INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2021

Details of income tax provisions are as follows:


	2021
	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Federal —
Current	$	50	$	104	$	311	$	25	$	(340)	$	85
Deferred	36		172		(449)		(15)		343		35
	86		276		(138)		10		3		120
State —
Current	(25)		23		71		—		(16)		(68)
Deferred	206		73		(101)		11		—		223
	181		96		(30)		11		(16)		155
Total	$	267	$	372	$	(168)	$	21	$	(13)	$	275


	2020
	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Federal —
Current	$	199	$	198	$	365	$	18	$	(303)	$	82
Deferred	70		44		(224)		(14)		299		53
	269		242		141		4		(4)		135
State —
Current	100		61		60		—		(4)		35
Deferred	24		34		(49)		10		11		3
	124		95		11		10		7		38
Total	$	393	$	337	$	152	$	14	$	3	$	173


	2019
	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Federal —
Current	$	156	$	61	$	264	$	(6)	$	(717)	$	(120)
Deferred	1,237		125		180		26		647		195
	1,393		186		444		20		(70)		75
State —
Current	275		12		6		(1)		1		37
Deferred	130		72		22		11		13		18
	405		84		28		10		14		55
Total	$	1,798	$	270	$	472	$	30	$	(56)	$	130

Summary of amortization of tax credits

ITCs amortized in 2021, 2020, and 2019 were immaterial for the traditional electric operating companies and Southern Company Gas and were as follows for Southern Company and Southern Power:


	Southern Company		Southern Power
	(in millions)
2021	$	84	$	58
2020	84		59
2019	181		151

Schedule of effective income tax reconciliation

A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:


	2021
	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
Federal statutory rate	21.0	%	21.0	%	21.0	%	21.0	%	21.0	%	21.0	%
State income tax, net of federal deduction	5.5		4.6		(5.7)		4.9		(8.0)		15.1
Employee stock plans' dividend deduction	(0.9)		—		—		—		—		—
Non-deductible book depreciation	0.9		0.5		3.1		0.4		—		—
Flowback of excess deferred income taxes	(11.7)		(2.6)		(49.9)		(15.2)		—		(2.8)
AFUDC-Equity	(1.5)		(0.7)		(6.4)		—		—		—
Federal PTCs	—		—		—		—		(4.6)		—
Amortization of ITC	(2.2)		(0.1)		(0.4)		—		(29.7)		(0.1)
Noncontrolling interests	0.8		—		—		—		13.4		—
Leveraged lease impairments and dispositions	(1.4)		—		—		—		—		—
Other	(0.1)		0.2		(1.9)		0.6		(0.4)		0.6
Effective income tax (benefit) rate	10.4	%	22.9	%	(40.2)	%	11.7	%	(8.3)	%	33.8	%


	2020
	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
Federal statutory rate	21.0	%	21.0	%	21.0	%	21.0	%	21.0	%	21.0	%
State income tax, net of federal deduction	2.8		5.0		0.5		4.8		2.7		4.0
Employee stock plans' dividend deduction	(0.7)		—		—		—		—		—
Non-deductible book depreciation	0.7		0.6		0.8		0.5		—		—
Flowback of excess deferred income taxes	(8.8)		(3.1)		(12.0)		(18.5)		—		(2.7)
AFUDC-Equity	(0.8)		(0.6)		(1.1)		(0.1)		—		—

Federal PTCs	—		—		—		—		(2.5)		—
Amortization of ITC	(1.6)		(0.1)		(0.1)		(0.1)		(22.1)		(0.1)


Noncontrolling interests	—		—		—		—		3.1		—
Leveraged lease impairments	(1.6)		—		—		—		—		—
Other	0.2		(0.3)		(0.3)		0.9		(0.9)		0.5
Effective income tax (benefit) rate	11.2	%	22.5	%	8.8	%	8.5	%	1.3	%	22.7	%


