EEI ESG/Sustainability Reporting Template

20192019

December 2019

12019 EEI ESG/Sustainability Reporting Template l December 2019

Introduction

Southern Company worked with Edison Electric Institute, American Gas Association, other utilities, and investors to develop a template for reporting Environmental, Social, and Governance (ESG) information that was pertinent to our industry. Southern published an initial report in 2018, and this serves as an update to that report.

This report serves as a part of our continued commitment to transparency and accessibility to information, along with other reports on our website including our CDP Climate Disclosure and our Planning for a Low Carbon Future report. Southern Company has published numerous reports related to our strategy, risks, and opportunities for the future.

ESG Strategy

Southern Company is transitioning our energy generation fleet for a low-carbon future. In doing so, we have established an intermediate goal of a 50 percent reduction in carbon emissions from 2007 levels by 2030 and a long-term goal of low- to no-carbon operations by 2050.

These goals are a continuation of our trajectory of lower carbon emissions over the past decade-plus, which have resulted in a 35% reduction since 2007. Notably, while making decisions in the best interest of our customers, generation from coal plants continues to trend downward in line with our stated carbon reduction goals. For 2018, coal represented only 28 percent of our energy mix compared to 69 percent in 2007.

Our strategy to achieve these carbon reduction goals includes the continued development and deployment of

a diverse portfolio of energy resources to reliably and affordably serve our customers and communities with a focus on reducing carbon emissions. To do this, we are growing our investment in renewable energy, modernizing the grid to optimize technology advancements, leveraging natural gas, building new nuclear generating units, continuing our industry-leading, robust research and development (R&D) efforts, and investing in energy efficiency for savings on both sides of the meter.

We will work within the regulatory framework in each of our states to ensure that our carbon reduction efforts support customers’ needs and preferences. Our uncompromising values guide us in keeping those customers and communities we serve at the center of everything we do and govern how we do business to improve our world. Information on how we manage and adapt to future risks and opportunities can be found on our Corporate Responsibility website.

Business Environment

We are developing a full portfolio of energy resources to maintain and increase reliability and maintain levels of affordability that our customers have come to know and expect. This strategy enables us to cost effectively

Green House Gas (GHG) Emissions

2007

Baseline Low to no35% reduction 50% reduction

2018 2030 2050

Southern Company Gas

We have effectively mitigated more than 3.3 metric tons of methane through pipeline construction material upgrades on more than 6,000 miles of natural gas transmission pipeline.

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serve load, effectively manage the variable nature of renewables, while efficiently balancing fuel sources and providing clean energy solutions. We continue to modernize our business and are diligent in our approach to emerging opportunities in the energy production and delivery model as we plan for a low-carbon future. We remain steadfast in our commitment to our customers and communities by delivering the energy that powers growth, prosperity and wellness.

Southern Company and its subsidiaries are engaged across the energy value chain as we make, move and sell energy to a wide customer base. We also recognize the potential energy solutions that reside behind customers’ meters. As we seek opportunities to expand our business, we continue to focus on our customer-centric model. This asset mix is designed to produce stable, predictable revenue streams while managing carbon risks.

Just as Southern Company is committed to an “all of the above” approach to diversified generation, our strategy towards the low to no goal is just as diverse. Coal unit retirements, conversions to natural gas fuel, addition of solar and wind renewable sources are all part of the strategy. Southern Company, with recent approvals, has plans for 88% more renewable generation as part of greater than 20,000 MW of carbon free sources by 2024.

Investing in Innovation

Southern Company’s R&D organization has been setting the standard in technology development for energy production, delivery and use for half a century. Through a diverse research portfolio, we meet customers’ energy needs today by addressing the latest technology challenges and trends. And we anticipate tomorrow: our many pilot projects explore and evaluate fuel cells, battery storage and microgrids, as well as renewable technologies to advance the industry.

Southern Company is also a founding partner of Energy Impact Partners (EIP), a $700 million venture capital fund that invests in early-state technology companies impacting the energy and utility industry. Collaborating with EIP portfolio companies helps Southern Company remain on the cutting edge of technology while uncovering new revenue opportunities and identifying potential partnerships. This is just one of the ways we are working to shape the future of energy.

