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LEASES | 12 Months Ended
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Dec. 31, 2021
Leases [Abstract] |
LEASES | LEASES On January 1, 2019, the Registrants adopted the provisions of FASB ASC Topic 842 (as amended), Leases (ASC 842), which require lessees to recognize leases with a term of greater than 12 months on the balance sheet as lease obligations, representing the discounted future fixed payments due, along with ROU assets that will be amortized over the term of each lease. The Registrants elected the transition methodology provided by ASC 842, whereby the applicable requirements were applied on a prospective basis as of the adoption date. The Registrants also elected the package of practical expedients provided by ASC 842 that allows prior determinations of whether existing contracts are, or contain, leases and the classification of existing leases to continue without reassessment. Additionally, the Registrants applied the use-of-hindsight practical expedient in determining lease terms as of the date of adoption and elected the practical expedient that allows existing land easements not previously accounted for as leases not to be reassessed. Lessee As lessee, the Registrants lease certain electric generating units (including renewable energy facilities), real estate/land, communication towers, railcars, and other equipment and vehicles. 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, 2021 |  |  |  |  |  |
Electric generating units | $ | 802 |  | $ | 104 |  | $ | 1,217 |  | $ | — |  | $ | — |  | $ | — |
Real estate/land | 876 |  | 3 |  | 49 |  | 2 |  | 526 |  | 45 |
Communication towers | 156 |  | 2 |  | 4 |  | — |  | — |  | 24 |
Railcars | 32 |  | 10 |  | 20 |  | 2 |  | — |  | — |
Other | 103 |  | 5 |  | 1 |  | 24 |  | — |  | 1 |
Total | $ | 1,969 |  | $ | 124 |  | $ | 1,291 |  | $ | 28 |  | $ | 526 |  | $ | 70 |
At December 31, 2020 |  |  |  |  |  |
Electric generating units | $ | 941 |  | $ | 146 |  | $ | 1,368 |  | $ | — |  | $ | — |  | $ | — |
Real estate/land | 815 |  | 4 |  | 53 |  | 2 |  | 451 |  | 61 |
Communication towers | 158 |  | 2 |  | 3 |  | — |  | — |  | 20 |
Railcars | 42 |  | 16 |  | 23 |  | 3 |  | — |  | — |
Other | 127 |  | 7 |  | 5 |  | 23 |  | — |  | 1 |
Total | $ | 2,083 |  | $ | 175 |  | $ | 1,452 |  | $ | 28 |  | $ | 451 |  | $ | 82 |
Real estate/land leases primarily consist of commercial real estate leases at Southern Company, Georgia Power, and Southern Company Gas and various land leases primarily associated with renewable energy facilities at Southern Power. The commercial real estate leases have remaining terms of up to 24 years while the land leases have remaining terms of up to 45 years, including renewal periods. Communication towers are leased for the installation of equipment to provide cellular phone service to customers and to support the automated meter infrastructure programs at the traditional electric operating companies and Nicor Gas. Communication tower leases have remaining terms of up to 15 years with options to renew that could extend the terms for an additional 15 years. Renewal options exist in many of the leases. Except as otherwise noted, the expected term used in calculating the lease obligation generally reflects only the noncancelable period of the lease as it is not considered reasonably certain that the lease will be extended. Land leases associated with renewable energy facilities at Southern Power and communication tower leases for automated meter infrastructure at Nicor Gas include renewal periods reasonably certain of exercise resulting in an expected lease term at least equal to the expected life of the renewable energy facilities and the automated meter infrastructure, respectively. Contracts that Contain a Lease While not specifically structured as a lease, some of the PPAs at Alabama Power and Georgia Power are deemed to represent a lease of the underlying electric generating units when the terms of the PPA convey the right to control the use of the underlying assets. Amounts recorded for leases of electric generating units are generally based on the amount of scheduled capacity payments due over the remaining term of the PPA, which varies between one and 17 years. Georgia Power has several PPAs with Southern Power that Georgia Power accounts for as leases with a lease obligation of $521 million and $575 million at December 31, 2021 and 2020, respectively. The amount paid for energy under these affiliate PPAs reflects a price that would be paid in an arm's-length transaction as reviewed and approved by the Georgia PSC. Short-term Leases Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Registrants generally recognize lease expense for these leases on a straight-line basis over the lease term. Residual Value Guarantees Residual value guarantees exist primarily in railcar leases at Alabama Power and Georgia Power and the amounts probable of being paid under those guarantees are included in the lease payments. All such amounts are immaterial at December 31, 2021 and 2020. Lease and Nonlease Components For all asset categories, with the exception of electric generating units, gas pipelines, and real estate leases, the Registrants combine lease payments and any nonlease components, such as asset maintenance, for purposes of calculating the lease obligation and the right-of-use asset. 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, 2021 |  |  |  |  |  |
Operating Leases |  |  |  |  |  |
Operating lease ROU assets, net | $ | 1,701 |  | $ | 108 |  | $ | 1,157 |  | $ | 10 |  | $ | 479 |  | $ | 70 |
Operating lease obligations - current | $ | 250 |  | $ | 54 |  | $ | 156 |  | $ | 4 |  | $ | 28 |  | $ | 11 |
Operating lease obligations - non-current | 1,503 |  | 66 |  | 999 |  | 6 |  | 497 |  | 59 |
Total operating lease obligations(*) | $ | 1,754 |  | $ | 121 |  | $ | 1,155 |  | $ | 10 |  | $ | 525 |  | $ | 70 |
Finance Leases |  |  |  |  |  |
Finance lease ROU assets, net | $ | 197 |  | $ | 4 |  | $ | 104 |  | $ | 17 |  | $ | — |  | $ | — |
Finance lease obligations - current | $ | 16 |  | $ | 1 |  | $ | 10 |  | $ | 1 |  | $ | — |  | $ | — |
Finance lease obligations - non-current | 199 |  | 3 |  | 126 |  | 17 |  | — |  | — |
Total finance lease obligations | $ | 215 |  | $ | 4 |  | $ | 136 |  | $ | 18 |  | $ | — |  | $ | — |
At December 31, 2020 |  |  |  |  |  |
Operating Leases |  |  |  |  |  |
Operating lease ROU assets, net | $ | 1,802 |  | $ | 151 |  | $ | 1,308 |  | $ | 9 |  | $ | 415 |  | $ | 81 |
Operating lease obligations - current | $ | 241 |  | $ | 51 |  | $ | 151 |  | $ | 2 |  | $ | 25 |  | $ | 15 |
Operating lease obligations - non-current | 1,611 |  | 119 |  | 1,156 |  | 7 |  | 426 |  | 67 |
Total operating lease obligations(*) | $ | 1,852 |  | $ | 170 |  | $ | 1,307 |  | $ | 9 |  | $ | 451 |  | $ | 82 |
Finance Leases |  |  |  |  |  |
Finance lease ROU assets, net | $ | 218 |  | $ | 5 |  | $ | 115 |  | $ | 19 |  | $ | — |  | $ | — |
Finance lease obligations - current | $ | 17 |  | $ | 1 |  | $ | 9 |  | $ | 1 |  | $ | — |  | $ | — |
Finance lease obligations - non-current | 214 |  | 4 |  | 136 |  | 18 |  | — |  | — |
Total finance lease obligations | $ | 231 |  | $ | 5 |  | $ | 145 |  | $ | 19 |  | $ | — |  | $ | — |
(*)Includes operating lease obligations related to PPAs at Southern Company, Alabama Power, and Georgia Power totaling $802 million, $104 million, and $1.11 billion, respectively, at December 31, 2021 and $941 million, $146 million, and $1.25 billion, respectively, at December 31, 2020. If not presented separately on the Registrants' balance sheets, amounts related to leases are presented as follows: operating lease ROU assets, net are included in "other deferred charges and assets"; operating lease obligations are included in "other current liabilities" and "other deferred credits and liabilities," as applicable; finance lease ROU assets, net are included in "plant in service"; and finance lease obligations are included in "securities due within one year" and "long-term debt," as applicable. Lease costs for 2021, 2020, and 2019, 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)
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 |
2020 |  |  |  |  |  |
Lease cost |  |  |  |  |  |
Operating lease cost(*) | $ | 309 |  | $ | 55 |  | $ | 212 |  | $ | 3 |  | $ | 29 |  | $ | 19 |
Finance lease cost: |  |  |  |  |  |
Amortization of ROU assets | 26 |  | 1 |  | 15 |  | — |  | — |  | — |
Interest on lease obligations | 11 |  | — |  | 16 |  | — |  | — |  | — |
Total finance lease cost | 37 |  | 1 |  | 31 |  | — |  | — |  | — |
Short-term lease costs | 39 |  | 11 |  | 26 |  | — |  | — |  | — |
Variable lease cost | 91 |  | 4 |  | 76 |  | — |  | 7 |  | — |
Sublease income | — |  | (1) |  | — |  | — |  | — |  | — |
Total lease cost | $ | 476 |  | $ | 70 |  | $ | 345 |  | $ | 3 |  | $ | 36 |  | $ | 19 |
2019 |  |  |  |  |  |
Lease cost |  |  |  |  |  |
Operating lease cost(*) | $ | 310 |  | $ | 54 |  | $ | 206 |  | $ | 3 |  | $ | 28 |  | $ | 18 |
Finance lease cost: |  |  |  |  |  |
Amortization of ROU assets | 28 |  | 1 |  | 15 |  | — |  | — |  | — |
Interest on lease obligations | 12 |  | — |  | 18 |  | — |  | — |  | — |
Total finance lease cost | 40 |  | 1 |  | 33 |  | — |  | — |  | — |
Short-term lease costs | 48 |  | 19 |  | 22 |  | — |  | — |  | — |
Variable lease cost | 105 |  | 6 |  | 85 |  | — |  | 7 |  | — |
Sublease income | — |  | (1) |  | — |  | — |  | — |  | — |
Total lease cost | $ | 503 |  | $ | 79 |  | $ | 346 |  | $ | 3 |  | $ | 35 |  | $ | 18 |
(*)Includes operating lease costs related to PPAs at Southern Company, Alabama Power, and Georgia Power totaling $165 million, $47 million, and $184 million, respectively, in 2021, $161 million, $43 million, and $184 million, respectively, in 2020, and $149 million, $41 million, and $174 million, respectively, in 2019. Georgia Power has variable lease payments that are based on the amount of energy produced by certain renewable generating facilities subject to PPAs, including $41 million, $39 million, and $42 million in 2021, 2020, and 2019, respectively, from finance leases which are included in purchased power on Georgia Power's statements of income, $20 million of which was included in purchased power, affiliates for all periods presented. 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)
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 in exchange for new operating lease obligations | 64 |  | 3 |  | 9 |  | — |  | 72 |  | 7 |
ROU assets obtained in exchange for new finance lease obligations | 3 |  | — |  | — |  | — |  | — |  | — |
2020 |  |  |  |  |  |
Other information |  |  |  |  |  |
Cash paid for amounts included in the measurements of lease obligations: |  |  |  |  |  |
Operating cash flows from operating leases | $ | 310 |  | $ | 55 |  | $ | 215 |  | $ | 3 |  | $ | 28 |  | $ | 18 |
Operating cash flows from finance leases | 9 |  | — |  | 18 |  | — |  | — |  | — |
Financing cash flows from finance leases | 22 |  | 1 |  | 11 |  | — |  | — |  | — |
ROU assets obtained in exchange for new operating lease obligations | 227 |  | 63 |  | 32 |  | — |  | 51 |  | 4 |
ROU assets obtained in exchange for new finance lease obligations | 10 |  | 2 |  | — |  | — |  | — |  | — |
2019 |  |  |  |  |  |
Other information |  |  |  |  |  |
Cash paid for amounts included in the measurements of lease obligations: |  |  |  |  |  |
Operating cash flows from operating leases | $ | 323 |  | $ | 54 |  | $ | 210 |  | $ | 3 |  | 27 |  | 18 |
Operating cash flows from finance leases | 10 |  | — |  | 19 |  | — |  | — |  | — |
Financing cash flows from finance leases | 32 |  | 1 |  | 13 |  | — |  | — |  | — |
ROU assets obtained in exchange for new operating lease obligations | 118 |  | 7 |  | 21 |  | — |  | 2 |  | 19 |
ROU assets obtained in exchange for new finance lease obligations | 35 |  | 2 |  | 24 |  | — |  | — |  | — |
| Southern Company | Alabama Power | Georgia Power | Mississippi Power | Southern Power | Southern Company Gas
At December 31, 2021 |  |  |  |  |  |
Weighted-average remaining lease term in years: |  |  |  |  |  |
Operating leases | 15.9 | 9.1 | 8.7 | 6.1 | 32.8 | 10.5
Finance leases | 18.0 | 8.7 | 8.5 | 13.9 | N/A | N/A
Weighted-average discount rate: |  |  |  |  |  |
Operating leases | 4.41 | % | 4.37 | % | 4.45 | % | 2.74 | % | 5.20 | % | 3.61 | %
Finance leases | 4.82 | % | 3.09 | % | 10.81 | % | 2.74 | % | N/A | N/A
At December 31, 2020 |  |  |  |  |  |
Weighted-average remaining lease term in years: |  |  |  |  |  |
Operating leases | 14.5 | 7.8 | 9.4 | 6.5 | 32.1 | 9.8
Finance leases | 18.2 | 9.7 | 9.5 | 14.9 | N/A | N/A
Weighted-average discount rate: |  |  |  |  |  |
Operating leases | 4.44 | % | 4.14 | % | 4.37 | % | 3.26 | % | 5.45 | % | 3.67 | %
