REVENUE FROM CONTRACTS WITH CUSTOMERS AND LEASE INCOME

9 Months Ended

Sep. 30, 2020

Revenue from Contract with Customer [Abstract]

REVENUE FROM CONTRACTS WITH CUSTOMERS AND LEASE INCOME

REVENUE FROM CONTRACTS WITH CUSTOMERS AND LEASE INCOME

Revenue from Contracts with Customers

The Registrants generate revenues from a variety of sources, some of which are not accounted for as revenue from contracts with customers, such as leases, derivatives, and certain cost recovery mechanisms. See Note 1 to the financial statements under "Revenues" in Item 8 of the Form 10-K for additional information on the revenue policies of the Registrants. See "Lease Income" herein and Note (J) for additional information on revenue accounted for under lease and derivative accounting guidance, respectively.

The following table disaggregates revenue from contracts with customers for the three and nine months ended September 30, 2020 and 2019:

	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Three Months Ended September 30, 2020
Operating revenues
Retail electric revenues
Residential	$	2,019	$	752	$	1,183	$	84	$	—	$	—
Commercial	1,354		447		833		74		—		—
Industrial	783		358		352		73		—		—
Other	22		5		15		2		—		—
Total retail electric revenues	4,178		1,562		2,383		233		—		—
Natural gas distribution revenues
Residential	170		—		—		—		—		170
Commercial	41		—		—		—		—		41
Transportation	224		—		—		—		—		224
Industrial	4		—		—		—		—		4
Other	35		—		—		—		—		35
Total natural gas distribution revenues	474		—		—		—		—		474
Wholesale electric revenues
PPA energy revenues	214		40		13		2		165		—
PPA capacity revenues	136		26		15		1		95		—
Non-PPA revenues	59		10		3		93		68		—
Total wholesale electric revenues	409		76		31		96		328		—
Other natural gas revenues
Wholesale gas services	431		—		—		—		—		431
Gas marketing services	38		—		—		—		—		38
Other natural gas revenues	7		—		—		—		—		7
Total natural gas revenues	476		—		—		—		—		476
Other revenues	218		33		115		6		4		—
Total revenue from contracts with customers	5,755		1,671		2,529		335		332		950
Other revenue sources(a)	968		58		88		1		191		630
Other adjustments(b)	(1,103)		—		—		—		—		(1,103)
Total operating revenues	$	5,620	$	1,729	$	2,617	$	336	$	523	$	477

	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Nine Months Ended September 30, 2020
Operating revenues
Retail electric revenues
Residential	$	4,802	$	1,839	$	2,760	$	203	$	—	$	—
Commercial	3,589		1,152		2,242		195		—		—
Industrial	2,081		956		907		218		—		—
Other	68		16		46		6		—		—
Total retail electric revenues	10,540		3,963		5,955		622		—		—
Natural gas distribution revenues
Residential	906		—		—		—		—		906
Commercial	229		—		—		—		—		229
Transportation	723		—		—		—		—		723
Industrial	21		—		—		—		—		21
Other	179		—		—		—		—		179
Total natural gas distribution revenues	2,058		—		—		—		—		2,058
Wholesale electric revenues
PPA energy revenues	550		94		38		7		425		—
PPA capacity revenues	339		78		30		3		231		—
Non-PPA revenues	159		33		7		235		184		—
Total wholesale electric revenues	1,048		205		75		245		840		—
Other natural gas revenues
Wholesale gas services	1,168		—		—		—		—		1,168
Gas marketing services	258		—		—		—		—		258
Other natural gas revenues	22		—		—		—		—		22
Total natural gas revenues	1,448		—		—		—		—		1,448
Other revenues	677		117		329		19		11		—
Total revenue from contracts with customers	15,771		4,285		6,359		886		851		3,506
Other revenue sources(a)	2,604		160		12		9		486		1,973
Other adjustments(b)	(3,117)		—		—		—		—		(3,117)
Total operating revenues	$	15,258	$	4,445	$	6,371	$	895	$	1,337	$	2,362

