Exhibit 10(a)61









                               OPERATING AGREEMENT

                                     between

                             Southern Power Company

                                       and

                       Savannah Electric and Power Company




<PAGE>


                                TABLE OF CONTENTS

ARTICLE 1         Definitions..............................................2
                  -----------
                  1.1      "Fuel Services".................................2
                  1.2      "Generation Facility"...........................2
                  1.3      "Governmental Authority"........................3
                  1.4      "Legal Requirements"............................3
                  1.5      "New Investment Projects".......................3
                  1.6      "New Investment Services".......................4
                  1.7      "Operating Services"............................4
                  1.8      "Operation and Maintenance Services"............4
                  1.9      "Prudent Utility Practice"......................4

ARTICLE 2         Operator's Authority and Responsibility with
                  ---------------------------------------------
                  Respect to Operation of the Generation
                  ---------------------------------------
                  Facilities...............................................5
                  ----------
                  2.1      Responsibility of Operator......................5
                  2.2      Authorization of Operator.......................6
                           2.2.1.   Plant Operation and
                                    Maintenance............................6
                                    (a)     Staff and
                                            Personnel......................6
                                    (b)     Licenses and
                                            Permits for
                                            Generation
                                            Facilities.....................7
                                    (c)     Reductions in
                                            Capacity and
                                            Outages at Each
                                            Plant..........................7
                                    (d)     Events About
                                            Which Owner is
                                            to be Notified.................8
                                    (e)     No Changes to
                                            Transmission or
                                            Distribution
                                            Facilities.....................8
                                    (f)     Operation in
                                            Accordance with
                                            Operating Plan.................8
                                    (g)     Point of
                                            Interconnection................9
                           2.2.2.   New Investment
                                    Services...............................9
                           2.2.3.   Fuel Services..........................9
                  2.3      Removal or Addition of
                           Generating Facilities..........................10
                           2.3.1    Removal...............................10
                           2.3.2    Addition..............................10
                  2.4      Authority to Act as Agent for
                           Owner and Right of Third
                           Parties to Rely on Agency......................10
                  2.5      Assignment of Contracts;
                           Liability and Allocation of Risks
                           ...............................................11
                           2.5.1    Contracts with Third
                                    Parties...............................11
                           2.5.2    Acceptance of Contract
                                    Provisions............................11
                           2.5.3    Enforcement of Rights
                                    Under Contracts.......................12
                  2.6      Cooperation of Owner...........................12
                  2.7      Operator Interface Procedure...................13
                  2.8      Plans and Budgets..............................13
                           2.8.1 Strategic Plan...........................14
                                    (a)     Five-year
                                            Operating and
                                            Planned Outage
                                            Schedule......................14
                                    (b)     Availability and
                                            Performance
                                            Goals.........................14
                                    (c)     Planned
                                            Mandatory
                                            Projects......................15
                                    (d)     Planned
                                            Improvement
                                            Projects......................15
                                    (e)     Authorized Level
                                            of Staffing...................15
                           2.8.2    Fuel Plan.............................16
                           2.8.3    Operating Budget......................16
                           2.8.4    Capital Budget........................16
                           2.8.5    Fuel Budget...........................16
                           2.8.6    Material Contracts....................16
                  2.9      Information and Reports........................17
                           2.9.1    Generation Facility Data..............17
                           2.9.2    Generation Facility
                                    Budget Reports........................17
                           2.9.3    Generation Facility
                                    Strategic Plan Reports................17
                           2.9.4    Audit Reports.........................17
                           2.9.5    Correspondence to and
                                    from Regulatory
                                    Agencies..............................17
                           2.9.6    Responses to Owner
                                    Inquiries.............................18
                  2.10     Plant Tours....................................18
                  2.11     Management Audit...............................18

ARTICLE 3         Entitlement to Output...................................18
                  ---------------------
                  3.1      Entitlement to Output..........................18
                  3.2      Determination of
                           Output-Responsibility for Station
                           Service and Losses.............................19

ARTICLE 4 Costs, Billing, Accounting and Audit............................19
          ------------------------------------
                  4.1      Cost of Operation and
                           Maintenance....................................19
                  4.2      New Investment Costs...........................20
                  4.3      Fuel Costs.....................................20
                  4.4      Other Costs Required by Legal
                           Requirements...................................20
                  4.5      Revision.......................................20
                  4.6      Billing........................................21
                  4.7      Payment........................................21
                  4.8      General Accounting Matters.....................21
                  4.9      Right to Inspect Records.......................21
                  4.10     Disputed Invoice...............................22

ARTICLE 5         Advancement of Funds....................................22
                  --------------------
                  5.1      Advancement of Funds...........................22

ARTICLE 6         Taxes...................................................23
                  -----
                  6.1      Taxes..........................................23

ARTICLE 7         Compliance with Provisions of Permits

                  and Requirements of Governmental

                  Agencies................................................23
--------------------------
                  7.1      Compliance with Provisions of
                           Permits and Requirements of
                           Governmental Agencies..........................23

ARTICLE 8         Confidentiality of Information..........................23
                  ------------------------------

ARTICLE 9         Damage to Persons or Property; Penalties; Fines.........24
                  -----------------------------------------------
                  9.1      Applicability of Article.......................24
                  9.2      Absence of Warranty............................24
                  9.3      Liabilities to Third Parties and Owner.........24
                  9.4      Willful Misconduct.............................26
                  9.5      Limitation of Liability........................26
                  9.6      Severability...................................27

ARTICLE 10        Insurance...............................................27
                  ---------
                  10.1     Parties Obligations Generally..................27
                  10.2     Commercial Liability Insurance.................28
                  10.3     Workmen's Compensation Insurance...............28
                  10.4     Additional Insurance...........................29
                  10.5     Waiver of Subrogation - Allocation
                           and Payment of Premium.........................29

ARTICLE 11        Term....................................................29
                  ----
                  11.1     Term...........................................29

ARTICLE 12        Remedies................................................30
                  --------
                  12.1     Termination....................................30

ARTICLE 13        Miscellaneous...........................................32
                  -------------
                  13.1     No Partnership or Joint Venture................32
                  13.2     Owner's Designated
                           Representatives................................32
                  13.3     Operator's Designated
                           Representative.................................32
                  13.4     Depreciation...................................33
                  13.5     Holidays, Business Days........................33
                  13.6     Owner's Services to be
                           Furnished at Cost..............................33
                  13.7     Entire Agreement...............................33
                  13.8     Amendments.....................................33
                  13.9     Notices........................................33
                  13.10    Captions.......................................34
                  13.11    Counterparts...................................34
                  13.12    No Waiver......................................34
                  13.13    Singular and Plural............................34
                  13.14    Third Party Beneficiaries......................35
                  13.15    Severability...................................35

ARTICLE 14        Successors and Assigns..................................35
                  ----------------------
                  14.1     Successors and Assigns.........................35

ARTICLE 15 Governing Law..................................................35
           -------------
                  15.1     Governing Law..................................35


<PAGE>


                               OPERATING AGREEMENT
                                     between
                             Southern Power Company
                                       and
                       Savannah Electric and Power Company

         THIS OPERATING AGREEMENT (this "Agreement") is made and entered into
this 7th day of May, 2003, to be effective as January 1, 2003 (the "Effective
Date"), by and between Savannah Electric and Power Company ("Operator") and
Southern Power Company ("Owner").

