Acquisitions

12 Months Ended

Dec. 31, 2016

Southern Company

Merger with Southern Company Gas

Southern Company Gas is an energy services holding company whose primary business is the distribution of natural gas through the natural gas distribution utilities. On July 1, 2016, Southern Company completed the Merger for a total purchase price of approximately $8.0 billion and Southern Company Gas became a wholly-owned, direct subsidiary of Southern Company.

The Merger was accounted for using the acquisition method of accounting with the assets acquired and liabilities assumed recognized at fair value as of the acquisition date. The following table presents the purchase price allocation:



Southern Company Gas Purchase Price	December 31, 2016
	(in millions)
Current assets	$	1,557
Property, plant, and equipment	10,108
Goodwill	5,967
Intangible assets	400
Regulatory assets	1,118
Other assets	229
Current liabilities	(2,201		)
Other liabilities	(4,742		)
Long-term debt	(4,261		)
Noncontrolling interests	(174		)
Total purchase price	$	8,001

The excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed of $6.0 billion is recognized as goodwill, which is primarily attributable to positioning the Southern Company system to provide natural gas infrastructure to meet customers' growing energy needs and to compete for growth across the energy value chain. Southern Company anticipates that much of the value assigned to goodwill will not be deductible for tax purposes.

The valuation of identifiable intangible assets included customer relationships, trade names, and storage and transportation contracts with estimated lives of one to 28 years. The estimated fair value measurements of identifiable intangible assets were primarily based on significant unobservable inputs (Level 3).

The results of operations for Southern Company Gas have been included in the consolidated financial statements from the date of acquisition and consist of operating revenues of $1.7 billion and net income of $114 million.

The following summarized unaudited pro forma consolidated statement of earnings information assumes that the acquisition of Southern Company Gas was completed on January 1, 2015. The summarized unaudited pro forma consolidated statement of earnings information includes adjustments for (i) intercompany sales, (ii) amortization of intangible assets, (iii) adjustments to interest expense to reflect current interest rates on Southern Company Gas debt and additional interest expense associated with borrowings by Southern Company to fund the Merger, and (iv) the elimination of nonrecurring expenses associated with the Merger.



	2016		2015

Operating revenues (in millions)	$	21,791	$	21,430
Net income attributable to Southern Company (in millions)	$	2,591	$	2,665
Basic EPS	$	2.70	$	2.85
Diluted EPS	$	2.68	$	2.84

These unaudited pro forma results are for comparative purposes only and may not be indicative of the results that would have occurred had this acquisition been completed on January 1, 2015 or the results that would be attained in the future.

During 2016 and 2015, Southern Company recorded in its statements of income costs associated with the Merger of approximately $111 million and $41 million, respectively, of which $80 million and $27 million is included in operating expenses and $31 million and $14 million is included in other income and (expense), respectively. These costs include external transaction costs for financing, legal, and consulting services, as well as customer rate credits and additional compensation-related expenses.

Acquisition of PowerSecure

On May 9, 2016, Southern Company acquired all of the outstanding stock of PowerSecure, a provider of products and services in the areas of distributed generation, energy efficiency, and utility infrastructure, for $18.75 per common share in cash, resulting in an aggregate purchase price of $429 million. As a result, PowerSecure became a wholly-owned subsidiary of Southern Company.

The acquisition of PowerSecure was accounted for using the acquisition method of accounting with the assets acquired and liabilities assumed recognized at fair value as of the acquisition date. The allocation of the purchase price is as follows:



PowerSecure Purchase Price	December 31, 2016
	(in millions)
Current assets	$	172
Property, plant, and equipment	46
Intangible assets	101
Goodwill	282
Other assets	4
Current liabilities	(114		)
Long-term debt, including current portion	(48		)
Deferred credits and other liabilities	(14		)
Total purchase price	$	429

The excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed of $282 million was recognized as goodwill, which is primarily attributable to expected business expansion opportunities for PowerSecure. Southern Company anticipates that the majority of the value assigned to goodwill will not be deductible for tax purposes.

The valuation of identifiable intangible assets included customer relationships, trade names, patents, backlog, and software with estimated lives of one to 26 years. The estimated fair value measurements of identifiable intangible assets were primarily based on significant unobservable inputs (Level 3).

The results of operations for PowerSecure have been included in the consolidated financial statements from the date of acquisition and are immaterial to the consolidated financial results of Southern Company. Pro forma results of operations have not been presented for the acquisition because the effects of the acquisition were immaterial to Southern Company's consolidated financial results for all periods presented.

Alliance with Bloom Energy Corporation

On October 24, 2016, a subsidiary of Southern Company acquired from an affiliate of Bloom Energy Corporation (Bloom) all of the equity interests of 2016 ESA HoldCo, LLC and its subsidiary, 2016 ESA Project Company, LLC. 2016 ESA Project Company, LLC expects to acquire 50 MWs of Bloom fuel cell systems to serve commercial and industrial customers under long-term PPAs. In connection with this transaction, PowerSecure and Bloom agreed to pursue a strategic alliance to develop technology for behind-the-meter energy solutions.

