which is approximately equal to $84.16 per share of common stock. The conversion rate will be subject to adjustment upon the occurrence of certain specified events but will not be adjusted for

Table of ContentsIndex to Financial Statements

NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

accrued and unpaid interest. In addition, upon the occurrence of a make-whole fundamental change (as defined in the indenture governing the Series 2023A Convertible Senior Notes), Southern Company will, in certain circumstances, increase the conversion rate by a number of additional shares of common stock for conversions in connection with the make-whole fundamental change.

Upon the occurrence of a fundamental change (as defined in the indenture governing the Series 2023A Convertible Senior Notes), holders of the Series 2023A Convertible Senior Notes may require Southern Company to purchase all or a portion of their Series 2023A Convertible Senior Notes, in principal amounts equal to $1,000 or an integral multiple thereof, for cash at a price equal to 100% of the principal amount of the Series 2023A Convertible Senior Notes to be purchased plus any accrued and unpaid interest.

Earnings per Share

For Southern Company, the only ~~differences~~difference in computing basic and diluted earnings per share ~~are~~(EPS) is attributable to awards outstanding under stock-based compensation plans, the Series 2023A Convertible Senior Notes, and the ~~Equity Units until they were~~equity units issued in 2019 and settled in August 2022. ~~Earnings per share~~EPS dilution resulting from stock-based compensation plans and the ~~Equity Units issuance~~equity units is determined using the treasury stock method and EPS dilution resulting from the Series 2023A Convertible Senior Notes is determined using the net share settlement method. See Note 12 to the financial statements in Item 8 of the Form 10-K, "Convertible Senior Notes" herein, and 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.~~additional information. Shares used to compute diluted ~~earnings per share~~EPS were as follows:


		Three Months Ended September 30,		Nine Months Ended September 30,			Three Months Ended June 30,		Six Months Ended June 30,
		2022	2021	2022	2021		2023	2022	2023	2022
		(in millions)					(in millions)
As reported shares	As reported shares	1,082	1,061	1,070	1,060	As reported shares	1,092	1,065	1,092	1,064
Effect of stock-based compensation	Effect of stock-based compensation	6	7	6	7	Effect of stock-based compensation	6	5	6	5

Effect of equity units						Effect of equity units	—	2	—	1
Diluted shares	Diluted shares	1,088	1,068	1,076	1,067	Diluted shares	1,098	1,072	1,098	1,070

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

For all periods presented, there was no dilution resulting from the Series 2023A Convertible Senior Notes.

Southern Company Leveraged Lease

See Note 9 to the financial statements in Item 8 of the Form 10-K for information on a leveraged lease agreement related to energy generation. OnIn June ~~30,~~ 2022, the Southern Holdings subsidiary operating the generating plant for the lessee provided notice to the lessee to terminate the related operating and maintenance agreement effective June 30, 2023. Subsequently, the lessee failed to make the semi-annual lease payment due in December 2022. As a result, the Southern Holdings subsidiary was unable to make its corresponding payment to the holders of the underlying non-recourse debt related to the generation assets. The parties to the lease ~~agreement are currently negotiating a potential restructuring,~~entered into forbearance agreements which ~~could result in rescission~~suspended the related contractual rights of the parties while they continued restructuring negotiations, during which the termination ~~notice.~~date for the operating and maintenance agreement was delayed until July 31, 2023. The ~~ultimate outcome of this matter cannot be determined at this time but is not expected~~negotiations were completed on July 14, 2023, resulting in the Southern Holdings subsidiary agreeing to ~~have a~~continue operating the plant for the lessee until the lessee's associated power off-take agreement ends in 2032, subject to certain terms and conditions. The restructuring had no material impact on Southern Company's financial statements. Southern Company will continue to monitor the operational performance of the underlying assets and evaluate the ability of the lessee to continue to meet its obligations, including those associated with a future closure or retirement of the generation assets and associated properties, including the dry ash landfill.

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(UNAUDITED)

~~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. In July 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 removed from its balance sheet operating lease right-of-use assets, net of amortization of $17 million and lease obligations of $18 million maturing through 2024 and recorded finance lease right-of-use assets of $112 million and lease obligations of $113 million maturing through 2039.

(G) INCOME TAXES

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

Current and Deferred Income Taxes

Tax Credit and Net Operating Loss Carryforwards

Southern ~~Company had federal ITC and PTC carryforwards (primarily related to Southern Power) totaling $1.0 billion at September 30, 2022 compared to $1.2 billion at December 31, 2021.~~

~~The~~Company's federal PTC and ITC carryforwards begin expiring in ~~2032,~~2031, but are expected to be fully utilized by ~~2025.~~2027. The utilization of each Registrant's estimated tax credit and state net operating loss carryforwards and related valuation allowances could be impacted by numerous factors, including the acquisition of additional renewable projects, ~~the purchase of rights to additional PTCs of Plant Vogtle Units 3 and 4 pursuant to certain joint ownership agreements,~~ an increase in Georgia Power's ownership interest ~~percentage~~ in Plant Vogtle Units 3 and 4, changes in taxable income projections, 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.

Effective Tax Rate

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

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

Southern Company

Southern Company's effective tax rate was ~~20.0%~~10.7% for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to ~~17.5%~~18.7% for the corresponding period in ~~2021.~~2022. The effective tax rate ~~increase~~decrease was primarily due to ~~higher~~an increase in the flowback of certain excess deferred income taxes at Alabama Power in 2023, lower pre-tax earnings in 2023, and an adjustment related to ~~a prior year~~ state tax credit ~~carryforward~~carryforwards and the related valuation allowance at Georgia Power in 2022 and 2023, partially offset by ~~additional~~the flowback of certain excess deferred income taxes ending in 2022 at Georgia Power.

Alabama Power

Alabama Power's effective tax ~~expense~~rate was 3.9% for the six months ended June 30, 2023 compared to 23.6% for the corresponding period in ~~2021 as a result~~2022. The effective tax rate decrease was primarily due to an increase in the flowback of ~~the sale of Sequent.~~certain excess deferred income taxes in 2023 and lower pre-tax earnings in 2023. See Note 152 to the financial statements under ~~"Southern Company Gas"~~"Alabama Power – Excess Accumulated Deferred Income Tax Accounting Order" in Item 8 of the Form 10-K for additional information.

Georgia Power

Georgia Power's effective tax rate was ~~18.5%~~15.8% for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to ~~7.3%~~16.4% for the corresponding period in ~~2021.~~2022. The effective tax rate ~~increase~~decrease was primarily due to ~~higher pre-tax earnings and~~ an adjustment related to ~~a prior year~~ state tax credit ~~carryforward~~carryforwards in 2022, a decrease in a valuation allowance on certain state tax credit carryforwards in 2023, and lower pre-tax earnings in 2023, largely offset by the flowback of certain excess deferred income taxes ending in 2022.

Mississippi Power

Mississippi Power's effective tax rate was ~~20.1%~~15.2% for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to ~~14.3%~~18.8% for the corresponding period in ~~2021.~~2022. The effective tax rate ~~increase~~decrease was primarily due to ~~a decrease~~an increase in the flowback of certain excess deferred income taxes in ~~2022.~~2023.

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(UNAUDITED)

Southern Power

Southern Power's effective tax benefit rate was ~~18.8%~~(0.7)% for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to aan effective tax ~~benefit~~ rate of ~~(1.6)%~~11.2% for the corresponding period in ~~2021.~~2022. The effective tax rate ~~increase~~decrease was primarily due to ~~higher pre-tax earnings in 2022 and a change~~changes in state apportionment methodology resulting from tax legislation enacted by the State of ~~Alabama~~Tennessee in ~~the first quarter 2021, partially offset by higher wind PTCs in 2022.~~May 2023.

~~Southern Company Gas~~

Southern Company Gas' effective tax rate was 23.7% for the nine months ended September 30, 2022 compared to 36.6% for the corresponding period in 2021. The effective tax rate decrease was primarily due to additional tax expense in 2021 as a result of the sale of Sequent. See Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.

Unrecognized Tax Benefits

Southern Company's and ~~Southern Company Gas'~~Georgia Power's unrecognized tax positions balances at ~~September~~June 30, ~~2022~~2023 were ~~$79~~$130 million and ~~$32~~$48 million, respectively, compared to ~~$47~~$80 million for Southern Company at December 31, ~~2021.~~2022. The increases from prior periods are primarily related to the amendment of certain ~~2018~~2019 state tax filing positions related to ~~Southern Company Gas dispositions.~~tax credit utilization. If accepted by the ~~states,~~state, these positions would decrease Southern Company's and ~~Southern Company Gas' annual~~Georgia Power's effective tax rates. The ultimate outcome of ~~these~~this unrecognized tax ~~benefits~~benefit is dependent on acceptance by ~~each~~the state and is ~~not~~ expected to be resolved in the next 12 months.

(H) RETIREMENT BENEFITS

The Southern Company system has a qualified defined benefit, trusteed, pension plan covering substantially all employees, with the exception of employees at PowerSecure. The qualified pension plan is funded in accordance with requirements of the Employee Retirement Income Security Act of 1974, as amended (ERISA). No mandatory contributions to the qualified pension plan are anticipated for the year ending December 31, ~~2022.~~2023. The Southern Company system also provides certain non-qualified defined benefits for a select group of management and highly compensated employees, which are funded on a cash basis. In addition, the Southern Company system provides certain medical care and life insurance benefits for retired employees through other postretirement benefit plans. The traditional electric operating companies fund other postretirement trusts to the extent required by their respective regulatory commissions. Southern Company Gas has a separate unfunded supplemental retirement health care plan that provides medical care and life insurance benefits to employees of discontinued businesses.

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

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

On each Registrant's condensed statements of income, the service cost component of net periodic benefit costs is included in other operations and maintenance expenses and all other components of net periodic benefit costs are included in other income (expense), net. Components of the net periodic benefit costs for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 are presented in the following tables.

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(UNAUDITED)


		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 September 30, 2022
Three Months Ended June 30, 2023														Three Months Ended June 30, 2023
Pension Plans	Pension Plans													Pension Plans
Service cost	Service cost	$	103	$	25	$	26	$	5	$	2	$	9	Service cost	$	69	$	16	$	17	$	3	$	1	$	6
Interest cost	Interest cost	102		24		31		5		2		7		Interest cost	157		36		47		7		2		11
Expected return on plan assets	Expected return on plan assets	(316)		(77)		(99)		(15)		(4)		(22)		Expected return on plan assets	(308)		(74)		(96)		(14)		(4)		(22)
Amortization:	Amortization:													Amortization:
Prior service costs	Prior service costs	—		—		—		—		—		(1)		Prior service costs	—		—		1		—		—		(1)
Regulatory asset	Regulatory asset	—		—		—		—		—		3		Regulatory asset	—		—		—		—		—		4
Net loss		60		16		18		2		1		2
Net periodic pension cost (income)		$	(51)	$	(12)	$	(24)	$	(3)	$	1	$	(2)
Net (gain) loss														Net (gain) loss	8		3		3		—		—		(1)
Net periodic pension income														Net periodic pension income	$	(74)	$	(19)	$	(28)	$	(4)	$	(1)	$	(3)

Postretirement Benefits	Postretirement Benefits													Postretirement Benefits
Service cost	Service cost	$	6	$	2	$	2	$	1	$	1	$	—	Service cost	$	3	$	1	$	1	$	—	$	—	$	—
Interest cost	Interest cost	10		3		4		—		—		1		Interest cost	17		4		7		1		—		2
Expected return on plan assets	Expected return on plan assets	(20)		(9)		(8)		—		—		(2)		Expected return on plan assets	(20)		(9)		(8)		—		—		(2)
Amortization:	Amortization:													Amortization:
Prior service costs	Prior service costs	(1)		—		—		—		—		—		Prior service costs	1		—		—		—		—		—
Regulatory asset	Regulatory asset	—		—		—		—		—		2		Regulatory asset	—		—		—		—		—		2
Net (gain)/loss		1		—		—		—		—		(1)
Net gain														Net gain	(3)		—		(1)		—		—		(1)
Net periodic postretirement benefit cost (income)	Net periodic postretirement benefit cost (income)	$	(4)	$	(4)	$	(2)	$	1	$	1	$	—	Net periodic postretirement benefit cost (income)	$	(2)	$	(4)	$	(1)	$	1	$	—	$	1

Nine Months Ended September 30, 2022
Six Months Ended June 30, 2023														Six Months Ended June 30, 2023
Pension Plans	Pension Plans													Pension Plans
Service cost	Service cost	$	309	$	74	$	78	$	13	$	7	$	26	Service cost	$	138	$	32	$	34	$	6	$	3	$	12
Interest cost	Interest cost	306		72		92		14		5		21		Interest cost	313		72		95		14		4		21
Expected return on plan assets	Expected return on plan assets	(949)		(229)		(298)		(44)		(12)		(68)		Expected return on plan assets	(615)		(148)		(192)		(28)		(8)		(44)
Amortization:	Amortization:													Amortization:
Prior service costs	Prior service costs	—		—		1		—		—		(2)		Prior service costs	—		—		1		—		—		(1)
Regulatory asset	Regulatory asset	—		—		—		—		—		11		Regulatory asset	—		—		—		—		—		8
Net loss		180		47		55		9		2		5
Net periodic pension cost (income)		$	(154)	$	(36)	$	(72)	$	(8)	$	2	$	(7)
Net (gain) loss														Net (gain) loss	16		5		6		—		—		(2)
Net periodic pension income														Net periodic pension income	$	(148)	$	(39)	$	(56)	$	(8)	$	(1)	$	(6)

Postretirement Benefits	Postretirement Benefits													Postretirement Benefits
Service cost	Service cost	$	17	$	5	$	5	$	1	$	1	$	1	Service cost	$	7	$	2	$	2	$	—	$	—	$	—
Interest cost	Interest cost	31		8		11		1		—		4		Interest cost	35		8		13		2		—		4
Expected return on plan assets	Expected return on plan assets	(60)		(25)		(21)		(1)		—		(6)		Expected return on plan assets	(41)		(17)		(15)		(1)		—		(3)
Amortization:	Amortization:													Amortization:
Prior service costs	Prior service costs	(1)		—		—		—		—		—		Prior service costs	1		—		—		—		—		—
Regulatory asset	Regulatory asset	—		—		—		—		—		5		Regulatory asset	—		—		—		—		—		3
Net (gain)/loss		1		—		1		—		—		(2)
Net gain														Net gain	(6)		(1)		(2)		—		—		(2)
Net periodic postretirement benefit cost (income)	Net periodic postretirement benefit cost (income)	$	(12)	$	(12)	$	(4)	$	1	$	1	$	2	Net periodic postretirement benefit cost (income)	$	(4)	$	(8)	$	(2)	$	1	$	—	$	2

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(UNAUDITED)


		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 September 30, 2021
Three Months Ended June 30, 2022														Three Months Ended June 30, 2022
Pension Plans														Pension Plans
Service cost														Service cost	$	103	$	24	$	26	$	4	$	3	$	8
Interest cost														Interest cost	102		24		30		4		1		7
Expected return on plan assets														Expected return on plan assets	(317)		(75)		(100)		(14)		(4)		(24)
Amortization:														Amortization:
Prior service costs														Prior service costs	—		—		1		—		—		—
Regulatory asset														Regulatory asset	—		—		—		—		—		4
Net loss														Net loss	60		15		19		4		—		1
Net periodic pension income														Net periodic pension income	$	(52)	$	(12)	$	(24)	$	(2)	$	—	$	(4)

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

Regulatory asset														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													Pension Plans
Service cost	Service cost	$	109	$	26	$	28	$	4	$	2	$	10	Service cost	$	206	$	49	$	52	$	8	$	5	$	17
Interest cost	Interest cost	87		20		26		4		2		6		Interest cost	204		48		61		9		3		14
Expected return on plan assets	Expected return on plan assets	(298)		(72)		(94)		(14)		(4)		(21)		Expected return on plan assets	(633)		(152)		(199)		(29)		(8)		(46)
Amortization:	Amortization:													Amortization:
Prior service costs	Prior service costs	—		—		—		—		—		(1)		Prior service costs	—		—		1		—		—		(1)
Regulatory asset	Regulatory asset	—		—		—		—		—		3		Regulatory asset	—		—		—		—		—		8
Net loss	Net loss	78		21		25		4		1		3		Net loss	120		31		37		7		1		3
Net periodic pension cost (income)	Net periodic pension cost (income)	$	(24)	$	(5)	$	(15)	$	(2)	$	1	$	—	Net periodic pension cost (income)	$	(103)	$	(24)	$	(48)	$	(5)	$	1	$	(5)

Postretirement Benefits	Postretirement Benefits													Postretirement Benefits
Service cost	Service cost	$	6	$	2	$	2	$	1	$	1	$	—	Service cost	$	11	$	3	$	3	$	—	$	—	$	1
Interest cost	Interest cost	9		2		3		—		—		1		Interest cost	21		5		7		1		—		2
Expected return on plan assets	Expected return on plan assets	(19)		(8)		(7)		(1)		—		(2)		Expected return on plan assets	(40)		(16)		(13)		(1)		—		(3)
Amortization:	Amortization:													Amortization:

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

Nine Months Ended September 30, 2021
Pension Plans
Service cost		$	326	$	77	$	84	$	13	$	7	$	28
Interest cost		260		61		78		12		4		18
Expected return on plan assets		(893)		(215)		(282)		(41)		(11)		(64)
Amortization:
Prior service costs		—		—		1		—		—		(2)
Regulatory asset		—		—		—		—		—		11
Net loss		235		62		75		11		3		9
Net periodic pension cost (income)		$	(72)	$	(15)	$	(44)	$	(5)	$	3	$	—

Postretirement Benefits
Service cost		$	18	$	5	$	5	$	1	$	1	$	1
Interest cost		26		6		9		1		—		3
Expected return on plan assets		(57)		(22)		(20)		(2)		—		(6)
Amortization:
Prior service costs		(1)		—		—		—		—		—
Regulatory asset		—		—		—		—		—		5
Net (gain)/loss		3		—		2		—		—		(2)
Net periodic postretirement benefit cost (income)		$	(11)	$	(11)	$	(4)	$	—	$	1	$	1

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(UNAUDITED)

(I) FAIR VALUE MEASUREMENTS

At ~~September~~June 30, ~~2022,~~2023, assets and liabilities measured at fair value on a recurring basis during the period, together with their associated level of the fair value hierarchy, were as follows:


		Fair Value Measurements Using:											Fair Value Measurements Using:
At September 30, 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, 2023												At June 30, 2023	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)	$	49	$	454	$	—	$	—	$	503	Energy-related derivatives(a)	$	7	$	86	$	—	$	—	$	93

Interest rate derivatives												Interest rate derivatives	—		4		—		—		4

Investments in trusts:(b)(c)	Investments in trusts:(b)(c)											Investments in trusts:(b)(c)
Domestic equity	Domestic equity	610		161		—		—		771		Domestic equity	718		205		—		—		923
Foreign equity	Foreign equity	111		129		—		—		240		Foreign equity	140		167		—		—		307
U.S. Treasury and government agency securities	U.S. Treasury and government agency securities	—		265		—		—		265		U.S. Treasury and government agency securities	—		333		—		—		333
Municipal bonds	Municipal bonds	—		52		—		—		52		Municipal bonds	—		46		—		—		46
Pooled funds – fixed income	Pooled funds – fixed income	—		7		—		—		7		Pooled funds – fixed income	—		7		—		—		7
Corporate bonds	Corporate bonds	—		438		—		—		438		Corporate bonds	—		391		—		—		391
Mortgage and asset backed securities	Mortgage and asset backed securities	—		87		—		—		87		Mortgage and asset backed securities	—		90		—		—		90
Private equity	Private equity	—		—		—		156		156		Private equity	—		—		—		166		166
Cash and cash equivalents	Cash and cash equivalents	4		—		—		—		4		Cash and cash equivalents	2		—		—		—		2
Other	Other	17		13		—		—		30		Other	31		7		—		9		47
Cash equivalents	Cash equivalents	1,402		18		—		—		1,420		Cash equivalents	1,494		12		—		—		1,506
Other investments	Other investments	9		26		—		—		35		Other investments	9		34		8		—		51
Total	Total	$	2,202	$	1,650	$	—	$	156	$	4,008	Total	$	2,401	$	1,382	$	8	$	175	$	3,966
Liabilities:	Liabilities:											Liabilities:
Energy-related derivatives(a)	Energy-related derivatives(a)	$	20	$	141	$	—	$	—	$	161	Energy-related derivatives(a)	$	33	$	278	$	—	$	—	$	311
Interest rate derivatives	Interest rate derivatives	—		311		—		—		311		Interest rate derivatives	—		304		—		—		304
Foreign currency derivatives	Foreign currency derivatives	—		323		—		—		323		Foreign currency derivatives	—		170		—		—		170
Contingent consideration	Contingent consideration	—		—		14		—		14		Contingent consideration	—		—		12		—		12
Other	Other	—		13		—		—		13		Other	—		13		—		—		13
Total	Total	$	20	$	788	$	14	$	—	$	822	Total	$	33	$	765	$	12	$	—	$	810

7874

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)


		Fair Value Measurements Using:											Fair Value Measurements Using:
At September 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
At June 30, 2023												At June 30, 2023	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	$	—	$	147	$	—	$	—	$	147	Energy-related derivatives	$	—	$	32	$	—	$	—	$	32

Nuclear decommissioning trusts:(b)	Nuclear decommissioning trusts:(b)											Nuclear decommissioning trusts:(b)
Domestic equity	Domestic equity	370		152		—		—		522		Domestic equity	420		198		—		—		618
Foreign equity	Foreign equity	111		—		—		—		111		Foreign equity	140		—		—		—		140
U.S. Treasury and government agency securities	U.S. Treasury and government agency securities	—		15		—		—		15		U.S. Treasury and government agency securities	—		20		—		—		20
Municipal bonds	Municipal bonds	—		2		—		—		2		Municipal bonds	—		1		—		—		1
Corporate bonds	Corporate bonds	—		230		—		—		230		Corporate bonds	—		221		—		—		221
Mortgage and asset backed securities	Mortgage and asset backed securities	—		20		—		—		20		Mortgage and asset backed securities	—		21		—		—		21
Private equity	Private equity	—		—		—		156		156		Private equity	—		—		—		166		166
Other	Other	10		—		—		—		10		Other	7		—		—		9		16
Cash equivalents	Cash equivalents	1,225		18		—		—		1,243		Cash equivalents	110		12		—		—		122
Other investments	Other investments	—		26		—		—		26		Other investments	—		34		—		—		34
Total	Total	$	1,716	$	610	$	—	$	156	$	2,482	Total	$	677	$	539	$	—	$	175	$	1,391
Liabilities:	Liabilities:											Liabilities:
Energy-related derivatives	Energy-related derivatives	$	—	$	35	$	—	$	—	$	35	Energy-related derivatives	$	—	$	84	$	—	$	—	$	84

Georgia Power	Georgia Power											Georgia Power
Assets:	Assets:											Assets:
Energy-related derivatives	Energy-related derivatives	$	—	$	145	$	—	$	—	$	145	Energy-related derivatives	$	—	$	17	$	—	$	—	$	17

Nuclear decommissioning trusts:(b)(c)	Nuclear decommissioning trusts:(b)(c)											Nuclear decommissioning trusts:(b)(c)
Domestic equity	Domestic equity	240		1		—		—		241		Domestic equity	298		1		—		—		299
Foreign equity	Foreign equity	—		128		—		—		128		Foreign equity			166		—		—		166
U.S. Treasury and government agency securities	U.S. Treasury and government agency securities	—		250		—		—		250		U.S. Treasury and government agency securities	—		313		—		—		313
Municipal bonds	Municipal bonds	—		50		—		—		50		Municipal bonds	—		45		—		—		45
Corporate bonds	Corporate bonds	—		208		—		—		208		Corporate bonds	—		170		—		—		170
Mortgage and asset backed securities	Mortgage and asset backed securities	—		67		—		—		67		Mortgage and asset backed securities	—		69		—		—		69
Other	Other	7		13		—		—		20		Other	24		7		—		—		31

Total	Total	$	247	$	862	$	—	$	—	$	1,109	Total	$	322	$	788	$	—	$	—	$	1,110
Liabilities:	Liabilities:											Liabilities:
Energy-related derivatives	Energy-related derivatives	$	—	$	51	$	—	$	—	$	51	Energy-related derivatives	$	—	$	102	$	—	$	—	$	102

7975

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(UNAUDITED)


		Fair Value Measurements Using:											Fair Value Measurements Using:
At September 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
At June 30, 2023												At June 30, 2023	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	$	—	$	133	$	—	$	—	$	133	Energy-related derivatives	$	—	$	27	$	—	$	—	$	27

Cash equivalents		30		—		—		—		30
Total		$	30	$	133	$	—	$	—	$	163

Liabilities:	Liabilities:											Liabilities:
Energy-related derivatives	Energy-related derivatives	$	—	$	24	$	—	$	—	$	24	Energy-related derivatives	$	—	$	55	$	—	$	—	$	55

Southern Power	Southern Power											Southern Power
Assets:	Assets:											Assets:
Energy-related derivatives	Energy-related derivatives	$	—	$	7	$	—	$	—	$	7	Energy-related derivatives	$	—	$	4	$	—	$	—	$	4

Cash equivalents												Cash equivalents	5		—		—		—		5
Total												Total	$	5	$	4	$	—	$	—	$	9
Liabilities:	Liabilities:											Liabilities:
Energy-related derivatives	Energy-related derivatives	$	—	$	13	$	—	$	—	$	13	Energy-related derivatives	$	—	$	10	$	—	$	—	$	10
Foreign currency derivatives	Foreign currency derivatives	—		80		—		—		80		Foreign currency derivatives	—		28		—		—		28
Contingent consideration	Contingent consideration	—		—		14		—		14		Contingent consideration	—		—		12		—		12
Other	Other	—		13		—		—		13		Other	—		13		—		—		13
Total	Total	$	—	$	106	$	14	$	—	$	120	Total	$	—	$	51	$	12	$	—	$	63

Southern Company Gas	Southern Company Gas											Southern Company Gas
Assets:	Assets:											Assets:
Energy-related derivatives(a)	Energy-related derivatives(a)	$	49	$	22	$	—	$	—	$	71	Energy-related derivatives(a)	$	7	$	6	$	—	$	—	$	13

Interest rate derivatives												Interest rate derivatives	—		4		—		—		4
Non-qualified deferred compensation trusts:	Non-qualified deferred compensation trusts:											Non-qualified deferred compensation trusts:
Domestic equity	Domestic equity	—		8		—		—		8		Domestic equity	—		6		—		—		6
Foreign equity	Foreign equity	—		1		—		—		1		Foreign equity	—		1		—		—		1
Pooled funds – fixed income	Pooled funds – fixed income	—		7		—		—		7		Pooled funds – fixed income	—		7		—		—		7
Cash equivalents	Cash equivalents	4		—		—		—		4		Cash equivalents	2		—		—		—		2

Cash equivalents and restricted cash												Cash equivalents and restricted cash	215		—		—		—		215

Total	Total	$	53	$	38	$	—	$	—	$	91	Total	$	224	$	24	$	—	$	—	$	248
Liabilities:	Liabilities:											Liabilities:
Energy-related derivatives(a)	Energy-related derivatives(a)	$	20	$	17	$	—	$	—	$	37	Energy-related derivatives(a)	$	33	$	27	$	—	$	—	$	60
Interest rate derivatives	Interest rate derivatives	—		87		—		—		87		Interest rate derivatives	—		88		—		—		88

Total	Total	$	20	$	104	$	—	$	—	$	124	Total	$	33	$	115	$	—	$	—	$	148

(a)Excludes cash collateral of ~~$15~~$52 million.

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

(c)Includes investment securities pledged to creditors and collateral received and excludes payables related to the securities lending program. At ~~September~~June 30, ~~2022,~~2023, approximately ~~$46~~$25 million of the fair market value of Georgia Power's nuclear decommissioning trust funds' securities were on loan to creditors under the funds' managers' securities lending program. See Note 6 to the financial statements in Item 8 of the Form 10-K for additional information.

8076

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Southern Company, Alabama Power, and Georgia Power continue to elect the option to fair value investment securities held in the nuclear decommissioning trust funds. The fair value of the funds, including reinvested interest and dividends and excluding the funds' expenses, increased (decreased) by the amounts shown in the table below for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021.~~2022. The changes were recorded as a change to the regulatory assets and liabilities related to AROs for Georgia Power and Alabama Power, respectively.


											Three Months Ended				Six Months Ended
Fair value increases (decreases)	Fair value increases (decreases)	Three Months Ended September 30, 2022		Three Months Ended September 30, 2021		Nine Months Ended September 30, 2022		Nine Months Ended September 30, 2021		Fair value increases (decreases)	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
		(in millions)									(in millions)
Southern Company	Southern Company	$	(106)	$	9	$	(486)	$	173	Southern Company	$	132	$	(230)	$	228	$	(380)
Alabama Power	Alabama Power	(53)		15		(245)		133		Alabama Power	58		(125)		103		(192)
Georgia Power	Georgia Power	(53)		(6)		(241)		40		Georgia Power	74		(105)		125		(188)

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.

~~Table of ContentsIndex to Financial Statements~~

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

~~(UNAUDITED)~~

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.

Table of ContentsIndex to Financial Statements

NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

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~~primarily includes investments traded in the open market that have maturities greater than 90 days, which are categorized as Level 2 under Fair Value Measurements and are comprised of corporate bonds, bank certificates of deposit, treasury bonds, and/or agency bonds.

At ~~September~~June 30, ~~2022,~~2023, the fair value measurements of private ~~equity~~market 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~~$175 million and unfunded commitments related to the private ~~equity~~market investments totaled ~~$84~~$77 million. Private ~~equity~~market investments include high-quality private equity funds across several market sectors, ~~and~~ funds that invest in real estate ~~assets.~~assets, and a private credit fund. Private ~~equity~~market funds do not have redemption rights. Distributions from these funds will be received as the underlying investments in the funds are liquidated.

At ~~September~~June 30, ~~2022,~~2023, 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	$	53.4	$	10.8	$	14.5	$	1.5	$	2.9	$	7.4	Carrying amount	$	58.9	$	10.8	$	16.5	$	1.6	$	3.0	$	7.5
Fair value	Fair value	46.4		9.3		12.6		1.2		2.7		6.3		Fair value	53.5		9.5		15.0		1.4		2.8		6.6

(*)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.

~~Table of ContentsIndex to Financial Statements~~

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

~~(UNAUDITED)~~

(J) DERIVATIVES

The Registrants are exposed to market risks, including commodity price risk, interest rate risk, weather risk, and occasionally foreign currency exchange rate risk. To manage the volatility attributable to these exposures, each company nets its exposures, where possible, to take advantage of natural offsets and enters into various derivative transactions for the remaining exposures pursuant to each company's policies in areas such as counterparty exposure and risk management practices. ~~Prior to the sale of Sequent on July 1, 2021, Southern Company Gas' wholesale gas operations used various contracts in its commercial activities that generally met the definition of derivatives.~~ For the traditional electric operating companies, Southern Power, and Southern Company Gas' other businesses, each company's policy is that derivatives are to be used primarily for hedging purposes and mandates strict adherence to all applicable risk management policies. Derivative positions are monitored using techniques including, but not limited to, market valuation, value at risk, stress testing, and sensitivity analysis. Derivative instruments are recognized at fair value in the balance sheets as either assets or liabilities and are presented on a net basis. See Note (I) for additional fair value information. In the statements of cash flows, any cash impacts of settled energy-related and interest rate derivatives are recorded as operating activities. Any cash impacts of settled foreign currency derivatives are classified as operating or financing activities to correspond with the classification of the hedged interest or principal, respectively. See Note 1 to the financial statements under "Financial Instruments" in Item 8 of the Form 10-K for additional information. ~~See Note 15~~

Table of ContentsIndex to ~~the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information regarding the sale of Sequent.~~Financial Statements

NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(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.

~~Table of ContentsIndex to Financial Statements~~

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

~~(UNAUDITED)~~

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

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

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

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

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

Table of ContentsIndex to Financial Statements

NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

At ~~September~~June 30, ~~2022,~~2023, the net volume of energy-related derivative contracts for natural gas positions, together with the longest hedge date over which the respective entity is hedging its exposure to the variability in future cash flows for forecasted transactions and the longest non-hedge date for derivatives not designated as hedges, were as follows:


		Net Purchased mmBtu	Longest Hedge Date	Longest Non-Hedge Date		Net Purchased mmBtu	Longest Hedge Date	Longest Non-Hedge Date
		(in millions)				(in millions)
Southern Company(*)	Southern Company(*)	399	2030	2025	Southern Company(*)	422	2030	2028
Alabama Power	Alabama Power	105	2026	—	Alabama Power	108	2026	2023
Georgia Power	Georgia Power	116	2025	—	Georgia Power	109	2026	2023
Mississippi Power	Mississippi Power	82	2027	—	Mississippi Power	85	2027	2023
Southern Power	Southern Power	11	2030	2023	Southern Power	10	2030	2024
Southern Company Gas(*)	Southern Company Gas(*)	85	2025	2025	Southern Company Gas(*)	110	2028	2028

(*)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 119.7 million mmBtu long natural gas positions ~~of 95.7~~and 9.4 million mmBtu ~~and~~ short natural gas positions ~~of 10.6 million mmBtu~~ at ~~September~~June 30, ~~2022,~~2023, which is also included in Southern Company's total volume.

In addition to the volumes discussed above, the traditional electric operating companies and Southern Power enter into physical natural gas supply contracts that provide the option to sell back excess natural gas due to operational constraints. The maximum expected volume of natural gas subject to such a feature is 1511 million mmBtu for Southern Company, which includes 43 million mmBtu for Alabama Power, 54 million mmBtu for Georgia Power, 21 million mmBtu for Mississippi Power, and 43 million mmBtu for Southern Power.

For cash flow hedges of energy-related derivatives, the estimated pre-tax ~~gains (losses)~~losses expected to be reclassified from accumulated OCI to earnings for the 12-month period ending ~~September~~June 30, ~~2023~~2024 are ~~$17~~$33 million for Southern Company, ~~$26~~$24 million for Southern Company Gas, and ~~immaterial~~$9 million for ~~the other Registrants.~~Southern Power.

~~Table of ContentsIndex to Financial Statements~~

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

~~(UNAUDITED)~~

Interest Rate Derivatives

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

Table of ContentsIndex to Financial Statements

NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

At ~~September~~June 30, ~~2022,~~2023, the following interest rate derivatives were outstanding:


		Notional Amount		Interest Rate Received	Weighted Average Interest Rate Paid	Hedge Maturity Date	Fair Value Gain (Loss) at September 30, 2022			Notional Amount		Weighted Average Interest Rate Paid	Interest Rate Received	Hedge Maturity Date	Fair Value Gain (Loss) at June 30, 2023
		(in millions)					(in millions)			(in millions)					(in millions)
Cash Flow Hedges of Existing Debt
Southern Company parent		$	175	—	4.25%	September 2025	$	—
Southern Company parent		175		—	3.83%	August 2032	—
Cash Flow Hedges of Forecasted Debt									Cash Flow Hedges of Forecasted Debt
Southern Company Gas									Southern Company Gas	$	250	3.40%	N/A	August 2033	$	4
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	(57)		Southern Company parent	400		1-month LIBOR + 0.68%	1.75%	March 2028	(56)
Southern Company parent	Southern Company parent	1,000		3.70%	1-month LIBOR + 2.36%	April 2030	(167)		Southern Company parent	1,000		1-month LIBOR + 2.36%	3.70%	April 2030	(160)
Southern Company Gas	Southern Company Gas	500		1.75%	1-month LIBOR + 0.38%	January 2031	(87)		Southern Company Gas	500		1-month LIBOR + 0.38%	1.75%	January 2031	(88)
Southern Company	Southern Company	$	2,250				$	(311)	Southern Company	$	2,150				$	(300)

For cash flow 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 ~~September~~June 30, ~~2023~~2024 are ~~$(17)~~$(15) million for Southern Company and immaterial for the ~~other Registrants.~~traditional electric operating companies and Southern Company Gas. Deferred gains and losses related to interest rate derivatives are expected to be amortized into earnings through 2052 for Southern Company, Alabama Power, and Georgia Power, 2028 for Mississippi Power, and 2046 for Southern Company Gas.

~~Table of ContentsIndex to Financial Statements~~

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

~~(UNAUDITED)~~

Foreign Currency Derivatives

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

At ~~September~~June 30, ~~2022,~~2023, the following foreign currency derivatives were outstanding:


		Pay Notional		Pay Rate	Receive Notional		Receive Rate	Hedge Maturity Date	Fair Value Gain (Loss) at September 30, 2022			Pay Notional		Pay Rate	Receive Notional		Receive Rate	Hedge Maturity Date	Fair Value Gain (Loss) at June 30, 2023
		(in millions)			(in millions)				(in millions)			(in millions)			(in millions)				(in millions)
Cash Flow Hedges of Existing Debt	Cash Flow Hedges of Existing Debt										Cash Flow Hedges of Existing Debt
Southern Power	Southern Power	$	564	3.78%	€	500	1.85%	June 2026	$	(80)	Southern Power	$	564	3.78%	€	500	1.85%	June 2026	$	(28)

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	(243)		Southern Company parent	1,476		3.39%	1,250		1.88%	September 2027	(142)

Southern Company	Southern Company	$	2,040		€	1,750			$	(323)	Southern Company	$	2,040		€	1,750			$	(170)

Table of ContentsIndex to Financial Statements

NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

For cash flow hedges of foreign currency derivatives, the estimated pre-tax losses expected to be reclassified from accumulated OCI to earnings for the 12-month period ending ~~September~~June 30, ~~2023~~2024 are ~~$12~~$11 million for 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.

