Segment and Related Information

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

SEGMENT AND RELATED INFORMATION

SEGMENT AND RELATED INFORMATION

Southern Company

The primary business of the Southern Company system is electricity sales by the traditional electric operating companies and Southern Power and the distribution of natural gas by Southern Company Gas. The four traditional electric operating companies – Alabama Power, Georgia Power, Gulf Power, and Mississippi Power – are vertically integrated utilities providing electric service in four Southeastern states. Southern Power constructs, acquires, owns, and manages power generation assets, including renewable energy projects, and sells electricity at market-based rates in the wholesale market. Southern Company Gas distributes natural gas through the seven natural gas distribution utilities in seven states and is involved in several other complementary businesses including gas marketing services, wholesale gas services, and gas midstream operations.

Southern Company's reportable business segments are the sale of electricity by the four traditional electric operating companies, the sale of electricity in the competitive wholesale market by Southern Power, and the sale of natural gas and other complementary products and services by Southern Company Gas. Revenues from sales by Southern Power to the traditional electric operating companies were $100 million for the three months ended March 31, 2017 and $97 million for the three months ended March 31, 2016. The "All Other" column includes the Southern Company parent entity, which does not allocate operating expenses to business segments. Also, this category includes segments below the quantitative threshold for separate disclosure. These segments include providing energy technologies and services to electric utilities and large industrial, commercial, institutional, and municipal customers; as well as investments in telecommunications and leveraged lease projects. All other inter-segment revenues are not material.

Financial data for business segments and products and services for the three months ended March 31, 2017 and 2016 was as follows:

	Electric Utilities
	Traditional Electric Operating Companies		Southern Power		Eliminations			Total		Southern Company Gas		All Other			Eliminations			Consolidated
	(in millions)
Three Months Ended March 31, 2017:
Operating revenues	$	3,786	$	450	$	(105	)	$	4,131	$	1,560	$	123		$	(43	)	$	5,771
Segment net income (loss)(a)(b)(c)	432		70		—			502		239		(84		)	1			658
Total assets at March 31, 2017	$	72,692	$	14,681	$	(306	)	$	87,067	$	21,683	$	2,574		$	(1,564	)	$	109,760
Three Months Ended March 31, 2016:
Operating revenues	$	3,769	$	315	$	(103	)	$	3,981	$	—	$	47		$	(36	)	$	3,992
Segment net income (loss)(a)(b)	465		50		—			515		—		(23		)	(3		)	489
Total assets at December 31, 2016	$	72,141	$	15,169	$	(316	)	$	86,994	$	21,853	$	2,474		$	(1,624	)	$	109,697

(a) Attributable to Southern Company.

(b) Segment net income (loss) for the traditional electric operating companies includes pre-tax charges for estimated probable losses on the Kemper IGCC of $108 million ($67 million after tax) and $53 million ($33 million after tax) for the three months ended March 31, 2017 and 2016, respectively. See Note (B) under "Integrated Coal Gasification Combined Cycle – Kemper IGCC Schedule and Cost Estimate" for additional information.

(c) Segment net income (loss) for the traditional electric operating companies also includes a pre-tax charge for the write-down of Gulf Power's ownership of Plant Scherer Unit 3 of $33 million ($20 million after tax) for the three months ended March 31, 2017. See Note (B) under "Regulatory Matters – Gulf Power – Retail Base Rate Cases" for additional information.

Products and Services

	Electric Utilities' Revenues
Period	Retail		Wholesale		Other		Total
	(in millions)
Three Months Ended March 31, 2017	$	3,394	$	531	$	206	$	4,131
Three Months Ended March 31, 2016	3,377		396		208		3,981

	Southern Company Gas' Revenues
Period	Gas Distribution Operations		Gas Marketing Services		Other		Total
	(in millions)
Three Months Ended March 31, 2017	$	1,132	$	288	$	140	$	1,560

Southern Company Gas

Southern Company Gas manages its business through four reportable segments – gas distribution operations, gas marketing services, wholesale gas services, and gas midstream operations. The non-reportable segments are combined and presented as all other.

Gas distribution operations is the largest component of Southern Company Gas' business and includes natural gas local distribution utilities that construct, manage, and maintain intrastate natural gas pipelines and gas distribution facilities in seven states. Gas marketing services includes natural gas marketing to end-use customers primarily in Georgia and Illinois. Additionally, gas marketing services provides home equipment protection products and services. Wholesale gas services provides natural gas asset management and/or related logistics services for each of Southern Company Gas' utilities except Nicor Gas as well as for non-affiliated companies. Additionally, wholesale gas services engages in natural gas storage and gas pipeline arbitrage and related activities. Gas midstream operations primarily consists of Southern Company Gas' pipeline investments, with storage and fuel operations also aggregated into this segment. The all other column includes segments below the quantitative threshold for separate disclosure, including the subsidiaries that fall below the quantitative threshold for separate disclosure.

After the Merger, Southern Company Gas changed its segment performance measure to net income. In order to properly assess net income by segment, Southern Company Gas executed various intercompany note agreements to revise interest charges to its segments. Since such agreements did not exist in the predecessor period, Southern Company Gas is unable to provide the comparable net income.

Business segment financial data for the successor period January 1, 2017 through March 31, 2017 and the predecessor period January 1, 2016 through March 31, 2016 was as follows:

	Gas Distribution Operations		Gas Marketing Services		Wholesale Gas Services(*)		Gas Midstream Operations			Total		All Other			Eliminations			Consolidated
	(in millions)
Successor – January 1, 2017 through March 31, 2017:
Operating revenues	$	1,180	$	288	$	131	$	25		$	1,624	$	2		$	(66	)	$	1,560
Segment net income	117		31		68		15			231		8			—			239
Successor – Total assets at March 31, 2017	$	18,201	$	2,118	$	1,018	$	2,363		$	23,700	$	10,860		$	(12,877	)	$	21,683
Predecessor – January 1, 2016 through March 31, 2016:
Operating revenues	$	1,028	$	286	$	63	$	15		$	1,392	$	2		$	(60	)	$	1,334
Segment EBIT	235		80		44		(1		)	358		(5		)	(1		)	352
Successor – Total assets at December 31, 2016	$	19,453	$	2,084	$	1,127	$	2,211		$	24,875	$	11,145		$	(14,167	)	$	21,853

(*) The revenues for wholesale gas services are netted with costs associated with its energy and risk management activities. A reconciliation of operating revenues and intercompany revenues is shown in the following table.

	Third Party Gross Revenues		Intercompany Revenues		Total Gross Revenues		Less Gross Gas Costs		Operating Revenues
	(in millions)
Successor – January 1, 2017 through March 31, 2017	$	1,839	$	136	$	1,975	$	1,844	$	131
Predecessor – January 1, 2016 through March 31, 2016	$	1,443	$	81	$	1,524	$	1,461	$	63