Weighted average rates assumed in actuarial calculations used to determine both benefit obligations as of measurement date and net periodic costs for pension and other postretirement benefit plans

The weighted average rates assumed in the actuarial calculations used to determine both the net periodic costs for the pension and other postretirement benefit plans for the following year and the benefit obligations as of the measurement date are presented below.



Assumptions used to determine net periodic costs:	2016		2015		2014
Pension plans
Discount rate – benefit obligations	4.58	%	4.17	%	5.02	%
Discount rate – interest costs	3.88		4.17		5.02
Discount rate – service costs	4.98		4.48		5.02
Expected long-term return on plan assets	8.16		8.20		8.20
Annual salary increase	4.37		3.59		3.59
Other postretirement benefit plans
Discount rate – benefit obligations	4.38	%	4.04	%	4.85	%
Discount rate – interest costs	3.66		4.04		4.85
Discount rate – service costs	4.85		4.39		4.85
Expected long-term return on plan assets	6.66		6.97		7.15
Annual salary increase	4.37		3.59		3.59



Assumptions used to determine benefit obligations:	2016		2015
Pension plans
Discount rate	4.40	%	4.67	%
Annual salary increase	4.37		4.46
Other postretirement benefit plans
Discount rate	4.23	%	4.51	%
Annual salary increase	4.37		4.46

Effect of 1% annual increase or decrease in assumed medical care cost on APBO and service and interest cost components

The weighted average medical care cost trend rates used in measuring the APBO as of December 31, 2016 were as follows:



	Initial Cost Trend Rate		Ultimate Cost Trend Rate		Year That Ultimate Rate is Reached
Pre-65	6.50	%	4.50	%	2025
Post-65 medical	5.00		4.50		2025
Post-65 prescription	10.00		4.50		2025

An annual increase or decrease in the assumed medical care cost trend rate of 1% would affect the APBO and the service and interest cost components at December 31, 2016 as follows:



	1 Percent Increase		1 Percent Decrease
	(in millions)
Benefit obligation	$	128	$	110
Service and interest costs	4		3

Changes in projected benefit obligations and fair value of plan assets

Changes in the projected benefit obligations and the fair value of plan assets during the plan years ended December 31, 2016 and 2015 were as follows:



	2016			2015
	(in millions)
Change in benefit obligation
Benefit obligation at beginning of year	$	10,542		$	10,909
Acquisitions	1,244			—
Service cost	262			257
Interest cost	422			445
Benefits paid	(466		)	(487		)
Actuarial (gain) loss	381			(582		)
Balance at end of year	12,385			10,542
Change in plan assets
Fair value of plan assets at beginning of year	9,234			9,690
Acquisitions	837			—
Actual return (loss) on plan assets	902			(14		)
Employer contributions	1,076			45
Benefits paid	(466		)	(487		)
Fair value of plan assets at end of year	11,583			9,234
Accrued liability	$	(802	)	$	(1,308	)

Schedule of amounts recognized in other comprehensive income (loss)

The components of OCI, along with the changes in the balance of net regulatory assets (liabilities), related to the other postretirement benefit plans for the plan years ended December 31, 2016 and 2015 are presented in the following table:



	Accumulated OCI			Net Regulatory Assets (Liabilities)
	(in millions)
Balance at December 31, 2014	$	8		$	366
Net (gain) loss	—			33
Change in prior service costs	—			33
Reclassification adjustments:
Amortization of prior service costs	—			(4		)
Amortization of net gain (loss)	—			(17		)
Total reclassification adjustments	—			(21		)
Total change	—			45
Balance at December 31, 2015	$	8		$	411
Net (gain) loss	(1		)	(13		)
Reclassification adjustments:
Amortization of prior service costs	—			(6		)
Amortization of net gain (loss)	—			(14		)
Total reclassification adjustments	—			(20		)
Total change	(1		)	(33		)
Balance at December 31, 2016	$	7		$	378

Presented below are the amounts included in accumulated OCI and regulatory assets at December 31, 2016 and 2015 related to the defined benefit pension plans that had not yet been recognized in net periodic pension cost along with the estimated amortization of such amounts for 2017.



	Prior Service Cost		Net (Gain) Loss
	(in millions)
Balance at December 31, 2016:
Accumulated OCI	$	4	$	96
Regulatory assets	51		3,069
Total	$	55	$	3,165
Balance at December 31, 2015:
Accumulated OCI	$	3	$	122
Regulatory assets	27		2,971
Total	$	30	$	3,093
Estimated amortization in net periodic pension cost in 2017:
Accumulated OCI	$	1	$	7
Regulatory assets	11		155
Total	$	12	$	162

Components of other comprehensive income along with changes in balances of regulatory assets and regulatory liabilities related to defined benefit pension plans

The components of OCI and the changes in the balance of regulatory assets related to the defined benefit pension plans for the years ended December 31, 2016 and 2015 are presented in the following table:



	Accumulated OCI			Regulatory Assets
	(in millions)
Balance at December 31, 2014	$	134		$	3,073
Net (gain) loss	1			155
Reclassification adjustments:
Amortization of prior service costs	(1		)	(24		)
Amortization of net gain (loss)	(9		)	(206		)
Total reclassification adjustments	(10		)	(230		)
Total change	(9		)	(75		)
Balance at December 31, 2015	$	125		$	2,998
Net (gain) loss	(20		)	243
Change in prior service costs	2			37
Reclassification adjustments:
Amortization of prior service costs	(1		)	(13		)
Amortization of net gain (loss)	(6		)	(145		)
Total reclassification adjustments	(7		)	(158		)
Total change	(25		)	122
Balance at December 31, 2016	$	100		$	3,120

Changes in the accumulated postretirement benefit obligations (APBO) and in fair value of plan assets

At December 31, 2016, estimated benefit payments were as follows:



	Benefit Payments
	(in millions)
2017	$	571
2018	593
2019	620
2020	646
2021	666
2022 to 2026	3,673

Changes in the APBO and in the fair value of plan assets during the plan years ended December 31, 2016 and 2015 were as follows:



	2016			2015
	(in millions)
Change in benefit obligation
Benefit obligation at beginning of year	$	1,989		$	1,986
Acquisitions	338			—
Service cost	22			23
Interest cost	76			78
Benefits paid	(119		)	(102		)
Actuarial (gain) loss	(16		)	(38		)
Plan amendments	—			34
Retiree drug subsidy	7			8
Balance at end of year	2,297			1,989
Change in plan assets
Fair value of plan assets at beginning of year	833			900
Acquisitions	100			—
Actual return (loss) on plan assets	58			(12		)
Employer contributions	65			39
Benefits paid	(112		)	(94		)
Fair value of plan assets at end of year	944			833
Accrued liability	$	(1,353	)	$	(1,156	)

Amounts included in accumulated other comprehensive income and regulatory assets related to other postretirement benefit plans

Presented below are the amounts included in accumulated OCI and net regulatory assets (liabilities) at December 31, 2016 and 2015 related to the other postretirement benefit plans that had not yet been recognized in net periodic other postretirement benefit cost along with the estimated amortization of such amounts for 2017.



	Prior Service Cost		Net (Gain) Loss
	(in millions)
Balance at December 31, 2016:
Accumulated OCI	$	—	$	7
Net regulatory assets	25		353
Total	$	25	$	360
Balance at December 31, 2015:
Accumulated OCI	$	—	$	8
Net regulatory assets	32		379
Total	$	32	$	387
Estimated amortization as net periodic postretirement benefit cost in 2017:
Net regulatory assets	$	6	$	13

Summary of estimation of future benefit payments and subsidy receipts based on assumptions used to measure accumulated benefit obligation for postretirement plans

Estimated benefit payments are reduced by drug subsidy receipts expected as a result of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 as follows:



	Benefit Payments		Subsidy Receipts			Total
	(in millions)
2017	$	145	$	(10	)	$	135
2018	150		(11		)	139
2019	155		(12		)	143
2020	159		(13		)	146
2021	162		(14		)	148
2022 to 2026	823		(73		)	750

Pension plans

Amounts recognized in balance sheets related to benefit plans

Amounts recognized in the balance sheets at December 31, 2016 and 2015 related to the Company's pension plans consist of the following:



	2016			2015
	(in millions)
Other regulatory assets, deferred	$	3,207		$	2,998
Other current liabilities	(53		)	(46		)
Employee benefit obligations	(749		)	(1,262		)
Other regulatory liabilities, deferred	(87		)	—
Accumulated OCI	100			125

Other postretirement benefit plans

Components of net periodic pension cost were as follows:



	2016			2015			2014
	(in millions)
Service cost	$	262		$	257		$	213
Interest cost	422			445			435
Expected return on plan assets	(782		)	(724		)	(645		)
Recognized net (gain) loss	150			215			110
Net amortization	14			25			26
Net periodic pension cost	$	66		$	218		$	139

Amounts recognized in balance sheets related to benefit plans

Amounts recognized in the balance sheets at December 31, 2016 and 2015 related to the Company's other postretirement benefit plans consist of the following:



	2016			2015
	(in millions)
Other regulatory assets, deferred	$	419		$	433
Other current liabilities	(4		)	(4		)
Employee benefit obligations	(1,349		)	(1,152		)
Other regulatory liabilities, deferred	(41		)	(22		)
Accumulated OCI	7			8

Components of the other postretirement benefit plans' net periodic cost were as follows:



	2016			2015			2014
	(in millions)
Service cost	$	22		$	23		$	21
Interest cost	76			78			79
Expected return on plan assets	(60		)	(58		)	(59		)
Net amortization	21			21			6
Net periodic postretirement benefit cost	$	59		$	64		$	47

