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

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


			Page
Combined Management's Discussion and Analysis of Financial Condition and Results of Operations
Overview			84
Results of Operations			85
Southern Company			85
Alabama Power			91
Georgia Power			95
Mississippi Power			99
Southern Power			102
Southern Company Gas			105
Future Earnings Potential			109
Accounting Policies			113
Financial Condition and Liquidity			113

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

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

OVERVIEW

Southern Company is a holding company that owns all of the common stock of three traditional electric operating companies (Alabama Power, Georgia Power, and Mississippi Power), Southern Power, and Southern Company Gas and owns other direct and indirect subsidiaries. The primary businesses of the Southern Company system are electricity sales by the traditional electric operating companies and Southern Power and the distribution of natural gas by Southern Company Gas. Southern Company's reportable segments are the sale of electricity by the traditional electric operating companies, the sale of electricity in the competitive wholesale market by Southern Power, and the sale of natural gas and other complementary products and services by Southern Company Gas. Southern Company Gas' reportable segments are gas distribution operations, gas pipeline investments, and gas marketing services. See Note (L) to the Condensed Financial Statements herein for additional information on segment reporting. Alabama Power, Georgia Power, and Mississippi Power each operate with one reportable business segment, since substantially all of their business is providing electric service to customers. Southern Power also operates its business with one reportable business segment, the sale of electricity in the competitive wholesale market. For additional information on the Registrants' primary business activities, see BUSINESS – "The Southern Company System" in Item 1 of the Form 10-K.

The Registrants continue to focus on several key performance indicators. For the traditional electric operating companies and Southern Company Gas, these indicators include, but are not limited to, customer satisfaction, plant availability, electric and natural gas system reliability, and execution of major construction projects. Southern Company Gas also continues to focus on several operating metrics, including Heating Degree Days, customer count, and volumes of natural gas sold. Southern Company Gas measures weather and the effect on its business using Heating Degree Days. Generally, increased Heating Degree Days result in higher demand for natural gas on Southern Company Gas' distribution system. For Southern Power, key performance indicators include, but are not limited to, the equivalent forced outage rate and contract availability to evaluate operating results and help ensure its ability to meet its contractual commitments to customers. In addition, Southern Company and the Subsidiary Registrants focus on earnings per share and net income, respectively, as a key performance indicator.

Recent Developments

Georgia Power

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

Georgia Power placed Plant Vogtle Unit 3 in service on July 31, 2023 and placed Plant Vogtle Unit 4 in service on April 29, 2024 (each with electric generating capacity of approximately 1,100 MWs), in each of which it holds a 45.7% ownership interest. Georgia Power's share of the total project capital cost forecast, including demobilizing the site after Unit 4's in-service date, is $10.8 billion. See Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction" herein for additional information.

Plant Vogtle Units 3 and 4 Regulatory Matters

Georgia Power included in retail rate base $5.462 billion of construction and capital costs as well as $647 million of associated retail rate base items effective with the April 29, 2024 in-service date for Unit 4, pursuant to the approved Prudency Stipulation. Annual retail base revenues increased approximately $730 million and the average retail base rates were adjusted by approximately 5% (net of the elimination of the NCCR tariff described below) effective May 1, 2024.

Further, as included in the approved Prudency Stipulation, since commercial operation for Unit 4 was not achieved by March 31, 2024, Georgia Power's ROE used to determine the NCCR tariff and calculate AFUDC was reduced to zero effective April 1, 2024. Effective May 1, 2024, following commercial operation of Unit 4, Georgia Power's NCCR tariff was eliminated and related financing costs are included in Georgia Power's general retail revenue requirements and collected through retail base rates.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

See Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction – Regulatory Matters" herein for additional information.

Integrated Resource Plan

On April 16, 2024, the Georgia PSC approved Georgia Power's updated IRP (2023 IRP Update) as modified by a stipulated agreement among Georgia Power, the staff of the Georgia PSC, and certain intervenors, which includes the authority to develop, own, and operate up to 1,400 MWs from three simple cycle combustion turbines at Plant Yates. See Note (B) to the Condensed Financial Statements under "Georgia Power – Integrated Resource Plan" herein for additional information.

Mississippi Power

On April 26, 2024, Mississippi Power filed its 2024 IRP with the Mississippi PSC. The filing includes a schedule to retire Plant Watson Unit 4 (268 MWs) and Plant Greene County Units 1 and 2 (206 MWs based on 40% ownership) and to retire early Plant Daniel Units 1 and 2 (502 MWs based on 50% ownership), all by the end of 2028. The 2024 IRP is subject to review by the Mississippi PSC and is expected to conclude in the third quarter 2024.

On March 29, 2024, Mississippi Power filed a request with the FERC for an $8 million increase in annual wholesale base revenues under the MRA tariff and requested an effective date of May 29, 2024. On April 19, 2024, Cooperative Energy challenged the new rates in a filing with the FERC.

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

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

Southern Power

During the three months ended March 31, 2024, Southern Power continued construction of the 200-MW Millers Branch solar facility and began construction of the 180-MW second phase of the solar project. The second phase of the facility's output is contracted under seven 15-year PPAs and commercial operation is projected to occur in the second quarter 2026. Southern Power also continued construction of the 150-MW South Cheyenne solar facility. Subsequent to March 31, 2024, Southern Power completed construction of and placed in service the 150-MW South Cheyenne solar facility. See Note (K) to the Condensed Financial Statements under "Southern Power" herein for additional information.

At March 31, 2024, Southern Power's average investment coverage ratio for its generating assets, including those owned with various partners, based on the ratio of investment under contract to total investment using the respective facilities' net book value (or expected in-service value for facilities under construction) as the investment amount was 97% through 2028 and 89% through 2033, with an average remaining contract duration of approximately 12 years.

RESULTS OF OPERATIONS

Southern Company

Net Income


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$267	31.0

Consolidated net income attributable to Southern Company in the first quarter 2024 was $1.1 billion ($1.03 per share) compared to $862 million ($0.79 per share) for the corresponding period in 2023. The increase was primarily due to an increase in retail electric revenues associated with rates and pricing, colder weather in the first quarter 2024 as compared to the corresponding period in 2023, and sales growth and an increase in natural gas revenues

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

from rate increases, partially offset by increases in interest expense, depreciation and amortization, non-fuel operations and maintenance costs, and income taxes.

Retail Electric Revenues

In the first quarter 2024, retail electric revenues were $3.9 billion compared to $3.6 billion for the corresponding period in 2023. Details of the changes in retail electric revenues were as follows:


	First Quarter 2024 vs. First Quarter 2023
		(change in millions)		(% change)
Rates and pricing		$	239	6.6	%
Sales growth		49		1.4
Weather		92		2.6
Fuel and other cost recovery		(38)		(1.1)
Retail electric revenues		$	342	9.5	%

Revenues associated with changes in rates and pricing increased in the first quarter 2024 when compared to the corresponding period in 2023 primarily due to the inclusion of Plant Vogtle Unit 3 in retail rates at Georgia Power, base tariff increases at Georgia Power in accordance with its 2022 ARP, customer bill credits in 2023 at Alabama Power related to the flowback of certain excess accumulated deferred income taxes, and an increase in Rate CNP New Plant revenues at Alabama Power. See Note 2 to the financial statements under "Alabama Power" and "Georgia Power" in Item 8 of the Form 10-K for additional information.

Revenues attributable to changes in sales increased in the first quarter 2024 when compared to the corresponding period in 2023. Weather-adjusted residential KWH sales increased 1.0% primarily due to customer growth. Weather-adjusted commercial KWH sales increased 3.8% primarily due to increased customer usage. Industrial KWH sales increased 0.4% primarily due to increases in the lumber and paper sectors, partially offset by decreases in the chemicals and primary metals sectors.

Fuel and other cost recovery revenues decreased $38 million in the first quarter 2024 compared to the corresponding period in 2023 primarily due to lower fuel and purchased power costs. Electric rates for the traditional electric operating companies include provisions to adjust billings for fluctuations in fuel costs, including the energy component of purchased power costs. Under these provisions, fuel revenues generally equal fuel expenses, including the energy component of PPA costs, and do not affect net income. The traditional electric operating companies each have one or more regulatory mechanisms to recover other costs such as environmental and other compliance costs, storm damage, new plants, and PPA capacity costs. See Note 2 to the financial statements in Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements herein for additional information.

Wholesale Electric Revenues


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$(28)	(4.7)

In the first quarter 2024, wholesale electric revenues were $571 million compared to $599 million for the corresponding period in 2023. The decrease was primarily due to decreases of $18 million in energy revenues resulting from lower natural gas prices and $10 million in capacity revenues primarily resulting from power sales agreements that ended in May 2023 at Alabama Power, partially offset by an increase related to new capacity contracts at Georgia Power and an increase associated with a change in rates from natural gas PPAs at Southern Power.

Wholesale electric revenues consist of revenues from PPAs and short-term opportunity sales. Wholesale electric revenues from PPAs (other than solar and wind PPAs) have both capacity and energy components. Capacity

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

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

Other Electric Revenues


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$9	4.7

In the first quarter 2024, other electric revenues were $199 million compared to $190 million for the corresponding period in 2023. The increase was primarily due to increases of $13 million in transmission revenues primarily associated with open access transmission tariff sales and $6 million in regulated outdoor lighting sales at Georgia Power, partially offset by a $6 million decrease in gains on the resale of gas at Alabama Power and a $5 million decrease associated with price stability products for retail customers on variable demand-driven pricing tariffs at Georgia Power.

Natural Gas Revenues

In the first quarter 2024, natural gas revenues were $1.7 billion compared to $1.9 billion for the corresponding period in 2023. Details of the changes in natural gas revenues were as follows:


	First Quarter 2024 vs. First Quarter 2023
		(change in millions)		(% change)
Rate changes		$	152	8.1	%
Gas costs and other cost recovery		(291)		(15.5)
Gas marketing services		(9)		(0.5)
Other		(20)		(1.1)
Natural gas revenues		$	(168)	(9.0)	%

Revenues from rate changes at the natural gas distribution utilities increased in the first quarter 2024 compared to the corresponding period in 2023 primarily due to rate increases and a change in timing of revenues at Nicor Gas.

Revenues from gas costs and other cost recovery decreased in the first quarter 2024 compared to the corresponding period in 2023 primarily due to lower natural gas cost recovery associated with lower natural gas prices and lower demand associated with warmer weather in the first quarter 2024 when compared to the corresponding period in 2023. Natural gas distribution rates include provisions to adjust billings for fluctuations in natural gas costs. Therefore, gas costs recovered through natural gas revenues generally equal the amount expensed in cost of natural gas and do not affect net income from the natural gas distribution utilities.

Revenues from gas marketing services decreased in the first quarter 2024 compared to the corresponding period in 2023 primarily due to lower commodity prices.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Other Revenues


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$11	5.1

In the first quarter 2024, other revenues were $228 million compared to $217 million for the corresponding period in 2023. The increase was primarily due to increases in unregulated sales at Georgia Power primarily associated with energy conservation projects, power delivery construction and maintenance projects, and outdoor lighting.

Fuel and Purchased Power Expenses


	First Quarter 2024 vs. First Quarter 2023
		(change in millions)		(% change)
Fuel		$	(54)	(5.1)
Purchased power		(44)		(18.2)
Total fuel and purchased power expenses		$	(98)

In the first quarter 2024, total fuel and purchased power expenses were $1.2 billion compared to $1.3 billion for the corresponding period in 2023. The decrease was due to a $52 million net decrease in the average cost of fuel and purchased power and a $46 million net decrease in the volume of KWHs generated and purchased.

