Planning for a
low-carbon future

 A letter from the CEO
The energy sector is rapidly evolving,
driven by customer preferences,
technology advancements, commodity
prices, energy security and resiliency
efforts, and environmental, social
and governance initiatives. With
evolution comes opportunity and
Southern Company, with its customercentric business model, is poised
to provide continued value to our
customers and communities in this
evolving energy landscape.
We have a long history of proactive,
constructive engagement and
dialogue with shareholders,
customers and other stakeholders
around the path forward in a lowcarbon future, and we understand
the need for a broader focus on
the financial, operational and
regulatory risks that come with
reducing carbon emissions over the
long term. We are committed to
keeping everyone informed as we
move forward.
Throughout this report you will see
how we are taking steps to increase
disclosure of our preparations
for a low-carbon future, as well
as the risks and opportunities
for our company with this
important transition.
With this backdrop, we are
establishing an intermediate goal
of a 50 percent reduction in carbon
emissions from 2007 levels by 2030
and a long-term goal of low- to nocarbon operations by 2050. These

2

goals are a continuation of our
trajectory of lower carbon emissions
over the past 10 years, which have
resulted in a 36 percent reduction
since 2007. Similarly, our use of coal
for power generation has declined
by almost 60 percent; in 2017, coal
represented only 28 percent of
our energy mix as compared to 69
percent in 2007.
Over the long term, meeting our
goals will require energy policies
that support low natural gas
prices and the development and
deployment of more low- to nocarbon emitting energy resources.
We will continue our commitments
to research and development and
to help shape responsible energy
policies that promote optionality
across the entire energy value
chain and retain each state’s ability
to adequately plan and deploy
resources that meet the needs of
their citizens and communities.
Managing risks in our business is
an integral component of the value
proposition for our investors and

our carbon emission reduction
goals are no exception. Combined
with our objective of delivering
regular, predictable and sustainable
earnings and dividend growth,
our collective goal is to provide
premier risk-adjusted returns to
our shareholders.
I am confident that we are prepared
and well-positioned to meet the
needs of our customers well into
the future and to succeed in this
transition to a low-carbon future.
We remain steadfastly committed
to providing clean, safe, reliable and
affordable energy to the customers
we are privileged to serve.
  homas A. Fanning
T
Chairman, President and Chief
Executive Officer
April 2018

 Contents

Greenhouse gas emissions and references
to carbon and carbon dioxide
Southern Company’s greenhouse gas (GHG) emissions
come primarily from fossil fuels used to generate
electricity, which result in emissions of three GHGs:
carbon dioxide (CO2), methane (CH4) and nitrous
oxide (N2O). Southern Company subsidiaries Alabama
Power, Georgia Power, Gulf Power, Mississippi Power,
Southern Power, Southern Company Gas, Southern
Electric Generating Company and PowerSecure all have
operations that emit CO₂, CH₄ and N₂O. More than
99 percent of the system’s electric generation GHG
emissions are CO₂. Throughout this report, references
to carbon or CO₂ emissions should be interpreted as
all GHGs.
Southern Company is a holding company that conducts
its business through its subsidiaries; accordingly,
throughout this report references to Southern
Company’s GHG emissions and related operations refer
to the operations conducted through its subsidiaries.
Southern Company is transitioning to a 2007
baseline year that represents Southern Company’s
maximum emissions year, while continuing to rely on
a baseline calculation methodology consistent with
the Environmental Protection Agency’s (EPA’s) GHG
Reporting Program (GHGRP) methodology. See “Details
about emissions reporting” (page 22) for further
information about this methodology.

Task force on climate-related financial
disclosures

02

A letter from the CEO

4

Executive summary

6

Goals and actions for a low-carbon future

7

Our approach to reducing CO2 emissions

13

Risks and opportunities in a low-carbon future

17

Conclusion

Further discussion

18

Achieving climate goals through resource
diversity and clean energy investment

22

Details about emissions reporting

23

Governance

25

Engagement, transparency
and further information

The Financial Stability Board’s Task Force on Climaterelated Financial Disclosures (TCFD) has developed
voluntary, consistent, climate-related financial
risk disclosures for use by companies in providing
information to investors and other stakeholders. In 2017,
the TCFD issued its final disclosure recommendations.
This report includes disclosure responsive to the four
core elements identified in the TCFD recommendations:
metrics and targets; strategy; risk management;
and governance.

Planning for a low-carbon future

3

 Executive summary
Southern Company is committed to providing
clean, safe, reliable and affordable energy, while
transitioning to low- to no-carbon operations by
2050. We have already made significant progress
with an “all of the above” approach to electric
generation resource diversity. Since 2007, without
any regulatory mandates, we have reduced CO2
emissions by 36 percent.

2007: GHG Emissions Baseline

Setting emission
reduction goals
We are, for the first time, setting
emission reduction goals that are
aligned with our long-term business
strategy and our commitment to
a leadership role in developing
solutions that make technological and
economic sense. These are enterprisewide goals that encompass our
electric and natural gas operations.

Strategy to achieve
the goals
Our strategy to achieve these 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 CO₂ emissions. To
do this, we are aggressively growing
our investment in renewable energy,

4

36%

Reduction

in greenhouse
gas emissions
since 2007

2017: GHG Emissions Reduced 36%
modernizing the grid to optimize
technology advancements, increasing
the use of 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.
Transitioning to a low-carbon future
will require continued advancement
in technology.
Existing opportunities to reduce
our carbon emissions include
completing construction on the
new Vogtle 3 and 4 nuclear units,
seeking useful life extensions for
our existing 3,700 megawatt (MW)
nuclear fleet, continuing to grow
our sizable renewable energy
resources, partnering with battery
manufacturers and vendors on
energy storage development and
continuing to modernize the power
grid for greater efficiencies. We also

see potential to invest appropriately
in new technologies that may
emerge, mature and come to market
through our PowerSecure subsidiary.
We are also engaging with
policymakers, customers and
other stakeholders to help shape
an energy policy that enhances
optionality across the entire energy
value chain and supports the
development and deployment of
more carbon-free energy sources,
while ensuring that each state
that we serve retains the ability
to adequately plan and deploy
resources that meet the needs of its
citizens and communities.

Risks and opportunities
along the way
We aim to minimize our exposure
to carbon risk across the energy
value chain as we make, move and

 2030 Goal: 50% Reduction in GHG Emissions
sell energy to a wide customer
base. Our business model relies
heavily on state-regulated electric
and natural gas investments as
well as long-term contracted
energy infrastructure, which
differentiates Southern Company
from other businesses. We believe
that operating a customer-centric
business model provides the
opportunity to effectively respond
to future carbon regulations and
the potential to succeed in an
accelerated transition to a low
carbon business environment.
By continuing to make major
energy decisions that are in the best
interest of customers, appropriately
consider fuel and carbon risks,
and are approved by our state
regulators, we expect to continue to
receive fair regulatory treatment of
our state-regulated investments. We
believe that investment risk to these
rate-regulated assets is limited.

