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Forty-five minutes later, the investigator took photos as the woman returned to her car, stowed her gym bag and drove away. He next followed her for 25 minutes to the home of her then-boyfriend, Tom Fanning, who, as chief executive of Southern Co., SO -0.85%decrease; red down pointing triangle had for years been one of the energy industry’s most powerful figures.

The following day, while parked in Fanning’s neighborhood, the investigator photographed the executive running up a hill near his house. The investigator compiled the innocuous findings from his four days of surveillance into an eight-page report and billed his client more than $6,800 for the work.

Atlanta-based Southern, one of the largest utility companies in the U.S. and one of the most prominent corporate brands across the Southeast, has been bedeviled for much of the past year by the peculiar espionage effort, which led to an internal investigation but no public explanation.

Word of the surveillance surfaced last summer in a lawsuit between consultants in a firm that for decades has done work for Alabama Power, a Southern subsidiary. One of them alleged that, at the direction of Alabama Power officials, the other consultant had ordered surveillance of Southern executives in order to possibly gain internal leverage.

When Fanning learned of the effort last summer, he was incensed, according to people familiar with the matter. He hired outside law firms to probe the allegation that someone within Alabama Power was behind it.

Now, nearly a year after the spying became public, the investigation is largely complete—and the company says it has no idea who ordered the operation or why.

Fanning, 66, retired last month after more than a decade atop the massive utility company. He remains Southern’s executive chairman. Last winter, the CEO of Alabama Power stepped down.

The episode marks a bizarre coda to Fanning’s career, and has contributed to turmoil within Southern, which operates utilities in Mississippi and Georgia as well as Alabama.

The company’s board of directors, which has been briefed on the results of the investigation, has discussed how to implement better oversight of Southern’s operating units and the consultants they engage, according to people familiar with the matter.

“We conducted a thorough internal investigation of this matter and were unable to substantiate the allegation that the highly inappropriate surveillance of Tom Fanning was authorized by any employee of the company,” a Southern spokesman said in a statement. “We have moved on.”

Through the spokesman, Fanning declined to comment.

In November, about three months after the start of the investigation, Mark Crosswhite, then CEO of Alabama Power, abruptly announced plans to retire at the end of the year. The 60-year-old told employees he wanted to spend more time with his family.

Crosswhite had been a serious contender to succeed Fanning as Southern CEO, people familiar with the matter said. The people said the surveillance allegations and subsequent investigation played a role in his decision to leave.

Crosswhite, who stayed on as a consultant and, according to securities filings, drops off the company payroll at the end of this month, didn’t respond to requests for comment.

The Southern spokesman said the spying allegations played “zero factor” in succession planning.

Southern recently reached a milestone when one of two new reactors at a nuclear-power plant in Georgia produced electricity for the first time. The reactors, the first in the U.S. to be built from scratch in decades, are billions over budget and years behind schedule.

Among other things, the alleged motivation for the spying was based in part on issues related to the plant’s troubles.

The allegations spilled out of a lawsuit filed in 2021 stemming from an acrimonious split between Joe Perkins and Jeff Pitts, who had worked together at an Alabama-based consulting firm called Matrix. Pitts alleged in court filings that Perkins, at the direction of Alabama Power executives, had ordered surveillance of Southern executives to influence corporate decision-making.

Pitts signaled his intent to subpoena Southern and Alabama Power for surveillance-related documents. Within days, lawyers for the companies sent a letter to Pitts demanding that he cease to make any requests or disclosures that would involve the companies in the lawsuit. Pitts and Perkins soon settled their dispute.

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Southern then hired attorneys with Atlanta law firm King & Spalding, as well as Birmingham, Ala.-based White Arnold & Dowd, to perform an internal investigation into the allegations, according to people familiar with the matter and documents reviewed by The Wall Street Journal.

In communications reviewed by the Journal, Pitts conveyed to Southern’s attorneys that Perkins consulted with Crosswhite before ordering surveillance on Fanning and his then-girlfriend, the personal trainer.

The idea, Pitts alleged, was part of a plan to put pressure on Fanning and the company’s board of directors as they contemplated corporate restructuring.

At the time, Fanning was under significant pressure. The company had lost $1.38 billion in the second quarter of 2017, its first loss since 1998.

Southern was struggling to build a power plant in Mississippi designed to run on coal and capture much of the carbon dioxide emitted in the process. The project’s costs had ballooned, and the Securities and Exchange Commission was investigating its accounting practices and cost-control measures. The company said at the time it was cooperating with the investigation, which ended without the agency taking any enforcement action.

Southern was also facing serious challenges in expanding the nuclear plant in Georgia.

The plant, known as Vogtle, was supposed to have been completed by 2017 but had been substantially delayed. Construction costs had surged to nearly double the original estimate, and the company revised its completion estimate to 2021 at the earliest.

As the projects bled money, Southern began considering whether to consolidate certain functions of Southern’s three utilities to save costs over time.

Bain, a consulting firm, began exploring the potential benefits of consolidation, according to a person involved in the effort. Executives within Alabama Power were resistant to the idea, the person said.

Pitts alleged that Perkins and Crosswhite were concerned that consolidating resources, such as consulting and legal services, could result in job losses and potentially affect succession planning across the company. Pitts included what he said were handwritten notes from Perkins.

“Need more intel,” read an annotation next to the name of Fanning’s girlfriend at the time. Fanning wasn’t married at the time.

Pitts alleged that Perkins told him to undertake surveillance of Fanning and his girlfriend, saying that “the company wants this.”

The surveillance began on a Wednesday, June 14, 2017, with findings that were less than explosive.

“Through discreet methods, we determined that the fitness center was closed due to the installation of a new air conditioning system,” the investigator wrote after finding that the girlfriend wasn’t inside the facility as expected.

Two days later, after following the trainer from the gym to Fanning’s house, the investigator parked and waited for Fanning to arrive in his blue Lexus. He lingered outside for hours after the car pulled into the driveway.

The next day, a Saturday, the investigator drove by Fanning’s house at 10:45 a.m. and noted a newspaper on the driveway. He returned at 2:30 p.m. and noted it had been picked up.

Just before 4 p.m., the investigator spotted Fanning running and noted he appeared to be interval training.

“We elected not to pursue Fanning to the top of the hill,” the investigator wrote.

The private investigator billed Matrix for the surveillance work and listed Pitts as the recipient on the invoice. He charged $150 for finding license-plate numbers for both Fanning and his girlfriend, $4,275 for the surveillance and $127.50 for producing a report and video, plus other miscellaneous expenses.

Southern said it found “no indication” that the company or its subsidiaries paid for the operation.

David Pomerantz, executive director of the Energy and Policy Institute, said since the surveillance came to light in local media coverage, investors and watchdogs have been puzzled about the whole affair, including whether any customer money was used. He said that it adds to his longstanding concerns about the industry’s corporate governance and use of consultants, which has led to other scandals in recent years.

“What we actually need—and what the company’s customers are entitled to—is an external investigation by regulators who can compel the production of information,” he said.

The Alabama Public Service Commission, the agency tasked with overseeing Alabama Power, said it has “no information regarding this matter.”