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Introduction | 6 Months Ended
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Jun. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Introduction | INTRODUCTION The condensed quarterly financial statements of each Registrant included herein have been prepared by such Registrant, without audit, pursuant to the rules and regulations of the SEC. The Condensed Balance Sheets at December 31, 2022 have been derived from the audited financial statements of each Registrant. In the opinion of each Registrant's management, the information regarding such Registrant furnished herein reflects all adjustments, which, except as otherwise disclosed, are of a normal recurring nature, necessary to present fairly the results of operations for the periods ended June 30, 2023 and 2022. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although each Registrant believes that the disclosures regarding such Registrant are adequate to make the information presented not misleading. Disclosures which would substantially duplicate the disclosures in the Form 10-K and details which have not changed significantly in amount or composition since the filing of the Form 10-K are generally omitted from this Quarterly Report on Form 10-Q unless specifically required by GAAP. Therefore, these Condensed Financial Statements should be read in conjunction with the financial statements and the notes thereto included in the Form 10-K. Due to the seasonal variations in the demand for energy and other factors, operating results for the periods presented are not necessarily indicative of the operating results to be expected for the full year. Certain prior year data presented in the financial statements have been reclassified to conform to the current year presentation. These reclassifications had no impact on the overall results of operations, financial position, or cash flows of any Registrant. Goodwill and Other Intangible Assets Goodwill at June 30, 2023 and December 31, 2022 was as follows:
| Goodwill |
| (in millions)
Southern Company | $ | 5,161 |  |
Southern Company Gas: |  |
Gas distribution operations | $ | 4,034 |  |
Gas marketing services | 981 |  |
Southern Company Gas total | $ | 5,015 |  |
Goodwill is not amortized, but is subject to an annual impairment test during the fourth quarter of each year, or more frequently if goodwill impairment indicators arise. Other intangible assets were as follows:
| At June 30, 2023 |  | At December 31, 2022
| Gross Carrying Amount | Accumulated Amortization | Other Intangible Assets, Net |  | Gross Carrying Amount | Accumulated Amortization | Other Intangible Assets, Net
| (in millions) |  | (in millions)
Southern Company |  |  |  |  |  |  |
Subject to amortization: |  |  |  |  |  |  |
Customer relationships | $ | 212 |  | $ | (167) |  | $ | 45 |  |  | $ | 212 |  | $ | (162) |  | $ | 50 |
Trade names | 64 |  | (49) |  | 15 |  |  | 64 |  | (44) |  | 20 |
PPA fair value adjustments | 390 |  | (139) |  | 251 |  |  | 390 |  | (129) |  | 261 |
Other | 3 |  | (3) |  | — |  |  | 5 |  | (5) |  | — |
Total subject to amortization | $ | 669 |  | $ | (358) |  | $ | 311 |  |  | $ | 671 |  | $ | (340) |  | $ | 331 |
Not subject to amortization: |  |  |  |  |  |  |
FCC licenses | 75 |  | — |  | 75 |  |  | 75 |  | — |  | 75 |
Total other intangible assets | $ | 744 |  | $ | (358) |  | $ | 386 |  |  | $ | 746 |  | $ | (340) |  | $ | 406 |
Southern Power(*) |  |  |  |  |  |  |
PPA fair value adjustments | $ | 390 |  | $ | (139) |  | $ | 251 |  |  | $ | 390 |  | $ | (129) |  | $ | 261 |
Southern Company Gas(*) |  |  |  |  |  |  |
Gas marketing services |  |  |  |  |  |  |
Customer relationships | $ | 156 |  | $ | (142) |  | $ | 14 |  |  | $ | 156 |  | $ | (139) |  | $ | 17 |
Trade names | 26 |  | (19) |  | 7 |  |  | 26 |  | (17) |  | 9 |
Total other intangible assets | $ | 182 |  | $ | (161) |  | $ | 21 |  |  | $ | 182 |  | $ | (156) |  | $ | 26 |
(*) All subject to amortization. Amortization associated with other intangible assets was as follows:
| Three Months Ended | Six Months Ended | Three Months Ended | Six Months Ended |
| June 30, 2023 | June 30, 2022 |
| (in millions)
Southern Company(a) | $ | 9 |  | $ | 18 |  | $ | 9 |  | $ | 19 |  |
Southern Power(b) | 5 |  | 10 |  | 5 |  | 10 |  |
Southern Company Gas | 2 |  | 5 |  | 2 |  | 5 |  |
(a)Includes $5 million, $10 million, $5 million, and $10 million for the three and six months ended June 30, 2023 and 2022, respectively, recorded as a reduction to operating revenues. (b)Recorded as a reduction to operating revenues. Cash, Cash Equivalents, and Restricted Cash The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed balance sheets that total to the amount shown in the condensed statements of cash flows for the applicable Registrants:
| Southern Company | Georgia Power | Southern Power | Southern Company Gas
| (in millions)
At June 30, 2023 |  |  |  |
Cash and cash equivalents | $ | 2,123 |  | $ | 44 |  | $ | 169 |  | $ | 242 |
Restricted cash(a): |  |  |  |
Other current assets | 83 |  | 80 |  | — |  | 3 |
Other deferred charges and assets | 39 |  | 36 |  | 3 |  | — |
