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			83
Results of Operations			84
Southern Company			84
Alabama Power			89
Georgia Power			93
Mississippi Power			97
Southern Power			100
Southern Company Gas			103
Future Earnings Potential			107
Accounting Policies			112
Financial Condition and Liquidity			112

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. 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. 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. 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. 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

Mississippi Power

On March 17, 2025, Mississippi Power submitted its annual retail PEP filing for 2025 to the Mississippi PSC, which requested a 4.0%, or $41 million, annual increase in revenues. In accordance with the PEP rate schedule, an increase of 2.0% of total retail revenues, or approximately $22 million, became effective with the first billing cycle of April 2025, subject to refund. The related proceedings are projected to conclude in summer 2025. The ultimate outcome of this matter cannot be determined at this time.

On April 3, 2025, the FERC approved a settlement agreement filed by Mississippi Power and Cooperative Energy in December 2024, as part of the MRA tariff.

On April 21, 2025, the Florida PSC preliminarily approved Mississippi Power's acquisition of FP&L's 50% ownership interest in Plant Daniel Units 1 and 2. Interested parties may file an objection or protest by May 12, 2025. The ultimate outcome of this matter cannot be determined at this time.

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

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

RESULTS OF OPERATIONS

Southern Company

Net Income


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$205	18.2

Consolidated net income attributable to Southern Company in the first quarter 2025 was $1.3 billion ($1.21 per share) compared to $1.1 billion ($1.03 per share) for the corresponding period in 2024. The increase was primarily due to an increase in retail electric revenues associated with rates and pricing and weather impacts and an increase in other revenues, partially offset by increases in non-fuel operations and maintenance expenses and depreciation and amortization.

Retail Electric Revenues

In the first quarter 2025, retail electric revenues were $4.6 billion compared to $3.9 billion for the corresponding period in 2024. Details of the changes in retail electric revenues were as follows:


	First Quarter 2025 vs. First Quarter 2024
		(change in millions)		(% change)
Rates and pricing		$	360	9.1	%
Sales decline		(24)		(0.6)
Weather		117		3.0
Fuel and other cost recovery		207		5.2
Retail electric revenues		$	660	16.7	%

Changes in rates and pricing resulted in an increase in revenues in the first quarter 2025 when compared to the corresponding period in 2024 primarily due to the inclusion of Plant Vogtle Unit 4 in retail rates net of elimination of the NCCR tariff at Georgia Power, an increase in Rate RSE at Alabama Power, higher contributions from commercial and industrial customers with variable demand-driven pricing at Georgia Power, and base tariff increases at Georgia Power in accordance with the 2022 ARP. See Note 2 to the financial statements under "Alabama Power" and "Georgia Power" in Item 8 of the Form 10-K for additional information.

Changes in sales resulted in a decrease in revenues in the first quarter 2025 when compared to the corresponding period in 2024. Weather-adjusted residential KWH sales decreased 1.8% primarily due to decreased customer usage, partially offset by customer growth. Weather-adjusted commercial KWH sales increased 0.5% primarily due to customer growth. Industrial KWH sales increased 0.5% primarily due to increases in the primary metals, paper, and transportation sectors, partially offset by decreases in the textiles and stone, clay, and glass sectors.

Fuel and other cost recovery revenues increased $207 million in the first quarter 2025 compared to the corresponding period in 2024 primarily due to higher recoverable fuel 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.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Wholesale Electric Revenues


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$173	30.3

In the first quarter 2025, wholesale electric revenues were $744 million compared to $571 million for the corresponding period in 2024. The increase was due to an increase in energy revenues of $179 million, partially offset by a decrease in capacity revenues of $6 million. The increase in energy revenues was primarily due to fuel and purchased power price increases and an increase in the volume of KWHs sold primarily under natural gas and solar PPAs at Southern Power.

Wholesale electric revenues consist of revenues from PPAs and short-term opportunity sales. Wholesale electric revenues from PPAs (other than solar and wind PPAs) have both capacity and energy components. Capacity revenues generally represent the greatest contribution to net income and are designed to provide recovery of fixed costs plus a return on investment. Energy revenues will vary depending on fuel prices, the market prices of wholesale energy compared to the Southern Company system's generation, demand for energy within the Southern Company system's electric service territory, and the availability of the Southern Company system's generation. Increases and decreases in energy revenues that are driven by fuel prices are accompanied by an increase or decrease in fuel costs and do not have a significant impact on net income. Energy sales from solar and wind PPAs do not have a capacity charge and customers either purchase the energy output of a dedicated renewable facility through an energy charge or through a fixed price related to the energy. As a result, the ability to recover fixed and variable operations and maintenance expenses is dependent upon the level of energy generated from these facilities, which can be impacted by weather conditions, equipment performance, transmission constraints, and other factors. Wholesale electric revenues at Mississippi Power include FERC-regulated municipal and rural association sales 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 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$43	21.6

In the first quarter 2025, other electric revenues were $242 million compared to $199 million for the corresponding period in 2024. The increase was primarily due to increases of $20 million in open access transmission tariff sales at Alabama Power and Georgia Power, $12 million in regulated sales associated with power delivery construction and maintenance projects at Georgia Power, and $11 million in regulated energy services revenues at Alabama Power.

Natural Gas Revenues

In the first quarter 2025, natural gas revenues were $1.8 billion compared to $1.7 billion for the corresponding period in 2024. Details of the changes in natural gas revenues were as follows:


	First Quarter 2025 vs. First Quarter 2024
		(change in millions)		(% change)
Rates		$	43	2.5	%
Gas costs and other cost recovery		62		3.6
Gas marketing services		18		1.1
Other		9		0.5
Natural gas revenues		$	132	7.7	%

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Changes in rates resulted in an increase in revenues in the first quarter 2025 compared to the corresponding period in 2024 primarily due to base rate increases at Atlanta Gas Light and Virginia Natural Gas. See Note 2 to the financial statements under "Southern Company Gas – Rate Proceedings" in Item 8 of the Form 10-K for additional information.

Revenues from gas costs and other cost recovery increased in the first quarter 2025 compared to the corresponding period in 2024 primarily due to higher gas volumes. Natural gas distribution rates include provisions to adjust billings for fluctuations in natural gas costs. Therefore, gas costs recovered through natural gas revenues generally equal the amount expensed in cost of natural gas and do not affect net income from the natural gas distribution utilities.

Revenues from gas marketing services increased in the first quarter 2025 compared to the corresponding period in 2024 primarily due to higher commodity prices.

Other Revenues


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$121	53.1

In the first quarter 2025, other revenues were $349 million compared to $228 million for the corresponding period in 2024. The increase was primarily due to increases of $62 million in unregulated sales at Georgia Power primarily associated with power delivery construction and maintenance, energy conservation, and renewables projects and $61 million at PowerSecure primarily related to distributed infrastructure projects.

Fuel and Purchased Power Expenses


	First Quarter 2025 vs. First Quarter 2024
		(change in millions)		(% change)
Fuel		$	296	29.7	%
Purchased power		52		26.3
Total fuel and purchased power expenses		$	348

In the first quarter 2025, total fuel and purchased power expenses were $1.5 billion compared to $1.2 billion for the corresponding period in 2024. The increase was due to a $230 million net increase related to the average cost of fuel and purchased power and a $118 million increase related to 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.