Finance leases | 4.79 | % | 3.20 | % | 10.81 | % | 2.74 |  | N/A | N/A
Maturities of lease liabilities are as follows:
| At December 31, 2021
| Southern Company | Alabama Power | Georgia Power | Mississippi Power | Southern Power | Southern Company Gas
| (in millions)
Maturity Analysis |  |  |  |  |  |
Operating leases: |  |  |  |  |  |
2022 | $ | 307 |  | $ | 59 |  | $ | 205 |  | $ | 4 |  | $ | 37 |  | $ | 14 |
2023 | 238 |  | 9 |  | 201 |  | 2 |  | 29 |  | 11 |
2024 | 195 |  | 7 |  | 164 |  | 1 |  | 29 |  | 11 |
2025 | 174 |  | 6 |  | 136 |  | 1 |  | 29 |  | 11 |
2026 | 154 |  | 5 |  | 133 |  | 1 |  | 30 |  | 8 |
Thereafter | 1,575 |  | 69 |  | 566 |  | 2 |  | 995 |  | 31 |
Total | 2,643 |  | 155 |  | 1,405 |  | 11 |  | 1,149 |  | 86 |
Less: Present value discount | 889 |  | 34 |  | 250 |  | 1 |  | 624 |  | 16 |
Operating lease obligations | $ | 1,754 |  | $ | 121 |  | $ | 1,155 |  | $ | 10 |  | $ | 525 |  | $ | 70 |
Finance leases: |  |  |  |  |  |
2022 | $ | 25 |  | $ | 2 |  | $ | 25 |  | $ | 2 |  | $ | — |  | $ | — |
2023 | 22 |  | 1 |  | 25 |  | 2 |  | — |  | — |
2024 | 19 |  | 1 |  | 25 |  | 2 |  | — |  | — |
2025 | 16 |  | — |  | 25 |  | 2 |  | — |  | — |
2026 | 16 |  | — |  | 26 |  | 1 |  | — |  | — |
Thereafter | 231 |  | — |  | 83 |  | 13 |  | — |  | — |
Total | 329 |  | 4 |  | 209 |  | 22 |  | — |  | — |
Less: Present value discount | 114 |  | — |  | 73 |  | 4 |  | — |  | — |
Finance lease obligations | $ | 215 |  | $ | 4 |  | $ | 136 |  | $ | 18 |  | $ | — |  | $ | — |
Payments made under PPAs at Georgia Power for energy generated from certain renewable energy facilities accounted for as operating and finance leases are considered variable lease costs and are therefore not reflected in the above maturity analysis. Lessor The Registrants are each considered lessors in various arrangements that have been determined to contain a lease due to the customer's ability to control the use of the underlying asset owned by the applicable Registrant. For the traditional electric operating companies, these arrangements consist of outdoor lighting contracts accounted for as operating leases with initial terms of up to seven years, after which the contracts renew on a month-to-month basis at the customer's option. For Mississippi Power, these arrangements also include a tolling arrangement related to an electric generating unit accounted for as a sales-type lease with a remaining term of 17 years. For Southern Power, these arrangements consist of PPAs related to electric generating units, including solar and wind facilities, accounted for as operating leases with remaining terms of up to 25 years and PPAs related to battery energy storage facilities accounted for as sales-type leases with remaining terms of up to 19 years. Southern Company Gas is the lessor in operating leases related to gas pipelines with remaining terms of up to 21 years. For Southern Company, these arrangements also include PPAs related to fuel cells accounted for as operating leases with remaining terms of up to 12 years. Lease income for 2021, 2020, and 2019, is as follows:
| Southern Company | Alabama Power | Georgia Power | Mississippi Power | Southern Power | Southern Company Gas
| (in millions)
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 |
2020 |  |  |  |  |  |
Lease income - interest income on sales-type leases | $ | 16 |  | $ | — |  | $ | — |  | $ | 12 |  | $ | — |  | $ | — |
Lease income - operating leases | 208 |  | 45 |  | 58 |  | 2 |  | 87 |  | 35 |
Variable lease income | 419 |  | — |  | — |  | — |  | 449 |  | — |
Total lease income | $ | 643 |  | $ | 45 |  | $ | 58 |  | $ | 14 |  | $ | 536 |  | $ | 35 |
2019 |  |  |  |  |  |
Lease income - interest income on sales-type leases | $ | 9 |  | $ | — |  | $ | — |  | $ | 9 |  | $ | — |  | $ | — |
Lease income - operating leases | 273 |  | 24 |  | 71 |  | — |  | 160 |  | 35 |
Variable lease income | 403 |  | — |  | — |  | — |  | 434 |  | — |
Total lease income | $ | 685 |  | $ | 24 |  | $ | 71 |  | $ | 9 |  | $ | 594 |  | $ | 35 |
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. Scheduled payments to be received under outdoor lighting contracts, tolling arrangements, and PPAs accounted for as leases are presented in the following maturity analyses. No profit or loss was recognized by Mississippi Power when a tolling arrangement accounted for as a sales-type lease began in 2019. During 2020 and 2021, Mississippi Power completed construction of additional leased assets under the lease and, upon completion, the book values of $26 million and $39 million, respectively, were transferred from CWIP to lease receivables. Each transfer represented a non-cash investing transaction for purposes of the statements of cash flows. During 2021, Southern Power completed construction of a portion of the Garland and Tranquillity battery energy storage facilities' assets and recorded losses totaling $40 million upon commencement of the related PPAs, which Southern Power accounts for as sales-type leases. The losses were due to ITCs retained and expected to be realized by Southern Power and its partners in these projects, and no estimated residual asset value was assumed in calculating the losses. Each lease has an initial term of 20 years. Upon commencement of the leases, the book values of the related assets totaling $210 million were derecognized from CWIP and lease receivables were recorded. At December 31, 2021, the current portion of the lease receivables totaling $12 million is included in other current assets and the long-term portion totaling $161 million is included in miscellaneous property and investments on Southern Company's balance sheet and net investment in sales-type leases on Southern Power's consolidated balance sheet. The transfers represented noncash investing transactions for purposes of the statement of cash flows. See Note 15 under "Southern Power" for additional information. The undiscounted cash flows expected to be received for in-service leased assets under the leases are as follows:
| At December 31, 2021
| Southern Company | Mississippi Power | Southern Power
| (in millions)
2022 | $ | 37 |  | $ | 25 |  | $ | 12 |
2023 | 39 |  | 24 |  | 15 |
2024 | 38 |  | 23 |  | 15 |
2025 | 37 |  | 22 |  | 15 |
2026 | 36 |  | 21 |  | 15 |
Thereafter | 390 |  | 183 |  | 207 |
Total undiscounted cash flows | $ | 577 |  | $ | 298 |  | $ | 279 |
Net investment in sales-type lease(*) | 340 |  | 167 |  | 173 |
Difference between undiscounted cash flows and discounted cash flows | $ | 237 |  | $ | 131 |  | $ | 106 |
(*)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 and net investment in sales-type leases on the balance sheet. The undiscounted cash flows to be received under operating leases and contracts accounted for as operating leases (adjusted for intercompany eliminations) are as follows:
| At December 31, 2021
| Southern Company | Alabama Power | Georgia Power | Southern Power | Southern Company Gas
| (in millions)
2022 | $ | 188 |  | $ | 76 |  | $ | 8 |  | $ | 87 |  | $ | 35 |
2023 | 139 |  | 32 |  | 2 |  | 88 |  | 35 |
2024 | 107 |  | 5 |  | — |  | 90 |  | 33 |
2025 | 100 |  | 3 |  | — |  | 74 |  | 28 |
2026 | 99 |  | 3 |  | — |  | 73 |  | 28 |
Thereafter | 883 |  | 23 |  | — |  | 240 |  | 407 |
Total | $ | 1,516 |  | $ | 142 |  | $ | 10 |  | $ | 652 |  | $ | 566 |
Southern Power receives payments for renewable energy under PPAs accounted for as operating leases that are considered contingent rents and are therefore not reflected in the table above. Alabama Power and Southern Power allocate revenue to the nonlease components of PPAs based on the stand-alone selling price of capacity and energy. The undiscounted cash flows to be received under outdoor lighting contracts accounted for as operating leases at Mississippi Power are immaterial. Southern Company Leveraged Lease At December 31, 2020, a subsidiary of Southern Holdings had four leveraged lease agreements related to energy generation, distribution, and transportation assets, including two domestic and two international projects. During 2021, one of the domestic projects was sold and the agreements for both international projects were terminated. At December 31, 2021, one leveraged lease agreement related to energy generation remains, with an expected remaining term of 10 years. Southern Company continues to receive federal income tax deductions for depreciation and amortization, as well as interest on long-term debt related to this investment. Southern Company wrote off the related investment balance in 2020, as discussed below. Southern Company's net investment in leveraged leases at December 31, 2020 consisted of the following:
| December 31, 2020(*)
| (in millions)
Net rentals receivable | $ | 734 |
Unearned income | (178) |
Investment in leveraged leases | 556 |
Deferred taxes from leveraged leases | (7) |
Net investment in leveraged leases | $ | 549 |
(*)Excludes the investment classified as held for sale. See Note 15 under "Southern Company" for additional information. The following table provides a summary of the components of income related to leveraged lease investments. Income was impacted in all periods presented 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 |  | 2020 |  | 2019
| (in millions)
Pretax leveraged lease income (loss) | $ | 17 |  |  | $ | (180) |  |  | $ | 11 |
Income tax benefit (expense) | (5) |  |  | 98 |  |  | — |
Net leveraged lease income (loss) | $ | 12 |  |  | $ | (82) |  |  | $ | 11 |
Since 2017, the financial and operational performance of the remaining domestic lessee and the associated generation assets raised significant concerns about the short-term ability of the generation assets to produce cash flows sufficient to support ongoing operations and the lessee's contractual obligations and its ability to make the remaining semi-annual lease payments through the end of the lease term in 2047. In addition, following the expiration of the existing power offtake agreement in 2032, the lessee also is exposed to remarketing risk, which encompasses the price and availability of alternative sources of generation. In connection with the 2019 annual impairment analysis, Southern Company revised the estimated cash flows to be received under the leveraged lease, which resulted in an impairment charge of $17 million ($13 million after tax) recorded in the fourth quarter 2019. During the second quarter 2020, Southern Company received the latest annual forecasts of natural gas prices and considered the significant decline in forecasted prices to be an indicator of potential impairment that required an interim impairment assessment. Accordingly, consistent with prior impairment analyses, Southern Company evaluated the recoverability of the lease receivable and the expected residual value of the generation assets under various natural gas price scenarios to estimate the cash flows expected to be received from remarketing the generation assets following the expiration of the existing PPA and the residual value of the generation assets at the end of the lease. Based on the forecasts of energy prices in the years following the expiration of the existing PPA, Southern Company concluded that it was no longer probable that any of the associated rental payments would be received, because it was no longer probable the generation assets would be successfully remarketed and continue to operate after that date. During the second quarter 2020, Southern Company revised the estimated cash flows to be received under the leveraged lease to reflect this conclusion, which resulted in a full impairment of the lease investment and a pre-tax charge to earnings of $154 million ($74 million after tax). All required lease payments through December 31, 2021 have been paid in full. If any future lease payments due prior to the expiration of the associated PPA are not paid in full, the Southern Holdings subsidiary may be unable to make its corresponding payment to the holders of the underlying non-recourse debt related to the generation assets. Failure to make the required payment to the debtholders could represent an event of default that would give the debtholders the right to foreclose on, and take ownership of, the generation assets, in effect terminating the lease. As the remaining amount of the lease investment was charged against earnings in the second quarter 2020, termination would not be expected to result in additional charges. Southern Company will continue to monitor the operational performance of the underlying assets and evaluate the ability of the lessee to continue to make the required lease payments and meet its obligations associated with a future closure or retirement of the generation assets and associated properties, including the dry ash landfill.
