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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Details of income tax provisions are as follows:



	2012		2011		2010
	(in millions)
Federal —
Current	$	177	$	57	$	42
Deferred	1,011		1,035		898
	1,188		1,092		940
State —
Current	61		8		(54		)
Deferred	85		119		140
	146		127		86
Total	$	1,334	$	1,219	$	1,026

Tax effects between the carrying amounts of assets and liabilities

The tax effects of temporary differences between the carrying amounts of assets and liabilities in the financial statements and their respective tax bases, which give rise to deferred tax assets and liabilities, are as follows:



	2012			2011
	(in millions)
Deferred tax liabilities —
Accelerated depreciation	$	9,022		$	7,882
Property basis differences	1,254			1,256
Leveraged lease basis differences	278			277
Employee benefit obligations	536			499
Under recovered fuel clause	16			82
Premium on reacquired debt	84			111
Regulatory assets associated with employee benefit obligations	988			1,198
Regulatory assets associated with asset retirement obligations	1,108			546
Other	333			276
Total	13,619			12,127
Deferred tax assets —
Federal effect of state deferred taxes	394			393
Employee benefit obligations	1,678			1,594
Over recovered fuel clause	135			33
Other property basis differences	134			134
Deferred costs	39			55
Cost of removal	29			40
Tax credit carryforward	256			129
Unbilled revenue	101			110
Other comprehensive losses	84			81
Asset retirement obligations	720			546
Other	362			358
Total	3,932			3,473
Total deferred tax liabilities, net	9,687			8,654
Portion included in prepaid expenses (accrued income taxes), net	237			125
Deferred state tax assets	68			86
Valuation allowance	(54		)	(56		)
Accumulated deferred income taxes	$	9,938		$	8,809

Reconciliation of federal statutory income tax rate to effective income tax rate

A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:



	2012		2011		2010
Federal statutory rate	35.0	%	35.0	%	35.0	%
State income tax, net of federal deduction	2.5		2.4		1.8
Employee stock plans dividend deduction	(1.0	)	(1.1	)	(1.2	)
Non-deductible book depreciation	0.9		0.7		0.8
Difference in prior years' deferred and current tax rate	(0.1	)	(0.1	)	(0.1	)
AFUDC-Equity	(1.3	)	(1.5	)	(2.2	)
ITC basis difference	(0.3	)	(0.2	)	(0.4	)
Other	(0.1	)	(0.2	)	(0.2	)
Effective income tax rate	35.6	%	35.0	%	33.5	%

Changes in unrecognized tax benefits

Changes during the year in unrecognized tax benefits were as follows:



	2012			2011			2010
	(in millions)
Unrecognized tax benefits at beginning of year	$	120		$	296		$	199
Tax positions from current periods	13			46			62
Tax positions increase from prior periods	7			1			62
Tax positions decrease from prior periods	(56		)	(111		)	(27		)
Reductions due to settlements	(10		)	(112		)	—
Reductions due to expired statute of limitations	(4		)	—			—
Balance at end of year	$	70		$	120		$	296

Impact on effective tax rate

The impact on Southern Company's effective tax rate, if recognized, was as follows:



	2012		2011		2010
	(in millions)
Tax positions impacting the effective tax rate	$	5	$	69	$	217
Tax positions not impacting the effective tax rate	65		51		79
Balance of unrecognized tax benefits	$	70	$	120	$	296

Accrued interest for unrecognized tax benefits

Accrued interest for unrecognized tax benefits was as follows:



	2012			2011			2010
	(in millions)
Interest accrued at beginning of year	$	10		$	29		$	21
Interest reclassified due to settlements	(9		)	(24		)	—
Interest accrued during the year	—			5			8
Balance at end of year	$	1		$	10		$	29

Southern Power [Member]

Income Tax Disclosure [Line Items]

Details of income tax provisions

Details of income tax provisions are as follows:



	2012			2011			2010
	(in millions)
Federal —
Current	$	(133.1	)	$	61.6		$	4.3
Deferred	210.4			12.4			46.5
	77.3			74.0			50.8
State —
Current	(3.0		)	9.8			6.5
Deferred	18.3			(7.9		)	18.1
	15.3			1.9			24.6
Total	$	92.6		$	75.9		$	75.4

Tax effects between the carrying amounts of assets and liabilities



	2012		2011
	(in millions)
Deferred tax liabilities —
Accelerated depreciation and other property basis differences	$	632.9	$	394.8
Basis difference on asset transfers	3.1		3.3
Other	6.2		4.6
Total	642.2		402.7
Deferred tax assets —
Federal effect of state deferred taxes	25.2		18.6
Net basis difference on investment tax credits	28.6		21.8
Basis difference on asset transfers	3.9		4.9
Alternative minimum tax carryforward	1.1		1.1
Unrealized loss on interest rate swaps	15.7		19.1
Levelized capacity revenues	4.5		8.2
Other	12.7		11.1
Total	91.7		84.8
Total deferred tax liabilities, net	550.5		317.9
Portion included in current income taxes	0.2		1.9
Accumulated deferred income taxes	$	550.7	$	319.8

Reconciliation of federal statutory income tax rate to effective income tax rate

A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:



	2012		2011		2010
Federal statutory rate	35.0	%	35.0	%	35.0	%
State income tax, net of federal deduction	3.7		0.6		7.7
Amortization of ITC	(1.0	)	(0.4	)	—
ITC basis difference	(2.6	)	(3.1	)	(5.6	)
Other	(0.6	)	(0.3	)	(0.7	)
Effective income tax rate	34.5	%	31.8	%	36.4	%

Changes in unrecognized tax benefits

Changes during the year in unrecognized tax benefits were as follows:



	2012			2011			2010
	(in millions)
Unrecognized tax benefits at beginning of year	$	2.6		$	2.3		$	0.1
Tax positions from current periods	0.7			0.4			0.7
Tax positions from prior periods	(0.2		)	(0.1		)	1.5
Reductions due to settlements	(0.2		)	—			—
Balance at end of year	$	2.9		$	2.6		$	2.3

Impact on effective tax rate

The impact on the Company's effective tax rate, if recognized, was as follows:



	2012		2011		2010
	(in millions)
Tax positions impacting the effective tax rate	$	0.3	$	0.5	$	0.6
Tax positions not impacting the effective tax rate	2.6		2.1		1.7
Balance of unrecognized tax benefits	$	2.9	$	2.6	$	2.3

Accrued interest for unrecognized tax benefits

Accrued interest for unrecognized tax benefits was as follows:



	2012			2011		2010
	(in millions)
Interest accrued at beginning of year	$	0.1		$	—	$	—
Interest accrued during the year	(0.1		)	0.1		—
Balance at end of year	$	—		$	0.1	$	—

Gulf Power [Member]

Income Tax Disclosure [Line Items]

Details of income tax provisions

Details of income tax provisions are as follows:



	2012			2011			2010
	(in thousands)
Federal -
Current	$	(92,610	)	$	(1,548	)	$	(14,115	)
Deferred	161,096			56,087			77,452
	68,486			54,539			63,337
State -
Current	(2,484		)	(412		)	2,948
Deferred	13,209			7,141			5,229
	10,725			6,729			8,177
Total	$	79,211		$	61,268		$	71,514

Tax effects between the carrying amounts of assets and liabilities



	2012		2011
	(in thousands)
Deferred tax liabilities-
Accelerated depreciation	$	696,502	$	496,392
Pension and other employee benefits	28,579		25,268
Regulatory assets associated with employee benefit obligations	57,279		44,871
Regulatory assets associated with asset retirement obligations	6,502		4,345
Other	16,019		14,804
Total	804,881		585,680
Deferred tax assets-
Federal effect of state deferred taxes	20,656		16,684
Postretirement benefits	17,905		16,769
Fuel recovery clause	6,922		2,531
Pension and other employee benefits	61,939		49,116
Property reserve	13,773		13,159
Other comprehensive loss	993		1,353
Asset retirement obligations	6,502		4,345
Alternative minimum tax carryforward	938		7,151
Other	28,273		20,191
Total	157,901		131,299
Net deferred tax liabilities	646,980		454,381
Portion included in current assets (liabilities), net	1,972		4,597
Accumulated deferred income taxes	$	648,952	$	458,978