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

Details of the Southern Company system's generation and purchased power were as follows:


	First Quarter 2024	First Quarter 2023
Total generation (in billions of KWHs)(a)	45	44
Total purchased power (in billions of KWHs)	4	5
Sources of generation (percent) —
Gas	50	54
Nuclear(a)	20	17
Coal	17	15
Hydro	5	5
Wind, Solar, and Other	8	9
Cost of fuel, generated (in cents per net KWH)—
Gas	2.89	3.13
Nuclear(a)	0.81	0.71
Coal	3.81	4.02
Average cost of fuel, generated (in cents per net KWH)(a)	2.59	2.80
Average cost of purchased power (in cents per net KWH)(b)	5.72	5.50

(a)Excludes KWHs generated from test period energy at Plant Vogtle Unit 4 prior to its in-service date. The related fuel costs are charged to CWIP in accordance with FERC guidance. See Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction" herein for additional information on Plant Vogtle Units 3 and 4.

(b)Average cost of purchased power includes fuel purchased by the Southern Company system for tolling agreements where power is generated by the provider.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Fuel

In the first quarter 2024, fuel expense was $1.0 billion compared to $1.1 billion for the corresponding period in 2023. The decrease was primarily due to a 7.7% decrease in the average cost of natural gas per KWH generated, a 6.6% decrease in the volume of KWHs generated by natural gas, and a 5.2% decrease in the average cost of coal per KWH generated, partially offset by an 18.2% increase in the volume of KWHs generated by nuclear, a 17.7% increase in the volume of KWHs generated by coal, a 14.1% increase in the average cost of nuclear per KWH generated, and a 13.0% decrease in the volume of KWHs generated by hydro.

Purchased Power

In the first quarter 2024, purchased power expense was $198 million compared to $242 million for the corresponding period in 2023. The decrease was primarily due to a 21.2% decrease in the volume of KWHs purchased primarily as a result of a PPA that ended in May 2023 and the availability of Plant Barry Unit 8 and Central Alabama Generating Station generation, both at Alabama Power, partially offset by a 4.0% increase in the average cost per KWH purchased.

Energy purchases will vary depending on demand for energy within the Southern Company system's electric service territory, the market prices of wholesale energy as compared to the cost of the Southern Company system's generation, and the availability of the Southern Company system's generation.

Cost of Natural Gas


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$(293)	(32.6)

Excluding Atlanta Gas Light, which does not sell natural gas to end-use customers, the natural gas distribution utilities' rates include provisions to adjust billings for fluctuations in natural gas costs. Therefore, gas costs recovered through natural gas revenues generally equal the amount expensed in cost of natural gas and do not affect net income from the natural gas distribution utilities. See Note 2 to the financial statements under "Southern Company Gas – Natural Gas Cost Recovery" in Item 8 of the Form 10-K for additional information. Cost of natural gas at the natural gas distribution utilities represented 81% of the total cost of natural gas in the first quarter 2024.

In the first quarter 2024, cost of natural gas was $605 million compared to $898 million for the corresponding period in 2023. The decrease reflects lower gas cost recovery as a result of a 35% decrease in natural gas prices.

Other Operations and Maintenance Expenses


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$32	2.2

In the first quarter 2024, other operations and maintenance expenses were $1.5 billion compared to $1.4 billion for the corresponding period in 2023. The increase was primarily due to an increase of $52 million in generation expenses primarily associated with Plant Vogtle Unit 3 being placed in service in July 2023 at Georgia Power and Rate CNP Compliance-related expenses at Alabama Power, $20 million in gains in 2023 from sales of integrated transmission system assets at Georgia Power, a $16 million gain on the sale of spare parts in 2023 at Southern Power, and a $12 million increase in employee compensation and benefit expenses, partially offset by decreases of $26 million in technology infrastructure and application production costs, $18 million in expenses passed through to customers primarily related to bad debt and energy efficiency programs at Southern Company Gas, and $10 million related to the injuries and damages reserve primarily at Alabama Power and Southern Company Gas.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Depreciation and Amortization


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$34	3.1

In the first quarter 2024, depreciation and amortization was $1.15 billion compared to $1.11 billion for the corresponding period in 2023. The increase was primarily due to an increase of $60 million from additional plant in service, partially offset by a $15 million decrease in amortization of regulatory assets related to CCR AROs at Georgia Power as approved in the 2024 compliance filing under the terms of the 2022 ARP, a $5 million decrease from insurance proceeds received for damaged generation equipment at Southern Power, and a $5 million decrease in units-of-production depreciation at Southern Power related to lower production from natural gas generating facilities. See Note 2 to the financial statements under "Georgia Power" in Item 8 of the Form 10-K for additional information.

Taxes Other Than Income Taxes


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$2	0.5

In the first quarter 2024, taxes other than income taxes were $396 million compared to $394 million for the corresponding period in 2023. The increase was primarily due to an increase of $14 million in property taxes at Georgia Power primarily resulting from an increase in the assessed value of property, partially offset by a decrease of $13 million in revenue taxes as a result of lower natural gas revenues at Nicor Gas.

Allowance for Equity Funds Used During Construction


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$(7)	(10.8)

In the first quarter 2024, allowance for equity funds used during construction was $58 million compared to $65 million for the corresponding period in 2023. The decrease was primarily associated with Plant Vogtle Unit 3 being placed in service in July 2023 at Georgia Power and Plant Barry Unit 8 being placed in service in November 2023 at Alabama Power, partially offset by an increase in capital expenditures subject to AFUDC. See Note 2 to the financial statements under "Alabama Power" and "Georgia Power" in Item 8 of the Form 10-K for additional information.

Interest Expense, Net of Amounts Capitalized


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$83	14.3

In the first quarter 2024, interest expense, net of amounts capitalized was $665 million compared to $582 million for the corresponding period in 2023. The increase primarily reflects approximately $51 million related to higher interest rates and $45 million related to higher average outstanding borrowings, partially offset by the deferral of $9 million in financing costs related to Plant Vogtle Unit 3 at Georgia Power. See FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" and "Financing Activities" herein for additional information on borrowings and Note (B) to the Condensed Financial Statements herein under "Georgia Power – Nuclear Construction" for additional information on Plant Vogtle Unit 3.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Income Taxes


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$126	129.9

In the first quarter 2024, income taxes were $223 million compared to $97 million for the corresponding period in 2023. The increase was primarily due to higher pre-tax earnings and a $42 million decrease in the flowback of certain excess deferred income taxes at Alabama Power, partially offset by the generation of $19 million of advanced nuclear PTCs at Georgia Power. See Note 2 to the financial statements in Item 8 of the Form 10-K and Note (G) to the Condensed Financial Statements herein for additional information.

Alabama Power

Net Income


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$78	30.6

Alabama Power's net income in the first quarter 2024 was $333 million compared to $255 million for the corresponding period in 2023. The increase was primarily due to an increase in retail revenues associated with customer bill credits in 2023 related to the flowback of certain excess accumulated deferred income taxes, an increase in Rate CNP New Plant revenues, and colder weather in the Alabama Power service territory in the first quarter 2024 compared to the corresponding period in 2023. These increases to income were partially offset by an increase in income tax expense related to a decrease in the flowback of certain excess deferred income taxes. See Note 2 to the financial statements under "Alabama Power" in Item 8 of the Form 10-K for additional information.

Retail Revenues

In the first quarter 2024, retail revenues were $1.57 billion compared to $1.38 billion for the corresponding period in 2023. Details of the changes in retail revenues were as follows:


	First Quarter 2024 vs. First Quarter 2023
		(change in millions)		(% change)
Rates and pricing		$	126	9.1	%
Sales growth		3		0.2
Weather		40		2.9
Fuel and other cost recovery		15		1.1
Retail revenues		$	184	13.3	%

Revenues associated with changes in rates and pricing increased in the first quarter 2024 when compared to the corresponding period in 2023 primarily due to customer bill credits in 2023 related to the flowback of certain excess accumulated deferred income taxes as well as an increase in Rate CNP New Plant revenues. See Note 2 to the financial statements under "Alabama Power" in Item 8 of the Form 10-K for additional information.

Revenues attributable to changes in sales were relatively flat in the first quarter 2024 when compared to the corresponding period in 2023. Weather-adjusted residential KWH sales decreased 0.6% primarily due to a decrease in customer usage. Weather-adjusted commercial KWH sales increased 2.5% primarily due to an increase in customer usage. Industrial KWH sales decreased 0.8% primarily due to a decrease in the primary metals sector.

Fuel and other cost recovery revenues increased in the first quarter 2024 when compared to the corresponding period in 2023 primarily as a result of higher recoverable fuel costs.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Electric rates include provisions to recognize the recovery of fuel costs, purchased power costs, PPAs certificated by the Alabama PSC, and costs associated with the NDR. Under these provisions, fuel and other cost recovery revenues generally equal fuel and other cost recovery expenses and do not affect net income. See Note 2 to the financial statements under "Alabama Power" in Item 8 of the Form 10-K for additional information.

Wholesale Revenues – Non-Affiliates


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$(56)	(39.7)

In the first quarter 2024, wholesale revenues from sales to non-affiliates were $85 million compared to $141 million for the corresponding period in 2023. The decrease was primarily due to a 59.5% decrease in the volume of KWHs sold as a result of power sales agreements that ended in May 2023 and a 49.5% decrease in the price of energy due to lower natural gas prices.

Wholesale revenues from sales to non-affiliates will vary depending on fuel prices, the market prices of wholesale energy compared to the cost of Alabama Power's and the Southern Company system's generation, demand for energy within the Southern Company system's electric service territory, and the availability of the Southern Company system's generation. Increases and decreases in energy revenues that are driven by fuel prices are accompanied by an increase or decrease in fuel costs and do not affect net income. Short-term opportunity energy sales are also included in wholesale energy sales to non-affiliates. These opportunity sales are made at market-based rates that generally provide a margin above Alabama Power's variable cost to produce the energy.

Wholesale Revenues – Affiliates


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$22	115.8

In the first quarter 2024, wholesale revenues from sales to affiliates were $41 million compared to $19 million for the corresponding period in 2023. The increase was primarily due to a 207.9% increase in the volume of KWH sales due to affiliated company energy needs, partially offset by a 31.6% decrease in the price of energy due to lower gas prices.

Wholesale revenues from sales to affiliated companies will vary depending on demand and the availability and cost of generating resources at each company. These affiliate sales are made in accordance with the IIC, as approved by the FERC. Energy revenues related to these transactions do not have a significant impact on earnings since this energy is generally sold at marginal cost and energy purchases are generally offset by energy revenues through Alabama Power's energy cost recovery clause.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Fuel and Purchased Power Expenses


	First Quarter 2024 vs. First Quarter 2023
		(change in millions)		(% change)
Fuel		$	23	7.5
Purchased power – non-affiliates		(49)		(48.5)
Purchased power – affiliates		(17)		(28.8)
Total fuel and purchased power expenses		$	(43)

In the first quarter 2024, total fuel and purchased power expenses were $425 million compared to $468 million for the corresponding period in 2023. The decrease was due to a $38 million net decrease related to the volume of KWHs generated and purchased and a $5 million net decrease in the cost of fuel and purchased power.

Fuel and purchased power energy transactions do not have a significant impact on earnings, since energy expenses are generally offset by energy revenues through Alabama Power's energy cost recovery clause. See Note 2 to the financial statements under "Alabama Power – Rate ECR" in Item 8 of the Form 10-K for additional information.