LEASES | LEASES On January 1, 2019, the Registrants adopted the provisions of FASB ASC Topic 842 (as amended), Leases (ASC 842), which require lessees to recognize leases with a term of greater than 12 months on the balance sheet as lease obligations, representing the discounted future fixed payments due, along with ROU assets that will be amortized over the term of each lease. The Registrants elected the transition methodology provided by ASC 842, whereby the applicable requirements were applied on a prospective basis as of the adoption date. The Registrants also elected the package of practical expedients provided by ASC 842 that allows prior determinations of whether existing contracts are, or contain, leases and the classification of existing leases to continue without reassessment. Additionally, the Registrants applied the use-of-hindsight practical expedient in determining lease terms as of the date of adoption and elected the practical expedient that allows existing land easements not previously accounted for as leases not to be reassessed. Lessee As lessee, the Registrants lease certain electric generating units (including renewable energy facilities), real estate/land, communication towers, railcars, and other equipment and vehicles. 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, 2021 |  |  |  |  |  |
Electric generating units | $ | 802 |  | $ | 104 |  | $ | 1,217 |  | $ | — |  | $ | — |  | $ | — |
Real estate/land | 876 |  | 3 |  | 49 |  | 2 |  | 526 |  | 45 |
Communication towers | 156 |  | 2 |  | 4 |  | — |  | — |  | 24 |
Railcars | 32 |  | 10 |  | 20 |  | 2 |  | — |  | — |
Other | 103 |  | 5 |  | 1 |  | 24 |  | — |  | 1 |
Total | $ | 1,969 |  | $ | 124 |  | $ | 1,291 |  | $ | 28 |  | $ | 526 |  | $ | 70 |
At December 31, 2020 |  |  |  |  |  |
Electric generating units | $ | 941 |  | $ | 146 |  | $ | 1,368 |  | $ | — |  | $ | — |  | $ | — |
Real estate/land | 815 |  | 4 |  | 53 |  | 2 |  | 451 |  | 61 |
Communication towers | 158 |  | 2 |  | 3 |  | — |  | — |  | 20 |
Railcars | 42 |  | 16 |  | 23 |  | 3 |  | — |  | — |
Other | 127 |  | 7 |  | 5 |  | 23 |  | — |  | 1 |
Total | $ | 2,083 |  | $ | 175 |  | $ | 1,452 |  | $ | 28 |  | $ | 451 |  | $ | 82 |
Real estate/land leases primarily consist of commercial real estate leases at Southern Company, Georgia Power, and Southern Company Gas and various land leases primarily associated with renewable energy facilities at Southern Power. The commercial real estate leases have remaining terms of up to 24 years while the land leases have remaining terms of up to 45 years, including renewal periods. Communication towers are leased for the installation of equipment to provide cellular phone service to customers and to support the automated meter infrastructure programs at the traditional electric operating companies and Nicor Gas. Communication tower leases have remaining terms of up to 15 years with options to renew that could extend the terms for an additional 15 years. Renewal options exist in many of the leases. Except as otherwise noted, the expected term used in calculating the lease obligation generally reflects only the noncancelable period of the lease as it is not considered reasonably certain that the lease will be extended. Land leases associated with renewable energy facilities at Southern Power and communication tower leases for automated meter infrastructure at Nicor Gas include renewal periods reasonably certain of exercise resulting in an expected lease term at least equal to the expected life of the renewable energy facilities and the automated meter infrastructure, respectively. Contracts that Contain a Lease While not specifically structured as a lease, some of the PPAs at Alabama Power and Georgia Power are deemed to represent a lease of the underlying electric generating units when the terms of the PPA convey the right to control the use of the underlying assets. Amounts recorded for leases of electric generating units are generally based on the amount of scheduled capacity payments due over the remaining term of the PPA, which varies between one and 17 years. Georgia Power has several PPAs with Southern Power that Georgia Power accounts for as leases with a lease obligation of $521 million and $575 million at December 31, 2021 and 2020, respectively. The amount paid for energy under these affiliate PPAs reflects a price that would be paid in an arm's-length transaction as reviewed and approved by the Georgia PSC. Short-term Leases Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Registrants generally recognize lease expense for these leases on a straight-line basis over the lease term. Residual Value Guarantees Residual value guarantees exist primarily in railcar leases at Alabama Power and Georgia Power and the amounts probable of being paid under those guarantees are included in the lease payments. All such amounts are immaterial at December 31, 2021 and 2020. Lease and Nonlease Components For all asset categories, with the exception of electric generating units, gas pipelines, and real estate leases, the Registrants combine lease payments and any nonlease components, such as asset maintenance, for purposes of calculating the lease obligation and the right-of-use asset. 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, 2021 |  |  |  |  |  |
Operating Leases |  |  |  |  |  |
Operating lease ROU assets, net | $ | 1,701 |  | $ | 108 |  | $ | 1,157 |  | $ | 10 |  | $ | 479 |  | $ | 70 |
Operating lease obligations - current | $ | 250 |  | $ | 54 |  | $ | 156 |  | $ | 4 |  | $ | 28 |  | $ | 11 |
Operating lease obligations - non-current | 1,503 |  | 66 |  | 999 |  | 6 |  | 497 |  | 59 |
Total operating lease obligations(*) | $ | 1,754 |  | $ | 121 |  | $ | 1,155 |  | $ | 10 |  | $ | 525 |  | $ | 70 |
Finance Leases |  |  |  |  |  |
Finance lease ROU assets, net | $ | 197 |  | $ | 4 |  | $ | 104 |  | $ | 17 |  | $ | — |  | $ | — |
Finance lease obligations - current | $ | 16 |  | $ | 1 |  | $ | 10 |  | $ | 1 |  | $ | — |  | $ | — |
Finance lease obligations - non-current | 199 |  | 3 |  | 126 |  | 17 |  | — |  | — |
Total finance lease obligations | $ | 215 |  | $ | 4 |  | $ | 136 |  | $ | 18 |  | $ | — |  | $ | — |
At December 31, 2020 |  |  |  |  |  |
Operating Leases |  |  |  |  |  |
Operating lease ROU assets, net | $ | 1,802 |  | $ | 151 |  | $ | 1,308 |  | $ | 9 |  | $ | 415 |  | $ | 81 |
Operating lease obligations - current | $ | 241 |  | $ | 51 |  | $ | 151 |  | $ | 2 |  | $ | 25 |  | $ | 15 |
Operating lease obligations - non-current | 1,611 |  | 119 |  | 1,156 |  | 7 |  | 426 |  | 67 |
Total operating lease obligations(*) | $ | 1,852 |  | $ | 170 |  | $ | 1,307 |  | $ | 9 |  | $ | 451 |  | $ | 82 |
Finance Leases |  |  |  |  |  |
Finance lease ROU assets, net | $ | 218 |  | $ | 5 |  | $ | 115 |  | $ | 19 |  | $ | — |  | $ | — |
Finance lease obligations - current | $ | 17 |  | $ | 1 |  | $ | 9 |  | $ | 1 |  | $ | — |  | $ | — |
Finance lease obligations - non-current | 214 |  | 4 |  | 136 |  | 18 |  | — |  | — |
Total finance lease obligations | $ | 231 |  | $ | 5 |  | $ | 145 |  | $ | 19 |  | $ | — |  | $ | — |
(*)Includes operating lease obligations related to PPAs at Southern Company, Alabama Power, and Georgia Power totaling $802 million, $104 million, and $1.11 billion, respectively, at December 31, 2021 and $941 million, $146 million, and $1.25 billion, respectively, at December 31, 2020. If not presented separately on the Registrants' balance sheets, amounts related to leases are presented as follows: operating lease ROU assets, net are included in "other deferred charges and assets"; operating lease obligations are included in "other current liabilities" and "other deferred credits and liabilities," as applicable; finance lease ROU assets, net are included in "plant in service"; and finance lease obligations are included in "securities due within one year" and "long-term debt," as applicable. Lease costs for 2021, 2020, and 2019, 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)
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 |
2020 |  |  |  |  |  |
Lease cost |  |  |  |  |  |
Operating lease cost(*) | $ | 309 |  | $ | 55 |  | $ | 212 |  | $ | 3 |  | $ | 29 |  | $ | 19 |
Finance lease cost: |  |  |  |  |  |
Amortization of ROU assets | 26 |  | 1 |  | 15 |  | — |  | — |  | — |
Interest on lease obligations | 11 |  | — |  | 16 |  | — |  | — |  | — |
Total finance lease cost | 37 |  | 1 |  | 31 |  | — |  | — |  | — |
Short-term lease costs | 39 |  | 11 |  | 26 |  | — |  | — |  | — |
Variable lease cost | 91 |  | 4 |  | 76 |  | — |  | 7 |  | — |
Sublease income | — |  | (1) |  | — |  | — |  | — |  | — |
Total lease cost | $ | 476 |  | $ | 70 |  | $ | 345 |  | $ | 3 |  | $ | 36 |  | $ | 19 |
2019 |  |  |  |  |  |
Lease cost |  |  |  |  |  |
Operating lease cost(*) | $ | 310 |  | $ | 54 |  | $ | 206 |  | $ | 3 |  | $ | 28 |  | $ | 18 |
Finance lease cost: |  |  |  |  |  |
Amortization of ROU assets | 28 |  | 1 |  | 15 |  | — |  | — |  | — |
Interest on lease obligations | 12 |  | — |  | 18 |  | — |  | — |  | — |
Total finance lease cost | 40 |  | 1 |  | 33 |  | — |  | — |  | — |
Short-term lease costs | 48 |  | 19 |  | 22 |  | — |  | — |  | — |
Variable lease cost | 105 |  | 6 |  | 85 |  | — |  | 7 |  | — |
Sublease income | — |  | (1) |  | — |  | — |  | — |  | — |
Total lease cost | $ | 503 |  | $ | 79 |  | $ | 346 |  | $ | 3 |  | $ | 35 |  | $ | 18 |
(*)Includes operating lease costs related to PPAs at Southern Company, Alabama Power, and Georgia Power totaling $165 million, $47 million, and $184 million, respectively, in 2021, $161 million, $43 million, and $184 million, respectively, in 2020, and $149 million, $41 million, and $174 million, respectively, in 2019. Georgia Power has variable lease payments that are based on the amount of energy produced by certain renewable generating facilities subject to PPAs, including $41 million, $39 million, and $42 million in 2021, 2020, and 2019, respectively, from finance leases which are included in purchased power on Georgia Power's statements of income, $20 million of which was included in purchased power, affiliates for all periods presented. 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)
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 in exchange for new operating lease obligations | 64 |  | 3 |  | 9 |  | — |  | 72 |  | 7 |
ROU assets obtained in exchange for new finance lease obligations | 3 |  | — |  | — |  | — |  | — |  | — |
2020 |  |  |  |  |  |
Other information |  |  |  |  |  |
Cash paid for amounts included in the measurements of lease obligations: |  |  |  |  |  |
Operating cash flows from operating leases | $ | 310 |  | $ | 55 |  | $ | 215 |  | $ | 3 |  | $ | 28 |  | $ | 18 |
Operating cash flows from finance leases | 9 |  | — |  | 18 |  | — |  | — |  | — |
Financing cash flows from finance leases | 22 |  | 1 |  | 11 |  | — |  | — |  | — |
ROU assets obtained in exchange for new operating lease obligations | 227 |  | 63 |  | 32 |  | — |  | 51 |  | 4 |
ROU assets obtained in exchange for new finance lease obligations | 10 |  | 2 |  | — |  | — |  | — |  | — |
2019 |  |  |  |  |  |
Other information |  |  |  |  |  |
Cash paid for amounts included in the measurements of lease obligations: |  |  |  |  |  |
Operating cash flows from operating leases | $ | 323 |  | $ | 54 |  | $ | 210 |  | $ | 3 |  | 27 |  | 18 |
Operating cash flows from finance leases | 10 |  | — |  | 19 |  | — |  | — |  | — |
Financing cash flows from finance leases | 32 |  | 1 |  | 13 |  | — |  | — |  | — |
ROU assets obtained in exchange for new operating lease obligations | 118 |  | 7 |  | 21 |  | — |  | 2 |  | 19 |
ROU assets obtained in exchange for new finance lease obligations | 35 |  | 2 |  | 24 |  | — |  | — |  | — |
| Southern Company | Alabama Power | Georgia Power | Mississippi Power | Southern Power | Southern Company Gas
At December 31, 2021 |  |  |  |  |  |
Weighted-average remaining lease term in years: |  |  |  |  |  |
Operating leases | 15.9 | 9.1 | 8.7 | 6.1 | 32.8 | 10.5
Finance leases | 18.0 | 8.7 | 8.5 | 13.9 | N/A | N/A
Weighted-average discount rate: |  |  |  |  |  |
Operating leases | 4.41 | % | 4.37 | % | 4.45 | % | 2.74 | % | 5.20 | % | 3.61 | %
Finance leases | 4.82 | % | 3.09 | % | 10.81 | % | 2.74 | % | N/A | N/A
At December 31, 2020 |  |  |  |  |  |
Weighted-average remaining lease term in years: |  |  |  |  |  |
Operating leases | 14.5 | 7.8 | 9.4 | 6.5 | 32.1 | 9.8
Finance leases | 18.2 | 9.7 | 9.5 | 14.9 | N/A | N/A
Weighted-average discount rate: |  |  |  |  |  |
Operating leases | 4.44 | % | 4.14 | % | 4.37 | % | 3.26 | % | 5.45 | % | 3.67 | %
Finance leases | 4.79 | % | 3.20 | % | 10.81 | % | 2.74 |  | N/A | N/A
