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DERIVATIVES (Tables)

12 Months Ended

Dec. 31, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

At December 31, 2021, 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(*)	311	2030	2025
Alabama Power	74	2024	—
Georgia Power	89	2024	—
Mississippi Power	75	2025	—
Southern Power	5	2030	2022
Southern Company Gas(*)	68	2024	2025

(*)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 74 million mmBtu and short natural gas positions of 6 million mmBtu at December 31, 2021, which is also included in Southern Company's total volume. See Note 15 under "Southern Company Gas" for information regarding the sale of Sequent.

Notional amount of interest rate derivatives

At December 31, 2021, the following interest rate derivatives were outstanding:


	Notional Amount		Interest Rate Received	Weighted Average Interest Rate Paid	Hedge Maturity Date	Fair Value Gain (Loss) December 31, 2021
	(in millions)					(in millions)






Fair Value Hedges of Existing Debt
Southern Company parent	$	400	1.75%	1-month LIBOR + 0.68%	March 2028	$	(5)
Southern Company parent	1,000		3.70%	1-month LIBOR + 2.36%	April 2030	(6)
Southern Company Gas	500		1.75%	1-month LIBOR + 0.38%	January 2031	1
Southern Company	$	1,900				$	(10)

Schedule of foreign exchange contracts

At December 31, 2021, the following foreign currency derivatives were outstanding:


	Pay Notional		Pay Rate	Receive Notional		Receive Rate	Hedge Maturity Date	Fair Value Gain (Loss) December 31, 2021
	(in millions)			(in millions)				(in millions)
Fair Value Hedges of Existing Debt
Southern Company parent	$	1,476	3.39%	€	1,250	1.88%	September 2027	$	(63)

Cash Flow Hedges of Existing Debt
Southern Power	$	677	2.95%	€	600	1.00%	June 2022	$	(5)
Southern Power	564		3.78%	500		1.85%	June 2026	(10)
Southern Power total	$	1,241		€	1,100			$	(15)

Southern Company	$	2,717		€	2,350			$	(78)

Fair value of energy-related derivatives and interest rate derivatives

At December 31, 2021 and 2020, the fair value of energy-related derivatives, interest rate derivatives, and foreign currency derivatives was reflected in the balance sheets as follows:


	2021				2020
Derivative Category and Balance Sheet Location	Assets		Liabilities		Assets		Liabilities
	(in millions)
Southern Company
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:
Assets from risk management activities/Other current liabilities	$	129	$	30	$	24	$	11
Other deferred charges and assets/Other deferred credits and liabilities	72		6		18		19


Total derivatives designated as hedging instruments for regulatory purposes	$	201	$	36	$	42	$	30
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Assets from risk management activities/Other current liabilities	$	7	$	5	$	3	$	5
Other deferred charges and assets/Other deferred credits and liabilities	1		—		—		—
Interest rate derivatives:
Assets from risk management activities/Other current liabilities	19		—		20		—
Other deferred charges and assets/Other deferred credits and liabilities	—		29		—		—
Foreign currency derivatives:
Assets from risk management activities/Other current liabilities	—		39		—		23
Other deferred charges and assets/Other deferred credits and liabilities	—		40		87		—
Total derivatives designated as hedging instruments in cash flow and fair value hedges	$	27	$	113	$	110	$	28
Derivatives not designated as hedging instruments
Energy-related derivatives:
Assets from risk management activities/Other current liabilities	$	9	$	4	$	388	$	331
Other deferred charges and assets/Other deferred credits and liabilities	1		—		270		232


Total derivatives not designated as hedging instruments	$	10	$	4	$	658	$	563
Gross amounts recognized	$	238	$	153	$	810	$	621
Gross amounts offset(a)	$	(25)	$	(28)	$	(529)	$	(557)
Net amounts recognized in the Balance Sheets(b)	$	213	$	125	$	281	$	64


	2021				2020
Derivative Category and Balance Sheet Location	Assets		Liabilities		Assets		Liabilities
	(in millions)
Alabama Power
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:
Other current assets/Other current liabilities	$	30	$	9	$	7	$	2
Other deferred charges and assets/Other deferred credits and liabilities	25		2		5		5
Total derivatives designated as hedging instruments for regulatory purposes	$	55	$	11	$	12	$	7



