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Derivatives (Tables)

9 Months Ended

Sep. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

At September 30, 2022, 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(*)	399	2030	2025
Alabama Power	105	2026	—
Georgia Power	116	2025	—
Mississippi Power	82	2027	—
Southern Power	11	2030	2023
Southern Company Gas(*)	85	2025	2025

(*)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 95.7 million mmBtu and short natural gas positions of 10.6 million mmBtu at September 30, 2022, which is also included in Southern Company's total volume.

Schedule of Interest Rate Derivatives

At September 30, 2022, 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 September 30, 2022
	(in millions)					(in millions)
Cash Flow Hedges of Existing Debt
Southern Company parent	$	175	—	4.25%	September 2025	$	—
Southern Company parent	175		—	3.83%	August 2032	—
Fair Value Hedges of Existing Debt
Southern Company parent	400		1.75%	1-month LIBOR + 0.68%	March 2028	(57)
Southern Company parent	1,000		3.70%	1-month LIBOR + 2.36%	April 2030	(167)
Southern Company Gas	500		1.75%	1-month LIBOR + 0.38%	January 2031	(87)
Southern Company	$	2,250				$	(311)

Schedule of Foreign Currency Derivatives

At September 30, 2022, the following foreign currency derivatives were outstanding:


	Pay Notional		Pay Rate	Receive Notional		Receive Rate	Hedge Maturity Date	Fair Value Gain (Loss) at September 30, 2022
	(in millions)			(in millions)				(in millions)
Cash Flow Hedges of Existing Debt
Southern Power	$	564	3.78%	€	500	1.85%	June 2026	$	(80)

Fair Value Hedges of Existing Debt

Southern Company parent	1,476		3.39%	1,250		1.88%	September 2027	(243)


Southern Company	$	2,040		€	1,750			$	(323)

Schedule of Derivative Category and Balance Sheet Location

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


	At September 30, 2022				At December 31, 2021
Derivative Category and Balance Sheet Location	Assets		Liabilities		Assets		Liabilities
	(in millions)				(in millions)
Southern Company
Energy-related derivatives designated as hedging instruments for regulatory purposes

Assets from risk management activities/Other current liabilities	$	299	$	70	$	129	$	30
Other deferred charges and assets/Other deferred credits and liabilities	150		59		72		6


Total derivatives designated as hedging instruments for regulatory purposes	449		129		201		36
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Assets from risk management activities/Other current liabilities	27		13		7		5
Other deferred charges and assets/Other deferred credits and liabilities	7		1		1		—
Interest rate derivatives:
Assets from risk management activities/Other current liabilities	—		44		19		—
Other deferred charges and assets/Other deferred credits and liabilities	—		266		—		29
Foreign currency derivatives:
Assets from risk management activities/Other current liabilities	—		37		—		39
Other deferred charges and assets/Other deferred credits and liabilities	—		285		—		40
Total derivatives designated as hedging instruments in cash flow and fair value hedges	34		646		27		113
Energy-related derivatives not designated as hedging instruments

Assets from risk management activities/Other current liabilities	19		18		9		4
Other deferred charges and assets/Other deferred credits and liabilities	2		1		1		—

Total derivatives not designated as hedging instruments	21		19		10		4
Gross amounts recognized	504		794		238		153
Gross amounts offset(a)	(113)		(128)		(25)		(28)
Net amounts recognized in the Balance Sheets(b)	$	391	$	666	$	213	$	125


	At September 30, 2022				At December 31, 2021
Derivative Category and Balance Sheet Location	Assets		Liabilities		Assets		Liabilities
	(in millions)				(in millions)
Alabama Power
Energy-related derivatives designated as hedging instruments for regulatory purposes

Other current assets/Other current liabilities	$	90	$	12	$	30	$	9
Other deferred charges and assets/Other deferred credits and liabilities	57		23		25		2
Total derivatives designated as hedging instruments for regulatory purposes	147		35		55		11






Gross amounts offset	(31)		(31)		(5)		(5)
Net amounts recognized in the Balance Sheets	$	116	$	4	$	50	$	6

Georgia Power
Energy-related derivatives designated as hedging instruments for regulatory purposes

Assets from risk management activities/Other current liabilities	$	107	$	28	$	54	$	6
Other deferred charges and assets/Other deferred credits and liabilities	38		23		21		2
Total derivatives designated as hedging instruments for regulatory purposes	145		51		75		8





