FINANCING

Long-Term Debt Payable to an Affiliated Trust

Alabama Power has formed a wholly-owned trust subsidiary for the purpose of issuing preferred securities. The proceeds of the related equity investments and preferred security sales were loaned back to Alabama Power through the issuance of junior subordinated notes totaling $206 million as of December 31, 2016 and 2015, which constitute substantially all of the assets of this trust and are reflected in the balance sheets as long-term debt payable. Alabama Power considers that the mechanisms and obligations relating to the preferred securities issued for its benefit, taken together, constitute a full and unconditional guarantee by it of the trust's payment obligations with respect to these securities. At December 31, 2016 and 2015, trust preferred securities of $200 million were outstanding.

Securities Due Within One Year

A summary of scheduled maturities and redemptions of securities due within one year at December 31 was as follows:



	2016			2015
	(in millions)
Senior notes	$	1,995		$	1,810
Other long-term debt	485			829
Pollution control revenue bonds^(*)	76			4
Capitalized leases	32			32
Unamortized debt issuance expense	(1		)	(1		)
Total	$	2,587		$	2,674


(*)	Includes $40 million of pollution control revenue bonds classified as short-term since they are variable rate demand obligations that are supported by short-term credit facilities; however, the final maturity date is in 2028.

Maturities through 2021 applicable to total long-term debt are as follows: $2.6 billion in 2017; $3.9 billion in 2018; $3.2 billion in 2019; $1.4 billion in 2020; and $3.1 billion in 2021.

Bank Term Loans

Southern Company and certain of its subsidiaries have entered into various bank term loan agreements. At December 31, 2016, Southern Company, Alabama Power, Gulf Power, Mississippi Power, and Southern Power Company had outstanding bank term loans totaling $400 million, $45 million, $100 million, $1.2 billion, and $380 million, respectively, of which $2.0 billion are reflected in the statements of capitalization as long-term debt and $100 million are reflected in the balance sheet as notes payable. At December 31, 2015, Southern Company, Mississippi Power, and Southern Power Company had outstanding bank term loans totaling $400 million, $900 million, and $400 million, respectively.

In March 2016, Alabama Power entered into three bank term loan agreements with maturity dates of March 2021, in an aggregate principal amount of $45 million, one of which bears interest at 2.38% per annum and two of which bear interest based on three-month LIBOR.

In March 2016, Mississippi Power entered into an unsecured term loan agreement with a syndicate of financial institutions for an aggregate amount of $1.2 billion. Mississippi Power borrowed $900 million in March 2016 under the term loan agreement and the remaining $300 million in October 2016. Mississippi Power used the initial proceeds to repay $900 million in maturing bank loans in March 2016 and the remaining $300 million to repay at maturity Mississippi Power's Series 2011A 2.35% Senior Notes due October 15, 2016. This loan matures on April 1, 2018 and bears interest based on one-month LIBOR.

In May 2016, Gulf Power entered into an 11-month floating rate bank loan bearing interest based on one-month LIBOR. This short-term loan was for $100 million aggregate principal amount and the proceeds were used to repay existing indebtedness and for working capital and other general corporate purposes.

In September 2016, Southern Power Company repaid $80 million of an outstanding $400 million floating rate bank loan and extended the maturity date of the remaining $320 million from September 2016 to September 2018. In addition, Southern Power Company entered into a $60 million aggregate principal amount floating rate bank loan bearing interest based on one-month LIBOR due September 2017. The proceeds were used to repay existing indebtedness and for other general corporate purposes.

The outstanding bank loans as of December 31, 2016 have covenants that limit debt levels to a percentage of total capitalization. The percentage is 70% for Southern Company and 65% for Alabama Power, Gulf Power, Mississippi Power, and Southern Power Company, as defined in the agreements. For purposes of these definitions, debt excludes any long-term debt payable to affiliated trusts, other hybrid securities, and, for Southern Company and Mississippi Power, any securitized debt relating to the securitization of certain costs of the Kemper IGCC. Additionally, for Southern Company and Southern Power Company, for purposes of these definitions, debt excludes any project debt incurred by certain subsidiaries of Southern Power Company to the extent such debt is non-recourse to Southern Power Company and capitalization excludes the capital stock or other equity attributable to such subsidiary. At December 31, 2016, each of Southern Company, Alabama Power, Gulf Power, Mississippi Power, and Southern Power Company was in compliance with its debt limits.

