PROPERTY, PLANT, AND EQUIPMENT (Notes)

12 Months Ended

Dec. 31, 2019

Property, Plant and Equipment [Abstract]

PROPERTY, PLANT, AND EQUIPMENT

PROPERTY, PLANT, AND EQUIPMENT

Property, plant, and equipment is stated at original cost or fair value at acquisition, as appropriate, less any regulatory disallowances and impairments. Original cost may include: materials; labor; minor items of property; appropriate administrative and general costs; payroll-related costs such as taxes, pensions, and other benefits; and the interest capitalized and/or cost of equity funds used during construction.

The Registrants' property, plant, and equipment in service consisted of the following at December 31, 2019 and 2018:

At December 31, 2019:	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Electric utilities:
Generation	$	50,329	$	15,329	$	18,341	$	2,786	$	13,241	$	—
Transmission	12,157		4,719		6,590		808		—		—
Distribution	19,846		7,798		11,024		1,024		—		—
General/other	4,650		2,177		2,182		239		29		—
Electric utilities' plant in service	86,982		30,023		38,137		4,857		13,270		—
Southern Company Gas:
Natural gas distribution utilities transportation and distribution	13,518		—		—		—		—		13,518
Storage facilities	1,634		—		—		—		—		1,634
Other	1,192		—		—		—		—		1,192
Southern Company Gas plant in service	16,344		—		—		—		—		16,344
Other plant in service	1,788		—		—		—		—		—
Total plant in service	$	105,114	$	30,023	$	38,137	$	4,857	$	13,270	$	16,344

At December 31, 2018:	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Electric utilities:
Generation	$	52,324	$	16,533	$	19,145	$	2,849	$	13,246	$	—
Transmission	11,344		4,380		6,156		769		—		—
Distribution	18,746		7,389		10,389		968		—		—
General/other	4,446		2,100		1,985		314		25		—
Electric utilities' plant in service	86,860		30,402		37,675		4,900		13,271		—
Southern Company Gas:
Natural gas distribution utilities transportation and distribution	12,409		—		—		—		—		12,409
Storage facilities	1,640		—		—		—		—		1,640
Other	1,128		—		—		—		—		1,128
Southern Company Gas plant in service	15,177		—		—		—		—		15,177
Other plant in service	1,669		—		—		—		—		—
Total plant in service	$	103,706	$	30,402	$	37,675	$	4,900	$	13,271	$	15,177

The cost of replacements of property, exclusive of minor items of property, is capitalized. The cost of maintenance, repairs, and replacement of minor items of property is charged to other operations and maintenance expenses as incurred or performed with the exception of nuclear refueling costs and certain maintenance costs including those described below.

In accordance with orders from their respective state PSCs, Alabama Power and Georgia Power defer nuclear outage operations and maintenance expenses to a regulatory asset when the charges are incurred. Alabama Power amortizes the costs over a subsequent 18-month period with Plant Farley's fall outage cost amortization beginning in January of the following year and spring outage cost amortization beginning in July of the same year. Georgia Power amortizes its costs over each unit's operating cycle, or 18 months for Plant Vogtle Units 1 and 2 and 24 months for Plant Hatch Units 1 and 2.

A portion of Mississippi Power's railway track maintenance costs is charged to fuel stock and recovered through Mississippi Power's fuel clause.

The portion of Southern Company Gas' non-working gas used to maintain the structural integrity of natural gas storage facilities that is considered to be non-recoverable is depreciated, while the recoverable or retained portion is not depreciated.

Finance Leases

Assets acquired under a finance lease (previously referred to as a capital lease) are included in property, plant, and equipment and are further detailed in the table below for the applicable Registrants at December 31, 2018:

At December 31, 2018:	Southern Company			Georgia Power
	(in millions)
Office buildings	$	216		$	61
PPAs(*)	—			144
Computer-related equipment	43			—
Gas pipeline	7			—
Less: Accumulated amortization	(75		)	(84		)
Balance, net of amortization	$	191		$	121

(*) Represents Georgia Power's affiliate PPAs with Southern Power. See Note 1 under "Affiliate Transactions" for additional information.

