Revenue from Contracts with Customers and Lease Income

6 Months Ended

Jun. 30, 2022

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers and Lease Income

REVENUE FROM CONTRACTS WITH CUSTOMERS AND LEASE INCOME

Revenue from Contracts with Customers

The Registrants generate revenues from a variety of sources, some of which are not accounted for as revenue from contracts with customers, such as leases, derivatives, and certain cost recovery mechanisms. See Note 1 to the financial statements under "Revenues" in Item 8 of the Form 10-K for additional information on the revenue policies of the Registrants. See "Lease Income" herein and Note (J) for additional information on revenue accounted for under lease and derivative accounting guidance, respectively.

The following table disaggregates revenue from contracts with customers for the three and six months ended June 30, 2022 and 2021:

	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Three Months Ended June 30, 2022
Operating revenues
Retail electric revenues
Residential	$	1,655	$	617	$	962	$	76	$	—	$	—
Commercial	1,387		410		900		77		—		—
Industrial	1,005		368		553		84		—		—
Other	25		3		20		2		—		—
Total retail electric revenues	4,072		1,398		2,435		239		—		—
Natural gas distribution revenues
Residential	474		—		—		—		—		474
Commercial	130		—		—		—		—		130
Transportation	276		—		—		—		—		276
Industrial	16		—		—		—		—		16
Other	67		—		—		—		—		67
Total natural gas distribution revenues	963		—		—		—		—		963
Wholesale electric revenues
PPA energy revenues	585		108		40		5		441		—
PPA capacity revenues	136		40		12		—		85		—
Non-PPA revenues	62		35		6		169		196		—
Total wholesale electric revenues	783		183		58		174		722		—
Other natural gas revenues
Gas marketing services	90		—		—		—		—		90
Other natural gas revenues	10		—		—		—		—		10
Total natural gas revenues	100		—		—		—		—		100
Other revenues	308		63		121		9		9		—
Total revenue from contracts with customers	6,226		1,644		2,614		422		731		1,063
Other revenue sources(a)	980		287		507		12		168		20
Total operating revenues	$	7,206	$	1,931	$	3,121	$	434	$	899	$	1,083

	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Six Months Ended June 30, 2022
Operating revenues
Retail electric revenues
Residential	$	3,179	$	1,250	$	1,783	$	146	$	—	$	—
Commercial	2,567		786		1,638		143		—		—
Industrial	1,732		691		887		154		—		—
Other	51		7		40		4		—		—
Total retail electric revenues	7,529		2,734		4,348		447		—		—
Natural gas distribution revenues
Residential	1,490		—		—		—		—		1,490
Commercial	400		—		—		—		—		400
Transportation	613		—		—		—		—		613
Industrial	48		—		—		—		—		48
Other	195		—		—		—		—		195
Total natural gas distribution revenues	2,746		—		—		—		—		2,746
Wholesale electric revenues
PPA energy revenues	930		168		72		8		694		—
PPA capacity revenues	268		78		23		3		166		—
Non-PPA revenues	124		99		15		271		269		—
Total wholesale electric revenues	1,322		345		110		282		1,129		—
Other natural gas revenues
Gas marketing services	333		—		—		—		—		333
Other natural gas revenues	26		—		—		—		—		26
Total natural gas revenues	359		—		—		—		—		359
Other revenues	530		109		216		17		17		—
Total revenue from contracts with customers	12,486		3,188		4,674		746		1,146		3,105
Other revenue sources(a)	1,368		392		654		23		292		35
Total operating revenues	$	13,854	$	3,580	$	5,328	$	769	$	1,438	$	3,140

	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Three Months Ended June 30, 2021
Operating revenues
Retail electric revenues
Residential	$	1,469	$	553	$	852	$	64	$	—	$	—
Commercial	1,176		386		724		66		—		—
Industrial	728		334		321		73		—		—
Other	23		4		17		2		—		—
Total retail electric revenues	3,396		1,277		1,914		205		—		—
Natural gas distribution revenues
Residential	311		—		—		—		—		311
Commercial	73		—		—		—		—		73
Transportation	247		—		—		—		—		247
Industrial	8		—		—		—		—		8
Other	59		—		—		—		—		59
Total natural gas distribution revenues	698		—		—		—		—		698
Wholesale electric revenues
PPA energy revenues	209		38		16		2		158		—
PPA capacity revenues	118		29		14		1		75		—
Non-PPA revenues	55		25		3		75		78		—
Total wholesale electric revenues	382		92		33		78		311		—
Other natural gas revenues
Wholesale gas services	578		—		—		—		—		578
Gas marketing services	63		—		—		—		—		63
Other natural gas revenues	10		—		—		—		—		10
Total natural gas revenues	651		—		—		—		—		651
Other revenues	295		52		137		7		5		—
Total revenue from contracts with customers	5,422		1,421		2,084		290		316		1,349
Other revenue sources(a)	1,179		135		141		13		174		731
Other adjustments(b)	(1,403)		—		—		—		—		(1,403)
Total operating revenues	$	5,198	$	1,556	$	2,225	$	303	$	490	$	677

