Derivatives (Tables)

9 Months Ended

Sep. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Energy-Related Derivatives

At September 30, 2019, the net volume of energy-related derivative contracts for natural gas positions, together with the longest hedge date over which the respective entity is hedging its exposure to the variability in future cash flows for forecasted transactions and the longest non-hedge date for derivatives not designated as hedges, were as follows:

	Net Purchased mmBtu	Longest Hedge Date	Longest Non-Hedge Date
	(in millions)
Southern Company(*)	475	2023	2029
Alabama Power	89	2022	—
Georgia Power	184	2023	—
Mississippi Power	99	2023	—
Southern Power	9	2020	—
Southern Company Gas(*)	94	2022	2029

(*)

Southern Company Gas' derivative instruments include both long and short natural gas positions. A long position is a contract to purchase natural gas and a short position is a contract to sell natural gas. Southern Company Gas' volume represents the net of long natural gas positions of 4.1 billion mmBtu and short natural gas positions of 4.1 billion mmBtu as of September 30, 2019, which is also included in Southern Company's total volume.

Schedule of Interest Rate Derivatives

At September 30, 2019, the following interest rate derivatives were outstanding:

	Notional Amount		Interest Rate Received	Weighted Average Interest Rate Paid	Hedge Maturity Date	Fair Value Gain (Loss) at September 30, 2019
	(in millions)					(in millions)
Cash Flow Hedges of Forecasted Debt
Georgia Power	$	250	3-month LIBOR	2.23%	March 2025	$	(9	)
Georgia Power	250		3-month LIBOR	2.40%	March 2030	(20		)
Georgia Power	250		3-month LIBOR	2.48%	February 2044	(30		)
Southern Company Gas	200		3-month LIBOR	1.81%	September 2030	(5		)
Fair Value Hedges of Existing Debt
Southern Company(*)	300		2.75%	3-month LIBOR+0.92%	June 2020	(1		)
Southern Company(*)	1,500		2.35%	1-month LIBOR+0.87%	July 2021	(5		)
Georgia Power	200		4.25%	3-month LIBOR+2.46%	December 2019	(1		)
Southern Company Consolidated	$	2,950				$	(71	)

(*)

Represents the Southern Company parent entity.

Schedule of Foreign Currency Derivatives

At September 30, 2019, the following foreign currency derivatives were outstanding:

	Pay Notional		Pay Rate	Receive Notional		Receive Rate	Hedge Maturity Date	Fair Value Gain (Loss) at September 30, 2019
	(in millions)			(in millions)				(in millions)
Cash Flow Hedges of Existing Debt
Southern Power	$	677	2.95%	€	600	1.00%	June 2022	$	(21	)
Southern Power	564		3.78%	500		1.85%	June 2026	(11		)
Total	$	1,241		€	1,100			$	(32	)

Fair Value of Energy-Related Derivatives and Interest Rate Derivatives

The fair value of energy-related derivatives, interest rate derivatives, and foreign currency derivatives was reflected in the balance sheets as follows:

	As of September 30, 2019						As of December 31, 2018
Derivative Category and Balance Sheet Location	Assets			Liabilities			Assets			Liabilities
	(in millions)						(in millions)
Southern Company
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:
Other current assets/Other current liabilities	$	5		$	61		$	8		$	23
Other deferred charges and assets/Other deferred credits and liabilities	6			44			9			26
Assets held for sale, current/Liabilities held for sale, current							—			6
Total derivatives designated as hedging instruments for regulatory purposes	$	11		$	105		$	17		$	55
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Other current assets/Other current liabilities	$	—		$	8		$	3		$	7
Other deferred charges and assets/Other deferred credits and liabilities	—			1			1			2
Interest rate derivatives:
Other current assets/Other current liabilities	—			72			—			19
Other deferred charges and assets/Other deferred credits and liabilities	2			—			—			30
Foreign currency derivatives:
Other current assets/Other current liabilities	—			24			—			23
Other deferred charges and assets/Other deferred credits and liabilities	—			8			75			—
Total derivatives designated as hedging instruments in cash flow and fair value hedges	$	2		$	113		$	79		$	81
Derivatives not designated as hedging instruments
Energy-related derivatives:
Other current assets/Other current liabilities	$	311		$	342		$	561		$	575
Other deferred charges and assets/Other deferred credits and liabilities	165			211			180			325
Total derivatives not designated as hedging instruments	$	476		$	553		$	741		$	900
Gross amounts recognized	$	489		$	771		$	837		$	1,036
Gross amounts offset(a)	$	(348	)	$	(514	)	$	(524	)	$	(801	)
Net amounts recognized in the Balance Sheets(b)	$	141		$	257		$	313		$	235

