Segment and Related Information

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

Segment and Related Information

SEGMENT AND RELATED INFORMATION

Southern Company

The primary businesses of the Southern Company system are electricity sales by the traditional electric operating companies and Southern Power and the distribution of natural gas by Southern Company Gas. The traditional electric operating companies are vertically integrated utilities providing electric service in three Southeastern states. Southern Power develops, constructs, acquires, owns, and manages power generation assets, including renewable energy and battery energy storage projects, and sells electricity at market-based rates in the wholesale market. Southern Company Gas distributes natural gas through its natural gas distribution utilities and is involved in several other complementary businesses including gas pipeline investments and gas marketing services.

Southern Company's reportable business segments are the sale of electricity by the traditional electric operating companies, the sale of electricity in the competitive wholesale market by Southern Power, and the sale of natural gas and other complementary products and services by Southern Company Gas. Revenues from sales by Southern Power to the traditional electric operating companies were $116 million and $251 million for the three and six months ended June 30, 2023, respectively, and $232 million and $337 million for the three and six months ended June 30, 2022, respectively. Revenues from sales of natural gas from Southern Company Gas to the traditional electric operating companies and Southern Power were immaterial for all periods presented. The "All Other" column includes the Southern Company parent entity, which does not allocate operating expenses to business segments. Also, this category includes segments below the quantitative threshold for separate disclosure. These segments include providing distributed energy and resilience solutions and deploying microgrids for commercial, industrial, governmental, and utility customers, as well as investments in telecommunications. All other inter-segment revenues are not material.

Financial data for business segments and products and services for the three and six months ended June 30, 2023 and 2022 was as follows:

	Electric Utilities
	Traditional Electric Operating Companies		Southern Power		Eliminations		Total		Southern Company Gas		All Other		Eliminations		Consolidated
	(in millions)
Three Months Ended June 30, 2023
Operating revenues	$	4,359	$	525	$	(120)	$	4,764	$	852	$	180	$	(48)	$	5,748
Segment net income (loss)(a)(b)	823		85		—		908		85		(157)		2		838
Six Months Ended June 30, 2023
Operating revenues	$	8,472	$	1,033	$	(258)	$	9,247	$	2,728	$	346	$	(93)	$	12,228
Segment net income (loss)(a)(b)(c)	1,433		187		—		1,620		393		(311)		(2)		1,700
At June 30, 2023
Goodwill	$	—	$	2	$	—	$	2	$	5,015	$	144	$	—	$	5,161
Total assets	97,751		13,046		(589)		110,208		24,331		3,523		(946)		137,116
Three Months Ended June 30, 2022
Operating revenues	$	5,563	$	899	$	(456)	$	6,006	$	1,083	$	159	$	(42)	$	7,206
Segment net income (loss)(a)(d)	1,036		98		—		1,134		115		(137)		(5)		1,107
Six Months Ended June 30, 2022
Operating revenues	$	9,778	$	1,438	$	(700)	$	10,516	$	3,140	$	283	$	(85)	$	13,854
Segment net income (loss)(a)(d)	1,811		170		—		1,981		433		(263)		(12)		2,139
At December 31, 2022
Goodwill	$	—	$	2	$	—	$	2	$	5,015	$	144	$	—	$	5,161
Total assets	95,861		13,081		(659)		108,283		24,621		2,665		(678)		134,891

(a)Attributable to Southern Company.

(b)For Southern Company Gas, includes a pre-tax charge of approximately $38 million ($28 million after tax) associated with the disallowance of certain capital expenditures at Nicor Gas. See Note (B) under "Southern Company Gas" for additional information.

(c)For Southern Power, includes a $16 million pre-tax gain ($12 million after tax) on the sale of spare parts.

(d)For the traditional electric operating companies, includes pre-tax charges of $52 million ($39 million after tax) at Georgia Power for the estimated probable loss associated with the construction of Plant Vogtle Units 3 and 4. See Note (B) and Note 2 to the financial statements in Item 8 of the Form 10-K under "Georgia Power – Nuclear Construction" for additional information.

Products and Services

	Electric Utilities' Revenues
	Retail		Wholesale		Other		Total
	(in millions)
Three Months Ended June 30, 2023	$	3,859	$	605	$	300	$	4,764
Three Months Ended June 30, 2022	4,789		937		280		6,006
Six Months Ended June 30, 2023	$	7,458	$	1,203	$	586	$	9,247
Six Months Ended June 30, 2022	8,402		1,601		513		10,516

	Southern Company Gas' Revenues
	Gas Distribution Operations		Gas Marketing Services		Other		Total
	(in millions)
Three Months Ended June 30, 2023	$	761	$	75	$	16	$	852
Three Months Ended June 30, 2022	975		92		16		1,083
Six Months Ended June 30, 2023	$	2,372	$	320	$	36	$	2,728
Six Months Ended June 30, 2022	2,765		335		40		3,140

Southern Company Gas

Southern Company Gas manages its business through three reportable segments – gas distribution operations, gas pipeline investments, and gas marketing services. The non-reportable segments are combined and presented as all other.

Gas distribution operations is the largest component of Southern Company Gas' business and includes natural gas local distribution utilities that construct, manage, and maintain intrastate natural gas pipelines and gas distribution facilities in four states.

Gas pipeline investments consists of joint ventures in natural gas pipeline investments including a 50% interest in SNG and a 50% joint ownership interest in the Dalton Pipeline. These natural gas pipelines enable the provision of diverse sources of natural gas supplies to the customers of Southern Company Gas. See Note 7 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.

Gas marketing services provides natural gas marketing to end-use customers primarily in Georgia and Illinois through SouthStar.

The all other column includes segments and subsidiaries that fall below the quantitative threshold for separate disclosure, including storage and fuels operations. The all other column included a natural gas storage facility in Texas through its sale in November 2022. See Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information, including the sale of a natural gas storage facility in California expected to be completed later in 2023.

Business segment financial data for the three months ended June 30, 2023 and 2022 was as follows:

	Gas Distribution Operations		Gas Pipeline Investments		Gas Marketing Services		Total		All Other		Eliminations		Consolidated
	(in millions)
Three Months Ended June 30, 2023
Operating revenues	$	764	$	8	$	75	$	847	$	9	$	(4)	$	852
Segment net income (loss)(*)	60		19		7		86		(1)		—		85
Six Months Ended June 30, 2023
Operating revenues	$	2,383	$	16	$	320	$	2,719	$	22	$	(13)	$	2,728
Segment net income(*)	281		50		56		387		6		—		393
Total assets at June 30, 2023	22,366		1,552		1,542		25,460		9,606		(10,735)		24,331
Three Months Ended June 30, 2022
Operating revenues	$	980	$	8	$	92	$	1,080	$	10	$	(7)	$	1,083
Segment net income (loss)	92		23		1		116		(1)		—		115
Six Months Ended June 30, 2022
Operating revenues	$	2,782	$	16	$	335	$	3,133	$	26	$	(19)	$	3,140
Segment net income	306		52		67		425		8		—		433
Total assets at December 31, 2022	22,040		1,577		1,616		25,233		8,943		(9,555)		24,621

(*)For gas distribution operations, includes a pre-tax charge of approximately $38 million ($28 million after tax) associated with the disallowance of certain capital expenditures at Nicor Gas. See Note (B) under "Southern Company Gas" for additional information.