Derivatives

12 Months Ended

Dec. 31, 2015

Derivative [Line Items]

DERIVATIVES

DERIVATIVES

Southern Company, the traditional operating companies, and Southern Power are exposed to market risks, primarily commodity price risk and interest rate risk. To manage the volatility attributable to these exposures, each company nets its exposures, where possible, to take advantage of natural offsets and enters into various derivative transactions for the remaining exposures pursuant to each company's policies in areas such as counterparty exposure and risk management practices. Each company's policy is that derivatives are to be used primarily for hedging purposes and mandates strict adherence to all applicable risk management policies. Derivative positions are monitored using techniques including, but not limited to, market valuation, value at risk, stress testing, and sensitivity analysis. Derivative instruments are recognized at fair value in the balance sheets as either assets or liabilities and are presented on a gross basis. See Note 10 for additional information. In the statements of cash flows, the cash impacts of settled energy-related and interest rate derivatives are recorded as operating activities.

Energy-Related Derivatives

The traditional operating companies and Southern Power enter into energy-related derivatives to hedge exposures to electricity, gas, and other fuel price changes. However, due to cost-based rate regulations and other various cost recovery mechanisms, the traditional operating companies have limited exposure to market volatility in commodity fuel prices and prices of electricity. Each of the traditional operating companies manages fuel-hedging programs, implemented per the guidelines of their respective state PSCs, through the use of financial derivative contracts, which is expected to continue to mitigate price volatility. The traditional operating companies (with respect to wholesale generating capacity) and Southern Power have limited exposure to market volatility in commodity fuel prices and prices of electricity because their long-term sales contracts shift substantially all fuel cost responsibility to the purchaser. However, the traditional operating companies and Southern Power may be exposed to market volatility in energy-related commodity prices to the extent any uncontracted wholesale generating capacity is used to sell electricity.

Energy-related derivative contracts are accounted for under one of three methods:

• Regulatory Hedges – Energy-related derivative contracts which are designated as regulatory hedges relate primarily to the traditional operating companies' fuel-hedging programs, where gains and losses are initially recorded as regulatory liabilities and assets, respectively, and then are included in fuel expense as the underlying fuel is used in operations and ultimately recovered through the respective fuel cost recovery clauses.

• Cash Flow Hedges – Gains and losses on energy-related derivatives designated as cash flow hedges (which are mainly used to hedge anticipated purchases and sales) are initially deferred in OCI before being recognized in the statements of income in the same period as the hedged transactions are reflected in earnings.

• Not Designated – Gains and losses on energy-related derivative contracts that are not designated or fail to qualify as hedges are recognized in the statements of income as incurred.

Some energy-related derivative contracts require physical delivery as opposed to financial settlement, and this type of derivative is both common and prevalent within the electric industry. When an energy-related derivative contract is settled physically, any cumulative unrealized gain or loss is reversed and the contract price is recognized in the respective line item representing the actual price of the underlying goods being delivered.

At December 31, 2015, the net volume of energy-related derivative contracts for natural gas positions totaled 224 million mmBtu for the Southern Company system, with the longest hedge date of 2020 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 of 2017 for derivatives not designated as hedges.

In addition to the volumes discussed above, the traditional operating companies and Southern Power enter into physical natural gas supply contracts that provide the option to sell back excess gas due to operational constraints. The maximum expected volume of natural gas subject to such a feature is 5 million mmBtu.

For cash flow hedges, the amounts expected to be reclassified from accumulated OCI to earnings for the next 12-month period ending December 31, 2016 are immaterial for Southern Company.

Interest Rate Derivatives

Southern Company and certain subsidiaries may also enter into interest rate derivatives to hedge exposure to changes in interest rates. The derivatives employed as hedging instruments are structured to minimize ineffectiveness. Derivatives related to existing variable rate securities or forecasted transactions are accounted for as cash flow hedges where the effective portion of the derivatives' fair value gains or losses is recorded in OCI and is reclassified into earnings at the same time the hedged transactions affect earnings, with any ineffectiveness recorded directly to earnings. Derivatives related to existing fixed rate securities are accounted for as fair value hedges, where the derivatives' fair value gains or losses and hedged items' fair value gains or losses are both recorded directly to earnings, providing an offset, with any difference representing ineffectiveness. Fair value gains or losses on derivatives that are not designated or fail to qualify as hedges are recognized in the statements of income as incurred.

At December 31, 2015, the following interest rate derivatives were outstanding:

	Notional Amount			Interest Rate Received	Weighted Average Interest Rate Paid	Hedge Maturity Date		Fair Value Gain (Loss) December 31, 2015
	(in millions)							(in millions)
Cash Flow Hedges of Forecasted Debt
	$	1,000		3-month LIBOR	2.37%	November 2026		$	1
	1,000			3-month LIBOR	2.70%	November 2046		(1		)
	200			3-month LIBOR	2.93%	October 2025		(15		)
	80			3-month LIBOR	2.32%	December 2026		1
Cash Flow Hedges of Existing Debt
	250			3-month LIBOR + 0.32%	0.75%	March 2016		—
	200			3-month LIBOR + 0.40%	1.01%	August 2016		—
Fair Value Hedges of Existing Debt
	250			1.30%	3-month LIBOR + 0.17%	August 2017		1
	300			2.75%	3-month LIBOR + 0.92%	June 2020		2
	250			5.40%	3-month LIBOR + 4.02%	June 2018		1
	200			4.25%	3-month LIBOR + 2.46%	December 2019		2
	500			1.95%	3-month LIBOR + 0.76%	December 2018		(3		)
Derivatives not Designated as Hedges
	65		(a,d)	3-month LIBOR	2.50%	October 2016	(e)	1
	47		(b,d)	3-month LIBOR	2.21%	October 2016	(e)	1
	65		(c,d)	3-month LIBOR	2.21%	November 2016	(f)	1
Total	$	4,407						$	(8	)

(a) Swaption at RE Tranquillity LLC. See Note 12 for additional information.

(b) Swaption at RE Roserock LLC. See Note 12 for additional information.

(c) Swaption at RE Garland Holdings LLC. See Note 12 for additional information.

(d) Amortizing notional amount.

(e) Represents the mandatory settlement date. Settlement amount will be based on a 15-year amortizing swap.

(f) Represents the mandatory settlement date. Settlement amount will be based on a 12-year amortizing swap.

The estimated pre-tax gains (losses) that will be reclassified from accumulated OCI to interest expense for the next 12-month period ending December 31, 2016 are immaterial. The Company has deferred gains and losses that are expected to be amortized into earnings through 2046.

