SO Southern Company 10-Q 2026-09-30 section summaries

Southern Company — Q3 and nine months ended September 30, 2026

Consolidated results

Revenue growth accelerated to 13.0% in Q3 from 7.3% for the first nine months. Higher revenue and operating income supported earnings growth despite rising operating costs and interest expense.

Revenue by category was: retail electric $6,623M vs. $5,707M in Q3 and $16,009M vs. $15,065M for 9M; wholesale electric $873M vs. $832M and $2,537M vs. $2,257M; other electric $229M vs. $262M and $736M vs. $724M; natural gas $773M vs. $734M and $3,930M vs. $3,552M; and other revenue $345M vs. $288M and $1,006M vs. $974M.

Business segments and operating companies

Segment results are measured by segment net income. Traditional electric companies drove most segment earnings; Georgia Power had the strongest Q3 revenue growth among the electric utilities. Southern Power’s 9M operating results weakened sharply despite revenue growth, principally because of higher depreciation, including wind-repowering costs.

Southern Power’s 9M segment net income fell to $30M from $141M; accelerated wind-repowering depreciation was $409M pre-tax ($318M after tax), compared with $181M pre-tax ($130M after tax) in 9M 2025. Gas’ distribution operations were its largest business: Q3 revenue was $706M vs. $668M and segment net income $9M vs. $12M; 9M revenue was $3.491B vs. $3.122B and net income $441M vs. $417M. Gas pipeline investments earned $17M vs. $20M in Q3 and $71M vs. $62M in 9M; gas marketing services earned $3M vs. $3M and $85M vs. $77M, respectively.

Cash flow, investment and balance sheet

Property additions exceeded operating cash flow by $2.320B, versus $1.497B in 9M 2025. Financing included $3.841B of common-stock proceeds versus $90M, $8.262B vs. $10.269B of long-term debt proceeds, and $6.830B vs. $2.383B of long-term debt redemptions.

Derived tangible equity (equity less goodwill and other intangible assets) was $39.364B. Issued common shares increased from 1,120M at year-end 2025 to 1,165M at September 30, 2026. The company’s 9M effective tax rate declined to 16.2% from 20.3%, primarily reflecting increased production tax credits and investment tax-credit amortization.

Funding, regulation and material developments

In August 2026, Southern Company issued $834M principal of 2.125% convertible notes due 2027 and $1.898B principal of 3.50% notes due 2029. Proceeds partly funded repurchase of $368.7M principal of 4.50% notes, producing a $33M debt-extinguishment loss. ATM forward sales generated approximately $3.8B net proceeds; 40,526,002 shares were settled during 9M, contributing to the increase in average diluted shares. The new convertible notes may also dilute shares, with initial conversion prices of approximately $104.56 and $118.50 per share.

Committed bank credit arrangements totaled $8.920B, of which $8.909B was unused; covered entities were in compliance with facility covenants. DOE-backed borrowing capacity is approximately $4.1B for Alabama Power and $22.4B for Georgia Power; Georgia Power drew approximately $1.0B in March at 5.041%. At September 30, Southern Company long-term debt, including securities due within one year, had a $72.4B carrying amount and $64.0B fair value.

Georgia Power’s capital program includes major generation, storage and large-load-related investment. It agreed to at least $949M per year of levelized downward rate pressure for non-large-load customers in 2029–2031 and agreed not to seek recovery from those customers for revenue deficiencies if specified large-load contracts terminate early. Georgia Power had recorded approximately $5.0B of capital costs, excluding AFUDC, against approximately $19.5B of certified project amounts. The Power to the People Act restricts covered Alabama retail base-rate increases until January 1, 2029; the outcome of Alabama Power’s proposed deferred recovery for Lindsay Hill costs remains uncertain.

Other notable items include a $46M Georgia Power asset-retirement obligation recorded for removal of two hydro dams following a FERC surrender order; Georgia Power storm recovery of an adjusted $869M regulatory asset over 67 months; and a Nicor Gas rate-case stipulation providing an approximately $82M annual base-rate increase, subject to remaining procedural steps. Alabama Power’s Plant Barry coal-ash closure litigation was remanded for further proceedings; the company says it complies with applicable requirements.

Southern Company — Q3 and nine months ended September 30, 2026

Southern Company is a holding company with regulated electric utilities, competitive wholesale power, and natural-gas businesses. Q3 earnings grew on higher non-fuel retail electric revenue, including data-center demand, and Southern Power project activity; higher O&M and taxes partly offset the gains. Revenue and expense changes tied to fuel and other recoverable costs generally have limited earnings effect.

Consolidated results

Net income rose 19.6% in Q3 to $1.77/share from $1.55/share, and 16.6% for 9M to $4.02/share from $3.56/share. Retail-electric revenue growth reflected rates/pricing, sales growth, weather and fuel-cost recovery; data-center demand was a significant contributor to commercial sales. Natural-gas revenue growth reflected base-rate increases, while gas-cost recovery rose for 9M mainly because of higher first-quarter gas prices. Wholesale electric revenue also increased, with higher sales volumes and average energy costs.

Expense increases included higher O&M, property taxes and interest. Q3 O&M reflected generation, transmission/distribution and storm costs, plus the absence of a $33M 2025 credit related to the estimated Vogtle Units 3 and 4 probable loss. 9M depreciation included $228M of accelerated depreciation for Southern Power wind repowering. Higher construction spending lifted AFUDC equity income to $140M from $90M in Q3 and $388M from $243M for 9M. Interest expense was $842M from $755M in Q3 and $2.4B from $2.3B for 9M; Q3 included $43M of parent debt-extinguishment losses. 9M income taxes declined to $887M from $973M, aided by renewable tax credits and tax-credit valuation changes.

