Item 1. Financial Statements (Unaudited).

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Item 1. Financial Statements (Unaudited).


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

Alabama Power Company:
Condensed Statements of Income			16
Condensed Statements of Comprehensive Income			16
Condensed Statements of Cash Flows			17
Condensed Balance Sheets			18
Condensed Statements of Common Stockholder's Equity			20

Georgia Power Company:
Condensed Statements of Income			21
Condensed Statements of Comprehensive Income			21
Condensed Statements of Cash Flows			22
Condensed Balance Sheets			23
Condensed Statements of Common Stockholder's Equity			25

Mississippi Power Company:
Condensed Statements of Income and Comprehensive Income			26
Condensed Statements of Cash Flows			27
Condensed Balance Sheets			28
Condensed Statements of Common Stockholder's Equity			30

Southern Power Company and Subsidiary Companies:
Condensed Consolidated Statements of Income			31
Condensed Consolidated Statements of Comprehensive Income			31
Condensed Consolidated Statements of Cash Flows			32
Condensed Consolidated Balance Sheets			33
Condensed Consolidated Statements of Stockholders' Equity			35

Southern Company Gas and Subsidiary Companies:
Condensed Consolidated Statements of Income			36
Condensed Consolidated Statements of Comprehensive Income			36
Condensed Consolidated Statements of Cash Flows			37
Condensed Consolidated Balance Sheets			38
Condensed Consolidated Statements of Stockholder's Equity			40

Combined Notes to the Condensed Financial Statements			41

Table of Contents Index to Financial Statements

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)


	For the Three Months Ended March 31,
		2023		2022
	(in millions)
Operating Revenues:
Retail electric revenues		$	3,599	$	3,613
Wholesale electric revenues		599		664
Other electric revenues		190		177
Natural gas revenues (includes alternative revenue programs of $12 and $—, respectively)		1,875		2,058
Other revenues		217		136
Total operating revenues		6,480		6,648
Operating Expenses:
Fuel		1,050		1,111
Purchased power		242		232
Cost of natural gas		898		1,095
Cost of other sales		127		69
Other operations and maintenance		1,482		1,516
Depreciation and amortization		1,111		892
Taxes other than income taxes		394		372



Gain on dispositions, net		(42)		(23)
Total operating expenses		5,262		5,264
Operating Income		1,218		1,384
Other Income and (Expense):
Allowance for equity funds used during construction		65		51
Earnings from equity method investments		48		46
Interest expense, net of amounts capitalized		(582)		(462)

Other income (expense), net		147		145
Total other income and (expense)		(322)		(220)
Earnings Before Income Taxes		896		1,164
Income taxes		97		173
Consolidated Net Income		799		991

Dividends on preferred stock of subsidiaries		—		4
Net loss attributable to noncontrolling interests		(63)		(45)
Consolidated Net Income Attributable to Southern Company		$	862	$	1,032
Common Stock Data:
Earnings per share -
Basic		$	0.79	$	0.97
Diluted		$	0.79	$	0.97
Average number of shares of common stock outstanding (in millions)
Basic		1,091		1,063
Diluted		1,098		1,069

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

Table of Contents Index to Financial Statements

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)


	For the Three Months Ended March 31,
		2023		2022
	(in millions)
Consolidated Net Income		$	799	$	991
Other comprehensive income (loss):
Qualifying hedges:
Changes in fair value, net of tax of $(23) and $8, respectively		(63)		19
Reclassification adjustment for amounts included in net income, net of tax of $7 and $6, respectively		19		20
Pension and other postretirement benefit plans:

Reclassification adjustment for amounts included in net income, net of tax of $— and $1, respectively		—		3
Total other comprehensive income (loss)		(44)		42
Comprehensive Income		755		1,033

Dividends on preferred stock of subsidiaries		—		4
Comprehensive loss attributable to noncontrolling interests		(63)		(45)
Consolidated Comprehensive Income Attributable to Southern Company		$	818	$	1,074

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

Table of Contents Index to Financial Statements

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	For the Three Months Ended March 31,
	2023		2022
	(in millions)
Operating Activities:
Consolidated net income	$	799	$	991
Adjustments to reconcile consolidated net income to net cash provided from operating activities —
Depreciation and amortization, total	1,233		989


Allowance for equity funds used during construction	(65)		(51)

Pension, postretirement, and other employee benefits	(126)		(123)
Settlement of asset retirement obligations	(113)		(87)
Stock based compensation expense	92		85








Natural gas cost under recovery – long-term	—		162
Retail fuel cost under recovery – long-term	454		(130)
Other, net	51		79
Changes in certain current assets and liabilities —
-Receivables	319		(217)
-Prepayments	(100)		(86)
-Fossil fuel for generation	(203)		39
-Materials and supplies	(98)		(28)
-Natural gas for sale, net of temporary LIFO liquidation	267		450

-Other current assets	143		8
-Accounts payable	(1,056)		132
-Accrued taxes	(237)		(58)
-Accrued compensation	(478)		(470)
-Accrued interest	(127)		(128)



-Natural gas cost over recovery	117		—
-Other current liabilities	(28)		35
Net cash provided from operating activities	844		1,592
Investing Activities:


Property additions	(1,850)		(1,419)


Nuclear decommissioning trust fund purchases	(256)		(294)
Nuclear decommissioning trust fund sales	251		289
Proceeds from dispositions	103		91
Cost of removal, net of salvage	(135)		(227)
Change in construction payables, net	(140)		23


Other investing activities	(91)		(18)
Net cash used for investing activities	(2,118)		(1,555)
Financing Activities:
Increase in notes payable, net	187		137
Proceeds —
Long-term debt	1,979		700

Short-term borrowings	100		850
Common stock	15		38

Redemptions and repurchases —
Long-term debt	(575)		(977)



Short-term borrowings	(400)		(100)
Capital contributions from noncontrolling interests	21		73
Distributions to noncontrolling interests	(48)		(97)

Payment of common stock dividends	(742)		(702)

Other financing activities	(83)		(115)
Net cash provided from (used for) financing activities	454		(193)
Net Change in Cash, Cash Equivalents, and Restricted Cash	(820)		(156)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	2,037		1,829
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	1,217	$	1,673
Supplemental Cash Flow Information:
Cash paid (received) during the period for —
Interest (net of $32 and $23 capitalized for 2023 and 2022, respectively)	$	652	$	515
Income taxes, net	(9)		(8)
Noncash transactions —
Accrued property additions at end of period	833		863



Right-of-use assets obtained under operating leases	26		3
Right-of-use assets obtained under finance leases	1		—
Reassessment of right-of-use assets under operating leases	—		40

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

Table of Contents Index to Financial Statements

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


Assets	At March 31, 2023		At December 31, 2022
	(in millions)
Current Assets:
Cash and cash equivalents	$	1,053	$	1,917

Receivables —
Customer accounts	1,890		2,128

Unbilled revenues	596		1,012
Under recovered fuel clause revenues	484		10

Other accounts and notes	510		637
Accumulated provision for uncollectible accounts	(80)		(71)
Materials and supplies	1,756		1,664
Fossil fuel for generation	778		575
Natural gas for sale	216		438

Prepaid expenses	626		347

Assets from risk management activities, net of collateral	53		115
Regulatory assets – asset retirement obligations	342		332
Natural gas cost under recovery	—		108

Other regulatory assets	936		860
Other current assets	395		344
Total current assets	9,555		10,416
Property, Plant, and Equipment:
In service	118,690		117,529
Less: Accumulated depreciation	35,990		35,297
Plant in service, net of depreciation	82,700		82,232
Other utility plant, net	571		599
Nuclear fuel, at amortized cost	849		843
Construction work in progress	11,510		10,896
Total property, plant, and equipment	95,630		94,570
Other Property and Investments:
Goodwill	5,161		5,161
Nuclear decommissioning trusts, at fair value	2,245		2,145
Equity investments in unconsolidated subsidiaries	1,408		1,443
Other intangible assets, net of amortization of $350 and $340, respectively	397		406

Miscellaneous property and investments	616		602
Total other property and investments	9,827		9,757
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization	1,505		1,531
Deferred charges related to income taxes	876		866
Prepaid pension costs	2,384		2,290

Unamortized loss on reacquired debt	234		238
Deferred under recovered fuel clause revenues	1,702		2,056
Regulatory assets – asset retirement obligations, deferred	5,701		5,764
Other regulatory assets, deferred	5,886		5,918


Other deferred charges and assets	1,456		1,485
Total deferred charges and other assets	19,744		20,148
Total Assets	$	134,756	$	134,891

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

Table of Contents Index to Financial Statements

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


Liabilities and Stockholders' Equity	At March 31, 2023		At December 31, 2022
	(in millions)
Current Liabilities:
Securities due within one year	$	4,363	$	4,285

Notes payable	2,554		2,609

Accounts payable	2,365		3,525
Customer deposits	475		502
Accrued taxes —
Accrued income taxes	52		60

Other accrued taxes	435		764
Accrued interest	487		614

Accrued compensation	617		1,127
Asset retirement obligations	709		694
Liabilities from risk management activities, net of collateral	318		178




Operating lease obligations	199		197
Natural gas cost over recovery	117		—
Other regulatory liabilities	287		382
Other current liabilities	915		787
Total current liabilities	13,893		15,724
Long-term Debt	52,060		50,656
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	10,488		10,036
Deferred credits related to income taxes	5,107		5,235
Accumulated deferred ITCs	2,112		2,133
Employee benefit obligations	1,222		1,238
Operating lease obligations, deferred	1,374		1,388
Asset retirement obligations, deferred	10,209		10,146


Other cost of removal obligations	1,921		1,903
Other regulatory liabilities, deferred	690		733

Other deferred credits and liabilities	1,118		1,167
Total deferred credits and other liabilities	34,241		33,979
Total Liabilities	100,194		100,359



















Total Stockholders' Equity (See accompanying statements)	34,562		34,532
Total Liabilities and Stockholders' Equity	$	134,756	$	134,891

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

Table of Contents Index to Financial Statements

SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)


	Southern Company Common Stockholders' Equity
	Number of Common Shares		Common Stock								Accumulated Other Comprehensive Income (Loss)
	Issued	Treasury	Par Value		Paid-In Capital		Treasury		Retained Earnings				Noncontrolling Interests	Total
	(in millions)
Balance at December 31, 2021	1,061	(1)	$	5,279	$	11,950	$	(47)	$	10,929	$	(237)		$	4,402	$	32,276
Consolidated net income (loss)	—	—	—		—		—		1,032		—			(45)		987
Other comprehensive income	—	—	—		—		—		—		42			—		42
Stock issued	3	—	7		31		—		—		—			—		38
Stock-based compensation	—	—	—		6		—		—		—			—		6

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

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



Other	—	—	—		7		(2)		2		—			—		7
Balance at March 31, 2022	1,064	(1)	$	5,286	$	11,994	$	(49)	$	11,261	$	(195)		$	4,332	$	32,629






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

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

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



Other	—	—	—		2		(2)		—		—		—		—
Balance at March 31, 2023	1,092	(1)	$	5,421	$	13,715	$	(55)	$	11,658	$	(211)	$	4,034	$	34,562

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

Table of Contents Index to Financial Statements

ALABAMA POWER COMPANY

CONDENSED STATEMENTS OF INCOME (UNAUDITED)


	For the Three Months Ended March 31,
		2023		2022
	(in millions)
Operating Revenues:
Retail revenues		$	1,381	$	1,379
Wholesale revenues, non-affiliates		141		114
Wholesale revenues, affiliates		19		65
Other revenues		106		91
Total operating revenues		1,647		1,649
Operating Expenses:
Fuel		308		333
Purchased power, non-affiliates		101		67
Purchased power, affiliates		59		26
Other operations and maintenance		424		409
Depreciation and amortization		345		215
Taxes other than income taxes		115		104
Total operating expenses		1,352		1,154
Operating Income		295		495
Other Income and (Expense):
Allowance for equity funds used during construction		21		16
Interest expense, net of amounts capitalized		(103)		(89)
Other income (expense), net		40		36
Total other income and (expense)		(42)		(37)
Earnings Before Income Taxes		253		458
Income taxes (benefit)		(2)		107
Net Income		255		351
Dividends on Preferred Stock		—		4
Net Income After Dividends on Preferred Stock		$	255	$	347

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)


	For the Three Months Ended March 31,
		2023		2022
	(in millions)
Net Income		$	255	$	351
Other comprehensive income:
Qualifying hedges:
Changes in fair value, net of tax of $— and $(1), respectively		—		(1)
Reclassification adjustment for amounts included in net income, net of tax of $— and $—, respectively		—		1
Total other comprehensive income		—		—
Comprehensive Income		$	255	$	351

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

Table of Contents Index to Financial Statements

ALABAMA POWER COMPANY

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)


	For the Three Months Ended March 31,
	2023		2022
	(in millions)
Operating Activities:
Net income	$	255	$	351
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total	398		250
Deferred income taxes	(75)		35

Pension, postretirement, and other employee benefits	(51)		(48)
Settlement of asset retirement obligations	(52)		(38)

Retail fuel cost under recovery – long-term	100		(46)

Other, net	(3)		(27)
Changes in certain current assets and liabilities —
-Receivables	90		(4)
-Fossil fuel stock	(78)		23
-Prepayments	(89)		(85)


-Other current assets	(37)		(10)
-Accounts payable	(400)		(237)
-Accrued taxes	109		102
-Accrued compensation	(102)		(99)


-Other current liabilities	(35)		(13)
Net cash provided from operating activities	30		154
Investing Activities:
Property additions	(389)		(343)
Nuclear decommissioning trust fund purchases	(87)		(72)
Nuclear decommissioning trust fund sales	87		72
Cost of removal, net of salvage	(41)		(60)
Change in construction payables	(70)		39
Other investing activities	(9)		(1)
Net cash used for investing activities	(509)		(365)
Financing Activities:
Increase in notes payable, net	170		—
Proceeds —
Senior notes	—		700


Other long-term debt	16		—


Redemptions — Senior notes	—		(550)



Capital contributions from parent company	325		625
Payment of common stock dividends	(285)		(254)
Other financing activities	(7)		(17)
Net cash provided from financing activities	219		504
Net Change in Cash, Cash Equivalents, and Restricted Cash	(260)		293
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	687		1,060
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	427	$	1,353
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $7 and $4 capitalized for 2023 and 2022, respectively)	$	138	$	110

Noncash transactions —
Accrued property additions at end of period	111		188

Right-of-use assets obtained under operating leases	13		1
Right-of-use assets obtained under finance leases	1		—

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

Table of Contents Index to Financial Statements

ALABAMA POWER COMPANY

CONDENSED BALANCE SHEETS (UNAUDITED)


Assets	At March 31, 2023		At December 31, 2022
	(in millions)
Current Assets:
Cash and cash equivalents	$	427	$	687
Receivables —
Customer accounts	446		431
Unbilled revenues	129		174


Affiliated	98		101
Other accounts and notes	86		153
Accumulated provision for uncollectible accounts	(15)		(14)
Fossil fuel stock	307		229
Materials and supplies	586		557