Derivative Financial Statement Presentation and Amounts

At December 31, 2015 and 2014, the fair value of energy-related derivatives and interest rate derivatives was reflected in the balance sheets as follows:

	Asset Derivatives					Liability Derivatives
Derivative Category	Balance Sheet Location	2015		2014		Balance Sheet Location	2015		2014
		(in millions)					(in millions)
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:	Other current assets	$	3	$	7	Liabilities from risk management activities	$	130	$	118
	Other deferred charges and assets	—		—		Other deferred credits and liabilities	87		79
Total derivatives designated as hedging instruments for regulatory purposes		$	3	$	7		$	217	$	197
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:	Other current assets	$	3	$	—	Liabilities from risk management activities	$	2	$	—
Interest rate derivatives:	Other current assets	19		7		Liabilities from risk management activities	23		17
	Other deferred charges and assets	—		1		Other deferred credits and liabilities	7		7
Total derivatives designated as hedging instruments in cash flow and fair value hedges		$	22	$	8		$	32	$	24
Derivatives not designated as hedging instruments
Energy-related derivatives:	Other current assets	$	1	$	6	Liabilities from risk management activities	$	1	$	4
Interest rate derivatives:	Other current assets	3		—		Liabilities from risk management activities	—		—
Total derivatives not designated as hedging instruments		$	4	$	6		$	1	$	4
Total		$	29	$	21		$	250	$	225

The Company's derivative contracts are not subject to master netting arrangements or similar agreements and are reported gross on the Company's financial statements. Some of these energy-related and interest rate derivative contracts may contain certain provisions that permit intra-contract netting of derivative receivables and payables for routine billing and offsets related to events of default and settlements. Amounts related to energy-related derivative contracts and interest rate derivative contracts at December 31, 2015 and 2014 are presented in the following tables.

Fair Value
Assets	2015			2014			Liabilities	2015			2014
	(in millions)							(in millions)
Energy-related derivatives presented in the Balance Sheet (a)	$	7		$	13		Energy-related derivatives presented in the Balance Sheet (a)	$	220		$	201
Gross amounts not offset in the Balance Sheet (b)	(6		)	(9		)	Gross amounts not offset in the Balance Sheet (b)	(6		)	(9		)
Net energy-related derivative assets	$	1		$	4		Net energy-related derivative liabilities	$	214		$	192
Interest rate derivatives presented in the Balance Sheet (a)	$	22		$	8		Interest rate derivatives presented in the Balance Sheet (a)	$	30		$	24
Gross amounts not offset in the Balance Sheet (b)	(9		)	(8		)	Gross amounts not offset in the Balance Sheet (b)	(9		)	(8		)
Net interest rate derivative assets	$	13		$	—		Net interest rate derivative liabilities	$	21		$	16

(a) The Company does not offset fair value amounts for multiple derivative instruments executed with the same counterparty on the balance sheets; therefore, gross and net amounts of derivative assets and liabilities presented on the balance sheets are the same.

(b) Includes gross amounts subject to netting terms that are not offset on the balance sheets and any cash/financial collateral pledged or received.

At December 31, 2015 and 2014, 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:

	Unrealized Losses							Unrealized Gains
Derivative Category	Balance Sheet Location	2015			2014			Balance Sheet Location	2015		2014
		(in millions)							(in millions)
Energy-related derivatives:	Other regulatory assets, current	$	(130	)	$	(118	)	Other regulatory liabilities, current	$	3	$	7
	Other regulatory assets, deferred	(87		)	(79		)	Other regulatory liabilities, deferred	—		—
Total energy-related derivative gains (losses)		$	(217	)	$	(197	)		$	3	$	7

For the years ended December 31, 2015, 2014, and 2013, the pre-tax effects of interest rate derivatives designated as cash flow hedging instruments on the statements of income were as follows:

Derivatives in Cash Flow Hedging Relationships	Gain (Loss) Recognized in OCI on Derivative (Effective Portion)								Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)
										Amount
Derivative Category	2015			2014			2013		Statements of Income Location	2015			2014			2013
	(in millions)									(in millions)
Interest rate derivatives	$	(22	)	$	(16	)	$	—	Interest expense, net of amounts capitalized	$	(9	)	$	(8	)	$	(14	)

For the years ended December 31, 2015, 2014, and 2013, the pre-tax effects of energy-related derivatives designated as cash flow hedging instruments recognized in OCI and those reclassified from OCI into earnings were immaterial for Southern Company.

For the years ended December 31, 2015, 2014, and 2013, the pre-tax effects of interest rate derivatives designated as fair value hedging instruments were immaterial and offset by changes to the carrying value of long-term debt.

There was no material ineffectiveness recorded in earnings for any period presented.

For the years ended December 31, 2015, 2014, and 2013, the pre-tax effects of energy-related and interest rate derivatives not designated as hedging instruments on the statements of income were immaterial for Southern Company.

Contingent Features

The Company does not have any credit arrangements that would require material changes in payment schedules or terminations as a result of a credit rating downgrade. There are certain derivatives that could require collateral, but not accelerated payment, in the event of various credit rating changes of certain Southern Company subsidiaries. At December 31, 2015, Southern Company's collateral posted with its derivative counterparties was immaterial.

At December 31, 2015, the fair value of derivative liabilities with contingent features was $52 million. The maximum potential collateral requirements arising from the credit-risk-related contingent features, at a rating below BBB- and/or Baa3, were $52 million and include certain agreements that could require collateral in the event that one or more Southern Company system power pool participants has a credit rating change to below investment grade.

Generally, collateral may be provided by a Southern Company guaranty, letter of credit, or cash. If collateral is required, fair value amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral are not offset against fair value amounts recognized for derivatives executed with the same counterparty.

Southern Company, the traditional operating companies, and Southern Power are exposed to losses related to financial instruments in the event of counterparties' nonperformance. Southern Company, the traditional operating companies, and Southern Power only enter into agreements and material transactions with counterparties that have investment grade credit ratings by Moody's and S&P or with counterparties who have posted collateral to cover potential credit exposure. Southern Company, the traditional operating companies, and Southern Power have also established risk management policies and controls to determine and monitor the creditworthiness of counterparties in order to mitigate Southern Company's, the traditional operating companies', and Southern Power's exposure to counterparty credit risk. Therefore, Southern Company, the traditional operating companies, and Southern Power do not anticipate a material adverse effect on the financial statements as a result of counterparty nonperformance.

Alabama Power [Member]

Derivative [Line Items]

DERIVATIVES

DERIVATIVES

The Company is exposed to market risks, primarily commodity price risk and interest rate risk. To manage the volatility attributable to these exposures, the Company nets its exposures, where possible, to take advantage of natural offsets and enters into various derivative transactions for the remaining exposures pursuant to the Company's policies in areas such as counterparty exposure and risk management practices. The Company's policy is that derivatives are to be used primarily for hedging purposes and mandates strict adherence to all applicable risk management policies. Derivative positions are monitored using techniques including, but not limited to, market valuation, value at risk, stress testing, and sensitivity analysis. Derivative instruments are recognized at fair value in the balance sheets as either assets or liabilities and are presented on a gross basis. See Note 10 for additional information. In the statements of cash flows, the cash impacts of settled energy-related and interest rate derivatives are recorded as operating activities.

