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Income Taxes
9 Months Ended
Sep. 30, 2019
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
See Note 10 to the financial statements in Item 8 of the Form 10-K for additional tax information.
Current and Deferred Income Taxes
Tax Credit Carryforwards
Southern Company had federal ITC and PTC carryforwards (primarily related to Southern Power) totaling $1.8 billion as of September 30, 2019 compared to $2.4 billion as of December 31, 2018.
The federal ITC and PTC carryforwards begin expiring in 2034 and 2032, respectively, but are expected to be fully utilized by 2023. The estimated tax credit utilization reflects the projected taxable gains on the various sale transactions describe in Note (K) and could be further delayed by numerous factors, including the acquisition of additional renewable projects, the purchase of rights to additional PTCs of Plant Vogtle Units 3 and 4 pursuant to certain joint ownership agreements, and changes in taxable income projections. See Note (B) and Note 2 to the financial statements in Item 8 of the Form 10-K under "Georgia Power – Nuclear Construction" for additional information regarding Plant Vogtle Units 3 and 4.
Effective Tax Rate
Details of significant changes in the effective tax rate for the applicable registrants are provided herein.
Southern Company
Southern Company's effective tax rate is typically lower than the statutory rate due to employee stock plans' dividend deduction, non-taxable AFUDC equity and flowback of excess deferred income taxes at the regulated utilities, and federal income tax benefits from ITCs and PTCs, primarily at Southern Power.
Southern Company's effective tax rate was 30.2% for the nine months ended September 30, 2019 compared to 22.7% for the corresponding period in 2018. The effective tax rate increase was primarily due to the tax impact
from the sale of Gulf Power in 2019 and the reductions of tax benefits associated with wind PTCs following Southern Power's 2018 sale of a noncontrolling tax equity interest in its wind projects. The effective tax rate increase was partially offset by the tax impacts related to the Southern Company Gas Dispositions in 2018. See Note (K) for additional information.
Georgia Power
Georgia Power's effective tax rate was 22.6% for the nine months ended September 30, 2019 compared to 25.5% for the corresponding period in 2018. The effective tax rate decrease was primarily due to an increase in state ITCs in 2019 related to the construction of Plant Vogtle Units 3 and 4 and the impact of recording a valuation allowance on certain state tax credit carryforwards in 2018, partially offset by additional benefits recorded in 2018 as a result of the Tax Reform Legislation.
Mississippi Power
Mississippi Power's effective tax rate was 16.3% for the nine months ended September 30, 2019 compared to 20.8% for the corresponding period in 2018. The effective tax rate decrease was primarily due to an increase in the flowback of excess deferred income taxes as a result of both a settlement agreement reached with wholesale customers under the MRA tariff and a new tolling arrangement accounted for as a sales-type lease. See Note (B) under "Mississippi Power" for additional information on the settlement agreement.
Southern Power
Southern Power's effective tax benefit rate was (13.6)% for the nine months ended September 30, 2019 compared to (220.3)% for the corresponding period in 2018. The effective tax benefit rate decrease primarily resulted from lower wind PTCs following the 2018 sale of a noncontrolling tax equity interest in SP Wind and changes in state apportionment rates following the 2018 reorganization of certain legal entities, partially offset by the net tax benefits from the sale of Plant Nacogdoches in 2019. See Note (K) and Note 15 to the financial statements in Item 8 of the Form 10-K under "Southern Power" for additional information.
Southern Company Gas
Southern Company Gas' effective tax rate was 15.0% for the nine months ended September 30, 2019 compared to 61.8% for the corresponding period in 2018. This decrease was primarily related to an increase in the flowback of excess deferred income taxes in 2019, primarily at Atlanta Gas Light as previously authorized by the Georgia PSC, and the reversal of a federal tax valuation allowance in connection with Southern Company Gas' sale of Triton in 2019, as well as the tax impacts of the Southern Company Gas Dispositions in 2018. See Note (E) under "Southern Company Gas" and Notes 2 and 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.