| Revenue from Contracts with Customers and Lease Income |
REVENUE FROM CONTRACTS WITH CUSTOMERS AND LEASE INCOME Revenue from Contracts with Customers The Registrants generate revenues from a variety of sources, some of which are not accounted for as revenue from contracts with customers, such as leases, derivatives, and certain cost recovery mechanisms. See Note 1 to the financial statements under "Revenues" in Item 8 of the Form 10-K for additional information on the revenue policies of the Registrants. See "Lease Income" herein and Note (J) for additional information on revenue accounted for under lease and derivative accounting guidance, respectively. The following table disaggregates revenue from contracts with customers for the three and nine months ended September 30, 2023 and 2022: | | | | | | | | | | | | | | | | | | | | | | Southern Company | Alabama Power | Georgia Power | Mississippi Power | Southern Power | Southern Company Gas | | (in millions) | | Three Months Ended September 30, 2023 | | | | | | | | Operating revenues | | | | | | | | Retail electric revenues | | | | | | | | Residential | $ | 2,543 | | $ | 969 | | $ | 1,473 | | $ | 101 | | $ | — | | $ | — | | | Commercial | 1,845 | | 599 | | 1,151 | | 95 | | — | | — | | | Industrial | 1,116 | | 498 | | 528 | | 90 | | — | | — | | | Other | 30 | | 3 | | 25 | | 2 | | — | | — | | | Total retail electric revenues | 5,534 | | 2,069 | | 3,177 | | 288 | | — | | — | | | Natural gas distribution revenues | | | | | | | | Residential | 217 | | — | | — | | — | | — | | 217 | | | Commercial | 56 | | — | | — | | — | | — | | 56 | | | Transportation | 275 | | — | | — | | — | | — | | 275 | | | Industrial | 4 | | — | | — | | — | | — | | 4 | | | Other | 60 | | — | | — | | — | | — | | 60 | | | Total natural gas distribution revenues | 612 | | — | | — | | — | | — | | 612 | | | Wholesale electric revenues | | | | | | | | PPA energy revenues | 317 | | 66 | | 31 | | 2 | | 226 | | — | | | PPA capacity revenues | 151 | | 26 | | 13 | | 3 | | 110 | | — | | | Non-PPA revenues | 101 | | 15 | | 21 | | 137 | | 126 | | — | | | Total wholesale electric revenues | 569 | | 107 | | 65 | | 142 | | 462 | | — | | | Other natural gas revenues | | | | | | | | Gas marketing services | 54 | | — | | — | | — | | — | | 54 | | | Other natural gas revenues | 8 | | — | | — | | — | | — | | 8 | | | Total natural gas revenues | 62 | | — | | — | | — | | — | | 62 | | | Other revenues | 330 | | 54 | | 146 | | 10 | | 18 | | — | | | Total revenue from contracts with customers | 7,107 | | 2,230 | | 3,388 | | 440 | | 480 | | 674 | | Other revenue sources(*) | (127) | | (147) | | (151) | | (4) | | 173 | | 15 | | | | | | | | | | Total operating revenues | $ | 6,980 | | $ | 2,083 | | $ | 3,237 | | $ | 436 | | $ | 653 | | $ | 689 | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | Southern Company | Alabama Power | Georgia Power | Mississippi Power | Southern Power | Southern Company Gas | | (in millions) | | Nine Months Ended September 30, 2023 | | | | | | | | Operating revenues | | | | | | | | Retail electric revenues | | | | | | | | Residential | $ | 5,717 | | $ | 2,277 | | $ | 3,202 | | $ | 238 | | $ | — | | $ | — | | | Commercial | 4,464 | | 1,493 | | 2,733 | | 238 | | — | | — | | | Industrial | 2,770 | | 1,324 | | 1,195 | | 251 | | — | | — | | | Other | 84 | | 10 | | 68 | | 6 | | — | | — | | | Total retail electric revenues | 13,035 | | 5,104 | | 7,198 | | 733 | | — | | — | | | Natural gas distribution revenues | | | | | | | | Residential | 1,443 | | — | | — | | — | | — | | 1,443 | | | Commercial | 370 | | — | | — | | — | | — | | 370 | | | Transportation | 878 | | — | | — | | — | | — | | 878 | | | Industrial | 33 | | — | | — | | — | | — | | 33 | | | Other | 228 | | — | | — | | — | | — | | 228 | | | Total natural gas distribution revenues | 2,952 | | — | | — | | — | | — | | 