FAIR VALUE MEASUREMENTS

As of March 31, 2015, assets and liabilities measured at fair value on a recurring basis during the period, together with the level of the fair value hierarchy in which they fall, were as follows:



	Fair Value Measurements Using
As of March 31, 2015:	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(in millions)
Southern Company
Assets:
Energy-related derivatives	$	—	$	7	$	—	$	7
Interest rate derivatives	—		8		—		8
Nuclear decommissioning trusts^(a)	632		937		4		1,573
Cash equivalents	863		—		—		863
Other investments	9		—		1		10
Total	$	1,504	$	952	$	5	$	2,461
Liabilities:
Energy-related derivatives	$	—	$	225	$	—	$	225
Interest rate derivatives	—		46		—		46
Total	$	—	$	271	$	—	$	271

Alabama Power
Assets:
Energy-related derivatives	$	—	$	1	$	—	$	1
Nuclear decommissioning trusts^(b)
Domestic equity	393		90		—		483
Foreign equity	36		65		—		101
U.S. Treasury and government agency securities	—		34		—		34
Corporate bonds	10		113		—		123
Mortgage and asset backed securities	—		18		—		18
Other	—		6		4		10
Cash equivalents	287		—		—		287
Total	$	726	$	327	$	4	$	1,057
Liabilities:
Energy-related derivatives	$	—	$	59	$	—	$	59
Interest rate derivatives	—		14		—		14
Total	$	—	$	73	$	—	$	73



	Fair Value Measurements Using
As of March 31, 2015:	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(in millions)
Georgia Power
Assets:
Energy-related derivatives	$	—	$	6	$	—	$	6
Interest rate derivatives	—		6		—		6
Nuclear decommissioning trusts^{(b) (c)}
Domestic equity	182		2		—		184
Foreign equity	—		126		—		126
U.S. Treasury and government agency securities	—		86		—		86
Municipal bonds	—		92		—		92
Corporate bonds	—		192		—		192
Mortgage and asset backed securities	—		107		—		107
Other	11		6		—		17
Cash equivalents	406		—		—		406
Total	$	599	$	623	$	—	$	1,222
Liabilities:
Energy-related derivatives	$	—	$	24	$	—	$	24
Interest rate derivatives	—		31		—		31
Total	$	—	$	55	$	—	$	55

Gulf Power
Assets:
Cash equivalents	$	18	$	—	$	—	$	18
Liabilities:
Energy-related derivatives	—		90		—		90

Mississippi Power
Assets:
Cash equivalents	$	110	$	—	$	—	$	110
Liabilities:
Energy-related derivatives	—		52		—		52

Southern Power
Assets:
Cash equivalents	$	3	$	—	$	—	$	3


(a)	For additional detail, see the nuclear decommissioning trusts sections for Alabama Power and Georgia Power in this table.


(b)	Excludes receivables related to investment income, pending investment sales, payables related to pending investment purchases, and currencies.


(c)	Includes the investment securities pledged to creditors and collateral received and excludes payables related to the securities lending program. As of March 31, 2015, approximately $50 million of the fair market value of Georgia Power's nuclear decommissioning trust funds' securities were on loan and pledged to creditors under the funds' managers' securities lending program.

Valuation Methodologies

The energy-related derivatives primarily consist of over-the-counter financial products for natural gas and physical power products, including, from time to time, basis swaps. These are standard products used within the energy industry and are valued using the market approach. The inputs used are mainly from observable market sources, such as forward natural gas prices, power prices, implied volatility, and overnight index swap interest rates. Interest rate derivatives are also standard over-the-counter financial products valued using the market approach. Inputs for interest rate derivatives include LIBOR interest rates, interest rate futures contracts, and occasionally, implied volatility of interest rate options. See Note (H) herein for additional information on how these derivatives are used.

For fair value measurements of the investments within the nuclear decommissioning trusts, external pricing vendors are designated for each asset class with each security specifically assigned a primary pricing source. For investments held within commingled funds, fair value is determined at the end of each business day through the net asset value, which is established by obtaining the underlying securities' individual prices from the primary pricing source. A market price secured from the primary source vendor is then evaluated by management in its valuation of the assets within the trusts. As a general approach, fixed income market pricing vendors gather market data (including indices and market research reports) and integrate relative credit information, observed market movements, and sector news into proprietary pricing models, pricing systems, and mathematical tools. Dealer quotes and other market information, including live trading levels and pricing analysts' judgment, are also obtained when available.

Investments in private equity and real estate within Alabama Power's nuclear decommissioning trusts are generally classified as Level 3, as the underlying assets typically do not have observable inputs. The fund manager values these assets using various inputs and techniques depending on the nature of the underlying investments. The fair value of partnerships is determined by aggregating the value of the underlying assets.

"Other investments" include investments that are not traded in the open market. The fair value of these investments have been determined based on market factors including comparable multiples and the expectations regarding cash flows and business plan executions.