Details of Alabama Power's generation and purchased power were as follows:


	First Quarter 2024	First Quarter 2023
Total generation (in billions of KWHs)	15	14
Total purchased power (in billions of KWHs)	1	3
Sources of generation (percent) —
Gas	33	29
Coal	30	30
Nuclear	26	28
Hydro	11	13
Cost of fuel, generated (in cents per net KWH) —
Gas	2.95	3.37
Coal	3.27	3.33
Nuclear	0.69	0.67
Average cost of fuel, generated (in cents per net KWH)	2.40	2.49
Average cost of purchased power (in cents per net KWH)(*)	7.81	6.35

(*)Average cost of purchased power includes fuel, energy, and transmission purchased by Alabama Power for tolling agreements where power is generated by the provider.

Fuel

In the first quarter 2024, fuel expense was $331 million compared to $308 million for the corresponding period in 2023. The increase was primarily due to a 28.8% increase in the volume of KWHs generated by natural gas, an 8.3% increase in the volume of KWHs generated by coal, and a 15.0% decrease in the volume of KWHs generated by hydro facilities as a result of less rainfall, partially offset by a 12.5% decrease in the average cost of natural gas per KWH generated, which excludes tolling agreements.

Purchased Power – Non-Affiliates

In the first quarter 2024, purchased power expense from non-affiliates was $52 million compared to $101 million for the corresponding period in 2023. The decrease was primarily due to a 55.5% decrease in the volume of KWHs purchased as a result of a PPA that ended in May 2023 and the availability of Plant Barry Unit 8 and Central Alabama Generating Station generation.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Energy purchases from non-affiliates will vary depending on the market prices of wholesale energy as compared to the cost of the Southern Company system's generation, demand for energy within the Southern Company system's electric service territory, and the availability of the Southern Company system's generation.

Purchased Power – Affiliates

In the first quarter 2024, purchased power expense from affiliates was $42 million compared to $59 million for the corresponding period in 2023. The decrease was primarily due to a 35.8% decrease in the volume of KWHs purchased due to the availability of Plant Barry Unit 8 and Central Alabama Generating Station generation.

Energy purchases from affiliates will vary depending on demand for energy and the availability and cost of generating resources at each company within the Southern Company system. These purchases are made in accordance with the IIC or other contractual agreements, as approved by the FERC.

Other Operations and Maintenance Expenses


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$(12)	(2.8)

In the first quarter 2024, other operations and maintenance expenses were $412 million compared to $424 million for the corresponding period in 2023. The decrease was primarily due to decreases of $7 million in technology infrastructure and application production costs, $7 million related to the injuries and damages reserve, $5 million in expenses related to unregulated products and services, and $3 million in employee compensation and benefits, as well as a $5 million increase in nuclear property insurance refunds. The decreases were partially offset by a $17 million increase in generation expenses primarily associated with Rate CNP Compliance-related expenses. See Note 2 to the financial statements under "Alabama Power – Rate CNP Compliance" in Item 8 of the Form 10-K for additional information.

Depreciation and Amortization


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$16	4.6

In the first quarter 2024, depreciation and amortization was $361 million compared to $345 million for the corresponding period in 2023. The increase was primarily due to additional plant in service related to transmission and distribution systems as well as Plant Barry Unit 8 being placed in service in November 2023. See Note 2 to the financial statements under "Alabama Power" in Item 8 of the Form 10-K for additional information.

Allowance for Equity Funds Used During Construction


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$(7)	(33.3)

In the first quarter 2024, allowance for equity funds used during construction was $14 million compared to $21 million for the corresponding period in 2023. The decrease was primarily due to Plant Barry Unit 8 being placed in service in November 2023. See Note 2 to the financial statements under "Alabama Power – Rate CNP New Plant" in Item 8 of the Form 10-K for additional information.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Income Taxes (Benefit)


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$87	N/M

In the first quarter 2024, income tax expense was $85 million compared to income tax benefit of $2 million for the corresponding period in 2023. The change was primarily due to higher pre-tax earnings and a $42 million decrease in the flowback of certain excess deferred income taxes. See Note 2 to the financial statements under "Alabama Power – Excess Accumulated Deferred Income Tax Accounting Order" in Item 8 of the Form 10-K and Note (G) to the Condensed Financial Statements herein for additional information.

Georgia Power

Net Income


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$141	47.6

Georgia Power's net income in the first quarter 2024 was $437 million compared to $296 million for the corresponding period in 2023. The increase was primarily due to higher retail revenues associated with the inclusion of Plant Vogtle Unit 3 in retail rates, base tariff increases in accordance with the 2022 ARP, and colder weather in the first quarter 2024 as compared to the corresponding period in 2023. See Note 2 to the financial statements under "Georgia Power" in Item 8 of the Form 10-K for additional information.

Retail Revenues

In the first quarter 2024, retail revenues were $2.16 billion compared to $1.98 billion for the corresponding period in 2023. Details of the changes in retail revenues were as follows:


	First Quarter 2024 vs. First Quarter 2023
		(change in millions)		(% change)
Rates and pricing		$	110	5.6	%
Sales growth		41		2.1
Weather		53		2.7
Fuel cost recovery		(30)		(1.5)
Retail revenues		$	174	8.9	%

Revenues associated with changes in rates and pricing increased in the first quarter 2024 when compared to the corresponding period in 2023 primarily due to the inclusion of Plant Vogtle Unit 3 in retail rates and base tariff increases in accordance with the 2022 ARP. See Note 2 to the financial statements under "Georgia Power" in Item 8 of the Form 10-K for additional information.

Revenues attributable to changes in sales increased in the first quarter 2024 when compared to the corresponding period in 2023. Weather-adjusted residential KWH sales increased 1.8% primarily due to customer growth. Weather-adjusted commercial KWH sales increased 4.1% primarily due to increased customer usage and customer growth. Weather-adjusted industrial KWH sales increased 1.8% primarily due to increases in the primary metals, lumber, and paper sectors, partially offset by decreases in the chemicals, electronics, and pipeline sectors.

Fuel revenues and costs are allocated between retail and wholesale jurisdictions. Retail fuel cost recovery revenues decreased in the first quarter 2024 when compared to the corresponding period in 2023 due to lower fuel and

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

purchased power costs. Electric rates include provisions to adjust billings for fluctuations in fuel costs, including the energy component of purchased power costs. Under these fuel cost recovery provisions, fuel revenues generally equal fuel expenses and do not affect net income. See Note (B) to the Condensed Financial Statements herein and Note 2 to the financial statements under "Georgia Power – Fuel Cost Recovery" in Item 8 of the Form 10-K for additional information.

Wholesale Revenues


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$27	87.1

In the first quarter 2024, wholesale revenues were $58 million compared to $31 million for the corresponding period in 2023. The increase was primarily due to a $20 million increase related to new capacity contracts and a $9 million increase related to the volume of KWH sales associated with higher market demand, partially offset by a $6 million decrease related to the average cost per KWH sold due to lower Southern Company system fuel and purchased power costs.

Wholesale revenues from sales to non-affiliates consist of PPAs and short-term opportunity sales. Wholesale revenues from PPAs have both capacity and energy components. Wholesale capacity revenues from PPAs are recognized in amounts billable under the contract terms and provide for recovery of fixed costs and a return on investment. Wholesale revenues from sales to non-affiliates will vary depending on fuel prices, the market prices of wholesale energy compared to the cost of Georgia Power's and the Southern Company system's generation, demand for energy within the Southern Company system's electric service territory, and the availability of the Southern Company system's generation. Increases and decreases in energy revenues that are driven by fuel prices are accompanied by an increase or decrease in fuel costs and do not have a significant impact on net income. Short-term opportunity sales are made at market-based rates that generally provide a margin above Georgia Power's variable cost of energy.

Other Revenues


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$21	12.8

In the first quarter 2024, other revenues were $185 million compared to $164 million for the corresponding period in 2023. The increase was primarily due to increases of $8 million in unregulated sales primarily associated with energy conservation projects, power delivery construction and maintenance, and outdoor lighting, $6 million in regulated outdoor lighting sales, and $5 million in open access transmission tariff sales.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Fuel and Purchased Power Expenses


	First Quarter 2024 vs. First Quarter 2023
		(change in millions)		(% change)
Fuel		$	(13)	(3.2)
Purchased power – non-affiliates		17		13.8
Purchased power – affiliates		(25)		(12.1)
Total fuel and purchased power expenses		$	(21)

In the first quarter 2024, total fuel and purchased power expenses were $710 million compared to $731 million for the corresponding period in 2023. The decrease was primarily due to a net decrease of $37 million related to the average cost of fuel and purchased power, partially offset by a net increase of $16 million related to the volume of KWHs generated and purchased.

Fuel and purchased power energy transactions do not have a significant impact on earnings since these fuel expenses are generally offset by fuel revenues through Georgia Power's fuel cost recovery mechanism. See Note 2 to the financial statements under "Georgia Power – Fuel Cost Recovery" in Item 8 of the Form 10-K for additional information.

Details of Georgia Power's generation and purchased power were as follows:


	First Quarter 2024	First Quarter 2023
Total generation (in billions of KWHs)(a)	15	13
Total purchased power (in billions of KWHs)	7	8
Sources of generation (percent) —
Gas	46	55

Nuclear(a)	32	26
Coal	18	14
Hydro and other	4	5
Cost of fuel, generated (in cents per net KWH) —
Gas	3.15	3.57

Nuclear(a)	0.90	0.75
Coal	4.35	5.24
Average cost of fuel, generated (in cents per net KWH)(a)	2.62	3.05
Average cost of purchased power (in cents per net KWH)(b)	4.63	4.52

(b)Average cost of purchased power includes fuel purchased by Georgia Power for tolling agreements where power is generated by the provider.

Fuel

In the first quarter 2024, fuel expense was $389 million compared to $402 million for the corresponding period in 2023. The decrease was primarily due to decreases of 17.0% in the average cost per KWH generated by coal, 11.8% in the average cost per KWH generated by natural gas, and 6.6% in the volume of KWHs generated by natural gas, partially offset by increases of 37.6% in the volume of KWHs generated by coal, 36.2% in the volume of KWHs generated by nuclear, and 20.0% in the average cost per KWH generated by nuclear.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Purchased Power – Non-Affiliates

In the first quarter 2024, purchased power expense from non-affiliates was $140 million compared to $123 million for the corresponding period in 2023. The increase for the first quarter 2024 was primarily due to an increase of 26.3% in the volume of KWHs purchased as Georgia Power and other Southern Company system units generally dispatched at a higher cost than available market resources, partially offset by a decrease of 8.8% in the average cost per KWH purchased primarily due to lower natural gas prices.

Purchased Power – Affiliates

In the first quarter 2024, purchased power expense from affiliates was $181 million compared to $206 million for the corresponding period in 2023. The decrease was primarily due to a decrease of 13.9% in the volume of KWHs purchased as Southern Company system units generally dispatched at a higher cost than available market resources, partially offset by capacity purchased through a new PPA with Mississippi Power. See Note (B) to the Condensed Financial Statements herein under "Georgia Power – Integrated Resource Plan" for additional information.

Energy purchases from affiliates will vary depending on the demand and the availability and cost of generating resources at each company within the Southern Company system. These purchases are made in accordance with the IIC or other contractual agreements, all as approved by the FERC.

