Financing

12 Months Ended

Dec. 31, 2018

Securities Due Within One Year

A summary of long-term securities due within one year at each of December 31, 2018 and 2017 is as follows:



	December 31, 2018
	Southern Company		Alabama Power		Georgia Power			Mississippi Power		Southern Power			Southern Company Gas
	(in millions)
Senior notes	$	2,950	$	200	$	500		$	—	$	600		$	300
Revenue bonds^(a)	173		—		108			40		—			—
First mortgage bonds	50		—		—			—		—			50
Capitalized leases	24		1		13			—		—			—
Other^(b)	1		—		(4		)	—		(1		)	7
Total	$	3,198	$	201	$	617		$	40	$	599		$	357


(a)	For Southern Company and Mississippi Power, includes $40 million in pollution control revenue bonds classified as short term since they are variable rate demand obligations supported by short-term credit facilities; however, the final maturity dates range from 2020 to 2028.


(b)	Represents unamortized debt related amounts, acquisition accounting fair value adjustments, and/or fair value hedges. See Note 14 for additional information regarding fair value hedges.



	December 31, 2017
	Southern Company			Georgia Power			Mississippi Power			Southern Power		Southern Company Gas
	(in millions)
Senior notes	$	2,354		$	750		$	—		$	350	$	155
Long-term bank term loans	1,420			100			900			420		—
Revenue bonds^(a)	90			—			90			—		—
Capitalized leases	31			11			—			—		—
Other^(b)	(3		)	(4		)	(1		)	—		2
Total	$	3,892		$	857		$	989		$	770	$	157

(a)

For Southern Company and Mississippi Power, includes $50 million in revenue bonds classified as short term at December 31, 2017 that were remarketed in an index rate mode subsequent to December 31, 2017. Also for Southern Company and Mississippi Power, includes $40 million in pollution control revenue bonds classified as short term since they are variable rate demand obligations supported by short-term credit facilities; however, the final maturity dates range from 2020 to 2028.


(b)	Represents unamortized debt related amounts, acquisition accounting fair value adjustments, and fair value hedges. See Note 14 for additional information regarding fair value hedges.

Maturities of long-term debt for the next five years are as follows:



	Southern Company^(a)		Alabama Power		Georgia Power^(a)		Mississippi Power		Southern Power^(b)		Southern Company Gas
	(in millions)
2019	$	3,156	$	200	$	621	$	—	$	600	$	350
2020	4,041		250		1,006		307		825		—
2021	3,186		310		375		270		300		330
2022	1,974		750		505		—		677		46
2023	2,388		300		153		—		290		400


(a)	Amounts include principal amortization related to the FFB borrowings beginning in 2020; however, the final maturity date is February 20, 2044. See "Long-term Debt – DOE Loan Guarantee Borrowings" herein for additional information.


(b)	Southern Power's 2022 maturity represents euro-denominated debt at the U.S. dollar denominated hedge settlement amount.

Long-term Debt

Senior Notes

Total senior notes (including amounts due within one year) outstanding at December 31, 2018 and 2017 were as follows:



	Southern Company^(a)		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas^(b)
	(in millions)
December 31, 2018	$	32,725	$	6,875	$	5,600	$	1,200	$	5,050	$	4,000
December 31, 2017	35,148		6,375		7,100		755		5,459		4,157


(a)	Includes $10.0 billion and $10.2 billion of senior notes at the Southern Company parent entity at December 31, 2018 and 2017, respectively.


(b)	Represents senior notes issued by Southern Company Gas Capital, which are fully and unconditionally guaranteed by Southern Company Gas. See "Structural Considerations" herein for additional information.

See Note 14 for information regarding fair value hedges of existing senior notes.

Except as otherwise described herein, Southern Company and its subsidiaries used the proceeds of 2018 senior note issuances for long-term debt redemptions and maturities, to repay short-term indebtedness, and for general corporate purposes, including working capital. The subsidiaries also used the proceeds for their construction programs.

In August 2018, Southern Company issued $750 million aggregate principal amount of Series 2018A Floating Rate Senior Notes due February 14, 2020 bearing interest based on three-month LIBOR.

Subsequent to December 31, 2018, through cash tender offers, Southern Company repurchased and retired approximately $522 million of the $1.0 billion aggregate principal amount outstanding of its 1.85% Senior Notes due July 1, 2019 (1.85% Notes), approximately $180 million of the $350 million aggregate principal amount outstanding of its Series 2014B 2.15% Senior Notes due September 1, 2019 (Series 2014B Notes), and approximately $504 million of the $750 million aggregate principal amount outstanding of its Series 2018A Floating Rate Notes due February 14, 2020 (Series 2018A Notes), for an aggregate purchase price, excluding accrued and unpaid interest, of approximately $1.2 billion. In addition, subsequent to December 31, 2018, and following the completion of the cash tender offers, Southern Company completed the redemption of all of the Series 2018A Notes remaining outstanding and called for redemption all of the 1.85% Notes and Series 2014B Notes remaining outstanding.

In June 2018, Alabama Power issued $500 million aggregate principal amount of Series 2018A 4.30% Senior Notes due July 15, 2048.

In April 2018, Georgia Power redeemed all $250 million aggregate principal amount of its Series 2008B 5.40% Senior Notes due June 1, 2018.