8682

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

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


		At September 30, 2022				At December 31, 2021					At June 30, 2023				At December 31, 2022
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
Energy-related derivatives designated as hedging instruments for regulatory purposes	Energy-related derivatives designated as hedging instruments for regulatory purposes									Energy-related derivatives designated as hedging instruments for regulatory purposes

Assets from risk management activities/Other current liabilities		$	299	$	70	$	129	$	30
Assets from risk management activities/Liabilities from risk management activities										Assets from risk management activities/Liabilities from risk management activities	$	46	$	166	$	123	$	121
Other deferred charges and assets/Other deferred credits and liabilities	Other deferred charges and assets/Other deferred credits and liabilities	150		59		72		6		Other deferred charges and assets/Other deferred credits and liabilities	36		101		52		44

Total derivatives designated as hedging instruments for regulatory purposes	Total derivatives designated as hedging instruments for regulatory purposes	449		129		201		36		Total derivatives designated as hedging instruments for regulatory purposes	82		267		175		165
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		27		13		7		5
Assets from risk management activities/Liabilities from risk management activities										Assets from risk management activities/Liabilities from risk management activities	1		32		3		27
Other deferred charges and assets/Other deferred credits and liabilities	Other deferred charges and assets/Other deferred credits and liabilities	7		1		1		—		Other deferred charges and assets/Other deferred credits and liabilities	3		5		6		4
Interest rate derivatives:	Interest rate derivatives:									Interest rate derivatives:
Assets from risk management activities/Other current liabilities		—		44		19		—
Assets from risk management activities/Liabilities from risk management activities										Assets from risk management activities/Liabilities from risk management activities	4		77		12		62
Other deferred charges and assets/Other deferred credits and liabilities	Other deferred charges and assets/Other deferred credits and liabilities	—		266		—		29		Other deferred charges and assets/Other deferred credits and liabilities	—		227		—		240
Foreign currency derivatives:	Foreign currency derivatives:									Foreign currency derivatives:
Assets from risk management activities/Other current liabilities		—		37		—		39
Assets from risk management activities/Liabilities from risk management activities										Assets from risk management activities/Liabilities from risk management activities	—		35		—		34
Other deferred charges and assets/Other deferred credits and liabilities	Other deferred charges and assets/Other deferred credits and liabilities	—		285		—		40		Other deferred charges and assets/Other deferred credits and liabilities	—		135		—		182
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	34		646		27		113		Total derivatives designated as hedging instruments in cash flow and fair value hedges	8		511		21		549
Energy-related derivatives not designated as hedging instruments	Energy-related derivatives not designated as hedging instruments									Energy-related derivatives not designated as hedging instruments

Assets from risk management activities/Other current liabilities		19		18		9		4
Assets from risk management activities/Liabilities from risk management activities										Assets from risk management activities/Liabilities from risk management activities	7		7		13		13
Other deferred charges and assets/Other deferred credits and liabilities	Other deferred charges and assets/Other deferred credits and liabilities	2		1		1		—		Other deferred charges and assets/Other deferred credits and liabilities	—		—		2		1

Total derivatives not designated as hedging instruments	Total derivatives not designated as hedging instruments	21		19		10		4		Total derivatives not designated as hedging instruments	7		7		15		14
Gross amounts recognized	Gross amounts recognized	504		794		238		153		Gross amounts recognized	97		785		211		728
Gross amounts offset(a)	Gross amounts offset(a)	(113)		(128)		(25)		(28)		Gross amounts offset(a)	(40)		(92)		(70)		(111)
Net amounts recognized in the Balance Sheets(b)	Net amounts recognized in the Balance Sheets(b)	$	391	$	666	$	213	$	125	Net amounts recognized in the Balance Sheets(b)	$	57	$	693	$	141	$	617

8783

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)


		At September 30, 2022				At December 31, 2021					At June 30, 2023				At December 31, 2022
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(c)	Alabama Power(c)									Alabama Power(c)
Energy-related derivatives designated as hedging instruments for regulatory purposes	Energy-related derivatives designated as hedging instruments for regulatory purposes									Energy-related derivatives designated as hedging instruments for regulatory purposes

Other current assets/Other current liabilities	Other current assets/Other current liabilities	$	90	$	12	$	30	$	9	Other current assets/Other current liabilities	$	20	$	46	$	42	$	21
Other deferred charges and assets/Other deferred credits and liabilities	Other deferred charges and assets/Other deferred credits and liabilities	57		23		25		2		Other deferred charges and assets/Other deferred credits and liabilities	12		38		20		18
Total derivatives designated as hedging instruments for regulatory purposes	Total derivatives designated as hedging instruments for regulatory purposes	147		35		55		11		Total derivatives designated as hedging instruments for regulatory purposes	32		84		62		39

Gross amounts offset	Gross amounts offset	(31)		(31)		(5)		(5)		Gross amounts offset	(20)		(20)		(24)		(24)
Net amounts recognized in the Balance Sheets	Net amounts recognized in the Balance Sheets	$	116	$	4	$	50	$	6	Net amounts recognized in the Balance Sheets	$	12	$	64	$	38	$	15

Georgia Power	Georgia Power									Georgia Power
Energy-related derivatives designated as hedging instruments for regulatory purposes	Energy-related derivatives designated as hedging instruments for regulatory purposes									Energy-related derivatives designated as hedging instruments for regulatory purposes

Assets from risk management activities/Other current liabilities	Assets from risk management activities/Other current liabilities	$	107	$	28	$	54	$	6	Assets from risk management activities/Other current liabilities	$	7	$	65	$	36	$	43
Other deferred charges and assets/Other deferred credits and liabilities	Other deferred charges and assets/Other deferred credits and liabilities	38		23		21		2		Other deferred charges and assets/Other deferred credits and liabilities	8		37		6		18
Total derivatives designated as hedging instruments for regulatory purposes	Total derivatives designated as hedging instruments for regulatory purposes	145		51		75		8		Total derivatives designated as hedging instruments for regulatory purposes	15		102		42		61

Energy-related derivatives not designated as hedging instruments	Energy-related derivatives not designated as hedging instruments									Energy-related derivatives not designated as hedging instruments

Other current assets/Other current liabilities	Other current assets/Other current liabilities	1		—		—		—		Other current assets/Other current liabilities	2		—		—		1

Gross amounts recognized	Gross amounts recognized	146		51		75		8		Gross amounts recognized	17		102		42		62
Gross amounts offset	Gross amounts offset	(41)		(41)		(8)		(8)		Gross amounts offset	(12)		(12)		(21)		(21)
Net amounts recognized in the Balance Sheets	Net amounts recognized in the Balance Sheets	$	105	$	10	$	67	$	—	Net amounts recognized in the Balance Sheets	$	5	$	90	$	21	$	41

Mississippi Power(c)	Mississippi Power(c)									Mississippi Power(c)
Energy-related derivatives designated as hedging instruments for regulatory purposes	Energy-related derivatives designated as hedging instruments for regulatory purposes									Energy-related derivatives designated as hedging instruments for regulatory purposes

Assets from risk management activities/Other current liabilities	Assets from risk management activities/Other current liabilities	$	78	$	12	$	30	$	3	Assets from risk management activities/Other current liabilities	$	11	$	28	$	33	$	24
Other deferred charges and assets/Other deferred credits and liabilities	Other deferred charges and assets/Other deferred credits and liabilities	55		12		26		2		Other deferred charges and assets/Other deferred credits and liabilities	16		27		26		8
Total derivatives designated as hedging instruments for regulatory purposes	Total derivatives designated as hedging instruments for regulatory purposes	133		24		56		5		Total derivatives designated as hedging instruments for regulatory purposes	27		55		59		32

Gross amounts offset	Gross amounts offset	(20)		(20)		(4)		(4)		Gross amounts offset	(19)		(19)		(17)		(17)
Net amounts recognized in the Balance Sheets	Net amounts recognized in the Balance Sheets	$	113	$	4	$	52	$	1	Net amounts recognized in the Balance Sheets	$	8	$	36	$	42	$	15

8884

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

At September 30, 2022 At December 31, 2021
Derivative Category and Balance Sheet Location Assets Liabilities Assets Liabilities
(in millions) (in millions)
Southern Power
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Other current assets/Other current liabilities $ — $ 10 $ 2 $ —
Other deferred charges and assets/Other deferred credits and liabilities 5 1 1 —
Foreign currency derivatives:
Other current assets/Other current liabilities — 12 — 16
Other deferred charges and assets/Other deferred credits and liabilities — 68 — —
Total derivatives designated as hedging instruments in cash flow and fair value hedges 5 91 3 16
Energy-related derivatives not designated as hedging instruments
Other current assets/Other current liabilities 2 2 1 —
Gross amounts recognized 7 93 4 16
Gross amounts offset (3) (3) — —
Net amounts recognized in the Balance Sheets $ 4 $ 90 $ 4 $ 16
Southern Company Gas
Energy-related derivatives designated as hedging instruments for regulatory purposes
Other current assets/Other current liabilities $ 24 $ 17 $ 15 $ 12
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Other current assets/Other current liabilities 26 3 5 5
Other deferred charges and assets/Other deferred credits and liabilities 3 — — —
Interest rate derivatives:
Other current assets/Other current liabilities — 13 6 —
Other deferred charges and assets/Other deferred credits and liabilities — 74 — 6
Total derivatives designated as hedging instruments in cash flow and fair value hedges 29 90 11 11
Energy-related derivatives not designated as hedging instruments
Other current assets/Other current liabilities 16 16 8 4
Other deferred charges and assets/Other deferred credits and liabilities 2 1 1 —
Total derivatives not designated as hedging instruments 18 17 9 4
Gross amounts recognized 71 124 35 27
Gross amounts offset(a)
(18) (33) (8) (11)
Net amounts recognized in the Balance Sheets(b)
$ 53 $ 91 $ 27 $ 16

~~(a)Gross amounts offset includes cash collateral held on deposit in broker margin accounts of $15 million and $3 million at September 30, 2022 and December 31, 2021, respectively.~~

~~(b)Net amounts of derivative instruments outstanding exclude immaterial premium and intrinsic value associated with weather derivatives for all periods presented.~~


	At June 30, 2023				At December 31, 2022
Derivative Category and Balance Sheet Location	Assets		Liabilities		Assets		Liabilities
	(in millions)				(in millions)
Southern Power
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Other current assets/Other current liabilities	$	—	$	9	$	—	$	12
Other deferred charges and assets/Other deferred credits and liabilities	3		1		5		—
Foreign currency derivatives:
Other current assets/Other current liabilities	—		11		—		11
Other deferred charges and assets/Other deferred credits and liabilities	—		17		—		36
Total derivatives designated as hedging instruments in cash flow and fair value hedges	3		38		5		59
Energy-related derivatives not designated as hedging instruments

Other current assets/Other current liabilities	—		—		2		—
Other deferred charges and assets/Other deferred credits and liabilities	1		—		1		—


Total derivatives not designated as hedging instruments	1		—		3		—
Gross amounts recognized	4		38		8		59
Gross amounts offset	(1)		(1)		—		—
Net amounts recognized in the Balance Sheets	$	3	$	37	$	8	$	59

Southern Company Gas
Energy-related derivatives designated as hedging instruments for regulatory purposes

Other current assets/Other current liabilities	$	8	$	27	$	12	$	33


Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Other current assets/Other current liabilities	1		23		3		15
Other deferred charges and assets/Other deferred credits and liabilities	—		4		1		4
Interest rate derivatives:
Other current assets/Other current liabilities	4		19		—		14
Other deferred charges and assets/Other deferred credits and liabilities	—		69		—		72
Total derivatives designated as hedging instruments in cash flow and fair value hedges	5		115		4		105
Energy-related derivatives not designated as hedging instruments

Other current assets/Other current liabilities	4		6		11		12
Other deferred charges and assets/Other deferred credits and liabilities	—		—		1		1

Total derivatives not designated as hedging instruments	4		6		12		13
Gross amounts recognized	17		148		28		151
Gross amounts offset(a)	14		(38)		—		(41)
Net amounts recognized in the Balance Sheets(b)	$	31	$	110	$	28	$	110

8985

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

(a)Gross amounts offset includes cash collateral held on deposit in broker margin accounts of $52 million and $41 million at June 30, 2023 and December 31, 2022, respectively.

(b)Net amounts of derivative instruments outstanding exclude immaterial premium and intrinsic value associated with weather derivatives for both periods presented.

(c)Energy-related derivatives not designated as hedging instruments were immaterial for Alabama Power and Mississippi Power ~~at September 30, 2022. There were no such instruments~~ for ~~the traditional electric operating companies at December 31, 2021.~~both periods presented.

At ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, 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 September 30, 2022:
At June 30, 2023:												At June 30, 2023:
Energy-related derivatives:	Energy-related derivatives:											Energy-related derivatives:
Other regulatory assets, current	Other regulatory assets, current	$	(17)	$	(2)	$	(8)	$	(3)	$	(4)	Other regulatory assets, current	$	(141)	$	(37)	$	(60)	$	(22)	$	(22)
Other regulatory assets, deferred	Other regulatory assets, deferred	(6)		(2)		(3)		(1)		—		Other regulatory assets, deferred	(71)		(27)		(30)		(14)		—

Other regulatory liabilities, current	Other regulatory liabilities, current	246		80		87		69		10		Other regulatory liabilities, current	29		11		2		4		12
Other regulatory liabilities, deferred	Other regulatory liabilities, deferred	98		36		18		44		—		Other regulatory liabilities, deferred	6		1		1		4		—
Total energy-related derivative gains (losses)	Total energy-related derivative gains (losses)	$	321	$	112	$	94	$	109	$	6	Total energy-related derivative gains (losses)	$	(177)	$	(52)	$	(87)	$	(28)	$	(10)

At December 31, 2021:
At December 31, 2022:												At December 31, 2022:
Energy-related derivatives:	Energy-related derivatives:											Energy-related derivatives:
Other regulatory assets, current	Other regulatory assets, current	$	(17)	$	(6)	$	—	$	—	$	(11)	Other regulatory assets, current	$	(71)	$	(8)	$	(26)	$	(13)	$	(24)

Other regulatory assets, deferred												Other regulatory assets, deferred	(23)		(7)		(14)		(2)		—
Other regulatory liabilities, current	Other regulatory liabilities, current	107		28		48		27		4		Other regulatory liabilities, current	72		29		19		22		2
Other regulatory liabilities, deferred	Other regulatory liabilities, deferred	65		22		19		24		—		Other regulatory liabilities, deferred	31		9		2		20		—
Total energy-related derivative gains (losses)	Total energy-related derivative gains (losses)	$	155	$	44	$	67	$	51	$	(7)	Total energy-related derivative gains (losses)	$	9	$	23	$	(19)	$	27	$	(22)

9086

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, the pre-tax effects of cash flow and fair value hedge accounting on accumulated OCI for the applicable Registrants were as follows:


Gain (Loss) Recognized in OCI on Derivative		For the Three Months Ended September 30,				For the Nine Months Ended September 30,
		2022		2021		2022		2021
Gain (Loss) Recognized in OCI on Derivatives										Gain (Loss) Recognized in OCI on Derivatives	For the Three Months Ended June 30,				For the Six Months Ended June 30,
											2023		2022		2023		2022
		(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	$	11	$	38	$	51	$	59	Energy-related derivatives	$	(5)	$	(1)	$	(50)	$	41
Interest rate derivatives	Interest rate derivatives	6		5		36		7		Interest rate derivatives	3		21		(10)		30
Foreign currency derivatives	Foreign currency derivatives	(35)		(36)		(137)		(79)		Foreign currency derivatives	8		(74)		9		(102)
Fair value hedges(*):	Fair value hedges(*):									Fair value hedges(*):
Foreign currency derivatives	Foreign currency derivatives	20		(4)		18		(4)		Foreign currency derivatives	30		(7)		1		(3)
Total	Total	$	2	$	3	$	(32)	$	(17)	Total	$	36	$	(61)	$	(50)	$	(34)

Georgia Power	Georgia Power									Georgia Power

Cash flow hedges:										Cash flow hedges:
Interest rate derivatives	Interest rate derivatives	$	—	$	—	$	31	$	—	Interest rate derivatives	$	(1)	$	19	$	(3)	$	31

Southern Power	Southern Power									Southern Power
Cash flow hedges:	Cash flow hedges:									Cash flow hedges:
Energy-related derivatives	Energy-related derivatives	$	(11)	$	8	$	(4)	$	16	Energy-related derivatives	$	(2)	$	2	$	(13)	$	7

Foreign currency derivatives	Foreign currency derivatives	(35)		(36)		(137)		(79)		Foreign currency derivatives	8		(74)		9		(102)
Total	Total	$	(46)	$	(28)	$	(141)	$	(63)	Total	$	6	$	(72)	$	(4)	$	(95)
Southern Company Gas	Southern Company Gas									Southern Company Gas
Cash flow hedges:	Cash flow hedges:									Cash flow hedges:
Energy-related derivatives	Energy-related derivatives	$	22	$	30	$	55	$	43	Energy-related derivatives	$	(3)	$	(2)	$	(37)	$	35
Interest rate derivatives	Interest rate derivatives	5		—		—		—		Interest rate derivatives	3		(5)		4		(5)
Total	Total	$	27	$	30	$	55	$	43	Total	$	—	$	(7)	$	(33)	$	30

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

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, the pre-tax effects of ~~interest rate~~energy-related derivatives designated as cash flow hedging instruments on accumulated OCI were immaterial for ~~the other Registrants.~~Alabama Power and Mississippi Power.

9187

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, the pre-tax effects of cash flow and fair value hedge accounting on income were as follows:


Location and Amount of Gain (Loss) Recognized in Income on Cash Flow and Fair Value Hedging Relationships	Location and Amount of Gain (Loss) Recognized in Income on Cash Flow and Fair Value Hedging Relationships	For the Three Months Ended September 30,				For the Nine Months Ended September 30,				Location and Amount of Gain (Loss) Recognized in Income on Cash Flow and Fair Value Hedging Relationships	For the Three Months Ended June 30,				For the Six Months Ended June 30,
																			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,
		2022		2021		2022		2021			2023		2022		2023		2022
		(in millions)									(in millions)
Southern Company	Southern Company									Southern Company
Total cost of natural gas	Total cost of natural gas	$	294	$	129	$	1,840	$	943	Total cost of natural gas	$	199	$	452	$	1,097	$	1,546
Gain (loss) on energy-related cash flow hedges(a)	Gain (loss) on energy-related cash flow hedges(a)	9		2		28		—		Gain (loss) on energy-related cash flow hedges(a)	(9)		10		(29)		18
Total depreciation and amortization	Total depreciation and amortization	922		896		2,728		2,658		Total depreciation and amortization	1,112		913		2,222		1,805
Gain (loss) on energy-related cash flow hedges(a)	Gain (loss) on energy-related cash flow hedges(a)	(1)		3		5		6		Gain (loss) on energy-related cash flow hedges(a)	(4)		4		(13)		6
Total interest expense, net of amounts capitalized	Total interest expense, net of amounts capitalized	(511)		(451)		(1,461)		(1,352)		Total interest expense, net of amounts capitalized	(610)		(488)		(1,192)		(950)
Gain (loss) on interest rate cash flow hedges(a)	Gain (loss) on interest rate cash flow hedges(a)	(7)		(7)		(19)		(20)		Gain (loss) on interest rate cash flow hedges(a)	(5)		(6)		(9)		(13)
Gain (loss) on foreign currency cash flow hedges(a)	Gain (loss) on foreign currency cash flow hedges(a)	(3)		(6)		(16)		(18)		Gain (loss) on foreign currency cash flow hedges(a)	(2)		(7)		(5)		(13)
Gain (loss) on interest rate fair value hedges(b)	Gain (loss) on interest rate fair value hedges(b)	(102)		(4)		(300)		(16)		Gain (loss) on interest rate fair value hedges(b)	(45)		(76)		(3)		(198)
Total other income (expense), net	Total other income (expense), net	132		131		414		290		Total other income (expense), net	142		139		286		283
Gain (loss) on foreign currency cash flow hedges(a)(c)	Gain (loss) on foreign currency cash flow hedges(a)(c)	(32)		(34)		(129)		(76)		Gain (loss) on foreign currency cash flow hedges(a)(c)	—		(73)		10		(97)
Gain (loss) on foreign currency fair value hedges	Gain (loss) on foreign currency fair value hedges	(59)		(32)		(180)		(32)		Gain (loss) on foreign currency fair value hedges	29		(96)		26		(121)
Amount excluded from effectiveness testing recognized in earnings	Amount excluded from effectiveness testing recognized in earnings	(21)		4		(17)		4		Amount excluded from effectiveness testing recognized in earnings	(29)		7		(1)		3

Southern Power	Southern Power									Southern Power
Total depreciation and amortization	Total depreciation and amortization	$	133	$	132	$	384	$	383	Total depreciation and amortization	$	122	$	131	$	250	$	251
Gain (loss) on energy-related cash flow hedges(a)	Gain (loss) on energy-related cash flow hedges(a)	(1)		3		5		6		Gain (loss) on energy-related cash flow hedges(a)	(4)		4		(13)		6
Total interest expense, net of amounts capitalized	Total interest expense, net of amounts capitalized	(32)		(36)		(105)		(111)		Total interest expense, net of amounts capitalized	(33)		(36)		(66)		(73)
Gain (loss) on foreign currency cash flow hedges(a)	Gain (loss) on foreign currency cash flow hedges(a)	(3)		(6)		(16)		(18)		Gain (loss) on foreign currency cash flow hedges(a)	(2)		(7)		(5)		(13)
Total other income (expense), net	Total other income (expense), net	3		2		5		10		Total other income (expense), net	2		1		4		3
Gain (loss) on foreign currency cash flow hedges(a)(c)	Gain (loss) on foreign currency cash flow hedges(a)(c)	(32)		(34)		(129)		(76)		Gain (loss) on foreign currency cash flow hedges(a)(c)	—		(73)		10		(97)
Southern Company Gas	Southern Company Gas									Southern Company Gas
Total cost of natural gas	Total cost of natural gas	$	294	$	129	$	1,840	$	943	Total cost of natural gas	$	199	$	452	$	1,097	$	1,546
Gain (loss) on energy-related cash flow hedges(a)	Gain (loss) on energy-related cash flow hedges(a)	9		2		28		—		Gain (loss) on energy-related cash flow hedges(a)	(9)		10		(29)		18
Total interest expense, net of amounts capitalized	Total interest expense, net of amounts capitalized	(65)		(57)		(187)		(175)		Total interest expense, net of amounts capitalized	(73)		(61)		(150)		(122)
Gain (loss) on interest rate cash flow hedges(a)	Gain (loss) on interest rate cash flow hedges(a)	(2)		(1)		(3)		(2)		Gain (loss) on interest rate cash flow hedges(a)	—		(1)		(1)		(1)
Gain (loss) on interest rate fair value hedges(b)	Gain (loss) on interest rate fair value hedges(b)	(30)		—		(87)		2		Gain (loss) on interest rate fair value hedges(b)	(15)		(22)		(2)		(57)

(a)Reclassified from accumulated OCI into earnings.

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

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

~~For the three and nine months ended September 30, 2022 and 2021, the~~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 ~~Alabama Power, Georgia Power, and Mississippi Power.~~the traditional electric operating companies for all periods presented.

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(UNAUDITED)

At ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the following amounts were recorded on the balance sheets related to cumulative basis adjustments for fair value hedges:


		Carrying Amount of the Hedged 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 September 30, 2022		At December 31, 2021		At September 30, 2022		At December 31, 2021		Balance Sheet Location of Hedged Items	At June 30, 2023		At December 31, 2022		At June 30, 2023		At December 31, 2022
		(in millions)				(in millions)					(in millions)				(in millions)
Southern Company	Southern Company									Southern Company

Long-term debt	Long-term debt	$	(2,788)	$	(3,280)	$	306	$	9	Long-term debt	$	(2,970)	$	(2,927)	$	265	$	282

Southern Company Gas	Southern Company Gas									Southern Company Gas

Long-term debt	Long-term debt	$	(411)	$	(493)	$	86	$	2	Long-term debt	$	(417)	$	(415)	$	80	$	81

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, the pre-tax effects of energy-related derivatives not designated as hedging instruments on the statements of income of Southern Company and Southern Company Gas were as follows:


			Gain (Loss)										Gain (Loss)
			Three Months Ended September 30,				Nine Months Ended September 30,						Three Months Ended 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		2022		2021		Derivatives in Non-Designated Hedging Relationships	Statements of Income Location	2023		2022		2023		2022
			(in millions)				(in millions)						(in millions)				(in millions)

Energy-related derivatives:	Energy-related derivatives:	Natural gas revenues(*)	$	3	$	(2)	$	(10)	$	(122)	Energy-related derivatives:	Natural gas revenues(*)	$	—	$	(15)	$	—	$	(13)
		Cost of natural gas	(2)		20		(7)		36			Cost of natural gas	16		(25)		29		(5)

Total derivatives in non-designated hedging relationships	Total derivatives in non-designated hedging relationships		$	1	$	18	$	(17)	$	(86)	Total derivatives in non-designated hedging relationships		$	16	$	(40)	$	29	$	(18)

(*)Excludes $14 million of gains for the six months ended June 30, 2023, and immaterial ~~gains (losses)~~amounts for all other periods presented, recorded in natural gas revenues associated with weather ~~derivatives for all periods presented.~~derivatives.

Contingent Features

The Registrants do not have any credit arrangements that would require material changes in payment schedules or terminations as a result of a credit rating downgrade. There are certain derivatives that could require collateral, but not accelerated payment, in the event of various credit rating changes of certain Southern Company subsidiaries. Generally, collateral may be provided by a Southern Company guaranty, letter of credit, or cash. At ~~September~~June 30, ~~2022,~~2023, the Registrants had no collateral posted with derivative counterparties to satisfy these arrangements.

For Southern Company and Southern Power, the fair value of interest rate derivative liabilities with contingent features and the maximum potential collateral requirements arising from the credit-risk-related contingent features, at a rating below BBB- and/or Baa3, were ~~$156~~$65 million and ~~$38~~$13 million, respectively, at ~~September~~June 30, ~~2022.~~2023. For the traditional electric operating companies and Southern Power, energy-related derivative liabilities with contingent features and the maximum potential collateral requirements arising from the credit-risk-related contingent features, at a rating below BBB- and/or Baa3, were immaterial at ~~September~~June 30, ~~2022.~~2023. The maximum potential collateral requirements arising from the credit-risk-related contingent features for the traditional electric operating companies and Southern Power include certain agreements that could require collateral in the event that one or more Southern Company power pool participants has a credit rating change to below investment grade. ~~Following the sale of Gulf Power to NextEra Energy, Inc., Gulf Power continued participating in the Southern Company power pool through July 13, 2022.~~

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(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 ~~September~~June 30, ~~2022,~~2023, cash collateral posted in these accounts was ~~immaterial.~~$15 million for Southern Power and immaterial for Alabama Power. Southern Company Gas maintains accounts with brokers or the clearing houses of certain exchanges to facilitate financial derivative transactions. Based on the value of the positions in these accounts and the associated margin requirements, Southern Company Gas may be required to deposit cash into these accounts. At ~~September~~June 30, ~~2022,~~2023, cash collateral held on deposit in broker margin accounts was ~~$15~~$52 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.

~~(K) ACQUISITIONS AND DISPOSITIONS~~

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

~~Alabama Power~~

On September 30, 2022, Alabama Power completed its acquisition of the Calhoun Generating Station, which was accounted for as an asset acquisition. The total purchase price was $179 million, of which $171 million was related to net assets recorded within property, plant, and equipment on the balance sheet and the remainder primarily related to fossil fuel stock and materials and supplies. See Note (B) and Note 15 to the financial statements in Item 8 of the Form 10-K under "Alabama Power" for additional information.

~~Southern Power~~

~~Construction Projects~~

During the nine months ended September 30, 2022, Southern Power completed construction of and placed in service the remaining 40 MWs of the Tranquillity battery energy storage facility and the remaining 15 MWs of the Garland battery energy storage facility.

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(UNAUDITED)

~~Project Facility~~

~~Resource~~

~~Approximate Nameplate Capacity (~~MW)

~~Location~~

~~COD~~

~~PPA Contract Period~~

~~Projects Completed During the Nine Months Ended September 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~~

~~Sale of Natural Gas Storage Facilities~~

On September 7, 2022, certain affiliates of Southern Company Gas entered into agreements to sell two natural gas storage facilities located in California and Texas for an aggregate purchase price of $186 million, plus working capital and certain other adjustments. Completion of the sales is subject to material closing conditions, including, among others, release of a Southern Company Gas parent guarantee, approval from the California Public Utility Commission without a material burdensome condition, and the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The parent guarantee release was executed on October 20, 2022, which resolved a material closing condition. As a result, Southern Company Gas expects to record pre-tax impairment charges totaling approximately $125 million ($95 million after tax) in the fourth quarter 2022. The sale of the Texas facility is expected to be completed later in the fourth quarter 2022, and the sale of the California facility is expected to be completed during 2023; however, the ultimate outcome of these matters cannot be determined at this time.

~~Sale of Pivotal LNG~~

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

~~(L)~~(K) SEGMENT AND RELATED INFORMATION

Southern Company

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

~~Table of ContentsIndex to Financial Statements~~

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

~~(UNAUDITED)~~

Southern Company's reportable business segments are the sale of electricity by the traditional electric operating companies, the sale of electricity in the competitive wholesale market by Southern Power, and the sale of natural gas and other complementary products and services by Southern Company Gas. Revenues from sales by Southern Power to the traditional electric operating companies were ~~$336~~$116 million and ~~$673~~$251 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, respectively, and ~~$167~~$232 million and ~~$361~~$337 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, respectively. Revenues from sales of natural gas from Southern Company Gas to the traditional electric operating companies and Southern Power were immaterial for all periods presented. ~~Revenues from sales of natural gas from Southern Company Gas (prior to its sale of Sequent) to Southern Power were $18 million for the nine months ended September 30, 2021.~~ The "All Other" column includes the Southern Company parent entity, which does not allocate operating expenses to business segments. Also, this category includes segments below the quantitative threshold for separate disclosure. These segments include providing distributed energy and resilience solutions and deploying microgrids for commercial, industrial, governmental, and utility customers, as well as investments in ~~telecommunications and, for the three and nine months ended September 30, 2021, leveraged lease projects.~~telecommunications. All other inter-segment revenues are not material.

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(UNAUDITED)

Financial data for business segments and products and services for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 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 September 30, 2022
Three Months Ended June 30, 2023																		Three Months Ended June 30, 2023
Operating revenues	Operating revenues	$	6,938	$	1,180	$	(691)	$	7,427	$	857	$	135	$	(41)	$	8,378	Operating revenues	$	4,359	$	525	$	(120)	$	4,764	$	852	$	180	$	(48)	$	5,748
Segment net income (loss)(a)(b)	Segment net income (loss)(a)(b)	1,445		95		—		1,540		83		(152)		1		1,472		Segment net income (loss)(a)(b)	823		85		—		908		85		(157)		2		838
Nine Months Ended September 30, 2022
Six Months Ended June 30, 2023																		Six Months Ended June 30, 2023
Operating revenues	Operating revenues	$	16,716	$	2,618	$	(1,391)	$	17,943	$	3,998	$	418	$	(127)	$	22,232	Operating revenues	$	8,472	$	1,033	$	(258)	$	9,247	$	2,728	$	346	$	(93)	$	12,228
Segment net income (loss)~~(b)~~(c)	Segment net income (loss)~~(b)~~(c)	3,256		265		—		3,521		516		(415)		(11)		3,611		Segment net income (loss)~~(b)~~(c)	1,433		187		—		1,620		393		(311)		(2)		1,700
At September 30, 2022
At June 30, 2023																		At June 30, 2023
Goodwill	Goodwill	$	—	$	2	$	—	$	2	$	5,015	$	263	$	—	$	5,280	Goodwill	$	—	$	2	$	—	$	2	$	5,015	$	144	$	—	$	5,161
Total assets	Total assets	95,659		13,283		(748)		108,194		24,097		2,372		(658)		134,005		Total assets	97,751		13,046		(589)		110,208		24,331		3,523		(946)		137,116
Three Months Ended September 30, 2021
Three Months Ended June 30, 2022																		Three Months Ended June 30, 2022
Operating revenues	Operating revenues	$	5,018	$	679	$	(170)	$	5,527	$	623	$	124	$	(36)	$	6,238	Operating revenues	$	5,563	$	899	$	(456)	$	6,006	$	1,083	$	159	$	(42)	$	7,206
Segment net income (loss)~~(c)~~(d)	Segment net income (loss)~~(c)~~(d)	1,085		78		—		1,163		56		(121)		3		1,101		Segment net income (loss)~~(c)~~(d)	1,036		98		—		1,134		115		(137)		(5)		1,107
Nine Months Ended September 30, 2021
Six Months Ended June 30, 2022																		Six Months Ended June 30, 2022
Operating revenues	Operating revenues	$	12,813	$	1,610	$	(372)	$	14,051	$	2,994	$	412	$	(111)	$	17,346	Operating revenues	$	9,778	$	1,438	$	(700)	$	10,516	$	3,140	$	283	$	(85)	$	13,854
Segment net income (loss)~~(e)~~(d)	Segment net income (loss)~~(e)~~(d)	2,352		211		—		2,563		389		(338)		(6)		2,608		Segment net income (loss)~~(e)~~(d)	1,811		170		—		1,981		433		(263)		(12)		2,139
At December 31, 2021
At December 31, 2022																		At December 31, 2022
Goodwill	Goodwill	$	—	$	2	$	—	$	2	$	5,015	$	263	$	—	$	5,280	Goodwill	$	—	$	2	$	—	$	2	$	5,015	$	144	$	—	$	5,161
Total assets	Total assets	89,051		13,390		(667)		101,774		23,560		2,975		(775)		127,534		Total assets	95,861		13,081		(659)		108,283		24,621		2,665		(678)		134,891

(a)Attributable to Southern Company.

(b)For Southern Company Gas, includes a pre-tax charge of approximately $38 million ($28 million after tax) associated with the disallowance of certain capital expenditures at Nicor Gas. See Note (B) under "Southern Company Gas" for additional information.

(c)For Southern Power, includes a $16 million pre-tax gain ($12 million after tax) on the sale of spare parts.

(d)For the traditional electric operating companies, includes pre-tax charges ~~(credits) to income~~of $52 million ($39 million after tax) at Georgia Power for the estimated probable loss associated with the construction of Plant Vogtle Units 3 and 4 of $(70) million ($(52) million after tax) and $(18) million ($(13) million after tax) for the three and nine months ended September 30, 2022, respectively, and $264 million ($197 million after tax) and $772 million ($576 million after tax) for the three and nine months ended September 30, 2021, respectively.4. 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 gain of $121 million ($93 million after tax) related to its sale of Sequent, as well as the resulting $85 million of additional tax expense as a result of the sale. See Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.

~~(d)~~For 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.

~~(e)~~For Southern Company Gas, includes pre-tax impairment charges totaling $84 million ($67 million after tax) related to its equity method investment in the PennEast Pipeline project. See Note 7 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.

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(UNAUDITED)

Products and Services

Electric Utilities' Revenues
Retail Wholesale Other Total
(in millions)
Three Months Ended September 30, 2022 $ 5,961 $ 1,197 $ 269 $ 7,427
Three Months Ended September 30, 2021 4,551 731 245 5,527
Nine Months Ended September 30, 2022 $ 14,363 $ 2,798 $ 782 $ 17,943
Nine Months Ended September 30, 2021 11,492 1,822 737 14,051


	Electric Utilities' Revenues
	Retail		Wholesale		Other		Total
	(in millions)
Three Months Ended June 30, 2023	$	3,859	$	605	$	300	$	4,764
Three Months Ended June 30, 2022	4,789		937		280		6,006
Six Months Ended June 30, 2023	$	7,458	$	1,203	$	586	$	9,247
Six Months Ended June 30, 2022	8,402		1,601		513		10,516

Southern Company Gas' Revenues
Gas
Distribution
Operations
Wholesale
Gas
Services(*)
Gas
Marketing
Services Other Total
(in millions)
Three Months Ended September 30, 2022 $ 748 $ — $ 85 $ 24 $ 857
Three Months Ended September 30, 2021 553 — 52 18 623
Nine Months Ended September 30, 2022 $ 3,513 $ — $ 420 $ 65 $ 3,998
Nine Months Ended September 30, 2021 2,451 188 311 44 2,994

~~(*)~~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.


	Southern Company Gas' Revenues
	Gas Distribution Operations		Gas Marketing Services		Other		Total
	(in millions)
Three Months Ended June 30, 2023	$	761	$	75	$	16	$	852
Three Months Ended June 30, 2022	975		92		16		1,083
Six Months Ended June 30, 2023	$	2,372	$	320	$	36	$	2,728
Six Months Ended June 30, 2022	2,765		335		40		3,140

Southern Company Gas

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

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

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

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

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

The all other column includes segments and subsidiaries that fall below the quantitative threshold for separate disclosure, including storage and fuels operations. The all other column included a natural gas storage facility in Texas through its sale in November 2022. See Note ~~(K)~~15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information, ~~regarding agreements by certain affiliates~~including the sale of ~~Southern Company Gas to sell two~~ a natural gas storage ~~facilities.~~facility in California expected to be completed later in 2023.

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(UNAUDITED)

Business segment financial data for the three ~~and nine~~ months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 was as follows:

Gas Distribution Operations Gas Pipeline Investments
Wholesale Gas Services(a)
Gas Marketing Services Total All Other Eliminations Consolidated
(in millions)
Three Months Ended September 30, 2022
Operating revenues $ 751 $ 8 $ — $ 85 $ 844 $ 16 $ (3) $ 857
Segment net income (loss) 59 24 — (2) 81 2 — 83
Nine Months Ended September 30, 2022
Operating revenues $ 3,533 $ 24 $ — $ 420 $ 3,977 $ 43 $ (22) $ 3,998
Segment net income (loss) 365 76 — 65 506 10 — 516
Total assets at September 30, 2022 21,605 1,425 — 1,595 24,625 9,100 (9,628) 24,097
Three Months Ended September 30, 2021
Operating revenues $ 556 $ 8 $ — $ 52 $ 616 $ 11 $ (4) $ 623
Segment net income (loss)(b)(c)
45 10 94 (2) 147 (91) — 56
Nine Months Ended September 30, 2021
Operating revenues $ 2,466 $ 24 $ 188 $ 311 $ 2,989 $ 29 $ (24) $ 2,994
Segment net income (loss)(b)(c)(d)
308 3 108 60 479 (90) — 389
Total assets at December 31, 2021 20,917 1,467 31 1,556 23,971 12,114 (12,525) 23,560


	Gas Distribution Operations		Gas Pipeline Investments		Gas Marketing Services		Total		All Other		Eliminations		Consolidated
	(in millions)
Three Months Ended June 30, 2023
Operating revenues	$	764	$	8	$	75	$	847	$	9	$	(4)	$	852
Segment net income (loss)(*)	60		19		7		86		(1)		—		85
Six Months Ended June 30, 2023
Operating revenues	$	2,383	$	16	$	320	$	2,719	$	22	$	(13)	$	2,728
Segment net income(*)	281		50		56		387		6		—		393
Total assets at June 30, 2023	22,366		1,552		1,542		25,460		9,606		(10,735)		24,331
Three Months Ended June 30, 2022
Operating revenues	$	980	$	8	$	92	$	1,080	$	10	$	(7)	$	1,083
Segment net income (loss)	92		23		1		116		(1)		—		115
Six Months Ended June 30, 2022
Operating revenues	$	2,782	$	16	$	335	$	3,133	$	26	$	(19)	$	3,140
Segment net income	306		52		67		425		8		—		433
Total assets at December 31, 2022	22,040		1,577		1,616		25,233		8,943		(9,555)		24,621

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

Third Party Gross Revenues Intercompany Revenues Total Gross Revenues Less Gross Gas Costs Operating Revenues
(in millions)
Nine Months Ended September 30, 2021 $ 3,881 $ 90 $ 3,971 $ 3,783 $ 188

~~(b)~~(*)For ~~wholesale~~ gas ~~services,~~distribution operations, includes a pre-tax ~~gain~~charge of ~~$121~~approximately $38 million ($9328 million after tax) ~~related to~~associated with the ~~sale~~disallowance of ~~Sequent.~~certain capital expenditures at Nicor Gas. See Note ~~15 to the financial statements~~(B) under "Southern Company Gas" ~~in Item 8 of the Form 10-K for additional information.~~

~~(c)~~For the "All Other" column, includes $85 million of additional tax expense as a result of the sale. See Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.

~~(d)~~For gas pipeline investments, includes pre-tax impairment charges totaling $84 million ($67 million after tax) related to the equity method investment in the PennEast Pipeline project. See Note 7 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.

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


			Page
Combined Management's Discussion and Analysis of Financial Condition and Results of Operations
Overview			~~101~~96
Results of Operations			~~105~~99
Southern Company			~~105~~99
Alabama Power			~~114~~108
Georgia Power			~~119~~114
Mississippi Power			~~125~~120
Southern Power			~~129~~124
Southern Company Gas			~~133~~128
Future Earnings Potential			~~141~~134
Accounting Policies			~~145~~138
Financial Condition and Liquidity			~~146~~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.

~~100~~95

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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)~~(K) to the Condensed Financial Statements herein for additional information on segment reporting. Alabama Power, Georgia Power, and Mississippi Power each operate with one reportable business segment, since substantially all of their business is providing electric service to customers. Southern Power also operates its business with one reportable business segment, the sale of electricity in the competitive wholesale market. For additional information on the Registrants' primary business activities, ~~and the sale of Sequent,~~ see BUSINESS – "The Southern Company System" in Item 1 of the Form ~~10-K and Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K, respectively.~~10-K.

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

Recent Developments

Alabama Power

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

•~~Alabama Power's petition for a certificate~~first six months of ~~convenience and necessity authorizing~~2023, Alabama Power continued construction of Plant Barry Unit 8, which is expected to ~~complete the acquisition of the Calhoun Generating Station. The transaction closed on September~~be placed in service in November 2023. At June 30, ~~2022 and, on October 3, 2022,~~2023, project expenditures associated with Plant Barry Unit 8 totaled approximately $568 million.

On March 24, 2023, Alabama Power filed Rate CNP New Plant with the Alabama PSC to recover costs associated with the ~~related costs.~~acquisition of the Central Alabama Generating Station. The filing reflected an annual increase in ~~annual~~retail revenues of ~~$34~~$78 million ~~or 0.6%,~~ effective with June 2023 billings. Through May 2023, Alabama Power recovered substantially all costs associated with the ~~billing month of November 2022.~~Central Alabama Generating Station through Rate RSE, offset by revenues from a power sales agreement. On May 24, 2023, the Central Alabama Generating Station was placed into retail service.

•~~An increase~~On June 14, 2023, the Alabama PSC issued an order approving modifications to Rate ECR effective with August 2022 billings, which is expected to result in an increase of approximately $310 million annually. The approved increase in the Rate ECR factor has no significant effect on Alabama Power's ~~net income, but does increase operating cash flows~~Renewable Generation Certificate. The modifications authorized Alabama Power to procure an additional 2,400 MWs of renewable capacity and energy by June 14, 2029 and to market the related energy and environmental attributes to ~~fuel cost recovery.~~customers and other third parties. The modifications also increased the size of allowable renewable projects from 80 MWs to 200 MWs and increased the annual approval limit from 160 MWs to 400 MWs.

•~~Modifications to Rate NDR.~~

•~~An accounting~~On July 11, 2023, the Alabama PSC issued an order authorizing Alabama Power to ~~create a~~expand the existing authority of its reliability reserve ~~separate from the NDR and transition the previous Rate NDR authority related~~ to include certain production-related expenses that are intended to maintain reliability ~~expenditures to the reliability reserve. Alabama Power may make accruals to the reliability reserve if the NDR balance exceeds $35 million.~~in periods between scheduled generating unit outages.

