SOUTHERN CO

Mississippi Power's net income was $199 million in 2024 compared to$188 million in 2023. Theincrease was primarily due toincreases in affiliate wholesale capacity revenues, partially offset by increases in income taxes and non-fuel operations and maintenance expenses.

A condensed income statement for Mississippi Power follows:

Operating revenues for 2024 were $1.5 billion, reflecting an$11 million, or 0.7%, decrease from 2023. Details of operating revenues were as follows:

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Retail revenues for 2024 increased $2 million, or 0.2%, compared to 2023. The significant factors driving this change are shown in the preceding table. The increase in rates and pricing was primarily due tocertain regulatory assets that fully amortized in December 2023 and higher ECO Plan rates that became effective in June 2024. See Note 2 to the financial statements under "Mississippi Power – Environmental Compliance Overview Plan" for additional information.

Electric rates for Mississippi Power 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 expenses, including the energy component of purchased power costs, and do not affect net income. Recoverable fuel costs include fuel and purchased power expenses reduced by the fuel and emissions portion of wholesale revenues from energy sold to customers outside Mississippi Power's service territory. See Note 2 to the financial statements under "Mississippi Power – Fuel Cost Recovery" for additional information.

Wholesale revenues from power sales to non-affiliated utilities, including FERC-regulated MRA sales as well as market-based sales, were as follows:

Wholesale revenues from sales to non-affiliates decreased $44 million, or 16.2%, in 2024 ascompared to 2023. Thedecrease was largely due todecreases of $35 million associated with power supply agreements mainly due to agreements that ended in 2023 and $10 million associated with MRA customers primarily due to lower recoverable fuel costs and customer usage, partially offset by an increase in demand as a result of weather impacts.

Wholesale revenues from sales to non-affiliates will vary depending on fuel prices, the market prices of wholesale energy compared to the cost of Mississippi 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. In addition, Mississippi Power provides service under long-term contracts with rural electric cooperative associations and a municipality located in southeastern Mississippi under requirements cost-based electric tariffs which are subject to regulation by the FERC. The contracts with these wholesale customers represented 13.9% of Mississippi Power's total operating revenues in 2024. Short-term opportunity energy sales are also included in sales for resale to non-affiliates. These opportunity sales are made at market-based rates that generally provide a margin above Mississippi Power's variable cost to produce the energy. See Note 2 under "Mississippi Power –Municipal and Rural Associations Tariff" for additional information.

Wholesale revenues from sales to affiliates increased $18 million, or 9.0%, in 2024 compared to 2023. Theincrease was primarily due to an increase of $60 million in capacity revenues primarily associated with a new PPA with Georgia Power and $4 million related to the price of energy driven by natural gas prices. This increase was partially offset by decreases of $31 million in capacity revenues mainly associated with Mississippi Power's lower availability of generation reserves to the Southern Company power pool and $15 million primarily related to the volume of KWH sales. See Note 2 to the financial statements under "Mississippi Power – Integrated Resource Plans" for additional information.

Wholesale revenues from sales to affiliates 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 or other contractual agreements, as approved by the FERC. The energy portion of these transactions does not have a significant impact on earnings since this energy is generally sold at marginal cost.

In 2024, other operating revenues increased $13 million, or 33.3%, as compared to 2023 primarily due to an increase in open access transmission tariff revenues.

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(*)Weather-adjusted KWH sales are estimated using statistical models of the historical relationship between temperatures and energy sales, and then removing the estimated effect of deviations from normal temperature conditions. Normal temperature conditions are defined as those experienced in Mississippi Power's service territory over a specified historical period. This metric is useful because it allows trends in historical operations to be evaluated apart from the influence of weather conditions. Management also considers this metric in developing long-term capital and financial plans.

Changes in retail energy sales are generally the result of changes in electricity usage by customers, weather, and the number of customers. Revenues attributable to changes in sales increased in 2024 when compared to 2023. Weather-adjusted residential KWH sales decreased 2.4% primarily due to decreased customer usage. Weather-adjusted commercial KWH sales increased 2.8% primarily due to increased customer usage. Industrial KWH sales increased 0.3% primarily due to an increase in the chemicals sector.

See "Operating Revenues" above for a discussion of significant changes in wholesale revenues to affiliated companies.

The mix of fuel sources for generation of electricity is determined primarily by demand, the unit cost of fuel consumed, and the availability of generating units. Additionally, Mississippi Power purchases a portion of its electricity needs from the wholesale market.

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

Fuel and purchased power expenses were $477 million in 2024, a decrease of $61 million, or 11.3%, as compared to 2023. The decrease was primarily due to a $45 million net decrease related to the average cost of fuel and purchased power and a $16 million net decrease related to the volume of KWHs generated and purchased.

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Fuel and purchased power energy transactions do not have a significant impact on earnings since energy expenses are generally offset by energy revenues through Mississippi Power's fuel cost recovery clauses. See Note 2 to the financial statements under "Mississippi Power – Fuel Cost Recovery" and Note 1 to the financial statements under "Fuel Costs" for additional information.

Fuel expense decreased $75 million, or 14.5%, in 2024 as compared to 2023 primarily due to a 10.8% decrease in the average cost of natural gas per KWH generated and a 7.1% decrease in the volume of KWHs generated by natural gas.

Purchased power expense increased $14 million, or 63.6%, in 2024 as compared to 2023 primarily due to a 56.7% increase in the volume of KWHs purchased and a 3.0% increase in the average cost per KWH purchased.

Energy purchases 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 service territory, and the availability of the Southern Company system's generation. These purchases are made in accordance with the IIC or other contractual agreements, as approved by the FERC.

Other operations and maintenance expenses increased $8 million, or 2.2%, in 2024 as compared to 2023. The increase was primarily due to increases of $10 million in reliability reserve accruals, $6 million in generation expenses primarily associated with non-outage costs, and $4 million in certain compensation and benefits expenses. These increases were partially offset by decreases of $12 million associated with previously deferred Plant Ratcliffe expenses that fully amortized in December 2023 and $4 million associated with the Kemper County energy facility largely due to a decrease in dismantlement costs in 2024 when compared to 2023. See Notes 2 and 3 to the financial statements under "Mississippi Power –Reliability Reserve Accounting Order" and "Other Matters – Mississippi Power," respectively, for additional information.

Interest expense, net of amounts capitalized increased $6 million, or 8.5%, in 2024 as compared to 2023. The increase was primarily due to increases of approximately $4 million related to higher average outstanding borrowings and $2 million related to higher interest rates. See FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" and "Financing Activities" herein and Note 8 to the financial statements for additional information.

Other Income (Expense), Net

Other income (expense), net decreased $8 million, or 22.9%, in 2024 as compared to 2023 primarily due to an increase of $13 million in charitable donations, partially offset by an increase of $3 million in customer charges related to contributions in aid of construction.

Income taxes increased $11 million, or 30.6%, in 2024 as compared to 2023 primarily due to a decrease of $6 million in the flowback of certain excess deferred income taxes and higher pre-tax earnings. See Note 10 to the financial statements for additional information.