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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR

15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2009
 OR
 o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission
    
    Registrant, State of Incorporation,
    
    I.R.S. EmployerFile Number
    
    Address and Telephone Number
    
    Identification No.1-3526
    
    The Southern Company
(A Delaware Corporation) 
30 Ivan Allen Jr. Boulevard, N.W. 
Atlanta, Georgia 30308
(404) 506-5000
    
    58-06900701-3164
    
    Alabama Power Company
(An Alabama Corporation)
600 North 18th Street
Birmingham, Alabama 35291
(205) 257-1000
    
    63-00042501-6468
    
    Georgia Power Company
(A Georgia Corporation)
241 Ralph McGill Boulevard, N.E. 
Atlanta, Georgia 30308
(404) 506-6526
    
    58-02571100-2429
    
    Gulf Power Company
(A Florida Corporation)
One Energy Place
Pensacola, Florida 32520
(850) 444-6111
    
    59-0276810001-11229
    
    Mississippi Power Company
(A Mississippi Corporation)
2992 West Beach 
Gulfport, Mississippi 39501
(228) 864-1211
    
    64-0205820333-98553
    
    Southern Power Company
(A Delaware Corporation) 
30 Ivan Allen Jr. Boulevard, N.W. 
Atlanta, Georgia 30308
(404) 506-5000
    
    58-2598670




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Indicate by check mark whether the registrants (1) have filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrants were required to file such reports), and (2) have been
subject to such filing requirements for the past 90 days. Yes þ No o
 Indicate by check mark whether the registrants have submitted electronically and posted on
their corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period
that the registrants were required to submit and post such files). Yes o No o
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large
accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act. (Check one):
 Large
    
    
    
    
    
    SmallerAccelerated
    
    Accelerated
    
    Non-accelerated
    
    ReportingRegistrant
    
    Filer
    
    Filer
    
    Filer
    
    CompanyThe Southern Company
    
    XAlabama Power Company
    
    
    
    
    
    XGeorgia Power Company
    
    
    
    
    
    XGulf Power Company
    
    
    
    
    
    XMississippi Power Company
    
    
    
    
    
    XSouthern Power Company
    
    
    
    
    
    X
 Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act.) Yes o No þ
 Description of
    
    Shares OutstandingRegistrant
    
    Common Stock
    
    at June 30, 2009The Southern Company
    
    Par Value $5 Per Share
    
    
    796,051,643Alabama Power Company
    
    Par Value $40 Per Share
    
    
    25,475,000Georgia Power Company
    
    Without Par Value
    
    
    9,261,500Gulf Power Company
    
    Without Par Value
    
    
    3,142,717Mississippi Power Company
    
    Without Par Value
    
    
    1,121,000Southern Power Company
    
    Par Value $0.01 Per Share
    
    
    1,000
  2




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##### 



INDEX TO QUARTERLY REPORT ON FORM 10-Q
June 30, 2009
 PageNumberDEFINITIONS
    
    
    5CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
    
    
    7PART I  FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (Unaudited)Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of OperationsThe Southern Company and Subsidiary CompaniesCondensed Consolidated Statements of Income
    
    
    9Condensed Consolidated Statements of Cash Flows
    
    
    10Condensed Consolidated Balance Sheets
    
    
    11Condensed Consolidated Statements of Comprehensive Income
    
    
    13Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Alabama Power CompanyCondensed Statements of Income
    
    
    34Condensed Statements of Comprehensive Income
    
    
    34Condensed Statements of Cash Flows
    
    
    35Condensed Balance Sheets
    
    
    36Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    38Georgia Power CompanyCondensed Statements of Income
    
    
    54Condensed Statements of Comprehensive Income
    
    
    54Condensed Statements of Cash Flows
    
    
    55Condensed Balance Sheets
    
    
    56Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    58Gulf Power CompanyCondensed Statements of Income
    
    
    73Condensed Statements of Comprehensive Income
    
    
    73Condensed Statements of Cash Flows
    
    
    74Condensed Balance Sheets
    
    
    75Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    77Mississippi Power CompanyCondensed Statements of Income
    
    
    93Condensed Statements of Comprehensive Income
    
    
    93Condensed Statements of Cash Flows
    
    
    94Condensed Balance Sheets
    
    
    95Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    97Southern Power Company and Subsidiary CompaniesCondensed Consolidated Statements of Income
    
    
    115Condensed Consolidated Statements of Comprehensive Income
    
    
    115Condensed Consolidated Statements of Cash Flows
    
    
    116Condensed Consolidated Balance Sheets
    
    
    117Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    119Notes to the Condensed Financial Statements
    
    
    132Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    32Item 4.
    
    Controls and Procedures
    
    
    32Item 4T.
    
    Controls and Procedures
    
    
    32
  3




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INDEX TO QUARTERLY REPORT ON FORM 10-Q
June 30, 2009
 PageNumberPART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    
    162Item 1A.
    
    Risk Factors
    
    
    
    162Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    InapplicableItem 3.
    
    Defaults Upon Senior Securities
    
    InapplicableItem 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    
    162Item 5.
    
    Other Information
    
    InapplicableItem 6.
    
    Exhibits
    
    
    
    166Signatures
    
    
    
    170
 4




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DEFINITIONS
 Term
    
    Meaning2007 Retail Rate Plan
    
    Georgia Powers retail rate plan for the years 2008 through 2010Alabama Power
    
    Alabama Power CompanyClean Air Act
    
    Clean Air Act Amendments of 1990DOE
    
    U.S. Department of EnergyDuke Energy
    
    Duke Energy CorporationECO Plan
    
    Mississippi Powers Environmental Compliance Overview PlanEPA
    
    U.S. Environmental Protection AgencyFASB
    
    Financial Accounting Standards BoardFERC
    
    Federal Energy Regulatory CommissionForm 10-K
    
    Combined Annual Report on Form 10-K of Southern Company,
Alabama Power, Georgia Power, Gulf Power, Mississippi Power,
and Southern Power for the year ended December 31, 2008 and,
with respect to Southern Company, the subsequently revised
audited financial statements included in the Current Report on
Form 8-K filed May 8, 2009Georgia Power
    
    Georgia Power CompanyGulf Power
    
    Gulf Power CompanyIGCC
    
    Integrated coal gasification combined cycleIIC
    
    Intercompany Interchange ContractInternal Revenue Code
    
    Internal Revenue Code of 1986, as amendedIRS
    
    Internal Revenue ServiceKWH
    
    Kilowatt-hourLIBOR
    
    London Interbank Offered RateMirant
    
    Mirant CorporationMississippi Power
    
    Mississippi Power CompanymmBtu
    
    Million British thermal unitMW
    
    MegawattMWH
    
    Megawatt-hourNRC
    
    Nuclear Regulatory CommissionNSR
    
    New Source ReviewOCI
    
    Other Comprehensive IncomePEP
    
    Performance Evaluation PlanPower Pool
    
    The operating arrangement whereby the integrated generating
resources of the traditional operating companies and Southern
Power are subject to joint commitment and dispatch in order to
serve their combined load obligationsPPA
    
    Power Purchase AgreementPSC
    
    Public Service CommissionRate ECR
    
    Alabama Powers energy cost recovery rate mechanismregistrants
    
    Southern Company, Alabama Power, Georgia Power, Gulf Power,
Mississippi Power, and Southern PowerSCS
    
    Southern Company Services, Inc.SEC
    
    Securities and Exchange CommissionSouthern Company
    
    The Southern CompanySouthern Company system
    
    Southern Company, the traditional operating companies, Southern
Power, and other subsidiaries
 5




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DEFINITIONS
 Term
    
    MeaningSouthernLINC Wireless
    
    Southern Communications Services, Inc.Southern Nuclear
    
    Southern Nuclear Operating Company, Inc.Southern Power
    
    Southern Power Companytraditional operating companies
    
    Alabama Power, Georgia Power, Gulf Power, and Mississippi Powerwholesale revenues
    
    revenues generated from sales for resale
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
  
    
    the impact of recent and future federal and state regulatory change, including legislative
and regulatory initiatives regarding deregulation and restructuring of the electric utility
industry, implementation of the Energy Policy Act of 2005, environmental laws including
regulation of water quality and emissions of sulfur, nitrogen, mercury, carbon, soot, or
particulate matter and other substances, and also changes in tax and other laws and
regulations to which Southern Company and its subsidiaries are subject, as well as changes in
application of existing laws and regulations;
    
    current and future litigation, regulatory investigations, proceedings, or inquiries,
including the pending EPA civil actions against certain Southern Company subsidiaries, FERC
matters, IRS audits, and Mirant matters;
    
    the effects, extent, and timing of the entry of additional competition in the markets in
which Southern Companys subsidiaries operate;
    
    variations in demand for electricity, including those relating to weather, the general
economy, population and business growth (and declines), and the effects of energy conservation
measures;
    
    available sources and costs of fuels;
    
    effects of inflation;
    
    ability to control costs and avoid cost overruns during the development and construction of
facilities;
    
    investment performance of Southern Companys employee benefit plans;
    
    advances in technology;
    
    state and federal rate regulations and the impact of pending and future rate cases and
negotiations, including rate actions relating to fuel and storm restoration cost recovery and
including Georgia Powers pending accounting order request;
    
    regulatory approvals related to the potential Plant Vogtle expansion, including Georgia PSC
and NRC approvals;
    
    the performance of projects undertaken by the non-utility businesses and the success of
efforts to invest in and develop new opportunities;
    
    internal restructuring or other restructuring options that may be pursued;
    
    potential business strategies, including acquisitions or dispositions of assets or
businesses, which cannot be assured to be completed or beneficial to Southern Company or its
subsidiaries;
    
    the ability of counterparties of Southern Company and its subsidiaries to make payments as
and when due and to perform as required;
    
    the ability to obtain new short- and long-term contracts with neighboring utilities and
other wholesale customers;
    
    the direct or indirect effect on Southern Companys business resulting from terrorist
incidents and the threat of terrorist incidents;
    
    interest rate fluctuations and financial market conditions and the results of financing
efforts, including Southern Companys and its subsidiaries credit ratings;
    
    the ability of Southern Company and its subsidiaries to obtain additional generating
capacity at competitive prices;
    
    catastrophic events such as fires, earthquakes, explosions, floods, hurricanes, droughts,
pandemic health events such as an avian or other influenza, or other similar occurrences;
    
    the direct or indirect effects on Southern Companys business resulting from incidents
similar to the August 2003 power outage in the Northeast;
    
    the effect of accounting pronouncements issued periodically by standard setting bodies; and
    
    other factors discussed elsewhere herein and in other reports (including the Form 10-K)
filed by the registrants from time to time with the SEC.
 Each registrant expressly disclaims any obligation to update any forward-looking statements.
 7




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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
 8




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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
 For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands)
    
    
    (in thousands)Operating Revenues:Retail revenues
    
    $
    3,293,012
    
    
    $
    3,449,878
    
    
    $
    6,357,671
    
    
    $
    6,455,492Wholesale revenues
    
    
    437,750
    
    
    
    591,802
    
    
    
    889,164
    
    
    
    1,105,464Other electric revenues
    
    
    128,403
    
    
    
    141,162
    
    
    
    251,201
    
    
    
    271,352Other revenues
    
    
    25,999
    
    
    
    32,345
    
    
    
    53,435
    
    
    
    65,789Total operating revenues
    
    
    3,885,164
    
    
    
    4,215,187
    
    
    
    7,551,471
    
    
    
    7,898,097Operating Expenses:Fuel
    
    
    1,449,138
    
    
    
    1,622,074
    
    
    
    2,855,405
    
    
    
    3,074,017Purchased power
    
    
    133,188
    
    
    
    197,260
    
    
    
    240,832
    
    
    
    290,164Other operations and maintenance
    
    
    831,214
    
    
    
    914,998
    
    
    
    1,702,295
    
    
    
    1,811,815MC Asset Recovery litigation settlement
    
    
    
    
    
    
    
    
    
    
    202,000
    
    
    
    Depreciation and amortization
    
    
    377,341
    
    
    
    358,745
    
    
    
    767,099
    
    
    
    702,630Taxes other than income taxes
    
    
    208,089
    
    
    
    198,042
    
    
    
    407,969
    
    
    
    387,314Total operating expenses
    
    
    2,998,970
    
    
    
    3,291,119
    
    
    
    6,175,600
    
    
    
    6,265,940Operating Income
    
    
    886,194
    
    
    
    924,068
    
    
    
    1,375,871
    
    
    
    1,632,157Other Income and (Expense):Allowance for equity funds used during construction
    
    
    47,500
    
    
    
    35,486
    
    
    
    90,112
    
    
    
    76,071Interest income
    
    
    4,870
    
    
    
    1,188
    
    
    
    11,778
    
    
    
    10,993Equity in income (losses) of unconsolidated subsidiaries
    
    
    680
    
    
    
    1,097
    
    
    
    (296
    )
    
    
    1,425Leveraged lease income (losses)
    
    
    8,676
    
    
    
    (70,879
    )
    
    
    18,117
    
    
    
    (59,954
    )Gain on disposition of lease termination
    
    
    26,300
    
    
    
    
    
    
    
    26,300
    
    
    
    Loss on extinguishment of debt
    
    
    (17,184
    )
    
    
    
    
    
    
    (17,184
    )
    
    
    Interest expense, net of amounts capitalized
    
    
    (232,830
    )
    
    
    (228,948
    )
    
    
    (458,557
    )
    
    
    (446,057
    )Other income (expense), net
    
    
    (3,681
    )
    
    
    (4,483
    )
    
    
    (16,531
    )
    
    
    (3,569
    )Total other income and (expense)
    
    
    (165,669
    )
    
    
    (266,539
    )
    
    
    (346,261
    )
    
    
    (421,091
    )Earnings Before Income Taxes
    
    
    720,525
    
    
    
    657,529
    
    
    
    1,029,610
    
    
    
    1,211,066Income taxes
    
    
    225,717
    
    
    
    224,952
    
    
    
    392,886
    
    
    
    403,090Consolidated Net Income
    
    
    494,808
    
    
    
    432,577
    
    
    
    636,724
    
    
    
    807,976Dividends on Preferred and Preference Stock of Subsidiaries
    
    
    16,195
    
    
    
    16,195
    
    
    
    32,390
    
    
    
    32,390Consolidated Net Income After Dividends on
Preferred and Preference Stock of Subsidiaries
    
    $
    478,613
    
    
    $
    416,382
    
    
    $
    604,334
    
    
    $
    775,586Common Stock Data:Earnings per share (EPS) Basic EPS
    
    $
    0.61
    
    
    $
    0.54
    
    
    $
    0.77
    
    
    $
    1.01Diluted EPS
    
    $
    0.60
    
    
    $
    0.54
    
    
    $
    0.77
    
    
    $
    1.00Average number of shares of common stock outstanding (in thousands)Basic
    
    
    790,748
    
    
    
    769,122
    
    
    
    785,303
    
    
    
    767,636Diluted
    
    
    792,068
    
    
    
    773,140
    
    
    
    786,865
    
    
    
    771,727Cash dividends paid per share of common stock
    
    $
    0.4375
    
    
    $
    0.4200
    
    
    $
    0.8575
    
    
    $
    0.8225
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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
 For the Six MonthsEnded June 30,2009
    
    
    2008(in thousands)Operating Activities:Consolidated net income
    
    $
    636,724
    
    
    $
    807,976Adjustments to reconcile consolidated net income
to net cash provided from operating activities Depreciation and amortization, total
    
    
    895,354
    
    
    
    831,790Deferred income taxes and investment tax credits
    
    
    (13,807
    )
    
    
    (79,033
    )Deferred revenues
    
    
    (26,295
    )
    
    
    57,768Allowance for equity funds used during construction
    
    
    (90,112
    )
    
    
    (76,071
    )Equity in income (losses) of unconsolidated subsidiaries
    
    
    296
    
    
    
    (1,425
    )Leveraged lease income (losses)
    
    
    (18,117
    )
    
    
    59,954Gain on disposition of lease termination
    
    
    (26,300
    )
    
    
    Loss on extinguishment of debt
    
    
    17,184
    
    
    
    Pension, postretirement, and other employee benefits
    
    
    (10,939
    )
    
    
    24,596Stock option expense
    
    
    18,956
    
    
    
    15,734Hedge settlements
    
    
    (16,167
    )
    
    
    17,289Other, net
    
    
    27,948
    
    
    
    (3,969
    )Changes in certain current assets and liabilities -Receivables
    
    
    74,770
    
    
    
    (317,403
    )-Fossil fuel stock
    
    
    (375,888
    )
    
    
    (121,823
    )-Materials and supplies
    
    
    (20,079
    )
    
    
    (28,609
    )-Other current assets
    
    
    (96,394
    )
    
    
    (54,536
    )-Accounts payable
    
    
    14,711
    
    
    
    161,703-Accrued taxes
    
    
    (140,308
    )
    
    
    181,105-Accrued compensation
    
    
    (298,670
    )
    
    
    (185,500
    )-Other current liabilities
    
    
    66,748
    
    
    
    121,337Net cash provided from operating activities
    
    
    619,615
    
    
    
    1,410,883Investing Activities:Property additions
    
    
    (2,192,959
    )
    
    
    (1,983,177
    )Investment in restricted cash from pollution control revenue bonds
    
    
    (49,478
    )
    
    
    (161
    )Distribution of restricted cash from pollution control revenue bonds
    
    
    59,741
    
    
    
    32,908Nuclear decommissioning trust fund purchases
    
    
    (823,416
    )
    
    
    (405,999
    )Nuclear decommissioning trust fund sales
    
    
    788,690
    
    
    
    399,119Proceeds from property sales
    
    
    339,903
    
    
    
    5,495Cost of removal, net of salvage
    
    
    (63,705
    )
    
    
    (40,757
    )Change in construction payables
    
    
    128,101
    
    
    
    3,174Other investing activities
    
    
    8,063
    
    
    
    (34,547
    )Net cash used for investing activities
    
    
    (1,805,060
    )
    
    
    (2,023,945
    )Financing Activities:Increase (decrease) in notes payable, net
    
    
    148,090
    
    
    
    (151,513
    )Proceeds Long-term debt issuances
    
    
    1,785,474
    
    
    
    1,684,935Common stock issuances
    
    
    539,088
    
    
    
    235,454Redemptions Long-term debt
    
    
    (199,929
    )
    
    
    (361,263
    )Redeemable
preferred stock
    
    
    
    
    
    
    (125,000
    )Payment of common stock dividends
    
    
    (670,226
    )
    
    
    (630,594
    )Payment of dividends on preferred and preference stock of subsidiaries
    
    
    (32,465
    )
    
    
    (33,273
    )Other financing activities
    
    
    (19,327
    )
    
    
    (12,267
    )Net cash provided from financing activities
    
    
    1,550,705
    
    
    
    606,479Net Change in Cash and Cash Equivalents
    
    
    365,260
    
    
    
    (6,583
    )Cash and Cash Equivalents at Beginning of Period
    
    
    416,581
    
    
    
    200,550Cash and Cash Equivalents at End of Period
    
    $
    781,841
    
    
    $
    193,967Supplemental Cash Flow Information:Cash paid during the period for Interest (net of $38,594 and $39,434 capitalized for 2009 and
2008, respectively)
    
    $
    386,729
    
    
    $
    389,466Income taxes (net of refunds)
    
    $
    468,278
    
    
    $
    280,902
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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
 At June 30,
    
    
    At December 31,Assets
    
    2009
    
    
    2008(in thousands)Current Assets:Cash and cash equivalents
    
    $
    781,841
    
    
    $
    416,581Restricted cash and cash equivalents
    
    
    96,540
    
    
    
    102,537Receivables Customer accounts receivable
    
    
    1,149,309
    
    
    
    1,053,674Unbilled revenues
    
    
    453,022
    
    
    
    320,439Under recovered regulatory clause revenues
    
    
    547,927
    
    
    
    646,318Other accounts and notes receivable
    
    
    335,712
    
    
    
    301,028Accumulated provision for uncollectible accounts
    
    
    (27,273
    )
    
    
    (26,326
    )Fossil fuel stock, at average cost
    
    
    1,387,738
    
    
    
    1,018,314Materials and supplies, at average cost
    
    
    773,721
    
    
    
    756,746Vacation pay
    
    
    134,958
    
    
    
    140,283Prepaid expenses
    
    
    364,463
    
    
    
    301,570Other regulatory assets, current
    
    
    322,790
    
    
    
    275,424Other current assets
    
    
    68,622
    
    
    
    51,044Total current assets
    
    
    6,389,370
    
    
    
    5,357,632Property, Plant, and Equipment:In service
    
    
    51,880,917
    
    
    
    50,618,219Less accumulated depreciation
    
    
    18,739,799
    
    
    
    18,285,800Plant in service, net of depreciation
    
    
    33,141,118
    
    
    
    32,332,419Nuclear fuel, at amortized cost
    
    
    546,217
    
    
    
    510,274Construction work in progress
    
    
    3,810,611
    
    
    
    3,035,795Total property, plant, and equipment
    
    
    37,497,946
    
    
    
    35,878,488Other Property and Investments:Nuclear decommissioning trusts, at fair value
    
    
    940,499
    
    
    
    864,396Leveraged leases
    
    
    599,569
    
    
    
    897,338Miscellaneous property and investments
    
    
    227,196
    
    
    
    226,757Total other property and investments
    
    
    1,767,264
    
    
    
    1,988,491Deferred Charges and Other Assets:Deferred charges related to income taxes
    
    
    1,010,624
    
    
    
    972,781Unamortized debt issuance expense
    
    
    215,437
    
    
    
    207,763Unamortized loss on reacquired debt
    
    
    260,614
    
    
    
    270,919Deferred under recovered regulatory clause revenues
    
    
    364,728
    
    
    
    606,483Other regulatory assets, deferred
    
    
    2,553,505
    
    
    
    2,636,217Other deferred charges and assets
    
    
    357,561
    
    
    
    428,432Total deferred charges and other assets
    
    
    4,762,469
    
    
    
    5,122,595Total Assets
    
    $
    50,417,049
    
    
    $
    48,347,206
  11




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
 At June 30,
    
    
    At December 31,Liabilities and Stockholders Equity
    
    2009
    
    
    2008(in thousands)Current Liabilities:Securities due within one year
    
    $
    1,095,586
    
    
    $
    616,415Notes payable
    
    
    1,093,217
    
    
    
    953,437Accounts payable
    
    
    1,419,534
    
    
    
    1,249,694Customer deposits
    
    
    319,842
    
    
    
    302,495Accrued taxes Accrued income taxes
    
    
    95,345
    
    
    
    195,922Unrecognized tax benefits
    
    
    150,344
    
    
    
    131,641Other accrued taxes
    
    
    301,852
    
    
    
    396,206Accrued interest
    
    
    222,382
    
    
    
    195,500Accrued vacation pay
    
    
    168,273
    
    
    
    178,519Accrued compensation
    
    
    162,969
    
    
    
    446,718Liabilities from risk management activities
    
    
    267,977
    
    
    
    260,977Other current liabilities
    
    
    365,441
    
    
    
    298,711Total current liabilities
    
    
    5,662,762
    
    
    
    5,226,235Long-term Debt
    
    
    17,921,409
    
    
    
    16,816,438Deferred Credits and Other Liabilities:Accumulated deferred income taxes
    
    
    6,151,050
    
    
    
    6,080,104Deferred credits related to income taxes
    
    
    261,840
    
    
    
    259,156Accumulated deferred investment tax credits
    
    
    443,128
    
    
    
    455,398Employee benefit obligations
    
    
    2,029,596
    
    
    
    2,057,424Asset retirement obligations
    
    
    1,217,956
    
    
    
    1,182,769Other cost of removal obligations
    
    
    1,327,726
    
    
    
    1,320,558Other regulatory liabilities, deferred
    
    
    217,020
    
    
    
    261,970Other deferred credits and liabilities
    
    
    319,029
    
    
    
    329,534Total deferred credits and other liabilities
    
    
    11,967,345
    
    
    
    11,946,913Total Liabilities
    
    
    35,551,516
    
    
    
    33,989,586Redeemable Preferred Stock of Subsidiaries
    
    
    374,496
    
    
    
    374,496Stockholders Equity:Common Stockholders Equity:Common stock, par value $5 per share Authorized  1 billion sharesIssued  June 30, 2009: 796,509,669 Shares; December 31, 2008: 777,615,751 SharesTreasury  June 30, 2009: 458,026 Shares; December 31, 2008: 423,477 SharesPar value
    
    
    3,982,521
    
    
    
    3,888,041Paid-in capital
    
    
    2,356,636
    
    
    
    1,892,802Treasury, at cost
    
    
    (13,299
    )
    
    
    (12,279
    )Retained earnings
    
    
    7,546,424
    
    
    
    7,611,977Accumulated other comprehensive loss
    
    
    (88,612
    )
    
    
    (104,784
    )Total Common Stockholders Equity
    
    
    13,783,670
    
    
    
    13,275,757Preferred and Preference Stock of Subsidiaries
    
    
    707,367
    
    
    
    707,367Total Stockholders Equity
    
    
    14,491,037
    
    
    
    13,983,124Total Liabilities and Stockholders Equity
    
    $
    50,417,049
    
    
    $
    48,347,206
  12




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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
 For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands)
    
    
    (in thousands)Consolidated Net Income
    
    $
    494,808
    
    
    $
    432,577
    
    
    $
    636,724
    
    
    $
    807,976Other comprehensive income (loss):Qualifying hedges:Changes in fair value, net of tax of $(1,744),
$2,571, $(982), and $(11,417), respectively
    
    
    (2,811
    )
    
    
    4,338
    
    
    
    (1,664
    )
    
    
    (17,913
    )Reclassification adjustment for amounts included
in net income, net of tax of $4,630, $2,371,
$8,463, and $4,149, respectively
    
    
    7,370
    
    
    
    3,733
    
    
    
    13,468
    
    
    
    6,508Marketable securities:Change in fair value, net of tax of $1,204,
$(319), $1,295, and $(2,456), respectively
    
    
    2,935
    
    
    
    (925
    )
    
    
    3,669
    
    
    
    (4,026
    )Pension and other post retirement benefit plans:Reclassification adjustment for amounts included
in net income, net of tax of $221, $277, $443,
and $536, respectively
    
    
    349
    
    
    
    471
    
    
    
    699
    
    
    
    882Total other comprehensive income (loss)
    
    
    7,843
    
    
    
    7,617
    
    
    
    16,172
    
    
    
    (14,549
    )Dividends on preferred and preference stock of
subsidiaries
    
    
    (16,195
    )
    
    
    (16,195
    )
    
    
    (32,390
    )
    
    
    (32,390
    )Comprehensive Income
    
    $
    486,456
    
    
    $
    423,999
    
    
    $
    620,506
    
    
    $
    761,037
  13




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
 
 OVERVIEW
   RESULTS OF OPERATIONS
 Net Income
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$62.2
    
    14.9
    
    $(171.3)
    
    (22.1)
   14




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
 Retail Revenues
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(156.9)
    
    (4.5)
    
    $(97.8)
    
    (1.5)
    Second Quarter
    
    Year-to-Date2009
    
    2009(in millions)
    
    (% change)
    
    (in millions)
    
    (% change)Retail  prior year
    
    $
    3,449.9
    
    
    
    
    
    
    $
    6,455.5Estimated change in Rates and pricing
    
    
    7.7
    
    
    
    0.2
    
    
    
    85.7
    
    
    
    1.3Sales growth (decline)
    
    
    (82.6
    )
    
    
    (2.4
    )
    
    
    (139.1
    )
    
    
    (2.2
    )Weather
    
    
    8.3
    
    
    
    0.3
    
    
    
    4.4
    
    
    
    0.1Fuel and other cost recovery
    
    
    (90.3
    )
    
    
    (2.6
    )
    
    
    (48.8
    )
    
    
    (0.7
    )Retail  current year
    
    $
    3,293.0
    
    
    
    (4.5
    )%
    
    $
    6,357.7
    
    
    
    (1.5
    )%
     15




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
 Wholesale Revenues
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(154.0)
    
    (26.0)
    
    $(216.3)
    
    (19.6)
    Other Electric Revenues
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(12.8)
    
    (9.0)
    
    $(20.2)
    
    (7.4)
    16




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
 Other Revenues
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(6.3)
    
    (19.6)
    
    $(12.4)
    
    (18.8)
   Fuel and Purchased Power Expenses
 Second Quarter 2009
    
    
    Year-to-Date 2009vs.
    
    
    vs.Second Quarter 2008
    
    
    Year-to-Date 2008(change in millions)

    
    (% change)

    
    (change in millions)

    
    (% change)Fuel
    
    $
    (172.9
    )
    
    
    (10.7
    )
    
    $
    (218.6
    )
    
    
    (7.1
    )Purchased power
    
    
    (64.1
    )
    
    
    (32.5
    )
    
    
    (49.3
    )
    
    
    (17.0
    )Total fuel and purchased power expenses
    
    $
    (237.0
    )
    
    
    
    
    
    $
    (267.9
    )
    17




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
  Second Quarter
    
    Second Quarter
    
    Percent
    
    Year-to-Date
    
    Year-to-Date
    
    PercentAverage Cost
    
    2009
    
    2008
    
    Change
    
    2009
    
    2008
    
    Change(cents per net KWH)
    
    
    
    
    
    (cents per net KWH)Fuel
    
    
    3.29
    
    
    
    3.29
    
    
    
    
    
    
    
    3.34
    
    
    
    3.18
    
    
    
    5.0Purchased power
    
    
    7.79
    
    
    
    9.61
    
    
    
    (18.9
    )
    
    
    6.31
    
    
    
    8.28
    
    
    
    (23.8
    )
  Other Operations and Maintenance Expenses
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(83.8)
    
    (9.2)
    
    $(109.5)
    
    (6.0)
   MC Asset Recovery Litigation Settlement
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)
    
    
    
    $202.0
    
    N/M
   18




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
 Depreciation and Amortization
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$18.6
    
    5.2
    
    $64.5
    
    9.2
   Taxes Other Than Income Taxes
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$10.1
    
    5.1
    
    $20.7
    
    5.3
    Allowance for Equity Funds Used During Construction
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$12.0
    
    33.9
    
    $14.0
    
    18.5
    19




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
 Leveraged Lease Income (Losses)
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$79.6
    
    112.2
    
    $78.1
    
    130.2
    Gain on Disposition of Lease Termination
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$26.3
    
    N/M
    
    $26.3
    
    N/M
   Loss on Extinguishment of Debt
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$17.2
    
    N/M
    
    $17.2
    
    N/M
   Interest Expense, Net of Amounts Capitalized
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$3.9
    
    1.7
    
    $12.5
    
    2.8
  20




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
  Other Income (Expense), Net
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$0.8
    
    17.9
    
    $(12.9)
    
    N/M
    Income Taxes
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$0.7
    
    0.3
    
    $(10.2)
    
    (2.5)
   FUTURE EARNINGS POTENTIAL
  21




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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
  Environmental Matters
  Water Quality
  Global Climate Issues
  22




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
  FERC and State PSC Matters
 Market-Based Rate Authority
  Retail Fuel Cost Recovery
   23




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
 Retail Rate Matters
   Legislation
  Construction Projects
 Integrated Coal Gasification Combined Cycle
    24




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
      Nuclear
     25




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
 Nuclear Relicensing
  Other Matters
   ACCOUNTING POLICIES
 Application of Critical Accounting Policies and Estimates
  New Accounting Standards
 Variable Interest Entities
  26




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
 FINANCIAL CONDITION AND LIQUIDITY
 Overview
 1 4
     27




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
 Capital Requirements and Contractual Obligations
  Sources of Capital
    28




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
  Off-Balance Sheet Financing Arrangements
  Credit Rating Risk
  Market Price Risk
   29




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
  Second Quarter
    
    Year-to-Date2009
    
    2009Changes
    
    ChangesFair Value(in millions)Contracts outstanding at the beginning of the period, assets
(liabilities), net
    
    $
    (423
    )
    
    $
    (285
    )Contracts realized or settled
    
    
    127
    
    
    
    187Current period changes(a)
    
    
    (6
    )
    
    
    (204
    )Contracts outstanding at the end of the period, assets (liabilities), net
    
    $
    (302
    )
    
    $
    (302
    )
 
 (a)
    
    Current period changes also include the changes in fair value of new contracts entered into
during the period, if any.   June 30, 2009
    
    December 31, 2008(in millions)Regulatory hedges
    
    $
    (305
    )
    
    $
    (288
    )Cash flow hedges
    
    
    
    
    
    
    (1
    )Not designated
    
    
    3
    
    
    
    4Total fair value
    
    $
    (302
    )
    
    $
    (285
    )
   30




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
  June 30, 2009Fair Value MeasurementsTotal
    
    MaturityFair Value
    
    Year 1
    
    Years 2&3
    
    Years 4&5(in millions)Level 1
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Level 2
    
    
    (302
    )
    
    
    (234
    )
    
    
    (66
    )
    
    
    (2
    )Level 3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Fair value of contracts outstanding at end of period
    
    $
    (302
    )
    
    $
    (234
    )
    
    $
    (66
    )
    
    $
    (2
    )
   Financing Activities
      31




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##### Table of Contents



PART I
 
 Item 3. Quantitative And Qualitative Disclosures About Market Risk.
  
