Derivatives (Tables)
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3 Months Ended |
Mar. 31, 2017 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
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Schedule of energy-related derivatives |
At March 31, 2017, the net volume of energy-related derivative contracts for natural gas positions for the Southern Company system, together with the longest hedge date over which the respective entity is hedging its exposure to the variability in future cash flows for forecasted transactions and the longest non-hedge date for derivatives not designated as hedges, were as follows: | | | | | | | | Net Purchased mmBtu | | Longest Hedge Date | | Longest Non-Hedge Date | | (in millions) | | | | | Southern Company(*) | 503 | | 2021 | | 2024 | Alabama Power | 71 | | 2020 | | — | Georgia Power | 155 | | 2020 | | — | Gulf Power | 42 | | 2020 | | — | Mississippi Power | 37 | | 2021 | | — | Southern Power | 21 | | 2017 | | 2017 | Southern Company Gas(*) | 177 | | 2019 | | 2024 |
| | (*) | Southern Company's and Southern Company Gas' derivative instruments include both long and short natural gas positions. A long position is a contract to purchase natural gas and a short position is a contract to sell natural gas. Southern Company Gas' volume represents the net of long natural gas positions of 3.4 billion mmBtu and short natural gas positions of 3.2 billion mmBtu as of March 31, 2017, which is also included in Southern Company's total volume. |
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Schedule of interest rate derivatives |
At March 31, 2017, the following interest rate derivatives were outstanding: | | | | | | | | | | | | | | Notional Amount | | Interest Rate Received | Weighted Average Interest Rate Paid | Hedge Maturity Date | | Fair Value Gain (Loss) at March 31, 2017 | | (in millions) | | | | | | (in millions) | Cash Flow Hedges of Forecasted Debt | | | | | | | Gulf Power | $ | 80 |
| | 3-month LIBOR | 2.32% | December 2026 | | $ | — |
| Cash Flow Hedges of Existing Debt | | | | | | | Mississippi Power | 900 |
| | 1-month LIBOR | 0.79% | March 2018 | | 4 |
| Fair Value Hedges of Existing Debt | | | | | | | Southern Company(*) | 250 |
| | 1.30% | 3-month LIBOR + 0.17% | August 2017 | | — |
| Southern Company(*) | 300 |
| | 2.75% | 3-month LIBOR + 0.92% | June 2020 | | 1 |
| Southern Company(*) | 1,500 |
| | 2.35% | 1-month LIBOR + 0.87% | July 2021 | | (21 | ) | Georgia Power | 250 |
| | 5.40% | 3-month LIBOR + 4.02% | June 2018 | | — |
| Georgia Power | 500 |
| | 1.95% | 3-month LIBOR + 0.76% | December 2018 | | (3 | ) | Georgia Power | 200 |
| | 4.25% | 3-month LIBOR + 2.46% | December 2019 | | 1 |
| Southern Company Consolidated | $ | 3,980 |
| | | | | | $ | (18 | ) |
| | (*) | Represents the Southern Company parent entity. |
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Schedule of foreign currency derivatives |
At March 31, 2017, the following foreign currency derivatives were outstanding: | | | | | | | | | | | | | |
| Pay Notional | Pay Rate | Receive Notional | Receive Rate | Hedge Maturity Date | Fair Value Gain (Loss) at March 31, 2017 |
| (in millions) | | (in millions) | | | (in millions) | Cash Flow Hedges of Existing Debt | | | | | | Southern Power | $ | 677 |
| 2.95% | € | 600 |
| 1.00% | June 2022 | $ | (35 | ) | Southern Power | 564 |
| 3.78% | 500 |
| 1.85% | June 2026 | (27 | ) | Total | $ | 1,241 |
| | € | 1,100 |
| | | $ | (62 | ) |
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Fair value of energy-related derivatives and interest rate derivatives |