In May 2018, through cash tender offers, Georgia Power repurchased and retired $89 million of the $250 million aggregate principal amount outstanding of its Series 2007A 5.65% Senior Notes due March 1, 2037, $326 million of the $500 million aggregate principal amount outstanding of its Series 2009A 5.95% Senior Notes due February 1, 2039, and $335 million of the $600 million aggregate principal amount outstanding of its Series 2010B 5.40% Senior Notes due June 1, 2040, for an aggregate purchase price, excluding accrued and unpaid interest, of $902 million.

In March 2018, Mississippi Power issued $300 million aggregate principal amount of Series 2018A Floating Rate Senior Notes due March 27, 2020 bearing interest based on three-month LIBOR and $300 million aggregate principal amount of Series 2018B 3.95% Senior Notes due March 30, 2028.

In October 2018, Mississippi Power completed the redemption of all $30 million aggregate principal amount outstanding of its Series G 5.40% Senior Notes due July 1, 2035 and all $125 million aggregate principal amount outstanding of its Series 2009A 5.55% Senior Notes due March 1, 2019.

Junior Subordinated Notes

Total junior subordinated notes outstanding for Southern Company and Georgia Power at December 31, 2018 and 2017 were as follows:


(*)	Includes $3.3 billion of junior subordinated notes at the Southern Company parent entity at both December 31, 2018 and 2017.

Pollution Control Revenue Bonds

Pollution control revenue bond obligations represent loans to the traditional electric operating companies from public authorities of funds derived from sales by such authorities of revenue bonds issued to finance pollution control and solid waste disposal facilities. In some cases, the pollution control revenue bond obligations represent obligations under installment sales agreements with respect to facilities constructed with the proceeds of revenue bonds issued by public authorities. The traditional electric operating companies are required to make payments sufficient for the authorities to meet principal and interest requirements of such bonds. Proceeds from certain issuances are restricted until qualifying expenditures are incurred. Total tax-exempt pollution control revenue bond obligations (including amounts due within one year) outstanding at December 31, 2018 and 2017 were as follows:



	Southern Company		Alabama Power		Georgia Power		Mississippi Power
	(in millions)
December 31, 2018	$	2,585	$	1,060	$	1,460	$	40
December 31, 2017	3,297		1,060		1,821		83

In October 2018, Alabama Power purchased and held $120 million aggregate principal amount of The Industrial Development Board of the City of Mobile, Alabama Pollution Control Revenue Bonds (Alabama Power Company Plant Barry Project), Series 2008. Alabama Power reoffered these bonds to the public in November 2018.

During 2018, Georgia Power purchased and held the following pollution control revenue bonds, which may be reoffered to the public at a later date:


•	approximately $105 million aggregate principal amount of Development Authority of Burke County (Georgia) Pollution Control Revenue Bonds (Georgia Power Company Plant Vogtle Project), First Series 2013


•	$173 million aggregate principal amount of Development Authority of Bartow County (Georgia) Pollution Control Revenue Bonds (Georgia Power Company Plant Bowen Project), First Series 2009


•	$55 million aggregate principal amount of Development Authority of Burke County (Georgia) Pollution Control Revenue Bonds (Georgia Power Company Plant Vogtle Project), Fifth Series 1994


•	$65 million aggregate principal amount of Development Authority of Burke County (Georgia) Pollution Control Revenue Bonds (Georgia Power Company Plant Vogtle Project), Second Series 2008


•	approximately $72 million aggregate principal amount of Development Authority of Bartow County (Georgia) Pollution Control Revenue Bonds (Georgia Power Company Plant Bowen Project), First Series 2013

In December 2018, the Development Authority of Burke County (Georgia) issued approximately $108 million aggregate principal amount of Pollution Control Revenue Bonds (Georgia Power Company Plant Vogtle Project), First Series 2018 due November 1, 2052 for the benefit of Georgia Power. The proceeds were used to redeem, in January 2019, approximately $13 million, $20 million, and $75 million aggregate principal amount of Development Authority of Burke County (Georgia) Pollution Control Revenue Bonds (Georgia Power Company Plant Vogtle Project), First Series 1992, Eighth Series 1994, and Second Series 1995, respectively.

In July 2018, Mississippi Power purchased and held approximately $43 million aggregate principal amount of Mississippi Business Finance Corporation Pollution Control Revenue Refunding Bonds, Series 2002. Mississippi Power may reoffer these bonds to the public at a later date.

Bank Term Loans

Total long-term bank term loans (including amounts due within one year) outstanding at December 31, 2018 and 2017 were as follows:



	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power
	(in millions)
December 31, 2018	$	145	$	45	$	—	$	—	$	—
December 31, 2017	1,465		45		100		900		420

See "Notes Payable" herein for additional information regarding bank term loans.

In January 2018, Georgia Power repaid its outstanding $100 million floating rate bank loan due October 26, 2018.

In March 2018, Mississippi Power repaid at maturity a $900 million unsecured term loan.

In May 2018, Southern Power repaid $420 million aggregate principal amount of long-term floating rate bank loans.

In November 2018, SEGCO, as borrower, and Alabama Power, as guarantor, entered into a $100 million long-term delayed draw floating rate bank term loan bearing interest based on three-month LIBOR, which SEGCO used to repay at maturity $100 million aggregate principal amount of Series 2013A Senior Notes. See Note 9 under "Guarantees" for additional information.

