Southern Power 10-Q 2021 Q2 Quarterly report

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    Table of Contents                                Index to Financial Statements

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

OR

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

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from           to            

Commission
File Number Registrant,
State of Incorporation,
Address and Telephone Number I.R.S. Employer
Identification No.

1-3526 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 2016A 5.25% Junior Subordinated Notes due 2076	SOJB	NYSE
The Southern Company	Series 2017B 5.25% Junior Subordinated Notes due 2077	SOJC	NYSE
The Southern Company	2019 Series A Corporate Units	SOLN	NYSE
The Southern Company	Series 2020A 4.95% Junior Subordinated Notes due 2080	SOJD	NYSE
The Southern Company	Series 2020C 4.20% Junior Subordinated Notes due 2060	SOJE	NYSE
Alabama Power Company	5.00% Series Class A Preferred Stock	ALP PR Q	NYSE
Georgia Power Company	Series 2017A 5.00% Junior Subordinated Notes due 2077	GPJA	NYSE
Southern Power Company	Series 2016A 1.000% Senior Notes due 2022	SO/22B	NYSE
Southern Power Company	Series 2016B 1.850% Senior Notes due 2026	SO/26A	NYSE

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	X
Alabama Power Company			X
Georgia Power Company			X
Mississippi Power Company			X
Southern Power Company			X
Southern Company Gas			X

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 June 30, 2021
The Southern Company	Par Value $5 Per Share	1,058,825,814
Alabama Power Company	Par Value $40 Per Share	30,537,500
Georgia Power Company	Without Par Value	9,261,500
Mississippi Power Company	Without Par Value	1,121,000
Southern Power Company	Par Value $0.01 Per Share	1,000
Southern Company Gas	Par Value $0.01 Per Share	100

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

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TABLE OF CONTENTS

		Page
	Definitions	4
	Cautionary Statement Regarding Forward-Looking Information	8
	PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	10
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	97
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	156
Item 4.	Controls and Procedures	156
	PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	157
Item 1A.	Risk Factors	157
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	Inapplicable
Item 3.	Defaults Upon Senior Securities	Inapplicable
Item 4.	Mine Safety Disclosures	Inapplicable
Item 5.	Other Information	Inapplicable
Item 6.	Exhibits	157
	Signatures	161

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DEFINITIONS

Term	Meaning
2019 ARP	Alternate Rate Plan approved by the Georgia PSC in 2019 for Georgia Power for the years 2020 through 2022
AFUDC	Allowance for funds used during construction
Alabama Power	Alabama Power Company
Amended and Restated Loan Guarantee Agreement	Loan guarantee agreement entered into by Georgia Power with the DOE in 2014, as amended and restated in March 2019, under which the proceeds of borrowings may be used to reimburse Georgia Power for Eligible Project Costs incurred in connection with its construction of Plant Vogtle Units 3 and 4
ARO	Asset retirement obligation
Atlanta Gas Light	Atlanta Gas Light Company, a wholly-owned subsidiary of Southern Company Gas
Atlantic Coast Pipeline	Atlantic Coast Pipeline, LLC, a joint venture to construct and operate a natural gas pipeline in which Southern Company Gas held a 5% interest through March 24, 2020
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
Chattanooga Gas	Chattanooga Gas Company, a wholly-owned subsidiary of Southern Company Gas
COD	Commercial operation date
Contractor Settlement Agreement	The December 31, 2015 agreement between Westinghouse and the Vogtle Owners resolving disputes between the Vogtle Owners and the EPC Contractor under the Vogtle 3 and 4 Agreement
COVID-19	The novel coronavirus disease declared a pandemic by the World Health Organization and the Centers for Disease Control and Prevention in March 2020
CWIP	Construction work in progress
Dalton	City of Dalton, Georgia, an incorporated municipality in the State of Georgia, acting by and through its Board of Water, Light, and Sinking Fund Commissioners
Dalton Pipeline	A pipeline facility in Georgia in which Southern Company Gas has a 50% undivided ownership interest
DOE	U.S. Department of Energy
ECCR	Georgia Power's Environmental Compliance Cost Recovery tariff
ECO Plan	Mississippi Power's environmental compliance overview plan
ELG Rules	The EPA's steam electric effluent limitations guidelines (ELG) rule (finalized in 2015) and the ELG reconsideration rule (finalized in October 2020)
Eligible Project Costs	Certain costs of construction relating to Plant Vogtle Units 3 and 4 that are eligible for financing under the loan guarantee program established under Title XVII of the Energy Policy Act of 2005
EPA	U.S. Environmental Protection Agency
EPC Contractor	Westinghouse and its affiliate, WECTEC Global Project Services Inc.; the former engineering, procurement, and construction contractor for Plant Vogtle Units 3 and 4
FERC	Federal Energy Regulatory Commission
FFB	Federal Financing Bank
FFB Credit Facilities	Note purchase agreements among the DOE, Georgia Power, and the FFB and related promissory notes which provide for two multi-advance term loan facilities
Fitch	Fitch Ratings, Inc.
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, 2020, as applicable
GAAP	U.S. generally accepted accounting principles
Georgia Power	Georgia Power Company
GRAM	Atlanta Gas Light's Georgia Rate Adjustment Mechanism

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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
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
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
IRP	Integrated resource plan
ITAAC	Inspections, Tests, Analyses, and Acceptance Criteria, standards established by the NRC
ITC	Investment tax credit
JEA	Jacksonville Electric Authority
Jefferson Island	Jefferson Island Storage and Hub, L.L.C, which owns a natural gas storage facility in Louisiana consisting of two salt dome caverns; a subsidiary of Southern Company Gas through December 1, 2020
KWH	Kilowatt-hour
LIBOR	London Interbank Offered Rate
LIFO	Last-in, first-out
LOCOM	Lower of weighted average cost or current market price
LTSA	Long-term service agreement
Marketers	Marketers selling retail natural gas in Georgia and certificated by the Georgia PSC
MEAG Power	Municipal Electric Authority of Georgia
Mississippi Power	Mississippi Power Company
Mississippi Power Rate Case Settlement Agreement	Settlement agreement between Mississippi Power and the Mississippi Public Utilities Staff approved by the Mississippi PSC in March 2020 related to Mississippi Power's base rate case filed in 2019
mmBtu	Million British thermal units
Moody's	Moody's Investors Service, Inc.
MRA	Municipal and Rural Associations
MW	Megawatt
natural gas distribution utilities	Southern Company Gas' natural gas distribution utilities (Nicor Gas, Atlanta Gas Light, Virginia Natural Gas, and Chattanooga Gas)
NCCR	Georgia Power's Nuclear Construction Cost Recovery
NDR	Alabama Power's Natural Disaster Reserve
Nicor Gas	Northern Illinois Gas Company, a wholly-owned subsidiary of Southern Company Gas
NRC	U.S. Nuclear Regulatory Commission
NYMEX	New York Mercantile Exchange, Inc.
OCI	Other comprehensive income
PennEast Pipeline	PennEast Pipeline Company, LLC, a joint venture to construct and operate a natural gas pipeline in which Southern Company Gas has a 20% ownership interest
PEP	Mississippi Power's Performance Evaluation Plan
Pivotal LNG	Pivotal LNG, Inc., through March 24, 2020, a wholly-owned subsidiary of Southern Company Gas
PowerSecure	PowerSecure, Inc., a wholly-owned subsidiary of Southern Company

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DEFINITIONS

(continued)

Term	Meaning
PowerSouth	PowerSouth Energy Cooperative
PPA	Power purchase agreements, as well as, for Southern Power, contracts for differences that provide the owner of a renewable facility a certain fixed price for the electricity sold to the grid
PSC	Public Service Commission
PTC	Production tax credit
Rate CNP	Alabama Power's Rate Certificated New Plant, consisting of Rate CNP New Plant, Rate CNP Compliance, and Rate CNP PPA
Rate ECR	Alabama Power's Rate Energy Cost Recovery
Rate RSE	Alabama Power's Rate Stabilization and Equalization
Registrants	Southern Company, Alabama Power, Georgia Power, Mississippi Power, Southern Power Company, and Southern Company Gas
ROE	Return on equity
S&P	S&P Global Ratings, a division of S&P Global Inc.
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., until July 1, 2021, wholly-owned subsidiaries of Southern Company Gas
SNG	Southern Natural Gas Company, L.L.C., a pipeline system in which Southern Company Gas has a 50% ownership interest
Southern Company	The Southern Company
Southern Company Gas	Southern Company Gas and its subsidiaries
Southern Company Gas Capital	Southern Company Gas Capital Corporation, a 100%-owned subsidiary of Southern Company Gas
Southern Company power pool	The operating arrangement whereby the integrated generating resources of the traditional electric operating companies and Southern Power (excluding subsidiaries) are subject to joint commitment and dispatch in order to serve their combined load obligations
Southern Company system	Southern Company, the traditional electric operating companies, Southern Power, Southern Company Gas, Southern Electric Generating Company, Southern Nuclear, SCS, Southern Communications Services, Inc., PowerSecure, and other subsidiaries
Southern Holdings	Southern Company Holdings, Inc., a wholly-owned subsidiary of Southern Company
Southern Nuclear	Southern Nuclear Operating Company, Inc., a wholly-owned subsidiary of Southern Company
Southern Power	Southern Power Company and its subsidiaries
SouthStar	SouthStar Energy Services, LLC (a 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 facilities, in which Southern Power has a 67% ownership interest
SP Wind	SP Wind Holdings II, LLC, a holding company owning a portfolio of eight operating wind facilities, in which Southern Power is the controlling partner in a tax equity arrangement
Subsidiary Registrants	Alabama Power, Georgia Power, Mississippi Power, Southern Power, and Southern Company Gas
Tax Reform	The impact of the Tax Cuts and Jobs Act, which became effective on January 1, 2018
Toshiba	Toshiba Corporation, the parent company of Westinghouse
traditional electric operating companies	Alabama Power, Georgia Power, and Mississippi Power
VCM	Vogtle Construction Monitoring

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DEFINITIONS

(continued)

Term	Meaning
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, Oglethorpe Power Corporation, MEAG Power, and Dalton
Vogtle Services Agreement	The June 2017 services agreement between the Vogtle Owners and the EPC Contractor, as amended and restated in July 2017, for the EPC Contractor to transition construction management of Plant Vogtle Units 3 and 4 to Southern Nuclear and to provide ongoing design, engineering, and procurement services to Southern Nuclear
WACOG	Weighted average cost of gas
Westinghouse	Westinghouse Electric Company LLC
Williams Field Services Group	Williams Field Services Group, LLC

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

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

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

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

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

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

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

•variations in demand for electricity and natural gas;

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

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

•transmission constraints;

•effects of inflation;

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

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

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

•under certain specified circumstances, a decision by holders of more than 10% of the ownership interests of Plant Vogtle Units 3 and 4 not to proceed with construction and the ability of other Vogtle Owners to tender a portion of their ownership interests to Georgia Power following certain construction cost increases;

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

(continued)

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

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

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

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

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

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

•the ability to successfully operate the electric utilities' generating, transmission, and distribution facilities and Southern Company Gas' natural gas distribution and storage facilities and the successful performance of necessary corporate functions;

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

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

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

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

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

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

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

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

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

•access to capital markets and other financing sources;

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

•changes in the method of determining LIBOR or the replacement of LIBOR with an alternative reference rate;

•the ability of Southern Company's electric utilities to obtain additional generating capacity (or sell excess generating capacity) at competitive prices;

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

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

•impairments of goodwill or long-lived assets;

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

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

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

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PART I

Item 1. Financial Statements (Unaudited).