The fair value of energy-related derivatives, interest rate derivatives, and foreign currency derivatives was reflected in the balance sheets as follows: | | | | | | | | | | | | | | | As of March 31, 2017 | As of December 31, 2016 | Derivative Category and Balance Sheet Location | Assets | Liabilities | Assets | Liabilities | | (in millions) | (in millions) | Southern Company | | | | | Derivatives designated as hedging instruments for regulatory purposes | | | | | Energy-related derivatives: | | | | | Other current assets/Liabilities from risk management activities, net of collateral | $ | 48 |
| $ | 30 |
| $ | 73 |
| $ | 27 |
| Other deferred charges and assets/Other deferred credits and liabilities | 6 |
| 38 |
| 25 |
| 33 |
| Total derivatives designated as hedging instruments for regulatory purposes | $ | 54 |
| $ | 68 |
| $ | 98 |
| $ | 60 |
| Derivatives designated as hedging instruments in cash flow and fair value hedges | | | | | Energy-related derivatives: | | | | | Other current assets/Liabilities from risk management activities, net of collateral | $ | 14 |
| $ | 5 |
| $ | 23 |
| $ | 7 |
| Interest rate derivatives: | | | | | Other current assets/Liabilities from risk management activities, net of collateral | 13 |
| — |
| 12 |
| 1 |
| Other deferred charges and assets/Other deferred credits and liabilities | — |
| 32 |
| 1 |
| 28 |
| Foreign currency derivatives: | | | | | Other current assets/Liabilities from risk management activities, net of collateral | — |
| 25 |
| — |
| 25 |
| Other deferred charges and assets/Other deferred credits and liabilities | — |
| 37 |
| — |
| 33 |
| Total derivatives designated as hedging instruments in cash flow and fair value hedges | $ | 27 |
| $ | 99 |
| $ | 36 |
| $ | 94 |
| Derivatives not designated as hedging instruments | | | | | Energy-related derivatives: | | | | | Other current assets/Liabilities from risk management activities, net of collateral | $ | 306 |
| $ | 271 |
| $ | 489 |
| $ | 483 |
| Other deferred charges and assets/Other deferred credits and liabilities | 132 |
| 114 |
| 66 |
| 81 |
| Interest rate derivatives: | | | | | Other current assets/Liabilities from risk management activities, net of collateral | — |
| — |
| 1 |
| — |
| Total derivatives not designated as hedging instruments | $ | 438 |
| $ | 385 |
| $ | 556 |
| $ | 564 |
| Gross amounts recognized | $ | 519 |
| $ | 552 |
| $ | 690 |
| $ | 718 |
| Gross amounts offset(*) | $ | (303 | ) | $ | (395 | ) | $ | (462 | ) | $ | (524 | ) | Net amounts recognized in the Balance Sheets | $ | 216 |
| $ | 157 |
| $ | 228 |
| $ | 194 |
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| | | | | | | | | | | | | | | As of March 31, 2017 | As of December 31, 2016 | Derivative Category and Balance Sheet Location | Assets | Liabilities | Assets | Liabilities | | (in millions) | (in millions) | | | | | | Alabama Power | | | | | Derivatives designated as hedging instruments for regulatory purposes | | | | | Energy-related derivatives: | | | | | Other current assets/Liabilities from risk management activities | $ | 9 |
| $ | 5 |
| $ | 13 |
| $ | 5 |
| Other deferred charges and assets/Other deferred credits and liabilities | 2 |
| 5 |
| 7 |
| 4 |
| Total derivatives designated as hedging instruments for regulatory purposes | $ | 11 |
| $ | 10 |
| $ | 20 |
| $ | 9 |
| Gross amounts recognized | $ | 11 |
| $ | 10 |
| $ | 20 |
| $ | 9 |
| Gross amounts offset | $ | (6 | ) | $ | (6 | ) | $ | (8 | ) | $ | (8 | ) | Net amounts recognized in the Balance Sheets | $ | 5 |
| $ | 4 |
| $ | 12 |
| $ | 1 |
| | | | | | Georgia Power | | | | | Derivatives designated as hedging instruments for regulatory purposes | | | | | Energy-related derivatives: | | | | | Other current assets/Other current liabilities | $ | 20 |