Energy-Related Derivatives

The Company enters into energy-related derivatives to hedge exposures to electricity, gas, and other fuel price changes. However, due to cost-based rate regulations and other various cost recovery mechanisms, the Company has limited exposure to market volatility in commodity fuel prices and prices of electricity. The Company manages fuel-hedging programs, implemented per the guidelines of the Alabama PSC, through the use of financial derivative contracts, which is expected to continue to mitigate price volatility.

Energy-related derivative contracts are accounted for under one of two methods:

• Regulatory Hedges – Energy-related derivative contracts which are designated as regulatory hedges relate primarily to the Company's fuel-hedging programs, where gains and losses are initially recorded as regulatory liabilities and assets, respectively, and then are included in fuel expense as the underlying fuel is used in operations and ultimately recovered through the energy cost recovery clause.

• Not Designated – Gains and losses on energy-related derivative contracts that are not designated or fail to qualify as hedges are recognized in the statements of income as incurred.

Some energy-related derivative contracts require physical delivery as opposed to financial settlement, and this type of derivative is both common and prevalent within the electric industry. When an energy-related derivative contract is settled physically, any cumulative unrealized gain or loss is reversed and the contract price is recognized in the respective line item representing the actual price of the underlying goods being delivered.

At December 31, 2015, the net volume of energy-related derivative contracts for natural gas positions for the Company, together with the longest hedge date over which it is hedging its exposure to the variability in future cash flows for forecasted transactions and the longest date for derivatives not designated as hedges, were as follows:

Net Purchased mmBtu	Longest Hedge Date	Longest Non-Hedge Date
(in millions)
50	2018	—

Interest Rate Derivatives

The Company may also enter into interest rate derivatives to hedge exposure to changes in interest rates. Derivatives related to existing variable rate securities or forecasted transactions are accounted for as cash flow hedges where the effective portion of the derivatives' fair value gains or losses is recorded in OCI and is reclassified into earnings at the same time the hedged transactions affect earnings. The derivatives employed as hedging instruments are structured to minimize ineffectiveness, which is recorded directly to earnings.

At December 31, 2015, the following interest rate derivative was outstanding:

	Notional Amount		Interest Rate Received	Weighted Average Interest Rate Paid	Hedge Maturity Date	Fair Value Gain (Loss) December 31, 2015
	(in millions)					(in millions)
Cash Flow Hedges of Forecasted Debt
	$	200	3-month  LIBOR	2.93%	October 2025	$	(15	)

The estimated pre-tax losses that will be reclassified from accumulated OCI to interest expense for the 12-month period ending December 31, 2016 are $4 million. The Company has deferred gains and losses that are expected to be amortized into earnings through 2035.

Derivative Financial Statement Presentation and Amounts

At December 31, 2015 and 2014, the fair value of energy-related derivatives and interest rate derivatives was reflected in the balance sheets as follows:

	Asset Derivatives					Liability Derivatives
Derivative Category	Balance Sheet Location	2015		2014		Balance Sheet Location	2015		2014
		(in millions)					(in millions)
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:	Other current assets	$	1	$	1	Liabilities from risk management activities	$	40	$	32
	Other deferred charges and assets	—		—		Other deferred credits and liabilities	15		21
Total derivatives designated as hedging instruments for regulatory purposes		$	1	$	1		$	55	$	53
Derivatives designated as hedging instruments in cash flow hedges
Interest rate derivatives:	Other current assets	$	—	$	—	Liabilities from risk management activities	$	15	$	8
Total		$	1	$	1		$	70	$	61

Energy-related derivatives not designated as hedging instruments were immaterial on the balance sheets for 2015 and 2014.

The Company's derivative contracts are not subject to master netting arrangements or similar agreements and are reported gross on the Company's financial statements. Some of these energy-related and interest rate derivative contracts contain certain provisions that permit intra-contract netting of derivative receivables and payables for routine billing and offsets related to events of default and settlements. Amounts related to energy-related derivative contracts at December 31, 2015 and 2014 are presented in the following tables. Interest rate derivatives presented in the tables above do not have amounts available for offset and are therefore excluded from the offsetting disclosure table below.

Fair Value
Assets	2015			2014		Liabilities	2015			2014
	(in millions)						(in millions)
Energy-related derivatives presented in the Balance Sheet (a)	$	1		$	1	Energy-related derivatives presented in the Balance Sheet (a)	$	55		$	53
Gross amounts not offset in the Balance Sheet (b)	(1		)	—		Gross amounts not offset in the Balance Sheet (b)	(1		)	—
Net energy-related derivative assets	$	—		$	1	Net energy-related derivative liabilities	$	54		$	53

(a) The Company does not offset fair value amounts for multiple derivative instruments executed with the same counterparty on the balance sheets; therefore, gross and net amounts of derivative assets and liabilities presented on the balance sheets are the same.

(b) Includes gross amounts subject to netting terms that are not offset on the balance sheets and any cash/financial collateral pledged or received.

At December 31, 2015 and 2014, the pre-tax effect of unrealized derivative gains (losses) arising from energy-related derivative instruments designated as regulatory hedging instruments and deferred were as follows:

	Unrealized Losses							Unrealized Gains
Derivative Category	Balance Sheet Location	2015			2014			Balance Sheet Location	2015		2014
		(in millions)							(in millions)
Energy-related derivatives:	Other regulatory assets, current	$	(40	)	$	(32	)	Other current liabilities	$	1	$	1
	Other regulatory assets, deferred	(15		)	(21		)	Other regulatory liabilities, deferred	—		—
Total energy-related derivative gains (losses)		$	(55	)	$	(53	)		$	1	$	1

For the years ended December 31, 2015, 2014, and 2013, the pre-tax effect of interest rate derivatives designated as cash flow hedging instruments on the statements of income was as follows:

Derivatives in Cash Flow Hedging Relationships	Gain (Loss) Recognized in OCI on Derivative (Effective Portion)								Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)
										Amount
Derivative Category	2015			2014			2013		Statements of Income Location	2015			2014			2013
	(in millions)									(in millions)
Interest rate derivatives	$	(7	)	$	(8	)	$	—	Interest expense, net of amounts capitalized	$	(3	)	$	(3	)	$	(3	)

There was no material ineffectiveness recorded in earnings for any period presented.

For the years ended December 31, 2015, 2014, and 2013, the pre-tax effect of energy-related derivatives not designated as hedging instruments on the statements of income was not material.

Contingent Features

The Company does not have any credit arrangements that would require material changes in payment schedules or terminations as a result of a credit rating downgrade. There are certain derivatives that could require collateral, but not accelerated payment, in the event of various credit rating changes of certain affiliated companies. At December 31, 2015, the Company's collateral posted with its derivative counterparties was not material.

