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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 March 31, 2008
 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
    
    58-0690070(A Delaware Corporation)30 Ivan Allen Jr. Boulevard, N.W.Atlanta, Georgia 30308(404) 506-50001-3164
    
    Alabama Power Company
    
    63-0004250(An Alabama Corporation)600 North 18th StreetBirmingham, Alabama 35291(205) 257-10001-6468
    
    Georgia Power Company
    
    58-0257110(A Georgia Corporation)241 Ralph McGill Boulevard, N.E.Atlanta, Georgia 30308(404) 506-65260-2429
    
    Gulf Power Company
    
    59-0276810(A Florida Corporation)One Energy PlacePensacola, Florida 32520(850) 444-6111001-11229
    
    Mississippi Power Company
    
    64-0205820(A Mississippi Corporation)2992 West BeachGulfport, Mississippi 39501(228) 864-1211333-98553
    
    Southern Power Company
    
    58-2598670(A Delaware Corporation)30 Ivan Allen Jr. Boulevard, N.W.Atlanta, Georgia 30308(404) 506-5000




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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 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 (Response applicable to all registrants.)
 Description of
    
    Shares OutstandingRegistrant
    
    Common Stock
    
    at March 31, 2008The Southern Company
    
    Par Value $5 Per Share
    
    
    767,212,302Alabama Power Company
    
    Par Value $40 Per Share
    
    
    21,725,000Georgia Power Company
    
    Without Par Value
    
    
    9,261,500Gulf Power Company
    
    Without Par Value
    
    
    1,792,717Mississippi 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
March 31, 2008
 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
    
    
    31Condensed Statements of Comprehensive Income
    
    
    31Condensed Statements of Cash Flows
    
    
    32Condensed Balance Sheets
    
    
    33Managements Discussion and Analysis of Financial Condition and Results
of Operations
    
    
    35Georgia Power CompanyCondensed Statements of Income
    
    
    47Condensed Statements of Comprehensive Income
    
    
    47Condensed Statements of Cash Flows
    
    
    48Condensed Balance Sheets
    
    
    49Managements Discussion and Analysis of Financial Condition and Results
of Operations
    
    
    51Gulf Power CompanyCondensed Statements of Income
    
    
    64Condensed
Statements of Comprehensive Income
    
    
    64Condensed Statements of Cash Flows
    
    
    65Condensed Balance Sheets
    
    
    66Managements Discussion and Analysis of Financial Condition and Results
of Operations
    
    
    68Mississippi Power CompanyCondensed Statements of Income
    
    
    80Condensed Statements of Comprehensive Income
    
    
    80Condensed Statements of Cash Flows
    
    
    81Condensed Balance Sheets
    
    
    82Managements Discussion and Analysis of Financial Condition and Results
of Operations
    
    
    84Southern Power Company and Subsidiary CompaniesCondensed Consolidated Statements of Income
    
    
    98Condensed Consolidated Statements of Comprehensive Income
    
    
    98Condensed Consolidated Statements of Cash Flows
    
    
    99Condensed Consolidated Balance Sheets
    
    
    100Managements Discussion and Analysis of Financial Condition and Results
of Operations
    
    
    102Notes to the Condensed Financial Statements
    
    
    110Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    29Item 4.
    
    Controls and Procedures
    
    
    29Item 4T.
    
    Controls and Procedures
    
    
    29
  3




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INDEX TO QUARTERLY REPORT ON FORM 10-Q
March 31, 2008
 PageNumberPART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    
    130Item 1A.
    
    Risk Factors
    
    
    
    130Item 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
    
    InapplicableItem 5.
    
    Other Information
    
    InapplicableItem 6.
    
    Exhibits
    
    
    
    131Signatures
    
    
    
    134
 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 1990Dalton Utilities
    
    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 CommissionersDOE
    
    U.S. Department of EnergyDuke Energy
    
    Duke Energy CorporationECO Plan
    
    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, 2007Georgia Power
    
    Georgia Power CompanyGulf Power
    
    Gulf Power CompanyIGCC
    
    Integrated coal gasification combined cycleIIC
    
    Intercompany Interchange ContractIRC
    
    Internal Revenue Code of 1986, as amendedIRS
    
    Internal Revenue ServiceKWH
    
    Kilowatt-hourLIBOR
    
    London Interbank Offered RateMEAG Power
    
    Municipal Electric Authority of GeorgiaMirant
    
    Mirant CorporationMississippi Power
    
    Mississippi Power CompanyMW
    
    MegawattNRC
    
    Nuclear Regulatory CommissionNSR
    
    New Source ReviewOPC
    
    Oglethorpe Power CorporationPEP
    
    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 CNP
    
    Alabama Powers certified new plant rate mechanismRate ECR
    
    Alabama Powers energy cost recovery rate mechanismRate NDR
    
    Alabama Powers natural disaster recovery rate mechanismRate RSE
    
    Alabama Powers rate stabilization and equilization rate mechanismregistrants
    
    Southern Company, Alabama Power, Georgia Power, Gulf Power,
Mississippi Power, and Southern PowerSCS
    
    Southern Company Services, Inc.SEC
    
    Securities and Exchange CommissionSFAS No. 157
    
    FASB Statement No. 157, Fair Value Measurement
 5




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DEFINITIONS
 Term
    
    MeaningSouthern Company
    
    The Southern CompanySouthern Company system
    
    Southern Company, the traditional operating companies, Southern Power, and other subsidiariesSouthern Nuclear
    
    Southern Nuclear Operating Company, Inc.Southern Power
    
    Southern Power CompanyStone & Webster
    
    Stone & Webster, Inc.traditional operating companies
    
    Alabama Power, Georgia Power, Gulf Power, and Mississippi PowerWestinghouse
    
    Westinghouse Electric Company LLCwholesale revenues
    
    revenues generated from sales for resale
 6




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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;
    
    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;
    
    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;
    
    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 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 MonthsEnded March 31,2008
    
    
    2007(in thousands)Operating Revenues:Retail revenues
    
    $
    3,005,614
    
    
    $
    2,743,811Wholesale revenues
    
    
    513,662
    
    
    
    480,699Other electric revenues
    
    
    130,190
    
    
    
    121,294Other revenues
    
    
    33,444
    
    
    
    62,865Total operating revenues
    
    
    3,682,910
    
    
    
    3,408,669Operating Expenses:Fuel
    
    
    1,451,943
    
    
    
    1,316,519Purchased power
    
    
    92,904
    
    
    
    64,073Other operations
    
    
    590,426
    
    
    
    565,372Maintenance
    
    
    306,391
    
    
    
    281,995Depreciation and amortization
    
    
    343,885
    
    
    
    306,344Taxes other than income taxes
    
    
    189,272
    
    
    
    183,039Total operating expenses
    
    
    2,974,821
    
    
    
    2,717,342Operating Income
    
    
    708,089
    
    
    
    691,327Other Income and (Expense):Allowance for equity funds used during construction
    
    
    40,585
    
    
    
    20,174Interest income
    
    
    9,805
    
    
    
    10,555Equity in income (losses) of unconsolidated subsidiaries
    
    
    328
    
    
    
    (6,735
    )Leveraged lease income
    
    
    10,925
    
    
    
    9,862Interest expense, net of amounts capitalized
    
    
    (217,109
    )
    
    
    (217,850
    )Preferred and preference dividends of subsidiaries
    
    
    (16,195
    )
    
    
    (10,129
    )Other income (expense), net
    
    
    914
    
    
    
    (2,931
    )Total other income and (expense)
    
    
    (170,747
    )
    
    
    (197,054
    )Earnings Before Income Taxes
    
    
    537,342
    
    
    
    494,273Income taxes
    
    
    178,138
    
    
    
    155,584Consolidated Net Income
    
    $
    359,204
    
    
    $
    338,689Common Stock Data:Earnings per share-Basic
    
    $
    0.47
    
    
    $
    0.45Diluted
    
    $
    0.47
    
    
    $
    0.45Average number of shares of common stock outstanding (in thousands)Basic
    
    
    766,150
    
    
    
    750,259Diluted
    
    
    770,322
    
    
    
    755,352Cash dividends paid per share of common stock
    
    $
    0.4025
    
    
    $
    0.3875
  9




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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
 
  For the Three MonthsEnded March 31,2008
    
    
    2007(in thousands)Operating Activities:Consolidated net income
    
    $
    359,204
    
    
    $
    338,689Adjustments to reconcile consolidated net income to net
cash provided from operating activities Depreciation and amortization
    
    
    407,690
    
    
    
    363,903Deferred income taxes and investment tax credits
    
    
    (2,342
    )
    
    
    53,433Deferred revenues
    
    
    33,446
    
    
    
    (5,583
    )Allowance for equity funds used during construction
    
    
    (40,585
    )
    
    
    (20,174
    )Equity in losses of unconsolidated subsidiaries
    
    
    (328
    )
    
    
    6,735Leveraged lease income
    
    
    (10,925
    )
    
    
    (9,862
    )Pension, postretirement, and other employee benefits
    
    
    30,916
    
    
    
    19,992Stock option expense
    
    
    13,427
    
    
    
    20,554Derivative fair value adjustments
    
    
    14,380
    
    
    
    (5,932
    )Hedge settlements
    
    
    27,180
    
    
    
    (3,923
    )Other, net
    
    
    (7,239
    )
    
    
    (4,475
    )Changes in certain current assets and liabilities Receivables
    
    
    188,538
    
    
    
    161,960Fossil fuel stock
    
    
    (53,305
    )
    
    
    (63,438
    )Materials and supplies
    
    
    (22,762
    )
    
    
    (7,077
    )Other current assets
    
    
    (61,320
    )
    
    
    (63,751
    )Accounts payable
    
    
    (114,636
    )
    
    
    (92,238
    )Accrued taxes
    
    
    13,865
    
    
    
    (100,356
    )Accrued compensation
    
    
    (265,386
    )
    
    
    (325,500
    )Other current liabilities
    
    
    10,213
    
    
    
    (1,107
    )Net cash provided from operating activities
    
    
    520,031
    
    
    
    261,850Investing Activities:Property additions
    
    
    (1,012,907
    )
    
    
    (742,384
    )Distribution of restricted cash from pollution control bonds
    
    
    35,716
    
    
    
    Nuclear decommissioning trust fund purchases
    
    
    (160,752
    )
    
    
    (167,193
    )Nuclear decommissioning trust fund sales
    
    
    153,872
    
    
    
    160,313Investment in unconsolidated subsidiaries
    
    
    (2,780
    )
    
    
    (11,423
    )Cost of removal, net of salvage
    
    
    (25,581
    )
    
    
    (22,870
    )Other
    
    
    17,191
    
    
    
    (4,315
    )Net cash used for investing activities
    
    
    (995,241
    )
    
    
    (787,872
    )Financing Activities:Decrease in notes payable, net
    
    
    (100,215
    )
    
    
    (299,583
    )Proceeds Long-term debt
    
    
    930,000
    
    
    
    1,350,000Common stock
    
    
    132,107
    
    
    
    167,509Redemptions Long-term debt
    
    
    (4,653
    )
    
    
    (405,210
    )Preferred stock
    
    
    (125,000
    )
    
    
    Payment of common stock dividends
    
    
    (307,960
    )
    
    
    (290,292
    )Other
    
    
    (770
    )
    
    
    (1,759
    )Net cash provided from financing activities
    
    
    523,509
    
    
    
    520,665Net Change in Cash and Cash Equivalents
    
    
    48,299
    
    
    
    (5,357
    )Cash and Cash Equivalents at Beginning of Period
    
    
    200,550
    
    
    
    166,846Cash and Cash Equivalents at End of Period
    
    $
    248,849
    
    
    $
    161,489Supplemental Cash Flow Information:Cash paid during the period for Interest (net of $21,800 and $12,259 capitalized for 2008
and 2007, respectively)
    
    $
    197,570
    
    
    $
    181,712Income taxes (net of refunds)
    
    $
    3,719
    
    
    $
    (19,257
    )
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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
 
  At March 31,
    
    
    At December 31,Assets
    
    2008
    
    
    2007(in thousands)Current Assets:Cash and cash equivalents
    
    $
    248,849
    
    
    $
    200,550Restricted cash
    
    
    32,442
    
    
    
    68,013Receivables Customer accounts receivable
    
    
    988,001
    
    
    
    999,264Unbilled revenues
    
    
    297,251
    
    
    
    294,487Under recovered regulatory clause revenues
    
    
    667,391
    
    
    
    715,744Other accounts and notes receivable
    
    
    294,072
    
    
    
    347,573Accumulated provision for uncollectible accounts
    
    
    (23,217
    )
    
    
    (22,142
    )Fossil fuel stock, at average cost
    
    
    763,886
    
    
    
    709,823Materials and supplies, at average cost
    
    
    738,779
    
    
    
    725,001Vacation pay
    
    
    133,926
    
    
    
    134,806Prepaid expenses
    
    
    216,911
    
    
    
    147,903Other
    
    
    467,709
    
    
    
    411,210Total current assets
    
    
    4,826,000
    
    
    
    4,732,232Property, Plant, and Equipment:In service
    
    
    47,719,321
    
    
    
    47,175,717Less accumulated depreciation
    
    
    17,690,685
    
    
    
    17,412,65830,028,636
    
    
    
    29,763,059Nuclear fuel, at amortized cost
    
    
    423,370
    
    
    
    336,129Construction work in progress
    
    
    3,551,358
    
    
    
    3,227,605Total property, plant, and equipment
    
    
    34,003,364
    
    
    
    33,326,793Other Property and Investments:Nuclear decommissioning trusts, at fair value
    
    
    1,064,197
    
    
    
    1,131,798Leveraged leases
    
    
    995,400
    
    
    
    984,441Other
    
    
    222,548
    
    
    
    237,400Total other property and investments
    
    
    2,282,145
    
    
    
    2,353,639Deferred Charges and Other Assets:Deferred charges related to income taxes
    
    
    927,458
    
    
    
    910,402Prepaid pension costs
    
    
    2,399,735
    
    
    
    2,368,798Unamortized debt issuance expense
    
    
    194,831
    
    
    
    190,700Unamortized loss on reacquired debt
    
    
    283,537
    
    
    
    288,973Deferred under recovered regulatory clause revenues
    
    
    318,089
    
    
    
    388,945Other regulatory assets
    
    
    842,186
    
    
    
    769,226Other
    
    
    518,408
    
    
    
    459,172Total deferred charges and other assets
    
    
    5,484,244
    
    
    
    5,376,216Total Assets
    
    $
    46,595,753
    
    
    $
    45,788,880
  11




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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
 At March 31,
    
    
    At December 31,Liabilities and Stockholders Equity
    
    2008
    
    
    2007(in thousands)Current Liabilities:Securities due within one year
    
    $
    1,243,616
    
    
    $
    1,177,889Notes payable
    
    
    1,171,242
    
    
    
    1,271,457Accounts payable
    
    
    1,152,838
    
    
    
    1,213,766Customer deposits
    
    
    283,786
    
    
    
    273,800Accrued taxes Income taxes
    
    
    380,072
    
    
    
    216,836Other
    
    
    177,480
    
    
    
    329,895Accrued interest
    
    
    222,566
    
    
    
    217,883Accrued vacation pay
    
    
    167,528
    
    
    
    170,574Accrued compensation
    
    
    145,433
    
    
    
    407,543Other
    
    
    498,050
    
    
    
    351,017Total current liabilities
    
    
    5,442,611
    
    
    
    5,630,660Long-term Debt
    
    
    14,887,512
    
    
    
    14,143,114Deferred Credits and Other Liabilities:Accumulated deferred income taxes
    
    
    5,831,898
    
    
    
    5,838,674Deferred credits related to income taxes
    
    
    267,411
    
    
    
