ALABAMA POWER CO

Overview

See MANAGEMENT'S DISCUSSION AND ANALYSIS – FINANCIAL CONDITION AND LIQUIDITY– "Overview" in Item 7 of the Form 10-K for additional information. The financial condition of each Registrant remained stable at March 31, 2026. The Registrants intend to continue to monitor their access to short-term and long-term capital markets as well as their bank credit arrangements to meet future capital and liquidity needs. See "Cash Requirements," "Sources of Capital," and "Financing Activities" herein for additional information.

At the end of the first quarter 2026, the market price of Southern Company's common stock was $96.52 per share (based on the closing price as reported on the NYSE) and the book value was $32.93 per share, representing a market-to-book ratio of 293%, compared to $87.20, $32.18, and 271%, respectively, at the end of 2025. Southern

Company's common stock dividend for the first quarter 2026 was $0.74 per share compared to $0.72 per share in the first quarter 2025.

Cash Requirements

See MANAGEMENT'S DISCUSSION AND ANALYSIS – FINANCIAL CONDITION AND LIQUIDITY – "Cash Requirements" in Item 7 of the Form 10-K for a description of the Registrants' significant cash requirements.

The Registrants' significant cash requirements include estimated capital expenditures associated with their construction programs. The construction programs are subject to periodic review and revision, and actual construction costs may vary from these estimates because of numerous factors. These factors include: changes in business conditions; changes in load projections; changes in environmental laws and regulations; the outcome of any legal challenges to environmental rules; changes in electric generating plants, including unit retirements and replacements and adding or changing fuel sources at existing electric generating units or extending the retirement dates of certain generating plants, to meet regulatory requirements; changes in FERC rules and regulations; state regulatory agency approvals; changes in the expected environmental compliance program; changes in legislation, regulation, and/or tariff policy; the cost, availability, and efficiency of construction labor, equipment, and materials; project scope and design changes; abnormal weather; delays in construction due to judicial or regulatory action; storm impacts; and the cost of capital. In addition, with respect to the traditional electric operating companies and the natural gas distribution utilities, there can be no assurance that any costs related to capital expenditures and AROs will be fully recovered. Additionally, expenditures associated with Southern Power's planned acquisitions may vary due to market opportunities and the execution of its growth strategy.

During the first quarter 2026, Southern Power committed to development projects to upgrade certain turbines at the Franklin and Wansley natural gas facilities. The aggregate construction costs for these projects are expected to be between $660 million and $725 million. See Note (K) to the Condensed Financial Statements under "Southern Power – Natural Gas Turbine Upgrade Projects" herein for additional information regarding Southern Power's construction projects.

Long-term debt maturities and the interest payable on long-term debt each represent a significant cash requirement for the Registrants. See "Financing Activities" herein for information on changes in the Registrants' long-term debt balances since December 31, 2025.

Fuel and purchased power costs represent a significant component of funding ongoing operations for the traditional electric operating companies and Southern Power. Fuel costs include purchases of coal (for the traditional electric operating companies) and natural gas (for the traditional electric operating companies and Southern Power), as well as the related transportation and storage. Since December 31, 2025, Georgia Power has entered into additional commitments for natural gas primarily related to its construction of generation projects. As a result, Southern Company's and Georgia Power's estimated costs for fuel commitments at March 31, 2026 increased by approximately $25 million for 2027, $150 million per year for 2028 through 2030, and $2.5 billion thereafter. See Note (B) to the Condensed Financial Statements under "Georgia Power – Construction" herein for additional information regarding Georgia Power's current construction projects.

Sources of Capital

See MANAGEMENT'S DISCUSSION AND ANALYSIS – FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" in Item 7 of the Form 10-K for additional information. Southern Company intends to meet its future capital needs through operating cash flows, borrowings from financial institutions, and debt, hybrid, and/or equity issuances. Equity capital can be provided from any combination of Southern Company's stock plans, private placements, or public offerings.

The Subsidiary Registrants plan to obtain the funds to meet their future capital needs from sources similar to those they used in the past, which were primarily from operating cash flows, external securities issuances, borrowings from financial institutions, and equity contributions from Southern Company. In addition, Alabama Power and Georgia Power plan to utilize borrowings from the FFB. Operating cash flows provide a substantial portion of the

Registrants' cash needs. See Note (F) to the Condensed Financial Statements under "DOE Loan Guarantee Borrowings" herein for additional information.