DOE Loan Guarantee Borrowings

Pursuant to the loan guarantee program established under Title XVII of the Energy Policy Act of 2005 (Title XVII Loan Guarantee Program), Georgia Power and the DOE entered into the Loan Guarantee Agreement in 2014, under which the DOE agreed to guarantee the obligations of Georgia Power under a note purchase agreement (FFB Note Purchase Agreement) among the DOE, Georgia Power, and the FFB and a related promissory note (FFB Promissory Note). The FFB Note Purchase Agreement and the FFB Promissory Note provide for a multi-advance term loan facility (FFB Credit Facility), under which Georgia Power may make term loan borrowings through the FFB.

In July 2017, Georgia Power entered into an amendment to the Loan Guarantee Agreement (LGA Amendment) in connection with the DOE's consent to Georgia Power's entry into the Vogtle Services Agreement and the related intellectual property licenses (IP Licenses).

Under the terms of the Loan Guarantee Agreement, upon termination of the Vogtle 3 and 4 Agreement, further advances are conditioned upon the DOE's approval of any agreements entered into in replacement of the Vogtle 3 and 4 Agreement. Under the terms of the LGA Amendment, Georgia Power will not request any advances unless and until certain conditions are satisfied, including (i) receipt of the DOE's approval of the Bechtel Agreement (together with the Vogtle Services Agreement and the IP Licenses, the Replacement EPC Arrangements) and (ii) Georgia Power's entry into a further amendment to the Loan Guarantee Agreement with the DOE to reflect the Replacement EPC Arrangements.

Proceeds of advances made under the FFB Credit Facility are used to reimburse Georgia Power for Eligible Project Costs. Aggregate borrowings under the FFB Credit Facility may not exceed the lesser of (i) 70% of Eligible Project Costs or (ii) approximately $3.46 billion.

In September 2017, the DOE issued a conditional commitment to Georgia Power for up to approximately $1.67 billion of additional guaranteed loans under the Loan Guarantee Agreement. This conditional commitment expires on March 31, 2019, subject to any further extension approved by the DOE. Final approval and issuance of these additional loan guarantees by the DOE cannot be assured and are subject to the negotiation of definitive agreements, completion of due diligence by the DOE, receipt of any necessary regulatory approvals, and satisfaction of other conditions.

All borrowings under the FFB Credit Facility are full recourse to Georgia Power, and Georgia Power is obligated to reimburse the DOE for any payments the DOE is required to make to the FFB under the guarantee. Georgia Power's reimbursement obligations to the DOE are full recourse and secured by a first priority lien on (i) Georgia Power's 45.7% undivided ownership interest in Plant Vogtle Units 3 and 4 (primarily the units under construction, the related real property, and any nuclear fuel loaded in the reactor core) and (ii) Georgia Power's rights and obligations under the principal contracts relating to Plant Vogtle Units 3 and 4. There are no restrictions on Georgia Power's ability to grant liens on other property.

In addition to the conditions described above, future advances are subject to satisfaction of customary conditions, as well as certification of compliance with the requirements of the Title XVII Loan Guarantee Program, including accuracy of project-related representations and warranties, delivery of updated project-related information, and evidence of compliance with the prevailing wage requirements of the Davis-Bacon Act of 1931, as amended, and certification from the DOE's consulting engineer that proceeds of the advances are used to reimburse Eligible Project Costs.

Upon satisfaction of all conditions described above, advances may be requested under the FFB Credit Facility on a quarterly basis through 2020. The final maturity date for each advance under the FFB Credit Facility is February 20, 2044. Interest is payable quarterly and principal payments will begin on February 20, 2020. Borrowings under the FFB Credit Facility will bear interest at the applicable U.S. Treasury rate plus a spread equal to 0.375%.

At both December 31, 2018 and 2017, Georgia Power had $2.6 billion of borrowings outstanding under the FFB Credit Facility.

Under the Loan Guarantee Agreement, Georgia Power is subject to customary borrower affirmative and negative covenants and events of default. In addition, Georgia Power is subject to project-related reporting requirements and other project-specific covenants and events of default.

In the event certain mandatory prepayment events (including any decision not to continue construction of Plant Vogtle Units 3 and 4) occur, the FFB's commitment to make further advances under the FFB Credit Facility will terminate and Georgia Power will be required to prepay the outstanding principal amount of all borrowings under the FFB Credit Facility over a period of five years (with level principal amortization). Among other things, these mandatory prepayment events include (i) the termination of the Vogtle Services Agreement or rejection of the Vogtle Services Agreement in bankruptcy if Georgia Power does not maintain access to intellectual property rights under the IP Licenses; (ii) a decision by Georgia Power not to continue construction of Plant Vogtle Units 3 and 4; (iii) cancellation of Plant Vogtle Units 3 and 4 by the Georgia PSC, or by Georgia Power if authorized by the Georgia PSC; and (iv) cost disallowances by the Georgia PSC that could have a material adverse effect on completion of Plant Vogtle Units 3 and 4 or Georgia Power's ability to repay the outstanding borrowings under the FFB Credit Facility. Under certain circumstances, insurance proceeds and any proceeds from an event of taking must be applied to immediately prepay outstanding borrowings under the FFB Credit Facility. In addition, if Georgia Power discontinues construction of Plant Vogtle Units 3 and 4, Georgia Power would be obligated to immediately repay a portion of the outstanding borrowings under the FFB Credit Facility to the extent such outstanding borrowings exceed 70% of Eligible Project Costs, net of the proceeds received by Georgia Power under the Guarantee Settlement Agreement. Georgia Power also may voluntarily prepay outstanding borrowings under the FFB Credit Facility. Under the FFB Credit Facility, any prepayment (whether mandatory or optional) will be made with a make-whole premium or discount, as applicable.