DOE Loan Guarantee Borrowings

Pursuant to the loan guarantee program established under Title XVII of the Energy Policy Act of 2005 (Title XVII Loan Guarantee Program), Georgia Power and the DOE entered into a loan guarantee agreement (Loan Guarantee Agreement) in February 2014, under which the DOE agreed to guarantee the obligations of Georgia Power under a note purchase agreement (FFB Note Purchase Agreement) among the DOE, Georgia Power, and the FFB and a related promissory note (FFB Promissory Note). The FFB Note Purchase Agreement and the FFB Promissory Note provide for a multi-advance term loan facility (FFB Credit Facility), under which Georgia Power may make term loan borrowings through the FFB.

Proceeds of advances made under the FFB Credit Facility are used to reimburse Georgia Power for a portion of certain costs of construction relating to Plant Vogtle Units 3 and 4 that are eligible for financing under the Title XVII Loan Guarantee Program (Eligible Project Costs). Aggregate borrowings under the FFB Credit Facility may not exceed the lesser of (i) 70% of Eligible Project Costs or (ii) approximately $3.46 billion.

All borrowings under the FFB Credit Facility are full recourse to Georgia Power, and Georgia Power is obligated to reimburse the DOE for any payments the DOE is required to make to the FFB under the guarantee. Georgia Power's reimbursement obligations to the DOE are full recourse and secured by a first priority lien on (i) Georgia Power's 45.7% undivided ownership interest in Plant Vogtle Units 3 and 4 (primarily the units under construction, the related real property, and any nuclear fuel loaded in the reactor core) and (ii) Georgia Power's rights and obligations under the principal contracts relating to Plant Vogtle Units 3 and 4. There are no restrictions on Georgia Power's ability to grant liens on other property.

Advances may be requested under the FFB Credit Facility on a quarterly basis through 2020. The final maturity date for each advance under the FFB Credit Facility is February 20, 2044. Interest is payable quarterly and principal payments will begin on February 20, 2020. Borrowings under the FFB Credit Facility will bear interest at the applicable U.S. Treasury rate plus a spread equal to 0.375%.

In connection with its entry into the agreements with the DOE and the FFB, Georgia Power incurred issuance costs of approximately $66 million, which are being amortized over the life of the borrowings under the FFB Credit Facility.

In June and December 2016, Georgia Power made borrowings under the FFB Credit Facility in an aggregate principal amount of $300 million and $125 million, respectively. The interest rate applicable to the $300 million principal amount is 2.571% and the interest rate applicable to the $125 million principal amount is 3.142%, both for an interest period that extends to the final maturity date of February 20, 2044.

At December 31, 2016 and 2015, Georgia Power had $2.6 billion and $2.2 billion of borrowings outstanding under the FFB Credit Facility, respectively. Future advances are subject to satisfaction of customary conditions, as well as certification of compliance with the requirements of the Title XVII Loan Guarantee Program, including accuracy of project-related representations and warranties, delivery of updated project-related information, and evidence of compliance with the prevailing wage requirements of the Davis-Bacon Act of 1931, as amended, and certification from the DOE's consulting engineer that proceeds of the advances are used to reimburse Eligible Project Costs.

Under the Loan Guarantee Agreement, Georgia Power is subject to customary borrower affirmative and negative covenants and events of default. In addition, Georgia Power is subject to project-related reporting requirements and other project-specific covenants and events of default.

