| SEGMENT AND RELATED INFORMATION |
SEGMENT AND RELATED INFORMATION Southern Company The primary businesses of the Southern Company system are electricity sales by the traditional electric operating companies and Southern Power and the distribution of natural gas by Southern Company Gas. The traditional electric operating companies – Alabama Power, Georgia Power, and Mississippi Power – are vertically integrated utilities providing electric service in three Southeastern states. Southern Power develops, 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 its natural gas distribution utilities and is involved in several other complementary businesses including gas pipeline investments, wholesale gas services, and gas marketing services. Southern Company's reportable business segments are the sale of electricity by the 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 $117 million and $204 million for the three and six months ended June 30, 2019, respectively, and $109 million and $192 million for the three and six months ended June 30, 2018, respectively. Revenues from sales of natural gas from Southern Company Gas to the traditional electric operating companies were immaterial for both the three and six months ended June 30, 2019 and 2018. Revenues from sales of natural gas from Southern Company Gas to Southern Power were $16 million and $33 million for the three and six months ended June 30, 2019, respectively, and $22 million and $58 million for the three and six months ended June 30, 2018, respectively. 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 solutions, such as distributed energy infrastructure and energy efficiency products and services, to 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 and six months ended June 30, 2019 and 2018 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 June 30, 2019 | | | | | | | | Operating revenues | $ | 3,899 |
| $ | 510 |
| $ | (119 | ) | $ | 4,290 |
| $ | 689 |
| $ | 186 |
| $ | (67 | ) | $ | 5,098 |
| Segment net income (loss)(a)(b)(c)(d) | 782 |
| 174 |
| — |
| 956 |
| 106 |
| (154 | ) | (9 | ) | 899 |
| Six Months Ended June 30, 2019 | | | |
|
| | | | Operating revenues | $ | 7,343 |
| $ | 953 |
| $ | (211 | ) | $ | 8,085 |
| $ | 2,163 |
| $ | 368 |
| $ | (106 | ) | $ | 10,510 |
| Segment net income (loss)(a)(b)(c)(d) | 1,346 |
| 230 |
| — |
| 1,576 |
| 376 |
| 1,041 |
| (11 | ) | 2,982 |
| At June 30, 2019 | | | | | | | | | Goodwill | $ | — |
| $ | 2 |
| $ | — |
| $ | 2 |
| $ | 5,015 |
| $ | 265 |
| $ | — |
| $ | 5,282 |
| Total assets | 78,314 |
| 14,518 |
| (783 | ) | 92,049 |
| 20,761 |
| 3,343 |
| (1,286 | ) | 114,867 |
| Three Months Ended June 30, 2018 | | | | | | | | Operating revenues | $ | 4,124 |
| $ | 555 |
| $ | (114 | ) | $ | 4,565 |
| $ | 730 |
| $ | 381 |
| $ | (49 | ) | $ | 5,627 |
| Segment net income (loss)(a)(b)(d) | (48 | ) | 22 |
| — |
| (26 | ) | (31 | ) | (100 | ) | 3 |
| (154 | ) | Six Months Ended June 30, 2018 | | | | | | | | Operating revenues | $ | 8,104 |
| $ | 1,064 |
| $ | (220 | ) | $ | 8,948 |
| $ | 2,369 |
| $ | 782 |
| $ | (100 | ) | $ | 11,999 |
| Segment net income (loss)(a)(b)(d)(e) | 563 |
| 143 |
| — |
| 706 |
| 248 |
| (174 | ) | 4 |
| 784 |
| At December 31, 2018 | | | | | | | | | Goodwill | $ | — |
| $ | 2 |
| $ | — |
| $ | 2 |
| $ | 5,015 |
| $ | 298 |
| $ | — |
| $ | 5,315 |
| Total assets | 79,382 |
| 14,883 |
| (306 | ) | 93,959 |
| 21,448 |
| 3,285 |
| (1,778 | ) | 116,914 |
|
| | (a) | Attributable to Southern Company. |