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

On September 23, 2022, the FERC authorized Alabama Power to use updated depreciation rates from its 2021 depreciation study effective January 1, 2023. The study was also provided to the Alabama PSC, and the new depreciation rates will be reflected in Alabama Power's future rate filings. See FUTURE EARNINGS POTENTIAL – "Regulatory Matters – Alabama Power" herein for additional information.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

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 July 2023 and March 2024, respectively, is $10.6 billion.

On March 6, 2023, Unit 3 achieved self-sustaining nuclear fission, commonly referred to as initial criticality, and, on April 1, 2023, the ~~end of~~generator successfully synchronized to the power grid and generated electricity for the first ~~quarter 2023 and the fourth quarter 2023, respectively, is $10.4 billion.~~time. Georgia Power placed Unit 3 in service on July 31, 2023.

Hot functional testing for Unit 4 was completed on May 1, 2023. On July ~~29, 2022,~~20, 2023, Southern Nuclear announced that all Unit 34 ITAACs had been submitted to the ~~NRC. On August 3, 2022,~~NRC, and, on July 28, 2023, the NRC published its 103(g) finding that the ~~acceptance~~accepted criteria in the combined license for Unit 34 had been met, which ~~allowed~~allows nuclear fuel to be loaded and ~~allows~~ start-up testing to begin. Fuel load for Unit ~~3 was completed on October 17, 2022, and the unit~~4 is projected to be ~~placed in service~~completed by the end of ~~the first quarter~~October 2023. The projected schedule for Unit 3 primarily depends on the pace of system and area transitions to operations, including the completion of closure documentation necessary to support start-up testing, and the progression of start-up, final component, and pre-operational testing, which may be impacted by equipment or other operational failures. Unit 4 is projected to be placed in service ~~by the end of the~~during late fourth quarter ~~2023.~~2023 or the first quarter 2024. The projected schedule for Unit 4 ~~primarily~~significantly depends on ~~Unit 3 progress through start-up and testing;~~maintaining overall construction productivity and production levels, ~~improving,~~ particularly in ~~electrical installation, including terminations; and appropriate levels~~completing remaining subcontractor scopes of work while reducing the level of craft laborers ~~particularly electricians, being added and maintained.~~based on work remaining. Any further delays could result in a later in-service ~~dates~~date and cost increases.

During the first ~~nine months~~half of ~~2022,~~2023, established construction contingency totaling ~~$170~~$43 million was assigned to the base capital cost forecast for costs primarily associated with ~~construction productivity,~~ the ~~pace~~Unit 3 schedule extension, including continued need of ~~system turnovers,~~support resources for Unit 3 testing, as well as additional craft and support resources and ~~procurement~~subcontract work for ~~Units 3 and~~Unit 4. Georgia Power also increased its total project capital cost forecast by adding $36 million and $32 million to replenish construction contingency in the second quarter 2022 and the third quarter 2022, respectively. After considering the significant level of uncertainty that exists regarding the future recoverability of these costs since the ultimate outcome of these matters is subject to the outcome of future assessments by management, as well as Georgia PSC decisions in future regulatory proceedings, Georgia Power recorded pre-tax charges to income in the second quarter 2022 and the third quarter 2022 of $36 million ($27 million after tax) and $32 million ($24 million after tax), respectively, for the increases in the total project capital cost forecast. Georgia Power may request the Georgia PSC to evaluate those expenditures for rate recovery during the prudence review following the Unit 4 fuel load pursuant to the twenty-fourth VCM stipulation described in Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction – Regulatory Matters" herein.

Georgia Power and the other Vogtle Owners 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 capital cost expenditures have already exceeded the cost-sharing thresholds and the current~~ project capital cost forecast ~~triggers~~approved by the Vogtle Owners in February 2022 triggered the tender ~~provisions under the Global Amendments.~~provisions.

OnIn June ~~17,~~ 2022 and July ~~26,~~ 2022, OPC and Dalton, respectively, notified Georgia Power of their purported exercises of their tender options. OnGeorgia Power did not accept these purported tender exercises. In June ~~18,~~ 2022, OPC and MEAG Power each filed a separate lawsuit against Georgia Power in the Superior Court of Fulton County, Georgia seeking a declaratory judgment that the starting dollar amount is $17.1 billion and that the cost-sharing and tender provisions ~~have~~had been triggered. OnIn July ~~25, 2022 and July 28,~~ 2022, Georgia Power filed its answers in the lawsuits filed by MEAG Power and OPC ~~respectively,~~ and included counterclaims seeking a declaratory judgment that the starting dollar amount is $18.38 billion and that costs related to force majeure events are excluded prior to calculating the cost-sharing and tender provisions and when calculating Georgia Power's related financial obligations. OnIn September ~~26,~~ 2022, Dalton filed complaints in each of these lawsuits.

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

~~AND RESULTS OF OPERATIONS (Continued)~~

OnAlso in September ~~29,~~ 2022, Georgia Power and MEAG Power reached an agreement to resolve their dispute regarding the proper interpretation of the cost-sharing and tender provisions of the Global Amendments. Under the terms of the agreement, among other items, (i) MEAG Power will not exercise its tender option and will retain its full ownership interest in Plant Vogtle Units 3 and 4; (ii) Georgia Power will ~~pay~~reimburse a portion of MEAG Power's costs of construction for Plant Vogtle Units 3 and 4 as such costs are incurred and with no further adjustment for force majeure costs, which payments will total approximately ~~$79~~$92 million based on the current project capital cost forecast; and (iii) Georgia Power will ~~pay~~reimburse 20% of MEAG Power's costs of construction with respect to any amounts over the current project capital cost forecast, with no further adjustment for force majeure costs. OnIn October 4, 2022, MEAG Power and Georgia Power filed a notice of settlement and voluntary dismissal of the pending litigation described above, including Georgia Power's counterclaim, and ~~on October 6, 2022,~~ Dalton dismissed its related complaint.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Georgia Power recorded pre-tax charges ~~(credits)~~ to income inthrough the fourth quarter ~~2021, the second quarter 2022, and the third quarter~~ 2022 of ~~approximately $440~~$407 million ($~~328~~304 million after tax)~~, $16 million ($12 million after tax), and $(102) million ($(76) million after tax), respectively,~~ associated with the cost-sharing and tender provisions of the Global Amendments, including the settlement with MEAG ~~Power, which are~~Power. This total is included in the total project capital cost ~~forecast.~~forecast and will not be recovered from retail customers. The settlement with MEAG Power does not resolve the separate pending litigation with OPC, including Dalton's associated ~~complaint.~~complaint, described above. Georgia Power may be required to record further pre-tax charges to income of up to approximately ~~$300~~$345 million associated with the cost-sharing and tender provisions of the Global Amendments for OPC and Dalton based on the current project capital cost forecast.

Georgia Power's ownership interest in Plant Vogtle Units 3 and 4 continues to be 45.7%. Georgia Power believes the increases in the total project capital cost forecast through December 31, 2022 triggered the tender provisions, but Georgia Power disagrees with OPC and Dalton on the tender provisions trigger date. Valid notices of tender from OPC and Dalton would require Georgia Power to pay 100% of their respective remaining shares of the costs necessary to complete Plant Vogtle Units 3 and 4. Georgia Power's incremental ownership interest will be calculated and conveyed to Georgia Power after Plant Vogtle Units 3 and 4 are placed in service.

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

~~2022 Base~~Plant Vogtle Unit 3 and Common Facilities Rate ~~Case~~Proceeding

~~On June 24, 2022,~~In compliance with a Georgia PSC order approved in November 2021, Georgia Power ~~filed a~~increased annual retail base rate case (Georgia Power 2022 Base Rate Case) with the Georgia PSC. The filing, as modified on August 22, 2022, proposes a three-year alternate rate plan with requested rate increases totaling $889 million, $107 million, and $45rates by $318 million effective ~~January~~August 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), which occurred on August~~the actual in-service date of July 31, ~~2022, and~~2023 for Plant ~~Scherer~~Vogtle 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.

•~~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.~~3.

See Note (B) to the Condensed Financial Statements under "Georgia Power – ~~Integrated Resource Plans"~~Nuclear Construction" herein for additional information on Plant Vogtle Units 3 and 4.

Fuel Cost Recovery

On May 16, 2023, the Georgia PSC approved a stipulation agreement between Georgia Power and the staff of the Georgia PSC to increase annual fuel billings by 54%, or approximately $1.1 billion,effective June 1, 2023. The increase reflects a three-year recovery period for $2.2 billion of Georgia Power's under recovered fuel balance at May 31, 2023. Changes in fuel rates have no significant effect on Georgia Power's net income but do impact the related operating cash flows. See Note (B) to the Condensed Financial Statements under "Georgia Power – Fuel Cost Recovery" herein for additional information.

Mississippi Power

On July 31, 2023, Mississippi Power and Cooperative Energy filed a settlement agreement with the FERC related to Mississippi Power's July 2022 request for a $23 million increase in annual wholesale base revenues under the MRA tariff. Interim rates based on the initial request became effective September 14, 2022, subject to refund. The settlement agreement provides for a $16 million increase in annual wholesale base revenues and a refund to customers of approximately $6 million. The settlement agreement is subject to approval by the FERC. The ultimate outcome of this matter cannot be determined at this time.

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AND RESULTS OF OPERATIONS (Continued)

~~Mississippi Power~~

On June 7, 2022, the Mississippi PSC approved Mississippi Power's annual retail PEP filing for 2022, resulting in an annual increase in revenues of approximately $18 million, or 1.9%. The rate increase became effective with the first billing cycle of April 2022 in accordance with the PEP rate schedule.

On August 26, 2022, the FERC accepted an amended shared service agreement (SSA) between Mississippi Power and Cooperative Energy, effective July 1, 2022, under which Cooperative Energy will continue to decrease its use of Mississippi Power's generation services under the MRA tariff up to 2.5% annually through 2035. At September 30, 2022, Mississippi Power is serving approximately 400 MWs of Cooperative Energy's annual demand.Beginning in 2036, Cooperative Energy will provide 100% of its electricity requirements at the MRA delivery points under the tariff. Neither party has the option to cancel the amended SSA. Mississippi Power expects to remarket this capacity, including the potential development of future arrangements with Cooperative Energy.

~~On July 15, 2022, Mississippi Power filed a request with the FERC for a $23 million increase in annual wholesale base revenues under the MRA tariff and requested an~~ effective date of July 15, 2022. Cooperative Energy has filed a complaint with FERC challenging the new rates. On September 13, 2022, the FERC issued an order accepting Mississippi Power's request effective September 14, 2022, subject to refund, and establishing hearing and settlement judge procedures. The ultimate outcome of this matter cannot be determined at this time.

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

~~Southern Power~~

At September 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% through 2026 and 92% through 2031, with an average remaining contract duration of approximately 13 years.

Southern Company Gas

On ~~August 1, 2022,~~June 7, 2023, Virginia Natural Gas, ~~filed~~the Virginia Commission staff, and the Virginia Attorney General's Division of Consumer Counsel entered into a stipulation agreement related to Virginia Natural Gas' August 2022 general base rate case ~~with the Virginia Commission seeking an~~filing. The stipulation provides for a $48 million increase in annual base rate revenues, ~~of $69 million,~~ including ~~$15 million related to~~ the recovery of investments under the SAVE program, primarily to recover investments and increased costs associated with infrastructure, technology, and workforce development. The requested increase is based on a projected 12-month period beginning January 1, 2023, aan ROE of ~~10.35%~~9.70%, and an equity ratio of ~~53.2%~~49.06%. ~~Rate adjustments are expected to be effective January 1, 2023, subject to refund.~~ The Virginia Commission is expected to rule on this matter by the ~~requested increase~~end of 2023.

~~On September 7, 2022, certain affiliates~~2023 of ~~Southern Company Gas entered into agreements to sell two natural gas storage facilities located in California and Texas for an aggregate purchase price of $186~~$38 million plus working capital and certain other adjustments. On October 20, 2022, the release of a Southern Company Gas parent guarantee was executed, which resolved a material closing condition. As a result, Southern Company Gas expects to record pre-tax impairment charges totaling approximately $125 million ($9528 million after tax) associated with the disallowance of capital investments. The disallowance is reflected on the income statement as an $8 million reduction to revenues and a $30 million increase in operating expenses. On July 14, 2023, Nicor Gas requested rehearing by the ~~fourth quarter~~Illinois Commission, which is expected to render a decision by August 3, 2023. Nicor Gas defends these investments in infrastructure as prudently incurred and, if necessary, intends to appeal to the Illinois Appellate Court.

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

~~AND RESULTS OF OPERATIONS (Continued)~~

~~2022.~~these matters cannot be determined at this time. See Note ~~(K)~~(B) to the Condensed Financial Statements under "Southern Company Gas" herein for additional information.

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

RESULTS OF OPERATIONS

Southern Company

Net Income

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$371 33.7 $1,003 38.5


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$(269)	(24.3)	$(439)	(20.5)

Consolidated net income attributable to Southern Company was ~~$1.5~~$0.8 billion ($~~1.36~~0.77 per share) in the ~~third~~second quarter ~~2022~~2023 compared to $1.1 billion ($1.04 per share) for the corresponding period in ~~2021. Consolidated~~2022. For year-to-date 2023, consolidated net income attributable to Southern Company was ~~$3.6~~$1.7 billion ($~~3.38~~1.56 per share) ~~for year-to-date 2022~~ compared to ~~$2.6~~$2.1 billion ($~~2.46~~2.01 per share) for the corresponding period in ~~2021.~~2022. The ~~increases~~decreases were primarily due to ~~decreases of $249 million~~higher depreciation and ~~$589 million in the third quarter and year-to-date 2022, respectively, in after-tax charges related to the construction of Plant Vogtle Units 3 and 4, increases~~amortization, a decrease in retail electric revenues associated with milder weather and rates and pricing, ~~warmer weather,~~ and ~~sales growth, and increases in natural gas revenues from base rate increases and continued infrastructure replacement,~~higher interest expense, partially offset by ~~higher~~a decrease in income tax expense and lower non-fuel operations and maintenance costs. The year-to-date 2023 decrease was partially offset by an increase ~~for year-to-date 2022 also reflects after-tax charges totaling $67 million~~ in ~~2021 related to the PennEast Pipeline project at Southern Company Gas.~~

~~See Note (B) to the Condensed Financial Statements herein~~other revenues and ~~Note 2 to the financial statements~~an increase in ~~Item 8 of the Form 10-K under "Georgia Power – Nuclear Construction" for additional information regarding Plant Vogtle Units 3~~natural gas revenues from rate increases and ~~4 and Note 7 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information on the PennEast Pipeline project.~~

~~Retail Electric Revenues~~

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$1,410 31.0 $2,871 25.0

In the third quarter 2022, retail electric revenues were $6.0 billion compared to $4.6 billion for the corresponding period in 2021. For year-to-date 2022, retail electric revenues were $14.4 billion compared to $11.5 billion for the corresponding period in 2021.

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

Third Quarter 2022 Year-To-Date 2022
(in millions) (% change) (in millions) (% change)
Retail electric – prior year $ 4,551 $ 11,492
Estimated change resulting from –
Rates and pricing 165 3.6 % 458 4.0 %
Sales growth 73 1.6 158 1.4
Weather 26 0.6 188 1.6
Fuel and other cost recovery 1,146 25.2 2,067 18.0
Retail electric – current year $ 5,961 31.0 % $ 14,363 25.0 %
continued infrastructure replacement.

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AND RESULTS OF OPERATIONS (Continued)

Retail Electric Revenues

In the second quarter 2023, retail electric revenues were $3.9 billion compared to $4.8 billion for the corresponding period in 2022. For year-to-date 2023, retail electric revenues were $7.5 billion compared to $8.4 billion for the corresponding period in 2022. Details of the changes in retail electric revenues were as follows:


	Second Quarter 2023 vs. Second Quarter 2022				Year-To-Date 2023 vs. Year-To-Date 2022
	(change in millions)		(% change)		(change in millions)		(% change)
Rates and pricing	$	(113)	(2.4)	%	$	(17)	(0.2)	%
Sales decline	(24)		(0.5)		(16)		(0.2)
Weather	(174)		(3.6)		(326)		(3.8)
Fuel and other cost recovery	(619)		(12.9)		(585)		(7.0)
Retail electric revenues	$	(930)	(19.4)	%	$	(944)	(11.2)	%

Revenues associated with changes in rates and pricing ~~increased~~decreased in the ~~third~~second quarter and year-to-date ~~2022~~2023 when compared to the corresponding periods in ~~2021.~~2022. The ~~increases~~decreases were primarily due to ~~higher~~lower contributions from commercial and industrial customers with variable demand-driven pricing at Georgia Power, partially offset by an increase in Rate CNP Compliance revenues at Alabama Power and base tariff increases in accordance with Georgia Power's ~~2019 ARP,~~2022 ARP. In addition, in the second quarter and ~~pricing effects~~year-to-date 2023, revenues associated with Rate CNP Depreciation increased $68 million and $141 million, respectively, and were fully offset by customer ~~usage.~~bill credits related to the flowback of excess accumulated deferred income taxes at Alabama Power. See Note 2 to the financial statements under "Alabama Power" and "Georgia Power – Rate Plans" in Item 8 of the Form 10-K for additional information.

Revenues attributable to changes in sales ~~increased~~decreased in the ~~third~~second quarter and year-to-date ~~2022~~2023 when compared to the corresponding periods in ~~2021.~~2022. Weather-adjusted residential KWH sales decreased 0.4% in the second quarter 2023 when compared to the corresponding period in 2022 primarily due to decreased customer usage, partially offset by customer growth. Weather-adjusted residential KWH sales increased ~~1.3% and 0.4% in the third quarter and~~0.5% for year-to-date ~~2022, respectively, and weather-adjusted commercial KWH sales increased 2.0% in both the third quarter and year-to-date 2022~~2023 when compared to the corresponding ~~periods~~period in ~~2021~~2022 primarily due to customer growth. ~~In addition,~~Weather-adjusted commercial ~~customer usage~~KWH sales increased 0.9% and 1.3% in the ~~third~~second quarter and year-to-date 2022 and residential customer usage decreased for year-to-date 2022 when compared to the corresponding periods in 2021 as customers return to pre-pandemic levels of activity outside the home. Industrial KWH sales increased 2.2% and 2.6% in the third quarter and year-to-date 2022,2023, respectively, when compared to the corresponding periods in ~~2021~~2022 due to both increased customer usage and customer growth. Industrial KWH sales decreased 2.4% and 2.0% in the second quarter and year-to-date 2023, respectively, when compared to the corresponding periods in 2022 primarily due to ~~increases~~a decrease in the ~~pipeline~~chemicals and ~~paper~~textiles sectors, partially offset by ~~a decrease~~an increase in the ~~chemicals~~pipeline sector.

Fuel and other cost recovery revenues ~~increased $1.1 billion~~decreased $619 million and ~~$2.1 billion~~$585 million in the ~~third~~second quarter and year-to-date ~~2022,~~2023, respectively, compared to the corresponding periods in ~~2021~~2022 primarily due to ~~higher~~lower recoverable fuel ~~and purchased power costs and an increase in the volume of KWHs generated.~~costs. Electric rates for the traditional electric operating companies include provisions to adjust billings for fluctuations in fuel costs, including the energy component of purchased power costs. Under these provisions, fuel revenues generally equal fuel expenses, including the energy component of PPA costs, and do not affect net income. The traditional electric operating companies each have one or more regulatory mechanisms to recover other costs such as environmental and other compliance costs, storm damage, new plants, and PPA capacity costs. See Note 2 to the financial statements in Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements herein for additional information.

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AND RESULTS OF OPERATIONS (Continued)

Wholesale Electric Revenues

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$466 63.7 $976 53.6


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$(332)	(35.4)	$(398)	(24.9)

In the ~~third~~second quarter ~~2022,~~2023, wholesale electric revenues were $605 million compared to $937 million for the corresponding period in 2022. For year-to-date 2023, wholesale electric revenues were $1.2 billion compared to ~~$731 million for the corresponding period in 2021. For year-to-date 2022, wholesale electric revenues were $2.8 billion compared to $1.8~~$1.6 billion for the corresponding period in ~~2021.~~2022. The ~~increases~~decreases were primarily due to ~~increases~~decreases of ~~$437~~$342 million and ~~$930~~$440 million in energy revenues in the ~~third~~second quarter and year-to-date ~~2022,~~2023, respectively, ~~in energy revenues~~ as a result of fuel and purchased power price ~~increases~~decreases when compared to the corresponding periods in ~~2021, an increase~~2022 and a net decrease in the volume of KWHs sold primarily associated with natural gas PPAs at Southern ~~Power,~~Power. The decreases in energy revenues were partially offset by increases in capacity revenues of $10 million and ~~increased opportunity~~$42 million in the second quarter and year-to-date 2023, respectively, primarily resulting from a power sales agreement that began in July 2022 and ended in May 2023 at Alabama Power ~~due to warmer weather.~~and a net increase in capacity sales from 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

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~~AND RESULTS OF OPERATIONS (Continued)~~

under cost-based tariffs as well as market-based sales. Short-term opportunity sales are made at market-based rates that generally provide a margin above the Southern Company system's variable cost to produce the energy.

Other Electric Revenues

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$6 3.4 $29 5.5


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$17	8.9	$29	7.8

In the ~~third~~second quarter ~~2022,~~2023, other electric revenues were ~~$185~~$209 million compared to ~~$179~~$192 million for the corresponding period in ~~2021.~~2022. For year-to-date 2023, other electric revenues were $399 million compared to $370 million for the corresponding period in 2022. The ~~increase was~~increases in the second quarter and year-to-date 2023 were primarily due to increases of $14 million and $21 million, respectively, in transmission revenues primarily associated with open access transmission tariff sales, $8 million and $7$11 million, ~~in cogeneration steam revenues associated with higher natural gas prices at Alabama Power, partially offset by a $14 million increase~~respectively, in realized ~~losses~~gains associated with price stability products for retail customers on variable demand-driven pricing tariffs at Georgia ~~Power.~~

For year-to-date 2022, other electric revenues were $554 million compared to $525 million for the corresponding period in 2021. The increase was primarily due to increases of $41 million in transmission revenues primarily associated with open access transmission tariff sales, $15 million in cogeneration steam revenues associated with higher natural gas prices at Alabama Power, and ~~$13~~$6 million and $12 million, respectively, in outdoor lighting sales at Georgia Power, partially offset by ~~a decrease~~decreases of ~~$26~~$7 million ~~resulting from the termination of a transmission service contract~~ and ~~an increase of $21~~$12 million, respectively, in ~~realized losses~~cogeneration steam revenue primarily associated with ~~price stability products for retail customers on variable demand-driven pricing tariffs, both at Georgia Power.~~

~~Natural Gas Revenues~~

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$234 37.6 $1,004 33.5

~~In the third quarter 2022,~~lower natural gas revenues were $857 million compared to $623 million for the corresponding period in 2021. For year-to-date 2022, natural gas revenues were $4.0 billion compared to $3.0 billion for the corresponding period in 2021.

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

Third Quarter 2022 Year-To-Date 2022
(in millions) (% change) (in millions) (% change)
Natural gas revenues – prior year $ 623 $ 2,994
Estimated change resulting from –
Infrastructure replacement programs and base rate changes 54 8.7 % 186 6.2 %
Gas costs and other cost recovery 172 27.6 955 31.9
Gas marketing services 1 0.2 14 0.5
Wholesale gas services — — (187) (6.2)
Other 7 1.1 36 1.1
Natural gas revenues – current year $ 857 37.6 % $ 3,998 33.5 %

~~Revenues from infrastructure replacement programs and base rate changes~~prices at the natural gas distribution utilities increased in the third quarter and year-to-date 2022 compared to the corresponding 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.Alabama Power.

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AND RESULTS OF OPERATIONS (Continued)

Natural Gas Revenues

In the second quarter 2023, natural gas revenues were $0.9 billion compared to $1.1 billion for the corresponding period in 2022. For year-to-date 2023, natural gas revenues were $2.7 billion compared to $3.1 billion for the corresponding period in 2022. Details of the changes in natural gas revenues were as follows:


	Second Quarter 2023 vs. Second Quarter 2022				Year-To-Date 2023 vs. Year-To-Date 2022
	(change in millions)		(% change)		(change in millions)		(% change)
Infrastructure replacement programs and rate changes	$	38	3.5	%	$	88	2.8	%
Gas costs and other cost recovery	(265)		(24.4)		(464)		(14.8)
Gas marketing services	(1)		(0.1)		(22)		(0.7)
Other	(3)		(0.3)		(14)		(0.4)
Natural gas revenues	$	(231)	(21.3)	%	$	(412)	(13.1)	%

Revenues ~~associated with~~from infrastructure replacement programs and rate changes at the natural gas distribution utilities increased in the second quarter and year-to-date 2023 compared to the corresponding periods in 2022 primarily due to rate increases at the natural gas distribution utilities and continued investment in infrastructure replacement, partially offset by a regulatory disallowance at Nicor Gas. See Note 2 to the financial statements under "Southern Company Gas – Rate Proceedings" in Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements under "Southern Company Gas – Infrastructure Replacement Programs and Capital Projects" herein for additional information.

Revenues from gas costs and other cost recovery ~~increased~~decreased in the ~~third~~second quarter and year-to-date ~~2022~~2023 compared to the corresponding periods in ~~2021~~2022 primarily due to ~~higher~~lower natural gas cost ~~recovery.~~recovery associated with the timing of natural gas purchases and the recovery of those costs from customers. Natural gas distribution rates include provisions to adjust billings for fluctuations in natural gas costs. Therefore, gas costs recovered through natural gas revenues generally equal the amount expensed in cost of natural gas and do not affect net income from the natural gas distribution utilities.

Revenues from gas marketing services ~~increased for~~decreased in the second quarter and year-to-date ~~2022~~2023 compared to the corresponding ~~period~~periods in ~~2021~~2022 primarily due to ~~higher commodity~~lower natural gas prices and the timing of unrealized hedge losses, partially offset by higher ~~sales to commercial customers.~~

~~The changes~~variable price spreads in ~~year-to-date 2022 revenues related to Southern Company Gas' wholesale gas services were due to the sale of Sequent on July 1, 2021. See Note 15 to the financial statements under "Southern Company Gas"~~Georgia and Illinois and higher customer count in ~~Item 8 of the Form 10-K for additional information.~~Georgia.

Other Revenues

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$24 15.6 $6 1.2


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$18	8.8	$99	29.0

In the ~~third~~second quarter ~~2022,~~2023, other revenues were ~~$178~~$223 million compared to ~~$154~~$205 million for the corresponding period in ~~2021.~~2022. The increase was primarily due to ~~a $15~~increases of $20 million ~~increase in unregulated~~at Southern Linc primarily related to sales ~~at the traditional electric operating companies primarily~~ associated with commercial customers and $11 million in power delivery construction and maintenance projects ~~energy conservation projects, and lighting. Also contributing to the increase was a $9~~at Georgia Power, partially offset by an $8 million ~~increase primarily~~decrease related to distributed infrastructure projects at PowerSecure.

For year-to-date ~~2022,~~2023, other revenues were ~~$519~~$440 million compared to ~~$513~~$341 million for the corresponding period in ~~2021.~~2022. The increase was primarily due to increases of ~~$10~~$32 million in ~~unregulated sales associated with~~ power delivery construction and maintenance projects at ~~Mississippi Power, $9 million in unregulated energy conservation projects at~~ Georgia Power, $8$28 million ~~in unregulated lighting sales at Alabama Power, and $5 million primarily~~ related to ~~distribution~~distributed infrastructure projects at PowerSecure, ~~partially offset by a $28~~$17 million ~~decrease~~at Southern Linc primarily related to sales associated with ~~the timing~~commercial customers, and $16 million in unregulated sales of ~~revenue recognition for a large, ongoing power delivery construction~~products and ~~maintenance contract~~services at ~~Georgia~~Alabama Power.

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AND RESULTS OF OPERATIONS (Continued)

Fuel and Purchased Power Expenses


		Third Quarter 2022 vs. Third Quarter 2021			Year-To-Date 2022 vs. Year-To-Date 2021				Second Quarter 2023 vs. Second Quarter 2022			Year-To-Date 2023 vs. Year-To-Date 2022
		(change in millions)		(% change)	(change in millions)		(% change)		(change in millions)		(% change)	(change in millions)		(% change)
Fuel	Fuel	$	1,189	96.4	$	2,319	79.1	Fuel	$	(756)	(44.1)	$	(817)	(28.9)
Purchased power	Purchased power	357		124.0	573		80.5	Purchased power	(177)		(43.4)	(167)		(26.1)
Total fuel and purchased power expenses	Total fuel and purchased power expenses	$	1,546		$	2,892		Total fuel and purchased power expenses	$	(933)		$	(984)

In the ~~third~~second quarter ~~2022,~~2023, total fuel and purchased power expenses were ~~$3.1~~$1.2 billion compared to ~~$1.5~~$2.1 billion for the corresponding period in ~~2021.~~2022. The ~~increase~~decrease was ~~primarily the result of~~due to a ~~$1.2 billion increase~~$792 million decrease in the average cost of fuel and purchased power and a ~~$310~~$141 million ~~increase~~decrease in the volume of KWHs generated and purchased.

For year-to-date ~~2022,~~2023, total fuel and purchased power expenses were ~~$6.5~~$2.5 billion compared to ~~$3.6~~$3.5 billion for the corresponding period in ~~2021.~~2022. The ~~increase~~decrease was ~~primarily the result of a $2.4 billion increase~~due to an $868 million decrease in the average cost of fuel and purchased power and a ~~$523~~$116 million ~~increase~~decrease in the volume of KWHs generated and purchased.

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

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~~AND RESULTS OF OPERATIONS (Continued)~~

Details of the Southern Company system's generation and purchased power were as follows:


		Third Quarter 2022	Third Quarter 2021	Year-To-Date 2022	Year-To-Date 2021		Second Quarter 2023	Second Quarter 2022	Year-To-Date 2023	Year-To-Date 2022
Total generation (in billions of KWHs)~~(a)~~(b)	Total generation (in billions of KWHs)~~(a)~~(b)	50	50	141	136	Total generation (in billions of KWHs)~~(a)~~(b)	44	46	88	92
Total purchased power (in billions of KWHs)	Total purchased power (in billions of KWHs)	9	5	20	13	Total purchased power (in billions of KWHs)	5	6	9	11
Sources of generation (percent)(a) —	Sources of generation (percent)(a) —					Sources of generation (percent)(a) —
Gas	Gas	54	48	50	47	Gas	54	49	54	47
Nuclear(b)						Nuclear(b)	18	16	17	16
Coal	Coal	21	26	22	24	Coal	16	22	16	23
Nuclear		16	16	16	17
Hydro	Hydro	2	3	4	4	Hydro	3	3	4	5
Wind, Solar, and Other	Wind, Solar, and Other	7	7	8	8	Wind, Solar, and Other	9	10	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)	6.75	3.38	5.42	2.87	Gas(a)	2.42	5.59	2.78	4.60
Nuclear(b)						Nuclear(b)	0.71	0.72	0.71	0.72
Coal	Coal	4.12	2.82	3.58	2.84	Coal	4.55	3.50	4.30	3.30
Nuclear		0.71	0.78	0.72	0.76
Average cost of fuel, generated (in cents per net KWH)~~(a)~~(b)	Average cost of fuel, generated (in cents per net KWH)~~(a)~~(b)	5.05	2.75	4.07	2.45	Average cost of fuel, generated (in cents per net KWH)~~(a)~~(b)	2.47	4.13	2.63	3.50
Average cost of purchased power (in cents per net KWH)~~(b)~~(c)	Average cost of purchased power (in cents per net KWH)~~(b)~~(c)	8.94	6.45	7.84	5.77	Average cost of purchased power (in cents per net KWH)~~(b)~~(c)	4.97	7.83	5.23	6.90

(a)Excludes Central Alabama Generating Station KWHs and associated cost of fuel through July 12, 2022 as its fuel was previously provided by the purchaser under a power sales agreement. See Note 15 to the financial statements under "Alabama Power" in Item 8 of the Form 10-K for additional information.

(b)Excludes KWHs generated from test period energy at Plant Vogtle Unit 3 prior to its in-service date. The related fuel costs are charged to CWIP in accordance with FERC guidance. See Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction" herein for additional information on Plant Vogtle Units 3 and 4.

(c)Average cost of purchased power includes fuel purchased by the Southern Company system for tolling agreements where power is generated by the provider.

~~Fuel~~

In the third quarter 2022, fuel expense was $2.4 billion compared to $1.2 billion for the corresponding period in 2021. The increase was primarily due to a 99.7% increase in the average cost of natural gas per KWH generated, a 52.7% decrease in the volume of KWHs generated by hydro, a 46.1% increase in the average cost of coal per KWH generated, and a 13.0% increase in the volume of KWHs generated by natural gas, partially offset by a 19.0% decrease in the volume of KWHs generated by coal.

For year-to-date 2022, fuel expense was $5.2 billion compared to $2.9 billion for the corresponding period in 2021. The increase was primarily due to an 88.9% increase in the average cost of natural gas per KWH generated, a 26.1% increase in the average cost of coal per KWH generated, a 9.6% increase in the volume of KWHs generated by natural gas, and an 8.7% decrease in the volume of KWHs generated by hydro, partially offset by a 4.1% decrease in the volume of KWHs generated by coal.

~~Purchased Power~~

In the third quarter 2022, purchased power expense was $645 million compared to $288 million for the corresponding period in 2021. The increase was primarily due to a 38.6% increase in the average cost per KWH purchased primarily due to higher natural gas and coal prices and an 87.2% increase in the volume of KWHs purchased.

For year-to-date 2022, purchased power expense was $1.3 billion compared to $712 million for the corresponding period in 2021. The increase was primarily due to a 35.9% increase in the average cost per KWH purchased primarily due to higher natural gas and coal prices and a 50.9% increase in the volume of KWHs purchased.

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AND RESULTS OF OPERATIONS (Continued)

Fuel

In the second quarter 2023, fuel expense was $1.0 billion compared to $1.7 billion for the corresponding period in 2022. For year-to-date 2023, fuel expense was $2.0 billion compared to $2.8 billion for the corresponding period in 2022. The decreases for the second quarter and year-to-date 2023 were primarily due to decreases of 56.7% and 39.6%, respectively, in the average cost of natural gas per KWH generated and 28.8% and 34.0%, respectively, in the volume of KWHs generated by coal, partially offset by increases of 30.0% and 30.3%, respectively, in the average cost of coal per KWH generated, decreases of 8.3% and 12.0%, respectively, in the volume of KWHs generated by hydro, and increases of 6.0% and 10.9%, respectively, in the volume of KWHs generated by natural gas.

Purchased Power

In the second quarter 2023, purchased power expense was $231 million compared to $408 million for the corresponding period in 2022. For year-to-date 2023, purchased power expense was $473 million compared to $640 million for the corresponding period in 2022. The decreases for the second quarter and year-to-date 2023 were primarily due to decreases of 36.5% and 24.2%, respectively, in the average cost per KWH purchased primarily due to a decrease in natural gas prices and decreases of 22.8% and 12.7%, respectively, 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.

Cost of Natural Gas

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$165 N/M $897 95.1


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$(253)	(56.0)	$(449)	(29.0)

Excluding Atlanta Gas Light, which does not sell natural gas to end-use customers, natural gas distribution rates include provisions to adjust billings for fluctuations in natural gas costs. Therefore, gas costs recovered through natural gas revenues generally equal the amount expensed in cost of natural gas and do not affect net income from the natural gas distribution utilities. Cost of natural gas at the natural gas distribution utilities represented ~~78%~~84% and ~~87%~~85% of the total cost of natural gas in the ~~third~~second quarter and year-to-date ~~2022,~~2023, respectively.

In the ~~third~~second quarter ~~2022,~~2023, cost of natural gas was ~~$294~~$199 million compared to ~~$129~~$452 million for the corresponding period in ~~2021.~~2022. For year-to-date ~~2022,~~2023, cost of natural gas was ~~$1.8~~$1.1 billion compared to ~~$943 million~~$1.5 billion for the corresponding period in ~~2021.~~2022. The ~~increases~~decreases reflect ~~higher~~lower gas cost recovery as a result of ~~increases~~decreases of ~~104%~~71% and ~~113%~~54% in natural gas prices in the ~~third~~second quarter and year-to-date ~~2022,~~2023, respectively, compared to the corresponding periods in ~~2021.~~2022.

Cost of Other Sales

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$21 29.6 $20 7.8


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$14	12.3	$72	39.3

In the ~~third~~second quarter ~~2022,~~2023, cost of other sales was ~~$92~~$128 million compared to ~~$71~~$114 million for the corresponding period in ~~2021.~~2022. The increase was primarily due to increases of $16 million at Southern Linc primarily related to sales associated with commercial customers and $11 million related to energy service contracts at Southern Company Gas, partially offset by a $13 million decrease related to distributed infrastructure projects at PowerSecure.

For year-to-date 2022, cost of other sales was $275 million compared to $255 million for the corresponding period in 2021. The increase was primarily due to increases of $32 million related to distributed infrastructure projects at PowerSecure, $9 million related to unregulated power delivery construction and maintenance projects at Mississippi Power, and $9 million primarily associated with unregulated merchandising and energy services expenses at Alabama Power, partially offset by a decrease of $32 million associated with unregulated power delivery construction and maintenance projects at Georgia Power.

~~Other Operations and Maintenance Expenses~~

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$101 7.0 $364 8.6

In the third quarter 2022, other operations and maintenance expenses were $1.5 billion compared to $1.4 billion for the corresponding period in 2021. The increase was primarily due to increases of $49 million in transmission and distribution expenses primarily related to line maintenance, $18 million in customer accounts, customer service, and sales expenses primarily related to bad debt expenses, payment convenience fees, and labor, $12 million in compensation and benefit expenses, and $10 million in generation expenses primarily related to scheduled outage and maintenance costs.

For year-to-date 2022, other operations and maintenance expenses were $4.6 billion compared to $4.3 billion for the corresponding period in 2021. Excluding $53 million of expenses related to Sequent in 2021, other operations and

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AND RESULTS OF OPERATIONS (Continued)

~~maintenance expenses increased $417 million.~~For year-to-date 2023, cost of other sales was $255 million compared to $183 million for the corresponding period in 2022. The increase was primarily due to increases of ~~$135~~$24 million from unregulated power delivery construction and maintenance projects at Georgia Power, $16 million related to energy service contracts at Southern Company Gas, $16 million at Southern Linc primarily related to sales associated with commercial customers, $16 million related to distributed infrastructure projects at PowerSecure, and $7 million in expenses related to unregulated products and services at Alabama Power.

Other Operations and Maintenance Expenses


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$(59)	(3.8)	$(113)	(3.7)

In the second quarter 2023, other operations and maintenance expenses were $1.49 billion compared to $1.55 billion for the corresponding period in 2022. The decrease was primarily due to decreases of $45 million in storm damage recovery as authorized in Georgia Power's 2022 ARP, $29 million in transmission and distribution expenses primarily related to line maintenance, ~~$90 million in generation expenses primarily related to scheduled outage and maintenance costs, $38 million in compensation and benefit expenses, $30~~$20 million in expenses ~~at Southern Company Gas~~ passed through ~~directly~~ to customers primarily related to bad debt and ~~$21~~energy efficiency programs at Southern Company Gas, and $14 million in ~~customer accounts, customer service,~~generation expenses primarily associated with non-outage and ~~sales~~scheduled outage maintenance costs, partially offset by a $32 million increase in technology infrastructure and application production costs and $30 million related to a regulatory disallowance at Nicor Gas.

For year-to-date 2023, other operations and maintenance expenses were $2.9 billion compared to $3.0 billion for the corresponding period in 2022. The decrease was primarily due to decreases of $91 million in storm damage recovery as authorized in Georgia Power's 2022 ARP, $59 million in transmission and distribution expenses primarily related to line maintenance, $57 million in generation expenses primarily associated with non-outage and scheduled outage maintenance costs, and $36 million in expenses passed through to customers primarily related to bad debt ~~expenses, payment convenience fees,~~ and ~~labor.~~energy efficiency programs at Southern Company Gas, as well as a $16 million gain on the sale of spare parts in 2023 at Southern Power, partially offset by a $69 million increase in technology infrastructure and application production costs, $30 million related to a regulatory disallowance at Nicor Gas, a $25 million decrease in nuclear property insurance refunds at Georgia Power and Alabama Power, and a $14 million increase in employee compensation and benefit expenses.

See Note (B) to the Condensed Financial Statements under "Southern Company Gas – Infrastructure Replacement Programs and Capital Projects" herein for additional information on the regulatory disallowance at Nicor Gas.

Depreciation and Amortization

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$26 2.9 $70 2.6


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$199	21.8	$417	23.1

In the ~~third~~second quarter ~~2022,~~2023, depreciation and amortization was ~~$922~~$1.1 billion compared to $0.9 billion for the corresponding period in 2022. For year-to-date 2023, depreciation and amortization was $2.2 billion compared to $1.8 billion for the corresponding period in 2022. The increases in the second quarter and year-to-date 2023 were primarily due to increases of $182 million and $363 million, respectively, resulting from higher depreciation rates at Alabama Power and Georgia Power and increases of $20 million and $46 million, respectively, from additional plant in service. See Notes 2 and 5 to the financial statements under "Alabama Power" and "Depreciation and Amortization," respectively, in Item 8 of the Form 10-K for additional information.

