Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Significant Accounting Policies [Line Items]

Regulatory Assets and Liabilities

Regulatory assets and (liabilities) reflected in the balance sheets at December 31 relate to:

	2017			2016			Note
	(in millions)
Retiree benefit plans	$	3,931		$	3,959		(a,n)
Asset retirement obligations-asset	1,133			1,080			(b,n)
Deferred income tax charges	814			1,590			(b,p)
Environmental remediation-asset	511			491			(j,n)
Property damage reserves-asset	333			206			(i)
Under recovered regulatory clause revenues	317			273			(g)
Remaining net book value of retired assets	306			351			(o)
Loss on reacquired debt	223			243			(c)
Vacation pay	183			182			(f,n)
Long-term debt fair value adjustment	138			155			(d)
Deferred PPA charges	119			141			(e,n)
Kemper County energy facility	88			201			(h)
Other regulatory assets	511			487			(k)
Deferred income tax credits	(7,261		)	(219		)	(b,p)
Other cost of removal obligations	(2,684		)	(2,774		)	(b)
Over recovered regulatory clause revenues	(155		)	(203		)	(g)
Property damage reserves-liability	(135		)	(177		)	(l)
Other regulatory liabilities	(266		)	(120		)	(m)
Total regulatory assets (liabilities), net	$	(1,894	)	$	5,866

Note: The recovery and amortization periods for these regulatory assets and (liabilities) are as follows:

(a) Recovered and amortized over the average remaining service period which may range up to 15 years. See Note 2 for additional information.

(b) Asset retirement and other cost of removal obligations are recorded, deferred income tax assets are recovered, and deferred income tax liabilities are amortized over the related property lives, which may range up to 80 years. Asset retirement and removal liabilities will be settled and trued up following completion of the related activities.

(c) Recovered over either the remaining life of the original issue or, if refinanced, over the remaining life of the new issue, which may range up to 50 years.

(d) Recovered over the remaining life of the original debt issuances, which range up to 21 years. For additional information see Note 12 under "Southern Company – Merger with Southern Company Gas."

(e) Recovered over the life of the PPA for periods up to six years.

(f) Recorded as earned by employees and recovered as paid, generally within one year. This includes both vacation and banked holiday pay.

(g) Recorded and recovered or amortized as approved or accepted by the appropriate state PSCs or other applicable regulatory agencies over periods generally not exceeding 10 years.

(h) Includes $114 million of regulatory assets and $26 million of regulatory liabilities to be recovered over periods of eight and six years, respectively. For additional information, see Note 3 under "Kemper County Energy Facility – Rate Recovery – Kemper Settlement Agreement."

(i) Previous under-recovery as of December 2013 is recorded and recovered or amortized as approved by the Georgia PSC through 2019. Amortization of $319 million related to the under-recovery from January 2014 through December 2017 is expected to be determined by the Georgia PSC in the 2019 base rate case. See Note 3 under "Regulatory Matters – Georgia Power – Storm Damage Recovery" for additional information.

(j) Recovered through environmental cost recovery mechanisms when the remediation is performed or the work is performed.

(k) Comprised of numerous immaterial components including nuclear outage, fuel-hedging losses, deferred income tax charges - Medicare subsidy, cancelled construction projects, building and generating plant leases, property tax, and other miscellaneous assets. These costs are recorded and recovered or amortized as approved by the appropriate state PSCs over periods generally not exceeding 50 years.

(l) Recovered as storm restoration and potential reliability-related expenses are incurred as approved by the appropriate state PSCs.

(m) Comprised of numerous immaterial components including retiree benefit plans, fuel-hedging gains, AROs, and other liabilities that are recorded and recovered or amortized as approved by the appropriate state PSCs or other applicable regulatory agencies generally over periods not exceeding 20 years.

(n) Not earning a return as offset in rate base by a corresponding asset or liability.

(o) Amortized as approved by the appropriate state PSCs over periods generally up to 48 years.

(p) As a result of the Tax Reform Legislation, these accounts include certain deferred income tax assets and liabilities not subject to normalization. The recovery and amortization of these amounts will be determined by the appropriate state PSCs or other applicable regulatory agencies. See Note 3 under "Regulatory Matters" and Note 5 for additional information.

