Fair Value Measurements

12 Months Ended

Dec. 31, 2013

Fair value measurements are based on inputs of observable and unobservable market data that a market participant would use in pricing the asset or liability. The use of observable inputs is maximized where available and the use of unobservable inputs is minimized for fair value measurement and reflects a three-tier fair value hierarchy that prioritizes inputs to valuation techniques used for fair value measurement.


•	Level 1 consists of observable market data in an active market for identical assets or liabilities.


•	Level 2 consists of observable market data, other than that included in Level 1, that is either directly or indirectly observable.


•	Level 3 consists of unobservable market data. The input may reflect the assumptions of the Company of what a market participant would use in pricing an asset or liability. If there is little available market data, then the Company's own assumptions are the best available information.

In the case of multiple inputs being used in a fair value measurement, the lowest level input that is significant to the fair value measurement represents the level in the fair value hierarchy in which the fair value measurement is reported.

As of December 31, 2013, assets and liabilities measured at fair value on a recurring basis during the period, together with the level of the fair value hierarchy in which they fall, were as follows:



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
As of December 31, 2013:	(Level 1)		(Level 2)		(Level 3)		Total
	(in millions)
Assets:
Energy-related derivatives	$	—	$	24	$	—	$	24
Interest rate derivatives	—		3		—		3
Nuclear decommissioning trusts:^(a)
Domestic equity	589		75		—		664
Foreign equity	35		196		—		231
U.S. Treasury and government agency securities	—		103		—		103
Municipal bonds	—		64		—		64
Corporate bonds	—		229		—		229
Mortgage and asset backed securities	—		132		—		132
Other investments	—		37		3		40
Cash equivalents	491		—		—		491
Other investments	9		—		4		13
Total	$	1,124	$	863	$	7	$	1,994

Liabilities:
Energy-related derivatives	$	—	$	56	$	—	$	56


(a)	Includes the investment securities pledged to creditors and collateral received, and excludes receivables related to investment income, pending investment sales, and payables related to pending investment purchases and the lending pool. See Note 1 under "Nuclear Decommissioning" for additional information.

As of December 31, 2012, assets and liabilities measured at fair value on a recurring basis during the period, together with the level of the fair value hierarchy in which they fall, were as follows:



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
As of December 31, 2012:	(Level 1)		(Level 2)		(Level 3)		Total
	(in millions)
Assets:
Energy-related derivatives	$	—	$	26	$	—	$	26
Interest rate derivatives	—		10		—		10
Nuclear decommissioning trusts:^(a)
Domestic equity	453		65		—		518
Foreign equity	28		172		—		200
U.S. Treasury and government agency securities	—		134		—		134
Municipal bonds	—		55		—		55
Corporate bonds	—		234		—		234
Mortgage and asset backed securities	—		141		—		141
Other investments	—		20		—		20
Cash equivalents	384		—		—		384
Other investments	9		—		15		24
Total	$	874	$	857	$	15	$	1,746

Liabilities:
Energy-related derivatives	$	—	$	111	$	—	$	111


(a)	Includes the investment securities pledged to creditors and collateral received, and excludes receivables related to investment income, pending investment sales, and payables related to pending investment purchases and the lending pool. See Note 1 under "Nuclear Decommissioning" for additional information.

Valuation Methodologies

The energy-related derivatives primarily consist of over-the-counter financial products for natural gas and physical power products including, from time to time, basis swaps. These are standard products used within the energy industry and are valued using the market approach. The inputs used are mainly from observable market sources, such as forward natural gas prices, power prices, implied volatility, and Overnight Index Swap interest rates. Interest rate derivatives are also standard over-the-counter financial products valued using the market approach. Inputs for interest rate derivatives include LIBOR interest rates, interest rate futures contracts, and occasionally implied volatility of interest rate options. See Note 11 for additional information on how these derivatives are used.

