ALABAMA POWER CO

Consolidated net income attributable to Southern Company in the first quarter 2026 was $1.36 billion ($1.21 per share) compared to $1.33 billion ($1.21 per share) for the corresponding period in 2025. The increase was primarily due to increases in retail electric revenues associated with sales growth, higher natural gas revenues associated with base rate increases, higher non-fuel-related wholesale electric revenues, and an increase in AFUDC equity, partially offset by an increase in depreciation and amortization, decreases in retail electrics revenues associated with weather impacts, and an increase in interest expense.

Retail Electric Revenues

In the first quarter 2026, retail electric revenues were $4.64 billion compared to $4.60 billion for the corresponding period in 2025. Details of the changes in retail electric revenues were as follows:

Changes in rates and pricing resulted in a decrease in revenues in the first quarter 2026 when compared to the corresponding period in 2025 primarily due tolower contributions from commercial and industrial customers with variable demand-driven pricing at Georgia Power, partially offset byincreases in PEP rates at Mississippi Power. See Note 2 to the financial statements under "Mississippi Power – Performance Evaluation Plan" in Item 8 of the Form 10-K for additional information.

Changes in sales resulted in an increase in revenues in the first quarter 2026 when compared to the corresponding period in 2025. Weather-adjusted residential KWH sales increased 0.9% in thefirst quarter 2026 primarily due to customer growth. Weather-adjusted commercial KWH sales increased 4.6% in the first quarter 2026 primarily due to increased customer usage, largely driven by data centers at Georgia Power. Industrial KWH sales increased 1.5% in the first quarter 2026 primarily due to increases in the primary metals, pipeline, and stone, clay, and glass sectors, partially offset by decreases in the paper and chemicals sectors.

Fuel and other cost recovery revenues increased $48 million in the first quarter 2026 compared to the corresponding period in 2025 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 expenses, 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 2026, wholesale electric revenues were $965 million compared to $744 million for the corresponding period in 2025. The increase was primarily due to an increase in energy revenues associated with a$145 million increase related to the average cost per KWH sold primarily resulting from higher fuel and purchased power prices and a$76 million increase related to the volume of KWHs sold resulting from higher demand.

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 2026, other electric revenues were $265 million compared to $242 million for the corresponding period in 2025. The increase was primarily due to increases of $15 million in open access transmission tariff sales at the traditional electric operating companies and $8 million in realized gains associated with price stability products for retail customers on variable demand-driven pricing tariffs at Georgia Power.

Natural Gas Revenues

In the first quarter 2026, natural gas revenues were $2.2 billion compared to $1.8 billion for the corresponding period in 2025. Details of the changes in natural gas revenues were as follows:

Changes in rates resulted in an increase in revenues in the first quarter 2026 compared to the corresponding period in 2025 primarily due to base rate increases at Nicor Gas and Atlanta Gas Light. 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 associated with gas costs and other cost recovery increased in the first quarter 2026 compared to the corresponding period in 2025 primarily due to higher cost of natural gas driven by higher natural gas prices, as well as increases in other expenses passed through to customers. See "Cost of Natural Gas" herein for additional information. 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 2026 compared to the corresponding period in 2025 primarily due to higher commodity prices, partially offset by weather impacts.

In the first quarter 2026, other revenues were $336 million compared to $349 million for the corresponding period in 2025. The decrease was primarily due to a decrease of $18 million in unregulated sales associated with energy conservation projects at Georgia Power and $7 million in customer charges related to contributions in aid of construction included in rates in 2025 at Mississippi Power, partially offset by an increase of $13 million in unregulated sales associated with power delivery construction and maintenance projects at Georgia Power.

In the first quarter 2026, total fuel and purchased power expenses were $1.7 billion compared to $1.5 billion for the corresponding period in 2025. The increase was due to a $99 million increase related to the average cost of fuel and purchased power and a $94 million net 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:

(*)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 84.2% of the total cost of natural gas in the first quarter 2026.

In the first quarter 2026, cost of natural gas was $926 million compared to $674 million for the corresponding period in 2025. The increase reflects higher gas cost recovery as a result of a 38.0% increase in natural gas prices.

Cost of Other Sales

In the first quarter 2026, cost of other sales was $181 million compared to $199 million for the corresponding period in 2025. The decrease was primarily related to a decrease of $25 million in expenses at PowerSecure primarily related to distributed infrastructure and energy efficiency projects, partially offset by an increase of $11 million in expenses associated with unregulated power delivery construction and maintenance projects at Georgia Power.