    272,181Accumulated deferred investment tax credits
    
    
    473,345
    
    
    
    479,302Employee benefit obligations
    
    
    1,525,566
    
    
    
    1,492,472Asset retirement obligations
    
    
    1,200,297
    
    
    
    1,200,094Other cost of removal obligations
    
    
    1,312,585
    
    
    
    1,307,732Other regulatory liabilities
    
    
    1,649,585
    
    
    
    1,613,004Other
    
    
    359,762
    
    
    
    346,371Total deferred credits and other liabilities
    
    
    12,620,449
    
    
    
    12,549,830Total Liabilities
    
    
    32,950,572
    
    
    
    32,323,604Preferred and Preference Stock of Subsidiaries
    
    
    1,081,863
    
    
    
    1,080,248Common Stockholders Equity:Common stock, par value $5 per share Authorized  1 billion sharesIssued   March 31, 2008: 767,624,255
Shares; December 31, 2007: 763,502,427
SharesTreasury   March 31, 2008: 411,953
Shares; December 31, 2007: 398,746
SharesPar value
    
    
    3,838,068
    
    
    
    3,817,453Paid-in capital
    
    
    1,587,414
    
    
    
    1,454,288Treasury, at cost
    
    
    (11,799
    )
    
    
    (11,143
    )Retained earnings
    
    
    7,201,511
    
    
    
    7,154,596Accumulated other comprehensive loss
    
    
    (51,876
    )
    
    
    (30,166
    )Total Common Stockholders Equity
    
    
    12,563,318
    
    
    
    12,385,028Total Liabilities and Stockholders Equity
    
    $
    46,595,753
    
    
    $
    45,788,880
  12




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
 
  For the Three MonthsEnded March 31,2008
    
    
    2007(in thousands)Consolidated Net Income
    
    $
    359,204
    
    
    $
    338,689Other comprehensive income (loss):Qualifying hedges:Changes in fair value, net of tax of $(13,988) and $(1,567), respectively
    
    
    (22,251
    )
    
    
    (2,468
    )Reclassification adjustment for amounts included in net income, net of
tax of $1,778 and $1,259, respectively
    
    
    2,775
    
    
    
    2,204Marketable securities:Change in fair value, net of tax of $(2,137) and $818, respectively
    
    
    (3,101
    )
    
    
    1,307Pension and other post retirement benefit plans:Reclassification adjustment for amounts included in net income, net of
tax of $259 and $246, respectively
    
    
    411
    
    
    
    438Total other comprehensive income (loss)
    
    
    (22,166
    )
    
    
    1,481COMPREHENSIVE INCOME
    
    $
    337,038
    
    
    $
    340,170
  13




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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
 
 
  OVERVIEW
   RESULTS OF OPERATIONS
 Net Income
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$20.5
    
    6.1
  Retail Revenues
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$261.8
    
    9.5
  First Quarter2008(in millions)
    
    % changeRetail  prior year
    
    $
    2,743.8Estimated change in Rates and pricing
    
    
    131.9
    
    
    
    4.8Sales growth
    
    
    22.5
    
    
    
    0.8Weather
    
    
    1.1
    
    
    
    0.1Fuel and other cost recovery
    
    
    106.3
    
    
    
    3.8Retail  current year
    
    $
    3,005.6
    
    
    
    9.5
    %
 14




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
     Wholesale Revenues
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$33.0
    
    6.9
  Other Electric Revenues
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$8.9
    
    7.3
  Other Revenues
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$(29.5)
    
    (46.8)
  15




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
  Fuel and Purchased Power Expenses
 First
Quarter 2008 vs. 
First Quarter 2007(change in millions)
    
    

    % changeFuel
    
    $
    135.4
    
    
    
    10.3Purchased power
    
    
    28.8
    
    
    
    45.0Total fuel and purchased power expenses
    
    $
    164.2
    First Quarter
    
    First Quarter
    
    PercentAverage Cost
    
    2008
    
    2007
    
    Change(cents per net KWH)Fuel
    
    
    3.07
    
    
    
    2.80
    
    
    
    9.6Purchased power
    
    
    5.60
    
    
    
    5.10
    
    
    
    9.8
  Other Operations and Maintenance Expenses
 First
Quarter 2008 vs. 
First Quarter 2007(change in millions)
    
    
    % changeOther operations
    
    $
    25.0
    
    
    
    4.4Maintenance
    
    
    24.4
    
    
    
    8.7Total other operations and maintenance expenses
    
    $
    49.4
  16




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
 Depreciation and Amortization
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$37.6
    
    12.3
  Allowance for Equity Funds Used During Construction
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$20.4
    
    101.2
  Equity in Income (Losses) of Unconsolidated Subsidiaries
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$7.0
    
    104.9
  Interest Expense, Net of Amounts Capitalized
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$(0.8)
    
    (0.3)
  17




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
 Preferred and Preference Dividends of Subsidiaries
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$6.1
    
    59.9
  Income Taxes
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$22.5
    
    14.5
  FUTURE EARNINGS POTENTIAL
 
 Environmental Matters
  18




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
 Eight-Hour Ozone Regulations
  Carbon Dioxide Litigation
  Global Climate Issues
  FERC and State PSC Matters
 Retail Fuel Cost Recovery
  19




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
   Mississippi Base Load Construction Legislation
  Income Tax Matters
 Leveraged Lease Transactions
  20




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
 Bonus Depreciation
  Construction Projects
 Integrated Coal Gasification Combined Cycle
    Nuclear
  21




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
     in-service
    22




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
 Other Matters
   ACCOUNTING POLICIES
 Application of Critical Accounting Policies and Estimates
  New Accounting Standards
 Business Combinations
   23




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
  FINANCIAL CONDITION AND LIQUIDITY
 Overview
     Capital Requirements and Contractual Obligations
  Sources of Capital
  24




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
   Off-Balance Sheet Financing Arrangements
  Credit Rating Risk
   25




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
 Market Price Risk
    First Quarter2008ChangesFair Value(in millions)Contracts outstanding at the beginning of the period, assets (liabilities), net
    
    $
    4Contracts realized or settled
    
    
    10Current period changes(a)
    
    
    148Contracts outstanding at the end of the period, assets (liabilities), net
    
    $
    162
 (a)
    
    Current period changes also include the changes in fair value of new contracts entered into
during the period, if any.   Amounts(in millions)Regulatory liabilities, net
    
    $
    183Accumulated other comprehensive income
    
    
    (10
    )Net income
    
    
    (11
    )Total fair value gain/(loss)
    
    $
    162
  26




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
  March 31, 2008Fair Value MeasurementsTotal
    
    MaturityFair Value
    
    Year 1
    
    1-3 Years(in millions)Level 1
    
    $
    
    
    
    $
    
    
    
    $
    Level 2
    
    
    162
    
    
    
    127
    
    
    
    35Level 3
    
    
    
    
    
    
    
    
    
    
    Fair value of contracts
outstanding at end of period
    
    $
    162
    
    
    $
    127
    
    
    $
    35
   Financing Activities
    27




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
   28




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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.
     29




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ALABAMA POWER COMPANY
 30




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##### Table of Contents



ALABAMA POWER COMPANY
 
  For the Three MonthsEnded March 31,2008
    
    
    2007(in thousands)Operating Revenues:Retail revenues
    
    $
    1,034,254
    
    
    $
    955,773Wholesale revenues Non-affiliates
    
    
    170,040
    
    
    
    155,122Affiliates
    
    
    83,692
    
    
    
    42,194Other revenues
    
    
    48,693
    
    
    
    44,113Total operating revenues
    
    
    1,336,679
    
    
    
    1,197,202Operating Expenses:Fuel
    
    
    453,149
    
    
    
    386,072Purchased power Non-affiliates
    
    
    11,219
    
    
    
    4,638Affiliates
    
    
    88,707
    
    
    
    72,714Other operations
    
    
    184,550
    
    
    
    171,403Maintenance
    
    
    125,000
    
    
    
    118,762Depreciation and amortization
    
    
    124,637
    
    
    
    115,943Taxes other than income taxes
    
    
    75,771
    
    
    
    72,718Total operating expenses
    
    
    1,063,033
    
    
    
    942,250Operating Income
    
    
    273,646
    
    
    
    254,952Other Income and (Expense):Allowance for equity funds used during construction
    
    
    11,304
    
    
    
    6,586Interest income
    
    
    4,642
    
    
    
    4,394Interest expense, net of amounts capitalized
    
    
    (68,975
    )
    
    
    (67,190
    )Other income (expense), net
    
    
    (7,223
    )
    
    
    (2,924
    )Total other income and (expense)
    
    
    (60,252
    )
    
    
    (59,134
    )Earnings Before Income Taxes
    
    
    213,394
    
    
    
    195,818Income taxes
    
    
    73,428
    
    
    
    72,702Net Income
    
    
    139,966
    
    
    
    123,116Dividends on Preferred and Preference Stock
    
    
    9,866
    
    
    
    8,182Net Income After Dividends on Preferred and Preference Stock
    
    $
    130,100
    
    
    $
    114,934
 
  For the Three MonthsEnded March 31,2008
    
    
    2007(in thousands)Net Income After Dividends on Preferred and Preference Stock
    
    $
    130,100
    
    
    $
    114,934Other comprehensive income (loss):Qualifying hedges:Changes in fair value, net of tax of $(2,211) and $(102), respectively
    
    
    (3,637
    )
    
    
    (168
    )Reclassification adjustment for amounts included in net income, net of
tax of $185 and $59, respectively
    
    
    305
    
    
    
    96Total other comprehensive income (loss)
    
    
    (3,332
    )
    
    
    (72
    )COMPREHENSIVE INCOME
    
    $
    126,768
    
    
    $
    114,862
  31




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ALABAMA POWER COMPANY
 
  For the Three MonthsEnded March 31,2008
    
    
    2007(in thousands)Operating Activities:Net income
    
    $
    139,966
    
    
    $
    123,116Adjustments to reconcile net income
to net cash provided from operating activities Depreciation and amortization
    
    
    146,208
    
    
    
    136,060Deferred income taxes and investment tax credits, net
    
    
    4,513
    
    
    
    (889
    )Allowance for equity funds used during construction
    
    
    (11,304
    )
    
    
    (6,586
    )Pension, postretirement, and other employee benefits
    
    
    (3,995
    )
    
    
    (2,439
    )Stock option expense
    
    
    2,178
    
    
    
    3,713Tax benefit of stock options
    
    
    347
    
    
    
    286Other, net
    
    
    9,223
    
    
    
    3,779Changes in certain current assets and liabilities Receivables
    
    
    62,227
    
    
    
    43,143Fossil fuel stock
    
    
    (34,750
    )
    
    
    (21,732
    )Materials and supplies
    
    
    (7,751
    )
    
    
    (2,288
    )Other current assets
    
    
    (63,757
    )
    
    
    (45,381
    )Accounts payable
    
    
    (124,728
    )
    
    
    (94,769
    )Accrued taxes
    
    
    79,338
    
    
    
    93,770Accrued compensation
    
    
    (64,851
    )
    
    
    (61,830
    )Other current liabilities
    
    
    9,358
    
    
    
    7,811Net cash provided from operating activities
    
    
    142,222
    
    
    
    175,764Investing Activities:Property additions
    
    
    (349,684
    )
    
    
    (263,712
    )Investment in restricted cash from pollution control bonds
    
    
    (145
    )
    
    
    Distribution of restricted cash from pollution control bonds
    
    
    19,622
    
    
    
    Nuclear decommissioning trust fund purchases
    
    
    (46,941
    )
    
    
    (73,062
    )Nuclear decommissioning trust fund sales
    
    
    46,941
    
    
    
    73,062Cost of removal, net of salvage
    
    
    (8,863
    )
    
    
    (10,012
    )Other
    
    
    13,454
    
    
    
    (1,863
    )Net cash used for investing activities
    
    
    (325,616
    )
    
    
    (275,587
    )Financing Activities:Decrease in notes payable, net
    
    
    
    
    
    
    (44,875
    )Proceeds Senior notes
    
    
    300,000
    
    
    
    200,000Common stock issued to parent
    
    
    150,000
    
    
    
    70,000Capital contributions
    
    
    6,016
    
    
    
    Gross excess tax benefit of stock options
    
    
    607
    
    
    
    741Redemptions Preferred stock
    
    
    (125,000
    )
    
    
    Payment of preferred and preference stock dividends
    
    
    (11,275
    )
    
    
    (6,515
    )Payment of common stock dividends
    
    
    (122,825
    )
    
    
    (116,250
    )Other
    
    
    (1,684
    )
    
    
    (2,469
    )Net cash provided from financing activities
    
    
    195,839
    
    
    
    100,632Net Change in Cash and Cash Equivalents
    
    
    12,445
    
    
    
    809Cash and Cash Equivalents at Beginning of Period
    
    
    73,616
    
    
    
    15,539Cash and Cash Equivalents at End of Period
    
    $
    86,061
    
    
    $
    16,348Supplemental Cash Flow Information:Cash paid during the period for Interest (net of $5,130 and $3,346 capitalized for
2008 and 2007, respectively)
    
    $
    63,324
    
    
    $
    52,607Income taxes (net of refunds)
    
    $
    1,550
    
    
    $
    (3,250
    )
  32




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##### Table of Contents



ALABAMA POWER COMPANY
 
  At March 31,
    
    
    At December 31,Assets
    
    2008
    
    
    2007(in thousands)Current Assets:Cash and cash equivalents
    
    $
    86,061
    
    
    $
    73,616Restricted cash
    
    
    255
    
    
    
    19,732Receivables Customer accounts receivable
    
    
    353,244
    
    
    
    357,355Unbilled revenues
    
    
    94,032
    
    
    
    95,278Under recovered regulatory clause revenues
    
    
    204,157
    
    
    
    232,226Other accounts and notes receivable
    
    
    33,326
    
    
    
    42,745Affiliated companies
    
    
    90,758
    
    
    
    61,250Accumulated provision for uncollectible accounts
    
    
    (9,119
    )
    
    
    (7,988
    )Fossil fuel stock, at average cost
    
    
    218,470
    
    
    
    182,963Materials and supplies, at average cost
    
    
    295,411
    
    
    
    287,994Vacation pay
    
    
    50,382
    
    
    
    50,266Prepaid expenses
    
    
    97,391
    
    
    
    72,952Other
    
    
    47,018
    
    
    
    19,610Total current assets
    
    
    1,561,386
    
    
    
    1,487,999Property, Plant, and Equipment:In service
    
    
    17,033,807
    
    
    
    16,669,142Less accumulated provision for depreciation
    
    
    6,046,690
    
    
    
    5,950,37310,987,117
    
    
    
    10,718,769Nuclear fuel, at amortized cost
    
    
    175,808
    
    
    
    137,146Construction work in progress
    
    
    855,363
    
    
    
    928,182Total property, plant, and equipment
    
    
    12,018,288
    
    
    
    11,784,097Other Property and Investments:Equity investments in unconsolidated subsidiaries
    
    
    50,293
    
    
    
    48,664Nuclear decommissioning trusts, at fair value
    
    
    509,034
    
    
    
    542,846Other
    
    
    31,714
    
    
    
    31,146Total other property and investments
    
    
    591,041
    
    
    
    622,656Deferred Charges and Other Assets:Deferred charges related to income taxes
    
    
    351,302
    
    
    
    347,193Prepaid pension costs
    
    
    1,011,680
    
    
    
    989,085Deferred under recovered regulatory clause revenues
    
    
    33,459
    
    
    
    81,650Other regulatory assets
    
    
    227,474
    
    
    
    224,792Other
    
    
    227,969
    
    
    
    209,153Total deferred charges and other assets
    
    
    1,851,884
    
    
    
