FAIR VALUE MEASUREMENTS

As of March 31, 2014, 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
As of March 31, 2014:	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(in millions)
Southern Company
Assets:
Energy-related derivatives	$	—	$	40	$	—	$	40
Interest rate derivatives	3		—		—		3
Nuclear decommissioning trusts^(a)	626		884		2		1,512
Cash equivalents	408		—		—		408
Other investments	9		—		4		13
Total	$	1,046	$	924	$	6	$	1,976
Liabilities:
Energy-related derivatives	$	—	$	43	$	—	$	43

Alabama Power
Assets:
Energy-related derivatives	$	—	$	12	$	—	$	12
Nuclear decommissioning trusts^(b)
Domestic equity	403		77		—		480
Foreign equity	35		65		—		100
U.S. Treasury and government agency securities	—		29		—		29
Corporate bonds	—		88		—		88
Mortgage and asset backed securities	—		18		—		18
Other	—		9		2		11
Cash equivalents	176		—		—		176
Total	$	614	$	298	$	2	$	914
Liabilities:
Energy-related derivatives	$	—	$	6	$	—	$	6



	Fair Value Measurements Using
As of March 31, 2014:	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(in millions)
Georgia Power
Assets:
Energy-related derivatives	$	—	$	8	$	—	$	8
Nuclear decommissioning trusts^{(b) (c)}
Domestic equity	188		1		—		189
Foreign equity	—		131		—		131
U.S. Treasury and government agency securities	—		125		—		125
Municipal bonds	—		40		—		40
Corporate bonds	—		153		—		153
Mortgage and asset backed securities	—		103		—		103
Other	—		45		—		45
Total	$	188	$	606	$	—	$	794
Liabilities:
Energy-related derivatives	$	—	$	16	$	—	$	16

Gulf Power
Assets:
Energy-related derivatives	$	—	$	12	$	—	$	12
Cash equivalents	18		—		—		18
Total	$	18	$	12	$	—	$	30
Liabilities:
Energy-related derivatives	$	—	$	13	$	—	$	13

Mississippi Power
Assets:
Energy-related derivatives	$	—	$	8	$	—	$	8
Cash equivalents	63		—		—		63
Total	$	63	$	8	$	—	$	71
Liabilities:
Energy-related derivatives	$	—	$	8	$	—	$	8

Southern Power
Assets:
Cash equivalents	$	115	$	—	$	—	$	115


(a)	For additional detail, see the nuclear decommissioning trusts sections for Alabama Power and Georgia Power in this table.


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


(c)	Includes the investment securities pledged to creditors and cash collateral received and excludes payables related to the securities lending program. As of March 31, 2014, approximately $51 million of the fair market value of Georgia Power's nuclear decommissioning trust funds' securities were on loan and pledged to creditors under the funds' managers' securities lending program.

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 (H) herein for additional information on how these derivatives are used.

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. 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 March 31, 2014, 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:



As of March 31, 2014:	Fair Value		Unfunded Commitments	Redemption Frequency	Redemption Notice Period
	(in millions)
Southern Company
Nuclear decommissioning trusts:
Foreign equity funds	$	131	None	Monthly	5 days
Equity - commingled funds	65		None	Daily/Monthly	Daily/7 days
Other - commingled funds	45		None	Daily/Monthly	Daily/7 days
Trust-owned life insurance	111		None	Daily	15 days
Cash equivalents:
Money market funds	408		None	Daily	Not applicable
Alabama Power
Nuclear decommissioning trusts:
Equity - commingled funds	$	65	None	Daily/Monthly	Daily/7 days
Trust-owned life insurance	111		None	Daily	15 days
Cash equivalents:
Money market funds	176		None	Daily	Not applicable
Georgia Power
Nuclear decommissioning trusts:
Foreign equity funds	$	131	None	Monthly	5 days
Other - commingled funds	45		None	Daily	Not applicable
Gulf Power
Cash equivalents:
Money market funds	$	18	None	Daily	Not applicable
Mississippi Power
Cash equivalents:
Money market funds	$	63	None	Daily	Not applicable
Southern Power
Cash equivalents:
Money market funds	$	115	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 external trust funds (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, 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. Included in commingled funds as of March 31, 2014 is $7 million representing 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 to the financial statements of Southern Company and Georgia Power under "Nuclear Decommissioning" in Item 8 of the Form 10-K for additional information.

Alabama Power's nuclear decommissioning trust includes investments in Trust-Owned Life Insurance (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. See Note 1 to the financial statements of Southern Company and Alabama Power under "Nuclear Decommissioning" in Item 8 of the Form 10-K for additional information.

Southern Company, Alabama Power, and Georgia Power continue to elect the option to fair value investment securities held in the nuclear decommissioning trust funds. For the three months ended March 31, 2014, the change in fair value of the funds, including reinvested interest and dividends reduced by the funds' expenses, increased by $27 million at Southern Company. Alabama Power recorded an increase in fair value of $16 million as an increase in regulatory liabilities. Georgia Power recorded an increase in fair value of $11 million as a reduction of its regulatory asset related to its asset retirement obligations.

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 investment in the money market funds.

As of March 31, 2014, 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:
Southern Company	$	22,896	$	23,963
Alabama Power	$	6,228	$	6,689
Georgia Power	$	9,593	$	9,997
Gulf Power	$	1,233	$	1,308
Mississippi Power	$	2,346	$	2,346
Southern Power	$	1,620	$	1,709

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.