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

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


			Page
Combined Management's Discussion and Analysis of Financial Condition and Results of Operations
Overview			84
Results of Operations			85
Southern Company			85
Alabama Power			91
Georgia Power			94
Mississippi Power			97
Southern Power			100
Southern Company Gas			104
Future Earnings Potential			108
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 distribution of natural gas and sale of 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 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

Alabama Power

In December 2025, the Alabama PSC issued a consent order to keep retail rates stable through 2027. On April 2, 2026, the State of Alabama enacted legislation providing that retail base rates established and in place on October 1, 2026 may not be increased before January 1, 2029 for utilities that are regulated by the Alabama PSC and that provide retail electric service. The ultimate outcome of this matter cannot be determined at this time. See Note 2 to the financial statements under "Alabama Power" in Item 8 of the Form 10-K for additional information.

Southern Power

During the three months ended March 31, 2026, Southern Power committed to development projects to upgrade certain turbines at its existing Franklin and Wansley natural gas facilities, which are projected to add up to 400 MWs of incremental capacity. Commercial operations for the incremental capacity at the natural gas facilities are projected to occur between the second quarter 2029 and the first quarter 2031. The ultimate outcome of these matters cannot be determined at this time. In addition, in the first quarter 2026 and subsequent to March 31, 2026, Southern Power placed in service 51 MWs of the 200-MW repowering project at the Kay wind facility. See Note (K) to the Condensed Financial Statements under "Southern Power" herein for additional information.

At March 31, 2026, Southern Power's average investment coverage ratio for its generating assets, including those owned with various partners, based on the ratio of investment under contract to total investment using the respective facilities' net book value (or expected in-service value for facilities under construction) as the investment amount was 97% through 2030 and 88% through 2035, with an average remaining contract duration of approximately 12 years.

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 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$22	1.6

Consolidated net income attributable to Southern Company in the first quarter 2026 was $1.36 billion ($1.21 per share) compared to $1.33 billion ($1.21 per share) for the corresponding period in 2025. The increase was primarily due to increases in retail electric revenues associated with sales growth, higher natural gas revenues associated with base rate increases, higher non-fuel-related wholesale electric revenues, and an increase in AFUDC equity, partially offset by an increase in depreciation and amortization, decreases in retail electrics revenues associated with weather impacts, and an increase in interest expense.

Retail Electric Revenues

In the first quarter 2026, retail electric revenues were $4.64 billion compared to $4.60 billion for the corresponding period in 2025. Details of the changes in retail electric revenues were as follows:


	First Quarter 2026 vs. First Quarter 2025
		(change in millions)		(% change)
Rates and pricing		$	(21)	(0.5)	%
Sales growth		81		1.8
Weather		(69)		(1.5)
Fuel and other cost recovery		48		1.0
Retail electric revenues		$	39	0.8	%

Changes in rates and pricing resulted in a decrease in revenues in the first quarter 2026 when compared to the corresponding period in 2025 primarily due to lower contributions from commercial and industrial customers with variable demand-driven pricing at Georgia Power, partially offset by increases in PEP rates at Mississippi Power. See Note 2 to the financial statements under "Mississippi Power – Performance Evaluation Plan" in Item 8 of the Form 10-K for additional information.

Changes in sales resulted in an increase in revenues in the first quarter 2026 when compared to the corresponding period in 2025. Weather-adjusted residential KWH sales increased 0.9% in the first quarter 2026 primarily due to customer growth. Weather-adjusted commercial KWH sales increased 4.6% in the first quarter 2026 primarily due to increased customer usage, largely driven by data centers at Georgia Power. Industrial KWH sales increased 1.5% in the first quarter 2026 primarily due to increases in the primary metals, pipeline, and stone, clay, and glass sectors, partially offset by decreases in the paper and chemicals sectors.

Fuel and other cost recovery revenues increased $48 million in the first quarter 2026 compared to the corresponding period in 2025 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 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$221	29.7

In the first quarter 2026, wholesale electric revenues were $965 million compared to $744 million for the corresponding period in 2025. The increase was primarily due to an increase in energy revenues associated with a $145 million increase related to the average cost per KWH sold primarily resulting from higher fuel and purchased power prices and a $76 million increase related to the volume of KWHs sold resulting from higher demand.

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 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$23	9.5

In the first quarter 2026, other electric revenues were $265 million compared to $242 million for the corresponding period in 2025. The increase was primarily due to increases of $15 million in open access transmission tariff sales at the traditional electric operating companies and $8 million in realized gains associated with price stability products for retail customers on variable demand-driven pricing tariffs at Georgia Power.

Natural Gas Revenues

In the first quarter 2026, natural gas revenues were $2.2 billion compared to $1.8 billion for the corresponding period in 2025. Details of the changes in natural gas revenues were as follows:


	First Quarter 2026 vs. First Quarter 2025
		(change in millions)		(% change)
Rates		$	76	4.1	%
Gas costs and other cost recovery		245		13.3
Gas marketing services		32		1.8
Other		(1)		(0.1)
Natural gas revenues		$	352	19.1	%

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 2026 compared to the corresponding period in 2025 primarily due to base rate increases at Nicor Gas and Atlanta Gas Light. 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 associated with gas costs and other cost recovery increased in the first quarter 2026 compared to the corresponding period in 2025 primarily due to higher cost of natural gas driven by higher natural gas prices, as well as increases in other expenses passed through to customers. See "Cost of Natural Gas" herein for additional information. 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 2026 compared to the corresponding period in 2025 primarily due to higher commodity prices, partially offset by weather impacts.

Other Revenues


First Quarter 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$(13)	(3.7)

In the first quarter 2026, other revenues were $336 million compared to $349 million for the corresponding period in 2025. The decrease was primarily due to a decrease of $18 million in unregulated sales associated with energy conservation projects at Georgia Power and $7 million in customer charges related to contributions in aid of construction included in rates in 2025 at Mississippi Power, partially offset by an increase of $13 million in unregulated sales associated with power delivery construction and maintenance projects at Georgia Power.

Fuel and Purchased Power Expenses


	First Quarter 2026 vs. First Quarter 2025
		(change in millions)		(% change)
Fuel		$	199	15.4	%
Purchased power		(6)		(2.4)
Total fuel and purchased power expenses		$	193

In the first quarter 2026, total fuel and purchased power expenses were $1.7 billion compared to $1.5 billion for the corresponding period in 2025. The increase was due to a $99 million increase related to the average cost of fuel and purchased power and a $94 million net 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 2026	First Quarter 2025
Total generation (in billions of KWHs)	47	46
Total purchased power (in billions of KWHs)	4	5
Sources of generation (percent) —
Gas	50	50
Coal	20	19
Nuclear	20	20
Hydro	2	3
Wind, Solar, and Other	8	8
Cost of fuel, generated (in cents per net KWH)—
Gas	4.71	4.17
Coal	3.56	4.02
Nuclear	0.79	0.84
Average cost of fuel, generated (in cents per net KWH)	3.56	3.35
Average cost of purchased power (in cents per net KWH)(*)	6.09	5.50

(*)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 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$252	37.4

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 84.2% of the total cost of natural gas in the first quarter 2026.

In the first quarter 2026, cost of natural gas was $926 million compared to $674 million for the corresponding period in 2025. The increase reflects higher gas cost recovery as a result of a 38.0% increase in natural gas prices.

