SEGMENT AND RELATED INFORMATION (Notes)

12 Months Ended

Dec. 31, 2019

Segment Reporting [Abstract]

SEGMENT AND RELATED INFORMATION

SEGMENT AND RELATED INFORMATION

Southern Company

Southern Company's reportable business segments are the sale of electricity by the traditional electric operating companies, the sale of electricity in the competitive wholesale market by Southern Power, and the sale of natural gas and other complementary products and services by Southern Company Gas. Revenues from sales by Southern Power to the traditional electric operating companies were $398 million, $435 million, and $392 million in 2019, 2018, and 2017, respectively. Revenues from sales of natural gas from Southern Company Gas to the traditional electric operating companies and Southern Power were $14 million and $64 million, respectively, in 2019, $32 million and $119 million, respectively, in 2018, and $23 million and $119 million, respectively, in 2017. The "All Other" column includes the Southern Company parent entity, which does not allocate operating expenses to business segments. Also, this category includes segments below the quantitative threshold for separate disclosure. These segments include providing energy solutions to electric utilities and their customers in the areas of distributed generation, energy storage and renewables, and energy efficiency, as well as investments in telecommunications and leveraged lease projects. All other inter-segment revenues are not material.

Financial data for business segments and products and services for the years ended December 31, 2019, 2018, and 2017 was as follows:

	Electric Utilities
	Traditional Electric Operating Companies			Southern Power			Eliminations			Total			Southern Company Gas		All Other			Eliminations			Consolidated
	(in millions)
2019
Operating revenues	$	15,569		$	1,938		$	(412	)	$	17,095		$	3,792	$	690		$	(158	)	$	21,419
Depreciation and amortization	1,993			479			—			2,472			487		79			—			3,038
Interest income	38			9			—			47			3		16			(6		)	60
Earnings from equity method investments	2			3			—			5			157		—			—			162
Interest expense	818			169			—			987			232		517			—			1,736
Income taxes (benefit)	764			(56		)	—			708			130		960			—			1,798
Segment net income (loss)(a)(b)(c)(d)(e)	2,929			339			—			3,268			585		908			(22		)	4,739
Goodwill	—			2			—			2			5,015		263			—			5,280
Total assets	81,063			14,300			(713		)	94,650			21,687		3,511			(1,148		)	118,700
Gross property additions	5,748			489			—			6,237			1,418		159			—			7,814
2018
Operating revenues	$	16,843		$	2,205		$	(477	)	$	18,571		$	3,909	$	1,213		$	(198	)	$	23,495
Depreciation and amortization	2,072			493			—			2,565			500		66			—			3,131
Interest income	23			8			—			31			4		8			(5		)	38
Earnings from equity method investments	(1		)	—			—			(1		)	148		2			(1		)	148
Interest expense	852			183			—			1,035			228		580			(1		)	1,842
Income taxes (benefit)	371			(164		)	—			207			464		(222		)	—			449
Segment net income (loss)(a)(b)(f)(g)	2,117			187			—			2,304			372		(453		)	3			2,226
Goodwill	—			2			—			2			5,015		298			—			5,315
Total assets	79,382			14,883			(306		)	93,959			21,448		3,285			(1,778		)	116,914
Gross property additions	6,077			315			—			6,392			1,399		414			—			8,205
2017
Operating revenues	$	16,884		$	2,075		$	(419	)	$	18,540		$	3,920	$	741		$	(170	)	$	23,031
Depreciation and amortization	1,954			503			—			2,457			501		52			—			3,010
Interest income	14			7			—			21			3		11			(9		)	26
Earnings from equity method investments	1			—			—			1			106		(1		)	—			106
Interest expense	820			191			—			1,011			200		490			(7		)	1,694
Income taxes (benefit)	1,021			(939		)	—			82			367		(307		)	—			142
Segment net income (loss)(a)(b)(h)(i)	(193		)	1,071			—			878			243		(279		)	—			842
Goodwill	—			2			—			2			5,967		299			—			6,268
Total assets	72,204			15,206			(325		)	87,085			22,987		2,552			(1,619		)	111,005
Gross property additions	3,836			268			—			4,104			1,525		355			—			5,984

(a) Attributable to Southern Company.

(b) Segment net income (loss) for the traditional electric operating companies includes pre-tax charges for estimated losses on plants under construction of $24 million ($24 million after tax) in 2019, $1.1 billion ($722 million after tax) in 2018, and $3.4 billion ($2.4 billion after tax) in 2017. See Note 2 under "Georgia Power – Nuclear Construction" and "Mississippi Power – Kemper County Energy Facility – Schedule and Cost Estimate" for additional information.