As of March 31, 2015, the fair value measurements of investments calculated at net asset value per share (or its equivalent), as well as the nature and risks of those investments, were as follows:



As of March 31, 2015:	Fair Value		Unfunded Commitments	Redemption Frequency	Redemption Notice Period
	(in millions)
Southern Company
Nuclear decommissioning trusts:
Foreign equity funds	$	126	None	Monthly	5 days
Equity - commingled funds	65		None	Daily/Monthly	Daily/7 days
Debt - commingled funds	16		None	Daily	5 days
Other - commingled funds	6		None	Daily	Not applicable
Other - money market funds	11		None	Daily	Not applicable
Trust-owned life insurance	118		None	Daily	15 days
Cash equivalents:
Money market funds	863		None	Daily	Not applicable
Alabama Power
Nuclear decommissioning trusts:
Equity - commingled funds	$	65	None	Daily/Monthly	Daily/7 days
Debt - commingled funds	16		None	Daily	5 days
Trust-owned life insurance	118		None	Daily	15 days
Cash equivalents:
Money market funds	287		None	Daily	Not applicable
Georgia Power
Nuclear decommissioning trusts:
Foreign equity funds	$	126	None	Monthly	5 days
Other - commingled funds	6		None	Daily	Not applicable
Other - money market funds	11		None	Daily	Not applicable
Cash equivalents:
Money market funds	406		None	Daily	Not applicable
Gulf Power
Cash equivalents:
Money market funds	$	18	None	Daily	Not applicable
Mississippi Power
Cash equivalents:
Money market funds	$	110	None	Daily	Not applicable
Southern Power
Cash equivalents:
Money market funds	$	3	None	Daily	Not applicable

The NRC requires licensees of commissioned nuclear power reactors to establish a plan for providing reasonable assurance of funds for future decommissioning. Alabama Power and Georgia Power have external trust funds (the Funds) to comply with the NRC's regulations. The foreign equity fund in Georgia Power's nuclear decommissioning trusts seeks to provide long-term capital appreciation. In pursuing this investment objective, the foreign equity fund primarily invests in a diversified portfolio of equity securities of foreign companies, including those in emerging markets. These equity securities may include, but are not limited to, common stocks, preferred stocks, real estate investment trusts, convertible securities, depositary receipts (including American depositary receipts, European depositary receipts, and global depositary receipts), and rights and warrants to buy common stocks. Georgia Power may withdraw all or a portion of its investment on the last business day of each month subject to a minimum withdrawal of $1 million, provided that a minimum investment of $10 million remains. If notices of withdrawal exceed 20% of the aggregate value of the foreign equity fund, then the foreign equity fund's board may refuse to permit the withdrawal of all such investments and may scale down the amounts to be withdrawn pro rata and may further determine that any withdrawal that has been postponed will have priority on the subsequent withdrawal date.

The other-commingled funds and other-money market funds in Georgia Power's nuclear decommissioning trusts are invested primarily in a diversified portfolio of high-quality, short-term, liquid debt securities. The funds represent cash collateral received under the Funds' managers' securities lending program and/or excess cash held within each separate investment account. The primary objective of the funds is to provide a high level of current income consistent with stability of principal and liquidity. The funds invest primarily in, but not limited to, commercial paper, floating and variable rate demand notes, debt securities issued or guaranteed by the U.S. government or its agencies or instrumentalities, time deposits, repurchase agreements, municipal obligations, notes, and other high-quality short-term liquid debt securities that mature in 90 days or less. Redemptions are available on a same day basis up to the full amount of the investment in the fund. See Note 1 to the financial statements of Southern Company and Georgia Power under "Nuclear Decommissioning" in Item 8 of the Form 10-K for additional information.

Alabama Power's nuclear decommissioning trusts include investments in Trust-Owned Life Insurance (TOLI). The taxable nuclear decommissioning trusts invest in the TOLI in order to minimize the impact of taxes on the portfolios and can draw on the value of the TOLI through death proceeds, loans against the cash surrender value, and/or the cash surrender value, subject to legal restrictions. The amounts reported in the table above reflect the fair value of investments the insurer has made in relation to the TOLI agreements. The nuclear decommissioning trusts do not own the underlying investments, but the fair value of the investments approximates the cash surrender value of the TOLI policies. The investments made by the insurer are in commingled funds. These commingled funds, along with other equity and debt commingled funds held in Alabama Power's nuclear decommissioning trusts, primarily include investments in domestic and international equity securities and predominantly high-quality fixed income securities. These fixed income securities may include U.S. Treasury and government agency fixed income securities, non-U.S. government and agency fixed income securities, domestic and foreign corporate fixed income securities, and mortgage and asset backed securities. The passively managed funds seek to replicate the performance of a related index. The actively managed funds seek to exceed the performance of a related index through security analysis and selection. See Note 1 to the financial statements of Southern Company and Alabama Power under "Nuclear Decommissioning" in Item 8 of the Form 10-K for additional information.

Southern Company, Alabama Power, and Georgia Power continue to elect the option to fair value investment securities held in the nuclear decommissioning trust funds. For the three months ended March 31, 2015, the change in fair value of the funds, including reinvested interest and dividends reduced by the funds' expenses, increased by $65 million at Southern Company. For the three months ended March 31, 2015, Alabama Power recorded an increase in fair value of $47 million as an increase in regulatory liabilities. Georgia Power recorded an increase in fair value of $18 million as a reduction of its regulatory asset related to its ARO.

The money market funds are short-term investments of excess funds in various money market mutual funds, which are portfolios of short-term debt securities. The money market funds are regulated by the SEC and typically receive the highest rating from credit rating agencies. Regulatory and rating agency requirements for money market funds include minimum credit ratings and maximum maturities for individual securities and a maximum weighted average portfolio maturity. Redemptions are available on a same day basis up to the full amount of the investment in the money market funds.

As of March 31, 2015, other financial instruments for which the carrying amount did not equal fair value were as follows:



	Carrying Amount		Fair Value
	(in millions)
Long-term debt:
Southern Company	$	24,241	$	26,350
Alabama Power	$	6,922	$	7,696
Georgia Power	$	9,801	$	10,733
Gulf Power	$	1,370	$	1,501
Mississippi Power	$	2,251	$	2,323
Southern Power	$	1,621	$	1,789

The fair values are determined using Level 2 measurements and are based on quoted market prices for the same or similar issues or on the current rates offered to Southern Company, Alabama Power, Georgia Power, Gulf Power, Mississippi Power, and Southern Power.