SOUTHERN CO

Georgia Power's net income in the first quarter 2024 was $437 million compared to $296 million for the corresponding period in 2023. The increase was primarily due to higher retail revenues associated with the inclusion of Plant Vogtle Unit 3 in retail rates, base tariff increases in accordance with the 2022 ARP, and colder weather in the first quarter 2024 as compared to the corresponding period in 2023. See Note 2 to the financial statements under "Georgia Power" in Item 8 of the Form 10-K for additional information.

In the first quarter 2024, retail revenues were $2.16 billion compared to $1.98 billion for the corresponding period in 2023. Details of the changes in retail revenues were as follows:

Revenues associated with changes in rates and pricing increased in the first quarter 2024 when compared to the corresponding period in 2023 primarily due to the inclusion of Plant Vogtle Unit 3 in retail rates and base tariff increases in accordance with the 2022 ARP. See Note 2 to the financial statements under "Georgia Power" in Item 8 of the Form 10-K for additional information.

Revenues attributable to changes in sales increased in the first quarter 2024 when compared to the corresponding period in 2023. Weather-adjusted residential KWH sales increased 1.8% primarily due to customer growth. Weather-adjusted commercial KWH sales increased 4.1% primarily due to increased customer usage and customer growth. Weather-adjusted industrial KWH sales increased 1.8% primarily due to increases in the primary metals, lumber, and paper sectors, partially offset by decreases in the chemicals, electronics, and pipeline sectors.

Fuel revenues and costs are allocated between retail and wholesale jurisdictions. Retail fuel cost recovery revenues decreased in the first quarter 2024 when compared to the corresponding period in 2023 due to lower fuel and purchased power costs. Electric rates include provisions to adjust billings for fluctuations in fuel costs, including the energy component of purchased power costs. Under these fuel cost recovery provisions, fuel revenues generally equal fuel expenses and do not affect net income. See Note (B) to the Condensed Financial Statements herein and Note 2 to the financial statements under "Georgia Power – Fuel Cost Recovery" in Item 8 of the Form 10-K for additional information.

Wholesale Revenues

In the first quarter 2024, wholesale revenues were $58 million compared to $31 million for the corresponding period in 2023. The increase was primarily due to a $20 million increase related to new capacity contracts and a $9 million increase related to the volume of KWH sales associated with higher market demand, partially offset by a $6 million decrease related to the average cost per KWH sold due to lower Southern Company system fuel and purchased power costs.

Wholesale revenues from sales to non-affiliates consist of PPAs and short-term opportunity sales. Wholesale revenues from PPAs have both capacity and energy components. Wholesale capacity revenues from PPAs are recognized in amounts billable under the contract terms and provide for recovery of fixed costs and a return on investment. Wholesale revenues from sales to non-affiliates will vary depending on fuel prices, the market prices of wholesale energy compared to the cost of Georgia Power's and the Southern Company system's generation, demand for energy within the Southern Company system's electric service territory, and the availability of the Southern Company system's generation. Increases and decreases in energy revenues that are driven by fuel prices are accompanied by an increase or decrease in fuel costs and do not have a significant impact on net income. Short-term opportunity sales are made at market-based rates that generally provide a margin above Georgia Power's variable cost of energy.

Wholesale revenues from sales to affiliated companies will vary depending on demand and the availability and cost of generating resources at each company. These affiliate sales are made in accordance with the IIC, as approved by the FERC. Energy revenues related to these transactions do not have a significant impact on earnings since this energy is generally sold at marginal cost.

Other Revenues

In the first quarter 2024, other revenues were $185 million compared to $164 million for the corresponding period in 2023. The increase was primarily due to increases of $8 million in unregulated sales primarily associated with energy conservation projects, power delivery construction and maintenance, and outdoor lighting, $6 million in regulated outdoor lighting sales, and $5 million in open access transmission tariff sales.

In the first quarter 2024, total fuel and purchased power expenses were $710 million compared to $731 million for the corresponding period in 2023. The decrease was primarily due to a net decrease of $37 million related to the average cost of fuel and purchased power, partially offset by a net increase of $16 million related to the volume of KWHs generated and purchased.

Fuel and purchased power energy transactions do not have a significant impact on earnings since these fuel expenses are generally offset by fuel revenues through Georgia Power's fuel cost recovery mechanism. See Note 2 to the financial statements under "Georgia Power – Fuel Cost Recovery" in Item 8 of the Form 10-K for additional information.

