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Leases (Tables)

9 Months Ended

Sep. 30, 2019

The major categories of lease obligations are as follows:



	As of September 30, 2019
	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Electric generating units	$	988	$	125	$	1,488	$	—	$	—	$	—
Real estate/land	785		4		57		2		395		77
Communication towers	150		2		3		—		—		13
Railcars	51		23		25		3		—		—
Other	89		9		14		2		—		1
Total	$	2,063	$	163	$	1,587	$	7	$	395	$	91

Balance Sheet Amounts Recorded for Operating and Financing Leases

Balance sheet amounts recorded for operating and finance leases are as follows:



	As of September 30, 2019
	Southern Company^(*)		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Operating Leases
Operating lease ROU assets, net	$	1,823	$	143	$	1,461	$	7	$	368	$	92

Operating lease obligations - current	$	229	$	49	$	143	$	2	$	22	$	14
Operating lease obligations - non current	1,606		109		1,287		5		373		77
Total operating lease obligations	$	1,835	$	158	$	1,430	$	7	$	395	$	91

Finance Leases
Finance lease ROU assets, net	$	220	$	4	$	134	$	—	$	—	$	—

Finance lease obligations - current	$	21	$	1	$	12	$	—	$	—	$	—
Finance lease obligations - noncurrent	207		4		145		—		—		—
Total finance lease obligations	$	228	$	5	$	157	$	—	$	—	$	—

(*)

Includes operating lease ROU assets, net and operating lease obligations classified as held for sale.

Lease Costs and Other Information

Lease costs for the three and nine months ended September 30, 2019, which includes both amounts recognized as operations and maintenance expense and amounts capitalized as part of the cost of another asset, are as follows:



	Southern Company			Alabama Power			Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
For the Three Months Ended September 30, 2019
Lease cost
Operating lease cost	$	94		$	29		$	53	$	1	$	7	$	5
Finance lease cost:
Amortization of ROU assets	7			—			4		—		—		—
Interest on lease obligations	3			—			4		—		—		—
Total finance lease cost	10			—			8		—		—		—
Short-term lease costs	9			4			5		—		—		—
Variable lease cost	33			4			26		—		1		—
Total lease cost	$	146		$	37		$	92	$	1	$	8	$	5

For the Nine Months Ended September 30, 2019
Lease cost
Operating lease cost	$	243		$	49		$	154	$	2	$	21	$	14
Finance lease cost:
Amortization of ROU assets	21			1			11		—		—		—
Interest on lease obligations	9			—			14		—		—		—
Total finance lease cost	30			1			25		—		—		—
Short-term lease costs	39			15			17		—		—		—
Variable lease cost	81			6			67		—		3		—
Sublease income	(1		)	(1		)	—		—		—		—
Total lease cost	$	392		$	70		$	263	$	2	$	24	$	14

Georgia Power has variable lease payments that are based on the amount of energy produced by certain renewable generating facilities subject to PPAs.

Other information with respect to cash and noncash activities related to leases, as well as weighted-average lease terms and discount rates, is as follows:



	For the Nine Months Ended September 30, 2019
	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Other information
Cash paid for amounts included in the measurements of lease obligations:
Operating cash flows from operating leases	$	211	$	50	$	130	$	2	$	18	$	13
Operating cash flows from finance leases	3		1		17		—		—		—
Financing cash flows from finance leases	24		—		4		—		—		—
ROU assets obtained in exchange for new operating lease obligations	76		7		18		—		—		14
ROU assets obtained in exchange for new finance lease obligations	31		1		24		—		—		—



	As of September 30, 2019
	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
Weighted-average remaining lease term in years:
Operating leases	14.4		3.4		10.4		6.8		33.2		9.6
Finance leases	18.9		12.4		10.8		N/A		N/A		N/A
Weighted-average discount rate:
Operating leases	4.56	%	3.33	%	4.46	%	3.98	%	5.68	%	3.73	%
Finance leases	5.07	%	3.65	%	10.74	%	N/A		N/A		N/A

Maturities of Operating Lease Liabilities

Maturities of lease liabilities are as follows:



	As of September 30, 2019
	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Maturity Analysis
Operating leases:
2019 (remaining)	$	45	$	4	$	23	$	1	$	8	$	4
2020	284		54		205		2		22		17
2021	269		53		198		1		23		17
2022	259		52		196		1		23		13
2023	202		4		197		1		24		11
Thereafter	1,662		2		991		2		847		49
Total	2,721		169		1,810		8		947		111
Less: Present value discount	886		11		380		1		552		20
Operating lease obligations	$	1,835	$	158	$	1,430	$	7	$	395	$	91
Finance leases:
2019 (remaining)	$	9	$	—	$	4	$	—	$	—	$	—
2020	31		1		28		—		—		—
2021	24		1		24		—		—		—
2022	21		1		24		—		—		—
2023	17		1		25		—		—		—
Thereafter	259		1		161		—		—		—
Total	361		5		266		—		—		—
Less: Present value discount	133		—		109						—
Finance lease obligations	$	228	$	5	$	157	$	—	$	—	$	—

