SOUTHERN CO

For the period ended Dec 31, 2024. Filed Feb 20, 2025.

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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.

FY2024 · Filed Feb 20, 2025

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

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Southern Power and Subsidiary Companies:

To the stockholder and the Board of Directors of Southern Power Company and Subsidiary Companies

We have audited the accompanying consolidated balance sheets of Southern Power Company and subsidiary companies (Southern Power) (a wholly-owned subsidiary of The Southern Company) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2024, 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 Southern Power as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

These financial statements are the responsibility of Southern Power's management. Our responsibility is to express an opinion on Southern 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 Southern 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. Southern 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 Southern 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.

Income/Loss Allocation to Noncontrolling Interests – Refer to Note 1 (Summary of Significant Accounting Policies – Variable Interest Entities) and Note 7 (Consolidated Entities and Equity Method Investments – Southern Power – Variable Interest Entities) to the financial statements

Southern Power has entered into a number of tax equity partnership arrangements, wherein they agree to sell 100% of a class of membership interests (e.g. Class A) in an entity to a noncontrolling investor in exchange for cash contributions, while retaining control of the entity through a separate class of membership interests (e.g. Class B). The agreements for these partnerships give different rights and priorities to their owners in terms of cash distributions, tax attribute allocations, and partnership income or loss allocations. These provisions make the conventional equity method of accounting where an investor applies its "percentage ownership interest" to the investee's net income under generally accepted accounting principles to determine the investor's share of earnings or losses difficult to apply. Therefore, Southern Power uses the Hypothetical Liquidation at Book Value (HLBV) accounting method to account for these partnership arrangements. The HLBV accounting method calculates each partner's share of income or loss based on the change in net equity the partner can legally claim at the end of the reporting period compared to the beginning of the reporting period. The application of the HLBV accounting method by Southern Power required significant consideration of the allocations between Southern Power and the noncontrolling investors over the life of the agreement and the liquidation provisions of the agreement to determine the appropriate allocation of income or loss between the parties.

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The determination of the appropriate amount of allocated partnership income or loss to noncontrolling interests using the HLBV accounting method required increased audit effort and specialized skill and knowledge, including evaluation of the terms of the agreement and consideration of the appropriateness of the HLBV model based on the provisions of the agreement.

Our audit procedures included the following, among others:

We read certain agreements to understand the liquidation provisions and the provisions governing the allocation of benefits.

We evaluated certain HLBV models utilized by management to determine whether the models accurately reflect the allocation of income or loss and tax attributes in accordance with the liquidation provisions and allocation terms defined in the agreements, as well as whether the inputs in the models are accurate and complete.

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

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	2024	2023	2022
(in millions)
Operating Revenues:
Wholesale revenues, non-affiliates	$1,606	$1,597	$2,458
Wholesale revenues, affiliates	371	537	875
Other revenues	37	55	36
Total operating revenues	2,014	2,189	3,369
Operating Expenses:
Fuel	579	706	1,614
Purchased power	78	116	311
Other operations and maintenance	516	473	483
Depreciation and amortization	522	504	516
Taxes other than income taxes	41	51	49
Gain on dispositions, net	—	(20)	(2)
Total operating expenses	1,736	1,830	2,971
Operating Income	278	359	398
Other Income and (Expense):
Interest expense, net of amounts capitalized	(117)	(129)	(138)
Other income (expense), net	13	12	7
Total other income and (expense)	(104)	(117)	(131)
Earnings Before Income Taxes	174	242	267
Income taxes (benefit)	(13)	12	20
Net Income	187	230	247
Net loss attributable to noncontrolling interests	(141)	(127)	(107)
Net Income Attributable to Southern Power	$328	$357	$354

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	2024	2023	2022
(in millions)
Net Income	$187	$230	$247
Other comprehensive income:
Qualifying hedges:
Changes in fair value, net of tax of $(10), $(1), and $(30), respectively	(31)	(3)	(91)
Reclassification adjustment for amounts included in net income, net of tax of $12, $4, and $26, respectively	39	11	81
Pension and other postretirement benefit plans:
Benefit plan net gain (loss), net of tax of $2, $(2), and $6, respectively	7	(7)	18
Reclassification adjustment for amounts included in net income, net of tax of $—, $—, and $1, respectively	—	—	2
Total other comprehensive income	15	1	10
Comprehensive loss attributable to noncontrolling interests	(141)	(127)	(107)
Comprehensive Income Attributable to Southern Power	$343	$358	$364