 Item 4. Controls and Procedures.
     
 Item 4T. Controls and Procedures.
     32




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ALABAMA POWER COMPANY
 33




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##### Table of Contents



ALABAMA POWER COMPANY
 For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands)
    
    
    (in thousands)Operating Revenues:Retail revenues
    
    $
    1,119,606
    
    
    $
    1,147,786
    
    
    $
    2,177,743
    
    
    $
    2,182,040Wholesale revenues, non-affiliates
    
    
    153,912
    
    
    
    169,971
    
    
    
    312,607
    
    
    
    340,011Wholesale revenues, affiliates
    
    
    52,493
    
    
    
    96,421
    
    
    
    136,845
    
    
    
    180,113Other revenues
    
    
    40,505
    
    
    
    55,635
    
    
    
    79,087
    
    
    
    104,328Total operating revenues
    
    
    1,366,516
    
    
    
    1,469,813
    
    
    
    2,706,282
    
    
    
    2,806,492Operating Expenses:Fuel
    
    
    447,486
    
    
    
    523,348
    
    
    
    930,719
    
    
    
    976,497Purchased power, non-affiliates
    
    
    26,123
    
    
    
    38,450
    
    
    
    41,667
    
    
    
    49,669Purchased power, affiliates
    
    
    56,570
    
    
    
    75,789
    
    
    
    98,130
    
    
    
    164,496Other operations and maintenance
    
    
    278,298
    
    
    
    306,543
    
    
    
    555,157
    
    
    
    616,093Depreciation and amortization
    
    
    126,487
    
    
    
    130,630
    
    
    
    269,903
    
    
    
    255,267Taxes other than income taxes
    
    
    82,039
    
    
    
    75,614
    
    
    
    162,320
    
    
    
    151,385Total operating expenses
    
    
    1,017,003
    
    
    
    1,150,374
    
    
    
    2,057,896
    
    
    
    2,213,407Operating Income
    
    
    349,513
    
    
    
    319,439
    
    
    
    648,386
    
    
    
    593,085Other Income and (Expense):Allowance for equity funds used during construction
    
    
    19,153
    
    
    
    9,235
    
    
    
    35,878
    
    
    
    20,539Interest income
    
    
    4,148
    
    
    
    4,258
    
    
    
    8,270
    
    
    
    8,900Interest expense, net of amounts capitalized
    
    
    (76,768
    )
    
    
    (69,646
    )
    
    
    (148,975
    )
    
    
    (138,622
    )Other income (expense), net
    
    
    (4,491
    )
    
    
    (6,707
    )
    
    
    (10,863
    )
    
    
    (13,929
    )Total other income and (expense)
    
    
    (57,958
    )
    
    
    (62,860
    )
    
    
    (115,690
    )
    
    
    (123,112
    )Earnings Before Income Taxes
    
    
    291,555
    
    
    
    256,579
    
    
    
    532,696
    
    
    
    469,973Income taxes
    
    
    105,357
    
    
    
    93,798
    
    
    
    190,366
    
    
    
    167,226Net Income
    
    
    186,198
    
    
    
    162,781
    
    
    
    342,330
    
    
    
    302,747Dividends on Preferred and Preference Stock
    
    
    9,866
    
    
    
    9,866
    
    
    
    19,732
    
    
    
    19,732Net Income After Dividends on Preferred and Preference Stock
    
    $
    176,332
    
    
    $
    152,915
    
    
    $
    322,598
    
    
    $
    283,015
 
  For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands)
    
    
    (in thousands)Net Income After Dividends on Preferred and Preference Stock
    
    $
    176,332
    
    
    $
    152,915
    
    
    $
    322,598
    
    
    $
    283,015Other comprehensive income (loss):Qualifying hedges:Changes in fair value, net of tax of $(700), $1,171,
$(1,586), and $(1,039), respectively
    
    
    (1,152
    )
    
    
    1,927
    
    
    
    (2,609
    )
    
    
    (1,710
    )Reclassification adjustment for amounts included in net
income, net of tax of $1,178, $443, $2,239, and $628, respectively
    
    
    1,938
    
    
    
    728
    
    
    
    3,683
    
    
    
    1,033Total other comprehensive income (loss)
    
    
    786
    
    
    
    2,655
    
    
    
    1,074
    
    
    
    (677
    )Comprehensive Income
    
    $
    177,118
    
    
    $
    155,570
    
    
    $
    323,672
    
    
    $
    282,338
  34




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##### Table of Contents



ALABAMA POWER COMPANY
 For the Six MonthsEnded June 30,2009
    
    
    2008(in thousands)Operating Activities:Net income
    
    $
    342,330
    
    
    $
    302,747Adjustments to reconcile net income
to net cash provided from operating activities Depreciation and amortization, total
    
    
    311,868
    
    
    
    297,792Deferred income taxes and investment tax credits, net
    
    
    5,182
    
    
    
    20,648Allowance for equity funds used during construction
    
    
    (35,878
    )
    
    
    (20,539
    )Pension, postretirement, and other employee benefits
    
    
    (16,568
    )
    
    
    (12,958
    )Stock option expense
    
    
    3,168
    
    
    
    2,520Tax benefit of stock options
    
    
    42
    
    
    
    460Other, net
    
    
    638
    
    
    
    14,499Changes in certain current assets and liabilities -Receivables
    
    
    206,523
    
    
    
    34,056-Fossil fuel stock
    
    
    (59,418
    )
    
    
    (21,879
    )-Materials and supplies
    
    
    (9,094
    )
    
    
    (6,887
    )-Other current assets
    
    
    (62,618
    )
    
    
    (42,632
    )-Accounts payable
    
    
    (133,138
    )
    
    
    (68,407
    )-Accrued taxes
    
    
    25,199
    
    
    
    64,490-Accrued compensation
    
    
    (56,429
    )
    
    
    (47,094
    )-Other current liabilities
    
    
    18,302
    
    
    
    26,481Net cash provided from operating activities
    
    
    540,109
    
    
    
    543,297Investing Activities:Property additions
    
    
    (641,598
    )
    
    
    (714,878
    )Investment in restricted cash from pollution control revenue bonds
    
    
    (290
    )
    
    
    (161
    )Distribution of restricted cash from pollution control revenue bonds
    
    
    32,758
    
    
    
    19,687Nuclear decommissioning trust fund purchases
    
    
    (124,057
    )
    
    
    (180,522
    )Nuclear decommissioning trust fund sales
    
    
    124,057
    
    
    
    180,522Cost of removal, net of salvage
    
    
    (13,004
    )
    
    
    (18,157
    )Other investing activities
    
    
    (1,583
    )
    
    
    (11,489
    )Net cash used for investing activities
    
    
    (623,717
    )
    
    
    (724,998
    )Financing Activities:Increase (decrease) in notes payable, net
    
    
    (24,995
    )
    
    
    24,980Proceeds Common stock issued to parent
    
    
    
    
    
    
    150,000Capital contributions from parent company
    
    
    11,510
    
    
    
    12,178Gross excess tax benefit of stock options
    
    
    81
    
    
    
    858Pollution control revenue bonds
    
    
    53,000
    
    
    
    Senior notes issuances
    
    
    500,000
    
    
    
    600,000Redemptions Preferred stock
    
    
    
    
    
    
    (125,000
    )Senior notes
    
    
    
    
    
    
    (250,000
    )Payment of preferred and preference stock dividends
    
    
    (19,740
    )
    
    
    (21,142
    )Payment of common stock dividends
    
    
    (261,400
    )
    
    
    (245,650
    )Other financing activities
    
    
    (6,114
    )
    
    
    (5,523
    )Net cash provided from financing activities
    
    
    252,342
    
    
    
    140,701Net Change in Cash and Cash Equivalents
    
    
    168,734
    
    
    
    (41,000
    )Cash and Cash Equivalents at Beginning of Period
    
    
    28,181
    
    
    
    73,616Cash and Cash Equivalents at End of Period
    
    $
    196,915
    
    
    $
    32,616Supplemental Cash Flow Information:Cash paid during the period for Interest (net of $15,005 and $9,322 capitalized for 2009 and 2008, respectively)
    
    $
    122,624
    
    
    $
    126,502Income taxes (net of refunds)
    
    $
    203,248
    
    
    $
    124,050
  35




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##### Table of Contents



ALABAMA POWER COMPANY
 At June 30,
    
    
    At December 31,Assets
    
    2009
    
    
    2008(in thousands)Current Assets:Cash and cash equivalents
    
    $
    196,915
    
    
    $
    28,181Restricted cash and cash equivalents
    
    
    47,611
    
    
    
    80,079Receivables Customer accounts receivable
    
    
    375,523
    
    
    
    350,410Unbilled revenues
    
    
    137,895
    
    
    
    98,921Under recovered regulatory clause revenues
    
    
    125,583
    
    
    
    153,899Other accounts and notes receivable
    
    
    34,923
    
    
    
    44,645Affiliated companies
    
    
    21,122
    
    
    
    70,612Accumulated provision for uncollectible accounts
    
    
    (9,125
    )
    
    
    (8,882
    )Fossil fuel stock, at average cost
    
    
    375,978
    
    
    
    322,089Materials and supplies, at average cost
    
    
    313,297
    
    
    
    305,880Vacation pay
    
    
    52,825
    
    
    
    52,577Prepaid expenses
    
    
    146,665
    
    
    
    88,219Other regulatory assets, current
    
    
    78,371
    
    
    
    74,825Other current assets
    
    
    17,451
    
    
    
    12,915Total current assets
    
    
    1,915,034
    
    
    
    1,674,370Property, Plant, and Equipment:In service
    
    
    17,897,911
    
    
    
    17,635,129Less accumulated provision for depreciation
    
    
    6,429,812
    
    
    
    6,259,720Plant in service, net of depreciation
    
    
    11,468,099
    
    
    
    11,375,409Nuclear fuel, at amortized cost
    
    
    244,057
    
    
    
    231,862Construction work in progress
    
    
    1,419,838
    
    
    
    1,092,516Total property, plant, and equipment
    
    
    13,131,994
    
    
    
    12,699,787Other Property and Investments:Equity investments in unconsolidated subsidiaries
    
    
    57,071
    
    
    
    50,912Nuclear decommissioning trusts, at fair value
    
    
    420,053
    
    
    
    403,966Miscellaneous property and investments
    
    
    65,735
    
    
    
    62,782Total other property and investments
    
    
    542,859
    
    
    
    517,660Deferred Charges and Other Assets:Deferred charges related to income taxes
    
    
    380,116
    
    
    
    362,596Prepaid pension costs
    
    
    186,893
    
    
    
    166,334Deferred under recovered regulatory clause revenues
    
    
    
    
    
    
    180,874Other regulatory assets, deferred
    
    
    710,265
    
    
    
    732,367Other deferred charges and assets
    
    
    198,258
    
    
    
    202,018Total deferred charges and other assets
    
    
    1,475,532
    
    
    
    1,644,189Total Assets
    
    $
    17,065,419
    
    
    $
    16,536,006
  36




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##### Table of Contents



ALABAMA POWER COMPANY
 At June 30,
    
    
    At December 31,Liabilities and Stockholder's Equity
    
    2009
    
    
    2008(in thousands)Current Liabilities:Securities due within one year
    
    $
    250,000
    
    
    $
    250,079Notes payable
    
    
    
    
    
    
    24,995Accounts payable Affiliated
    
    
    169,684
    
    
    
    178,708Other
    
    
    252,902
    
    
    
    358,176Customer deposits
    
    
    84,880
    
    
    
    77,205Accrued taxes Accrued income taxes
    
    
    35,767
    
    
    
    18,299Other accrued taxes
    
    
    73,653
    
    
    
    30,372Accrued interest
    
    
    69,044
    
    
    
    56,375Accrued vacation pay
    
    
    44,217
    
    
    
    44,217Accrued compensation
    
    
    43,219
    
    
    
    91,856Liabilities from risk management activities
    
    
    87,888
    
    
    
    83,873Other current liabilities
    
    
    45,075
    
    
    
    53,777Total current liabilities
    
    
    1,156,329
    
    
    
    1,267,932Long-term Debt
    
    
    6,156,915
    
    
    
    5,604,791Deferred Credits and Other Liabilities:Accumulated deferred income taxes
    
    
    2,248,530
    
    
    
    2,243,117Deferred credits related to income taxes
    
    
    89,884
    
    
    
    90,083Accumulated deferred investment tax credits
    
    
    168,668
    
    
    
    172,638Employee benefit obligations
    
    
    396,440
    
    
    
    396,923Asset retirement obligations
    
    
    476,038
    
    
    
    461,284Other cost of removal obligations
    
    
    657,939
    
    
    
    634,792Other regulatory liabilities, deferred
    
    
    57,749
    
    
    
    79,151Other deferred credits and liabilities
    
    
    40,428
    
    
    
    45,857Total deferred credits and other liabilities
    
    
    4,135,676
    
    
    
    4,123,845Total Liabilities
    
    
    11,448,920
    
    
    
    10,996,568Redeemable Preferred Stock
    
    
    341,716
    
    
    
    341,716Preference Stock
    
    
    343,412
    
    
    
    343,412Common Stockholders Equity:Common stock, par value $40 per share Authorized - 40,000,000 sharesOutstanding - 25,475,000 shares
    
    
    1,019,000
    
    
    
    1,019,000Paid-in capital
    
    
    2,106,259
    
    
    
    2,091,462Retained earnings
    
    
    1,814,987
    
    
    
    1,753,797Accumulated other comprehensive loss
    
    
    (8,875
    )
    
    
    (9,949
    )Total common stockholders equity
    
    
    4,931,371
    
    
    
    4,854,310Total Liabilities and Stockholders Equity
    
    $
    17,065,419
    
    
    $
    16,536,006
  37




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##### Table of Contents



ALABAMA POWER COMPANY
 
 OVERVIEW
   RESULTS OF OPERATIONS
 Net Income
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$23.4
    
    15.3
    
    $39.6
    
    14.0
   38




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##### Table of Contents



ALABAMA POWER COMPANY
 Retail Revenues
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(28.2)
    
    (2.5)
    
    $(4.3)
    
    (0.2)
   Second Quarter
    
    Year-to-Date2009
    
    2009(in millions)
    
    (% change)
    
    (in millions)
    
    (% change)Retail  prior year
    
    $
    1,147.8
    
    
    
    
    
    
    $
    2,182.0Estimated change in Rates and pricing
    
    
    40.8
    
    
    
    3.5
    
    
    
    90.4
    
    
    
    4.1Sales growth (decline)
    
    
    (40.5
    )
    
    
    (3.5
    )
    
    
    (72.8
    )
    
    
    (3.3
    )Weather
    
    
    3.4
    
    
    
    0.3
    
    
    
    2.7
    
    
    
    0.1Fuel and other cost recovery
    
    
    (31.9
    )
    
    
    (2.8
    )
    
    
    (24.6
    )
    
    
    (1.1
    )Retail  current year
    
    $
    1,119.6
    
    
    
    (2.5
    )%
    
    $
    2,177.7
    
    
    
    (0.2
    )%
    39




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##### Table of Contents



ALABAMA POWER COMPANY
   Wholesale Revenues  Non-Affiliates
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(16.1)
    
    (9.4)
    
    $(27.4)
    
    (8.1)
    Wholesale Revenues  Affiliates
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(43.9)
    
    (45.6)
    
    $(43.3)
    
    (24.0)
    40




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##### Table of Contents



ALABAMA POWER COMPANY
 Other Revenues
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(15.1)
    
    (27.2)
    
    $(25.2)
    
    (24.2)
    Fuel and Purchased Power Expenses
 Second Quarter 2009
    
    Year-to-Date 2009vs.
    
    vs.Second Quarter 2008
    
    Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)Fuel
    
    $
    (75.9
    )
    
    
    (14.5
    )
    
    $
    (45.8
    )
    
    
    (4.7
    )Purchased power  non-affiliates
    
    
    (12.3
    )
    
    
    (32.1
    )
    
    
    (8.0
    )
    
    
    (16.1
    )Purchased power  affiliates
    
    
    (19.2
    )
    
    
    (25.4
    )
    
    
    (66.4
    )
    
    
    (40.3
    )Total fuel and purchased power expenses
    
    $
    (107.4
    )
    
    
    
    
    
    $
    (120.2
    )
    41




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##### Table of Contents



ALABAMA POWER COMPANY
  Second Quarter
    
    Second Quarter
    
    Percent
    
    Year-to-Date
    
    Year-to-Date
    
    PercentAverage Cost
    
    2009
    
    2008
    
    Change
    
    2009
    
    2008
    
    Change(cents per net KWH)
    
    
    
    
    
    (cents per net KWH)Fuel
    
    
    2.78
    
    
    
    2.72
    
    
    
    2.2
    
    
    
    2.85
    
    
    
    2.66
    
    
    
    7.1Purchased power
    
    
    6.01
    
    
    
    8.61
    
    
    
    (30.2
    )
    
    
    6.06
    
    
    
    6.97
    
    
    
    (13.1
    )
   Non-Affiliates
    Affiliates
   42




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##### Table of Contents



ALABAMA POWER COMPANY
  Other Operations and Maintenance Expenses
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(28.2)
    
    (9.2)
    
    $(60.9)
    
    (9.9)
   Depreciation and Amortization
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(4.1)
    
    (3.2)
    
    $14.6
    
    5.7
     43




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##### Table of Contents



ALABAMA POWER COMPANY
 Taxes Other than Income Taxes
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$6.4
    
    8.5
    
    $10.9
    
    7.2
  Allowance for Equity Funds Used During Construction
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$9.9
    
    107.4
    
    $15.3
    
    74.7
  Interest Expense, Net of Amounts Capitalized
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$7.1
    
    10.2
    
    $10.4
    
    7.5
  Income Taxes
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$11.6
    
    12.3
    
    $23.1
    
    13.8
  44




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##### Table of Contents



ALABAMA POWER COMPANY
 FUTURE EARNINGS POTENTIAL
   Environmental Matters
  Water Quality
  Global Climate Issues
  45




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##### Table of Contents



ALABAMA POWER COMPANY
  FERC and Alabama PSC Matters
 Market-Based Rate Authority
  Retail Fuel Cost Recovery
  46




---



##### Table of Contents



ALABAMA POWER COMPANY
  Natural Disaster Cost Recovery
  Steam Service
  Legislation
  Other Matters
  47




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##### Table of Contents



ALABAMA POWER COMPANY
   ACCOUNTING POLICIES
 Application of Critical Accounting Policies and Estimates
  New Accounting Standards
 Variable Interest Entities
  FINANCIAL CONDITION AND LIQUIDITY
 Overview
 1 4
 48




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##### Table of Contents



ALABAMA POWER COMPANY
     Capital Requirements and Contractual Obligations
  Sources of Capital
 49




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##### Table of Contents



ALABAMA POWER COMPANY
  Credit Rating Risk
  Market Price Risk
   50




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##### Table of Contents



ALABAMA POWER COMPANY
  Second Quarter
    
    Year-to-Date2009
    
    2009Changes
    
    ChangesFair Value(in millions)Contracts outstanding at the beginning of the period, assets
(liabilities), net
    
    $
    (130.2
    )
    
    $
    (91.9
    )Contracts realized or settled
    
    
    40.6
    
    
    
    63.9Current period changes(a)
    
    
    (1.9
    )
    
    
    (63.5
    )Contracts outstanding at the end of the period, assets (liabilities), net
    
    $
    (91.5
    )
    
    $
    (91.5
    )
 
 (a)
    
    Current period changes also include the changes in fair value of new contracts entered into
during the period, if any.   June 30,
    
    December 31,2009
    
    2008(in millions)Regulatory hedges
    
    
    $(91.5
    )
    
    
    $(91.9
    )Cash flow hedges
    
    
    
    
    
    
    Not designated
    
    
    
    
    
    
    Total fair value
    
    
    $(91.5
    )
    
    
    $(91.9
    )
   51




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##### Table of Contents



ALABAMA POWER COMPANY
  June 30, 2009Fair Value MeasurementsTotal
    
    MaturityFair Value
    
    Year 1
    
    Years 2&3
    
    Years 4&5(in millions)Level 1
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Level 2
    
    
    (91.5
    )
    
    
    (77.0
    )
    
    
    (14.6
    )
    
    
    0.1Level 3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Fair value of
contracts
outstanding at end
of period
    
    $
    (91.5
    )
    
    $
    (77.0
    )
    
    $
    (14.6
    )
    
    $
    0.1
   Financing Activities
     52




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##### Table of Contents



GEORGIA POWER COMPANY
 53




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##### Table of Contents



GEORGIA POWER COMPANY
 For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands)
    
    
    (in thousands)Operating Revenues:Retail revenues
    
    $
    1,682,225
    
    
    $
    1,830,753
    
    
    $
    3,274,620
    
    
    $
    3,405,760Wholesale revenues, non-affiliates
    
    
    96,570
    
    
    
    142,276
    
    
    
    192,556
    
    
    
    294,968Wholesale revenues, affiliates
    
    
    29,623
    
    
    
    72,164
    
    
    
    44,833
    
    
    
    146,074Other revenues
    
    
    65,896
    
    
    
    65,969
    
    
    
    128,146
    
    
    
    129,207Total operating revenues
    
    
    1,874,314
    
    
    
    2,111,162
    
    
    
    3,640,155
    
    
    
    3,976,009Operating Expenses:Fuel
    
    
    652,889
    
    
    
    683,299
    
    
    
    1,253,379
    
    
    
    1,321,222Purchased power, non-affiliates
    
    
    70,817
    
    
    
    107,723
    
    
    
    132,770
    
    
    
    165,754Purchased power, affiliates
    
    
    172,418
    
    
    
    247,842
    
    
    
    369,641
    
    
    
    500,777Other operations and maintenance
    
    
    353,562
    
    
    
    391,781
    
    
    
    744,055
    
    
    
    760,596Depreciation and amortization
    
    
    175,080
    
    
    
    159,204
    
    
    
    342,191
    
    
    
    309,812Taxes other than income taxes
    
    
    81,008
    
    
    
    79,485
    
    
    
    157,256
    
    
    
    150,771Total operating expenses
    
    
    1,505,774
    
    
    
    1,669,334
    
    
    
    2,999,292
    
    
    
    3,208,932Operating Income
    
    
    368,540
    
    
    
    441,828
    
    
    
    640,863
    
    
    
    767,077Other Income and (Expense):Allowance for equity funds used during construction
    
    
    22,313
    
    
    
    23,981
    
    
    
    43,067
    
    
    
    51,738Interest income
    
    
    (197
    )
    
    
    1,050
    
    
    
    1,033
    
    
    
    1,837Interest expense, net of amounts capitalized
    
    
    (99,425
    )
    
    
    (83,727
    )
    
    
    (197,815
    )
    
    
    (170,065
    )Other income (expense), net
    
    
    2,531
    
    
    
    1,371
    
    
    
    (4,189
    )
    
    
    (1,922
    )Total other income and (expense)
    
    
    (74,778
    )
    
    
    (57,325
    )
    
    
    (157,904
    )
    
    
    (118,412
    )Earnings Before Income Taxes
    
    
    293,762
    
    
    
    384,503
    
    
    
    482,959
    
    
    
    648,665Income taxes
    
    
    99,682
    
    
    
    132,279
    
    
    
    162,310
    
    
    
    216,080Net Income
    
    
    194,080
    
    
    
    252,224
    
    
    
    320,649
    
    
    
    432,585Dividends on Preferred and Preference Stock
    
    
    4,346
    
    
    
    4,346
    
    
    
    8,691
    
    
    
    8,691Net Income After Dividends on Preferred and
Preference Stock
    
    $
    189,734
    
    
    $
    247,878
    
    
    $
    311,958
    
    
    $
    423,894
 
  For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands)
    
    
    (in thousands)Net Income After Dividends on Preferred and Preference Stock
    
    $
    189,734
    
    
    $
    247,878
    
    
    $
    311,958
    
    
    $
    423,894Other comprehensive income (loss):Qualifying hedges:Changes in fair value, net of tax of $(905), $6,027, $275, and
$(16), respectively
    
    
    (1,435
    )
    
    
    9,556
    
    
    
    435
    
    
    
    (24
    )Reclassification adjustment for amounts included in net
income, net of tax of $2,427, $489, $4,170, and $695, respectively
    
    
    3,848
    
    
    
    774
    
    
    
    6,611
    
    
    
    1,101Total other comprehensive income (loss)
    
    
    2,413
    
    
    
    10,330
    
    
    
    7,046
    
    
    
    1,077Comprehensive Income
    
    $
    192,147
    
    
    $
    258,208
    
    
    $
    319,004
    
    
    $
    424,971
  54




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##### Table of Contents



GEORGIA POWER COMPANY
 For the Six MonthsEnded June 30,2009
    
    
    2008(in thousands)Operating Activities:Net income
    
    $
    320,649
    
    
    $
    432,585Adjustments to reconcile net income
to net cash provided from operating activities Depreciation and amortization, total
    
    
    402,086
    
    
    
    367,910Deferred income taxes and investment tax credits
    
    
    54,721
    
    
    
    29,175Deferred revenues
    
    
    (20,929
    )
    
    
    60,875Deferred expenses
    
    
    20,523
    
    
    
    27,059Allowance for equity funds used during construction
    
    
    (43,067
    )
    
    
    (51,738
    )Pension, postretirement, and other employee benefits
    
    
    (11,543
    )
    
    
    6,304Hedge settlements
    
    
    (16,167
    )
    
    
    (20,486
    )Other, net
    
    
    42,135
    
    
    
