Retirement Benefits (Tables)

12 Months Ended

Dec. 31, 2018

The portion of the Southern Company system's pension and other postretirement benefit plans attributable to Gulf Power that is reflected in Southern Company's consolidated balance sheet as held for sale at December 31, 2018 consists of:



	Pension Plans			Other Postretirement Benefit Plans
	(in millions)
Projected benefit obligation	$	526		$	69
Plan assets	492			17
Accrued liability	$	(34	)	$	(52	)

Summary of Actuarial Assumptions

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.



	2018
Assumptions used to determine net periodic costs:	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power
Pension plans
Discount rate – benefit obligations	3.80	%	3.81	%	3.79	%	3.80	%	3.94	%
Discount rate – interest costs	3.45		3.45		3.42		3.46		3.69
Discount rate – service costs	3.98		4.00		3.99		3.99		4.01
Expected long-term return on plan assets	7.95		7.95		7.95		7.95		7.95
Annual salary increase	4.34		4.46		4.46		4.46		4.46
Other postretirement benefit plans
Discount rate – benefit obligations	3.68	%	3.71	%	3.68	%	3.68	%	3.81	%
Discount rate – interest costs	3.29		3.31		3.29		3.29		3.47
Discount rate – service costs	3.91		3.93		3.91		3.91		3.93
Expected long-term return on plan assets	6.83		6.83		6.80		6.99		—
Annual salary increase	4.34		4.46		4.46		4.46		4.46



	2017
Assumptions used to determine net periodic costs:	Southern Company		Alabama Power		Georgia Power		Mississippi Power
Pension plans
Discount rate – benefit obligations	4.40	%	4.44	%	4.40	%	4.44	%
Discount rate – interest costs	3.77		3.76		3.72		3.81
Discount rate – service costs	4.81		4.85		4.83		4.83
Expected long-term return on plan assets	7.92		7.95		7.95		7.95
Annual salary increase	4.37		4.46		4.46		4.46
Other postretirement benefit plans
Discount rate – benefit obligations	4.23	%	4.27	%	4.23	%	4.22	%
Discount rate – interest costs	3.54		3.58		3.55		3.55
Discount rate – service costs	4.64		4.70		4.63		4.65
Expected long-term return on plan assets	6.84		6.83		6.79		6.88
Annual salary increase	4.37		4.46		4.46		4.46



	2016
Assumptions used to determine net periodic costs:	Southern Company		Alabama Power		Georgia Power		Mississippi Power
Pension plans
Discount rate – benefit obligations	4.58	%	4.67	%	4.65	%	4.69	%
Discount rate – interest costs	3.88		3.90		3.86		3.97
Discount rate – service costs	4.98		5.07		5.03		5.04
Expected long-term return on plan assets	8.16		8.20		8.20		8.20
Annual salary increase	4.37		4.46		4.46		4.46
Other postretirement benefit plans
Discount rate – benefit obligations	4.38	%	4.51	%	4.49	%	4.47	%
Discount rate – interest costs	3.66		3.69		3.67		3.66
Discount rate – service costs	4.85		4.96		4.88		4.88
Expected long-term return on plan assets	6.66		6.83		6.27		7.07
Annual salary increase	4.37		4.46		4.46		4.46



	Southern Company Gas
	Successor						Predecessor
Assumptions used to determine net periodic costs:	Year Ended December 31, 2018		Year Ended December 31, 2017		July 1, 2016 through December 31, 2016		January 1, 2016 through June 30, 2016
Pension plans
Discount rate – benefit obligations	3.74	%	4.39	%	3.85	%	4.60	%
Discount rate – interest costs	3.41		3.76		3.21		4.00
Discount rate – service costs	3.84		4.64		4.07		4.80
Expected long-term return on plan assets	7.95		7.60		7.75		7.80
Annual salary increase	3.07		3.50		3.50		3.70
Pension band increase^(*)	N/A		N/A		2.00		2.00
Other postretirement benefit plans
Discount rate - benefit obligations	3.62	%	4.15	%	3.61	%	4.40	%
Discount rate – interest costs	3.21		3.40		2.84		3.60
Discount rate – service costs	3.82		4.55		3.96		4.70
Expected long-term return on plan assets	5.89		6.03		5.93		6.60
Annual salary increase	3.07		3.50		3.50		3.70


(*)	Only applicable to Nicor Gas union employees. The pension bands for the former Nicor Gas plan reflect the negotiated rates in accordance with the union agreements.



	2018
Assumptions used to determine benefit obligations:	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
Pension plans
Discount rate	4.49	%	4.51	%	4.48	%	4.49	%	4.65	%	4.47	%
Annual salary increase	4.34		4.46		4.46		4.46		4.46		3.07
Other postretirement benefit plans
Discount rate	4.37	%	4.40	%	4.36	%	4.35	%	4.50	%	4.32	%
Annual salary increase	4.34		4.46		4.46		4.46		4.46		3.07



	2017
Assumptions used to determine benefit obligations:	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
Pension plans
Discount rate	3.80	%	3.81	%	3.79	%	3.80	%	3.94	%	3.74	%
Annual salary increase	4.32		4.46		4.46		4.46		4.46		2.88
Other postretirement benefit plans
Discount rate	3.68	%	3.71	%	3.68	%	3.68	%	3.81	%	3.62	%
Annual salary increase	4.32		4.46		4.46		4.46		4.46		2.56

Schedule of Health Care Cost Trend Rates

The weighted average medical care cost trend rates used in measuring the APBO for the registrants at December 31, 2018 were as follows:



	Initial Cost Trend Rate		Ultimate Cost Trend Rate		Year That Ultimate Rate is Reached
Pre-65	6.50	%	4.50	%	2028
Post-65 medical	5.00		4.50		2028
Post-65 prescription	8.00		4.50		2028

Schedule of Accumulated and Projected Benefit Obligations

The projected benefit obligations for the qualified and non-qualified pension plans at December 31, 2018 are shown in the following table. All pension plan assets are related to the qualified pension plan.