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.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

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


	First Quarter 2025	First Quarter 2024
Total generation (in billions of KWHs)(a)	46	45
Total purchased power (in billions of KWHs)	5	4
Sources of generation (percent) —
Gas	50	50
Nuclear(a)	20	20
Coal	19	17
Hydro	3	5
Wind, Solar, and Other	8	8
Cost of fuel, generated (in cents per net KWH)—
Gas	3.88	2.89
Nuclear(a)	0.84	0.81
Coal	4.02	3.81
Average cost of fuel, generated (in cents per net KWH)(a)	3.22	2.59
Average cost of purchased power (in cents per net KWH)(b)	5.50	5.72

(a)Excludes KWHs generated from test period energy at Plant Vogtle Unit 4 prior to its in-service date. The related fuel costs were charged to CWIP in accordance with FERC guidance. See Note 2 to the financial statements under "Georgia Power – Nuclear Construction" in Item 8 of the Form 10-K 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.

Cost of Natural Gas


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$69	11.4

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 80% of the total cost of natural gas in the first quarter 2025.

In the first quarter 2025, cost of natural gas was $674 million compared to $605 million for the corresponding period in 2024. The increase reflects higher gas cost recovery as a result of a 63% increase in natural gas prices and higher gas volumes.

Cost of Other Sales


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$68	51.9

In the first quarter 2025, cost of other sales was $199 million compared to $131 million for the corresponding period in 2024. The increase was primarily due to increases of $38 million at PowerSecure primarily related to

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

distributed infrastructure projects and $31 million in expenses at Georgia Power associated with unregulated power delivery construction and maintenance projects.

Other Operations and Maintenance Expenses


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$147	10.0

In the first quarter 2025, other operations and maintenance expenses were $1.6 billion compared to $1.5 billion for the corresponding period in 2024. The increase was primarily due to increases of $70 million in generation expenses primarily resulting from planned outages at Alabama Power and Plant Vogtle Unit 4 being placed in service in April 2024 at Georgia Power, $33 million in certain employee compensation and benefit expenses, $23 million in technology infrastructure and application production costs, and $12 million in expenses passed through to customers primarily related to bad debt and energy efficiency programs at Southern Company Gas. See Note 2 to the financial statements under "Georgia Power – Nuclear Construction" in Item 8 of the Form 10-K for additional information.

Depreciation and Amortization


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$141	12.3

In the first quarter 2025, depreciation and amortization was $1.3 billion compared to $1.1 billion for the corresponding period in 2024. The increase was primarily due to increases of $78 million associated with additional plant in service, $31 million in amortization of regulatory assets related to CCR AROs at Georgia Power as approved in the 2025 compliance filing under the terms of the 2022 ARP, and $27 million in accelerated depreciation related to the repowering of the Kay Wind facility at Southern Power. See Note (K) to the Condensed Financial Statements under "Southern Power – Wind Repowering Projects" herein and Notes 2 and 15 to the financial statements under "Georgia Power" and "Southern Power – Development Projects," respectively, in Item 8 of the Form 10-K for additional information.

Taxes Other Than Income Taxes


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$49	12.4

In the first quarter 2025, taxes other than income taxes were $445 million compared to $396 million for the corresponding period in 2024. The increase was primarily due to increases of $19 million in property taxes primarily resulting from an increase in the assessed value of property as well as a decrease in the capitalized portion of property taxes at Georgia Power primarily due to Plant Vogtle Unit 4 being placed in service in April 2024, $11 million in municipal franchise fees resulting from higher retail revenues at Georgia Power, $10 million in revenue taxes as a result of higher natural gas revenues at Nicor Gas, and $5 million in utility license taxes at Alabama Power. See Note 2 to the financial statements under "Georgia Power – Nuclear Construction" in Item 8 of the Form 10-K for additional information on Plant Vogtle Unit 4.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Allowance for Equity Funds Used During Construction


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$15	25.9

In the first quarter 2025, allowance for equity funds used during construction was $73 million compared to $58 million for the corresponding period in 2024. The increase was primarily associated with an increase in capital expenditures subject to AFUDC at Georgia Power and Alabama Power, partially offset by the impact of Plant Vogtle Unit 4 being placed in service in April 2024 at Georgia Power. See Note 2 to the financial statements under "Georgia Power – Nuclear Construction" in Item 8 of the Form 10-K for additional information on Plant Vogtle Unit 4.

Interest Expense, Net of Amounts Capitalized


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$49	7.4

In the first quarter 2025, interest expense, net of amounts capitalized was $714 million compared to $665 million for the corresponding period in 2024. The increase was primarily due to higher average outstanding borrowings. See FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" and "Financing Activities" herein for additional information.

Income Taxes


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$57	25.6

In the first quarter 2025, income taxes were $280 million compared to $223 million for the corresponding period in 2024. The increase was primarily due to higher pre-tax earnings and a $9 million decrease in the flowback of certain excess deferred income taxes at Alabama Power, partially offset by increases of $19 million in the generation of advanced nuclear PTCs at Georgia Power and $15 million in the flowback of excess state deferred income taxes at Georgia Power. See Note (G) to the Condensed Financial Statements herein for additional information.

Alabama Power

Net Income


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$42	12.6

Alabama Power's net income in the first quarter 2025 was $375 million compared to $333 million for the corresponding period in 2024. The increase was primarily due to an increase in retail electric revenues associated with rates and pricing and weather impacts and an increase in other revenues. These increases to net income were partially offset by an increase in non-fuel operations and maintenance expenses, decreased customer usage, and increases in taxes other than income taxes and depreciation and amortization.

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 2025, retail revenues were $1.7 billion compared to $1.6 billion for the corresponding period in 2024. Details of the changes in retail revenues were as follows:


	First Quarter 2025 vs. First Quarter 2024
		(change in millions)		(% change)
Rates and pricing		$	92	5.9	%
Sales decline		(24)		(1.5)
Weather		46		2.9
Fuel and other cost recovery		44		2.8
Retail revenues		$	158	10.1	%

Changes in rates and pricing resulted in an increase in revenues in the first quarter 2025 when compared to the corresponding period in 2024 primarily due to an increase in Rate RSE. See Note 2 to the financial statements under "Alabama Power" in Item 8 of the Form 10-K for additional information.

Changes in sales resulted in a decrease in revenues in the first quarter 2025 when compared to the corresponding period in 2024. Weather-adjusted residential KWH sales and weather-adjusted commercial KWH sales decreased 3.1% and 1.5%, respectively, primarily due to decreased customer usage. Industrial KWH sales were flat primarily due to increases in the primary metals sector, offset by decreases in the chemicals sector.

Fuel and other cost recovery revenues increased in the first quarter 2025 when compared to the corresponding period in 2024 primarily as a result of higher recoverable fuel costs.

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

Wholesale Revenues – Affiliates


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$28	68.3

In the first quarter 2025, wholesale revenues from sales to affiliates were $69 million compared to $41 million for the corresponding period in 2024. The increase was primarily due to a 78.7% increase in the price of energy due to an increase in natural gas prices, partially offset by a 5.6% decrease in the volume of KWH sales due to affiliated company energy needs.

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)

Other Revenues


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$29	29.0

In the first quarter 2025, other revenues were $129 million compared to $100 million for the corresponding period in 2024. The increase was primarily due to a $14 million increase in transmission revenue primarily associated with open access transmission tariff sales and an $11 million increase in regulated energy services revenues.

