Southern Power's Parent Sees Q3 Revenue Jump 7.5%, Net Income Up 9.2%

TL;DR

Southern Power's parent company is crushing it with revenue and net income growth, making it a solid bet for stable returns despite rising costs.

AI Summary

SOUTHERN POWER CO, as part of The Southern Company system, reported robust financial performance for the three and nine months ended September 30, 2025. Total operating revenues for The Southern Company system increased by $549 million, or 7.5%, to $7,823 million for the three months ended September 30, 2025, compared to $7,274 million in the prior year. This growth was primarily driven by a $341 million increase in retail electric revenues to $5,707 million and a $111 million increase in wholesale electric revenues to $832 million. For the nine-month period, total operating revenues surged by $2,189 million, or 10.7%, to $22,572 million from $20,383 million. Operating income for the system rose by $226 million to $2,594 million for the three-month period and by $358 million to $6,368 million for the nine-month period. Net income attributable to common stockholders for The Southern Company system was $1,289 million for the three months ended September 30, 2025, up from $1,180 million in the same period last year, representing an 9.2% increase. For the nine months, net income attributable to common stockholders increased by $175 million to $3,210 million from $3,035 million. Key business changes include increased fuel costs by $199 million to $1,345 million for the quarter and $579 million to $3,753 million for the nine months, and a significant rise in depreciation and amortization by $212 million to $1,422 million for the quarter and $493 million to $4,030 million for the nine months. Strategic outlook remains focused on managing these rising operational costs while leveraging increased electric and natural gas revenues.

Why It Matters

This filing indicates strong revenue and net income growth for The Southern Company system, of which Southern Power is a key component, signaling healthy demand for electricity and natural gas. For investors, this suggests a stable and growing utility business, potentially leading to consistent dividends and capital appreciation, especially given the regulated nature of many of its operations. Employees benefit from a financially robust company, ensuring job security and potential for growth. Customers, while facing increased fuel costs reflected in higher revenues, are served by a company investing in its infrastructure, as evidenced by rising depreciation. In a competitive context, Southern Company's performance highlights its resilience and market position against alternative energy sources and other utilities, particularly with its diverse generation portfolio.

Risk Assessment

Risk Level: medium — The filing indicates a 'medium' risk level due to significant increases in operating expenses, specifically fuel costs rising by $199 million to $1,345 million for the quarter and depreciation and amortization increasing by $212 million to $1,422 million. While revenues are growing, these rising costs could compress margins if not effectively managed or recovered through rate adjustments, as highlighted in the 'Cautionary Statement Regarding Forward-Looking Information' which mentions 'the ability to control costs and avoid cost and schedule overruns'.

Analyst Insight

Investors should consider holding or initiating a position in Southern Company, given its consistent revenue and net income growth. Monitor future filings closely for trends in operating expenses, particularly fuel and depreciation, and the company's ability to pass these costs through to consumers via rate adjustments to maintain profitability.

Financial Highlights

revenue

$7.823B

operating Margin

33.2%

net Income

$1.289B

revenue Growth

+7.5%

Revenue Breakdown

Key Numbers

• $7.823B — Total operating revenues (Increased by $549 million (7.5%) for the three months ended September 30, 2025)
• $22.572B — Total operating revenues (Increased by $2,189 million (10.7%) for the nine months ended September 30, 2025)
• $1.289B — Net income attributable to common stockholders (Increased by $109 million (9.2%) for the three months ended September 30, 2025)
• $3.210B — Net income attributable to common stockholders (Increased by $175 million (5.8%) for the nine months ended September 30, 2025)
• $1.345B — Fuel expenses (Increased by $199 million for the three months ended September 30, 2025)
• $4.030B — Depreciation and amortization (Increased by $493 million for the nine months ended September 30, 2025)
• $5.707B — Retail electric revenues (Increased by $341 million for the three months ended September 30, 2025)
• $832M — Wholesale electric revenues (Increased by $111 million for the three months ended September 30, 2025)
• $2.594B — Operating Income (Increased by $226 million for the three months ended September 30, 2025)
• $6.368B — Operating Income (Increased by $358 million for the nine months ended September 30, 2025)

