Derivatives (Tables)

9 Months Ended

Sep. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of energy-related derivatives

At September 30, 2016, the net volume of energy-related derivative contracts for natural gas positions for the Southern Company system, together with the longest hedge date over which the respective entity is hedging its exposure to the variability in future cash flows for forecasted transactions and the longest non-hedge date for derivatives not designated as hedges, were as follows:

	Net Purchased mmBtu	Longest Hedge Date	Longest Non-Hedge Date
	(in millions)
Southern Company(*)	540	2020	2022
Alabama Power	75	2020	—
Georgia Power	148	2020	—
Gulf Power	57	2020	—
Mississippi Power	37	2020	—
Southern Power	9	2017	2016

(*) Southern Company Gas' derivative instruments are comprised of both long and short natural gas positions. A long position is a contract to purchase natural gas and a short position is a contract to sell natural gas. Southern Company Gas' volume represents the net of long natural gas positions of 3.2 billion mmBtu and short natural gas positions of 2.9 billion mmBtu as of September 30, 2016.

Schedule of interest rate derivatives

At September 30, 2016, the following interest rate derivatives were outstanding:

	Notional Amount			Interest Rate Received	Weighted Average Interest Rate Paid	Hedge Maturity Date		Fair Value Gain (Loss) at September 30, 2016
	(in millions)							(in millions)
Cash Flow Hedges of Forecasted Debt
Gulf Power	$	80		3-month LIBOR	2.32%	December 2026		$	(6	)
Cash Flow Hedges of Existing Debt
Mississippi Power	900			1-month LIBOR	0.79%	March 2018		(1		)
Fair Value Hedges of Existing Debt
Southern Company(a)	250			1.30%	3-month LIBOR + 0.17%	August 2017		1
Southern Company(a)	300			2.75%	3-month LIBOR + 0.92%	June 2020		9
Georgia Power	250			5.40%	3-month LIBOR + 4.02%	June 2018		2
Georgia Power	200			4.25%	3-month LIBOR + 2.46%	December 2019		5
Georgia Power	500			1.95%	3-month LIBOR + 0.76%	December 2018		2
Derivatives not Designated as Hedges
Southern Power	65		(b)(e)	3-month LIBOR	2.50%	October 2016	(f)	—
Southern Power	47		(c)(e)	3-month LIBOR	2.21%	October 2016	(f)	—
Southern Power	65		(d)(e)	3-month LIBOR	2.21%	November 2016	(g)	—
Southern Company Consolidated	$	2,657						$	12

(a) Represents the Southern Company parent entity.

(b) Swaption at RE Tranquillity LLC. See Note 12 to the financial statements of Southern Company and Note 2 to the financial statements of Southern Power in Item 8 of the Form 10-K for additional information.

(c) Swaption at RE Roserock LLC. See Note 12 to the financial statements of Southern Company and Note 2 to the financial statements of Southern Power in Item 8 of the Form 10-K for additional information. Subsequent to September 30, 2016, Roserock extended the maturity date of its swaption to December 31, 2016.

(d) Swaption at RE Garland Holdings LLC. See Note 12 to the financial statements of Southern Company and Note 2 to the financial statements of Southern Power in Item 8 of the Form 10-K for additional information.

(e) Amortizing notional amount.

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

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

Schedule of foreign currency derivatives

At September 30, 2016, the following foreign currency derivatives were outstanding:

	Pay Notional		Pay Rate	Receive Notional		Receive Rate	Hedge Maturity Date	Fair Value Gain (Loss) at September 30, 2016
	(in millions)			(in millions)				(in millions)
Cash Flow Hedges of Existing Debt
Southern Power	$	677	2.95%	€	600	1.00%	June 2022	$	(2	)
Southern Power	564		3.78%	500		1.85%	June 2026	1
Total	$	1,241		€	1,100			$	(1	)

