Alabama Power (ALP-PQ) 10-Q 2021 Q3 Quarterly report

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 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
The Southern Company	Series 2021B 1.875% Fixed-to-Fixed Reset Rate Junior Subordinated Notes due 2081	SO 81	NYSE
Alabama Power Company	5.00% Series Class A Preferred Stock	ALP PR Q	NYSE
Georgia Power Company	Series 2017A 5.00% Junior Subordinated Notes due 2077	GPJA	NYSE
Southern Power Company	Series 2016A 1.000% Senior Notes due 2022	SO/22B	NYSE
Southern Power Company	Series 2016B 1.850% Senior Notes due 2026	SO/26A	NYSE

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

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

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

Registrant	Large Accelerated Filer	Accelerated Filer	Non-accelerated Filer	Smaller Reporting Company	Emerging Growth Company
The Southern Company	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 September 30, 2021
The Southern Company	Par Value $5 Per Share	1,059,803,931
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	102
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	162
Item 4.	Controls and Procedures	162
	PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	163
Item 1A.	Risk Factors	163
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	163
	Signatures	166

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    Table of Contents                                Index to Financial Statements

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
CCR Rule	Disposal of Coal Combustion Residuals from Electric Utilities final rule published by the EPA in 2015
Chattanooga Gas	Chattanooga Gas Company, a wholly-owned subsidiary of Southern Company Gas
COD	Commercial operation date
Contractor Settlement Agreement	The December 31, 2015 agreement between Westinghouse and the Vogtle Owners resolving disputes between the Vogtle Owners and the EPC Contractor under the Vogtle 3 and 4 Agreement
COVID-19	The novel coronavirus disease declared a pandemic by the World Health Organization and the Centers for Disease Control and Prevention in March 2020
CWIP	Construction work in progress
Dalton	City of Dalton, Georgia, an incorporated municipality in the State of Georgia, acting by and through its Board of Water, Light, and Sinking Fund Commissioners
Dalton Pipeline	A pipeline facility in Georgia in which Southern Company Gas has a 50% undivided ownership interest
DOE	U.S. Department of Energy
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

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DEFINITIONS

(continued)

Term	Meaning
GRAM	Atlanta Gas Light's Georgia Rate Adjustment Mechanism
Guarantee Settlement Agreement	The June 9, 2017 settlement agreement between the Vogtle Owners and Toshiba related to certain payment obligations of the EPC Contractor guaranteed by Toshiba
Gulf Power	Gulf Power Company, until January 1, 2019 a wholly-owned subsidiary of Southern Company; effective January 1, 2021, Gulf Power Company merged with and into Florida Power and Light Company, with Florida Power and Light Company remaining as the surviving company
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 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

5

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DEFINITIONS

(continued)

Term	Meaning
PowerSecure	PowerSecure, Inc., a wholly-owned subsidiary of Southern Company
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., wholly-owned subsidiaries of Southern Company Gas through June 30, 2021
SNG	Southern Natural Gas Company, L.L.C., a pipeline system in which Southern Company Gas has a 50% ownership interest
Southern Company	The Southern Company
Southern Company Gas	Southern Company Gas and its subsidiaries
Southern Company Gas Capital	Southern Company Gas Capital Corporation, a 100%-owned subsidiary of Southern Company Gas
Southern Company power pool	The operating arrangement whereby the integrated generating resources of the traditional electric operating companies and Southern Power (excluding subsidiaries) are subject to joint commitment and dispatch in order to serve their combined load obligations
Southern Company system	Southern Company, the traditional electric operating companies, Southern Power, Southern Company Gas, SEGCO, Southern Nuclear, SCS, Southern Communications Services, Inc., PowerSecure, and other subsidiaries
Southern Holdings	Southern Company Holdings, Inc., a wholly-owned subsidiary of Southern Company
Southern Nuclear	Southern Nuclear Operating Company, Inc., a wholly-owned subsidiary of Southern Company
Southern Power	Southern Power Company and its subsidiaries
SouthStar	SouthStar Energy Services, LLC (a Marketer), a wholly-owned subsidiary of Southern Company Gas
SP Solar	SP Solar Holdings I, LP, a limited partnership indirectly owning substantially all of Southern Power's solar and battery energy storage facilities, in which Southern Power has a 67% ownership interest
SP Wind	SP Wind Holdings II, LLC, a holding company owning a portfolio of eight operating wind facilities, in which Southern Power is the controlling partner in a tax equity arrangement
Subsidiary Registrants	Alabama Power, Georgia Power, Mississippi Power, Southern Power, and Southern Company Gas
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

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DEFINITIONS

(continued)

Term	Meaning
VCM	Vogtle Construction Monitoring
VIE	Variable interest entity
Virginia Commission	Virginia State Corporation Commission
Virginia Natural Gas	Virginia Natural Gas, Inc., a wholly-owned subsidiary of Southern Company Gas
Vogtle 3 and 4 Agreement	Agreement entered into with the EPC Contractor in 2008 by Georgia Power, acting for itself and as agent for the Vogtle Owners, and rejected in bankruptcy in July 2017, pursuant to which the EPC Contractor agreed to design, engineer, procure, construct, and test Plant Vogtle Units 3 and 4
Vogtle Owners	Georgia Power, 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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    Table of Contents                                Index to Financial Statements

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

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

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

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

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

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

•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 or any remediation related thereto; design and other licensing-based compliance matters, including, for nuclear units, inspections and the timely submittal by Southern Nuclear of the ITAAC documentation for each unit and the related investigations, reviews, and approvals by the NRC necessary to support NRC authorization to load fuel; challenges with start-up activities, including major equipment failure, or system integration; and/or operational performance; and challenges related to the COVID-19 pandemic;

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

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

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

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
	(in millions)				(in millions)
Operating Revenues:
Retail electric revenues	$	4,551	$	4,243	$	11,492	$	10,503
Wholesale electric revenues	731		584		1,822		1,473
Other electric revenues	179		164		525		484
Natural gas revenues (includes alternative revenue programs of    $(1), $(1), $3, and $6, respectively)	623		477		2,994		2,362
Other revenues	154		152		513		436
Total operating revenues	6,238		5,620		17,346		15,258
Operating Expenses:
Fuel	1,234		933		2,930		2,190
Purchased power	288		230		712		611
Cost of natural gas	129		71		943		654
Cost of other sales	71		72		255		201
Other operations and maintenance	1,446		1,286		4,257		3,785
Depreciation and amortization	896		889		2,658		2,619
Taxes other than income taxes	312		304		969		932
Estimated loss on Plant Vogtle Units 3 and 4	264		—		772		149
(Gain) loss on dispositions, net	(125)		—		(179)		(39)
Total operating expenses	4,515		3,785		13,317		11,102
Operating Income	1,723		1,835		4,029		4,156
Other Income and (Expense):
Allowance for equity funds used during construction	49		38		140		106
Earnings from equity method investments	30		33		35		105
Interest expense, net of amounts capitalized	(451)		(443)		(1,352)		(1,343)
Impairment of leveraged leases	—		—		(7)		(154)
Other income (expense), net	131		113		297		319
Total other income and (expense)	(241)		(259)		(887)		(967)
Earnings Before Income Taxes	1,482		1,576		3,142		3,189
Income taxes	372		293		550		443
Consolidated Net Income	1,110		1,283		2,592		2,746
Dividends on preferred stock of subsidiaries	4		4		11		11
Net income (loss) attributable to noncontrolling interests	5		28		(27)		3
Consolidated Net Income Attributable to    Southern Company	$	1,101	$	1,251	$	2,608	$	2,732
Common Stock Data:
Earnings per share -
Basic	$	1.04	$	1.18	$	2.46	$	2.58
Diluted	$	1.03	$	1.18	$	2.44	$	2.57
Average number of shares of common stock outstanding (in millions)
Basic	1,061		1,058		1,060		1,058
Diluted	1,068		1,064		1,067		1,064

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

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    Table of Contents                                Index to Financial Statements