                              W I T N E S S E T H:
                               -------------------

         WHEREAS, Operator and Owner are each a wholly-owned subsidiary of The
Southern Company ("Southern"), a registered holding company under the Public
Utility Holding Company Act of 1935 (the "1935 Act"); and

         WHEREAS, Owner owns certain generation stations, plants and other
generation-related facilities within the service territory of Operator and may
construct or acquire additional facilities in the future; and

         WHEREAS, Owner intends to sell on the wholesale market the electric
power generated by such facilities; and

         WHEREAS, Operator owns and operates generation stations, plants and
other related generation facilities and has developed the expertise and
experience to efficiently and economically operate such facilities; and

         WHEREAS, Owner believes that in order to more efficiently and
economically provide for the operation, maintenance, repair, and rehabilitation
of its generating stations, plants and other generation-related facilities, such
activities should be conducted and coordinated by Operator; and

         WHEREAS, Owner and Operator desire to set forth in this Agreement their
understandings and agreements regarding the operation, maintenance, repair and
rehabilitation of Owner's generating stations, plants and other
generation-related facilities.

         NOW THEREFORE, in consideration of these premises, the parties,
intending to be legally bound, do hereby agree as follows:

                                    ARTICLE 1

                                   Definitions

         As used herein, the following terms and phrases shall have,
respectively, the following meanings: 1.1 "Fuel Services" shall mean work
related to supplying and managing all necessary fuels for the Generation
Facilities, including, without limitation, planning, procurement, contract
administration, fuel quality assurance, administration of payables and
receivables, and all activities relating to procurement, transportation,
installation, monitoring, repairing, storage, reprocessing and disposal of fuel
for the Generation Facilities, related materials and waste products.

                  1.2 "Generation Facility" shall mean, and refer to,
         respectively, each of the fossil fuel, hydro-electric and pumped
         storage generation stations, plants and other generation-related
         facilities owned by Owner, located within the service territory of
         Operator and identified on Schedule 1 attached hereto and incorporated
         herein; provided, however, that should activities concerning a
         Generation Facility be undertaken with respect to one unit of such
         station, plant or facility, the phrase "Generation Facility" shall mean
         and refer to that unit and related common facilities. Generation
         stations, plants and other generation-related facilities may be removed
         from or added to the definition of "Generation Facilities" as
         contemplated in Section 2.3.

                  1.3 "Governmental Authority" shall mean any local, state,
         regional or federal legislative, regulatory, administrative, legal,
         judicial or executive agency, commission, department or other entity
         and any person acting on behalf of any such entity.

                  1.4 "Legal Requirements" shall mean all laws, codes,
         ordinances, orders, judgments, decrees, injunctions, licenses, rules,
         permits, approvals, written agreements, regulations and requirements of
         or issued by every Governmental Authority having jurisdiction over the
         matter in question, whether federal, regional, state or local, which
         may be applicable to Operator, or to Owner, or to any Generation
         Facility or any of the real or personal property comprising the
         Generation Facilities, or to services to be provided to Owner
         hereunder, or the use, occupancy, possession, operation, maintenance,
         construction, acquisition, installation, alteration, replacement, or
         reconstruction of any one or more of the Generation Facilities or any
         part thereof.

                  1.5 "New Investment Projects" shall mean projects for the
         Generation Facilities relating to the planning, design, licensing,
         acquisition, construction, completion, renewal, improvement, addition,
         repair, replacement or enlargement of any Unit of Property (as
         described in the Federal Energy Regulatory Commission's "Units of
         Property for Use in Accounting for Additions and Retirements of
         Electric Plants"), under circumstances where expenditures on or for
         such projects are to be capitalized in accordance with the Electric
         Plant Instructions of the Uniform System of Accounts prescribed for
         Class A and B utilities by the Federal Energy Regulatory Commission.

                  1.6 "New Investment Services" shall mean work on or for any
         New Investment Project, including, but not limited to, any planning,
         design, engineering, labor, procurement of materials and supplies,
         materials management, quality assurance, training, security, and
         environmental protection, together with maintaining or obtaining
         licenses and regulatory approvals related thereto, governmental affairs
         or regulatory relationships, administration of payables and
         receivables, and all other activity required for the safe and reliable
         operation of the New Investment Project and/or the relevant Generation
         Facility or that may be required to comply with Legal Requirements.

                  1.7 "Operating Services" shall mean Fuel Services, New
         Investment Services, and Operation and Maintenance Services.

                  1.8 "Operation and Maintenance Services" shall mean work for
         Owner relating to the possession, management, control, start-up,
         operation, availability, production of energy, maintenance,
         improvement, renewal, and replacement, including, but not limited to,
         any planning, design, engineering, labor, procurement of materials and
         supplies, materials management, quality assurance, training, security,
         and environmental protection, together with maintaining or obtaining
         licenses and regulatory approvals related thereto, governmental affairs
         or regulatory relationships, administration of payables and
         receivables, and all other activity required for the safe and reliable
         operation of the Generation Facilities or that may be required to
         comply with Legal Requirements.

                  1.9 "Prudent Utility Practice" shall mean at a particular time
         any of the practices, methods and acts engaged in or approved by a
         significant portion of the electric utility industry prior to such
         time, or any of the practices, methods and acts which, in the exercise
         of reasonable judgment in light of the facts known at the time the
         decision was made, could have been expected to accomplish the desired
         result at the lowest reasonable cost consistent with good business
         practices, reliability, safety and expedition. "Prudent Utility
         Practice" is not intended to be limited to the optimum practice, method
         or act to the exclusion of all others, but rather to be a spectrum of
         possible practices, methods or acts having due regard for, among other
         things, manufacturers' warranties and the requirements of governmental
         agencies of competent jurisdiction.

                                    ARTICLE 2

       Operator's Authority and Responsibility with Respect to Operation
                          of the Generation Facilities

         2.1......Responsibility of Operator. Operator, consistent with such
written guidelines as may be jointly developed with Owner, shall provide and be
responsible for (i) the operation and maintenance of the Generation Facilities
in a safe and reliable manner in accordance with all Legal Requirements and with
Prudent Utility Practice, (ii) the generation of power and energy at the
Generation Facilities to the credit of and for the benefit of the Owner as
economically as is reasonably practicable, (iii) the repair and rehabilitation
of the Generation Facilities as may, from time to time, be necessary,
appropriate or reasonably practicable and advisable and (iv) as and to the
extent deemed by Owner to be necessary or appropriate, the construction of new
or additional non-nuclear generation facilities for Owner. Operator also shall
make such further changes and additions to the Generation Facilities in its
service territory as shall be consistent with such operation, maintenance,
repair and rehabilitation. Such services and construction may be provided by
Operator through its own personnel or, in part, by others, including without
limitation affiliate personnel, under contractual or other arrangements,
including the use of Owner's personnel under the direction and supervision of
Operator.

         2.2......Authorization of Operator. In furtherance of the foregoing,
Owner authorizes Operator, and Operator agrees to provide, Operation and
Maintenance Services and Fuel Services for the Generation Facilities and, as
authorized herein, New Investment Services. Owner hereby authorizes Operator to
take all actions that, in the discretion and judgment of Operator consistent
with Prudent Utility Practice, are deemed necessary or advisable in providing
these Operating Services. Owner hereby authorizes Operator, as operator, to take
any and all action necessary to comply with all Legal Requirements and to take
all action necessary to fulfill any requirements for the safe and reliable
operation of the Generation Facilities. The authority vested in Operator shall
include, but not be limited to, the authority to incur costs, liabilities, and
obligations, to purchase equipment, materials and supplies, to perform and
arrange for performance of work, to select and retain contractors, engineers,
consultants, architect-engineers, attorneys, accountants and other firms or
persons, and to take all actions in connection with the Generation Facilities
that are within the scope set forth above. Without limiting the foregoing, the
authority vested in Operator shall include the following:

                  2.2.1. Plant Operation and Maintenance. Operator shall have
         the authority to possess, operate and maintain the Generation
         Facilities in accordance with policies and decisions established and
         made by Owner. Subject to the provisions of this Agreement, Operator
         shall in accordance with Prudent Utility Practice endeavor to achieve
         reliable performance of each Generation Facility, to maximize the
         capacity and availability factors and minimize forced outage rates and
         durations at each Generation Facility and to produce busbar costs as
         low as reasonably possible.