	2019
	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
Federal statutory rate	21.0	%	21.0	%	21.0	%	21.0	%	21.0	%	21.0	%
State income tax, net of federal deduction	4.9		4.9		1.0		4.3		4.0		6.1
Employee stock plans' dividend deduction	(0.4)		—		—		—		—		—
Non-deductible book depreciation	0.3		0.6		0.5		0.4		—		—
Flowback of excess deferred income taxes	(2.1)		(5.3)		—		(12.6)		—		(6.0)
AFUDC-Equity	(0.4)		(0.8)		(0.6)		(0.1)		—		—

ITC basis difference	(0.1)		—		—		—		(1.9)		—

Amortization of ITC	(0.8)		(0.1)		(0.1)		(0.1)		(16.1)		(0.1)
Tax impact from sale of subsidiaries	5.1		—		—		—		(27.6)		(1.4)

Noncontrolling interests	—		—		—		—		0.8		—
Other	—		(0.4)		(0.3)		4.9		(0.6)		(1.4)
Effective income tax (benefit) rate	27.5	%	19.9	%	21.5	%	17.8	%	(20.4)	%	18.2	%

Tax effects between the carrying amounts of assets and liabilities

The tax effects of temporary differences between the carrying amounts of assets and liabilities in the financial statements of the Registrants and their respective tax bases, which give rise to deferred tax assets and liabilities, are as follows:


	December 31, 2021
	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Deferred tax liabilities —
Accelerated depreciation	$	9,300	$	2,541	$	3,340	$	330	$	1,421	$	1,428
Property basis differences	2,301		1,182		781		169		—		148
Federal effect of net state deferred tax assets	—		—		—		22		—		—
Leveraged lease basis differences	61		—		—		—		—		—
Employee benefit obligations	820		268		382		41		11		57
Under recovered fuel and natural gas costs	315		47		109		15		—		144
Regulatory assets –
Storm damage reserves	18		—		18		—		—		—
Employee benefit obligations	825		205		256		38		—		15
Remaining book value of retired assets	271		145		121		5		—		—
Premium on reacquired debt	72		10		62		—		—		—
AROs	2,232		863		1,325		44		—		—
AROs	868		329		494		—		—		—
Other	368		147		77		34		14		82
Total deferred income tax liabilities	17,451		5,737		6,965		698		1,446		1,874
Deferred tax assets —
Federal effect of net state deferred tax liabilities	305		165		41		—		27		93
State effect of federal deferred taxes	135		135		—		—		—		—
Employee benefit obligations	1,035		225		342		57		7		77
Other property basis differences	231		—		90		—		121		—
ITC and PTC carryforward	1,750		12		704		—		827		—
Long-term debt fair value adjustment	91		—		—		—		—		91
Other partnership basis difference	160		—		—		—		160		—
Other comprehensive losses	92		5		15		—		11		—
AROs	3,100		1,192		1,819		44		—		—
Estimated loss on plants under construction	825		—		825		—		—		—
Other deferred state tax attributes	361		—		11		246		52		5
Regulatory liability associated with the Tax Reform Legislation (not subject to normalization)	268		237		19		12		—		—
Other	561		193		153		34		53		62
Total deferred income tax assets	8,914		2,164		4,019		393		1,258		328
Valuation allowance	(207)		—		(73)		(41)		(27)		(9)
Net deferred income tax assets	8,707		2,164		3,946		352		1,231		319
Net deferred income taxes (assets)/liabilities	$	8,744	$	3,573	$	3,019	$	346	$	215	$	1,555

Recognized in the balance sheets:
Accumulated deferred income taxes – assets	$	(118)	$	—	$	—	$	(118)	$	—	$	—
Accumulated deferred income taxes – liabilities	$	8,862	$	3,573	$	3,019	$	464	$	215	$	1,555