Cost of Other Sales


First Quarter 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$(18)	(9.0)

In the first quarter 2026, cost of other sales was $181 million compared to $199 million for the corresponding period in 2025. The decrease was primarily related to a decrease of $25 million in expenses at PowerSecure primarily related to distributed infrastructure and energy efficiency projects, partially offset by an increase of $11 million in expenses associated with unregulated power delivery construction and maintenance projects at Georgia Power.

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 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$34	2.1

In the first quarter 2026, other operations and maintenance expenses were $1.65 billion compared to $1.62 billion for the corresponding period in 2025. The increase was primarily due to a $24 million increase in certain employee compensation and benefit expenses, $20 million in weather-related damage at a Southern Power solar project, and increases of $15 million in transmission and distribution expenses at the traditional electric operating companies, $14 million in customer education and assistance expenses at Georgia Power, $13 million in technology infrastructure and application production costs, $10 million in expenses at PowerSecure primarily related to distributed infrastructure projects, and $7 million related to certain deferred expenses at Southern Company Gas. Partially offsetting the increase was a $21 million decrease associated with utilization of the reliability reserve to offset reliability-related transmission, distribution, and generation expenses at Alabama Power, a $21 million increase in nuclear property insurance refunds at Alabama Power and Georgia Power, an $18 million decrease in planned outages at the traditional electric operating companies, and an $18 million decrease in legal expenses at Southern Company Gas.

Depreciation and Amortization


First Quarter 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$134	10.4

In the first quarter 2026, depreciation and amortization was $1.4 billion compared to $1.3 billion for the corresponding period in 2025. The increase was primarily due to increases of $127 million in accelerated depreciation related to wind repowering projects at Southern Power and $102 million associated with additional plant in service, partially offset by a decrease of $98 million resulting from the extension of Georgia Power's 2022 ARP. See Note 2 to the financial statements under "Georgia Power – Rate Plans" for additional information related to Georgia Power's 2022 ARP. Also see Note (K) to the Condensed Financial Statements under "Southern Power – Wind Repowering Projects" herein and Notes 5 and 15 to the financial statements under "Depreciation and Amortization – Southern Power" and "Southern Power – Wind Repowering Projects," respectively, in Item 8 of the Form 10-K for additional information regarding Southern Power's wind repowering projects.

Taxes Other Than Income Taxes


First Quarter 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$19	4.3

In the first quarter 2026, taxes other than income taxes were $464 million compared to $445 million for the corresponding period in 2025. The increase was primarily due to increases of $7 million in property taxes primarily related to an increase in the assessed value of property and $6 million in revenue taxes at Nicor Gas as a result of higher natural gas revenues.

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 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$48	65.8

In the first quarter 2026, allowance for equity funds used during construction was $121 million compared to $73 million for the corresponding period in 2025. The increase was primarily associated with an increase in capital expenditures subject to AFUDC at Georgia Power.

Earnings from Equity Method Investments


First Quarter 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$18	56.3

In the first quarter 2026, earnings from equity method investments were $50 million compared to $32 million for the corresponding period in 2025. The increase was primarily due to an increase of $10 million at Southern Holdings related to investment gains and losses and a $7 million increase at Southern Company Gas related to SNG. See Note 7 to the financial statements in Item 8 of the Form 10-K and Note (E) to the Condensed Financial Statements under "Southern Company" and "Southern Company Gas" herein for additional information.

Interest Expense, Net of Amounts Capitalized


First Quarter 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$64	9.0

In the first quarter 2026, interest expense, net of amounts capitalized was $778 million compared to $714 million for the corresponding period in 2025. The increase primarily reflects approximately $56 million related to higher average outstanding borrowings, an $11 million loss associated with the extinguishment of debt at the parent company, and a $7 million increase in interest associated with PPAs accounted for as finance leases at Georgia Power, partially offset by an increase of $23 million in capitalized interest and AFUDC debt associated with increased capital expenditures. See FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" and "Financing Activities" herein for additional information.

Income Taxes


First Quarter 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$(52)	(18.6)

In the first quarter 2026, income taxes were $228 million compared to $280 million for the corresponding period in 2025. The decrease was primarily due to an increase of $35 million related to higher wind PTCs resulting from the purchase of the noncontrolling membership interest in the SP Wind tax equity partnership at Southern Power and an increase of $16 million in amortization of federal PTCs at Georgia Power. See Note (G) to the Condensed Financial Statements herein and Note 15 to the financial statements under "Southern Power – Purchase of Renewable Facility Interests" in Item 8 of the Form 10-K for additional information.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Net Loss Attributable to Noncontrolling Interests


First Quarter 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$46	71.9

Substantially all noncontrolling interests relate to renewable projects at Southern Power. In the first quarter 2026, net loss attributable to noncontrolling interests was $18 million compared to $64 million for the corresponding period in 2025. The decrease was primarily due to $41 million in lower HLBV loss allocations to Southern Power's tax equity partners, primarily resulting from Southern Power's purchase of the noncontrolling membership interests in the SP Wind tax equity partnership, and $5 million in higher income allocations to Southern Power's equity partners. See Note 15 to the financial statements under "Southern Power – Purchase of Renewable Facility Interests" in Item 8 of the Form 10-K for additional information.

Alabama Power

Net Income


First Quarter 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$50	13.3

Alabama Power's net income in the first quarter 2026 was $425 million compared to $375 million for the corresponding period in 2025. The increase was primarily due to a decrease in other operations and maintenance expenses and an increase in retail revenues associated with sales growth, partially offset by weather impacts.

Retail Revenues

In the first quarter 2026, retail revenues were $1.73 billion compared to $1.72 billion for the corresponding period in 2025. Details of the changes in retail revenues were as follows:


	First Quarter 2026 vs. First Quarter 2025
		(change in millions)		(% change)
Rates and pricing		$	3	0.2	%
Sales growth		34		2.0
Weather		(39)		(2.3)
Fuel and other cost recovery		7		0.4
Retail revenues		$	5	0.3	%

Changes in rates and pricing resulted in an increase in revenues in the first quarter 2026 as compared to the corresponding period in 2025 primarily due to an increase in Rate CNP Compliance revenues.

Changes in sales resulted in an increase in revenues in the first quarter 2026 as compared to the corresponding period in 2025. Weather-adjusted residential KWH sales increased 2.2% primarily due to increased customer usage and customer growth. Weather-adjusted commercial KWH sales increased 0.3% primarily due to customer growth. Industrial KWH sales increased 4.0% primarily due to an increase in the primary metals sector.

Fuel and other cost recovery revenues increased in the first quarter 2026 as compared to the corresponding period in 2025 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.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Wholesale Revenues – Non-Affiliates


First Quarter 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$26	28.6

In the first quarter 2026, wholesale revenues from sales to non-affiliates were $117 million compared to $91 million for the corresponding period in 2025. The increase consisted of a $36 million increase in energy revenues due to increases of $31 million related to the average cost per KWH sold due to higher Southern Company system fuel and purchased power prices and $5 million related to the volume of KWH sales associated with higher market demand, partially offset by a $10 million decrease in non-fuel revenues from wholesale capacity contracts. The decrease in capacity revenues was primarily due to the expiration of a power sales agreement in December 2025, partially offset by the commencement of a new power sales agreement in October 2025 associated with the acquisition of the Lindsay Hill Generating Station. See Note 15 to the financial statements under "Alabama Power" in Item 8 of the Form 10-K for additional information.