Fuel and Purchased Power Expenses


	First Quarter 2025 vs. First Quarter 2024
		(change in millions)		(% change)
Fuel		$	55	16.6	%
Purchased power – non-affiliates		17		32.7
Purchased power – affiliates		13		31.0
Total fuel and purchased power expenses		$	85

In the first quarter 2025, total fuel and purchased power expenses were $510 million compared to $425 million for the corresponding period in 2024. The increase was due to a $50 million increase related to the volume of KWHs generated and purchased and a $35 million net increase related to the average 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.

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.

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.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

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


	First Quarter 2025	First Quarter 2024
Total generation (in billions of KWHs)	15	15
Total purchased power (in billions of KWHs)	2	1
Sources of generation (percent) —
Coal	35	30
Gas	33	33
Nuclear	24	26
Hydro	8	11
Cost of fuel, generated (in cents per net KWH) —
Coal	3.43	3.27
Gas	3.58	2.95
Nuclear	0.70	0.69
Average cost of fuel, generated (in cents per net KWH)	2.76	2.40
Average cost of purchased power (in cents per net KWH)(*)	7.52	7.81

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

Other Operations and Maintenance Expenses


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$51	12.4

In the first quarter 2025, other operations and maintenance expenses were $463 million compared to $412 million for the corresponding period in 2024. The increase was primarily due to increases of $38 million in generation expenses primarily associated with planned outages and $8 million in certain employee compensation and benefit expenses.

Depreciation and Amortization


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$9	2.5

In the first quarter 2025, depreciation and amortization was $370 million compared to $361 million for the corresponding period in 2024. The increase was primarily due to additional plant in service related to transmission and distribution systems.

Taxes Other Than Income Taxes


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$11	9.2

In the first quarter 2025, taxes other than income taxes were $131 million compared to $120 million for the corresponding period in 2024. The increase was primarily due to increases of $5 million in utility license taxes and $4 million in property taxes.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Income Taxes


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$26	30.6

In the first quarter 2025, income taxes were $111 million compared to $85 million for the corresponding period in 2024. The increase was primarily due to higher pre-tax earnings and a $9 million decrease in the flowback of certain excess deferred income taxes. See Note (G) to the Condensed Financial Statements herein for additional information.

Georgia Power

Net Income


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$159	36.4

Georgia Power's net income in the first quarter 2025 was $596 million compared to $437 million for the corresponding period in 2024. The increase was primarily due to higher retail revenues associated with the inclusion of Plant Vogtle Unit 4 in retail rates, weather impacts, an increase in retail revenues associated with higher contributions from customers with demand-driven pricing, and base tariff increases in accordance with the 2022 ARP. Also contributing to the increase were higher wholesale revenues and other revenues. These increases were partially offset by higher non-fuel operations and maintenance expenses and depreciation and amortization.

Retail Revenues

In the first quarter 2025, retail revenues were $2.6 billion compared to $2.2 billion for the corresponding period in 2024. Details of the changes in retail revenues were as follows:


	First Quarter 2025 vs. First Quarter 2024
		(change in millions)		(% change)
Rates and pricing		$	267	12.4	%
Sales decline		(1)		—
Weather		67		3.1
Fuel cost recovery		142		6.5
Retail revenues		$	475	22.0	%

Changes in rates and pricing resulted in an increase in revenues in the first quarter 2025 when compared to the corresponding period in 2024 primarily due to the inclusion of Plant Vogtle Unit 4 in retail rates net of elimination of the NCCR tariff, higher contributions from commercial and industrial customers with variable demand-driven pricing, 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.

Changes in sales resulted in a decrease in revenues in the first quarter 2025 when compared to the corresponding period in 2024. Weather-adjusted residential KWH sales decreased 1.1% primarily due to decreased customer usage, partially offset by customer growth. Weather-adjusted commercial KWH sales increased 1.2% primarily due to increased customer usage, primarily driven by data centers, and customer growth. Weather-adjusted industrial KWH sales were flat primarily due to increases in the paper and transportation sectors, offset by decreases in the textiles and stone, clay, and glass sectors.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Fuel revenues and costs are allocated between retail and wholesale jurisdictions. Retail fuel cost recovery revenues increased in the first quarter 2025 when compared to the corresponding period in 2024 due to higher recoverable fuel 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 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$86	148.3

In the first quarter 2025, wholesale revenues were $144 million compared to $58 million for the corresponding period in 2024. The increase was primarily due to increases of $47 million related to the volume of KWH sales associated with higher market demand, $20 million related to the average cost per KWH sold due to higher Southern Company system fuel and purchased power prices, and $9 million related to additional capacity from wholesale capacity contracts.

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 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$78	42.2

In the first quarter 2025, other revenues were $263 million compared to $185 million for the corresponding period in 2024. The increase was primarily due to $62 million in unregulated sales primarily associated with power delivery construction and maintenance, energy conservation, and renewables projects and $12 million in regulated sales associated with power delivery construction and maintenance projects.

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 2025 vs. First Quarter 2024
		(change in millions)		(% change)
Fuel		$	135	34.7	%
Purchased power – non-affiliates		21		15.0
Purchased power – affiliates		83		45.9
Total fuel and purchased power expenses		$	239

In the first quarter 2025, total fuel and purchased power expenses were $949 million compared to $710 million for the corresponding period in 2024. The increase was due to increases of $129 million related to the average cost of fuel and purchased power and $110 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.

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. See Note 2 to the financial statements under "Georgia Power – Integrated Resource Plans" in Item 8 of the Form 10-K for information regarding two new PPAs with Southern Power.

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


	First Quarter 2025	First Quarter 2024
Total generation (in billions of KWHs)(a)	15	15
Total purchased power (in billions of KWHs)	9	7
Sources of generation (percent) —
Gas	40	46

Nuclear(a)	36	32
Coal	21	18
Hydro and other	3	4
Cost of fuel, generated (in cents per net KWH) —
Gas	4.09	3.15

Nuclear(a)	0.92	0.90
Coal	4.72	4.35
Average cost of fuel, generated (in cents per net KWH)(a)	3.06	2.62
Average cost of purchased power (in cents per net KWH)(b)	5.24	4.63

(b)Average cost of purchased power includes fuel purchased by Georgia Power 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)

Other Operations and Maintenance Expenses


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$119	23.1

In the first quarter 2025, other operations and maintenance expenses were $634 million compared to $515 million for the corresponding period in 2024. The increase was primarily due to increases of $48 million in expenses associated with unregulated power delivery construction and maintenance, energy conservation, and renewables projects, $28 million in generation expenses primarily due to non-outage maintenance expenses largely resulting from Plant Vogtle Unit 4 being placed in service in April 2024, $15 million in technology infrastructure and application production costs, $15 million in transmission and distribution line maintenance costs, and $13 million in certain employee compensation and benefit expenses, partially offset by a $12 million increase in billing adjustments with integrated transmission system owners.

See Note 2 to the financial statements under "Georgia Power – Nuclear Construction" in Item 8 of the Form 10-K for additional information.

Depreciation and Amortization


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$78	18.4

In the first quarter 2025, depreciation and amortization was $503 million compared to $425 million for the corresponding period in 2024. The increase was primarily due to increases of $50 million associated with additional plant in service and $31 million in amortization of regulatory assets related to CCR AROs as approved in the 2025 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.

