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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, 2009
 OR
 o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission
    
    Registrant, State of Incorporation,
    
    I.R.S. EmployerFile Number
    
    Address and Telephone Number
    
    Identification No.1-3526
    
    The Southern Company
(A Delaware Corporation)
    
    58-069007030 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 registrants have submitted electronically and posted on
their corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period
that the registrants were required to submit and post such files).
Yes o No o
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large
accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act. (Check one):
 Large
    
    
    
    
    
    SmallerAccelerated
    
    Accelerated
    
    Non-accelerated
    
    ReportingRegistrant
    
    Filer
    
    Filer
    
    Filer
    
    CompanyThe Southern Company
    
    XAlabama Power Company
    
    
    
    
    
    XGeorgia Power Company
    
    
    
    
    
    XGulf Power Company
    
    
    
    
    
    XMississippi Power Company
    
    
    
    
    
    XSouthern Power Company
    
    
    
    
    
    X
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act.) Yes o No
þ
 (Response applicable to all registrants.)
 Description of
    
    Shares OutstandingRegistrant
    
    Common Stock
    
    at March 31, 2009The Southern Company
    
    Par Value $5 Per Share
    
    
    782,433,682Alabama Power Company
    
    Par Value $40 Per Share
    
    
    25,475,000Georgia Power Company
    
    Without Par Value
    
    
    9,261,500Gulf Power Company
    
    Without Par Value
    
    
    3,142,717Mississippi Power Company
    
    Without Par Value
    
    
    1,121,000Southern Power Company
    
    Par Value $0.01 Per Share
    
    
    1,000
  2




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##### 



INDEX TO QUARTERLY REPORT ON FORM 10-Q
March 31, 2009
 PageNumberDEFINITIONS
    
    
    5CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
    
    
    7PART I  FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (Unaudited)Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of OperationsThe Southern Company and Subsidiary CompaniesCondensed Consolidated Statements of Income
    
    
    9Condensed Consolidated Statements of Cash Flows
    
    
    10Condensed Consolidated Balance Sheets
    
    
    11Condensed Consolidated Statements of Comprehensive Income
    
    
    13Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Alabama Power CompanyCondensed Statements of Income
    
    
    30Condensed Statements of Comprehensive Income
    
    
    30Condensed Statements of Cash Flows
    
    
    31Condensed Balance Sheets
    
    
    32Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    34Georgia 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
    
    
    82Condensed Statements of Comprehensive Income
    
    
    82Condensed Statements of Cash Flows
    
    
    83Condensed Balance Sheets
    
    
    84Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    86Southern Power Company and Subsidiary CompaniesCondensed Consolidated Statements of Income
    
    
    100Condensed Consolidated Statements of Comprehensive Income
    
    
    100Condensed Consolidated Statements of Cash Flows
    
    
    101Condensed Consolidated Balance Sheets
    
    
    102Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    104Notes to the Condensed Financial Statements
    
    
    115Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk.
    
    
    28Item 4.
    
    Controls and Procedures.
    
    
    28Item 4T.
    
    Controls and Procedures.
    
    
    28
  
 3




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INDEX TO QUARTERLY REPORT ON FORM 10-Q
March 31, 2009
 PageNumberPART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    141Item 1A.
    
    Risk Factors
    
    141Item 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
    
    142Signatures
    
    145
 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 CompanyBcf
    
    Billion cubic feetClean Air Act
    
    Clean Air Act Amendments of 1990DOE
    
    U.S. Department of EnergyDuke Energy
    
    Duke Energy CorporationECO Plan
    
    Mississippi Powers Environmental Compliance Overview PlanEPA
    
    U.S. Environmental Protection AgencyFASB
    
    Financial Accounting Standards BoardFERC
    
    Federal Energy Regulatory CommissionForm 10-K
    
    Combined Annual Report on Form 10-K of Southern Company,
Alabama Power, Georgia Power, Gulf Power, Mississippi Power,
and Southern Power for the year ended December 31, 2008Georgia 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 RateMirant
    
    Mirant CorporationMississippi Power
    
    Mississippi Power CompanymmBtu
    
    Million British thermal unitMW
    
    MegawattMWH
    
    Megawatt-hourNRC
    
    Nuclear Regulatory CommissionNSR
    
    New Source ReviewOCI
    
    Other Comprehensive IncomePEP
    
    Performance Evaluation PlanPower Pool
    
    The operating arrangement whereby the integrated generating
resources of the traditional operating companies and Southern
Power are subject to joint commitment and dispatch in order to
serve their combined load obligationsPPA
    
    Power Purchase AgreementPSC
    
    Public Service CommissionRate ECR
    
    Alabama Powers energy cost recovery rate mechanismregistrants
    
    Southern Company, Alabama Power, Georgia Power, Gulf Power,
Mississippi Power, and Southern PowerSCS
    
    Southern Company Services, Inc.SEC
    
    Securities and Exchange CommissionSFAS No. 157
    
    FASB Statement No. 157, Fair Value MeasurementSouthern Company
    
    The Southern CompanySouthern Company system
    
    Southern Company, the traditional operating companies, Southern
Power, and other subsidiaries
 5




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DEFINITIONS
 Term
    
    MeaningSouthernLINC Wireless
    
    Southern Communications Services, Inc.Southern Nuclear
    
    Southern Nuclear Operating Company, Inc.Southern Power
    
    Southern Power Companytraditional operating companies
    
    Alabama Power, Georgia Power, Gulf Power, and Mississippi Powerwholesale revenues
    
    revenues generated from sales for resale
 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 and avoid cost overruns during the development and construction of
facilities;
    
    investment performance of Southern Companys employee benefit plans;
    
    advances in technology;
    
    state and federal rate regulations and the impact of pending and future rate cases and
negotiations, including rate actions relating to fuel and storm restoration cost recovery;
    
    regulatory approvals related to the potential Plant Vogtle expansion, including Georgia PSC
and NRC approvals;
    
    the performance of projects undertaken by the non-utility businesses and the success of
efforts to invest in and develop new opportunities;
    
    internal restructuring or other restructuring options that may be pursued;
    
    potential business strategies, including acquisitions or dispositions of assets or
businesses, which cannot be assured to be completed or beneficial to Southern Company or its
subsidiaries;
    
    the ability of counterparties of Southern Company and its subsidiaries to make payments as
and when due and to perform as required;
    
    the ability to obtain new short- and long-term contracts with neighboring utilities and
other wholesale customers;
    
    the direct or indirect effect on Southern Companys business resulting from terrorist
incidents and the threat of terrorist incidents;
    
    interest rate fluctuations and financial market conditions and the results of financing
efforts, including Southern Companys and its subsidiaries credit ratings;
    
    the ability of Southern Company and its subsidiaries to obtain additional generating
capacity at competitive prices;
    
    catastrophic events such as fires, earthquakes, explosions, floods, hurricanes, droughts,
pandemic health events such as an avian or other influenza, or other similar occurrences;
    
    the direct or indirect effects on Southern Companys business resulting from incidents
similar to the August 2003 power outage in the Northeast;
    
    the effect of accounting pronouncements issued periodically by standard setting bodies; and
    
    other factors discussed elsewhere herein and in other reports (including the Form 10-K)
filed by the registrants from time to time with the SEC.
 Each registrant expressly disclaims any obligation to update any forward-looking statements.
 7




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THE SOUTHERN COMPANY AND 
SUBSIDIARY COMPANIES
 8




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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
  For the Three MonthsEnded March 31,2009
    
    
    2008(in thousands)Operating Revenues:Retail revenues
    
    $
    3,064,659
    
    
    $
    3,005,614Wholesale revenues
    
    
    451,414
    
    
    
    513,662Other electric revenues
    
    
    122,798
    
    
    
    130,190Other revenues
    
    
    27,436
    
    
    
    33,444Total operating revenues
    
    
    3,666,307
    
    
    
    3,682,910Operating Expenses:Fuel
    
    
    1,406,267
    
    
    
    1,451,943Purchased power
    
    
    107,644
    
    
    
    92,904Other operations and maintenance
    
    
    871,081
    
    
    
    896,817MC Asset Recovery litigation settlement
    
    
    202,000
    
    
    
    Depreciation and amortization
    
    
    389,758
    
    
    
    343,885Taxes other than income taxes
    
    
    199,880
    
    
    
    189,272Total operating expenses
    
    
    3,176,630
    
    
    
    2,974,821Operating Income
    
    
    489,677
    
    
    
    708,089Other Income and (Expense):Allowance for equity funds used during construction
    
    
    42,612
    
    
    
    40,585Interest income
    
    
    6,908
    
    
    
    9,805Equity in income (losses) of unconsolidated subsidiaries
    
    
    (976
    )
    
    
    328Leveraged lease income (losses)
    
    
    9,441
    
    
    
    10,925Interest expense, net of amounts capitalized
    
    
    (225,727
    )
    
    
    (217,109
    )Other income (expense), net
    
    
    (12,850
    )
    
    
    914Total other income and (expense)
    
    
    (180,592
    )
    
    
    (154,552
    )Earnings Before Income Taxes
    
    
    309,085
    
    
    
    553,537Income taxes
    
    
    167,169
    
    
    
    178,138Consolidated Net Income
    
    
    141,916
    
    
    
    375,399Dividends on Preferred and Preference Stock of Subsidiaries
    
    
    16,195
    
    
    
    16,195Consolidated Net Income After Dividends on

Preferred and Preference Stock of Subsidiaries
    
    $
    125,721
    
    
    $
    359,204Common Stock Data:Earnings per shareBasic
    
    $
    0.16
    
    
    $
    0.47Diluted
    
    $
    0.16
    
    
    $
    0.47Average number of shares of common stock outstanding (in
thousands)Basic
    
    
    779,858
    
    
    
    766,150Diluted
    
    
    781,645
    
    
    
    770,322Cash dividends paid per share of common stock
    
    $
    0.4200
    
    
    $
    0.4025
  9




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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
  For the Three MonthsEnded March 31,2009
    
    
    2008(in thousands)Operating Activities:Consolidated net income
    
    $
    141,916
    
    
    $
    375,399Adjustments to reconcile consolidated net income
to net cash provided from operating activities Depreciation and amortization
    
    
    456,833
    
    
    
    407,689Deferred income taxes and investment tax credits
    
    
    (30,386
    )
    
    
    (2,342
    )Deferred revenues
    
    
    (10,732
    )
    
    
    33,446Allowance for equity funds used during construction
    
    
    (42,612
    )
    
    
    (40,585
    )Equity in income (losses) of unconsolidated
subsidiaries
    
    
    976
    
    
    
    (328
    )Leveraged lease income (losses)
    
    
    (9,441
    )
    
    
    (10,925
    )Pension, postretirement, and other employee benefits
    
    
    7,974
    
    
    
    30,916Stock option expense
    
    
    16,955
    
    
    
    13,427Derivative fair value adjustments
    
    
    659
    
    
    
    14,380Hedge settlements
    
    
    (16,167
    )
    
    
    27,180MC Asset Recovery litigation settlement
    
    
    202,000
    
    
    
    Other, net
    
    
    6,915
    
    
    
    (6,372
    )Changes in certain current assets and liabilities Receivables
    
    
    292,162
    
    
    
    188,538Fossil fuel stock
    
    
    (160,992
    )
    
    
    (53,305
    )Materials and supplies
    
    
    (12,648
    )
    
    
    (22,762
    )Other current assets
    
    
    (67,717
    )
    
    
    (61,320
    )Accounts payable
    
    
    80,995
    
    
    
    (114,636
    )Accrued taxes
    
    
    (185,215
    )
    
    
    13,865Accrued compensation
    
    
    (319,715
    )
    
    
    (265,386
    )Other current liabilities
    
    
    49,371
    
    
    
    10,212Net cash provided from operating activities
    
    
    401,131
    
    
    
    537,091Investing Activities:Property additions
    
    
    (1,136,212
    )
    
    
    (1,012,907
    )Investment in restricted cash from pollution control revenue
bonds
    
    
    (49,348
    )
    
    
    (145
    )Distribution of restricted cash from pollution control revenue
bonds
    
    
    23,079
    
    
    
    35,716Nuclear decommissioning trust fund purchases
    
    
    (379,332
    )
    
    
    (160,752
    )Nuclear decommissioning trust fund sales
    
    
    381,280
    
    
    
    153,872Investment in unconsolidated subsidiaries
    
    
    (1,800
    )
    
    
    (2,780
    )Cost of removal, net of salvage
    
    
    (30,231
    )
    
    
    (25,581
    )Other
    
    
    70,534
    
    
    
    17,336Net cash used for investing activities
    
    
    (1,122,030
    )
    
    
    (995,241
    )Financing Activities:Increase (decrease) in notes payable, net
    
    
    121,274
    
    
    
    (100,215
    )Proceeds Long-term debt
    
    
    1,255,925
    
    
    
    930,000Common stock
    
    
    151,379
    
    
    
    132,107Redemptions Long-term debt
    
    
    (193,417
    )
    
    
    (4,653
    )Preferred and preference stock
    
    
    
    
    
    
    (125,000
    )Payment of common stock dividends
    
    
    (326,780
    )
    
    
    (307,960
    )Payment of dividends on preferred and preference stock of
subsidiaries
    
    
    (16,265
    )
    
    
    (17,060
    )Other
    
    
    (15,618
    )
    
    
    (770
    )Net cash provided from financing activities
    
    
    976,498
    
    
    
    506,449Net Change in Cash and Cash Equivalents
    
    
    255,599
    
    
    
    48,299Cash and Cash Equivalents at Beginning of Period
    
    
    416,581
    
    
    
    200,550Cash and Cash Equivalents at End of Period
    
    $
    672,180
    
    
    $
    248,849Supplemental Cash Flow Information:Cash paid during the period for Interest (net of $18,298 and $21,800 capitalized for
2009 and 2008, respectively)
    
    $
    178,560
    
    
    $
    197,570Income taxes (net of refunds)
    
    $
    172,517
    
    
    $
    3,719
  10




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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
  At March 31,
    
    
    At December 31,Assets
    
    2009
    
    
    2008(in thousands)Current Assets:Cash and cash equivalents
    
    $
    672,180
    
    
    $
    416,581Restricted cash and cash equivalents
    
    
    131,609
    
    
    
    102,537Receivables Customer accounts receivable
    
    
    996,427
    
    
    
    1,053,674Unbilled revenues
    
    
    287,126
    
    
    
    320,439Under recovered regulatory clause revenues
    
    
    677,665
    
    
    
    646,318Other accounts and notes receivable
    
    
    353,119
    
    
    
    301,028Accumulated provision for uncollectible accounts
    
    
    (26,308
    )
    
    
    (26,326
    )Fossil fuel stock, at average cost
    
    
    1,175,688
    
    
    
    1,018,314Materials and supplies, at average cost
    
    
    768,777
    
    
    
    756,746Vacation pay
    
    
    134,581
    
    
    
    140,283Prepaid expenses
    
    
    337,898
    
    
    
    301,570Other regulatory assets
    
    
    378,662
    
    
    
    275,424Other
    
    
    61,324
    
    
    
    51,044Total current assets
    
    
    5,948,748
    
    
    
    5,357,632Property, Plant, and Equipment:In service
    
    
    51,127,521
    
    
    
    50,618,219Less accumulated depreciation
    
    
    18,517,683
    
    
    
    18,285,80032,609,838
    
    
    
    32,332,419Nuclear fuel, at amortized cost
    
    
    547,981
    
    
    
    510,274Construction work in progress
    
    
    3,609,909
    
    
    
    3,035,795Total property, plant, and equipment
    
    
    36,767,728
    
    
    
    35,878,488Other Property and Investments:Nuclear decommissioning trusts, at fair value
    
    
    809,181
    
    
    
    864,396Leveraged leases
    
    
    906,805
    
    
    
    897,338Other
    
    
    223,069
    
    
    
    226,757Total other property and investments
    
    
    1,939,055
    
    
    
    1,988,491Deferred Charges and Other Assets:Deferred charges related to income taxes
    
    
    989,180
    
    
    
    972,781Unamortized debt issuance expense
    
    
    215,783
    
    
    
    207,763Unamortized loss on reacquired debt
    
    
    265,711
    
    
    
    270,919Deferred under recovered regulatory clause revenues
    
    
    366,045
    
    
    
    606,483Other regulatory assets
    
    
    2,670,820
    
    
    
    2,636,217Other
    
    
    394,044
    
    
    
    428,432Total deferred charges and other assets
    
    
    4,901,583
    
    
    
    5,122,595Total Assets
    
    $
    49,557,114
    
    
    $
    48,347,206
  11




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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
 At March 31,
    
    
    At December 31,Liabilities and Stockholders Equity
    
    2009
    
    
    2008(in thousands)Current Liabilities:Securities due within one year
    
    $
    686,441
    
    
    $
    616,415Notes payable
    
    
    1,074,711
    
    
    
    953,437Accounts payable
    
    
    1,639,403
    
    
    
    1,249,694Customer deposits
    
    
    312,993
    
    
    
    302,495Accrued taxes Income taxes
    
    
    221,875
    
    
    
    195,922Unrecognized tax benefits
    
    
    143,858
    
    
    
    131,641Other
    
    
    183,549
    
    
    
    396,206Accrued interest
    
    
    225,139
    
    
    
    195,500Accrued vacation pay
    
    
    169,121
    
    
    
    178,519Accrued compensation
    
    
    131,092
    
    
    
    446,718Liabilities from risk management activities
    
    
    354,349
    
    
    
    260,977Other
    
    
    315,766
    
    
    
    298,711Total current liabilities
    
    
    5,458,297
    
    
    
    5,226,235Long-term Debt
    
    
    17,805,963
    
    
    
    16,816,438Deferred Credits and Other Liabilities:Accumulated deferred income taxes
    
    
    6,064,938
    
    
    
    6,080,104Deferred credits related to income taxes
    
    
    254,883
    
    
    
    259,156Accumulated deferred investment tax credits
    
    
    449,263
    
    
    
    455,398Employee benefit obligations
    
    
    2,056,981
    
    
    
    2,057,424Asset retirement obligations
    
    
    1,199,752
    
    
    
    1,182,769Other cost of removal obligations
    
    
    1,333,078
    
    
    
    1,320,558Other regulatory liabilities
    
    
    251,438
    
    
    
    261,970Other
    
    
    347,950
    
    
    
    329,534Total deferred credits and other liabilities
    
    
    11,958,283
    
    
    
    11,946,913Total Liabilities
    
    
    35,222,543
    
    
    
    33,989,586Redeemable Preferred Stock of Subsidiaries
    
    
    374,496
    
    
    
    374,496Stockholders Equity:Common Stockholders Equity:Common stock, par value $5 per share Authorized  1 billion sharesIssued  March 31, 2009: 782,865,285 Shares; December 31, 2008: 777,615,751 SharesTreasury  March 31, 2009: 431,603 Shares; December 31, 2008: 423,477 SharesPar value
    
    
    3,914,294
    
    
    
    3,888,041Paid-in capital
    
    
    2,036,731
    
    
    
    1,892,802Treasury, at cost
    
    
    (12,949
    )
    
    
    (12,279
    )Retained earnings
    
    
    7,411,087
    
    
    
    7,611,977Accumulated other comprehensive loss
    
    
    (96,455
    )
    
    
    (104,784
    )Total Common Stockholders Equity
    
    
    13,252,708
    
    
    
    13,275,757Preferred and Preference Stock of Subsidiaries
    
    
    707,367
    
    
    
    707,367Total Stockholders Equity
    
    
    13,960,075
    
    
    
    13,983,124Total Liabilities and Stockholders Equity
    
    $
    49,557,114
    
    
    $
    48,347,206
  12




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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
  For the Three MonthsEnded March 31,2009
    
    
    2008(in thousands)Consolidated Net Income
    
    $
    141,916
    
    
    $
    375,399Other comprehensive income (loss):Qualifying hedges:Changes in fair value, net of tax of $762
and $(13,988), respectively
    
    
    1,147
    
    
    
    (22,251
    )Reclassification adjustment for amounts included in net income,
net of tax of $3,833 and $1,778, respectively
    
    
    6,098
    
    
    
    2,775Marketable securities:Change in fair value, net of tax of $91
and $(2,137), respectively
    
    
    734
    
    
    
    (3,101
    )Pension and other post retirement benefit plans:Reclassification adjustment for amounts included in net income,
net of tax of $222 and $259, respectively
    
    
    350
    
    
    
    411Total other comprehensive income (loss)
    
    
    8,329
    
    
    
    (22,166
    )Dividends on
preferred and preference stock of subsidiaries
    
    
    (16,195
    )
    
    
    (16,195
    )Comprehensive Income
    
    $
    134,050
    
    
    $
    337,038
  13




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
    OVERVIEW
   RESULTS OF OPERATIONS
 Net Income
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$(233.5)
    
    (65.0)
  Retail Revenues
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$59.0
    
    2.0
  First Quarter2009(in millions)
    
    (% change)Retail  prior year
    
    $
    3,005.6Estimated change in Rates and pricing
    
    
    78.4
    
    
    
    2.6Sales growth (decline)
    
    
    (56.8
    )
    
    
    (1.9
    )Weather
    
    
    (4.0
    )
    
    
    (0.1
    )Fuel and other cost recovery
    
    
    41.5
    
    
    
    1.4Retail  current year
    
    $
    3,064.7
    
    
    
    2.0
    %
 14




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
     Wholesale Revenues
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$(62.3)
    
    (12.1)
  Other Electric Revenues
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$(7.4)
    
    (5.7)
  15




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
  Other Revenues
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$(6.0)
    
    (18.0)
  Fuel and Purchased Power Expenses
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    
    (% change)Fuel
    
