DERIVATIVES (Tables)

6 Months Ended

Jun. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Energy-Related Derivatives

At June 30, 2020, the net volume of energy-related derivative contracts for natural gas positions, together with the longest hedge date over which the respective entity is hedging its exposure to the variability in future cash flows for forecasted transactions and the longest non-hedge date for derivatives not designated as hedges, were as follows:

	Net Purchased mmBtu	Longest Hedge Date	Longest Non-Hedge Date
	(in millions)
Southern Company(*)	944	2024	2031
Alabama Power	85	2024	—
Georgia Power	152	2023	—
Mississippi Power	91	2024	—
Southern Power	15	2022	2021
Southern Company Gas(*)	601	2022	2031

(*)

Southern Company Gas' derivative instruments include both long and short natural gas positions. A long position is a contract to purchase natural gas and a short position is a contract to sell natural gas. Southern Company Gas' volume represents the net of long natural gas positions of 4.6 billion mmBtu and short natural gas positions of 4.0 billion mmBtu as of June 30, 2020, which is also included in Southern Company's total volume.

Schedule of Interest Rate Derivatives

At June 30, 2020, the following interest rate derivatives were outstanding:

	Notional Amount		Interest Rate Received	Weighted Average Interest Rate Paid	Hedge Maturity Date	Fair Value Gain (Loss) at June 30, 2020
	(in millions)					(in millions)
Cash Flow Hedges of Forecasted Debt
Southern Company Gas	$	200	3-month LIBOR	1.81%	September 2030	$	(23	)
Cash Flow Hedges of Existing Debt
Mississippi Power	60		1-month LIBOR	0.58%	December 2021	—
Fair Value Hedges of Existing Debt
Southern Company parent	1,500		2.35%	1-month LIBOR + 0.87%	July 2021	23
Southern Company	$	1,760				$	—

Schedule of Foreign Currency Derivatives

At June 30, 2020, the following foreign currency derivatives were outstanding:

	Pay Notional		Pay Rate	Receive Notional		Receive Rate	Hedge Maturity Date	Fair Value Gain (Loss) at June 30, 2020
	(in millions)			(in millions)				(in millions)
Cash Flow Hedges of Existing Debt
Southern Power	$	677	2.95%	€	600	1.00%	June 2022	$	(18	)
Southern Power	564		3.78%	500		1.85%	June 2026	(31		)
Total	$	1,241		€	1,100			$	(49	)

Fair Value of Energy-Related Derivatives and Interest Rate Derivatives

The fair value of energy-related derivatives, interest rate derivatives, and foreign currency derivatives was reflected in the balance sheets as follows:

	As of June 30, 2020						As of December 31, 2019
Derivative Category and Balance Sheet Location	Assets			Liabilities			Assets			Liabilities
	(in millions)						(in millions)
Southern Company
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:
Other current assets/Other current liabilities	$	19		$	64		$	3		$	70
Other deferred charges and assets/Other deferred credits and liabilities	13			28			6			44
Total derivatives designated as hedging instruments for regulatory purposes	$	32		$	92		$	9		$	114
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Other current assets/Other current liabilities	$	3		$	6		$	1		$	6
Interest rate derivatives:
Other current assets/Other current liabilities	12			23			2			23
Other deferred charges and assets/Other deferred credits and liabilities	10			—			—			1
Foreign currency derivatives:
Other current assets/Other current liabilities	—			24			—			24
Other deferred charges and assets/Other deferred credits and liabilities	—			25			16			—
Total derivatives designated as hedging instruments in cash flow and fair value hedges	$	25		$	78		$	19		$	54
Derivatives not designated as hedging instruments
Energy-related derivatives:
Other current assets/Other current liabilities	$	361		$	367		$	461		$	358
Other deferred charges and assets/Other deferred credits and liabilities	316			253			207			225
Total derivatives not designated as hedging instruments	$	677		$	620		$	668		$	583
Gross amounts recognized	$	734		$	790		$	696		$	751
Gross amounts offset(a)	(520		)	(634		)	(463		)	(562		)
Net amounts recognized in the Balance Sheets(b)	$	214		$	156		$	233		$	189