	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Three Months Ended September 30, 2019
Operating revenues
Retail electric revenues
Residential	$	2,119	$	820	$	1,211	$	88	$	—	$	—
Commercial	1,563		512		965		86		—		—
Industrial	953		421		450		82		—		—
Other	26		7		16		3		—		—
Total retail electric revenues	4,661		1,760		2,642		259		—		—
Natural gas distribution revenues
Residential	162		—		—		—		—		162
Commercial	42		—		—		—		—		42
Transportation	204		—		—		—		—		204
Industrial	3		—		—		—		—		3
Other	30		—		—		—		—		30
Total natural gas distribution revenues	441		—		—		—		—		441
Wholesale electric revenues
PPA energy revenues	245		43		19		2		188		—
PPA capacity revenues	134		25		13		1		100		—
Non-PPA revenues	62		2		3		111		81		—
Total wholesale electric revenues	441		70		35		114		369		—
Other natural gas revenues
Wholesale gas services	425		—		—		—		—		425
Gas marketing services	37		—		—		—		—		37
Other natural gas revenues	10		—		—		—		—		10
Total natural gas revenues	472		—		—		—		—		472
Other revenues	267		36		113		4		3		—
Total revenue from contracts with customers	6,282		1,866		2,790		377		372		913
Other revenue sources(a)	855		(25)		(35)		(7)		202		727
Other adjustments(b)	(1,142)		—		—		—		—		(1,142)
Total operating revenues	$	5,995	$	1,841	$	2,755	$	370	$	574	$	498

	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Nine Months Ended September 30, 2019
Operating revenues
Retail electric revenues
Residential	$	4,939	$	1,971	$	2,751	$	217	$	—	$	—
Commercial	3,951		1,301		2,427		223		—		—
Industrial	2,428		1,128		1,074		226		—		—
Other	69		20		41		8		—		—
Total retail electric revenues	11,387		4,420		6,293		674		—		—
Natural gas distribution revenues
Residential	992		—		—		—		—		992
Commercial	277		—		—		—		—		277
Transportation	673		—		—		—		—		673
Industrial	25		—		—		—		—		25
Other	191		—		—		—		—		191
Total natural gas distribution revenues	2,158		—		—		—		—		2,158
Wholesale electric revenues
PPA energy revenues	648		110		47		8		508		—
PPA capacity revenues	350		77		41		2		272		—
Non-PPA revenues	174		65		5		275		190		—
Total wholesale electric revenues	1,172		252		93		285		970		—
Other natural gas revenues
Wholesale gas services	1,590		—		—		—		—		1,590
Gas marketing services	313		—		—		—		—		313
Other natural gas revenues	32		—		—		—		—		32
Total natural gas revenues	1,935		—		—		—		—		1,935
Other revenues	763		119		298		14		10		—
Total revenue from contracts with customers	17,415		4,791		6,684		973		980		4,093
Other revenue sources(a)	3,266		(29)		22		(3)		547		2,744
Other adjustments(b)	(4,176)		—		—		—		—		(4,176)
Total operating revenues	$	16,505	$	4,762	$	6,706	$	970	$	1,527	$	2,661

(a)Other revenue sources primarily relate to revenues from customers accounted for as derivatives and leases, as well as alternative revenue programs at Southern Company Gas and other cost recovery mechanisms at the traditional electric operating companies.

(b)Other adjustments relate to the cost of Southern Company Gas' energy and risk management activities. Wholesale gas services revenues are presented net of the related costs of those activities on the statement of income. See Note (L) under "Southern Company Gas" for additional information on the components of wholesale gas services' operating revenues.