Investment in Southern Natural Gas

On July 10, 2016, Southern Company and Kinder Morgan, Inc. entered into a definitive agreement for Southern Company to acquire a 50% equity interest in SNG, which is the owner of a 7,000-mile pipeline system connecting natural gas supply basins in Texas, Louisiana, Mississippi, and Alabama to markets in Louisiana, Mississippi, Alabama, Florida, Georgia, South Carolina, and Tennessee. On August 31, 2016, Southern Company assigned its rights and obligations under the definitive agreement to a wholly-owned, indirect subsidiary of Southern Company Gas. On September 1, 2016, Southern Company Gas completed the acquisition for a purchase price of approximately $1.4 billion. The investment in SNG is accounted for using the equity method.

Acquisition of Remaining Interest in SouthStar

SouthStar is a retail natural gas marketer and markets natural gas to residential, commercial, and industrial customers, primarily in Georgia and Illinois. Southern Company Gas previously had an 85% ownership interest in SouthStar, with Piedmont owning the remaining 15%. In October 2016, Southern Company Gas purchased Piedmont's 15% interest in SouthStar for $160 million.

Southern Power

During 2016 and 2015, in accordance with its overall growth strategy, Southern Power or one of its wholly-owned subsidiaries, Southern Renewable Partnerships, LLC (SRP) or Southern Renewable Energy, Inc. (SRE), acquired or contracted to acquire the projects discussed below. Also, on March 29, 2016, Southern Power acquired an additional 15% interest in Desert Stateline, 51% of which was initially acquired in August 2015. As a result, Southern Power and the class B member are now entitled to 66% and 34%, respectively, of all cash distributions from Desert Stateline. In addition, Southern Power will continue to be entitled to substantially all of the federal tax benefits with respect to the transaction.

The following table presents Southern Power's acquisitions during and subsequent to the year ended December 31, 2016.



Project Facility	Resource	Seller; Acquisition Date	Approximate Nameplate Capacity (MW)	Location	Southern Power Percentage Ownership			Actual/Expected COD	PPA Contract Period
Acquisitions During the Year Ended December 31, 2016
Boulder 1	Solar	SunPower Corp. November 16, 2016	100	Clark County, NV	51	%	(a)	December 2016	20 years
Calipatria	Solar	Solar Frontier Americas Holding LLC February 11, 2016	20	Imperial County, CA	90	%	(b)	February 2016	20 years
East Pecos	Solar	First Solar, Inc. March 4, 2016	120	Pecos County, TX	100	%		March 2017	15 years
Grant Plains	Wind	Apex Clean Energy Holdings, LLC August 26, 2016	147	Grant County, OK	100	%		December 2016	20 years and 12 years ^(c)
Grant Wind	Wind	Apex Clean Energy Holdings, LLC April 7, 2016	151	Grant County, OK	100	%		April 2016	20 years
Henrietta	Solar	SunPower Corp. July 1, 2016	102	Kings County, CA	51	%	(a)	July 2016	20 years
Lamesa	Solar	RES America Developments Inc. July 1, 2016	102	Dawson County, TX	100	%		Second quarter 2017	15 years
Mankato^(d)	Natural Gas	Calpine Corporation October 26, 2016	375	Mankato, MN	100	%		N/A ^(e)	10 years
Passadumkeag	Wind	Quantum Utility Generation, LLC June 30, 2016	42	Penobscot County, ME	100	%		July 2016	15 years
Rutherford	Solar	Cypress Creek Renewables, LLC July 1, 2016	74	Rutherford County, NC	90	%	(b)	December 2016	15 years
Salt Fork	Wind	EDF Renewable Energy, Inc. December 1, 2016	174	Donley and Gray Counties, TX	100	%		December 2016	14 years and 12 years
Tyler Bluff	Wind	EDF Renewable Energy, Inc. December 21, 2016	125	Cooke County, TX	100	%		December 2016	12 years
Wake Wind	Wind	Invenergy Wind Global LLC October 26, 2016	257	Floyd and Crosby Counties, TX	90.1	%	(f)	October 2016	12 years
Acquisitions Subsequent to December 31, 2016
Bethel	Wind	Invenergy Wind Global LLC January 6, 2017	276	Castro County, TX	100	%		January 2017	12 years


(a)	Southern Power owns 100% of the class A membership interests and a wholly-owned subsidiary of the seller owns 100% of the class B membership interests. Southern Power and the class B member are entitled to 51% and 49%, respectively, of all cash distributions from the project. In addition, Southern Power is entitled to substantially all of the federal tax benefits with respect to the transaction.


(b)	Southern Power owns 90%, with the minority owner, Turner Renewable Energy, LLC (TRE), owning 10%.


(c)	In addition to the 20-year and 12-year PPAs, the facility has a 10-year contract with Allianz Risk Transfer (Bermuda) Ltd.


(d)	Under the terms of the remaining 10-year PPA and the 20-year expansion PPA, approximately $408 million of assets, primarily related to property, plant, and equipment, are subject to lien at December 31, 2016.