	As of June 30, 2020						As of December 31, 2019
Derivative Category and Balance Sheet Location	Assets			Liabilities			Assets			Liabilities
	(in millions)						(in millions)
Alabama Power
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:
Other current assets/Other current liabilities	$	7		$	12		$	2		$	14
Other deferred charges and assets/Other deferred credits and liabilities	4			7			2			10
Total derivatives designated as hedging instruments for regulatory purposes	$	11		$	19		$	4		$	24
Gross amounts recognized	$	11		$	19		$	4		$	24
Gross amounts offset	(8		)	(8		)	(2		)	(2		)
Net amounts recognized in the Balance Sheets	$	3		$	11		$	2		$	22
Georgia Power
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:
Other current assets/Other current liabilities	$	5		$	28		$	1		$	32
Other deferred charges and assets/Other deferred credits and liabilities	5			12			3			21
Total derivatives designated as hedging instruments for regulatory purposes	$	10		$	40		$	4		$	53
Derivatives designated as hedging instruments in cash flow and fair value hedges
Interest rate derivatives:
Other current assets/Other current liabilities	$	—		$	—		$	—		$	17
Total derivatives designated as hedging instruments in cash flow and fair value hedges	$	—		$	—		$	—		$	17
Gross amounts recognized	$	10		$	40		$	4		$	70
Gross amounts offset	(10		)	(10		)	(3		)	(3		)
Net amounts recognized in the Balance Sheets	$	—		$	30		$	1		$	67

	As of June 30, 2020						As of December 31, 2019
Derivative Category and Balance Sheet Location	Assets			Liabilities			Assets			Liabilities
	(in millions)						(in millions)
Mississippi Power
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:
Other current assets/Other current liabilities	$	3		$	13		$	—		$	15
Other deferred charges and assets/Other deferred credits and liabilities	3			9			1			12
Total derivatives designated as hedging instruments for regulatory purposes	$	6		$	22		$	1		$	27
Gross amounts recognized	$	6		$	22		$	1		$	27
Gross amounts offset	(6		)	(6		)	(1		)	(1		)
Net amounts recognized in the Balance Sheets	$	—		$	16		$	—		$	26
Southern Power
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Other current assets/Other current liabilities	$	2		$	3		$	1		$	2
Foreign currency derivatives:
Other current assets/Other current liabilities	—			24			—			24
Other deferred charges and assets/Other deferred credits and liabilities	—			25			16			—
Total derivatives designated as hedging instruments in cash flow and fair value hedges	$	2		$	52		$	17		$	26
Derivatives not designated as hedging instruments
Energy-related derivatives:
Other current assets/Other current liabilities	$	—		$	—		$	2		$	1
Total derivatives not designated as hedging instruments	$	—		$	—		$	2		$	1
Gross amounts recognized	$	2		$	52		$	19		$	27
Gross amounts offset	(1		)	(1		)	—			—
Net amounts recognized in the Balance Sheets	$	1		$	51		$	19		$	27

