For the transition period from to

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes  ☑ No  ¨

Indicate by check mark whether the registrants have submitted electronically and posted on their corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such files). Yes  ☑ No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No  ☑ (Response applicable to all registrants.)

This combined Form 10-Q is separately filed by The Southern Company, Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company, Southern Power Company, and Southern Company Gas. Information contained herein relating to any individual registrant is filed by such registrant on its own behalf. Each registrant makes no representation as to information relating to the other registrants.

DEFINITIONS

(continued)

DEFINITIONS

(continued)

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This Quarterly Report on Form 10-Q contains forward-looking statements. Forward-looking statements include, among other things, statements concerning regulated rates, the strategic goals for the wholesale business, customer and sales growth, economic conditions, fuel and environmental cost recovery and other rate actions, current and proposed environmental regulations and related compliance plans and estimated expenditures, pending or potential litigation matters, access to sources of capital, financing activities, completion dates of construction projects, filings with state and federal regulatory authorities, federal income tax benefits, estimated sales and purchases under power sale and purchase agreements, and estimated construction and other plans and expenditures. In some cases, forward-looking statements can be identified by terminology such as "may," "will," "could," "should," "expects," "plans," "anticipates," "believes," "estimates," "projects," "predicts," "potential," or "continue" or the negative of these terms or other similar terminology. There are various factors that could cause actual results to differ materially from those suggested by the forward-looking statements; accordingly, there can be no assurance that such indicated results will be realized. These factors include:

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

(continued)

The registrants expressly disclaim any obligation to update any forward-looking statements.

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

The accompanying notes as they relate to Southern Company are an integral part of these condensed consolidated financial statements.

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

The accompanying notes as they relate to Southern Company are an integral part of these condensed consolidated financial statements.

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

The accompanying notes as they relate to Southern Company are an integral part of these condensed consolidated financial statements.

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

The accompanying notes as they relate to Southern Company are an integral part of these condensed consolidated financial statements.

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

The accompanying notes as they relate to Southern Company are an integral part of these condensed consolidated financial statements.

SECOND QUARTER 2017 vs. SECOND QUARTER 2016

AND

YEAR-TO-DATE 2017 vs. YEAR-TO-DATE 2016

Southern Company is a holding company that owns all of the common stock of the traditional electric operating companies and the parent entities of Southern Power and Southern Company Gas and owns other direct and indirect subsidiaries. Discussion of the results of operations is focused on the Southern Company system's primary businesses of electricity sales by the traditional electric operating companies and Southern Power and the distribution of natural gas by Southern Company Gas. The four traditional electric operating companies are vertically integrated utilities providing electric service in four Southeastern states. Southern Power constructs, acquires, owns, and manages power generation assets, including renewable energy projects, and sells electricity at market-based rates in the wholesale market. Southern Company Gas distributes natural gas through natural gas distribution utilities in seven states and is involved in several other complementary businesses including gas marketing services, wholesale gas services, and gas midstream operations. Southern Company's other business activities include providing energy technologies and services to electric utilities and large industrial, commercial, institutional, and municipal customers. Customer solutions include distributed generation systems, utility infrastructure solutions, and energy efficiency products and services. Other business activities also include investments in telecommunications, leveraged lease projects, and gas storage facilities. For additional information, see BUSINESS – "The Southern Company System – Traditional Electric Operating Companies," " – Southern Power," " – Southern Company Gas," and " – Other Businesses" in Item 1 of the Form 10-K.

Southern Company continues to focus on several key performance indicators. These indicators include customer satisfaction, plant availability, electric and natural gas system reliability, execution of major construction projects, and earnings per share.

See RESULTS OF OPERATIONS – " Estimated Loss on Kemper IGCC ," FUTURE EARNINGS POTENTIAL – " Construction Program ," and Note (B) to the Condensed Financial Statements under " Regulatory Matters – Georgia Power – Nuclear Construction " and " Integrated Coal Gasification Combined Cycle " herein for additional information regarding the construction program. For information about Southern Power's acquisitions and construction of renewable energy facilities, see Note (I) to the Condensed Financial Statements under " Southern Power " herein.