Fair value of energy-related derivatives and interest rate derivatives

At September 30, 2016, the fair value of energy-related derivatives, interest rate derivatives, and foreign currency derivatives was reflected in the balance sheets as follows:

	As of September 30, 2016
Derivative Category and Balance Sheet Location	Assets		Liabilities
	(in millions)
Southern Company
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:
Other current assets/Liabilities from risk management activities, net of collateral	$	20	$	(62	)
Other deferred charges and assets/Other deferred credits and liabilities	13		(53		)
Total derivatives designated as hedging instruments for regulatory purposes	$	33	$	(115	)
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Other current assets/Liabilities from risk management activities, net of collateral	$	4	$	(6	)
Other deferred charges and assets/Other deferred credits and liabilities	—		(1		)

	As of September 30, 2016
Derivative Category and Balance Sheet Location	Assets			Liabilities
	(in millions)
Interest rate derivatives:
Other current assets/Liabilities from risk management activities, net of collateral	$	8		$	(7	)
Other deferred charges and assets/Other deferred credits and liabilities	11			—
Foreign currency derivatives:
Other current assets/Liabilities from risk management activities, net of collateral	$	—		$	(24	)
Other deferred charges and assets/Other deferred credits and liabilities	23			—
Total derivatives designated as hedging instruments in cash flow and fair value hedges	$	46		$	(38	)
Derivatives not designated as hedging instruments
Energy-related derivatives:
Other current assets/Liabilities from risk management activities, net of collateral	$	305		$	(345	)
Other deferred charges and assets/Other deferred credits and liabilities	58			(74		)
Total derivatives not designated as hedging instruments	$	363		$	(419	)
Gross amounts of recognized assets and liabilities	$	442		$	(572	)
Gross amounts offset in the Balance Sheet(*)	$	(283	)	$	394
Net amounts of assets and liabilities presented in the Balance Sheet	$	159		$	(178	)
Alabama Power
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:
Other current assets/Liabilities from risk management activities	$	4		$	(14	)
Other deferred charges and assets/Other deferred credits and liabilities	4			(7		)
Total derivatives designated as hedging instruments for regulatory purposes	$	8		$	(21	)
Gross amounts of recognized assets and liabilities	$	8		$	(21	)
Gross amounts offset in the Balance Sheet(*)	$	(7	)	$	7
Net amounts of assets and liabilities presented in the Balance Sheet	$	1		$	(14	)
Georgia Power
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:
Other current assets/Other current liabilities	$	7		$	(5	)
Other deferred charges and assets/Other deferred credits and liabilities	8			(11		)
Total derivatives designated as hedging instruments for regulatory purposes	$	15		$	(16	)
Derivatives designated as hedging instruments in cash flow and fair value hedges
Interest rate derivatives:
Other current assets/Other current liabilities	$	5		$	—
Other deferred charges and assets/Other deferred credits and liabilities	5			—
Total derivatives designated as hedging instruments in cash flow and fair value hedges	$	10		$	—
Gross amounts of recognized assets and liabilities	$	25		$	(16	)
Gross amounts offset in the Balance Sheet(*)	$	(11	)	$	11
Net amounts of assets and liabilities presented in the Balance Sheet	$	14		$	(5	)