ESG Governance

Southern Company believes that corporate governance underpins and enhances the long-term value shareholders seek from their investment. A long-term perspective,

Renewables

8,400 MWof renewable

generationonline

7,400 MWProjected -

88% increaseby 2024

Reductions

35%reduction in CO2e emissions since

2007

> 20,000Portfolio of carbon-free

sources by 2024

Natural GasDistribution

99%efficiency on

Southern Company Gas System

3.3 MillionMetric tons of methane

mitigated through pipeline replacement

Data represents systems under financial control

Retirements/Conversions

6,300 MWof coal and oil

retirement

3,470 MWconversion to

natural gas

32019 EEI ESG/Sustainability Reporting Template l December 2019

executed through a well-governed and highly engaged board, shapes Southern Company’s strategy for realizing maximum shareholder value through every risk and every opportunity it faces. Southern Company’s Board of Directors is responsible for oversight of strategy, risk, and environmental, social and governance issues. Issues that are the subject of active discussions at Board and Board committee meetings include, among others: carbon-related risks, regulatory compliance, energy efficiency, renewable energy and emerging technology.

» The Nominating, Governance, and Corporate Responsibility Committee oversees and reports to the full Board on the composition and competencies of the Board and its corporate governance policies. The Committee oversees the Company’s practices and positions to advance its corporate citizenship, including environmental, sustainability and corporate social responsibility initiatives. The Committee receives quarterly updates on Southern Company’s ongoing shareholder engagement program and feedback received from shareholders on Environmental, Social, and Governance (ESG) topics, including climate-related risks and disclosures.

» The Operations, Environmental and Safety Committee is comprised of independent members who oversee significant environmental regulation, policy and operational matters. The Committee oversees information, activities and events related to operations at the Company’s system.

» The Compensation and Management Succession Committee oversees review and approval of compensation plans and programs. This includes tying the CEO’s executive compensation to achieving emission reduction goals.

» The Audit Committee supports the Company’s financial reporting, audit process, internal controls and compliance for legal, regulatory and ethical issues including any risk management policies related to climate.

» The Finance Committee reviews the financial strategy by guiding annual budgets and business plans. The committee overseas major capital expenditures including those related to climate-related issues.

» The Business Security and Resiliency Committee is focused on the protection of cyber and physical assets to ensure resiliency of on-going operations through the system.

To demonstrate its commitment to Southern Company’s GHG emission reduction goals set in 2018, the Board decided to tie a significant portion of the CEO’s long-term incentive compensation for 2019 to the achievement of those goals over time. There is a quantitative and a qualitative element of the metrics as outlined below:

Quantitative Metric: Performance over the period from 2019 through 2021 is aligned with a trajectory to our 2030 goal of 50% GHG emission reduction as compared to 2007. The metric is defined in terms of net megawatt change, which includes:

» Adding zero-carbon megawatts

» Placing coal in retirement status or inactive reserve (which means no longer available for routine economic commitment and dispatch but available for resiliency and reliability)

Qualitative Metric: creates incentives to achieve our goal of low- to no- carbon emissions by 2050 through a qualitative assessment by the Compensation Committee

2019-2021 Net MW Change(1)

Payout % of Target

Estimated % Complete by 2021 of GHG Emission Reduction Goal for 2030

< 2,204 MW 0% 42% of 50% GHG emission reduction goal, equivalent to 84% achievement of 2030 goal

2,641 MW 50% 43% of 50% GHG emission reduction goal, equivalent to 86% achievement of 2030 goal

3,080 MW 100% 43% of 50% GHG emission reduction goal, equivalent to 88% achievement of 2030 goal

3,518 MW 150% 43% of 50% GHG emission reduction goal, equivalent to 90% achievement of 2030 goal

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and the Board of the CEO’s leadership in advancing the energy portfolio of the future. The payout modifier, which is applied to the payout determined under the quantitative metric, is up to 30%

» Leadership in energy policy, nationally and within the industry

» Research and development (R&D) investment, such as Electric Power Research Institute and Southern proprietary R&D

» Investments, such as corporate venture capital spend and Energy Impact Partners

» New business development, through Southern Power, PowerSecure, Sequent and liquefied natural gas (e.g. renewables, distributed generation, distributed infrastructure, Bloom energy, Greener State)

Additional Resources:

Investor Fact Sheet

https://s2.q4cdn.com/471677839/files/doc_downloads/fact_sheet/2018/04/Company-Overview-One-Pager.pdf

Building the Future of Energy

http://southerncompany.info/future/

Low-Carbon Future Report

https://www.southerncompany.com/content/dam/southern-company/pdf/corpresponsibility/Planning-for-a-low-carbon-future.pdf

CDP Climate Disclosure 2019

https://www.southerncompany.com/content/dam/southern-company/pdf/corpresponsibility/CDP-Climate-Disclosure-2019.pdf

2018 Corporate Responsibility Report

https://www.southerncompany.com/content/dam/southern-company/pdf/corpresponsibility/2018_Corporate_Responsibility_Report.pdf

2019 Proxy Statement

https://www.southerncompanyannualmeeting.com/media/2517/346338-1-_35_southern-company_nps_wr-spread-_r1.pdf

FAQs: Asset Strategy, Planning and Risks

https://www.southerncompany.com/content/dam/southern-company/pdf/corpresponsibility/2017_161_FAQs_Asset_Strategy_Planning_and_Risks_handout_v6_REV.pdf

FAQs: Methane Emissions

https://www.southerncompany.com/content/dam/southern-company/pdf/corpresponsibility/2017_162_FAQs_Methane_Emissions_handout_v6_REV.pdf

Achievement Modifier

Fails to meet 0%

Meets +15%

Exceeds +30%

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Quantitative Information - Portfolio

Parent Company: Parent Company: Southern Company Operating Company(s): Alabama Power, Georgia Power, Gulf Power, Mississippi Power, Southern Power, Southern Nuclear, Southern Company Gas, PowerSecure Business Type(s): Vertically Integrated State(s) of Operation: Retail Electric Provider: Alabama, Georgia, Florida, and Mississippi; Wholesale Electric Provider: Alabama, California, Florida, Georgia, Maine, Minnesota, Nevada, New Mexico, North Carolina, Oklahoma, and Texas; Natural Gas Distribution: California, Florida, Georgia, Illinois, Louisiana, Maryland, New Hampshire, New Jersey, Tennessee, Texas, and VirginiaState(s) with RPS Programs: California, Illinois, Maine, Maryland, Minnesota, Nevada, New Hampshire, New Mexico, North Carolina, and TexasRegulatory Environment: Both Report Date: September 2018

² As reported on 10-K Financial Disclosure. ³ This report contains the amount of total installed nameplate capacity owned by resource type. It should be assumed that the generator or purchaser of energy from any renewable generation resources has the ability to use the associated renewable energy credits (RECs) to serve its customers with renewable energy or sell the RECs to third parties. ⁴ Other represents biomass, solar, and wind generation resources. ⁵ As reported in EIA Form 861.