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	2024	2023	2022
(in millions)
Operating Activities:
Net income	$187	$230	$247
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization, total	537	524	543
Deferred income taxes	(7)	16	9
Utilization of federal tax credit carryforward	75	332	49
Amortization of ITCs	(58)	(58)	(58)
Gain on dispositions, net	—	(20)	(2)
Other, net	36	28	19
Changes in certain current assets and liabilities —
-Receivables	(39)	121	(82)
-Prepaid income taxes	2	2	22
-Other current assets	(24)	(24)	(11)
-Accounts payable	(3)	(60)	68
-Other current liabilities	2	5	11
Net cash provided from operating activities	708	1,096	815
Investing Activities:
Acquisitions, net of cash acquired	—	(181)	—
Property additions	(344)	(118)	(100)
Change in construction payables	35	21	(69)
Proceeds from dispositions	—	59	48
Payments pursuant to LTSAs	(45)	(50)	(71)
Other investing activities	24	4	(2)
Net cash used for investing activities	(330)	(265)	(194)
Financing Activities:
Increase (decrease) in notes payable, net	(129)	(83)	10
Redemptions — Senior notes	—	(290)	(677)
Capital contributions from parent company	216	18	430
Capital contributions from noncontrolling interests	11	21	73
Distributions to noncontrolling interests	(185)	(234)	(259)
Payment of common stock dividends	(262)	(252)	(198)
Other financing activities	(5)	—	(2)
Net cash used for financing activities	(354)	(820)	(623)
Net Change in Cash, Cash Equivalents, and Restricted Cash	24	11	(2)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Year	144	133	135
Cash, Cash Equivalents, and Restricted Cash at End of Year	$168	$144	$133
Supplemental Cash Flow Information:
Cash paid (received) during the period for —
Interest (net of $7, $3, and $— capitalized, respectively)	$107	$122	$142
Income taxes, net (excludes credit transfers)	(32)	(254)	(15)
Noncash transactions —
Accrued property additions at year-end	84	59	24
LTSA credits utilized from the sale of spare parts	13	23	—
Contributions from noncontrolling interests	—	—	15

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Assets	2024	2023
(in millions)
Current Assets:
Cash and cash equivalents	$159	$124
Receivables —
Customer accounts, net	122	136
Affiliated	39	37
Other	90	54
Materials and supplies	107	80
Other current assets	82	92
Total current assets	599	523
Property, Plant, and Equipment:
In service	14,961	14,690
Less: Accumulated provision for depreciation	4,540	4,119
Plant in service, net of depreciation	10,421	10,571
Construction work in progress	317	278
Total property, plant, and equipment	10,738	10,849
Other Property and Investments:
Intangible assets, net of amortization of $168 and $148, respectively	223	243
Net investment in sales-type leases	143	148
Total other property and investments	366	391
Deferred Charges and Other Assets:
Operating lease right-of-use assets, net of amortization	484	488
Prepaid LTSAs	234	248
Other deferred charges and assets	232	262
Total deferred charges and other assets	950	998
Total Assets	$12,653	$12,761

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Liabilities and Stockholders' Equity	2024	2023
(in millions)
Current Liabilities:
Securities due within one year	$500	$—
Notes payable	—	138
Accounts payable —
Affiliated	80	82
Other	100	91
Accrued taxes	18	26
Accrued interest	26	27
Operating lease obligations	29	29
Other current liabilities	96	97
Total current liabilities	849	490
Long-Term Debt	2,180	2,711
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	712	614
Accumulated deferred ITCs	1,440	1,498
Operating lease obligations, deferred	511	517
Other deferred credits and liabilities	279	233
Total deferred credits and other liabilities	2,942	2,862
Total Liabilities	5,971	6,063
Common Stockholder's Equity:
Common stock, par value $0.01 per share (Authorized - 1 million shares; Outstanding - 1,000 shares)	—	—
Paid-in capital	1,306	1,088
Retained earnings	1,912	1,846
Accumulated other comprehensive loss	(2)	(17)
Total common stockholder's equity	3,216	2,917
Noncontrolling Interests	3,466	3,781
Total Stockholders' Equity (See accompanying statements)	6,682	6,698
Total Liabilities and Stockholders' Equity	$12,653	$12,761
Commitments and Contingent Matters (See notes)

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