Southern Company Gas [Member]

The fair values of Southern Company's (excluding Southern Company Gas) other postretirement benefit plan assets as of December 31, 2016 and 2015 are presented below. These fair value measurements exclude cash, receivables related to investment income, pending investment sales, and payables related to pending investment purchases.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Net Asset Value as a Practical Expedient		Total		Target Allocation		Actual Allocation
As of December 31, 2016:	(Level 1)		(Level 2)		(Level 3)		(NAV)
	(in millions)
Assets:
Domestic equity^(*)	$	118	$	28	$	—	$	—	$	146	39	%	40	%
International equity^(*)	37		61		—		—		98		23		21
Fixed income:											29		31
U.S. Treasury, government, and agency bonds	—		24		—		—		24
Corporate bonds	—		30		—		—		30
Pooled funds	—		49		—		—		49
Cash equivalents and other	41		—		—		—		41
Trust-owned life insurance	—		382		—		—		382
Real estate investments	11		—		—		35		46		5		5
Special situations	—		—		—		5		5		1		1
Private equity	—		—		—		17		17		3		2
Total	$	207	$	574	$	—	$	57	$	838	100	%	100	%


(*)	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Net Asset Value as a Practical Expedient				Target Allocation		Actual Allocation
As of December 31, 2015:	(Level 1)		(Level 2)		(Level 3)		(NAV)		Total
	(in millions)
Assets:
Domestic equity^(a)	$	106	$	52	$	—	$	—	$	158	42	%	38	%
International equity^(a)	40		63		—		—		103		21		23
Fixed income:											28		30
U.S. Treasury, government, and agency bonds	—		22		—		—		22
Mortgage- and asset-backed securities	—		7		—		—		7
Corporate bonds	—		38		—		—		38
Pooled funds	—		42		—		—		42
Cash equivalents and other	11		9		—		—		20
Trust-owned life insurance	—		370		—		—		370
Real estate investments	11		—		—		40		51		5		6
Special situations^(b)	—		—		—		5		5		1		1
Private equity	—		—		—		18		18		3		2
Total	$	168	$	603	$	—	$	63	$	834	100	%	100	%


(a)	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.


(b)	The 2015 presentation above has been revised to separately reflect special situations, consistent with the 2016 presentation.

Weighted average rates assumed in actuarial calculations used to determine both benefit obligations as of measurement date and net periodic costs for pension and other postretirement benefit plans

The weighted average rates assumed in the actuarial calculations used to determine both the net periodic costs for the pension and other postretirement benefit plans for the periods presented and the benefit obligations as of the measurement date are presented below.



	Successor		Predecessor
	July 1, 2016 through December 31,		January 1, 2016 through June 30,		Years Ended December 31,
Assumptions used to determine net periodic costs:	2016		2016		2015		2014
Pension plans
Discount rate – interest costs^(a)	3.21	%	4.00	%	4.20	%	5.00	%
Discount rate – service costs^(a)	4.07		4.80		4.20		5.00
Expected long-term return on plan assets	7.75		7.80		7.80		7.80
Annual salary increase	3.50		3.70		3.70		3.70
Pension band increase^(b)	2.00		2.00		2.00		2.00
Other postretirement benefit plans
Discount rate – interest costs^(a)	2.84	%	3.60	%	4.00	%	4.70	%
Discount rate – service costs^(a)	3.96		4.70		4.00		4.70
Expected long-term return on plan assets	5.93		6.60		7.80		7.80
Annual salary increase	3.50		3.70		3.70		3.70


(a)	Effective January 1, 2016, the Company uses a spot rate approach to estimate the service cost and interest cost components. Previously, the Company estimated these components using a single weighted average discount rate.


(b)	Only applicable to Nicor Gas union employees. The pension bands for the former Nicor plan reflect the negotiated rates of 2.0% for each of 2016 and 2017, in accordance with a March 2014 union agreement.



	Successor		Predecessor
Assumptions used to determine benefit obligations:	December 31, 2016		December 31, 2015
Pension plans
Discount rate	4.39	%	4.6	%
Annual salary increase	3.50		3.7
Pension band increase^(*)	2.00		2.0
Other postretirement benefit plans
Discount rate	4.15	%	4.4	%
Annual salary increase	3.50		3.7


(*)	Only applicable to Nicor Gas union employees. The pension bands for the former Nicor plan reflect the negotiated rates of 2.0% for each of 2016 and 2017, in accordance with a March 2014 union agreement.

Effect of 1% annual increase or decrease in assumed medical care cost on APBO and service and interest cost components

The weighted average medical care cost trend rates used in measuring the APBO as of December 31, 2016 were as follows:



	Initial Cost Trend Rate		Ultimate Cost Trend Rate		Year That Ultimate Rate is Reached
Pre-65	6.60	%	4.50	%	2038
Post-65 medical	8.40		4.50		2038
Post-65 prescription	8.40		4.50		2038

An annual increase or decrease in the assumed medical care cost trend rate of 1% would affect the APBO and the service and interest cost components as follows:



	1 Percent Increase		1 Percent Decrease
	(in millions)
Successor – December 31, 2016
Benefit obligation	$	14	$	12
Service and interest costs	—		—

Changes in projected benefit obligations and fair value of plan assets

Changes in the projected benefit obligations and the fair value of plan assets for the successor period ended December 31, 2016 and for the predecessor periods ended June 30, 2016 and December 31, 2015 were as follows:



	Successor			Predecessor
	July 1, 2016 through December 31, 2016			January 1, 2016 through June 30, 2016			2015
	(in millions)			(in millions)
Change in benefit obligation
Benefit obligation at beginning of period	$	1,244		$	1,067		$	1,098
Service cost	15			13			28
Interest cost	20			21			45
Benefits paid	(31		)	(26		)	(49		)
Actuarial loss (gain)	(115		)	169			(55		)
Balance at end of period	1,133			1,244			1,067
Change in plan assets
Fair value of plan assets at beginning of period	837			847			906
Actual return (loss) on plan assets	48			15			(12		)
Employer contributions	129			1			2
Benefits paid	(31		)	(26		)	(49		)
Fair value of plan assets at end of period	983			837			847
Accrued liability	$	150		$	407		$	220

Schedule of amounts recognized in other comprehensive income (loss)

The components of OCI and the changes in the balance of regulatory assets related to the defined benefit pension plans for the successor period ended December 31, 2016 and for the predecessor periods ended June 30, 2016 and December 31, 2015 are presented in the following table:



	Accumulated OCI			Regulatory Assets
	(in millions)
Predecessor – Balance at December 31, 2014:	$	301		$	76
Net (gain) loss	—			22
Reclassification adjustments:
Amortization of prior service costs	2			—
Amortization of net loss	(21		)	(10		)
Total reclassification adjustments	(19		)	(10		)
Total change	(19		)	12
Predecessor – Balance at December 31, 2015:	$	282		$	88
Reclassification adjustments:
Amortization of prior service costs	1			—
Amortization of net loss	(9		)	(4		)
Total reclassification adjustments	(8		)	(4		)
Total change	(8		)	(4		)
Predecessor – Balance at June 30, 2016:	$	274		$	84


Successor – Balance at July 1, 2016:	$	—		$	368
Net (gain) loss	(43		)	(87		)
Reclassification adjustments:
Amortization of prior service costs	—			1
Amortization of net loss	—			(15		)
Total reclassification adjustments	—			(14		)
Total change	(43		)	(101		)
Successor – Balance at December 31, 2016:	$	(43	)	$	267

The components of OCI, along with the changes in the balance of regulatory assets (liabilities), related to the other postretirement benefit plans for the successor period ended December 31, 2016 and for the predecessor periods ended June 30, 2016 and December 31, 2015 are presented in the following table:



	Accumulated OCI			Regulatory Assets
	(in millions)
Predecessor – Balance at December 31, 2014:	$	36		$	39
Net (gain) loss	2			(8		)
Reclassification adjustments:
Amortization of prior service costs	—			2
Amortization of net loss	(2		)	(3		)
Total reclassification adjustments	(2		)	(1		)
Total change	—			(9		)
Predecessor – Balance at December 31, 2015:	$	36		$	30
Reclassification adjustments:
Amortization of prior service costs	—			1
Amortization of net loss	(1		)	(1		)
Total reclassification adjustments	(1		)	—
Total change	(1		)	—
Predecessor – Balance at June 30, 2016:	$	35		$	30


Successor – Balance at July 1, 2016:	$	—		$	77
Net (gain) loss	(3		)	(23		)
Reclassification adjustments:
Amortization of prior service costs	—			1
Amortization of net loss	—			(3		)
Total reclassification adjustments	—			(2		)
Total change	(3		)	(25		)
Successor – Balance at December 31, 2016:	$	(3	)	$	52

Changes in the accumulated postretirement benefit obligations (APBO) and in fair value of plan assets

Components of net periodic pension costs for the periods presented were as follows:



	Successor			Predecessor
	July 1, 2016 through December 31,			January 1, 2016 through June 30,			Years Ended December 31,
	2016			2016			2015			2014
	(in millions)			(in millions)
Service cost	$	15		$	13		$	28		$	24
Interest cost	20			21			45			47
Expected return on plan assets	(35		)	(33		)	(65		)	(65		)
Amortization of regulatory assets	13			—			—			—
Amortization:
Prior service costs	—			(1		)	(2		)	(2		)
Net (gain)/loss	—			13			31			22
Net periodic pension cost	$	13		$	13		$	37		$	26

Changes in the APBO and the fair value of plan assets for the successor period ended December 31, 2016 and for the predecessor periods ended June 30, 2016 and December 31, 2015 were as follows:



	Successor			Predecessor
	July 1, 2016 through December 31, 2016			January 1, 2016 through June 30, 2016			2015
	(in millions)			(in millions)
Change in benefit obligation
Benefit obligation at beginning of period	$	338		$	318		$	334
Service cost	1			1			2
Interest cost	5			5			13
Benefits paid	(11		)	(11		)	(20		)
Actuarial loss (gain)	(26		)	24			(13		)
Retiree drug subsidy	—			—			1
Employee contributions	1			1			1
Balance at end of period	308			338			318
Change in plan assets
Fair value of plan assets at beginning of period	100			99			99
Actual return (loss) on plan assets	4			1			1
Employee contributions	1			1			1
Employer contributions	11			10			17
Benefits paid	(11		)	(11		)	(20		)
Retiree drug subsidy	—			—			1
Fair value of plan assets at end of year	105			100			99
Accrued liability	$	203		$	238		$	219

Amounts included in accumulated other comprehensive income and regulatory assets related to other postretirement benefit plans



	Prior Service Cost			Net (Gain) Loss
	(in millions)
Successor – Balance at December 31, 2016:
Accumulated OCI	$	—		$	(43	)
Regulatory assets (liabilities)	(2		)	269
Total	$	(2	)	$	226

Predecessor – Balance at December 31, 2015:
Accumulated OCI	$	(4	)	$	286
Regulatory assets	—			88
Total	$	(4	)	$	374
Estimated amortization in net periodic cost in 2017:
Regulatory assets (liabilities)	$	1		$	(21	)

Presented below are the amounts included in accumulated OCI and regulatory assets at December 31, 2016 and 2015 related to the other postretirement benefit plans that had not yet been recognized in net periodic other postretirement benefit cost. The estimated amortization of such amounts for 2017 is immaterial.



	Prior Service Cost			Net (Gain) Loss
	(in millions)
Successor – Balance at December 31, 2016:
Accumulated OCI	$	—		$	(3	)
Regulatory assets (liabilities)	(12		)	64
Total	$	(12	)	$	61

Predecessor – Balance at December 31, 2015:
Accumulated OCI	$	—		$	36
Regulatory assets (liabilities)	(15		)	45
Total	$	(15	)	$	81

Southern Company Gas [Member] | Pension plans

For 2016, special situations (absolute return and hedge funds) investment assets are presented in the tables below based on the nature of the investment.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Net Asset Value as a Practical Expedient		Total
As of December 31, 2016:	(Level 1)		(Level 2)		(Level 3)		(NAV)
	(in millions)
Assets:
Domestic equity^(*)	$	3	$	58	$	—	$	—	$	61
International equity^(*)	—		18		—		—		18
Fixed income:
Pooled funds	—		23		—		—		23
Cash equivalents and other	1		—		—		2		3
Total	$	4	$	99	$	—	$	2	$	105


(*)	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.

These fair values exclude cash, receivables related to investment income and pending investment sales, and payables related to pending investment purchases.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Net Asset Value as a Practical Expedient				Target Allocation		Actual Allocation
As of December 31, 2016:	(Level 1)		(Level 2)		(Level 3)		(NAV)		Total
	(in millions)
Assets:
Domestic equity^(*)	$	2,010	$	927	$	—	$	—	$	2,937	26	%	29	%
International equity^(*)	1,231		1,110		—		—		2,341		25		22
Fixed income:											23		29
U.S. Treasury, government, and agency bonds	—		588		—		—		588
Mortgage- and asset-backed securities	—		13		—		—		13
Corporate bonds	—		991		—		—		991
Pooled funds	—		524		—		—		524
Cash equivalents and other	996		2		—		—		998
Real estate investments	310		—		—		1,152		1,462		14		13
Special situations	—		—				180		180		3		2
Private equity	—		—		—		549		549		9		5
Total	$	4,547	$	4,155	$	—	$	1,881	$	10,583	100	%	100	%


(*)	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets			Significant Other Observable Inputs		Significant Unobservable Inputs		Net Asset Value as a Practical Expedient					Target Allocation		Actual Allocation
As of December 31, 2015:	(Level 1)			(Level 2)		(Level 3)		(NAV)		Total
	(in millions)
Assets:
Domestic equity^(a)	$	1,632		$	681	$	—	$	—	$	2,313		26	%	30	%
International equity^(a)	1,190			962		—		—		2,152			25		23
Fixed income:													23		23
U.S. Treasury, government, and agency bonds	—			454		—		—		454
Mortgage- and asset-backed securities	—			199		—		—		199
Corporate bonds	—			1,140		—		—		1,140
Pooled funds	—			500		—		—		500
Cash equivalents and other	—			145		—		—		145
Real estate investments	299			—		—		1,185		1,484			14		16
Special situations^(b)	—			—		—		160		160			3		2
Private equity	—			—		—		536		536			9		6
Total	$	3,121		$	4,081	$	—	$	1,881	$	9,083		100	%	100	%
Liabilities:
Derivatives	$	(1	)	$	—	$	—	$	—	$	(1	)
Total	$	3,120		$	4,081	$	—	$	1,881	$	9,082		100	%	100	%


(a)	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.


(b)	The 2015 presentation above has been revised to separately reflect special situations, consistent with the 2016 presentation.

The fair values of Southern Company Gas' pension plan assets for the period ended December 31, 2016 are presented below. The fair value measurements exclude cash, receivables related to investment income, pending investment sales, and payables related to pending investment purchases. For 2016, special situations (absolute return and hedge funds) investment assets are presented in the tables below based on the nature of the investment.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Net Asset Value as a Practical Expedient
As of December 31, 2016:	(Level 1)		(Level 2)		(Level 3)		(NAV)		Total
	(in millions)
Assets:
Domestic equity^(*)	$	142	$	343	$	—	$	—	$	485
International equity^(*)	—		185		—		—		185
Fixed income:
U.S. Treasury, government, and agency bonds	—		85		—		—		85
Corporate bonds	—		41		—		—		41
Pooled funds	—		66		—		—		66
Cash equivalents and other	12		5		—		83		100
Real estate investments	4		—		—		15		19
Private equity	—		—		—		2		2
Total	$	158	$	725	$	—	$	100	$	983


(*)	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.

The fair values of pension plan assets as of December 31, 2016 and 2015 are presented below. These fair value measurements exclude cash, receivables related to investment income, pending investments sales, and payables related to pending investment purchases. For 2016, special situations (absolute return and hedge funds) investment assets are presented in the table below based on the nature of the investment.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Net Asset Value as a Practical Expedient
Successor – As of December 31, 2016	(Level 1)		(Level 2)		(Level 3)		(NAV)		Total
	(in millions)
Assets:
Domestic equity^(*)	$	142	$	343	$	—	$	—	$	485
International equity^(*)	—		185		—		—		185
Fixed income:
U.S. Treasury, government, and agency bonds	—		85		—		—		85
Corporate bonds	—		41		—		—		41
Pooled funds	—		66		—		—		66
Cash equivalents and other	12		5		—		83		100
Real estate investments	4		—		—		15		19
Private equity	—		—		—		2		2
Total	$	158	$	725	$	—	$	100	$	983


(*)	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.



	Predecessor – As of December 31, 2015
	Pension plans ^(a)
In millions	Level 1			Level 2			Level 3			Total			% of total
Cash	$	4		$	—		$	—		$	4		—	%
Equity securities:
U.S. large cap^(b)	$	75		$	199		$	—		$	274		32	%
U.S. small cap^(b)	57			24			—			81			9	%
International companies^(c)	—			125			—			125			15	%
Emerging markets^(d)	—			28			—			28			3	%
Total equity securities	$	132		$	376		$	—		$	508		59	%
Fixed income securities:
Corporate bonds^(e)	$	—		$	91		$	—		$	91		11	%
Other (or gov't/muni bonds)	—			151			—			151			18	%
Total fixed income securities	$	—		$	242		$	—		$	242		29	%
Other types of investments:
Global hedged equity^(f)	$	—		$	—		$	40		$	40		5	%
Absolute return^(g)	—			—			42			42			5	%
Private capital^(h)	—			—			20			20			2	%
Total other investments	$	—		$	—		$	102		$	102		12	%
Total assets at fair value	$	136		$	618		$	102		$	856		100	%
% of fair value hierarchy	16		%	72		%	12		%	100		%


(a)	Includes $9 million at December 31, 2015 of medical benefit (health and welfare) component for 401(h) accounts to fund a portion of the other retirement benefits.


(b)	Includes funds that invest primarily in U.S. common stocks.


(c)	Includes funds that invest primarily in foreign equity and equity-related securities.


(d)	Includes funds that invest primarily in common stocks of emerging markets.


(e)	Includes funds that invest primarily in investment grade debt and fixed income securities.


(f)	Includes funds that invest in limited/general partnerships, managed accounts, and other investment entities issued by non-traditional firms or "hedge funds."


(g)	Includes funds that invest primarily in investment vehicles and commodity pools as a "fund of funds."


(h)	Includes funds that invest in private equity and small buyout funds, partnership investments, direct investments, secondary investments, directly/indirectly in real estate and may invest in equity securities of real estate related companies, real estate mortgage loans, and real estate mezzanine loans.

The fair values of other postretirement benefit plan assets as of December 31, 2016 and 2015 are presented below. These fair value measurements exclude cash, receivables related to investment income, pending investments sales, and payables related to pending investment purchases. For 2016, special situations (absolute return and hedge funds) investment assets are presented in the table below based on the nature of the investment.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Net Asset Value as a Practical Expedient
Successor – As of December 31, 2016	(Level 1)		(Level 2)		(Level 3)		(NAV)		Total
	(in millions)
Assets:
Domestic equity^(*)	$	3	$	58	$	—	$	—	$	61
International equity^(*)	—		18		—		—		18
Fixed income:
Pooled funds	—		23		—		—		23
Cash equivalents and other	1		—		—		2		3
Total	$	4	$	99	$	—	$	2	$	105


(*)	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.



