Acquisitions and Dispositions (Tables)
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12 Months Ended |
Dec. 31, 2018 |
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| Business Combinations [Abstract] |
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| Schedule of Business Acquisitions, by Acquisition |
The following table presents the final purchase price allocation: | | | | | PowerSecure Purchase Price | | | (in millions) | Current assets | $ | 172 |
| Property, plant, and equipment | 46 |
| Intangible assets | 106 |
| Goodwill | 284 |
| Other assets | 4 |
| Current liabilities | (121 | ) | Long-term debt, including current portion | (48 | ) | Deferred credits and other liabilities | (14 | ) | Total purchase price | $ | 429 |
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The following table presents the final purchase price allocation: | | | | | | | | | | | | | | | Southern Company Gas Successor | | | Southern Company Gas Predecessor | | | Southern Company Gas Purchase Price | New Basis | | | Old Basis | | Change in Basis | | (in millions) | | | (in millions) | Current assets | $ | 1,557 |
| | | $ | 1,474 |
| | $ | 83 |
| Property, plant, and equipment | 10,108 |
| | | 10,148 |
| | (40 | ) | Goodwill | 5,967 |
| | | 1,813 |
| | 4,154 |
| Other intangible assets | 400 |
| | | 101 |
| | 299 |
| Regulatory assets | 1,118 |
| | | 679 |
| | 439 |
| Other assets | 229 |
| | | 273 |
| | (44 | ) | Current liabilities | (2,201 | ) | | | (2,205 | ) | | 4 |
| Other liabilities | (4,742 | ) | | | (4,600 | ) | | (142 | ) | Long-term debt | (4,261 | ) | | | (3,709 | ) | | (552 | ) | Contingently redeemable noncontrolling interest | (174 | ) | | | (41 | ) | | (133 | ) | Total purchase price | $ | 8,001 |
| | | $ | 3,933 |
| | $ | 4,068 |
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During 2018, Southern Power acquired and completed the project below and acquired the Wild Horse Mountain and Reading wind facilities discussed under "Construction Projects Completed and/or in Progress" below. | | | | | | | | | | | Project Facility | Resource | Seller, Acquisition Date | Approximate Nameplate Capacity (MW) | | Location | Ownership Percentage | Actual COD | PPA Contract Period | Gaskell West 1 | Solar | Recurrent Energy Development Holdings, LLC,
January 26, 2018 | 20 | | Kern County, CA | 100% of Class B | (*) | March
2018 | 20 years |
| | (*) | Southern Power owns 100% of the class B membership interests under a tax equity partnership. |
The fair values of the assets acquired and liabilities assumed were finalized in 2017 and recorded as follows: | | | | | | 2017 | | (in millions) | Restricted cash | $ | 16 |
| CWIP | 534 |
| Other assets | 5 |
| Accounts payable | (16 | ) | Total purchase price | $ | 539 |
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The following table presents Southern Power's acquisition activity for the year ended December 31, 2017. | | | | | | | | | | | | Project Facility | Resource | Seller, Acquisition Date | Approximate Nameplate Capacity (MW) | | Location | Ownership Percentage | Actual COD | PPA Contract Period | Bethel | Wind | Invenergy Wind Global LLC,
January 6, 2017 | 276 | | Castro County, TX | 100 | % | | January 2017 | 12 years | Cactus Flats(*) | Wind | RES America Developments, Inc.,
July 31, 2017 | 148 | | Concho County, TX | 100 | % | | July 2018 | 12 years and 15 years |
| | (*) | On July 31, 2017, Southern Power purchased 100% of the Cactus Flats facility. In August 2018, Southern Power closed on a tax equity partnership and owns 100% of the class B membership interests. |
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| Pro Forma Information |
The following summarized unaudited pro forma consolidated statement of earnings information assumes that the acquisition of Southern Company Gas was completed on January 1, 2015. The summarized unaudited pro forma consolidated statement of earnings information includes adjustments for (i) intercompany sales, (ii) amortization of intangible assets, (iii) adjustments to interest expense to reflect current interest rates on Southern Company Gas debt and additional interest expense associated with borrowings by Southern Company to fund the Merger, and (iv) the elimination of nonrecurring expenses associated with the Merger. | | | | | | 2016 | | | Operating revenues (in millions) | $ | 21,791 |