Prepaid expenses	136		65
Other regulatory assets	485		474
Other current assets	48		67
Total current assets	2,733		2,924
Property, Plant, and Equipment:
In service	33,803		33,472
Less: Accumulated provision for depreciation	10,664		10,470
Plant in service, net of depreciation	23,139		23,002
Other utility plant, net	571		599
Nuclear fuel, at amortized cost	238		239
Construction work in progress	1,510		1,526
Total property, plant, and equipment	25,458		25,366
Other Property and Investments:
Nuclear decommissioning trusts, at fair value	1,170		1,127
Equity investments in unconsolidated subsidiaries	55		57
Miscellaneous property and investments	125		124
Total other property and investments	1,350		1,308
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization	81		71
Deferred charges related to income taxes	253		250
Prepaid pension and other postretirement benefit costs	689		657

Regulatory assets – asset retirement obligations	1,827		1,845
Other regulatory assets, deferred	2,034		2,107
Other deferred charges and assets	454		442
Total deferred charges and other assets	5,338		5,372
Total Assets	$	34,879	$	34,970

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

Table of Contents Index to Financial Statements

ALABAMA POWER COMPANY

CONDENSED BALANCE SHEETS (UNAUDITED)


Liabilities and Stockholder's Equity	At March 31, 2023		At December 31, 2022
	(in millions)
Current Liabilities:
Securities due within one year	$	323	$	301
Notes payable	170		—
Accounts payable —
Affiliated	242		443
Other	380		641
Customer deposits	105		106


Accrued taxes	148		57
Accrued interest	78		120

Accrued compensation	133		229

Asset retirement obligations	334		330
Other regulatory liabilities	74		96
Other current liabilities	132		91
Total current liabilities	2,119		2,414
Long-term Debt	10,322		10,329
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	3,997		3,981
Deferred credits related to income taxes	1,836		1,925
Accumulated deferred ITCs	79		81
Employee benefit obligations	149		145
Operating lease obligations	75		67
Asset retirement obligations, deferred	3,940		3,957

Other regulatory liabilities, deferred	300		315

Other deferred credits and liabilities	75		69
Total deferred credits and other liabilities	10,451		10,540
Total Liabilities	22,892		23,283









Common Stockholder's Equity (See accompanying statements)	11,987		11,687
Total Liabilities and Stockholder's Equity	$	34,879	$	34,970

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

Table of Contents Index to Financial Statements

ALABAMA POWER COMPANY

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

Capital contributions from parent company	—	—		626		—		—		626

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

Balance at March 31, 2022	31	$	1,222	$	6,682	$	3,541	$	(13)	$	11,432
















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

Capital contributions from parent company	—	—		330		—		—		330

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

Balance at March 31, 2023	31	$	1,222	$	7,040	$	3,734	$	(9)	$	11,987

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

Table of Contents Index to Financial Statements

GEORGIA POWER COMPANY

CONDENSED STATEMENTS OF INCOME (UNAUDITED)


	For the Three Months Ended March 31,
		2023		2022
	(in millions)
Operating Revenues:
Retail revenues		$	1,981	$	2,017
Wholesale revenues		31		66

Other revenues		164		125
Total operating revenues		2,176		2,208
Operating Expenses:
Fuel		402		419
Purchased power, non-affiliates		123		150
Purchased power, affiliates		206		206
Other operations and maintenance		496		517
Depreciation and amortization		408		351
Taxes other than income taxes		131		125

Total operating expenses		1,766		1,768
Operating Income		410		440
Other Income and (Expense):
Allowance for equity funds used during construction		40		32
Interest expense, net of amounts capitalized		(146)		(107)
Other income (expense), net		45		50
Total other income and (expense)		(61)		(25)
Earnings Before Income Taxes		349		415
Income taxes		53		30
Net Income		$	296	$	385

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)


	For the Three Months Ended March 31,
		2023		2022
	(in millions)
Net Income		$	296	$	385
Other comprehensive income:
Qualifying hedges:
Changes in fair value, net of tax of $— and $3, respectively		(1)		9
Reclassification adjustment for amounts included in net income, net of tax of $— and $1, respectively		1		1
Total other comprehensive income		—		10
Comprehensive Income		$	296	$	395

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

Table of Contents Index to Financial Statements

GEORGIA POWER COMPANY

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)


	For the Three Months Ended March 31,
	2023		2022
	(in millions)
Operating Activities:
Net income	$	296	$	385
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total	455		397
Deferred income taxes	57		(6)

Allowance for equity funds used during construction	(40)		(32)


Pension, postretirement, and other employee benefits	(64)		(63)

Settlement of asset retirement obligations	(54)		(41)
Storm damage accruals	8		53
Retail fuel cost under recovery – long-term	354		(84)



Other, net	(40)		(54)
Changes in certain current assets and liabilities —
-Receivables	(136)		—
-Fossil fuel stock	(107)		18

-Materials and supplies	(46)		(11)

-Other current assets	6		(20)
-Accounts payable	(293)		39
-Accrued taxes	(266)		(78)
-Accrued compensation	(85)		(79)

-Customer refunds	(103)		2
-Accrued interest	(23)		(43)
-Other current liabilities	28		(22)
Net cash provided from (used for) operating activities	(53)		361
Investing Activities:
Property additions	(1,042)		(749)
Nuclear decommissioning trust fund purchases	(169)		(221)
Nuclear decommissioning trust fund sales	164		217
Cost of removal, net of salvage	(64)		(140)
Change in construction payables, net of joint owner portion	(27)		14


Proceeds from dispositions	56		56

Other investing activities	(35)		14
Net cash used for investing activities	(1,117)		(809)
Financing Activities:
Increase in notes payable, net	465		410
Proceeds —

Revenue bonds	229		—

Short-term borrowings	100		450

Redemptions and repurchases —

Senior notes	—		(400)

FFB loan	(21)		(24)
Short-term borrowings	(200)		—


Capital contributions from parent company	750		445
Payment of common stock dividends	(464)		(423)


Other financing activities	(9)		(17)
Net cash provided from financing activities	850		441
Net Change in Cash, Cash Equivalents, and Restricted Cash	(320)		(7)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	480		33
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	160	$	26
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $21 and $16 capitalized for 2023 and 2022, respectively)	$	159	$	139

Noncash transactions —
Accrued property additions at end of period	548		459
Right-of-use assets obtained under operating leases	3		1

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

Table of Contents Index to Financial Statements

GEORGIA POWER COMPANY

CONDENSED BALANCE SHEETS (UNAUDITED)


Assets	At March 31, 2023		At December 31, 2022
	(in millions)
Current Assets:
Cash and cash equivalents	$	—	$	364

Receivables —
Customer accounts, net	597		735
Unbilled revenues	197		309
Under recovered fuel clause revenues	447		—
Joint owner accounts	100		128

Affiliated	59		53
Other accounts and notes	45		62

Fossil fuel stock	399		291
Materials and supplies	774		729




Regulatory assets – asset retirement obligations	166		158

Other regulatory assets	377		324
Other current assets	264		246
Total current assets	3,425		3,399
Property, Plant, and Equipment:
In service	42,465		41,879
Less: Accumulated provision for depreciation	13,383		13,115
Plant in service, net of depreciation	29,082		28,764

Nuclear fuel, at amortized cost	611		604
Construction work in progress	8,639		8,103
Total property, plant, and equipment	38,332		37,471
Other Property and Investments:
Nuclear decommissioning trusts, at fair value	1,075		1,018
Equity investments in unconsolidated subsidiaries	50		51
Miscellaneous property and investments	116		107
Total other property and investments	1,241		1,176
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization	974		1,007
Deferred charges related to income taxes	592		583
Prepaid pension costs	771		738
Deferred under recovered fuel clause revenues	1,702		2,056
Regulatory assets – asset retirement obligations, deferred	3,635		3,671
Other regulatory assets, deferred	2,576		2,522
Other deferred charges and assets	489		540
Total deferred charges and other assets	10,739		11,117
Total Assets	$	53,737	$	53,163

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

Table of Contents Index to Financial Statements

GEORGIA POWER COMPANY

CONDENSED BALANCE SHEETS (UNAUDITED)


Liabilities and Stockholder's Equity	At March 31, 2023		At December 31, 2022
	(in millions)
Current Liabilities:
Securities due within one year	$	901	$	901
Notes payable	1,965		1,600
Accounts payable —
Affiliated	606		928
Other	1,099		1,076
Customer deposits	251		252


Accrued taxes	222		508
Accrued interest	133		157

Accrued compensation	133		254
Operating lease obligations	154		151
Asset retirement obligations	308		295


Other regulatory liabilities	47		170


Other current liabilities	426		286
Total current liabilities	6,245		6,578
Long-term Debt	14,219		14,009
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	3,818		3,707
Deferred credits related to income taxes	2,220		2,244
Accumulated deferred ITCs	316		319
Employee benefit obligations	310		318
Operating lease obligations, deferred	840		851
Asset retirement obligations, deferred	5,820		5,739

Other deferred credits and liabilities	506		540
Total deferred credits and other liabilities	13,830		13,718
Total Liabilities	34,294		34,305









Common Stockholder's Equity (See accompanying statements)	19,443		18,858
Total Liabilities and Stockholder's Equity	$	53,737	$	53,163

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

Table of Contents Index to Financial Statements

GEORGIA POWER COMPANY

CONDENSED 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, 2021	9	$	398	$	14,153	$	2,724	$	(41)	$	17,234
Net income	—	—		—		385		—		385

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

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















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

Capital contributions from parent company	—	—		752		—		—		752

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

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

Table of Contents Index to Financial Statements

MISSISSIPPI POWER COMPANY

CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)


	For the Three Months Ended March 31,
		2023		2022
	(in millions)
Operating Revenues:
Retail revenues		$	236	$	217
Wholesale revenues, non-affiliates		68		68
Wholesale revenues, affiliates		75		42
Other revenues		11		8
Total operating revenues		390		335
Operating Expenses:
Fuel and purchased power		151		132


Other operations and maintenance		82		76
Depreciation and amortization		47		45
Taxes other than income taxes		32		29

Total operating expenses		312		282
Operating Income		78		53
Other Income and (Expense):

Interest expense, net of amounts capitalized		(16)		(13)
Other income (expense), net		9		10
Total other income and (expense)		(7)		(3)
Earnings Before Income Taxes		71		50
Income taxes		13		8
Net Income and Comprehensive Income		$	58	$	42

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

Table of Contents Index to Financial Statements

MISSISSIPPI POWER COMPANY

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)


	For the Three Months Ended March 31,
	2023		2022
	(in millions)
Operating Activities:
Net income	$	58	$	42
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total	58		55




Settlement of asset retirement obligations	(3)		(5)


Other, net	(5)		17
Changes in certain current assets and liabilities —
-Receivables	73		(7)
-Retail fuel cost under recovery	(23)		(11)


-Other current assets	(1)		(11)
-Accounts payable	(74)		(9)
-Accrued taxes	(62)		(63)

-Accrued compensation	(17)		(18)




-Other current liabilities	(7)		(6)
Net cash used for operating activities	(3)		(16)
Investing Activities:
Property additions	(94)		(45)
Construction payables	(9)		(8)



Payments pursuant to LTSAs	(8)		(8)
Other investing activities	(6)		(7)
Net cash used for investing activities	(117)		(68)
Financing Activities:
Increase in notes payable, net	126		25

















Capital contributions from parent company	—		50

Payment of common stock dividends	(46)		(43)
Other financing activities	(1)		—
Net cash provided from financing activities	79		32
Net Change in Cash, Cash Equivalents, and Restricted Cash	(41)		(52)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	59		61
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	18	$	9
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest	$	25	$	22

Noncash transactions —
Accrued property additions at end of period	13		17
Right-of-use assets obtained under operating leases	1		—

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

Table of Contents Index to Financial Statements

MISSISSIPPI POWER COMPANY

CONDENSED BALANCE SHEETS (UNAUDITED)


Assets	At March 31, 2023		At December 31, 2022
	(in millions)
Current Assets:
Cash and cash equivalents	$	18	$	59
Receivables —
Customer accounts, net	69		47
Unbilled revenues	37		47

Affiliated	26		82
Other accounts and notes	29		35

Fossil fuel stock	51		44
Materials and supplies	80		80

Other regulatory assets	80		72

Other current assets	13		38
Total current assets	403		504
Property, Plant, and Equipment:
In service	5,319		5,254
Less: Accumulated provision for depreciation	1,723		1,689
Plant in service, net of depreciation	3,596		3,565

Construction work in progress	225		208
Total property, plant, and equipment	3,821		3,773
Other Property and Investments	165		167
Deferred Charges and Other Assets:

Deferred charges related to income taxes	29		30
Prepaid pension costs	114		109
Regulatory assets – asset retirement obligations	239		239
Other regulatory assets, deferred	253		249
Accumulated deferred income taxes	103		107

Other deferred charges and assets	89		94
Total deferred charges and other assets	827		828
Total Assets	$	5,216	$	5,272

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

Table of Contents Index to Financial Statements

MISSISSIPPI POWER COMPANY

CONDENSED BALANCE SHEETS (UNAUDITED)


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


Notes payable	126		—

Accounts payable —
Affiliated	69		121
Other	75		106



Accrued taxes	62		124


Accrued compensation	20		37

Asset retirement obligations	35		37

Other regulatory liabilities	25		43


Other current liabilities	81		85
Total current liabilities	494		554



Long-term Debt	1,544		1,544
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	470		466
Deferred credits related to income taxes	247		253

Employee benefit obligations	69		69

Asset retirement obligations, deferred	143		142

Other cost of removal obligations	196		196
Other regulatory liabilities, deferred	84		96
Other deferred credits and liabilities	26		21
Total deferred credits and other liabilities	1,235		1,243
Total Liabilities	3,273		3,341








Common Stockholder's Equity (See accompanying statements)	1,943		1,931
Total Liabilities and Stockholder's Equity	$	5,216	$	5,272

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

Table of Contents Index to Financial Statements

MISSISSIPPI POWER COMPANY

CONDENSED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY (UNAUDITED)


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

Capital contributions from parent company	—	—		51		—		51


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

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

















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




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

Balance at March 31, 2023	1	$	38	$	4,652	$	(2,747)	$	1,943

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

Table of Contents Index to Financial Statements

SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)


	For the Three Months Ended March 31,
		2023		2022
	(in millions)
Operating Revenues:
Wholesale revenues, non-affiliates		$	362	$	426
Wholesale revenues, affiliates		135		105
Other revenues		11		8
Total operating revenues		508		539
Operating Expenses:
Fuel		191		232
Purchased power		26		21

Other operations and maintenance		107		105
Depreciation and amortization		128		120
Taxes other than income taxes		13		13


Gain on dispositions, net		(20)		(2)
Total operating expenses		445		489
Operating Income		63		50
Other Income and (Expense):
Interest expense, net of amounts capitalized		(33)		(37)
Other income (expense), net		2		2
Total other income and (expense)		(31)		(35)
Earnings Before Income Taxes		32		15
Income taxes (benefit)		(7)		(12)
Net Income		39		27
Net loss attributable to noncontrolling interests		(63)		(45)
Net Income Attributable to Southern Power		$	102	$	72

