ALABAMA POWER CO

Consolidated Net Income Attributable to Southern Company

Consolidated net income attributable to Southern Company was $2.0 billion ($1.77 per share) in the third quarter 2026 compared to $1.7 billion ($1.55 per share) for the corresponding period in 2025. The increase was primarily due to an increase in non-fuel retail electric revenues, partially offset by increases in other operations and maintenance expenses and taxes other than income taxes.

For year-to-date 2026, consolidated net income attributable to Southern Company was $4.6 billion ($4.02 per share) compared to $3.9 billion ($3.56 per share) for the corresponding period in 2025. The increase was primarily due to increases in non-fuel retail electric revenues, higher natural gas revenues associated with base rate increases, increases in AFUDC equity and earnings from equity method investments, and a decrease in income taxes, partially offset by increases in depreciation and amortization, other operations and maintenance expenses, and taxes other than income taxes.

Retail Electric Revenues

In the third quarter 2026, retail electric revenues were $6.6 billion compared to $5.7 billion for the corresponding period in 2025. For year-to-date 2026, retail electric revenues were $16.0 billion compared to $15.1 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 increases in revenues in thethird quarter and year-to-date 2026 when compared to the corresponding periods in 2025 primarily due to higher contributions from commercial and industrial customers with variable demand-driven pricing at Georgia Power and an increase in Rate CNP Compliance revenues at Alabama Power. See Note 2 to the financial statements under "Alabama Power – Rate CNP Compliance" in Item 8 of the Form 10-K for additional information.

Changes in sales resulted in increases in revenues in the third quarter and year-to-date 2026 when compared to the corresponding periods in 2025. Weather-adjusted residential KWH sales increased 1.3% and 0.6% in the third quarter andyear-to-date 2026, respectively, primarily due to customer growth. Weather-adjusted commercial KWH sales increased 7.3% and 6.5% in the third quarter and year-to-date 2026, respectively, primarily due to increased customer usage, largely driven by data centers at Georgia Power. Weather-adjusted industrial KWH sales increased 1.8% in the third quarter 2026 primarily due to increases in the primary metals, lumber, and miscellaneous manufacturing sectors, partially offset by declines in the paper and chemicals sectors. Weather-adjusted industrial KWH sales increased 1.1% foryear-to-date 2026 primarily due to increases in the primary metals, miscellaneous manufacturing, and stone, clay, and glass sectors, partially offset by declines in the paper and chemicals sectors.

Fuel and other cost recovery revenues increased in the third quarter and year-to-date 2026 as compared to the corresponding periods 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 third quarter 2026, wholesale electric revenues were $873 million compared to $832 million for the corresponding period in 2025. For year-to-date 2026, wholesale electric revenues were $2.54 billion compared to $2.26 billion for the corresponding period in 2025. The increases in the third quarter and year-to-date 2026 were due to an increase in energy revenues associated with increases of $40 million and $162 million, respectively, related to the volume of KWHs sold resulting from higher demand and $11 million and $132 million, respectively, related to the average cost per KWH sold primarily resulting from higher fuel and purchased power prices, partially offset by decreases of $10 million and $14 million, respectively, in non-fuel revenues from wholesale capacity contracts primarily at Alabama Power.

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 third quarter 2026, other electric revenues were $229 million compared to $262 million for the corresponding period in 2025. The decrease was primarily due to a decrease of $31 million in renewable energy program revenues primarily associated with solar application fees at Georgia Power.

For year-to-date 2026, other electric revenues were $736 million compared to $724 million for the corresponding period in 2025. The increase was primarily due to an increase of $50 million in open access transmission tariff sales at the traditional electric operating companies, partially offset by a decrease of $28 million in renewable energy program revenues primarily associated with solar application fees at Georgia Power.

Natural Gas Revenues

In the third quarter 2026, natural gas revenueswere $773 million compared to $734 million for the corresponding period in 2025. For year-to-date 2026, natural gas revenues were $3.93 billion compared to $3.55 billion for the corresponding period in 2025. Details of the changes in natural gas revenues were as follows:

Changes in rates resulted in increases in revenues in the third quarter and year-to-date 2026 as compared to the corresponding periods 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 decreased in the third quarter 2026 as compared to the corresponding period in 2025 primarily due to lower cost of natural gas driven by lower natural gas prices. Revenues associated with gas costs and other cost recovery increased for year-to-date 2026 as compared to the corresponding period in 2025 primarily due to higher cost of natural gas driven by higher natural gas prices in the first quarter 2026, as well as increases in other expenses passed through to customers. See "Cost of Natural Gas" herein for additional information.

Revenues from gas marketing services increased for year-to-date 2026 as compared to the corresponding period in 2025 primarily due to higher commodity prices in the first quarter 2026, partially offset by weather impacts.

In the third quarter 2026, other revenues were $345 million compared to $288 million for the corresponding period in 2025. The increase was primarily due to an increase of $57 million in revenues at PowerSecure related to distributed infrastructure projects.