A market price secured from the primary source vendor is then evaluated by management in its valuation of the assets within the trusts. As a general approach, market pricing vendors gather market data (including indices and market research reports) and integrate relative credit information, observed market movements, and sector news into proprietary pricing models, pricing systems, and mathematical tools. Dealer quotes and other market information including live trading levels and pricing analysts' judgment are also obtained when available.

"Other investments" include investments in funds that are valued using the market approach and income approach. Securities that are traded in the open market are valued at the closing price on their principal exchange as of the measurement date. Discounts are applied in accordance with GAAP when certain trading restrictions exist. For investments that are not traded in the open market, the price paid will have been determined based on market factors including comparable multiples and the expectations regarding cash flows and business plan execution. As the investments mature or if market conditions change materially, further analysis of the fair market value of the investment is performed. This analysis is typically based on a metric, such as multiple of earnings, revenues, earnings before interest and income taxes, or earnings adjusted for certain cash changes. These multiples are based on comparable multiples for publicly traded companies or other relevant prior transactions.

As of December 31, 2013 and 2012, the fair value measurements of investments calculated at net asset value per share (or its equivalent), as well as the nature and risks of those investments, were as follows:



	Fair Value		Unfunded Commitments	Redemption Frequency	Redemption Notice Period
As of December 31, 2013:	(in millions)
Nuclear decommissioning trusts:
Foreign equity funds	$	131	None	Monthly	5 days
Corporate bonds – commingled funds	8		None	Daily	Not applicable
Equity – commingled funds	65		None	Daily/Monthly	Daily/7 days
Other – commingled funds	24		None	Daily	Not applicable
Trust-owned life insurance	110		None	Daily	15 days
Cash equivalents:
Money market funds	491		None	Daily	Not applicable
As of December 31, 2012:
Nuclear decommissioning trusts:
Foreign equity funds	$	117	None	Monthly	5 days
Corporate bonds – commingled funds	9		None	Daily	Not applicable
Equity – commingled funds	55		None	Daily/Monthly	Daily/7 days
Other – commingled funds	10		None	Daily	Not applicable
Trust-owned life insurance	96		None	Daily	15 days
Cash equivalents:
Money market funds	384		None	Daily	Not applicable

The NRC requires licensees of commissioned nuclear power reactors to establish a plan for providing reasonable assurance of funds for future decommissioning. Alabama Power and Georgia Power have the Funds to comply with the NRC's regulations. The foreign equity fund in Georgia Power's nuclear decommissioning trusts seeks to provide long-term capital appreciation. In pursuing this investment objective, the foreign equity fund primarily invests in a diversified portfolio of equity securities of foreign companies, including those in emerging markets. These equity securities may include, but are not limited to, common stocks, preferred stocks, real estate investment trusts, convertible securities and depositary receipts, including American depositary receipts, European depositary receipts and global depositary receipts, and rights and warrants to buy common stocks. Georgia Power may withdraw all or a portion of its investment on the last business day of each month subject to a minimum withdrawal of $1 million, provided that a minimum investment of $10 million remains. If notices of withdrawal exceed 20% of the aggregate value of the foreign equity fund, then the foreign equity fund's board may refuse to permit the withdrawal of all such investments and may scale down the amounts to be withdrawn pro rata and may further determine that any withdrawal that has been postponed will have priority on the subsequent withdrawal date.

The commingled funds in Georgia Power's nuclear decommissioning trusts are invested primarily in a diversified portfolio including, but not limited to, commercial paper, notes, repurchase agreements, and other evidences of indebtedness with a maturity not exceeding 13 months from the date of purchase. The commingled funds will, however, generally maintain a dollar-weighted average portfolio maturity of 90 days or less. The assets may be longer term investment grade fixed income obligations with maturity shortening provisions. The primary objective for the commingled funds is a high level of current income consistent with stability of principal and liquidity. The commingled funds included within corporate bonds represent the investment of cash collateral received under the Funds' managers' securities lending program that can only be sold upon the return of the loaned securities. See Note 1 under "Nuclear Decommissioning" for additional information.

