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Revenue from Contracts with Customers
6 Months Ended
Jun. 30, 2018
Revenue from Contract with Customer [Abstract]  
Revenue from Contracts with Customers
REVENUE FROM CONTRACTS WITH CUSTOMERS
The registrants generate revenues from a variety of sources, some of which are excluded from the scope of ASC 606, such as leases, derivatives, and certain cost recovery mechanisms. See Note (A) under "Recently Adopted Accounting StandardsRevenue" for additional information on the adoption of ASC 606 for revenue from contracts with customers.
The majority of the revenues of the traditional electric operating companies and Southern Company Gas are generated from contracts with retail electric and natural gas distribution customers. Revenues from this integrated service to deliver electricity or gas when and if called upon by the customer is recognized as a single performance obligation satisfied over time and is recognized at a tariff rate as electricity or gas is delivered to the customer during the month. The traditional electric operating companies and Southern Company Gas exclude taxes imposed on the customer and collected on behalf of governmental agencies to be remitted to these agencies from the transaction price in determining the revenue related to contracts with a customer.
The traditional electric operating companies and Southern Power also have contracts with multiple performance obligations, such as capacity and energy in a wholesale PPA, where the contract's total transaction price is allocated to each performance obligation based on the standalone selling price. The standalone selling price is primarily determined by the price charged to customers for the specific goods or services transferred with the performance obligations. Generally, the registrants recognize revenue as the performance obligations are satisfied over time as electricity or natural gas is delivered to the customer or as generation capacity is available to the customer. At Southern Company Gas, the performance obligations related to wholesale gas services are satisfied, and revenue is recognized, at a point in time when natural gas is delivered to the customer.
The registrants generally have a right to consideration in an amount that corresponds directly with the value to the customer of the entity's performance completed to date and may recognize revenue in the amount to which the entity has a right to invoice and has elected to recognize revenue for its sales of electricity, capacity, and natural gas using the invoice practical expedient. In addition, payment for goods and services rendered is typically due in the subsequent month following satisfaction of the registrants' performance obligation.
The following tables disaggregate revenue sources for the three and six months ended June 30, 2018:
 
For the Three Months Ended June 30, 2018
For the Six
Months Ended June 30, 2018
 
(in millions)
Southern Company
 
 
Operating revenues
 
 
Retail electric revenues(a)
 
 
Residential
$
1,579

$
3,118

Commercial
1,315

2,557

Industrial
814

1,569

Other
32

64

Natural gas distribution revenues
642

1,865

Alternative revenue programs(b)
(4
)
(27
)
Total retail electric and gas distribution revenues
$
4,378

$
9,146

Wholesale energy revenues(c)(d)
459

928

Wholesale capacity revenues(d)
152

302

Other natural gas revenues(e)
68

476

Other revenues(f)
570

1,147

Total operating revenues
$
5,627

$
11,999

(a)
Retail electric revenues include $18 million and $36 million of leases for the three and six months ended June 30, 2018, respectively, and a net increase of $68 million and $101 million for the three and six months ended June 30, 2018, respectively, from certain cost recovery mechanisms that are not accounted for as revenue under ASC 606. See Note 3 to the financial statements of Southern Company under "Regulatory Matters" in Item 8 of the Form 10-K for additional information on cost recovery mechanisms.
(b)
See Note 1 to the financial statements of Southern Company under "Revenues" in Item 8 of the Form 10-K for additional information on alternative revenue programs at the natural gas distribution utilities. Alternative revenue program revenues are presented net of any previously recognized program amounts billed to customers during the same accounting period.
(c)
Wholesale energy revenues include $61 million and $155 million for the three and six months ended June 30, 2018, respectively, of revenues accounted for as derivatives, primarily related to physical energy sales in the wholesale electricity market. See Note (I) for additional information on energy-related derivative contracts.
(d)
Wholesale energy and wholesale capacity revenues include $118 million and $31 million, respectively, for the three months ended June 30, 2018 and $187 million and $61 million, respectively, for the six months ended June 30, 2018 of PPA contracts accounted for as leases.
(e)
Other natural gas revenues related to Southern Company Gas' energy and risk management activities are presented net of the related costs of those activities and include gross third-party revenues of $1.3 billion and $3.3 billion for the three and six months ended June 30, 2018, respectively, of which $0.7 billion and $1.8 billion, respectively, relates to contracts that are accounted for as derivatives. See Note (L) under "Southern Company Gas" for additional information on the components of wholesale gas services operating revenues.
(f)
Other revenues include $89 million and $183 million for the three and six months ended June 30, 2018, respectively, of revenues not accounted for under ASC 606.
 
