XML 95 R67.htm IDEA: XBRL DOCUMENT

Derivatives (Tables)

6 Months Ended

Jun. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

At June 30, 2023, 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(*)	422	2030	2028
Alabama Power	108	2026	2023
Georgia Power	109	2026	2023
Mississippi Power	85	2027	2023
Southern Power	10	2030	2024
Southern Company Gas(*)	110	2028	2028

(*)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 119.7 million mmBtu long natural gas positions and 9.4 million mmBtu short natural gas positions at June 30, 2023, which is also included in Southern Company's total volume.

Schedule of Interest Rate Derivatives

At June 30, 2023, the following interest rate derivatives were outstanding:


	Notional Amount		Weighted Average Interest Rate Paid	Interest Rate Received	Hedge Maturity Date	Fair Value Gain (Loss) at June 30, 2023
	(in millions)					(in millions)
Cash Flow Hedges of Forecasted Debt
Southern Company Gas	$	250	3.40%	N/A	August 2033	$	4
Fair Value Hedges of Existing Debt
Southern Company parent	400		1-month LIBOR + 0.68%	1.75%	March 2028	(56)
Southern Company parent	1,000		1-month LIBOR + 2.36%	3.70%	April 2030	(160)
Southern Company Gas	500		1-month LIBOR + 0.38%	1.75%	January 2031	(88)
Southern Company	$	2,150				$	(300)

Schedule of Foreign Currency Derivatives

At June 30, 2023, 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, 2023
	(in millions)			(in millions)				(in millions)
Cash Flow Hedges of Existing Debt
Southern Power	$	564	3.78%	€	500	1.85%	June 2026	$	(28)

Fair Value Hedges of Existing Debt

Southern Company parent	1,476		3.39%	1,250		1.88%	September 2027	(142)


Southern Company	$	2,040		€	1,750			$	(170)

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 June 30, 2023				At December 31, 2022
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/Liabilities from risk management activities	$	46	$	166	$	123	$	121
Other deferred charges and assets/Other deferred credits and liabilities	36		101		52		44


Total derivatives designated as hedging instruments for regulatory purposes	82		267		175		165
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	1		32		3		27
Other deferred charges and assets/Other deferred credits and liabilities	3		5		6		4
Interest rate derivatives:
Assets from risk management activities/Liabilities from risk management activities	4		77		12		62
Other deferred charges and assets/Other deferred credits and liabilities	—		227		—		240
Foreign currency derivatives:
Assets from risk management activities/Liabilities from risk management activities	—		35		—		34
Other deferred charges and assets/Other deferred credits and liabilities	—		135		—		182
Total derivatives designated as hedging instruments in cash flow and fair value hedges	8		511		21		549
Energy-related derivatives not designated as hedging instruments

Assets from risk management activities/Liabilities from risk management activities	7		7		13		13
Other deferred charges and assets/Other deferred credits and liabilities	—		—		2		1

Total derivatives not designated as hedging instruments	7		7		15		14
Gross amounts recognized	97		785		211		728
Gross amounts offset(a)	(40)		(92)		(70)		(111)
Net amounts recognized in the Balance Sheets(b)	$	57	$	693	$	141	$	617


	At June 30, 2023				At December 31, 2022
Derivative Category and Balance Sheet Location	Assets		Liabilities		Assets		Liabilities
	(in millions)				(in millions)
Alabama Power(c)
Energy-related derivatives designated as hedging instruments for regulatory purposes

Other current assets/Other current liabilities	$	20	$	46	$	42	$	21
Other deferred charges and assets/Other deferred credits and liabilities	12		38		20		18
Total derivatives designated as hedging instruments for regulatory purposes	32		84		62		39






Gross amounts offset	(20)		(20)		(24)		(24)
Net amounts recognized in the Balance Sheets	$	12	$	64	$	38	$	15

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

Assets from risk management activities/Other current liabilities	$	7	$	65	$	36	$	43
Other deferred charges and assets/Other deferred credits and liabilities	8		37		6		18
Total derivatives designated as hedging instruments for regulatory purposes	15		102		42		61





