Segment and Related Information

12 Months Ended

Dec. 31, 2016

Segment Reporting Information [Line Items]

SEGMENT AND RELATED INFORMATION

SEGMENT AND RELATED INFORMATION

The primary business of the Southern Company system is electricity sales by the traditional electric operating companies and Southern Power and, as a result of closing the Merger, the distribution of natural gas by Southern Company Gas. The four traditional electric operating companies – Alabama Power, Georgia Power, Gulf Power, and Mississippi Power – are vertically integrated utilities providing electric service in four Southeastern states. Southern Power constructs, acquires, owns, and manages power generation assets, including renewable energy projects, and sells electricity at market-based rates in the wholesale market. Southern Company Gas distributes natural gas through the natural gas distribution utilities in seven states and is involved in several other complementary businesses including gas marketing services, wholesale gas services, and gas midstream operations.

Southern Company's reportable business segments are the sale of electricity by the four 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 $419 million, $417 million, and $383 million in 2016, 2015, and 2014, respectively. 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 energy technologies and services to electric utilities and large industrial, commercial, institutional, and municipal customers; as well as investments in telecommunications and leveraged lease projects. All other inter-segment revenues are not material. Financial data for business segments and products and services for the years ended December 31, 2016, 2015, and 2014 was as follows:

	Electric Utilities
	Traditional Electric Operating Companies		Southern Power			Eliminations			Total		Southern Company Gas		All Other			Eliminations			Consolidated
	(in millions)
2016
Operating revenues	$	16,803	$	1,577		$	(439	)	$	17,941	$	1,652	$	463		$	(160	)	$	19,896
Depreciation and amortization	1,881		352			—			2,233		238		31			—			2,502
Interest income	6		7			—			13		2		20			(15		)	20
Earnings from equity method investments	2		—			—			2		60		(3		)	—			59
Interest expense	814		117			—			931		81		317			(12		)	1,317
Income taxes	1,286		(195		)	—			1,091		76		(216		)	—			951
Segment net income (loss)(a) (b)	2,233		338			—			2,571		114		(230		)	(7		)	2,448
Total assets	72,141		15,169			(316		)	86,994		21,853		2,474			(1,624		)	109,697
Gross property additions	4,852		2,114			—			6,966		618		41			(1		)	7,624
2015
Operating revenues	$	16,491	$	1,390		$	(439	)	$	17,442	$	—	$	152		$	(105	)	$	17,489
Depreciation and amortization	1,772		248			—			2,020		—		14			—			2,034
Interest income	19		2			1			22		—		6			(5		)	23
Earnings from equity method investments	1		—			—			1		—		(1		)	—			—
Interest expense	697		77			—			774		—		69			(3		)	840
Income taxes	1,305		21			—			1,326		—		(132		)	—			1,194
Segment net income (loss)(a) (b)	2,186		215			—			2,401		—		(32		)	(2		)	2,367
Total assets	69,052		8,905			(397		)	77,560		—		1,819			(1,061		)	78,318
Gross property additions	5,124		1,005			—			6,129		—		40			—			6,169
2014
Operating revenues	$	17,354	$	1,501		$	(449	)	$	18,406	$	—	$	159		$	(98	)	$	18,467
Depreciation and amortization	1,709		220			—			1,929		—		16			—			1,945
Interest income	17		1			—			18		—		3			(2		)	19
Earnings from equity method investments	1		—			—			1		—		(1		)	—			—
Interest expense	705		89			—			794		—		43			(2		)	835
Income taxes	1,056		(3		)	—			1,053		—		(76		)	—			977
Segment net income (loss)(a) (b)	1,797		172			—			1,969		—		(3		)	(3		)	1,963
Total assets(c)	64,300		5,233			(131		)	69,402		—		1,143			(312		)	70,233
Gross property additions	5,568		942			—			6,510		—		11			1			6,522

(a) Attributable to Southern Company.

(b) Segment net income (loss) for the traditional electric operating companies includes pre-tax charges for estimated probable losses on the Kemper IGCC of $428 million ($264 million after tax) in 2016, $365 million ($226 million after tax) in 2015, and $868 million ($536 million after tax) in 2014. See Note 3 under "Integrated Coal Gasification Combined Cycle – Kemper IGCC Schedule and Cost Estimate" for additional information.

(c) Net of $202 million of unamortized debt issuance costs as of December 31, 2014.Also net of $488 million of deferred tax assets as of December 31, 2014.

Products and Services

Electric Utilities' Revenues
Year	Retail		Wholesale		Other		Total
	(in millions)
2016	$	15,234	$	1,926	$	781	$	17,941
2015	14,987		1,798		657		17,442
2014	15,550		2,184		672		18,406

Southern Company Gas' Revenues
Year	Gas Distribution Operations		Gas Marketing Services		All Other		Total
	(in millions)
2016	$	1,266	$	354	$	32	$	1,652

Southern Company Gas [Member]

Segment Reporting Information [Line Items]

SEGMENT AND RELATED INFORMATION

SEGMENT AND RELATED INFORMATION

The Company manages its business through four reportable segments - gas distribution operations (formerly referred to as distribution operations), gas marketing services (formerly referred to as retail operations), wholesale gas services (formerly referred to as wholesale services), and gas midstream operations (formerly referred to as midstream operations). The non-reportable segments are combined and presented as all other. In conjunction with the Merger, the Company changed the names of certain reportable segments to better align with its new parent company.

