Southern Company 2014 Summary Annual Report
Doing Energy Better
MAKING It Better
Southern Company is committed to the development of the full portfolio of fuel sources
for energy generation: New nuclear, 21st century coal, natural gas and renewables such
as wind and solar, deployed in tandem with an emphasis on energy effi ciency. By utilizing
a variety of technologies and abundant natural resources, this environmentally responsible
approach ensures that our subsidiaries’ ability to produce clean, safe, reliable and
affordable energy is not reliant upon any single source of generation.
[ See Page 6 ]
Mark Rauckhorst, Construction Vice President (left), and Vanderian Floyd, Performance Improvement Manager (right),
assess construction of Vogtle units 3 and 4 at Georgia Power’s Plant Vogtle.
MOVING It Better
We take great pride in our ability to deliver electricity throughout our system with
industry-leading reliability. Southern Company has invested nearly $7 billion in smart grid
technology that gives us the means to both predict and adapt to the variable energy needs
of customers. No less important are the dedicated line crews who work diligently through
all kinds of weather conditions to maintain the transmission and distribution network.
[ See Page 12 ]
Southern Company 2014 Summary Annual Report
1
So Customers Can USE It Better
Everything we do to make and move energy better is ultimately for the benefi t of
customers. But generating electricity cleanly, safely and effi ciently and delivering
it to the grid is only part of our mission. We work hard to maintain exceptional
reliability and to keep rates affordable. Our traditional operating companies also
work directly with customers to help them fi nd better ways to manage their
energy consumption more effi ciently.
[ See Page 18 ]
C o n t e n t s
Letter to Shareholders .................................................. 3
Shareholder Value ....................................................... 24
Financial Highlights ...................................................... 5
Summary Financial Review ......................................... 26
Making Energy Better ................................................... 6
Board of Directors ...................................................... 32
Moving Energy Better ................................................. 12
Management Council .................................................. 34
Using Energy Better .................................................... 18
Glossary ..................................................................... 36
Southern Company 2014 Summary Annual Report
2
Thomas A. Fanning
Chairman, President & CEO
Southern Company
Dear Fellow Shareholders,
Southern Company’s franchise operations have never performed better than they
did in 2014. We continued to provide the most outstanding customer service in
our industry. In terms of system reliability, we continued to set–and raise–the bar.
We grew our portfolio of wholesale renewable assets and made signifi cant
progress on major construction projects.
In these and many other areas, Southern Company’s franchise business
and to position Southern Company for continued success in the years
continues to lead the way as we strengthen existing operations and
to come.
seek new opportunities to grow and expand our reach for the benefi t
The response was overwhelming, with more than 500 individuals
of the customers and communities we serve.
and cross-functional teams submitting nearly 1,000 ideas. From among
As evidenced throughout this report, we are steadfastly committed
those, we identifi ed six in particular as having transformative potential.
to ‘doing energy better.’ This speaks to our goal to make, move and
Their stories are detailed elsewhere in this report, and I am confi dent
help customers use energy more effi ciently than anyone else in our
that you will be extremely impressed with the depth and breadth of
industry. With that mission in mind, we have sharpened our focus
thinking represented.
on innovation.
The complete story of 2014 is perhaps best told through a brief
Innovation has been a hallmark of Southern Company since its
review of progress on each of our fi ve strategic priorities:
inception, and in 2014 we were very intentional in our efforts to
leverage the creativity of our workforce. In May, we announced an
internal competition to tap into that creative energy and surface
fresh ideas. Known as SO Prize, the competition was designed to
recognize system employees who devised the most inventive solu-
tions to address the various challenges of the electric utility industry,
Excel at the Fundamentals
Nothing is more fundamental to our business than customer service.
Southern Company and its four traditional operating companies occu-
pied the top fi ve spots in the most recent Customer Value Benchmark
survey, our annual peer comparison of U.S. electric utilities. Those of
Southern Company 2014 Summary Annual Report
3
our traditional operating companies that were rated in the J.D. Power
fl exibility to serve customers with that generated energy, or sell some
and Associates American Customer Satisfaction Survey all ranked
or all of it–or the associated renewable energy credits –to third parties.
either fi rst or second in their respective categories. Alabama Power
In 2014, we continued to grow our wholesale renewable portfolio
was also named the Most Trusted Residential Electric Utility in America
through our Southern Power subsidiary, which added three new solar
by Lifestory Research, an independent research fi rm.
facilities in California and New Mexico. Southern Power is also devel-
Our transmission and distribution businesses performed superbly,
oping a 131-megawatt solar plant in Taylor County, Georgia, and has
setting all-time record lows for the frequency and duration of trans-
acquired two other solar projects in Georgia that will provide an
mission outages, as well as an all-time system record for distribution
additional 99 megawatts. Along with the expansion of its solar assets,
outage frequency. And these results are just the latest in a 12-year
Southern Power has also entered into an agreement to acquire the
trend of improved performance.
299-megawatt Kay Wind project in Oklahoma.
Achieve Success with Major Construction Projects
to own more than 970 megawatts of renewable energy generating
Work continues on Georgia Power’s Vogtle units 3 and 4, where our
capacity, and is clearly becoming an industry leader in the advance-
focus continues to be on safety and quality, with construction of the
ment and operation of renewable energy technologies.
two nuclear islands as our critical path going forward. Milestones
In addition, Gulf Power has fi led for approval to purchase power
achieved in 2014 include the placement of the Unit 4 containment
from Kingfi sher Wind in Oklahoma, and Georgia Power is evaluating
Upon completion of these facilities, Southern Power is expected
vessel bottom head, the Unit 3 lower ring and the CA20 critical module,
wind turbines on Skidaway Island, Georgia.
which houses plant components and the used fuel storage area.
Vogtle construction has not been without its challenges. We received
Value and Develop Our People
a revised forecast from our contractor that refl ects an 18-month delay
Fortune magazine recently named Southern Company to its “World’s
from previously estimated in-service dates. It is signifi cant to note,
Most Admired Companies” list as a top utility worldwide for the sixth
however, that the proposed schedule does not change the range of
consecutive year, and we were cited as one of the 40 Best Companies
the expected customer rate impact. The forecasted effect on customer
for Diversity by Black Enterprise magazine. G.I. Jobs magazine ranked
rates is still less than originally anticipated, with the overall impact
Southern Company fi rst among utilities in its Top 100 Military Friendly
projected to be 6 to 8 percent, compared with 12 percent when cer-
Employers, the eighth consecutive year we have received the top rank-
tifi ed by the Georgia Public Service Commission in 2009. These new
ing. In 2014, we completed 481 transfers of employees between our
units will fuel a growing Georgia for at least 60 years, resulting in
various subsidiaries, broadening their experience and knowledge of
signifi cant lifecycle savings. Building them safely–and correctly–is far
our industry and business operations.
more important than building them quickly.
At Mississippi Power’s Integrated Gasifi cation Combined Cycle
These and many other accomplishments are the direct result of an
project in Kemper County, Mississippi, construction is nearly complete
unwavering focus on the core values that have shaped our company’s
and we have completed the fi rst fi ring of the facility’s gasifi er burners,
identity since its inception. Going forward, we remain anchored in those
which functioned as expected. We anticipate our fi rst syngas pro-
values. In particular, our customer-focused business model will continue
duction in the third quarter of 2015. Operational training and control
to be the guiding principle for all that we do. As we turn our attention
systems validation, as well as start-up and commissioning activities,
to the future, I am confi dent that the opportunities we encounter will
are all underway and progressing well.
give rise to even greater creativity and innovation throughout our orga-
Support the Building of a National Energy Policy
Thank you for your continued confi dence in Southern Company.
We continue to advocate for a common sense national energy policy
Our management and employees remain diligent in their efforts to pro-
that embraces the full energy portfolio and places a premium on
vide exceptional shareholder value. It is an honor to serve you.
nization, even as we remain rooted in this fi rm foundation.
energy innovation and the restoration of America’s fi nancial integrity.
Our vision for the full energy portfolio includes new nuclear, 21st century
Sincerely,
coal, natural gas and renewables such as wind and solar, together with
an emphasis on energy effi ciency.
Promote Energy Innovation
We continue to produce and purchase power from a variety of renew-
able energy sources. Our traditional operating companies have the
Thomas A. Fanning
March 26, 2015
Southern Company 2014 Summary Annual Report
4
Financial Highlights
2.57
2.70
2.37
2.19
1.88
2.37
2.57
2.68
2.71
2.80
2010
2011
2012
2013
2014
2010
2011
2012
2013
2014
Basic Earnings Per Share
(In Dollars)
Basic Earnings Per Share Excluding Kemper
IGCC Impacts, Leveraged Lease Restructure Charge,
and MC Asset Recovery Insurance Settlements*
(In Dollars)
* Not a financial measure under generally accepted accounting
principles. See Glossary on page 36 for additional information
and specific adjustments made to this measure by year.
