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Derivatives
 3 Months Ended
Mar. 31, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives DERIVATIVES
The Registrants are exposed to market risks, including commodity price risk, interest rate risk, weather risk, and occasionally foreign currency exchange rate risk. To manage the volatility attributable to these exposures, each company nets its exposures, where possible, to take advantage of natural offsets and enters into various derivative transactions for the remaining exposures pursuant to each company's policies in areas such as counterparty exposure and risk management practices. Each company's policy is that derivatives are to be used primarily for hedging purposes and mandates strict adherence to all applicable risk management policies. Derivative positions are monitored using techniques including, but not limited to, market valuation, value at risk, stress testing, and sensitivity analysis. Derivative instruments are recognized at fair value in the balance sheets as either assets or liabilities and are presented on a net basis. See Note (I) for additional fair value information. In the statements of cash flows, any cash impacts of settled energy-related and interest rate derivatives are recorded as operating activities. Any cash impacts of settled foreign currency derivatives are classified as operating or financing activities to correspond with the classification of the hedged interest or principal, respectively. See Note 1 to the financial statements under "Financial Instruments" in Item 8 of the Form 10-K for additional information.
Energy-Related Derivatives
The Subsidiary Registrants enter into energy-related derivatives to hedge exposures to electricity, natural gas, and other fuel price changes. However, due to cost-based rate regulations and other various cost recovery mechanisms, the traditional electric operating companies and the natural gas distribution utilities have limited exposure to market volatility in energy-related commodity prices. Each of the traditional electric operating companies and certain of the natural gas distribution utilities manage fuel-hedging programs, implemented per the guidelines of their respective state PSCs or other applicable state regulatory agencies, through the use of financial derivative contracts, which are expected to continue to mitigate price volatility. The traditional electric operating companies (with respect to wholesale generating capacity) and Southern Power have limited exposure to market volatility in energy-related commodity prices because their long-term sales contracts shift substantially all fuel cost responsibility to the purchaser. However, the traditional electric operating companies and Southern Power may be exposed to market volatility in energy-related commodity prices to the extent any uncontracted capacity is used to sell electricity. Southern Company Gas retains exposure to price changes that can, in a volatile energy market, be material and can adversely affect its results of operations.
Southern Company Gas also enters into weather derivative contracts as economic hedges in the event of warmer-than-normal weather. Exchange-traded options are carried at fair value, with changes reflected in natural gas revenues. Non-exchange-traded options are accounted for using the intrinsic value method. Changes in the intrinsic value for non-exchange-traded contracts are reflected in natural gas revenues.
Energy-related derivative contracts are accounted for under one of three methods:
•Regulatory Hedges – Energy-related derivative contracts designated as regulatory hedges relate primarily to the traditional electric operating companies' and the natural gas distribution utilities' fuel-hedging programs, where gains and losses are initially recorded as regulatory liabilities and assets, respectively, and then are included in fuel expense as the underlying fuel is used in operations and ultimately recovered through an approved cost recovery mechanism.
•Cash Flow Hedges – Gains and losses on energy-related derivatives designated as cash flow hedges (which are mainly used to hedge anticipated purchases and sales) are initially deferred in accumulated OCI before being recognized in the statements of income in the same period and in the same income statement line item as the earnings effect of the hedged transactions.
•Not Designated – Gains and losses on energy-related derivative contracts that are not designated or fail to qualify as hedges are recognized in the statements of income as incurred.
Some energy-related derivative contracts require physical delivery as opposed to financial settlement, and this type of derivative is both common and prevalent within the electric and natural gas industries. When an energy-related derivative contract is settled physically, any cumulative unrealized gain or loss is reversed and the contract price is recognized in the respective line item representing the actual price of the underlying goods being delivered.
At March 31, 2026, the net volume of energy-related derivative contracts for natural gas positions, together with the longest hedge date over which the respective entity is hedging its exposure to the variability in future cash flows for forecasted transactions and the longest non-hedge date for derivatives not designated as hedges, were as follows:
Net
Purchased
mmBtu		Longest
Hedge
Date		Longest
Non-Hedge
Date
(in millions)
Southern Company(*)
46920302029
Alabama Power14520292026
Georgia Power13220282026
Mississippi Power11220302026
Southern Power720302026
Southern Company Gas(*)
7320282029
(*)Southern Company Gas' derivative instruments include both long and short natural gas positions. A long position is a contract to purchase natural gas and a short position is a contract to sell natural gas. Southern Company Gas' volume represents the net of 80 million mmBtu long natural gas positions and 7 million mmBtu short natural gas positions at March 31, 2026, which is also included in Southern Company's total volume.