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AND RESULTS OF OPERATIONS (Continued)

Taxes Other Than Income Taxes


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$(9)	(2.6)	$13	1.8

In the second quarter 2023, taxes other than income taxes were $340 million compared to ~~$896~~$349 million for the corresponding period in ~~2021. For year-to-date 2022, depreciation and amortization~~2022. The decrease was ~~$2.73 billion compared to $2.66 billion for the corresponding period in 2021. The increases were~~ primarily due to ~~additional plant~~decreases of $17 million in ~~service, including continued infrastructure investments~~municipal franchise fees resulting from lower retail revenues at Georgia Power and $7 million in revenue tax expenses at Southern Company Gas, partially offset by increases of $10 million in property taxes primarily at Georgia Power resulting from an increase in the ~~natural gas distribution utilities.~~assessed value of property and $7 million in utility license taxes at Alabama Power.

~~Taxes Other Than Income Taxes~~

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$40 12.8 $104 10.7

~~In the third quarter 2022,~~For year-to-date 2023, taxes other than income taxes were ~~$352~~$734 million compared to ~~$312~~$721 million for the corresponding period in ~~2021. For year-to-date 2022,~~2022. The increase was primarily due to increases of $22 million in property taxes ~~other than income~~primarily at Georgia Power resulting from an increase in the assessed value of property and $16 million in utility license taxes ~~were $1.1 billion compared to $969~~at Alabama Power, partially offset by decreases of $17 million ~~for the corresponding period in 2021. The increases primarily reflect an increase~~ in municipal franchise fees resulting from lower retail revenues at Georgia Power and ~~an increase~~$12 million in revenue tax expenses at Southern Company Gas.

Estimated Loss on Plant Vogtle Units 3 and 4

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$(334) N/M $(790) N/M


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$(52)	(100.0)	$(52)	(100.0)

In the second quarter 2022, Georgia Power recorded ~~pre-tax charges (credits) to income for the~~an estimated probable loss on Plant Vogtle Units 3 and 4 ~~totaling $(70) million and $264 million in the third quarter 2022 and 2021, respectively, and $(18) million and $772 million for year-to-date 2022 and 2021, respectively.~~of $52 million. The ~~charges (credits) reflect~~loss reflected 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~~Allowance for Equity Funds Used During Construction

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$(105) (84.0) $(126) (70.4)


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$17	32.1	$31	29.8

In the ~~third~~second quarter ~~2022, gain on dispositions, net~~2023, allowance for equity funds used during construction was ~~$20~~$70 million compared to ~~$125~~$53 million for the corresponding period in ~~2021.~~2022. For year-to-date ~~2022, gain on dispositions, net~~2023, allowance for equity funds used during construction was ~~$53~~$135 million compared to ~~$179~~$104 million for the corresponding period in ~~2021.~~2022. The ~~decreases~~increases were primarily ~~reflect a $121 million gain~~associated with an increase in capital expenditures subject to AFUDC at ~~Southern Company Gas~~Georgia Power and an increase in capital expenditures related to Plant Barry Unit 8 construction at Alabama Power. See Note 2 to the ~~sale~~financial statements in Item 8 of ~~Sequent in~~ the ~~third quarter 2021, partially offset by a $14 million gain recorded in~~Form 10-K and Note (B) to the ~~third quarter~~Condensed Financial Statements herein under "Alabama Power – Certificates of Convenience and Necessity" for additional information.

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AND RESULTS OF OPERATIONS (Continued)

2022 as a result of the early termination of the transition services agreement related to the 2019 sale of Gulf Power. The year-to-date 2022 decrease also reflects a $39 million gain at Southern Power primarily from contributions of wind turbine equipment to various equity method investments in 2021, partially offset by a $17 million gain from sales of integrated transmission system assets at Georgia Power in 2022. See Note 15 to the financial statements under "Southern Power – Development Projects" and "Southern Company Gas – Sale of Sequent" in Item 8 of the Form 10-K for additional information.

~~Allowance for Equity Funds Used During Construction~~

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$10 20.4 $23 16.4

In the third quarter 2022, allowance for equity funds used during construction was $59 million compared to $49 million for the corresponding period in 2021. For year-to-date 2022, allowance for equity funds used during construction was $163 million compared to $140 million for the corresponding period in 2021. The increases were primarily associated with an increase in capital expenditures related to Plant Barry Unit 8 construction at Alabama Power and transmission and distribution projects related to grid modernization at Georgia Power.

~~Earnings from Equity Method Investments~~

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$(2) (6.7) $74 N/M

For year-to-date 2022, earnings from equity method investments were $109 million compared to $35 million for the corresponding period in 2021. The increase was primarily due to pre-tax impairment charges in 2021 totaling $84 million related to the PennEast Pipeline project at Southern Company Gas, partially offset by a $16 million decrease at Southern Holdings primarily due to a decrease in investment income. See Note 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

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$60 13.3 $109 8.1


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$122	25.0	$242	25.5

In the ~~third~~second quarter ~~2022,~~2023, interest expense, net of amounts capitalized was ~~$511~~$610 million compared to ~~$451~~$488 million for the corresponding period in ~~2021. The increase was primarily due to increases of approximately $28 million due to higher average outstanding borrowings and $28 million due to higher interest rates.~~

2022. For year-to-date ~~2022,~~2023, interest expense, net of amounts capitalized was ~~$1.5~~$1.2 billion compared to ~~$1.4~~$1.0 billion for the corresponding period in ~~2021.~~2022. The ~~increase was~~increases in the second quarter and year-to-date 2023 primarily ~~due~~reflect approximately $76 million and $170 million, respectively, related to higher interest rates and $48 million and $87 million, respectively, related to higher average outstanding borrowings.

See FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" and "Financing Activities" herein for additional information on borrowings.

Other Income (Expense), Net


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$3	2.2	$3	1.1

In the second quarter 2023, other income (expense), net was $142 million compared to $139 million for the corresponding period in 2022. For year-to-date 2023, other income (expense), net was $286 million compared to $283 million for the corresponding period in 2022. The increases for the second quarter and year-to-date 2023 were primarily due to increases of $21 million and $26 million, respectively, in interest income, largely offset by decreases of $12 million and $19 million, respectively, in non-service cost-related retirement benefits income and $7 million and $13 million, respectively, in customer charges related to contributions in aid of construction at Georgia Power. The year-to-date 2023 increase also reflects an $8 million gain on investments at Southern Holdings. See Note (H) to the Condensed Financial Statements herein for additional information.

Income Taxes


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$(206)	(67.8)	$(283)	(59.3)

In the second quarter 2023, income taxes were $98 million compared to $304 million for the corresponding period in 2022. For year-to-date 2023, income taxes were $194 million compared to $477 million for the corresponding period in 2022. The decreases were primarily due to lower pre-tax earnings, an increase in the flowback of certain excess deferred income taxes at Alabama Power, an adjustment in the second quarter 2022 related to a prior year state tax credit carryforward at Georgia Power, and a decrease in a valuation allowance on certain state tax credit carryforwards at Georgia Power in 2023, partially offset by a decrease in the flowback of certain excess deferred income taxes at Georgia Power that ended in 2022. See Note (G) to the Condensed Financial Statements herein for additional information.

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AND RESULTS OF OPERATIONS (Continued)

~~Other Income (Expense), Net~~

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$1 0.8 $124 42.8

For year-to-date 2022, other income (expense), net was $414 million compared to $290 million for the corresponding period in 2021. The increase was primarily due to charitable contributions of $101 million at Southern Company Gas during the first and second quarters of 2021 and a $44 million increase in non-service cost-related retirement benefits income. See Note (H) to the Condensed Financial Statements herein for additional information.

~~Income Taxes~~

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$42 11.3 $341 62.0

In the third quarter 2022, income taxes were $414 million compared to $372 million for the corresponding period in 2021. For year-to-date 2022, income taxes were $891 million compared to $550 million for the corresponding period in 2021. The increases were primarily due to higher pre-tax earnings, partially offset by $113 million of additional tax expense in 2021 resulting from Southern Company Gas' sale of Sequent in the third quarter 2021. The year-to-date 2022 increase was also due to an adjustment in the second quarter 2022 related to a prior year state tax credit carryforward at Georgia Power. See Note (G) to the Condensed Financial Statements herein for additional information.

Net ~~Income (Loss)~~Loss Attributable to Noncontrolling Interests

Third Quarter 2022 vs. Third Quarter 2021

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

Second Quarter 2023 vs. Second Quarter 2022

Year-To-Date 2023 vs. Year-To-Date 2022

(change in millions)

(% change)

(change in millions)

(% change)

(change in millions)

(% change)

(change in millions)

(% change)

N/M

$(28)

N/M

31.8

$(11)

(16.4)

Substantially all noncontrolling interests relate to renewable projects at Southern Power. In the ~~third~~second quarter ~~2022,~~2023, net ~~income~~loss attributable to noncontrolling interests was ~~$12~~$15 million compared to $5$22 million for the corresponding period in ~~2021.~~2022. The ~~increase~~decreased loss was primarily due to $7 million in lower HLBV loss allocations to Southern Power's wind tax equity partners ~~including~~and $6 million in lower loss ~~allocation impacts associated with the Garland~~allocations to Southern Power's battery energy storage ~~facility being placed~~partners, partially offset by $5 million in ~~service in the third quarter 2021, and higher~~lower income allocations to Southern Power's equity partners.

For year-to-date ~~2022,~~2023, net loss attributable to noncontrolling interests was ~~$55~~$78 million compared to ~~$27~~$67 million for the corresponding period in ~~2021.~~2022. The increased loss was primarily due to $15 million in lower income allocations to Southern Power's equity partners and $9 million in higher HLBV loss allocations to Southern Power's wind tax equity partners, partially offset by ~~loss allocation impacts associated with the Garland battery energy storage facility being placed~~$14 million in ~~service in the third quarter 2021 and higher income~~lower loss allocations to Southern Power's ~~equity~~battery energy storage partners.

Alabama Power

Net Income


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$(71)	(18.5)	$(162)	(22.2)

Alabama Power's net income after dividends on preferred stock in the second quarter 2023 was $312 million compared to $383 million for the corresponding period in 2022. Alabama Power's net income after dividends on preferred stock for year-to-date 2023 was $568 million compared to $730 million for the corresponding period in 2022. These decreases were primarily due to an increase in depreciation rates effective January 2023 and a decrease in weather-related revenues due to milder weather in Alabama Power's service territory in 2023 compared to the corresponding periods in 2022. In addition, the year-to-date 2023 decrease was also due to increased capacity-related expenses. These decreases to income were partially offset by a decrease in income tax expense and an increase in Rate CNP Compliance revenues. See ~~Notes 9 and 15~~Note 2 to the financial statements ~~under "Lessor" and "Southern Power," respectively,~~ in Item 8 of the Form 10-K under "Alabama Power" for additional information.

Retail Revenues

In the second quarter 2023, retail revenues were $1.47 billion compared to $1.63 billion for the corresponding period in 2022. For year-to-date 2023, retail revenues were $2.85 billion compared to $3.01 billion for the corresponding period in 2022. Details of the changes in retail revenues were as follows:


	Second Quarter 2023 vs. Second Quarter 2022				Year-To-Date 2023 vs. Year-To-Date 2022
	(change in millions)		(% change)		(change in millions)		(% change)
Rates and pricing	$	56	3.4	%	$	114	3.8	%
Sales decline	(16)		(1.0)		(33)		(1.1)
Weather	(58)		(3.6)		(119)		(4.0)
Fuel and other cost recovery	(144)		(8.8)		(122)		(4.1)
Retail revenues	$	(162)	(10.0)	%	$	(160)	(5.4)	%

Revenues associated with changes in rates and pricing increased in the second quarter and year-to-date 2023 when compared to the corresponding periods in 2022 primarily due to an increase in Rate CNP Compliance revenues. In

~~113~~

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AND RESULTS OF OPERATIONS (Continued)

~~Alabama Power~~

~~Net Income~~

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$26 5.2 $67 5.6

~~Alabama Power's net income after dividends on preferred stock~~addition, in the ~~third~~second quarter ~~2022 was $525 million compared to $499 million for the corresponding period in 2021. Alabama Power's net income after dividends on preferred stock for~~and year-to-date ~~2022 was $1.26 billion compared to $1.19 billion for the corresponding period in 2021. These increases were primarily due to an increase in retail~~2023, revenues associated with ~~warmer weather in Alabama Power's service territory in 2022 compared~~Rate CNP Depreciation increased $68 million and $141 million, respectively, and were fully offset by customer bill credits related to the ~~corresponding periods~~flowback of excess accumulated deferred income taxes. See Note 2 to the financial statements under "Alabama Power" in ~~2021 and sales growth, partially offset by higher non-fuel operations and maintenance costs.~~

~~Retail Revenues~~

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$357 21.6 $658 15.1

In the third quarter 2022, retail revenues were $2.01 billion compared to $1.65 billion for the corresponding period in 2021. For year-to-date 2022, retail revenues were $5.02 billion compared to $4.36 billion for the corresponding period in 2021.

~~Details~~Item 8 of the ~~changes in retail revenues were as follows:~~Form 10-K for additional information.

Third Quarter 2022 Year-To-Date 2022
(in millions) (% change) (in millions) (% change)
Retail – prior year $ 1,651 $ 4,357
Estimated change resulting from –
Rates and pricing 3 0.2 % 7 0.2 %
Sales growth 20 1.2 53 1.2
Weather 25 1.5 88 2.0
Fuel and other cost recovery 309 18.7 510 11.7
Retail – current year $ 2,008 21.6 % $ 5,015 15.1 %

Revenues attributable to changes in sales ~~increased~~decreased inthe ~~third~~second quarter and year-to-date ~~2022~~2023 when compared to the corresponding periods in ~~2021.~~2022. Weather-adjusted residential KWH sales ~~decreased 0.4%~~increased 1.1% and ~~0.3%~~0.6% in the ~~third~~second quarter and year-to-date ~~2022,~~2023, respectively, when compared to the corresponding periods in ~~2021~~2022 primarily due to ~~decreased~~ customer ~~usage.~~growth. Weather-adjusted commercial KWH sales ~~decreased 0.7%~~increased 1.5% and 0.6% in the third quarter 2022 when compared to the corresponding period in 2021 primarily due to decreased customer usage. Weather-adjusted commercial KWH sales were flat for year-to-date 2022 when compared to the corresponding period in 2021. Industrial KWH sales increased 2.9% and 2.3% in the thirdsecond quarter and year-to-date ~~2022,~~2023, respectively, when compared to the corresponding periods in ~~2021~~2022 primarily due to increases in customer demand and customer growth. Industrial KWH sales decreased 4.3% and 3.4% in the ~~forest product~~second quarter and ~~pipeline sectors, partially offset by~~year-to-date 2023, respectively, primarily due to decreases in the chemicals and forest products sectors. Also contributing to the industrial KWH sales decrease in the second quarter 2023 was a decrease in the primary metals sector.

Fuel and other cost recovery revenues ~~increased~~decreased in the ~~third~~second quarter and year-to-date ~~2022~~2023 when compared to the corresponding periods in ~~2021~~2022 primarily ~~due to increases in the volume~~as a result of ~~KWHs generated and the average cost of fuel.~~

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~~AND RESULTS OF OPERATIONS (Continued)~~

lower recoverable fuel costs.

Electric rates include provisions to recognize the recovery of fuel costs, purchased power costs, PPAs certificated by the Alabama PSC, and costs associated with the NDR. Under these provisions, fuel and other cost recovery revenues generally equal fuel and other cost recovery expenses and do not affect net income. See Note 2 to the financial statements under "Alabama Power" in Item 8 of the Form 10-K for additional information.

Wholesale Revenues – Non-Affiliates

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$143 N/M $237 83.2


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$(47)	(29.6)	$(20)	(7.4)

In the ~~third~~second quarter ~~2022,~~2023, wholesale revenues from sales to non-affiliates were ~~$250~~$112 million compared to ~~$107~~$159 million for the corresponding period in ~~2021.~~ 2022. The decrease was primarily due to a 28.3% decrease in the price of energy primarily as a result of lower natural gas prices in the second quarter 2023 compared to the corresponding period in 2022.

For year-to-date ~~2022,~~2023, wholesale revenues from sales to non-affiliates were ~~$522~~$252 million compared to ~~$285~~$272 million for the corresponding period in ~~2021.~~2022. The ~~increases for the third quarter and year-to-date 2022 were~~decrease was primarily due to ~~increases of 75.9% and 41.8%, respectively,~~a 14.5% decrease in the price of energy due to ~~higher~~lower natural gas prices, ~~as well as increases~~partially offset by an 8.3% increase in the volume of ~~32.3% and 29.3%, respectively, in KWH sales~~KWHs sold as a result of ~~increased opportunity~~a power sales ~~due to warmer weather~~agreement that began in ~~the third quarter~~July 2022 and ~~year-to-date 2022 compared to the corresponding periods~~ended in ~~2021.~~May 2023.

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

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$17 32.1 $61 56.0


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$(24)	(70.6)	$(71)	(71.0)

In the ~~third~~second quarter ~~2022,~~2023, wholesale revenues from sales to affiliates were ~~$70~~$10 million compared to ~~$53~~$34 million for the corresponding period in ~~2021.~~2022. For year-to-date 2023, wholesale revenues from sales to affiliates were $29 million compared to $100 million for the corresponding period in 2022. The ~~increase was~~decreases for the second quarter and year-to-date 2023 were primarily due to ~~a 142.2% increase~~decreases of 62.0% and 35.4%, respectively, in the price of energy due to ~~higher~~lower natural gas prices ~~partially offset by a 45.7% decrease~~and 23.9% and 54.3%, respectively, in the volume of KWH sales due to ~~the availability~~lower customer demand as a result of ~~lower cost Southern Company system resources~~milder weather in 2023 compared to ~~Alabama Power's generation.~~

~~For year-to-date 2022, wholesale revenues from sales to affiliates were $170 million compared to $109 million for~~ the corresponding period in 2021. The increase was primarily due to an 84.7% increase in the price of energy due to higher natural gas prices, partially offset by a 15.3% decrease in KWH sales due to the availability of lower cost Southern Company system resources compared to Alabama Power's generation.2022.

Wholesale revenues from sales to affiliated companies will vary depending on demand and the availability and cost of generating resources at each company. These affiliate sales are made in accordance with the IIC, as approved by the FERC. ~~These~~Energy revenues related to these transactions do not have a significant impact on earnings since this energy is generally sold at marginal cost and energy purchases are generally offset by energy revenues through Alabama Power's energy cost recovery clause.

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~~AND RESULTS OF OPERATIONS (Continued)~~

~~Other Revenues~~

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$23 24.7 $48 17.9

In the third quarter 2022, other revenues were $116 million compared to $93 million for the corresponding period in 2021. For year-to-date 2022, other revenues were $316 million compared to $268 million for the corresponding period in 2021. The third quarter and year-to-date 2022 increases were primarily due to increases of $7 million and $15 million, respectively, in cogeneration steam revenue associated with higher natural gas prices, $6 million and $13 million, respectively, in transmission revenues primarily due to open access transmission tariff sales, and $3 million and $8 million, respectively, in unregulated lighting sales. The year-to-date 2022 increase also included a $5 million increase in energy services revenue.

Fuel and Purchased Power Expenses


		Third Quarter 2022 vs. Third Quarter 2021			Year-To-Date 2022 vs. Year-To-Date 2021				Second Quarter 2023 vs. Second Quarter 2022			Year-To-Date 2023 vs. Year-To-Date 2022
		(change in millions)		(% change)	(change in millions)		(% change)		(change in millions)		(% change)	(change in millions)		(% change)
Fuel	Fuel	$	293	78.6	$	472	50.9	Fuel	$	(98)	(24.4)	$	(122)	(16.6)
Purchased power – non-affiliates	Purchased power – non-affiliates	109		143.4	174		100.6	Purchased power – non-affiliates	(41)		(43.2)	(7)		(4.3)
Purchased power – affiliates	Purchased power – affiliates	68		151.1	146		128.1	Purchased power – affiliates	(67)		(55.4)	(34)		(23.1)
Total fuel and purchased power expenses	Total fuel and purchased power expenses	$	470		$	792		Total fuel and purchased power expenses	$	(206)		$	(163)

In the ~~third~~second quarter ~~2022,~~2023, total fuel and purchased power expenses were ~~$964~~$411 million compared to ~~$494~~$617 million for the corresponding period in ~~2021. The increase was primarily due to a $257 million increase in the cost of fuel and purchased power and a $213 million increase related to the volume of KWHs generated and purchased.~~

2022. For year-to-date ~~2022,~~2023, total fuel and purchased power expenses were ~~$2.01 billion~~$879 million compared to ~~$1.21~~$1.04 billion for the corresponding period in ~~2021.~~2022. The ~~increase was primarily~~decreases for the second quarter and year-to-date 2023 were due to ~~a $518~~decreases of $214 million ~~increase~~and $222 million, respectively, in the average cost of fuel and purchased power, partially offset by an increase of $8 million and a ~~$274~~net increase of $59 million, ~~increase~~respectively, related to the volume of KWHs generated and purchased.

Fuel and purchased power energy transactions do not have a significant impact on earnings, since energy expenses are generally offset by energy revenues through Alabama Power's energy cost recovery clause. See Note 2 to the financial statements under "Alabama Power – Rate ECR" in Item 8 of the Form 10-K for additional information.

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AND RESULTS OF OPERATIONS (Continued)

Details of Alabama Power's generation and purchased power were as follows:


		Third Quarter 2022	Third Quarter 2021	Year-To-Date 2022	Year-To-Date 2021		Second Quarter 2023	Second Quarter 2022	Year-To-Date 2023	Year-To-Date 2022
Total generation (in billions of KWHs)(a)	Total generation (in billions of KWHs)(a)	16	16	45	45	Total generation (in billions of KWHs)(a)	13	13	27	29
Total purchased power (in billions of KWHs)	Total purchased power (in billions of KWHs)	4	2	9	5	Total purchased power (in billions of KWHs)	3	3	5	4
Sources of generation (percent)(a) —	Sources of generation (percent)(a) —					Sources of generation (percent)(a) —
Coal	Coal	47	50	45	47	Coal	35	45	33	44
Nuclear	Nuclear	22	24	24	25	Nuclear	29	25	28	25
Gas	Gas	28	18	23	19	Gas	29	22	29	20
Hydro	Hydro	3	8	8	9	Hydro	7	8	10	11
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	3.89	2.85	3.40	2.78	Coal	3.50	3.35	3.42	3.11
Nuclear	Nuclear	0.67	0.73	0.67	0.71	Nuclear	0.69	0.67	0.68	0.67
Gas(a)	Gas(a)	6.55	3.03	5.20	2.68	Gas(a)	2.69	4.88	3.03	4.17
Average cost of fuel, generated (in cents per net KWH)(a)	Average cost of fuel, generated (in cents per net KWH)(a)	3.91	2.33	3.13	2.20	Average cost of fuel, generated (in cents per net KWH)(a)	2.39	2.98	2.44	2.66
Average cost of purchased power (in cents per net KWH)(b)	Average cost of purchased power (in cents per net KWH)(b)	8.55	7.96	8.33	6.70	Average cost of purchased power (in cents per net KWH)(b)	4.08	8.88	5.17	8.12

(b)Average cost of purchased power includes fuel, energy, and transmission purchased by Alabama Power for tolling agreements where power is generated by the provider.

Fuel

In the ~~third~~second quarter ~~2022,~~2023, fuel expense was ~~$666~~$303 million compared to ~~$373~~$401 million for the corresponding period in ~~2021.~~2022. The ~~increase~~decrease was primarily due to a ~~116.2% increase~~44.9% decrease in the average cost of natural gas per KWH generated, which excludes tolling agreements, and a ~~36.5%~~23.0% decrease in the volume of KWHs generated by coal, partially offset by a 33.3% increase in the ~~average cost~~volume of ~~coal per KWH~~KWHs generated by natural gas, a ~~56.8%~~9.2% decrease in the volume of KWHs generated by hydro facilities as a result of less rainfall in the ~~third~~second quarter ~~2022~~2023 compared to the corresponding period in ~~2021,~~2022, and a ~~46.9%~~4.5% increase in the average cost of coal per KWH generated.

For year-to-date 2023, fuel expense was $611 million compared to $733 million for the corresponding period in 2022. The decrease was primarily due to a 29.1% decrease in the volume of KWHs generated by ~~natural gas.~~

~~For year-to-date 2022, fuel expense was $1.4 billion compared to $0.9 billion for the corresponding period in 2021. The increase was primarily due to~~coal and a ~~94.0% increase~~27.3% decrease in the average cost of natural gas per KWH generated, which excludes tolling agreements, partially offset by a ~~22.3% increase in the average cost of coal per KWH generated, an 18.3%~~34.9% increase in the volume of KWHs generated by natural gas, ~~and~~ an ~~8.5%~~11.6% decrease in the volume of KWHs generated by hydro facilities as a result of less rainfall for year-to-date ~~2022~~2023 compared to the corresponding period in ~~2021.~~2022, and a 10.0% increase in the average cost of coal per KWH generated.

Purchased Power – Non-Affiliates

In the ~~third~~second quarter ~~2022,~~2023, purchased power expense from non-affiliates was ~~$185~~$54 million compared to ~~$76~~$95 million for the corresponding period in ~~2021.~~2022. The ~~increase~~decrease was primarily due to a ~~193.7% increase in the volume of KWHs purchased as a result of warmer weather in the third quarter 2022 compared to the corresponding period in 2021, partially offset by an 11.2%~~50.8% decrease in the average cost per KWH purchased due to ~~fixed capacity costs allocated across a higher level of generation.~~lower natural gas prices.

For year-to-date ~~2022,~~2023, purchased power expense from non-affiliates was ~~$347~~$155 million compared to ~~$173~~$162 million for the corresponding period in ~~2021.~~2022. The ~~increase~~decrease was primarily due to a ~~100.5%~~35.7% decrease in the average cost per KWH purchased as a result of lower natural gas prices, partially offset by a 25.5% 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 an 8.2% increase in the average cost per KWH purchased~~ due to ~~higher natural gas~~a new power purchase contract that began in July 2022 and ~~coal prices.~~

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~~AND RESULTS OF OPERATIONS (Continued)~~

ended in May 2023.

Energy purchases from non-affiliates will vary depending on the market prices of wholesale energy as compared to the cost of the Southern Company system's generation, demand for energy within the Southern Company system's electric service territory, and the availability of the Southern Company system's generation.

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Purchased Power – Affiliates

In the ~~third~~second quarter ~~2022,~~2023, purchased power expense from affiliates was $54 million compared to $121 million for the corresponding period in 2022. For year-to-date 2023, purchased power expense from affiliates was $113 million compared to ~~$45~~$147 million for the corresponding period in ~~2021.~~2022. The ~~increase was~~decreases for the second quarter and year-to-date 2023 were primarily due to ~~an 84.5% increase~~decreases of 57.8% and 36.6%, respectively, in the average cost per KWH purchased due to ~~higher~~lower purchase prices as a result of lower natural gas prices, partially offset by increases of 6.3% and ~~coal prices and a 36.4% increase~~21.0%, respectively, in the volume of KWHs purchased ~~as a result~~due to the availability of ~~warmer weather~~lower cost gas generation in the ~~third quarter 2022 compared to the corresponding period in 2021.~~

For year-to-date 2022, purchased power expense from affiliates was $260 million compared to $114 million for the corresponding period in 2021. The increase was primarily due to a 71.0% increase in the average cost per KWH purchased due to higher natural gas and coal prices and a 33.6% increase in the volume of KWHs purchased as a result of warmer weather for year-to-date 2022 compared to the corresponding period in 2021.Southern Company system.

Energy purchases from affiliates will vary depending on demand for energy and the availability and cost of generating resources at each company within the Southern Company system. These purchases are made in accordance with the IIC or other contractual agreements, as approved by the FERC.

Other Operations and Maintenance Expenses

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$17 4.2 $95 8.1


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$(1)	(0.2)	$10	1.2

In the ~~third~~second quarter ~~2022,~~2023, other operations and maintenance expenses were ~~$418~~$440 million compared to ~~$401~~$441 million for the corresponding period in ~~2021. For year-to-date 2022, other operations and maintenance expenses were $1.27 billion compared to $1.18 billion for the corresponding period in 2021.~~2022. The ~~increases for the third quarter and year-to-date 2022 were~~decrease was primarily due to increases of $18 million and $41 million, respectively, in transmission and distribution expenses primarily associated with line maintenance and $6 million and $12 million, respectively, in customer accounts, customer service, and sales expenses primarily associated with labor and bad debt expense. The increase for the third quarter 2022 was partially offset by a $15 million decrease in generation expenses primarily associated with ~~scheduled~~planned outages and ~~maintenance.~~maintenance and a $4 million decrease related to the injuries and damages reserve. The decreases were largely offset by increases of $10 million in technology infrastructure and application production costs, $5 million in customer accounts primarily associated with bad debt expense, and $5 million in expenses related to unregulated products and services.

For year-to-date ~~2022~~2023, other operations and maintenance expenses were $862 million compared to $852 million for the corresponding period in 2022. The increase ~~also included~~was primarily due to a ~~$24~~$14 million ~~increase~~decrease in nuclear property insurance refunds and increases of $18 million in technology infrastructure and application production costs, $13 million in expenses related to unregulated products and services, and $9 million in customer accounts primarily associated with bad debt expense. The increases were partially offset by a $47 million decrease in generation expenses primarily associated with ~~scheduled~~planned outages and ~~maintenance~~maintenance.

Depreciation and ~~Rate CNP Compliance-related expenses.~~Amortization


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$131	60.1	$262	60.6

In the second quarter 2023, depreciation and amortization was $349 million compared to $218 million for the corresponding period in 2022. For year-to-date 2023, depreciation and amortization was $694 million compared to $432 million for the corresponding period in 2022. The increases were primarily due to an increase in depreciation rates effective in 2023. See ~~Note~~Notes 2 and 5 to the financial statements under "Alabama ~~Power – Rate CNP Compliance"~~Power" and "Depreciation and Amortization," respectively, in Item 8 of the Form 10-K for additional information.

~~Allowance for Equity Funds Used During Construction~~

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$4 28.6 $13 34.2

~~For year-to-date 2022, allowance for equity funds used during construction was~~ ~~$51 million compared to $38 million for the corresponding period in 2021.~~ ~~The increase for year-to-date 2022 was primarily due to an increase in capital expenditures related to Plant Barry Unit 8 construction.~~

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AND RESULTS OF OPERATIONS (Continued)

Taxes Other Than Income Taxes


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$7	7.0	$19	9.3

In the second quarter 2023, taxes other than income taxes were $107 million compared to $100 million for the corresponding period in 2022. For year-to-date 2023, taxes other than income taxes were $223 million compared to $204 million for the corresponding period in 2022. The increases were primarily due to an increase in utility license taxes.

Interest Expense, Net of Amounts Capitalized

Third Quarter 2022 vs. Third Quarter 2021

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

Second Quarter 2023 vs. Second Quarter 2022

Year-To-Date 2023 vs. Year-To-Date 2022

(change in millions)

(% change)

(change in millions)

(% change)

(change in millions)

(% change)

(change in millions)

(% change)

$14

16.7

$26

10.3

$14

15.4

$28

15.6

In the ~~third~~second quarter ~~2022,~~2023, interest expense, net of amounts capitalized was ~~$98~~$105 million compared to ~~$84~~$91 million for the corresponding period in ~~2021.~~2022. For year-to-date ~~2022,~~2023, interest expense, net of amounts capitalized was ~~$278~~$208 million compared to ~~$252~~$180 million for the corresponding period in ~~2021.~~2022. The increases for the second quarter and year-to-date 2023 were primarily ~~due~~associated with increases of approximately $9 million and $20 million, respectively, related to higher average outstanding ~~borrowings.~~borrowings and $6 million and $11 million, respectively, related to higher interest rates. See FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" ~~and "Financing Activities"~~ herein for additional information on borrowings.

Other Income ~~Taxes~~(Expense), Net

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$14 9.2 $28 7.7


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$12	44.4	$18	29.5

In the ~~third~~second quarter ~~2022,~~2023, other income ~~taxes were $166~~(expense), net was $39 million compared to ~~$152~~$27 million for the corresponding period in ~~2021.~~2022. For year-to-date ~~2022,~~2023, other income ~~taxes were $394~~(expense), net was $79 million compared to ~~$366~~$61 million for the corresponding period in ~~2021.~~2022. The increases were primarily due to ~~higher~~an increase in interest income and a decrease in non-operating expenses.

Income Taxes


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$(96)	(79.3)	$(204)	(89.9)

In the second quarter 2023, income taxes were $25 million compared to $121 million for the corresponding period in 2022. For year-to-date 2023, income taxes were $23 million compared to $227 million for the corresponding period in 2022. The decreases were primarily due to an increase in the flowback of certain excess deferred income taxes and lower pre-tax earnings. See Note 2 to the financial statements under "Alabama Power – Excess Accumulated Deferred Income Tax Accounting Order" in Item 8 of the Form 10-K and Note (G) to the Condensed Financial Statements herein for additional information.

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AND RESULTS OF OPERATIONS (Continued)

Georgia Power

Net Income

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$322 60.1 $821 79.7


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$(137)	(22.5)	$(226)	(22.8)

Georgia Power's net income in the ~~third~~second quarter ~~2022~~2023 was ~~$858~~$471 million compared to ~~$536~~$608 million for the corresponding period in ~~2021.~~2022. For year-to-date ~~2022~~2023, net income was ~~$1.85 billion~~$767 million compared to ~~$1.03 billion~~$993 million for the corresponding period in ~~2021.~~2022. The ~~increases~~decreases were primarily due to decreases ~~of $249 million~~in retail revenues associated with lower contributions from variable demand-driven pricing and ~~$589 million~~milder weather in the ~~third~~second quarter and year-to-date 2023 compared to the corresponding periods in 2022 ~~respectively,~~and higher interest expense, partially offset by lower non-fuel operations and maintenance costs and a decrease of $39 million in after-tax charges related to the construction of Plant Vogtle Units 3 and ~~4 and increases in~~4. Also partially offsetting the net income reductions were the impacts of the 2022 ARP effective January 1, 2023, including increased retail ~~revenues associated with~~ rates, ~~and pricing and sales growth, partially~~largely offset by higher ~~non-fuel operations~~depreciation and ~~maintenance costs. The increase for year-to-date 2022 was also due to warmer weather in Georgia Power's service territory compared to the corresponding period in 2021.~~amortization.

See ~~Note (B) to the Condensed Financial Statements herein and~~ Note 2 to the financial statements under "Georgia Power" in Item 8 of the Form 10-K ~~under "Georgia Power – Nuclear Construction"~~ for additional ~~information regarding Plant Vogtle Units 3 and 4.~~information.

Retail Revenues

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$1,051 39.6 $2,164 33.5

In the ~~third~~second quarter ~~2022,~~2023, retail revenues were ~~$3.70~~$2.17 billion compared to ~~$2.65~~$2.91 billion for the corresponding period in ~~2021.~~2022. For year-to-date ~~2022,~~2023, retail revenues were ~~$8.63~~$4.15 billion compared to ~~$6.47~~$4.93 billion for the corresponding period in ~~2021.~~2022. Details of the changes in retail revenues were as follows:


	Second Quarter 2023 vs. Second Quarter 2022				Year-To-Date 2023 vs. Year-To-Date 2022
	(change in millions)		(% change)		(change in millions)		(% change)
Rates and pricing	$	(166)	(5.7)	%	$	(132)	(2.7)	%
Sales growth (decline)	(9)		(0.3)		14		0.3
Weather	(111)		(3.8)		(197)		(4.0)
Fuel cost recovery	(457)		(15.7)		(465)		(9.4)
Retail revenues	$	(743)	(25.5)	%	$	(780)	(15.8)	%

Revenues associated with changes in rates and pricing decreased in the second quarter and year-to-date 2023 when compared to the corresponding periods in 2022. The decreases were primarily due to lower contributions from commercial and industrial customers with variable demand-driven pricing, partially offset by base tariff increases in accordance with the 2022 ARP. 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 decreased in the second quarter 2023 and increased for year-to-date 2023 when compared to the corresponding periods in 2022. Weather-adjusted residential KWH sales decreased 1.3% in the second quarter 2023 when compared to the corresponding period in 2022 primarily due to decreased customer usage, partially offset by customer growth. Weather-adjusted residential KWH sales increased 0.5% for year-to-date 2023 when compared to the corresponding period in 2022 primarily due to customer growth, partially offset by decreased customer usage. Weather-adjusted commercial KWH sales increased 0.5% in the second quarter 2023 when compared to the corresponding period in 2022 primarily due to customer growth, partially offset by decreased customer usage. Weather-adjusted commercial KWH sales increased 1.5% for year-to-date 2023 when compared to the corresponding period in 2022 primarily due to customer growth and increased customer usage as customers continued their return to regular business trends. Weather-adjusted industrial KWH sales increased 0.4% in the second quarter 2023 when compared to the corresponding period in 2022 primarily due to increases in the paper and electronics sectors, partially offset by decreases in the textile and mining sectors. Weather-adjusted industrial KWH

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AND RESULTS OF OPERATIONS (Continued)

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

Third Quarter 2022 Year-To-Date 2022
(in millions) (% change) (in millions) (% change)
Retail – prior year $ 2,652 $ 6,465
Estimated change resulting from –
Rates and pricing 157 5.9 % 442 6.8 %
Sales growth 54 2.0 101 1.6
Weather (1) — 89 1.4
Fuel cost recovery 841 31.7 1,532 23.7
Retail – current year $ 3,703 39.6 % $ 8,629 33.5 %

~~Revenues associated with changes in rates and pricing increased in the third quarter and~~sales decreased 0.8% for year-to-date ~~2022~~2023 when compared to the corresponding ~~periods~~period in ~~2021. The increases were~~2022 primarily due to higher contributions from commercial and industrial customers with variable demand-driven pricing, base tariff increases in accordance with the 2019 ARP, and pricing effects associated with customer usage. See Note 2 to the financial statements under "Georgia Power – Rate Plans" in Item 8 of the Form 10-K for additional information.

~~Revenues attributable to changes in sales increased~~decreases in the ~~third quarter~~textile and year-to-date 2022 when compared to the corresponding periods in 2021. Weather-adjusted residential KWH sales increased 2.7% and 1.0% in the third quarter and year-to-date 2022, respectively, when compared to the corresponding periods in 2021 primarily due to customer growth. The increase for the third quarter 2022 also reflects increased customer usage. Weather-adjusted commercial KWH sales increased 3.2% and 2.9% in the third quarter and year-to-date 2022, respectively, when compared to the corresponding periods in 2021 primarily due to impacts on customer usage from increased activity outside the home as customers return to pre-pandemic levels of activity, as well as customer growth. Weather-adjusted industrial KWH sales increased 1.8% and 2.8% in the third quarter and year-to-date 2022, respectively, when compared to the corresponding periods in 2021 primarily due to increases in the pipeline, electronic, and paperrubber sectors, partially offset by ~~decreases~~increases in the ~~chemicals~~electronics and ~~textiles~~pipeline sectors.

Fuel revenues and costs are allocated between retail and wholesale jurisdictions. Retail fuel cost recovery revenues ~~increased~~decreased in the ~~third~~second quarter and year-to-date ~~2022~~2023 when compared to the corresponding periods in ~~2021~~2022 due to ~~higher~~lower fuel and purchased power costs. Electric rates include provisions to adjust billings for fluctuations in fuel costs, including the energy component of purchased power costs. Under these fuel cost recovery provisions, fuel revenues generally equal fuel expenses and do not affect net income. See Note (B) to the Condensed Financial Statements herein and Note 2 to the financial statements in Item 8 of the Form 10-K under "Georgia Power – Fuel Cost Recovery" ~~in Item 8 of the Form 10-K~~ for additional information.

Wholesale Revenues

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$(7) (11.1) $43 30.1


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$(17)	(26.6)	$(52)	(40.0)

In the ~~third~~second quarter ~~2022,~~2023, wholesale revenues were ~~$56~~$47 million compared to ~~$63~~$64 million for the corresponding period in ~~2021.~~2022. The decrease was primarily due to a $22 million decrease related to the average cost per KWH sold due to lower Southern Company system fuel and purchased power costs.