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)


	For the Three Months Ended March 31,
		2023		2022
	(in millions)
Net Income		$	39	$	27
Other comprehensive income (loss):
Qualifying hedges:
Changes in fair value, net of tax of $(3) and $(6), respectively		(8)		(17)
Reclassification adjustment for amounts included in net income, net of tax of $— and $7, respectively		1		22




Total other comprehensive income (loss)		(7)		5
Comprehensive Income		32		32
Comprehensive loss attributable to noncontrolling interests		(63)		(45)
Comprehensive Income Attributable to Southern Power		$	95	$	77

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

Table of Contents Index to Financial Statements

SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	For the Three Months Ended March 31,
	2023		2022
	(in millions)
Operating Activities:
Net income	$	39	$	27
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total	133		126
Deferred income taxes	3		12

Amortization of investment tax credits	(15)		(15)







Gain on dispositions, net	(20)		(2)
Other, net	(14)		(3)
Changes in certain current assets and liabilities —
-Receivables	120		11

-Prepaid income taxes	15		(8)
-Other current assets	(13)		—
-Accounts payable	(92)		(21)


-Accrued compensation	(13)		(13)
-Other current liabilities	(8)		3
Net cash provided from operating activities	135		117
Investing Activities:

Property additions	(11)		(19)
Proceeds from dispositions	46		29

Change in construction payables	(15)		(31)

Payments pursuant to LTSAs	(16)		(15)


Other investing activities	—		(1)
Net cash provided from (used for) investing activities	4		(37)
Financing Activities:
Decrease in notes payable, net	(59)		(3)











Capital contributions from noncontrolling interests	21		73
Distributions to noncontrolling interests	(48)		(97)

Payment of common stock dividends	(63)		(49)
Other financing activities	3		—
Net cash used for financing activities	(146)		(76)
Net Change in Cash, Cash Equivalents, and Restricted Cash	(7)		4
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	133		135
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	126	$	139
Supplemental Cash Flow Information:
Cash paid (received) during the period for —
Interest	$	30	$	29
Income taxes, net	(9)		(8)
Noncash transactions —


Accrued property additions at end of period	12		46

Reassessment of right-of-use assets under operating leases	—		40

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

Table of Contents Index to Financial Statements

SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


Assets	At March 31, 2023		At December 31, 2022
	(in millions)
Current Assets:
Cash and cash equivalents	$	123	$	131
Receivables —
Customer accounts, net	133		226
Affiliated	39		51
Other	71		70

Materials and supplies	85		88

Prepaid income taxes	291		5




Other current assets	59		50
Total current assets	801		621
Property, Plant, and Equipment:
In service	14,635		14,658
Less: Accumulated provision for depreciation	3,760		3,661
Plant in service, net of depreciation	10,875		10,997
Construction work in progress	43		41

Total property, plant, and equipment	10,918		11,038
Other Property and Investments:

Intangible assets, net of amortization of $134 and $129, respectively	258		263
Equity investments in unconsolidated subsidiaries	—		49
Net investment in sales-type leases	152		154
Total other property and investments	410		466
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization	487		489
Prepaid LTSAs	208		193




Other deferred charges and assets	310		274
Total deferred charges and other assets	1,005		956
Total Assets	$	13,134	$	13,081

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

Table of Contents Index to Financial Statements

SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


Liabilities and Stockholders' Equity	At March 31, 2023		At December 31, 2022
	(in millions)
Current Liabilities:
Securities due within one year	$	291	$	290
Notes payable	165		225
Accounts payable —
Affiliated	71		139
Other	31		67

Accrued taxes	22		24

Accrued interest	27		28



Other current liabilities	90		111
Total current liabilities	697		884
Long-term Debt	2,700		2,689
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	581		279
Accumulated deferred ITCs	1,541		1,556





Operating lease obligations	510		514
Other deferred credits and liabilities	247		243
Total deferred credits and other liabilities	2,879		2,592
Total Liabilities	6,276		6,165










Total Stockholders' Equity (See accompanying statements)	6,858		6,916
Total Liabilities and Stockholders' Equity	$	13,134	$	13,081

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

Table of Contents Index to Financial Statements

SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)


	Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Common Stockholders' Equity		Noncontrolling Interests		Total
	(in millions)
Balance at December 31, 2021	$	638	$	1,585	$	(27)	$	2,196	$	4,402	$	6,598
Net income (loss)	—		72		—		72		(45)		27


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

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




Balance at March 31, 2022	$	638	$	1,608	$	(22)	$	2,224	$	4,332	$	6,556




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


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

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




Balance at March 31, 2023	$	1,069	$	1,780	$	(25)	$	2,824	$	4,034	$	6,858

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

Table of Contents Index to Financial Statements

SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)


	For the Three Months Ended March 31,
		2023		2022
	(in millions)
Operating Revenues:
Natural gas revenues (includes revenue taxes of $66 and $71, respectively)		$	1,875	$	2,058


Total operating revenues		1,875		2,058
Operating Expenses:
Cost of natural gas		898		1,095

Other operations and maintenance		305		305
Depreciation and amortization		141		137
Taxes other than income taxes		102		100



Total operating expenses		1,446		1,637
Operating Income		429		421
Other Income and (Expense):
Earnings from equity method investments		45		40
Interest expense, net of amounts capitalized		(76)		(61)
Other income (expense), net		14		16
Total other income and (expense)		(17)		(5)
Earnings Before Income Taxes		412		416
Income taxes		103		97
Net Income		$	309	$	319

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)


	For the Three Months Ended March 31,
		2023		2022
	(in millions)
Net Income		$	309	$	319
Other comprehensive income (loss):
Qualifying hedges:
Changes in fair value, net of tax of $(10) and $10, respectively		(24)		26
Reclassification adjustment for amounts included in net income, net of tax of $6 and $(2), respectively		14		(6)



Total other comprehensive income (loss)		(10)		20
Comprehensive Income		$	299	$	339

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

Table of Contents Index to Financial Statements

SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	For the Three Months Ended March 31,
	2023		2022
	(in millions)
Operating Activities:
Net income	$	309	$	319
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total	141		137
Deferred income taxes	27		5




Mark-to-market adjustments	13		(38)


Natural gas cost under recovery – long-term	—		162
Other, net	(15)		41
Changes in certain current assets and liabilities —
-Receivables	266		(115)
-Natural gas for sale, net of temporary LIFO liquidation	267		450
-Prepaid income taxes	33		34

-Other current assets	90		(1)
-Accounts payable	(303)		(23)
-Accrued taxes	36		54

-Natural gas cost over recovery	117		—
-Other current liabilities	(3)		(1)
Net cash provided from operating activities	978		1,024
Investing Activities:
Property additions	(299)		(247)
Cost of removal, net of salvage	(24)		(20)
Change in construction payables, net	(53)		(5)



Other investing activities	(3)		1
Net cash used for investing activities	(379)		(271)
Financing Activities:
Decrease in notes payable, net	(448)		(577)







Redemptions — Short-term borrowings	(200)		(100)




Capital contributions from parent company	192		39
Payment of common stock dividends	(146)		(130)
Other financing activities	9		—
Net cash used for financing activities	(593)		(768)
Net Change in Cash, Cash Equivalents, and Restricted Cash	6		(15)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	83		48
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	89	$	33
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $4 and $2 capitalized for 2023 and 2022, respectively)	$	76	$	55


Noncash transactions — Accrued property additions at end of period	124		107

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 March 31, 2023		At December 31, 2022
	(in millions)
Current Assets:
Cash and cash equivalents	$	88	$	81
Receivables —

Customer accounts	586		616
Unbilled revenues	218		453



Other accounts and notes	73		76
Accumulated provision for uncollectible accounts	(58)		(50)

Natural gas for sale	216		438


Prepaid expenses	74		93

Natural gas cost under recovery	—		108


Other regulatory assets	126		119
Other current assets	118		104
Total current assets	1,441		2,038
Property, Plant, and Equipment:
In service	19,918		19,723
Less: Accumulated depreciation	5,350		5,276
Plant in service, net of depreciation	14,568		14,447
Construction work in progress	996		909
Total property, plant, and equipment	15,564		15,356
Other Property and Investments:
Goodwill	5,015		5,015
Equity investments in unconsolidated subsidiaries	1,282		1,276
Other intangible assets, net of amortization of $159 and $156, respectively	23		26
Miscellaneous property and investments	29		28
Total other property and investments	6,349		6,345
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization	55		57
Prepaid pension costs	190		183


Other regulatory assets, deferred	478		497


Other deferred charges and assets	145		145
Total deferred charges and other assets	868		882
Total Assets	$	24,222	$	24,621

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

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SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


Liabilities and Stockholder's Equity	At March 31, 2023		At December 31, 2022
	(in millions)
Current Liabilities:
Securities due within one year	$	401	$	400
Notes payable	120		768

Accounts payable —
Affiliated	91		104
Other	361		701
Customer deposits	99		125


Accrued taxes	113		77
Accrued interest	69		67

Accrued compensation	68		105




Temporary LIFO liquidation	45		—

Natural gas cost over recovery	117		—
Other regulatory liabilities	104		36
Other current liabilities	208		187
Total current liabilities	1,796		2,570
Long-term Debt	7,055		7,042
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	1,583		1,560
Deferred credits related to income taxes	781		788

Employee benefit obligations	112		120


Operating lease obligations	50		51
Other cost of removal obligations	1,725		1,707
Accrued environmental remediation	200		207



Other deferred credits and liabilities	167		179
Total deferred credits and other liabilities	4,618		4,612
Total Liabilities	13,469		14,224







Common Stockholder's Equity (See accompanying statements)	10,753		10,397
Total Liabilities and Stockholder's Equity	$	24,222	$	24,621

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

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SOUTHERN COMPANY GAS AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (UNAUDITED)


	Paid-In Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income (Loss)		Total
	(in millions)
Balance at December 31, 2021	$	10,024	$	(132)	$	24	$	9,916
Net income	—		319		—		319


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

Balance at March 31, 2022	$	10,074	$	57	$	44	$	10,175
















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


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

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

Table of Contents Index to Financial Statements

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	42
B	Regulatory Matters	45
C	Contingencies	53
D	Revenue from Contracts with Customers and Lease Income	57
E	Consolidated Entities and Equity Method Investments	60
F	Financing and Leases	63
G	Income Taxes	65
H	Retirement Benefits	66
I	Fair Value Measurements	69
J	Derivatives	74
K	Segment and Related Information	86

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

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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, 2022 have been derived from the audited financial statements of each Registrant. In the opinion of each Registrant's management, the information regarding such Registrant furnished herein reflects all adjustments, which, except as otherwise disclosed, are of a normal recurring nature, necessary to present fairly the results of operations for the periods ended March 31, 2023 and 2022. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although each Registrant believes that the disclosures regarding such Registrant are adequate to make the information presented not misleading. Disclosures which would substantially duplicate the disclosures in the Form 10-K and details which have not changed significantly in amount or composition since the filing of the Form 10-K are generally omitted from this Quarterly Report on Form 10-Q unless specifically required by GAAP. Therefore, these Condensed Financial Statements should be read in conjunction with the financial statements and the notes thereto included in the Form 10-K. Due to the seasonal variations in the demand for energy and other factors, operating results for the periods presented are not necessarily indicative of the operating results to be expected for the full year.

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

Goodwill and Other Intangible Assets

Goodwill at March 31, 2023 and December 31, 2022 was as follows:


	Goodwill
	(in millions)
Southern Company	$	5,161
Southern Company Gas:
Gas distribution operations	$	4,034
Gas marketing services	981
Southern Company Gas total	$	5,015

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

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Other intangible assets were as follows:


	At March 31, 2023						At December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Other Intangible Assets, Net		Gross Carrying Amount		Accumulated Amortization		Other Intangible Assets, Net
	(in millions)						(in millions)
Southern Company
Subject to amortization:
Customer relationships	$	212	$	(164)	$	48	$	212	$	(162)	$	50
Trade names	64		(47)		17		64		(44)		20
PPA fair value adjustments	390		(134)		256		390		(129)		261
Other	6		(5)		1		5		(5)		—
Total subject to amortization	$	672	$	(350)	$	322	$	671	$	(340)	$	331
Not subject to amortization:
FCC licenses	75		—		75		75		—		75
Total other intangible assets	$	747	$	(350)	$	397	$	746	$	(340)	$	406

Southern Power*()**
PPA fair value adjustments	$	390	$	(134)	$	256	$	390	$	(129)	$	261

Southern Company Gas*()**

Gas marketing services
Customer relationships	$	156	$	(140)	$	16	$	156	$	(139)	$	17
Trade names	26		(19)		7		26		(17)		9
Total other intangible assets	$	182	$	(159)	$	23	$	182	$	(156)	$	26

(*) All subject to amortization.

Amortization associated with other intangible assets was as follows:


	Three Months Ended
	March 31, 2023		March 31, 2022
	(in millions)
Southern Company(a)	$	10	$	10
Southern Power(b)	5		5
Southern Company Gas	3		3

(a)Includes $5 million recorded as a reduction to operating revenues for both periods presented.

(b)Recorded as a reduction to operating revenues.

Cash, Cash Equivalents, and Restricted Cash

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

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)


	Southern Company		Georgia Power		Southern Power		Southern Company Gas
	(in millions)
At March 31, 2023
Cash and cash equivalents	$	1,053	$	—	$	123	$	88
Restricted cash(a):
Other current assets	117		115		—		2
Other deferred charges and assets	47		45		3		—
Total cash, cash equivalents, and restricted cash(b)	$	1,217	$	160	$	126	$	89

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

(a)For Georgia Power, reflects $116 million at both March 31, 2023 and December 31, 2022 related to proceeds from the issuance of solid waste disposal facility revenue bonds in 2022 and $44 million at March 31, 2023 related to funds from a Georgia Housing and Finance Authority (GHFA) rental assistance program used to offset qualifying customers' past due balances, which expired on March 31, 2023 and will be returned to the GHFA. For Southern Power, reflects $3 million at both March 31, 2023 and December 31, 2022 held to fund estimated construction completion costs at the Deuel Harvest wind facility. For Southern Company Gas, reflects collateral for workers' compensation, life insurance, and long-term disability insurance.

(b)Total may not add due to rounding.

Natural Gas for Sale

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

Southern Company Gas recorded no material adjustments to natural gas inventories for either period presented. Nicor Gas' inventory decrement at March 31, 2023 is expected to be restored prior to year-end.

Storm Damage Reserves

See Note 1 to the financial statements in Item 8 of the Form 10-K under "Storm Damage and Reliability Reserves" for additional information.

