XML 126 R84.htm IDEA: XBRL DOCUMENT

DERIVATIVES (Tables)

12 Months Ended

Dec. 31, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

At December 31, 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(*)	448	2030	2028
Alabama Power	118	2026	—
Georgia Power	128	2026	—
Mississippi Power	93	2028	—
Southern Power	7	2030	2024
Southern Company Gas(*)	102	2027	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 long natural gas positions of 112 million mmBtu and short natural gas positions of 10 million mmBtu at December 31, 2023, which is also included in Southern Company's total volume.

Notional amount of interest rate derivatives

At December 31, 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) December 31, 2023
	(in millions)					(in millions)
Cash Flow Hedges of Forecasted Debt
Georgia Power	$	150	4.01%	N/A	April 2024	$	—
Mississippi Power	75		3.84%	N/A	June 2024	—
Mississippi Power	75		4.04%	N/A	June 2024	—

Fair Value Hedges of Existing Debt
Southern Company parent	400		1-month SOFR + 0.80%	1.75%	March 2028	(46)
Southern Company parent	1,000		1-month SOFR + 2.48%	3.70%	April 2030	(139)
Southern Company Gas	500		1-month SOFR + 0.49%	1.75%	January 2031	(79)
Southern Company	$	2,200				$	(264)

Schedule of foreign exchange contracts

At December 31, 2023, the following foreign currency derivatives were outstanding:


	Pay Notional		Pay Rate	Receive Notional		Receive Rate	Hedge Maturity Date	Fair Value Gain (Loss) December 31, 2023
	(in millions)			(in millions)				(in millions)
Cash Flow Hedges of Existing Debt
Southern Power	$	564	3.78%	€	500	1.85%	June 2026	$	(22)
Fair Value Hedges of Existing Debt
Southern Company parent	1,476		3.39%	1,250		1.88%	September 2027	(100)
Southern Company	$	2,040		€	1,750			$	(122)

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:


	2023				2022
Derivative Category and Balance Sheet Location	Assets		Liabilities		Assets		Liabilities
	(in millions)
Southern Company
Energy-related derivatives designated as hedging instruments for regulatory purposes

Assets from risk management activities/Liabilities from risk management activities	$	12	$	198	$	123	$	121
Other deferred charges and assets/Other deferred credits and liabilities	31		117		52		44


Total derivatives designated as hedging instruments for regulatory purposes	43		315		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	—		29		3		27
Other deferred charges and assets/Other deferred credits and liabilities	3		4		6		4
Interest rate derivatives:
Assets from risk management activities/Liabilities from risk management activities	—		74		12		62
Other deferred charges and assets/Other deferred credits and liabilities	—		190		—		240
Foreign currency derivatives:
Assets from risk management activities/Liabilities from risk management activities	—		34		—		34
Other deferred charges and assets/Other deferred credits and liabilities	—		88		—		182
Total derivatives designated as hedging instruments in cash flow and fair value hedges	3		419		21		549
Energy-related derivatives not designated as hedging instruments

Assets from risk management activities/Liabilities from risk management activities	8		8		13		13
Other deferred charges and assets/Other deferred credits and liabilities	1		2		2		1


Total derivatives not designated as hedging instruments	9		10		15		14
Gross amounts recognized	55		744		211		728
Gross amounts offset(a)	(23)		(85)		(70)		(111)
Net amounts recognized in the Balance Sheets(b)	$	32	$	659	$	141	$	617


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

Other current assets/Other current liabilities	$	6	$	69	$	42	$	21
Other deferred charges and assets/Other deferred credits and liabilities	9		41		20		18
Total derivatives designated as hedging instruments for regulatory purposes	15		110		62		39



Gross amounts offset	(10)		(10)		(24)		(24)
Net amounts recognized in the Balance Sheets	$	5	$	100	$	38	$	15