Property Plant and Equipment

The Southern Company system's property, plant, and equipment in service consisted of the following at December 31:

	2017		2016
	(in millions)
Electric utilities:
Generation	$	51,279	$	48,836
Transmission	11,562		11,156
Distribution	19,239		18,418
General	4,276		4,629
Plant acquisition adjustment	126		126
Electric utility plant in service	86,482		83,165
Natural gas distribution utilities:
Transportation and distribution	13,078		11,996
Utility plant in service	99,560		95,161
Information technology equipment and software	752		544
Communications equipment	456		424
Storage facilities	1,598		1,463
Other	1,176		824
Total other plant in service	3,982		3,255
Total plant in service	$	103,542	$	98,416

Assets Acquired Under Capital Leases

Assets acquired under a capital lease are included in property, plant, and equipment and are further detailed in the table below:

	Asset Balances at December 31,
	2017			2016
	(in millions)
Office buildings	$	216		$	61
Nitrogen plant(*)	—			83
Computer-related equipment	51			63
Gas pipeline	6			6
Less: Accumulated amortization	(72		)	(69		)
Balance, net of amortization	$	201		$	144

(*) Represents a nitrogen supply agreement for the air separation unit of the Kemper County energy facility, which was terminated following the suspension of the gasifier portion of the project. See Note 6 under "Capital Leases" for additional information.

Asset Retirement Obligations and Other Costs of Removal

Details of the AROs included in the balance sheets are as follows:

	2017			2016
	(in millions)
Balance at beginning of year	$	4,514		$	3,759
Liabilities incurred	16			66
Liabilities settled	(177		)	(171		)
Accretion	179			162
Cash flow revisions	292			698
Balance at end of year	$	4,824		$	4,514

Accumulated Provisions for Decommissioning

At December 31, 2017 and 2016, the accumulated provisions for the external decommissioning trust funds were as follows:

	External Trust Funds
	2017		2016
	(in millions)
Plant Farley	$	902	$	790
Plant Hatch	583		511
Plant Vogtle Units 1 and 2	346		303

Estimated Cost of Decommissioning

The estimated costs of decommissioning as of December 31, 2017 based on the most current studies, which were performed in 2013 for Alabama Power's Plant Farley and in 2015 for the Georgia Power plants, were as follows for Alabama Power's Plant Farley and Georgia Power's ownership interests in Plant Hatch and Plant Vogtle Units 1 and 2:

	Plant Farley		Plant Hatch		Plant Vogtle Units 1 and 2
Decommissioning periods:
Beginning year	2037		2034		2047
Completion year	2076		2075		2079
	(in millions)
Site study costs:
Radiated structures	$	1,362	$	678	$	568
Spent fuel management	—		160		147
Non-radiated structures	80		64		89
Total site study costs	$	1,442	$	902	$	804

Schedule of Finite-Lived and Infinite-Lived Intangible Assets

At December 31, 2017 and 2016, other intangible assets were as follows:

		At December 31, 2017							At December 31, 2016
	Estimated Useful Life	Gross Carrying Amount		Accumulated Amortization			Other Intangible Assets, Net		Gross Carrying Amount		Accumulated Amortization			Other Intangible Assets, Net
		(in millions)							(in millions)
Other intangible assets subject to amortization:
Customer relationships	11-26 years	$	288	$	(83	)	$	205	$	268	$	(32	)	$	236
Trade names	5-28 years	159		(17		)	142		158		(5		)	153
Storage and transportation contracts	1-5 years	64		(34		)	30		64		(2		)	62
PPA fair value adjustments	10-20 years	456		(47		)	409		456		(22		)	434
Other	1-12 years	17		(5		)	12		11		(1		)	10
Total other intangible assets subject to amortization		$	984	$	(186	)	$	798	$	957	$	(62	)	$	895
Other intangible assets not subject to amortization:
Federal Communications Commission licenses		75		—			75		75		—			75
Total other intangible assets		$	1,059	$	(186	)	$	873	$	1,032	$	(62	)	$	970

Future Amortization Expense for Intangible Assets

As of December 31, 2017, the estimated amortization associated with other intangible assets for the next five years is as follows:

	Amortization
	(in millions)
2018	$	95
2019	77
2020	65
2021	56
2022	51

Future Amortization Expense for Intangible Liabilities

The remaining estimated amortization associated with the intangible liabilities that will be recorded in natural gas revenues is as follows:

	Amortization
	(in millions)
2018	$	24
2019	17

Net Investments in Leveraged Leases

Southern Company's net investment in domestic and international leveraged leases consists of the following at December 31:

	2017			2016
	(in millions)
Net rentals receivable	$	1,498		$	1,481
Unearned income	(723		)	(707		)
Investment in leveraged leases	775			774
Deferred taxes from leveraged leases	(252		)	(309		)
Net investment in leveraged leases	$	523		$	465

Components of Income from Leveraged Leases

A summary of the components of income from the leveraged leases follows:

	2017			2016			2015
	(in millions)
Pretax leveraged lease income	$	25		$	25		$	20
Net impact of Tax Reform Legislation	48			—			—
Income tax expense	(9		)	(9		)	(7		)
Net leveraged lease income	$	64		$	16		$	13

Accumulated Other Comprehensive Income (Loss) Balances, Net of Tax Effects

Accumulated OCI (loss) balances, net of tax effects, were as follows:

	Qualifying Hedges			Pension and Other Postretirement Benefit Plans			Accumulated Other Comprehensive Income (Loss)
	(in millions)
Balance at December 31, 2016	$	(115	)	$	(65	)	$	(180	)
Current period change	(4		)	(5		)	(9		)
Balance at December 31, 2017	$	(119	)	$	(70	)	$	(189	)

ALABAMA POWER CO

Summary of Significant Accounting Policies [Line Items]

Regulatory Assets and Liabilities

Regulatory assets and (liabilities) reflected in the balance sheets at December 31 relate to:

	2017			2016			Note
	(in millions)
Retiree benefit plans	$	946		$	947		(i,j)
Deferred income tax charges	240			526			(a,k,n)
Regulatory clauses	142			—			(m)
Vacation pay	70			69			(c,j)
Loss on reacquired debt	62			68			(b)
Nuclear outage	56			70			(d)
Remaining net book value of retired assets	54			69			(l)
Under/(over) recovered regulatory clause revenues	53			76			(d)
Other regulatory assets	51			50			(f)
Fuel-hedging losses	7			1			(e,j)
Deferred income tax credits	(2,082		)	(65		)	(a,n)
Other cost of removal obligations	(609		)	(684		)	(a)
Natural disaster reserve	(38		)	(69		)	(h)
Asset retirement obligations	(33		)	12			(a)
Other regulatory liabilities	(7		)	(23		)	(e,g)
Total regulatory assets (liabilities), net	$	(1,088	)	$	1,047

Note: The recovery and amortization periods for these regulatory assets and (liabilities) are as follows:

(a) Asset retirement and removal assets and liabilities are recorded, deferred income tax assets are recovered, and deferred income tax credits are amortized over the related property lives, which may range up to 50 years. Asset retirement and other cost of removal assets and liabilities will be settled and trued up following completion of the related activities.

(b) Recovered over the remaining life of the original issue, which may range up to 50 years.

(c) Recorded as earned by employees and recovered as paid, generally within one year. This includes both vacation and banked holiday pay.

(d) Recorded and recovered or amortized as approved or accepted by the Alabama PSC over periods not exceeding 10 years. See Note 3 under "Retail Regulatory Matters" for additional information.

(e) Fuel-hedging assets and liabilities are recorded over the life of the underlying hedged purchase contracts, which generally do not exceed three and a half years. Upon final settlement, actual costs incurred are recovered through the energy cost recovery clause.

(f) Comprised of components including generation site selection/evaluation costs, PPA capacity (to be recovered over the next 12 months), and other miscellaneous assets. Recorded as accepted by the Alabama PSC. Capitalized upon initialization of related construction projects, if applicable.

(g) Comprised of components including mine reclamation and remediation liabilities and fuel-hedging gains. Recorded as accepted by the Alabama PSC. Mine reclamation and remediation liabilities will be settled following completion of the related activities.

(h) Utilized as storm restoration and potential reliability-related expenses are incurred, as approved by the Alabama PSC.

(i) Recovered and amortized over the average remaining service period which may range up to 15 years. See Note 2 for additional information.

(j) Not earning a return as offset in rate base by a corresponding asset or liability.

(k) Included in the deferred income tax charges are $13 million for 2017 and $16 million for 2016 for the retiree Medicare drug subsidy, which is recovered and amortized, as approved by the Alabama PSC, over the average remaining service period which may range up to 15 years.

(l) Recorded and amortized as approved by the Alabama PSC for a period up to 11 years.

(m) Established per an order from the Alabama PSC issued on February 17, 2017 and will be amortized concurrently with the effective date of the Company's next depreciation study. See Note 3 under "Retail Regulatory Matters – Rate RSE" for additional information.

(n) As a result of the Tax Reform Legislation, these accounts include certain deferred income tax assets and liabilities not subject to normalization. The recovery and amortization of these amounts will be established consistent with guidance provided by the Alabama PSC. See Note 5 for additional information.