Alabama Power's nuclear decommissioning trust includes investments in TOLI. The taxable nuclear decommissioning trust invests in the TOLI in order to minimize the impact of taxes on the portfolio and can draw on the value of the TOLI through death proceeds, loans against the cash surrender value, and/or the cash surrender value, subject to legal restrictions. The amounts reported in the table above reflect the fair value of investments the insurer has made in relation to the TOLI agreements. The nuclear decommissioning trust does not own the underlying investments, but the fair value of the investments approximates the cash surrender value of the TOLI policies. The investments made by the insurer are in commingled funds. The commingled funds primarily include investments in domestic and international equity securities and predominantly high-quality fixed income securities. These fixed income securities may include U.S. Treasury and government agency fixed income securities, non-U.S. government and agency fixed income securities, domestic and foreign corporate fixed income securities, and, to some degree, mortgage and asset backed securities. The passively managed funds seek to replicate the performance of a related index. The actively managed funds seek to exceed the performance of a related index through security analysis and selection.

The money market funds are short-term investments of excess funds in various money market mutual funds, which are portfolios of short-term debt securities. The money market funds are regulated by the Securities and Exchange Commission and typically receive the highest rating from credit rating agencies. Regulatory and rating agency requirements for money market funds include minimum credit ratings and maximum maturities for individual securities and a maximum weighted average portfolio maturity. Redemptions are available on a same day basis up to the full amount of the Company's investment in the money market funds.

As of December 31, 2013 and 2012, other financial instruments for which the carrying amount did not equal fair value were as follows:



	Carrying Amount		Fair Value
	(in millions)
Long-term debt:
2013	$	21,650	$	22,197
2012	$	21,530	$	23,480

The fair values are determined using Level 2 measurements and are based on quoted market prices for the same or similar issues or on the current rates offered to Southern Company, Alabama Power, Georgia Power, Gulf Power, Mississippi Power, and Southern Power.

Alabama Power [Member]

Fair Value Disclosures [Line Items]

FAIR VALUE MEASUREMENTS


•	Level 1 consists of observable market data in an active market for identical assets or liabilities.


•	Level 2 consists of observable market data, other than that included in Level 1, that is either directly or indirectly observable.


•	Level 3 consists of unobservable market data. The input may reflect the assumptions of the Company of what a market participant would use in pricing an asset or liability. If there is little available market data, then the Company's own assumptions are the best available information.

As of December 31, 2013, assets and liabilities measured at fair value on a recurring basis during the period, together with the level of the fair value hierarchy in which they fall, were as follows:



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
As of December 31, 2013:	(Level 1)		(Level 2)		(Level 3)		Total
	(in millions)
Assets:
Energy-related derivatives	$	—	$	7	$	—	$	7
Nuclear decommissioning trusts:^(a)
Domestic equity	392		74		—		466
Foreign equity	35		65		—		100
U.S. Treasury and government agency securities	—		24		—		24
Corporate bonds	—		89		—		89
Mortgage and asset backed securities	—		18		—		18
Other investments	—		13		3		16
Cash equivalents	236		—		—		236
Total	$	663	$	290	$	3	$	956
Liabilities:
Energy-related derivatives	$	—	$	8	$	—	$	8


(a)	Excludes receivables related to investment income, pending investment sales, and payables related to pending investment purchases. See Note 1 under "Nuclear Decommissioning" for additional information.