In addition to the volumes discussed above, the traditional electric operating companies and Southern Power enter into physical natural gas supply contracts that provide the option to sell back excess natural gas due to operational constraints. The maximum expected volume of natural gas subject to such a feature is 13 million mmBtu for Southern Company, which includes 3 million mmBtu for Alabama Power, 5 million mmBtu for Georgia Power, 2 million mmBtu for Mississippi Power, and 3 million mmBtu for Southern Power.
For cash flow hedges of energy-related derivatives, the estimated pre-tax gains (losses) expected to be reclassified from accumulated OCI to earnings for the 12-month period ending March 31, 2027 are immaterial for Southern Company, Southern Power, and Southern Company Gas.
Interest Rate Derivatives
Southern Company and certain subsidiaries may enter into interest rate derivatives to hedge exposure to changes in interest rates. Derivatives related to existing variable rate securities or forecasted transactions are accounted for as cash flow hedges where the derivatives' fair value gains or losses are recorded in OCI and are reclassified into earnings at the same time and presented on the same income statement line item as the earnings effect of the hedged transactions. Derivatives related to existing fixed rate securities are accounted for as fair value hedges, where the derivatives' fair value gains or losses and hedged items' fair value gains or losses are both recorded directly to earnings on the same income statement line item. Fair value gains or losses on derivatives that are not designated or fail to qualify as hedges are recognized in the statements of income as incurred.
At March 31, 2026, the following interest rate derivatives were outstanding:
Notional
Amount		Weighted
Average Interest
Rate Paid		Interest
Rate
Received		Hedge
Maturity
Date
Fair Value
Gain (Loss) at
March 31, 2026
 (in millions)   (in millions)
Fair Value Hedges of Existing Debt
Southern Company parent$400 
1-day SOFR + 0.80%
1.75%March 2028$(20)
Southern Company parent1,000 
1-day SOFR + 2.48%
3.70%April 2030(103)
Southern Company parent565 
1-day SOFR + 1.56%
6.50%March 2045(6)
Southern Company Gas500 
1-day SOFR + 0.49%
1.75%January 2031(55)
Southern Company$2,465 $(184)
For cash flow hedges of interest rate derivatives, the estimated pre-tax gains (losses) expected to be reclassified from accumulated OCI to interest expense for the 12-month period ending March 31, 2027 are immaterial for Southern Company, the traditional electric operating companies, and Southern Company Gas. Deferred gains and losses related to interest rate derivatives are expected to be amortized into earnings through 2054 for Southern Company, Georgia Power, and Mississippi Power, 2052 for Alabama Power, and 2046 for Southern Company Gas.
Foreign Currency Derivatives
Southern Company and certain subsidiaries, including Southern Power, may enter into foreign currency derivatives to hedge exposure to changes in foreign currency exchange rates, such as that arising from the issuance of debt denominated in a currency other than U.S. dollars. Derivatives related to forecasted transactions are accounted for as cash flow hedges where the derivatives' fair value gains or losses are recorded in OCI and are reclassified into earnings at the same time and on the same income statement line as the earnings effect of the hedged transactions, including foreign currency gains or losses arising from changes in the U.S. currency exchange rates. Derivatives related to existing fixed rate securities are accounted for as fair value hedges, where the derivatives' fair value gains or losses and hedged items' fair value gains or losses are both recorded directly to earnings on the same income statement line item, including foreign currency gains or losses arising from changes in the U.S. currency exchange rates. Southern Company has elected to exclude the cross-currency basis spread from the assessment of effectiveness in the fair value hedges of its foreign currency risk and record any difference between the change in the fair value of the excluded components and the amounts recognized in earnings as a component of OCI.