For year-to-date 2023, wholesale revenues were $78 million compared to $130 million for the corresponding period in 2022. The decrease was primarily due to a $26 million decrease related to the volume of KWH sales associated with lower market demand and a $3$23 million decrease ~~in capacity revenues due to the expiration of a non-affiliate PPA in 2021, largely offset by an increase of $20 million~~ related to the average cost ~~of fuel primarily~~per KWH sold due to ~~higher natural gas~~lower Southern Company system fuel and ~~coal prices.~~

For year-to-date 2022, wholesale revenues were $186 million compared to $143 million for the corresponding period in 2021. The increase was primarily due to an increase of $60 million related to the average cost of fuel primarily due to higher natural gas and coal prices, partially offset by a $10 million decrease in KWH sales

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~~AND RESULTS OF OPERATIONS (Continued)~~

~~associated with lower market demand and an $8 million decrease in capacity revenues due to the expiration of a non-affiliate PPA in 2021.~~purchased power costs.

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.

Other Revenues

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$(11) (7.8) $(39) (8.8)


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$30	20.1	$71	26.1

In the ~~third~~second quarter ~~2022,~~2023, other revenues were ~~$130~~$179 million compared to ~~$141~~$149 million for the corresponding period in ~~2021.~~2022. For year-to-date ~~2022,~~2023, other revenues were ~~$403~~$343 million compared to ~~$442~~$272 million for the corresponding period in ~~2021.~~2022. The ~~decreases~~increases for the ~~third~~second quarter and year-to-date ~~2022~~2023 were primarily due to increases of ~~$14~~$15 million and ~~$21~~$46 million, respectively, in ~~realized losses~~unregulated sales associated with ~~price stability products for retail customers on variable demand-driven pricing tariffs, decreases of $9 million~~power delivery construction and ~~$12 million, respectively, from retail solar programs as a result of higher avoided cost credits to customers,~~maintenance and ~~$6 million and $26 million, respectively, resulting from the termination of a transmission service contract. These reductions were partially offset by~~outdoor lighting, net increases of $8 million and ~~$22~~$11 million, respectively, ~~associated with unregulated outdoor lighting sales and energy conservation projects and $6 million and $16 million, respectively,~~ in open access transmission tariff sales. Also contributing to the decrease for year-to-date 2022 was a decrease of $28 million associated with the timing of revenue recognition for a large, ongoing power delivery construction and maintenance contract.

~~Fuel and Purchased Power Expenses~~

Third Quarter 2022 vs.
Third Quarter 2021
Year-to-Date 2022 vs.
Year-to-Date 2021
(change in millions) (% change) (change in millions) (% change)
Fuel $ 409 94.7 $ 799 73.4
Purchased power – non-affiliates 131 75.7 239 51.8
Purchased power – affiliates 283 98.3 527 92.0
Total fuel and purchased power expenses $ 823 $ 1,565

In the third quarter 2022, total fuel and purchased power expenses were $1.7 billion compared to $0.9 billion for the corresponding period in 2021. For year-to-date 2022, total fuel and purchased power expenses were $3.7 billion compared to $2.1 billion for the corresponding period in 2021. The increases for the third quarter and year-to-date 2022 were primarily due to increases of $0.8 billion and $1.4 billion, respectively, related to the average cost of fuel

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AND RESULTS OF OPERATIONS (Continued)

realized gains associated with price stability products for retail customers on variable demand-driven pricing tariffs, and increases of $4 million and $7 million, respectively, in open access transmission tariff sales.

Fuel and Purchased Power Expenses


	Second Quarter 2023 vs. Second Quarter 2022			Year-To-Date 2023 vs. Year-To-Date 2022
	(change in millions)		(% change)	(change in millions)		(% change)
Fuel	$	(214)	(34.1)	$	(230)	(22.0)
Purchased power – non-affiliates	(104)		(42.3)	(130)		(32.8)
Purchased power – affiliates	(171)		(52.9)	(171)		(32.3)
Total fuel and purchased power expenses	$	(489)		$	(531)

In the second quarter 2023, total fuel and purchased power expenses were $0.7 billion compared to $1.2 billion for the corresponding period in 2022. For year-to-date 2023, total fuel and purchased power expenses were $1.4 billion compared to $2.0 billion for the corresponding period in 2022. The decreases for the second quarter and year-to-date 2023 were due to decreases of $330 million and $344 million, respectively, related to the average cost of fuel and purchased power and ~~net increases of $30~~$159 million and ~~$158~~$187 million, respectively, related to the volume of KWHs generated and purchased.

Fuel and purchased power energy transactions do not have a significant impact on earnings since these fuel expenses are generally offset by fuel revenues through Georgia Power's fuel cost recovery mechanism. See Note (B) to the Condensed Financial Statements herein and Note 2 to the financial statements in Item 8 of the Form 10-K under "Georgia Power – Fuel Cost Recovery" ~~in Item 8 of the Form 10-K~~ for additional information.

Details of Georgia Power's generation and purchased power were as follows:


		Third Quarter 2022	Third Quarter 2021	Year-To-Date 2022	Year-To-Date 2021		Second Quarter 2023	Second Quarter 2022	Year-To-Date 2023	Year-To-Date 2022
Total generation (in billions of KWHs)(a)	Total generation (in billions of KWHs)(a)	15	16	45	46	Total generation (in billions of KWHs)(a)	15	15	28	30
Total purchased power (in billions of KWHs)	Total purchased power (in billions of KWHs)	11	10	27	23	Total purchased power (in billions of KWHs)	6	8	14	16
Sources of generation (percent) —	Sources of generation (percent) —					Sources of generation (percent) —
Gas	Gas	53	45	48	46	Gas	51	45	53	45

Nuclear		28	24	26	26
Nuclear(a)						Nuclear(a)	28	27	27	25
Coal	Coal	16	28	22	24	Coal	17	24	16	25
Hydro and other	Hydro and other	3	3	4	4	Hydro and other	4	4	4	5
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	6.10	3.28	4.99	2.84	Gas	2.67	5.10	3.11	4.34

Nuclear(a)						Nuclear(a)	0.72	0.76	0.73	0.76
Coal	Coal	4.73	2.73	3.84	2.89	Coal	6.45	3.68	5.92	3.54
Nuclear		0.75	0.83	0.76	0.80

Average cost of fuel, generated (in cents per net KWH)(a)	Average cost of fuel, generated (in cents per net KWH)(a)	4.32	2.51	3.56	2.30	Average cost of fuel, generated (in cents per net KWH)(a)	2.76	3.52	2.89	3.18
Average cost of purchased power (in cents per net KWH)(*)		10.14	5.24	8.00	4.80
Average cost of purchased power (in cents per net KWH)(b)						Average cost of purchased power (in cents per net KWH)(b)	4.91	8.22	4.70	6.58

~~(*)~~(a)Excludes KWHs generated from test period energy at Plant Vogtle Unit 3 prior to its in-service date. The related fuel costs are charged to CWIP in accordance with FERC guidance. See Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction" herein for additional information on Plant Vogtle Units 3 and 4.

(b)Average cost of purchased power includes fuel purchased by Georgia Power for tolling agreements where power is generated by the provider.

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Fuel

In the ~~third~~second quarter ~~2022,~~2023, fuel expense was ~~$841~~$414 million compared to ~~$432~~$628 million for the corresponding period in ~~2021.~~2022. For year-to-date 2023, fuel expense was $0.82 billion compared to $1.05 billion for the corresponding period in 2022. The ~~increase was~~decreases for the second quarter and year-to-date 2023 were primarily due to ~~increases~~decreases of ~~86.0%~~47.6% and ~~73.3%~~28.3%, respectively, in the average cost per KWH generated by natural gas and 31.3% and 40.0%, respectively, in the volume of KWHs generated by coal, partially offset by increases of 75.3% and 67.2%, respectively, in the average cost per KWH generated by coal and ~~an 11.1% increase~~12.3% and 9.4%, respectively, in the volume of KWHs generated by natural ~~gas, partially offset by a 44.2% decrease in the volume of KWHs generated by coal.~~

For year-to-date 2022, fuel expense was $1.89 billion compared to $1.09 billion for the corresponding period in 2021. The increase was primarily due to increases of 75.7% and 32.9% in the average cost per KWH generated by natural gas and coal, respectively, partially offset by a 9.1% decrease in the volume of KWHs generated by coal.gas.

Purchased Power – Non-Affiliates

In the ~~third~~second quarter ~~2022,~~2023, purchased power expense from non-affiliates was ~~$304~~$142 million compared to ~~$173~~$246 million for the corresponding period in ~~2021.~~2022. For year-to-date ~~2022,~~2023, purchased power expense from non-affiliates was ~~$700~~$266 million compared to ~~$461~~$396 million for the corresponding period in ~~2021.~~2022. The ~~increases~~decreases for the ~~third~~second quarter and year-to-date ~~2022~~2023 were primarily due to ~~increases~~decreases of ~~50.5%~~40.5% and ~~39.4%~~37.6%, respectively, in the volume of KWHs purchased ~~primarily due to less~~as Georgia Power and other Southern Company system units generally dispatched at a lower cost than available ~~Georgia Power-owned coal generation~~market resources and ~~increases of 53.1%~~18.3% and ~~31.6%~~4.2%, respectively, in the average cost per KWH purchased primarily due to ~~higher~~lower natural gas ~~and coal~~ prices.

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~~AND RESULTS OF OPERATIONS (Continued)~~

Purchased Power – Affiliates

In the ~~third~~second quarter ~~2022,~~2023, purchased power expense from affiliates was ~~$571~~$152 million compared to ~~$288~~$323 million for the corresponding period in ~~2021. For year-to-date 2022, purchased power expense from affiliates was $1.1 billion compared to $573 million for the corresponding period in 2021.~~2022. The ~~increases for the third quarter and year-to-date 2022 were primarily due to increases~~decrease reflects decreases of ~~120.3% and 93.3%, respectively,~~52.6% in the average cost per KWH purchased primarily due to ~~higher~~lower natural gas prices and ~~coal prices.~~8.0% in the volume of KWHs purchased.

For year-to-date 2023, purchased power expense from affiliates was $358 million compared to $529 million for the corresponding period in 2022. The decrease reflects a 38.6% decrease in the average cost per KWH purchased primarily due to lower natural gas prices, partially offset by a 4.0% increase in the volume of KWHs purchased.

Energy purchases from affiliates will vary depending on the demand and the availability and cost of generating resources at each company within the Southern Company system. These purchases are made in accordance with the IIC or other contractual agreements, all as approved by the FERC.

Other Operations and Maintenance Expenses

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$51 9.4 $128 8.2


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$(77)	(13.4)	$(100)	(9.2)

In the ~~third~~second quarter ~~2022,~~2023, other operations and maintenance expenses were ~~$595~~$496 million compared to ~~$544~~$573 million for the corresponding period in ~~2021.~~2022. The ~~increase~~decrease was primarily due to ~~increases~~decreases of ~~$35~~$45 million in storm damage recovery as authorized in the 2022 ARP, $32 million in transmission and distribution expenses primarily associated with line maintenance, ~~$10~~$23 million in generation ~~expenses primarily related to~~ non-outage maintenance expense, and $13 million in certain employee compensation and benefit expenses. These decreases were partially offset by increases of $24 million in technology infrastructure and application production costs, $17 million in generation environmental projects, and $9 million ~~in certain compensation and benefit expenses, partially offset by a decrease of $6 million related to~~from unregulated power delivery construction and maintenance and energy conservation projects.

For year-to-date ~~2022,~~2023, other operations and maintenance expenses were ~~$1.69~~$0.99 billion compared to ~~$1.56~~$1.09 billion for the corresponding period in ~~2021.~~2022. The ~~increase~~decrease was primarily due to ~~increases~~decreases of ~~$80~~$91 million in distribution expenses primarily associated with line maintenance, $37 million in generation expenses primarily related to non-outage maintenance costs, $20 million in certain compensation and benefit expenses, $11 million in legal and regulatory expenses, and $8 million in amortization of cloud software, partially offset by a net decrease of $19 million related to unregulated products and services and $17 million in gains from sales of integrated transmission system assets.

~~Depreciation and Amortization~~

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$14 4.1 $41 4.0

In the third quarter 2022, depreciation and amortization was $359 million compared to $345 million for the corresponding period in 2021. For year-to-date 2022, depreciation and amortization was $1.07 billion compared to $1.03 billion for the corresponding period in 2021. The increases for the third quarter and year-to-date 2022 were primarily due to additional plant in service and increases of $3 million and $9 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.storm damage

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AND RESULTS OF OPERATIONS (Continued)

recovery as authorized in the 2022 ARP, $57 million in transmission and distribution expenses primarily associated with line maintenance, $49 million in generation non-outage maintenance expense, and $18 million in certain employee compensation and benefit expenses. These decreases were partially offset by increases of $48 million in technology infrastructure and application production costs, $29 million from unregulated power delivery construction and maintenance and energy conservation projects, and $26 million in generation environmental projects and planned outages, as well as a $12 million decrease in nuclear property insurance refunds.

See Note 2 to the financial statements under "Georgia Power – Storm Damage Recovery" in Item 8 of the Form 10-K for additional information.

Depreciation and Amortization


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$55	15.4	$113	16.0

In the second quarter 2023, depreciation and amortization was $411 million compared to $356 million for the corresponding period in 2022. For year-to-date 2023, depreciation and amortization was $819 million compared to $706 million for the corresponding period in 2022. The increases for the second quarter and year-to-date 2023 were primarily due to increases of $47 million and $94 million, respectively, resulting from higher depreciation rates as authorized in the 2022 ARP and $15 million and $30 million, respectively, associated with additional plant in service. Partially offsetting these increases for the second quarter and year-to-date 2023 were decreases of $5 million and $7 million, respectively, in amortization of regulatory assets related to CCR AROs under the terms of the 2022 ARP and $4 million and $7 million, respectively, in amortization of regulatory assets related to the retirement of certain generating units that ended in 2022.

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

Taxes Other Than Income Taxes

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$25 19.2 $55 15.1


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$(9)	(6.4)	$(2)	(0.8)

In the ~~third~~second quarter ~~2022,~~2023, taxes other than income taxes were ~~$155~~$132 million compared to ~~$130~~$141 million for the corresponding period in ~~2021.~~2022. For year-to-date ~~2022,~~2023, taxes other than income taxes were ~~$420~~$263 million compared to ~~$365~~$265 million for the corresponding period in ~~2021.~~2022. The ~~increases~~decreases for the second quarter and year-to-date 2023 were ~~primarily~~ due to ~~increases~~decreases of $17 million in municipal franchise fees resulting from ~~higher~~lower retail ~~revenues.~~revenues and $3 million and $4 million, respectively, in payroll taxes, largely offset by increases of $11 million and $19 million, respectively, in property taxes primarily resulting from an increase in the assessed value of property.

Estimated Loss on Plant Vogtle Units 3 and 4

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$(334) N/M $(790) N/M


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$(52)	(100.0)	$(52)	(100.0)

~~Interest Expense, Net of Amounts Capitalized~~

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$17 16.0 $32 10.2

In the third quarter 2022, interest expense, net of amounts capitalized was $123 million compared to $106 million for the corresponding period in 2021. For year-to-date 2022, interest expense, net of amounts capitalized was $347 million compared to $315 million for the corresponding period in 2021. The increases for the third quarter and year-to-date 2022 were primarily associated with increases of approximately $11 million and $23 million, respectively, related to higher average outstanding borrowings and $10 million and $12 million, respectively, related to higher interest rates. See FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" and "Financing Activities" herein for additional information on borrowings.

~~Other Income (Expense), Net~~

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$(6) (14.3) $16 12.9

For year-to-date 2022, other income (expense), net was $140 million compared to $124 million for the corresponding period in 2021. The increase was primarily due to an increase of $11 million in non-service cost-related retirement benefits income. See Note (H) to the Condensed Financial Statements herein for additional information on retirement benefits.

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AND RESULTS OF OPERATIONS (Continued)

~~Income Taxes~~Allowance for Equity Funds Used During Construction

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$113 100.0 $340 N/M


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$10	30.3	$18	27.7

In the ~~third~~second quarter ~~2022, income taxes were $226~~2023, allowance for equity funds used during construction was $43 million compared to ~~$113~~$33 million for the corresponding period in ~~2021.~~2022. For year-to-date ~~2022, income taxes were $421~~2023, allowance for equity funds used during construction was $83 million compared to ~~$81~~$65 million for the corresponding period in ~~2021.~~2022. The increases were primarily due to an increase in capital expenditures subject to AFUDC.

Interest Expense, Net of Amounts Capitalized


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$43	36.8	$82	36.6

In the second quarter 2023, interest expense, net of amounts capitalized was $160 million compared to $117 million for the corresponding period in 2022. For year-to-date 2023, interest expense, net of amounts capitalized was $306 million compared to $224 million for the corresponding period in 2022. The increases for the second quarter and year-to-date 2023 were primarily associated with increases of approximately $23 million and $44 million, respectively, related to higher average outstanding borrowings and $20 million and $39 million, respectively, related to higher interest rates. See FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" and "Financing Activities" herein for additional information on borrowings.

Other Income (Expense), Net


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$(18)	(33.3)	$(23)	(22.3)

In the second quarter 2023, other income (expense), net was $36 million compared to $54 million for the corresponding period in 2022. For year-to-date 2023, other income (expense), net was $80 million compared to $103 million for the corresponding period in 2022. The decreases for the second quarter and year-to-date 2023 were primarily due to decreases of $7 million and $13 million, respectively, in customer charges related to contributions in aid of construction and a $7 million charge in the second quarter 2023 under a stipulation agreement approved by the Georgia PSC related to Georgia Power's fuel cost recovery case.

See Note (B) to the Condensed Financial Statements herein under "Georgia Power – Fuel Cost Recovery" for additional information.

Income Taxes


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$(72)	(43.9)	$(50)	(25.8)

In the second quarter 2023, income taxes were $92 million compared to $164 million for the corresponding period in 2022. For year-to-date 2023, income taxes were $144 million compared to $194 million for the corresponding period in 2022. The decreases were primarily due to lower pre-tax earnings, ~~largely resulting from lower charges associated with the construction of Plant Vogtle Units 3 and 4. The year-to-date increase also reflects~~ an adjustment in the second quarter 2022 related to a prior year state tax credit ~~carryforward. See Note (B) to~~carryforward, and a decrease in a valuation allowance on certain state tax credit carryforwards in 2023, partially offset by the ~~Condensed Financial Statements herein and Note 2 to the financial statements~~flowback of certain excess deferred income taxes that ended in ~~Item 8 of the Form 10-K under "Georgia Power – Nuclear Construction" and~~2022.

See Note (G) to the Condensed Financial Statements herein for additional information.

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AND RESULTS OF OPERATIONS (Continued)

Mississippi Power

Net Income

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$12 24.0 $17 12.8


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$(5)	(11.1)	$11	12.6

Mississippi Power's net income infor the ~~third~~second quarter ~~2022~~2023 was ~~$62~~$40 million compared to ~~$50~~$45 million for the corresponding period in ~~2021. For year-to-date~~2022. The decrease was primarily due to a decrease in revenues due to milder weather in the second quarter 2023 compared to the corresponding period in 2022 and changes in power supply agreements.

Mississippi Power's net income for year-to-date 2023 was ~~$150~~$98 million compared to ~~$133~~$87 million for the corresponding period in ~~2021.~~2022. The ~~increases were~~increase was primarily due to an increase in affiliate wholesale capacity revenues, partially offset by a decrease in revenues due to milder weather in 2023 compared to the corresponding period in 2022 and an increase in ~~income taxes. The year-to-date 2022 increase was also partially offset by higher non-fuel operations and maintenance costs.~~interest expense.

Retail Revenues

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$2 0.8 $48 7.2

In the ~~third~~second quarter ~~2022,~~2023, retail revenues were $~~250~~227 million compared to ~~$248~~$252 million for the corresponding period in ~~2021.~~2022. For year-to-date ~~2022,~~2023, retail revenues were ~~$718~~$464 million compared to ~~$670~~$469 million for the corresponding period in ~~2021.~~

2022. Details of the changes in retail revenues were as follows:

Third Quarter 2022 Year-To-Date 2022
(in millions) (% change) (in millions) (% change)
Retail – prior year $ 248 $ 670
Estimated change resulting from –
Rates and pricing 4 1.6 % 9 1.3 %
Sales growth (decline) — — 3 0.5
Weather 3 1.2 10 1.5
Fuel and other cost recovery (5) (2.0) 26 3.9
Retail – current year $ 250 0.8 % $ 718 7.2 %


	Second Quarter 2023 vs. Second Quarter 2022				Year-To-Date 2023 vs. Year-To-Date 2022
	(change in millions)		(% change)		(change in millions)		(% change)
Rates and pricing	$	(3)	(1.2)	%	$	2	0.4	%
Sales growth	—		—		2		0.4
Weather	(4)		(1.6)		(10)		(2.1)
Fuel and other cost recovery	(18)		(7.1)		1		0.2
Retail revenues	$	(25)	(9.9)	%	$	(5)	(1.1)	%

Revenues associated with changes in rates and pricing decreased in the second quarter 2023 and increased year-to-date 2023 when compared to the corresponding periods in 2022. The second quarter 2023 decrease was primarily due to the expiration of a PEP surcharge at the end of 2022 that became effective for the first billing cycle of April 2022. The year-to-date 2023 increase was primarily due to ECO Plan rates that became effective in May 2022. See Note 2 to the financial statements under "Mississippi Power – Performance Evaluation Plan" and " – Environmental Compliance Overview Plan" in Item 8 of the Form 10-K for additional information.

Revenues attributable to changes in sales were relatively flat in the second quarter and year-to-date 2023 when compared to the corresponding periods in 2022. Weather-adjusted residential KWH sales increased 0.1% in the second quarter 2023 when compared to the corresponding period in 2022 due to an increase in customer usage. Weather-adjusted residential KWH sales decreased 1.0% year-to-date 2023 when compared to the corresponding period in 2022 due to a decrease in customer usage. Weather-adjusted commercial KWH sales increased 2.7% and 2.9% in the second quarter and year-to-date 2023, respectively, when compared to the corresponding periods in 2022 due to an increase in customer usage. Industrial KWH sales decreased 2.1% in the second quarter 2023 when compared to the corresponding period in 2022 primarily due to decreases in the chemicals, petroleum, and lumber sectors, partially offset by increases in the non-manufacturing sector. Industrial KWH sales increased 1.4% year-to-date 2023 when compared to the corresponding period in 2022 primarily due to increases in the non-manufacturing, petroleum, and pipeline sectors, partially offset by decreases in the chemicals sector.

Fuel and other cost recovery revenues decreased in the second quarter 2023 when compared to the corresponding period in 2022 primarily as a result of lower recoverable fuel costs. Recoverable fuel costs include fuel and

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AND RESULTS OF OPERATIONS (Continued)

~~Revenues associated with changes in rates and~~ ~~pricing~~ increased in the third quarter and year-to-date 2022 when compared to the corresponding periods in 2021 primarily due to new PEP rates that became effective for the first billing cycle of April 2022, partially offset by a decrease in revenues associated with a tolling arrangement. S~~ee Note (B) to the Condensed Financial Statements under "Mississippi Power – Performance Evaluation Plan" herein for additional information.~~

~~Revenues attributable to changes in sales~~decreased in the third quarter 2022 when compared to the corresponding period in 2021. Revenues attributable to changes in sales increased for year-to-date 2022 when compared to the corresponding period in 2021. Weather-adjusted residential KWH sales ~~decreased 3.3% and 1.2% in the~~ ~~third quarter and~~ ~~year-to-date 2022, respectively,~~ ~~when compared to the corresponding periods in 2021 due to a decrease in customer usage resulting from increased activity outside the home as customers return to pre-pandemic levels of activity.~~ ~~Weather-adjusted commercial KWH sales~~ ~~increased 0.3% and 1.3%~~ ~~in the third quarter and year-to-date 2022, respectively, when compared to the corresponding periods in 2021 due to~~ ~~customer growth.~~ ~~Industrial KWH sales~~ ~~increased 1.9% and 1.8%~~ ~~in the third quarter and year-to-date 2022, respectively,~~ ~~when compared to the corresponding periods in 2021 primarily due to increases in the petroleum, pipeline, and transportation sectors.~~

Fuel and other cost recovery revenues decreased in the third quarter 2022 when compared to the corresponding period in 2021 primarily as a result of lower recoverable fuel costs. Fuel and other cost recovery revenues increased for year-to-date 2022 when compared to the corresponding period in 2021 primarily as a result of higher recoverable fuel costs. Recoverable fuel costs include fuel and purchased power expenses reduced by the fuel and emissions portion of wholesale revenues from energy sold to customers outside Mississippi Power's service territory. Electric rates include provisions to adjust billings for fluctuations in fuel costs, including the energy component of purchased power costs. Under these provisions, fuel revenues generally equal fuel expenses, including the energy component of purchased power costs, and do not affect net income. See Note 2 to the financial statements in Item 8 of the Form 10-K ~~and Note (B) to the Condensed Financial Statements herein under "Mississippi Power"~~ for additional information.

Wholesale Revenues – Non-Affiliates

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$— — $13 7.3


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$(7)	(11.1)	$(7)	(5.3)

~~For year-to-date 2022,~~In the second quarter 2023, wholesale revenues from sales to non-affiliates were ~~$191~~$56 million compared to ~~$178~~$63 million for the corresponding period in ~~2021.~~2022. For year-to-date 2023, wholesale revenues from sales to non-affiliates were $124 million compared to $131 million for the corresponding period in 2022. The ~~increase was~~decreases were primarily due to ~~higher fuel costs and an increase~~a decrease in ~~base~~ revenue from MRA customers primarily due to ~~increased demand as a result~~the lower cost of ~~weather impacts~~natural gas and changes in ~~2022.~~power supply agreements, partially offset by higher opportunity sales.

Wholesale revenues from sales to non-affiliates will vary depending on fuel prices, the market prices of wholesale energy compared to the cost of Mississippi Power's and the Southern Company system's generation, demand for energy within the Southern Company system's electric service territory, and the availability of the Southern Company system's generation. Increases and decreases in energy revenues that are driven by fuel prices are accompanied by an increase or decrease in fuel costs and do not have a significant impact on net income. In addition, Mississippi Power provides service under long-term contracts with rural electric cooperative associations and municipalities located in southeastern Mississippi under cost-based electric tariffs which are subject to regulation by the FERC. See Note 2 to the financial statements under "Mississippi Power" in Item 8 of the Form 10-K for additional information. See Note (B) to the Condensed Financial Statements under "Mississippi Power – Municipal and Rural Associations Tariff" herein for additional information.

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~~AND RESULTS OF OPERATIONS (Continued)~~

Wholesale Revenues – Affiliates

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$125 N/M $216 N/M


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$(89)	(83.2)	$(56)	(37.6)

In the ~~third~~second quarter ~~2022,~~2023, wholesale revenues from sales to affiliates were ~~$187~~$18 million compared to ~~$62~~$107 million for the corresponding period in ~~2021.~~ 2022. The decrease was primarily due to a $44 million decrease associated with lower natural gas prices and a $44 million decrease associated with lower KWH sales.

For year-to-date ~~2022,~~2023, wholesale revenues from sales to affiliates were ~~$336~~$93 million compared to ~~$120~~$149 million for the corresponding period in ~~2021.~~2022. The~~increases were primarily~~ decrease was due to~~increases of $111~~ an $81 million ~~and $197 million, respectively,~~decrease associated with ~~higher fuel prices, primarily for~~lower natural gas prices and ~~$14~~a $4 million ~~and $19 million, respectively,~~decrease associated with ~~higher~~lower KWH sales, ~~due to lower cost available Mississippi Power resources as compared to the available affiliate company generation.~~partially offset by a $29 million increase in capacity revenues resulting from an increase in pricing and volume of generation reserves.

~~Other Revenues~~

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$5 62.5 $14 70.0

In the third quarter 2022, other revenues were $13 million compared to $8 million for the corresponding period in 2021. For year-to-date 2022, other revenues were $34 million compared to $20 million for the corresponding period in 2021. The increases for the third quarter and year-to-date 2022 were primarily due to increases of $5 million and $10 million, respectively, in unregulated sales associated with power delivery construction and maintenance projects.

~~Fuel and Purchased Power Expenses~~

Third Quarter 2022 vs.
Third Quarter 2021
Year-to-Date 2022 vs.
Year-to-Date 2021
(change in millions) (% change) (change in millions) (% change)
Fuel $ 103 74.2 $ 235 71.1
Purchased power 14 250.0 15 70.6
Total fuel and purchased power expenses $ 117 $ 250

~~In the third quarter 2022, total fuel and purchased power expenses were $262 millioncompared to $145 million for the corresponding period in 2021. Theincrease was due to a $106 millionincrease~~ ~~related to the average cost of fuel and purchased power and an~~ ~~$11 million increase related to the volume of KWHs generated and purchased.~~

~~For year-to-date 2022, total fuel and purchased power expenses were $601 millioncompared to $351 million for the corresponding period in 2021. Theincreasewas primarily due to a $233 millionincrease~~ ~~related to the average cost of fuel and purchased power and a~~ ~~$17 millionincrease related to the volume of KWHs generated.~~

Fuel and purchased power energy transactions do not have a significant impact on earnings since energy expenses are generally offset by energy revenues through Mississippi Power's fuel cost recovery clause.

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AND RESULTS OF OPERATIONS (Continued)

Fuel and Purchased Power Expenses


	Second Quarter 2023 vs. Second Quarter 2022			Year-To-Date 2023 vs. Year-To-Date 2022
	(change in millions)		(% change)	(change in millions)		(% change)
Fuel	$	(107)	(54.6)	$	(87)	(27.0)
Purchased power	(4)		(36.4)	(6)		(35.3)
Total fuel and purchased power expenses	$	(111)		$	(93)

In the second quarter 2023, total fuel and purchased power expenses were $96 million compared to $207 million for the corresponding period in 2022. The decrease was primarily due to an $86 million decrease related to the average cost of fuel and purchased power and a $25 million decrease related to the volume of KWHs generated.

For year-to-date 2023, total fuel and purchased power expenses were $246 million compared to $339 million for the corresponding period in 2022. The decrease was primarily due to an $85 million decrease related to the average cost of fuel and purchased power and an $8 million decrease related to the volume of KWHs generated.

Details of Mississippi Power's generation and purchased power were as follows:


		Third Quarter 2022	Third Quarter 2021	Year-To-Date 2022	Year-To-Date 2021		Second Quarter 2023	Second Quarter 2022	Year-To-Date 2023	Year-To-Date 2022
Total generation (in millions of KWHs)	Total generation (in millions of KWHs)	5,093	4,878	13,650	13,016	Total generation (in millions of KWHs)	3,897	4,483	8,340	8,557
Total purchased power (in millions of KWHs)	Total purchased power (in millions of KWHs)	241	124	527	562	Total purchased power (in millions of KWHs)	174	166	274	286
Sources of generation (percent) –	Sources of generation (percent) –					Sources of generation (percent) –
Gas	Gas	89	93	89	91	Gas	97	88	95	90
Coal	Coal	11	7	11	9	Coal	3	12	5	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) –
Gas	Gas	5.10	2.99	4.43	2.66	Gas	2.31	4.73	2.85	4.04
Coal	Coal	4.50	3.16	4.12	3.13	Coal	6.31	3.95	5.94	3.86
Average cost of fuel, generated (in cents per net KWH)	Average cost of fuel, generated (in cents per net KWH)	5.02	3.00	4.40	2.70	Average cost of fuel, generated (in cents per net KWH)	2.44	4.63	3.01	4.02
Average cost of purchased power (in cents per net KWH)	Average cost of purchased power (in cents per net KWH)	8.15	4.51	6.83	3.78	Average cost of purchased power (in cents per net KWH)	4.07	6.57	4.08	5.72

Fuel

In the ~~third~~second quarter ~~2022,~~2023, fuel expense was ~~$242~~$89 million compared ~~to $139~~to $196 million for the corresponding period in ~~2021.~~2022. The ~~increase~~decrease was due to a ~~70.6%increase~~ 78.3% decrease in the volume of KWHs generated by coal, a 51.2% decrease in the average cost of natural gas per KWH generated, and a ~~42.4%~~5.0% decrease in the volume of KWHs generated by natural gas, partially offset by a 59.7% increase in the average cost of coal per ~~KWHs generated, and~~KWH generated.

For year-to-date 2023, fuel expense was $235 million compared to $322 million for the corresponding period in 2022. The decrease was due to a ~~61.3%increase~~55.0% decrease in the volume of KWHs generated by ~~coal.~~

~~For year-to-date 2022, fuel expense was $565 million compared to $330 million for the corresponding period in 2021. Theincreasewas due to~~coal and a ~~66.5%increase~~29.5% decrease in the average cost of natural gas per KWH generated, partially offset by a ~~31.6%~~53.9% increase in the average cost of coal per ~~KWHs~~KWH generated a ~~30.2%increase in the volume of KWHs generated by coal,~~ and a ~~2.4%~~4.0% increase in the volume of KWHs generated by natural gas.

Purchased Power

In the ~~third~~second quarter ~~2022,~~2023, purchased power expense was ~~$20~~$7 million compared to $6$11 million for the corresponding period in ~~2021.~~2022. The ~~increase~~decrease was due to a ~~93.6%~~ ~~increase in the~~ ~~volume of KWHs purchased and~~ ~~an 80.7% increase~~ ~~in the average cost per KWH purchased.~~

~~For year-to-date 2022, purchased power expense was $36 million compared to $21 million for the corresponding period in 2021. The increasewas primarily due to an 80.6% increase~~38.1% decrease in the average cost per KWH purchased primarily due to lower natural gas prices, partially offset by a ~~6.3%~~ ~~decrease~~5.1% increase in the volume of KWHs purchased.

Energy purchases 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. These purchases are made in accordance with the IIC or other contractual agreements, as approved by the FERC.

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For year-to-date 2023, purchased power expense was $11 million compared to $17 million for the corresponding period in 2022. The decrease was due to a 28.7% decrease in the average cost per KWH purchased primarily due to lower natural gas prices and a 4.1% decrease in the volume of KWHs purchased.

Other Operations and Maintenance Expenses

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$1 1.2 $22 9.6


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$—	—	$8	4.8

For year-to-date ~~2022,~~2023, other operations and maintenance expenses were ~~$252~~$175 million compared to ~~$230~~$167 million for the corresponding period in ~~2021.~~2022. The increase was primarily due to increases of $9$4 million ~~related to unregulated power delivery construction and maintenance projects, $6~~in generation expenses, $3 million ~~associated with~~in storm reserve accruals, $4and $2 million ~~in transmission and distribution line maintenance, and $4 million in sales and use taxes~~ associated with the Kemper County energy ~~facility.~~facility (primarily related to lower salvage proceeds in 2023), partially offset by a decrease of $3 million in distribution lines and substation expenses. See ~~Note~~Notes 2 and 3 to the financial statements under "Mississippi Power – System Restoration Rider" and "Other Matters – Mississippi Power," respectively, in Item 8 of the Form 10-K and Note ~~(C)~~(B) to the Condensed Financial Statements under ~~"Other Matters~~"Mississippi Power – ~~Mississippi Power"~~System Restoration Rider" herein for additional information.

Taxes Other Than Income Taxes

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$7 70.0 $16 72.7


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$(4)	(12.5)	$(1)	(1.6)

In the second quarter 2023, taxes other than income taxes were $28 million compared to $32 million for the corresponding period in 2022. For year-to-date 2023, taxes other than income taxes were $60 million compared to $61 million for the corresponding period in 2022. The decreases primarily reflect a decrease in ad valorem taxes due to lower assessed values.

Interest Expense, Net of Amounts Capitalized


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$4	28.6	$7	25.9

In the ~~third~~second quarter ~~2022,~~2023, interest expense, net of amounts capitalized was $18 million compared to $14 million for the corresponding period in 2022. For year-to-date 2023, interest expense, net of amounts capitalized was $34 million compared to $27 million for the corresponding period in 2022. The increases for the second quarter and year-to-date 2023 were associated with increases of approximately $3 million and $5 million, respectively, related to higher interest rates and $1 million and $2 million, respectively, related to higher average outstanding borrowings. See FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" and "Financing Activities" herein for additional information on borrowings.

Income Taxes


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$(8)	(66.7)	$(3)	(15.0)

In the second quarter 2023, income taxes were $4 million compared to $12 million for the corresponding period in 2022. The decrease was primarily due to lower pre-tax earnings and the flowback of certain excess deferred income taxes.

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For year-to-date 2023, income taxes were $17 million compared to ~~$10~~$20 million for the corresponding period in ~~2021. For year-to-date 2022, income taxes were $38 million compared to $22 million for the corresponding period in 2021.~~2022. The ~~third quarter and year-to-date 2022 increases~~decrease was primarily ~~relate to a reduction of $3 million and $8 million, respectively, in~~due the flowback of certain excess deferred income taxes, ~~associated with new PEP rates that became effective in April 2022, as well as increases of $4 million and $8 million, respectively, due to~~partially offset by higher pre-tax earnings.

See Note (G) to the Condensed Financial Statements herein for additional information.

Southern Power

Net Income Attributable to Southern Power

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$17 21.8 $54 25.6


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$(13)	(13.3)	$17	10.0

Net income attributable to Southern Power in the ~~third~~second quarter ~~2022~~2023 was ~~$95~~$85 million compared to ~~$78~~$98 million for the corresponding period in ~~2021.~~ 2022. The decrease was primarily due to lower revenues driven by lower market prices of energy, as well as lower HLBV income associated with tax equity partnerships. These decreases were partially offset by a tax benefit related to changes in state apportionment methodology due to tax legislation enacted by the State of Tennessee and insurance proceeds received for damaged generation equipment.

Net income attributable to Southern Power for year-to-date ~~2022~~2023 was ~~$265~~$187 million compared to ~~$211~~$170 million for the corresponding period in ~~2021.~~2022. The ~~increases were~~increase was primarily due to ~~higher revenues driven by higher market prices~~a gain on the sale of ~~energy, partially offset by higher other operations and maintenance expenses. Also contributing to the year-to-date 2022 increase were higher revenues from new natural gas PPAs~~spare parts and higher HLBV income associated with tax equity partnerships. The year-to-date 2022 increase was partially offset by gains from contributions of wind turbine equipment to various equity method investments in the first quarter 2021 and a tax benefit due to a changepartnerships, as well as changes in state apportionment methodology ~~resulting from~~related to tax legislation enacted by the State of ~~Alabama in the first quarter 2021.~~Tennessee and receipts of liquidated damages associated with generation facility production guarantees. These increases were partially offset by lower revenues driven by lower market prices of energy.

~~See Note 15 to the financial statements under "Southern Power – Development Projects" in Item 8 of the Form 10-K for additional information.~~

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~~AND RESULTS OF OPERATIONS (Continued)~~

Operating Revenues

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$501 73.8 $1,008 62.6


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$(374)	(41.6)	$(405)	(28.2)

Total operating revenues include PPA capacity revenues, which are derived primarily from long-term contracts involving natural gas facilities, and PPA energy revenues from Southern Power's generation facilities. To the extent Southern Power has capacity not contracted under a PPA, it may sell power into an accessible wholesale market, or, to the extent those generation assets are part of the FERC-approved IIC, it may sell power into the Southern Company power pool.

Natural Gas Capacity and Energy Revenue

Capacity revenues generally represent the greatest contribution to operating income and are designed to provide recovery of fixed costs plus a return on investment.

Energy is generally sold at variable cost or is indexed to published natural gas indices. Energy revenues will vary depending on the energy demand of Southern Power's customers and their generation capacity, as well as the market prices of wholesale energy compared to the cost of Southern Power's energy. Energy revenues also include fees for support services, fuel storage, and unit start charges. Increases and decreases in energy revenues under PPAs that are driven by fuel or purchased power prices are accompanied by an increase or decrease in fuel and purchased power costs and do not have a significant impact on net income.

Solar and Wind Energy Revenue

Southern Power's energy sales from solar and wind generating facilities are predominantly through long-term PPAs that do not have capacity revenue. Customers either purchase the energy output of a dedicated renewable facility

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AND RESULTS OF OPERATIONS (Continued)

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.

Operating Revenues Details

Details of Southern Power's operating revenues were as follows:


		Third Quarter 2022		Third Quarter 2021		Year-To-Date 2022		Year-To-Date 2021			Second Quarter 2023		Second Quarter 2022		Year-To-Date 2023		Year-To-Date 2022
		(in millions)									(in millions)
PPA capacity revenues	PPA capacity revenues	$	131	$	118	$	344	$	311	PPA capacity revenues	$	114	$	109	$	227	$	214
PPA energy revenues	PPA energy revenues	736		413		1,657		954		PPA energy revenues	307		579		583		921
Total PPA revenues	Total PPA revenues	867		531		2,001		1,265		Total PPA revenues	421		688		810		1,135
Non-PPA revenues	Non-PPA revenues	304		139		590		327		Non-PPA revenues	88		202		196		286
Other revenues	Other revenues	9		9		27		18		Other revenues	16		9		27		17
Total operating revenues	Total operating revenues	$	1,180	$	679	$	2,618	$	1,610	Total operating revenues	$	525	$	899	$	1,033	$	1,438

In the second quarter 2023, total operating revenues were $525 million, reflecting a $374 million, or 41.6%, decrease from the corresponding period in 2022. The change in operating revenues was primarily due to the following:

•PPA capacity revenues increased $5 million, or 4.6%, primarily due to a net increase in MW capacity under contract from natural gas PPAs and an increase associated with a change in rates from natural gas PPAs.