Maturities of Finance Lease Liabilities

Maturities of lease liabilities are as follows:



	As of September 30, 2019
	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Maturity Analysis
Operating leases:
2019 (remaining)	$	45	$	4	$	23	$	1	$	8	$	4
2020	284		54		205		2		22		17
2021	269		53		198		1		23		17
2022	259		52		196		1		23		13
2023	202		4		197		1		24		11
Thereafter	1,662		2		991		2		847		49
Total	2,721		169		1,810		8		947		111
Less: Present value discount	886		11		380		1		552		20
Operating lease obligations	$	1,835	$	158	$	1,430	$	7	$	395	$	91
Finance leases:
2019 (remaining)	$	9	$	—	$	4	$	—	$	—	$	—
2020	31		1		28		—		—		—
2021	24		1		24		—		—		—
2022	21		1		24		—		—		—
2023	17		1		25		—		—		—
Thereafter	259		1		161		—		—		—
Total	361		5		266		—		—		—
Less: Present value discount	133		—		109						—
Finance lease obligations	$	228	$	5	$	157	$	—	$	—	$	—

Leases Not Yet Commenced

As of September 30, 2019, Alabama Power and Southern Power have additional operating leases that have not yet commenced, as detailed in the following table:



	Southern Company	Alabama Power	Southern Power
Operating lease type	PPAs and land	PPAs	Land
Expected commencement date	2019-2024	2020-2024	2019-2022
Longest lease term expiration	28-31 years	28 years	31 years
Estimated total obligations (in millions)	$159	$95	$64

Lease Income, Sales-type Leases

Lease income for the three and nine months ended September 30, 2019 is as follows:



	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
For the Three Months Ended September 30, 2019
Lease income - interest income on sales-type leases	$	2	$	—	$	—	$	2	$	—	$	—
Lease income - operating leases	64		6		18		—		31		9
Variable lease income	141		—		—		—		151		—
Total lease income	$	207	$	6	$	18	$	2	$	182	$	9

For the Nine Months Ended September 30, 2019
Lease income - interest income on sales-type leases	$	7	$	—	$	—	$	7	$	—	$	—
Lease income - operating leases	216		19		57		—		111		26
Variable lease income	324		—		—		—		349		—
Total lease income	$	547	$	19	$	57	$	7	$	460	$	26

Lease Income, Operating Leases

Lease income for the three and nine months ended September 30, 2019 is as follows:



	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
For the Three Months Ended September 30, 2019
Lease income - interest income on sales-type leases	$	2	$	—	$	—	$	2	$	—	$	—
Lease income - operating leases	64		6		18		—		31		9
Variable lease income	141		—		—		—		151		—
Total lease income	$	207	$	6	$	18	$	2	$	182	$	9

For the Nine Months Ended September 30, 2019
Lease income - interest income on sales-type leases	$	7	$	—	$	—	$	7	$	—	$	—
Lease income - operating leases	216		19		57		—		111		26
Variable lease income	324		—		—		—		349		—
Total lease income	$	547	$	19	$	57	$	7	$	460	$	26

Undiscounted Cash Flows to be Received Under Tolling Arrangements Accounted for as Sales-type Leases

The undiscounted cash flows to be received under tolling arrangements accounted for as sales-type leases are as follows:



	As of September 30, 2019
	Southern Company		Mississippi Power
	(in millions)
2019 (remaining)	$	4	$	4
2020	17		17
2021	15		15
2022	15		15
2023	14		14
Thereafter	152		152
Total undiscounted cash flows	$	217	$	217
Lease receivable	119		119
Difference between undiscounted cash flows and discounted cash flows	$	98	$	98

Undiscounted Cash Flows to be Received Under PPAs Accounted for as Operating Leases

The undiscounted cash flows to be received under operating leases and contracts accounted for as operating leases (adjusted for intercompany eliminations) are as follows:



	As of September 30, 2019
	Southern Company		Alabama Power		Georgia Power		Southern Power		Southern Company Gas
	(in millions)
2019 (remaining)	$	39	$	6	$	7	$	8	$	9
2020	155		26		26		65		35
2021	140		22		18		66		35
2022	121		13		8		68		34
2023	109		5		2		69		34
Thereafter	1,166		22		—		350		497
Total	$	1,730	$	94	$	61	$	626	$	644