At December 31, 2015, the fair value of derivative liabilities with contingent features was $16 million. However, because of joint and several liability features underlying these derivatives, the maximum potential collateral requirements arising from the credit-risk-related contingent features, at a rating below BBB- and/or Baa3, were $52 million, and include certain agreements that could require collateral in the event that one or more Southern Company system power pool participants has a credit rating change to below investment grade.

Generally, collateral may be provided by a Southern Company guaranty, letter of credit, or cash. If collateral is required, fair value amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral are not offset against fair value amounts recognized for derivatives executed with the same counterparty.

The Company is exposed to losses related to financial instruments in the event of counterparties' nonperformance. The Company only enters into agreements and material transactions with counterparties that have investment grade credit ratings by Moody's and S&P or with counterparties who have posted collateral to cover potential credit exposure. The Company has also established risk management policies and controls to determine and monitor the creditworthiness of counterparties in order to mitigate the Company's exposure to counterparty credit risk. Therefore, the Company does not anticipate a material adverse effect on the financial statements as a result of counterparty nonperformance.

Georgia Power [Member]

Derivative [Line Items]

DERIVATIVES

DERIVATIVES

The Company is exposed to market risks, primarily commodity price risk and interest rate risk. To manage the volatility attributable to these exposures, the Company nets its exposures, where possible, to take advantage of natural offsets and enters into various derivative transactions for the remaining exposures pursuant to the Company’s policies in areas such as counterparty exposure and risk management practices. The Company’s policy is that derivatives are to be used primarily for hedging purposes and mandates strict adherence to all applicable risk management policies. Derivative positions are monitored using techniques including, but not limited to, market valuation, value at risk, stress testing, and sensitivity analysis. Derivative instruments are recognized at fair value in the balance sheets as either assets or liabilities and are presented on a gross basis. See Note 10 for additional information. In the statements of cash flows, the cash impacts of settled energy-related and interest rate derivatives are recorded as operating activities.

Energy-Related Derivatives

The Company enters into energy-related derivatives to hedge exposures to electricity, gas, and other fuel price changes. However, due to cost-based rate regulations and other various cost recovery mechanisms, the Company has limited exposure to market volatility in commodity fuel prices and prices of electricity. The Company manages a fuel-hedging program, implemented per the guidelines of the Georgia PSC, through the use of financial derivative contracts, which is expected to continue to mitigate price volatility.

Energy-related derivative contracts are accounted for under one of two methods:

• Regulatory Hedges – Energy-related derivative contracts which are designated as regulatory hedges relate primarily to the Company’s fuel-hedging program, where gains and losses are initially recorded as regulatory liabilities and assets, respectively, and then are included in fuel expense as the underlying fuel is used in operations and ultimately recovered through the fuel cost recovery mechanism.

• Not Designated – Gains and losses on energy-related derivative contracts that are not designated or fail to qualify as hedges are recognized in the statements of income as incurred.

Some energy-related derivative contracts require physical delivery as opposed to financial settlement, and this type of derivative is both common and prevalent within the electric industry. When an energy-related derivative contract is settled physically, any cumulative unrealized gain or loss is reversed and the contract price is recognized in the respective line item representing the actual price of the underlying goods being delivered.

At December 31, 2015, the net volume of energy-related derivative contracts for natural gas positions totaled 50 million mmBtu, all of which expire by 2017, which is the longest hedge date.

In addition to the volume discussed above, the Company enters into physical natural gas supply contracts that provide the option to sell back excess gas due to operational constraints. The expected volume of natural gas subject to such a feature is 4 million mmBtu for the Company.

Interest Rate Derivatives

The Company may also enter into interest rate derivatives to hedge exposure to changes in interest rates. The derivatives employed as hedging instruments are structured to minimize ineffectiveness. Derivatives related to existing variable rate securities or forecasted transactions are accounted for as cash flow hedges where the effective portion of the derivatives' fair value gains or losses is recorded in OCI and is reclassified into earnings at the same time the hedged transactions affect earnings, with any ineffectiveness recorded directly to earnings. Derivatives related to fixed rate securities are accounted for as fair value hedges, where the derivatives' fair value gains and losses and the hedged items' fair value gains and losses attributable to interest rate risk are both recorded directly to earnings, providing an offset, with any differences representing ineffectiveness.

At December 31, 2015, the following interest rate derivatives were outstanding:

	Notional Amount		Interest Rate Received	Weighted Average Interest Rate Paid	Hedge Maturity Date	Fair Value Gain (Loss) December 31, 2015
	(in millions)					(in millions)
Cash Flow Hedges of Existing Debt
	$	250	3-month LIBOR + 0.32%	0.75%	March 2016	$	—
	200		3-month LIBOR + 0.40%	1.01%	August 2016	—
Fair Value Hedges of Existing Debt
	250		5.40%	3-month LIBOR + 4.02%	June 2018	1
	200		4.25%	3-month LIBOR + 2.46%	December 2019	2
	500		1.95%	3-month LIBOR + .76%	December 2018	(3		)
Total	$	1,400				$	—

The estimated pre-tax gains (losses) that will be reclassified from accumulated OCI to interest expense for the 12-month period ending December 31, 2016 are $4 million. The Company has deferred gains and losses related to interest rate derivative settlements of cash flow hedges that are expected to be amortized into earnings through 2037.

Derivative Financial Statement Presentation and Amounts

At December 31, 2015 and 2014, the fair value of energy-related derivatives and interest rate derivatives was reflected in the balance sheets as follows:

	Asset Derivatives					Liability Derivatives
Derivative Category	Balance Sheet Location	2015		2014		Balance Sheet Location	2015		2014
		(in millions)					(in millions)
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:	Other current assets	$	2	$	6	Liabilities from risk management activities	$	12	$	23
	Other deferred charges and assets	—		1		Other deferred credits and liabilities	3		4
Total derivatives designated as hedging instruments for regulatory purposes		$	2	$	7		$	15	$	27
Derivatives designated as hedging instruments in cash flow and fair value hedges
Interest rate derivatives:	Other current assets	$	5	$	5	Liabilities from risk management activities	$	—	$	9
	Other deferred charges and assets	—		1		Other deferred credits and liabilities	6		5
Total derivatives designated as hedging instruments in cash flow and fair value hedges		$	5	$	6		$	6	$	14
Total		$	7	$	13		$	21	$	41

Energy-related derivatives not designated as hedging instruments were immaterial on the balance sheets for 2015 and 2014.

The Company's derivative contracts are not subject to master netting arrangements or similar agreements and are reported gross on the Company's financial statements. Some of these energy-related and interest rate derivative contracts may contain certain provisions that permit intra-contract netting of derivative receivables and payables for routine billing and offsets related to events of default and settlements. Amounts related to energy-related derivative contracts and interest rate derivative contracts at December 31, 2015 and 2014 are presented in the following tables.