    (25,801
    )Changes in certain current assets and liabilities -Receivables
    
    
    (126,080
    )
    
    
    (193,372
    )-Fossil fuel stock
    
    
    (222,837
    )
    
    
    (40,214
    )-Prepaid income taxes
    
    
    (20,298
    )
    
    
    4,302-Other current assets
    
    
    (14,914
    )
    
    
    (14,874
    )-Accounts payable
    
    
    120,228
    
    
    
    102,384-Accrued taxes
    
    
    (74,291
    )
    
    
    (12,300
    )-Accrued compensation
    
    
    (103,764
    )
    
    
    (49,119
    )-Other current liabilities
    
    
    31,345
    
    
    
    54,941Net cash provided from operating activities
    
    
    337,797
    
    
    
    677,631Investing Activities:Property additions
    
    
    (1,208,114
    )
    
    
    (992,317
    )Distribution of restricted cash from pollution control revenue bonds
    
    
    15,566
    
    
    
    13,221Nuclear decommissioning trust fund purchases
    
    
    (699,359
    )
    
    
    (225,477
    )Nuclear decommissioning trust fund sales
    
    
    664,633
    
    
    
    218,597Cost of removal, net of salvage
    
    
    (33,041
    )
    
    
    (15,957
    )Change in construction payables, net of joint owner portion
    
    
    103,558
    
    
    
    7,200Other investing activities
    
    
    43,910
    
    
    
    (16,754
    )Net cash used for investing activities
    
    
    (1,112,847
    )
    
    
    (1,011,487
    )Financing Activities:Increase (decrease) in notes payable, net
    
    
    114,439
    
    
    
    (347,612
    )Proceeds Capital contributions from parent company
    
    
    602,968
    
    
    
    251,262Pollution control revenue bonds issuances
    
    
    
    
    
    
    94,935Senior notes issuances
    
    
    500,000
    
    
    
    500,000Other long-term debt issuances
    
    
    750
    
    
    
    300,000Redemptions Pollution control revenue bonds
    
    
    
    
    
    
    (41,935
    )Senior notes
    
    
    (151,928
    )
    
    
    (45,812
    )Payment of preferred and preference stock dividends
    
    
    (8,758
    )
    
    
    (8,309
    )Payment of common stock dividends
    
    
    (369,450
    )
    
    
    (360,600
    )Other financing activities
    
    
    (7,963
    )
    
    
    (8,430
    )Net cash provided from financing activities
    
    
    680,058
    
    
    
    333,499Net Change in Cash and Cash Equivalents
    
    
    (94,992
    )
    
    
    (357
    )Cash and Cash Equivalents at Beginning of Period
    
    
    132,739
    
    
    
    15,392Cash and Cash Equivalents at End of Period
    
    $
    37,747
    
    
    $
    15,035Supplemental Cash Flow Information:Cash paid during the period for Interest (net of $18,986 and $21,619 capitalized for 2009 and 2008, respectively)
    
    $
    167,890
    
    
    $
    154,225Income taxes (net of refunds)
    
    $
    79,141
    
    
    $
    130,091
  55




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##### Table of Contents



GEORGIA POWER COMPANY
 At June 30,
    
    
    At December 31,Assets
    
    2009
    
    
    2008(in thousands)Current Assets:Cash and cash equivalents
    
    $
    37,747
    
    
    $
    132,739Restricted cash and cash equivalents
    
    
    11,081
    
    
    
    22,381Receivables Customer accounts receivable
    
    
    575,753
    
    
    
    554,219Unbilled revenues
    
    
    212,550
    
    
    
    147,978Under recovered regulatory clause revenues
    
    
    346,608
    
    
    
    338,780Joint owner accounts receivable
    
    
    146,544
    
    
    
    43,858Other accounts and notes receivable
    
    
    44,913
    
    
    
    54,041Affiliated companies
    
    
    15,784
    
    
    
    13,091Accumulated provision for uncollectible accounts
    
    
    (11,679
    )
    
    
    (10,732
    )Fossil fuel stock, at average cost
    
    
    707,594
    
    
    
    484,757Materials and supplies, at average cost
    
    
    362,530
    
    
    
    356,537Vacation pay
    
    
    65,644
    
    
    
    71,217Prepaid income taxes
    
    
    86,285
    
    
    
    65,987Other regulatory assets, current
    
    
    151,044
    
    
    
    118,961Other current assets
    
    
    52,240
    
    
    
    63,464Total current assets
    
    
    2,804,638
    
    
    
    2,457,278Property, Plant, and Equipment:In service
    
    
    24,779,503
    
    
    
    23,975,262Less accumulated provision for depreciation
    
    
    9,301,959
    
    
    
    9,101,474Plant in service, net of depreciation
    
    
    15,477,544
    
    
    
    14,873,788Nuclear fuel, at amortized cost
    
    
    302,160
    
    
    
    278,412Construction work in progress
    
    
    1,759,917
    
    
    
    1,434,989Total property, plant, and equipment
    
    
    17,539,621
    
    
    
    16,587,189Other Property and Investments:Equity investments in unconsolidated subsidiaries
    
    
    63,450
    
    
    
    57,163Nuclear decommissioning trusts, at fair value
    
    
    520,445
    
    
    
    460,430Miscellaneous property and investments
    
    
    37,058
    
    
    
    40,945Total other property and investments
    
    
    620,953
    
    
    
    558,538Deferred Charges and Other Assets:Deferred charges related to income taxes
    
    
    586,370
    
    
    
    572,528Deferred under recovered regulatory clause revenues
    
    
    364,728
    
    
    
    425,609Other regulatory assets, deferred
    
    
    1,361,027
    
    
    
    1,449,352Other deferred charges and assets
    
    
    204,552
    
    
    
    265,174Total deferred charges and other assets
    
    
    2,516,677
    
    
    
    2,712,663Total Assets
    
    $
    23,481,889
    
    
    $
    22,315,668
  56




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##### Table of Contents



GEORGIA POWER COMPANY
 At June 30,
    
    
    At December 31,Liabilities and Stockholder's Equity
    
    2009
    
    
    2008(in thousands)Current Liabilities:Securities due within one year
    
    $
    435,372
    
    
    $
    280,443Notes payable
    
    
    471,533
    
    
    
    357,095Accounts payable Affiliated
    
    
    240,279
    
    
    
    260,545Other
    
    
    678,495
    
    
    
    422,485Customer deposits
    
    
    193,851
    
    
    
    186,919Accrued taxes Accrued income taxes
    
    
    78,877
    
    
    
    70,916Unrecognized tax benefits
    
    
    148,686
    
    
    
    128,712Other accrued taxes
    
    
    155,370
    
    
    
    278,172Accrued interest
    
    
    91,215
    
    
    
    79,432Accrued vacation pay
    
    
    49,248
    
    
    
    57,643Accrued compensation
    
    
    38,556
    
    
    
    135,191Liabilities from risk management activities
    
    
    109,522
    
    
    
    113,432Other current liabilities
    
    
    207,789
    
    
    
    136,176Total current liabilities
    
    
    2,898,793
    
    
    
    2,507,161Long-term Debt
    
    
    7,196,675
    
    
    
    7,006,275Deferred Credits and Other Liabilities:Accumulated deferred income taxes
    
    
    3,161,017
    
    
    
    3,064,580Deferred credits related to income taxes
    
    
    134,470
    
    
    
    140,933Accumulated deferred investment tax credits
    
    
    249,357
    
    
    
    256,218Employee benefit obligations
    
    
    870,699
    
    
    
    882,965Asset retirement obligations
    
    
    706,933
    
    
    
    688,019Other cost of removal obligations
    
    
    378,462
    
    
    
    396,947Other regulatory liabilities, deferred
    
    
    75,293
    
    
    
    115,865Other deferred credits and liabilities
    
    
    108,498
    
    
    
    111,505Total deferred credits and other liabilities
    
    
    5,684,729
    
    
    
    5,657,032Total Liabilities
    
    
    15,780,197
    
    
    
    15,170,468Preferred Stock
    
    
    44,991
    
    
    
    44,991Preference Stock
    
    
    220,966
    
    
    
    220,966Common Stockholders Equity:Common stock, without par valueAuthorized - 20,000,000 sharesOutstanding - 9,261,500 shares
    
    
    398,473
    
    
    
    398,473Paid-in capital
    
    
    4,262,668
    
    
    
    3,655,731Retained earnings
    
    
    2,800,298
    
    
    
    2,857,789Accumulated other comprehensive loss
    
    
    (25,704
    )
    
    
    (32,750
    )Total common stockholders equity
    
    
    7,435,735
    
    
    
    6,879,243Total Liabilities and Stockholders Equity
    
    $
    23,481,889
    
    
    $
    22,315,668
  57




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##### Table of Contents



GEORGIA POWER COMPANY
 
 OVERVIEW
   RESULTS OF OPERATIONS
 Net Income
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(58.2)
    
    (23.5)
    
    $(111.9)
    
    (26.4)
  Retail Revenues
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(148.5)
    
    (8.1)
    
    $(131.1)
    
    (3.9)
  58




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##### Table of Contents



GEORGIA POWER COMPANY
  Second Quarter
    
    Year-to-Date2009
    
    2009(in millions)
    
    (% change)
    
    (in millions)
    
    (% change)Retail  prior year
    
    $
    1,830.8
    
    
    
    
    
    
    $
    3,405.8Estimated change in Rates and pricing
    
    
    (42.1
    )
    
    
    (2.3
    )
    
    
    (22.5
    )
    
    
    (0.7
    )Sales growth (decline)
    
    
    (42.4
    )
    
    
    (2.3
    )
    
    
    (60.4
    )
    
    
    (1.8
    )Weather
    
    
    5.1
    
    
    
    0.3
    
    
    
    4.5
    
    
    
    0.1Fuel cost recovery
    
    
    (69.2
    )
    
    
    (3.8
    )
    
    
    (52.8
    )
    
    
    (1.5
    )Retail  current year
    
    $
    1,682.2
    
    
    
    (8.1
    )%
    
    $
    3,274.6
    
    
    
    (3.9
    )%
     Wholesale Revenues  Non-Affiliates
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(45.7)
    
    (32.1)
    
    $(102.4)
    
    (34.7)
  59




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##### Table of Contents



GEORGIA POWER COMPANY
  Wholesale Revenues  Affiliates
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(42.6)
    
    (59.0)
    
    $(101.3)
    
    (69.3)
   Fuel and Purchased Power Expenses
 Second Quarter 2009
    
    Year-to-Date 2009vs.
    
    vs.Second Quarter 2008
    
    Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)Fuel
    
    $
    (30.4
    )
    
    
    (4.5
    )
    
    $
    (67.8
    )
    
    
    (5.1
    )Purchased power  non-affiliates
    
    
    (36.9
    )
    
    
    (34.3
    )
    
    
    (33.0
    )
    
    
    (19.9
    )Purchased power  affiliates
    
    
    (75.4
    )
    
    
    (30.4
    )
    
    
    (131.2
    )
    
    
    (26.2
    )Total fuel and purchased power expenses
    
    $
    (142.7
    )
    
    
    
    
    
    $
    (232.0
    )
   60




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##### Table of Contents



GEORGIA POWER COMPANY
  Second Quarter
    
    Second Quarter
    
    Percent
    
    
    
    
    
    
    
    
    
    PercentAverage Cost
    
    2009
    
    2008
    
    Change
    
    Year-to-Date 2009
    
    Year-to-Date 2008
    
    Change(cents per net KWH)
    
    
    
    
    
    (cents per net KWH)Fuel
    
    
    3.40
    
    
    
    3.03
    
    
    
    12.2
    
    
    
    3.32
    
    
    
    2.94
    
    
    
    12.9Purchased power
    
    
    6.41
    
    
    
    8.90
    
    
    
    (28.0
    )
    
    
    6.41
    
    
    
    8.07
    
    
    
    (20.6
    )
   Non-Affiliates
   Affiliates
   61




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##### Table of Contents



GEORGIA POWER COMPANY
 Other Operations and Maintenance Expenses
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(38.2)
    
    (9.8)
    
    $(16.5)
    
    (2.2)
   Depreciation and Amortization
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$15.9
    
    10.0
    
    $32.4
    
    10.5
  Allowance for Equity Funds Used During Construction
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(1.7)
    
    (7.0)
    
    $(8.6)
    
    (16.8)
   62




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##### Table of Contents



GEORGIA POWER COMPANY
 Interest Expense, Net of Amount Capitalized
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$15.7
    
    18.7
    
    $27.7
    
    16.3
  Income Taxes
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(32.6)
    
    (24.6)
    
    $(53.8)
    
    (24.9)
  FUTURE EARNINGS POTENTIAL
  Environmental Matters
  Water Quality
  63




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##### Table of Contents



GEORGIA POWER COMPANY
  Global Climate Issues
  FERC and Georgia PSC Matters
 Market-Based Rate Authority
  64




---



##### Table of Contents



GEORGIA POWER COMPANY
  Retail Fuel Cost Recovery
   Retail Rate Matters
   Legislation
  65




---



##### Table of Contents



GEORGIA POWER COMPANY
  Construction
 Nuclear
     Other
  Nuclear Relicensing
  Other Matters
  66




---



##### Table of Contents



GEORGIA POWER COMPANY
  ACCOUNTING POLICIES
 Application of Critical Accounting Policies and Estimates
  New Accounting Standards
 Variable Interest Entities
  FINANCIAL CONDITION AND LIQUIDITY
 Overview
 3 8
 67




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##### Table of Contents



GEORGIA POWER COMPANY
    Capital Requirements and Contractual Obligations
 
 Sources of Capital
   68




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##### Table of Contents



GEORGIA POWER COMPANY
   Credit Rating Risk
  Market Price Risk
   69




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##### Table of Contents



GEORGIA POWER COMPANY
  Second Quarter
    
    Year-to-Date2009
    
    2009Changes
    
    ChangesFair Value(in millions)Contracts outstanding at the beginning of the period, assets
(liabilities), net
    
    $
    (176.6
    )
    
    $
    (113.2
    )Contracts realized or settled
    
    
    54.3
    
    
    
    74.1Current period changes(a)
    
    
    (3.1
    )
    
    
    (86.3
    )Contracts outstanding at the end of the period, assets (liabilities), net
    
    $
    (125.4
    )
    
    $
    (125.4
    )
 
 (a)
    
    Current period changes also include the changes in fair value of new contracts entered into
during the period, if any.   June 30,
    
    December 31,2009
    
    2008(in millions)Regulatory hedges
    
    $
    (125.4
    )
    
    $
    (113.2
    )Not designated
    
    
    
    
    
    
    Total fair value
    
    $
    (125.4
    )
    
    $
    (113.2
    )
   70




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##### Table of Contents



GEORGIA POWER COMPANY
  June 30, 2009Fair Value MeasurementsTotal
    
    MaturityFair Value
    
    Year 1
    
    Years 2&3
    
    Years 4&5(in millions)Level 1
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Level 2
    
    
    (125.4
    )
    
    
    (100.6
    )
    
    
    (25.1
    )
    
    
    0.3Level 3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Fair value of
contracts
outstanding at end
of period
    
    $
    (125.4
    )
    
    $
    (100.6
    )
    
    $
    (25.1
    )
    
    $
    0.3
   Financing Activities
     71




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##### Table of Contents



GULF POWER COMPANY
 72




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##### Table of Contents



GULF POWER COMPANY
 For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands)
    
    
    (in thousands)Operating Revenues:Retail revenues
    
    
    
    
    
    $
    290,050
    
    
    $
    284,218
    
    
    $
    528,441
    
    
    $
    512,182Wholesale revenues, non-affiliates
    
    
    
    
    
    
    22,700
    
    
    
    25,052
    
    
    
    44,666
    
    
    
    50,708Wholesale revenues, affiliates
    
    
    
    
    
    
    10,727
    
    
    
    26,524
    
    
    
    16,087
    
    
    
    69,464Other revenues
    
    
    
    
    
    
    17,618
    
    
    
    14,073
    
    
    
    36,185
    
    
    
    29,048Total operating revenues
    
    
    
    
    
    
    341,095
    
    
    
    349,867
    
    
    
    625,379
    
    
    
    661,402Operating Expenses:Fuel
    
    
    
    
    
    
    156,195
    
    
    
    165,999
    
    
    
    271,748
    
    
    
    316,126Purchased power, non-affiliates
    
    
    
    
    
    
    6,051
    
    
    
    6,086
    
    
    
    10,489
    
    
    
    9,212Purchased power, affiliates
    
    
    
    
    
    
    13,240
    
    
    
    16,685
    
    
    
    28,621
    
    
    
    25,428Other operations and maintenance
    
    
    
    
    
    
    64,983
    
    
    
    65,774
    
    
    
    137,474
    
    
    
    132,205Depreciation and amortization
    
    
    
    
    
    
    23,317
    
    
    
    22,206
    
    
    
    46,376
    
    
    
    43,910Taxes other than income taxes
    
    
    
    
    
    
    22,989
    
    
    
    20,803
    
    
    
    45,437
    
    
    
    41,499Total operating expenses
    
    
    
    
    
    
    286,775
    
    
    
    297,553
    
    
    
    540,145
    
    
    
    568,380Operating Income
    
    
    
    
    
    
    54,320
    
    
    
    52,314
    
    
    
    85,234
    
    
    
    93,022Other Income and (Expense):Allowance for equity funds used during construction
    
    
    
    
    
    
    5,707
    
    
    
    2,040
    
    
    
    10,525
    
    
    
    3,523Interest income
    
    
    
    
    
    
    85
    
    
    
    709
    
    
    
    294
    
    
    
    1,418Interest expense, net of amounts capitalized
    
    
    
    
    
    
    (9,907
    )
    
    
    (10,678
    )
    
    
    (19,739
    )
    
    
    (21,674
    )Other income (expense), net
    
    
    
    
    
    
    (487
    )
    
    
    (344
    )
    
    
    (1,103
    )
    
    
    (1,010
    )Total other income and (expense)
    
    
    
    
    
    
    (4,602
    )
    
    
    (8,273
    )
    
    
    (10,023
    )
    
    
    (17,743
    )Earnings Before Income Taxes
    
    
    
    
    
    
    49,718
    
    
    
    44,041
    
    
    
    75,211
    
    
    
    75,279Income taxes
    
    
    
    
    
    
    15,899
    
    
    
    15,499
    
    
    
    23,299
    
    
    
    25,656Net Income
    
    
    
    
    
    
    33,819
    
    
    
    28,542
    
    
    
    51,912
    
    
    
    49,623Dividends on Preference Stock
    
    
    
    
    
    
    1,550
    
    
    
    1,550
    
    
    
    3,101
    
    
    
    3,101Net Income After Dividends on Preference Stock
    
    
    
    
    
    $
    32,269
    
    
    $
    26,992
    
    
    $
    48,811
    
    
    $
    46,522
 
  For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands)
    
    
    (in thousands)Net Income After Dividends on Preference Stock
    
    $
    32,269
    
    
    $
    26,992
    
    
    $
    48,811
    
    
    $
    46,522Other comprehensive income (loss):Qualifying hedges:Changes in fair value, net of tax of $-, $403, $-, and
$(1,077), respectively
    
    
    
    
    
    
    643
    
    
    
    
    
    
    
    (1,715
    )Reclassification adjustment for amounts included in net
income, net of tax of $104, $103, $209, and $157,
respectively
    
    
    167
    
    
    
    162
    
    
    
    334
    
    
    
    249Total other comprehensive income (loss)
    
    
    167
    
    
    
    805
    
    
    
    334
    
    
    
    (1,466
    )Comprehensive Income
    
    $
    32,436
    
    
    $
    27,797
    
    
    $
    49,145
    
    
    $
    45,056
  73




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##### Table of Contents



GULF POWER COMPANY
 For the Six MonthsEnded June 30,2009
    
    
    2008(in thousands)Operating Activities:Net income
    
    $
    51,912
    
    
    $
    49,623Adjustments to reconcile net income
to net cash provided from operating activities Depreciation and amortization, total
    
    
    48,831
    
    
    
    46,438Deferred income taxes
    
    
    (10,224
    )
    
    
    9,215Allowance for equity funds used during construction
    
    
    (10,525
    )
    
    
    (3,523
    )Pension, postretirement, and other employee benefits
    
    
    (597
    )
    
    
    554Stock option expense
    
    
    637
    
    
    
    537Tax benefit of stock options
    
    
    3
    
    
    
    109Hedge settlements
    
    
    
    
    
    
    (5,220
    )Other, net
    
    
    (1,762
    )
    
    
    (60
    )Changes in certain current assets and liabilities -Receivables
    
    
    (3,606
    )
    
    
    (27,073
    )-Fossil fuel stock
    
    
    (50,999
    )
    
    
    (26,432
    )-Materials and supplies
    
    
    (459
    )
    
    
    6,669-Prepaid income taxes
    
    
    416
    
    
    
    -Property damage cost recovery
    
    
    10,816
    
    
    
    12,463-Other current assets
    
    
    1,319
    
    
    
    1,339-Accounts payable
    
    
    (1,002
    )
    
    
    6,419-Accrued taxes
    
    
    13,591
    
    
    
    4,433-Accrued compensation
    
    
    (9,347
    )
    
    
    (6,952
    )-Other current liabilities
    
    
    10,640
    
    
    
    2,838Net cash provided from operating activities
    
    
    49,644
    
    
    
    71,377Investing Activities:Property additions
    
    
    (240,336
    )
    
    
    (149,760
    )Investment in restricted cash from pollution control revenue bonds
    
    
    (49,188
    )
    
    
    Distribution of restricted cash from pollution control revenue bonds
    
    
    11,417
    
    
    
    Cost of removal, net of salvage
    
    
    (5,439
    )
    
    
    (4,519
    )Construction payables
    
    
    9,661
    
    
    
    5,754Other investing activities
    
    
    (3,375
    )
    
    
    (2,885
    )Net cash used for investing activities
    
    
    (277,260
    )
    
    
    (151,410
    )Financing Activities:Decrease in notes payable, net
    
    
    (73,944
    )
    
    
    (40,801
    )Proceeds Common stock issued to parent
    
    
    135,000
    
    
    
    Capital contributions from parent company
    
    
    1,897
    
    
    
    73,060Gross excess tax benefit of stock options
    
    
    9
    
    
    
    212Pollution control revenue bonds
    
    
    130,400
    
    
    
    Senior notes
    
    
    140,000
    
    
    
    Other long-term debt issuances
    
    
    
    
    
    
    110,000Redemptions Senior notes
    
    
    (722
    )
    
    
    (651
    )Payment of preference stock dividends
    
    
    (3,101
    )
    
    
    (2,956
    )Payment of common stock dividends
    
    
    (44,650
    )
    
    
    (40,850
    )Other financing activities
    
    
    (1,556
    )
    
    
    (2,141
    )Net cash provided from financing activities
    
    
    283,333
    
    
    
    95,873Net Change in Cash and Cash Equivalents
    
    
    55,717
    
    
    
    15,840Cash and Cash Equivalents at Beginning of Period
    
    
    3,443
    
    
    
    5,348Cash and Cash Equivalents at End of Period
    
    $
    59,160
    
    
    $
    21,188Supplemental Cash Flow Information:Cash paid during the period for Interest (net of $4,195 and $1,404 capitalized for
2009 and 2008, respectively)
    
    $
    19,502
    
    
    $
    19,831Income taxes (net of refunds)
    
    $
    25,642
    
    
    $
    17,744
  74




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GULF POWER COMPANY
 At June 30,
    
    
    At December 31,Assets
    
    2009
    
    
    2008(in thousands)Current Assets:Cash and cash equivalents
    
    $
    59,160
    
    
    $
    3,443Restricted cash and cash equivalents
    
    
    37,771
    
    
    
    Receivables Customer accounts receivable
    
    
    91,578
    
    
    
    69,531Unbilled revenues
    
    
    71,132
    
    
    
    48,742Under recovered regulatory clause revenues
    
    
    54,573
    
    
    
    98,644Other accounts and notes receivable
    
    
    5,943
    
    
    
    7,201Affiliated companies
    
    
    4,205
    
    
    
    8,516Accumulated provision for uncollectible accounts
    
    
    (2,120
    )
    
    
    (2,188
    )Fossil fuel stock, at average cost
    
    
    159,084
    
    
    
    108,129Materials and supplies, at average cost
    
    
    37,295
    
    
    
    36,836Other regulatory assets, current
    
    
    37,791
    
    
    
    38,908Other current assets
    
    
    25,320
    
    
    
    25,655Total current assets
    
    
    581,732
    
    
    
    443,417Property, Plant, and Equipment:In service
    
    
    2,872,680
    
    
    
    2,785,561Less accumulated provision for depreciation
    
    
    993,670
    
    
    
    971,464Plant in service, net of depreciation
    
    
    1,879,010
    
    
    
    1,814,097Construction work in progress
    
    
    540,019
    
    
    
    391,987Total property, plant, and equipment
    
    
    2,419,029
    
    
    
    2,206,084Other Property and Investments
    
    
    15,779
    
    
    
    15,918Deferred Charges and Other Assets:Deferred charges related to income taxes
    
    
    31,556
    
    
    
    24,220Other regulatory assets, deferred
    
    
    172,345
    
    
    
    170,836Other deferred charges and assets
    
    
    24,569
    
    
    
    18,550Total deferred charges and other assets
    
    
    228,470
    
    
    
    213,606Total Assets
    
    $
    3,245,010
    
    
    $
    2,879,025
  75




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##### Table of Contents



GULF POWER COMPANY
 At June 30,
    
    
    At December 31,Liabilities and Stockholder's Equity
    
    2009
    
    
    2008(in thousands)Current Liabilities:Securities due within one year
    
    $
    140,000
    
    
    $
    Notes payable
    
    
    65,986
    
    
    
    148,239Accounts payable Affiliated
    
    
    58,777
    
    
    
    50,304Other
    
    
    93,742
    
    
    
    90,381Customer deposits
    
    
    30,571
    
    
    
    28,017Accrued taxes Accrued income taxes
    
    
    23,610
    
    
    
    39,983Other accrued taxes
    
    
    18,064
    
    
    
    11,855Accrued interest
    
    
    9,363
    
    
    
    8,959Accrued compensation
    
    
    6,319
    
    
    
    15,667Other regulatory liabilities, current
    
    
    17,799
    
    
    
    4,602Liabilities from risk management activities
    
    
    23,734
    
    
    
    26,928Other current liabilities
    
    
    21,254
    
    
    
    29,047Total current liabilities
    
    
    509,219
    
    
    
    453,982Long-term Debt
    
    
    979,177
    
    
    
    849,265Deferred Credits and Other Liabilities:Accumulated deferred income taxes
    
    
    275,861
    
    
    
    254,354Accumulated deferred investment tax credits
    
    
    10,454
    
    
    
    11,255Employee benefit obligations
    
    
    95,660
    
    
    
    97,389Other cost of removal obligations
    
    
    185,098
    
    
    
    180,325Other regulatory liabilities, deferred
    
    
    41,668
    
    
    
    28,597Other deferred credits and liabilities
    
    
    85,743
    
    
    
    83,768Total deferred credits and other liabilities
    
    
    694,484
    
    
    
    655,688Total Liabilities
    
    
    2,182,880
    
    
    
    1,958,935Preference Stock
    
    
    97,998
    
    
    
    97,998Common Stockholders Equity:Common stock, without par valueAuthorized - 20,000,000 sharesOutstanding - June 30, 2009: 3,142,717 shares- December 31, 2008: 1,792,717 shares
    
    
    253,060
    
    
    
    118,060Paid-in capital
    
    
    514,091
    
    
    
    511,547Retained earnings
    
    
    201,579
    
    
    
    197,417Accumulated other comprehensive loss
    
    
    (4,598
    )
    
    
    (4,932
    )Total common stockholders equity
    
    
    964,132
    
    
    
    822,092Total Liabilities and Stockholders Equity
    
    $
    3,245,010
    
    
    $
    2,879,025
  76




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##### Table of Contents



GULF POWER COMPANY
 
 OVERVIEW
   RESULTS OF OPERATIONS
 Net Income
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$5.3
    
    19.6
    
    $2.3
    
    4.9
   Retail Revenues
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$5.9
    
    2.1
    
    $16.2
    
    3.1
  77




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##### Table of Contents



GULF POWER COMPANY
  Second Quarter
    
    Year-to-Date2009
    
    2009(in millions)
    
    (% change)
    
    (in millions)
    
    (% change)Retail  prior year
    
    $
    284.2
    
    
    
    
    
    
    $
    512.2Estimated change in Rates and pricing
    
    
    8.0
    
    
    
    2.9
    
    
    
    15.3
    
    
    
    3.0Sales growth (decline)
    
    
    0.6
    
    
    
    0.2
    
    
    
    (3.5
    )
    
    
    (0.7
    )Weather
    
    
    (1.4
    )
    
    
    (0.5
    )
    
    
    (3.0
    )
    
    
    (0.6
    )Fuel and other cost recovery
    
    
    (1.3
    )
    
    
    (0.5
    )
    
    
    7.4
    
    
    
    1.4Retail  current year
    
    $
    290.1
    
    
    
    2.1
    %
    
    $
    528.4
    
    
    
    3.1
    %
      78




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##### Table of Contents



GULF POWER COMPANY
  Wholesale Revenues  Non-Affiliates
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(2.3)
    
    (9.4)
    
    $(6.0)
    
    (11.9)
    Wholesale Revenues  Affiliates
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(15.8)
    