Kemper IGCC

On June 21, 2017, the Mississippi PSC stated its intent to issue an order (which occurred on July 6, 2017) directing Mississippi Power to pursue a settlement under which the Kemper County energy facility would be operated as a natural gas plant, rather than an IGCC plant, and address all issues associated with the Kemper IGCC (Kemper Settlement Order). The Kemper Settlement Order established a new docket for the purposes of pursuing a global settlement of costs of the Kemper IGCC (Kemper IGCC Settlement Docket). The Mississippi PSC requested any such proposed settlement agreement reflect: (i) at a minimum, no rate increase to Mississippi Power customers (with a rate reduction focused on residential customers encouraged); (ii) removal of all cost risk to customers associated with the Kemper IGCC gasifier and related assets; and (iii) modification or amendment of the CPCN for the Kemper IGCC to allow only for ownership and operation of a natural gas facility.

Although the ability to achieve a negotiated settlement is uncertain, Mississippi Power intends to pursue any available settlement alternatives. In addition, the Kemper Settlement Order provides that, in the event a settlement agreement is not reached, the Mississippi PSC reserves its right to take any appropriate steps, including issuing an order to show cause as to why the CPCN for the Kemper IGCC should not be revoked.

On June 28, 2017, Mississippi Power notified the Mississippi PSC that it would begin a process to suspend operations and start-up activities on the gasifier portion of the Kemper IGCC, given the uncertainty as to the future of the gasifier portion of the Kemper IGCC. Mississippi Power expects to continue to operate the combined cycle portion of the Kemper IGCC as it has done since August 2014.

At the time of project suspension, the total cost estimate for the Kemper IGCC was approximately $7.38 billion, including approximately $5.95 billion of costs subject to the construction cost cap, and was net of the $137 million in additional grants from the DOE received on April 8, 2016 (Additional DOE Grants). Mississippi Power recorded pre-tax charges to income for revisions to the cost estimate subject to the construction cost cap totaling $196 million ($121 million after tax) in the second quarter through May 31, 2017 and a total of $305 million ($188 million after tax) for year-to-date through May 31, 2017. In the aggregate, Mississippi Power incurred charges of $3.07 billion ($1.89 billion after tax) as a result of changes in the cost estimate above the cost cap for the Kemper IGCC through May 31, 2017. The May 31, 2017 cost estimate included approximately $175 million of estimated costs to be incurred beyond the then-estimated in-service date of June 30, 2017 that were expected to be subject to the $2.88 billion cost cap.

At June 30, 2017, approximately $3.3 billion in actual Kemper IGCC costs were not reflected in Mississippi Power's retail and wholesale rates, of which $0.5 billion was related to the combined cycle and associated facilities and $2.8 billion was related to the gasification portions of the Kemper IGCC.

While the ultimate disposition of the gasification portions of the Kemper IGCC remains subject to the Mississippi PSC's jurisdiction, including the potential resolution of the matters addressed in the Kemper Settlement Order, given the Mississippi PSC's stated intent regarding no further rate increase for the Kemper County energy facility, cost recovery of the gasification portions is no longer probable; therefore, Mississippi Power recorded an additional charge to income in June 2017 of $2.8 billion ($2.0 billion after tax), which includes estimated costs associated with the gasification portions of the plant and lignite mine. In the event the gasification portions of the project are ultimately canceled, additional pre-tax costs currently estimated at approximately $100 million to $200 million are expected to be incurred.

Total pre-tax charges to income for the estimated probable losses on the Kemper IGCC were $3.0 billion ($2.1 billion after tax) for the second quarter 2017 and $3.1 billion ($2.2 billion after tax) for the six months ended June 30, 2017. In the aggregate, since the Kemper IGCC project started, Mississippi Power has incurred charges of $6.0 billion ($3.9 billion after tax) through June 30, 2017.

As of June 30, 2017, Mississippi Power has recorded a total of approximately $1.3 billion in costs associated with the combined cycle portion of the Kemper IGCC including transmission and related regulatory assets, of which $0.8 billion is included in retail and wholesale rates. The $0.5 billion not included in current rates includes costs in excess of the original 2010 estimate for the combined cycle portion of the facility, as well as the 15% that was previously contracted to SMEPA. Mississippi Power has calculated the revenue requirements resulting from these remaining costs, using reasonable assumptions for amortization periods, and expects them to be recovered through rates consistent with the Mississippi PSC's requested settlement conditions. The ultimate outcome will be determined by the Mississippi PSC in the Kemper IGCC Settlement Docket proceedings.