Energy-related derivatives not designated as hedging instruments

Other current assets/Other current liabilities	2		—		—		1

Gross amounts recognized	17		102		42		62
Gross amounts offset	(12)		(12)		(21)		(21)
Net amounts recognized in the Balance Sheets	$	5	$	90	$	21	$	41

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

Assets from risk management activities/Other current liabilities	$	11	$	28	$	33	$	24
Other deferred charges and assets/Other deferred credits and liabilities	16		27		26		8
Total derivatives designated as hedging instruments for regulatory purposes	27		55		59		32






Gross amounts offset	(19)		(19)		(17)		(17)
Net amounts recognized in the Balance Sheets	$	8	$	36	$	42	$	15


	At June 30, 2023				At December 31, 2022
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	$	—	$	9	$	—	$	12
Other deferred charges and assets/Other deferred credits and liabilities	3		1		5		—
Foreign currency derivatives:
Other current assets/Other current liabilities	—		11		—		11
Other deferred charges and assets/Other deferred credits and liabilities	—		17		—		36
Total derivatives designated as hedging instruments in cash flow and fair value hedges	3		38		5		59
Energy-related derivatives not designated as hedging instruments

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


Total derivatives not designated as hedging instruments	1		—		3		—
Gross amounts recognized	4		38		8		59
Gross amounts offset	(1)		(1)		—		—
Net amounts recognized in the Balance Sheets	$	3	$	37	$	8	$	59

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

Other current assets/Other current liabilities	$	8	$	27	$	12	$	33


Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Other current assets/Other current liabilities	1		23		3		15
Other deferred charges and assets/Other deferred credits and liabilities	—		4		1		4
Interest rate derivatives:
Other current assets/Other current liabilities	4		19		—		14
Other deferred charges and assets/Other deferred credits and liabilities	—		69		—		72
Total derivatives designated as hedging instruments in cash flow and fair value hedges	5		115		4		105
Energy-related derivatives not designated as hedging instruments

Other current assets/Other current liabilities	4		6		11		12
Other deferred charges and assets/Other deferred credits and liabilities	—		—		1		1

Total derivatives not designated as hedging instruments	4		6		12		13
Gross amounts recognized	17		148		28		151
Gross amounts offset(a)	14		(38)		—		(41)
Net amounts recognized in the Balance Sheets(b)	$	31	$	110	$	28	$	110

(a)Gross amounts offset includes cash collateral held on deposit in broker margin accounts of $52 million and $41 million at June 30, 2023 and December 31, 2022, respectively.

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

(c)Energy-related derivatives not designated as hedging instruments were immaterial for Alabama Power and Mississippi Power for both periods presented.

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

At June 30, 2023 and December 31, 2022, 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, 2023:
Energy-related derivatives:
Other regulatory assets, current	$	(141)	$	(37)	$	(60)	$	(22)	$	(22)
Other regulatory assets, deferred	(71)		(27)		(30)		(14)		—


Other regulatory liabilities, current	29		11		2		4		12
Other regulatory liabilities, deferred	6		1		1		4		—
Total energy-related derivative gains (losses)	$	(177)	$	(52)	$	(87)	$	(28)	$	(10)

At December 31, 2022:
Energy-related derivatives:
Other regulatory assets, current	$	(71)	$	(8)	$	(26)	$	(13)	$	(24)
Other regulatory assets, deferred	(23)		(7)		(14)		(2)		—
Other regulatory liabilities, current	72		29		19		22		2
Other regulatory liabilities, deferred	31		9		2		20		—
Total energy-related derivative gains (losses)	$	9	$	23	$	(19)	$	27	$	(22)

Schedule of Pre-Tax Effects of Hedging on AOCI

For the three and six months ended June 30, 2023 and 2022, the pre-tax effects of cash flow and fair value hedge accounting on accumulated OCI for the applicable Registrants were as follows:


Gain (Loss) Recognized in OCI on Derivatives	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
	(in millions)				(in millions)
Southern Company
Cash flow hedges:
Energy-related derivatives	$	(5)	$	(1)	$	(50)	$	41
Interest rate derivatives	3		21		(10)		30
Foreign currency derivatives	8		(74)		9		(102)
Fair value hedges(*):
Foreign currency derivatives	30		(7)		1		(3)
Total	$	36	$	(61)	$	(50)	$	(34)


Georgia Power
Cash flow hedges:
Interest rate derivatives	$	(1)	$	19	$	(3)	$	31



Southern Power
Cash flow hedges:
Energy-related derivatives	$	(2)	$	2	$	(13)	$	7

Foreign currency derivatives	8		(74)		9		(102)
Total	$	6	$	(72)	$	(4)	$	(95)
Southern Company Gas
Cash flow hedges:
Energy-related derivatives	$	(3)	$	(2)	$	(37)	$	35
Interest rate derivatives	3		(5)		4		(5)
Total	$	—	$	(7)	$	(33)	$	30

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

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

For the three and six months ended June 30, 2023 and 2022, 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,

	2023		2022		2023		2022
	(in millions)				(in millions)
Southern Company
Total cost of natural gas	$	199	$	452	$	1,097	$	1,546
Gain (loss) on energy-related cash flow hedges(a)	(9)		10		(29)		18
Total depreciation and amortization	1,112		913		2,222		1,805
Gain (loss) on energy-related cash flow hedges(a)	(4)		4		(13)		6
Total interest expense, net of amounts capitalized	(610)		(488)		(1,192)		(950)
Gain (loss) on interest rate cash flow hedges(a)	(5)		(6)		(9)		(13)
Gain (loss) on foreign currency cash flow hedges(a)	(2)		(7)		(5)		(13)
Gain (loss) on interest rate fair value hedges(b)	(45)		(76)		(3)		(198)
Total other income (expense), net	142		139		286		283
Gain (loss) on foreign currency cash flow hedges(a)(c)	—		(73)		10		(97)
Gain (loss) on foreign currency fair value hedges	29		(96)		26		(121)
Amount excluded from effectiveness testing recognized in earnings	(29)		7		(1)		3










Southern Power
Total depreciation and amortization	$	122	$	131	$	250	$	251
Gain (loss) on energy-related cash flow hedges(a)	(4)		4		(13)		6
Total interest expense, net of amounts capitalized	(33)		(36)		(66)		(73)
Gain (loss) on foreign currency cash flow hedges(a)	(2)		(7)		(5)		(13)
Total other income (expense), net	2		1		4		3
Gain (loss) on foreign currency cash flow hedges(a)(c)	—		(73)		10		(97)
Southern Company Gas
Total cost of natural gas	$	199	$	452	$	1,097	$	1,546
Gain (loss) on energy-related cash flow hedges(a)	(9)		10		(29)		18
Total interest expense, net of amounts capitalized	(73)		(61)		(150)		(122)
Gain (loss) on interest rate cash flow hedges(a)	—		(1)		(1)		(1)
Gain (loss) on interest rate fair value hedges(b)	(15)		(22)		(2)		(57)

(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 June 30, 2023 and December 31, 2022, 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 June 30, 2023		At December 31, 2022		At June 30, 2023		At December 31, 2022
	(in millions)				(in millions)
Southern Company

Long-term debt	$	(2,970)	$	(2,927)	$	265	$	282

Southern Company Gas

Long-term debt	$	(417)	$	(415)	$	80	$	81

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

For the three and six months ended June 30, 2023 and 2022, 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	2023		2022		2023		2022
		(in millions)				(in millions)

Energy-related derivatives:	Natural gas revenues(*)	$	—	$	(15)	$	—	$	(13)
	Cost of natural gas	16		(25)		29		(5)

Total derivatives in non-designated hedging relationships		$	16	$	(40)	$	29	$	(18)

(*)Excludes $14 million of gains for the six months ended June 30, 2023, and immaterial amounts for all other periods presented, recorded in natural gas revenues associated with weather derivatives.