Southern (SO) Risk Factor Changes

The costs of providing pension and other postretirement benefit plans are dependent on a number of factors, such as the rates of return on plan assets, discount rates, the level of interest rates used to measure the r…

The Registrants and Nicor Gas rely on access to both short-term and longer-term capital markets as a significant source of liquidity to meet capital requirements not satisfied by the cash flow from their respective op…

The traditional electric operating companies are currently obligated to supply power to retail customers, as well as wholesale customers under long-term PPAs.

Southern Company and Southern Company Gas are holding companies and, as such, they have no operations of their own.

In the event a traditional electric operating company or Southern Company Gas experiences any of these weather events or any natural disaster or other catastrophic event, recovery of costs in excess of reserves and in…

Volatile or significant weather events could result in substantial damage to the transmission and distribution lines of the traditional electric operating companies, the generating facilities of the traditional electr…

In addition, the adoption of technology by customers can have both positive and negative impacts on sales.

Customers could also voluntarily reduce their consumption of energy in response to decreases in their disposable income, elimination of government energy assistance programs, government shutdowns, increases in energy…

The consumption and use of energy are linked to economic activity.

The traditional electric operating companies and Southern Company Gas from time to time have experienced and may continue to experience under recovered fuel and purchased power and/or purchased gas cost balances.

The generation, energy marketing, and natural gas operations of the Southern Company system are subject to changes in energy prices and fuel costs, which could increase the cost of producing power, decrease the amount…

In addition, partnership and joint ownership agreements may provide partners or co-owners with certain decision-making authority in connection with projects under construction.

If a Subsidiary Registrant is unable to complete the development or construction of a project or decides to delay or cancel construction of a project, it may not be able to recover its investment in that project and m…

Completion of these types of projects without delays or significant cost overruns is subject to substantial risks that have occurred or may occur, including changes in labor costs, availability, and productivity; chal…

The businesses of the Registrants require substantial expenditures for investments in new facilities as well as capital improvements, including transmission, distribution, generation, and battery energy storage facili…

Supply chain disruptions and trade policies have contributed to higher prices of components, materials, equipment, and other needed commodities, and these inflationary increases may continue.

Supply chain disruptions, inflation, elevated interest rates, trade policies (including tariffs and other trade measures), and other economic factors could negatively impact operations.

The Southern Company system must attract, train, and retain a workforce to meet current and future needs.

The traditional electric operating companies operate under a business model that invests capital to serve customers and recovers those investments and earns a return for investors through state regulation.

Most of Southern Power's generating capacity has been sold to purchasers under PPAs with Southern Power's top three customers comprising approximately 25% of Southern Power's total revenues for the year ended December…

The traditional electric operating companies are also dependent on coal, and related coal supply contracts, for a portion of their electric generating capacity.

gas through the natural gas distribution utilities.

The Registrants and their third-party vendors have been subject, and will likely continue to be subject, to attempts to gain unauthorized access to their technology systems and confidential data or to attempts to disr…

Cyber actors, including those associated with foreign governments, have attacked and threatened to attack energy infrastructure.

The NRC has broad authority under federal law to impose licensing and safety-related requirements for the operation of nuclear facilities.

The financial performance of Southern Company and its subsidiaries depends on the successful operation of the electric generation, transmission, and distribution facilities, natural gas distribution facilities, and di…

Since 2018, Southern Company system management established GHG emissions reductions goals including an intermediate goal of 50% from 2007 levels by 2030 and a long-term goal of net zero by 2050.

Because natural gas is a fossil fuel with lower carbon content relative to other fossil fuels, future carbon constraints, including, but not limited to, the imposition of a carbon tax, may create additional demand for…

The Southern Company system has processes for identifying, assessing, and responding to climate-related risks, including a scenario planning process that is used to inform resource planning decisions in the states in…

Concern and activism about climate change continue and, as a result, demand for energy conservation and sustainable assets could further increase.

The Southern Company system's operations are regulated by state and federal environmental agencies through a variety of laws and regulations governing air, GHGs, water, land, avian and other wildlife and habitat prote…

The Registrants are unable to predict changes in laws or regulations, regulatory guidance, legal interpretations, policy positions, and implementation actions that may occur in the future.

The traditional electric operating companies, and the power industry in general, have experienced a period of rising costs and projected capital expenditures, especially with respect to infrastructure investments, whi…

Southern Company and its subsidiaries are subject to substantial federal, state, and local governmental regulation, including with respect to rates.

incurrence of costs of purchased or constructed capacity and the traditional electric operating companies' recovery through regulated rates.

The traditional electric operating companies are experiencing projected demand that exceeds recent experience, creating the need for new power generating resources and transmission facilities.

funding Southern Company, Southern Company Gas, or Southern Power, the respective subsidiaries have financial obligations and, with respect to Southern Company and Southern Company Gas, regulatory restrictions that mu…

natural disasters, including hurricanes and wildfires.

The generation, energy marketing, and natural gas operations of the Southern Company system are subject to changes in energy prices and fuel costs, which could increase the cost of producing power, decrease the amount…

interconnect facilities to transmission grids; and increased financing costs as a result of changes in interest rates or as a result of project delays.

The Registrants and their third-party vendors have been subject, and will likely continue to be subject, to attempts to gain unauthorized access to their technology systems and confidential data or to attempts to disr…

could result in substantial costs to Alabama Power or Georgia Power and Southern Company.

gas could likewise result in increased costs to the Southern Company system and affect the demand for natural gas as well as the prices charged to customers and the competitive position of natural gas.

The SEC adopted new rules relating to the disclosure of climate-related matters, but has stayed their effectiveness pending judicial review.

however, that all such costs will be recovered.

postretirement plans.

Table of Contents Index to Financial Statements

The traditional electric operating companies are experiencing projected demand that significantly exceeds recent experience, creating the need for new power generating resources and transmission facilities.

such delay or failure in recovering costs by the Subsidiary Registrants could have a material adverse effect on the Registrants, including lower credit ratings and, thus, higher costs for future debt issuances, as wel…

purchased gas costs through cost recovery clauses, recovery may be delayed or may be denied if costs are deemed to be imprudently incurred.

key premise of these business models is that generating power at power plants achieves economies of scale and produces power at a competitive cost.

SCS, on behalf of the traditional electric operating companies and Southern Power, purchases fuel for the Southern Company system's generation fleet from a diverse set of suppliers.

operating companies operate.

FUTURE EARNINGS POTENTIAL – "Income Tax Matters – Federal Tax Legislation" in Item 7 herein for additional information.

The OBBB was signed into law on July 4, 2025.