	Predecessor – As of December 31, 2015
	Welfare plans
In millions	Level 1			Level 2			Level 3			Total			% of total
Cash	$	1		$	—		$	—		$	1		1	%
Equity securities:
U.S. large cap^(a)	$	—		$	52		$	—		$	52		58	%
U.S. small cap^(a)	—			—			—			—			—	%
International companies^(b)	—			15			—			15			17	%
Emerging markets^(c)	—			—			—			—			—	%
Total equity securities	$	—		$	67		$	—		$	67		75	%
Fixed income securities:
Corporate bonds^(d)	$	—		$	22		$	—		$	22		24	%
Other (or gov't/muni bonds)	—			—			—			—			—	%
Total fixed income securities	$	—		$	22		$	—		$	22		24	%
Other types of investments:
Global hedged equity^(e)	$	—		$	—		$	—		$	—		—	%
Absolute return^(f)	—			—			—			—			—	%
Private capital^(g)	—			—			—			—			—	%
Total other investments	$	—		$	—		$	—		$	—		—	%
Total assets at fair value	$	1		$	89		$	—		$	90		100	%
% of fair value hierarchy	1		%	99		%	—		%	100		%


(a)	Includes funds that invest primarily in U.S. common stocks.


(b)	Includes funds that invest primarily in foreign equity and equity-related securities.


(c)	Includes funds that invest primarily in common stocks of emerging markets.


(d)	Includes funds that invest primarily in investment grade debt and fixed income securities.


(e)	Includes funds that invest in limited/general partnerships, managed accounts, and other investment entities issued by non-traditional firms or "hedge funds."


(f)	Includes funds that invest primarily in investment vehicles and commodity pools as a "fund of funds."


(g)	Includes funds that invest in private equity and small buyout funds, partnership investments, direct investments, secondary investments, directly/indirectly in real estate and may invest in equity securities of real estate related companies, real estate mortgage loans, and real estate mezzanine loans.

Amounts recognized in balance sheets related to benefit plans

Amounts recognized in the consolidated balance sheets at December 31, 2016 and 2015 related to the Company's pension plans consist of the following:



	Successor			Predecessor
	2016			2015
	(in millions)			(in millions)
Other regulatory assets, deferred	$	267		$	88
Other deferred charges and assets	58			78
Other current liabilities	(2		)	(4		)
Employee benefit obligations	(206		)	(294		)

Southern Company Gas [Member] | Other postretirement benefit plans

At December 31, 2016, estimated benefit payments were as follows:



	Benefit Payments
	(in millions)
2017	$	71
2018	72
2019	73
2020	74
2021	74
2022 to 2026	363

Amounts recognized in balance sheets related to benefit plans

Amounts recognized in the consolidated balance sheets at December 31, 2016 and 2015 related to the Company's other postretirement benefit plans consist of the following:



	Successor			Predecessor
	2016			2015
	(in millions)			(in millions)
Other regulatory assets, deferred	$	52		$	30
Employee benefit obligations	(203		)	(219		)

Components of the other postretirement benefit plans' net periodic cost for the periods presented were as follows:



	Successor			Predecessor
	July 1, 2016 through December 31,			January 1, 2016 through June 30,			Years Ended December 31,
	2016			2016			2015			2014
	(in millions)			(in millions)
Service cost	$	1		$	1		$	2		$	2
Interest cost	5			5			13			15
Expected return on plan assets	(3		)	(3		)	(7		)	(7		)
Amortization of regulatory assets	2			—			—			—
Amortization:
Prior service costs	—			(1		)	(3		)	(3		)
Net (gain)/loss	—			2			6			6
Net periodic postretirement benefit cost	$	5		$	4		$	11		$	13

Future benefit payments, including prescription drug benefits, reflect expected future service and are estimated based on assumptions used to measure the APBO for the other postretirement benefit plans. At December 31, 2016, estimated benefit payments were as follows:



	Benefit Payments
	(in millions)
2017	$	20
2018	20
2019	21
2020	22
2021	22
2022 to 2026	111

Alabama Power [Member]

Weighted average rates assumed in actuarial calculations used to determine both benefit obligations as of measurement date and net periodic costs for pension and other postretirement benefit plans



Assumptions used to determine net periodic costs:	2016		2015		2014
Pension plans
Discount rate – benefit obligations	4.67	%	4.18	%	5.02	%
Discount rate – interest costs	3.90		4.18		5.02
Discount rate – service costs	5.07		4.49		5.02
Expected long-term return on plan assets	8.20		8.20		8.20
Annual salary increase	4.46		3.59		3.59
Other postretirement benefit plans
Discount rate – benefit obligations	4.51	%	4.04	%	4.86	%
Discount rate – interest costs	3.69		4.04		4.86
Discount rate – service costs	4.96		4.40		4.86
Expected long-term return on plan assets	6.83		7.17		7.34
Annual salary increase	4.46		3.59		3.59



Assumptions used to determine benefit obligations:	2016		2015
Pension plans
Discount rate	4.44	%	4.67	%
Annual salary increase	4.46		4.46
Other postretirement benefit plans
Discount rate	4.27	%	4.51	%
Annual salary increase	4.46		4.46

Effect of 1% annual increase or decrease in assumed medical care cost on APBO and service and interest cost components

The weighted average medical care cost trend rates used in measuring the APBO as of December 31, 2016 were as follows:



	Initial Cost Trend Rate		Ultimate Cost Trend Rate		Year That Ultimate Rate is Reached
Pre-65	6.50	%	4.50	%	2025
Post-65 medical	5.00		4.50		2025
Post-65 prescription	10.00		4.50		2025

An annual increase or decrease in the assumed medical care cost trend rate of 1% would affect the APBO and the service and interest cost components at December 31, 2016 as follows:



	1 Percent Increase		1 Percent Decrease
	(in millions)
Benefit obligation	$	28	$	24
Service and interest costs	1		1

Changes in projected benefit obligations and fair value of plan assets

Changes in the projected benefit obligations and the fair value of plan assets during the plan years ended December 31, 2016 and 2015 were as follows:



	2016			2015
	(in millions)
Change in benefit obligation
Benefit obligation at beginning of year	$	2,506		$	2,592
Service cost	57			59
Interest cost	95			106
Benefits paid	(109		)	(120		)
Actuarial (gain) loss	114			(131		)
Balance at end of year	2,663			2,506
Change in plan assets
Fair value of plan assets at beginning of year	2,279			2,396
Actual return (loss) on plan assets	206			(9		)
Employer contributions	141			12
Benefits paid	(109		)	(120		)
Fair value of plan assets at end of year	2,517			2,279
Accrued liability	$	(146	)	$	(227	)

Amounts recognized in balance sheets related to benefit plans

Amounts recognized in the balance sheets at December 31, 2016 and 2015 related to the Company's pension plans consist of the following:



	2016			2015
	(in millions)
Other regulatory assets, deferred	$	870		$	822
Other current liabilities	(12		)	(11		)
Employee benefit obligations	(134		)	(216		)

Amounts recognized in the balance sheets at December 31, 2016 and 2015 related to the Company's other postretirement benefit plans consist of the following:



	2016			2015
	(in millions)
Other regulatory assets, deferred	$	86		$	95
Other regulatory liabilities, deferred	(10		)	(13		)
Employee benefit obligations	(134		)	(142		)

Presented below are the amounts included in net regulatory assets (liabilities) at December 31, 2016 and 2015 related to the other postretirement benefit plans that had not yet been recognized in net periodic other postretirement benefit cost along with the estimated amortization of such amounts for 2017.



	2016		2015		Estimated Amortization in 2017
	(in millions)
Prior service cost	$	15	$	19	$	4
Net (gain) loss	61		63		1
Net regulatory assets	$	76	$	82

Presented below are the amounts included in regulatory assets at December 31, 2016 and 2015 related to the defined benefit pension plans that had not yet been recognized in net periodic pension cost along with the estimated amortization of such amounts for 2017.