Property Plant and Equipment

The Company's property, plant, and equipment in service consisted of the following at December 31:

	2017		2016
	(in millions)
Generation	$	14,213	$	13,551
Transmission	4,119		3,921
Distribution	7,034		6,707
General	1,948		1,840
Plant acquisition adjustment	12		12
Total plant in service	$	27,326	$	26,031

Asset Retirement Obligations and Other Costs of Removal

Details of the AROs included in the balance sheets are as follows:

	2017			2016
	(in millions)
Balance at beginning of year	$	1,533		$	1,448
Liabilities incurred	—			5
Liabilities settled	(26		)	(25		)
Accretion	77			73
Cash flow revisions	125			32
Balance at end of year	$	1,709		$	1,533

Accumulated Provisions for Decommissioning

At December 31, the accumulated provisions for decommissioning were as follows:

	2017		2016
	(in millions)
External trust funds	$	902	$	790
Internal reserves	18		19
Total	$	920	$	809

Estimated Cost of Decommissioning

The estimated costs of decommissioning as of December 31, 2017 based on the most current study performed in 2013 for Plant Farley are as follows:

Decommissioning periods:
Beginning year	2037
Completion year	2076
	(in millions)
Site study costs:
Radiated structures	$	1,362
Non-radiated structures	80
Total site study costs	$	1,442

GULF POWER CO

Summary of Significant Accounting Policies [Line Items]

Regulatory Assets and Liabilities

Regulatory assets and (liabilities) reflected in the balance sheets at December 31 relate to:

	2017			2016			Note
	(in millions)
Retiree benefit plans, net	$	166		$	160		(a,b)
PPA charges	119			141			(b,c)
Closure of ash ponds	80			75			(b,d)
Remaining book value of retired assets	65			66			(e)
Environmental remediation	52			44			(b,d)
Other regulatory assets, net	36			18			(i)
Deferred income tax charges	31			56			(f)
Deferred return on transmission upgrades	25			25			(e)
Fuel-hedging assets, net	21			24			(b,h)
Loss on reacquired debt	17			18			(j)
Asset retirement obligations, net	13			7			(b,f)
Regulatory asset, offset to other cost of removal	—			29			(e)
Deferred income tax credits	(458		)	(2		)	(g)
Other cost of removal obligations	(221		)	(278		)	(f)
Property damage reserve	(40		)	(40		)	(e)
Over recovered regulatory clause revenues	(11		)	(23		)	(k)
Total regulatory assets (liabilities), net	$	(105	)	$	320

Note: The recovery and amortization periods for these regulatory assets and (liabilities) are as follows:

(a) Recovered and amortized over the average remaining service period, which may range up to 14 years. See Note 2 for additional information.

(b) Not earning a return as offset in rate base by a corresponding asset or liability.

(c) Recovered over the life of the PPA for periods up to six years.

(d) Recovered through the environmental cost recovery clause when the remediation or the work is performed.

(e) Recorded and recovered or amortized as approved by the Florida PSC.

(f) Asset retirement and removal assets and liabilities are recorded, and deferred income tax assets are recorded, recovered, and amortized, over the related property lives, which may range up to 65 years. Asset retirement and removal assets and liabilities will be settled and trued up following completion of the related activities.

(g) Deferred income tax liabilities are amortized over the related property lives, which may range up to 65 years. Includes the deferred tax liabilities as a result of the Tax Reform Legislation. Amortization of $71 million of the deferred tax liabilities at December 31, 2017 is expected to be determined by the Florida PSC at a later date. See Notes 3 and 5 for additional information.

(h) Fuel-hedging assets and liabilities are recorded over the life of the underlying hedged purchase contracts, which currently do not exceed four years. Upon final settlement, actual costs incurred are recovered through the fuel cost recovery clause.

(i) Comprised primarily of under recovered regulatory clause revenues. Other regulatory assets costs, with the exception of vacation pay, are recorded and recovered or amortized as approved by the Florida PSC. Vacation pay, including banked holiday pay, does not earn a return as offset in rate base by a corresponding liability; it is recorded as earned by employees and recovered as paid, generally within one year.

(j) Recovered over either the remaining life of the original issue or, if refinanced, over the life of the new issue, which may range up to 40 years.

(k) Recorded and recovered or amortized as approved by the Florida PSC, generally within one year.

Property Plant and Equipment

The Company's property, plant, and equipment in service consisted of the following at December 31:

	2017		2016
	(in millions)
Generation	$	3,005	$	3,001
Transmission	720		706
Distribution	1,282		1,241
General	188		191
Plant acquisition adjustment	1		1
Total plant in service	$	5,196	$	5,140

Asset Retirement Obligations and Other Costs of Removal

Details of the AROs included on the balance sheets are as follows:

	2017			2016
	(in millions)
Balance at beginning of year	$	136		$	130
Liabilities incurred	—			1
Liabilities settled	(8		)	(1		)
Accretion	2			4
Cash flow revisions	12			2
Balance at end of year	$	142		$	136