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
	(in millions)				(in millions)
Consolidated Net Income	$	1,110	$	1,283	$	2,592	$	2,746
Other comprehensive income (loss):
Qualifying hedges:
Changes in fair value, net of tax of    $1, $17, $(4), and $(9), respectively	1		49		(15)		(26)
Reclassification adjustment for amounts included in net income,    net of tax of $10, $(11), $27, and $(1), respectively	31		(32)		81		(3)
Pension and other postretirement benefit plans:
Reclassification adjustment for amounts included in net income,    net of tax of $1, $1, $4, and $3, respectively	4		3		10		6
Total other comprehensive income (loss)	36		20		76		(23)
Comprehensive Income	1,146		1,303		2,668		2,723
Dividends on preferred stock of subsidiaries	4		4		11		11
Comprehensive income (loss) attributable to noncontrolling interests	5		28		(27)		3
Consolidated Comprehensive Income Attributable to    Southern Company	$	1,137	$	1,271	$	2,684	$	2,709

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

12

    Table of Contents                                Index to Financial Statements

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	For the Nine Months Ended September 30,
	2021		2020
	(in millions)
Operating Activities:
Consolidated net income	$	2,592	$	2,746
Adjustments to reconcile consolidated net income to net cash provided from operating activities —
Depreciation and amortization, total	2,944		2,903
Deferred income taxes	89		(196)
Utilization of federal investment tax credits	256		319
Pension, postretirement, and other employee benefits	(218)		(190)
Settlement of asset retirement obligations	(341)		(315)
Stock based compensation expense	134		99
Estimated loss on Plant Vogtle Units 3 and 4	772		149
Storm damage accruals	166		171
Impairment charges	91		154
(Gain) loss on dispositions, net	(171)		(36)
Retail fuel cost under recovery – long-term	(209)		—
Other, net	(7)		(14)
Changes in certain current assets and liabilities —
-Receivables	2		125
-Materials and supplies	(91)		(141)
-Natural gas cost under recovery	(432)		—
-Other current assets	(160)		(119)
-Accounts payable	(45)		(428)
-Accrued taxes	288		289
-Accrued compensation	(93)		(183)
-Accrued interest	(110)		(52)
-Retail fuel cost over recovery	(150)		158
-Customer refunds	(58)		(226)
-Other current liabilities	(168)		7
Net cash provided from operating activities	5,081		5,220
Investing Activities:
Business acquisitions, net of cash acquired	(345)		(81)
Property additions	(5,222)		(5,365)
Nuclear decommissioning trust fund purchases	(1,301)		(714)
Nuclear decommissioning trust fund sales	1,297		708
Proceeds from dispositions	160		987
Cost of removal, net of salvage	(282)		(233)
Payments pursuant to LTSAs	(145)		(139)
Other investing activities	(12)		(55)
Net cash used for investing activities	(5,850)		(4,892)
Financing Activities:
Decrease in notes payable, net	(203)		(1,534)
Proceeds —
Long-term debt	6,793		7,543
Common stock	62		63
Short-term borrowings	325		615
Redemptions and repurchases —
Long-term debt	(3,060)		(2,472)
Short-term borrowings	(25)		(840)
Capital contributions from noncontrolling interests	415		173
Distributions to noncontrolling interests	(204)		(164)
Payment of common stock dividends	(2,077)		(2,008)
Other financing activities	(224)		(299)
Net cash provided from financing activities	1,802		1,077
Net Change in Cash, Cash Equivalents, and Restricted Cash	1,033		1,405
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	1,068		1,978
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	2,101	$	3,383
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $68 and $61 capitalized for 2021 and 2020, respectively)	$	1,417	$	1,346
Income taxes, net	92		66
Noncash transactions —
Accrued property additions at end of period	915		917
Contributions from noncontrolling interests	89		9
Contributions of wind turbine equipment	82		17
Right-of-use assets obtained under leases	92		166

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 September 30, 2021		At December 31, 2020
	(in millions)
Current Assets:
Cash and cash equivalents	$	2,078	$	1,065
Receivables —
Customer accounts	1,831		1,753
Energy marketing	—		516
Unbilled revenues	535		672
Other accounts and notes	611		512
Accumulated provision for uncollectible accounts	(72)		(118)
Materials and supplies	1,504		1,478
Fossil fuel for generation	386		550
Natural gas for sale	368		460
Prepaid expenses	329		276
Assets from risk management activities, net of collateral	365		147
Regulatory assets – asset retirement obligations	233		214
Natural gas cost under recovery	432		—
Other regulatory assets	792		810
Other current assets	282		282
Total current assets	9,674		8,617
Property, Plant, and Equipment:
In service	114,166		110,516
Less: Accumulated depreciation	33,723		32,397
Plant in service, net of depreciation	80,443		78,119
Nuclear fuel, at amortized cost	805		818
Construction work in progress	9,611		8,697
Total property, plant, and equipment	90,859		87,634
Other Property and Investments:
Goodwill	5,280		5,280
Nuclear decommissioning trusts, at fair value	2,446		2,303
Equity investments in unconsolidated subsidiaries	1,278		1,362
Other intangible assets, net of amortization of $296 and $328, respectively	455		487
Leveraged leases	575		556
Miscellaneous property and investments	586		398
Total other property and investments	10,620		10,386
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization	1,724		1,802
Deferred charges related to income taxes	815		796
Unamortized loss on reacquired debt	263		280
Regulatory assets – asset retirement obligations, deferred	5,418		4,934
Other regulatory assets, deferred	6,902		7,198
Other deferred charges and assets	1,586		1,288
Total deferred charges and other assets	16,708		16,298
Total Assets	$	127,861	$	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 September 30, 2021		At December 31, 2020
	(in millions)
Current Liabilities:
Securities due within one year	$	3,286	$	3,507
Notes payable	707		609
Energy marketing trade payables	—		494
Accounts payable	2,229		2,312
Customer deposits	493		487
Accrued taxes —
Accrued income taxes	149		130
Other accrued taxes	797		699
Accrued interest	404		513
Accrued compensation	908		1,025
Asset retirement obligations	690		585
Operating lease obligations	246		241
Other regulatory liabilities	555		509
Other current liabilities	795		968
Total current liabilities	11,259		12,079
Long-term Debt	48,843		45,073
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	8,916		8,175
Deferred credits related to income taxes	5,485		5,767
Accumulated deferred ITCs	2,230		2,235
Employee benefit obligations	1,849		2,213
Operating lease obligations, deferred	1,495		1,611
Asset retirement obligations, deferred	10,919		10,099
Accrued environmental remediation	203		216
Other cost of removal obligations	2,164		2,211
Other regulatory liabilities, deferred	351		251
Other deferred credits and liabilities	637		480
Total deferred credits and other liabilities	34,249		33,258
Total Liabilities	94,351		90,410
Redeemable Preferred Stock of Subsidiaries	291		291
Total Stockholders' Equity (See accompanying statements)	33,219		32,234
Total Liabilities and Stockholders' Equity	$	127,861	$	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
Consolidated net income	—	—	—		—		—		1,251		—			28			1,279
Other comprehensive income	—	—	—		—		—		—		20			—			20
Stock issued	—	—	1		3		—		—		—			—			4
Stock-based compensation	—	—	—		15		—		—		—			—			15
Cash dividends of $0.64 per share	—	—	—		—		—		(676)		—			—			(676)
Capital contributions from    noncontrolling interests	—	—	—		—		—		—		—			2			2
Distributions to noncontrolling interests	—	—	—		—		—		—		—			(51)			(51)
Purchase of membership interests    from noncontrolling interests	—	—	—		5		—		—		—			(60)			(55)
Other	—	—	—		—		—		1		(1)			1			1
Balance at September 30, 2020	1,057	(1)	$	5,267	$	11,810	$	(44)	$	11,600	$	(344)		$	4,211		$	32,500

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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		—			—			—
Balance at June 30, 2021	1,060	(1)	5,274		11,886		(48)		11,442		(355)			4,547			32,746
Consolidated net income	—	—	—		—		—		1,101		—			5			1,106
Other comprehensive income	—	—	—		—		—		—		36			—			36
Stock issued	1	—	4		34		—		—		—			—			38
Stock-based compensation	—	—	—		22		—		—		—			—			22
Cash dividends of $0.66 per share	—	—	—		—		—		(700)		—			—			(700)
Capital contributions from    noncontrolling interests	—	—	—		—		—		—		—			72			72
Distributions to noncontrolling interests	—	—	—		—		—		—		—			(94)			(94)
Other	—	—	—		(10)		2		1		—			—			(7)
Balance at September 30, 2021	1,061	(1)	$	5,278	$	11,932	$	(46)	$	11,844	$	(319)		$	4,530		$	33,219

