XML 96 R68.htm IDEA: XBRL DOCUMENT

Derivatives (Tables)

9 Months Ended

Sep. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

At September 30, 2023, the net volume of energy-related derivative contracts for natural gas positions, together with the longest hedge date over which the respective entity is hedging its exposure to the variability in future cash flows for forecasted transactions and the longest non-hedge date for derivatives not designated as hedges, were as follows:


	Net Purchased mmBtu	Longest Hedge Date	Longest Non-Hedge Date
	(in millions)
Southern Company(*)	422	2030	2028
Alabama Power	109	2026	—
Georgia Power	104	2026	—
Mississippi Power	80	2027	—
Southern Power	8	2030	2024
Southern Company Gas(*)	121	2027	2028

(*)Southern Company Gas' derivative instruments include both long and short natural gas positions. A long position is a contract to purchase natural gas and a short position is a contract to sell natural gas. Southern Company Gas' volume represents the net of 135.5 million mmBtu long natural gas positions and 14.2 million mmBtu short natural gas positions at September 30, 2023, which is also included in Southern Company's total volume.

Schedule of Interest Rate Derivatives

At September 30, 2023, the following interest rate derivatives were outstanding:


	Notional Amount		Weighted Average Interest Rate Paid	Interest Rate Received	Hedge Maturity Date	Fair Value Gain (Loss) at September 30, 2023
	(in millions)					(in millions)


Fair Value Hedges of Existing Debt
Southern Company parent	$	400	1-month SOFR + 0.80%	1.75%	March 2028	$	(56)
Southern Company parent	1,000		1-month SOFR + 2.48%	3.70%	April 2030	(196)
Southern Company Gas	500		1-month SOFR + 0.49%	1.75%	January 2031	(99)
Southern Company	$	1,900				$	(351)

Schedule of Foreign Currency Derivatives

At September 30, 2023, the following foreign currency derivatives were outstanding:


	Pay Notional		Pay Rate	Receive Notional		Receive Rate	Hedge Maturity Date	Fair Value Gain (Loss) at September 30, 2023
	(in millions)			(in millions)				(in millions)
Cash Flow Hedges of Existing Debt
Southern Power	$	564	3.78%	€	500	1.85%	June 2026	$	(42)

Fair Value Hedges of Existing Debt

Southern Company parent	1,476		3.39%	1,250		1.88%	September 2027	(150)


Southern Company	$	2,040		€	1,750			$	(192)

Schedule of Derivative Category and Balance Sheet Location

The fair value of energy-related derivatives, interest rate derivatives, and foreign currency derivatives was reflected in the balance sheets as follows:


	At September 30, 2023				At December 31, 2022
Derivative Category and Balance Sheet Location	Assets		Liabilities		Assets		Liabilities
	(in millions)				(in millions)
Southern Company
Energy-related derivatives designated as hedging instruments for regulatory purposes

Assets from risk management activities/Liabilities from risk management activities	$	34	$	134	$	123	$	121
Other deferred charges and assets/Other deferred credits and liabilities	36		77		52		44


Total derivatives designated as hedging instruments for regulatory purposes	70		211		175		165
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Assets from risk management activities/Liabilities from risk management activities	—		28		3		27
Other deferred charges and assets/Other deferred credits and liabilities	4		2		6		4
Interest rate derivatives:
Assets from risk management activities/Liabilities from risk management activities	—		80		12		62
Other deferred charges and assets/Other deferred credits and liabilities	—		271		—		240
Foreign currency derivatives:
Assets from risk management activities/Liabilities from risk management activities	—		35		—		34
Other deferred charges and assets/Other deferred credits and liabilities	—		157		—		182
Total derivatives designated as hedging instruments in cash flow and fair value hedges	4		573		21		549
Energy-related derivatives not designated as hedging instruments

Assets from risk management activities/Liabilities from risk management activities	5		8		13		13
Other deferred charges and assets/Other deferred credits and liabilities	1		2		2		1