In connection with any cancellation of Plant Vogtle Units 3 and 4 that results in a mandatory prepayment event, the DOE may elect to continue construction of Plant Vogtle Units 3 and 4. In such an event, the DOE will have the right to assume Georgia Power's rights and obligations under the principal agreements relating to Plant Vogtle Units 3 and 4 and to acquire all or a portion of Georgia Power's ownership interest in Plant Vogtle Units 3 and 4.

Other Long-Term Debt

Alabama Power

Alabama Power has formed a wholly-owned trust subsidiary for the purpose of issuing preferred securities. The proceeds of the related equity investments and preferred security sales were loaned back to Alabama Power through the issuance of junior subordinated notes totaling $206 million outstanding at December 31, 2018 and 2017, which constitute substantially all of the assets of this trust and are reflected in the balance sheets as long-term debt payable. Alabama Power considers that the mechanisms and obligations relating to the preferred securities issued for its benefit, taken together, constitute a full and unconditional guarantee by it of the trust's payment obligations with respect to these securities. At December 31, 2018 and 2017, trust preferred securities of $200 million were outstanding. See Note 1 under "Variable Interest Entities" for additional information on the accounting treatment for this trust and the related securities.

Mississippi Power

At December 31, 2018 and 2017, Mississippi Power had $270 million aggregate principal amount outstanding of Mississippi Business Finance Corporation Taxable Revenue Bonds, 7.13% Series 1999A due October 20, 2021. Mississippi Power assumed the obligations in 2011 in connection with its election under its operating lease of Plant Daniel Units 3 and 4 to purchase the assets. The bonds were recorded at fair value at the date of assumption, or $346 million, reflecting a premium of $76 million. See "Secured Debt" herein for additional information.

At December 31, 2018 and 2017, Mississippi Power had $50 million of tax-exempt revenue bond obligations outstanding representing loans to Mississippi Power from a public authority of funds derived from the sale by such authority of revenue bonds issued to finance a portion of the costs of constructing the Kemper County energy facility.

Southern Company Gas

At December 31, 2018 and 2017, Nicor Gas had $1.3 billion and $1.0 billion, respectively, of first mortgage bonds outstanding. These bonds have been issued with maturities ranging from 2019 to 2058. See "Secured Debt" herein for additional information.

Prior to its sale, in the second quarter 2018, Pivotal Utility Holdings caused $200 million aggregate principal amount of gas facility revenue bonds to be redeemed.

Nicor Gas issued $300 million aggregate principal amount of first mortgage bonds in a private placement, of which $100 million was issued in August 2018 and $200 million was issued in November 2018.

At both December 31, 2018 and 2017, Atlanta Gas Light had $159 million of medium-term notes outstanding.

Capital Leases

Assets acquired under capital leases are recorded in the balance sheets as property, plant, and equipment and the related obligations are classified as long-term debt. See Note 5 under "Capital Leases" for additional information.

Southern Company

At December 31, 2018 and 2017, SCS had capital lease obligations of approximately $178 million and $177 million, respectively, for an office building and certain computer equipment including desktops, laptops, servers, printers, and storage devices with annual interest rates that range from 1.6% to 4.7%.

Georgia Power

At December 31, 2018 and 2017, Georgia Power had a capital lease obligation for its corporate headquarters building of $15 million and $22 million, respectively, with an annual interest rate of 7.9%. For ratemaking purposes, the Georgia PSC has allowed the lease payments in cost of service with no return on the capital lease asset. The difference between the depreciation and the lease payments allowed for ratemaking purposes is recovered as operating expenses as ordered by the Georgia PSC. The annual operating expense incurred for this capital lease was not material for any year presented.

At December 31, 2018 and 2017, Georgia Power had capital lease obligations related to two affiliate PPAs with Southern Power of $128 million and $132 million, respectively. The annual interest rates range from 11% to 12% for these two capital lease PPAs. For ratemaking purposes, the Georgia PSC has included the capital lease asset amortization in cost of service and the interest in Georgia Power's cost of debt. See Note 1 under "Affiliate Transactions" and Note 9 under "Fuel and Power Purchase Agreements – Affiliate" for additional information.

Secured Debt

Each of Southern Company's subsidiaries is organized as a legal entity, separate and apart from Southern Company and its other subsidiaries. There are no agreements or other arrangements among the Southern Company system companies under which the assets of one company have been pledged or otherwise made available to satisfy obligations of Southern Company or any of its other subsidiaries.

