Alabama Power Fuels Southern Co's Q3 Revenue Surge

TL;DR

**ALABAMA POWER CO is powering up Southern Co's bottom line, making it a solid bet in a volatile market.**

AI Summary

ALABAMA POWER CO, a subsidiary of The Southern Company, reported a robust financial performance for the three and nine months ended September 30, 2025. For the three months, retail electric revenues increased to $5,707 million from $5,366 million in the prior year, contributing to a total operating revenue of $7,823 million, up from $7,274 million. Operating income for the quarter rose to $2,594 million from $2,368 million. For the nine-month period, total operating revenues reached $22,572 million, a significant increase from $20,383 million in 2024. Net income for the nine months was $4,021 million, up from $3,803 million in the previous year, demonstrating strong profitability. Key business changes include continued investment in infrastructure, as evidenced by the increase in depreciation and amortization expenses to $4,030 million for the nine months, up from $3,537 million. Risks highlighted include regulatory changes, particularly new EPA rules on effluent limitations, greenhouse gas, and coal combustion residuals, which could impact compliance costs. The strategic outlook focuses on maintaining reliable service and navigating environmental regulations, with ongoing capital expenditures for infrastructure improvements.

Why It Matters

This strong performance by ALABAMA POWER CO, a key operating company within The Southern Company system, signals healthy demand for electricity and effective cost management, which is positive for investors in the parent company. Employees benefit from the stability and growth, potentially leading to job security and investment in operational improvements. Customers are impacted by the company's ability to recover costs through rates, as indicated by various rate mechanisms like Rate CNP and Rate ECR. In the broader market, ALABAMA POWER CO's results reflect the resilience of regulated utilities, especially amid evolving environmental regulations and competitive pressures from alternative energy sources.

Risk Assessment

Risk Level: medium — The risk level is medium due to significant exposure to regulatory changes, specifically new EPA rules like the 2024 ELG Rule, 2024 GHG Rules, and 2024 Legacy Rule, which could increase compliance costs. Additionally, the company faces inherent operational risks in managing generation, transmission, and distribution of electricity, as detailed in the 'Cautionary Statement Regarding Forward-Looking Information'.

Analyst Insight

Investors should consider ALABAMA POWER CO's consistent revenue growth and its parent company's (The Southern Company) dividend stability. Monitor regulatory developments, particularly environmental compliance costs, as these could impact future profitability. This filing suggests a stable, albeit regulated, investment.

Financial Highlights

revenue

$22.572B

operating Margin

28.2%

net Income

$4.021B

revenue Growth

+10.7%

Revenue Breakdown

Key Numbers

• $7.823B — Total operating revenues for Q3 2025 (Increased from $7.274 billion in Q3 2024, indicating strong revenue growth.)
• $22.572B — Total operating revenues for YTD Q3 2025 (Increased from $20.383 billion in YTD Q3 2024, showing consistent top-line expansion.)
• $2.594B — Operating Income for Q3 2025 (Increased from $2.368 billion in Q3 2024, reflecting improved operational efficiency.)
• $4.021B — Net Income for YTD Q3 2025 (Increased from $3.803 billion in YTD Q3 2024, demonstrating enhanced profitability.)
• $5.707B — Retail electric revenues for Q3 2025 (Increased from $5.366 billion in Q3 2024, highlighting strong customer demand.)
• $4.030B — Depreciation and amortization for YTD Q3 2025 (Increased from $3.537 billion in YTD Q3 2024, indicating significant capital investments.)
• $1.345B — Fuel expense for Q3 2025 (Increased from $1.146 billion in Q3 2024, reflecting higher energy costs or increased generation.)
• $1.643B — Other operations and maintenance for Q3 2025 (Slightly decreased from $1.662 billion in Q3 2024, suggesting some cost control.)

Key Players & Entities

• ALABAMA POWER CO (company) — Registrant and key operating company
• The Southern Company (company) — Parent company of ALABAMA POWER CO
• EPA (regulator) — U.S. Environmental Protection Agency, issuing new environmental rules
• Georgia PSC (regulator) — Georgia Public Service Commission, approving rate plans
• FERC (regulator) — Federal Energy Regulatory Commission, involved in regulatory actions
• NRC (regulator) — U.S. Nuclear Regulatory Commission, involved in regulatory actions
• Mississippi Power Company (company) — Subsidiary Registrant
• Southern Company Gas (company) — Subsidiary Registrant
• Southern Power Company (company) — Subsidiary Registrant
• Georgia Power Company (company) — Subsidiary Registrant