    1,851,873Total Assets
    
    $
    16,022,599
    
    
    $
    15,746,625
  33




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##### Table of Contents



ALABAMA POWER COMPANY
 At March 31,
    
    
    At December 31,Liabilities and Stockholders Equity
    
    2008
    
    
    2007(in thousands)Current Liabilities:Securities due within one year
    
    $
    410,154
    
    
    $
    535,152Accounts payable Affiliated
    
    
    161,392
    
    
    
    193,518Other
    
    
    247,832
    
    
    
    308,177Customer deposits
    
    
    70,316
    
    
    
    67,722Accrued taxes Income taxes
    
    
    63,655
    
    
    
    45,958Other
    
    
    48,057
    
    
    
    29,198Accrued interest
    
    
    55,935
    
    
    
    55,263Accrued vacation pay
    
    
    42,138
    
    
    
    42,138Accrued compensation
    
    
    29,060
    
    
    
    92,385Other
    
    
    105,032
    
    
    
    55,331Total current liabilities
    
    
    1,233,571
    
    
    
    1,424,842Long-term Debt
    
    
    5,051,860
    
    
    
    4,750,196Deferred Credits and Other Liabilities:Accumulated deferred income taxes
    
    
    2,072,146
    
    
    
    2,065,264Deferred credits related to income taxes
    
    
    92,789
    
    
    
    93,709Accumulated deferred investment tax credits
    
    
    178,589
    
    
    
    180,578Employee benefit obligations
    
    
    358,597
    
    
    
    349,974Asset retirement obligations
    
    
    513,547
    
    
    
    505,794Other cost of removal obligations
    
    
    617,972
    
    
    
    613,616Other regulatory liabilities
    
    
    613,618
    
    
    
    637,040Other
    
    
    32,784
    
    
    
    31,417Total deferred credits and other liabilities
    
    
    4,480,042
    
    
    
    4,477,392Total Liabilities
    
    
    10,765,473
    
    
    
    10,652,430Preferred and Preference Stock
    
    
    685,127
    
    
    
    683,512Common Stockholders Equity:Common stock, par value $40 per share Authorized - 25,000,000 sharesOutstanding  March 31, 2008: 21,725,000 shares December 31, 2007: 17,975,000 shares
    
    
    869,000
    
    
    
    719,000Paid-in capital
    
    
    2,074,339
    
    
    
    2,065,298Retained earnings
    
    
    1,636,439
    
    
    
    1,630,832Accumulated other comprehensive loss
    
    
    (7,779
    )
    
    
    (4,447
    )Total common stockholders equity
    
    
    4,571,999
    
    
    
    4,410,683Total Liabilities and Stockholders Equity
    
    $
    16,022,599
    
    
    $
    15,746,625
  34




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##### Table of Contents



ALABAMA POWER COMPANY
 
    OVERVIEW
   RESULTS OF OPERATIONS
 Net Income
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$15.2
    
    13.2
  Retail Revenues
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$78.5
    
    8.2
  35




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##### Table of Contents



ALABAMA POWER COMPANY
  First Quarter2008(in millions)
    
    % changeRetail  prior year
    
    $
    955.8Estimated change in Rates and pricing
    
    
    48.4
    
    
    
    5.1Sales growth
    
    
    19.5
    
    
    
    2.0Weather
    
    
    (7.4
    )
    
    
    (0.8
    )Fuel and other cost recovery
    
    
    18.0
    
    
    
    1.9Retail  current year
    
    $
    1,034.3
    
    
    
    8.2
    %
     Wholesale Revenues  Non-Affiliates
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$14.9
    
    9.6
  36




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##### Table of Contents



ALABAMA POWER COMPANY
  Wholesale Revenues  Affiliates
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$41.5
    
    98.4
  Fuel and Purchased Power Expenses
 First
Quarter 2008 vs. 
First Quarter 2007(change in millions)
    
    
    % changeFuel
    
    $
    67.1
    
    
    
    17.4Purchased power - non-affiliates
    
    
    6.6
    
    
    
    141.9Purchased power - affiliates
    
    
    16.0
    
    
    
    22.0Total fuel and purchased power expenses
    
    $
    89.7
    First Quarter
    
    First Quarter
    
    PercentAverage Cost
    
    2008
    
    2007
    
    Change(cents per net KWH)Fuel
    
    
    2.60
    
    
    
    2.29
    
    
    
    13.5Purchased power
    
    
    5.67
    
    
    
    4.55
    
    
    
    24.6
  37




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##### Table of Contents



ALABAMA POWER COMPANY
 Non-Affiliates
   Affiliates
   Other Operations and Maintenance Expenses
 First
Quarter 2008 vs. 
First Quarter 2007(change in millions)
    
    
    % changeOther operations
    
    $
    13.1
    
    
    
    7.7Maintenance
    
    
    6.2
    
    
    
    5.3Total other operations and maintenance expenses
    
    $
    19.3
  Depreciation and Amortization
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$8.7
    
    7.5
  38




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##### Table of Contents



ALABAMA POWER COMPANY
 Allowance for Equity Funds Used During Construction
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$4.7
    
    71.6
  Other Income (Expense), Net
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$(4.3)
    
    (147.0)
  FUTURE EARNINGS POTENTIAL
  Environmental Matters
  39




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##### Table of Contents



ALABAMA POWER COMPANY
 Eight-Hour Ozone Regulations
  Carbon Dioxide Litigation
  FERC and Alabama PSC Matters
 Retail Fuel Cost Recovery
  Natural Disaster Cost Recovery
  40




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##### Table of Contents



ALABAMA POWER COMPANY
 Income Tax Matters
 Bonus Depreciation
  Other Matters
   ACCOUNTING POLICIES
 Application of Critical Accounting Policies and Estimates
  41




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##### Table of Contents



ALABAMA POWER COMPANY
 FINANCIAL CONDITION AND LIQUIDITY
 Overview
   Capital Requirements and Contractual Obligations
  Sources of Capital
   42




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##### Table of Contents



ALABAMA POWER COMPANY
  Credit Rating Risk
   Market Price Risk
    First Quarter2008ChangesFair Value(in millions)Contracts outstanding at the beginning of the period, assets (liabilities), net
    
    $
    (0.4
    )Contracts realized or settled
    
    
    4.6Current period changes(a)
    
    
    51.7Contracts outstanding at the end of the period, assets (liabilities), net
    
    $
    55.9
 (a)
    
    Current period changes also include the changes in fair value of new contracts entered into
during the period, if any.
 43




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##### Table of Contents



ALABAMA POWER COMPANY
   Amounts(in millions)Regulatory liabilities, net
    
    $
    56.1Accumulated other comprehensive income
    
    
    (0.1
    )Net income
    
    
    (0.1
    )Total fair value gain/(loss)
    
    $
    55.9
   March 31, 2008Fair Value MeasurementsTotal
    
    
    MaturityFair Value
    
    
    Year 1
    
    
    1-3 Years(in millions)Level 1
    
    $
    
    
    
    $
    
    
    
    $
    Level 2
    
    
    55.9
    
    
    
    45.3
    
    
    
    10.6Level 3
    
    
    
    
    
    
    
    
    
    
    Fair value of contracts
outstanding at end of period
    
    $
    55.9
    
    
    $
    45.3
    
    
    $
    10.6
   44




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##### Table of Contents



ALABAMA POWER COMPANY
 Financing Activities
      45




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##### Table of Contents



GEORGIA POWER COMPANY
 46




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##### Table of Contents



GEORGIA POWER COMPANY
 
  For the Three MonthsEnded March 31,2008
    
    
    2007(in thousands)Operating Revenues:Retail revenues
    
    $
    1,575,007
    
    
    $
    1,412,329Wholesale revenues Non-affiliates
    
    
    152,692
    
    
    
    143,767Affiliates
    
    
    73,910
    
    
    
    41,788Other revenues
    
    
    63,238
    
    
    
    59,286Total operating revenues
    
    
    1,864,847
    
    
    
    1,657,170Operating Expenses:Fuel
    
    
    637,923
    
    
    
    593,894Purchased power Non-affiliates
    
    
    58,031
    
    
    
    46,093Affiliates
    
    
    252,935
    
    
    
    184,542Other operations
    
    
    241,092
    
    
    
    230,748Maintenance
    
    
    127,723
    
    
    
    124,442Depreciation and amortization
    
    
    150,608
    
    
    
    126,149Taxes other than income taxes
    
    
    71,286
    
    
    
    72,341Total operating expenses
    
    
    1,539,598
    
    
    
    1,378,209Operating Income
    
    
    325,249
    
    
    
    278,961Other Income and (Expense):Allowance for equity funds used during construction
    
    
    27,757
    
    
    
    13,179Interest income
    
    
    787
    
    
    
    475Interest expense, net of amounts capitalized
    
    
    (86,337
    )
    
    
    (85,465
    )Other income (expense), net
    
    
    (3,294
    )
    
    
    (4,216
    )Total other income and (expense)
    
    
    (61,087
    )
    
    
    (76,027
    )Earnings Before Income Taxes
    
    
    264,162
    
    
    
    202,934Income taxes
    
    
    83,801
    
    
    
    70,980Net Income
    
    
    180,361
    
    
    
    131,954Dividends on Preferred and Preference Stock
    
    
    4,345
    
    
    
    689Net Income After Dividends on Preferred and Preference Stock
    
    $
    176,016
    
    
    $
    131,265
   
  For the Three MonthsEnded March 31,2008
    
    
    2007(in thousands)Net Income After Dividends on Preferred and Preference Stock
    
    $
    176,016
    
    
    $
    131,265Other comprehensive income (loss):Qualifying hedges:Changes in fair value, net of tax of $(6,043) and
$(1,082), respectively
    
    
    (9,580
    )
    
    
    (1,714
    )Reclassification adjustment for amounts included in
net income,
net of tax of $206 and $(29), respectively
    
    
    327
    
    
    
    (46
    )Marketable securities:Change in fair value, net of tax of $- and $42,
respectively
    
    
    
    
    
    
    65Total other comprehensive income (loss)
    
    
    (9,253
    )
    
    
    (1,695
    )COMPREHENSIVE INCOME
    
    $
    166,763
    
    
    $
    129,570
  47




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##### Table of Contents



GEORGIA POWER COMPANY
 
  For the Three MonthsEnded March 31,2008
    
    
    2007(in thousands)Operating Activities:Net income
    
    $
    180,361
    
    
    $
    131,954Adjustments to reconcile net income
to net cash provided from operating activities Depreciation and amortization
    
    
    178,735
    
    
    
    149,339Deferred income taxes and investment tax credits
    
    
    (5,709
    )
    
    
    12,709Deferred revenues
    
    
    35,057
    
    
    
    (240
    )Deferred expenses  affiliates
    
    
    21,209
    
    
    
    21,524Allowance for equity funds used during construction
    
    
    (27,757
    )
    
    
    (13,179
    )Pension, postretirement, and other employee benefits
    
    
    9,863
    
    
    
    5,289Hedge settlements
    
    
    (15,816
    )
    
    
    (3,923
    )Other, net
    
    
    (18,819
    )
    
    
    (3,980
    )Changes in certain current assets and liabilities Receivables
    
    
    77,075
    
    
    
    81,442Fossil fuel stock
    
    
    1,293
    
    
    
    (14,009
    )Prepaid income taxes
    
    
    22,380
    
    
    
    19,084Other current assets
    
    
    (4,041
    )
    
    
    (8,047
    )Accounts payable
    
    
    (44,570
    )
    
    
    (86,459
    )Accrued taxes
    
    
    (79,097
    )
    
    
    (124,431
    )Accrued compensation
    
    
    (72,174
    )
    
    
    (111,026
    )Other current liabilities
    
    
    22,630
    
    
    
    35,473Net cash provided from operating activities
    
    
    280,620
    
    
    
    91,520Investing Activities:Property additions
    
    
    (517,606
    )
    
    
    (352,475
    )Distribution of restricted cash from pollution control bonds
    
    
    16,094
    
    
    
    Nuclear decommissioning trust fund purchases
    
    
    (113,811
    )
    
    
    (94,131
    )Nuclear decommissioning trust fund sales
    
    
    106,931
    
    
    
    87,251Cost of removal, net of salvage
    
    
    (11,346
    )
    
    
    (8,937
    )Change in construction payables, net of joint owner portion
    
    
    8,608
    
    
    
    379Other
    
    
    (11,239
    )
    
    
    (11,714
    )Net cash used for investing activities
    
    
    (522,369
    )
    
    
    (379,627
    )Financing Activities:Decrease in notes payable, net
    
    
    (359,113
    )
    
    
    (58,951
    )Proceeds Senior notes
    
    
    250,000
    
    
    
    250,000Capital contributions from parent company
    
    
    241,800
    
    
    
    269,949Other long-term debt
    
    
    300,000
    
    
    
    Redemptions Capital leases
    
    
    (683
    )
    
    
    (1,841
    )Senior notes
    
    
    (417
    )
    
    
    Payment of preferred and preference stock dividends
    
    
    (3,947
    )
    
    
    (832
    )Payment of common stock dividends
    
    
    (180,300
    )
    
    
    (172,475
    )Other
    
    
    (2,630
    )
    
    
    (1,560
    )Net cash provided from financing activities
    
    
    244,710
    
    
    
    284,290Net Change in Cash and Cash Equivalents
    
    
    2,961
    
    
    
    (3,817
    )Cash and Cash Equivalents at Beginning of Period
    
    
    15,392
    
    
    
    16,850Cash and Cash Equivalents at End of Period
    
    $
    18,353
    
    
    $
    13,033Supplemental Cash Flow Information:Cash paid during the period for Interest (net of $11,837 and $5,251 capitalized for 2008 and 2007, respectively)
    
    $
    70,452
    
    
    $
    64,595Income taxes (net of refunds)
    
    $
    450
    
    
    $
    6,585
  48




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##### Table of Contents



GEORGIA POWER COMPANY
 
  At March 31,
    
    
    At December 31,Assets
    
    2008
    
    
    2007(in thousands)Current Assets:Cash and cash equivalents
    
    $
    18,353
    
    
    $
    15,392Restricted cash
    
    
    32,185
    
    
    
    48,279Receivables Customer accounts receivable
    
    
    502,523
    
    
    
    491,389Unbilled revenues
    
    
    143,269
    
    
    
    137,046Under recovered regulatory clause revenues
    
    
    379,394
    
    
    
    384,538Other accounts and notes receivable
    
    
    89,343
    
    
    
    147,498Affiliated companies
    
    
    19,717
    
    
    
    21,699Accumulated provision for uncollectible accounts
    
    
    (7,686
    )
    
    
    (7,636
    )Fossil fuel stock, at average cost
    
    
    391,929
    
    
    
    393,222Materials and supplies, at average cost
    
    
    338,008
    
    
    
    337,652Vacation pay
    
    
    68,397
    
    
    
    69,394Prepaid income taxes
    
    
    28,722
    
    
    
    51,101Other
    
    
    109,211
    
    
    
    55,169Total current assets
    
    
    2,113,365
    
    
    
    2,144,743Property, Plant, and Equipment:In service
    
    
    22,157,064
    
    
    
    22,011,215Less accumulated provision for depreciation
    
    
    8,823,496
    
    
    
    8,696,66813,333,568
    
    
    
    13,314,547Nuclear fuel, at amortized cost
    
    
    247,562
    
    
    
    198,983Construction work in progress
    
    
    2,105,094
    
    
    
    1,797,642Total property, plant, and equipment
    
    
    15,686,224
    
    
    
    15,311,172Other Property and Investments:Equity investments in unconsolidated subsidiaries
    
    
    55,349
    
    
    
    53,813Nuclear decommissioning trusts, at fair value
    
    
    555,163
    
    
    