17.46
17.66
16.54
17.09
18.47
12.71
13.04
13.10
10.08
8.82
2010
2011
2012
2013
2014
2010
2011
2012
2013
2014
Operating Revenues
(In Billions of Dollars)
Return On Average Common Equity
(Percent)
Operating Revenues (In Millions)
Earnings (In Millions)
Basic Earnings Per Share
Diluted Earnings Per Share
Dividends Per Share (Amount Paid)
Dividend Yield (Year-End, Percent)
Average Shares Outstanding (In Millions)
Return On Average Common Equity (Percent)
Book Value Per Share
Market Price Per Share (Year-End, Closing)
Total Market Value of Common Stock (Year-End, In Millions)
Total Assets (In Millions)
Total Kilowatt-Hour Sales (In Millions)
Retail
Wholesale
Total Traditional Operating Company Customers (Year-End, In Thousands)
2014
2013
Change
$18,467
$17,087
$1,963
$1,644
$2.19
$2.18
$1.88
$1.87
$2.0825
$2.0125
4.2
897
10.08
$21.98
$49.11
$44,581
$70,923
194,425
4.9
877
8.82
$21.43
$41.11
$36,468
$64,546
183,401
161,639
156,457
32,786
4,504
26,944
4,467
8.1)%
19.4)%
16.5)%
16.6)%
3.5)%
(14.3)%
2.3)%
14.3)%
2.6)%
19.5)%
22.2)%
9.9)%
6.0)%
3.3)%
21.7)%
0.8)%
Southern Company 2014 Summary Annual Report
5
MAKING Energy Better
By Utilizing ALL Available Resources
Including new nuclear, 21st century coal, natural gas,
renewables and energy effi ciency
(Above) The construction of Vogtle units 3 and 4 is the largest job-producing project in the state of Georgia, employing more than 5,500 people
in construction, and is expected to create 800 permanent jobs once the units go on line. Upon completion of the new units, Plant Vogtle is
expected to generate more electricity than any other U.S. nuclear facility; (Left) Construction nears completion at the Kemper County, Mississippi,
coal gasifi cation facility; (Middle) Plant Franklin, a natural gas facility in Smiths, Alabama; (Right) Cimarron Solar Facility, part of the Southern
Company system’s growing renewable energy portfolio
Southern Company 2014 Summary Annual Report
6
Just as an astute investor understands the importance of a diver-
sifi ed investment portfolio, Southern Company is committed to a
diversifi ed portfolio of options for power generation that makes
use of a wide range of available fuel sources. This approach allows
for fl exibility in choosing the most economical and effi cient means
of providing clean, safe, reliable and affordable electricity to cus-
tomers throughout the Southeast.
As a starting point, we believe nuclear must be a dominant solution in a carbon-
constrained world. The Southern Company system is pursuing the newest generation of
nuclear technology in the world today, and we are leading the nuclear renaissance with
the construction of new units at Plant Vogtle in Georgia.
Because coal remains such an abundant domestic resource, we have invested consid-
erable time and energy exploring ways to use it in a more environmentally responsible
manner. We have developed our own technology for coal gasifi cation, and Mississippi
Power is constructing a facility designed to use this traditional natural resource in an
innovative way that will signifi cantly reduce emissions.
With advances in drilling technology, we are now able to obtain affordable supplies
of natural gas that were previously unobtainable. As a result, natural gas represented
40 percent of our fuel mix in 2014, and the Southern Company system has become the
third-largest consumer of natural gas in the United States.
The Southern Company system is one of the largest owners of solar photovoltaic
facilities in the U.S., generating energy that can be used to serve customers or sold by our
traditional operating companies to third parties, with or without the associated renewable
energy credits.
The benefi t of this fl exible, full portfolio strategy was apparent during the winter of
2014, when uncharacteristically cold temperatures across the Southeast and other parts
of the nation resulted in an accelerated demand for natural gas, as well as a corresponding
increase in the cost to purchase it. In response, we were able to seamlessly turn to other
fuel sources for power generation to help keep costs low, even as we addressed increased
customer demand.
Fuel Flexibility (Percent, GWHs of Energy)*
Coal
Gas
Nuclear
Hydro/Other
2000
2014
Low Gas Price
High Gas Price
2020 Range**
78
4
16
2
40
40
16
4
21
55
18
6
49
27
18
6
* Includes purchased power. ** Illustrative ranges based on assumed natural gas prices of $2/mmBtu (Low Gas Price) and
$14/mmBtu (High Gas Price). Assumptions have been selected to illustrate the Southern Company system’s fuel fl exibility
and do not represent actual forecasts of future system fuel mix or natural gas prices.
MAKING Energy Better
By Advancing Smarter Technologies
that Generate Cleaner Energy
With new nuclear, 21st century coal and a rapidly growing portfolio of renewables,
the Southern Company system leads the way in clean power generation.
0%
-20%
-40%
-60%
-80%
-100%
’90
’94
’98
’02
’06
’10
’14
Southern Company System Emissions Trends
(Percent Change Since 1990 Levels)
• SULFUR DIOXIDE • • NITROGEN OXIDES •
The Southern Company system continues to develop and utilize the
very latest in technological innovations to produce electricity more
cleanly and effi ciently. Since 1990, we have reduced major emissions
by 80 percent, even as generating capacity increased by as much as
40 percent.
At Plant Vogtle, Georgia Power is building the fi rst new nuclear
reactors in the United States in 30 years, using the latest in nuclear
technology. With virtually no emissions, nuclear power is one of the
cleanest forms of generation available.
The Southern Company system is leading the way in coal gasifi -
cation technology with our Transport Reactor Integrated Gasifi cation
process, or TRIG™. This process is currently being implemented at
Mississippi Power’s new coal-fi red facility in Kemper County, Missis-
sippi, where construction is nearing completion. When the facility
is fi nished, Mississippi Power will take an otherwise unused natural
resource – native Mississippi lignite – remove much of the CO2 and
generate electricity with a carbon footprint comparable to that of a
similarly sized natural gas facility.
In Wilsonville, Alabama, we operate the National Carbon Capture
Center on behalf of the U.S. Department of Energy. The center provides
facilities for testing new technologies for fl ue gas and coal-derived
syngas, helping to accelerate the development of cost-effective CO2
capture technologies.
We continue to produce and purchase thousands of megawatt-hours
from renewable projects, with the fl exibility to serve the customers of
our traditional operating companies with the generated energy, or sell
some or all of the power or the associated renewable energy credits
to third parties. Georgia Power has plans to build 30-megawatt solar
installations at the Kings Bay Naval Submarine Base near St. Mary’s,
Georgia, and at three U.S. Army bases: Fort Stewart, near Savannah;
Fort Benning, near Columbus; and Fort Gordon, near Augusta. Gulf
Power is partnering with the U.S. Navy and U.S. Air Force to build
solar farms at three different military installations in northwest Florida,
and Alabama Power, Georgia Power and Gulf Power all have contracts
to purchase power from wind facilities in Kansas and Oklahoma.
Meanwhile, Southern Power has been cleared to con struct a
900-acre, 131-megawatt solar farm in Taylor County, Georgia and an-
nounced the acquisition of an additional 99 megawatts of generating
capacity associated with two other Georgia facilities. With the comple-
tion of these and other projects, Southern Power is expected to own
more than 970 megawatts of renewable energy generating capacity
that is either already in operation or under development.
Construction nears completion at Mississippi Power’s new integrated gasifi cation combined cycle (IGCC) facility in Kemper County, Mississippi. When completed, this 21st century
coal facility will utilize native Mississippi lignite to generate electricity with a carbon footprint comparable to a similarly sized natural gas facility.
Southern Company 2014 Summary Annual Report
8
Southern Company 2014 Summary Annual Report
9
SO
PRIZE
Doing Energy Better
By Harnessing the Power of
Innovation and Collaboration
In May of 2014, we announced an internal competition for system
employees that aimed to harness the power of innovation and collabo-
ration. The goal was to help the company “look around the corners of
the future” and position itself for continued success.
More than 500 individuals and teams submitted nearly 1,000 ideas.
Many teams were made up of employees from different operating
companies and subsidiaries, collaborating across geographic and
business unit lines.
Known as SO Prize, the competition was designed to recognize
employees who devised the most inventive solutions to the various
challenges faced by Southern Company and the electric utility industry,
and to stimulate fresh ideas that could potentially drive future growth
for years to come.
In October, six SO Prize winners were announced. The winning
teams and individuals, along with a synopsis of their proposals, are
highlighted throughout the pages of this publication. Pilot programs
have been approved for all six concepts as the company continues to
explore and evaluate the possibilities of each.
SO
PRIZE
The Hydrogen Alternative
Chethan Acharya and Todd Wall envision a plan for using existing power plants to make hydrogen, which could be transported by liquid carriers to fuel stations
using existing oil pipeline infrastructure. The gas could then be used to power proton-exchange membrane fuel cell vehicles on the open road or in industrial
settings. Such a scenario could ultimately pave the way for a carbon-free hydrogen economy, with Southern Company positioned as the leading supplier of
hydrogen for this market.
