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•	the impact of recent and future federal and state regulatory changes, including environmental laws and regulations governing air, water, land, and protection of other natural resources, and also changes in tax and other laws and regulations to which Southern Company and its subsidiaries are subject, as well as changes in application of existing laws and regulations;

•	the uncertainty surrounding the Tax Reform Legislation, including implementing regulations and IRS interpretations, actions that may be taken in response by regulatory authorities, and its impact, if any, on the credit ratings of Southern Company and its subsidiaries;

•	current and future litigation or regulatory investigations, proceedings, or inquiries;

•	the effects, extent, and timing of the entry of additional competition in the markets in which Southern Company's subsidiaries operate, including from the development and deployment of alternative energy sources such as self-generation and distributed generation technologies;

•	variations in demand for electricity and natural gas, including those relating to weather, the general economy, population and business growth (and declines), the effects of energy conservation and efficiency measures, and any potential economic impacts resulting from federal fiscal decisions;

•	available sources and costs of natural gas and other fuels;

•	limits on pipeline capacity;

•	transmission constraints;

•	effects of inflation;

•

the ability to control costs and avoid cost and schedule overruns during the development, construction, and operation of facilities, including Plant Vogtle Units 3 and 4 which includes components based on new technology that only recently began initial operation in the global nuclear industry at scale, including changes in labor costs, availability, and productivity, challenges with management of contractors, subcontractors, or vendors, adverse weather conditions, shortages, increased costs or inconsistent quality of equipment, materials, and labor, including any changes related to imposition of import tariffs, contractor or supplier delay, non-performance under construction, operating, or other agreements, operational readiness, including specialized operator training and required site safety programs, unforeseen engineering or design problems, start-up activities (including major equipment failure and system integration), and/or operational performance;

•	the ability to construct facilities in accordance with the requirements of permits and licenses (including satisfaction of NRC requirements), to satisfy any environmental performance standards and the requirements of tax credits and other incentives, and to integrate facilities into the Southern Company system upon completion of construction;

•	investment performance of the Southern Company system's employee and retiree benefit plans and nuclear decommissioning trust funds;

•	advances in technology;

•	ongoing renewable energy partnerships and development agreements;

•	state and federal rate regulations and the impact of pending and future rate cases and negotiations, including rate actions relating to fuel and other cost recovery mechanisms;

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•	the ability to successfully operate the electric utilities' generating, transmission, and distribution facilities and Southern Company Gas' natural gas distribution and storage facilities and the successful performance of necessary corporate functions;

•	legal proceedings and regulatory approvals and actions related to Plant Vogtle Units 3 and 4, including Georgia PSC approvals and NRC actions;

•	under certain specified circumstances, a decision by holders of more than 10% of the ownership interests of Plant Vogtle Units 3 and 4 not to proceed with construction and the ability of other Vogtle Owners to tender a portion of their ownership interests to Georgia Power following certain construction cost increases;

•	in the event Georgia Power becomes obligated to provide funding to MEAG with respect to the portion of MEAG's ownership interest in Plant Vogtle Units 3 and 4 involving JEA, any inability of Georgia Power to receive repayment of such funding;

•	litigation or other disputes related to the Kemper County energy facility;

•	the inherent risks involved in operating and constructing nuclear generating facilities, including environmental, health, regulatory, natural disaster, terrorism, and financial risks;

•	the inherent risks involved in transporting and storing natural gas;

•	the performance of projects undertaken by the non-utility businesses and the success of efforts to invest in and develop new opportunities;

•	internal restructuring or other restructuring options that may be pursued;

•

potential business strategies, including acquisitions or dispositions of assets or businesses, including the proposed dispositions of Gulf Power, Southern Power's plants located in Florida, and the Mankato natural gas facility and the proposed sale of a noncontrolling interest in Southern Power's wind facilities, which cannot be assured to be completed or beneficial to Southern Company or its subsidiaries;

•	the possibility that the anticipated benefits from the Merger cannot be fully realized or may take longer to realize than expected and the possibility that costs related to the integration of Southern Company and Southern Company Gas will be greater than expected;

