Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Details of income tax provisions are as follows:



	2018

	Southern Company			Alabama Power		Georgia Power			Mississippi Power			Southern Power
	(in millions)
Federal —
Current	$	167		$	91	$	393		$	(567	)	$	85
Deferred	231			123		(249		)	575			(154		)
	398			214		144			8			(69		)
State —
Current	188			26		81			(10		)	(9		)
Deferred	(137		)	51		(11		)	(100		)	(86		)
	51			77		70			(110		)	(95		)
Total	$	449		$	291	$	214		$	(102	)	$	(164	)



	2017

	Southern Company			Alabama Power		Georgia Power			Mississippi Power			Southern Power
	(in millions)
Federal —
Current	$	(62	)	$	136	$	256		$	194		$	(566	)
Deferred	(6		)	336		504			(753		)	(312		)
	(68		)	472		760			(559		)	(878		)
State —
Current	37			23		116			—			(110		)
Deferred	173			73		(46		)	27			49
	210			96		70			27			(61		)
Total	$	142		$	568	$	830		$	(532	)	$	(939	)



	2016
	Southern Company			Alabama Power		Georgia Power		Mississippi Power			Southern Power
	(in millions)
Federal —
Current	$	1,184		$	103	$	391	$	(31	)	$	928
Deferred	(342		)	339		319		(60		)	(1,098		)
	842			442		710		(91		)	(170		)
State —
Current	(108		)	20		6		(6		)	(60		)
Deferred	217			69		64		(7		)	35
	109			89		70		(13		)	(25		)
Total	$	951		$	531	$	780	$	(104	)	$	(195	)



	Southern Company Gas
	Successor								Predecessor
	Year Ended December 31, 2018			Year Ended December 31, 2017		July 1, 2016 through December 31, 2016			January 1, 2016 through June 30, 2016
	(in millions)								(in millions)
Federal —
Current	$	334		$	103	$	—		$	67
Deferred	33			170		65			8
	367			273		65			75
State —
Current	131			27		(16		)	12
Deferred	(34		)	67		27			—
	97			94		11			12
Total	$	464		$	367	$	76		$	87

Summary of amortization of tax credits

ITCs amortized in 2018, 2017, and 2016 were immaterial for Alabama Power, Georgia Power, Mississippi Power, and Southern Company Gas and were as follows for Southern Company and Southern Power:



	Southern Company		Southern Power
	(in millions)
2018	$	87	$	58
2017	79		57
2016	59		37

Schedule of effective income tax reconciliation

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



	2018
	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power
Federal statutory rate	21.0	%	21.0	%	21.0	%	21.0	%	21.0	%
State income tax, net of federal deduction	1.8		5.0		5.5		(65.1	)	(90.8	)
Employee stock plans' dividend deduction	(1.0	)	—		—		—		—
Non-deductible book depreciation	0.8		0.6		1.2		0.7		—
Flowback of excess deferred income taxes	(4.0	)	(1.8	)	—		(4.1	)	—
AFUDC-Equity	(1.0	)	(1.0	)	(1.4	)	—		—
ITC basis difference	(0.6	)	—		—		—		(0.2	)
Federal PTCs	(4.7	)	—		—		—		(156.6	)
Amortization of ITC	(2.0	)	(0.1	)	(0.2	)	(0.2	)	(55.4	)
Tax impact from sale of subsidiaries	8.6		—		—		—		—
Tax Reform Legislation	(1.4	)	—		(4.9	)	(26.3	)	96.1
Noncontrolling interests	(0.4	)	—		—		—		(14.9	)
Other	(0.8	)	(0.1	)	0.1		(1.4	)	2.0
Effective income tax (benefit) rate	16.3	%	23.6	%	21.3	%	(75.4	)%	(198.8	)%



	2017
	Southern Company		Alabama Power		Georgia Power		Mississippi Power^(*)		Southern Power
Federal statutory rate	35.0	%	35.0	%	35.0	%	(35.0	)%	35.0	%
State income tax, net of federal deduction	12.5		4.5		2.0		0.6		(22.2	)
Employee stock plans' dividend deduction	(4.0	)	—		—		—		—
Non-deductible book depreciation	3.1		0.9		0.7		0.1		—
Flowback of excess deferred income taxes	(0.3	)	—		(0.1	)	—		—
AFUDC-Equity	(2.6	)	(1.0	)	(0.6	)	—		—
AFUDC-Equity portion of Kemper IGCC charge	15.7		—		—		5.3		—
ITC basis difference	(1.7	)	—		—		—		(10.0	)
Federal PTCs	(12.1	)	—		—		—		(72.5	)
Amortization of ITC	(4.2	)	(0.2	)	(0.1	)	—		(20.6	)
Tax Reform Legislation	(25.6	)	0.3		(0.4	)	11.9		(416.1	)
Noncontrolling interests	(1.4	)	—		—		—		(8.6	)
Other	(1.1	)	0.1		0.2		—		(10.7	)
Effective income tax (benefit) rate	13.3	%	39.6	%	36.7	%	(17.1	)%	(525.7	)%


(*)	Represents effective income tax benefit rate for Mississippi Power due to a loss before income taxes in 2017.