2050 Goal: LOW to NO GHG Emissions

Robust processes to
get us there
As we plan for a cleaner energy
future, we recognize that our current
electric generation portfolio consists
of high-capital, long-life assets.
Efforts to further diversify our
portfolio should be achieved through
an orderly transition that accounts
for the economic value of our
existing assets. Our robust scenariobased integrated resource planning
process occurs annually, and is a key
component that we use to ensure
that the right resources are deployed
at the right time to maintain safety,
reliability and affordability for
customers. The planning process
allows for updates to a number
of assumptions, inputs, and
alternatives, including potential CO₂
prices, fuel and other commodity
prices, as well as economic or other
policy indicators. The annual process
allows each of our state-regulated

utilities to actively work within its
regulatory framework to ensure
that carbon reduction efforts are in
customers’ best interests over time.

Governance to guide
us through
Our Board of Directors recognizes
the potential impacts on our
business and the transitional
risks and opportunities the utility
industry faces in a low-carbon
future. Our governance process
combines regular assessments of
our short- and long-term business
strategy and a robust enterprise
risk management program, both
of which facilitate identification,
communication and management of
significant risks ultimately reporting
to the Chief Executive Officer and
the Board. The existing governance
and enterprise risk management
process ensures focus on the longterm sustainability of our business.
Planning for a low-carbon future

5

 Goals and actions for a
low-carbon future
We are setting a long-term goal of low- to no-carbon
operations by 2050 on an enterprise-wide basis. On
our path to 2050, we have set a goal of 50 percent
reduction from 2007 levels in CO2 emissions by 2030.
Achievement of these goals will be dependent on
many factors, including natural gas prices and the pace
and extent of improvements in energy technology.
Metrics and goals – GHG emissions reductions

36%

Reduction
in GHG
emissions

2017

In addition, we aim to reduce
fugitive methane emissions for our
natural gas distribution operations
to align with Our Nation’s
Energy (ONE) Future’s 2025 goal.
Southern Company Gas was a
founding member in ONE Future.
Today, our natural gas operations
intensity is already 0.26 percent,
which is below ONE Future's 2025
goal of 0.44 percent for local
distribution companies.
We believe these goals are
reasonable and achievable, while
still supporting our commitment to
serve customers with clean, safe,
reliable, and affordable energy.
Our path to 2050 will include the
following actions:

6

50%

Reduction
in GHG
emissions

2030

ff We do not intend to invest
further in our existing thermal
coal fleet, unless the investment
ensures safety, affordability or
reliability to serve customers
or to comply with federal or
state laws.
ff In each of our state-regulated
electric jurisdictions, we will
continue to propose and seek
approval of low-carbon and
carbon-free resources that
are in the best interest of our
customers – such as natural
gas, nuclear, renewables, and
energy efficiency – as energy
deployment options in the
resource planning process. It’s
important to note that advanced
efficient natural gas combined
cycle facilities will be needed
as a bridge to a low- to nocarbon future.

LOW
to NO
GHG
emissions

2050

ff We will work within the
regulatory framework in each
of our states to ensure that
our carbon reduction efforts
support customers’ needs
and preferences.
ff We will continue our
industry-leading research and
development efforts seeking to
drive technology advancements
that lead to GHG reductions
across the energy value chain.
ff As a consumer and distributor of
natural gas, we will continue our
participation in the ONE Future
program with a goal to achieve
an average rate of methane
emissions across the entire
natural gas value chain that
is one percent or less of total
natural gas production.

 Our approach to reducing
CO2 emissions
We operate a complex business in a complicated
environment. Our approach to reducing CO2
emissions is based on three key focus areas.

Diverse energy
resource portfolio

Research &
development

Constructive
engagement

Pursue a diverse portfolio to
include low-carbon and carbonfree resources and energy
efficiency resources

Continue our industry-leading R&D,
as well as active participation in the
Electric Power Research Institute
(EPRI), with particular focus on
technologies that lower GHG
emissions

Constructively engage with
policymakers, regulators, investors
and customers to support outcomes
leading to a low-carbon future

Diversifying the portfolio
of energy resources

Our environmental compliance
strategy involves the continuous
monitoring of policy developments,
compliance options and other
factors which may impact the

long-term viability of our electric
generating units. Over the past
eight years, more than 50 percent
of our coal units have been retired
or converted to natural gas.

Today, we are one of the few
energy companies pursuing an “all
of the above” energy strategy. We
believe developing and maintaining
a diversified energy portfolio is
essential to successfully reducing
carbon emissions while maintaining
reliability and affordability.
Southern Company’s portfolio was
initially founded on hydroelectric
generation and has grown to
include coal, natural gas, nuclear,
biomass, landfill gas, solar, wind,
energy efficiency programs,
demand response, and distributed
resources. Over the last decade, we
have significantly transformed our
electricity generation mix.

Electricity generation mix

16% 14% 1%

69%
Coal

Natural Gas Nuclear Renewables/Other

2007

47%

Natural Gas

28%
Coal

15% 10%

Nuclear Renewables/Other

2017

Planning for a low-carbon future

7

 Recent generation decisions and
environmental compliance
strategies have led to the following:
ff Approximately 4,200 MW of
coal- and oil-related retirements
since 2010.
ff Approximately 3,300 MW
of natural gas fuel switches
since 2015.
We invest in a diverse portfolio
of low-carbon and carbon-free
energy assets to serve customers
and communities with a focus
on maintaining reliability and
affordability while reducing carbon
emissions. Through our subsidiaries
we have invested $20 billion in
developing low-carbon and carbonfree resources and more than
5,000 MW of renewable generating
capacity has been added across
the system since 2010. Our current
portfolio of over 12,000 MW of
carbon-free and carbon neutral
resource capacity has established a
foundation enabling us to continue
our carbon reduction efforts.1
ff Along with our partners, we are
building the first new nuclear
units in the U.S. in more than
30 years. These units will add
1,000 MW to our existing 3,700
MW portfolio of carbon-free
nuclear generation.
ff We are among the largest solar
owner-operators in the U.S. Solar
represents a key component of
our state-regulated utilities’ and
Southern Power’s 8,500 MW
renewable resource portfolio.
ff Our state-regulated electric
operating companies’ renewable
resource portfolio includes more
than 900 MW of wind, 1,000 MW
of solar, 3,000 MW of hydroelectric
and nearly 200 MW of biomass.
1 

8

ff Our competitive generation
subsidiary, Southern Power,
owns approximately 1,800 MW
of solar, 1,600 MW of wind and
100 MW of biomass.
Our future energy mix is expected
to include more low- and no-carbon
resources, particularly if natural gas
prices remain low and technology
costs associated with renewables
and storage continue to decrease.
The trends of coal unit retirements
and additions of natural gas-fired
and renewable generation are
projected to continue. We expect
to add an additional 3,000 MW
of renewable generating capacity
by 2022.
Nuclear energy is one of the
cleanest, most reliable and costeffective fuel sources available
today. It currently accounts for
about 15 percent of our electricity
generation mix, and its importance
in our portfolio continues to grow.
As we transition to a low-carbon
energy future, we are preparing
to bring Georgia Power's Vogtle
Units 3 and 4 into operation in 2021
and 2022.

We expect to own or otherwise
control 16,000 MW of carbon-free
and carbon neutral generating
capacity by 2022.