    588,952Other
    
    
    49,098
    
    
    
    47,914Total other property and investments
    
    
    659,610
    
    
    
    690,679Deferred Charges and Other Assets:Deferred charges related to income taxes
    
    
    544,686
    
    
    
    532,539Prepaid pension costs
    
    
    1,046,140
    
    
    
    1,026,985Deferred under recovered regulatory clause revenues
    
    
    284,629
    
    
    
    307,294Other regulatory assets
    
    
    606,326
    
    
    
    541,014Other
    
    
    266,461
    
    
    
    268,335Total deferred charges and other assets
    
    
    2,748,242
    
    
    
    2,676,167Total Assets
    
    $
    21,207,441
    
    
    $
    20,822,761
  49




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##### Table of Contents



GEORGIA POWER COMPANY
 At March 31,
    
    
    At December 31,Liabilities and Stockholders Equity
    
    2008
    
    
    2007(in thousands)Current Liabilities:Securities due within one year
    
    $
    348,310
    
    
    $
    198,576Notes payable
    
    
    356,478
    
    
    
    715,591Accounts payable Affiliated
    
    
    202,150
    
    
    
    236,332Other
    
    
    478,125
    
    
    
    463,945Customer deposits
    
    
    177,700
    
    
    
    171,553Accrued taxes Income taxes
    
    
    134,205
    
    
    
    68,782Other
    
    
    87,737
    
    
    
    219,585Accrued interest
    
    
    84,438
    
    
    
    74,674Accrued vacation pay
    
    
    55,064
    
    
    
    56,303Accrued compensation
    
    
    44,550
    
    
    
    114,974Other
    
    
    167,698
    
    
    
    103,225Total current liabilities
    
    
    2,136,455
    
    
    
    2,423,540Long-term Debt
    
    
    6,338,121
    
    
    
    5,937,792Deferred Credits and Other Liabilities:Accumulated deferred income taxes
    
    
    2,827,668
    
    
    
    2,850,655Deferred credits related to income taxes
    
    
    144,335
    
    
    
    146,886Accumulated deferred investment tax credits
    
    
    265,898
    
    
    
    269,125Employee benefit obligations
    
    
    697,404
    
    
    
    678,826Asset retirement obligations
    
    
    653,275
    
    
    
    663,503Other cost of removal obligations
    
    
    412,896
    
    
    
    414,745Other regulatory liabilities
    
    
    628,981
    
    
    
    577,642Other
    
    
    167,982
    
    
    
    158,670Total deferred credits and other liabilities
    
    
    5,798,439
    
    
    
    5,760,052Total Liabilities
    
    
    14,273,015
    
    
    
    14,121,384Preferred and Preference Stock
    
    
    265,957
    
    
    
    265,957Common Stockholders Equity:Common stock, without par valueAuthorized - 20,000,000 sharesOutstanding - 9,261,500 shares
    
    
    398,473
    
    
    
    398,473Paid-in capital
    
    
    3,621,364
    
    
    
    3,374,777Retained earnings
    
    
    2,671,778
    
    
    
    2,676,063Accumulated other comprehensive loss
    
    
    (23,146
    )
    
    
    (13,893
    )Total common stockholders equity
    
    
    6,668,469
    
    
    
    6,435,420Total Liabilities and Stockholders Equity
    
    $
    21,207,441
    
    
    $
    20,822,761
  50




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##### Table of Contents



GEORGIA POWER COMPANY
 
 
  OVERVIEW
   RESULTS OF OPERATIONS
 Net Income
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$44.7
    
    
    34.1
  Retail Revenues
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$162.7
    
    
    11.5
  51




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##### Table of Contents



GEORGIA POWER COMPANY
  First Quarter2008(in millions)
    
    
    % changeRetail  prior year
    
    $
    1,412.3Estimated change in Rates and pricing
    
    
    77.8
    
    
    
    5.5Sales growth
    
    
    (0.6
    )
    
    
    Weather
    
    
    8.0
    
    
    
    0.6Fuel and other cost recovery
    
    
    77.5
    
    
    
    5.4Retail  current year
    
    $
    1,575.0
    
    
    
    11.5
    %
     Wholesale Revenues  Non-Affiliates
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$8.9
    
    
    6.2
  52




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##### Table of Contents



GEORGIA POWER COMPANY
 Wholesale Revenues  Affiliates
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$32.1
    
    
    76.9
  Fuel and Purchased Power Expenses
 First Quarter 2008vs.First Quarter 2007(change in millions)
    
    % changeFuel
    
    $
    44.0
    
    
    
    7.4Purchased power  non-affiliates
    
    
    11.9
    
    
    
    25.9Purchased power  affiliates
    
    
    68.4
    
    
    
    37.1Total fuel and purchased power expenses
    
    $
    124.3
    First Quarter
    
    First Quarter
    
    PercentAverage Cost
    
    2008
    
    2007
    
    Change(cents per net KWH)Fuel
    
    
    2.84
    
    
    
    2.62
    
    
    
    8.4Purchased power
    
    
    7.32
    
    
    
    6.60
    
    
    
    10.9
  53




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##### Table of Contents



GEORGIA POWER COMPANY
 Non-affiliates
   Affiliates
   Other Operations and Maintenance Expenses
 First Quarter 2008vs.First Quarter 2007(change in millions)
    
    % changeOther operations
    
    $
    10.3
    
    
    
    4.5Maintenance
    
    
    3.3
    
    
    
    2.6Total other operations and maintenance expenses
    
    $
    13.6
  Depreciation and Amortization
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$24.5
    
    
    19.4
  54




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##### Table of Contents



GEORGIA POWER COMPANY
 Allowance for Equity Funds Used During Construction
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$14.6
    
    
    110.6
  Income Taxes
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$12.8
    
    
    18.1
  Dividends on Preferred and Preference Stock
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$3.6
    
    
    530.6
  FUTURE EARNINGS POTENTIAL
  55




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##### Table of Contents



GEORGIA POWER COMPANY
 Environmental Matters
  Eight-Hour Ozone Regulations
  Carbon Dioxide Litigation
  FERC and Georgia PSC Matters
 Retail Fuel Cost Recovery
  56




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##### Table of Contents



GEORGIA POWER COMPANY
  Nuclear
 Nuclear Projects
      in-service
  57




---



##### Table of Contents



GEORGIA POWER COMPANY
 
 Income Tax Matters
 Bonus Depreciation
  Other Matters
   ACCOUNTING POLICIES
 Application of Critical Accounting Policies and Estimates
  58




---



##### Table of Contents



GEORGIA POWER COMPANY
  FINANCIAL CONDITION AND LIQUIDITY
 Overview
  Capital Requirements and Contractual Obligations
 -
 Sources of Capital
   59




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##### Table of Contents



GEORGIA POWER COMPANY
   Credit Rating Risk
    Market Price Risk
   60




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##### Table of Contents



GEORGIA POWER COMPANY
  First Quarter2008ChangesFair Value(in millions)Contracts outstanding at the beginning of the period, assets (liabilities), net
    
    $
    (0.4
    )Contracts realized or settled
    
    
    5.9Current period changes(a)
    
    
    78.1Contracts outstanding at the end of the period, assets (liabilities), net
    
    $
    83.6
  (a)
    
    Current period changes also include the changes in fair value of new contracts entered into
during the period, if any.   Amounts(in millions)Regulatory liabilities, net
    
    $
    83.8Accumulated other comprehensive income
    
    
    Net income
    
    
    (0.2
    )Total fair value gain/(loss)
    
    $
    83.6
   March 31, 2008Fair Value MeasurementsTotal
    
    
    MaturityFair Value
    
    
    Year 1
    
    
    1-3 Years(in millions)Level 1
    
    $
    
    
    
    $
    
    
    
    $
    Level 2
    
    
    83.6
    
    
    
    65.5
    
    
    
    18.1Level 3
    
    
    
    
    
    
    
    
    
    
    Fair value of contracts outstanding at end of period
    
    $
    83.6
    
    
    $
    65.5
    
    
    $
    18.1
 61




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##### Table of Contents



GEORGIA POWER COMPANY
   Financing Activities
    62




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##### Table of Contents



GULF POWER COMPANY
 63




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##### Table of Contents



GULF POWER COMPANY
 
  For the Three MonthsEnded March 31,2008
    
    
    2007(in thousands)Operating Revenues:Retail revenues
    
    $
    227,964
    
    
    $
    219,584Wholesale revenues Non-affiliates
    
    
    25,656
    
    
    
    23,400Affiliates
    
    
    42,940
    
    
    
    40,080Other revenues
    
    
    14,975
    
    
    
    13,169Total operating revenues
    
    
    311,535
    
    
    
    296,233Operating Expenses:Fuel
    
    
    150,127
    
    
    
    146,474Purchased power Non-affiliates
    
    
    3,126
    
    
    
    1,388Affiliates
    
    
    8,743
    
    
    
    7,041Other operations
    
    
    47,856
    
    
    
    46,050Maintenance
    
    
    18,575
    
    
    
    13,202Depreciation and amortization
    
    
    21,704
    
    
    
    21,097Taxes other than income taxes
    
    
    20,696
    
    
    
    20,206Total operating expenses
    
    
    270,827
    
    
    
    255,458Operating Income
    
    
    40,708
    
    
    
    40,775Other Income and (Expense):Allowance for equity funds used during construction
    
    
    1,483
    
    
    
    379Interest income
    
    
    709
    
    
    
    1,608Interest expense, net of amounts capitalized
    
    
    (10,996
    )
    
    
    (11,153
    )Other income (expense), net
    
    
    (666
    )
    
    
    (550
    )Total other income and (expense)
    
    
    (9,470
    )
    
    
    (9,716
    )Earnings Before Income Taxes
    
    
    31,238
    
    
    
    31,059Income taxes
    
    
    10,157
    
    
    
    11,371Net Income
    
    
    21,081
    
    
    
    19,688Dividends on Preference Stock
    
    
    1,551
    
    
    
    825Net Income After Dividends on
Preference Stock
    
    $
    19,530
    
    
    $
    18,863
 
  For the Three MonthsEnded March 31,2008
    
    
    2007(in thousands)Net Income After Dividends on Preference Stock
    
    $
    19,530
    
    
    $
    18,863Other comprehensive income (loss):Qualifying hedges:Changes in fair value, net of tax of $(1,481) and $559, respectively
    
    
    (2,358
    )
    
    
    890Reclassification adjustment for amounts included in net income,
net of tax of $54 and $84, respectively
    
    
    87
    
    
    
    133Total other comprehensive income (loss)
    
    
    (2,271
    )
    
    
    1,023COMPREHENSIVE INCOME
    
    $
    17,259
    
    
    $
    19,886
  64




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##### Table of Contents



GULF
POWER COMPANY
 
  For the Three MonthsEnded March 31,2008
    
    
    2007(in thousands)Operating Activities:Net income
    
    $
    21,081
    
    
    $
    19,688Adjustments to reconcile net income
to net cash provided from operating activities Depreciation and amortization
    
    
    22,982
    
    
    
    22,384Deferred income taxes
    
    
    569
    
    
    
    (3,997
    )Allowance for equity funds used during construction
    
    
    (1,483
    )
    
    
    (379
    )Pension, postretirement, and other employee benefits
    
    
    1,319
    
    
    
    388Stock option expense
    
    
    408
    
    
    
    721Tax benefit of stock options
    
    
    85
    
    
    
    105Other, net
    
    
    428
    
    
    
    (780
    )Changes in certain current assets and liabilities Receivables
    
    
    11,189
    
    
    
    1,208Fossil fuel stock
    
    
    (13,622
    )
    
    
    (17,154
    )Materials and supplies
    
    
    (1,005
    )
    
    
    (105
    )Prepaid income taxes
    
    
    
    
    
    
    7,306Property damage cost recovery
    
    
    5,742
    
    
    
    5,325Other current assets
    
    
    1,063
    
    
    
    945Accounts payable
    
    
    (1,437
    )
    
    
    2,078Accrued taxes
    
    
    6,094
    
    
    
    6,885Accrued compensation
    
    
    (9,847
    )
    
    
    (12,345
    )Other current liabilities
    
    
    6,230
    
    
    
    1,089Net cash provided from operating activities
    
    
    49,796
    
    
    
    33,362Investing Activities:Property additions
    
    
    (76,305
    )
    
    
    (43,526
    )Cost of removal, net of salvage
    
    
    (3,583
    )
    
    
    (2,755
    )Construction payables
    
    
    1,014
    
    
    
    (7,287
    )Other
    
    
    (54
    )
    
    
    (80
    )Net cash used for investing activities
    
    
    (78,928
    )
    
    
    (53,648
    )Financing Activities:Decrease in notes payable, net
    
    
    (21,413
    )
    
    
    (42,232
    )Proceeds Common stock issued to parent
    
    
    
    
    
    
    80,000Gross excess tax benefit of stock options
    
    
    194
    
    
    
    218Capital contributions from parent company
    
    
    72,106
    
    
    
    Payment of preference stock dividends
    
    
    (1,406
    )
    
    
    (825
    )Payment of common stock dividends
    
    
    (20,425
    )
    
    
    (18,525
    )Other
    
    
    (271
    )
    
    
    (122
    )Net cash provided from financing activities
    
    
    28,785
    
    
    
    18,514Net Change in Cash and Cash Equivalents
    
    
    (347
    )
    
    
    (1,772
    )Cash and Cash Equivalents at Beginning of Period
    
    
    5,348
    
    
    
    7,526Cash and Cash Equivalents at End of Period
    
    $
    5,001
    
    
    $
    5,754Supplemental Cash Flow Information:Cash paid during the period for Interest (net of $654 and $167 capitalized for 2008 and
2007, respectively)
    
    $
    8,241
    
    
    $
    8,826Income taxes (net of refunds)
    
    $
    1,200
    
    
    $
    264
  65




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GULF
POWER COMPANY
 
  At March 31,
    
    
    At December 31,Assets
    
    2008
    
    
    2007(in thousands)Current Assets:Cash and cash equivalents
    
    $
    5,001
    
    
    $
    5,348Receivables Customer accounts receivable
    
    
    55,601
    
    
    
    63,227Unbilled revenues
    
    
    37,151
    
    
    
    39,000Under recovered regulatory clause revenues
    
    
    57,673
    
    
    
    58,435Other accounts and notes receivable
    
    
    5,494
    
    
    
    7,162Affiliated companies
    
    
    28,264
    
    
    
    19,377Accumulated provision for uncollectible accounts
    
    
    (1,584
    )
    
    
    (1,711
    )Fossil fuel stock, at average cost
    
    
    84,633
    
    
    
    71,012Materials and supplies, at average cost
    
    
    39,592
    
    
    
    45,763Property damage cost recovery
    
    
    11,968
    
    
    
    18,585Other regulatory assets
    
    
    8,229
    
    
    
    10,220Other
    
    
    24,218
    
    
    
    14,878Total current assets
    
    
    356,240
    
    
    
    351,296Property, Plant, and Equipment:In service
    
    
    2,701,587
    
    
    
    2,678,952Less accumulated provision for depreciation
    
    
    948,345
    
    
    
    931,9681,753,242
    
    
    
    1,746,984Construction work in progress
    
    
    197,338
    
    
    
    150,870Total property, plant, and equipment
    
    
    1,950,580
    
    
    
    1,897,854Other Property and Investments
    
    
    4,618
    
    
    
    4,563Deferred Charges and Other Assets:Deferred charges related to income taxes
    
    
    19,405
    
    
    
    17,847Prepaid pension costs
    
    
    108,450
    
    
    
    107,151Other regulatory assets
    
    
    96,429
    
    
    
    97,492Other
    
    
    34,775
    
    
    
    22,784Total deferred charges and other assets
    
    
    259,059
    
    
    