Storm damage reserve activity for the traditional electric operating companies during the three months ended March 31, 2023 was as follows:


	Southern Company		Alabama Power		Georgia Power		Mississippi Power
	(in millions)
Balance at December 31, 2022	$	216	$	97	$	83	$	36
Accrual	13		3		8		2
Weather-related damages	(43)		(12)		(31)		—
Balance at March 31, 2023	$	186	$	88	$	60	$	38

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Asset Retirement Obligations

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

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

(B) REGULATORY MATTERS

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

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


Regulatory Clause	Balance Sheet Line Item	March 31, 2023		December 31, 2022
		(in millions)
Alabama Power


Rate CNP Compliance	Other regulatory assets, current	$	23	$	47
	Other regulatory assets, deferred	18		—
Rate CNP PPA	Other regulatory assets, current	17		18
	Other regulatory assets, deferred	100		102


Retail Energy Cost Recovery	Other regulatory assets, current	101		102
	Other regulatory assets, deferred	420		520
Georgia Power
Fuel Cost Recovery(*)	Receivables – under recovered fuel clause revenues	$	447	$	—
	Deferred under recovered fuel clause revenues	1,702		2,056

Mississippi Power

Fuel Cost Recovery	Receivables – customer accounts, net	$	25	$	1
Ad Valorem Tax	Other regulatory assets, current	9		12
	Other regulatory assets, deferred	19		19


Southern Company Gas

Natural Gas Cost Recovery	Natural gas cost under recovery	$	—	$	108
	Natural gas cost over recovery	117		—

(*)See "Georgia Power – Fuel Cost Recovery" herein for additional information.

Alabama Power

Certificates of Convenience and Necessity

In 2020, the Alabama PSC approved a certificate of convenience and necessity authorizing Alabama Power's construction of Plant Barry Unit 8 and the recovery of estimated actual in-service costs of $652 million. At March 31, 2023, project expenditures associated with Plant Barry Unit 8 totaled approximately $541 million, of which $536 million and $5 million was included in CWIP and property, plant, and equipment in service, respectively. The unit is expected to be placed in service in November 2023. The ultimate outcome of this matter cannot be determined at this time.

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Rate CNP New Plant

On March 24, 2023, Alabama Power filed Rate CNP New Plant with the Alabama PSC to recover costs associated with the acquisition of the Central Alabama Generating Station. The filing reflected an annual increase in retail revenues of $78 million effective with June 2023 billings. Through May 2023, Alabama Power expects to recover substantially all costs associated with the Central Alabama Generating Station through Rate RSE, offset by revenues from a power sales agreement. See Note 15 to the financial statements under "Alabama Power" in Item 8 of the Form 10-K for additional information.

Renewable Generation Certificate

Through the issuance of a Renewable Generation Certificate (RGC), Alabama Power is authorized by the Alabama PSC to procure up to 500 MWs of renewable capacity and energy by September 16, 2027 and to market the related energy and environmental attributes to customers and other third parties. On April 4, 2023, the Alabama PSC approved two new solar PPAs totaling 160 MWs. Alabama Power has procured solar capacity totaling approximately 490 MWs under the RGC.

Georgia Power

Fuel Cost Recovery

On February 28, 2023, Georgia Power filed a request with the Georgia PSC to increase fuel rates. On April 13, 2023, Georgia Power and the staff of the Georgia PSC reached a stipulated agreement that includes the following terms: (i) Georgia Power would update fuel rates from the original request for revised fuel costs and to reflect a three-year recovery period, starting June 1, 2023, for $2.2 billion of the under recovered fuel balance and (ii) Georgia Power would be required to file its next fuel case no later than February 28, 2026. On April 24, 2023, Georgia Power filed an updated request reflecting a 54% increase in fuel rates effective June 1, 2023, which is expected to increase annual billings by approximately $1.1 billion and includes recovery of the under recovered fuel balance described above. Changes in fuel rates have no significant effect on Georgia Power's net income but do impact the related operating cash flows. Georgia Power expects the Georgia PSC to make a final decision on this matter on May 16, 2023. The ultimate outcome of this matter cannot be determined at this time.

Integrated Resource Plans

In August 2022, Restore Chattooga Gorge Coalition (RCG) filed a petition in the Superior Court of Fulton County, Georgia against Georgia Power and the Georgia PSC. The petition challenges Georgia Power's plan to expend $115 million to modernize Plant Tugalo, as approved in the 2019 IRP, and seeks judicial review of the Georgia PSC's order in the 2022 IRP proceeding with respect to the denial of RCG's challenge to the modernization plan. In November 2022, Georgia Power and the Georgia PSC both filed motions to dismiss the RCG petition. 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 currently holds a 45.7% ownership interest. In 2012, the NRC issued the related combined construction and operating licenses, which allowed full construction of the two AP1000 nuclear units (with electric generating capacity of approximately 1,100 MWs each) and related facilities to begin. Until March 2017, construction on Plant Vogtle Units 3 and 4 continued under the Vogtle 3 and 4 Agreement, which was a substantially fixed price agreement.

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

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

is generated and sold from both units. The Vogtle Services Agreement is terminable by the Vogtle Owners upon 30 days' written notice.

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

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

Cost and Schedule

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


	(in millions)
Base project capital cost forecast(a)(b)	$	10,553
Construction contingency estimate	40

Total project capital cost forecast(a)(b)	10,593
Net investment at March 31, 2023(b)	(9,747)
Remaining estimate to complete	$	846

(a)Includes approximately $610 million of costs that are not shared with the other Vogtle Owners, including $33 million of construction monitoring costs approved for recovery by the Georgia PSC in its nineteenth VCM order, and approximately $407 million of incremental costs under the cost-sharing and tender provisions of the joint ownership agreements described below. Excludes financing costs expected to be capitalized through AFUDC of approximately $418 million, of which $334 million had been accrued through March 31, 2023.

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

Georgia Power estimates that its financing costs for construction of Plant Vogtle Units 3 and 4 will total approximately $3.5 billion, of which $3.3 billion had been incurred through March 31, 2023.

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 start-up testing and related test results, engineering support, commodity installation, system turnovers, and workforce statistics. Southern Nuclear establishes aggressive target values for monthly construction production and system turnover activities, which are reflected in the site work plans.

Since March 2020, the number of active COVID-19 cases at the site has fluctuated consistent with the surrounding area and impacted productivity levels and pace of activity completion, with the site experiencing peaks in the number of active cases in January 2021, August 2021, and January 2022. Georgia Power estimates the productivity impacts of the COVID-19 pandemic have consumed approximately three to four months of schedule margin previously embedded in the site work plans. As of March 31, 2023, Georgia Power's proportionate share of the estimated incremental cost associated with COVID-19 mitigation actions and impacts on construction productivity is estimated to be between $160 million and $200 million and is included in the total project capital cost forecast. Future COVID-19 variants could further disrupt or delay construction and testing activities.

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

On March 6, 2023, Unit 3 achieved self-sustaining nuclear fission, commonly referred to as initial criticality, and, on April 1, 2023, the generator successfully synchronized to the power grid and generated electricity for the first time. Operators continue to perform tests at various power levels to help ensure the reactor performs as designed, and Southern Nuclear continues to remediate various equipment and component issues as they are identified. Based on the expected duration of start-up testing, Unit 3 is projected to be placed in service during May or June 2023. Hot functional testing for Unit 4 commenced on March 20, 2023, with fuel load projected to occur in the third quarter 2023. Unit 4 is projected to be placed in service during late fourth quarter 2023 or the first quarter 2024.

During the first quarter 2023, established construction contingency totaling $20 million was assigned to the base capital cost forecast for costs primarily associated with additional craft and support resources.

The projected schedule for Unit 3 primarily depends on the progression of pre-operational testing and start-up, which may be impacted by further equipment, component, and/or other operational challenges. The projected schedule for Unit 4 primarily depends on potential impacts arising from Unit 4 testing activities overlapping with Unit 3 start-up and commissioning; maintaining overall construction productivity and production levels, particularly in subcontractor scopes of work; and maintaining appropriate levels of craft laborers. As Unit 4 completes construction and transitions further into testing, ongoing and potential future challenges include the duration of hot functional testing; the timeframe and duration of other testing; the pace and quality of remaining commodities installation; the completion of documentation to support ITAAC submittals; the pace of remaining work package closures and system turnovers; and the availability of craft, supervisory, and technical support resources. Ongoing or future challenges for both units also include management of contractors and vendors; subcontractor performance; and/or related cost escalation. New challenges also may continue to arise, as Unit 3 completes start-up and commissioning and Unit 4 moves further into testing and start-up, which may result in required engineering changes or remediation related to plant systems, structures, or components (some of which are based on new technology that only within the last few years began initial operation in the global nuclear industry at this scale). These challenges may result in further schedule delays and/or cost increases.

There have been technical and procedural challenges to the construction and licensing of Plant Vogtle Units 3 and 4 at the federal and state level and additional challenges may arise. Processes are in place that are designed to ensure compliance with the requirements specified in the Westinghouse Design Control Document and the combined construction and operating licenses, including inspections by Southern Nuclear and the NRC that occur throughout construction. With the receipt of the NRC's 103(g) finding in August 2022, Unit 3 is now subject to the NRC's operating reactor oversight process and must meet applicable technical and operational requirements contained in its operating license. Various design and other licensing-based compliance matters, including the timely submittal by Southern Nuclear of the ITAAC documentation and the related reviews and approvals by the NRC necessary to support NRC authorization to load fuel for Unit 4, may arise, which may result in additional license amendment requests or require other resolution. If any license amendment requests or other licensing-based compliance issues, including inspections and ITAACs for Unit 4, are not resolved in a timely manner, there may be delays in the project schedule that could result in increased costs.

The ultimate outcome of these matters cannot be determined at this time. However, any extension of the in-service date beyond the second quarter 2023 for Unit 3 or the first quarter 2024 for Unit 4, including the joint owner cost sharing and tender impacts described below, is estimated to result in additional base capital costs for Georgia Power of up to $15 million per month for Unit 3 and $35 million per month for Unit 4, as well as the related AFUDC and any additional related construction, support resources, or testing costs. While Georgia Power is not precluded from seeking retail recovery of any future capital cost forecast increase other than the amounts related to the cost-sharing and tender provisions of the joint ownership agreements described below, management will ultimately determine whether or not to seek recovery. Any further changes to the capital cost forecast that are not expected to be recoverable through regulated rates will be required to be charged to income and such charges could be material.

Joint Owner Contracts

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

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

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

Amendments to the Vogtle Joint Ownership Agreements

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

Pursuant to the Global Amendments: (i) each Vogtle Owner must pay its proportionate share of qualifying construction costs for Plant Vogtle Units 3 and 4 based on its ownership percentage up to the estimated cost at completion (EAC) for Plant Vogtle Units 3 and 4, of which Georgia Power's share is $8.4 billion (VCM 19 Forecast Amount), plus $800 million; (ii) Georgia Power will be responsible for 55.7% of actual qualifying construction costs between $800 million and $1.6 billion over the VCM 19 Forecast Amount (resulting in $80 million of potential additional costs to Georgia Power), with the remaining Vogtle Owners responsible for 44.3% of such costs pro rata in accordance with their respective ownership interests; and (iii) Georgia Power will be responsible for 65.7% of qualifying construction costs between $1.6 billion and $2.1 billion over the VCM 19 Forecast Amount (resulting in a further $100 million of potential additional costs to Georgia Power), with the remaining Vogtle Owners responsible for 34.3% of such costs pro rata in accordance with their respective ownership interests. The Global Amendments provide that if the EAC is revised and exceeds the VCM 19 Forecast Amount by more than $2.1 billion, each of the other Vogtle Owners will have a one-time option at the time the project budget cost forecast is so revised to tender a portion of its ownership interest to Georgia Power in exchange for Georgia Power's agreement to pay 100% of such Vogtle Owner's remaining share of total construction costs in excess of the VCM 19 Forecast Amount plus $2.1 billion.

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

In addition, pursuant to the Global Amendments, the holders of at least 90% of the ownership interests in Plant Vogtle Units 3 and 4 must vote to continue construction if certain adverse events (Project Adverse Events) occur, including, among other events: (i) the bankruptcy of Toshiba; (ii) the termination or rejection in bankruptcy of certain agreements, including the Vogtle Services Agreement, the Bechtel Agreement, or the agency agreement with

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Southern Nuclear; (iii) Georgia Power's public announcement of its intention not to submit for rate recovery any portion of its investment in Plant Vogtle Units 3 and 4 or the Georgia PSC determines that any of Georgia Power's costs relating to the construction of Plant Vogtle Units 3 and 4 will not be recovered in retail rates, excluding any additional amounts paid by Georgia Power on behalf of the other Vogtle Owners pursuant to the Global Amendments described above and the first 6% of costs during any six-month VCM reporting period that are disallowed by the Georgia PSC for recovery, or for which Georgia Power elects not to seek cost recovery, through retail rates; and (iv) an incremental extension of one year or more from the seventeenth VCM report estimated in-service dates of November 2021 and November 2022 for Units 3 and 4, respectively. The schedule extension announced in February 2022 triggered the requirement for a vote to continue construction and all the Vogtle Owners voted to continue construction.

Georgia Power and the other Vogtle Owners do not agree on either the starting dollar amount for the determination of cost increases subject to the cost-sharing and tender provisions of the Global Amendments or the extent to which COVID-19-related costs impact those provisions. The other Vogtle Owners notified Georgia Power that they believe the project capital cost forecast approved by the Vogtle Owners in February 2022 triggered the tender provisions. In June 2022 and July 2022, OPC and Dalton, respectively, notified Georgia Power of their purported exercises of their tender options. Georgia Power did not accept these purported tender exercises.

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

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

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

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necessary to complete Plant Vogtle Units 3 and 4. Georgia Power's incremental ownership interest will be calculated and conveyed to Georgia Power after Plant Vogtle Units 3 and 4 are placed in service.

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

Regulatory Matters

In 2009, the Georgia PSC voted to certify construction of Plant Vogtle Units 3 and 4 with a certified capital cost of $4.418 billion. In addition, in 2009 the Georgia PSC approved inclusion of the Plant Vogtle Units 3 and 4 related CWIP accounts in rate base, and the State of Georgia enacted the Georgia Nuclear Energy Financing Act, which allows Georgia Power to recover financing costs for Plant Vogtle Units 3 and 4. Financing costs are recovered on all applicable certified costs through annual adjustments to the NCCR tariff up to the certified capital cost of $4.418 billion. At March 31, 2023, Georgia Power had recovered approximately $2.9 billion of financing costs. Financing costs related to capital costs above $4.418 billion are being recognized through AFUDC and are expected to be recovered through retail rates over the life of Plant Vogtle Units 3 and 4; however, Georgia Power is not recording AFUDC related to any capital costs in excess of the total deemed reasonable by the Georgia PSC (currently $7.3 billion) and not requested for rate recovery. In December 2022, the Georgia PSC approved Georgia Power's filing to increase the NCCR tariff by $36 million annually, effective January 1, 2023.