(e)	The acquisition included a fully operational 375-MW natural gas-fired combined-cycle facility.


(f)	Southern Power owns 90.1%, with the minority owner, Invenergy Wind Global LLC, owning 9.9%.

Acquisitions During the Year Ended December 31, 2016

Southern Power's aggregate purchase price for acquisitions during the year ended December 31, 2016 was approximately $2.3 billion. Including the minority owner TRE's 10% ownership interest in Calipatria and Rutherford, SunPower Corp's 49% ownership interest in Boulder 1 and Henrietta, along with the assumption of $217 million in construction debt (non-recourse to Southern Power), and Invenergy Wind Global LLC's 9.9% ownership interest in Wake Wind, the total aggregate purchase price is approximately $2.6 billion for the project facilities acquired during the year ended December 31, 2016. The allocations of the purchase price to individual assets have not been finalized, except for Calipatria, East Pecos, Lamesa, and Rutherford, which were finalized with no changes to amounts originally reported. The fair values of the assets and liabilities acquired through the business combinations were recorded as follows:



	2016
	(in millions)
CWIP	$	2,354
Property, plant, and equipment	302
Intangible assets ^(a)	128
Other assets	52
Accounts payable	(16		)
Debt	(217		)
Total purchase price	$	2,603

Funded by:
Southern Power ^(b)(c)	$	2,345
Noncontrolling interests ^(d)(e)	258
Total purchase price	$	2,603


(a)	Intangible assets consist of acquired PPAs that will be amortized over 10 and 20-year terms. The estimated amortization for future periods is approximately $9 million per year.


(b)	At December 31, 2016, $461 million is included in acquisitions payable on the balance sheets.


(c)	Includes approximately $281 million of contingent consideration, of which $67 million remains payable at December 31, 2016.


(d)	Includes approximately $51 million of non-cash contributions recorded as capital contributions from noncontrolling interests in the statements of stockholders' equity.


(e)	Includes approximately $142 million of contingent consideration, all of which had been paid at December 31, 2016 by the noncontrolling interests.

The following table presents Southern Power's acquisitions for the year ended December 31, 2015. During the year ended December 31, 2016, the fair values of assets and liabilities acquired for all projects listed below were finalized with no changes to amounts originally reported.



Project Facility	Resource	Seller; Acquisition Date	Approximate Nameplate Capacity (MW)	Location	Southern Power Percentage Ownership			Actual COD	PPA Contract Period
Acquisitions for the Year Ended December 31, 2015
Desert Stateline	Solar	First Solar Inc. August 31, 2015	299^(a)	San Bernardino County, CA	51	%	(b)	From December 2015 to July 2016	20 years
Garland and Garland A	Solar	Recurrent Energy, LLC December 17, 2015	205	Kern County, CA	51	%	(b)	October and August 2016	15 years and 20 years
Kay Wind	Wind	Apex Clean Energy Holdings, LLC December 11, 2015	299	Kay County, OK	100	%		December 2015	20 years
Lost Hills Blackwell	Solar	First Solar Inc. April 15, 2015	33	Kern County, CA	51	%	(b)	April 2015	29 years
Morelos	Solar	Solar Frontier Americas Holding, LLC October 22, 2015	15	Kern County, CA	90	%	(c)	November 2015	20 years
North Star	Solar	First Solar Inc. April 30, 2015	61	Fresno County, CA	51	%	(b)	June 2015	20 years
Roserock	Solar	Recurrent Energy, LLC November 23, 2015	160	Pecos County, TX	51	%	(b)	November 2016	20 years
Tranquillity	Solar	Recurrent Energy, LLC August 28, 2015	205	Fresno County, CA	51	%	(b)	July 2016	18 years


(a)	The facility has a total of 299 MWs, of which 110 MWs were placed in service in the fourth quarter 2015 and the remainder by July 2016.


(b)	Southern Power owns 100% of the class A membership interests and a wholly-owned subsidiary of the seller owns 100% of the class B membership interests. Southern Power and the class B member are entitled to 51% and 49%, respectively, of all cash distributions from the project. In addition, Southern Power is entitled to substantially all of the federal tax benefits with respect to the transaction.


(c)	Southern Power owns 90%, with the minority owner, TRE, owning 10%.

Acquisitions During the Year Ended December 31, 2015

Southern Power's aggregate purchase price for the project facilities acquired during the year ended December 31, 2015 was approximately $1.4 billion. Including the minority owner TRE's 10% ownership interest in Morelos, First Solar Inc.'s 49% ownership interest in Desert Stateline, Lost Hills Blackwell, and North Star, and Recurrent Energy, LLC's 49% ownership interest in Garland, Garland A, Roserock, and Tranquillity, the total aggregate purchase price was approximately $1.9 billion for the project facilities acquired during the year ended December 31, 2015.