(c) Segment net income (loss) for Southern Power includes a $23 million pre-tax gain ($88 million gain after tax) on the sale of Plant Nacogdoches in 2019. See Note 15 under "Southern Power" for additional information.

(d) Segment net income (loss) for Southern Company Gas in 2019 includes pre-tax impairment charges totaling $115 million ($86 million after tax). See Notes 3 and 15 under "Other Matters – Southern Company Gas" and "Southern Company Gas – Proposed Sale of Pivotal LNG and Atlantic Coast Pipeline," respectively, for additional information.

(e) Segment net income (loss) for the "All Other" column in 2019 includes the pre-tax gain associated with the sale of Gulf Power of $2.6 billion ($1.4 billion after tax), the pre-tax loss, including related impairment charges, on the sales of certain PowerSecure business units totaling $58 million ($52 million after tax), and a pre-tax impairment charge of $17 million ($13 million after tax) related to a leveraged lease investment. See Notes 3 and 15 under "Other Matters – Southern Company" and "Southern Company," respectively, for additional information.

(f) Segment net income (loss) for Southern Power includes pre-tax impairment charges of $156 million ($117 million after tax) in 2018. See Note 15 under "Southern Power" for additional information.

(g) Segment net income (loss) for Southern Company Gas includes a net gain on dispositions of $291 million ($51 million loss after tax) in 2018 related to the Southern Company Gas Dispositions and a goodwill impairment charge of $42 million in 2018 related to the sale of Pivotal Home Solutions. See Note 15 under "Southern Company Gas" for additional information.

(h) Segment net income (loss) for the traditional electric operating companies includes a pre-tax charge for the write-down of Gulf Power's ownership of Plant Scherer Unit 3 of $33 million ($20 million after tax) in 2017. See Note 2 under "Southern Company – Gulf Power" for additional information.

(i) Segment net income (loss) includes income tax expense of $367 million for the traditional electric operating companies, income tax benefit of $743 million for Southern Power, and income tax expense of $93 million for Southern Company Gas in 2017 related to the Tax Reform Legislation.

Products and Services

Electric Utilities' Revenues
Year	Retail		Wholesale		Other		Total
	(in millions)
2019	$	14,084	$	2,152	$	859	$	17,095
2018	15,222		2,516		833		18,571
2017	15,330		2,426		784		18,540

Southern Company Gas' Revenues
Year	Gas Distribution Operations		Gas Marketing Services		All Other		Total
	(in millions)
2019	$	3,001	$	456	$	335	$	3,792
2018	3,155		568		186		3,909
2017	3,024		860		36		3,920

Southern Company Gas

Southern Company Gas manages its business through four reportable segments - gas distribution operations, gas pipeline investments, wholesale gas services, and gas marketing services. The non-reportable segments are combined and presented as all other. During 2018, Southern Company Gas changed its reportable segments to further align the way its Chief Operating Decision Maker reviews operating results and reclassified prior year data to conform to the new reportable segment presentation. This change resulted in a new reportable segment, gas pipeline investments, which was formerly included in gas midstream operations.

Gas distribution operations is the largest component of Southern Company Gas' business and includes natural gas local distribution utilities that construct, manage, and maintain intrastate natural gas pipelines and gas distribution facilities in four states. In July 2018, Southern Company Gas sold three of its natural gas distribution utilities, Elizabethtown Gas, Elkton Gas, and Florida City Gas. See Note 15 under "Southern Company Gas" for additional information.

Gas pipeline investments consists of joint ventures in natural gas pipeline investments including a 50% interest in SNG, two significant pipeline construction projects, and a 50% joint ownership interest in the Dalton Pipeline. These natural gas pipelines enable the provision of diverse sources of natural gas supplies to the customers of Southern Company Gas. See Notes 3, 5, 7, and 15 for additional information.

Wholesale gas services provides natural gas asset management and/or related logistics services for each of Southern Company Gas' utilities except Nicor Gas as well as for non-affiliated companies. Additionally, wholesale gas services engages in natural gas storage and gas pipeline arbitrage and related activities.

Gas marketing services provides natural gas marketing to end-use customers primarily in Georgia and Illinois through SouthStar. In June 2018, Southern Company Gas sold Pivotal Home Solutions, which provided home equipment protection products and services. See Note 15 under "Southern Company Gas – Sale of Pivotal Home Solutions" for additional information.

The all other column includes segments below the quantitative threshold for separate disclosure, including storage and fuels operations, Pivotal LNG, the investment in Triton through its sale on May 29, 2019, and other subsidiaries that fall below the quantitative threshold for separate disclosure. See Note 15 under "Southern Company Gas – Proposed Sale of Pivotal LNG and Atlantic Coast Pipeline" for additional information.