•PPA energy revenues decreased $272 million, or 47.0%, primarily due to a $267 million decrease in sales under natural gas PPAs resulting from a $209 million decrease in the price of fuel and purchased power and a $58 million decrease in the volume of KWHs sold.

•Non-PPA revenues decreased $114 million, or 56.4%, primarily due to a $183 million decrease in the market price of energy, partially offset by a $68 million increase in the volume of KWHs sold through short-term sales.

•Other revenues increased $7 million, or 77.8%, primarily due to receipts of liquidated damages associated with generation facility production guarantees and business interruption insurance proceeds received for damaged generation equipment.

For year-to-date 2023, total operating revenues were $1.0 billion, reflecting a $405 million, or 28.2%, decrease from the corresponding period in 2022. The change in operating revenues was primarily due to the following:

•PPA capacity revenues increased $13 million, or 6.1%, primarily due to a net increase in MW capacity under contract from natural gas PPAs and an increase associated with a change in rates from natural gas PPAs.

•PPA energy revenues decreased $338 million, or 36.7%, primarily due to a $328 million decrease in sales under natural gas PPAs resulting from a $269 million decrease in the price of fuel and purchased power and a $59 million decrease in the volume of KWHs sold.

•Non-PPA revenues decreased $90 million, or 31.5%, primarily due to a $244 million decrease in the market price of energy, largely offset by a $152 million increase in the volume of KWHs sold through short-term sales.

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~~In the third quarter 2022, total operating~~•Other revenues ~~were $1.2 billion, reflecting a $501~~increased $10 million, or ~~74%, increase from the corresponding period in 2021. The increase in operating revenues was primarily due to the following:~~

•~~PPA capacity revenues increased $13 million, or 11%~~58.8%, primarily due to ~~increased capacity sales under existing natural gas PPAs.~~

•~~PPA energy revenues increased $323 million, or 78%, primarily due to a $333 million increase in sales under existing natural gas PPAs resulting from a $287 million increase in the price~~receipts of ~~fuel and purchased power and a $45 million increase in the volume of KWHs sold.~~

•Non-PPA revenues increased $165 million, or 119%, due to a $172 million increase in the market price of energy, partially offset by a $7 million decrease in the volume of KWHs sold through short-term sales.

For year-to-date 2022, total operating revenues were $2.6 billion, reflecting a $1.0 billion, or 63%, increase from the corresponding period in 2021. The increase in operating revenues was primarily due to the following:

•PPA capacity revenues increased $33 million, or 11%, primarily due to new natural gas PPAs and increased capacity sales under existing natural gas PPAs, partially offset by the contractual expiration of natural gas PPAs.

•PPA energy revenues increased $703 million, or 74%, primarily due to a $540 million increase in sales under existing natural gas PPAs resulting from a $442 million increase in the price of fuel and purchased power and a $98 million increase in the volume of KWHs sold. Also contributing to the increase was a $186 million increase in salesliquidated damages associated with ~~new natural gas PPAs, partially offset by a $17 million decrease due to the contractual expiration of natural gas PPAs.~~

•Non-PPA revenues increased $263 million, or 80%, due to a $299 million increase in the market price of energy, partially offset by a $35 million decrease in the volume of KWHs sold through short-term sales.generation facility production guarantees and business interruption insurance proceeds for damaged generation equipment.

Fuel and Purchased Power Expenses

Details of Southern Power's generation and purchased power were as follows:


		Third Quarter 2022	Third Quarter 2021	Year-To-Date 2022	Year-To-Date 2021		Second Quarter 2023	Second Quarter 2022	Year-To-Date 2023	Year-To-Date 2022
		(in billions of KWHs)					(in billions of KWHs)
Generation	Generation	12.8	12.1	36.7	31.8	Generation	11.7	12.8	24.0	23.9
Purchased power	Purchased power	1.2	0.8	2.3	2.0	Purchased power	0.9	0.7	1.6	1.1
Total generation and purchased power	Total generation and purchased power	14.0	12.9	39.0	33.8	Total generation and purchased power	12.6	13.5	25.6	25.0

Total generation and purchased power (excluding solar, wind, fuel cells, and tolling agreements)	Total generation and purchased power (excluding solar, wind, fuel cells, and tolling agreements)	8.8	7.7	23.2	20.2	Total generation and purchased power (excluding solar, wind, fuel cells, and tolling agreements)	7.8	7.5	16.2	14.4

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:


	Second Quarter 2023 vs. Second Quarter 2022			Year-To-Date 2023 vs. Year-To-Date 2022
	(change in millions)		(% change)	(change in millions)		(% change)
Fuel	$	(298)	(68.2)	$	(339)	(50.7)
Purchased power	(40)		(58.8)	(35)		(39.3)
Total fuel and purchased power expenses	$	(338)		$	(374)

In the second quarter 2023, total fuel and purchased power expenses decreased $338 million, or 66.9%, compared to the corresponding period in 2022. Fuel expense decreased $298 million due to a $303 million decrease associated with the average cost of fuel, partially offset by a $4 million increase associated with the volume of KWHs generated. Purchased power expense decreased $40 million due to a $62 million decrease associated with the average cost of purchased power, partially offset by a $23 million increase associated with the volume of KWHs purchased.

For year-to-date 2023, total fuel and purchased power expenses decreased $374 million, or 49.3%, compared to the corresponding period in 2022. Fuel expense decreased $339 million due to a $403 million decrease associated with the average cost of fuel, partially offset by a $64 million increase associated with the volume of KWHs generated. Purchased power expense decreased $35 million due to a $72 million decrease associated with the average cost of purchased power, partially offset by a $37 million increase associated with the volume of KWHs purchased.

~~131~~

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Depreciation and Amortization


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$(9)	(6.9)	$(1)	(0.4)

In the second quarter 2023, depreciation and amortization was $122 million compared to $131 million for the corresponding period in 2022. The decrease was primarily due to a decrease in units-of-production depreciation related to lower production from natural gas generating facilities and insurance proceeds received for damaged generation equipment, partially offset by an increase in depreciation related to capital improvements at natural gas generating facilities.

Gain on Dispositions, Net

Second Quarter 2023 vs. Second Quarter 2022

Year-To-Date 2023 vs. Year-To-Date 2022

(change in millions)

(% change)

(change in millions)

(% change)

$—

—

$18

N/M

For year-to-date 2023, gain on dispositions, net was $20 million compared to $2 million for the corresponding period in 2022. The increase was primarily due to a $16 million gain on the sale of spare parts in 2023.

Interest Expense, Net of Amounts Capitalized


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$(3)	(8.3)	$(7)	(9.6)

In the second quarter 2023, interest expense, net of amounts capitalized was $33 million compared to $36 million for the corresponding period in 2022. For year-to-date 2023, interest expense, net of amounts capitalized was $66 million compared to $73 million for the corresponding period in 2022. The decreases were primarily due to lower average outstanding borrowings.

Income Taxes (Benefit)


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$(19)	(76.0)	$(14)	(107.7)

In the second quarter 2023, income tax expense was $6 million compared to $25 million for the corresponding period in 2022. For year-to-date 2023, income tax benefit was $1 million compared to income tax expense of $13 million for the corresponding period in 2022. These changes were primarily due to lower pre-tax earnings and a change in state apportionment methodology resulting from tax legislation enacted by the state of Tennessee in the second quarter 2023. See Note (G) to the Condensed Financial Statements herein for additional information.

Net Loss Attributable to Noncontrolling Interests


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$7	31.8	$(11)	(16.4)

In the second quarter 2023, net loss attributable to noncontrolling interests was $15 million compared to $22 million for the corresponding period in 2022. The decreased loss was primarily due to $7 million in lower HLBV loss allocations to wind tax equity partners and $6 million in lower loss allocations to battery energy storage partners, partially offset by $5 million in lower income allocations to equity partners.

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~~Details of Southern Power's fuel and purchased power expenses were as follows:~~

Third Quarter 2022 vs.
Third Quarter 2021
Year-to-Date 2022 vs.
Year-to-Date 2021
(change in millions) (% change) (change in millions) (% change)
Fuel $ 346 133.6 $ 734 135.9
Purchased power 103 251.2 147 170.9
Total fuel and purchased power expenses $ 449 $ 881

In the third quarter 2022, total fuel and purchased power expenses increased $449 million, or 150%, compared to the corresponding period in 2021. Fuel expense increased $346 million due to a $323 million increase associated with the average cost of fuel and a $23 million increase associated with the volume of KWHs generated. Purchased power expense increased $103 million due to a $79 million increase associated with the average cost of purchased power and a $24 million increase associated with the volume of KWHs purchased.

For year-to-date 2022, total fuel and purchased power expenses increased $881 million, or 141%, compared to the corresponding period in 2021. Fuel expense increased $734 million due to a $651 million increase associated with the average cost of fuel and an $83 million increase associated with the volume of KWHs generated. Purchased power expense increased $147 million due to a $134 million increase associated with the average cost of purchased power and a $13 million increase associated with the volume of KWHs purchased.

~~Other Operations and Maintenance Expenses~~

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$19 20.1 $23 7.4

In the third quarter 2022, other operations and maintenance expenses were $113 million compared to $94 million for the corresponding period in 2021. For year-to-date 2022, other operations and maintenance expenses were $331 million compared to $308 million for the corresponding period in 2021. The increases for the third quarter and year-to-date 2022 were primarily due to increases of $11 million and $13 million, respectively, related to the timing of non-outage generation maintenance expenses. Also contributing to the year-to-date 2022 increase was an increase of $11 million in transmission expenses to serve new natural gas PPAs, partially offset by $6 million related to the allocation in 2021 of uncollected settlements by the Energy Reliability Council of Texas market as a result of Winter Storm Uri.

~~Loss on Sales-Type Lease~~

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$(15) (100.0) $(14) (93.4)

In the third quarter 2021, a $15 million loss on sales-type lease was recorded upon commencement of the Garland battery energy storage facility PPA, $10 million of which was allocated through noncontrolling interests to Southern Power's partners in the project. See Notes 9 and 15 to the financial statements under "Lessor" and "Southern Power," respectively, in Item 8 of the Form 10-K for additional information.

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~~AND RESULTS OF OPERATIONS (Continued)~~

~~Gain on Dispositions, Net~~

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$— N/M $(37) (94.9)

For year-to-date 2022, gain on dispositions, net was $2 million compared to $39 million for the corresponding period in 2021. The decrease primarily resulted from gains associated with contributions of wind turbine equipment to various equity method investments in the first quarter 2021. See Note 15 to the financial statements under "Southern Power – Development Projects" in Item 8 of the Form 10-K and Note (E) to the Condensed Financial Statements under "Southern Power" herein for additional information.

~~Income Taxes (Benefit)~~

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$27 N/M $52 N/M

In the third quarter 2022, income tax expense was $36 million compared to $9 million for the corresponding period in 2021. The change was primarily due to higher pre-tax earnings, partially offset by higher wind PTCs.

For year-to-date 2022, income tax expense was $49 million compared to a benefit of $3 million for the corresponding period in 2021. The change was primarily due to higher pre-tax earnings for year-to-date 2022 and a change in state apportionment methodology resulting from tax legislation enacted by the State of Alabama in the first quarter 2021, partially offset by higher wind PTCs for year-to-date 2022.

~~Net Income (Loss) Attributable to Noncontrolling Interests~~

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$7 N/M $(28) N/M

In the third quarter 2022, net income attributable to noncontrolling interests was $12 million compared to $5 million for the corresponding period in 2021. The increase was primarily due to lower HLBV loss allocations to tax equity partners, including loss allocation impacts associated with the Garland battery energy storage facility being placed in service in the third quarter 2021, and higher income allocations to equity partners.

~~For year-to-date 2022,~~2023, net loss attributable to noncontrolling interests was ~~$55~~$78 million compared to ~~$27~~$67 million for the corresponding period in ~~2021.~~2022. The increased loss was primarily due to $15 million in lower income allocations to equity partners and $9 million in higher HLBV loss allocations to wind tax equity partners, partially offset by $14 million in lower loss ~~allocation impacts associated with the Garland~~allocations to battery energy storage ~~facility being placed in service in the third quarter 2021 and higher income allocations to equity~~ partners.

~~See Notes 9 and 15 to the financial statements under "Lessor" and "Southern Power," respectively, in Item 8 of the Form 10-K for additional information.~~

Southern Company Gas

Operating Metrics

Southern Company Gas continues to focus on several operating metrics, including Heating Degree Days, customer count, and volumes of natural gas sold.

Southern Company Gas measures weather and the effect on its business using Heating Degree Days. Generally, increased Heating Degree Days result in higher demand for natural gas on Southern Company Gas' distribution system. Southern Company Gas has various regulatory mechanisms, such as weather and revenue normalization and straight-fixed-variable rate design, which limit its exposure to weather changes within typical ranges in each of its

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~~AND RESULTS OF OPERATIONS (Continued)~~

utility's respective service territory. Southern Company Gas also utilizes weather hedges to limit the negative income impacts in the event of warmer-than-normal weather.

The number of customers served by gas distribution operations and gas marketing services can be impacted by natural gas prices, economic conditions, and competition from alternative fuels. Gas distribution operations and gas marketing services' customers are primarily located in Georgia and Illinois.

Southern Company Gas' natural gas volume metrics for gas distribution operations and gas marketing services illustrate the effects of weather and customer demand for natural gas.

Seasonality of Results

During the Heating Season, natural gas usage and operating revenues are generally higher as more customers are connected to the gas distribution systems and natural gas usage is higher in periods of colder weather. Southern Company Gas' base operating expenses, excluding cost of natural gas, bad debt expense, and certain incentive compensation costs, are incurred relatively evenly throughout the year. Seasonality also affects the comparison of certain balance sheet items across quarters, including receivables, unbilled revenues, natural gas for sale, and notes payable. However, these items are comparable when reviewing Southern Company Gas' annual results. Thus, Southern Company Gas' operating results for the interim periods presented are not necessarily indicative of annual results and can vary significantly from quarter to quarter.

Net Income

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$27 48.2 $127 32.6


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$(30)	(26.1)	$(40)	(9.2)

In the ~~third~~second quarter ~~2022,~~2023, net income was ~~$83~~$85 million compared to ~~$56~~$115 million for the corresponding period in 2021. Net income increased $14 million at gas distribution operations primarily due to base rate increases and continued investment in infrastructure replacement and $14 million at gas pipeline investments primarily as a result of higher earnings at SNG and lower income taxes related to the PennEast Pipeline project. The third quarter 2021 results also included a $93 million after-tax gain and $85 million of additional tax expense as a result of the July 1, 2021 sale of Sequent.

2022. For year-to-date ~~2022,~~2023, net income was ~~$516~~$393 million compared to ~~$389~~$433 million for the corresponding period in ~~2021. Net~~2022. The decreases were primarily due to lower net income ~~increased $73 million~~ at gas ~~pipeline investments~~distribution operations primarily as a result of a ~~2021 impairment charge~~$28 million loss related to ~~the PennEast Pipeline project and $57~~a regulatory disallowance at Nicor Gas. The year-to-date 2023 decrease also included an $11 million decrease in net income at gas ~~distribution operations~~marketing services primarily ~~due~~related to base rate increases and continued investment in infrastructure replacement. The year-to-date 2021 results also included $108 million of net income from Sequent, including the $93 million after-tax gain, and $85 million of additional tax expense as a result of the July 1, 2021 sale of Sequent.

hedge losses. See ~~Notes 2, 7, and 15~~Note (B) to the ~~financial statements~~Condensed Financial Statements under "Southern Company ~~Gas" in Item 8 of the Form 10-K~~Gas – Infrastructure Replacement Programs and Capital Projects" herein for additional information.

~~Natural Gas Revenues, including Alternative Revenue Programs~~

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$234 37.6 $1,004 33.5

~~In the third quarter 2022, natural gas revenues, including alternative revenue programs,~~ ~~were~~ ~~$857 million~~ ~~compared to $623 million for the corresponding period in 2021. For year-to-date 2022, natural gas revenues, including alternative revenue programs, were~~ ~~$4.0 billion~~ ~~compared to $3.0 billion for the corresponding period in 2021.~~

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Natural Gas Revenues


	Second Quarter 2023 vs. Second Quarter 2022				Year-To-Date 2023 vs. Year-To-Date 2022
	(change in millions)		(% change)		(change in millions)		(% change)


Infrastructure replacement programs and rate changes	$	38	3.5	%	$	88	2.8	%
Gas costs and other cost recovery	(265)		(24.4)		(464)		(14.8)
Gas marketing services	(1)		(0.1)		(22)		(0.7)

Other	(3)		(0.3)		(14)		(0.4)
Natural gas revenues	$	(231)	(21.3)	%	$	(412)	(13.1)	%

Revenues from infrastructure replacement programs and ~~base~~ rate changes increased in the ~~third~~second quarter and year-to-date ~~2022~~2023 compared to the corresponding periods in ~~2021~~2022 primarily due to rate increases at ~~Nicor Gas, Atlanta Gas Light, and Chattanooga Gas~~the natural gas distribution utilities and continued investment in infrastructure ~~replacement.~~replacement, partially offset by a regulatory disallowance at Nicor Gas. See Note 2 to the financial statements under "Southern Company Gas – Rate Proceedings" in Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements under "Southern Company Gas – Infrastructure Replacement Programs and Capital Projects" herein for additional information.

Revenues ~~associated with~~from gas costs and other cost recovery ~~increased~~decreased in the ~~third~~second quarter and year-to-date ~~2022~~2023 compared to the corresponding periods in ~~2021~~2022 primarily due to ~~higher~~lower natural gas cost ~~recovery.~~recovery associated with the timing of natural gas purchases and the recovery of those costs from customers. See "Cost of Natural Gas" herein for additional information. Revenue impacts from weather and customer growth are described further below.

~~The changes~~variable price spreads in ~~year-to-date 2022 revenues related to wholesale gas services were due to the sale of Sequent on July 1, 2021. See Note 15 to the financial statements under "Southern Company Gas"~~Georgia and Illinois and higher customer count in ~~Item 8 of the Form 10-K for additional information.~~Georgia.

Southern Company Gas' natural gas distribution utilities have various regulatory mechanisms that limit their exposure to weather changes. Southern Company Gas also uses hedges for the majority of any remaining exposure to warmer-than-normal weather in Illinois for gas distribution operations and in Illinois and Georgia for gas marketing services; therefore, weather typically does not have a significant net income impact. The following table presents Heating Degree Days information for Illinois and Georgia, the primary locations where Southern Company Gas' operations are impacted by weather.


																	Second Quarter							Year-to-Date
		Third Quarter			2022 vs. normal		2022 vs. 2021		Year-to-Date			2022 vs. normal		2022 vs. 2021						2023 vs. normal		2023 vs. 2022					2023 vs. normal		2023 vs. 2022
		Normal(*)	2022	2021	colder (warmer)				Normal(*)	2022	2021	colder (warmer)					Normal(*)	2023	2022	warmer		colder (warmer)		Normal(*)	2023	2022	warmer
		(in thousands)							(in thousands)								(in thousands)							(in thousands)
Illinois	Illinois	42	56	14	33.3	%	300.0	%	3,686	3,683	3,594	(0.1)	%	2.5	%	Illinois	651	538	620	(17.4)	%	(13.2)	%	3,715	3,198	3,627	(13.9)	%	(11.8)	%
Georgia	Georgia	3	—	3	—	%	—	%	1,431	1,361	1,396	(4.9)	%	(2.5)	%	Georgia	129	121	110	(6.2)	%	10.0	%	1,458	1,029	1,361	(29.4)	%	(24.4)	%

(*)Normal represents the 10-year average ~~from~~from January 1, ~~2012~~2013 through ~~September~~June 30, ~~2021~~2022 for Illinois at Chicago Midway International Airport and for Georgia at Atlanta Hartsfield-Jackson International Airport, based on information obtained from the National Oceanic and Atmospheric Administration, National Climatic Data Center.

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The following table provides the number of customers served by Southern Company Gas at ~~September~~June 30, ~~2022~~2023 and ~~2021:~~2022:


		September 30,							June 30,
		2022		2021		2022 vs. 2021			2023		2022		2023 vs. 2022
		(in thousands, except market share %)				(% change)			(in thousands, except market share %)				(% change)
Gas distribution operations	Gas distribution operations	4,300		4,283		0.4	%	Gas distribution operations	4,337		4,314		0.5	%
Gas marketing services	Gas marketing services							Gas marketing services
Energy customers(*)	Energy customers(*)	598		603		(0.8)	%	Energy customers(*)	665		610		9.0	%
Market share of energy customers in Georgia	Market share of energy customers in Georgia	28.3	%	28.9	%			Market share of energy customers in Georgia	30.0	%	28.6	%

(*)Gas marketing services' customers are primarily located in Georgia and Illinois.

Southern Company Gas anticipates customer growth and uses a variety of targeted marketing programs to attract new customers and to retain existing customers.

Cost of Natural Gas

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$165 N/M $897 95.1


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$(253)	(56.0)	$(449)	(29.0)

Excluding Atlanta Gas Light, which does not sell natural gas to end-use customers, natural gas distribution rates include provisions to adjust billings for fluctuations in natural gas costs. Therefore, gas costs recovered through natural gas revenues generally equal the amount expensed in cost of natural gas and do not affect net income from gas distribution operations. Cost of natural gas at gas distribution operations represented ~~78%~~84% and ~~87%~~85% of the total cost of natural gas in the ~~third~~second quarter and year-to-date ~~2022,~~2023, respectively. See MANAGEMENT'S DISCUSSION AND ANALYSIS – RESULTS OF OPERATIONS – "Southern Company Gas – Cost of Natural Gas" in Item 7 of the Form 10-K and "Natural Gas ~~Revenues, including Alternative Revenue Programs"~~Revenues" herein for additional information.

The following table details the volumes of natural gas sold during both periods presented.


	Second Quarter				Year-to-Date
	2023	2022	2023 vs. 2022		2023	2022	2023 vs. 2022
Gas distribution operations (mmBtu in millions)
Firm	101	111	(9.0)	%	359	415	(13.5)	%
Interruptible	23	22	4.5		47	47	—
Total	124	133	(6.8)	%	406	462	(12.1)	%


Gas marketing services (mmBtu in millions)
Firm:
Georgia	5	5	—	%	18	21	(14.3)	%
Illinois	1	1	—		4	4	—

Other	3	3	—		7	7	—
Interruptible large commercial and industrial	4	3	33.3		7	7	—
Total	13	12	8.3	%	36	39	(7.7)	%

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~~The following table details the volumes of natural gas sold during all periods presented.~~

Third Quarter 2022 vs. 2021 Year-to-Date 2022 vs. 2021
2022 2021 2022 2021
Gas distribution operations (mmBtu in millions)
Firm 70 74 (5.4) % 485 465 4.3 %
Interruptible 22 23 (4.3) 69 73 (5.5)
Total 92 97 (5.2) % 554 538 3.0 %
Gas marketing services (mmBtu in millions)
Firm:
Georgia 3 3 — % 24 26 (7.7) %
Illinois — — — 4 5 (20.0)
Other 2 2 — 8 10 (20.0)
Interruptible large commercial and industrial 3 3 — 11 10 10.0
Total 8 8 — % 47 51 (7.8) %

Other Operations and Maintenance Expenses

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$14 5.9 $53 6.8


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$43	16.2	$45	7.9

In the ~~third~~second quarter ~~2022,~~2023, other operations and maintenance expenses were ~~$252~~$309 million compared to ~~$238~~$266 million for the corresponding period in ~~2021~~2022. .For year-to-date 2023, other operations and maintenance expenses were $615 million compared to $570 million for the corresponding period in 2022. The ~~increase was~~increases for the second quarter and year-to-date 2023 were primarily due to ~~higher~~increases of $30 million and $43 million, respectively, in compensation and ~~benefit expenses~~benefits, $30 million for both periods related to a regulatory disallowance at Nicor Gas, and ~~higher~~increases of $11 million and $16 million, respectively, related to energy service contracts, partially offset by decreases of $20 million and $36 million, respectively, in expenses passed through ~~directly~~ to customers primarily related to bad debt and energy efficiency programs at gas distribution operations. See Note (B) to the Condensed Financial Statements under "Southern Company Gas – Infrastructure Replacement Programs and Capital Projects" herein for additional information on the regulatory disallowance.

~~For year-to-date 2022, other operations~~Depreciation and ~~maintenance expenses were $829~~Amortization


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$5	3.6	$9	3.3

In the second quarter 2023, depreciation and amortization was $143 million compared to ~~$776~~$138 million for the corresponding period in ~~2021. Excluding $53 million of expenses related to Sequent for~~2022. For year-to-date 2021, other operations and maintenance expenses increased approximately $106 million. The increase was primarily due to increases of $47 million in compensation and benefit expenses, $30 million in expenses passed through directly to customers primarily related to bad debt at gas distribution operations, $18 million in customer accounts expenses, and $15 million in technology-related costs.

~~Depreciation and Amortization~~

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$7 5.3 $18 4.5

~~In the third quarter 2022,~~2023, depreciation and amortization was ~~$140~~$284 million compared to ~~$133~~$275 million for the corresponding period in ~~2021.~~ ~~For year-to-date 2022, depreciation and amortization~~ ~~was $414 million compared to $396 million for the corresponding period in 2021.~~2022. The increases were 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

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$9 25.0 $42 25.3


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$(3)	(4.8)	$(2)	(1.2)

In the ~~third~~second quarter ~~2022,~~2023, taxes other than income taxes ~~were $45~~was $59 million compared to ~~$36~~$62 million for the corresponding period in ~~2021.~~2022. For year-to-date ~~2022,~~2023, taxes other than income taxes ~~were $208~~was $161 million compared to ~~$166~~$163 million for the corresponding period in ~~2021.~~2022. The ~~increases~~decreases for the second quarter and year-to-date 2023 were primarily ~~reflect an increase~~due to decreases of $7 million and $12 million, respectively, in revenue ~~tax expenses as a result~~taxes, largely offset by increases of ~~higher natural gas revenues~~$5 million and ~~an increase~~$11 million, respectively, in payroll, property, and invested capital ~~tax expense at Nicor Gas. Revenue tax expenses are passed through directly to customers and have no impact on net income.~~taxes.

~~Gain on Dispositions,~~Interest Expense, Net of Amounts Capitalized

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$(121) (100.0) $(122) (96.1)

The sale of Sequent in the third quarter 2021 resulted in a gain on dispositions, net of $121 million. See Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.

~~Earnings from Equity Method Investments~~

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$9 36.0 $91 N/M


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$12	19.7	$28	23.0

In the ~~third~~second quarter ~~2022~~2023, ~~earnings from equity method investments were~~ inte~~$34~~rest expense, net of amounts capitalized was $73 million compared to ~~$25~~$61 million for the corresponding period in 2022. For year-to-date 2023, interest expense, net of amounts capitalized was $150 million compared to $122 million for the corresponding period in ~~2021~~.2022. The ~~increase~~ ~~was primarily due to~~ ~~higher earnings at SNG resulting from higher revenues primarily due to increased demand.~~

~~For~~ ~~year-to-date 2022, earnings from equity method investments were~~ ~~$105 million~~ ~~compared to $14 million~~increases for the ~~corresponding period in~~ ~~2021. The increase was~~second quarter and year-to-date 2023 were primarily ~~due to pre-tax impairment charges totaling $84~~associated with increases of approximately $13 million ~~in 2021~~and $31 million, respectively, related to ~~the PennEast Pipeline project~~higher interest rates. See FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" and ~~higher earnings at SNG resulting from higher revenues primarily due to increased demand.~~

See Note 7 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K and Note (E) to the Condensed Financial Statements herein under "Southern Company Gas" for additional information.

~~Other Income (Expense), Net~~

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$2 15.4 $113 N/M

~~For year-to-date 2022, other income (expense), net was~~ ~~$47 million of income~~ ~~compared to $66 million of expense for the correspondi~~ng period in 2021. The change was largely due to charitable contributions totaling $101 million during the first and second quarters of 2021 and an increase of $12 million at gas distribution operations primarily related to an increase in non-service cost-related retirement benefits income. See Note (H) to the Condensed Financial Statements"Financing Activities" herein for additional ~~information.~~information on borrowings.

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AND RESULTS OF OPERATIONS (Continued)

Income Taxes

Third Quarter 2022 vs. Third Quarter 2021 Year-To-Date 2022 vs. Year-To-Date 2021
(change in millions) (% change) (change in millions) (% change)
$(106) (79.7) $(63) (28.1)


Second Quarter 2023 vs. Second Quarter 2022		Year-To-Date 2023 vs. Year-To-Date 2022
(change in millions)	(% change)	(change in millions)	(% change)
$(7)	(19.4)	$(2)	(1.5)

In the ~~third~~second quarter ~~2022,~~2023, income taxes were~~$27~~ $29 million compared to ~~$133~~$36 million for the corresponding period in ~~2021.~~ For2022. For year-to-date ~~2022,~~2023, income taxes were ~~$161~~$132 million compared to ~~$224~~$134 million for the corresponding period in ~~2021.~~2022. The decreases were primarily the result of ~~$113 million in additional tax expense in~~ the ~~third quarter 2021 as a result of the sale of Sequent. Partially offsetting the third quarter 2022 decrease was an increase of $9 million in income tax expense~~regulatory disallowance at ~~gas distribution operations primarily as a result of~~Nicor Gas, partially offset by higher pre-tax earnings. ~~The year-to-date 2022 decrease was partially offset by increases in income tax expense of $25 million at gas distribution operations primarily as a result of higher pre-tax earnings~~See Note (B) under "Southern Company Gas – Infrastructure Replacement Programs and ~~$20 million at gas pipeline investments primarily from $18 million of tax benefits resulting from the impairment charge in the second quarter 2021 related to the PennEast Pipeline project. See Notes 7~~Capital Projects" and ~~15 to the financial statements~~Note (G) under "Southern Company Gas" ~~in Item 8 of~~to the ~~Form 10-K~~Condensed Financial Statements herein for additional information.

Segment Information

Operating revenues, operating expenses, and net income ~~(loss)~~ for each segment are provided in the table below. See Note ~~(L)~~(K) to the Condensed Financial Statements under "Southern Company Gas" herein for additional information.

2022 2021
Operating Revenues Operating Expenses Net Income (Loss) Operating Revenues Operating Expenses Net Income (Loss)
(in millions) (in millions)
Third Quarter
Gas distribution operations $ 751 $ 629 $ 59 $ 556 $ 459 $ 45
Gas pipeline investments 8 3 24 8 3 10
Wholesale gas services(*)
— — — — (120) 94
Gas marketing services 85 87 (2) 52 52 (2)
All other 16 12 2 11 25 (91)
Intercompany eliminations (3) — — (4) (4) —
Consolidated $ 857 $ 731 $ 83 $ 623 $ 415 $ 56
Year-to-Date
Gas distribution operations $ 3,533 $ 2,922 $ 365 $ 2,466 $ 1,936 $ 308
Gas pipeline investments 24 8 76 24 9 3
Wholesale gas services(*)
— — — 188 (53) 108
Gas marketing services 420 327 65 311 226 60
All other 43 48 10 29 60 (90)
Intercompany eliminations (22) (19) — (24) (24) —
Consolidated $ 3,998 $ 3,286 $ 516 $ 2,994 $ 2,154 $ 389

~~(*)~~As a result of the sale of Sequent, wholesale gas services is no longer a reportable segment for the third quarter and year-to-date 2022. See Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.


	2023						2022
	Operating Revenues		Operating Expenses		Net Income (Loss)		Operating Revenues		Operating Expenses		Net Income (Loss)
	(in millions)						(in millions)
Second Quarter
Gas distribution operations	$	764	$	636	$	60	$	980	$	819	$	92
Gas pipeline investments	8		2		19		8		2		23

Gas marketing services	75		64		7		92		90		1
All other	9		9		(1)		10		14		(1)
Intercompany eliminations	(4)		(1)		—		(7)		(7)		—
Consolidated	$	852	$	710	$	85	$	1,083	$	918	$	115

Year-to-Date
Gas distribution operations	$	2,383	$	1,901	$	281	$	2,782	$	2,293	$	306
Gas pipeline investments	16		5		50		16		5		52
Gas marketing services	320		239		56		335		240		67
All other	22		18		6		26		35		8
Intercompany eliminations	(13)		(6)		—		(19)		(19)		—
Consolidated	$	2,728	$	2,157	$	393	$	3,140	$	2,554	$	433

Gas Distribution Operations

Gas distribution operations is the largest component of Southern Company Gas' business and is subject to regulation and oversight by regulatory agencies in each of the states it serves. These agencies approve natural gas rates designed to provide Southern Company Gas with the opportunity to generate revenues to recover the cost of natural

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gas delivered to its customers and its fixed and variable costs, including depreciation, interest expense, operations and maintenance, taxes, and overhead costs, and to earn a reasonable return on its investments.

With the exception of Atlanta Gas Light, Southern Company Gas' second largest utility that operates in a deregulated natural gas market and has a straight-fixed-variable rate design that minimizes the variability of its revenues based on consumption, the earnings of the natural gas distribution utilities can be affected by customer consumption patterns that are a function of weather conditions, price levels for natural gas, and general economic conditions that may impact customers' ability to pay for natural gas consumed. Southern Company Gas has various regulatory and other mechanisms, such as weather and revenue normalization mechanisms and weather derivative

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instruments, that limit its exposure to changes in customer consumption, including weather changes within typical ranges in its natural gas distribution utilities' service territories. See Note 2 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.

In the ~~third~~second quarter ~~and year-to-date 2022,~~2023, net income ~~increased $14~~decreased $32 million, or ~~31.1%~~34.8%, ~~and $57 million, or 18.5%, respectively,~~ when compared to the corresponding ~~periods~~period in ~~2021,~~2022, as described further below:

•Operating revenues ~~increased $195~~decreased $216 million ~~and $1.07 billion, respectively, when compared to the corresponding periods in 2021~~ primarily due to ~~higher~~lower gas cost recovery and the regulatory disallowance at Nicor Gas, partially offset by rate increases and continued investment in infrastructure replacement. Gas costs recovered through natural gas revenues generally equal the amount expensed in cost of natural gas.

•Operating expenses ~~increased $170~~decreased $183 million ~~and $986 million, respectively, when compared to the corresponding periods in 2021~~ primarily due to ~~increases~~a $230 million decrease in cost of ~~$129 million and $802 million, respectively, in the cost of~~natural gas as a result of ~~higher natural~~lower gas prices and lower volumes sold compared to ~~2021, higher compensation and benefit expenses, and~~2022, partially offset by higher depreciation resulting from additional assets placed in ~~service.~~service, $30 million related to the regulatory disallowance at Nicor Gas, and an $11 million increase related to energy service contracts. The ~~increase~~decrease 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)~~Interest expense, net of amounts capitalized increased ~~$3 million and~~ $12 million ~~respectively,~~primarily due to higher interest rates and higher average outstanding debt.

•Income taxes decreased $12 million primarily as a result of the tax benefit resulting from the regulatory disallowance at Nicor Gas.

For year-to-date 2023, net income decreased $25 million, or 8.2%, when compared to the corresponding ~~periods~~period in ~~2021,~~2022, as described further below:

•Operating revenues decreased $399 million primarily due to ~~an increase~~lower gas cost recovery, partially offset by rate increases and continued investment in ~~non-service cost-related retirement~~infrastructure replacement. Gas costs recovered through natural gas revenues generally equal the amount expensed in cost of natural gas.

•Operating expenses decreased $392 million primarily due to a $447 million decrease in cost of natural gas as a result of lower gas prices and lower volumes sold compared to 2022, partially offset by higher depreciation resulting from additional assets placed in service, higher compensation and benefits, ~~income. See Note (H)~~$30 million related to the ~~Condensed Financial Statements herein for additional information.~~regulatory disallowance at Nicor Gas, and a $16 million increase related to energy service contracts. The decrease in operating expenses also includes costs passed through directly to customers, primarily related to bad debt expenses and revenue taxes.

•Interest expense, net of amounts capitalized increased $5$26 million ~~and $11 million, respectively, when compared to the corresponding periods in 2021~~ primarily due to ~~additional debt issued to finance continued investments. See FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital"~~higher interest rates and ~~"Financing Activities" herein for additional information on borrowings.~~higher average outstanding debt.

•Income taxes ~~increased~~decreased $9 million ~~and $25 million, respectively, when compared~~primarily as a result of the tax benefit resulting from the regulatory disallowance at Nicor Gas.

See Note (B) to the ~~corresponding periods in 2021 primarily due to higher pre-tax earnings.~~Condensed Financial Statements under "Southern Company Gas – Infrastructure Replacement Programs and Capital Projects" herein for additional information.

Gas Pipeline Investments

Gas pipeline investments consists primarily of joint ventures in natural gas pipeline investments including SNG ~~Dalton Pipeline,~~ and ~~PennEast~~Dalton Pipeline. See Note (E) to the Condensed Financial Statements under "Southern Company Gas" herein for additional information.

In the third quarter 2022, net income increased $14 million when compared to the corresponding period in 2021 primarily due to higher earnings at SNG resulting from higher revenues primarily due to increased demand and lower income taxes related to the PennEast Pipeline project.

For year-to-date 2022, net income increased $73 million when compared to the corresponding period in 2021 primarily due to pre-tax impairment charges totaling $84 million ($67 million after tax) in 2021 related to the equity method investment in the PennEast Pipeline project and higher earnings at SNG resulting from higher revenues primarily due to increased demand. See Note 7 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.

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Gas Marketing Services

Gas marketing services provides energy-related products and services to natural gas markets and participants in customer choice programs that were approved in various states to increase competition. These programs allow customers to choose their natural gas supplier while the local distribution utility continues to provide distribution and transportation services. Gas marketing services is weather sensitive and uses a variety of hedging strategies,

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such as weather derivative instruments and other risk management tools, to partially mitigate potential weather impacts.

In the ~~third~~second quarter ~~2022,~~2023, net income ~~was flat~~increased $6 million, when compared to the corresponding period in ~~2021~~2022 primarily due to ~~an increase~~a $27 million decrease in cost of ~~$35~~gas, partially offset by a $17 million decrease in operating ~~expenses~~revenue primarily due to ~~higher cost~~the timing of ~~gas, largely offset by~~unrealized hedge losses and a ~~related~~$3 million increase ~~of $33 million~~ in ~~operating revenues.~~income taxes.

For year-to-date ~~2022,~~2023, net income ~~increased $5~~decreased $11 million, or ~~8.3%~~16.4%, when compared to the corresponding period in ~~2021~~2022 primarily due to a ~~$109~~$15 million ~~increase~~decrease in operating ~~revenues as a result~~revenue primarily due to the timing of ~~higher commodity prices and higher sales to commercial customers,~~unrealized hedge losses, partially offset by ~~a $101 million increase in operating expenses primarily due to $95 million in higher cost of natural~~lower gas prices and ~~an increase of $4 million in income taxes as a result of higher pre-tax earnings.~~lower volumes sold.

All Other

All other includes natural gas storage businesses, a renewable natural gas business, AGL Services Company, and Southern Company Gas Capital, as well as various corporate operating expenses that are not allocated to the reportable segments and interest income (expense) associated with affiliate financing arrangements. All other included a natural gas storage facility in Texas through its sale in November 2022. See Note ~~(K)~~15 to the ~~Condensed Financial Statements~~financial statements under "Southern Company Gas" ~~herein~~in Item 8 of the Form 10-K for additional information, ~~regarding agreements by certain affiliates~~including the sale of ~~Southern Company Gas to sell two~~a natural gas storage ~~facilities.~~facility in California expected to be completed later in 2023.

~~In the third quarter 2022,~~For year-to-date 2023, net income ~~increased $93~~decreased $2 million when compared to the corresponding period in ~~2021.~~2022. The ~~change~~decrease was primarily ~~relates~~related to ~~additional tax expense as a result of the sale of Sequent~~an increase in ~~2021 and~~income taxes, largely offset by a decrease ~~of $13 million~~ in operating expenses primarily related to lower depreciation in ~~2022 and transaction costs in 2021 related to the sale of Sequent.~~

For year-to-date 2022, net income increased $100 million when compared to the corresponding period in 2021. The change primarily relates to additional tax expense as a result of the sale of Sequent in 2021 and an increase in operating revenues of $14 million primarily related to higher demand fees and favorable hedge gains at the natural gas storage businesses, higher sales from the renewable natural gas business, and lower depreciation in 2022.2023.

FUTURE EARNINGS POTENTIAL

Each Registrant's results of operations are not necessarily indicative of its future earnings potential. The level of the Registrants' future earnings depends on numerous factors that affect the opportunities, challenges, and risks of the Registrants' primary businesses of selling electricity and/or distributing natural gas, as described further herein.