GEORGIA POWER CO

Summary of Significant Accounting Policies [Line Items]

Regulatory Assets and Liabilities

Regulatory assets and (liabilities) reflected in the balance sheets at December 31 relate to:

	2017			2016			Note
	(in millions)
Retiree benefit plans	$	1,313		$	1,348		(a, k)
Asset retirement obligations	945			893			(b, k)
Deferred income tax charges	521			681			(b, c, k)
Storm damage reserves	333			206			(d)
Remaining net book value of retired assets	146			166			(e)
Loss on reacquired debt	127			137			(f, k)
Other regulatory assets	119			97			(g)
Vacation pay	91			91			(h, k)
Other cost of removal obligations	40			3			(b)
Cancelled construction projects	36			44			(i)
Deferred income tax credits	(3,248		)	(121		)	(b, c)
Other regulatory liabilities	(191		)	(39		)	(j, k)
Total regulatory assets (liabilities), net	$	232		$	3,506

Note: The recovery and amortization periods for these regulatory assets and (liabilities) are as follows:

(a) Recovered and amortized over the average remaining service period which may range up to 14 years. See Note 2 for additional information.

(b) Asset retirement and other cost of removal obligations and deferred income tax assets are recovered and deferred income tax liabilities are amortized over the related property lives, which may range up to 65 years. Asset retirement and removal liabilities will be settled and trued up following completion of the related activities. Included in the deferred income tax assets is $21 million for the retiree Medicare drug subsidy, which is recovered and amortized, as approved by the Georgia PSC, through 2022.

(c) As a result of Tax Reform Legislation, these balances include $145 million of deferred income tax assets related to CWIP for Plant Vogtle Units 3 and 4 and $626 million of deferred income tax liabilities, neither of which are subject to normalization. The recovery and amortization of these amounts will be determined by the Georgia PSC. See Note 3 under "Retail Regulatory Matters – Rate Plans" and Note 5 for additional information.

(d) Previous under-recovery as of December 2013 is recorded and recovered or amortized as approved by the Georgia PSC through 2019. Amortization of $319 million related to the under-recovery from January 2014 through December 2017 is expected to be determined by the Georgia PSC in the 2019 base rate case. See Note 3 under "Retail Regulatory Matters – Storm Damage Recovery" for additional information.

(e) Amortized as approved by the Georgia PSC over periods not exceeding 10 years or through 2024. The net book value of Plant Mitchell Unit 3 at December 31, 2017 was $10 million, which will continue to be amortized through December 31, 2019 as provided in the 2013 ARP. Amortization of the remaining net book value of Plant Mitchell Unit 3 at December 31, 2019, which is expected to be approximately $4 million, and $31 million related to obsolete inventories of certain retired units is expected to be determined by the Georgia PSC in the 2019 base rate case. See Note 3 under "Retail Regulatory Matters – Integrated Resource Plan" for additional information.

(f) Recovered over either the remaining life of the original issue or, if refinanced, over the remaining life of the new issue, which currently does not exceed 35 years.

(g) Comprised of several components including deferred nuclear outages, environmental remediation, building lease, demand-side management tariff under-recovery, and fuel-hedging losses. Deferred nuclear outages are recorded and recovered or amortized over the outage cycles of each nuclear unit, which does not exceed 24 months. The building lease is recorded and recovered or amortized as approved by the Georgia PSC through 2020. The amortization of environmental remediation and demand-side management tariff under-recovery of $54 million at December 31, 2017 is expected to be determined by the Georgia PSC in the 2019 base rate case. Fuel-hedging losses are recovered through the Company's fuel cost recovery mechanism upon final settlement.

(h) Recorded as earned by employees and recovered as paid, generally within one year. This includes both vacation and banked holiday pay.

(i) Costs associated with construction of environmental controls that will not be completed as a result of unit retirements are being amortized as approved by the Georgia PSC over periods not exceeding nine years or through 2022.

(j) Comprised of certain customer refunds and fuel-hedging gains. As ordered by the Georgia PSC on January 11, 2018, approximately $188 million of the proceeds pursuant to the Toshiba Guarantee will be refunded to customers in 2018. Fuel-hedging gains are refunded through the Company's fuel cost recovery mechanism upon final settlement. See Note 3 under "Nuclear Construction" for additional information on the customer refunds related to the Toshiba Guarantee.

(k) Generally not earning a return as they are excluded from rate base or are offset in rate base by a corresponding asset or liability.