•	the ability of counterparties of Southern Company and its subsidiaries to make payments as and when due and to perform as required;

•	the ability to obtain new short- and long-term contracts with wholesale customers;

•	the direct or indirect effect on the Southern Company system's business resulting from cyber intrusion or physical attack and the threat of physical attacks;

•	interest rate fluctuations and financial market conditions and the results of financing efforts;

•	changes in Southern Company's and any of its subsidiaries' credit ratings, including impacts on interest rates, access to capital markets, and collateral requirements;

•	the impacts of any sovereign financial issues, including impacts on interest rates, access to capital markets, impacts on foreign currency exchange rates, counterparty performance, and the economy in general, as well as potential impacts on the benefits of the DOE loan guarantees;

•	the ability of Southern Company's electric utilities to obtain additional generating capacity (or sell excess generating capacity) at competitive prices;

•	catastrophic events such as fires, earthquakes, explosions, floods, tornadoes, hurricanes and other storms, droughts, pandemic health events such as influenzas, or other similar occurrences;

•	the direct or indirect effects on the Southern Company system's business resulting from incidents affecting the U.S. electric grid, natural gas pipeline infrastructure, or operation of generating or storage resources;

•	impairments of goodwill or long-lived assets;

•	the effect of accounting pronouncements issued periodically by standard-setting bodies; and

•	other factors discussed elsewhere herein and in other reports (including the Form 10-K) filed by the registrants from time to time with the SEC.

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(*)	Includes Pivotal Utility Holdings' disposition of Elizabethtown Gas and Elkton Gas as well as NUI Corporation's disposition of Pivotal Utility Holdings, which primarily consisted of Florida City Gas. See Note (J) to the Condensed Financial Statements under "Southern Company Gas" herein for additional information.

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(a)	For year-to-date 2018, cost of fuel, generated and average cost of fuel, generated excludes a $30 million adjustment associated with the Alabama PSC accounting order related to excess deferred income taxes.

(b)	Average cost of purchased power includes fuel purchased by the Southern Company system for tolling agreements where power is generated by the provider.

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(a)	Excludes financing costs expected to be capitalized through AFUDC of approximately $350 million.

(b)	Net of $1.7 billion received from Toshiba under the Guarantee Settlement Agreement and approximately $188 million in related Customer Refunds.

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(a)	Represents the Southern Company parent entity.

(b)	Does not include Southern Power Company's $120 million continuing letter of credit facility for standby letters of credit expiring in 2019, of which $22 million remains unused at September 30, 2018.

(c)	Southern Company Gas, as the parent entity, guarantees the obligations of Southern Company Gas Capital, which is the borrower of $1.4 billion of these arrangements. Southern Company Gas' committed credit arrangements also include $500 million for which Nicor Gas is the borrower and which is restricted for working capital needs of Nicor Gas.

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(*)	Average and maximum amounts are based upon daily balances during the three-month period ended September 30, 2018.

(*)	Any additional credit rating downgrades at or below BB- and/or Ba3 could increase collateral requirements up to an additional $38 million.

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(a)	Includes reductions in capital lease obligations resulting from cash payments under capital leases.

(b)	Represents the Southern Company parent entity.

(c)	Represents reductions in affiliate capital lease obligations at Georgia Power, which are eliminated in Southern Company's Consolidated Financial Statements.

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(a)	Evaluation of disclosure controls and procedures.

(b)	Changes in internal controls over financial reporting.

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(a)	Cost of fuel, generated and average cost of fuel, generated excludes a $30 million adjustment for year-to-date 2018 associated with the Alabama PSC accounting order related to excess deferred income taxes.

(b)	KWHs generated by hydro are excluded from the average cost of fuel, generated.

(c)	Average cost of purchased power includes fuel, energy, and transmission purchased by Alabama Power for tolling agreements where power is generated by the provider.

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(*)	Average and maximum amounts are based upon daily balances during the three-month period ended September 30, 2018.

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(*)	Average cost of purchased power includes fuel purchased by Georgia Power for tolling agreements where power is generated by the provider.