Other Operations and Maintenance Expenses


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$19	3.8

In the first quarter 2024, other operations and maintenance expenses were $515 million compared to $496 million for the corresponding period in 2023. The increase was primarily due to $20 million in gains in 2023 from sales of integrated transmission system assets and an increase of $17 million in generation expenses associated with non-outage maintenance costs primarily due to Plant Vogtle Unit 3 being placed in service in July 2023, partially offset by a decrease of $14 million in technology infrastructure and application production costs. See Note (B) to the Condensed Financial Statements herein under "Georgia Power – Nuclear Construction" for additional information on Plant Vogtle Unit 3.

Depreciation and Amortization


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$17	4.2

In the first quarter 2024, depreciation and amortization was $425 million compared to $408 million for the corresponding period in 2023. The increase was primarily due to an increase of $29 million associated with additional plant in service, partially offset by a decrease of $15 million in amortization of regulatory assets related to CCR AROs as approved in the 2024 compliance filing under the terms of the 2022 ARP. See Note 2 to the financial statements under "Georgia Power – Rate Plans" in Item 8 of the Form 10-K for additional information.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Taxes Other Than Income Taxes


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$16	12.2

In the first quarter 2024, taxes other than income taxes were $147 million compared to $131 million for the corresponding period in 2023. The increase was primarily due to an increase of $14 million in property taxes primarily resulting from an increase in the assessed value of property.

Interest Expense, Net of Amounts Capitalized


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$27	18.5

In the first quarter 2024, interest expense, net of amounts capitalized was $173 million compared to $146 million for the corresponding period in 2023. The increase was primarily associated with increases of approximately $17 million related to higher interest rates and $15 million related to higher average outstanding borrowings, partially offset by the deferral of $9 million in financing costs related to Plant Vogtle Unit 3. See FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" and "Financing Activities" herein for additional information on borrowings and Note (B) to the Condensed Financial Statements herein under "Georgia Power – Nuclear Construction" for additional information on Plant Vogtle Unit 3.

Income Taxes


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$26	49.1

In the first quarter 2024, income taxes were $79 million compared to $53 million for the corresponding period in 2023. The increase was primarily due to higher pre-tax earnings, partially offset by the generation of $19 million of advanced nuclear PTCs. See Note (G) to the Condensed Financial Statements herein for additional information.

Mississippi Power

Net Income


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$(8)	(13.8)

Mississippi Power's net income for the first quarter 2024 was $50 million compared to $58 million for the corresponding period in 2023. The decrease was primarily due to a decrease in affiliate wholesale capacity revenues.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Retail Revenues

In the first quarter 2024, retail revenues were $221 million compared to $236 million for the corresponding period in 2023. Details of the changes in retail revenues were as follows:


	First Quarter 2024 vs. First Quarter 2023
		(change in millions)		(% change)
Rates and pricing		$	3	1.3	%
Sales growth		6		2.5
Weather		—		—
Fuel and other cost recovery		(24)		(10.2)
Retail revenues		$	(15)	(6.4)	%

Revenues associated with changes in rates and pricing increased in the first quarter 2024 when compared to the corresponding period in 2023 primarily due to the amortization of certain regulatory assets that ended in December 2023.

Revenues attributable to changes in sales increased in the first quarter 2024 when compared to the corresponding period in 2023. Weather-adjusted residential and commercial KWH sales increased 4.7% and 7.4%, respectively, primarily due to increased customer usage. Industrial KWH sales decreased 1.7% primarily due to decreases in the petroleum and transportation sectors.

Fuel and other cost recovery revenues decreased in the first quarter 2024 when compared to the corresponding period in 2023 primarily as a result of lower recoverable fuel costs. Recoverable fuel costs include fuel and purchased power expenses reduced by the fuel and emissions portion of wholesale revenues from energy sold to customers outside Mississippi Power's service territory. Electric rates include provisions to adjust billings for fluctuations in fuel costs, including the energy component of purchased power costs. Under these provisions, fuel revenues generally equal fuel expenses, including the energy component of purchased power costs, and do not affect net income. See Note 2 to the financial statements in Item 8 of the Form 10-K for additional information.

Wholesale Revenues – Non-Affiliates


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$(9)	(13.2)

In the first quarter 2024, wholesale revenues from sales to non-affiliates were $59 million compared to $68 million for the corresponding period in 2023. The decrease was primarily due to a $6 million decrease associated with MRA customers largely due to lower recoverable fuel costs and a $4 million decrease associated with changes in power supply agreements.

Wholesale revenues from sales to non-affiliates will vary depending on fuel prices, the market prices of wholesale energy compared to the cost of Mississippi Power's and the Southern Company system's generation, demand for energy within the Southern Company system's electric service territory, and the availability of the Southern Company system's generation. Increases and decreases in energy revenues that are driven by fuel prices are accompanied by an increase or decrease in fuel costs and do not have a significant impact on net income. In addition, Mississippi Power provides service under long-term contracts with rural electric cooperative associations and municipalities located in southeastern Mississippi under cost-based electric tariffs which are subject to regulation by the FERC. Short-term opportunity energy sales are also included in sales for resale to non-affiliates. These opportunity sales are made at market-based rates that generally provide a margin above Mississippi Power's variable cost to produce the energy. See Note 2 to the financial statements under "Mississippi Power – Municipal and Rural Associations Tariff" in Item 8 of the Form 10-K for additional information.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Wholesale Revenues – Affiliates


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$(24)	(32.0)

In the first quarter 2024, wholesale revenues from sales to affiliates were $51 million compared to $75 million for the corresponding period in 2023. The decrease was primarily due to a decrease of $31 million in capacity revenues mainly associated with Mississippi Power's lower availability of generation reserves to the Southern Company power pool and a $9 million decrease primarily associated with lower KWH sales. These decreases were partially offset by a $15 million increase in capacity revenues associated with a new PPA with Georgia Power. See Note 2 to the financial statements under "Mississippi Power – Integrated Resource Plan" in Item 8 of the Form 10-K for additional information.

Wholesale revenues from sales to affiliated companies will vary depending on demand and the availability and cost of generating resources at each company. These affiliate sales are made in accordance with the IIC or other contractual agreements, as approved by the FERC. Energy revenues related to these transactions do not have a significant impact on earnings since this energy is generally sold at marginal cost.

Fuel and Purchased Power Expenses


	First Quarter 2024 vs. First Quarter 2023
		(change in millions)		(% change)
Fuel		$	(42)	(28.6)
Purchased power		2		50.0
Total fuel and purchased power expenses		$	(40)

In the first quarter 2024, total fuel and purchased power expenses were $111 million compared to $151 million for the corresponding period in 2023. The decrease was due to a $27 million decrease related to the average cost of fuel and purchased power and a $13 million net decrease related to the volume of KWHs generated and purchased.

Fuel and purchased power energy transactions do not have a significant impact on earnings since energy expenses are generally offset by energy revenues through Mississippi Power's fuel cost recovery clause.

Details of Mississippi Power's generation and purchased power were as follows:


	First Quarter 2024	First Quarter 2023
Total generation (in millions of KWHs)	3,952	4,443
Total purchased power (in millions of KWHs)	171	100
Sources of generation (percent) –
Gas	91	94
Coal	9	6
Cost of fuel, generated (in cents per net KWH) –
Gas	2.69	3.34
Coal	4.70	5.78
Average cost of fuel, generated (in cents per net KWH)	2.88	3.51
Average cost of purchased power (in cents per net KWH)	3.64	4.10

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Fuel

In the first quarter 2024, fuel expense was $105 million compared to $147 million for the corresponding period in 2023. The decrease was primarily due to a 19.5% decrease in the average cost of natural gas per KWH generated and a 15.2% decrease in the volume of KWHs generated by natural gas.

Other Operations and Maintenance Expenses


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$6	7.3

For first quarter 2024, other operations and maintenance expenses were $88 million compared to $82 million for the corresponding period in 2023. The increase was primarily due to an increase in generation expenses primarily associated with planned outages and maintenance.

Other Income (Expense), Net


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$5	55.6

In the first quarter 2024, other income (expense), net was $14 million compared to $9 million for the corresponding period in 2023. The increase was primarily due to customer charges related to contributions in aid of construction.

Southern Power

Net Income Attributable to Southern Power


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$(6)	(5.9)

Net income attributable to Southern Power in the first quarter 2024 was $96 million compared to $102 million for the corresponding period in 2023. The decrease was primarily related to a gain on the sale of spare parts in 2023.

Operating Revenues


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$(35)	(6.9)

Total operating revenues include PPA capacity revenues, which are derived primarily from long-term contracts involving natural gas facilities, and PPA energy revenues from Southern Power's generation facilities. To the extent Southern Power has capacity not contracted under a PPA, it may sell power into an accessible wholesale market, or, to the extent those generation assets are part of the FERC-approved IIC, it may sell power into the Southern Company power pool.

Natural Gas Capacity and Energy Revenue

Capacity revenues generally represent the greatest contribution to operating income and are designed to provide recovery of fixed costs plus a return on investment.

Energy is generally sold at variable cost or is indexed to published natural gas indices. Energy revenues will vary depending on the energy demand of Southern Power's customers and their generation capacity, as well as the market

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

prices of wholesale energy compared to the cost of Southern Power's energy. Energy revenues also include fees for support services, fuel storage, and unit start charges. Increases and decreases in energy revenues under PPAs that are driven by fuel or purchased power prices are accompanied by an increase or decrease in fuel and purchased power costs and do not have a significant impact on net income.

Solar and Wind Energy Revenue

Southern Power's energy sales from solar and wind generating facilities are predominantly through long-term PPAs that do not have capacity revenue. Customers either purchase the energy output of a dedicated renewable facility through an energy charge or pay a fixed price related to the energy generated from the respective facility and sold to the grid. As a result, Southern Power's ability to recover fixed and variable operations and maintenance expenses is dependent upon the level of energy generated from these facilities, which can be impacted by weather conditions, equipment performance, transmission constraints, and other factors.

See FUTURE EARNINGS POTENTIAL – "Southern Power's Power Sales Agreements" in Item 7 of the Form 10-K for additional information regarding Southern Power's PPAs.

Operating Revenues Details

Details of Southern Power's operating revenues were as follows:


	First Quarter 2024		First Quarter 2023
	(in millions)
PPA capacity revenues	$	120	$	112
PPA energy revenues	281		277
Total PPA revenues	401		389
Non-PPA revenues	60		108
Other revenues	12		11
Total operating revenues	$	473	$	508

In the first quarter 2024, total operating revenues were $473 million, reflecting a $35 million, or 6.9%, decrease from the corresponding period in 2023. The change in operating revenues was primarily due to the following:

PPA capacity revenues increased $8 million, or 7.1%, primarily due to an increase associated with a change in rates from natural gas PPAs.
Non-PPA revenues decreased $48 million, or 44.4%, primarily due to a $51 million decrease in the volume of KWHs sold through short-term sales.

Fuel and Purchased Power Expenses

Details of Southern Power's generation and purchased power were as follows:


	First Quarter 2024	First Quarter 2023
	(in billions of KWHs)
Generation	10.3	12.3
Purchased power	0.4	0.7
Total generation and purchased power	10.7	13.0

Total generation and purchased power (excluding solar, wind, fuel cells, and tolling agreements)	6.7	8.4

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Southern Power's PPAs for natural gas generation generally provide that the purchasers are responsible for either procuring the fuel (tolling agreements) or reimbursing Southern Power for substantially all of the cost of fuel relating to the energy delivered under such PPAs. Consequently, changes in such fuel costs are generally accompanied by a corresponding change in related fuel revenues and do not have a significant impact on net income. Southern Power is responsible for the cost of fuel for generating units that are not covered under PPAs. Power from these generating units is sold into the wholesale market or into the Southern Company power pool for capacity owned directly by Southern Power.

