Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2019

Assets and Liabilities Measured at Fair Value on a Recurring Basis

As of September 30, 2019, assets and liabilities measured at fair value on a recurring basis during the period, together with their associated level of the fair value hierarchy, were as follows:



	Fair Value Measurements Using:
As of September 30, 2019:	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Net Asset Value as a Practical Expedient (NAV)		Total
	(in millions)
Southern Company
Assets:
Energy-related derivatives^(a)	$	297	$	156	$	34	$	—	$	487
Interest rate derivatives	—		2		—		—		2
Investments in trusts:^(b)(c)
Domestic equity	713		126		—		—		839
Foreign equity	61		204		—		—		265
U.S. Treasury and government agency securities	—		301		—		—		301
Municipal bonds	—		86		—		—		86
Pooled funds – fixed income	—		16		—		—		16
Corporate bonds	24		306		—		—		330
Mortgage and asset backed securities	—		82		—		—		82
Private equity	—		—		—		53		53
Cash and cash equivalents	1		—		—		—		1
Other	17		6		—		—		23
Cash equivalents	2,078		7		—		—		2,085
Other investments	9		15		—		—		24
Total	$	3,200	$	1,307	$	34	$	53	$	4,594
Liabilities:
Energy-related derivatives^(a)	$	412	$	227	$	28	$	—	$	667
Interest rate derivatives	—		72		—		—		72
Foreign currency derivatives	—		32		—		—		32
Contingent consideration	—		—		21		—		21
Total	$	412	$	331	$	49	$	—	$	792



	Fair Value Measurements Using:
As of September 30, 2019:	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Net Asset Value as a Practical Expedient (NAV)		Total
	(in millions)
Alabama Power
Assets:
Energy-related derivatives	$	—	$	5	$	—	$	—	$	5
Nuclear decommissioning trusts:^(b)
Domestic equity	464		114		—		—		578
Foreign equity	61		60		—		—		121
U.S. Treasury and government agency securities	—		23		—		—		23
Municipal bonds	—		1		—		—		1
Corporate bonds	24		142		—		—		166
Mortgage and asset backed securities	—		26		—		—		26
Private equity	—		—		—		53		53
Other	5		—		—		—		5
Cash equivalents	1,136		7		—		—		1,143
Other investments			15		—		—		15
Total	$	1,690	$	393	$	—	$	53	$	2,136
Liabilities:
Energy-related derivatives	$	—	$	22	$	—	$	—	$	22

Georgia Power
Assets:
Energy-related derivatives	$	—	$	3	$	—	$	—	$	3
Nuclear decommissioning trusts:^(b)(c)
Domestic equity	248		1		—		—		249
Foreign equity	—		140		—		—		140
U.S. Treasury and government agency securities	—		277		—		—		277
Municipal bonds	—		86		—		—		86
Corporate bonds	—		164		—		—		164
Mortgage and asset backed securities	—		55		—		—		55
Other	12		6		—		—		18
Cash equivalents	392		—		—		—		392
Total	$	652	$	732	$	—	$	—	$	1,384
Liabilities:
Energy-related derivatives	$	—	$	49	$	—	$	—	$	49
Interest rate derivatives	—		60		—		—		60
Total	$	—	$	109	$	—	$	—	$	109



	Fair Value Measurements Using:
As of September 30, 2019:	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Net Asset Value as a Practical Expedient (NAV)		Total
	(in millions)
Mississippi Power
Assets:
Energy-related derivatives	$	—	$	2	$	—	$	—	$	2
Cash equivalents	234		—		—		—		234
Total	$	234	$	2	$	—	$	—	$	236
Liabilities:
Energy-related derivatives	$	—	$	24	$	—	$	—	$	24

Southern Power
Assets:
Cash equivalents	$	23	$	—	$	—	$	—	$	23
Liabilities:
Energy-related derivatives	$	—	$	4	$	—	$	—	$	4
Foreign currency derivatives	—		32		—		—		32
Contingent consideration	—		—		21		—		21
Total	$	—	$	36	$	21	$	—	$	57

Southern Company Gas
Assets:
Energy-related derivatives^(a)	$	297	$	146	$	34	$	—	$	477
Non-qualified deferred compensation trusts:
Domestic equity	—		11		—		—		11
Foreign equity	—		4		—		—		4
Pooled funds – fixed income	—		16		—		—		16
Cash equivalents	1		—		—		—		1
Total	$	298	$	177	$	34	$	—	$	509
Liabilities:
Energy-related derivatives^(a)	$	412	$	128	$	28	$	—	$	568
Interest rate derivatives	—		5		—		—		5
Total	$	412	$	133	$	28	$	—	$	573


(a)	Energy-related derivatives exclude cash collateral of $166 million.


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

(c)

Includes investment securities pledged to creditors and collateral received and excludes payables related to the securities lending program. As of September 30, 2019, approximately $50 million of the fair market value of Georgia Power's nuclear decommissioning trust funds' securities were on loan to creditors under the funds' managers' securities lending program. See Note 6 to the financial statements in Item 8 of the Form 10-K for additional information.

Schedule of Increase (Decrease) In Fair Value Of Funds

The fair value of the funds, including reinvested interest and dividends and excluding the funds' expenses, increased (decreased) by the amounts shown in the table below for the three and nine months ended September 30, 2019 and 2018. The changes were recorded as a change to the regulatory assets and liabilities related to AROs for Georgia Power and Alabama Power, respectively.



	Three Months Ended September 30, 2019		Three Months Ended September 30, 2018		Nine Months Ended September 30, 2019		Nine Months Ended September 30, 2018
	(in millions)
Southern Company	$	27	$	58	$	255	$	68
Alabama Power	15		39		140		49
Georgia Power	12		19		115		19

Financial Instruments for Which Carrying Amount Did Not Equal Fair Value

As of September 30, 2019, other financial instruments for which the carrying amount did not equal fair value were as follows:



	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas^(*)
	(in millions)
Long-term debt, including securities due within one year:
Carrying amount	$	45,182	$	8,516	$	11,787	$	1,616	$	4,960	$	5,755
Fair value	49,424		9,646		13,001		1,717		5,290		6,489

(*)

The long-term debt of Southern Company Gas is recorded at amortized cost, including the fair value adjustments at the effective date of the 2016 merger with Southern Company. Southern Company Gas amortizes the fair value adjustments over the lives of the respective bonds.

Fair Value of Commodity Derivative Contracts that Include a Significant Unobservable Component

The following table includes transfers to Level 3, which represent the fair value of Southern Company Gas' commodity derivative contracts that include a significant unobservable component for the first time during the period.



	Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019
	(in millions)
Beginning balance	$	(10	)	$	—
Transfers to Level 3	—			(33		)
Transfers from Level 3	3			3
Instruments realized or otherwise settled during period	(2		)	(2		)
Changes in fair value	14			37
Ending balance	$	5		$	5