	As of September 30, 2016
Derivative Category and Balance Sheet Location	Assets			Liabilities
	(in millions)
Gulf Power
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:
Other current assets/Liabilities from risk management activities	$	1		$	(24	)
Other deferred charges and assets/Other deferred credits and liabilities	—			(27		)
Total derivatives designated as hedging instruments for regulatory purposes	$	1		$	(51	)
Derivatives designated as hedging instruments in cash flow and fair value hedges
Interest rate derivatives:
Other current assets/Liabilities from risk management activities	$	—		$	(6	)
Gross amounts of recognized assets and liabilities	$	1		$	(57	)
Gross amounts offset in the Balance Sheet(*)	$	(1	)	$	1
Net amounts of assets and liabilities presented in the Balance Sheet	$	—		$	(56	)
Mississippi Power
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:
Other current assets/Other current liabilities	$	—		$	(13	)
Other deferred charges and assets/Other deferred credits and liabilities	1			(8		)
Total derivatives designated as hedging instruments for regulatory purposes	$	1		$	(21	)
Derivatives designated as hedging instruments in cash flow and fair value hedges
Interest rate derivatives:
Other current assets/Other current liabilities	$	—		$	(1	)
Gross amounts of recognized assets and liabilities	$	1		$	(22	)
Gross amounts offset in the Balance Sheet(*)	$	(1	)	$	1
Net amounts of assets and liabilities presented in the Balance Sheet	$	—		$	(21	)
Southern Power
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Other current assets/Other current liabilities	$	2		$	(3	)
Other deferred charges and assets/Other deferred credits and liabilities	—			—
Foreign currency derivatives:
Other current assets/Other current liabilities	$	—		$	(24	)
Other deferred charges and assets/Other deferred credits and liabilities	23			—
Total derivatives designated as hedging instruments in cash flow and fair value hedges	$	25		$	(27	)
Derivatives not designated as hedging instruments
Energy-related derivatives:
Other current assets/Other current liabilities	$	1		$	—
Gross amounts of recognized assets and liabilities	$	26		$	(27	)
Gross amounts offset in the Balance Sheet(*)	$	(1	)	$	1
Net amounts of assets and liabilities presented in the Balance Sheet	$	25		$	(26	)

(*) Includes any cash/financial collateral pledged or received.

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

Asset Derivatives at December 31, 2015
	Fair Value
Derivative Category and Balance Sheet Location	Southern Company		Alabama Power		Georgia Power		Gulf Power		Southern Power
	(in millions)
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:
Other current assets	$	3	$	1	$	2	$	—	$	—
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Other current assets	$	3	$	—	$	—	$	—	$	3
Interest rate derivatives:
Other current assets	19		—		5		1		—
Total derivatives designated as hedging instruments in cash flow and fair value hedges	$	22	$	—	$	5	$	1	$	3
Derivatives not designated as hedging instruments
Energy-related derivatives:
Other current assets	$	1	$	—	$	—	$	—	$	1
Interest rate derivatives:
Other current assets	3		—		—		—		3
Total derivatives not designated as hedging instruments	$	4	$	—	$	—	$	—	$	4
Total asset derivatives	$	29	$	1	$	7	$	1	$	7

Liability Derivatives at December 31, 2015
	Fair Value
Derivative Category and Balance Sheet Location	Southern Company		Alabama Power		Georgia Power		Gulf Power		Mississippi Power		Southern Power
	(in millions)
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:
Liabilities from risk management activities(*)	$	130	$	40	$	12	$	49	$	29
Other deferred credits and liabilities	87		15		3		51		18
Total derivatives designated as hedging instruments for regulatory purposes	$	217	$	55	$	15	$	100	$	47	N/A
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Liabilities from risk management activities(*)	$	2	$	—	$	—	$	—	$	—	$	2
Interest rate derivatives:
Liabilities from risk management activities	23		15		—		—		—		—
Other deferred credits and liabilities	7		—		6		—		—		—
Total derivatives designated as hedging instruments in cash flow and fair value hedges	$	32	$	15	$	6	$	—	$	—	$	2
Derivatives not designated as hedging instruments
Energy-related derivatives:
Liabilities from risk management activities(*)	$	1	$	—	$	—	$	—	$	—	$	1
Total liability derivatives	$	250	$	70	$	21	$	100	$	47	$	3

(*) Georgia Power, Mississippi Power, and Southern Power include current liabilities related to derivatives in other current liabilities.