	As of June 30, 2020						As of December 31, 2019
Derivative Category and Balance Sheet Location	Assets			Liabilities			Assets			Liabilities
	(in millions)						(in millions)
Southern Company Gas
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:
Assets from risk management activities/Liabilities from risk management activities-current	$	4		$	11		$	—		$	9
Other deferred charges and assets/Other deferred credits and liabilities	1			—			—			1
Total derivatives designated as hedging instruments for regulatory purposes	$	5		$	11		$	—		$	10
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Assets from risk management activities/Liabilities from risk management activities-current	$	1		$	3		$	—		$	4
Interest rate derivatives:
Assets from risk management activities/Liabilities from risk management activities-current	—			23			2			—
Total derivatives designated as hedging instruments in cash flow and fair value hedges	$	1		$	26		$	2		$	4
Derivatives not designated as hedging instruments
Energy-related derivatives:
Assets from risk management activities/Liabilities from risk management activities-current	$	361		$	367		$	459		$	357
Other deferred charges and assets/Other deferred credits and liabilities	316			253			207			225
Total derivatives not designated as hedging instruments	$	677		$	620		$	666		$	582
Gross amounts of recognized	$	683		$	657		$	668		$	596
Gross amounts offset(a)	(495		)	(609		)	(456		)	(555		)
Net amounts recognized in the Balance Sheets(b)	$	188		$	48		$	212		$	41

(a) Gross amounts offset include cash collateral held on deposit in broker margin accounts of $114 million and $99 million as of June 30, 2020 and December 31, 2019, respectively.

(b)

Net amounts of derivative instruments outstanding exclude premium and intrinsic value associated with weather derivatives of $4 million as of December 31, 2019.

Pre-tax Effects of Unrealized Derivative Gains (Losses) Arising from Energy-Related Derivative Instruments

At June 30, 2020 and December 31, 2019, the pre-tax effects of unrealized derivative gains (losses) arising from energy-related derivative instruments designated as regulatory hedging instruments and deferred were as follows:

Regulatory Hedge Unrealized Gain (Loss) Recognized in the Balance Sheet
Derivative Category and Balance Sheet Location	Southern Company(*)			Alabama Power			Georgia Power			Mississippi Power			Southern Company Gas(*)
	(in millions)
At June 30, 2020:
Energy-related derivatives:
Other regulatory assets, current	$	(42	)	$	(8	)	$	(23	)	$	(10	)	$	(1	)
Other regulatory assets, deferred	(16		)	(3		)	(7		)	(6		)	—
Other regulatory liabilities, current	10			3			—			—			7
Total energy-related derivative gains (losses)	$	(48	)	$	(8	)	$	(30	)	$	(16	)	$	6
At December 31, 2019:
Energy-related derivatives:
Other regulatory assets, current	$	(63	)	$	(14	)	$	(31	)	$	(15	)	$	(3	)
Other regulatory assets, deferred	(37		)	(8		)	(18		)	(11		)	—
Other regulatory liabilities, current	6			2			—			—			4
Total energy-related derivative gains (losses)	$	(94	)	$	(20	)	$	(49	)	$	(26	)	$	1

(*)

Fair value gains and losses recorded in regulatory assets and liabilities include cash collateral held on deposit in broker margin accounts of $12 million and $11 million at June 30, 2020 and December 31, 2019, respectively.

Pre-tax Effects of Interest Rate Derivatives, Designated as Cash Flow Hedging Instruments

For the three and six months ended June 30, 2020 and 2019, the pre-tax effects of cash flow hedge accounting on accumulated OCI were as follows:

Gain (Loss) Recognized in OCI on Derivative	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2020			2019			2020			2019
	(in millions)						(in millions)
Southern Company
Energy-related derivatives	$	(2	)	$	(6	)	$	(6	)	$	(6	)
Interest rate derivatives	(1		)	(37		)	(28		)	(37		)
Foreign currency derivatives	17			(1		)	(65		)	(39		)
Total	$	14		$	(44	)	$	(99	)	$	(82	)
Georgia Power
Interest rate derivatives	$	—		$	(37	)	$	(3	)	$	(37	)
Southern Power
Energy-related derivatives	$	(2	)	$	(2	)	$	(2	)	$	(2	)
Foreign currency derivatives	$	17		$	(1	)	(65		)	(39		)
Total	$	15		$	(3	)	$	(67	)	$	(41	)
Southern Company Gas
Energy-related derivatives	$	—		$	(4	)	$	(4	)	$	(4	)
Interest rate derivatives	(1		)	—			(25		)	—
Total	$	(1	)	$	(4	)	$	(29	)	$	(4	)