    245,274Total Assets
    
    $
    2,570,497
    
    
    $
    2,498,987
  66




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GULF POWER COMPANY
 At March 31,
    
    
    At December 31,Liabilities and Stockholders Equity
    
    2008
    
    
    2007(in thousands)Current Liabilities:Notes payable
    
    $
    23,212
    
    
    $
    44,625Accounts payable Affiliated
    
    
    44,834
    
    
    
    39,375Other
    
    
    59,389
    
    
    
    56,823Customer deposits
    
    
    25,824
    
    
    
    24,885Accrued taxes Income taxes
    
    
    35,741
    
    
    
    30,026Other
    
    
    9,851
    
    
    
    10,577Accrued interest
    
    
    10,115
    
    
    
    7,698Accrued compensation
    
    
    5,249
    
    
    
    15,096Other regulatory liabilities
    
    
    20,106
    
    
    
    6,027Other
    
    
    30,705
    
    
    
    32,023Total current liabilities
    
    
    265,026
    
    
    
    267,155Long-term Debt
    
    
    740,159
    
    
    
    740,050Deferred Credits and Other Liabilities:Accumulated deferred income taxes
    
    
    240,921
    
    
    
    240,101Accumulated deferred investment tax credits
    
    
    12,555
    
    
    
    12,988Employee benefit obligations
    
    
    75,971
    
    
    
    74,021Other cost of removal obligations
    
    
    172,975
    
    
    
    172,876Other regulatory liabilities
    
    
    85,292
    
    
    
    82,741Other
    
    
    80,047
    
    
    
    79,802Total deferred credits and other liabilities
    
    
    667,761
    
    
    
    662,529Total Liabilities
    
    
    1,672,946
    
    
    
    1,669,734Preference Stock
    
    
    97,998
    
    
    
    97,998Common Stockholders Equity:Common stock, without par valueAuthorized  20,000,000 sharesOutstanding  1,792,717 shares
    
    
    118,060
    
    
    
    118,060Paid-in capital
    
    
    507,787
    
    
    
    435,008Retained earnings
    
    
    179,776
    
    
    
    181,986Accumulated other comprehensive loss
    
    
    (6,070
    )
    
    
    (3,799
    )Total common stockholders equity
    
    
    799,553
    
    
    
    731,255Total Liabilities and Stockholders Equity
    
    $
    2,570,497
    
    
    $
    2,498,987
  67




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##### Table of Contents



GULF
POWER COMPANY
 
 
  OVERVIEW
   RESULTS OF OPERATIONS
 Net Income
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$0.6
    
    3.5
  Retail Revenues
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$8.4
    
    3.8
  68




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##### Table of Contents



GULF POWER COMPANY
  First Quarter2008(in millions)
    
    
    % changeRetail  prior year
    
    $
    219.6Estimated
change in Rates and pricing
    
    
    1.4
    
    
    
    0.6Sales growth
    
    
    2.3
    
    
    
    1.1Weather
    
    
    1.2
    
    
    
    0.5Fuel and other cost recovery
    
    
    3.5
    
    
    
    1.6Retail  current year
    
    $
    228.0
    
    
    
    3.8
    %
     69




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##### Table of Contents



GULF POWER COMPANY
 Wholesale Revenues  Non-Affiliates
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$2.3
    
    9.6
   Wholesale Revenues  Affiliates
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$2.8
    
    7.1
   Other Revenues
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$1.8
    
    13.7
  70




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##### Table of Contents



GULF POWER COMPANY
 Fuel and Purchased Power Expenses
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    
    % changeFuel
    
    $
    3.7
    
    
    
    2.5Purchased
power-non-affiliates
    
    
    1.7
    
    
    
    125.2Purchased
power-affiliates
    
    
    1.7
    
    
    
    24.2Total fuel and purchased power expenses
    
    $
    7.1
    First Quarter
    
    
    First Quarter
    
    
    PercentAverage Cost
    
    2008
    
    
    2007
    
    
    Change(cents per net KWH)Fuel
    
    
    3.8
    
    
    
    3.5
    
    
    
    9.2Purchased power
    
    
    6.7
    
    
    
    4.4
    
    
    
    51.9
  Non- affiliates
   Affiliates
  71




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##### Table of Contents



GULF POWER COMPANY
  Other Operations and Maintenance Expenses
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    
    % changeOther operations
    
    $
    1.8
    
    
    
    3.9Maintenance
    
    
    5.4
    
    
    
    40.7Total other operations and maintenance expenses
    
    $
    7.2
  Allowance for Equity Funds Used During Construction
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$1.1
    
    291.3
  Interest Income
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$(0.9)
    
    (55.9)
  Income Taxes
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$(1.2)
    
    (10.7)
  72




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##### Table of Contents



GULF POWER COMPANY
 FUTURE EARNINGS POTENTIAL
  Environmental Matters
  Eight-Hour Ozone Regulations
  Carbon Dioxide Litigation
  73




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##### Table of Contents



GULF POWER COMPANY
 Global Climate Issues
  FERC and Florida PSC Matters
 Retail Fuel Cost Recovery
  Income Tax Matters
 Bonus Depreciation
  Other Matters
  74




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##### Table of Contents



GULF POWER COMPANY
   ACCOUNTING POLICIES
 Application of Critical Accounting Policies and Estimates
  FINANCIAL CONDITION AND LIQUIDITY
 Overview
   Capital Requirements and Contractual Obligations
 
 75




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##### Table of Contents



GULF POWER COMPANY
  Sources of Capital
   Credit Rating Risk
    76




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##### Table of Contents



GULF POWER COMPANY
 Market Price Risk
    First Quarter2008ChangesFair Value(in millions)Contracts outstanding at the beginning of the period, assets (liabilities), net
    
    $
    (0.2
    )Contracts realized or settled
    
    
    1.3Current period changes(a)
    
    
    13.0Contracts outstanding at the end of the period, assets (liabilities), net
    
    $
    14.1
  (a)
    
    Current period changes also include the changes in fair value of new contracts entered into
during the period, if any.   Amounts(in millions)Regulatory liabilities, net
    
    $
    14.1Accumulated other comprehensive income
    
    
    Net income
    
    
    Total fair value gain/(loss)
    
    $
    14.1
  77




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##### Table of Contents



GULF POWER COMPANY
  March 31, 2008Fair Value MeasurementsTotal
    
    
    MaturityFair Value
    
    
    Year 1
    
    
    1-3 Years(in millions)Level 1
    
    $
    
    
    
    $
    
    
    
    $
    Level 2
    
    
    14.1
    
    
    
    10.9
    
    
    
    3.2Level 3
    
    
    
    
    
    
    
    
    
    
    Fair value of contracts
outstanding at end of period
    
    $
    14.1
    
    
    $
    10.9
    
    
    $
    3.2
   Financing Activities
    78




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MISSISSIPPI POWER COMPANY
 79




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##### Table of Contents



MISSISSIPPI
POWER COMPANY
 
  For the Three MonthsEnded March 31,2008
    
    
    2007(in thousands)Operating Revenues:Retail revenues
    
    $
    168,389
    
    
    $
    156,124Wholesale revenues Non-affiliates
    
    
    84,806
    
    
    
    77,294Affiliates
    
    
    28,379
    
    
    
    18,915Other revenues
    
    
    3,842
    
    
    
    4,493Total operating revenues
    
    
    285,416
    
    
    
    256,826Operating Expenses:Fuel
    
    
    130,116
    
    
    
    121,759Purchased power Non-affiliates
    
    
    2,255
    
    
    
    954Affiliates
    
    
    25,998
    
    
    
    12,424Other operations
    
    
    46,685
    
    
    
    43,847Maintenance
    
    
    18,088
    
    
    
    13,947Depreciation and amortization
    
    
    17,997
    
    
    
    14,228Taxes other than income taxes
    
    
    15,565
    
    
    
    12,843Total operating expenses
    
    
    256,704
    
    
    
    220,002Operating Income
    
    
    28,712
    
    
    
    36,824Other Income and (Expense):Interest income
    
    
    409
    
    
    
    575Interest expense, net of amounts capitalized
    
    
    (4,440
    )
    
    
    (5,072
    )Other income (expense), net
    
    
    1,618
    
    
    
    (128
    )Total other income and (expense)
    
    
    (2,413
    )
    
    
    (4,625
    )Earnings Before Income Taxes
    
    
    26,299
    
    
    
    32,199Income taxes
    
    
    9,694
    
    
    
    12,130Net Income
    
    
    16,605
    
    
    
    20,069Dividends on Preferred Stock
    
    
    433
    
    
    
    433Net Income After Dividends on Preferred Stock
    
    $
    16,172
    
    
    $
    19,636
 
  For the Three MonthsEnded March 31,2008
    
    
    2007(in thousands)Net Income After Dividends on Preferred Stock
    
    $
    16,172
    
    
    $
    19,636Other comprehensive income (loss):Qualifying hedges:Changes in fair value, net of tax of $(1,310) and $(362), respectively
    
    
    (2,114
    )
    
    
    (584
    )COMPREHENSIVE INCOME
    
    $
    14,058
    
    
    $
    19,052
  80




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##### Table of Contents



MISSISSIPPI POWER COMPANY
 
  For the Three MonthsEnded March 31,2008
    
    
    2007(in thousands)Operating Activities:Net income
    
    $
    16,605
    
    
    $
    20,069Adjustments to reconcile net income
to net cash provided from operating activities Depreciation and amortization
    
    
    18,555
    
    
    
    16,949Deferred income taxes and investment tax credits, net
    
    
    (4,498
    )
    
    
    9,224Plant Daniel capacity
    
    
    
    
    
    
    (1,415
    )Pension, postretirement, and other employee benefits
    
    
    1,606
    
    
    
    2,680Stock option expense
    
    
    458
    
    
    
    711Tax benefit of stock options
    
    
    80
    
    
    
    71Other, net
    
    
    (4,875
    )
    
    
    (4,151
    )Changes in certain current assets and liabilities Receivables
    
    
    (4,769
    )
    
    
    11,469Fossil fuel stock
    
    
    (3,852
    )
    
    
    (10,693
    )Materials and supplies
    
    
    (12,769
    )
    
    
    (532
    )Prepaid income taxes
    
    
    4,304
    
    
    
    18,301Other current assets
    
    
    1,775
    
    
    
    803Hurricane Katrina accounts payable
    
    
    
    
    
    
    (1,588
    )Other accounts payable
    
    
    8,247
    
    
    
    (9,578
    )Accrued taxes
    
    
    (21,608
    )
    
    
    (28,308
    )Accrued compensation
    
    
    (15,825
    )
    
    
    (17,828
    )Other current liabilities
    
    
    2,109
    
    
    
    459Net cash provided from (used for) operating activities
    
    
    (14,457
    )
    
    
    6,643Investing Activities:Property additions
    
    
    (25,984
    )
    
    
    (23,545
    )Cost of removal, net of salvage
    
    
    (151
    )
    
    
    (420
    )Construction payables
    
    
    2,410
    
    
    
    (2,926
    )Other
    
    
    (564
    )
    
    
    (50
    )Net cash used for investing activities
    
    
    (24,289
    )
    
    
    (26,941
    )Financing Activities:Increase in notes payable, net
    
    
    1,850
    
    
    
    35,354Proceeds Capital contributions
    
    
    1,180
    
    
    
    (3
    )Gross excess tax benefit of stock options
    
    
    215
    
    
    
    178Other long-term debt
    
    
    80,000
    
    
    
    Payment of preferred stock dividends
    
    
    (433
    )
    
    
    (433
    )Payment of common stock dividends
    
    
    (17,100
    )
    
    
    (16,825
    )Net cash provided from financing activities
    
    
    65,712
    
    
    
    18,271Net Change in Cash and Cash Equivalents
    
    
    26,966
    
    
    
    (2,027
    )Cash and Cash Equivalents at Beginning of Period
    
    
    4,827
    
    
    
    4,214Cash and Cash Equivalents at End of Period
    
    $
    31,793
    
    
    $
    2,187Supplemental Cash Flow Information:Cash paid during the period for Interest (net of $29 and $0 capitalized for 2008 and 2007, respectively)
    
    $
    3,847
    
    
    $
    5,183Income taxes (net of refunds)
    
    $
    (35
    )
    
    $
    (21,559
    )
  81




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MISSISSIPPI POWER COMPANY
 
  At March 31,
    
    
    At December 31,Assets
    
    2008
    
    
    2007(in thousands)Current Assets:Cash and cash equivalents
    
    $
    31,793
    
    
    $
    4,827Receivables Customer accounts receivable
    
    
    39,052
    
    
    
    43,946Unbilled revenues
    
    
    22,799
    
    
    
    23,163Under recovered regulatory clause revenues
    
    
    26,167
    
    
    
    40,545Other accounts and notes receivable
    
    
    7,288
    
    
    
    5,895Affiliated companies
    
    
    34,849
    
    
    
    11,838Accumulated provision for uncollectible accounts
    
    
    (785
    )
    
    
    (924
    )Fossil fuel stock, at average cost
    
    
    51,318
    
    
    
    47,466Materials and supplies, at average cost
    
    
    40,209
    
    
    
    27,440Assets from risk management activities
    
    
    27,157
    
    
    
    3,756Other regulatory assets
    
    
    28,339
    
    
    
    32,234Other
    
    
    16,631
    
    
    
    14,666Total current assets
    
    
    324,817
    
    
    
    254,852Property, Plant, and Equipment:In service
    
    
    2,146,326
    
    
    
    2,130,835Less accumulated provision for depreciation
    
    
    893,209
    
    
    
    880,1481,253,117
    
    
    
    1,250,687Construction work in progress
    
    
    60,742
    
    
    
    50,015Total property, plant, and equipment
    
    
    1,313,859
    
    
    
    1,300,702Other Property and Investments
    
    
    9,305
    
    
    
    9,556Deferred Charges and Other Assets:Deferred charges related to income taxes
    
    
    8,721
    
    
    
    8,867Prepaid pension costs
    
    
    65,883
    
    
    
    66,099Other regulatory assets
    
    
    68,298
    
    
    
    62,746Other
    
    
    28,476
    
    
    
    24,843Total deferred charges and other assets
    
    
    171,378
    
    
    
    162,555Total Assets
    
    $
    1,819,359
    
    
    $
    1,727,665
  82




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##### Table of Contents



MISSISSIPPI POWER COMPANY
 At March 31,
    
    
    At December 31,Liabilities and Stockholders Equity
    
    2008
    
    
    2007(in thousands)Current Liabilities:Securities due within one year
    
    $
    41,161
    
    
    $
    1,138Notes payable
    
    
    11,793
    
    
    
    9,944Accounts payable Affiliated
    
    
    36,001
    
    
    
    40,394Other
    
    
    76,440
    
    
    
    60,758Customer deposits
    
    
    9,947
    
    
    
    9,640Accrued taxes Income taxes
    
    
    10,671
    
    
    
    Other
    
    
    16,578
    
    
    
    48,853Accrued interest
    
    
    2,998
    
    
    
    2,713Accrued compensation
    
    
    6,140
    
    
    
    21,965Other regulatory liabilities
    
    
    34,458
    
    
    
    11,082Other
    
    
    25,176
    
    
    
    23,882Total current liabilities
    
    
    271,363
    
    
    
    230,369Long-term Debt
    
    
    321,671
    
    
    
    281,963Deferred Credits and Other Liabilities:Accumulated deferred income taxes
    
    
    207,769
    
    
    
    206,818Deferred credits related to income taxes
    
    
    14,915
    
    
    
    15,156Accumulated deferred investment tax credits
    
    
    14,967
    
    
    
    15,254Employee benefit obligations
    
    
    90,591
    
    
    
    88,300Other cost of removal obligations
    
    
    93,201
    
    
    
