ALABAMA POWER CO

(B)REGULATORY MATTERS

See Note 2 to the financial statements in Item 8 of the Form 10-K for additional information relating to regulatory matters.

The recovery balances for retail fuel and storm/property damage for the traditional electric operating companies and natural gas cost for Southern Company Gas at September 30, 2026 and December 31, 2025 were as follows:

(*)Mississippi Power also has wholesale MRA and Market Based (MB) fuel cost recovery factors. At September 30, 2026 and December 31, 2025, wholesale MRA fuel cost under recovery was $3 million and $6 million, respectively, and was included in customer accounts receivable, net on Mississippi Power's balance sheets. The wholesale MB fuel cost recovery wasimmaterial for both periods presented.

Power to the People Act

In December 2025, the Alabama PSC issued a consent order to keep retail rates stable through 2027. On April 2, 2026, the State of Alabama enacted legislation (Power to the People Act) providing that retail base rates established and in place on October 1, 2026 may not be increased before January 1, 2029 for utilities that are regulated by the Alabama PSC and that provide retail electric service. The ultimate outcome of this matter cannot be determined at this time.

Renewable Generation Certificate

On August 4, 2026, the Alabama PSC approved Alabama Power's Clearview Ranch Project under the Renewable Generation Certificate (RGC) program. The Clearview Ranch Project consists of an Alabama Power-owned 200-MW solar generating facility paired with a 200-MW battery energy storage system with atwo-hour duration. The facility's projected COD is the second quarter 2029. Through September 30, 2026, Alabama Power has procured solar capacity totaling approximately 870 MWs under the RGC.

Rate CNP New Plant

On November 4, 2026, in conjunction with a Rate CNP New Plant filing, Alabama Power requested authorization from the Alabama PSC to defer until 2029 the recovery of the costs associated with the Lindsay Hill Generating Station to reconcile the timing of that recovery with the apparent intent of the Power to the People Act. In this filing,

Alabama Power proposed providing bill credits to retail customers during 2028 to offset any rate impact of the previously approved cost recovery associated with the Lindsay Hill Generating Station through Rate CNP New Plant beginning January 2028. Alabama Power also proposed establishing a regulatory asset for the associated costs in 2028 to be recovered over afive-year period starting in 2029 in order to effectuate the previously approved cost recovery. The ultimate outcome of this matter cannot be determined at this time. See "Power to the People Act" herein and Note 15 to the financial statements under "Alabama Power" in Item 8 of the Form 10-K for additional information.

Reliability Reserve Accounting Order

In its annual Rate RSE filing, Alabama Power notified the Alabama PSC of its plans to use $60 million of its reliability reserve. During the first nine months of 2026, Alabama Power utilized $60 million of its reliability reserve for reliability-related transmission, distribution, and generation expenses. At September 30, 2026, Alabama Power's reliability reserve balance was $124 million.

Environmental Accounting Order

As a result of the planned conversion of Plant Barry Unit 5 from coal to natural gas, the unit's net book value no longer meets the criteria to be considered probable of abandonment, and, in the first quarter 2026, approximately $307 million was reclassified from other utility plant, net to plant in service on Alabama Power's and Southern Company's balance sheets.

Potential Cost Exposure Petition

In addition to comprehensive pricing, early termination fees, and security features such as guarantees or surety bonds, Alabama Power has included in certain electric service contracts an Incremental Revenue Component (IRC) designed to further help mitigate Potential Cost Exposure (PCE) associated with expected incremental investments. On October 16, 2026, Alabama Power filed a petition with the Alabama PSC seeking authorization to establish a regulatory liability effective October 1, 2026 for future PCE to align with the IRC.

Alabama Power proposed in this petition that when the IRC amounts are billed, Alabama Power would identify a corresponding amount of PCE and record that amount as a regulatory liability, with a corresponding charge to amortization. This would allow Alabama Power to establish a regulatory liability to mitigate PCE when and if it materializes while the related IRC amounts are billed. Once risk mitigation thresholds are achieved, Alabama Power would begin systematically reducing the regulatory liability with a corresponding credit to amortization.

