GEORGIA POWER CO

Consolidated net income attributable to Southern Company was $1.5 billion ($1.40 per share) in the third quarter 2024 compared to $1.4 billion ($1.30 per share) for the corresponding period in 2023. For year-to-date 2024, consolidated net income attributable to Southern Company was $3.9 billion ($3.53 per share) compared to $3.1 billion ($2.86 per share) for the corresponding period in 2023. The increases were primarily due to increases in retail electric revenues associated with rates and pricing, an after-tax charge of $120 million in the third quarter 2023 related to the construction of Plant Vogtle Units 3 and 4, and increases in other revenues, partially offset by increases in interest expense, non-fuel operations and maintenance expenses, depreciation and amortization, taxes other than income taxes, and cost of other sales. Also contributing to the year-to-date 2024 increase was an increase in retail electric revenues associated with colder weather in the first quarter 2024 and warmer weather in the second quarter 2024 compared to the corresponding periods in 2023 and an increase in natural gas revenues from rate increases.

Retail Electric Revenues

In the third quarter 2024, retail electric revenues were $5.4 billion compared to $5.1 billion for the corresponding period in 2023. For year-to-date 2024, retail electric revenues were $13.8 billion compared to $12.6 billion for the corresponding period in 2023. Details of the changes in retail electric revenues were as follows:

Revenues associated with changes in rates and pricing increased in the third quarter and year-to-date 2024 when compared to the corresponding periods in 2023 primarily due to the inclusion of Plant Vogtle Units 3 and 4 in retail rates net of the elimination of the NCCR tariff at Georgia Power, customer bill credits in 2023 at Alabama Power related to the flowback of certain excess accumulated deferred income taxes, base tariff increases at Georgia Power in accordance with its 2022 ARP, higher contributions from commercial and industrial customers with variable demand-driven pricing at Georgia Power, and an increase in Rate CNP New Plant revenues at Alabama Power. See Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction – Regulatory Matters" herein and Note 2 to the financial statements under "Alabama Power" and "Georgia Power" in Item 8 of the Form 10-K for additional information.

Revenues attributable to changes in sales decreased in the third quarter 2024 and increased for year-to-date 2024 when compared to the corresponding periods in 2023. Weather-adjusted residential KWH sales decreased 1.5% and 0.5% in the third quarter and year-to-date 2024, respectively, primarily due to decreased customer usage, partially offset by customer growth. Weather-adjusted commercial KWH sales increased 0.1% in the third quarter 2024 primarily due to customer growth, largely offset by decreased customer usage. Weather-adjusted commercial KWH sales increased 2.1% for year-to-date 2024 primarily due to increased customer usage, primarily driven by existing data centers, and customer growth. Industrial KWH sales increased 0.4% and 0.3% in the third quarter and year-to-date 2024, respectively, primarily due to increases in the pipeline, chemicals, and transportation sectors.

Fuel and other cost recovery revenues decreased $177 million and $158 million in the third quarter and year-to-date 2024, respectively, compared to the corresponding periods in 2023 primarily due to lower recoverable fuel and purchased power costs. Electric rates for the traditional electric operating companies include provisions to adjust billings for fluctuations in fuel costs, including the energy component of purchased power costs. Under these provisions, fuel revenues generally equal fuel expe nses, including the energy component of PPA costs, and do not affect net income. The traditional electric operating companies each have one or more regulatory mechanisms to recover other costs such as environmental and other compliance costs, storm damage, new plants, and PPA capacity costs. See Note 2 to the financial statements in Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements herein for additional information.

Wholesale Electric Revenues

In the third quarter 2024, wholesale electric revenues were $721 million compared to $727 million for the corresponding period in 2023. For year-to-date 2024, wholesale electric revenues were $1.92 billion compared to $1.93 billion for the corresponding period in 2023. The decreases in the third quarter and year-to-date 2024 were due to decreases in energy revenues of $38 million and $36 million, respectively, partially offset by increases in capacity revenues of $32 million and $25 million, respectively. The decreases in energy revenues were primarily due to decreases related to the average net cost of fuel and purchased power. Partially offsetting the year-to-date 2024 decrease in energy revenues was an increase in the volume of KWHs sold under natural gas and solar PPAs at Southern Power. The increases in capacity revenues were primarily due to a net increase in revenues from capacity contracts at Georgia Power and an increase in capacity revenues associated with natural gas PPAs at Southern Power. The changes for year-to-date 2024 in capacity and energy revenues also reflect decreases resulting from power sales agreements that ended in May 2023 at Alabama Power.