Offsetting disclosure tables

Amounts related to energy-related derivative contracts and interest rate derivative contracts at December 31, 2015 are presented in the following table:

Derivative Contracts at December 31, 2015
	Fair Value
	Southern Company			Alabama Power			Georgia Power			Gulf Power		Mississippi Power		Southern Power
	(in millions)
Assets
Energy-related derivatives:
Energy-related derivatives presented in the Balance Sheet(a)	$	7		$	1		$	2		$	—	$	—	$	4
Gross amounts not offset in the Balance Sheet(b)	(6		)	(1		)	(2		)	—		—		(1		)
Net energy-related derivative assets	$	1		$	—		$	—		$	—	$	—	$	3
Interest rate derivatives:
Interest rate derivatives presented in the Balance Sheet(a)	$	22		$	—		$	5		$	1	$	—	$	3
Gross amounts not offset in the Balance Sheet(b)	(9		)	—			(4		)	—		—		—
Net interest rate derivative assets	$	13		$	—		$	1		$	1	$	—	$	3
Liabilities
Energy-related derivatives:
Energy-related derivatives presented in the Balance Sheet(a)	$	220		$	55		$	15		$	100	$	47	$	3
Gross amounts not offset in the Balance Sheet(b)	(6		)	(1		)	(2		)	—		—		(1		)
Net energy-related derivative liabilities	$	214		$	54		$	13		$	100	$	47	$	2
Interest rate derivatives:
Interest rate derivatives presented in the Balance Sheet(a)	$	30		$	15		$	6		$	—	$	—	$	—
Gross amounts not offset in the Balance Sheet(b)	(9		)	—			(4		)	—		—		—
Net interest rate derivative liabilities	$	21		$	15		$	2		$	—	$	—	$	—

(a) As of December 31, 2015, none of the registrants offset fair value amounts for multiple derivative instruments executed with the same counterparty in the balance sheets; therefore, gross and net amounts of derivative assets and liabilities presented in the balance sheets are the same.

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

Pre-tax effects of unrealized derivative gains (losses) arising from energy-related derivative instruments

At September 30, 2016 and December 31, 2015, the pre-tax effects of unrealized derivative gains (losses) arising from energy-related derivative instruments designated as regulatory hedging instruments and deferred were as follows:

Regulatory Hedge Unrealized Gain (Loss) Recognized in the Balance Sheet at September 30, 2016
Derivative Category and Balance Sheet Location	Southern Company			Alabama Power			Georgia Power			Gulf Power			Mississippi Power
	(in millions)
Energy-related derivatives:
Other regulatory assets, current	$	(52	)	$	(10	)	$	(2	)	$	(24	)	$	(13	)
Other regulatory assets, deferred	(42		)	(4		)	(4		)	(26		)	(8		)
Other regulatory liabilities, current(a)	8			1			4			—			—
Other regulatory liabilities, deferred(b)	1			—			1			—			—
Total energy-related derivative gains (losses)	$	(85	)	$	(13	)	$	(1	)	$	(50	)	$	(21	)

(a) Georgia Power includes other regulatory liabilities, current in other current liabilities.

(b) Georgia Power includes other regulatory liabilities, deferred in other deferred credits and liabilities.

Regulatory Hedge Unrealized Gain (Loss) Recognized in the Balance Sheet at December 31, 2015
Derivative Category and Balance Sheet Location	Southern Company			Alabama Power			Georgia Power			Gulf Power			Mississippi Power
	(in millions)
Energy-related derivatives:
Other regulatory assets, current	$	(130	)	$	(40	)	$	(12	)	$	(49	)	$	(29	)
Other regulatory assets, deferred	(87		)	(15		)	(3		)	(51		)	(18		)
Other regulatory liabilities, current(*)	3			1			2			—			—
Total energy-related derivative gains (losses)	$	(214	)	$	(54	)	$	(13	)	$	(100	)	$	(47	)

(*) Georgia Power includes other regulatory liabilities, current in other current liabilities.

