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LEASES (Tables)

12 Months Ended

Dec. 31, 2023

The major categories of lease obligations are as follows:


	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
At December 31, 2023
Electric generating units(*)	$	670	$	58	$	1,028	$	—	$	—	$	—
Real estate/land	871		4		54		2		546		28
Communication towers	123		1		4		—		—		23
Railcars	64		32		27		5		—		—
Other	60		3		2		18		—		—
Total	$	1,788	$	98	$	1,115	$	25	$	546	$	51

At December 31, 2022
Electric generating units(*)	$	760	$	59	$	1,163	$	—	$	—	$	—
Real estate/land	885		4		54		2		542		36
Communication towers	141		2		4		—		—		23
Railcars	34		12		18		3		—		—
Other	79		4		1		21		—		1
Total	$	1,899	$	81	$	1,240	$	26	$	542	$	60

(*)Amounts related to affiliate leases are eliminated in consolidation for Southern Company. See "Contracts that Contain a Lease" herein for additional information.

Balance sheet amounts recorded for operating and financing leases

Balance sheet amounts recorded for operating and finance leases are as follows:


	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
At December 31, 2023
Operating Leases
Operating lease ROU assets, net	$	1,432	$	87	$	884	$	9	$	488	$	47

Operating lease obligations - current	$	183	$	12	$	135	$	3	$	29	$	11
Operating lease obligations - non-current	1,307		81		740		6		517		40
Total operating lease obligations(*)	$	1,490	$	93	$	875	$	9	$	546	$	51

Finance Leases
Finance lease ROU assets, net	$	272	$	5	$	203	$	15	$	—	$	—

Finance lease obligations - current	$	11	$	2	$	18	$	1	$	—	$	—
Finance lease obligations - non-current	287		3		222		15		—		—
Total finance lease obligations	$	298	$	5	$	240	$	16	$	—	$	—

At December 31, 2022
Operating Leases
Operating lease ROU assets, net	$	1,531	$	71	$	1,007	$	9	$	489	$	57

Operating lease obligations - current	$	197	$	9	$	151	$	4	$	28	$	9
Operating lease obligations - non-current	1,388		67		851		5		514		51
Total operating lease obligations(*)	$	1,585	$	76	$	1,002	$	9	$	542	$	60

Finance Leases
Finance lease ROU assets, net	$	292	$	5	$	205	$	16	$	—	$	—

Finance lease obligations - current	$	18	$	2	$	16	$	1	$	—	$	—
Finance lease obligations - non-current	296		3		222		16		—		—
Total finance lease obligations	$	314	$	5	$	238	$	17	$	—	$	—

(*)Includes operating lease obligations related to PPAs at Southern Company, Alabama Power, and Georgia Power totaling $566 million, $58 million, and $813 million, respectively, at December 31, 2023 and $652 million, $59 million, and $952 million, respectively, at December 31, 2022.

Lease costs and other information

Lease costs for 2023, 2022, and 2021, which includes both amounts recognized as operations and maintenance expense and amounts capitalized as part of the cost of another asset, are as follows:


	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
2023
Lease cost
Operating lease cost(*)	$	252	$	16	$	192	$	5	$	34	$	12
Finance lease cost:
Amortization of ROU assets	24		2		19		1		—		—
Interest on lease obligations	14		—		17		—		—		—
Total finance lease cost	38		2		36		1		—		—
Short-term lease costs	40		16		16		—		—		—
Variable lease cost	47		—		74		—		4		—
Sublease income	—		—		—		—		—		—
Total lease cost	$	377	$	34	$	318	$	6	$	38	$	12

2022
Lease cost
Operating lease cost(*)	$	297	$	59	$	198	$	5	$	32	$	15
Finance lease cost:
Amortization of ROU assets	23		1		15		1		—		—
Interest on lease obligations	13		—		17		1		—		—
Total finance lease cost	36		1		32		2		—		—
Short-term lease costs	64		44		13		—		—		—
Variable lease cost	125		13		105		—		5		—
Sublease income	(1)		—		—		—		—		—
Total lease cost	$	521	$	117	$	348	$	7	$	37	$	15

2021
Lease cost
Operating lease cost(*)	$	313	$	58	$	208	$	2	$	33	$	19
Finance lease cost:
Amortization of ROU assets	21		1		11		1		—		—
Interest on lease obligations	11		—		16		1		—		—
Total finance lease cost	32		1		27		2		—		—
Short-term lease costs	48		15		24		—		—		—
Variable lease cost	96		4		83		—		5		—
Sublease income	1		—		—		—		—		—
Total lease cost	$	490	$	78	$	342	$	4	$	38	$	19

(*)Includes operating lease costs related to PPAs at Southern Company, Alabama Power, and Georgia Power totaling $112 million, $4 million, and $174 million, respectively, in 2023, $162 million, $48 million, and $180 million, respectively, in 2022, and $165 million, $47 million, and $184 million, respectively, in 2021.