Total derivatives not designated as hedging instruments	6		10		15		14
Gross amounts recognized	80		794		211		728
Gross amounts offset(a)	(37)		(86)		(70)		(111)
Net amounts recognized in the Balance Sheets(b)	$	43	$	708	$	141	$	617


	At September 30, 2023				At December 31, 2022
Derivative Category and Balance Sheet Location	Assets		Liabilities		Assets		Liabilities
	(in millions)				(in millions)
Alabama Power(c)
Energy-related derivatives designated as hedging instruments for regulatory purposes

Other current assets/Other current liabilities	$	15	$	46	$	42	$	21
Other deferred charges and assets/Other deferred credits and liabilities	11		29		20		18
Total derivatives designated as hedging instruments for regulatory purposes	26		75		62		39






Gross amounts offset	(17)		(17)		(24)		(24)
Net amounts recognized in the Balance Sheets	$	9	$	58	$	38	$	15

Georgia Power
Energy-related derivatives designated as hedging instruments for regulatory purposes

Other current assets/Other current liabilities	$	4	$	57	$	36	$	43
Other deferred charges and assets/Other deferred credits and liabilities	10		26		6		18
Total derivatives designated as hedging instruments for regulatory purposes	14		83		42		61





Energy-related derivatives not designated as hedging instruments

Other current assets/Other current liabilities	—		—		—		1

Gross amounts recognized	14		83		42		62
Gross amounts offset	(11)		(11)		(21)		(21)
Net amounts recognized in the Balance Sheets	$	3	$	72	$	21	$	41

Mississippi Power(c)
Energy-related derivatives designated as hedging instruments for regulatory purposes

Other current assets/Other current liabilities	$	9	$	22	$	33	$	24
Other deferred charges and assets/Other deferred credits and liabilities	15		22		26		8
Total derivatives designated as hedging instruments for regulatory purposes	24		44		59		32






Gross amounts offset	(17)		(17)		(17)		(17)
Net amounts recognized in the Balance Sheets	$	7	$	27	$	42	$	15


	At September 30, 2023				At December 31, 2022
Derivative Category and Balance Sheet Location	Assets		Liabilities		Assets		Liabilities
	(in millions)				(in millions)
Southern Power
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Other current assets/Other current liabilities	$	—	$	5	$	—	$	12
Other deferred charges and assets/Other deferred credits and liabilities	4		—		5		—
Foreign currency derivatives:
Other current assets/Other current liabilities	—		11		—		11
Other deferred charges and assets/Other deferred credits and liabilities	—		31		—		36
Total derivatives designated as hedging instruments in cash flow and fair value hedges	4		47		5		59
Energy-related derivatives not designated as hedging instruments

Other current assets/Other current liabilities	1		1		2		—
Other deferred charges and assets/Other deferred credits and liabilities	—		—		1		—
Total derivatives not designated as hedging instruments	1		1		3		—
Gross amounts recognized	5		48		8		59
Gross amounts offset	(1)		(1)		—		—
Net amounts recognized in the Balance Sheets	$	4	$	47	$	8	$	59

Southern Company Gas
Energy-related derivatives designated as hedging instruments for regulatory purposes

Other current assets/Other current liabilities	$	6	$	9	$	12	$	33


Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Other current assets/Other current liabilities	—		23		3		15
Other deferred charges and assets/Other deferred credits and liabilities	—		2		1		4
Interest rate derivatives:
Other current assets/Other current liabilities	—		21		—		14
Other deferred charges and assets/Other deferred credits and liabilities	—		78		—		72
Total derivatives designated as hedging instruments in cash flow and fair value hedges	—		124		4		105
Energy-related derivatives not designated as hedging instruments

Other current assets/Other current liabilities	4		7		11		12
Other deferred charges and assets/Other deferred credits and liabilities	1		2		1		1

Total derivatives not designated as hedging instruments	5		9		12		13
Gross amounts recognized	11		142		28		151
Gross amounts offset(a)	9		(40)		—		(41)
Net amounts recognized in the Balance Sheets(b)	$	20	$	102	$	28	$	110

(a)Gross amounts offset includes cash collateral held on deposit in broker margin accounts of $49 million and $41 million at September 30, 2023 and December 31, 2022, respectively.

