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Derivatives (Tables)

3 Months Ended

Mar. 31, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

At March 31, 2024, 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(*)	475	2030	2028
Alabama Power	125	2027	2024
Georgia Power	142	2026	2024
Mississippi Power	108	2028	2024
Southern Power	7	2030	2024
Southern Company Gas(*)	93	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 100.7 million mmBtu long natural gas positions and 7.8 million mmBtu short natural gas positions at March 31, 2024, which is also included in Southern Company's total volume.

Schedule of Interest Rate Derivatives

At March 31, 2024, 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 March 31, 2024
	(in millions)					(in millions)



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	(166)
Southern Company Gas	500		1-month SOFR + 0.49%	1.75%	January 2031	(83)
Southern Company	$	1,900				$	(295)

Schedule of Foreign Currency Derivatives

At March 31, 2024, the following foreign currency derivatives were outstanding:


	Pay Notional		Pay Rate	Receive Notional		Receive Rate	Hedge Maturity Date	Fair Value Gain (Loss) at March 31, 2024
	(in millions)			(in millions)				(in millions)
Cash Flow Hedges of Existing Debt
Southern Power	$	564	3.78%	€	500	1.85%	June 2026	$	(36)

Fair Value Hedges of Existing Debt

Southern Company parent	1,476		3.39%	1,250		1.88%	September 2027	(130)


Southern Company	$	2,040		€	1,750			$	(166)

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 March 31, 2024				At December 31, 2023
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

Other current assets/Liabilities from risk management activities, net of collateral	$	13	$	208	$	12	$	198
Other current assets/Other deferred credits and liabilities	29		98		31		117


Total derivatives designated as hedging instruments for regulatory purposes	42		306		43		315
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Other current assets/Liabilities from risk management activities, net of collateral	—		19		—		29
Other deferred charges and assets/Other deferred credits and liabilities	3		1		3		4
Interest rate derivatives:
Other current assets/Liabilities from risk management activities, net of collateral	—		77		—		74
Other deferred charges and assets/Other deferred credits and liabilities	—		218		—		190
Foreign currency derivatives:
Other current assets/Liabilities from risk management activities, net of collateral	—		35		—		34
Other deferred charges and assets/Other deferred credits and liabilities	—		131		—		88
Total derivatives designated as hedging instruments in cash flow and fair value hedges	3		481		3		419
Energy-related derivatives not designated as hedging instruments

Other current assets/Liabilities from risk management activities, net of collateral	3		4		8		8
Other deferred charges and assets/Other deferred credits and liabilities	—		—		1		2

Total derivatives not designated as hedging instruments	3		4		9		10
Gross amounts recognized	48		791		55		744
Gross amounts offset(a)	(19)		(73)		(23)		(85)
Net amounts recognized in the Balance Sheets(b)	$	29	$	718	$	32	$	659


	At March 31, 2024				At December 31, 2023
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	$	4	$	68	$	6	$	69
Other deferred charges and assets/Other deferred credits and liabilities	8		33		9		41
Total derivatives designated as hedging instruments for regulatory purposes	12		101		15		110






Gross amounts offset	(9)		(9)		(10)		(10)
Net amounts recognized in the Balance Sheets	$	3	$	92	$	5	$	100

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

Other current assets/Other current liabilities	$	3	$	82	$	2	$	82
Other deferred charges and assets/Other deferred credits and liabilities	9		33		10		42
Total derivatives designated as hedging instruments for regulatory purposes	12		115		12		124





Energy-related derivatives not designated as hedging instruments

Other current assets/Other current liabilities	1		—		1		—

Gross amounts recognized	13		115		13		124
Gross amounts offset	(11)		(11)		(11)		(11)
Net amounts recognized in the Balance Sheets	$	2	$	104	$	2	$	113

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

Other current assets/Other current liabilities	$	3	$	30	$	3	$	27
Other deferred charges and assets/Other deferred credits and liabilities	10		30		12		34
Total derivatives designated as hedging instruments for regulatory purposes	13		60		15		61






Gross amounts offset	(13)		(13)		(14)		(14)
Net amounts recognized in the Balance Sheets	$	—	$	47	$	1	$	47


	At March 31, 2024				At December 31, 2023
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	$	—	$	4	$	—	$	5
Other deferred charges and assets/Other deferred credits and liabilities	3		—		3		—
Foreign currency derivatives:
Other current assets/Other current liabilities	—		11		—		11
Other deferred charges and assets/Other deferred credits and liabilities	—		25		—		11
Total derivatives designated as hedging instruments in cash flow and fair value hedges	3		40		3		27
Energy-related derivatives not designated as hedging instruments

Other current assets/Other current liabilities	—		1		—		—




Net amounts recognized in the Balance Sheets	$	3	$	41	$	3	$	27

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

Other current assets/Other current liabilities	$	3	$	28	$	1	$	20
Other deferred charges and assets/Other deferred credits and liabilities	2		2		—		—
Total derivatives designated as hedging instruments for regulatory purposes	5		30		1		20
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Other current assets/Other current liabilities	—		15		—		24
Other deferred charges and assets/Other deferred credits and liabilities	—		1		—		4
Interest rate derivatives:
Other current assets/Other current liabilities	—		19		—		20
Other deferred charges and assets/Other deferred credits and liabilities	—		64		—		59
Total derivatives designated as hedging instruments in cash flow and fair value hedges	—		99		—		107
Energy-related derivatives not designated as hedging instruments