For additional information on the Kemper IGCC, including information on the project economic viability analysis, pending lawsuits, and an ongoing SEC investigation, see Note 3 to the financial statements of Southern Company under "Integrated Coal Gasification Combined Cycle" in Item 8 of the Form 10-K and FUTURE EARNINGS POTENTIAL – " Integrated Coal Gasification Combined Cycle " and "Other Matters" and Note (B) to the Condensed Financial Statements under " Integrated Coal Gasification Combined Cycle " herein.

Nuclear Construction

On March 29, 2017, the EPC Contractor filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. To provide for a continuation of work at Plant Vogtle Units 3 and 4, Georgia Power, acting for itself and as agent for the Vogtle Owners, entered into an interim assessment agreement with the EPC Contractor (Interim Assessment Agreement), which the bankruptcy court approved on March 30, 2017. On June 9, 2017, Georgia Power

and the other Vogtle Owners and Toshiba entered into a settlement agreement regarding the Toshiba Guarantee (Guarantee Settlement Agreement). Pursuant to the Guarantee Settlement Agreement, Toshiba acknowledged the amount of its obligation under the Toshiba Guarantee is $3.68 billion (Guarantee Obligations), of which Georgia Power's proportionate share is approximately $1.7 billion, and that the Guarantee Obligations exist regardless of whether Plant Vogtle Units 3 and 4 are completed. Additionally, on June 9, 2017, Georgia Power, acting for itself and as agent for the other Vogtle Owners, and the EPC Contractor entered into a services agreement (Services Agreement), which was amended and restated on July 20, 2017, for the EPC Contractor to transition construction management of Plant Vogtle Units 3 and 4 to Southern Nuclear and to provide ongoing design, engineering, and procurement services to Southern Nuclear. On July 27, 2017, the Services Agreement, and the EPC Contractor's rejection of the Vogtle 3 and 4 Agreement, became effective upon approval by the DOE and the Interim Assessment Agreement expired pursuant to its terms. The Services Agreement will continue until the start-up and testing of Plant Vogtle Units 3 and 4 is complete and electricity is generated and sold from both units. The Services Agreement is terminable by the Vogtle Owners upon 30 days' written notice.

Georgia Power and the other Vogtle Owners are continuing to conduct comprehensive schedule and cost-to-complete assessments, as well as cancellation cost assessments, to determine the impact of the EPC Contractor's bankruptcy filing on the construction cost and schedule for Plant Vogtle Units 3 and 4. Georgia Power will continue working with the Georgia PSC and the other Vogtle Owners to determine future actions related to Plant Vogtle Units 3 and 4, including, but not limited to, the status of construction and rate recovery, and currently expects to include its recommendation in its seventeenth Vogtle Construction Monitoring (VCM) report to be filed with the Georgia PSC in late August 2017.

An inability or other failure by Toshiba to perform its obligations under the Guarantee Settlement Agreement could have a further material impact on the net cost to the Vogtle Owners to complete construction of Plant Vogtle Units 3 and 4 and, therefore, on Southern Company's financial statements. The ultimate outcome of these matters also is dependent on the completion of the assessments described above, as well as the related regulatory treatment, and cannot be determined at this time. See FUTURE EARNINGS POTENTIAL – " Construction Program – Nuclear Construction" herein for additional information on Plant Vogtle Units 3 and 4, including Georgia Power's preliminary cost-to-complete and cancellation cost assessments for Plant Vogtle Units 3 and 4.

Net Income (Loss)

N/M - Not meaningful

Consolidated net loss attributable to Southern Company was $(1.4) billion ( $(1.38) per share) for the second quarter 2017 compared to net income of $623 million ( $0.67 per share) for the corresponding period in 2016 . The decrease was primarily due to charges of $3.0 billion and $81 million in the second quarter 2017 and 2016 , respectively, related to the Kemper IGCC at Mississippi Power. Also contributing to the change were increases in renewable energy sales at Southern Power, higher retail electric revenues resulting from increases in base rates, and $49 million in net income from Southern Company Gas, which was acquired on July 1, 2016, partially offset by higher interest expense.

