ALABAMA POWER CO

Georgia Power's net income in the second quarter 2026 was $779 million compared to $607 million for the corresponding period in 2025. The increase was primarily due to a decrease in income taxes, higher retail revenues associated with sales growth, an increase in AFUDC equity, and a decrease in taxes other than income taxes, partially offset by lower retail revenues associated with rates and pricing and an increase in interest expense.

For year-to-date 2026, net income was $1.4 billion compared to $1.2 billion for the corresponding period in 2025. The increase was primarily due to a decrease in income taxes, higher retail revenues associated with sales growth, an increase in AFUDC equity, and higher non-fuel-related wholesale revenues, partially offset by lower retail revenues associated with rates and pricing, an increase in other operations and maintenance expenses, and an increase in interest expense.

In the second quarter 2026, retail revenues were $2.753 billion compared to $2.765 billion for the corresponding period in 2025. For year-to-date 2026, retail revenues were $5.391 billion compared to $5.395 billion for the corresponding period in 2025. Details of the changes in retail revenues were as follows:

Changes in rates and pricing resulted in decreases in revenues in the second quarter and year-to-date 2026 as compared to the corresponding periods in 2025 primarily due to lower contributions from commercial and industrial customers with variable demand-driven pricing.

Changes in sales resulted in increases in revenues in the second quarter and year-to-date 2026 as compared to the corresponding periods in 2025. Weather-adjusted residential KWH sales decreased 0.5% in the second quarter 2026 primarily due to decreased customer usage. Weather-adjusted residential KWH sales decreased 0.1% for year-to-date 2026 primarily due to decreased customer usage, largely offset by customer growth. Weather-adjusted commercial KWH sales increased 10.9% and 8.7% in the second quarter and year-to-date 2026, respectively, primarily due to increased customer usage, largely driven by data centers. Weather-adjusted industrial KWH sales decreased 1.3% and 0.7% in the second quarter and year-to-date 2026, respectively, primarily due to decreases in the paper, textiles, and primary metals sectors, partially offset by increases in the miscellaneous manufacturing and stone, clay, and glass sectors.

Fuel revenues and costs are allocated between retail and wholesale jurisdictions. Retail fuel cost recovery revenues decreased in the second quarter and year-to-date 2026 as compared to the corresponding periods in 2025 due to lower 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 under "Georgia Power – Fuel Cost Recovery" 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 2026, wholesale revenues were $120 million compared to $107 million for the corresponding period in 2025. The increase was primarily due to a $15 million increase in energy revenues largely due to increases of $7 million related to the volume of KWH sales associated with higher market demand and $5 million in non-fuel-related energy revenues from wholesale contracts.

For year-to-date 2026, wholesale revenues were $347 million compared to $250 million for the corresponding period in 2025. The increase was due to an $89 million increase in energy revenues due to increases of $44 million related to the average cost per KWH sold due to higher Southern Company system fuel and purchased power prices, $30 million in non-fuel-related energy revenues from wholesale contracts, and $15 million related to the volume of KWH sales associated with higher market demand, as well as an $8 million increase in capacity revenues from new and existing power sales agreements.

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 2026, other revenues were $260 million compared to $238 million for the corresponding period in 2025. The increase was primarily due to increases of $10 million in unregulated sales associated with power delivery construction and maintenance projects, $9 million in open access transmission tariff sales, $5 million in realized gains associated with price stability products for retail customers on variable demand-driven pricing tariffs, $4 million in renewable energy program revenues primarily associated with solar application fees, and $4 million in outdoor lighting sales, partially offset by a decrease of $12 million in unregulated sales associated with energy conservation projects.

For year-to-date 2026, other revenues were $538 million compared to $503 million for the corresponding period in 2025. The increase was primarily due to increases of $24 million in unregulated sales associated with power delivery construction and maintenance projects, $22 million in open access transmission tariff sales, $13 million in realized gains associated with price stability products for retail customers on variable demand-driven pricing tariffs, and $10 million in outdoor lighting sales, partially offset by a decrease of $30 million in unregulated sales associated with energy conservation projects.

In the second quarter 2026, total fuel and purchased power expenses were $821 million compared to $853 million for the corresponding period in 2025. The decrease was due to an $85 million decrease related to the average cost of fuel and purchased power, partially offset by a $53 million increase related to the volume of KWHs generated and purchased.