Other information with respect to cash and noncash activities related to leases, as well as weighted-average lease terms and discount rates, is as follows:


	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
2023
Other information
Cash paid for amounts included in the measurements of lease obligations:
Operating cash flows from operating leases	$	253	$	17	$	199	$	5	$	33	$	12
Operating cash flows from finance leases	15		—		22		—		—		—
Financing cash flows from finance leases	18		2		16		1		—		—
ROU assets obtained under operating leases	100		30		26		1		7		7

ROU assets obtained under finance leases	3		3		18		—		—		—

2022
Other information
Cash paid for amounts included in the measurements of lease obligations:
Operating cash flows from operating leases	$	303	$	58	$	206	$	5	$	30	$	14
Operating cash flows from finance leases	11		—		20		1		—		—
Financing cash flows from finance leases	16		1		10		1		—		—
ROU assets obtained under operating leases	56		10		17		9		—		3
Reassessment of ROU assets under operating leases	16		—		—		—		16		—
ROU assets obtained under finance leases	118		2		116		—		—		—

2021
Other information
Cash paid for amounts included in the measurements of lease obligations:
Operating cash flows from operating leases	$	308	$	58	$	211	$	2	$	28	$	19
Operating cash flows from finance leases	9		—		17		1		—		—
Financing cash flows from finance leases	17		1		9		1		—		—
ROU assets obtained under operating leases	64		3		9		—		72		7
ROU assets obtained under finance leases	3		—		—		—		—		—


	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
At December 31, 2023
Weighted-average remaining lease term in years:
Operating leases	17.2		11.1		7.5		4.6		33.1		7.0
Finance leases	16.7		4.3		10.6		11.9		N/A		N/A
Weighted-average discount rate:
Operating leases	4.68	%	5.02	%	4.58	%	3.67	%	4.89	%	3.80	%
Finance leases	4.85	%	3.93	%	5.95	%	2.74	%	N/A		N/A

At December 31, 2022
Weighted-average remaining lease term in years:
Operating leases	17.3		13.0		8.1		4.7		34.0		11.0
Finance leases	17.4		6.4		11.8		12.9		N/A		N/A
Weighted-average discount rate:
Operating leases	4.51	%	4.87	%	4.52	%	3.49	%	4.86	%	3.79	%
Finance leases	4.87	%	3.00	%	8.06	%	2.74	%	N/A		N/A

Maturities of operating lease liabilities

Maturities of lease liabilities are as follows:


	At December 31, 2023
	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Maturity Analysis
Operating leases:
2024	$	230	$	16	$	172	$	4	$	36	$	12
2025	203		14		147		3		29		12
2026	180		12		142		2		29		9
2027	159		10		141		—		29		4
2028	143		7		135		—		30		3
Thereafter	1,378		64		303		1		1,000		18
Total	2,293		123		1,040		10		1,153		58
Less: Present value discount	803		30		165		1		607		7
Operating lease obligations	$	1,490	$	93	$	875	$	9	$	546	$	51
Finance leases:
2024	$	22	$	2	$	27	$	2	$	—	$	—
2025	27		1		36		2		—		—
2026	27		1		36		2		—		—
2027	27		1		36		2		—		—
2028	26		1		37		1		—		—
Thereafter	320		—		153		10		—		—
Total	449		6		325		19		—		—
Less: Present value discount	151		1		85		3		—		—
Finance lease obligations	$	298	$	5	$	240	$	16	$	—	$	—

Maturities of finance lease liabilities

Maturities of lease liabilities are as follows:


	At December 31, 2023
	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Maturity Analysis
Operating leases:
2024	$	230	$	16	$	172	$	4	$	36	$	12
2025	203		14		147		3		29		12
2026	180		12		142		2		29		9
2027	159		10		141		—		29		4
2028	143		7		135		—		30		3
Thereafter	1,378		64		303		1		1,000		18
Total	2,293		123		1,040		10		1,153		58
Less: Present value discount	803		30		165		1		607		7
Operating lease obligations	$	1,490	$	93	$	875	$	9	$	546	$	51
Finance leases:
2024	$	22	$	2	$	27	$	2	$	—	$	—
2025	27		1		36		2		—		—
2026	27		1		36		2		—		—
2027	27		1		36		2		—		—
2028	26		1		37		1		—		—
Thereafter	320		—		153		10		—		—
Total	449		6		325		19		—		—
Less: Present value discount	151		1		85		3		—		—
Finance lease obligations	$	298	$	5	$	240	$	16	$	—	$	—

Lease income, operating leases

Lease income for 2023, 2022, and 2021, is as follows:


	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
2023
Lease income - interest income on sales-type leases	$	24	$	—	$	—	$	14	$	10	$	—
Lease income - operating leases	164		35		29		2		85		37
Variable lease income	406		1		—		—		437		—
Total lease income	$	594	$	36	$	29	$	16	$	532	$	37

2022
Lease income - interest income on sales-type leases	$	25	$	—	$	—	$	15	$	10	$	—
Lease income - operating leases	208		77		32		2		85		36
Variable lease income	417		1		—		—		448		—
Total lease income	$	650	$	78	$	32	$	17	$	543	$	36

2021
Lease income - interest income on sales-type leases	$	15	$	—	$	—	$	14	$	1	$	—
Lease income - operating leases	223		82		42		2		85		35
Variable lease income	429		—		—		—		456		—
Total lease income	$	667	$	82	$	42	$	16	$	542	$	35

Lease income, sales-type leases and Power Purchase Agreements

Lease income for 2023, 2022, and 2021, is as follows:


	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
2023
Lease income - interest income on sales-type leases	$	24	$	—	$	—	$	14	$	10	$	—
Lease income - operating leases	164		35		29		2		85		37
Variable lease income	406		1		—		—		437		—
Total lease income	$	594	$	36	$	29	$	16	$	532	$	37

2022
Lease income - interest income on sales-type leases	$	25	$	—	$	—	$	15	$	10	$	—
Lease income - operating leases	208		77		32		2		85		36
Variable lease income	417		1		—		—		448		—
Total lease income	$	650	$	78	$	32	$	17	$	543	$	36

2021
Lease income - interest income on sales-type leases	$	15	$	—	$	—	$	14	$	1	$	—
Lease income - operating leases	223		82		42		2		85		35
Variable lease income	429		—		—		—		456		—
Total lease income	$	667	$	82	$	42	$	16	$	542	$	35

Undiscounted cash flows to be received under tolling arrangements accounted for as sales-type leases

The undiscounted cash flows expected to be received for in-service leased assets under the leases are as follows:


	At December 31, 2023
	Southern Company		Mississippi Power		Southern Power
	(in millions)
2024	$	38	$	23	$	15
2025	37		22		15
2026	36		21		15
2027	35		20		15
2028	34		19		15
Thereafter	330		145		185
Total undiscounted cash flows	$	510	$	250	$	260
Net investment in sales-type lease(*)	311		148		163
Difference between undiscounted cash flows and discounted cash flows	$	199	$	102	$	97

(*)For Mississippi Power, included in other current assets and other property and investments on the balance sheets. For Southern Power, included in other current assets ($15 million and $15 million at December 31, 2023 and 2022, respectively) and net investment in sales-type leases ($148 million and $154 million at December 31, 2023 and 2022, respectively) on the balance sheet.

Undiscounted cash flows to be received under PPAs accounted for as operating leases

The undiscounted cash flows to be received under operating leases and contracts accounted for as operating leases are as follows:


	At December 31, 2023
	Southern Company		Alabama Power		Southern Power		Southern Company Gas
	(in millions)
2024	$	116	$	7	$	90	$	35
2025	107		5		75		29
2026	108		5		73		29
2027	105		4		75		28
2028	104		3		76		28
Thereafter	706		26		91		354
Total	$	1,246	$	50	$	480	$	503

Summary of the components of income from leveraged leases

The following table provides a summary of the components of income related to leveraged lease investments. Income was impacted in 2021 by the impairment charges discussed below and in Note 15 under "Southern Company." Income in 2021 does not include the impacts of the sale and terminations of leveraged lease projects discussed in Note 15 under "Southern Company."


	2021
	(in millions)
Pretax leveraged lease income	$	17
Income tax expense	(5)
Net leveraged lease income	$	12