Energy-related derivatives not designated as hedging instruments

Other current assets/Other current liabilities	1		—		—		—

Gross amounts recognized	146		51		75		8
Gross amounts offset	(41)		(41)		(8)		(8)
Net amounts recognized in the Balance Sheets	$	105	$	10	$	67	$	—

Mississippi Power
Energy-related derivatives designated as hedging instruments for regulatory purposes

Assets from risk management activities/Other current liabilities	$	78	$	12	$	30	$	3
Other deferred charges and assets/Other deferred credits and liabilities	55		12		26		2
Total derivatives designated as hedging instruments for regulatory purposes	133		24		56		5






Gross amounts offset	(20)		(20)		(4)		(4)
Net amounts recognized in the Balance Sheets	$	113	$	4	$	52	$	1


	At September 30, 2022				At December 31, 2021
Derivative Category and Balance Sheet Location	Assets		Liabilities		Assets		Liabilities
	(in millions)				(in millions)
Southern Power
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Other current assets/Other current liabilities	$	—	$	10	$	2	$	—
Other deferred charges and assets/Other deferred credits and liabilities	5		1		1		—
Foreign currency derivatives:
Other current assets/Other current liabilities	—		12		—		16
Other deferred charges and assets/Other deferred credits and liabilities	—		68		—		—
Total derivatives designated as hedging instruments in cash flow and fair value hedges	5		91		3		16
Energy-related derivatives not designated as hedging instruments

Other current assets/Other current liabilities	2		2		1		—




Gross amounts recognized	7		93		4		16
Gross amounts offset	(3)		(3)		—		—
Net amounts recognized in the Balance Sheets	$	4	$	90	$	4	$	16

Southern Company Gas
Energy-related derivatives designated as hedging instruments for regulatory purposes

Other current assets/Other current liabilities	$	24	$	17	$	15	$	12


Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Other current assets/Other current liabilities	26		3		5		5
Other deferred charges and assets/Other deferred credits and liabilities	3		—		—		—
Interest rate derivatives:
Other current assets/Other current liabilities	—		13		6		—
Other deferred charges and assets/Other deferred credits and liabilities	—		74		—		6
Total derivatives designated as hedging instruments in cash flow and fair value hedges	29		90		11		11
Energy-related derivatives not designated as hedging instruments

Other current assets/Other current liabilities	16		16		8		4
Other deferred charges and assets/Other deferred credits and liabilities	2		1		1		—

Total derivatives not designated as hedging instruments	18		17		9		4
Gross amounts recognized	71		124		35		27
Gross amounts offset(a)	(18)		(33)		(8)		(11)
Net amounts recognized in the Balance Sheets(b)	$	53	$	91	$	27	$	16

(a)Gross amounts offset includes cash collateral held on deposit in broker margin accounts of $15 million and $3 million at September 30, 2022 and December 31, 2021, respectively.

(b)Net amounts of derivative instruments outstanding exclude immaterial premium and intrinsic value associated with weather derivatives for all periods presented.

Schedule of Pre-tax Effects of Unrealized Derivative Gains (Losses)

At September 30, 2022 and December 31, 2021, 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 September 30, 2022:
Energy-related derivatives:
Other regulatory assets, current	$	(17)	$	(2)	$	(8)	$	(3)	$	(4)
Other regulatory assets, deferred	(6)		(2)		(3)		(1)		—


Other regulatory liabilities, current	246		80		87		69		10
Other regulatory liabilities, deferred	98		36		18		44		—
Total energy-related derivative gains (losses)	$	321	$	112	$	94	$	109	$	6

At December 31, 2021:
Energy-related derivatives:
Other regulatory assets, current	$	(17)	$	(6)	$	—	$	—	$	(11)

Other regulatory liabilities, current	107		28		48		27		4
Other regulatory liabilities, deferred	65		22		19		24		—
Total energy-related derivative gains (losses)	$	155	$	44	$	67	$	51	$	(7)

Schedule of Pre-Tax Effects of Hedging on AOCI

For the three and nine months ended September 30, 2022 and 2021, the pre-tax effects of cash flow and fair value hedge accounting on accumulated OCI were as follows:


Gain (Loss) Recognized in OCI on Derivative	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2022		2021		2022		2021
	(in millions)				(in millions)
Southern Company
Cash flow hedges:
Energy-related derivatives	$	11	$	38	$	51	$	59
Interest rate derivatives	6		5		36		7
Foreign currency derivatives	(35)		(36)		(137)		(79)
Fair value hedges(*):
Foreign currency derivatives	20		(4)		18		(4)
Total	$	2	$	3	$	(32)	$	(17)


Georgia Power

Interest rate derivatives	$	—	$	—	$	31	$	—



Southern Power
Cash flow hedges:
Energy-related derivatives	$	(11)	$	8	$	(4)	$	16

Foreign currency derivatives	(35)		(36)		(137)		(79)
Total	$	(46)	$	(28)	$	(141)	$	(63)
Southern Company Gas
Cash flow hedges:
Energy-related derivatives	$	22	$	30	$	55	$	43
Interest rate derivatives	5		—		—		—
Total	$	27	$	30	$	55	$	43

(*)Represents amounts excluded from the assessment of effectiveness for which the difference between changes in fair value and periodic amortization is recorded in OCI.

For the three and nine months ended September 30, 2022 and 2021, the pre-tax effects of interest rate derivatives designated as cash flow hedging instruments on accumulated OCI were immaterial for the other Registrants.

Schedule of Pre-Tax Effects of Cash Flow and Fair Value Hedging on Income

For the three and nine months ended September 30, 2022 and 2021, 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 September 30,				For the Nine Months Ended September 30,

	2022		2021		2022		2021
	(in millions)				(in millions)
Southern Company
Total cost of natural gas	$	294	$	129	$	1,840	$	943
Gain (loss) on energy-related cash flow hedges(a)	9		2		28		—
Total depreciation and amortization	922		896		2,728		2,658
Gain (loss) on energy-related cash flow hedges(a)	(1)		3		5		6
Total interest expense, net of amounts capitalized	(511)		(451)		(1,461)		(1,352)
Gain (loss) on interest rate cash flow hedges(a)	(7)		(7)		(19)		(20)
Gain (loss) on foreign currency cash flow hedges(a)	(3)		(6)		(16)		(18)
Gain (loss) on interest rate fair value hedges(b)	(102)		(4)		(300)		(16)
Total other income (expense), net	132		131		414		290
Gain (loss) on foreign currency cash flow hedges(a)(c)	(32)		(34)		(129)		(76)
Gain (loss) on foreign currency fair value hedges	(59)		(32)		(180)		(32)
Amount excluded from effectiveness testing recognized in earnings	(21)		4		(17)		4










Southern Power
Total depreciation and amortization	$	133	$	132	$	384	$	383
Gain (loss) on energy-related cash flow hedges(a)	(1)		3		5		6
Total interest expense, net of amounts capitalized	(32)		(36)		(105)		(111)
Gain (loss) on foreign currency cash flow hedges(a)	(3)		(6)		(16)		(18)
Total other income (expense), net	3		2		5		10
Gain (loss) on foreign currency cash flow hedges(a)(c)	(32)		(34)		(129)		(76)
Southern Company Gas
Total cost of natural gas	$	294	$	129	$	1,840	$	943
Gain (loss) on energy-related cash flow hedges(a)	9		2		28		—
Total interest expense, net of amounts capitalized	(65)		(57)		(187)		(175)
Gain (loss) on interest rate cash flow hedges(a)	(2)		(1)		(3)		(2)
Gain (loss) on interest rate fair value hedges(b)	(30)		—		(87)		2

(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 Cumulative Basis Adjustments for Fair Value Hedges

At September 30, 2022 and December 31, 2021, 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	At September 30, 2022		At December 31, 2021		At September 30, 2022		At December 31, 2021
	(in millions)				(in millions)
Southern Company

Long-term debt	$	(2,788)	$	(3,280)	$	306	$	9

Southern Company Gas

Long-term debt	$	(411)	$	(493)	$	86	$	2

Schedule of Pre-tax Effect of Interest Rate and Energy Related Derivatives on Income

For the three and nine months ended September 30, 2022 and 2021, 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 September 30,				Nine Months Ended September 30,
Derivatives in Non-Designated Hedging Relationships	Statements of Income Location	2022		2021		2022		2021
		(in millions)				(in millions)

Energy-related derivatives:	Natural gas revenues(*)	$	3	$	(2)	$	(10)	$	(122)
	Cost of natural gas	(2)		20		(7)		36

Total derivatives in non-designated hedging relationships		$	1	$	18	$	(17)	$	(86)

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