Southern (SO) risk factors, 2026 10-K

Southern's 2026 10-K lists 33 risk factors in 2 groups. Against the prior year's 33: 3 new, 3 dropped, 11 substantially reworded.

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Risk factors listed
332 groups
New this year
3vs 33 last year
Dropped
3since the prior 10-K
Substantially reworded
11of those kept
Section length
12k wordsItem 1A

What the changes say

  • Nuclear operations are newly quantified as material: eight units supplied 22% of Alabama Power’s and 36% of Georgia Power’s generation in 2025.
  • New GHG policies could restrict natural-gas use while electrification may increase electricity demand and reduce gas demand.
  • Environmental compliance costs remain significant, with less certainty that rates will recover them; supply-chain risks now emphasize tariffs and trade measures.

What changed since the prior 10-K

New

  • New

    FUTURE EARNINGS POTENTIAL – "Income Tax Matters – Federal Tax Legislation" in Item 7 herein for additional information

    Future tax, regulatory, legal, and policy changes or enforcement could impose substantial costs on Southern Company and its subsidiaries.

  • New

    operating companies operate. This process relies on information and assumptions from internal and external sources, which may or may not be accurate in predicting future outcomes

    New GHG policies could accelerate decarbonization, restrict natural-gas use, increase electricity demand, or reduce gas demand and recoverability.

  • NewOPERATIONAL RISKS

    Table of Contents Index to Financial Statements

    Safety, regulatory, cyber, physical, environmental, and financial problems at eight Alabama Power and Georgia Power nuclear units could cause fines or closures beyond insurance.

Dropped

  • Dropped

    however, that all such costs will be recovered. The Registrants expect future compliance expenditures will continue to be significant

  • Dropped

    gas could likewise result in increased costs to the Southern Company system and affect the demand for natural gas as well as the prices charged to customers and the competitive position of natural gas

  • DroppedOPERATIONAL RISKS

    interconnect facilities to transmission grids; and increased financing costs as a result of changes in interest rates or as a result of project delays

    EPA and state rules governing air, GHG, water, and coal combustion residuals could require significant compliance spending.

Reworded

  • 87% rewritten

    The Southern Company system's costs of compliance with environmental laws and regulations and satisfying related AROs are significant

    Adds that future environmental compliance expenditures will remain significant and that EPA Clean Air and Clean Water Act costs may not be fully recovered.

    Was: The Southern Company system's costs of compliance with environmental laws and satisfying related AROs are significant

  • 82% rewritten

    The Southern Company system may be exposed to regulatory and financial risks related to the impact of GHG legislation, regulation, and emission reduction goals

    Adds adverse publicity risk from conflicting public views about fossil-fuel use while retaining unrecovered GHG-cost exposure.

  • 67% rewrittenOPERATIONAL RISKS

    The financial performance of Southern Company and its subsidiaries may be adversely affected if the subsidiaries are unable to successfully operate their facilities or perform certain corporate functions

    Adds joint-venture arrangements and counterparty performance failures to threats that could disrupt facilities or corporate functions.

  • 57% rewrittenOPERATIONAL RISKS

    Supply chain disruptions, inflation, elevated interest rates, trade policies (including tariffs and other trade measures), and other economic factors could negatively impact operations

    Expands geopolitical and supply-chain language to regional conflicts and U.S. and foreign trade policies, including tariffs and other trade measures.

    Was: Supply chain disruptions, inflation, elevated interest rates, tariffs, and other economic factors could negatively impact operations

  • 52% rewritten

    UTILITY REGULATORY, LEGISLATIVE, AND LITIGATION RISKS

    Adds risk that reduced, eliminated, or expired renewable-energy incentives or restrictions could reduce renewable-project demand; removes several specific regulatory examples.

  • 41% rewrittenFINANCIAL, ECONOMIC, AND MARKET RISKS

    Uncertainty in demand for energy can result in lower earnings or higher costs

    No substantive change; demand forecasts still depend on economic conditions, customer usage, efficiency programs, and technology adoption.

  • 35% rewrittenFINANCIAL, ECONOMIC, AND MARKET RISKS

    Electric power and natural gas supply are generally seasonal businesses. The Subsidiary Registrants have historically sold less power and natural gas when weather conditions are milder

    Broadens weather risk to extreme temperatures and states that damage may reduce revenue and/or earnings, rather than revenue alone.

  • 28% rewrittenFINANCIAL, ECONOMIC, AND MARKET RISKS

    The businesses of the Registrants and Nicor Gas are dependent on their ability to successfully access capital through capital markets and financial institutions

    Adds projected electric-demand capital spending and unexpected funding needs for volatile commodity costs and severe-storm restoration.

  • 25% rewrittenOPERATIONAL RISKS

    The Subsidiary Registrants are subject to workforce factors that could affect operations

  • 25% rewrittenFINANCIAL, ECONOMIC, AND MARKET RISKS

    Failure to comply with debt covenants or conditions could adversely affect the ability of the Registrants, SEGCO, Southern Company Gas Capital, or Nicor Gas to execute future borrowings

  • 24% rewrittenFINANCIAL, ECONOMIC, AND MARKET RISKS

    Customers could also voluntarily reduce their consumption of energy in response to decreases in their disposable income, elimination of government energy assistance programs, government shutdowns, increases in energy prices, or individual conservation efforts

    Was: Customers could also voluntarily reduce their consumption of energy in response to decreases in their disposable income, increases in energy prices, or individual conservation efforts

All 33 risk factors

Headings as the filing states them, in filing order.