The fair values of the assets and liabilities acquired through the business combinations were recorded as follows:



	2015
	(in millions)
CWIP	$	1,367
Property, plant, and equipment	315
Intangible assets ^(a)	274
Other assets	64
Accounts payable	(89		)
Total purchase price	$	1,931

Funded by:
Southern Power ^(b)	$	1,440
Noncontrolling interests ^{(c) (d)}	491
Total purchase price	$	1,931


(a)	Intangible assets consist of acquired PPAs that will be amortized over 20-year terms. The estimated amortization for future periods is approximately $14 million per year.


(b)	Includes approximately $195 million of contingent consideration, all of which has been paid at December 31, 2016.


(c)	Includes approximately $227 million of non-cash contributions recorded as capital contributions from noncontrolling interests in the statements of stockholders' equity.


(d)	Includes approximately $76 million of contingent consideration, all of which had been paid at December 31, 2016 by the noncontrolling interests.

Construction Projects

Construction Projects Completed

During 2016, in accordance with Southern Power's overall growth strategy, Southern Power completed construction of, and placed in service, the projects set forth in the table below. Total costs of construction incurred for these projects were $3.2 billion.



Solar Facility	Seller	Approximate Nameplate Capacity (MW)	Location	Actual COD	PPA Contract Period
Butler	CERSM, LLC and Community Energy, Inc.	103	Taylor County, GA	December 2016	30 years ^(a)
Butler Solar Farm	Strata Solar Development, LLC	22	Taylor County, GA	February 2016	20 years ^(a)
Desert Stateline	First Solar Development, LLC	299^(b)	San Bernardino County, CA	From December 2015 to July 2016	20 years
Garland	Recurrent Energy, LLC	185	Kern County, CA	October 2016	15 years
Garland A	Recurrent Energy, LLC	20	Kern County, CA	August 2016	20 years
Pawpaw	Longview Solar, LLC	30	Taylor County, GA	March 2016	30 years
Roserock ^(c)	Recurrent Energy, LLC	160	Pecos County, TX	November 2016	20 years
Sandhills	N/A	146	Taylor County, GA	October 2016	25 years
Tranquillity	Recurrent Energy, LLC	205	Fresno County, CA	July 2016	18 years


(a)	Affiliate PPA approved by the FERC.


(b)	The facility has a total of 299 MWs, of which 110 MWs were placed in service in the fourth quarter 2015 and the remainder by July 2016.


(c)	Prior to placing the Roserock facility in service, certain solar panels were damaged. While the facility is currently generating energy as expected, Southern Power is pursuing remedies under its insurance policies and other contracts to repair or replace these solar panels.

Construction Projects in Progress

At December 31, 2016, Southern Power continued construction of the East Pecos and Lamesa solar facilities that were acquired in 2016. In addition, as part of Southern Power's acquisition of Mankato in 2016, Southern Power commenced construction of an additional 345-MW expansion, which is fully contracted under a new 20-year PPA. Total aggregate construction costs, excluding the acquisition costs, are expected to be $530 million to $590 million for East Pecos, Lamesa, and Mankato. At December 31, 2016, the construction costs totaled $386 million and are included in CWIP. The ultimate outcome of these matters cannot be determined at this time.

The following table presents Southern Power's construction projects in progress as of December 31, 2016:



Project Facility	Resource	Approximate Nameplate Capacity (MW)	Location	Actual/Expected COD	PPA Contract Period
East Pecos	Solar	120	Pecos County, TX	March 2017	15 years
Lamesa	Solar	102	Dawson County, TX	Second quarter 2017	15 years
Mankato	Natural Gas	345	Mankato, MN	Second quarter 2019	20 years

Development Projects

In December 2016, as part of Southern Power's renewable development strategy, SRP entered into a joint development agreement with Renewable Energy Systems Americas, Inc. to develop and construct approximately 3,000 MWs across 10 wind projects expected to be placed in service between 2018 and 2020. Also in December 2016, Southern Power signed agreements and made payments to purchase wind turbine equipment from Siemens Wind Power, Inc. and Vestas-American Wind Technology, Inc. to be used for construction of the facilities. Once these wind projects reach commercial operations, they are expected to qualify for 100% PTCs. The ultimate outcome of these matters cannot be determined at this time.

Southern Power [Member]

Business Acquisition [Line Items]

ACQUISITIONS

During 2016 and 2015, in accordance with its overall growth strategy, the Company or one of its wholly-owned subsidiaries, SRP and SRE, acquired or contracted to acquire the projects discussed below. Also, on March 29, 2016, the Company acquired an additional 15% interest in Desert Stateline, 51% of which was initially acquired in August 2015. As a result, the Company and the class B member are now entitled to 66% and 34%, respectively, of all cash distributions from Desert Stateline. In addition, the Company will continue to be entitled to substantially all of the federal tax benefits with respect to the transaction. Acquisition-related costs were expensed as incurred and were not material for any of the years presented.

The following table presents the Company's acquisitions during and subsequent to the year ended December 31, 2016.



