Company: SOJE
Filing Date: 2025-05-01
Form Type: 10-Q
Source: 0000092122-25-000042
Chunk: 177

Company: SOUTHERN CO
Filing Date: 2025-05-01
Form: 10-Q
Item: Item 8
Chunk 177
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$8 Interest rate derivatives— 66 — — 66 Total$6 $68 $— $— $74 (a)Excludes cash collateral of $5 million.(b)Excludes receivables related to investment income, pending investment sales, payables related to pending investment purchases, and currencies. See Note 6 to the financial statements under "Nuclear Decommissioning" in Item 8 of the Form 10-K for additional information.Southern Company, Alabama Power, and Georgia Power continue to elect the option to fair value investment securities held in the nuclear decommissioning trust funds. The fair value of the funds, including reinvested interest and dividends and excluding the funds' expenses, increased (decreased) by the amounts shown in the table below for 

63

    Table of Contents                                Index to Financial StatementsNOTES TO THE CONDENSED FINANCIAL STATEMENTS (Continued)(UNAUDITED)

the three months ended March 31, 2025 and 2024. The changes were recorded as a change to the regulatory assets and liabilities related to AROs for Georgia Power and Alabama Power, respectively.Three Months EndedMarch 31,Fair value increases (decreases)20252024(in millions)Southern Company $(6)$103 Alabama Power (13)68 Georgia Power7 35 Valuation MethodologiesThe energy-related derivatives primarily consist of exchange-traded and over-the-counter financial products for natural gas and physical power products, including, from time to time, basis swaps. These are standard products used within the energy industry and are valued using the market approach. The inputs used are mainly from observable market sources, such as forward natural gas prices, power prices, implied volatility, and overnight index swap interest rates. Interest rate derivatives are also standard over-the-counter products that are valued using observable market data and assumptions commonly used by market participants. The fair value of interest rate derivatives reflects the net present value of expected payments and receipts under the swap agreement based on the market's expectation of future interest rates. Additional inputs to the net present value calculation may include the contract terms, counterparty credit risk, and occasionally, implied volatility of interest rate options. The fair value of cross-currency swaps reflects the net present value of expected payments and receipts under the swap agreement based on the market's expectation of future foreign currency exchange rates. Additional inputs to the net present value calculation may include the contract terms, counterparty credit risk