Investing in technologies
that support our goals
Southern Company has actively
engaged in robust, proprietary R&D
that grows the value of energy
services to customers since the
1960s. Nearly all of our current
R&D spend is focused on lower
carbon-emitting technologies.
We are also an active participant
and a significant funder of EPRI.
EPRI is an independent, nonprofit
organization for public interest
energy and environmental research.
The members of EPRI include
utilities throughout the world. EPRI
seeks to pool resources and ideas
from all members to advance the
development and deployment
of technologies impacting the
electricity sector. Southern
Company was instrumental in
forming EPRI as the primary

Growing portfolio of carbon-free and carbon neutral energy sources

30%

25%

22%

21%

2%

2017

12,000 MW
30%

29%

19%

19%

2022

16,000 MW

Generally, with respect to renewable energy generated or purchased by the state-regulated electric operating companies,
the state-regulated electric operating companies retain the right to use the renewable energy to serve customers or to sell
the energy and associated renewable energy credits, together or separately, to third parties for the benefit of customers.

3%

 research organization for more
than 90 percent of the electricity
generated and delivered in the U.S.
A low-carbon future will
require developing new and
more cost-effective energy
conversion, delivery and use
technologies. Our R&D strategy
seeks at least six revolutionary
technological successes:
ff Beneficial electrification with
newly developed and broadly
deployed technologies including
those for transportation,
buildings, industrial processes
and food production;
ff Solar, wind, energy storage
and other carbon-free energy
resources – supported by
advancements in cost and
efficiency through R&D developed and operated in
centralized and microgrid
configurations, as well as behind
the meter as the lowest-cost
energy sources;
ff Resilient, fully integrated
energy delivery grids allowing
increased use of low- to no-GHG
emissions energy;
ff Cost-effective carbon capture,
use and storage (CCUS)
technologies developed and
operating on an efficient, reliable
natural gas-fired generation fleet;
ff New utility business models
created from hydrogen
production, delivery and end-use
technologies; and
ff Advanced nuclear power
generation developed with
superior safety benefits and
polygeneration (simultaneous
production of electricity and
useful chemicals) business
opportunities that is cost-

competitive with natural
gas-fired generation.

National Carbon Capture
Center
The National Carbon Capture
Center (NCCC) is a focal point of
the U.S. Department of Energy's
(DOE) efforts to develop advanced
technologies to reduce emissions
from natural gas- and coal-based
power generation. Since 2009, we
have managed and operated this
world-class test facility and worked
with scientists and technology
developers to help overcome the
challenges of developing carbon
capture technologies. The NCCC has
already surpassed 100,000 hours of
technology testing. The Center also
cofounded the International Test
Center Network, a global coalition
of facilities working to accelerate
the research and development of
CCUS technologies.

PowerSecure and Bloom
Energy
Beyond providing clean, safe,
reliable and affordable energy to
our customers, we are ensuring
that our customers can efficiently
use our product. In May 2016, we
acquired PowerSecure, a proprietary
distributed infrastructure,
energy efficiency and utility
infrastructure solutions company.
With over 1.5 gigawatts (GW) of
distributed energy resources under
management, PowerSecure has a
national footprint and continues
to grow.
In October 2016, PowerSecure
and Bloom Energy formed a
strategic venture where Bloom
servers (fuel cells) are paired with
PowerSecure’s energy storage
solution for a portfolio of customers
including Home Depot and
Kaiser Permanente.

In June 2017, PowerSecure and
Advanced Microgrid Solutions
announced a strategic alliance with
the goal of accelerating the costeffective deployment of distributed
energy resources. We believe this
alliance positions us to serve a
nationwide base of customers
on both sides of the meter more
reliably and efficiently.

Leading the way for
advanced nuclear
As a leader in pursuing innovative
solutions for a clean energy
future, we are investing in several
advanced nuclear research and
development projects while working
closely with federal regulators —
playing a vital role in moving the
nuclear energy industry forward.
In recognition of the difficulties
associated with deploying new
nuclear, we are forming strategic
partnerships with companies
worldwide. We continue to leverage
the experience and expertise at
Southern Nuclear and Southern
Company's R&D division to fully
explore all potential opportunities
within the current fleet and with
advanced technologies including
Generation III+, AP1000, small
modular reactors and advanced
Generation IV reactors.

Energy Impact Partners
Southern Company is a primary
partner in Energy Impact Partners
(EIP). EIP is a private equity
firm that strategically invests in
innovative technologies, services and
products throughout the electricity
supply chain from generation
to consumption. Through close
collaboration with its investor base,
EIP seeks to bring the best companies,
buying power and vision in the
industry to bear on the emerging
energy landscape. Information about
investments by EIP can be found at
https://www.energyimpactpartners.
com/investments/.

Planning for a low-carbon future

9

 Renewable resources

Nuclear

Grid modernization

We have more than 20 research and
development projects underway
across our system to determine the
potential of different renewable
resources and technologies. Research
areas include solar photovoltaic
(PV) deployment, operation and
maintenance, solar resource
forecasting, wind generation, biomassfueled power generation and bulkpower system integration of variable
generation sources.

We are committed to nuclear energy
as an integral component of the full
portfolio strategy for low- to nocarbon operations. Georgia Power,
with its co-owners, is constructing
two new nuclear units at the Plant
Vogtle site in Burke County, Georgia.
Upon completion, Plant Vogtle Units 3
and 4 will provide a total of 2,200 MW
(approximately 1,000 MW for Georgia
Power). Once completed, Plant Vogtle
units 3 and 4 will be part of a 4,700
MW carbon-free nuclear generation
fleet. We have also been awarded
up to $40 million from the DOE to
explore, develop and demonstrate
advanced nuclear reactor technologies.

Over the past ten years, we have
made major investments in smart
grid technologies including deploying
approximately 4.6 million smart
meters, or advanced metering
infrastructure, helping customers
better manage their energy use
and save money. We are also
conducting collaborative, industrywide research with EPRI, for the
ongoing development of transmission
system monitoring, diagnostics and
visualization tools that will facilitate
decisions and mitigation measures
to enhance system performance,
efficiency and reliability.

Energy efficiency

Distributed resources

We are a leader in offering innovative electric and natural
gas energy efficiency programs that help our customers
use energy more wisely. Across our state-regulated electric
utilities, since 2000, energy efficiency and demand response
programs have helped reduce peak demand for electricity
by more than 5,300 MW (which equates to 17 percent of our
2017 peak load) and avoid more than 3 billion kWh of energy
use. Additionally, over the past 16 years, Southern Company
Gas’ energy efficiency programs have helped reduce demand
by more than 90 million therms and reducing customers’
emissions. Looking forward, we are on a path to finding more
ways for our customers to save money while also reducing
GHG emissions by investing more than $1 billion in energy
efficiency for electric customers by 2020 and more than
$160 million in energy efficiency for natural gas customers by
2021. Energy efficiency programs and associated customer
savings will remain a focus of the Company.