Team Members:
Chethan Acharya (SCS), Todd Wall (SCS)
Southern Company 2014 Summary Annual Report
10
SO
PRIZE
Water, Water Everywhere
With 400 miles of coastal access and 27,000 miles of transmission line rights-of-way in the Southern Company system, Ray Smith envisions a grid of pipelines
that move water to where it is needed. Desalination plants could be constructed to convert coastal seawater to fresh water and then pump it through pipelines
along transmission rights-of-way. Providing the Southeast with a virtually unlimited source of water could help alleviate ongoing discussions between states
over the current limited supply, and address local communities’ concerns regarding droughts and water rationing.
Team Member:
Ray W. Smith (SCS)
Southern Company 2014 Summary Annual Report
11
MOVING Energy Better
As Proven by
Our Industry-Leading Reliability
The Southern Company system’s Power Coordination Center, dedicated
line crews and innovative technologies combine to ensure excellence
in transmission and distribution.
1.4
1.2
1.0
’05
’06
’07
’08
’09
’10
’11
’12
’13
’14
SAIFI Performance
(In Number of Outages Per Customer)
System Average Interruption Frequency Index (SAIFI) is the standard industry index
for measuring the number of outages experienced by an average customer in a year.
Our 2014 SAIFI was 1.069 events, the best in Southern Company history.
Southern Company 2014 Summary Annual Report
12
You might say that Todd Lucas is an expert in keeping the lights on.
As gen eral manager of bulk power operations, Todd oversees the Power
Coordination Center (PCC), which is responsible for maintaining a reli-
able and effi cient transfer of energy throughout the system. PCC staff
members work around the clock 365 days a year to monitor activity
on the grid, and they oversee the transmission and distribution system
at the highest level.
that might disrupt sophisticated electronic systems or industrial op-
erations. And, of course, having a consistent and reliable source of
energy is no less important to residential customers and their families.
Thanks to the efforts of these and many other system associates,
2014 saw yet another all-time record established for reliability on our
transmission and distribution system, continuing a long-term positive
trend of more than a decade.
Throughout the Southeast, the diligent efforts of our traditional
operating companies’ line crews cannot be over-emphasized. In 2014,
crews worked tirelessly to restore power to customers after outages
caused by tornadoes and winter storms.
On the technology front, we’ve been busy testing innovative power
fl ow control technologies that improve the utilization of existing grid
infrastructure at signifi cant savings compared with traditional trans-
mission line upgrades.
These dedicated men and women know that reliability is of critical
importance to customers. Businesses require a high level of power
quality in order to prevent incremental fl uctuations in the fl ow of energy
Ultimately, the combined impact of these individuals and deployed
technologies converge to help maintain the industry-leading reliability
that customers demand.
Todd Lucas (center), general manager of bulk power operations, consults with team members at the Southern Company system’s state-of-the-art Power Coordination Center in Alabama.
Southern Company 2014 Summary Annual Report
13
MOVING Energy Better
Putting Customers First Makes For
Sweet Satisfaction
Southern Company’s customer-focused business
model is the linchpin of our success.
Andra Hall is laser-focused on keeping her customers satisfi ed. Of course, with friendly service
and succulent confections like ‘The Elvis’ cupcake, it’s hard to envision how patrons of CamiCakes
Cupcakes could ever be anything less than satisfi ed. Named for Andra’s daughter Camille (nick-
named “Cami”), CamiCakes offers dedicated fans throughout metro Atlanta a unique selection
of baked delights.
Likewise, Georgia Power sales and effi ciency representatives work hard to keep customers
satisfi ed in their role as company liaisons with businesses like Andra’s. They consult with local
businesses to provide an analysis of their energy consumption, and make recommendations for
more energy-effi cient operations and potential dollar savings. For example, Andra’s represen-
tative suggested that she operate the ovens in her production facility during off-peak hours for
signifi cant reductions in cost and usage.
Elsewhere, Georgia Power’s new state-of-the-art Customer Resource Center (CRC) enhances
customer satisfaction by catering to residential, commercial and industrial customers in a
variety of innovative ways. The CRC offers information and demonstrations on electric transpor-
tation, comfort systems and cooking technologies, as well as manufacturing applications for
industry and energy effi cient ideas for the home, all under one roof.
CamiCakes Cupcakes owner Andra Hall and her employees adjust a display of delicious treats prior to the morning
opening of one of her Atlanta stores. Georgia Power consults with Ms. Hall to help achieve optimal effi ciency in energy
consumption in her retail locations and production center.
Southern Company 2014 Summary Annual Report
15
SO
PRIZE
Line Inspections Using UAVs
Today, aerial inspections of power lines are performed with manned aircraft. Paul Schneider and his team propose fl ight-based data collections by unmanned
aerial vehicles (UAVs). UAVs are more cost-effective than helicopters and winged aircraft, and they enable closer inspection with less environmental impact.
UAVs could also dramatically reduce the time between data collection fl ights that require air support. This proposal estimates that outages could be shortened
by an average of 1.5 hours per outage through the use of UAVs –eliminating almost 11 days of outages every year.
Team Members:
Paul Schneider (GPC; pictured), Matt Clarkson (APC), Dexter Lewis (SCS), Drew McGuire (SCS), Patrick Norris (SCS), Ranato Salvaleon (GPC)
Southern Company 2014 Summary Annual Report
16
SO
PRIZE
Dynamic Data
Alabama Power’s James Young and his colleagues are convinced that the key to increasing customer satisfaction, loyalty and revenue lies in better understanding
what individual customers want and treating them accordingly. The idea: Use data to identify customer priorities and proactively provide individualized
solutions. Data analytics could provide actionable insights that enable the delivery of the right message to the right customer at the right time – or assist in the
development of new product and service offerings while identifying the most cost-effective manner in which to implement them.
Team Members:
James Young (APC; pictured), Noel Black (SCS), Chris Blake (APC), Stoney Burke (SCS), Hannah Flint (SCS), Joe Massari (SCS),
Todd Perkins (APC), Tom Schmaeling (APC), Nick Sellers (APC), John Smola (APC), George Stegall (APC), Jeanne Wolak (SCS)
Southern Company 2014 Summary Annual Report
17
Southern Company 2014 Summary Annual Report
18
USING Energy Better
By Delivering Reliable Service at Affordable Rates,
We’re Providing Customers with Peace of Mind
Industry-leading reliability, energy-effi cient homes and rates below
the national average prove to be a winning combination.
Atlanta homeowner Larry Cummings and his wife, Cia, appreciate
Georgia Power’s reliable service and affordable rates. And as the own-
ers of an almost totally rebuilt home, they also appreciate the energy-
effi cient features that their builder included on the advice of Georgia
Power’s energy consultants.
“We have great confi dence in the reliability of the service we get
from Georgia Power,” says Larry. “We don’t really have to think about it.
That’s not always the case with other utility providers. And when we
fi rst moved into our new home, we were able to establish service with
just a single point of contact. For our family, that’s really more important
than the savings.”
Southern Company’s traditional operating companies work dili-
gently to maintain transmission and distribution reliability, and to
minimize service down time. But when the occasional planned or
weather-related power outage occurs, customers are kept apprised of
the latest outage status by a variety of means, including mobile apps,
outage alerts, interactive outage maps and social media.
Of course, lower power bills don’t hurt, either. According to Larry,
“Affordable rates are important because our three children can consume
a lot of energy. But because we’ve enjoyed consistently predictable
rates, we’ve been able to budget in such a way as to direct household
cash fl ow to other family priorities.”
Southern Company 2014 Summary Annual Report
Southern Company 2014 Summary Annual Report
Southern Company
19
USING Energy Better
Through Smarter Choices
Simple, common-sense choices can result
in signifi cant savings.
Since 2000, energy-effi ciency programs have helped the Southern
Company system reduce peak demand by 4,382 megawatts and
avoid over 2.6 billion kilowatt-hours of energy use. That’s enough
electricity to power the cities of Birmingham, Alabama, Montgom-
ery, Alabama and Savannah, Georgia for a year.
Pensacola, Florida, homebuilder Kevin Russell understands the value of energy effi ciency
in home construction, both for his own home and the homes he builds for his customers.
When building a home, Kevin works hand-in-glove with his Gulf Power residential
energy consultant, Heather Madison, even before construction begins. Heather meets
with Kevin and his team to consult on HVAC, insulation and other aspects of the home-
building process, and she continues to visit the job site to assess the energy fi tness of
the home as construction progresses. She also counsels Kevin on options for the most
effi cient lighting fi xtures, heat pumps, water heaters and other appliances that will work
within his customers’ budgets.
In his own home, Kevin uses energy-effi cient lighting fi xtures and appliances. Kevin
appreciates the fact that energy effi ciency helps keep his monthly power bill low. As part
of Gulf Power’s EarthCents program, Gulf Power residential energy consultants also work
directly with homeowners like Kevin to help them assess and better control energy usage
in their homes. Residential energy consultants in Southern Company’s traditional operat-
ing companies are available to perform energy audits, conduct new home inspections and
discuss incentive programs.
At the end of the day, our goal is to help customers like Kevin use energy better by
making smarter and more energy-effi cient choices both in new home construction and in
existing homes.