    $
    (45.7
    )
    
    
    (3.1
    )Purchased power
    
    
    14.7
    
    
    
    15.9Total fuel and purchased power expenses
    
    $
    (31.0
    )
    First Quarter
    
    
    First Quarter
    
    
    PercentAverage Cost
    
    2009
    
    
    2008
    
    
    Change(cents per net KWH)Fuel
    
    
    3.40
    
    
    
    3.07
    
    
    
    10.8Purchased power
    
    
    5.09
    
    
    
    6.35
    
    
    
    (19.8)
  Other Operations and Maintenance Expenses
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$(25.7)
    
    (2.9)
 16




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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
  MC Asset Recovery Litigation Settlement
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$202.0
    
    N/M
   Depreciation and Amortization
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$45.9
    
    13.3
  Taxes Other Than Income Taxes
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$10.6
    
    5.6
  Other Income (Expense), Net
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$(13.8)
    
    N/M
  17




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
  Income Taxes
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$(10.9)
    
    (6.2)
  FUTURE EARNINGS POTENTIAL
  Environmental Matters
  18




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
 Water Quality
  Global Climate Issues
  FERC and State PSC Matters
 Market-Based Rate Authority
  19




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
  Retail Fuel Cost Recovery
   Income Tax Matters
 Legislation
  Construction Projects
 Integrated Coal Gasification Combined Cycle
    20




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
     Nuclear
    Other Matters
 
 21




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
  ACCOUNTING POLICIES
 Application of Critical Accounting Policies and Estimates
  FINANCIAL CONDITION AND LIQUIDITY
 Overview
 1 4
  22




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
    Capital Requirements and Contractual Obligations
  Sources of Capital
  23




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
   Off-Balance Sheet Financing Arrangements
  Credit Rating Risk
  24




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
 Market Price Risk
    First Quarter2009ChangesFair Value(in millions)Contracts outstanding at the beginning of the period, assets (liabilities), net
    
    $
    (285
    )Contracts realized or settled
    
    
    60Current period changes(a)
    
    
    (198
    )Contracts outstanding at the end of the period, assets (liabilities), net
    
    $
    (423
    )
 (a)
    
    Current period changes also include the changes in fair value of new contracts entered into
during the period, if any.
  25




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
  March 31, 2009(in millions)Regulatory hedges
    
    $
    (427
    )Cash flow hedges
    
    
    1Not designated
    
    
    3Total fair value
    
    $
    (423
    )
    March 31, 2009Fair Value MeasurementsTotal
    
    MaturityFair Value
    
    Year 1
    
    Years 2&3
    
    Years 4&5(in millions)Level 1
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Level 2
    
    
    (423
    )
    
    
    (319
    )
    
    
    (99
    )
    
    
    (5
    )Level 3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Fair value of
contracts
outstanding at end
of period
    
    $
    (423
    )
    
    $
    (319
    )
    
    $
    (99
    )
    
    $
    (5
    )
   26




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
 Financing Activities
   27




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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.
     28




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ALABAMA POWER COMPANY
 29




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##### Table of Contents



ALABAMA POWER COMPANY
  For the Three MonthsEnded March 31,2009
    
    
    2008(in thousands)Operating Revenues:Retail revenues
    
    $
    1,058,137
    
    
    $
    1,034,254Wholesale revenues Non-affiliates
    
    
    158,695
    
    
    
    170,040Affiliates
    
    
    84,352
    
    
    
    83,692Other revenues
    
    
    38,582
    
    
    
    48,693Total operating revenues
    
    
    1,339,766
    
    
    
    1,336,679Operating Expenses:Fuel
    
    
    483,233
    
    
    
    453,149Purchased power Non-affiliates
    
    
    15,544
    
    
    
    11,219Affiliates
    
    
    41,560
    
    
    
    88,707Other operations and maintenance
    
    
    276,859
    
    
    
    309,550Depreciation and amortization
    
    
    143,416
    
    
    
    124,637Taxes other than income taxes
    
    
    80,281
    
    
    
    75,771Total operating expenses
    
    
    1,040,893
    
    
    
    1,063,033Operating Income
    
    
    298,873
    
    
    
    273,646Other Income and (Expense):Allowance for equity funds used during construction
    
    
    16,725
    
    
    
    11,304Interest income
    
    
    4,122
    
    
    
    4,642Interest expense, net of amounts capitalized
    
    
    (72,207
    )
    
    
    (68,976
    )Other income (expense), net
    
    
    (6,372
    )
    
    
    (7,222
    )Total other income and (expense)
    
    
    (57,732
    )
    
    
    (60,252
    )Earnings Before Income Taxes
    
    
    241,141
    
    
    
    213,394Income taxes
    
    
    85,009
    
    
    
    73,428Net Income
    
    
    156,132
    
    
    
    139,966Dividends on Preferred and Preference Stock
    
    
    9,866
    
    
    
    9,866Net Income After Dividends on Preferred and Preference Stock
    
    $
    146,266
    
    
    $
    130,100
 
  For the Three MonthsEnded March 31,2009
    
    
    2008(in thousands)Net Income After Dividends on Preferred and Preference Stock
    
    $
    146,266
    
    
    $
    130,100Other comprehensive income (loss):Qualifying hedges:Changes in fair value, net of tax of $(886)
and $(2,211), respectively
    
    
    (1,457
    )
    
    
    (3,637
    )Reclassification adjustment for amounts included in net
income, net of tax of $1,061 and $185, respectively
    
    
    1,745
    
    
    
    305Total other comprehensive income (loss)
    
    
    288
    
    
    
    (3,332
    )COMPREHENSIVE INCOME
    
    $
    146,554
    
    
    $
    126,768
  30




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ALABAMA POWER COMPANY
  For the Three MonthsEnded March 31,2009
    
    
    2008(in thousands)Operating Activities:Net income
    
    $
    156,132
    
    
    $
    139,966Adjustments to reconcile net income
to net cash provided from operating activities Depreciation and amortization
    
    
    164,488
    
    
    
    146,208Deferred income taxes and investment tax credits, net
    
    
    (25,795
    )
    
    
    4,513Allowance for equity funds used during construction
    
    
    (16,725
    )
    
    
    (11,304
    )Pension, postretirement, and other employee benefits
    
    
    (4,933
    )
    
    
    (3,995
    )Stock option expense
    
    
    2,851
    
    
    
    2,178Tax benefit of stock options
    
    
    24
    
    
    
    347Other, net
    
    
    8,834
    
    
    
    9,223Changes in certain current assets and liabilities Receivables
    
    
    173,032
    
    
    
    62,227Fossil fuel stock
    
    
    (11,654
    )
    
    
    (34,750
    )Materials and supplies
    
    
    (6,775
    )
    
    
    (7,751
    )Other current assets
    
    
    (73,518
    )
    
    
    (63,757
    )Accounts payable
    
    
    (136,678
    )
    
    
    (124,727
    )Accrued taxes
    
    
    123,746
    
    
    
    79,338Accrued compensation
    
    
    (64,030
    )
    
    
    (64,851
    )Other current liabilities
    
    
    7,928
    
    
    
    9,357Net cash provided from operating activities
    
    
    296,927
    
    
    
    142,222Investing Activities:Property additions
    
    
    (337,984
    )
    
    
    (349,683
    )Investment in restricted cash from pollution control revenue bonds
    
    
    (160
    )
    
    
    (145
    )Distribution of restricted cash from pollution control revenue bonds
    
    
    13,774
    
    
    
    19,622Nuclear decommissioning trust fund purchases
    
    
    (60,600
    )
    
    
    (46,941
    )Nuclear decommissioning trust fund sales
    
    
    60,600
    
    
    
    46,941Cost of removal, net of salvage
    
    
    (5,109
    )
    
    
    (8,863
    )Other
    
    
    3,025
    
    
    
    13,453Net cash used for investing activities
    
    
    (326,454
    )
    
    
    (325,616
    )Financing Activities:Decrease in notes payable, net
    
    
    (24,995
    )
    
    
    Proceeds Common stock issued to parent
    
    
    
    
    
    
    150,000Capital contributions
    
    
    6,682
    
    
    
    6,016Gross excess tax benefit of stock options
    
    
    47
    
    
    
    607Senior notes
    
    
    500,000
    
    
    
    300,000Redemptions Preferred stock
    
    
    
    
    
    
    (125,000
    )Payment of preferred and preference stock dividends
    
    
    (9,868
    )
    
    
    (11,275
    )Payment of common stock dividends
    
    
    (130,700
    )
    
    
    (122,825
    )Other
    
    
    (5,869
    )
    
    
    (1,684
    )Net cash provided from financing activities
    
    
    335,297
    
    
    
    195,839Net Change in Cash and Cash Equivalents
    
    
    305,770
    
    
    
    12,445Cash and Cash Equivalents at Beginning of Period
    
    
    28,181
    
    
    
    73,616Cash and Cash Equivalents at End of Period
    
    $
    333,951
    
    
    $
    86,061Supplemental Cash Flow Information:Cash paid during the period for Interest (net of $6,992 and $5,130 capitalized for 2009 and 2008, respectively)
    
    $
    54,875
    
    
    $
    63,324Income taxes (net of refunds)
    
    $
    (640
    )
    
    $
    1,550
  31




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ALABAMA POWER COMPANY
  At March 31,
    
    
    At December 31,Assets
    
    2009
    
    
    2008(in thousands)Current Assets:Cash and cash equivalents
    
    $
    333,951
    
    
    $
    28,181Restricted cash and cash equivalents
    
    
    66,466
    
    
    
    80,079Receivables Customer accounts receivable
    
    
    343,870
    
    
    
    350,410Unbilled revenues
    
    
    89,450
    
    
    
    98,921Under recovered regulatory clause revenues
    
    
    204,804
    
    
    
    153,899Other accounts and notes receivable
    
    
    29,649
    
    
    
    44,645Affiliated companies
    
    
    60,765
    
    
    
    70,612Accumulated provision for uncollectible accounts
    
    
    (9,161
    )
    
    
    (8,882
    )Fossil fuel stock, at average cost
    
    
    330,134
    
    
    
    322,089Materials and supplies, at average cost
    
    
    312,416
    
    
    
    305,880Vacation pay
    
    
    52,701
    
    
    
    52,577Prepaid expenses
    
    
    130,271
    
    
    
    88,219Other regulatory assets
    
    
    105,654
    
    
    
    74,825Other
    
    
    12,772
    
    
    
    12,915Total current assets
    
    
    2,063,742
    
    
    
    1,674,370Property, Plant, and Equipment:In service
    
    
    17,789,435
    
    
    
    17,635,129Less accumulated provision for depreciation
    
    
    6,346,622
    
    
    
    6,259,72011,442,813
    
    
    
    11,375,409Nuclear fuel, at amortized cost
    
    
    255,818
    
    
    
    231,862Construction work in progress
    
    
    1,243,412
    
    
    
    1,092,516Total property, plant, and equipment
    
    
    12,942,043
    
    
    
    12,699,787Other Property and Investments:Equity investments in unconsolidated subsidiaries
    
    
    51,745
    
    
    
    50,912Nuclear decommissioning trusts, at fair value
    
    
    376,606
    
    
    
    403,966Other
    
    
    63,496
    
    
    
    62,782Total other property and investments
    
    
    491,847
    
    
    
    517,660Deferred Charges and Other Assets:Deferred charges related to income taxes
    
    
    369,991
    
    
    
    362,596Prepaid pension costs
    
    
    176,613
    
    
    
    166,334Deferred under recovered regulatory clause revenues
    
    
    
    
    
    
    180,874Other regulatory assets
    
    
    761,831
    
    
    
    732,367Other
    
    
    206,178
    
    
    
    202,018Total deferred charges and other assets
    
    
    1,514,613
    
    
    
    1,644,189Total Assets
    
    $
    17,012,245
    
    
    $
    16,536,006
  32




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ALABAMA POWER COMPANY
 At March 31,
    
    
    At December 31,Liabilities and Stockholders Equity
    
    2009
    
    
    2008(in thousands)Current Liabilities:Securities due within one year
    
    $
    250,040
    
    
    $
    250,079Notes payable
    
    
    
    
    
    
    24,995Accounts payable Affiliated
    
    
    140,190
    
    
    
    178,708Other
    
    
    272,427
    
    
    
    358,176Customer deposits
    
    
    81,730
    
    
    
    77,205Accrued taxes Income taxes
    
    
    143,306
    
    
    
    18,299Other
    
    
    49,447
    
    
    
    30,372Accrued interest
    
    
    67,393
    
    
    
    56,375Accrued vacation pay
    
    
    44,217
    
    
    
    44,217Accrued compensation
    
    
    26,973
    
    
    
    91,856Liabilities from risk management activities
    
    
    116,330
    
    
    
    83,873Other
    
    
    43,075
    
    
    
    53,777Total current liabilities
    
    
    1,235,128
    
    
    
    1,267,932Long-term Debt
    
    
    6,103,870
    
    
    
    5,604,791Deferred Credits and Other Liabilities:Accumulated deferred income taxes
    
    
    2,192,025
    
    
    
    2,243,117Deferred credits related to income taxes
    
    
    90,806
    
    
    
    90,083Accumulated deferred investment tax credits
    
    
    170,653
    
    
    
    172,638Employee benefit obligations
    
    
    399,844
    
    
    
    396,923Asset retirement obligations
    
    
    468,632
    
    
    
    461,284Other cost of removal obligations
    
    
    655,389
    
    
    
    634,792Other regulatory liabilities
    
    
    79,371
    
    
    
    79,151Other
    
    
    51,638
    
    
    
    45,858Total deferred credits and other liabilities
    
    
    4,108,358
    
    
    
    4,123,846Total Liabilities
    
    
    11,447,356
    
    
    
    10,996,569Preferred and Preference Stock
    
    
    685,127
    
    
    
    685,127Common Stockholders Equity:Common stock, par value $40 per share Authorized - 40,000,000 sharesOutstanding - 25,475,000 shares
    
    
    1,019,000
    
    
    
    1,019,000Paid-in capital
    
    
    2,101,062
    
    
    
    2,091,462Retained earnings
    
    
    1,769,361
    
    
    
    1,753,797Accumulated other comprehensive loss
    
    
    (9,661
    )
    
    
    (9,949
    )Total common stockholders equity
    
    
    4,879,762
    
    
    
    4,854,310Total Liabilities and Stockholders Equity
    
    $
    17,012,245
    
    
    $
    16,536,006
  33




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##### Table of Contents



ALABAMA POWER COMPANY
    OVERVIEW
   RESULTS OF OPERATIONS
 Net Income
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$16.2
    
    12.4
  Retail Revenues
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$23.9
    
    2.3
  34




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##### Table of Contents



ALABAMA POWER COMPANY
  First Quarter2009(in millions)
    
    (% change)Retail  prior year
    
    $
    1,034.3Estimated
change in Rates and pricing
    
    
    49.6
    
    
    
    4.8Sales growth (decline)
    
    
    (32.4
    )
    
    
    (3.1
    )Weather
    
    
    (0.7
    )
    
    
    (0.1
    )Fuel and other cost recovery
    
    
    7.3
    
    
    
    0.7Retail  current year
    
    $
    1,058.1
    
    
    
    2.3
    %
     Wholesale Revenues  Non-Affiliates
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$(11.3)
    
    (6.7)
  35




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##### Table of Contents



ALABAMA POWER COMPANY
 Other Revenues
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$(10.1)
    
    (20.8)
   Fuel and Purchased Power Expenses
 First Quarter 2009
 vs.
 First Quarter 2008(change in millions)
    
    (% change)Fuel
    
    $
    30.1
    
    
    
    6.6Purchased
power  non-affiliates
    
    
    4.3
    
    
    
    38.6Purchased
power  affiliates
    
    
    (47.1
    )
    
    
    (53.1
    )Total fuel and purchased power expenses
    
    $
    (12.7
    )
    First Quarter
    
    First Quarter
    
    PercentAverage Cost
    
    2009
    
    2008
    
    Change(cents per net KWH)Fuel
    
    
    2.92
    
    
    
    2.60
    
    
    
    12.3Purchased power
    
    
    6.14
    
    
    
    5.67
    
    
    
    8.3
  36




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##### Table of Contents



ALABAMA POWER COMPANY
 Non-Affiliates
   Affiliates
   Other Operations and Maintenance Expenses
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$(32.7)
    
    (10.6)
  Depreciation and Amortization
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$18.8
    
    15.1
  37




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##### Table of Contents



ALABAMA POWER COMPANY
 Allowance for Equity Funds Used During Construction
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$5.4
    
    48.0
  Income Taxes
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$11.6
    
    15.8
  FUTURE EARNINGS POTENTIAL
   Environmental Matters
  38




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##### Table of Contents



ALABAMA POWER COMPANY
 Water Quality
  Global Climate Issues
  FERC and Alabama PSC Matters
 Market-Based Rate Authority
  39




---



##### Table of Contents



ALABAMA POWER COMPANY
  Retail Fuel Cost Recovery
   Natural Disaster Cost Recovery
  Steam Service
  Income Tax Matters
 Legislation
  40




---



##### Table of Contents



ALABAMA POWER COMPANY
  Other Matters
   ACCOUNTING POLICIES
 Application of Critical Accounting Policies and Estimates
  FINANCIAL CONDITION AND LIQUIDITY
 Overview
  41




---



##### Table of Contents



ALABAMA POWER COMPANY
 1 4
    Capital Requirements and Contractual Obligations
  42




---



##### Table of Contents



ALABAMA POWER COMPANY
 Sources of Capital
   Credit Rating Risk
  Market Price Risk
  43




---



##### Table of Contents



ALABAMA POWER COMPANY
    First Quarter2009ChangesFair Value(in millions)Contracts outstanding at the beginning of the period, assets (liabilities), net
    
    $
    (91.9
    )Contracts realized or settled
    
    
    23.2Current period changes(a)
    
    
    (61.5
    )Contracts outstanding at the end of the period, assets (liabilities), net
    
    $
    (130.2
    )
 
 (a)
    
    Current period changes also include the changes in fair value of new contracts entered into
during the period, if any.   March 31, 2009(in millions)Regulatory hedges
    
    $
    (130.2
    )Cash flow hedges
    
    
    Not designated
    
    
    -Total fair value
    
    $
    (130.2
    )
  44




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##### Table of Contents



ALABAMA POWER COMPANY
   March 31, 2009Fair Value MeasurementsTotal
    
    MaturityFair Value
    
    Year 1
    
    Years 2&3
    
    Years 4&5(in millions)Level 1
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Level 2
    
    
    (130.2
    )
    
    
    (105.4
    )
    
    
    (24.8
    )
    
    
    Level 3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Fair value of
contracts
outstanding at end
of period
    
    $
    (130.2
    )
    
    $
    (105.4
    )
    
    $
    (24.8
    )
    
    $
    
   Financing Activities
   45




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##### Table of Contents



GEORGIA POWER COMPANY
 46




---



##### Table of Contents



GEORGIA POWER COMPANY
  For the Three MonthsEnded March 31,2009
    
    
    2008(in thousands)Operating Revenues:Retail revenues
    
    $
    1,592,395
    
    
    $
    1,575,007Wholesale revenues Non-affiliates
    
    
    95,986
    
    
    
    152,692Affiliates
    
    
    15,210
    
    
    
    73,910Other revenues
    
    
    62,250
    
    
    
    63,238Total operating revenues
    
    
    1,765,841
    
    
    
    1,864,847Operating Expenses:Fuel
    
    
    600,490
    
    
    
    637,923Purchased power Non-affiliates
    
    
    61,953
    
    
    
    58,031Affiliates
    
    
    197,223
    
    
    
    252,935Other operations and maintenance
    
    
    390,493
    
    
    
    368,815Depreciation and amortization
    
    
    167,111
    
    
    
    150,608Taxes other than income taxes
    
    
    76,248
    
    
    
    71,286Total operating expenses
    
    
    1,493,518
    
    
    
    1,539,598Operating Income
    
    
    272,323
    
    
    
    325,249Other Income and (Expense):Allowance for equity funds used during construction
    
    
    20,754
    
    
    
    27,757Interest income
    
    
    1,230
    
    
    
    787Interest expense, net of amounts capitalized
    
    
    (98,390
    )
    
    
    (86,338
    )Other income (expense), net
    
    
    (6,720
    )
    
    
    (3,293
    )Total other income and (expense)
    
    
    (83,126
    )
    
    
    (61,087
    )Earnings Before Income Taxes
    
    
    189,197
    
    
    
    264,162Income taxes
    
    
    62,628
    
    
    
    83,801Net Income
    
    
    126,569
    
    
    
    180,361Dividends on Preferred and Preference Stock
    
    
    4,345
    
    
    
    4,345Net Income After Dividends on Preferred and Preference Stock
    
    $
    122,224
    
    
    $
    176,016
 
  For the Three MonthsEnded March 31,2009
    
    
    2008(in thousands)Net Income After Dividends on Preferred and Preference Stock
    
    $
    122,224
    
    
    $
    176,016Other comprehensive income (loss):Qualifying hedges:Changes in fair value, net of tax of $1,180 and $(6,043), respectively
    
    
    1,870
    
    
    
    (9,580
    )Reclassification adjustment for amounts included in net
income, net of tax of $1,743 and $206, respectively
    
    
    2,763
    
    
    
    327Total other comprehensive income (loss)
    
    
    4,633
    
    
    
    (9,253
    )COMPREHENSIVE INCOME
    
    $
    126,857
    
    
    $
    166,763
  47




---



##### Table of Contents



GEORGIA POWER COMPANY
  For the Three MonthsEnded March 31,2009
    
    
    2008(in thousands)Operating Activities:Net income
    
    $
    126,569
    
    
    $
    180,361Adjustments to reconcile net income
to net cash provided from operating activities Depreciation and amortization
    