	Page
The Southern Company and Subsidiary Companies:
Condensed Consolidated Statements of Income	11
Condensed Consolidated Statements of Comprehensive Income	12
Condensed Consolidated Statements of Cash Flows	13
Condensed Consolidated Balance Sheets	14
Condensed Consolidated Statements of Stockholders' Equity	16
Alabama Power Company:
Condensed Statements of Income	18
Condensed Statements of Comprehensive Income	18
Condensed Statements of Cash Flows	19
Condensed Balance Sheets	20
Condensed Statements of Common Stockholder's Equity	22
Georgia Power Company:
Condensed Statements of Income	23
Condensed Statements of Comprehensive Income	23
Condensed Statements of Cash Flows	24
Condensed Balance Sheets	25
Condensed Statements of Common Stockholder's Equity	27
Mississippi Power Company:
Condensed Statements of Income	28
Condensed Statements of Comprehensive Income	28
Condensed Statements of Cash Flows	29
Condensed Balance Sheets	30
Condensed Statements of Common Stockholder's Equity	32
Southern Power Company and Subsidiary Companies:
Condensed Consolidated Statements of Income	33
Condensed Consolidated Statements of Comprehensive Income	33
Condensed Consolidated Statements of Cash Flows	34
Condensed Consolidated Balance Sheets	35
Condensed Consolidated Statements of Stockholders' Equity	37
Southern Company Gas and Subsidiary Companies:
Condensed Consolidated Statements of Income	39
Condensed Consolidated Statements of Comprehensive Income	39
Condensed Consolidated Statements of Cash Flows	40
Condensed Consolidated Balance Sheets	41
Condensed Consolidated Statements of Stockholder's Equity	43
Combined Notes to the Condensed Financial Statements	44

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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021		2020
	(in millions)				(in millions)
Operating Revenues:
Retail electric revenues	$	3,599	$	3,182	$	6,941	$	6,260
Wholesale electric revenues	546		472		1,091		889
Other electric revenues	175		168		346		320
Natural gas revenues (includes alternative revenue programs of    $2, $(2), $4, and $7, respectively)	677		636		2,371		1,885
Other revenues	201		162		359		284
Total operating revenues	5,198		4,620		11,108		9,638
Operating Expenses:
Fuel	848		621		1,696		1,257
Purchased power	217		200		424		381
Cost of natural gas	231		144		814		583
Cost of other sales	103		74		185		129
Other operations and maintenance	1,438		1,203		2,810		2,498
Depreciation and amortization	891		873		1,762		1,730
Taxes other than income taxes	313		298		657		629
Estimated loss on Plant Vogtle Units 3 and 4	460		149		508		149
(Gain) loss on dispositions, net	(11)		0		(54)		(39)
Total operating expenses	4,490		3,562		8,802		7,317
Operating Income	708		1,058		2,306		2,321
Other Income and (Expense):
Allowance for equity funds used during construction	45		35		90		68
Earnings (loss) from equity method investments	(40)		30		5		72
Interest expense, net of amounts capitalized	(450)		(444)		(901)		(900)
Impairment of leveraged leases	(7)		(154)		(7)		(154)
Other income (expense), net	108		101		167		204
Total other income and (expense)	(344)		(432)		(646)		(710)
Earnings Before Income Taxes	364		626		1,660		1,611
Income taxes (benefit)	(12)		5		178		150
Consolidated Net Income	376		621		1,482		1,461
Dividends on preferred stock of subsidiaries	4		4		7		7
Net income (loss) attributable to noncontrolling interests	0		5		(33)		(26)
Consolidated Net Income Attributable to    Southern Company	$	372	$	612	$	1,508	$	1,480
Common Stock Data:
Earnings per share -
Basic	$	0.35	$	0.58	$	1.42	$	1.40
Diluted	$	0.35	$	0.58	$	1.41	$	1.39
Average number of shares of common stock outstanding (in millions)
Basic	1,061		1,058		1,060		1,057
Diluted	1,067		1,063		1,066		1,065

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

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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021		2020
	(in millions)				(in millions)
Consolidated Net Income	$	376	$	621	$	1,482	$	1,461
Other comprehensive income (loss):
Qualifying hedges:
Changes in fair value, net of tax of    $5, $4, $(5), and $(26), respectively	14		10		(16)		(75)
Reclassification adjustment for amounts included in net income,    net of tax of $(1), $(3), $17, and $10, respectively	(5)		(9)		50		29
Pension and other postretirement benefit plans:
Reclassification adjustment for amounts included in net income,    net of tax of $2, $1, $3, and $2, respectively	3		3		6		3
Total other comprehensive income (loss)	12		4		40		(43)
Comprehensive Income	388		625		1,522		1,418
Dividends on preferred stock of subsidiaries	4		4		7		7
Comprehensive income (loss) attributable to noncontrolling interests	0		5		(33)		(26)
Consolidated Comprehensive Income Attributable to    Southern Company	$	384	$	616	$	1,548	$	1,437

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

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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	For the Six Months Ended June 30,
	2021		2020
	(in millions)
Operating Activities:
Consolidated net income	$	1,482	$	1,461
Adjustments to reconcile consolidated net income to net cash provided from operating activities —
Depreciation and amortization, total	1,949		1,916
Deferred income taxes	(101)		(218)
Utilization of federal investment tax credits	224		0
Mark-to-market adjustments	136		36
Pension, postretirement, and other employee benefits	(115)		(119)
Settlement of asset retirement obligations	(228)		(193)
Stock based compensation expense	105		84
Estimated loss on Plant Vogtle Units 3 and 4	508		149
Storm damage accruals	112		117
Impairment charges	89		154
Natural gas cost under recovery – long-term	(119)		0
Other, net	(60)		(96)
Changes in certain current assets and liabilities —
-Receivables	29		292
-Prepayments	(79)		(102)
-Natural gas for sale, net of temporary LIFO liquidation	375		182
-Natural gas cost under recovery	(485)		0
-Other current assets	36		(253)
-Accounts payable	(177)		(467)
-Accrued taxes	(157)		258
-Accrued compensation	(238)		(347)
-Retail fuel cost over recovery	(146)		174
-Customer refunds	(59)		(223)
-Other current liabilities	(177)		42
Net cash provided from operating activities	2,904		2,847
Investing Activities:
Business acquisitions, net of cash acquired	(345)		(81)
Property additions	(3,384)		(3,202)
Nuclear decommissioning trust fund purchases	(930)		(524)
Nuclear decommissioning trust fund sales	926		519
Proceeds from dispositions	25		983
Cost of removal, net of salvage	(184)		(130)
Change in construction payables, net	(55)		(103)
Payments pursuant to LTSAs	(114)		(91)
Other investing activities	35		(26)
Net cash used for investing activities	(4,026)		(2,655)
Financing Activities:
Increase (decrease) in notes payable, net	492		(1,170)
Proceeds —
Long-term debt	4,646		4,293
Common stock	24		59
Short-term borrowings	325		615
Redemptions and repurchases —
Long-term debt	(2,477)		(2,444)
Short-term borrowings	(25)		(190)
Capital contributions from noncontrolling interests	343		172
Distributions to noncontrolling interests	(113)		(118)
Payment of common stock dividends	(1,377)		(1,332)
Other financing activities	(167)		(170)
Net cash provided from (used for) financing activities	1,671		(285)
Net Change in Cash, Cash Equivalents, and Restricted Cash	549		(93)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	1,068		1,978
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	1,617	$	1,885
Supplemental Cash Flow Information:
Cash paid (received) during the period for —
Interest (net of $43 and $41 capitalized for 2021 and 2020, respectively)	$	884	$	852
Income taxes, net	88		(8)
Noncash transactions —
Accrued property additions at end of period	943		828
Contributions from noncontrolling interests	89		9
Contributions of wind turbine equipment	82		17
Right-of-use assets obtained under leases	90		94

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

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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

Assets	At June 30, 2021		At December 31, 2020
	(in millions)
Current Assets:
Cash and cash equivalents	$	1,582	$	1,065
Receivables —
Customer accounts	1,683		1,753
Energy marketing	0		516
Unbilled revenues	643		672
Other accounts and notes	488		512
Accumulated provision for uncollectible accounts	(88)		(118)
Materials and supplies	1,469		1,478
Fossil fuel for generation	475		550
Natural gas for sale	178		460
Prepaid expenses	538		276
Assets from risk management activities, net of collateral	175		147
Regulatory assets – asset retirement obligations	224		214
Natural gas cost under recovery	485		0
Assets held for sale	787		60
Other regulatory assets	728		810
Other current assets	184		222
Total current assets	9,551		8,617
Property, Plant, and Equipment:
In service	112,783		110,516
Less: Accumulated depreciation	33,240		32,397
Plant in service, net of depreciation	79,543		78,119
Nuclear fuel, at amortized cost	816		818
Construction work in progress	9,264		8,697
Total property, plant, and equipment	89,623		87,634
Other Property and Investments:
Goodwill	5,280		5,280
Nuclear decommissioning trusts, at fair value	2,457		2,303
Equity investments in unconsolidated subsidiaries	1,287		1,362
Other intangible assets, net of amortization of $286 and $328, respectively	466		487
Leveraged leases	569		556
Miscellaneous property and investments	494		398
Total other property and investments	10,553		10,386
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization	1,775		1,802
Deferred charges related to income taxes	806		796
Unamortized loss on reacquired debt	269		280
Regulatory assets – asset retirement obligations, deferred	4,931		4,934
Other regulatory assets, deferred	7,092		7,198
Other deferred charges and assets	1,307		1,288
Total deferred charges and other assets	16,180		16,298
Total Assets	$	125,907	$	122,935

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

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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

Liabilities and Stockholders' Equity	At June 30, 2021		At December 31, 2020
	(in millions)
Current Liabilities:
Securities due within one year	$	2,829	$	3,507
Notes payable	1,402		609
Energy marketing trade payables	0		494
Accounts payable	2,075		2,312
Customer deposits	467		487
Accrued taxes —
Accrued income taxes	40		130
Other accrued taxes	589		699
Accrued interest	510		513
Accrued compensation	770		1,025
Asset retirement obligations	684		585
Liabilities held for sale	677		0
Operating lease obligations	245		241
Other regulatory liabilities	416		509
Other current liabilities	956		968
Total current liabilities	11,660		12,079
Long-term Debt	47,828		45,073
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	8,710		8,175
Deferred credits related to income taxes	5,593		5,767
Accumulated deferred ITCs	2,247		2,235
Employee benefit obligations	2,004		2,213
Operating lease obligations, deferred	1,604		1,611
Asset retirement obligations, deferred	9,983		10,099
Accrued environmental remediation	208		216
Other cost of removal obligations	2,190		2,211
Other regulatory liabilities, deferred	256		251
Other deferred credits and liabilities	587		480
Total deferred credits and other liabilities	33,382		33,258
Total Liabilities	92,870		90,410
Redeemable Preferred Stock of Subsidiaries	291		291
Total Stockholders' Equity (See accompanying statements)	32,746		32,234
Total Liabilities and Stockholders' Equity	$	125,907	$	122,935

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

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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, 2019	1,054	(1)	$	5,257	$	11,734	$	(42)	$	10,877	$	(321)		$	4,254		$	31,759
Consolidated net income (loss)	—	—	—		—		—		868		—			(31)			837
Other comprehensive income (loss)	—	—	—		—		—		—		(47)			—			(47)
Stock issued	3	—	9		43		—		—		—			—			52
Stock-based compensation	—	—	—		5		—		—		—			—			5
Cash dividends of $0.62 per share	—	—	—		—		—		(655)		—			—			(655)
Capital contributions from    noncontrolling interests	—	—	—		—		—		—		—			16			16
Distributions to noncontrolling interests	—	—	—		—		—		—		—			(48)			(48)
Other	—	—	—		—		(2)		(2)		1			—			(3)
Balance at March 31, 2020	1,057	(1)	5,266		11,782		(44)		11,088		(367)			4,191			31,916
Consolidated net income	—	—	—		—		—		612		—			5			617
Other comprehensive income	—	—	—		—		—		—		4			—			4
Stock issued	—	—	—		7		—		—		—			—			7
Stock-based compensation	—	—	—		11		—		—		—			—			11
Cash dividends of $0.64 per share	—	—	—		—		—		(677)		—			—			(677)
Capital contributions from    noncontrolling interests	—	—	—		—		—		—		—			165			165
Distributions to noncontrolling interests	—	—	—		—		—		—		—			(70)			(70)
Other	—	—	—		(13)		—		1		—			—			(12)
Balance at June 30, 2020	1,057	(1)	$	5,266	$	11,787	$	(44)	$	11,024	$	(363)		$	4,291		$	31,961

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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, 2020	1,058	(1)	$	5,268	$	11,834	$	(46)	$	11,311	$	(395)		$	4,262		$	32,234
Consolidated net income (loss)	—	—	—		—		—		1,135		—			(32)			1,103
Other comprehensive income	—	—	—		—		—		—		28			—			28
Stock 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	—	—	—		—		—		—		12			—			12
Stock issued	—	—	1		9		—		—		—			—			10
Stock-based compensation	—	—	—		22		—		—		—			—			22
Cash dividends of $0.66 per share	—	—	—		—		—		(699)		—			—			(699)
Capital contributions from    noncontrolling interests	—	—	—		—		—		—		—			29			29
Distributions to noncontrolling interests	—	—	—		—		—		—		—			(68)			(68)
Other	—	—	—		1		(2)		1		—			—			0
Balance at June 30, 2021	1,060	(1)	$	5,274	$	11,886	$	(48)	$	11,442	$	(355)		$	4,547		$	32,746

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

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ALABAMA POWER COMPANY

CONDENSED STATEMENTS OF INCOME (UNAUDITED)