	2016		2015		Estimated Amortization in 2017
	(in millions)
Prior service cost	$	10	$	6	$	3
Net (gain) loss	860		816		42
Regulatory assets	$	870	$	822

Components of other comprehensive income along with changes in balances of regulatory assets and regulatory liabilities related to defined benefit pension plans

The changes in the balance of net regulatory assets (liabilities) related to the other postretirement benefit plans for the plan years ended December 31, 2016 and 2015 are presented in the following table:



	2016			2015
	(in millions)
Net regulatory assets (liabilities):
Beginning balance	$	82		$	54
Net (gain) loss	—			25
Change in prior service costs	—			8
Reclassification adjustments:
Amortization of prior service costs	(4		)	(3		)
Amortization of net gain (loss)	(2		)	(2		)
Total reclassification adjustments	(6		)	(5		)
Total change	(6		)	28
Ending balance	$	76		$	82

The changes in the balance of regulatory assets related to the defined benefit pension plans for the years ended December 31, 2016 and 2015 are presented in the following table:



	2016			2015
	(in millions)
Regulatory assets:
Beginning balance	$	822		$	827
Net (gain) loss	84			56
Change in prior service costs	7			—
Reclassification adjustments:
Amortization of prior service costs	(3		)	(6		)
Amortization of net gain (loss)	(40		)	(55		)
Total reclassification adjustments	(43		)	(61		)
Total change	48			(5		)
Ending balance	$	870		$	822

Components of the other postretirement benefit plans' net periodic cost were as follows:



	2016			2015			2014
	(in millions)
Service cost	$	5		$	6		$	5
Interest cost	18			20			20
Expected return on plan assets	(25		)	(26		)	(25		)
Net amortization	6			5			4
Net periodic postretirement benefit cost	$	4		$	5		$	4

Components of net periodic pension cost were as follows:



	2016			2015			2014
	(in millions)
Service cost	$	57		$	59		$	48
Interest cost	95			106			103
Expected return on plan assets	(184		)	(178		)	(168		)
Recognized net (gain) loss	40			55			31
Net amortization	3			6			7
Net periodic pension cost	$	11		$	48		$	21

Changes in the accumulated postretirement benefit obligations (APBO) and in fair value of plan assets

At December 31, 2016, estimated benefit payments were as follows:



	Benefit Payments
	(in millions)
2017	$	122
2018	127
2019	132
2020	137
2021	142
2022 to 2026	777

Future benefit payments, including prescription drug benefits, reflect expected future service and are estimated based on assumptions used to measure the APBO for the other postretirement benefit plans. Estimated benefit payments are reduced by drug subsidy receipts expected as a result of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 as follows:



	Benefit Payments		Subsidy Receipts			Total
	(in millions)
2017	$	32	$	(3	)	$	29
2018	33		(3		)	30
2019	34		(4		)	30
2020	35		(4		)	31
2021	36		(4		)	32
2022 to 2026	183		(22		)	161

Changes in the APBO and in the fair value of plan assets during the plan years ended December 31, 2016 and 2015 were as follows:



	2016			2015
	(in millions)
Change in benefit obligation
Benefit obligation at beginning of year	$	505		$	503
Service cost	5			6
Interest cost	18			20
Benefits paid	(28		)	(27		)
Actuarial (gain) loss	(1		)	(7		)
Plan amendment	—			7
Retiree drug subsidy	2			3
Balance at end of year	501			505
Change in plan assets
Fair value of plan assets at beginning of year	363			392
Actual return (loss) on plan assets	23			(6		)
Employer contributions	7			1
Benefits paid	(26		)	(24		)
Fair value of plan assets at end of year	367			363
Accrued liability	$	(134	)	$	(142	)

Composition of benefit plan assets along with targeted mix of assets

The composition of the Company's pension plan and other postretirement benefit plan assets as of December 31, 2016 and 2015, along with the targeted mix of assets for each plan, is presented below:



	Target		2016		2015
Pension plan assets:
Domestic equity	26	%	29	%	30	%
International equity	25		22		23
Fixed income	23		29		23
Special situations	3		2		2
Real estate investments	14		13		16
Private equity	9		5		6
Total	100	%	100	%	100	%
Other postretirement benefit plan assets:
Domestic equity	46	%	44	%	45	%
International equity	22		20		20
Domestic fixed income	24		29		27
Special situations	1		1		1
Real estate investments	4		4		5
Private equity	3		2		2
Total	100	%	100	%	100	%

The fair values of pension plan assets as of December 31, 2016 and 2015 are presented below. These fair value measurements exclude cash, receivables related to investment income, pending investments sales, and payables related to pending investment purchases. For 2015, investments in special situations were presented in the table below based on the nature of the investment.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Net Asset Value as a Practical Expedient
As of December 31, 2016:	(Level 1)		(Level 2)		(Level 3)		(NAV)		Total
	(in millions)
Assets:
Domestic equity^(*)	$	477	$	220	$	—	$	—	$	697
International equity^(*)	292		264		—		—		556
Fixed income:
U.S. Treasury, government, and agency bonds	—		140		—		—		140
Mortgage- and asset-backed securities	—		3		—		—		3
Corporate bonds	—		235		—		—		235
Pooled funds	—		124		—		—		124
Cash equivalents and other	236		1		—		—		237
Real estate investments	74		—		—		274		348
Special situations	—		—		—		43		43
Private equity	—		—		—		130		130
Total	$	1,079	$	987	$	—	$	447	$	2,513


(*)	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Net Asset Value as a Practical Expedient
As of December 31, 2015:	(Level 1)		(Level 2)		(Level 3)		(NAV)		Total
	(in millions)
Assets:
Domestic equity^(*)	$	403	$	168	$	—	$	—	$	571
International equity^(*)	294		244		—		—		538
Fixed income:
U.S. Treasury, government, and agency bonds	—		112		—		—		112
Mortgage- and asset-backed securities	—		49		—		—		49
Corporate bonds	—		280		—		—		280
Pooled funds	—		123		—		—		123
Cash equivalents and other	—		36		—		—		36
Real estate investments	74		—		—		301		375
Private equity	—		—		—		157		157
Total	$	771	$	1,012	$	—	$	458	$	2,241


(*)	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Net Asset Value as a Practical Expedient
As of December 31, 2016:	(Level 1)		(Level 2)		(Level 3)		(NAV)		Total
	(in millions)
Assets:
Domestic equity^(*)	$	51	$	10	$	—	$	—	$	61
International equity^(*)	13		12		—		—		25
Fixed income:
U.S. Treasury, government, and agency bonds	—		7		—		—		7
Mortgage- and asset-backed securities	—		—		—		—		—
Corporate bonds	—		10		—		—		10
Pooled funds	—		5		—		—		5
Cash equivalents and other	14		—		—		—		14
Trust-owned life insurance	—		220		—		—		220
Real estate investments	4		—		—		12		16
Special situations	—		—		—		2		2
Private equity	—		—		—		6		6
Total	$	82	$	264	$	—	$	20	$	366


(*)	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Net Asset Value as a Practical Expedient
As of December 31, 2015:	(Level 1)		(Level 2)		(Level 3)		(NAV)		Total
	(in millions)
Assets:
Domestic equity^(*)	$	57	$	8	$	—	$	—	$	65
International equity^(*)	14		12		—		—		26
Fixed income:
U.S. Treasury, government, and agency bonds	—		8		—		—		8
Mortgage- and asset-backed securities	—		2		—		—		2
Corporate bonds	—		13		—		—		13
Pooled funds	—		6		—		—		6
Cash equivalents and other	1		2		—		—		3
Trust-owned life insurance	—		212		—		—		212
Real estate investments	5		—		—		14		19
Private equity	—		—		—		7		7
Total	$	77	$	263	$	—	$	21	$	361


(*)	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.

Georgia Power [Member]

Weighted average rates assumed in actuarial calculations used to determine both benefit obligations as of measurement date and net periodic costs for pension and other postretirement benefit plans



Assumptions used to determine net periodic costs:	2016		2015		2014
Pension plans
Discount rate – benefit obligations	4.65	%	4.18	%	5.02	%
Discount rate – interest costs	3.86		4.18		5.02
Discount rate – service costs	5.03		4.49		5.02
Expected long-term return on plan assets	8.20		8.20		8.20
Annual salary increase	4.46		3.59		3.59
Other postretirement benefit plans
Discount rate – benefit obligations	4.49	%	4.03	%	4.85	%
Discount rate – interest costs	3.67		4.03		4.85
Discount rate – service costs	4.88		4.39		4.85
Expected long-term return on plan assets	6.27		6.48		6.75
Annual salary increase	4.46		3.59		3.59



Assumptions used to determine benefit obligations:	2016		2015
Pension plans
Discount rate	4.40	%	4.65	%
Annual salary increase	4.46		4.46
Other postretirement benefit plans
Discount rate	4.23	%	4.49	%
Annual salary increase	4.46		4.46

Effect of 1% annual increase or decrease in assumed medical care cost on APBO and service and interest cost components

The weighted average medical care cost trend rates used in measuring the APBO as of December 31, 2016 were as follows:



	Initial Cost Trend Rate		Ultimate Cost Trend Rate		Year That Ultimate Rate is Reached
Pre-65	6.50	%	4.50	%	2025
Post-65 medical	5.00		4.50		2025
Post-65 prescription	10.00		4.50		2025

An annual increase or decrease in the assumed medical care cost trend rate of 1% would affect the APBO and the service and interest cost components at December 31, 2016 as follows:



	1 Percent Increase		1 Percent Decrease
	(in millions)
Benefit obligation	$	55	$	48
Service and interest costs	2		2

Changes in projected benefit obligations and fair value of plan assets

Changes in the projected benefit obligations and the fair value of plan assets during the plan years ended December 31, 2016 and 2015 were as follows:



	2016			2015
	(in millions)
Change in benefit obligation
Benefit obligation at beginning of year	$	3,615		$	3,781
Service cost	70			73
Interest cost	136			154
Benefits paid	(164		)	(188		)
Actuarial (gain) loss	143			(205		)
Balance at end of year	3,800			3,615
Change in plan assets
Fair value of plan assets at beginning of year	3,196			3,383
Actual return (loss) on plan assets	288			(13		)
Employer contributions	301			14
Benefits paid	(164		)	(188		)
Fair value of plan assets at end of year	3,621			3,196
Accrued liability	$	(179	)	$	(419	)

Amounts recognized in balance sheets related to benefit plans

Amounts recognized in the balance sheets at December 31, 2016 and 2015 related to the Company's pension plans consist of the following:



	2016			2015
	(in millions)
Other regulatory assets, deferred	$	1,129		$	1,076
Other current liabilities	(14		)	(13		)
Employee benefit obligations	(165		)	(406		)

Amounts recognized in the balance sheets at December 31, 2016 and 2015 related to the Company's other postretirement benefit plans consist of the following:



	2016			2015
	(in millions)
Other regulatory assets, deferred	$	213		$	223
Employee benefit obligations	(493		)	(496		)

Schedule of amounts recognized in other comprehensive income (loss)

The changes in the balance of regulatory assets related to the other postretirement benefit plans for the plan years ended December 31, 2016 and 2015 are presented in the following table:



	2016			2015
	(in millions)
Regulatory assets:
Beginning balance	$	223		$	213
Net (gain) loss	—			9
Change in prior service costs	—			12
Reclassification adjustments:
Amortization of prior service costs	(1		)	—
Amortization of net gain (loss)	(9		)	(11		)
Total reclassification adjustments	(10		)	(11		)
Total change	(10		)	10
Ending balance	$	213		$	223



	2016		2015		Estimated Amortization in 2017
	(in millions)
Prior service cost	$	17	$	8	$	3
Net (gain) loss	1,112		1,068		57
Regulatory assets	$	1,129	$	1,076

Presented below are the amounts included in regulatory assets at December 31, 2016 and 2015 related to the other postretirement benefit plans that had not yet been recognized in net periodic other postretirement benefit cost along with the estimated amortization of such amounts for 2017.