Wholesale Revenues – Affiliates


First Quarter 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$50	72.5

In the first quarter 2026, wholesale revenues from sales to affiliates were $119 million compared to $69 million for the corresponding period in 2025. The increase was primarily due to increases of 35.9% in the volume of KWH sales due to affiliated company energy needs and 26.3% in the price of energy due to an increase in natural gas prices.

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

Fuel and Purchased Power Expenses


	First Quarter 2026 vs. First Quarter 2025
		(change in millions)		(% change)
Fuel		$	42	10.9	%
Purchased power – non-affiliates		4		5.8
Purchased power – affiliates		18		32.7
Total fuel and purchased power expenses		$	64

In the first quarter 2026, total fuel and purchased power expenses were $574 million compared to $510 million for the corresponding period in 2025. The increase was due to a $53 million increase related to the average cost of fuel and purchased power and an $11 million net 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 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.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

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.

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


	First Quarter 2026	First Quarter 2025
Total generation (in billions of KWHs)	16	15
Total purchased power (in billions of KWHs)	2	2
Sources of generation (percent) —
Coal	35	35
Gas	33	33

Nuclear	26	24
Hydro	6	8
Cost of fuel, generated (in cents per net KWH) —
Coal	3.37	3.43
Gas	3.99	3.58

Nuclear	0.72	0.70
Average cost of fuel, generated (in cents per net KWH)	2.87	2.76
Average cost of purchased power (in cents per net KWH)(*)	9.65	7.52

(*)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 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$(70)	(15.1)

In the first quarter 2026, other operations and maintenance expenses were $393 million compared to $463 million for the corresponding period in 2025. The decrease was primarily due to decreases of $28 million in planned outages, $21 million associated with utilization of the reliability reserve to offset reliability-related transmission, distribution, and generation expenses, and $11 million associated with higher nuclear property insurance refunds and $10 million of deferred costs related to the Jurisdictional Separation Study Order. See Note (B) to the Condensed Financial Statements under "Alabama Power – Reliability Reserve Accounting Order" herein and Note 2 to the financial statements under "Alabama Power – Jurisdictional Separation Study Order" in Item 8 of the Form 10-K for additional information.

Income Taxes


First Quarter 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$18	16.2

In the first quarter 2026, income taxes were $129 million compared to $111 million for the corresponding period in 2025. The increase was primarily due to higher pre-tax earnings.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Georgia Power

Net Income


First Quarter 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$32	5.4

Georgia Power's net income in the first quarter 2026 was $628 million compared to $596 million for the corresponding period in 2025. The increase was primarily due to an increase in AFUDC equity and higher non-fuel-related wholesale revenues, partially offset by an increase in other operations and maintenance expenses.

Retail Revenues

In the first quarter 2026, retail revenues were $2.64 billion compared to $2.63 billion for the corresponding period in 2025. Details of the changes in retail revenues were as follows:


	First Quarter 2026 vs. First Quarter 2025
		(change in millions)		(% change)
Rates and pricing		$	(43)	(1.6)	%
Sales growth		47		1.8
Weather		(27)		(1.0)
Fuel cost recovery		31		1.1
Retail revenues		$	8	0.3	%

Changes in rates and pricing resulted in a decrease in revenues in the first quarter 2026 as compared to the corresponding period in 2025 primarily due to lower contributions from commercial and industrial customers with variable demand-driven pricing.

Changes in sales resulted in an increase in revenues in the first quarter 2026 as compared to the corresponding period in 2025. Weather-adjusted residential KWH sales increased 0.4% primarily due to customer growth, partially offset by decreased customer usage. Weather-adjusted commercial KWH sales increased 6.4% primarily due to additional sales from data centers. Weather-adjusted industrial KWH sales were flat primarily due to increases in the electronics and stone, clay, and glass sectors, offset by a decrease in the paper sector.

Fuel revenues and costs are allocated between retail and wholesale jurisdictions. Retail fuel cost recovery revenues increased in the first quarter 2026 as compared to the corresponding period in 2025 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 under "Georgia Power – Fuel Cost Recovery" 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 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$83	57.6

In the first quarter 2026, wholesale revenues were $227 million compared to $144 million for the corresponding period in 2025. The increase was due to a $74 million increase in energy revenues due to increases of $41 million related to the average cost per KWH sold due to higher Southern Company system fuel and purchased power prices, $25 million in non-fuel-related energy revenues from wholesale contracts, and $8 million related to the volume of

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

KWH sales associated with higher market demand, as well as a $9 million increase in capacity revenues from new and existing power sales agreements.

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 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$14	5.3

In the first quarter 2026, other revenues were $277 million compared to $263 million for the corresponding period in 2025. The increase was primarily due to increases of $13 million in unregulated sales associated with power delivery construction and maintenance projects, $13 million in open access transmission tariff sales, and $8 million in realized gains associated with price stability products for retail customers on variable demand-driven pricing tariffs, partially offset by a decrease of $18 million in unregulated sales associated with energy conservation projects.

Fuel and Purchased Power Expenses


	First Quarter 2026 vs. First Quarter 2025
		(change in millions)		(% change)
Fuel		$	77	14.7	%
Purchased power – non-affiliates		(3)		(1.9)
Purchased power – affiliates		25		9.5
Total fuel and purchased power expenses		$	99

In the first quarter 2026, total fuel and purchased power expenses were $1.0 billion compared to $0.9 billion for the corresponding period in 2025. The increase was due to a $68 million increase related to the average cost of fuel and purchased power and a $31 million net 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 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.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

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


	First Quarter 2026	First Quarter 2025
Total generation (in billions of KWHs)	16	15
Total purchased power (in billions of KWHs)	9	9
Sources of generation (percent) —
Gas	42	40

Nuclear	33	36
Coal	23	21
Hydro and other	2	3
Cost of fuel, generated (in cents per net KWH) —
Gas	4.75	4.09

Nuclear	0.84	0.92
Coal	3.76	4.72
Average cost of fuel, generated (in cents per net KWH)	3.21	3.06
Average cost of purchased power (in cents per net KWH)(*)	5.96	5.24

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

Other Operations and Maintenance Expenses


First Quarter 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$38	6.0

In the first quarter 2026, other operations and maintenance expenses were $672 million compared to $634 million for the corresponding period in 2025. The increase was primarily due to increases of $14 million in customer education and assistance expenses, $11 million in certain generation expenses primarily due to planned outages, $6 million in certain employee compensation and benefit expenses, and $5 million in technology infrastructure and application production costs, partially offset by a $10 million increase in nuclear property insurance refunds.

Depreciation and Amortization


First Quarter 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$(19)	(3.8)

In the first quarter 2026, depreciation and amortization was $484 million compared to $503 million for the corresponding period in 2025. The decrease was primarily due to a decrease of $98 million resulting from the extension of the 2022 ARP, partially offset by an increase of $72 million from additional plant in service. See Note 2 to the financial statements under "Georgia Power – Rate Plans" in Item 8 of the Form 10-K for additional information.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Allowance for Equity Funds Used During Construction


First Quarter 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$49	102.1

In the first quarter 2026, allowance for equity funds used during construction was $97 million compared to $48 million for the corresponding period in 2025. The increase was primarily due to an increase in capital expenditures subject to AFUDC.