Taxes Other Than Income Taxes


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$23	15.6

In the first quarter 2025, taxes other than income taxes were $170 million compared to $147 million for the corresponding period in 2024. The increase was primarily due to an increase of $11 million in municipal franchise fees resulting from higher retail revenues, an increase of $6 million in property taxes primarily resulting from an increase in the assessed value of property, and a decrease of $5 million in property taxes capitalized primarily due to Plant Vogtle Unit 4 being placed in service in April 2024. See Note 2 to the financial statements under "Georgia Power – Nuclear Construction" in Item 8 of the Form 10-K for additional information on Plant Vogtle Unit 4.

Allowance for Equity Funds Used During Construction


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$9	23.1

In the first quarter 2025, allowance for equity funds used during construction was $48 million compared to $39 million for the corresponding period in 2024. The increase was primarily due to an increase in capital expenditures subject to AFUDC, partially offset by the impact of Plant Vogtle Unit 4 being placed in service in April 2024. See Note 2 to the financial statements under "Georgia Power – Nuclear Construction" in Item 8 of the Form 10-K for additional information on Plant Vogtle Unit 4.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Interest Expense, Net of Amounts Capitalized


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$14	8.1

In the first quarter 2025, interest expense, net of amounts capitalized was $187 million compared to $173 million for the corresponding period in 2024. The increase was primarily associated with an increase of approximately $10 million related to higher average outstanding borrowings and a decrease of $9 million in net deferred financing costs related to Plant Vogtle Unit 3, partially offset by a decrease of approximately $4 million related to lower interest rates.

See Note 2 to the financial statements under "Georgia Power – Nuclear Construction – Regulatory Matters" in Item 8 of the Form 10-K and FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" and "Financing Activities" herein for additional information.

Income Taxes


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$19	24.1

In the first quarter 2025, income taxes were $98 million compared to $79 million for the corresponding period in 2024. The increase was primarily due to higher pre-tax earnings, partially offset by increases of $19 million in the generation of advanced nuclear PTCs and $15 million in the flowback of excess state deferred income taxes. See Note (G) to the Condensed Financial Statements herein for additional information.

Mississippi Power

Net Income


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$5	10.0

Mississippi Power's net income in the first quarter 2025 was $55 million compared to $50 million for the corresponding period in 2024. The increase was primarily due to an increase in weather-related revenues due to colder weather in the first quarter 2025 compared to the corresponding period in 2024.

Retail Revenues

In the first quarter 2025, retail revenues were $248 million compared to $221 million for the corresponding period in 2024. Details of the changes in retail revenues were as follows:


	First Quarter 2025 vs. First Quarter 2024
		(change in millions)		(% change)
Rates and pricing		$	—	—	%
Sales growth		1		0.4
Weather		5		2.3
Fuel and other cost recovery		21		9.5
Retail revenues		$	27	12.2	%

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Changes in rates and pricing resulted in an immaterial change in revenues in the first quarter 2025 when compared to the corresponding period in 2024.

Changes in sales resulted in an increase in revenues in the first quarter 2025 when compared to the corresponding period in 2024. Weather-adjusted residential KWH sales decreased 2.1% primarily due to decreased customer usage. Weather-adjusted commercial KWH sales increased 0.7% primarily due to increased customer usage. Industrial KWH sales increased 4.8% primarily due to increases in the chemical and pipeline sectors.

Fuel and other cost recovery revenues increased in the first quarter 2025 when compared to the corresponding period in 2024 primarily as a result of higher recoverable fuel costs. Recoverable fuel costs include fuel and purchased power expenses reduced by the fuel and emissions portion of wholesale revenues from energy sold to customers outside Mississippi Power's service territory. Electric rates include provisions to adjust billings for fluctuations in fuel costs, including the energy component of purchased power costs. Under these provisions, fuel revenues generally equal fuel expenses, including the energy component of purchased power costs, and do not affect net income. See Note 2 to the financial statements in Item 8 of the Form 10-K for additional information.

Wholesale Revenues – Non-Affiliates


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$12	20.3

In the first quarter 2025, wholesale revenues from sales to non-affiliates were $71 million compared to $59 million for the corresponding period in 2024. The increase was primarily due to an $8 million increase associated with MRA customers largely due to higher recoverable fuel costs and a $4 million increase 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.

Wholesale Revenues – Affiliates


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$30	58.8

In the first quarter 2025, wholesale revenues from sales to affiliates were $81 million compared to $51 million for the corresponding period in 2024. The increase was primarily due to increases of $16 million related to the price of energy driven by natural gas prices and $14 million related to the volume of KWH sales.

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.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Other Revenues


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$9	81.8

In the first quarter 2025, other revenues were $20 million compared to $11 million for the corresponding period in 2024. The increase was primarily due to customer charges related to contributions in aid of construction included in rates.

Fuel and Purchased Power Expenses


	First Quarter 2025 vs. First Quarter 2024
		(change in millions)		(% change)
Fuel		$	50	47.6	%
Purchased power		5		83.3
Total fuel and purchased power expenses		$	55

In the first quarter 2025, total fuel and purchased power expenses were $166 million compared to $111 million for the corresponding period in 2024. The increase was due to a $37 million increase related to the average cost of fuel and purchased power and an $18 million increase 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.

Energy purchases will vary depending on the market prices of wholesale energy as compared to the cost of the Southern Company system's generation, demand for energy within the Southern Company system's electric service territory, and the availability of the Southern Company system's generation. These purchases are made in accordance with the IIC or other contractual agreements, as approved by the FERC.

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


	First Quarter 2025	First Quarter 2024
Total generation (in millions of KWHs)	4,538	3,952
Total purchased power (in millions of KWHs)	188	171
Sources of generation (percent) –
Gas	91	91
Coal	9	9
Cost of fuel, generated (in cents per net KWH) –
Gas	3.50	2.69
Coal	4.94	4.70
Average cost of fuel, generated (in cents per net KWH)	3.65	2.88
Average cost of purchased power (in cents per net KWH)	5.78	3.64

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Other Operations and Maintenance Expenses


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$(4)	(4.5)

In the first quarter 2025, other operations and maintenance expenses were $84 million compared to $88 million for the corresponding period in 2024. The decrease was primarily due to a decrease in generation expenses associated with planned outages.

Depreciation and Amortization


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$5	10.6

In the first quarter 2025, depreciation and amortization was $52 million compared to $47 million for the corresponding period in 2024. The increase was primarily due to additional plant in service and an increase in depreciation rates. See Note (A) to the Condensed Financial Statements under "Depreciation and Amortization" herein for additional information.

Other Income (Expense), Net


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$(8)	(57.1)

In the first quarter 2025, other income (expense), net was $6 million compared to $14 million for the corresponding period in 2024. The decrease was primarily due to customer charges related to contributions in aid of construction.

Income Taxes


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$6	60.0

In the first quarter 2025, income taxes were $16 million compared to $10 million for the corresponding period in 2024. The increase was primarily due to higher pre-tax earnings and a decrease of $3 million in the flowback of certain excess deferred income taxes. See Note (G) to the Condensed Financial Statements herein for additional information.