As of December 31, 2012, assets and liabilities measured at fair value on a recurring basis during the period, together with the level of the fair value hierarchy in which they fall, were as follows:



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
As of December 31, 2012:	(Level 1)		(Level 2)		(Level 3)		Total
	(in millions)
Assets:
Energy-related derivatives	$	—	$	5	$	—	$	5
Nuclear decommissioning trusts:^(a)
Domestic equity	291		64		—		355
Foreign equity	28		55		—		83
U.S. Treasury and government agency securities	—		29		—		29
Corporate bonds	—		101		—		101
Mortgage and asset backed securities	—		26		—		26
Other investments	—		10		—		10
Total	$	319	$	290	$	—	$	609
Liabilities:
Energy-related derivatives	$	—	$	18	$	—	$	18


(a)	Excludes receivables related to investment income, pending investment sales, and payables related to pending investment purchases.

Valuation Methodologies

For fair value measurements of investments within the nuclear decommissioning trusts, specifically the fixed income assets using significant other observable inputs and unobservable inputs, the primary valuation technique used is the market approach. External pricing vendors are designated for each of the asset classes in the nuclear decommissioning trusts with each security discriminately assigned a primary pricing source, based on similar characteristics. Other investments in private equity and real estate are generally classified as Level 3, as the underlying assets typically do not have observable inputs. The fund manager values these assets using various inputs and techniques depending on the nature of the underlying investments. The fair value of partnerships is determined by aggregating the value of the underlying assets.

A market price secured from the primary source vendor is evaluated by management in its valuation of the assets within the trusts. As a general approach, market pricing vendors gather market data (including indices and market research reports) and integrate relative credit information, observed market movements, and sector news into proprietary pricing models, pricing systems, and mathematical tools. Dealer quotes and other market information including live trading levels and pricing analysts' judgment are also obtained when available.



	Fair Value	Unfunded Commitments	Redemption Frequency	Redemption Notice Period
As of December 31, 2013:	(in millions)
Nuclear decommissioning trusts:
Equity-commingled funds	$65	None	Daily/Monthly	Daily/7 Days
Trust-owned life insurance	110	None	Daily	15 days
Cash equivalents:
Money market funds	236	None	Daily	Not applicable
As of December 31, 2012:
Nuclear decommissioning trusts:
Equity-commingled funds	$55	None	Daily/Monthly	Daily/7 days
Trust-owned life insurance	96	None	Daily	15 days

The nuclear decommissioning trust includes investments in TOLI. The taxable nuclear decommissioning trust invests in the TOLI in order to minimize the impact of taxes on the portfolio and can draw on the value of the TOLI through death proceeds, loans against the cash surrender value, and/or the cash surrender value, subject to legal restrictions. The amounts reported in the table above reflect the fair value of investments the insurer has made in relation to the TOLI agreements. The nuclear decommissioning trust does not own the underlying investments, but the fair value of the investments approximates the cash surrender value of the TOLI policies. The investments made by the insurer are in commingled funds. The commingled funds primarily include investments in domestic and international equity securities and predominantly high-quality fixed income securities. These fixed income securities may include U.S. Treasury and government agency fixed income securities, non-U.S. government and agency fixed income securities, domestic and foreign corporate fixed income securities, and, to some degree, mortgage and asset backed securities. The passively managed funds seek to replicate the performance of a related index. The actively managed funds seek to exceed the performance of a related index through security analysis and selection.

The money market funds are short-term investments of excess funds in various money market mutual funds, which are portfolios of short-term debt securities. The money market funds are regulated by the SEC and typically receive the highest rating from credit rating agencies. Regulatory and rating agency requirements for money market funds include minimum credit ratings and maximum maturities for individual securities and a maximum weighted average portfolio maturity. Redemptions are available on a same day basis, up to the full amount of the Company's investment in the money market funds.

As of December 31, 2013 and 2012, other financial instruments for which the carrying amount did not equal fair value were as follows:



	Carrying Amount		Fair Value
	(in millions)
Long-term debt:
2013	$	6,228	$	6,534
2012	$	6,179	$	6,899

The fair values are determined using Level 2 measurements and are based on quoted market prices for the same or similar issues or on the current rates offered to the Company.