In the event certain mandatory prepayment events occur, the FFB's commitment to make further advances under the FFB Credit Facility will terminate and Georgia Power will be required to prepay the outstanding principal amount of all borrowings under the FFB Credit Facility over a period of five years (with level principal amortization). Among other things, these mandatory prepayment events include (i) the termination of the Vogtle 3 and 4 Agreement; (ii) cancellation of Plant Vogtle Units 3 and 4 by the Georgia PSC, or by Georgia Power if authorized by the Georgia PSC; and (iii) cost disallowances by the Georgia PSC that could have a material adverse effect on completion of Plant Vogtle Units 3 and 4 or Georgia Power's ability to repay the outstanding borrowings under the FFB Credit Facility. Under certain circumstances, insurance proceeds and any proceeds from an event of taking must be applied to immediately prepay outstanding borrowings under the FFB Credit Facility. Georgia Power also may voluntarily prepay outstanding borrowings under the FFB Credit Facility. Under the FFB Promissory Note, any prepayment (whether mandatory or optional) will be made with a make-whole premium or discount, as applicable.

In connection with any cancellation of Plant Vogtle Units 3 and 4 that results in a mandatory prepayment event, the DOE may elect to continue construction of Plant Vogtle Units 3 and 4. In such an event, the DOE will have the right to assume Georgia Power's rights and obligations under the principal agreements relating to Plant Vogtle Units 3 and 4 and to acquire all or a portion of Georgia Power's ownership interest in Plant Vogtle Units 3 and 4.

Senior Notes

Southern Company and its subsidiaries issued a total of $13.3 billion of senior notes in 2016. Southern Company issued $8.5 billion and its subsidiaries issued a total of $4.8 billion. These amounts include senior notes issued by Southern Company Gas subsequent to the Merger. The proceeds of Southern Company's issuances were used to fund a portion of the consideration for the Merger and related transaction costs and for general corporate purposes. Except as described below, the proceeds of Southern Company's subsidiaries' issuances were used to repay long-term indebtedness, to repay short-term indebtedness, and for other general corporate purposes, including the applicable subsidiaries' continuous construction programs, and, for Southern Power, its growth strategy. Certain of Georgia Power's and Southern Power's issuances were allocated to eligible renewable energy expenditures. The proceeds of Southern Company Gas' issuances were primarily used to repay a $360 million promissory note issued to Southern Company for the purpose of funding a portion of the purchase price for a 50% equity interest in Southern Natural Gas Company, L.L.C. (SNG), to fund the purchase of Piedmont Natural Gas Company, Inc.'s (Piedmont) interest in SouthStar Energy Services, LLC (SouthStar), and to make a voluntary contribution to Southern Company Gas' pension plan. See Note 12 under "Southern Company – Investment in Southern Natural Gas" and " – Acquisition of Remaining Interest in SouthStar" for additional information.

At December 31, 2016 and 2015, Southern Company and its subsidiaries had a total of $33.0 billion and $19.1 billion, respectively, of senior notes outstanding. At December 31, 2016 and 2015, Southern Company had a total of $10.3 billion and $2.4 billion, respectively, of senior notes outstanding. These amounts include senior notes due within one year.

Subsequent to December 31, 2016, Alabama Power repaid at maturity $200 million aggregate principal amount of its Series 2007A 5.55% Senior Notes due February 1, 2017.

Since Southern Company is a holding company, the right of Southern Company and, hence, the right of creditors of Southern Company (including holders of Southern Company senior notes) to participate in any distribution of the assets of any subsidiary of Southern Company, whether upon liquidation, reorganization or otherwise, is subject to prior claims of creditors and preferred and preference stockholders of such subsidiary.

Junior Subordinated Notes

At December 31, 2016 and 2015, Southern Company had a total of $2.4 billion and $1.0 billion, respectively, of junior subordinated notes outstanding.

In September 2016, Southern Company issued $800 million aggregate principal amount of Series 2016A 5.25% Junior Subordinated Notes due October 1, 2076. The proceeds were used to repay short-term indebtedness that was incurred to repay at maturity $500 million aggregate principal amount of Southern Company's Series 2011A 1.95% Senior Notes due September 1, 2016 and for other general corporate purposes.