Gas distribution operations is the largest component of the Company's business and includes natural gas local distribution utilities that construct, manage, and maintain intrastate natural gas pipelines and gas distribution facilities in seven states. Gas marketing services includes natural gas marketing to end-use customers primarily in Georgia and Illinois. Additionally, gas marketing services provides home equipment protection products and services. Wholesale gas services provides natural gas asset management and/or related logistics services for each of the Company's utilities except Nicor Gas as well as for non-affiliated companies. Additionally, this segment engages in natural gas storage and gas pipeline arbitrage and related activities. Since the acquisition of the Company's 50% interest in SNG, gas midstream operations primarily consists of the Company's gas pipeline investments, with storage and fuel operations also aggregated into this segment. The all other column includes segments below the quantitative threshold for separate disclosure, including the subsidiaries that fall below the quantitative threshold for separate disclosure.

After the Merger, the Company changed the segment performance measure to net income, which is utilized by its new parent company. In order to properly assess net income by segment, the Company executed various intercompany note agreements to revise interest charges to its segments. Since such agreements did not exist in the predecessor periods, the Company is unable to provide the comparable net income for those periods.

Financial data for business segments for the successor period of July 1, 2016 through December 31, 2016 and for the predecessor periods of January 1, 2016 through June 30, 2016 and the years ended December 31, 2015 and 2014 were as follows:

	Gas Distribution Operations			Gas Marketing Services			Wholesale Gas Services(*)			Gas Midstream Operations			Total			All Other			Eliminations			Consolidated
	(in millions)
Successor – July 1, 2016 through December 31, 2016
Operating revenues	$	1,342		$	354		$	24		$	31		$	1,751		$	3		$	(102	)	$	1,652
Depreciation and amortization	185			35			1			9			230			8			—			238
Earnings from equity method investments	—			—			—			58			58			2			—			60
Interest expense	(105		)	(1		)	(3		)	(16		)	(125		)	44			—			(81		)
Income taxes	51			7			(3		)	16			71			5			—			76
Segment net income (loss)	77			19			—			20			116			(2		)	—			114
Gross property additions	561			5			1			54			621			11			—			632
Successor – Total assets at December 31, 2016	19,453			2,084			1,127			2,211			24,875			11,145			(14,167		)	21,853

(*) The revenues for wholesale gas services are netted with costs associated with its energy and risk management activities. A reconciliation of operating revenues and intercompany revenues is shown in the following table.

	Gas Distribution Operations		Gas Marketing Services		Wholesale Gas Services(*)			Gas Midstream Operations			Total		All Other			Eliminations			Consolidated
	(in millions)
Predecessor – January 1, 2016 through June 30, 2016
Operating revenues	$	1,575	$	435	$	(32	)	$	25		$	2,003	$	4		$	(102	)	$	1,905
Depreciation and  amortization	178		11		1			9			199		7			—			206
EBIT	353		109		(68		)	(6		)	388		(60		)	—			328
Gross property additions	484		4		1			43			532		16			—			548
Predecessor – Year Ended December 31, 2015
Operating revenues	$	3,049	$	835	$	202		$	55		$	4,141	$	11		$	(211	)	$	3,941
Depreciation and  amortization	336		25		1			18			380		17			—			397
EBIT	581		152		110			(23		)	820		(59		)	—			761
Gross property additions	957		7		2			27			993		34			—			1,027
Predecessor – Total assets at December 31, 2015	12,519		686		935			692			14,832		9,662			(9,740		)	14,754
Predecessor – Year Ended December 31, 2014
Operating revenues	$	4,001	$	994	$	578		$	88		5,661		$	7		$	(283	)	$	5,385
Depreciation and  amortization	317		28		1			18			364		16			—			380
EBIT	582		132		425			(17		)	1,122		(10		)	—			1,112
Gross property additions	715		11		2			15			743		26			—			769
Predecessor – Total assets at December 31, 2014	12,038		670		1,402			694			14,804		9,705			(9,647		)	14,862

(*) The revenues for wholesale gas services are netted with costs associated with its energy and risk management activities. A reconciliation of operating revenues and intercompany revenues is shown in the following table.

	Third Party Gross Revenues		Intercompany Revenues		Total Gross Revenues		Less Gross Gas Costs		Operating Revenues
	(in millions)
Successor – July 1, 2016 through December 31, 2016	$	5,807	$	333	$	6,140	$	6,116	$	24
	(in millions)
Predecessor – January 1, 2016 through June 30, 2016	$	2,500	$	143	$	2,643	$	2,675	$	(32	)
Year Ended December 31, 2015	6,286		408		6,694		6,492		202
Year Ended December 31, 2014	10,709		718		11,427		10,849		578