Wholesale electric revenues consist of revenues from PPAs and short-term opportunity sales. Wholesale electric revenues from PPAs (other than solar and wind PPAs) have both capacity and energy components. Capacity revenues generally represent the greatest contribution to net income and are designed to provide recovery of fixed costs plus a return on investment. Energy revenues will vary depending on fuel prices, the market prices of wholesale energy compared to 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. Energy sales from solar and wind PPAs do not have a capacity charge and customers either purchase the energy output of a dedicated renewable facility through an energy charge or through a fixed price related to the energy. As a result, the 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. Wholesale electric revenues at Mississippi Power include FERC-regulated municipal and rural association sales under cost-based tariffs as well as market-based sales. Short-term opportunity sales are made at market-based rates that generally provide a margin above the Southern Company system's variable cost to produce the energy.

Other Electric Revenues

In the third quarter 2024, other electric revenues were $222 million compared to $203 million for the corresponding period in 2023. The increase was primarily due to increases of $15 million in transmission revenues primarily associated with open access transmission tariff sales, $8 million in pole attachment revenues at Georgia Power, and $6 million in regulated outdoor lighting sales at Georgia Power, partially offset by a decrease of $7 million due to an arbitration award received in 2023 at Southern Power and a net increase of $7 million in realized losses associated with price stability products for retail customers on variable demand-driven pricing tariffs at Georgia Power.

For year-to-date 2024, other electric revenues were $631 million compared to $602 million for the corresponding period in 2023. The increase was primarily due to increases of $34 million in transmission revenues primarily associated with open access transmission tariff sales, $17 million in regulated outdoor lighting sales at Georgia Power, and $10 million in customer fees primarily at Georgia Power, partially offset by a net increase of $18 million in realized losses associated with price stability products for retail customers on variable demand-driven pricing tariffs at Georgia Power and a decrease of $14 million related to liquidated damages receipts associated with generation facility production guarantees and an arbitration award in 2023 at Southern Power.

Natural Gas Revenues

In the third quarter 2024, natural gas revenues were $682 million compared to $689 million for the corresponding period in 2023. For year-to-date 2024, natural gas revenues were $3.2 billion compared to $3.4 billion for the corresponding period in 2023. Details of the changes in natural gas revenues were as follows:

Revenues from rate changes increased for year-to-date 2024 compared to the corresponding period in 2023 primarily due to rate increases, partially offset by a change in timing of revenues at Nicor Gas. See Note 2 to the financial statements under "Southern Company Gas – Rate Proceedings" in Item 8 of the Form 10-K for additional information.

Revenues from gas costs and other cost recovery decreased for year-to-date 2024 compared to the corresponding period in 2023 primarily due to lower natural gas cost recovery associated with lower natural gas prices and lower demand associated with warmer weather. Natural gas distribution rates include provisions to adjust billings for fluctuations in natural gas costs. Therefore, gas costs recovered through natural gas revenues generally equal the amount expensed in cost of natural gas and do not affect net income from the natural gas distribution utilities.

Revenues from gas marketing services decreased for year-to-date 2024 compared to the corresponding period in 2023 primarily due to lower commodity prices.

Other Revenues

In the third quarter 2024, other revenues were $283 million compared to $222 million for the corresponding period in 2023. For year-to-date 2024, other revenues were $820 million compared to $662 million for the corresponding period in 2023. The increases in the third quarter and year-to-date 2024 were primarily due to increases of $49 million and $97 million, respectively, at PowerSecure primarily related to distributed infrastructure projects and $14 million and $36 million, respectively, in unregulated sales at Georgia Power associated with power delivery construction and maintenance projects, partially offset by decreases of $7 million and $19 million, respectively, at Southern Linc primarily related to equipment sales associated with commercial customers. Also contributing to the year-to-date 2024 increase were increases of $14 million in unregulated sales at Georgia Power associated with energy conservation projects and renewables and $10 million in unregulated sales associated with outdoor lighting at the traditional electric operating companies.