In December 2016, Southern Company issued $550 million aggregate principal amount of Series 2016B Junior Subordinated Notes due March 15, 2057, which bear interest at a fixed rate of 5.50% per year up to, but not including, March 15, 2022. From, and including, March 15, 2022, the Series 2016B Junior Subordinated Notes will bear interest at a floating rate based on three-month LIBOR. The proceeds were used for general corporate purposes.

Pollution Control Revenue Bonds

Pollution control revenue bond obligations represent loans to the traditional electric operating companies from public authorities of funds derived from sales by such authorities of revenue bonds issued to finance pollution control and solid waste disposal facilities. In some cases, the pollution control revenue bond obligations represent obligations under installment sales agreements with respect to facilities constructed with the proceeds of revenue bonds issued by public authorities. The traditional electric operating companies had $3.3 billion of outstanding pollution control revenue bond obligations at December 31, 2016 and 2015, which includes pollution control revenue bonds due within one year. The traditional electric operating companies are required to make payments sufficient for the authorities to meet principal and interest requirements of such bonds. Proceeds from certain issuances are restricted until qualifying expenditures are incurred.

Plant Daniel Revenue Bonds

In 2011, in connection with Mississippi Power's election under its operating lease of Plant Daniel Units 3 and 4 to purchase the assets, Mississippi Power assumed the obligations of the lessor related to $270 million aggregate principal amount of Mississippi Business Finance Corporation Taxable Revenue Bonds, 7.13% Series 1999A due October 20, 2021, issued for the benefit of the lessor. See "Assets Subject to Lien" herein for additional information.

Gas Facility Revenue Bonds

Pivotal Utility Holdings, Inc., a subsidiary of Southern Company Gas, is party to a series of loan agreements with the New Jersey Economic Development Authority and Brevard County, Florida under which five series of gas facility revenue bonds have been issued with maturities ranging from 2022 to 2033. These revenue bonds are issued by state agencies or counties to investors, and proceeds from the issuance then are loaned to Southern Company Gas. The amount of gas facility revenue bonds outstanding at December 31, 2016 was $200 million.

Other Revenue Bonds

Other revenue bond obligations represent loans to Mississippi Power from a public authority of funds derived from the sale by such authority of revenue bonds issued to finance a portion of the costs of constructing the Kemper IGCC and related facilities.

Mississippi Power had $50 million of such obligations outstanding related to tax-exempt revenue bonds at December 31, 2016 and 2015. Such amounts are reflected in the statements of capitalization as long-term senior notes and debt.

First Mortgage Bonds

Nicor Gas, a subsidiary of Southern Company Gas, had $625 million of first mortgage bonds outstanding at December 31, 2016. These bonds have been issued with maturities ranging from 2019 to 2038. Substantially all of Nicor Gas' properties are subject to the lien of the indenture securing these first mortgage bonds. See "Assets Subject to Lien" herein for additional information.

Capital Leases

Assets acquired under capital leases are recorded in the balance sheets as property, plant, and equipment and the related obligations are classified as long-term debt.

In 2013, Mississippi Power entered into a nitrogen supply agreement for the air separation unit of the Kemper IGCC, which resulted in a capital lease obligation at December 31, 2016 and 2015 of approximately $74 million and $77 million, respectively, with an annual interest rate of 4.9% for both years. Amortization of the capital lease asset for the air separation unit will begin when the Kemper IGCC is placed in service. See Note 3 under "Integrated Coal Gasification Combined Cycle" for additional information regarding the Kemper IGCC.

At December 31, 2016 and 2015, the capitalized lease obligations for Georgia Power's corporate headquarters building were $28 million and $35 million, respectively, with an annual interest rate of 7.9% for both years.

At December 31, 2016 and 2015, Alabama Power had capitalized lease obligations of $4 million and $5 million, respectively, for a natural gas pipeline with an annual interest rate of 6.9%.

At December 31, 2016 and 2015, a subsidiary of Southern Company had capital lease obligations of approximately $29 million and $30 million, respectively, for certain computer equipment including desktops, laptops, servers, printers, and storage devices with annual interest rates that range from 1.4% to 3.4%.