Property Plant and Equipment

The Company's property, plant, and equipment in service consisted of the following at December 31:

	2017		2016
	(in millions)
Generation	$	17,038	$	16,668
Transmission	5,947		5,779
Distribution	9,978		9,553
General	1,870		1,813
Plant acquisition adjustment	28		28
Total plant in service	$	34,861	$	33,841

Asset Retirement Obligations and Other Costs of Removal

Details of the AROs included in the balance sheets are as follows:

	2017			2016
	(in millions)
Balance at beginning of year	$	2,532		$	1,916
Liabilities incurred	4			—
Liabilities settled	(120		)	(123		)
Accretion	89			77
Cash flow revisions	133			662
Balance at end of year	$	2,638		$	2,532

Accumulated Provisions for Decommissioning

The site study costs and external trust funds for decommissioning as of December 31, 2017 based on the Company's ownership interests were as follows:

	Plant Hatch		Plant Vogtle Units 1 and 2
Decommissioning periods:
Beginning year	2034		2047
Completion year	2075		2079
	(in millions)
Site study costs:
Radiated structures	$	678	$	568
Spent fuel management	160		147
Non-radiated structures	64		89
Total site study costs	$	902	$	804
External trust funds	$	583	$	346

MISSISSIPPI POWER CO

Summary of Significant Accounting Policies [Line Items]

Regulatory Assets and Liabilities

Regulatory assets and (liabilities) reflected in the balance sheets at December 31 relate to:

	2017			2016			Note
	(in millions)
Retiree benefit plans – regulatory assets	$	174		$	173		(a)
Asset retirement obligations	95			83			(b)
Kemper County energy facility	88			194			(c)
Remaining net book value of retired assets	44			53			(d)
Property tax	43			37			(e)
Deferred charges related to income taxes	36			362			(d)
Plant Daniel Units 3 and 4	36			33			(f)
Other regulatory assets	28			28			(g)
ECO carryforward	26			22			(h)
Other regulatory liabilities	—			(1		)	(i)
Deferred credits related to income taxes	(377		)	(9		)	(j)
Other cost of removal obligations	(178		)	(170		)	(k)
Property damage	(57		)	(68		)	(l)
Total regulatory assets (liabilities), net	$	(42	)	$	737

Note: The recovery and amortization periods for these regulatory assets and (liabilities) are as follows:

(a) Recovered and amortized over the average remaining service period which may range up to 15 years. See Note 2 for additional information.

(b) To be recovered upon completion of removal activities over a period approved by the Mississippi PSC.

(c) Includes $114 million of regulatory assets and $26 million of regulatory liabilities to be recovered in rates over periods of eight and six years, respectively. For additional information, see Note 3 under "Kemper County Energy Facility – Rate Recovery – Kemper Settlement Agreement."

(d) Recovered over the related property lives up to 48 years.

(e) Recovered through the ad valorem tax adjustment clause over a 12-month period beginning in April of the following year. See Note 3 under "Retail Regulatory Matters – Ad Valorem Tax Adjustment" for additional information.

(f) Represents the difference between the revenue requirement under the purchase option and the revenue requirement assuming operating lease accounting treatment for the extended term, which will be amortized over a 10-year period beginning October 2021.

(g) Comprised of vacation pay, loss on reacquired debt, and other miscellaneous assets. These costs are recorded and recovered or amortized as approved by the Mississippi PSC over periods which may range up to 50 years. This amount also includes fuel-hedging assets and liabilities which are recorded over the life of the underlying hedged purchase contracts, which generally do not exceed three years. Upon final settlement, actual costs incurred are recovered through the ECM.

(h) Recovered through the ECO clause in the year following the deferral.

(i) Comprised of numerous immaterial components including deferred income tax credits and other miscellaneous liabilities that are recorded and refunded or amortized as approved by the Mississippi PSC generally over periods not exceeding one year.

(j) This amount includes excess deferred income taxes primarily associated with Tax Reform Legislation of $375 million, of which $273 million is related to protected deferred income taxes to be recovered over the related property lives utilizing the average rate assumption method in accordance with IRS normalization principles and $102 million related to unprotected (not subject to normalization) deferred income taxes to be amortized over a period approved by the Mississippi PSC or the FERC, as appropriate. Of the total excess deferred income taxes associated with Tax Reform Legislation, $129 million is associated with the Kemper County energy facility. The unprotected portion associated with the Kemper County energy facility is $54 million, of which $38 million is being amortized over eight years for retail as approved by the Mississippi PSC on February 6, 2018 and $16 million is wholesale-related. Currently, the Company is requesting eight-year amortization for the remaining portions of the unprotected deferred income taxes associated with Tax Reform Legislation in all of its retail and wholesale rate filings. See Note 3 under "Retail Regulatory Matters" and "Kemper County Energy Facility" and Note 5 for additional information.

(k) Collected in advance from customers to remove assets upon their retirement.