Other

  1. 01UTILITY REGULATORY, LEGISLATIVE, AND LITIGATION RISKS52% rewritten
  2. 02FUTURE EARNINGS POTENTIAL – "Income Tax Matters – Federal Tax Legislation" in Item 7 herein for additional informationnew
  3. 03The Southern Company system's costs of compliance with environmental laws and regulations and satisfying related AROs are significant87% rewritten
  4. 04The Southern Company system may be exposed to regulatory and financial risks related to the impact of GHG legislation, regulation, and emission reduction goals82% rewritten
  5. 05operating companies operate. This process relies on information and assumptions from internal and external sources, which may or may not be accurate in predicting future outcomesnew

OPERATIONAL RISKS

  1. 06The financial performance of Southern Company and its subsidiaries may be adversely affected if the subsidiaries are unable to successfully operate their facilities or perform certain corporate functions67% rewritten
  2. 07Table of Contents Index to Financial Statementsnew
  3. 08Damages, decommissioning, or other costs could exceed the amount of decommissioning trusts or insurance coverage, including statutorily required nuclear incident insurance
  4. 09Generation, transmission, and distribution of electricity and transportation and storage of natural gas involve risks that may result in accidents and other operating risks and costs and that may present potential exposures in excess of insurance coverage
  5. 10Physical attacks, both threatened and actual, could impact the ability of the Subsidiary Registrants to operate
  6. 11An information security incident, including a cybersecurity breach, or the failure of, or inability to remotely access, one or more key technology systems, networks, or processes could impact the ability of the Registrants to operate
  7. 12The Southern Company system may not be able to obtain adequate natural gas, fuel supplies, and other resources required to operate the traditional electric operating companies' and Southern Power's electric generating plants or serve Southern Company Gas' natural gas customers
  8. 13Increased competition from other companies that supply energy or generation and storage technologies and changes in customer demand for energy could negatively impact Southern Company and its subsidiaries
  9. 14Customers and stakeholders are increasingly focused on the Registrants' ability to meet rapidly changing demands for new and varied products, services, and offerings. Additionally, the risk of global climate change continues to shape customers' and stakeholders' sustainability goals and energy needs
  10. 15It is also possible that rapid advances in power generation technology could reduce the value of the current electric generating facilities owned by the traditional electric operating companies and Southern Power. Changes in technology could also alter the channels through which electric customers buy or utilize power
  11. 16The Subsidiary Registrants are subject to workforce factors that could affect operations25% rewritten
  12. 17Supply chain disruptions, inflation, elevated interest rates, trade policies (including tariffs and other trade measures), and other economic factors could negatively impact operations57% rewritten
  13. 18Southern Company Gas' significant investment in pipeline development projects involves financial and execution risks

FINANCIAL, ECONOMIC, AND MARKET RISKS

  1. 19The electric generation and energy marketing operations of the traditional electric operating companies and Southern Power and the natural gas operations of Southern Company Gas are subject to changes in energy prices and fuel costs
  2. 20The Registrants are subject to risks associated with a changing economic environment, customer behaviors, including increased energy conservation, and adoption patterns of technologies by customers
  3. 21Customers could also voluntarily reduce their consumption of energy in response to decreases in their disposable income, elimination of government energy assistance programs, government shutdowns, increases in energy prices, or individual conservation efforts24% rewritten
  4. 22Electric power and natural gas supply are generally seasonal businesses. The Subsidiary Registrants have historically sold less power and natural gas when weather conditions are milder35% rewritten
  5. 23Acquisitions, dispositions, or other strategic ventures or investments may not result in anticipated benefits and may present risks, including risks not originally contemplated
  6. 24Southern Company and Southern Company Gas are holding companies and Southern Power owns many of its assets indirectly through subsidiaries. Each of these companies is dependent on cash flows from their respective subsidiaries to meet their ongoing and future financial obligations
  7. 25A downgrade in the credit ratings of any of the Registrants, Southern Company Gas Capital, or Nicor Gas could negatively affect their ability to access capital at reasonable costs and/or could require posting of collateral or replacing certain indebtedness
  8. 26Uncertainty in demand for energy can result in lower earnings or higher costs41% rewritten
  9. 27The businesses of the Registrants and Nicor Gas are dependent on their ability to successfully access capital through capital markets and financial institutions28% rewritten
  10. 28Failure to comply with debt covenants or conditions could adversely affect the ability of the Registrants, SEGCO, Southern Company Gas Capital, or Nicor Gas to execute future borrowings25% rewritten
  11. 29Volatility in the securities markets, interest rates, and other factors could substantially increase defined benefit pension and other postretirement plan costs and affect the funding available for nuclear decommissioning
  12. 30Shareholder activism could cause Southern Company to incur significant expense, hinder execution of Southern Company's business strategy, and impact Southern Company's stock price
  13. 31The Registrants are subject to risks associated with their ability to obtain adequate insurance at acceptable costs
  14. 32The use of derivative contracts by Southern Company and its subsidiaries in the normal course of business could result in financial losses that negatively impact the net income of the Registrants or in reported net income volatility
  15. 33Future impairments of goodwill or long-lived assets could have a material adverse effect on the Registrants' results of operations

Other Southern 10-Ks

  • 2025 10-K risk factors

    33 risks. Environmental compliance, greenhouse-gas reduction, and regulatory cost recovery are central risks for its regulated utility and gas businesses.

    Filed Feb 20, 2025

About this page

Item 1A of the 10-K on EDGAR was split into its risk factors and, where the company's previous 10-K is on file, each heading was matched to last year's and the text compared word for word. The headings are the filing's own. The one-line readings and the overview were written by a language model from the text of the new, dropped, and rewritten risks; they refer to risks by position and cannot misquote a heading.

Southern (SO) Risk Factors: 2026 10-K, What Changed | Gloomberb