At March 31, 2026, the following foreign currency derivatives were outstanding:
Pay
Notional		Pay
Rate		Receive
Notional		Receive
Rate		Hedge
Maturity Date
Fair Value
Gain (Loss) at
March 31, 2026
(in millions)(in millions)(in millions)
Cash Flow Hedges of Existing Debt
Southern Power$564 3.78%€500 1.85%June 2026$5 
Fair Value Hedges of Existing Debt
Southern Company parent1,476 3.39%1,250 1.88%September 2027(50)
Southern Company$2,040 €1,750 $(45)
For cash flow hedges of foreign currency derivatives, the estimated pre-tax gains expected to be reclassified from accumulated OCI to earnings for the 12-month period ending March 31, 2027 are immaterial for Southern Power.
Derivative Financial Statement Presentation and Amounts
The Registrants enter into derivative contracts that may contain certain provisions that permit intra-contract netting of derivative receivables and payables for routine billing and offsets related to events of default and settlements. Southern Company and certain subsidiaries also utilize master netting agreements to mitigate exposure to counterparty credit risk. The fair value amounts of derivative assets and liabilities on the balance sheets are presented net to the extent that there are netting arrangements or similar agreements with the counterparties.
The fair value of energy-related derivatives, interest rate derivatives, and foreign currency derivatives was reflected as either assets or liabilities in the balance sheets (included in "Other" or shown separately as "Risk Management Activities") as follows:
At March 31, 2026At December 31, 2025
Derivative Category and Balance Sheet LocationAssetsLiabilitiesAssetsLiabilities
(in millions)
Southern Company
Energy-related derivatives designated as hedging instruments for regulatory purposes
Current
$35 $91 $24 $64 
Non-current
34 56 31 35 
Total derivatives designated as hedging instruments for regulatory purposes69 147 55 99 
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Current2 8 1 6 
Non-current2 — 2 1 
Interest rate derivatives:
Current7 49 8 48 
Non-current— 142 — 139 
Foreign currency derivatives:
Current5 22 17 22 
Non-current— 28 4 — 
Total derivatives designated as hedging instruments in cash flow and fair value hedges16 249 32 216 
Energy-related derivatives not designated as hedging instruments
Current5 5 6 6 
Gross amounts recognized90 401 93 321 
Gross amounts offset(a)
(53)(75)(21)(54)
Net amounts recognized in the Balance Sheets(b)
$37 $326 $72 $267 
Alabama Power
Energy-related derivatives designated as hedging instruments for regulatory purposes
Current$12 $26 $9 $18 
Non-current13 22 10 13 
Total derivatives designated as hedging instruments for regulatory purposes25 48 19 31 
Gross amounts offset(23)(23)(13)(13)
Net amounts recognized in the Balance Sheets$2 $25 $6 $18 
At March 31, 2026At December 31, 2025
Derivative Category and Balance Sheet LocationAssetsLiabilitiesAssetsLiabilities
(in millions)
Georgia Power
Energy-related derivatives designated as hedging instruments for regulatory purposes
Current$13 $32 $7 $23 
Non-current9 17 10 10 
Total derivatives designated as hedging instruments for regulatory purposes22 49 17 33 
Energy-related derivatives not designated as hedging instruments
Current
3 — 1 — 
Gross amounts recognized25 49 18 33 
Gross amounts offset(21)(21)(14)(14)
Net amounts recognized in the Balance Sheets$4 $28 $4 $19 
Mississippi Power
Energy-related derivatives designated as hedging instruments for regulatory purposes
Current$7 $21 $3 $15 
Non-current12 17 11 12 
Total derivatives designated as hedging instruments for regulatory purposes19 38 14 27 
Gross amounts offset(18)(18)(13)(13)
Net amounts recognized in the Balance Sheets$1 $20 $1 $14 
Southern Power
Derivatives designated as hedging instruments in cash flow hedges
Energy-related derivatives:
Current$1 $2 $1 $1 
Non-current2 — 2 — 
Foreign currency derivatives:
Current5 — 17 — 
Total derivatives designated as hedging instruments in cash flow hedges
8 2 20 1 
Energy-related derivatives not designated as hedging instruments
Energy-related derivatives:
Current
1 1 1 — 
Gross amounts recognized9 3 21 1 
Gross amounts offset(1)(1)— — 
Net amounts recognized in the Balance Sheets$8 $2 $21 $1 
At March 31, 2026At December 31, 2025
Derivative Category and Balance Sheet LocationAssetsLiabilitiesAssetsLiabilities
(in millions)
Southern Company Gas
Energy-related derivatives designated as hedging instruments for regulatory purposes
Current
$3 $12 $5 $8 
Derivatives designated as hedging instruments in cash flow and fair value hedges
Energy-related derivatives:
Current1 6 — 5 
Non-current— — — 1 
Interest rate derivatives:
Current— 12 — 13 
Non-current— 43 — 46 
Total derivatives designated as hedging instruments in cash flow and fair value hedges1 61 — 65 
Energy-related derivatives not designated as hedging instruments
Current1 4 4 6 
Gross amounts recognized5 77 9 79 
Gross amounts offset(a)
10 (12)19 (14)
Net amounts recognized in the Balance Sheets(b)
$15 $65 $28 $65 
(a)Gross amounts offset includes cash collateral held on deposit in broker margin accounts of $22 million and $33 million at March 31, 2026 and December 31, 2025, respectively.