    90,485Other regulatory liabilities
    
    
    122,706
    
    
    
    119,458Other
    
    
    36,679
    
    
    
    33,252Total deferred credits and other liabilities
    
    
    580,828
    
    
    
    568,723Total Liabilities
    
    
    1,173,862
    
    
    
    1,081,055Preferred 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
    
    
    316,253
    
    
    
    314,324Retained earnings
    
    
    260,314
    
    
    
    261,242Accumulated other comprehensive income (loss)
    
    
    (1,541
    )
    
    
    573Total common stockholders equity
    
    
    612,717
    
    
    
    613,830Total Liabilities and Stockholders Equity
    
    $
    1,819,359
    
    
    $
    1,727,665
  83




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##### Table of Contents



MISSISSIPPI POWER COMPANY
 
 
  OVERVIEW
   RESULTS OF OPERATIONS
 Net Income
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$(3.5)
    
    (17.6)
  Retail Revenues
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$12.3
    
    7.9
  84




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##### Table of Contents



MISSISSIPPI POWER COMPANY
  First Quarter2008(in millions)
    
    % changeRetail  prior year
    
    $
    156.1Estimated
change in Rates and pricing
    
    
    4.3
    
    
    
    2.7Sales growth
    
    
    1.4
    
    
    
    0.9Weather
    
    
    (0.7
    )
    
    
    (0.4
    )Fuel and other cost recovery
    
    
    7.3
    
    
    
    4.7Retail  current year
    
    $
    168.4
    
    
    
    7.9
    %
     Wholesale Revenues  Non-Affiliates
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$7.5
    
    9.7
  85




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MISSISSIPPI POWER COMPANY
 Wholesale Revenues  Affiliates
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$9.5
    
    50.0
  Fuel and Purchased Power Expenses
 First
Quarter 2008 vs. 
First Quarter 2007(change in millions)
    
    
    % changeFuel
    
    $
    8.4
    
    
    
    6.9Purchased
power-non-affiliates
    
    
    1.3
    
    
    
    136.4Purchased
power-affiliates
    
    
    13.6
    
    
    
    109.3Total fuel and purchased power expenses
    
    $
    23.3
    First Quarter
    
    First Quarter
    
    PercentAverage Cost
    
    2008
    
    2007
    
    Change(cents per net KWH)Fuel
    
    
    3.91
    
    
    
    3.56
    
    
    
    9.8
    %Purchased power
    
    
    5.40
    
    
    
    3.37
    
    
    
    60.2
    %
  86




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MISSISSIPPI POWER COMPANY
 Non-affiliates
   Affiliates
   Other Operations and Maintenance Expenses
 First
Quarter 2008 vs. 
First Quarter 2007(change in millions)
    
    
    % changeOther operations
    
    $
    2.8
    
    
    
    6.5Maintenance
    
    
    4.1
    
    
    
    29.7Total other operations and maintenance expenses
    
    $
    6.9
  Depreciation and Amortization
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$3.8
    
    26.5
  87




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MISSISSIPPI POWER COMPANY
  Taxes Other Than Income Taxes
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$2.7
    
    21.2
  Total Other Income and (Expense)
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$2.2
    
    47.8
  Income Taxes
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$(2.4)
    
    (20.1)
  FUTURE EARNINGS POTENTIAL
  88




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##### Table of Contents



MISSISSIPPI POWER COMPANY
 Environmental Matters
  Eight-Hour Ozone Regulations
  Carbon Dioxide Litigation
  FERC and Mississippi PSC Matters
 Retail Regulatory Matters
 Environmental Compliance Overview Plan
   89




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MISSISSIPPI POWER COMPANY
  Performance Evaluation Plan
   Fuel Cost Recovery
  Mississippi Base Load Construction Legislation
  90




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MISSISSIPPI POWER COMPANY
 Kemper County Integrated Coal Gasification Combined Cycle
    Income Tax Matters
 Bonus Depreciation
  91




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##### Table of Contents



MISSISSIPPI POWER COMPANY
 Other Matters
   ACCOUNTING POLICIES
 Application of Critical Accounting Policies and Estimates
  FINANCIAL CONDITION AND LIQUIDITY
 Overview
  92




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MISSISSIPPI POWER COMPANY
  Capital Requirements and Contractual Obligations
  Sources of Capital
   93




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MISSISSIPPI POWER COMPANY
 Off-Balance Sheet Financing Arrangements
  Credit Rating Risk
   Market Price Risk
    First Quarter2008ChangesFair Value(in millions)Contracts outstanding at the beginning of the period, assets (liabilities), net
    
    $
    1.9Contracts realized or settled
    
    
    0.6Current period changes(a)
    
    
    24.7Contracts outstanding at the end of the period, assets (liabilities), net
    
    $
    27.2
 
 (a)
    
    Current period changes also include the changes in fair value of new contracts entered into
during the period, if any. 94




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MISSISSIPPI POWER COMPANY
   Amounts(in millions)Regulatory liabilities, net
    
    $
    29.6Accumulated other comprehensive income
    
    
    (2.5
    )Net income
    
    
    0.1Total fair value gain/(loss)
    
    $
    27.2
   March 31, 2008Fair Value MeasurementsTotal
    
    MaturityFair Value
    
    Year 1
    
    1-3 Years(in millions)Level 1
    
    $
    
    
    
    $
    
    
    
    $
    Level 2
    
    
    27.2
    
    
    
    23.5
    
    
    
    3.7Level 3
    
    
    
    
    
    
    
    
    
    
    Fair value of contracts
outstanding at end of period
    
    $
    27.2
    
    
    $
    23.5
    
    
    $
    3.7
   95




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MISSISSIPPI POWER COMPANY
 Financing Activities
    96




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SOUTHERN
POWER COMPANY AND SUBSIDIARY COMPANIES
 97




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SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
 
  For the Three MonthsEnded March 31,2008
    
    
    2007(in thousands)Operating Revenues:Wholesale revenues Non-affiliates
    
    $
    80,469
    
    
    $
    81,117Affiliates
    
    
    133,493
    
    
    
    109,502Other revenues
    
    
    1,570
    
    
    
    1,873Total operating revenues
    
    
    215,532
    
    
    
    192,492Operating Expenses:Fuel
    
    
    36,047
    
    
    
    27,366Purchased power Non-affiliates
    
    
    16,556
    
    
    
    11,030Affiliates
    
    
    50,708
    
    
    
    31,287Other operations
    
    
    26,199
    
    
    
    20,889Maintenance
    
    
    8,832
    
    
    
    5,298Depreciation and amortization
    
    
    19,987
    
    
    
    18,394Taxes other than income taxes
    
    
    4,542
    
    
    
    3,711Total operating expenses
    
    
    162,871
    
    
    
    117,975Operating Income
    
    
    52,661
    
    
    
    74,517Other Income and (Expense):Interest expense, net of amounts capitalized
    
    
    (19,357
    )
    
    
    (20,894
    )Other income (expense), net
    
    
    12,580
    
    
    
    (82
    )Total other income and (expense)
    
    
    (6,777
    )
    
    
    (20,976
    )Earnings Before Income Taxes
    
    
    45,884
    
    
    
    53,541Income taxes
    
    
    16,909
    
    
    
    21,505Net Income
    
    $
    28,975
    
    
    $
    32,036
 
  For the Three MonthsEnded March 31,2008
    
    
    2007(in thousands)Net Income
    
    $
    28,975
    
    
    $
    32,036Other comprehensive income (loss):Qualifying hedges:Changes in fair value, net of tax of $(2,944) and $(580), respectively
    
    
    (4,562
    )
    
    
    (891
    )Reclassification adjustment for amounts included in net income, net of tax of $1,342 and $1,156, respectively
    
    
    2,074
    
    
    
    2,037Total other comprehensive income (loss)
    
    
    (2,488
    )
    
    
    1,146COMPREHENSIVE INCOME
    
    $
    26,487
    
    
    $
    33,182
  98




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SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
 
  For the Three MonthsEnded March 31,2008
    
    
    2007(in thousands)Operating Activities:Net income
    
    $
    28,975
    
    
    $
    32,036Adjustments to reconcile net income
to net cash provided from operating activities Depreciation and amortization
    
    
    24,016
    
    
    
    22,086Deferred income taxes and investment tax credits, net
    
    
    11,067
    
    
    
    20,953Deferred revenues
    
    
    (26,767
    )
    
    
    (27,924
    )Mark-to-market adjustments
    
    
    14,406
    
    
    
    410Accumulated billings on construction contract
    
    
    18,737
    
    
    
    15,098Accumulated costs on construction contract
    
    
    (18,630
    )
    
    
    (4,408
    )Gain on sale of property
    
    
    (6,029
    )
    
    
    Other, net
    
    
    1,662
    
    
    
    517Changes in certain current assets and liabilities Receivables
    
    
    (2,356
    )
    
    
    5,399Fossil fuel stock
    
    
    (2,375
    )
    
    
    149Materials and supplies
    
    
    (155
    )
    
    
    (650
    )Other current assets
    
    
    (214
    )
    
    
    80Accounts payable
    
    
    (5,719
    )
    
    
    (3,065
    )Accrued taxes
    
    
    8,356
    
    
    
    (2,961
    )Accrued interest
    
    
    (12,210
    )
    
    
    (12,067
    )Other current liabilities
    
    
    (2,881
    )
    
    
    Net cash provided from operating activities
    
    
    29,883
    
    
    
    45,653Investing Activities:Property additions
    
    
    (30,003
    )
    
    
    (45,852
    )Sale of property
    
    
    4,999
    
    
    
    Change in construction payables, net
    
    
    4,853
    
    
    
    5,104Other
    
    
    (725
    )
    
    
    Net cash used for investing activities
    
    
    (20,876
    )
    
    
    (40,748
    )Financing Activities:Increase in notes payable, net
    
    
    13,720
    
    
    
    21,380Proceeds  Capital contributions
    
    
    897
    
    
    
    (3
    )Payment of common stock dividends
    
    
    (23,625
    )
    
    
    (22,450
    )Other
    
    
    
    
    
    
    (23
    )Net cash used for financing activities
    
    
    (9,008
    )
    
    
    (1,096
    )Net Change in Cash and Cash Equivalents
    
    
    (1
    )
    
    
    3,809Cash and Cash Equivalents at Beginning of Period
    
    
    5
    
    
    
    29,929Cash and Cash Equivalents at End of Period
    
    $
    4
    
    
    $
    33,738Supplemental Cash Flow Information:Cash paid during the period for Interest (net of $4,142 and $3,409 capitalized for 2008 and 2007, respectively)
    
    $
    27,717
    
    
    $
    29,293Income taxes (net of refunds)
    
    $
    495
    
    
    $
    6,948
  99




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SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
 
  At March 31,
    
    
    At December 31,Assets
    
    2008
    
    
    2007(in thousands)Current Assets:Cash and cash equivalents
    
    $
    4
    
    
    $
    5Receivables Customer accounts receivable
    
    
    21,952
    
    
    
    19,100Other accounts receivable
    
    
    816
    
    
    
    1,025Affiliated companies
    
    
    26,794
    
    
    
    27,004Fossil fuel stock, at average cost
    
    
    17,535
    
    
    
    15,160Materials and supplies, at average cost
    
    
    19,439
    
    
    
    19,284Prepaid service agreements  current
    
    
    14,379
    
    
    
    14,233Other prepaid expenses
    
    
    5,223
    
    
    
    2,840Assets from risk management activities
    
    
    27,973
    
    
    
    16,079Other
    
    
    
    
    
    
    4,226Total current assets
    
    
    134,115
    
    
    
    118,956Property, Plant, and Equipment:In service
    
    
    2,534,640
    
    
    
    2,534,507Less accumulated provision for depreciation
    
    
    300,378
    
    
    
    280,9622,234,262
    
    
    
    2,253,545Construction work in progress
    
    
    305,532
    
    
    
    283,084Total property, plant, and equipment
    
    
    2,539,794
    
    
    
    2,536,629Deferred Charges and Other Assets:Prepaid long-term service agreements
    
    
    92,528
    
    
    
    87,058OtherAffiliated
    
    
    4,060
    
    
    
    4,138Other
    
    
    21,904
    
    
    
    21,993Total deferred charges and other assets
    
    
    118,492
    
    
    
    113,189Total Assets
    
    $
    2,792,401
    
    
    $
    2,768,774
  100




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SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
  At March 31,
    
    
    At December 31,Liabilities and Stockholders Equity
    
    2008
    
    
    2007(in thousands)Current Liabilities:Notes payable
    
    $
    63,468
    
    
    $
    49,748Accounts payable Affiliated
    
    
    58,206
    
    
    
    48,475Other
    
    
    11,106
    
    
    
    20,322Accrued taxes Income taxes
    
    
    
    
    
    
    392Other
    
    
    6,388
    
    
    
    2,658Accrued interest
    
    
    17,958
    
    
    
    30,168Liabilities from risk management activities
    
    
    46,051
    
    
    
    12,639Billings in excess of cost on construction contract
    
    
    36,491
    
    
    
    36,384Other
    
    
    1,416
    
    
    
    9,523Total current liabilities
    
    
    241,084
    
    
    
    210,309Long-term Debt
    
    
    1,297,163
    
    
    
    1,297,099Deferred Credits and Other Liabilities:Accumulated deferred income taxes
    
    
    154,699
    
    
    
    138,123Deferred capacity revenues  Affiliated
    
    
    8,586
    
    
    
    34,801OtherAffiliated
    
    
    7,494
    
    
    
    7,754Other
    
    
    2,410
    
    
    
    2,801Total deferred credits and other liabilities
    
    
    173,189
    
    
    
    183,479Total Liabilities
    
    
    1,711,436
    
    
    
    1,690,887Common Stockholders Equity:Common stock, par value $.01 per share Authorized  1,000,000 sharesOutstanding  1,000 shares
    
    
    
    
    
    
    Paid-in capital
    
    
    859,362
    
    
    
    858,466Retained earnings
    
    
    257,801
    
    
    
    253,131Accumulated other comprehensive loss
    
    
    (36,198
    )
    
    
    (33,710
    )Total common stockholders equity
    
    
    1,080,965
    
    
    
    1,077,887Total Liabilities and Stockholders Equity
    
    $
    2,792,401
    
    
    $
    2,768,774
  101




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##### Table of Contents



SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
 
    OVERVIEW
   RESULTS OF OPERATIONS
 Net Income
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$(3.0)
    
    (9.6)
  Wholesale
Revenues  Affiliates and Wholesale Revenues  Non-Affiliates
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$23.3
    
    12.2
  102




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SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
   Fuel and Purchased Power Expenses
 First
Quarter 2008 vs. 
First Quarter 2007(change in millions)
    
    % changeFuel
    
    $
    8.7
    
    
    
    31.7Purchased
power  non-affiliates
    
    
    5.5
    
    
    
    50.1Purchased
power  affiliates
    
    
    19.4
    
    
    
    62.1Total fuel and purchased power expenses
    
    $
    33.6
  Other Operations and Maintenance Expenses
 First
Quarter 2008 vs. 
First Quarter 2007(change in millions)
    
    % changeOther operations
    
    $
    5.3
    
    
    
    25.4Maintenance
    
    
    3.5
    
    
    
    66.7Total other operations and maintenance expenses
    
    $
    8.8
  Depreciation and Amortization
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$1.6
    
    8.7
  103




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SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
 Other Income (Expense), Net
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$12.7
    
    N/M
 
 N/M
    
     Not Meaningful  Income Taxes
 First Quarter 2008 vs. First Quarter 2007(change in millions)
    
    % change$(4.6)
    
    (21.4)
  FUTURE EARNINGS POTENTIAL
  Construction Projects
 Plant Franklin Unit 3
  Environmental Matters
  104