Maturities of lease liabilities are as follows:
| At December 31, 2021
| Southern Company | Alabama Power | Georgia Power | Mississippi Power | Southern Power | Southern Company Gas
| (in millions)
Maturity Analysis |  |  |  |  |  |
Operating leases: |  |  |  |  |  |
2022 | $ | 307 |  | $ | 59 |  | $ | 205 |  | $ | 4 |  | $ | 37 |  | $ | 14 |
2023 | 238 |  | 9 |  | 201 |  | 2 |  | 29 |  | 11 |
2024 | 195 |  | 7 |  | 164 |  | 1 |  | 29 |  | 11 |
2025 | 174 |  | 6 |  | 136 |  | 1 |  | 29 |  | 11 |
2026 | 154 |  | 5 |  | 133 |  | 1 |  | 30 |  | 8 |
Thereafter | 1,575 |  | 69 |  | 566 |  | 2 |  | 995 |  | 31 |
Total | 2,643 |  | 155 |  | 1,405 |  | 11 |  | 1,149 |  | 86 |
Less: Present value discount | 889 |  | 34 |  | 250 |  | 1 |  | 624 |  | 16 |
Operating lease obligations | $ | 1,754 |  | $ | 121 |  | $ | 1,155 |  | $ | 10 |  | $ | 525 |  | $ | 70 |
Finance leases: |  |  |  |  |  |
2022 | $ | 25 |  | $ | 2 |  | $ | 25 |  | $ | 2 |  | $ | — |  | $ | — |
2023 | 22 |  | 1 |  | 25 |  | 2 |  | — |  | — |
2024 | 19 |  | 1 |  | 25 |  | 2 |  | — |  | — |
2025 | 16 |  | — |  | 25 |  | 2 |  | — |  | — |
2026 | 16 |  | — |  | 26 |  | 1 |  | — |  | — |
Thereafter | 231 |  | — |  | 83 |  | 13 |  | — |  | — |
Total | 329 |  | 4 |  | 209 |  | 22 |  | — |  | — |
Less: Present value discount | 114 |  | — |  | 73 |  | 4 |  | — |  | — |
Finance lease obligations | $ | 215 |  | $ | 4 |  | $ | 136 |  | $ | 18 |  | $ | — |  | $ | — |
Payments made under PPAs at Georgia Power for energy generated from certain renewable energy facilities accounted for as operating and finance leases are considered variable lease costs and are therefore not reflected in the above maturity analysis. Lessor The Registrants are each considered lessors in various arrangements that have been determined to contain a lease due to the customer's ability to control the use of the underlying asset owned by the applicable Registrant. For the traditional electric operating companies, these arrangements consist of outdoor lighting contracts accounted for as operating leases with initial terms of up to seven years, after which the contracts renew on a month-to-month basis at the customer's option. For Mississippi Power, these arrangements also include a tolling arrangement related to an electric generating unit accounted for as a sales-type lease with a remaining term of 17 years. For Southern Power, these arrangements consist of PPAs related to electric generating units, including solar and wind facilities, accounted for as operating leases with remaining terms of up to 25 years and PPAs related to battery energy storage facilities accounted for as sales-type leases with remaining terms of up to 19 years. Southern Company Gas is the lessor in operating leases related to gas pipelines with remaining terms of up to 21 years. For Southern Company, these arrangements also include PPAs related to fuel cells accounted for as operating leases with remaining terms of up to 12 years. Lease income for 2021, 2020, and 2019, is as follows:
| Southern Company | Alabama Power | Georgia Power | Mississippi Power | Southern Power | Southern Company Gas
| (in millions)
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 |
2020 |  |  |  |  |  |
Lease income - interest income on sales-type leases | $ | 16 |  | $ | — |  | $ | — |  | $ | 12 |  | $ | — |  | $ | — |
Lease income - operating leases | 208 |  | 45 |  | 58 |  | 2 |  | 87 |  | 35 |
Variable lease income | 419 |  | — |  | — |  | — |  | 449 |  | — |
Total lease income | $ | 643 |  | $ | 45 |  | $ | 58 |  | $ | 14 |  | $ | 536 |  | $ | 35 |
2019 |  |  |  |  |  |
Lease income - interest income on sales-type leases | $ | 9 |  | $ | — |  | $ | — |  | $ | 9 |  | $ | — |  | $ | — |
Lease income - operating leases | 273 |  | 24 |  | 71 |  | — |  | 160 |  | 35 |
Variable lease income | 403 |  | — |  | — |  | — |  | 434 |  | — |
Total lease income | $ | 685 |  | $ | 24 |  | $ | 71 |  | $ | 9 |  | $ | 594 |  | $ | 35 |
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. Scheduled payments to be received under outdoor lighting contracts, tolling arrangements, and PPAs accounted for as leases are presented in the following maturity analyses. No profit or loss was recognized by Mississippi Power when a tolling arrangement accounted for as a sales-type lease began in 2019. During 2020 and 2021, Mississippi Power completed construction of additional leased assets under the lease and, upon completion, the book values of $26 million and $39 million, respectively, were transferred from CWIP to lease receivables. Each transfer represented a non-cash investing transaction for purposes of the statements of cash flows. During 2021, Southern Power completed construction of a portion of the Garland and Tranquillity battery energy storage facilities' assets and recorded losses totaling $40 million upon commencement of the related PPAs, which Southern Power accounts for as sales-type leases. The losses were due to ITCs retained and expected to be realized by Southern Power and its partners in these projects, and no estimated residual asset value was assumed in calculating the losses. Each lease has an initial term of 20 years. Upon commencement of the leases, the book values of the related assets totaling $210 million were derecognized from CWIP and lease receivables were recorded. At December 31, 2021, the current portion of the lease receivables totaling $12 million is included in other current assets and the long-term portion totaling $161 million is included in miscellaneous property and investments on Southern Company's balance sheet and net investment in sales-type leases on Southern Power's consolidated balance sheet. The transfers represented noncash investing transactions for purposes of the statement of cash flows. See Note 15 under "Southern Power" for additional information. The undiscounted cash flows expected to be received for in-service leased assets under the leases are as follows:
| At December 31, 2021
| Southern Company | Mississippi Power | Southern Power
| (in millions)
2022 | $ | 37 |  | $ | 25 |  | $ | 12 |
2023 | 39 |  | 24 |  | 15 |
2024 | 38 |  | 23 |  | 15 |
2025 | 37 |  | 22 |  | 15 |
2026 | 36 |  | 21 |  | 15 |
Thereafter | 390 |  | 183 |  | 207 |
Total undiscounted cash flows | $ | 577 |  | $ | 298 |  | $ | 279 |
Net investment in sales-type lease(*) | 340 |  | 167 |  | 173 |
Difference between undiscounted cash flows and discounted cash flows | $ | 237 |  | $ | 131 |  | $ | 106 |
(*)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 and net investment in sales-type leases on the balance sheet. The undiscounted cash flows to be received under operating leases and contracts accounted for as operating leases (adjusted for intercompany eliminations) are as follows:
| At December 31, 2021
| Southern Company | Alabama Power | Georgia Power | Southern Power | Southern Company Gas
| (in millions)
2022 | $ | 188 |  | $ | 76 |  | $ | 8 |  | $ | 87 |  | $ | 35 |
2023 | 139 |  | 32 |  | 2 |  | 88 |  | 35 |
2024 | 107 |  | 5 |  | — |  | 90 |  | 33 |
2025 | 100 |  | 3 |  | — |  | 74 |  | 28 |
2026 | 99 |  | 3 |  | — |  | 73 |  | 28 |
Thereafter | 883 |  | 23 |  | — |  | 240 |  | 407 |
Total | $ | 1,516 |  | $ | 142 |  | $ | 10 |  | $ | 652 |  | $ | 566 |
Southern Power receives payments for renewable energy under PPAs accounted for as operating leases that are considered contingent rents and are therefore not reflected in the table above. Alabama Power and Southern Power allocate revenue to the nonlease components of PPAs based on the stand-alone selling price of capacity and energy. The undiscounted cash flows to be received under outdoor lighting contracts accounted for as operating leases at Mississippi Power are immaterial. Southern Company Leveraged Lease At December 31, 2020, a subsidiary of Southern Holdings had four leveraged lease agreements related to energy generation, distribution, and transportation assets, including two domestic and two international projects. During 2021, one of the domestic projects was sold and the agreements for both international projects were terminated. At December 31, 2021, one leveraged lease agreement related to energy generation remains, with an expected remaining term of 10 years. Southern Company continues to receive federal income tax deductions for depreciation and amortization, as well as interest on long-term debt related to this investment. Southern Company wrote off the related investment balance in 2020, as discussed below. Southern Company's net investment in leveraged leases at December 31, 2020 consisted of the following:
| December 31, 2020(*)
| (in millions)
Net rentals receivable | $ | 734 |
Unearned income | (178) |
Investment in leveraged leases | 556 |
Deferred taxes from leveraged leases | (7) |
Net investment in leveraged leases | $ | 549 |
(*)Excludes the investment classified as held for sale. See Note 15 under "Southern Company" for additional information. The following table provides a summary of the components of income related to leveraged lease investments. Income was impacted in all periods presented 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 |  | 2020 |  | 2019
| (in millions)
Pretax leveraged lease income (loss) | $ | 17 |  |  | $ | (180) |  |  | $ | 11 |
Income tax benefit (expense) | (5) |  |  | 98 |  |  | — |
Net leveraged lease income (loss) | $ | 12 |  |  | $ | (82) |  |  | $ | 11 |
Since 2017, the financial and operational performance of the remaining domestic lessee and the associated generation assets raised significant concerns about the short-term ability of the generation assets to produce cash flows sufficient to support ongoing operations and the lessee's contractual obligations and its ability to make the remaining semi-annual lease payments through the end of the lease term in 2047. In addition, following the expiration of the existing power offtake agreement in 2032, the lessee also is exposed to remarketing risk, which encompasses the price and availability of alternative sources of generation. In connection with the 2019 annual impairment analysis, Southern Company revised the estimated cash flows to be received under the leveraged lease, which resulted in an impairment charge of $17 million ($13 million after tax) recorded in the fourth quarter 2019. During the second quarter 2020, Southern Company received the latest annual forecasts of natural gas prices and considered the significant decline in forecasted prices to be an indicator of potential impairment that required an interim impairment assessment. Accordingly, consistent with prior impairment analyses, Southern Company evaluated the recoverability of the lease receivable and the expected residual value of the generation assets under various natural gas price scenarios to estimate the cash flows expected to be received from remarketing the generation assets following the expiration of the existing PPA and the residual value of the generation assets at the end of the lease. Based on the forecasts of energy prices in the years following the expiration of the existing PPA, Southern Company concluded that it was no longer probable that any of the associated rental payments would be received, because it was no longer probable the generation assets would be successfully remarketed and continue to operate after that date. During the second quarter 2020, Southern Company revised the estimated cash flows to be received under the leveraged lease to reflect this conclusion, which resulted in a full impairment of the lease investment and a pre-tax charge to earnings of $154 million ($74 million after tax). All required lease payments through December 31, 2021 have been paid in full. If any future lease payments due prior to the expiration of the associated PPA are not paid in full, the Southern Holdings subsidiary may be unable to make its corresponding payment to the holders of the underlying non-recourse debt related to the generation assets. Failure to make the required payment to the debtholders could represent an event of default that would give the debtholders the right to foreclose on, and take ownership of, the generation assets, in effect terminating the lease. As the remaining amount of the lease investment was charged against earnings in the second quarter 2020, termination would not be expected to result in additional charges. Southern Company will continue to monitor the operational performance of the underlying assets and evaluate the ability of the lessee to continue to make the required lease payments and meet its obligations associated with a future closure or retirement of the generation assets and associated properties, including the dry ash landfill.