    
    199,773
    
    
    
    178,735Deferred income taxes and investment tax credits
    
    
    (7,130
    )
    
    
    (5,709
    )Deferred revenues
    
    
    (7,685
    )
    
    
    35,046Deferred expenses
    
    
    26,387
    
    
    
    27,996Allowance for equity funds used during construction
    
    
    (20,754
    )
    
    
    (27,757
    )Pension, postretirement, and other employee benefits
    
    
    (386
    )
    
    
    9,863Hedge settlements
    
    
    (16,167
    )
    
    
    (15,816
    )Other, net
    
    
    26,708
    
    
    
    (25,593
    )Changes in certain current assets and liabilities Receivables
    
    
    13,563
    
    
    
    77,074Fossil fuel stock
    
    
    (112,255
    )
    
    
    1,293Prepaid income taxes
    
    
    (5,139
    )
    
    
    22,380Other current assets
    
    
    4,562
    
    
    
    (4,042
    )Accounts payable
    
    
    174,347
    
    
    
    (44,570
    )Accrued taxes
    
    
    (135,100
    )
    
    
    (79,097
    )Accrued compensation
    
    
    (96,144
    )
    
    
    (72,174
    )Other current liabilities
    
    
    61,917
    
    
    
    22,630Net cash provided from operating activities
    
    
    233,066
    
    
    
    280,620Investing Activities:Property additions
    
    
    (640,486
    )
    
    
    (517,606
    )Distribution of restricted cash from pollution control revenue bonds
    
    
    9,305
    
    
    
    16,094Nuclear decommissioning trust fund purchases
    
    
    (318,732
    )
    
    
    (113,811
    )Nuclear decommissioning trust fund sales
    
    
    320,681
    
    
    
    106,931Cost of removal, net of salvage
    
    
    (16,368
    )
    
    
    (11,346
    )Change in construction payables, net of joint owner portion
    
    
    55,767
    
    
    
    8,608Other
    
    
    14,125
    
    
    
    (11,239
    )Net cash used for investing activities
    
    
    (575,708
    )
    
    
    (522,369
    )Financing Activities:Decrease in notes payable, net
    
    
    (76,509
    )
    
    
    (359,113
    )Proceeds Capital contributions from parent company
    
    
    280,016
    
    
    
    241,800Senior notes
    
    
    500,000
    
    
    
    250,000Other long-term debt
    
    
    750
    
    
    
    300,000Redemptions Senior notes
    
    
    (150,361
    )
    
    
    (417
    )Payment of preferred and preference stock dividends
    
    
    (4,413
    )
    
    
    (3,947
    )Payment of common stock dividends
    
    
    (184,725
    )
    
    
    (180,300
    )Other
    
    
    (7,554
    )
    
    
    (3,313
    )Net cash provided from financing activities
    
    
    357,204
    
    
    
    244,710Net Change in Cash and Cash Equivalents
    
    
    14,562
    
    
    
    2,961Cash and Cash Equivalents at Beginning of Period
    
    
    132,739
    
    
    
    15,392Cash and Cash Equivalents at End of Period
    
    $
    147,301
    
    
    $
    18,353Supplemental Cash Flow Information:Cash paid during the period for Interest (net of $9,143 and $11,837 capitalized for 2009 and 2008, respectively)
    
    $
    60,905
    
    
    $
    70,452Income taxes (net of refunds)
    
    $
    13,330
    
    
    $
    450
  48




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##### Table of Contents



GEORGIA POWER COMPANY
  At March 31,
    
    
    At December 31,Assets
    
    2009
    
    
    2008(in thousands)Current Assets:Cash and cash equivalents
    
    $
    147,301
    
    
    $
    132,739Restricted cash and cash equivalents
    
    
    15,879
    
    
    
    22,381Receivables Customer accounts receivable
    
    
    505,440
    
    
    
    554,219Unbilled revenues
    
    
    131,520
    
    
    
    147,978Under recovered regulatory clause revenues
    
    
    351,964
    
    
    
    338,780Other accounts and notes receivable
    
    
    228,555
    
    
    
    97,899Affiliated companies
    
    
    20,874
    
    
    
    13,091Accumulated provision for uncollectible accounts
    
    
    (11,291
    )
    
    
    (10,732
    )Fossil fuel stock, at average cost
    
    
    597,012
    
    
    
    484,757Materials and supplies, at average cost
    
    
    361,226
    
    
    
    356,537Vacation pay
    
    
    65,390
    
    
    
    71,217Prepaid income taxes
    
    
    71,126
    
    
    
    65,987Other regulatory assets
    
    
    164,748
    
    
    
    118,961Other
    
    
    45,489
    
    
    
    63,464Total current assets
    
    
    2,695,233
    
    
    
    2,457,278Property, Plant, and Equipment:In service
    
    
    24,266,916
    
    
    
    23,975,262Less accumulated provision for depreciation
    
    
    9,204,865
    
    
    
    9,101,47415,062,051
    
    
    
    14,873,788Nuclear fuel, at amortized cost
    
    
    292,163
    
    
    
    278,412Construction work in progress
    
    
    1,773,995
    
    
    
    1,434,989Total property, plant, and equipment
    
    
    17,128,209
    
    
    
    16,587,189Other Property and Investments:Equity investments in unconsolidated subsidiaries
    
    
    57,796
    
    
    
    57,163Nuclear decommissioning trusts, at fair value
    
    
    432,575
    
    
    
    460,430Other
    
    
    37,970
    
    
    
    40,945Total other property and investments
    
    
    528,341
    
    
    
    558,538Deferred Charges and Other Assets:Deferred charges related to income taxes
    
    
    578,218
    
    
    
    572,528Deferred under recovered regulatory clause revenues
    
    
    366,045
    
    
    
    425,609Other regulatory assets
    
    
    1,435,775
    
    
    
    1,449,352Other
    
    
    205,278
    
    
    
    265,174Total deferred charges and other assets
    
    
    2,585,316
    
    
    
    2,712,663Total Assets
    
    $
    22,937,099
    
    
    $
    22,315,668
  49




---



##### Table of Contents



GEORGIA POWER COMPANY
  At March 31,
    
    
    At December 31,Liabilities and Stockholders Equity
    
    2009
    
    
    2008(in thousands)Current Liabilities:Securities due within one year
    
    $
    380,323
    
    
    $
    280,443Notes payable
    
    
    280,586
    
    
    
    357,095Accounts payable Affiliated
    
    
    195,395
    
    
    
    260,545Other
    
    
    748,629
    
    
    
    422,485Customer deposits
    
    
    191,356
    
    
    
    186,919Accrued taxes Income taxes
    
    
    102,591
    
    
    
    70,916Unrecognized tax benefits
    
    
    141,095
    
    
    
    128,712Other
    
    
    91,672
    
    
    
    278,172Accrued interest
    
    
    107,411
    
    
    
    79,432Accrued vacation pay
    
    
    51,563
    
    
    
    57,643Accrued compensation
    
    
    43,734
    
    
    
    135,191Liabilities from risk management activities
    
    
    143,271
    
    
    
    113,432Other
    
    
    186,851
    
    
    
    136,176Total current liabilities
    
    
    2,664,477
    
    
    
    2,507,161Long-term Debt
    
    
    7,254,092
    
    
    
    7,006,275Deferred Credits and Other Liabilities:Accumulated deferred income taxes
    
    
    3,076,923
    
    
    
    3,064,580Deferred credits related to income taxes
    
    
    136,630
    
    
    
    140,933Accumulated deferred investment tax credits
    
    
    252,788
    
    
    
    256,218Employee benefit obligations
    
    
    882,380
    
    
    
    882,965Asset retirement obligations
    
    
    696,930
    
    
    
    688,019Other cost of removal obligations
    
    
    385,140
    
    
    
    396,947Other regulatory liabilities
    
    
    97,502
    
    
    
    115,865Other
    
    
    119,370
    
    
    
    111,505Total deferred credits and other liabilities
    
    
    5,647,663
    
    
    
    5,657,032Total Liabilities
    
    
    15,566,232
    
    
    
    15,170,468Preferred 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
    
    
    3,939,265
    
    
    
    3,655,731Retained earnings
    
    
    2,795,289
    
    
    
    2,857,789Accumulated other comprehensive loss
    
    
    (28,117
    )
    
    
    (32,750
    )Total common stockholders equity
    
    
    7,104,910
    
    
    
    6,879,243Total Liabilities and Stockholders Equity
    
    $
    22,937,099
    
    
    $
    22,315,668
  50




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##### Table of Contents



GEORGIA POWER COMPANY
 
  OVERVIEW
  Form 10-K.
 RESULTS OF OPERATIONS
 Net Income
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$(53.8)
    
    (30.6)
  Retail Revenues
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$17.4
    
    1.1
  51




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##### Table of Contents



GEORGIA POWER COMPANY
  First Quarter2009(in millions)
    
    (% change)Retail  prior year
    
    $
    1,575.0Estimated
change in Rates and pricing
    
    
    19.7
    
    
    
    1.3Sales growth (decline)
    
    
    (18.1
    )
    
    
    (1.2
    )Weather
    
    
    (0.6
    )
    
    
    Fuel cost recovery
    
    
    16.4
    
    
    
    1.0Retail  current year
    
    $
    1,592.4
    
    
    
    1.1
    %
    Wholesale Revenues  Non-Affiliates
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$(56.7)
    
    (37.1)
  52




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##### Table of Contents



GEORGIA POWER COMPANY
 Wholesale Revenues  Affiliates
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$(58.7)
    
    (79.4)
  Fuel and Purchased Power Expenses
 First Quarter 2009 
vs.
 First Quarter 2008(change in millions)
    
    (% change)Fuel
    
    $
    (37.4
    )
    
    
    (5.9
    )Purchased power  non-affiliates
    
    
    3.9
    
    
    
    6.8Purchased power  affiliates
    
    
    (55.7
    )
    
    
    (22.0
    )Total fuel and purchased power expenses
    
    $
    (89.2
    )
   First Quarter
    
    First Quarter
    
    PercentAverage Cost
    
    2009
    
    2008
    
    Change(cents per net KWH)Fuel
    
    
    3.23
    
    
    
    2.84
    
    
    
    13.7Purchased power
    
    
    6.40
    
    
    
    7.32
    
    
    
    (12.6
    )
   53




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##### Table of Contents



GEORGIA POWER COMPANY
 Non-Affiliates
   Affiliates
   Other Operations and Maintenance Expenses
 First Quarter 2009
vs.
 First Quarter 2008(change in millions)
    
    (% change)$21.7
    
    5.9
  Depreciation and Amortization
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$16.5
    
    11.0
  54




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##### Table of Contents



GEORGIA POWER COMPANY
 Allowance for Equity Funds Used During Construction
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$(7.0)
    
    (25.2)
  Taxes Other Than Income Taxes
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$4.9
    
    7.0
  Income Taxes
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$(21.2)
    
    (25.3)
  FUTURE EARNINGS POTENTIAL
  55




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##### Table of Contents



GEORGIA POWER COMPANY
 Environmental Matters
  Water Quality
  Global Climate Issues
  FERC and Georgia PSC Matters
 Market-Based Rate Authority
  56




---



##### Table of Contents



GEORGIA POWER COMPANY
  Retail Fuel Cost Recovery
   Income Tax Matters
 Legislation
  Construction
 Nuclear
  57




---



##### Table of Contents



GEORGIA POWER COMPANY
   Other
  Other Matters
   ACCOUNTING POLICIES
 Application of Critical Accounting Policies and Estimates
  58




---



##### Table of Contents



GEORGIA POWER COMPANY
 FINANCIAL CONDITION AND LIQUIDITY
 Overview
 3 8
    Capital Requirements and Contractual Obligations
 
 59




---



##### Table of Contents



GEORGIA POWER COMPANY
  Sources of Capital
    Credit Rating Risk
  60




---



##### Table of Contents



GEORGIA POWER COMPANY
  Market Price Risk
    First Quarter2009ChangesFair Value(in millions)Contracts outstanding at the beginning of the period, assets (liabilities), net
    
    $
    (113.2
    )Contracts realized or settled
    
    
    19.8Current period changes(a)
    
    
    (83.2
    )Contracts outstanding at the end of the period, assets (liabilities), net
    
    $
    (176.6
    )
 (a)
    
    Current period changes also include the changes in fair value of new contracts entered into
during the period, if any.
   March 31, 
2009(in millions)Regulatory hedges
    
    $
    (176.6
    )Not designated
    
    
    Total fair value
    
    $
    (176.6
    )
 61




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##### Table of Contents



GEORGIA POWER COMPANY
    March 31, 2009Fair Value MeasurementsTotal
    
    MaturityFair Value
    
    Year 1
    
    Years 2&3
    
    Years 4&5(in millions)Level 1
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Level 2
    
    
    (176.6
    )
    
    
    (135.8
    )
    
    
    (40.8
    )
    
    
    Level 3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Fair value
of contracts
outstanding at end
of period
    
    $
    (176.6
    )
    
    $
    (135.8
    )
    
    $
    (40.8
    )
    
    $
    
   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 31,2009
    
    
    2008(in thousands)Operating Revenues:Retail revenues
    
    $
    238,391
    
    
    $
    227,964Wholesale revenues Non-affiliates
    
    
    21,966
    
    
    
    25,656Affiliates
    
    
    5,360
    
    
    
    42,940Other revenues
    
    
    18,567
    
    
    
    14,975Total operating revenues
    
    
    284,284
    
    
    
    311,535Operating Expenses:Fuel
    
    
    115,553
    
    
    
    150,127Purchased power Non-affiliates
    
    
    4,438
    
    
    
    3,126Affiliates
    
    
    15,381
    
    
    
    8,743Other operations and maintenance
    
    
    72,491
    
    
    
    66,431Depreciation and amortization
    
    
    23,059
    
    
    
    21,704Taxes other than income taxes
    
    
    22,448
    
    
    
    20,696Total operating expenses
    
    
    253,370
    
    
    
    270,827Operating Income
    
    
    30,914
    
    
    
    40,708Other Income and (Expense):Allowance for equity funds used during construction
    
    
    4,818
    
    
    
    1,483Interest income
    
    
    209
    
    
    
    709Interest expense, net of amounts capitalized
    
    
    (9,832
    )
    
    
    (10,996
    )Other income (expense), net
    
    
    (616
    )
    
    
    (666
    )Total other income and (expense)
    
    
    (5,421
    )
    
    
    (9,470
    )Earnings Before Income Taxes
    
    
    25,493
    
    
    
    31,238Income taxes
    
    
    7,400
    
    
    
    10,157Net Income
    
    
    18,093
    
    
    
    21,081Dividends on Preference Stock
    
    
    1,551
    
    
    
    1,551Net Income After Dividends on Preference Stock
    
    $
    16,542
    
    
    $
    19,530
 
  For the Three MonthsEnded March 31,2009
    
    
    2008(in thousands)Net Income After Dividends on Preference Stock
    
    $
    16,542
    
    
    $
    19,530Other comprehensive income (loss):Qualifying hedges:Changes in fair value, net of tax of $- and $(1,481), respectively
    
    
    
    
    
    
    (2,358
    )Reclassification adjustment for amounts included in net
income, net of tax of $105 and $54, respectively
    
    
    167
    
    
    
    87Total other comprehensive income (loss)
    
    
    167
    
    
    
    (2,271
    )COMPREHENSIVE INCOME
    
    $
    16,709
    
    
    $
    17,259
  64




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##### Table of Contents



GULF POWER COMPANY
  For the Three MonthsEnded March 31,2009
    
    
    2008(in thousands)Operating Activities:Net income
    
    $
    18,093
    
    
    $
    21,081Adjustments to reconcile net income
to net cash provided from operating activities Depreciation and amortization
    
    
    24,269
    
    
    
    22,981Deferred income taxes
    
    
    (4,022
    )
    
    
    569Allowance for equity funds used during construction
    
    
    (4,818
    )
    
    
    (1,483
    )Pension, postretirement, and other employee benefits
    
    
    (391
    )
    
    
    1,319Stock option expense
    
    
    479
    
    
    
    408Tax benefit of stock options
    
    
    3
    
    
    
    85Other, net
    
    
    (5,325
    )
    
    
    430Changes in certain current assets and liabilities Receivables
    
    
    32,887
    
    
    
    11,189Fossil fuel stock
    
    
    (18,231
    )
    
    
    (13,622
    )Materials and supplies
    
    
    (205
    )
    
    
    (1,005
    )Prepaid income taxes
    
    
    416
    
    
    
    Property damage cost recovery
    
    
    5,428
    
    
    
    5,742Other current assets
    
    
    916
    
    
    
    1,063Accounts payable
    
    
    (13,344
    )
    
    
    (1,438
    )Accrued taxes
    
    
    6,361
    
    
    
    6,094Accrued compensation
    
    
    (11,576
    )
    
    
    (9,847
    )Other current liabilities
    
    
    5,761
    
    
    
    6,230Net cash provided from operating activities
    
    
    36,701
    
    
    
    49,796Investing Activities:Property additions
    
    
    (109,737
    )
    
    
    (76,305
    )Investment in restricted cash from pollution control revenue bonds
    
    
    (49,188
    )
    
    
    Cost of removal, net of salvage
    
    
    (2,330
    )
    
    
    (3,583
    )Contruction payables
    
    
    2,362
    
    
    
    1,014Other
    
    
    (1,578
    )
    
    
    (54
    )Net cash used for investing activities
    
    
    (160,471
    )
    
    
    (78,928
    )Financing Activities:Decrease in notes payable, net
    
    
    (89,930
    )
    
    
    (21,413
    )Proceeds Common stock issued to parent
    
    
    135,000
    
    
    
    Capital contributions from parent company
    
    
    1,106
    
    
    
    72,106Gross excess tax benefit of stock options
    
    
    9
    
    
    
    194Pollution control revenue bonds
    
    
    130,400
    
    
    
    Payment of preference stock dividends
    
    
    (1,551
    )
    
    
    (1,406
    )Payment of common stock dividends
    
    
    (22,350
    )
    
    
    (20,425
    )Other
    
    
    (847
    )
    
    
    (271
    )Net cash provided from financing activities
    
    
    151,837
    
    
    
    28,785Net Change in Cash and Cash Equivalents
    
    
    28,067
    
    
    
    (347
    )Cash and Cash Equivalents at Beginning of Period
    
    
    3,443
    
    
    
    5,348Cash and Cash Equivalents at End of Period
    
    $
    31,510
    
    
    $
    5,001Supplemental Cash Flow Information:Cash paid during the period for Interest (net of $1,920 and $654 capitalized for 2009 and 2008, respectively)
    
    $
    8,347
    
    
    $
    8,241Income taxes (net of refunds)
    
    $
    3,281
    
    
    $
    1,200
  65




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GULF POWER COMPANY
  At March 31,
    
    
    At December 31,Assets
    
    2009
    
    
    2008(in thousands)Current Assets:Cash and cash equivalents
    
    $
    31,510
    
    
    $
    3,443Restricted cash and cash equivalents
    
    
    49,188
    
    
    
    Receivables Customer accounts receivable
    
    
    67,112
    
    
    
    69,531Unbilled revenues
    
    
    42,597
    
    
    
    48,742Under recovered regulatory clause revenues
    
    
    78,850
    
    
    
    98,644Other accounts and notes receivable
    
    
    10,300
    
    
    
    7,201Affiliated companies
    
    
    1,015
    
    
    
    8,516Accumulated provision for uncollectible accounts
    
    
    (1,557
    )
    
    
    (2,188
    )Fossil fuel stock, at average cost
    
    
    126,352
    
    
    
    108,129Materials and supplies, at average cost
    
    
    37,041
    
    
    
    36,836Other regulatory assets
    
    
    48,058
    
    
    
    38,908Other
    
    
    24,030
    
    
    
    25,655Total current assets
    
    
    514,496
    
    
    
    443,417Property, Plant, and Equipment:In service
    
    
    2,835,502
    
    
    
    2,785,561Less accumulated provision for depreciation
    
    
    982,542
    
    
    
    971,4641,852,960
    
    
    
    1,814,097Construction work in progress
    
    
    453,749
    
    
    
    391,987Total property, plant, and equipment
    
    
    2,306,709
    
    
    
    2,206,084Other Property and Investments
    
    
    15,904
    
    
    
    15,918Deferred Charges and Other Assets:Deferred charges related to income taxes
    
    
    27,888
    
    
    
    24,220Other regulatory assets
    
    
    174,115
    
    
    
    170,836Other
    
    
    19,945
    
    
    
    18,550Total deferred charges and other assets
    
    
    221,948
    
    
    
    213,606Total Assets
    
    $
    3,059,057
    
    
    $
    2,879,025
  66




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GULF POWER COMPANY
 At March 31,
    
    
    At December 31,Liabilities and Stockholders Equity
    
    2009
    
    
    2008(in thousands)Current Liabilities:Pollution control revenue bonds
    
    $
    9,930
    
    
    $
    Notes payable
    
    
    58,309
    
    
    
    148,239Accounts payable Affiliated
    
    
    35,822
    
    
    
    50,304Other
    
    
    94,762
    
    
    
    90,381Customer deposits
    
    
    29,371
    
    
    
    28,017Accrued taxes Income taxes
    
    
    36,718
    
    
    
    39,983Other
    
    
    10,504
    
    
    
    11,855Accrued interest
    
    
    11,113
    
    
    
    8,959Accrued compensation
    
    
    4,346
    
    
    
    15,667Other regulatory liabilities
    
    
    12,199
    
    
    