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

In 2016, the Georgia PSC voted to approve a settlement agreement (Vogtle Cost Settlement Agreement) resolving certain prudency matters in connection with the fifteenth VCM report. In December 2017, the Georgia PSC voted to approve (and issued its related order on January 11, 2018) Georgia Power's seventeenth VCM report and modified the Vogtle Cost Settlement Agreement. The Vogtle Cost Settlement Agreement, as modified by the January 11, 2018 order, resolved the following regulatory matters related to Plant Vogtle Units 3 and 4: (i) none of the $3.3 billion of costs incurred through December 31, 2015 and reflected in the fourteenth VCM report should be disallowed from rate base on the basis of imprudence; (ii) the Contractor Settlement Agreement was reasonable and prudent and none of the $0.3 billion paid pursuant to the Contractor Settlement Agreement should be disallowed from rate base on the basis of imprudence; (iii) (a) capital costs incurred up to $5.68 billion would be presumed to be reasonable and prudent with the burden of proof on any party challenging such costs, (b) Georgia Power would have the burden to show that any capital costs above $5.68 billion were prudent, and (c) a revised capital cost forecast of $7.3 billion (after reflecting the impact of payments received under the Guarantee Settlement Agreement and related customer refunds) was found reasonable; (iv) construction of Plant Vogtle Units 3 and 4 should be completed, with Southern Nuclear serving as project manager and Bechtel as primary contractor; (v) approved and deemed reasonable Georgia Power's revised schedule placing Plant Vogtle Units 3 and 4 in service in November 2021 and November 2022, respectively; (vi) confirmed that the revised cost forecast does not represent a cost cap and that a prudence proceeding on cost recovery will occur following Unit 4 fuel load, consistent with applicable Georgia law; (vii) reduced the ROE used to calculate the NCCR tariff (a) from 10.95% (the ROE rate setting point authorized by the Georgia PSC at that time) to 10.00% effective January 1, 2016, (b) from 10.00% to 8.30%, effective January 1, 2020, and (c) from 8.30% to 5.30%, effective January 1, 2021 (provided that the ROE in no case will be less than Georgia Power's average cost of long-term debt); (viii) reduced the ROE used for AFUDC equity for Plant Vogtle Units 3 and 4 from 10.00% to Georgia Power's average cost of long-term debt, effective January 1, 2018; and (ix) agreed that effective the first month after Unit 3 reaches commercial operation, retail base rates would be adjusted to include the costs related to Unit 3 and common facilities deemed prudent in the Vogtle Cost Settlement Agreement (see Note 2 to the financial statements under "Georgia Power – Plant Vogtle Unit 3 and Common Facilities Rate Proceeding" in Item 8 of the Form 10-K for additional information). The January 11, 2018 order also stated that if Plant Vogtle Units 3 and 4 are not commercially operational by June 1, 2021 and June 1, 2022, respectively, the ROE used to calculate the NCCR tariff will be further reduced by 10 basis points each month

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(but not lower than Georgia Power's average cost of long-term debt) until the respective Unit is commercially operational. The ROE reductions negatively impacted earnings by approximately $300 million in 2022 and are estimated to have negative earnings impacts of approximately $270 million in 2023 and $60 million in 2024. In its January 11, 2018 order, the Georgia PSC also stated if other conditions change and assumptions upon which Georgia Power's seventeenth VCM report are based do not materialize, the Georgia PSC reserved the right to reconsider the decision to continue construction.

In the August 2021 order approving the twenty-fourth VCM report, the Georgia PSC approved a stipulation addressing the following matters: (i) beginning with its twenty-fifth VCM report, Georgia Power will continue to report to the Georgia PSC all costs incurred during the period for review and will request for approval costs up to the $7.3 billion determined to be reasonable in the Georgia PSC's seventeenth VCM order and (ii) Georgia Power will not seek rate recovery of the $0.7 billion increase to the base capital cost forecast included in the nineteenth VCM report and charged to income by Georgia Power in the second quarter 2018. In addition, the stipulation confirms Georgia Power may request verification and approval of costs above $7.3 billion for inclusion in rate base at a later time, but no earlier than the prudence review contemplated by the seventeenth VCM order described previously.

The Georgia PSC has approved 25 VCM reports covering periods through June 30, 2021. These reports reflect total construction capital costs incurred of $7.9 billion (net of $1.7 billion of payments received under the Guarantee Settlement Agreement and approximately $188 million in related customer refunds), of which the Georgia PSC has verified and approved $7.3 billion as described above. The Georgia PSC also has reviewed two additional VCM reports, which reflected $1.1 billion of additional construction capital costs incurred through June 30, 2022. Georgia Power filed its twenty-eighth VCM report with the Georgia PSC on February 16, 2023, which reflected the revised capital cost forecast described above and $461 million of construction capital costs incurred from July 1, 2022 through December 31, 2022.

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

Mississippi Power

Performance Evaluation Plan

On March 15, 2023, Mississippi Power submitted its annual retail PEP filing for 2023 to the Mississippi PSC indicating no change in retail rates. The ultimate outcome of this matter cannot be determined at this time.

Ad Valorem Tax Adjustment

On March 31, 2023, Mississippi Power submitted its annual ad valorem tax adjustment filing for 2023, which requested a $7 million annual decrease in revenues. The ultimate outcome of this matter cannot be determined at this time.

Environmental Compliance Overview Plan

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

System Restoration Rider

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

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Southern Company Gas

Infrastructure Replacement Programs and Capital Projects

Capital expenditures incurred under specific infrastructure replacement programs and capital projects during the first three months of 2023 were as follows:


Utility	Program	Three Months Ended March 31, 2023
		(in millions)
Nicor Gas	Investing in Illinois	$	62
Virginia Natural Gas	SAVE	20
Atlanta Gas Light	System Reinforcement Rider	32
Chattanooga Gas	Pipeline Replacement Program	1
Total		$	115

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

General Litigation Matters

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

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

Alabama Power

In September 2022, Mobile Baykeeper filed a citizen suit in the U.S. District Court for the Southern District of Alabama alleging that Alabama Power's plan to close the Plant Barry ash pond utilizing a closure-in-place methodology violates the Resource Conservation and Recovery Act (RCRA) and regulations governing CCR. Among other relief requested, Mobile Baykeeper seeks a declaratory judgment that the RCRA and regulations governing CCR are being violated, preliminary and injunctive relief to prevent implementation of Alabama Power's closure plan and the development of a closure plan that satisfies regulations governing CCR requirements. On December 19, 2022, Alabama Power filed a motion to dismiss the case. On January 31, 2023, the EPA issued a Notice of Potential Violations associated with Alabama Power's plan to close the Plant Barry ash pond. Alabama Power submitted responses on March 20, 2023, March 24, 2023, and April 3, 2023 affirming its position that it is in compliance with CCR requirements. The ultimate outcome of these matters cannot be determined at this time but could have an impact on Alabama Power's ARO estimates. See Note 6 to the financial statements in Item 8 of the Form 10-K for a discussion of Alabama Power's ARO liabilities.

Georgia Power

Municipal Franchise Fees

In 2011, plaintiffs filed a putative class action against Georgia Power in the Superior Court of Fulton County, Georgia alleging that Georgia Power's collection in rates of amounts for municipal franchise fees (which fees are paid to municipalities) exceeded the amounts allowed in orders of the Georgia PSC and alleging certain state law

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claims. This case has been ruled upon and appealed numerous times over the last several years. In 2019, the Georgia PSC issued an order that found Georgia Power has appropriately implemented the municipal franchise fee schedule. In March 2021, the Superior Court of Fulton County granted class certification and Georgia Power's motion for summary judgment and the plaintiffs filed a notice of appeal. In April 2021, Georgia Power filed a notice of cross appeal on the issue of class certification. In December 2021, the Georgia Court of Appeals affirmed the Superior Court's ruling that granted summary judgment to Georgia Power and dismissed Georgia Power's cross appeal on the issue of class certification as moot. Also in December 2021, the plaintiffs filed a petition for writ of certiorari to the Georgia Supreme Court, which was denied on January 27, 2023. On February 6, 2023, the plaintiffs filed a motion for reconsideration with the Georgia Supreme Court, which was denied on February 16, 2023. This matter is now concluded.

Plant Scherer

In July 2020, a group of individual plaintiffs filed a complaint, which was amended in December 2022, in the Superior Court of Fulton County, Georgia against Georgia Power alleging that the construction and operation of Plant Scherer has impacted groundwater and air, resulting in alleged personal injuries and property damage. The plaintiffs seek an unspecified amount of monetary damages including punitive damages, a medical monitoring fund, and injunctive relief. Georgia Power has filed multiple motions to dismiss the complaint. In December 2022, the Superior Court of Fulton County, Georgia granted Georgia Power's motion to transfer the case to the Superior Court of Monroe County, Georgia.

In October 2021 and February 2022, a total of seven additional complaints were filed in the Superior Court of Monroe County, Georgia against Georgia Power alleging that releases from Plant Scherer have impacted groundwater and air, resulting in alleged personal injuries and property damage. The plaintiffs sought an unspecified amount of monetary damages including punitive damages. In November 2021 and March 2022, Georgia Power removed these cases to the U.S. District Court for the Middle District of Georgia. In November 2022, the plaintiffs voluntarily dismissed their complaints without prejudice. Georgia Power anticipates that these plaintiffs will refile their complaints.

On January 9, 2023, an additional complaint was filed in the Superior Court of Monroe County, Georgia against Georgia Power alleging that the construction and operation of Plant Scherer have impacted groundwater and air, resulting in alleged personal injuries. The plaintiff sought an unspecified amount of monetary damages, including punitive damages. On January 19, 2023, Georgia Power filed a notice to remove the case to the U.S. District Court for the Middle District of Georgia. On February 21, 2023, the plaintiff voluntarily dismissed the complaint without prejudice. Georgia Power anticipates that this plaintiff will refile the complaint.

The amount of any possible losses from these matters cannot be estimated at this time.

Mississippi Power

In 2018, Ray C. Turnage and 10 other individual plaintiffs filed a putative class action complaint against Mississippi Power and the three then-serving members of the Mississippi PSC in the U.S. District Court for the Southern District of Mississippi, which was amended in March 2019 to include four additional plaintiffs. Mississippi Power received Mississippi PSC approval in 2013 to charge a mirror CWIP rate premised upon including in its rate base pre-construction and construction costs for the Kemper IGCC prior to placing the Kemper IGCC into service. The Mississippi Supreme Court reversed that approval and ordered Mississippi Power to refund the amounts paid by customers under the previously-approved mirror CWIP rate. The plaintiffs allege that the initial approval process, and the amount approved, were improper and make claims for gross negligence, reckless conduct, and intentional wrongdoing. They also allege that Mississippi Power underpaid customers by up to $23.5 million in the refund process by applying an incorrect interest rate. The plaintiffs seek to recover, on behalf of themselves and their putative class, actual damages, punitive damages, pre-judgment interest, post-judgment interest, attorney's fees, and costs. The district court dismissed the amended complaint; however, in March 2020, the plaintiffs filed a motion seeking to name the new members of the Mississippi PSC, the Mississippi Development Authority, and Southern Company as additional defendants and add a cause of action against all defendants based on a dormant commerce

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

Environmental Remediation

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

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

Southern Company Gas' environmental remediation liability was $243 million and $256 million at March 31, 2023 and December 31, 2022, respectively, based on the estimated cost of environmental investigation and remediation associated with known former manufactured gas plant operating sites.

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

Other Matters

Traditional Electric Operating Companies

In April 2019, Bellsouth Telecommunications d/b/a AT&T Alabama (AT&T) filed a complaint against Alabama Power with the FCC alleging that the pole rental rate AT&T is required to pay pursuant to the parties' joint use agreement is unjust and unreasonable under federal law. The complaint sought a new rate and approximately $87 million in refunds of alleged overpayments for the preceding six years. In August 2019, the FCC stayed the case in favor of arbitration, which AT&T has not pursued. The ultimate outcome of this matter cannot be determined at this time, but an adverse outcome could have a material impact on the financial statements of Southern Company and Alabama Power. Georgia Power and Mississippi Power have joint use agreements with other AT&T affiliates.

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Mississippi Power

In August 2022, the Mississippi Department of Revenue (Mississippi DOR) completed an audit of sales and use taxes paid by Mississippi Power from 2016 to 2019 and entered a final assessment, indicating a total amount due of $28 million, including associated penalties and interest. Additional interest of approximately $1 million was estimated through March 31, 2023. Mississippi Power does not agree with the audit findings and, in October 2022, filed an administrative appeal with the Mississippi DOR. See Note 3 to the financial statements in Item 8 of the Form 10-K under "Other Matters – Mississippi Power – Department of Revenue Audit" for information regarding a Mississippi PSC accounting order related to the tax audit proceeding. The ultimate outcome of this matter cannot be determined at this time.

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(D) REVENUE FROM CONTRACTS WITH CUSTOMERS AND LEASE INCOME

Revenue from Contracts with Customers

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

The following table disaggregates revenue from contracts with customers for the three months ended March 31, 2023 and 2022:


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
































Three Months Ended March 31, 2023
Operating revenues
Retail electric revenues
Residential	$	1,525	$	659	$	801	$	65	$	—	$	—
Commercial	1,251		430		753		68		—		—
Industrial	789		398		313		78		—		—
Other	27		3		22		2		—		—
Total retail electric revenues	3,592		1,490		1,889		213		—		—
Natural gas distribution revenues
Residential	896		—		—		—		—		896
Commercial	232		—		—		—		—		232
Transportation	319		—		—		—		—		319
Industrial	23		—		—		—		—		23
Other	117		—		—		—		—		117
Total natural gas distribution revenues	1,587		—		—		—		—		1,587
Wholesale electric revenues
PPA energy revenues	284		72		12		4		202		—
PPA capacity revenues	190		60		11		32		89		—
Non-PPA revenues	36		20		3		107		103		—
Total wholesale electric revenues	510		152		26		143		394		—
Other natural gas revenues

Gas marketing services	231		—		—		—		—		231
Other natural gas revenues	11		—		—		—		—		11
Total natural gas revenues	242		—		—		—		—		242
Other revenues	310		54		132		11		11		—
Total revenue from contracts with customers	6,241		1,696		2,047		367		405		1,829
Other revenue sources(*)	239		(49)		129		23		103		46

Total operating revenues	$	6,480	$	1,647	$	2,176	$	390	$	508	$	1,875

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	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Three Months Ended March 31, 2022
Operating revenues
Retail electric revenues
Residential	$	1,525	$	634	$	821	$	70	$	—	$	—
Commercial	1,178		375		738		65		—		—
Industrial	727		323		334		70		—		—
Other	26		4		20		2		—		—
Total retail electric revenues	3,456		1,336		1,913		207		—		—
Natural gas distribution revenues
Residential	1,016		—		—		—		—		1,016
Commercial	270		—		—		—		—		270
Transportation	337		—		—		—		—		337
Industrial	32		—		—		—		—		32
Other	129		—		—		—		—		129
Total natural gas distribution revenues	1,784		—		—		—		—		1,784
Wholesale electric revenues
PPA energy revenues	342		59		32		3		251		—
PPA capacity revenues	134		39		12		3		81		—
Non-PPA revenues	58		64		9		102		73		—
Total wholesale electric revenues	534		162		53		108		405		—
Other natural gas revenues

Gas marketing services	243		—		—		—		—		243
Other natural gas revenues	16		—		—		—		—		16
Total natural gas revenues	259		—		—		—		—		259
Other revenues	225		48		95		9		8		—
Total revenue from contracts with customers	6,258		1,546		2,061		324		413		2,043
Other revenue sources(*)	390		103		147		11		126		15

Total operating revenues	$	6,648	$	1,649	$	2,208	$	335	$	539	$	2,058

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

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(UNAUDITED)

Contract Balances

The following table reflects the closing balances of receivables, contract assets, and contract liabilities related to revenues from contracts with customers at March 31, 2023 and December 31, 2022:


	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Accounts Receivable
At March 31, 2023	$	2,433	$	622	$	672	$	79	$	119	$	853
At December 31, 2022	3,123		696		922		92		237		1,107
Contract Assets
At March 31, 2023	$	160	$	3	$	74	$	—	$	—	$	19
At December 31, 2022	156		2		89		—		—		—
Contract Liabilities
At March 31, 2023	$	61	$	2	$	14	$	1	$	1	$	—
At December 31, 2022	45		4		9		—		1		—

Contract assets for Georgia Power primarily relate to retail customer fixed bill programs, where the payment is contingent upon Georgia Power's continued performance and the customer's continued participation in the program over a one-year contract term, and unregulated service agreements, where payment is contingent on project completion. Contract liabilities for Georgia Power primarily relate to cash collections recognized in advance of revenue for unregulated service agreements. At March 31, 2023, Southern Company Gas' contract assets relate to work performed on an energy efficiency enhancement and upgrade contract with the U.S. General Services Administration. Southern Company Gas receives cash advances from a third-party financial institution to fund work performed, of which approximately $30 million had been received at March 31, 2023. These advances have been accounted for as long-term debt on the balance sheets. See Note 1 to the financial statements under "Affiliate Transactions" in Item 8 of the Form 10-K for additional information regarding the construction contract. At March 31, 2023 and December 31, 2022, Southern Company's unregulated distributed generation business had contract assets of $64 million and $65 million, respectively, and contract liabilities of $44 million and $32 million, respectively, for outstanding performance obligations.