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 September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
	(in millions)				(in millions)
Operating Revenues:
Retail revenues	$	1,651	$	1,575	$	4,357	$	4,003
Wholesale revenues, non-affiliates	107		73		285		184
Wholesale revenues, affiliates	53		11		109		36
Other revenues	93		70		268		222
Total operating revenues	1,904		1,729		5,019		4,445
Operating Expenses:
Fuel	373		306		927		721
Purchased power, non-affiliates	76		64		173		153
Purchased power, affiliates	45		44		114		93
Other operations and maintenance	401		387		1,175		1,078
Depreciation and amortization	214		205		640		606
Taxes other than income taxes	99		103		303		311
Total operating expenses	1,208		1,109		3,332		2,962
Operating Income	696		620		1,687		1,483
Other Income and (Expense):
Allowance for equity funds used during construction	14		12		38		34
Interest expense, net of amounts capitalized	(84)		(84)		(252)		(255)
Other income (expense), net	29		30		93		78
Total other income and (expense)	(41)		(42)		(121)		(143)
Earnings Before Income Taxes	655		578		1,566		1,340
Income taxes	152		130		366		307
Net Income	503		448		1,200		1,033
Dividends on Preferred Stock	4		4		11		11
Net Income After Dividends on Preferred Stock	$	499	$	444	$	1,189	$	1,022

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
	(in millions)				(in millions)
Net Income	$	503	$	448	$	1,200	$	1,033
Other comprehensive income (loss):
Qualifying hedges:
Changes in fair value, net of tax of $1, $—, $1, and $—, respectively	4		—		3		—
Reclassification adjustment for amounts included in net income,    net of tax of $—, $—, $1, and $1, respectively	1		1		3		3
Total other comprehensive income (loss)	5		1		6		3
Comprehensive Income	$	508	$	449	$	1,206	$	1,036

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 Nine Months Ended September 30,
	2021		2020
	(in millions)
Operating Activities:
Net income	$	1,200	$	1,033
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total	748		731
Deferred income taxes	104		71
Pension, postretirement, and other employee benefits	(74)		(71)
Settlement of asset retirement obligations	(152)		(157)
Other, net	(51)		33
Changes in certain current assets and liabilities —
-Receivables	(128)		(130)
-Fossil fuel stock	91		4
-Prepayments	(24)		(32)
-Materials and supplies	(13)		(55)
-Retail fuel cost under recovery	(79)		—
-Other current assets	(19)		(35)
-Accounts payable	(230)		(248)
-Accrued taxes	178		142
-Accrued compensation	(37)		(55)
-Retail fuel cost over recovery	(18)		74
-Other current liabilities	(77)		(76)
Net cash provided from operating activities	1,419		1,229
Investing Activities:
Property additions	(1,235)		(1,460)
Nuclear decommissioning trust fund purchases	(536)		(213)
Nuclear decommissioning trust fund sales	536		213
Cost of removal, net of salvage	(93)		(68)
Change in construction payables	12		(46)
Other investing activities	(19)		(17)
Net cash used for investing activities	(1,335)		(1,591)
Financing Activities:
Proceeds —
Senior notes	600		600
Pollution control revenue bonds	—		87
Redemptions —
Senior notes	(200)		—
Pollution control revenue bonds	—		(87)
Other long-term debt	(206)		—
Capital contributions from parent company	630		649
Payment of common stock dividends	(738)		(718)
Other financing activities	(30)		(26)
Net cash provided from financing activities	56		505
Net Change in Cash, Cash Equivalents, and Restricted Cash	140		143
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	530		894
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	670	$	1,037
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $11 capitalized for both 2021 and 2020)	$	246	$	249
Income taxes, net	183		203
Noncash transactions —
Accrued property additions at end of period	178		154
Right-of-use assets obtained under leases	2		65

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 September 30, 2021		At December 31, 2020
	(in millions)
Current Assets:
Cash and cash equivalents	$	670	$	530
Receivables —
Customer accounts	497		429
Unbilled revenues	151		152
Affiliated	53		31
Other accounts and notes	101		66
Accumulated provision for uncollectible accounts	(18)		(43)
Fossil fuel stock	144		235
Materials and supplies	556		546
Prepaid expenses	65		42
Other regulatory assets	289		226
Other current assets	107		33
Total current assets	2,615		2,247
Property, Plant, and Equipment:
In service	32,787		31,816
Less: Accumulated provision for depreciation	10,298		10,009
Plant in service, net of depreciation	22,489		21,807
Nuclear fuel, at amortized cost	241		270
Construction work in progress	1,129		866
Total property, plant, and equipment	23,859		22,943
Other Property and Investments:
Nuclear decommissioning trusts, at fair value	1,259		1,157
Equity investments in unconsolidated subsidiaries	57		63
Miscellaneous property and investments	129		131
Total other property and investments	1,445		1,351
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization	119		151
Deferred charges related to income taxes	238		235
Regulatory assets – asset retirement obligations	1,580		1,441
Other regulatory assets, deferred	2,100		2,162
Other deferred charges and assets	348		273
Total deferred charges and other assets	4,385		4,262
Total Assets	$	32,304	$	30,803

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

20

    Table of Contents                                Index to Financial Statements

ALABAMA POWER COMPANY

CONDENSED BALANCE SHEETS (UNAUDITED)

Liabilities and Stockholder's Equity	At September 30, 2021		At December 31, 2020
	(in millions)
Current Liabilities:
Securities due within one year	$	616	$	311
Accounts payable —
Affiliated	299		316
Other	370		545
Customer deposits	106		104
Accrued taxes	331		152
Accrued interest	79		90
Accrued compensation	191		212
Asset retirement obligations	308		254
Other regulatory liabilities	72		108
Other current liabilities	122		107
Total current liabilities	2,494		2,199
Long-term Debt	8,443		8,558
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	3,425		3,273
Deferred credits related to income taxes	1,973		2,016
Accumulated deferred ITCs	89		94
Employee benefit obligations	136		214
Operating lease obligations	69		119
Asset retirement obligations, deferred	4,015		3,720
Other cost of removal obligations	261		335
Other regulatory liabilities, deferred	139		124
Other deferred credits and liabilities	66		50
Total deferred credits and other liabilities	10,173		9,945
Total Liabilities	21,110		20,702
Redeemable Preferred Stock	291		291
Common Stockholder's Equity (See accompanying statements)	10,903		9,810
Total Liabilities and Stockholder's Equity	$	32,304	$	30,803

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

21

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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
Net income after dividends on    preferred stock	—	—		—		444		—		444
Capital contributions from parent company	—	—		40		—		—		40
Other comprehensive income	—	—		—		—		1		1
Cash dividends on common stock	—	—		—		(240)		—		(240)
Balance at September 30, 2020	31	$	1,222	$	5,408	$	3,305	$	(20)	$	9,915
Balance at December 31, 2020	31	$	1,222	$	5,413	$	3,194	$	(19)	$	9,810
Net income after dividends on    preferred stock	—	—		—		359		—		359
Capital contributions from parent company	—	—		602		—		—		602
Other comprehensive income	—	—		—		—		1		1
Cash dividends on common stock	—	—		—		(246)		—		(246)
Balance at March 31, 2021	31	1,222		6,015		3,307		(18)		10,526
Net income after dividends on    preferred stock	—	—		—		331		—		331
Capital contributions from parent company	—	—		26		—		—		26
Other comprehensive income	—	—		—		—		1		1
Cash dividends on common stock	—	—		—		(246)		—		(246)
Other	—	—		—		(1)		—		(1)
Balance at June 30, 2021	31	1,222		6,041		3,391		(17)		10,637
Net income after dividends on    preferred stock	—	—		—		499		—		499
Capital contributions from parent company	—	—		9		—		—		9
Other comprehensive income	—	—		—		—		5		5
Cash dividends on common stock	—	—		—		(246)		—		(246)
Other	—	—		—		—		(1)		(1)
Balance at September 30, 2021	31	$	1,222	$	6,050	$	3,644	$	(13)	$	10,903

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

22

    Table of Contents                                Index to Financial Statements

GEORGIA POWER COMPANY

CONDENSED STATEMENTS OF INCOME (UNAUDITED)