The amount, type, and timing of any financings in 2026, as well as in subsequent years, will be contingent on investment opportunities and the Registrants' capital requirements and will depend upon prevailing market conditions, regulatory approvals (for certain of the Subsidiary Registrants), and other factors. See "Cash Requirements" and "Financing Activities" herein for additional information.

By regulation, Nicor Gas is restricted, up to its retained earnings balance, in the amount it can dividend or loan to affiliates and is not permitted to make money pool loans to affiliates. At March 31, 2026, the amount of subsidiary retained earnings restricted to dividend totaled $2.0 billion. This restriction did not impact Southern Company Gas' ability to meet its cash obligations, nor does management expect such restriction to materially impact Southern Company Gas' ability to meet its currently anticipated cash obligations.

Certain Registrants' current liabilities frequently exceed their current assets because of long-term debt maturities and the periodic use of short-term debt as a funding source, as well as significant seasonal fluctuations in cash needs. The Registrants generally plan to refinance long-term debt as it matures. The following table shows the amount by which current liabilities exceeded current assets at March 31, 2026 for the applicable Registrants:

The Registrants believe the need for working capital can be adequately met by utilizing operating cash flows, as well as commercial paper, lines of credit, and short-term bank notes, as market conditions permit. In addition, under certain circumstances, the Subsidiary Registrants may utilize equity contributions and/or loans from Southern Company.

Bank Credit Arrangements

At March 31, 2026, unused committed credit arrangements with banks were as follows:

(a)Includes $15 million at Alabama Property Company, a wholly-owned subsidiary of Alabama Power. Alabama Power is not party to this arrangement.

(b)Georgia Power had $26 million of letters of credit outstanding under an uncommitted letter of credit facility at March 31, 2026.

(c)At March 31, 2026, Southern Power also had two continuing letters of credit facilities for standby letters of credit, of which $21 million was unused. In addition, Southern Power Company had $23 million of letters of credit outstanding under an uncommitted letter of credit facility at March 31, 2026. Southern Power's subsidiaries are not parties to its bank credit arrangements or letter of credit facilities.

(d)Includes $798 million and $800 million at Southern Company Gas Capital and Nicor Gas, respectively.

Subject to applicable market conditions, the Registrants, Nicor Gas, and SEGCO expect to renew or replace their bank credit arrangements as needed, prior to expiration. In connection therewith, the Registrants, Nicor Gas, and SEGCO may extend the maturity dates and/or increase or decrease the lending commitments thereunder.

A portion of the unused credit with banks is allocated to provide liquidity support to certain revenue bonds of the traditional electric operating companies and the commercial paper programs of the Registrants, Nicor Gas, and SEGCO. At March 31, 2026, outstanding variable rate demand revenue bonds of the traditional electric operating companies with allocated liquidity support totaled approximately $1.5 billion (comprised of approximately $796 million at Alabama Power, $667 million at Georgia Power, and $58 million at Mississippi Power). In addition, at

March 31, 2026, Alabama Power and Georgia Power had approximately $160 million and $325 million, respectively, of fixed rate revenue bonds outstanding that are required to be remarketed within the next 12 months. Alabama Power's $160 million of fixed rate revenue bonds are classified as securities due within one year on its balance sheets as they are not covered by long-term committed credit. All other variable rate demand revenue bonds and fixed rate revenue bonds required to be remarketed within the next 12 months are classified as long-term debt on the balance sheets as a result of available long-term committed credit.

See Note 8 to the financial statements in Item 8 of the Form 10-K and Note (F) to the Condensed Financial Statements under "Bank Credit Arrangements" herein for additional information.

Short-term Borrowings

The Registrants, Nicor Gas, and SEGCO make short-term borrowings primarily through commercial paper programs that have the liquidity support of the committed bank credit arrangements described above. Southern Power's subsidiaries are not issuers or obligors under its commercial paper program. Commercial paper and short-term bank term loans are included in notes payable in the balance sheets. Details of the Registrants' short-term borrowings were as follows:

(*)Average and maximum amounts are based upon daily balances during the three-month period ended March 31, 2026.