	As of September 30, 2019						As of December 31, 2018
Derivative Category and Balance Sheet Location	Assets			Liabilities			Assets			Liabilities
	(in millions)						(in millions)
Alabama Power
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:
Other current assets/Other current liabilities	$	3		$	12		$	3		$	4
Other deferred charges and assets/Other deferred credits and liabilities	2			10			3			6
Total derivatives designated as hedging instruments for regulatory purposes	$	5		$	22		$	6		$	10
Gross amounts recognized	$	5		$	22		$	6		$	10
Gross amounts offset	$	(2	)	$	(2	)	$	(4	)	$	(4	)
Net amounts recognized in the Balance Sheets	$	3		$	20		$	2		$	6
Georgia Power
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:
Other current assets/Other current liabilities	$	1		$	27		$	2		$	8
Other deferred charges and assets/Other deferred credits and liabilities	2			22			4			13
Total derivatives designated as hedging instruments for regulatory purposes	$	3		$	49		$	6		$	21
Derivatives designated as hedging instruments in cash flow and fair value hedges
Interest rate derivatives:
Other current assets/Other current liabilities	$	—		$	60		$	—		$	2
Total derivatives designated as hedging instruments in cash flow and fair value hedges	$	—		$	60		$	—		$	2
Gross amounts recognized	$	3		$	109		$	6		$	23
Gross amounts offset	$	(3	)	$	(3	)	$	(6	)	$	(6	)
Net amounts recognized in the Balance Sheets	$	—		$	106		$	—		$	17

	As of September 30, 2019						As of December 31, 2018
Derivative Category and Balance Sheet Location	Assets			Liabilities			Assets			Liabilities
	(in millions)						(in millions)
Mississippi Power
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:
Other current assets/Other current liabilities	$	—		$	12		$	1		$	3
Other deferred charges and assets/Other deferred credits and liabilities	2			12			2			6
Total derivatives designated as hedging instruments for regulatory purposes	$	2		$	24		$	3		$	9
Gross amounts recognized	$	2		$	24		$	3		$	9
Gross amounts offset	$	(2	)	$	(2	)	$	(2	)	$	(2	)
Net amounts recognized in the Balance Sheets	$	—		$	22		$	1		$	7
Southern Power
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Other current assets/Other current liabilities	$	—		$	4		$	3		$	6
Other deferred charges and assets/Other deferred credits and liabilities	—			—			1			2
Foreign currency derivatives:
Other current assets/Other current liabilities	—			24			—			23
Other deferred charges and assets/Other deferred credits and liabilities	—			8			75			—
Total derivatives designated as hedging instruments in cash flow and fair value hedges	$	—		$	36		$	79		$	31
Gross amounts recognized	$	—		$	36		$	79		$	31
Gross amounts offset	$	—		$	—		$	(3	)	$	(3	)
Net amounts recognized in the Balance Sheets	$	—		$	36		$	76		$	28