Alabama Power
Georgia Power
Gulf
Power
Mississippi Power
 
(in millions)
For the Three Months Ended June 30, 2018
 
 
 
 
Operating revenues
 
 
 
 
Retail revenues(a)(b)
 
 
 
 
Residential
$
557

$
785

$
172

$
65

Commercial
402

749

96

68

Industrial
372

335

31

76

Other
7

20

2

3

Total retail electric revenues
$
1,338

$
1,889

$
301

$
212

Wholesale energy revenues(c)
71

26

21

73

Wholesale capacity revenues
25

13

6

1

Other revenues(b)(d)
69

120

16

11

Total operating revenues
$
1,503

$
2,048

$
344

$
297

 
 
 
 
 
For the Six Months Ended June 30, 2018
 
 
 
 
Operating revenues
 
 
 
 
Retail revenues(a)(b)
 
 
 
 
Residential
$
1,127

$
1,529

$
337

$
125

Commercial
774

1,466

188

130

Industrial
710

650

63

146

Other
13

43

3

5

Total retail electric revenues
$
2,624

$
3,688

$
591

$
406

Wholesale energy revenues(c)
172

66

56

167

Wholesale capacity revenues
49

27

12

5

Other revenues(b)(d)
131

227

33

20

Total operating revenues
$
2,976

$
4,008

$
692

$
598

(a)
Retail revenues at Alabama Power, Georgia Power, Gulf Power, and Mississippi Power include a net increase or (net reduction) of $78 million, $3 million, $(12) million, and $(1) million, respectively, for the three months ended June 30, 2018 and $125 million, $12 million, $(28) million, and $(8) million, respectively, for the six months ended June 30, 2018 related to certain cost recovery mechanisms that are not accounted for as revenue under ASC 606. See Note 3 to the financial statements of Alabama Power, Georgia Power, Gulf Power, and Mississippi Power under "Retail Regulatory Matters" in Item 8 of the Form 10-K for additional information on cost recovery mechanisms.
(b)
Retail revenues and other revenues at Georgia Power include $18 million and $33 million, respectively, for the three months ended June 30, 2018 and $36 million and $66 million, respectively, for the six months ended June 30, 2018 of revenues accounted for as leases.
(c)
Wholesale energy revenues at Alabama Power and Georgia Power include $4 million and $5 million, respectively, for the three months ended June 30, 2018 and $9 million and $13 million, respectively, for the six months ended June 30, 2018 accounted for as derivatives primarily related to physical energy sales in the wholesale electricity market. See Note (I) for additional information on energy-related derivative contracts.
(d)
Other revenues at Alabama Power, Georgia Power, and Gulf Power include $26 million, $26 million, and $2 million, respectively, for the three months ended June 30, 2018 and $52 million, $53 million, and $4 million, respectively, for the six months ended June 30, 2018 of revenues not accounted for under ASC 606.
 
For the Three Months Ended June 30, 2018
For the Six
Months Ended June 30, 2018
 
(in millions)
Southern Power
 
 
PPA capacity revenues(a)
$
144

$
282

PPA energy revenues(a)
302

556

Non-PPA revenues(b)
106

221

Other revenues
3

5

Total operating revenues
$
555

$
1,064

(a)
PPA capacity revenues and PPA energy revenues include $47 million and $127 million, respectively, for the three months ended June 30, 2018 and $94 million and $203 million, respectively, for the six months ended June 30, 2018 related to PPAs accounted for as leases. See Note 1 to the financial statements of Southern Power under "Revenues" in Item 8 of the Form 10-K for additional information on capacity revenues accounted for as leases.
(b)
Non-PPA revenues include $50 million and $129 million for the three and six months ended June 30, 2018, respectively, of revenues from short-term sales related to physical energy sales from uncovered capacity in the wholesale electricity market. See Note 1 to the financial statements of Southern Power under "Revenues" in Item 8 of the Form 10-K and Note (I) for additional information on energy-related derivative contracts.
 