Southern Power

Net Income Attributable to Southern Power


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$(9)	(9.4)

Net income attributable to Southern Power in the first quarter 2025 was $87 million compared to $96 million for the corresponding period in 2024. The decrease was primarily due to accelerated depreciation related to the repowering of the Kay Wind facility, largely offset by higher revenues driven by higher market prices and increased demand for energy related to weather impacts. See Note (K) to the Condensed Financial Statements under "Southern Power –

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Wind Repowering Projects" herein and Note 15 to the financial statements under "Southern Power – Development Projects" in Item 8 of the Form 10-K for additional information.

Operating Revenues


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$94	19.9

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 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 2025		First Quarter 2024
	(in millions)
PPA capacity revenues	$	121	$	120
PPA energy revenues	373		281
Total PPA revenues	494		401
Non-PPA revenues	69		60
Other revenues	4		12
Total operating revenues	$	567	$	473

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

In the first quarter 2025, total operating revenues were $567 million, reflecting a $94 million, or 19.9%, increase from the corresponding period in 2024. The change in operating revenues was primarily due to the following:

PPA energy revenues increased $92 million, or 32.7%, primarily due to an increase of $59 million driven by fuel and purchased power prices and an increase of $25 million related to the volume of KWHs sold primarily under natural gas and solar PPAs.
Non-PPA revenues increased $9 million, or 15.0%, primarily due to an increase of $25 million driven by fuel and purchased power prices, largely offset by a decrease of $17 million related to 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 2025	First Quarter 2024
	(in billions of KWHs)
Generation	10.9	10.3
Purchased power	0.5	0.4
Total generation and purchased power	11.4	10.7

Total generation and purchased power (excluding solar, wind, fuel cells, and tolling agreements)	7.0	6.7

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 2025 vs. First Quarter 2024
		(change in millions)		(% change)
Fuel		$	51	32.7	%
Purchased power		10		55.6
Total fuel and purchased power expenses		$	61

In the first quarter 2025, total fuel and purchased power expenses increased $61 million, or 35.1%, compared to the corresponding period in 2024. Fuel expense increased $51 million primarily due to a $45 million increase associated with the average cost of fuel. Purchased power expense increased $10 million primarily due to an $8 million increase associated with the average cost of purchased power.

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 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$34	28.8

In the first quarter 2025, depreciation and amortization was $152 million compared to $118 million for the corresponding period in 2024. The increase was primarily due to $27 million in accelerated depreciation related to the repowering of the Kay Wind facility. See Note (K) to the Condensed Financial Statements under "Southern Power – Wind Repowering Projects" herein and Note 15 to the financial statements under "Southern Power – Development Projects" in Item 8 of the Form 10-K for additional information.

Income Taxes (Benefit)


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$13	92.9

In the first quarter 2025, income tax benefit was $1 million compared to $14 million for the corresponding period in 2024. The decrease was primarily due to a change in pre-tax earnings attributable to Southern Power, including the impact of accelerated depreciation related to the repowering of the Kay Wind facility. See Note (G) to the Condensed Financial Statements and Note (K) to the Condensed Financial Statements under "Southern Power – Wind Repowering Projects" herein for additional information.

Southern Company Gas

Southern Company Gas measures weather and the effect on its business using Heating Degree Days. Generally, increased Heating Degree Days results in higher demand for natural gas on Southern Company Gas' distribution system. Southern Company Gas has various regulatory mechanisms, such as weather and revenue normalization and straight-fixed-variable rate design, which limit its exposure to weather changes within typical ranges in each of its 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, more customers are connected to the gas distribution systems and natural gas usage is higher in periods of colder weather. Southern Company Gas' base operating expenses, excluding cost of natural gas 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 as a result of seasonality.

Net Income


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$9	2.2

Southern Company Gas' net income in the first quarter 2025 was $418 million compared to $409 million for the corresponding period in 2024. The increase was primarily due to a $13 million increase in net income at gas distribution operations, partially offset by a $3 million decrease in net income at gas pipeline investments.

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 2025, natural gas revenues were $1.8 billion compared to $1.7 billion for the corresponding period in 2024. Details of the changes in natural gas revenues were as follows:


	First Quarter 2025 vs. First Quarter 2024
		(change in millions)		(% change)

Rates		$	43	2.5	%
Gas costs and other cost recovery		62		3.6
Gas marketing services		18		1.1

Other		9		0.5
Natural gas revenues		$	132	7.7	%

Revenues from gas costs and other cost recovery increased in the first quarter 2025 compared to the corresponding period in 2024 primarily due to higher gas volumes. See "Cost of Natural Gas" herein for additional information.

Revenues from gas marketing services increased in the first quarter 2025 compared to the corresponding period in 2024 primarily due to higher commodity prices.

Cost of Natural Gas


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$69	11.4

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 80% of the total cost of natural gas in the first quarter 2025. 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 all periods presented:


	First Quarter
		2025	2024	2025 vs. 2024
Gas distribution operations (mmBtu in millions)
Firm		302	266	13.5	%
Interruptible		23	25	(8.0)
Total		325	291	11.7	%

Gas marketing services (mmBtu in millions)
Firm:
Georgia		18	17	5.9	%
Illinois		3	2	50.0

Other		8	6	33.3
Interruptible large commercial and industrial		4	4	—
Total		33	29	13.8	%

Other Operations and Maintenance Expenses


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$23	7.8

In the first quarter 2025, other operations and maintenance expenses were $316 million compared to $293 million for the corresponding period in 2024. The increase was primarily due to increases of $16 million in employee compensation and benefit expenses and $12 million in expenses passed through to customers primarily related to bad debt and energy efficiency programs at gas distribution operations.

Depreciation and Amortization


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$14	9.0

In the first quarter 2025, depreciation and amortization was $169 million compared to $155 million for the corresponding period in 2024. The increase was primarily due to continued investments at the natural gas distribution utilities.

Taxes Other Than Income Taxes


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$10	11.5

In the first quarter 2025, taxes other than income taxes were $97 million compared to $87 million for the corresponding period in 2024. The increase was primarily due to an increase of $10 million in revenue taxes as a result of higher natural gas revenues at Nicor Gas.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Earnings from Equity Method Investments


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$(5)	(11.4)

In the first quarter 2025, earnings from equity method investments were $39 million compared to $44 million for the corresponding period in 2024. The decrease was primarily due to lower rates at SNG. See Note 7 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K and Note (E) to the Condensed Financial Statements herein under "Southern Company Gas" for additional information.

Interest Expense, Net of Amounts Capitalized


First Quarter 2025 vs. First Quarter 2024
	(change in millions)	(% change)
	$8	9.5

In the first quarter 2025, interest expense, net of amounts capitalized was $92 million compared to $84 million for the corresponding period in 2024. The increase reflects an increase of approximately $8 million related to higher average outstanding borrowings. See FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" herein for additional information on borrowings.

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.


	2025						2024
	Operating Revenues		Operating Expenses		Net Income		Operating Revenues		Operating Expenses		Net Income
	(in millions)








First Quarter
Gas distribution operations	$	1,570	$	1,082	$	315	$	1,463	$	989	$	302
Gas pipeline investments	8		3		27		8		3		30
Gas marketing services	261		170		65		235		148		65
All other	4		2		11		6		2		12
Intercompany eliminations	(4)		(1)		—		(5)		(2)		—
Consolidated	$	1,839	$	1,256	$	418	$	1,707	$	1,140	$	409

Gas Distribution Operations

The gas distribution operations segment 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

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

instruments, that limit its exposure to changes in customer consumption, including weather changes within typical ranges in its natural gas distribution utilities' service territories. See Note 2 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.