Interest Expense, Net of Amounts Capitalized


First Quarter 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$17	9.1

In the first quarter 2026, interest expense, net of amounts capitalized was $204 million compared to $187 million for the corresponding period in 2025. The increase was primarily associated with increases of approximately $25 million related to higher average outstanding borrowings and $7 million in interest associated with PPAs accounted for as finance leases, partially offset by an increase of $16 million in AFUDC debt related to increased capital expenditures. See FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" and "Financing Activities" herein for additional information.

Income Taxes


First Quarter 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$(13)	(13.3)

In the first quarter 2026, income taxes were $85 million compared to $98 million for the corresponding period in 2025. The decrease was primarily due to an increase of $16 million in amortization of federal PTCs. See Note (G) to the Condensed Financial Statements herein for additional information.

Mississippi Power

Net Income


First Quarter 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$5	9.1

Mississippi Power's net income in the first quarter 2026 was $60 million compared to $55 million for the corresponding period in 2025. The increase was primarily due to higher retail revenues associated with changes in rates and pricing, partially offset by a decrease in other revenues and an increase in other operations and maintenance expenses.

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 2026, retail revenues were $273 million compared to $248 million for the corresponding period in 2025. Details of the changes in retail revenues were as follows:


	First Quarter 2026 vs. First Quarter 2025
		(change in millions)		(% change)
Rates and pricing		$	18	7.3	%
Sales decline		—		—
Weather		(3)		(1.2)
Fuel and other cost recovery		10		4.0
Retail revenues		$	25	10.1	%

Changes in rates and pricing resulted in an increase in revenues in the first quarter 2026 as compared to the corresponding period in 2025 primarily due to increases in PEP rates. See Note 2 to the financial statements under "Mississippi Power – Performance Evaluation Plan" in Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements under "Mississippi Power – Performance Evaluation Plan" herein for additional information.

Changes in sales resulted in an immaterial change in revenues in the first quarter 2026 as compared to the corresponding period in 2025. Weather-adjusted residential KWH sales decreased 1.8% primarily due to decreased customer usage. Weather-adjusted commercial KWH sales increased 1.5% primarily due to increased customer usage. Industrial KWH sales decreased 1.5% primarily due to decreases in the chemicals and oil and gas extraction sectors.

Fuel and other cost recovery revenues increased in the first quarter 2026 as compared to the corresponding period in 2025 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 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$16	22.5

In the first quarter 2026, wholesale revenues from sales to non-affiliates were $87 million compared to $71 million for the corresponding period in 2025. The increase was due to a $9 million increase in opportunity sales, a $4 million increase associated with MRA customers primarily due to pricing and higher recoverable fuel costs, partially offset by milder weather, and a $3 million increase associated with new and existing 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

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

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 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$16	19.8

In the first quarter 2026, wholesale revenues from sales to affiliates were $97 million compared to $81 million for the corresponding period in 2025. The increase was primarily due to increases of $13 million related to the price of energy driven by natural gas prices and $3 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.

Other Revenues


First Quarter 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$(5)	(25.0)

In the first quarter 2026, other revenues were $15 million compared to $20 million for the corresponding period in 2025. The decrease was primarily due to customer charges related to contributions in aid of construction included in rates in 2025.

Fuel and Purchased Power Expenses


	First Quarter 2026 vs. First Quarter 2025
		(change in millions)		(% change)
Fuel		$	29	18.7	%
Purchased power		10		90.9
Total fuel and purchased power expenses		$	39

In the first quarter 2026, total fuel and purchased power expenses were $205 million compared to $166 million for the corresponding period in 2025. The increase was primarily due to a $37 million increase related to the average cost of fuel and purchased power, of which $7 million is related to capacity.

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.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

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


	First Quarter 2026	First Quarter 2025
Total generation (in millions of KWHs)	4,554	4,538
Total purchased power (in millions of KWHs)	241	188
Sources of generation (percent) –
Gas	94	91
Coal	6	9
Cost of fuel, generated (in cents per net KWH) –
Gas	4.30	3.50
Coal	4.47	4.94
Average cost of fuel, generated (in cents per net KWH)	4.31	3.65
Average cost of purchased power (in cents per net KWH)	8.67	5.78

Other Operations and Maintenance Expenses


First Quarter 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$4	4.8

For first quarter 2026, other operations and maintenance expenses were $88 million compared to $84 million for the corresponding period in 2025. The increase was primarily due to increases of $5 million in generation expenses primarily associated with non-outage costs, $2 million in expenses associated with unregulated products and services, and $2 million related to distribution expenses, partially offset by a decrease of $6 million due to utilization of the retail reliability reserve to offset generation, transmission, and distribution expenses. See Note (B) to the Condensed Financial Statements under "Mississippi Power – Reliability Reserve Accounting Order" herein for additional information.

Southern Power

Net Income Attributable to Southern Power


First Quarter 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$(83)	(95.4)

Net income attributable to Southern Power in the first quarter 2026 was $4 million compared to $87 million for the corresponding period in 2025. The decrease was primarily due to higher accelerated depreciation related to wind repowering projects and an increase in other operations and maintenance expenses associated with hail damage to solar panels at the Millers Branch solar project, partially offset by higher revenues due to higher market prices and increased demand for energy related to weather impacts. See Note (K) to the Condensed Financial Statements under "Southern Power – Wind Repowering Projects" herein and Notes 5 and 15 to the financial statements under "Depreciation and Amortization – Southern Power" and "Southern Power," respectively, in Item 8 of the Form 10-K for additional information.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Operating Revenues


First Quarter 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$114	20.1

Total operating revenues include PPA capacity revenues derived primarily from long-term contracts associated with natural gas facilities and PPA energy revenues derived from long-term contracts associated with 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 2026		First Quarter 2025
	(in millions)
PPA capacity revenues	$	122	$	121
PPA energy revenues	479		373
Total PPA revenues	601		494
Non-PPA revenues	76		69
Other revenues	4		4
Total operating revenues	$	681	$	567

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

In the first quarter 2026, total operating revenues were $681 million, reflecting a $114 million, or 20.1%, increase from the corresponding period in 2025. The change in operating revenues was primarily due to the following:

PPA energy revenues increased $106 million, or 28.4%, primarily due to an increase of $70 million related to the volume of KWHs sold under natural gas PPAs and an increase of $38 million driven by fuel and purchased power prices.
Non-PPA revenues increased $7 million, or 10.1%, primarily due to an increase of $11 million driven by the market price of energy, partially offset by a decrease of $2 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 2026	First Quarter 2025
	(in billions of KWHs)
Generation	10.7	10.9
Purchased power	0.9	0.5
Total generation and purchased power	11.6	11.4

Total generation and purchased power (excluding solar, wind, fuel cells, and tolling agreements)	5.8	5.4

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 2026 vs. First Quarter 2025
		(change in millions)		(% change)
Fuel		$	47	22.7	%
Purchased power		30		107.1
Total fuel and purchased power expenses		$	77

In the first quarter 2026, total fuel and purchased power expenses increased $77 million, or 32.8%, as compared to the corresponding period in 2025. Fuel expense increased $47 million primarily due to an increase of $49 million associated with the average cost of fuel. Purchased power expense increased $30 million due to an increase of $26 million related to the volume of KWHs purchased and an increase of $4 million 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)

Other Operations and Maintenance Expenses


First Quarter 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$14	11.4

In the first quarter 2026, other operations and maintenance expenses were $137 million compared to $123 million for the corresponding period in 2025. The increase was primarily due to hail damage to solar panels at the Millers Branch solar project, partially offset by a decrease in generation expenses related to planned outages.

