ALABAMA POWER CO

Georgia Power's net income in the second quarter 2025 was $607 million compared to $762 million for the corresponding period in 2024. The decrease was primarily due to higher non-fuel operations and maintenance expenses and depreciation and amortization, weather impacts on retail revenues, and higher income taxes, partially offset by higher retail revenues associated with increased base tariff and ECCR tariff revenues in accordance with the 2022 ARP, the inclusion of Plant Vogtle Unit 4 in retail rates, and higher contributions from customers with demand-driven pricing. Also partially offsetting this decrease were higher wholesale revenues and other revenues.

For year-to-date 2025, net income was essentially flat compared to the corresponding period in 2024. Higher retail revenues associated with the inclusion of Plant Vogtle Unit 4 in retail rates, increased base tariff and ECCR tariff revenues in accordance with the 2022 ARP, and higher contributions from customers with demand-driven pricing, as well as higher wholesale revenues and other revenues, were largely offset by higher non-fuel operations and maintenance expenses, depreciation and amortization, and income taxes.

In the second quarter 2025, retail revenues were $2.8 billion compared to $2.6 billion for the corresponding period in 2024. For year-to-date 2025, retail revenues were $5.4 billion compared to $4.8 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 second quarter and year-to-date 2025 when compared to the corresponding periods in 2024 primarily due to the inclusion of Plant Vogtle Unit 4 in retail rates net of elimination of the NCCR tariff, base tariff increases and increased ECCR tariff revenues in accordance with the 2022 ARP, and higher contributions from commercial and industrial customers with variable demand-driven pricing. 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 an increase in revenues in the second quarter and year-to-date 2025 when compared to the corresponding periods in 2024. Weather-adjusted residential KWH sales increased 2.1% in the second quarter 2025 primarily due to customer growth and increased customer usage. Weather-adjusted residential KWH sales increased 0.4% for year-to-date 2025 primarily due to customer growth, partially offset by decreased customer usage. Weather-adjusted commercial KWH sales increased 4.4% and 2.9% in the second quarter and year-to-date 2025, respectively, primarily due to increased customer usage, primarily driven by data centers. Weather-adjusted industrial KWH sales increased 3.5% in the second quarter 2025 primarily due to increases in the transportation and paper sectors, partially offset by a decrease in the pipeline sector. Weather-adjusted industrial KWH sales increased 1.8% for year-to-date 2025 primarily due to increases in the transportation and paper sectors, partially offset by decreases in the pipeline and textiles sectors.

Fuel revenues and costs are allocated between retail and wholesale jurisdictions. Retail fuel cost recovery revenues increased in the second quarter and year-to-date 2025 when compared to the corresponding periods 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 second quarter 2025, wholesale revenues were $107 million compared to $63 million for the corresponding period in 2024. For year-to-date 2025, wholesale revenues were $250 million compared to $120 million for the corresponding period in 2024. The increases for the second quarter and year-to-date 2025 were due to increases of $21 million and $63 million, respectively, related to the volume of KWH sales associated with higher market demand, $11 million and $35 million, respectively, related to the average cost per KWH sold due to higher Southern Company system fuel and purchased power prices, and $12 million and $32 million, respectively, related to additional non-fuel revenues 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 second quarter 2025, other revenues were $238 million compared to $215 million for the corresponding period in 2024. The increase was primarily due to increases of $15 million in unregulated sales primarily associated with power delivery construction and maintenance projects and $5 million in outdoor lighting sales.

For year-to-date 2025, other revenues were $503 million compared to $401 million for the corresponding period in 2024. The increase was primarily due to increases of $77 million in unregulated sales primarily associated with power delivery construction and maintenance, energy conservation, and renewables projects, $14 million in regulated sales associated with power delivery construction and maintenance projects, and $9 million in outdoor lighting sales.