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(a)	Excludes financing costs expected to be capitalized through AFUDC of approximately $350 million.

(b)	Net of $1.7 billion received from Toshiba under the Guarantee Settlement Agreement and approximately $188 million in related Customer Refunds.

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(*)	Average and maximum amounts are based upon daily balances during the three-month period ended September 30, 2018.

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•	$104.6 million aggregate principal amount of Development Authority of Burke County (Georgia) Pollution Control Revenue Bonds (Georgia Power Company Plant Vogtle Project), First Series 2013

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•	$173 million aggregate principal amount of Development Authority of Bartow County (Georgia) Pollution Control Revenue Bonds (Georgia Power Company Plant Bowen Project), First Series 2009

•	$55 million aggregate principal amount of Development Authority of Burke County (Georgia) Pollution Control Revenue Bonds (Georgia Power Company Plant Vogtle Project), Fifth Series 1994

•	$65 million aggregate principal amount of Development Authority of Burke County (Georgia) Pollution Control Revenue Bonds (Georgia Power Company Plant Vogtle Project), Second Series 2008

•	$71.735 million aggregate principal amount of Development Authority of Bartow County (Georgia) Pollution Control Revenue Bonds (Georgia Power Company Plant Bowen Project), First Series 2013

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(*)	Average cost of purchased power includes fuel purchased by Gulf Power for tolling agreements where power is generated by the provider.

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(*)	Average and maximum amounts are based upon daily balances during the three-month period ended September 30, 2018.

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(*)	Year-to-date 2017 includes energy produced during the test period for the Kemper IGCC and accounted for in accordance with FERC guidance.

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(*)	Average and maximum amounts are based upon daily balances during the three-month period ended September 30, 2018. No short-term debt was outstanding at September 30, 2018.

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•	PPA energy revenues increased $37 million, or 12%, primarily due to increases of $20 million from new natural gas PPAs from existing facilities, $9 million from renewable facilities primarily due to an increase in the volume of KWHs sold, and $8 million in fuel costs that are contractually recovered through existing PPAs.

•	Non-PPA revenues decreased $21 million, or 14%, primarily due to the volume of KWHs sold from uncovered natural gas capacity through short-term sales.

•	PPA capacity revenues decreased $16 million, or 3%, primarily due to the contractual expiration of an affiliate natural gas PPA.

•	PPA energy revenues increased $127 million, or 17%, primarily due to increases of $56 million from new natural gas PPAs from existing facilities, $45 million in fuel costs that are contractually recovered through existing PPAs, and $27 million from renewable facilities primarily due to an increase in the volume of KWHs sold.

•	Non-PPA revenues decreased $10 million, or 3%, primarily due to the volume of KWHs sold from uncovered natural gas capacity through short-term sales.

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(*)	Southern Power owns 100% of the class B membership interests under a tax equity partnership agreement.

(a)	In July 2017, Southern Power purchased 100% of the Cactus Flats facility and commenced construction. In July 2018, the facility was placed in service and, in August 2018, Southern Power closed on a tax equity partnership agreement and owns 100% of the class B membership interests.

(b)	In May 2018, Southern Power purchased 100% of the Wild Horse Mountain facility and commenced construction. Southern Power may enter into a tax equity partnership agreement, in which case it would then own 100% of the class B membership interests.

(c)	In August 2018, Southern Power purchased 100% of the membership interests from the joint development arrangement with Renewable Energy Systems Americas, Inc. and commenced construction. Southern Power may enter into a tax equity partnership agreement, in which case it would then own 100% of the class B membership interests.

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(*)	Average and maximum amounts are based upon daily balances during the three-month period ended September 30, 2018.

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(*)	Any additional credit rating downgrades at or below BB- and/or Ba3 could increase collateral requirements up to an additional $38 million.

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(*)	Includes Pivotal Utility Holdings' disposition of Elizabethtown Gas and Elkton Gas as well as NUI Corporation's disposition of Pivotal Utility Holdings, which primarily consisted of Florida City Gas. See Note (J) to the Condensed Financial Statements under "Southern Company Gas" herein for additional information.