| | (b) | Segment net income (loss) for the traditional electric operating companies includes pre-tax charges for estimated losses on plants under construction of $4 million ($3 million after tax) and $1.1 billion ($0.8 billion after tax) for the three months ended June 30, 2019 and 2018, respectively, and $6 million ($5 million after tax) and $1.1 billion ($0.8 billion after tax) for the six months ended June 30, 2019 and 2018, respectively. See Note 2 to the financial statements in Item 8 of the Form 10-K and Note (B) under "Georgia Power – Nuclear Construction" and "Mississippi Power – Kemper County Energy Facility" for additional information. |
| | (c) | Segment net income (loss) for the "All Other" column includes the preliminary pre-tax gain associated with the sale of Gulf Power of $2.5 billion ($1.3 billion after tax) for the six months ended June 30, 2019, of which $(15) million ($(11) million after tax) was recorded in the three months ended June 30, 2019, as well as a goodwill impairment charge of $32 million for the three and six months ended June 30, 2019 in contemplation of the sale of one of PowerSecure's business units. See Note (K) under "Southern Company" for additional information. |
| | (d) | Segment net income (loss) for Southern Power includes a $23 million pre-tax gain ($88 million gain after tax) on the sale of Plant Nacogdoches for the three and six months ended June 30, 2019 and a pre-tax impairment charge of $119 million ($89 million after tax) for the three and six months ended June 30, 2018 related to the sale of Southern Power's Florida Plants. See Note (K) under "Southern Power" and Note 15 to the financial statements in Item 8 of the Form 10-K under "Southern Power – Sale of Natural Gas Plants" for additional information. |
| | (e) | Segment net income (loss) for Southern Company Gas includes a goodwill impairment charge of $42 million for the six months ended June 30, 2018 related to the sale of Pivotal Home Solutions. See Note 15 to the financial statements in Item 8 of the Form 10-K under "Southern Company Gas" for additional information. |
Products and Services | | | | | | | | | | | | | | | Electric Utilities' Revenues | | Retail | Wholesale | Other | Total | | (in millions) | Three Months Ended June 30, 2019 | $ | 3,540 |
| $ | 542 |
| $ | 208 |
| $ | 4,290 |
| Three Months Ended June 30, 2018 | 3,740 |
| 616 |
| 209 |
| 4,565 |
| Six Months Ended June 30, 2019 | $ | 6,623 |
| $ | 1,041 |
| $ | 421 |
| $ | 8,085 |
| Six Months Ended June 30, 2018 | 7,308 |
| 1,239 |
| 401 |
| 8,948 |
|
| | | | | | | | | | | | | | | Southern Company Gas' Revenues | | Gas
Distribution
Operations(a) | Gas
Marketing
Services(b) | Other | Total | | (in millions) | Three Months Ended June 30, 2019 | $ | 563 |
| $ | 58 |
| $ | 68 |
| $ | 689 |
| Three Months Ended June 30, 2018 | 638 |
| 89 |
| 3 |
| 730 |
| Six Months Ended June 30, 2019 | $ | 1,724 |
| $ | 287 |
| $ | 152 |
| $ | 2,163 |
| Six Months Ended June 30, 2018 | 1,838 |
| 359 |
| 172 |
| 2,369 |
|
| | (a) | Operating revenues for the three gas distribution operations dispositions were $70 million and $237 million for the three and six months ended June 30, 2018, respectively. |
(b) Operating revenues for Pivotal Home Solutions were $24 million and $55 million for the three and six months ended June 30, 2018, respectively. Southern Company Gas Southern Company Gas manages its business through four reportable segments – gas distribution operations, gas pipeline investments, wholesale gas services, and gas marketing services. 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 four states. Gas pipeline investments consists of joint ventures in natural gas pipeline investments including a 50% interest in SNG, two significant pipeline construction projects, and a 50% joint ownership interest in the Dalton Pipeline. These natural gas pipelines enable the provision of diverse sources of natural gas supplies to the customers of Southern Company Gas. 