SOUTHERN CO

Georgia Power's net income in the first quarter 2025 was $596 million compared to $437 million for the corresponding period in 2024. The increase was primarily due to higher retail revenues associated with the inclusion of Plant Vogtle Unit 4 in retail rates, weather impacts, an increase in retail revenues associated with higher contributions from customers with demand-driven pricing, and base tariff increases in accordance with the 2022 ARP. Also contributing to the increase were higher wholesale revenues and other revenues. These increases were partially offset by higher non-fuel operations and maintenance expenses and depreciation and amortization.

In the first quarter 2025, retail revenues were $2.6 billion compared to $2.2 billion for the corresponding period in 2024. Details of the changes in retail revenues were as follows:

Changes in rates and pricing resulted in an increase in revenues in the first quarter 2025 when compared to the corresponding period in 2024 primarily due to the inclusion of Plant Vogtle Unit 4 in retail rates net of elimination of the NCCR tariff, higher contributions from commercial and industrial customers with variable demand-driven pricing, 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.

Changes in sales resulted in a decrease in revenues in the first quarter 2025 when compared to the corresponding period in 2024. Weather-adjusted residential KWH sales decreased 1.1% primarily due to decreased customer usage, partially offset by customer growth. Weather-adjusted commercial KWH sales increased 1.2% primarily due to increased customer usage, primarily driven by data centers, and customer growth. Weather-adjusted industrial KWH sales were flat primarily due to increases in the paper and transportation sectors, offset by decreases in the textiles and stone, clay, and glass sectors.

Fuel revenues and costs are allocated between retail and wholesale jurisdictions. Retail fuel cost recovery revenues increased in the first quarter 2025 when compared to the corresponding period in 2024 due to higher recoverable fuel 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 2025, wholesale revenues were $144 million compared to $58 million for the corresponding period in 2024. The increase was primarily due to increases of $47 million related to the volume of KWH sales associated with higher market demand, $20 million related to the average cost per KWH sold due to higher Southern Company system fuel and purchased power prices, and $9 million related to additional capacity from wholesale capacity contracts.

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.

In the first quarter 2025, other revenues were $263 million compared to $185 million for the corresponding period in 2024. The increase was primarily due to $62 million in unregulated sales primarily associated with power delivery construction and maintenance, energy conservation, and renewables projects and $12 million in regulated sales associated with power delivery construction and maintenance projects.

In the first quarter 2025, total fuel and purchased power expenses were $949 million compared to $710 million for the corresponding period in 2024. The increase was due to increases of $129 million related to the average cost of fuel and purchased power and $110 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.

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.

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. See Note 2 to the financial statements under "Georgia Power – Integrated Resource Plans" in Item 8 of the Form 10-K for information regarding two new PPAs with Southern Power.

Details of Georgia Power's generation and purchased power and the related costs 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 were charged to CWIP in accordance with FERC guidance. See Note 2 to the financial statements under "Georgia Power – Nuclear Construction" in Item 8 of the Form 10-K 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.

In the first quarter 2025, other operations and maintenance expenses were $634 million compared to $515 million for the corresponding period in 2024. The increase was primarily due to increases of $48 million in expenses associated with unregulated power delivery construction and maintenance, energy conservation, and renewables projects, $28 million in generation expenses primarily due to non-outage maintenance expenses largely resulting from Plant Vogtle Unit 4 being placed in service in April 2024, $15 million in technology infrastructure and application production costs, $15 million in transmission and distribution line maintenance costs, and $13 million in certain employee compensation and benefit expenses, partially offset by a $12 million increase in billing adjustments with integrated transmission system owners.

See Note 2 to the financial statements under "Georgia Power – Nuclear Construction" in Item 8 of the Form 10-K for additional information.

In the first quarter 2025, depreciation and amortization was $503 million compared to $425 million for the corresponding period in 2024. The increase was primarily due to increases of $50 million associated with additional plant in service and $31 million in amortization of regulatory assets related to CCR AROs as approved in the 2025 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 2025, taxes other than income taxes were $170 million compared to $147 million for the corresponding period in 2024. The increase was primarily due to an increase of $11 million in municipal franchise fees resulting from higher retail revenues, an increase of $6 million in property taxes primarily resulting from an increase in the assessed value of property, and a decrease of $5 million in property taxes capitalized primarily due to Plant Vogtle Unit 4 being placed in service in April 2024. See Note 2 to the financial statements under "Georgia Power – Nuclear Construction" in Item 8 of the Form 10-K for additional information on Plant Vogtle Unit 4.

Allowance for Equity Funds Used During Construction

In the first quarter 2025, allowance for equity funds used during construction was $48 million compared to $39 million for the corresponding period in 2024. The increase was primarily due to an increase in capital expenditures subject to AFUDC, partially offset by the impact of Plant Vogtle Unit 4 being placed in service in April 2024. See Note 2 to the financial statements under "Georgia Power – Nuclear Construction" in Item 8 of the Form 10-K for additional information on Plant Vogtle Unit 4.

In the first quarter 2025, interest expense, net of amounts capitalized was $187 million compared to $173 million for the corresponding period in 2024. The increase was primarily associated with an increase of approximately $10 million related to higher average outstanding borrowings and a decrease of $9 million in net deferred financing costs related to Plant Vogtle Unit 3, partially offset by a decrease of approximately $4 million related to lower interest rates.

See Note 2 to the financial statements under "Georgia Power – Nuclear Construction – Regulatory Matters" in Item 8 of the Form 10-K and FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" and "Financing Activities" herein for additional information.

In the first quarter 2025, income taxes were $98 million compared to $79 million for the corresponding period in 2024. The increase was primarily due to higher pre-tax earnings, partially offset by increases of $19 million in the generation of advanced nuclear PTCs and $15 million in the flowback of excess state deferred income taxes. See Note (G) to the Condensed Financial Statements herein for additional information.