(Above) Homeowner–and homebuilder–Kevin Russell installs an energy-effi cient light-emitting diode (LED) light bulb; (Left) An electric charger for plug-in electrical
vehicles (PEVs); some 10,000 PEVs are registered in the Southern Company service territory; (Middle) An energy-effi cient programmable thermostat can help lower
energy costs; (Right) An ENERGY STAR-rated clothes washer uses about 20 percent less energy than regular washers.
Southern Company 2014 Summary Annual Report
21
SO
PRIZE
Empowering Customers
with More Choices
Gulf Power’s Lisa Roddy believes customers should have more options, similar to the customized cell phone plans offered by wireless carriers.
For example, customers might pay a set amount for unlimited usage or pay only for what they use. They could potentially purchase charging stations
for electric vehicles or surge protection at a fi xed price. Lisa envisions that customers might even be able to purchase blocks of renewable energy
or select options to fi nance solar power for their homes.
Team Member:
Lisa Roddy (Gulf)
Southern Company 2014 Summary Annual Report
22
SO
PRIZE
Fueling the PEV Revolution
Bryan Coley, John Socha and their team envision a comprehensive effort to accelerate the adoption of plug-in electric vehicles (PEVs). The team proposes the
creation of a pre-sale education and awareness program, PEV sales and leasing facilitation, post-sale customer service and a network of charging stations
throughout the Southeast. This vision includes the establishment of strategic concierge locations for hands-on driving experiences and the opportunity to
purchase PEVs through a network of dealer partners.
Team Members:
Bryan Coley (Gulf; pictured), John Socha (SCS; pictured), Blair Farley (SCS), Trey Hayes (APC), John Peters (GPC),
Jamie Sandford (APC), Lincoln Wood (SCS)
Southern Company 2014 Summary Annual Report
23
DOING Energy Better
Delivers Long-Term Shareholder Value
Customer-Focused Strategy Underpins Consistent Financial Performance
Throughout the 103-year history of Southern Company, customers
have remained at the center of all we do. We believe our focus on
customers translates to value creation for investors, and this is borne
out in the results we have delivered over time.
Over the long term, Southern Company has proved to be an out-
standing investment, outperforming the S&P 500 over the 10-, 20- and
30-year periods ending December 31, 2014. Our dividend– an import-
ant part of that performance–increased for the 13th consecutive year
in 2014, and we have paid shareholder dividends every quarter since
1948. That’s 269 consecutive quarters.
At year-end, Southern Company’s dividend yield was 4.2 percent,
compared with approximately 1.9 percent for the S&P 500. Over the
past 20 years, dividends and dividend reinvestment have accounted
for approximately 69 percent of the increase in our shareholder value,
compared with approximately 37 percent of the increase in shareholder
value for the S&P 500.
As we’ve shared in years past, dividends do more than simply pro-
vide cash to shareholders; they help shape a company’s approach to risk.
Once again, the proof is in the numbers. In 2014, Southern Company
was the least volatile stock in the Philadelphia Electric Utility Index.
Stocks with low volatility tend to be less prone to price swings during
times of market stress, and are therefore considered more stable.
Keeping customers fi rst–along with industry-leading reliability and
prices below the national average– has enabled us to sustain opera-
tional success, reinforcing our reputation for providing exceptional
shareholder value.
• SOUTHERN COMPANY •
• S&P 500 INDEX •
• PHILADELPHIA ELECTRIC UTILITY INDEX •
$10,855
$6,547
$6,446
$10,000
$8,000
$6,000
$4,000
$2,000
$0
’94 ’95
’96
’97
’98
’99
’00
’01
’02
’03
’04
’05
’06
’07
’08
’09
’10
’11
’12
’13
’14
Value of $1,000 Invested Over 20 Years
This performance graph compares the cumulative return on Southern Company (SO) common stock with the Philadelphia
Electric Utility Index and the Standard & Poor’s (S&P) 500 Index for the past 20 years. The average annualized return during the
20-year period is 12.7 percent for Southern Company, compared to 9.8 percent for the UTY and 9.8 percent for the S&P 500. The
graph assumes that $1,000 was invested in Southern Company common stock and each of the above indices on December 31,
1994, and that all dividends were reinvested. A fi ve-year performance graph is included in Appendix D to the Proxy Statement.
See Glossary on page 36 for information on total shareholder return.
Source: FactSet and Bloomberg
Southern Company 2014 Summary Annual Report
24
SOUTHERN COMPANY
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
Value Added by Low Volatility Relative to the Market
This chart shows the volatility of each of the 20 utilities in the Philadelphia Electric Utility Index (UTY). Volatility refers to the
tendency of a stock to react to swings in the market. Southern Company had the lowest level of volatility in the UTY Index and
one of lowest in the S&P 500.
See Glossary on page 36 for information on beta.
Source: FactSet and Bloomberg, fi ve-year beta as of December 31, 2014
• SOUTHERN COMPANY DIVIDEND VALUE •
• SOUTHERN COMPANY STOCK VALUE •
$10,000
$8,000
$6,000
$4,000
$2,000
$0
’94 ’95
’96
’97
’98
’99
’00
’01
’02
’03
’04
’05
’06
’07
’08
’09
’10
’11
’12
’13
’14
Value Created by Dividend and Price Performance
This chart shows the power of Southern Company’s dividend. Over the last 20 years, a $1,000 investment in SO grew to $10,855.
Increases in the value of SO stock contributed $3,047 and dividends, with reinvestment, accounted for an increase of $6,808,
or approximately 69 percent of the gain in value. The graph assumes that $1,000 was invested in Southern Company common
stock on December 31, 1994, and that all dividends were reinvested.
See Glossary on page 36 for information on total shareholder return.
Source: Bloomberg
Southern Company 2014 Summary Annual Report
Southern Company 2014 Summary Annual Report
Southern Company
25
TOTAL SO VALUE
SO DIVIDENDS AND
REINVESTMENT
SO STOCK VALUE
Cautionary Statement Regarding Forward-Looking Statements
Southern Company’s 2014 Summary Annual Report contains forward-looking
statements. Forward-looking statements include, among other things, state-
ments concerning future sources of generation, completion of acquisitions
and construction projects and the anticipated benefi ts thereof, expected retail
rates and the potential benefi ts of possible innovations. In some cases, forward-
looking statements can be identifi ed by terminology such as “may,” “will,”
“could,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,”
“projects,” “predicts,” “potential,” or “continue” or the negative of these
terms or other similar terminology. There are various factors that could cause
actual results to differ materially from those suggested by the forward-looking
statements; accordingly, there can be no assurance that such indicated results
will be realized. These factors include:
• the impact of recent and future federal and state regulatory changes, includ-
ing legislative and regulatory initiatives regarding deregulation and restruc-
turing of the electric utility industry, environmental laws including regulation
of water, coal combustion residuals, and emissions of sulfur, nitrogen, CO2,
soot, particulate matter, hazardous air pollutants, including mercury, and
other substances, and also changes in tax and other laws and regulations to
which Southern Company and its subsidiaries are subject, as well as changes
in application of existing laws and regulations;
• current and future litigation, regulatory investigations, proceedings, or
inquiries, including pending Environmental Protection Agency civil actions
against certain Southern Company subsidiaries, Federal Enegy Regulatory
Commission matters, and Internal Revenue Service and state tax audits;
• legal proceedings and regulatory approvals and actions related to Plant Vogtle
units 3 and 4, including Georgia Public Service Commission approvals and
NRC actions and related legal proceedings involving the commercial parties;
• actions related to cost recovery for the Kemper IGCC project, including
actions relating to proposed securitization, Mississippi Public Service
Commission approval of a rate recovery plan, including the ability to com-
plete the proposed sale of an interest in the Kemper IGCC project to South
Mississippi Electric Power Association, the ability to utilize bonus deprecia-
tion, which currently requires that assets be placed in service in 2015, and
satisfaction of requirements to utilize ITCs and grants;
• Mississippi Public Service Commission review of the prudence of Kemper
IGCC project costs;
• the ultimate outcome and impact of the February 2015 decision of the
Mississippi Supreme Court and any further legal or regulatory proceedings
regarding any settlement agreement between MPC and the Mississippi
Public Service Commission, the March 2013 rate order regarding retail rate
increases, or the Baseload Act;
• the ability to successfully operate the electric utilities’ generating, transmis-
sion, and distribution facilities and the successful performance of necessary
corporate functions;
• the inherent risks involved in operating and constructing nuclear generating
facilities, including environmental, health, regulatory, natural disaster, terror-
ism, or fi nancial risks;
• the performance of projects undertaken by the non-utility businesses and the
• the effects, extent, and timing of the entry of additional competition in the
success of efforts to invest in and develop new opportunities;
markets in which Southern Company’s subsidiaries operate;
• variations in demand for electricity, including those relating to weather, the
general economy and recovery from the last recession, population and busi-
ness growth (and declines), the effects of energy conservation and effi ciency
measures, including from the development and deployment of alternative en-
ergy sources such as self-generation and distributed generation technologies,
and any potential economic impacts resulting from federal fi scal decisions;
• available sources and costs of fuels;
• effects of infl ation;
• the ability to control costs and avoid cost overruns during the development