| $ | 2 |
| $ | 30 |
| $ | 1 |
| Other deferred charges and assets/Other deferred credits and liabilities | 4 |
| 11 |
| 14 |
| 7 |
| Total derivatives designated as hedging instruments for regulatory purposes | $ | 24 |
| $ | 13 |
| $ | 44 |
| $ | 8 |
| Derivatives designated as hedging instruments in cash flow and fair value hedges | | | | | Interest rate derivatives: | | | | | Other current assets/Other current liabilities | $ | 2 |
| $ | — |
| $ | 2 |
| $ | — |
| Other deferred charges and assets/Other deferred credits and liabilities | — |
| 4 |
| — |
| 3 |
| Total derivatives designated as hedging instruments in cash flow and fair value hedges | $ | 2 |
| $ | 4 |
| $ | 2 |
| $ | 3 |
| Gross amounts recognized | $ | 26 |
| $ | 17 |
| $ | 46 |
| $ | 11 |
| Gross amounts offset | $ | (6 | ) | $ | (6 | ) | $ | (8 | ) | $ | (8 | ) | Net amounts recognized in the Balance Sheets | $ | 20 |
| $ | 11 |
| $ | 38 |
| $ | 3 |
| | | | | | Gulf Power | | | | | Derivatives designated as hedging instruments for regulatory purposes | | | | | Energy-related derivatives: | | | | | Other current assets/Liabilities from risk management activities | $ | 2 |
| $ | 14 |
| $ | 4 |
| $ | 12 |
| Other deferred charges and assets/Other deferred credits and liabilities | — |
| 17 |
| 1 |
| 17 |
| Total derivatives designated as hedging instruments for regulatory purposes | $ | 2 |
| $ | 31 |
| $ | 5 |
| $ | 29 |
| Gross amounts recognized | $ | 2 |
| $ | 31 |
| $ | 5 |
| $ | 29 |
| Gross amounts offset | $ | (2 | ) | $ | (2 | ) | $ | (4 | ) | $ | (4 | ) | Net amounts recognized in the Balance Sheets | $ | — |
| $ | 29 |
| $ | 1 |
| $ | 25 |
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| | | | | | | | | | | | | | | As of March 31, 2017 | As of December 31, 2016 | Derivative Category and Balance Sheet Location | Assets | Liabilities | Assets | Liabilities | | (in millions) | (in millions) | | | | | | Mississippi Power | | | | | Derivatives designated as hedging instruments for regulatory purposes | | | | | Energy-related derivatives: | | | | | Other current assets/Other current liabilities | $ | 3 |
| $ | 7 |
| $ | 2 |
| $ | 6 |
| Other deferred charges and assets/Other deferred credits and liabilities | — |
| 5 |
| 2 |
| 5 |
| Total derivatives designated as hedging instruments for regulatory purposes | $ | 3 |
| $ | 12 |
| $ | 4 |
| $ | 11 |
| Derivatives designated as hedging instruments in cash flow and fair value hedges | | | | | Interest rate derivatives: | | | | | Other current assets/Other current liabilities | $ | 4 |
| $ | — |
| $ | 2 |
| $ | — |
| Other deferred charges and assets/Other deferred credits and liabilities | — |
| — |
| 1 |
| — |
| Total derivatives designated as hedging instruments in cash flow and fair value hedges | $ | 4 |
| $ | — |
| $ | 3 |
| $ | — |
| Gross amounts recognized | $ | 7 |
| $ | 12 |
| $ | 7 |
| $ | 11 |
| Gross amounts offset | $ | (2 | ) | $ | (2 | ) | $ | (3 | ) | $ | (3 | ) | Net amounts recognized in the Balance Sheets | $ | 5 |
| $ | 10 |
| $ | 4 |
| $ | 8 |
| | | | | | Southern Power | | | | | Derivatives designated as hedging instruments in cash flow and fair value hedges | | | | | Energy-related derivatives: | | | | | Other current assets/Other current liabilities | $ | 13 |
| $ | 4 |
| $ | 18 |
| $ | 4 |
| Foreign currency derivatives: | | | | | Other current assets/Other current liabilities | — |
| 25 |
| — |
| 25 |
| Other deferred charges and assets/Other deferred credits and liabilities | — |
| 37 |
| — |
| 33 |
| Total derivatives designated as hedging instruments in cash flow and fair value hedges | $ | 13 |
| $ | 66 |
| $ | 18 |
| $ | 62 |