Depreciation and Amortization


First Quarter 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$126	82.9

In the first quarter 2026, depreciation and amortization was $278 million compared to $152 million for the corresponding period in 2025. The increase was primarily due to a $127 million increase in accelerated depreciation related to wind repowering projects. See Note (K) to the Condensed Financial Statements under "Southern Power – Wind Repowering Projects" herein and Notes 5 and 15 to the financial statements under "Depreciation and Amortization – Southern Power" and "Southern Power – Wind Repowering Projects," respectively, in Item 8 of the Form 10-K for additional information.

Income Taxes (Benefit)


First Quarter 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$(69)	N/M

In the first quarter 2026, income tax benefit was $70 million compared to $1 million for the corresponding period in 2025. The increase was primarily due to higher wind PTCs resulting from Southern Power's purchase of the noncontrolling membership interests in the SP Wind tax equity partnership, as well as a change in pre-tax earnings attributable to Southern Power, including the impact of accelerated depreciation related to wind repowering projects. See Note (G) to the Condensed Financial Statements and Note (K) to the Condensed Financial Statements under "Southern Power – Wind Repowering Projects" herein and Notes 5 and 15 to the financial statements under "Depreciation and Amortization – Southern Power" and "Southern Power," respectively, in Item 8 of the Form 10-K for additional information.

Net Loss Attributable to Noncontrolling Interests


First Quarter 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$46	71.9

In the first quarter 2026, net loss attributable to noncontrolling interests was $18 million compared to $64 million for the corresponding period in 2025. The decrease was due to $41 million in lower HLBV loss allocations to tax equity partners, primarily resulting from Southern Power's purchase of the noncontrolling membership interests in the SP Wind tax equity partnership, and $5 million in higher income allocations to equity partners. See Note 15 to the financial statements under "Southern Power – Purchase of Renewable Facility Interests" in Item 8 of the Form 10-K for additional information.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Southern Company Gas

Southern Company Gas uses Heating Degree Days to measure weather and the operational effects on its business. Generally, increased Heating Degree Days result in higher demand for natural gas on Southern Company Gas' distribution system. However, Southern Company Gas has various regulatory mechanisms, such as weather and revenue normalization and straight-fixed-variable rate design, which limit positive or negative impacts to income from 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 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 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$29	6.9

Southern Company Gas' net income in the first quarter 2026 was $447 million compared to $418 million for the corresponding period in 2025. The increase was primarily due to a $22 million increase in net income at gas distribution operations.

Natural Gas Revenues

In the first quarter 2026, natural gas revenues were $2.2 billion compared to $1.8 billion for the corresponding period in 2025. Details of the changes in natural gas revenues were as follows:


	First Quarter 2026 vs. First Quarter 2025
		(change in millions)		(% change)

Rates		$	76	4.1	%
Gas costs and other cost recovery		245		13.3
Gas marketing services		32		1.8

Other		(1)		(0.1)
Natural gas revenues		$	352	19.1	%

Changes in rates resulted in an increase in revenues in the first quarter 2026 as compared to the corresponding period in 2025 primarily due to base rate increases at Nicor Gas and Atlanta Gas Light. 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 associated with gas costs and other cost recovery increased in the first quarter 2026 as compared to the corresponding period in 2025 primarily due to higher cost of natural gas driven by higher natural gas prices, as well as increases in other expenses passed through to customers. See "Cost of Natural Gas" herein for additional information.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Revenues from gas marketing services increased in the first quarter 2026 as compared to the corresponding period in 2025 primarily due to higher commodity prices, partially offset by weather impacts.

Cost of Natural Gas


First Quarter 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$252	37.4

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 84.2% of the total cost of natural gas in the first quarter 2026. 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.

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


	First Quarter
		2026	2025	2026 vs. 2025
Gas distribution operations (mmBtu in millions)
Firm		282	302	(6.6)	%
Interruptible		23	23	—
Total		305	325	(6.2)	%

Gas marketing services (mmBtu in millions)
Firm		27	29	(6.9)	%




Interruptible large commercial and industrial		3	4	(25.0)
Total		30	33	(9.1)	%

Other Operations and Maintenance Expenses


First Quarter 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$27	8.5

In the first quarter 2026, other operations and maintenance expenses were $343 million compared to $316 million for the corresponding period in 2025. The increase was primarily due to a $20 million increase related to employee compensation and benefit expenses, a $7 million increase related to certain deferred expenses, a $7 million increase in expenses passed through to customers at gas distribution operations, and a $4 million increase related to expenses for gas mains, partially offset by an $18 million decrease in legal expenses.

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 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$14	8.3

In the first quarter 2026, depreciation and amortization was $183 million compared to $169 million for the corresponding period in 2025. The increase was primarily due to additional plant in service related to continued investments at the natural gas distribution utilities.

Taxes Other Than Income Taxes


First Quarter 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$8	8.2

In the first quarter 2026, taxes other than income taxes were $105 million compared to $97 million for the corresponding period in 2025. The increase was primarily due to an increase in revenue taxes as a result of higher natural gas revenues at Nicor Gas. Revenue taxes imposed on Nicor Gas are recoverable from its customers.

Earnings from Equity Method Investments


First Quarter 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$7	17.9

In the first quarter 2026, earnings from equity method investments were $46 million compared to $39 million for the corresponding period in 2025. The increase was primarily due to higher revenue from short-term natural gas storage and borrowing services and prior period customer refunds, both 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 under "Southern Company Gas" herein for additional information.

Interest Expense, Net of Amounts Capitalized


First Quarter 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$13	14.1

In the first quarter 2026, interest expense, net of amounts capitalized was $105 million compared to $92 million for the corresponding period in 2025. The increase was primarily associated with higher average outstanding borrowings and an interest rate adjustment. See FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" herein for additional information on borrowings.

Income Taxes


First Quarter 2026 vs. First Quarter 2025
	(change in millions)	(% change)
	$15	11.5

In the first quarter 2026, income taxes were $145 million compared to $130 million for the corresponding period in 2025. The increase was primarily due to higher pre-tax earnings.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

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.


	2026						2025
	Operating Revenues		Operating Expenses		Net Income		Operating Revenues		Operating Expenses		Net Income
	(in millions)








First Quarter
Gas distribution operations	$	1,900	$	1,368	$	337	$	1,570	$	1,082	$	315
Gas pipeline investments	8		2		33		8		3		27
Gas marketing services	285		186		71		261		170		65
All other	2		3		6		4		2		11
Intercompany eliminations	(4)		(2)		—		(4)		(1)		—
Consolidated	$	2,191	$	1,557	$	447	$	1,839	$	1,256	$	418

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 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, 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 2026, net income increased $22 million, or 7.0%, as compared to the corresponding period in 2025, as described further below:

Operating revenues increased $330 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 $286 million primarily due to a $239 million increase in cost of natural gas as a result of higher natural gas prices compared to 2025, a $16 million increase related to employee compensation and benefit expenses, a $15 million increase in depreciation primarily due to additional plant in service related to continued investments at the natural gas distribution utilities, and a $7 million increase related to certain deferred expenses, partially offset by a $19 million decrease in legal expenses.