Georgia Power [Member]

Fair Value Disclosures [Line Items]

FAIR VALUE MEASUREMENTS


•	Level 1 consists of observable market data in an active market for identical assets or liabilities.


•	Level 2 consists of observable market data, other than that included in Level 1, that is either directly or indirectly observable.


•	Level 3 consists of unobservable market data. The input may reflect the assumptions of the Company of what a market participant would use in pricing an asset or liability. If there is little available market data, then the Company's own assumptions are the best available information.

As of December 31, 2013, assets and liabilities measured at fair value on a recurring basis during the period, together with the level of the fair value hierarchy in which they fall, were as follows:



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
As of December 31, 2013:	(Level 1)		(Level 2)		(Level 3)		Total
	(in millions)
Assets:
Energy-related derivatives	$	—	$	5	$	—	$	5
Nuclear decommissioning trusts:^(a)
Domestic equity	197		1		—		198
Foreign equity	—		131		—		131
U.S. Treasury and government agency securities	—		79		—		79
Municipal bonds	—		64		—		64
Corporate bonds	—		140		—		140
Mortgage and asset backed securities	—		114		—		114
Other investments	—		24		—		24
Total	$	197	$	558	$	—	$	755
Liabilities:
Energy-related derivatives	$	—	$	21	$	—	$	21


(a)	Includes the investment securities pledged to creditors and collateral received, and excludes receivables related to investment income, pending investment sales, and payables related to pending investment purchases and the lending pool. See Note 1 under "Nuclear Decommissioning" for additional information.

As of December 31, 2012, assets and liabilities measured at fair value on a recurring basis during the period, together with the level of the fair value hierarchy in which they fall, were as follows:



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
As of December 31, 2012:	(Level 1)		(Level 2)		(Level 3)		Total
	(in millions)
Assets:
Energy-related derivatives	$	—	$	11	$	—	$	11
Nuclear decommissioning trusts:^(a)
Domestic equity	162		1		—		163
Foreign equity	—		117		—		117
U.S. Treasury and government agency securities	—		105		—		105
Municipal bonds	—		55		—		55
Corporate bonds	—		133		—		133
Mortgage and asset backed securities	—		115		—		115
Other investments	—		10		—		10
Cash equivalents	15		—		—		15
Total	$	177	$	547	$	—	$	724
Liabilities:
Energy-related derivatives	$	—	$	45	$	—	$	45


(a)	Includes the investment securities pledged to creditors and collateral received, and excludes receivables related to investment income, pending investment sales, and payables related to pending investment purchases and the lending pool. See Note 1 under "Nuclear Decommissioning" for additional information.

Valuation Methodologies

The energy-related derivatives primarily consist of over-the-counter financial products for natural gas, including, from time to time, basis swaps. These are standard products used within the energy industry and are valued using the market approach. The inputs used are mainly from observable market sources, such as forward natural gas prices, implied volatility, and Overnight Index Swap interest rates. See Note 11 for additional information on how these derivatives are used.



	Fair Value		Unfunded Commitments	Redemption Frequency	Redemption Notice Period
As of December 31, 2013:	(in millions)
Nuclear decommissioning trusts:
Foreign equity fund	$	131	None	Daily	5 days
Corporate bonds — commingled funds	8		None	Daily	Not applicable
Other — commingled funds	24		None	Daily	Not applicable
As of December 31, 2012:
Nuclear decommissioning trusts:
Foreign equity fund	$	117	None	Daily	5 days
Corporate bonds — commingled funds	9		None	Daily	Not applicable
Other — commingled funds	10		None	Daily	Not applicable
Cash equivalents:
Money market funds	15		None	Daily	Not applicable