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021		2020
	(in millions)				(in millions)
Operating Revenues:
Retail revenues	$	1,354	$	1,223	$	2,706	$	2,427
Wholesale revenues, non-affiliates	85		54		178		111
Wholesale revenues, affiliates	24		7		55		26
Other revenues	93		81		176		152
Total operating revenues	1,556		1,365		3,115		2,716
Operating Expenses:
Fuel	263		199		554		415
Purchased power, non-affiliates	48		49		97		89
Purchased power, affiliates	39		30		69		49
Other operations and maintenance	413		342		775		690
Depreciation and amortization	214		202		425		402
Taxes other than income taxes	101		102		203		208
Total operating expenses	1,078		924		2,123		1,853
Operating Income	478		441		992		863
Other Income and (Expense):
Allowance for equity funds used during construction	12		11		24		22
Interest expense, net of amounts capitalized	(84)		(83)		(168)		(171)
Other income (expense), net	33		26		62		48
Total other income and (expense)	(39)		(46)		(82)		(101)
Earnings Before Income Taxes	439		395		910		762
Income taxes	104		93		213		177
Net Income	335		302		697		585
Dividends on Preferred Stock	4		4		7		7
Net Income After Dividends on Preferred Stock	$	331	$	298	$	690	$	578

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021		2020
	(in millions)				(in millions)
Net Income	$	335	$	302	$	697	$	585
Other comprehensive income (loss):
Qualifying hedges:
Reclassification adjustment for amounts included in net income,    net of tax of $0, $0, $1, and $1, respectively	1		1		2		2
Total other comprehensive income (loss)	1		1		2		2
Comprehensive Income	$	336	$	303	$	699	$	587

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

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ALABAMA POWER COMPANY

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

	For the Six Months Ended June 30,
	2021		2020
	(in millions)
Operating Activities:
Net income	$	697	$	585
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total	496		484
Deferred income taxes	87		38
Pension, postretirement, and other employee benefits	(39)		(50)
Settlement of asset retirement obligations	(104)		(100)
Other, net	(35)		24
Changes in certain current assets and liabilities —
-Receivables	(85)		6
-Fossil fuel stock	21		(38)
-Prepayments	(53)		(62)
-Materials and supplies	(7)		(38)
-Other current assets	(37)		(34)
-Accounts payable	(236)		(232)
-Accrued taxes	20		197
-Accrued compensation	(60)		(75)
-Retail fuel cost over recovery	(18)		66
-Other current liabilities	(63)		(97)
Net cash provided from operating activities	584		674
Investing Activities:
Property additions	(844)		(686)
Nuclear decommissioning trust fund purchases	(473)		(160)
Nuclear decommissioning trust fund sales	473		160
Cost of removal, net of salvage	(56)		(29)
Change in construction payables	25		(53)
Other investing activities	(18)		(15)
Net cash used for investing activities	(893)		(783)
Financing Activities:
Proceeds —
Senior notes	600		0
Pollution control revenue bonds	0		87
Redemptions —
Senior notes	(200)		0
Pollution control revenue bonds	0		(87)
Capital contributions from parent company	624		610
Payment of common stock dividends	(492)		(479)
Other financing activities	(26)		(15)
Net cash provided from financing activities	506		116
Net Change in Cash, Cash Equivalents, and Restricted Cash	197		7
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	530		894
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	727	$	901
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $7 capitalized for both 2021 and 2020)	$	154	$	161
Income taxes, net	171		0
Noncash transactions —
Accrued property additions at end of period	191		147
Right-of-use assets obtained under leases	2		3

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

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ALABAMA POWER COMPANY

CONDENSED BALANCE SHEETS (UNAUDITED)

Assets	At June 30, 2021		At December 31, 2020
	(in millions)
Current Assets:
Cash and cash equivalents	$	727	$	530
Receivables —
Customer accounts	402		429
Unbilled revenues	180		152
Affiliated	40		31
Other accounts and notes	80		66
Accumulated provision for uncollectible accounts	(25)		(43)
Fossil fuel stock	214		235
Materials and supplies	550		546
Prepaid expenses	94		42
Other regulatory assets	221		226
Other current assets	88		33
Total current assets	2,571		2,247
Property, Plant, and Equipment:
In service	32,390		31,816
Less: Accumulated provision for depreciation	10,229		10,009
Plant in service, net of depreciation	22,161		21,807
Nuclear fuel, at amortized cost	254		270
Construction work in progress	978		866
Total property, plant, and equipment	23,393		22,943
Other Property and Investments:
Nuclear decommissioning trusts, at fair value	1,251		1,157
Equity investments in unconsolidated subsidiaries	64		63
Miscellaneous property and investments	127		131
Total other property and investments	1,442		1,351
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization	130		151
Deferred charges related to income taxes	237		235
Regulatory assets – asset retirement obligations	1,437		1,441
Other regulatory assets, deferred	2,168		2,162
Other deferred charges and assets	313		273
Total deferred charges and other assets	4,285		4,262
Total Assets	$	31,691	$	30,803

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

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ALABAMA POWER COMPANY

CONDENSED BALANCE SHEETS (UNAUDITED)

Liabilities and Stockholder's Equity	At June 30, 2021		At December 31, 2020
	(in millions)
Current Liabilities:
Securities due within one year	$	616	$	311
Accounts payable —
Affiliated	290		316
Other	378		545
Customer deposits	106		104
Accrued taxes	173		152
Accrued interest	93		90
Accrued compensation	176		212
Asset retirement obligations	296		254
Other regulatory liabilities	37		108
Other current liabilities	119		107
Total current liabilities	2,284		2,199
Long-term Debt	8,649		8,558
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	3,390		3,273
Deferred credits related to income taxes	1,988		2,016
Accumulated deferred ITCs	91		94
Employee benefit obligations	173		214
Operating lease obligations	100		119
Asset retirement obligations, deferred	3,651		3,720
Other cost of removal obligations	291		335
Other regulatory liabilities, deferred	93		124
Other deferred credits and liabilities	53		50
Total deferred credits and other liabilities	9,830		9,945
Total Liabilities	20,763		20,702
Redeemable Preferred Stock	291		291
Common Stockholder's Equity (See accompanying statements)	10,637		9,810
Total Liabilities and Stockholder's Equity	$	31,691	$	30,803

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

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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, 2019	31	$	1,222	$	4,755	$	3,001	$	(23)	$	8,955
Net income after dividends on    preferred stock	—	—		—		280		—		280
Capital contributions from parent company	—	—		612		—		—		612
Other comprehensive income	—	—		—		—		1		1
Cash dividends on common stock	—	—		—		(239)		—		(239)
Balance at March 31, 2020	31	1,222		5,367		3,042		(22)		9,609
Net income after dividends on    preferred stock	—	—		—		298		—		298
Capital contributions from parent company	—	—		1		—		—		1
Other comprehensive income	—	—		—		—		1		1
Cash dividends on common stock	—	—		—		(239)		—		(239)
Balance at June 30, 2020	31	$	1,222	$	5,368	$	3,101	$	(21)	$	9,670
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

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

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GEORGIA POWER COMPANY

CONDENSED STATEMENTS OF INCOME (UNAUDITED)

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021		2020
	(in millions)				(in millions)
Operating Revenues:
Retail revenues	$	2,026	$	1,760	$	3,813	$	3,435
Wholesale revenues	36		25		80		51
Other revenues	163		143		302		268
Total operating revenues	2,225		1,928		4,195		3,754
Operating Expenses:
Fuel	343		226		656		458
Purchased power, non-affiliates	144		133		288		262
Purchased power, affiliates	149		122		285		251
Other operations and maintenance	542		463		1,015		928
Depreciation and amortization	342		354		680		707
Taxes other than income taxes	118		108		235		221
Estimated loss on Plant Vogtle Units 3 and 4	460		149		508		149
Total operating expenses	2,098		1,555		3,667		2,976
Operating Income	127		373		528		778
Other Income and (Expense):
Allowance for equity funds used during construction	30		20		61		40
Interest expense, net of amounts capitalized	(106)		(105)		(210)		(216)
Other income (expense), net	42		31		83		63
Total other income and (expense)	(34)		(54)		(66)		(113)
Earnings Before Income Taxes	93		319		462		665
Income taxes (benefit)	(50)		11		(32)		27
Net Income	$	143	$	308	$	494	$	638

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021		2020
	(in millions)				(in millions)
Net Income	$	143	$	308	$	494	$	638
Other comprehensive income (loss):
Qualifying hedges:
Changes in fair value, net of tax of    $0, $0, $0, and $(1), respectively	0		0		0		(2)
Reclassification adjustment for amounts included in net income,    net of tax of $1, $1, $1, and $1, respectively	1		2		3		3
Total other comprehensive income (loss)	1		2		3		1
Comprehensive Income	$	144	$	310	$	497	$	639

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

23

    Table of Contents                                Index to Financial Statements

GEORGIA POWER COMPANY

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

	For the Six Months Ended June 30,
	2021		2020
	(in millions)
Operating Activities:
Net income	$	494	$	638
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total	772		800
Deferred income taxes	(309)		(202)
Allowance for equity funds used during construction	(61)		(40)
Pension, postretirement, and other employee benefits	(59)		(55)
Settlement of asset retirement obligations	(100)		(78)
Storm damage accruals	107		107
Estimated loss on Plant Vogtle Units 3 and 4	508		149
Other, net	90		19
Changes in certain current assets and liabilities —
-Receivables	(73)		(73)
-Fossil fuel stock	55		(52)
-Materials and supplies	(46)		(61)
-Other current assets	15		(26)
-Accounts payable	83		0
-Accrued taxes	14		87
-Accrued compensation	(39)		(69)
-Retail fuel cost over recovery	(113)		109
-Customer refunds	(6)		(159)
-Other current liabilities	(19)		30
Net cash provided from operating activities	1,313		1,124
Investing Activities:
Property additions	(1,575)		(1,650)
Nuclear decommissioning trust fund purchases	(458)		(365)
Nuclear decommissioning trust fund sales	453		359
Cost of removal, net of salvage	(73)		(62)
Change in construction payables, net of joint owner portion	(72)		(48)
Proceeds from dispositions	3		143
Other investing activities	(8)		(36)
Net cash used for investing activities	(1,730)		(1,659)
Financing Activities:
Increase (decrease) in notes payable, net	250		(25)
Proceeds —
Senior notes	750		1,500
Pollution control revenue bonds	0		53
FFB loan	371		519
Short-term borrowings	0		250
Redemptions and repurchases —
Senior notes	(325)		(950)
Pollution control revenue bonds	(69)		(148)
FFB loan	(45)		(32)
Capital contributions from parent company	368		500
Payment of common stock dividends	(824)		(771)
Other financing activities	(19)		(27)
Net cash provided from financing activities	457		869
Net Change in Cash, Cash Equivalents, and Restricted Cash	40		334
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	9		52
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	49	$	386
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $30 and $22 capitalized for 2021 and 2020, respectively)	$	182	$	180
Income taxes, net	139		0
Noncash transactions —
Accrued property additions at end of period	476		478
Right-of-use assets obtained under operating leases	3		29

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

24

    Table of Contents                                Index to Financial Statements

GEORGIA POWER COMPANY

CONDENSED BALANCE SHEETS (UNAUDITED)

Assets	At June 30, 2021		At December 31, 2020
	(in millions)
Current Assets:
Cash and cash equivalents	$	49	$	9
Receivables —
Customer accounts	601		621
Unbilled revenues	334		233
Joint owner accounts	98		123
Affiliated	27		21
Other accounts and notes	40		67
Accumulated provision for uncollectible accounts	(3)		(26)
Fossil fuel stock	223		278
Materials and supplies	631		592
Regulatory assets – storm damage	150		213
Regulatory assets – asset retirement obligations	183		166
Other regulatory assets	240		248
Other current assets	140		143
Total current assets	2,713		2,688
Property, Plant, and Equipment:
In service	40,408		39,682
Less: Accumulated provision for depreciation	12,540		12,251
Plant in service, net of depreciation	27,868		27,431
Nuclear fuel, at amortized cost	562		548
Construction work in progress	7,062		6,857
Total property, plant, and equipment	35,492		34,836
Other Property and Investments:
Nuclear decommissioning trusts, at fair value	1,207		1,145
Equity investments in unconsolidated subsidiaries	51		51
Miscellaneous property and investments	66		63
Total other property and investments	1,324		1,259
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization	1,236		1,308
Deferred charges related to income taxes	535		527
Regulatory assets – asset retirement obligations, deferred	3,281		3,291
Other regulatory assets, deferred	2,550		2,692
Other deferred charges and assets	494		479
Total deferred charges and other assets	8,096		8,297
Total Assets	$	47,625	$	47,080

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

25

    Table of Contents                                Index to Financial Statements

GEORGIA POWER COMPANY

CONDENSED BALANCE SHEETS (UNAUDITED)

