Company: SOJE
Filing Date: 2025-02-20
Form Type: 10-K
Source: 0000092122-25-000018
Chunk: 607

Company: SOUTHERN CO
Filing Date: 2025-02-20
Form: 10-K
Item: Item 7
Chunk 607
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 at December 31, 2024 and was approximately $0.76 per mmBtu below market prices at December 31, 2023. The change in option fair value is primarily attributable to the volatility of the market and the underlying change in the natural gas price. Substantially all of the traditional electric operating companies' natural gas hedge gains and losses are recovered through their respective fuel cost recovery clauses.

The Registrants use OTC contracts that are not exchange traded but are fair valued using prices which are market observable, and thus fall into Level 2 of the fair value hierarchy. In addition, Southern Company Gas uses exchange-traded market-observable contracts, which are categorized as Level 1. See Note 13 to the financial statements for further discussion of fair value measurements. The maturities of the energy-related derivative contracts for Southern Company and Southern Company Gas at December 31, 2024 were as follows:

Fair Value Measurements of Contracts atDecember 31, 2024TotalFair ValueMaturity20252026 – 20272028 – 2029Thereafter(in millions)Southern CompanyLevel 1(a)$7 $6 $1 $— $— Level 2(b)(46)(52)4 1 1 Southern Company total(c)$(39)$(46)$5 $1 $1 Southern Company GasLevel 1(a)$7 $6 $1 $— $— Level 2(b)3 3 — — — Southern Company Gas total(c)$10 $9 $1 $— $— 

(a)Valued using NYMEX futures prices.

(b)Level 2 amounts for Southern Company Gas are valued using basis transactions that represent the cost to transport natural gas from a NYMEX delivery point to the contract delivery point. These transactions are based on quotes obtained either through electronic trading platforms or directly from brokers.

(c)Excludes cash collateral of $17 million as well as immaterial premium and associated intrinsic value associated with weather derivatives.

The Registrants are exposed to risk in the event of nonperformance by counterparties to energy-related and interest rate derivative contracts, as applicable. The Registrants generally enter into agreements and material transactions with counterparties that have 

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investment grade credit ratings by Moody's, S