In the second quarter 2025, total fuel and purchased power expenses were $853 million compared to $774 million for the corresponding period in 2024. For year-to-date 2025, total fuel and purchased power expenses were $1.8 billion compared to $1.5 billion for the corresponding period in 2024. The increases for the second quarter and year-to-date 2025 were due to net increases of $69 million and $182 million, respectively, related to the volume of KWHs generated and purchased and increases of $10 million and $135 million, respectively, 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 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 second quarter 2025, other operations and maintenance expenses were $645 million compared to $438 million for the corresponding period in 2024. The increase was primarily due to a $114 million gain from the sale of integrated transmission system assets in the second quarter 2024, an increase of $24 million in generation expenses primarily due to planned outages, a $21 million credit related to the estimated loss on Plant Vogtle Units 3 and 4 recorded in the second quarter 2024, and increases of $19 million in certain technology infrastructure and application production costs, $11 million in transmission and distribution expenses primarily due to line maintenance costs, and $8 million in certain employee compensation and benefit expenses.

For year-to-date 2025, other operations and maintenance expenses were $1.3 billion compared to $1.0 billion for the corresponding period in 2024. The increase was primarily due to a $114 million gain from the sale of integrated transmission system assets in the second quarter 2024, increases of $56 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, $50 million in expenses associated with unregulated power delivery construction and maintenance, energy conservation, and renewables projects, and $23 million in certain technology infrastructure and application production costs, a $21 million credit related to the estimated loss on Plant Vogtle Units 3 and 4 recorded in the second quarter 2024, and increases of $21 million in certain employee compensation and benefit expenses and $20 million in transmission and distribution expenses primarily due to line maintenance costs.

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

In the second quarter 2025, depreciation and amortization was $512 million compared to $447 million for the corresponding period in 2024. For year-to-date 2025, depreciation and amortization was $1.0 billion compared to $0.9 billion for the corresponding period in 2024. The increases for the second quarter and year-to-date 2025 were primarily due to increases of $37 million and $87 million, respectively, associated with additional plant in service and $31 million and $62 million, respectively, 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 second quarter 2025, taxes other than income taxes were $173 million compared to $164 million for the corresponding period in 2024. The increase was primarily due to increases of $4 million in property taxes primarily resulting from an increase in the assessed value of property and $3 million in municipal franchise fees resulting from higher retail revenues.

For year-to-date 2025, taxes other than income taxes were $342 million compared to $311 million for the corresponding period in 2024. The increase was primarily due to an increase of $14 million in municipal franchise fees resulting from higher retail revenues, an increase of $10 million in property taxes primarily resulting from an increase in the assessed value of property, and a decrease of $6 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.

In the second quarter 2025, allowance for equity funds used during construction was $56 million compared to $33 million for the corresponding period in 2024. For year-to-date 2025, allowance for equity funds used during construction was $104 million compared to $72 million for the corresponding period in 2024. The increases were primarily due to an increase in capital expenditures subject to AFUDC. Partially offsetting the increase for year-to-date 2025 was 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 second quarter 2025, interest expense, net of amounts capitalized was $198 million compared to $185 million for the corresponding period in 2024. For year-to-date 2025, interest expense, net of amounts capitalized was $385 million compared to $359 million for the corresponding period in 2024. The increases for the second quarter and year-to-date 2025 were primarily associated with increases of approximately $13 million and $23 million, respectively, related to higher average outstanding borrowings and decreases of $3 million and $12 million, respectively, in net deferred financing costs related to Plant Vogtle Unit 3, partially offset by decreases of approximately $2 million and $4 million, respectively, 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 second quarter 2025, income taxes were $236 million compared to $192 million for the corresponding period in 2024. The increase was primarily due to a $64 million increase in charges to a valuation allowance on certain state tax credit carryforwards and $33 million from the recognition of certain state tax positions from amended returns in the second quarter 2024, partially offset by lower pre-tax earnings and an increase of $19 million in the flowback of excess state deferred income taxes.

For year-to-date 2025, income taxes were $334 million compared to $271 million for the corresponding period in 2024. The increase was primarily due to a $71 million increase in charges to a valuation allowance on certain state tax credit carryforwards, $33 million from the recognition of certain state tax positions from amended returns in the second quarter 2024, and higher pre-tax earnings, partially offset by increases of $34 million in the flowback of excess state deferred income taxes and $21 million in the generation of advanced nuclear PTCs.

See Note (G) to the Condensed Financial Statements herein for additional information.