In the third quarter 2024, total fuel and purchased power expenses were $1.4 billion compared to $1.6 billion for the corresponding period in 2023. The decrease was primarily due to a $111 million net decrease related to the average cost of fuel and purchased power and an $8 million net decrease related to the volume of KWHs generated and purchased. Also contributing to the decrease was a $60 million credit to nuclear fuel expense at Georgia Power resulting from litigation related to nuclear fuel disposal costs.

For year-to-date 2024, total fuel and purchased power expenses were $3.8 billion compared to $4.1 billion for the corresponding period in 2023. The decrease was primarily due to a $174 million net decrease related to the average cost of fuel and purchased power, partially offset by a $21 million net increase related to the volume of KWHs generated and purchased. Also contributing to the decrease was a $60 million credit to nuclear fuel expense at Georgia Power resulting from litigation related to nuclear fuel disposal costs.

Fuel and purchased power energy transactions at the traditional electric operating companies are generally offset by fuel revenues and do not have a significant impact on net income. See Note 2 to the financial statements in Item 8 of the Form 10-K for additional information. Fuel expenses incurred under Southern Power's PPAs are generally the responsibility of the counterparties and do not significantly impact net income.

Details of the Southern Company system's generation and purchased power were as follows:

(a)Excludes KWHs generated from test period energy at Plant Vogtle Units 3 and 4 prior to their respective in-service dates. The related fuel costs were 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)Excludes $60 million of credits recorded in the third quarter 2024 to nuclear fuel expense resulting from litigation related to nuclear fuel disposal costs. See Note (C) to the Condensed Financial Statements under "Nuclear Fuel Disposal Costs" herein for additional information.

(c)Average cost of purchased power includes fuel purchased by the Southern Company system for tolling agreements where power is generated by the provider.

Fuel

In the third quarter 2024, fuel expense was $1.1 billion compared to $1.4 billion for the corresponding period in 2023. The decrease was primarily due to an 11.8% decrease in the average cost per KWH generated by natural gas, a 9.6% decrease in the volume of KWHs generated by coal, and a 7.5% decrease in the average cost per KWH generated by coal, partially offset by a 15.2% increase in the average cost per KWH generated by nuclear, a 12.9% increase in the volume of KWHs generated by nuclear, and an 11.7% decrease in the volume of KWHs generated by hydro. Also contributing to the third quarter 2024 decrease was $60 million of credits recorded to nuclear fuel expense resulting from litigation related to nuclear fuel disposal costs at Georgia Power.

For year-to-date 2024, fuel expense was $3.2 billion compared to $3.4 billion for the corresponding period in 2023. The decrease was primarily due to a 9.1% decrease in the average cost per KWH generated by coal, a 5.8% decrease in the average cost per KWH generated by natural gas, and a 1.6% decrease in the volume of KWHs generated by natural gas, partially offset by a 17.6% increase in the average cost per KWH generated by nuclear, a 15.9% decrease in the volume of KWHs generated by hydro, a 15.3% increase in the volume of KWHs generated by nuclear, and a 7.1% increase in the volume of KWHs generated by coal. Also contributing to the year-to-date 2024 decrease was $60 million of credits recorded to nuclear fuel expense resulting from litigation related to nuclear fuel disposal costs at Georgia Power.

Purchased Power

In the third quarter 2024, purchased power expense was $249 million compared to $207 million for the corresponding period in 2023. The increase was primarily due to an increase of 8.9% in the volume of KWHs purchased and an increase of 1.5% in the average cost per KWH purchased.

For year-to-date 2024, purchased power expense was $669 million compared to $680 million for the corresponding period in 2023. The decrease was primarily due to a decrease of 7.1% in the volume of KWHs purchased, partially offset by an increase of 2.2% in the average cost per KWH purchased.

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

Cost of Natural Gas

Excluding Atlanta Gas Light, which does not sell natural gas to end-use customers, the natural gas distribution utilities' rates include provisions to adjust billings for fluctuations in natural gas costs. Therefore, gas costs recovered through natural gas revenues generally equal the amount expensed in cost of natural gas and do not affect net income from the natural gas distribution utilities. See Note 2 to the financial statements under "Southern Company Gas – Natural Gas Cost Recovery" in Item 8 of the Form 10-K for additional information. Cost of natural gas at the natural gas distribution utilities represented 77% and 81% of the total cost of natural gas in the third quarter and year-to-date 2024, respectively.