The NRC requires licensees of commissioned nuclear power reactors to establish a plan for providing reasonable assurance of funds for future decommissioning. The foreign equity fund in the nuclear decommissioning trusts seeks to provide long-term capital appreciation. In pursuing this investment objective, the foreign equity fund primarily invests in a diversified portfolio of equity securities of foreign companies, including those in emerging markets. These equity securities may include, but are not limited to, common stocks, preferred stocks, real estate investment trusts, convertible securities and depositary receipts, including American depositary receipts, European depositary receipts and global depositary receipts, and rights and warrants to buy common stocks. The Company may withdraw all or a portion of its investment on the last business day of each month subject to a minimum withdrawal of $1 million, provided that a minimum investment of $10 million remains. If notices of withdrawal exceed 20% of the aggregate value of the foreign equity fund, then the foreign equity fund's board may refuse to permit the withdrawal of all such investments and may scale down the amounts to be withdrawn pro rata and may further determine that any withdrawal that has been postponed will have priority on the subsequent withdrawal date.

The commingled funds in the nuclear decommissioning trusts are invested primarily in a diversified portfolio including, but not limited to, commercial paper, notes, repurchase agreements, and other evidences of indebtedness with a maturity not exceeding 13 months from the date of purchase. The commingled funds will, however, generally maintain a dollar-weighted average portfolio maturity of 90 days or less. The assets may be longer term investment grade fixed income obligations with maturity shortening provisions. The primary objective for the commingled funds is a high level of current income consistent with stability of principal and liquidity. The commingled funds included within corporate bonds represent the investment of cash collateral received under the Funds' managers' securities lending program that can only be sold upon the return of the loaned securities. See Note 1 under "Nuclear Decommissioning" for additional information.

The money market funds are short-term investments of excess funds in various money market mutual funds, which are portfolios of short-term debt securities. The money market funds are regulated by the SEC and typically receive the highest rating from credit rating agencies. Regulatory and rating agency requirements for money market funds include minimum credit ratings and maximum maturities for individual securities and a maximum weighted average portfolio maturity. Redemptions are available on a same day basis up to the full amount of the Company's investment in the money market funds.

As of December 31, 2013 and 2012, other financial instruments for which the carrying amount did not equal fair value were as follows:



	Carrying Amount		Fair Value
	(in millions)
Long-term debt:
2013	$	8,593	$	8,782
2012	$	9,624	$	10,427

The fair values are determined using Level 2 measurements and are based on quoted market prices for the same or similar issues or on current rates offered to the Company.

Gulf Power [Member]

Fair Value Disclosures [Line Items]

FAIR VALUE MEASUREMENTS


•	Level 1 consists of observable market data in an active market for identical assets or liabilities.


•	Level 2 consists of observable market data, other than that included in Level 1, that is either directly or indirectly observable.


•	Level 3 consists of unobservable market data. The input may reflect the assumptions of the Company of what a market participant would use in pricing an asset or liability. If there is little available market data, then the Company's own assumptions are the best available information.

As of December 31, 2013, assets and liabilities measured at fair value on a recurring basis during the period, together with the level of the fair value hierarchy in which they fall, were as follows:



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
As of December 31, 2013:	(Level 1)		(Level 2)		(Level 3)		Total
	(in thousands)
Assets:
Energy-related derivatives	$	—	$	6,962	$	—	$	6,962
Cash equivalents	15,929		—		—		15,929
Total	$	15,929	$	6,962	$	—	$	22,891
Liabilities:
Energy-related derivatives	$	—	$	17,043	$	—	$	17,043

As of December 31, 2012, assets and liabilities measured at fair value on a recurring basis during the period, together with the level of the fair value hierarchy in which they fall, were as follows:



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
As of December 31, 2012:	(Level 1)		(Level 2)		(Level 3)		Total
	(in thousands)
Assets:
Energy-related derivatives	$	—	$	4,358	$	—	$	4,358
Cash equivalents	15,231		—		—		15,231
Total	$	15,231	$	4,358	$	—	$	19,589
Liabilities:
Energy-related derivatives	$	—	$	27,112	$	—	$	27,112

