SOUTHERN CO

Consolidated net income attributable to Southern Company in the first quarter 2025 was $1.3 billion ($1.21 per share) compared to $1.1 billion ($1.03 per share) for the corresponding period in 2024. The increase was primarily due to an increase in retail electric revenues associated with rates and pricing and weather impacts and an increase in other revenues, partially offset by increases in non-fuel operations and maintenance expenses and depreciation and amortization.

Retail Electric Revenues

In the first quarter 2025, retail electric revenues were $4.6 billion compared to $3.9 billion for the corresponding period in 2024. Details of the changes in retail electric 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 at Georgia Power, an increase in Rate RSE at Alabama Power, higher contributions from commercial and industrial customers with variable demand-driven pricing at Georgia Power, and base tariff increases at Georgia Power in accordance with the 2022 ARP. See Note 2 to the financial statements under "Alabama Power" and "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 1.8% primarily due to decreased customer usage, partially offset by customer growth. Weather-adjusted commercial KWH sales increased 0.5% primarily due to customer growth. Industrial KWH sales increased 0.5% primarily due to increases in the primary metals, paper, and transportation sectors, partially offset by decreases in the textiles and stone, clay, and glass sectors.

Fuel and other cost recovery revenues increased $207 million in the first quarter 2025 compared to the corresponding period in 2024 primarily due to higher recoverable fuel 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 first quarter 2025, wholesale electric revenues were $744 million compared to $571 million for the corresponding period in 2024. The increase was due to an increase in energy revenues of $179 million, partially offset by a decrease in capacity revenues of $6 million. The increase in energy revenues was primarily due to fuel and purchased power price increases and an increase in the volume of KWHs sold primarily under natural gas and solar PPAs at Southern 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 first quarter 2025, other electric revenues were $242 million compared to $199 million for the corresponding period in 2024. The increase was primarily due to increases of $20 million in open access transmission tariff sales at Alabama Power and Georgia Power, $12 million in regulated sales associated with power delivery construction and maintenance projects at Georgia Power, and $11 million in regulated energy services revenues at Alabama Power.

Natural Gas Revenues

In the first quarter 2025, natural gas revenues were $1.8 billion compared to $1.7 billion for the corresponding period in 2024. Details of the changes in natural gas revenues were as follows:

Changes in rates resulted in an increase in revenues in the first quarter 2025 compared to the corresponding period in 2024 primarily due to base rate increases at Atlanta Gas Light and Virginia Natural 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 increased in the first quarter 2025 compared to the corresponding period in 2024 primarily due to higher gas volumes. 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 increased in the first quarter 2025 compared to the corresponding period in 2024 primarily due to higher commodity prices.

In the first quarter 2025, other revenues were $349 million compared to $228 million for the corresponding period in 2024. The increase was primarily due to increases of $62 million in unregulated sales at Georgia Power primarily associated with power delivery construction and maintenance, energy conservation, and renewables projects and $61 million at PowerSecure primarily related to distributed infrastructure projects.

In the first quarter 2025, total fuel and purchased power expenses were $1.5 billion compared to $1.2 billion for the corresponding period in 2024. The increase was due to a $230 million net increase related to the average cost of fuel and purchased power and a $118 million increase related to the volume of KWHs generated and purchased.

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.

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.

Details of the Southern Company system'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 the Southern Company system for tolling agreements where power is generated by the provider.

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 80% of the total cost of natural gas in the first quarter 2025.

In the first quarter 2025, cost of natural gas was $674 million compared to $605 million for the corresponding period in 2024. The increase reflects higher gas cost recovery as a result of a 63% increase in natural gas prices and higher gas volumes.

Cost of Other Sales

In the first quarter 2025, cost of other sales was $199 million compared to $131 million for the corresponding period in 2024. The increase was primarily due to increases of $38 million at PowerSecure primarily related to distributed infrastructure projects and $31 million in expenses at Georgia Power associated with unregulated power delivery construction and maintenance projects.

In the first quarter 2025, other operations and maintenance expenses were $1.6 billion compared to $1.5 billion for the corresponding period in 2024. The increase was primarily due to increases of $70 million in generation expenses primarily resulting from planned outages at Alabama Power and Plant Vogtle Unit 4 being placed in service in April 2024 at Georgia Power, $33 million in certain employee compensation and benefit expenses, $23 million in technology infrastructure and application production costs, and $12 million in expenses passed through to customers primarily related to bad debt and energy efficiency programs at Southern Company Gas. 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 $1.3 billion compared to $1.1 billion for the corresponding period in 2024. The increase was primarily due to increases of $78 million associated with additional plant in service, $31 million in amortization of regulatory assets related to CCR AROs at Georgia Power as approved in the 2025 compliance filing under the terms of the 2022 ARP, and $27 million in accelerated depreciation related to the repowering of the Kay Wind facility at Southern Power. See Note (K) to the Condensed Financial Statements under "Southern Power – Wind Repowering Projects" herein and Notes 2 and 15 to the financial statements under "Georgia Power" and "Southern Power – Development Projects," respectively, in Item 8 of the Form 10-K for additional information.

In the first quarter 2025, taxes other than income taxes were $445 million compared to $396 million for the corresponding period in 2024. The increase was primarily due to increases of $19 million 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, $11 million in municipal franchise fees resulting from higher retail revenues at Georgia Power, $10 million in revenue taxes as a result of higher natural gas revenues at Nicor Gas, and $5 million in utility license taxes at Alabama Power. 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 $73 million compared to $58 million for the corresponding period in 2024. The increase was primarily associated with an increase in capital expenditures subject to AFUDC at Georgia Power and Alabama Power, partially offset by the impact of Plant Vogtle Unit 4 being placed in service in April 2024 at Georgia Power. 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 $714 million compared to $665 million for the corresponding period in 2024. The increase was primarily due to higher average outstanding borrowings. See FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" and "Financing Activities" herein for additional information.

In the first quarter 2025, income taxes were $280 million compared to $223 million for the corresponding period in 2024. The increase was primarily due tohigher pre-tax earnings and a $9 million decrease in the flowback of certain excess deferred income taxes at Alabama Power, partially offset byincreases of $19 million in the generation of advanced nuclear PTCs at Georgia Power and $15 million in the flowback of excess state deferred income taxes at Georgia Power. See Note (G) to the Condensed Financial Statements herein for additional information.