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

Other current assets/Other current liabilities	$	2	$	82	$	36	$	43
Other deferred charges and assets/Other deferred credits and liabilities	10		42		6		18
Total derivatives designated as hedging instruments for regulatory purposes	12		124		42		61





Energy-related derivatives not designated as hedging instruments


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

Gross amounts recognized	13		124		42		62
Gross amounts offset	(11)		(11)		(21)		(21)
Net amounts recognized in the Balance Sheets	$	2	$	113	$	21	$	41

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

Other current assets/Other current liabilities	$	3	$	27	$	33	$	24
Other deferred charges and assets/Other deferred credits and liabilities	12		34		26		8
Total derivatives designated as hedging instruments for regulatory purposes	15		61		59		32






Gross amounts offset	(14)		(14)		(17)		(17)
Net amounts recognized in the Balance Sheets	$	1	$	47	$	42	$	15


	2023				2022
Derivative Category and Balance Sheet Location	Assets		Liabilities		Assets		Liabilities
	(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	$	—	$	5	$	—	$	12
Other deferred charges and assets/Other deferred credits and liabilities	3		—		5		—
Foreign currency derivatives:
Other current assets/Other current liabilities	—		11		—		11
Other deferred charges and assets/Other deferred credits and liabilities	—		11		—		36
Total derivatives designated as hedging instruments in cash flow and fair value hedges	3		27		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		—






Total derivatives not designated as hedging instruments	—		—		3		—


Net amounts recognized in the Balance Sheets	$	3	$	27	$	8	$	59

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

Other current assets/Other current liabilities	$	1	$	20	$	12	$	33


Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Other current assets/Other current liabilities	—		24		3		15
Other deferred charges and assets/Other deferred credits and liabilities	—		4		1		4
Interest rate derivatives:
Other current assets/Other current liabilities	—		20		—		14
Other deferred charges and assets/Other deferred credits and liabilities	—		59		—		72
Total derivatives designated as hedging instruments in cash flow and fair value hedges	—		107		4		105
Energy-related derivatives not designated as hedging instruments

Other current assets/Other current liabilities	7		8		11		12
Other deferred charges and assets/Other deferred credits and liabilities	1		2		1		1
Total derivatives not designated as hedging instruments	8		10		12		13
Gross amounts recognized	9		137		28		151
Gross amounts offset(a)	12		(50)		—		(41)
Net amounts recognized in the Balance Sheets(b)	$	21	$	87	$	28	$	110

(a)Gross amounts offset includes cash collateral held on deposit in broker margin accounts of $62 million and $41 million at December 31, 2023 and 2022, respectively.

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

(c)Energy-related derivatives not designated as hedging instruments were immaterial at December 31, 2022. There were no such instruments at December 31, 2023.

Pre-tax effects on the balance sheets

At December 31, 2023 and 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 Sheets
Derivative Category and Balance Sheet Location	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Company Gas
	(in millions)
At December 31, 2023:
Energy-related derivatives:
Other regulatory assets, current	$	(180)	$	(67)	$	(80)	$	(25)	$	(8)
Other regulatory assets, deferred	(87)		(32)		(33)		(22)		—


Other regulatory liabilities, current	9		4		—		1		4
Other regulatory liabilities, deferred	1		—		1		—		—
Total energy-related derivative gains (losses)	$	(257)	$	(95)	$	(112)	$	(46)	$	(4)

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)

Pre-tax effects of hedging on AOCI

For the years ended December 31, 2023, 2022, and 2021, the pre-tax effects of cash flow and fair value hedge accounting on AOCI for the applicable Registrants were as follows:


Gain (Loss) From Derivatives Recognized in OCI	2023		2022		2021
	(in millions)
Southern Company
Cash flow hedges:
Energy-related derivatives	$	(81)	$	3	$	34
Interest rate derivatives	(12)		46		5
Foreign currency derivatives	14		(105)		(103)
Fair value hedges(*):
Foreign currency derivatives	21		(24)		(3)
Total	$	(58)	$	(80)	$	(67)