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
	(in millions)				(in millions)
Operating Revenues:
Retail revenues	$	2,652	$	2,435	$	6,465	$	5,870
Wholesale revenues	63		34		143		85
Other revenues	141		148		442		416
Total operating revenues	2,856		2,617		7,050		6,371
Operating Expenses:
Fuel	432		368		1,088		826
Purchased power, non-affiliates	173		146		461		409
Purchased power, affiliates	288		142		573		393
Other operations and maintenance	544		483		1,558		1,411
Depreciation and amortization	345		358		1,025		1,064
Taxes other than income taxes	130		123		365		344
Estimated loss on Plant Vogtle Units 3 and 4	264		—		772		149
Total operating expenses	2,176		1,620		5,842		4,596
Operating Income	680		997		1,208		1,775
Other Income and (Expense):
Allowance for equity funds used during construction	33		22		94		63
Interest expense, net of amounts capitalized	(106)		(106)		(315)		(322)
Other income (expense), net	42		32		124		93
Total other income and (expense)	(31)		(52)		(97)		(166)
Earnings Before Income Taxes	649		945		1,111		1,609
Income taxes	113		172		81		198
Net Income	$	536	$	773	$	1,030	$	1,411

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
	(in millions)				(in millions)
Net Income	$	536	$	773	$	1,030	$	1,411
Other comprehensive income (loss):
Qualifying hedges:
Changes in fair value, net of tax of    $—, $—, $—, and $(1), respectively	—		—		—		(2)
Reclassification adjustment for amounts included in net income,    net of tax of $1, $—, $2, and $2, respectively	2		2		5		4
Total other comprehensive income (loss)	2		2		5		2
Comprehensive Income	$	538	$	775	$	1,035	$	1,413

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 Nine Months Ended September 30,
	2021		2020
	(in millions)
Operating Activities:
Net income	$	1,030	$	1,411
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total	1,164		1,206
Deferred income taxes	(299)		(167)
Allowance for equity funds used during construction	(94)		(63)
Pension, postretirement, and other employee benefits	(112)		(98)
Settlement of asset retirement obligations	(154)		(130)
Storm damage accruals	160		160
Retail fuel cost under recovery – long-term	(203)		—
Estimated loss on Plant Vogtle Units 3 and 4	772		149
Other, net	88		11
Changes in certain current assets and liabilities —
-Receivables	(85)		(168)
-Fossil fuel stock	77		4
-Materials and supplies	(60)		(74)
-Other current assets	(51)		(69)
-Accounts payable	164		25
-Accrued taxes	154		44
-Retail fuel cost over recovery	(113)		84
-Customer refunds	(5)		(162)
-Other current liabilities	(83)		(38)
Net cash provided from operating activities	2,350		2,125
Investing Activities:
Property additions	(2,411)		(2,519)
Nuclear decommissioning trust fund purchases	(766)		(500)
Nuclear decommissioning trust fund sales	761		495
Cost of removal, net of salvage	(99)		(93)
Change in construction payables, net of joint owner portion	(68)		(14)
Payments pursuant to LTSAs	(38)		(44)
Contributions in aid of construction	71		18
Proceeds from dispositions	4		143
Other investing activities	(26)		(12)
Net cash used for investing activities	(2,572)		(2,526)
Financing Activities:
Decrease in notes payable, net	(60)		(115)
Proceeds —
Senior notes	750		1,500
Pollution control revenue bonds	122		53
FFB loan	371		519
Short-term borrowings	—		250
Redemptions and repurchases —
Senior notes	(325)		(950)
Pollution control revenue bonds	(69)		(148)
Short-term borrowings	—		(375)
FFB loan	(75)		(55)
Capital contributions from parent company	1,054		1,379
Payment of common stock dividends	(1,237)		(1,156)
Other financing activities	(26)		(35)
Net cash provided from financing activities	505		867
Net Change in Cash, Cash Equivalents, and Restricted Cash	283		466
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	9		52
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	292	$	518
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $47 and $34 capitalized for 2021 and 2020, respectively)	$	325	$	316
Income taxes, net	237		311
Noncash transactions —
Accrued property additions at end of period	477		523
Right-of-use assets obtained under operating leases	(3)		30

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 September 30, 2021		At December 31, 2020
	(in millions)
Current Assets:
Cash and cash equivalents	$	292	$	9
Receivables —
Customer accounts	689		621
Unbilled revenues	258		233
Joint owner accounts	106		123
Affiliated	41		21
Other accounts and notes	46		67
Accumulated provision for uncollectible accounts	(2)		(26)
Fossil fuel stock	201		278
Materials and supplies	647		592
Regulatory assets – storm damage	102		213
Regulatory assets – asset retirement obligations	191		166
Other regulatory assets	243		248
Other current assets	255		143
Total current assets	3,069		2,688
Property, Plant, and Equipment:
In service	40,831		39,682
Less: Accumulated provision for depreciation	12,743		12,251
Plant in service, net of depreciation	28,088		27,431
Nuclear fuel, at amortized cost	564		548
Construction work in progress	7,337		6,857
Total property, plant, and equipment	35,989		34,836
Other Property and Investments:
Nuclear decommissioning trusts, at fair value	1,187		1,145
Equity investments in unconsolidated subsidiaries	50		51
Miscellaneous property and investments	66		63
Total other property and investments	1,303		1,259
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization	1,193		1,308
Deferred charges related to income taxes	544		527
Regulatory assets – asset retirement obligations, deferred	3,607		3,291
Other regulatory assets, deferred	2,515		2,692
Other deferred charges and assets	712		479
Total deferred charges and other assets	8,571		8,297
Total Assets	$	48,932	$	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 September 30, 2021		At December 31, 2020
	(in millions)
Current Liabilities:
Securities due within one year	$	672	$	542
Notes payable	—		60
Accounts payable —
Affiliated	719		597
Other	761		753
Customer deposits	263		276
Accrued taxes	457		407
Accrued interest	98		130
Accrued compensation	207		233
Operating lease obligations	153		151
Asset retirement obligations	333		287
Over recovered fuel clause revenues	—		113
Other regulatory liabilities	360		228
Other current liabilities	198		254
Total current liabilities	4,221		4,031
Long-term Debt	13,064		12,428
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	3,222		3,272
Deferred credits related to income taxes	2,386		2,588
Accumulated deferred ITCs	321		273
Employee benefit obligations	461		586
Operating lease obligations, deferred	1,008		1,156
Asset retirement obligations, deferred	6,432		5,978
Other deferred credits and liabilities	456		267
Total deferred credits and other liabilities	14,286		14,120
Total Liabilities	31,571		30,579
Common Stockholder's Equity (See accompanying statements)	17,361		16,501
Total Liabilities and Stockholder's Equity	$	48,932	$	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
Net income	—	—		—		773		—		773
Capital contributions from parent company	—	—		880		—		—		880
Other comprehensive income	—	—		—		—		2		2
Cash dividends on common stock	—	—		—		(386)		—		(386)
Balance at September 30, 2020	9	$	398	$	12,345	$	4,011	$	(48)	$	16,706
Balance at December 31, 2020	9	$	398	$	12,361	$	3,789	$	(47)	$	16,501
Net income	—	—		—		351		—		351
Capital contributions from parent company	—	—		332		—		—		332
Other comprehensive income	—	—		—		—		2		2
Cash dividends on common stock	—	—		—		(412)		—		(412)
Balance at March 31, 2021	9	398		12,693		3,728		(45)		16,774
Net income	—	—		—		143		—		143
Capital contributions from parent company	—	—		40		—		—		40
Other comprehensive income	—	—		—		—		1		1
Cash dividends on common stock	—	—		—		(412)		—		(412)
Balance at June 30, 2021	9	398		12,733		3,459		(44)		16,546
Net income	—	—		—		536		—		536
Capital contributions from parent company	—	—		690		—		—		690
Other comprehensive income	—	—		—		—		2		2
Cash dividends on common stock	—	—		—		(413)		—		(413)
Balance at September 30, 2021	9	$	398	$	13,423	$	3,582	$	(42)	$	17,361

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 September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
	(in millions)				(in millions)
Operating Revenues:
Retail revenues	$	248	$	232	$	670	$	630
Wholesale revenues, non-affiliates	60		61		178		164
Wholesale revenues, affiliates	62		36		120		82
Other revenues	8		7		20		19
Total operating revenues	378		336		988		895
Operating Expenses:
Fuel	139		103		330		266
Purchased power	6		6		21		18
Other operations and maintenance	85		62		230		202
Depreciation and amortization	46		47		138		135
Taxes other than income taxes	33		31		96		90
Total operating expenses	309		249		815		711
Operating Income	69		87		173		184
Other Income and (Expense):
Interest expense, net of amounts capitalized	(16)		(14)		(45)		(45)
Other income (expense), net	7		6		27		19
Total other income and (expense)	(9)		(8)		(18)		(26)
Earnings Before Income Taxes	60		79		155		158
Income taxes	10		12		22		20
Net Income	$	50	$	67	$	133	$	138