Assets Subject to Lien

Each of Southern Company's subsidiaries is organized as a legal entity, separate and apart from Southern Company and its other subsidiaries. There are no agreements or other arrangements among the Southern Company system companies under which the assets of one company have been pledged or otherwise made available to satisfy obligations of Southern Company or any of its other subsidiaries.

Gulf Power has granted one or more liens on certain of its property in connection with the issuance of certain series of pollution control revenue bonds with an aggregate outstanding principal amount of $41 million as of December 31, 2016.

The revenue bonds assumed in conjunction with Mississippi Power's purchase of Plant Daniel Units 3 and 4 are secured by Plant Daniel Units 3 and 4 and certain related personal property. See "Plant Daniel Revenue Bonds" herein for additional information.

See "DOE Loan Guarantee Borrowings" above for information regarding certain borrowings of Georgia Power that are secured by a first priority lien on (i) Georgia Power's 45.7% undivided ownership interest in Plant Vogtle Units 3 and 4 (primarily the units under construction, the related real property, and any nuclear fuel loaded in the reactor core) and (ii) Georgia Power's rights and obligations under the principal contracts relating to Plant Vogtle Units 3 and 4.

The first mortgage bonds issued by Nicor Gas are secured by substantially all of Nicor Gas' properties. See "First Mortgage Bonds" herein for additional information.

During 2016, in accordance with its overall growth strategy, Southern Power acquired the Mankato project. 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. See Note 12 under "Southern Power" for additional information.

Bank Credit Arrangements

At December 31, 2016, committed credit arrangements with banks were as follows:



	Expires										Executable Term Loans				Expires Within One Year
Company	2017		2018		2020		Total		Unused		One Year		Two Years		Term Out		No Term Out
	(in millions)						(in millions)				(in millions)				(in millions)
Southern Company^(a)	$	—	$	1,000	$	1,250	$	2,250	$	2,250	$	—	$	—	$	—	$	—
Alabama Power	35		500		800		1,335		1,335		—		—		—		35
Georgia Power	—		—		1,750		1,750		1,732		—		—		—		—
Gulf Power	85		195		—		280		280		45		—		25		60
Mississippi Power	173		—		—		173		150		—		13		13		160
Southern Power Company^(b)	—		—		600		600		522		—		—		—		—
Southern Company Gas^(c)	75		1,925		—		2,000		1,949		—		—		—		75
Other	55		—		—		55		55		20		—		20		35
Southern Company Consolidated	$	423	$	3,620	$	4,400	$	8,443	$	8,273	$	65	$	13	$	58	$	365


(a)	Represents the Southern Company parent entity.

(b)

Excludes credit agreements (Project Credit Facilities) assumed with the acquisition of certain solar facilities, which were non-recourse to Southern Power Company, the proceeds of which were used to finance project costs related to such solar facilities. See Note 12 under "Southern Power" for additional information. Also excludes a $120 million continuing letter of credit facility entered into by Southern Power in December 2016 for standby letters of credit expiring in 2019. At December 31, 2016, the total amount available under the letter of credit facility was $82 million.


(c)	Southern Company Gas, as the parent entity, guarantees the obligations of Southern Company Gas Capital, which is the borrower of $1.3 billion of these arrangements. Southern Company Gas' committed credit arrangements also include $700 million for which Nicor Gas is the borrower and which is restricted for working capital needs of Nicor Gas.

Most of the bank credit arrangements require payment of commitment fees based on the unused portion of the commitments or the maintenance of compensating balances with the banks. Commitment fees average less than ¹/4 of 1% for Southern Company, the traditional electric operating companies, Southern Power Company, Southern Company Gas, and Nicor Gas. Compensating balances are not legally restricted from withdrawal.

Subject to applicable market conditions, Southern Company and its subsidiaries expect to renew or replace their bank credit arrangements as needed, prior to expiration. In connection therewith, Southern Company and its subsidiaries may extend the maturity dates and/or increase or decrease the lending commitments thereunder.