    (59.6)
    
    $(53.4)
    
    (76.8)
    79




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##### Table of Contents



GULF POWER COMPANY
 Other Revenues
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$3.5
    
    25.2
    
    $7.2
    
    24.6
  Fuel and Purchased Power Expenses
 Second Quarter 2009
    
    Year-to-Date 2009vs.
    
    vs.Second Quarter 2008
    
    Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)Fuel
    
    $
    (9.8
    )
    
    
    (5.9
    )
    
    $
    (44.4
    )
    
    
    (14.0
    )Purchased power  non-affiliates
    
    
    (0.1
    )
    
    
    (0.6
    )
    
    
    1.3
    
    
    
    13.9Purchased power  affiliates
    
    
    (3.4
    )
    
    
    (20.6
    )
    
    
    3.2
    
    
    
    12.6Total fuel and purchased power expenses
    
    $
    (13.3
    )
    
    
    
    
    
    $
    (39.9
    )
     Second Quarter
    
    Second Quarter
    
    Percent
    
    Year-to-Date
    
    Year-to-Date
    
    PercentAverage Cost
    
    2009
    
    2008
    
    Change
    
    2009
    
    2008
    
    Change(cents per net KWH)
    
    
    
    
    
    (cents per net KWH)Fuel
    
    
    4.45
    
    
    
    4.26
    
    
    
    4.5
    
    
    
    4.39
    
    
    
    4.03
    
    
    
    8.9Purchased power
    
    
    6.71
    
    
    
    10.73
    
    
    
    (37.5
    )
    
    
    5.87
    
    
    
    8.90
    
    
    
    (34.0
    )
 80




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##### Table of Contents



GULF POWER COMPANY
   Non-Affiliates
    Affiliates
    Other Operations and Maintenance Expenses
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(0.8)
    
    (1.2)
    
    $5.3
    
    4.0
  81




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##### Table of Contents



GULF POWER COMPANY
  Depreciation and Amortization
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$1.1
    
    5.0
    
    $2.5
    
    5.6
  Taxes Other Than Income Taxes
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$2.2
    
    10.5
    
    $3.9
    
    9.5
  Allowance for Equity Funds Used During Construction
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$3.7
    
    N/M
    
    $7.0
    
    N/M
   Interest Income
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(0.6)
    
    (88.0)
    
    $(1.1)
    
    (79.3)
  82




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##### Table of Contents



GULF POWER COMPANY
 Interest Expense, Net of Amounts Capitalized
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(0.8)
    
    (7.2)
    
    $(1.9)
    
    (8.9)
  Income Taxes
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$0.4
    
    2.6
    
    $(2.4)
    
    (9.2)
   FUTURE EARNINGS POTENTIAL
  Environmental Matters
  83




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##### Table of Contents



GULF POWER COMPANY
 Water Quality
  Global Climate Issues
  FERC and Florida PSC Matters
 Market-Based Rate Authority
  84




---



##### Table of Contents



GULF POWER COMPANY
  Retail Fuel Cost Recovery
   Legislation
  Other Matters
  85




---



##### Table of Contents



GULF POWER COMPANY
    ACCOUNTING POLICIES
 Application of Critical Accounting Policies and Estimates
  New Accounting Standards
 Variable Interest Entities
  86




---



##### Table of Contents



GULF POWER COMPANY
 FINANCIAL CONDITION AND LIQUIDITY
 Overview
 1 2
    87




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##### Table of Contents



GULF POWER COMPANY
 Capital Requirements and Contractual Obligations
 
 Sources of Capital
   Credit Rating Risk
  88




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##### Table of Contents



GULF POWER COMPANY
  Market Price Risk
    Second Quarter
    
    Year-to-Date2009
    
    2009Changes
    
    ChangesFair Value(in millions)Contracts outstanding at the beginning of the period, assets
(liabilities), net
    
    $
    (43.2
    )
    
    $
    (31.2
    )Contracts realized or settled
    
    
    15.2
    
    
    
    23.2Current period changes(a)
    
    
    (0.2
    )
    
    
    (20.2
    )Contracts outstanding at the end of the period, assets (liabilities), net
    
    $
    (28.2
    )
    
    $
    (28.2
    )
 
 (a)
    
    Current period changes also include the changes in fair value of new contracts entered into
during the period, if any.  89




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##### Table of Contents



GULF POWER COMPANY
  June 30,
    
    December 31,2009
    
    2008(in millions)Regulatory hedges
    
    $
    (28.2
    )
    
    $
    (31.2
    )Not designated
    
    
    
    
    
    
    Total fair value
    
    $
    (28.2
    )
    
    $
    (31.2
    )
    June 30, 2009Fair Value MeasurementsTotal
    
    MaturityFair Value
    
    Year 1
    
    Years 2&3
    
    Years 4&5(in millions)Level 1
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Level 2
    
    
    (28.2
    )
    
    
    (23.4
    )
    
    
    (4.8
    )
    
    
    Level 3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Fair value of
contracts
outstanding at end
of period
    
    $
    (28.2
    )
    
    $
    (23.4
    )
    
    $
    (4.8
    )
    
    $
    
   90




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##### Table of Contents



GULF POWER COMPANY
 Financing Activities
      91




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##### Table of Contents



MISSISSIPPI POWER COMPANY
 92




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##### Table of Contents



MISSISSIPPI POWER COMPANY
 For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands)
    
    
    (in thousands)Operating Revenues:Retail revenues
    
    $
    201,132
    
    
    $
    187,121
    
    
    $
    376,867
    
    
    $
    355,510Wholesale revenues, non-affiliates
    
    
    73,693
    
    
    
    83,595
    
    
    
    153,847
    
    
    
    168,401Wholesale revenues, affiliates
    
    
    7,963
    
    
    
    22,546
    
    
    
    17,381
    
    
    
    50,925Other revenues
    
    
    3,893
    
    
    
    4,670
    
    
    
    7,309
    
    
    
    8,512Total operating revenues
    
    
    286,681
    
    
    
    297,932
    
    
    
    555,404
    
    
    
    583,348Operating Expenses:Fuel
    
    
    125,832
    
    
    
    138,857
    
    
    
    245,797
    
    
    
    268,973Purchased power, non-affiliates
    
    
    2,873
    
    
    
    5,426
    
    
    
    5,708
    
    
    
    7,681Purchased power, affiliates
    
    
    21,595
    
    
    
    17,484
    
    
    
    43,400
    
    
    
    43,482Other operations and maintenance
    
    
    61,601
    
    
    
    63,368
    
    
    
    121,362
    
    
    
    128,141Depreciation and amortization
    
    
    17,660
    
    
    
    17,101
    
    
    
    35,675
    
    
    
    35,098Taxes other than income taxes
    
    
    16,221
    
    
    
    16,286
    
    
    
    31,145
    
    
    
    31,851Total operating expenses
    
    
    245,782
    
    
    
    258,522
    
    
    
    483,087
    
    
    
    515,226Operating Income
    
    
    40,899
    
    
    
    39,410
    
    
    
    72,317
    
    
    
    68,122Other Income and (Expense):Interest income
    
    
    163
    
    
    
    184
    
    
    
    795
    
    
    
    593Interest expense, net of amounts capitalized
    
    
    (6,254
    )
    
    
    (4,391
    )
    
    
    (11,016
    )
    
    
    (8,832
    )Other income (expense), net
    
    
    1,136
    
    
    
    2,899
    
    
    
    2,765
    
    
    
    4,518Total other income and (expense)
    
    
    (4,955
    )
    
    
    (1,308
    )
    
    
    (7,456
    )
    
    
    (3,721
    )Earnings Before Income Taxes
    
    
    35,944
    
    
    
    38,102
    
    
    
    64,861
    
    
    
    64,401Income taxes
    
    
    13,578
    
    
    
    13,664
    
    
    
    24,091
    
    
    
    23,358Net Income
    
    
    22,366
    
    
    
    24,438
    
    
    
    40,770
    
    
    
    41,043Dividends on Preferred Stock
    
    
    433
    
    
    
    433
    
    
    
    866
    
    
    
    866Net Income After Dividends on Preferred Stock
    
    $
    21,933
    
    
    $
    24,005
    
    
    $
    39,904
    
    
    $
    40,177
 
  For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands)
    
    
    (in thousands)Net Income After Dividends on Preferred Stock
    
    $
    21,933
    
    
    $
    24,005
    
    
    $
    39,904
    
    
    $
    40,177Other comprehensive income (loss):Qualifying hedges:Changes in fair value, net of tax of $(139), $(144), $27, and
$(1,454), respectively
    
    
    (224
    )
    
    
    (233
    )
    
    
    44
    
    
    
    (2,347
    )Comprehensive Income
    
    $
    21,709
    
    
    $
    23,772
    
    
    $
    39,948
    
    
    $
    37,830
  93




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MISSISSIPPI POWER COMPANY
 For the Six MonthsEnded June 30,2009
    
    
    2008(in thousands)Operating Activities:Net income
    
    $
    40,770
    
    
    $
    41,043Adjustments to reconcile net income
to net cash provided from operating activities Depreciation and amortization, total
    
    
    39,202
    
    
    
    37,232Deferred income taxes and investment tax credits, net
    
    
    (11,019
    )
    
    
    (8,732
    )Pension, postretirement, and other employee benefits
    
    
    2,852
    
    
    
    3,765Stock option expense
    
    
    747
    
    
    
    555Tax benefit of stock options
    
    
    14
    
    
    
    95Generation construction screening expense
    
    
    (14,049
    )
    
    
    (8,780
    )Other, net
    
    
    2,078
    
    
    
    (1,861
    )Changes in certain current assets and liabilities -Receivables
    
    
    13,274
    
    
    
    (22,108
    )-Fossil fuel stock
    
    
    (44,024
    )
    
    
    (30,521
    )-Materials and supplies
    
    
    (1,464
    )
    
    
    (13,569
    )-Prepaid income taxes
    
    
    (446
    )
    
    
    1,607-Other current assets
    
    
    (12,644
    )
    
    
    273-Other accounts payable
    
    
    (14,103
    )
    
    
    14,948-Accrued taxes
    
    
    (14,243
    )
    
    
    (20,369
    )-Accrued compensation
    
    
    (12,990
    )
    
    
    (12,379
    )-Other current liabilities
    
    
    2,260
    
    
    
    19,801Net cash provided from (used for) operating activities
    
    
    (23,785
    )
    
    
    1,000Investing Activities:Property additions
    
    
    (50,943
    )
    
    
    (57,404
    )Cost of removal, net of salvage
    
    
    (7,287
    )
    
    
    (424
    )Construction payables
    
    
    (4,709
    )
    
    
    (7,275
    )Hurricane Katrina capital grant proceeds
    
    
    
    
    
    
    7,314Other investing activities
    
    
    (1,412
    )
    
    
    (998
    )Net cash used for investing activities
    
    
    (64,351
    )
    
    
    (58,787
    )Financing Activities:Increase in notes payable, net
    
    
    20,501
    
    
    
    10,669Proceeds Capital contributions from parent company
    
    
    2,101
    
    
    
    2,714Gross excess tax benefit of stock options
    
    
    60
    
    
    
    253Senior notes issuances
    
    
    125,000
    
    
    
    Other long-term debt issuances
    
    
    
    
    
    
    80,000Redemptions Senior notes
    
    
    (40,000
    )
    
    
    Payment of preferred stock dividends
    
    
    (866
    )
    
    
    (866
    )Payment of common stock dividends
    
    
    (34,250
    )
    
    
    (34,200
    )Other financing activities
    
    
    (1,780
    )
    
    
    (1,471
    )Net cash provided from financing activities
    
    
    70,766
    
    
    
    57,099Net Change in Cash and Cash Equivalents
    
    
    (17,370
    )
    
    
    (688
    )Cash and Cash Equivalents at Beginning of Period
    
    
    22,413
    
    
    
    4,827Cash and Cash Equivalents at End of Period
    
    $
    5,043
    
    
    $
    4,139Supplemental Cash Flow Information:Cash paid during the period for Interest (net of $117 and $58 capitalized for 2009 and 2008, respectively)
    
    $
    8,873
    
    
    $
    7,844Income taxes (net of refunds)
    
    $
    27,149
    
    
    $
    32,628
  94




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MISSISSIPPI POWER COMPANY
 At June 30,
    
    
    At December 31,Assets
    
    2009

    
    
    2008(in thousands)Current Assets:Cash and cash equivalents
    
    $
    5,043
    
    
    $
    22,413Receivables Customer accounts receivable
    
    
    52,477
    
    
    
    40,262Unbilled revenues
    
    
    31,445
    
    
    
    24,798Under recovered regulatory clause revenues
    
    
    21,163
    
    
    
    54,994Other accounts and notes receivable
    
    
    11,355
    
    
    
    8,995Affiliated companies
    
    
    23,443
    
    
    
    24,108Accumulated provision for uncollectible accounts
    
    
    (919
    )
    
    
    (1,039
    )Fossil fuel stock, at average cost
    
    
    129,562
    
    
    
    85,538Materials and supplies, at average cost
    
    
    28,607
    
    
    
    27,143Other regulatory assets, current
    
    
    72,074
    
    
    
    59,220Other current assets
    
    
    22,497
    
    
    
    10,898Total current assets
    
    
    396,747
    
    
    
    357,330Property, Plant, and Equipment:In service
    
    
    2,296,298
    
    
    
    2,234,573Less accumulated provision for depreciation
    
    
    932,020
    
    
    
    923,269Plant in service, net of depreciation
    
    
    1,364,278
    
    
    
    1,311,304Construction work in progress
    
    
    40,180
    
    
    
    70,665Total property, plant, and equipment
    
    
    1,404,458
    
    
    
    1,381,969Other Property and Investments
    
    
    7,606
    
    
    
    8,280Deferred Charges and Other Assets:Deferred charges related to income taxes
    
    
    8,807
    
    
    
    9,566Other regulatory assets, deferred
    
    
    182,882
    
    
    
    171,680Other deferred charges and assets
    
    
    24,355
    
    
    
    23,870Total deferred charges and other assets
    
    
    216,044
    
    
    
    205,116Total Assets
    
    $
    2,024,855
    
    
    $
    1,952,695
  95




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##### Table of Contents



MISSISSIPPI POWER COMPANY
 At June 30,
    
    
    At December 31,Liabilities and Stockholder's Equity
    
    2009
    
    
    2008(in thousands)Current Liabilities:Securities due within one year
    
    $
    1,279
    
    
    $
    41,230Notes payable
    
    
    46,794
    
    
    
    26,293Accounts payable Affiliated
    
    
    38,537
    
    
    
    36,847Other
    
    
    43,203
    
    
    
    63,704Customer deposits
    
    
    10,539
    
    
    
    10,354Accrued taxes Accrued income taxes
    
    
    8,128
    
    
    
    8,842Other accrued taxes
    
    
    28,965
    
    
    
    50,700Accrued interest
    
    
    5,524
    
    
    
    3,930Accrued compensation
    
    
    7,614
    
    
    
    20,604Other regulatory liabilities, current
    
    
    9,695
    
    
    
    9,718Liabilities from risk management activities
    
    
    37,851
    
    
    
    29,291Other current liabilities
    
    
    20,290
    
    
    
    19,144Total current liabilities
    
    
    258,419
    
    
    
    320,657Long-term Debt
    
    
    494,073
    
    
    
    370,460Deferred Credits and Other Liabilities:Accumulated deferred income taxes
    
    
    222,470
    
    
    
    222,324Deferred credits related to income taxes
    
    
    12,592
    
    
    
    14,074Accumulated deferred investment tax credits
    
    
    13,419
    
    
    
    14,014Employee benefit obligations
    
    
    143,513
    
    
    
    142,188Other cost of removal obligations
    
    
    96,497
    
    
    
    96,191Other regulatory liabilities, deferred
    
    
    54,359
    
    
    
    51,340Other deferred credits and liabilities
    
    
    51,662
    
    
    
    52,216Total deferred credits and other liabilities
    
    
    594,512
    
    
    
    592,347Total Liabilities
    
    
    1,347,004
    
    
    
    1,283,464Redeemable Preferred Stock
    
    
    32,780
    
    
    
    32,780Common Stockholders Equity:Common stock, without par value Authorized - 1,130,000 sharesOutstanding - 1,121,000 shares
    
    
    37,691
    
    
    
    37,691Paid-in capital
    
    
    322,880
    
    
    
    319,958Retained earnings
    
    
    284,456
    
    
    
    278,802Accumulated other comprehensive income (loss)
    
    
    44
    
    
    
    Total common stockholders equity
    
    
    645,071
    
    
    
    636,451Total Liabilities and Stockholders Equity
    
    $
    2,024,855
    
    
    $
    1,952,695
  96




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##### Table of Contents



MISSISSIPPI POWER COMPANY
 
 OVERVIEW
   RESULTS OF OPERATIONS
 Net Income
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(2.1)
    
    (8.6)
    
    $(0.3)
    
    (0.7)
  97




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##### Table of Contents



MISSISSIPPI POWER COMPANY
 Retail Revenues
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$14.0
    
    7.5
    
    $21.4
    
    6.0
   Second Quarter
    
    Year-to-Date2009
    
    2009(in millions)
    
    (% change)
    
    (in millions)
    
    (% change)Retail  prior year
    
    $
    187.1
    
    
    
    
    
    
    $
    355.5Estimated change in Rates and pricing
    
    
    0.9
    
    
    
    0.5
    
    
    
    2.5
    
    
    
    0.7Sales growth (decline)
    
    
    (0.3
    )
    
    
    (0.2
    )
    
    
    (2.5
    )
    
    
    (0.7
    )Weather
    
    
    1.3
    
    
    
    0.7
    
    
    
    0.2
    
    
    
    0.0Fuel and other cost recovery
    
    
    12.1
    
    
    
    6.5
    
    
    
    21.2
    
    
    
    6.0Retail  current year
    
    $
    201.1
    
    
    
    7.5
    %
    
    $
    376.9
    
    
    
    6.0
    %
      98




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##### Table of Contents



MISSISSIPPI POWER COMPANY
   Wholesale Revenues  Non-Affiliates
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(9.9)
    
    (11.8)
    
    $(14.6)
    
    (8.6)
    99




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##### Table of Contents



MISSISSIPPI POWER COMPANY
 Wholesale Revenues  Affiliates
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(14.5)
    
    (64.7)
    
    $(33.5)
    
    (65.9)
    Other Revenues
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(0.8)
    
    (16.6)
    
    $(1.2)
    
    (14.1)
   Fuel and Purchased Power Expenses
 Second Quarter 2009

    
    Year-to-Date 2009vs.
    
    vs.Second Quarter 2008
    
    Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)Fuel
    
    $
    (13.1
    )
    
    
    (9.4
    )
    
    $
    (23.2
    )
    
    
    (8.6
    )Purchased power  non-affiliates
    
    
    (2.5
    )
    
    
    (47.1
    )
    
    
    (2.0
    )
    
    
    (25.7
    )Purchased power  affiliates
    
    
    4.1
    
    
    
    23.5
    
    
    
    (0.1
    )
    
    
    (0.2
    )Total fuel and purchased power expenses
    
    $
    (11.5
    )
    
    
    
    
    
    $
    (25.3
    )
  100




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##### Table of Contents



MISSISSIPPI POWER COMPANY
    Second Quarter
    
    Second Quarter
    
    Percent
    
    Year-to-Date
    
    Year-to-Date
    
    PercentAverage Cost
    
    2009
    
    2008
    
    Change
    
    2009
    
    2008
    
    Change(cents per net KWH)
    
    
    
    
    
    (cents per net KWH)Fuel
    
    
    4.21
    
    
    
    4.03
    
    
    
    4.5
    
    
    
    4.32
    
    
    
    3.97
    
    
    
    8.8Purchased power
    
    
    3.36
    
    
    
    6.77
    
    
    
    (50.4
    )
    
    
    3.62
    
    
    
    5.94
    
    
    
    (39.1
    )
   Non-Affiliates
    101




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##### Table of Contents



MISSISSIPPI POWER COMPANY
 Affiliates
    Other Operations and Maintenance Expenses
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(1.8)
    
    (2.8)
    
    $(6.7)
    
    (5.3)
    102




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##### Table of Contents



MISSISSIPPI POWER COMPANY
 Interest Expense, Net of Amounts Capitalized
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$1.9
    
    42.4
    
    $2.2
    
    24.7
    Other Income (Expense), Net
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(1.8)
    
    (60.8)
    
    $(1.7)
    
    (38.8)
   Income Taxes
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(0.1)
    
    (0.6)
    
    $0.7
    
    3.1
   103




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##### Table of Contents



MISSISSIPPI POWER COMPANY
  FUTURE EARNINGS POTENTIAL
  Environmental Matters
  Water Quality
  Global Climate Issues
  104




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##### Table of Contents



MISSISSIPPI POWER COMPANY
  FERC and Mississippi PSC Matters
 Market-Based Rate Authority
  Retail Regulatory Matters
 Environmental Compliance Overview Plan
  105




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##### Table of Contents



MISSISSIPPI POWER COMPANY
 Performance Evaluation Plan
   Fuel Cost Recovery
   106




---



##### Table of Contents



MISSISSIPPI POWER COMPANY
 Integrated Coal Gasification Combined Cycle
        107




---



##### Table of Contents



MISSISSIPPI POWER COMPANY
 Legislation
  Other Matters
    ACCOUNTING POLICIES
 Application of Critical Accounting Policies and Estimates
  108




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##### Table of Contents



MISSISSIPPI POWER COMPANY
 New Accounting Standards
 Variable Interest Entities
  FINANCIAL CONDITION AND LIQUIDITY
 Overview
 1 4
   109




---



##### Table of Contents



MISSISSIPPI POWER COMPANY
  Capital Requirements and Contractual Obligations
  Sources of Capital
   110




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##### Table of Contents



MISSISSIPPI POWER COMPANY
  Off-Balance Sheet Financing Arrangements
  Credit Rating Risk
  Market Price Risk
   111




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##### Table of Contents



MISSISSIPPI POWER COMPANY
  Second Quarter
    
    Year-to-Date2009
    
    2009Changes
    
    ChangesFair Value(in millions)Contracts outstanding at the beginning of the period, assets
(liabilities), net
    
    $
    (76.0
    )
    
    $
    (52.0
    )Contracts realized or settled
    
    
    16.8
    
    
    
    25.8Current period changes(a)
    
    
    (0.6
    )
    
    
    (33.6
    )Contracts outstanding at the end of the period, assets (liabilities), net
    
    $
    (59.8
    )
    
    $
    (59.8
    )
 
 (a)
    
    Current period changes also include the changes in fair value of new contracts
entered into during the period, if any.   June 30, 2009
    
    December 31, 2008(in millions)Regulatory hedges
    
    $
    (59.6
    )
    
    $
    (52.0
    )Cash flow hedges
    
    
    
    
    
    
    Not designated
    
    
    (0.2
    )
    
    
    Total fair value
    
    $
    (59.8
    )
    
    $
    (52.0
    )
   112




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##### Table of Contents



MISSISSIPPI POWER COMPANY
  June 30, 2009Fair Value MeasurementsTotal
    
    MaturityFair Value
    
    Year 1
    
    Years 2&3
    
    Years 4&5(in millions)Level 1
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Level 2
    
    
    (59.8
    )
    
    
    (36.4
    )
    
    
    (21.1
    )
    
    
    (2.3
    )Level 3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Fair value of
contracts
outstanding at end
of period
    
    $
    (59.8
    )
    
    $
    (36.4
    )
    
    $
    (21.1
    )
    
    $
    (2.3
    )
   Financing Activities
   113




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##### Table of Contents



SOUTHERN POWER COMPANY
AND SUBSIDIARY COMPANIES
 114




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##### Table of Contents



SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
 For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands)
    
    
    (in thousands)Operating Revenues:Wholesale revenues, non-affiliates
    
    $
    90,877
    
    
    $
    170,907
    
    
    $
    185,489
    
    
    $
    251,376Wholesale revenues, affiliates
    
    
    137,718
    
    
    
    143,893
    
    
    
    273,002
    
    
    
    277,386Other revenues
    
    
    2,003
    
    
    
    1,784
    
    
    
    3,624
    
    
    
    3,354Total operating revenues
    
    
    230,598
    
    
    
    316,584
    
    
    
    462,115
    
    
    
    532,116Operating Expenses:Fuel
    
    
    51,731
    
    
    
    76,341
    
    
    
    117,512
    
    
    
    112,388Purchased power, non-affiliates
    
    
    24,778
    
    
    
    34,312
    
    
    
    46,260
    
    
    
    50,868Purchased power, affiliates
    
    
    13,860
    
    
    
    64,963
    
    
    
    29,062
    
    
    
    115,671Other operations and maintenance
    
    
    34,966
    
    
    
    35,654
    
    
    
    67,939
    
    
    
    70,685Depreciation and amortization
    
    
    27,198
    
    
    
    20,943
    
    
    
    51,537
    
    
    
    40,930Taxes other than income taxes
    
    
    4,789
    
    
    
    4,639
    
    
    
    9,548
    
    
    
    9,181Total operating expenses
    
    
    157,322
    
    
    
    236,852
    
    
    
    321,858
    
    
    
    399,723Operating Income
    
    
    73,276
    
    
    
    79,732
    
    
    
    140,257
    
    
    
    132,393Other Income and (Expense):Interest expense, net of amounts capitalized
    
    
    (21,592
    )
    
    
    (19,894
    )
    
    
    (43,151
    )
    
    
    (39,251
    )Other income (expense), net
    
    
    (23
    )
    
    
    34
    
    
    
    (234
    )
    
    
    12,614Total other income and (expense)
    
    
    (21,615
    )
    
    
    (19,860
    )
    
    
    (43,385
    )
    
    
    (26,637
    )Earnings Before Income Taxes
    
    
    51,661
    
    
    
    59,872
    
    
    
    96,872
    
    
    
    105,756Income taxes
    
    
    20,607
    
    
    
    24,452
    
    
    
    37,902
    
    
    
    41,361Net Income
    
    $
    31,054
    
    
    $
    35,420
    
    
    $
    58,970
    
    
    $
    64,395
 
  For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands)
    
    
    (in thousands)Net Income
    
    $
    31,054
    
    
    $
    35,420
    
    
    $
    58,970
    
    
    $
    64,395Other comprehensive income (loss):Qualifying hedges:Changes in fair value, net of tax
of $-, $(4,886), $302, and
$(7,831), respectively
    
    
    
    
    
    
    (7,554
    )
    
    
    466
    
    
    
    (12,116
    )Reclassification adjustment for
amounts included in net
income, net of tax of $931,
$1,348, $1,866, and $2,690,
respectively
    
    
    1,435
    
    
    
    2,084
    
    
    
    2,875
    
    
    
    4,158Total other comprehensive income (loss)
    
    
    1,435
    
    
    
    (5,470
    )
    
    
    3,341
    
    
    
    (7,958
    )Comprehensive Income
    
    $
    32,489
    
    
    $
    29,950
    
    
    $
    62,311
    
    
    $
    56,437
  115




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SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
 For the Six MonthsEnded June 30,2009
    
    
    2008(in thousands)Operating Activities:Net income
    
    $
    58,970
    
    
    $
    64,395Adjustments to reconcile net income
to net cash provided from operating activities Depreciation and amortization, total
    
    
    57,610
    
    
    
    48,844Deferred income taxes
    
    
    24,442
    
    
    
    23,614Deferred revenues
    
    
    (21,070
    )
    
    
    (27,234
    )Mark-to-market adjustments
    
    
    991
    
    
    
    8,534Accumulated billings on construction contract
    
    
    24,565
    
    
    
    39,437Accumulated costs on construction contract
    
    
    (31,113
    )
    
    
    (46,014
    )Gain on sale of property
    
    
    (24
    )
    
    
    (6,015
    )Other, net
    
    
    3,858
    
    
    
    1,553Changes in certain current assets and liabilities -Receivables
    
    
    (50,026
    )
    
    
    (114,097
    )-Fossil fuel stock
    
    
    1,389
    
    
    
    (2,776
    )-Materials and supplies
    
    
    (1,826
    )
    
    
    (1,049
    )-Prepaid income taxes
    
    
    5,510
    
    
    
    (12,034
    )-Other current assets
    
    
    1,493
    
    
    
    (494
    )-Accounts payable
    
    
    (15,940
    )
    
    
    59,180-Accrued taxes
    
    
    8,642
    
    
    
    7,829-Accrued interest
    
    
    27
    
    
    
    (25
    )-Other current liabilities
    
    
    (158
    )
    
    
    2,326Net cash provided from operating activities
    
    
    67,340
    
    
    
    45,974Investing Activities:Property additions
    
    
    (7,835
    )
    
    
    (40,444
    )Sale of property
    
    
    52
    
    
    
    5,001Change in construction payables
    
    
    (1,624
    )
    
    
    (7,222
    )Payments pursuant to long-term service agreements
    
    
    (15,450
    )
    
    
    (14,094
    )Other investing activities
    
    
    (184
    )
    
    
    (726
    )Net cash used for investing activities
    
    
    (25,041
    )
    
    
    (57,485
    )Financing Activities:Increase in notes payable, net
    
    
    
    
    
    
    56,625Proceeds  Capital contributions
    
    
    1,680
    
    
    
    2,135Payment of common stock dividends
    
    
    (53,050
    )
    
    
    (47,250
    )Net cash provided from (used for) financing activities
    
    
    (51,370
    )
    