	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Projected benefit obligations:
Qualified pension plan	$	12,135	$	2,692	$	3,757	$	527	$	122	$	866
Non-qualified pension plan	629		124		148		30		1		41

The total accumulated benefit obligation for the pension plans at December 31, 2018 and 2017 was as follows:



	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
December 31, 2018	$	11,683	$	2,550	$	3,613	$	513	$	101	$	842
December 31, 2017	12,577		2,696		3,847		541		111		1,139

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, 2018 and 2017 were as follows:



	2018
	Southern Company			Alabama Power			Georgia Power			Mississippi Power			Southern Power			Southern Company Gas
	(in millions)
Change in benefit obligation
Benefit obligation at beginning of year	$	13,808		$	2,998		$	4,188		$	602		$	139		$	1,184
Dispositions	(107		)	—			—			—			(3		)	(104		)
Service cost	359			78			87			17			9			34
Interest cost	464			101			139			20			5			39
Benefits paid	(618		)	(124		)	(191		)	(24		)	(3		)	(98		)
Actuarial (gain) loss	(1,143		)	(237		)	(318		)	(58		)	(24		)	(148		)
Balance at end of year	12,763			2,816			3,905			557			123			907
Change in plan assets
Fair value of plan assets at beginning of year	12,992			2,836			4,058			563			138			1,068
Dispositions	(107		)	—			—			—			(3		)	(104		)
Actual return (loss) on plan assets	(711		)	(150		)	(218		)	(37		)	(9		)	(70		)
Employer contributions	55			13			14			3			—			2
Benefits paid	(618		)	(124		)	(191		)	(24		)	(3		)	(98		)
Fair value of plan assets at end of year	11,611			2,575			3,663			505			123			798
Accrued liability	$	(1,152	)	$	(241	)	$	(242	)	$	(52	)	$	—		$	(109	)



	2017
	Southern Company			Alabama Power			Georgia Power			Mississippi Power			Southern Power			Southern Company Gas
	(in millions)
Change in benefit obligation
Benefit obligation at beginning of year	$	12,385		$	2,663		$	3,800		$	534		$	—		$	1,133
Service cost	293			63			74			15			—			23
Interest cost	455			98			138			20			—			42
Benefits paid	(596		)	(120		)	(187		)	(22		)	—			(91		)
Plan amendments	(26		)	—			—			—			—			(26		)
Actuarial (gain) loss	1,297			294			363			55			—			103
Obligations assumed from employee transfer	—			—			—			—			139			—
Balance at end of year	13,808			2,998			4,188			602			139			1,184
Change in plan assets
Fair value of plan assets at beginning of year	11,583			2,517			3,621			499			—			983
Actual return (loss) on plan assets	1,953			427			610			84			—			175
Employer contributions	52			12			14			2			—			1
Benefits paid	(596		)	(120		)	(187		)	(22		)	—			(91		)
Assets assumed from employee transfer	—			—			—			—			138			—
Fair value of plan assets at end of year	12,992			2,836			4,058			563			138			1,068
Accrued liability	$	(816	)	$	(162	)	$	(130	)	$	(39	)	$	(1	)	$	(116	)

Amounts Recognized in Balance Sheets

Presented below are the amounts included in regulatory assets at December 31, 2018 and 2017 related to the portion of the defined benefit pension plan attributable to Southern Company, the traditional electric operating companies, and Southern Company Gas that had not yet been recognized in net periodic pension cost.



	Southern Company^(*)		Alabama Power		Georgia Power		Mississippi Power		Southern Company Gas
	(in millions)
Balance at December 31, 2018
Regulatory assets:
Prior service cost	$	17	$	6	$	12	$	2	$	(17	)
Net (gain) loss	3,441		949		1,218		165		83
Regulatory amortization^(*)	—		—		—		—		94
Total regulatory assets (liabilities)	$	3,458	$	955	$	1,230	$	167	$	160

Balance at December 31, 2017
Regulatory assets:
Prior service cost	$	14	$	8	$	14	$	3	$	(20	)
Net (gain) loss	3,140		882		1,091		155		197
Regulatory amortization^(*)	—		—		—		—		40
Total regulatory assets	$	3,154	$	890	$	1,105	$	158	$	217


(*)	Amounts for Southern Company exclude regulatory assets of $268 million associated with unamortized amounts in Southern Company Gas' pension plans prior to its acquisition by Southern Company on July 1, 2016.

Amounts recognized in the balance sheets at December 31, 2018 and 2017 related to the registrants' pension plans consist of the following:



	Southern Company^(*)			Alabama Power			Georgia Power			Mississippi Power			Southern Power			Southern Company Gas
	(in millions)
December 31, 2018:
Prepaid pension costs	$	—		$	—		$	—		$	—		$	1		$	—
Other regulatory assets, deferred	3,566			955			1,230			167			—			160
Other deferred charges and assets	—			—			—			—			—			74
Other current liabilities	(55		)	(12		)	(15		)	(3		)	—			(3		)
Employee benefit obligations	(1,097		)	(229		)	(227		)	(49		)	(1		)	(179		)
Other regulatory liabilities, deferred	(108		)	—			—			—			—			—
AOCI	97			—			—			—			26			(44		)

December 31, 2017:
Prepaid pension costs	$	—		$	—		$	23		$	—		$	—		$	—
Other regulatory assets, deferred	3,273			890			1,105			158			—			217
Other deferred charges and assets	—			—			—			—			—			85
Other current liabilities	(53		)	(12		)	(15		)	(3		)	—			(3		)
Employee benefit obligations	(763		)	(150		)	(138		)	(36		)	(1		)	(198		)
Other regulatory liabilities, deferred	(118		)	—			—			—			—			—
AOCI	107			—			—			—			33			(42		)


(*)	Amounts for Southern Company exclude regulatory assets of $268 million associated with unamortized amounts in Southern Company Gas' pension plans prior to its acquisition by Southern Company on July 1, 2016.