| Derivatives not designated as hedging instruments | | | | | Energy-related derivatives: | | | | | Other current assets/Other current liabilities | $ | 2 |
| $ | 1 |
| $ | 3 |
| $ | 1 |
| Interest rate derivatives: | | | | | Other current assets/Other current liabilities | — |
| — |
| 1 |
| — |
| Total derivatives not designated as hedging instruments | $ | 2 |
| $ | 1 |
| $ | 4 |
| $ | 1 |
| Gross amounts recognized | $ | 15 |
| $ | 67 |
| $ | 22 |
| $ | 63 |
| Gross amounts offset | $ | (3 | ) | $ | (3 | ) | $ | (5 | ) | $ | (5 | ) | Net amounts recognized in the Balance Sheets | $ | 12 |
| $ | 64 |
| $ | 17 |
| $ | 58 |
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| | | | | | | | | | | | | | | As of March 31, 2017 | As of December 31, 2016 | Derivative Category and Balance Sheet Location | Assets | Liabilities | Assets | Liabilities | | (in millions) | (in millions) | | | | | | Southern Company Gas | | | | | Derivatives designated as hedging instruments for regulatory purposes | | | | | Energy-related derivatives: | | | | | Assets from risk management activities/Liabilities from risk management activities-current | $ | 14 |
| $ | 2 |
| $ | 24 |
| $ | 3 |
| Other deferred charges and assets/Other deferred credits and liabilities | — |
| — |
| 1 |
| — |
| Total derivatives designated as hedging instruments for regulatory purposes | $ | 14 |
| $ | 2 |
| $ | 25 |
| $ | 3 |
| Derivatives designated as hedging instruments in cash flow and fair value hedges | | | | | Energy-related derivatives: | | | | | Assets from risk management activities/Liabilities from risk management activities-current | $ | 1 |
| $ | 1 |
| $ | 4 |
| $ | 3 |
| Derivatives not designated as hedging instruments | | | | | Energy-related derivatives: | | | | | Assets from risk management activities/Liabilities from risk management activities-current | $ | 304 |
| $ | 270 |
| $ | 486 |
| $ | 482 |
| Other deferred charges and assets/Other deferred credits and liabilities | 132 |
| 114 |
| 66 |
| 81 |
| Total derivatives not designated as hedging instruments | $ | 436 |
| $ | 384 |
| $ | 552 |
| $ | 563 |
| Gross amounts of recognized | $ | 451 |
| $ | 387 |
| $ | 581 |
| $ | 569 |
| Gross amounts offset(*) | $ | (272 | ) | $ | (364 | ) | $ | (435 | ) | $ | (497 | ) | Net amounts recognized in the Balance Sheets | $ | 179 |
| $ | 23 |
| $ | 146 |
| $ | 72 |
|
| | (*) | Gross amounts offset include cash collateral held on deposit in broker margin accounts of $92 million and $62 million as of March 31, 2017 and December 31, 2016, respectively. |
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Pre-tax effects of unrealized derivative gains (losses) arising from energy-related derivative instruments |
At March 31, 2017 and December 31, 2016, the pre-tax effects of unrealized derivative gains (losses) arising from energy-related derivative instruments designated as regulatory hedging instruments and deferred were as follows: | | | | | | | | | | | | | | | | | | | | Regulatory Hedge Unrealized Gain (Loss) Recognized in the Balance Sheet at March 31, 2017 | Derivative Category and Balance Sheet Location | Southern Company(b) | Alabama Power | Georgia Power | Gulf Power | Mississippi Power | Southern Company Gas(b) | | (in millions) | | Energy-related derivatives: | | | | | | | Other regulatory assets, current | $ | (19 | ) | $ | (1 | ) | $ | — |
| $ | (12 | ) | $ | (5 | ) | $ | (1 | ) | Other regulatory assets, deferred | (32 | ) | (3 | ) | (7 | ) | (17 | ) | (5 | ) | — |
| Other regulatory liabilities, current(a) | 33 |
| 5 |
| 18 |
| — |
| 1 |
| 9 |
| Total energy-related derivative gains (losses) | $ | (18 | ) | $ | 1 |
| $ | 11 |
| $ | (29 | ) | $ | (9 | ) | $ | 8 |