Revenues recognized in the three months ended March 31, 2023, which were included in contract liabilities at December 31, 2022, were $19 million for Southern Company and immaterial for the other Registrants.

Remaining Performance Obligations

The Subsidiary Registrants may enter into long-term contracts with customers in which revenues are recognized as performance obligations are satisfied over the contract term. For Alabama Power, Georgia Power, and Southern Power, these contracts primarily relate to PPAs whereby electricity and generation capacity are provided to a customer. The revenue recognized for the delivery of electricity is variable; however, certain PPAs include a fixed payment for fixed generation capacity over the term of the contract. For Southern Company Gas, these contracts primarily relate to the U.S. General Services Administration contract described above. Southern Company's unregulated distributed generation business also has partially satisfied performance obligations related to certain fixed price contracts. Revenues from contracts with customers related to these performance obligations remaining at March 31, 2023 are expected to be recognized as follows:

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(UNAUDITED)


	2023 (remaining)		2024		2025		2026		2027		Thereafter
	(in millions)
Southern Company	$	632	$	553	$	347	$	315	$	319	$	2,089
Alabama Power	17		7		6		—		—		—
Georgia Power	68		60		25		13		14		23

Southern Power	268		345		302		303		310		2,077
Southern Company Gas	15		29		—		—		—		—

Lease Income

Lease income for the three months ended March 31, 2023 and 2022 is as follows:


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






For the Three Months Ended March 31, 2023
Lease income - interest income on sales-type leases	$	6	$	—	$	—	$	4	$	2	$	—
Lease income - operating leases	49		18		7		1		21		9
Variable lease income	69		—		—		—		75		—
Total lease income	$	124	$	18	$	7	$	5	$	98	$	9







For the Three Months Ended March 31, 2022
Lease income - interest income on sales-type leases	$	6	$	—	$	—	$	4	$	2	$	—
Lease income - operating leases	51		20		8		—		21		9
Variable lease income	84		—		—		—		90		—
Total lease income	$	141	$	20	$	8	$	4	$	113	$	9

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

(E) CONSOLIDATED ENTITIES AND EQUITY METHOD INVESTMENTS

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

Southern Company

At March 31, 2023 and December 31, 2022, Southern Holdings had equity method investments totaling $120 million and $112 million, respectively, primarily related to investments in venture capital funds focused on energy and utility investments. Earnings from these investments were immaterial for both periods presented.

Southern Power

Variable Interest Entities

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

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

SP Solar and SP Wind

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

At March 31, 2023 and December 31, 2022, SP Wind had total assets of $2.2 billion, total liabilities of $172 million and $169 million, respectively, and noncontrolling interests of $39 million. Under the terms of the limited liability agreement, distributions without Class A member consent are limited to available cash and SP Wind is obligated to distribute all such available cash to its members each quarter. Available cash includes all cash generated in the quarter subject to the maintenance of appropriate operating reserves. Cash distributions from SP Wind are generally allocated 60% to Southern Power and 40% to the three financial investors in accordance with the limited liability agreement.

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

Other Variable Interest Entities

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

At March 31, 2023 and December 31, 2022, the other VIEs had total assets of $1.8 billion, total liabilities of $0.2 billion, and noncontrolling interests of $0.8 billion. Under the terms of the partnership agreements, distributions of all available cash are required each month or quarter and additional distributions require partner consent.

Equity Method Investments

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

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(UNAUDITED)

Southern Company Gas

Equity Method Investments

The carrying amounts of Southern Company Gas' equity method investments at March 31, 2023 and December 31, 2022 and related earnings from those investments for the three months ended March 31, 2023 and 2022 were as follows:


Investment Balance	March 31, 2023		December 31, 2022
	(in millions)
SNG	$	1,249	$	1,243
Other	33		33
Total	$	1,282	$	1,276


	Three Months Ended March 31,
Earnings from Equity Method Investments		2023		2022
		(in millions)
SNG		$	44	$	39
Other		1		1
Total		$	45	$	40

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(UNAUDITED)

(F) FINANCING AND LEASES

Bank Credit Arrangements

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

At March 31, 2023, committed credit arrangements with banks were as follows:


	Expires
Company	2023		2024		2025		2026		Total		Unused		Expires within One Year
	(in millions)
Southern Company parent	$	—	$	—	$	—	$	2,000	$	2,000	$	1,998	$	—
Alabama Power	—		550		—		700		1,250		1,250		—
Georgia Power	—		—		—		1,750		1,750		1,726		—
Mississippi Power	—		150		125		—		275		225		—
Southern Power(a)	—		—		—		600		600		587		—
Southern Company Gas(b)	250		—		—		1,500		1,750		1,748		250
SEGCO	30		—		—		—		30		30		30
Southern Company	$	280	$	700	$	125	$	6,550	$	7,655	$	7,564	$	280

(a)Does not include Southern Power Company's $75 million and $100 million continuing letter of credit facilities for standby letters of credit, expiring in 2025 and 2026, respectively, of which $9 million and $16 million, respectively, was unused at March 31, 2023. In March 2023, Southern Power amended the $100 million letter of credit facility, which, among other things, extended the expiration date from 2025 to 2026 and increased the amount from $75 million. Southern Power's subsidiaries are not parties to its bank credit arrangements or letter of credit facilities.

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

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

These bank credit arrangements, as well as the term loan arrangements of the Registrants, Nicor Gas, and SEGCO, contain covenants that limit debt levels and contain cross-acceleration or, in the case of Southern Power, cross-default provisions to other indebtedness (including guarantee obligations) that are restricted only to the indebtedness of the individual company. Such cross-default provisions to other indebtedness would trigger an event of default if Southern Power defaulted on indebtedness or guarantee obligations over a specified threshold. Such cross-acceleration provisions to other indebtedness would trigger an event of default if the applicable borrower defaulted on indebtedness, the payment of which was then accelerated. At March 31, 2023, the Registrants, Nicor Gas, and SEGCO were in compliance with all such covenants. None of the bank credit arrangements contain material adverse change clauses at the time of borrowings.

A portion of the unused credit with banks is allocated to provide liquidity support to the revenue bonds of the traditional electric operating companies and the commercial paper programs of the Registrants, Nicor Gas, and SEGCO. The amount of variable rate revenue bonds of the traditional electric operating companies outstanding requiring liquidity support at March 31, 2023 was approximately $1.7 billion (comprised of approximately $789 million at Alabama Power, $819 million at Georgia Power, and $69 million at Mississippi Power). In addition, at March 31, 2023, Alabama Power and Georgia Power had approximately $120 million and $285 million, respectively, of fixed rate revenue bonds outstanding that are required to be remarketed within the next 12 months.

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(UNAUDITED)

Convertible Senior Notes

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

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

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

during any calendar quarter (and only during such calendar quarter), if the last reported sale price of Southern Company's common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day as determined by Southern Company;
during the five business day period after any 10 consecutive trading day period (Measurement Period) in which the trading price per $1,000 principal amount of Series 2023A Convertible Senior Notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price of the common stock and the conversion rate on each such trading day; or
upon the occurrence of certain corporate events specified in the indenture governing the Series 2023A Convertible Senior Notes.

On or after September 15, 2025, a holder may convert all or any portion of its Series 2023A Convertible Senior Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date regardless of the foregoing conditions.

Southern Company will settle conversions of the Series 2023A Convertible Senior Notes by paying cash up to the aggregate principal amount of the Series 2023A Convertible Senior Notes to be converted and paying or delivering, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock, at Southern Company's election, in respect of the remainder, if any, of Southern Company's conversion obligation in excess of the aggregate principal amount of the Series 2023A Convertible Senior Notes being converted. The Series 2023A Convertible Senior Notes are initially convertible at a rate of 11.8818 shares of common stock per $1,000 principal amount converted, which is approximately equal to $84.16 per share of common stock. The conversion rate will be subject to adjustment upon the occurrence of certain specified events but will not be adjusted for accrued and unpaid interest. In addition, upon the occurrence of a make-whole fundamental change (as defined in the indenture governing the Series 2023A Convertible Senior Notes), Southern Company will, in certain circumstances, increase the conversion rate by a number of additional shares of common stock for conversions in connection with the make-whole fundamental change.

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

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(UNAUDITED)

Earnings per Share

For Southern Company, the only difference in computing basic and diluted earnings per share (EPS) is attributable to awards outstanding under stock-based compensation plans and the Series 2023A Convertible Senior Notes. EPS dilution resulting from stock-based compensation plans is determined using the treasury stock method and EPS dilution resulting from the Series 2023A Convertible Senior Notes is determined using the net share settlement method. See Note 12 to the financial statements in Item 8 of the Form 10-K and "Convertible Senior Notes" herein for additional information. Shares used to compute diluted EPS were as follows:


	Three Months Ended March 31,
		2023	2022
		(in millions)
As reported shares		1,091	1,063
Effect of stock-based compensation		7	6

Diluted shares		1,098	1,069

For the three months ended March 31, 2023, there were no anti-dilutive shares. For the three months ended March 31, 2022, an immaterial number of stock-based compensation awards was excluded from the diluted EPS calculation because the awards were anti-dilutive.

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

Southern Company Leveraged Lease

See Note 9 to the financial statements in Item 8 of the Form 10-K for information on a leveraged lease agreement related to energy generation. In June 2022, the Southern Holdings subsidiary operating the generating plant for the lessee provided notice to the lessee to terminate the related operating and maintenance agreement effective June 30, 2023. Subsequently, the lessee failed to make the semi-annual lease payment due in December 2022. As a result, the Southern Holdings subsidiary was unable to make its corresponding payment to the holders of the underlying non-recourse debt related to the generation assets. The parties to the lease have entered into a forbearance agreement which suspends the related contractual rights of the parties while they continue restructuring negotiations, which could result in rescission of the termination notice. The ultimate outcome of this matter cannot be determined at this time, but is not expected to have a material impact on Southern Company's financial statements. Southern Company will continue to monitor the operational performance of the underlying assets and evaluate the ability of the lessee to continue to make the required lease payments and meet its obligations associated with a future closure or retirement of the generation assets and associated properties, including the dry ash landfill.

(G) INCOME TAXES

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

Current and Deferred Income Taxes

Tax Credit and Net Operating Loss Carryforwards

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

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(UNAUDITED)

Effective Tax Rate

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

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

Southern Company

Southern Company's effective tax rate was 10.8% for the three months ended March 31, 2023 compared to 14.9% for the corresponding period in 2022. The effective tax rate decrease was primarily due to an increase in the flowback of certain excess deferred income taxes at Alabama Power in 2023, partially offset by the flowback of certain excess deferred income taxes ending in 2022 at Georgia Power.

Alabama Power

Alabama Power's effective tax benefit rate was (0.8)% for the three months ended March 31, 2023 compared to an effective tax rate of 23.3% for the corresponding period in 2022. The effective tax rate decrease was primarily due to an increase in the flowback of certain excess deferred income taxes in 2023. See Note 2 to the financial statements under "Alabama Power – Excess Accumulated Deferred Income Tax Accounting Order" in Item 8 of the Form 10-K for additional information.

Georgia Power

Georgia Power's effective tax rate was 15.1% for the three months ended March 31, 2023 compared to 7.3% for the corresponding period in 2022. The effective tax rate increase was primarily due to the flowback of certain excess deferred income taxes ending in 2022.

Southern Power

Southern Power's effective tax benefit rate was (20.7)% for the three months ended March 31, 2023 compared to (80.0)% for the corresponding period in 2022. The effective tax rate increase was primarily due to higher pre-tax earnings and the impacts of noncontrolling interests.

(H) RETIREMENT BENEFITS

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

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

On each Registrant's condensed statements of income, the service cost component of net periodic benefit costs is included in other operations and maintenance expenses and all other components of net periodic benefit costs are included in other income (expense), net. Components of the net periodic benefit costs for the three months ended March 31, 2023 and 2022 are presented in the following tables.