In the first quarter 2025, net income increased $13 million, or 4.3%, when compared to the corresponding period in 2024, as described further below:

Operating revenues increased $107 million primarily due to higher gas cost recovery and base rate increases. Gas costs recovered through natural gas revenues generally equal the amount expensed in cost of natural gas.

*•*Operating expenses increased $93 million primarily due to a $49 million increase in cost of natural gas as a result of higher gas prices and higher volumes sold compared to 2024, a $14 million increase in depreciation primarily due to continued investments at the natural gas distribution utilities, and a $12 million increase related to expenses passed through to customers primarily related to bad debt and energy efficiency programs.

Interest expense, net of amounts capitalized increased $4 million primarily due to higher average outstanding borrowings.

Gas Pipeline Investments

The gas pipeline investments segment 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

The gas marketing services segment 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 2025, net income was flat when compared to the corresponding period in 2024 primarily due to an increase in retail margins, largely offset by a decrease in other income.

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

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. The Registrants are unable to predict changes in law, regulations, regulatory guidance, legal interpretations, policy positions, and implementation actions that may result from the new presidential administration.

For the traditional electric operating companies, these factors include the ability to maintain constructive regulatory environments that allow for the timely recovery of prudently-incurred costs during a time of increasing costs, including those related to projected long-term demand growth, stringent environmental standards, including CCR rules, safety, system reliability and resiliency, fuel, restoration following major storms, and capital expenditures, including constructing new electric generating plants, extending the retirement dates of certain fossil fuel plants, and expanding and improving the transmission and distribution systems; continued customer growth; and the trends of

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an uncertain inflationary environment 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 and pricing of large customers such that incremental costs are met with adequate incremental revenues, 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.

Economic uncertainty and policy uncertainty have increased the volatility of future economic outlooks above historical norms. Significant changes in fiscal, monetary, or trade policies could disrupt anticipated economic outlooks. This uncertainty in economic growth, interest rates, tariffs, and inflation could impact customer demand for energy, access to capital markets, and the cost of doing business. 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 2025.

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 United States 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.

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

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requirements with wholesale customers; demand growth in data centers; 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/or 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, Note (K) to the Condensed Financial Statements herein, and "Construction Programs" 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" and – FINANCIAL CONDITION AND LIQUIDITY – "Cash Requirements" in Item 7 and Note 3 to the financial statements under "Environmental Remediation" and Note 6 to the financial statements in Item 8 of the Form 10-K, as well as Note (C) to the Condensed Financial Statements under "General Litigation Matters" and "Environmental Remediation" herein, for additional information.

Environmental Laws and Regulations

Air Quality

On April 14, 2025, the U.S. Court of Appeals for the D.C. Circuit granted the EPA's motion to hold in abeyance the litigation regarding the 2015 Ozone National Ambient Air Quality Standards (NAAQS) Good Neighbor federal implementation plan (FIP).

On March 25, 2025, the U.S. Court of Appeals for the Fifth Circuit vacated and remanded the EPA's disapproval of the Mississippi state implementation plan (SIP) addressing interstate transport provisions of the Clean Air Act for the 2015 NAAQS. The decision protects the State of Mississippi from the requirements of the federal Good Neighbor plan unless or until the EPA properly disapproves Mississippi's SIP.

The ultimate impact of the FIP and associated legal matters cannot be determined at this time; however, implementation of the stayed FIP would likely result in increased compliance costs for the traditional electric operating companies.

Water Quality

On February 28, 2025, the U.S. Court of Appeals for the Eighth Circuit granted the EPA's motion to hold the 2024 ELG Rule litigation in abeyance for 60 days. On March 12, 2025, the EPA announced its intent to reconsider the standards finalized in the 2024 ELG Rule, including the new technology-based ELGs for leachate. On April 29, 2025, the EPA filed a motion with the U.S. Court of Appeals for the Eighth Circuit requesting an additional 60-day abeyance of the 2024 ELG Rule litigation. The ultimate impact of the 2024 ELG Rule and associated legal matters cannot be determined at this time; however, it may result in significant compliance costs.

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Coal Combustion Residuals

On March 12, 2025, the EPA announced its intent to undertake several regulatory actions related to the CCR Rule, including reviewing the legacy rule and evaluating whether to grant short- and long-term relief, such as extending compliance deadlines.

On January 16, 2025, the EPA simultaneously published a direct final rule and companion proposed rule that included identical revisions to certain definitions in the 2024 final legacy CCR surface impoundment rule. On March 20, 2025, the EPA published a notice withdrawing its direct final rule and stating the EPA's intent to respond to comments received on the companion proposed rule. The ultimate impact of any final rule and associated legal matters cannot be determined at this time; however, it may result in significant compliance costs.

Based on compliance requirements for closure and monitoring of CCR units pursuant to state and federal CCR rules, the traditional electric operating companies have periodically updated, and expect to continue periodically updating, their related cost estimates and ARO liabilities for each CCR unit as additional information related to compliance monitoring, closure methodologies and strategies, schedules, and/or costs becomes available. Some of these updates have been, and future updates may be, material. The cost estimates for Alabama Power are based on closure-in-place for all surface impoundments. The cost estimates for Georgia Power and Mississippi Power are based on a combination of closure-in-place for some surface impoundments and closure by removal for others. Additionally, the closure designs and plans in the States of Alabama and Georgia are subject to approval by environmental regulatory agencies. Absent continued recovery of ARO costs through regulated rates, results of operations, cash flows, and financial condition for Southern Company and the traditional electric operating companies could be materially impacted.

Greenhouse Gases

On February 19, 2025, the U.S. Court of Appeals for the D.C. Circuit granted the EPA's motion to hold the litigation over the 2024 GHG Rules in abeyance for 60 days. On April 25, 2025, the U.S. Court of Appeals for the D.C. Circuit granted the EPA's motion requesting a continuing abeyance of the litigation over the 2024 GHG Rules. The EPA states in its motion that the agency will issue a proposed reconsideration rule in spring 2025 and a final reconsideration rule by December 2025. The ultimate impact of the final rules and associated legal matters cannot be determined at this time; however, it may result in significant compliance costs.

In 2009, the EPA finalized its determination that concentration of certain GHGs in the atmosphere represent a danger to public health and welfare, and such endangerment finding is a prerequisite for regulation of GHG emissions from electric generating units. On March 21, 2025, the EPA announced its intent to ask for public comment on its reconsideration of this endangerment finding. The ultimate impact of this action cannot be determined at this time.

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, through which the traditional electric operating companies recover their investment and a return. See Note 2 to the financial statements under "Georgia Power – Integrated

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Resource Plans" in Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements under "Georgia Power – Other Construction" herein for information regarding Georgia Power's construction of three simple cycle combustion turbines at Plant Yates.

Alabama Power executed an agreement to build a battery energy storage facility at the former Plant Gorgas site in Walker County, Alabama. The new Gorgas battery facility will have the capacity to store up to 150 MWs of electricity generated by other Alabama Power resources. Construction is expected to begin in 2025, with estimated completion by 2027.

