ALABAMA POWER CO

Net Income Attributable to Southern Power

Net income attributable to Southern Power in the first quarter 2026 was $4 million compared to $87 million for the corresponding period in 2025. The decrease was primarily due to higher accelerated depreciation related to wind repowering projects and an increase in other operations and maintenance expenses associated with hail damage to solar panels at the Millers Branch solar project, partially offset by higher revenues due to higher market prices and increased demand for energy related to weather impacts. 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," respectively, in Item 8 of the Form 10-K for additional information.

Operating Revenues

Total operating revenues include PPA capacity revenues derived primarily from long-term contracts associated with natural gas facilities and PPA energy revenues derived from long-term contracts associated with Southern Power's generation facilities. To the extent Southern Power has capacity not contracted under a PPA, it may sell power into an accessible wholesale market, or, to the extent those generation assets are part of the FERC-approved IIC, it may sell power into the Southern Company power pool.

Natural Gas Capacity and Energy Revenue

Capacity revenues generally represent the greatest contribution to operating income and are designed to provide recovery of fixed costs plus a return on investment.

Energy is generally sold at variable cost or is indexed to published natural gas indices. Energy revenues will vary depending on the energy demand of Southern Power's customers and their generation capacity, as well as the market prices of wholesale energy compared to the cost of Southern Power's energy. Energy revenues also include fees for support services, fuel storage, and unit start charges. Increases and decreases in energy revenues under PPAs that are driven by fuel or purchased power prices are accompanied by an increase or decrease in fuel and purchased power costs and do not have a significant impact on net income.

Solar and Wind Energy Revenue

Southern Power's energy sales from solar and wind generating facilities are predominantly through long-term PPAs that do not have capacity revenue. Customers either purchase the energy output of a dedicated renewable facility through an energy charge or pay a fixed price related to the energy generated from the respective facility and sold to the grid. As a result, Southern Power's 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.

See FUTURE EARNINGS POTENTIAL – "Southern Power's Power Sales Agreements" in Item 7 of the Form 10-K for additional information regarding Southern Power's PPAs.

Operating Revenues Details

Details of Southern Power's operating revenues were as follows:

In the first quarter 2026, total operating revenues were $681 million, reflecting a $114 million, or 20.1%, increase from the corresponding period in 2025. The change in operating revenues was primarily due to the following:

•PPA energy revenues increased $106 million, or 28.4%, primarily due to an increase of $70 million related to the volume of KWHs sold under natural gas PPAs and an increase of $38 million driven by fuel and purchased power prices.

•Non-PPA revenues increased $7 million, or 10.1%, primarily due to an increase of $11 million driven by the market price of energy, partially offset by a decrease of $2 million related to the volume of KWHs sold through short-term sales.

Details of Southern Power's generation and purchased power were as follows:

Southern Power's PPAs for natural gas generation generally provide that the purchasers are responsible for either procuring the fuel (tolling agreements) or reimbursing Southern Power for substantially all of the cost of fuel relating to the energy delivered under such PPAs. Consequently, changes in such fuel costs are generally accompanied by a corresponding change in related fuel revenues and do not have a significant impact on net income. Southern Power is responsible for the cost of fuel for generating units that are not covered under PPAs. Power from these generating units is sold into the wholesale market or into the Southern Company power pool for capacity owned directly by Southern Power.

Purchased power expenses will vary depending on demand, availability, and the cost of generating resources throughout the Southern Company system and other contract resources. Load requirements are submitted to the Southern Company power pool on an hourly basis and are fulfilled with the lowest cost alternative, whether that is generation owned by Southern Power, an affiliate company, or external parties. Such purchased power costs are generally recovered through PPA revenues.

Details of Southern Power's fuel and purchased power expenses were as follows:

In the first quarter 2026, total fuel and purchased power expenses increased $77 million, or 32.8%, as compared to the corresponding period in 2025. Fuel expense increased $47 million primarily due to an increase of $49 million associated with the average cost of fuel. Purchased power expense increased $30 million due to an increase of $26 million related to the volume of KWHs purchased and an increase of $4 million associated with the average cost of purchased power.

In the first quarter 2026, other operations and maintenance expenses were $137 million compared to $123 million for the corresponding period in 2025. The increase was primarily due to hail damage to solar panels at the Millers Branch solar project, partially offset by a decrease in generation expenses related to planned outages.

In the first quarter 2026, depreciation and amortization was $278 million compared to $152 million for the corresponding period in 2025. The increase was primarily due to a $127 million increase in accelerated depreciation related to wind repowering projects. 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.

Income Taxes (Benefit)

In the first quarter 2026, income tax benefit was $70 million compared to $1 million for the corresponding period in 2025. The increase was primarily due to higher wind PTCs resulting from Southern Power's purchase of the noncontrolling membership interests in the SP Wind tax equity partnership, as well as a change in pre-tax earnings attributable to Southern Power, including the impact of accelerated depreciation related to wind repowering projects. See Note (G) to the Condensed Financial Statements and 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," respectively, in Item 8 of the Form 10-K for additional information.

Net Loss Attributable to Noncontrolling Interests

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 due to $41 million in lower HLBV loss allocations to 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 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.