Our long and successful history of incorporating distributed
generation into our energy mix began in the late 1970s
and continues today. In April 2017, PowerSecure extended
its distributed infrastructure offering by acquiring Power
Pro-Tech Services, a distributed power system service
provider that specializes in distributed power systems
including fuel cells, solar inverters and controls that can be
used to create microgrids for use by customers. In addition,
Gulf Power is operating a 1 MWh Tesla lithium-ion battery
energy storage system in a research demonstration with
Southern Company R&D and EPRI. The integration of cost
effective energy storage with intermittent renewable
generation is one of the key options that can help lower
carbon emissions.

10

 Engaged in shaping energy
policy at local, state and
federal levels
Engagement at all levels of energy
policy development is essential
to executing our customer-centric
business model. We engage
with policymakers to help shape
an energy policy that supports
developing and deploying more lowand carbon-free energy resources
while ensuring that each state
that we serve retains the ability
to adequately plan and deploy
resources that meet the needs of its
citizens and communities.

State-regulated
Electric Service
Territory

We believe the following principles
are fundamental to shaping
energy policy.
ff Constructive regulation:
Regulations should provide
constructive solutions to problems
affecting people, the environment
and the economy. Requirements
should be supported by sound
data and analysis, while
considering other statutes and
regulations, both federal and state.
ff Regulatory certainty: For many
regulated industries, including
the utility industry, regulatory
certainty is essential to
inform the long-term business
planning and substantial
capital investments required
to effectively operate and plan
for the future. We value clear,
predictable requirements and
consistent application of the law.
ff Cooperative federalism:
Regulation is most effective
when the federal government
works in partnership with the
states rather than imposing onesize-fits-all federal regulations.
ff Realistic assessments of costs
and benefits: Analyses of
proposed or existing regulation

must properly weigh the relevant
costs and benefits imposed by
those regulations.
ff Realistic technology-based
standards: Standards should
be based on supported
conclusions or on proven
and reliable commercially
available technologies.
Federal: As of the publication of this
report, there is no comprehensive
federal regulatory framework for
limiting CO₂ emissions from existing
power plants in the U.S., absent
major modifications at those plants.
We recognize that domestic policies
may emerge in the future that
assist in transitioning the U.S. to a
lower GHG-emitting economy. As
the EPA considers repealing and
replacing the Clean Power Plan (CPP)
and as the courts consider its legal
standing, we support regulating
GHG emissions and, in the case
of repeal, instating a durable and
constructive GHG regulation policy
solution that works within the
cooperative federalism goals of the
Clean Air Act and other federal laws

and regulation. To date, Southern
Company’s percent reduction in
GHG emissions is equivalent to
EPA’s stated nationwide electric
sector reductions associated with
the CPP of approximately 32 percent
by 2030 from 2005 levels.
State and local: Our electric
operating companies and our
natural gas local distribution
companies are subject to the
jurisdiction of their respective state
Public Service Commissions (PSCs)
and state environmental agencies.
PSCs have broad regulatory
authority over the companies,
including approval of new supplyside and demand-side resources and
related cost recovery rates, while
environmental agencies are charged
with the enforcement of each
state’s environmental policies.
At varying frequencies and under a
variety of circumstances, the electric
operating companies file with their
respective PSCs economic analyses
of recommendations or decisions
using the scenario planning process.
Planning for a low-carbon future

11

 Accordingly, decisions made by
an electric operating company
regarding its assets, including those
requiring specific PSC approval,
must be made in the best interest
of its customers, taking into
consideration a wide variety of
factors, and based on the best
information available at the time
the decisions are made.
Our state-regulated electric
operating companies are committed
to proposing and seeking approval
of energy deployment options in
each state jurisdiction's resource
planning process that coincide
with a transition to a low- to nocarbon future. These resources, for
example, may include: advanced
natural gas generating units,
nuclear, renewables, energy
efficiency, and demand response.
Each state-regulated electric
operating company will work within
its state’s regulatory framework to
ensure that carbon reduction efforts
are supportive of customers’ needs
and preferences.
To date, none of the four states
where we operate electric
utilities has enacted legislation or
regulations to specifically regulate
CO₂ emissions or mandates
for certain levels of renewable
resources. But we understand our
customers’ needs and preferences
for clean, safe, reliable and
affordable energy, as well as a
continuing desire of many of our
stakeholders to reduce our carbon
emissions. We will work within each
state’s regulatory framework – with
support from customers, PSCs, and
environmental agencies – to ensure
that our carbon reduction efforts
are supportive of customers’ needs
and preferences.

12

Partnering with the US military
on renewable energy. We are
the only energy company in the
nation to partner with the Army,
Navy, Marine Corps and Air Force
to develop innovative renewable
energy generation projects
on 19 military bases. Through
March 2018, Southern Company
and its subsidiaries Alabama Power,
Georgia Power, Gulf Power and
Mississippi Power have military
solar projects online or under
contract totaling 365 MW. This
partnership with the Department of
Defense helps meet the military’s
goals to support the development
of new renewable generation
resources nationwide.

Bringing wind to the Southeast.
Alabama Power, Georgia Power and
Gulf Power have purchased more
than 900 MW of wind generation
from Oklahoma and Kansas. The
companies receive all the renewable
energy credits from these projects,
which they may use to serve
customers with wind energy or
sell to third parties for the benefit
of customers.

Meeting customer demand
for renewable energy. Our
state-regulated electric utilities
utilize over 5,000 MW of existing
renewable resources. We expect
that number to grow through
programs like Georgia Power's
Renewable Energy Development
Initiative (REDI). REDI was approved
by the Georgia PSC as part of its
2016 Integrated Resource Plan
and includes approval for Georgia
Power to add an additional 1,200
MW of renewable resources.
REDI included the beginning of a
Commercial and Industrial (C&I)
customer renewable program that
allows Georgia Power to procure
up to 200 MW of additional
renewable generation that C&I
customers can use to support their
sustainability initiatives. Through
our planning process and customer
partnerships, Southern Company
and its subsidiaries will continue
to evaluate and develop similar
program designs to meet customers’
renewable energy needs.

 Risks and opportunities in a
low-carbon future
For the energy industry, high-capital, long-life assets
require long-term planning. The current transition
in the energy industry along with the potential for
a low-carbon future is placing new and different
pressures on the traditional energy production and
delivery model, creating uncertainty and presenting
challenges. The investor community recognizes this
as potential risk.
Revenue mix

13%

82%

Wholesale
Electric

State-regulated Electric

5%

Energy
Integration

2007
Operating Revenues = $15.3B

67%

16%

Natural Gas
Distribution**

State-regulated Electric

11%

Wholesale
Electric

6%

Energy
Integration*

2017
Operating Revenues = $23B
* 

** 

Certain non-regulated sales of products and services by Alabama Power and Georgia Power were reclassified as other
revenues for consistency of presentation on a consolidated basis following the PowerSecure acquisition.
Natural Gas Distribution includes Southern Company Gas’ state-regulated local distribution companies, midstream
pipeline operations and gas marketing services.