Other current assets/Other current liabilities	2		3		7		8
Other deferred charges and assets/Other deferred credits and liabilities	—		—		1		2

Total derivatives not designated as hedging instruments	2		3		8		10
Gross amounts recognized	7		132		9		137
Gross amounts offset(a)	14		(40)		12		(50)
Net amounts recognized in the Balance Sheets(b)	$	21	$	92	$	21	$	87

(a)Gross amounts offset includes cash collateral held on deposit in broker margin accounts of $54 million and $62 million at March 31, 2024 and December 31, 2023, 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 at March 31, 2024. There were no such instruments for Alabama Power and Mississippi Power at December 31, 2023.

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

At March 31, 2024 and December 31, 2023, 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 March 31, 2024:
Energy-related derivatives:
Other regulatory assets, current	$	(181)	$	(66)	$	(79)	$	(27)	$	(9)
Other regulatory assets, deferred	(71)		(26)		(25)		(20)		—


Other regulatory liabilities, current	13		2		—		—		11
Other regulatory liabilities, deferred	2		1		1		—		—
Total energy-related derivative gains (losses)	$	(237)	$	(89)	$	(103)	$	(47)	$	2

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)

Schedule of Pre-Tax Effects of Hedging on AOCI

For the three months ended March 31, 2024 and 2023, 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 March 31,
		2024		2023
	(in millions)
Southern Company
Cash flow hedges:
Energy-related derivatives		$	(8)	$	(45)
Interest rate derivatives		23		(13)
Foreign currency derivatives		(14)		—
Fair value hedges(*):
Foreign currency derivatives		—		(28)
Total		$	1	$	(86)


Georgia Power
Cash flow hedges:
Interest rate derivatives		$	16	$	(1)

Mississippi Power
Cash flow hedges:
Interest rate derivatives		$	7	$	—
Southern Power
Cash flow hedges:
Energy-related derivatives		$	(1)	$	(11)

Foreign currency derivatives		(14)		—
Total		$	(15)	$	(11)
Southern Company Gas
Cash flow hedges:
Energy-related derivatives		$	(7)	$	(34)
Interest rate derivatives		—		1
Total		$	(7)	$	(33)

(*)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 months ended March 31, 2024 and 2023, 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 March 31,

						2024	2023
	(in millions)
Southern Company
Total cost of natural gas		$	605	$	898
Gain (loss) on energy-related cash flow hedges(a)		(23)		(20)
Total other operations and maintenance		1,472		1,440
Gain (loss) on energy-related cash flow hedges(a)		(1)		—
Total depreciation and amortization		1,145		1,111
Gain (loss) on energy-related cash flow hedges(a)		(1)		(9)
Total interest expense, net of amounts capitalized		(665)		(582)
Gain (loss) on interest rate cash flow hedges(a)		(4)		(4)
Gain (loss) on foreign currency cash flow hedges(a)		(3)		(3)
Gain (loss) on interest rate fair value hedges(b)		(31)		43
Total other income (expense), net		153		147
Gain (loss) on foreign currency cash flow hedges(a)(c)		(12)		10
Gain (loss) on foreign currency fair value hedges		39		(2)
Amount excluded from effectiveness testing recognized in earnings		—		28










Southern Power
Total depreciation and amortization		$	118	$	128
Gain (loss) on energy-related cash flow hedges(a)		(1)		(9)
Total interest expense, net of amounts capitalized		(29)		(33)
Gain (loss) on foreign currency cash flow hedges(a)		(3)		(3)
Total other income (expense), net		3		2
Gain (loss) on foreign currency cash flow hedges(a)(c)		(12)		10
Southern Company Gas
Total cost of natural gas		$	605	$	898
Gain (loss) on energy-related cash flow hedges(a)		(23)		(20)
Total other operations and maintenance		293		305
Gain (loss) on energy-related cash flow hedges(a)		(1)		—
Total interest expense, net of amounts capitalized		(84)		(76)
Gain (loss) on interest rate cash flow hedges(a)		—		(1)
Gain (loss) on interest rate fair value hedges(b)		(4)		13

(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 March 31, 2024 and December 31, 2023, 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 March 31, 2024		At December 31, 2023		At March 31, 2024		At December 31, 2023
	(in millions)				(in millions)
Southern Company

Long-term debt	$	(2,971)	$	(3,024)	$	259	$	235

Southern Company Gas

Long-term debt	$	(418)	$	(427)	$	79	$	70

- Definition

Tabular disclosure of pertinent information about a derivative or group of derivatives on a disaggregated basis, such as for individual instruments, or small groups of similar instruments. May include a combination of the type of instrument, risks being hedged, notional amount, hedge designation, related hedged item, inception date, maturity date, or other relevant item.

+ References + Details