Project Facility	Resource	Seller; Acquisition Date	Approximate Nameplate Capacity (MW)	Location	Percentage Ownership			Actual/Expected COD	PPA Contract Period
Acquisitions During the Year Ended December 31, 2016
Boulder 1	Solar	SunPower November 16, 2016	100	Clark County, NV	51	%	(a)	December 2016	20 years
Calipatria	Solar	Solar Frontier Americas Holding LLC February 11, 2016	20	Imperial County, CA	90	%	(b)	February 2016	20 years
East Pecos	Solar	First Solar, Inc. March 4, 2016	120	Pecos County, TX	100	%		March 2017	15 years
Grant Plains	Wind	Apex Clean Energy Holdings, LLC August 26, 2016	147	Grant County, OK	100	%		December 2016	20 years and 12 years ^(c)
Grant Wind	Wind	Apex Clean Energy Holdings, LLC April 7, 2016	151	Grant County, OK	100	%		April 2016	20 years
Henrietta	Solar	SunPower July 1, 2016	102	Kings County, CA	51	%	(a)	July 2016	20 years
Lamesa	Solar	RES America Developments Inc. July 1, 2016	102	Dawson County, TX	100	%		Second quarter 2017	15 years
Mankato ^(d)	Natural Gas	Calpine Corporation October 26, 2016	375	Mankato, MN	100	%		N/A ^(e)	10 years
Passadumkeag	Wind	Quantum Utility Generation, LLC June 30, 2016	42	Penobscot County, ME	100	%		July 2016	15 years
Rutherford	Solar	Cypress Creek Renewables, LLC July 1, 2016	74	Rutherford County, NC	90	%	(b)	December 2016	15 years
Salt Fork	Wind	EDF Renewable Energy, Inc. December 1, 2016	174	Donley and Gray Counties, TX	100	%		December 2016	14 years and 12 years
Tyler Bluff	Wind	EDF Renewable Energy, Inc. December 21, 2016	125	Cooke County, TX	100	%		December 2016	12 years
Wake Wind	Wind	Invenergy October 26, 2016	257	Floyd and Crosby Counties, TX	90.1	%	(f)	October 2016	12 years
Acquisitions Subsequent to December 31, 2016
Bethel	Wind	Invenergy January 6, 2017	276	Castro County, TX	100	%		January 2017	12 years


(a)	The Company owns 100% of the class A membership interests and a wholly-owned subsidiary of the seller owns 100% of the class B membership interests. The Company and the class B member are entitled to 51% and 49%, respectively, of all cash distributions from the project. In addition, the Company is entitled to substantially all of the federal tax benefits with respect to the transaction.


(b)	The Company owns 90%, with the minority owner, TRE, owning 10%.


(c)	In addition to the 20-year and 12-year PPAs, the facility has a 10-year contract with Allianz Risk Transfer (Bermuda) Ltd.


(d)	Under the terms of the remaining 10-year PPA and the 20-year expansion PPA, approximately $408 million of assets, primarily related to property, plant, and equipment, are subject to lien at December 31, 2016.


(e)	The acquisition included a fully operational 375-MW natural gas-fired combined-cycle facility.


(f)	The Company owns 90.1%, with the minority owner, Invenergy, owning 9.9%.

Acquisitions During the Year Ended December 31, 2016

The Company's aggregate purchase price for acquisitions during the year ended December 31, 2016 was approximately $2.3 billion. Including the minority owner TRE's 10% ownership interest in Calipatria and Rutherford, SunPower's 49% ownership interest in Boulder 1 and Henrietta, along with the assumption of $217 million in construction debt (non-recourse to the Company), and Invenergy's 9.9% ownership interest in Wake Wind, the total aggregate purchase price is approximately $2.6 billion for the project facilities acquired during the year ended December 31, 2016. The allocations of the purchase price to individual assets have not been finalized, except for Calipatria, East Pecos, Lamesa, and Rutherford, which were finalized with no changes to amounts originally reported. The fair values of the assets and liabilities acquired through the business combinations were recorded as follows:



	2016
	(in millions)
CWIP	$	2,354
Property, plant, and equipment	302
Intangible assets ^(a)	128
Other assets	52
Accounts payable	(16		)
Debt	(217		)
Total purchase price	$	2,603

Funded by:
The Company ^{(b) (c)}	$	2,345
Noncontrolling interests ^{(d) (e)}	258
Total purchase price	$	2,603


(a)	Intangible assets consist of acquired PPAs that will be amortized over 10 and 20-year terms. The estimated amortization for future periods is approximately $9 million per year. See Note 1 for additional information.


(b)	At December 31, 2016, $461 million is included in acquisitions payable on the consolidated balance sheets.


(c)	Includes approximately $281 million of contingent consideration, of which $67 million remains payable at December 31, 2016.


(d)	Includes approximately $51 million of non-cash contributions recorded as capital contributions from noncontrolling interests in the consolidated statements of stockholders' equity.


(e)	Includes approximately $142 million of contingent consideration, all of which had been paid at December 31, 2016 by the noncontrolling interests.

The aggregate amount of revenue recognized by the Company related to the acquisitions during 2016, included in the consolidated statement of income for 2016, is $37 million. The amount of net income, excluding impacts of ITCs and PTCs, attributable to the Company related to the acquisitions during 2016 included in the consolidated statement of income is immaterial.