Liabilities and Stockholder's Equity	At June 30, 2021		At December 31, 2020
	(in millions)
Current Liabilities:
Securities due within one year	$	627	$	542
Notes payable	310		60
Accounts payable —
Affiliated	587		597
Other	755		753
Customer deposits	268		276
Accrued taxes	322		407
Accrued interest	138		130
Accrued compensation	164		233
Operating lease obligations	152		151
Asset retirement obligations	321		287
Over recovered fuel clause revenues	0		113
Other regulatory liabilities	277		228
Other current liabilities	230		254
Total current liabilities	4,151		4,031
Long-term Debt	13,023		12,428
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	3,138		3,272
Deferred credits related to income taxes	2,463		2,588
Accumulated deferred ITCs	322		273
Employee benefit obligations	518		586
Operating lease obligations, deferred	1,111		1,156
Asset retirement obligations, deferred	5,962		5,978
Other deferred credits and liabilities	391		267
Total deferred credits and other liabilities	13,905		14,120
Total Liabilities	31,079		30,579
Common Stockholder's Equity (See accompanying statements)	16,546		16,501
Total Liabilities and Stockholder's Equity	$	47,625	$	47,080

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

26

    Table of Contents                                Index to Financial Statements

GEORGIA POWER COMPANY

CONDENSED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY (UNAUDITED)

	Number of Common Shares Issued	Common Stock		Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
	(in millions)
Balance at December 31, 2019	9	$	398	$	10,962	$	3,756	$	(51)	$	15,065
Net income	—	—		—		331		—		331
Capital contributions from parent company	—	—		502		—		—		502
Other comprehensive income (loss)	—	—		—		—		(1)		(1)
Cash dividends on common stock	—	—		—		(385)		—		(385)
Balance at March 31, 2020	9	398		11,464		3,702		(52)		15,512
Net income	—	—		—		308		—		308
Capital contributions from parent company	—	—		1		—		—		1
Other comprehensive income	—	—		—		—		2		2
Cash dividends on common stock	—	—		—		(386)		—		(386)
Balance at June 30, 2020	9	$	398	$	11,465	$	3,624	$	(50)	$	15,437
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

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

27

    Table of Contents                                Index to Financial Statements

MISSISSIPPI POWER COMPANY

CONDENSED STATEMENTS OF INCOME (UNAUDITED)

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021		2020
	(in millions)				(in millions)
Operating Revenues:
Retail revenues	$	219	$	199	$	422	$	398
Wholesale revenues, non-affiliates	54		52		117		103
Wholesale revenues, affiliates	25		25		57		47
Other revenues	5		7		14		11
Total operating revenues	303		283		610		559
Operating Expenses:
Fuel	91		83		192		162
Purchased power	11		7		16		12
Other operations and maintenance	76		67		144		142
Depreciation and amortization	44		46		91		88
Taxes other than income taxes	32		30		63		59
Total operating expenses	254		233		506		463
Operating Income	49		50		104		96
Other Income and (Expense):
Interest expense, net of amounts capitalized	(14)		(15)		(29)		(31)
Other income (expense), net	11		6		20		14
Total other income and (expense)	(3)		(9)		(9)		(17)
Earnings Before Income Taxes	46		41		95		79
Income taxes	8		2		12		8
Net Income	$	38	$	39	$	83	$	71

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021		2020
	(in millions)				(in millions)
Net Income	$	38	$	39	$	83	$	71
Other comprehensive income (loss):
Qualifying hedges:
Changes in fair value, net of tax of    $0, $0, $0, and $0, respectively	0		0		0		(1)
Reclassification adjustment for amounts included in net income,    net of tax of $0, $0, $0, and $0, respectively	0		0		1		1
Total other comprehensive income (loss)	0		0		1		0
Comprehensive Income	$	38	$	39	$	84	$	71

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

28

    Table of Contents                                Index to Financial Statements

MISSISSIPPI POWER COMPANY

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

	For the Six Months Ended June 30,
	2021		2020
	(in millions)
Operating Activities:
Net income	$	83	$	71
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total	106		92
Settlement of asset retirement obligations	(12)		(9)
Other, net	(16)		(4)
Changes in certain current assets and liabilities —
-Other current assets	(3)		(13)
-Accounts payable	(33)		(19)
-Accrued taxes	(51)		(21)
-Accrued compensation	(10)		(15)
-Retail fuel cost over recovery	(15)		(1)
-Other current liabilities	(8)		(10)
Net cash provided from operating activities	41		71
Investing Activities:
Property additions	(90)		(111)
Construction payables	(3)		(14)
Payments pursuant to LTSAs	(14)		(10)
Other investing activities	(10)		(10)
Net cash used for investing activities	(117)		(145)
Financing Activities:
Increase (decrease) in notes payable, net	(25)		4
Proceeds —
Senior notes	525		0
Short-term borrowings	0		40
Pollution control revenue bonds	0		34
Other long-term debt	0		100
Redemptions —
Senior notes	0		(275)
Short-term borrowings	0		(40)
Pollution control revenue bonds	0		(41)
Capital contributions from parent company	101		75
Return of capital to parent company	0		(74)
Payment of common stock dividends	(79)		0
Other financing activities	(7)		(1)
Net cash provided from (used for) financing activities	515		(178)
Net Change in Cash, Cash Equivalents, and Restricted Cash	439		(252)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	39		286
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	478	$	34
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $0 capitalized for both 2021 and 2020)	$	31	$	33
Income taxes, net	7		0
Noncash transactions — Accrued property additions at end of period	31		21

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

29

    Table of Contents                                Index to Financial Statements

MISSISSIPPI POWER COMPANY

CONDENSED BALANCE SHEETS (UNAUDITED)

Assets	At June 30, 2021		At December 31, 2020
	(in millions)
Current Assets:
Cash and cash equivalents	$	478	$	39
Receivables —
Customer accounts, net	38		34
Unbilled revenues	42		38
Affiliated	26		32
Other accounts and notes	30		32
Fossil fuel stock	25		24
Materials and supplies	68		65
Other regulatory assets	53		60
Other current assets	41		20
Total current assets	801		344
Property, Plant, and Equipment:
In service	5,053		5,011
Less: Accumulated provision for depreciation	1,556		1,545
Plant in service, net of depreciation	3,497		3,466
Construction work in progress	126		146
Total property, plant, and equipment	3,623		3,612
Other Property and Investments	180		151
Deferred Charges and Other Assets:
Deferred charges related to income taxes	31		32
Regulatory assets – asset retirement obligations	213		201
Other regulatory assets, deferred	375		388
Accumulated deferred income taxes	123		129
Other deferred charges and assets	66		55
Total deferred charges and other assets	808		805
Total Assets	$	5,412	$	4,912

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

30

    Table of Contents                                Index to Financial Statements

MISSISSIPPI POWER COMPANY

CONDENSED BALANCE SHEETS (UNAUDITED)

Liabilities and Stockholder's Equity	At June 30, 2021		At December 31, 2020
	(in millions)
Current Liabilities:
Securities due within one year	$	421	$	406
Notes payable	0		25
Accounts payable —
Affiliated	71		63
Other	66		109
Accrued taxes	63		114
Accrued interest	15		15
Accrued compensation	24		34
Asset retirement obligations	36		27
Over recovered regulatory clause liabilities	12		34
Other regulatory liabilities	62		49
Other current liabilities	51		40
Total current liabilities	821		916
Long-term Debt	1,512		1,013
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	460		447
Deferred credits related to income taxes	283		287
Employee benefit obligations	102		113
Asset retirement obligations, deferred	135		150
Other cost of removal obligations	193		194
Other regulatory liabilities, deferred	26		15
Other deferred credits and liabilities	31		35
Total deferred credits and other liabilities	1,230		1,241
Total Liabilities	3,563		3,170
Common Stockholder's Equity (See accompanying statements)	1,849		1,742
Total Liabilities and Stockholder's Equity	$	5,412	$	4,912

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

31

    Table of Contents                                Index to Financial Statements

MISSISSIPPI POWER COMPANY

CONDENSED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY (UNAUDITED)

	Number of Common Shares Issued	Common Stock		Paid-In Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income (Loss)		Total
	(in millions)
Balance at December 31, 2019	1	$	38	$	4,449	$	(2,832)	$	(3)	$	1,652
Net income	—	—		—		32		—		32
Capital contributions from parent company	—	—		76		—		—		76
Return of capital to parent company	—	—		(37)		—		—		(37)
Other	—	—		(1)		—		—		(1)
Balance at March 31, 2020	1	38		4,487		(2,800)		(3)		1,722
Net income	—	—		—		39		—		39
Return of capital to parent company	—	—		(37)		—		—		(37)
Balance at June 30, 2020	1	$	38	$	4,450	$	(2,761)	$	(3)	$	1,724
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		0
Balance at June 30, 2021	1	$	38	$	4,562	$	(2,750)	$	(1)	$	1,849

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

32

    Table of Contents                                Index to Financial Statements

SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021		2020
	(in millions)				(in millions)
Operating Revenues:
Wholesale revenues, non-affiliates	$	373	$	343	$	728	$	629
Wholesale revenues, affiliates	112		92		193		178
Other revenues	5		4		9		7
Total operating revenues	490		439		930		814
Operating Expenses:
Fuel	140		102		281		209
Purchased power	25		18		46		32
Other operations and maintenance	111		77		211		156
Depreciation and amortization	132		121		251		239
Taxes other than income taxes	12		10		24		19
(Gain) loss on dispositions, net	0		0		(39)		(39)
Total operating expenses	420		328		774		616
Operating Income	70		111		156		198
Other Income and (Expense):
Interest expense, net of amounts capitalized	(37)		(38)		(75)		(77)
Other income (expense), net	1		1		8		4
Total other income and (expense)	(36)		(37)		(67)		(73)
Earnings Before Income Taxes	34		74		89		125
Income taxes (benefit)	(2)		6		(11)		13
Net Income	36		68		100		112
Net income (loss) attributable to noncontrolling interests	0		5		(33)		(26)
Net Income Attributable to Southern Power	$	36	$	63	$	133	$	138

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021		2020
	(in millions)				(in millions)
Net Income	$	36	$	68	$	100	$	112
Other comprehensive income (loss):
Qualifying hedges:
Changes in fair value, net of tax of    $2, $4, $(8), and $(17), respectively	6		11		(26)		(50)
Reclassification adjustment for amounts included in net income,    net of tax of $(3), $(5), $13, and $5, respectively	(9)		(15)		38		13
Pension and other postretirement benefit plans:
Reclassification adjustment for amounts included in net income,    net of tax of $1, $0, $1, and $0, respectively	0		1		1		1
Total other comprehensive income (loss)	(3)		(3)		13		(36)
Comprehensive Income	33		65		113		76
Comprehensive income (loss) attributable to noncontrolling interests	0		5		(33)		(26)
Comprehensive Income Attributable to Southern Power	$	33	$	60	$	146	$	102

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

33

    Table of Contents                                Index to Financial Statements

SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	For the Six Months Ended June 30,
	2021		2020
	(in millions)
Operating Activities:
Net income	$	100	$	112
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total	264		251
Deferred income taxes	(20)		(34)
Utilization of federal investment tax credits	205		0
Amortization of investment tax credits	(29)		(30)
(Gain) loss on dispositions, net	(39)		(39)
Other, net	(18)		(31)
Changes in certain current assets and liabilities —
-Receivables	(91)		(67)
-Prepaid income taxes	28		73
-Other current assets	2		(8)
-Accounts payable	14		(29)
-Accrued taxes	8		16
-Other current liabilities	(13)		(19)
Net cash provided from operating activities	411		195
Investing Activities:
Business acquisitions, net of cash acquired	(345)		(81)
Property additions	(224)		(101)
Proceeds from dispositions	17		660
Change in construction payables	(14)		(4)
Payments pursuant to LTSAs	(47)		(31)
Other investing activities	12		47
Net cash provided from (used for) investing activities	(601)		490
Financing Activities:
Decrease in notes payable, net	(56)		(357)
Proceeds — Senior notes	400		0
Redemptions —
Short-term borrowings	0		(100)
Senior notes	0		(300)
Return of capital to parent company	(271)		0
Capital contributions from noncontrolling interests	343		172
Distributions to noncontrolling interests	(113)		(118)
Payment of common stock dividends	(102)		(100)
Other financing activities	(5)		(5)
Net cash provided from (used for) financing activities	196		(808)
Net Change in Cash, Cash Equivalents, and Restricted Cash	6		(123)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	183		279
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	189	$	156
Supplemental Cash Flow Information:
Cash paid (received) during the period for —
Interest (net of $2 and $7 capitalized for 2021 and 2020, respectively)	$	91	$	96
Income taxes, net	(189)		(5)
Noncash transactions —
Contributions from noncontrolling interests	89		9
Contributions of wind turbine equipment	82		17
Accrued property additions at end of period	59		38
Right-of-use assets obtained under operating leases	65		30