Pre-tax effects of interest rate derivatives, designated as cash flow hedging instruments

For the three months ended September 30, 2016 and 2015, the pre-tax effects of energy-related derivatives, interest rate derivatives, and foreign currency derivatives designated as cash flow hedging instruments 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)
							Statements of Income Location	Amount
	2016			2015				2016			2015
	(in millions)							(in millions)
Southern Company
Energy-related derivatives	$	—		$	—		Amortization	$	1		$	—
Interest rate derivatives	(6		)	(28		)	Interest expense, net of amounts capitalized	(6		)	(2		)
Foreign currency derivatives	37			—			Interest expense, net of amounts capitalized	(6		)	—
							Other income (expense), net(*)	7			—
Total	$	31		$	(28	)		$	(4	)	$	(2	)
Alabama Power
Interest rate derivatives	$	—		$	(10	)	Interest expense, net of amounts capitalized	$	(2	)	$	(1	)
Georgia Power
Interest rate derivatives	$	—		$	(18	)	Interest expense, net of amounts capitalized	$	(1	)	$	(1	)
Southern Power
Energy-related derivatives	$	—		$	—		Amortization	$	1		$	—
Foreign currency derivatives	37			—			Interest expense, net of amounts capitalized	(6		)	—
							Other income (expense), net(*)	7			—
Total	$	37		$	—			$	2		$	—

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

For the nine months ended September 30, 2016 and 2015, the pre-tax effects of energy-related derivatives, interest rate derivatives, and foreign currency derivatives designated as cash flow hedging instruments recognized in OCI and those reclassified from accumulated OCI into earnings 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)
							Statements of Income Location	Amount
	2016			2015				2016			2015
	(in millions)							(in millions)
Southern Company
Energy-related derivatives	$	(1	)	$	—		Amortization	$	1		$	—
Interest rate derivatives	(189		)	(26		)	Interest expense, net of amounts capitalized	(13		)	(7		)
Foreign currency derivatives	(1		)	—			Interest expense, net of amounts capitalized	(7		)	—
							Other income (expense), net(*)	(13		)	—
Total	$	(191	)	$	(26	)		$	(32	)	$	(7	)
Alabama Power
Interest rate derivatives	$	(3	)	$	(9	)	Interest expense, net of amounts capitalized	$	(5	)	$	(2	)
Georgia Power
Interest rate derivatives	$	—		$	(17	)	Interest expense, net of amounts capitalized	$	(3	)	$	(3	)
Gulf Power
Interest rate derivatives	$	(7	)	$	—		Interest expense, net of amounts capitalized	$	—		$	—
Mississippi Power
Interest rate derivatives	$	(1	)	$	—		Interest expense, net of amounts capitalized	$	(1	)	$	(1	)
Southern Power
Energy-related derivatives	$	(1	)	$	—		Amortization	$	1		$	—
Interest rate derivatives	—			—			Interest expense, net of amounts capitalized	(1		)	(1		)
Foreign currency derivatives	(1		)	—			Interest expense, net of amounts capitalized	(7		)	—
							Other income (expense), net(*)	(13		)	—
Total	$	(2	)	$	—			$	(20	)	$	(1	)

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

Pre-tax effects of interest rate derivatives, designated as fair value hedging instruments

For the three and nine months ended September 30, 2016 and 2015, the pre-tax effects of interest rate derivatives designated as fair value hedging instruments were as follows:

Derivatives in Fair Value Hedging Relationships
		Gain (Loss)
		Three Months Ended September 30,					Nine Months Ended September 30,
Derivative Category	Statements of Income Location	2016			2015		2016		2015
		(in millions)					(in millions)
Southern Company
Interest rate derivatives:	Interest expense, net of amounts capitalized	$	(9	)	$	15	$	15	$	19
Georgia Power
Interest rate derivatives:	Interest expense, net of amounts capitalized	$	(5	)	$	7	$	10	$	9