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Derivatives (Tables)

3 Months Ended

Mar. 31, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

At March 31, 2022, 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(*)	279	2030	2025
Alabama Power	65	2025	—
Georgia Power	75	2024	—
Mississippi Power	71	2026	—
Southern Power	4	2030	—
Southern Company Gas(*)	64	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 66.2 million mmBtu and short natural gas positions of 2.6 million mmBtu at March 31, 2022, which is also included in Southern Company's total volume.

Schedule of Interest Rate Derivatives

At March 31, 2022, 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 March 31, 2022
	(in millions)					(in millions)
Cash Flow Hedges of Forecasted Debt

Georgia Power	$	200	1.87%	—	February 2032	$	8
Georgia Power	100		2.27%	—	November 2051	4

Cash Flow Hedges of Existing Debt
Southern Company parent	100		2.58%	—	April 2027	(1)
Fair Value Hedges of Existing Debt
Southern Company parent	400		1.75%	1-month LIBOR + 0.68%	March 2028	(29)
Southern Company parent	1,000		3.70%	1-month LIBOR + 2.36%	April 2030	(69)
Southern Company Gas	500		1.75%	1-month LIBOR + 0.38%	January 2031	(35)
Southern Company	$	2,300				$	(122)

Schedule of Foreign Currency Derivatives

At March 31, 2022, the following foreign currency derivatives were outstanding:


	Pay Notional		Pay Rate	Receive Notional		Receive Rate	Hedge Maturity Date	Fair Value Gain (Loss) at March 31, 2022
	(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	$	(87)

Cash Flow Hedges of Existing Debt
Southern Power	$	677	2.95%	€	600	1.00%	June 2022	$	(24)
Southern Power	564		3.78%	500		1.85%	June 2026	(19)
Southern Power total	$	1,241		€	1,100			$	(43)

Southern Company	$	2,717		€	2,350			$	(130)

Schedule of Derivative Category and Balance Sheet Location

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


	At March 31, 2022				At December 31, 2021
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:
Assets from risk management activities/Other current liabilities	$	381	$	1	$	129	$	30
Other deferred charges and assets/Other deferred credits and liabilities	116		6		72		6


Total derivatives designated as hedging instruments for regulatory purposes	$	497	$	7	$	201	$	36
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Assets from risk management activities/Other current liabilities	$	28	$	2	$	7	$	5
Other deferred charges and assets/Other deferred credits and liabilities	5		—		1		—
Interest rate derivatives:
Assets from risk management activities/Other current liabilities	17		3		19		—
Other deferred charges and assets/Other deferred credits and liabilities	—		136		—		29
Foreign currency derivatives:
Assets from risk management activities/Other current liabilities	—		59		—		39
Other deferred charges and assets/Other deferred credits and liabilities	—		71		—		40
Total derivatives designated as hedging instruments in cash flow and fair value hedges	$	50	$	271	$	27	$	113
Derivatives not designated as hedging instruments
Energy-related derivatives:
Assets from risk management activities/Other current liabilities	$	16	$	2	$	9	$	4
Other deferred charges and assets/Other deferred credits and liabilities	1		—		1		—

Total derivatives not designated as hedging instruments	$	17	$	2	$	10	$	4
Gross amounts recognized	$	564	$	280	$	238	$	153
Gross amounts offset(a)	(45)		(9)		(25)		(28)
Net amounts recognized in the Balance Sheets(b)	$	519	$	271	$	213	$	125


	At March 31, 2022				At December 31, 2021
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	$	87	$	—	$	30	$	9
Other deferred charges and assets/Other deferred credits and liabilities	41		2		25		2
Total derivatives designated as hedging instruments for regulatory purposes	$	128	$	2	$	55	$	11






Gross amounts offset	(2)		(2)		(5)		(5)
Net amounts recognized in the Balance Sheets	$	126	$	—	$	50	$	6