Gross amounts offset	$	(5)	$	(5)	$	(7)	$	(7)
Net amounts recognized in the Balance Sheets	$	50	$	6	$	5	$	—

Georgia Power
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:
Other current assets/Other current liabilities	$	54	$	6	$	7	$	5
Other deferred charges and assets/Other deferred credits and liabilities	21		2		8		8
Total derivatives designated as hedging instruments for regulatory purposes	$	75	$	8	$	15	$	13











Gross amounts offset	$	(8)	$	(8)	$	(12)	$	(12)
Net amounts recognized in the Balance Sheets	$	67	$	—	$	3	$	1

Mississippi Power
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:
Other current assets/Other current liabilities	$	30	$	3	$	4	$	3
Other deferred charges and assets/Other deferred credits and liabilities	26		2		5		6
Total derivatives designated as hedging instruments for regulatory purposes	$	56	$	5	$	9	$	9






Gross amounts offset	$	(4)	$	(4)	$	(7)	$	(7)
Net amounts recognized in the Balance Sheets	$	52	$	1	$	2	$	2


	2021				2020
Derivative Category and Balance Sheet Location	Assets		Liabilities		Assets		Liabilities
	(in millions)
Southern Power
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Other current assets/Other current liabilities	$	2	$	—	$	2	$	2
Other deferred charges and assets/Other deferred credits and liabilities	1		—		—		—
Foreign currency derivatives:
Other current assets/Other current liabilities	—		16		—		23
Other deferred charges and assets/Other deferred credits and liabilities	—		—		87		—
Total derivatives designated as hedging instruments in cash flow and fair value hedges	$	3	$	16	$	89	$	25
Derivatives not designated as hedging instruments
Energy-related derivatives:
Other current assets/Other current liabilities	$	1	$	—	$	—	$	1










Net amounts recognized in the Balance Sheets	$	4	$	16	$	89	$	26

Southern Company Gas
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:
Assets from risk management activities/Other current liabilities	$	15	$	12	$	6	$	1


Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Assets from risk management activities/Other current liabilities	$	5	$	5	$	1	$	3

Interest rate derivatives:
Assets from risk management activities/Other current liabilities	6		—		—		—
Other deferred charges and assets/Other deferred credits and liabilities	—		6		—		—
Total derivatives designated as hedging instruments in cash flow and fair value hedges	$	11	$	11	$	1	$	3
Derivatives not designated as hedging instruments
Energy-related derivatives:
Assets from risk management activities/Other current liabilities	$	8	$	4	$	388	$	330
Other deferred charges and assets/Other deferred credits and liabilities	1		—		270		232
Total derivatives not designated as hedging instruments	$	9	$	4	$	658	$	562
Gross amounts recognized	$	35	$	27	$	665	$	566
Gross amounts offset(a)	$	(8)	$	(11)	$	(503)	$	(531)
Net amounts recognized in the Balance Sheets (b)	$	27	$	16	$	162	$	35

(a)Gross amounts offset include cash collateral held on deposit in broker margin accounts of $3 million and $28 million at December 31, 2021 and 2020, respectively.

(b)Net amounts of derivative instruments outstanding exclude immaterial premium and intrinsic value associated with weather derivatives for all periods presented.

Pre-tax effects on the balance sheets

At December 31, 2021 and 2020, 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 Sheets
Derivative Category and Balance Sheet Location	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Company Gas
	(in millions)
At December 31, 2021:
Energy-related derivatives:
Other regulatory assets, current	$	(17)	$	(6)	$	—	$	—	$	(11)



Other regulatory liabilities, current	107		28		48		27		4
Other regulatory liabilities, deferred	65		22		19		24		—
Total energy-related derivative gains (losses)	$	155	$	44	$	67	$	51	$	(7)

At December 31, 2020:
Energy-related derivatives:

Other regulatory assets, deferred	$	(2)	$	—	$	(1)	$	(1)	$	—

Other regulatory liabilities, current	12		5		2		1		4
Other regulatory liabilities, deferred	2		1		1		—		—
Total energy-related derivative gains (losses)	$	12	$	6	$	2	$	—	$	4