(b)Net amounts of derivative instruments outstanding exclude immaterial premium and intrinsic value associated with weather derivatives for both periods presented.

(c)Energy-related derivatives not designated as hedging instruments were immaterial for Alabama Power and Mississippi Power at December 31, 2022. There were no such instruments for Alabama Power and Mississippi Power at September 30, 2023.

Schedule of Pre-tax Effects of Unrealized Derivative Gains (Losses)

At September 30, 2023 and December 31, 2022, the pre-tax effects of unrealized derivative gains (losses) arising from energy-related derivative instruments designated as regulatory hedging instruments and deferred were as follows:


Regulatory Hedge Unrealized Gain (Loss) Recognized in the Balance Sheet
Derivative Category and Balance Sheet Location	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Company Gas
	(in millions)
At September 30, 2023:
Energy-related derivatives:
Other regulatory assets, current	$	(113)	$	(39)	$	(54)	$	(16)	$	(4)
Other regulatory assets, deferred	(48)		(19)		(18)		(11)		—


Other regulatory liabilities, current	23		8		1		4		10
Other regulatory liabilities, deferred	6		1		2		3		—
Total energy-related derivative gains (losses)	$	(132)	$	(49)	$	(69)	$	(20)	$	6

At December 31, 2022:
Energy-related derivatives:
Other regulatory assets, current	$	(71)	$	(8)	$	(26)	$	(13)	$	(24)
Other regulatory assets, deferred	(23)		(7)		(14)		(2)		—
Other regulatory liabilities, current	72		29		19		22		2
Other regulatory liabilities, deferred	31		9		2		20		—
Total energy-related derivative gains (losses)	$	9	$	23	$	(19)	$	27	$	(22)

Schedule of Pre-Tax Effects of Hedging on AOCI

For the three and nine months ended September 30, 2023 and 2022, the pre-tax effects of cash flow and fair value hedge accounting on accumulated OCI for the applicable Registrants were as follows:


Gain (Loss) Recognized in OCI on Derivatives	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2023		2022		2023		2022
	(in millions)				(in millions)
Southern Company
Cash flow hedges:
Energy-related derivatives	$	(4)	$	11	$	(55)	$	51
Interest rate derivatives	(3)		6		(12)		36
Foreign currency derivatives	(15)		(35)		(6)		(137)
Fair value hedges(*):
Foreign currency derivatives	27		20		28		18
Total	$	5	$	2	$	(45)	$	(32)


Georgia Power
Cash flow hedges:
Interest rate derivatives	$	—	$	—	$	(3)	$	31



Southern Power
Cash flow hedges:
Energy-related derivatives	$	—	$	(11)	$	(14)	$	(4)

Foreign currency derivatives	(15)		(35)		(6)		(137)
Total	$	(15)	$	(46)	$	(20)	$	(141)
Southern Company Gas
Cash flow hedges:
Energy-related derivatives	$	(4)	$	22	$	(41)	$	55
Interest rate derivatives	(4)		5		—		—
Total	$	(8)	$	27	$	(41)	$	55

(*)Represents amounts excluded from the assessment of effectiveness for which the difference between changes in fair value and periodic amortization is recorded in OCI.

Schedule of Pre-Tax Effects of Cash Flow and Fair Value Hedging on Income

For the three and nine months ended September 30, 2023 and 2022, the pre-tax effects of cash flow and fair value hedge accounting on income were as follows:


Location and Amount of Gain (Loss) Recognized in Income on Cash Flow and Fair Value Hedging Relationships	For the Three Months Ended September 30,				For the Nine Months Ended September 30,

