Leases (Tables)

6 Months Ended

Jun. 30, 2019

The major categories of lease obligations are as follows:



	As of June 30, 2019
	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Electric generating units	$	1,072	$	150	$	1,580	$	—	$	—	$	—
Real estate/land	800		4		62		2		395		81
Communication towers	147		1		3		—		—		13
Railcars	54		25		27		3		—		—
Other	145		10		14		2		—		—
Total	$	2,218	$	190	$	1,686	$	7	$	395	$	94

Balance Sheet Amounts Recorded for Operating and Financing Leases

Balance sheet amounts recorded for operating and finance leases are as follows:



	As of June 30, 2019
	Southern Company^(*)		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Operating Leases
Operating lease ROU assets, net	$	1,907	$	152	$	1,492	$	7	$	370	$	95

Operating lease obligations - current	$	241	$	48	$	140	$	2	$	22	$	15
Operating lease obligations - non current	1,733		137		1,377		5		373		79
Total operating lease obligations	$	1,974	$	185	$	1,517	$	7	$	395	$	94

Finance Leases
Finance lease ROU assets, net	$	237	$	5	$	142	$	—	$	—	$	—

Finance lease obligations - current	$	24	$	1	$	10	$	—	$	—	$	—
Finance lease obligations - noncurrent	220		4		159		—		—		—
Total finance lease obligations	$	244	$	5	$	169	$	—	$	—	$	—

(*)

Includes operating lease ROU assets, net and operating lease obligations classified as held for sale.

Lease Costs and Other Information

Lease costs for the three and six months ended June 30, 2019, which includes both amounts recognized as operations and maintenance expense and amounts capitalized as part of the cost of another asset, are as follows:



	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
For the Three Months Ended June 30, 2019
Lease cost
Operating lease cost	$	77	$	13	$	50	$	1	$	7	$	5
Finance lease cost:
Amortization of ROU assets	7		—		4		—		—		—
Interest on lease obligations	3		—		4		—		—		—
Total finance lease cost	10		—		8		—		—		—
Short-term lease costs	13		6		6		—		—		—
Variable lease cost	29		1		25		—		1		—
Sublease income	—		—		—		—		—		—
Total lease cost	$	129	$	20	$	89	$	1	$	8	$	5

For the Six Months Ended June 30, 2019
Lease cost
Operating lease cost	$	147	$	20	$	99	$	1	$	14	$	9
Finance lease cost:
Amortization of ROU assets	14		—		7		—		—		—
Interest on lease obligations	6		—		9		—		—		—
Total finance lease cost	20		—		16		—		—		—
Short-term lease costs	30		11		12		—		—		—
Variable lease cost	48		1		41		—		3		—
Sublease income	—		—		—		—		—		—
Total lease cost	$	245	$	32	$	168	$	1	$	17	$	9

Georgia Power has variable lease payments that are based on the amount of energy produced by certain renewable generating facilities subject to PPAs.

Other information with respect to cash and noncash activities related to leases, as well as weighted-average lease terms and discount rates, is as follows:



	For the Six Months Ended June 30, 2019
	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Other information
Cash paid for amounts included in the measurements of lease obligations:
Operating cash flows from operating leases	$	129	$	20	$	75	$	1	$	12	$	9
Operating cash flows from finance leases	2		—		10		—		—		—
Financing cash flows from finance leases	16		—		3		—		—		—
ROU assets obtained in exchange for new operating lease obligations	55		5		13		—		—		13
ROU assets obtained in exchange for new finance lease obligations	33		1		28		—		—		—



	As of June 30, 2019
	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
Weighted-average remaining lease term in years:
Operating leases	14.0		3.6		10.5		7.0		33.5		9.7
Finance leases	18.3		12.8		11.0		N/A		N/A		N/A
Weighted-average discount rate:
Operating leases	4.53	%	3.33	%	4.46	%	4.06	%	5.68	%	3.73	%
Finance leases	5.05	%	3.67	%	10.69	%	N/A		N/A		N/A

Maturities of Operating Lease Liabilities

Maturities of lease liabilities are as follows:



	As of June 30, 2019
	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Maturity Analysis
Operating leases:
2019 (remaining)	$	178	$	33	$	129	$	1	$	13	$	9
2020	295		53		203		2		22		17
2021	279		52		198		1		23		16
2022	268		52		196		1		23		13
2023	204		4		197		1		24		11
Thereafter	1,661		2		990		2		849		49
Total	2,885		196		1,913		8		954		115
Less: Present value discount	911		11		396		1		559		21
Operating lease obligations	$	1,974	$	185	$	1,517	$	7	$	395	$	94
Finance leases:
2019 (remaining)	$	16	$	—	$	16	$	—	$	—	$	—
2020	33		1		28		—		—		—
2021	27		1		25		—		—		—
2022	23		1		25		—		—		—
2023	18		1		25		—		—		—
Thereafter	266		1		165		—		—		—
Total	383		5		284		—		—		—
Less: Present value discount	139		—		115		—		—		—
Finance lease obligations	$	244	$	5	$	169	$	—	$	—	$	—

Maturities of Finance Lease Liabilities

Maturities of lease liabilities are as follows:



	As of June 30, 2019
	Southern Company		Alabama Power		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
Maturity Analysis
Operating leases:
2019 (remaining)	$	178	$	33	$	129	$	1	$	13	$	9
2020	295		53		203		2		22		17
2021	279		52		198		1		23		16
2022	268		52		196		1		23		13
2023	204		4		197		1		24		11
Thereafter	1,661		2		990		2		849		49
Total	2,885		196		1,913		8		954		115
Less: Present value discount	911		11		396		1		559		21
Operating lease obligations	$	1,974	$	185	$	1,517	$	7	$	395	$	94
Finance leases:
2019 (remaining)	$	16	$	—	$	16	$	—	$	—	$	—
2020	33		1		28		—		—		—
2021	27		1		25		—		—		—
2022	23		1		25		—		—		—
2023	18		1		25		—		—		—
Thereafter	266		1		165		—		—		—
Total	383		5		284		—		—		—
Less: Present value discount	139		—		115		—		—		—
Finance lease obligations	$	244	$	5	$	169	$	—	$	—	$	—

Lease Income, Sales-type Leases

Lease income for the three and six months ended June 30, 2019 is as follows:



	Southern Company		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
For the Three Months Ended June 30, 2019
Lease income - interest income on sales-type leases	$	2	$	—	$	2	$	—	$	—
Lease income - operating leases	67		19		—		39		9
Variable lease income	115		—		—		125		—
Total lease income	$	184	$	19	$	2	$	164	$	9

For the Six Months Ended June 30, 2019
Lease income - interest income on sales-type leases	$	5	$	—	$	5	$	—	$	—
Lease income - operating leases	139		39		—		80		17
Variable lease income	182		—		—		198		—
Total lease income	$	326	$	39	$	5	$	278	$	17

Lease Income, Operating Leases

Lease income for the three and six months ended June 30, 2019 is as follows:



	Southern Company		Georgia Power		Mississippi Power		Southern Power		Southern Company Gas
	(in millions)
For the Three Months Ended June 30, 2019
Lease income - interest income on sales-type leases	$	2	$	—	$	2	$	—	$	—
Lease income - operating leases	67		19		—		39		9
Variable lease income	115		—		—		125		—
Total lease income	$	184	$	19	$	2	$	164	$	9

For the Six Months Ended June 30, 2019
Lease income - interest income on sales-type leases	$	5	$	—	$	5	$	—	$	—
Lease income - operating leases	139		39		—		80		17
Variable lease income	182		—		—		198		—
Total lease income	$	326	$	39	$	5	$	278	$	17

Undiscounted Cash Flows to be Received Under Tolling Arrangements Accounted for as Sales-type Leases

The undiscounted cash flows to be received under tolling arrangements accounted for as sales-type leases are as follows:



	As of June 30, 2019
	Southern Company		Mississippi Power
	(in millions)
2019 (remaining)	$	7	$	7
2020	14		14
2021	14		14
2022	13		13
2023	12		12
Thereafter	135		135
Total undiscounted cash flows	$	195	$	195
Lease receivable	106		106
Difference between undiscounted cash flows and discounted cash flows	$	89	$	89

Undiscounted Cash Flows to be Received Under PPAs Accounted for as Operating Leases

The undiscounted cash flows to be received under operating leases and contracts accounted for as operating leases (adjusted for intercompany eliminations) are as follows:



	As of June 30, 2019
	Southern Company		Georgia Power		Southern Power		Southern Company Gas
	(in millions)
2019 (remaining)	$	75	$	13	$	52	$	17
2020	125		26		65		35
2021	118		18		66		35
2022	109		8		68		34
2023	103		2		69		34
Thereafter	1,142		—		350		497
Total	$	1,672	$	67	$	670	$	652