Purchased power expenses will vary depending on demand, availability, and the cost of generating resources throughout the Southern Company system and other contract resources. Load requirements are submitted to the Southern Company power pool on an hourly basis and are fulfilled with the lowest cost alternative, whether that is generation owned by Southern Power, an affiliate company, or external parties. Such purchased power costs are generally recovered through PPA revenues.

Details of Southern Power's fuel and purchased power expenses were as follows:


	First Quarter 2024 vs. First Quarter 2023
		(change in millions)		(% change)
Fuel		$	(35)	(18.3)
Purchased power		(8)		(30.8)
Total fuel and purchased power expenses		$	(43)

In the first quarter 2024, total fuel and purchased power expenses decreased $43 million, or 19.8%, compared to the corresponding period in 2023. Fuel expense decreased $35 million primarily due to a $36 million decrease associated with the volume of KWHs generated. Purchased power expense decreased $8 million primarily due to a $10 million decrease associated with the volume of KWHs purchased.

Other Operations and Maintenance Expenses


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$14	13.1

In the first quarter 2024, other operations and maintenance expenses were $121 million compared to $107 million for the corresponding period in 2023. The increase was primarily due to the timing of generation maintenance and scheduled outage expenses.

Depreciation and Amortization


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$(10)	(7.8)

In the first quarter 2024, depreciation and amortization was $118 million compared to $128 million for the corresponding period in 2023. The decrease was primarily due to insurance proceeds received for damaged generation equipment and a decrease in units-of-production depreciation related to lower production from natural gas generating facilities.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Gain on Dispositions, Net


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$(20)	(100.0)

In the first quarter 2024, gain on dispositions, net decreased by $20 million compared to the corresponding period in 2023. The decrease was primarily due to a $16 million gain on the sale of spare parts in 2023.

Southern Company Gas

Southern Company Gas has various regulatory mechanisms, such as weather and revenue normalization and straight-fixed-variable rate design, which limit its exposure to weather changes within typical ranges in each of its utility's respective service territory. Southern Company Gas also utilizes weather hedges to limit the negative income impacts in the event of warmer-than-normal weather in Illinois for gas distribution operations and in Illinois and Georgia for gas marketing services. Therefore, weather typically does not have a significant net income impact.

During the Heating Season, natural gas usage and operating revenues are generally higher as more customers are connected to the gas distribution systems and natural gas usage is higher in periods of colder weather. In addition, because of a rate design change affecting volumetric rates ordered by the Illinois Commission in Nicor Gas' 2023 rate case, additional revenues are expected in the Heating Season, with a corresponding decrease expected in revenues in the second and third quarters of each year. This change will affect the comparison of the prior year revenue for the impacted quarters. Southern Company Gas' base operating expenses, excluding cost of natural gas and bad debt expense, are incurred relatively evenly throughout the year. Seasonality also affects the comparison of certain balance sheet items across quarters, including receivables, unbilled revenues, natural gas for sale, and notes payable. However, these items are comparable when reviewing Southern Company Gas' annual results. Thus, Southern Company Gas' operating results for the interim periods presented are not necessarily indicative of annual results and can vary significantly from quarter to quarter.

Net Income


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$100	32.4

Southern Company Gas' net income in the first quarter 2024 was $409 million compared to $309 million for the corresponding period in 2023. The increase was primarily due to an $81 million increase in net income at gas distribution operations and a $15 million increase in net income at gas marketing services.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Natural Gas Revenues

In the first quarter 2024, natural gas revenues were $1.7 billion compared to $1.9 billion for the corresponding period in 2023. Details of the changes in natural gas revenues were as follows:


	First Quarter 2024 vs. First Quarter 2023
		(change in millions)		(% change)


Rate changes		$	152	8.1	%
Gas costs and other cost recovery		(291)		(15.5)
Gas marketing services		(9)		(0.5)

Other		(20)		(1.1)
Natural gas revenues		$	(168)	(9.0)	%

Revenues from rate changes increased in the first quarter 2024 compared to the corresponding period in 2023 primarily due to rate increases and a change in timing of revenues at Nicor Gas.

Revenues from gas marketing services decreased in the first quarter 2024 compared to the corresponding period in 2023 primarily due lower commodity prices.

Cost of Natural Gas


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$(293)	(32.6)

Excluding Atlanta Gas Light, which does not sell natural gas to end-use customers, natural gas distribution rates include provisions to adjust billings for fluctuations in natural gas costs. Therefore, gas costs recovered through natural gas revenues generally equal the amount expensed in cost of natural gas and do not affect net income from gas distribution operations. Cost of natural gas at gas distribution operations represented 81% of the total cost of natural gas in the first quarter 2024. See MANAGEMENT'S DISCUSSION AND ANALYSIS – RESULTS OF OPERATIONS – "Southern Company Gas – Cost of Natural Gas" in Item 7 of the Form 10-K and "Natural Gas Revenues" herein for additional information.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

The following table details the volumes of natural gas sold during both periods presented:


	First Quarter
		2024	2023	2024 vs. 2023
Gas distribution operations (mmBtu in millions)
Firm		266	258	3.1	%
Interruptible		25	25	—
Total		291	283	2.8	%


Gas marketing services (mmBtu in millions)
Firm:
Georgia		17	13	30.8	%
Illinois		2	3	(33.3)

Other		6	5	20.0
Interruptible large commercial and industrial		4	4	—
Total		29	25	16.0	%

Other Operations and Maintenance Expenses


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$(12)	(3.9)

In the first quarter 2024, other operations and maintenance expenses were $293 million compared to $305 million for the corresponding period in 2023. The decrease was primarily due to decreases of $18 million in expenses passed through to customers primarily related to bad debt and energy efficiency programs at gas distribution operations, $4 million in operating expenses, $4 million in service maintenance and meter sets maintenance expenses at Nicor Gas, and $3 million in bad debt expenses. The decreases were partially offset by increases of $14 million in compensation and benefit expenses and $3 million related to energy service contracts.

Depreciation and Amortization


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$14	9.9

In the first quarter 2024, depreciation and amortization was $155 million compared to $141 million for the corresponding period in 2023. The increase was primarily due to continued investments at the natural gas distribution utilities.

Taxes Other Than Income Taxes


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$(15)	(14.7)

In the first quarter 2024, taxes other than income taxes was $87 million compared to $102 million for the corresponding period in 2023. The decrease primarily reflects a decrease of $13 million in revenue taxes as a result of lower natural gas revenues at Nicor Gas.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Interest Expense, Net of Amounts Capitalized


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$8	10.5

In the first quarter 2024, interest expense, net of amounts capitalized was $84 million compared to $76 million for the corresponding period in 2023. The increase was primarily associated with increases of approximately $5 million related to higher interest rates and approximately $3 million related to higher outstanding debt. See FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" and "Financing Activities" herein for additional information on borrowings.

Income Taxes


First Quarter 2024 vs. First Quarter 2023
	(change in millions)	(% change)
	$35	34.0

In the first quarter 2024, income taxes were $138 million compared to $103 million for the corresponding period in 2023. The increase was primarily due to higher pre-tax earnings.

Segment Information

Operating revenues, operating expenses, and net income for each segment are provided in the table below. See Note (L) to the Condensed Financial Statements under "Southern Company Gas" herein for additional information.


	2024						2023
	Operating Revenues		Operating Expenses		Net Income		Operating Revenues		Operating Expenses		Net Income
	(in millions)						(in millions)









First Quarter
Gas distribution operations	$	1,463	$	989	$	302	$	1,618	$	1,264	$	221
Gas pipeline investments	8		3		30		8		3		31
Gas marketing services	235		148		65		246		175		50
All other	6		2		12		12		9		7
Intercompany eliminations	(5)		(2)		—		(9)		(5)		—
Consolidated	$	1,707	$	1,140	$	409	$	1,875	$	1,446	$	309

Gas Distribution Operations

Gas distribution operations is the largest component of Southern Company Gas' business and is subject to regulation and oversight by regulatory agencies in each of the states it serves. These agencies approve natural gas rates designed to provide Southern Company Gas with the opportunity to generate revenues to recover the cost of natural gas delivered to its customers and its fixed and variable costs, including depreciation, interest expense, operations and maintenance, taxes, and overhead costs, and to earn a reasonable return on its investments.

With the exception of Atlanta Gas Light, Southern Company Gas' second largest utility that operates in a deregulated natural gas market and has a straight-fixed-variable rate design that minimizes the variability of its revenues based on consumption, the earnings of the natural gas distribution utilities can be affected by customer consumption patterns that are a function of weather conditions, price levels for natural gas, and general economic conditions that may impact customers' ability to pay for natural gas consumed. Southern Company Gas has various regulatory and other mechanisms, such as weather and revenue normalization mechanisms and weather derivative instruments, that limit its exposure to changes in customer consumption, including weather changes within typical

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

ranges in its natural gas distribution utilities' service territories. See Note 2 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.

In the first quarter 2024, net income increased $81 million, or 36.7%, when compared to the corresponding period in 2023, as described further below:

Operating revenues decreased $155 million primarily due to lower gas cost over recovery, partially offset by rate increases and a change in timing of revenues at Nicor Gas. Gas costs recovered through natural gas revenues generally equal the amount expensed in cost of natural gas.
Operating expenses decreased $275 million primarily due to a $273 million decrease in cost of natural gas as a result of lower gas prices and lower volume sold compared to 2023, partially offset by higher depreciation resulting from additional assets placed in service, higher compensation and benefit expenses, and higher revenue taxes.
Interest expense, net of amounts capitalized increased $10 million primarily due to higher interest rates and higher average outstanding debt.
Income taxes increased $32 million primarily as a result of higher pre-tax earnings.

Gas Pipeline Investments

Gas pipeline investments consists primarily of joint ventures in natural gas pipeline investments including SNG and Dalton Pipeline. See Note (E) to the Condensed Financial Statements under "Southern Company Gas" herein for additional information.

Gas Marketing Services

Gas marketing services provides energy-related products and services to natural gas markets and participants in customer choice programs that were approved in various states to increase competition. These programs allow customers to choose their natural gas supplier while the local distribution utility continues to provide distribution and transportation services. Gas marketing services is weather sensitive and uses a variety of hedging strategies, such as weather derivative instruments and other risk management tools, to partially mitigate potential weather impacts.

In the first quarter 2024, net income increased $15 million, or 30.0%, when compared to the corresponding period in 2023 primarily due to retail margins and decreases in cost of natural gas.

All Other

All other includes a renewable natural gas business, AGL Services Company, and Southern Company Gas Capital, as well as various corporate operating expenses that are not allocated to the reportable segments and interest income (expense) associated with affiliate financing arrangements. All other included a natural gas storage facility in California through its sale in September 2023. See Note 15 to the financial statements in Item 8 of the Form 10-K for additional information.

In the first quarter 2024, net income increased $5 million when compared to the corresponding period in 2023. The increase was primarily related to decreases in operating expenses and income taxes, partially offset by a decrease in operating revenue.

FUTURE EARNINGS POTENTIAL

Each Registrant's results of operations are not necessarily indicative of its future earnings potential. The level of the Registrants' future earnings depends on numerous factors that affect the opportunities, challenges, and risks of the Registrants' primary businesses of selling electricity and/or distributing natural gas, as described further herein.

For the traditional electric operating companies, these factors include the ability to maintain constructive regulatory environments that allow for the timely recovery of prudently-incurred costs during a time of increasing costs, including those related to projected long-term demand growth, stringent environmental standards, including CCR

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

rules, safety, system reliability and resiliency, fuel, restoration following major storms, and capital expenditures, including constructing new electric generating plants and expanding and improving the transmission and distribution systems; continued customer growth; and the trends of higher inflation and reduced electricity usage per customer, especially in residential and commercial markets.