For the traditional electric operating companies, these factors include the ability to maintain constructive regulatory environments that allow for the timely recovery of prudently-incurred costs during a time of increasing costs, including those related to projected long-term demand growth, stringent environmental standards, including CCR rules, safety, system reliability and resiliency, fuel, restoration following major storms, and capital expenditures, including constructing new electric generating plants and expanding and improving the transmission and distribution systems; continued customer growth; and the trends of higher inflation and reduced electricity usage per customer, especially in residential and commercial markets. For Georgia Power, other major factors are completing construction and start-up of Plant Vogtle Unit 4, meeting the related cost and schedule projections, and completing the related cost recovery proceedings for Plant Vogtle Units 3 and ~~4 and the related cost recovery proceedings is another major factor.~~4.

Earnings in the electricity business will also depend upon maintaining and growing sales, considering, among other things, the adoption and/or penetration rates of increasingly energy-efficient technologies and increasing volumes of electronic commerce transactions, which could contribute to a net reduction in customer usage.

Global and U.S. economic conditions continue to be significantly affected by a series of demand and supply shocks that caused a global and national economic recession in 2020 and have been further impacted by the invasion of Ukraine and significant declines in labor force participation rates. The confluence of these disruptions has resulted in the highest levels of inflation globally in 40 years and driven a significant policy response by central banks across the global economy. The U.S. Federal Reserve has increased policy interest rates faster than any rate increase cycle in the last 40 years and to levels high enough to slow economic activity and reduce inflation, although target inflation levels have not yet been achieved. These actions and impacts, including increased costs for goods and services and borrowing costs, have led to a slowing of some economic activity and an increased risk of recession. Recent challenges facing small and midsize banks may tighten lending standards, cause uncertainty in the banking sector, and further reduce economic growth. Additionally, inflation remains elevated in part due to continued supply chain and labor market constraints. Electricity sales across all classes have recovered to pre-COVID-19 pandemic levels and customer growth at both the traditional electric operating companies and natural gas distribution utilities has remained strong. However, weakening economic activity increases the risk of slowing to declining energy sales.

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~~Global and U.S.~~Additionally, the current economic ~~conditions have been significantly affected by a series~~environment has increased the uncertainty of future energy demand and supply shocks that caused a global and national economic recession in 2020. The drivers, speed, and depth of the 2020 economic contraction were unprecedented and continue to reduce energy demand across the Southern Company system's service territory, primarily in the commercial class. Retail electric revenues attributable to changes in sales increased in the first nine months of 2022 when compared to the corresponding period in 2021 primarily due to the normalization of economic activity; however, total retail electric sales for the Southern Company system continued to be negatively impacted by the COVID-19 pandemic when compared to pre-pandemic trends. Most prominently, the COVID-19 pandemic has negatively impacted global supply chains and business operations as suppliers continue to experience difficulties keeping up with strong demand for factory goods, which is being driven by low business inventories. In addition, rising inflation in 2021 and 2022 has resulted in increasing costs for many goods and services. As a result of persistently high inflation, interest rates have been on the rise and are expected to continue rising in the near term, which has impacted, and may continue to impact, the Registrants' borrowingoperating costs. Based on these factors, the probability of the U.S. economy falling into a recession has heightened. The impacts of new COVID-19 variants, responses to the COVID-19 pandemic by both customers and governments, ongoing geopolitical threats, such as the escalation of the Russia-Ukraine war, and the potential of future COVID-19-related lockdowns in Asia or elsewhere could further disrupt global supply chains and increase the severity of a possible economic downturn in the Southern Company system's service territory. See RESULTS OF OPERATIONS herein for information on ~~COVID-19-related impacts on~~ energy ~~demand~~sales in the Southern Company system's service territory during the first ~~nine months~~half of ~~2022.~~2023.

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 facilities and other energy projects while containing costs; regulatory matters; customer creditworthiness; total electric generating capacity available in Southern Power's market areas; Southern Power's ability to successfully remarket capacity as current contracts expire; renewable portfolio standards; continued availability of federal and state ITCs and PTCs, which could be impacted by future tax legislation; transmission constraints; cost of generation from units within the Southern Company power pool; and operational limitations. See MANAGEMENT'S DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL – "Income Tax Matters" ~~herein~~in Item 7 of the Form 10-K for ~~additional~~ information ~~on recent tax legislation expanding~~regarding the Inflation Reduction Act's expansion of the availability of federal ITCs and PTCs.

The level of future earnings for Southern Company Gas' primary business of distributing natural gas and its complementary businesses in the gas pipeline investments and gas marketing services sectors depends on numerous factors. These factors include the natural gas distribution utilities' ability to maintain constructive regulatory environments that allow for the timely recovery of prudently-incurred costs, including those related to projected long-term demand growth, safety, system reliability and resiliency, natural gas, and capital expenditures, including expanding and improving the natural gas distribution systems; the completion and subsequent operation of ongoing infrastructure and other construction projects; customer creditworthiness; and certain policies to limit the use of natural gas, such as the potential across certain parts of the U.S. for state or municipal bans on the use of natural ~~gas.~~gas or policies designed to promote electrification. The volatility of natural gas prices has an impact on Southern Company Gas' customer rates, its long-term competitive position against other energy sources, and the ability of Southern Company Gas' gas marketing services business to capture value from locational and seasonal spreads. Additionally, changes in commodity prices, primarily driven by tight gas supplies, geopolitical events, and diminished gas production, subject a portion of Southern Company Gas' operations to earnings variability and ~~have recently resulted~~may result in higher natural gas prices. Additional economic factors may contribute to this environment. The demand for natural gas may increase, which may cause natural gas prices to rise and drive higher volatility in the natural gas markets on a longer-term basis. Alternatively, a significant drop in oil and natural gas prices could lead to a consolidation of natural gas producers or reduced levels of natural gas production.

Earnings for both the electricity and natural gas businesses are subject to a variety of other factors. These factors include weather; competition; developing new and maintaining existing energy contracts and associated load requirements with wholesale customers; customer energy conservation ~~practiced by customers;~~practices; the use of alternative energy sources by customers; government incentives to reduce overall energy usage; ~~the prices of electricity and natural~~

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~~gas; costs and availability of~~fuel, labor, and ~~materials~~material prices in ~~a time~~an environment of ~~rising costs, impacted by~~ heightened inflation ~~caused by unprecedented shocks to the broader economy,~~ and material and labor supply chain disruptions; and the price elasticity of demand. Demand for electricity and natural gas in the Registrants' service territories is primarily driven by the pace of economic growth or decline that may be affected by changes in regional and global economic conditions, which may impact future earnings.

As part of its ongoing effort to adapt to changing market conditions, Southern Company continues to evaluate and consider a wide array of potential business strategies. These strategies may include business combinations, partnerships, and acquisitions involving other utility or non-utility businesses or properties, disposition of, or the sale of interests in, certain assets or businesses, internal restructuring, or some combination thereof. Furthermore, Southern Company may engage in new business ventures that arise from competitive and regulatory changes in the utility industry. Pursuit of any of the above strategies, or any combination thereof, may significantly affect the business operations, risks, and financial condition of Southern Company. In addition, Southern Power and Southern Company Gas regularly consider and evaluate joint development arrangements as well as acquisitions and dispositions of businesses and assets as part of their business strategies. See Note 15 to the financial statements in Item 8 of the Form 10-K ~~and Note (K) to the Condensed Financial Statements herein~~ for additional information.

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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 "General Litigation Matters" and "Environmental Remediation" herein, for additional information.

Environmental Laws and Regulations

Air Quality

On ~~August 30, 2022,~~February 13, 2023, the EPA ~~found that 15 states,~~published a final rule disapproving 19 state implementation plans (SIPs), including the States of Alabama and Mississippi, ~~failed to submit regional haze state implementation plans~~under the interstate transport (good neighbor) provisions of the Clean Air Act for the ~~second 10-year planning period (2018 through 2028) by~~2015 Ozone National Ambient Air Quality Standards (NAAQS). On March 14, 2023 and March 15, 2023, the State of Mississippi and Mississippi Power, respectively, challenged the EPA's disapproval of the Mississippi SIP in the U.S. Court of Appeals for the Fifth Circuit. On May 11, 2023, the State of Mississippi and Mississippi Power filed a joint motion for stay of the EPA's disapproval of the Mississippi SIP, which was granted on June 8, 2023. On April 13, 2023 and April 14, 2023, the State of Alabama and Alabama Power, respectively, challenged the EPA's disapproval of the Alabama SIP in the U.S. Court of Appeals for the Eleventh Circuit. On June 13, 2023, the State of Alabama, Alabama Power, and PowerSouth Energy Cooperative filed a joint motion for stay of the EPA's disapproval of the Alabama SIP.

On June 5, 2023, the EPA published the 2015 Ozone NAAQS Good Neighbor federal implementation plan (FIP), which will become effective August 4, 2023. On June 16, 2023 and June 27, 2023, the State of Mississippi and Mississippi Power, respectively, challenged the FIP in the U.S. Court of Appeals for the Fifth Circuit. On June 30, 2023, the State of Mississippi and Mississippi Power filed in the U.S. Court of Appeals for the Fifth Circuit a joint motion for stay of the FIP as to the State of Mississippi, which was denied on July 20, 2023.

On July 31, ~~2021. The finding of failure to submit establishes a two-year deadline for~~2023, the EPA published an interim final rule that stays the implementation of the FIP for states with judicially stayed SIP disapprovals, including Mississippi. The interim final rule revises the existing regulations to ~~promulgate a Federal Implementation Plan (FIP) to address these requirements~~maintain currently applicable trading programs for ~~each applicable state unless, before the EPA promulgates a FIP, the state submits, and the EPA approves, a state implementation plan that meets the requirements.~~ those states.

The ultimate ~~outcome~~impact of ~~this matter, including any potential impacts to Alabama Power, Mississippi Power,~~the rule and ~~Southern Power,~~associated legal matters cannot be determined at this ~~time.~~time; however, implementation of the FIP will likely result in increased compliance costs for the traditional electric operating companies.

~~Global Climate Issues~~Water Quality

On June 30, 2022, the U.S. Supreme Court issued an opinion limiting the EPA's authority to regulate greenhouse gas emissions under the Clean Air Act. The Court's review in the case focused on whether the EPA's authority under the Clean Air Act allowsMarch 29, 2023, the EPA published a proposed ELG Supplemental Rule revising certain effluent limits of the 2020 and 2015 ELG rules. The proposal imposes more stringent requirements for flue gas desulfurization wastewater, bottom ash transport water, and combustion residual leachate to regulate the electric industry in a manner as broad as the Clean Power Plan (CPP), which was repealed and replaced by the Affordable Clean Energy rule (ACE Rule). The Court held that the generation shifting to lower carbon emitting sources approach in the CPP is not authorized by the Clean Air Act. However, the Court did not decide whether the EPA may adopt measures only applied at the individual electric generating source, which is the basis for the ACE Rule.be met no later than December 31, 2029. The EPA ~~has announced its intent~~is also proposing that a limited number of facilities already achieving compliance with the 2020 ELG Reconsideration Rule be allowed to ~~propose a~~elect retirement or repowering by December 31, 2032 as opposed to meeting the new more stringent requirements. The proposal maintains the 2020 ELG Reconsideration Rule's permanent cessation of coal combustion subcategory allowing units to continue to operate until the end of 2028 without having to install additional technologies. A final rule ~~for existing power plants pursuant to the Clean Air Act by March 2023.~~is anticipated in 2024. The ultimate impact of ~~the Court's decision~~this proposal cannot be determined at this ~~time.~~time; however, it may result in significant compliance costs.

Coal Combustion Residuals

On May 18, 2023, the EPA published a proposal to establish two new categories of federally regulated CCR, legacy surface impoundments and CCR management units (CCRMUs). The EPA is proposing to define a legacy surface impoundment as a CCR surface impoundment that no longer receives CCR but contained both CCR and liquids on

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or after October 19, 2015 and that is located at an inactive electric generating facility. The EPA is proposing that owners and operators of legacy surface impoundments comply with all of the existing CCR Rule requirements with the exception of location restrictions and liner demonstrations. The proposal establishes accelerated compliance deadlines for legacy surface impoundments to meet regulatory requirements, including a requirement to initiate closure within 12 months after the effective date of the final rule. The EPA is also proposing to define CCRMUs as any area of land on which any non-containerized accumulation of CCR is received, placed, or otherwise managed at any time, that is not a CCR unit, including inactive CCR landfills and CCR units that closed prior to October 17, 2015. The EPA's proposal would require evaluations to be completed at both active facilities and inactive facilities with one or more legacy surface impoundment. CCRMUs must comply with the CCR Rule's provisions for groundwater monitoring, corrective action, closure, and post-closure activities. A final rule is anticipated in 2024. The ultimate impact of this proposal cannot be determined at this time; however, it may result in significant compliance costs.

Greenhouse Gases

On May 23, 2023, the EPA published the proposed GHG standards and state plan guidelines for fossil fuel-fired power plants. The proposal includes GHG limits for both new and existing units based on technologies such as carbon capture and sequestration, low-GHG hydrogen co-firing, and natural gas co-firing. The proposed standards for new combustion turbines include subcategories for different operational uses including peaking, intermediate, and base load. Compliance with new source standards, once finalized, begins when the unit comes online. The EPA proposes a phased approach for intermediate and base load units that increases in stringency over time. The proposed state plan guidelines for existing units include subcategories based on unit type, retirement date, size, and capacity factor. The EPA is proposing a 24-month state plan submission deadline for the existing unit implementation and proposes to potentially allow some limited form of trading and averaging for the state plans. Existing source compliance is proposed to begin as early as January 1, 2030, depending on the unit type and subcategory. The EPA also proposes to simultaneously repeal the Affordable Clean Energy rule. A final rule is anticipated in 2024. The ultimate impact of this proposal cannot be determined at this time; however, it may result in significant compliance costs.

Regulatory Matters

See Note 2 to the financial statements in Item 8 of the Form 10-K, OVERVIEW – "Recent Developments" herein, and Note (B) to the Condensed Financial Statements herein for a discussion of regulatory matters related to Alabama Power, Georgia Power, Mississippi Power, and Southern Company Gas, including items that could impact the applicable Registrants' future earnings, cash flows, and/or financial condition.

Alabama Power

On ~~September 23, 2022, the FERC authorized~~July 14, 2023, Alabama Power issued a request for proposals of between 100 MWs and 1,200 MWs of capacity beginning no later than December 1, 2028, with consideration for commencement as early as 2025. Any purchases will depend upon the cost competitiveness of the respective offers, as well as other options available to ~~use updated depreciation rates from its 2021 depreciation study effective January 1, 2023. The study was also provided to~~Alabama Power, and would ultimately require approval by the Alabama ~~PSC, and the new depreciation rates will~~PSC. The ultimate outcome of this matter cannot be reflected in Alabama Power's future rate filings. The updated depreciation rates are expected to result in an approximately $500 million increase in annual depreciation expense. See Notes 2 and 5 to the financial statements under "Alabama Power" and "Depreciation and Amortization," respectively, in Item 8 of the Form 10-K for additional information.determined at this time.

Construction Programs

The Subsidiary Registrants are engaged in continuous construction programs to accommodate existing and estimated future loads on their respective systems. The Southern Company system strategy continues to include developing and constructing new electric generating facilities, expanding and improving the electric transmission and electric and natural gas distribution systems, and undertaking projects to comply with environmental laws and regulations.

For the traditional electric operating companies, major generation construction projects are subject to state PSC approval in order to be included in retail rates. The largest construction project currently underway in the Southern Company system is Plant Vogtle ~~Units 3 and~~Unit 4. See Note (B) to the Condensed Financial Statements under "Georgia Power

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– Nuclear Construction" herein for additional information. Also see Note 2 to the financial statements in Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements herein under "Alabama Power – Certificates of Convenience and Necessity" ~~in Item 8 of the Form 10-K~~ for information regarding Alabama Power's construction of Plant Barry Unit 8.

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 resiliency, reduce emissions, and meet operational flexibility and growth. The natural gas distribution utilities recover their investment and a return associated with these infrastructure programs through their regulated rates. See Note 2 to the financial statements in Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements herein under "Southern Company Gas" for additional information on Southern Company Gas' construction program.

See FINANCIAL CONDITION AND LIQUIDITY – "Cash Requirements" herein for additional information regarding the Registrants' capital requirements for their construction programs.

~~Income Tax Matters~~Southern Power's Power Sales Agreements

See MANAGEMENT'S DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL – ~~"Income Tax Matters"~~ "Southern Power's Power Sales Agreements" in Item 7 of the Form 10-K for additional information.

~~On August 16, 2022,~~At June 30, 2023, Southern Power's average investment coverage ratio for its generating assets, including those owned with various partners, based on the ~~Inflation Reduction Act (IRA)~~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 ~~signed into law. The IRA extends, expands,~~97% through 2027 and ~~increases ITCs and PTCs for clean energy projects, allows PTCs for solar projects, adds ITCs for stand-alone energy storage projects~~90% through 2032, with an ~~option to elect out~~average remaining contract duration of the tax normalization requirement, and allows for the transferability of the tax credits. The IRA extends and increases the tax credits for carbon capture and sequestration projects and adds tax credits for clean hydrogen and nuclear projects. Additional ITC and PTC amounts are available if the projects meet domestic content requirements or are located in low-income or energy communities.

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The IRA also enacted a 15% corporate minimum tax on book income, with some adjustments including adjustments for pension and tax depreciation. The 15% corporate minimum tax on book income can be reduced by energy tax credits.

For solar projects placed in service in 2022 through 2032, the IRA provides for a 30% ITC and an option to claim a PTC instead of an ITC. Starting in 2023 and through 2032, the IRA provides for a 30% ITC for stand-alone energy storage projects. For wind projects placed in service in 2022 through 2032, the IRA provides for a 100% PTC. The PTC rate for 2022 is 2.6 cents per KWH and will be adjusted for inflation annually. The same PTC rate applies for solar projects for which the PTC option has been elected. To realize the full value of ITCs and PTCs, the IRA requires satisfaction of prevailing wage and apprenticeship requirements.

Implementation of the IRA provisions is subject to the issuance of additional guidance by the U.S. Treasury Department, and the ultimate impacts cannot be determined at this time; however, the IRA is not expected to have a material impact on the Registrants' financial statements for the year ending December 31, 2022.approximately 12 years.

General Litigation and Other Matters

The Registrants are involved in various matters being litigated and/or regulatory and other matters that could affect future earnings, cash flows, and/or financial condition. The ultimate outcome of such pending or potential litigation against each Registrant and any subsidiaries or regulatory and other matters cannot be determined at this time; however, for current proceedings and/or matters not specifically reported herein or in Notes (B) and (C) to the Condensed Financial Statements herein, management does not anticipate that the ultimate liabilities, if any, arising from such current proceedings and/or matters would have a material effect on such Registrant's financial statements. See Notes (B) and (C) to the Condensed Financial Statements for a discussion of various contingencies, including matters being litigated, regulatory matters, and other matters which may affect future earnings potential.

Traditional Electric Operating Companies

See BUSINESS – "The Southern Company System – Traditional Electric Operating Companies" in Item 1 of the Form 10-K for information regarding the Southeast Energy Exchange Market (SEEM). On July 14, 2023, the U.S. Court of Appeals for the District of Columbia Circuit vacated the FERC's orders related to SEEM and remanded the proceeding to the FERC. The ultimate outcome of this matter cannot be determined at this time.

ACCOUNTING POLICIES

See MANAGEMENT'S DISCUSSION AND ANALYSIS – ACCOUNTING POLICIES in Item 7 of the Form 10-K for a complete discussion of the Registrants' critical accounting policies and estimates, as well as recently issued accounting standards.

~~Application of Critical Accounting Policies and Estimates~~

The Registrants prepare their financial statements in accordance with GAAP. Significant accounting policies are described in the notes to the financial statements in Item 8 of the Form 10-K. In the application of these policies, certain estimates are made that may have a material impact on the Registrants' results of operations and related disclosures. Different assumptions and measurements could produce estimates that are significantly different from those recorded in the financial statements.

138

~~Estimated Cost, Schedule, and Rate Recovery for the Construction of Plant Vogtle Units 3 and 4~~

~~(Southern Company and Georgia Power)~~

As of September 30, 2022, Georgia Power revised its total project capital cost forecast to $10.4 billion (net of $1.7 billion received under the Guarantee Settlement Agreement and approximately $188 million in related customer refunds). This forecast includes construction contingency of $49 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 pace of system and area transitions to operations, including the completion of closure documentation necessary to support start-up testing, and the progression of start-up, final component, and pre-operational testing, which may be impacted by equipment or other operational failures. The projected schedule for Unit 4 primarily depends on Unit 3 progress through start-up and testing; overall construction productivity and production levels improving, particularly in electrical installation, including terminations; and appropriate levels of craft laborers, particularly electricians, being added and maintained. Any further delays could result in later in-service dates and cost increases.

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AND RESULTS OF OPERATIONS (Continued)

During the first nine months of 2022, established construction contingency totaling $170 million was assigned to the base capital cost forecast for costs primarily associated with construction productivity, the pace of system turnovers, additional craft and support resources, and procurement for Units 3 and 4. Georgia Power also increased its total project capital cost forecast and recorded pre-tax charges of $36 million ($27 million after tax) and $32 million ($24 million after tax) to replenish construction contingency in the second quarter 2022 and the third quarter 2022, respectively.

Georgia Power and the other Vogtle Owners do not agree on either the starting dollar amount for the determination of cost increases subject to the cost-sharing and tender provisions of the Global Amendments (as defined in Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction – Joint Owner Contracts" herein) or the extent to which COVID-19-related costs impact those provisions. In October 2021, Georgia Power and the other Vogtle Owners entered into an agreement, which was modified on June 3, 2022, to clarify the process for the tender provisions of the Global Amendments to provide for a decision between 120 and 194 days after the tender option is triggered, which the other Vogtle Owners assert occurred on February 14, 2022. On June 17, 2022 and July 26, 2022, OPC and Dalton, respectively, notified Georgia Power of their purported exercises of their tender options. On September 29, 2022, Georgia Power and MEAG Power reached an agreement to resolve their dispute regarding the proper interpretation of the cost-sharing and tender provisions of the Global Amendments. Under the terms of the agreement, among other items, (i) MEAG Power will not exercise its tender option and will retain its full ownership interest in Plant Vogtle Units 3 and 4; (ii) Georgia Power will pay a portion of MEAG Power's costs of construction for Plant Vogtle Units 3 and 4 as such costs are incurred and with no further adjustment for force majeure costs, which payments will total approximately $79 million based on the current project capital cost forecast; and (iii) Georgia Power will pay 20% of MEAG Power's costs of construction with respect to any amounts over the current project capital cost forecast, with no further adjustment for force majeure costs.

Georgia Power recorded additional pre-tax charges (credits) to income in the second quarter 2022 and the third quarter 2022 of approximately $16 million ($12 million after tax) and $(102) million ($(76) million after tax), respectively, associated with the cost-sharing and tender provisions of the Global Amendments, including the settlement with MEAG Power, which are included in the total project capital cost forecast. The settlement with MEAG Power does not resolve the separate pending litigation with OPC, including Dalton's associated complaint, regarding the cost-sharing and tender provisions of the Global Amendments described in Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction – Joint Owner Contracts" herein. Georgia Power may be required to record further pre-tax charges to income of up to approximately $300 million associated with these provisions for OPC and Dalton based on the current project capital cost forecast.

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 $15 million per month for Unit 3 and $35 million per month for Unit 4, as well as the related AFUDC and any additional related construction, support resources, or testing costs. See Note 2 to the financial statements in Item 8 of the Form 10-K 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 ~~September~~June 30, ~~2022.~~2023. The Registrants intend to continue to monitor their access to short-term and long-term capital markets as well as their bank credit arrangements to meet future capital and liquidity needs. See "Cash Requirements," "Sources of Capital," and "Financing Activities" herein for additional information.

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~~AND RESULTS OF OPERATIONS (Continued)~~

At the end of the ~~third~~second quarter ~~2022,~~2023, the market price of Southern Company's common stock was ~~$68.00~~$70.25 per share (based on the closing price as reported on the NYSE) and the book value was ~~$28.69~~$28.12 per share, representing a market-to-book ratio of ~~237%~~250%, compared to ~~$68.58, $26.30,~~$71.41, $27.93, and ~~261%~~256%, respectively, at the end of ~~2021.~~2022. Southern Company's common stock dividend for the ~~third~~second quarter ~~2022~~2023 was ~~$0.68~~$0.70 per share compared to ~~$0.66~~$0.68 per share in the ~~third~~second quarter ~~2021.~~2022.

Cash Requirements

See MANAGEMENT'S DISCUSSION AND ANALYSIS – FINANCIAL CONDITION AND LIQUIDITY – "Cash Requirements" in Item 7 of the Form 10-K for a description of the Registrants' significant cash requirements.

The Registrants' significant cash requirements include estimated capital expenditures associated with their construction programs and, for the traditional electric operating companies, operating cash flows related to fuel cost under recovery. The fuel cost under recovery balances are primarily the result of higher than forecasted prices for natural gas and purchased power. See Note (B) to the Condensed Financial Statements herein under "Georgia Power – Fuel Cost Recovery" for additional information.

The construction programs are subject to periodic review and revision, and actual construction costs may vary from these estimates because of numerous factors. These factors include: changes in business conditions; changes in load projections; changes in environmental laws and regulations; the outcome of any legal challenges to environmental rules; changes in electric generating plants, including unit retirements and replacements and adding or changing fuel sources at existing electric generating units, to meet regulatory requirements; changes in FERC rules and regulations; state regulatory agency approvals; changes in the expected environmental compliance program; changes in legislation and/or regulation; the cost, availability, and efficiency of construction labor, equipment, and materials; project scope and design changes; abnormal weather; delays in construction due to judicial or regulatory action; storm impacts; and the cost of capital. ~~The continued impacts of the COVID-19 pandemic could also impair the ability to develop, construct, and operate facilities, as discussed further in Item 1A of the Form 10-K.~~ In addition, there can be no assurance that costs related to capital expenditures and AROs will be fully recovered. Additionally, expenditures associated with Southern Power's planned acquisitions may vary due to market opportunities and the execution of its growth strategy. See Note 15 to the financial statements under "Southern Power" 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~~Unit 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.~~2022.

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AND RESULTS OF OPERATIONS (Continued)

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~~hybrid, and/or equity issuances. Equity capital can be provided from any combination of Southern Company's stock plans, private placements, or public offerings. ~~Southern Company does not expect to issue any equity in the capital markets through 2026, but may issue equity through its stock plans during this time.~~

The Subsidiary Registrants plan to obtain the funds to meet their future capital needs from sources similar to those they used in the past, which were primarily from operating cash flows, external securities issuances, borrowings from financial institutions, and equity contributions from Southern Company. Operating cash flows provide a

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~~AND RESULTS OF OPERATIONS (Continued)~~

substantial portion of the Registrants' cash needs. During the nine months ended September 30, 2022, Southern Power utilized tax credits, which provided $218 million in operating cash flows. In addition, Southern Power plans to utilize tax equity partnership contributions (as discussed further herein). Georgia Power intends to utilize a mix of senior note issuances, short-term floating rate bank loans, and commercial paper issuances to ~~fund~~continue funding operating cash flows related to fuel cost under recovery. Subsequent to September 30, 2022, Georgia Power borrowed $250 million pursuant to a short-term uncommitted bank credit arrangement and intends to borrow up to an additional $1.2 billion pursuant to a short-term floating rate bank loan in November 2022.

The amount, type, and timing of any financings in ~~2022,~~2023, as well as in subsequent years, will be contingent on investment opportunities and the Registrants' capital requirements and will depend upon prevailing market conditions, regulatory approvals (for certain of the Subsidiary Registrants), and other factors. See "Cash Requirements" and "Financing Activities" herein for additional information.

Southern Power utilizes tax equity partnerships as one of its financing sources, where the tax partner takes significantly all of the federal tax benefits. These tax equity partnerships are consolidated in Southern Power's financial statements and are accounted for using HLBV methodology to allocate partnership gains and losses. During the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, Southern Power obtained tax equity funding for existing tax equity partnerships totaling ~~$51~~$21 million. See Note 1 to the financial statements under "General" in Item 8 of the Form 10-K ~~and Note (K) to the Condensed Financial Statements under "Southern Power" herein~~ for additional information.

By regulation, Nicor Gas is restricted, to the extent of its retained earnings balance, in the amount it can dividend or loan to affiliates and is not permitted to make money pool loans to affiliates. At ~~September~~June 30, ~~2022,~~2023, the amount of subsidiary retained earnings restricted to dividend totaled ~~$1.4~~$1.6 billion. This restriction did not impact Southern Company Gas' ability to meet its cash obligations, nor does management expect such restriction to materially impact Southern Company Gas' ability to meet its currently anticipated cash obligations.

Certain Registrants' current liabilities frequently exceed their current assets because of long-term debt maturities and the periodic use of short-term debt as a funding source, as well as significant seasonal fluctuations in cash needs. The Registrants generally plan to refinance long-term debt as it matures. The following table shows the amount by which current liabilities exceeded current assets at ~~September~~June 30, ~~2022~~2023 for the applicable Registrants:


At September 30, 2022		Southern Company		Georgia Power		Mississippi Power		Southern Power
At June 30, 2023											At June 30, 2023	Southern Company		Georgia Power		Mississippi Power		Southern Company Gas
		(in millions)								(in millions)
Current liabilities in excess of current assets	Current liabilities in excess of current assets	$	2,438	$	2,442	$	18	$	325		Current liabilities in excess of current assets	$	2,261	$	1,689	$	232	$	626

The Registrants believe the need for working capital can be adequately met by utilizing operating cash flows, as well as commercial paper, lines of credit, and short-term bank notes, as market conditions permit. In addition, under certain circumstances, the Subsidiary Registrants may utilize equity contributions and/or loans from Southern Company.

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AND RESULTS OF OPERATIONS (Continued)

Bank Credit Arrangements

At ~~September~~June 30, ~~2022,~~2023, the Registrants' unused committed credit arrangements with banks were as follows:


At September 30, 2022		Southern Company parent		Alabama Power		Georgia Power		Mississippi Power		Southern Power(a)		Southern Company Gas(b)		SEGCO		Southern Company
At June 30, 2023																		At June 30, 2023	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	$	275	$	569	$	1,748	$	30	$	7,596	Unused committed credit	$	1,998	$	1,250	$	1,726	$	275	$	589	$	1,598	$	30	$	7,466

(a)At ~~September~~June 30, ~~2022,~~2023, Southern Power also had two continuing letters of credit facilities for standby letters of credit, of which ~~$16~~$25 million was unused. Southern Power's subsidiaries are not parties to its bank credit arrangements or letter of credit facilities.

(b)Includes $798 million and ~~$950~~$800 million at Southern Company Gas Capital and Nicor Gas, respectively.

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

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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~~AND RESULTS OF OPERATIONS (Continued)~~

Short-term Borrowings

The Registrants, Nicor Gas, and SEGCO make short-term borrowings primarily through commercial paper programs that have the liquidity support of the committed bank credit arrangements described above. Southern Power's subsidiaries are not issuers or obligors under its commercial paper program. Commercial paper and short-term bank term loans are included in notes payable in the balance sheets. Details of the Registrants' short-term borrowings were as follows:


		Short-term Debt at September 30, 2022				Short-term Debt During the Period(*)							Short-term Debt at June 30, 2023				Short-term Debt During the Period(*)
		Amount Outstanding		Weighted Average Interest Rate		Average Amount Outstanding		Weighted Average Interest Rate		Maximum Amount Outstanding			Amount Outstanding		Weighted Average Interest Rate		Average Amount Outstanding		Weighted Average Interest Rate		Maximum Amount Outstanding
		(in millions)				(in millions)				(in millions)			(in millions)				(in millions)				(in millions)
Southern Company	Southern Company	$	1,398	3.5	%	$	1,859	2.5	%	$	2,809	Southern Company	$	1,647	5.9	%	$	2,115	5.7	%	$	2,595
Alabama Power	Alabama Power	—		—		—		—		—		Alabama Power	—		—		84		5.1		195
Georgia Power	Georgia Power	814		3.4		443		2.7		815		Georgia Power	1,295		6.0		1,553		5.7		2,110
Mississippi Power	Mississippi Power	—		—		3		2.1		23		Mississippi Power	53		5.3		130		5.7		169
Southern Power	Southern Power	208		3.6		199		2.5		306		Southern Power	100		5.7		117		5.7		197
Southern Company Gas:	Southern Company Gas:											Southern Company Gas:
Southern Company Gas Capital	Southern Company Gas Capital	$	35	3.4	%	$	347	2.5	%	$	547	Southern Company Gas Capital	$	196	5.3	%	$	104	5.4	%	$	206
Nicor Gas		325		3.5		218		2.7		330
Southern Company Gas Total		$	360	3.5	%	$	565	2.6	%

(*)Average and maximum amounts are based upon daily balances during the three-month period ended ~~September~~June 30, ~~2022.~~2023.

~~Analysis of Cash Flows~~

~~Net cash flows provided from (used for) operating, investing, and financing activities for the nine months ended September 30, 2022 and 2021 are presented in the following table:~~

Net cash provided from
(used for): Southern Company Alabama Power Georgia
Power Mississippi Power Southern Power Southern Company Gas
(in millions)
Nine Months Ended September 30, 2022
Operating activities $ 5,017 $ 1,072 $ 1,482 $ 279 $ 827 $ 1,532
Investing activities (5,952) (1,641) (2,653) (219) (128) (1,239)
Financing activities 1,119 967 1,171 (72) (603) (313)
Nine Months Ended September 30, 2021
Operating activities $ 5,081 $ 1,419 $ 2,350 $ 159 $ 750 $ 757
Investing activities (5,850) (1,335) (2,572) (182) (753) (966)
Financing activities 1,802 56 505 130 33 222

~~Fluctuations in cash flows from financing activities vary from year to year based on capital needs and the maturity or redemption of securities.~~

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Analysis of Cash Flows

Net cash flows provided from (used for) operating, investing, and financing activities for the six months ended June 30, 2023 and 2022 are presented in the following table:


Net cash provided from (used for):	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Six Months Ended June 30, 2023
Operating activities	$	2,900	$	656	$	576	$	82	$	357	$	1,530
Investing activities	(4,288)		(1,011)		(2,260)		(193)		(18)		(761)
Financing activities	1,595		(11)		1,364		71		(300)		(608)

Six Months Ended June 30, 2022
Operating activities	$	3,579	$	510	$	926	$	112	$	552	$	1,478
Investing activities	(3,460)		(889)		(1,668)		(133)		(73)		(658)
Financing activities	(213)		227		939		(18)		(403)		(650)

Fluctuations in cash flows from financing activities vary from year to year based on capital needs and the maturity or redemption of securities.

Southern Company

Net cash provided from operating activities decreased ~~$64 million~~$0.7 billion for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 as compared to the corresponding period in ~~2021~~2022 primarily due to ~~decreased fuel cost recovery at the traditional electric operating companies and the timing of customer receivable collections, largely offset by~~ the timing of vendor payments and ~~increased natural gas cost recovery at~~fossil fuel stock purchases, partially offset by the ~~natural gas distribution utilities.~~timing of customer receivable collections.

The net cash used for investing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 was primarily related to the Subsidiary Registrants' construction programs.

The net cash provided from financing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 was primarily related to net issuances of long-term debt, and the issuance of common stock to settle the purchase contracts entered into as part of the 2019 Series A Equity Units (Equity Units) (as discussed in Note (F) to the Condensed Financial Statements under "Equity Units" herein), partially offset by common stock dividend ~~payments.~~payments, net repayments of short-term bank loans, and a reduction in commercial paper borrowings.

Alabama Power

Net cash provided from operating activities ~~decreased $347~~increased $146 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 as compared to the corresponding period in ~~2021~~2022 primarily due to ~~decreased~~an increase in fuel cost recovery and the timing of customer receivable collections, ~~and fossil fuel stock purchases,~~ partially offset by the timing of vendor ~~payments.~~payments and fuel stock purchases.

The net cash used for investing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 was primarily related to gross property additions, including approximately ~~$182~~$50 million related to the construction of Plant Barry Unit ~~8 and $171 million related to the acquisition of the Calhoun Generating Station.~~8. See ~~Notes~~Note (B) ~~and (K)~~ to the Condensed Financial Statements under "Alabama Power" herein for additional information.

The net cash ~~provided from~~used for financing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 was primarily related to ~~the net issuance of long-term debt and~~common stock dividend payments, largely offset by capital contributions from Southern Company ~~partially offset by common stock dividend payments.~~and the issuance of senior notes.

Georgia Power

Net cash provided from operating activities decreased ~~$868~~$350 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 as compared to the corresponding period in ~~2021~~2022 primarily due to ~~decreased fuel cost recovery and~~ the timing of ~~customer receivable collections~~vendor payments and fossil fuel stock purchases, partially offset by the timing of ~~vendor payments.~~customer receivable collections.

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AND RESULTS OF OPERATIONS (Continued)

The net cash used for investing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 was primarily related to gross property additions, including a total of approximately ~~$820~~$425 million related to the construction of Plant Vogtle Units 3 and 4. See Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction" herein for additional information on ~~construction of~~ Plant Vogtle Units 3 and 4.

The net cash provided from financing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 was primarily related to ~~net~~ issuances of senior notes, ~~a net increase in short-term borrowings, and~~ capital contributions from Southern Company, and reofferings of pollution control revenue bonds which were previously held by Georgia Power, partially offset by common stock dividend ~~payments.~~payments and a net decrease in short-term borrowings.

Mississippi Power

Net cash provided from operating activities ~~increased $120~~decreased $30 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 as compared to the corresponding period in ~~2021~~2022 primarily due to the timing of vendor payments, partially offset by the timing of customer receivable collections.

The net cash used for investing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 was primarily related to gross property additions.

The net cash provided from financing activities for the six months ended June 30, 2023 was primarily related to the issuance of senior notes and an increase in short-term borrowings, partially offset by common stock dividend payments.

Southern Power

Net cash provided from operating activities decreased $195 million for the six months ended June 30, 2023 as compared to the corresponding period in 2022 primarily due to the timing of vendor payments and a decrease in the utilization of tax credits, partially offset by the timing of customer receivable collections.

The net cash used for investing activities for the six months ended June 30, 2023 was primarily related to ongoing construction activities, partially offset by proceeds from the sale of equity investments.

The net cash used for financing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 was primarily related to common stock dividend payments, net repayments of short-term debt, and net distributions to noncontrolling interests.

Southern Company Gas

Net cash provided from operating activities increased $52 million for the six months ended June 30, 2023 as compared to the corresponding period in 2022 primarily due to the timing of customer receivable collections and higher gas cost recovery, partially offset by the timing of vendor payments and a change in natural gas for sale, net of temporary LIFO liquidation due to use of stored natural gas.

The net cash used for investing activities for the six months ended June 30, 2023 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 six months ended June 30, 2023 was primarily related to repayment of short-term borrowings and common stock dividend payments, partially offset by capital contributions from Southern ~~Company.~~Company and proceeds from other long-term debt.

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AND RESULTS OF OPERATIONS (Continued)

~~Southern Power~~

Net cash provided from operating activities increased $77 million for the nine months ended September 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 and the timing of vendor payments, partially offset by the timing of customer receivable collections.

The net cash used for investing activities for the nine months ended September 30, 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 nine months ended September 30, 2022 was primarily related to the repayment of senior notes at maturity, common stock dividend payments, net capital distributions to noncontrolling interests, and a decrease in commercial paper borrowings, partially offset by a capital contribution from Southern Company.

~~Southern Company Gas~~

~~Net c~~ash provided from operating activities increased $775 million for the nine months ended September 30, 2022 as compared to the corresponding period in 2021 primarily due to increased natural gas cost recovery and the timing of vendor payments, partially offset by an increase in natural gas for sale as a result of higher prices for natural gas purchases.

The net cash used for investing activities for the nine months ended September 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 nine months ende~~d September 30, 2022 was primarily related to common stock dividend payments and net repayments of short-term debt, partially offset by net issuances of long-term debt and capital contributions from Southern Company.