	2016		2015		Estimated Amortization in 2017
	(in millions)
Prior service cost	$	6	$	8	$	1
Net (gain) loss	207		215		8
Regulatory assets	$	213	$	223

Components of other comprehensive income along with changes in balances of regulatory assets and regulatory liabilities related to defined benefit pension plans

The changes in the balance of regulatory assets related to the defined benefit pension plans for the years ended December 31, 2016 and 2015 are presented in the following table:



	2016			2015
	(in millions)
Regulatory assets:
Beginning balance	$	1,076		$	1,102
Net (gain) loss	99			59
Change in prior service costs	14			—
Reclassification adjustments:
Amortization of prior service costs	(5		)	(9		)
Amortization of net gain (loss)	(55		)	(76		)
Total reclassification adjustments	(60		)	(85		)
Total change	53			(26		)
Ending balance	$	1,129		$	1,076

Components of net periodic pension cost were as follows:



	2016			2015			2014
	(in millions)
Service cost	$	70		$	73		$	62
Interest cost	136			154			153
Expected return on plan assets	(258		)	(251		)	(228		)
Recognized net (gain) loss	55			76			41
Net amortization	5			9			10
Net periodic pension cost	$	8		$	61		$	38

Components of the other postretirement benefit plans' net periodic cost were as follows:



	2016			2015			2014
	(in millions)
Service cost	$	6		$	7		$	6
Interest cost	30			34			34
Expected return on plan assets	(22		)	(24		)	(25		)
Net amortization	10			11			2
Net periodic postretirement benefit cost	$	24		$	28		$	17

Changes in the accumulated postretirement benefit obligations (APBO) and in fair value of plan assets

At December 31, 2016, estimated benefit payments were as follows:



	Benefit Payments
	(in millions)
2017	$	184
2018	190
2019	196
2020	202
2021	206
2022 to 2026	1,126

Changes in the APBO and in the fair value of plan assets during the plan years ended December 31, 2016 and 2015 were as follows:



	2016			2015
	(in millions)
Change in benefit obligation
Benefit obligation at beginning of year	$	854		$	864
Service cost	6			7
Interest cost	30			34
Benefits paid	(45		)	(45		)
Actuarial (gain) loss	(1		)	(22		)
Plan amendment	—			12
Retiree drug subsidy	3			4
Balance at end of year	847			854
Change in plan assets
Fair value of plan assets at beginning of year	358			395
Actual return (loss) on plan assets	21			(6		)
Employer contributions	17			10
Benefits paid	(42		)	(41		)
Fair value of plan assets at end of year	354			358
Accrued liability	$	(493	)	$	(496	)

Summary of estimation of future benefit payments and subsidy receipts based on assumptions used to measure accumulated benefit obligation for postretirement plans

Future benefit payments, including prescription drug benefits, reflect expected future service and are estimated based on assumptions used to measure the APBO for the other postretirement benefit plans. Estimated benefit payments are reduced by drug subsidy receipts expected as a result of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 as follows:



	Benefit Payments		Subsidy Receipts			Total
	(in millions)
2017	$	54	$	(4	)	$	50
2018	56		(5		)	51
2019	58		(5		)	53
2020	59		(5		)	54
2021	60		(6		)	54
2022 to 2026	303		(32		)	271

Composition of benefit plan assets along with targeted mix of assets

The composition of the Company's pension plan and other postretirement benefit plan assets as of December 31, 2016 and 2015, along with the targeted mix of assets for each plan, is presented below:



	Target		2016		2015
Pension plan assets:
Domestic equity	26	%	29	%	30	%
International equity	25		22		23
Fixed income	23		29		23
Special situations	3		2		2
Real estate investments	14		13		16
Private equity	9		5		6
Total	100	%	100	%	100	%
Other postretirement benefit plan assets:
Domestic equity	36	%	35	%	34	%
International equity	24		24		27
Domestic fixed income	33		35		25
Global fixed income					8
Special situations	1		1		—
Real estate investments	4		4		4
Private equity	2		1		2
Total	100	%	100	%	100	%

The fair values of other postretirement benefit plan assets as of December 31, 2016 and 2015 are presented below. These fair value measurements exclude cash, receivables related to investment income, pending investments sales, and payables related to pending investment purchases. For 2015, investments in special situations were presented in the table below based on the nature of the investment.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Net Asset Value as a Practical Expedient
As of December 31, 2016:	(Level 1)		(Level 2)		(Level 3)		(NAV)		Total
	(in millions)
Assets:
Domestic equity^(*)	$	45	$	9	$	—	$	—	$	54
International equity^(*)	11		37		—		—		48
Fixed income:
U.S. Treasury, government, and agency bonds	—		5		—		—		5
Mortgage- and asset-backed securities	—		—		—		—		—
Corporate bonds	—		9		—		—		9
Pooled funds	—		38		—		—		38
Cash equivalents and other	15		—		—		—		15
Trust-owned life insurance	—		162		—		—		162
Real estate investments	3		—		—		11		14
Special situations	—		—		—		2		2
Private equity	—		—		—		5		5
Total	$	74	$	260	$	—	$	18	$	352


(*)	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Net Asset Value as a Practical Expedient
As of December 31, 2015:	(Level 1)		(Level 2)		(Level 3)		(NAV)		Total
	(in millions)
Assets:
Domestic equity^(*)	$	30	$	36	$	—	$	—	$	66
International equity^(*)	12		41		—		—		53
Fixed income:
U.S. Treasury, government, and agency bonds	—		5		—		—		5
Mortgage- and asset-backed securities	—		2		—		—		2
Corporate bonds	—		12		—		—		12
Pooled funds	—		30		—		—		30
Cash equivalents and other	10		6		—		—		16
Trust-owned life insurance	—		158		—		—		158
Real estate investments	3		—		—		12		15
Private equity	—		—		—		7		7
Total	$	55	$	290	$	—	$	19	$	364


(*)	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.

The fair values of pension plan assets as of December 31, 2016 and 2015 are presented below. These fair value measurements exclude cash, receivables related to investment income, pending investments sales, and payables related to pending investment purchases. For 2015, investments in special situations were presented in the table below based on the nature of the investment.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Net Asset Value as a Practical Expedient
As of December 31, 2016:	(Level 1)		(Level 2)		(Level 3)		(NAV)		Total
	(in millions)
Assets:
Domestic equity^(*)	$	686	$	317	$	—	$	—	$	1,003
International equity^(*)	420		380		—		—		800
Fixed income:
U.S. Treasury, government, and agency bonds	—		201		—		—		201
Mortgage- and asset-backed securities	—		4		—		—		4
Corporate bonds	—		338		—		—		338
Pooled funds	—		179		—		—		179
Cash equivalents and other	340		1		—		—		341
Real estate investments	106		—		—		394		500
Special situations	—		—		—		61		61
Private equity	—		—		—		188		188
Total	$	1,552	$	1,420	$	—	$	643	$	3,615


(*)	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Net Asset Value as a Practical Expedient
As of December 31, 2015:	(Level 1)		(Level 2)		(Level 3)		(NAV)		Total
	(in millions)
Assets:
Domestic equity^(*)	$	565	$	236	$	—	$	—	$	801
International equity^(*)	412		343		—		—		755
Fixed income:
U.S. Treasury, government, and agency bonds	—		157		—		—		157
Mortgage- and asset-backed securities	—		69		—		—		69
Corporate bonds	—		394		—		—		394
Pooled funds	—		173		—		—		173
Cash equivalents and other	—		50		—		—		50
Real estate investments	103		—		—		421		524
Private equity	—		—		—		220		220
Total	$	1,080	$	1,422	$	—	$	641	$	3,143


(*)	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.