Amounts recognized in the balance sheets at December 31, 2018 and 2017 related to the registrants' other postretirement benefit plans consist of the following:



	Southern Company^(a)			Alabama Power			Georgia Power			Mississippi Power			Southern Power			Southern Company Gas
	(in millions)
December 31, 2018:
Other regulatory assets, deferred^(a)	$	99		$	—		$	60		$	6		$	—		$	(4	)
Other current liabilities	(6		)	—			—			—			—			—
Employee benefit obligations^(b)	(931		)	(43		)	(331		)	(58		)	(9		)	146
Other regulatory liabilities, deferred	(77		)	(8		)	—			(2		)	—			—
AOCI	(4		)	—			—			—			1			(4		)

December 31, 2017:
Other regulatory assets, deferred^(a)	$	382		$	63		$	202		$	18		$	—		$	46
Other current liabilities	(5		)	—			—			—			—			—
Employee benefit obligations^(b)	(1,281		)	(111		)	(477		)	(72		)	(11		)	(185		)
Other regulatory liabilities, deferred	(41		)	(7		)	—			(1		)	—			—
AOCI	4			—			—			—			3			(3		)


(a)	Amounts for Southern Company exclude regulatory assets of $57 million associated with unamortized amounts in Southern Company Gas' other postretirement benefit plans prior to its acquisition by Southern Company on July 1, 2016.


(b)	Included in other deferred credits and liabilities on Southern Power's consolidated balance sheets.

Presented below are the amounts included in net regulatory assets (liabilities) at December 31, 2018 and 2017 related to the other postretirement benefit plans of Southern Company, the traditional electric operating companies, and Southern Company Gas that had not yet been recognized in net periodic other postretirement benefit cost.



	Southern Company^(*)		Alabama Power			Georgia Power		Mississippi Power		Southern Company Gas
	(in millions)
Balance at December 31, 2018
Regulatory assets:
Prior service cost	$	14	$	8		$	4	$	—	$	2
Net (gain) loss	8		(16		)	56		4		(43		)
Regulatory amortization^(*)	—		—			—		—		37
Total regulatory assets (liabilities)	$	22	$	(8	)	$	60	$	4	$	(4	)

Balance at December 31, 2017
Regulatory assets:
Prior service cost	$	21	$	11		$	5	$	—	$	(7	)
Net (gain) loss	320		45			197		17		47
Regulatory amortization^(*)	—		—			—		—		6
Total regulatory assets	$	341	$	56		$	202	$	17	$	46


(*)	Amounts for Southern Company exclude regulatory assets of $57 million associated with unamortized amounts in Southern Company Gas' other postretirement benefit plans prior to its acquisition by Southern Company on July 1, 2016.

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 portion of the defined benefit pension plan attributable to Southern Company, the traditional electric operating companies, and Southern Company Gas for the years ended December 31, 2018 and 2017 are presented in the following table:



	Southern Company^(*)			Alabama Power			Georgia Power			Mississippi Power			Southern Company Gas
	(in millions)
Regulatory assets (liabilities):
Balance at December 31, 2016	$	3,120		$	870		$	1,129		$	154		$	267
Net (gain) loss	227			64			36			12			(31		)
Change in prior service costs	(26		)	—			—			—			—
Reclassification adjustments:
Amortization of prior service costs	(11		)	(2		)	(3		)	(1		)	—
Amortization of net gain (loss)	(155		)	(42		)	(57		)	(7		)	(18		)
Amortization of regulatory assets^(*)	—			—			—			—			(1		)
Total reclassification adjustments	(166		)	(44		)	(60		)	(8		)	(19		)
Total change	35			20			(24		)	4			(50		)
Balance at December 31, 2017	$	3,155		$	890		$	1,105		$	158		$	217
Net (gain) loss	498			120			196			19			20
Change in prior service costs	1			—			—			—			(18		)
Dispositions	12			—			—			—			(34		)
Reclassification adjustments:
Amortization of prior service costs	(4		)	(1		)	(2		)	—			2
Amortization of net gain (loss)	(204		)	(54		)	(69		)	(10		)	(12		)
Amortization of regulatory assets	—			—			—			—			(15		)
Total reclassification adjustments	(208		)	(55		)	(71		)	(10		)	(25		)
Total change	303			65			125			9			(57		)
Balance at December 31, 2018	$	3,458		$	955		$	1,230		$	167		$	160


(*)	Amounts for Southern Company exclude regulatory assets of $268 million associated with unamortized amounts in Southern Company Gas' pension plans prior to its acquisition by Southern Company on July 1, 2016.

The changes in the balance of net regulatory assets (liabilities) related to the other postretirement benefit plans for the plan years ended December 31, 2018 and 2017 are presented in the following table:



	Southern Company^(*)			Alabama Power			Georgia Power			Mississippi Power			Southern Company Gas
	(in millions)
Net regulatory assets (liabilities):
Balance at December 31, 2016	$	378		$	76		$	213		$	19		$	52
Net (gain) loss	(21		)	(15		)	(2		)	(1		)	(5		)
Change in prior service costs	3			—			—			—			—
Reclassification adjustments:
Amortization of prior service costs	(6		)	(4		)	(1		)	—			3
Amortization of net gain (loss)	(13		)	(1		)	(8		)	(1		)	(4		)
Total reclassification adjustments	(19		)	(5		)	(9		)	(1		)	(1		)
Total change	(37		)	(20		)	(11		)	(2		)	(6		)
Balance at December 31, 2017	$	341		$	56		$	202		$	17		$	46
Net (gain) loss	(298		)	(60		)	(132		)	(12		)	(42		)
Change in prior service costs	—			—			—			—			(2		)
Reclassification adjustments:
Amortization of prior service costs	(7		)	(4		)	(1		)	—			—
Amortization of net gain (loss)	(14		)	(1		)	(9		)	(1		)	—
Amortization of regulatory assets	—			—			—			—			(6		)
Total reclassification adjustments	(21		)	(5		)	(10		)	(1		)	(6		)
Total change	(319		)	(65		)	(142		)	(13		)	(50		)
Balance at December 31, 2018	$	22		$	(9	)	$	60		$	4		$	(4	)


(*)	Amounts for Southern Company exclude regulatory assets of $57 million associated with unamortized amounts in Southern Company Gas' other postretirement benefit plans prior to its acquisition by Southern Company on July 1, 2016.