Southern Power's construction program includes the Millers Branch solar project and the Kay Wind repowering project. The Kay Wind repowering project results in accelerated depreciation related to the equipment being replaced that will continue until commercial operation of the project, which is projected to occur in the third quarter 2026. At March 31, 2025, the remaining pre-tax accelerated depreciation, net of noncontrolling interest impacts, is projected to total approximately $75 million in 2025 and $40 million in 2026. The ultimate outcome of this matter cannot be determined at this time. 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, as approved by their applicable state regulatory agency. See Note 2 to the financial statements 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.

Southern Power's Power Sales Agreements

See MANAGEMENT'S DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL – "Southern Power's Power Sales Agreements" in Item 7 of the Form 10-K for additional information.

At March 31, 2025, 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 96% through 2029 and 87% through 2034, with an average remaining contract duration of approximately 12 years.

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.

Georgia State Tax Legislation

On April 15, 2025, the State of Georgia enacted tax legislation that reduced the corporate income tax rate from 5.39% to 5.19% effective for the 2025 tax year. This legislation will reduce the amount of Southern Company's and certain subsidiaries' income tax expense in the State of Georgia and existing state net accumulated deferred tax liabilities, increase regulatory liabilities at Georgia Power and Southern Company Gas, and reduce Georgia Power's ability to utilize certain state tax credits in the State of Georgia. The legislation is not expected to have a material impact on the net income of the applicable Registrants. The ultimate outcome of this matter cannot be determined at this time.

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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, 2025. 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.

At the end of the first quarter 2025, the market price of Southern Company's common stock was $91.95 per share (based on the closing price as reported on the NYSE) and the book value was $30.79 per share, representing a market-to-book ratio of 299%, compared to $82.32, $30.28, and 272%, respectively, at the end of 2024. Southern Company's common stock dividend for the first quarter 2025 was $0.72 per share compared to $0.70 per share in the first quarter 2024.

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. 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, regulation, and/or tariff policy; 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, with

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AND RESULTS OF OPERATIONS (Continued)

respect to the traditional electric operating companies and the natural gas distribution utilities, there can be no assurance that any 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 (K) to the Condensed Financial Statements under "Southern Power" herein for additional information regarding Southern Power's construction projects.

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, 2024.

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.

The amount, type, and timing of any financings in 2025, 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.

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, 2025, the amount of subsidiary retained earnings restricted to dividend totaled $1.8 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, 2025 for the applicable Registrants:


At March 31, 2025	Southern Company		Georgia Power		Southern Power		Southern Company Gas
	(in millions)
Current liabilities in excess of current assets	$	1,953	$	497	$	634	$	450

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

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Bank Credit Arrangements

At March 31, 2025, unused committed credit arrangements with banks were as follows:


At March 31, 2025	Southern Company parent		Alabama Power(a)		Georgia Power		Mississippi Power		Southern Power(b)		Southern Company Gas(c)		SEGCO		Southern Company
	(in millions)
Unused committed credit	$	2,999	$	1,364	$	2,026	$	275	$	600	$	1,598	$	30	$	8,892

(a)Includes $14 million at Alabama Property Company, a wholly-owned subsidiary of Alabama Power. Alabama Power is not party to this arrangement.

(b)At March 31, 2025, Southern Power also had two continuing letters of credit facilities for standby letters of credit, of which $21 million was unused. Southern Power's subsidiaries are not parties to its bank credit arrangements or letter of credit facilities.

(c)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, 2025, outstanding variable rate demand revenue bonds of the traditional electric operating companies with allocated liquidity support totaled approximately $1.5 billion (comprised of approximately $796 million at Alabama Power, $667 million at Georgia Power, and $69 million at Mississippi Power). In addition, at March 31, 2025, Alabama Power and Georgia Power had approximately $207 million and $386 million, respectively, of fixed rate revenue bonds outstanding that are required to be remarketed within the next 12 months. Alabama Power's $207 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-

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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, 2025				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	$	514	4.9	%	$	1,472	4.7	%	$	2,291
Alabama Power	—		—		3		4.4		50
Georgia Power	200		5.3		351		5.0		1,020
Mississippi Power	—		—		82		4.6		144
Southern Power	—		—		15		4.6		72
Southern Company Gas:
Southern Company Gas Capital	$	314	4.6	%	$	280	4.6	%	$	387
Nicor Gas	—		—		73		4.6		172
Southern Company Gas Total	$	314	4.6	%	$	353	4.6	%

(*)Average and maximum amounts are based upon daily balances during the three-month period ended March 31, 2025.

Analysis of Cash Flows

Net cash flows provided from (used for) operating, investing, and financing activities for the three months ended March 31, 2025 and 2024 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, 2025
Operating activities	$	1,250	$	227	$	305	$	(11)	$	146	$	687
Investing activities	(2,834)		(591)		(1,719)		(44)		(161)		(321)
Financing activities	2,815		718		1,679		87		39		(323)

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)

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

Southern Company

Net cash provided from operating activities decreased $61 million for the three months ended March 31, 2025 as compared to the corresponding period in 2024 primarily due to decreased retail fuel cost recovery at the traditional electric operating companies and storm restoration costs at Georgia Power, partially offset by the timing of natural gas purchases at the natural gas distribution utilities. See Note 2 to the financial statements under "Georgia Power – Storm Damage Recovery" in Item 8 of the Form 10-K for additional information relating to storm restoration costs.

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The net cash used for investing activities for the three months ended March 31, 2025 was primarily related to the Subsidiary Registrants' construction programs.

The net cash provided from financing activities for the three months ended March 31, 2025 was primarily related to issuances of long-term debt, partially offset by a reduction in commercial paper borrowings and common stock dividend payments.

Alabama Power

Net cash provided from operating activities decreased $21 million for the three months ended March 31, 2025 as compared to the corresponding period in 2024 primarily due to customer refunds associated with the nuclear fuel disposal cost award and decrease in fuel cost recovery, partially offset by the timing of vendor payments. See Note 3 to the financial statements under "Nuclear Fuel Disposal Cost" in Item 8 of the Form 10-K for additional information.

The net cash used for investing activities for the three months ended March 31, 2025 was primarily related to gross property additions.

The net cash provided from financing activities for the three months ended March 31, 2025 was primarily related to capital contributions from Southern Company and issuances of senior notes, partially offset by common stock dividend payments.

Georgia Power

Net cash provided from operating activities decreased $188 million for the three months ended March 31, 2025 as compared to the corresponding period in 2024 primarily due to the timing of vendor payments, storm restoration costs, and decreased fuel cost recovery. See Note 2 to the financial statements under "Georgia Power – Storm Damage Recovery" in Item 8 of the Form 10-K for additional information relating to storm restoration costs.

The net cash used for investing activities for the three months ended March 31, 2025 was primarily related to gross property additions.

The net cash provided from financing activities for the three months ended March 31, 2025 was primarily related to issuances of senior notes and capital contributions from Southern Company, partially offset by common stock dividend payments.

Mississippi Power

Net cash used for operating activities increased $4 million for the three months ended March 31, 2025 as compared to the corresponding period in 2024 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, 2025 was primarily related to gross property additions, partially offset by contributions in aid of construction.

