Introduction

3 Months Ended

Mar. 31, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

INTRODUCTION

The condensed quarterly financial statements of each Registrant included herein have been prepared by such Registrant, without audit, pursuant to the rules and regulations of the SEC. The Condensed Balance Sheets at December 31, 2022 have been derived from the audited financial statements of each Registrant. In the opinion of each Registrant's management, the information regarding such Registrant furnished herein reflects all adjustments, which, except as otherwise disclosed, are of a normal recurring nature, necessary to present fairly the results of operations for the periods ended March 31, 2023 and 2022. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although each Registrant believes that the disclosures regarding such Registrant are adequate to make the information presented not misleading. Disclosures which would substantially duplicate the disclosures in the Form 10-K and details which have not changed significantly in amount or composition since the filing of the Form 10-K are generally omitted from this Quarterly Report on Form 10-Q unless specifically required by GAAP. Therefore, these Condensed Financial Statements should be read in conjunction with the financial statements and the notes thereto included in the Form 10-K. Due to the seasonal variations in the demand for energy and other factors, operating results for the periods presented are not necessarily indicative of the operating results to be expected for the full year.

Certain prior year data presented in the financial statements have been reclassified to conform to the current year presentation. These reclassifications had no impact on the overall results of operations, financial position, or cash flows of any Registrant.

Goodwill and Other Intangible Assets

Goodwill at March 31, 2023 and December 31, 2022 was as follows:


	Goodwill
	(in millions)
Southern Company	$	5,161
Southern Company Gas:
Gas distribution operations	$	4,034
Gas marketing services	981
Southern Company Gas total	$	5,015

Goodwill is not amortized, but is subject to an annual impairment test during the fourth quarter of each year, or more frequently if impairment indicators arise.

Other intangible assets were as follows:


	At March 31, 2023						At December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Other Intangible Assets, Net		Gross Carrying Amount		Accumulated Amortization		Other Intangible Assets, Net
	(in millions)						(in millions)
Southern Company
Subject to amortization:
Customer relationships	$	212	$	(164)	$	48	$	212	$	(162)	$	50
Trade names	64		(47)		17		64		(44)		20
PPA fair value adjustments	390		(134)		256		390		(129)		261
Other	6		(5)		1		5		(5)		—
Total subject to amortization	$	672	$	(350)	$	322	$	671	$	(340)	$	331
Not subject to amortization:
FCC licenses	75		—		75		75		—		75
Total other intangible assets	$	747	$	(350)	$	397	$	746	$	(340)	$	406

Southern Power(*)
PPA fair value adjustments	$	390	$	(134)	$	256	$	390	$	(129)	$	261

Southern Company Gas(*)

Gas marketing services
Customer relationships	$	156	$	(140)	$	16	$	156	$	(139)	$	17
Trade names	26		(19)		7		26		(17)		9
Total other intangible assets	$	182	$	(159)	$	23	$	182	$	(156)	$	26

(*) All subject to amortization.

Amortization associated with other intangible assets was as follows:


	Three Months Ended
	March 31, 2023		March 31, 2022
	(in millions)
Southern Company(a)	$	10	$	10
Southern Power(b)	5		5
Southern Company Gas	3		3

(a)Includes $5 million recorded as a reduction to operating revenues for both periods presented.

(b)Recorded as a reduction to operating revenues.

Cash, Cash Equivalents, and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed balance sheets that total to the amount shown in the condensed statements of cash flows for the applicable Registrants:


	Southern Company		Georgia Power		Southern Power		Southern Company Gas
	(in millions)
At March 31, 2023
Cash and cash equivalents	$	1,053	$	—	$	123	$	88
Restricted cash(a):
Other current assets	117		115		—		2
Other deferred charges and assets	47		45		3		—
Total cash, cash equivalents, and restricted cash(b)	$	1,217	$	160	$	126	$	89

At December 31, 2022
Cash and cash equivalents	$	1,917	$	364	$	131	$	81
Restricted cash(a):
Other current assets	62		60		—		2
Other deferred charges and assets	58		56		3		—
Total cash, cash equivalents, and restricted cash(b)	$	2,037	$	480	$	133	$	83

(a)For Georgia Power, reflects $116 million at both March 31, 2023 and December 31, 2022 related to proceeds from the issuance of solid waste disposal facility revenue bonds in 2022 and $44 million at March 31, 2023 related to funds from a Georgia Housing and Finance Authority (GHFA) rental assistance program used to offset qualifying customers' past due balances, which expired on March 31, 2023 and will be returned to the GHFA. For Southern Power, reflects $3 million at both March 31, 2023 and December 31, 2022 held to fund estimated construction completion costs at the Deuel Harvest wind facility. For Southern Company Gas, reflects collateral for workers' compensation, life insurance, and long-term disability insurance.

(b)Total may not add due to rounding.

Natural Gas for Sale

With the exception of Nicor Gas, Southern Company Gas records natural gas inventories on a WACOG basis. For any declines in market prices below the WACOG considered to be other than temporary, an adjustment is recorded to reduce the value of natural gas inventories to market value. Nicor Gas' natural gas inventory is carried at cost on a LIFO basis. Inventory decrements occurring during the year that are restored prior to year-end are charged to cost of natural gas at the estimated annual replacement cost. Inventory decrements that are not restored prior to year-end are charged to cost of natural gas at the actual LIFO cost of the inventory layers liquidated.

Southern Company Gas recorded no material adjustments to natural gas inventories for either period presented. Nicor Gas' inventory decrement at March 31, 2023 is expected to be restored prior to year-end.

Storm Damage Reserves

See Note 1 to the financial statements in Item 8 of the Form 10-K under "Storm Damage and Reliability Reserves" for additional information.

Storm damage reserve activity for the traditional electric operating companies during the three months ended March 31, 2023 was as follows:


	Southern Company		Alabama Power		Georgia Power		Mississippi Power
	(in millions)
Balance at December 31, 2022	$	216	$	97	$	83	$	36
Accrual	13		3		8		2
Weather-related damages	(43)		(12)		(31)		—
Balance at March 31, 2023	$	186	$	88	$	60	$	38

Asset Retirement Obligations

See Note 6 to the financial statements in Item 8 of the Form 10-K for additional information.

Following initial criticality on March 6, 2023, Georgia Power recorded AROs of approximately $90 million related to Plant Vogtle Unit 3. See Note (B) under "Georgia Power – Nuclear Construction" for additional information on construction and start-up of Plant Vogtle Units 3 and 4.