Fair Value
Assets	2015			2014			Liabilities	2015			2014
	(in millions)							(in millions)
Energy-related derivatives presented in the Balance Sheet (a)	$	2		$	7		Energy-related derivatives presented in the Balance Sheet (a)	$	15		$	27
Gross amounts not offset in the Balance Sheet (b)	(2		)	(7		)	Gross amounts not offset in the Balance Sheet (b)	(2		)	(7		)
Net energy-related derivative assets	$	—		$	—		Net energy-related derivative liabilities	$	13		$	20
Interest rate derivatives presented in the Balance Sheet (a)	$	5		$	6		Interest rate derivatives presented in the Balance Sheet (a)	$	6		$	14
Gross amounts not offset in the Balance Sheet (b)	(4		)	(6		)	Gross amounts not offset in the Balance Sheet (b)	(4		)	(6		)
Net interest rate derivative assets	$	1		$	—		Net interest rate derivative liabilities	$	2		$	8

(a) The Company does not offset fair value amounts for multiple derivative instruments executed with the same counterparty on the balance sheets; therefore, gross and net amounts of derivative assets and liabilities presented on the balance sheets are the same.

(b) Includes gross amounts subject to netting terms that are not offset on the balance sheets and any cash/financial collateral pledged or received.

At December 31, 2015 and 2014, 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:

	Unrealized Losses							Unrealized Gains
Derivative Category	Balance Sheet Location	2015			2014			Balance Sheet Location	2015		2014
		(in millions)							(in millions)
Energy-related derivatives:	Other regulatory assets, current	$	(12	)	$	(23	)	Other regulatory liabilities, current	$	2	$	6
	Other regulatory assets, deferred	(3		)	(4		)	Other deferred credits and liabilities	—		1
Total energy-related derivative gains (losses)		$	(15	)	$	(27	)		$	2	$	7

For the years ended December 31, 2015, 2014, and 2013, the pre-tax effects of interest rate derivatives designated as cash flow hedging instruments on the statements of income were as follows:

Derivatives in Cash Flow Hedging Relationships	Gain (Loss) Recognized in OCI on Derivative (Effective Portion)								Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)
										Amount
Derivative Category	2015			2014			2013		Statements of Income Location	2015			2014			2013
	(in millions)									(in millions)
Interest rate derivatives	$	(15	)	$	(8	)	$	—	Interest expense, net of amounts capitalized	$	(3	)	$	(3	)	$	(3	)

For the years ended December 31, 2015 and 2014, the pre-tax effects of interest rate derivatives designated as fair value hedging instruments on the statements of income were immaterial on a gross basis for the Company. Furthermore, the pre-tax effect of interest rate derivatives designated as fair value hedging instruments on the Company's statements of income were offset by changes to the carrying value of long-term debt. The gains and losses related to interest rate derivative settlements of fair value hedges are recorded directly to earnings.

There was no material ineffectiveness recorded in earnings for any period presented. The pre-tax effect of energy-related derivatives not designated as hedging instruments on the statements of income was immaterial for all years presented.

Contingent Features

The Company does not have any credit arrangements that would require material changes in payment schedules or terminations as a result of a credit rating downgrade. There are certain derivatives that could require collateral, but not accelerated payment, in the event of various credit rating changes of certain affiliated companies. At December 31, 2015, the Company's collateral posted with its derivative counterparties was immaterial.

At December 31, 2015, the fair value of derivative liabilities with contingent features was $1 million. However, because of joint and several liability features underlying these derivatives, the maximum potential collateral requirements arising from the credit-risk-related contingent features, at a rating below BBB- and/or Baa3, were $52 million, and include certain agreements that could require collateral in the event that one or more Southern Company system power pool participants has a credit rating change to below investment grade.

Generally, collateral may be provided by a Southern Company guaranty, letter of credit, or cash. If collateral is required, fair value amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral are not offset against fair value amounts recognized for derivatives executed with the same counterparty.

The Company is exposed to losses related to financial instruments in the event of counterparties' nonperformance. The Company only enters into agreements and material transactions with counterparties that have investment grade credit ratings by Moody's and S&P or with counterparties who have posted collateral to cover potential credit exposure. The Company has also established risk management policies and controls to determine and monitor the creditworthiness of counterparties in order to mitigate the Company's exposure to counterparty credit risk. Therefore, the Company does not anticipate a material adverse effect on the financial statements as a result of counterparty nonperformance.

Gulf Power [Member]

Derivative [Line Items]

DERIVATIVES

DERIVATIVES

The Company is exposed to market risks, primarily commodity price risk and interest rate risk. To manage the volatility attributable to these exposures, the Company nets its exposures, where possible, to take advantage of natural offsets and may enter into various derivative transactions for the remaining exposures pursuant to the Company's policies in areas such as counterparty exposure and risk management practices. The Company's policy is that derivatives are to be used primarily for hedging purposes and mandates strict adherence to all applicable risk management policies. Derivative positions are monitored using techniques including, but not limited to, market valuation, value at risk, stress testing, and sensitivity analysis. Derivative instruments are recognized at fair value in the balance sheets as either assets or liabilities and are presented on a gross basis. See Note 9 for additional information. In the statements of cash flows, the cash impacts of settled energy-related and interest rate derivatives are recorded as operating activities.

Energy-Related Derivatives

The Company enters into energy-related derivatives to hedge exposures to electricity, gas, and other fuel price changes. However, due to cost-based rate regulations and other various cost recovery mechanisms, the Company has limited exposure to market volatility in commodity fuel prices and prices of electricity. The Company manages fuel-hedging programs, implemented per the guidelines of the Florida PSC, through the use of financial derivative contracts, which is expected to continue to mitigate price volatility.

Energy-related derivative contracts are accounted for under one of two methods:

• Regulatory Hedges — Energy-related derivative contracts which are designated as regulatory hedges relate primarily to the Company's fuel-hedging programs, where gains and losses are initially recorded as regulatory liabilities and assets, respectively, and then are included in fuel expense as the underlying fuel is used in operations and ultimately recovered through the fuel cost recovery clause.

• Not Designated — Gains and losses on energy-related derivative contracts that are not designated or fail to qualify as hedges are recognized in the statements of income as incurred.

Some energy-related derivative contracts require physical delivery as opposed to financial settlement, and this type of derivative is both common and prevalent within the electric industry. When an energy-related derivative contract is settled physically, any cumulative unrealized gain or loss is reversed and the contract price is recognized in the respective line item representing the actual price of the underlying goods being delivered.

At December 31, 2015, the net volume of energy-related derivative contracts for natural gas positions totaled 82 million mmBtu for the Company, with the longest hedge date of 2020 over which it is hedging its exposure to the variability in future cash flows for forecasted transactions.