Analysis of Cash Flows

Net cash flows provided from (used for) operating, investing, and financing activities for the three months ended March 31, 2026 and 2025 are presented in the following table:

Fluctuations in cash flows from financing activities vary from year to year based on capital needs and the maturity or redemption of securities.

Net cash provided from operating activities decreased $24 million for the three months ended March 31, 2026 as compared to the corresponding period in 2025 primarily due to the timing of vendor payments, partially offset by higher natural gas cost recovery.

The net cash used for investing activities for the three months ended March 31, 2026 was primarily related to the Subsidiary Registrants' construction programs.

The net cash provided from financing activities for the three months ended March 31, 2026 was primarily related to net issuances of long-term debt, an increase in notes payable, and issuances of common stock through the settlement of forward sale contracts, partially offset by common stock dividend payments. See Note (F) to the Condensed Financial Statements under "Equity Distribution Agreement" herein for additional information.

Net cash provided from operating activities increased $74 million for the three months ended March 31, 2026 as compared to the corresponding period in 2025 primarily due to customer refunds in 2025 associated with a nuclear fuel disposal cost award and the timing of customer receivable collections, partially offset by the timing of vendor payments. See Note 3 to the financial statements under "Nuclear Fuel Disposal Costs" in Item 8 of the Form 10-K for additional information.

The net cash used for investing activities for the three months ended March 31, 2026 was primarily related to gross property additions.

The net cash used for financing activities for the three months ended March 31, 2026 was primarily related to common stock dividend payments and repayment of bank term loans, partially offset by capital contributions from Southern Company and an increase in commercial paper borrowings.

Net cash provided from operating activities increased $75 million for the three months ended March 31, 2026 as compared to the corresponding period in 2025 primarily due to the timing of vendor payments and storm restoration costs, partially offset by an increase in charitable donations and the timing of materials and supplies purchases. See

Note 2 to the financial statements under "Georgia Power – Storm Damage Recovery" in Item 8 of the Form 10-K for additional information relating to storm restoration costs.

The net cash used for investing activities for the three months ended March 31, 2026 was primarily related to gross property additions.

The net cash provided from financing activities for the three months ended March 31, 2026 was primarily related to borrowings from the FFB and capital contributions from Southern Company, partially offset by common stock dividend payments. See Note (F) to the Condensed Financial Statements under "DOE Loan Guarantee Borrowings" herein for additional information.

Net cash used for operating activities increased $38 million for the three months ended March 31, 2026 as compared to the corresponding period in 2025 primarily due tothe timing of vendor payments and the timing of fossil fuel stock purchases.

The net cash used for investing activities for the three months ended March 31, 2026 was primarily related togross property additions.

The net cash provided from financing activities for the three months ended March 31, 2026 was primarily related to capital contributions from Southern Company, the issuance of senior notes, and an increase in commercial paper borrowings, partially offset by common stock dividend payments.

Net cash provided from operating activities increased $47 million for the three months ended March 31, 2026 as compared to the corresponding period in 2025 primarily due to an increase in wholesale revenues, driven by higher market prices of energy, and the timing of customer receivable collections, partially offset by the timing of vendor payments.

The net cash used for investing activities for the three months ended March 31, 2026 was primarily related to ongoing construction activities. See Note (K) to the Condensed Financial Statements under "Southern Power" herein for additional information.

The net cash used for financing activities for the three months ended March 31, 2026 was primarily related to common stock dividend payments and net distributions to noncontrolling interests, partially offset by an increase in commercial paper borrowings.

Net cash provided from operating activities increased $121 million for the three months ended March 31, 2026 as compared to the corresponding period in 2025 primarily due to higher natural gas cost recovery and timing of customer receivable collections as a result of weather impacts, partially offset by lower natural gas volumes and prices and the timing of vendor payments.

The net cash used for investing activities for the three months ended March 31, 2026 was primarily related to construction of transmission and distribution assets recovered through base rates.

The net cash used for financing activities for the three months ended March 31, 2026 was primarily related to a reduction in commercial paper borrowings and common stock dividend payments.