	2016
	Southern Company		Alabama Power		Georgia Power		Mississippi Power^(*)		Southern Power
Federal statutory rate	35.0	%	35.0	%	35.0	%	(35.0	)%	35.0	%
State income tax, net of federal deduction	2.0		4.2		2.1		(5.7	)	(9.1	)
Employee stock plans' dividend deduction	(1.2	)	—		—		—		—
Non-deductible book depreciation	0.9		1.0		0.8		0.7		—
Flowback of excess deferred income taxes	(0.1	)	—		(0.1	)	(0.3	)	—
AFUDC-Equity	(2.0	)	(0.7	)	(0.8	)	(28.5	)	—
ITC basis difference	(5.0	)	—		—		—		(96.3	)
Federal PTCs	(1.2	)	—		—		—		(23.3	)
Amortization of ITC	(0.9	)	(0.2	)	(0.2	)	(0.1	)	(13.4	)
Noncontrolling interests	(0.3	)	—		—		—		(6.2	)
Other	0.1		(0.5	)	(0.1	)	0.4		4.7
Effective income tax (benefit) rate	27.3	%	38.8	%	36.7	%	(68.5	)%	(108.6	)%


(*)	Represents effective income tax benefit rate for Mississippi Power due to a loss before income taxes in 2016.



	Southern Company Gas
	Successor			Predecessor
	Year Ended December 31, 2018	Year Ended December 31, 2017	July 1, 2016 through December 31, 2016	January 1, 2016 through June 30, 2016
Federal statutory rate	21.0%	35.0%	35.0%	35.0%
State income tax, net of federal deduction	9.2	10.0	3.6	3.5
Flowback of excess deferred income taxes	(3.0)	(0.2)	—	—
Amortization of ITC	(0.1)	(0.2)	(0.4)	—
Tax impact on sale of subsidiaries	28.5	—	—	—
Tax Reform Legislation	(0.4)	15.0	—	—
Other	0.3	0.6	1.8	(0.9)
Effective income tax rate	55.5%	60.2%	40.0%	37.6%

Tax effects between the carrying amounts of assets and liabilities

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



	December 31, 2018
	Southern Company			Alabama Power		Georgia Power			Mississippi Power			Southern Power			Southern Company Gas
	(in millions)
Deferred tax liabilities —
Accelerated depreciation	$	8,461		$	2,236	$	3,005		$	335		$	1,483		$	1,176
Property basis differences	1,807			865		633			162			—			134
Federal effect of net state deferred tax assets	—			—		—			36			—			—
Leveraged lease basis differences	253			—		—			—			—			—
Employee benefit obligations	477			149		290			25			6			6
Premium on reacquired debt	88			14		74			—			—			—
Regulatory assets –
Storm damage reserves	111			—		111			—			—			—
Employee benefit obligations	975			260		344			45			—			45
AROs	1,232			276		925			31			—			—
AROs	1,210			607		575			—			—			—
Other	593			177		141			68			34			132
Total deferred income tax liabilities	15,207			4,584		6,098			702			1,523			1,493
Deferred tax assets —
Federal effect of net state deferred tax liabilities	260			155		71			—			22			46
Employee benefit obligations	1,273			286		444			62			7			150
Other property basis differences	251			—		61			—			172			—
ITC and PTC carryforward	2,730			11		430			—			2,128			—
Alternative minimum tax carryforward	62			—		—			32			21			—
Other partnership basis difference	162			—		—			—			162			—
Other comprehensive losses	82			10		3			—			—			—
AROs	2,442			883		1,500			31			—			—
Estimated loss on plants under construction	346			—		283			63			—			—
Other deferred state tax attributes	415			—		19			251			72			—
Regulatory liability associated with the Tax Reform Legislation (not subject to normalization)	294			130		127			29			—			8
Other	731			147		140			47			47			285
Total deferred income tax assets	9,048			1,622		3,078			515			2,631			489
Valuation allowance	(123		)	—		(42		)	(41		)	(27		)	(12		)
Net deferred income tax assets	8,925			1,622		3,036			474			2,604			477
Net deferred income taxes (assets)/liabilities	$	6,282		$	2,962	$	3,062		$	228		$	(1,081	)	$	1,016

Recognized in the balance sheets:
Accumulated deferred income taxes – assets	$	(276	)	$	—	$	—		$	(150	)	$	(1,186	)	$	—
Accumulated deferred income taxes – liabilities	$	6,558		$	2,962	$	3,062		$	378		$	105		$	1,016