Consolidated net loss attributable to Southern Company was $(723) million ( $(0.73) per share) for year-to-date 2017 compared to net income of $1.1 billion ( $1.20 per share) for the corresponding period in 2016 . The decrease was primarily due to charges of $3.1 billion and $134 million for year-to-date 2017 and 2016 , respectively, related to the Kemper IGCC at Mississippi Power. Also contributing to the change was $288 million in net income from Southern Company Gas, increases in renewable energy sales at Southern Power, and higher retail electric revenues

resulting from increases in base rates, partially offset by higher interest expense and a decrease in retail electric revenues resulting from milder weather for year-to-date 2017 compared to the corresponding period in 2016.

See Note (B) to the Condensed Financial Statements under " Integrated Coal Gasification Combined Cycle " herein for additional information regarding the Kemper IGCC and Note (I) to the Condensed Financial Statements under " Southern Company " herein for additional information on the Merger.

Retail Electric Revenues

In the second quarter 2017 , retail electric revenues were $3.8 billion compared to $3.7 billion for the corresponding period in 2016 . For year-to-date 2017 , retail revenues were $7.2 billion compared to $7.1 billion for the corresponding period in 2016.

Details of the changes in retail electric revenues were as follows:

Revenues associated with changes in rates and pricing increased in the second quarter and year-to-date 2017 when compared to the corresponding periods in 2016 primarily due to a Rate RSE increase at Alabama Power effective January 1, 2017, the recovery of Plant Vogtle Units 3 and 4 construction financing costs under the NCCR tariff at Georgia Power, and an ECO Plan rate increase at Mississippi Power implemented in the third quarter 2016. Additionally, the second quarter 2017 increase was partially offset by the rate pricing effect of decreased customer usage and lower contributions from commercial and industrial customers under a rate plan for variable demand-driven pricing at Georgia Power.

See Note 3 to the financial statements of Southern Company under "Regulatory Matters – Alabama Power" and " – Georgia Power – Rate Plans" in Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements herein for additional information.

Revenues attributable to changes in sales decreased in the second quarter 2017 w hen compared to the corresponding period in 2016 . Industrial KWH sales decreased 0.8% in the second quarter 2017 primarily in the paper, primary metals, and transportation sectors, partially offset by increased sales in the chemicals sector. Despite a more stable dollar and improving global economy, the industrial sector remains constrained by economic policy uncertainty. Weather-adjusted residential KWH sales decreased 0.4% in the second quarter 2017 primarily due to decreased customer usage primarily resulting from increased efficiency improvements in residential appliances and lighting, partially offset by customer growth. Weather-adjusted commercial KWH sales were flat in the second quarter 2017 primarily due to decreased customer usage resulting from an increase in electronic commerce transactions and energy saving initiatives, offset by customer growth.

Revenues attributable to changes in sales decreased for year-to-date 2017 when compared to the corresponding period in 2016 . Industrial KWH sales decreased 1.5% for year-to-date 2017 primarily in the paper, stone, clay, and

glass, and transportation sectors. Despite a more stable dollar and improving global economy, the industrial sector remains constrained by economic policy uncertainty. Weather-adjusted commercial KWH sales decreased 0.9% for year-to-date 2017 primarily due to decreased customer usage resulting from an increase in electronic commerce transactions and energy saving initiatives, partially offset by customer growth. Weather-adjusted residential KWH sales increased 0.2% for year-to-date 2017 primarily due to customer growth, partially offset by decreased customer usage primarily resulting from efficiency improvements in residential appliances and lighting.

Fuel and other cost recovery revenues increased $11 million and $58 million in the second quarter and year-to-date 2017 , respectively, when compared to the corresponding periods in 2016 primarily due to an increase in natural gas prices. Electric rates for the traditional electric operating companies include provisions to adjust billings for fluctuations in fuel costs, including the energy component of purchased power costs. Under these provisions, fuel revenues generally equal fuel expenses, includi ng the energy component of PPA costs, and do not affect net income. The traditional electric operating companies each have one or more regulatory mechanisms to recover other costs such as environmental and other compliance costs, storm damage, new plants, and PPA capacity costs.