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
	(in millions)				(in millions)
Net Income	$	50	$	67	$	133	$	138
Other comprehensive income (loss):
Qualifying hedges:
Reclassification adjustment for amounts included in net income,    net of tax of $—, $—, $—, and $—, respectively	—		—		1		1
Total other comprehensive income (loss)	—		—		1		1
Comprehensive Income	$	50	$	67	$	134	$	139

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 Nine Months Ended September 30,
	2021		2020
	(in millions)
Operating Activities:
Net income	$	133	$	138
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total	161		142
Settlement of asset retirement obligations	(18)		(16)
Other, net	(20)		(11)
Changes in certain current assets and liabilities —
-Receivables	(19)		(3)
-Other current assets	(9)		(7)
-Accounts payable	(12)		(54)
-Accrued taxes	(20)		15
-Retail fuel cost over recovery	(19)		—
-Other current liabilities	(18)		(18)
Net cash provided from operating activities	159		186
Investing Activities:
Property additions	(135)		(174)
Construction payables	(11)		7
Payments pursuant to LTSAs	(21)		(20)
Other investing activities	(15)		(13)
Net cash used for investing activities	(182)		(200)
Financing Activities:
Decrease in notes payable, net	(25)		—
Proceeds —
Senior notes	525		—
Short-term borrowings	—		40
Pollution control revenue bonds	—		34
Other long-term debt	—		100
Redemptions —
Senior notes	—		(275)
Short-term borrowings	—		(40)
Pollution control revenue bonds	—		(41)
Other revenue bonds	(270)		—
Other long-term debt	(75)		—
Capital contributions from parent company	103		80
Return of capital to parent company	—		(74)
Payment of common stock dividends	(118)		(37)
Other financing activities	(10)		(1)
Net cash provided from (used for) financing activities	130		(214)
Net Change in Cash, Cash Equivalents, and Restricted Cash	107		(228)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	39		286
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	146	$	58
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest	$	53	$	49
Income taxes, net	11		9
Noncash transactions — Accrued property additions at end of period	23		42

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 September 30, 2021		At December 31, 2020
	(in millions)
Current Assets:
Cash and cash equivalents	$	146	$	39
Receivables —
Customer accounts, net	46		34
Unbilled revenues	39		38
Affiliated	45		32
Other accounts and notes	27		32
Fossil fuel stock	27		24
Materials and supplies	71		65
Assets from risk management activities, net of collateral	66		1
Other regulatory assets	54		60
Other current assets	11		19
Total current assets	532		344
Property, Plant, and Equipment:
In service	5,078		5,011
Less: Accumulated provision for depreciation	1,568		1,545
Plant in service, net of depreciation	3,510		3,466
Construction work in progress	117		146
Total property, plant, and equipment	3,627		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	231		201
Other regulatory assets, deferred	371		388
Accumulated deferred income taxes	119		129
Other deferred charges and assets	100		55
Total deferred charges and other assets	852		805
Total Assets	$	5,191	$	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 September 30, 2021		At December 31, 2020
	(in millions)
Current Liabilities:
Securities due within one year	$	76	$	406
Notes payable	—		25
Accounts payable —
Affiliated	88		63
Other	61		109
Accrued taxes	94		114
Accrued interest	7		15
Accrued compensation	31		34
Asset retirement obligations	19		27
Over recovered regulatory clause liabilities	7		34
Other regulatory liabilities	104		49
Other current liabilities	50		40
Total current liabilities	537		916
Long-term Debt	1,509		1,013
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	464		447
Deferred credits related to income taxes	276		287
Employee benefit obligations	94		113
Asset retirement obligations, deferred	175		150
Other cost of removal obligations	194		194
Other regulatory liabilities, deferred	48		15
Other deferred credits and liabilities	31		35
Total deferred credits and other liabilities	1,282		1,241
Total Liabilities	3,328		3,170
Common Stockholder's Equity (See accompanying statements)	1,863		1,742
Total Liabilities and Stockholder's Equity	$	5,191	$	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
Net income	—	—		—		67		—		67
Capital contributions from parent company	—	—		6		—		—		6
Cash dividends on common stock	—	—		—		(37)		—		(37)
Balance at September 30, 2020	1	$	38	$	4,456	$	(2,731)	$	(3)	$	1,760
Balance at December 31, 2020	1	$	38	$	4,460	$	(2,754)	$	(2)	$	1,742
Net income	—	—		—		45		—		45
Capital contributions from parent company	—	—		100		—		—		100
Cash dividends on common stock	—	—		—		(39)		—		(39)
Balance at March 31, 2021	1	38		4,560		(2,748)		(2)		1,848
Net income	—	—		—		38		—		38
Capital contributions from parent company	—	—		2		—		—		2
Cash dividends on common stock	—	—		—		(39)		—		(39)
Other	—	—		—		(1)		1		—
Balance at June 30, 2021	1	38		4,562		(2,750)		(1)		1,849
Net income	—	—		—		50		—		50
Capital contributions from parent company	—	—		3		—		—		3
Cash dividends on common stock	—	—		—		(39)		—		(39)
Balance at September 30, 2021	1	$	38	$	4,565	$	(2,739)	$	(1)	$	1,863

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

32

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SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
	(in millions)				(in millions)
Operating Revenues:
Wholesale revenues, non-affiliates	$	503	$	418	$	1,231	$	1,047
Wholesale revenues, affiliates	167		101		361		279
Other revenues	9		4		18		11
Total operating revenues	679		523		1,610		1,337
Operating Expenses:
Fuel	259		137		540		346
Purchased power	41		19		86		52
Other operations and maintenance	94		89		308		245
Depreciation and amortization	132		129		383		367
Taxes other than income taxes	12		10		35		29
Loss on sales-type lease	15		—		15		—
(Gain) loss on dispositions, net	—		—		(39)		(39)
Total operating expenses	553		384		1,328		1,000
Operating Income	126		139		282		337
Other Income and (Expense):
Interest expense, net of amounts capitalized	(36)		(36)		(111)		(114)
Other income (expense), net	2		13		10		19
Total other income and (expense)	(34)		(23)		(101)		(95)
Earnings Before Income Taxes	92		116		181		242
Income taxes (benefit)	9		14		(3)		27
Net Income	83		102		184		215
Net income (loss) attributable to noncontrolling interests	5		28		(27)		3
Net Income Attributable to Southern Power	$	78	$	74	$	211	$	212

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
	(in millions)				(in millions)
Net Income	$	83	$	102	$	184	$	215
Other comprehensive income (loss):
Qualifying hedges:
Changes in fair value, net of tax of    $(7), $15, $(16), and $(2), respectively	(21)		44		(48)		(6)
Reclassification adjustment for amounts included in net income,    net of tax of $9, $(13), $22, and $(8), respectively	27		(36)		66		(24)
Pension and other postretirement benefit plans:
Reclassification adjustment for amounts included in net income,    net of tax of $—, $—, $1, and $—, respectively	1		—		2		2
Total other comprehensive income (loss)	7		8		20		(28)
Comprehensive Income	90		110		204		187
Comprehensive income (loss) attributable to noncontrolling interests	5		28		(27)		3
Comprehensive Income Attributable to Southern Power	$	85	$	82	$	231	$	184