The ultimate outcome of this matter cannot be determined at this time.

Certification Requests

On March 25, 2026, Georgia Interfaith Power & Light, Park Avenue Baptist Church, Unitarian Universalist Church of Savannah, Sierra Club, Adrien Webber, and Southern Alliance for Clean Energy filed a petition with the Fulton County Superior Court appealing the Georgia PSC's December 19, 2025 approval of Georgia Power's request for certification of resources totaling 9,885 MWs (2025 All-Source Certification). The petition requests a reversal of the 2025 All-Source Certification, including a decertification of at least 757 MWs of resources. Georgia Power intervened in the proceeding, and both the Georgia PSC and Georgia Power filed motions to dismiss on April 24, 2026 and June 23, 2026, respectively. Georgia Power believes the appeal has no merit; however, the ultimate outcome of this matter cannot be determined at this time.

On June 2, 2026, the FERC approvedtwo affiliate PPAs with Southern Power procured under the 2022 IRP. These affiliate PPAs commenced in June 2026 with capacities of 638 MWs and 74 MWs. See Note (F) under "Georgia Power Lease Modification" for additional information.

On August 26, 2026, as a result of additional large load contracts, Georgia Power filed a joint statement with the Georgia PSC Staff in which Georgia Power agreed to increase the amount of downward pressure on rates for non-large load customers to be included in its next base rate case to at least $949 million per year, on a levelized basis, for the years 2029, 2030, and 2031. Georgia Power also agreed that it will not seek recovery from non-large load customers for any revenue deficiency associated with serving large load data center customers in the event of an early contract termination. The Georgia PSC will continue to have discretion to allow recovery of any such revenue deficiency, including the allocation to other large load data center customers.

Nuclear Uprates

On October 6, 2026, the Georgia PSC approved Georgia Power's request to uprate Plant Hatch Units 1 and 2 (900 MWs based on 50.1% ownership) by a projected 49 MWs of incremental capacity. Additionally, the Georgia PSC approved a tariff for new large load customers to purchase zero-emission credits produced by the projected 47 MWs of uprates from Plant Vogtle Units 1 and 2 (1,060 MWs based on 45.7% ownership), previously approved in the 2025 IRP, and the projected 49 MWs of uprates from Plant Hatch Units 1 and 2. Under the tariff, the customer will pay an up-front program enrollment contribution for the right to participate in the program and additional payments throughout the term of the program to purchase zero-emission credits as they become available, both of which will reduce cost impacts of the uprates to non-subscribing customers. All of the expected zero-emission credits from the uprates under the tariff have been fully subscribed and contracted for a 25-year term beginning with the COD of the first unit uprate. CODs for the incremental capacity at the nuclear facilities are projected to occur between the first quarter 2028 and the second quarter 2031.

2025 IRP

Pursuant to the final order for Georgia Power's 2025 IRP, on June 9, 2026, Georgia Power initiated a request for proposals for 2,000 MWs to 6,000 MWs of capacity resources with projected CODs or delivery commencement dates in 2032 and 2033.

Fuel Cost Recovery

On each of March 13, 2026, April 15, 2026, and May 14, 2026, Georgia Power filed an Interim Fuel Rider (IFR) notification and plan informing the Georgia PSC that Georgia Power's under recovered fuel balance accumulated since May 31, 2023 exceeded $200 million, as established in a Georgia PSC stipulation approved in 2023, as of February 28, 2026, March 31, 2026, and April 30, 2026, respectively. Georgia Power did not propose a fuel cost recovery rate change pursuant to these IFR notifications and plans.