Wholesale Electric Revenues

Wholesale electric revenues consist of PPAs primarily with investor-owned utilities and electric cooperatives and short-term opportunity sales. Wholesale electric revenues from PPAs (other than solar and wind PPAs) have both capacity and energy components. Capacity revenues generally represent the greatest contribution to net income and are designed to provide recovery of fixed costs plus a return on investment. Energy revenues will vary depending on fuel prices, the market prices of wholesale energy compared to the Southern Company system's generation, demand for energy within the Southern Company system's electric service territory, and the availability of the Southern Company system's generation. Increases and decreases in energy revenues that are driven by fuel prices are accompanied by an increase or decrease in fuel costs and do not have a significant impact on net income. Electricity sales from solar and wind PPAs do not have a capacity charge and customers either purchase the energy output of a dedicated renewable facility through an energy charge or through a fixed price for electricity. As a result, Southern Company's ability to recover fixed and variable operations and maintenance expenses is dependent upon the level of energy generated from these facilities, which can be impacted by weather conditions, equipment performance, and other factors. Wholesale electric revenues at Mississippi Power include FERC-regulated municipal and rural association sales as well as market-based sales. Short-term opportunity sales are made at market-based rates that generally provide a margin above the Southern Company system's variable cost to produce the energy.

In the second quarter 2017 , wholesale electric revenues were $618 million compared to $446 million for the corresponding period in 2016 . This increase was primarily related to a $158 million increase in energy revenues and a $14 million increase in capacity revenues. For year-to-date 2017 , wholesale electric revenues were $1.1 billion compared to $842 million for the corresponding period in 2016 . This increase was primarily related to a $276 million increase in energy revenues and a $31 million increase in capacity revenues. The increases in energy revenues primarily related to Southern Power increases in renewable energy sales arising from new solar and wind facilities, sales from new natural gas PPAs, and non-PPA revenues from short-term sales. The increases in capacity revenues primarily resulted from PPAs related to new natural gas facilities and additional customer load requirements at Southern Power.

Natural Gas Revenues

Natural gas revenues represent sales from the natural gas distribution utilities and certain non-regulated operations of Southern Company Gas. Following the Merger, $684 million and $2.2 billion of natural gas revenues are included in the consolidated statements of income for the second quarter and year-to-date 2017 , respectively.

See Note (I) to the Condensed Financial Statements under " Southern Company – Merger with Southern Company Gas " herein for additional information.

Other Revenues

N/M - Not meaningful

In the second quarter 2017 , other revenues were $184 million compared to $99 million for the corresponding period in 2016 . For year-to-date 2017 , other revenues were $326 million compared to $137 million for the corresponding period in 2016 . These increases were primarily due to increases of $60 million and $130 million for the second quarter and year-to-date 2017 , respectively, from products and services at PowerSecure, which was acquired on May 9, 2016, and $32 million and $62 million for the second quarter and year-to-date 2017 , respectively, of revenues from gas marketing products and services at Southern Company Gas following the Merger.

See Note (I) to the Condensed Financial Statements under " Southern Company " herein for additional information on the Merger and the acquisition of PowerSecure.

Fuel and Purchased Power Expenses

In the second quarter 2017 , total fuel and purchased power expenses were $1.3 billion compared to $1.2 billion for the corresponding period in 2016 . The increase was primarily the result of a $154 million increase in the average cost of fuel and purchased power primarily due to higher natural gas prices, partially offset by a $63 million decrease primarily due to the volume of KWHs purchased.

For year-to-date 2017 , total fuel and purchased power expenses were $2.5 billion compared to $2.3 billion for the corresponding period in 2016 . The increase was primarily the result of a $277 million increase in the average cost of fuel and purchased power primarily due to higher natural gas prices, partially offset by an $87 million decrease primarily due to the volume of KWHs purchased.

Fuel and purchased power energy transactions at the traditional electric operating companies are generally offset by fuel revenues and do not have a significant impact on net income. See FUTURE EARNINGS POTENTIAL – " Regulatory Matters – Fuel Cost Recovery " herein for additional information. Fuel expenses incurred under Southern Power's PPAs are generally the responsibility of the counterparties and do not significantly impact net income.

Details of the Southern Company system's generation and purchased power were as follows:

Fuel

In the second quarter 2017 , fuel expense was $1.1 billion compared to $1.0 billion for the corresponding period in 2016 . The increase was primarily due to a 31.3% increase in the average cost of natural gas per KWH generated and a 3.0% increase in the volume of KWHs generated by coal, partially offset by a 13.4% decrease in the average cost of coal per KWH generated and a 4.8% decrease in the volume of KWHs generated by natural gas.