Earnings in the electricity business will also depend upon maintaining and growing sales, considering, among other things, recent trends driving projected growth in electricity consumption including the increasing digitization of the economy and growth in data centers, an increase in industrial activity in the Southern Company system's electric service territory, and continued electrification of transportation. These growth opportunities could be offset by energy efficiency trends in each market.

Global and U.S. economic conditions continue to be affected by higher-than-expected inflation that arose from the COVID-19 pandemic and associated policy responses of governments and central banks. In response to elevated inflation levels, the U.S. Federal Reserve raised interest rates faster than any rate increase cycle in the last 40 years. The actions by the U.S. Federal Reserve have helped to slow the rate of inflation and curtail economic activity. Although target levels of inflation have yet to be achieved, the U.S. Federal Reserve has indicated its current intention to pause future rate increases and evaluate rate cuts depending on the current economic data. The shifting economic policy variables and weakening of historic relationships among economic activity, prices, and employment have increased the uncertainty of future levels of economic activity which will directly impact future energy demand and operating costs. Weakening economic activity increases the risk of slowing or declining energy sales. See RESULTS OF OPERATIONS herein for information on energy sales in the Southern Company system's service territory during the first three months of 2024.

The level of future earnings for Southern Power's competitive wholesale electric business depends on numerous factors including the parameters of the wholesale market and the efficient operation of its wholesale generating assets; Southern Power's ability to execute its growth strategy through the development, construction, or acquisition of renewable facilities and other energy projects while containing costs; regulatory matters; customer creditworthiness; total electric generating capacity available in Southern Power's market areas; Southern Power's ability to successfully remarket capacity as current contracts expire; renewable portfolio standards; continued availability of federal and state ITCs and PTCs, which could be impacted by future tax legislation; transmission constraints; cost of generation from units within the Southern Company power pool; and operational limitations. See MANAGEMENT'S DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL – "Income Tax Matters" in Item 7 of the Form 10-K for information regarding the Inflation Reduction Act's expansion of the availability of federal ITCs and PTCs and Note (K) to the Condensed Financial Statements under "Southern Power" herein for information regarding construction projects.

The level of future earnings for Southern Company Gas' primary business of distributing natural gas and its complementary businesses in the gas pipeline investments and gas marketing services sectors depends on numerous factors. These factors include the natural gas distribution utilities' ability to maintain constructive regulatory environments that allow for the timely recovery of prudently-incurred costs, including those related to projected long-term demand growth, safety, system reliability and resiliency, natural gas, and capital expenditures, including expanding and improving the natural gas distribution systems; the completion and subsequent operation of ongoing infrastructure and other construction projects; customer creditworthiness; and certain policies to limit the use of natural gas, such as the potential in Illinois and across certain other parts of the U.S. for state or municipal bans on the use of natural gas or policies designed to promote electrification. The volatility of natural gas prices has an impact on Southern Company Gas' customer rates, its long-term competitive position against other energy sources, and the ability of Southern Company Gas' gas marketing services business to capture value from locational and seasonal spreads. Additionally, changes in commodity prices, primarily driven by tight gas supplies, geopolitical events, and diminished gas production, subject a portion of Southern Company Gas' operations to earnings variability and may result in higher natural gas prices. Additional economic factors may contribute to this environment. The demand for natural gas may increase, which may cause natural gas prices to rise and drive higher volatility in the natural gas markets on a longer-term basis. Alternatively, a significant drop in oil and natural gas prices could lead to a consolidation of natural gas producers or reduced levels of natural gas production.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Earnings for both the electricity and natural gas businesses are subject to a variety of other factors. These factors include weather; competition; developing new and maintaining existing energy contracts and associated load requirements with wholesale customers; customer energy conservation practices; the use of alternative energy sources by customers; government incentives to reduce overall energy usage; fuel, labor, and material prices in an environment of heightened inflation and material and labor supply chain disruptions; and the price elasticity of demand. Demand for electricity and natural gas in the Registrants' service territories is primarily driven by the pace of economic growth or decline that may be affected by changes in regional and global economic conditions, which may impact future earnings.

As part of its ongoing effort to adapt to changing market conditions, Southern Company continues to evaluate and consider a wide array of potential business strategies. These strategies may include business combinations, partnerships, and acquisitions involving other utility or non-utility businesses or properties, disposition of, or the sale of interests in, certain assets or businesses, internal restructuring, or some combination thereof. Furthermore, Southern Company may engage in new business ventures that arise from competitive and regulatory changes in the utility industry. Pursuit of any of the above strategies, or any combination thereof, may significantly affect the business operations, risks, and financial condition of Southern Company. In addition, Southern Power and Southern Company Gas regularly consider and evaluate joint development arrangements as well as acquisitions and dispositions of businesses and assets as part of their business strategies. See Note 15 to the financial statements in Item 8 of the Form 10-K and Note (K) to the Condensed Financial Statements herein for additional information.

For additional information relating to these issues, see RISK FACTORS in Item 1A and MANAGEMENT'S DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL in Item 7 of the Form 10-K.

Environmental Matters

See MANAGEMENT'S DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL – "Environmental Matters" in Item 7 and Note 3 to the financial statements under "Environmental Remediation" in Item 8 of the Form 10-K, as well as Note (C) to the Condensed Financial Statements under "General Litigation Matters" and "Environmental Remediation" herein, for additional information.

Environmental Laws and Regulations

Water Quality

On April 25, 2024, the EPA released a pre-publication copy of the final rule revising the Steam Effluent Guidelines (ELG Final Rule), which will establish more stringent limits for flue gas desulfurization wastewater, bottom ash transport water, and combustion residual leachate to be met no later than December 31, 2029. The ELG Final Rule maintains the existing rule's permanent cessation of coal subcategory and the existing rule's voluntary incentive program and adds a new cessation subcategory which allows units to cease coal combustion by December 31, 2034 as opposed to meeting the new more stringent requirements. The ELG Final Rule will also establish limitations for legacy wastewater which will be effective 60 days from the date of publication. The ultimate impact of the ELG Final Rule cannot be determined at this time; however, it may result in significant compliance costs.

Coal Combustion Residuals

On April 25, 2024, the EPA released a pre-publication copy of the final legacy CCR surface impoundments rule which will establish two new categories of federally regulated CCR, legacy surface impoundments and CCR management units (CCRMU). The rule will require legacy surface impoundments and CCRMUs to meet certain existing regulatory requirements, including a requirement to initiate closure within 42 months after the effective date of the final rule for legacy surface impoundments and within 54 months after the effective date of the final rule for CCRMUs. The final rule also includes an option to defer closure of previously closed units where certain criteria have been met. The EPA is also finalizing an alternative provision for closure by removal. The ultimate impact of the final rule cannot be determined at this time; however, it may result in significant compliance costs.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Greenhouse Gases

On April 25, 2024, the EPA released pre-publication copies of the final GHG rules for existing fossil fuel-fired steam electric generating units and new fossil fuel-fired combustion turbines and combined cycle generation facilities, which will require GHG limits for subcategories of both new and existing units. The new rules do not include standards for existing fossil fuel-fired combustion turbines and combined cycle generation facilities, which will be deferred to a future rulemaking. Requirements for existing coal-fired units are based on technologies such as carbon capture and sequestration (CCS) and natural gas co-firing. States have 24 months after the rule's publication to submit state plans for existing units. The rule allows states to consider remaining useful life and other factors to specify alternative, unit-specific emissions limits and compliance timelines for existing units, as needed to address reliability and other concerns. Existing source compliance will begin as early as January 1, 2030, depending on the subcategory. The final rule incorporates some limited reliability mechanisms including a provision for short-term grid emergencies and a "reliability assurance mechanism" that allows for a one-time, up to one year, extension of existing coal unit retirement dates specified in an approved state plan. The standards for new combustion turbines include subcategories for low, intermediate, and base load operations. Compliance with new source standards begins when the unit comes online, with requirements for CCS beginning on January 1, 2032. The EPA also simultaneously repealed the Affordable Clean Energy rule. The ultimate impact of the final rules cannot be determined at this time; however, it may result in significant compliance costs.

Regulatory Matters

See Note 2 to the financial statements in Item 8 of the Form 10-K, OVERVIEW – "Recent Developments" herein, and Note (B) to the Condensed Financial Statements herein for a discussion of regulatory matters related to Alabama Power, Georgia Power, Mississippi Power, and Southern Company Gas, including items that could impact the applicable Registrants' future earnings, cash flows, and/or financial condition.

Construction Programs

The Southern Company system strategy continues to include developing and constructing new electric generating facilities, expanding and improving the electric transmission and electric and natural gas distribution systems, and undertaking projects to comply with environmental laws and regulations.

The traditional electric operating companies are engaged in continuous construction programs to accommodate existing and estimated future loads on their respective systems. Major generation construction projects are subject to state PSC approval in order to be included in retail rates. See Note 2 to the financial statements in Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements herein under "Georgia Power – Integrated Resource Plan" for information regarding Georgia Power's construction of three simple cycle combustion turbines at Plant Yates.

See Note (K) to the Condensed Financial Statements under "Southern Power" herein for information relating to Southern Power's construction of renewable energy facilities.

Southern Company Gas is engaged in various infrastructure improvement programs designed to update or expand the natural gas distribution systems of the natural gas distribution utilities to improve reliability and resiliency, reduce emissions, and meet operational flexibility and growth. The natural gas distribution utilities recover their investment and a return associated with these infrastructure programs through their regulated rates. See Note 2 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information on Southern Company Gas' construction program.

See FINANCIAL CONDITION AND LIQUIDITY – "Cash Requirements" herein for additional information regarding the Registrants' capital requirements for their construction programs.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Income Tax Matters

See Note (G) to the Condensed Financial Statements herein and MANAGEMENT'S DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL – "Income Tax Matters" in Item 7 of the Form 10-K for additional information.

Inflation Reduction Act

Alabama Power and Georgia Power have nuclear generating facilities that may qualify to generate and claim PTCs under the Inflation Reduction Act beginning in 2024, subject to the issuance of additional guidance by the U.S. Treasury Department and the Internal Revenue Service. The ultimate outcome of this matter cannot be determined at this time.

Georgia State Tax Legislation

On April 18, 2024, the State of Georgia enacted tax legislation that reduces the corporate income tax rate from 5.75% to 5.39% effective for the 2024 tax year. This legislation will reduce the amount of Southern Company's and certain subsidiaries' income tax expense in the State of Georgia, reduce existing state accumulated deferred tax liabilities, and increase regulatory liabilities at Georgia Power and Southern Company Gas. The impacted Registrants are still evaluating the impacts of this legislation, which is not expected to have a material impact on net income. The ultimate outcome of this matter cannot be determined at this time.

General Litigation and Other Matters

The Registrants are involved in various matters being litigated and/or regulatory and other matters that could affect future earnings, cash flows, and/or financial condition. The ultimate outcome of such pending or potential litigation against each Registrant and any subsidiaries or regulatory and other matters cannot be determined at this time; however, for current proceedings and/or matters not specifically reported herein or in Notes (B) and (C) to the Condensed Financial Statements herein, management does not anticipate that the ultimate liabilities, if any, arising from such current proceedings and/or matters would have a material effect on such Registrant's financial statements. See Notes (B) and (C) to the Condensed Financial Statements for a discussion of various contingencies, including matters being litigated, regulatory matters, and other matters which may affect future earnings potential.