Portfolio

Ref No. 2007 Baseline

2016 Actual

2017 Actual

Current Year2018

Actual

1 Owned Nameplate Generation Capacity at end of year (MW)2,3

1.1 Coal 21,097 17,513 13,457 13,307

1.2 Natural Gas/Petroleum 14,410 18,744 23,592 21,764

1.3 Nuclear 3,680 3,680 3,680 3,680

1.5 Total Renewable Energy Resources

1.5.1 Biomass/Biogas - 116 116 116

1.5.2 Geothermal - 3.2 3.0 3.0

1.5.3 Hydroelectric 2,758 2,756 2,756 2,756

1.5.4 Solar - 2,282 2,032 2,576

1.5.5 Wind - 1,198 1,448 1,622

1.6 Other - - -

2 Net Generation for the data year (MWh)³

2.1 Coal 143,404,887 59,846,787 55,833,300 56,221,842

2.2 Natural Gas/Petroleum 31,812,893 94,303,503 88,322,400 95,396,445

2.3 Nuclear 28,597,842 30,313,593 30,847,500 30,412,864

2.5 Total Renewable Energy Resources

2.5.1 Biomass/Biogas - - -

2.5.2 Geothermal - - -

2.5.3 Hydroelectric 2,915,528 4,225,928 4,614,100 6,466,371

2.5.4 Solar - - -

2.5.5 Wind - - -

2.6 Other⁴ - 8,565,725 9,825,900 9,184,200

3 Investing in the Future: Capital Expenditures, Energy Efficiency (EE), and Smart Meters

3.1 Total Annual Capital Expenditures (nominal million dollars)² $3,653 $7,555 $7,736 $8,389

3.2 Incremental Annual Electricity Savings from EE Measures (MWh)⁵ - 476,535 407,284 431,030

3.3 Incremental Annual Investment in Electric EE Programs (nominal thousand dollars)⁵ - $26,983 $53,060 $23,884

3.4 Percent of Total Electric Customers with Smart Meters (at end of year) - 95.9% 95.9% 95.9%

4 Retail Electric Customer Count (at end of year)

4.1 Commercial 599,655 594,508 599,417 603,000

4.2 Industrial 14,901 17,323 17,522 17,000

4.3 Residential 3,756,040 3,970,370 4,011,441 4,053,000

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6 See "Planning for a Low-Carbon Future" - https://www.southerncompany.com/content/dam/southern-company/pdf/corpresponsibility/Planning-for-a-

low-carbon-future.pdf. ⁷ Generation values used in intensity calculations may vary based on associated regulatory reporting program requirements.

Emissions

Ref No. 2007 Baseline

2016 Actual

2017 Actual

Current Year2018

Actual

5 GHG Emissions: Carbon Dioxide (CO₂) and Carbon Dioxide (CO₂e)⁶

5.1 Owned Generation

5.1.1 Carbon Dioxide (CO₂)

5.1.1.1 Total Owned Generation CO₂ Emissions (million MT) 151 99.0 95.9 96.6

5.1.1.2 Total Owned Generation CO₂ Emissions Intensity (MT/Net MWh) 0.729 0.503 0.508 0.488

5.1.2 Carbon Dioxide Equivalent (CO₂e)

5.1.2.1 Total Owned Generation CO₂e Emissions (million MT) 152 99.4 96.6 97.2

5.1.2.2 Total Owned Generation CO₂e Emissions Intensity (MT/Net MWh) 0.736 0.505 0.511 0.491

5.4 Non-Generation CO₂e Emissions

5.4.1 CO₂e emissions of sulfur hexafluoride (million MT) (5) 0.093 0.079 0.109 0.089

5.4.2 Total CO₂e emissions from natural gas sector (MT) (6) - 0.57 1.00 0.99

6 Nitrogen Oxide (NOx), Sulfur Dioxide (SO₂), Mercury (Hg)

6.1 Generation basis for calculation (MWh) 206,731,150 189,148,686 189,925,848 189,724,521

6.2 Nitrogen Oxide (NOx)

6.2.1 Total NOx Emissions (thousand MT) 192 41 39 42

6.2.2 Total NOx Emissions Intensity (MT/Net MWh)⁷ 0.000927 0.000218 0.000204 0.000220

6.3 Sulfur Dioxide (SO₂)

6.3.1 Total SO₂ Emissions (thousand MT) 920 30 20 22

6.3.2 Total SO₂ Emissions Intensity (MT/Net MWh)⁷ 0.004450 0.000159 0.000104 0.000116

6.4 Mercury (Hg)

6.4.1 Total Hg Emissions (kg) 3,995 230 192 142

6.4.2 Total Hg Emissions Intensity (kg/Net MWh)⁷ 0.000019 0.000001 0.000001 0.000001

Quantitative Information - Emissions

Parent Company: Southern Company Operating Company(s): Alabama Power, Georgia Power, Gulf Power, Mississippi Power, Southern Power, Southern Nuclear, Southern Company Gas, PowerSecure Business Type(s): Vertically Integrated State(s) of Operation: Retail Electric Provider: Alabama, Georgia, Florida, and Mississippi; Wholesale Electric Provider: Alabama, California, Florida, Georgia, Maine, Minnesota, Nevada, New Mexico, North Carolina, Oklahoma, and Texas; Natural Gas Distribution: California, Florida, Georgia, Illinois, Louisiana, Maryland, New Hampshire, New Jersey, Tennessee, Texas, and VirginiaState(s) with RPS Programs: California, Illinois, Maine, Maryland, Minnesota, Nevada, New Hampshire, New Mexico, North Carolina, and TexasRegulatory Environment: Both Report Date: September 2018