Schedule of Cash Flow Hedging Instruments, Statements of Financial Performance and Financial Position, Location

For the three and six months ended June 30, 2020 and 2019, the pre-tax effects of cash flow and fair value hedge accounting on income were as follows:

Location and Amount of Gain (Loss) Recognized in Income on Cash Flow and Fair Value Hedging Relationships	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2020			2019			2020			2019
	(in millions)						(in millions)
Southern Company
Total cost of natural gas	$	144		$	191		$	583		$	877
Gain (loss) on energy-related cash flow hedges(a)	(1		)	—			(8		)	—
Total depreciation and amortization	873			755			1,730			1,506
Gain (loss) on energy-related cash flow hedges(a)	(1		)	(1		)	(2		)	(4		)
Total interest expense, net of amounts capitalized	(444		)	(429		)	(900		)	(859		)
Gain (loss) on interest rate cash flow hedges(a)	(6		)	(5		)	(13		)	(9		)
Gain (loss) on foreign currency cash flow hedges(a)	(6		)	(6		)	(12		)	(12		)
Gain (loss) on interest rate fair value hedges(b)	1			19			30			33
Total other income (expense), net	101			99			204			176
Gain (loss) on foreign currency cash flow hedges(a)(c)	27			16			(4		)	(8		)
Southern Power
Total depreciation and amortization	$	121		$	119		$	239		$	237
Gain (loss) on energy-related cash flow hedges(a)	(1		)	(1		)	(2		)	(4		)
Total interest expense, net of amounts capitalized	(38		)	(41		)	(77		)	(84		)
Gain (loss) on foreign currency cash flow hedges(a)	(6		)	(6		)	(12		)	(12		)
Total other income (expense), net	1			40			4			41
Gain (loss) on foreign currency cash flow hedges(a)(c)	27			16			(4		)	(8		)

(a) Reclassified from accumulated OCI into earnings.

(b) For fair value hedges, changes in the fair value of the derivative contracts are generally equal to changes in the fair value of the underlying debt and have no material impact on income.

(c)

The reclassification from accumulated OCI into other income (expense), net completely offsets currency gains and losses arising from changes in the U.S. currency exchange rates used to record the euro-denominated notes.

Schedule of Fair Value Hedging Instruments, Statements of Financial Performance and Financial Position, Location

As of June 30, 2020 and December 31, 2019, the following amounts were recorded on the balance sheets related to cumulative basis adjustments for fair value hedges:

	Carrying Amount of the Hedged Item						Cumulative Amount of Fair Value Hedging Adjustment included in Carrying Amount of the Hedged Item
Balance Sheet Location of Hedged Items	As of June 30, 2020			As of December 31, 2019			As of June 30, 2020			As of December 31, 2019
	(in millions)						(in millions)
Southern Company
Securities due within one year	$	—		$	(599	)	$	—		$	—
Long-term debt	(1,517		)	(1,494		)	(20		)	3

Pre-tax Effect of Interest Rate and Energy Related Derivatives

For the three and six months ended June 30, 2020 and 2019, the pre-tax effects of energy-related derivatives not designated as hedging instruments on the statements of income of Southern Company and Southern Company Gas were as follows:

		Gain (Loss)
		Three Months Ended June 30,					Six Months Ended June 30,
Derivatives in Non-Designated Hedging Relationships	Statements of Income Location	2020		2019			2020		2019
		(in millions)					(in millions)
Energy-related derivatives:	Natural gas revenues(*)	$	14	$	50		$	84	$	83
	Cost of natural gas	5		(5		)	13		3
Total derivatives in non-designated hedging relationships		$	19	$	45		$	97	$	86

(*)

Excludes immaterial gains (losses) recorded in natural gas revenues associated with weather derivatives for all periods presented.