We are engaged across the energy
value chain as we make, move and
sell energy to a wide customer
base. We are seeking to minimize
potential risk by diversifying our
business through electric generation
optionality, as well as through the
addition of regulated natural gas
infrastructure with our acquisition
of Southern Company Gas in 2016.
Also in 2016, recognizing that
more energy solutions will reside
on the customer’s side of the
meter, we acquired PowerSecure,
which specializes in customer
energy solutions.
As we seek out opportunities to
expand our business, we continue
to focus on our customer-centric
business model, combining

state-regulated assets and other
energy assets that were developed
pursuant to long-term contracts
with creditworthy counterparties.
This mix of asset types is designed
to produce stable, predictable
revenue streams with lower
carbon risks.
Over the past 10 years, we have
diversified our revenue streams
while continuing to grow revenue.
To further compare and contrast
our business model with other
business models that experience
greater carbon risk, it is helpful to
consider the three primary energy
asset business models in use across
the U.S. energy industry.

State-regulated asset
Owned and operated by
regulated utilities, with state
utility commissions setting rates
to cover the cost of the asset

Long-term contracted asset
Owned and operated pursuant
to long-term contracts with
creditworthy counterparties that
are designed to cover the cost of
the asset

Merchant asset
Owned and operated based on
market speculation with plans to
sell power into the competitive
spot or term markets with
little or no certainty of fixed
revenue streams
Planning for a low-carbon future

13

 Our key asset categories are state-regulated assets and long-term contracted assets. Our carbon risk is lower than
many other businesses due to reliance on these two business models, a customer-centric focus and state regulatory
approval processes that are informed by a scenario planning process described later in this report. The following table
provides greater details on our asset categories and denotes the business model associated with each.
Asset outlook of Southern Company's portfolio in GHG-constrained futures
Portfolio

Pros

Natural Gas

yy
yy
yy
yy
yy
yy
yy

Coal

Abundant supply
Flexible operations
Balances renewables
Lower GHG emissions
Stable price
Abundant supply
Onsite fuel storage

Cons

yy No onsite gas storage
yy Requires pipeline infrastructure
yy GHG emissions
yy Environmental footprint
yy Higher GHG emissions

Nuclear

yy Low and stable fuel costs
yy GHG emissions free
yy Abundant supply of fuel

yy High capital cost
yy Waste disposal
yy Long construction period

Renewables

yy Abundant supply
yy GHG free or neutral
yy Declining capital cost for solar

yy Intermittent generation for solar and wind
yy Siting and permitting constraints for
new infrastructure

Energy Storage

yy Enables effective utilization of
intermittent generation
yy Declining capital costs

yy High capital cost
yy Limited storage capacity

Electric Transmission
& Distribution

yy Increases power
transmission capabilities

yy Siting and permitting constraints for new
infrastructure

Local Natural Gas
Distribution

yy Abundant supply
yy Existing infrastructure

yy Needs additional infrastructure

Midstream Natural
Gas Transmission

yy Abundant supply
yy Opportunity to provide pipeline
expansion

yy Siting and permitting constraints for new
infrastructure

Distributed Energy
Infrastructure

yy Facilitates electricity peak shaving and
demand management
yy Potential transmission and
distribution benefits

yy Requires rate adjustments for regulated
electric subsidiaries

14

 Rate
Regulated

Long-Term
Contract

Merchant2

Facilitates GHG
Reductions

GHG-Constrained Futures
Demand Potential Opportunities to Address Emission
Outlook Reductions Pressure and Demand Outlook3

yy Increase existing natural gas unit efficiency
yy Deploy new high efficiency natural gas units
yy Retrofit existing and deploy new natural
gas assets with CCUS where economic
yy Increase coal unit efficiency
yy Retrofit existing coal assets with CCUS
where economic
yy Replace with lower emission resources
yy Maximize life of existing nuclear units
yy Invest in nuclear uprates at existing
nuclear units
yy Develop new generation nuclear technology
yy Invest in renewable energy capacity and
transmission infrastructure
yy Improve efficiency of renewable technologies
yy Invest in energy storage projects and R&D
yy Develop strategic partnerships with
battery companies
yy Invest in grid modernization, such as smart
grid, advanced metering infrastructure

yy Replace aging pipeline infrastructure
yy Minimize methane emissions
yy Invest in renewable natural gas
yy Replace aging pipeline infrastructure
yy Minimize methane emissions
yy Expand to support generation growth,
replacements and conversions
yy Increase market penetration
yy Utilize energy and product monitoring to
mitigate future distribution system impacts
2 

3 

Southern Company's business model does not rely on merchant assets that could create unpredictable fuel price or
GHG risk.
Potential opportunities are hypothetical in nature, do not necessarily represent a component of the Southern Company
system's future plans and may or may not actually be pursued in the future.

Planning for a low-carbon future

15

 Potential stranded assets,
investments and costs
For rate-regulated assets, we
have an obligation to continually
make decisions that are in the
best interest of customers. Our
state-regulated electric operating
companies seek approval of major
decisions regarding rate-regulated
assets from their respective state
PSCs. Information provided to the
state PSCs by the electric operating
companies includes economic
results from the Company’s scenario
planning process, thereby allowing
the PSCs to render a decision is in
the best interest of customers under
a variety of fuel and CO2 scenarios.

16

We expect that if our companies
continue to make major energy
decisions that are in the best
interest of customers, that
appropriately consider fuel
and carbon risks, and that are
approved by the state regulators,
each company will receive fair
regulatory treatment regarding its
rate-regulated assets. We believe
that carbon investment risk to these
rate-regulated assets is low.
For our portfolio of non-rate
regulated assets, we rely on
long-term contracts with
creditworthy counterparties
that help mitigate carbon risk
associated with these assets. Our

business model does not rely on
merchant assets that could create
unpredictable investment risk.
Our energy infrastructure portfolio
of primarily rate-regulated assets
and assets under long-term
contracts is designed to produce
regular, predictable and sustainable
earnings. Our significant investment
over the past decade in low- and
no-carbon resources is expected to
further reduce future risk related to
carbon emissions.

 Conclusion
Our strategy is to maximize long-term value to
shareholders through a customer, community and
stakeholder-focused business model that produces
sustainable levels of return on energy infrastructure.
We believe we can successfully
sustain and evolve our business
as we transition to a low- to
no-carbon future. We anticipate
that we are well-positioned for
the transition and the risks and
opportunities that are part of
that transition.

We continue to manage our
carbon risk using effective
scenario planning for major electric
generation decisions through the
execution of a customer-centric
business model that focuses on
state-regulated or long-term
contracted assets while adhering to
a robust governance process.

Our carbon reduction goals of
50 percent by 2030 and low- to
no-carbon operations by 2050
are a critical step forward for us
and our business units. As we
work to achieve those goals, we
remain committed to our core
principles of providing clean, safe,
reliable and affordable energy for
our customers.