ACCOUNTING POLICIES

See MANAGEMENT'S DISCUSSION AND ANALYSIS – ACCOUNTING POLICIES in Item 7 of the Form 10-K for a complete discussion of the Registrants' critical accounting policies and estimates, as well as recently issued accounting standards.

Application of Critical Accounting Policies and Estimates

The Registrants prepare their financial statements in accordance with GAAP. Significant accounting policies are described in the notes to the financial statements in Item 8 of the Form 10-K. In the application of these policies, certain estimates are made that may have a material impact on the Registrants' results of operations and related disclosures. Different assumptions and measurements could produce estimates that are significantly different from those recorded in the financial statements.

FINANCIAL CONDITION AND LIQUIDITY

Overview

See MANAGEMENT'S DISCUSSION AND ANALYSIS – FINANCIAL CONDITION AND LIQUIDITY – "Overview" in Item 7 of the Form 10-K for additional information. The financial condition of each Registrant remained stable at March 31, 2024. The Registrants intend to continue to monitor their access to short-term and long-term capital markets as well as their bank credit arrangements to meet future capital and liquidity needs. See "Cash Requirements," "Sources of Capital," and "Financing Activities" herein for additional information.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

At the end of the first quarter 2024, the market price of Southern Company's common stock was $71.74 per share (based on the closing price as reported on the NYSE) and the book value was $29.19 per share, representing a market-to-book ratio of 246%, compared to $70.12, $28.83, and 243%, respectively, at the end of 2023. Southern Company's common stock dividend for the first quarter 2024 was $0.70 per share compared to $0.68 per share in the first quarter 2023.

Cash Requirements

See MANAGEMENT'S DISCUSSION AND ANALYSIS – FINANCIAL CONDITION AND LIQUIDITY – "Cash Requirements" in Item 7 of the Form 10-K for a description of the Registrants' significant cash requirements.

The Registrants' significant cash requirements include estimated capital expenditures associated with their construction programs and, for the traditional electric operating companies, operating cash flows related to fuel cost under recovery. The fuel cost under recovery balances are primarily the result of higher than forecasted prices for natural gas and purchased power. See Note (B) to the Condensed Financial Statements herein for additional information.

The construction programs are subject to periodic review and revision, and actual construction costs may vary from these estimates because of numerous factors. These factors include: changes in business conditions; changes in load projections; changes in environmental laws and regulations; the outcome of any legal challenges to environmental rules; changes in electric generating plants, including unit retirements and replacements and adding or changing fuel sources at existing electric generating units, to meet regulatory requirements; changes in FERC rules and regulations; state regulatory agency approvals; changes in the expected environmental compliance program; changes in legislation and/or regulation; the cost, availability, and efficiency of construction labor, equipment, and materials; project scope and design changes; abnormal weather; delays in construction due to judicial or regulatory action; storm impacts; and the cost of capital. In addition, there can be no assurance that costs related to capital expenditures and AROs will be fully recovered. Additionally, expenditures associated with Southern Power's planned acquisitions may vary due to market opportunities and the execution of its growth strategy.

See Note (B) to the Condensed Financial Statements under "Georgia Power – Integrated Resource Plan" herein for information regarding Georgia Power's 2023 IRP Update, which includes incremental cash requirements for capital expenditures through 2027 of approximately $700 million.

Southern Power's construction program includes the Millers Branch and South Cheyenne solar projects. The remaining aggregate construction costs for these projects are expected to be between $500 million and $620 million. The ultimate outcome of these matters cannot be determined at this time. See Note (K) to the Condensed Financial Statements under "Southern Power" herein for additional information.

Long-term debt maturities and the interest payable on long-term debt each represent a significant cash requirement for the Registrants. See "Financing Activities" herein for information on changes in the Registrants' long-term debt balances since December 31, 2023.

Sources of Capital

See MANAGEMENT'S DISCUSSION AND ANALYSIS – FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" in Item 7 of the Form 10-K for additional information. Southern Company intends to meet its future capital needs through operating cash flows, borrowings from financial institutions, and debt, hybrid, and/or equity issuances. Equity capital can be provided from any combination of Southern Company's stock plans, private placements, or public offerings.

The Subsidiary Registrants plan to obtain the funds to meet their future capital needs from sources similar to those they used in the past, which were primarily from operating cash flows, external securities issuances, borrowings from financial institutions, and equity contributions from Southern Company. Operating cash flows provide a substantial portion of the Registrants' cash needs. Georgia Power intends to utilize a mix of senior note issuances, short-term floating rate bank loans, and commercial paper issuances to continue funding operating cash flows related to fuel cost under recovery.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

The amount, type, and timing of any financings in 2024, as well as in subsequent years, will be contingent on investment opportunities and the Registrants' capital requirements and will depend upon prevailing market conditions, regulatory approvals (for certain of the Subsidiary Registrants), and other factors. See "Cash Requirements" and "Financing Activities" herein for additional information.

Southern Power utilizes tax equity partnerships as one of its financing sources, where the tax partner takes significantly all of the federal tax benefits. These tax equity partnerships are consolidated in Southern Power's financial statements and are accounted for using HLBV methodology to allocate partnership gains and losses. During the three months ended March 31, 2024, Southern Power's tax equity funding for existing tax equity partnerships was immaterial. See Note 1 to the financial statements under "General" in Item 8 of the Form 10-K for additional information.

By regulation, Nicor Gas is restricted, up to its retained earnings balance, in the amount it can dividend or loan to affiliates and is not permitted to make money pool loans to affiliates. At March 31, 2024, the amount of subsidiary retained earnings restricted to dividend totaled $1.9 billion. This restriction did not impact Southern Company Gas' ability to meet its cash obligations, nor does management expect such restriction to materially impact Southern Company Gas' ability to meet its currently anticipated cash obligations.

Certain Registrants' current liabilities frequently exceed their current assets because of long-term debt maturities and the periodic use of short-term debt as a funding source, as well as significant seasonal fluctuations in cash needs. The Registrants generally plan to refinance long-term debt as it matures. The following table shows the amount by which current liabilities exceeded current assets at March 31, 2024 for the applicable Registrants:


At March 31, 2024	Southern Company		Mississippi Power		Southern Company Gas
	(in millions)
Current liabilities in excess of current assets	$	915	$	115	$	51

The Registrants believe the need for working capital can be adequately met by utilizing operating cash flows, as well as commercial paper, lines of credit, and short-term bank notes, as market conditions permit. In addition, under certain circumstances, the Subsidiary Registrants may utilize equity contributions and/or loans from Southern Company.

Bank Credit Arrangements

At March 31, 2024, the Registrants' unused committed credit arrangements with banks were as follows:


At March 31, 2024	Southern Company parent		Alabama Power		Georgia Power		Mississippi Power		Southern Power(a)		Southern Company Gas(b)		SEGCO		Southern Company
	(in millions)
Unused committed credit	$	1,998	$	1,350	$	1,726	$	275	$	600	$	1,598	$	30	$	7,577

(a)At March 31, 2024, Southern Power also had two continuing letters of credit facilities for standby letters of credit, of which $15 million was unused. Southern Power's subsidiaries are not parties to its bank credit arrangements or letter of credit facilities.

(b)Includes $798 million and $800 million at Southern Company Gas Capital and Nicor Gas, respectively.

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

A portion of the unused credit with banks is allocated to provide liquidity support to certain revenue bonds of the traditional electric operating companies and the commercial paper programs of the Registrants, Nicor Gas, and SEGCO. At March 31, 2024, outstanding variable rate demand revenue bonds of the traditional electric operating companies with allocated liquidity support totaled approximately $1.7 billion (comprised of approximately $796

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AND RESULTS OF OPERATIONS (Continued)

million at Alabama Power, $819 million at Georgia Power, and $69 million at Mississippi Power). In addition, at March 31, 2024, Alabama Power and Georgia Power had approximately $120 million and $155 million, respectively, of fixed rate revenue bonds outstanding that are required to be remarketed within the next 12 months. Alabama Power's $120 million of fixed rate revenue bonds are classified as securities due within one year on its balance sheets as they are not covered by long-term committed credit. All other variable rate demand revenue bonds and fixed rate revenue bonds required to be remarketed within the next 12 months are classified as long-term debt on the balance sheets as a result of available long-term committed credit.

See Note 8 to the financial statements in Item 8 of the Form 10-K and Note (F) to the Condensed Financial Statements herein under "Bank Credit Arrangements" for additional information.

Short-term Borrowings

The Registrants, Nicor Gas, and SEGCO make short-term borrowings primarily through commercial paper programs that have the liquidity support of the committed bank credit arrangements described above. Southern Power's subsidiaries are not issuers or obligors under its commercial paper program. Commercial paper and short-term bank term loans are included in notes payable in the balance sheets. Details of the Registrants' short-term borrowings were as follows:


	Short-term Debt at March 31, 2024				Short-term Debt During the Period*()**
	Amount Outstanding		Weighted Average Interest Rate		Average Amount Outstanding		Weighted Average Interest Rate		Maximum Amount Outstanding
	(in millions)				(in millions)				(in millions)
Southern Company	$	2,445	5.7	%	$	2,638	5.7	%	$	1,843
Alabama Power	105		5.4		77		5.4		210
Georgia Power	684		6.1		1,088		6.0		1,422
Mississippi Power	8		5.5		73		5.5		154
Southern Power	140		5.5		141		5.6		191
Southern Company Gas:
Southern Company Gas Capital	$	101	5.5	%	$	45	5.5	%	$	152
Nicor Gas	233		5.5		272		5.5		397
Southern Company Gas Total	$	334	5.5	%	$	317	5.5	%

(*)Average and maximum amounts are based upon daily balances during the three-month period ended March 31, 2024.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Analysis of Cash Flows

Net cash flows provided from (used for) operating, investing, and financing activities for the three months ended March 31, 2024 and 2023 are presented in the following table:


Net cash provided from (used for):	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Three Months Ended March 31, 2024
Operating activities	$	1,311	$	248	$	493	$	(7)	$	121	$	598
Investing activities	(2,385)		(496)		(1,417)		(104)		(44)		(319)
Financing activities	985		175		904		111		(89)		(235)

Three Months Ended March 31, 2023
Operating activities	$	844	$	30	$	(53)	$	(3)	$	135	$	978
Investing activities	(2,118)		(509)		(1,117)		(117)		4		(379)
Financing activities	454		219		850		79		(146)		(593)

Fluctuations in cash flows from financing activities vary from year to year based on capital needs and the maturity or redemption of securities.

Southern Company

Net cash provided from operating activities increased $467 million for the three months ended March 31, 2024 as compared to the corresponding period in 2023 primarily due to the timing of vendor payments and increased fuel cost recovery at the traditional electric operating companies, partially offset by the timing of customer receivable collections and decreased natural gas cost recovery at the natural gas distribution utilities.

The net cash used for investing activities for the three months ended March 31, 2024 was primarily related to the Subsidiary Registrants' construction programs.

The net cash provided from financing activities for the three months ended March 31, 2024 was primarily related to net issuances of long-term debt, partially offset by common stock dividend payments.

Alabama Power

Net cash provided from operating activities increased $218 million for the three months ended March 31, 2024 as compared to the corresponding period in 2023 primarily due to an increase in retail revenues associated with customer bill credits in 2023 and timing of fuel stock purchases.

The net cash used for investing activities for the three months ended March 31, 2024 was primarily related to gross property additions.