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

(a)Excludes KWHs generated from test period energy at Plant Vogtle Unit 4 prior to its in-service date. The related fuel costs are charged to CWIP in accordance with FERC guidance. See Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction" herein for additional information on Plant Vogtle Units 3 and 4.

(b)Average cost of purchased power includes fuel purchased by Georgia Power for tolling agreements where power is generated by the provider.

Fuel

In the first quarter 2024, fuel expense was $389 million compared to $402 million for the corresponding period in 2023. The decrease was primarily due to decreases of 17.0% in the average cost per KWH generated by coal, 11.8% in the average cost per KWH generated by natural gas, and 6.6% in the volume of KWHs generated by natural gas, partially offset by increases of 37.6% in the volume of KWHs generated by coal, 36.2% in the volume of KWHs generated by nuclear, and 20.0% in the average cost per KWH generated by nuclear.

Purchased Power – Non-Affiliates

In the first quarter 2024, purchased power expense from non-affiliates was $140 million compared to $123 million for the corresponding period in 2023. The increase for the first quarter 2024 was primarily due to an increase of 26.3% in the volume of KWHs purchased as Georgia Power and other Southern Company system units generally dispatched at a higher cost than available market resources, partially offset by a decrease of 8.8% in the average cost per KWH purchased primarily due to lower natural gas prices.

Energy purchases from non-affiliates will vary depending on the market prices of wholesale energy as compared to the cost of the Southern Company system's generation, demand for energy within the Southern Company system's electric service territory, and the availability of the Southern Company system's generation.

Purchased Power – Affiliates

In the first quarter 2024, purchased power expense from affiliates was $181 million compared to $206 million for the corresponding period in 2023. The decrease was primarily due to a decrease of 13.9% in the volume of KWHs purchased as Southern Company system units generally dispatched at a higher cost than available market resources, partially offset by capacity purchased through a new PPA with Mississippi Power. See Note (B) to the Condensed Financial Statements herein under "Georgia Power – Integrated Resource Plan" for additional information.

Energy purchases from affiliates will vary depending on the demand and the availability and cost of generating resources at each company within the Southern Company system. These purchases are made in accordance with the IIC or other contractual agreements, all as approved by the FERC.

In the first quarter 2024, other operations and maintenance expenses were $515 million compared to $496 million for the corresponding period in 2023. The increase was primarily due to $20 million in gains in 2023 from sales of integrated transmission system assets and an increase of $17 million in generation expenses associated with non-outage maintenance costs primarily due to Plant Vogtle Unit 3 being placed in service in July 2023, partially offset by a decrease of $14 million in technology infrastructure and application production costs. See Note (B) to the Condensed Financial Statements herein under "Georgia Power – Nuclear Construction" for additional information on Plant Vogtle Unit 3.

In the first quarter 2024, depreciation and amortization was $425 million compared to $408 million for the corresponding period in 2023. The increase was primarily due to an increase of $29 million associated with additional plant in service, partially offset by a decrease of $15 million in amortization of regulatory assets related to CCR AROs as approved in the 2024 compliance filing under the terms of the 2022 ARP. See Note 2 to the financial statements under "Georgia Power – Rate Plans" in Item 8 of the Form 10-K for additional information.

In the first quarter 2024, taxes other than income taxes were $147 million compared to $131 million for the corresponding period in 2023. The increase was primarily due to an increase of $14 million in property taxes primarily resulting from an increase in the assessed value of property.

In the first quarter 2024, interest expense, net of amounts capitalized was $173 million compared to $146 million for the corresponding period in 2023. The increase was primarily associated with increases of approximately $17 million related to higher interest rates and $15 million related to higher average outstanding borrowings, partially offset by the deferral of $9 million in financing costs related to Plant Vogtle Unit 3. See FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" and "Financing Activities" herein for additional information on borrowings and Note (B) to the Condensed Financial Statements herein under "Georgia Power – Nuclear Construction" for additional information on Plant Vogtle Unit 3.

In the first quarter 2024, income taxes were $79 million compared to $53 million for the corresponding period in 2023. The increase was primarily due to higher pre-tax earnings, partially offset by the generation of $19 million of advanced nuclear PTCs. See Note (G) to the Condensed Financial Statements herein for additional information.