Outstanding secured debt at December 31, 2018 and 2017 for the applicable registrants was as follows:



	Georgia Power^(a)		Mississippi Power^(b)		Southern Company Gas^(c)
	(in millions)
December 31, 2018	$	2,767	$	270	$	1,325
December 31, 2017	2,779		270		1,025

(a)

Includes Georgia Power's FFB loans that are secured by a first priority lien on (i) Georgia Power's 45.7% undivided ownership interest in Plant Vogtle Units 3 and 4 (primarily the units under construction, the related real property, and any nuclear fuel loaded in the reactor core) and (ii) Georgia Power's rights and obligations under the principal contracts relating to Plant Vogtle Units 3 and 4. These borrowings totaled $2.6 billion at both December 31, 2018 and 2017. See "Long-term Debt – DOE Loan Guarantee Borrowings" herein for additional information. Also includes capital lease obligations of $142 million and $154 million at December 31, 2018 and 2017, respectively. See "Long-term Debt – Capital Leases – Georgia Power" herein for additional information.


(b)	The revenue bonds assumed in conjunction with Mississippi Power's purchase of Plant Daniel Units 3 and 4 are secured by Plant Daniel Units 3 and 4 and certain related personal property. See "Long-term Debt – Other Long-Term Debt" herein for additional information.


(c)	Nicor Gas' first mortgage bonds are secured by substantially all of Nicor Gas' properties. See "Long-term Debt – Other Long-Term Debt – Southern Company Gas" herein for additional information.

At December 31, 2018 and 2017, Gulf Power had $41 million of secured debt related to a lien on its property at Plant Daniel in connection with the issuance of two series of its pollution control revenue bonds, which are included in liabilities held for sale on Southern Company's balance sheet at December 31, 2018. On January 1, 2019, Southern Company completed its sale of Gulf Power to NextEra Energy. See Note 15 under "Southern Company's Sale of Gulf Power" for additional information.

Each registrant's senior notes, junior subordinated notes, pollution control and other revenue bond obligations, bank term loans, credit facility borrowings, and notes payable are effectively subordinated to all secured debt of each respective registrant.

Bank Credit Arrangements

At December 31, 2018, committed credit arrangements with banks were as follows:



	Expires										Executable Term Loans				Expires Within One Year
Company	2019		2020		2022		Total		Unused^(d)		One Year		Two Years		Term Out		No Term Out
	(in millions)
Southern Company^(a)	$	—	$	—	$	2,000	$	2,000	$	1,999	$	—	$	—	$	—	$	—
Alabama Power	33		500		800		1,333		1,333		—		—		—		33
Georgia Power	—		—		1,750		1,750		1,736		—		—		—		—
Mississippi Power	100		—		—		100		100		—		—		—		100
Southern Power^(b)	—		—		750		750		727		—		—		—		—
Southern Company Gas^(c)	—		—		1,900		1,900		1,895		—		—		—		—
Other	30		—		—		30		30		—		—		—		30
Southern Company Consolidated^(e)	$	163	$	500	$	7,200	$	7,863	$	7,820	$	—	$	—	$	—	$	163


(a)	Represents the Southern Company parent entity.


(b)	Southern Power's subsidiaries are not parties to its bank credit arrangement.

(c)

Southern Company Gas provides a parent guarantee of the obligations of its subsidiary Southern Company Gas Capital, which is the borrower of $1.4 billion ($1.395 billion unused) of this arrangement. Southern Company Gas' committed credit arrangement also includes $500 million (all unused) for which Nicor Gas is the borrower and which is restricted for working capital needs of Nicor Gas. Pursuant to this multi-year credit arrangement, the allocations between Southern Company Gas Capital and Nicor Gas may be adjusted. See "Structural Considerations" herein for additional information.


(d)	Amounts used are for letters of credit.


(e)	Excludes $280 million of committed credit arrangements of Gulf Power, which was sold on January 1, 2019. See Note 15 under "Southern Company's Sale of Gulf Power" for additional information.

Most of the bank credit arrangements require payment of commitment fees based on the unused portion of the commitments or the maintenance of compensating balances with the banks. Commitment fees average less than ¹/4 of 1% for Southern Company, the traditional electric operating companies, Southern Power, Southern Company Gas, and Nicor Gas. Compensating balances are not legally restricted from withdrawal.

Subject to applicable market conditions, Southern Company and its subsidiaries expect to renew or replace their bank credit arrangements as needed, prior to expiration. In connection therewith, Southern Company and its subsidiaries may extend the maturity dates and/or increase or decrease the lending commitments thereunder.

Southern Company's, Southern Company Gas', and Nicor Gas' credit arrangements contain covenants that limit debt levels to 70% of total capitalization, as defined in the agreements, and most of the other subsidiaries' bank credit arrangements contain covenants that limit debt levels to 65% of total capitalization, as defined in the agreements. For purposes of these definitions, debt excludes the long-term debt payable to affiliated trusts and, in certain arrangements, other hybrid securities. Additionally, for Southern Company and Southern Power, for purposes of these definitions, debt would exclude any project debt incurred by certain subsidiaries of Southern Power to the extent such debt is non-recourse to Southern Power and capitalization would exclude the capital stock or other equity attributable to such subsidiaries. At December 31, 2018, Southern Company, the traditional electric operating companies, Southern Power, Southern Company Gas, and Nicor Gas were each in compliance with their respective debt limit covenants.