Significant Balance Sheet Changes

•an increase of $1.7 billion in total property, plant, and equipment primarily related to the Subsidiary Registrants' construction programs;

•an increase of $1.0 billion in total stockholders' equity primarily related to net income and issuances of common stock largely through the settlement of forward sale contracts, partially offset by common stock dividend payments;

•an increase of $980 million in long-term debt (including securities due within one year) primarily due to the issuance of senior notes and borrowings from the FFB, partially offset by the redemption of junior subordinated notes;

•an increase of $951 million in notes payable primarily due to increases in commercial paper borrowings and short-term bank debt;

•a decrease of $801 million in accounts payable primarily related to the timing of vendor payments;

•a decrease of $658 million in cash and cash equivalents, as reflected in the statements of cash flows and discussed further under "Analysis of Cash Flows – Southern Company" herein; and

•a decrease of $657 million in accrued compensation primarily due to the timing of payments.

See "Financing Activities" and Note (F) to the Condensed Financial Statements under "Equity Distribution Agreement" and "DOE Loan Guarantee Borrowings" herein for additional information.

•an increase of $350 million in common stockholder's equity primarily due to net income and capital contributions from Southern Company, partially offset by dividends paid to Southern Company;

•a decrease of $291 million in cash and cash equivalents, as reflected in the statements of cash flows and discussed further under "Analysis of Cash Flows – Alabama Power" herein; and

•a decrease of $225 million in other accounts payable primarily due to the timing of vendor payments.

•an increase of $1.6 billion in total property, plant, and equipment primarily related to the construction of generation, transmission, and distribution facilities;

•an increase of $1.5 billion in common stockholder's equity primarily due to capital contributions from Southern Company and net income, partially offset by dividends paid to Southern Company;

•an increase of $943 million in long-term debt (including securities due within one year) primarily due to net borrowings from the FFB;

•a decrease of $430 million in accounts payable primarily related to the timing of vendor payments; and

•a decrease of $352 million in accrued taxes primarily due to payments for municipal franchise fees and property taxes.

See "Financing Activities – Georgia Power" and Notes (B) and (F) to the Condensed Financial Statements under "Georgia Power – Construction" and "DOE Loan Guarantee Borrowings," respectively, herein for additional information.

•an increase of $102 million in common stockholder's equity related to capital contributions from Southern Company and net income, partially offset by dividends paid to Southern Company;

•an increase of $74 million in long-term debt (including securities due within one year) primarily due to the issuance of senior notes;

•a decrease of $73 million in accrued taxes primarily due to the payment of ad valorem taxes;

•an increase of $32 million in notes payable primarily due to commercial paper borrowings; and

•an increase of $27 million in total property, plant, and equipment primarily related to the construction of transmission and distribution facilities.

See "Financing Activities – Mississippi Power" herein for additional information.

•a decrease of $179 million in total property, plant, and equipment primarily due to the continued depreciation of assets, partially offset by the continued construction of the wind repowering projects;

•a decrease of $127 million in total stockholders' equity primarily due to dividends paid to Southern Company, net distributions to noncontrolling interests, and net loss; and

•an increase of $46 million in other receivables primarily related to the transfer of tax credits generated in the first quarter 2026, which were previously allocated to the SP Wind tax equity partners in 2025.

See Note (K) to the Condensed Financial Statements under "Southern Power – Wind Repowering Projects" herein and Note 15 to the financial statements under "Southern Power – Purchase of Renewable Facility Interests" in Item 8 of the Form 10-K for additional information.

•an increase of $306 million in common stockholder's equity primarily related to net income, partially offset by dividends paid to Southern Company;

•a decrease of $251 million in natural gas for sale primarily due to seasonality;

•a decrease of $183 million in total accounts payable primarily due to lower natural gas volumes and prices and the timing of vendor payments;

•an increase of $182 million in total property, plant, and equipment primarily related to the construction of transmission and distribution assets;

•a decrease of $170 million in notes payable due to a reduction in commercial paper borrowings;

•an increase of $122 million in cash and cash equivalents, as reflected in the statements of cash flows and discussed further under "Analysis of Cash Flows – Southern Company Gas" herein; and

•an increase of $104 million in temporary LIFO liquidation due to use of stored natural gas.

Financing Activities

The following table outlines long-term debt financing activities for the first three months of 2026:

(a)Includes reductions in finance lease obligations resulting from cash payments under finance leases and, for Georgia Power, principal amortization payments totaling $21 million for FFB borrowings. See Note 8 to the financial statements under "Long-term Debt – DOE Loan Guarantee Borrowings" in Item 8 of the Form 10-K for additional information.

