INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2022

Details of income tax provisions are as follows:


	2022
	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Federal —
Current	$	10	$	54	$	38	$	42	$	(43)	$	122
Deferred	455		259		152		(16)		56		(3)
	465		313		190		26		13		119
State —
Current	27		14		(21)		—		2		42
Deferred	303		96		201		11		5		19
	330		110		180		11		7		61
Total	$	795	$	423	$	370	$	37	$	20	$	180


	2021
	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Federal —
Current	$	50	$	104	$	311	$	25	$	(340)	$	85
Deferred	36		172		(449)		(15)		343		35
	86		276		(138)		10		3		120
State —
Current	(25)		23		71		—		(16)		(68)
Deferred	206		73		(101)		11		—		223
	181		96		(30)		11		(16)		155
Total	$	267	$	372	$	(168)	$	21	$	(13)	$	275


	2020
	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Federal —
Current	$	199	$	198	$	365	$	18	$	(303)	$	82
Deferred	70		44		(224)		(14)		299		53
	269		242		141		4		(4)		135
State —
Current	100		61		60		—		(4)		35
Deferred	24		34		(49)		10		11		3
	124		95		11		10		7		38
Total	$	393	$	337	$	152	$	14	$	3	$	173

Summary of amortization of tax credits

ITCs amortized in 2022, 2021, and 2020 were immaterial for the traditional electric operating companies and Southern Company Gas and were as follows for Southern Company and Southern Power:


	Southern Company		Southern Power
	(in millions)
2022	$	83	$	58
2021	84		58
2020	84		59

Schedule of effective income tax reconciliation

A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:


	2022
	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
Federal statutory rate	21.0	%	21.0	%	21.0	%	21.0	%	21.0	%	21.0	%
State income tax, net of federal deduction	6.2		4.8		6.5		4.4		1.9		6.4
Employee stock plans' dividend deduction	(0.5)		—		—		—		—		—
Non-deductible book depreciation	0.6		0.5		0.6		0.3		—		—
Flowback of excess deferred income taxes	(6.6)		(1.9)		(9.6)		(7.8)		—		(2.5)
AFUDC-Equity	(1.1)		(0.8)		(1.5)		—		—		—
Federal PTCs	—		—		—		—		(6.6)		—
ITC amortization	(1.3)		(0.1)		(0.1)		—		(17.2)		(0.1)
Noncontrolling interests	0.5		—		—		—		8.4		—

Other	—		0.3		—		0.3		(0.1)		(0.9)
Effective income tax (benefit) rate	18.8	%	23.8	%	16.9	%	18.2	%	7.4	%	23.9	%


	2021
	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
Federal statutory rate	21.0	%	21.0	%	21.0	%	21.0	%	21.0	%	21.0	%
State income tax, net of federal deduction	5.5		4.6		(5.7)		4.9		(8.0)		15.1
Employee stock plans' dividend deduction	(0.9)		—		—		—		—		—
Non-deductible book depreciation	0.9		0.5		3.1		0.4		—		—
Flowback of excess deferred income taxes	(11.7)		(2.6)		(49.9)		(15.2)		—		(2.8)
AFUDC-Equity	(1.5)		(0.7)		(6.4)		—		—		—

Federal PTCs	—		—		—		—		(4.6)		—
ITC amortization	(2.2)		(0.1)		(0.4)		—		(29.7)		(0.1)


Noncontrolling interests	0.8		—		—		—		13.4		—
Leveraged lease impairments and dispositions	(1.4)		—		—		—		—		—
Other	(0.1)		0.2		(1.9)		0.6		(0.4)		0.6
Effective income tax (benefit) rate	10.4	%	22.9	%	(40.2)	%	11.7	%	(8.3)	%	33.8	%


	2020
	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
Federal statutory rate	21.0	%	21.0	%	21.0	%	21.0	%	21.0	%	21.0	%
State income tax, net of federal deduction	2.8		5.0		0.5		4.8		2.7		4.0
Employee stock plans' dividend deduction	(0.7)		—		—		—		—		—
Non-deductible book depreciation	0.7		0.6		0.8		0.5		—		—
Flowback of excess deferred income taxes	(8.8)		(3.1)		(12.0)		(18.5)		—		(2.7)
AFUDC-Equity	(0.8)		(0.6)		(1.1)		(0.1)		—		—


Federal PTCs	—		—		—		—		(2.5)		—
ITC amortization	(1.6)		(0.1)		(0.1)		(0.1)		(22.1)		(0.1)


Noncontrolling interests	—		—		—		—		3.1		—
Leveraged lease impairments	(1.6)		—		—		—		—		—
Other	0.2		(0.3)		(0.3)		0.9		(0.9)		0.5
Effective income tax (benefit) rate	11.2	%	22.5	%	8.8	%	8.5	%	1.3	%	22.7	%

Tax effects between the carrying amounts of assets and liabilities

The tax effects of temporary differences between the carrying amounts of assets and liabilities in the financial statements of the Registrants and their respective tax bases, which give rise to deferred tax assets and liabilities, are as follows:


	December 31, 2022
	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Deferred tax liabilities —
Accelerated depreciation	$	9,443	$	2,564	$	3,447	$	338	$	1,351	$	1,505
Property basis differences	2,350		1,303		693		179		—		150
Employee benefit obligations	888		284		412		43		11		68
AROs	876		499		324		—		—		—
Under recovered fuel and natural gas costs	805		185		548		40		—		32
Regulatory assets –
AROs	2,006		679		1,285		42		—		—
Employee benefit obligations	677		180		226		30		—		15
Remaining book value of retired assets	400		142		253		5		—		—
Premium on reacquired debt	66		9		57		—		—		—
Other	555		179		181		40		14		82
Total deferred income tax liabilities	18,066		6,024		7,426		717		1,376		1,852
Deferred tax assets —
AROs	2,882		1,178		1,609		42		—		—
ITC and PTC carryforwards	1,685		12		673		—		794		—
Employee benefit obligations	890		198		304		47		9		89
Estimated loss on plants under construction	888		—		888		—		—		—
Other state deferred tax attributes	388		—		12		239		51		7
Federal effect of net state deferred tax liabilities	365		175		88		—		28		92
Other property basis differences	207		—		79		—		109		—
State effect of federal deferred taxes	136		136		—		—		—		—
Other partnership basis differences	111		—		—		—		111		—
Regulatory liability associated with the Tax Reform Legislation (not subject to normalization)	137		127		—		9		—		—
Long-term debt fair value adjustment	85		—		—		—		—		85
Other comprehensive losses	72		4		5		—		5		—
Other	552		213		186		62		17		28
Total deferred income tax assets	8,398		2,043		3,844		399		1,124		301
Valuation allowance	(257)		—		(125)		(41)		(27)		(9)
Net deferred income tax assets	8,141		2,043		3,719		358		1,097		292
Net deferred income taxes (assets)/liabilities	$	9,925	$	3,981	$	3,707	$	359	$	279	$	1,560

Recognized in the balance sheets:
Accumulated deferred income taxes – assets	$	(111)	$	—	$	—	$	(107)	$	—	$	—
Accumulated deferred income taxes – liabilities	$	10,036	$	3,981	$	3,707	$	466	$	279	$	1,560


	December 31, 2021
	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Deferred tax liabilities —
Accelerated depreciation	$	9,300	$	2,541	$	3,340	$	330	$	1,421	$	1,428
Property basis differences	2,301		1,182		781		169		—		148
Federal effect of net state deferred tax assets	—		—		—		22		—		—
Leveraged lease basis differences	61		—		—		—		—		—
Employee benefit obligations	820		268		382		41		11		57
AROs	868		329		494		—		—		—
Under recovered fuel and natural gas costs	315		47		109		15		—		144
Regulatory assets –
AROs	2,232		863		1,325		44		—		—
Storm damage reserves	18		—		18		—		—		—
Employee benefit obligations	825		205		256		38		—		15
Remaining book value of retired assets	271		145		121		5		—		—
Premium on reacquired debt	72		10		62		—		—		—
Other	368		147		77		34		14		82
Total deferred income tax liabilities	17,451		5,737		6,965		698		1,446		1,874
Deferred tax assets —
AROs	3,100		1,192		1,819		44		—		—
ITC and PTC carryforwards	1,750		12		704		—		827		—
Employee benefit obligations	1,035		225		342		57		7		77
Estimated loss on plants under construction	825		—		825		—		—		—
Other state deferred tax attributes	361		—		11		246		52		5
Federal effect of net state deferred tax liabilities	305		165		41		—		27		93
Other property basis differences	231		—		90		—		121		—
State effect of federal deferred taxes	135		135		—		—		—		—

Other partnership basis differences	160		—		—		—		160		—
Regulatory liability associated with the Tax Reform Legislation (not subject to normalization)	268		237		19		12		—		—
Long-term debt fair value adjustment	91		—		—		—		—		91
Other comprehensive losses	92		5		15		—		11		—
Other	561		193		153		34		53		62
Total deferred income tax assets	8,914		2,164		4,019		393		1,258		328
Valuation allowance	(207)		—		(73)		(41)		(27)		(9)
Net deferred income tax assets	8,707		2,164		3,946		352		1,231		319
Net deferred income taxes (assets)/liabilities	$	8,744	$	3,573	$	3,019	$	346	$	215	$	1,555

Recognized in the balance sheets:
Accumulated deferred income taxes – assets	$	(118)	$	—	$	—	$	(118)	$	—	$	—
Accumulated deferred income taxes – liabilities	$	8,862	$	3,573	$	3,019	$	464	$	215	$	1,555

Summary of tax credit carryforwards

Federal ITC/PTC carryforwards at December 31, 2022 were as follows:


	Southern Company		Alabama Power		Georgia Power		Southern Power
	(in millions)
Federal ITC/PTC carryforwards	$	1,148	$	12	$	135	$	794
Tax year in which federal ITC/PTC carryforwards begin expiring	2031		2032		2031		2035
Year by which federal ITC/PTC carryforwards are expected to be utilized	2026		2025		2025		2026

Summary of operating loss carryforward

At December 31, 2022, the net state income tax benefit of state and local NOL carryforwards for Southern Company's subsidiaries were as follows:


Company/Jurisdiction	Approximate Net State Income Tax Benefit of NOL Carryforwards		Tax Year NOL Begins Expiring
	(in millions)
Mississippi Power
Mississippi	$	189	2031

Southern Power
Oklahoma	27		2035
Florida	10		2034
Other states	3		Various
Southern Power Total	$	40

Other(*)
Georgia	23		2042
New York	11		2036
New York City	14		2036
Other states	21		Various
Southern Company Total	$	298

(*)Represents other non-registrant Southern Company subsidiaries. Alabama Power, Georgia Power, and Southern Company Gas did not have material state or local NOL carryforwards at December 31, 2022.

Changes in unrecognized tax benefits

Changes in unrecognized tax benefits for the periods presented were as follows:


	Southern Company		Southern Company Gas
	(in millions)
Unrecognized tax benefits at December 31, 2019	$	—	$	—
Tax positions changes – increase from prior periods	44		—
Unrecognized tax benefits at December 31, 2020	$	44	$	—
Tax positions changes – increase from prior periods	3		—
Unrecognized tax benefits at December 31, 2021	$	47	$	—
Tax positions changes – increase from prior periods	33		32
Unrecognized tax benefits at December 31, 2022	$	80	$	32