	As of September 30, 2019						As of December 31, 2018
Derivative Category and Balance Sheet Location	Assets			Liabilities			Assets			Liabilities
	(in millions)						(in millions)
Southern Company Gas
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:
Assets from risk management activities/Liabilities from risk management activities-current	$	1		$	10		$	2		$	8
Other deferred charges and assets/Other deferred credits and liabilities	—			—			—			1
Total derivatives designated as hedging instruments for regulatory purposes	$	1		$	10		$	2		$	9
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Assets from risk management activities/Liabilities from risk management activities-current	$	—		$	4		$	—		$	1
Other deferred charges and assets/Other deferred credits and liabilities	—			1			—			—
Interest rate derivatives:
Assets from risk management activities/Liabilities from risk management activities-current	—			5			—			—
Total derivatives designated as hedging instruments in cash flow and fair value hedges	$	—		$	10		$	—		$	1
Derivatives not designated as hedging instruments
Energy-related derivatives:
Assets from risk management activities/Liabilities from risk management activities-current	$	311		$	342		$	559		$	574
Other deferred charges and assets/Other deferred credits and liabilities	165			211			180			325
Total derivatives not designated as hedging instruments	$	476		$	553		$	739		$	899
Gross amounts of recognized	$	477		$	573		$	741		$	909
Gross amounts offset(a)	$	(341	)	$	(507	)	$	(508	)	$	(785	)
Net amounts recognized in the Balance Sheets(b)	$	136		$	66		$	233		$	124

(a) Gross amounts offset include cash collateral held on deposit in broker margin accounts of $166 million and $277 million as of September 30, 2019 and December 31, 2018, respectively.

(b)

Net amounts of derivative instruments outstanding exclude premium and intrinsic value associated with weather derivatives of $8 million as of December 31, 2018.

Pre-tax Effects of Unrealized Derivative Gains (Losses) Arising from Energy-Related Derivative Instruments

At September 30, 2019 and December 31, 2018, the pre-tax effects of unrealized derivative gains (losses) arising from energy-related derivative instruments designated as regulatory hedging instruments and deferred were as follows:

Regulatory Hedge Unrealized Gain (Loss) Recognized in the Balance Sheet at September 30, 2019
Derivative Category and Balance Sheet Location	Southern Company(*)			Alabama Power			Georgia Power			Mississippi Power			Southern Company Gas(*)
	(in millions)
Energy-related derivatives:
Other regulatory assets, current	$	(55	)	$	(11	)	$	(27	)	$	(12	)	$	(5	)
Other regulatory assets, deferred	(37		)	(8		)	(19		)	(10		)	—
Other regulatory liabilities, current	6			3			—			—			3
Total energy-related derivative gains (losses)	$	(86	)	$	(16	)	$	(46	)	$	(22	)	$	(2	)

(*) Fair value gains and losses recorded in regulatory assets and liabilities include cash collateral held on deposit in broker margin accounts of $8 million at September 30, 2019.

Regulatory Hedge Unrealized Gain (Loss) Recognized in the Balance Sheet at December 31, 2018
Derivative Category and Balance Sheet Location	Southern Company			Alabama Power			Georgia Power			Mississippi Power			Southern Company Gas
	(in millions)
Energy-related derivatives:
Other regulatory assets, current	$	(19	)	$	(3	)	$	(6	)	$	(2	)	$	(8	)
Other regulatory assets, deferred	(16		)	(3		)	(9		)	(4		)	—
Assets held for sale, current	(6		)	—			—			—			—
Other regulatory liabilities, current	1			—			—			—			1
Total energy-related derivative gains (losses)	$	(40	)	$	(6	)	$	(15	)	$	(6	)	$	(7	)

Pre-tax Effects of Interest Rate Derivatives, Designated as Cash Flow Hedging Instruments

For the three and nine months ended September 30, 2019 and 2018, the pre-tax effects of cash flow hedge accounting on accumulated OCI were as follows:

Gain (Loss) Recognized in OCI on Derivative	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
	(in millions)						(in millions)
Southern Company
Energy-related derivatives	$	(5	)	$	(5	)	$	(11	)	$	7
Interest rate derivatives	(52		)	—			(88		)	(2		)
Foreign currency derivatives	(68		)	(10		)	(107		)	(31		)
Total	$	(125	)	$	(15	)	$	(206	)	$	(26	)
Georgia Power
Interest rate derivatives	$	(47	)	$	—		$	(83	)	$	—
Total	$	(47	)	$	—		$	(83	)	$	—
Southern Power
Energy-related derivatives	$	(3	)	$	(5	)	$	(5	)	$	5
Foreign currency derivatives	(68		)	(10		)	(107		)	(31		)
Total	$	(71	)	$	(15	)	$	(112	)	$	(26	)