Amounts Included in AOCI Related to Defined Benefit Pension Plans

Presented below are the amounts included in AOCI at December 31, 2018 and 2017 related to the portion of the defined benefit pension plan attributable to Southern Company, Southern Power, and Southern Company Gas that had not yet been recognized in net periodic pension cost.



	Southern Company			Southern Power		Southern Company Gas
	(in millions)
Balance at December 31, 2018
AOCI:
Prior service cost	$	(3	)	$	—	$	(6	)
Net (gain) loss	100			26		(38		)
Total AOCI	$	97		$	26	$	(44	)

Balance at December 31, 2017
AOCI:
Prior service cost	$	3		$	1	$	—
Net (gain) loss	104			32		(42		)
Total AOCI	$	107		$	33	$	(42	)

Presented below are the amounts included in AOCI at December 31, 2018 and 2017 related to the other postretirement benefit plans of Southern Company, Southern Power, and Southern Company Gas that had not yet been recognized in net periodic other postretirement benefit cost.



	Southern Company			Southern Power		Southern Company Gas
	(in millions)
Balance at December 31, 2018
AOCI:
Prior service cost	$	1		$	—	$	1
Net (gain) loss	(5		)	1		(5		)
Total AOCI	$	(4	)	$	1	$	(4	)

Balance at December 31, 2017
AOCI:
Prior service cost	$	—		$	—	$	—
Net (gain) loss	4			3		(3		)
Total AOCI	$	4		$	3	$	(3	)

Components of OCI Related to Defined Benefit Pension Plan

The components of OCI related to the portion of the defined benefit pension plan attributable to Southern Company, Southern Power, and Southern Company Gas for the years ended December 31, 2018 and 2017 are presented in the following table:



	Southern Company			Southern Power			Southern Company Gas
	(in millions)
AOCI:
Balance at December 31, 2016	$	100		$	—		$	(43	)
Net (gain) loss	15			—			1
Change from employee transfer	—			33			—
Reclassification adjustments:
Amortization of prior service costs	(1		)	—			—
Amortization of net gain (loss)	(7		)	—			—
Total reclassification adjustments	(8		)	—			—
Total change	7			33			1
Balance at December 31, 2017	$	107		$	33		$	(42	)
Net (gain) loss	7			(5		)	6
Dispositions	(8		)	—			(8		)
Reclassification adjustments:
Amortization of net gain (loss)	(9		)	(2		)	—
Total reclassification adjustments	(9		)	(2		)	—
Total change	(10		)	(7		)	(2		)
Balance at December 31, 2018	$	97		$	26		$	(44	)

The components of OCI related to the other postretirement benefit plans for the plan years ended December 31, 2018 and 2017 are presented in the following table:



	Southern Company			Southern Power			Southern Company Gas
	(in millions)
AOCI:
Balance at December 31, 2016	$	7		$	—		$	(3	)
Net (gain) loss	(3		)	—			(1		)
Change from employee transfer	—			3			1
Total change	(3		)	3			—
Balance at December 31, 2017	$	4		$	3		$	(3	)
Net (gain) loss	(8		)	(2		)	(2		)
Amortization of prior service costs	—			—			1
Total change	(8		)	(2		)	(1		)
Balance at December 31, 2018	$	(4	)	$	1		$	(4	)

Components of Net Periodic Benefit Cost

Components of net periodic pension cost for Southern Company, the traditional electric operating companies, and Southern Power were as follows:



	Southern Company			Alabama Power			Georgia Power			Mississippi Power			Southern Power
	(in millions)
2018:
Service cost	$	359		$	78		$	87		$	17		$	9
Interest cost	464			101			139			20			5
Expected return on plan assets	(943		)	(207		)	(296		)	(41		)	(10		)
Recognized net (gain) loss	213			54			69			10			1
Net amortization	4			1			2			—			—
Net periodic pension cost	$	97		$	27		$	1		$	6		$	5

2017:
Service cost	$	293		$	63		$	74		$	15
Interest cost	455			98			138			20
Expected return on plan assets	(897		)	(196		)	(283		)	(40		)
Recognized net (gain) loss	162			42			57			7
Net amortization	12			2			3			1
Net periodic pension cost	$	25		$	9		$	(11	)	$	3

2016:
Service cost	$	262		$	57		$	70		$	13
Interest cost	422			95			136			19
Expected return on plan assets	(782		)	(184		)	(258		)	(35		)
Recognized net (gain) loss	150			40			55			7
Net amortization	14			3			5			1
Net periodic pension cost	$	66		$	11		$	8		$	5

Components of net periodic pension cost for Southern Company Gas were as follows:



	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)
Service cost	$	34		$	23		$	15		$	13
Interest cost	39			42			20			21
Expected return on plan assets	(75		)	(70		)	(35		)	(33		)
Recognized net (gain) loss	12			18			14			13
Net amortization of regulatory asset	15			1			—			—
Prior service cost	(2		)	—			(1		)	(1		)
Net periodic pension cost	$	23		$	14		$	13		$	13

Components of the other postretirement benefit plans' net periodic cost for Southern Company, the traditional electric operating companies, and Southern Power were as follows:



	Southern Company			Alabama Power			Georgia Power			Mississippi Power			Southern Power
	(in millions)
2018:
Service cost	$	24		$	6		$	6		$	1		$	1
Interest cost	75			17			28			3			—
Expected return on plan assets	(69		)	(26		)	(25		)	(2		)	—
Net amortization	21			5			10			1			—
Net periodic postretirement benefit cost	$	51		$	2		$	19		$	3		$	1

2017:
Service cost	$	24		$	6		$	7		$	1
Interest cost	79			17			29			3
Expected return on plan assets	(66		)	(25		)	(25		)	(1		)
Net amortization	20			5			9			1
Net periodic postretirement benefit cost	$	57		$	3		$	20		$	4

2016:
Service cost	$	22		$	5		$	6		$	1
Interest cost	76			18			30			3
Expected return on plan assets	(60		)	(25		)	(22		)	(1		)
Net amortization	21			6			10			1
Net periodic postretirement benefit cost	$	59		$	4		$	24		$	4

Components of the other postretirement benefit plans' net periodic cost for Southern Company Gas were as follows:



	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)
Service cost	$	2		$	2		$	1		$	1
Interest cost	10			10			5			5
Expected return on plan assets	(7		)	(7		)	(3		)	(3		)
Amortization:
Regulatory assets	6			—			2			—
Prior service costs	—			(3		)	—			(1		)
Net (gain)/loss	—			4			—			2
Net periodic postretirement benefit cost	$	11		$	6		$	5		$	4

Changes in the APBO and the Fair Value of Plan Assets

Changes in the APBO and the fair value of the registrants' plan assets during the plan years ended December 31, 2018 and 2017 were as follows:



	2018
	Southern Company			Alabama Power			Georgia Power			Mississippi Power			Southern Power			Southern Company Gas
	(in millions)
Change in benefit obligation
Benefit obligation at beginning of year	$	2,339		$	517		$	863		$	97		$	11		$	310
Dispositions	(18		)	—			—			—			—			(18		)
Service cost	24			6			6			1			1			2
Interest cost	75			17			28			3			—			10
Benefits paid	(129		)	(28		)	(47		)	(5		)	(1		)	(17		)
Actuarial (gain) loss	(432		)	(111		)	(178		)	(15		)	(2		)	(43		)
Retiree drug subsidy	6			2			3			—			—			—
Balance at end of year	1,865			403			675			81			9			244
Change in plan assets
Fair value of plan assets at beginning of year	1,053			406			386			25			—			125
Dispositions	(18		)	—			—			—			—			(18		)
Actual return (loss) on plan assets	(57		)	(25		)	(20		)	(1		)	—			(5		)
Employer contributions	73			5			22			4			1			13
Benefits paid	(123		)	(26		)	(44		)	(5		)	(1		)	(17		)
Fair value of plan assets at end of year	928			360			344			23			—			98
Accrued liability	$	(937	)	$	(43	)	$	(331	)	$	(58	)	$	(9	)	$	(146	)



	2017
	Southern Company			Alabama Power			Georgia Power			Mississippi Power			Southern Power			Southern Company Gas
	(in millions)
Change in benefit obligation
Benefit obligation at beginning of year	$	2,297		$	501		$	847		$	97		$	—		$	308
Service cost	24			6			7			1			—			2
Interest cost	79			17			29			3			—			10
Benefits paid	(136		)	(29		)	(51		)	(6		)	—			(19		)
Actuarial (gain) loss	65			20			28			1			—			3
Plan amendments	3			—			—			—			—			3
Retiree drug subsidy	7			2			3			1			—			—
Obligations assumed from employee transfer	—			—			—			—			11			—
Employee contributions	—			—			—			—			—			3
Balance at end of year	2,339			517			863			97			11			310
Change in plan assets
Fair value of plan assets at beginning of year	944			367			354			23			—			105
Actual return (loss) on plan assets	154			60			54			3			—			20
Employer contributions	84			6			26			4			—			17
Employee contributions	—			—			—			—			—			3
Benefits paid	(129		)	(27		)	(48		)	(5		)	—			(20		)
Fair value of plan assets at end of year	1,053			406			386			25			—			125
Accrued liability	$	(1,286	)	$	(111	)	$	(477	)	$	(72	)	$	(11	)	$	(185	)

Estimated Pension Benefit Payments

At December 31, 2018, estimated benefit payments were as follows:



	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Benefit Payments:
2019	$	623	$	132	$	201	$	28	$	3	$	59
2020	645		136		206		28		3		61
2021	664		141		209		29		4		62
2022	687		147		215		29		4		62
2023	711		152		221		30		5		62
2024 to 2028	3,869		832		1,183		166		27		313

The registrants' 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:



	Southern Company			Alabama Power			Georgia Power			Mississippi Power			Southern Power		Southern Company Gas
	(in millions)
Benefit payments:
2019	$	136		$	28		$	51		$	6		$	—	$	18
2020	136			28			50			6			—		18
2021	136			29			50			6			—		19
2022	137			29			50			6			1		19
2023	137			29			49			7			1		19
2024 to 2028	669			146			243			30			3		90

Subsidy receipts:
2019	$	(7	)	$	(2	)	$	(3	)	$	—		$	—	$	—
2020	(7		)	(2		)	(3		)	—			—		—
2021	(8		)	(2		)	(3		)	—			—		—
2022	(8		)	(2		)	(3		)	(1		)	—		—
2023	(8		)	(3		)	(4		)	(1		)	—		—
2024 to 2028	(41		)	(13		)	(18		)	(2		)	—		—

Total:
2019	$	129		$	26		$	48		$	6		$	—	$	18
2020	129			26			47			6			—		18
2021	128			27			47			6			—		19
2022	129			27			47			5			1		19
2023	129			26			45			6			1		19
2024 to 2028	628			133			225			28			3		90

Fair Values of Plan Assets

The composition of Southern Company Gas' other postretirement benefit plan assets at December 31, 2017, along with the targets, is presented below:



	Target		2017
Other postretirement benefit plan assets:
Equity	72	%	76	%
Fixed Income	24		20
Cash	1		2
Other	3		2
Total	100	%	100	%

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		Net Asset Value as a Practical Expedient				Target Allocation		Actual Allocation
At December 31, 2018:	(Level 1)		(Level 2)		(NAV)		Total
	(in millions)
Southern Company
Assets:
Domestic equity^(*)	$	2,102	$	1,030	$	—	$	3,132	26	%	28	%
International equity^(*)	1,344		1,325		—		2,669		25		25
Fixed income:									23		24
U.S. Treasury, government, and agency bonds	—		930		—		930
Mortgage- and asset-backed securities	—		7		—		7
Corporate bonds	—		1,195		—		1,195
Pooled funds	—		654		—		654
Cash equivalents and other	270		2		—		272
Real estate investments	419		—		1,361		1,780		14		15
Special situations	—		—		171		171		3		1
Private equity	—		—		821		821		9		7
Total	$	4,135	$	5,143	$	2,353	$	11,631	100	%	100	%

Alabama Power
Assets:
Domestic equity^(*)	$	466	$	228	$	—	$	694	26	%	28	%
International equity^(*)	298		293		—		591		25		25
Fixed income:									23		24
U.S. Treasury, government, and agency bonds	—		206		—		206
Mortgage- and asset-backed securities	—		2		—		2
Corporate bonds	—		265		—		265
Pooled funds	—		145		—		145
Cash equivalents and other	60		1		—		61
Real estate investments	93		—		302		395		14		15
Special situations	—		—		38		38		3		1
Private equity	—		—		182		182		9		7
Total	$	917	$	1,140	$	522	$	2,579	100	%	100	%



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Net Asset Value as a Practical Expedient				Target Allocation		Actual Allocation
At December 31, 2018:	(Level 1)		(Level 2)		(NAV)		Total
	(in millions)
Georgia Power
Assets:
Domestic equity^(*)	$	663	$	325	$	—	$	988	26	%	28	%
International equity^(*)	424		418		—		842		25		25
Fixed income:									23		24
U.S. Treasury, government, and agency bonds	—		294		—		294
Mortgage- and asset-backed securities	—		2		—		2
Corporate bonds	—		377		—		377
Pooled funds	—		206		—		206
Cash equivalents and other	85		1		—		86
Real estate investments	132		—		429		561		14		15
Special situations	—		—		54		54		3		1
Private equity	—		—		259		259		9		7
Total	$	1,304	$	1,623	$	742	$	3,669	100	%	100	%

Mississippi Power
Assets:
Domestic equity^(*)	$	91	$	45	$	—	$	136	26	%	28	%
International equity^(*)	59		59		—		118		25		25
Fixed income:									23		24
U.S. Treasury, government, and agency bonds	—		40		—		40
Corporate bonds	—		52		—		52
Pooled funds	—		28		—		28
Cash equivalents and other	12		—		—		12
Real estate investments	18		—		59		77		14		15
Special situations	—		—		7		7		3		1
Private equity	—		—		36		36		9		7
Total	$	180	$	224	$	102	$	506	100	%	100	%



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Net Asset Value as a Practical Expedient				Target Allocation		Actual Allocation
At December 31, 2018:	(Level 1)		(Level 2)		(NAV)		Total
	(in millions)
Southern Power
Assets:
Domestic equity^(*)	$	22	$	11	$	—	$	33	26	%	28	%
International equity^(*)	14		14		—		28		25		25
Fixed income:									23		24
U.S. Treasury, government, and agency bonds	—		10		—		10
Corporate bonds	—		13		—		13
Pooled funds	—		7		—		7
Cash equivalents and other	3		—		—		3
Real estate investments	4		—		15		19		14		15
Special situations	—		—		2		2		3		1
Private equity	—		—		9		9		9		7
Total	$	43	$	55	$	26	$	124	100	%	100	%

Southern Company Gas
Assets:
Domestic equity^(*)	$	145	$	71	$	—	$	216	26	%	28	%
International equity^(*)	92		91		—		183		25		25
Fixed income:									23		24
U.S. Treasury, government, and agency bonds	—		64		—		64
Corporate bonds	—		82		—		82
Pooled funds	—		45		—		45
Cash equivalents and other	19		—		—		19
Real estate investments	29		—		94		123		14		15
Special situations	—		—		12		12		3		1
Private equity	—		—		56		56		9		7
Total	$	285	$	353	$	162	$	800	100	%	100	%


(*)	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Net Asset Value as a Practical Expedient				Target Allocation		Actual Allocation
At December 31, 2017:	(Level 1)		(Level 2)		(NAV)		Total
	(in millions)
Southern Company^(a)
Assets:
Domestic equity^(b)	$	2,559	$	1,482	$	—	$	4,041	26	%	31	%
International equity^(b)	1,555		1,569		—		3,124		25		25
Fixed income:									23		24
U.S. Treasury, government, and agency bonds	—		926		—		926
Mortgage- and asset-backed securities	—		8		—		8
Corporate bonds	—		1,241		—		1,241
Pooled funds	—		650		—		650
Cash equivalents and other	301		36		48		385
Real estate investments	472		—		1,204		1,676		14		13
Special situations	—		—		180		180		3		1
Private equity	—		—		670		670		9		6
Total	$	4,887	$	5,912	$	2,102	$	12,901	100	%	100	%

Alabama Power
Assets:
Domestic equity^(b)	$	572	$	276	$	—	$	848	26	%	31	%
International equity^(b)	370		333		—		703		25		25
Fixed income:									23		24
U.S. Treasury, government, and agency bonds	—		200		—		200
Mortgage- and asset-backed securities	—		2		—		2
Corporate bonds	—		286		—		286
Pooled funds	—		155		—		155
Cash equivalents and other	51		3		—		54
Real estate investments	111		—		283		394		14		13
Special situations	—		—		43		43		3		1
Private equity	—		—		159		159		9		6
Total	$	1,104	$	1,255	$	485	$	2,844	100	%	100	%