|
| | (a) | Georgia Power includes other regulatory liabilities, current in other current liabilities. |
| | (b) | Fair value gains and losses recorded in regulatory assets and liabilities include cash collateral held on deposit in broker margin accounts of $4 million at March 31, 2017. |
| | | | | | | | | | | | | | | | | | | | Regulatory Hedge Unrealized Gain (Loss) Recognized in the Balance Sheet at December 31, 2016 | Derivative Category and Balance Sheet Location | Southern Company(c) | Alabama Power | Georgia Power | Gulf Power | Mississippi Power | Southern Company Gas(c) | | (in millions) | | Energy-related derivatives: | | | | | | | Other regulatory assets, current | $ | (16 | ) | $ | (1 | ) | $ | — |
| $ | (9 | ) | $ | (5 | ) | $ | (1 | ) | Other regulatory assets, deferred | (19 | ) | — |
| — |
| (16 | ) | (3 | ) | — |
| Other regulatory liabilities, current(a) | 56 |
| 8 |
| 29 |
| 1 |
| 1 |
| 17 |
| Other regulatory liabilities, deferred(b) | 12 |
| 4 |
| 7 |
| — |
| — |
| 1 |
| Total energy-related derivative gains (losses) | $ | 33 |
| $ | 11 |
| $ | 36 |
| $ | (24 | ) | $ | (7 | ) | $ | 17 |
|
| | (a) | Georgia Power includes other regulatory liabilities, current in other current liabilities. |
| | (b) | Georgia Power includes other regulatory liabilities, deferred in other deferred credits and liabilities. |
| | (c) | Fair value gains and losses recorded in regulatory assets and liabilities include cash collateral held on deposit in broker margin accounts of $8 million at December 31, 2016. |
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Pre-tax effects of interest rate derivatives, designated as cash flow hedging instruments |
For the three months ended March 31, 2017 and 2016, the pre-tax effects of energy-related derivatives, interest rate derivatives, and foreign currency derivatives designated as cash flow hedging instruments were as follows: | | | | | | | | | | | | | | | | | | Derivatives in Cash Flow Hedging Relationships | Gain (Loss) Recognized in OCI on Derivative (Effective Portion) | | Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | | Statements of Income Location | Amount | | 2017 | | 2016 | | | 2017 | | 2016 | | (in millions) | | | (in millions) | Southern Company | | | | | | | | | Energy-related derivatives | $ | (11 | ) | | $ | — |
| | Depreciation and amortization | $ | (4 | ) | | $ | (1 | ) | Interest rate derivatives | 1 |
| | (190 | ) | | Interest expense, net of amounts capitalized | (5 | ) | | (3 | ) | Foreign currency derivatives | (4 | ) | | — |
| | Interest expense, net of amounts capitalized | (6 | ) | | — |
| | | | | | Other income (expense), net(*) | 17 |
| | — |
| Total | $ | (14 | ) | | $ | (190 | ) | | | $ | 2 |
| | $ | (4 | ) | Gulf Power | | | | | | | | | Energy-related derivatives | $ | (1 | ) | | $ | — |
| | Depreciation and amortization | $ | — |
| | $ | — |
| Interest rate derivatives | — |
| | (5 | ) | | Interest expense, net of amounts capitalized | — |
| | — |
| Total | $ | (1 | ) | | $ | (5 | ) | | | $ | — |
| | $ | — |
| Southern Power | | | | | | | | | Energy-related derivatives | $ | (8 | ) | | $ | — |
| | Depreciation and amortization | $ | (4 | ) | | $ | (1 | ) | Foreign currency derivatives | (4 | ) | | — |
| | Interest expense, net of amounts capitalized | (6 | ) | | — |
| | | | | | Other income (expense), net(*) | 17 |
| | — |
| Total | $ | (12 | ) | | $ | — |
| | | $ | 7 |
| | $ | (1 | ) |
| | (*) | The reclassification from accumulated OCI into other income (expense), net completely offsets currency gains and losses arising from changes in the U.S. currency exchange rates used to record the euro-denominated notes. |
