SOUTHERN CO

Net income attributable to Southern Power for 2023 was $357 million, a $3 million increase from 2022. The increase was primarily due to higher HLBV income associated with tax equity partnerships, an arbitration award received for losses previously incurred, a gain on the sale of spare parts, and receipts of liquidated damages and insurance proceeds related to generation facility production and equipment, as well as changes in state apportionment methodology related to tax legislation enacted by the State of Tennessee. These increases were largely offset by lower revenues driven by lower market prices of energy.

A condensed statement of income follows:

Total operating revenues include PPA capacity revenues, which are derived primarily from long-term contracts involving natural gas facilities, and PPA energy revenues from Southern Power's generation facilities. To the extent Southern Power has capacity not contracted under a PPA, it may sell power into an accessible wholesale market, or, to the extent those generation assets are part of the FERC-approved IIC, it may sell power into the Southern Company power pool.

Natural Gas Capacity and Energy Revenue

Capacity revenues generally represent the greatest contribution to operating income and are designed to provide recovery of fixed costs plus a return on investment.

Energy is generally sold at variable cost or is indexed to published natural gas indices. Energy revenues will vary depending on the energy demand of Southern Power's customers and their generation capacity, as well as the market prices of wholesale energy compared to the cost of Southern Power's energy. Energy revenues also include fees for support services, fuel storage, and unit start charges. Increases and decreases in energy revenues under PPAs that are driven by fuel or purchased power prices are generally accompanied by an increase or decrease in fuel and purchased power costs and do not have a significant impact on net income.

Solar and Wind Energy Revenue

Southern Power's energy sales from solar and wind generating facilities are predominantly through long-term PPAs that do not have capacity revenue. Customers either purchase the energy output of a dedicated renewable facility through an energy charge or pay a fixed price related to the energy generated from the respective facility and sold to the grid. As a result, Southern Power's ability to recover fixed and variable operations and maintenance expenses is dependent upon the level of energy generated from these facilities, which can be impacted by weather conditions, equipment performance, transmission constraints, and other factors.

II-32

See FUTURE EARNINGS POTENTIAL – "Southern Power's Power Sales Agreements" herein for additional information regarding Southern Power's PPAs.

Operating Revenues Details

Details of Southern Power's operating revenues were as follows:

Operating revenues for 2023 were $2.2 billion, a $1.2 billion, or 35.0% decrease from 2022. The change in operating revenues was primarily due to the following:

•PPA capacity revenues increased $20 million, or 4.4%, primarily due to an increase associated with a change in rates from new and existing natural gas PPAs.

•PPA energy revenues decreased $894 million, or 42.1%, primarily due to a $904 million decrease in sales under natural gas PPAs resulting from a $726 million decrease in the price of fuel and purchased power and a $178 million decrease in the volume of KWHs sold.

•Non-PPA revenues decreased $325 million, or 42.7%, primarily due to a $650 million decrease in the market price of energy, partially offset by a $321 million increase in the volume of KWHs sold through short-term sales.

•Other revenues increased $19 million, or 52.8%, primarily due to receipts of liquidated damages associated with generation facility production guarantees, an arbitration award received for losses previously incurred, and business interruption insurance proceeds for damaged generation equipment. See Note 3 to the financial statements under "General Litigation Matters – Southern Power" for additional information.

Details of Southern Power's generation and purchased power were as follows:

Southern Power's PPAs for natural gas generation generally provide that the purchasers are responsible for either procuring the fuel (tolling agreements) or reimbursing Southern Power for substantially all of the cost of fuel relating to the energy delivered under such PPAs. Consequently, changes in such fuel costs are generally accompanied by a corresponding change in related fuel revenues and do not have a significant impact on net income. Southern Power is responsible for the cost of fuel for generating units that are not covered under PPAs. Power from these generating units is sold into the wholesale market or into the Southern Company power pool for capacity owned directly by Southern Power.

Purchased power expenses will vary depending on demand, availability, and the cost of generating resources throughout the Southern Company system and other contract resources. Load requirements are submitted to the Southern Company power pool on an hourly basis and are fulfilled with the lowest cost alternative, whether that is generation owned by Southern Power, an affiliate company, or external parties. Such purchased power costs are generally recovered through PPA revenues.

II-33

Details of Southern Power's fuel and purchased power expenses were as follows:

In 2023, total fuel and purchased power expenses decreased $1.1 billion, or 57.3%, compared to 2022. Fuel expense decreased $908 million, or 56.3%, primarily due to a $1.0 billion decrease associated with the average cost of fuel. Purchased power expense decreased $195 million, or 62.7%, primarily due to a $206 million decrease associated with the average cost of purchased power.

Gain on Dispositions, Net

In 2023, gain on dispositions, net increased $18 million compared to 2022 primarily due to a $16 million gain on the sale of spare parts in 2023.

In 2023, interest expense, net of amounts capitalized decreased $9 million, or 6.5%, compared to 2022. The decrease was primarily due to lower average outstanding borrowings.

In 2023, income taxes decreased $8 million, or 40.0%, compared to 2022. The decrease was primarily due to a change in state apportionment methodology resulting from tax legislation enacted by the State of Tennessee in the second quarter 2023. See Notes 1 and 10 to the financial statements under "Income Taxes" and "Effective Tax Rate," respectively, for additional information.

Net Loss Attributable to Noncontrolling Interests

In 2023, net loss attributable to noncontrolling interests increased $20 million, or 18.7%, compared to 2022. The increased loss was primarily due to $25 million in higher HLBV loss allocations to wind tax equity partners and $5 million in lower income allocations to equity partners, partially offset by $10 million in lower HLBV loss allocations to battery energy storage partners.