For year-to-date 2024, cost of natural gas was $0.9 billion compared to $1.2 billion for the corresponding period in 2023. The decrease reflects lower gas cost recovery as a result of a decrease of 22% in natural gas prices.

Cost of Other Sales

In the third quarter 2024, cost of other sales was $166 million compared to $126 million for the corresponding period in 2023. For year-to-date 2024, cost of other sales was $464 million compared to $381 million for the corresponding period in 2023. The increases in the third quarter and year-to-date 2024 were primarily due to increases of $38 million and $72 million, respectively, at PowerSecure primarily related to distributed infrastructure projects and $9 million and $25 million, respectively, in unregulated power delivery construction and maintenance contracts at Georgia Power, partially offset by decreases of $6 million and $15 million, respectively, at Southern Linc primarily related to equipment sales associated with commercial customers.

In the third quarter 2024, other operations and maintenance expenses were $1.7 billion compared to $1.4 billion for the corresponding period in 2023. The increase was primarily due to increases of $68 million in generation expenses primarily associated with Plant Vogtle Unit 4 being placed in service at Georgia Power, Rate CNP Compliance-related expenses at Alabama Power, and an arbitration award received in 2023 at Southern Power, $51 million in transmission and distribution costs primarily associated with line maintenance and billing adjustments with integrated transmission system owners at Georgia Power, $39 million in certain employee compensation and benefit expenses, and $36 million related to an impairment loss associated with Alabama Power discontinuing the development of a multi-use commercial facility.

For year-to-date 2024, other operations and maintenance expenses were $4.5 billion compared to $4.4 billion for the corresponding period in 2023. The increase was primarily due to increases of $134 million in generation expenses primarily associated with Plant Vogtle Units 3 and 4 being placed in service at Georgia Power, Rate CNP Compliance-related expenses at Alabama Power, and maintenance and scheduled outage expenses at Southern Power, $72 million in certain employee compensation and benefit expenses, $61 million in transmission and distribution costs primarily associated with line maintenance and billing adjustments with integrated transmission system owners at Georgia Power, $36 million related to an impairment loss associated with Alabama Power discontinuing the development of a multi-use commercial facility, $31 million in customer service and sales expenses including bad debt, and $16 million from a gain on the sale of spare parts in 2023 at Southern Power, partially offset by a $92 million increase in gains from sales of integrated transmission system assets at Georgia Power, a decrease of $44 million in technology infrastructure and application production costs, and a $30 million prior year regulatory disallowance at Nicor Gas.

See Note (A) to the Condensed Financial Statements under "Impairment of Long-Lived Assets" herein, Note (B) to the Condensed Financial Statements under "Georgia Power – Transmission Asset Sales" and " – Nuclear Construction" herein, and Note 2 to the financial statements under "Southern Company Gas – Infrastructure Replacement Programs and Capital Projects – Nicor Gas" in Item 8 of the Form 10-K for additional information.

In the third quarter 2024, depreciation and amortization was $1.2 billion compared to $1.1 billion for the corresponding period in 2023. For year-to-date 2024, depreciation and amortization was $3.5 billion compared to $3.4 billion for the corresponding period in 2023. The increases in the third quarter and year-to-date 2024 were primarily due to increases of $86 million and $227 million, respectively, associated with additional plant in service, partially offset by decreases of $15 million and $45 million, respectively, in amortization of regulatory assets related to CCR AROs at Georgia Power as approved in the 2024 compliance filing under the terms of the 2022 ARP. See Note 2 to the financial statements under "Georgia Power" in Item 8 of the Form 10-K for additional information.

In the third quarter 2024, taxes other than income taxes were $375 million compared to $341 million for the corresponding period in 2023. For year-to-date 2024, taxes other than income taxes were $1.2 billion compared to $1.1 billion for the corresponding period in 2023. The increases in the third quarter and year-to-date 2024 were primarily due to increases of $30 million and $70 million, respectively, in property taxes primarily resulting from an increase in the assessed value of property as well as a decrease in the capitalized portion of property taxes at Georgia Power primarily due to Plant Vogtle Unit 4 being placed in service in April 2024 and $5 million and $19 million, respectively, in municipal franchise fees resulting from higher retail revenues at Georgia Power. Partially offsetting the increase for year-to-date 2024 was a decrease of $16 million in revenue taxes as a result of lower natural gas revenues at Nicor Gas. See Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction" herein for additional information on Plant Vogtle Unit 4.