For Southern Company Gas, the pre-tax effect of energy related derivatives and interest rate derivatives designated as cash flow hedging instruments recognized in OCI and those reclassified from accumulated OCI into earnings for the three months ended March 31, 2017 and the predecessor period of January 1, 2016 through March 31, 2016 were as follows: | | | | | | | | | | | | | | | | | | | | | Gain (Loss) Recognized in OCI on Derivative (Effective Portion) | | | Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | | Successor | | | Predecessor | | | Successor | | | Predecessor | Derivatives in Cash Flow Hedging Relationships | Three Months Ended March 31, 2017 | | | Three Months Ended March 31, 2016 | | Statements of Income Location | Three Months Ended March 31, 2017 | | | Three Months Ended March 31, 2016 | | (in millions) | | | (in millions) | | | (in millions) | | | (in millions) | Energy-related derivatives | $ | (2 | ) | | | $ | — |
| | Cost of natural gas | $ | — |
| | | $ | — |
| Interest rate derivatives | — |
| | | (45 | ) | | Interest expense, net of amounts capitalized | — |
| | | 1 |
| Total | $ | (2 | ) | | | $ | (45 | ) | | | $ | — |
| | | $ | 1 |
|
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Pre tax effect of interest rate and energy related derivatives |
For the three months ended March 31, 2017 and 2016, the pre-tax effects of energy-related derivatives and interest rate derivatives not designated as hedging instruments on the statements of income were as follows: | | | | | | | | | | | | Gain (Loss) | | | Three Months Ended March 31, | Derivatives in Non-Designated Hedging Relationships | Statements of Income Location | 2017 | | 2016 | | | (in millions) | Southern Company | | | | | Energy Related derivatives: | Natural gas revenues(*) | $ | 50 |
| | $ | — |
| | Cost of natural gas | (3 | ) | | — |
| Total derivatives in non-designated hedging relationships | $ | 47 |
| | $ | — |
|
| | (*) | Excludes gains (losses) recorded in cost of natural gas associated with weather derivatives of $14 million for the three months ended March 31, 2017. |
| | | | | | | | | | | | | Gain (Loss) | | | Successor | | | Predecessor | Derivatives in Non-Designated Hedging Relationships | Statements of Income Location | Three Months Ended March 31, 2017 | | | Three Months Ended March 31, 2016 | | | (in millions) | | | (in millions) | Southern Company Gas | | | | | | Energy Related derivatives: | Natural gas revenues(*) | $ | 50 |
| | | $ | 20 |
| | Cost of natural gas | (3 | ) | | | (1 | ) | Total derivatives in non-designated hedging relationships | $ | 47 |
| | | $ | 19 |
|
| | (*) | Excludes gains (losses) recorded in cost of natural gas associated with weather derivatives of $14 million for the successor three months ended March 31, 2017 and $3 million for the predecessor three months ended March 31, 2016. |
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Pre-tax effects of interest rate derivatives, designated as fair value hedging instruments |
For the three months ended March 31, 2017 and 2016, the pre-tax effects of interest rate derivatives designated as fair value hedging instruments were as follows: | | | | | | | | | | Derivatives in Fair Value Hedging Relationships | | | Gain (Loss) | | | Three Months Ended March 31, | Derivative Category | Statements of Income Location | 2017 | | 2016 | | | (in millions) | Southern Company | | | | | Interest rate derivatives: | Interest expense, net of amounts capitalized | $ | (8 | ) | | $ | 20 |
| Georgia Power | | | | | Interest rate derivatives: | Interest expense, net of amounts capitalized | $ | (1 | ) | | $ | 14 |
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