Georgia Power

Cash flow hedges:
Interest rate derivatives	$	(2)	$	31	$	—






Southern Power
Cash flow hedges:
Energy-related derivatives	$	(18)	$	(15)	$	12
Foreign currency derivatives	14		(105)		(103)
Total	$	(4)	$	(120)	$	(91)
Southern Company Gas
Cash flow hedges:
Energy-related derivatives	$	(63)	$	18	$	22

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

Pre-tax effect of interest rate and energy related derivatives

The pre-tax effects of cash flow and fair value hedge accounting on income for the years ended December 31, 2023, 2022, and 2021 were as follows:


Location and Amount of Gain (Loss) Recognized in Income on Cash Flow and Fair Value Hedging Relationships	2023		2022		2021
	(in millions)
Southern Company
Total cost of natural gas	$	1,644	$	3,004	$	1,619
Gain (loss) on energy-related cash flow hedges(a)	(44)		37		17
Total other operations and maintenance	6,093		6,573		5,902
Gain (loss) on energy-related cash flow hedges(a)	(2)		—		—
Total depreciation and amortization	4,525		3,663		3,565
Gain (loss) on energy-related cash flow hedges(a)	(23)		(5)		9
Total interest expense, net of amounts capitalized	(2,446)		(2,022)		(1,837)
Gain (loss) on interest rate cash flow hedges(a)	(35)		(25)		(27)
Gain (loss) on foreign currency cash flow hedges(a)	(11)		(19)		(24)
Gain (loss) on interest rate fair value hedges(b)	37		(291)		(30)
Total other income (expense), net	553		500		449
Gain (loss) on foreign currency cash flow hedges(a)(c)	19		(83)		(104)
Gain (loss) on foreign currency fair value hedges	69		(106)		(63)
Amount excluded from effectiveness testing recognized in earnings	(21)		24		3










Southern Power
Total depreciation and amortization	$	504	$	516	$	517
Gain (loss) on energy-related cash flow hedges(a)	(23)		(5)		9
Total interest expense, net of amounts capitalized	(129)		(138)		(147)
Gain (loss) on foreign currency cash flow hedges(a)	(11)		(19)		(24)
Total other income (expense), net	12		7		10
Gain (loss) on foreign currency cash flow hedges(a)(c)	19		(83)		(104)
Southern Company Gas
Total cost of natural gas	$	1,644	$	3,004	$	1,619
Gain (loss) on energy-related cash flow hedges(a)	(44)		37		17
Total other operations and maintenance	1,194		1,176		1,072
Gain (loss) on energy-related cash flow hedges(a)	(2)		—		—
Total interest expense, net of amounts capitalized	(310)		(263)		(238)
Gain (loss) on interest rate cash flow hedges(a)	(19)		(4)		—
Gain (loss) on interest rate fair value hedges(b)	6		(86)		—

(a)Reclassified from AOCI 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 AOCI 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

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

Long-term debt	$	(3,024)	$	(2,927)	$	235	$	282

Southern Company Gas

Long-term debt	$	(427)	$	(415)	$	70	$	81

Pre-tax effect of interest rate and energy related derivatives

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 for the years ended December 31, 2023, 2022, and 2021 were as follows:


		Gain (Loss)
Derivatives in Non-Designated Hedging Relationships	Statements of Income Location	2023		2022		2021
		(in millions)

Energy-related derivatives	Natural gas revenues(*)	$	—	$	(11)	$	(117)
	Cost of natural gas	59		(65)		(27)



Total derivatives in non-designated hedging relationships		$	59	$	(76)	$	(144)

(*) Excludes the impact of weather derivatives recorded in natural gas revenues of $15 million and $(7) million for 2023 and 2022, respectively, as they are accounted for based on intrinsic value rather than fair value. There was no weather derivatives impact for 2021.