See Note 9 for additional information, including finance lease right-of-use (ROU) assets, net included in property, plant, and equipment at December 31, 2019.

Depreciation and Amortization

The traditional electric operating companies' and Southern Company Gas' depreciation of the original cost of utility plant in service is provided primarily by using composite straight-line rates. The approximate rates for 2019, 2018, and 2017 are as follows:

	2019		2018		2017
Alabama Power	3.1	%	3.0	%	2.9	%
Georgia Power	2.6	%	2.6	%	2.7	%
Mississippi Power	3.7	%	4.2	%	3.4	%
Southern Company Gas	2.9	%	2.9	%	2.9	%

Depreciation studies are conducted periodically to update the composite rates. These studies are filed with the respective state PSC and/or other applicable state and federal regulatory agencies for the traditional electric operating companies and natural gas distribution utilities. Effective January 1, 2020, Georgia Power's and Atlanta Gas Light's depreciation rates were revised by the Georgia PSC in connection with their respective base rate cases. On November 26, 2019, an updated depreciation study was filed with the Mississippi PSC in conjunction with the Mississippi Power 2019 Base Rate Case requesting a $16 million increase in total annual depreciation. See Note 2 for additional information.

When property, plant, and equipment subject to composite depreciation is retired or otherwise disposed of in the normal course of business, its original cost, together with the cost of removal, less salvage, is charged to accumulated depreciation. For other property dispositions, the applicable cost and accumulated depreciation are removed from the balance sheet accounts, and a gain or loss is recognized. Minor items of property included in the original cost of the asset are retired when the related property unit is retired.

At December 31, 2019 and 2018, accumulated depreciation for utility plant in service totaled $30.0 billion and $30.3 billion, respectively, for Southern Company and $4.5 billion and $4.3 billion, respectively, for Southern Company Gas.

Depreciation of the original cost of other plant in service is provided primarily on a straight-line basis over estimated useful lives, which for Southern Company range up to 65 years and for Southern Company Gas range from five to 15 years for transportation equipment, 40 to 60 years for storage facilities, and up to 65 years for other assets. At December 31, 2019 and 2018, accumulated depreciation for other plant in service totaled $732 million and $766 million, respectively, for Southern Company and $155 million and $129 million, respectively, for Southern Company Gas.

Southern Power

Southern Power applies component depreciation, where depreciation is computed principally by the straight-line method over the estimated useful life of the asset. Certain of Southern Power's generation assets related to natural gas-fired facilities are depreciated on a units-of-production basis, using hours or starts, to better match outage and maintenance costs to the usage of, and revenues from, these assets. The primary assets in Southern Power's property, plant, and equipment are generating facilities, which generally have estimated useful lives as follows:

Southern Power Generating Facility	Useful life
Natural gas	Up to 45 years
Biomass(*)	Up to 40 years
Solar	Up to 35 years
Wind	Up to 30 years

(*) See Note 15 under "Southern Power – Sales of Natural Gas and Biomass Plants" for information on Southern Power's sale of its biomass facility on June 13, 2019.

Southern Power reviews its estimated useful lives and salvage values on an ongoing basis. The results of these reviews could result in changes which could have a material impact on Southern Power's net income in the near term.

When Southern Power's depreciable property, plant, and equipment is retired, or otherwise disposed of in the normal course of business, the applicable cost and accumulated depreciation is removed and a gain or loss is recognized in the statements of income.