Total cash, cash equivalents, and restricted cash(b) | $ | 2,244 |  | $ | 160 |  | $ | 172 |  | $ | 244 |
At December 31, 2022 |  |  |  |
Cash and cash equivalents | $ | 1,917 |  | $ | 364 |  | $ | 131 |  | $ | 81 |
Restricted cash(a): |  |  |  |
Other current assets | 62 |  | 60 |  | — |  | 2 |
Other deferred charges and assets | 58 |  | 56 |  | 3 |  | — |
Total cash, cash equivalents, and restricted cash(b) | $ | 2,037 |  | $ | 480 |  | $ | 133 |  | $ | 83 |
(a)For Georgia Power, reflects $116 million at both June 30, 2023 and December 31, 2022 related to proceeds from the issuance of solid waste disposal facility revenue bonds in 2022. For Southern Power, reflects $3 million at both June 30, 2023 and December 31, 2022 held to fund estimated construction completion costs at the Deuel Harvest wind facility. For Southern Company Gas, reflects collateral for workers' compensation, life insurance, and long-term disability insurance. (b)Total may not add due to rounding. Natural Gas for Sale With the exception of Nicor Gas, Southern Company Gas records natural gas inventories on a WACOG basis. For any declines in market prices below the WACOG considered to be other than temporary, an adjustment is recorded to reduce the value of natural gas inventories to market value. Nicor Gas' natural gas inventory is carried at cost on a LIFO basis. Inventory decrements occurring during the year that are restored prior to year-end are charged to cost of natural gas at the estimated annual replacement cost. Inventory decrements that are not restored prior to year-end are charged to cost of natural gas at the actual LIFO cost of the inventory layers liquidated. Southern Company Gas recorded no material adjustments to natural gas inventories for either period presented. Nicor Gas' inventory decrement at June 30, 2023 is expected to be restored prior to year-end. Storm Damage Reserves See Note 1 to the financial statements in Item 8 of the Form 10-K under "Storm Damage and Reliability Reserves" for additional information. Storm damage reserve activity for the traditional electric operating companies during the six months ended June 30, 2023 was as follows:
| Southern Company | Alabama Power | Georgia Power | Mississippi Power
| (in millions)
Balance at December 31, 2022 | $ | 216 |  | $ | 97 |  | $ | 83 |  | $ | 36 |
Accrual | 28 |  | 6 |  | 16 |  | 6 |
Weather-related damages | (85) |  | (24) |  | (58) |  | (3) |
Balance at June 30, 2023 | $ | 159 |  | $ | 79 |  | $ | 41 |  | $ | 39 |
Asset Retirement Obligations See Note 6 to the financial statements in Item 8 of the Form 10-K for additional information. Following initial criticality on March 6, 2023, Georgia Power recorded AROs of approximately $90 million related to Plant Vogtle Unit 3. See Note (B) under "Georgia Power – Nuclear Construction" for additional information on Plant Vogtle Units 3 and 4. In June 2023, Alabama Power completed an updated decommissioning cost site study for Plant Farley. The estimated cost of decommissioning based on the study resulted in a decrease in Alabama Power's ARO liability of approximately $15 million. See "Nuclear Decommissioning" herein for additional information. Nuclear Decommissioning See Note 6 to the financial statements in Item 8 of the Form 10-K under "Nuclear Decommissioning" for additional information. Site study cost is the estimate to decommission a specific facility as of the site study year. The decommissioning cost estimates are based on prompt dismantlement and removal of the plant from service. The actual decommissioning costs may vary from these estimates because of changes in the assumed date of decommissioning, changes in NRC requirements, or changes in the assumptions used in making these estimates. The estimated costs of decommissioning Plant Farley based on Alabama Power's June 2023 site study are as follows:
| Plant Farley
Decommissioning periods: |
Beginning year | 2037
Completion year | 2087
| (in millions)
Site study costs: |
Radiated structures | $ | 1,402 |
Spent fuel management | 513 |
Non-radiated structures | 133 |
Total site study costs | $ | 2,048 |
For ratemaking purposes, Alabama Power's decommissioning costs are based on the site study. Significant assumptions used to determine these costs for ratemaking were an estimated inflation rate of 4.5% and an estimated trust earnings rate of 7.0%. Amounts previously contributed to the external trust funds are currently projected to be adequate to meet the updated decommissioning obligations. Alabama Power's site-specific estimates of decommissioning costs for Plant Farley are updated every five years. The next site study for Alabama Power is expected to be completed in 2028. Projections of funds are reviewed with the Alabama PSC to ensure that, over time, the deposits and earnings of the funds in the external trust will provide adequate funding to cover the site-specific costs. If necessary, Alabama Power would seek the Alabama PSC's approval to address any changes in a manner consistent with NRC and other applicable requirements.

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