Planning for a low-carbon future

17

 Further discussion
Achieving climate goals through resource diversity and clean
energy investment
A global perspective
In 2015, negotiations at the
United Nations Framework
Convention on Climate Change
resulted in a new international
climate deal, the Paris Agreement.
A central goal of the Paris
Agreement is to hold the increase
in global average temperature
to well below 2° Celsius above
pre-industrial levels.
The International Energy Agency
(IEA) developed a global 2° Celsius
scenario (2DS) that provides an
example of a global energy system
pathway and a CO2 emissions
trajectory consistent with at least
a 50 percent chance of limiting
the average global temperature
increase to 2°C by 2100. The 2DS
emission trajectory represents
a 70 percent reduction in global
annual energy sector CO2 emissions

from 2014 levels by 2060 (Figure 1),
with carbon neutrality in the global
energy system being achieved
in 2100.

capture and storage, nuclear and
sustainably sourced bioenergy are
specifically identified by IEA as key
drivers within the 2DS.

While this global energy sector
analysis shows a large reduction
in the use of fossil fuels over
the next several decades, it
also demonstrates that global
energy demand will require a
full portfolio of energy solutions
in a carbon-constrained future
(Figure 2). IEA states: “sustainable
transformation of the energy
sector can be achieved only
with accelerated investment
in a portfolio of clean energy
technologies and energy
efficiency.”4 Energy efficiency,
electrification of end-use sectors,
low emitting electricity generation
such as renewable energy,
fossil-fueled generation with carbon

A national perspective

Figure 1: Global Direct CO2 Emissions in IEA’s 2DS4,5
Million Metric Tons CO2

Figure 2: Global Primary Energy Demand in IEA’s 2DS4,5
EJ (EJ - exajoule - 1018 joules)
700

40,000

Other transformation

30,000

Transport

10,000

4 
5 

18

2060

Nuclear

400

Oil
Natural gas

200

Hydro

100

Industry

-10,000

500

300

Buildings, agriculture,
fishing, other

0

Coal

600

Power

20,000

2014

Southern Company’s recent scenario
planning analysis of the overall
U.S. economy shows a potential
39 percent reduction in CO2
emissions from 2007 levels by 2050
(Figure 3). Most of these reductions
are achieved by the electric sector,
with a reduction of approximately
70 percent in one of the scenarios
(Figure 4). It should be noted that
this reduction of approximately 70
percent in carbon emissions is close
to the U.S. electric sector reductions
modeled in IEA’s 2DS. However, our
recent analysis does not achieve
these reductions until 2050.

Renewables

0
2014

2060

© OECD/IEA 2017, Energy Technology Perspectives 2017, IEA Publishing. License: www.iea.org/t&c
Based on IEA data from the Energy Technology Perspectives 2017, ETP 2017 scenarios summary © OECD/IEA 2017,
www.iea.org. License: www.iea.org/t&c; as modified by Bridget Brown.

 Our goal of low- to no-carbon
emissions by 2050 aligns with the
modeled trajectories associated
with the 2DS emissions trajectories.
The transportation sector accounted
for 36 percent of the total U.S.
energy-related CO₂ emissions in
2016. Transitioning this sector
from the heavy use of fossil fuels
presents the largest opportunity in
realizing a carbon-free future. With
overall carbon reductions as the
objective, emissions reductions in
the electricity sector can provide
important motivation for further
electrification of the remaining
end-use sectors.
We are exploring opportunities
for carbon reductions from the
transportation sector through our
electric vehicle (EV) and hydrogen
research efforts.

Figure 3: U.S. Sector-Related
CO2 Emissions6
(Range Across Scenarios)
Projected CO2 Reductions (2007 - 2050)

6 

7 

Electric transportation
We are actively engaged in
advancing the electrification of
transportation, which will reduce
transportation costs for customers
while reducing carbon emissions.
This includes:
ff Promoting customer education
and awareness.
ff Working with vehicle
manufacturers and EPRI to bring
viable on-road EV technologies
to market.
ff Helping develop charging
infrastructure and improve
vehicle/grid integration plans for
efficient distribution.
ff Offering lower electricity rates
and programs for off-peak
usage, which helps commercial
and industrial customers reduce
their operating costs and
environmental impact.

ff Accelerating the growth of
the U.S. EV infrastructure as
a member of the Alliance for
Transportation Electrification.
Moreover, we monitor technology
advancements that will be vital
in a low-carbon future. New

Figure 4: U.S. Energy-Related
CO2 Emissions7
(Range Across Scenarios)
Change in CO2 Emissions from 2007

10%

0%

0%

-5%

-10%

-10%

-20%

-15%

-30%

-20%

-70%

-40%

-80%

-45%

Electric Sector

-35%

Transportation

-60%

Industrial

-30%

Commercial

-25%

-50%

Residential

-40%

-10%
-16%

Area represents
resulting range
of CO2 emission
pathways

-39%
2010

2020

2030

2040

2050

U.S. sector-related CO2 emissions determined by Charles River Associates through the Company’s annual resource
planning process. End-use sector-related emissions reductions include those associated with electricity.
U.S. energy-related CO2 emissions determined by Charles River Associates through the Company’s annual resource planning
process. Based on U.S. Energy Information Administration 2007 U.S. energy-related CO2 emissions of 6,021 MMTCO2.
Planning for a low-carbon future

19

 technologies are incorporated
into the annual scenario planning
process when appropriate,
thereby influencing major
generation decisions.

Scenario planning
Our integrated resource planning
process occurs annually – allowing
updates to the scenarios and
associated CO2 prices, as well
as incorporation of the most
recent commodity, economic or
policy indicators.
We use a robust scenario
planning process that has two
primary components: energy
economy modeling and integrated
resource planning.

ff Energy economy modeling,
in collaboration with external
industry experts, analyzes the
implications of diverse futures
on multiple sectors of the
nation’s economy. The two
central uncertainties analyzed
at a macro, national-level are
fuel (e.g., natural gas prices) and
CO₂ (e.g., represented as a cost
to emit CO₂). Understanding
the impacts to individual
sectors of the economy and
the interaction between sectors
at the macro-economy level
provides significant insight to
informing and identifying broad
industry risks and potential
business strategies. This scenario
format also serves as a basis for

integrated resource planning
at the state-regulated electric
operating companies – and
ultimately informs major
generation retirement and capital
investment decisions.
ff Integrated resource planning
provides an orderly and reasoned
framework where generation
supply and demand-side
options are analyzed across the
state-regulated electric operating
companies with the objective of
providing reliable and affordable
energy that meets customers’
needs over the planning horizon.

Scenario planning process

Energy Economy Modeling
Areas of
uncertainty

Economic
Assumptions

Environmental
Policy
Assumptions

Integrated Resource Planning
Scenario 1

Fuel Market
Assumptions

Additional generation
technology options
Unit-specific
characteristics

Scenario
Structure

Company-specific
load projections

Technology
Assumptions

National energy
economy model
with multiple
sectors, including
the electricity sector

Scenario 1
Scenario 2

20

Scenario 2

Scenario 3
Scenario ...

Interrelationships
between various
factors in
the economy

Fuel and Emission
Allowance
Price Forecast
Economic Impacts
(e.g. GDP, Income)
Integrated resource plans
Retirement analyses

Scenario ...
Scenario 3

New generation development

 Energy economy modeling
Our most recent national-level
scenario planning process
encompasses a range of scenarios
with varying views for natural
gas prices and CO2 prices. The CO2
price is represented as a range of
economy-wide dollar per-metric
ton prices of emissions. For this
recent analysis, the starting price of
CO2 emissions spans $0 to $20 per
metric ton and increases annually
above inflation.