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

34

    Table of Contents                                Index to Financial Statements

SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

Assets	At June 30, 2021		At December 31, 2020
	(in millions)
Current Assets:
Cash and cash equivalents	$	165	$	182
Receivables —
Customer accounts, net	168		125
Affiliated	52		37
Other	48		27
Materials and supplies	101		157
Prepaid income taxes	153		11
Other current assets	56		36
Total current assets	743		575
Property, Plant, and Equipment:
In service	14,372		13,904
Less: Accumulated provision for depreciation	2,991		2,842
Plant in service, net of depreciation	11,381		11,062
Construction work in progress	250		127
Total property, plant, and equipment	11,631		11,189
Other Property and Investments:
Intangible assets, net of amortization of $99 and $89, respectively	292		302
Equity investments in unconsolidated subsidiaries	84		19
Total other property and investments	376		321
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization	476		415
Prepaid LTSAs	179		155
Accumulated deferred income taxes	0		262
Income taxes receivable, non-current	31		25
Other deferred charges and assets	272		293
Total deferred charges and other assets	958		1,150
Total Assets	$	13,708	$	13,235

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

35

    Table of Contents                                Index to Financial Statements

SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

Liabilities and Stockholders' Equity	At June 30, 2021		At December 31, 2020
	(in millions)
Current Liabilities:
Securities due within one year	$	1,012	$	299
Notes payable	119		175
Accounts payable —
Affiliated	75		65
Other	90		92
Accrued taxes —
Accrued income taxes	7		8
Other accrued taxes	20		22
Accrued interest	24		32
Other current liabilities	116		132
Total current liabilities	1,463		825
Long-term Debt	3,036		3,393
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	221		123
Accumulated deferred ITCs	1,643		1,672
Operating lease obligations	488		426
Other deferred credits and liabilities	167		165
Total deferred credits and other liabilities	2,519		2,386
Total Liabilities	7,018		6,604
Total Stockholders' Equity (See accompanying statements)	6,690		6,631
Total Liabilities and Stockholders' Equity	$	13,708	$	13,235

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

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SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)

	Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Common Stockholders' Equity		Noncontrolling Interests		Total
	(in millions)
Balance at December 31, 2019	$	909	$	1,485	$	(26)	$	2,368	$	4,254	$	6,622
Net income (loss)	—		75		—		75		(31)		44
Other comprehensive income (loss)	—		—		(33)		(33)		—		(33)
Cash dividends on common stock	—		(50)		—		(50)		—		(50)
Capital contributions from    noncontrolling interests	—		—		—		—		16		16
Distributions to noncontrolling interests	—		—		—		—		(48)		(48)
Balance at March 31, 2020	909		1,510		(59)		2,360		4,191		6,551
Net income	—		63		—		63		5		68
Other comprehensive income (loss)	—		—		(3)		(3)		—		(3)
Cash dividends on common stock	—		(50)		—		(50)		—		(50)
Capital contributions from    noncontrolling interests	—		—		—		—		165		165
Distributions to noncontrolling interests	—		—		—		—		(70)		(70)
Other	(2)		—		—		(2)		—		(2)
Balance at June 30, 2020	$	907	$	1,523	$	(62)	$	2,368	$	4,291	$	6,659

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SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)

	Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Common Stockholders' Equity		Noncontrolling 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

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

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SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021		2020
	(in millions)				(in millions)
Operating Revenues:
Natural gas revenues (includes revenue taxes of    $23, $22, $77, and $69, respectively)	$	675	$	638	$	2,367	$	1,878
Alternative revenue programs	2		(2)		4		7
Total operating revenues	677		636		2,371		1,885
Operating Expenses:
Cost of natural gas	231		144		814		583
Other operations and maintenance	233		220		532		479
Depreciation and amortization	133		123		263		243
Taxes other than income taxes	49		47		130		118
Total operating expenses	646		534		1,739		1,423
Operating Income	31		102		632		462
Other Income and (Expense):
Earnings (loss) from equity method investments	(52)		30		(11)		72
Interest expense, net of amounts capitalized	(59)		(57)		(118)		(114)
Other income (expense), net	(14)		12		(78)		21
Total other income and (expense)	(125)		(15)		(207)		(21)
Earnings (Loss) Before Income Taxes	(94)		87		425		441
Income taxes (benefit)	(29)		16		92		95
Net Income (Loss)	$	(65)	$	71	$	333	$	346

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021		2020
	(in millions)				(in millions)
Net Income (Loss)	$	(65)	$	71	$	333	$	346
Other comprehensive income (loss):
Qualifying hedges:
Changes in fair value, net of tax of    $3, $(1), $3, and $(8), respectively	8		(1)		9		(21)
Reclassification adjustment for amounts included in net income,    net of tax of $0, $0, $1, and $2, respectively	0		1		3		6
Total other comprehensive income (loss)	8		0		12		(15)
Comprehensive Income (Loss)	$	(57)	$	71	$	345	$	331

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

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SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	For the Six Months Ended June 30,
	2021		2020
	(in millions)
Operating Activities:
Net income	$	333	$	346
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total	263		243
Deferred income taxes	110		40
Mark-to-market adjustments	137		34
Impairment of PennEast Pipeline investment	82		0
Natural gas cost under recovery – long-term	(119)		0
Other, net	15		11
Changes in certain current assets and liabilities —
-Receivables	262		344
-Natural gas for sale, net of temporary LIFO liquidation	375		182
-Prepaid income taxes	(129)		14
-Natural gas cost under recovery	(485)		0
-Other current assets	7		(8)
-Accounts payable	(42)		(176)
-Accrued compensation	17		(31)
-Other current liabilities	(104)		47
Net cash provided from operating activities	722		1,046
Investing Activities:
Property additions	(635)		(647)
Cost of removal, net of salvage	(44)		(31)
Investment in unconsolidated subsidiaries	(3)		(78)
Proceeds from dispositions	0		178
Other investing activities	14		8
Net cash used for investing activities	(668)		(570)
Financing Activities:
Increase (decrease) in notes payable, net	210		(321)
Proceeds — Short-term borrowings	300		0
Redemptions —
Senior notes	(300)		0
Medium-term notes	(30)		0
Capital contributions from parent company	60		186
Payment of common stock dividends	(265)		(266)
Net cash used for financing activities	(25)		(401)
Net Change in Cash, Cash Equivalents, and Restricted Cash	29		75
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	19		49
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	48	$	124
Supplemental Cash Flow Information:
Cash paid (received) during the period for —
Interest (net of $3 and $4 capitalized for 2021 and 2020, respectively)	$	127	$	119
Income taxes, net	100		(4)
Noncash transactions — Accrued property additions at end of period	137		123

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)

Assets	At June 30, 2021		At December 31, 2020
	(in millions)
Current Assets:
Cash and cash equivalents	$	37	$	17
Receivables —
Energy marketing	0		516
Customer accounts	283		353
Unbilled revenues	74		219
Affiliated	3		4
Other accounts and notes	31		51
Accumulated provision for uncollectible accounts	(45)		(40)
Natural gas for sale	178		460
Prepaid expenses	162		48
Assets from risk management activities, net of collateral	22		118
Natural gas cost under recovery	485		0
Assets held for sale	736		0
Other regulatory assets	97		102
Other current assets	40		38
Total current assets	2,103		1,886
Property, Plant, and Equipment:
In service	18,051		17,611
Less: Accumulated depreciation	4,942		4,821
Plant in service, net of depreciation	13,109		12,790
Construction work in progress	790		648
Total property, plant, and equipment	13,899		13,438
Other Property and Investments:
Goodwill	5,015		5,015
Equity investments in unconsolidated subsidiaries	1,189		1,290
Other intangible assets, net of amortization of $138 and $195, respectively	44		51
Miscellaneous property and investments	19		19
Total other property and investments	6,267		6,375
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization	72		81
Other regulatory assets, deferred	697		615
Other deferred charges and assets	197		235
Total deferred charges and other assets	966		931
Total Assets	$	23,235	$	22,630

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

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SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

Liabilities and Stockholder's Equity	At June 30, 2021		At December 31, 2020
	(in millions)
Current Liabilities:
Securities due within one year	$	48	$	333
Notes payable	834		324
Energy marketing trade payables	0		494
Accounts payable —
Affiliated	50		56
Other	311		373
Customer deposits	75		90
Accrued taxes	79		83
Accrued interest	55		58
Accrued compensation	105		106
Temporary LIFO liquidation	182		0
Liabilities held for sale	677		0
Other regulatory liabilities	39		122
Other current liabilities	125		150
Total current liabilities	2,580		2,189
Long-term Debt	6,234		6,293
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	1,413		1,265
Deferred credits related to income taxes	831		847
Employee benefit obligations	267		283
Operating lease obligations	59		67
Other cost of removal obligations	1,673		1,649
Accrued environmental remediation	208		216
Other deferred credits and liabilities	41		54
Total deferred credits and other liabilities	4,492		4,381
Total Liabilities	13,306		12,863
Common Stockholder's Equity (See accompanying statements)	9,929		9,767
Total Liabilities and Stockholder's Equity	$	23,235	$	22,630

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

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SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (UNAUDITED)

	Paid-In Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income (Loss)		Total
	(in millions)
Balance at December 31, 2019	$	9,697	$	(198)	$	7	$	9,506
Net income	—		275		—		275
Return of capital to parent company	(2)		—		—		(2)
Other comprehensive income (loss)	—		—		(15)		(15)
Cash dividends on common stock	—		(133)		—		(133)
Balance at March 31, 2020	9,695		(56)		(8)		9,631
Net income	—		71		—		71
Capital contributions from parent company	200		—		—		200
Cash dividends on common stock	—		(133)		—		(133)
Balance at June 30, 2020	$	9,895	$	(118)	$	(8)	$	9,769
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

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

Note		Page
A	Introduction	45
B	Regulatory Matters	48
C	Contingencies	57
D	Revenue from Contracts with Customers and Lease Income	60
E	Consolidated Entities and Equity Method Investments	67
F	Financing	69
G	Income Taxes	70
H	Retirement Benefits	71
I	Fair Value Measurements	74
J	Derivatives	79
K	Acquisitions and Dispositions	91
L	Segment and Related Information	93

INDEX TO APPLICABLE NOTES TO FINANCIAL STATEMENTS BY REGISTRANT

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

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

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

(A) INTRODUCTION

The condensed quarterly financial statements of each Registrant included herein have been prepared by such Registrant, without audit, pursuant to the rules and regulations of the SEC. The Condensed Balance Sheets at December 31, 2020 have been derived from the audited financial statements of each Registrant. In the opinion of each Registrant's management, the information regarding such Registrant furnished herein reflects all adjustments, which, except as otherwise disclosed, are of a normal recurring nature, necessary to present fairly the results of operations for the periods ended June 30, 2021 and 2020. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although each Registrant believes that the disclosures regarding such Registrant are adequate to make the information presented not misleading. Disclosures which would substantially duplicate the disclosures in the Form 10-K and details which have not changed significantly in amount or composition since the filing of the Form 10-K are generally omitted from this Quarterly Report on Form 10-Q unless specifically required by GAAP. Therefore, these Condensed Financial Statements should be read in conjunction with the financial statements and the notes thereto included in the Form 10-K. Due to the seasonal variations in the demand for energy and other factors, including the impacts of the COVID-19 pandemic, operating results for the periods presented are not necessarily indicative of the operating results to be expected for the full year.

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

Goodwill and Other Intangible Assets

Goodwill at June 30, 2021 and December 31, 2020 was as follows:

	Goodwill
	(in millions)
Southern Company	$	5,280
Southern Company Gas:
Gas distribution operations	$	4,034
Gas marketing services	981
Southern Company Gas total	$	5,015

Goodwill is not amortized but is subject to an annual impairment test in the fourth quarter of the year and on an interim basis as events and changes in circumstances occur.

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Other intangible assets were as follows:

	At June 30, 2021						At December 31, 2020
	Gross Carrying Amount		Accumulated Amortization		Other Intangible Assets, Net		Gross Carrying Amount		Accumulated Amortization		Other Intangible Assets, Net
	(in millions)						(in millions)
Southern Company
Other intangible assets subject to amortization:
Customer relationships	$	212	$	(142)	$	70	$	212	$	(135)	$	77
Trade names	64		(35)		29		64		(31)		33
Storage and transportation contracts(*)	0		0		0		64		(64)		0
PPA fair value adjustments	390		(99)		291		390		(89)		301
Other	11		(10)		1		10		(9)		1
Total other intangible assets subject to amortization	$	677	$	(286)	$	391	$	740	$	(328)	$	412
Other intangible assets not subject to amortization:
Federal Communications Commission licenses	75		—		75		75		—		75
Total other intangible assets	$	752	$	(286)	$	466	$	815	$	(328)	$	487
Southern Power
Other intangible assets subject to amortization:
PPA fair value adjustments	$	390	$	(99)	$	291	$	390	$	(89)	$	301
Southern Company Gas
Other intangible assets subject to amortization:
Gas marketing services
Customer relationships	$	156	$	(124)	$	32	$	156	$	(119)	$	37
Trade names	26		(14)		12		26		(12)		14
Wholesale gas services
Storage and transportation contracts(*)	0		0		0		64		(64)		0
Total other intangible assets subject to amortization	$	182	$	(138)	$	44	$	246	$	(195)	$	51

(*)See Note (K) under "Southern Company Gas" for information regarding the sale of Sequent.