Schedule of Cash Flow Hedging Instruments, Statements of Financial Performance and Financial Position, Location

For the three and nine months ended September 30, 2019 and 2018, the pre-tax effects of cash flow and fair value hedge accounting on income were as follows:

Location and Amount of Gain (Loss) Recognized in Income on Cash Flow and Fair Value Hedging Relationships	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
	(in millions)						(in millions)
Southern Company
Total depreciation and amortization	$	760		$	787		$	2,267		$	2,338
Gain (loss) on energy-related cash flow hedges(a)	(1		)	—			(5		)	2
Total interest expense, net of amounts capitalized	(434		)	(458		)	(1,294		)	(1,386		)
Gain (loss) on interest rate cash flow hedges(a)	(5		)	(5		)	(14		)	(16		)
Gain (loss) on foreign currency cash flow hedges(a)	(6		)	(6		)	(18		)	(18		)
Gain (loss) on interest rate fair value hedges(b)	10			(4		)	43			(35		)
Total other income (expense), net	61			57			239			195
Gain (loss) on foreign currency cash flow hedges(a)(c)	(54		)	(9		)	(62		)	(46		)
Southern Power
Total depreciation and amortization	$	120		$	130		$	357		$	370
Gain (loss) on energy-related cash flow hedges(a)	(1		)	—			(5		)	2
Total interest expense, net of amounts capitalized	(43		)	(45		)	(127		)	(138		)
Gain (loss) on foreign currency cash flow hedges(a)	(6		)	(6		)	(18		)	(18		)
Total other income (expense), net	6			17			48			22
Gain (loss) on foreign currency cash flow hedges(a)(c)	(54		)	(9		)	(62		)	(46		)

(a) Reclassified from accumulated OCI into earnings.

(b) For fair value hedges, changes in the fair value of the derivative contracts are generally equal to changes in the fair value of the underlying debt and have no material impact on income.

(c)

The reclassification from accumulated OCI into other income (expense), net completely offsets currency gains and losses arising from changes in the U.S. currency exchange rates used to record the euro-denominated notes.

Schedule of Fair Value Hedging Instruments, Statements of Financial Performance and Financial Position, Location

As of September 30, 2019 and December 31, 2018, the following amounts were recorded on the balance sheets related to cumulative basis adjustments for fair value hedges:

	Carrying Amount of the Hedged Item						Cumulative Amount of Fair Value Hedging Adjustment included in Carrying Amount of the Hedged Item
Balance Sheet Location of Hedged Items	As of September 30, 2019			As of December 31, 2018			As of September 30, 2019			As of December 31, 2018
	(in millions)						(in millions)
Southern Company
Securities due within one year	$	(500	)	$	(498	)	$	—		$	2
Long-term debt	(2,093		)	(2,052		)	(2		)	41
Georgia Power
Securities due within one year	$	(500	)	$	(498	)	$	—		$	2

Pre-tax Effect of Interest Rate and Energy Related Derivatives

For the three and nine months ended September 30, 2019 and 2018, the pre-tax effects of energy-related derivatives not designated as hedging instruments on the statements of income of Southern Company and Southern Company Gas were as follows:

		Gain (Loss)
		Three Months Ended September 30,						Nine Months Ended September 30,
Derivatives in Non-Designated Hedging Relationships	Statements of Income Location	2019			2018			2019		2018
		(in millions)						(in millions)
Energy-related derivatives:	Natural gas revenues(*)	$	(2	)	$	(36	)	$	81	$	(79	)
	Cost of natural gas	2			2			5		5
Total derivatives in non-designated hedging relationships		$	—		$	(34	)	$	86	$	(74	)

(*)

Excludes immaterial gains (losses) recorded in natural gas revenues associated with weather derivatives for all periods presented.