	December 31, 2017
	Southern Company			Alabama Power		Georgia Power		Mississippi Power			Southern Power			Southern Company Gas
	(in millions)
Deferred tax liabilities —
Accelerated depreciation	$	9,059		$	2,135	$	2,889	$	303		$	1,922		$	1,150
Property basis differences	1,853			725		606		207			2			204
Federal effect of net state deferred tax assets	—			—		—		9			—			—
Leveraged lease basis differences	251			—		—		—			—			—
Employee benefit obligations	527			162		287		28			7			4
Premium on reacquired debt	54			16		34		—			—			—
Regulatory assets –
Storm damage reserves	89			—		89		—			—			—
Employee benefit obligations	1,044			260		349		46			—			75
AROs	821			249		501		33			—			—
AROs	370			220		130		—			—			—
Other	689			147		140		73			30			208
Total deferred income tax liabilities	14,757			3,914		5,025		699			1,961			1,641
Deferred tax assets —
Federal effect of net state deferred tax liabilities	330			143		85		—			42			54
Employee benefit obligations	1,339			286		448		62			8			185
Other property basis differences	343			—		59		—			184			—
ITC and PTC carryforward	2,414			9		403		—			2,002			—
Federal NOL carryforward	518			—		—		40			333			92
Alternative minimum tax carryforward	69			—		—		32			21			—
Other partnership basis difference	23			—		—		—			23			—
Other comprehensive losses	84			10		4		—			1			—
AROs	1,191			469		631		33			—			—
Estimated loss on plants under construction	722			—		—		722			—			—
Other deferred state tax attributes	330			—		6		133			77			—
Regulatory liability associated with the Tax Reform Legislation (not subject to normalization)	304			126		123		27			—			9
Other	538			111		91		54			9			223
Total deferred income tax assets	8,205			1,154		1,850		1,103			2,700			563
Valuation allowance	(184		)	—		—		(157		)	(13		)	(11		)
Net deferred income tax assets	8,021			1,154		1,850		946			2,687			552
Net deferred income taxes (assets)/liabilities	$	6,736		$	2,760	$	3,175	$	(247	)	$	(726	)	$	1,089

Recognized in the balance sheets:
Accumulated deferred income taxes – assets	$	(106	)	$	—	$	—	$	(247	)	$	(925	)	$	—
Accumulated deferred income taxes – liabilities	$	6,842		$	2,760	$	3,175	$	—		$	199		$	1,089

Summary of tax credit carryforwards

Federal ITC/PTC carryforwards at December 31, 2018 were as follows:



	Southern Company		Alabama Power		Georgia Power		Southern Power
	(in millions)
Federal ITC/PTC carryforwards	$	2,410	$	11	$	108	$	2,128
Year in which federal ITC/PTC carryforwards begin expiring	2032		2033		2032		2034
Year by which federal ITC/PTC carryforwards are expected to be utilized	2022		2021		2021		2022

Summary of operating loss carryforward

At December 31, 2018, the state and local NOL carryforwards for Southern Company's subsidiaries were as follows:



Company/Jurisdiction	Approximate NOL Carryforwards		Approximate Net State Income Tax Benefit		Tax Year NOL Begins Expiring
	(in millions)
Mississippi Power
Mississippi	$	5,062	$	200	2031

Southern Power
Oklahoma	846		40		2035
Florida	264		11		2033
South Carolina	62		2		2034
Other states	42		3		2029
Southern Power Total	$	1,214	$	56

Other^(*)
Georgia	358		16		2019
New York	223		11		2036
New York City	208		15		2036
Other states	278		14		Various
Southern Company Total	$	7,343	$	312


(*)	Represents other Southern Company subsidiaries. Alabama Power, Georgia Power, and Southern Company Gas did not have state NOL carryforwards at December 31, 2018.

Changes in unrecognized tax benefits

Unrecognized tax benefits changes in 2018, 2017, and 2016 for Southern Company, Mississippi Power, and Southern Power are provided below. The remaining registrants did not have any material unrecognized tax benefits for the periods presented.



	Southern Company			Mississippi Power			Southern Power
	(in millions)
Unrecognized tax benefits at December 31, 2015	$	433		$	421		$	8
Tax positions changes –
Increase from current periods	45			26			17
Increase from prior periods	21			18			—
Decrease from prior periods	(15		)	—			(8		)
Unrecognized tax benefits at December 31, 2016	484			465			17
Tax positions changes –
Increase from current periods	10			—			—
Increase from prior periods	10			2			—
Decrease from prior periods	(196		)	(177		)	(17		)
Reductions due to settlements	(290		)	(290		)	—
Unrecognized tax benefits at December 31, 2017	18			—			—
Tax positions changes –
Decrease from prior periods	(18		)	—			—
Unrecognized tax benefits at December 31, 2018	$	—		$	—		$	—

Impact on effective tax rate

The impact on the effective tax rate of Southern Company, Mississippi Power, and Southern Power, if recognized, was as follows for 2017 and 2016:



	Southern Company		Mississippi Power		Southern Power
	(in millions)
2017
Tax positions impacting the effective tax rate	$	18	$	—	$	—
Tax positions not impacting the effective tax rate	—		—		—
Balance of unrecognized tax benefits	$	18	$	—	$	—

2016
Tax positions impacting the effective tax rate	$	20	$	1	$	17
Tax positions not impacting the effective tax rate	464		464		—
Balance of unrecognized tax benefits	$	484	$	465	$	17