For year-to-date 2017 , fuel expense was $2.1 billion compared to $1.9 billion for the corresponding period in 2016 . The increase was primarily due to a 33.2% increase in the average cost of natural gas per KWH generated and a 4.1% increase in the volume of KWHs generated by coal, partially offset by a 12.4% decrease in the average cost of coal per KWH generated and a 6.6% decrease in the volume of KWHs generated by natural gas.

Purchased Power

In the second quarter 2017 , purchased power expense was $211 million compared to $189 million for the corresponding period in 2016 . The increase was primarily due to a 53.1% increase in the average cost per KWH purchased, primarily as a result of higher natural gas prices, partially offset by a 28.0% decrease in the volume of KWHs purchased.

For year-to-date 2017 , purchased power expense was $390 million compared to $354 million for the corresponding period in 2016 . The increase was primarily due to a 33.3% increase in the average cost per KWH purchased, primarily as a result of higher natural gas prices, partially offset by a 16.8% decrease in the volume of KWHs purchased.

Energy purchases will vary depending on demand for energy within the Southern Company system's electric service territory, the market prices of wholesale energy as compared to the cost of the Southern Company system's generation, and the availability of the Southern Company system's generation.

Cost of Natural Gas

Cost of natural gas represents the cost of natural gas sold by the natural gas distribution utilities and certain non-regulated operations of Southern Company Gas. Following the Merger, $232 million and $951 million of natural gas costs were included in the consolidated statements of income for the second quarter and year-to-date 2017 , respectively.

See Note (I) to the Condensed Financial Statements under " Southern Company – Merger with Southern Company Gas " herein for additional information.

Cost of Other Sales

N/M - Not meaningful

In the second quarter 2017 , cost of other sales was $114 million compared to $58 million for the corresponding period in 2016 . For year-to-date 2017 , cost of other sales was $203 million compared to $77 million for the corresponding period in 2016 . These increases were primarily due to costs related to sales of products and services by PowerSecure, which was acquired on May 9, 2016, and costs related to gas marketing products and services at Southern Company Gas following the Merger. See Note (I) to the Condensed Financial Statements under " Southern Company " herein for additional information.

Other Operations and Maintenance Expenses

In the second quarter 2017 , other operations and maintenance expenses were $1.3 billion compared to $1.1 billion for the corresponding period in 2016 . The increase was primarily due to $213 million in operations and maintenance expenses at Southern Company Gas following the Merger, a $19 million increase associated with new solar, wind, and gas facilities at Southern Power, and a $15 million increase in operations and maintenance expenses at PowerSecure, which was acquired on May 9, 2016. These increases were partially offset by a $24 million decrease in acquisition-related expenses and a $7 million decrease in scheduled outage and maintenance costs at generation facilities.

For year-to-date 2017 , other operations and maintenance expenses were $2.6 billion compared to $2.2 billion for the corresponding period in 2016 . The increase was primarily due to increases of $467 million and $36 million in operations and maintenance expenses from Southern Company Gas and PowerSecure, respectively, a $35 million increase associated with new solar, wind, and gas facilities at Southern Power, and $32.5 million resulting from the write-down of Gulf Power's ownership of Plant Scherer Unit 3 in accordance with a settlement agreement approved by the Florida PSC on April 4, 2017 (2017 Rate Case Settlement Agreement). These increases were partially offset by a $46 million decrease in scheduled outage and maintenance costs at generation facilities, a $26 million decrease in acquisition-related expenses, a $19 million increase in gains from sales of integrated transmission system assets at Georgia Power, a $16 million decrease in customer accounts, service, and sales costs primarily associated with demand-side management costs related to the timing of new programs at Georgia Power, and a $14 million decrease in employee compensation and benefits including pension costs.

See Note (B) to the Condensed Financial Statements under " Regulatory Matters – Gulf Power – Retail Base Rate Cases " herein for additional information regarding the 2017 Rate Case Settlement Agreement and Note (I) to the

Condensed Financial Statements under " Southern Company " herein for additional information related to the Merger and the acquisition of PowerSecure.