For year-to-date 2026, other revenues were $1.01 billion compared to $0.97 billion for the corresponding period in 2025. The increase was primarily due to increases of $56 million in revenues at PowerSecure related to distributed infrastructure projects, $22 million in unregulated sales associated with power delivery construction and maintenance projects at Georgia Power, and $20 million in unregulated sales associated with outdoor lighting at Alabama Power and Georgia Power, partially offset by decreases of $31 million in unregulated sales associated with energy conservation projects at Georgia Power and $25 million in sales of other unregulated products and services at Alabama Power.

In the third quarter 2026, total fuel and purchased power expenses were $1.8 billion compared to $1.6 billion for the corresponding period in 2025. The increase was due to a $128 million increase related to the volume of KWHs generated and purchased and a $95 million increase related to the average cost of fuel and purchased power.

For year-to-date 2026, total fuel and purchased power expenses were $4.9 billion compared to $4.5 billion for the corresponding period in 2025. The increase was due to a $232 million increase related to the volume of KWHs generated and purchased and a $149 million increase related to the average cost of fuel and purchased power.

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 77.8% and 84.2% of the total cost of natural gas in the third quarter and year-to-date 2026, respectively.

In the third quarter 2026, cost of natural gas was $99 million compared to $116 million for the corresponding period in 2025. The decrease reflects lower gas cost recovery as a result of a 3.8% decrease in natural gas prices.

For year-to-date 2026, cost of natural gas was $1.2 billion compared to $1.0 billion for the corresponding period in 2025. The increase reflects higher gas cost recovery, primarily in the first quarter 2026, as a result of a 7.2% increase in natural gas prices.

Cost of Other Sales

In the third quarter 2026, cost of other sales was $191 million compared to $156 million for the corresponding period in 2025. The increase was primarily due to an increase of $34 million in expenses at PowerSecure primarily related to distributed infrastructure projects.

For year-to-date 2026, cost of other sales was $548 million compared to $522 million for the corresponding period in 2025. The increase was primarily related to increases of $29 million in expenses associated with unregulated power delivery construction and maintenance projects at Georgia Power and $11 million in expenses related to energy service contracts at Southern Company Gas, partially offset by a decrease of $19 million in expenses related to sales of unregulated products and services at Alabama Power.

In the third quarter 2026, other operations and maintenance expenses were $1.8 billion compared to $1.6 billion for the corresponding period in 2025. The increase was primarily due to an increase of $46 million in generation expenses at the traditional electric operating companies, increases of $42 million in transmission and distribution costs and $39 million in storm damage recovery, both at Georgia Power, a $33 million credit to income at Georgia Power related to the estimated probable loss on Plant Vogtle Units 3 and 4 in 2025, and $24 million in expenses at Southern Company Gas related to charges associated with the disallowance of certain capital investments at Nicor Gas as part of its 2025 base rate case, certain deferred expenses, and gas mains.

For year-to-date 2026, other operations and maintenance expenses were $5.2 billion compared to $4.9 billion for the corresponding period in 2025. The increase was primarily due to increases of $80 million in expenses at Southern Company Gas related to employee compensation and benefits, certain deferred expenses, and charges associated with the disallowance of certain capital investments at Nicor Gas as part of its 2025 base rate case, $72 million in transmission and distribution operational costs at the traditional electric operating companies, $63 million in NDR accruals and storm damage recovery at Alabama Power and Georgia Power, and $43 million in generation expenses at Georgia Power largely due to non-outage maintenance expenses, a $33 million credit to income at Georgia Power related to the estimated probable loss on Plant Vogtle Units 3 and 4 in the third quarter 2025, and a $31 million increase in customer education and assistance expenses at Georgia Power. Partially offsetting the increase were $35 million of deferred costs related to the Jurisdictional Separation Study Order at Alabama Power and decreases of $30 million associated with increased utilization of the reliability reserve to offset reliability-related transmission, distribution, and generation expenses and $24 million related to the acquisition of the Lindsay Hill Generating Station, both at Alabama Power.

See Note (B) to the Condensed Financial Statements under "Alabama Power – Reliability Reserve Accounting Order," "Georgia Power – Storm Damage Recovery," and "Southern Company Gas – Rate Proceedings – Nicor Gas" herein for additional information. Also see Note 2 to the financial statements under "Georgia Power – Nuclear Construction" and "Southern Company Gas – Rate Proceedings – Nicor Gas" and Notes 2 and 15 to the financial statements under "Alabama Power – Jurisdictional Separation Study Order" and "Alabama Power," respectively, in Item 8 of the Form 10-K for additional information.

In the third quarter 2026, depreciation and amortization was $1.44 billion compared to $1.42 billion for the corresponding period in 2025. For year-to-date 2026, depreciation and amortization was $4.3 billion compared to $4.0 billion for the corresponding period in 2025. The increases in thethird quarter and year-to-date 2026 were primarily due to increases of $114 million and $317 million, respectively, associated with additional plant in service, partially offset by decreases of $100 million and $297 million, respectively, resulting from the extension of Georgia Power's 2022 ARP. Also contributing to the increase for year-to-date 2026 was an increase of $228 million in accelerated depreciation related to wind repowering projects at Southern Power.