Reconciliation of federal statutory income tax rate to effective income tax rate

A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:



	2012		2011		2010
Federal statutory rate	35.0	%	35.0	%	35.0	%
State income tax, net of federal deduction	3.3		2.5		2.7
Non-deductible book depreciation	0.5		0.5		0.3
Differences in prior years' deferred and current tax rates	(0.2	)	(0.3	)	(0.3	)
AFUDC equity	(0.9	)	(2.0	)	(1.3	)
Other, net	(0.2	)	(0.2	)	(0.5	)
Effective income tax rate	37.5	%	35.5	%	35.9	%

Changes in unrecognized tax benefits

Changes during the year in unrecognized tax benefits were as follows:



	2012			2011			2010
	(in thousands)
Unrecognized tax benefits at beginning of year	$	2,892		$	3,870		$	1,639
Tax positions from current periods	2,630			540			1,027
Tax positions from prior periods	515			(1,518		)	1,204
Reductions due to settlements	(1,030		)	—			—
Balance at end of year	$	5,007		$	2,892		$	3,870

Impact on effective tax rate

The impact on the Company's effective tax rate, if recognized, was as follows:



	2012		2011		2010
	(in thousands)
Tax positions impacting the effective tax rate	$	45	$	1,804	$	1,826
Tax positions not impacting the effective tax rate	4,962		1,088		2,044
Balance of unrecognized tax benefits	$	5,007	$	2,892	$	3,870

Accrued interest for unrecognized tax benefits

Accrued interest for unrecognized tax benefits was as follows:



	2012			2011		2010
	(in thousands)
Interest accrued at beginning of year	$	283		$	210	$	90
Interest reclassified due to settlements	(283		)	—		—
Interest accrued during the year	—			73		120
Balance at end of year	$	—		$	283	$	210

Georgia Power [Member]

Income Tax Disclosure [Line Items]

Details of income tax provisions

Details of income tax provisions are as follows:



	2012		2011		2010
	(in millions)
Federal –
Current	$	273	$	106	$	147
Deferred	370		479		312
	643		585		459
State –
Current	38		19		(36		)
Deferred	7		21		30
	45		40		(6		)
Total	$	688	$	625	$	453

Tax effects between the carrying amounts of assets and liabilities



	2012		2011
	(in millions)
Deferred tax liabilities –
Accelerated depreciation	$	4,201	$	3,687
Property basis differences	757		804
Employee benefit obligations	255		257
Under-recovered fuel costs	—		56
Premium on reacquired debt	77		72
Regulatory assets associated with employee benefit obligations	536		481
Asset retirement obligations	446		299
Other	93		103
Total	6,365		5,759
Deferred tax assets –
Federal effect of state deferred taxes	142		157
Employee benefit obligations	644		585
Other property basis differences	100		106
Other deferred costs	39		55
Cost of removal obligations	29		40
State tax credit carry forward	86		52
Over-recovered fuel costs	89		—
Unbilled fuel revenue	39		45
Asset retirement obligations	446		299
Other	42		63
Total	1,656		1,402
Total deferred tax liabilities, net	4,709		4,357
Portion included in current assets/(liabilities), net	152		31
Accumulated deferred income taxes	$	4,861	$	4,388

Reconciliation of federal statutory income tax rate to effective income tax rate

A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:



	2012		2011		2010
Federal statutory rate	35.0	%	35.0	%	35.0	%
State income tax, net of federal deduction	1.6		1.5		(0.3	)
Non-deductible book depreciation	1.2		0.8		1.0
AFUDC equity	(1.0	)	(1.9	)	(3.6	)
Other	(0.1	)	(0.5	)	(0.2	)
Effective income tax rate	36.7	%	34.9	%	31.9	%