and construction of facilities, which include the development and construc-
tion of generating facilities with designs that have not been fi nalized or
previously constructed, including changes in labor costs and productivity,
adverse weather conditions, shortages and inconsistent quality of equip-
ment, materials, and labor, contractor or supplier delay, non-performance
under construction or other agreements, operational readiness, including
specialized operator training and required site safety programs, unfore-
seen engineering or design problems, start-up activities (including major
equipment failure and system integration), and/or operational performance
(including additional costs to satisfy any operational parameters ultimately
adopted by any Public Service Commission);
• the ability to construct facilities in accordance with the requirements of per-
mits and licenses, to satisfy any operational and environmental performance
standards, including any Public Service Commission requirements and the
requirements of tax credits and other incentives, and to integrate facilities
into the Southern Company system upon completion of construction;
• investment performance of Southern Company’s employee and retiree ben-
efi t plans and the Southern Company system’s nuclear decommissioning
trust funds;
• advances in technology;
• state and federal rate regulations and the impact of pending and future rate
cases and negotiations, including rate actions relating to fuel and other cost
recovery mechanisms;
• internal restructuring or other restructuring options that may be pursued;
• potential business strategies, including acquisitions or dispositions of assets
or businesses, which cannot be assured to be completed or benefi cial to
Southern Company or its subsidiaries;
• the ability of counterparties of Southern Company and its subsidiaries to
make payments as and when due and to perform as required;
• the ability to obtain new short- and long-term contracts with wholesale
customers;
• the direct or indirect effect on the Southern Company system’s business
resulting from cyber intrusion or terrorist incidents and the threat of terrorist
incidents;
• interest rate fl uctuations and fi nancial market conditions and the results of
fi nancing efforts;
• changes in Southern Company’s or any of its subsidiaries’ credit ratings,
including impacts on interest rates, access to capital markets, and collateral
requirements;
• the impacts of any sovereign fi nancial issues, including impacts on inter-
est rates, access to capital markets, impacts on currency exchange rates,
counterparty performance, and the economy in general, as well as potential
impacts on the benefi ts of the Department of Energy loan guarantees;
• the ability of Southern Company’s subsidiaries to obtain additional generating
capacity at competitive prices;
• catastrophic events such as fi res, earthquakes, explosions, fl oods, hurricanes
and other storms, droughts, pandemic health events such as infl uenzas, or
other similar occurrences;
• the direct or indirect effects on the Southern Company system’s business
resulting from incidents affecting the U.S. electric grid or operation of gen-
erating resources;
• the effect of accounting pronouncements issued periodically by standard-
setting bodies; and
• other factors discussed elsewhere herein and in other reports, including
Southern Company’s Annual Report on Form 10-K for the year ended
December 31, 2014 (Form 10-K), fi led by Southern Company from time to
time with the Securities and Exchange Commission.
Southern Company expressly disclaims any obligation to update any forward-looking information.
Southern Company 2014 Summary Annual Report
Southern Company 2014 Summary Annual Report
Southern Company
26
Financial Information
The following condensed fi nancial presentation should not be consid-
ered a substitute for the full fi nancial statements, inclusive of footnotes
and Management’s Discussion and Analysis of Financial Condition and
Results of Operations, provided to all shareholders in Appendix D to
the Company’s 2015 Proxy Statement and included in the Form 10-K
as fi led with the Securities and Exchange Commission. Appendix D to
the Proxy Statement and the Form 10-K also contain detailed discus-
sions of major uncertainties, contingencies, risks, and other issues the
Company faces. A copy of the Form 10-K and/or the Proxy Statement,
when available, including the full fi nancial statements, can be obtained by
calling Shareowner Services at 1-800-554-7626 or by accessing it online at
http://investor.southerncompany.com.
Management’s Report On Internal Control Over Financial Reporting
The management of The Southern Company is responsible for establish-
ing and maintaining an adequate system of internal control over fi nancial
reporting as required by the Sarbanes-Oxley Act of 2002 and as defi ned in
Exchange Act Rule 13a-15(f). A control system can provide only reason-
able, not absolute, assurance that the objectives of the control system
are met.
Under management’s supervision, an evaluation of the design and
effectiveness of Southern Company’s internal control over fi nancial re-
porting was conducted based on the framework in Internal Control—
Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on this evaluation,
management concluded that Southern Company’s internal control over
fi nancial reporting was effective as of December 31, 2014.
Deloitte & Touche LLP, an independent registered public accounting
fi rm, as auditors of Southern Company’s fi nancial statements, has issued
an attestation report on the effectiveness of Southern Company’s inter-
nal control over fi nancial reporting as of December 31, 2014. Deloitte &
Touche LLP’s report on Southern Company’s internal control over fi nan-
cial reporting appears in Appendix D to the Proxy Statement and in the
Form 10-K as fi led with the Securities and Exchange Commission.
Thomas A. Fanning
Chairman, President and Chief Executive Offi cer
Art P. Beattie
Executive Vice President and Chief Financial Offi cer
March 2, 2015
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Southern Company
We have audited the consolidated balance sheets and consolidated state-
ments of capitalization of Southern Company and Subsidiary Companies
(the Company) as of December 31, 2014 and 2013, and the related con-
solidated statements of income, comprehensive income, stockholders’
equity, and cash fl ows for each of the three years in the period ended
December 31, 2014. We have also audited the effectiveness of the Com-
pany’s internal control over fi nancial reporting as of December 31, 2014.
Such consolidated fi nancial statements, management’s assessment of
the effectiveness of the Company’s internal control over fi nancial report-
ing, and our report on the consolidated fi nancial statements and internal
control over fi nancial reporting dated March 2, 2015, expressing an un-
qualifi ed opinion (which is not included herein) are included in Appendix
D to the proxy statement for the 2015 annual meeting of stockholders.
The accompanying condensed consolidated fi nancial statements are the
responsibility of the Company’s management. Our responsibility is to ex-
press an opinion on such condensed consolidated fi nancial statements
in relation to the complete consolidated fi nancial statements.
In our opinion, the information set forth in the accompanying con-
densed consolidated balance sheets as of December 31, 2014 and 2013,
and the related condensed consolidated statements of income and of
cash fl ows for each of the three years in the period ended December 31,
2014, is fairly stated in all material respects in relation to the consolidat-
ed fi nancial statements from which it has been derived.
Atlanta, Georgia
March 2, 2015
Southern Company 2014 Summary Annual Report
Southern Company 2014 Summary Annual Report
Southern Company
27
Condensed Consolidated Statements of Income
For the Years Ended December 31, 2014, 2013, and 2012
(In Millions)
Operating Revenues:
Retail revenues
Wholesale revenues
Other electric revenues
Other revenues
Total operating revenues
Operating Expenses:
Fuel
Purchased power
Other operations and maintenance
Depreciation and amortization
Taxes other than income taxes
Estimated loss on Kemper IGCC
Total operating expenses
Operating Income
Other Income and (Expense):
Allowance for equity funds used during construction
Interest income
Interest expense, net of amounts capitalized
Other income (expense), net
Total other income and (expense)
Earnings Before Income Taxes
Income taxes
Consolidated Net Income
Dividends on Preferred and Preference Stock of Subsidiaries
Consolidated Net Income After Dividends on
Preferred and Preference Stock of Subsidiaries
Common Stock Data:
Earnings per share (EPS)—
Earnings per share (EPS)—
Basic EPS
Diluted EPS
Average number of shares of common stock outstanding—(in millions)
Average number of shares of common stock outstanding—(in millions)
Basic
Diluted
2014
2013
2013
2013
2012
2012
2012
$15,550
2,184
672
61
18,467
6,005
672
4,354
1,945
981
868
14,825
3,642
245
19
(835)
(63)
(634)
3,008
977
2,031
68
$14,541
$14,541
$14,541
1,855
1,855
1,855
639
639
639
52
52
52
17,087
17,087
17,087
5,510
5,510
5,510
461
461
461
3,846
3,846
3,846
1,901
1,901
1,901
934
934
934
1,180
1,180
1,180
13,832
13,832
13,832
3,255
3,255
3,255
190
190
190
19
19
19
(824)
(824)
(824)
(81)
(81)
(81)
(696)
(696)
(696)
2,559
2,559
2,559
849
849
849
1,710
1,710
1,710
66
66
66
$14,187
$14,187
$14,187
1,675
1,675
1,675
616
616
616
59
59
59
16,537
16,537
16,537
5,057
5,057
5,057
544
544
544
3,772
3,772
3,772
1,787
1,787
1,787
914
914
914
—
—
—
12,074
12,074
12,074
4,463
4,463
4,463
143
143
143
40
40
40
(859)
(859)
(859)
(38)
(38)
(38)
(714)
(714)
(714)
3,749
3,749
3,749
1,334
1,334
1,334
2,415
2,415
2,415
65
65
65
$ 1,963
$ 1,644
$ 1,644
$ 1,644
$ 2,350
$ 2,350
$ 2,350
$ 2.19
2.18
897
901
$ 1.88
$ 1.88
$ 1.88
1.87
1.87
1.87
877
877
877
881
881
881
$ 2.70
$ 2.70
$ 2.70
2.67
2.67
2.67
871
871
871
879
879
879
Full disclosure of all fi nancial information is included in Appendix D to the Proxy Statement and in the Form 10-K as fi led with the Securities and Exchange Commission,
including the accompanying footnotes, which are an integral part of the fi nancial statements.
