Consolidated Entities and Equity Method Investments

3 Months Ended

Mar. 31, 2024

Consolidated Entities and Equity Method Investments

CONSOLIDATED ENTITIES AND EQUITY METHOD INVESTMENTS

See Note 7 to the financial statements in Item 8 of the Form 10-K for additional information.

Southern Company

At March 31, 2024 and December 31, 2023, Southern Holdings had equity method investments totaling $128 million and $126 million, respectively, primarily related to investments in venture capital funds focused on energy and utility investments. Earnings from these investments were immaterial for both periods presented.

Southern Power

Variable Interest Entities

Southern Power has certain subsidiaries that are determined to be VIEs. Southern Power is considered the primary beneficiary of these VIEs because it controls the most significant activities of the VIEs, including operating and maintaining the respective assets, and has the obligation to absorb expected losses of these VIEs to the extent of its equity interests.

SP Solar and SP Wind

At March 31, 2024 and December 31, 2023, SP Solar had total assets of $5.6 billion, total liabilities of $407 million and $399 million, respectively, and noncontrolling interests of $1.0 billion. Cash distributions from SP Solar are allocated 67% to Southern Power and 33% to the limited partner in accordance with their partnership interest percentage. Under the terms of the limited partnership agreement, distributions without limited partner consent are limited to available cash and SP Solar is obligated to distribute all such available cash to its partners each quarter. Available cash includes all cash generated in the quarter subject to the maintenance of appropriate operating reserves.

At March 31, 2024 and December 31, 2023, SP Wind had total assets of $2.1 billion, total liabilities of $196 million and $187 million, respectively, and noncontrolling interests of $37 million and $38 million, respectively. Under the terms of the limited liability agreement, distributions without Class A member consent are limited to available cash and SP Wind is obligated to distribute all such available cash to its members each quarter. Available cash includes all cash generated in the quarter subject to the maintenance of appropriate operating reserves. Cash distributions from SP Wind are generally allocated 60% to Southern Power and 40% to the three financial investors in accordance with the limited liability agreement.

Southern Power consolidates both SP Solar and SP Wind, as the primary beneficiary, since it controls the most significant activities of each entity, including operating and maintaining their assets. Certain transfers and sales of the assets in the VIEs are subject to partner consent and the liabilities are non-recourse to the general credit of Southern Power. Liabilities consist of customary working capital items and do not include any long-term debt.

Other Variable Interest Entities

Southern Power has other consolidated VIEs that relate to certain subsidiaries that have either sold noncontrolling interests to tax equity investors or acquired less than a 100% interest from facility developers. These entities are considered VIEs because the arrangements are structured similar to a limited partnership and the noncontrolling members do not have substantive kick-out rights.

At March 31, 2024 and December 31, 2023, the other VIEs had total assets of $1.7 billion, total liabilities of $238 million and $230 million, respectively, and noncontrolling interests of $742 million and $761 million, respectively. Under the terms of the partnership agreements, distributions of all available cash are required each month or quarter and additional distributions require partner consent.

Southern Company Gas

Equity Method Investments

The carrying amounts of Southern Company Gas' equity method investments at March 31, 2024 and December 31, 2023 and related earnings from those investments for the three months ended March 31, 2024 and 2023 were as follows:


Investment Balance	March 31, 2024		December 31, 2023
	(in millions)
SNG	$	1,227	$	1,202
Other	33		33
Total	$	1,260	$	1,235


	Three Months Ended March 31,
Earnings from Equity Method Investments		2024		2023
		(in millions)
SNG		$	44	$	44
Other		—		1
Total		$	44	$	45