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.

In the third quarter 2026, taxes other than income taxes were $434 million compared to $288 million for the corresponding period in 2025. For year-to-date 2026, taxes other than income taxes were $1.27 billion compared to $1.14 billion for the corresponding period in 2025. The increases inthe third quarter and year-to-date 2026 were primarily due to increases of $116 million and $81 million, respectively, in property taxes at Georgia Power largely resulting from the timing of prior-year actualizations and $23 million and $30 million, respectively, in municipal franchise fees and utility license taxes at the traditional electric operating companies.

Allowance for Equity Funds Used During Construction

In the third quarter 2026, allowance for equity funds used during construction was $140 million compared to $90 million for the corresponding period in 2025. For year-to-date 2026, allowance for equity funds used during construction was $388 million compared to $243 million for the corresponding period in 2025. The increases were primarily associated with an increase in capital expenditures subject to AFUDC at Georgia Power.

Earnings from Equity Method Investments

In the third quarter 2026, earnings from equity method investments were $77 million compared to $33 million for the corresponding period in 2025. For year-to-date 2026, earnings from equity method investments were $213 million compared to $76 million for the corresponding period in 2025. The increases in thethird quarter and year-to-date 2026 were primarily due to increases of $46 million and $115 million, respectively, at Southern Holdings related to gains and losses on investments in energy-related venture capital funds. Also contributing to the increase for year-to-date 2026 was a $15 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 third quarter 2026, interest expense, net of amounts capitalized was $842 million compared to $755 million for the corresponding period in 2025. The increase was primarily due to $43 million in losses associated with the extinguishment of debt at the parent company and increases of $40 million related to higher average outstanding borrowings and $16 million related to higher interest rates, partially offset by an increase of $16 million in capitalized interest and AFUDC debt primarily associated with increased capital expenditures.

For year-to-date 2026, interest expense, net of amounts capitalized was $2.4 billion compared to $2.3 billion for the corresponding period in 2025. The increase was primarily due to increases of $161 million related to higher average outstanding borrowings, $29 million related to higher interest rates, and $21 million in interest associated with PPAs accounted for as finance leases at Georgia Power, partially offset by a decrease of $75 million in losses associated with the extinguishment of debt at the parent company and an increase of $63 million in capitalized interest and AFUDC debt primarily associated with increased capital expenditures.

See FINANCIAL CONDITION AND LIQUIDITY – "Sources of Capital" and "Financing Activities" herein for additional information.

In the third quarter 2026, other income (expense), net was $171 million compared to $149 million for the corresponding period in 2025. For year-to-date 2026, other income (expense), net was $508 million compared to $459 million for the corresponding period in 2025. The increases in the third quarter and year-to-date 2026 were primarily due to increases in customer charges related to contributions in aid of construction at Alabama Power and Georgia Power, partially offset by a loss on certain investments at Southern Holdings.

In the third quarter 2026, income taxes were $472 million compared to $404 million for the corresponding period in 2025. The increase was primarily due to higher pre-tax earnings, $57 million associated with a change in tax benefits related to the extinguishment of debt in 2025, and a decrease of $23 million in the flowback of excess state deferred income taxes at Georgia Power, partially offset by an increase of $70 million in amortization of federal PTCs and ITCs at Georgia Power and an increase of $36 million in wind and solar PTCs at Southern Power.

For year-to-date 2026, income taxes were $887 million compared to $973 million for the corresponding period in 2025. The decrease was primarily due to an increase of $107 million in wind and solar PTCs at Southern Power and an increase of $102 million in amortization of federal PTCs and ITCs and a decrease of $82 million in charges to a valuation allowance on certain state tax credit carryforwards, both at Georgia Power, partially offset by higher pre-tax earnings, $57 million associated with a change in tax benefits related to the extinguishment of debt in 2025, and a decrease of $53 million in the flowback of excess state deferred income taxes at Georgia Power.

See Note (G) to the Condensed Financial Statements and Note (K) to the Condensed Financial Statements under "Southern Power" herein and Notes 8 and 15 to the financial statements under "Convertible Senior Notes" and "Southern Power – Purchase of Renewable Facility Interests," respectively, in Item 8 of the Form 10-K for additional information.

Net Income (Loss) Attributable to Noncontrolling Interests

Substantially all noncontrolling interests relate to renewable projects at Southern Power. In the third quarter 2026, net income attributable to noncontrolling interests was $28 million compared to a net loss of $4 million for the corresponding period in 2025. For year-to-date 2026, net income attributable to noncontrolling interests was $24 million compared to a net loss of $95 million for the corresponding period in 2025. The changes in the third quarter and year-to-date 2026 were primarily due to $32 million and $111 million, respectively, in lower loss allocations to Southern Power's 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.