    
    11,510Net Change in Cash and Cash Equivalents
    
    
    (9,071
    )
    
    
    (1
    )Cash and Cash Equivalents at Beginning of Period
    
    
    37,894
    
    
    
    5Cash and Cash Equivalents at End of Period
    
    $
    28,823
    
    
    $
    4Supplemental Cash Flow Information:Cash paid during the period for Interest (net of $163 and $7,000 capitalized for 2009 and 2008, respectively)
    
    $
    37,508
    
    
    $
    31,941Income taxes (net of refunds)
    
    $
    7,725
    
    
    $
    29,866
  116




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SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
 At June 30,
    
    
    At December 31,Assets
    
    2009
    
    
    2008(in thousands)Current Assets:Cash and cash equivalents
    
    $
    28,823
    
    
    $
    37,894Receivables Customer accounts receivable
    
    
    39,530
    
    
    
    23,640Other accounts receivable
    
    
    1,514
    
    
    
    2,162Affiliated companies
    
    
    70,605
    
    
    
    33,401Fossil fuel stock, at average cost
    
    
    15,521
    
    
    
    17,801Materials and supplies, at average cost
    
    
    28,353
    
    
    
    26,527Prepaid service agreements  current
    
    
    38,992
    
    
    
    26,304Prepaid income taxes
    
    
    15,962
    
    
    
    18,066Other prepaid expenses
    
    
    1,259
    
    
    
    2,756Assets from risk management activities
    
    
    12,884
    
    
    
    10,799Other current assets
    
    
    4,507
    
    
    
    4,532Total current assets
    
    
    257,950
    
    
    
    203,882Property, Plant, and Equipment:In service
    
    
    2,880,403
    
    
    
    2,847,757Less accumulated provision for depreciation
    
    
    401,164
    
    
    
    351,193Plant in service, net of depreciation
    
    
    2,479,239
    
    
    
    2,496,564Construction work in progress
    
    
    10,449
    
    
    
    8,775Total property, plant, and equipment
    
    
    2,489,688
    
    
    
    2,505,339Deferred Charges and Other Assets:Prepaid long-term service agreements
    
    
    50,600
    
    
    
    81,542Other deferred charges and assets  affiliated
    
    
    3,684
    
    
    
    3,827Other deferred charges and assets 
non-affiliated
    
    
    18,690
    
    
    
    18,550Total deferred charges and other assets
    
    
    72,974
    
    
    
    103,919Total Assets
    
    $
    2,820,612
    
    
    $
    2,813,140
  117




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SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
 At June 30,
    
    
    At December 31,Liabilities and Stockholders Equity
    
    2009
    
    
    2008(in thousands)Current Liabilities:Accounts payable Affiliated
    
    $
    49,256
    
    
    $
    61,527Other
    
    
    6,502
    
    
    
    11,278Accrued taxes Accrued income taxes
    
    
    5,471
    
    
    
    88Other accrued taxes
    
    
    10,303
    
    
    
    2,343Accrued interest
    
    
    29,943
    
    
    
    29,916Liabilities from risk management activities
    
    
    8,982
    
    
    
    7,452Billings in excess of cost on construction contract
    
    
    5,359
    
    
    
    11,907Deferred capacity revenues  current affiliated
    
    
    6,099
    
    
    
    1,206Other current liabilities
    
    
    67
    
    
    
    223Total current liabilities
    
    
    121,982
    
    
    
    125,940Long-term Debt
    
    
    1,297,480
    
    
    
    1,297,353Deferred Credits and Other Liabilities:Accumulated deferred income taxes
    
    
    234,652
    
    
    
    209,960Deferred capacity revenues  affiliated
    
    
    8,515
    
    
    
    32,211Other deferred credits and liabilities  affiliated
    
    
    6,150
    
    
    
    6,667Other deferred credits and liabilities 
non-affiliated
    
    
    2,532
    
    
    
    2,648Total deferred credits and other liabilities
    
    
    251,849
    
    
    
    251,486Total Liabilities
    
    
    1,671,311
    
    
    
    1,674,779Common Stockholders Equity:Common stock, par value $.01 per share Authorized - 1,000,000 sharesOutstanding - 1,000 shares
    
    
    
    
    
    
    Paid-in capital
    
    
    863,788
    
    
    
    862,109Retained earnings
    
    
    308,229
    
    
    
    302,309Accumulated other comprehensive loss
    
    
    (22,716
    )
    
    
    (26,057
    )Total common stockholders equity
    
    
    1,149,301
    
    
    
    1,138,361Total Liabilities and Stockholders Equity
    
    $
    2,820,612
    
    
    $
    2,813,140
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SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
  
 OVERVIEW
   RESULTS OF OPERATIONS
 Net Income
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(4.3)
    
    (12.3)
    
    $(5.4)
    
    (8.4)
   119




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SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
 Wholesale Revenues  Non-Affiliates
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(80.0)
    
    (46.8)
    
    $(65.9)
    
    (26.2)
     Wholesale Revenues  Affiliates
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(6.2)
    
    (4.3)
    
    $(4.4)
    
    (1.6)
   120




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SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
   Fuel and Purchased Power Expenses
 Second Quarter 2009
    
    Year-to-Date 2009vs.
    
    vs.Second Quarter 2008
    
    Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)Fuel
    
    $
    (24.6
    )
    
    
    (32.2
    )
    
    $
    5.1
    
    
    
    4.6Purchased power  non-affiliates
    
    
    (9.5
    )
    
    
    (27.8
    )
    
    
    (4.6
    )
    
    
    (9.1
    )Purchased power  affiliates
    
    
    (51.1
    )
    
    
    (78.7
    )
    
    
    (86.6
    )
    
    
    (74.9
    )Total fuel and purchased power expenses
    
    $
    (85.2
    )
    
    
    
    
    
    $
    (86.1
    )
    121




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SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
     Other Operations and Maintenance Expenses
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(0.7)
    
    (1.9)
    
    $(2.8)
    
    (3.9)
   Depreciation and Amortization
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$6.3
    
    29.9
    
    $10.6
    
    25.9
  122




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SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
  Interest Expense, Net of Amounts Capitalized
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$1.7
    
    8.5
    
    $3.9
    
    9.9
  Other Income (Expense), Net
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(0.1)
    
    N/M
    
    $(12.8)
    
    (101.9)
    Income Taxes
 Second Quarter 2009 vs. Second Quarter 2008
    
    Year-to-Date 2009 vs. Year-to-Date 2008(change in millions)
    
    (% change)
    
    (change in millions)
    
    (% change)$(3.9)
    
    (15.7)
    
    $(3.5)
    
    (8.4)
  FUTURE EARNINGS POTENTIAL
  123




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SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
  Environmental Matters
  Global Climate Issues
  FERC Matters
 Market-Based Rate Authority
  124




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SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
  Legislation
  Construction Projects
 Cleveland County Units 1-4
  Power Sales Agreements
  125




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SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
 Potential Acquisition
   Other Matters
   ACCOUNTING POLICIES
 Application of Critical Accounting Policies and Estimates
 
 126




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SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
 New Accounting Standards
 Variable Interest Entities
  FINANCIAL CONDITION AND LIQUIDITY
 Overview
 1 8
    127




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SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
 Capital Requirements and Contractual Obligations
  Sources of Capital
     Credit Rating Risk
  128




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SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
   Market Price Risk
     Second Quarter
    
    Year-to-Date2009
    
    2009Changes
    
    ChangesFair Value(in millions)Contracts outstanding at the beginning of the period, assets
(liabilities), net
    
    $
    3.3
    
    
    $
    3.4Contracts realized or settled
    
    
    0.1
    
    
    
    0.2Current period changes(a)
    
    
    (0.2
    )
    
    
    (0.4
    )Contracts outstanding at the end of the period, assets (liabilities), net
    
    $
    3.2
    
    
    $
    3.2
 (a)
    
    Current period changes also include the changes in fair value of new contracts entered into during the period, if any.
 129




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##### Table of Contents



SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
  June 30,
    
    March 31,
    
    December 31,2009
    
    2009
    
    2008Power (net sold)MWHs (in millions)
    
    
    1.1
    
    
    
    0.7
    
    
    
    0.3Weighted average contract
cost per MWH
above (below) market
prices (in dollars)
    
    $
    2.29
    
    
    $
    3.71
    
    
    $
    (2.29
    )Natural gas (net purchase)Commodity  million mmBtu
    
    
    2.9
    
    
    
    3.5
    
    
    
    1.9Location basis  million mmBtu
    
    
    2.0
    
    
    
    2.0
    
    
    
    Commodity  Weighted average
contract cost per mmBtu above
(below) market prices (in
dollars)
    
    $
    0.24
    
    
    $
    (0.27
    )
    
    $
    (2.16
    )Location basis  Weighted
average contract cost per
mmBtu above (below) market
prices (in dollars)
    
    $
    (0.05
    )
    
    $
    0.06
    
    
    $
    
  June 30, 2009
    
    December 31,
 2008(in millions)Cash flow hedges
    
    $
    
    
    
    $
    (0.8
    )Not designated
    
    
    3.2
    
    
    
    4.2Total fair value
    
    $
    3.2
    
    
    $
    3.4
   130




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SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
  June 30, 2009Fair Value MeasurementsTotal
    
    MaturityFair Value
    
    Year 1
    
    Years 2&3
    
    Years 4&5(in millions)Level 1
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Level 2
    
    
    3.2
    
    
    
    3.9
    
    
    
    (0.7
    )
    
    
    Level 3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Fair value of
contracts
outstanding at end
of period
    
    $
    3.2
    
    
    $
    3.9
    
    
    $
    (0.7
    )
    
    $
    
   Financing Activities
  131




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NOTES TO THE CONDENSED FINANCIAL STATEMENTS
FOR
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
ALABAMA POWER COMPANY
GEORGIA POWER COMPANY
GULF POWER COMPANY
MISSISSIPPI POWER COMPANY
SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
 
 Registrant
    
    Applicable NotesSouthern Company
    
    A, B, C, D, E, F, G, HAlabama Power
    
    A, B, C, E, F, GGeorgia Power
    
    A, B, C, E, F, GGulf Power
    
    A, B, C, E, F, GMississippi Power
    
    A, B, C, E, F, GSouthern Power
    
    A, B, C, E, G
 132




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
ALABAMA POWER COMPANY
GEORGIA POWER COMPANY
GULF POWER COMPANY
MISSISSIPPI POWER COMPANY
SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
 NOTES TO THE CONDENSED FINANCIAL STATEMENTS:
 (A)
    
    INTRODUCTIONThe condensed quarterly financial statements of each registrant included herein have been
prepared by such registrant, without audit, pursuant to the rules and regulations of the
SEC. The Condensed Balance Sheets as of December 31, 2008 have been derived from the
audited financial statements of each registrant. In the opinion of each registrants
management, the information regarding such registrant furnished herein reflects all
adjustments, which, except as otherwise disclosed, are of a normal recurring nature,
necessary to present fairly the results of operations for the periods ended June 30, 2009
and 2008. In addition, all subsequent events have been evaluated for disclosure through the
issuance of the financial statements on August 6, 2009. Certain information and footnote
disclosures normally included in annual financial statements prepared in accordance with
accounting principles generally accepted in the United States have been condensed or omitted
pursuant to such rules and regulations, although each registrant believes that the
disclosures regarding such registrant are adequate to make the information presented not
misleading. Disclosures which would substantially duplicate the disclosures in the audited
financial statements included in the Form 10-K and, with respect to Southern Company, the
subsequently revised audited financial statements included in the Current Report on Form 8-K
filed May 8, 2009 (the Form 8-K), and details which have not changed significantly in amount
or composition since the filing of the Form 10-K and, for Southern Company, the Form 8-K are
generally omitted from this Quarterly Report on Form 10-Q. Therefore, these Condensed
Financial Statements should be read in conjunction with the financial statements and the
notes thereto included in the Form 10-K and, for Southern Company, the Form 8-K. Due to the
seasonal variations in the demand for energy, operating results for the periods presented do
not necessarily indicate operating results for the entire year.ReclassificationsCertain prior period data presented in the financial statements have been reclassified to conform
to the current year presentation. For comparative purposes, each registrants statement of income
for the three and six months ended June 30, 2008 were modified within the operating expenses
section to combine the line items Other operations and Maintenance into a single line item
entitled Other operations and maintenance. The balance sheets at December 31, 2008 of Southern
Company, Alabama Power, and Georgia Power were modified to present a separate line item for Other
regulatory assets, current previously included in Other current assets. In addition, Georgia
Powers balance sheet was modified to present a separate line item for Joint owner accounts
receivable previously included in Other accounts and notes receivable and to reflect a new line
item Liabilities from risk management activities previously included in Other current
liabilities. To conform to the current year presentation, Southern Powers balance sheet at
December 31, 2008 reflects a separate line item for the amount of Deferred capacity
revenuescurrent affiliated previously included in Accounts payableaffiliated. Southern
Company modified its statements of cash flows within the operating activities section for the prior
period by collapsing the line item Derivative fair value adjustments into Other, net. Also,
within the investing activities section, the line items Investment in unconsolidated subsidiaries
and Hurricane Katrina capital grant proceeds previously shown as separate line items are now
included in Other investing activities
while Change in construction payables previously included in Other investing activities is
shown separately in the current presentation. Within the operating activities of Georgia Powers
statements of cash flows, Deferred revenues and Deferred expenses previously included in
Other, net in
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 the prior period are now shown as separate line items. Also, within the financing
activities of the same statement, the line item Capital leases was collapsed into Other
financing activities. Mississippi Powers balance sheet was modified to combine the line item
Prepaid income taxes with Other current assets. Mississippi Powers statement of cash flows
for the six months ended June 30, 2008 was modified within the operating activities to present
separately from Other, net the amount of Generation construction screening expense.These reclassifications had no effect on total assets, net income, cash flows, or earnings per
share.Effective January 1, 2009, Southern Company and its subsidiaries adopted retrospectively a new
accounting standard for noncontrolling interests. In connection with the adoption, Southern
Company evaluated the requirements with respect to the presentation of preferred and preference
stock of subsidiaries. Based on the accounting guidance, the preferred and preference stock at
Georgia Power and the preference stock at Alabama Power and Gulf Power are considered to be
noncontrolling interests and are separately presented as a component of Stockholders Equity on
Southern Companys consolidated balance sheets. The preferred stock of Alabama Power and
Mississippi Power contains a feature that allows the holders to elect a majority of such
subsidiarys board of directors if dividends are not paid for four consecutive quarters. Because
such a potential redemption-triggering event is not solely within the control of Alabama Power and
Mississippi Power, this preferred stock is presented as Redeemable Preferred Stock of
Subsidiaries in a manner consistent with temporary equity. The preferred and preference stock at
Georgia Power and the preference stock at Alabama Power and Gulf Power do not contain such a
provision that would allow the holders to elect a majority of such subsidiarys board.In addition, the new accounting standard for noncontrolling interests requires that preferred and
preference dividends of subsidiaries previously presented within Southern Companys consolidated
statements of income as a component of Other Income and (Expense) be presented as a deduction
from Consolidated Net Income to arrive at Consolidated Net Income After Dividends on Preferred
and Preference Stock. In Southern Companys consolidated statements of cash flows, the preferred
and preference dividends previously classified in operating activities are now classified in
financing activities.Southern Power Depreciation PolicySee Note 1 to the financial statements of Southern Power under Depreciation in Item 8 of the Form
10-K for information regarding Southern Powers depreciation policy. Southern Power revised its
depreciation rates in 2009. The change in estimate is due to revised useful life assumptions for
certain components of plant in service. The expected 2009 impact to Southern Power is an increase
in depreciation expense of $8.2 million and a reduction in net income of $5.0 million.Nuclear RelicensingThe NRC operating licenses for Plant Vogtle Units 1 and 2 were scheduled to expire in January 2027
and February 2029, respectively. In June 2007, Georgia Power filed an application with the NRC to
extend the licenses for Plant Vogtle Units 1 and 2 for an additional 20 years. On June 3, 2009,
the NRC approved the extension of the licenses as requested.Leveraged LeasesOn June 29, 2009, Southern Company terminated two international leveraged lease investments for a
net gain, after termination of related debt, of $25.5 million. The termination is reflected on the
statements of cash flows and the statements of income on line items Proceeds from property sales,
Gain on disposition of lease termination, and Loss
on extinguishment of debt.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 (B)
    