                           (a) Staff and Personnel. Subject to the provisions of
                  Section 2.8.1 respecting Strategic Plans and approval of Owner
                  or Owner's designated representative, Operator shall have the
                  authority to select, hire, compensate, control and discharge
                  (when deemed appropriate by Operator) those persons, firms or
                  corporations which are required to satisfy its obligations
                  under this Agreement. Operator shall keep Owner informed of
                  any plans to change either the Operator officer responsible
                  for any of Owner's Generation Facilities or the Operator
                  manager of such Generation Facility. Any input from Owner on
                  such plans will be considered by Operator, but Operator's
                  decisions on personnel matters shall be final. Operator shall
                  also consider any positive or negative comments from Owner
                  regarding the performance of any of Operator's officers or
                  managers, but management decisions on whether to take
                  personnel or salary administration actions shall be made
                  solely by Operator.

                           (b) Licenses and Permits for Generation Facilities.
                  Operator is authorized to obtain and maintain compliance with
                  all licenses, approvals and permits for each Generation
                  Facility from Governmental Authorities required for operation
                  and maintenance of the Generation Facility. Upon mutual
                  agreement of Operator and Owner, or as required by Legal
                  Requirements, Operator will be designated in such licenses,
                  approvals and permits as having operating responsibility for
                  the Generation Facilities.

                           (c) Reductions in Capacity and Outages at Each Plant.
                  Owner recognizes that, in the course of operating the
                  Generation Facilities, it may be necessary to decide whether
                  to operate the Generation Facilities at less than full power
                  or to terminate or suspend such operations altogether in light
                  of technical, legal, regulatory, safety, economic, power
                  system, testing, or other considerations. Operator recognizes
                  the need to minimize periods of reduced capacity or outages at
                  the Generation Facilities that could have an adverse effect on
                  Owner's power supply system or its cost of providing reliable
                  electric service. Operator will endeavor to consult with Owner
                  concerning any operating conditions which are expected to
                  result in capacity reductions of fifty percent (50%) or more
                  at a Generation Facility or outages at a unit of any
                  Generation Facility, and Operator will only take those actions
                  when they determine they are prudent and necessary from an
                  operating standpoint.

                           (d) Events About Which Owner is to be Notified. In
                  the event of an occurrence at a Generation Facility of any
                  unplanned outage, any significant extension of a planned
                  outage, any unplanned reduction in the capacity of a unit for
                  an extended period, or any event at a Generation Facility or
                  any regulatory action which is likely to attract substantial
                  media attention or to affect substantially the operation of
                  the Generation Facility, Operator shall inform Owner as soon
                  as practical, or in accordance with guidelines acceptable to
                  Owner, after the occurrence of such event.

                           (e) No Changes to Transmission or Distribution
                  Facilities. In order that the safe operation of the Generation
                  Facilities is assured, Owner shall not effect any operating or
                  physical changes to its transmission and distribution
                  facilities which may adversely affect the safe operation of
                  the Generation Facilities without prior consultation with and
                  the concurrence of Operator.

                           (f) Operation in Accordance with Operating Plan. Each
                  Generation Facility shall be operated in accordance with
                  Prudent Utility Practice and pursuant to an operating plan
                  developed and updated regularly by Operator and Owner and in
                  accordance with Owner's obligations, if any, under any
                  interconnection agreements, power pooling arrangements or
                  other applicable arrangements, as such obligations may
                  presently exist or may hereafter be modified from time to
                  time, including the obligations, if any, of Owner to maintain
                  the design integrity of each Generation Facility under the
                  requirements of the Southeast Electric Reliability Council and
                  the National Electric Reliability Council.

                           (g) Point of Interconnection. The point of
                  interconnection between any Generation Facility and Operator's
                  or a third party's transmission system and the extent of
                  Operator's operational responsibility therefor shall be
                  determined from time to time by Owner and Operator.

                  2.2.2. New Investment Services. Operator shall have
         responsibility for all New Investment Services. Operator is authorized
         to enter into such arrangements as it deems appropriate for the
         Generation Facilities and to make all decisions regarding the
         completion of New Investment Projects that were contemplated in the
         construction budgets for the Generation Facilities as of this
         acquisition by Owner or that have been approved and provided for in an
         Operating Budget or Capital Budget under the procedures contemplated in
         Section 2.8 and as applicable Section 2.3.2. All equipment, materials
         and supplies included in such New Investment Projects for each
         Generation Facility shall be acquired in the name of Owner and shall be
         the property of Owner.

                  2.2.3. Fuel Services. Operator shall have responsibility for
         Fuel Services. Operator is authorized to enter into such arrangements
         as it deems appropriate and to make all decisions regarding fuel and
         fuel services.

         2.3......Removal or Addition of Generating Facilities. Owner shall
retain the exclusive authority to remove a particular generation station, plant
or other generation-related Facility from the provisions of this Agreement and
to arrange for other means for its operation and maintenance. Owner and Operator
may agree to add new generation stations, plants or other generation-related
facilities of Owner within Operator's service territory to this Agreement.

                  2.3.1 Removal. Upon Owner informing Operator of any removal of
         a Generation Facility from this Agreement, Operator shall take such
         action as may be necessary to transfer operational control of such
         Generation Facility, and to comply with the provisions of Sections
         12.1.2 and 12.1.3, which shall also apply. Upon the transfer of
         operational control of a Generation Facility as contemplated above and
         in Sections 12.1.2 and 12.1.3, such generation station, plant or other
         generation-related facility shall cease to be a "Generation Facility."

                  2.3.2 Addition. Upon Owner and Operator agreeing to the
         addition of a generation station, plant or other generation-related
         facility to this Agreement, such generation station, plant or other
         generation-related facility shall be a "Generation Facility" and shall
         be subject to all of the provisions of this Agreement.

         2.4......Authority to Act as Agent for Owner and Right of Third Parties
to Rely on Agency. In the conduct of the authority vested in Operator in
Sections 2.1 and 2.2 above, Owner hereby designates and authorizes Operator to
act as its attorney-in-fact and agent for such purposes, including, without
limitation, authority to enter into and administer contracts on behalf of Owner
for procurement of material, equipment or services and authority to administer
contracts entered into by Owner with respect to the Generation Facilities. As
relates to all third parties, the designation of Operator as agent shall be
binding on Owner. Operator accepts such appointment as agent of Owner. Upon
request from Operator, Owner shall provide written confirmation of this agency
relationship to third parties.

         2.5......Assignment of Contracts; Liability and Allocation of Risks.

                  2.5.1 Contracts with Third Parties. Upon mutual agreement of
         Operator and Owner, Owner shall assign and transfer to Operator those
         contracts with third parties relating to the operation of each
         Generation Facility. Prior to assignment and transfer of such
         contracts, Operator may request Owner to appoint Operator as agent for
         administration of any such contracts. After receipt of any such
         assignment, transfer or authorization to administer, Operator shall
         have the exclusive responsibility for the administration and
         enforcement thereof in accordance with the terms thereof.