State-regulated
Electric Service
Territory

Multiple scenarios are
generated using a range
of fuel price and CO2
price inputs.
Applying the scenario
planning process at the
state-regulated electric
companies
Our electric operating companies
are subject to the jurisdiction of
their respective state PSCs. These
regulatory agencies have broad
authority over the companies,
including approval of new
supply-side and demand-side
resources and related cost
recovery rates.
At varying frequencies and under a
variety of circumstances, the electric
operating companies file with their
respective PSCs economic analyses
of recommendations or decisions
using the scenario planning process.
Accordingly, decisions made by
an electric operating company
regarding its assets, including those
requiring specific PSC approval, are
in the best interest of its customers,
taking into account a wide variety
of factors, and based on the best
information available at the time
the decisions are made.

We consider the potential for
retirement of generating units
as a part of our overall resource
strategy. For example:
ff If an electric generating unit is
not able to achieve required
emissions reductions in a
cost-effective manner, we
evaluate other options, such as
switching fuels, finding alternate
methods to comply or retiring
the unit and replacing it with
another resource if needed.
If environmental controls are
required for a unit to remain in
compliance, then the economic
value of the unit, including
future operating costs, must
be considered to determine
whether it is in the best interest
of customers to install the
required control technology or to
retire the unit and, if necessary,
replace it with another resource.
Typically, an environmental
strategy is also compiled on
a unit level and reviewed
annually based on the most
current information.

ff Along with a quantitative
economic review, we also
consider other qualitative
factors such as fuel diversity,
impacts to local communities,
and operational flexibility
when making major
generation decisions.
Our state-regulated electric
operating companies are committed
to proposing and seeking approval
of energy deployment options in
each state jurisdiction's resource
planning process that coincide
with a transition to a low- to nocarbon future. These resources, for
example, may include: advanced
natural gas generating units,
nuclear, renewables, energy
efficiency, and demand response.
Each state-regulated electric
operating company will work within
its state’s regulatory framework
to ensure that carbon reduction
efforts are supportive of customers’
desires for clean, safe, reliable and
affordable energy.
Planning for a low-carbon future

21

 Details about emissions reporting
Our estimated 2017 GHG
emissions (CO2 equivalent) were
approximately 97 million metric
tons. This represents a carbon
emissions reduction of 36 percent as
compared to 2007 levels.
To better represent GHG emission
reductions, we are transitioning
to a 2007 baseline year that
represents Southern Company's
maximum emissions year, and we
are continuing to use a calculation
methodology consistent with
EPA’s GHGRP methodology. Our
actions and diverse generation
portfolio have resulted in a GHG
emission reduction of 36 percent
from 2007 through 2017. Based on
ownership, or financial control of
facilities, the GHG emissions are
calculated using methods required
by GHGRP, including the GHGRP’s
global warming potentials and
emission factors.8
The majority of our GHG emissions
result from the use of fossil fuels to
generate electricity, which results
in emissions of three GHGs: CO2,
CH4 and N2O. More than 99 percent
of the system’s electric generation
GHG emissions are CO2. Alabama
Power, Georgia Power, Gulf Power,
Mississippi Power, Southern Power,
Southern Company Gas, Southern
Electric Generating Company and
PowerSecure all emit CO₂, CH₄
and N₂O.

8 

22

We have reported natural gas CH4
emissions through EPA’s Natural Gas
STAR voluntary reporting program
for nearly two decades, and
through GHGRP since 2011. In 2016,
Southern Company Gas’ fugitive
methane emissions intensity
rate was 0.25 percent, where the
total methane emissions were
1,900 million standard cubic feet
(MMscf) and methane throughput
was approximately 767,000 MMscf.

Southern Company Gas continues to
work diligently with state PSCs to
remove aging pipe from its system,
which helps reduce leakage-related
GHG emissions. All seven local
distribution companies continue
to achieve methane emissions
reductions through system
modernization. An overview of the
Southern Company Gas pipeline
replacement program can be viewed
on our website.

The emissions reported under the GHGRP are verified by EPA and based on units for which the system has operational
control. The majority of the system’s electricity generation GHG emissions are measured with continuous emissions
monitoring systems (CEMS) according to EPA’s Title 40 of the U.S. Code of Federal Regulations Part 75 specifications.
Emissions not monitored by CEMS are calculated based on GHGRP methodology.

 Governance
Board oversight of risk
The Board of Directors is responsible
for oversight of strategy and risk,
including risks related to carbon
emissions and related matters. The
Board recognizes the potential
impacts on our business and the
transitional risks and opportunities
the utility industry faces in a
low carbon future. The Board
regularly assesses the Company’s
short- and long-term business
strategy, including the long-term
sustainability of its business, in
light of carbon-related risks and
opportunities. Issues that are
the subject of active discussions
at Board and Board committee
meetings include carbon-related
risk, regulatory compliance, energy
efficiency, renewable energy and
emerging technology.

Board and management
engagement in enterprise
risk management program
All Board members are actively
involved in our risk oversight
function. The Board reviews
our risk profile and ensures that
oversight of each risk is properly
designated to an appropriate Board
committee or the full Board. Each
Board committee provides ongoing

oversight for the risks designated
to it, reports to the Board on their
oversight activities and elevates
review of risk issues to the Board as
appropriate. Independent Directors
chair each Board committee, and
each committee has a designated
member of executive management
as the primary responsible officer
for providing information and
updates to the Board committee
related to significant risks. There
is regular, open communication
between management and the
Board on these topics throughout
the year.
We have a robust enterprise
risk management program
that facilitates identification,
communication and management
of the most significant risks in
a formal process. Within this
framework, risk governance and
oversight are largely embedded
in existing organizational and
control structures. As a part of the
governance structure, the Chief
Risk Officer is accountable to the
Chief Executive Officer and the
Board for ensuring that enterprise
risk oversight and management
processes are established and
operating effectively. Officers and
senior managers are responsible
for working across the business

to manage enterprise-level risk,
monitor the performance of risk
mitigation strategies and identify
emerging risks. They meet routinely
and engage regularly with the Board
and its committees throughout
the year.

Board committees
The Operations, Environmental
and Safety (OE&S) Committee of
the Board oversees and reports
to the full Board on significant
environmental and safety policy
and planning issues, including:
ff Policies and operating matters
before environmental regulatory
agencies; compliance with
environmental, health, and
safety laws and regulations;
transmission reliability and
pipeline safety standards.
ff Programs, policies and
procedures to protect the
environment and provide a
healthy and safe environment
for employees, customers,
contractors and the public.
ff Significant technology initiatives.
ff Risks and associated risk
management activities related to
significant system operation.

Planning for a low-carbon future

23

 The OE&S Committee receives
regular reports on operating units’
safety and environmental activities.
The Committee also engages in
robust discussions about carbon
emissions and carbon risks, strategic
planning and scenario planning
and analysis.
The Nominating, Governance and
Corporate Responsibility (NG&CR)
Committee of the Board oversees
and reports to the full Board on
the composition and competencies
of the Board and its committees
and corporate governance
policies, including:
ff Evaluating the composition
and size of the Board to assess
the skills and expertise that are
represented on the Board and
in individual directors, as well
as the skills and experience that
the Board may find valuable in
the future.
ff Reviewing and making
recommendations to the Board
regarding the Company’s
practices and positions to
advance its corporate citizenship,
including environmental,
sustainability and corporate
social responsibility initiatives.