Valuation Methodologies



	Fair Value	Unfunded Commitments	Redemption Frequency	Redemption Notice Period
As of December 31, 2013:	(in thousands)
Cash equivalents:
Money market funds	$15,929	None	Daily	Not applicable
As of December 31, 2012:
Cash equivalents:
Money market funds	$15,231	None	Daily	Not applicable

The money market funds are short-term investments of excess funds in various money market mutual funds, which are portfolios of short-term debt securities. The money market funds are regulated by the SEC and typically receive the highest rating from credit rating agencies. Regulatory and rating agency requirements for money market funds include minimum credit ratings and maximum maturities for individual securities and a maximum weighted average portfolio maturity. Redemptions are available on a same day basis up to the full amount of the Company's investment in the money market funds.

As of December 31, 2013 and 2012, other financial instruments for which the carrying amount did not equal fair value were as follows:



	Carrying Amount		Fair Value
	(in thousands)
Long-term debt:
2013	$	1,233,163	$	1,261,889
2012	$	1,245,870	$	1,367,404

The fair values are determined using Level 2 measurements and are based on quoted market prices for the same or similar issues or on the current rates offered to the Company.

Mississippi Power [Member]

Fair Value Disclosures [Line Items]

FAIR VALUE MEASUREMENTS


•	Level 1 consists of observable market data in an active market for identical assets or liabilities.


•	Level 2 consists of observable market data, other than that included in Level 1, that is either directly or indirectly observable.


•	Level 3 consists of unobservable market data. The input may reflect the assumptions of the Company of what a market participant would use in pricing an asset or liability. If there is little available market data, then the Company's own assumptions are the best available information.

As of December 31, 2013, assets and liabilities measured at fair value on a recurring basis during the period, together with the level of the fair value hierarchy in which they fall, were as follows:



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
As of December 31, 2013:	(Level 1)		(Level 2)		(Level 3)		Total
	(in thousands)
Assets:
Energy-related derivatives	$	—	$	4,803	$	—	$	4,803
Cash equivalents	125,000		—		—		125,000
Total	$	125,000	$	4,803	$	—	$	129,803
Liabilities:
Energy-related derivatives	$	—	$	10,281	$	—	$	10,281
Foreign currency derivatives	—		1		—		1
Total	$	—	$	10,282	$	—	$	10,282

As of December 31, 2012, assets and liabilities measured at fair value on a recurring basis during the period, together with the level of the fair value hierarchy in which they fall, were as follows:



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
As of December 31, 2012:	(Level 1)		(Level 2)		(Level 3)		Total
	(in thousands)
Assets:
Energy-related derivatives	$	—	$	2,519	$	—	$	2,519
Cash equivalents	125,600		—		—		125,600
Total	$	125,600	$	2,519	$	—	$	128,119
Liabilities:
Energy-related derivatives	$	—	$	19,446	$	—	$	19,446
Foreign currency derivatives	—		37		—		37
Total	$	—	$	19,483	$	—	$	19,483

Valuation Methodologies

The energy-related derivatives primarily consist of over-the-counter financial products for natural gas and physical power products including, from time to time, basis swaps. These are standard products used within the energy industry and are valued using the market approach. The inputs used are mainly from observable market sources, such as forward natural gas prices, power prices, implied volatility, and Overnight Index Swap interest rates. Interest rate and foreign currency derivatives are also standard over-the-counter financial products valued using the market approach. Inputs for interest rate derivatives include LIBOR interest rates, interest rate futures contracts, and occasionally implied volatility of interest rate options. Inputs for foreign currency derivatives are from observable market sources. See Note 10 for additional information on how these derivatives are used.