(b)Represents reductions in affiliate finance lease obligations at Georgia Power, which are eliminated in Southern Company's consolidated financial statements.

Except as otherwise described herein, the Registrants used the proceeds of debt issuances for their redemptions and maturities shown in the table above, to repay short-term indebtedness, and for general corporate purposes, including working capital. The Subsidiary Registrants also used the proceeds for their construction programs.

In addition to any financings that may be necessary to meet capital requirements and contractual obligations, the Registrants plan to continue, when economically feasible, a program to retire higher-cost securities and replace these obligations with lower-cost capital if market conditions permit.

During the first three months of 2026, Southern Company issued approximately 8.1 million shares of common stock primarily through forward sale contract settlements and employee equity compensation plans. Proceeds from settlements of the forward sale contracts totaled approximately $506 million. Also during the first three months of 2026, Southern Company entered into additional forward sale contracts for the issuance of shares of common stock that may be settled through March 2028. See Note (F) to the Condensed Financial Statements under "Equity Distribution Agreement" herein for additional information.

In January 2026, Southern Company redeemed all $1.25 billion aggregate principal amount of its Series 2020B 4.00% Fixed-to-Fixed Reset Rate Junior Subordinated Notes due January 15, 2051.

In January 2026, Southern Company borrowed $100 million pursuant to a short-term uncommitted bank credit arrangement bearing interest at a floating rate.

In March 2026, Southern Company issued $1.3 billion aggregate principal amount of Series 2026A 6.00% Fixed-to-Fixed Reset Rate Junior Subordinated Notes due April 1, 2058.

In March 2026, Alabama Power repaid at maturity its three bank term loan agreements with an aggregate principal amount of $45 million.

In February 2026, Georgia Power borrowed $250 million pursuant to a short-term uncommitted bank credit arrangement which is payable on demand, following specified notice by the bank, and bears interest at a rate agreed upon by Georgia Power and the bank from time to time. In both March 2026 and subsequent to March 31, 2026, Georgia Power repaid $50 million of the short-term uncommitted bank credit arrangement, resulting in $150 million outstanding.

In March 2026, Georgia Power made initial borrowings under a multi-advance term loan facility with the FFB in an aggregate principal amount of approximately $1.0 billion at an interest rate of 5.041% through the final maturity date of December 10, 2055. The proceeds were used to reimburse Georgia Power for eligible costs relating to certain generation, battery energy storage, and transmission facilities. See Note (F) to the Condensed Financial Statements under "DOE Loan Guarantee Borrowings" herein for additional information.

Subsequent to March 31, 2026, Georgia Power repaid at maturity $325 million aggregate principal amount of its Series 2016A 3.25% Senior Notes.

In March 2026, Mississippi Power issued approximately $75 million aggregate principal amount of Series 2026A Floating Rate Senior Notes due May 15, 2076.

Credit Rating Risk

At March 31, 2026, the Registrants did not have any credit arrangements that would require material changes in payment schedules or terminations as a result of a credit rating downgrade.

There are certain contracts that could require collateral, but not accelerated payment, in the event of a credit rating change of certain Registrants to BBB and/or Baa2 or below. These contracts are primarily for physical electricity and natural gas purchases and sales, fuel purchases, fuel transportation and storage, energy price risk management, transmission, interest rate management, and equipment purchases related to construction of facilities.

The maximum potential collateral requirements under these contracts at March 31, 2026 were as follows:

(*)Southern Power has PPAs that could require collateral, but not accelerated payment, in the event of a downgrade of Southern Power's credit. The PPAs require credit assurances without stating a specific credit rating. The amount of collateral required would depend upon actual losses resulting from a credit downgrade. Southern Power had $106 million of cash collateral posted related to PPA requirements at March 31, 2026.

The amounts in the previous table for the traditional electric operating companies and Southern Power include certain agreements that could require collateral if either Alabama Power or Georgia Power has a credit rating change to below investment grade. Generally, collateral may be provided by a Southern Company guaranty, letter of credit, or cash. Additionally, a credit rating downgrade could impact the ability of the Registrants to access capital markets and would be likely to impact the cost at which they do so.