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Amortization associated with other intangible assets was as follows:

	Three Months Ended		Six Months Ended
	June 30, 2021
	(in millions)
Southern Company(a)	$	10	$	21
Southern Power(b)	5		10
Southern Company Gas(c)	3		7

(a)Includes $5 million and $10 million for the three and six months ended June 30, 2021, respectively, recorded as a reduction to operating revenues.

(b)Recorded as a reduction to operating revenues.

(c)Relates to gas marketing services.

Cash, Cash Equivalents, and Restricted Cash

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

	Southern Company				Southern Power		Southern Company Gas
	June 30, 2021		December 31, 2020		June 30, 2021		June 30, 2021		December 31, 2020
	(in millions)				(in millions)		(in millions)
Cash and cash equivalents	$	1,582	$	1,065	$	165	$	37	$	17
Cash and cash equivalents classified as held for sale	8		0		0		8		0
Restricted cash(a):
Other current assets	2		2		0		2		2
Other deferred charges and assets	24		0		24		0		0
Total cash, cash equivalents, and restricted cash(b)	$	1,617	$	1,068	$	189	$	48	$	19

(a)For Southern Company Gas, reflects restricted cash held as collateral for workers' compensation, life insurance, and long-term disability insurance. For Southern Power, reflects restricted cash held for construction payables.

(b)Total may not add due to rounding.

Natural Gas for Sale

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

Southern Company Gas recorded no material adjustments to natural gas inventories for either period presented. Nicor Gas' inventory decrement at June 30, 2021 is expected to be restored prior to year end.

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

(B) REGULATORY MATTERS

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

The recovery balances for certain retail regulatory clauses of the traditional electric operating companies and Southern Company Gas at June 30, 2021 and December 31, 2020 were as follows:

Regulatory Clause	Balance Sheet Line Item	June 30, 2021		December 31, 2020
		(in millions)
Alabama Power
Rate CNP Compliance	Other regulatory liabilities, current	$	1	$	28
Rate CNP PPA	Other regulatory assets, deferred	64		58
Retail Energy Cost Recovery	Other regulatory liabilities, current	0		18
	Other regulatory assets, deferred	54		0
Natural Disaster Reserve	Other regulatory liabilities, deferred	36		77
Georgia Power
Fuel Cost Recovery	Over recovered fuel clause revenues	$	0	$	113
	Other deferred charges and assets	21		0
Mississippi Power
Fuel Cost Recovery	Over recovered regulatory clause liabilities	$	9	$	24
Ad Valorem Tax	Other regulatory assets, current	12		11
	Other regulatory assets, deferred	45		41
Property Damage Reserve	Other regulatory liabilities, deferred	0		4
	Other regulatory assets, deferred	5		0
Southern Company Gas
Natural Gas Cost Recovery(*)	Other regulatory liabilities	$	5	$	88
	Natural gas cost under recovery	485		0
	Other regulatory assets, deferred	119		0

(*)The significant change during the six months ended June 30, 2021 was primarily driven by an increase in the cost of gas purchased in February 2021 resulting from Winter Storm Uri.

Alabama Power

Certificate of Convenience and Necessity

Energy Alabama, Gasp, Inc., and the Sierra Club filed requests for reconsideration and rehearing with the Alabama PSC regarding the certificate of convenience and necessity (CCN) issued to Alabama Power in August 2020, which authorized, among other things, the construction of Plant Barry Unit 8 and the acquisition of the Central Alabama Generating Station. In December 2020, the Alabama PSC issued an order denying the requests. On January 7, 2021, Energy Alabama and Gasp, Inc. filed a judicial appeal regarding both the Alabama PSC's August 2020 CCN order and the December 2020 order denying reconsideration and rehearing. On March 9, 2021, the Circuit Court of Montgomery County, Alabama granted a motion by Alabama Power to intervene in the appeal. At June 30, 2021, expenditures associated with the construction of Plant Barry Unit 8 included in CWIP totaled approximately $188 million. The ultimate outcome of this matter cannot be determined at this time.

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Plant Greene County

Alabama Power jointly owns Plant Greene County with an affiliate, Mississippi Power. See Note 5 under "Joint Ownership Agreements" in Item 8 of the Form 10-K for additional information.

On April 15, 2021, Mississippi Power filed its 2021 IRP with the Mississippi PSC, which includes a schedule to retire its 40% ownership interest in Plant Greene County Units 1 and 2 in December 2025 and 2026, respectively, consistent with each unit's remaining useful life. Mississippi Power's IRP is subject to a review period during which the Mississippi PSC may note any deficiencies which could require re-evaluation or resubmission of the IRP. If no deficiencies are noted, the Mississippi PSC's review will conclude on August 13, 2021.

The Plant Greene County unit retirements identified by Mississippi Power require the completion of transmission and system reliability improvements, as well as agreement by Alabama Power. Alabama Power will continue to monitor the status of Mississippi Power's IRP and associated regulatory processes, as well as the transmission and system reliability improvements. Currently, Alabama Power plans to retire Plant Greene County Units 1 and 2 at the dates indicated. The ultimate outcome of this matter cannot be determined at this time.

Rate NDR

Based on an order from the Alabama PSC, when Alabama Power's NDR balance falls below $50 million, a reserve establishment charge will be activated and the ongoing reserve maintenance charge will be concurrently suspended until the NDR balance reaches $75 million. At June 30, 2021, Alabama Power's NDR balance was $36 million. As a result, effective with October 2021 billings, the reserve maintenance charge component of Rate NDR will be suspended and the reserve establishment charge will be activated. Alabama Power expects to collect approximately $4 million in the fourth quarter 2021 and $16 million annually under Rate NDR until the NDR balance is restored to $75 million.

Georgia Power

Rate Plan

Effective January 1, 2021, Georgia Power reduced its amortization of costs associated with CCR AROs by approximately $90 million as approved by the Georgia PSC in conjunction with Georgia Power's annual compliance filings.

In February 2020, the Georgia PSC denied a motion for reconsideration filed by the Sierra Club regarding the Georgia PSC's decision in the 2019 ARP allowing Georgia Power to recover compliance costs for CCR AROs, and, in December 2020, the Superior Court of Fulton County affirmed the decision of the Georgia PSC. On January 5, 2021, the Sierra Club filed a notice of appeal with the Georgia Court of Appeals. The ultimate outcome of this matter cannot be determined at this time.

See Note 6 to the financial statements in Item 8 of the Form 10-K for additional information regarding Georgia Power's AROs.

Plant Vogtle Unit 3 and Common Facilities Rate Proceeding

On June 15, 2021, Georgia Power filed an application with the Georgia PSC to adjust retail base rates to include the portion of costs related to its investment in Plant Vogtle Unit 3 and common facilities shared between Plant Vogtle Units 3 and 4 (Common Facilities) previously deemed prudent by the Georgia PSC ($2.38 billion), as well as the related costs of operation.

The request includes an annual rate increase totaling approximately $370 million to be effective the month after Unit 3 is placed in service. Unit 3 is projected to be placed in service in the second quarter 2022. This increase will be partially offset by a decrease in the NCCR tariff of approximately $116 million expected to be effective January 1, 2022. In addition, an estimated $45 million of fuel cost savings related to Unit 3 is already incorporated in Georgia Power's current fuel cost recovery rates.

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Georgia Power also is requesting to defer some of its 2022 financing costs (approximately $42 million) relating to the remaining portion of the total Unit 3 and Common Facilities construction costs not being recovered through the NCCR tariff until Unit 4 costs are placed in retail base rates.

The Georgia PSC is scheduled to issue a final order in this proceeding on November 2, 2021. The ultimate outcome of this matter cannot be determined at this time. See "Nuclear Construction" herein for additional information on Plant Vogtle Units 3 and 4.

Deferral of Incremental COVID-19 Costs

In June 2021, Georgia Power performed a review of bad debt amounts deferred under the Georgia PSC-approved methodology, including consideration of actual amounts repaid by customers from arrears and installment plans after the disconnection moratorium period ended in July 2020. As a result of the review, Georgia Power reduced the balance of deferred incremental costs by approximately $20 million. At June 30, 2021, the incremental costs deferred totaled approximately $20 million, including approximately $2 million of incremental bad debt costs and $18 million of other incremental costs. The period over which these costs will be recovered is expected to be determined in Georgia Power's next base rate case. The ultimate outcome of this matter cannot be determined at this time.

Nuclear Construction

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

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

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

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

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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 June 2022 and March 2023, respectively, is as follows:

	(in millions)
Base project capital cost forecast(a)(b)	$	9,096
Construction contingency estimate	119
Total project capital cost forecast(a)(b)	9,215
Net investment at June 30, 2021(b)	(7,856)
Remaining estimate to complete	$	1,359

(a)    Includes approximately $570 million of costs that are not shared with the other Vogtle Owners. Excludes financing costs expected to be capitalized through AFUDC of approximately $290 million, of which $143 million had been accrued through June 30, 2021.

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

Georgia Power estimates that its financing costs for construction of Plant Vogtle Units 3 and 4 will total approximately $3.2 billion, of which $2.7 billion had been incurred through June 30, 2021.

As part of its ongoing processes, Southern Nuclear continues to evaluate cost and schedule forecasts on a regular basis to incorporate current information available, particularly in the areas of engineering support, commodity installation, system turnovers and related test results, and workforce statistics. Southern Nuclear establishes aggressive target values for monthly construction production and system turnover activities. Southern Nuclear's site work plans continue to reflect this approach in support of safely completing Units 3 and 4, while achieving the required construction quality.

In mid-March 2020, Southern Nuclear began implementing policies and procedures designed to mitigate the risk of transmission of COVID-19 at the construction site, including worker distancing measures; isolating individuals who tested positive for COVID-19, showed symptoms consistent with COVID-19, were being tested for COVID-19, or were in close contact with such persons; requiring self-quarantine; and adopting additional precautionary measures. Since March 2020, the number of active cases at the site has fluctuated and impacted productivity levels and pace of activity completion. The site has experienced an overall decline in the number of active cases since a peak in January 2021. The lower productivity levels and slower pace of activity completion experienced since March 2020 contributed to a backlog to the aggressive site work plan established at the beginning of 2020. Georgia Power estimates the productivity impacts of the COVID-19 pandemic have consumed approximately three to four months of schedule margin previously embedded in the site work plan for Unit 3 and Unit 4. In addition, the project continued to face challenges including, but not limited to, higher than expected absenteeism; overall construction and subcontractor labor productivity; system turnover and testing activities; and electrical equipment and commodity installation. As a result of these factors, in January 2021, Southern Nuclear further extended certain milestone dates, including the start of hot functional testing and fuel load for Unit 3, from those established in October 2020.

Following the January 2021 milestone extensions, Southern Nuclear has been performing additional construction remediation work necessary to ensure quality and design standards are met as system turnovers are completed to support hot functional testing and fuel load for Unit 3. Hot functional testing for Unit 3 was completed in July 2021. As a result of challenges including, but not limited to, construction productivity, construction remediation work, the pace of system turnovers, spent fuel pool repairs, and the timeframe and duration for hot functional and other testing, at the end of the second quarter 2021, Southern Nuclear further extended certain milestone dates, including the fuel load for Unit 3, from those established in January 2021. The site work plan currently targets fuel load for Unit 3 in the fourth quarter 2021 and an in-service date of March 2022. As the site work plan includes minimal margin to these milestone dates, an in-service date in the second quarter 2022 for Unit 3 is projected, although any further delays could result in a later in-service date.

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As the result of productivity challenges, at the end of the second quarter 2021, Southern Nuclear also further extended milestone dates for Unit 4 from those established in January 2021. The site work plan targets an in-service date of November 2022 and primarily depends on overall construction productivity and production levels significantly improving as well as appropriate levels of craft laborers, particularly electricians and pipefitters, being added and maintained. As the site work plan includes minimal margin to the milestone dates, an in-service date in the first quarter 2023 for Unit 4 is projected, although any further delays could result in a later in-service date.

As of March 31, 2021, approximately $84 million of the construction contingency established in the fourth quarter 2020 was assigned to the base capital cost forecast for costs primarily associated with the schedule extension for Unit 3 to December 2021, construction productivity, support resources, and construction remediation work. Georgia Power increased its total capital cost forecast as of March 31, 2021 by adding $48 million to the remaining construction contingency. Considering the factors above, during the second quarter 2021, all of the remaining construction contingency previously established and an additional $341 million was assigned to the base capital cost forecast for costs primarily associated with the schedule extensions for Units 3 and 4 described above, construction remediation work for Unit 3, and construction productivity and support resources for Units 3 and 4. Georgia Power also increased its total capital cost forecast as of June 30, 2021 by adding $119 million to replenish construction contingency.