On May 28, 2026, the Georgia PSC approved a stipulation among Georgia Power, the staff of the Georgia PSC, and certain intervenors to decrease annual fuel billings by 12.9%, or approximately $394 million, effective June 1, 2026. Under the approved stipulation, Georgia Power is required to file for an adjustment to its fuel cost recovery rates under an IFR prior to the next fuel case, subject to a maximum 40% cumulative change, if its under or over recovered fuel balance accumulated since May 31, 2026 exceeds $300 million. Within 30 days of the filing, the Georgia PSC will approve, modify, or reject any proposed fuel cost recovery rate adjustment. Georgia Power is scheduled to file its next fuel case no later than February 28, 2029. Changes in fuel rates have no significant effect on Georgia Power's net income but impact the related operating cash flows.

Real-Time Pricing Proceedings

In the third quarter 2026, the Georgia PSC commenced a proceeding to review the methodology for assigning a portion of the revenue charged to the variable demand-driven pricing customers to fuel cost recovery revenues. A decision by the Georgia PSC is expected on December 15, 2026. The ultimate impact of this matter cannot be determined at this time.

Storm Damage Recovery

On May 28, 2026, the Georgia PSC approved a stipulation among Georgia Power, the staff of the Georgia PSC, and certain intervenors regarding Georgia Power's recovery of storm restoration costs. Under the stipulation, the Georgia PSC approved the following:

•Recovery of $31 million annually for storm restoration costs incurred after December 31, 2025.

•Recovery of Georgia Power's adjusted regulatory asset balance totaling $869 million, as determined through the proceedings and stipulation, related to storm damage as of December 31, 2025 over a period of 67 months from June 1, 2026 through December 31, 2031, or approximately $156 million annually.

Additionally, the stipulation provided for the treatment of the Internal Revenue Code §45U PTCs generated from Georgia Power's nuclear generating facilities in 2024 and 2025, in which Georgia Power agreed to use $77 million of these tax credits for the benefit of customers.

Construction

At September 30, 2026, Georgia Power had recorded approximately $5.0 billion of combined capital costs, excluding AFUDC, for the projects reflected in the table below approved by the Georgia PSC through the 2023 IRP Update and certification requests in September and December 2025 authorized through its 2022 IRP. The total certified amounts related to these projects are approximately $19.5 billion, excluding AFUDC. The ultimate outcome of these matters cannot be determined at this time.

(a)Subsequent to September 30, 2026, Georgia Power completed the construction of the 58-MW Hammond Phase 1 battery energy storage facility.

(b)Pursuant to the 2023 IRP Update, cost recovery over the certified amount is limited.

(c)Reflects an updated projected COD. Georgia Power projects that the total combined capital costs for Plant Yates Units 8 through 10, excluding AFUDC, will remain within the amount certified by the Georgia PSC.

Performance Evaluation Plan

On June 18, 2026, the Mississippi PSC approved Mississippi Power's annual retail PEP Evaluation Report for 2026, resulting in an annual increase in revenues of approximately 1.8%, or $20 million, primarily due to increases in investment and depreciation. In accordance with the PEP rate schedule, the increase became effective with the first billing cycle of January 2026.

On March 9, 2026, in compliance with its IRP requirements, Mississippi Power submitted its mid-point update to its 2024 IRP to the Mississippi PSC, indicating that the retirement dates of Plant Daniel Unit 2 and Plant Watson Unit 4 will extend beyond 2028.

On July 7, 2026, the Mississippi PSC approved a request from Mississippi Power to convert either Plant Daniel Unit 1 or Unit 2 from a coal-fired unit to a natural gas-fired unit. Conversion of the declared unit is projected to be completed in 2029.

The remaining net book value of Plant Daniel Units 1 and 2 was approximately $476 million at September 30, 2026, and Mississippi Power is continuing to depreciate these units using approved rates. Until a unit is declared to be converted, Mississippi Power is unable to determine what portion of the net book value will remain in service upon a unit conversion. Mississippi Power expects to reclassify the remaining net book value of assets no longer in service upon a unit conversion or retirement to a regulatory asset to be amortized over a period to be determined by the Mississippi PSC in future proceedings, consistent with a 2020 order. The ultimate outcome of this matter cannot be determined at this time.