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 marketing services provides natural gas marketing to end-use customers primarily in Georgia and Illinois through SouthStar Energy Services, LLC. The all other column includes segments below the quantitative threshold for separate disclosure. This includes Southern Company Gas' storage and fuels operations, its investment in Triton through the completion of its sale on May 29, 2019, and other subsidiaries that fall below the quantitative threshold for separate disclosure. See Note (E) under "Southern Company Gas" for additional information and related disclosures. Business segment financial data for the three and six months ended June 30, 2019 and 2018 was as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | Gas Distribution Operations(a) | Gas Pipeline Investments | Wholesale Gas Services(b) | Gas Marketing Services(c)(d) | Total | All Other | Eliminations | Consolidated | | (in millions) | Three Months Ended June 30, 2019 | | | | | | | Operating revenues | $ | 568 |
| $ | 8 |
| $ | 48 |
| $ | 58 |
| $ | 682 |
| $ | 13 |
| $ | (6 | ) | $ | 689 |
| Segment net income (loss) | 58 |
| 25 |
| 23 |
| (3 | ) | 103 |
| 3 |
| — |
| 106 |
| Six Months Ended June 30, 2019 | | | | | | | Operating revenues | $ | 1,740 |
| $ | 16 |
| $ | 134 |
| $ | 287 |
| $ | 2,177 |
| $ | 24 |
| $ | (38 | ) | $ | 2,163 |
| Segment net income (loss) | 191 |
| 57 |
| 70 |
| 58 |
| 376 |
| — |
| — |
| 376 |
| Total assets at June 30, 2019 | 17,397 |
| 1,768 |
| 668 |
| 1,527 |
| 21,360 |
| 10,934 |
| (11,533 | ) | 20,761 |
| Three Months Ended June 30, 2018 | | | | | | | Operating revenues | $ | 643 |
| $ | 8 |
| $ | (16 | ) | $ | 89 |
| $ | 724 |
| $ | 11 |
| $ | (5 | ) | $ | 730 |
| Segment net income (loss) | 68 |
| 21 |
| (21 | ) | (76 | ) | (8 | ) | (23 | ) | — |
| (31 | ) | Six Months Ended June 30, 2018 | | | | | | | | Operating revenues | $ | 1,856 |
| $ | 16 |
| $ | 150 |
| $ | 359 |
| $ | 2,381 |
| $ | 26 |
| $ | (38 | ) | $ | 2,369 |
| Segment net income (loss) | 216 |
| 48 |
| 83 |
| (63 | ) | 284 |
| (36 | ) | — |
| 248 |
| Total assets at December 31, 2018 | 17,266 |
| 1,763 |
| 1,302 |
| 1,587 |
| 21,918 |
| 11,112 |
| (11,582 | ) | 21,448 |
|
| | (a) | Operating revenues for the three gas distribution operations dispositions were $70 million and $237 million for the three and six months ended June 30, 2018, respectively. See Note 15 to the financial statements in Item 8 of the Form 10-K under "Southern Company Gas" for additional information. |
| | (b) | 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) | Three Months Ended June 30, 2019 | $ | 1,223 |
| $ | 63 |
| $ | 1,286 |
| $ | 1,238 |
| $ | 48 |
| Three Months Ended June 30, 2018 | 1,336 |
| 102 |
| 1,438 |
| 1,454 |
| (16 | ) | Six Months Ended June 30, 2019 | $ | 3,148 |
| $ | 151 |
| $ | 3,299 |
| $ | 3,165 |
| $ | 134 |
| Six Months Ended June 30, 2018 | 3,274 |
| 269 |
| 3,543 |
| 3,393 |
| 150 |
|
| | (c) | Operating revenues for Pivotal Home Solutions were $24 million and $55 million for the three and six months ended June 30, 2018, respectively. See Note 15 to the financial statements in Item 8 of the Form 10-K under "Southern Company Gas" for additional information on the sale of Pivotal Home Solutions. |
(d) Segment net income (loss) for gas marketing services includes a loss on disposition of $36 million for the three and six months ended June 30, 2018 and a goodwill impairment charge of $42 million for the six months ended June 30, 2018 related to the sale of Pivotal Home Solutions. See Note 15 to the financial statements in Item 8 of the Form 10-K under "Southern Company Gas" for additional information.
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