Southern Company 2014 Summary Annual Report
Southern Company 2014 Summary Annual Report
Southern Company
28
Condensed Consolidated Statements of Cash Flows
For the Years Ended December 31, 2014, 2013, and 2012
(In Millions)
2014
2013
2013
2013
2012
2012
2012
Operating Activities:
Consolidated net income
Adjustments to reconcile consolidated net income to net cash provided
from operating activities—
from operating activities—
Depreciation and amortization, total
Deferred income taxes
Investment tax credits
Allowance for equity funds used during construction
Pension, postretirement, and other employee benefi ts
Stock based compensation expense
Estimated loss on Kemper IGCC
Other, net
Changes in certain current assets and liabilities—
Changes in certain current assets and liabilities—
Receivables
Fossil fuel stock
Materials and supplies
Other current assets
Accounts payable
Accrued taxes
Accrued compensation
Mirror CWIP
Other current liabilities
Net cash provided from operating activities
Investing Activities:
Property additions
Investment in restricted cash
Distribution of restricted cash
Nuclear decommissioning trust fund purchases
Nuclear decommissioning trust fund sales
Cost of removal, net of salvage
Change in construction payables, net
Prepaid long-term service agreement
Other investing activities
Net cash used for investing activities
Financing Activities:
Increase (decrease) in notes payable, net
Proceeds—
Proceeds—
Long-term debt issuances
Interest-bearing refundable deposit
Preference stock
Common stock issuances
Redemptions and repurchases—
Redemptions and repurchases—
Long-term debt
Common stock repurchased
Payment of common stock dividends
Payment of dividends on preferred and preference stock of subsidiaries
Other fi nancing activities
Net cash provided from (used for) fi nancing activities
Net Change in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Year
Cash and Cash Equivalents at End of Year
$ 2,031
$ 1,710
$ 1,710
$ 1,710
$ 2,415
$ 2,415
$ 2,415
2,293
709
35
(245)
(515)
63
868
(38)
(352)
408
(67)
(57)
267
(105)
255
180
85
5,815
(5,977)
(11)
57
(916)
914
(170)
(107)
(181)
(17)
(6,408)
(676)
3,169
125
—
806
(816)
(5)
(1,866)
(68)
(25)
644
51
659
$ 710
2,298
2,298
2,298
496
496
496
302
302
302
(190)
(190)
(190)
131
131
131
59
59
59
1,180
1,180
1,180
(41)
(41)
(41)
(153)
(153)
(153)
481
481
481
36
36
36
(11)
(11)
(11)
72
72
72
(85)
(85)
(85)
(138)
(138)
(138)
—
—
—
(50)
(50)
(50)
6,097
6,097
6,097
(5,463)
(5,463)
(5,463)
(149)
(149)
(149)
96
96
96
(986)
(986)
(986)
984
984
984
(131)
(131)
(131)
(126)
(126)
(126)
(91)
(91)
(91)
124
124
124
(5,742)
(5,742)
(5,742)
662
662
662
2,938
2,938
2,938
—
—
—
50
50
50
695
695
695
(2,830)
(2,830)
(2,830)
(20)
(20)
(20)
(1,762)
(1,762)
(1,762)
(66)
(66)
(66)
9
9
9
(324)
(324)
(324)
31
31
31
628
628
628
$ 659
$ 659
$ 659
2,145
2,145
2,145
1,096
1,096
1,096
128
128
128
(143)
(143)
(143)
(398)
(398)
(398)
55
55
55
—
—
—
51
51
51
234
234
234
(452)
(452)
(452)
(97)
(97)
(97)
(37)
(37)
(37)
(89)
(89)
(89)
(71)
(71)
(71)
(28)
(28)
(28)
—
—
—
89
89
89
4,898
4,898
4,898
(4,809)
(4,809)
(4,809)
(280)
(280)
(280)
284
284
284
(1,046)
(1,046)
(1,046)
1,043
1,043
1,043
(149)
(149)
(149)
(84)
(84)
(84)
(146)
(146)
(146)
19
19
19
(5,168)
(5,168)
(5,168)
(30)
(30)
(30)
4,404
4,404
4,404
150
150
150
—
—
—
397
397
397
(3,169)
(3,169)
(3,169)
(430)
(430)
(430)
(1,693)
(1,693)
(1,693)
(65)
(65)
(65)
19
19
19
(417)
(417)
(417)
(687)
(687)
(687)
1,315
1,315
1,315
$ 628
$ 628
$ 628
Full disclosure of all fi nancial information is included in Appendix D to the Proxy Statement and in the Form 10-K as fi led with the Securities and Exchange Commission,
including the accompanying footnotes, which are an integral part of the fi nancial statements.
Southern Company 2014 Summary Annual Report
Southern Company 2014 Summary Annual Report
Southern Company
29
Condensed Consolidated Balance Sheets
At December 31, 2014 and 2013
Assets (In Millions)
Current Assets:
Cash and cash equivalents
Receivables—
Receivables—
Customer accounts receivable
Unbilled revenues
Under recovered regulatory clause revenues
Other accounts and notes receivable
Accumulated provision for uncollectible accounts
Fossil fuel stock, at average cost
Materials and supplies, at average cost
Vacation pay
Prepaid expenses
Deferred income taxes, current
Other regulatory assets, current
Other current assets
Total current assets
Property, Plant, and Equipment:
In service
Less accumulated depreciation
Plant in service, net of depreciation
Other utility plant, net
Nuclear fuel, at amortized cost
Construction work in progress
Total property, plant, and equipment
Other Property and Investments:
Nuclear decommissioning trusts, at fair value
Leveraged leases
Miscellaneous property and investments
Total other property and investments
Deferred Charges and Other Assets:
Deferred charges related to income taxes
Prepaid pension costs
Unamortized debt issuance expense
Unamortized loss on reacquired debt
Other regulatory assets, deferred
Other deferred charges and assets
Total deferred charges and other assets
Total Assets
2014
2013
2013
$ 710
$ 659
1,090
432
136
307
(18)
930
1,039
177
665
506
346
50
6,370
70,013
24,059
45,954
211
911
7,792
54,868
1,546
743
203
2,492
1,510
—
202
243
4,334
904
7,193
$70,923
1,027
1,027
448
448
58
58
304
304
(18)
(18)
1,339
1,339
959
959
171
171
278
278
143
143
207
207
39
39
5,614
5,614
66,021
66,021
23,059
23,059
42,962
42,962
240
240
855
855
7,151
7,151
51,208
51,208
1,465
1,465
665
665
218
218
2,348
2,348
1,436
1,436
419
419
139
139
269
269
2,495
2,495
618
618
5,376
5,376
$64,546
Full disclosure of all fi nancial information is included in Appendix D to the Proxy Statement and in the Form 10-K as fi led with the Securities and Exchange Commission,
including the accompanying footnotes, which are an integral part of the fi nancial statements.
Southern Company 2014 Summary Annual Report
Southern Company 2014 Summary Annual Report
Southern Company
30
Condensed Consolidated Balance Sheets
At December 31, 2014 and 2013
Liabilities and Stockholders’ Equity (In Millions)
2014
2013
2013
Current Liabilities:
Securities due within one year
Interest-bearing refundable deposit
Notes payable
Accounts payable
Customer deposits
Accrued taxes —
Accrued income taxes
Other accrued taxes
Accrued interest
Accrued vacation pay
Accrued compensation
Other regulatory liabilities, current
Mirror CWIP
Other current liabilities
Total current liabilities
Long-Term Debt
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes
Deferred credits related to income taxes
Accumulated deferred investment tax credits
Employee benefi t obligations
Asset retirement obligations
Other cost of removal obligations
Other regulatory liabilities, deferred
Other deferred credits and liabilities
Total deferred credits and other liabilities
Total Liabilities
Redeemable Preferred Stock of Subsidiaries
Redeemable Noncontrolling Interest
Total Stockholders’ Equity
Total Liabilities and Stockholders’ Equity
$ 3,333
275
803
1,593
390
151
487
295
223
576
26
271
544
8,967
20,841
11,568
192
1,208
2,432
2,168
1,215
398
594
19,775
49,583
375
39
20,926
$70,923
$ 469
$ 469
150
150
1,482
1,482
1,376
1,376
380
380
13
13
456
456
251
251
217
217
303
303
82
82
—
—
346
346
5,525
5,525
21,344
21,344
10,563
10,563
203
203
966
966
1,461
1,461
2,006
2,006
1,275
1,275
479
479
585
585
17,538
17,538
44,407
44,407
375
375
—
—
19,764
19,764
$64,546
$64,546
Full disclosure of all fi nancial information is included in Appendix D to the Proxy Statement and in the Form 10-K as fi led with the Securities and Exchange Commission,
including the accompanying footnotes, which are an integral part of the fi nancial statements.