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

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SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	For the Nine Months Ended September 30,
	2021		2020
	(in millions)
Operating Activities:
Net income	$	184	$	215
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total	402		386
Deferred income taxes	(16)		(59)
Utilization of federal investment tax credits	237		318
Amortization of investment tax credits	(44)		(44)
(Gain) loss on dispositions, net	(39)		(39)
Other, net	14		(16)
Changes in certain current assets and liabilities —
-Receivables	(117)		(28)
-Prepaid income taxes	63		74
-Other current assets	(5)		(17)
-Accounts payable	55		(12)
-Accrued taxes	15		21
-Other current liabilities	1		(25)
Net cash provided from operating activities	750		774
Investing Activities:
Business acquisitions, net of cash acquired	(345)		(81)
Property additions	(355)		(135)
Proceeds from dispositions	22		663
Change in construction payables	(22)		(12)
Payments pursuant to LTSAs	(61)		(61)
Other investing activities	8		50
Net cash provided from (used for) investing activities	(753)		424
Financing Activities:
Decrease in notes payable, net	(148)		(449)
Proceeds — Senior notes	400		—
Redemptions —
Short-term borrowings	—		(100)
Senior notes	—		(300)
Return of capital to parent company	(271)		—
Capital contributions from noncontrolling interests	415		173
Distributions to noncontrolling interests	(204)		(164)
Purchase of membership interests from noncontrolling interests	—		(60)
Payment of common stock dividends	(153)		(151)
Other financing activities	(6)		(9)
Net cash provided from (used for) financing activities	33		(1,060)
Net Change in Cash, Cash Equivalents, and Restricted Cash	30		138
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	183		279
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	213	$	417
Supplemental Cash Flow Information:
Cash paid (received) during the period for —
Interest (net of $5 and $10 capitalized for 2021 and 2020, respectively)	$	118	$	123
Income taxes, net	(235)		(278)
Noncash transactions —
Contributions from noncontrolling interests	89		9
Contributions of wind turbine equipment	82		17
Accrued property additions at end of period	53		44
Right-of-use assets obtained under operating leases	66		30

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

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SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

Assets	At September 30, 2021		At December 31, 2020
	(in millions)
Current Assets:
Cash and cash equivalents	$	192	$	182
Receivables —
Customer accounts, net	178		125
Affiliated	68		37
Other	53		27
Materials and supplies	103		157
Prepaid income taxes	15		11
Other current assets	56		36
Total current assets	665		575
Property, Plant, and Equipment:
In service	14,399		13,904
Less: Accumulated provision for depreciation	3,122		2,842
Plant in service, net of depreciation	11,277		11,062
Construction work in progress	274		127
Total property, plant, and equipment	11,551		11,189
Other Property and Investments:
Intangible assets, net of amortization of $104 and $89, respectively	288		302
Equity investments in unconsolidated subsidiaries	83		19
Net investment in sales-type lease	91		—
Total other property and investments	462		321
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization	475		415
Prepaid LTSAs	191		155
Accumulated deferred income taxes	—		262
Income taxes receivable, non-current	33		25
Other deferred charges and assets	234		293
Total deferred charges and other assets	933		1,150
Total Assets	$	13,611	$	13,235

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

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SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

Liabilities and Stockholders' Equity	At September 30, 2021		At December 31, 2020
	(in millions)
Current Liabilities:
Securities due within one year	$	994	$	299
Notes payable	27		175
Accounts payable —
Affiliated	110		65
Other	91		92
Accrued taxes —
Accrued income taxes	8		8
Other accrued taxes	27		22
Accrued interest	26		32
Other current liabilities	125		132
Total current liabilities	1,408		825
Long-term Debt	3,021		3,393
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	156		123
Accumulated deferred ITCs	1,629		1,672
Operating lease obligations	489		426
Other deferred credits and liabilities	201		165
Total deferred credits and other liabilities	2,475		2,386
Total Liabilities	6,904		6,604
Total Stockholders' Equity (See accompanying statements)	6,707		6,631
Total Liabilities and Stockholders' Equity	$	13,611	$	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
Net income	—		74		—		74		28		102
Return of capital to parent company	(4)		—		—		(4)		—		(4)
Other comprehensive income	—		—		8		8		—		8
Cash dividends on common stock	—		(51)		—		(51)		—		(51)
Capital contributions from    noncontrolling interests	—		—		—		—		2		2
Distributions to noncontrolling interests	—		—		—		—		(51)		(51)
Purchase of membership interests    from noncontrolling interests	5		—		—		5		(60)		(55)
Other	—		—		—		—		1		1
Balance at September 30, 2020	$	908	$	1,546	$	(54)	$	2,400	$	4,211	$	6,611

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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
Net income	—		78		—		78		5		83
Other comprehensive income	—		—		7		7		—		7
Cash dividends on common stock	—		(51)		—		(51)		—		(51)
Capital contributions from    noncontrolling interests	—		—		—		—		73		73
Distributions to noncontrolling interests	—		—		—		—		(95)		(95)
Balance at September 30, 2021	$	643	$	1,581	$	(47)	$	2,177	$	4,530	$	6,707

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

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SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
	(in millions)				(in millions)
Operating Revenues:
Natural gas revenues (includes revenue taxes of    $12, $10, $89, and $79, respectively)	$	624	$	478	$	2,991	$	2,356
Alternative revenue programs	(1)		(1)		3		6
Total operating revenues	623		477		2,994		2,362
Operating Expenses:
Cost of natural gas	129		71		943		654
Other operations and maintenance	238		217		776		694
Depreciation and amortization	133		125		396		368
Taxes other than income taxes	36		35		166		154
(Gain) loss on dispositions, net	(121)		—		(127)		2
Total operating expenses	415		448		2,154		1,872
Operating Income	208		29		840		490
Other Income and (Expense):
Earnings from equity method investments	25		33		14		106
Interest expense, net of amounts capitalized	(57)		(57)		(175)		(171)
Other income (expense), net	13		12		(66)		33
Total other income and (expense)	(19)		(12)		(227)		(32)
Earnings Before Income Taxes	189		17		613		458
Income taxes	133		3		224		98
Net Income	$	56	$	14	$	389	$	360

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
	(in millions)				(in millions)
Net Income	$	56	$	14	$	389	$	360
Other comprehensive income (loss):
Qualifying hedges:
Changes in fair value, net of tax of    $8, $1, $11, and $(6), respectively	23		4		32		(17)
Reclassification adjustment for amounts included in net income,    net of tax of $—, $—, $1, and $2, respectively	(2)		1		1		7
Total other comprehensive income (loss)	21		5		33		(10)
Comprehensive Income	$	77	$	19	$	422	$	350

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 Nine Months Ended September 30,
	2021		2020
	(in millions)
Operating Activities:
Net income	$	389	$	360
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total	396		368
Deferred income taxes	289		(1)
Mark-to-market adjustments	147		104
Impairment of PennEast Pipeline investment	84		—
(Gain) loss on dispositions, net	(127)		2
Natural gas cost under recovery – long-term	(79)		—
Other, net	32		(21)
Changes in certain current assets and liabilities —
-Receivables	311		403
-Prepaid income taxes	(148)		(19)
-Natural gas cost under recovery	(432)		—
-Other current assets	(78)		(1)
-Accounts payable	30		(75)
-Other current liabilities	(57)		2
Net cash provided from operating activities	757		1,122
Investing Activities:
Property additions	(1,045)		(1,045)
Cost of removal, net of salvage	(74)		(60)
Investment in unconsolidated subsidiaries	(3)		(79)
Proceeds from dispositions	126		178
Other investing activities	30		33
Net cash used for investing activities	(966)		(973)
Financing Activities:
Increase (decrease) in notes payable, net	38		(500)
Proceeds —
Short-term borrowings	300		—
First mortgage bonds	100		150
Senior notes	450		500
Redemptions —
Senior notes	(300)		—
Medium-term notes	(30)		—
Capital contributions from parent company	63		215
Payment of common stock dividends	(397)		(399)
Other financing activities	(2)		(3)
Net cash provided from (used for) financing activities	222		(37)
Net Change in Cash, Cash Equivalents, and Restricted Cash	13		112
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	19		49
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	32	$	161
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $6 and $5 capitalized for 2021 and 2020, respectively)	$	173	$	162
Income taxes, net	85		45
Noncash transactions — Accrued property additions at end of period	146		146