2,952 | | | Wholesale electric revenues | | | | | | | | PPA energy revenues | 853 | | 196 | | 66 | | 8 | | 601 | | — | | | PPA capacity revenues | 490 | | 130 | | 38 | | 36 | | 289 | | — | | | Non-PPA revenues | 199 | | 49 | | 30 | | 315 | | 312 | | — | | | Total wholesale electric revenues | 1,542 | | 375 | | 134 | | 359 | | 1,202 | | — | | | Other natural gas revenues | | | | | | | | | | | | | | | Gas marketing services | 358 | | — | | — | | — | | — | | 358 | | | Other natural gas revenues | 28 | | — | | — | | — | | — | | 28 | | | Total natural gas revenues | 386 | | — | | — | | — | | — | | 386 | | | Other revenues | 971 | | 159 | | 422 | | 31 | | 46 | | — | | | Total revenue from contracts with customers | 18,886 | | 5,638 | | 7,754 | | 1,123 | | 1,248 | | 3,338 | | Other revenue sources(*) | 322 | | (218) | | 51 | | 14 | | 438 | | 79 | | | | | | | | | | Total operating revenues | $ | 19,208 | | $ | 5,420 | | $ | 7,805 | | $ | 1,137 | | $ | 1,686 | | $ | 3,417 | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | Southern Company | Alabama Power | Georgia Power | Mississippi Power | Southern Power | Southern Company Gas | | (in millions) | | Three Months Ended September 30, 2022 | | | | | | | | Operating revenues | | | | | | | | Retail electric revenues | | | | | | | | Residential | $ | 2,104 | | $ | 799 | | $ | 1,212 | | $ | 93 | | $ | — | | $ | — | | | Commercial | 1,637 | | 499 | | 1,051 | | 87 | | — | | — | | | Industrial | 1,183 | | 452 | | 642 | | 89 | | — | | — | | | Other | 27 | | 3 | | 22 | | 2 | | — | | — | | | Total retail electric revenues | 4,951 | | 1,753 | | 2,927 | | 271 | | — | | — | | | Natural gas distribution revenues | | | | | | | | Residential | 331 | | — | | — | | — | | — | | 331 | | | Commercial | 93 | | — | | — | | — | | — | | 93 | | | Transportation | 259 | | — | | — | | — | | — | | 259 | | | Industrial | 12 | | — | | — | | — | | — | | 12 | | | Other | 49 | | — | | — | | — | | — | | 49 | | | Total natural gas distribution revenues | 744 | | — | | — | | — | | — | | 744 | | | Wholesale electric revenues | | | | | | | | PPA energy revenues | 812 | | 187 | | 40 | | 4 | | 591 | | — | | | PPA capacity revenues | 175 | | 56 | | 12 | | 1 | | 107 | | — | | | Non-PPA revenues | 58 | | 67 | | 4 | | 242 | | 303 | | — | | | Total wholesale electric revenues | 1,045 | | 310 | | 56 | | 247 | | 1,001 | | — | | | Other natural gas revenues | | | | | | | | Gas marketing services | 84 | | — | | — | | — | | — | | 84 | | | Other natural gas revenues | 15 | | — | | — | | — | | — | | 15 | | | Total natural gas revenues | 99 | | — | | — | | — | | — | | 99 | | | Other revenues | 277 | | 65 | | 110 | | 13 | | 9 | | — | | | Total revenue from contracts with customers | 7,116 | | 2,128 | | 3,093 | | 531 | | 1,010 | | 843 | | Other revenue sources(*) | 1,262 | | 316 | | 796 | | (21) | | 170 | | 14 | | | | | | | | | | Total operating revenues | $ | 8,378 | | $ | 2,444 | | $ | 3,889 | | $ | 510 | | $ | 1,180 | | $ | 857 | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | Southern Company | Alabama Power | Georgia Power | Mississippi Power | Southern Power | Southern Company Gas | | (in millions) | | Nine Months Ended September 30, 2022 | | | | | | | | Operating revenues | | | | | | | | Retail electric revenues | | | | | | | | Residential | $ | 5,282 | | $ | 2,049 | | $ | 2,995 | | $ | 238 | | $ | — | | $ | — | | | Commercial | 4,202 | | 1,285 | | 2,688 | | 229 | | — | | — | | | Industrial | 2,914 | | 1,143 | | 1,529 | | 242 | | — | | — | | | Other | 79 | | 10 | | 62 | | 7 | | — | | — | | | Total retail electric revenues | 12,477 | | 4,487 | | 7,274 | | 716 | | — | | — | | | Natural gas distribution revenues | | | | | | | | Residential | 1,821 | | — | | — | | — | | — | | 1,821 | | | Commercial | 493 | | — | | — | | — | | — | | 493 | | | Transportation | 