Company: SOJE
Filing Date: 2025-02-20
Form Type: 10-K
Source: 0000092122-25-000018
Chunk: 4606

Company: SOUTHERN CO
Filing Date: 2025-02-20
Form: 10-K
Item: Item 3
Chunk 4606
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 judgments include assessing the likelihood of (1) recovery in future rates of incurred costs, (2) a disallowance of part of the cost of recently completed plant or plant under construction, and/or (3) a refund to customers. Auditing these judgments, which include assumptions about the outcome of future decisions by the Commissions, required specialized knowledge of accounting for rate regulations and the rate setting process due to its inherent complexities.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the impact of rate regulation on certain assets and liabilities included the following, among others:

•We tested the effectiveness of management's controls over the evaluation of the likelihood of (1) the recovery in future rates of certain incurred costs and (2) refunds or future reductions in rates that should be reported as regulatory liabilities; and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering certain costs in future rates or of a future reduction in rates. We also tested the effectiveness of management's controls over the initial recognition of regulatory assets or liabilities.

•We read and evaluated relevant regulatory orders and/or other relevant publicly available information to assess the likelihood of recovery of certain incurred costs in future rates or of a future reduction in rates based on precedents of the treatment of similar costs under similar circumstances.

•We tested certain incurred costs recorded as regulatory assets or liabilities during the period for completeness and accuracy.

•We obtained representation from management regarding the likelihood of recoverability of incurred costs and potential refund or future reduction in rates for regulatory liabilities to assess management's assertions about the likelihood of recovery, refund, or a future reduction in rates.

•We evaluated Alabama Power's disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments, including where there is a high degree of subjectivity involved in assessing the potential impact of future regulatory orders on incurred costs.

/s/ Deloitte & Touche LLP

Birmingham, Alabama

February 19, 2025

We have served as Alabama Power's auditor since 2002.

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STATEMENTS OF INCOME

For the Years Ended December 31, 2024, 2023, and 2022

Alabama Power Company

202420232022(in millions)Operating Revenues:Retail revenues$6,639 $6,159 $6,470 Wholesale revenues, non-affiliates337 424 726 Wholesale revenues, affiliates139 60