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 September 30, 2021		At December 31, 2020
	(in millions)
Current Assets:
Cash and cash equivalents	$	29	$	17
Receivables —
Energy marketing	—		516
Customer accounts	249		353
Unbilled revenues	70		219
Affiliated	1		4
Other accounts and notes	39		51
Accumulated provision for uncollectible accounts	(37)		(40)
Natural gas for sale	368		460
Prepaid expenses	181		48
Assets from risk management activities, net of collateral	75		118
Natural gas cost under recovery	432		—
Other regulatory assets	137		102
Other current assets	44		38
Total current assets	1,588		1,886
Property, Plant, and Equipment:
In service	18,527		17,611
Less: Accumulated depreciation	5,004		4,821
Plant in service, net of depreciation	13,523		12,790
Construction work in progress	691		648
Total property, plant, and equipment	14,214		13,438
Other Property and Investments:
Goodwill	5,015		5,015
Equity investments in unconsolidated subsidiaries	1,174		1,290
Other intangible assets, net of amortization of $142 and $195, respectively	40		51
Miscellaneous property and investments	20		19
Total other property and investments	6,249		6,375
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization	72		81
Other regulatory assets, deferred	634		615
Other deferred charges and assets	201		235
Total deferred charges and other assets	907		931
Total Assets	$	22,958	$	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 September 30, 2021		At December 31, 2020
	(in millions)
Current Liabilities:
Securities due within one year	$	47	$	333
Notes payable	662		324
Energy marketing trade payables	—		494
Accounts payable —
Affiliated	42		56
Other	399		373
Customer deposits	106		90
Accrued taxes	79		83
Accrued interest	68		58
Accrued compensation	87		106
Temporary LIFO liquidation	18		—
Other regulatory liabilities	18		122
Other current liabilities	154		150
Total current liabilities	1,680		2,189
Long-term Debt	6,766		6,293
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	1,571		1,265
Deferred credits related to income taxes	822		847
Employee benefit obligations	260		283
Operating lease obligations	60		67
Other cost of removal obligations	1,675		1,649
Accrued environmental remediation	203		216
Other deferred credits and liabilities	45		54
Total deferred credits and other liabilities	4,636		4,381
Total Liabilities	13,082		12,863
Common Stockholder's Equity (See accompanying statements)	9,876		9,767
Total Liabilities and Stockholder's Equity	$	22,958	$	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
Net income	—		14		—		14
Capital contributions from parent company	30		—		—		30
Other comprehensive income	—		—		5		5
Cash dividends on common stock	—		(133)		—		(133)
Balance at September 30, 2020	$	9,925	$	(237)	$	(3)	$	9,685
Balance at December 31, 2020	$	9,930	$	(141)	$	(22)	$	9,767
Net income	—		398		—		398
Capital contributions from parent company	57		—		—		57
Other comprehensive income	—		—		4		4
Cash dividends on common stock	—		(132)		—		(132)
Balance at March 31, 2021	9,987		125		(18)		10,094
Net loss	—		(65)		—		(65)
Capital contributions from parent company	25		—		—		25
Other comprehensive income	—		—		8		8
Cash dividends on common stock	—		(133)		—		(133)
Balance at June 30, 2021	10,012		(73)		(10)		9,929
Net income	—		56		—		56
Capital contributions from parent company	2		—		—		2
Other comprehensive income	—		—		21		21
Cash dividends on common stock	—		(132)		—		(132)
Balance at September 30, 2021	$	10,014	$	(149)	$	11	$	9,876

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	49
C	Contingencies	60
D	Revenue from Contracts with Customers and Lease Income	63
E	Consolidated Entities and Equity Method Investments	70
F	Financing	72
G	Income Taxes	74
H	Retirement Benefits	75
I	Fair Value Measurements	78
J	Derivatives	83
K	Acquisitions and Dispositions	95
L	Segment and Related Information	98

INDEX TO APPLICABLE NOTES TO FINANCIAL STATEMENTS BY REGISTRANT

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

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

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

(A) INTRODUCTION

The condensed quarterly financial statements of each Registrant included herein have been prepared by such Registrant, without audit, pursuant to the rules and regulations of the SEC. The Condensed Balance Sheets at December 31, 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 September 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 September 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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Other intangible assets were as follows:

	At September 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	$	(148)	$	64	$	212	$	(135)	$	77
Trade names	64		(36)		28		64		(31)		33
Storage and transportation contracts(*)	—		—		—		64		(64)		—
PPA fair value adjustments	390		(104)		286		390		(89)		301
Other	10		(8)		2		10		(9)		1
Total other intangible assets subject to amortization	$	676	$	(296)	$	380	$	740	$	(328)	$	412
Other intangible assets not subject to amortization:
Federal Communications Commission licenses	75		—		75		75		—		75
Total other intangible assets	$	751	$	(296)	$	455	$	815	$	(328)	$	487
Southern Power
Other intangible assets subject to amortization:
PPA fair value adjustments	$	390	$	(104)	$	286	$	390	$	(89)	$	301
Southern Company Gas
Other intangible assets subject to amortization:
Gas marketing services
Customer relationships	$	156	$	(128)	$	28	$	156	$	(119)	$	37
Trade names	26		(14)		12		26		(12)		14
Wholesale gas services
Storage and transportation contracts(*)	—		—		—		64		(64)		—
Total other intangible assets subject to amortization	$	182	$	(142)	$	40	$	246	$	(195)	$	51

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

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Amortization associated with other intangible assets was as follows:

	Three Months Ended		Nine Months Ended
	September 30, 2021
	(in millions)
Southern Company(a)	$	11	$	33
Southern Power(b)	5		15
Southern Company Gas(c)	4		11

(a)Includes $5 million and $15 million for the three and nine months ended September 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
	September 30, 2021		December 31, 2020		September 30, 2021		September 30, 2021		December 31, 2020
	(in millions)				(in millions)		(in millions)
Cash and cash equivalents	$	2,078	$	1,065	$	192	$	29	$	17
Restricted cash(a):
Other current assets	3		2		—		3		2
Other deferred charges and assets	21		—		21		—		—
Total cash, cash equivalents, and restricted cash(b)	$	2,101	$	1,068	$	213	$	32	$	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 records natural gas inventories on a WACOG basis. For any declines in market prices below the WACOG considered to be other than temporary, an adjustment is recorded to reduce the value of natural gas inventories to market value. Nicor Gas' natural gas inventory is carried at cost on a LIFO basis. Inventory decrements occurring during the year that are restored prior to year end are charged to cost of natural gas at the estimated annual replacement cost. Inventory decrements that are not restored prior to year end are charged to cost of natural gas at the actual LIFO cost of the inventory layers liquidated.

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

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Asset Retirement Obligations

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

Details of changes in AROs for Southern Company, Alabama Power, Georgia Power, and Mississippi Power during the first nine months of 2021 are shown in the following table. There were no material changes in AROs for the other Registrants during the first nine months of 2021.

	Southern Company		Alabama Power		Georgia Power		Mississippi Power
	(in millions)
Balance at December 31, 2020	$	10,684	$	3,974	$	6,265	$	176
Liabilities incurred	17		—		3		—
Liabilities settled	(341)		(152)		(154)		(18)
Accretion	304		116		176		6
Cash flow revisions	945		385		475		30
Balance at September 30, 2021	$	11,609	$	4,323	$	6,765	$	194

In August 2021, Alabama Power recorded an increase of approximately $385 million to its AROs related to the CCR Rule and the related state rule based on updated estimates for post-closure costs at its ash ponds and inflation rates.

In September 2021, Georgia Power recorded an increase of approximately $435 million to its AROs related to the CCR Rule and the related state rule based on updated estimates for inflation rates and the timing of closure activities.

In September 2021, Mississippi Power recorded an increase of approximately $30 million to its AROs related to the CCR Rule based on updated estimates for the timing of closure activities, post-closure costs at one of its ash ponds, and inflation rates.

The traditional electric operating companies have periodically updated, and expect to continue periodically updating, their related cost estimates and ARO liabilities for each CCR unit as additional information related to these assumptions becomes available. Some of these updates have been, and future updates may be, material. Additionally, the closure designs and plans in the States of Alabama and Georgia are subject to approval by environmental regulatory agencies. Absent continued recovery of ARO costs through regulated rates, results of operations, cash flows, and financial condition for Southern Company and the traditional electric operating companies could be materially impacted. See Note (B) under "Georgia Power – Rate Plan" for additional information. The ultimate outcome of these matters cannot be determined at this time.