	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Six Months Ended June 30, 2021
Operating revenues
Retail electric revenues
Residential	$	2,936	$	1,181	$	1,627	$	128	$	—	$	—
Commercial	2,294		758		1,410		126		—		—
Industrial	1,397		654		606		137		—		—
Other	47		9		34		4		—		—
Total retail electric revenues	6,674		2,602		3,677		395		—		—
Natural gas distribution revenues
Residential	925		—		—		—		—		925
Commercial	243		—		—		—		—		243
Transportation	536		—		—		—		—		536
Industrial	24		—		—		—		—		24
Other	155		—		—		—		—		155
Total natural gas distribution revenues	1,883		—		—		—		—		1,883
Wholesale electric revenues
PPA energy revenues	422		81		30		7		313		—
PPA capacity revenues	237		58		27		4		150		—
Non-PPA revenues	119		57		12		162		139		—
Total wholesale electric revenues	778		196		69		173		602		—
Other natural gas revenues
Wholesale gas services	2,168		—		—		—		—		2,168
Gas marketing services	257		—		—		—		—		257
Other natural gas revenues	17		—		—		—		—		17
Total natural gas revenues	2,442		—		—		—		—		2,442
Other revenues	542		97		249		14		9		—
Total revenue from contracts with customers	12,319		2,895		3,995		582		611		4,325
Other revenue sources(a)	2,488		220		200		28		319		1,745
Other adjustments(b)	(3,699)		—		—		—		—		(3,699)
Total operating revenues	$	11,108	$	3,115	$	4,195	$	610	$	930	$	2,371

(a)Other revenue sources relate to revenues from customers accounted for as derivatives and leases, alternative revenue programs at Southern Company Gas, and cost recovery mechanisms and revenues that meet other scope exceptions for revenues from contracts with customers at the traditional electric operating companies.

(b)Other adjustments relate to the cost of Southern Company Gas' energy and risk management activities. Wholesale gas services revenues are presented net of the related costs of those activities on the statement of income. See Note 15 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K and Note (L) under "Southern Company Gas" for information on the sale of Sequent and components of wholesale gas services' operating revenues, respectively.

Contract Balances

The following table reflects the closing balances of receivables, contract assets, and contract liabilities related to revenues from contracts with customers at June 30, 2022 and December 31, 2021:

	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Accounts Receivable
At June 30, 2022	$	3,021	$	773	$	1,217	$	95	$	278	$	504
At December 31, 2021	2,504		589		736		73		149		753
Contract Assets
At June 30, 2022	$	102	$	—	$	38	$	—	$	—	$	—
At December 31, 2021	117		2		63		—		1		—
Contract Liabilities
At June 30, 2022	$	70	$	3	$	25	$	4	$	1	$	—
At December 31, 2021	57		4		14		—		1		—

At June 30, 2022 and December 31, 2021, Georgia Power had contract assets primarily related to retail customer fixed bill programs, where the payment is contingent upon Georgia Power's continued performance and the customer's continued participation in the program over a one-year contract term, and unregulated service agreements, where payment is contingent on project completion. Contract liabilities for Georgia Power relate to cash collections recognized in advance of revenue for unregulated service agreements. Southern Company's unregulated distributed generation business had $63 million and $50 million of contract assets and $38 million and $39 million of contract liabilities at June 30, 2022 and December 31, 2021, respectively, for outstanding performance obligations.

Revenues recognized in the three and six months ended June 30, 2022, which were included in contract liabilities at December 31, 2021, were $10 million and $19 million, respectively, for Southern Company and immaterial for the other Registrants.

Remaining Performance Obligations

The Subsidiary Registrants have long-term contracts with customers in which revenues are recognized as performance obligations are satisfied over the contract term. For the traditional electric operating companies and Southern Power, these contracts primarily relate to PPAs whereby electricity and generation capacity are provided to a customer. The revenue recognized for the delivery of electricity is variable; however, certain PPAs include a fixed payment for fixed generation capacity over the term of the contract. For Southern Company Gas, these contracts involve energy infrastructure enhancement and upgrade projects for certain governmental customers. Southern Company's unregulated distributed generation business also has partially satisfied performance obligations related to certain fixed price contracts. Revenues from contracts with customers related to these performance obligations remaining at June 30, 2022 are expected to be recognized as follows:

	2022 (remaining)		2023		2024		2025		2026		Thereafter
	(in millions)
Southern Company	$	347	$	617	$	414	$	322	$	307	$	2,340
Alabama Power	15		24		7		5		—		—
Georgia Power	39		63		30		22		11		21
Southern Power	184		347		344		294		299		2,334
Southern Company Gas	16		29		29		—		—		—

Revenue expected to be recognized for performance obligations remaining at June 30, 2022 was immaterial for Mississippi Power.

Lease Income

Lease income for the three and six months ended June 30, 2022 and 2021 is as follows:

	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
For the Three Months Ended June 30, 2022
Lease income - interest income on sales-type leases	$	7	$	—	$	—	$	4	$	3	$	—
Lease income - operating leases	52		19		8		—		21		9
Variable lease income	129		—		—		—		138		—
Total lease income	$	188	$	19	$	8	$	4	$	162	$	9
For the Six Months Ended June 30, 2022
Lease income - interest income on sales-type leases	$	13	$	—	$	—	$	8	$	5	$	—
Lease income - operating leases	105		39		16		1		42		18
Variable lease income	211		—		—		—		227		—
Total lease income	$	329	$	39	$	16	$	9	$	274	$	18
For the Three Months Ended June 30, 2021
Lease income - interest income on sales-type leases	$	4	$	—	$	—	$	4	$	—	$	—
Lease income - operating leases	56		21		10		—		21		9
Variable lease income	128		(1)		—		—		138		—
Total lease income	$	188	$	20	$	10	$	4	$	159	$	9
For the Six Months Ended June 30, 2021
Lease income - interest income on sales-type leases	$	7	$	—	$	—	$	7	$	—	$	—
Lease income - operating leases	112		41		21		1		42		17
Variable lease income	212		—		—		—		228		—
Total lease income	$	331	$	41	$	21	$	8	$	270	$	17

Lease payments received under tolling arrangements and PPAs consist of either scheduled payments or variable payments based on the amount of energy produced by the underlying electric generating units. Lease income for Alabama Power and Southern Power is included in wholesale revenues.