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##### Table of Contents



SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
  Carbon Dioxide Litigation
  Other Matters
   ACCOUNTING POLICIES
 Application of Critical Accounting Policies and Estimates
  105




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##### Table of Contents



SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
 
 New Accounting Standards
 Business Combinations
   FINANCIAL CONDITION AND LIQUIDITY
 Overview
   106




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##### Table of Contents



SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
  Capital Requirements and Contractual Obligations
  Sources of Capital
     Credit Rating Risk
   107




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SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
   Market Price Risk
     First Quarter2008ChangesFair Value(in millions)Contracts outstanding at the beginning of the period, assets (liabilities), net
    
    $
    3.4Contracts realized or settled
    
    
    (2.9
    )Current period changes(a)
    
    
    (19.1
    )Contracts outstanding at the end of the period, assets (liabilities), net
    
    $
    (18.6
    )
  (a)
    
    Current period changes also include the changes in fair value of new contracts entered into
during the period, if any. 108




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SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
   Amounts(in millions)Accumulated other comprehensive income
    
    $
    (7.5
    )Net income
    
    
    (11.1
    )Total fair value gain/(loss)
    
    $
    (18.6
    )
   March 31, 2008Fair Value MeasurementsTotal
    
    MaturityFair Value
    
    Year 1
    
    1-3 Years(in millions)Level 1
    
    $
    
    
    
    $
    
    
    
    $
    Level 2
    
    
    (18.6
    )
    
    
    (18.0
    )
    
    
    (0.6
    )Level 3
    
    
    
    
    
    
    
    
    
    
    Fair value of contracts outstanding at end of period
    
    $
    (18.6
    )
    
    $
    (18.0
    )
    
    $
    (0.6
    )
   Financing Activities
  109




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##### Table of Contents



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, H, I, KAlabama Power
    
    A, B, C, F, G, H, IGeorgia Power
    
    A, B, C, D, F, G, H, IGulf Power
    
    A, B, C, F, G, HMississippi Power
    
    A, B, C, D, F, G, HSouthern Power
    
    A, B, C, F, H, J
 110




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##### Table of Contents



NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 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 the registrants included herein have been
prepared by each registrant, without audit, pursuant to the rules and regulations of the
SEC. The Condensed Balance Sheets as of December 31, 2007 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 necessary to present fairly the results of operations for the periods ended
March 31, 2008 and 2007. 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 latest Form 10-K and details which have
not changed significantly in amount or composition since the filing of the Form 10-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. 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.Certain prior period amounts have been reclassified to conform to current period
presentation. Where applicable, each companys statement of income for the first quarter
2007 was modified to report Interest expense to affiliate trusts together with Interest
expense, net of amounts capitalized. Southern Companys statement of cash flows for the
prior period was modified within the operating activities section to present separate line
items for Derivative fair value adjustments and Deferred revenues previously included in
Other, net. Within the investing activities section, Proceeds from property sales was
combined into Other.Alabama Powers statement of cash flows for the first quarter 2007 was modified within the
operating activities section to combine Deferred expenses  affiliates into Other, net.Georgia Powers statement of cash flows for the prior period was modified within the
operating activities section to present a separate line item for Deferred revenues
previously included in Other, net. Additionally, the line items Stock option expense
and Tax benefit of stock options were combined into Other, net and Material and
supplies was combined into Other current assets. In the financing activities section,
Gross excess tax benefit of stock options was combined into Other.Gulf Power modified its statement of income for the three months ended March 31, 2007 to
report a separate line item for Allowance for funds used during construction previously
included in Other income and expense, net. In conjunction with such modification, Gulf
Power modified its statement of cash flows within the operating activities section to
present a separate line item for Allowance for equity funds used during construction
previously included in Other, net.
 111




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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 Due to the relative significance of the amount reported at March 31, 2008 associated with
Assets from risk management activities, the balance sheet at December 31, 2007 of
Mississippi Power was
modified to report the amount for that line item previously included in Other. In
conjunction with this modification, the balance sheet amount reported by Mississippi Power
at December 31, 2007 for Prepaid income taxes was combined into Other.Southern Powers statement of cash flows for the prior period was modified within the
operating activities section to present a separate line item for Mark to market
adjustments previously included in Other, net. Within the financing activities section,
a modification was made to report Proceeds  Capital contributions which was previously
included in Other.These reclassifications had no effect on total assets, net income, cash flows, or earnings
per share.In the first quarter 2008, Gulf Power sold a turbine rotor assembly to Southern Power for
$9.4 million. These transactions were eliminated in consolidation for Southern Company.(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).
 112




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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
   MC Asset Recovery Litigation
    113




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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
   Mirant Securities Litigation
    114




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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
    Environmental Matters
 New Source Review Actions
   115




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##### Table of Contents



NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
   Carbon Dioxide Litigation
 New York Case
  Kivalina Case
  116




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##### Table of Contents



NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 Environmental Remediation
     117




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##### Table of Contents



NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
   FERC Matters
 Market-Based Rate Authority
     Intercompany Interchange Contract
  118




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##### Table of Contents



NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
  Generation Interconnection Agreements
   Right of Way Litigation
   119




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##### Table of Contents



NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
    Income Tax Matters
 Leveraged Lease Transactions
  120




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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 Company has claimed approximately $330 million in tax benefits related to these SILO
transactions challenged by the IRS. These tax benefits relate to timing differences and do
not impact total net income over the life of the transactions. Southern Company believes these transactions are valid leases
for U.S. tax purposes and the related deductions are allowable. Southern Company is
continuing to pursue resolution of these matters; however, the ultimate outcome cannot now
be determined. In accordance with the requirements of FASB Interpretation No. 48,
Accounting for Uncertainty in Income Taxes and FASB Staff Position No. 13-2, Accounting
for a Change or Projected Change in the Timing of Cash Flows Relating to Income Taxes
Generated by a Leveraged Lease Transaction, Southern Company will continue to evaluate the
SILO transactions and the projected timing of income tax cash flows in light of Southern
Companys pending litigation, other recent court decisions involving lease-in-lease-out
(LILO) and SILO transactions, and proposed legislation. As a result, it is reasonably
possible that the amount of the unrecognized tax benefit could significantly change within
the next 12 months. In addition, the U.S. Senate is currently considering legislation that
would disallow tax benefits after December 31, 2007 for SILO losses and other international
leveraged lease transactions (such as LILO transactions). The ultimate impact
on Southern Companys net income and cash flow will be dependent on the outcome of the
pending litigation, other court decisions, and proposed legislation, but could be
significant, and potentially material.Georgia State Income Tax CreditsGeorgia Powers 2005 through 2007 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. On July 24, 2007, Georgia Power filed a complaint in the
Superior Court of Fulton County to recover the credits claimed for the years 2002 through
2004. 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.IRC Section 199 Domestic Production DeductionThe American Jobs Creation Act of 2004 created a tax deduction for a portion of income
attributable to U.S. production activities as defined in the IRC Section 199 (production
activities deduction). The deduction is equal to a stated percentage of qualified
production activities net income. The percentage is phased in over the years 2005 through
2010 with a 3% rate applicable to the years 2005 and 2006, a 6% rate applicable for years
2007 through 2009, and a 9% rate applicable for all years after 2009. The IRS has not
clearly defined a methodology for calculating this deduction, therefore an unrecognized tax
benefit has been recorded related to this deduction.(C)
    
    FAIR VALUE MEASUREMENTOn January 1, 2008, the registrants adopted FASB Statement No. 159, Fair Value Option
for Financial Assets and Financial Liabilities  Including an Amendment of FASB Statement
No. 115 (SFAS No. 159). This standard permits an entity to choose to measure many
financial instruments and certain other items at fair value. Southern Company, Alabama
Power, and Georgia Power have elected the fair value option only for investment
securities held in nuclear decommissioning trust funds (Funds). See Note 1 to the
financial statements of Southern Company, Alabama Power, and Georgia Power under Nuclear
Decommissioning in Item 8 of the Form 10-K for information on these trusts funds.Management elected the fair value option for the Funds because management believes that
fair value best represents the nature of the Funds. Management has delegated day-to-day
management of the investments in the Funds to unrelated third party managers with
oversight by Southern
 121




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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
  
   
    
    Level 1 consists of observable market data in an active market for identical
assets or liabilities.
    
    Level 2 consists of observable market data, other than that included in Level
1, that is either directly or indirectly observable.
    
    Level 3 consists of unobservable market data. The input may reflect the
assumptions of the registrant of what a market participant would use in pricing
an asset or liability. If there is little available market data, then the
registrants own assumptions are the best available information.
   122




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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
  As of March 31, 2008:
    
    Level 1
    
    Level 2
    
    Level 3
    
    Total(in millions)Southern CompanyAssets:Energy-related derivatives
    
    $
    
    
    
    $
    214.6
    
    
    $
    
    
    
    $
    214.6Interest rate derivatives
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    0.1Nuclear decommissioning trusts
    
    
    668.4
    
    
    
    394.8
    
    
    
    
    
    
    
    1,063.2
    (a)Other
    
    
    0.8
    
    
    
    42.0
    
    
    
    44.9
    
    
    
    87.7Total fair value
    
    $
    669.2
    
    
    $
    651.5
    
    
    $
    44.9
    
    
    $
    1,365.6Liabilities:Energy-related derivatives
    
    $
    
    
    
    $
    52.4
    
    
    $
    
    
    
    $
    52.4Interest rate derivatives
    
    
    
    
    
    
    30.2
    
    
    
    
    
    
    
    30.2Total fair value
    
    $
    
    
    
    $
    82.6
    
    
    $
    
    
    
    $
    82.6Alabama PowerAssets:Energy-related derivatives
    
    $
    
    
    
    $
    56.6
    
    
    $
    
    
    
    $
    56.6Nuclear decommissioning trusts
    
    
    296.9
    
    
    
    210.6
    
    
    
    
    
    
    
    507.5
    (a)Total fair value
    
    $
    296.9
    
    
    $
    267.2
    
    
    $
    
    
    
    $
    564.1Liabilities:Energy-related derivatives
    
    $
    
    
    
    $
    0.7
    
    
    $
    
    
    
    $
    0.7Interest rate derivatives
    
    
    
    
    
    
    6.7
    
    
    
    
    
    
    
    6.7Total fair value
    
    $
    
    
    
    $
    7.4
    
    
    $
    
    
    
    $
    7.4Georgia PowerAssets:Energy-related derivatives
    
    $
    
    
    
    $
    85.0
    
    
    $
    
    
    
    $
    85.0Interest rate derivatives
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    0.1Nuclear decommissioning trusts
    
    
    371.5
    
    
    
    184.2
    
    
    
    
    
    
    
    555.7
    (a)Total fair value
    
    $
    371.5
    
    
    $
    269.3
    
    
    $
    
    
    
    $
    640.8Liabilities:Energy-related derivatives
    
    $
    
    
    
    $
    1.4
    
    
    $
    
    
    
    $
    1.4Interest rate derivatives
    
    
    
    
    
    
    17.2
    
    
    
    
    
    
    
    17.2Total fair value
    
    $
    
    
    
    $
    18.6
    
    
    $
    
    
    
    $
    18.6Gulf PowerAssets:Energy-related derivatives total
fair value
    
    $
    
    
    
    $
    14.2
    
    
    $
    
    
    
    $
    14.2Liabilities:Energy-related derivatives
    
    $
    
    
    
    $
    0.1
    
    
    $
    
    
    
    $
    0.1Interest rate derivatives
    
    
    
    
    
    
    6.3
    
    
    
    
    
    
    
    6.3Total fair value
    
    $
    
    
    
    $
    6.4
    
    
    $
    
    
    
    $
    6.4Mississippi PowerAssets:Energy-related derivatives total
fair value
    
    $
    
    
    
    $
    30.8
    
    
    $
    
    
    
    $
    30.8Liabilities:Energy-related derivatives total
fair value
    
    $
    
    
    
    $
    3.6
    
    
    $
    
    
    
    $
    3.6Southern PowerAssets:Energy-related derivatives total
fair value
    
    $
    
    
    
    $
    28.0
    
    
    $
    
    
    
    $
    28.0Liabilities:Energy-related derivatives total
fair value
    
    $
    
    
    
    $
    46.6
    
    
    $
    
    
    
    $
    46.6(a) Excludes receivables related to investment income and pending
investment sales, and payables related to pending investment
purchases.
 123




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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
   SouthernOther
    
    Company(in millions)Beginning
balance as of January 1, 2008
    
    $
    50.4Total gains or losses (realized/unrealized)Included in other comprehensive income
    
    
    (5.5
    )Purchases, issuances and settlements
    
    
    Transfers in and/or out of Level 3
    
    
    Ending
balance as of March 31, 2008
    
    $
    44.9
 (D)
    
    CONSTRUCTION PROJECTSConstruction ProgramIn connection with Georgia Powers entering into an engineering, procurement, and
construction agreement to design, engineer, procure, construct, and test two AP 1000 nuclear
units with electric generating capacity of approximately 1,100 MWs each and related
facilities, structures, and improvements at Plant Vogtle, the revised estimated total
construction program for Southern Company is $4.4 billion in 2008, $5.2 billion in 2009, and
$4.8 billion in 2010 and for Georgia Power is $2.0 billion in 2008, $2.6 billion in 2009,
and $2.5 billion in 2010. Actual construction costs may vary from these estimates because
of changes in such factors as: business conditions; environmental statutes and regulations;
nuclear plant regulation; FERC rules and regulations; load projections; the cost and
efficiency of construction labor, equipment, and materials; and the cost of capital. In
addition, there can be no assurance that costs related to capital expenditures will be fully
recovered. See Note 7 to the financial statements of Southern Company and Georgia Power
under COMMITMENTS  Construction Program in Item 8 of the Form 10-K for additional
information.Kemper County Integrated Coal Gasification Combined CycleAs part of the evaluation and screening of alternatives to meet its future generation needs,
Mississippi Power is considering the construction of an advanced coal gasification facility
to be located in Kemper County, Mississippi, that would use locally mined lignite coal. The
plant would use an air-blown IGCC technology that generates power from low-rank coals and
coals with high moisture or high ash content. These coals, which include lignite, make up
approximately half the proven United States and worldwide coal reserves. The feasibility
assessment of the project is currently underway. 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
project and in November 2006, the IRS allocated IRC Section 48A tax credits of $133 million
to Mississippi Power. The utilization of these credits is dependent upon meeting the
certification requirements for the project, including an in-service date no later than
November 2013. On February 14, 2008, Mississippi Power also requested that the DOE transfer
the
remaining funds previously granted to another Southern Company project that would have been
located in Orlando, Florida. The Orlando project was cancelled in 2007.
 124




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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 In December 2006, the Mississippi PSC approved Mississippi Powers request for accounting
treatment of the costs associated with Mississippi Powers generation resource planning,
evaluation, and screening activities. The Mississippi PSC gave Mississippi Power the
authority to create and recognize a regulatory asset for such costs. In December 2007,
Mississippi Power reported to the Mississippi PSC an updated estimate and received an order
directing Mississippi Power to continue charging all costs associated with the generation
capacity assessment to the regulatory asset. At March 31, 2008, Mississippi Power had spent
$25.3 million, of which $2.7 million related to land purchases capitalized. The retail
portion of $16.4 million was deferred in other regulatory assets and the wholesale portion
of $6.2 million was expensed. The retail portion of these costs will be charged to and
remain as a regulatory asset until the Mississippi PSC determines the prudence and ultimate
recovery of such costs, which decision is expected by January 2009. The balance of such
regulatory asset is included in Mississippi Powers rate base for retail ratemaking
purposes. Approval by various regulatory agencies, including the Mississippi PSC, will also
be required if the project proceeds. The Mississippi PSC, in its discretion, may exercise
its additional rate authority granted to the Mississippi PSC in the Mississippi base load
construction legislation if such legislation is signed by the Governor and if the project
proceeds.The final outcome of this matter cannot now be determined.(E)
    