                  2.5.2 Acceptance of Contract Provisions. To the extent
         permitted pursuant to Section 2.8, Operator in such contracts with
         third parties may agree to such matters as limitations on the liability
         of contractors for work performed or materials furnished, restrictions
         on warranties, agreements to indemnify the contractors from liability,
         requirements that Owner be bound by financial protection provisions,
         waivers, releases, indemnifications, limitations of liability and
         further transfers or assignments under such contracts, and other
         similar provisions (each contract with a third party that contains any
         of the provisions, terms or other effects described in this sentence,
         shall be referred to as a "Material Contract"). Owner waives any claims
         against Operator for entering into Material Contracts approved pursuant
         to the process provided in Section 2.8. Owner also agrees to be bound
         by the requirements for financial protection, waivers, releases,
         indemnification, limitation of liability and further transfers or
         assignments that bind Operator as they now exist in existing Material
         Contracts or as they may exist in the future with respect to Material
         Contracts approved or entered into pursuant to such process provided in
         Section 2.8.

                  2.5.3 Enforcement of Rights Under Contracts. Owner covenants
         that, Owner will notify Operator in writing in advance if Owner intends
         to threaten suit or bring suit against third parties or otherwise make
         any claim under any contract or arrangement relating to any of the
         Generation Facilities or Operating Services being provided by Operator.
         If Owner desires for Operator to threaten or bring suit or otherwise to
         make any claim, or desires that such action contemplated by Operator
         shall not be taken, Owner shall, by written notice to Operator, request
         it so to act or refrain from acting. Upon Operator's receipt of a
         notice under one of the previous two sentences, Owner and Operator
         shall arrange for consultation within ten (10) working days thereafter
         on the questions raised, or such lesser period of time as Operator or
         Owner shall specify in the light of circumstances requiring a more
         expeditious determination. Neither Operator nor Owner shall make its
         final determination whether it will or will not bring any such suit or
         make any such claim until after such consultation; however, the
         determination by Operator regarding the action that it will or will not
         take, shall be final and binding (irrespective of what Owner decides to
         do), and the decision of Owner regarding the action that it will or
         will not take will also be final and binding (irrespective of what
         Operator decides to do).

         2.6......Cooperation of Owner. Subject to the requirements and
procedures of Sections 2.5.2 and 2.8, and in the case of New Investment Services
Section 2.2.2 and as applicable Section 2.3.2, Owner agrees that it will take
all necessary action in a prompt manner to execute any agreements with respect
to the provision of Operation and Maintenance Services and Fuel Services for the
Generation Facilities, and New Investment Services, as and when requested by
Operator to permit Operator to carry out its authority and responsibilities
pursuant to this Article 2. Operator may request Owner to furnish services or
assistance, materials, supplies, licenses, offices and real property rights
including, without limitation, power supply services, transmission and
distribution system repair, replacement, construction and maintenance,
accounting services, maintenance personnel, security services, and other
personnel, services or assistance as Operator may require with respect to any
one or more Generation Facilities. Any such items which Owner agrees to furnish
to Operator shall be provided at cost.

         2.7......Operator Interface Procedure. Operator and Owner will jointly
establish and maintain an Operator Interface Procedure to govern the working
relationships between the two companies. The Operator Interface Procedure shall
contain procedures by which Owner can maintain an overview of Generation
Facility operations, procedures for administering this Operating Agreement
through designated executive points of contact, and procedures to define
interfaces for support services and assistance provided by Owner pursuant to
Section 2.6 hereof.

         2.8......Plans and Budgets. Strategic Plans, Fuel Plans, Operating
Budgets, Capital Budgets, Fuel Budgets and Material Contracts shall be submitted
to Owner by Operator as provided in Paragraphs 2.8.1 through 2.8.5 below. The
contents of these plans, budgets and Material Contracts shall conform to the
requirements and guidelines established pursuant to the Operator Interface
Procedure. Owner shall approve or disapprove each such plan, budget or Material
Contract within thirty (30) days after its submittal. In the event Owner
disapproves a plan, budget or Material Contract, Owner shall inform Operator of
the basis for such disapproval. Operator shall then modify such plan, budget or
Material Contracts as required to make it acceptable to Owner and shall resubmit
it for approval; provided, however, that in no event shall Operator be required
to submit plans, budgets or Material Contracts which would cause Operator to
operate a Generation Facility in violation of any Legal Requirements or in a
manner that fails to provide reasonable assurance of health and safety to
employees. Operator shall attempt to provide Operating Services in accordance
with such approved plans and within the aggregate annual amount of such budgets.
Notwithstanding the foregoing, Operator makes no representation, warranty or
promise of any kind as to accuracy of any such plan or budget, or that any
attempt referred to in the preceding sentence will be successful, and in no
event shall Owner be relieved of its responsibility to pay costs incurred by
Operator as required in Article 4 hereof.

                  2.8.1 Strategic Plan. A Strategic Plan for each Generating
         Facility shall be submitted to Owner by Operator no later than July 1
         of each year. Owner may separately approve or disapprove individual
         projects which are classified as planned improvement projects pursuant
         to Paragraph (d) below, but shall otherwise approve or disapprove each
         Strategic Plan in its entirety. Strategic Plans may cover one or more
         Generation Facilities. Each Strategic Plan shall identify key
         assumptions to be used in the preparation of budgets and forecasts,
         including:

                           (a) Five-year Operating and Planned Outage Schedule.
                  This section shall identify the scheduled operating cycles and
                  planned outages for maintenance and other work during the
                  succeeding five years. The schedule shall describe in
                  reasonable detail the time and duration of each planned outage
                  and the maintenance and other work planned to be performed
                  during such outage.

                           (b) Availability and Performance Goals. This section
                  shall contain overall performance goals which have been
                  established by Operator for the Generation Facility for the
                  current year.

                           (c) Planned Mandatory Projects. A mandatory project
                  is any project with a total estimated cost in excess of one
                  million dollars ($1,000,000) or such other amount as Owner may
                  establish, including but not limited to any upgrade,
                  replacement, addition or program, which is needed in order to
                  support normal operations in accordance with Prudent Utility
                  Practice or in order to comply with regulatory or safety
                  requirements. The associated schedule and estimated annual
                  funding requirements shall be included.

                           (d) Planned Improvement Projects. An improvement
                  project is any project with a total estimated cost in excess
                  of one million dollars ($1,000,000) or such other amount as
                  Owner may establish, including but not limited to any upgrade,
                  replacement, addition, or program, which is not mandatory as
                  defined in (c) above. Examples of such projects include
                  efforts to improve performance of a Generation Facility or
                  conditions, such as improved Generation Facility capacity or
                  efficiency, enhanced working conditions, and appearance. The
                  associated schedule and estimated annual funding requirements
                  shall be included.

                           (e) Authorized Level of Staffing. This section shall
                  provide the current authorized number of permanent staff
                  positions which are assigned to the Generation Facility and
                  its offsite support. Such number of positions shall be broken
                  down by functional areas (e.g., operations, maintenance,
                  administrative, technical, corporate support), shall include
                  positions which are located either on-site or off-site, and
                  shall include all positions regardless of the actual employer.
                  This section shall also show any estimates of planned changes
                  in such authorized number of positions over the succeeding
                  five years.

                  2.8.2 Fuel Plan. A five-year Fuel Plan for each Generation
         Facility shall be submitted to Owner by September 15 of each year.
         Owner shall approve or disapprove each Fuel Plan within thirty days
         after submittal. Each Fuel Plan shall describe in reasonable detail
         plans for procurement and utilization of fuel for the Generation
         Facility and information on disposal of waste products. A Fuel Plan may
         cover one or more Generation Facilities.

                  2.8.3 Operating Budget. By September 1 of each year, Operator
         shall submit to Owner a written Operating Budget showing the estimated
         costs of operating and maintaining Owner's Generation Facilities during
         the next calendar year, with a forecast of budget requirements for the
         succeeding four calendar years. Each budget shall be supported by
         detail reasonably adequate for the purpose of review by Owner.

