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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Details of income tax provisions are as follows:



	2013			2012		2011
	(in millions)
Federal —
Current	$	363		$	177	$	57
Deferred	386			1,011		1,035
	749			1,188		1,092
State —
Current	(10		)	61		8
Deferred	110			85		119
	100			146		127
Total	$	849		$	1,334	$	1,219

Tax effects between the carrying amounts of assets and liabilities

The tax effects of temporary differences between the carrying amounts of assets and liabilities in the financial statements and their respective tax bases, which give rise to deferred tax assets and liabilities, are as follows:



	2013			2012
	(in millions)
Deferred tax liabilities —
Accelerated depreciation	$	9,710		$	9,022
Property basis differences	1,515			1,254
Leveraged lease basis differences	287			278
Employee benefit obligations	491			536
Premium on reacquired debt	113			84
Regulatory assets associated with employee benefit obligations	705			988
Regulatory assets associated with asset retirement obligations	824			1,108
Other	350			349
Total	13,995			13,619
Deferred tax assets —
Federal effect of state deferred taxes	421			394
Employee benefit obligations	1,048			1,678
Over recovered fuel clause	30			135
Other property basis differences	157			134
Deferred costs	84			39
ITC carryforward	121			256
Unbilled revenue	116			101
Other comprehensive losses	54			84
Asset retirement obligations	824			720
Estimated Loss on Kemper IGCC	472			—
Deferred state tax assets	77			68
Other	220			363
Total	3,624			3,972
Valuation allowance	(49		)	(54		)
Total deferred tax assets	3,575			3,918
Total deferred tax liabilities, net	10,420			9,701
Portion included in prepaid expenses (accrued income taxes), net	143			237
Accumulated deferred income taxes	$	10,563		$	9,938

Reconciliation of federal statutory income tax rate to effective income tax rate

A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:



	2013		2012		2011
Federal statutory rate	35.0	%	35.0	%	35.0	%
State income tax, net of federal deduction	2.5		2.5		2.4
Employee stock plans dividend deduction	(1.6	)	(1.0	)	(1.1	)
Non-deductible book depreciation	1.5		0.9		0.7
AFUDC-Equity	(2.6	)	(1.3	)	(1.5	)
ITC basis difference	(1.2	)	(0.3	)	(0.2	)
Other	(0.5	)	(0.2	)	(0.3	)
Effective income tax rate	33.1	%	35.6	%	35.0	%

Changes in unrecognized tax benefits

Changes during the year in unrecognized tax benefits were as follows:



	2013			2012			2011
	(in millions)
Unrecognized tax benefits at beginning of year	$	70		$	120		$	296
Tax positions from current periods	3			13			46
Tax positions increase from prior periods	—			7			1
Tax positions decrease from prior periods	(66		)	(56		)	(111		)
Reductions due to settlements	—			(10		)	(112		)
Reductions due to expired statute of limitations	—			(4		)	—
Balance at end of year	$	7		$	70		$	120

Impact on effective tax rate

The impact on Southern Company's effective tax rate, if recognized, is as follows:



	2013		2012		2011
	(in millions)
Tax positions impacting the effective tax rate	$	7	$	5	$	69
Tax positions not impacting the effective tax rate	—		65		51
Balance of unrecognized tax benefits	$	7	$	70	$	120

Accrued interest for unrecognized tax benefits

Accrued interest for unrecognized tax benefits was as follows:



	2013		2012			2011
	(in millions)
Interest accrued at beginning of year	$	1	$	10		$	29
Interest reclassified due to settlements	—		(9		)	(24		)
Interest accrued during the year	—		—			5
Balance at end of year	$	1	$	1		$	10

Alabama Power [Member]

Income Tax Disclosure [Line Items]

Details of income tax provisions

Details of income tax provisions are as follows:



	2013		2012		2011
	(in millions)
Federal —
Current	$	243	$	262	$	20
Deferred	160		137		377
	403		399		397
State —
Current	36		51		(1		)
Deferred	39		27		82
	75		78		81
Total	$	478	$	477	$	478

Tax effects between the carrying amounts of assets and liabilities



	2013		2012
	(in millions)
Deferred tax liabilities —
Accelerated depreciation	$	3,187	$	2,989
Property basis differences	458		420
Premium on reacquired debt	33		36
Employee benefit obligations	209		218
Under recovered energy clause	—		16
Regulatory assets associated with employee benefit obligations	198		378
Asset retirement obligations	38		—
Regulatory assets associated with asset retirement obligations	265		248
Other	128		114
Total	4,516		4,419
Deferred tax assets —
Federal effect of state deferred taxes	205		194
Unbilled fuel revenue	41		39
Storm reserve	32		34
Employee benefit obligations	231		408
Other comprehensive losses	18		19
Asset retirement obligations	303		248
Other	108		98
Total	938		1,040
Total deferred tax liabilities, net	3,578		3,379
Portion included in prepaid expenses (accrued income taxes)	25		25
Accumulated deferred income taxes	$	3,603	$	3,404

Reconciliation of federal statutory income tax rate to effective income tax rate

A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:



	2013		2012		2011
Federal statutory rate	35.0	%	35.0	%	35.0	%
State income tax, net of federal deduction	4.0		4.1		4.3
Non-deductible book depreciation	1.0		0.9		0.8
Differences in prior years' deferred and current tax rates	(0.1	)	(0.1	)	(0.1	)
AFUDC equity	(0.9	)	(0.5	)	(0.6	)
Other	(0.1	)	(0.3	)	(0.4	)
Effective income tax rate	38.9	%	39.1	%	39.0	%

Changes in unrecognized tax benefits

Changes during the year in unrecognized tax benefits were as follows:



	2013			2012			2011
				(in millions)
Unrecognized tax benefits at beginning of year	$	31		$	32		$	43
Tax positions from current periods	—			5			6
Tax positions from prior periods	(31		)	(4		)	(17		)
Reductions due to settlements	—			(2		)	—
Balance at end of year	$	—		$	31		$	32

Impact on effective tax rate

The impact on the Company's effective tax rate, if recognized, is as follows:



	2013		2012		2011
			(in millions)
Tax positions impacting the effective tax rate	$	—	$	—	$	5
Tax positions not impacting the effective tax rate	—		31		27
Balance of unrecognized tax benefits	$	—	$	31	$	32

Accrued interest for unrecognized tax benefits

Accrued interest for unrecognized tax benefits is as follows:



	2013		2012			2011
			(in millions)
Interest accrued at beginning of year	$	—	$	1.9		$	1.5
Interest reclassified due to settlements	—		(1.9		)	—
Interest accrued during the year	—		—			0.4
Balance at end of year	$	—	$	—		$	1.9

Georgia Power [Member]

Income Tax Disclosure [Line Items]

Details of income tax provisions

Details of income tax provisions are as follows:



	2013			2012		2011
	(in millions)
Federal –
Current	$	277		$	273	$	106
Deferred	374			370		479
	651			643		585
State –
Current	(30		)	38		19
Deferred	102			7		21
	72			45		40
Total	$	723		$	688	$	625

Tax effects between the carrying amounts of assets and liabilities



	2013		2012
	(in millions)
Deferred tax liabilities –
Accelerated depreciation	$	4,479	$	4,201
Property basis differences	873		757
Employee benefit obligations	232		255
Premium on reacquired debt	73		77
Regulatory assets associated with employee benefit obligations	276		536
Asset retirement obligations	495		446
Other	168		93
Total	6,596		6,365
Deferred tax assets –
Federal effect of state deferred taxes	159		142
Employee benefit obligations	388		644
Other property basis differences	93		100
Other deferred costs	84		39
Cost of removal obligations	17		29
State tax credit carry forward	118		86
Federal tax credit carry forward	3		—
Over-recovered fuel costs	22		89
Unbilled fuel revenue	53		39
Asset retirement obligations	495		446
Other	32		42
Total	1,464		1,656
Total deferred tax liabilities, net	5,132		4,709
Portion included in current assets/(liabilities), net	68		152
Accumulated deferred income taxes	$	5,200	$	4,861

