ALABAMA POWER CO

Alabama Power's net income in the first quarter 2026 was $425 million compared to $375 million for the corresponding period in 2025. The increase was primarily due to a decrease in other operations and maintenance expenses and an increase in retail revenues associated with sales growth, partially offset by weather impacts.

In the first quarter 2026, retail revenues were $1.73 billion compared to $1.72 billion for the corresponding period in 2025. Details of the changes in retail revenues were as follows:

Changes in rates and pricing resu lted in an increase in revenues in the first quarter 2026 as compared to the corresponding period in 2025 primarily due to an increase in Rate CNP Compliance revenues.

Changes in sales resulted in an increase in revenues in the first quarter 2026 as compared to the corresponding period in 2025. Weather-adjusted residential KWH sales increased 2.2% primarily due to increased customer usage and customer growth. Weather-adjusted commercial KWH sales increased 0.3% primarily due to customer growth. Industrial KWH sales increased 4.0% primarily due to an increase in the primary metals sector.

Fuel and other cost recovery revenues increased in the first quarter 2026 as compared to the corresponding period in 2025 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 first quarter 2026, wholesale revenues from sales to non-affiliates were $117 million compared to $91 million for the corresponding period in 2025. The increase consisted of a $36 million increase in energy revenues due to increases of $31 million related to the average cost per KWH sold due to higher Southern Company system fuel and purchased power prices and $5 million related to the volume of KWH sales associated with higher market demand, partially offset by a $10 million decrease in non-fuel revenues from wholesale capacity contracts. The decrease in capacity revenues was primarily due to the expiration of a power sales agreement in December 2025, partially offset by the commencement of a new power sales agreement in October 2025 associated with the acquisition of the Lindsay Hill Generating Station. See Note 15 to the financial statements under "Alabama Power" in Item 8 of the Form 10-K for additional information.

Wholesale Revenues– Affiliates

In the first quarter 2026, wholesale revenues from sales to affiliates were $119 million compared to $69 million for the corresponding period in 2025. The increase was primarily due to increases of 35.9% in the volume of KWH sales due to affiliated company energy needs and 26.3% 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.

In the first quarter 2026, total fuel and purchased power expenses were $574 million compared to $510 million for the corresponding period in 2025. The increase was due to a $53 million increase related to the average cost of fuel and purchased power and an $11 million net increase related to the volume of KWHs generated and purchased.

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 first quarter 2026, other operations and maintenance expenses were $393 million compared to $463 million for the corresponding period in 2025. The decrease was primarily due to decreases of $28 million in planned outages, $21 million associated with utilization of the reliability reserve to offset reliability-related transmission, distribution, and generation expenses, and $11 million associated with higher nuclear property insurance refunds and $10 million of deferred costs related to the Jurisdictional Separation Study Order. See Note (B) to the Condensed Financial Statements under "Alabama Power – Reliability Reserve Accounting Order" herein and Note 2 to the financial statements under "Alabama Power – Jurisdictional Separation Study Order" in Item 8 of the Form 10-K for additional information.

In the first quarter 2026, income taxes were $129 million compared to $111 million for the corresponding period in 2025. The increase was primarily due to higher pre-tax earnings.