Interest Rate Derivatives

The Company may also enter into interest rate derivatives to hedge exposure to changes in interest rates. Derivatives related to existing variable rate securities or forecasted transactions are accounted for as cash flow hedges where the effective portion of the derivatives' fair value gains or losses is recorded in OCI and is reclassified into earnings at the same time the hedged transactions affect earnings. The derivatives employed as hedging instruments are structured to minimize ineffectiveness, which is recorded directly to earnings.

At December 31, 2015, the following interest rate derivative was outstanding:

	Notional Amount		Interest Rate Received	Weighted Average Interest Rate Paid	Hedge Maturity Date	Fair Value Gain (Loss) December 31, 2015
	(in millions)					(in millions)
Cash Flow Hedges of Forecasted Debt
	$	80	3-month LIBOR	2.32%	December 2026	$	1

The estimated pre-tax losses that will be reclassified from accumulated OCI to interest expense for the 12-month period ending December 31, 2016 are immaterial. The Company has deferred gains and losses that are expected to be amortized into earnings through 2026.

Derivative Financial Statement Presentation and Amounts

At December 31, 2015 and 2014, the fair value of energy-related derivatives and interest rate derivatives was reflected in the balance sheets as follows:

	Asset Derivatives					Liability Derivatives
Derivative Category	Balance Sheet Location	2015		2014		Balance Sheet Location	2015		2014
		(in millions)					(in millions)
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:	Other current assets	$	—	$	—	Liabilities from risk management activities	$	49	$	37
	Other deferred charges and assets	—		—		Other deferred credits and liabilities	51		35
Total derivatives designated as hedging instruments for regulatory purposes		$	—	$	—		$	100	$	72
Derivatives designated as hedging instruments in cash flow and fair value hedges
Interest rate derivatives:	Other current assets	$	1	$	—	Liabilities from risk management activities	$	—	$	—
Total		$	1	$	—		$	100	$	72

Energy-related derivatives not designated as hedging instruments were immaterial on the balance sheets for 2015 and 2014.

The Company's derivative contracts are not subject to master netting arrangements or similar agreements and are reported gross on the Company's financial statements. Some of these energy-related derivative contracts contain certain provisions that permit intra-contract netting of derivative receivables and payables for routine billing and offsets related to events of default and settlements. At December 31, 2015 and 2014, energy-related derivatives and interest rate derivatives presented in the tables above do not have amounts available for offset.

At December 31, 2015 and 2014, the pre-tax effects of unrealized derivative gains (losses) arising from energy-related derivative instruments designated as regulatory hedging instruments and deferred on the balance sheets were as follows:

	Unrealized Losses							Unrealized Gains
Derivative Category	Balance Sheet Location	2015			2014			Balance Sheet Location	2015		2014
		(in millions)							(in millions)
Energy-related derivatives:	Other regulatory assets, current	$	(49	)	$	(37	)	Other regulatory liabilities, current	$	—	$	—
	Other regulatory assets, deferred	(51		)	(35		)	Other regulatory liabilities, deferred	—		—
Total energy-related derivative gains (losses)		$	(100	)	$	(72	)		$	—	$	—

For the years ended December 31, 2015, 2014, and 2013, the pre-tax effects of interest rate derivatives designated as cash flow hedging instruments on the statements of income were as follows:

Derivatives in Cash Flow Hedging Relationships	Gain (Loss) Recognized in OCI on Derivative						Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)
	(Effective Portion)							Amount
Derivative Category	2015		2014		2013		Statements of Income Location	2015			2014			2013
	(in millions)							(in millions)
Interest rate derivatives	$	1	$	—	$	—	Interest expense, net of amounts capitalized	$	(1	)	$	(1	)	$	(1	)

There was no material ineffectiveness recorded in earnings for any period presented.

For the years ended December 31, 2015, 2014, and 2013, the pre-tax effects of energy-related derivatives not designated as hedging instruments on the statements of income were not material.

Contingent Features

The Company does not have any credit arrangements that would require material changes in payment schedules or terminations as a result of a credit rating downgrade. There are certain derivatives that could require collateral, but not accelerated payment, in the event of various credit rating changes of certain affiliated companies. At December 31, 2015, the Company's collateral posted with its derivative counterparties was not material.

At December 31, 2015, the fair value of derivative liabilities with contingent features was $22 million. However, because of joint and several liability features underlying these derivatives, the maximum potential collateral requirements arising from the credit-risk-related contingent features, at a rating below BBB- and/or Baa3, were $52 million and include certain agreements that could require collateral in the event that one or more Southern Company system power pool participants has a credit rating change to below investment grade.

Generally, collateral may be provided by a Southern Company guaranty, letter of credit, or cash. If collateral is required, fair value amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral are not offset against fair value amounts recognized for derivatives executed with the same counterparty.

The Company is exposed to losses related to financial instruments in the event of counterparties' nonperformance. The Company only enters into agreements and material transactions with counterparties that have investment grade credit ratings by Moody's and S&P or with counterparties who have posted collateral to cover potential credit exposure. The Company has also established risk management policies and controls to determine and monitor the creditworthiness of counterparties in order to mitigate the Company's exposure to counterparty credit risk. Therefore, the Company does not anticipate a material adverse effect on the financial statements as a result of counterparty nonperformance.

Mississippi Power [Member]

Derivative [Line Items]

DERIVATIVES

DERIVATIVES

The Company is exposed to market risks, primarily commodity price risk and interest rate risk and occasionally foreign currency risk. To manage the volatility attributable to these exposures, the Company nets its exposures, where possible, to take advantage of natural offsets and enters into various derivative transactions for the remaining exposures pursuant to the Company's policies in areas such as counterparty exposure and risk management practices. The Company's policy is that derivatives are to be used primarily for hedging purposes and mandates strict adherence to all applicable risk management policies. Derivative positions are monitored using techniques including, but not limited to, market valuation, value at risk, stress testing, and sensitivity analysis. Derivative instruments are recognized at fair value in the balance sheets as either assets or liabilities and are presented on a gross basis. See Note 9 for additional information. In the statements of cash flows, the cash impacts of settled energy-related and interest rate derivatives are recorded as operating activities and the cash impacts of settled foreign currency derivatives are recorded as investing activities.

Energy-Related Derivatives

The Company enters into energy-related derivatives to hedge exposures to electricity, gas, and other fuel price changes. However, due to cost-based rate regulations and other various cost recovery mechanisms, the Company has limited exposure to market volatility in commodity fuel prices and prices of electricity. The Company manages fuel-hedging programs, implemented per the guidelines of the Mississippi PSC, through the use of financial derivative contracts, which is expected to continue to mitigate price volatility.

Energy-related derivative contracts are accounted for under one of the following methods:

• Regulatory Hedges – Energy-related derivative contracts which are designated as regulatory hedges relate primarily to the Company's fuel-hedging programs, where gains and losses are initially recorded as regulatory liabilities and assets, respectively, and then are included in fuel expense as the underlying fuel is used in operations and ultimately recovered through the respective fuel cost recovery clauses.