Gulf Power [Member]

Weighted average rates assumed in actuarial calculations used to determine both benefit obligations as of measurement date and net periodic costs for pension and other postretirement benefit plans



Assumptions used to determine net periodic costs:	2016		2015		2014
Pension plans
Discount rate – benefit obligations	4.71	%	4.18	%	5.02	%
Discount rate – interest costs	3.97		4.18		5.02
Discount rate – service costs	5.04		4.48		5.02
Expected long-term return on plan assets	8.20		8.20		8.20
Annual salary increase	4.46		3.59		3.59
Other postretirement benefit plans
Discount rate – benefit obligations	4.51	%	4.04	%	4.86	%
Discount rate – interest costs	3.68		4.04		4.86
Discount rate – service costs	4.88		4.38		4.86
Expected long-term return on plan assets	8.05		8.07		8.08
Annual salary increase	4.46		3.59		3.59



Assumptions used to determine benefit obligations:	2016		2015
Pension plans
Discount rate	4.46	%	4.71	%
Annual salary increase	4.46		4.46
Other postretirement benefit plans
Discount rate	4.25	%	4.51	%
Annual salary increase	4.46		4.46

Effect of 1% annual increase or decrease in assumed medical care cost on APBO and service and interest cost components

The weighted average medical care cost trend rates used in measuring the APBO as of December 31, 2016 were as follows:



	Initial Cost Trend Rate		Ultimate Cost Trend Rate		Year That Ultimate Rate is Reached
Pre-65	6.50	%	4.50	%	2025
Post-65 medical	5.00		4.50		2025
Post-65 prescription	10.00		4.50		2025

An annual increase or decrease in the assumed medical care cost trend rate of 1% would affect the APBO and the service and interest cost components at December 31, 2016 as follows:



	1 Percent Increase		1 Percent Decrease
	(in millions)
Benefit obligation	$	4	$	3
Service and interest costs	—		—

Changes in projected benefit obligations and fair value of plan assets

Changes in the projected benefit obligations and the fair value of plan assets during the plan years ended December 31, 2016 and 2015 were as follows:



	2016			2015
	(in millions)
Change in benefit obligation
Benefit obligation at beginning of year	$	480		$	491
Service cost	12			12
Interest cost	19			20
Benefits paid	(17		)	(20		)
Actuarial (gain) loss	23			(23		)
Balance at end of year	517			480
Change in plan assets
Fair value of plan assets at beginning of year	420			435
Actual return (loss) on plan assets	39			4
Employer contributions	49			1
Benefits paid	(17		)	(20		)
Fair value of plan assets at end of year	491			420
Accrued liability	$	(26	)	$	(60	)

Schedule of amounts recognized in other comprehensive income (loss)



	2016		2015
	(in millions)
Net regulatory assets (liabilities):
Beginning balance	$	5	$	2
Net (gain) loss	2		1
Change in prior service costs	—		2
Total change	2		3
Ending balance	$	7	$	5



	2016		2015		Estimated Amortization in 2017
	(in millions)
Prior service cost	$	3	$	2	$	1
Net (gain) loss	150		140		7
Regulatory assets	$	153	$	142

Components of other comprehensive income along with changes in balances of regulatory assets and regulatory liabilities related to defined benefit pension plans

The changes in the balance of regulatory assets related to the defined benefit pension plans for the years ended December 31, 2016 and 2015 are presented in the following table:



	2016			2015
	(in millions)
Regulatory assets:
Beginning balance	$	142		$	146
Net (gain) loss	16			6
Change in prior service costs	2			—
Reclassification adjustments:
Amortization of prior service costs	(1		)	(1		)
Amortization of net gain (loss)	(6		)	(9		)
Total reclassification adjustments	(7		)	(10		)
Total change	11			(4		)
Ending balance	$	153		$	142

Changes in the accumulated postretirement benefit obligations (APBO) and in fair value of plan assets

At December 31, 2016, estimated benefit payments were as follows:



	Benefit Payments
	(in millions)
2017	$	20
2018	22
2019	23
2020	24
2021	26
2022 to 2026	149

Changes in the APBO and in the fair value of plan assets during the plan years ended December 31, 2016 and 2015 were as follows:



	2016			2015
	(in millions)
Change in benefit obligation
Benefit obligation at beginning of year	$	81		$	78
Service cost	1			1
Interest cost	3			3
Benefits paid	(4		)	(4		)
Actuarial (gain) loss	2			(1		)
Plan amendment	—			4
Balance at end of year	83			81
Change in plan assets
Fair value of plan assets at beginning of year	17			18
Actual return (loss) on plan assets	2			—
Employer contributions	3			3
Benefits paid	(4		)	(4		)
Fair value of plan assets at end of year	18			17
Accrued liability	$	(65	)	$	(64	)

Summary of estimation of future benefit payments and subsidy receipts based on assumptions used to measure accumulated benefit obligation for postretirement plans

Future benefit payments, including prescription drug benefits, reflect expected future service and are estimated based on assumptions used to measure the APBO for the other postretirement benefit plans. Estimated benefit payments are reduced by drug subsidy receipts expected as a result of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 as follows:



	Benefit Payments		Subsidy Receipts			Total
	(in millions)
2017	$	5	$	—		$	5
2018	5		—			5
2019	6		(1		)	5
2020	6		(1		)	5
2021	6		(1		)	5
2022 to 2026	30		(3		)	27

Composition of benefit plan assets along with targeted mix of assets

The composition of the Company's pension plan and other postretirement benefit plan assets as of December 31, 2016 and 2015, along with the targeted mix of assets for each plan, is presented below:



	Target		2016		2015
Pension plan assets:
Domestic equity	26	%	29	%	30	%
International equity	25		22		23
Fixed income	23		29		23
Special situations	3		2		2
Real estate investments	14		13		16
Private equity	9		5		6
Total	100	%	100	%	100	%
Other postretirement benefit plan assets:
Domestic equity	25	%	28	%	29	%
International equity	24		21		22
Domestic fixed income	25		31		25
Special situations	3		2		2
Real estate investments	14		13		16
Private equity	9		5		6
Total	100	%	100	%	100	%

Gulf Power [Member] | Pension plans

Amounts recognized in balance sheets related to benefit plans

Amounts recognized in the balance sheets at December 31, 2016 and 2015 related to the Company's pension plans consist of the following:



	2016			2015
	(in millions)
Other regulatory assets, deferred	$	153		$	142
Other current liabilities	(1		)	(1		)
Employee benefit obligations	(25		)	(59		)

Components of net periodic pension cost were as follows:



	2016			2015			2014
	(in millions)
Service cost	$	12		$	12		$	10
Interest cost	19			20			19
Expected return on plan assets	(34		)	(32		)	(28		)
Recognized net (gain) loss	6			9			5
Net amortization	1			1			1
Net periodic pension cost	$	4		$	10		$	7

Gulf Power [Member] | Other postretirement benefit plans

The fair values of pension plan assets as of December 31, 2016 and 2015 are presented below. These fair value measurements exclude cash, receivables related to investment income, pending investments sales, and payables related to pending investment purchases. For 2015, investments in special situations were presented in the table below based on the nature of the investment.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Net Asset Value as a Practical Expedient
As of December 31, 2016:	(Level 1)		(Level 2)		(Level 3)		(NAV)		Total
	(in millions)
Assets:
Domestic equity^(*)	$	93	$	43	$	—	$	—	$	136
International equity^(*)	57		52		—		—		109
Fixed income:
U.S. Treasury, government, and agency bonds	—		27		—		—		27
Mortgage- and asset-backed securities	—		1		—		—		1
Corporate bonds	—		47		—		—		47
Pooled funds	—		24		—		—		24
Cash equivalents and other	46		—		—		—		46
Real estate investments	14		—		—		53		67
Special situations	—		—		—		8		8
Private equity	—		—		—		25		25
Total	$	210	$	194	$	—	$	86	$	490


(*)	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Net Asset Value as a Practical Expedient
As of December 31, 2015:	(Level 1)		(Level 2)		(Level 3)		(NAV)		Total
	(in millions)
Assets:
Domestic equity^(*)	$	73	$	31	$	—	$	—	$	104
International equity^(*)	54		45		—		—		99
Fixed income:
U.S. Treasury, government, and agency bonds	—		21		—		—		21
Mortgage- and asset-backed securities	—		9		—		—		9
Corporate bonds	—		51		—		—		51
Pooled funds	—		23		—		—		23
Cash equivalents and other	—		7		—		—		7
Real estate investments	14		—		—		55		69
Private equity	—		—		—		29		29
Total	$	141	$	187	$	—	$	84	$	412


(*)	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.

Amounts recognized in balance sheets related to benefit plans

Amounts recognized in the balance sheets at December 31, 2016 and 2015 related to the Company's other postretirement benefit plans consist of the following:



	2016			2015
	(in millions)
Other regulatory assets, deferred	$	11		$	10
Other current liabilities	(1		)	(1		)
Other regulatory liabilities, deferred	(4		)	(5		)
Employee benefit obligations	(64		)	(63		)

Components of the other postretirement benefit plans' net periodic cost were as follows:



	2016			2015			2014
	(in millions)
Service cost	$	1		$	1		$	1
Interest cost	3			3			3
Expected return on plan assets	(1		)	(1		)	(1		)
Net periodic postretirement benefit cost	$	3		$	3		$	3

Mississippi Power [Member]



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Net Asset Value as a Practical Expedient
As of December 31, 2016:	(Level 1)		(Level 2)		(Level 3)		(NAV)		Total
	(in millions)
Assets:
Domestic equity^(*)	$	3	$	2	$	—	$	—	$	5
International equity^(*)	2		2		—		—		4
Fixed income:
U.S. Treasury, government, and agency bonds	—		1		—		—		1
Corporate bonds	—		2		—		—		2
Pooled funds	—		1		—		—		1
Cash equivalents and other	2		—		—		—		2
Real estate investments	1		—		—		2		3
Private equity	—		—		—		1		1
Total	$	8	$	8	$	—	$	3	$	19


(*)	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Net Asset Value as a Practical Expedient
As of December 31, 2015:	(Level 1)		(Level 2)		(Level 3)		(NAV)		Total
	(in millions)
Assets:
Domestic equity^(*)	$	3	$	1	$	—	$	—	$	4
International equity^(*)	2		2		—		—		4
Fixed income:
U.S. Treasury, government, and agency bonds	—		1		—		—		1
Corporate bonds	—		2		—		—		2
Pooled funds	—		1		—		—		1
Cash equivalents and other	1		—		—		—		1
Real estate investments	1		—		—		2		3
Private equity	—		—		—		1		1
Total	$	7	$	7	$	—	$	3	$	17


(*)	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.