872 | | — | | — | | — | | — | | 872 | | | Industrial | 60 | | — | | — | | — | | — | | 60 | | | Other | 244 | | — | | — | | — | | — | | 244 | | | Total natural gas distribution revenues | 3,490 | | — | | — | | — | | — | | 3,490 | | | Wholesale electric revenues | | | | | | | | PPA energy revenues | 1,739 | | 354 | | 112 | | 11 | | 1,285 | | — | | | PPA capacity revenues | 443 | | 135 | | 35 | | 4 | | 273 | | — | | | Non-PPA revenues | 182 | | 166 | | 19 | | 511 | | 572 | | — | | | Total wholesale electric revenues | 2,364 | | 655 | | 166 | | 526 | | 2,130 | | — | | | Other natural gas revenues | | | | | | | | | | | | | | | Gas marketing services | 417 | | — | | — | | — | | — | | 417 | | | Other natural gas revenues | 41 | | — | | — | | — | | — | | 41 | | | Total natural gas revenues | 458 | | — | | — | | — | | — | | 458 | | | Other revenues | 810 | | 173 | | 327 | | 34 | | 27 | | — | | | Total revenue from contracts with customers | 19,599 | | 5,315 | | 7,767 | | 1,276 | | 2,157 | | 3,948 | | Other revenue sources(*) | 2,633 | | 708 | | 1,451 | | 3 | | 461 | | 50 | | | | | | | | | | Total operating revenues | $ | 22,232 | | $ | 6,023 | | $ | 9,218 | | $ | 1,279 | | $ | 2,618 | | $ | 3,998 | |
(*)Other revenue sources relate to revenues from customers accounted for as derivatives and leases, alternative revenue programs at Southern Company Gas, and cost recovery mechanisms and revenues (including those related to fuel costs) that meet other scope exceptions for revenues from contracts with customers at the traditional electric operating companies. Contract Balances The following table reflects the closing balances of receivables, contract assets, and contract liabilities related to revenues from contracts with customers at September 30, 2023 and December 31, 2022: | | | | | | | | | | | | | | | | | | | | | | Southern Company | Alabama Power | Georgia Power | Mississippi Power | Southern Power | Southern Company Gas | | (in millions) | | Accounts Receivable | | | | | | | | At September 30, 2023 | $ | 2,680 | | $ | 858 | | $ | 1,175 | | $ | 106 | | $ | 138 | | $ | 331 | | | At December 31, 2022 | 3,123 | | 696 | | 922 | | 92 | | 237 | | 1,107 | | | Contract Assets | | | | | | | | At September 30, 2023 | $ | 267 | | $ | 6 | | $ | 146 | | $ | — | | $ | — | | $ | 41 | | | At December 31, 2022 | 156 | | 2 | | 89 | | — | | — | | — | | | Contract Liabilities | | | | | | | | At September 30, 2023 | $ | 62 | | $ | — | | $ | 8 | | $ | 2 | | $ | 8 | | $ | — | | | At December 31, 2022 | 45 | | 4 | | 9 | | — | | 1 | | — | |
Contract assets for Georgia Power primarily relate to retail customer fixed bill programs, where the payment is contingent upon Georgia Power's continued performance and the customer's continued participation in the program over a one-year contract term, and unregulated service agreements, where payment is contingent on project completion. Contract liabilities for Georgia Power primarily relate to cash collections recognized in advance of revenue for unregulated service agreements. At September 30, 2023, Southern Company Gas' contract assets relate to work performed on an energy efficiency enhancement and upgrade contract with the U.S. General Services Administration. Southern Company Gas receives cash advances from a third-party financial institution to fund work performed, of which approximately $51 million had been received at September 30, 2023. These advances have been accounted for as long-term debt on the balance sheets. See Note 1 to the financial statements under "Affiliate Transactions" in Item 8 of the Form 10-K for additional information regarding the construction contract. At September 30, 2023 and December 31, 2022, Southern Company's unregulated distributed generation business had contract assets of $75 million and $65 million, respectively, and contract