                  2.8.4 Capital Budget. By September 1 of each year, Operator
         shall submit to Owner a written Capital Budget estimate of capital
         expenditures for each of Owner's Generation Facilities for the next
         calendar year, with a forecast of budget requirements for the
         succeeding four calendar years. Each budget shall be supported by
         detail reasonably adequate for the purpose of review by Owner.

                  2.8.5 Fuel Budget. By September 15 of each year, Operator
         shall submit to Owner a written Fuel Budget estimate of fuel
         expenditures for each of Owner's Generation Facilities for the next
         calendar year, with a forecast of budget requirements for the
         succeeding four calendar years. Each budget shall be supported by
         detail reasonably adequate for the purpose of review by Owner.

                  2.8.6 Material Contracts. Reasonably in advance of the time it
         plans to enter into a Material Contract with a third party, Operator
         shall submit to Owner a draft of such Material Contract. Each draft
         Material Contract will be supported with all attachments and sufficient
         information for Owner to evaluate the provisions that render such draft
         a Material Contract.

         2.9......Information and Reports. Operator shall furnish to Owner the
following information and reports:

                  2.9.1 Generation Facility Data. At the time of submittal of
         each Strategic Plan, Operator shall also furnish a comparison of the
         performance of each Generation Facility with other generating
         facilities using performance indicators in common use in the electric
         utility industry or as may be specified by Owner.

                  2.9.2 Generation Facility Budget Reports. Operator shall
         furnish monthly data showing actual costs for operation and
         maintenance, capital expenditures, and direct fuel expenditures with
         comparisons to the respective budgets. This report will normally be
         provided by the end of the succeeding month.

                  2.9.3 Generation Facility Strategic Plan Reports. At least
         quarterly, Operator shall furnish data showing actual performance for
         each unit at each Generation Facility compared to goals contained in
         the Strategic Plan for the Generation Facility.

                  2.9.4 Audit Reports. Operator shall make available for review
         by Owner copies of financial or accounting reports concerning Owner's
         Generation Facilities containing the results of audits by or for
         Southern Company Services, Inc., or any affiliate or subsidiary of The
         Southern Company, or by any regulatory agency.

                  2.9.5 Correspondence to and from Regulatory Agencies. At the
         request of Owner, Operator shall furnish to Owner copies of
         correspondence to and from regulatory agencies concerning one or more
         of Owner's Generation Facilities.

                  2.9.6 Responses to Owner Inquiries. In addition to the
         obligation of Operator to provide the information as explicitly
         required herein, Operator shall respond to reasonable written or verbal
         requests from Owner for information not otherwise specifically provided
         for herein.

         2.10.....Plant Tours. Owner shall have the right to have its
representatives and guests visit its Generation Facilities, to tour the
facilities, and observe activities at the Generation Facilities; provided that
such visits or tours will not interfere with the operation of the Generation
Facilities, or the security or safety of such facilities. Owner shall assure
that its representatives and guests comply with all applicable rules and
regulations in effect at a Generation Facility whether imposed by Governmental
Authority or by Operator.

         2.11.....Management Audit. Owner shall have the right to conduct a
management audit, at its own cost, of Operator's performance hereunder either by
Owner officers and employees or through their duly authorized agents or
representatives. Operator shall cooperate with Owner in the conducting of such
audit and, subject to applicable Legal Requirements and the requirements of
vendors, give Owner reasonable access to all contracts, records and other
documents relating to the Generating Facilities. Following any such management
audit, Operator shall respond to the findings of such audit if requested to do
so by Owner. Management audits by Owner shall be scheduled so as to minimize the
number of audits required and so as to not to exceed one management audit in any
consecutive twelve-month period.

                                    ARTICLE 3

                              Entitlement to Output

         3.1......Entitlement to Output. Owner shall be entitled to all of the
output from its Generation Facilities at the time generation in such units
occurs. Subject to Operator's primary responsibility for safe operation of the
Generation Facilities, Owner shall have the right to schedule and dispatch the
capacity and energy needed from the facilities, and Operator shall use its best
efforts to honor such schedule.

         3.2......Determination of Output-Responsibility for Station Service and
Losses. Output of each Generation Facility shall be the gross generation of the
facility, less station service requirements, and less adjustments for losses
experienced. Owner shall be responsible for providing all off-site electric
power required at the Generation Facility whenever the station service and
losses exceed the gross generation of the Generation Facility.

                                    ARTICLE 4

                      Costs, Billing, Accounting and Audit

         4.1......Cost of Operation and Maintenance. Owner shall pay to Operator
all direct costs incurred by Operator relating to Operation and Maintenance
Services for the Generation Facilities (including all costs identified in
Section 9.3 and any costs incurred by Operator as a consequence of termination
hereunder). Such costs shall include all payments made to Operator employees
(including payment of wages, salaries, workmen's compensation and other
benefits) relating to work performed by such employees while on the premises of
any of the Generation Facilities. Operator and Owner acknowledge that all such
payments made to Operator employees, relating to work performed by such
employees while on Generation Facility premises, are effectively made by Owner,
since Owner is responsible for such payments and they are made from funds placed
on deposit by Owner for those purposes. Owner shall also pay to Operator the
Generation Facility allocated share of other of Operator's costs. Allocation of
costs to Operation and Maintenance Services shall be performed in accordance
with the methodology agreed-upon from time to time by Owner and Operator.

         4.2......New Investment Costs. Owner shall pay to Operator all costs
incurred by Operator relating to New Investment Services for the Generation
Facilities, including obligations incurred to third parties, direct costs of
Operator associated with such New Investment Services and the Generation
Facilities' allocated share of Operator's other costs associated with such
activities. Allocation of costs to New Investment Services shall be performed in
accordance with the methodology agreed-upon from time to time by Owner and
Operator pursuant to Section 4.1 hereof.

         4.3......Fuel Costs. Owner shall pay to Operator all direct costs
incurred by Operator relating to Fuel Services for the Generation Facilities and
the Generation Facilities allocated share of other of Operator's costs.
Allocation of costs to Fuel Costs shall be performed in accordance with the
methodology agreed-upon from time to time by Owner and Operator pursuant to
Section 4.1 hereof.

         4.4......Other Costs Required by Legal Requirements. Owner shall pay to
Operator all direct costs incurred by Operator and the Generation Facilities'
allocated share of other of Operator's costs associated with any other
activities of Operator relative to the Generation Facilities that are required
to meet Legal Requirements.

         4.5......Revision. Should Operator undertake to perform services for
any other affiliated company or for any non-affiliated company where the cost to
Operator of providing such services affects the cost of Operator to provide
Operating Services pursuant to this Agreement, Operator shall discuss the matter
and reach agreement with Owner respecting the need for or the terms of any
amendment of this Section 4 as may be appropriate to assure the continued
fairness of the determination of the responsibility for costs payable to
Operator hereunder.

         4.6......Billing. Operator shall render to Owner a monthly billing
statement, with detailed data in a computer readable form as reasonably
requested by Owner, no later than the fifth (5th) day of each month detailing
costs incurred for Operation and Maintenance Services during the preceding month
pursuant to Section 4.1; costs incurred for New Investment Services during the
preceding month pursuant to Section 4.2; costs incurred for Fuel Services during
the preceding month pursuant to Section 4.3; and the other costs incurred during
the preceding month pursuant to Section 4.4.

         4.7......Payment. The obligation to make payments as specified herein
shall continue notwithstanding the capability (or lack of capability) of the
Generation Facilities to produce power for any reason.

         4.8......General Accounting Matters. Determinations by Operator on all
accounting matters related to the transactions contemplated by this Agreement
will be in accordance with Generally Accepted Accounting Principles and the
Securities and Exchange Commission's Uniform System of Accounts for Mutual and
Subsidiary Service Companies, utilizing the accrual method of accounting, unless
otherwise specifically provided in this Agreement or mutually agreed by Operator
and Owner or as prescribed by other regulatory agencies having jurisdiction, as
in effect from time to time.