Interest expense, net of amounts capitalized increased $9 million primarily due to higher average outstanding borrowings and an interst rate adjustment.
Income taxes increased $12 million primarily as a result of higher pre-tax earnings.

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AND RESULTS OF OPERATIONS (Continued)

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.

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 occur in the future.

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 customer affordability concerns and 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 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. Historically, the traditional electric operating companies have entered into large load contracts that support economic development and benefit existing customers; since 2023, the traditional electric operating companies have contracts with new data centers and other large load customers covering approximately 11 gigawatts of electric load, with each contract individually representing a maximum electric load greater than 100 MWs, that have been signed by the parties without material contingencies and/or reviewed by the state regulatory commissions. These new contracts fully ramp up over several years after commencement of service. Some of these contracts are already in effect. Service under the contracts is expected to begin through 2028. The contracts contain various terms and conditions, such as minimum duration, minimum bill provisions, contribution by the customer to local construction costs, termination payment requirements, and financial security, designed to generate adequate incremental revenues associated with incremental costs to serve these customers. These growth opportunities may be affected by a variety of factors, such as energy efficiency, changes in technology, reliability and operational factors, customer demand, and government

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AND RESULTS OF OPERATIONS (Continued)

policies, which could increase or decrease the pace of growth associated with these opportunities. In addition, these opportunities present risks such as capital access and cost recovery risks. See Note 2 to the financial statements under "Georgia Power – Integrated Resource Plans" in Item 8 of the Form 10-K for additional information regarding Georgia Power's related regulatory proceedings.

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 generating 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 under current and future tax legislation and U.S. Treasury guidance; 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 IRA's expansion of the availability of federal ITCs and PTCs and the OBBB's restrictions on federal ITCs and PTCs. Also see 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, including from large customers, 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 requirements with wholesale customers; demand growth from data centers and other large load customers and associated load and operating requirements; 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 and could be influenced by changes in technology, public policy, utility efficiency programs, and customer behavior. Geopolitical conflicts (such as the current Middle East conflict) and significant changes in fiscal, monetary, or trade policies could affect actual economic activity and historical economic relationships in ways not anticipated in economic outlooks or Southern Company system plans. Additionally, changes in inflation, interest rates, and credit market conditions could affect the cost of doing business. All of these factors may impact future earnings. See RESULTS OF OPERATIONS herein for information on energy sales in the Southern Company system's service territory during the first three months of 2026.

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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, joint ventures, 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

Coal Combustion Residuals

On April 13, 2026, the EPA published a proposed rule that, if finalized, would make several revisions to the existing federal CCR regulations, including rescinding CCR management unit provisions. The proposal also provides additional clarity around the scope of beneficial use and provides for site-specific groundwater, closure, and corrective action flexibilities under federal or state CCR permits. The ultimate outcome of this matter cannot be determined at this time.

Based on compliance requirements for closure and monitoring of landfills and surface impoundments 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.

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.

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Construction Programs

The Southern Company system strategy continues to include developing and constructing new electric generating and battery energy storage 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 approved investment and a return on investment. See Note 2 to the financial statements under "Georgia Power – Integrated Resource Plans" in Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements under "Georgia Power – Construction" herein for information regarding Georgia Power's current construction projects.

Southern Power's construction program includes the Millers Branch solar project, the Kay, Grant, Grant Plains, Wake, and Bethel wind repowering projects, and the incremental capacity upgrade projects at the Franklin and Wansley natural gas facilities. The repowering projects result in accelerated depreciation related to the equipment being replaced that will continue until the projects' completion dates, which are projected to occur through the third quarter 2027. At March 31, 2026, the remaining pre-tax accelerated depreciation is projected to total approximately $335 million in 2026 and $100 million in 2027. The ultimate impact of these matters cannot be determined at this time. See Note (K) to the Condensed Financial Statements under "Southern Power" herein and Note 5 to the financial statements under "Depreciation and Amortization – Southern Power" in Item 8 of the Form 10-K for additional information.

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 approved investment and a return on investment associated with these infrastructure programs through their regulated rates, as approved by their applicable state regulatory agency. See Note 2 to the financial statements under "Southern Company Gas – Infrastructure Replacement Programs and Capital Projects" 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.

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.

Federal Tax Legislation

The OBBB modified certain renewable energy tax incentives and added eligibility restrictions for certain credits related to renewable facilities that are controlled or influenced by, or that receive material assistance from, a prohibited foreign entity.

The U.S. Treasury issued a notice on February 12, 2026, which provides interim safe harbors related to the evaluation of material assistance from a prohibited foreign entity. Southern Company is assessing this guidance and its potential implications for eligibility of technology-neutral tax credits for renewable projects for which construction begins in 2026. The U.S. Treasury has indicated that additional guidance and regulations are expected later in 2026. The ultimate outcome of this matter cannot be determined at this time.

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Corporate Alternative Minimum Tax

On February 18, 2026, the U.S. Treasury issued guidance regarding the calculation of the CAMT. The CAMT, enacted as part of the IRA, generally imposes a 15% minimum tax on a corporation's adjusted financial statement income (AFSI) for taxable years beginning after December 31, 2022, subject to applicable thresholds and adjustments under the Internal Revenue Code. The guidance includes provisions that, in certain circumstances, would permit taxpayers to reflect certain repair-related tax deductions as reductions to AFSI for purposes of computing CAMT.

Regulated utilities industry participants have engaged with the U.S. Treasury regarding the interaction of repair-related costs, regulatory accounting, and the CAMT framework. Southern Company is evaluating the guidance, including its applicability to Southern Company's specific facts and circumstances. If applicable, the guidance could reduce Southern Company's potential CAMT exposure by permitting the inclusion of certain repair-related deductions in the computation of AFSI, which could affect Southern Company's income tax expense and cash tax position in future periods. Southern Company will continue to assess the impact of the guidance and any further administrative guidance or regulatory developments.

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, 2026. 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 2026, the market price of Southern Company's common stock was $96.52 per share (based on the closing price as reported on the NYSE) and the book value was $32.93 per share, representing a market-to-book ratio of 293%, compared to $87.20, $32.18, and 271%, respectively, at the end of 2025. Southern

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AND RESULTS OF OPERATIONS (Continued)

Company's common stock dividend for the first quarter 2026 was $0.74 per share compared to $0.72 per share in the first quarter 2025.

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 or extending the retirement dates of certain generating plants, 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 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.

During the first quarter 2026, Southern Power committed to development projects to upgrade certain turbines at the Franklin and Wansley natural gas facilities. The aggregate construction costs for these projects are expected to be between $660 million and $725 million. See Note (K) to the Condensed Financial Statements under "Southern Power – Natural Gas Turbine Upgrade Projects" 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, 2025.