Southern Company 2014 Summary Annual Report
Southern Company 2014 Summary Annual Report
Southern Company
31
Board of Directors
4. Thomas A. Fanning
Chairman, President and CEO
Southern Company
Atlanta, GA | Age 58 | elected 2010
Other directorships: Federal Reserve
Bank of Atlanta, Vulcan Materials Company
5. David J. Grain
Founder and Managing Partner
Grain Management, LLC (private equity firm)
Sarasota, FL | Age 52 | elected 2012
Board committees: Compensation and
Management Succession, Finance
Other directorship: Gateway Bank
of Southwest Florida
6. Veronica M. Hagen
Lead Independent Director
Southern Company Board (effective May 2014)
Retired President and CEO
Polymer Group, Inc. (engineered materials)
Charlotte, NC | Age 69 | elected 2008
Board committees: Compensation and
Management Succession, Nuclear/Operations
Other directorships: Polymer Group, Inc.,
Newmont Mining Corporation
7. Warren A. Hood, Jr.
Chairman and CEO
Hood Companies, Inc.
(packaging and construction products)
Hattiesburg, MS | Age 63 | elected 2007
Board committee: Audit
Other directorships: Hood Companies, Inc.,
BancorpSouth, Inc.
1. Juanita Powell Baranco
Executive Vice President
and Chief Operating Officer
Baranco Automotive Group (automobile sales)
Atlanta, GA | Age 66 | elected 2006
Board committee: Audit
Other directorships: None
2. Jon A. Boscia
Founder and President
Boardroom Advisors LLC
(board governance consulting firm)
Sarasota, FL | Age 62 | elected 2007
Board committee: Audit (chair)
Other directorships: None
3. Henry A. Clark III
Senior Advisor
Evercore Partners Inc.
(corporate finance advisory firm)
New York, NY | Age 65 | elected 2009
Board committees: Compensation and
Management Succession (chair), Finance
Other directorships: None
2.
3.
1.
4.
5.
6.
7.
8. Linda P. Hudson
11. Dale E. Klein
13. Steven R. Specker
Founder, Chairman and CEO
The Cardea Group
(business management consulting)
Charlotte, NC | Age 64 | elected 2014
Board committees: Governance, Nuclear/
Operations, Business Security Subcommittee
Other directorships: BAE Systems, Inc.,
Bank of America Corporation
9. Donald M. James
Chairman and Retired CEO
Vulcan Materials Company
(construction materials)
Birmingham, AL | Age 66 | elected 1999
Board committees: Governance (chair), Finance
Other directorships: Vulcan Materials
Company, Wells Fargo & Company
10. John D. Johns
Chairman, President and CEO
Protective Life Corporation
(insurance)
Birmingham, AL | Age 63 | elected 2015
Board committee: Audit
Other directorships: Protective Life Corporation,
Regions Financial Corporation, Genuine Parts
Company
Associate Vice Chancellor of Research
University of Texas System
Associate Director The Energy Institute
at the University of Texas at Austin
Retired Chairman U.S. Nuclear Regulatory
Commission (energy)
Austin, TX | Age 67 | elected 2010
Board committees: Governance,
Nuclear/Operations, Business Security
Subcommittee (chair)
Other directorships: Pinnacle West Capital
Corporation, Arizona Public Service Company
12. William G. Smith, Jr.
Chairman, President and CEO
Capital City Bank Group, Inc. (banking)
Tallahassee, FL | Age 61 | elected 2006
Board committees: Compensation and
Management Succession, Finance (chair)
Other directorships: Capital City Bank
Group, Inc., Capital City Bank
Retired President and CEO
Electric Power Research Institute (energy)
Scottsdale, AZ | Age 69 | elected 2010
Board committees: Nuclear/Operations (chair),
Compensation and Management Succession
Other directorship: Trilliant, Inc.
14. Larry D. Thompson
Retired Executive Vice President
PepsiCo, Inc. (food and beverage products)
Atlanta, GA | Age 69 | elected 2014
Board committee: Audit
Other directorships: Graham Holdings Company,
Franklin, Templeton Series Mutual Funds
15. E. Jenner Wood III
Chairman and CEO
SunTrust Bank – Atlanta Division (banking)
Atlanta, GA | Age 63 | elected 2012
Board committees: Governance,
Nuclear/Operations
Other directorships: Oxford Industries, Inc.,
Genuine Parts Company
9.
10.
11.
12.
13.
14.
15.
8.
Southern Company 2014 Summary Annual Report
Southern Company 2014 Summary Annual Report
Southern Company
33
Management Council
1. Art P. Beattie
3. Stan W. Connally, Jr.
Executive Vice President and Chief Financial Officer
President and CEO, Gulf Power
5. Thomas A. Fanning
Chairman, President and CEO
Beattie, 60, joined the company in 1976 as a junior
accountant with Alabama Power. He has held his
current position since August 2010. Beattie is
responsible for the company’s accounting, fi nance,
tax, investor relations, treasury and risk management
functions. He also serves as chief risk officer.
Previously, Beattie served in several executive
accounting and fi nance positions at Alabama Power,
including chief financial officer, treasurer and
comptroller.
2. W. Paul Bowers
Executive Vice President
Chairman, President and CEO, Georgia Power
Bowers, 58, joined the company as a residential sales
representative with Gulf Power in 1979. He has held
his current position since January 2011. Previously,
Bowers served as chief fi nancial offi cer for Southern
Company. He also served as president of Southern
Company Generation, president and CEO of Southern
Power, president and CEO of Southern Company’s
former United Kingdom subsidiary and senior vice
president and chief marketing officer for Southern
Company.
Connally, 45, joined the company in 1989 as a co-op
student at Georgia Power. He has held his current
position since July 2012. Previously, he served as
senior vice president and senior production offi cer for
Georgia Power. He has served as plant manager at
plants Watson, Daniel and Barry. He has also worked
in customer operations and sales and marketing.
Fanning, 58, joined the company as a fi nancial
analyst in 1980. He has held his current position
since December 2010. Previously, Fanning served
as executive vice president and chief operating
offi cer for Southern Company, president and CEO of
Gulf Power and chief fi nancial offi cer for Southern
Company, Georgia Power and Mississippi Power.
4. Mark A. Crosswhite
6. Kimberly S. Greene
Executive Vice President
Chairman, President and CEO, Alabama Power
Executive Vice President and
Chief Operating Officer
Crosswhite, 52, joined the company in 2004 as senior
vice president and general counsel for Southern
Company Generation. He has held his current position
since March 2014. He was previously executive vice
president and chief operating officer for Southern
Company, president and CEO of Gulf Power and
executive vice president of external affairs and senior
vice president and general counsel at Alabama Power.
Prior to joining the company, he was a partner in the
law firm of Balch & Bingham LLP in Birmingham,
Alabama, where he practiced for 17 years.
Greene, 48, has held her current role since March
2014. Previously, she was president and CEO of
Southern Company Services. Prior to that, she was
employed by TVA, where she served as chief fi nancial
offi cer, group president of strategy and external
relations and chief generation offi cer. Prior to her
time at TVA, she served as senior vice president of
fi nance and treasurer for Southern Company and has
held various positions with Mirant, including chief
commercial offi cer, South Region.
1.
2.
3.
4.
5.
6.
7. G. Edison Holland, Jr.
Executive Vice President
Chairman, President and CEO, Mississippi Power
Holland, 62, joined the company as vice president
and corporate counsel for Gulf Power in 1992. He
was named to his current position in May 2013.
Previously, he was executive vice president, general
counsel and corporate secretary of Southern Company,
president and CEO of Savannah Electric and vice
president of power generation and transmission
at Gulf Power.
8. James Y. Kerr II
Executive Vice President and General Counsel
Kerr, 51, assumed his current role in March 2014.
Previously, he was a partner with McGuireWoods
LLP and a senior advisor at McGuireWoods
Consulting LLC. He also served as co-chairman of
McGuireWoods’ energy industry team with focus
in the areas of energy transactions and fi nance,
energy regulation, energy policy and energy
litigation. Prior to joining McGuireWoods, Kerr
served as a Commissioner on the North Carolina
Utilities Commission and was the former president
of the National Association of Regulatory Utility
Commissioners.
9. Stephen E. Kuczynski
11. Christopher C. Womack
Executive Vice President and President
of External Affairs
Womack, 57, joined the company in 1988 as a
governmental affairs representative for Alabama
Power. He has held his current position since
January 2009. Previously, Womack was executive
vice president of external affairs for Georgia Power.
He has also served as senior vice president of human
resources and chief people officer for Southern
Company as well as senior vice president and senior
production offi cer of Southern Company Generation.
Chairman, President and CEO, Southern Nuclear
Kuczynski, 52, joined the company in July 2011
as chairman, president and CEO of Southern
Nuclear. Previously, he was senior vice president of
engineering and technical services for Exelon Nuclear.