    4,602Liabilities from risk management activities
    
    
    35,309
    
    
    
    26,928Other
    
    
    22,603
    
    
    
    29,047Total current liabilities
    
    
    360,986
    
    
    
    453,982Long-term Debt
    
    
    969,843
    
    
    
    849,265Deferred Credits and Other Liabilities:Accumulated deferred income taxes
    
    
    265,516
    
    
    
    254,354Accumulated deferred investment tax credits
    
    
    10,855
    
    
    
    11,255Employee benefit obligations
    
    
    96,436
    
    
    
    97,389Other cost of removal obligations
    
    
    183,002
    
    
    
    180,325Other regulatory liabilities
    
    
    34,367
    
    
    
    28,597Other
    
    
    86,981
    
    
    
    83,768Total deferred credits and other liabilities
    
    
    677,157
    
    
    
    655,688Total Liabilities
    
    
    2,007,986
    
    
    
    1,958,935Preference Stock
    
    
    97,998
    
    
    
    97,998Common Stockholders Equity:Common stock, without par valueAuthorized - 20,000,000 sharesOutstanding - March 31, 2009: 3,142,717 shares- December 31, 2008: 1,792,717 shares
    
    
    253,060
    
    
    
    118,060Paid-in capital
    
    
    513,143
    
    
    
    511,547Retained earnings
    
    
    191,635
    
    
    
    197,417Accumulated other comprehensive loss
    
    
    (4,765
    )
    
    
    (4,932
    )Total common stockholders equity
    
    
    953,073
    
    
    
    822,092Total Liabilities and Stockholders Equity
    
    $
    3,059,057
    
    
    $
    2,879,025
  67




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GULF POWER COMPANY
 
  OVERVIEW
   RESULTS OF OPERATIONS
 Net Income
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$(3.0)
    
    (15.3)
  Retail Revenues
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$10.4
    
    4.6
  68




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GULF POWER COMPANY
  First Quarter2009(in millions)
    
    (% change)Retail  prior year
    
    $
    228.0Estimated change in Rates and pricing
    
    
    7.4
    
    
    
    3.2Sales growth (decline)
    
    
    (4.1
    )
    
    
    (1.8
    )Weather
    
    
    (1.6
    )
    
    
    (0.7
    )Fuel and other cost recovery
    
    
    8.7
    
    
    
    3.8Retail  current year
    
    $
    238.4
    
    
    
    4.5
    %
     69




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GULF POWER COMPANY
 Wholesale
Revenues  Non-Affiliates
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$(3.7)
    
    (14.4)
   Wholesale
Revenues  Affiliates
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$(37.6)
    
    (87.5)
   Other Revenues
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$3.6
    
    24.0
  70




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GULF POWER COMPANY
 Fuel and Purchased Power Expenses
 First Quarter 2009 
vs. 
First Quarter 2008(change in millions)
    
    (% change)Fuel
    
    $
    (34.5
    )
    
    
    (23.0
    )Purchased
power  non-affiliates
    
    
    1.3
    
    
    
    42.0Purchased
power  affiliates
    
    
    6.6
    
    
    
    75.9Total fuel and purchased power expenses
    
    $
    (26.6
    )
    First Quarter
    
    First Quarter
    
    PercentAverage Cost
    
    2009
    
    2008
    
    Change(cents per net KWH)Fuel
    
    
    4.31
    
    
    
    3.80
    
    
    
    13.4Purchased power
    
    
    5.19
    
    
    
    6.70
    
    
    
    (22.5
    )
  Non-Affiliates
   Affiliates
  71




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GULF POWER COMPANY
  Other Operations and Maintenance Expenses
 First Quarter 2009
vs.
First Quarter 2008(change in millions)
    
    (% change)$6.1
    
    9.1
  Depreciation and Amortization
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$1.4
    
    6.2
  Taxes Other Than Income Taxes
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$1.7
    
    8.5
  Allowance for Equity Funds Used During Construction
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$3.3
    
    N/M
 N/M-Not Meaningful
  72




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GULF POWER COMPANY
 Interest Expense, Net of Amounts Capitalized
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$(1.2)
    
    (10.6)
  Income Taxes
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$(2.8)
    
    (27.1)
  FUTURE EARNINGS POTENTIAL
  Environmental Matters
  Water Quality
  73




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##### Table of Contents



GULF POWER COMPANY
 standards and in providing variances from those standards for
existing power plant cooling water intake structures. Other aspects of the courts decision were
not appealed and remain unaffected by the U.S. Supreme Courts ruling. While the U.S. Supreme
Courts decision may ultimately result in greater flexibility for
demonstrating compliance with the standards, the full scope of the regulations will depend on
subsequent legal proceedings, further rulemaking by the EPA, the results of studies and analyses
performed as part of the rules implementation, and the actual requirements established by state
regulatory agencies and, therefore, cannot be determined at this time.
 Global Climate Issues
  FERC and Florida PSC Matters
 Market-Based Rate Authority
  74




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GULF POWER COMPANY
 Retail Fuel Cost Recovery
   Income Tax Matters
 Legislation
  Other Matters
  75




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##### Table of Contents



GULF POWER COMPANY
   ACCOUNTING POLICIES
 Application of Critical Accounting Policies and Estimates
  FINANCIAL CONDITION AND LIQUIDITY
 Overview
 1 2
 76




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##### Table of Contents



GULF POWER COMPANY
    Capital Requirements and Contractual Obligations
 
 Sources of Capital
  77




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##### Table of Contents



GULF POWER COMPANY
  Credit Rating Risk
  Market Price Risk
   78




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##### Table of Contents



GULF POWER COMPANY
  First Quarter2009ChangesFair Value(in millions)Contracts outstanding at the beginning of the period, assets (liabilities), net
    
    $
    (31.2
    )Contracts realized or settled
    
    
    8.0Current period changes(a)
    
    
    (20.0
    )Contracts outstanding at the end of the period, assets (liabilities), net
    
    $
    (43.2
    )
 (a)
    
    Current period changes also include the changes in fair value of new contracts entered into
during the period, if any.
   March 31,
 2009(in millions)Regulatory hedges
    
    $
    (43.2
    )Not designated
    
    
    Total fair value
    
    $
    (43.2
    )
   79




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##### Table of Contents



GULF POWER COMPANY
  March 31, 2009Fair Value MeasurementsTotal
    
    MaturityFair Value
    
    Year 1
    
    Years 2&3
    
    Years 4&5(in millions)Level 1
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Level 2
    
    
    (43.2
    )
    
    
    (35.2
    )
    
    
    (7.7
    )
    
    
    (0.3
    )Level 3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Fair value of
contracts
outstanding at end
of period
    
    $
    (43.2
    )
    
    $
    (35.2
    )
    
    $
    (7.7
    )
    
    $
    (0.3
    )
   Financing Activities
    80




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MISSISSIPPI POWER COMPANY
 81




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##### Table of Contents



MISSISSIPPI POWER COMPANY
  For the Three MonthsEnded March 31,2009
    
    
    2008(in thousands)Operating Revenues:Retail revenues
    
    $
    175,735
    
    
    $
    168,389Wholesale revenues Non-affiliates
    
    
    80,154
    
    
    
    84,806Affiliates
    
    
    9,418
    
    
    
    28,379Other revenues
    
    
    3,416
    
    
    
    3,842Total operating revenues
    
    
    268,723
    
    
    
    285,416Operating Expenses:Fuel
    
    
    119,965
    
    
    
    130,116Purchased power Non-affiliates
    
    
    2,835
    
    
    
    2,255Affiliates
    
    
    21,805
    
    
    
    25,998Other operations and maintenance
    
    
    59,761
    
    
    
    64,773Depreciation and amortization
    
    
    18,015
    
    
    
    17,997Taxes other than income taxes
    
    
    14,924
    
    
    
    15,565Total operating expenses
    
    
    237,305
    
    
    
    256,704Operating Income
    
    
    31,418
    
    
    
    28,712Other Income and (Expense):Interest income
    
    
    632
    
    
    
    409Interest expense, net of amounts capitalized
    
    
    (4,762
    )
    
    
    (4,441
    )Other income (expense), net
    
    
    1,629
    
    
    
    1,619Total other income and (expense)
    
    
    (2,501
    )
    
    
    (2,413
    )Earnings Before Income Taxes
    
    
    28,917
    
    
    
    26,299Income taxes
    
    
    10,513
    
    
    
    9,694Net Income
    
    
    18,404
    
    
    
    16,605Dividends on Preferred Stock
    
    
    433
    
    
    
    433Net Income After Dividends on Preferred Stock
    
    $
    17,971
    
    
    $
    16,172
 
  For the Three MonthsEnded March 31,2009
    
    
    2008(in thousands)Net Income After Dividends on Preferred Stock
    
    $
    17,971
    
    
    $
    16,172Other comprehensive income (loss):Qualifying hedges:Changes in fair value, net of tax of $166 and
$(1,310), respectively
    
    
    268
    
    
    
    (2,114
    )Total other comprehensive income (loss)
    
    
    268
    
    
    
    (2,114
    )COMPREHENSIVE INCOME
    
    $
    18,239
    
    
    $
    14,058
  82




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MISSISSIPPI POWER COMPANY
  For the Three MonthsEnded March 31,2009
    
    
    2008(in thousands)Operating Activities:Net income
    
    $
    18,404
    
    
    $
    16,605Adjustments to reconcile net income
to net cash provided from operating activities Depreciation and amortization
    
    
    19,479
    
    
    
    18,556Deferred income taxes and investment tax credits, net
    
    
    (4,562
    )
    
    
    (4,498
    )Pension, postretirement, and other employee benefits
    
    
    1,902
    
    
    
    1,606Stock option expense
    
    
    657
    
    
    
    458Tax benefit of stock options
    
    
    10
    
    
    
    80Other, net
    
    
    (8,523
    )
    
    
    (4,878
    )Changes in certain current assets and liabilities Receivables
    
    
    32,327
    
    
    
    (4,768
    )Fossil fuel stock
    
    
    (20,315
    )
    
    
    (3,852
    )Materials and supplies
    
    
    (379
    )
    
    
    (12,769
    )Prepaid income taxes
    
    
    1,061
    
    
    
    4,305Other current assets
    
    
    (2,592
    )
    
    
    1,775Other accounts payable
    
    
    (17,890
    )
    
    
    8,247Accrued taxes
    
    
    (18,604
    )
    
    
    (21,608
    )Accrued compensation
    
    
    (15,483
    )
    
    
    (15,825
    )Other current liabilities
    
    
    1,629
    
    
    
    2,109Net cash used for operating activities
    
    
    (12,879
    )
    
    
    (14,457
    )Investing Activities:Property additions
    
    
    (26,476
    )
    
    
    (25,983
    )Cost of removal, net of salvage
    
    
    (2,941
    )
    
    
    (151
    )Construction payables
    
    
    1,082
    
    
    
    2,410Other
    
    
    (506
    )
    
    
    (565
    )Net cash used for investing activities
    
    
    (28,841
    )
    
    
    (24,289
    )Financing Activities:Increase (decrease) in notes payable, net
    
    
    (26,293
    )
    
    
    1,850Proceeds Capital contributions
    
    
    1,294
    
    
    
    1,180Gross excess tax benefit of stock options
    
    
    50
    
    
    
    215Senior notes
    
    
    125,000
    
    
    
    Other long-term debt
    
    
    
    
    
    
    80,000Redemptions Senior notes
    
    
    (40,000
    )
    
    
    Payment of preferred stock dividends
    
    
    (433
    )
    
    
    (433
    )Payment of common stock dividends
    
    
    (17,125
    )
    
    
    (17,100
    )Other
    
    
    (1,792
    )
    
    
    Net cash provided from financing activities
    
    
    40,701
    
    
    
    65,712Net Change in Cash and Cash Equivalents
    
    
    (1,019
    )
    
    
    26,966Cash and Cash Equivalents at Beginning of Period
    
    
    22,413
    
    
    
    4,827Cash and Cash Equivalents at End of Period
    
    $
    21,394
    
    
    $
    31,793Supplemental Cash Flow Information:Cash paid during the period for Interest (net of $125 and $29 capitalized for 2009 and
2008, respectively)
    
    $
    3,847
    
    
    $
    3,847Income taxes (net of refunds)
    
    $
    (2,325
    )
    
    $
    (35
    )
  83




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MISSISSIPPI POWER COMPANY
  At March 31,
    
    
    At December 31,Assets
    
    2009
    
    
    2008(in thousands)Current Assets:Cash and cash equivalents
    
    $
    21,394
    
    
    $
    22,413Receivables Customer accounts receivable
    
    
    39,623
    
    
    
    40,262Unbilled revenues
    
    
    23,558
    
    
    
    24,798Under recovered regulatory clause revenues
    
    
    42,047
    
    
    
    54,994Other accounts and notes receivable
    
    
    5,243
    
    
    
    8,995Affiliated companies
    
    
    10,360
    
    
    
    24,108Accumulated provision for uncollectible accounts
    
    
    (842
    )
    
    
    (1,039
    )Fossil fuel stock, at average cost
    
    
    105,853
    
    
    
    85,538Materials and supplies, at average cost
    
    
    27,523
    
    
    
    27,143Other regulatory assets
    
    
    76,691
    
    
    
    59,220Other
    
    
    12,782
    
    
    
    10,898Total current assets
    
    
    364,232
    
    
    
    357,330Property, Plant, and Equipment:In service
    
    
    2,244,657
    
    
    
    2,234,573Less accumulated provision for depreciation
    
    
    932,791
    
    
    
    923,2691,311,866
    
    
    
    1,311,304Construction work in progress
    
    
    80,809
    
    
    
    70,665Total property, plant, and equipment
    
    
    1,392,675
    
    
    
    1,381,969Other Property and Investments
    
    
    7,976
    
    
    
    8,280Deferred Charges and Other Assets:Deferred charges related to income taxes
    
    
    9,260
    
    
    
    9,566Other regulatory assets
    
    
    185,461
    
    
    
    171,680Other
    
    
    24,742
    
    
    
    23,870Total deferred charges and other assets
    
    
    219,463
    
    
    
    205,116Total Assets
    
    $
    1,984,346
    
    
    $
    1,952,695
  84




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MISSISSIPPI POWER COMPANY
 At March 31,
    
    
    At December 31,Liabilities and Stockholders Equity
    
    2009
    
    
    2008(in thousands)Current Liabilities:Securities due within one year
    
    $
    1,254
    
    
    $
    41,230Notes payable
    
    
    
    
    
    
    26,293Accounts payable Affiliated
    
    
    37,175
    
    
    
    36,847Other
    
    
    46,569
    
    
    
    63,704Customer deposits
    
    
    10,536
    
    
    
    10,354Accrued taxes Income taxes
    
    
    19,815
    
    
    
    8,842Other
    
    
    17,148
    
    
    
    50,700Accrued interest
    
    
    4,683
    
    
    
    3,930Accrued compensation
    
    
    5,120
    
    
    
    20,604Other regulatory liabilities
    
    
    8,846
    
    
    
    9,718Liabilities from risk management activities
    
    
    47,045
    
    
    
    29,291Other
    
    
    17,964
    
    
    
    19,144Total current liabilities
    
    
    216,155
    
    
    
    320,657Long-term Debt
    
    
    494,360
    
    
    
    370,460Deferred Credits and Other Liabilities:Accumulated deferred income taxes
    
    
    222,009
    
    
    
    222,324Deferred credits related to income taxes
    
    
    13,854
    
    
    
    14,074Accumulated deferred investment tax credits
    
    
    13,716
    
    
    
    14,014Employee benefit obligations
    
    
    143,308
    
    
    
    142,188Other cost of removal obligations
    
    
    97,243
    
    
    
    96,191Other regulatory liabilities
    
    
    52,714
    
    
    
    51,340Other
    
    
    58,632
    
    
    
    52,216Total deferred credits and other liabilities
    
    
    601,476
    
    
    
    592,347Total Liabilities
    
    
    1,311,991
    
    
    
    1,283,464Preferred 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
    
    
    321,968
    
    
    
    319,958Retained earnings
    
    
    279,648
    
    
    
    278,802Accumulated other comprehensive income (loss)
    
    
    268
    
    
    
    Total common stockholders equity
    
    
    639,575
    
    
    
    636,451Total Liabilities and Stockholders Equity
    
    $
    1,984,346
    
    
    $
    1,952,695
  85




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##### Table of Contents



MISSISSIPPI POWER COMPANY
    OVERVIEW
   RESULTS OF OPERATIONS
 Net Income
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$1.8
    
    11.1
  Retail Revenues
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$7.3
    
    4.4
  86




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##### Table of Contents



MISSISSIPPI POWER COMPANY
  First Quarter2009(in millions)
    
    (% change)Retail  prior year
    
    $
    168.4Estimated
change in Rates and pricing
    
    
    1.6
    
    
    
    1.0Sales growth (decline)
    
    
    (2.2
    )
    
    
    (1.3
    )Weather
    
    
    (1.1
    )
    
    
    (0.7
    )Fuel and other cost recovery
    
    
    9.0
    
    
    
    5.4Retail  current year
    
    $
    175.7
    
    
    
    4.4
    %
     Wholesale Revenues  Non-Affiliates
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$(4.6)
    
    (5.5)
  87




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##### Table of Contents



MISSISSIPPI POWER COMPANY
  Wholesale Revenues  Affiliates
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$(19.0)
    
    (66.8)
   Fuel and Purchased Power Expenses
 First Quarter 2009vs.First Quarter 2008(change in millions)
    
    (% change)Fuel
    
    $
    (10.1
    )
    
    
    (7.8
    )Purchased power  non-affiliates
    
    
    0.5
    
    
    
    25.7Purchased power  affiliates
    
    
    (4.2
    )
    
    
    (16.1
    )Total fuel and purchased power expenses
    
    $
    (13.8
    )
   88




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##### Table of Contents



MISSISSIPPI POWER COMPANY
  First Quarter
    
    First Quarter
    
    PercentAverage Cost
    
    2009
    
    2008
    
    Change(cents per net KWH)Fuel
    
    
    4.44
    
    
    
    3.91
    
    
    
    13.6Purchased power
    
    
    3.91
    
    
    
    5.40
    
    
    
    (27.6
    )
  Non-Affiliates
   Affiliates
   Other Operations and Maintenance Expenses
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$(4.9)
    
    (7.7)
   89




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##### Table of Contents



MISSISSIPPI POWER COMPANY
 Taxes Other Than Income Taxes
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$(0.7)
    
    (4.1)
  Income Taxes
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$0.8
    
    8.4
  FUTURE EARNINGS POTENTIAL
 Form 10-K.
 Environmental Matters
  90




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##### Table of Contents



MISSISSIPPI POWER COMPANY
 Water Quality
  Global Climate Issues
  FERC and Mississippi PSC Matters
 Market-Based Rate Authority
  91




---



##### Table of Contents



MISSISSIPPI POWER COMPANY
  Retail Regulatory Matters
 Performance Evaluation Plan
   Fuel Cost Recovery
   92




---



##### Table of Contents



MISSISSIPPI POWER COMPANY
 Integrated Coal Gasification Combined Cycle
       Income Tax Matters
 Legislation
  93




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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
 1 4
 94




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##### Table of Contents



MISSISSIPPI POWER COMPANY
    Capital Requirements and Contractual Obligations
  95




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##### Table of Contents



MISSISSIPPI POWER COMPANY
 Sources of Capital
   Off-Balance Sheet Financing Arrangements
  Credit Rating Risk
  96




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##### Table of Contents



MISSISSIPPI POWER COMPANY
 Market Price Risk
    First Quarter2009ChangesFair Value(in millions)Contracts outstanding at the beginning of the period, assets (liabilities), net
    
    $
    (52.0
    )Contracts realized or settled
    
    
    9.0Current period changes(a)
    
    
    (33.0
    )Contracts outstanding at the end of the period, assets (liabilities), net
    
    $
    (76.0
    )
 (a)
    
    Current period changes also include the changes in fair value of new contracts entered
into during the period, if any.
   March 31, 2009(in millions)Regulatory hedges
    
    $
    (76.4
    )Cash flow hedges
    
    
    0.4Not designated
    
    
    Total fair value
    
    $
    (76.0
    )
 97




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##### Table of Contents



MISSISSIPPI POWER COMPANY
    March 31, 2009Fair Value MeasurementsTotal
    
    MaturityFair Value
    
    Year 1
    
    Years 2&3
    
    Years 4&5(in millions)Level 1
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Level 2
    
    
    (76.0
    )
    
    
    (45.2
    )
    
    
    (26.1
    )
    
    
    (4.7
    )Level 3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Fair value of
contracts
outstanding at end
of period
    
    $
    (76.0
    )
    
    $
    (45.2
    )
    
    $
    (26.1
    )
    
    $
    (4.7
    )
   Financing Activities
   98




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SOUTHERN POWER COMPANY
AND SUBSIDIARY COMPANIES
 99




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##### Table of Contents



SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
  For the Three MonthsEnded March 31,2009
    
    
    2008(in thousands)Operating Revenues:Wholesale revenues Non-affiliates
    
    
    94,612
    
    
    
    80,469Affiliates
    
    
    135,284
    
    
    
    133,493Other revenues
    
    
    1,621
    
    
    
    1,570Total operating revenues
    
    
    231,517
    
    
    
    215,532Operating Expenses:Fuel
    
    
    65,781
    
    
    
    36,047Purchased power Non-affiliates
    
    
    21,482
    
    
    
    16,556Affiliates
    
    
    15,202
    
    
    
    50,708Other operations and maintenance
    
    
    32,973
    
    
    
    35,031Depreciation and amortization
    
    
    24,339
    
    
    