• Not Designated – Gains and losses on energy-related derivative contracts that are not designated or fail to qualify as hedges are recognized in the statements of operations as incurred.

Some energy-related derivative contracts require physical delivery as opposed to financial settlement, and this type of derivative is both common and prevalent within the electric industry. When an energy-related derivative contract is settled physically, any cumulative unrealized gain or loss is reversed and the contract price is recognized in the respective line item representing the actual price of the underlying goods being delivered.

At December 31, 2015, the net volume of energy-related derivative contracts for natural gas positions totaled 32 million mmBtu for the Company, with the longest hedge date of 2018 over which the Company is hedging its exposure to the variability in future cash flows for forecasted transactions.

Interest Rate Derivatives

The Company may also enter into interest rate derivatives to hedge exposure to changes in interest rates. Derivatives related to existing variable rate securities or forecasted transactions are accounted for as cash flow hedges where the effective portion of the derivatives' fair value gains or losses is recorded in OCI and is reclassified into earnings at the same time the hedged transactions affect earnings. The derivatives employed as hedging instruments are structured to minimize ineffectiveness, which is recorded directly to income.

At December 31, 2015, there were no interest rate derivatives outstanding.

The estimated pre-tax losses that will be reclassified from accumulated OCI to interest expense for the next 12-month period ending December 31, 2016 are $1 million. The Company has deferred gains and losses that are expected to be amortized into earnings through 2022.

Derivative Financial Statement Presentation and Amounts

At December 31, 2015 and 2014, the fair value of energy-related derivatives was reflected in the balance sheets as follows:

	Asset Derivatives					Liability Derivatives
Derivative Category	Balance Sheet Location	2015		2014		Balance Sheet Location	2015		2014
		(in millions)					(in millions)
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:	Other current assets	$	—	$	—	Other current liabilities	$	29	$	26
	Other deferred charges and assets	—		—		Other deferred credits and liabilities	18		19
Total derivatives designated as hedging instruments for regulatory purposes		$	—	$	—		$	47	$	45

Energy-related derivatives not designated as hedging instruments were immaterial for 2015 and 2014.

The Company's derivative contracts are not subject to master netting arrangements or similar agreements and are reported gross on the Company's financial statements. Some of these energy-related derivative contracts contain certain provisions that permit intra-contract netting of derivative receivables and payables for routine billing and offsets related to events of default and settlements. At December 31, 2015 and 2014, energy-related derivatives presented in the table above did not have amounts available for offset.

At December 31, 2015 and 2014, the pre-tax effects of unrealized derivative gains (losses) arising from energy-related derivative instruments designated as regulatory hedging instruments and deferred on the balance sheets were as follows:

	Unrealized Losses							Unrealized Gains
Derivative Category	Balance Sheet Location	2015			2014			Balance Sheet Location	2015		2014
		(in millions)							(in millions)
Energy-related derivatives:	Other regulatory assets, current	$	(29	)	$	(26	)	Other regulatory liabilities, current	$	—	$	—
	Other regulatory assets, deferred	(18		)	(19		)	Other regulatory liabilities, deferred	—		—
Total energy-related derivative gains (losses)		$	(47	)	$	(45	)		$	—	$	—

For the years ended December 31, 2015, 2014, and 2013, the pre-tax effects of energy-related derivatives not designated as hedging instruments on the statements of operations were immaterial.

For the years ended December 31, 2015, 2014, and 2013, the pre-tax effects of derivatives designated as cash flow hedging instruments on the statements of operations were immaterial.

There was no material ineffectiveness recorded in earnings for any period presented.

Contingent Features

The Company does not have any credit arrangements that would require material changes in payment schedules or terminations as a result of a credit rating downgrade. There are certain derivatives that could require collateral, but not accelerated payment, in the event of various credit rating changes of certain affiliated companies. At December 31, 2015, the Company's collateral posted with its derivative counterparties was immaterial.

At December 31, 2015, the fair value of derivative liabilities with contingent features was $12 million. However, because of joint and several liability features underlying these derivatives, the maximum potential collateral requirements arising from the credit-risk-related contingent features, at a rating below BBB- and/or Baa3, were $52 million, and include certain agreements that could require collateral in the event that one or more Southern Company system power pool participants has a credit rating change to below investment grade.

Generally, collateral may be provided by a Southern Company guaranty, letter of credit, or cash. If collateral is required, fair value amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral are not offset against fair value amounts recognized for derivatives executed with the same counterparty.

The Company is exposed to losses related to financial instruments in the event of counterparties' nonperformance. The Company only enters into agreements and material transactions with counterparties that have investment grade credit ratings by Moody's and S&P or with counterparties who have posted collateral to cover potential credit exposure. The Company has also established risk management policies and controls to determine and monitor the creditworthiness of counterparties in order to mitigate the Company's exposure to counterparty credit risk. Therefore, the Company does not anticipate a material adverse effect on the financial statements as a result of counterparty nonperformance.

Southern Power [Member]

Derivative [Line Items]

DERIVATIVES

DERIVATIVES

The Company is exposed to market risks, primarily commodity price risk and interest rate risk. To manage the volatility attributable to these exposures, the Company nets its exposures, where possible, to take advantage of natural offsets and enters into various derivative transactions for the remaining exposures pursuant to the Company's policies in areas such as counterparty exposure and risk management practices. The Company's policy is that derivatives are to be used primarily for hedging purposes and mandates strict adherence to all applicable risk management policies. Derivative positions are monitored using techniques including, but not limited to, market valuation, value at risk, stress testing, and sensitivity analysis. Derivative instruments are recognized at fair value in the balance sheets as either assets or liabilities and are presented on a gross basis. See Note 8 for additional information. In the statements of cash flows, the cash impacts of settled energy-related and interest rate derivatives are recorded as operating activities.

Energy-Related Derivatives

The Company enters into energy-related derivatives to hedge exposures to electricity, gas, and other fuel price changes. The Company has limited exposure to market volatility in commodity fuel prices and prices of electricity because its long-term sales contracts shift substantially all fuel cost responsibility to the purchaser. However, the Company has been and may continue to be exposed to market volatility in energy-related commodity prices as a result of uncontracted generating capacity.

Energy-related derivative contracts are accounted for under one of two methods:

• Cash Flow Hedges – Gains and losses on energy-related derivatives designated as cash flow hedges which are used to hedge anticipated purchases and sales and are initially deferred in OCI before being recognized in the statements of income in the same period as the hedged transactions are reflected in earnings.

• Not Designated – Gains and losses on energy-related derivative contracts that are not designated or fail to qualify as hedges are recognized in the statements of income as incurred.

Some energy-related derivative contracts require physical delivery as opposed to financial settlement, and this type of derivative is both common and prevalent within the electric industry. When an energy-related derivative contract is settled physically, any cumulative unrealized gain or loss is reversed and the contract price is recognized in the respective line item representing the actual price of the underlying goods being delivered.

