SOUTHERN CO

For the period ended Dec 31, 2023. Filed Feb 15, 2024.

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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.

FY2023 · Filed Feb 15, 2024

SO$93.65+0.1%Stored close · as of Nov 10, 2026

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Mississippi Power:

To the stockholder and the Board of Directors of Mississippi Power Company

We have audited the accompanying balance sheets of Mississippi Power Company (Mississippi Power) (a wholly-owned subsidiary of The Southern Company) as of December 31, 2023 and 2022, the related statements of income, comprehensive income, common stockholder's equity, and cash flows for each of the three years in the period ended December 31, 2023, the related notes, and the financial statement schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of Mississippi Power as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

These financial statements are the responsibility of Mississippi Power's management. Our responsibility is to express an opinion on Mississippi Power's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to Mississippi Power in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Mississippi Power is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of Mississippi Power's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the Audit Committee of Southern Company's Board of Directors and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Impact of Rate Regulation on the Financial Statements – Refer to Note 1 (Summary of Significant Accounting Policies – Regulatory Assets and Liabilities) and Note 2 (Regulatory Matters – Mississippi Power) to the financial statements

Mississippi Power is subject to retail rate regulation by the Mississippi Public Service Commission and wholesale regulation by the Federal Energy Regulatory Commission (collectively, the "Commissions"). Management has determined that it meets the requirements under accounting principles generally accepted in the United States of America to utilize specialized rules to account for the effects of rate regulation in the preparation of its financial statements. Accounting for the economics of rate regulation may impact multiple financial statement line items and disclosures.

The Commissions set the rates Mississippi Power is permitted to charge customers. Rates are determined and approved in regulatory proceedings based on an analysis of Mississippi Power's costs to provide utility service and a return on, and recovery of, its investment in the utility business. Current and future regulatory decisions can have an impact on the recovery of costs, the rate of return earned on investments, and the timing and amount of assets to be recovered through rates. The Commissions' regulation of rates is premised on the full recovery of prudently incurred costs and a reasonable rate of return on invested capital. While Mississippi Power expects to recover costs from customers through regulated rates, there is a risk that the Commissions will not approve: (1) full recovery of the costs of providing utility service, or (2) full recovery of all amounts invested in the utility business and a reasonable return on those investments.

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We identified the impact of rate regulation related to certain assets and liabilities as a critical audit matter due to the significant judgments made by management to support its assertions about impacted account balances and disclosures and/or the high degree of subjectivity involved in assessing the potential impact of future regulatory orders on incurred costs. Management judgments include assessing the likelihood of (1) recovery in future rates of incurred costs, (2) a disallowance of part of the cost of recently completed plant or plant under construction, and/or (3) a refund to customers. Auditing these judgments, which include assumptions about the outcome of future decisions by the Commissions, required specialized knowledge of accounting for rate regulations and the rate setting process due to its inherent complexities.

We tested the effectiveness of management's controls over the evaluation of the likelihood of (1) the recovery in future rates of certain incurred costs and (2) refunds or future reductions in rates that should be reported as regulatory liabilities; and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering certain costs in future rates or of a future reduction in rates. We also tested the effectiveness of management's controls over the initial recognition of regulatory assets or liabilities.

We read and evaluated relevant regulatory orders and/or other relevant publicly available information to assess the likelihood of recovery of certain incurred costs in future rates or of a future reduction in rates based on precedents of the treatment of similar costs under similar circumstances.

We obtained representation from management regarding the likelihood of recoverability of incurred costs and potential refund or future reduction in rates to assess management's assertions about the likelihood of recovery, refund, or a future reduction in rates.

We evaluated Mississippi Power's disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments, including where there is a high degree of subjectivity involved in assessing the potential impact of future regulatory orders on incurred costs.

We have served as Mississippi Power's auditor since 2002.

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	2023	2022	2021
(in millions)
Operating Revenues:
Retail revenues	$963	$935	$875
Wholesale revenues, non-affiliates	272	252	230
Wholesale revenues, affiliates	200	460	188
Other revenues	39	47	29
Total operating revenues	1,474	1,694	1,322
Operating Expenses:
Fuel and purchased power	538	789	496
Other operations and maintenance	362	376	313
Depreciation and amortization	190	181	180
Taxes other than income taxes	124	124	128
Total operating expenses	1,214	1,470	1,117
Operating Income	260	224	205
Other Income and (Expense):
Interest expense, net of amounts capitalized	(71)	(56)	(60)
Other income (expense), net	35	33	35
Total other income and (expense)	(36)	(23)	(25)
Earnings Before Income Taxes	224	201	180
Income taxes	36	37	21
Net Income	$188	$164	$159

	2023	2022	2021
(in millions)
Net Income	$188	$164	$159
Other comprehensive income:
Qualifying hedges:
Reclassification adjustment for amounts included in net income, net of tax of $—, $—, and $—, respectively	—	—	1
Total other comprehensive income	—	—	1
Comprehensive Income	$188	$164	$160