    19,987Taxes other than income taxes
    
    
    4,759
    
    
    
    4,542Total operating expenses
    
    
    164,536
    
    
    
    162,871Operating Income
    
    
    66,981
    
    
    
    52,661Other Income and (Expense):Interest expense, net of amounts capitalized
    
    
    (21,559
    )
    
    
    (19,357
    )Other income (expense), net
    
    
    (211
    )
    
    
    12,580Total other income and (expense)
    
    
    (21,770
    )
    
    
    (6,777
    )Earnings Before Income Taxes
    
    
    45,211
    
    
    
    45,884Income taxes
    
    
    17,295
    
    
    
    16,909Net Income
    
    $
    27,916
    
    
    $
    28,975
 
  For the Three MonthsEnded March 31,2009
    
    
    2008(in thousands)Net Income
    
    $
    27,916
    
    
    $
    28,975Other comprehensive income (loss):Qualifying hedges:Changes in fair value, net of tax of $302 and $(2,944), respectively
    
    
    466
    
    
    
    (4,561
    )Reclassification adjustment for amounts included in net income,
net of tax of $935 and $1,342, respectively
    
    
    1,440
    
    
    
    2,073Total other comprehensive income (loss)
    
    
    1,906
    
    
    
    (2,488
    )COMPREHENSIVE INCOME
    
    $
    29,822
    
    
    $
    26,487
  100




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SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
  For the Three MonthsEnded March 31,2009
    
    
    2008(in thousands)Operating Activities:Net income
    
    $
    27,916
    
    
    $
    28,975Adjustments to reconcile net income
to net cash provided from operating activities Depreciation and amortization
    
    
    27,371
    
    
    
    24,016Deferred income taxes
    
    
    18,763
    
    
    
    11,067Deferred revenues
    
    
    (22,020
    )
    
    
    (26,767
    )Mark-to-market adjustments
    
    
    883
    
    
    
    14,406Accumulated billings on construction contract
    
    
    11,520
    
    
    
    18,737Accumulated costs on construction contract
    
    
    (20,145
    )
    
    
    (18,630
    )Gain on sale of property
    
    
    
    
    
    
    (6,029
    )Other, net
    
    
    (134
    )
    
    
    1,660Changes in certain current assets and liabilities Receivables
    
    
    2,439
    
    
    
    (2,355
    )Fossil fuel stock
    
    
    1,464
    
    
    
    (2,375
    )Materials and supplies
    
    
    (497
    )
    
    
    (155
    )Prepaid income taxes
    
    
    7,870
    
    
    
    Other current assets
    
    
    652
    
    
    
    (214
    )Accounts payable
    
    
    (19,840
    )
    
    
    (5,718
    )Accrued taxes
    
    
    3,628
    
    
    
    8,356Accrued interest
    
    
    (12,194
    )
    
    
    (12,210
    )Other current liabilities
    
    
    88
    
    
    
    (2,881
    )Net cash provided from operating activities
    
    
    27,764
    
    
    
    29,883Investing Activities:Property additions
    
    
    (4,632
    )
    
    
    (24,332
    )Sale of property
    
    
    
    
    
    
    4,999Change in construction payables, net
    
    
    (271
    )
    
    
    4,854Payments pursuant to long-term service agreements
    
    
    (6,136
    )
    
    
    (5,671
    )Other
    
    
    
    
    
    
    (726
    )Net cash used for investing activities
    
    
    (11,039
    )
    
    
    (20,876
    )Financing Activities:Increase in notes payable, net
    
    
    
    
    
    
    13,720Proceeds  Capital contributions
    
    
    1,060
    
    
    
    897Payment of common stock dividends
    
    
    (26,525
    )
    
    
    (23,625
    )Net cash used for financing activities
    
    
    (25,465
    )
    
    
    (9,008
    )Net Change in Cash and Cash Equivalents
    
    
    (8,740
    )
    
    
    (1
    )Cash and Cash Equivalents at Beginning of Period
    
    
    37,894
    
    
    
    5Cash and Cash Equivalents at End of Period
    
    $
    29,154
    
    
    $
    4Supplemental Cash Flow Information:Cash paid during the period for Interest (net of $78 and $4,142 capitalized for 2009
and 2008, respectively)
    
    $
    30,791
    
    
    $
    27,717Income taxes (net of refunds)
    
    $
    (10,003
    )
    
    $
    495
  101




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##### Table of Contents



SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
  At March 31,
    
    
    At December 31,Assets
    
    2009
    
    
    2008(in thousands)Current Assets:Cash and cash equivalents
    
    $
    29,154
    
    
    $
    37,894Receivables Customer accounts receivable
    
    
    25,777
    
    
    
    23,640Other accounts receivable
    
    
    1,795
    
    
    
    2,162Affiliated companies
    
    
    31,651
    
    
    
    33,401Fossil fuel stock, at average cost
    
    
    16,337
    
    
    
    17,801Materials and supplies, at average cost
    
    
    27,024
    
    
    
    26,527Prepaid service agreements  current
    
    
    18,423
    
    
    
    26,304Prepaid income taxes
    
    
    13,602
    
    
    
    18,066Other prepaid expenses
    
    
    2,109
    
    
    
    2,756Assets from risk management activities
    
    
    15,563
    
    
    
    10,799Other
    
    
    4,532
    
    
    
    4,532Total current assets
    
    
    185,967
    
    
    
    203,882Property, Plant, and Equipment:In service
    
    
    2,865,524
    
    
    
    2,847,757Less accumulated provision for depreciation
    
    
    376,361
    
    
    
    351,1932,489,163
    
    
    
    2,496,564Construction work in progress
    
    
    11,117
    
    
    
    8,775Total property, plant, and equipment
    
    
    2,500,280
    
    
    
    2,505,339Deferred Charges and Other Assets:Prepaid long-term service agreements
    
    
    78,525
    
    
    
    81,542OtherAffiliated
    
    
    3,756
    
    
    
    3,827Other
    
    
    18,354
    
    
    
    18,550Total deferred charges and other assets
    
    
    100,635
    
    
    
    103,919Total Assets
    
    $
    2,786,882
    
    
    $
    2,813,140
  102




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##### Table of Contents



SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
 At March 31,
    
    
    At December 31,Liabilities and Stockholders Equity
    
    2009
    
    
    2008(in thousands)Current Liabilities:Accounts payable Affiliated
    
    $
    43,185
    
    
    $
    62,732Other
    
    
    9,767
    
    
    
    11,278Accrued taxes Income taxes
    
    
    3,394
    
    
    
    88Other
    
    
    5,910
    
    
    
    2,343Accrued interest
    
    
    17,722
    
    
    
    29,916Liabilities from risk management activities
    
    
    12,394
    
    
    
    7,452Billings in excess of cost on construction contract
    
    
    3,283
    
    
    
    11,907Other
    
    
    310
    
    
    
    224Total current liabilities
    
    
    95,965
    
    
    
    125,940Long-term Debt
    
    
    1,297,416
    
    
    
    1,297,353Deferred Credits and Other Liabilities:Accumulated deferred income taxes
    
    
    229,973
    
    
    
    209,960Deferred capacity revenues  Affiliated
    
    
    12,884
    
    
    
    32,211OtherAffiliated
    
    
    6,408
    
    
    
    6,667Other
    
    
    1,518
    
    
    
    2,648Total deferred credits and other liabilities
    
    
    250,783
    
    
    
    251,486Total Liabilities
    
    
    1,644,164
    
    
    
    1,674,779Common Stockholders Equity:Common stock, par value $.01 per share Authorized - 1,000,000 sharesOutstanding - 1,000 shares
    
    
    
    
    
    
    Paid-in capital
    
    
    863,169
    
    
    
    862,109Retained earnings
    
    
    303,700
    
    
    
    302,309Accumulated other comprehensive loss
    
    
    (24,151
    )
    
    
    (26,057
    )Total common stockholders equity
    
    
    1,142,718
    
    
    
    1,138,361Total Liabilities and Stockholders Equity
    
    $
    2,786,882
    
    
    $
    2,813,140
  103




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##### Table of Contents



SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
 
  OVERVIEW
   RESULTS OF OPERATIONS
 Net Income
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$(1.1)
    
    (3.7)
  Wholesale Revenues  Affiliates and Wholesale Revenues  Non-Affiliates
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$15.9
    
    7.4
  104




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##### Table of Contents



SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
   Fuel and Purchased Power Expenses
 First Quarter 2009
 vs.
 First Quarter 2008(change in millions)
    
    (% change)Fuel
    
    $
    29.7
    
    
    
    82.5Purchased power  non-affiliates
    
    
    4.9
    
    
    
    29.8Purchased power  affiliates
    
    
    (35.5
    )
    
    
    (70.0
    )Total fuel and purchased power expenses
    
    $
    (0.8
    )
  Other Operations and Maintenance Expenses
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$(2.1)
    
    (5.9)
  105




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##### Table of Contents



SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
 Depreciation and Amortization
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$4.3
    
    21.8
  Interest Expense, Net of Amounts Capitalized
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$2.2
    
    11.4
  Other Income (Expense), Net
 First Quarter 2009 vs. First Quarter 2008(change in millions)
    
    (% change)$(12.8)
    
    (101.7)
  FUTURE EARNINGS POTENTIAL
  106




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##### Table of Contents



SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
  Environmental Matters
  Global Climate Issues
  FERC Matters
 Market-Based Rate Authority
  107




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##### Table of Contents



SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
  Income Tax Matters
 Legislation
  Construction Projects
 Cleveland County Units 1-4
  Power Sales Agreements
   108




---



##### Table of Contents



SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
 Potential Acquisition
   Other Matters
   ACCOUNTING POLICIES
 Application of Critical Accounting Policies and Estimates
 
 109




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##### Table of Contents



SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
 FINANCIAL CONDITION AND LIQUIDITY
 Overview
 1 8
    Capital Requirements and Contractual Obligations
  110




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##### Table of Contents



SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
  Sources of Capital
     Credit Rating Risk
  111




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##### Table of Contents



SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
   Market Price Risk
     First Quarter2009ChangesFair Value(in millions)Contracts outstanding at the beginning of the period, assets (liabilities), net
    
    $
    3.4Contracts realized or settled
    
    
    0.1Current period changes(a)
    
    
    (0.2
    )Contracts outstanding at the end of the period, assets (liabilities), net
    
    $
    3.3
 (a)
    
    Current period changes also include the changes in fair value of new contracts entered
into during the period, if any.
 112




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##### Table of Contents



SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
  March 31, 
2009Power (net sold)MWHs (in millions)
    
    
    0.7Weighted average contract cost per MWH
above (below) market prices (in dollars)
    
    $
    3.71Natural gas
(net purchase)Commodity  Bcf
    
    
    3.5Location basis  Bcf
    
    
    2.0Commodity  Weighted average contract cost per mmBtu
above (below) market prices (in dollars)
    
    $
    (0.27
    )Location basis  Weighted average contract cost per mmBtu
above (below) market prices (in dollars)
    
    $
    0.06
  March 31, 
2009(in millions)Cash flow hedges
    
    $
    Not designated
    
    
    3.3Total fair value
    
    $
    3.3
    March 31, 2009Fair Value MeasurementsTotal
    
    MaturityFair Value
    
    Year 1
    
    Years 2&3
    
    Years 4&5(in millions)Level 1
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Level 2
    
    
    3.3
    
    
    
    3.2
    
    
    
    0.1
    
    
    
    Level 3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Fair value of
contracts
outstanding at end
of period
    
    $
    3.3
    
    
    $
    3.2
    
    
    $
    0.1
    
    
    $
    
 113




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##### Table of Contents



SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
   Financing Activities
  114




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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, IAlabama Power
    
    A, B, C, F, G, HGeorgia Power
    
    A, B, C, D, F, G, HGulf Power
    
    A, B, C, F, G, HMississippi Power
    
    A, B, C, D, F, G, HSouthern Power
    
    A, B, C, F, H
 115




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##### Table of Contents



THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
ALABAMA POWER COMPANY
GEORGIA POWER COMPANY
GULF POWER COMPANY
MISSISSIPPI POWER COMPANY
SOUTHERN POWER COMPANY AND SUBSIDIARY COMPANIES
 NOTES TO THE CONDENSED FINANCIAL STATEMENTS:
 (A)
    
