v3.7.0.1
Segment and Related Information
 3 Months Ended
Mar. 31, 2017
Segment Reporting [Abstract]  
SEGMENT AND RELATED INFORMATION
SEGMENT AND RELATED INFORMATION
Southern Company
The primary business of the Southern Company system is electricity sales by the traditional electric operating companies and Southern Power and the distribution of natural gas by Southern Company Gas. The four traditional electric operating companies – Alabama Power, Georgia Power, Gulf Power, and Mississippi Power – are vertically integrated utilities providing electric service in four Southeastern states. Southern Power constructs, acquires, owns, and manages power generation assets, including renewable energy projects, and sells electricity at market-based rates in the wholesale market. Southern Company Gas distributes natural gas through the seven natural gas distribution utilities in seven states and is involved in several other complementary businesses including gas marketing services, wholesale gas services, and gas midstream operations.
Southern Company's reportable business segments are the sale of electricity by the four traditional electric operating companies, the sale of electricity in the competitive wholesale market by Southern Power, and the sale of natural gas and other complementary products and services by Southern Company Gas. Revenues from sales by Southern Power to the traditional electric operating companies were $100 million for the three months ended March 31, 2017 and $97 million for the three months ended March 31, 2016. The "All Other" column includes the Southern Company parent entity, which does not allocate operating expenses to business segments. Also, this category includes segments below the quantitative threshold for separate disclosure. These segments include providing energy technologies and services to electric utilities and large industrial, commercial, institutional, and municipal customers; as well as investments in telecommunications and leveraged lease projects. All other inter-segment revenues are not material.
Financial data for business segments and products and services for the three months ended March 31, 2017 and 2016 was as follows:
 
Electric Utilities
 
 
 
 
 
Traditional
Electric Operating
Companies
Southern
Power
Eliminations
Total
Southern Company Gas
All
Other
Eliminations
Consolidated
 
(in millions)
Three Months Ended
March 31, 2017:
 
 
 
 
 
 
 
 
Operating revenues
$
3,786

$
450

$
(105
)
$
4,131

$
1,560

$
123

$
(43
)
$
5,771

Segment net income (loss)(a)(b)(c)
432

70

—

502

239

(84
)
1

658

Total assets at March 31, 2017
$
72,692

$
14,681

$
(306
)
$
87,067

$
21,683

$
2,574

$
(1,564
)
$
109,760

Three Months Ended
March 31, 2016:
 
 
 
 
 
 
 
 
Operating revenues
$
3,769

$
315

$
(103
)
$
3,981

$
—

$
47

$
(36
)
$
3,992

Segment net income (loss)(a)(b)
465

50

—

515

—

(23
)
(3
)
489

Total assets at December 31, 2016
$
72,141

$
15,169

$
(316
)
$
86,994

$
21,853

$
2,474

$
(1,624
)
$
109,697

(a)
Attributable to Southern Company.
(b)
Segment net income (loss) for the traditional electric operating companies includes pre-tax charges for estimated probable losses on the Kemper IGCC of $108 million ($67 million after tax) and $53 million ($33 million after tax) for the three months ended March 31, 2017 and 2016, respectively. See Note (B) under "Integrated Coal Gasification Combined Cycle – Kemper IGCC Schedule and Cost Estimate" for additional information.
(c)
Segment net income (loss) for the traditional electric operating companies also includes a pre-tax charge for the write-down of Gulf Power's ownership of Plant Scherer Unit 3 of $33 million ($20 million after tax) for the three months ended March 31, 2017. See Note (B) under "Regulatory Matters – Gulf Power – Retail Base Rate Cases" for additional information.
Products and Services
 
 
Electric Utilities' Revenues
Period
 
Retail
 
Wholesale
 
Other
 
Total
 
 
(in millions)
Three Months Ended March 31, 2017
 
$
3,394

 
$
531

 
$
206

 
$
4,131

Three Months Ended March 31, 2016
 
3,377

 
396

 
208

 
3,981

 
Southern Company Gas' Revenues
Period
Gas
Distribution
Operations
Gas
Marketing
Services
Other
Total
 
(in millions)
Three Months Ended March 31, 2017
$
1,132

$
288

$
140

$
1,560

Southern Company Gas
Southern Company Gas manages its business through four reportable segments – gas distribution operations, gas marketing services, wholesale gas services, and gas midstream operations. The non-reportable segments are combined and presented as all other.
Gas distribution operations is the largest component of Southern Company Gas' business and includes natural gas local distribution utilities that construct, manage, and maintain intrastate natural gas pipelines and gas distribution facilities in seven states. Gas marketing services includes natural gas marketing to end-use customers primarily in Georgia and Illinois. Additionally, gas marketing services provides home equipment protection products and services. Wholesale gas services provides natural gas asset management and/or related logistics services for each of Southern Company Gas' utilities except Nicor Gas as well as for non-affiliated companies. Additionally, wholesale gas services engages in natural gas storage and gas pipeline arbitrage and related activities. Gas midstream operations primarily consists of Southern Company Gas' pipeline investments, with storage and fuel operations also aggregated into this segment. The all other column includes segments below the quantitative threshold for separate disclosure, including the subsidiaries that fall below the quantitative threshold for separate disclosure.
After the Merger, Southern Company Gas changed its segment performance measure to net income. In order to properly assess net income by segment, Southern Company Gas executed various intercompany note agreements to revise interest charges to its segments. Since such agreements did not exist in the predecessor period, Southern Company Gas is unable to provide the comparable net income.
Business segment financial data for the successor period January 1, 2017 through March 31, 2017 and the predecessor period January 1, 2016 through March 31, 2016 was as follows:
 
Gas Distribution Operations
Gas Marketing Services
Wholesale Gas Services(*)
Gas Midstream Operations
Total
All Other
Eliminations
Consolidated
 
(in millions)
Successor – January 1, 2017
through March 31, 2017:
 
 
 
 
 
 
 
 
Operating revenues
$
1,180

$
288

$
131

$
25

$
1,624

$
2

$
(66
)
$
1,560

Segment net income
117

31

68

15

231

8

—

239

Successor – Total assets at
March 31, 2017
$
18,201

$
2,118

$
1,018

$
2,363

$
23,700

$
10,860

$
(12,877
)
$
21,683

Predecessor – January 1, 2016
through March 31, 2016:
 
 
 
 
 
 
 
 
Operating revenues
$
1,028

$
286

$
63

$
15

$
1,392

$
2

$
(60
)
$
1,334

Segment EBIT
235

80

44

(1
)
358

(5
)
(1
)
352

Successor – Total assets at
December 31, 2016
$
19,453

$
2,084

$
1,127

$
2,211

$
24,875

$
11,145

$
(14,167
)
$
21,853

(*)
The revenues for wholesale gas services are netted with costs associated with its energy and risk management activities. A reconciliation of operating revenues and intercompany revenues is shown in the following table.
 
Third Party Gross Revenues
 
Intercompany Revenues
 
Total Gross Revenues
 
Less Gross Gas Costs
 
Operating Revenues
 
(in millions)
Successor – January 1, 2017 through March 31, 2017
$
1,839

 
$
136

 
$
1,975

 
$
1,844

 
$
131

Predecessor – January 1, 2016 through March 31, 2016
$
1,443

 
$
81

 
$
1,524

 
$
1,461

 
$
63