The solar and wind acquisitions did not have operating revenues or net income prior to the completion of construction and the generating facility being placed in service; therefore, supplemental pro forma information as if these acquisitions occurred as of the beginning of 2016, and for the comparable 2015 year, is not meaningful and has been omitted. However, the Mankato acquisition is an operating facility and unaudited supplemental pro forma information, as though the acquisition occurred as of the beginning of 2016 and for the comparable 2015 year, is as follows:

The following table presents the Company's acquisitions for the year ended December 31, 2015. During the year ended December 31, 2016, the fair values of assets and liabilities acquired for all projects listed below were finalized with no changes to amounts originally reported.



Project Facility	Resource	Seller; Acquisition Date	Approximate Nameplate Capacity (MW)	Location	Percentage Ownership			Actual COD	PPA Contract Period
Acquisitions for the Year Ended December 31, 2015
Desert Stateline	Solar	First Solar August 31, 2015	299 ^(a)	San Bernardino County, CA	51	%	(b)	From December 2015 to July 2016	20 years
Garland and Garland A	Solar	Recurrent December 17, 2015	205	Kern County, CA	51	%	(b)	October and August 2016	15 years and 20 years
Kay Wind	Wind	Apex Clean Energy Holdings, LLC December 11, 2015	299	Kay County, OK	100	%		December 2015	20 years
Lost Hills Blackwell	Solar	First Solar April 15, 2015	33	Kern County, CA	51	%	(b)	April 2015	29 years
Morelos	Solar	Solar Frontier Americas Holding, LLC October 22, 2015	15	Kern County, CA	90	%	(c)	November 2015	20 years
North Star	Solar	First Solar April 30, 2015	61	Fresno County, CA	51	%	(b)	June 2015	20 years
Roserock	Solar	Recurrent November 23, 2015	160	Pecos County, TX	51	%	(b)	November 2016	20 years
Tranquillity	Solar	Recurrent August 28, 2015	205	Fresno County, CA	51	%	(b)	July 2016	18 years


(a)	The facility has a total of 299 MWs, of which 110 MWs were placed in service in the fourth quarter 2015 and the remainder by July 2016.


(b)	The Company owns 100% of the class A membership interests and a wholly-owned subsidiary of the seller owns 100% of the class B membership interests. The Company and the class B member are entitled to 51% and 49%, respectively, of all cash distributions from the project. In addition, the Company is entitled to substantially all of the federal tax benefits with respect to the transaction.


(c)	The Company owns 90%, with the minority owner, TRE, owning 10%.

Acquisitions During the Year Ended December 31, 2015

The Company's aggregate purchase price for the project facilities acquired during the year ended December 31, 2015 was approximately $1.4 billion. Including the minority owner TRE's 10% ownership interest in Morelos, First Solar's 49% ownership interest in Desert Stateline, Lost Hills Blackwell, and North Star, and Recurrent's 49% ownership interest in Garland, Garland A, Roserock, and Tranquillity, the total aggregate purchase price was approximately $1.9 billion for the project facilities acquired during the year ended December 31, 2015.

The fair values of the assets and liabilities acquired through the business combinations were recorded as follows:



	2015
	(in millions)
CWIP	$	1,367
Property, plant, and equipment	315
Intangible assets ^(a)	274
Other assets	64
Accounts payable	(89		)
Total purchase price	$	1,931

Funded by:
The Company ^(b)	$	1,440
Noncontrolling interests ^{(c) (d)}	491
Total purchase price	$	1,931


(a)	Intangible assets consist of acquired PPAs that will be amortized over 20-year terms. The estimated amortization for future periods is approximately $14 million per year. See Note 1 under "Impairment of Long-Lived Assets and Intangibles" for additional information.


(b)	Includes approximately $195 million of contingent consideration, all of which had been paid at December 31, 2016.


(c)	Includes approximately $227 million of non-cash contributions recorded as capital contributions from noncontrolling interests in the consolidated statements of stockholders' equity.


(d)	Includes approximately $76 million of contingent consideration, all of which had been paid at December 31, 2016 by the noncontrolling interests.

Construction Projects

Construction Projects Completed

During 2016, in accordance with its overall growth strategy, the Company completed construction of, and placed in service, the projects set forth in the table below. Total costs of construction incurred for these projects were $3.2 billion.



Solar Facility	Seller	Approximate Nameplate Capacity (MW)	Location	Actual COD	PPA Contract Period
Butler	CERSM, LLC and Community Energy, Inc.	103	Taylor County, GA	December 2016	30 years ^(a)
Butler Solar Farm	Strata Solar Development, LLC	22	Taylor County, GA	February 2016	20 years ^(a)
Desert Stateline	First Solar Development, LLC	299 ^(b)	San Bernardino County, CA	From December 2015 to July 2016	20 years
Garland	Recurrent	185	Kern County, CA	October 2016	15 years
Garland A	Recurrent	20	Kern County, CA	August 2016	20 years
Pawpaw	Longview Solar, LLC	30	Taylor County, GA	March 2016	30 years
Roserock ^(c)	Recurrent	160	Pecos County, TX	November 2016	20 years
Sandhills	N/A	146	Taylor County, GA	October 2016	25 years
Tranquillity	Recurrent	205	Fresno County, CA	July 2016	18 years


(a)	Affiliate PPA approved by the FERC.