For the Three Months Ended June 30, 2018
For the Six
Months Ended June 30, 2018
 
(in millions)
Southern Company Gas
 
 
Operating revenues
 
 
Natural gas distribution revenues
 
 
Residential
$
273

$
933

Commercial
76

268

Transportation
7

24

Industrial
228

505

Other
58

135

Alternative revenue programs(a)
(4
)
(27
)
Total natural gas distribution revenues
$
638

$
1,838

Gas marketing services(b)
89

359

Wholesale gas services(c)
(15
)
131

Gas midstream operations
18

40

Other revenues

1

Total operating revenues
$
730

$
2,369

(a)
See Note 1 to the financial statements of Southern Company Gas under "Revenues" in Item 8 of the Form 10-K for additional information on alternative revenue programs at the natural gas distribution utilities. Alternative revenue program revenues are presented net of any previously recognized program amounts billed to customers during the same accounting period.
(b)
Gas marketing services includes $4 million for the six months ended June 30, 2018 of revenues not accounted for under ASC 606.
(c)
Wholesale gas services revenues are presented net of the related costs associated with its energy trading and risk management activities. Operating revenues, as presented, include gross third-party revenues of $1.3 billion and $3.3 billion for the three and six months ended June 30, 2018, respectively, of which $0.7 billion and $1.8 billion, respectively, relates to contracts that are accounted for as derivatives. See Note (L) under "Southern Company Gas" for additional information on the components of wholesale gas services operating revenues and Note (I) for additional information on energy-related derivative contracts.
Contract Balances
The following table reflects the closing balances of receivables, contract assets, and contract liabilities related to revenues from contracts with customers as of June 30, 2018:
 
Receivables
 
Contract Assets
 
Contract Liabilities
 
(in millions)
Southern Company
$
2,785

 
$
33

 
$
36

Alabama Power
603

 

 
10

Georgia Power
840

 
9

 
9

Gulf Power
169

 

 
1

Mississippi Power
83

 

 

Southern Power
136

 

 
4

Southern Company Gas
570

 

 
1


As of June 30, 2018, Alabama Power had contract liabilities for outstanding performance obligations primarily related to extended service agreements. Georgia Power had contract assets primarily related to unregulated service agreements where payment is contingent on project completion. Georgia Power had contract liabilities for outstanding performance obligations primarily related to fixed retail customer bill programs where the payment is contingent upon Georgia Power's continued performance and the customer's continued participation in the program over the one-year contract term. Southern Company's unregulated distributed generation business had $23 million and $16 million of contract assets and contract liabilities, respectively, remaining for outstanding performance obligations.
Remaining Performance Obligations
The traditional electric operating companies and Southern Power have long-term contracts with customers in which revenues are recognized as performance obligations are satisfied over the contract term. These contracts primarily relate to PPAs whereby the traditional electric operating companies and Southern Power provide electricity and generation capacity to a customer. The revenue recognized for the delivery of electricity is variable; however, certain PPAs include a fixed payment for fixed generation capacity over the term of the contract. Southern Company's unregulated distributed generation business also has partially satisfied performance obligations related to certain fixed price contracts. Revenues from contracts with customers related to these performance obligations remaining at June 30, 2018 are expected to be recognized as follows:
 
2018
2019
2020
2021
2022
2023 and
Thereafter
 
(in millions)
Southern Company(*)
$
263

$
352

$
322

$
322

$
310

$
1,960

Alabama Power
11

22

22

26

23

161

Georgia Power
20

41

38

40

30

113

Gulf Power
11

22





Mississippi Power
2

3

3

1



Southern Power(*)
211

310

283

277

276

1,809

(*)
Excludes amounts related to held for sale assets. See Note (J) under "Southern Company's Sale of Gulf Power" and "Southern PowerSale of Florida Plants" for additional information.