After considering the significant level of uncertainty that exists regarding the future recoverability of these costs since the ultimate outcome of these matters is subject to the outcome of future assessments by management, as well as Georgia PSC decisions in future regulatory proceedings, Georgia Power recorded pre-tax charges to income in the first quarter 2021 and the second quarter 2021 of $48 million ($36 million after tax) and $460 million ($343 million after tax), respectively, for the increases in the total project capital cost forecast. As and when these amounts are spent, Georgia Power may request the Georgia PSC to evaluate those expenditures for rate recovery.

In addition, the continuing effects of the COVID-19 pandemic could further disrupt or delay construction and testing activities at Plant Vogtle Units 3 and 4. Georgia Power's proportionate share of the estimated incremental cost associated with COVID-19 mitigation actions and impacts on construction productivity is currently estimated to be between $160 million and $200 million and is included in the total project capital cost forecast.

As construction, including subcontract work, continues and testing and system turnover activities increase, ongoing or future challenges with management of contractors and vendors; subcontractor performance; supervision of craft labor and related productivity, particularly in the installation of electrical, mechanical, and instrumentation and controls commodities, ability to attract and retain craft labor, and/or related cost escalation; procurement, fabrication, delivery, assembly, installation, system turnover, and the initial testing and start-up, including any required engineering changes or any remediation related thereto, of plant systems, structures, or components (some of which are based on new technology that only within the last few years began initial operation in the global nuclear industry at this scale), including the spent fuel pools, any of which may require additional labor and/or materials; or other issues could continue or arise and change the projected schedule and estimated cost.

There have been technical and procedural challenges to the construction and licensing of Plant Vogtle Units 3 and 4 at the federal and state level and additional challenges may arise. Processes are in place that are designed to ensure compliance with the requirements specified in the Westinghouse Design Control Document and the combined construction and operating licenses, including inspections by Southern Nuclear and the NRC that occur throughout construction. In connection with the additional construction remediation work described above, Southern Nuclear reviewed the project's construction quality programs and, where needed, is implementing improvement plans consistent with these processes. In June 2021, the NRC began a special inspection to review the root cause of this additional construction remediation work and the corresponding corrective action plans. Findings resulting from this or other inspections could require additional remediation and/or further NRC oversight. In addition, certain license amendment requests have been filed and approved or are pending before the NRC. On March 15, 2021, the NRC denied the Blue Ridge Environmental Defense League's (BREDL) December 2020 motion to reopen proceedings on BREDL's petition challenging a requested license amendment, which has been issued by the NRC staff.

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In September 2020, Southern Nuclear notified the NRC of its intent to load fuel for Unit 3 in 2021. Various design and other licensing-based compliance matters, including the timely submittal by Southern Nuclear of the ITAAC documentation for each unit and the related reviews and approvals by the NRC necessary to support NRC authorization to load fuel, have arisen or may arise, which may result in additional license amendments or require other resolution. If any license amendment requests or other licensing-based compliance issues, including inspections and ITAACs, are not resolved in a timely manner, there may be delays in the project schedule that could result in increased costs.

The ultimate outcome of these matters cannot be determined at this time. However, any extension of the in-service date beyond the second quarter 2022 for Unit 3 or the first quarter 2023 for Unit 4 is currently estimated to result in additional base capital costs for Georgia Power of approximately $25 million per month for Unit 3 and approximately $15 million per month for Unit 4, as well as the related AFUDC. While Georgia Power is not precluded from seeking recovery of any future capital cost forecast increase, management will ultimately determine whether or not to seek recovery. Any further changes to the capital cost forecast that are not expected to be recoverable through regulated rates will be required to be charged to income and such charges could be material.

Joint Owner Contracts

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

As a result of an increase in the total project capital cost forecast and Georgia Power's decision not to seek rate recovery of the increase in the base capital costs in conjunction with the nineteenth VCM report in 2018, the holders of at least 90% of the ownership interests in Plant Vogtle Units 3 and 4 were required to vote to continue construction. In September 2018, the Vogtle Owners unanimously voted to continue construction of Plant Vogtle Units 3 and 4.

Amendments to the Vogtle Joint Ownership Agreements

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

As previously disclosed, pursuant to the Global Amendments: (i) each Vogtle Owner must pay its proportionate share of qualifying construction costs for Plant Vogtle Units 3 and 4 based on its ownership percentage up to the estimated cost at completion (EAC) for Plant Vogtle Units 3 and 4 which formed the basis of Georgia Power's forecast of $8.4 billion in the nineteenth VCM plus $800 million; (ii) Georgia Power will be responsible for 55.7% of actual qualifying construction costs between $800 million and $1.6 billion over the EAC in the nineteenth VCM

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(resulting in $80 million of potential additional costs to Georgia Power), with the remaining Vogtle Owners responsible for 44.3% of such costs pro rata in accordance with their respective ownership interests; and (iii) Georgia Power will be responsible for 65.7% of qualifying construction costs between $1.6 billion and $2.1 billion over the EAC in the nineteenth VCM (resulting in a further $100 million of potential additional costs to Georgia Power), with the remaining Vogtle Owners responsible for 34.3% of such costs pro rata in accordance with their respective ownership interests. If the EAC is revised and exceeds the EAC in the nineteenth VCM by more than $2.1 billion, each of the other Vogtle Owners will have a one-time option at the time the project budget forecast is so revised to tender a portion of its ownership interest to Georgia Power in exchange for Georgia Power's agreement to pay 100% of such Vogtle Owner's remaining share of total construction costs in excess of the EAC in the nineteenth VCM plus $2.1 billion.

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

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

Regulatory Matters

In 2009, the Georgia PSC voted to certify construction of Plant Vogtle Units 3 and 4 with a certified capital cost of $4.418 billion. In addition, in 2009 the Georgia PSC approved inclusion of the Plant Vogtle Units 3 and 4 related CWIP accounts in rate base, and the State of Georgia enacted the Georgia Nuclear Energy Financing Act, which allows Georgia Power to recover financing costs for Plant Vogtle Units 3 and 4. Financing costs are recovered on all applicable certified costs through annual adjustments to the NCCR tariff up to the certified capital cost of $4.418 billion. At June 30, 2021, Georgia Power had recovered approximately $2.6 billion of financing costs. Financing costs related to capital costs above $4.418 billion are being recognized through AFUDC and are expected to be recovered through retail rates over the life of Plant Vogtle Units 3 and 4; however, Georgia Power will not record AFUDC related to any capital costs in excess of the total deemed reasonable by the Georgia PSC (currently $7.3 billion) and not requested for rate recovery. In November 2020, the Georgia PSC approved Georgia Power's request to decrease the NCCR tariff by $142 million annually, effective January 1, 2021.

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

In 2016, the Georgia PSC voted to approve a settlement agreement (Vogtle Cost Settlement Agreement) resolving certain prudency matters in connection with the fifteenth VCM report. In December 2017, the Georgia PSC voted to approve (and issued its related order on January 11, 2018) Georgia Power's seventeenth VCM report and modified the Vogtle Cost Settlement Agreement. The Vogtle Cost Settlement Agreement, as modified by the January 11, 2018 order, resolved the following regulatory matters related to Plant Vogtle Units 3 and 4: (i) none of the $3.3 billion of costs incurred through December 31, 2015 and reflected in the fourteenth VCM report should be disallowed from rate base on the basis of imprudence; (ii) the Contractor Settlement Agreement was reasonable and prudent and none of the $0.3 billion paid pursuant to the Contractor Settlement Agreement should be disallowed from rate base on the basis of imprudence; (iii) (a) capital costs incurred up to $5.68 billion would be presumed to

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be reasonable and prudent with the burden of proof on any party challenging such costs, (b) Georgia Power would have the burden to show that any capital costs above $5.68 billion were prudent, and (c) a revised capital cost forecast of $7.3 billion (after reflecting the impact of payments received under the Guarantee Settlement Agreement and related customer refunds) was found reasonable; (iv) construction of Plant Vogtle Units 3 and 4 should be completed, with Southern Nuclear serving as project manager and Bechtel as primary contractor; (v) approved and deemed reasonable Georgia Power's revised schedule placing Plant Vogtle Units 3 and 4 in service in November 2021 and November 2022, respectively; (vi) confirmed that the revised cost forecast does not represent a cost cap and that a prudence proceeding on cost recovery will occur following Unit 4 fuel load, consistent with applicable Georgia law; (vii) reduced the ROE used to calculate the NCCR tariff (a) from 10.95% (the ROE rate setting point authorized by the Georgia PSC in the 2013 alternate rate plan) to 10.00% effective January 1, 2016, (b) from 10.00% to 8.30%, effective January 1, 2020, and (c) from 8.30% to 5.30%, effective January 1, 2021 (provided that the ROE in no case will be less than Georgia Power's average cost of long-term debt); (viii) reduced the ROE used for AFUDC equity for Plant Vogtle Units 3 and 4 from 10.00% to Georgia Power's average cost of long-term debt, effective January 1, 2018; and (ix) agreed that upon Unit 3 reaching commercial operation, retail base rates would be adjusted to include the costs related to Unit 3 and common facilities deemed prudent in the Vogtle Cost Settlement Agreement. The January 11, 2018 order also stated that if Plant Vogtle Units 3 and 4 are not commercially operational by June 1, 2021 and June 1, 2022, respectively, the ROE used to calculate the NCCR tariff will be further reduced by 10 basis points each month (but not lower than Georgia Power's average cost of long-term debt) until the respective Unit is commercially operational. The ROE reductions negatively impacted earnings by approximately $150 million in 2020 and are estimated to have negative earnings impacts of approximately $270 million, $270 million, and $90 million in 2021, 2022, and 2023, respectively. In its January 11, 2018 order, the Georgia PSC also stated if other conditions change and assumptions upon which Georgia Power's seventeenth VCM report are based do not materialize, the Georgia PSC reserved the right to reconsider the decision to continue construction.

The Georgia PSC has approved 23 VCM reports covering periods through June 30, 2020 and is scheduled to vote on the twenty-fourth VCM report in August 2021, including total construction capital costs incurred through December 31, 2020 of $8.7 billion (before $1.7 billion of payments received under the Guarantee Settlement Agreement and approximately $188 million in related customer refunds). On July 28, 2021, Georgia Power and the staff of the Georgia PSC reached a stipulated agreement providing for approval of the twenty-fourth VCM report as well as a change to future VCM proceedings. Beginning with its twenty-fifth VCM report, which Georgia Power expects to file with the Georgia PSC by August 31, 2021, Georgia Power will continue to report to the Georgia PSC all costs incurred during the period for review and will include a request for approval of costs up to the $7.3 billion determined to be reasonable in the Georgia PSC's seventeenth VCM order. Under the stipulation, Georgia Power will not seek verification or approval of costs above $7.3 billion prior to the Georgia PSC's prudence review contemplated by the seventeenth VCM order. The twenty-fifth VCM report will reflect the revised capital cost forecast discussed above. See "Plant Vogtle Unit 3 and Common Facilities Rate Proceeding" herein for information on Georgia Power's request to adjust retail base rates to include a portion of costs related to its investment in Plant Vogtle Unit 3 and Common Facilities.

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

Mississippi Power

Performance Evaluation Plan

On June 8, 2021, the Mississippi PSC approved Mississippi Power's annual retail PEP filing for 2021, resulting in an annual increase in revenues of approximately $16 million, or 1.8%, which became effective with the first billing cycle of April 2021 in accordance with the PEP rate schedule.

Integrated Resource Plan

In December 2020, the Mississippi PSC issued an order in the Reserve Margin Plan docket requiring Mississippi Power to incorporate into its 2021 IRP a schedule reflecting the retirement of 950 MWs of fossil-steam generation

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by year-end 2027 to reduce Mississippi Power's excess reserve margin. On April 15, 2021, Mississippi Power filed its 2021 IRP with the Mississippi PSC. The filing includes a schedule to retire Plant Watson Unit 4 (268 MWs) and Mississippi Power's 40% ownership interest in Plant Greene County Units 1 and 2 (103 MWs each) in December 2023, 2025, and 2026, respectively, consistent with each unit's remaining useful life in the most recent approved depreciation studies. In addition, the schedule reflects the early retirement of Mississippi Power's 50% undivided ownership interest in Plant Daniel Units 1 and 2 (502 MWs) by the end of 2027. The Plant Greene County unit retirements require the completion by Alabama Power of transmission and system reliability improvements, as well as agreement by Alabama Power.

The remaining net book value of Plant Daniel Units 1 and 2 was approximately $522 million at June 30, 2021. Mississippi Power expects to reclassify the net book value remaining at retirement to a regulatory asset to be amortized over a period to be determined by the Mississippi PSC in future proceedings, consistent with the December 2020 order. The Plant Watson and Greene County units are expected to be fully depreciated upon retirement.