    CONTINGENCIES AND REGULATORY MATTERSSee Note 3 to the financial statements of the registrants in Item 8 of the Form 10-K for
information relating to various lawsuits, other contingencies, and regulatory matters.General Litigation MattersEach registrant is subject to certain claims and legal actions arising in the ordinary course of
business. In addition, each registrants business activities are subject to extensive governmental
regulation related to public health and the environment. Litigation over environmental issues and
claims of various types, including property damage, personal injury, common law nuisance, and
citizen enforcement of environmental requirements such as opacity and air and water quality
standards, has increased generally throughout the United States. In particular, personal injury
claims for damages caused by alleged exposure to hazardous materials have become more frequent.
The ultimate outcome of such pending or potential litigation against the registrants and any of
their subsidiaries cannot be predicted at this time; however, for current proceedings not
specifically reported herein or in Note 3 to the financial statements of each registrant in Item 8
of the Form 10-K, management does not anticipate that the liabilities, if any, arising from such
current proceedings would have a material adverse effect on such registrants financial statements.Mirant MattersMirant was an energy company with businesses that included independent power projects and energy
trading and risk management companies in the United States and selected other countries. It was a
wholly-owned subsidiary of Southern Company until its initial public offering in October 2000. In
April 2001, Southern Company completed a spin-off to its shareholders of its remaining ownership,
and Mirant became an independent corporate entity.Mirant BankruptcyIn July 2003, Mirant and certain of its affiliates filed voluntary petitions for relief under
Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Northern District of Texas.
The Bankruptcy Court entered an order confirming Mirants plan of reorganization in December 2005,
and Mirant announced that this plan became effective in January 2006. As part of the plan, Mirant
transferred substantially all of its assets and its restructured debt to a new corporation that
adopted the name Mirant Corporation (Reorganized Mirant).Southern Company has certain contingent liabilities associated with guarantees of contractual
commitments made by Mirants subsidiaries discussed under Guarantees in Note 7 to the financial
statements of Southern Company in Item 8 of the Form 10-K and with various lawsuits related to
Mirant discussed below. Also, Southern Company has joint and several liability with Mirant
regarding the joint consolidated federal income tax returns through 2001, as discussed in Note 5 to
the financial statements of Southern Company in Item 8 of the Form 10-K. In December 2004, as a
result of concluding an IRS audit for the tax years 2000 and 2001, Southern Company paid
approximately $39 million in additional tax and interest related to Mirant tax items and filed a
claim in Mirants bankruptcy case for that amount. To date, Southern Company has received from the
IRS approximately $38 million in refunds related to Mirant. Southern Company believes it has a
right to recoup the $39 million tax payment owed by Mirant from such tax refunds. As a result,
Southern Company intends to retain the tax refunds and reduce its claim against Mirant for the
payment of Mirant taxes by the amount of such refunds. MC Asset Recovery, LLC, a special purpose
subsidiary of Reorganized Mirant (MC Asset Recovery), has objected to and sought to equitably
subordinate the Southern Company tax claim in its fraudulent transfer litigation against Southern
Company. Southern Companys proofs of claim filed in the Mirant bankruptcy survive the settlement
of the MC
Asset Recovery litigation. Southern Company has reserved the remaining amount with respect to its
Mirant tax claim.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 Under the terms of the separation agreements entered into in connection with the spin-off, Mirant
agreed to indemnify Southern Company for costs associated with these guarantees, lawsuits, and
additional IRS assessments. As a result of Mirants bankruptcy, Southern Company sought
reimbursement as an unsecured creditor in Mirants Chapter 11 proceeding. As part of a
complaint filed against Southern Company in June 2005 and amended thereafter, Mirant and The
Official Committee of Unsecured Creditors of Mirant Corporation (Unsecured Creditors Committee)
objected to and sought equitable subordination of Southern Companys claims, and Mirant moved to
reject the separation agreements entered into in connection with the spin-off. MC Asset Recovery
has been substituted as plaintiff in the complaint. If Southern Companys claims for
indemnification with respect to these, or any additional future payments, are allowed, then
Mirants indemnity obligations to Southern Company would constitute unsecured claims against Mirant
entitled to stock in Reorganized Mirant. The final outcome of this matter cannot now be
determined.MC Asset Recovery LitigationIn June 2005, Mirant, as a debtor in possession, and the Unsecured Creditors Committee filed a
complaint against Southern Company in the U.S. Bankruptcy Court for the Northern District of Texas,
which was amended in July 2005, February 2006, May 2006, and March 2007.In December 2005, the Bankruptcy Court entered an order authorizing the transfer of this
proceeding, along with certain other actions, to MC Asset Recovery. Under that order, Reorganized
Mirant was obligated to fund up to $20 million in professional fees in connection with the
lawsuits, as well as certain additional amounts. Any net recoveries from these lawsuits would be
distributed to, and shared equally by, certain unsecured creditors and the original equity holders.
In January 2006, the U.S. District Court for the Northern District of Texas substituted MC Asset
Recovery as plaintiff.The complaint, as amended in March 2007, alleged that Southern Company caused Mirant to engage in
certain fraudulent transfers and to pay illegal dividends to Southern Company prior to the
spin-off. The alleged fraudulent transfers and illegal dividends included without limitation:
(1) certain dividends from Mirant to Southern Company in the aggregate amount of $668 million,
(2) the repayment of certain intercompany loans and accrued interest in an aggregate amount of
$1.035 billion, and (3) the dividend distribution of one share of Series B Preferred Stock and its
subsequent redemption in exchange for Mirants 80% interest in a holding company that owned
SE Finance Capital Corporation and Southern Company Capital Funding, Inc., which transfer plaintiff
asserted was valued at over $200 million. The complaint also sought to recharacterize certain
advances from Southern Company to Mirant for investments in energy facilities from debt to equity.
The complaint further alleged that Southern Company was liable to Mirants creditors for the full
amount of Mirants liability under an alter ego theory of recovery and that Southern Company
breached its fiduciary duties to Mirant and its creditors, caused Mirant to breach its fiduciary
duties to creditors, and aided and abetted breaches of fiduciary duties by Mirants directors and
officers. The complaint also sought recoveries under the theories of restitution and unjust
enrichment. In addition, the complaint alleged a claim under the Federal Debt Collection Procedure
Act (FDCPA) to avoid certain transfers from Mirant to Southern Company; however, in July 2008, the
court ruled that the FDCPA does not apply and that Georgia law should apply instead. The complaint
sought monetary damages in excess of $2 billion plus interest, punitive damages, attorneys fees,
and costs. Finally, the complaint included an objection to Southern Companys pending claims
against Mirant in the Bankruptcy Court (which relate to reimbursement under the separation
agreements of payments such as income taxes, interest, legal fees, and other guarantees described
in Note 7 to the financial statements of Southern Company in Item 8 of the Form 10-K) and sought
equitable subordination of Southern Companys claims to the claims of all other creditors.
Southern Company served an answer to the complaint in April 2007.In January 2006, the U.S. District Court for the Northern District of Texas granted Southern
Companys motion to withdraw this action from the Bankruptcy Court and, in February 2006, granted
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 Southern Companys motion to transfer the case to the U.S. District Court for the Northern District
of Georgia. In May 2006, Southern Company filed a motion for summary judgment seeking entry of
judgment against the plaintiff as to all counts of the complaint. In December 2006, the U.S.
District Court for the Northern District of Georgia granted in part and denied in part the motion.
As a result, certain breach of fiduciary duty claims alleged in earlier versions of the complaint
were barred; all other claims in the complaint were allowed to proceed. In August 2008, Southern
Company filed a second motion for summary judgment. MC Asset Recovery filed its response to
Southern Companys motion for summary judgment in October 2008. On February 5, 2009, the court
denied the summary judgment motion in connection with the fraudulent conveyance and illegal
dividend claims concerning certain advance return/loan repayments in 1999, dividends in 1999 and
2000, and transfers in connection with Mirants separation from Southern Company. The court
granted Southern Companys motion for summary judgment with respect to certain claims, including
claims for unjust enrichment, claims that Southern Company aided and abetted Mirants directors
breach of fiduciary duties to Mirant, and claims that Southern Company used Mirant as an alter ego.
In addition, the court granted Southern Companys motion in connection with the fraudulent
transfer and illegal dividend claims concerning certain turbine termination payments.On March 31, 2009, Southern Company entered into a settlement agreement with MC Asset Recovery to
resolve the action. The settlement includes an agreement by Southern Company to pay MC Asset
Recovery $202 million and requires MC Asset Recovery to release Southern Company and certain other
designated avoidance actions assigned to MC Asset Recovery in connection with Mirants plan of
reorganization, as well as to release all actions against current or former officers and directors
of Mirant and Southern Company that have or could have been filed. Pursuant to the settlement,
Southern Company recorded a charge in the first quarter 2009 of $202 million, which was paid in the
second quarter 2009. The settlement has been completed and resolves all claims by MC Asset
Recovery against Southern Company. On June 29, 2009, the case was dismissed with prejudice.
Southern Companys claims in the Mirant bankruptcy remain pending. Southern Company is currently
evaluating potential recovery of the settlement payment through various means. The degree to which
any recovery is realized will determine, in part, the final income tax treatment of the settlement
payment. The ultimate outcome of any such recovery and/or income tax treatment cannot be
determined at this time.Environmental MattersNew Source Review ActionsIn November 1999, the EPA brought a civil action in the U.S. District Court for the Northern
District of Georgia against certain Southern Company subsidiaries, including Alabama Power and
Georgia Power, alleging that these subsidiaries had violated the NSR provisions of the Clean Air
Act and related state laws at certain coal-fired generating facilities. Through subsequent
amendments and other legal procedures, the EPA filed a separate action in January 2001 against
Alabama Power in the U.S. District Court for the Northern District of Alabama after Alabama Power
was dismissed from the original action. In these lawsuits, the EPA alleged that NSR violations
occurred at eight coal-fired generating facilities operated by Alabama Power and Georgia Power,
including one facility co-owned by Mississippi Power. The civil actions request penalties and
injunctive relief, including an order requiring the installation of the best available control
technology at the affected units. The EPA concurrently issued notices of violation to Gulf Power
and Mississippi Power relating to Gulf Powers Plant Crist and Mississippi Powers Plant Watson.
In early 2000, the EPA filed a motion to amend its complaint to add Gulf Power and Mississippi
Power as defendants based on the allegations in the notices of violation. However, in March 2001,
the Court denied the motion based on lack of
jurisdiction, and the EPA has not refiled. The action against Georgia Power has been
administratively closed since the spring of 2001, and the case has not been reopened.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 In June 2006, the U.S. District Court for the Northern District of Alabama entered a consent decree
between Alabama Power and the EPA, resolving a portion of the Alabama Power lawsuit relating to the
alleged NSR violations at Plant Miller. The consent decree required Alabama Power to pay $100,000
to resolve the governments claim for a civil penalty and to donate $4.9 million of sulfur dioxide
emission allowances to a nonprofit charitable organization. It also formalized specific emissions
reductions to be accomplished by Alabama Power, consistent with other Clean Air Act programs that
require emissions reductions. In August 2006, the district court in Alabama granted Alabama
Powers motion for summary judgment and entered final judgment in favor of Alabama Power on the
EPAs claims related to all of the remaining plants: Plants Barry, Gaston, Gorgas, and Greene
County.The plaintiffs appealed the district courts decision to the U.S. Court of Appeals for the Eleventh
Circuit, where the appeal was stayed, pending the U.S. Supreme Courts decision in a similar case
against Duke Energy. The Supreme Court issued its decision in the Duke Energy case in April 2007,
and in December 2007, the Eleventh Circuit vacated the district courts decision in the Alabama
Power case and remanded the case back to the district court for consideration of the legal issues
in light of the Supreme Courts decision in the Duke Energy case. In July 2008, the U.S. District
Court for the Northern District of Alabama granted partial summary judgment in favor of Alabama
Power regarding the proper legal test for determining whether projects are routine maintenance,
repair, and replacement and therefore are excluded from NSR permitting. The decision did not
resolve the case, and the ultimate outcome of these matters cannot be determined at this time.Southern Company and the traditional operating companies believe they have complied with applicable
laws and the EPA regulations and interpretations in effect at the time the work in question took
place. The Clean Air Act authorizes maximum civil penalties of $25,000 to $37,500 per day, per
violation at each generating unit, depending on the date of the alleged violation. An adverse
outcome in these matters could require substantial capital expenditures or affect the timing of
currently budgeted capital expenditures that cannot be determined at this time and could possibly
require payment of substantial penalties. Such expenditures could affect future results of
operations, cash flows, and financial condition if such costs are not recovered through regulated
rates.Carbon Dioxide LitigationNew York CaseIn July 2004, three environmental groups and attorneys general from eight states, each outside of
Southern Companys service territory, and the corporation counsel for New York City filed
complaints in the U.S. District Court for the Southern District of New York against Southern
Company and four other electric power companies. The complaints allege that the companies
emissions of carbon dioxide, a greenhouse gas, contribute to global warming, which the plaintiffs
assert is a public nuisance. Under common law public and private nuisance theories, the plaintiffs
seek a judicial order (1) holding each defendant jointly and severally liable for creating,
contributing to, and/or maintaining global warming and (2) requiring each of the defendants to cap
its emissions of carbon dioxide and then reduce those emissions by a specified percentage each year
for at least a decade. The plaintiffs have not, however, requested that damages be awarded in
connection with their claims. Southern Company believes these claims are without merit and notes
that the complaint cites no statutory or regulatory basis for the claims. In September 2005, the
U.S. District Court for the Southern District of New York granted Southern Companys and the other
defendants motions to dismiss these cases. The plaintiffs filed an appeal to the U.S. Court of
Appeals for the Second Circuit in October 2005, but no decision has been issued. The ultimate
outcome of these matters cannot be determined at this time.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 Kivalina CaseIn February 2008, the Native Village of Kivalina and the City of Kivalina filed a suit in the U.S.
District Court for the Northern District of California against several electric utilities
(including Southern Company), several oil companies, and a coal company. The plaintiffs are the
governing bodies of an Inupiat village in Alaska. The plaintiffs contend that the village is being
destroyed by erosion allegedly caused by global warming that the plaintiffs attribute to emissions
of greenhouse gases by the defendants. The plaintiffs assert claims for public and private
nuisance and contend that the defendants have acted in concert and are therefore jointly and
severally liable for the plaintiffs damages. The suit seeks damages for lost property values and
for the cost of relocating the village, which is alleged to be $95 million to $400 million. In
June 2008, all defendants filed motions to dismiss this case. Southern Company believes that these
claims are without merit and notes that the complaint cites no statutory or regulatory basis for
the claims. The ultimate outcome of this matter cannot be determined at this time.Environmental RemediationThe registrants must comply with environmental laws and regulations that cover the handling and
disposal of waste and releases of hazardous substances. Under these various laws and regulations,
the subsidiaries may also incur substantial costs to clean up properties. The traditional
operating companies have each received authority from their respective state PSCs to recover
approved environmental compliance costs through regulatory mechanisms. Within limits approved by
the state PSCs, these rates are adjusted annually or as necessary.Georgia Powers environmental remediation liability at June 30, 2009 was $11.1 million. Georgia
Power has been designated or identified as a potentially responsible party (PRP) at sites governed
by the Georgia Hazardous Site Response Act and/or by the federal Comprehensive Environmental
Response, Compensation, and Liability Act (CERCLA), including a large site in Brunswick, Georgia on
the CERCLA National Priorities List (NPL). The parties have completed the removal of wastes from
the Brunswick site as ordered by the EPA. Additional claims for recovery of natural resource
damages at this site or for the assessment and potential cleanup of other sites on the Georgia
Hazardous Sites Inventory and CERCLA NPL are anticipated.By letter dated September 30, 2008, the EPA advised Georgia Power that it has been designated as a
PRP at the Ward Transformer Superfund site located in Raleigh, North Carolina. Numerous other
entities have also received notices from the EPA. Georgia Power, along with other named PRPs, is
negotiating with the EPA to address cleanup of the site and reimbursement for past expenditures
related to work performed at the site. In addition, on April 30, 2009, two PRPs filed separate
actions in the U.S. District Court for the Eastern District of North Carolina against numerous
other PRPs, including Georgia Power, seeking contribution from the defendants for expenses incurred
by the plaintiffs related to work performed at a portion of the site. The ultimate outcome of
these matters will depend upon further environmental assessment and the ultimate number of PRPs and
cannot be determined at this time; however, it is not expected to have a material impact on Georgia
Powers financial statements.Gulf Powers environmental remediation liability includes estimated costs of environmental
remediation projects of approximately $67.2 million at June 30, 2009. These estimated costs relate
to site closure criteria by the Florida Department of Environmental Protection (FDEP) for potential
impacts to soil and groundwater from herbicide applications at Gulf Power substations. The
schedule for completion of the remediation projects will be subject to FDEP approval. The projects
have been approved by the Florida PSC for recovery through Gulf Powers environmental cost recovery
clause; therefore, there was no impact on net income as a result of these estimates.In 2003, the Texas Commission on Environmental Quality (TCEQ) designated Mississippi Power as a
potentially responsible party at a site in Texas. The site was owned by an electric transformer
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 company that handled Mississippi Powers transformers as well as those of many other entities. The
site owner is now in bankruptcy and the State of Texas has entered into an agreement with
Mississippi Power and several other utilities to investigate and remediate the site. Amounts
expensed related to this work have not been material. Hundreds of entities have received notices
from the TCEQ requesting their participation in the anticipated site remediation. The final impact
of this matter on Mississippi Power will depend upon further environmental assessment and the
ultimate number of potentially responsible parties. The remediation expenses incurred by
Mississippi Power are expected to be recovered through the ECO Plan. See Note 3 to the financial
statements of Mississippi Power under Retail Regulatory Matters  Environmental Compliance
Overview Plan.The final outcome of these matters cannot now be determined. However, based on the currently known
conditions at these sites and the nature and extent of activities relating to these sites, Southern
Company, Georgia Power, Gulf Power, and Mississippi Power do not believe that additional
liabilities, if any, at these sites would be material to their respective financial statements.FERC MattersMarket-Based Rate AuthorityEach of the traditional operating companies and Southern Power has authorization from the FERC to
sell power to non-affiliates, including short-term opportunity sales, at market-based prices.
Specific FERC approval must be obtained with respect to a market-based contract with an affiliate.In December 2004, the FERC initiated a proceeding to assess Southern Companys generation dominance
within its retail service territory. The ability to charge market-based rates in other markets is
not an issue in the proceeding. Any new market-based rate sales by any subsidiary of Southern
Company in Southern Companys retail service territory entered into during a 15-month refund period
that ended in May 2006 could be subject to refund to a cost-based rate level.In November 2007, the presiding administrative law judge issued an initial decision regarding the
methodology to be used in the generation dominance tests. The proceedings are ongoing. The
ultimate outcome of this generation dominance proceeding cannot now be determined, but an adverse
decision by the FERC in a final order could require the traditional operating companies and
Southern Power to charge cost-based rates for certain wholesale sales in the Southern Company
retail service territory, which may be lower than negotiated market-based rates and could also
result in total refunds of up to $19.7 million, plus interest. The potential refunds include $3.9
million for Alabama Power, $5.8 million for Georgia Power, $0.8 million for Gulf Power, $8.4
million for Mississippi Power, and $0.7 million for Southern Power, in each case plus interest.
Southern Company and its subsidiaries believe that there is no meritorious basis for an adverse
decision in this proceeding and are vigorously defending themselves in this matter.In June 2007, the FERC issued its final rule in Order No. 697 regarding market-based rate
authority. The FERC generally retained its current market-based rate standards. Responding to a
number of requests for rehearing, the FERC issued Order No. 697-A on April 21, 2008 and Order No.
697-B on December 12, 2008 and Order No. 697-C on June 16, 2009. These orders largely affirmed and
clarified the FERCs prior revision and codification of the regulations governing market-based
rates for public utilities. In accordance with the orders, Southern Company submitted to the FERC
an updated market power analysis in September 2008 related to its continued market-based rate
authority.In October 2008, Southern Company filed with the FERC a revised market-based rate (MBR) tariff and
a new cost-based rate (CBR) tariff. The revised MBR tariff provides for a must offer energy
auction whereby Southern Company offers all of its available energy for sale in a day-ahead auction
and an hour-ahead auction with reserve prices not to exceed the CBR tariff price, after considering
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 Southern Companys native load requirements, reliability obligations, and sales commitments to
third parties. All sales under the energy auction would be at market clearing prices established
under the auction rules. The new CBR tariff provides for a cost-based price for wholesale sales of
less than a year. On March 5, 2009, the FERC accepted Southern Companys CBR tariff for filing.
On March 25, 2009, the FERC accepted Southern Companys compliance filing related to the MBR tariff
and directed Southern Company to commence the energy auction within 30 days. Southern Company
commenced the energy auction on April 23, 2009. The FERC has determined that implementation of the
energy auction in accordance with the MBR tariff order adequately mitigates going forward any
presumption of market power that Southern Company may have in the Southern Company retail service
territory and adjacent market areas.Intercompany Interchange ContractSouthern Companys generation fleet in its retail service territory is operated under the IIC as
approved by the FERC. In May 2005, the FERC initiated a new proceeding to examine (1) the
provisions of the IIC among the traditional operating companies, Southern Power, and SCS, as agent,
under the terms of which the Power Pool is operated, (2) whether any parties to the IIC have
violated the FERCs standards of conduct applicable to utility companies that are transmission
providers, and (3) whether Southern Companys code of conduct defining Southern Power as a system
company rather than a marketing affiliate is just and reasonable. In connection with the
formation of Southern Power, the FERC authorized Southern Powers inclusion in the IIC in 2000.
The FERC also previously approved Southern Companys code of conduct.In October 2006, the FERC issued an order accepting a settlement resolving the proceeding subject
to Southern Companys agreement to accept certain modifications to the settlements terms and
Southern Company notified the FERC that it accepted the modifications. The modifications largely
involve functional separation and information restrictions related to marketing activities
conducted on behalf of Southern Power. In November 2006, Southern Company filed with the FERC a
compliance plan in connection with the order. In April 2007, the FERC approved, with certain
modifications, the plan submitted by Southern Company. Implementation of the plan did not have a
material impact on Southern Companys or the traditional operating companies financial statements.
Southern Powers annual cost of implementing the compliance plan is approximately $7.0 million.
In November 2007, Southern Company notified the FERC that the plan had been implemented. In
December 2008, the FERC division of audits issued for public comment its final audit report
pertaining to compliance implementation and related matters. No comments challenging the audit
reports findings were submitted. A decision is now pending from the FERC.Generation Interconnection AgreementsIn November 2004, generator company subsidiaries of Tenaska, Inc. (Tenaska), as counterparties to
three previously executed interconnection agreements with subsidiaries of Southern Company, filed
complaints at the FERC requesting that the FERC modify the agreements and that those Southern
Company subsidiaries refund a total of $19 million previously paid for interconnection facilities,
of which $11 million would be refunded by Alabama Power and $8 million by Georgia Power. No other
similar complaints are pending with the FERC.In January 2007, the FERC issued an order granting Tenaskas requested relief. Although the FERCs
order required the modification of Tenaskas interconnection agreements, under the provisions of
the order, Southern Company determined that no refund was payable to Tenaska.
Southern Company requested rehearing asserting that the FERC retroactively applied a new principle
to existing interconnection agreements. Tenaska requested rehearing of FERCs methodology for
determining the amount of refunds. The requested rehearings were denied, and Southern Company and
Tenaska appealed the orders to the U.S.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 Circuit Court for the District of Columbia. On July 7,
2009, the U.S. Circuit Court affirmed the FERCs January 2007 order. The ultimate outcome of these
matters cannot now be determined.Right of Way LitigationSouthern Company and certain of its subsidiaries, including Mississippi Power, have been named as
defendants in numerous lawsuits brought by landowners since 2001. The plaintiffs lawsuits claim
that defendants may not use, or sublease to third parties, some or all of the fiber optic
communications lines on the rights of way that cross the plaintiffs properties and that such
actions exceed the easements or other property rights held by defendants. The plaintiffs assert
claims for, among other things, trespass and unjust enrichment and seek compensatory and punitive
damages and injunctive relief. Management of Southern Company and Mississippi Power believe that
they have complied with applicable laws and that the plaintiffs claims are without merit.To date, Mississippi Power has entered into agreements with plaintiffs in approximately 95% of the
actions pending against Mississippi Power to clarify its easement rights in the State of
Mississippi. These agreements have been approved by the Circuit Courts of Harrison County and
Jasper County, Mississippi (First Judicial Circuit), and dismissals of the related cases are in
progress. These agreements have not resulted in any material effects on Southern Companys or
Mississippi Powers financial statements.In addition, in late 2001, certain subsidiaries of Southern Company, including Mississippi Power,
were named as defendants in a lawsuit brought in Troup County, Georgia, Superior Court by
Interstate Fiber Network, a subsidiary of telecommunications company ITC DeltaCom, Inc. that uses
rights of way. This lawsuit alleges, among other things, that the defendants are contractually
obligated to indemnify, defend, and hold harmless the telecommunications company from any liability
that may be assessed against it in pending and future right of way litigation. Southern Company
and Mississippi Power believe that the plaintiffs claims are without merit. In the fall of 2004,
the trial court stayed the case until resolution of the underlying landowner litigation discussed
above. In January 2005, the Georgia Court of Appeals dismissed the telecommunications companys
appeal of the trial courts order for lack of jurisdiction. An adverse outcome in this matter,
combined with an adverse outcome against the telecommunications company in one or more of the right
of way lawsuits, could result in substantial judgments; however, the final outcome of these matters
cannot now be determined.Nuclear Fuel Disposal Cost LitigationSee Note 3 to the financial statements of Southern Company, Alabama Power, and Georgia Power under
Nuclear Fuel Disposal Costs in Item 8 of the Form 10-K for information regarding the litigation
brought by Alabama Power and Georgia Power against the government for breach of contracts related
to the disposal of spent nuclear fuel. In July 2007, the U.S. Court of Federal Claims awarded
Georgia Power a total of $30 million, based on its ownership interests, and awarded Alabama Power
$17.3 million, representing all of the direct costs of the expansion of spent nuclear fuel storage
facilities from 1998 through 2004. In August 2007, the government filed a motion for
reconsideration, which was denied in November 2007. In January 2008, the government filed a notice
of appeal. In February 2008, the government filed a motion to stay the appeal pending the courts
decisions in three other cases already on appeal. In April 2008, the court granted the
governments motion to stay the appeal pending the courts decisions in three other similar cases
already on appeal. Those cases were decided in August 2008. Based on the rulings in those cases,
an appeal is expected.In April 2008, a second claim against the government was filed for damages incurred after December
31, 2004 (the court-mandated cut-off in the original claim), due to the governments alleged
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 continuing breach of contract. In October 2008, the court denied a similar request by the
government to stay this proceeding. The complaint does not contain any specific dollar amount for
recovery of damages. Damages will continue to accumulate until the issue is resolved or the
storage is provided. No amounts have been recognized in the financial statements as of June 30,
2009 for either claim. The final outcome of these matters cannot be determined at this time;
however, no material impact on net income is expected as any damage amounts collected from the
government are expected to be returned to customers.Income Tax MattersLeveraged LeasesIn 2002, the IRS began the examination of three sale-in-lease-out (SILO) transactions entered into
by Southern Company. As a result of this examination, the IRS challenged the deductions related to
these transactions. Southern Company disagreed with the IRSs conclusion, went through all
administrative appeals, paid approximately $168 million of the additional tax, and sued the IRS for
the refund of such taxes.During the second quarter 2008, decisions in favor of the IRS were reached in several court cases
involving other taxpayers with similar leveraged lease investments. Pursuant to the application of
certain accounting standards related to leveraged leases, management is required to assess on a
periodic basis the likely outcome of the uncertain tax positions related to the SILO transactions.
Based on these accounting standards and managements review of the recent court decisions, Southern
Company recorded an after-tax charge of approximately $67 million in the second quarter 2008.In December 2008, Southern Company received from the Commissioner of the IRS an invitation to
participate in a global settlement initiative related to the SILO transactions. Southern Company
accepted the settlement offer on January 8, 2009. Pursuant to the settlement offer, Southern
Company recorded an additional after-tax charge in the fourth quarter 2008 of $16 million.
Including the charge recorded in the second quarter 2008, total after-tax charges related to
settling the SILO litigation amounted to $83 million in 2008. Of the total, approximately $7
million represented interest and $76 million represented non-cash charges related to the
reallocation of lease income and will be recognized in income over the remaining term of the
affected leases. All additional taxes due as a result of the settlement have now been paid. A
final closing agreement with the IRS was signed on June 19, 2009. This agreement ends the dispute
with the IRS. Subsequent to the settlement and before the end of the second quarter 2009, Southern
Company terminated one of the SILOs and one other international leveraged lease. Of the $76
million non-cash charges related to the IRS settlement, approximately $30 million related to the
SILO which was terminated on June 29, 2009.Georgia State Income Tax CreditsGeorgia Powers 2005 through 2008 income tax filings for the State of Georgia include state income
tax credits for increased activity through Georgia ports. Georgia Power has also filed similar
claims for the years 2002 through 2004. The Georgia Department of Revenue has not responded to
these claims. In July 2007, Georgia Power filed a complaint in the Superior Court of Fulton County
to recover the credits claimed for the years 2002 through 2004. An unrecognized tax benefit has
been
recorded related to these credits. If Georgia Power prevails, these claims could have a
significant, and possibly material, positive effect on Southern Companys and Georgia Powers net
income. If Georgia Power is not successful, payment of the related state tax could have a
significant, and possibly material, negative effect on Southern Companys and Georgia Powers cash
flow. The ultimate outcome of this matter cannot now be determined.
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 Retail Rate MattersUnder the 2007 Retail Rate Plan, Georgia Powers earnings are evaluated against a retail return on
equity (ROE) range of 10.25% to 12.25%. In connection with the 2007 Retail Rate Plan, the Georgia
PSC ordered that Georgia Power file its next general base rate case by July 1, 2010; however, the
2007 Retail Rate Plan provides that Georgia Power may file for a general base rate increase in the
event its projected retail ROE falls below 10.25%.The economic recession has significantly reduced Georgia Powers revenues upon which retail rates
were set under the Retail Rate Plan. Despite stringent efforts to reduce expenses, current
projections indicate Georgia Powers retail ROE will be less than 10.25% in both 2009 and 2010.
However, in lieu of filing to increase customer rates as allowed under the 2007 Retail Rate Plan,
on June 29, 2009, Georgia Power filed a request with the Georgia PSC for an accounting order that
would allow Georgia Power to amortize approximately $324 million of its regulatory liability
related to other cost of removal obligations. Under Georgia Powers proposal, the regulatory
liability would be amortized ratably over the 18-month period from July 1, 2009 through December
31, 2010 as a reduction to operating expenses. Even if the Georgia PSC approves the accounting
order request as filed, Georgia Power currently expects its retail ROE will remain below the 10.25%
low end of its allowed retail ROE range in 2009 and 2010. The accounting order request is subject
to the review and approval of the Georgia PSC. The ultimate outcome of this matter cannot be
determined at this time.Construction ProjectsIntegrated Coal Gasification Combined CycleOn January 16, 2009, Mississippi Power filed for a Certificate of Public Convenience and Necessity
with the Mississippi PSC to allow construction of a new electric generating plant located in Kemper
County, Mississippi. The plant would utilize an advanced integrated coal gasification combined
cycle technology with an output capacity of 582 MWs. The
Kemper IGCC will use locally mined lignite (an abundant, lower heating value coal) from a proposed
mine adjacent to the plant as fuel. This certificate, if approved by the Mississippi PSC, would
authorize Mississippi Power to acquire, construct and operate the Kemper IGCC and related
facilities. The Kemper IGCC, subject to federal and state reviews and certain regulatory
approvals, is expected to begin commercial operation in May 2014. As part of its filing,
Mississippi Power has requested certain rate recovery treatment in accordance with the base load
construction legislation.Mississippi Power filed an application in June 2006 with the DOE for certain tax credits available
to projects using clean coal technologies under the Energy Policy Act of 2005. The DOE
subsequently certified the Kemper IGCC, and in November 2006 the IRS allocated Internal
Revenue Code Section 48A tax credits of $133 million to Mississippi Power. On May 11, 2009,
Mississippi Power received notification from the IRS formally certifying these tax credits. The
utilization of these credits is dependent upon meeting the certification requirements for the
Kemper IGCC, including an in-service date no later than May 2014. Mississippi Power has
secured all environmental reviews and permits necessary to commence construction of the Kemper
IGCC and has entered into a binding contract for the steam turbine generator, completing two
milestone requirements for the Section 48A credits.On February 14, 2008, Mississippi Power also requested that the DOE transfer the remaining funds
previously granted to a cancelled Southern Company project that would have been located in Orlando,
Florida. On December 12, 2008, an agreement was reached to assign the remaining funds to the
Kemper IGCC. The estimated construction cost of the Kemper IGCC is approximately $2.2
billion, which is net of $220 million related to funding to be received from the DOE related to
project construction. The remaining DOE funding of $50 million is projected to be used for
demonstration over the first few years of operation.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 On April 6, 2009, the Governor of the State of Mississippi signed into law a bill that will provide
an ad valorem tax exemption for a portion of the assessed value of all property utilized in certain
electric generating facilities with integrated gasification process facilities. This tax
exemption, which may not exceed 50% of the total value of the project, is for projects with a
capital investment from private sources of $1 billion or more. Mississippi Power expects the
Kemper IGCC to be a qualifying project under the law and the gasification portion of the Kemper
IGCC to be exempt from ad valorem taxation.Beginning in December 2006, the Mississippi PSC has approved Mississippi Powers requested
accounting treatment to defer the costs associated with Mississippi Powers generation resource
planning, evaluation, and screening activities as a regulatory asset. On December 22, 2008,
Mississippi Power requested an amendment to its original order that would allow these costs to
continue to be charged to and remain in a regulatory asset until January 1, 2010. On April 6,
2009, Mississippi Power received an accounting order from the Mississippi PSC directing Mississippi
Power to continue to charge all generation resource planning, evaluation, and screening costs to
regulatory assets including those costs associated with activities to obtain a certificate of
public convenience and necessity and costs necessary and prudent to preserve the availability,
economic viability, and/or required schedule of the Kemper IGCC generation resource planning,
evaluation, and screening activities until the Mississippi PSC makes findings and determination as
to the recovery of Mississippi Powers prudent expenditures. The Mississippi PSCs determination
of prudence for Mississippi Powers pre-construction costs is scheduled to occur by May 2010. As
of June 30, 2009, Mississippi Power had spent a total of $56.4 million associated with Mississippi
Powers generation resource planning, evaluation, and screening activities, including regulatory
filing costs. Costs incurred for the six months ended June 30, 2009 totaled $14.1 million as
compared to $13.0 million for the six months ended June 30, 2008. Of the total $56.4 million,
$51.9 million was deferred in other regulatory assets, $3.7 million was related to land purchases
capitalized, and $0.8 million was previously expensed.Several motions were filed by intervenors, most of which were procedural in nature and sought to
stay or delay the timely and orderly administration of the docket. In addition to these procedural
motions, a motion was filed by the Attorney General for the State of Mississippi which questioned
whether the Mississippi PSC had authority to approve the gasification portion of the Kemper IGCC.
On June 5, 2009, all of these motions were denied by the Mississippi PSC.On June 5, 2009, the Mississippi PSC issued an order initiating an evaluation of the Kemper IGCC
and establishing a two-phase procedural schedule. During Phase I, the Mississippi PSC will
determine if a need exists for new generating resources. Hearings for Phase I are scheduled for
October 2009 with a decision in November 2009. If it is determined a need exists in Phase I, the
appropriate resource to fill the need as well as the cost recovery of that resource through
application of the State of Mississippis Baseload Act of 2008 will be determined during Phase II.
Hearings regarding Phase II issues are scheduled for February 2010 with a decision by May 2010.The ultimate outcome of these matters cannot now be determined.NuclearIn August 2006, Southern Nuclear, on behalf of Georgia Power, Oglethorpe Power Corporation (OPC),
the Municipal Electric Authority of Georgia (MEAG Power), and the City of Dalton, Georgia, an
incorporated municipality in the State of Georgia acting by and through its Board of Water, Light
and Sinking Fund Commissioners (collectively, Owners), filed an application with the NRC for an
early site permit relating to two additional nuclear units on the site of Plant Vogtle. See Note 4
to the financial statements of Southern Company and Georgia Power in Item 8 of the Form
10-K for additional information on these co-owners. On March 31, 2008, Southern Nuclear filed an
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 application with the NRC for a combined construction and operating license (COL) for the new units.
If licensed by the NRC, Vogtle Units 3 and 4 are scheduled to be placed in service in 2016 and
2017, respectively.On April 8, 2008, Georgia Power, acting for itself and as agent for the Owners, and a consortium
consisting of Westinghouse Electric Company LLC and Stone & Webster, Inc. (collectively,
Consortium) entered into an engineering, procurement, and construction agreement to design,
engineer, procure, construct, and test two AP1000 nuclear units with electric generating capacity
of approximately 1,100 MWs each and related facilities, structures, and improvements at Plant
Vogtle (Vogtle 3 and 4 Agreement).The Vogtle 3 and 4 Agreement is an arrangement whereby the Consortium supplies and constructs the
entire facility with the exception of certain items provided by the Owners. Under the terms of the
Vogtle 3 and 4 Agreement, the Owners will pay a purchase price that will be subject to certain
price escalation and adjustments, adjustments for change orders, and performance bonuses. Each
Owner is severally (and not jointly) liable for its proportionate share, based on its ownership
interest, of all amounts owed to the Consortium under the Vogtle 3 and 4 Agreement. Georgia
Powers proportionate share, based on its current ownership interest, is 45.7%.On March 17, 2009, the Georgia PSC voted to certify construction of Plant Vogtle Units 3 and 4 at
an in-service cost of $6.4 billion. In addition, the Georgia PSC voted to approve inclusion of the
related construction work in progress accounts in rate base and to recover financing costs during
the construction period beginning in 2011, which is expected to reduce the in-service cost to
approximately $4.5 billion.On April 21, 2009, the Governor of the State of Georgia signed into law the Georgia Nuclear Energy
Financing Act that will allow Georgia Power to recover financing costs for nuclear construction
projects by including the related construction work in progress accounts in rate base during the
construction period. The cost recovery provisions will become effective January 1, 2011.On
June 15, 2009, an environmental group filed a petition in the
Superior Court of Fulton County, Georgia seeking review of the
Georgia PSCs certification order and challenging the
constitutionality of the Georgia Nuclear Energy Financing Act. Georgia
Power believes there is no meritorious basis for this petition and
intends to vigorously defend against the requested actions. The
ultimate outcome of this matter cannot be determined at this time.The Owners and the Consortium have agreed to certain liquidated damages upon the Consortiums
failure to comply with the schedule and performance guarantees. The Owners and the Consortium also
have agreed to certain bonuses payable to the Consortium for early completion and unit performance.
The Consortiums liability to the Owners for schedule and performance liquidated damages and
warranty claims is subject to a cap.The obligations of Westinghouse Electric Company LLC and Stone & Webster, Inc. under the Vogtle 3
and 4 Agreement are guaranteed by Toshiba Corporation and The Shaw Group, Inc., respectively. In
the event of certain credit rating downgrades of any Owner, such Owner will be required to provide
a letter of credit or other credit enhancement.In addition, the Owners may terminate the Vogtle 3 and 4 Agreement at any time for their
convenience, provided that the Owners will be required to pay certain termination costs and, at
certain stages of the work, cancellation fees to the Consortium. The Consortium may terminate the
Vogtle 3 and 4 Agreement under certain circumstances, including delays in receipt of the COL or
delivery of full notice to proceed, certain Owner suspension or delays of work, action by a
governmental authority to permanently stop work, certain breaches of the Vogtle 3 and 4 Agreement
by the Owners, Owner insolvency, and certain other events.Southern Company is also exploring other possibilities relating to additional nuclear power
projects, both on its own or in partnership with other utilities. The final outcome of these
matters cannot now be determined.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 (C)
    
    FAIR VALUE MEASUREMENTSAs of June 30, 2009, assets and liabilities measured at fair value on a recurring basis during
the period, together with the level of the fair value hierarchy in which they fall, are as
follows:
 Fair Value Measurements UsingQuoted Pricesin Active
    
    SignificantMarkets for
    
    Other
    
    SignificantIdentical
    
    Observable
    
    UnobservableAssets
    
    Inputs
    
    InputsAs of June 30, 2009:
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)
    
    Total(in millions)Southern CompanyAssets:Energy-related derivatives
    
    $
    
    
    
    $
    23
    
    
    $
    
    
    
    $
    23Nuclear decommissioning trusts(a)(b)
    
    
    594
    
    
    
    343
    
    
    
    
    
    
    
    937Cash equivalents and restricted cash
    
    
    688
    
    
    
    
    
    
    
    
    
    
    
    688Other
    
    
    7
    
    
    
    44
    
    
    
    34
    
    
    
    85Total
    
    $
    1,289
    
    
    $
    410
    
    
    $
    34
    
    
    $
    1,733Liabilities:Energy-related derivatives
    
    $
    
    
    
    $
    325
    
    
    $
    
    
    
    $
    325Interest rate derivatives
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    16Total
    
    $
    
    
    
    $
    341
    
    
    $
    
    
    
    $
    341Alabama PowerAssets:Energy-related derivatives
    
    $
    
    
    
    $
    3
    
    
    $
    
    
    
    $
    3Nuclear decommissioning trusts(a)Domestic equity
    
    
    244
    
    
    
    35
    
    
    
    
    
    
    
    279U.S. Treasury and government agency securities
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    12Corporate bonds
    
    
    7
    
    
    
    56
    
    
    
    
    
    
    
    63Mortgage and asset backed securities
    
    
    
    
    
    
    50
    
    
    
    
    
    
    
    50Other
    
    
    
    
    
    
    14
    
    
    
    
    
    
    
    14Cash equivalents and restricted cash
    
    
    191
    
    
    
    
    
    
    
    
    
    
    
    191Total
    
    $
    442
    
    
    $
    170
    
    
    $
    
    
    
    $
    612Liabilities:Energy-related derivatives
    
    $
    
    
    
    $
    95
    
    
    $
    
    
    
    $
    95Interest rate derivatives
    
    
    
    
    