He also served as senior vice president of Exelon
Nuclear’s Midwest operations, senior vice president
of operations support and plant manager and later
site vice president of Exelon’s Byron Nuclear Station.
10. Mark S. Lantrip
Executive Vice President
Chairman, President and CEO,
Southern Company Services, Inc.
Lantrip, 60, joined the company in 1981 as an analyst
in Gulf Power’s corporate planning department.
He assumed his current position in March 2014.
Previously, Lantrip was executive vice president
of finance and treasurer of Southern Company
Services and treasurer of Southern Company, with
responsibility for financial planning and analysis,
enterprise risk management, trust finance, capital
markets and treasury.
8.
7.
9.
10.
11.
Glossary
APC
Abbreviation for Alabama Power Company.
Basic Earnings Per Share Excluding Kemper IGCC Impacts,
Leveraged Lease Restructure Charge, And MC Asset Recovery
Insurance Settlements
Basic earnings per share in 2014 of $2.19 plus an excluded 59-cent
charge related to Mississippi Power’s construction of the Kemper
integrated gasifi cation combined cycle project and plus an excluded
2-cents related to the reversal of previously recognized revenues
recorded in 2014 and 2013 and the recognition of carrying costs
associated with the 2015 Mississippi Supreme Court decision which
reversed the Mississippi Public Service Commission’s March 2013 rate
order related to the Kemper IGCC project; basic earnings per share in
2013 of $1.88 plus an excluded 83-cent charge related to Mississippi
Power’s construction of the Kemper IGCC project, plus an excluded
2-cent charge related to the restructuring of a leveraged lease invest-
ment, and minus an excluded MC Asset Recovery insurance settle-
ment of 2 cents; and basic earnings per share in 2012 of $2.70 minus
an excluded MC Asset Recovery insurance settlement of 2 cents.
Beta
A measure of the volatility of a stock in comparison to the market as
a whole. Beta can be described as the tendency of a security’s returns
to respond to swings in the market.
Book Value
A company’s common stock equity as it appears on a balance sheet,
equal to total assets minus liabilities, preferred and preference stock
and intangible assets such as good will. Book value per share refers
to the book value of a company divided by the number of shares out-
standing.
CO2
Abbreviation for carbon dioxide.
Coal Gasifi cation
A process in which the energy stored in coal is converted to gas, mak-
ing it available for use in refi neries for the synthesis of chemicals or in
gas-fi red power plants as a fuel.
Desalination
The process of removing salt, especially from sea water, so that it can
be used for drinking or irrigation.
Diluted Earnings Per Share
A company’s earnings per share calculated by using fully diluted
shares outstanding, including the impact of stock option grants and
convertible bonds that can be converted into shares of stock in the
issuing company.
Dividend Yield
The annual dividend income per share received from a company divided
by its current stock price.
Earnings Per Share
Net income divided by the average number of shares of common stock
outstanding.
GPC
Abbreviation for Georgia Power Company.
Gulf
Abbreviation for Gulf Power Company.
Integrated Gasifi cation Combined Cycle (IGCC)
A technology that uses a gasifi er to turn coal and other carbon-based
fuels into synthesis gas (syngas). It then removes impurities from the
syngas before it is combusted. This results in lower emissions of sulfur
dioxide, particulates and mercury.
HVAC
Abbreviation for heating, ventilation and air conditioning.
Kilowatt-Hour
A unit of electricity equal to 1,000 watt-hours, delivered by an electric
utility steadily for one hour.
LED (Light-Emitting Diodes)
Semiconductor devices that produce visible light when an electrical
current is passed through them. LED lighting can be more effi cient,
durable and longer lasting.
Megawatt
A measurement of electricity equal to 1,000 kilowatts and typically
used when describing large amounts of generating capacity.
mmBtu
Abbreviation for Million British thermal units.
MPC
Abbreviation for Mississippi Power Company.
Proton-Exchange Membrane Fuel Cell Vehicles
Vehicles that are powered by proton exchange membrane fuel cells, a
type of fuel cell being developed for transport applications as well as
for stationary and portable fuel cell applications.
Reliability
As pertains to electric networks, the extent to which supply is avail-
able to meet demand.
Renewable Energy
Energy generated directly from natural resources such as sunlight,
wind, water, biomass, ocean tides and geothermal heat.
SCS
Abbreviation for Southern Company Services, Inc.
System Average Interruption Frequency Index (SAIFI)
SAIFI is the average number of times that a system customer experi-
ences an outage during a year (or some particular time period under
study). The SAIFI is found by dividing the total number of customers
interrupted by the total number of customers served.
Total Shareholder Return
Stock Price appreciation plus reinvested dividends. (The distribution
of shares of Mirant Corporation stock to Southern Company share-
holders is treated as a special dividend for the purposes of calculating
Southern Company shareholder return.)
Energy Audit
An onsite inspection in which recommendations are made for improv-
ing the energy effi ciency of a home or business.
TVA
Abbreviation for Tennessee Valley Authority.
Southern Company 2014 Summary Annual Report
Southern Company 2014 Summary Annual Report
Southern Company
36
Shareholder Information
Transfer Agent
Computershare, Inc. is Southern Company’s transfer agent, dividend-
paying agent, investment plan administrator and registrar. If you have
questions concerning your registered Southern Company shareowner
account, please contact:
Investor Information
For information about earnings and dividends, stock
quotes and current news releases, please visit us at
www.investor.southerncompany.com.
By Mail
Computershare
P.O. Box 30170
College Station, TX 77842-3170
By Phone-U.S.
9 a.m. to 7 p.m. ET
Monday through Friday
800-554-7626
(Automated voice response system
24 hours/day, 7 days/week)
Hearing Impaired: 800-231-5469
By Courier
Computershare
211 Quality Circle
Suite 210
College Station, TX 77845
By Phone-Outside U.S.
201-680-6693
Shareowner Services Internet Site
To take advantage of Shareowner Services’ online services, you will
need to activate your account. This one-time authentication process
will be used to validate your identity. You can use your 12-digit
Investor ID or your Computershare Holder ID. The Internet address
is www.computershare.com/investor. Through this site, registered
shareowners can securely access their account information, as well as
submit numerous transactions. Also, transfer instructions and service
request forms can be obtained.
Southern Investment Plan
The Southern Investment Plan provides a convenient way to purchase
common stock and reinvest dividends. You can access the Southern
Company website to review the prospectus.
Direct Registration
Southern Company common stock can be issued in direct registration
(uncertificated) form. The stock is Direct Registration System eligible.
Dividend Payments
The entire amount of dividends paid in 2014 is taxable. The board of
directors sets the record and payment dates for quarterly dividends.
A dividend of 52.5 cents per share was paid in March 2015. For the
remainder of 2015, projected record dates are May 18, August 17 and
November 16. Projected payment dates for dividends declared during
the remainder of 2015 are June 6, September 5 and December 5.
Annual Meeting
The 2015 Annual Meeting of Stockholders will be held Wednesday,
May 27, at 10 a.m. ET at The Lodge Conference Center at Callaway
Gardens, Highway 18, Pine Mountain, Ga. 31822.
Auditors
Deloitte & Touche, LLP
191 Peachtree St. NE
Suite 2000
Atlanta, GA 30303
Institutional Investor Inquiries
Southern Company maintains an investor relations office in Atlanta,
404-506-5310, to meet the information needs of institutional investors
and securities analysts.
Electronic Delivery Of Proxy Materials
Any stockholder may enroll for electronic delivery of proxy materials
by logging on at www.icsdelivery.com/so.
Certifications
Southern Company has filed the required certifications of its chief
executive officer and chief financial officer under Section 302 of
the Sarbanes-Oxley Act of 2002, regarding the quality of its public
disclosures as exhibits 31(a)1 and 31(a)2, respectively, to Southern
Company’s Annual Report on Form 10-K for the year ended Decem-
ber 31, 2014. The certification of Southern Company’s chief executive
officer regarding compliance with the New York Stock Exchange
(NYSE) corporate governance listing standards, required by NYSE
Rule 303A.12, will be filed with the NYSE following the 2015 Annu-
al Meeting of Stockholders. Last year, Southern Company filed this
certification with the NYSE on June 14, 2014.
Environmental Information
Southern Company publishes information on its activities to meet
environmental commitments. This information is available online at
www.southerncompany.com/planetpower/#reports.
To request printed materials, write to:
Larry Monroe
Chief Environmental Officer & Senior Vice President
Research and Environmental Affairs
600 North 18th St.
Bin 14N-8195
Birmingham, AL 35203-2206
Common Stock
Southern Company common stock is listed on the NYSE under the
ticker symbol SO. On December 31, 2014, Southern Company had
137,369 shareholders of record.
The 2014 summary annual report is submitted for shareholders’
information. It is not intended for use in connection with any sale or
purchase of, or any solicitation of, offers to buy or sell securities.
Visit our website at www.southerncompany.com
Visit our Corporate Responsibility Report at
www.southerncompany.com/corporateresponsibility
Follow us on Twitter at www.twitter.com/southerncompany
.
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