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(*)	Normal represents the 10-year average from January 1, 2008 through September 30, 2017 for Illinois at Chicago Midway International Airport and for Georgia at Atlanta Hartsfield-Jackson International Airport, based on information obtained from the National Oceanic and Atmospheric Administration, National Climatic Data Center.

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(a)	Includes total customers of approximately 404,000 at September 30, 2017 related to Elizabethtown Gas, Elkton Gas, and Florida City Gas, which were sold in July 2018. See Note (J) to the Condensed Financial Statements under "Southern Company Gas – Sale of Elizabethtown Gas and Elkton Gas" and " – Sale of Florida City Gas" herein for additional information.

(b)	On June 4, 2018, Southern Company Gas completed the sale of Pivotal Home Solutions, which served approximately 1.2 million contracts prior to disposition. See Note (J) to the Condensed Financial Statements under "Southern Company Gas – Sale of Pivotal Home Solutions" herein for additional information.

(c)	The decrease at September 30, 2018 is primarily due to approximately 70,000 fewer customers in Ohio contracted through an annual auction process to serve for 12 months beginning April 1, 2018. At September 30, 2017, there were approximately 140,000 customers in Ohio contracted through an annual auction process to serve for 12 months beginning April 1, 2017.

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(a)	Includes other operations and maintenance, depreciation and amortization, taxes other than income taxes, goodwill impairment, and gain on dispositions, net.

(b)	Nicor Gas' revenue tax expenses, which are passed through directly to customers.

(a)	Adjusted operating margin and operating expenses are adjusted for Nicor Gas revenue tax expenses, which are passed through directly to customers.

(b)	Operating expenses for gas distribution operations and gas marketing services include the gain on dispositions, net. Net income for gas distribution operations and gas marketing services includes the gain on dispositions, net and the associated income tax expense. See Note (J) to the Condensed Financial Statements under "Southern Company Gas" herein for additional information.

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(a)	Adjusted operating margin and operating expenses are adjusted for Nicor Gas revenue tax expenses, which are passed through directly to customers.

(b)

Operating expenses for gas marketing services include a goodwill impairment charge of $42 million recorded during the first quarter 2018 in contemplation of the sale of Pivotal Home Solutions. See Note (A) to the Condensed Financial Statements under "Goodwill and Other Intangible Assets" and Note (J) to the Condensed Financial Statements under "Southern Company Gas – Sale of Pivotal Home Solutions" herein for additional information.

(c)	Operating expenses for gas distribution operations and gas marketing services include the gain on dispositions, net. Net income for gas distribution operations and gas marketing services includes the gain on dispositions, net and the associated income tax expense. See Note (J) to the Condensed Financial Statements under "Southern Company Gas" herein for additional information.

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(a)	At September 30, 2018, the WACOG of wholesale gas services' expected natural gas withdrawals from storage was $2.51 per mmBtu.

(b)	Represents expected operating gains from planned storage withdrawals associated with existing inventory positions and could change as wholesale gas services adjusts its daily injection and withdrawal plans in response to changes in future market conditions and forward NYMEX price fluctuations.

(c)	Represents the periods associated with the transportation derivative gains and (losses) during which the derivatives will be settled and the physical transportation transactions will occur that offset the derivative gains and losses that were previously recognized.

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(a)	Includes other operations and maintenance, depreciation and amortization, taxes other than income taxes, goodwill impairment, and gain on dispositions, net.

(b)	Nicor Gas' revenue tax expenses, which are passed through directly to customers.

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(a)	Southern Company Gas guarantees the obligations of Southern Company Gas Capital.

(b)	Pursuant to the credit arrangement, the allocations between Southern Company Gas Capital and Nicor Gas may be adjusted.

(*)	Average and maximum amounts are based upon daily balances during the three-month period ended September 30, 2018.

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(a)	Current period changes also include the fair value of new contracts entered into during the period, if any.