liabilities of $47 million and $32 million, respectively, for outstanding performance obligations. Revenues recognized in the three and nine months ended September 30, 2023, which were included in contract liabilities at December 31, 2022, were immaterial for the applicable Registrants. Contract liabilities are primarily classified as current on the balance sheets as the corresponding revenues are generally expected to be recognized within one year. Remaining Performance Obligations The Subsidiary Registrants may enter into long-term contracts with customers in which revenues are recognized as performance obligations are satisfied over the contract term. For Alabama Power, Georgia Power, and Southern Power, these contracts primarily relate to PPAs whereby electricity and generation capacity are provided 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. For Southern Company Gas, these contracts primarily relate to the U.S. General Services Administration contract described above. 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 September 30, 2023 are expected to be recognized as follows: | | | | | | | | | | | | | | | | | | | | | | 2023 (remaining) | 2024 | 2025 | 2026 | 2027 | Thereafter | | (in millions) | | Southern Company | $ | 166 | | $ | 599 | | $ | 359 | | $ | 318 | | $ | 319 | | $ | 2,245 | | | Alabama Power | 10 | | 24 | | 8 | | — | | — | | — | | | Georgia Power | 23 | | 66 | | 34 | | 14 | | 14 | | 23 | | | | | | | | | | Southern Power | 84 | | 356 | | 302 | | 303 | | 310 | | 2,233 | | | Southern Company Gas | 4 | | 29 | | — | | — | | — | | — | |
Lease Income Lease income for the three and nine months ended September 30, 2023 and 2022 is as follows: | | | | | | | | | | | | | | | | | | | | | | Southern
Company | Alabama Power | Georgia Power | Mississippi
Power | Southern Power | Southern Company Gas | | | (in millions) | For the Three Months Ended September 30, 2023 | | Lease income - interest income on sales-type leases | $ | 6 | | $ | — | | $ | — | | $ | 4 | | $ | 2 | | $ | — | | | Lease income - operating leases | 36 | | 3 | | 7 | | — | | 21 | | 9 | | | Variable lease income | 134 | | — | | — | | — | | 144 | | — | | | Total lease income | $ | 176 | | $ | 3 | | $ | 7 | | $ | 4 | | $ | 167 | | $ | 9 | | | | | | | | | For the Nine Months Ended September 30, 2023 | | Lease income - interest income on sales-type leases | $ | 18 | | $ | — | | $ | — | | $ | 11 | | $ | 7 | | $ | — | | | Lease income - operating leases | 129 | | 32 | | 22 | | 2 | | 64 | | 27 | | | Variable lease income | 327 | | 1 | | — | | — | | 351 | | — | | | Total lease income | $ | 474 | | $ | 33 | | $ | 22 | | $ | 13 | | $ | 422 | | $ | 27 | | | | | | | | | For the Three Months Ended September 30, 2022 | | Lease income - interest income on sales-type leases | $ | 7 | | $ | — | | $ | — | | $ | 4 | | $ | 3 | | $ | — | | | Lease income - operating leases | 50 | | 19 | | 8 | | 1 | | 21 | | 9 | | | Variable lease income | 139 | | — | | — | | — | | 145 | | — | | | Total lease income | $ | 196 | | $ | 19 | | $ | 8 | | $ | 5 | | $ | 169 | | $ | 9 | | | | | | | | | For the Nine Months Ended September 30, 2022 | | Lease income - interest income on sales-type leases | $ | 19 | | $ | — | | $ | — | | $ | 11 | | $ | 8 | | $ | — | | | Lease income - operating leases | 149 | | 58 | | 24 | | 1 | | 64 | | 27 | | | Variable lease income | 355 | | 1 | | — | | — | | 372 | | — | | | Total lease income | $ | 523 | | $ | 59 | | $ | 24 | | $ | 12 | | $ | 444 | | $ | 27 | |
Lease payments received under tolling arrangements and PPAs consist of either scheduled payments or variable payments based on the amount of energy produced by the underlying electric generating units. Lease income for Alabama Power and Southern Power is included in wholesale revenues.
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