Fuel and purchased power costs represent a significant component of funding ongoing operations for the traditional electric operating companies and Southern Power. Fuel costs include purchases of coal (for the traditional electric operating companies) and natural gas (for the traditional electric operating companies and Southern Power), as well as the related transportation and storage. Since December 31, 2025, Georgia Power has entered into additional commitments for natural gas primarily related to its construction of generation projects. As a result, Southern Company's and Georgia Power's estimated costs for fuel commitments at March 31, 2026 increased by approximately $25 million for 2027, $150 million per year for 2028 through 2030, and $2.5 billion thereafter. See Note (B) to the Condensed Financial Statements under "Georgia Power – Construction" herein for additional information regarding Georgia Power's current construction projects.

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. In addition, Alabama Power and Georgia Power plan to utilize borrowings from the FFB. Operating cash flows provide a substantial portion of the

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Registrants' cash needs. See Note (F) to the Condensed Financial Statements under "DOE Loan Guarantee Borrowings" herein for additional information.

The amount, type, and timing of any financings in 2026, 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, 2026, the amount of subsidiary retained earnings restricted to dividend totaled $2.0 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, 2026 for the applicable Registrants:


At March 31, 2026	Southern Company		Georgia Power		Southern Power		Southern Company Gas
	(in millions)
Current liabilities in excess of current assets	$	5,357	$	2,519	$	529	$	645

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

Bank Credit Arrangements

At March 31, 2026, unused committed credit arrangements with banks were as follows:


At March 31, 2026	Southern Company parent		Alabama Power(a)		Georgia Power(b)		Mississippi Power		Southern Power(c)		Southern Company Gas(d)		SEGCO		Southern Company
	(in millions)
Unused committed credit	$	2,999	$	1,365	$	2,042	$	275	$	600	$	1,598	$	30	$	8,909

(a)Includes $15 million at Alabama Property Company, a wholly-owned subsidiary of Alabama Power. Alabama Power is not party to this arrangement.

(b)Georgia Power had $26 million of letters of credit outstanding under an uncommitted letter of credit facility at March 31, 2026.

(c)At March 31, 2026, Southern Power also had two continuing letters of credit facilities for standby letters of credit, of which $21 million was unused. In addition, Southern Power Company had $23 million of letters of credit outstanding under an uncommitted letter of credit facility at March 31, 2026. Southern Power's subsidiaries are not parties to its bank credit arrangements or letter of credit facilities.

(d)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, 2026, 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 $58 million at Mississippi Power). In addition, at

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AND RESULTS OF OPERATIONS (Continued)

March 31, 2026, Alabama Power and Georgia Power had approximately $160 million and $325 million, respectively, of fixed rate revenue bonds outstanding that are required to be remarketed within the next 12 months. Alabama Power's $160 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 under "Bank Credit Arrangements" herein for additional information.

Short-term Borrowings

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


	Short-term Debt at March 31, 2026				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	$	1,673	4.1	%	$	2,022	3.9	%	$	3,291
Alabama Power	30		3.8		10		3.8		75
Georgia Power	225		4.2		586		4.0		1,000
Mississippi Power	32		4.0		15		3.9		64
Southern Power	160		4.1		149		3.9		225
Southern Company Gas:
Southern Company Gas Capital	$	255	4.1	%	$	220	3.9	%	$	358
Nicor Gas	—		—		72		3.8		216
Southern Company Gas Total	$	255	4.1	%	$	292	3.9	%

(*)Average and maximum amounts are based upon daily balances during the three-month period ended March 31, 2026.

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Analysis of Cash Flows

Net cash flows provided from (used for) operating, investing, and financing activities for the three months ended March 31, 2026 and 2025 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, 2026
Operating activities	$	1,226	$	301	$	380	$	(49)	$	193	$	808
Investing activities	(3,421)		(509)		(2,289)		(106)		(129)		(360)
Financing activities	1,542		(83)		1,874		148		(97)		(321)

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)

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 $24 million for the three months ended March 31, 2026 as compared to the corresponding period in 2025 primarily due to the timing of vendor payments, partially offset by higher natural gas cost recovery.

The net cash used for investing activities for the three months ended March 31, 2026 was primarily related to the Subsidiary Registrants' construction programs.

The net cash provided from financing activities for the three months ended March 31, 2026 was primarily related to net issuances of long-term debt, an increase in notes payable, and issuances of common stock through the settlement of forward sale contracts, partially offset by common stock dividend payments. See Note (F) to the Condensed Financial Statements under "Equity Distribution Agreement" herein for additional information.

Alabama Power

Net cash provided from operating activities increased $74 million for the three months ended March 31, 2026 as compared to the corresponding period in 2025 primarily due to customer refunds in 2025 associated with a nuclear fuel disposal cost award and the timing of customer receivable collections, partially offset by the timing of vendor payments. See Note 3 to the financial statements under "Nuclear Fuel Disposal Costs" 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, 2026 was primarily related to gross property additions.

The net cash used for financing activities for the three months ended March 31, 2026 was primarily related to common stock dividend payments and repayment of bank term loans, partially offset by capital contributions from Southern Company and an increase in commercial paper borrowings.

Georgia Power

Net cash provided from operating activities increased $75 million for the three months ended March 31, 2026 as compared to the corresponding period in 2025 primarily due to the timing of vendor payments and storm restoration costs, partially offset by an increase in charitable donations and the timing of materials and supplies purchases. See

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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, 2026 was primarily related to gross property additions.

The net cash provided from financing activities for the three months ended March 31, 2026 was primarily related to borrowings from the FFB and capital contributions from Southern Company, partially offset by common stock dividend payments. See Note (F) to the Condensed Financial Statements under "DOE Loan Guarantee Borrowings" herein for additional information.

Mississippi Power

Net cash used for operating activities increased $38 million for the three months ended March 31, 2026 as compared to the corresponding period in 2025 primarily due to the timing of vendor payments and the timing of fossil fuel stock purchases.

The net cash used for investing activities for the three months ended March 31, 2026 was primarily related to gross property additions.

The net cash provided from financing activities for the three months ended March 31, 2026 was primarily related to capital contributions from Southern Company, the issuance of senior notes, and an increase in commercial paper borrowings, partially offset by common stock dividend payments.

Southern Power

Net cash provided from operating activities increased $47 million for the three months ended March 31, 2026 as compared to the corresponding period in 2025 primarily due to an increase in wholesale revenues, driven by higher market prices of energy, and 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, 2026 was primarily related to ongoing construction activities. See Note (K) to the Condensed Financial Statements under "Southern Power" herein for additional information.

The net cash used for financing activities for the three months ended March 31, 2026 was primarily related to common stock dividend payments and net distributions to noncontrolling interests, partially offset by an increase in commercial paper borrowings.

Southern Co****mpany Gas

Net cash provided from operating activities increased $121 million for the three months ended March 31, 2026 as compared to the corresponding period in 2025 primarily due to higher natural gas cost recovery and timing of customer receivable collections as a result of weather impacts, partially offset by lower natural gas volumes and prices and the timing of vendor payments.

The net cash used for investing activities for the three months ended March 31, 2026 was primarily related to construction of transmission and distribution assets recovered through base rates.