         4.9......Right to Inspect Records. During normal business hours and
subject to conditions consistent with the conduct by Operator of its regular
business affairs and responsibilities, Operator will provide Owner or any
auditor utilized by Owner and reasonably acceptable to Operator, or any
nationally recognized accounting firm retained by Owner, access to Operator's
books, records, and other documents directly related to the performance of
Operator's obligations under this Agreement and, upon request, copies thereof,
which pertain to (a) costs applicable to Operation and Maintenance Services, New
Investment Services, Fuel Services, and Other Costs for Owner's Generation
Facilities to the extent necessary to enable Owner to verify the costs which
have been billed to Owner pursuant to the provisions of this Agreement; (b)
compliance with all environmental Legal Requirements; and (c) matters relating
to the design, construction and operation of Owner's Generation Facilities in
proceedings before any Governmental Authority.

         4.10.....Disputed Invoice. In the event Owner shall question any
statement rendered by Operator in accordance with the provisions of Section 4.1
hereof, Owner shall nevertheless promptly pay amounts called for by Operator
under Section 4.1 hereof but such payment shall not be deemed to prevent Owner
from claiming an adjustment of any statement rendered.

                                    ARTICLE 5

                              Advancement of Funds

         5.1...... Operator shall prepare forecasts, in such frequency, form and
detail as Owner shall direct, of the funds required to pay Operator's
anticipated costs of the services to be provided to Owner and the dates on which
payment of such costs shall become due. Owner shall advance funds to Operator in
such amounts and at such times determined on the basis of such forecasts, to
enable Operator to pay its costs of services on or before payment of such costs
shall be due. Such advances shall be made by deposits or bank transfers to
accounts of Operator with such financial institutions as Operator shall
designate. Any excess funds in such accounts shall be invested by Operator in
accordance with prudent cash management practices and all investment income and
appreciation received on such funds shall be credited against the cost of
service provided to Owner.

                                    ARTICLE 6

                                     Taxes

         6.1...... Owner shall report, file returns with respect to, be
responsible for and pay all real property, franchise, business or other taxes,
except payroll and sales or use taxes, arising out of or relating to its
ownership of the Generation Facilities.

                                    ARTICLE 7

                      Compliance with Provisions of Permits
                    and Requirements of Governmental Agencies

         7.1...... Owner and Operator shall cooperate in taking whatever action
may be necessary to comply with the terms and provisions of all permits and
licenses for the Generation Facilities and with all applicable lawful
requirements of any federal, state or local agency or regulatory body having
jurisdiction in or over the Generation Facilities.

                                    ARTICLE 8

                         Confidentiality of Information

         8.1......Each party to this Agreement may, from time to time, come into
possession of information of the other parties that is either confidential or
proprietary. Any party having any such information which is known to be
considered by any other party as either confidential or proprietary will not
reproduce, copy, use or disclose (except when required by a Governmental
Authority) any such information in whole or in part for any purpose without the
written consent of the other party. In disclosing confidential or proprietary
information to a Governmental Authority, the disclosing party shall cooperate
with the other party in minimizing the amount of such information furnished. At
the specific request of the other party, the disclosing party will endeavor to
secure the agreement of such Governmental Authority to maintain specified
portions of such information in confidence. Public dissemination of information
by the furnishing party before or after it is furnished shall constitute a
termination of the confidentiality requirement as to that specific information.

                                    ARTICLE 9

                 Damage to Persons or Property; Penalties; Fines

         9.1......Applicability of Article. Since Operator is undertaking its
responsibilities hereunder (i) at cost and (ii) in order to assist Owner in
meeting its responsibilities with respect to its Generation Facilities, the
following provisions shall be applicable to loss or damage to the property of
any or all of the parties hereto (including Generation Facilities property) or
of third parties, or injuries to or loss of life by any person, including
employees of the parties hereto, and to penalties or fines assessed with respect
to the Generation Facilities:

         9.2......Absence of Warranty. Operator does not warrant that its
performance of Operating Services will meet the standards set forth in Sections
2.1 and 2.2 hereof, and its sole obligation if it fails to meet such standards
is to reperform at the request of Owner the deficient work at cost payable by
Owner in a manner that complies with such standards. Owner acknowledges that
such services are not subject to any warranty of any nature, express or implied,
including, without limitation, any warranty of merchantability or fitness for a
particular purpose.

         9.3......Liabilities to Third Parties and Owner. (a) To the fullest
extent provided by law, all liability to third parties other than liability for
Operator's Willful Misconduct (as defined in 9.4 below), fraud or gross
negligence whether arising in contract (including breach of warranty), tort
(including negligence, product liability, breach of fiduciary duty or any other
theory of tort liability), under the laws of real property or otherwise, or as a
result of fines or other penalties imposed by any Governmental Authority, that
results from or is in any way connected with the provision of Operation and
Maintenance Services, New Investment Services, or Fuel Services for the
Generation Facilities shall be borne by Owner in their entirety. Owner shall
indemnify and hold harmless Operator, its agents servants, directors, employees
and affiliates (the "Indemnified Parties") from and against any and all claims,
losses, damages, expenses and costs of any kind, including without limitation
attorneys fees, costs of investigation and court costs, other than those
attributable to Willful Misconduct, fraud or gross negligence of Operator,
whether direct or indirect, on account of or by reason of bodily injuries
(including death) to any person or persons or property damage arising out of or
occurring in connection with the provision of Operation and Maintenance
Services, New Investment Services, or Fuel Services for the Generation
Facilities, whether or not such claims, losses, damages, expenses or costs were
caused by or alleged to have been caused by or contributed to by the active,
passive, affirmative, sole or concurrent negligence or by breach of any
statutory or other duty (whether non-delegable or otherwise) of any of the
Indemnified Parties.

         Except for consequences of Operator's Willful Misconduct or fraud,
Owner and its affiliates, servants, employees, agents and insurers hereby
release, acquit and forever discharge the Indemnified Parties, to the fullest
extent permitted by applicable law, from any and all damages, claims, causes of
action, damage to property of Owner or expenses of whatever kind or nature, that
are in any manner connected with the provision of any Operating Services or the
performance and prosecution of any project or work by any of the Indemnified
Parties for or on behalf of Owner for its Generation Facilities, whether arising
in tort (including negligence, strict liability, breach of fiduciary duty or any
other theory of tort liability), contract (including breach of warranty), under
the laws of real property or otherwise, or as a result of any fine or other
penalty imposed by any Governmental Authority. This release shall be effective
whether or not such claims, causes of action, damages, or expenses were caused
or alleged to have been caused by or contributed to by the active, passive,
affirmative, sole or concurrent negligence or by breach of any statutory or
other duty (whether non-delegable or otherwise) of any of the Indemnified
Parties.

         9.4......Willful Misconduct. As used in this Agreement, the term
"Willful Misconduct" shall mean any act or omission by any of the Indemnified
Parties that is performed or omitted consciously with actual knowledge that such
conduct is likely to result in damage or injury to persons or property;
provided, however, that any such act or omission, if performed or omitted by an
Indemnified Party, shall not be deemed Willful Misconduct unless an officer or
employee of Operator at or above the officer level of Vice President or the
employee level of plant manager shall have expressly authorized such act or
omission. Operator shall exercise reasonable and customary supervision or
control over the activities of its agents, servants and employees, and its
affiliates, so as to minimize the potential for adverse willful actions by such
agents, servants or employees or affiliates; provided, however, that failure of
Operator to prevent such adverse willful actions shall not itself be considered
Willful Misconduct. Liability attributable to Operator's Willful Misconduct,
fraud or gross negligence shall be borne by Operator, subject to the limitations
of liability in Section 9.5 below and the last paragraph of Section 9.3 above in
the case of liability to Owner.