    
    9
    
    
    
    
    
    
    
    9Total
    
    $
    
    
    
    $
    104
    
    
    $
    
    
    
    $
    104Georgia PowerAssets:Energy-related derivatives
    
    $
    
    
    
    $
    4
    
    
    $
    
    
    
    $
    4Nuclear decommissioning trusts(a)Domestic equity
    
    
    343
    
    
    
    1
    
    
    
    
    
    
    
    344U.S. Treasury and government agency securities
    
    
    
    
    
    
    24
    
    
    
    
    
    
    
    24Municipal bonds
    
    
    
    
    
    
    15
    
    
    
    
    
    
    
    15Corporate bonds
    
    
    
    
    
    
    86
    
    
    
    
    
    
    
    86Mortgage and asset backed securities
    
    
    
    
    
    
    25
    
    
    
    
    
    
    
    25Other
    
    
    
    
    
    
    25
    
    
    
    
    
    
    
    25Cash equivalents and restricted cash
    
    
    34
    
    
    
    
    
    
    
    
    
    
    
    34Total
    
    $
    377
    
    
    $
    180
    
    
    $
    
    
    
    $
    557Liabilities:Energy-related derivatives
    
    $
    
    
    
    $
    129
    
    
    $
    
    
    
    $
    129Interest rate derivatives
    
    
    
    
    
    
    7
    
    
    
    
    
    
    
    7Total
    
    $
    
    
    
    $
    136
    
    
    $
    
    
    
    $
    136
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 Fair Value Measurements UsingQuoted Pricesin Active
    
    SignificantMarkets for
    
    Other
    
    SignificantIdentical
    
    Observable
    
    UnobservableAssets
    
    Inputs
    
    InputsAs of June 30, 2009:
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)
    
    Total(in millions)Gulf PowerAssets:Energy-related derivatives
    
    $
    
    
    
    $
    1
    
    
    $
    
    
    
    $
    1Cash equivalents and restricted cash
    
    
    41
    
    
    
    
    
    
    
    
    
    
    
    41Total
    
    $
    41
    
    
    $
    1
    
    
    $
    
    
    
    $
    42Liabilities:Energy-related derivatives
    
    $
    
    
    
    $
    29
    
    
    $
    
    
    
    $
    29Mississippi PowerAssets:Energy-related derivatives
    
    $
    
    
    
    $
    2
    
    
    $
    
    
    
    $
    2Cash equivalents
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    2Total
    
    $
    2
    
    
    $
    2
    
    
    $
    
    
    
    $
    4Liabilities:Energy-related derivatives
    
    $
    
    
    
    $
    62
    
    
    $
    
    
    
    $
    62Southern PowerAssets:Energy-related derivatives
    
    $
    
    
    
    $
    13
    
    
    $
    
    
    
    $
    13Cash equivalents
    
    
    29
    
    
    
    
    
    
    
    
    
    
    
    29Total
    
    $
    29
    
    
    $
    13
    
    
    $
    
    
    
    $
    42Liabilities:Energy-related derivatives
    
    $
    
    
    
    $
    10
    
    
    $
    
    
    
    $
    10
 (a)
    
    Excludes receivables related to investment income, pending investment sales,
and payables related to pending investment purchases.(b)
    
    For additional detail, see the nuclear decommissioning trusts for Alabama Power and
Georgia Power.
 Energy-related derivatives and interest rate derivatives primarily consist of
over-the-counter contracts. See Note (E) under Financial Instruments herein for additional
information. The nuclear decommissioning trust funds are invested in a diversified mix of
equity and fixed income securities. The cash equivalents and restricted cash consist of
securities with original maturities of 90 days or less. Other represents marketable
securities and certain deferred compensation funds also invested in various marketable
securities. All of these financial instruments and investments are valued primarily using the
market approach.Changes in the fair value measurement of the Level 3 items using significant unobservable
inputs for Southern Company at June 30, 2009 are as follows:
 Level 3OtherThree Months Ended
    
    Six Months EndedJune 30, 2009
    
    June 30, 2009(in millions)Beginning balance
    
    $
    32
    
    
    $
    35Total gains (losses)  realized/unrealized:Included in earnings
    
    
    
    
    
    
    (3
    )Included in OCI
    
    
    2
    
    
    
    2Ending balance at June 30, 2009
    
    $
    34
    
    
    $
    34
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
    Carrying Amount
    
    Fair Value(in millions)Long-term debt:Southern Company
    
    
    $18,916
    
    
    
    $19,231Alabama Power
    
    
    $6,407
    
    
    
    $6,547Georgia Power
    
    
    $7,566
    
    
    
    $7,626Gulf Power
    
    
    $1,119
    
    
    
    $1,129Mississippi Power
    
    
    $491
    
    
    
    $500Southern Power
    
    
    $1,297
    
    
    
    $1,357
 The fair values were based on either closing market prices (Level 1) or closing prices of
comparable instruments (Level 2).
 (D)
    
    STOCKHOLDERS EQUITYEarnings per ShareFor Southern Company, the only difference in computing basic and diluted earnings per share is
attributable to exercised options and outstanding options under the stock option plan. See Note 8
to the financial statements of Southern Company in Item 8 of the Form 10-K for further information
on the stock option plan. The effect of the stock options was determined using the treasury stock
method. Shares used to compute diluted earnings per share are as follows (in thousands):
 Three Months
    
    Three Months
    
    Six Months
    
    Six MonthsEnded
    
    Ended
    
    Ended
    
    EndedJune 30, 2009
    
    June 30, 2008
    
    June 30, 2009
    
    June 30, 2008As reported shares
    
    
    790,748
    
    
    
    769,122
    
    
    
    785,303
    
    
    
    767,636Effect of options
    
    
    1,320
    
    
    
    4,018
    
    
    
    1,562
    
    
    
    4,091Diluted shares
    
    
    792,068
    
    
    
    773,140
    
    
    
    786,865
    
    
    
    771,727
 The reduction in the effect of options for the three and six months ended June 30, 2009 compared to
the corresponding periods in 2008 is primarily due to the anti-dilutive nature of certain stock
options outstanding that have exercise prices that exceed the average stock price of Southern
Company shares in the three and six months ended June 30, 2009. At June 30, 2009, there were 37.8
million stock options that were not included in the diluted earnings per share calculation because
they were anti-dilutive. Assuming an average stock price of $38.01 (the highest exercise price of
the anti-dilutive options outstanding), the effect of options for the three and six months ended
June 30, 2009 would have increased by 3.5 million and 3.1 million shares, respectively.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 Changes in Stockholders EquityThe following table presents year-to-date changes in stockholders equity of Southern Company:
 Preferred andCommon
    
    Preference
    
    TotalStockholders
    
    Stock of
    
    StockholdersEquity
    
    Subsidiaries
    
    Equity(in millions)Balance at December 31, 2008
    
    $
    13,276
    
    
    $
    707
    
    
    $
    13,983Net income after dividends on
preferred and preference stock
    
    
    604
    
    
    
    
    
    
    
    604Other comprehensive income (loss)
    
    
    16
    
    
    
    
    
    
    
    16Stock issued
    
    
    559
    
    
    
    
    
    
    
    559Cash dividends on common stock
    
    
    (670
    )
    
    
    
    
    
    
    (670
    )Other
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )Balance at June 30, 2009
    
    $
    13,784
    
    
    $
    707
    
    
    $
    14,491
 Preferred andCommon
    
    Preference
    
    TotalStockholders
    
    Stock of
    
    StockholdersEquity
    
    Subsidiaries
    
    Equity(in millions)Balance at December 31, 2007
    
    $
    12,385
    
    
    $
    707
    
    
    $
    13,092Net income after dividends on
preferred and preference stock
    
    
    776
    
    
    
    
    
    
    
    776Other comprehensive income (loss)
    
    
    (14
    )
    
    
    
    
    
    
    (14
    )Stock issued
    
    
    260
    
    
    
    
    
    
    
    260Cash dividends on common stock
    
    
    (630
    )
    
    
    
    
    
    
    (630
    )Other
    
    
    (7
    )
    
    
    
    
    
    
    (7
    )Balance at June 30, 2008
    
    $
    12,770
    
    
    $
    707
    
    
    $
    13,477
 (E)
    
    FINANCINGBank Credit ArrangementsAt June 30, 2009, unused credit arrangements with banks totaled $4.7 billion, of which $484 million
expires during 2009, $965 million expires in 2010, $25 million expires in 2011, and $3.2 billion
expires in 2012. These credit arrangements provide liquidity support to the registrants
commercial paper borrowings and the traditional operating companies variable rate pollution
control revenue bonds.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 The following table outlines the credit arrangements by company:
 ExecutableTerm-Loans
    
    ExpiresOne
    
    TwoCompany
    
    Total
    
    Unused
    
    Year
    
    Years
    
    2009
    
    2010
    
    2011
    
    2012(in millions)Southern
Company
    
    $
    950
    
    
    $
    950
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    950Alabama Power
    
    
    1,260
    
    
    
    1,260
    
    
    
    361
    
    
    
    
    
    
    
    325
    
    
    
    145
    
    
    
    25
    
    
    
    765Georgia Power
    
    
    1,675
    
    
    
    1,663
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    555
    
    
    
    
    
    
    
    1,120Gulf Power
    
    
    220
    
    
    
    220
    
    
    
    70
    
    
    
    
    
    
    
    90
    
    
    
    130
    
    
    
    
    
    
    
    Mississippi Power
    
    
    149
    
    
    
    149
    
    
    
    15
    
    
    
    44
    
    
    
    59
    
    
    
    90
    
    
    
    
    
    
    
    Southern Power
    
    
    400
    
    
    
    400
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    400Other
    
    
    55
    
    
    
    55
    
    
    
    55
    
    
    
    
    
    
    
    10
    
    
    
    45
    
    
    
    
    
    
    
    Total
    
    $
    4,709
    
    
    $
    4,697
    
    
    $
    501
    
    
    $
    44
    
    
    $
    484
    
    
    $
    965
    
    
    $
    25
    
    
    $
    3,235
 Subsequent to June 30, 2009, Georgia Power entered into an additional committed credit agreement
resulting in an increase of $40 million. The agreement expires in 2010 and contains a two year
term-loan option.See Note 6 to the financial statements of Southern Company, Alabama Power, Georgia Power, Gulf
Power, Mississippi Power, and Southern Power under Bank Credit Arrangements in Item 8 of the Form
10-K for additional information.Changes in Redeemable Preferred Stock of SubsidiariesThe following table presents year-to-date changes in redeemable preferred stock of subsidiaries for
Southern Company:
 Redeemable PreferredStock of Subsidiaries(in millions)Balance at December 31, 2008
    
    $
    375Issuance (Redemption) of preferred stock
    
    
    Balance at June 30, 2009
    
    $
    375Balance at December 31, 2007
    
    $
    498Issuance (Redemption) of preferred stock
    
    
    (125
    )Other
    
    
    2Balance at June 30, 2008
    
    $
    375
 Financial InstrumentsSouthern Company, the traditional operating companies, and Southern Power are exposed to market
risks, primarily commodity price risk and interest rate risk. To manage the volatility
attributable to these exposures, each company nets its exposures, where possible, to take advantage
of natural offsets and enters into various derivative transactions for the remaining exposures
pursuant to the companies policies in areas such as counterparty exposure and risk management
practices. The registrants policy is that derivatives are to be used primarily for hedging
purposes and mandates strict adherence to all applicable risk management policies. Derivative
positions are monitored using techniques including, but not limited to, market valuation, value at
risk, stress testing, and sensitivity analysis. Derivative instruments are recognized at fair
value in the statement of financial position as either assets or liabilities.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 Energy-Related DerivativesThe traditional operating companies and Southern Power enter into energy-related derivatives to
hedge exposures to electricity, gas, and other fuel price changes. However, due to cost-based rate
regulations, the traditional operating companies have limited exposure to market volatility in
commodity fuel prices and prices of electricity. Each of the traditional operating companies
manages fuel-hedging programs, implemented per the guidelines of their respective state PSCs,
through the use of financial derivative contracts. Southern Power also has limited exposure to
market volatility in commodity fuel prices and prices of electricity because its long-term sales
contracts shift substantially all fuel cost responsibility to the purchaser. However, Southern
Power has been and may continue to be exposed to market volatility in energy-related commodity
prices as a result of sales of uncontracted generating capacity.To mitigate residual risks relative to movements in electricity prices, the registrants enter into
physical fixed-price or heat rate contracts for the purchase and sale of electricity through the
wholesale electricity market. To mitigate residual risks relative to movements in gas prices, the
registrants may enter into fixed-price contracts for natural gas purchases; however, a significant
portion of contracts are priced at market.Energy-related derivative contracts are accounted for in one of three methods:
 
    
    Regulatory Hedges Energy-related derivative contracts which are designated as regulatory
hedges relate primarily to the traditional operating companies fuel hedging programs, where
gains and losses are initially recorded as regulatory liabilities and assets, respectively,
and then are included in fuel expense as the underlying fuel is used in operations and
ultimately recovered through the respective fuel cost recovery clauses.
    
    Cash Flow Hedges Gains and losses on energy-related derivatives designated as cash flow
hedges, which are mainly used by Southern Power, to hedge anticipated purchases and sales are
initially deferred in OCI before being recognized in income in the same period as the hedged
transactions are reflected in earnings.
    
    Not Designated Gains and losses on energy-related derivative contracts that are not
designated or fail to qualify as hedges are recognized in the statements of income as
incurred.
 Some energy-related derivative contracts require physical delivery as opposed to financial
settlement, and this type of derivative is both common and prevalent within the electric industry.
When an energy-related derivative contract is settled physically, any cumulative unrealized gain or
loss is reversed and the contract price is recognized in the respective line item representing the
actual price of the underlying goods being delivered.At June 30, 2009, the net volume of energy-related derivative contracts for power and natural gas
positions for the registrants, together with the longest hedge date over which the respective
entity is hedging its exposure to the variability in future cash flows for forecasted transactions
and the longest date for derivatives not designated as hedges, were as follows:
 Power
    
    GasLongest
    
    Longest
    
    Net
    
    Longest
    
    LongestAs of June 30,
    
    Net Sold
    
    Hedge
    
    Non-Hedge
    
    Purchased
    
    Hedge
    
    Non-Hedge2009:
    
    MWH
    
    Date
        Date
    
    mmBtu
    
    Date
    
    Date(in thousands)
    
    
    
    
    
    
    
    
    


    (in millions)Southern Company
    
    
    1,442
    
    
    
    2009
    
    
    
    2010
    
    
    
    173
    *
    
    
    2012
    
    
    
    2010Alabama Power
    
    
    6
    
    
    
    
    
    
    
    2009
    
    
    
    49
    
    
    
    2012
    
    
    
    Georgia Power
    
    
    7
    
    
    
    
    
    
    
    2009
    
    
    
    75
    
    
    
    2012
    
    
    
    Gulf Power
    
    
    1
    
    
    
    
    
    
    
    2009
    
    
    
    15
    
    
    
    2012
    
    
    
    Mississippi Power
    
    
    286
    
    
    
    2009
    
    
    
    2009
    
    
    
    30
    
    
    
    2012
    
    
    
    2009Southern Power
    
    
    1,142
    
    
    
    
    
    
    
    2010
    
    
    
    5
    *
    
    
    
    
    
    
    2010
 *
    
    Includes location basis of 2 million mmBtu.
 152




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##### Table of Contents



NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 For cash flow hedges, the amounts expected to be reclassified from OCI to revenue and fuel
expense for the next 12-month period ending June 30, 2010 are immaterial for all registrants.Interest Rate DerivativesSouthern Company and certain subsidiaries also enter into interest rate derivatives, which include
forward-starting interest rate swaps, to hedge exposure to changes in interest rates. Derivatives
related to existing variable rate securities or forecasted transactions are accounted for as cash
flow hedges. The derivatives employed as hedging instruments are structured to minimize
ineffectiveness.For cash flow hedges, the fair value gains or losses are recorded in OCI and are reclassified into
earnings at the same time the hedged transactions affect earnings.At June 30, 2009, Southern Company had a total of $1.2 billion notional amount of interest rate
derivatives outstanding with net fair value losses of $16 million as follows:
 WeightedAverage
    
    
    
    Fair ValueNotional
    
    Variable Rate
    
    Fixed Rate
    
    Hedge Maturity
    
    Gain (Loss)Registrant
    
    Amount
    
    Received
    
    Paid
    
    Date
    
    June 30, 2009(in millions)
    
    
    
    
    
    
    
    (in millions)Cash flow hedges of existing debtAlabama Power
    
    $576
    
    SIFMA* Index
    
    2.69%
    
    February 2010
    
    $(9)Georgia Power
    
    301
    
    SIFMA* Index
    
    2.22%
    
    December 2009
    
    (3)Georgia Power
    
    300
    
    1-month LIBOR
    
    2.43%
    
    April 2010
    
    (4)Total
    
    $1,177
    
    
    
    
    
    
    
    $(16)
 *
    
    Securities Industry and Financial Markets Association Municipal Swap Index (SIFMA)
 For the six months ended June 30, 2009, Georgia Power incurred net losses of $16 million (all
of which were incurred in the first quarter 2009) upon termination of certain interest rate
derivatives at the same time it issued debt. The effective portion of these losses has been
deferred in OCI and will be amortized to interest expense over the life of the original interest
rate derivative, reflecting the period in which the forecasted hedged transaction affects earnings.Subsequent to June 30, 2009, Gulf Power entered into a forward starting interest rate swap to
mitigate exposure to interest rate changes related to anticipated debt issuances. The notional
amount of the swap is $50 million, and the swap has been designated as a cash flow hedge.The following table reflects the estimated pre-tax gains (losses) that will be reclassified from
OCI to interest expense for the next 12-month period ending June 30, 2010, together with the
longest date that total deferred gains and losses are expected to be amortized into earnings.
 Estimated Gain (Loss) tobe Reclassified for the
    
    Total Deferred12 Months Ending
    
    Gains (Losses)Registrant
    
    June 30, 2010
    
    Amortized Through(in millions)Southern Company
    
    $
    (35
    )
    
    
    2037Alabama Power
    
    
    (9
    )
    
    
    2035Georgia Power
    
    
    (15
    )
    
    
    2037Gulf Power
    
    
    (1
    )
    
    
    2018Southern Power
    
    
    (10
    )
    
    
    2016
 153




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##### Table of Contents



NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 Derivative Financial Statement Presentation and AmountsAt June 30, 2009, the fair value of energy-related derivatives and interest rate derivatives was
reflected in the balance sheets as follows:
 Asset Derivatives at June 30, 2009Fair ValueDerivative Category and Balance Sheet
    
    Southern
    
    Alabama
    
    Georgia
    
    Gulf
    
    Mississippi
    
    SouthernLocation
    
    Company
    
    Power
    
    Power
    
    Power
    
    Power
    
    Power(in millions)Derivatives designated as hedging
instruments for regulatory purposesEnergy-related derivativesOther current assets
    
    $
    4
    
    
    $
    1
    
    
    $
    2
    
    
    $
    1
    
    
    $
    Other deferred charges and assets
    
    
    5
    
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    1Total derivatives designated as hedging
instruments for regulatory purposes
    
    $
    9
    
    
    $
    3
    
    
    $
    4
    
    
    $
    1
    
    
    $
    1
    
    
    
    N/ADerivatives not designated as hedging
instrumentsEnergy-related derivativesOther current assets*
    
    $
    14
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1
    
    
    $
    Assets from risk management activities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13Total derivatives not designated as
hedging instruments
    
    $
    14
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1
    
    
    $
    13Total asset derivatives
    
    $
    23
    
    
    $
    3
    
    
    $
    4
    
    
    $
    1
    
    
    $
    2
    
    
    $
    13
 *
    
    Southern Company includes Assets from risk management activities in Other current assets.
 Liability Derivatives at June 30, 2009Fair ValueDerivative Category and Balance Sheet
    
    Southern
    
    Alabama
    
    Georgia
    
    Gulf
    
    Mississippi
    
    SouthernLocation
    
    Company
    
    Power
    
    Power
    
    Power
    
    Power
    
    Power(in millions)Derivatives designated as hedging
instruments for regulatory purposesEnergy-related derivativesLiabilities from risk management activities
    
    $
    241
    
    
    $
    78
    
    
    $
    102
    
    
    $
    24
    
    
    $
    37Other deferred credits and liabilities
    
    
    73
    
    
    
    17
    
    
    
    27
    
    
    
    5
    
    
    
    24Total derivatives designated as hedging
instruments for regulatory purposes
    
    $
    314
    
    
    $
    95
    
    
    $
    129
    
    
    $
    29
    
    
    $
    61
    
    
    
    N/ADerivatives designated as hedging instruments
in cash flow and fair value hedgesInterest rate derivativesLiabilities from risk management activities
    
    $
    16
    
    
    $
    9
    
    
    $
    7
    
    
    $
    
    
    
    $
    
    
    
    $
    Derivatives not designated as hedging
instrumentsEnergy-related derivativesLiabilities from risk management activities
    
    $
    10
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1
    
    
    $
    9Other deferred credits and liabilities
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Total derivatives not designated as hedging
instruments
    
    $
    11
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1
    
    
    $
    10Total liability derivatives
    
    $
    341
    
    
    $
    104
    
    
    $
    136
    
    
    $
    29
    
    
    $
    62
    
    
    $
    10
 154




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##### Table of Contents



NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 All derivative instruments are measured at fair value. See Note (C) herein for additional
information.At June 30, 2009, the pre-tax effect of unrealized derivative gains (losses) arising from
energy-related derivative instruments designated as regulatory hedging instruments and deferred on
the balance sheets were as follows:
 Regulatory Hedge Unrealized Gain (Loss) Recognized on the Balance SheetDerivative Category and Balance Sheet
    
    Southern
    
    Alabama
    
    Georgia
    
    Gulf
    
    MississippiLocation
    
    Company
    
    Power
    
    Power
    
    Power
    
    Power(in millions)Energy-related derivativesOther regulatory assets, current
    
    $
    (241
    )
    
    $
    (78
    )
    
    $
    (102
    )
    
    $
    (24
    )
    
    $
    (37
    )Other regulatory assets, deferred
    
    
    (73
    )
    
    
    (17
    )
    
    
    (27
    )
    
    
    (5
    )
    
    
    (24
    )Other current liabilities
    
    
    4
    
    
    
    1
    
    
    
    2
    
    
    
    
    
    
    
    Other regulatory liabilities, current
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    Other regulatory liabilities, deferred
    
    
    5
    
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    1Total energy-related derivative gains (losses)
    
    $
    (305
    )
    
    $
    (92
    )
    
    $
    (125
    )
    
    $
    (28
    )
    
    $
    (60
    )
  Gain (Loss)Recognized in OCI
    
    Gain (Loss) Reclassified from Accumulated OCIDerivatives in Cash Flow
    
    on Derivative
    
    into Income (Effective Portion)Hedging Relationships
    
    (Effective Portion)
    
    Statements of Income Location
    
    Amount2009
    
    2008
    
    
    
    2009
    
    2008(in millions)
    
    
    
    (in millions)Southern CompanyEnergy-related derivatives
    
    $
    
    
    
    $
    7
    
    
    Fuel
    
    
    
    $
    
    
    
    $
    Interest rate derivatives
    
    
    (4
    )
    
    
    
    
    
    Interest expense
    
    
    
    
    (12
    )
    
    
    (6
    )Total
    
    $
    (4
    )
    
    $
    7
    
    
    
    
    
    
    $
    (12
    )
    
    $
    (6
    )Alabama PowerEnergy-related derivatives
    
    $
    
    
    
    $
    
    
    
    Fuel
    
    
    
    $
    
    
    
    $
    Interest rate derivatives
    
    
    (2
    )
    
    
    3
    
    
    Interest expense
    
    
    
    
    (3
    )
    
    
    (2
    )Total
    
    $
    (2
    )
    
    $
    3
    
    
    
    
    
    
    $
    (3
    )
    
    $
    (2
    )Georgia PowerInterest rate derivatives total
    
    $
    (2
    )
    
    $
    16
    
    
    Interest expense
    
    
    
    $
    (6
    )
    
    $
    (1
    )Gulf PowerInterest rate derivatives total
    
    $
    
    
    
    $
    1
    
    
    Interest expense
    
    
    
    $
    
    
    
    $
    Mississippi PowerEnergy-related derivatives total
    
    $
    
    
    
    $
    (1
    )
    
    Fuel
    
    
    
    $
    
    
    
    $
    Southern PowerEnergy-related derivatives
    
    $
    
    
    
    $
    (12
    )
    
    Fuel
    
    
    
    $
    
    
    
    $
    Interest rate derivatives
    
    
    
    
    
    
    
    
    
    Interest expense
    
    
    
    
    (3
    )
    
    
    (3
    )Total
    
    $
    
    
    
    $
    (12
    )
    
    
    
    
    
    $
    (3
    )
    
    $
    (3
    )
 155




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##### Table of Contents



NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 For the six months ended June 30, 2009 and June 30, 2008, the pre-tax effect of energy-related
derivatives and interest rate derivatives designated as cash flow hedging instruments on the
statements of income were as follows:
 Gain (Loss)Recognized in OCIDerivatives in Cash Flow
    
    on Derivative
    
    Gain (Loss) Reclassified from Accumulated OCIHedging Relationships
    
    (Effective Portion)
    
    into Income (Effective Portion)Statements of Income Location
    
    Amount2009
    
    2008
    
    
    
    
    
    2009
    
    2008(in millions)
    
    
    
    
    
    (in millions)Southern CompanyEnergy-related derivatives
    
    $
    1
    
    
    $
    (5
    )
    
    Fuel
    
    
    
    $
    
    
    
    $
    Interest rate derivatives
    
    
    (3
    )
    
    
    (24
    )
    
    Interest expense
    
    
    
    
    (22
    )
    
    
    (11
    )Total
    
    $
    (2
    )
    
    $
    (29
    )
    
    
    
    
    
    $
    (22
    )
    
    $
    (11
    )Alabama PowerEnergy-related derivatives
    
    $
    
    
    
    $
    (1
    )
    
    Fuel
    
    
    
    $
    
    
    
    $
    Interest rate derivatives
    
    
    (4
    )
    
    
    (2
    )
    
    Interest expense
    
    
    
    
    (6
    )
    
    
    (2
    )Total
    
    $
    (4
    )
    
    $
    (3
    )
    
    
    
    
    
    $
    (6
    )
    
    $
    (2
    )Georgia PowerInterest rate derivatives total
    
    $
    1
    
    
    $
    
    
    
    Interest expense
    
    
    
    $
    (11
    )
    
    $
    (2
    )Gulf PowerInterest rate derivatives total
    
    $
    
    
    
    $
    (3
    )
    
    Interest expense
    
    
    
    $
    (1
    )
    
    $
    Mississippi PowerEnergy-related derivatives total
    
    $
    
    
    
    $
    (4
    )
    
    Fuel
    
    
    
    $
    
    
    
    $
    Southern PowerEnergy-related derivatives
    
    $
    1
    
    
    $
    (20
    )
    
    Fuel
    
    
    
    $
    
    
    
    $
    Interest rate derivatives
    
    
    
    
    
    
    
    
    
    Interest expense
    
    
    
    
    (5
    )
    
    
    (7
    )Total
    
    $
    1
    
    
    $
    (20
    )
    
    
    
    
    
    $
    (5
    )
    
    $
    (7
    )There was no material ineffectiveness recorded in earnings for any registrant for any period
presented.For the three months ended June 30, 2009 and June 30, 2008, the pre-tax effect of energy-related
derivatives not designated as hedging instruments on the statements of income were as follows:Derivatives not Designated
    








    Unrealized Gain (Loss) Recognized in Incomeas Hedging Instruments
    
    
    
    
    
    
    
    
    
    Statements of Income Location
    
    Amount2009
    
    2008(in millions)Southern CompanyEnergy-related derivatives
    








    Wholesale revenues

    $
    1
    
    
    $
    (6
    )Fuel
    


    
    1
    
    
    
    16Purchased power

    
    (2
    )
    
    
    (5
    )Other income (expense), net

    
    
    
    
    
    2Total
    








    
    


    $
    
    
    
    $
    7Mississippi PowerEnergy-related derivatives
    








    Other income (expense), net

    $
    
    
    
    $
    2Southern PowerEnergy-related derivatives
    








    Wholesale revenues
    
    $
    1
    
    
    $
    (6
    )Fuel
    


    
    1
    
    
    
    16Purchased power
    
    
    (2
    )
    
    
    (5
    )Total
    








    
    


    $
    
    
    
    $
    5
 156




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##### Table of Contents



NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 For the six months ended June 30, 2009 and June 30, 2008, the pre-tax effect of energy-related
derivatives not designated as hedging instruments on the statements of income were as follows:
 Derivatives not Designated
    
    Unrealized Gain (Loss) Recognized in Incomeas Hedging Instruments
    
    Statements of Income Location
    
    
    Amount2009

    
    2008(in millions)Southern CompanyEnergy-related derivatives
    
    Wholesale revenues
    
    
    
    $
    5
    
    
    $
    (34
    )Fuel
    
    
    
    
    (3
    )
    
    
    28Purchased power
    
    
    
    
    (3
    )
    
    
    (3
    )Other income (expense), net
    
    
    
    
    
    
    
    
    2Total
    
    
    
    
    
    $
    (1
    )
    
    $
    (7
    )Mississippi PowerEnergy-related derivatives
    
    Other income (expense), net
    
    
    