Key Players & Entities

• SOUTHERN POWER CO (company) — Registrant in the 10-Q filing
• The Southern Company (company) — Parent company of Southern Power Company
• Alabama Power Company (company) — Subsidiary Registrant
• Georgia Power Company (company) — Subsidiary Registrant
• Mississippi Power Company (company) — Subsidiary Registrant
• Southern Company Gas (company) — Subsidiary Registrant
• U.S. Securities and Exchange Commission (regulator) — Filing authority for Form 10-Q
• EPA (regulator) — U.S. Environmental Protection Agency, mentioned in environmental regulations
• FERC (regulator) — Federal Energy Regulatory Commission, mentioned in regulatory approvals
• NRC (regulator) — U.S. Nuclear Regulatory Commission, mentioned in regulatory approvals

FAQ

Risk Factors

• Rising Fuel and Operating Costs [high — operational]: Fuel expenses increased by $199 million to $1,345 million for the three months ended September 30, 2025. Other operations and maintenance costs also saw an increase of $1,643 million for the quarter. Managing these rising operational costs is a key strategic focus.
• Increased Depreciation and Amortization [medium — operational]: Depreciation and amortization expenses rose significantly by $212 million to $1,422 million for the three months ended September 30, 2025. This increase impacts profitability and requires careful financial management.
• Regulatory Environment [high — regulatory]: As a utility, Southern Power operates within a heavily regulated environment. Changes in regulations, environmental standards, or rate-setting policies could materially impact financial performance and operations.
• Market Volatility and Competition [medium — market]: The company faces market risks related to fluctuations in energy prices and demand. Increased competition in the wholesale market could also pressure revenues and margins.

Industry Context

The electric utility sector is characterized by significant capital investment in infrastructure, regulatory oversight, and a transition towards cleaner energy sources. Southern Power, as a wholesale power generator, operates in a competitive market while also facing the broader industry trends of rising operational costs and evolving energy demands.

Regulatory Implications

Southern Power operates under stringent regulatory frameworks that govern pricing, environmental standards, and operational practices. Changes in these regulations, particularly those related to emissions or renewable energy mandates, could significantly impact costs and investment strategies.

What Investors Should Do

1. Monitor fuel cost hedging strategies.
2. Analyze the impact of increased depreciation on future cash flows.
3. Assess the company's ability to pass on increased costs to customers.

Glossary

Operating Revenues

The total amount of money generated from the company's primary business activities, such as selling electricity and natural gas. (Indicates the overall scale of business and revenue generation trends.)

Operating Expenses

Costs incurred by the company in its normal course of business, including fuel, purchased power, maintenance, and depreciation. (Essential for calculating operating income and understanding cost management.)

Operating Income

Profit generated from a company's core business operations before interest and taxes. Calculated as Operating Revenues minus Operating Expenses. (A key measure of operational profitability and efficiency.)

Depreciation and Amortization

The systematic allocation of the cost of tangible (depreciation) and intangible (amortization) assets over their useful lives. (Represents a significant non-cash expense that impacts net income and reflects investment in infrastructure.)

Fuel Expenses

The cost of fuel (e.g., natural gas, coal) used to generate electricity. (A major variable cost for power generation companies, sensitive to market price fluctuations.)

Year-Over-Year Comparison

For the three months ended September 30, 2025, The Southern Company system reported a 7.5% increase in total operating revenues to $7.823 billion, driven by strong retail and wholesale electric revenue growth. Operating income also saw a healthy increase of $226 million. However, fuel expenses rose by $199 million and depreciation and amortization increased by $212 million, indicating rising operational costs that are being managed alongside revenue expansion.

Key Financial Figures

• $5 — outhern Company Common Stock, par value $5 per share SO New York Stock Exchange (
• $40 — 04,843 Alabama Power Company Par Value $40 Per Share 30,537,500 Georgia Power Com
• $0.01 — 1,000 Southern Power Company Par Value $0.01 Per Share 1,000 Southern Company Gas P

Filing Documents

• so-20250930.htm (10-Q) — 7426KB
• ex4-f6nicorsupplementalind.htm (EX-4.F6) — 187KB
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• x31f1-q32025gas.htm (EX-31.F1) — 10KB
• x31f2-q32025gas.htm (EX-31.F2) — 9KB
• x32a-q32025so.htm (EX-32.A) — 6KB
• x32b-q32025apc.htm (EX-32.B) — 6KB
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• screenshot2025-10x22135334.jpg (GRAPHIC) — 4KB
• 0000092122-25-000084.txt ( ) — 30915KB
• so-20250930.xsd (EX-101.SCH) — 134KB
• so-20250930_cal.xml (EX-101.CAL) — 165KB
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—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION

Financial Statements (Unaudited)