Weighted average rates assumed in actuarial calculations used to determine both benefit obligations as of measurement date and net periodic costs for pension and other postretirement benefit plans



Assumptions used to determine net periodic costs:	2016		2015		2014
Pension plans
Discount rate – benefit obligations	4.69	%	4.17	%	5.01	%
Discount rate – interest costs	3.97		4.17		5.01
Discount rate – service costs	5.04		4.49		5.01
Expected long-term return on plan assets	8.20		8.20		8.20
Annual salary increase	4.46		3.59		3.59
Other postretirement benefit plans
Discount rate – benefit obligations	4.47	%	4.03	%	4.85	%
Discount rate – interest costs	3.66		4.03		4.85
Discount rate – service costs	4.88		4.38		4.85
Expected long-term return on plan assets	7.07		7.23		7.30
Annual salary increase	4.46		3.59		3.59



Assumptions used to determine benefit obligations:	2016		2015
Pension plans
Discount rate	4.44	%	4.69	%
Annual salary increase	4.46		4.46
Other postretirement benefit plans
Discount rate	4.22	%	4.47	%
Annual salary increase	4.46		4.46

Effect of 1% annual increase or decrease in assumed medical care cost on APBO and service and interest cost components

The weighted average medical care cost trend rates used in measuring the APBO as of December 31, 2016 were as follows:



	Initial Cost Trend Rate		Ultimate Cost Trend Rate		Year That Ultimate Rate is Reached
Pre-65	6.50	%	4.50	%	2025
Post-65 medical	5.00		4.50		2025
Post-65 prescription	10.00		4.50		2025

An annual increase or decrease in the assumed medical care cost trend rate of 1% would affect the APBO and the service and interest cost components at December 31, 2016 as follows:



	1 Percent Increase		1 Percent Decrease
	(in millions)
Benefit obligation	$	5	$	4
Service and interest costs	—		—

Changes in projected benefit obligations and fair value of plan assets

Changes in the projected benefit obligations and the fair value of plan assets during the plan years ended December 31, 2016 and 2015 were as follows:



	2016			2015
	(in millions)
Change in benefit obligation
Benefit obligation at beginning of year	$	500		$	513
Service cost	13			13
Interest cost	19			21
Benefits paid	(20		)	(22		)
Actuarial (gain) loss	22			(25		)
Balance at end of year	534			500
Change in plan assets
Fair value of plan assets at beginning of year	430			446
Actual return (loss) on plan assets	39			4
Employer contributions	50			2
Benefits paid	(20		)	(22		)
Fair value of plan assets at end of year	499			430
Accrued liability	$	(35	)	$	(70	)

Amounts recognized in balance sheets related to benefit plans

Amounts recognized in the balance sheets at December 31, 2016 and 2015 related to the Company's other postretirement benefit plans consist of the following:



	2016			2015
	(in millions)
Other regulatory assets, deferred	$	21		$	21
Other regulatory liabilities, deferred	(2		)	(3		)
Employee benefit obligations	(74		)	(74		)

Schedule of amounts recognized in other comprehensive income (loss)



	2016			2015
	(in millions)
Net regulatory assets (liabilities):
Beginning balance	$	18		$	16
Net (gain) loss	2			—
Change in prior service costs	—			3
Reclassification adjustments:
Amortization of net gain (loss)	(1		)	(1		)
Total reclassification adjustments	(1		)	(1		)
Total change	1			2
Ending balance	$	19		$	18

Components of other comprehensive income along with changes in balances of regulatory assets and regulatory liabilities related to defined benefit pension plans

The changes in the balance of regulatory assets related to the defined benefit pension plans for the years ended December 31, 2016 and 2015 are presented in the following table:



	2016			2015
	(in millions)
Regulatory assets:
Beginning balance	$	144		$	151
Net (gain) loss	16			4
Change in prior service costs	2			—
Reclassification adjustments:
Amortization of prior service costs	(1		)	(1		)
Amortization of net gain (loss)	(7		)	(10		)
Total reclassification adjustments	(8		)	(11		)
Total change	10			(7		)
Ending balance	$	154		$	144

Changes in the accumulated postretirement benefit obligations (APBO) and in fair value of plan assets

At December 31, 2016, estimated benefit payments were as follows:



	Benefit Payments
	(in millions)
2017	$	22
2018	23
2019	24
2020	26
2021	27
2022 to 2026	154

Changes in the APBO and in the fair value of plan assets during the plan years ended December 31, 2016 and 2015 were as follows:



	2016			2015
	(in millions)
Change in benefit obligation
Benefit obligation at beginning of year	$	97		$	96
Service cost	1			1
Interest cost	3			4
Benefits paid	(6		)	(5		)
Actuarial (gain) loss	1			(1		)
Plan amendment	—			1
Retiree drug subsidy	1			1
Balance at end of year	97			97
Change in plan assets
Fair value of plan assets at beginning of year	23			24
Actual return (loss) on plan assets	1			—
Employer contributions	4			3
Benefits paid	(5		)	(4		)
Fair value of plan assets at end of year	23			23
Accrued liability	$	(74	)	$	(74	)

Summary of estimation of future benefit payments and subsidy receipts based on assumptions used to measure accumulated benefit obligation for postretirement plans

Estimated benefit payments are reduced by drug subsidy receipts expected as a result of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 as follows:



	Benefit Payments		Subsidy Receipts			Total
	(in millions)
2017	$	6	$	(1	)	$	5
2018	6		(1		)	5
2019	7		(1		)	6
2020	7		(1		)	6
2021	7		(1		)	6
2022 to 2026	36		(1		)	35

Composition of benefit plan assets along with targeted mix of assets

The composition of the Company's pension plan and other postretirement benefit plan assets as of December 31, 2016 and 2015, along with the targeted mix of assets for each plan, is presented below:



	Target		2016		2015
Pension plan assets:
Domestic equity	26	%	29	%	30	%
International equity	25		22		23
Fixed income	23		29		23
Special situations	3		2		2
Real estate investments	14		13		16
Private equity	9		5		6
Total	100	%	100	%	100	%
Other postretirement benefit plan assets:
Domestic equity	21	%	23	%	24	%
International equity	20		18		18
Domestic fixed income	38		43		38
Special situations	3		2		2
Real estate investments	11		10		13
Private equity	7		4		5
Total	100	%	100	%	100	%

Mississippi Power [Member] | Pension plans

Amounts recognized in balance sheets related to benefit plans

Amounts recognized in the balance sheets at December 31, 2016 and 2015 related to the Company's pension plans consist of the following:



	2016			2015
	(in millions)
Other regulatory assets, deferred	$	154		$	144
Other current liabilities	(3		)	(3		)
Employee benefit obligations	(32		)	(67		)



	2016		2015		Estimated Amortization in 2017
	(in millions)
Prior service cost	$	3	$	2	$	1
Net (gain) loss	151		142		7
Regulatory assets	$	154	$	144

Components of net periodic pension cost were as follows:



	2016			2015			2014
	(in millions)
Service cost	$	13		$	13		$	10
Interest cost	19			21			20
Expected return on plan assets	(35		)	(33		)	(29		)
Recognized net (gain) loss	7			10			5
Net amortization	1			1			1
Net periodic pension cost	$	5		$	12		$	7

Mississippi Power [Member] | Other postretirement benefit plans

The fair values of pension plan assets as of December 31, 2016 and 2015 are presented below. These fair value measurements exclude cash, receivables related to investment income, pending investments sales, and payables related to pending investment purchases. For 2015, investments in special situations were presented in the table below based on the nature of the investment.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Net Asset Value as a Practical Expedient
As of December 31, 2016:	(Level 1)		(Level 2)		(Level 3)		(NAV)		Total
	(in millions)
Assets:
Domestic equity^(*)	$	95	$	44	$	—	$	—	$	139
International equity^(*)	58		51		—		—		109
Fixed income:
U.S. Treasury, government, and agency bonds	—		28		—		—		28
Mortgage- and asset-backed securities	—		1		—		—		1
Corporate bonds	—		46		—		—		46
Pooled funds	—		25		—		—		25
Cash equivalents and other	47		—		—		—		47
Real estate investments	15		—		—		54		69
Special situations	—		—		—		8		8
Private equity	—		—		—		26		26
Total	$	215	$	195	$	—	$	88	$	498


(*)	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Net Asset Value as a Practical Expedient
As of December 31, 2015:	(Level 1)		(Level 2)		(Level 3)		(NAV)		Total
	(in millions)
Assets:
Domestic equity^(*)	$	76	$	32	$	—	$	—	$	108
International equity^(*)	55		46		—		—		101
Fixed income:
U.S. Treasury, government, and agency bonds	—		21		—		—		21
Mortgage- and asset-backed securities	—		9		—		—		9
Corporate bonds	—		53		—		—		53
Pooled funds	—		23		—		—		23
Cash equivalents and other	—		7		—		—		7
Real estate investments	14		—		—		57		71
Private equity	—		—		—		30		30
Total	$	145	$	191	$	—	$	87	$	423


(*)	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.

Approximately $19 million and $18 million was included in net regulatory assets at December 31, 2016 and 2015, respectively, related to the net loss for the other postretirement benefit plans that had not yet been recognized in net periodic other postretirement benefit cost. The estimated amortization of such amounts for 2017 is $1 million.

Components of the other postretirement benefit plans' net periodic cost were as follows:



	2016			2015			2014
	(in millions)
Service cost	$	1		$	1		$	1
Interest cost	3			4			4
Expected return on plan assets	(1		)	(2		)	(2		)
Net amortization	1			1			—
Net periodic postretirement benefit cost	$	4		$	4		$	3