Estimated Loss on Plant Vogtle Units 3 and 4

Georgia Power recorded pre-tax charges (credits) to income related to the estimated probable loss on Plant Vogtle Units 3 and 4 totaling $(21) million in the second quarter 2024 and $160 million in the third quarter 2023. These charges (credits) reflected revisions to the total project capital cost forecast for the construction and completion of Plant Vogtle Units 3 and 4. See Note (B) to the Condensed Financial Statements herein and Note 2 to the financial statements in Item 8 of the Form 10-K under "Georgia Power – Nuclear Construction" for additional information.

In the third quarter 2024, allowance for equity funds used during construction was $58 million compared to $66 million for the corresponding period in 2023. For year-to-date 2024, allowance for equity funds used during construction was $167 million compared to $200 million for the corresponding period in 2023. The decreases were primarily associated with Plant Vogtle Units 3 and 4 being placed in service in July 2023 and April 2024, respectively, at Georgia Power and Plant Barry Unit 8 being placed in service in November 2023 at Alabama Power, partially offset by an increase in capital expenditures subject to AFUDC at Georgia Power. See Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction" herein and Note 2 to the financial statements under "Alabama Power" in Item 8 of the Form 10-K for additional information.

In the third quarter 2024, interest expense, net of amounts capitalized was $692 million compared to $620 million for the corresponding period in 2023. The increase primarily reflects increases of approximately $34 million related to higher average outstanding borrowings and $16 million related to higher interest rates, as well as decreases of $7 million in AFUDC debt primarily related to Plant Vogtle Unit 4 at Georgia Power and $6 million in net deferred financing costs related to Plant Vogtle Unit 3 at Georgia Power.

For year-to-date 2024, interest expense, net of amounts capitalized was $2.1 billion compared to $1.8 billion for the corresponding period in 2023. The increase primarily reflects increases of approximately $112 million related to higher average outstanding borrowings and $112 million related to higher interest rates, as well as a decrease of $29 million in AFUDC debt primarily related to Plant Vogtle Units 3 and 4 at Georgia Power and Plant Barry Unit 8 at Alabama Power.

See Note (B) to the Condensed Financial Statements under "Georgia Power – Nuclear Construction – Regulatory Matters" and FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" and "Financing Activities" herein and Note 2 to the financial statements under "Alabama Power – Rate CNP New Plant" in Item 8 of the Form 10-K for additional information.

Other Income (Expense), Net

For year-to-date 2024, other income (expense), net was $450 million compared to $428 million for the corresponding period in 2023. The increase was primarily due to a $12 million increase in customer charges related to contributions in aid of construction at Georgia Power, an $8 million increase in non-service cost-related retirement benefits income, and a $7 million charge in the second quarter 2023 under a stipulation approved by the Georgia PSC related to Georgia Power's fuel cost recovery case, partially offset by a $10 million decrease in interest income. See Note 2 to the financial statements in Item 8 of the Form 10-K under "Georgia Power – Fuel Cost Recovery" for additional information.

In the third quarter 2024, income taxes were $377 million compared to $297 million for the corresponding period in 2023. The increase was primarily due to higher pre-tax earnings and a decrease of $58 million in the flowback of certain excess deferred income taxes at Alabama Power, partially offset by an increase of $23 million in the generation of advanced nuclear PTCs at Georgia Power.

For year-to-date 2024, income taxes were $890 million compared to $492 million for the corresponding period in 2023. The increase was primarily due to higher pre-tax earnings, a decrease of $139 million in the flowback of certain excess deferred income taxes at Alabama Power, and a $56 million increase in charges to a valuation allowance on certain state tax credit carryforwards at Georgia Power, partially offset by an increase of $73 million in the generation of advanced nuclear PTCs at Georgia Power and $33 million from the recognition of certain state tax positions from amended returns at Georgia Power.

See Note 2 to the financial statements in Item 8 of the Form 10-K and Note (G) to the Condensed Financial Statements herein for additional information.