	December 31, 2020
	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Deferred tax liabilities —
Accelerated depreciation	$	8,950	$	2,453	$	3,228	$	319	$	1,389	$	1,349
Property basis differences	1,999		1,010		689		148		—		135
Federal effect of net state deferred tax assets	—		—		—		25		—		—
Leveraged lease basis differences	142		—		—		—		—		—
Employee benefit obligations	739		250		362		39		12		26
Regulatory assets –
Storm damage reserves	80		—		80		—		—		—
Employee benefit obligations	1,313		348		438		62		—		45
Remaining book value of retired assets	270		123		141		6		—		—
Premium on reacquired debt	78		12		66		—		—		—
AROs	1,969		764		1,165		40		—		—
AROs	804		328		429		—		—		—
Other	437		128		82		66		12		138
Total deferred income tax liabilities	16,781		5,416		6,680		705		1,413		1,693
Deferred tax assets —
Federal effect of net state deferred tax liabilities	284		151		59		—		26		70
State effect of federal deferred taxes	126		126		—		—		—		—
Employee benefit obligations	1,511		369		522		80		6		100
Other property basis differences	223		—		72		—		134		—
ITC and PTC carryforward	1,853		12		539		—		1,110		—

Long-term debt fair value adjustment	86		—		—		—		—		86
Other partnership basis difference	166		—		—		—		166		—
Other comprehensive losses	128		7		17		—		25		—
AROs	2,773		1,092		1,594		40		—		—
Estimated loss on plants under construction	369		—		369		—		—		—
Other deferred state tax attributes	357		—		9		250		68		10
Regulatory liability associated with the Tax Reform Legislation (not subject to normalization)	338		243		76		19		—		—
Other	660		143		186		39		52		166
Total deferred income tax assets	8,874		2,143		3,443		428		1,587		432
Valuation allowance	(136)		—		(35)		(41)		(35)		(4)
Net deferred income tax assets	8,738		2,143		3,408		387		1,552		428
Net deferred income taxes (assets)/liabilities	$	8,043	$	3,273	$	3,272	$	318	$	(139)	$	1,265

Recognized in the balance sheets:
Accumulated deferred income taxes – assets	$	(132)	$	—	$	—	$	(129)	$	(262)	$	—
Accumulated deferred income taxes – liabilities	$	8,175	$	3,273	$	3,272	$	447	$	123	$	1,265

Summary of tax credit carryforwards

Federal ITC/PTC carryforwards at December 31, 2021 were as follows:


	Southern Company		Alabama Power		Georgia Power		Southern Power
	(in millions)
Federal ITC/PTC carryforwards	$	1,218	$	12	$	173	$	827
Tax year in which federal ITC/PTC carryforwards begin expiring	2031		2032		2031		2035
Year by which federal ITC/PTC carryforwards are expected to be utilized	2024		2024		2024		2024

Summary of operating loss carryforward

At December 31, 2021, the net state income tax benefit of state and local NOL carryforwards for Southern Company's subsidiaries were as follows:


Company/Jurisdiction	Approximate Net State Income Tax Benefit of NOL Carryforwards		Tax Year NOL Begins Expiring
	(in millions)
Mississippi Power
Mississippi	$	195	2031

Southern Power
Oklahoma	27		2035
Florida	10		2034
South Carolina	2		2036
Other states	2		Various
Southern Power Total	$	41

Other(*)
New York	11		2035
New York City	14		2035
Other states	17		Various
Southern Company Total	$	278

(*)Represents other non-registrant Southern Company subsidiaries. Alabama Power, Georgia Power, and Southern Company Gas did not have material state or local NOL carryforwards at December 31, 2021.

Changes in unrecognized tax benefits

Changes in unrecognized tax benefits for the periods presented were as follows:


	Southern Company
	(in millions)
Unrecognized tax benefits at December 31, 2018 and 2019	$	—
Tax positions changes – increase from prior periods	44
Unrecognized tax benefits at December 31, 2020	44
Tax positions changes – increase from prior periods	3
Unrecognized tax benefits at December 31, 2021	$	47