ALABAMA POWER CO

Alabama Power's net income in the second quarter 2025 was $381 million compared to $369 million for the corresponding period in 2024. The increase was primarily due to higher retail electric revenues resulting from changes in rates and pricing and increased customer usage, partially offset by weather impacts and an increase in non-fuel operations and maintenance expenses.

For year-to-date 2025, net income was $755 million compared to $702 million for the corresponding period in 2024. The increase was primarily due to higher retail electric revenues resulting from changes in rates and pricing, as well as an increase in other revenues, partially offset by increases in non-fuel operations and maintenance expenses and depreciation and amortization.

In the second quarter 2025, retail revenues were $1.7 billion compared to $1.6 billion for the corresponding period in 2024. For year-to-date 2025, retail revenues were $3.4 billion compared to $3.2 billion for the corresponding period in 2024. Details of the changes in retail revenues were as follows:

Changes in rates and pricing resulted in increases in revenues in thesecond quarter and year-to-date 2025 when compared to the corresponding periods in 2024 primarily due to an increase in Rate RSE. See Note 2 to the financial statements under "Alabama Power" in Item 8 of the Form 10-K for additional information.

Changes in sales resulted in an increase in revenues in the second quarter and no change in revenues for year-to-date 2025 when compared to the corresponding periods in 2024. Weather-adjusted residential KWH sales increased 3.9% in the second quarter 2025 primarily due to increased customer usage. Weather-adjusted residential KWH sales increased 0.2% for year-to-date 2025 primarily due to customer growth. Weather-adjusted commercial KWH sales increased 2.0% in the second quarter 2025 primarily due to increased customer usage. Weather-adjusted commercial KWH sales increased 0.3% for year-to-date 2025 primarily due to customer growth. Industrial KWH sales increased 2.2% and 1.1% in the second quarter and year-to-date 2025, respectively, primarily due to increases in the primary metals sector.

Fuel and other cost recovery revenues increased in the second quarter and year-to-date 2025 when compared to the corresponding periods in 2024 primarily as a result of higher recoverable fuel costs.

Electric rates include provisions to recognize the recovery of fuel costs, purchased power costs, PPAs certificated by the Alabama PSC, and costs associated with the NDR. Under these provisions, fuel and other cost recovery revenues generally equal fuel and other cost recovery expenses and do not affect net income. See Note 2 to the financial statements under "Alabama Power" in Item 8 of the Form 10-K for additional information.

Wholesale Revenues– Non-Affiliates

In the second quarter 2025, wholesale revenues from sales to non-affiliates were $98 million compared to $84 million for the corresponding period in 2024. For year-to-date 2025, wholesale revenues from sales to non-affiliates were $189 million compared to $169 million for the corresponding period in 2024. The increases for the second quarter and year-to-date 2025 were primarily due to increases of 27.4% and 20.1%, respectively, in the price of energy due to an increase in natural gas prices.

Wholesale Revenues– Affiliates

In the second quarter 2025, wholesale revenues from sales to affiliates were $36 million compared to $27 million for the corresponding period in 2024. For year-to-date 2025, wholesale revenues from sales to affiliates were $105 million compared to $68 million for the corresponding period in 2024. The increases for the second quarter and year-to-date 2025 were primarily due to increases of 31.8% and 59.7%, respectively, in the price of energy due to an increase in natural gas prices.

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 and energy purchases are generally offset by energy revenues through Alabama Power's energy cost recovery clause.

For year-to-date 2025, other revenues were $245 million compared to $214 million for the corresponding period in 2024. The increase was primarily due to an $11 million increase in transmission revenue primarily associated with open access transmission tariff sales, an $11 million increase in regulated energy services revenues, $7 million related to undistributed customer bill credits associated with nuclear fuel disposal costs litigation, which was offset by an additional NDR accrual within other operations and maintenance expenses, and a $4 million increase in cogeneration revenues primarily related to higher fuel prices. These increases were partially offset by a $10 million decrease in pole attachment rental revenues. See Note 3 to the financial statements under "Nuclear Fuel Disposal Costs" in Item 8 of the Form 10-K for additional information.

In the second quarter 2025, total fuel and purchased power expenses were $458 million compared to $426 million for the corresponding period in 2024. The increase was primarily due to a $19 million net increase related to the average cost of fuel and purchased power and a $13 million net increase related to the volume of KWHs generated and purchased.

For year-to-date 2025, total fuel and purchased power expenses were$968 million compared to $852 million for the corresponding period in 2024. The increase was due to a $63 million net increase related to the volume of KWHs generated and purchased and a $53 million net increase related to the average cost of fuel and purchased power.

Fuel and purchased power energy transactions do not have a significant impact on earnings since energy expenses are generally offset by energy revenues through Alabama Power's energy cost recovery clause. See Note 2 to the financial statements under "Alabama Power – Rate ECR" 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 demand for energy 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, as approved by the FERC.

Details of Alabama Power's generation and purchased power and the related costs were as follows:

(*)Average cost of purchased power includes fuel, energy, and transmission purchased by Alabama Power for tolling agreements where power is generated by the provider.

In the second quarter 2025, other operations and maintenance expenses were $472 million compared to $429 million for the corresponding period in 2024. The increase was primarily due to increases of $14 million in generation expenses primarily associated with planned and unplanned outages, $7 million associated with an additional NDR accrual, which is offset within other revenues, $4 million in vegetation management expenses, $4 million in certain employee compensation and benefit expenses, and $3 million in technology infrastructure and application production costs. See Note 3 to the financial statements under "Nuclear Fuel Disposal Costs" in Item 8 of the Form 10-K for additional information.

For year-to-date 2025, other operations and maintenance expenses were $935 million compared to $840 million for the corresponding period in 2024. Theincrease was primarily due to increases of $52 million in generation expenses primarily associated with planned outages, $12 million in certain employee compensation and benefit expenses, and $8 million in technology infrastructure and application production costs.

For year-to-date 2025, depreciation and amortization was $741 million compared to $725 million for the corresponding period in 2024. The increase was primarily due to additional plant in service related to transmission and distribution systems.

For year-to-date 2025, taxes other than income taxes were $250 million compared to $238 million for the corresponding period in 2024. The increase was primarily due to an increase in utility license taxes resulting from an increase in the tax base.

In the second quarter 2025, allowance for equity funds used during construction was $18 million compared to $12 million for the corresponding period in 2024. For year-to-date 2025, allowance for equity funds used during construction was $36 million compared to $26 million for the corresponding period in 2024. The increases were primarily due to increases in capital expenditures subject to AFUDC.

Other Income (Expense), Net

In the second quarter 2025, other income (expense), net was$47 million compared to$37 million for the corresponding period in 2024. The increase was primarily due to the receipt of liquidated damages associated with the termination of two solar projects.

In the second quarter 2025, income taxes were $115 million compared to $102 million for the corresponding period in 2024. For year-to-date 2025, income taxes were $226 million compared to $187 million for the corresponding period in 2024. The increases for thesecond quarter and year-to-date 2025 were primarily due to higher pre-tax earnings and decreases of $9 million and $19 million, respectively, in the flowback of certain excess deferred income taxes. See Note (G) to the Condensed Financial Statements herein for additional information.