In the first quarter 2026, other operations and maintenance expenses were $1.65 billion compared to $1.62 billion for the corresponding period in 2025. The increase was primarily due to a $24 million increase in certain employee compensation and benefit expenses, $20 million in weather-related damage at a Southern Power solar project, and increases of $15 million in transmission and distribution expenses at the traditional electric operating companies, $14 million in customer education and assistance expenses at Georgia Power, $13 million in technology infrastructure and application production costs, $10 million in expenses at PowerSecure primarily related to distributed infrastructure projects, and $7 million related to certain deferred expenses at Southern Company Gas. Partially offsetting the increase was a $21 million decrease associated with utilization of the reliability reserve to offset reliability-related transmission, distribution, and generation expenses at Alabama Power, a $21 million increase in nuclear property insurance refunds at Alabama Power and Georgia Power, an $18 million decrease in planned outages at the traditional electric operating companies, and an $18 million decrease in legal expenses at Southern Company Gas.

In the first quarter 2026, depreciation and amortization was $1.4 billion compared to $1.3 billion for the corresponding period in 2025. The increase was primarily due to increases of $127 million in accelerated depreciation related to wind repowering projects at Southern Power and $102 million associated with additional plant in service, partially offset by a decrease of $98 million resulting from the extension of Georgia Power's 2022 ARP. See Note 2 to the financial statements under "Georgia Power – Rate Plans" for additional information related to Georgia Power's 2022 ARP. Also see Note (K) to the Condensed Financial Statements under "Southern Power – Wind Repowering Projects" herein and Notes 5 and 15 to the financial statements under "Depreciation and Amortization – Southern Power"and "Southern Power – Wind Repowering Projects," respectively, in Item 8 of the Form 10-K for additional information regarding Southern Power's wind repowering projects.

Taxes Other Than Income Taxes

In the first quarter 2026, taxes other than income taxes were $464 million compared to $445 million for the corresponding period in 2025. The increase was primarily due to increases of $7 million in property taxes primarily related to an increase in the assessed value of property and $6 million in revenue taxes at Nicor Gas as a result of higher natural gas revenues.

Allowance for Equity Funds Used During Construction

In the first quarter 2026, allowance for equity funds used during construction was $121 million compared to $73 million for the corresponding period in 2025. The increase was primarily associated with an increase in capital expenditures subject to AFUDC at Georgia Power.

Earnings from Equity Method Investments

In the first quarter 2026, earnings from equity method investments were $50 million compared to $32 million for the corresponding period in 2025. The increase was primarily due to an increase of $10 million at Southern Holdings related to investment gains and losses and a $7 million increase at Southern Company Gas related to SNG. See Note 7 to the financial statements in Item 8 of the Form 10-K and Note (E) to the Condensed Financial Statements under "Southern Company" and "Southern Company Gas" herein for additional information.

In the first quarter 2026, interest expense, net of amounts capitalized was $778 million compared to $714 million for the corresponding period in 2025. The increase primarily reflects approximately $56 million related to higher average outstanding borrowings, an $11 million loss associated with the extinguishment of debt at the parent company, and a $7 million increase in interest associated with PPAs accounted for as finance leases at Georgia Power, partially offset by an increase of $23 million in capitalized interest and AFUDC debt associated with increased capital expenditures. See FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" and "Financing Activities" herein for additional information.

In the first quarter 2026, income taxes were $228 million compared to $280 million for the corresponding period in 2025. The decrease was primarily due to an increase of $35 million related to higher wind PTCs resulting from the purchase of the noncontrolling membership interest in the SP Wind tax equity partnership at Southern Power and an increase of $16 million in amortization of federal PTCs at Georgia Power. See Note (G) to the Condensed Financial Statements 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.

Net Loss Attributable to Noncontrolling Interests

Substantially all noncontrolling interests relate to renewable projects at Southern Power. In the first quarter 2026, net loss attributable to noncontrolling interests was $18 million compared to $64 million for the corresponding period in 2025. The decrease was primarily due to $41 million in lower HLBV loss allocations to Southern Power's tax equity partners, primarily resulting from Southern Power's purchase of the noncontrolling membership interests in the SP Wind tax equity partnership, and $5 million in higher income allocations to Southern Power's equity partners. See 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.