Pre-tax effects of hedging on AOCI

For the years ended December 31, 2021, 2020, and 2019, the pre-tax effects of cash flow and fair value hedge accounting on AOCI for the applicable Registrants were as follows:


Gain (Loss) From Derivatives Recognized in OCI	2021		2020		2019
	(in millions)
Southern Company
Cash flow hedges:
Energy-related derivatives	$	34	$	(8)	$	(13)
Interest rate derivatives	5		(26)		(57)
Foreign currency derivatives	(103)		48		(84)
Fair value hedges(*):
Foreign currency derivatives	(3)		—		—
Total	$	(67)	$	14	$	(154)


Georgia Power
Cash flow hedges:
Interest rate derivatives	$	—	$	(3)	$	(59)






Southern Power
Cash flow hedges:
Energy-related derivatives	$	12	$	(2)	$	(4)
Foreign currency derivatives	(103)		48		(84)
Total	$	(91)	$	46	$	(88)
Southern Company Gas
Cash flow hedges:
Energy-related derivatives	$	22	$	(6)	$	(9)
Interest rate derivatives	—		(23)		2
Total	$	22	$	(29)	$	(7)

(*)Represents amounts excluded from the assessment of effectiveness for which the difference between changes in fair value and periodic amortization is recorded in OCI.

Pre-tax effect of interest rate and energy related derivatives

The pre-tax effects of cash flow and fair value hedge accounting on income for the years ended December 31, 2021, 2020, and 2019 were as follows:


Location and Amount of Gain (Loss) Recognized in Income on Cash Flow and Fair Value Hedging Relationships	2021		2020		2019
	(in millions)
Southern Company
Total cost of natural gas	$	1,619	$	972	$	1,319
Gain (loss) on energy-related cash flow hedges(a)	17		(8)		(2)
Total depreciation and amortization	3,565		3,518		3,038
Gain (loss) on energy-related cash flow hedges(a)	9		(3)		(6)
Total interest expense, net of amounts capitalized	(1,837)		(1,821)		(1,736)
Gain (loss) on interest rate cash flow hedges(a)	(27)		(26)		(20)
Gain (loss) on foreign currency cash flow hedges(a)	(24)		(23)		(24)
Gain (loss) on interest rate fair value hedges(b)	(30)		27		42
Total other income (expense), net	456		336		252
Gain (loss) on foreign currency cash flow hedges(a)(c)	(104)		114		(24)
Gain (loss) on foreign currency fair value hedges	(63)		—		—
Amount excluded from effectiveness testing recognized in earnings	3		—		—










Southern Power
Total depreciation and amortization	$	517	$	494	$	479
Gain (loss) on energy-related cash flow hedges(a)	9		(3)		(6)
Total interest expense, net of amounts capitalized	(147)		(151)		(169)
Gain (loss) on foreign currency cash flow hedges(a)	(24)		(23)		(24)
Total other income (expense), net	10		19		47
Gain (loss) on foreign currency cash flow hedges(a)(c)	(104)		114		(24)
Southern Company Gas
Total cost of natural gas	$	1,619	$	972	$	1,319
Gain (loss) on energy-related cash flow hedges(a)	17		(8)		(2)

(a)Reclassified from AOCI 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 AOCI 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

At December 31, 2021 and 2020, 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	At December 31, 2021		At December 31, 2020		At December 31, 2021		At December 31, 2020
	(in millions)				(in millions)
Southern Company
Securities due within one year	$	—	$	(1,509)	$	—	$	(10)
Long-term debt	(3,280)		—		9		—

Southern Company Gas

Long-term debt	$	(493)	$	—	$	2	$	—

Pre-tax effect of interest rate and energy related derivatives

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 for the years ended December 31, 2021, 2020, and 2019 were as follows:


		Gain (Loss)
Derivatives in Non-Designated Hedging Relationships	Statements of Income Location	2021		2020		2019
		(in millions)

Energy-related derivatives	Natural gas revenues(*)	$	(117)	$	134	$	223
	Cost of natural gas	(27)		15		10



Total derivatives in non-designated hedging relationships		$	(144)	$	149	$	233

(*) Excludes the impact of weather derivatives recorded in natural gas revenues of $9 million and $3 million for 2020 and 2019, respectively, as they are accounted for based on intrinsic value rather than fair value. There was no weather derivatives impact for 2021.