(b)	Net fair value of derivative contracts outstanding excludes premium and the intrinsic value associated with weather derivatives of $5 million at September 30, 2018 and includes premium and the intrinsic value associated with weather derivatives of $13 million at September 30, 2017.

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(a)	Valued using NYMEX futures prices.

(b)	Valued using basis transactions that represent the cost to transport natural gas from a NYMEX delivery point to the contract delivery point. These transactions are based on quotes obtained either through electronic trading platforms or directly from brokers.

(c)	Excludes cash collateral of $189 million as well as premium and associated intrinsic value associated with weather derivatives of $5 million at September 30, 2018.

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(A)	INTRODUCTION

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(a)	On April 11, 2018, Southern Company Gas entered into a stock purchase agreement for the sale of Pivotal Home Solutions. In contemplation of the transaction, a goodwill impairment charge of $42 million was recorded in the first quarter 2018. See Note (J) under "Southern Company Gas" for additional information.

(b)	Gas distribution operations reflects goodwill allocated to Elizabethtown Gas, Elkton Gas, and Florida City Gas, which were sold during the third quarter 2018. Gas marketing services reflects goodwill associated with Pivotal Home Solutions, which was sold on June 4, 2018. See Note (J) under "Southern Company Gas" for additional information.

(c)	Total does not add due to rounding.

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(*)	Balances as of September 30, 2018 reflect Southern Company Gas' sale of Pivotal Home Solutions. See Note (J) under "Southern Company Gas – Sale of Pivotal Home Solutions" for additional information.

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(*)	Total does not add due to rounding.

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(B)	CONTINGENCIES AND REGULATORY MATTERS

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(*)

At September 30, 2018 and December 31, 2017, the over and under recovered balances, respectively, included in the balance sheets represents the current portion of the regulatory assets associated with projected environmental expenditures of approximately $8 million and $13 million, respectively, net of the over recovered environmental cost recovery balance of approximately $21 million and $11 million, respectively.

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(a)	Excludes financing costs expected to be capitalized through AFUDC of approximately $350 million.

(b)	Net of $1.7 billion received from Toshiba under the Guarantee Settlement Agreement and approximately $188 million in related Customer Refunds.

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(C)	REVENUE FROM CONTRACTS WITH CUSTOMERS

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(a)

Retail electric revenues include $17 million and $54 million of leases for the three and nine months ended September 30, 2018, respectively, and a (net reduction) or net increase of $(98) million and $4 million for the three and nine months ended September 30, 2018, respectively, from certain cost recovery mechanisms that are not accounted for as revenue under ASC 606. See Note 3 to the financial statements of Southern Company under "Regulatory Matters" in Item 8 of the Form 10-K for additional information on cost recovery mechanisms.

(b)	See Note 1 to the financial statements of Southern Company under "Revenues" in Item 8 of the Form 10-K 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 $63 million and $217 million for the three and nine months ended September 30, 2018, respectively, of revenues accounted for as derivatives, primarily related to physical energy sales in the wholesale electricity market. See Note (I) for additional information on energy-related derivative contracts.

(d)	Wholesale energy and wholesale capacity revenues include $130 million and $31 million, respectively, for the three months ended September 30, 2018 and $318 million and $92 million, respectively, for the nine months ended September 30, 2018 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 $1.6 billion and $4.8 billion for the three and nine months ended September 30, 2018, respectively, of which $0.9 billion and $2.7 billion, respectively, relates to contracts that are accounted for as derivatives. See Note (L) under "Southern Company Gas" for additional information on the components of wholesale gas services operating revenues.

(f)	Other revenues include $92 million and $274 million for the three and nine months ended September 30, 2018, respectively, of revenues not accounted for under ASC 606.

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(a)

Retail revenues at Alabama Power, Georgia Power, Gulf Power, and Mississippi Power include a net increase or (net reduction) of $(12) million, $(47) million, $(36) million, and $(3) million, respectively, for the three months ended September 30, 2018 and $113 million, $(35) million, $(63) million, and $(11) million, respectively, for the nine months ended September 30, 2018 related to certain cost recovery mechanisms that are not accounted for as revenue under ASC 606. See Note 3 to the financial statements of Alabama Power, Georgia Power, Gulf Power, and Mississippi Power under "Retail Regulatory Matters" in Item 8 of the Form 10-K for additional information on cost recovery mechanisms.