         9.5......Limitation of Liability. Notwithstanding Sections 9.3 and 9.4
hereof, Owner agrees that in no event shall any of the Indemnified Parties be
liable to Owner for any indirect, special, punitive, incidental or consequential
damages including, without limitation, (1) loss of profits or revenues, (2)
damages suffered as a result of the loss of the use of Owner's power system,
Generation Facilities or equipment, (3) cost of purchase of replacement power
(including any differential in fuel or power costs), or (4) cost of capital with
respect to any claim based on or in any way connected with this Agreement
whether arising in contract (including breach of warranty), tort (including
negligence, strict liability, breach of fiduciary duty or any other theory of
tort liability), under the laws of real property or any other legal or equitable
theory of law, or as a result of any fine or other penalty imposed by any
Governmental Authority. Owner shall release, acquit, forever discharge,
indemnify, and hold harmless the Indemnified Parties from and against any claim
by any customer of Owner, or any other third party, for any direct, indirect,
special, punitive, incidental or consequential damages arising out of any
performance or failure to perform under this Agreement. The provisions of this
Section 9.5 shall apply to the fullest extent permitted by law.

         9.6......Severability. In the event that any particular application of
any of the limitations of liability contained in this Article 9 should be
finally adjudicated to be void as a violation of the public policy of the State
of Georgia then such limitation of liability shall not apply with respect to
such application to the extent (but only to the extent) required in order for
such limitation of liability not to be void as a violation of such public
policy, and such limitations of liability shall remain in full force and effect
with respect to all other applications to the fullest extent permitted by law.

                                   ARTICLE 10

                                   Insurance

         10.1.....Parties' Obligations Generally. During the term of this
Agreement, Owner and Operator shall make reasonable efforts to procure and
maintain in force such physical damage and loss, public liability, worker's
compensation, officers' liability and other insurance as Owner may deem
appropriate with respect to all losses, damages, liability and claims arising
out of Owner's ownership of its Generation Facilities and Operator's operation
thereof and the provision of Operating Services hereunder. All such insurance
policies shall identify Operator and Owner as additional insureds thereunder as
their interests may appear, and shall contain a waiver of subrogation clause in
favor of Operator and Owner to the extent of the applicable limits of such
policies. The aggregate cost of all insurance, applicable to each Generation
Facility and procured by Operator pursuant to this Agreement, and any payment by
Operator of any deductible, self-insured retention, or co-payment in connection
with any policy claim arising out of Operator's performance of this Agreement
shall be included in the costs of Operating Services. Operator will take steps
to meet the requirements of such insurance policies and cooperate with Owner to
furnish information, establish procedures, erect or change physical facilities
and otherwise meet the requirements of the insurers to maintain coverage in
effect and to collect claims that may be made under such insurance. In the event
that any of the insurance described in this Article 10 is canceled by a party,
that party shall give written notice of such cancellation to the other party at
least sixty (60) days prior to the effective date of such cancellation.

         10.2.....Commercial Liability Insurance. Operator will carry insurance
to cover the legal obligations to pay damages because of bodily injury or
property damage. The limits and deductibles of such coverage shall be as
mutually agreed by Operator and Owner.

         10.3.....Workmen's Compensation Insurance. Operator shall qualify as a
self-insurer in Georgia and with the U.S. Department of Labor for purposes of
the U.S. Longshoreman's and Harbor Worker's Act, but will provide an umbrella
policy to cover benefits in excess of its assumed liability for workmen's
compensation, the Longshoreman's and Harbor Worker's Act, and employers
liability. Owner and Operator acknowledge that, pursuant to the terms of this
Agreement, all premiums for Operator's workmen's compensation insurance and all
payments to Operator employees, including workmen's compensation benefits,
relating to work performed by such employees while on the premises of a
Generation Facility, are effectively made by the Owner, since such premiums and
payments constitute direct charges incurred by Operator in relation to the
performance of Operating Services for such Generation Facility. It is the intent
of Owner and Operator that for purposes of workmen's compensation Owner not be
exposed to greater liability by virtue of this Agreement than Owner would have
if Owner had utilized Owner employees to perform Operating Services. If Operator
and Owner agree, as an alternative, the parties can purchase any such insurance.

         10.4.....Additional Insurance. In the event Owner at any time or from
time to time shall have elected to participate in supplemental insurance
programs to cover other risks arising from the ownership and operation of a
Generation Facility, including the extra costs of replacement power, the costs
of such protection shall be borne by Owner.

         10.5.....Waiver of Subrogation - Allocation and Payment of Premium.
Each insurance policy obtained by a party hereto shall contain waivers of
subrogation against the other party, if obtainable from the insurer. The
aggregate cost of all insurance, applicable to the Generation Facilities and
procured by Operator pursuant to this Agreement, shall be considered an
operating cost subject to reimbursement under Section 4.1. In the event that any
of the foregoing insurance policies is canceled by a party, that party shall
give written notice of such cancellation to the other party sixty (60) days
prior to the effective date of such cancellation.

                                   ARTICLE 11

                                      Term

         11.1.....Term. The term of this Agreement shall commence on the
Effective Date, subject nevertheless to any applicable rules, regulations or
approvals of any regulatory authority whose approval is required. This Agreement
shall expire (i) upon termination pursuant to Section 12.1; or (ii) upon mutual
agreement of the parties. Owner's obligation to make payments to Operator under
this Agreement that have not been satisfied prior to the expiration of the term
of this Agreement shall survive such expiration of the term.

                  11.1.1 It is recognized in the case of expiration under
         Section 11.1(ii), however, that this Agreement shall not expire, unless
         all necessary regulatory approvals, if any, have been obtained to
         transfer the operating responsibility for all Generation Facilities to
         Owner or Owner's designee. Until the date on which such transfer of
         operating responsibility is accomplished, or as Owner may otherwise
         notify Operator in writing, Operator agrees to continue to provide
         Operating Services for the Generation Facilities.

                                   ARTICLE 12

                                    Remedies
         12.1.....Termination. In the event Owner determines that it is in its
interest to do so, or Operator determines that it is in Operator's interest to
do so, either Operator or Owner may at will terminate this Agreement as provided
below. Except as may be otherwise provided in Section 11.1, this Section 12.1
and Article 9 hereof, this right of termination shall be Owner's sole and
exclusive remedy, legal or equitable, for any failure by Operator at any time to
perform its duties, responsibilities, obligations, or functions under this
Agreement, or for any other breach by Operator of this Agreement. The procedure
for exercise of this right of termination shall be as follows:

                  12.1.1 Owner shall give written notice to Operator of Owner's
         determination to terminate this Agreement or Operator shall give
         written notice to Owner of its determination to terminate this
         Agreement.

                  12.1.2 Following the giving of such notice, the parties agree
         to cooperate, in good faith, to accomplish the transfer of operating
         responsibility in a prompt manner, including without limitation
         assigning contracts, transferring employees, and modifying licenses,
         approvals and permits as necessary to reflect such change (including,
         if required to effectuate transfer to Owner for regulatory purposes of
         the operating responsibility for the Generation Facilities).

                  12.1.3 It is recognized that no termination shall be
         accomplished until all necessary regulatory approvals, if any, have
         been obtained to transfer the operating responsibility for all
         Generation Facilities to Owner or Owner's designee. During the period
         between the giving of the notice of determination to terminate, and the
         date on which such transfer of operating responsibility is
         accomplished, Operator agrees to continue the provision of Operating
         Services for the Generation Facilities.