LEASES | LEASES On January 1, 2019, the Registrants adopted the provisions of FASB ASC Topic 842 (as amended), Leases (ASC 842), which require lessees to recognize leases with a term of greater than 12 months on the balance sheet as lease obligations, representing the discounted future fixed payments due, along with ROU assets that will be amortized over the term of each lease. The Registrants elected the transition methodology provided by ASC 842, whereby the applicable requirements were applied on a prospective basis as of the adoption date. The Registrants also elected the package of practical expedients provided by ASC 842 that allows prior determinations of whether existing contracts are, or contain, leases and the classification of existing leases to continue without reassessment. Additionally, the Registrants applied the use-of-hindsight practical expedient in determining lease terms as of the date of adoption and elected the practical expedient that allows existing land easements not previously accounted for as leases not to be reassessed. Lessee As lessee, the Registrants lease certain electric generating units (including renewable energy facilities), real estate/land, communication towers, railcars, and other equipment and vehicles. 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, 2021 |  |  |  |  |  |
Electric generating units | $ | 802 |  | $ | 104 |  | $ | 1,217 |  | $ | — |  | $ | — |  | $ | — |
Real estate/land | 876 |  | 3 |  | 49 |  | 2 |  | 526 |  | 45 |
Communication towers | 156 |  | 2 |  | 4 |  | — |  | — |  | 24 |
Railcars | 32 |  | 10 |  | 20 |  | 2 |  | — |  | — |
Other | 103 |  | 5 |  | 1 |  | 24 |  | — |  | 1 |
Total | $ | 1,969 |  | $ | 124 |  | $ | 1,291 |  | $ | 28 |  | $ | 526 |  | $ | 70 |
At December 31, 2020 |  |  |  |  |  |
Electric generating units | $ | 941 |  | $ | 146 |  | $ | 1,368 |  | $ | — |  | $ | — |  | $ | — |
Real estate/land | 815 |  | 4 |  | 53 |  | 2 |  | 451 |  | 61 |
Communication towers | 158 |  | 2 |  | 3 |  | — |  | — |  | 20 |
Railcars | 42 |  | 16 |  | 23 |  | 3 |  | — |  | — |
Other | 127 |  | 7 |  | 5 |  | 23 |  | — |  | 1 |
Total | $ | 2,083 |  | $ | 175 |  | $ | 1,452 |  | $ | 28 |  | $ | 451 |  | $ | 82 |
Real estate/land leases primarily consist of commercial real estate leases at Southern Company, Georgia Power, and Southern Company Gas and various land leases primarily associated with renewable energy facilities at Southern Power. The commercial real estate leases have remaining terms of up to 24 years while the land leases have remaining terms of up to 45 years, including renewal periods. Communication towers are leased for the installation of equipment to provide cellular phone service to customers and to support the automated meter infrastructure programs at the traditional electric operating companies and Nicor Gas. Communication tower leases have remaining terms of up to 15 years with options to renew that could extend the terms for an additional 15 years. Renewal options exist in many of the leases. Except as otherwise noted, the expected term used in calculating the lease obligation generally reflects only the noncancelable period of the lease as it is not considered reasonably certain that the lease will be extended. Land leases associated with renewable energy facilities at Southern Power and communication tower leases for automated meter infrastructure at Nicor Gas include renewal periods reasonably certain of exercise resulting in an expected lease term at least equal to the expected life of the renewable energy facilities and the automated meter infrastructure, respectively. Contracts that Contain a Lease While not specifically structured as a lease, some of the PPAs at Alabama Power and Georgia Power are deemed to represent a lease of the underlying electric generating units when the terms of the PPA convey the right to control the use of the underlying assets. Amounts recorded for leases of electric generating units are generally based on the amount of scheduled capacity payments due over the remaining term of the PPA, which varies between one and 17 years. Georgia Power has several PPAs with Southern Power that Georgia Power accounts for as leases with a lease obligation of $521 million and $575 million at December 31, 2021 and 2020, respectively. The amount paid for energy under these affiliate PPAs reflects a price that would be paid in an arm's-length transaction as reviewed and approved by the Georgia PSC. Short-term Leases Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Registrants generally recognize lease expense for these leases on a straight-line basis over the lease term. Residual Value Guarantees Residual value guarantees exist primarily in railcar leases at Alabama Power and Georgia Power and the amounts probable of being paid under those guarantees are included in the lease payments. All such amounts are immaterial at December 31, 2021 and 2020. Lease and Nonlease Components For all asset categories, with the exception of electric generating units, gas pipelines, and real estate leases, the Registrants combine lease payments and any nonlease components, such as asset maintenance, for purposes of calculating the lease obligation and the right-of-use asset. 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, 2021 |  |  |  |  |  |
Operating Leases |  |  |  |  |  |
Operating lease ROU assets, net | $ | 1,701 |  | $ | 108 |  | $ | 1,157 |  | $ | 10 |  | $ | 479 |  | $ | 70 |
Operating lease obligations - current | $ | 250 |  | $ | 54 |  | $ | 156 |  | $ | 4 |  | $ | 28 |  | $ | 11 |
Operating lease obligations - non-current | 1,503 |  | 66 |  | 999 |  | 6 |  | 497 |  | 59 |
Total operating lease obligations(*) | $ | 1,754 |  | $ | 121 |  | $ | 1,155 |  | $ | 10 |  | $ | 525 |  | $ | 70 |
Finance Leases |  |  |  |  |  |
Finance lease ROU assets, net | $ | 197 |  | $ | 4 |  | $ | 104 |  | $ | 17 |  | $ | — |  | $ | — |
Finance lease obligations - current | $ | 16 |  | $ | 1 |  | $ | 10 |  | $ | 1 |  | $ | — |  | $ | — |
Finance lease obligations - non-current | 199 |  | 3 |  | 126 |  | 17 |  | — |  | — |
Total finance lease obligations | $ | 215 |  | $ | 4 |  | $ | 136 |  | $ | 18 |  | $ | — |  | $ | — |
At December 31, 2020 |  |  |  |  |  |
Operating Leases |  |  |  |  |  |
Operating lease ROU assets, net | $ | 1,802 |  | $ | 151 |  | $ | 1,308 |  | $ | 9 |  | $ | 415 |  | $ | 81 |
Operating lease obligations - current | $ | 241 |  | $ | 51 |  | $ | 151 |  | $ | 2 |  | $ | 25 |  | $ | 15 |
Operating lease obligations - non-current | 1,611 |  | 119 |  | 1,156 |  | 7 |  | 426 |  | 67 |
Total operating lease obligations(*) | $ | 1,852 |  | $ | 170 |  | $ | 1,307 |  | $ | 9 |  | $ | 451 |  | $ | 82 |
Finance Leases |  |  |  |  |  |
Finance lease ROU assets, net | $ | 218 |  | $ | 5 |  | $ | 115 |  | $ | 19 |  | $ | — |  | $ | — |
Finance lease obligations - current | $ | 17 |  | $ | 1 |  | $ | 9 |  | $ | 1 |  | $ | — |  | $ | — |
Finance lease obligations - non-current | 214 |  | 4 |  | 136 |  | 18 |  | — |  | — |
Total finance lease obligations | $ | 231 |  | $ | 5 |  | $ | 145 |  | $ | 19 |  | $ | — |  | $ | — |
(*)Includes operating lease obligations related to PPAs at Southern Company, Alabama Power, and Georgia Power totaling $802 million, $104 million, and $1.11 billion, respectively, at December 31, 2021 and $941 million, $146 million, and $1.25 billion, respectively, at December 31, 2020. If not presented separately on the Registrants' balance sheets, amounts related to leases are presented as follows: operating lease ROU assets, net are included in "other deferred charges and assets"; operating lease obligations are included in "other current liabilities" and "other deferred credits and liabilities," as applicable; finance lease ROU assets, net are included in "plant in service"; and finance lease obligations are included in "securities due within one year" and "long-term debt," as applicable. Lease costs for 2021, 2020, and 2019, 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)
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 |
2020 |  |  |  |  |  |
Lease cost |  |  |  |  |  |
Operating lease cost(*) | $ | 309 |  | $ | 55 |  | $ | 212 |  | $ | 3 |  | $ | 29 |  | $ | 19 |
Finance lease cost: |  |  |  |  |  |
Amortization of ROU assets | 26 |  | 1 |  | 15 |  | — |  | — |  | — |
Interest on lease obligations | 11 |  | — |  | 16 |  | — |  | — |  | — |
Total finance lease cost | 37 |  | 1 |  | 31 |  | — |  | — |  | — |
Short-term lease costs | 39 |  | 11 |  | 26 |  | — |  | — |  | — |
Variable lease cost | 91 |  | 4 |  | 76 |  | — |  | 7 |  | — |
Sublease income | — |  | (1) |  | — |  | — |  | — |  | — |
Total lease cost | $ | 476 |  | $ | 70 |  | $ | 345 |  | $ | 3 |  | $ | 36 |  | $ | 19 |
2019 |  |  |  |  |  |
Lease cost |  |  |  |  |  |
Operating lease cost(*) | $ | 310 |  | $ | 54 |  | $ | 206 |  | $ | 3 |  | $ | 28 |  | $ | 18 |
Finance lease cost: |  |  |  |  |  |
Amortization of ROU assets | 28 |  | 1 |  | 15 |  | — |  | — |  | — |
Interest on lease obligations | 12 |  | — |  | 18 |  | — |  | — |  | — |
Total finance lease cost | 40 |  | 1 |  | 33 |  | — |  | — |  | — |
Short-term lease costs | 48 |  | 19 |  | 22 |  | — |  | — |  | — |
Variable lease cost | 105 |  | 6 |  | 85 |  | — |  | 7 |  | — |
Sublease income | — |  | (1) |  | — |  | — |  | — |  | — |
Total lease cost | $ | 503 |  | $ | 79 |  | $ | 346 |  | $ | 3 |  | $ | 35 |  | $ | 18 |
(*)Includes operating lease costs related to PPAs at Southern Company, Alabama Power, and Georgia Power totaling $165 million, $47 million, and $184 million, respectively, in 2021, $161 million, $43 million, and $184 million, respectively, in 2020, and $149 million, $41 million, and $174 million, respectively, in 2019. Georgia Power has variable lease payments that are based on the amount of energy produced by certain renewable generating facilities subject to PPAs, including $41 million, $39 million, and $42 million in 2021, 2020, and 2019, respectively, from finance leases which are included in purchased power on Georgia Power's statements of income, $20 million of which was included in purchased power, affiliates for all periods presented. 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)
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 in exchange for new operating lease obligations | 64 |  | 3 |  | 9 |  | — |  | 72 |  | 7 |
ROU assets obtained in exchange for new finance lease obligations | 3 |  | — |  | — |  | — |  | — |  | — |
2020 |  |  |  |  |  |
Other information |  |  |  |  |  |
Cash paid for amounts included in the measurements of lease obligations: |  |  |  |  |  |
Operating cash flows from operating leases | $ | 310 |  | $ | 55 |  | $ | 215 |  | $ | 3 |  | $ | 28 |  | $ | 18 |
Operating cash flows from finance leases | 9 |  | — |  | 18 |  | — |  | — |  | — |
Financing cash flows from finance leases | 22 |  | 1 |  | 11 |  | — |  | — |  | — |
ROU assets obtained in exchange for new operating lease obligations | 227 |  | 63 |  | 32 |  | — |  | 51 |  | 4 |
ROU assets obtained in exchange for new finance lease obligations | 10 |  | 2 |  | — |  | — |  | — |  | — |
2019 |  |  |  |  |  |
Other information |  |  |  |  |  |
Cash paid for amounts included in the measurements of lease obligations: |  |  |  |  |  |
Operating cash flows from operating leases | $ | 323 |  | $ | 54 |  | $ | 210 |  | $ | 3 |  | 27 |  | 18 |
Operating cash flows from finance leases | 10 |  | — |  | 19 |  | — |  | — |  | — |
Financing cash flows from finance leases | 32 |  | 1 |  | 13 |  | — |  | — |  | — |
ROU assets obtained in exchange for new operating lease obligations | 118 |  | 7 |  | 21 |  | — |  | 2 |  | 19 |
ROU assets obtained in exchange for new finance lease obligations | 35 |  | 2 |  | 24 |  | — |  | — |  | — |
| Southern Company | Alabama Power | Georgia Power | Mississippi Power | Southern Power | Southern Company Gas
At December 31, 2021 |  |  |  |  |  |
Weighted-average remaining lease term in years: |  |  |  |  |  |
Operating leases | 15.9 | 9.1 | 8.7 | 6.1 | 32.8 | 10.5
Finance leases | 18.0 | 8.7 | 8.5 | 13.9 | N/A | N/A
Weighted-average discount rate: |  |  |  |  |  |
Operating leases | 4.41 | % | 4.37 | % | 4.45 | % | 2.74 | % | 5.20 | % | 3.61 | %
Finance leases | 4.82 | % | 3.09 | % | 10.81 | % | 2.74 | % | N/A | N/A
At December 31, 2020 |  |  |  |  |  |
Weighted-average remaining lease term in years: |  |  |  |  |  |
Operating leases | 14.5 | 7.8 | 9.4 | 6.5 | 32.1 | 9.8
Finance leases | 18.2 | 9.7 | 9.5 | 14.9 | N/A | N/A
Weighted-average discount rate: |  |  |  |  |  |
Operating leases | 4.44 | % | 4.14 | % | 4.37 | % | 3.26 | % | 5.45 | % | 3.67 | %
Finance leases | 4.79 | % | 3.20 | % | 10.81 | % | 2.74 |  | N/A | N/A