Contract Balances

The following table reflects the closing balances of receivables, contract assets, and contract liabilities related to revenues from contracts with customers at September 30, 2020 and December 31, 2019:

	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Accounts Receivables
As of September 30, 2020	$	2,344	$	686	$	901	$	93	$	100	$	385
As of December 31, 2019	2,413		586		688		79		97		749
Contract Assets
As of September 30, 2020	$	159	$	5	$	103	$	—	$	—	$	—
As of December 31, 2019	117		—		69		—		—		—
Contract Liabilities
As of September 30, 2020	$	56	$	1	$	24	$	—	$	3	$	1
As of December 31, 2019	52		10		13		—		1		1

As of September 30, 2020 and December 31, 2019, Georgia Power had contract assets 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 a one-year contract term, and unregulated service agreements, where payment is contingent on project completion. Contract liabilities for Georgia Power relate to cash collections recognized in advance of revenue for certain unregulated service agreements. Alabama Power had contract liabilities for outstanding performance obligations primarily related to extended service agreements. Southern Company's unregulated distributed generation business had $47 million and $40 million of contract assets and $22 million and $28 million of contract liabilities at September 30, 2020 and December 31, 2019, respectively, for outstanding performance obligations.

Revenues recognized by Southern Company in the three and nine months ended September 30, 2020, which were included in contract liabilities at December 31, 2019, were $8 million and $29 million, respectively, and immaterial for all other applicable Registrants.

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. Revenue from contracts with customers related to these performance obligations remaining at September 30, 2020 are expected to be recognized as follows:

	2020 (remaining)		2021		2022		2023		2024		2025 and Thereafter
	(in millions)
Southern Company	$	170	$	487	$	362	$	339	$	319	$	3,062
Alabama Power	7		33		31		24		7		5
Georgia Power	20		71		43		35		24		62
Southern Power	60		290		292		282		290		3,013

Revenue expected to be recognized for performance obligations remaining at September 30, 2020 was immaterial for Mississippi Power.

Lease Income

Lease income for the three and nine months ended September 30, 2020 and 2019 is as follows:

	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
For the Three Months Ended September 30, 2020
Lease income - interest income on sales-type leases	$	3	$	—	$	—	$	3	$	—	$	—
Lease income - operating leases	50		11		14		—		21		9
Variable lease income	145		—		—		—		153		—
Total lease income	$	198	$	11	$	14	$	3	$	174	$	9
For the Nine Months Ended September 30, 2020
Lease income - interest income on sales-type leases	$	8	$	—	$	—	$	8	$	—	$	—
Lease income - operating leases	148		24		44		1		66		26
Variable lease income	345		—		—		—		368		—
Total lease income	$	501	$	24	$	44	$	9	$	434	$	26
For the Three Months Ended September 30, 2019
Lease income - interest income on sales-type leases	$	2	$	—	$	—	$	2	$	—	$	—
Lease income - operating leases	64		5		18		—		31		9
Variable lease income	141		—		—		—		151		—
Total lease income	$	207	$	5	$	18	$	2	$	182	$	9
For the Nine Months Ended September 30, 2019
Lease income - interest income on sales-type leases	$	7	$	—	$	—	$	7	$	—	$	—
Lease income - operating leases	216		19		57		—		111		26
Variable lease income	324		—		—		—		349		—
Total lease income	$	547	$	19	$	57	$	7	$	460	$	26

Lease income for Southern Power is included in wholesale revenues. Lease payments received under tolling arrangements and PPAs consist of either scheduled payments or variable payments based on the amount of energy produced by the underlying electric generating units.

As part of the Autauga Combined Cycle Acquisition, Alabama Power assumed an existing power sales agreement under which the full output of the generating facility remains committed to another third party for its remaining term of approximately three years. These revenues are included above as lease income from operating leases. See Note (B) and Note 15 to the financial statements in Item 8 of the Form 10-K under "Alabama Power" for additional information.

Lease Receivables

Mississippi Power completed construction of additional leased assets under an existing sales-type lease during the third quarter 2020. Upon completion of construction, the book value of $25 million was transferred from CWIP to lease receivables, of which $22 million and $3 million is included in other property and investments and other accounts and notes receivable, respectively, at September 30, 2020. The transfer represents a non-cash investing transaction for purposes of the statements of cash flows.