A portion of the unused credit with banks is allocated to provide liquidity support to the revenue bonds of the traditional electric operating companies and the commercial paper programs of Southern Company, the traditional electric operating companies, Southern Power, Southern Company Gas, and Nicor Gas. The amount of variable rate revenue bonds of the traditional electric operating companies outstanding requiring liquidity support at December 31, 2018 was approximately $1.6 billion (comprised of approximately $854 million at Alabama Power, $659 million at Georgia Power, $82 million at Gulf Power, and $40 million at Mississippi Power). In addition, at December 31, 2018, the traditional electric operating companies had approximately $403 million (comprised of approximately $345 million at Georgia Power and $58 million at Gulf Power) of revenue bonds outstanding that are required to be remarketed within the next 12 months. See Note 15 under "Southern Company's Sale of Gulf Power" for information regarding the sale of Gulf Power on January 1, 2019. Subsequent to December 31, 2018, Georgia Power redeemed approximately $108 million of obligations related to outstanding variable rate pollution control revenue bonds.

In addition to its credit arrangement described above, Southern Power also has a $120 million continuing letter of credit facility expiring in 2021 for standby letters of credit. At December 31, 2018, $103 million has been used for letters of credit, primarily as credit support for PPA requirements, and $17 million was unused. At December 31, 2017, the total amount available under this facility was $19 million. Southern Power's subsidiaries are not parties to this letter of credit facility. Also, at December 31, 2018 and 2017, Southern Power had $103 million and $113 million, respectively, of cash collateral posted related to PPA requirements, which is included in other deferred charges and assets in Southern Power's consolidated balance sheets.

Notes Payable

Southern Company, Alabama Power, Georgia Power, Southern Power, Southern Company Gas, Nicor Gas, and SEGCO make short-term borrowings primarily through commercial paper programs that have the liquidity support of the committed bank credit arrangements described above under "Bank Credit Arrangements." Southern Power's subsidiaries are not parties to its commercial paper program. Southern Company Gas maintains commercial paper programs at Southern Company Gas Capital and at Nicor Gas. Nicor Gas' commercial paper program supports working capital needs at Nicor Gas as Nicor Gas is not permitted to make money pool loans to affiliates. All of Southern Company Gas' other subsidiaries benefit from Southern Company Gas Capital's commercial paper program. See "Structural Considerations" herein for additional information.

In addition, Southern Company and certain of its subsidiaries have entered into various bank term loan agreements. Unless otherwise stated, the proceeds of these loans were used to repay existing indebtedness and for general corporate purposes, including working capital and, for the subsidiaries, their continuous construction programs.

Commercial paper and short-term bank term loans are included in notes payable in the balance sheets. Details of short-term borrowings were as follows:



	Notes Payable at December 31, 2018				Notes Payable at December 31, 2017
	Amount Outstanding		Weighted Average Interest Rate		Amount Outstanding		Weighted Average Interest Rate
	(in millions)				(in millions)
Southern Company
Commercial paper	$	1,064	3.0	%	$	1,832	1.8	%
Short-term bank debt	1,851		3.1	%	607		2.3	%
Total	$	2,915	3.1	%	$	2,439	1.9	%

Alabama Power
Short-term bank debt	$	—	—	%	$	3	3.7	%

Georgia Power
Commercial paper	$	294	3.1	%	$	—	—	%
Short-term bank debt	—		—	%	150		2.2	%
Total	$	294	3.1	%	$	150	2.2	%

Mississippi Power
Short-term bank debt	$	—	—	%	$	4	3.8	%

Southern Power
Commercial paper	$	—	—	%	$	105	2.0	%
Short-term bank debt	100		3.1	%	—		—	%
Total	$	100	3.1	%	$	105	2.0	%

Southern Company Gas
Commercial paper:
Southern Company Gas Capital	$	403	3.1	%	$	1,243	1.7	%
Nicor Gas	247		3.0	%	275		1.8	%
Total	$	650	3.0	%	$	1,518	1.8	%

The outstanding bank term loans at December 31, 2018 have covenants that limit debt levels to a percentage of total capitalization. The percentage is 70% for Southern Company and 65% for Alabama Power and Southern Power, as defined in the agreements. For purposes of these definitions, debt excludes any long-term debt payable to affiliated trusts and other hybrid securities. Additionally, for Southern Company and Southern Power, for purposes of these definitions, debt excludes any project debt incurred by certain subsidiaries of Southern Power to the extent such debt is non-recourse to Southern Power and capitalization excludes the capital stock or other equity attributable to such subsidiary. At December 31, 2018, each of Southern Company, Alabama Power, and Southern Power was in compliance with its debt limits.

Except as otherwise described herein, Southern Company and its subsidiaries used the proceeds of bank loans for long-term debt redemptions and maturities, to repay short-term indebtedness, and for general corporate purposes, including working capital.

In March 2018, Southern Company entered into a $900 million short-term floating rate bank loan bearing interest based on one-month LIBOR, which was repaid in August 2018.

In April 2018, Southern Company borrowed $250 million pursuant to a short-term uncommitted bank credit arrangement, bearing interest at a rate agreed upon by Southern Company and the bank from time to time and payable on no less than 30 days' demand by the bank. Subsequent to December 31, 2018, Southern Company repaid this loan.

In June 2018, Southern Company repaid at maturity two $100 million short-term floating rate bank term loans.

In August 2018, Southern Company entered into a $1.5 billion short-term floating rate bank loan bearing interest based on one-month LIBOR, and repaid $250 million borrowed in August 2017 pursuant to a short-term uncommitted bank credit arrangement. Subsequent to December 31, 2018, Southern Company repaid this loan.

In January 2018, Georgia Power repaid its outstanding $150 million floating rate bank loan due May 31, 2018.