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)


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





















Three Months Ended March 31, 2023
Pension Plans
Service cost	$	69	$	16	$	17	$	3	$	2	$	6
Interest cost	156		36		48		7		2		11
Expected return on plan assets	(307)		(74)		(96)		(14)		(4)		(22)
Amortization:
Prior service costs	—		—		—		—		—		(1)
Regulatory asset	—		—		—		—		—		4
Net (gain) loss	8		2		3		—		—		(1)
Net periodic pension income	$	(74)	$	(20)	$	(28)	$	(4)	$	—	$	(3)

Postretirement Benefits
Service cost	$	4	$	1	$	1	$	—	$	—	$	—
Interest cost	18		4		6		1		—		2
Expected return on plan assets	(21)		(8)		(7)		(1)		—		(2)
Amortization:

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

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)


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





















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

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

Regulatory asset	—		—		—		—		—		2

Net periodic postretirement benefit cost (income)	$	(4)	$	(4)	$	(1)	$	—	$	—	$	1

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

(I) FAIR VALUE MEASUREMENTS

At March 31, 2023, assets and liabilities measured at fair value on a recurring basis during the period, together with their associated level of the fair value hierarchy, were as follows:


	Fair Value Measurements Using:
At March 31, 2023	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Net Asset Value as a Practical Expedient (NAV)		Total
	(in millions)
Southern Company
Assets:
Energy-related derivatives(a)	$	4	$	100	$	—	$	—	$	104
Interest rate derivatives	—		2		—		—		2

Investments in trusts:(b)(c)
Domestic equity	680		192		—		—		872
Foreign equity	138		162		—		—		300
U.S. Treasury and government agency securities	—		316		—		—		316
Municipal bonds	—		48		—		—		48
Pooled funds – fixed income	—		7		—		—		7
Corporate bonds	—		403		—		—		403
Mortgage and asset backed securities	—		90		—		—		90
Private equity	—		—		—		160		160
Cash and cash equivalents	2		—		—		—		2
Other	40		12		—		9		61
Cash equivalents	433		13		—		—		446
Other investments	9		29		8		—		46
Total	$	1,306	$	1,374	$	8	$	169	$	2,857
Liabilities:
Energy-related derivatives(a)	$	40	$	354	$	—	$	—	$	394
Interest rate derivatives	—		261		—		—		261
Foreign currency derivatives	—		218		—		—		218
Contingent consideration	—		—		12		—		12
Other	—		13		—		—		13
Total	$	40	$	846	$	12	$	—	$	898

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)


	Fair Value Measurements Using:
At March 31, 2023	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Net Asset Value as a Practical Expedient (NAV)		Total
	(in millions)
Alabama Power
Assets:
Energy-related derivatives	$	—	$	32	$	—	$	—	$	32

Nuclear decommissioning trusts:(b)
Domestic equity	404		185		—		—		589
Foreign equity	138		—		—		—		138
U.S. Treasury and government agency securities	—		19		—		—		19
Municipal bonds	—		1		—		—		1
Corporate bonds	—		223		—		—		223
Mortgage and asset backed securities	—		22		—		—		22
Private equity	—		—		—		160		160
Other	7		—		—		9		16
Cash equivalents	193		13		—		—		206
Other investments	—		29		—		—		29
Total	$	742	$	524	$	—	$	169	$	1,435
Liabilities:
Energy-related derivatives	$	—	$	96	$	—	$	—	$	96



Georgia Power
Assets:
Energy-related derivatives	$	—	$	22	$	—	$	—	$	22

Nuclear decommissioning trusts:(b)(c)
Domestic equity	276		1		—		—		277
Foreign equity	—		161		—		—		161
U.S. Treasury and government agency securities	—		297		—		—		297
Municipal bonds	—		47		—		—		47
Corporate bonds	—		180		—		—		180
Mortgage and asset backed securities	—		68		—		—		68
Other	33		12		—		—		45

Total	$	309	$	788	$	—	$	—	$	1,097
Liabilities:
Energy-related derivatives	$	—	$	132	$	—	$	—	$	132
Interest rate derivatives	—		1		—		—		1
Total	$	—	$	133	$	—	$	—	$	133

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(UNAUDITED)


	Fair Value Measurements Using:
At March 31, 2023	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Net Asset Value as a Practical Expedient (NAV)		Total
	(in millions)
Mississippi Power
Assets:
Energy-related derivatives	$	—	$	35	$	—	$	—	$	35

Cash equivalents	3		—		—		—		3
Total	$	3	$	35	$	—	$	—	$	38
Liabilities:
Energy-related derivatives	$	—	$	62	$	—	$	—	$	62



Southern Power
Assets:
Energy-related derivatives	$	—	$	5	$	—	$	—	$	5

Cash equivalents	13		—		—		—		13
Total	$	13	$	5	$	—	$	—	$	18
Liabilities:
Energy-related derivatives	$	—	$	14	$	—	$	—	$	14
Foreign currency derivatives	—		47		—		—		47
Contingent consideration	—		—		12		—		12
Other	—		13		—		—		13
Total	$	—	$	74	$	12	$	—	$	86

Southern Company Gas
Assets:
Energy-related derivatives(a)	$	4	$	6	$	—	$	—	$	10
Interest rate derivatives	—		1		—		—		1
Non-qualified deferred compensation trusts:
Domestic equity	—		6		—		—		6
Foreign equity	—		1		—		—		1
Pooled funds – fixed income	—		7		—		—		7
Cash equivalents	2		—		—		—		2
Cash equivalents and restricted cash	55		—		—		—		55

Total	$	61	$	21	$	—	$	—	$	82
Liabilities:
Energy-related derivatives(a)	$	40	$	50	$	—	$	—	$	90
Interest rate derivatives	—		72		—		—		72

Total	$	40	$	122	$	—	$	—	$	162

(a)Excludes cash collateral of $60 million.

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

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(UNAUDITED)

(c)Includes investment securities pledged to creditors and collateral received and excludes payables related to the securities lending program. At March 31, 2023, approximately $37 million of the fair market value of Georgia Power's nuclear decommissioning trust funds' securities were on loan to creditors under the funds' managers' securities lending program. See Note 6 to the financial statements in Item 8 of the Form 10-K for additional information.

Southern Company, Alabama Power, and Georgia Power continue to elect the option to fair value investment securities held in the nuclear decommissioning trust funds. The fair value of the funds, including reinvested interest and dividends and excluding the funds' expenses, increased (decreased) by the amounts shown in the table below for the three months ended March 31, 2023 and 2022. The changes were recorded as a change to the regulatory assets and liabilities related to AROs for Georgia Power and Alabama Power, respectively.


	Three Months Ended
Fair value increases (decreases)	March 31, 2023		March 31, 2022
	(in millions)
Southern Company	$	102	$	(150)
Alabama Power	45		(67)
Georgia Power	57		(83)

Valuation Methodologies

The energy-related derivatives primarily consist of exchange-traded and over-the-counter financial products for natural gas and physical power products, including, from time to time, basis swaps. These are standard products used within the energy industry and are valued using the market approach. The inputs used are mainly from observable market sources, such as forward natural gas prices, power prices, implied volatility, and overnight index swap interest rates. Interest rate derivatives are also standard over-the-counter products that are valued using observable market data and assumptions commonly used by market participants. The fair value of interest rate derivatives reflects the net present value of expected payments and receipts under the swap agreement based on the market's expectation of future interest rates. Additional inputs to the net present value calculation may include the contract terms, counterparty credit risk, and occasionally, implied volatility of interest rate options. The fair value of cross-currency swaps reflects the net present value of expected payments and receipts under the swap agreement based on the market's expectation of future foreign currency exchange rates. Additional inputs to the net present value calculation may include the contract terms, counterparty credit risk, and discount rates. The interest rate derivatives and cross-currency swaps are categorized as Level 2 under Fair Value Measurements as these inputs are based on observable data and valuations of similar instruments. See Note (J) for additional information on how these derivatives are used.

For fair value measurements of the investments within the nuclear decommissioning trusts and the non-qualified deferred compensation trusts, external pricing vendors are designated for each asset class with each security specifically assigned a primary pricing source. For investments held within commingled funds, fair value is determined at the end of each business day through the net asset value, which is established by obtaining the underlying securities' individual prices from the primary pricing source. A market price secured from the primary source vendor is then evaluated by management in its valuation of the assets within the trusts. As a general approach, fixed income market pricing vendors gather market data (including indices and market research reports) and integrate relative credit information, observed market movements, and sector news into proprietary pricing models, pricing systems, and mathematical tools. Dealer quotes and other market information, including live trading levels and pricing analysts' judgments, are also obtained when available.

The NRC requires licensees of commissioned nuclear power reactors to establish a plan for providing reasonable assurance of funds for future decommissioning. See Note 6 to the financial statements under "Nuclear Decommissioning" in Item 8 of the Form 10-K for additional information.

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(UNAUDITED)

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

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

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

At March 31, 2023, the fair value measurements of private market investments held in Alabama Power's nuclear decommissioning trusts that are calculated at net asset value per share (or its equivalent) as a practical expedient totaled $169 million and unfunded commitments related to the private market investments totaled $75 million. Private market investments include high-quality private equity funds across several market sectors, funds that invest in real estate assets, and a private credit fund. Private market funds do not have redemption rights. Distributions from these funds will be received as the underlying investments in the funds are liquidated.

At March 31, 2023, other financial instruments for which the carrying amount did not equal fair value were as follows:


	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas*()**
	(in billions)
Long-term debt, including securities due within one year:
Carrying amount	$	56.1	$	10.6	$	14.9	$	1.5	$	3.0	$	7.5
Fair value	51.6		9.5		13.7		1.3		2.9		6.7

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

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

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(UNAUDITED)

(J) DERIVATIVES

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

Energy-Related Derivatives

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

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

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

Regulatory Hedges – Energy-related derivative contracts designated as regulatory hedges relate primarily to the traditional electric operating companies' and the natural gas distribution utilities' fuel-hedging programs, where gains and losses are initially recorded as regulatory liabilities and assets, respectively, and then are included in fuel expense as the underlying fuel is used in operations and ultimately recovered through an approved cost recovery mechanism.
Cash Flow Hedges – Gains and losses on energy-related derivatives designated as cash flow hedges (which are mainly used to hedge anticipated purchases and sales) are initially deferred in accumulated OCI before being recognized in the statements of income in the same period and in the same income statement line item as the earnings effect of the hedged transactions.
Not Designated – Gains and losses on energy-related derivative contracts that are not designated or fail to qualify as hedges are recognized in the statements of income as incurred.

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

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

At March 31, 2023, the net volume of energy-related derivative contracts for natural gas positions, together with the longest hedge date over which the respective entity is hedging its exposure to the variability in future cash flows for forecasted transactions and the longest non-hedge date for derivatives not designated as hedges, were as follows:


	Net Purchased mmBtu	Longest Hedge Date	Longest Non-Hedge Date
	(in millions)
Southern Company(*)	437	2030	2028
Alabama Power	111	2026	2023
Georgia Power	122	2026	2023
Mississippi Power	86	2027	2023
Southern Power	11	2030	2023
Southern Company Gas(*)	107	2028	2028

(*)Southern Company Gas' derivative instruments include both long and short natural gas positions. A long position is a contract to purchase natural gas and a short position is a contract to sell natural gas. Southern Company Gas' volume represents the net of long natural gas positions of 113.6 million mmBtu and short natural gas positions of 6.6 million mmBtu at March 31, 2023, which is also included in Southern Company's total volume.

In addition to the volumes discussed above, the traditional electric operating companies and Southern Power enter into physical natural gas supply contracts that provide the option to sell back excess natural gas due to operational constraints. The maximum expected volume of natural gas subject to such a feature is 22 million mmBtu for Southern Company, which includes 6 million mmBtu for Alabama Power, 8 million mmBtu for Georgia Power, 3 million mmBtu for Mississippi Power, and 5 million mmBtu for Southern Power.

For cash flow hedges of energy-related derivatives, the estimated pre-tax gains (losses) expected to be reclassified from accumulated OCI to earnings for the 12-month period ending March 31, 2024 are $(42) million for Southern Company, $(12) million for Southern Power, $(30) million for Southern Company Gas, and immaterial for the other Registrants.

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(UNAUDITED)

Interest Rate Derivatives

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

At March 31, 2023, the following interest rate derivatives were outstanding:


	Notional Amount		Weighted Average Interest Rate Paid	Interest Rate Received	Hedge Maturity Date	Fair Value Gain (Loss) at March 31, 2023
	(in millions)					(in millions)
Cash Flow Hedges of Forecasted Debt
Georgia Power	$	750	3.63%	N/A	February 2033	$	(1)
Southern Company parent	500		3.47%	N/A	June 2033	—
Southern Company Gas	250		3.40%	N/A	August 2033	1
Fair Value Hedges of Existing Debt
Southern Company parent	400		1-month LIBOR + 0.68%	1.75%	March 2028	(45)
Southern Company parent	1,000		1-month LIBOR + 2.36%	3.70%	April 2030	(142)
Southern Company Gas	500		1-month LIBOR + 0.38%	1.75%	January 2031	(71)
Southern Company	$	3,400				$	(258)

For cash flow hedges of interest rate derivatives, the estimated pre-tax gains (losses) expected to be reclassified from accumulated OCI to interest expense for the 12-month period ending March 31, 2024 are $(15) million for Southern Company and immaterial for the other Registrants. Deferred gains and losses related to interest rate derivatives are expected to be amortized into earnings through 2052 for Southern Company, Alabama Power, and Georgia Power, 2028 for Mississippi Power, and 2046 for Southern Company Gas.

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(UNAUDITED)

Foreign Currency Derivatives

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

At March 31, 2023, the following foreign currency derivatives were outstanding:


	Pay Notional		Pay Rate	Receive Notional		Receive Rate	Hedge Maturity Date	Fair Value Gain (Loss) at March 31, 2023
	(in millions)			(in millions)				(in millions)
Cash Flow Hedges of Existing Debt
Southern Power	$	564	3.78%	€	500	1.85%	June 2026	$	(47)

Fair Value Hedges of Existing Debt

Southern Company parent	1,476		3.39%	1,250		1.88%	September 2027	(171)


Southern Company	$	2,040		€	1,750			$	(218)

For cash flow hedges of foreign currency derivatives, the estimated pre-tax losses expected to be reclassified from accumulated OCI to earnings for the 12-month period ending March 31, 2024 are $11 million for Southern Power.