The 2021 IRP is subject to a review period during which the Mississippi PSC may note any deficiencies which could require re-evaluation or resubmission of the IRP. If no deficiencies are noted, the Mississippi PSC's review will conclude on August 13, 2021.

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

Environmental Compliance Overview Plan

On June 8, 2021, the Mississippi PSC approved Mississippi Power's ECO Plan filing for 2021, resulting in an annual decrease in revenues of approximately $9 million, primarily due to a change in the amortization periods of certain regulatory assets and liabilities. The rate decrease became effective with the first billing cycle of July 2021.

Ad Valorem Tax Adjustment

On April 6, 2021, the Mississippi PSC approved Mississippi Power's annual ad valorem tax adjustment filing for 2021, which requested an annual increase in revenues of approximately $28 million, including approximately $19 million of ad valorem taxes previously recovered through PEP in accordance with the Mississippi Power Rate Case Settlement Agreement. The rate increase became effective with the first billing cycle of May 2021.

Southern Company Gas

Infrastructure Replacement Programs and Capital Projects

Capital expenditures incurred under specific infrastructure replacement programs during the first six months of 2021 were as follows:

Utility	Program	Six Months Ended June 30, 2021
		(in millions)
Nicor Gas	Investing in Illinois	$	179
Virginia Natural Gas	Steps to Advance Virginia's Energy	22
Total		$	201

Atlanta Gas Light

On April 28, 2021, Atlanta Gas Light filed its first Integrated Capacity and Delivery Plan (i-CDP) with the Georgia PSC, which includes a series of ongoing and proposed pipeline safety, reliability, and growth programs for the next 10 years (2022 through 2031), as well as the required capital investments and related costs to implement the programs. The i-CDP reflects capital investments totaling approximately $0.5 billion to $0.6 billion annually.

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Recovery of the related revenue requirements will be included in either subsequent annual GRAM filings or the new System Reinforcement Rider for authorized large pressure improvement and system reliability projects. The Georgia PSC is scheduled to vote on this matter in November 2021. The ultimate outcome of this matter cannot be determined at this time.

Virginia Natural Gas

On April 6, 2021, the Virginia Commission approved a motion filed by Virginia Natural Gas to withdraw the application for its 9.5-mile interconnect project due to a change in the capacity needs of one of the project's customers. No further action is necessary and this matter is now concluded.

Rate Proceedings

Virginia Natural Gas

On May 10, 2021, Virginia Natural Gas, the Virginia Commission staff, and other intervenors entered into a stipulation agreement related to Virginia Natural Gas' June 2020 general rate case filing, which allows for a $43 million increase in annual base rate revenues, including $14 million related to the recovery of investments under the SAVE program, based on a ROE of 9.5% and an equity ratio of 51.9%. On July 8, 2021, the hearing examiner issued a report recommending adoption of the stipulation agreement. The Virginia Commission is expected to rule on this matter by September 2021. Interim rate adjustments became effective as of November 1, 2020, subject to refund, based on Virginia Natural Gas' original request for an increase of approximately $50 million. The ultimate outcome of this matter cannot be determined at this time.

Atlanta Gas Light

On July 21, 2021, Atlanta Gas Light filed its annual GRAM filing with the Georgia PSC. The filing requests an annual base rate increase of $49 million based on the projected 12-month period beginning January 1, 2022. The proposed rate increase may be updated pending the resolution of Atlanta Gas Light's i-CDP filing. Resolution of the GRAM filing is expected by December 31, 2021, with the new rates to become effective January 1, 2022. The ultimate outcome of this matter cannot be determined at this time. See "Infrastructure Replacement Programs and Capital Projects – Atlanta Gas Light" herein for additional information.

Deferral of Incremental COVID-19 Costs

Nicor Gas

On March 18, 2021, the Illinois Commission approved a phased-in schedule for disconnections related to non-payment. Nicor Gas began certain disconnections in late April 2021 and resumed normal disconnections in June 2021. Nicor Gas will continue certain flexible credit and collection procedures through the third quarter 2021.

(C) CONTINGENCIES

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

General Litigation Matters

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

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

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Southern Company

In February 2017, Jean Vineyard and Judy Mesirov each filed a shareholder derivative lawsuit in the U.S. District Court for the Northern District of Georgia. Each of these lawsuits names as defendants Southern Company, certain of its directors, certain of its current and former officers, and certain former Mississippi Power officers. In 2017, these 2 shareholder derivative lawsuits were consolidated in the U.S. District Court for the Northern District of Georgia. The complaints allege that the defendants caused Southern Company to make false or misleading statements regarding the Kemper County energy facility cost and schedule. Further, the complaints allege that the defendants were unjustly enriched and caused the waste of corporate assets and also allege that the individual defendants violated their fiduciary duties.

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

The plaintiffs in each of these cases seek to recover, on behalf of Southern Company, unspecified actual damages and, on each plaintiff's own behalf, attorneys' fees and costs in bringing the lawsuit. The plaintiffs also seek certain changes to Southern Company's corporate governance and internal processes. In 2018, the court in each case entered an order staying each lawsuit until 30 days after the settlement of a securities class action filed in January 2017 against Southern Company, certain of its current and former officers, and certain former Mississippi Power officers. In September 2020, the plaintiffs in each case filed a status report noting the settlement of the securities class action and informing the court that the parties had scheduled mediation, which occurred in November 2020. The parties in each case did not reach settlement but continue to explore possible resolution. Each case is stayed while the parties discuss potential resolution.

Georgia Power

In 2011, plaintiffs filed a putative class action against Georgia Power in the Superior Court of Fulton County, Georgia alleging that Georgia Power's collection in rates of amounts for municipal franchise fees (which fees are paid to municipalities) exceeded the amounts allowed in orders of the Georgia PSC and alleging certain state law claims. This case has been ruled upon and appealed numerous times over the last several years. In one recent appeal, the Georgia Supreme Court remanded the case and noted that the trial court could refer the matter to the Georgia PSC to interpret its tariffs. Following a motion by Georgia Power, in February 2019, the Superior Court of Fulton County ordered the parties to submit petitions to the Georgia PSC for a declaratory ruling and also conditionally certified the proposed class. In March 2019, Georgia Power and the plaintiffs filed petitions with the Georgia PSC seeking confirmation of the proper application of the municipal franchise fee schedule pursuant to the Georgia PSC's orders. Also in March 2019, Georgia Power appealed the class certification decision to the Georgia Court of Appeals. In October 2019, the Georgia PSC issued an order that found Georgia Power has appropriately implemented the municipal franchise fee schedule. In March 2020, the Georgia Court of Appeals vacated the Superior Court of Fulton County's February 2019 order granting conditional class certification and remanded the case to the Superior Court of Fulton County for further proceedings. In September 2020, the plaintiffs and Georgia Power each filed motions for summary judgment and the plaintiffs renewed their motion for class certification. On March 16, 2021, the Superior Court of Fulton County granted class certification and Georgia Power's motion for summary judgment. On March 22, 2021, the plaintiffs filed a notice of appeal, and, on April 2, 2021, Georgia Power filed a notice of cross appeal on the issue of class certification. The amount of any possible losses cannot be estimated at this time because, among other factors, it is unknown whether any losses would be subject to recovery from any municipalities.

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(UNAUDITED)

In July 2020, a group of individual plaintiffs filed a complaint in the Superior Court of Fulton County, Georgia against Georgia Power alleging that releases from Plant Scherer have impacted groundwater, surface water, and air, resulting in alleged personal injuries and property damage. The plaintiffs seek an unspecified amount of monetary damages including punitive damages, a medical monitoring fund, and injunctive relief. In September 2020, Georgia Power filed a motion to dismiss. The amount of any possible losses cannot be estimated at this time.

Mississippi Power

In 2018, Ray C. Turnage and 10 other individual plaintiffs filed a putative class action complaint against Mississippi Power and the 3 then-serving members of the Mississippi PSC in the U.S. District Court for the Southern District of Mississippi. Mississippi Power received Mississippi PSC approval in 2013 to charge a mirror CWIP rate premised upon including in its rate base pre-construction and construction costs for the Kemper IGCC prior to placing the Kemper IGCC into service. The Mississippi Supreme Court reversed that approval and ordered Mississippi Power to refund the amounts paid by customers under the previously-approved mirror CWIP rate. The plaintiffs allege that the initial approval process, and the amount approved, were improper. They also allege that Mississippi Power underpaid customers by up to $23.5 million in the refund process by applying an incorrect interest rate. The plaintiffs seek to recover, on behalf of themselves and their putative class, actual damages, punitive damages, pre-judgment interest, post-judgment interest, attorney's fees, and costs. In response to Mississippi Power and the Mississippi PSC each filing a motion to dismiss, the plaintiffs filed an amended complaint in March 2019. The amended complaint included 4 additional plaintiffs and additional claims for gross negligence, reckless conduct, and intentional wrongdoing. Mississippi Power and the Mississippi PSC each filed a motion to dismiss the amended complaint, which occurred in May 2020 and March 2020, respectively. Also in March 2020, the plaintiffs filed a motion seeking to name the new members of the Mississippi PSC, the Mississippi Development Authority, and Southern Company as additional defendants and add a cause of action against all defendants based on a dormant commerce clause theory under the U.S. Constitution. In July 2020, the plaintiffs filed a motion for leave to file a third amended complaint, which included the same federal claims as the proposed second amended complaint, as well as several additional state law claims based on the allegation that Mississippi Power failed to disclose the annual percentage rate of interest applicable to refunds. In November 2020, the court denied each of the plaintiffs' pending motions and entered final judgment in favor of Mississippi Power. On January 22, 2021, the court denied further motions by the plaintiffs to vacate the judgment and to file a revised second amended complaint. On February 19, 2021, the plaintiffs filed a notice of appeal with the U.S. Court of Appeals for the Fifth Circuit. An adverse outcome in this proceeding could have a material impact on Mississippi Power's financial statements.

See Note 3 to the financial statements under "Other Matters – Mississippi Power – Kemper County Energy Facility" in Item 8 of the Form 10-K for additional information.

Environmental Remediation

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

Georgia Power's environmental remediation liability was $15 million at both June 30, 2021 and December 31, 2020. 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.

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(UNAUDITED)

Southern Company Gas' environmental remediation liability was $247 million and $245 million at June 30, 2021 and December 31, 2020, respectively, based on the estimated cost of environmental investigation and remediation associated with known former manufactured gas plant operating sites.

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

Other Matters

Southern Company Gas

PennEast Pipeline Project

Work continues with state and federal agencies to obtain the required permits to begin construction of the PennEast Pipeline. On June 29, 2021, the U.S. Supreme Court ruled in favor of PennEast Pipeline regarding its federal eminent domain authority over lands in which a state has property rights interests.

Southern Company Gas tests its equity method investments for impairment whenever events or changes in circumstances indicate that the investment may be impaired. Following the U.S. Supreme Court ruling, during the second quarter 2021, Southern Company Gas management reassessed the project construction timing, including the anticipated timing for receipt of the FERC certificate and all remaining state and local permits for both Phase 1 (the construction of 68 miles of pipe entirely within Pennsylvania) and Phase 2 (the construction of the remaining 50 miles in Pennsylvania and New Jersey), as well as potential challenges thereto, and performed an impairment analysis. The outcome of the analysis resulted in a pre-tax impairment charge of $82 million ($58 million after tax). The ultimate outcome of the PennEast Pipeline construction project cannot be determined at this time. See Note (E) under "Southern Company Gas" for additional information.

SNG

As a 50% equity investor in SNG, Southern Company Gas is required to make additional capital contributions as necessary pursuant to the terms of its operating agreement with SNG. Southern Company Gas previously committed to fund up to $150 million as a contingent capital contribution if SNG was unable to refinance or otherwise satisfy $300 million of debt maturing in June 2021. On April 29, 2021, SNG successfully refinanced the debt obligation. See Note (E) under "Southern Company Gas" for additional information.

(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.

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(UNAUDITED)

The following table disaggregates revenue from contracts with customers for the three and six months ended June 30, 2021 and 2020:

	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Three Months Ended June 30, 2021
Operating revenues
Retail electric revenues
Residential	$	1,469	$	553	$	852	$	64	$	0	$	0
Commercial	1,176		386		724		66		0		0
Industrial	728		334		321		73		0		0
Other	23		4		17		2		0		0
Total retail electric revenues	3,396		1,277		1,914		205		0		0
Natural gas distribution revenues
Residential	311		0		0		0		0		311
Commercial	73		0		0		0		0		73
Transportation	247		0		0		0		0		247
Industrial	8		0		0		0		0		8
Other	59		0		0		0		0		59
Total natural gas distribution revenues	698		0		0		0		0		698
Wholesale electric revenues
PPA energy revenues	209		38		16		2		158		0
PPA capacity revenues	118		29