	Fair Value		Unfunded Commitments	Redemption Frequency	Redemption Notice Period
As of December 31, 2013:	(in thousands)
Cash equivalents:
Money market funds	$	125,000	None	Daily	Not applicable
As of December 31, 2012:
Cash equivalents:
Money market funds	$	125,600	None	Daily	Not applicable

The money market funds are short-term investments of excess funds in various money market mutual funds, which are portfolios of short-term debt securities. The money market funds are regulated by the SEC and typically receive the highest rating from credit rating agencies. Regulatory and rating agency requirements for money market funds include minimum credit ratings and maximum maturities for individual securities and a maximum weighted average portfolio maturity. Redemptions are available on a same day basis up to the full amount of the Company's investment in the money market funds.

As of December 31, 2013 and 2012, other financial instruments for which the carrying amount did not equal fair value were as follows:



	Carrying Amount		Fair Value
	(in thousands)
Long-term debt:
2013	$	2,098,639	$	2,045,519
2012	$	1,840,933	$	1,956,799

The fair values are determined using primarily Level 2 measurements and are based on quoted market prices for the same or similar issues or on the current rates offered to the Company.

Southern Power [Member]

Fair Value Disclosures [Line Items]

FAIR VALUE MEASUREMENTS


•	Level 1 consists of observable market data in an active market for identical assets or liabilities.


•	Level 2 consists of observable market data, other than that included in Level 1, that is either directly or indirectly observable.

•

Level 3 consists of unobservable market data. The input may reflect the assumptions of the Company of what a market participant would use in pricing an asset or liability. If there is little available market data, then the Company's own assumptions are the best available information. The need to use unobservable inputs would typically apply to long-term energy-related derivative contracts and generally results from the nature of the energy industry, as each participant forecasts its own power supply and demand and those of other participants, which directly impact the valuation of each unique contract.

As of December 31, 2013, assets and liabilities measured at fair value on a recurring basis during the period, together with the level of the fair value hierarchy in which they fall, were as follows:



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
As of December 31, 2013:	(Level 1)		(Level 2)		(Level 3)		Total
	(in millions)
Assets:
Energy-related derivatives	$	—	$	0.6	$	—	$	0.6
Cash equivalents	68.0		—		—		68.0
Total	$	68.0	$	0.6	$	—	$	68.6
Liabilities:
Energy-related derivatives	$	—	$	0.6	$	—	$	0.6

As of December 31, 2012, assets and liabilities measured at fair value on a recurring basis during the period, together with the level of the fair value hierarchy in which they fall, were as follows:



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
As of December 31, 2012:	(Level 1)		(Level 2)		(Level 3)		Total
	(in millions)
Assets:
Energy-related derivatives	$	—	$	2.1	$	—	$	2.1
Cash equivalents	26.0		—		—		26.0
Total	$	26.0	$	2.1	$	—	$	28.1
Liabilities:
Energy-related derivatives	$	—	$	1.3	$	—	$	1.3

Valuation Methodologies



	Fair Value		Unfunded Commitments	Redemption Frequency	Redemption Notice Period
As of December 31, 2013:	(in millions)
Cash equivalents:
Money market funds	$	68.0	None	Daily	Not applicable
As of December 31, 2012:
Cash equivalents:
Money market funds	$	26.0	None	Daily	Not applicable

The money market funds are short-term investments of excess funds in various money market mutual funds, which are portfolios of short-term debt securities. The money market funds are regulated by the SEC and typically receive the highest rating from credit rating agencies. Regulatory and rating agency requirements for money market funds include minimum credit ratings and maximum maturities for individual securities and a maximum weighted average portfolio maturity. Redemptions are available on a same day basis up to the full amount of the Company's investment in the money market funds.

As of December 31, 2013 and 2012, other financial instruments for which the carrying amount did not equal fair value were as follows:



	Carrying Amount		Fair Value
	(in millions)
Long-term debt:
2013	$	1,620	$	1,660
2012	$	1,306	$	1,444

The fair values are determined using Level 2 measurements and are based on quoted market prices for the same or similar issues or on the current rates offered to the Company.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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