At December 31, 2015, the net volume of energy-related derivative contracts for natural gas positions totaled 10 million mmBtu, all of which expire by 2017, which is the longest non-hedge date. At December 31, 2015, the net volume of energy-related derivative contracts for power positions was immaterial.

In addition to the volume discussed above, the Company enters into physical natural gas supply contracts that provide the option to sell back excess gas due to operational constraints. The maximum expected volume of natural gas subject to such a feature is 1 million mmBtu.

For cash flow hedges, the amounts expected to be reclassified from accumulated OCI to earnings for the next 12-month period ending December 31, 2016 is immaterial.

Interest Rate Derivatives

The Company may also enter into interest rate derivatives from time to time to hedge exposure to changes in interest rates. Derivatives related to existing variable rate securities or forecasted transactions are accounted for as cash flow hedges where the effective portion of the derivatives' fair value gains or losses is recorded in OCI and is reclassified into earnings at the same time the hedged transactions affect earnings. The derivatives employed as hedging instruments are structured to minimize ineffectiveness, which is recorded directly to earnings. Fair value gains or losses on derivatives that are not designated or fail to qualify as hedges are recognized in the statements of income as incurred.

At December 31, 2015, the following interest rate derivatives were outstanding:

	Notional Amount			Interest Rate Received	Weighted Average Interest Rate Paid	Hedge Maturity Date		Fair Value Gain (Loss) December 31, 2015
	(in millions)							(in millions)
Derivatives not Designated as Hedges
	$	65	(a,d)	3-month LIBOR	2.50%	October 2016	(e)	$	1
	47		(b.d)	3-month LIBOR	2.21%	October 2016	(e)	1
	65		(c,d)	3-month LIBOR	2.21%	November 2016	(f)	1
Total	$	177						$	3

(a) Swaption at RE Tranquillity LLC. See Note 2 for additional information.

(b) Swaption at RE Roserock LLC. See Note 2 for additional information.

(c) Swaption at RE Garland Holdings LLC. See Note 2 for additional information.

(d) Amortizing notional amount.

(e) Represents the mandatory settlement date. Settlement amount will be based on a 15-year amortizing swap.

(f) Represents the mandatory settlement date. Settlement amount will be based on a 12-year amortizing swap.

The Company has deferred gains and losses in AOCI related to past cash flow hedges that are expected to be amortized into earnings through 2016. The estimated pre-tax loss that will be reclassified from AOCI to interest expense for the 12-month period ending December 31, 2016 is immaterial.

Derivative Financial Statement Presentation and Amounts

At December 31, 2015 and 2014, the fair value of energy-related derivatives and interest rate derivatives was reflected in the balance sheets as follows:

	Asset Derivatives					Liability Derivatives
Derivative Category	Balance Sheet Location	2015		2014		Balance Sheet Location	2015		2014
		(in millions)					(in millions)
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:	Assets from risk management activities	$	3	$	—	Other current liabilities	$	2	$	—
Derivatives not designated as hedging instruments
Energy-related derivatives:	Assets from risk management activities	$	1	$	5	Other current liabilities	$	1	$	4
Interest rate derivatives:	Assets from risk management activities	3		—		Other current liabilities	—		—
Total derivatives not designated as hedging instruments		$	4	$	5		$	1	$	4
Total		$	7	$	5		$	3	$	4

The Company's derivative contracts are not subject to master netting arrangements or similar agreements and are reported gross on the Company's financial statements. Some of these energy-related and interest rate derivative contracts contain certain provisions that permit intra-contract netting of derivative receivables and payables for routine billing and offsets related to events of default and settlements. Amounts related to energy-related derivative contracts at December 31, 2015 and 2014 are presented in the following tables. Interest rate derivatives presented in the tables above do not have amounts available for offset and are therefore excluded from the offsetting disclosure tables below.

Fair Value
Assets	2015			2014		Liabilities	2015			2014
	(in millions)						(in millions)
Energy-related derivatives presented in the Balance Sheet (a)	$	4		$	5	Energy-related derivatives presented in the Balance Sheet (a)	$	3		$	4
Gross amounts not offset in the Balance Sheet (b)	(1		)	—		Gross amounts not offset in the Balance Sheet (b)	(1		)	—
Net energy-related derivative assets	$	3		$	5	Net energy-related derivative liabilities	$	2		$	4

(a) The Company does not offset fair value amounts for multiple derivative instruments executed with the same counterparty on the balance sheets; therefore, gross and net amounts of derivative assets and liabilities presented on the balance sheets are the same.

(b) Includes gross amounts subject to netting terms that are not offset on the balance sheets and any cash/financial collateral pledged or received.

For the years ended December 31, 2015, 2014, and 2013, the pre-tax effects of interest rate derivatives designated as cash flow hedging instruments on the statements of income were as follows:

Derivatives in Cash Flow Hedging Relationships	Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
		Amount
Derivative Category	Statements of Income Location	2015			2014			2013
		(in millions)
Interest rate derivatives	Interest expense, net of amounts capitalized	$	(1	)	$	(1	)	$	(6	)

For the years ended December 31, 2015, 2014, and 2013, the pre-tax effects of energy-related derivatives designated as cash flow hedging instruments recognized in OCI and reclassified from AOCI into earnings were immaterial.

There was no material ineffectiveness recorded in earnings for any period presented.

The pre-tax effects of energy-related derivatives and interest rate derivatives not designated as hedging instruments on the Company's statements of income were not material for any year presented.

Contingent Features

The Company does not have any credit arrangements that would require material changes in payment schedules or terminations as a result of a credit rating downgrade. There are certain derivatives that could require collateral, but not accelerated payment, in the event of various credit rating changes of certain affiliated companies. At December 31, 2015, the amount of collateral posted with its derivative counterparties was immaterial.

At December 31, 2015, the fair value of derivative liabilities with contingent features was immaterial. However, because of joint and several liability features underlying these derivatives, the maximum potential collateral requirements arising from the credit-risk-related contingent features, at a rating below BBB- and/or Baa3, were $52 million, and include certain agreements that could require collateral in the event that one or more Southern Company system power pool participants has a credit rating change to below investment grade.

Generally, collateral may be provided by a Southern Company guaranty, letter of credit, or cash. If collateral is required, fair value amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral are not offset against fair value amounts recognized for derivatives executed with the same counterparty.

The Company is exposed to losses related to financial instruments in the event of counterparties' nonperformance. The Company only enters into agreements and material transactions with counterparties that have investment grade credit ratings by Moody's and S&P or with counterparties who have posted collateral to cover potential credit exposure. The Company has also established risk management policies and controls to determine and monitor the creditworthiness of counterparties in order to mitigate the Company's exposure to counterparty credit risk. Therefore, the Company does not anticipate a material adverse effect on the financial statements as a result of counterparty nonperformance.