(b)	Retail revenues and other revenues at Georgia Power include $17 million and $34 million, respectively, for the three months ended September 30, 2018 and $54 million and $100 million, respectively, for the nine months ended September 30, 2018 of revenues accounted for as leases.

(c)

Wholesale energy revenues at Alabama Power and Georgia Power include $6 million and $8 million, respectively, for the three months ended September 30, 2018 and $14 million and $21 million, respectively, for the nine months ended September 30, 2018 accounted for as derivatives primarily related to physical energy sales in the wholesale electricity market. See Note (I) for additional information on energy-related derivative contracts.

(d)	Other revenues at Alabama Power, Georgia Power, and Gulf Power include $27 million, $28 million, and $2 million, respectively, for the three months ended September 30, 2018 and $79 million, $80 million, and $5 million, respectively, for the nine months ended September 30, 2018 of revenues not accounted for under ASC 606.

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(a)

PPA capacity revenues and PPA energy revenues include $47 million and $139 million, respectively, for the three months ended September 30, 2018 and $141 million and $342 million, respectively, for the nine months ended September 30, 2018 related to PPAs accounted for as leases. See Note 1 to the financial statements of Southern Power under "Revenues" in Item 8 of the Form 10-K for additional information on capacity revenues accounted for as leases.

(b)

Non-PPA revenues include $47 million and $176 million for the three and nine months ended September 30, 2018, respectively, of revenues from short-term sales related to physical energy sales from uncovered capacity in the wholesale electricity market. See Note 1 to the financial statements of Southern Power under "Revenues" in Item 8 of the Form 10-K and Note (I) for additional information on energy-related derivative contracts.

(a)	See Note 1 to the financial statements of Southern Company Gas under "Revenues" in Item 8 of the Form 10-K 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)	Gas marketing services includes $4 million for the nine months ended September 30, 2018 of revenues not accounted for under ASC 606.

(c)

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 $1.6 billion and $4.8 billion for the three and nine months ended September 30, 2018, respectively, of which $0.9 billion and $2.7 billion, respectively, relates to contracts that are accounted for as derivatives. See Note (L) under "Southern Company Gas" for additional information on the components of wholesale gas services operating revenues and Note (I) for additional information on energy-related derivative contracts.

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

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(D)	FAIR VALUE MEASUREMENTS

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(a)	Excludes $5 million associated with premiums and certain weather derivatives accounted for based on intrinsic value rather than fair value.

(b)	Excludes cash collateral of $189 million.

(c)	For additional detail, see the nuclear decommissioning trusts sections for Alabama Power and Georgia Power in this table.

(d)	Excludes receivables related to investment income, pending investment sales, payables related to pending investment purchases, and currencies.

(e)	Includes the investment securities pledged to creditors and collateral received and excludes payables related to the securities lending program. As of September 30, 2018, approximately $37 million of the fair market value of Georgia Power's nuclear decommissioning trust funds' securities were on loan to creditors under the funds' managers' securities lending program.

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(E)	STOCKHOLDERS' EQUITY

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(a)	Primarily related to Southern Power and excludes redeemable noncontrolling interests. See Note 10 to the financial statements of Southern Power in Item 8 of the Form 10-K for additional information.

(b)	See Note (J) under "Southern Power – Sale of Solar Facility Interests" for additional information.

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(F)	FINANCING

(a)	Represents the Southern Company parent entity.

(b)	Does not include Southern Power Company's $120 million continuing letter of credit facility for standby letters of credit expiring in 2019, of which $22 million remains unused at September 30, 2018.

(c)	Southern Company Gas, as the parent entity, guarantees the obligations of Southern Company Gas Capital, which is the borrower of $1.4 billion of these arrangements. Southern Company Gas' committed credit arrangements also include $500 million for which Nicor Gas is the borrower and which is restricted for working capital needs of Nicor Gas.