(l) For additional information, see Note 1 under "Provision for Property Damage."

Property Plant and Equipment

The Company's property, plant, and equipment in service consisted of the following at December 31:

	2017		2016
	(in millions)
Generation	$	2,801	$	2,632
Transmission	737		712
Distribution	946		916
General	204		520
Plant acquisition adjustment	85		85
Total plant in service	$	4,773	$	4,865

Asset Retirement Obligations and Other Costs of Removal

Details of the AROs included in the balance sheets are as follows:

	2017			2016
	(in millions)
Balance at beginning of year	$	179		$	177
Liabilities incurred	—			15
Liabilities settled	(23		)	(23		)
Accretion	5			5
Cash flow revisions	13			5
Balance at end of year	$	174		$	179

SOUTHERN POWER CO

Summary of Significant Accounting Policies [Line Items]

Property Plant and Equipment

The primary assets in property, plant, and equipment are generating facilities, which generally have estimated useful lives as follows:

Generating facility	Useful life
Natural gas	Up to 45 years
Biomass	Up to 40 years
Solar	Up to 35 years
Wind	Up to 30 years

Asset Retirement Obligations and Other Costs of Removal

Details of the AROs included on the consolidated balance sheets are as follows:

	2017		2016
	(in millions)
Balance at beginning of year	$	64	$	21
Liabilities incurred	6		42
Accretion	4		1
Cash flow revisions	4		—
Balance at end of year	$	78	$	64

Future Amortization Expense for Intangible Assets

The estimated annual amortization expense is $25 million for each of the next five years.

Accumulated Other Comprehensive Income (Loss) Balances, Net of Tax Effects

Accumulated OCI (loss) balances, net of tax effects, were as follows:

	Qualifying Hedges			Pension and Other Postretirement Benefit Plans			Accumulated Other Comprehensive Income (Loss)
	(in millions)
Balance at December 31, 2016	$	35		$	—		$	35
Current period change	(10		)	—			(10		)
Other comprehensive income transfer from SCS(*)	—			(27		)	(27		)
Balance at December 31, 2017	$	25		$	(27	)	$	(2	)

(*) In connection with the Company becoming a participant to the Southern Company qualified pension plan and other postretirement benefit plan, $27 million of OCI, net of tax of $9 million, was transferred from SCS.

Schedule of Revenue by Major Customers by Reporting Segments

The following table shows the percentage of total revenues for the Company's top three customers for each of the years presented:

	2017		2016		2015
Georgia Power	11.3	%	16.5	%	15.8	%
Duke Energy Corporation	6.7	%	7.8	%	8.2	%
Morgan Stanley Capital Group	4.5	%	N/A		N/A
San Diego Gas & Electric Company	N/A		5.7	%	N/A
Florida Power & Light Company	N/A		N/A		10.7	%

SOUTHERN Co GAS

Summary of Significant Accounting Policies [Line Items]

Regulatory Assets and Liabilities

Regulatory assets and (liabilities) reflected in the balance sheets at December 31 relate to:

	2017			2016			Note
	(in millions)
Environmental remediation	$	410		$	411		(a,b)
Retiree benefit plans	270			325			(a,c)
Long-term debt fair value adjustment	138			154			(d)
Under recovered regulatory clause revenues	98			118			(e)
Other regulatory assets	79			58			(f)
Other cost of removal obligations	(1,646		)	(1,616		)	(g)
Deferred income tax credits	(1,063		)	(22		)	(g,i)
Over recovered regulatory clause revenues	(144		)	(104		)	(e)
Other regulatory liabilities	(21		)	(39		)	(h)
Total regulatory assets (liabilities), net	$	(1,879	)	$	(715	)

Note: The recovery and amortization periods for these regulatory assets and (liabilities) are as follows:

(a) Not earning a return as offset in rate base by a corresponding asset or liability.

(b) Recovered through environmental cost recovery mechanisms when the remediation is performed or the work is performed.

(c) Recovered and amortized over the average remaining service period which range up to 15 years. See Note 2 for additional information.

(d) Recovered over the remaining life of the original debt issuances, which range up to 21 years.

(e) Recorded and recovered or amortized as approved or accepted by the appropriate state regulatory agencies over periods generally not exceeding eight years.

(f) Comprised of several components including unamortized loss on reacquired debt, weather normalization, franchise gas, deferred depreciation expense, and financial instrument-hedging assets, which are recovered or amortized as approved by the applicable state regulatory agencies over periods generally not exceeding 10 years, except for financial hedging-instruments. Financial instrument-hedging assets are recorded over the life of the underlying hedged purchase contracts, which generally do not exceed two years. Upon final settlement, actual costs incurred are recovered, and actual income earned is refunded through the energy cost recovery clause.

