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Acquisitions and Dispositions
 3 Months Ended
Mar. 31, 2021
Business Combinations [Abstract]  
Acquisitions and Dispositions ACQUISITIONS AND DISPOSITIONSSee Note 15 to the financial statements in Item 8 of the Form 10-K for additional information.
Southern Company
The following table provides Southern Company's major classes of assets classified as held for sale at March 31, 2021 and December 31, 2020:
Southern Company
At March 31,At December 31,
20212020
(in millions)
Assets Held for Sale:
Total property, plant, and equipment$7 $8 
Leveraged leases52 52 
Total Assets Held for Sale$59 $60 
Southern Company's asset sales, both individually and combined, do not represent a strategic shift in operations that has, or is expected to have, a major effect on operations and financial results; therefore, none of the assets have been classified as discontinued operations for any of the periods presented.
Southern Power
Asset Acquisition
During the three months ended March 31, 2021, Southern Power acquired a controlling membership interest in the wind facility listed below. Acquisition-related costs were expensed as incurred and were not material.
Project FacilityResourceSeller
Approximate Nameplate Capacity (MW)
LocationSouthern Power Ownership PercentageCODPPA Contract Period
Deuel Harvest(*)
WindInvenergy Renewables, LLC300Deuel County, SD
100% of
Class B
February 2021
25 years
and
15 years
(*)On March 26, 2021, Southern Power acquired a controlling interest in the facility and consolidates the project's operating results in its financial statements. On March 30, 2021, Southern Power completed a tax equity transaction whereby it received $220 million. The tax equity partner, which is the Class A member, and Invenergy Renewables, LLC each own a noncontrolling interest.
Construction Projects
During the three months ended March 31, 2021, Southern Power continued construction of the Garland and Tranquillity battery energy storage facilities and the Glass Sands wind facility. Total aggregate construction costs, excluding acquisition costs, are expected to be between $392 million and $460 million for the facilities under construction. At March 31, 2021, total costs of construction incurred for these projects were $158 million and are included in CWIP. The ultimate outcome of these matters cannot be determined at this time.
Project FacilityResource
Approximate Nameplate Capacity (MW)
LocationActual/Expected CODPPA Contract Period
Projects Under Construction at March 31, 2021
Garland Solar Storage(a)
Battery energy storage system88Kern County, CAThird quarter 202120 years
Tranquillity Solar Storage(a)
Battery energy storage system72Fresno County, CAFourth quarter 202120 years
Glass Sands(b)
Wind118Murray County, OKFourth quarter 202112 years
(a)In December 2020, Southern Power restructured its ownership of the project by contributing the Class A membership interests to an existing partnership and selling 100% of the Class B membership interests while retaining the controlling interest. Prior to commercial operation, Southern Power may restructure the project ownership again and enter into additional partnerships, but expects to retain the controlling interest. The ultimate outcome of this matter cannot be determined at this time.
(b)In December 2020, Southern Power purchased 100% of the membership interests of the Glass Sands facility.
Development Projects
Southern Power continues to evaluate and refine the deployment of the remaining wind turbine equipment purchased in 2016 and 2017 to development and construction projects. During the three months ended March 31, 2021, gains on wind turbine equipment contributed to various equity method investments totaled approximately $37 million.
Southern Company Gas
Sale of Sequent
On April 28, 2021, certain affiliates of Southern Company Gas entered into an agreement for the sale of Sequent for a purchase price of $50 million, plus working capital and certain other adjustments. The net book value of Sequent at March 31, 2021, excluding working capital, was $46 million; however, any potential gain or loss on the sale will be based, in large part, on the fair value of the open derivative positions as of the date of closing. See Notes (I) and (J) for information on fair value and derivatives outstanding at March 31, 2021.
Southern Company Gas has existing agreements in place in which it guarantees the payment performance of Sequent. Southern Company Gas will continue to guarantee payment performance for Sequent after the transaction closes for a period of time as the buyer obtains releases from these obligations. As of March 31, 2021, the obligations subject to the payment performance guarantee totaled $279 million. Changes in the price of natural gas, market conditions, and the number of open contracts will change the amount that Southern Company Gas is required to guarantee for Sequent each month. The maximum potential exposure over the period of the payment performance guarantee generally is capped at $1 billion. At closing, the buyer (an investment-grade entity) will issue a payment performance guarantee to Southern Company Gas, equal to the outstanding guarantee obligation throughout this period. Further, Southern Company Gas will retain responsibility for certain potential obligations that may arise from transactions during Winter Storm Uri. The completion of the transaction is subject to the satisfaction or waiver of certain conditions, including, among other customary closing conditions, the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The transaction is expected to be completed during the third quarter 2021; however, the ultimate outcome of this matter cannot be determined at this time.
Sale of Pivotal LNG
In connection with its March 2020 sale of Pivotal LNG, Southern Company Gas was entitled to two $5 million payments contingent upon Dominion Modular LNG Holdings, Inc. meeting certain milestones related to Pivotal LNG. Southern Company Gas received the first payment on April 22, 2021 and expects to receive the second payment in August 2021.