	2023		2022		2023		2022
	(in millions)				(in millions)
Southern Company
Total cost of natural gas	$	102	$	294	$	1,199	$	1,840
Gain (loss) on energy-related cash flow hedges(a)	(4)		9		(32)		28
Total other operations and maintenance	1,424		1,527		4,352		4,568
Gain (loss) on energy-related cash flow hedges(a)	(1)		—		(2)		—
Total depreciation and amortization	1,143		922		3,365		2,728
Gain (loss) on energy-related cash flow hedges(a)	(5)		(1)		(18)		5
Total interest expense, net of amounts capitalized	(620)		(511)		(1,812)		(1,461)
Gain (loss) on interest rate cash flow hedges(a)	(22)		(7)		(31)		(19)
Gain (loss) on foreign currency cash flow hedges(a)	(3)		(3)		(8)		(16)
Gain (loss) on interest rate fair value hedges(b)	(47)		(102)		(50)		(300)
Total other income (expense), net	141		132		428		414
Gain (loss) on foreign currency cash flow hedges(a)(c)	(14)		(32)		(4)		(129)
Gain (loss) on foreign currency fair value hedges	(7)		(59)		19		(180)
Amount excluded from effectiveness testing recognized in earnings	(27)		(21)		(28)		(17)










Southern Power
Total depreciation and amortization	$	130	$	133	$	380	$	384
Gain (loss) on energy-related cash flow hedges(a)	(5)		(1)		(18)		5
Total interest expense, net of amounts capitalized	(32)		(32)		(98)		(105)
Gain (loss) on foreign currency cash flow hedges(a)	(3)		(3)		(8)		(16)
Total other income (expense), net	4		3		8		5
Gain (loss) on foreign currency cash flow hedges(a)(c)	(14)		(32)		(4)		(129)
Southern Company Gas
Total cost of natural gas	$	102	$	294	$	1,199	$	1,840
Gain (loss) on energy-related cash flow hedges(a)	(4)		9		(32)		28
Total other operations and maintenance	264		252		879		824
Gain (loss) on energy-related cash flow hedges(a)	(1)		—		(2)		—
Total interest expense, net of amounts capitalized	(77)		(65)		(226)		(187)
Gain (loss) on interest rate cash flow hedges(a)	(18)		(2)		(18)		(3)
Gain (loss) on interest rate fair value hedges(b)	(11)		(30)		(14)		(87)

(a)Reclassified from accumulated OCI into earnings.

(b)For fair value hedges, changes in the fair value of the derivative contracts are generally equal to changes in the fair value of the underlying debt and have no material impact on income.

(c)The reclassification from accumulated OCI into other income (expense), net completely offsets currency gains and losses arising from changes in the U.S. currency exchange rates used to record the euro-denominated notes.

Schedule of Cumulative Basis Adjustments for Fair Value Hedges

At September 30, 2023 and December 31, 2022, the following amounts were recorded on the balance sheets related to cumulative basis adjustments for fair value hedges:


	Carrying Amount of the Hedged Item				Cumulative Amount of Fair Value Hedging Adjustment included in Carrying Amount of the Hedged Item
Balance Sheet Location of Hedged Items	At September 30, 2023		At December 31, 2022		At September 30, 2023		At December 31, 2022
	(in millions)				(in millions)
Southern Company

Long-term debt	$	(2,873)	$	(2,927)	$	328	$	282

Southern Company Gas

Long-term debt	$	(402)	$	(415)	$	95	$	81

Schedule of Pre-tax Effect of Interest Rate and Energy Related Derivatives on Income

For the three and nine months ended September 30, 2023 and 2022, the pre-tax effects of energy-related derivatives not designated as hedging instruments on the statements of income of Southern Company and Southern Company Gas were as follows:


		Gain (Loss)
		Three Months Ended September 30,				Nine Months Ended September 30,
Derivatives in Non-Designated Hedging Relationships	Statements of Income Location	2023		2022		2023		2022
		(in millions)				(in millions)

Energy-related derivatives:	Natural gas revenues(*)	$	—	$	3	$	—	$	(10)
	Cost of natural gas	7		(2)		36		(7)

Total derivatives in non-designated hedging relationships		$	7	$	1	$	36	$	(17)

(*)Excludes $14 million of gains for the nine months ended September 30, 2023, and immaterial amounts for all other periods presented, recorded in natural gas revenues associated with weather derivatives.