For year-to-date 2026, total fuel and purchased power expenses were $1.9 billion compared to $1.8 billion for the corresponding period in 2025. The increase was due to an $84 million net increase related to the volume of KWHs generated and purchased, partially offset by a $16 million net decrease 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 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, all as approved by the FERC.

Details of Georgia Power's generation and purchased power and the related costs were as follows:

(*)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 2026, other operations and maintenance expenses were $667 million compared to $645 million for the corresponding period in 2025. The increase was primarily due to increases of $13 million in storm damage recovery, $13 million in transmission and distribution operational costs, $12 million in expenses associated with unregulated power delivery construction and maintenance projects, $9 million in non-outage generation maintenance expenses, and $8 million in certain employee compensation and benefit expenses, partially offset by decreases of $21 million in technology infrastructure and application production costs and $10 million in expenses associated with energy conservation projects.

For year-to-date 2026, other operations and maintenance expenses were $1.34 billion compared to $1.28 billion for the corresponding period in 2025. The increase was primarily due to increases of $24 million in expenses associated with unregulated power delivery construction and maintenance projects, $22 million in customer education and assistance expenses, $17 million in transmission and distribution operational costs, $14 million in certain employee compensation and benefit expenses, $13 million in storm damage recovery, and $13 million in non-outage generation maintenance expenses, partially offset by decreases of $26 million in expenses associated with energy conservation projects and $16 million in technology infrastructure and application production costs and an increase of $10 million in nuclear property insurance refunds.

See Note (B) to the Condensed Financial Statements under "Georgia Power – Storm Damage Recovery" herein for additional information.

In the second quarter 2026, depreciation and amortization was $503 million compared to $512 million for the corresponding period in 2025. For year-to-date 2026, depreciation and amortization was $0.99 billion compared to $1.02 billion for the corresponding period in 2025. The decreases in the second quarter and year-to-date 2026 were primarily due to decreases of $99 million and $197 million, respectively, resulting from the extension of the 2022 ARP, partially offset by increases of $75 million and $147 million, respectively, from additional plant in service and $12 million and $18 million, respectively, from depreciation associated with PPAs accounted for as finance leases. See Note 2 to the financial statements under "Georgia Power – Rate Plans" in Item 8 of the Form 10-K and Note (F) to the Condensed Financial Statements under "Georgia Power Lease Modification" herein for additional information.

Taxes Other Than Income Taxes

In the second quarter 2026, taxes other than income taxes were $138 million compared to $173 million for the corresponding period in 2025. For year-to-date 2026, taxes other than income taxes were $313 million compared to $342 million for the corresponding period in 2025. The decreases in the second quarter and year-to-date 2026 were primarily due to decreases of $37 million and $35 million, respectively, in property taxes primarily resulting from the actualization of prior-year tax assessments.

Allowance for Equity Funds Used During Construction

In the second quarter 2026, allowance for equity funds used during construction was $104 million compared to $56 million for the corresponding period in 2025. For year-to-date 2026, allowance for equity funds used during construction was $201 million compared to $104 million for the corresponding period in 2025. The increases were primarily due to an increase in capital expenditures subject to AFUDC.

In the second quarter 2026, interest expense, net of amounts capitalized was $228 million compared to $198 million for the corresponding period in 2025. For year-to-date 2026, interest expense, net of amounts capitalized was $431 million compared to $385 million for the corresponding period in 2025. The increases for the second quarter and year-to-date 2026 were primarily associated with increases of approximately $27 million and $52 million, respectively, related to higher average outstanding borrowings and $14 million and $21 million, respectively, in interest associated with PPAs accounted for as finance leases, partially offset by increases of $13 million and $29 million, respectively, in AFUDC debt related to increased capital expenditures. See FINANCIAL CONDITION

AND LIQUIDITY – "Sources of Capital" and "Financing Activities" herein and Note (F) to the Condensed Financial Statements under "Georgia Power Lease Modification" for additional information.

In the second quarter 2026, income taxes were $151 million compared to $236 million for the corresponding period in 2025. For year-to-date 2026, income taxes were $236 million compared to $334 million for the corresponding period in 2025. The decreases in the second quarter and year-to-date 2026 were primarily due to decreases of $93 million and $87 million, respectively, in charges to a valuation allowance on certain state tax credit carryforwards and increases of $12 million and $32 million, respectively, in amortization of federal PTCs and ITCs, partially offset by decreases of $17 million and $29 million, respectively, in the flowback of excess state deferred income taxes and higher pre-tax earnings for both periods presented. See Note (G) to the Condensed Financial Statements herein for additional information.