    INTRODUCTIONThe condensed quarterly financial statements of each registrant included herein have been
prepared by such registrant, without audit, pursuant to the rules and regulations of the
SEC. The Condensed Balance Sheets as of December 31, 2008 have been derived from the
audited financial statements of each registrant. In the opinion of each registrants
management, the information regarding such registrant furnished herein reflects all
adjustments, which, except as otherwise disclosed, are of a normal recurring nature,
necessary to present fairly the results of operations for the periods ended March 31, 2009
and 2008. 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 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.ReclassificationsCertain prior period data presented in the financial statements have been reclassified to conform
to the current year presentation.For comparative purposes, each registrants statement of income for the three months ended March
31, 2008 was modified within the operating expenses section to combine the line items Other
operations and Maintenance into a single line item entitled Other operations and maintenance.
The balance sheets at December 31, 2008 of Southern Company, Alabama Power, and Georgia Power were
modified to present a separate line item for Other regulatory assets previously included in
Other. In addition, Georgia Powers balance sheet was modified to reflect a new line item
Liabilities from risk management activities previously included in Other. Within the operating
activities of Georgia Powers statements of cash flows, Deferred revenues and Deferred expenses
previously included in Other, net in the prior period are now shown as separate line items.
Also, within the financing activities of the same statement, the line item Capital leases was
collapsed into Other. Mississippi Powers balance sheet was modified to combine the line item
Prepaid income taxes with Other current assets. Southern Powers consolidated statement of
cash flows for the three months ended March 31, 2008 was modified within the investing activities
to present separately the amount of Payments pursuant to long-term service agreements previously
included in Property additions.These reclassifications had no effect on total assets, net income, cash flows, or earnings per
share.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 Effective January 1, 2009, Southern Company and its
subsidiaries adopted retrospectively FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial
Statements, which is an amendment of Accounting Research Bulletin No. 51, Consolidated Financial
Statements, (SFAS No. 160). In connection with the
adoption of SFAS No. 160, Southern Company evaluated the
requirements of Emerging Issues Task Force Topic No. 98, Classification and Measurement
of Redeemable Securities (Topic D-98) with respect to the presentation of preferred and preference
stock of subsidiaries. Based on the guidance in Topic D-98 and SFAS
No. 160, the preferred and preference stock at Georgia Power
and the preference stock at Alabama Power and Gulf Power are required to be shown as
noncontrolling interests, separately presented as a component of Stockholders Equity on
Southern Companys consolidated balance sheets. The preferred stock of Alabama Power and
Mississippi Power contains a feature that allows the holders to elect a majority of such
subsidiarys board of directors if dividends are not paid for four consecutive quarters. Because
such a potential redemption-triggering event is not solely within the control of Alabama Power and
Mississippi Power, this preferred stock is presented as Redeemable Preferred Stock of
Subsidiaries in a manner consistent with temporary equity as
defined in Topic D-98. The preferred and preference stock at Georgia Power and the preference stock at Alabama Power and Gulf Power do not contain such
a provision that would allow the holders to elect a majority of such subsidiarys board.In addition, SFAS No. 160 requires that preferred and preference dividends of subsidiaries
previously presented within Southern Companys consolidated statements of income as a component of
Other Income and (Expense) be presented as a deduction from Consolidated Net Income to arrive
at Consolidated Net Income After Dividends on Preferred and Preference Stock. In Southern
Companys consolidated statements of cash flows, the preferred and preference dividends previously
classified in operating activities are now classified in financing activities.Southern Power Depreciation PolicySee Note 1 to the financial statements of Southern Power under Depreciation in Item 8 of the Form
10-K for information regarding Southern Powers depreciation policy. Southern Power revised its
depreciation rates in 2009. The change in estimate is due to revised useful life assumptions for
certain components of plant in service. The expected total impact on Southern Powers income from
continuing operations and net income for 2009 is a decrease of approximately $8.0 million and $5.0
million, respectively.(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.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 Mirant MattersMirant was an energy company with businesses that included independent power projects and energy
trading and risk management companies in the United States and selected other countries. It was a
wholly-owned subsidiary of Southern Company until its initial public offering in October 2000. In
April 2001, Southern Company completed a spin-off to its shareholders of its remaining ownership,
and Mirant became an independent corporate entity.Mirant BankruptcyIn July 2003, Mirant and certain of its affiliates filed voluntary petitions for relief under
Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Northern District of Texas.
The Bankruptcy Court entered an order confirming Mirants plan of reorganization in December 2005,
and Mirant announced that this plan became effective in January 2006. As part of the plan, Mirant
transferred substantially all of its assets and its restructured debt to a new corporation that
adopted the name Mirant Corporation (Reorganized Mirant).Southern Company has certain contingent liabilities associated with guarantees of contractual
commitments made by Mirants subsidiaries discussed under Guarantees in Note 7 to the financial
statements of Southern Company in Item 8 of the Form 10-K and with various lawsuits related to
Mirant discussed below. Also, Southern Company has joint and several liability with Mirant
regarding the joint consolidated federal income tax returns through 2001, as discussed in Note 5 to
the financial statements of Southern Company in Item 8 of the Form 10-K. In December 2004, as a
result of concluding an IRS audit for the tax years 2000 and 2001, Southern Company paid
approximately $39 million in additional tax and interest related to Mirant tax items and filed a
claim in Mirants bankruptcy case for that amount. To date, Southern Company has received from the
IRS approximately $38 million in refunds related to Mirant. Southern Company believes it has a
right to recoup the $39 million tax payment owed by Mirant from such tax refunds. As a result,
Southern Company intends to retain the tax refunds and reduce its claim against Mirant for the
payment of Mirant taxes by the amount of such refunds. MC Asset Recovery, LLC, a special purpose
subsidiary of Reorganized Mirant (MC Asset Recovery), has objected to and sought to equitably
subordinate the Southern Company tax claim in its fraudulent transfer litigation against Southern
Company. Southern Companys proofs of claim filed in the Mirant bankruptcy survive the settlement
of the MC Asset Recovery litigation. Southern Company has reserved the remaining amount with
respect to its Mirant tax claim.Under the terms of the separation agreements entered into in connection with the spin-off, Mirant
agreed to indemnify Southern Company for costs associated with these guarantees, lawsuits, and
additional IRS assessments. As a result of Mirants bankruptcy, Southern Company sought
reimbursement as an unsecured creditor in Mirants Chapter 11 proceeding. As part of a complaint
filed against Southern Company in June 2005 and amended thereafter, Mirant and The Official
Committee of Unsecured Creditors of Mirant Corporation (Unsecured Creditors Committee) objected to
and sought equitable subordination of Southern Companys claims, and Mirant moved to reject the
separation agreements entered into in connection with the spin-off as discussed in the preceding
paragraph. MC Asset Recovery has been substituted as plaintiff in the complaint. If Southern
Companys claims for indemnification with respect to these, or any additional future payments, are
allowed, then Mirants indemnity obligations to Southern Company would constitute unsecured claims
against Mirant entitled to stock in Reorganized Mirant. The final outcome of this matter cannot
now be determined.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 MC Asset Recovery LitigationIn June 2005, Mirant, as a debtor in possession, and the Unsecured Creditors Committee filed a
complaint against Southern Company in the U.S. Bankruptcy Court for the Northern District of Texas,
which was amended in July 2005, February 2006, May 2006, and March 2007.In December 2005, the Bankruptcy Court entered an order authorizing the transfer of this
proceeding, along with certain other actions, to MC Asset Recovery. Under that order, Reorganized
Mirant was obligated to fund up to $20 million in professional fees in connection with the
lawsuits, as well as certain additional amounts. Any net recoveries from these lawsuits would be
distributed to, and shared equally by, certain unsecured creditors and the original equity holders.
In January 2006, the U.S. District Court for the Northern District of Texas substituted MC Asset
Recovery as plaintiff.The complaint, as amended in March 2007, alleged that Southern Company caused Mirant to engage in
certain fraudulent transfers and to pay illegal dividends to Southern Company prior to the
spin-off. The alleged fraudulent transfers and illegal dividends included without limitation: (1)
certain dividends from Mirant to Southern Company in the aggregate amount of $668 million, (2) the
repayment of certain intercompany loans and accrued interest in an aggregate amount of $1.035
billion, and (3) the dividend distribution of one share of Series B Preferred Stock and its
subsequent redemption in exchange for Mirants 80% interest in a holding company that owned SE
Finance Capital Corporation and Southern Company Capital Funding, Inc., which transfer plaintiff
asserted was valued at over $200 million. The complaint also sought to recharacterize certain
advances from Southern Company to Mirant for investments in energy facilities from debt to equity.
The complaint further alleged that Southern Company was liable to Mirants creditors for the full
amount of Mirants liability under an alter ego theory of recovery and that Southern Company
breached its fiduciary duties to Mirant and its creditors, caused Mirant to breach its fiduciary
duties to creditors, and aided and abetted breaches of fiduciary duties by Mirants directors and
officers. The complaint also sought recoveries under the theories of restitution and unjust
enrichment. In addition, the complaint alleged a claim under the Federal Debt Collection Procedure
Act (FDCPA) to avoid certain transfers from Mirant to Southern Company; however, in July 2008, the
court ruled that the FDCPA does not apply and that Georgia law should apply instead. The complaint
sought monetary damages in excess of $2 billion plus interest, punitive damages, attorneys fees,
and costs. Finally, the complaint included an objection to Southern Companys pending claims
against Mirant in the Bankruptcy Court (which relate to reimbursement under the separation
agreements of payments such as income taxes, interest, legal fees, and other guarantees described
in Note 7 to the financial statements of Southern Company in Item 8 of the Form 10-K) and sought
equitable subordination of Southern Companys claims to the claims of all other creditors.
Southern Company served an answer to the complaint in April 2007.In January 2006, the U.S. District Court for the Northern District of Texas granted Southern
Companys motion to withdraw this action from the Bankruptcy Court and, in February 2006, granted
Southern Companys motion to transfer the case to the U.S. District Court for the Northern District
of Georgia. In May 2006, Southern Company filed a motion for summary judgment seeking entry of
judgment against the plaintiff as to all counts of the complaint. In December 2006, the U.S.
District Court for the Northern District of Georgia granted in part and denied in part the motion.
As a result, certain breach of fiduciary duty claims alleged in earlier versions of the complaint
were barred; all other claims in the complaint were allowed to proceed. In August 2008, Southern
Company filed a second motion for summary judgment. MC Asset Recovery filed its response to
Southern Companys motion for summary judgment in October 2008. On February 5, 2009, the court
denied the summary judgment motion in connection with the fraudulent conveyance and illegal
dividend claims concerning certain advance return/loan repayments in 1999, dividends in 1999 and
2000, and
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 transfers in connection with Mirants separation from Southern Company. The court granted Southern
Companys motion for summary judgment with respect to certain claims, including claims for
restitution and unjust enrichment, claims that Southern Company aided and abetted Mirants
directors breach of fiduciary duties to Mirant, and claims that Southern Company used Mirant as an
alter ego. In addition, the court granted Southern Companys motion in connection with the
fraudulent transfer and illegal dividend claims concerning certain turbine termination payments.On March 31, 2009, Southern Company entered into a settlement agreement with MC Asset Recovery to
resolve the action. The settlement includes an agreement by Southern Company to pay MC Asset
Recovery $202 million and requires MC Asset Recovery to release Southern Company and certain other
designated avoidance actions assigned to MC Asset Recovery in connection with Mirants plan of
reorganization, as well as to release all actions against current or former officers and directors
of Mirant and Southern Company that have or could have been filed. Pursuant to the settlement,
Southern Company recorded a charge in the first quarter 2009 of $202 million. This settlement
resolves all claims by MC Asset Recovery against Southern Company. Southern Company is currently
evaluating potential recovery of the settlement payment through various means including insurance,
claims in U.S. Bankruptcy Court, and other avenues. The degree to which any recovery is realized
will determine, in part, the final income tax treatment of the settlement payment. The ultimate
outcome of any such recovery and/or income tax treatment cannot be determined at this time.Environmental MattersNew Source Review ActionsIn November 1999, the EPA brought a civil action in the U.S. District Court for the Northern
District of Georgia against certain Southern Company subsidiaries, including Alabama Power and
Georgia Power, alleging that these subsidiaries had violated the NSR provisions of the Clean Air
Act and related state laws at certain coal-fired generating facilities. Through subsequent
amendments and other legal procedures, the EPA filed a separate action in January 2001 against
Alabama Power in the U.S. District Court for the Northern District of Alabama after Alabama Power
was dismissed from the original action. In these lawsuits, the EPA alleged that NSR violations
occurred at eight coal-fired generating facilities operated by Alabama Power and Georgia Power.
The civil actions request penalties and injunctive relief, including an order requiring the
installation of the best available control technology at the affected units. The EPA concurrently
issued notices of violation to Gulf Power and Mississippi Power relating to Gulf Powers Plant
Crist and Mississippi Powers Plant Watson. In early 2000, the EPA filed a motion to amend its
complaint to add Gulf Power and Mississippi Power as defendants based on the allegations in the
notices of violation. However, in March 2001, the Court denied the motion based on lack of
jurisdiction, and the EPA has not refiled. The action against Georgia Power has been
administratively closed since the spring of 2001, and the case has not been reopened.In June 2006, the U.S. District Court for the Northern District of Alabama entered a consent decree
between Alabama Power and the EPA, resolving a portion of the Alabama Power lawsuit relating to the
alleged NSR violations at Plant Miller. The consent decree required Alabama Power to pay $100,000
to resolve the governments claim for a civil penalty and to donate $4.9 million of sulfur dioxide
emission allowances to a nonprofit charitable organization. It also formalized specific emissions
reductions to be accomplished by Alabama Power, consistent with other Clean Air Act programs that
require emissions reductions. In August 2006, the district court in Alabama granted Alabama
Powers motion for summary judgment and entered final judgment in favor of Alabama Power on the
EPAs claims related to all of the remaining plants: Plants Barry, Gaston, Gorgas, and Greene
County.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 The plaintiffs appealed the district courts decision to the U.S. Court of Appeals for the Eleventh
Circuit, where the appeal was stayed, pending the U.S. Supreme Courts decision in a similar case
against Duke Energy. The Supreme Court issued its decision in the Duke Energy case in April 2007,
and in December 2007, the Eleventh Circuit vacated the district courts decision in the Alabama
Power case and remanded the case back to the district court for consideration of the legal issues
in light of the Supreme Courts decision in the Duke Energy case. In July 2008, the U.S. District
Court for the Northern District of Alabama granted partial summary judgment in favor of Alabama
Power regarding the proper legal test for determining whether projects are routine maintenance,
repair, and replacement and therefore are excluded from NSR permitting. The decision did not
resolve the case, and the ultimate outcome of these matters cannot be determined at this time.Southern Company and the traditional operating companies believe they have complied with applicable
laws and the EPA regulations and interpretations in effect at the time the work in question took
place. The Clean Air Act authorizes maximum civil penalties of $25,000 to $37,500 per day, per
violation at each generating unit, depending on the date of the alleged violation. An adverse
outcome in these matters could require substantial capital expenditures or affect the timing of
currently budgeted capital expenditures that cannot be determined at this time and could possibly
require payment of substantial penalties. Such expenditures could affect future results of
operations, cash flows, and financial condition if such costs are not recovered through regulated
rates.Carbon Dioxide LitigationNew York CaseIn July 2004, three environmental groups and attorneys general from eight states, each outside of
Southern Companys service territory, and the corporation counsel for New York City filed
complaints in the U.S. District Court for the Southern District of New York against Southern
Company and four other electric power companies. The complaints allege that the companies
emissions of carbon dioxide, a greenhouse gas, contribute to global warming, which the plaintiffs
assert is a public nuisance. Under common law public and private nuisance theories, the plaintiffs
seek a judicial order (1) holding each defendant jointly and severally liable for creating,
contributing to, and/or maintaining global warming and (2) requiring each of the defendants to cap
its emissions of carbon dioxide and then reduce those emissions by a specified percentage each year
for at least a decade. The plaintiffs have not, however, requested that damages be awarded in
connection with their claims. Southern Company believes these claims are without merit and notes
that the complaint cites no statutory or regulatory basis for the claims. In September 2005, the
U.S. District Court for the Southern District of New York granted Southern Companys and the other
defendants motions to dismiss these cases. The plaintiffs filed an appeal to the U.S. Court of
Appeals for the Second Circuit in October 2005, but no decision has been issued. The ultimate
outcome of these matters cannot be determined at this time.Kivalina CaseIn February 2008, the Native Village of Kivalina and the City of Kivalina filed a suit in the U.S.
District Court for the Northern District of California against several electric utilities
(including Southern Company), several oil companies, and a coal company. The plaintiffs are the
governing bodies of an Inupiat village in Alaska. The plaintiffs contend that the village is being
destroyed by erosion allegedly caused by global warming that the plaintiffs attribute to emissions
of greenhouse gases by the defendants. The plaintiffs assert claims for public and private
nuisance and contend that the defendants have acted in concert and are therefore jointly and
severally liable for the plaintiffs damages. The suit seeks damages for lost property values and
for the cost of relocating the village,
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 which is alleged to be $95 million to $400 million. In June 2008, all defendants filed motions to
dismiss this case. Southern Company believes that these claims are without merit and notes that
the complaint cites no statutory or regulatory basis for the claims. The ultimate outcome of this
matter cannot be determined at this time.Environmental RemediationThe registrants must comply with environmental laws and regulations that cover the handling and
disposal of waste and releases of hazardous substances. Under these various laws and regulations,
the subsidiaries may also incur substantial costs to clean up properties. The traditional
operating companies have each received authority from their respective state PSCs to recover
approved environmental compliance costs through regulatory mechanisms. Within limits approved by
the state PSCs, these rates are adjusted annually or as necessary.Georgia Powers environmental remediation liability at March 31, 2009 was $11.4 million. Georgia
Power has been designated or identified as a potentially responsible party (PRP) at sites governed
by the Georgia Hazardous Site Response Act and/or by the federal Comprehensive Environmental
Response, Compensation, and Liability Act (CERCLA), including a large site in Brunswick, Georgia on
the CERCLA National Priorities List (NPL). The parties have completed the removal of wastes from
the Brunswick site as ordered by the EPA. Additional claims for recovery of natural resource
damages at this site or for the assessment and potential cleanup of other sites on the Georgia
Hazardous Sites Inventory and CERCLA NPL are anticipated.By letter dated September 30, 2008, the EPA advised Georgia Power that it has been designated as a
PRP at the Ward Transformer Superfund site located in Raleigh, North Carolina. Numerous other
entities have also received notices from the EPA. Georgia Power, along with other named PRPs, is
negotiating with the EPA to address cleanup of the site and reimbursement for past expenditures
related to work performed at the site. In addition, on April 30, 2009, two PRPs filed separate
actions in the U.S. District Court for the Eastern District of North Carolina against numerous
other PRPs, including Georgia Power, seeking contribution from the defendants for expenses incurred
by the plaintiffs related to work performed at a portion of the site. The ultimate outcome of
these matters will depend upon further environmental assessment and the ultimate number of PRPs and
cannot be determined at this time; however, it is not expected to have a material impact on Georgia
Powers financial statements.Gulf Powers environmental remediation liability includes estimated costs of environmental
remediation projects of approximately $67.6 million at March 31, 2009. These estimated costs
relate to site closure criteria by the Florida Department of Environmental Protection (FDEP) for
potential impacts to soil and groundwater from herbicide applications at Gulf Power substations.
The schedule for completion of the remediation projects will be subject to FDEP approval. The
projects have been approved by the Florida PSC for recovery through Gulf Powers environmental cost
recovery clause; therefore, there was no impact on net income as a result of these estimates.In 2003, the Texas Commission on Environmental Quality (TCEQ) designated Mississippi Power as a
potentially responsible party at a site in Texas. The site was owned by an electric transformer
company that handled Mississippi Powers transformers as well as those of many other entities. The
site owner is now in bankruptcy and the State of Texas has entered into an agreement with
Mississippi Power and several other utilities to investigate and remediate the site. Amounts
expensed related to this work were not material. Hundreds of entities have received notices from
the TCEQ requesting their participation in the anticipated site remediation. The final impact of
this matter on Mississippi Power will depend upon further environmental assessment and the ultimate
number of potentially responsible parties. The remediation expenses incurred by Mississippi Power
are expected
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 to be recovered through the ECO Plan. See Note 3 to the financial statements of Mississippi Power
under Retail Regulatory Matters  Environmental Compliance.The final outcome of these matters cannot now be determined. However, based on the currently known
conditions at these sites and the nature and extent of activities relating to these sites, Southern
Company, Georgia Power, Gulf Power, and Mississippi Power do not believe that additional
liabilities, if any, at these sites would be material to their respective financial statements.FERC MattersMarket-Based Rate AuthorityEach of the traditional operating companies and Southern Power has authorization from the FERC to
sell power to non-affiliates, including short-term opportunity sales, at market-based prices.
Specific FERC approval must be obtained with respect to a market-based contract with an affiliate.In December 2004, the FERC initiated a proceeding to assess Southern Companys generation dominance
within its retail service territory. The ability to charge market-based rates in other markets is
not an issue in the proceeding. Any new market-based rate sales by any subsidiary of Southern
Company in Southern Companys retail service territory entered into during a 15-month refund period
that ended in May 2006 could be subject to refund to a cost-based rate level.In November 2007, the presiding administrative law judge issued an initial decision regarding the
methodology to be used in the generation dominance tests. The proceedings are ongoing. The
ultimate outcome of this generation dominance proceeding cannot now be determined, but an adverse
decision by the FERC in a final order could require the traditional operating companies and
Southern Power to charge cost-based rates for certain wholesale sales in the Southern Company
retail service territory, which may be lower than negotiated market-based rates and could also
result in total refunds of up to $19.7 million, plus interest. The potential refunds include $3.9
million for Alabama Power, $5.8 million for Georgia Power, $0.8 million for Gulf Power, $8.4
million for Mississippi Power, and $0.7 million for Southern Power, in each case plus interest.
Southern Company and its subsidiaries believe that there is no meritorious basis for an adverse
decision in this proceeding and are vigorously defending themselves in this matter.In June 2007, the FERC issued its final rule in Order No. 697 regarding market-based rate
authority. The FERC generally retained its current market-based rate standards. Responding to a
number of requests for rehearing, the FERC issued Order No. 697-A on April 21, 2008 and Order No.
697-B on December 12, 2008. These orders largely affirmed the FERCs prior revision and
codification of the regulations governing market-based rates for public utilities. In accordance
with the orders, Southern Company submitted to the FERC an updated market power analysis in
September 2008 related to its continued market-based rate authority.In October 2008, Southern Company filed with the FERC a revised market-based rate (MBR) tariff and
a new cost-based rate (CBR) tariff. The revised MBR tariff provides for a must offer energy
auction whereby Southern Company offers all of its available energy for sale in a day-ahead auction
and an hour-ahead auction with reserve prices not to exceed the CBR tariff price, after considering
Southern Companys native load requirements, reliability obligations, and sales commitments to
third parties. All sales under the energy auction would be at market clearing prices established
under the auction rules. The new CBR tariff provides for a cost-based price for wholesale sales of
less than a year. On March 5, 2009, the FERC accepted Southern Companys CBR tariff for filing.
On March 25, 2009, the FERC accepted Southern Companys compliance filing related to the MBR tariff
and directed Southern Company to commence the energy auction within 30 days. Southern Company
commenced the energy auction on April 23, 2009. Implementation of the energy auction in
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 accordance with the MBR tariff order is expected to adequately mitigate going forward any
presumption of market power that Southern Company may have in the Southern Company retail service
territory.Intercompany Interchange ContractSouthern Companys generation fleet in its retail service territory is operated under the IIC as
approved by the FERC. In May 2005, the FERC initiated a new proceeding to examine (1) the
provisions of the IIC among the traditional operating companies, Southern Power, and SCS, as agent,
under the terms of which the Power Pool is operated, (2) whether any parties to the IIC have
violated the FERCs standards of conduct applicable to utility companies that are transmission
providers, and (3) whether Southern Companys code of conduct defining Southern Power as a system
company rather than a marketing affiliate is just and reasonable. In connection with the
formation of Southern Power, the FERC authorized Southern Powers inclusion in the IIC in 2000.
The FERC also previously approved Southern Companys code of conduct.In October 2006, the FERC issued an order accepting a settlement resolving the proceeding subject
to Southern Companys agreement to accept certain modifications to the settlements terms and
Southern Company notified the FERC that it accepted the modifications. The modifications largely
involve functional separation and information restrictions related to marketing activities
conducted on behalf of Southern Power. In November 2006, Southern Company filed with the FERC a
compliance plan in connection with the order. In April 2007, the FERC approved, with certain
modifications, the plan submitted by Southern Company. Implementation of the plan did not have a
material impact on Southern Companys or the traditional operating companies financial statements.
Southern Powers annual cost of implementing the compliance plan is approximately $7.0 million.
In November 2007, Southern Company notified the FERC that the plan had been implemented. In
December 2008, the FERC division of audits issued for public comment its final audit report
pertaining to compliance implementation and related matters. No comments challenging the audit
reports findings were submitted. A decision is now pending from the FERC.Generation Interconnection AgreementsIn November 2004, generator company subsidiaries of Tenaska, Inc. (Tenaska), as counterparties to
three previously executed interconnection agreements with subsidiaries of Southern Company, filed
complaints at the FERC requesting that the FERC modify the agreements and that those Southern
Company subsidiaries refund a total of $19 million previously paid for interconnection facilities,
of which $11 million would be refunded by Alabama Power and $8 million by Georgia Power. No other
similar complaints are pending with the FERC.In January 2007, the FERC issued an order granting Tenaskas requested relief. Although the FERCs
order required the modification of Tenaskas interconnection agreements, under the provisions of
the order, Southern Company determined that no refund was payable to Tenaska. Southern Company
requested rehearing asserting that the FERC retroactively applied a new principle to existing
interconnection agreements. Tenaska requested rehearing of FERCs methodology for determining the
amount of refunds. The requested rehearings were denied, and Southern Company and Tenaska have
appealed the orders to the U.S. Circuit Court for the District of Columbia. The final outcome of
this matter cannot now be determined.Right of Way LitigationSouthern Company and certain of its subsidiaries, including Mississippi Power, have been named as
defendants in numerous lawsuits brought by landowners since 2001. The plaintiffs lawsuits claim
that defendants may not use, or sublease to third parties, some or all of the fiber optic
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 communications lines on the rights of way that cross the plaintiffs properties and that such
actions exceed the easements or other property rights held by defendants. The plaintiffs assert
claims for, among other things, trespass and unjust enrichment and seek compensatory and punitive
damages and injunctive relief. Management of Southern Company and Mississippi Power believe that
they have complied with applicable laws and that the plaintiffs claims are without merit.To date, Mississippi Power has entered into agreements with plaintiffs in approximately 95% of the
actions pending against Mississippi Power to clarify its easement rights in the State of
Mississippi. These agreements have been approved by the Circuit Courts of Harrison County and
Jasper County, Mississippi (First Judicial Circuit), and dismissals of the related cases are in
progress. These agreements have not resulted in any material effects on Southern Companys or
Mississippi Powers financial statements.In addition, in late 2001, certain subsidiaries of Southern Company, including Mississippi Power,
were named as defendants in a lawsuit brought in Troup County, Georgia, Superior Court by
Interstate Fiber Network, a subsidiary of telecommunications company ITC DeltaCom, Inc. that uses
rights of way. This lawsuit alleges, among other things, that the defendants are contractually
obligated to indemnify, defend, and hold harmless the telecommunications company from any liability
that may be assessed against it in pending and future right of way litigation. Southern Company
and Mississippi Power believe that the plaintiffs claims are without merit. In the fall of 2004,
the trial court stayed the case until resolution of the underlying landowner litigation discussed
above. In January 2005, the Georgia Court of Appeals dismissed the telecommunications companys
appeal of the trial courts order for lack of jurisdiction. An adverse outcome in this matter,
combined with an adverse outcome against the telecommunications company in one or more of the right
of way lawsuits, could result in substantial judgments; however, the final outcome of these matters
cannot now be determined.Nuclear Fuel Disposal Cost LitigationSee Note 3 to the financial statements of Southern Company, Alabama Power, and Georgia Power under
Nuclear Fuel Disposal Costs in Item 8 of the Form 10-K for information regarding the litigation
brought by Alabama Power and Georgia Power against the government for breach of contracts related
to the disposal of spent nuclear fuel. In July 2007, the U.S. Court of Federal Claims awarded
Georgia Power a total of $30 million, based on its ownership interests, and awarded Alabama Power
$17.3 million, representing all of the direct costs of the expansion of spent nuclear fuel storage
facilities from 1998 through 2004. In August 2007, the government filed a motion for
reconsideration, which was denied in November 2007. In January 2008, the government filed a notice
of appeal. In February 2008, the government filed a motion to stay the appeal pending the courts
decisions in three other cases already on appeal. In April 2008, the court granted the governments
motion to stay the appeal pending the courts decisions in three other similar cases already on
appeal. Those cases were decided in August 2008. Based on the rulings in those cases, an appeal
is expected.In April 2008, a second claim against the government was filed for damages incurred after December
31, 2004 (the court-mandated cut-off in the original claim), due to the governments alleged
continuing breach of contract. In October 2008, the court denied a similar request by the
government to stay this proceeding. The complaint does not contain any specific dollar amount for
recovery of
 125




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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 damages. Damages will continue to accumulate until the issue is resolved or the storage is
provided. No amounts have been recognized in the financial statements as of March 31, 2009 for
either claim. The final outcome of these matters cannot be determined at this time; however, no
material impact on net income is expected as any damage amounts collected from the government are
expected to be returned to customers.Income Tax MattersLeveraged LeasesIn 2002, the IRS began the examination of three sale-in-lease-out (SILO) transactions entered into
by Southern Company. As a result of this examination, the IRS challenged the deductions related to
these transactions. Southern Company disagreed with the IRSs conclusion, went through all
administrative appeals, paid approximately $168 million of the additional tax, and sued the IRS for
the refund of such taxes.During the second quarter 2008, decisions in favor of the IRS were reached in several court cases
involving other taxpayers with similar leveraged lease investments. Pursuant to the application of
FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes and FASB Staff Position
No. FAS 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, management is required to assess on a
periodic basis the likely outcome of the uncertain tax positions related to the SILO transactions.
Based on these accounting standards and managements review of the recent court decisions, Southern
Company recorded an after-tax charge of approximately $67 million in the second quarter 2008.In December 2008, Southern Company received from the Commissioner of the IRS an invitation to
participate in a global settlement initiative related to the SILO transactions. Southern Company
accepted the settlement offer on January 8, 2009. Pursuant to the settlement offer, Southern
Company recorded an additional after-tax charge in the fourth quarter 2008 of $16 million.
Including the charge recorded in the second quarter 2008, total after-tax charges related to
settling the SILO litigation amounted to $83 million in 2008. Of the total, approximately $7
million represents interest and $76 million represents non-cash charges related to the reallocation
of lease income and will be recognized in income over the remaining term of the affected leases.
All additional taxes due as a result of the settlement have now been paid. A final closing
agreement with the IRS is currently being negotiated and is expected to be completed in the second
quarter 2009.Georgia State Income Tax CreditsGeorgia Powers 2005 through 2008 income tax filings for the State of Georgia include state income
tax credits for increased activity through Georgia ports. Georgia Power has also filed similar
claims for the years 2002 through 2004. The Georgia Department of Revenue has not responded to
these claims. In July 2007, Georgia Power filed a complaint in the Superior Court of Fulton County
to recover the credits claimed for the years 2002 through 2004. An unrecognized tax benefit has
been recorded related to these credits. If Georgia Power prevails, these claims could have a
significant, and possibly material, positive effect on Southern Companys and Georgia Powers net
income. If Georgia Power is not successful, payment of the related state tax could have a
significant, and possibly material, negative effect on Southern Companys and Georgia Powers cash
flow. The ultimate outcome of this matter cannot now be determined.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 (C)
    