Environmental Compliance Overview Plan

On April 14, 2026, the Mississippi PSC approved Mississippi Power's annual ECO Plan filing for 2026, resulting in a $2 million annual increase in revenues effective with the first billing cycle of May 2026.

Ad Valorem Tax Adjustment

On August 4, 2026, the Mississippi PSC approved Mississippi Power's annual ad valorem tax adjustment filing for 2026, resulting in a $7 million annual revenue increase effective with the first billing cycle of September 2026. This increase is not expected to have a significant effect on Mississippi Power's net income but will affect operating cash flows.

System Restoration Rider

On June 18, 2026, the Mississippi PSC approved Mississippi Power's annual SRR filing for 2026, with no change in retail rates. Mississippi Power's minimum annual SRR accrual increased from $13.5 million to $13.7 million.

Reliability Reserve Accounting Order

On March 16, 2026, through its annual PEP Evaluation Report, Mississippi Power notified the Mississippi PSC of its intent to use a portion of its $59 million retail reliability reserve balance during 2026. On June 18, 2026, the Mississippi PSC approved the annual PEP filing which allowed for the use of approximately $7 million of the reliability reserve balance, which Mississippi Power utilized for reliability-related generation, transmission, and distribution expenses during the first six months of 2026. At September 30, 2026, Mississippi Power's retail reliability reserve balance was $52 million. See "Performance Evaluation Plan" herein for information regarding Mississippi Power's annual PEP filing.

Excess Accumulated Deferred Income Tax Accounting Order

On June 18, 2026, the Mississippi PSC approved approximately $21 million associated with certain federal excess accumulated deferred income taxes resulting from the Tax Reform Legislation to be credited back to customers over an 18-month period starting with the first billing cycle of July 2026.

Rate Proceedings

Nicor Gas

On June 16, 2026, in connection with Nicor Gas' 2023 general base rate case proceeding, the Illinois Appellate Court determined that the Illinois Commission did not provide sufficient support for its disallowance of $43 million of Nicor Gas' planned capital investments that were expected to be completed by December 31, 2024. As the disallowance related to planned capital investments for which costs had not yet been incurred, it was not included in the pre-tax charge to income recorded in 2023. This matter remains subject to further proceedings before the Illinois Commission and had no impact on the current period financial statements. The ultimate outcome of this matter cannot be determined at this time.

On July 21, 2026, Nicor Gas filed a petition for leave to appeal with the Illinois Supreme Court related to the capital structure approved in Nicor Gas' 2023 general base rate case proceeding. On September 30, 2026, the Illinois Supreme Court denied Nicor Gas' petition. This matter is now concluded.

On September 8, 2026, Nicor Gas, the staff of the Illinois Commission, and certain other parties entered into a stipulation to resolve Nicor Gas' general base rate case filed on January 9, 2026. On October 15, 2026, the Illinois Commission entered an order approving the stipulation, which provides for an annual base rate revenue increase of approximately $82 million, an ROE of 9.48%, and an equity ratio of 50%, effective November 16, 2026. Under the stipulation, Nicor Gas has agreed that once the order approving the stipulation becomes final, including the resolution of any rehearing requests, it will file a motion to dismiss its pending appeal of the Illinois Commission's November 19, 2025 base rate case decision. The order remains subject to rehearing requests and related procedural actions. The ultimate outcome of this matter cannot be determined at this time.

Virginia Natural Gas

On August 4, 2026, Virginia Natural Gas filed a base rate case with the Virginia Commission seeking an increase in annual base revenues of $67 million, including $18 million related to the recovery of investments under the SAVE program. The requested increase is based on a projected 12-month period beginning January 1, 2027, an ROE of 10.45%, and an equity ratio of 54.86%. Rate adjustments will be effective January 1, 2027, subject to refund. The Virginia Commission is expected to issue an order on the requested increase in the third quarter 2027. The ultimate outcome of this matter cannot be determined at this time.