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(B) REGULATORY MATTERS

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

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

Regulatory Clause	Balance Sheet Line Item	September 30, 2021		December 31, 2020
		(in millions)
Alabama Power
Rate CNP Compliance	Other regulatory liabilities, current	$	—	$	28
	Other regulatory liabilities, deferred	24		—
Rate CNP PPA	Other regulatory assets, deferred	88		58
Retail Energy Cost Recovery	Other regulatory liabilities, current	—		18
	Other regulatory assets, current	79		—
	Other regulatory assets, deferred	6		—
Natural Disaster Reserve	Other regulatory liabilities, deferred	36		77
Georgia Power
Fuel Cost Recovery	Over recovered fuel clause revenues	$	—	$	113
	Other deferred charges and assets	203		—
Mississippi Power
Fuel Cost Recovery	Over recovered regulatory clause liabilities	$	5	$	24
Ad Valorem Tax	Other regulatory assets, current	12		11
	Other regulatory assets, deferred	39		41
Property Damage Reserve	Other regulatory liabilities, deferred	—		4
	Other regulatory assets, deferred	16		—
Southern Company Gas
Natural Gas Cost Recovery(*)	Other regulatory liabilities	$	—	$	88
	Natural gas cost under recovery	432		—
	Other regulatory assets, deferred	79		—

(*)The significant change during the nine months ended September 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. On August 27, 2021, the court affirmed both the August 2020 and December 2020 Alabama PSC orders. On October 7, 2021, Energy Alabama and Gasp, Inc. filed an unopposed motion for voluntary dismissal of their direct appeal previously

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filed on January 7, 2021. This matter is now concluded. At September 30, 2021, expenditures associated with the construction of Plant Barry Unit 8 included in CWIP totaled approximately $222 million.

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 September 9, 2021, the Mississippi PSC issued an order confirming the conclusion of its review of Mississippi Power's 2021 IRP with no deficiencies identified. Mississippi Power's 2021 IRP includes a schedule to retire Mississippi Power's 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. 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 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 September 30, 2021, Alabama Power's NDR balance was $36 million. Effective with October 2021 billings, the reserve maintenance charge component of Rate NDR was suspended and the reserve establishment charge was 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.

Calhoun Generating Station Acquisition

On September 23, 2021, Alabama Power entered into an agreement to acquire all of the equity interests in Calhoun Power Company, LLC, which owns and operates a 743-MW winter peak, simple-cycle, combustion turbine generation facility in Calhoun County, Alabama (Calhoun Generating Station). The total purchase price associated with the acquisition is approximately $180 million, subject to working capital adjustments. The completion of the acquisition is subject to the satisfaction and waiver of certain conditions, including, among other customary conditions, approval by the Alabama PSC and the FERC, as well as the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. Alabama Power expects to complete the transaction by September 30, 2022.

On October 28, 2021, Alabama Power filed a petition for a CCN with the Alabama PSC to procure additional generating capacity through the acquisition of the Calhoun Generating Station.

Upon certification, Alabama Power expects to recover costs associated with the Calhoun Generating Station through its existing rate structure, primarily Rate CNP New Plant, Rate CNP Compliance, Rate ECR, and Rate RSE.

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

Georgia Power

Rate Plan

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

In February 2020, the Georgia PSC denied a motion for reconsideration filed by the Sierra Club regarding the Georgia PSC's decision in the 2019 ARP allowing Georgia Power to recover compliance costs for CCR AROs, and, in December 2020, the Superior Court of Fulton County affirmed the decision of the Georgia PSC. On October 25,

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(UNAUDITED)

2021, the Georgia Court of Appeals affirmed the Superior Court of Fulton County's December 2020 order. On November 3, 2021, the Sierra Club filed a motion for reconsideration with the Georgia Court of Appeals. The ultimate outcome of this matter cannot be determined at this time.

In accordance with the terms of the 2019 ARP, on October 1, 2021, Georgia Power filed the following tariff adjustments to become effective January 1, 2022 pending approval by the Georgia PSC:

•increase traditional base tariffs by approximately $192 million;

•decrease the ECCR tariff by approximately $12 million;

•decrease Demand-Side Management tariffs by approximately $25 million; and

•increase Municipal Franchise Fee tariffs by approximately $2 million.

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 the 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. On November 2, 2021, the Georgia PSC voted to approve Georgia Power's application as filed, with the following modifications pursuant to a stipulated agreement between Georgia Power and the staff of the Georgia PSC. Georgia Power will include in rate base $2.1 billion of the $2.38 billion previously deemed prudent by the Georgia PSC and will recover the related depreciation expense through retail base rates. Financing costs on the remaining portion of the total Unit 3 and the Common Facilities construction costs will continue to be recovered through the NCCR tariff or deferred. Georgia Power will defer as a regulatory asset the remaining depreciation expense (approximately $38 million annually) until Unit 4 costs are placed in retail base rates. In addition, the stipulated agreement clarified that following the prudency review, the remaining amount to be placed in retail base rates will be net of the proceeds from the Guarantee Settlement Agreement and will not be used to offset imprudent costs, if any.

The related increase in annual retail base rates of approximately $302 million also includes recovery of all projected operations and maintenance expenses for Unit 3 and the Common Facilities and other related costs of operation, partially offset by the related production tax credits, and will become effective the month after Unit 3 is placed in service. This increase will be partially offset by a decrease in the NCCR tariff of approximately $78 million expected to be effective January 1, 2022.

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

Deferral of Incremental COVID-19 Costs

Since June 2021, Georgia Power has continued 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, Georgia Power has reduced the balance of deferred incremental costs by a total of approximately $23 million through September 30, 2021. At September 30, 2021, the incremental costs deferred totaled approximately $20 million, including approximately $1 million of incremental bad debt costs and $19 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.

Fuel Cost Recovery

Georgia Power has established fuel cost recovery rates approved by the Georgia PSC. On October 12, 2021, Georgia Power filed a notification and plan with the Georgia PSC to implement an interim fuel rider and increase

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(UNAUDITED)

fuel rates by 15% effective January 1, 2022, which is expected to increase annual billings by approximately $252 million. The Georgia PSC has 30 days from the filing to approve the plan; however, if the Georgia PSC elects to take no action, the new rates become effective as requested. Georgia Power is currently scheduled to file its next fuel case by February 28, 2023. 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.

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

	(in millions)
Base project capital cost forecast(a)(b)	$	9,342
Construction contingency estimate	137
Total project capital cost forecast(a)(b)	9,479
Net investment at September 30, 2021(b)	(8,159)
Remaining estimate to complete	$	1,320

(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 $318 million, of which $169 million had been accrued through September 30, 2021.

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

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(UNAUDITED)

Georgia Power estimates that its financing costs for construction of Plant Vogtle Units 3 and 4 will total approximately $3.2 billion, of which $2.8 billion had been incurred through September 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. Through June 2021, the site experienced an overall decline in the number of active cases since the peak in January 2021. During the third quarter 2021, the site experienced a similar peak in August 2021; however, the number of active cases since this peak has declined. 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, which was completed in July 2021, and fuel load for Unit 3. 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. Through the third quarter 2021, the project continued to face challenges including, but not limited to, construction productivity, construction remediation work, and the pace of system turnovers. As a result of these continued challenges, at the end of the third quarter 2021, Southern Nuclear further extended certain milestone dates, including fuel load for Unit 3, from those established at the end of the second quarter 2021. The site work plan currently targets fuel load for Unit 3 in the first quarter 2022 and an in-service date of May 2022 and primarily depends on significant improvements in overall construction productivity and production levels, the volume of construction remediation work, the pace of system and area turnovers, and the progression of startup and other testing. As the site work plan includes minimal margin to these milestone dates, an in-service date in the third quarter 2022 for Unit 3 is projected, although any further delays could result in a later in-service date.

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. These productivity challenges continued into the third quarter 2021 and some craft and support resources were diverted temporarily to support construction efforts on Unit 3. As a result of these factors, at the end of the third quarter 2021, Southern Nuclear further extended the milestone dates for Unit 4 from those established at the end of the second quarter 2021. The site work plan targets an in-service date of March 2023 for Unit 4 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

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(UNAUDITED)

to the milestone dates, an in-service date in the second 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. As of June 30, 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, 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. As a result of the factors discussed above, during the third quarter 2021, all of the remaining construction contingency previously established in the second quarter 2021 and an additional $127 million was assigned to the base capital cost forecast for costs primarily associated with the schedule extensions for Units 3 and 4, construction productivity and support resources for Units 3 and 4, and construction remediation work for Unit 3. Georgia Power also increased its total capital cost forecast as of September 30, 2021 by adding $137 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, the second quarter 2021, and the third quarter 2021 of $48 million ($36 million after tax), $460 million ($343 million after tax), and $264 million ($197 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. On August 26, 2021, the NRC issued an inspection report with i