Joint Ownership Agreements

At December 31, 2019, the Registrants' percentage ownership and investment (exclusive of nuclear fuel) in jointly-owned facilities in commercial operation were as follows:

Facility (Type)	Percent Ownership			Plant in Service		Accumulated Depreciation		CWIP
				(in millions)
Alabama Power
Greene County (natural gas) Units 1 and 2	60.0	%	(a)	$	182	$	71	$	1
Plant Miller (coal) Units 1 and 2	91.8		(b)	2,058		630		65
Georgia Power
Plant Hatch (nuclear)	50.1	%	(c)	$	1,316	$	603	$	40
Plant Vogtle (nuclear) Units 1 and 2	45.7		(c)	3,565		2,177		96
Plant Scherer (coal) Units 1 and 2	8.4		(c)	266		94		14
Plant Scherer (coal) Unit 3	75.0		(c)	1,267		492		47
Plant Wansley (coal)	53.5		(c)	1,059		367		10
Rocky Mountain (pumped storage)	25.4		(d)	182		139		—
Mississippi Power
Greene County (natural gas) Units 1 and 2	40.0	%	(a)	$	118	$	46	$	1
Plant Daniel (coal) Units 1 and 2	50.0		(e)	750		214		11
Southern Company Gas
Dalton Pipeline (natural gas pipeline)	50.0	%	(f)	$	271	$	10	$	—

(a) Jointly owned by Alabama Power and Mississippi Power and operated and maintained by Alabama Power.

(b) Jointly owned with PowerSouth and operated and maintained by Alabama Power.

(c) Georgia Power owns undivided interests in Plants Hatch, Vogtle Units 1 and 2, Scherer, and Wansley in varying amounts jointly with one or more of the following entities: OPC, MEAG Power, Dalton, Florida Power & Light Company, JEA, and Gulf Power. Georgia Power has been contracted to operate and maintain the plants as agent for the co-owners and is jointly and severally liable for third party claims related to these plants.

(d) Jointly owned with OPC, which is the operator of the plant.

(e) Jointly owned by Gulf Power and Mississippi Power. In accordance with the operating agreement, Mississippi Power acts as Gulf Power's agent with respect to the operation and maintenance of these units. See Note 3 under "Other Matters – Mississippi Power" for information regarding a commitment between Mississippi Power and Gulf Power to seek a restructuring of their 50% undivided ownership interests in Plant Daniel.

(f) Jointly owned with The Williams Companies, Inc., The Dalton Pipeline is a 115-mile natural gas pipeline that serves as an extension of the Transco natural gas pipeline system into northwest Georgia. Southern Company Gas leases its 50% undivided ownership for approximately $26 million annually for an initial term through 2042. The lessee is responsible for maintaining the pipeline during the lease term and for providing service to transportation customers under its FERC-regulated tariff.

Georgia Power also owns 45.7% of Plant Vogtle Units 3 and 4, which are currently under construction and had a CWIP balance of $5.8 billion at December 31, 2019. See Note 2 under "Georgia Power – Nuclear Construction" for additional information.

The Registrants' proportionate share of their jointly-owned facility operating expenses is included in the corresponding operating expenses in the statements of income and each Registrant is responsible for providing its own financing.

Assets Subject to Lien

In October 2018, the Mississippi PSC approved executed agreements between Mississippi Power and its largest retail customer, Chevron Products Company (Chevron), for Mississippi Power to continue providing retail service to the Chevron refinery in Pascagoula, Mississippi through 2038. The agreements grant Chevron a security interest in the co-generation assets, with a lease receivable balance of $118 million at December 31, 2019, located at the refinery that is exercisable upon the occurrence of (i) certain bankruptcy events or (ii) other events of default coupled with specific reductions in steam output at the facility and a downgrade of Mississippi Power's credit rating to below investment grade by two of the three rating agencies.

On January 17, 2020, Southern Power completed the sale of its equity interests in Plant Mankato to a subsidiary of Xcel. As of December 31, 2019, under the terms of the PPA and the expansion PPA for Plant Mankato, approximately $547 million of assets, primarily related to property, plant, and equipment, were subject to lien. See Note 15 under "Southern Power – Sales of Natural Gas and Biomass Plants" for additional information.

See Note 8 under "Secured Debt" for information regarding debt secured by certain assets of Georgia Power, Mississippi Power, and Southern Company Gas.