                  12.1.4 Upon receipt of all necessary governmental
         authorization for transfer of operating responsibility for each
         Generation Facility from Operator to Owner or Owner's designee, this
         Agreement shall terminate. Except as may otherwise be provided in
         Section 11.1 and this Section 12.1 and except for the consequences of
         Operator's Willful Misconduct, fraud or gross negligence and the other
         limitations provided in Article 9 hereof, Owner hereby agrees that from
         and after such termination Owner shall indemnify and forever hold
         Operator, its servants, directors, employees, affiliates and its agents
         harmless from and against any and all liability, costs, expenses
         (including reasonable attorneys' fees) and judgments, which may
         thereafter be experienced by Operator, which are in any way related to,
         arise out of or are in connection with the activities of Operator, its
         agents, servants, directors, employees and affiliates under this
         Agreement (whether the cause occurred before or after termination).
         Except as may otherwise be provided in Section 11.1 and this Section
         12.1 and except for the consequences of Operator's Willful Misconduct
         or fraud and the other limitations provided in Article 9 hereof, Owner
         further waives any claim Owner may have against Operator, its officers,
         directors, employees, affiliates and agents for damage to property of
         Owner, that arose out of or in connection with the activities of
         Operator, its officers, directors, employees, affiliates and agents
         under this Agreement. The indemnification and waiver contained herein
         shall survive termination and shall be specifically enforceable by
         Operator against Owner.

                                   ARTICLE 13

                                  Miscellaneous
         13.1.....No Partnership or Joint Venture. Nothing in this Agreement
shall be deemed to create or constitute a partnership, joint venture or
association among the parties hereto or any of them, the sole purpose of this
Agreement being limited to providing for the orderly and efficient operation,
maintenance, repair, upgrade, rehabilitation, renewal, replacement, additions
and construction of the Generation Facilities.

         13.2.....Owner's Designated Representatives. Owner hereby designates
its President as Owner's Representative, who shall receive notices and
communications from Operator under the provisions of this Agreement and who
shall send to the designated Representative of Operator all notices and
communications under the provisions of this Agreement.

         13.3.....Operator's Designated Representative. Operator hereby
designates its President as the Operator Representative, who shall receive
notices and communications from Owner's Representative under the provisions of
this Agreement and who shall send to Owner's Representative all notices and
communications concerning the provisions of this Agreement.

         13.4.....Depreciation. Owner shall determine the basis and method it
will use for purposes of depreciation and other matters where investment in
Generation Facilities property is relevant.

         13.5.....Holidays, Business Days. Any obligations to perform under this
Agreement, including payment obligations, which shall become due on a
non-business day shall become due upon the next business day. The term "business
day" shall mean any day other than a day on which banking institutions in the
City of Atlanta, Georgia are authorized by law to close.

         13.6.....Owner's Services to be Furnished at Cost. To the extent that
Owner may, from time to time, provide goods or services to Operator, Operator
shall pay for such goods and services at Owner's cost determined as herein
provided, which payments shall thereupon be treated as Generation Facilities
costs under Article 4.

         13.7.....Entire Agreement. This Agreement constitutes the entire
understanding among the parties hereto, superseding any and all previous
understandings, oral or written, pertaining to the subject matter contained
herein. No party hereto has relied or will rely upon any verbal or written
representation or verbal or written information made or given to such party by
any representative of the other party or anyone on its behalf.

         13.8.....Amendments. This Agreement may not be amended, modified, or
terminated, nor may any obligation hereunder be waived verbally, and no such
amendment, modification, termination or waiver shall be effective for any
purpose unless it is in writing, and signed by both parties hereto, and all
necessary regulatory approvals have been obtained.

         13.9.....Notices. Any notice, request, consent or other communication
permitted or required by this Agreement shall be in writing and shall be deemed
given when deposited in the United States Mail, first class postage prepaid, and
addressed as follows:

         If to Operator:            Savannah Electric and Power Company
                                    600 East Bay Street
                                    Savannah, GA  31401
                                    Attention: President

         If to Owner:               Southern Power Company
                                    270 Peachtree Street, N.E.
                                    Atlanta, GA  30303
                                    Attention: President

         Unless a different officer or address shall have been designated by the
respective party by notice in writing.

         13.10....Captions. The descriptive captions of the various Articles,
Sections and Paragraphs of this Agreement have been inserted for convenience of
reference only and shall in no way modify or restrict any of the terms and
provisions hereof.

         13.11....Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

         13.12....No Waiver. Failure of any party to enforce any rights or to
require performance of any other party of any of the provisions of this
Agreement shall not release any party of any of its obligations under this
Agreement and shall not be deemed a waiver of any rights of the parties to
insist on performance thereof, or of any of the parties' rights or remedies
hereunder, and in no way shall affect the validity of these terms and conditions
or any part thereof, or the right of any party thereafter to enforce every
provision hereof.

         13.13....Singular and Plural. Throughout this Agreement, whenever any
word in the singular number is used, it shall include the plural unless the
context otherwise requires; and whenever the plural number is used, it shall
include the singular unless the context otherwise requires.

         13.14....Third Party Beneficiaries. This Agreement is for the benefit
of Owner and Operator, and no person or entity other than Owner and Operator is
or shall be entitled to bring any action to enforce any provision of this
Agreement against anyone.

         13.15....Severability. Should any provision of this Agreement be held
to be invalid or unenforceable by a court of competent jurisdiction, the
remaining provisions shall remain in full force and effect, provided that
deletion of the invalid or unenforceable provision does not materially affect
the agreement of the parties contained herein.

                                   ARTICLE 14

                             Successors and Assigns

         14.1.....This Agreement and all of the terms and conditions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that neither this
Agreement nor any of Operator's obligations hereunder shall be assignable by
Operator, in whole or in part, without the express written consent of Owner. Any
mortgage indenture trustee which shall foreclose on substantially all of the
electric generation properties of Owner may, at such trustee's own election, be
deemed to be a successor and assign of Owner under this Agreement.

                                   ARTICLE 15

                                  Governing Law

         15.1.....This Agreement shall be construed in accordance with, and to
be governed by, the laws of the State of Georgia.


<PAGE>


         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and by their duly authorized representatives as of the day and year
first above written.
                                 "Operator"

                                 SAVANNAH ELECTRIC AND POWER COMPANY


                                 By: /s/Sandra R. Miller
                                      Sandra R. Miller
                                      Vice-President, Power Generation



                                 "Owner"

                                 SOUTHERN POWER COMPANY


                                 By: /s/Robert G. Moore
                                      Robert G. Moore
                                      Senior Vice-President, Power Generation




<PAGE>



                                   SCHEDULE 1

SOUTHERN POWER COMPANY GENERATION FACILITIES
AND NEW INVESTMENT PROJECTS

NEW INVESTMENT PROJECT                      LOCATION
Plant McIntosh1                             Effingham County, Georgia

GENERATION FACILITIES                       LOCATION
Plant McIntosh2                             Effingham County, Georgia





--------
1 At all times from the Effective Date of this Agreement until the date of
commercial operation, Plant McIntosh shall be a New Investment Project. Operator
shall perform all New Investment Services, including, without limitation,
construction related services, in connection with Plant McIntosh while it is
classified as a New Investment Project in accordance with the terms and
conditions of this Agreement. In its performance of the New Investment Services
for Plant McIntosh, Operator shall also be entitled to the benefit of all
applicable provisions of this Agreement.

2 As of the date on which Plant McIntosh achieves commercial operation, it shall
be a Generation Facility. Operator shall perform all Operation and Maintenance
Services and all Fuel Services for Plant McIntosh as a Generation Facility in
accordance with the terms and conditions of this Agreement. In its performance
of the Operation and Maintenance Services and the Fuel Services, Operator shall
be entitled to the benefit of all applicable provisions of this Agreement.