ALABAMA POWER CO

Net Income (Loss) Attributable to Southern Power

Net loss attributable to Southern Power in the second quarter 2026 was $25 million compared to net income of $51 million for the corresponding period in 2025. The change was primarily due to higher accelerated depreciation related to wind repowering projects.

Net loss attributable to Southern Power for year-to-date 2026 was $22 million compared to net income of $138 million for the corresponding period in 2025. The change was primarily due to higher accelerated depreciation related to wind repowering projects, 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 second quarter 2026, total operating revenues were $535 million, reflecting an $11 million, or 2.0%, decrease from the corresponding period in 2025. The change in operating revenues was primarily due to the following:

•PPA capacity revenues decreased $6 million, or 4.8%, primarily due to an $18 million charge associated with a lease modification related to an affiliate PPA with Georgia Power, partially offset by an $8 million increase in capacity revenues under the PPA.

•PPA energy revenues increased $8 million, or 2.3%, primarily due to a $23 million increase related to the volume of KWHs sold under natural gas PPAs and a $7 million increase in solar revenues primarily related to the first phase of the Millers Branch solar facility being placed in service, largely offset by a $24 million decrease driven by fuel and purchased power prices. See Note (K) to the Condensed Financial Statements under "Southern Power – Construction Projects" herein for additional information.

•Non-PPA revenues decreased $9 million, or 13.0%, primarily due to a decrease of $8 million driven by the market price of energy.

For year-to-date 2026, total operating revenues were $1.2 billion, reflecting a $103 million, or 9.3%, increase from the corresponding period in 2025. The change in operating revenues was primarily due to the following:

•PPA capacity revenues decreased $6 million, or 2.4%, primarily due to an $18 million charge associated with a lease modification related to an affiliate PPA with Georgia Power, partially offset by an $8 million increase in capacity revenues under the PPA.

•PPA energy revenues increased $116 million, or 16.2%, primarily due to an increase of $63 million related to the volume of KWHs sold under natural gas PPAs and an increase of $44 million driven by fuel and purchased power prices.

•Other revenues decreased $6 million, or 42.9%, primarily due to a decrease in income from liquidated damages related to generation facility production guarantees and a warranty settlement in the prior year, partially offset by an increase in insurance proceeds.

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 second quarter 2026, total fuel and purchased power expenses decreased $13 million, or 7.3%, compared to the corresponding period in 2025. Fuel expense decreased $18 million due to a $21 million decrease associated with the average cost of fuel, partially offset by a $3 million increase related to the volume of KWHs generated. Purchased power expense increased $5 million due to an increase of $9 million related to the volume of KWHs purchased, partially offset by a $4 million decrease associated with the average cost of purchased power.

For year-to-date 2026, total fuel and purchased power expenses increased $63 million, or 15.2%, as compared to the corresponding period in 2025. Fuel expense increased $28 million primarily due to an increase of $27 million associated with the average cost of fuel. Purchased power expense increased $35 million due to an increase of $32 million related to the volume of KWHs purchased and an increase of $3 million associated with the average cost of purchased power.

For year-to-date 2026, other operations and maintenance expenses were $278 million compared to $257 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 second quarter 2026, depreciation and amortization was $280 million compared to $177 million for the corresponding period in 2025. For year-to-date 2026, depreciation and amortization was $558 million compared to $329 million for the corresponding period in 2025. The increases in the second quarter and year-to-date 2026 were largely due to increases in accelerated depreciation of $98 million and $224 million, respectively, 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 second quarter 2026, income tax benefit was $77 million compared to $2 million for the corresponding period in 2025. For year-to-date 2026, income tax benefit was $147 million compared to $3 million for the corresponding period in 2025. The increases were 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 Income (Loss) Attributable to Noncontrolling Interests

In the second quarter 2026, net income attributable to noncontrolling interests was $14 million compared to net loss of $27 million for the corresponding period in 2025. For year-to-date 2026, net loss attributable to noncontrolling interests was $4 million compared to $91 million for the corresponding period in 2025. The changes in the second quarter and year-to-date 2026 were primarily due to $38 million and $79 million, respectively, in lower HLBV loss allocations to tax equity partners, largely resulting from Southern Power's purchase of the noncontrolling membership interests in the SP Wind tax equity partnership. 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.