Southern Company's, Southern Company Gas', and Nicor Gas' credit arrangements contain covenants that limit debt levels to 70% of total capitalization, as defined in the agreements, and most of these other bank credit arrangements contain covenants that limit debt levels to 65% of total capitalization, as defined in the agreements. For purposes of these definitions, debt excludes the long-term debt payable to affiliated trusts and, in certain arrangements, other hybrid securities, and, for Southern Company and Mississippi Power, any securitized debt relating to the securitization of certain costs of the Kemper IGCC. Additionally, for Southern Company and Southern Power Company, for purposes of these definitions, debt excludes any project debt incurred by certain subsidiaries of Southern Power Company to the extent such debt is non-recourse to Southern Power Company and capitalization excludes the capital stock or other equity attributable to such subsidiaries. At December 31, 2016, Southern Company, the traditional electric operating companies, Southern Power Company, Southern Company Gas, and Nicor Gas were each in compliance with their respective debt limit covenants.

A portion of the $8.3 billion unused credit with banks is allocated to provide liquidity support to the pollution control revenue bonds of the traditional electric operating companies and the commercial paper programs of Southern Company, the traditional electric operating companies, Southern Power Company, Southern Company Gas, and Nicor Gas. The amount of variable rate pollution control revenue bonds of the traditional electric operating companies outstanding requiring liquidity support as of December 31, 2016 was approximately $1.9 billion. In addition, at December 31, 2016, the traditional electric operating companies had approximately $0.4 billion of fixed rate pollution control revenue bonds outstanding that were required to be remarketed within the next 12 months.

Southern Company, the traditional electric operating companies, Southern Power Company, Southern Company Gas, and Nicor Gas make short-term borrowings primarily through commercial paper programs that have the liquidity support of the committed bank credit arrangements described above. Commercial paper and short-term bank term loans are included in notes payable in the balance sheets.

Details of short-term borrowings were as follows:



	Short-term Debt at the End of the Period
	Amount Outstanding		Weighted Average Interest Rate
	(in millions)
December 31, 2016:
Commercial paper	$	1,909	1.1	%
Short-term bank debt	123		1.7	%
Total	$	2,032	1.1	%
December 31, 2015:
Commercial paper	$	740	0.7	%
Short-term bank debt	500		1.4	%
Total	$	1,240	0.9	%

In addition to the short-term borrowings in the table above, Southern Power's subsidiary Project Credit Facilities had total amounts outstanding of $209 million and $137 million at a weighted average interest rate of 2.1% and 2.0% as of December 31, 2016 and 2015, respectively. The amounts outstanding as of December 31, 2016 under the Project Credit Facilities were fully repaid subsequent to December 31, 2016.

Redeemable Preferred Stock of Subsidiaries

Each of the traditional electric operating companies has issued preferred and/or preference stock. The preferred stock of Alabama Power and Mississippi Power contains a feature that allows the holders to elect a majority of such subsidiary's board of directors if preferred dividends are not paid for four consecutive quarters. Because such a potential redemption-triggering event is not solely within the control of Alabama Power and Mississippi Power, this preferred stock is presented as "Redeemable Preferred Stock of Subsidiaries" in a manner consistent with temporary equity under applicable accounting standards. The preferred and preference stock at Georgia Power and the preference stock at Alabama Power and Gulf Power do not contain such a provision. As a result, under applicable accounting standards, the preferred and preference stock at Georgia Power and the preference stock at Alabama Power and Gulf Power are presented as "Preferred and Preference Stock of Subsidiaries," a separate component of "Stockholders' Equity," on Southern Company's balance sheets, statements of capitalization, and statements of stockholders' equity.

The following table presents changes during the year in redeemable preferred stock of subsidiaries for Southern Company:



	Redeemable Preferred Stock of Subsidiaries
	(in millions)
Balance at December 31, 2013	$	375
Issued	—
Redeemed	—
Balance at December 31, 2014	375
Issued	—
Redeemed	(262		)
Other	5
Balance at December 31, 2015	118
Issued	—
Redeemed	—
Balance at December 31, 2016	$	118

FINANCING

Southern Company Gas' 100%-owned subsidiary, Southern Company Gas Capital, was established to provide for certain of Southern Company Gas' ongoing financing needs through a commercial paper program, the issuance of various debt, hybrid securities, and other financing arrangements. Southern Company Gas fully and unconditionally guarantees all debt issued by Southern Company Gas Capital and the gas facility revenue bonds issued by Pivotal Utility Holdings. Nicor Gas is not permitted by regulation to make loans to affiliates or utilize Southern Company Gas Capital for its financing needs.

