Consolidated Entities and Equity Method Investments

6 Months Ended

Jun. 30, 2025

Consolidated Entities and Equity Method Investments

CONSOLIDATED ENTITIES AND EQUITY METHOD INVESTMENTS

See Note 7 to the financial statements in Item 8 of the Form 10-K for additional information.

Southern Company

At June 30, 2025 and December 31, 2024, Southern Holdings had equity method investments totaling $115 million and $128 million, respectively, primarily related to investments in venture capital funds focused on energy and utility investments. The net losses from these investments totaled $14 million and $20 million for the three and six months ended June 30, 2025, respectively. Earnings/losses from these investments for the three and six months ended June 30, 2024 were immaterial.

Southern Power

Variable Interest Entities

Southern Power has certain subsidiaries that are determined to be VIEs. Southern Power is considered the primary beneficiary of these VIEs because it controls the most significant activities of the VIEs, including operating and maintaining the respective assets, and has the obligation to absorb expected losses of these VIEs to the extent of its equity interests.

SP Solar and SP Wind

At June 30, 2025 and December 31, 2024, SP Solar had total assets of $5.3 billion and $5.4 billion, respectively, total liabilities of $360 million and $372 million, respectively, and noncontrolling interests of $1.0 billion. Cash distributions from SP Solar are allocated 67% to Southern Power and 33% to the limited partner in accordance with their partnership interest percentage. Under the terms of the limited partnership agreement, distributions without limited partner consent are limited to available cash and SP Solar is obligated to distribute all such available cash to its partners each quarter. Available cash includes all cash generated in the quarter subject to the maintenance of appropriate operating reserves.

At June 30, 2025 and December 31, 2024, SP Wind had total assets of $2.0 billion, total liabilities of $247 million and $177 million, respectively, and noncontrolling interests of $34 million and $35 million, respectively. Under the terms of the limited liability agreement, distributions without Class A member consent are limited to available cash and SP Wind is obligated to distribute all such available cash to its members each quarter. Available cash includes all cash generated in the quarter subject to the maintenance of appropriate operating reserves. Cash distributions from SP Wind are generally allocated 60% to Southern Power and 40% to the three financial investors in accordance with the limited liability agreement.

Southern Power consolidates both SP Solar and SP Wind, as the primary beneficiary, since it controls the most significant activities of each entity, including operating and maintaining their assets. Certain transfers and sales of the assets in the VIEs are subject to partner consent and the liabilities are non-recourse to the general credit of Southern Power. Liabilities consist of customary working capital items and do not include any long-term debt.

Subsequent to June 30, 2025, Southern Power notified the Class A members of its intent to exercise the option to purchase all Class A membership interests in the SP Wind tax equity partnership on December 31, 2025 under the terms of the limited liability agreement.

Other Variable Interest Entities

Southern Power has other consolidated VIEs that relate to certain subsidiaries that have either sold noncontrolling interests to tax equity investors or acquired less than a 100% interest from facility developers. These entities are considered VIEs because the arrangements are structured similar to a limited partnership and the noncontrolling members do not have substantive kick-out rights.

At June 30, 2025 and December 31, 2024, the other VIEs had total assets of $1.6 billion, total liabilities of $229 million and $224 million, respectively, and noncontrolling interests of $657 million and $691 million, respectively.

Under the terms of the partnership agreements, distributions of all available cash are required each month or quarter and additional distributions require partner consent.

Southern Company Gas

The carrying amounts of Southern Company Gas' equity method investments at June 30, 2025 and December 31, 2024 were as follows:


Investment Balance	At June 30, 2025		At December 31, 2024
	(in millions)
SNG	$	1,266	$	1,245
Other	34		34
Total	$	1,300	$	1,279

The earnings from Southern Company Gas' equity method investment in SNG were $23 million and $32 million for the three months ended June 30, 2025 and 2024, respectively, and $62 million and $76 million for the six months ended June 30, 2025 and 2024, respectively. The earnings from Southern Company Gas' other equity method investments were immaterial for all periods presented.