| Net income attributable to Southern Company (in millions) | $ | 2,591 |
| Basic EPS | $ | 2.70 |
| Diluted EPS | $ | 2.68 |
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| Schedule of Construction Projects |
During 2018, in accordance with its growth strategy, Southern Power started, continued, or completed construction of the projects set forth in the table below. Total aggregate construction costs, excluding the acquisition costs, are expected to be between $575 million and $640 million for the Plant Mankato expansion, Wild Horse Mountain, and Reading facilities. At December 31, 2018, construction costs included in CWIP related to these projects totaled $289 million, except for the Plant Mankato expansion which is classified as assets held for sale in the financial statements. The ultimate outcome of these matters cannot be determined at this time. | | | | | | | | Project Facility | Resource | Approximate Nameplate Capacity (MW) | Location | Actual/Expected COD | PPA Counterparties | PPA Contract Period | Construction Projects Completed During the Year Ended December 31, 2018 | Cactus Flats(a) | Wind | 148 | Concho County, TX | July 2018 | General Motors, LLC
and
General Mills Operations, LLC | 12 years
and
15 years | Projects Under Construction at December 31, 2018 | Mankato expansion(b) | Natural Gas | 385 | Mankato, MN | Second quarter 2019 | Northern States Power Company | 20 years | Wild Horse Mountain(c) | Wind | 100 | Pushmataha County, OK | Fourth quarter 2019 | Arkansas Electric Cooperative | 20 years | Reading(d) | Wind | 200 | Osage and Lyon Counties, KS | Second quarter 2020 | Royal Caribbean Cruises LTD | 12 years |
| | (a) | In July 2017, Southern Power purchased 100% of the Cactus Flats facility. In August 2018, Southern Power closed on a tax equity partnership and now owns 100% of the class B membership interests. |
| | (b) | In November 2018, Southern Power entered into an agreement to sell all of its equity interests in Plant Mankato, including this expansion currently under construction. See "Sales of Natural Gas Plants" below. |
| | (c) | In May 2018, Southern Power purchased 100% of the Wild Horse Mountain facility. Southern Power may enter into a tax equity partnership, in which case it would then own 100% of the class B membership interests. The ultimate outcome of this matter cannot be determined at this time. |
| | (d) | In August 2018, Southern Power purchased 100% of the membership interests of the Reading facility from the joint development arrangement with Renewable Energy Systems Americas, Inc. described below. Southern Power may enter into a tax equity partnership, in which case it would then own 100% of the class B membership interests. The ultimate outcome of this matter cannot be determined at this time. |
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| Disposal Groups, Including Discontinued Operations |
Gulf Power and the Florida Plants represent individually significant components of Southern Company and Southern Power, respectively; therefore, pre-tax income for these components for the years ended December 31, 2018, 2017, and 2016 are presented below: | | | | | | | | | | | | 2018 | 2017 | 2016 | | (in millions) | Earnings (loss) before income taxes: | | | | Gulf Power | $ | 140 |
| $ | 229 |
| $ | 231 |
| Southern Power's Florida Plants(*) | $ | 49 |
| $ | 37 |
| $ | 37 |
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| | (*) | Earnings before income taxes for the Florida Plants in 2018 represents the period from January 1, 2018 to December 4, 2018 (the divestiture date). |
The following table provides Southern Company's and Southern Power's major classes of assets and liabilities classified as held for sale at December 31, 2018: | | | | | | | | | Southern Company | Southern Power | | (in millions) | Assets Held for Sale: | | | Current assets | $ | 393 |
| $ | 8 |
| Total property, plant, and equipment | 4,623 |
| 576 |
| Other non-current assets | 727 |
| — |
| Total Assets Held for Sale | $ | 5,743 |
| $ | 584 |
| | | | Liabilities Held for Sale: | | | Current liabilities | $ | 425 |
| $ | 15 |
| Long-term debt | 1,286 |
| — |
| Accumulated deferred income taxes | 618 |
| — |
| Other non-current liabilities | 932 |
| — |
| Total Liabilities Held for Sale | $ | 3,261 |
| $ | 15 |
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