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Acquisitions and Dispositions
 6 Months Ended
Jun. 30, 2021
Business Combination and Asset Acquisition [Abstract]  
Acquisitions and Dispositions ACQUISITIONS AND DISPOSITIONSSee Note 15 to the financial statements in Item 8 of the Form 10-K for additional information.
Southern Power
Asset Acquisition
During the six months ended June 30, 2021, Southern Power acquired a controlling membership interest in the wind facility listed below. Acquisition-related costs were expensed as incurred and were not material.
Project FacilityResourceSeller
Approximate Nameplate Capacity (MW)
LocationSouthern Power Ownership PercentageCODPPA Contract Period
Deuel Harvest(*)
WindInvenergy Renewables, LLC300Deuel County, SD
100% of
Class B
February 2021
25 years
and
15 years
(*)On March 26, 2021, Southern Power acquired a controlling interest in the facility and consolidates the project's operating results in its financial statements. On March 30, 2021, Southern Power completed a tax equity transaction whereby it received $220 million. The tax equity partner, which is the Class A member, and Invenergy Renewables, LLC each own a noncontrolling interest.
Construction Projects
During the six months ended June 30, 2021, Southern Power continued construction of the Garland and Tranquillity battery energy storage facilities and the Glass Sands wind facility. Total aggregate construction costs, excluding acquisition costs, are expected to be between $390 million and $460 million for the facilities under construction. At June 30, 2021, total costs of construction incurred for these projects were $208 million and are included in CWIP. The ultimate outcome of these matters cannot be determined at this time.
Project FacilityResource
Approximate Nameplate Capacity (MW)
LocationActual/Expected CODPPA Contract Period
Projects Under Construction at June 30, 2021
Garland Solar Storage(a)
Battery energy storage system88Kern County, CAAugust 202120 years
Tranquillity Solar Storage(a)
Battery energy storage system72Fresno County, CAFourth quarter 202120 years
Glass Sands(b)
Wind118Murray County, OKFourth quarter 202112 years
(a)Subsequent to June 30, 2021, Southern Power further restructured its ownership in the Garland battery energy storage project and completed a tax equity transaction whereby it received initial proceeds of $11 million, while retaining the controlling interest. Prior to commercial operation, Southern Power expects to further restructure its ownership in the Tranquillity battery energy storage project and complete a tax equity transaction, but expects to retain the controlling interest. The ultimate outcome of this matter cannot be determined at this time.
(b)In December 2020, Southern Power purchased 100% of the membership interests of the Glass Sands facility.
Development Projects
Southern Power continues to evaluate and refine the deployment of the remaining wind turbine equipment purchased in 2016 and 2017 to development and construction projects. During the six months ended June 30, 2021, gains on wind turbine equipment contributed to various equity method investments totaled approximately $37 million.
Southern Company Gas
Sale of Sequent
On July 1, 2021, Southern Company Gas affiliates completed the sale of Sequent to Williams Field Services Group for a total cash purchase price of $150 million, including estimated working capital adjustments. The preliminary gain associated with the transaction is approximately $90 million, which will be recorded in the third quarter 2021.
Prior to the sale, Southern Company Gas had existing agreements in place in which it guaranteed the payment performance of Sequent. Southern Company Gas will continue to guarantee Sequent's payment performance for a period of time as Williams Field Services Group obtains releases from these obligations. At June 30, 2021, the obligations subject to the payment performance guarantee totaled $268 million. Changes in the price of natural gas, market conditions, and the number of open contracts may change the amount that Southern Company Gas is required to guarantee for Sequent each month. The maximum potential exposure over the period of the payment performance guarantee generally is capped at $1 billion. At closing, Williams Field Services Group issued a payment performance guarantee to Southern Company Gas, equal to the outstanding guarantee obligation throughout this period.
The assets and liabilities of Sequent were classified as held for sale on the balance sheets of Southern Company and Southern Company Gas at June 30, 2021. See "Assets and Liabilities Held for Sale" herein for additional information.
Sale of Pivotal LNG
In connection with its March 2020 sale of Pivotal LNG, Southern Company Gas was entitled to two $5 million payments contingent upon Dominion Modular LNG Holdings, Inc. meeting certain milestones related to Pivotal LNG. Southern Company Gas received the first payment on April 22, 2021 and expects to receive the second payment in February 2022.
Assets and Liabilities Held for Sale
The following table provides the major classes of assets and liabilities classified as held for sale by Southern Company and Southern Company Gas at June 30, 2021 and/or December 31, 2020:
Southern CompanySouthern Company Gas
At June 30,At December 31,At June 30,
202120202021
(in millions)
Assets Held for Sale:
Receivables – energy marketing$486 $— $486 
Natural gas for sale90 — 90 
Other current assets76 — 76 
Total property, plant, and equipment11 8 5 
Leveraged leases45 52 — 
Accumulated deferred income taxes30 — 30 
Other non-current assets49 — 49 
Total Assets Held for Sale$787 $60 $736 
Liabilities Held for Sale:
Energy marketing trade payables$491 $— $491 
Other current liabilities148 — 148 
Other non-current liabilities38 — 38 
Total Liabilities Held for Sale$677 $— $677 
Southern Company Gas' assets and liabilities held for sale at June 30, 2021 were recorded based on their carrying value as the net carrying value of Sequent was lower than the agreed upon price in the sale agreement. See Note (I) for information regarding Sequent's energy-related derivatives held for sale that are recorded at fair value on a recurring basis. Southern Company's other assets held for sale at June 30, 2021 and December 31, 2020 were recorded at fair value on a nonrecurring basis, based primarily on unobservable inputs (Level 3).
See Note 3 to the financial statements under "Other Matters – Southern Company" in Item 8 of the Form 10-K for additional information regarding the leveraged lease investment held for sale.
Southern Company's and Southern Company Gas' asset sales, both individually and combined, do not represent a strategic shift in operations that has, or is expected to have, a major effect on operations and financial results; therefore, none of the assets have been classified as discontinued operations for any of the periods presented.