Financial data for business segments for the years ended December 31, 2019, 2018, and 2017 was as follows:

	Gas Distribution Operations(a)(b)			Gas Pipeline Investments			Wholesale Gas Services(c)			Gas Marketing Services(b)(d)			Total			All Other(e)			Eliminations			Consolidated
	(in millions)
2019
Operating revenues	$	3,028		$	32		$	294		$	456		$	3,810		$	44		$	(62	)	$	3,792
Depreciation and amortization	422			5			1			26			454			33			—			487
Operating income (loss)	573			20			219			112			924			(154		)	—			770
Earnings from equity method investments	—			162			—			—			162			(5		)	—			157
Interest expense	(187		)	(30		)	(5		)	(3		)	(225		)	(7		)	—			(232		)
Income taxes (benefit)	63			58			52			27			200			(70		)	—			130
Segment net income (loss)	337			94			163			83			677			(92		)	—			585
Gross property additions	1,433			1			1			4			1,439			27			—			1,466
Total assets at December 31, 2019	18,204			1,678			850			1,496			22,228			10,759			(11,300		)	21,687
2018
Operating revenues	$	3,186		$	32		$	144		$	568		$	3,930		$	55		$	(76	)	$	3,909
Depreciation and amortization	409			5			2			37			453			47			—			500
Operating income (loss)	904			20			70			19			1,013			(98		)	—			915
Earnings from equity method investments	—			145			—			—			145			3			—			148
Interest expense	(178		)	(34		)	(9		)	(6		)	(227		)	(1		)	—			(228		)
Income taxes (benefit)	409			28			4			54			495			(31		)	—			464
Segment net income (loss)	334			103			38			(40		)	435			(63		)	—			372
Gross property additions	1,429			32			—			6			1,467			54			—			1,521
Total assets at December 31, 2018	17,266			1,763			1,302			1,587			21,918			11,112			(11,582		)	21,448
2017
Operating revenues	$	3,207		$	17		$	6		$	860		$	4,090		$	64		$	(234	)	$	3,920
Depreciation and amortization	391			2			2			62			457			44			—			501
Operating income (loss)	645			10			(51		)	113			717			(57		)	—			660
Earnings from equity method investments	—			103			—			—			103			3			—			106
Interest expense	(153		)	(26		)	(7		)	(5		)	(191		)	(9		)	—			(200		)
Income taxes(f)	178			109			—			24			311			56			—			367
Segment net income (loss)(f)	353			(22		)	(57		)	84			358			(115		)	—			243
Gross property additions	1,330			117			1			9			1,457			51			—			1,508
Total assets at December 31, 2017	19,358			1,699			1,096			2,147			24,300			12,726			(14,039		)	22,987

(a) Operating revenues for the three gas distribution operations dispositions were $244 million and $399 million for 2018 and 2017, respectively. See Note 15 under "Southern Company Gas" for additional information.

(b) Segment net income for gas distribution operations includes a gain on dispositions of $324 million ($16 million after tax) in 2018. Segment net income for gas marketing services includes a loss on disposition of $(33) million ($(67) million loss after tax) and a goodwill impairment charge of $42 million in 2018 recorded in contemplation of the sale of Pivotal Home Solutions. See Note 15 under "Southern Company Gas" for additional information.

(c) The revenues for wholesale gas services are netted with costs associated with its energy and risk management activities. A reconciliation of operating revenues and intercompany revenues is shown in the following table.

	Third Party Gross Revenues		Intercompany Revenues		Total Gross Revenues		Less Gross Gas Costs		Operating Revenues
	(in millions)
2019	$	5,703	$	275	$	5,978	$	5,684	$	294
2018	6,955		451		7,406		7,262		144
2017	6,152		481		6,633		6,627		6

(d) Operating revenues for the gas marketing services disposition were $55 million and $129 million in 2018 and 2017, respectively. See Note 15 under "Southern Company Gas" for additional information.

(e) Segment net income (loss) for the "All Other" column in 2019 includes pre-tax impairment charges totaling $115 million ($86 million after tax). See Notes 3 and 15 under "Other Matters – Southern Company Gas" and "Southern Company Gas – Proposed Sale of Pivotal LNG and Atlantic Coast Pipeline," respectively, for additional information.

(f)

Includes the impact of the Tax Reform Legislation and new income tax apportionment factors in several states resulting from Southern Company Gas' inclusion in the consolidated Southern Company state tax filings.