(g) Other cost of removal obligations are recorded and deferred income tax liabilities are amortized over the related property lives, which may range up to 80 years. Cost of removal liabilities will be settled and trued up following completion of the related activities.

(h) Comprised of several components including energy efficiency programs, unamortized bond issuance costs and financial instrument-hedging liabilities which are recovered or amortized as approved by the applicable state regulatory agencies over periods generally not exceeding a range of four years to 20 years, except for financial hedging-instruments. Financial instrument-hedging liabilities are recorded over the life of the underlying hedged purchase contracts, which generally do not exceed two years. Upon final settlement, actual costs incurred are recovered, and actual income earned is refunded through the energy cost recovery clause.

(i) Includes excess deferred income tax liabilities not subject to normalization as a result of the Tax Reform Legislation, the recovery and amortization of which will be determined by the applicable state regulatory agencies. See Note 3 under "Regulatory Matters" and Note 5 for additional details.

Property Plant and Equipment

.

The Company's property, plant, and equipment in service consisted of the following at December 31:

	2017		2016
	(in millions)
Utility plant in service	$	13,079	$	11,996
Information technology equipment and software	366		324
Storage facilities	1,599		1,463
Other	789		725
Total other plant in service	2,754		2,512
Total plant in service	$	15,833	$	14,508

Schedule of Finite-Lived and Infinite-Lived Intangible Assets

Goodwill and other intangible assets consisted of the following:

		At December 31, 2017
	Estimated Useful Life	Gross Carrying Amount		Accumulated Amortization			Other Intangible Assets, Net
		(in millions)
Other intangible assets subject to amortization:
Gas marketing services
Customer relationships	11-16 years	$	221	$	(77	)	$	144
Trade names	10-28 years	115		(9		)	106
Wholesale gas services
Storage and transportation contracts	1-5 years	64		(34		)	30
Total intangible assets subject to amortization		$	400	$	(120	)	$	280
Goodwill:
Gas distribution operations		$	4,702	$	—		$	4,702
Gas marketing services		1,265		—			1,265
Total goodwill		$	5,967	$	—		$	5,967

		At December 31, 2016
	Estimated Useful Life	Gross Carrying Amount		Accumulated Amortization			Other Intangible Assets, Net
		(in millions)
Other intangible assets subject to amortization:
Gas marketing services
Customer relationships	11-16 years	$	221	$	(30	)	$	191
Trade names	10-28 years	115		(2		)	113
Wholesale gas services
Storage and transportation contracts	1-5 years	64		(2		)	62
Total intangible assets subject to amortization		$	400	$	(34	)	$	366
Goodwill:
Gas distribution operations		$	4,702	$	—		$	4,702
Gas marketing services		1,265		—			1,265
Total goodwill		$	5,967	$	—		$	5,967

Future Amortization Expense for Intangible Assets

As of December 31, 2017, the estimated amortization associated with other intangible assets is as follows:

	Amortization
	(in millions)
2018	$	58
2019	40
2020	28
2021	21
2022	17

Future Amortization Expense for Intangible Liabilities

The estimated amortization associated with the intangible liabilities that will be recorded in natural gas revenues is as follows:

	Amortization
	(in millions)
2018	$	24
2019	17

Schedule of Inventory, Lower of Cost or Market Adjustment

For any declines considered to be other than temporary, the Company recorded the following LOCOM adjustments to cost of natural gas to reduce the value of its natural gas inventories to market value.

	Successor				Predecessor
	2017		July 1, 2016 to December 31, 2016		January 1, 2016 to June 30, 2016		2015
	(in millions)				(in millions)
Gas marketing services	$	—	$	—	$	—	$	3
Wholesale gas services	2		1		3		19
All other	—		—		—		1
Total LOCOM adjustments	$	2	$	1	$	3	$	23

Composite AFUDC Rates | SOUTHERN Co GAS

Summary of Significant Accounting Policies [Line Items]

Property Plant and Equipment

The Company's AFUDC composite rates are as follows:

	Successor				Predecessor
	Year ended December 31, 2017		July 1, 2016 through December 31, 2016		January 1, 2016 through June 30, 2016		Year ended December 31, 2015
Atlanta Gas Light	8.10	%	4.05	%	4.05	%	8.10	%
Chattanooga Gas	7.41		3.71		3.71		7.41
Elizabethtown Gas(*)	1.56		0.84		0.84		1.69
Nicor Gas(*)	1.22		1.50		1.50		0.82

(*) Variable rate is determined by the FERC method of AFUDC accounting.