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	2023	2022	2021
(in millions)
Operating Activities:
Net income	$188	$164	$159
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total	232	223	213
Deferred income taxes	(13)	(6)	(4)
Pension, postretirement, and other employee benefits	(20)	(18)	(10)
Settlement of asset retirement obligations	(18)	(20)	(24)
System restoration rider and reliability reserve accruals	23	32	(2)
Retail fuel cost under recovery – long-term	(50)	—	—
Other, net	(5)	21	(21)
Changes in certain current assets and liabilities —
-Receivables	85	(82)	9
-Materials and supplies	(9)	(10)	(6)
-Other current assets	7	(15)	—
-Accounts payable	(81)	97	(35)
-Accrued taxes	(7)	5	6
-Retail fuel cost over recovery	27	—	(24)
-Other current liabilities	10	(8)	(15)
Net cash provided from operating activities	369	383	246
Investing Activities:
Property additions	(319)	(257)	(198)
Cost of removal net of salvage	(32)	(27)	(20)
Payments pursuant to LTSAs	(26)	(29)	(29)
Other investing activities	7	(4)	(10)
Net cash used for investing activities	(370)	(317)	(257)
Financing Activities:
Increase (decrease) in notes payable, net	—	—	(25)
Proceeds —
Senior notes	100	—	525
Revenue bonds	—	35	—
Redemptions —
Revenue bonds	—	—	(320)
Other long-term debt	—	—	(100)
Capital contributions from parent company	68	68	120
Payment of common stock dividends	(185)	(170)	(157)
Other financing activities	(3)	(1)	(10)
Net cash provided from (used for) financing activities	(20)	(68)	33
Net Change in Cash, Cash Equivalents, and Restricted Cash	(21)	(2)	22
Cash, Cash Equivalents, and Restricted Cash at Beginning of Year	59	61	39
Cash, Cash Equivalents, and Restricted Cash at End of Year	$38	$59	$61
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest	$66	$55	$58
Income taxes, net	52	33	16
Noncash transactions — Accrued property additions at year-end	34	22	25

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Assets	2023	2022
(in millions)
Current Assets:
Cash and cash equivalents	$38	$59
Receivables —
Customer accounts, net	36	47
Unbilled revenues	40	47
Affiliated	29	82
Other accounts and notes	20	35
Fossil fuel stock	47	44
Materials and supplies	89	80
Other regulatory assets	56	72
Other current assets	10	38
Total current assets	365	504
Property, Plant, and Equipment:
In service	5,523	5,254
Less: Accumulated provision for depreciation	1,792	1,689
Plant in service, net of depreciation	3,731	3,565
Construction work in progress	203	208
Total property, plant, and equipment	3,934	3,773
Other Property and Investments	158	167
Deferred Charges and Other Assets:
Deferred charges related to income taxes	28	30
Prepaid pension costs	99	109
Deferred under recovered retail fuel clause revenues	50	—
Regulatory assets – asset retirement obligations	244	239
Other regulatory assets, deferred	285	249
Accumulated deferred income taxes	96	107
Other deferred charges and assets	85	94
Total deferred charges and other assets	887	828
Total Assets	$5,344	$5,272

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Liabilities and Stockholder's Equity	2023	2022
(in millions)
Current Liabilities:
Securities due within one year	$201	$1
Accounts payable —
Affiliated	82	121
Other	73	106
Accrued taxes	117	124
Accrued compensation	43	37
Asset retirement obligations	29	37
Over recovered retail fuel clause revenues	27	—
Other regulatory liabilities	17	43
Other current liabilities	90	85
Total current liabilities	679	554
Long-Term Debt	1,443	1,544
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	469	466
Deferred credits related to income taxes	229	253
Employee benefit obligations	67	69
Asset retirement obligations, deferred	139	142
Other cost of removal obligations	186	196
Other regulatory liabilities, deferred	92	96
Other deferred credits and liabilities	37	21
Total deferred credits and other liabilities	1,219	1,243
Total Liabilities	3,341	3,341
Common Stockholder's Equity:
Common stock, without par value (Authorized - 50 million shares; Outstanding - 1 million shares)	38	38
Paid-in capital	4,721	4,652
Accumulated deficit	(2,756)	(2,759)
Total common stockholder's equity (See accompanying statements)	2,003	1,931
Total Liabilities and Stockholder's Equity	$5,344	$5,272
Commitments and Contingent Matters (See notes)

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	Number of Common Shares Issued	CommonStock	Paid-In Capital	Retained Earnings (Accumulated Deficit)	Accumulated Other Comprehensive Income (Loss)	Total
(in millions)
Balance at December 31, 2020	1	$38	$4,460	$(2,754)	$(2)	$1,742
Net income	—	—	—	159	—	159
Capital contributions from parent company	—	—	122	—	—	122
Other comprehensive income	—	—	—	—	1	1
Cash dividends on common stock	—	—	—	(157)	—	(157)
Other	—	—	—	(1)	1	—
Balance at December 31, 2021	1	38	4,582	(2,753)	—	1,867
Net income	—	—	—	164	—	164
Capital contributions from parent company	—	—	70	—	—	70
Cash dividends on common stock	—	—	—	(170)	—	(170)
Balance at December 31, 2022	1	38	4,652	(2,759)	—	1,931
Net income	—	—	—	188	—	188
Capital contributions from parent company	—	—	69	—	—	69
Cash dividends on common stock	—	—	—	(185)	—	(185)
Balance at December 31, 2023	1	$38	$4,721	$(2,756)	$—	$2,003

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