(b)	The facility has a total of 299 MWs, of which 110 MWs were placed in service in the fourth quarter 2015 and the remainder by July 2016.


(c)	Prior to placing the Roserock facility in service, certain solar panels were damaged. While the facility is currently generating energy as expected, the Company is pursuing remedies under its insurance policies and other contracts to repair or replace these solar panels.

Construction Projects in Progress

At December 31, 2016, the Company continued construction of the East Pecos and Lamesa solar facilities that were acquired in 2016. In addition, as part of the Company's acquisition of Mankato in 2016, the Company commenced construction of an additional 345-MW expansion, which is fully contracted under a new 20-year PPA. Total aggregate construction costs, excluding the acquisition costs, are expected to be $530 million to $590 million for East Pecos, Lamesa, and Mankato. At December 31, 2016, the construction costs totaled $386 million and are included in CWIP. The ultimate outcome of these matters cannot be determined at this time.

The following table presents the Company's construction projects in progress as of December 31, 2016:



Project Facility	Resource	Approximate Nameplate Capacity (MW)	Location	Actual/Expected COD	PPA Contract Period
East Pecos	Solar	120	Pecos County, TX	March 2017	15 years
Lamesa	Solar	102	Dawson County, TX	Second quarter 2017	15 years
Mankato	Natural Gas	345	Mankato, MN	Second quarter 2019	20 years

Development Projects

In December 2016, as part of the Company's renewable development strategy, SRP entered into a joint development agreement with Renewable Energy Systems Americas, Inc. to develop and construct approximately 3,000 MWs across 10 wind projects expected to be placed in service between 2018 and 2020. Also in December 2016, the Company signed agreements and made payments to purchase wind turbine equipment from Siemens Wind Power, Inc. and Vestas-American Wind Technology, Inc. to be used for construction of the facilities. Once these wind projects reach commercial operations, they are expected to qualify for 100% PTCs. The ultimate outcome of these matters cannot be determined at this time.

Southern Company Gas [Member]

Business Acquisition [Line Items]

ACQUISITIONS

MERGER AND ACQUISITION

Merger with Southern Company

On July 1, 2016, the Company completed the Merger with Southern Company. A wholly-owned, direct subsidiary of Southern Company merged with and into Southern Company Gas, with the Company surviving as a wholly-owned, direct subsidiary of Southern Company.

At the effective time of the Merger, each share of Southern Company Gas common stock, other than certain excluded shares, was converted into the right to receive $66 in cash, without interest. Also at the effective time of the Merger, all of the outstanding restricted stock units, restricted stock awards, non-employee director stock awards, stock options, and performance share units were either redeemed or converted into Southern Company's restricted stock units. See Note 8 for additional information.

The application of the acquisition method of accounting was pushed down to the Company. The excess of the purchase price over the fair values of the Company's assets and liabilities was recorded as goodwill, which represents a different basis of accounting from the historical basis prior to the Merger. The following table presents the final purchase price allocation:



	Successor			Predecessor
	New Basis			Old Basis			Change in Basis
	(in millions)			(in millions)
Current assets	$	1,557		$	1,474		$	83
Property, plant, and equipment	10,108			10,148			(40		)
Goodwill	5,967			1,813			4,154
Other intangible assets	400			101			299
Regulatory assets	1,118			679			439
Other assets	229			273			(44		)
Current liabilities	(2,201		)	(2,205		)	4
Other liabilities	(4,742		)	(4,600		)	(142		)
Long-term debt	(4,261		)	(3,709		)	(552		)
Contingently redeemable noncontrolling interest	(174		)	(41		)	(133		)
Total purchase price/equity	$	8,001		$	3,933		$	4,068

Measurement period adjustments were recorded to the purchase price allocation during the fourth quarter 2016, which resulted in a net $30 million increase in goodwill to establish intangible liabilities for transportation contracts at wholesale services, partially offset by adjustments to deferred tax balances.

In determining the fair value of assets and liabilities subject to rate regulation that allows recovery of costs and/or a fair return on investments, historical cost was deemed to be a reasonable proxy for fair value, as it is included in rate base or otherwise specified in regulatory recovery mechanisms. Property, plant, and equipment subject to rate regulation was reflected based on the historical gross amount of assets in service and accumulated depreciation, as they are included in rate base. For certain assets and liabilities subject to rate regulation (such as debt instruments and employee benefit obligations), the fair value adjustment was applied to historical cost with a corresponding offset to regulatory asset or liability based on the assessment of probable future recovery in rates.