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(a)	Includes reductions in capital lease obligations resulting from cash payments under capital leases.

(b)	Represents the Southern Company parent entity.

(c)	Represents reductions in affiliate capital lease obligations at Georgia Power, which are eliminated in Southern Company's Consolidated Financial Statements.

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•	$104.6 million aggregate principal amount of Development Authority of Burke County (Georgia) Pollution Control Revenue Bonds (Georgia Power Company Plant Vogtle Project), First Series 2013

•	$173 million aggregate principal amount of Development Authority of Bartow County (Georgia) Pollution Control Revenue Bonds (Georgia Power Company Plant Bowen Project), First Series 2009

•	$55 million aggregate principal amount of Development Authority of Burke County (Georgia) Pollution Control Revenue Bonds (Georgia Power Company Plant Vogtle Project), Fifth Series 1994

•	$65 million aggregate principal amount of Development Authority of Burke County (Georgia) Pollution Control Revenue Bonds (Georgia Power Company Plant Vogtle Project), Second Series 2008

•	$71.735 million aggregate principal amount of Development Authority of Bartow County (Georgia) Pollution Control Revenue Bonds (Georgia Power Company Plant Bowen Project), First Series 2013

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(G)	RETIREMENT BENEFITS

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(*)	Excludes Southern Power since Southern Power did not participate in the qualified pension and postretirement benefit plans until December 2017.

(*)	Excludes Southern Power since Southern Power did not participate in the qualified pension and postretirement benefit plans until December 2017.

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(H)	INCOME TAXES

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(I)	DERIVATIVES

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Regulatory Hedges — Energy-related derivative contracts which are designated as regulatory hedges relate primarily to the traditional electric operating companies' and the natural gas distribution utilities' fuel-hedging programs, where gains and losses are initially recorded as regulatory liabilities and assets, respectively, and then are included in fuel expense as the underlying fuel is used in operations and ultimately recovered through the respective fuel cost recovery clauses.

•	Cash Flow Hedges — Gains and losses on energy-related derivatives designated as cash flow hedges (which are mainly used to hedge anticipated purchases and sales) are initially deferred in OCI before being recognized in the statements of income in the same period and in the same income statement line item as the earnings effect of the hedged transactions.

•	Not Designated — Gains and losses on energy-related derivative contracts that are not designated or fail to qualify as hedges are recognized in the statements of income as incurred.

(*)

Southern Company's and Southern Company Gas' derivative instruments include both long and short natural gas positions. A long position is a contract to purchase natural gas and a short position is a contract to sell natural gas. Southern Company Gas' volume represents the net of long natural gas positions of 4.3 billion mmBtu and short natural gas positions of 4 billion mmBtu as of September 30, 2018, which is also included in Southern Company's total volume.

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(*)	Represents the Southern Company parent entity.

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(a)	Gross amounts offset include cash collateral held on deposit in broker margin accounts of $189 million and $193 million as of September 30, 2018 and December 31, 2017, respectively.

(b)	Net amounts of derivative instruments outstanding exclude premium and intrinsic value associated with weather derivatives of $5 million and $11 million as of September 30, 2018 and December 31, 2017, respectively.

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(*)	Fair value gains and losses recorded in regulatory assets and liabilities include cash collateral held on deposit in broker margin accounts of $3 million at September 30, 2018.

(*)	Fair value gains and losses recorded in regulatory assets and liabilities include cash collateral held on deposit in broker margin accounts of $6 million at December 31, 2017.

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(a)	Amounts reflect gains or losses on cash flow hedges that were reclassified from accumulated OCI into income.

(b)	For fair value hedges presented above, generally changes in the fair value of the derivative contracts are equal to changes in the fair value of the underlying debt and have no material impact on income.

(c)	The reclassification from accumulated OCI into other income (expense), net completely offsets currency gains and losses arising from changes in the U.S. currency exchange rates used to record the euro-denominated notes.