The net cash provided from financing activities for the three months ended March 31, 2024 was primarily related to capital contributions from Southern Company, partially offset by the payment of common stock dividends.

Georgia Power

Net cash provided from operating activities increased $546 million for the three months ended March 31, 2024 as compared to the corresponding period in 2023 primarily due to increased fuel cost recovery and the timing of vendor payments, partially offset by the timing of customer receivable collections.

The net cash used for investing activities for the three months ended March 31, 2024 was primarily related to gross property additions.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

The net cash provided from financing activities for the three months ended March 31, 2024 was primarily related to the issuances of senior notes and capital contributions from Southern Company, partially offset by a net decrease in short-term borrowings and the payment of common stock dividends.

Mississippi Power

Net cash used for operating activities increased $4 million for the three months ended March 31, 2024 as compared to the corresponding period in 2023 primarily due to the timing of customer receivable collections, partially offset by the timing of vendor payments.

The net cash used for investing activities for the three months ended March 31, 2024 was primarily related to gross property additions.

The net cash provided from financing activities for the three months ended March 31, 2024 was primarily related to the issuances of senior notes, partially offset by common stock dividend payments.

Southern Power

Net cash provided from operating activities decreased $14 million for the three months ended March 31, 2024 as compared to the corresponding period in 2023 primarily due to the timing of customer receivable collections, partially offset by the timing of vendor payments.

The net cash used for investing activities for the three months ended March 31, 2024 was primarily related to ongoing construction activities. See Note (K) to the Condensed Financial Statements under "Southern Power" herein for additional information.

The net cash used for financing activities for the three months ended March 31, 2024 was primarily related to common stock dividend payments and net distributions to noncontrolling interests.

Southern Company Gas

Net cash provided from operating activities decreased $380 million for the three months ended March 31, 2024 as compared to the corresponding period in 2023 primarily due to the timing of customer receivable collections and lower natural gas cost recovery, partially offset by the timing of vendor payments.

The net cash used for investing activities for the three months ended March 31, 2024 was primarily related to construction of transportation and distribution assets recovered through base rates.

The net cash used for financing activities for the three months ended March 31, 2024 was primarily related to common stock dividend payments and a decrease in commercial paper borrowings.

Significant Balance Sheet Changes

Southern Company

Significant balance sheet changes for the three months ended March 31, 2024 included:

an increase of $1.6 billion in long-term debt (including securities due within one year) primarily related to net issuances of senior notes;
a decrease of $0.7 billion in accounts payable primarily related to the timing of vendor payments;
an increase of $0.6 billion in total property, plant, and equipment primarily related to the Subsidiary Registrants' construction programs;
a decrease of $0.5 billion in accrued compensation due to the timing of payments; and
an increase of $0.4 billion in total stockholders' equity primarily related to net income, partially offset by common stock dividend payments.

See "Financing Activities" herein for additional information.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Alabama Power

Significant balance sheet changes for the three months ended March 31, 2024 included:

an increase of $464 million in common stockholder's equity primarily due to capital contributions from Southern Company and net income, partially offset by dividends paid to Southern Company;
a decrease of $304 million in other accounts payable primarily due to the timing of vendor payments;
an increase of $154 million in accrued taxes primarily due to the timing of income tax payments;
a decrease of $136 million in affiliated accounts payable primarily due to the timing of payments; and
an increase of $95 million in total property, plant, and equipment primarily related to the construction of transmission and distribution facilities.

Georgia Power

Significant balance sheet changes for the three months ended March 31, 2024 included:

an increase of $1.4 billion in long-term debt (including securities due within one year) primarily due to issuances of senior notes;
an increase of $687 million in common stockholder's equity primarily due to capital contributions from Southern Company and net income, partially offset by dividends paid to Southern Company;
a decrease of $645 million in notes payable primarily due to repayments of short-term bank debt;
an increase of $481 million in total property, plant, and equipment primarily related to the construction of generation, transmission, and distribution facilities, including costs associated with Plant Vogtle Units 3 and 4; and
a decrease of $282 million in accrued taxes primarily due to payments for municipal franchise fees and property taxes.

See "Financing Activities – Georgia Power" herein and Note (B) to the Condensed Financial Statements herein under "Georgia Power – Nuclear Construction" for additional information.

Mississippi Power

Significant balance sheet changes for the three months ended March 31, 2024 included:

an increase of $149 million in long-term debt (including securities due within one year) primarily due to issuances of senior notes;
a decrease of $59 million in accrued taxes primarily due to the payment of ad valorem taxes;
an increase of $39 million in other accounts and notes receivable primarily related to timing on collections of contributions in aid of construction; and
a decrease of $37 million in affiliated accounts payable primarily due to timing of payments.

See "Financing Activities – Mississippi Power" herein for additional information.

Southern Power

Significant balance sheet changes for the three months ended March 31, 2024 included:

a decrease of $92 million in total property, plant, and equipment due to continued depreciation of assets, partially offset by an increase in CWIP primarily related to the construction of the Millers Branch and South Cheyenne solar facilities;
a decrease of $55 million in total stockholders' equity primarily due to dividends paid to Southern Company;
increases of $53 million in accumulated deferred income tax liabilities and $40 million in prepaid income taxes primarily related to the expected utilization of ITCs in 2024; and
a decrease of $43 million in affiliated accounts payable due to the timing of vendor payments.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

See Note (K) to the Condensed Financial Statements herein for additional information.

Southern Company Gas

Significant balance sheet changes for the three months ended March 31, 2024 included:

an increase of $271 million in common stockholder's equity related to net income, partially offset by dividends paid to Southern Company;
a decrease of $210 million in natural gas for sale due to lower gas prices;
an increase of $154 million in total property, plant, and equipment primarily related to the construction of transportation and distribution assets;
a decrease of $116 million in other accounts payable due to seasonality and the timing of vendor payments; and
a decrease of $81 million in notes payable due to a reduction in commercial paper borrowings.

Financing Activities

The following table outlines the Registrants' long-term debt financing activities for the first three months of 2024:


	Issuances and Reofferings				Maturities and Redemptions
Company	Senior Notes		Other Long- Term Debt			Senior Notes		Revenue Bonds		Other Long- Term Debt(a)
	(in millions)
Southern Company parent	$	800	$	—		$	600	$	—	$	—
Alabama Power	—		2			—		21		1
Georgia Power	1,400		—			—		—		23
Mississippi Power	150		—			—		—		—

Southern Company Gas	—		6			—		—		—
Other(b)	—		—			—		—		12
Elimination(c)	—		—			—		—		(1)
Southern Company	$	2,350	$	8		$	600	$	21	$	35

(a)Includes reductions in finance lease obligations resulting from cash payments under finance leases and, for Georgia Power, principal amortization payments totaling $21 million for FFB borrowings. See Note 8 to the financial statements under "Long-term Debt – DOE Loan Guarantee Borrowings" in Item 8 of the Form 10-K for additional information.

(b)Includes repayment by SEGCO of $10 million of its $100 million principal amount long-term bank loan due November 15, 2024, which is guaranteed by Alabama Power. See Note 3 to the financial statements under "Guarantees" in Item 8 of the Form 10-K for additional information.

(c)Represents reductions in affiliate finance lease obligations at Georgia Power, which are eliminated in Southern Company's consolidated financial statements.

Except as otherwise described herein, the Registrants used the proceeds of debt issuances for their redemptions and maturities shown in the table above, to repay short-term indebtedness, and for general corporate purposes, including working capital. The Subsidiary Registrants also used the proceeds for their construction programs.

In addition to any financings that may be necessary to meet capital requirements and contractual obligations, the Registrants plan to continue, when economically feasible, a program to retire higher-cost securities and replace these obligations with lower-cost capital if market conditions permit.

Southern Company

During the first three months of 2024, Southern Company issued approximately 2.6 million shares of common stock primarily through employee equity compensation plans.

In February 2024, Southern Company issued an additional $400 million aggregate principal amount of its Series 2023D 5.50% Senior Notes due March 15, 2029 (Series 2023D Senior Notes) and an additional $400 million

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

aggregate principal amount of its Series 2023E 5.70% Senior Notes due March 15, 2034 (Series 2023E Senior Notes). Upon these issuances, the aggregate principal amount of outstanding Series 2023D Senior Notes and Series 2023E Senior Notes was $1.0 billion and $1.1 billion, respectively.

Also in February 2024, Southern Company borrowed $300 million pursuant to a short-term uncommitted bank credit arrangement, which was repaid in March 2024.

Also in February 2024, Southern Company repaid at maturity $600 million aggregate principal amount of its Series 2021A 0.60% Senior Notes.

Alabama Power

In January 2024, Alabama Power repaid at maturity its obligations with respect to approximately $21 million aggregate principal amount of The Industrial Development Board of the Town of Wilsonville (Alabama) Pollution Control Revenue Bonds (Alabama Power Company Gaston Plant Project), Series D.

Georgia Power

In January 2024, Georgia Power borrowed an additional $150 million pursuant to a short-term uncommitted bank credit arrangement. In February 2024, Georgia Power repaid the aggregate $250 million outstanding.

Also in February 2024, Georgia Power issued $500 million aggregate principal amount of Series 2024A 5.004% Senior Notes due February 23, 2027 and $900 million aggregate principal amount of Series 2024B 5.250% Senior Notes due March 15, 2034.

Mississippi Power

In March 2024, Mississippi Power issued in a private placement $100 million aggregate principal amount of Series 2024A 5.62% Senior Notes due March 15, 2034 and $50 million aggregate principal amount of Series 2024B 5.72% Senior Notes due March 15, 2036. Pursuant to the same agreement, Mississippi Power agreed to issue in a private placement in June 2024 $100 million aggregate principal amount of Series 2024C 5.91% Senior Notes due June 15, 2054.

Southern Company Gas

During the first three months of 2024, Southern Company Gas received cash advances totaling $6 million under a long-term financing agreement related to a construction contract.

Credit Rating Risk

At March 31, 2024, the Registrants did not have any credit arrangements that would require material changes in payment schedules or terminations as a result of a credit rating downgrade.

There are certain contracts that could require collateral, but not accelerated payment, in the event of a credit rating change of certain Registrants to BBB and/or Baa2 or below. These contracts are primarily for physical electricity and natural gas purchases and sales, fuel purchases, fuel transportation and storage, energy price risk management, transmission, interest rate management, and, for Georgia Power, services at Plant Vogtle Units 3 and 4.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

The maximum potential collateral requirements under these contracts at March 31, 2024 were as follows:


Credit Ratings	Southern Company*()**		Alabama Power		Georgia Power		Mississippi Power		Southern Power*()**		Southern Company Gas
	(in millions)
At BBB and/or Baa2	$	33	$	1	$	—	$	—	$	32	$	—
At BBB- and/or Baa3	462		2		60		1		400		—
At BB+ and/or Ba1 or below	2,126		404		939		316		1,326		21

(*)Southern Power has PPAs that could require collateral, but not accelerated payment, in the event of a downgrade of Southern Power's credit. The PPAs require credit assurances without stating a specific credit rating. The amount of collateral required would depend upon actual losses resulting from a credit downgrade. Southern Power had $106 million of cash collateral posted related to PPA requirements at March 31, 2024.

The amounts in the previous table for the traditional electric operating companies and Southern Power include certain agreements that could require collateral if either Alabama Power or Georgia Power has a credit rating change to below investment grade. Generally, collateral may be provided by a Southern Company guaranty, letter of credit, or cash. Additionally, a credit rating downgrade could impact the ability of the Registrants to access capital markets and would be likely to impact the cost at which they do so.

Table of Contents Index to Financial Statements

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