    COMMON STOCKFor 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 MonthsEnded
    
    EndedMarch 31,
    
    March 31,2008
    
    2007As reported shares
    
    
    766,150
    
    
    
    750,259Effect of options
    
    
    4,171
    
    
    
    5,093Diluted shares
    
    
    770,321
    
    
    
    755,352
 (F)
    
    FINANCIAL INSTRUMENTSSee Note 6 to the financial statements of the registrants under Financial Instruments in
Item 8 of the Form 10-K. At March 31, 2008, the fair value of energy-related derivative
contracts was reflected in the financial statements as follows (in millions):
 Southern
    
    Alabama
    
    Georgia
    
    Gulf
    
    Mississippi
    
    SouthernCompany
    
    Power
    
    Power
    
    Power
    
    Power
    
    PowerRegulatory
(assets)/
liabilities, net
    
    $
    183.6
    
    
    $
    56.1
    
    
    $
    83.8
    
    
    $
    14.1
    
    
    $
    29.6
    
    
    $
    Accumulated other
comprehensive
income (loss)
    
    
    (10.1
    )
    
    
    (0.1
    )
    
    
    
    
    
    
    
    
    
    
    (2.5
    )
    
    
    (7.5
    )Net income (loss)
    
    
    (11.3
    )
    
    
    (0.1
    )
    
    
    (0.2
    )
    
    
    
    
    
    
    0.1
    
    
    
    (11.1
    )Total fair value
    
    $
    162.2
    
    
    $
    55.9
    
    
    $
    83.6
    
    
    $
    14.1
    
    
    $
    27.2
    
    
    $
    (18.6
    )
 125




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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
     Cash Flow Hedges
 Fair ValueWeighted
    
    Hedge
    
    Gain (Loss)Notional
    
    Variable Rate
    
    Average
    
    Maturity
    
    March 31,Amount
    
    Received
    
    Fixed Rate Paid
    
    Date
    
    2008(in millions)
    
    
    
    
    
    
    
    
    
    
    
    
    
    (in millions)Alabama Power*
    
    $
    576
    
    
    SIFMA Index
    
    
    2.69
    %
    
    February 2010
    
    $
    (6.7
    )Georgia Power*
    
    
    301
    
    
    SIFMA Index
    
    
    2.22
    %
    
    December 2009
    
    
    (0.8
    )Georgia Power
    
    
    75
    
    
    1-month LIBOR
    
    
    2.70
    %
    
    September 2008
    
    
    Georgia Power
    
    
    75
    
    
    1-month LIBOR
    
    
    2.61
    %
    
    November 2008
    
    
    Georgia Power
    
    
    100
    
    
    3-month LIBOR
    
    
    5.12
    %
    
    June 2018
    
    
    (8.3
    )Georgia Power
    
    
    150
    
    
    3-month LIBOR
    
    
    2.62
    %
    
    February 2009
    
    
    Georgia Power
    
    
    100
    
    
    3-month LIBOR
    
    
    5.28
    %
    
    February 2019
    
    
    (7.7
    )Georgia Power
    
    
    300
    
    
    1-month LIBOR
    
    
    2.43
    %
    
    April 2010
    
    
    (0.3
    )Gulf Power
    
    
    80
    
    
    3-month LIBOR
    
    
    5.10
    %
    
    July 2018
    
    
    (6.3
    )
 
 *
    
    Hedged using the Securities Industry and Financial Markets Association
Municipal Swap Index (SIFMA), (Formerly the Bond Market Association/PSA
Municipal Swap Index)
   126




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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
  Southern Company
    
    $
    (19.8
    )Alabama Power
    
    
    (3.0
    )Georgia Power
    
    
    (4.9
    )Gulf Power
    
    
    (1.0
    )Southern Power
    
    
    (11.0
    )
 (G)
    
    RETIREMENT BENEFITSSouthern Company accounts for pension and other postretirement obligations in accordance
with SFAS No. 158, Employers Accounting for Defined Benefit Pension and Other
Postretirement Plansan amendment of FASB Statements No. 87, 88, 106, and 132(R) (SFAS No.
158). SFAS No. 158 requires recognition of an asset for a plans over funded status or a
liability for a plans under funded status in Southern Companys statement of financial
position. In addition, the measurement date (the date at which plan assets and the benefit
obligation are measured) is required to be the same as Southern Companys fiscal year end.
As permitted, Southern Company adopted the measurement date provisions of SFAS No. 158
effective January 1, 2008. Southern Companys pension and postretirement plans previously
used a September 30 measurement date. All plans are now measured as of December 31,
consistent with Southern Companys fiscal year end. The adoption of the measurement date
provisions of SFAS No. 158 increased long-term liabilities by approximately $28 million and
prepaid pension costs by approximately $16 million. There was no effect on Southern
Companys results of operations or cash flows.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 periods ended March
31, 2008 and 2007 are as follows (in millions):
 Southern
    
    Alabama
    
    Georgia
    
    Gulf
    
    MississippiPENSION PLANS
    
    Company
    
    Power
    
    Power
    
    Power
    
    PowerThree Months Ended March 31,
2008Service cost
    
    $
    36
    
    
    $
    9
    
    
    $
    12
    
    
    $
    2
    
    
    $
    2Interest cost
    
    
    87
    
    
    
    22
    
    
    
    33
    
    
    
    4
    
    
    
    4Expected return on plan assets
    
    
    (131
    )
    
    
    (40
    )
    
    
    (53
    )
    
    
    (6
    )
    
    
    (5
    )Net amortization
    
    
    12
    
    
    
    3
    
    
    
    5
    
    
    
    
    
    
    
    Net cost (income)
    
    $
    4
    
    
    $
    (6
    )
    
    $
    (3
    )
    
    $
    
    
    
    $
    1Three Months Ended March 31,
2007Service cost
    
    $
    37
    
    
    $
    9
    
    
    $
    13
    
    
    $
    2
    
    
    $
    2Interest cost
    
    
    81
    
    
    
    21
    
    
    
    31
    
    
    
    4
    
    
    
    4Expected return on plan assets
    
    
    (120
    )
    
    
    (37
    )
    
    
    (49
    )
    
    
    (6
    )
    
    
    (5
    )Net amortization
    
    
    12
    
    
    
    3
    
    
    
    5
    
    
    
    
    
    
    
    Net cost (income)
    
    $
    10
    
    
    $
    (4
    )
    
    $
    
    
    
    $
    
    
    
    $
    1
 127




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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 Southern
    
    Alabama
    
    Georgia
    
    
    
    
    
    MississippiPOSTRETIREMENT PLANS
    
    Company
    
    Power
    
    Power
    
    Gulf Power
    
    PowerThree Months Ended March 31,
2008Service cost
    
    $
    7
    
    
    $
    2
    
    
    $
    2
    
    
    $
    
    
    
    $
    Interest cost
    
    
    28
    
    
    
    7
    
    
    
    12
    
    
    
    1
    
    
    
    1Expected return on plan assets
    
    
    (15
    )
    
    
    (5
    )
    
    
    (7
    )
    
    
    
    
    
    
    Net amortization
    
    
    8
    
    
    
    2
    
    
    
    4
    
    
    
    
    
    
    
    Net cost (income)
    
    $
    28
    
    
    $
    6
    
    
    $
    11
    
    
    $
    1
    
    
    $
    1Three Months Ended March 31,
2007Service cost
    
    $
    7
    
    
    $
    2
    
    
    $
    3
    
    
    $
    
    
    
    $
    Interest cost
    
    
    27
    
    
    
    7
    
    
    
    12
    
    
    
    1
    
    
    
    1Expected return on plan assets
    
    
    (13
    )
    
    
    (5
    )
    
    
    (7
    )
    
    
    
    
    
    
    Net amortization
    
    
    10
    
    
    
    3
    
    
    
    5
    
    
    
    
    
    
    
    1Net cost (income)
    
    $
    31
    
    
    $
    7
    
    
    $
    13
    
    
    $
    1
    
    
    $
    2
 (H)
    
    EFFECTIVE TAX RATESSouthern Companys effective tax rate was 32.2% for the three months ended March 31,2008, as
compared to 30.8% for the same period in 2007. The increase was largely due to the
unavailability of synthetic fuel tax credits 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 recorded net synthetic fuel tax credits for the
three months ended March 31, 2008 that are $23.9 million less than the net synthetic fuel
tax credits recorded for the same period in 2007, which resulted in an increase in income
tax expense. The credits are not allowed under IRC Section 45K for any production after
December 31, 2007. The increase in Southern Companys effective tax rate was partially
offset by decreases in the effective tax rate at all of the other registrants. These
decreases were due to additional allowance for equity funds used during construction (which
is not taxable) recorded by Alabama Power, Georgia Power, and Gulf Power and by an increase
in the production activities deduction.(I)
    
    NUCLEAR FUEL DISPOSAL COST LITIGATIONSee Note 1 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. On July 9, 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 on November 1,
2007. On January 2, 2008, the government filed a notice of appeal. On February 29, 2008,
the government filed a motion to stay the appeal pending the courts decisions in three
other cases already on appeal. On April 1, 2008, the court granted the governments motion
to stay the appeal. A claim against the government was also filed for damages incurred
after December 31, 2004 (the court-mandated cut-off in the original claim), due to the
governments continuing breach of contract. This claim was filed without including any
dollar amount for recovery of damages. The final outcome of this matter cannot be
determined at this time, but no material impact on net income is expected as any damage
amounts collected from the government are expected to be returned to customers.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 (J)
    
    SOUTHERN POWER DEPRECIATION STUDYSouthern Power revised its depreciation rates in January 2008. This change in estimate
arises from changes in useful life assumptions of certain components of plant in service
based on an engineering study completed in the first quarter 2008. Depreciation rates by
generating facility changed from a range of 2.7% to 3.8% to a range of 1.8% to 4.1%. These
changes increase depreciation and reduce net income. As a result of these changes, net
income was decreased by $0.7 million for the first quarter 2008. The expected total impact
on Southern Powers net income for 2008 is a decrease of $2.8 million.(K)
    
    SEGMENT AND RELATED INFORMATIONSouthern Companys reportable business segments are the sale of electricity in the Southeast
by the traditional operating companies and Southern Power. 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 leveraged lease projects,
telecommunications, and energy-related services. Southern Powers revenues from sales to
the traditional operating companies were $133 million and $110 million for the three months
ended March 31, 2008 and March 31, 2007, respectively. 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 March 31,
2008:Operating revenues
    
    $
    3,618
    
    
    $
    216
    
    
    $
    (185
    )
    
    $
    3,649
    
    
    $
    48
    
    
    $
    (14
    )
    
    $
    3,683Segment net income (loss)
    
    
    342
    
    
    
    29
    
    
    
    
    
    
    
    371
    
    
    
    (10
    )
    
    
    (2
    )
    
    
    359Total assets at March 31, 2008
    
    $
    42,596
    
    
    $
    2,792
    
    
    $
    (104
    )
    
    $
    45,284
    
    
    $
    1,714
    
    
    $
    (402
    )
    
    $
    46,596
 Electric UtilitiesTraditionalOperating
    
    Southern
    
    
    
    
    
    
    
    
    
    AllCompanies
    
    Power
    
    Eliminations
    
    Total
    
    Other
    
    Eliminations
    
    Consolidated(in millions)Three Months Ended March 31,
2007:Operating revenues
    
    $
    3,294
    
    
    $
    192
    
    
    $
    (140
    )
    
    $
    3,346
    
    
    $
    101
    
    
    $
    (38
    )
    
    $
    3,409Segment net income (loss)
    
    
    284
    
    
    
    32
    
    
    
    
    
    
    
    316
    
    
    
    24
    
    
    
    (1
    )
    
    
    339Total assets at December 31, 2007
    
    $
    41,812
    
    
    $
    2,769
    
    
    $
    (122
    )
    
    $
    44,459
    
    
    $
    1,767
    
    
    $
    (437
    )
    
    $
    45,789
 Products and Services
 Electric Utilities RevenuesPeriod
    
    Retail
    
    Wholesale
    
    Other
    
    Total(in millions)Three Months Ended March 31, 2008
    
    $
    3,006
    
    
    $
    514
    
    
    $
    129
    
    
    $
    3,649Three Months Ended March 31, 2007
    
    $
    2,744
    
    
    $
    481
    
    
    $
    121
    
    
    $
    3,346
 
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PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors.
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Item 6. Exhibits.
 (3) Articles of Incorporation and By-Laws
 Alabama Power(b)1
    
    - Articles of Amendment to the Articles
of Incorporation of Alabama Power dated
April 25, 2008.(4) Instruments Describing Rights of Security Holders, Including IndenturesGeorgia Power(c)1
    

- Thirty-Fourth Supplemental Indenture
to Senior Note Indenture dated as of
March 17, 2008, providing for the
issuance of the Series 2008A Floating
Rate Senior Notes. (Designated in Form
8-K dated March 12, 2008, File No.
1-6468, as Exhibit 4.2.)(10) Material ContractsGulf Power(d)1
    

-
Deferred Compensation Plan for Outside
Directors of Gulf Power Company, Amended
and Restated effective January 1, 2008.Mississippi Power(e)1
    

- Deferred Compensation Plan for Outside
Directors of Mississippi Power Company,
Amended and Restated effective January
1, 2008.(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, 2007, File No.
1-3526 as Exhibit 24(a) and incorporated
herein by reference.)Alabama Power(b)1
    
    - Power of Attorney and resolution.
(Designated in the Form 10-K for the
year ended December 31, 2007, File No.
1-3164 as Exhibit 24(b) and incorporated
herein by reference.)Georgia Power(c)1
    
    - Power of Attorney and resolution.
(Designated in the Form 10-K for the
year ended December 31, 2007, File No.
1-6468 as Exhibit 24(c) and incorporated
herein by reference.)Gulf Power(d)1
    
    - Power of Attorney and resolution.
(Designated in the Form 10-K for the
year ended December 31, 2007, File No.
0-2429 as Exhibit 24(d) and incorporated
herein by reference.)(d)2
    
    - Power of Attorney for Philip C.
Raymond.
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##### Table of Contents



Mississippi Power(e)1
    
    - Power of Attorney and resolution.
(Designated in the Form 10-K for the
year ended December 31, 2007, File No.
001-11229 as Exhibit 24(e) and
incorporated herein by reference.)Southern Power(f)1
    
    - Power of Attorney and resolution.
(Designated in the Form 10-K for the
year ended December 31, 2007, File No.
333-98553 as Exhibit 24(f) and
incorporated herein by reference.)(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.
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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.
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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/ Wayne Boston(Wayne Boston, Attorney-in-fact)Date: May 7, 2008
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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/ Wayne Boston(Wayne Boston, Attorney-in-fact)Date: May 7, 2008
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GEORGIA POWER COMPANY
 SIGNATURES
  GEORGIA POWER COMPANYBy
    
    Michael D. GarrettPresident and Chief Executive Officer(Principal Executive Officer)By
    
    Cliff S. ThrasherExecutive Vice President, Chief Financial Officer, and Treasurer(Principal Financial Officer)By
    
    /s/ Wayne Boston(Wayne Boston, Attorney-in-fact)Date: May 7, 2008
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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/ Wayne Boston(Wayne Boston, Attorney-in-fact)Date: May 7, 2008
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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/ Wayne Boston(Wayne Boston, Attorney-in-fact)Date: May 7, 2008
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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/ Wayne Boston(Wayne Boston, Attorney-in-fact)Date: May 7, 2008
 139