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(*)	Excludes gains (losses) recorded in natural gas revenues associated with weather derivatives of $15 million for the nine months ended September 30, 2017 and immaterial amounts for all other periods presented.

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(J)	ACQUISITIONS AND DISPOSITIONS

(*)	Southern Power owns 100% of the class B membership interests under a tax equity partnership agreement.

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(a)	In July 2017, Southern Power purchased 100% of the Cactus Flats facility and commenced construction. In July 2018, the facility was placed in service and, in August 2018, Southern Power closed on a tax equity partnership agreement and owns 100% of the class B membership interests.

(b)	In May 2018, Southern Power purchased 100% of the Wild Horse Mountain facility and commenced construction. Southern Power may enter into a tax equity partnership agreement, in which case it would then own 100% of the class B membership interests.

(c)	In August 2018, Southern Power purchased 100% of the membership interests from the joint development arrangement with Renewable Energy Systems Americas, Inc. and commenced construction. Southern Power may enter into a tax equity partnership agreement, in which case it would then own 100% of the class B membership interests.

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(K)	VARIABLE INTEREST ENTITY AND EQUITY METHOD INVESTMENTS

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(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 $1 million ($1 million after tax) and $34 million ($21 million after tax) for the three months ended September 30, 2018 and 2017, respectively, and $1.1 billion ($0.8 billion after tax) and $3.2 billion ($2.2 billion after tax) for the nine months ended September 30, 2018 and 2017, respectively. See Note 3 to the financial statements of Southern Company under "Kemper County Energy Facility" in Item 8 of the Form 10-K and Note (B) under "Nuclear Construction" and "Kemper County Energy Facility" for additional information.

(c)	Segment net income (loss) for Southern Power includes pre-tax impairment charges of $36 million ($27 million after tax) and $155 million ($116 million after tax) for the three and nine months ended September 30, 2018, respectively. See Note (J) under "Southern Power – Development Projects" and " – Sale of Florida Plants" for additional information.

(d)

Segment net income (loss) for Southern Company Gas includes a net gain on dispositions of $353 million ($40 million gain after tax) and $317 million ($35 million loss after tax) for the three and nine months ended September 30, 2018, respectively, related to the Southern Company Gas Dispositions and a goodwill impairment charge of $42 million for the nine months ended September 30, 2018 related to the sale of Pivotal Home Solutions. See Note (J) under "Southern Company Gas" for additional information.

(e)

Segment net income (loss) for the traditional electric operating companies includes a pre-tax charge for the write-down of Gulf Power's ownership of Plant Scherer Unit 3 of $33 million ($20 million after tax) for the nine months ended September 30, 2017. See Note 3 to the financial statements of Southern Company under "Regulatory Matters – Gulf Power – Retail Base Rate Cases" in Item 8 of the Form 10-K for additional information.

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(a)	Operating revenues for the three gas distribution operations dispositions were $8 million and $50 million for the three months ended September 30, 2018 and 2017, respectively, and $245 million and $274 million for the nine months ended September 30, 2018 and 2017, respectively. See Note (J) under "Southern Company Gas" for additional information.

(b)	Operating revenues for the gas marketing services disposition were $32 million for the three months ended September 30, 2017 and $55 million and $95 million for the nine months ended September 30, 2018 and 2017, respectively. See Note (J) under "Southern Company Gas" for additional information.

(c)

Segment net income for gas distribution operations includes a gain on dispositions of $351 million ($38 million after tax) for the three and nine months ended September 30, 2018. Segment net income for gas marketing services includes a gain on disposition of $2 million ($2 million after tax) for the three months ended September 30, 2018 and a loss on disposition of $34 million ($73 million loss after tax) and a goodwill impairment charge of $42 million for the nine months ended September 30, 2018 recorded in contemplation of the sale of Pivotal Home Solutions. See Note (J) under "Southern Company Gas" for additional information.

(d)	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.

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(a)	Excludes financing costs expected to be capitalized through AFUDC of approximately $350 million.

(b)	Net of $1.7 billion received from Toshiba under the Guarantee Settlement Agreement and approximately $188 million in related Customer Refunds.

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