Maturities of lease liabilities are as follows:
| At December 31, 2021
| Southern Company | Alabama Power | Georgia Power | Mississippi Power | Southern Power | Southern Company Gas
| (in millions)
Maturity Analysis |  |  |  |  |  |
Operating leases: |  |  |  |  |  |
2022 | $ | 307 |  | $ | 59 |  | $ | 205 |  | $ | 4 |  | $ | 37 |  | $ | 14 |
2023 | 238 |  | 9 |  | 201 |  | 2 |  | 29 |  | 11 |
2024 | 195 |  | 7 |  | 164 |  | 1 |  | 29 |  | 11 |
2025 | 174 |  | 6 |  | 136 |  | 1 |  | 29 |  | 11 |
2026 | 154 |  | 5 |  | 133 |  | 1 |  | 30 |  | 8 |
Thereafter | 1,575 |  | 69 |  | 566 |  | 2 |  | 995 |  | 31 |
Total | 2,643 |  | 155 |  | 1,405 |  | 11 |  | 1,149 |  | 86 |
Less: Present value discount | 889 |  | 34 |  | 250 |  | 1 |  | 624 |  | 16 |
Operating lease obligations | $ | 1,754 |  | $ | 121 |  | $ | 1,155 |  | $ | 10 |  | $ | 525 |  | $ | 70 |
Finance leases: |  |  |  |  |  |
2022 | $ | 25 |  | $ | 2 |  | $ | 25 |  | $ | 2 |  | $ | — |  | $ | — |
2023 | 22 |  | 1 |  | 25 |  | 2 |  | — |  | — |
2024 | 19 |  | 1 |  | 25 |  | 2 |  | — |  | — |
2025 | 16 |  | — |  | 25 |  | 2 |  | — |  | — |
2026 | 16 |  | — |  | 26 |  | 1 |  | — |  | — |
Thereafter | 231 |  | — |  | 83 |  | 13 |  | — |  | — |
Total | 329 |  | 4 |  | 209 |  | 22 |  | — |  | — |
Less: Present value discount | 114 |  | — |  | 73 |  | 4 |  | — |  | — |
Finance lease obligations | $ | 215 |  | $ | 4 |  | $ | 136 |  | $ | 18 |  | $ | — |  | $ | — |
Payments made under PPAs at Georgia Power for energy generated from certain renewable energy facilities accounted for as operating and finance leases are considered variable lease costs and are therefore not reflected in the above maturity analysis. Lessor The Registrants are each considered lessors in various arrangements that have been determined to contain a lease due to the customer's ability to control the use of the underlying asset owned by the applicable Registrant. For the traditional electric operating companies, these arrangements consist of outdoor lighting contracts accounted for as operating leases with initial terms of up to seven years, after which the contracts renew on a month-to-month basis at the customer's option. For Mississippi Power, these arrangements also include a tolling arrangement related to an electric generating unit accounted for as a sales-type lease with a remaining term of 17 years. For Southern Power, these arrangements consist of PPAs related to electric generating units, including solar and wind facilities, accounted for as operating leases with remaining terms of up to 25 years and PPAs related to battery energy storage facilities accounted for as sales-type leases with remaining terms of up to 19 years. Southern Company Gas is the lessor in operating leases related to gas pipelines with remaining terms of up to 21 years. For Southern Company, these arrangements also include PPAs related to fuel cells accounted for as operating leases with remaining terms of up to 12 years. Lease income for 2021, 2020, and 2019, is as follows:
| Southern Company | Alabama Power | Georgia Power | Mississippi Power | Southern Power | Southern Company Gas
| (in millions)
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 |
2020 |  |  |  |  |  |
Lease income - interest income on sales-type leases | $ | 16 |  | $ | — |  | $ | — |  | $ | 12 |  | $ | — |  | $ | — |
Lease income - operating leases | 208 |  | 45 |  | 58 |  | 2 |  | 87 |  | 35 |
Variable lease income | 419 |  | — |  | — |  | — |  | 449 |  | — |
Total lease income | $ | 643 |  | $ | 45 |  | $ | 58 |  | $ | 14 |  | $ | 536 |  | $ | 35 |
2019 |  |  |  |  |  |
Lease income - interest income on sales-type leases | $ | 9 |  | $ | — |  | $ | — |  | $ | 9 |  | $ | — |  | $ | — |
Lease income - operating leases | 273 |  | 24 |  | 71 |  | — |  | 160 |  | 35 |
Variable lease income | 403 |  | — |  | — |  | — |  | 434 |  | — |
Total lease income | $ | 685 |  | $ | 24 |  | $ | 71 |  | $ | 9 |  | $ | 594 |  | $ | 35 |
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. Scheduled payments to be received under outdoor lighting contracts, tolling arrangements, and PPAs accounted for as leases are presented in the following maturity analyses. No profit or loss was recognized by Mississippi Power when a tolling arrangement accounted for as a sales-type lease began in 2019. During 2020 and 2021, Mississippi Power completed construction of additional leased assets under the lease and, upon completion, the book values of $26 million and $39 million, respectively, were transferred from CWIP to lease receivables. Each transfer represented a non-cash investing transaction for purposes of the statements of cash flows. During 2021, Southern Power completed construction of a portion of the Garland and Tranquillity battery energy storage facilities' assets and recorded losses totaling $40 million upon commencement of the related PPAs, which Southern Power accounts for as sales-type leases. The losses were due to ITCs retained and expected to be realized by Southern Power and its partners in these projects, and no estimated residual asset value was assumed in calculating the losses. Each lease has an initial term of 20 years. Upon commencement of the leases, the book values of the related assets totaling $210 million were derecognized from CWIP and lease receivables were recorded. At December 31, 2021, the current portion of the lease receivables totaling $12 million is included in other current assets and the long-term portion totaling $161 million is included in miscellaneous property and investments on Southern Company's balance sheet and net investment in sales-type leases on Southern Power's consolidated balance sheet. The transfers represented noncash investing transactions for purposes of the statement of cash flows. See Note 15 under "Southern Power" for additional information. The undiscounted cash flows expected to be received for in-service leased assets under the leases are as follows:
| At December 31, 2021
| Southern Company | Mississippi Power | Southern Power
| (in millions)
2022 | $ | 37 |  | $ | 25 |  | $ | 12 |
2023 | 39 |  | 24 |  | 15 |
2024 | 38 |  | 23 |  | 15 |
2025 | 37 |  | 22 |  | 15 |
2026 | 36 |  | 21 |  | 15 |
Thereafter | 390 |  | 183 |  | 207 |
Total undiscounted cash flows | $ | 577 |  | $ | 298 |  | $ | 279 |
Net investment in sales-type lease(*) | 340 |  | 167 |  | 173 |
Difference between undiscounted cash flows and discounted cash flows | $ | 237 |  | $ | 131 |  | $ | 106 |
(*)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 and net investment in sales-type leases on the balance sheet. The undiscounted cash flows to be received under operating leases and contracts accounted for as operating leases (adjusted for intercompany eliminations) are as follows:
| At December 31, 2021
| Southern Company | Alabama Power | Georgia Power | Southern Power | Southern Company Gas
| (in millions)
2022 | $ | 188 |  | $ | 76 |  | $ | 8 |  | $ | 87 |  | $ | 35 |
2023 | 139 |  | 32 |  | 2 |  | 88 |  | 35 |
2024 | 107 |  | 5 |  | — |  | 90 |  | 33 |
2025 | 100 |  | 3 |  | — |  | 74 |  | 28 |
2026 | 99 |  | 3 |  | — |  | 73 |  | 28 |
Thereafter | 883 |  | 23 |  | — |  | 240 |  | 407 |
Total | $ | 1,516 |  | $ | 142 |  | $ | 10 |  | $ | 652 |  | $ | 566 |
Southern Power receives payments for renewable energy under PPAs accounted for as operating leases that are considered contingent rents and are therefore not reflected in the table above. Alabama Power and Southern Power allocate revenue to the nonlease components of PPAs based on the stand-alone selling price of capacity and energy. The undiscounted cash flows to be received under outdoor lighting contracts accounted for as operating leases at Mississippi Power are immaterial. Southern Company Leveraged Lease At December 31, 2020, a subsidiary of Southern Holdings had four leveraged lease agreements related to energy generation, distribution, and transportation assets, including two domestic and two international projects. During 2021, one of the domestic projects was sold and the agreements for both international projects were terminated. At December 31, 2021, one leveraged lease agreement related to energy generation remains, with an expected remaining term of 10 years. Southern Company continues to receive federal income tax deductions for depreciation and amortization, as well as interest on long-term debt related to this investment. Southern Company wrote off the related investment balance in 2020, as discussed below. Southern Company's net investment in leveraged leases at December 31, 2020 consisted of the following:
| December 31, 2020(*)
| (in millions)
Net rentals receivable | $ | 734 |
Unearned income | (178) |
Investment in leveraged leases | 556 |
Deferred taxes from leveraged leases | (7) |
Net investment in leveraged leases | $ | 549 |
(*)Excludes the investment classified as held for sale. See Note 15 under "Southern Company" for additional information. The following table provides a summary of the components of income related to leveraged lease investments. Income was impacted in all periods presented 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 |  | 2020 |  | 2019
| (in millions)
Pretax leveraged lease income (loss) | $ | 17 |  |  | $ | (180) |  |  | $ | 11 |
Income tax benefit (expense) | (5) |  |  | 98 |  |  | — |
Net leveraged lease income (loss) | $ | 12 |  |  | $ | (82) |  |  | $ | 11 |
Since 2017, the financial and operational performance of the remaining domestic lessee and the associated generation assets raised significant concerns about the short-term ability of the generation assets to produce cash flows sufficient to support ongoing operations and the lessee's contractual obligations and its ability to make the remaining semi-annual lease payments through the end of the lease term in 2047. In addition, following the expiration of the existing power offtake agreement in 2032, the lessee also is exposed to remarketing risk, which encompasses the price and availability of alternative sources of generation. In connection with the 2019 annual impairment analysis, Southern Company revised the estimated cash flows to be received under the leveraged lease, which resulted in an impairment charge of $17 million ($13 million after tax) recorded in the fourth quarter 2019. During the second quarter 2020, Southern Company received the latest annual forecasts of natural gas prices and considered the significant decline in forecasted prices to be an indicator of potential impairment that required an interim impairment assessment. Accordingly, consistent with prior impairment analyses, Southern Company evaluated the recoverability of the lease receivable and the expected residual value of the generation assets under various natural gas price scenarios to estimate the cash flows expected to be received from remarketing the generation assets following the expiration of the existing PPA and the residual value of the generation assets at the end of the lease. Based on the forecasts of energy prices in the years following the expiration of the existing PPA, Southern Company concluded that it was no longer probable that any of the associated rental payments would be received, because it was no longer probable the generation assets would be successfully remarketed and continue to operate after that date. During the second quarter 2020, Southern Company revised the estimated cash flows to be received under the leveraged lease to reflect this conclusion, which resulted in a full impairment of the lease investment and a pre-tax charge to earnings of $154 million ($74 million after tax). All required lease payments through December 31, 2021 have been paid in full. If any future lease payments due prior to the expiration of the associated PPA are not paid in full, the Southern Holdings subsidiary may be unable to make its corresponding payment to the holders of the underlying non-recourse debt related to the generation assets. Failure to make the required payment to the debtholders could represent an event of default that would give the debtholders the right to foreclose on, and take ownership of, the generation assets, in effect terminating the lease. As the remaining amount of the lease investment was charged against earnings in the second quarter 2020, termination would not be expected to result in additional charges. Southern Company will continue to monitor the operational performance of the underlying assets and evaluate the ability of the lessee to continue to make the required lease payments and meet its obligations associated with a future closure or retirement of the generation assets and associated properties, including the dry ash landfill.