For unregulated assets and liabilities, fair value adjustments were applied to historical cost of natural gas for sale, property, plant, and equipment, debt instruments, and noncontrolling interest. The valuation of other intangible assets included customer relationships, trade names, and favorable/unfavorable contracts. The valuation of these assets and liabilities applied either the market approach or income approach. The market approach was utilized when prices and other relevant market information were available. The income approach, which is based on discounted cash flows, was primarily based on significant unobservable inputs (Level 3). Key estimates and inputs included forecasted profitability and cash flows, customer retention rates, royalty rates, and discount rates.

The estimated fair value of deferred income taxes was determined by applying the appropriate enacted statutory tax rate to the temporary differences that arose on the differences between the financial reporting value and tax basis of the assets acquired and liabilities assumed.

The excess of the purchase price over the estimated fair value of assets and liabilities of $6.0 billion was recognized as goodwill, which is primarily attributable to positioning Southern Company to provide natural gas infrastructure to meet customers' growing energy needs and to compete for growth across the energy value chain. The Company anticipates that the majority of the value assigned to goodwill will not be deductible for tax purposes.

The Company's results for the successor period of July 1, 2016 through December 31, 2016 include a $20 million decrease in consolidated earnings comprised of $17 million of reduced revenues and $22 million of increased amortization, partially offset by lower interest expense of $19 million, as a result of the fair value adjustment of assets and liabilities in the application of acquisition accounting. Transaction costs included $18 million in rate credits provided to the customers of Elizabethtown Gas and Elkton Gas as a condition of the Merger, $3 million for financial advisory fees, legal expenses, and other Merger-related costs, including certain amounts payable upon successful completion of the Merger, and $20 million for additional compensation-related expenses, including accelerated vesting of share-based compensation expenses and change-in-control compensation charges.

During the predecessor period of January 1, 2016 through June 30, 2016, the Company recorded in its statements of income transaction costs of $56 million. Transaction costs included $31 million for financial advisory fees, legal expenses, and other Merger-related costs, including certain amounts payable upon successful completion of the Merger, which was deemed probable on June 29, 2016, and $25 million of additional compensation related expenses, including accelerated vesting of share-based compensation expenses and certain Merger-related compensation charges. The Company recorded Merger-related expenses of $44 million for the predecessor year ended December 31, 2015. The Company previously treated these costs as tax deductible since the requisite closing conditions to the Merger had not yet been satisfied. During the second quarter 2016, when the Merger became probable, the Company re-evaluated the tax deductibility of these costs and reflected any non-deductible amounts in the effective tax rate.

The receipt of required regulatory approvals was conditioned upon certain terms and commitments. In connection with these regulatory approvals, certain regulatory agencies prohibited the Company from recovering goodwill and Merger-related expenses, required the Company to maintain a minimum number of employees for a set period of time to ensure that certain pipeline safety standards and the competence level of the employee workforce is not degraded, and/or required the Company to maintain its pre-Merger level of support for various social and charitable programs. The most notable terms and commitments with potential financial impacts included:


•	rate credits of $18 million to be paid to customers in New Jersey and Maryland;


•	sharing of Merger savings with customers in Georgia starting in 2020;


•	phasing-out the use of the Nicor name or logo by certain of the Company's gas marketing services subsidiaries in conducting non-utility business in Illinois;


•	reaffirming that Elizabethtown Gas would file a base rate case no later than September 1, 2016, with another base rate case no later than three years after the 2016 rate case; and


•	requiring Elkton Gas to file a base rate case within two years of closing the Merger.

There is no restriction on the Company's other utilities' ability to file future rate cases. The rate credits to customers in New Jersey and Maryland were paid during the third and fourth quarters of 2016, respectively, and Elizabethtown Gas filed a base rate case with the New Jersey BPU on September 1, 2016. Upon completion of the Merger, the Company amended and restated its Bylaws and Articles of Incorporation, under which it now has the authority to issue no more than 110 million shares of stock consisting of (i) 100 million shares of common stock and (ii) 10 million shares of preferred stock, both categories of which have a par value of $0.01 per share. The amended and restated Articles of Incorporation do not allow any treasury shares to be held.

Investment in SNG

On September 1, 2016, the Company, through a wholly-owned, indirect subsidiary, acquired a 50% equity interest in SNG pursuant to a definitive agreement between Southern Company and Kinder Morgan, Inc. on July 10, 2016, to which Southern Company assigned all rights and obligations to the Company on August 31, 2016. SNG owns a 7,000-mile pipeline system connecting natural gas supply basins in Texas, Louisiana, Mississippi, and Alabama to markets in Louisiana, Mississippi, Alabama, Florida, Georgia, South Carolina, and Tennessee. The purchase price of $1.4 billion was financed by a $1.05 billion equity contribution from Southern Company and $360 million of cash paid by the Company, which was financed by a promissory note from Southern Company and repaid with a portion of the proceeds from the senior notes issued in September 2016. The purchase price of the 50% equity interest exceeded the underlying ownership interest in the net assets of SNG by approximately $700 million. This basis difference is attributable to goodwill and deferred tax assets. While the deferred tax assets will be amortized through deferred tax expense, the goodwill will not be amortized and is not required to be tested for impairment on an annual basis. See Note 4 under "Equity Method Investments" for additional information on this investment.

(in millions)

Net income