REVENUE FROM CONTRACTS WITH CUSTOMERS

The registrants generate revenues from a variety of sources, some of which are excluded from the scope of ASC 606, such as leases, derivatives, and certain cost recovery mechanisms. See Note 1 under "Recently Adopted Accounting Standards – Revenue" for additional information on the adoption of ASC 606 for revenue from contracts with customers and under "Revenues" for additional information on the revenue policies of the registrants.

The following tables disaggregate revenue sources for the year ended December 31, 2018:



	2018
	(in millions)
Southern Company
Operating revenues
Retail electric revenues^(a)
Residential	$	6,608
Commercial	5,266
Industrial	3,224
Other	124
Natural gas distribution revenues	3,175
Alternative revenue programs^(b)	(20		)
Total retail electric and gas distribution revenues	$	18,377
Wholesale energy revenues^(c)(d)	1,896
Wholesale capacity revenues^(d)	620
Other natural gas revenues^(e)	699
Other revenues^(f)	1,903
Total operating revenues	$	23,495


(a)	Retail electric revenues include $75 million of leases and a net increase of $60 million from certain cost recovery mechanisms that are not accounted for as revenue under ASC 606. See Note 2 for additional information on cost recovery mechanisms.


(b)	See Note 1 under "Revenues" for additional information on alternative revenue programs at the natural gas distribution utilities. Alternative revenue program revenues are presented net of any previously recognized program amounts billed to customers during the same accounting period.


(c)	Wholesale energy revenues include $299 million of revenues accounted for as derivatives, primarily related to short-term physical energy sales in the wholesale electricity market. See Note 1 under "Revenues – Southern Power" and Note 14 for additional information on energy-related derivative contracts.


(d)	Wholesale energy and wholesale capacity revenues include $384 million and $121 million, respectively, of PPA contracts accounted for as leases.

(e)

Other natural gas revenues related to Southern Company Gas' energy and risk management activities are presented net of the related costs of those activities and include gross third-party revenues of $7.0 billion of which $3.9 billion relates to contracts that are accounted for as derivatives. See Note 16 under "Southern Company Gas" for additional information on the components of wholesale gas services operating revenues.


(f)	Other revenues include $322 million of revenues not accounted for under ASC 606.



	2018
	Alabama Power		Georgia Power		Mississippi Power
	(in millions)
Operating revenues
Retail revenues^(a)(b)
Residential	$	2,335	$	3,301	$	273
Commercial	1,578		3,023		286
Industrial	1,428		1,344		321
Other	26		84		9
Total retail electric revenues	$	5,367	$	7,752	$	889
Wholesale energy revenues^(c)	297		133		348
Wholesale capacity revenues	101		54		6
Other revenues^(b)(d)	267		481		22
Total operating revenues	$	6,032	$	8,420	$	1,265


(a)	Retail revenues at Alabama Power, Georgia Power, and Mississippi Power include a net increase or (net reduction) of $152 million, $(19) million, and $(13) million, respectively, related to certain cost recovery mechanisms that are not accounted for as revenue under ASC 606. See Note 2 for additional information on cost recovery mechanisms.


(b)	Retail revenues and other revenues at Georgia Power include $74 million and $135 million, respectively, of revenues accounted for as leases.


(c)	Wholesale energy revenues at Alabama Power, Georgia Power, and Mississippi Power include $20 million, $29 million, and $4 million, respectively, accounted for as derivatives primarily related to short-term physical energy sales in the wholesale electricity market. See Note 14 for additional information on energy-related derivative contracts.


(d)	Other revenues at Alabama Power and Georgia Power include $57 million and $109 million, respectively, of revenues not accounted for under ASC 606.



	2018
	(in millions)
Southern Company Gas
Operating revenues
Natural gas distribution revenues
Residential	$	1,525
Commercial	436
Transportation	944
Industrial	40
Other	230
Alternative revenue programs^(a)	(20		)
Total natural gas distribution revenues	$	3,155
Gas pipeline investments	32
Wholesale gas services^(b)	101
Gas marketing services^(c)	568
Other revenues	53
Total operating revenues	$	3,909


(a)	See Note 1 under "Revenues – Southern Company Gas" for additional information on alternative revenue programs at the natural gas distribution utilities. Alternative revenue program revenues are presented net of any previously recognized program amounts billed to customers during the same accounting period.

(b)

Wholesale gas services revenues are presented net of the related costs associated with its energy trading and risk management activities. Operating revenues, as presented, include gross third-party revenues of $7.0 billion of which $3.9 billion relates to contracts that are accounted for as derivatives. See Note 16 under "Southern Company Gas" for additional information on the components of wholesale gas services operating revenues and Note 14 for additional information on energy-related derivative contracts.


(c)	Gas marketing services includes $3 million of revenues not accounted for under ASC 606.

Contract Balances

The following table reflects the closing balances of receivables, contract assets, and contract liabilities related to revenues from contracts with customers at December 31, 2018:



	Receivables		Contract Assets		Contract Liabilities
	(in millions)
Southern Company	$	2,630	$	102	$	32
Alabama Power	520		—		12
Georgia Power	721		58		7
Mississippi Power	100		—		—
Southern Power	118		—		11
Southern Company Gas	952		—		2

As of December 31, 2018, Alabama Power had contract liabilities for outstanding performance obligations primarily related to extended service agreements. Georgia Power had contract assets primarily related to fixed retail customer bill programs where the payment is contingent upon Georgia Power's continued performance and the customer's continued participation in the program over the one-year contract term and to unregulated service agreements where payment is contingent upon project completion. Georgia Power also had contract liabilities for outstanding performance obligations primarily related to unregulated service agreements. Southern Power's contract liabilities relate to collections recognized in advance of revenue for certain levelized PPAs with Georgia Power. Southern Company's unregulated distributed generation business had $39 million and $11 million of contract assets and contract liabilities, respectively, at December 31, 2018 remaining for outstanding performance obligations.

Remaining Performance Obligations

The traditional electric operating companies and Southern Power have long-term contracts with customers in which revenues are recognized as performance obligations are satisfied over the contract term. These contracts primarily relate to PPAs whereby the traditional electric operating companies and Southern Power provide electricity and generation capacity to a customer. The revenue recognized for the delivery of electricity is variable; however, certain PPAs include a fixed payment for fixed generation capacity over the term of the contract. Southern Company's unregulated distributed generation business also has partially satisfied performance obligations related to certain fixed price contracts. Revenues from contracts with customers related to these performance obligations remaining at December 31, 2018 are expected to be recognized as follows:



	2019		2020		2021		2022		2023		2024 and Thereafter
	(in millions)
Southern Company^(*)	$	487	$	341	$	315	$	315	$	306	$	2,103
Alabama Power	23		22		26		23		22		140
Georgia Power	41		38		40		30		31		82
Mississippi Power	3		3		1		—		—		—
Southern Power	323		295		270		281		275		2,028


(*)	Excludes amounts related to held for sale assets. See Note 15 under "Southern Company's Sale of Gulf Power" for additional information.