    FAIR VALUE MEASUREMENTSAs of March 31, 2009, assets and liabilities measured at fair value on a recurring basis during
the period, together with the level of the fair value hierarchy in which they fall, are as
follows:
 Fair Value Measurements UsingQuoted Pricesin Active
    
    SignificantMarkets for
    
    Other
    
    SignificantIdentical
    
    Observable
    
    UnobservableAssets
    
    Inputs
    
    InputsAs of March 31, 2009:
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)
    
    Total(in millions)Southern CompanyAssets:Energy-related derivatives
    
    $
    
    
    
    $
    20
    
    
    $
    
    
    
    $
    20Nuclear decommissioning trusts(a)
    
    
    413
    
    
    
    394
    
    
    
    
    
    
    
    807Cash equivalents and restricted cash
    
    
    697
    
    
    
    
    
    
    
    
    
    
    
    697Other
    
    
    3
    
    
    
    46
    
    
    
    32
    
    
    
    81Total
    
    $
    1,113
    
    
    $
    460
    
    
    $
    32
    
    
    $
    1,605Liabilities:Energy-related derivatives
    
    $
    
    
    
    $
    443
    
    
    $
    
    
    
    $
    443Interest rate derivatives
    
    
    
    
    
    
    18
    
    
    
    
    
    
    
    18Total
    
    $
    
    
    
    $
    461
    
    
    $
    
    
    
    $
    461Alabama PowerAssets:Energy-related derivatives
    
    $
    
    
    
    $
    1
    
    
    $
    
    
    
    $
    1Nuclear decommissioning trusts(a)
    
    
    208
    
    
    
    167
    
    
    
    
    
    
    
    375Cash equivalents and restricted cash
    
    
    347
    
    
    
    
    
    
    
    
    
    
    
    347Total
    
    $
    555
    
    
    $
    168
    
    
    $
    
    
    
    $
    723Liabilities:Energy-related derivatives
    
    $
    
    
    
    $
    131
    
    
    $
    
    
    
    $
    131Interest rate derivatives
    
    
    
    
    
    
    11
    
    
    
    
    
    
    
    11Total
    
    $
    
    
    
    $
    142
    
    
    $
    
    
    
    $
    142Georgia PowerAssets:Energy-related derivatives
    
    $
    
    
    
    $
    1
    
    
    $
    
    
    
    $
    1Nuclear decommissioning trusts(a)
    
    
    205
    
    
    
    227
    
    
    
    
    
    
    
    432Cash equivalents and restricted cash
    
    
    151
    
    
    
    
    
    
    
    
    
    
    
    151Total
    
    $
    356
    
    
    $
    228
    
    
    $
    
    
    
    $
    584Liabilities:Energy-related derivatives
    
    $
    
    
    
    $
    178
    
    
    $
    
    
    
    $
    178Interest rate derivatives
    
    
    
    
    
    
    7
    
    
    
    
    
    
    
    7Total
    
    $
    
    
    
    $
    185
    
    
    $
    
    
    
    $
    185Gulf PowerAssets:Cash
equivalents and restricted cash
    
    $
    55
    
    
    $
    
    
    
    $
    
    
    
    $
    55Liabilities:Energy-related derivatives
    
    $
    
    
    
    $
    43
    
    
    $
    
    
    
    $
    43Mississippi PowerAssets:Energy-related derivatives
    
    $
    
    
    
    $
    2
    
    
    $
    
    
    
    $
    2Cash equivalents
    
    
    19
    
    
    
    
    
    
    
    
    

    
    
    19Total
    
    $
    19
    
    
    $
    2
    
    
    $
    
    
    
    $
    21Liabilities:Energy-related derivatives
    
    $
    
    
    
    $
    78
    
    
    $
    
    
    
    $
    78
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 Fair Value Measurements UsingQuoted Pricesin Active
    
    SignificantMarkets for
    
    Other
    
    SignificantIdentical
    
    Observable
    
    UnobservableAssets
    
    Inputs
    
    InputsAs of March 31, 2009:
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)
    
    Total(in millions)Southern PowerAssets:Energy-related derivatives
    
    $
    
    
    
    $
    16
    
    
    $
    
    
    
    $
    16Cash equivalents
    
    
    29
    
    
    
    
    
    
    
    
    
    
    
    29Total
    
    $
    29
    
    
    $
    16
    
    
    $
    
    
    
    $
    45Liabilities:Energy-related derivatives
    
    $
    
    
    
    $
    13
    
    
    $
    
    
    
    $
    13
 (a)
    
    Excludes receivables related to investment income, pending investment sales,
and payables related to pending investment purchases.
 Energy-related derivatives and interest rate derivatives primarily consist of over-the-counter
contracts. See Note (F) under Financial Instruments herein for additional information. The
nuclear decommissioning trust funds are invested in a diversified mix of equity and fixed
income securities. The cash equivalents and restricted cash consist of securities with
original maturities of 90 days or less. Other represents marketable securities and certain
deferred compensation funds also invested in various marketable securities. All of these
financial instruments and investments are valued primarily using the market approach.Changes in the fair value measurement of the Level 3 items using significant unobservable
inputs for Southern Company at March 31, 2009 are as follows:
 Level 3Other(in millions)Beginning balance at December 31, 2008
    
    $
    35Total gains (losses)  realized/unrealized:Included in earnings
    
    
    (3
    )Included in other comprehensive income
    
    
    Ending balance at March 31, 2009
    
    $
    32
 Unrealized losses of $3 million were included in earnings during the period relating to assets
still held at March 31, 2009 and are recorded in depreciation and amortization.Southern Company, Alabama Power, and Georgia Power continue to elect the fair value option
under FASB Statement No. 159, Fair Value Option for Financial Assets and Financial Liabilities
 Including an Amendment of FASB Statement No. 115 for investment securities held in the
nuclear decommissioning trust funds. For the three months ended March 31, 2009, the reduction
in fair value of the funds, which includes reinvested interest and dividends, is recorded in
the regulatory liability, and was $23 million for Alabama Power, $25 million for Georgia Power,
and $48 million for Southern Company.
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##### Table of Contents



NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 (D)
    
    CONSTRUCTION PROJECTSIntegrated Coal Gasification Combined CycleSee Note 3 to the financial statements of Southern Company and Mississippi Power under Integrated
Coal Gasification Combined Cycle in Item 8 of the Form 10-K for information regarding the Kemper
IGCC.On April 6, 2009, the Governor of the State of Mississippi signed into law a bill that will provide
an ad valorem tax exemption for a portion of the assessed value of all property utilized in certain
electric generating facilities with integrated gasification process facilities. This tax
exemption, which may not exceed 50% of the total value of the project, is for projects with a
capital investment from private sources of $1 billion or more.On April 6, 2009, Mississippi Power received an accounting order from the Mississippi PSC directing
Mississippi Power to continue to charge all Kemper IGCC generation resources planning, evaluation,
and screening costs to regulatory assets including those costs associated with activities to obtain
a certificate of public convenience and necessity and costs necessary and prudent to preserve the
availability, economic viability, and/or required schedule of the selected generation resource
until the Mississippi PSC makes findings and determination as to the recovery of Mississippi
Powers prudent expenditures.As of March 31, 2009, Mississippi Power had spent a total of $50.7 million associated with
Mississippi Powers generation resource planning, evaluation, and screening activities, including
regulatory filings costs. Costs incurred during the first quarter 2009 totaled $8.4 million as
compared to $7.2 million during the first quarter 2008. Of the total $50.7 million, $46.2 million
was deferred in other regulatory assets, $3.7 million was related to land purchases capitalized,
and $0.8 million was previously expensed.Several motions have been filed by intervenors in this proceeding, most of which are procedural in
nature and seek to stay or delay the timely and orderly administration of the docket. In addition
to these procedural motions, a motion has been filed by the Attorney General for the State of
Mississippi which questions whether the Mississippi PSC has authority to approve the gasification
portion of the Kemper IGCC. All of these motions were heard by the Mississippi PSC on May 5, 2009.The ultimate outcome of these matters cannot now be determined.NuclearSee Note 3 to the financial statements of Southern Company and Georgia Power under Nuclear in
Item 8 of the Form 10-K for information regarding the potential expansion of Plant Vogtle.On March 17, 2009, the Georgia PSC voted to certify construction of Plant Vogtle Units 3 and 4 at
an in-service cost of $6.4 billion. In addition, the Georgia PSC voted to approve inclusion of the
related construction work in progress accounts in rate base and to recover financing costs during
the construction period beginning in 2011.
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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 On April 21, 2009, the Governor of the State of Georgia signed into law The Georgia Nuclear Energy
Financing Act that will allow Georgia Power to recover financing costs for nuclear construction
projects by including the related construction work in progress accounts in rate base during the
construction period. The cost recovery provisions will become effective January 1, 2011.(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, 2009
    
    March 31, 2008As reported shares
    
    
    779,858
    
    
    
    766,150Effect of options
    
    
    1,787
    
    
    
    4,171Diluted shares
    
    
    781,645
    
    
    
    770,321
 (F)
    
    FINANCINGBank Credit ArrangementsAt March 31, 2009, unused credit arrangements with banks totaled $4.2 billion, of which $775
million expires during 2009, $160 million expires in 2010, $25 million expires in 2011, and $3.2
billion expires in 2012. These credit arrangements provided liquidity support to the registrants
commercial paper programs and the traditional operating companies variable rate pollution control
revenue bonds. The following table outlines the credit arrangements by company:
 ExecutableTerm-Loans
    
    ExpiresOne
    
    TwoCompany
    
    Total
    
    Unused
    
    Year
    
    Years
    
    2009
    
    2010
    
    2011
    
    2012(in millions)Southern Company
    
    $
    950
    
    
    $
    950
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    950Alabama Power
    
    
    1,256
    
    
    
    1,256
    
    
    
    379
    
    
    
    
    
    
    
    466
    
    
    
    
    
    
    
    25
    
    
    
    765Georgia Power
    
    
    1,290
    
    
    
    1,278
    
    
    
    
    
    
    
    40
    
    
    
    40
    
    
    
    130
    
    
    
    
    
    
    
    1,120Gulf Power
    
    
    140
    
    
    
    140
    
    
    
    60
    
    
    
    
    
    
    
    110
    
    
    
    30
    
    
    
    
    
    
    
    Mississippi Power
    
    
    109
    
    
    
    109
    
    
    
    15
    
    
    
    54
    
    
    
    109
    
    
    
    
    
    
    
    
    
    
    
    Southern Power
    
    
    400
    
    
    
    400
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    400Other
    
    
    50
    
    
    
    50
    
    
    
    50
    
    
    
    
    
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    4,195
    
    
    $
    4,183
    
    
    $
    504
    
    
    $
    94
    
    
    $
    775
    
    
    $
    160
    
    
    $
    25
    
    
    $
    3,235
 130




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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)


Subsequent to March 31, 2009, Georgia Power, Gulf Power, and Mississippi Power entered into
additional committed credit arrangements resulting in a net increase of $425 million, $75 million,
and $40 million, respectively, to enhance liquidity. These additional credit arrangements all
expire in 2010.See Note 6 to the financial statements of Southern Company, Alabama Power, Georgia Power, Gulf
Power, Mississippi Power, and Southern Power under Bank Credit Arrangements in Item 8 of the Form
10-K for additional information.


Changes in EquityThe following table presents year-to-date changes in
stockholders equity and redeemable preferred stock of
subsidiaries:
 Preferredand
    
    
    
    
    
    RedeemableCommon
    
    Preference
    
    Total
    
    PreferredStockholders
    
    Stock of
    
    Stockholders
    
    Stock ofEquity
    
    Subsidiaries
    
    Equity
    
    Subsidiaries(in millions)Balance at December 31, 2008
    
    $
    13,276
    
    
    $
    707
    
    
    $
    13,983
    
    
    $
    375Net income
    
    
    142
    
    
    
    -
    
    
    
    142
    
    
    Other comprehensive income (loss)
    
    
    8
    
    
    
    -
    
    
    
    8
    
    
    Stock issued
    
    
    170
    
    
    
    -
    
    
    
    170
    
    
    Cash dividends
    
    
    (343
    )
    
    
    -
    
    
    
    (343
    )
    
    Balance at March 31, 2009
    
    $
    13,253
    
    
    $
    707
    
    
    $
    13,960
    
    
    $
    375
 Preferredand
    
    
    
    
    
    RedeemableCommon
    
    Preference
    
    Total
    
    PreferredStockholders
    
    Stock of
    
    Stockholders
    
    Stock ofEquity
    
    Subsidiaries
    
    Equity
    
    Subsidiaries(in millions)Balance at December 31, 2007
    
    $
    12,385
    
    
    $
    707
    
    
    $
    13,092
    
    
    $
    498Net income
    
    
    375
    
    
    
    -
    
    
    
    375
    
    
    Other comprehensive income (loss)
    
    
    (22
    )
    
    
    -
    
    
    
    (22
    )
    
    Stock issued
    
    
    154
    
    
    
    -
    
    
    
    154
    
    
    Cash dividends
    
    
    (325
    )
    
    
    -
    
    
    
    (325
    )
    
    Redemption of preferred stock
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (125
    )Other
    
    
    (4
    )
    
    
    -
    
    
    
    (4
    )
    
    Balance at March 31, 2008
    
    $
    12,563
    
    
    $
    707
    
    
    $
    13,270
    
    
    $
    373
 131




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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 Financial InstrumentsSouthern Company, the traditional operating companies, and Southern Power are exposed to market
risks, primarily commodity price risk and interest rate risk. To manage the volatility
attributable to these exposures, each company nets their exposures, where possible, to take
advantage of natural offsets and enters into various derivative transactions for the remaining
exposures pursuant to the companies policies in areas such as counterparty exposure and risk
management practices. The registrants policy is that derivatives are to be used primarily for
hedging purposes and mandates strict adherence to all applicable risk management policies.
Derivative positions are monitored using techniques including, but not limited to, market
valuation, value at risk, stress testing, and sensitivity analysis. FASB Statement No. 133,
Accounting for Derivative Instruments and Hedging Activities (SFAS No. 133) requires companies to
recognize all derivative instruments as either assets or liabilities at fair value in the statement
of financial position.Energy-Related DerivativesThe traditional operating companies and Southern Power enter into energy-related derivatives to
hedge exposures to electricity, gas, and other fuel price changes. However, due to cost-based rate
regulations, the traditional operating companies have limited exposure to market volatility in
commodity fuel prices and prices of electricity. Each of the traditional operating companies
manages fuel-hedging programs, implemented per the guidelines of their respective state PSCs,
through the use of financial derivative contracts. Southern Power also has limited exposure to
market volatility in commodity fuel prices and prices of electricity because its long-term sales
contracts shift substantially all fuel cost responsibility to the purchaser. However, Southern
Power has been and may continue to be exposed to market volatility in energy-related commodity
prices as a result of sales of uncontracted generating capacity.To mitigate residual risks relative to movements in electricity prices, the registrants enter into
physical fixed-price or heat rate contracts for the purchase and sale of electricity through the
wholesale electricity market. To mitigate residual risks relative to movements in gas prices, the
registrants may enter into fixed-price contracts for natural gas purchases; however, a significant
portion of contracts are priced at market.
 Energy-related derivative contracts are accounted for in one of three methods:
 
    
    Regulatory Hedges Energy-related derivative contracts which are designated as regulatory
hedges relate primarily to the traditional operating companies fuel hedging programs, where
gains and losses are initially recorded as regulatory liabilities and assets, respectively,
and then are included in fuel expense as the underlying fuel is used in operations and
ultimately recovered through the respective fuel cost recovery clauses.
    
    SFAS No. 133 Hedges Gains and losses on energy-related derivatives designated as cash
flow hedges, which are mainly used by Southern Power, to hedge anticipated purchases and sales
are initially deferred in other comprehensive income before being recognized in income in the
same period as the hedged transactions are reflected in earnings.
    
    Not Designated Gains and losses on energy-related derivative contracts that are not
designated or fail to qualify as hedges are recognized in the statements of income as
incurred.
 132




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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 Some energy-related derivative contracts require physical delivery as opposed to financial
settlement, and this type of derivative is both common and prevalent within the electric industry.
When an energy-related derivative contract is settled physically, any cumulative unrealized gain or
loss is reversed and the contract price is recognized in the respective line item representing the
actual price of the underlying goods being delivered.At March 31, 2009, the net volume of energy-related derivative contracts for power and natural gas
positions for the registrants, together with the longest hedge date over which the respective
entity is hedging its exposure to the variability in future cash flows for forecasted transactions,
and the longest date for derivatives not designated as hedges, were as follows:
 Power
    
    GasLongest
    
    Longest
    
    Net
    
    Longest
    
    LongestAs of March 31,
    
    Net Sold
    
    Hedge
    
    Non-Hedge
    
    Purchased
    
    Hedge
    
    Non-Hedge2009:
    
    MWH
    
    Date
    
    Date
    
    Bcf
    
    Date
    
    Date(in thousands)Southern Company
    
    
    1,172
    
    
    
    2009
    
    
    
    2010
    
    
    
    173
    *
    
    
    2012
    
    
    
    2010Alabama Power
    
    
    
    
    
    
    
    
    
    
    2009
    
    
    
    49
    
    
    
    2012
    
    
    
    Georgia Power
    
    
    
    
    
    
    
    
    
    
    2009
    
    
    
    71
    
    
    
    2012
    
    
    
    Gulf Power
    
    
    
    
    
    
    
    
    
    
    2009
    
    
    
    16
    
    
    
    2012
    
    
    
    Mississippi Power
    
    
    500
    
    
    
    2009
    
    
    
    2009
    
    
    
    30
    
    
    
    2012
    
    
    
    2009Southern Power
    
    
    672
    
    
    
    
    
    
    
    2010
    
    
    
    6
    *
    
    
    
    
    
    
    2010
 *
    
    Includes location basis of 2 Bcf. For cash flow hedges, the amounts expected to be reclassified from other comprehensive income to
revenue and fuel expense for the next 12-month period ending March 31, 2010 are immaterial for all
registrants.
 Interest Rate DerivativesSouthern Company and certain subsidiaries also enter into interest rate derivatives, which include
forward-starting interest rate swaps, to hedge exposure to changes in interest rates. Derivatives
related to fixed-rate securities are accounted for as fair value hedges. Derivatives related to
existing variable rate securities or forecasted transactions are accounted for as cash flow hedges.
The derivatives employed as hedging instruments are structured to minimize ineffectiveness.For fair value hedges under SFAS No. 133, the changes in the fair value of the hedging derivatives
are recorded in earnings and are offset by the changes in the fair value of the hedged item. For
other hedges qualifying as cash flow hedges under SFAS No. 133, the fair value gains or losses are
recorded in other comprehensive income and are reclassified into earnings at the same time the
hedged transactions affect earnings.
 133




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##### Table of Contents



NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 At March 31, 2009, Southern Company had a total of $1.2 billion notional amount of interest rate
derivatives outstanding with net fair value losses of $18 million as follows:
 Weighted
    
    
    
    Fair ValueAverage
    
    
    
    Gain (Loss)Notional
    
    Variable Rate
    
    Fixed Rate
    
    Hedge Maturity
    
    March 31,Registrant
    
    Amount
    
    Received
    
    Paid
    
    Date
    
    2009(in millions)
    
    
    
    
    
    
    
    
    
    (in millions)Cash flow hedges of existing debtAlabama Power
    
    $
    576
    
    
    SIFMA* Index
    
    
    2.69
    %
    
    February 2010
    
    $
    (11
    )Georgia Power
    
    
    301
    
    
    SIFMA* Index
    
    
    2.22
    %
    
    December 2009
    
    
    (3
    )Georgia Power
    
    
    300
    
    
    1-month LIBOR
    
    
    2.43
    %
    
    April 2010
    
    
    (4
    )Total
    
    $
    1,177
    
    
    
    
    
    
    
    
    
    
    $
    (18
    )
 *
    
    Securities Industry and Financial Markets Association Municipal Swap Index (SIFMA) For the three months ended March 31, 2009, Georgia Power incurred net losses of $(16) million upon
termination of certain interest rate derivatives at the same time it issued debt. The effective
portion of these losses has been deferred in other comprehensive income and will be amortized to
interest expense over the life of the original interest rate derivative, reflecting the period in
which the forecasted hedged transaction affects earnings.The following table reflects the estimated pre-tax gains (losses) that will be reclassified from
other comprehensive income to interest expense for the next 12-month period ending March 31, 2010,
together with the longest date that total deferred gains and losses are expected to be amortized
into earnings.
 Estimated Gain (Loss) tobe Reclassified for the
    
