Company: SOJE
Filing Date: 2025-07-31
Form Type: 10-Q
Source: 0000092122-25-000076
Chunk: 395

Company: SOUTHERN CO
Filing Date: 2025-07-31
Form: 10-Q
Item: Item 2
Chunk 395
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 natural gas, and general economic conditions that may impact customers' ability to pay for natural gas consumed. Southern Company Gas has various regulatory and other mechanisms, such as weather and revenue normalization mechanisms and weather derivative instruments, that limit its exposure to changes in customer consumption, including weather changes within typical ranges in its natural gas distribution utilities' service territories. See Note 2 to the financial statements under "Southern Company Gas" in Item 8 of the Form 10-K for additional information.

In the second quarter 2025, net income increased $11 million, or 13.8%, when compared to the corresponding period in 2024, as described further below:

•Operating revenues increased $136 million primarily due to higher gas cost recovery and base rate increases. Gas costs recovered through natural gas revenues generally equal the amount expensed in cost of natural gas.

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    Table of Contents                                Index to Financial StatementsMANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONAND RESULTS OF OPERATIONS (Continued)

•Operating expenses increased $125 million primarily due to a $96 million increase in cost of natural gas as a result of higher gas prices and higher volumes sold compared to 2024, a $14 million increase in depreciation primarily due to additional plant in service related to continued investments at the natural gas distribution utilities, and an $8 million increase related to expenses passed through to customers primarily related to bad debt and energy efficiency programs.

•Interest expense, net of amounts capitalized increased $6 million primarily due to higher average outstanding borrowings.

For year-to-date 2025, net income increased $24 million, or 6.3%, when compared to the corresponding period in 2024, as described further below:

•Operating revenues increased $242 million primarily due to higher gas cost recovery and base rate increases. Gas costs recovered through natural gas revenues generally equal the amount expensed in cost of natural gas.

•Operating expenses increased $218 million primarily due to a $145 million increase in cost of natural gas as a result of higher gas prices and higher volumes sold compared to 2024, a $28 million increase in depreciation primarily due to additional plant in service related to continued investments at the natural gas distribution utilities, and a $20 million increase related to expenses passed through to customers primarily related to bad debt and energy efficiency programs.

•Interest expense, net of amounts capitalized increased $10 million primarily due to higher average outstanding borrowings.

Gas Pipeline Investments

The gas pipeline investments segment consists primarily of joint ventures in