Securities Due Within One Year

The current portion of long-term debt at December 31, 2016 is composed of the portion of its long-term debt due within the next 12 months. At December 31, 2016, the Company had $22 million of medium-term notes due within one year, consisting of medium-term notes of Atlanta Gas Light. At December 31, 2015, the Company had $545 million of first mortgage bonds and senior notes due within one year.

Certain of the Company's senior notes with a principal amount of $275 million were subject to change-in-control provisions that were triggered by the Merger. Under the applicable note purchase agreement, Southern Company Gas Capital was required to provide notice to the holders of these notes of the change in control and offer to prepay these notes in August 2016. None of the holders of these notes accepted the offer for prepayment. These senior notes remained on their original payment schedules and included $120 million aggregate principal amount of Series A Floating Rate notes that were repaid at maturity on October 27, 2016 and $155 million aggregate principal amount of 3.50% Senior Notes due October 27, 2018.

Long-Term Debt

Long-term debt of the Company at December 31, 2016 and 2015 consisted of Series A, Series B, and Series C medium-term notes of Atlanta Gas Light; senior notes of Southern Company Gas Capital; first mortgage bonds of Nicor Gas; and gas facility revenue bonds of Pivotal Utility Holdings. Southern Company Gas fully and unconditionally guarantees all of Southern Company Gas Capital's senior notes and Pivotal Utility Holdings' gas facility revenue bonds. Additionally, substantially all of Nicor Gas' properties are subject to the lien of the indenture securing its first mortgage bonds. The majority of the long-term debt matures after fiscal year 2021.

The amount of medium-term notes outstanding at December 31, 2016 and December 31, 2015 was $159 million and $181 million, respectively.

Maturities through 2021 applicable to total long-term debt are as follows: $22 million in 2017; $155 million in 2018; $350 million in 2019; $330 million in 2021; and thereafter $3.9 billion. There are no material scheduled maturities in 2020.

First Mortgage Bonds

The first mortgage bonds of Nicor Gas have been issued with maturities ranging from 2019 to 2038.

In February and May 2016, $75 million and $50 million, respectively, of Nicor Gas' first mortgage bonds matured and were repaid using the proceeds from commercial paper borrowings.

In June 2016, Nicor Gas issued $250 million aggregate principal amount of first mortgage bonds with the following terms: $100 million at 2.66% due June 20, 2026, $100 million at 2.91% due June 20, 2031, and $50 million at 3.27% due June 20, 2036. The proceeds were used to repay short-term indebtedness incurred under the Nicor Gas commercial paper program and for other working capital needs. The amount of first mortgage bonds outstanding at December 31, 2016 and December 31, 2015 was $625 million and $375 million, respectively.

Gas Facility Revenue Bonds

Pivotal Utility Holdings is party to a series of loan agreements with the New Jersey Economic Development Authority and Brevard County, Florida under which five series of gas facility revenue bonds have been issued with maturities ranging from 2022 to 2033. These revenue bonds are issued by state agencies or counties to investors, and proceeds from each issuance then are loaned to Pivotal Utility Holdings. The amount of gas facility revenue bonds outstanding at December 31, 2016 and December 31, 2015 was $200 million.

Senior Notes

In May 2016, Southern Company Gas Capital issued $350 million aggregate principal amount of 3.25% Senior Notes due June 15, 2026, which are guaranteed by Southern Company Gas. The proceeds were used to repay at maturity $300 million aggregate principal amount of 6.375% Senior Notes due July 15, 2016 and for general corporate purposes.