Southern Power

Net cash provided from operating activities increased $25 million for the three months ended March 31, 2025 as compared to the corresponding period in 2024 primarily due to an increase in wholesale revenues, driven by higher market prices and increased demand for energy, and the timing of vendor payments, partially offset by the timing of customer receivable collections.

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The net cash used for investing activities for the three months ended March 31, 2025 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 provided from financing activities for the three months ended March 31, 2025 was primarily related to capital contributions from Southern Company, largely offset by common stock dividend payments and net distributions to noncontrolling interests.

Southern Company Gas

Net cash provided from operating activities increased $89 million for the three months ended March 31, 2025 as compared to the corresponding period in 2024 primarily due to the timing of natural gas purchases, partially offset by lower natural gas cost recovery.

The net cash used for investing activities for the three months ended March 31, 2025 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, 2025 was primarily related to common stock dividend payments and a reduction in commercial paper borrowings.

Significant Balance Sheet Changes

Southern Company

Significant balance sheet changes for the three months ended March 31, 2025 included:

an increase of $4.6 billion in long-term debt (including securities due within one year) primarily related to issuances of junior subordinated notes and senior notes;
an increase of $1.6 billion in total property, plant, and equipment primarily related to the Subsidiary Registrants' construction programs;
an increase of $1.3 billion in cash and cash equivalents, as discussed further under "Analysis of Cash Flows – Southern Company" herein;
a decrease of $0.8 billion in notes payable primarily due to a reduction in commercial paper borrowings;
a decrease of $0.6 billion in accounts payable primarily related to the timing of vendor payments;
a decrease of $0.6 billion in accrued compensation due to the timing of payments;
an increase of $0.5 billion in total stockholders' equity primarily related to net income, partially offset by common stock dividend payments; and
an increase of $0.5 billion in accumulated deferred income taxes primarily related to property-related timing differences and projected monetization of tax credits in 2025.

See "Financing Activities" herein for additional information.

Alabama Power

Significant balance sheet changes for the three months ended March 31, 2025 included:

an increase of $597 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;
an increase of $500 million in long-term debt (including securities due within one year) primarily due to an issuance of senior notes;
an increase of $354 million in cash and cash equivalents, as discussed further under "Analysis of Cash Flows – Alabama Power" herein;
an increase of $200 million in total property, plant, and equipment primarily related to the construction of transmission and distribution facilities; and

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

a decrease of $174 million in other accounts payable primarily due to the timing of vendor payments.

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

Georgia Power

Significant balance sheet changes for the three months ended March 31, 2025 included:

an increase of $1.6 billion in long-term debt (including securities due within one year) primarily due to issuances of senior notes;
an increase of $1.2 billion in total property, plant, and equipment primarily related to the construction of generation, transmission, and distribution facilities, including costs associated with Plant Yates Units 8, 9, and 10;
an increase of $745 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 $582 million in accounts payable primarily related to storm restoration costs;
a decrease of $376 million in accrued taxes primarily due to payments for municipal franchise fees and property taxes; and
an increase of $286 million in cash and cash equivalents, as discussed further under "Analysis of Cash Flows – Georgia Power" herein.

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

Mississippi Power

Significant balance sheet changes for the three months ended March 31, 2025 included:

an increase of $99 million in long-term debt (including securities due within one year) primarily due to issuances of senior notes;
a decrease of $65 million in accrued taxes is primarily due to the payment of ad valorem taxes;
an increase of $57 million in common stockholder's equity related to net income and capital contributions from Southern Company, partially offset by dividends paid to Southern Company; and
an increase of $50 million in other deferred credits and liabilities primarily due to contributions in aid of construction.

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

Southern Power

Significant balance sheet changes for the three months ended March 31, 2025 included:

an increase of $67 million in total stockholders' equity primarily due to capital contributions from Southern Company and net income, partially offset by dividends paid to Southern Company and net distributions to noncontrolling interests and
an increase of $37 million in total property, plant, and equipment due to an increase in CWIP primarily related to the continued construction of the Millers Branch solar facility and the Kay Wind repowering project, partially offset by the continued depreciation of assets.

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

Southern Company Gas

Significant balance sheet changes for the three months ended March 31, 2025 included:

a decrease of $239 million in natural gas for sale due to higher volumes of natural gas sold;

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

an increase of $229 million in common stockholder's equity primarily related to net income, partially offset by dividends paid to Southern Company;
a decrease of $177 million in natural gas cost over recovery due to reduced price of gas billed to customers;
an increase of $167 million in total property, plant, and equipment primarily related to the construction of transportation and distribution assets;
a decrease of $141 million in notes payable due to a reduction in commercial paper borrowings;
an increase of $126 million in temporary LIFO liquidation due to use of stored natural gas; and
an increase of $111 million in total accounts receivable primarily relating to an increase of $165 million in customer accounts receivable, partially offset by a decrease of $51 million in unbilled revenues as a result of seasonality.

Financing Activities

The following table outlines long-term debt financing activities for the first three months of 2025:


	Issuances and Reofferings				Maturities and Redemptions
Company	Senior Notes		Other Long- Term Debt			Other Long- Term Debt(a)
	(in millions)
Southern Company parent	$	—	$	2,365		$	—
Alabama Power	500		2			—
Georgia Power	1,600		—			34
Mississippi Power	100		—			—


Other	—		—			2
Elimination(b)	—		—			(1)
Southern Company	$	2,200	$	2,367		$	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)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 2025, Southern Company issued approximately 2.4 million shares of common stock primarily through employee equity compensation plans. Also during the first three months of 2025, and subsequent to March 31, 2025, Southern Company entered into forward sale contracts for the issuance of shares of common stock that may be settled through June 2026. See Note (F) to the Condensed Financial Statements under "Equity Distribution Agreement" herein for additional information.

In January 2025, Southern Company issued $565 million aggregate principal amount of Series 2025A 6.50%

Junior Subordinated Notes due March 15, 2085.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

In February 2025, Southern Company issued $1.8 billion aggregate principal amount of Series 2025B 6.375% Fixed-to-Fixed Reset Rate Junior Subordinated Notes due March 15, 2055.

Alabama Power

In March 2025, Alabama Power issued $500 million aggregate principal amount of Series 2025A 5.10% Senior Notes due April 2, 2035.

Subsequent to March 31, 2025, Alabama Power repaid at maturity $250 million aggregate principal amount of its Series 2015B 2.80% Senior Notes.

Georgia Power

In March 2025, Georgia Power issued $400 million aggregate principal amount of Series 2025A Floating Rate Senior Notes due September 15, 2026, $500 million aggregate principal amount of Series 2025B 4.85% Senior Notes due March 15, 2031, and $700 million aggregate principal amount of Series 2025C 5.20% Senior Notes due March 15, 2035.

Mississippi Power

In March 2025, Mississippi Power issued $50 million aggregate principal amount of Series 2025A 5.01% Senior Notes due March 15, 2030 and $50 million aggregate principal amount of Series 2025B 6.03% Senior Notes due March 15, 2055.

Credit Rating Risk

At March 31, 2025, 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 equipment purchases related to construction of facilities.

The maximum potential collateral requirements under these contracts at March 31, 2025 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	$	35	$	1	$	—	$	—	$	34	$	—
At BBB- and/or Baa3	488		2		60		—		426		—
At BB+ and/or Ba1 or below	3,933		427		2,624		276		1,367		13

(*)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, 2025.

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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