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Net Asset Value as a Practical Expedient				Target Allocation		Actual Allocation
At December 31, 2017:	(Level 1)		(Level 2)		(NAV)		Total
	(in millions)
Georgia Power
Assets:
Domestic equity^(b)	$	819	$	394	$	—	$	1,213	26	%	31	%
International equity^(b)	529		477		—		1,006		25		25
Fixed income:									23		24
U.S. Treasury, government, and agency bonds	—		286		—		286
Mortgage- and asset-backed securities	—		3		—		3
Corporate bonds	—		409		—		409
Pooled funds	—		221		—		221
Cash equivalents and other	74		4		—		78
Real estate investments	160		—		404		564		14		13
Special situations	—		—		61		61		3		1
Private equity	—		—		228		228		9		6
Total	$	1,582	$	1,794	$	693	$	4,069	100	%	100	%

Mississippi Power
Assets:
Domestic equity^(b)	$	113	$	55	$	—	$	168	26	%	31	%
International equity^(b)	73		66		—		139		25		25
Fixed income:									23		24
U.S. Treasury, government, and agency bonds	—		40		—		40
Corporate bonds	—		56		—		56
Pooled funds	—		31		—		31
Cash equivalents and other	10		1		—		11
Real estate investments	22		—		56		78		14		13
Special situations	—		—		9		9		3		1
Private equity	—		—		32		32		9		6
Total	$	218	$	249	$	97	$	564	100	%	100	%



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Net Asset Value as a Practical Expedient				Target Allocation		Actual Allocation
At December 31, 2017:	(Level 1)		(Level 2)		(NAV)		Total
	(in millions)
Southern Power
Assets:
Domestic equity^(b)	$	28	$	13	$	—	$	41	26	%	31	%
International equity^(b)	18		16		—		34		25		25
Fixed income:									23		24
U.S. Treasury, government, and agency bonds	—		10		—		10
Corporate bonds	—		14		—		14
Pooled funds	—		8		—		8
Cash equivalents and other	2		—		—		2
Real estate investments	5		—		14		19		14		13
Special situations	—		—		2		2		3		1
Private equity	—		—		8		8		9		6
Total	$	53	$	61	$	24	$	138	100	%	100	%


(a)	Target and actual allocations reflect the asset allocations for only the Southern Company system pension plan prior to its merger with the Southern Company Gas pension plan on January 1, 2018.


(b)	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds.

The fair values of Southern Company Gas' pension plan assets for the period ended December 31, 2017 are presented below. The fair value measurements exclude cash, receivables related to investment income, pending investment sales, and payables related to pending investment purchases. 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		Net Asset Value as a Practical Expedient
At December 31, 2017:	(Level 1)		(Level 2)		(NAV)		Total
	(in millions)
Southern Company Gas
Assets:
Domestic equity^(*)	$	155	$	323	$	—	$	478
International equity^(*)	—		166		—		166
Fixed income:
U.S. Treasury, government, and agency bonds	—		85		—		85
Corporate bonds	—		39		—		39
Cash equivalents and other	84		25		48		157
Real estate investments	3		—		16		19
Private equity	—		—		1		1
Total	$	242	$	638	$	65	$	945


(*)	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds.

The composition of Southern Company Gas' pension plan assets at December 31, 2017, along with the targets, is presented below:



	Target		2017
Pension plan assets:
Equity	53	%	65	%
Fixed Income	15		19
Cash	2		6
Other	30		10
Balance at end of period	100	%	100	%

The fair values of the applicable registrants' other postretirement benefit plan assets at December 31, 2018 and 2017 are presented below. The registrants did not have any investments classified as Level 3 at December 31, 2018 or 2017. 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		Net Asset Value as a Practical Expedient		Total		Target Allocation		Actual Allocation
At December 31, 2018:	(Level 1)		(Level 2)		(NAV)
	(in millions)
Southern Company
Assets:
Domestic equity^(*)	$	100	$	76	$	—	$	176	39	%	40	%
International equity^(*)	45		75		—		120		23		22
Fixed income:									29		30
U.S. Treasury, government, and agency bonds	—		34		—		34
Corporate bonds	—		35		—		35
Pooled funds	—		81		—		81
Cash equivalents and other	13		—		—		13
Trust-owned life insurance	—		386		—		386
Real estate investments	13		—		40		53		5		5
Special situations	—		—		4		4		1		—
Private equity	—		—		24		24		3		3
Total	$	171	$	687	$	68	$	926	100	%	100	%

Alabama Power
Assets:
Domestic equity^(*)	$	35	$	10	$	—	$	45	43	%	45	%
International equity^(*)	12		12		—		24		21		21
Fixed income:									28		28
U.S. Treasury, government, and agency bonds	—		10		—		10
Corporate bonds	—		11		—		11
Pooled funds	—		6		—		6
Cash equivalents and other	3		—		—		3
Trust-owned life insurance	—		233		—		233
Real estate investments	4		—		13		17		4		4
Special situations	—		—		2		2		1		—
Private equity	—		—		8		8		3		2
Total	$	54	$	282	$	23	$	359	100	%	100	%



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Net Asset Value as a Practical Expedient		Total		Target Allocation		Actual Allocation
At December 31, 2018:	(Level 1)		(Level 2)		(NAV)
	(in millions)
Georgia Power
Assets:
Domestic equity^(*)	$	41	$	9	$	—	$	50	36	%	35	%
International equity^(*)	17		32		—		49		24		24
Fixed income:									33		35
U.S. Treasury, government, and agency bonds	—		7		—		7
Corporate bonds	—		10		—		10
Pooled funds	—		44		—		44
Cash equivalents and other	5		—		—		5
Trust-owned life insurance	—		153		—		153
Real estate investments	4		—		11		15		4		4
Special situations	—		—		2		2		1		—
Private equity	—		—		7		7		2		2
Total	$	67	$	255	$	20	$	342	100	%	100	%