Changes in unrecognized tax benefits

Changes during the year in unrecognized tax benefits were as follows:



	2012			2011			2010
	(in millions)
Unrecognized tax benefits at beginning of year	$	47		$	237		$	181
Tax positions from current periods	3			9			52
Tax positions increase from prior periods	3			—			27
Tax positions decrease from prior periods	(19		)	(87		)	(23		)
Reductions due to settlements	(8		)	(112		)	—
Reductions due to expired statute of limitations	(3		)	—			—
Balance at end of year	$	23		$	47		$	237

Impact on effective tax rate

The impact on the Company's effective tax rate, if recognized, was as follows:



	2012		2011		2010
	(in millions)
Tax positions impacting the effective tax rate	$	—	$	28	$	202
Tax positions not impacting the effective tax rate	23		19		35
Balance of unrecognized tax benefits	$	23	$	47	$	237

Accrued interest for unrecognized tax benefits

Accrued interest for unrecognized tax benefits was as follows:



	2012			2011			2010
	(in millions)
Interest accrued at beginning of year	$	6		$	27		$	20
Interest reclassified due to settlements	(6		)	(24		)	—
Interest accrued during the year	—			3			7
Balance at end of year	$	—		$	6		$	27

Alabama Power [Member]

Income Tax Disclosure [Line Items]

Details of income tax provisions

Details of income tax provisions are as follows:



	2012		2011			2010
	(in millions)
Federal —
Current	$	262	$	20		$	52
Deferred	137		377			333
	399		397			385
State —
Current	51		(1		)	1
Deferred	27		82			77
	78		81			78
Total	$	477	$	478		$	463

Tax effects between the carrying amounts of assets and liabilities



	2012		2011
	(in millions)
Deferred tax liabilities —
Accelerated depreciation	$	2,989	$	2,820
Property basis differences	420		439
Premium on reacquired debt	36		33
Employee benefit obligations	218		217
Under recovered energy clause	16		26
Regulatory assets associated with employee benefit obligations	378		343
Regulatory assets associated with asset retirement obligations	248		233
Other	114		94
Total	4,419		4,205
Deferred tax assets —
Federal effect of state deferred taxes	194		186
State effect of federal deferred taxes	—		—
Unbilled fuel revenue	39		38
Storm reserve	34		38
Employee benefit obligations	408		373
Other comprehensive losses	19		14
Asset retirement obligations	248		233
Other	98		97
Total	1,040		979
Total deferred tax liabilities, net	3,379		3,226
Portion included in current assets (liabilities), net	25		31
Accumulated deferred income taxes	$	3,404	$	3,257

Reconciliation of federal statutory income tax rate to effective income tax rate

A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:



	2012	2011	2010
Federal statutory rate	35.0%	35.0%	35.0%
State income tax, net of federal deduction	4.1	4.3	4.2
Non-deductible book depreciation	0.9	0.8	0.8
Differences in prior years' deferred and current tax rates	(0.1)	(0.1)	(0.1)
AFUDC equity	(0.5)	(0.6)	(1.0)
Other	(0.3)	(0.4)	(0.6)
Effective income tax rate	39.1%	39.0%	38.3%

Changes in unrecognized tax benefits

Changes during the year in unrecognized tax benefits were as follows:



	2012			2011			2010
				(in millions)
Unrecognized tax benefits at beginning of year	$	32		$	43		$	6
Tax positions from current periods	5			6			6
Tax positions from prior periods	(4		)	(17		)	31
Reductions due to settlements	(2		)	—			—
Balance at end of year	$	31		$	32		$	43

Impact on effective tax rate

The impact on the Company's effective tax rate, if recognized, was as follows:



	2012		2011		2010
			(in millions)
Tax positions impacting the effective tax rate	$	—	$	5	$	6
Tax positions not impacting the effective tax rate	31		27		37
Balance of unrecognized tax benefits	$	31	$	32	$	43

Accrued interest for unrecognized tax benefits

Accrued interest for unrecognized tax benefits was as follows:



	2012			2011		2010
				(in millions)
Interest accrued at beginning of year	$	1.9		$	1.5	$	0.3
Interest reclassified due to settlements	(1.9		)	—		—
Interest accrued during the year	—			0.4		1.2
Balance at end of year	$	—		$	1.9	$	1.5

Mississippi Power [Member]

Income Tax Disclosure [Line Items]

Details of income tax provisions

Details of income tax provisions are as follows:



	2012		2011			2010
	(in thousands)
Federal —
Current	$	1,212	$	(27,099	)	$	5,399
Deferred	42,929		65,206			35,367
	44,141		38,107			40,766
State —
Current	1,656		(2,473		)	3,319
Deferred	4,594		6,559			2,190
	6,250		4,086			5,509
Total	$	50,391	$	42,193		$	46,275

Tax effects between the carrying amounts of assets and liabilities



	2012		2011
	(in thousands)
Deferred tax liabilities —
Accelerated depreciation	$	385,899	$	356,857
Property basis differences	72,451		48,268
Energy cost management clause under recovered	9,492		7,880
Regulatory assets associated with asset retirement obligations	16,851		7,557
Pensions and other benefits	33,756		18,283
Regulatory assets associated with employee benefit obligations	68,717		52,410
Regulatory assets associated with the Kemper IGCC	10,492		4,618
Long-term service agreement	—		5,231
Rate differential	27,270		8,400
Other	33,886		23,802
Total	658,814		533,306
Deferred tax assets —
Federal effect of state deferred taxes	9,097		10,899
Fuel clause over recovered	38,955		30,050
Other property basis differences	980		2,918
Pension and other benefits	87,416		70,255
Property insurance	23,171		25,349
Premium on long-term debt	26,778		29,820
Unbilled fuel	11,642		14,951
Long-term service agreement	5,544		—
Asset retirement obligations	16,851		7,557
Interest rate hedges	5,644		5,763
Investment tax credit carryforward	170,938		77,400
Other	22,820		21,571
Total	419,836		296,533
Total deferred tax liabilities, net	238,978		236,773
Portion included in (accrued) prepaid income taxes, net	35,815		33,624
Accumulated deferred income taxes	$	274,793	$	270,397

Reconciliation of federal statutory income tax rate to effective income tax rate

A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:



	2012		2011		2010
Federal statutory rate	35.0	%	35.0	%	35.0	%
State income tax, net of federal deduction	2.0		1.9		2.8
Non-deductible book depreciation	0.2		0.3		0.3
Medicare subsidy	(0.1	)	(0.1	)	(0.2	)
AFUDC-equity	(11.3	)	(6.3	)	(1.0	)
Other	(0.7	)	(0.2	)	(0.8	)
Effective income tax rate	25.1	%	30.6	%	36.1	%

Changes in unrecognized tax benefits

Changes during the year in unrecognized tax benefits were as follows:



	2012			2011			2010
	(in thousands)
Unrecognized tax benefits at beginning of year	$	4,964		$	4,288		$	3,026
Tax positions from current periods	1,186			1,486			868
Tax positions from prior periods	(26		)	(810		)	611
Reductions due to expired statute of limitations	—			—			(217		)
Settlements with taxing authorities	(369		)	—			—
Balance at end of year	$	5,755		$	4,964		$	4,288

Impact on effective tax rate

The impact on the Company's effective tax rate, if recognized, was as follows:



	2012		2011		2010
	(in thousands)
Tax positions impacting the effective tax rate	$	3,656	$	4,144	$	3,058
Tax positions not impacting the effective tax rate	2,099		820		1,230
Balance of unrecognized tax benefits	$	5,755	$	4,964	$	4,288

Accrued interest for unrecognized tax benefits

Accrued interest for unrecognized tax benefits was as follows:



	2012		2011		2010
	(in thousands)
Interest accrued at beginning of year	$	680	$	413	$	230
Interest accrued during the year	92		267		183
Balance at end of year	$	772	$	680	$	413

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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