    Total Deferred12 Months Ending
    
    Gains (Losses)Registrant
    
    March 31, 2010
    
    Amortized Through(in millions)Southern Company
    
    $
    (36
    )
    
    
    2037Alabama Power
    
    
    (10
    )
    
    
    2035Georgia Power
    
    
    (15
    )
    
    
    2037Gulf Power
    
    
    (1
    )
    
    
    2018Southern Power
    
    
    (10
    )
    
    
    2016
 134




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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 Derivative Financial Statement Presentation and AmountsAt March 31, 2009, the fair value of energy-related derivatives and interest rate derivatives was
reflected in the balance sheets as follows:
 Asset Derivatives at March 31, 2009Fair ValueDerivative Category and Balance Sheet
    
    Southern
    
    Alabama
    
    Georgia
    
    Gulf
    
    Mississippi
    
    SouthernLocation
    
    Company
    
    Power
    
    Power
    
    Power
    
    Power
    
    Power(in millions)Derivatives designated as hedging
instruments for regulatory purposesEnergy-related derivativesOther, deferred charges and other assets
    
    $
    2
    
    
    $
    1
    
    
    $
    1
    
    
    $
    
    
    
    $
    
    
    
    
    N/ADerivatives designated as hedging
instruments under SFAS No. 133Energy-related derivativesOther, current assets
    
    $
    1
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1
    
    
    $
    Derivatives not designated as hedging
instruments under SFAS No. 133Energy-related derivativesOther, current assets*
    
    $
    16
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1
    
    
    $
    Assets from risk management activities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15Other, deferred charges and other assets
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Total derivatives not designated as hedging
instruments under SFAS No. 133
    
    $
    17
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1
    
    
    $
    16Total asset derivatives
    
    $
    20
    
    
    $
    1
    
    
    $
    1
    
    
    $
    
    
    
    $
    2
    
    
    $
    16
 *
    
    Southern Company includes Assets from risk management activities in Other, current assets. Liability Derivatives at March 31, 2009Fair ValueDerivative Category and Balance Sheet
    
    Southern
    
    Alabama
    
    Georgia
    
    Gulf
    
    Mississippi
    
    SouthernLocation
    
    Company
    
    Power
    
    Power
    
    Power
    
    Power
    
    Power(in millions)Derivatives designated as hedging instruments
for regulatory purposesEnergy-related derivativesLiabilities from risk management activities
    
    $
    323
    
    
    $
    106
    
    
    $
    136
    
    
    $
    35
    
    
    $
    46Other, deferred credits and other liabilities
    
    
    106
    
    
    
    25
    
    
    
    42
    
    
    
    8
    
    
    
    31Total derivatives designated as hedging
instruments for regulatory purposes
    
    $
    429
    
    
    $
    131
    
    
    $
    178
    
    
    $
    43
    
    
    $
    77
    
    
    
    N/ADerivatives designated as hedging instruments
under SFAS No. 133Interest rate derivativesLiabilities from risk management activities
    
    $
    18
    
    
    $
    11
    
    
    $
    7
    
    
    $
    
    
    
    $
    
    
    
    $
    Derivatives not designated as hedging
instruments under SFAS No. 133Energy-related derivativesLiabilities from risk management activities
    
    $
    14
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1
    
    
    $
    13Total liability derivatives
    
    $
    461
    
    
    $
    142
    
    
    $
    185
    
    
    $
    43
    
    
    $
    78
    
    
    $
    13
 135




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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 All derivative instruments are measured at fair value. See Note (C) herein for additional
information.At March 31, 2009, the pre-tax effect of unrealized derivative gains (losses) arising from
energy-related derivative instruments designated as regulatory hedging instruments and deferred on
the balance sheet were as follows:
 Regulatory Hedge Unrealized Gain (Loss) Recognized on the Balance SheetDerivative Category and Balance Sheet
    
    Southern
    
    Alabama
    
    Georgia
    
    Gulf
    
    MississippiLocation
    
    Company
    
    Power
    
    Power
    
    Power
    
    Power(in millions)Energy-related derivativesOther regulatory assets, current
    
    $
    (323
    )
    
    $
    (106
    )
    
    $
    (136
    )
    
    $
    (35
    )
    
    $
    (46
    )Other regulatory assets, deferred
    
    
    (106
    )
    
    
    (25
    )
    
    
    (42
    )
    
    
    (8
    )
    
    
    (31
    )Other regulatory liabilities, deferred
    
    
    2
    
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    Total energy-related derivative gains (losses)
    
    $
    (427
    )
    
    $
    (130
    )
    
    $
    (177
    )
    
    $
    (43
    )
    
    $
    (77
    )
 For the three months ended March 31, 2009 and March 31, 2008, the pre-tax effect of energy-related
derivatives and interest rate derivatives designated as cash flow hedging instruments on the
statements of income were as follows:
 Gain (Loss)Derivatives in SFAS No. 133
    
    Recognized in OCI
    
    Gain (Loss) Reclassified from Accumulated OCICash Flow Hedging
    
    on Derivative
    
    into Income (Effective Portion)Relationships
    
    (Effective Portion)
    
    Statements of Income Location
    
    Amount2009
    
    2008
    
    
    
    2009
    
    2008(in millions)
    
    
    
    
    
    
    
    (in millions)Southern CompanyEnergy-related derivatives
    
    $
    1
    
    
    $
    (12
    )
    
    Fuel
    
    $
    
    
    
    $
    Interest rate derivatives
    
    
    1
    
    
    
    (24
    )
    
    Interest expense
    
    
    (10
    )
    
    
    (5
    )Total
    
    $
    2
    
    
    $
    (36
    )
    
    
    
    $
    (10
    )
    
    $
    (5
    )Alabama PowerEnergy-related derivatives
    
    $
    
    
    
    $
    (1
    )
    
    Fuel
    
    $
    
    
    
    $
    Interest rate derivatives
    
    
    (2
    )
    
    
    (5
    )
    
    Interest expense
    
    
    (3
    )
    
    
    Total
    
    $
    (2
    )
    
    $
    (6
    )
    
    
    
    $
    (3
    )
    
    $
    Georgia PowerInterest rate derivatives total
    
    $
    3
    
    
    $
    (16
    )
    
    Interest expense
    
    $
    (5
    )
    
    $
    (1
    )Gulf PowerInterest rate derivatives total
    
    $
    
    
    
    $
    (4
    )
    
    Interest expense
    
    $
    
    
    
    $
    Mississippi PowerEnergy-related derivatives total
    
    $
    
    
    
    $
    (3
    )
    
    Fuel
    
    $
    
    
    
    $
    Southern PowerEnergy-related derivatives
    
    $
    1
    
    
    $
    (8
    )
    
    Fuel
    
    $
    
    
    
    $
    Interest rate derivatives
    
    
    
    
    
    
    
    
    
    Interest expense
    
    
    (2
    )
    
    
    (4
    )Total
    
    $
    1
    
    
    $
    (8
    )
    
    
    
    $
    (2
    )
    
    $
    (4
    )
 There was no material ineffectiveness recorded in earnings for any registrant for any period
presented.
 136




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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 For the three months ended March 31, 2009 and March 31, 2008, the pre-tax effect of energy-related
derivatives not designated as hedging instruments on the statements of income were as follows:
 Derivatives not Designated as Hedging
    
    Unrealized Gain (Loss) Recognized in IncomeInstruments Under SFAS No. 133
    
    Statements of Income Location
    Amount2009
    
    
    2008(in millions)Southern CompanyEnergy-related derivatives
    
    Wholesale revenues
    
    $
    4
    
    
    $
    (28
    )Fuel
    
    
    (4
    )
    
    
    12Purchased power
    
    
    (1
    )
    
    
    2Total
    
    
    
    $
    (1
    )
    
    $
    (14
    )Southern PowerEnergy-related derivatives
    
    Wholesale revenues
    
    $
    4
    
    
    $
    (28
    )Fuel
    
    
    (4
    )
    
    
    12Purchased power
    
    
    (1
    )
    
    
    2Total
    
    
    
    $
    (1
    )
    
    $
    (14
    )
 Contingent FeaturesThe registrants do not have any credit arrangements that would require material changes in payment
schedules or terminations as a result of a credit rating downgrade. There are certain derivatives
that could require collateral, but not accelerated payment, in the event of various credit rating
changes of certain Southern Company subsidiaries. At March 31, 2009, the fair value of derivative
liabilities with contingent features, by registrant, is as follows:
 Southern
    
    Alabama
    
    Georgia
    
    Gulf
    
    Mississippi
    
    SouthernCompany
    
    Power
    
    Power
    
    Power
    
    Power
    
    Power(in millions)Derivative liabilities
    
    $
    82
    
    
    $
    25
    
    
    $
    40
    
    
    $
    6
    
    
    $
    9
    
    
    $
    2
 At March 31, 2009, the registrants had no collateral posted with their derivative counterparties;
however, because of the joint and several liability features underlying these derivatives, the
maximum potential collateral requirements arising from the credit-risk-related contingent features,
at a rating below BBB- and/or Baa3, is $82 million for each registrant.Currently, each of the registrants has investment grade credit ratings from the major rating
agencies with respect to debt, preferred securities, preferred stock, and/or preference stock.Generally, collateral may be provided by a Southern Company guaranty, letter of credit, or cash.
For the traditional operating companies and Southern Power, included in these amounts are certain
agreements that could require collateral in the event that one or more Power Pool participants has
a credit rating change to below investment grade.
 137




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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 (G)
    
    RETIREMENT BENEFITSSouthern Company has a defined benefit, trusteed, pension plan covering substantially all
employees. The plan is funded in accordance with requirements of the Employee Retirement Income
Security Act of 1974, as amended (ERISA). No contributions to the plan are expected for the year
ending December 31, 2009. Southern Company also provides certain defined benefit pension plans for
a selected group of management and highly compensated employees. Benefits under these
non-qualified pension plans are funded on a cash basis. In addition, Southern Company provides
certain medical care and life insurance benefits for retired employees through other postretirement
benefit plans. The traditional operating companies fund related trusts to the extent required by
their respective regulatory commissions.See Note 2 to the financial statements of Southern Company, Alabama Power, Georgia Power, Gulf
Power, and Mississippi Power in Item 8 of the Form 10-K. Components of the pension plans and
postretirement plans net periodic costs for the three-month periods ended March 31, 2009 and 2008
are as follows (in millions):
 Southern
    
    Alabama
    
    Georgia
    
    Gulf
    
    MississippiPENSION
PLANS
    
    Company
    
    Power
    
    Power
    
    Power
    
    PowerThree Months Ended
March 31, 2009Service cost
    
    $
    36
    
    
    $
    8
    
    
    $
    12
    
    
    $
    2
    
    
    $
    2Interest cost
    
    
    97
    
    
    
    24
    
    
    
    37
    
    
    
    4
    
    
    
    4Expected return on plan assets
    
    
    (135
    )
    
    
    (41
    )
    
    
    (54
    )
    
    
    (6
    )
    
    
    (5
    )Net amortization
    
    
    10
    
    
    
    3
    
    
    
    4
    
    
    
    
    
    
    
    Net cost (income)
    
    $
    8
    
    
    $
    (6
    )
    
    $
    (1
    )
    
    $
    
    
    
    $
    1Three 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
    )
    
    $
    
    
    
    $
    1
 Southern
    
    Alabama
    
    Georgia
    
    Gulf
    
    MississippiPOSTRETIREMENT
PLANS
    
    Company
    
    Power
    
    Power
    
    Power
    
    PowerThree Months Ended
March 31, 2009Service cost
    
    $
    7
    
    
    $
    2
    
    
    $
    2
    
    
    $
    
    
    
    $
    1Interest cost
    
    
    28
    
    
    
    7
    
    
    
    13
    
    
    
    1
    
    
    
    1Expected return on plan assets
    
    
    (15
    )
    
    
    (6
    )
    
    
    (8
    )
    
    
    
    
    
    
    Net amortization
    
    
    7
    
    
    
    2
    
    
    
    4
    
    
    
    
    
    
    
    Net cost (income)
    
    $
    27
    
    
    $
    5
    
    
    $
    11
    
    
    $
    1
    
    
    $
    2Three 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
    
    
    $
    1
 138




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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 (H)
    
    EFFECTIVE TAX RATE AND UNRECOGNIZED TAX BENEFITSEffective Tax RateSouthern Companys effective tax rate was 54.1% for the three months ended March 31, 2009, as
compared to 32.2% for the same period in 2008. See Note 5 to the financial statements of each
registrant in Item 8 of the Form 10-K for information on the effective income tax rate. Southern
Companys effective tax rate increased for the three months ended March 31, 2009 primarily due to
the $202 million charge recorded for the MC Asset Recovery settlement. Southern Company is
currently evaluating potential recovery of the settlement payment through various means including
insurance, claims in U.S. Bankruptcy Court, and other avenues. The degree to which any recovery is
realized will determine, in part, the final income tax treatment of the settlement payment. See
Note (B) herein under Mirant Matters for further information regarding this matter.Unrecognized Tax BenefitsChanges during 2009 for unrecognized tax benefits are as follows:
 Southern
    
    Alabama
    
    Georgia
    
    Gulf
    
    Mississippi
    
    SouthernCompany
    
    Power
    
    Power
    
    Power
    
    Power
    
    Power
    
    Total(in millions)Unrecognized tax benefits as of
December 31, 2008
    
    $
    3.7
    
    
    $
    3.0
    
    
    $
    137.1
    
    
    $
    0.3
    
    
    $
    1.8
    
    
    $
    0.5
    
    
    $
    146.4Tax positions from current periods
    
    
    0.1
    
    
    
    0.2
    
    
    
    11.5
    
    
    
    
    
    
    
    
    
    
    
    0.1
    
    
    
    11.9Tax positions from prior periods
    
    
    
    
    
    
    
    
    
    
    1.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.7Reductions due to settlements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reductions due to expired
statute of limitations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance as of March 31, 2009
    
    $
    3.8
    
    
    $
    3.2
    
    
    $
    150.3
    
    
    $
    0.3
    
    
    $
    1.8
    
    
    $
    0.6
    
    
    $
    160.0
 The tax positions increase from the current periods relates primarily to the Georgia state tax
credits litigation and other miscellaneous uncertain tax positions. See Note (B) herein under
Income Tax Matters  Georgia State Income Tax Credits for additional information.Impact on Southern Companys effective tax rate, if recognized, is as follows:
 As of
    
    As ofGeorgia
    
    Other
    
    March 31,
    
    December 31,Power
    
    Registrants
    
    2009
    
    2008
    
    Change(in millions)Tax positions
impacting the
effective tax rate
    
    $
    147.5
    
    
    $
    9.7
    
    
    $
    157.2
    
    
    $
    143.5
    
    
    $
    13.7Tax positions not
impacting the
effective tax rate
    
    
    2.8
    
    
    
    
    
    
    
    2.8
    
    
    
    2.9
    
    
    
    (0.1
    )Balance of
unrecognized tax
benefits
    
    $
    150.3
    
    
    $
    9.7
    
    
    $
    160.0
    
    
    $
    146.4
    
    
    $
    13.6
 Accrued interest for unrecognized tax benefits:
 (in millions)Interest accrued as of December 31, 2008
    
    $
    14.8Interest accrued during the period
    
    
    2.5Balance as of March 31, 2009
    
    $
    17.3
 139




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NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
 It is reasonably possible that the amount of the unrecognized benefit with respect to a majority of
Southern Companys and Georgia Powers unrecognized tax positions will significantly increase or
decrease within the next 12 months. The possible settlement of the Georgia state tax credits
litigation would substantially reduce the balances. The conclusion or settlement of federal or
state audits could also impact the balances significantly. At this time, an estimate of the range
of reasonably possible outcomes cannot be determined.(I)
    
    SEGMENT AND RELATED INFORMATIONSouthern Companys reportable business segments are the sale of electricity in the Southeast by the
four traditional operating companies and Southern Power. Southern Powers revenues from sales to
the traditional operating companies were $135 million and $133 million for the three months ended
March 31, 2009 and March 31, 2008, respectively. The All Other column includes parent Southern
Company, which does not allocate operating expenses to business segments. Also, this category
includes segments below the quantitative threshold for separate disclosure. These segments include
investments in telecommunications, energy-related services, and leveraged lease projects. All
other intersegment revenues are not material. Financial data for business segments and products
and services are as follows:
 Electric UtilitiesTraditionalOperating
    
    Southern
    
    
    
    
    
    
    
    
    
    AllCompanies
    
    Power
    
    Eliminations
    
    Total
    
    Other
    
    Eliminations
    
    Consolidated(in millions)Three Months Ended March 31, 2009:Operating revenues
    
    $
    3,558
    
    
    $
    232
    
    
    $
    (151
    )
    
    $
    3,639
    
    
    $
    44
    
    
    $
    (17
    )
    
    $
    3,666Segment net income (loss) after
dividends on preferred and
preference stock of subsidiaries
    
    
    302
    
    
    
    28
    
    
    
    
    
    
    
    330
    
    
    
    (205
    )
    
    
    1
    
    
    
    126Total assets at March 31, 2009
    
    $
    46,050
    
    
    $
    2,787
    
    
    $
    (93
    )
    
    $
    48,744
    
    
    $
    1,382
    
    
    $
    (569
    )
    
    $
    49,557
 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) after
dividends on preferred and
preference stock of subsidiaries
    
    
    342
    
    
    
    29
    
    
    
    
    
    
    
    371
    
    
    
    (10
    )
    
    
    (2
    )
    
    
    359Total assets at December 31, 2008
    
    $
    44,794
    
    
    $
    2,813
    
    
    $
    (139
    )
    
    $
    47,468
    
    
    $
    1,407
    
    
    $
    (528
    )
    
    $
    48,347
 Products and Services
 Electric Utilities RevenuesPeriod
    
    Retail
    
    Wholesale
    
    Other
    
    Total(in millions)Three Months Ended March 31, 2009
    
    $
    3,065
    
    
    $
    451
    
    
    $
    123
    
    
    $
    3,639Three Months Ended March 31, 2008
    
    $
    3,006
    
    
    $
    514
    
    
    $
    129
    
    
    $
    3,649
 140




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
 See the Notes to the Condensed Financial Statements herein for information regarding
certain legal and administrative proceedings in which the registrants are involved.
 
 Item 1A. Risk Factors.
 See RISK FACTORS in Item 1A of the Form 10-K for a discussion of the risk factors of the
registrants. There have been no material changes to these risk factors from those
previously disclosed in the Form 10-K.
 141




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##### Table of Contents



Item 6. Exhibits.
 (4) Instruments Describing Rights of Security Holders, Including Indentures
 Alabama Power(b)1
    
    -
    
    Forty-Third Supplemental Indenture to
Senior Note Indenture dated as of March
6, 2009, providing for the issuance of
the Series 2009A 6.00% Senior Notes due
March 1, 2039. (Designated in Form 8-K
dated February 26, 2009, File No.
1-3164, as Exhibit 4.2.)Georgia Power(c)1
    
    -
    
    Thirty-Eighth Supplemental Indenture
to Senior Note Indenture dated as of
February 10, 2009, providing for the
issuance of the Series 2009A 5.95%
Senior Notes due February 1, 2039.
(Designated in Form 8-K dated February
4, 2009, File No. 1-6468, as Exhibit
4.2.)Mississippi Power(e)1
    
    -
    
    Tenth Supplemental Indenture to Senior
Note Indenture dated as of March 6,
2009, providing for the issuance of the
2009A 5.55% Senior Notes due March 1,
2019. (Designated in Form 8-K dated
March 3, 2009, File No. 001-11229, as
Exhibit 4.2.)(10) Material ContractsSouthern Company(a)1
    
    -
    
    Form of 2009 Stock Option Award
Agreement for Executive Officers of
Southern Company under the Southern
Company Omnibus Incentive Compensation
Plan.Gulf Power(d)1
    
    -
    
    Power Purchase Agreement between Gulf
Power and Shell Energy North America
(US), L.P. dated March 16, 2009. (Gulf
Power has requested confidential
treatment for certain portions of this
document pursuant to an application for
confidential treatment sent to the SEC.
Gulf Power has omitted such portions
from this filing and filed them
separately with the SEC.)(24) Power of Attorney and ResolutionsSouthern Company(a)1
    
    -
    
    Power of Attorney and resolution.
(Designated in the Form 10-K for the
year ended December 31, 2008, File No.
1-3526 as Exhibit 24(a) 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, 2008, 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, 2008, File No.
1-6468 as Exhibit 24(c) and incorporated
herein by reference.)(c)2
    
    -
    
    Power of Attorney for Ronnie R.
Labrato.
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##### Table of Contents



Gulf Power(d)1
    
    -
    
    Power of Attorney and resolution.
(Designated in the Form 10-K for the
year ended December 31, 2008, File No.
0-2429 as Exhibit 24(d) and incorporated
herein by reference.)Mississippi Power(e)1
    
    -
    
    Power of Attorney and resolution.
(Designated in the Form 10-K for the
year ended December 31, 2008, File No.
001-11229 as Exhibit 24(e) 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, 2008, 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.
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##### Table of Contents



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.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)
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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)
  146




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GEORGIA POWER COMPANY
 SIGNATURES
  GEORGIA POWER COMPANYBy
    
    Michael D. GarrettPresident and Chief Executive Officer(Principal Executive Officer)By
    
    Ronnie R. LabratoExecutive Vice President, Chief Financial Officer, and Treasurer(Principal Financial Officer)By
    
    /s/ Wayne Boston(Wayne Boston, Attorney-in-fact)
  147




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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)
  148




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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)
  149




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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)
  150