Mississippi Power
Assets:
Domestic equity^(*)	$	3	$	2	$	—	$	5	21	%	22	%
International equity^(*)	2		2		—		4		20		20
Fixed income:									38		39
U.S. Treasury, government, and agency bonds	—		6		—		6
Corporate bonds	—		2		—		2
Pooled funds	—		1		—		1
Cash equivalents and other	1		—		—		1
Real estate investments	1		—		2		3		11		12
Special situations	—		—		—		—		3		1
Private equity	—		—		1		1		7		6
Total	$	7	$	13	$	3	$	23	100	%	100	%



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Net Asset Value as a Practical Expedient		Total		Target Allocation		Actual Allocation
At December 31, 2018:	(Level 1)		(Level 2)		(NAV)
	(in millions)
Southern Company Gas
Assets:
Domestic equity^(*)	$	2	$	47	$	—	$	49	51	%	51	%
International equity^(*)	1		17		—		18		20		18
Fixed income:									25		28
U.S. Treasury, government, and agency bonds	—		1		—		1
Corporate bonds	—		1		—		1
Pooled funds	—		24		—		24
Cash equivalents and other	1		—		—		1
Real estate investments	—		—		1		1		2		2
Special situations	—		—		—		—		1		—
Private equity	—		—		1		1		1		1
Total	$	4	$	90	$	2	$	96	100	%	100	%


(*)	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Net Asset Value as a Practical Expedient				Target Allocation		Actual Allocation
At December 31, 2017:	(Level 1)		(Level 2)		(NAV)		Total
	(in millions)
Southern Company^(a)
Assets:
Domestic equity^(b)	$	135	$	104	$	—	$	239	37	%	40	%
International equity^(b)	47		98		—		145		23		23
Fixed income:									30		29
U.S. Treasury, government, and agency bonds	—		32		—		32
Corporate bonds	—		37		—		37
Pooled funds	—		79		—		79
Cash equivalents and other	12		—		1		13
Trust-owned life insurance	—		426		—		426
Real estate investments	16		—		36		52		5		5
Special situations	—		—		5		5		1		1
Private equity	—		—		20		20		4		2
Total	$	210	$	776	$	62	$	1,048	100	%	100	%

Alabama Power
Assets:
Domestic equity^(b)	$	52	$	12	$	—	$	64	42	%	44	%
International equity^(b)	16		14		—		30		22		22
Fixed income:									28		28
U.S. Treasury, government, and agency bonds	—		11		—		11
Corporate bonds	—		12		—		12
Pooled funds	—		7		—		7
Cash equivalents and other	2		—		—		2
Trust-owned life insurance	—		253		—		253
Real estate investments	5		—		12		17		4		4
Special situations	—		—		2		2		1		—
Private equity	—		—		7		7		3		2
Total	$	75	$	309	$	21	$	405	100	%	100	%



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Net Asset Value as a Practical Expedient				Target Allocation		Actual Allocation
At December 31, 2017:	(Level 1)		(Level 2)		(NAV)		Total
	(in millions)
Georgia Power
Assets:
Domestic equity^(b)	$	53	$	11	$	—	$	64	36	%	38	%
International equity^(b)	14		46		—		60		24		24
Fixed income:									33		31
U.S. Treasury, government, and agency bonds	—		6		—		6
Corporate bonds	—		11		—		11
Pooled funds	—		41		—		41
Cash equivalents and other	4		—		—		4
Trust-owned life insurance	—		173		—		173
Real estate investments	6		—		11		17		4		4
Special situations	—		—		2		2		1		1
Private equity	—		—		6		6		2		2
Total	$	77	$	288	$	19	$	384	100	%	100	%

Mississippi Power
Assets:
Domestic equity^(b)	$	4	$	2	$	—	$	6	21	%	25	%
International equity^(b)	3		2		—		5		21		20
Fixed income:									37		38
U.S. Treasury, government, and agency bonds	—		5		—		5
Corporate bonds	—		2		—		2
Pooled funds	—		1		—		1
Cash equivalents and other	1		—		—		1
Real estate investments	1		—		2		3		12		11
Special situations	—		—		—		—		2		1
Private equity	—		—		1		1		7		5
Total	$	9	$	12	$	3	$	24	100	%	100	%


(a)	Target and actual allocations reflect the asset allocations for only the Southern Company other postretirement benefit plans prior to the merger of the plans with the Southern Company Gas other postretirement benefit plans on January 1, 2018.


(b)	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds.

The fair values of Southern Company Gas' other postretirement benefit plan assets for the period ended December 31, 2017 are presented below. These fair value measurements exclude cash, receivables related to investment income, pending investment sales, and payables related to pending investment purchases. 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		Net Asset Value as a Practical Expedient		Total
At December 31, 2017:	(Level 1)		(Level 2)		(NAV)
	(in millions)
Southern Company Gas
Assets:
Domestic equity^(*)	$	3	$	69	$	—	$	72
International equity^(*)	—		22		—		22
Fixed income:
Pooled funds	—		24		—		24
Cash equivalents and other	2		—		1		3
Total	$	5	$	115	$	1	$	121


(*)	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds.

Total Matching Contributions

Total matching contributions made to the plans for 2018, 2017, and 2016 were as follows:



	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power
	(in millions)
2018	$	119	$	24	$	26	$	5	$	3
2017	118		23		26		5		N/A
2016	105		23		27		5		N/A



	Southern Company Gas
	(in millions)
Successor – 2018	$	18
Successor – 2017	19
Successor – July 1, 2016 through December 31, 2016	8
Predecessor – January 1, 2016 through June 30, 2016	12