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Resources

Ref No. 2007 Baseline

2016 Actual

2017 Actual

Current Year2018

Actual

7 Human Resources

7.1 Total Number of Employees 26,742 30,612 29,700 28,383

7.2 Total Number on Board of Directors/Trustees 12 15 14 16

7.3 Total Women on Board of Directors/Trustees 2 3 2 3

7.4 Total Minorities on Board of Directors/Trustees 2 3 3 5

7.5 Employee Safety Metrics

7.5.1 Recordable Incident Rate 0.81 1.08 0.73

7.5.2 Lost-time Case Rate 0.26 0.26 0.39

7.5.3 Days Away, Restricted, and Transfer (DART) Rate 0.50 0.67 0.84

7.5.4 Work-related Fatalities 1.00 1.00 0.00

6 Fresh Water Resources

6.1 Water Withdrawals - Consumptive (Millions of Gallons/Net MWh)⁷ 0.0005 0.0004 0.0005

Water Withdrawals - Non-consumptive (Millions of Gallons/Net MWh)⁷ 0.005 0.005 0.006

9 Waste Products

9.1 Percent of Non-hazardous Municipal Solid Waste Diverted N/A N/A N/A

9.2 Percent of Coal Combustion Products Beneficially Used 53% 62% 62%

Quantitative Information - Resources

Parent Company: Southern Company Operating Company(s): Alabama Power, Georgia Power, Gulf Power, Mississippi Power, Southern Power, Southern Nuclear, Southern Company Gas, PowerSecure Business Type(s): Vertically Integrated State(s) of Operation: Retail Electric Provider: Alabama, Georgia, Florida, and Mississippi; Wholesale Electric Provider: Alabama, California, Florida, Georgia, Maine, Minnesota, Nevada, New Mexico, North Carolina, Oklahoma, and Texas; Natural Gas Distribution: California, Florida, Georgia, Illinois, Louisiana, Maryland, New Hampshire, New Jersey, Tennessee, Texas, and VirginiaState(s) with RPS Programs: California, Illinois, Maine, Maryland, Minnesota, Nevada, New Hampshire, New Mexico, North Carolina, and TexasRegulatory Environment: Both Report Date: September 2018

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Cautionary note regarding forward-looking statements

Certain information contained in this report is forward-looking information based on current expectations and plans that involve risks and uncertainties. Forward-looking information includes, among other things, future demand expectations, plans for reducing carbon emissions, and other items related to Southern Company’s future business plans. Southern Company cautions that there are certain factors that can cause actual results to differ materially from the forward-looking information that has been provided. The reader is cautioned not to put undue reliance on this forward-looking information, which is not a guarantee of future performance and is subject to a number of uncertainties and other factors, many of which are outside the control of Southern Company and its subsidiaries; accordingly, there can be no assurance that such suggested results will be realized. The following factors, in addition to those discussed in Southern Company’s and its subsidiaries’ Annual Reports on Form 10-K for the year ended December 31, 2017, and subsequent securities filings, could cause actual results to differ materially from management expectations as suggested by such forward-looking information: the impact of recent and future federal and state regulatory changes, including environmental laws and regulations governing air, water, land, and protection of other natural resources, as well as changes in application of existing laws and regulations; current and future litigation or regulatory investigations, proceedings, or inquiries; the effects, extent, and timing of the entry of additional competition in the markets in which Southern Company’s subsidiaries operate; variations in demand for electricity and natural gas, including those relating to weather, the general economy, population and business growth (and declines), the effects of energy conservation and efficiency measures, including from the development and deployment of alternative energy sources such as self-generation and distributed generation technologies; available sources and costs of natural gas and other fuels; limits on pipeline capacity; transmission constraints; advances in technology; ongoing renewable energy partnerships and development agreements; 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; the ability of Southern Company’s electric utilities to obtain additional generating capacity (or sell excess generating capacity) at competitive prices; catastrophic events such as fires, earthquakes, explosions, floods, tornadoes hurricanes and other storms, droughts, pandemic health events such as influenzas, or other similar occurrences; and the direct or indirect effects on the Southern Company system’s business resulting from incidents affecting the U.S. electric grid, natural gas pipeline infrastructure, or operation of generating or storage resources. Southern Company and its subsidiaries expressly disclaim any obligation to update any forward-looking information.