    $
    
    
    
    $
    2Southern PowerEnergy-related derivatives
    
    Wholesale revenues
    
    
    
    $
    5
    
    
    $
    (34
    )Fuel
    
    
    
    
    (3
    )
    
    
    28Purchased power
    
    
    
    
    (3
    )
    
    
    (3
    )Total
    
    
    
    
    
    $
    (1
    )
    
    $
    (9
    )
 Contingent FeaturesThe registrants do not have any credit arrangements that would require material changes in payment
schedules or terminations as a result of a credit rating downgrade. There are certain derivatives
that could require collateral, but not accelerated payment, in the event of various credit rating
changes of certain Southern Company subsidiaries. At June 30, 2009, the fair value of derivative
liabilities with contingent features, by registrant, is as follows:
 Southern
    
    Alabama
    
    Georgia
    
    Gulf
    
    Mississipi
    
    SouthernCompany
    
    Power
    
    Power
    
    Power
    
    Power
    
    Power(in millions)Derivative liabilities
    
    $
    68
    
    
    $
    19
    
    
    $
    30
    
    
    $
    5
    
    
    $
    8
    
    
    $
    6
 At June 30, 2009, the registrants had no collateral posted with their derivative counterparties;
however, because of the joint and several liability features underlying these derivatives, the
maximum potential collateral requirements arising from the credit-risk-related contingent features,
at a rating below BBB- and/or Baa3, is $68 million for each registrant.Currently, each of the registrants has investment grade credit ratings from the major rating
agencies with respect to debt, preferred securities, preferred stock, and/or preference stock.Generally, collateral may be provided by a Southern Company guaranty, letter of credit, or cash.
For the traditional operating companies and Southern Power, included in these amounts are certain
agreements that could require collateral in the event that one or more Power Pool participants has
a credit rating change to below investment grade.
 157




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##### Table of Contents



NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 (F)
    
    RETIREMENT BENEFITSSouthern Company has a defined benefit, trusteed, pension plan covering substantially all
employees. The plan is funded in accordance with requirements of the Employee Retirement Income
Security Act of 1974, as amended (ERISA). No contributions to the plan are expected for the year
ending December 31, 2009. Southern Company also provides certain defined benefit pension plans for
a selected group of management and highly compensated employees. Benefits under these
non-qualified pension plans are funded on a cash basis. In addition, Southern Company provides
certain medical care and life insurance benefits for retired employees through other postretirement
benefit plans. The traditional operating companies fund related trusts to the extent required by
their respective regulatory commissions.See Note 2 to the financial statements of Southern Company, Alabama Power, Georgia Power, Gulf
Power, and Mississippi Power in Item 8 of the Form 10-K. Components of the pension plans and
postretirement plans net periodic costs for the three-month and six-month periods ended June 30,
2009 and 2008 are as follows (in millions):
 Southern
    
    Alabama
    
    Georgia
    
    Gulf
    
    MississippiPENSION PLANS
    
    Company
    
    Power
    
    Power
    
    Power
    
    PowerThree Months Ended
June 30, 2009Service cost
    
    $
    37
    
    
    $
    9
    
    
    $
    12
    
    
    $
    1
    
    
    $
    1Interest cost
    
    
    97
    
    
    
    24
    
    
    
    36
    
    
    
    5
    
    
    
    5Expected return on plan assets
    
    
    (136
    )
    
    
    (41
    )
    
    
    (54
    )
    
    
    (6
    )
    
    
    (5
    )Net amortization
    
    
    11
    
    
    
    2
    
    
    
    4
    
    
    
    
    
    
    
    1Net cost (income)
    
    $
    9
    
    
    $
    (6
    )
    
    $
    (2
    )
    
    $
    
    
    
    $
    2Six Months Ended
June 30, 2009Service cost
    
    $
    73
    
    
    $
    17
    
    
    $
    24
    
    
    $
    3
    
    
    $
    3Interest cost
    
    
    194
    
    
    
    48
    
    
    
    73
    
    
    
    9
    
    
    
    9Expected return on plan assets
    
    
    (271
    )
    
    
    (82
    )
    
    
    (108
    )
    
    
    (12
    )
    
    
    (10
    )Net amortization
    
    
    21
    
    
    
    5
    
    
    
    8
    
    
    
    
    
    
    
    1Net cost (income)
    
    $
    17
    
    
    $
    (12
    )
    
    $
    (3
    )
    
    $
    
    
    
    $
    3Three Months Ended
June 30, 2008Service cost
    
    $
    37
    
    
    $
    8
    
    
    $
    13
    
    
    $
    1
    
    
    $
    1Interest cost
    
    
    87
    
    
    
    22
    
    
    
    34
    
    
    
    4
    
    
    
    4Expected return on plan assets
    
    
    (132
    )
    
    
    (40
    )
    
    
    (53
    )
    
    
    (6
    )
    
    
    (5
    )Net amortization
    
    
    11
    
    
    
    3
    
    
    
    3
    
    
    
    1
    
    
    
    1Net cost (income)
    
    $
    3
    
    
    $
    (7
    )
    
    $
    (3
    )
    
    $
    
    
    
    $
    1Six Months Ended
June 30, 2008Service cost
    
    $
    73
    
    
    $
    17
    
    
    $
    25
    
    
    $
    3
    
    
    $
    3Interest cost
    
    
    174
    
    
    
    44
    
    
    
    67
    
    
    
    8
    
    
    
    8Expected return on plan assets
    
    
    (263
    )
    
    
    (80
    )
    
    
    (106
    )
    
    
    (12
    )
    
    
    (10
    )Net amortization
    
    
    23
    
    
    
    6
    
    
    
    8
    
    
    
    1
    
    
    
    1Net cost (income)
    
    $
    7
    
    
    $
    (13
    )
    
    $
    (6
    )
    
    $
    
    
    
    $
    2
 158




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##### Table of Contents



NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 Southern
    
    Alabama
    
    Georgia
    
    Gulf
    
    MississippiPOSTRETIREMENT PLANS
    
    Company
    
    Power
    
    Power
    
    Power
    
    PowerThree Months Ended
June 30, 2009Service cost
    
    $
    6
    
    
    $
    1
    
    
    $
    3
    
    
    $
    1
    
    
    $
    Interest cost
    
    
    29
    
    
    
    8
    
    
    
    12
    
    
    
    2
    
    
    
    2Expected return on plan assets
    
    
    (15
    )
    
    
    (6
    )
    
    
    (7
    )
    
    
    (1
    )
    
    
    (1
    )Net amortization
    
    
    7
    
    
    
    2
    
    
    
    3
    
    
    
    
    
    
    
    Net cost (income)
    
    $
    27
    
    
    $
    5
    
    
    $
    11
    
    
    $
    2
    
    
    $
    1Six Months Ended
June 30, 2009Service cost
    
    $
    13
    
    
    $
    3
    
    
    $
    5
    
    
    $
    1
    
    
    $
    1Interest cost
    
    
    57
    
    
    
    15
    
    
    
    25
    
    
    
    3
    
    
    
    3Expected return on plan assets
    
    
    (30
    )
    
    
    (12
    )
    
    
    (15
    )
    
    
    (1
    )
    
    
    (1
    )Net amortization
    
    
    14
    
    
    
    4
    
    
    
    7
    
    
    
    
    
    
    
    Net cost (income)
    
    $
    54
    
    
    $
    10
    
    
    $
    22
    
    
    $
    3
    
    
    $
    3Three Months Ended
June 30, 2008Service cost
    
    $
    7
    
    
    $
    2
    
    
    $
    3
    
    
    $
    1
    
    
    $
    1Interest cost
    
    
    27
    
    
    
    8
    
    
    
    13
    
    
    
    1
    
    
    
    2Expected return on plan assets
    
    
    (14
    )
    
    
    (6
    )
    
    
    (8
    )
    
    
    (1
    )
    
    
    (1
    )Net amortization
    
    
    7
    
    
    
    2
    
    
    
    4
    
    
    
    1
    
    
    
    Net cost (income)
    
    $
    27
    
    
    $
    6
    
    
    $
    12
    
    
    $
    2
    
    
    $
    2Six Months Ended
June 30, 2008Service cost
    
    $
    14
    
    
    $
    4
    
    
    $
    5
    
    
    $
    1
    
    
    $
    1Interest cost
    
    
    55
    
    
    
    15
    
    
    
    25
    
    
    
    2
    
    
    
    3Expected return on plan assets
    
    
    (29
    )
    
    
    (11
    )
    
    
    (15
    )
    
    
    (1
    )
    
    
    (1
    )Net amortization
    
    
    15
    
    
    
    4
    
    
    
    8
    
    
    
    1
    
    
    
    Net cost (income)
    
    $
    55
    
    
    $
    12
    
    
    $
    23
    
    
    $
    3
    
    
    $
    3
 (G)
    
    EFFECTIVE TAX RATE AND UNRECOGNIZED TAX BENEFITSEffective Tax RateSouthern Companys effective tax rate was 38.2% for the six months ended June 30, 2009, as compared
to 33.3% for the same period in 2008. See Note 5 to the financial statements of each registrant in
Item 8 of the Form 10-K for information on the effective income tax rate. Southern Companys
effective tax rate increased for the six months ended June 30, 2009 primarily due to the $202
million charge recorded for the MC Asset Recovery settlement. Southern Company is currently
evaluating potential recovery of the settlement payment through various means. The degree to which
any recovery is realized will determine, in part, the final income tax treatment of the settlement
payment. See Note (B) herein under Mirant Matters for further information regarding this matter.
The increase in Southern Companys effective tax rate was partially offset by the early
termination of an international leveraged lease investment, which is not taxable.
 159




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##### Table of Contents



NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 Unrecognized Tax BenefitsChanges during 2009 for unrecognized tax benefits are as follows:
 Southern
    
    Alabama
    
    Georgia
    
    Gulf
    
    Mississippi
    
    SouthernCompany
    
    Power
    
    Power
    
    Power
    
    Power
    
    Power(in millions)Unrecognized tax benefits as of
December 31, 2008
    
    $
    146.4
    
    
    $
    3.0
    
    
    $
    137.1
    
    
    $
    0.3
    
    
    $
    1.8
    
    
    $
    0.5Tax positions from current periods
    
    
    29.4
    
    
    
    1.0
    
    
    
    23.4
    
    
    
    0.2
    
    
    
    0.7
    
    
    
    0.3Tax positions from prior periods
    
    
    2.2
    
    
    
    1.2
    
    
    
    0.2
    
    
    
    0.3
    
    
    
    0.1
    
    
    
    0.4Reductions due to settlements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reductions due to expired
statute of limitations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance as of June 30, 2009
    
    $
    178.0
    
    
    $
    5.2
    
    
    $
    160.7
    
    
    $
    0.8
    
    
    $
    2.6
    
    
    $
    1.2
 The tax positions increase from the current periods relates primarily to the Georgia state tax
credits and other miscellaneous uncertain tax positions. See Note (B) herein under Income Tax
Matters  Georgia State Income Tax Credits for additional information. The tax positions increase
from the prior periods relates to the production activities deduction tax position.Impact on Southern Companys effective tax rate, if recognized, is as follows:
 As of
    
    As ofGeorgia
    
    Other
    
    June 30,
    
    December 31,Power
    
    Registrants
    
    2009
    
    2008
    
    Change(in millions)Tax positions
impacting the
effective tax rate
    
    $
    158.0
    
    
    $
    17.2
    
    
    $
    175.2
    
    
    $
    143.5
    
    
    $
    31.7Tax positions not
impacting the
effective tax rate
    
    
    2.8
    
    
    
    
    
    
    
    2.8
    
    
    
    2.9
    
    
    
    (0.1
    )Balance of
unrecognized tax
benefits
    
    $
    160.8
    
    
    $
    17.2
    
    
    $
    178.0
    
    
    $
    146.4
    
    
    $
    31.6
 The change in the tax position impacting the effective tax rate increase relates primarily to
the Georgia state tax credits and the production activities deduction.Accrued interest for unrecognized tax benefits:
 (in millions)Interest accrued as of December 31, 2008
    
    $
    14.8Interest accrued year-to-date
    
    
    4.4Balance as of June 30, 2009
    
    $
    19.2
 It is reasonably possible that the amount of the unrecognized benefit with respect to a
majority of Southern Companys and Georgia Powers unrecognized tax positions will significantly
increase or decrease within the next 12 months. The conclusion or settlement of the Georgia state
tax credits litigation would substantially reduce the balances. The conclusion or settlement of
federal or state audits could also impact the balances significantly. At this time, an estimate of
the range of reasonably possible outcomes cannot be determined.
 160




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##### Table of Contents



NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 (H)
    
    SEGMENT AND RELATED INFORMATIONSouthern Companys reportable business segments are the sale of electricity in the Southeast by the
four traditional operating companies and Southern Power. Southern Powers revenues from sales to
the traditional operating companies were $138 million and $273 million for the three months and six
months ended June 30, 2009, respectively, and $144 million and $277 million for the three months
and six months ended June 30, 2008, respectively. The All Other column includes parent Southern
Company, which does not allocate operating expenses to business segments. Also, this category
includes segments below the quantitative threshold for separate disclosure. These segments include
investments in telecommunications, energy-related services, and leveraged lease projects. All
other intersegment revenues are not material. Financial data for business segments and products
and services are as follows:
 Electric UtilitiesTraditionalOperating
    
    Southern
    
    
    
    
    
    
    
    
    
    AllCompanies
    
    Power
    
    Eliminations
    
    Total
    
    Other
    
    Eliminations
    
    Consolidated(in millions)Three Months Ended June 30, 2009:Operating revenues
    
    $
    3,780
    
    
    $
    230
    
    
    $
    (151
    )
    
    $
    3,859
    
    
    $
    43
    
    
    $
    (17
    )
    
    $
    3,885Segment net income (loss) after
dividends on preferred and
preference stock of subsidiaries
    
    
    421
    
    
    
    31
    
    
    
    
    
    
    
    452
    
    
    
    25
    
    
    
    1
    
    
    
    478Six Months Ended June 30, 2009:Operating revenues
    
    $
    7,338
    
    
    $
    462
    
    
    $
    (302
    )
    
    $
    7,498
    
    
    $
    87
    
    
    $
    (34
    )
    
    $
    7,551Segment net income (loss) after
dividends on preferred and
preference stock of subsidiaries
    
    
    723
    
    
    
    59
    
    
    
    
    
    
    
    782
    
    
    
    (180
    )
    
    
    2
    
    
    
    604Total assets at June 30, 2009
    
    $
    46,943
    
    
    $
    2,821
    
    
    $
    (141
    )
    
    $
    49,623
    
    
    $
    1,359
    
    
    $
    (565
    )
    
    $
    50,417
 Electric UtilitiesTraditionalOperating
    
    Southern
    
    
    
    
    
    
    
    
    
    AllCompanies
    
    Power
    
    Eliminations
    
    Total
    
    Other
    
    Eliminations
    
    Consolidated(in millions)Three Months Ended June 30, 2008:Operating revenues
    
    $
    4,075
    
    
    $
    316
    
    
    $
    (208
    )
    
    $
    4,183
    
    
    $
    47
    
    
    $
    (15
    )
    
    $
    4,215Segment net income (loss) after
dividends on preferred and
preference stock of subsidiaries
    
    
    451
    
    
    
    35
    
    
    
    
    
    
    
    486
    
    
    
    (71
    )
    
    
    2
    
    
    
    417Six Months Ended June 30, 2008:Operating revenues
    
    $
    7,693
    
    
    $
    532
    
    
    $
    (393
    )
    
    $
    7,832
    
    
    $
    95
    
    
    $
    (29
    )
    
    $
    7,898Segment net income (loss) after
dividends on preferred and
preference stock of subsidiaries
    
    
    793
    
    
    
    64
    
    
    
    
    
    
    
    857
    
    
    
    (81
    )
    
    
    
    
    
    
    776Total assets at December 31, 2008
    
    $
    44,794
    
    
    $
    2,813
    
    
    $
    (139
    )
    
    $
    47,468
    
    
    $
    1,407
    
    
    $
    (528
    )
    
    $
    48,347
 Products and Services
 Electric Utilities RevenuesPeriod
    
    Retail
    
    Wholesale
    
    Other
    
    Total(in millions)Three Months Ended June 30, 2009
    
    $
    3,293
    
    
    $
    438
    
    
    $
    128
    
    
    $
    3,859Three Months Ended June 30, 2008
    
    
    3,449
    
    
    
    591
    
    
    
    143
    
    
    
    4,183Six Months Ended June 30, 2009
    
    $
    6,358
    
    
    $
    889
    
    
    $
    251
    
    
    $
    7,498Six Months Ended June 30, 2008
    
    
    6,455
    
    
    
    1,105
    
    
    
    272
    
    
    
    7,832
 161




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
 Southern Company
  Nominees
    
    Shares For
    
    Shares WithheldJuanita Powell Baranco
    
    
    557,953,677
    
    
    
    16,261,476Francis S. Blake
    
    
    541,627,901
    
    
    
    32,587,252Jon A. Boscia
    
    
    552,156,149
    
    
    
    22,059,004Thomas F. Chapman
    
    
    559,142,402
    
    
    
    15,072,751H. William Habermeyer, Jr.
    
    
    555,213,786
    
    
    
    19,001,367Veronica M. Hagen
    
    
    553,930,534
    
    
    
    20,284,619Warren A. Hood, Jr.
    
    
    559,164,234
    
    
    
    15,050,919Donald M. James
    
    
    529,248,958
    
    
    
    44,966,195J. Neal Purcell
    
    
    555,467,932
    
    
    
    18,747,221David M. Ratcliffe
    
    
    554,108,638
    
    
    
    20,106,515William G. Smith, Jr.
    
    
    559,122,012
    
    
    
    15,093,141Gerald J. St. Pé
    
    
    555,689,823
    
    
    
    18,525,330
 162




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##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders. (Continued)
  
    
    to ratify the appointment of the independent registered public accounting firm.
Vote tabulation for this proposal was 566,494,731 shares for, 4,531,672 shares
against, and 3,188,750 shares abstaining. As a result of this vote, the
appointment of the independent registered public accounting firm was ratified.
    
    to amend the Southern Company by-laws. Vote tabulation for this proposal was
428,773,461 shares for, 40,706,371 shares against, and 7,716,817 shares
abstaining. Although this proposal received a majority of the votes, its approval
was contingent upon the approval of the next proposal to amend the Certificate of
Incorporation and, therefore, this proposal to amend the by-laws of Southern
Company was not approved.
    
    to amend Southern Companys Certificate of Incorporation. Vote tabulation for
this proposal was 427,791,284 shares for, 44,157,735 shares against, and 5,247,630
shares abstaining. Since this proposal to amend Southern Companys Certificate of
Incorporation did not receive the requisite votes totaling 66 2/3% of the shares
outstanding, it was not approved.
    
    stockholder proposal on an environmental report. Vote tabulation for this
proposal was 43,159,326 shares for, 332,611,437 shares against, and 52,424,690
shares abstaining. As a result of this vote, the stockholder proposal on an
environmental report was not approved.
    
    stockholder proposal on a pension policy. Vote tabulation for this proposal was
162,455,186 shares for, 250,634,517 shares against, and 15,111,301 shares
abstaining. As a result of this vote, the stockholder proposal on a pension
policy was not approved.
 Alabama Power
  Whit Armstrong
    
    Malcolm PorteraRalph D. Cook
    
    Robert D. PowersDavid J. Cooper, Sr.
    
    David M. RatcliffeJohn D. Johns
    
    C. Dowd RitterPatricia M. King
    
    James H. SanfordJames K. Lowder
    
    John C. Webb, IVCharles D. McCrary
    
    James W. Wright
  163




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##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders. (Continued)
 Georgia Power
  Robert L. Brown, Jr.
    
    Beverly Daniel TatumAnna R. Cablik
    
    D. Gary ThompsonMichael D. Garrett
    
    Richard W. UsseryStephen S. Green
    
    W. Jerry VereenDavid M. Ratcliffe
    
    E. Jenner Wood, IIIJimmy C. Tallent
  Gulf Power
  C. LeDon Anchors
    
    William A. PullumWilliam C. Cramer, Jr.
    
    Winston E. ScottFred C. Donovan, Sr.
    
    Susan N. Story
  Mississippi Power
  Roy Anderson, III
    
    George A. SchloegelAubrey B. Patterson, Jr.
    
    Philip J. TerrellChristine L. Pickering
    
    Anthony J. TopaziMartha D. Saunders
  164




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##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders. (Continued)
 Southern Power
  William P. Bowers
    
    G. Edison Holland, Jr.Thomas A. Fanning
    
    David M. Ratcliffe
  165




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##### Table of Contents



Item 6. Exhibits.
 (3) Articles of Incorporation and By-LawsGeorgia Power(c)1
    
    -
    
    By-laws of Georgia Power as
amended effective May 20, 2009,
and as presently in effect.
(Designated in Form 8-K dated May
20, 2009, File No. 1-6468, as
Exhibit 3(c)2.)(4) Instruments Describing Rights of Security Holders, Including IndenturesSouthern Company(a)1
    
    -
    
    Fourth Supplemental Indenture
to the Senior Note Indenture
dated as of May 19, 2009,
providing for the issuance of
Southern Companys Series 2009A
4.15% Senior Notes due May 15,
2014. (Designated in Form 8-K
dated May 11, 2009, File No.
1-3526, as Exhibit 4.2.)Gulf Power(d)1
    
    -
    
    Fifteenth Supplemental
Indenture to Senior Note
Indenture dated as of June 26,
2009, providing for the issuance
of Gulf Powers Series 2009A
Floating Rate Senior Notes due
June 28, 2010. (Designated in
Form 8-K dated June 22, 2009,
File No. 0-2429, as Exhibit 4.2.)(24) Power of Attorney and ResolutionsSouthern Company(a)1
    
    -
    
    Power of Attorney and
resolution. (Designated in the
Form 10-K for the year ended
December 31, 2008, File No.
1-3526 as Exhibit 24(a).)Alabama Power(b)1
    
    -
    
    Power of Attorney and
resolution.Georgia Power(c)1
    
    -
    
    Power of Attorney and
resolution. (Designated in the
Form 10-K for the year ended
December 31, 2008, File No.
1-6468 as Exhibit 24(c).)(c)2
    
    -
    
    Power of Attorney for Ronnie R.
Labrato. (Designated in the
Form 10-Q for the quarter ended
March 31, 2009, File No. 1-6468
as Exhibit 24(c)2.)Gulf Power(d)1
    
    -
    
    Power of Attorney and
resolution. (Designated in the
Form 10-K for the year ended
December 31, 2008, File No.
0-2429 as Exhibit 24(d).)Mississippi Power(e)1
    
    -
    
    Power of Attorney and
resolution. (Designated in the
Form 10-K for the year ended
December 31, 2008, File No.
001-11229 as Exhibit 24(e).)
 166




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##### Table of Contents



Southern Power(f)1
    
    -
    
    Power of Attorney and
resolution. (Designated in the
Form 10-K for the year ended
December 31, 2008, File No.
333-98553 as Exhibit 24(f).)(31) Section 302 CertificationsSouthern Company(a)1
    
    -
    
    Certificate of Southern
Companys Chief Executive Officer
required by Section 302 of the
Sarbanes-Oxley Act of 2002.(a)2
    
    -
    
    Certificate of Southern
Companys Chief Financial Officer
required by Section 302 of the
Sarbanes-Oxley Act of 2002.Alabama Power(b)1
    
    -
    
    Certificate of Alabama Powers
Chief Executive Officer required
by Section 302 of the
Sarbanes-Oxley Act of 2002.(b)2
    
    -
    
    Certificate of Alabama Powers Chief Financial Officer required by Section 302 of the
Sarbanes-Oxley Act of 2002.Georgia Power(c)1
    
    -
    
    Certificate of Georgia Powers
Chief Executive Officer required
by Section 302 of the
Sarbanes-Oxley Act of 2002.(c)2
    
    -
    
    Certificate of Georgia Powers
Chief Financial Officer required
by Section 302 of the
Sarbanes-Oxley Act of 2002.Gulf Power(d)1
    
    -
    
    Certificate of Gulf Powers
Chief Executive Officer required
by Section 302 of the
Sarbanes-Oxley Act of 2002.(d)2
    
    -
    
    Certificate of Gulf Powers
Chief Financial Officer required
by Section 302 of the
Sarbanes-Oxley Act of 2002.Mississippi Power(e)1
    
    -
    
    Certificate of Mississippi
Powers Chief Executive Officer
required by Section 302 of the
Sarbanes-Oxley Act of 2002.(e)2
    
    -
    
    Certificate of Mississippi
Powers Chief Financial Officer
required by Section 302 of the
Sarbanes-Oxley Act of 2002.
 167




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##### Table of Contents



Southern Power(f)1
    
    -
    
    Certificate of Southern Powers
Chief Executive Officer required
by Section 302 of the
Sarbanes-Oxley Act of 2002.(f)2
    
    -
    
    Certificate of Southern Powers
Chief Financial Officer required
by Section 302 of the
Sarbanes-Oxley Act of 2002.(32) Section 906 CertificationsSouthern Company(a)
    
    -
    
    Certificate of Southern
Companys Chief Executive Officer
and Chief Financial Officer
required by Section 906 of the
Sarbanes-Oxley Act of 2002.Alabama Power(b)
    
    -
    
    Certificate of Alabama Powers
Chief Executive Officer and Chief
Financial Officer required by
Section 906 of the Sarbanes-Oxley
Act of 2002.Georgia Power(c)
    
    -
    
    Certificate of Georgia Powers Chief Executive Officer and
Chief Financial Officer required by Section 906 of the
Sarbanes-Oxley Act of 2002.Gulf Power(d)
    
    -
    
    Certificate of Gulf Powers Chief Executive Officer and Chief
Financial Officer required by Section 906 of the Sarbanes-Oxley
Act of 2002.Mississippi Power(e)
    
    -
    
    Certificate of Mississippi
Powers Chief Executive Officer
and Chief Financial Officer
required by Section 906 of the
Sarbanes-Oxley Act of 2002.Southern Power(f)
    
    -
    
    Certificate of Southern Powers
Chief Executive Officer and Chief
Financial Officer required by
Section 906 of the Sarbanes-Oxley
Act of 2002.
 168




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##### Table of Contents



(101) XBRL-Related Documents*
 Southern CompanyINS
    
    XBRL Instance Document*SCH
    
    XBRL Taxonomy Extension Schema Document*PRE
    
    XBRL Taxonomy Presentation Linkbase Document*LAB
    
    XBRL Taxonomy Label Linkbase Document*CAL
    
    XBRL Taxonomy Calculation Linkbase Document*DEF
    
    XBRL Definition Linkbase Document*
 
 *
    
    To be filed subsequently by amendment. 169




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##### Table of Contents



THE SOUTHERN COMPANY
 
 SIGNATURES
  THE SOUTHERN COMPANYBy
    
    David M. RatcliffeChairman, President, and Chief Executive Officer(Principal Executive Officer)By
    
    W. Paul BowersExecutive Vice President and Chief Financial Officer(Principal Financial Officer)By
    
    /s/ Melissa K. Caen

(Melissa K. Caen, Attorney-in-fact)
  170




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##### Table of Contents



ALABAMA POWER COMPANY
 SIGNATURES
  ALABAMA POWER COMPANYBy
    
    Charles D. McCraryPresident and Chief Executive Officer(Principal Executive Officer)By
    
    Art P. BeattieExecutive Vice President, Chief Financial Officer, and Treasurer(Principal Financial Officer)By
    
    /s/ Melissa K. Caen

(Melissa K. Caen, Attorney-in-fact)
  171




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##### Table of Contents



GEORGIA POWER COMPANY
 SIGNATURES
  GEORGIA POWER COMPANYBy
    
    Michael D. GarrettPresident and Chief Executive Officer(Principal Executive Officer)By
    
    Ronnie R. LabratoExecutive Vice President, Chief Financial Officer, and Treasurer(Principal Financial Officer)By
    
    /s/ W. Paul Bowers

(W. Paul Bowers, Attorney-in-fact)
  172




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##### Table of Contents



GULF POWER COMPANY
 SIGNATURES
  GULF POWER COMPANYBy
    
    Susan N. StoryPresident and Chief Executive Officer(Principal Executive Officer)By
    
    Philip C. RaymondVice President and Chief Financial Officer(Principal Financial Officer)By
    
    /s/ W. Paul Bowers

(W. Paul Bowers, Attorney-in-fact)
  173




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##### Table of Contents



MISSISSIPPI POWER COMPANY
 SIGNATURES
  MISSISSIPPI POWER COMPANYBy
    
    Anthony J. TopaziPresident and Chief Executive Officer(Principal Executive Officer)By
    
    Frances TurnageVice President, Treasurer, and Chief Financial Officer(Principal Financial Officer)By
    
    /s/ W. Paul Bowers

(W. Paul Bowers, Attorney-in-fact)
  174




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##### Table of Contents



SOUTHERN POWER COMPANY
 SIGNATURES
  SOUTHERN POWER COMPANYBy
    
    Ronnie L. BatesPresident and Chief Executive Officer(Principal Executive Officer)By
    
    Michael W. SouthernSenior Vice President, Treasurer, and Chief Financial Officer(Principal Financial Officer)By
    
    /s/ Laura I. Patterson

(Laura I. Patterson, Attorney-in-fact)
  175