Georgia Power
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:
Assets from risk management activities/Other current liabilities	$	150	$	—	$	54	$	6
Other deferred charges and assets/Other deferred credits and liabilities	29		1		21		2
Total derivatives designated as hedging instruments for regulatory purposes	$	179	$	1	$	75	$	8
Derivatives designated as hedging instruments in cash flow and fair value hedges
Interest rate derivatives:
Assets from risk management activities/Other current liabilities	$	12	$	—	$	—	$	—

Total derivatives designated as hedging instruments in cash flow and fair value hedges	$	12	$	—	$	—	$	—
Gross amounts recognized	$	191	$	1	$	75	$	8
Gross amounts offset	(1)		(1)		(8)		(8)
Net amounts recognized in the Balance Sheets	$	190	$	—	$	67	$	—

Mississippi Power
Derivatives designated as hedging instruments for regulatory purposes
Energy-related derivatives:
Assets from risk management activities/Other current liabilities	$	94	$	—	$	30	$	3
Other deferred charges and assets/Other deferred credits and liabilities	44		2		26		2
Total derivatives designated as hedging instruments for regulatory purposes	$	138	$	2	$	56	$	5






Gross amounts offset	(2)		(2)		(4)		(4)
Net amounts recognized in the Balance Sheets	$	136	$	—	$	52	$	1


	At March 31, 2022				At December 31, 2021
Derivative Category and Balance Sheet Location	Assets		Liabilities		Assets		Liabilities
	(in millions)				(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	$	3	$	—	$	2	$	—
Other deferred charges and assets/Other deferred credits and liabilities	3		—		1		—
Foreign currency derivatives:
Other current assets/Other current liabilities	—		35		—		16
Other deferred charges and assets/Other deferred credits and liabilities	—		8		—		—
Total derivatives designated as hedging instruments in cash flow and fair value hedges	$	6	$	43	$	3	$	16
Derivatives not designated as hedging instruments
Energy-related derivatives:
Other current assets/Other current liabilities	$	2	$	—	$	1	$	—




Gross amounts recognized	$	8	$	43	$	4	$	16
Gross amounts offset	—		—		—		—
Net amounts recognized in the Balance Sheets	$	8	$	43	$	4	$	16


	At March 31, 2022				At December 31, 2021
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/Other current liabilities	$	49	$	1	$	15	$	12
Other deferred charges and assets/Other deferred credits and liabilities	3		—		—		—
Total derivatives designated as hedging instruments for regulatory purposes	$	52	$	1	$	15	$	12
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Assets from risk management activities/Other current liabilities	$	25	$	2	$	5	$	5
Other deferred charges and assets/Other deferred credits and liabilities	2		—		—		—
Interest rate derivatives:
Assets from risk management activities/Liabilities from risk management activities-current	—		—		6		—
Other deferred charges and assets/Other deferred credits and liabilities	—		36		—		6
Total derivatives designated as hedging instruments in cash flow and fair value hedges	$	27	$	38	$	11	$	11
Derivatives not designated as hedging instruments
Energy-related derivatives:
Assets from risk management activities/Other current liabilities	$	14	$	1	$	8	$	4
Other deferred charges and assets/Other deferred credits and liabilities	1		—		1		—

Total derivatives not designated as hedging instruments	$	15	$	1	$	9	$	4
Gross amounts recognized	$	94	$	40	$	35	$	27
Gross amounts offset(a)	(40)		(4)		(8)		(11)
Net amounts recognized in the Balance Sheets(b)	$	54	$	36	$	27	$	16

(a)Gross amounts offset include cash collateral held on deposit in broker margin accounts of $36 million and $3 million at March 31, 2022 and December 31, 2021, respectively.