Reconciliation of federal statutory income tax rate to effective income tax rate

A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:



	2013		2012		2011
Federal statutory rate	35.0	%	35.0	%	35.0	%
State income tax, net of federal deduction	2.5		1.6		1.5
Non-deductible book depreciation	1.3		1.2		0.8
AFUDC equity	(0.6	)	(1.0	)	(1.9	)
Other	(0.4	)	(0.1	)	(0.5	)
Effective income tax rate	37.8	%	36.7	%	34.9	%

Changes in unrecognized tax benefits

Changes during the year in unrecognized tax benefits were as follows:



	2013			2012			2011
	(in millions)
Unrecognized tax benefits at beginning of year	$	23		$	47		$	237
Tax positions from current periods	—			3			9
Tax positions increase from prior periods	—			3			—
Tax positions decrease from prior periods	(23		)	(19		)	(87		)
Reductions due to settlements	—			(8		)	(112		)
Reductions due to expired statute of limitations	—			(3		)	—
Balance at end of year	$	—		$	23		$	47

Impact on effective tax rate

The impact on the Company's effective tax rate, if recognized, is as follows:



	2013		2012		2011
	(in millions)
Tax positions impacting the effective tax rate	$	—	$	—	$	28
Tax positions not impacting the effective tax rate	—		23		19
Balance of unrecognized tax benefits	$	—	$	23	$	47

Accrued interest for unrecognized tax benefits

Accrued interest for unrecognized tax benefits was as follows:



	2013		2012			2011
	(in millions)
Interest accrued at beginning of year	$	—	$	6		$	27
Interest reclassified due to settlements	—		(6		)	(24		)
Interest accrued during the year	—		—			3
Balance at end of year	$	—	$	—		$	6

Gulf Power [Member]

Income Tax Disclosure [Line Items]

Details of income tax provisions

Details of income tax provisions are as follows:



	2013			2012			2011
	(in thousands)
Federal -
Current	$	5,009		$	(92,610	)	$	(1,548	)
Deferred	63,134			161,096			56,087
	68,143			68,486			54,539
State -
Current	(2,410		)	(2,484		)	(412		)
Deferred	13,935			13,209			7,141
	11,525			10,725			6,729
Total	$	79,668		$	79,211		$	61,268

Tax effects between the carrying amounts of assets and liabilities



	2013		2012
	(in thousands)
Deferred tax liabilities-
Accelerated depreciation	$	721,087	$	696,502
Property basis differences	45,960		—
Fuel recovery clause	7,972		—
Pension and other employee benefits	25,800		28,579
Regulatory assets associated with employee benefit obligations	27,660		57,279
Regulatory assets associated with asset retirement obligations	6,554		6,502
Other	23,947		16,019
Total	858,980		804,881
Deferred tax assets-
Federal effect of state deferred taxes	24,277		20,656
Postretirement benefits	17,816		17,905
Fuel recovery clause	—		6,922
Pension and other employee benefits	33,015		61,939
Other basis differences	—		23,549
Property reserve	15,144		13,773
Other comprehensive loss	696		993
Asset retirement obligations	6,554		6,502
Alternative minimum tax carryforward	18,420		938
Other	17,084		4,724
Total	133,006		157,901
Net deferred tax liabilities	725,974		646,980
Portion included in current assets (liabilities), net	8,381		1,972
Accumulated deferred income taxes	$	734,355	$	648,952

Reconciliation of federal statutory income tax rate to effective income tax rate

A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:



	2013		2012		2011
Federal statutory rate	35.0	%	35.0	%	35.0	%
State income tax, net of federal deduction	3.5		3.3		2.5
Non-deductible book depreciation	0.5		0.5		0.5
Differences in prior years' deferred and current tax rates	(0.2	)	(0.2	)	(0.3	)
AFUDC equity	(1.1	)	(0.9	)	(2.0	)
Other, net	(0.1	)	(0.2	)	(0.2	)
Effective income tax rate	37.6	%	37.5	%	35.5	%

Changes in unrecognized tax benefits

Changes during the year in unrecognized tax benefits were as follows:



	2013			2012			2011
	(in thousands)
Unrecognized tax benefits at beginning of year	$	5,007		$	2,892		$	3,870
Tax positions from current periods	45			2,630			540
Tax positions from prior periods	(5,007		)	515			(1,518		)
Reductions due to settlements	—			(1,030		)	—
Balance at end of year	$	45		$	5,007		$	2,892

Impact on effective tax rate

The impact on the Company's effective tax rate, if recognized, was as follows:



	2013		2012		2011
	(in thousands)
Tax positions impacting the effective tax rate	$	45	$	45	$	1,804
Tax positions not impacting the effective tax rate	—		4,962		1,088
Balance of unrecognized tax benefits	$	45	$	5,007	$	2,892

Mississippi Power [Member]

Income Tax Disclosure [Line Items]

Details of income tax provisions

Details of income tax provisions are as follows:



	2013			2012		2011
	(in thousands)
Federal —
Current	$	23,345		$	1,212	$	(27,099	)
Deferred	(342,870		)	16,994		65,206
	(319,525		)	18,206		38,107
State —
Current	5,219			1,656		(2,473		)
Deferred	(53,529		)	694		6,559
	(48,310		)	2,350		4,086
Total	$	(367,835	)	$	20,556	$	42,193

Tax effects between the carrying amounts of assets and liabilities



	2013		2012
	(in thousands)
Deferred tax liabilities —
Accelerated depreciation	$	371,553	$	385,899
Property basis differences	130,679		72,451
Energy cost management clause under recovered	1,777		9,492
Regulatory assets associated with asset retirement obligations	16,764		16,851
Pensions and other benefits	23,769		33,756
Regulatory assets associated with employee benefit obligations	33,127		68,717
Regulatory assets associated with the Kemper IGCC	30,708		10,492
Rate differential	56,074		27,270
Federal effect of state deferred taxes	30,615		—
Other	35,583		33,886
Total	730,649		658,814
Deferred tax assets —
Federal effect of state deferred taxes	—		7,732
Fuel clause over recovered	7,741		38,955
Estimated loss on Kemper IGCC	472,000		31,200
Pension and other benefits	57,999		87,416
Property insurance	23,693		23,171
Premium on long-term debt	23,736		26,778
Unbilled fuel	12,136		11,642
Long-term service agreement	—		5,544
Asset retirement obligations	16,764		16,851
Interest rate hedges	5,094		5,644
ITC carryforward	—		170,938
Kemper rate factor - regulatory liability retail	36,210		—
Other	18,094		23,800
Total	673,467		449,671
Total deferred tax liabilities, net	57,182		209,143
Portion included in (accrued) prepaid income taxes, net	15,626		35,815
Accumulated deferred income taxes	$	72,808	$	244,958

Reconciliation of federal statutory income tax rate to effective income tax rate

A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:



	2013		2012		2011
Federal statutory rate	35.0	%	35.0	%	35.0	%
State income tax, net of federal deduction	3.7		1.3		1.9
Non-deductible book depreciation	(0.1	)	0.3		0.3
AFUDC-equity	5.0		(18.6	)	(6.3	)
Other	0.1		(1.2	)	(0.3	)
Effective income tax rate	43.7	%	16.8	%	30.6	%

Changes in unrecognized tax benefits

Changes during the year in unrecognized tax benefits were as follows:



	2013			2012			2011
	(in thousands)
Unrecognized tax benefits at beginning of year	$	5,755		$	4,964		$	4,288
Tax positions from current periods	226			1,186			1,486
Tax positions from prior periods	(2,141		)	(26		)	(810		)
Settlements with taxing authorities	—			(369		)	—
Balance at end of year	$	3,840		$	5,755		$	4,964

Impact on effective tax rate

The impact on the Company's effective tax rate, if recognized, was as follows:



	2013		2012		2011
	(in thousands)
Tax positions impacting the effective tax rate	$	3,840	$	3,656	$	4,144
Tax positions not impacting the effective tax rate	—		2,099		820
Balance of unrecognized tax benefits	$	3,840	$	5,755	$	4,964

Accrued interest for unrecognized tax benefits

Accrued interest for unrecognized tax benefits was as follows:



	2013		2012		2011
	(in thousands)
Interest accrued at beginning of year	$	772	$	680	$	413
Interest accrued during the year	399		92		267
Balance at end of year	$	1,171	$	772	$	680

Southern Power [Member]

Income Tax Disclosure [Line Items]

Details of income tax provisions

Details of income tax provisions are as follows:



	2013			2012			2011
	(in millions)
Federal —
Current	$	(120.2	)	$	(133.1	)	$	61.6
Deferred	158.7			210.4			12.4
	38.5			77.3			74.0
State —
Current	(5.2		)	(3.0		)	9.8
Deferred	12.6			18.3			(7.9		)
	7.4			15.3			1.9
Total	$	45.9		$	92.6		$	75.9

Tax effects between the carrying amounts of assets and liabilities



	2013			2012
	(in millions)
Deferred tax liabilities —
Accelerated depreciation and other property basis differences	$	829.5		$	632.9
Basis difference on asset transfers	2.8			3.1
Levelized capacity revenues	11.2			—
Other	0.9			—
Total	844.4			636.0
Deferred tax assets —
Federal effect of state deferred taxes	29.7			25.2
Net basis difference on ITCs	58.0			28.6
Basis difference on asset transfers	2.9			3.9
Alternative minimum tax carryforward	1.1			1.1
Unrealized loss on interest rate swaps	11.2			15.7
Levelized capacity revenues	6.0			4.5
State net operating loss	17.0			8.3
Other	1.8			4.4
Total	127.7			91.7
Valuation Allowance	(7.5		)	(6.2		)
Net deferred income tax assets	120.2			85.5
Total deferred tax liabilities, net	724.2			550.5
Portion included in current income taxes	0.2			0.2
Accumulated deferred income taxes	$	724.4		$	550.7

Reconciliation of federal statutory income tax rate to effective income tax rate

A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:



	2013		2012		2011
Federal statutory rate	35.0	%	35.0	%	35.0	%
State income tax, net of federal deduction	2.2		3.7		0.6
Amortization of ITC	(1.7	)	(1.0	)	(0.4	)
ITC basis difference	(14.5	)	(2.6	)	(3.1	)
Other	0.3		(0.6	)	(0.3	)
Effective income tax rate	21.3	%	34.5	%	31.8	%

Changes in unrecognized tax benefits

Changes in unrecognized tax benefits were as follows:



	2013			2012			2011
	(in millions)
Unrecognized tax benefits at beginning of year	$	2.9		$	2.6		$	2.3
Tax positions from current periods	1.6			0.7			0.4
Tax positions from prior periods	(3.0		)	(0.2		)	(0.1		)
Reductions due to settlements	—			(0.2		)	—
Balance at end of year	$	1.5		$	2.9		$	2.6

Impact on effective tax rate

The impact on the Company's effective tax rate, if recognized, was as follows:



	2013		2012		2011
	(in millions)
Tax positions impacting the effective tax rate	$	1.5	$	0.3	$	0.5
Tax positions not impacting the effective tax rate	—		2.6		2.1
Balance of unrecognized tax benefits	$	1.5	$	2.9	$	2.6

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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