In September 2016, Southern Company Gas Capital issued $350 million aggregate principal amount of 2.45% Senior Notes due October 1, 2023 and $550 million aggregate principal amount of 3.95% Senior Notes due October 1, 2046, both of which are guaranteed by Southern Company Gas. The proceeds were used to repay a $360 million promissory note issued to Southern Company for the purpose of funding a portion of the purchase price for a 50% equity interest in SNG, to fund the purchase of Piedmont's interest in SouthStar, to make a voluntary contribution to the pension plan, to repay at maturity $120 million aggregate principal amount of Series A Floating Rate Senior Notes due October 27, 2016, and for general corporate purposes. The amount of senior notes outstanding at December 31, 2016 and December 31, 2015 was $3.7 billion and $2.5 billion, respectively.

Dividend Restrictions

By regulation, Nicor Gas is restricted, to the extent of its retained earnings balance, in the amount it can dividend or loan to affiliates and is not permitted to make money pool loans to affiliates. Elizabethtown Gas is restricted by its dividend policy as established by the New Jersey BPU in the amount it can dividend to its parent company to the extent of 70% of its quarterly net income. Additionally, as stipulated in the New Jersey BPU's order approving the Merger, Southern Company Gas is prohibited from paying dividends to its parent company, Southern Company, if Southern Company Gas' senior unsecured debt rating falls below investment grade. As of December 31, 2016, the amount of subsidiary retained earnings restricted for dividend payment totaled $688 million.

Bank Credit Arrangements

Credit Facilities

Bank credit arrangements under the Southern Company Gas Credit Facility and the Nicor Gas Credit Facility provide liquidity support to Southern Company Gas Capital's and Nicor Gas' commercial paper borrowings. The Nicor Gas Credit Facility is restricted for working capital needs of Nicor Gas. In October 2015, the Company entered into agreements to amend and extend the Southern Company Gas Credit Facility and the Nicor Gas Credit Facility. Under the terms of these agreements, the Company extended the maturity dates of the Southern Company Gas Credit Facility and the Nicor Gas Credit Facility to November 9, 2018 and December 14, 2018, respectively. One of the banks elected not to participate in this extension and its total commitment of $75 million will continue through the fourth quarter 2017. The Company also modified the credit facilities to provide for the limited consent by the lenders to the Merger with Southern Company. Additionally, the Company made similar changes to its Bank Rate Mode Covenants Agreement relating to the Pivotal Utility Holdings gas facility revenue bonds.

At December 31, 2016, committed credit arrangements with banks were as follows:



Successor
	Expires								Expires Within One Year
Company	2017		2018		Total		Unused		Term Out		No Term Out
	(in millions)				(in millions)				(in millions)
Southern Company Gas Capital	$	49	$	1,251	$	1,300	$	1,249	$	—	$	49
Nicor Gas	26		674		700		700		—		26
Total	$	75	$	1,925	$	2,000	$	1,949	$	—	$	75

The Southern Company Gas Credit Facility and the Nicor Gas Credit Facility included in the table above each contain a covenant that limits the ratio of debt to capitalization (as defined in each Facility) to a maximum of 70% and contain cross acceleration provisions to other indebtedness (including guarantee obligations) of the applicable company. At December 31, 2016, the Company and Nicor Gas were in compliance with their respective debt limit covenants.

Commercial Paper Programs

The Company maintains commercial paper programs at Southern Company Gas Capital and at Nicor Gas that consist of short-term, unsecured promissory notes. Nicor Gas' commercial paper program supports working capital needs at Nicor Gas as Nicor Gas is not permitted to make money pool loans to affiliates. All of the Company's other subsidiaries benefit from Southern Company Gas Capital's commercial paper program. Commercial paper is included in notes payable in the consolidated balance sheets.

Details of commercial paper borrowings outstanding were as follows:



	Commercial Paper at the End of the Period
	Amount Outstanding		Weighted Average Interest Rate
	(in millions)
Successor – December 31, 2016:
Southern Company Gas Capital	$	733	1.09	%
Nicor Gas	524		0.95	%
Total	$	1,257	1.03	%

Predecessor – December 31, 2015:
Southern Company Gas Capital	$	471	0.71	%
Nicor Gas	539		0.52	%
Total	$	1,010	0.60	%