(b)Net amounts of derivative instruments outstanding exclude immaterial premium and intrinsic value associated with weather derivatives at March 31, 2026 and December 31, 2025.
At March 31, 2026 and December 31, 2025, the pre-tax effects of unrealized derivative gains (losses) arising from energy-related derivative instruments designated as regulatory hedging instruments and deferred were as follows:
Regulatory Hedge Unrealized Gain (Loss) Recognized in the Balance Sheets
Derivative Category and Balance Sheet
Location		Southern
Company		Alabama
Power		Georgia
Power		Mississippi
Power		Southern Company Gas
 (in millions)
At March 31, 2026:
Energy-related derivatives:
Other regulatory assets, current$(60)$(16)$(20)$(14)$(10)
Other regulatory assets, deferred(23)(10)(8)(5)— 
Other regulatory liabilities, current4 2 1 — 1 
Other regulatory liabilities, deferred1 1 — — — 
Total energy-related derivative gains (losses)$(78)$(23)$(27)$(19)$(9)
At December 31, 2025:
Energy-related derivatives:
Other regulatory assets, current$(48)$(13)$(17)$(12)$(6)
Other regulatory assets, deferred(8)(5)(1)(2)— 
Other regulatory liabilities, current7 4 1 — 2 
Other regulatory liabilities, deferred4 2 1 1 — 
Total energy-related derivative gains (losses)$(45)$(12)$(16)$(13)$(4)
For the three months ended March 31, 2026 and 2025, the pre-tax effects of cash flow and fair value hedge accounting on accumulated OCI for the applicable Registrants were as follows:
Gain (Loss) From Derivatives Recognized in OCIThree Months Ended March 31,
20262025
(in millions)
Southern Company
Cash flow hedges:
Energy-related derivatives$10 $19 
Interest rate derivatives— (2)
Foreign currency derivatives(12)19 
Fair value hedges(*):
Foreign currency derivatives(1)(16)
Total$(3)$20 
Georgia Power
Cash flow hedges:
Interest rate derivatives$— $(2)
Southern Power
Cash flow hedges:
Energy-related derivatives$2 $3 
Foreign currency derivatives(12)19 
Total$(10)$22 
Southern Company Gas
Cash flow hedges:
Energy-related derivatives$8 $16 
(*)Represents amounts excluded from the assessment of effectiveness for which the difference between changes in fair value and periodic amortization is recorded in OCI.