Depreciation and Amortization

In the second quarter 2017 , depreciation and amortization was $754 million compared to $569 million for the corresponding period in 2016 . Following the Merger, $125 million in depreciation and amortization for Southern Company Gas is included in the consolidated statements of income for the second quarter 2017 . Additionally, the increase reflects $61 million related to additional plant in service at the traditional electric operating companies and Southern Power, partially offset by $8 million more of a reduction in depreciation in the second quarter 2017 compared to the corresponding period in 2016 at Gulf Power, as authorized in its 2013 rate case settlement approved by the Florida PSC.

For year-to-date 2017 , depreciation and amortization was $1.5 billion compared to $1.1 billion for the corresponding period in 2016 . Following the Merger, $244 million in depreciation and amortization for Southern Company Gas is included in the consolidated statements of income for year-to-date 2017 . Additionally, the increase reflects $122 million related to additional plant in service at the traditional electric operating companies and Southern Power, partially offset by $28 million more of a reduction in depreciation for year-to-date 2017 compared to the corresponding period in 2016 at Gulf Power, as authorized in its 2013 rate case settlement approved by the Florida PSC.

See Note 3 to the financial statements of Southern Company under "Regulatory Matters – Gulf Power – Retail Base Rate Cases" in Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements under " Regulatory Matters – Gulf Power – Retail Base Rate Cases " herein for additional information. Also see Note (I) to the Condensed Financial Statements under " Southern Company – Merger with Southern Company Gas " herein for additional information.

Taxes Other Than Income Taxes

In the second quarter 2017 , taxes other than income taxes were $308 million compared to $255 million for the corresponding period in 2016 . For year-to-date 2017 , taxes other than income taxes were $638 million compared to $511 million for the corresponding period in 2016 . These increases were primarily related to $44 million and $114 million in the second quarter and year-to-date 2017 , respectively, in taxes other than income taxes associated with Southern Company Gas following the Merger.

See Note (I) to the Condensed Financial Statements under " Southern Company – Merger with Southern Company Gas " herein for additional information.

Estimated Loss on Kemper IGCC

N/M - Not meaningful

Prior to the project suspension on June 28, 2017, estimated probable losses on the Kemper IGCC of $196 million and $305 million were recorded at Mississippi Power in the second quarter and year-to-date 2017, respectively, compared to $81 million and $134 million in the second quarter and year-to-date 2016 , respectively. These losses reflected revisions of estimated costs expected to be incurred on Mississippi Power's construction of the Kemper IGCC prior to project suspension in excess of the $2.88 billion cost cap established by the Mississippi PSC, net of $245 million of grants awarded to the project by the DOE under the Clean Coal Power Initiative Round 2 (Initial DOE Grants) and excluding the cost of the lignite mine and equipment, the cost of the CO 2 pipeline facilities, AFUDC, and certain general exceptions, including change of law, force majeure, and beneficial capital (which exists when Mississippi Power demonstrates that the purpose and effect of the construction cost increase is to produce efficiencies that will result in a neutral or favorable effect on customers relative to the original proposal for the CPCN) (Cost Cap Exceptions).

While the ultimate disposition of the gasification portions of the Kemper IGCC remains subject to the Mississippi PSC's jurisdiction, including the potential resolution of the matters addressed in the Kemper Settlement Order, given the Mississippi PSC's stated intent regarding no further rate increase for the Kemper County energy facility, cost recovery of the gasification portions is no longer probable; therefore, Mississippi Power recorded an additional charge to income in June 2017 of $2.8 billion, which includes estimated costs associated with the gasification portions of the plant and lignite mine.

See FUTURE EARNINGS POTENTIAL – " Construction Program – Integrated Coal Gasification Combined Cycle " and Note (B) to the Condensed Financial Statements under " Integrated Coal Gasification Combined Cycle " herein for additional information.

Allowance for Equity Funds Used During Construction

In the second quarter 2017 , AFUDC equity was $58 million compared to $45 million in the corresponding period in 2016 . For year-to-date 2017 , AFUDC equity was $115 million compared to $98 million in the corresponding period in 2016 . These increases primarily resulted from a higher AFUDC rate and an increase in Kemper IGCC CWIP subject to AFUDC prior to project suspension at Mississippi Power.

See FUTURE EARNINGS POTENTIAL – " Construction Program – Integrated Coal Gasification Combined Cycle " and Note (B) to the Condensed Financial Statements under " Integrated Coal Gasification Combined Cycle " herein for additional information.

Earnings from Equity Method Investments