Derivative Financial Statement Presentation and Amounts

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

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

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


	At March 31, 2023				At December 31, 2022
Derivative Category and Balance Sheet Location	Assets		Liabilities		Assets		Liabilities
	(in millions)				(in millions)
Southern Company
Energy-related derivatives designated as hedging instruments for regulatory purposes

Assets from risk management activities/Liabilities from risk management activities	$	41	$	230	$	123	$	121
Other deferred charges and assets/Other deferred credits and liabilities	53		113		52		44


Total derivatives designated as hedging instruments for regulatory purposes	94		343		175		165
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Assets from risk management activities/Liabilities from risk management activities	—		38		3		27
Other deferred charges and assets/Other deferred credits and liabilities	4		4		6		4
Interest rate derivatives:
Assets from risk management activities/Liabilities from risk management activities	2		71		12		62
Other deferred charges and assets/Other deferred credits and liabilities	—		191		—		240
Foreign currency derivatives:
Assets from risk management activities/Liabilities from risk management activities	—		35		—		34
Other deferred charges and assets/Other deferred credits and liabilities	—		183		—		182
Total derivatives designated as hedging instruments in cash flow and fair value hedges	6		522		21		549
Energy-related derivatives not designated as hedging instruments

Assets from risk management activities/Liabilities from risk management activities	4		8		13		13
Other deferred charges and assets/Other deferred credits and liabilities	2		1		2		1

Total derivatives not designated as hedging instruments	6		9		15		14
Gross amounts recognized	106		874		211		728
Gross amounts offset(a)	(57)		(118)		(70)		(111)
Net amounts recognized in the Balance Sheets(b)	$	49	$	756	$	141	$	617

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)


	At March 31, 2023				At December 31, 2022
Derivative Category and Balance Sheet Location	Assets		Liabilities		Assets		Liabilities
	(in millions)				(in millions)
Alabama Power(c)
Energy-related derivatives designated as hedging instruments for regulatory purposes

Other current assets/Other current liabilities	$	14	$	54	$	42	$	21
Other deferred charges and assets/Other deferred credits and liabilities	18		42		20		18
Total derivatives designated as hedging instruments for regulatory purposes	32		96		62		39






Gross amounts offset	(28)		(28)		(24)		(24)
Net amounts recognized in the Balance Sheets	$	4	$	68	$	38	$	15

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

Assets from risk management activities/Other current liabilities	$	10	$	86	$	36	$	43
Other deferred charges and assets/Other deferred credits and liabilities	11		45		6		18
Total derivatives designated as hedging instruments for regulatory purposes	21		131		42		61
Interest rate derivatives designated as hedging instruments in cash flow and fair value hedges

Assets from risk management activities/Other current liabilities	—		1		—		—


Energy-related derivatives not designated as hedging instruments

Other current assets/Other current liabilities	1		1		—		1

Gross amounts recognized	22		133		42		62
Gross amounts offset	(19)		(19)		(21)		(21)
Net amounts recognized in the Balance Sheets	$	3	$	114	$	21	$	41

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

Assets from risk management activities/Other current liabilities	$	11	$	37	$	33	$	24
Other deferred charges and assets/Other deferred credits and liabilities	24		25		26		8
Total derivatives designated as hedging instruments for regulatory purposes	35		62		59		32






Gross amounts offset	(25)		(25)		(17)		(17)
Net amounts recognized in the Balance Sheets	$	10	$	37	$	42	$	15

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)


	At March 31, 2023				At December 31, 2022
Derivative Category and Balance Sheet Location	Assets		Liabilities		Assets		Liabilities
	(in millions)				(in millions)
Southern Power
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Other current assets/Other current liabilities	$	—	$	12	$	—	$	12
Other deferred charges and assets/Other deferred credits and liabilities	4		—		5		—
Foreign currency derivatives:
Other current assets/Other current liabilities	—		11		—		11
Other deferred charges and assets/Other deferred credits and liabilities	—		36		—		36
Total derivatives designated as hedging instruments in cash flow and fair value hedges	4		59		5		59
Energy-related derivatives not designated as hedging instruments

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


Total derivatives not designated as hedging instruments	1		2		3		—
Gross amounts recognized	5		61		8		59

Net amounts recognized in the Balance Sheets	$	5	$	61	$	8	$	59

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)


	At March 31, 2023				At December 31, 2022
Derivative Category and Balance Sheet Location	Assets		Liabilities		Assets		Liabilities
	(in millions)				(in millions)
Southern Company Gas
Energy-related derivatives designated as hedging instruments for regulatory purposes

Other current assets/Other current liabilities	$	6	$	53	$	12	$	33
Other deferred charges and assets/Other deferred credits and liabilities	—		1		—		—
Total derivatives designated as hedging instruments for regulatory purposes	6		54		12		33
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Other current assets/Other current liabilities	—		26		3		15
Other deferred charges and assets/Other deferred credits and liabilities	—		4		1		4
Interest rate derivatives:
Other current assets/Other current liabilities	1		19		—		14
Other deferred charges and assets/Other deferred credits and liabilities	—		53		—		72
Total derivatives designated as hedging instruments in cash flow and fair value hedges	1		102		4		105
Energy-related derivatives not designated as hedging instruments

Other current assets/Other current liabilities	3		5		11		12
Other deferred charges and assets/Other deferred credits and liabilities	1		1		1		1

Total derivatives not designated as hedging instruments	4		6		12		13
Gross amounts recognized	11		162		28		151
Gross amounts offset(a)	18		(43)		—		(41)
Net amounts recognized in the Balance Sheets(b)	$	29	$	119	$	28	$	110

(a)Gross amounts offset includes cash collateral held on deposit in broker margin accounts of $60 million and $41 million at March 31, 2023 and December 31, 2022, respectively.

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

(c)Energy-related derivatives not designated as hedging instruments were immaterial for Alabama Power and Mississippi Power for both periods presented.

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

At March 31, 2023 and December 31, 2022, the pre-tax effects of unrealized derivative gains (losses) arising from energy-related derivative instruments designated as regulatory hedging instruments and deferred were as follows:


Regulatory Hedge Unrealized Gain (Loss) Recognized in the Balance Sheet
Derivative Category and Balance Sheet Location	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Company Gas
	(in millions)
At March 31, 2023:
Energy-related derivatives:
Other regulatory assets, current	$	(198)	$	(44)	$	(78)	$	(29)	$	(47)
Other regulatory assets, deferred	(67)		(24)		(35)		(8)		—


Other regulatory liabilities, current	19		3		2		3		11
Other regulatory liabilities, deferred	9		1		1		7		—
Total energy-related derivative gains (losses)	$	(237)	$	(64)	$	(110)	$	(27)	$	(36)

At December 31, 2022:
Energy-related derivatives:
Other regulatory assets, current	$	(71)	$	(8)	$	(26)	$	(13)	$	(24)
Other regulatory assets, deferred	(23)		(7)		(14)		(2)		—
Other regulatory liabilities, current	72		29		19		22		2
Other regulatory liabilities, deferred	31		9		2		20		—
Total energy-related derivative gains (losses)	$	9	$	23	$	(19)	$	27	$	(22)

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

For the three months ended March 31, 2023 and 2022, the pre-tax effects of cash flow and fair value hedge accounting on accumulated OCI for the applicable Registrants were as follows:


Gain (Loss) Recognized in OCI on Derivatives	For the Three Months Ended March 31,
	2023	2022
	(in millions)
Southern Company
Cash flow hedges:
Energy-related derivatives		$	(45)	$	42
Interest rate derivatives		(13)		9
Foreign currency derivatives		—		(28)
Fair value hedges(*):
Foreign currency derivatives		(28)		4
Total		$	(86)	$	27


Georgia Power
Cash flow hedges:
Interest rate derivatives		$	(1)	$	12



Southern Power
Cash flow hedges:
Energy-related derivatives		$	(11)	$	5

Foreign currency derivatives		—		(28)
Total		$	(11)	$	(23)
Southern Company Gas
Cash flow hedges:
Energy-related derivatives		$	(34)	$	37
Interest rate derivatives		1		—
Total		$	(33)	$	37

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

For the three months ended March 31, 2023, the pre-tax effects of energy-related derivatives designated as cash flow hedging instruments on accumulated OCI were immaterial for Alabama Power and Mississippi Power. There were no such instruments for Alabama Power and Mississippi Power at March 31, 2022.

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

For the three months ended March 31, 2023 and 2022, the pre-tax effects of cash flow and fair value hedge accounting on income were as follows:


Location and Amount of Gain (Loss) Recognized in Income on Cash Flow and Fair Value Hedging Relationships	For the Three Months Ended March 31,

	2023	2022
	(in millions)
Southern Company
Total cost of natural gas		$	898	$	1,095
Gain (loss) on energy-related cash flow hedges(a)		(20)		9
Total depreciation and amortization		1,111		892
Gain (loss) on energy-related cash flow hedges(a)		(9)		2
Total interest expense, net of amounts capitalized		(582)		(462)
Gain (loss) on interest rate cash flow hedges(a)		(4)		(7)
Gain (loss) on foreign currency cash flow hedges(a)		(3)		(6)
Gain (loss) on interest rate fair value hedges(b)		43		(123)
Total other income (expense), net		147		145
Gain (loss) on foreign currency cash flow hedges(a)(c)		10		(25)
Gain (loss) on foreign currency fair value hedges		(2)		(24)
Amount excluded from effectiveness testing recognized in earnings		28		(4)










Southern Power
Total depreciation and amortization		$	128	$	120
Gain (loss) on energy-related cash flow hedges(a)		(9)		2
Total interest expense, net of amounts capitalized		(33)		(37)
Gain (loss) on foreign currency cash flow hedges(a)		(3)		(6)
Total other income (expense), net		2		2
Gain (loss) on foreign currency cash flow hedges(a)(c)		10		(25)
Southern Company Gas
Total cost of natural gas		$	898	$	1,095
Gain (loss) on energy-related cash flow hedges(a)		(20)		9
Total interest expense, net of amounts capitalized		(76)		(61)
Gain (loss) on interest rate cash flow hedges(a)		(1)		(1)
Gain (loss) on interest rate fair value hedges(b)		13		(36)

(a)Reclassified from accumulated OCI into earnings.

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

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

The pre-tax effects of cash flow and fair value hedge accounting on income for energy-related derivatives and interest rate derivatives were immaterial for the traditional electric operating companies for both periods presented.

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

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


	Carrying Amount of the Hedged Item				Cumulative Amount of Fair Value Hedging Adjustment included in Carrying Amount of the Hedged Item
Balance Sheet Location of Hedged Items	At March 31, 2023		At December 31, 2022		At March 31, 2023		At December 31, 2022
	(in millions)				(in millions)
Southern Company

Long-term debt	$	(3,007)	$	(2,927)	$	228	$	282

Southern Company Gas

Long-term debt	$	(428)	$	(415)	$	69	$	81

For the three months ended March 31, 2023 and 2022, the pre-tax effects of energy-related derivatives not designated as hedging instruments on the statements of income of Southern Company and Southern Company Gas were as follows:


		Gain (Loss)
		Three Months Ended March 31,
Derivatives in Non-Designated Hedging Relationships	Statements of Income Location		2023		2022
		(in millions)

Energy-related derivatives:	Natural gas revenues(*)		$	—	$	2
	Cost of natural gas		13		21

Total derivatives in non-designated hedging relationships			$	13	$	23

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

For the three months ended March 31, 2023 and 2022, the pre-tax effects of energy-related derivatives not designated as hedging instruments were immaterial for the other Registrants.

Contingent Features

The Registrants do not have any credit arrangements that would require material changes in payment schedules or terminations as a result of a credit rating downgrade. There are certain derivatives that could require collateral, but not accelerated payment, in the event of various credit rating changes of certain Southern Company subsidiaries. Generally, collateral may be provided by a Southern Company guaranty, letter of credit, or cash. At March 31, 2023, the Registrants had no collateral posted with derivative counterparties to satisfy these arrangements.

For Southern Company and Southern Power, the fair value of interest rate derivative liabilities with contingent features and the maximum potential collateral requirements arising from the credit-risk-related contingent features, at a rating below BBB- and/or Baa3, were $73 million and $23 million, respectively, at March 31, 2023. For the traditional electric operating companies and Southern Power, energy-related derivative liabilities with contingent features and the maximum potential collateral requirements arising from the credit-risk-related contingent features, at a rating below BBB- and/or Baa3, were immaterial at March 31, 2023. The maximum potential collateral requirements arising from the credit-risk-related contingent features for the traditional electric operating companies and Southern Power include certain agreements that could require collateral in the event that one or more Southern Company power pool participants has a credit rating change to below investment grade.

Alabama Power and Southern Power maintain accounts with certain regional transmission organizations to facilitate financial derivative transactions and they may be required to post collateral based on the value of the positions in

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

these accounts and the associated margin requirements. At March 31, 2023, cash collateral posted in these accounts was $15 million for Southern Power and immaterial for Alabama Power. Southern Company Gas maintains accounts with brokers or the clearing houses of certain exchanges to facilitate financial derivative transactions. Based on the value of the positions in these accounts and the associated margin requirements, Southern Company Gas may be required to deposit cash into these accounts. At March 31, 2023, cash collateral held on deposit in broker margin accounts was $60 million.

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

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

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

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

(K) SEGMENT AND RELATED INFORMATION

Southern Company

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

Southern Company's reportable business segments are the sale of electricity by the traditional electric operating companies, the sale of electricity in the competitive wholesale market by Southern Power, and the sale of natural gas and other complementary products and services by Southern Company Gas. Revenues from sales by Southern Power to the traditional electric operating companies were $135 million and $105 million for the three months ended March 31, 2023 and 2022, respectively. Revenues from sales of natural gas from Southern Company Gas to the traditional electric operating companies and Southern Power were immaterial for both periods presented. The "All Other" column includes the Southern Company parent entity, which does not allocate operating expenses to business segments. Also, this category includes segments below the quantitative threshold for separate disclosure. These segments include providing distributed energy and resilience solutions and deploying microgrids for commercial, industrial, governmental, and utility customers, as well as investments in telecommunications and, for the three months ended March 31, 2022, leveraged lease projects. All other inter-segment revenues are not material.

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Financial data for business segments and products and services for the three months ended March 31, 2023 and 2022 was as follows:


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



Three Months Ended March 31, 2023
Operating revenues	$	4,113	$	508	$	(138)	$	4,483	$	1,875	$	166	$	(44)	$	6,480
Segment net income (loss)(a)(b)	610		102		—		712		309		(154)		(5)		862
At March 31, 2023
Goodwill	$	—	$	2	$	—	$	2	$	5,015	$	144	$	—	$	5,161
Total assets	96,223		13,134		(575)		108,782		24,222		2,606		(854)		134,756



Three Months Ended March 31, 2022
Operating revenues	$	4,191	$	539	$	(221)	$	4,509	$	2,058	$	123	$	(42)	$	6,648
Segment net income (loss)(a)	774		72		—		846		319		(125)		(8)		1,032
At December 31, 2022
Goodwill	$	—	$	2	$	—	$	2	$	5,015	$	144	$	—	$	5,161
Total assets	95,861		13,081		(659)		108,283		24,621		2,665		(678)		134,891

(a)Attributable to Southern Company.

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

Products and Services


	Electric Utilities' Revenues
	Retail		Wholesale		Other		Total
	(in millions)


Three Months Ended March 31, 2023	$	3,599	$	599	$	285	$	4,483
Three Months Ended March 31, 2022	3,613		664		232		4,509


	Southern Company Gas' Revenues
	Gas Distribution Operations		Gas Marketing Services		Other		Total
	(in millions)


Three Months Ended March 31, 2023	$	1,610	$	246	$	19	$	1,875
Three Months Ended March 31, 2022	1,791		243		24		2,058

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Southern Company Gas

Southern Company Gas manages its business through three reportable segments – gas distribution operations, gas pipeline investments, and gas marketing services. The non-reportable segments are combined and presented as all other.

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

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

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

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

Business segment financial data for the three months ended March 31, 2023 and 2022 was as follows:


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



Three Months Ended March 31, 2023
Operating revenues	$	1,618	$	8	$	246	$	1,872	$	12	$	(9)	$	1,875
Segment net income	221		31		50		302		7		—		309
Total assets at March 31, 2023	22,223		1,583		1,596		25,402		9,598		(10,778)		24,222



Three Months Ended March 31, 2022
Operating revenues	$	1,803	$	8	$	243	$	2,054	$	16	$	(12)	$	2,058
Segment net income	214		29		66		309		10		—		319
Total assets at December 31, 2022	22,040		1,577		1,616		25,233		8,943		(9,555)		24,621

Table of Contents Index to Financial Statements

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