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

Schedule of Pre-tax Effects of Unrealized Derivative Gains (Losses)

At March 31, 2022 and December 31, 2021, 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
Derivative Category and Balance Sheet Location	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Company Gas
	(in millions)
At March 31, 2022:
Energy-related derivatives:




Other regulatory liabilities, current	$	353	$	87	$	150	$	94	$	22
Other regulatory liabilities, deferred	111		39		28		42		2
Total energy-related derivative gains (losses)	$	464	$	126	$	178	$	136	$	24

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)

Schedule of Pre-Tax Effects of Hedging on AOCI

For the three months ended March 31, 2022 and 2021, the pre-tax effects of cash flow and fair value hedge accounting on accumulated OCI were as follows:


Gain (Loss) Recognized in OCI on Derivative	For the Three Months Ended March 31,
		2022		2021
	(in millions)
Southern Company
Cash flow hedges:
Energy-related derivatives		$	42	$	5
Interest rate derivatives		9		3
Foreign currency derivatives		(28)		(47)
Fair value hedges(*):
Foreign currency derivatives		4		—
Total		$	27	$	(39)


Georgia Power
Cash flow hedges:
Interest rate derivatives		$	12	$	—



Southern Power
Cash flow hedges:
Energy-related derivatives		$	5	$	4

Foreign currency derivatives		(28)		(47)
Total		$	(23)	$	(43)
Southern Company Gas
Cash flow hedges:
Energy-related derivatives		$	37	$	1

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

Schedule of Pre-Tax Effects of Cash Flow and Fair Value Hedging on Income

For the three months ended March 31, 2022 and 2021, 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 March 31,

						2022	2021
	(in millions)
Southern Company
Total cost of natural gas		$	1,095	$	583
Gain (loss) on energy-related cash flow hedges(a)		9		(3)
Total depreciation and amortization		892		871
Gain (loss) on energy-related cash flow hedges(a)		2		3
Total interest expense, net of amounts capitalized		(462)		(450)
Gain (loss) on interest rate cash flow hedges(a)		(7)		(7)
Gain (loss) on foreign currency cash flow hedges(a)		(6)		(6)
Gain (loss) on interest rate fair value hedges(b)		(123)		(10)
Total other income (expense), net		145		58
Gain (loss) on foreign currency cash flow hedges(a)(c)		(25)		(60)
Gain (loss) on foreign currency fair value hedges		(24)		—
Amount excluded from effectiveness testing recognized in earnings		(4)		—










Southern Power
Total depreciation and amortization		$	120	$	119
Gain (loss) on energy-related cash flow hedges(a)		2		3
Total interest expense, net of amounts capitalized		(37)		(38)
Gain (loss) on foreign currency cash flow hedges(a)		(6)		(6)
Total other income (expense), net		2		7
Gain (loss) on foreign currency cash flow hedges(a)(c)		(25)		(60)
Southern Company Gas
Total cost of natural gas		$	1,095	$	583
Gain (loss) on energy-related cash flow hedges(a)		9		—
Total interest expense, net of amounts capitalized		(61)		(60)
Gain (loss) on interest rate cash flow hedges(a)		(1)		—
Gain (loss) on interest rate fair value hedges(b)		(36)		—

(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 Cumulative Basis Adjustments for Fair Value Hedges

At March 31, 2022 and December 31, 2021, 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 March 31, 2022		At December 31, 2021		At March 31, 2022		At December 31, 2021
	(in millions)				(in millions)
Southern Company

Long-term debt	$	(3,136)	$	(3,280)	$	126	$	9

Southern Company Gas

Long-term debt	$	(459)	$	(493)	$	37	$	2

Schedule of Pre-tax Effect of Interest Rate and Energy Related Derivatives on Income

For the three months ended March 31, 2022 and 2021, 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 March 31,
Derivatives in Non-Designated Hedging Relationships	Statements of Income Location		2022		2021
		(in millions)

Energy-related derivatives:	Natural gas revenues(*)		$	2	$	(17)

	Cost of natural gas		21		7
Total derivatives in non-designated hedging relationships			$	23	$	(10)

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