Significant Balance Sheet Changes

Southern Company

Significant balance sheet changes for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 included:

•an increase of $3.2 billion in total stockholders' equity primarily related to net income and the issuance of common stock to settle the purchase contracts entered into as part of the Equity Units (as discussed in Note (F) to the Condensed Financial Statements under "Equity Units" herein), partially offset by common stock dividend payments;

•an increase of $2.4 billion in total property, plant, and equipment primarily related to the Subsidiary Registrants' construction programs, net of the reclassification of $0.6 billion to other regulatory assets and $0.4 billion to regulatory assets associated with AROs upon Georgia Power's retirement of Plant Wansley Units 1 and 2;

•~~an increase of $1.4~~$4.3 billion in long-term debt (including securities due within one year) related to new issuances;

•an increase of ~~$1.3~~$2.2 billion in ~~deferred under recovered fuel clause revenues~~total property, plant, and equipment primarily related to the Subsidiary Registrants' construction programs;

•a decrease of $1.0 billion in accounts payable primarily related to the timing of vendor payments;

•a decrease of $1.0 billion in notes payable due to ~~higher fuel~~a reduction in commercial paper borrowings and ~~purchased power costs at Georgia Power;~~the repayment of short-term bank loans;

•an increase of ~~$1.1~~$0.6 billion in accumulated deferred income taxes primarily related to the expected utilization of ITCs in ~~2022 and the~~2023, as well as an increase in ~~under recovered fuel clause revenues;~~property-related timing differences; and

•~~an increase~~a decrease of ~~$0.9~~$0.4 billion in ~~accounts payable primarily related~~accrued compensation due to the timing of ~~vendor payments;~~

•an increase of $0.7 billion in regulatory assets associated with AROs, net of the reclassification from property, plant, and equipment discussed above, primarily due to a decrease of $0.5 billion in the fair value of the investments held in Alabama Power's and Georgia Power's nuclear decommissioning trusts; and

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~~AND RESULTS OF OPERATIONS (Continued)~~

•~~an increase of $0.6 billion in other deferred credits and liabilities primarily due to changes in the fair value of interest rate and foreign currency derivatives.~~payments.

See "Financing Activities" herein and Notes (B)~~, (F),~~ and (G)~~, (I), and (J)~~ to the Condensed Financial Statements herein for additional information.

Alabama Power

Significant balance sheet changes for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 included:

•an increase of ~~$1.2 billion in common stockholder's equity primarily due to capital contributions from Southern Company, partially offset by dividends paid to Southern Company;~~

•~~an increase of $1.1 billion in long-term debt (including securities due within one year) primarily due to net issuances of senior notes;~~

•an increase of $0.8 billion in total property, plant, and equipment primarily related to the construction of Plant Barry Unit 8, the acquisition of the Calhoun Generating Station, and construction of distribution and transmission facilities;

•~~an increase of $0.4 billion in cash and cash equivalents, as discussed further under "Analysis of Cash Flows – Alabama Power" herein; and~~

•an increase of $0.4 billion in regulatory assets associated with AROs primarily due to a decrease of $0.3 billion in the fair value of the investments held in Alabama Power's nuclear decommissioning trust.

~~See "Financing Activities – Alabama Power" herein and Notes (I) and (K) to the Condensed Financial Statements herein for additional information.~~

~~Georgia Power~~

~~Significant balance sheet changes for the nine months ended September 30, 2022 included:~~

•~~an increase of $1.4 billion~~$355 million in common stockholder's equity primarily due to net income and capital contributions from Southern Company, partially offset by dividends paid to Southern Company;

•~~an increase~~a decrease of ~~$1.3 billion~~$366 million in ~~deferred~~cash and cash equivalents, as discussed further under ~~recovered fuel clause revenues due to higher fuel and purchased power costs;~~"Analysis of Cash Flows – Alabama Power" herein;

•an increase of ~~$1.1~~$269 million in total property, plant, and equipment primarily related to the construction of Plant Barry Unit 8 and transmission and distribution facilities;

•a decrease of $269 million in other accounts payable primarily due to the timing of vendor payments; and

•an increase of $214 million in long-term debt (including securities due within one year) primarily due to the issuance of senior notes.

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

Georgia Power

Significant balance sheet changes for the six months ended June 30, 2023 included:

•an increase of $1.8 billion in long-term debt (including securities due within one year) primarily due to issuances of senior notes;

•an increase of $1.5 billion in total property, plant, and equipment primarily related to the construction of generation, transmission, and distribution facilities, including ~~$956~~$514 million for Plant Vogtle Units 3 and 4, net of $0.6 billion reclassified to other regulatory assets and $0.4 billion reclassified to regulatory assets associated with AROs due to the retirement of Plant Wansley Units 1 and 2 as approved in Georgia Power's 2022 IRP;4;

•an increase of ~~$0.9 billion~~$626 million in ~~long-term debt (including securities due within one year)~~common stockholder's equity primarily due to capital contributions from Southern Company and net ~~issuances of senior notes;~~income, partially offset by dividends paid to Southern Company;

•~~an increase of $0.8 billion in notes payable due to an increase in commercial paper and short-term bank debt;~~

•an increase of $0.6 billion in accumulated deferred income taxes primarily due to the increase in under recovered fuel clause revenues and the expected reduction in federal and state credit carryforward balances in 2022;

•~~an increase of $0.3 billion in regulatory assets associated with AROs, net of the reclassification from property, plant, and equipment discussed above, primarily due to~~ a decrease of $320 million in ~~the fair value~~cash and cash equivalents, as discussed further under "Analysis of ~~the investments held in~~Cash Flows – Georgia ~~Power's nuclear decommissioning trust;~~

•~~an increase of $0.3 billion~~ ~~in other accounts payable due to the timing of vendor payments;~~Power" herein; and

•~~an increase~~a decrease of ~~$0.3 billion~~$305 million in ~~customer accounts receivable~~notes payable primarily due to ~~higher customer usage and the timing~~repayments of ~~collections.~~short-term bank debt.

See "Financing Activities – Georgia Power" herein and Note (B) to the Condensed Financial Statements herein under "Georgia Power – Nuclear Construction" ~~and " – Integrated Resource Plans" and Note (I) to the Condensed Financial Statements herein~~ for additional information.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Mississippi Power

Significant balance sheet changes for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 included:

•~~an increase of $79 million in common stockholder's equity related to net income and capital contributions from Southern Company, partially offset by dividends paid to Southern Company and~~

•an increase of ~~$66~~$100 million ~~in total property, plant, and equipment primarily related to the~~ ~~construction of transmission and distribution facilities.~~

~~Southern Power~~

~~Significant balance sheet changes for the nine months ended September 30, 2022 included:~~

•~~a decrease of~~ ~~$756 million~~ in long-term debt (including securities due within one year) primarily due to ~~the redemption~~issuances of senior notes;

•an increase of $92 million in total property, plant, and equipment primarily related to the construction of transmission and distribution facilities;

•decreases of $62 million in affiliated receivables and $47 million in affiliated accounts payable primarily due to fluctuations in affiliate sales/purchases and the timing of payments;

•a decrease of $61 million in accrued taxes primarily due to ~~$289~~the payment of ad valorem taxes;

•an increase of $53 million in notes payable due to commercial paper borrowings; and

•a decrease of $40 million in cash and cash equivalents, as discussed further under "Analysis of Cash Flows – Mississippi Power" herein.

See "Financing Activities – Mississippi Power" herein for additional information.

Southern Power

Significant balance sheet changes for the six months ended June 30, 2023 included:

•increases of $319 million in accumulated deferred income tax liabilities and $223 million in prepaid income taxes primarily related to the expected utilization of ITCs in 2023;

•a decrease of $220 million in total property, plant, and equipment primarily due to continued depreciation of assets;

•~~an increase of~~ ~~$282 million~~ in common stockholder's equity primarily due to capital contributions from Southern Company and net income, partially offset by dividends paid to Southern Company and distributions to noncontrolling interests; and

•~~increases~~a decrease of ~~$194~~$125 million in ~~accrued taxes and~~ ~~$100 million~~ ~~in accumulated deferred income tax liabilities~~notes payable primarily ~~related~~due to ~~the expected utilization~~net repayments of ~~ITCs in 2022.~~commercial paper.

See "Financing Activities – Southern Power" herein and Note (G) to the Condensed Financial Statements herein for additional information.

Southern Company Gas

Significant balance sheet changes for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 included:

•a decrease of ~~$849~~$663 million in total accounts receivable primarily related to decreases of $367 million in unbilled revenues and $297 million in customer accounts receivable as a result of seasonality;

•a decrease of $572 million in notes payable due to ~~repayments~~a reduction in commercial paper borrowings and the repayment of short-term ~~debt and commercial paper borrowings;~~bank loans;

•an increase of ~~$760~~$525 million in total property, plant, and equipment primarily related to the construction of transportation and distribution assets and additional infrastructure investment;

•an increase of ~~$522~~$341 million in common stockholder's equity related to net income and capital contributions from Southern Company, partially offset by dividends paid to Southern Company;

•~~an increase of $459 million in long-term debt (including securities due with one year) due to issuances of senior notes and first mortgage bonds, partially offset by the repayment of medium-term notes and adjustments related to fair value hedges;~~

•a decrease of ~~$313 million in total accounts receivable primarily relating to decreases of $166 million in customer accounts receivable and $156 million in unbilled revenues as a result of seasonality;~~

•~~an increase of $231~~$278 million in other accounts payable due to seasonality and the timing of vendor payments; and

•a decrease of ~~$221~~$204 million in ~~other regulatory assets, deferred~~natural gas for sale primarily due to ~~a $207 million reduction in~~the use of stored natural ~~gas cost under recovery.~~gas.

See "Financing Activities – Southern Company Gas" herein and Note (B) to the Condensed Financial Statements herein for additional information.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Financing Activities

The following table outlines the Registrants' long-term debt financing activities for the first ~~nine~~six months of ~~2022:~~2023:


		Issuances				Maturities and Redemptions								Issuances and Reofferings								Maturities and Redemptions
Company	Company	Senior Notes		Other Long-Term Debt			Senior Notes		Revenue Bonds			Other Long-Term Debt(a)			Company	Senior Notes		Revenue Bonds		Other Long- Term Debt			Senior Notes		Other Long- Term Debt(*)
		(in millions)									(in millions)

Southern Company parent															Southern Company parent	$	3,225	$	—	$	—		$	600	$	550
Alabama Power	Alabama Power	$	1,700	$	—		$	550	$	—		$	1		Alabama Power	200		—		17			—		1
Georgia Power	Georgia Power	1,500		—			400		53			201			Georgia Power	1,750		229		—			100		44
Mississippi Power															Mississippi Power	100		—		—			—		—

Southern Power		—		—			677		—			—
Southern Company Gas	Southern Company Gas	500		100			—		—			46			Southern Company Gas	—		—		19			—		—
Other	Other	—		—			—		—			8			Other	—		—		—			—		5
Elimination(b)		—		—			—		—			(4)

Southern Company	Southern Company	$	3,700	$	100		$	1,627	$	53		$	252		Southern Company	$	5,275	$	229	$	36		$	700	$	600

~~(a)~~(*)Includes reductions in finance lease obligations resulting from cash payments under finance leases and, for Georgia Power, principal amortization payments totaling ~~$66~~$43 million for FFB borrowings. See Note 8 to the financial statements under "Long-term Debt – DOE Loan Guarantee Borrowings" in Item 8 of the Form 10-K for additional information.

~~(b)Represents reductions in affiliate finance lease obligations at Georgia Power, which are eliminated in Southern Company's consolidated financial statements.~~

Except as otherwise described herein, the Registrants used the proceeds of debt issuances for their redemptions and maturities shown in the table above, to repay short-term indebtedness, and for general corporate purposes, including working capital. The Subsidiary Registrants also used the proceeds for their construction programs.

In addition to any financings that may be necessary to meet capital requirements and contractual obligations, the Registrants plan to continue, when economically feasible, a program to retire higher-cost securities and replace these obligations with lower-cost capital if market conditions permit.

Southern Company

During the first ~~nine~~six months of ~~2022,~~2023, Southern Company issued approximately ~~3.5~~1.8 million shares of common stock primarily through employee equity compensation plans and received proceeds of approximately ~~$78~~$22 million.

In ~~May 2022,~~January 2023, Southern Company remarketed its Series 2019A and Series 2019B Remarketable Junior Subordinated Notes pursuant to the terms of its 2019 Series A Equity Units (Equity Units). Southern Company did not receive any proceeds from the remarketing, which were used to purchase a portfolio of treasury securities maturing on July 28, 2022. On August 1, 2022, the proceeds from this portfolio were used to settle the purchase contracts entered into as part of the Equity Units and Southern Company issued approximately 25.2 million shares of common stock and received proceeds of $1.725 billion. See Note (F) to the Condensed Financial Statements herein under "Equity Units" for additional information.

~~In March 2022, Southern Company entered into a $400 million short-term floating rate bank loan bearing interest based on term SOFR, which it repaid in August 2022.~~

~~In May 2022, Southern Company borrowed $100 million pursuant to a short-term uncommitted bank credit arrangement bearing interest at a mutually agreed upon rate, which it repaid in August 2022.~~

Subsequent to September 30, 2022, Southern Company issued $500 million aggregate principal amount of Series 2022A 5.15% Senior Notes due October 6, 2025 and $500 million aggregate principal amount of Series 2022B 5.70% Senior Notes due October 15, 2032.

~~Alabama Power~~

~~In February 2022, Alabama Power~~ redeemed all $550 million aggregate principal amount of its Series ~~2017A 2.45%~~2016B Junior Subordinated Notes due March 15, 2057.

In February 2023, Southern Company issued $1.5 billion aggregate principal amount of its Series 2023A 3.875% Convertible Senior Notes due December 15, 2025 (Series 2023A Convertible Senior Notes) in a private offering. In March 2023, Southern Company issued an additional $225 million aggregate principal amount of the Series 2023A Convertible Senior Notes upon the exercise by the initial purchasers of their over-allotment option. See Note (F) to the Condensed Financial Statements under "Convertible Senior Notes" herein for additional information.

In May 2023, Southern Company repaid at maturity $600 million aggregate principal amount of its 2021C Floating Rate Senior Notes.

Also in May 2023, Southern Company issued $750 million aggregate principal amount of Series 2023B 4.85% Senior Notes due June 15, 2028 and $750 million aggregate principal amount of Series 2023C 5.20% Senior Notes due June 15, 2033.

Subsequent to June 30, ~~2022.~~2023, Southern Company repaid at maturity $1.25 billion aggregate principal amount of its 2.95% Senior Notes.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Alabama Power

During the first half of 2023, a subsidiary of Alabama Power borrowed $17 million under a $39 million long-term floating rate bank loan entered into in December 2022 with a maturity date of December 12, 2029.

In ~~March 2022,~~May 2023, Alabama Power issued ~~$700~~$200 million aggregate principal amount of Series ~~2022A 3.05%~~2023A Floating Rate Senior Notes due ~~March~~May 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.

In August 2022, Alabama Power issued $550 million aggregate principal amount of Series 2022B 3.75% Senior Notes due September 1, 2027 and $450 million aggregate principal amount of Series 2022C 3.94% Senior Notes due September 1, 2032. An amount equal to the net proceeds of the Series 2022C Senior Notes will be allocated to finance or refinance, in whole or in part, one or more renewable energy projects and/or expenditures and programs related to enabling opportunities for diverse and small businesses/suppliers.

Subsequent to September 30, 2022, Alabama Power redeemed all of its 5.00% Class A Preferred Stock, Par Value $1 Per Share (Stated Capital $25 Per Share) at a redemption price of $25.00 per share plus accrued and unpaid dividends to the redemption date.2073.

Georgia Power

In ~~January 2022,~~March 2023, Georgia Power ~~redeemed all $400 million aggregate principal amount of its Series 2012B 2.85% Senior Notes due May 15, 2022.~~

~~In February 2022,~~reoffered to the public the following pollution control revenue bonds that previously had been purchased and were held by Georgia Power ~~borrowed $250 million pursuant to a short-term uncommitted bank credit arrangement, which it repaid in May 2022.~~at December 31, 2022:

~~In each of March and April 2022, Georgia Power entered into a $200 million short-term floating rate bank loan bearing interest based on term SOFR.~~

In May 2022, Georgia Power issued $700 million aggregate principal amount of Series 2022A 4.70% Senior Notes due May 15, 2032 and $800 million aggregate principal amount of Series 2022B 5.125% Senior Notes due May 15, 2052. An amount equal to the net proceeds of the Series 2022B Senior Notes will be allocated to finance or refinance, in whole or in part, one or more renewable energy projects and/or expenditures and programs related to enabling opportunities for diverse and small businesses/suppliers.

~~In May 2022, Georgia Power repaid its $125 million long-term bank loan that was scheduled to mature in June 2022.~~

~~In July 2022, Georgia Power repaid at maturity $53~~•approximately $28 million aggregate principal amount of Development Authority of ~~Floyd~~Monroe County (Georgia) Pollution Control Revenue Bonds (Georgia Power Company Plant ~~Hammond~~Scherer Project), Second Series 2006;

•approximately $89 million aggregate principal amount of Development Authority of Monroe County (Georgia) Pollution Control Revenue Bonds (Georgia Power Company Plant Scherer Project), Second Series 2009;

•approximately $49 million aggregate principal amount of Development Authority of Monroe County (Georgia) Pollution Control Revenue Bonds (Georgia Power Company Plant Scherer Project), First Series ~~2010.~~2012;

~~Subsequent to September 30, 2022,~~•approximately $18 million aggregate principal amount of Development Authority of Monroe County (Georgia) Pollution Control Revenue Bonds (Georgia Power Company Plant Scherer Project), First Series 2013; and

•$46 million aggregate principal amount of Development Authority of Burke County (Georgia) Pollution Control Revenue Bonds (Georgia Power Company Plant Vogtle Project), First Series 1996.

Also in March 2023, Georgia Power borrowed ~~$250~~$100 million pursuant to a short-term uncommitted bank credit arrangement bearing interest at a mutually agreed upon rate and payable on demand. In April 2023, Georgia Power borrowed an additional $150 million under the arrangement. In May 2023, Georgia Power repaid the aggregate $250 million outstanding.

Also in March 2023, Georgia Power repaid at maturity a $200 million short-term floating rate bank loan entered into in March 2022.

In April 2023, Georgia Power repaid at maturity $100 million aggregate principal amount of its Series N 5.750% Senior Notes.

Also in April 2023, Georgia Power repaid at maturity a $200 million short-term floating rate bank loan entered into in April 2022.

In May 2023, Georgia Power issued $750 million aggregate principal amount of Series 2023A 4.65% Senior Notes due May 16, 2028 and $1.0 billion aggregate principal amount of Series 2023B 4.95% Senior Notes due May 17, 2033.

Subsequent to June 30, 2023, Georgia Power repaid at maturity $700 million aggregate principal amount of its Series 2020A 2.10% Senior Notes.

Mississippi Power

In ~~June 2022,~~March 2023, Mississippi Power ~~repaid $20~~borrowed $50 million ~~which was borrowed in March 2022 under~~of short-term debt pursuant to its $125 million revolving credit ~~arrangement.~~

~~Southern Power~~arrangement, which it repaid in June 2023.

In June ~~2022, Southern~~2023, Mississippi Power ~~repaid at maturity €600~~issued in a private placement $65 million ~~(approximately $677 million)~~ aggregate principal amount of Series ~~2016A 1.00%~~2023A 5.64% Senior ~~Notes.~~Notes due July 15, 2026 and $35 million aggregate principal amount of Series 2023B 5.63% Senior Notes due July 15, 2033.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

~~Subsequent to September 30, 2022,~~Southern Power

In January 2023, Southern Power borrowed $100 million pursuant to a short-term uncommitted bank credit arrangement bearing interest at a mutually agreed upon rate and payable on demand. During the second quarter 2023, Southern Power made net repayments of $50 million of the $100 million borrowed.

Southern Company Gas

~~During the first quarter 2022,~~In February 2023, Nicor Gas repaid ~~one of~~ its ~~three $100~~$150 million and $50 million short-term floating rate bank loans entered into in February 2022 and March 2021. Nicor Gas also repaid $50 million of one of the other loans and increased the borrowing amount under the other loan to $150 million. In addition, both loans were renewed and amended to extend the maturity dates and change the interest rate provisions so the loans bear interest based on term SOFR.2022, respectively.

During the ~~second quarter 2022, Atlanta~~first half of 2023, Southern Company Gas ~~Light repaid at maturity $46~~received cash advances totaling $19 million ~~aggregate principal amount of medium-term notes with~~under a ~~weighted average interest rate of 8.63%.~~long-term financing agreement related to a construction contract.

~~In August 2022,~~Subsequent to June 30, 2023, Nicor Gas issued in a private placement ~~$100~~$50 million aggregate principal amount of ~~2.21%~~5.28% Series First Mortgage Bonds due ~~August~~July 31, ~~2032.~~

~~In September 2022, Southern Company Gas Capital issued $500~~2030 and $75 million aggregate principal amount of 5.43% Series ~~2022A 5.15% Senior Notes~~First Mortgage Bonds due ~~September 15, 2032, guaranteed by Southern Company Gas.~~July 31, 2035. Pursuant to the same agreement, Nicor Gas agreed to issue in a private placement in October 2023 $75 million aggregate principal amount of 5.67% Series First Mortgage Bonds due October 31, 2053 and $75 million aggregate principal amount of 5.77% Series First Mortgage Bonds due October 31, 2063.

Credit Rating Risk

At ~~September~~June 30, ~~2022,~~2023, the Registrants did not have any credit arrangements that would require material changes in payment schedules or terminations as a result of a credit rating downgrade.

There are certain contracts that could require collateral, but not accelerated payment, in the event of a credit rating change of certain Registrants to BBB and/or Baa2 or below. These contracts are primarily for physical electricity and natural gas purchases and sales, fuel purchases, fuel transportation and storage, energy price risk management, transmission, interest rate management, and, for Georgia Power, construction of new generation at Plant Vogtle Units 3 and 4.

The maximum potential collateral requirements under these contracts at ~~September~~June 30, ~~2022~~2023 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	$	33	$	1	$	—	$	—	$	32	$	—	At BBB and/or Baa2	$	33	$	1	$	—	$	—	$	32	$	—
At BBB- and/or Baa3	At BBB- and/or Baa3	395		2		61		1		333		—		At BBB- and/or Baa3	432		2		60		—		370		—
At BB+ and/or Ba1 or below	At BB+ and/or Ba1 or below	2,042		409		907		306		1,205		5		At BB+ and/or Ba1 or below	2,113		424		952		328		1,297		30

(*)Southern Power has PPAs that could require collateral, but not accelerated payment, in the event of a downgrade of Southern Power's credit. The PPAs require credit assurances without stating a specific credit rating. The amount of collateral required would depend upon actual losses resulting from a credit downgrade. Southern Power had $106 million of cash collateral posted related to PPA requirements at ~~September~~June 30, ~~2022.~~2023.

The amounts in the previous table for the traditional electric operating companies and Southern Power include certain agreements that could require collateral if either Alabama Power or Georgia Power has a credit rating change to below investment grade. Generally, collateral may be provided by a Southern Company guaranty, letter of credit, or cash. Additionally, a credit rating downgrade could impact the ability of the Registrants to access capital markets and would be likely to impact the cost at which they do so.

On ~~February 22, 2022, Fitch downgraded the senior unsecured long-term debt~~August 2, 2023, S&P revised its credit rating ~~of Georgia Power to BBB+ from A- with a stable outlook.~~

~~Also on February 22, 2022, Fitch revised the ratings~~ outlook offor Southern Company ~~Alabama Power, Southern Power, Nicor Gas,~~ and ~~SEGCO~~its subsidiaries to ~~negative~~positive from stable.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

During the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, there were no material changes to Southern Company's, Alabama Power's, Georgia Power's, Mississippi Power's, Southern Power's, or Southern Company Gas' disclosures about market risk. For an in-depth discussion of each Registrant's market risks, see MANAGEMENT'S DISCUSSION AND ANALYSIS – FINANCIAL CONDITION AND LIQUIDITY – "Market Price Risk" in Item 7 of the Form 10-K and Note 1 to the financial statements under "Financial Instruments" and Notes 13 and 14 to the financial statements in Item 8 of the Form 10-K, as well as Notes (I) and (J) to the Condensed Financial Statements herein.

Item 4. Controls and Procedures.

(a)Evaluation of disclosure controls and procedures.

As of the end of the period covered by this Quarterly Report on Form 10-Q, Southern Company, Alabama Power, Georgia Power, Mississippi Power, Southern Power, and Southern Company Gas conducted separate evaluations under the supervision and with the participation of each company's management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the disclosure controls and procedures (as defined in ~~Sections~~Rules 13a-15(e) and 15d-15(e) ofunder the Securities Exchange Act of 1934, as amended). Based upon these evaluations, the Chief Executive Officer and the Chief Financial Officer, in each case, concluded that the disclosure controls and procedures are effective.

(b) Changes in internal ~~controls~~control over financial reporting.

In July 2022, Southern Company, Alabama Power, Georgia Power, Mississippi Power, Southern Power, and Southern Company Gas implemented a new human resources and payroll application. In August 2022, Southern Company Gas implemented new financial accounting and reporting applications. As a result of these implementations, there were certainThere have been no changes ~~to processes and procedures, which resulted~~ in ~~changes to~~ Southern Company's, Alabama Power's, Georgia Power's, Mississippi Power's, Southern Power's, ~~and~~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)~~. These changes included automation of certain previously manual controls. These changes in internal controls were not made in response~~ during the second quarter 2023 that have materially affected or are reasonably likely to ~~any identified~~materially affect Southern Company's, Alabama Power's, Georgia Power's, Mississippi Power's, Southern Power's, or Southern Company Gas' internal control ~~deficiency.~~over financial reporting.

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Table of Contents Index to Financial Statements

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

See the Notes to the Condensed Financial Statements herein for information regarding certain legal and administrative proceedings in which the Registrants are involved. The Registrants' threshold for disclosing material environmental legal proceedings involving a governmental authority where potential monetary sanctions are involved is $1 million.

Item 1A. Risk Factors.

See RISK FACTORS in Item 1A of the Form 10-K for a discussion of the risk factors of the Registrants. There have been no material changes to these risk factors from those previously disclosed in the Form 10-K.

Item 5. Other Information.

The following table reports information regarding the adoption, modification, or termination of "Rule 10b5-1 trading arrangements" or "non-Rule 10b5-1 trading arrangements," as defined in Item 408(a) of Regulation S-K, during the three months ended June 30, 2023 for Southern Company's directors and "officers," as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended. There were no modifications or terminations of such trading arrangements during the three months ended June 30, 2023. Unless otherwise indicated, each trading arrangement listed below is a "Rule 10b5-1 trading arrangement," provides for the sale of shares of Southern Company's common stock, commences no earlier than the 120th day after the "Date of Adoption" listed below, and terminates upon the earlier of the "Expiration Date" listed below or the completion of all sales. The Subsidiary Registrants had no reportable trading arrangements for the three months ended June 30, 2023.

Name

Title

Date of Adoption

Expiration
Date

Aggregate Number of Shares Covered

Christopher Cummiskey

Executive Vice President

May 4, 2023

August 29, 2024

22,064(1)

Anthony L. Wilson

Chairman, President, and Chief Executive Officer of Mississippi Power

May 8, 2023

August 30, 2024

1,360(2)

(1)Includes shares underlying equity awards subject to performance conditions and accrual of dividend-equivalent rights. Accordingly, the total number of shares ultimately available for sale could be more or less than the amount shown. The amount shown is based on the target number of shares subject to equity awards and the dividend-equivalent rights accrued as of the date of adoption.

(2)Shares to be donated to a charitable organization.

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

Southern Company

(a)1

~~Twenty-Fifth~~Twenty-Eighth Supplemental Indenture to Senior Note Indenture dated as of ~~October 6, 2022,~~May 18, 2023, providing for the issuance of the Series ~~2022A 5.15%~~2023B 4.85% Senior Notes due ~~October 6, 2025.~~June 15, 2028. (Designated in Form 8-K dated ~~October 3, 2022,~~May 15, 2023, File No. 1-3526, as Exhibit 4.4(a).)

(a)2

~~Twenty-Sixth~~Twenty-Ninth Supplemental Indenture to Senior Note Indenture dated as of ~~October 6, 2022,~~May 18, 2023, providing for the issuance of the Series ~~2022B 5.70%~~2023C 5.20% Senior Notes due ~~October~~June 15, ~~2032.~~2033. (Designated in Form 8-K dated ~~October 3, 2022,~~May 15, 2023, File No. 1-3526, as Exhibit 4.4(b).)

~~Alabama Power~~

~~(b)1~~

~~Sixty-Fourth Supplemental Indenture to Senior Note Indenture dated as of August 12, 2022 providing for the issuance of the Series 2022B 3.75% Senior Notes due September 1, 2027. (Designated in Form 8-K dated August 9, 2022, File No. 1-3164, as Exhibit~~ ~~4.6(a)~~.)

~~(b)2~~

~~Sixty-Fifth Supplemental Indenture to Senior Note Indenture dated as of August 12, 2022 providing for the issuance of the Series 2022C 3.94% Senior Notes due September 1, 2032. (Designated in Form 8-K dated August 9, 2022, File No. 1-3164, as Exhibit~~ ~~4.6(b)~~.)

~~Southern Company Gas~~

~~(f)1~~

~~Southern Company Gas Capital Corporation's Series 2022A 5.15% Senior Notes due September 30, 2032, Form of Note. (Designated in Form 8-K dated September 6, 2022, File No. 1-14174, as Exhibit~~ ~~4.1~~.)

~~(f)2~~

~~Southern Company Gas' Guarantee related to the Series 2022A 5.15% Senior Notes due September 30, 2032, Form of Guarantee. (Designated in Form 8-K dated September 6, 2022, File No. 1-14174, as Exhibit~~ ~~4.3~~.)

~~(10) Material Contracts~~

~~Southern Company~~

~~(a)1~~

~~Amended and Restated Southern Company Change In Control Benefits Protection Plan, effective August 15, 2022. (Designated in Form 8-K dated August 15, 2022, File No. 1-3526, as Exhibit~~ ~~10.1~~.)

~~(a)2~~

~~Southern Company Senior Executive Change in Control Severance Plan, Amended and Restated effective August 15, 2022. (Designated in Form 8-K dated August 15, 2022, File No. 1-3526, as Exhibit~~ ~~10.2~~.)

~~159~~150

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~~(a)3~~

~~Southern Company Executive Change In Control Severance Plan, Amended and Restated effective August 15, 2022.~~

~~(a)4~~

~~Deferred Compensation Agreement between Southern Company, SCS, Georgia Power, and Christopher C. Womack, effective December 10, 2008.~~

Alabama Power

(b)1

-Sixty-Sixth Supplemental Indenture to Senior Note Indenture dated as of May 8, 2023, providing for the issuance of the Series 2023A Floating Rate Senior Notes due May 15, 2073. (Designated in Form 8-K dated May 3, 2023, File No. 1-3164, as Exhibit 4.6 .)

~~Amended and Restated Southern Company Change In Control Benefits Protection Plan, effective August 15, 2022. See Exhibit 10(a)1 herein.~~Georgia Power

#(c)1

~~(b)~~Sixty-Sixth Supplemental Indenture to Senior Note Indenture dated as of May 4, 2023, providing for the issuance of the Series 2023A 4.65% Senior Notes due May 16, 2028. (Designated in Form 8-K dated May 1, 2023, File No. 1-6468, as Exhibit 4.2(a).)

-Sixty-Seventh Supplemental Indenture to Senior Note Indenture dated as of May 4, 2023, providing for the issuance of the Series 2023B 4.95% Senior Notes due May 17, 2033. (Designated in Form 8-K dated May 1, 2023, File No. 1-6468, as Exhibit 4.2(b ).)

~~Southern Company Senior Executive Change in Control Severance Plan, Amended and Restated effective August 15, 2022. See Exhibit 10(a)2 herein.~~Mississippi Power

(d)1

~~(b)~~Senior Note Indenture dated as of June 1, 2023, between Mississippi Power and Regions Bank, as Trustee.

(d)2

First Supplemental Indenture to Senior Note Indenture dated as of June 28, 2023, providing for the issuance of the Series 2023A 5.64% Senior Notes due July 15, 2026.

(d)3

~~Southern Company Executive Change In Control Severance Plan, Amended and Restated effective August~~Second Supplemental Indenture to Senior Note Indenture dated as of June 28, 2023, providing for the issuance of the Series 2023B 5.63% Senior Notes due July 15, ~~2022. See Exhibit 10(a)3 herein.~~2033.

(24) Power of Attorney and Resolutions

Southern Company

(a)1

Power of Attorney and resolution. (Designated in the Form 10-K for the year ended December 31, ~~2021,~~2022, File No. 1-3526 as Exhibit 24(a)1.)

(a)2

Power of Attorney of Christopher C. Womack

Alabama Power

(b)1

Power of Attorney and resolution. (Designated in the Form 10-K for the year ended December 31, ~~2021,~~2022, File No. 1-3164 as Exhibit 24(b)1.1.)

(b)2

Power of Attorney of Moses H. Feagin. (Designated in the Form 10-Q for the quarter ended March 31, 2023, File No. 1-3164 as Exhibit 24(b)2 .)

Georgia Power

Power of Attorney and resolution. (Designated in the Form 10-K for the year ended December 31, ~~2021,~~2022, File No. 1-6468 as Exhibit 24(c)1.)

Power of Attorney of Kimberly S. Greene. (Designated in the Form 10-Q for the quarter ended March 31, 2023, File No . 1-6468 as Exhibit 24(c)2.)

Mississippi Power

(d)

Power of Attorney and resolution. (Designated in the Form 10-K for the year ended December 31, ~~2021,~~2022, File No. 001-11229 as Exhibit 24(d)1.1.)

Southern Power

(e)1

Power of Attorney and resolution. (Designated in the Form 10-K for the year ended December 31, ~~2021,~~2022, File No. 001-37803 as Exhibit 24(e)1.)

~~(e)2~~

~~Power of Attorney of Gary Kerr. (Designated in the Form 10-Q for the quarter ended June 30, 2022, File No. 001-37803 as Exhibit 24(e)2~~.)

Southern Company Gas

(f)1

Power of Attorney and resolution. (Designated in the Form 10-K for the year ended December 31, ~~2021,~~2022, File No. 1-14174 as Exhibit 24(f)1.)

151

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(f)2

Power of Attorney of James Y. Kerr II. (Designated in the Form 10-Q for the quarter ended March 31, 2023, File No. 1-14174 as Exhibit 24(f)2 .)

(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.~~2002.

(a)2

Certificate of Southern Company's Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of ~~2002.~~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.~~2002.

~~160~~

~~Table of ContentsIndex to Financial Statements~~

Georgia Power

Certificate of Georgia Power's Chief Executive Officer required by Section 302 of the Sarbanes-Oxley Act of ~~2002.~~2002.

Certificate of Georgia Power's Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of ~~2002.~~2002.

Mississippi Power

(d)1

Certificate of Mississippi Power's Chief Executive Officer required by Section 302 of the Sarbanes-Oxley Act of ~~2002.~~2002.

(d)2

Certificate of Mississippi Power's Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of ~~2002.~~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.

Southern Company Gas

(f)1

Certificate of Southern Company Gas' Chief Executive Officer required by Section 302 of the Sarbanes-Oxley Act of ~~2002.~~2002.

(f)2

Certificate of Southern Company Gas' Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of ~~2002.~~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.~~2002.

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.~~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.~~2002.

152

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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.~~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.~~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.~~2002.

~~161~~

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(101) Interactive Data Files

INS

Inline XBRL Instance Document – The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.

SCH

Inline XBRL Taxonomy Extension Schema Document

CAL

Inline XBRL Taxonomy Calculation Linkbase Document

DEF

Inline XBRL Definition Linkbase Document

LAB

Inline XBRL Taxonomy Label Linkbase Document

PRE

Inline XBRL Taxonomy Presentation Linkbase Document

(104) Cover Page Interactive Data File

Formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.

~~162~~153

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~~Christopher C. Womack
						~~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: ~~October 26, 2022~~August 2, 2023

~~163~~154

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ALABAMA POWER COMPANY

SIGNATURES


						ALABAMA POWER COMPANY

By						~~Mark A. Crosswhite~~J. Jeffrey Peoples
						Chairman, President, and Chief Executive Officer
						(Principal Executive Officer)

By						~~Philip C. Raymond~~Moses H. Feagin
						Executive Vice President, Chief Financial Officer, and Treasurer
						(Principal Financial Officer)

By						/s/ Melissa K. Caen
						(Melissa K. Caen, Attorney-in-fact)

Date: ~~October 26, 2022~~August 2, 2023

~~164~~155

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GEORGIA POWER COMPANY

SIGNATURES


						GEORGIA POWER COMPANY

By						~~Christopher C. Womack~~Kimberly S. Greene
						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: ~~October 26, 2022~~August 2, 2023

~~165~~156

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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~~Matthew P. Grice
						~~Senior~~ Vice President, Chief Financial Officer, and Treasurer
						(Principal Financial Officer)

By						/s/ Melissa K. Caen
						(Melissa K. Caen, Attorney-in-fact)

Date: ~~October 26, 2022~~August 2, 2023

~~166~~157

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SOUTHERN POWER COMPANY

SIGNATURES


						SOUTHERN POWER COMPANY

By						Christopher Cummiskey
						Chairman and Chief Executive Officer
						(Principal Executive Officer)

By						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: ~~October 26, 2022~~August 2, 2023

~~167~~158

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SOUTHERN COMPANY GAS

SIGNATURES


						SOUTHERN COMPANY GAS

By						~~Kimberly S. Greene~~James Y. Kerr II
						Chairman, President, and Chief Executive Officer
						(Principal Executive Officer)

By						~~David P. Poroch~~Grace A. Kolvereid
						Executive Vice President, Chief Financial Officer, and Treasurer
						(Principal Financial Officer)

By						/s/ Melissa K. Caen
						(Melissa K. Caen, Attorney-in-fact)

Date: ~~October 26, 2022~~August 2, 2023

~~168~~159


Note		Page
A	Introduction	4542
B	Regulatory Matters	4846
C	Contingencies	6055
D	Revenue from Contracts with Customers and Lease Income	6459
E	Consolidated Entities and Equity Method Investments	6965
F	Financing and Leases	7267
G	Income Taxes	7470
H	Retirement Benefits	7571
I	Fair Value Measurements	7874
J	Derivatives	8378
K	~~Acquisitions and Dispositions~~	94
L	Segment and Related Information	9591


	Three Months Ended		Nine Months Ended
	September 30, 2022
	(in millions)
Southern Company(a)	$	11	$	30
Southern Power(b)	5		15
Southern Company Gas	4		9


Tariff	2023		2024		2025
	(in millions)
Traditional base	$	762	$	—	$	—
ECCR
Traditional	5		—		—
CCR ARO(a)	64		78		47
DSM(a)	37		27		(2)
Municipal Franchise Fee	21		2		1
Total(b)	$	889	$	107	$	45


	2022 (remaining)		2023		2024		2025		2026		Thereafter
	(in millions)
Southern Company	$	243	$	619	$	434	$	322	$	307	$	2,340
Alabama Power	8		24		7		5		—		—
Georgia Power	20		70		34		22		11		21

Southern Power	80		341		344		294		299		2,334
Southern Company Gas	12		29		29		—		—		—


	Three Months Ended September 30,				Nine Months Ended September 30,
Earnings (Loss) from Equity Method Investments	2022		2021		2022		2021
	(in millions)
SNG	$	34	$	27	$	104	$	93
PennEast Pipeline(*)	—		(2)		—		(81)
Other	—		—		1		2
Total	$	34	$	25	$	105	$	14


	Southern Company Gas' Revenues
	Gas Distribution Operations		Wholesale Gas Services(*)		Gas Marketing Services		Other		Total
	(in millions)
Three Months Ended September 30, 2022	$	748	$	—	$	85	$	24	$	857
Three Months Ended September 30, 2021	553		—		52		18		623
Nine Months Ended September 30, 2022	$	3,513	$	—	$	420	$	65	$	3,998
Nine Months Ended September 30, 2021	2,451		188		311		44		2,994


	Gas Distribution Operations		Gas Pipeline Investments		Wholesale Gas Services(a)		Gas Marketing Services		Total		All Other		Eliminations		Consolidated
	(in millions)
Three Months Ended September 30, 2022
Operating revenues	$	751	$	8	$	—	$	85	$	844	$	16	$	(3)	$	857
Segment net income (loss)	59		24		—		(2)		81		2		—		83
Nine Months Ended September 30, 2022
Operating revenues	$	3,533	$	24	$	—	$	420	$	3,977	$	43	$	(22)	$	3,998
Segment net income (loss)	365		76		—		65		506		10		—		516
Total assets at September 30, 2022	21,605		1,425		—		1,595		24,625		9,100		(9,628)		24,097
Three Months Ended September 30, 2021
Operating revenues	$	556	$	8	$	—	$	52	$	616	$	11	$	(4)	$	623
Segment net income (loss)(b)(c)	45		10		94		(2)		147		(91)		—		56
Nine Months Ended September 30, 2021
Operating revenues	$	2,466	$	24	$	188	$	311	$	2,989	$	29	$	(24)	$	2,994
Segment net income (loss)(b)(c)(d)	308		3		108		60		479		(90)		—		389
Total assets at December 31, 2021	20,917		1,467		31		1,556		23,971		12,114		(12,525)		23,560


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



Nine Months Ended September 30, 2021	$	3,881	$	90	$	3,971	$	3,783	$	188