Item 1. Financial Statements (Unaudited) 9

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 97

Quantitative and Qualitative Disclosures about Market Risk

Item 3. Quantitative and Qualitative Disclosures about Market Risk 150

Controls and Procedures

Item 4. Controls and Procedures 150

—OTHER INFORMATION

PART II—OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 151

Risk Factors

Item 1A. Risk Factors 151

Unregistered Sales of Equity Securities and Use of Proceeds Inapplicable

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Inapplicable

Defaults Upon Senior Securities Inapplicable

Item 3. Defaults Upon Senior Securities Inapplicable

Mine Safety Disclosures Inapplicable

Item 4. Mine Safety Disclosures Inapplicable

Other Information

Item 5. Other Information 151

Exhibits

Item 6. Exhibits 151

Signatures

Signatures 155 3 Table of Contents Index to Financial Statements DEFINITIONS Term Meaning 2022 ARP Alternate Rate Plan approved by the Georgia PSC in 2022 for Georgia Power for the years 2023 through 2025 2023 IRP Update Georgia Power's updated IRP filed in 2023 and approved by the Georgia PSC in April 2024 as modified by a stipulation among Georgia Power, the staff of the Georgia PSC, and certain intervenors 2024 ELG Rule Final rule published by the EPA in May 2024 revising the steam effluent guidelines 2024 GHG Rules Final rules published by the EPA in May 2024 for existing fossil fuel-fired steam electric generating units and new fossil fuel-fired combustion turbines and combined cycle generation facilities 2024 Legacy Rule Final rule published by the EPA in May 2024 related to legacy surface impoundments and CCR management units AFUDC Allowance for funds used during construction AGL Services Company AGL Services Company, Inc., the Southern Company Gas system service company and a wholly-owned subsidiary of Southern Company Gas Alabama Power Alabama Power Company ARO Asset retirement obligation Atlanta Gas Light Atlanta Gas Light Company, a wholly-owned subsidiary of Southern Company Gas CAMT Corporate alternative minimum tax CCR Coal combustion residuals CCR Rule Disposal of Coal Combustion Residuals from Electric Utilities final rule published by the EPA in 2015 Chattanooga Gas Chattanooga Gas Company, a wholly-owned subsidiary of Southern Company Gas Clean Air Act Clean Air Act Amendments of 1990 COD Commercial operation date CODM Chief operating decision maker CWIP Construction work in progress Dalton City of Dalton, Georgia, an incorporated municipality in the state of Georgia, acting by and through its Board of Water, Light, and Sinking Fund Commissioners Dalton Pipeline A pipeline facility in Georgia in which Southern Company Gas has a 50% undivided ownership interest DOE U.S. Department of Energy ECCR Geo

Financial Statements (Unaudited)

Item 1. Financial Statements (Unaudited). Page The Southern Company and Subsidiary Companies: Condensed Consolidated Statements of Income 10 Condensed Consolidated Statements of Comprehensive Income 11 Condensed Consolidated Statements of Cash Flows 12 Condensed Consolidated Balance Sheets 13 Condensed Consolidated Statements of Stockholders' Equity 15 Alabama Power Company: Condensed Statements of Income 17 Condensed Statements of Comprehensive Income 17 Condensed Statements of Cash Flows 18 Condensed Balance Sheets 19 Condensed Statements of Common Stockholder's Equity 21 Georgia Power Company: Condensed Statements of Income 22 Condensed Statements of Comprehensive Income 22 Condensed Statements of Cash Flows 23 Condensed Balance Sheets 24 Condensed Statements of Common Stockholder's Equity 26 Mississippi Power Company: Condensed Statements of Income 27 Condensed Statements of Comprehensive Income 27 Condensed Statements of Cash Flows 28 Condensed Balance Sheets 29 Condensed Statements of Common Stockholder's Equity 31 Southern Power Company and Subsidiary Companies: Condensed Consolidated Statements of Income 32 Condensed Consolidated Statements of Comprehensive Income (Loss) 32 Condensed Consolidated Statements of Cash Flows 33 Condensed Consolidated Balance Sheets 34 Condensed Consolidated Statements of Stockholders' Equity 36 Southern Company Gas and Subsidiary Companies: Condensed Consolidated Statements of Income 38 Condensed Consolidated Statements of Comprehensive Income 38 Condensed Consolidated Statements of Cash Flows 39 Condensed Consolidated Balance Sheets 40 Condensed Consolidated Statements of Stockholder's Equity 42 Combined Notes to the Condensed Financial Statements 43 9 Table of Contents Index to Financial Statements THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) For the Three M

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