24

ff Reviewing and making
recommendations to the Board
regarding proposed responses to
shareholder proposals.
ff Overseeing the Company’s
shareholder engagement
program, and making
recommendations to the Board
regarding its involvement in
shareholder engagement.

The NG&CR Committee receives
updates about our ongoing
shareholder engagement program
and feedback received from
shareholders on environmental,
social and governance (ESG) topics,
including climate-related risks
and disclosures.

 Engagement, transparency and further information
Engagement with
stakeholders
We place great importance on
consistent dialogue with all our
stakeholders, including customers,
employees, and investors. We
regularly engage in discussions
with, and provide comprehensive
information for, constituents
interested in our citizenship,
stewardship and environmental
compliance. We are receptive to
stakeholder concerns, and we
are committed to transparency
and proactive interactions with
our investors. We regularly
communicate with our shareholders
to better understand their
viewpoints, gather input on our
business strategy and execution and
obtain feedback regarding other
matters of investor interest.
ff Our management team
participates in numerous investor
meetings each year to discuss our
business, our strategy and our
financial results. These meetings
include in-person, telephone, and
webcast conferences.
ff Since 2011, we have held regular
environmental stakeholder
forums, webinars, calls and
meetings covering a range of
topics, including regulatory and
policy issues, system risk and
planning related to renewables,
energy efficiency and greenhouse
gas matters. Members of senior
management participate in
these events.
ff We began a more systematic
approach to shareholder
outreach with respect to ESG
topics in 2014 that involved
members of our senior
management. The shareholder
outreach team expanded in 2016

to include independent Directors.
The NG&CR Committee currently
oversees the shareholder
engagement program on behalf
of the Board.

Shareholder outreach over
the last year
In 2017 and early 2018, we reached
out to our 100 largest shareholders
representing more than 35 percent
of our outstanding shares and
to our shareholders that are
not among our 100 largest but
expressed an interest in engaging
with us. We requested meetings
to discuss ESG topics, as well as
any other topics of interest to
shareholders. We received positive
responses from, and had meetings
by telephone or in person with,
shareholders representing more
than 31 percent of our outstanding
shares, including index funds, union
and public pension funds, activelymanaged funds and sociallyresponsible investment funds.
Participants in calls and meetings
with our largest shareholders
included one or more independent
Directors, the Chief Executive
Officer, the Chief Financial Officer,
the General Counsel, the Chief
Human Resources Officer and the
Vice President for Environmental
and System Planning. Shareholder
feedback is reported to our Board
committees throughout the year.

Response to 2017
shareholder proposal
At the 2017 annual meeting of
shareholders, a proposal from the
Sisters of St. Dominic of Caldwell,
New Jersey and certain colleagues
at the Interfaith Center on
Corporate Responsibility requesting
a report on our strategy related to

the IEA 2DS received 46 percent
support. Although the proposal
did not pass, we began working
with the proponents on disclosures
responsive to the proposal. Over the
past year, we have had a number
of collaborative and constructive
in-person meetings and telephone
conferences with the proponents to
discuss the proposal and this report.

Transparency on ESG data
We are focused on increasing
transparency and accessibility
to information about our carbon
emissions. We have worked with
the Edison Electric Institute (EEI)
and its member companies, our
investors and other stakeholders
to develop an ESG/Sustainability
template that is consistent across
the electric sector. The goals of this
initiative include:
ff Provide consistent information
to investors;
ff Allow integration of
ESG/Sustainability data
and performance;
ff Provide clarity of risks (e.g.,
stranded assets, regulatory
issues, etc.) and opportunities
(e.g., investments in renewables,
etc.) and how they are
being managed;
ff Provide insight into growth
strategy, assumptions and
future trajectory;
ff Provide both qualitative and
quantitative information; and
ff Serve as a primary reporting
channel for consolidated ESG/
Sustainability information
relevant to investors and
other stakeholders.

Planning for a low-carbon future

25

 Where you can find more information
2018
Notice of
Annual Meeting of Stockholders
and Proxy Statement

2017
Corporate Responsibility Report
The energy to lead

Annual Report

2018 Proxy Statement

Corporate Responsibility Reports

Our EEI/ESG Sustainability Report can be viewed on the Corporate Responsibility section of our website.

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, statements
concerning GHG reduction strategies,
demand outlooks, expected future cost
and benefit analyses, other items related
to Southern Company’s future business
plans, and expected in-service dates
for Plant Vogtle Units 3 and 4. Southern
Company cautions that there are certain
factors that can cause actual results
to differ materially from the forwardlooking information that has been
provided. The reader is cautioned not
to put undue reliance on this forwardlooking 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

26

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; the
ability to control costs and avoid cost
overruns during the development,
construction, and operation of facilities,
which include the development and
construction of generating facilities with
designs that have not been previously
constructed, including changes in
labor costs and productivity, adverse
weather conditions, shortages and
inconsistent quality of equipment,
materials, and labor, contractor or
supplier delay, non-performance
under construction, operating, or other
agreements, operational readiness,
including specialized operator training and
required site safety programs, unforeseen
engineering or design problems, start-up

activities (including major equipment
failure and system integration), and/or
operational performance; the ability
to construct facilities in accordance
with the requirements of permits and
licenses (including satisfaction of Nuclear
Regulatory Commission requirements), to
satisfy any environmental performance
standards and the requirements of tax
credits and other incentives, and to
integrate facilities into the Southern
Company system upon completion of
construction; 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.

 Southern Company
system footprint

34
61
PH
2

CC

3

PH

SS

1

1

SS
SS

53
PH

3

PH 11

69

17

LNG

LNG

1

PH

SE

B

4

8

CC

52

CT

LNG

CC CT

39

242

CC CT
CT

LNG
LNG

19

PH

PH

3

PH

7

11 PH

PH
2

3

PH

PH

20

SS
PH
3

23

5
PH

PH

21

PH 11

LNG

SS

4

5

SS

CC

SS
PH

PH
LNG

805

SE

CC SS
CT

Facilities in operation or under
development as of March 20, 2018

Electric
Gas
NOTE: On October 16, 2017,
Southern Company Gas announced
the pending disposition of its
Elizabethtown Gas and Elkton
Gas businesses.

CC

Combined cycle facility

CT

Peaking facility

B

Biomass facility

S

Solar facility

W

Wind facility

Gas pipelines
Southern Natural Gas
Southern Company Gas
Pipeline projects

Southern Company Gas

Southern Power

Service territories

PowerSecure
#

Owned and managed
sites per state

PH

LNG

LNG facilities

PH

Pivotal Home Solutions
NOTE: On April 11, 2018, Southern
Company Gas announced the pending
disposition of Pivotal Home Solutions.

SE

Sequent Energy Management

SS

SouthStar
Natural gas storage

 southerncompany.com
April 2018_4535

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