In March 2018, Mississippi Power entered into a $300 million short-term floating rate bank loan bearing interest based on one-month LIBOR, of which $200 million was repaid in the second quarter 2018 and $100 million was repaid in the third quarter 2018.

In May 2018, Southern Power entered into two short-term floating rate bank loans, each for an aggregate principal amount of $100 million, which bear interest based on one-month LIBOR. In November 2018, Southern Power repaid one of these short-term loans.

In January 2018, Southern Company Gas issued a floating rate promissory note to Southern Company in an aggregate principal amount of $100 million bearing interest based on one-month LIBOR. In March 2018, Southern Company Gas repaid this promissory note.

In April 2018, Pivotal Utility Holdings, as borrower, and Southern Company Gas, as guarantor, entered into a $181 million short-term delayed draw floating rate bank term loan bearing interest based on one-month LIBOR. In July 2018, Pivotal Utility Holdings repaid this short-term loan.

In May 2018, Southern Company Gas Capital borrowed $95 million pursuant to a short-term uncommitted bank credit arrangement, guaranteed by Southern Company Gas, bearing interest at a rate agreed upon by Southern Company Gas Capital and the bank from time to time and payable on no less than 30 days' demand by the bank. In July 2018, Southern Company Gas Capital repaid this loan.

Outstanding Classes of Capital Stock

Southern Company

Common Stock

Stock Issued

During 2018, Southern Company issued approximately 11.6 million shares of common stock primarily through employee equity compensation plans and received proceeds of approximately $442 million.

In addition, during the third and fourth quarters 2018, Southern Company issued a total of approximately 12.1 million and 2.5 million shares, respectively, of common stock through at-the-market issuances pursuant to sales agency agreements related to Southern Company's continuous equity offering program and received cash proceeds of approximately $540 million and $108 million, respectively, net of $5 million and $1 million in commissions, respectively.

Shares Reserved

At December 31, 2018, a total of 92 million shares were reserved for issuance pursuant to the Southern Investment Plan, employee savings plans, the Outside Directors Stock Plan, the Omnibus Incentive Compensation Plan (which includes stock options and performance share units as discussed in Note 12), and an at-the-market program. Of the total 92 million shares reserved, there were 10 million shares of common stock remaining available for awards under the Omnibus Incentive Compensation Plan at December 31, 2018.

Diluted Earnings Per Share

For Southern Company, the only difference in computing basic and diluted earnings per share (EPS) is attributable to awards outstanding under the stock option and performance share plans. The effect of both stock options and performance share award units was determined using the treasury stock method. Shares used to compute diluted EPS were as follows:



	Average Common Stock Shares
	2018	2017	2016
	(in millions)
As reported shares	1,020	1,000	951
Effect of options and performance share award units	5	8	7
Diluted shares	1,025	1,008	958

Stock options and performance share award units that were not included in the diluted EPS calculation because they were anti-dilutive were immaterial in all years presented.

Redeemable Preferred Stock of Subsidiaries

Prior to 2017, each of the traditional electric operating companies had outstanding preferred and/or preference stock. During 2017, Alabama Power and Gulf Power redeemed all of their outstanding preference stock and Georgia Power redeemed all of its outstanding preferred and preference stock. During 2018, Mississippi Power redeemed all of its outstanding preferred stock. The remaining preferred stock of Alabama Power contains a feature that allows the holders to elect a majority of such subsidiary's board of directors if preferred dividends are not paid for four consecutive quarters. Because such a potential redemption-triggering event is not solely within the control of Alabama Power, this preferred stock is presented as "Redeemable Preferred Stock of Subsidiaries" on Southern Company's balance sheets and statements of capitalization in a manner consistent with temporary equity under applicable accounting standards.

The following table presents changes during the year in redeemable preferred stock of subsidiaries for Southern Company:



	Redeemable Preferred Stock of Subsidiaries
	(in millions)
Balance at December 31, 2015 and 2016:	$	118
Issued^(a)	250
Redeemed^(a)	(38		)
Issuance costs^(a)	(6		)
Balance at December 31, 2017:	324
Redeemed^(b)	(33		)
Balance at December 31, 2018:	$	291


(a)	See "Alabama Power" herein for additional information.


(b)	See "Mississippi Power" herein for additional information.

Alabama Power

Alabama Power has preferred stock, Class A preferred stock, and common stock outstanding. Alabama Power also has authorized preference stock, none of which is outstanding. Alabama Power's preferred stock and Class A preferred stock, without preference between classes, rank senior to Alabama Power's common stock with respect to payment of dividends and voluntary and involuntary dissolution. The preferred stock and Class A preferred stock of Alabama Power contain a feature that allows the holders to elect a majority of Alabama Power's board of directors if preferred dividends are not paid for four consecutive quarters. Because such a potential redemption-triggering event is not solely within the control of Alabama Power, the preferred stock and Class A preferred stock is presented as "Redeemable Preferred Stock" on Alabama Power's balance sheets and statements of capitalization in a manner consistent with temporary equity under applicable accounting standards.