LEASES | LEASES On January 1, 2019, the Registrants adopted the provisions of FASB ASC Topic 842 (as amended), Leases (ASC 842), which require lessees to recognize leases with a term of greater than 12 months on the balance sheet as lease obligations, representing the discounted future fixed payments due, along with ROU assets that will be amortized over the term of each lease. The Registrants elected the transition methodology provided by ASC 842, whereby the applicable requirements were applied on a prospective basis as of the adoption date. The Registrants also elected the package of practical expedients provided by ASC 842 that allows prior determinations of whether existing contracts are, or contain, leases and the classification of existing leases to continue without reassessment. Additionally, the Registrants applied the use-of-hindsight practical expedient in determining lease terms as of the date of adoption and elected the practical expedient that allows existing land easements not previously accounted for as leases not to be reassessed. Lessee As lessee, the Registrants lease certain electric generating units (including renewable energy facilities), real estate/land, communication towers, railcars, and other equipment and vehicles. 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, 2021 |  |  |  |  |  |
Electric generating units | $ | 802 |  | $ | 104 |  | $ | 1,217 |  | $ | — |  | $ | — |  | $ | — |
Real estate/land | 876 |  | 3 |  | 49 |  | 2 |  | 526 |  | 45 |
Communication towers | 156 |  | 2 |  | 4 |  | — |  | — |  | 24 |
Railcars | 32 |  | 10 |  | 20 |  | 2 |  | — |  | — |
Other | 103 |  | 5 |  | 1 |  | 24 |  | — |  | 1 |
Total | $ | 1,969 |  | $ | 124 |  | $ | 1,291 |  | $ | 28 |  | $ | 526 |  | $ | 70 |
At December 31, 2020 |  |  |  |  |  |
Electric generating units | $ | 941 |  | $ | 146 |  | $ | 1,368 |  | $ | — |  | $ | — |  | $ | — |
Real estate/land | 815 |  | 4 |  | 53 |  | 2 |  | 451 |  | 61 |
Communication towers | 158 |  | 2 |  | 3 |  | — |  | — |  | 20 |
Railcars | 42 |  | 16 |  | 23 |  | 3 |  | — |  | — |
Other | 127 |  | 7 |  | 5 |  | 23 |  | — |  | 1 |
Total | $ | 2,083 |  | $ | 175 |  | $ | 1,452 |  | $ | 28 |  | $ | 451 |  | $ | 82 |
Real estate/land leases primarily consist of commercial real estate leases at Southern Company, Georgia Power, and Southern Company Gas and various land leases primarily associated with renewable energy facilities at Southern Power. The commercial real estate leases have remaining terms of up to 24 years while the land leases have remaining terms of up to 45 years, including renewal periods. Communication towers are leased for the installation of equipment to provide cellular phone service to customers and to support the automated meter infrastructure programs at the traditional electric operating companies and Nicor Gas. Communication tower leases have remaining terms of up to 15 years with options to renew that could extend the terms for an additional 15 years. Renewal options exist in many of the leases. Except as otherwise noted, the expected term used in calculating the lease obligation generally reflects only the noncancelable period of the lease as it is not considered reasonably certain that the lease will be extended. Land leases associated with renewable energy facilities at Southern Power and communication tower leases for automated meter infrastructure at Nicor Gas include renewal periods reasonably certain of exercise resulting in an expected lease term at least equal to the expected life of the renewable energy facilities and the automated meter infrastructure, respectively. Contracts that Contain a Lease While not specifically structured as a lease, some of the PPAs at Alabama Power and Georgia Power are deemed to represent a lease of the underlying electric generating units when the terms of the PPA convey the right to control the use of the underlying assets. Amounts recorded for leases of electric generating units are generally based on the amount of scheduled capacity payments due over the remaining term of the PPA, which varies between one and 17 years. Georgia Power has several PPAs with Southern Power that Georgia Power accounts for as leases with a lease obligation of $521 million and $575 million at December 31, 2021 and 2020, respectively. The amount paid for energy under these affiliate PPAs reflects a price that would be paid in an arm's-length transaction as reviewed and approved by the Georgia PSC. Short-term Leases Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Registrants generally recognize lease expense for these leases on a straight-line basis over the lease term. Residual Value Guarantees Residual value guarantees exist primarily in railcar leases at Alabama Power and Georgia Power and the amounts probable of being paid under those guarantees are included in the lease payments. All such amounts are immaterial at December 31, 2021 and 2020. Lease and Nonlease Components For all asset categories, with the exception of electric generating units, gas pipelines, and real estate leases, the Registrants combine lease payments and any nonlease components, such as asset maintenance, for purposes of calculating the lease obligation and the right-of-use asset. 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, 2021 |  |  |  |  |  |
Operating Leases |  |  |  |  |  |
Operating lease ROU assets, net | $ | 1,701 |  | $ | 108 |  | $ | 1,157 |  | $ | 10 |  | $ | 479 |  | $ | 70 |
Operating lease obligations - current | $ | 250 |  | $ | 54 |  | $ | 156 |  | $ | 4 |  | $ | 28 |  | $ | 11 |
Operating lease obligations - non-current | 1,503 |  | 66 |  | 999 |  | 6 |  | 497 |  | 59 |
Total operating lease obligations(*) | $ | 1,754 |  | $ | 121 |  | $ | 1,155 |  | $ | 10 |  | $ | 525 |  | $ | 70 |
Finance Leases |  |  |  |  |  |
Finance lease ROU assets, net | $ | 197 |  | $ | 4 |  | $ | 104 |  | $ | 17 |  | $ | — |  | $ | — |
Finance lease obligations - current | $ | 16 |  | $ | 1 |  | $ | 10 |  | $ | 1 |  | $ | — |  | $ | — |
Finance lease obligations - non-current | 199 |  | 3 |  | 126 |  | 17 |  | — |  | — |
Total finance lease obligations | $ | 215 |  | $ | 4 |  | $ | 136 |  | $ | 18 |  | $ | — |  | $ | — |
At December 31, 2020 |  |  |  |  |  |
Operating Leases |  |  |  |  |  |
Operating lease ROU assets, net | $ | 1,802 |  | $ | 151 |  | $ | 1,308 |  | $ | 9 |  | $ | 415 |  | $ | 81 |
Operating lease obligations - current | $ | 241 |  | $ | 51 |  | $ | 151 |  | $ | 2 |  | $ | 25 |  | $ | 15 |
Operating lease obligations - non-current | 1,611 |  | 119 |  | 1,156 |  | 7 |  | 426 |  | 67 |
Total operating lease obligations(*) | $ | 1,852 |  | $ | 170 |  | $ | 1,307 |  | $ | 9 |  | $ | 451 |  | $ | 82 |
Finance Leases |  |  |  |  |  |
Finance lease ROU assets, net | $ | 218 |  | $ | 5 |  | $ | 115 |  | $ | 19 |  | $ | — |  | $ | — |
Finance lease obligations - current | $ | 17 |  | $ | 1 |  | $ | 9 |  | $ | 1 |  | $ | — |  | $ | — |
Finance lease obligations - non-current | 214 |  | 4 |  | 136 |  | 18 |  | — |  | — |
Total finance lease obligations | $ | 231 |  | $ | 5 |  | $ | 145 |  | $ | 19 |  | $ | — |  | $ | — |
(*)Includes operating lease obligations related to PPAs at Southern Company, Alabama Power, and Georgia Power totaling $802 million, $104 million, and $1.11 billion, respectively, at December 31, 2021 and $941 million, $146 million, and $1.25 billion, respectively, at December 31, 2020. If not presented separately on the Registrants' balance sheets, amounts related to leases are presented as follows: operating lease ROU assets, net are included in "other deferred charges and assets"; operating lease obligations are included in "other current liabilities" and "other deferred credits and liabilities," as applicable; finance lease ROU assets, net are included in "plant in service"; and finance lease obligations are included in "securities due within one year" and "long-term debt," as applicable. Lease costs for 2021, 2020, and 2019, 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)
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 |
2020 |  |  |  |  |  |
Lease cost |  |  |  |  |  |
Operating lease cost(*) | $ | 309 |  | $ | 55 |  | $ | 212 |  | $ | 3 |  | $ | 29 |  | $ | 19 |
Finance lease cost: |  |  |  |  |  |
Amortization of ROU assets | 26 |  | 1 |  | 15 |  | — |  | — |  | — |
Interest on lease obligations | 11 |  | — |  | 16 |  | — |  | — |  | — |
Total finance lease cost | 37 |  | 1 |  | 31 |  | — |  | — |  | — |
Short-term lease costs | 39 |  | 11 |  | 26 |  | — |  | — |  | — |
Variable lease cost | 91 |  | 4 |  | 76 |  | — |  | 7 |  | — |
Sublease income | — |  | (1) |  | — |  | — |  | — |  | — |
Total lease cost | $ | 476 |  | $ | 70 |  | $ | 345 |  | $ | 3 |  | $ | 36 |  | $ | 19 |
2019 |  |  |  |  |  |
Lease cost |  |  |  |  |  |
Operating lease cost(*) | $ | 310 |  | $ | 54 |  | $ | 206 |  | $ | 3 |  | $ | 28 |  | $ | 18 |
Finance lease cost: |  |  |  |  |  |
Amortization of ROU assets | 28 |  | 1 |  | 15 |  | — |  | — |  | — |
Interest on lease obligations | 12 |  | — |  | 18 |  | — |  | — |  | — |
Total finance lease cost | 40 |  | 1 |  | 33 |  | — |  | — |  | — |
Short-term lease costs | 48 |  | 19 |  | 22 |  | — |  | — |  | — |
Variable lease cost | 105 |  | 6 |  | 85 |  | — |  | 7 |  | — |
Sublease income | — |  | (1) |  | — |  | — |  | — |  | — |
Total lease cost | $ | 503 |  | $ | 79 |  | $ | 346 |  | $ | 3 |  | $ | 35 |  | $ | 18 |
(*)Includes operating lease costs related to PPAs at Southern Company, Alabama Power, and Georgia Power totaling $165 million, $47 million, and $184 million, respectively, in 2021, $161 million, $43 million, and $184 million, respectively, in 2020, and $149 million, $41 million, and $174 million, respectively, in 2019. Georgia Power has variable lease payments that are based on the amount of energy produced by certain renewable generating facilities subject to PPAs, including $41 million, $39 million, and $42 million in 2021, 2020, and 2019, respectively, from finance leases which are included in purchased power on Georgia Power's statements of income, $20 million of which was included in purchased power, affiliates for all periods presented. 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)
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 in exchange for new operating lease obligations | 64 |  | 3 |  | 9 |  | — |  | 72 |  | 7 |
ROU assets obtained in exchange for new finance lease obligations | 3 |  | — |  | — |  | — |  | — |  | — |
2020 |  |  |  |  |  |
Other information |  |  |  |  |  |
Cash paid for amounts included in the measurements of lease obligations: |  |  |  |  |  |
Operating cash flows from operating leases | $ | 310 |  | $ | 55 |  | $ | 215 |  | $ | 3 |  | $ | 28 |  | $ | 18 |
Operating cash flows from finance leases | 9 |  | — |  | 18 |  | — |  | — |  | — |
Financing cash flows from finance leases | 22 |  | 1 |  | 11 |  | — |  | — |  | — |
ROU assets obtained in exchange for new operating lease obligations | 227 |  | 63 |  | 32 |  | — |  | 51 |  | 4 |
ROU assets obtained in exchange for new finance lease obligations | 10 |  | 2 |  | — |  | — |  | — |  | — |
2019 |  |  |  |  |  |
Other information |  |  |  |  |  |
Cash paid for amounts included in the measurements of lease obligations: |  |  |  |  |  |
Operating cash flows from operating leases | $ | 323 |  | $ | 54 |  | $ | 210 |  | $ | 3 |  | 27 |  | 18 |
Operating cash flows from finance leases | 10 |  | — |  | 19 |  | — |  | — |  | — |
Financing cash flows from finance leases | 32 |  | 1 |  | 13 |  | — |  | — |  | — |
ROU assets obtained in exchange for new operating lease obligations | 118 |  | 7 |  | 21 |  | — |  | 2 |  | 19 |
ROU assets obtained in exchange for new finance lease obligations | 35 |  | 2 |  | 24 |  | — |  | — |  | — |
| Southern Company | Alabama Power | Georgia Power | Mississippi Power | Southern Power | Southern Company Gas
At December 31, 2021 |  |  |  |  |  |
Weighted-average remaining lease term in years: |  |  |  |  |  |
Operating leases | 15.9 | 9.1 | 8.7 | 6.1 | 32.8 | 10.5
Finance leases | 18.0 | 8.7 | 8.5 | 13.9 | N/A | N/A
Weighted-average discount rate: |  |  |  |  |  |
Operating leases | 4.41 | % | 4.37 | % | 4.45 | % | 2.74 | % | 5.20 | % | 3.61 | %
Finance leases | 4.82 | % | 3.09 | % | 10.81 | % | 2.74 | % | N/A | N/A
At December 31, 2020 |  |  |  |  |  |
Weighted-average remaining lease term in years: |  |  |  |  |  |
Operating leases | 14.5 | 7.8 | 9.4 | 6.5 | 32.1 | 9.8
Finance leases | 18.2 | 9.7 | 9.5 | 14.9 | N/A | N/A
Weighted-average discount rate: |  |  |  |  |  |
Operating leases | 4.44 | % | 4.14 | % | 4.37 | % | 3.26 | % | 5.45 | % | 3.67 | %
Finance leases | 4.79 | % | 3.20 | % | 10.81 | % | 2.74 |  | N/A | N/A
Maturities of lease liabilities are as follows:
| At December 31, 2021
| Southern Company | Alabama Power | Georgia Power | Mississippi Power | Southern Power | Southern Company Gas
| (in millions)
Maturity Analysis |  |  |  |  |  |
Operating leases: |  |  |  |  |  |
2022 | $ | 307 |  | $ | 59 |  | $ | 205 |  | $ | 4 |  | $ | 37 |  | $ | 14 |
2023 | 238 |  | 9 |  | 201 |  | 2 |  | 29 |  | 11 |
2024 | 195 |  | 7 |  | 164 |  | 1 |  | 29 |  | 11 |
2025 | 174 |  | 6 |  | 136 |  | 1 |  | 29 |  | 11 |
2026 | 154 |  | 5 |  | 133 |  | 1 |  | 30 |  | 8 |
Thereafter | 1,575 |  | 69 |  | 566 |  | 2 |  | 995 |  | 31 |
Total | 2,643 |  | 155 |  | 1,405 |  | 11 |  | 1,149 |  | 86 |
Less: Present value discount | 889 |  | 34 |  | 250 |  | 1 |  | 624 |  | 16 |
Operating lease obligations | $ | 1,754 |  | $ | 121 |  | $ | 1,155 |  | $ | 10 |  | $ | 525 |  | $ | 70 |
Finance leases: |  |  |  |  |  |
2022 | $ | 25 |  | $ | 2 |  | $ | 25 |  | $ | 2 |  | $ | — |  | $ | — |
2023 | 22 |  | 1 |  | 25 |  | 2 |  | — |  | — |
2024 | 19 |  | 1 |  | 25 |  | 2 |  | — |  | — |
2025 | 16 |  | — |  | 25 |  | 2 |  | — |  | — |
2026 | 16 |  | — |  | 26 |  | 1 |  | — |  | — |
Thereafter | 231 |  | — |  | 83 |  | 13 |  | — |  | — |
Total | 329 |  | 4 |  | 209 |  | 22 |  | — |  | — |
Less: Present value discount | 114 |  | — |  | 73 |  | 4 |  | — |  | — |
Finance lease obligations | $ | 215 |  | $ | 4 |  | $ | 136 |  | $ | 18 |  | $ | — |  | $ | — |
Payments made under PPAs at Georgia Power for energy generated from certain renewable energy facilities accounted for as operating and finance leases are considered variable lease costs and are therefore not reflected in the above maturity analysis. Lessor The Registrants are each considered lessors in various arrangements that have been determined to contain a lease due to the customer's ability to control the use of the underlying asset owned by the applicable Registrant. For the traditional electric operating companies, these arrangements consist of outdoor lighting contracts accounted for as operating leases with initial terms of up to seven years, after which the contracts renew on a month-to-month basis at the customer's option. For Mississippi Power, these arrangements also include a tolling arrangement related to an electric generating unit accounted for as a sales-type lease with a remaining term of 17 years. For Southern Power, these arrangements consist of PPAs related to electric generating units, including solar and wind facilities, accounted for as operating leases with remaining terms of up to 25 years and PPAs related to battery energy storage facilities accounted for as sales-type leases with remaining terms of up to 19 years. Southern Company Gas is the lessor in operating leases related to gas pipelines with remaining terms of up to 21 years. For Southern Company, these arrangements also include PPAs related to fuel cells accounted for as operating leases with remaining terms of up to 12 years. Lease income for 2021, 2020, and 2019, is as follows:
| Southern Company | Alabama Power | Georgia Power | Mississippi Power | Southern Power | Southern Company Gas
| (in millions)
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 |
2020 |  |  |  |  |  |
Lease income - interest income on sales-type leases | $ | 16 |  | $ | — |  | $ | — |  | $ | 12 |  | $ | — |  | $ | — |
Lease income - operating leases | 208 |  | 45 |  | 58 |  | 2 |  | 87 |  | 35 |
Variable lease income | 419 |  | — |  | — |  | — |  | 449 |  | — |
Total lease income | $ | 643 |  | $ | 45 |  | $ | 58 |  | $ | 14 |  | $ | 536 |  | $ | 35 |
2019 |  |  |  |  |  |
Lease income - interest income on sales-type leases | $ | 9 |  | $ | — |  | $ | — |  | $ | 9 |  | $ | — |  | $ | — |
Lease income - operating leases | 273 |  | 24 |  | 71 |  | — |  | 160 |  | 35 |
Variable lease income | 403 |  | — |  | — |  | — |  | 434 |  | — |
Total lease income | $ | 685 |  | $ | 24 |  | $ | 71 |  | $ | 9 |  | $ | 594 |  | $ | 35 |
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. Scheduled payments to be received under outdoor lighting contracts, tolling arrangements, and PPAs accounted for as leases are presented in the following maturity analyses. No profit or loss was recognized by Mississippi Power when a tolling arrangement accounted for as a sales-type lease began in 2019. During 2020 and 2021, Mississippi Power completed construction of additional leased assets under the lease and, upon completion, the book values of $26 million and $39 million, respectively, were transferred from CWIP to lease receivables. Each transfer represented a non-cash investing transaction for purposes of the statements of cash flows. During 2021, Southern Power completed construction of a portion of the Garland and Tranquillity battery energy storage facilities' assets and recorded losses totaling $40 million upon commencement of the related PPAs, which Southern Power accounts for as sales-type leases. The losses were due to ITCs retained and expected to be realized by Southern Power and its partners in these projects, and no estimated residual asset value was assumed in calculating the losses. Each lease has an initial term of 20 years. Upon commencement of the leases, the book values of the related assets totaling $210 million were derecognized from CWIP and lease receivables were recorded. At December 31, 2021, the current portion of the lease receivables totaling $12 million is included in other current assets and the long-term portion totaling $161 million is included in miscellaneous property and investments on Southern Company's balance sheet and net investment in sales-type leases on Southern Power's consolidated balance sheet. The transfers represented noncash investing transactions for purposes of the statement of cash flows. See Note 15 under "Southern Power" for additional information. The undiscounted cash flows expected to be received for in-service leased assets under the leases are as follows:
| At December 31, 2021
| Southern Company | Mississippi Power | Southern Power
| (in millions)
2022 | $ | 37 |  | $ | 25 |  | $ | 12 |
2023 | 39 |  | 24 |  | 15 |
2024 | 38 |  | 23 |  | 15 |
2025 | 37 |  | 22 |  | 15 |
2026 | 36 |  | 21 |  | 15 |
Thereafter | 390 |  | 183 |  | 207 |
Total undiscounted cash flows | $ | 577 |  | $ | 298 |  | $ | 279 |
Net investment in sales-type lease(*) | 340 |  | 167 |  | 173 |
Difference between undiscounted cash flows and discounted cash flows | $ | 237 |  | $ | 131 |  | $ | 106 |
(*)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 and net investment in sales-type leases on the balance sheet. The undiscounted cash flows to be received under operating leases and contracts accounted for as operating leases (adjusted for intercompany eliminations) are as follows:
| At December 31, 2021
| Southern Company | Alabama Power | Georgia Power | Southern Power | Southern Company Gas
| (in millions)
2022 | $ | 188 |  | $ | 76 |  | $ | 8 |  | $ | 87 |  | $ | 35 |
2023 | 139 |  | 32 |  | 2 |  | 88 |  | 35 |
2024 | 107 |  | 5 |  | — |  | 90 |  | 33 |
2025 | 100 |  | 3 |  | — |  | 74 |  | 28 |
2026 | 99 |  | 3 |  | — |  | 73 |  | 28 |
Thereafter | 883 |  | 23 |  | — |  | 240 |  | 407 |
Total | $ | 1,516 |  | $ | 142 |  | $ | 10 |  | $ | 652 |  | $ | 566 |
Southern Power receives payments for renewable energy under PPAs accounted for as operating leases that are considered contingent rents and are therefore not reflected in the table above. Alabama Power and Southern Power allocate revenue to the nonlease components of PPAs based on the stand-alone selling price of capacity and energy. The undiscounted cash flows to be received under outdoor lighting contracts accounted for as operating leases at Mississippi Power are immaterial. Southern Company Leveraged Lease At December 31, 2020, a subsidiary of Southern Holdings had four leveraged lease agreements related to energy generation, distribution, and transportation assets, including two domestic and two international projects. During 2021, one of the domestic projects was sold and the agreements for both international projects were terminated. At December 31, 2021, one leveraged lease agreement related to energy generation remains, with an expected remaining term of 10 years. Southern Company continues to receive federal income tax deductions for depreciation and amortization, as well as interest on long-term debt related to this investment. Southern Company wrote off the related investment balance in 2020, as discussed below. Southern Company's net investment in leveraged leases at December 31, 2020 consisted of the following:
| December 31, 2020(*)
| (in millions)
Net rentals receivable | $ | 734 |
Unearned income | (178) |
Investment in leveraged leases | 556 |
Deferred taxes from leveraged leases | (7) |
Net investment in leveraged leases | $ | 549 |
(*)Excludes the investment classified as held for sale. See Note 15 under "Southern Company" for additional information. The following table provides a summary of the components of income related to leveraged lease investments. Income was impacted in all periods presented 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 |  | 2020 |  | 2019
| (in millions)
Pretax leveraged lease income (loss) | $ | 17 |  |  | $ | (180) |  |  | $ | 11 |
Income tax benefit (expense) | (5) |  |  | 98 |  |  | — |
Net leveraged lease income (loss) | $ | 12 |  |  | $ | (82) |  |  | $ | 11 |
Since 2017, the financial and operational performance of the remaining domestic lessee and the associated generation assets raised significant concerns about the short-term ability of the generation assets to produce cash flows sufficient to support ongoing operations and the lessee's contractual obligations and its ability to make the remaining semi-annual lease payments through the end of the lease term in 2047. In addition, following the expiration of the existing power offtake agreement in 2032, the lessee also is exposed to remarketing risk, which encompasses the price and availability of alternative sources of generation. In connection with the 2019 annual impairment analysis, Southern Company revised the estimated cash flows to be received under the leveraged lease, which resulted in an impairment charge of $17 million ($13 million after tax) recorded in the fourth quarter 2019. During the second quarter 2020, Southern Company received the latest annual forecasts of natural gas prices and considered the significant decline in forecasted prices to be an indicator of potential impairment that required an interim impairment assessment. Accordingly, consistent with prior impairment analyses, Southern Company evaluated the recoverability of the lease receivable and the expected residual value of the generation assets under various natural gas price scenarios to estimate the cash flows expected to be received from remarketing the generation assets following the expiration of the existing PPA and the residual value of the generation assets at the end of the lease. Based on the forecasts of energy prices in the years following the expiration of the existing PPA, Southern Company concluded that it was no longer probable that any of the associated rental payments would be received, because it was no longer probable the generation assets would be successfully remarketed and continue to operate after that date. During the second quarter 2020, Southern Company revised the estimated cash flows to be received under the leveraged lease to reflect this conclusion, which resulted in a full impairment of the lease investment and a pre-tax charge to earnings of $154 million ($74 million after tax). All required lease payments through December 31, 2021 have been paid in full. If any future lease payments due prior to the expiration of the associated PPA are not paid in full, the Southern Holdings subsidiary may be unable to make its corresponding payment to the holders of the underlying non-recourse debt related to the generation assets. Failure to make the required payment to the debtholders could represent an event of default that would give the debtholders the right to foreclose on, and take ownership of, the generation assets, in effect terminating the lease. As the remaining amount of the lease investment was charged against earnings in the second quarter 2020, termination would not be expected to result in additional charges. Southern Company will continue to monitor the operational performance of the underlying assets and evaluate the ability of the lessee to continue to make the required lease payments and meet its obligations associated with a future closure or retirement of the generation assets and associated properties, including the dry ash landfill.

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