For the three months ended March 31, 2026 and 2025, the pre-tax effects of cash flow and fair value hedge accounting on income were as follows:
Gain (Loss)
Statements of Income Location
Derivative Category
Three Months Ended March 31,
20262025
(in millions)
Southern Company
Fuel
Energy-related cash flow hedges
$3 $1 
Cost of natural gas
Energy-related cash flow hedges
10 (1)
Interest expense, net of amounts capitalized
Interest rate cash flow hedges
(2)(2)
Foreign currency cash flow hedges
(3)(3)
Interest rate fair value hedges
20 40 
Other income (expense), net
Foreign currency cash flow hedges
(13)21 
Foreign currency fair value hedges
(32)40 
Amount excluded from effectiveness testing recognized in earnings1 16 
Southern Power
Fuel
Energy-related cash flow hedges
$3 $1 
Interest expense, net of amounts capitalized
Foreign currency cash flow hedges
(3)(3)
Other income (expense), net
Foreign currency cash flow hedges
(13)21 
Southern Company Gas
Cost of natural gas
Energy-related cash flow hedges
$10 $(1)
Interest expense, net of amounts capitalized
Interest rate fair value hedges
29 17 
At March 31, 2026 and December 31, 2025, the following amounts were recorded on the balance sheets related to cumulative basis adjustments for fair value hedges:
Carrying Amount of the Hedged
Item		Cumulative Amount of Fair Value
Hedging Adjustment included in
Carrying Amount of the Hedged
Item
Balance Sheet Location of Hedged ItemsAt March 31, 2026At December 31, 2025At March 31, 2026At December 31, 2025
(in millions)
Southern Company
Long-term debt$(3,710)$(3,742)$158 $156 
Southern Company Gas
Long-term debt$(446)$(446)$52 $51 
Contingent Features
The Registrants do not have any credit arrangements that would require material changes in payment schedules or terminations as a result of a credit rating downgrade. There are certain derivatives that could require collateral, but not accelerated payment, in the event of various credit rating changes of certain Southern Company subsidiaries. Generally, collateral may be provided by a Southern Company guaranty, letter of credit, or cash. At March 31, 2026, the Registrants had no collateral posted with derivative counterparties to satisfy these arrangements.
For Southern Company, the fair value of foreign currency derivative liabilities and interest rate derivative liabilities with contingent features, and the maximum potential collateral requirements arising from the credit-risk-related contingent features at a rating below BBB- and/or Baa3, was $26 million at March 31, 2026. For Southern Power,
there were no foreign currency derivative liabilities with contingent features or associated collateral requirements arising from the credit-risk-related contingent features at a rating below BBB- and/or Baa3 at March 31, 2026. For the traditional electric operating companies and Southern Power, energy-related derivative liabilities with contingent features and the maximum potential collateral requirements arising from the credit-risk-related contingent features, at a rating below BBB- and/or Baa3, were immaterial at March 31, 2026. The maximum potential collateral requirements arising from the credit-risk-related contingent features for the traditional electric operating companies and Southern Power include certain agreements that could require collateral in the event that one or more Southern Company power pool participants has a credit rating change to below investment grade.
Alabama Power and Southern Power maintain accounts with certain regional transmission organizations to facilitate financial derivative transactions and they may be required to post collateral based on the value of the positions in these accounts and the associated margin requirements. At March 31, 2026, cash collateral posted in these accounts was immaterial for Alabama Power and Southern Power. Southern Company Gas maintains accounts with brokers or the clearing houses of certain exchanges to facilitate financial derivative transactions. Based on the value of the positions in these accounts and the associated margin requirements, Southern Company Gas may be required to deposit cash into these accounts, which are netted with energy-related derivatives recognized in the balance sheets.
The Registrants are exposed to losses related to financial instruments in the event of counterparties' nonperformance. The Registrants generally enter into agreements and material transactions with counterparties that have investment grade credit ratings by Moody's, S&P, or Fitch or with counterparties who have posted collateral to cover potential credit exposure. The Registrants have also established risk management policies and controls to determine and monitor the creditworthiness of counterparties in order to mitigate their exposure to counterparty credit risk.
Southern Company Gas uses established credit policies to determine and monitor the creditworthiness of counterparties, including requirements to post collateral or other credit security, as well as the quality of pledged collateral. Collateral or credit security is most often in the form of cash or letters of credit from an investment-grade financial institution, but may also include cash or U.S. government securities held by a trustee. Prior to entering a physical transaction, Southern Company Gas assigns its counterparties an internal credit rating and credit limit based on the counterparties' Moody's, S&P, and Fitch ratings, commercially available credit reports, and audited financial statements. Southern Company Gas may require counterparties to pledge additional collateral when deemed necessary.
The Registrants do not anticipate a material adverse effect on their respective financial statements as a result of counterparty nonperformance.