Business and segment performance

For 9M, net income was $1.5B at Alabama Power ($1.3B prior year), $2.9B at Georgia Power ($2.5B), $201M at Mississippi Power ($198M), $30M at Southern Power ($141M), and $593M at Southern Company Gas ($549M). Southern Power’s lower YTD earnings mainly reflected wind-repowering accelerated depreciation, despite stronger revenues.

Southern Power PPA revenue was $631M in Q3 ($545M prior year), comprising $174M of capacity revenue ($148M) and $457M of energy revenue ($397M). For 9M, PPA revenue was $1.703B ($1.508B), including $414M capacity ($394M) and $1.289B energy ($1.114B). Q3 capacity growth included a $24M Georgia Power affiliate-PPA lease modification; energy growth reflected natural-gas PPA volumes, energy prices and new solar output. Solar and wind results remain exposed to weather, equipment performance and transmission constraints.

Southern Company Gas segment Q3 revenue/net income was: gas distribution $706M/$9M (prior $668M/$12M); pipeline investments $8M/$17M (prior $8M/$20M); gas marketing $59M/$3M (prior $58M/$3M); and all other $1M/$(8)M (prior $1M/$(10)M). Distribution earnings faced higher depreciation, Nicor rate-case disallowance charges and borrowing costs. Gas distribution rates and weather-related mechanisms generally mitigate gas-cost and usage variability.

Cash flow and funding

Southern Company operating cash flow increased $675M, mainly on earnings after noncash adjustments and vendor-payment timing. Investing cash use primarily funded utility construction, Southern Power projects, and gas infrastructure; investing cash flow is not a capital-expenditure measure. During 9M, Southern Company issued approximately 44.9M common shares, with about $3.8B of forward-sale proceeds. It issued $5.256B of senior notes, $40M of revenue bonds and $2.966B of other long-term debt; maturities, redemptions and repurchases were $3.823B, $54M and $2.921B, respectively.

At September 30, unused committed bank credit totaled $8.909B. Southern Company had $890M of short-term debt outstanding at 4.1%; Southern Company Gas had $217M at 4.1%. Current liabilities exceeded current assets by $2.282B at the parent, $1.065B at Georgia Power and $595M at Southern Company Gas, largely reflecting maturities, short-term funding and seasonal cash needs. Management expects to meet working-capital requirements through operating cash flow, commercial paper, credit lines and short-term bank notes.

Regulation, investment and risks

Traditional electric companies had about 20 GW of large-load contracts, including data centers: approximately 16 GW reviewed by state commissions and 4 GW agreed but awaiting review. Contracts include minimum bills; many also require minimum durations, termination payments and customer collateral or guarantees. Growth depends on customer demand, reliability, policy, financing and recovery of incremental costs.

Georgia’s 2026 fuel stipulation reduced annual fuel billings by about $394M and approved recovery of an $869M storm regulatory asset over 67 months. Alabama’s rate restrictions extend through 2028 for covered base rates; proposed cost deferrals and customer credits remain subject to regulatory outcomes. Nicor Gas received approval, subject to further proceedings, for an approximately $82M annual base-revenue increase effective November 2026.

FERC approved Southern Gas’s $3.3B South System Expansion 4, with Southern Company Gas responsible for 50% of project costs; it is expected to add about 1.3 Bcf/day in phases in 2028–29. The proposed $7.6B Southeast Connector would add about 2.6 Bcf/day, but remains subject to customer commitments and approvals. Environmental rules affecting coal combustion residuals and greenhouse-gas emissions, capital-cost recovery, affordability, fuel and labor costs, weather, customer credit and access to capital remain material uncertainties.

For the nine months ended September 30, 2026, Southern Company and its listed subsidiaries—Alabama Power, Georgia Power, Mississippi Power, Southern Power, and Southern Company Gas—reported no material changes to their market-risk disclosures. The filing refers readers to each company’s 2025 Form 10-K market-risk discussion and financial-instrument notes, and to Notes (I) and (J) of the current condensed financial statements for further details.

Disclosure Controls and Internal Control

Southern Company and its subsidiaries Alabama Power, Georgia Power, Mississippi Power, Southern Power, and Southern Company Gas concluded that their disclosure controls and procedures were effective as of Q3 2026.

Southern Power and Southern Company Gas reported no material changes to internal control over financial reporting during the quarter. Southern Company, Alabama Power, Georgia Power, and Mississippi Power implemented a new customer billing application in September 2026, changing related processes and internal controls. The changes were not made in response to an identified control deficiency.

The registrants reported no material changes to the risk factors previously disclosed in Item 1A of their Form 10-K. This section describes no new financial metrics, business developments, or industry-specific risk updates.

Leadership, related parties, and trading plans

Effective January 1, 2027, Kimberly S. Greene, then Georgia Power’s Chairman, President and CEO, will become Southern Company Executive Vice President and President, Southern Company Operations. Stanley W. Connally, Jr., then Southern Company Executive Vice President and COO, will become Georgia Power Chairman, President and CEO. Compensation for the new roles had not been determined; Southern Company will disclose any material changes after those decisions are made.

The company identified no reportable related-party transactions other than matters disclosed in Southern Company’s 2026 proxy statement.

During Q3 2026, two executives adopted Rule 10b5-1 plans to sell Southern Company common shares:

Cummiskey’s plan share count includes performance-based equity awards at target and accrued dividend-equivalent rights, so the actual number of shares available for sale could be higher or lower. No trading-plan modifications or terminations occurred during Q3 2026, and subsidiary registrants had no reportable arrangements. This section reports no financial results or material financial changes.