Alabama Power's preferred stock is subject to redemption at a price equal to the par value plus a premium. Alabama Power's Class A preferred stock is subject to redemption at a price equal to the stated capital. All series of Alabama Power's preferred stock currently are subject to redemption at the option of Alabama Power. The Class A preferred stock is subject to redemption on or after October 1, 2022, or following the occurrence of a rating agency event. Information for each outstanding series is in the table below:



Preferred Stock	Par Value/Stated Capital Per Share	Shares Outstanding	Redemption Price Per Share
4.92% Preferred Stock	$100	80,000	$103.23
4.72% Preferred Stock	$100	50,000	$102.18
4.64% Preferred Stock	$100	60,000	$103.14
4.60% Preferred Stock	$100	100,000	$104.20
4.52% Preferred Stock	$100	50,000	$102.93
4.20% Preferred Stock	$100	135,115	$105.00
5.00% Class A Preferred Stock	$25	10,000,000	Stated Capital^(*)


(*)	Prior to October 1, 2022: $25.50; on or after October 1, 2022: Stated Capital

In September 2017, Alabama Power issued 10 million shares ($250 million aggregate stated capital) of 5.00% Class A Preferred Stock, Cumulative, Par Value $1 Per Share (Stated Capital $25 Per Share). The proceeds were used in October 2017 to redeem all 2 million shares ($50 million aggregate stated capital) of 6.50% Series Preference Stock, 6 million shares ($150 million aggregate stated capital) of 6.45% Series Preference Stock, and 1.52 million shares ($38 million aggregate stated capital) of 5.83% Class A Preferred Stock and for other general corporate purposes, including Alabama Power's continuous construction program.

There were no changes for the year ended December 31, 2018 in redeemable preferred stock of Alabama Power.

Georgia Power

Georgia Power has preferred stock, Class A preferred stock, preference stock, and common stock authorized, but only common stock outstanding as of December 31, 2018 and 2017. In October 2017, Georgia Power redeemed all 1.8 million shares ($45 million aggregate liquidation amount) of its 6.125% Series Class A Preferred Stock and 2.25 million shares ($225 million aggregate liquidation amount) of its 6.50% Series 2007A Preference Stock.

Mississippi Power

Mississippi Power has preferred stock and common stock authorized, but only common stock outstanding as of December 31, 2018. Mississippi Power previously had preferred stock that contained a feature allowing the holders to elect a majority of Mississippi Power's board of directors if preferred dividends were not paid for four consecutive quarters. Because such a potential redemption-triggering event was not solely within the control of Mississippi Power, this preferred stock was presented as "Cumulative Redeemable Preferred Stock" on Mississippi Power's balance sheets and statements of capitalization in a manner consistent with temporary equity under applicable accounting standards.

On October 23, 2018, Mississippi Power completed the redemption of all 8,867 outstanding shares ($886,700 aggregate par value) of its 4.40% Series Preferred Stock, all 8,643 outstanding shares ($864,300 aggregate par value) of its 4.60% Series Preferred Stock, all 16,700 outstanding shares ($1.67 million aggregate par value) of its 4.72% Series Preferred Stock, and all 1,200,000 outstanding depositary shares ($30 million aggregate stated value), each representing a 1/4th interest in a share of its 5.25% Series Preferred Stock.

Dividend Restrictions

The income of Southern Company is derived primarily from equity in earnings of its subsidiaries. At December 31, 2018, consolidated retained earnings included $4.9 billion of undistributed retained earnings of the subsidiaries.

The traditional electric operating companies and Southern Power can only pay dividends to Southern Company out of retained earnings or paid-in-capital.

See Note 7 under "Southern Power" for information regarding the distribution requirements for certain Southern Power subsidiaries.

The authority of the natural gas distribution utilities to pay dividends to Southern Company Gas is subject to regulation. By regulation, Nicor Gas is restricted, to the extent of its retained earnings balance, in the amount it can dividend or loan to affiliates and is not permitted to make money pool loans to affiliates. At December 31, 2018, the amount of Southern Company Gas' subsidiary retained earnings restricted for dividend payment totaled $814 million.

Structural Considerations

Since Southern Company and Southern Company Gas are holding companies, the right of Southern Company and Southern Company Gas and, hence, the right of creditors of Southern Company or Southern Company Gas to participate in any distribution of the assets of any respective subsidiary of Southern Company or Southern Company Gas, whether upon liquidation, reorganization or otherwise, is subject to prior claims of creditors and preferred stockholders of such subsidiary.

Southern Company Gas' 100%-owned subsidiary, Southern Company Gas Capital, was established to provide for certain of Southern Company Gas' ongoing financing needs through a commercial paper program, the issuance of various debt, hybrid securities, and other financing arrangements. Southern Company Gas fully and unconditionally guarantees all debt issued by Southern Company Gas Capital. Nicor Gas is not permitted by regulation to make loans to affiliates or utilize Southern Company Gas Capital for its financing needs.

Southern Power Company's senior notes, bank term loans, commercial paper, and bank credit arrangement are unsecured senior indebtedness, which rank equally with all other unsecured and unsubordinated debt of Southern Power Company. Southern Power's subsidiaries are not issuers, borrowers, or obligors, as applicable, under the senior notes, borrowings from financial institutions, commercial paper, or the bank credit arrangement. The senior notes, borrowings from financial institutions, commercial paper, and the bank credit arrangement are effectively subordinated to any future secured debt of Southern Power Company and any potential claims of creditors of Southern Power's subsidiaries.

Southern
Company^(*)

Georgia
Power

(in millions)

December 31, 2018

December 31, 2017