The net cash used for financing activities for the three months ended March 31, 2026 was primarily related to a reduction in commercial paper borrowings and common stock dividend payments.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Significant Balance Sheet Changes

Southern Company

Significant balance sheet changes for the three months ended March 31, 2026 included:

an increase of $1.7 billion in total property, plant, and equipment primarily related to the Subsidiary Registrants' construction programs;
an increase of $1.0 billion in total stockholders' equity primarily related to net income and issuances of common stock largely through the settlement of forward sale contracts, partially offset by common stock dividend payments;
an increase of $980 million in long-term debt (including securities due within one year) primarily due to the issuance of senior notes and borrowings from the FFB, partially offset by the redemption of junior subordinated notes;
an increase of $951 million in notes payable primarily due to increases in commercial paper borrowings and short-term bank debt;
a decrease of $801 million in accounts payable primarily related to the timing of vendor payments;
a decrease of $658 million in cash and cash equivalents, as reflected in the statements of cash flows and discussed further under "Analysis of Cash Flows – Southern Company" herein; and
a decrease of $657 million in accrued compensation primarily due to the timing of payments.

See "Financing Activities" and Note (F) to the Condensed Financial Statements under "Equity Distribution Agreement" and "DOE Loan Guarantee Borrowings" herein for additional information.

Alabama Power

Significant balance sheet changes for the three months ended March 31, 2026 included:

an increase of $350 million in common stockholder's equity primarily due to net income and capital contributions from Southern Company, partially offset by dividends paid to Southern Company;
a decrease of $291 million in cash and cash equivalents, as reflected in the statements of cash flows and discussed further under "Analysis of Cash Flows – Alabama Power" herein; and
a decrease of $225 million in other accounts payable primarily due to the timing of vendor payments.

Georgia Power

Significant balance sheet changes for the three months ended March 31, 2026 included:

an increase of $1.6 billion in total property, plant, and equipment primarily related to the construction of generation, transmission, and distribution facilities;
an increase of $1.5 billion 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 $943 million in long-term debt (including securities due within one year) primarily due to net borrowings from the FFB;
a decrease of $430 million in accounts payable primarily related to the timing of vendor payments; and
a decrease of $352 million in accrued taxes primarily due to payments for municipal franchise fees and property taxes.

See "Financing Activities – Georgia Power" and Notes (B) and (F) to the Condensed Financial Statements under "Georgia Power – Construction" and "DOE Loan Guarantee Borrowings," respectively, herein for additional information.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Mississippi Power

Significant balance sheet changes for the three months ended March 31, 2026 included:

an increase of $102 million in common stockholder's equity related to capital contributions from Southern Company and net income, partially offset by dividends paid to Southern Company;
an increase of $74 million in long-term debt (including securities due within one year) primarily due to the issuance of senior notes;
a decrease of $73 million in accrued taxes primarily due to the payment of ad valorem taxes;
an increase of $32 million in notes payable primarily due to commercial paper borrowings; and
an increase of $27 million in total property, plant, and equipment primarily related to the construction of transmission and distribution facilities.

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

Southern Power

Significant balance sheet changes for the three months ended March 31, 2026 included:

a decrease of $179 million in total property, plant, and equipment primarily due to the continued depreciation of assets, partially offset by the continued construction of the wind repowering projects;
a decrease of $127 million in total stockholders' equity primarily due to dividends paid to Southern Company, net distributions to noncontrolling interests, and net loss; and
an increase of $46 million in other receivables primarily related to the transfer of tax credits generated in the first quarter 2026, which were previously allocated to the SP Wind tax equity partners in 2025.

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 – Purchase of Renewable Facility Interests" in Item 8 of the Form 10-K for additional information.

Southern Company Gas

Significant balance sheet changes for the three months ended March 31, 2026 included:

an increase of $306 million in common stockholder's equity primarily related to net income, partially offset by dividends paid to Southern Company;
a decrease of $251 million in natural gas for sale primarily due to seasonality;
a decrease of $183 million in total accounts payable primarily due to lower natural gas volumes and prices and the timing of vendor payments;
an increase of $182 million in total property, plant, and equipment primarily related to the construction of transmission and distribution assets;
a decrease of $170 million in notes payable due to a reduction in commercial paper borrowings;
an increase of $122 million in cash and cash equivalents, as reflected in the statements of cash flows and discussed further under "Analysis of Cash Flows – Southern Company Gas" herein; and
an increase of $104 million in temporary LIFO liquidation due to use of stored natural gas.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Financing Activities

The following table outlines long-term debt financing activities for the first three months of 2026:


	Issuances and Reofferings				Maturities and Redemptions
Company	Senior Notes		Other Long- Term Debt			Other Long- Term Debt(a)
	(in millions)
Southern Company parent	$	—	$	1,300		$	1,250
Alabama Power	—		—			46
Georgia Power	—		1,016			28
Mississippi Power	75		—			—


Other	—		—			1
Elimination(b)	—		—			(3)
Southern Company	$	75	$	2,316		$	1,322

(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 2026, Southern Company issued approximately 8.1 million shares of common stock primarily through forward sale contract settlements and employee equity compensation plans. Proceeds from settlements of the forward sale contracts totaled approximately $506 million. Also during the first three months of 2026, Southern Company entered into additional forward sale contracts for the issuance of shares of common stock that may be settled through March 2028. See Note (F) to the Condensed Financial Statements under "Equity Distribution Agreement" herein for additional information.

In January 2026, Southern Company redeemed all $1.25 billion aggregate principal amount of its Series 2020B 4.00% Fixed-to-Fixed Reset Rate Junior Subordinated Notes due January 15, 2051.

In January 2026, Southern Company borrowed $100 million pursuant to a short-term uncommitted bank credit arrangement bearing interest at a floating rate.

In March 2026, Southern Company issued $1.3 billion aggregate principal amount of Series 2026A 6.00% Fixed-to-Fixed Reset Rate Junior Subordinated Notes due April 1, 2058.

Alabama Power

In March 2026, Alabama Power repaid at maturity its three bank term loan agreements with an aggregate principal amount of $45 million.

Table of Contents Index to Financial Statements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Georgia Power

In February 2026, Georgia Power borrowed $250 million pursuant to a short-term uncommitted bank credit arrangement which is payable on demand, following specified notice by the bank, and bears interest at a rate agreed upon by Georgia Power and the bank from time to time. In both March 2026 and subsequent to March 31, 2026, Georgia Power repaid $50 million of the short-term uncommitted bank credit arrangement, resulting in $150 million outstanding.

In March 2026, Georgia Power made initial borrowings under a multi-advance term loan facility with the FFB in an aggregate principal amount of approximately $1.0 billion at an interest rate of 5.041% through the final maturity date of December 10, 2055. The proceeds were used to reimburse Georgia Power for eligible costs relating to certain generation, battery energy storage, and transmission facilities. See Note (F) to the Condensed Financial Statements under "DOE Loan Guarantee Borrowings" herein for additional information.

Subsequent to March 31, 2026, Georgia Power repaid at maturity $325 million aggregate principal amount of its Series 2016A 3.25% Senior Notes.

Mississippi Power

In March 2026, Mississippi Power issued approximately $75 million aggregate principal amount of Series 2026A Floating Rate Senior Notes due May 15, 2076.

Credit Rating Risk

At March 31, 2026, 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, 2026 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	$	32	$	1	$	—	$	—	$	31	$	—
At BBB- and/or Baa3	463		2		36		—		424		—
At BB+ and/or Ba1 or below	3,837		425		2,496		280		1,409		33

(*)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, 2026.

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

Previous: Item 1. Financial Statements (Unaudited). · Next: Item 3. Quantitative and Qualitative Disclosures About Market Risk.