FAQ

Risk Factors

• Environmental Regulations (EPA Rules) [high — regulatory]: New EPA rules on effluent limitations, greenhouse gas emissions, and coal combustion residuals pose significant compliance challenges. These regulations could necessitate substantial capital investments and operational changes, potentially increasing compliance costs and impacting operations.
• Infrastructure Investment and Maintenance [medium — operational]: Continued investment in infrastructure, evidenced by a rise in depreciation and amortization expenses to $4,030 million for the nine months (up from $3,537 million), is crucial for reliability but also represents ongoing capital allocation and potential execution risks.
• Fuel and Purchased Power Costs [medium — market]: Fluctuations in fuel costs, as seen with a $1,345 million expense for Q3 2025 (up from $1,146 million), and purchased power costs can significantly impact operating expenses and profitability. Managing these volatile input costs is a key operational challenge.
• Rate Regulation and Approval [high — regulatory]: As a regulated utility, Alabama Power's ability to recover costs and earn a fair return is subject to state regulatory approvals. Changes in regulatory frameworks or adverse decisions could impact financial performance and investment recovery.

Industry Context

The electric utility sector is characterized by significant capital intensity, regulatory oversight, and an increasing focus on environmental sustainability. Companies like Alabama Power are navigating a transition towards cleaner energy sources while managing aging infrastructure and evolving customer demands. Competitive pressures exist from alternative energy providers and changing regulatory landscapes.

Regulatory Implications

New EPA regulations concerning effluent limitations, greenhouse gas emissions, and coal combustion residuals represent a significant regulatory hurdle. Compliance will likely require substantial capital expenditures and may lead to increased operating costs, impacting the company's financial performance and potentially requiring rate adjustments.

What Investors Should Do

1. Monitor regulatory developments closely.
2. Analyze capital expenditure plans and their impact on returns.
3. Evaluate the company's ability to manage volatile fuel costs.

Glossary

Depreciation and amortization

The systematic allocation of the cost of tangible (depreciation) and intangible (amortization) assets over their useful lives. It represents the 'using up' of an asset's value. (An increase in D&A to $4,030 million for the nine months indicates significant ongoing capital investments in infrastructure and assets.)

Operating Income

Profitability measure calculated as total operating revenues minus total operating expenses. It reflects the earnings from a company's core business operations. (Operating income grew to $6,368 million for the nine months, showing improved profitability from core operations.)

Allowance for equity funds used during construction (AFUDC)

A component of construction work in progress that represents the cost of equity and debt funds used to finance construction projects. It is capitalized into the cost of the asset. (While not explicitly quantified in the provided summary, AFUDC is a standard accounting practice for regulated utilities and impacts the rate base and future earnings.)

Coal Combustion Residuals (CCR)

Waste materials produced from burning coal in power plants, such as fly ash and bottom ash. Disposal and management of CCR are subject to environmental regulations. (New EPA regulations concerning CCR are a specific risk factor that could lead to increased compliance costs for Alabama Power.)

Year-Over-Year Comparison

Alabama Power Co. demonstrates strong year-over-year performance, with total operating revenues for the nine months ended September 30, 2025, increasing by 10.7% to $22.572 billion from $20.383 billion in 2024. Net income also saw a healthy rise of 5.7% to $4.021 billion. A notable increase in depreciation and amortization expenses by 14.6% to $4.030 billion signals substantial ongoing capital investments in infrastructure. While operating income improved, indicating efficiency gains, the company faces new regulatory risks, particularly from upcoming EPA environmental rules, which were not as prominent in the prior year's filings.

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
• ex24-c2cookgpcpoa.htm (EX-24.C2) — 4KB
• ex24-d2cherrympcpoa.htm (EX-24.D2) — 5KB
• x31a1-q32025so.htm (EX-31.A1) — 10KB
• x31a2-q32025so.htm (EX-31.A2) — 9KB
• x31b1-q32025apc.htm (EX-31.B1) — 10KB
• x31b2-q32025apc.htm (EX-31.B2) — 10KB
• x31c1-q32025gpc.htm (EX-31.C1) — 9KB
• x31c2-q32025gpc.htm (EX-31.C2) — 9KB
• x31d1-q32025mpc.htm (EX-31.D1) — 9KB
• x31d2-q32025mpc.htm (EX-31.D2) — 10KB
• x31e1-q32025spc.htm (EX-31.E1) — 10KB
• x31e2-q32025spc.htm (EX-31.E2) — 10KB
• 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
• x32c-q32025gpc.htm (EX-32.C) — 6KB
• x32d-q32025mpc.htm (EX-32.D) — 6KB
• x32e-q32025spc.htm (EX-32.E) — 6KB
• x32f-q32025gas.htm (EX-32.F) — 6KB
• image2a.jpg (GRAPHIC) — 13KB
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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
• so-20250930_def.xml (EX-101.DEF) — 1243KB
• so-20250930_lab.xml (EX-101.LAB) — 1125KB
• so-20250930_pre.xml (EX-101.PRE) — 1514KB
• so-20250930_htm.xml (XML) — 6170KB

—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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