Company: SOJE
Filing Date: 2025-02-20
Form Type: 10-K
Source: 0000092122-25-000018
Chunk: 2467

Company: SOUTHERN CO
Filing Date: 2025-02-20
Form: 10-K
Item: Item 3
Chunk 2467
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 its business using Heating Degree Days. Generally, increased Heating Degree Days result in higher demand for natural gas on Southern Company Gas' distribution system. Southern Company Gas has various regulatory mechanisms, such as weather and revenue normalization and straight-fixed-variable rate design, which limit its exposure to weather changes within typical ranges in each of its utility's respective service territory. Southern Company Gas also utilizes weather hedges to limit the negative income impacts in the event of warmer-than-normal weather in Illinois for gas distribution operations and in Illinois and Georgia for gas marketing services. Therefore, weather typically does not have a significant net income impact.

During the Heating Season, more customers are connected to the gas distribution systems and natural gas usage is higher in periods of colder weather. Southern Company Gas' base operating expenses, excluding cost of natural gas and bad debt expense, are incurred relatively evenly throughout the year. Seasonality also affects the comparison of certain balance sheet items across quarters, including receivables, unbilled revenues, natural gas for sale, and notes payable. Thus, Southern Company Gas' 

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    Table of Contents                                Index to Financial Statements        COMBINED MANAGEMENT'S DISCUSSION AND ANALYSIS

operating results can vary significantly from quarter to quarter as a result of seasonality. The impact of Heating Season on Southern Company Gas' annual results is illustrated in the table below.

Percent Generated DuringHeating SeasonOperating RevenuesNetIncome202462 %80 %202367 %73 %

Net Income

Net income attributable to Southern Company Gas in 2024 was $740 million, an increase of $125 million, or 20.3%, compared to 2023. The increase was primarily due to a $109 million increase in net income at gas distribution operations and an $11 million increase in net income at gas marketing services.

A condensed income statement for Southern Company Gas follows:

2024Increase (Decrease) from 2023(in millions)Operating revenues$4,456 $(246)Cost of natural gas1,196 (448)Other operations and maintenance1,235 48 Depreciation and amortization650 68 Taxes other than income taxes248 (14)Estimated loss on regulatory disallowance— (88)Total operating expenses3,329 (434)Operating income1,127 188 Earnings from equity method investments146 6 Interest expense, net of amounts capitalized341 31 Other income (expense), net66 9 E